Nektan posts half-year loss of £2.4m

Nektan warned it would either have to secure additional investment or change strategy after the company revealed losses for the six-month period ended 31 December had doubled year-on-year to £2.4m EBITDA.

Following its admission to London’s Alternative Investment Market (AIM) in November, the mobile gaming platform provider’s maiden half-year report posted this morning showed revenues of £250,000 compared to £1.3m in the comparable period of 2013.

The firm, which in 2013 acquired mobile gaming company mFuse, said the reduction in revenues was a result of the termination of a number of content licensing deals in the sports betting market as part of a move to focus on its “core strategy” and the development of its Evolve gaming platform.

The company, which also operates the recently launched in-house brands Chomp Casino and Sapphire Rooms, posted RMG turnover of £3.8m and net gaming revenues of £115,000.

The fall in total revenues was coupled with a rise in costs, with Nektan’s flotation having set the company back £983,000 while investment in recently established joint-ventures totalled £729,000.

The firm revealed it had this week taken out a £1.2m loan in order to cover higher operating costs, primarily due to its US joint-venture with ReSpin and recently signed deal to provide UK newspaper The Sun with a mobile gaming platform.

Nektan said it was also in the process of seeking out additional investment and was in advanced negotiations over the issue of convertible securities and ordinary shares.

However, it warned that if it was unable to secure additional funding on acceptable terms, its directors would have to “refocus investment plans which could reduce the longer-term prospects of the company”.

Despite its current financial position, Nektan executive chairman Gary Shaw described the six-month period as “transformational”.

“As well as the Group’s successful admission to AIM in November 2014, we have delivered a number of significant operational milestones including the launch of our first white-label partners,” Shaw said.

“Underpinned by our exceptional end-to-end mobile platform, Nektan is in a very strong position to exploit the exciting growth opportunities in the fastest-growing segment of online gaming in Europe as well as significant opportunities in the US,” he added.

Analyst Adam Lawson of Panmure Gordon said Nektan had made “significant progress” during the period and highlighted the addition of 10 new casino partners as well as its US joint venture.

In addition, Nektan has announced further deals with the likes of City AM, Channel 4 and Kerching Casino since the turn of the year.

Nektan’s share price was up 2.95p to 197.95p after early morning trading.