Trading Statement

1 February 2016

Nektan plc

("Nektan", the "Company" or the "Group")

Trading Update

Nektan PLC (AIM: NKTN), a leading international B2B mobile gaming platform and content provider, today issues an update on trading ahead of its results for the six month period ended 31 December 2015.

Financial Summary

*Adjusted EBITDA excludes listing costs, exchange differences, and non-cash charges relating to share based payments

Operational Summary

• Respin, Nektan's US JV, continued to perform strongly in the period and now has 54 existing or pending contracts with tribal and commercial casino operators (2014: nine) and became the first company to be approved by Apple Inc. for mobile in-venue gaming in the US

• In its European operations, the Company has seen at least 32% compound monthly growth in overall Net Gaming Revenue ("NGR") between July 2015 and January 2016, with NGR in January 2016 of £827k, driven by Nektan's digital / mobile NGR partners, which we are continuing to win more of

• However, a delay in the acceleration of one large contract, anticipated to be worth approximately £7 million in current year NGR, will have a significant impact on Group revenues and EBITDA with the accelerated launch now expected towards the end of the current financial year

• Recent Board changes have seen Gary Shaw appointed interim Chief Executive and Jim Wilkinson appointed non-executive Chairman on 12 January 2016

• Strong action has been taken during January 2016 to reduce the ongoing monthly cost base by 45% to £270,000 by April 2016, lowering the level of monthly NGR at which the Company will be EBITDA positive

• The Company is now expected to reach an EBITDA break-even monthly run-rate in late H2 of the current financial year

• The Company continues to look to raise additional capital to strengthen its balance sheet and provide working capital to support the Company through to break even

Gary Shaw, interim Chief Executive Officer of Nektan, commented:

"In the US, our Respin JV is fully licensed to operate its mobile gaming platform and solutions in US casinos across Nevada, California, Oregon and Louisiana, with little competition seen from established providers. The business now has 54 existing or pending contracts with tribal and commercial casino operators (2014: nine). The first product launches of Xtraspin have increased revenues for casino operators per machine by up to 50% and are resulting in the significant sales momentum continuing into the second half.

Respin also became the first company to be approved by Apple Inc. for mobile in-venue gaming in the US. Our US strategy of working with the largest incumbents in each State and utilising our advanced mobile solutions, that link in-venue platforms to mobile play on smartphones, is making us become the business partner of choice for new technology in the US gaming market.

In Europe, while we are seeing significant growth in our Net Gaming Revenues, we are disappointed with the delayed acceleration in the period of one large contract which was anticipated to be worth approximately £7 million in current year NGR. We are working hard with our partner to provide upgraded content, which will see an accelerated launch later in the second half of this financial year, and this has impacted revenues for the year as a whole.

Overall, we have seen at least 32% compound monthly growth in European Net Gaming Revenue between July 2015 and January 2016, with NGR in January 2016 of £827k, driven by Nektan's digital / mobile NGR partners, which we are continuing to win more of.

Following the recent Board changes, the directors have implemented a wholescale review of all costs and are taking the steps to reduce the Company's fixed cost base from an average monthly run rate of £490,000 in H1 to £270,000 by April 2016, lowering the level of monthly NGR at which the Company will be EBITDA positive. We believe that this will be achieved without adversely impacting growth and will be a significant step towards ensuring that we reach the key milestone of EBITDA break even as soon as possible.

The Company continues to look to raise additional capital to strengthen its balance sheet and provide working capital to support the Company through to break even. We believe that it is now approaching the stage where the Company's existing sales momentum, together with the reduction in the fixed cost base, will allow the Company to become a strongly growing and profitable business. We expect that the completion of the current fund raising will provide sufficient resources to maintain the sales growth and reach this objective."

Jim Wilkinson, non-executive Chairman of Nektan, stated:

"Nektan has a very strong and strengthening strategic position in the US through our Respin JV and a fast growing European business. With a reduced cost base and the high growth rates being achieved, we believe that the Company will start fulfilling its undoubted potential. We are also pleased to announce the addition of Graham Bradshaw to Nektan's senior management team as interim Finance Director (a non PLC board position) with immediate effect. Graham is a Chartered Accountant who has held a number of senior finance positions including Group Financial Controller at Sportingbet PLC and a Director in Audit & Corporate Finance at EY."

For further information on the Group, please contact:

Further information on Nektan can be found on the Company's website at www.nektan.com 

About Nektan:

Nektan is a leading international B2B mobile gaming content developer and platform provider. The Group designs, builds and operates mobile games in the regulated, interactive real money gaming space delivering original and innovative content to large commercial organisations that have established online audiences.

Nektan's full end-to-end technology platform, Evolve, simplifies and supports the route to mobile and desktop gaming revenues, managing the full customer experience and back-office operations, allowing commercial partners to focus solely on marketing the product to their consumers.

Nektan also operates a joint venture, Respin LLC, with Spin Games LLC that provides US land-based casinos with in-venue mobile technology and an innovative way of increasing revenue from end-of-life cabinets whilst providing players new and innovative content to play, which includes functionality on mobile devices.

Nektan is regulated by the Gibraltar Licensing Authority and the UK Gambling Commission, as well as in the Irish market, and has offices in Gibraltar, London and Las Vegas with Respin based in Reno, Nevada.