Nektan PLC (LON:NKTN) is an innovative B2B mobile gaming platform provider, gaining positive momentum in Europe and the US. However, the business is still early stage, with £13.3m FY17 revenues accompanied by continued EBITDA losses. During 2017, Nektan secured a £2.5m loan from management and raised £1.76m via a placing and subscription of new shares. Depending on performance, we believe further fund-raising is possible. The dilution from the 2017 fund-raising has been mitigated by positive sentiment over subsequent management share purchases, as well as a new investor. In our view, profitable revenue growth and a move to positive EBITDA are necessary for a re-rating.
Management supports loan and fund-raising
In December 2017, Nektan raised £1.76m via the placing and subscription of new shares at 21p, supported by existing shareholders and management. The new shares comprise 18.9% of the enlarged share capital and net proceeds will be used for investment into the platform and growth opportunities in the US and Asia. This follows a £2.3m fund-raising in December 2016. During 2017, Nektan also agreed a £2.5m unsecured loan facility (10% interest, from management) and favourably amended the warrant issuance terms related to its £10m convertible loan note.
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