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Nektan expects trading to improve in the final quarter of its fiscal year

The proposed sale of the majority shareholding of Nektan's US subsidiary, Respin, is being finalised and the company expects to enter into a binding contract by the end of this month

Trading in the B2C division is expected to improve this quarter due to the continued growth and breadth of the company's casino network

Gaming technology platform operator Nektan PLC (LON:NKTN) saw record revenue growth in its business-to-business (B2B) division in the first three months of 2019.

During the quarter – the third of the company’s fiscal year – overall revenue was up 5.9% year-on-year and the board expects an improvement in trading in the final quarter.

READ Nektan chief hails financial milestone; pledges to push on

B2B revenue rose 75% to £350,000 from £83,000 the year before but as reported in its interim results last month, the business-to-consumer (B2C) side of the company had a tougher time of it, with B2C net gaming revenue down 17.7% at £5.1mln versus £6.2mln in the same period of 2018.

B2C first-time deposits declined to 31,914 from 36,328 in the corresponding quarter of 2018 while B2C cash wagering declined to £141mln from £168mln.

Nektan said the slippage in the B2C business was due to a number of factors, including seasonality, increased UK regulation around player marketing and verifications and a delay in the granting of the company's Swedish operator licence.

The board expects the full-year will see the company achieve break-even at the underlying earnings (EBITDA) level.

"Q3 has been another record quarter of growth for our rapidly emerging B2B business,” said Lucy Buckley, the chief executive officer of Nektan.

“We continue to see strong demand for our award-winning casino technology as evidenced by the signing of seven significant B2B partners during Q3 FY19. Having achieved EBITDA break-even in H1 of this financial year, a key achievement for Nektan, we remain on track to be break-even in FY19. As reported in our interim results announcement on 25 March 2019, whilst the headlines revenue figures are slightly down on Q2, our growing portfolio of partners means that we do not expect a repeat of what was a quiet period by historical standards,” Buckley said.

“Developments on the sale of our majority stake in the US division Respin are progressing and we expect to conclude this shortly and before 30 April 2019. This transaction will mean us maintaining a material stake in the emerging US market while removing the cash burn of this business. As a result of that deal, the other inter-conditional transactions, namely the fund raising and CLN [convertible loan note] conversion, are due to complete as well, putting Nektan in a very strong position to capitalise on our global growth prospects," Buckley said.

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