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Nektan plc
Annual Report and
Accounts 2015
DELIVERING INNOVATIVE
MOBILE REAL MONEY GAMING
PRODUCTS AND SERVICES ON A
PROPRIETARY PLATFORM WITHIN
REGULATED MARKETS.
CONTENTS
Strategic Report
1Highlights
2 Nektan at a Glance
4 Chairman and Chief Executive’s Statement
8 Strategy for Growth
9 Business Model
10 Market Overview
12 Operational and Financial Review
14 Principal Risks
Governance
16
18
19
21
Board of Directors
Corporate Governance Statement
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Financial Statements
22 Independent Auditor’s Report
23 Consolidated Statement of Comprehensive Income
24 Consolidated Statement of Financial Position
25 Consolidated Statement of Changes in Equity
26 Consolidated Statement of Cash Flows
27 Notes to the Consolidated Financial Statements
49 Parent Company Balance Sheet
50 Parent Company Statement of Changes in Equity
51 Notes to the Parent Company Financial Statements
IBCDirectors, Offices and Advisors
Nektan plc Annual Report and Accounts 2015
Strategic Report
Financial
Statements
Governance
STRATEGIC REPORT
HIGHLIGHTS
YEAR-END HIGHLIGHTS:
•The Group continues to see strong and consistent
quarterly growth in real money gaming (‘RMG’) in
Europe across all key performance indicators (‘KPIs’)
•The successful launch of Sun Play in June 2015 in
partnership with News UK, to develop and operate
Sun Play, a best in class gaming and entertainment
experience across mobile, tablet and desktop, on a
multi-year contract
•Nektan plc’s (‘Nektan’) US joint venture with Spin
Games LLC, Respin LLC (‘Respin’), continues to see
considerable momentum building in the US from its
first mover advantage
•The Group announced in April and May 2015 a new
financing package totalling approximately £8 million,
ensuring that the Group is well positioned to continue
to execute on the strategy, scale the business and drive
profitable growth
POST PERIOD END HIGHLIGHTS:
Real money gaming: continues to see strong and
consistent quarterly growth in Europe across all KPIs
•Net gaming revenues in the month of August alone
surpassed the total revenues of the entire previous
quarter due to the continued increase in first time
depositors and over 70 percent growth in deposit
amounts made by players
Respin: The first Respin gaming deployments with
US land based casinos are Xtraspin wheels, which
are mobile technology enabled bolt-on modules
to slot machines. Respin is currently rolling out its
mobile gaming solution across the US, targeting land
based casinos in 32 states
•Xtraspin wheels are now live in 12 casinos across
California and Nevada, tripling since the end of
June (30 June 2015: 4)
•Q1 revenues for the current financial year have
surpassed the total revenues for the entire
previous year
•A total of 74 Xtraspin wheels are operational in
these casinos (30 June 2015: 25)
•Launch of Nektan Marketing Services (‘NMS’) in
•Casino operators are seeing revenue ‘coin in’
September, in partnership with Fred Done (Founder
of Betfred, one of the world’s largest independent
bookmakers) and Warren Jacobs (Managing
Director of Active Win Media Ltd)
uplifts in excess of 30 percent on slot machines
with Xtraspin wheels
•A further 22 land based casinos have now been
contracted or have signed letters of intent for
delivery of an initial additional 130 Xtraspin wheels
As announced on 6 October, the Group has raised
an additional £2.75 million to underpin expansion in
the US tribal and commercial casino market and to
support working capital requirements
•Respin has recently been granted approval for its
first patent for Xtraspin, helping to strengthen its
first mover advantage
FINANCIAL HIGHLIGHTS 2015:
CASH STAKES
GBP MILLION
PLAYER CASH DEPOSITS
GBP THOUSANDS
NET GAMING REVENUE
GBP THOUSANDS
£13.3M
£1,085K
£385K
Q4 2015
Q3 2015
Q2 2014
Q1 2014
Q4 2015
Q3 2015
Q2 2014
Q1 2014
6.2
3.4
2.3
1.4
0.0
6.2
491
296
161
137
0
491
Q4 2015
Q3 2015
Q2 2014
Q1 2014
180
86
73
46
0
180
1
STRATEGIC REPORT
NEKTAN
AT A GLANCE
A leading international B2B mobile real money gaming
content developer and platform provider.
WHAT WE DO
•Nektan designs, builds and
operates mobile casinos in the
regulated, real money gaming
(‘RMG’) space, delivering original
and innovative content to large
commercial organisations that have
established online audiences.
NEKTAN IS REAL MONEY GAMING
•Nektan simplifies the route to
USA
mobile gaming revenues for
its partners, managing the full
customer experience and back
office operations.
•Nektan’s US joint venture with Spin
Games LLC (‘Spin Games’), Respin,
provides US land based casinos
with in-venue mobile technology
and an innovative way of increasing
revenue from end-of-life slot
machines.
•Nektan is regulated by the
Gibraltar Licensing Authority and
UK Gambling Commission and has
a gaming licence in Ireland.
•Nektan has offices in London,
Gibraltar and Las Vegas with
Respin based in Reno, Nevada.
HOW WE CREATE VALUE
LAND BASED CASINOS
WHITE LABEL MOBILE CASINOS
POWERED BY THE EVOLVE PLATFORM
OUR PLATFORM
Nektan has invested significantly in its proprietary, end-to-end gaming back
office platform, Evolve, which was launched in April 2014 for the fast growing
TECHNOLOGY
CONTENT
PARTNERS
SCALABILITY
mobile
gaming industry. The
technology and platform
infrastructure
are
designed from the outset for mobile solutions, scalability and partner speed
to market in both Europe and the US. Evolve’s deep analytical capabilities
drive acquisition effectiveness and lifetime customer values and therefore
revenue for its partners.
REVENUE JOURNEY
TECHNOLOGY
SCALABILITY
Nektan’s in-house and end-to-end platform provides
fully automated player and partner management as well
as providing the content management system for the
Group’s HTML5 games portfolio.
PARTNERS
EUROPE
DEVELOP
Nektan’s mobile gaming content is market-leading and
our technology platform, Evolve, underpins our offer
with the necessary scalability to service our growing
portfolio of partners.
TRAFFIC
PEOPLE
REVENUE
Nektan has a growing base of partners across a variety
The expertise, experience and skillset of our people
Nektan develops
Players generate
of sectors with large online audiences. The Group is
are integral to the continuing success of the business,
and operates Partner
to their casino
revenues from the
also capitalising on its first mover advantage in the
as they help drive our continued innovation and
Mobile Casino
real money games
US through its joint venture, Respin, which partners with
the relationships that we are building with partners
land based casinos.
and customers.
2
MANAGE
Nektan manag
all aspects of th
end-to-end pla
lifecycle
Strategic Report
Governance
Financial
Statements
Case study
RESPIN – REINVENTING
CASINO FLOORS
In November 2014 Nektan
signed an agreement
with Spin Games for the
creation of the Respin joint
venture. The joint venture
has a genuinely disruptive
business model in a potential
$3 billion market.
Kent Young is the Founder and
President of Spin Games and has
25 years’ experience in the gaming
industry and strong connections with
the casino operators in California and
Nevada. Respin currently employs
25 people many with experience in
the gaming industry including roles
at IGT, Aristocrat and Bally.
“We are delighted to
have formed a joint venture
with Nektan. Our combined
technology and expertise
will allow us to exploit the
opportunities in the North
American gaming market.”
Kent Young
President/CEO of Spin Games
The opportunity has arisen due to
the reluctance of casino operators
to purchase new machines from
manufacturers. When slot machines
reach their end of contractual life
they become unsupported and
are therefore suitable for a third
party to extend their life, reducing
capex requirements for the casino
operator. 40 percent of slot machines
on casino floors are estimated to
be unsupported by the original
manufacturer, based on the 2013
figure of 775,000 slot machines in
commercial and tribal casinos.
Put an Xtraspin on it
Xtraspin is a secondary bonusing
system to add value to existing
installed base slot machine games
by enhancing the player experience
through offering the base game prize
and an additional mystery bonus
prize. The dynamic wheel displays
customisable graphic packages and
sounds to complement the base game.
Xtraspin can be installed on a bank of
slot machines or multiple banks
of machines.
These banks of machines add to
the shared excitement of a
group of players and serves to
attract more players who want
to take the chance at winning
the secondary bonus prizes.
Retrofit – making the old new
Retrofit updates classic
cabinets by taking an
unsupported slot machine
and giving it a modern facelift
using a Retrofit mobile adaptor to
link games across cabinets and offer
players premium content from the
Spin Games and Nektan content
libraries.
Rapid Bingo – in venue
mobile gaming
Rapid Bingo is an on-property mobile
bingo game available to players on
their own iPhone and Android devices,
creating a new revenue stream for land
based casinos. Geolocation allows the
play boundaries to be controlled to the
parameters of a casino’s footprint and
offers players the ability to gamble
whilst sat poolside, in a bar, restaurant
or club or at a show or conference. The
games are 75 ball bingo with a 40 ball
drop to increase the player reward
and are delivered through a secure,
web based back office system with
seamless integrated mobile wallet.
“This joint venture is a
significant step in the
execution of Nektan’s US
growth strategy. With our
joint mobile technology
solution including the Evolve
platform and Spin Games’
gaming machine expertise
we are offering a solution to
introduce mobile gaming to
land based casino operators
in up to 32 states.”
Gary Shaw
Executive Chairman of Nektan
BuffaloTM is a trademark of Aristocrat.
3
STRATEGIC REPORT
CHAIRMAN AND
CHIEF EXECUTIVE’S
STATEMENT
In November 2014, the Group
signed a joint venture agreement
with Spin Games to target the
opportunities we see in the US
land based casino market through
in-venue mobile technology. The
Group’s joint venture, Respin, offers
casino operators an innovative and
capital efficient way of refreshing
their customer offer and increasing
revenue from unsupported end-oflife slot machines whilst providing
players new and innovative content
to play which includes functionality
on mobile devices.
“Our admission to AIM in
November 2014 helped
to enhance Nektan’s
profile and credibility
with major partners.”
Overview
Over the last year and following
the period end, Nektan has made
considerable, tangible progress with
strong momentum in its key markets
in Europe and the US and strong
quarterly growth across all key
performance indicators.
Nektan operates in the high growth
market of mobile gaming and the
Group aims to strengthen its position
as the international, B2B mobile
platform and gaming provider of
choice. Nektan’s principal markets
are the regulated RMG sectors in
the US and Europe where the Group
continues to disrupt and exploit the
changing market dynamics through
innovation.
The Group’s competitive advantage
is its white label full end-to-end
technology platform, Evolve
(launched in April 2014), and its
growing suite of high quality mobile
gaming products, which together
continue to prove very attractive to
commercial entities, media agencies
and affiliates that have large
established online audiences.
4
Our admission to AIM in November
2014 helped to enhance Nektan’s
profile and credibility with major
partners, whilst also providing access
to capital as commercial opportunities
arise, all of which continues to
support our growth plans.
Performance
During the year, the Group’s
European business has delivered
material growth in RMG casino
KPIs, since the launch of the Evolve
platform and house RMG casino
brand, Chomp Casino, in April 2014.
RMG net gaming revenue in the year
ending June 2015 was £385k (2014:
£10k).
In the US, Respin continues to
strengthen its performance with
its first US product Xtraspin. The
uplift in revenues experienced by
casino partners with Xtraspin wheels
underlines the significant commercial
opportunities which are further
reflected in the continued growth of
its casino contract pipeline which at
year-end saw four live casinos and a
further 18 land based casinos either
contracted or with letters of intent for
delivery of in-venue mobile gaming.
The operating loss for the year was
£7.2 million (2014: £5.7 million loss).
Adjusted EBITDA, which excludes
listing costs, exchange differences,
and non-cash charges relating to
share based payments was a loss of
Strategic Report
Governance
Financial
Statements
Q&A
Since the period end, momentum
across the Group has continued as
set out in our recent Trading Update.
Net gaming revenues in the month
of August alone surpassed the total
revenues of the entire previous quarter,
attributable in part to a continued
increase in first time depositors and
over 70 percent growth in deposit
amounts made by players. In the
US, Xtraspin wheels are now live
in 12 casinos across California and
Nevada, tripling since the end of June
with a total of 74 Xtraspin wheels
operational. Furthermore, casino
operators are seeing revenue ‘coin
in’ uplifts in excess of 30 percent on
slot machines with Xtraspin wheels
and this is driving the growth in the
confirmed pipeline, with a further
22 land based casinos now contracted
or with letters of intent for delivery
of an initial additional 130 Xtraspin
wheels.
To continue to support business
growth and development and to
underpin our continued progress in
key markets, in April and May 2015
the Company announced a finance
package totalling, in aggregate,
gross proceeds of £8.0 million.
Furthermore and as announced
on 6 October the Company has
raised an additional £2.75 million,
to underpin expansion in the US
tribal and commercial casino market
and to support working capital
requirements.
Key drivers
Over the past 12 months, we have
continued to invest in our Evolve
gaming platform and innovative
high quality games to ensure that
our product remains market-leading
and that we retain our competitive
advantage. Evolve is focused on
supporting mobile gaming first as
well as enabling desktop, ensuring
its products provide a superior
mobile entertainment experience for
end users. The Group can identify
architecture developments and
prioritise these as it sees fit due to
Can you outline
your business
model?
Nektan operates, distributes and
monetises RMG entertainment in
regulated markets on behalf of
partners with large online audiences.
The Group’s end-to-end platform
simplifies the route to mobile gaming
revenues for its partners through
revenue share. The US joint venture,
Respin, targets the land based US
casino market with in-venue mobile
technology on a simple daily rental
model.
What size are your
target markets?
Our two primary geographical
targets are Europe and the US,
which are estimated to be £15 billion
and $66 billion, respectively.
How are the market
dynamics changing?
We are benefiting from the fastgrowing mobile gaming segment
and this opportunity is being driven
by increases in smartphone and
tablet penetration and ownership
worldwide.
What is your
competitive
advantage?
Our proprietary, scalable technology
platform, Evolve, and innovative
mobile gaming content, in addition to
our first mover advantage in the US,
supported by our recently approved
first patent and the proven expertise
of our team.
having full ownership of its platform,
which also allows the Group to
integrate third-party software in
short timeframes and at a lower cost.
The design of Evolve allows the
Group the flexibility to meet the
demand of evolving and new
markets, ensuring it has a speed-tomarket advantage and the ability to
produce a partner branded solution
in a matter of weeks rather than
months. The existing investment
in Evolve’s software architecture
and product development acts
as a significant barrier to entry in
offering a robust B2B mobile gaming
platform. We continue to add high
quality partners and, at the yearend, we had 20 live RMG casino
partners, including the landmark
multi-year relationship with The Sun
newspaper in the UK to develop and
operate Sun Play, an innovative new
gaming product launched in the UK
in June 2015. Nektan was contracted
following a rigorous selection
process, and this is testimony to the
quality of our B2B offer. Sun Play
combines free-to-play skill games
with a suite of real money games
that are designed to be played on
the go by the readers of The Sun
newspaper’s print and online formats.
“We are also delighted
with the significant
interest received so far in
the US for the in-venue
mobile technology
developed with Spin
Games in the Respin
joint venture.”
5
STRATEGIC REPORT
CHAIRMAN AND CHIEF EXECUTIVE’S
STATEMENT CONTINUED
We are also delighted with the
significant interest received so far
in the US for the in-venue mobile
technology developed with Spin
Games in the Respin joint venture.
Moreover, as recently announced,
Respin has now been granted
approval for its first patent for
Xtraspin, which helps to further
strengthen its first mover advantage.
Proven management team
Nektan has built a strong senior
management team with significant
experience of building and leading
high growth companies in the
technology and gaming industries.
Between them, the team has led
pioneering companies including
B2C, B2B, white label and content
licensing businesses, and possesses
the ability to assist the Group in
meeting its strategic goals. David
Gosen further strengthened the team
when he joined as CEO in January
2015, bringing 25 years of gaming
and technology expertise.
On behalf of the Board, we would
also like to thank all of Nektan’s
employees for their continued hard
work and commitment.
Outlook
In Europe, Nektan is expanding
its business in the fastest growing
segment of the online gaming market
and in the US the Group, alongside
our Joint Venture partner, is now
live with RMG mobile technology
in the estimated $3 billion a year
potential market. In both markets,
supported by our leading full endto-end technology platform, Evolve,
the opportunities are substantial
and there is significant interest in
Nektan’s offering.
Post period end, we have secured
additional investment, raising
£2.75 million through the issue of
convertible loan notes and equity to
new and existing investors to support
the Group’s overall growth strategy
and maintain strong momentum in
its key markets.
Our pipeline remains very
encouraging and, along with our
existing partner base, emphasises
the strength of our proprietary,
scalable platform, content and
sector expertise, all of which leave
the Group well-positioned to benefit
from the opportunities available to
us in a growing market. We remain
confident in our outlook for the full
year and beyond as Nektan continues
to strengthen its position and to
deliver strong momentum in our
key markets in Europe and the US.
Gary Shaw and David Gosen
Executive Chairman and
Chief Executive Officer
6
“Our first full year results
since IPO demonstrate
the Group’s considerable
progress. Our pipeline
remains very encouraging
and, along with our
existing partner base,
emphasises the strength
of our proprietary,
scalable platform, content
and sector expertise.”
Strategic Report
Governance
Financial
Statements
Case study
EVOLVE PLATFORM AND CONTENT
Over the past 24 months, we have invested
significantly in our Evolve gaming platform
and innovative high quality games to
ensure that our product remains marketleading and that we retain our competitive
advantage.
Launched in April 2014, Evolve is focused on
supporting mobile gaming first as well as enabling
desktop, ensuring its products provide a superior
mobile entertainment experience for end users.
The Group can identify architecture developments
and prioritise these as it sees fit due to having full
ownership of its platform, which also allows the Group
to integrate third-party software in a shorter timeframe
and at a lesser cost. The Evolve technology has been
designed to support both the European and US
markets in a single platform.
All content is built in HTML5, a mobile technology
base that allows games to be developed once and
deployed across all internet enabled devices, including
smartphones, tablets and desktop PCs.
The platform provides enhanced user management
functionality, user registration and partner relationship
management tools, and full gameplay history tracking.
User payments, including deposits and withdrawals,
multi-currency support, customer account management
and full reporting functionality, all underpin
the end‑to‑end power of Evolve.
Evolve allows the Group the flexibility to meet the
demand of developing and new markets, ensuring it
has a speed-to-market advantage and the ability to
produce a partner branded solution in a matter of
weeks rather than months. The existing investment
in Evolve’s software architecture and product
development acts as a significant barrier to entry
in offering a robust B2B mobile
gaming platform. The platform has
been developed to be fully scalable
for white label partners and built
to operate the full suite of casino
games including blackjack,
roulette and slots.
Case study
NEKTAN AND NEWS UK PARTNERED
TO LAUNCH ‘SUN PLAY’
Sun Play, an innovative mobile gaming destination for
The Sun readers, features a range of free games such as
the football themed Striker ‘Keepy Uppy’ and, Psychic
Swipe. Bonuses are awarded for high scores, which can
be redeemed in Sun Play’s cash gaming section that
includes a number of Sun themed slot games such as
‘Striker’ and ‘Reel All About it’ as well as other market
leading real money slot games.
In September Nektan launched ‘Treasure Codes’ as
part of Sun Play, a first to market concept built by
Nektan and enabled via the Sun Play gaming site.
Unique codes were printed in every single copy of the
Sun Newspaper to promote a cash giveaway of £70k.
Customers scanned the codes to win cash prizes from
£5 to £20k.
News UK is responsible for marketing ‘Sun Play’
and Nektan will continue to develop new and
compelling free and real money gaming content as
well as operating the end-to-end player management
experience and back office operations via Nektan’s
proprietary Evolve gaming platform.
“We’ve had huge success offering The Sun on
mobile and tablet and believe Sun Play is the
ideal way for us to continue to extend our
entertainment platforms. We are delighted
to be working with Nektan who have proved
themselves to be quick, creative and innovative
in providing a state of the art gaming experience
across mobile, tablet and desktop platforms.”
Tom Ustenal
News UK Head of Gaming
7
STRATEGIC REPORT
STRATEGY
FOR GROWTH
Nektan’s vision is to be the leading, global, B2B mobile gaming provider of
choice, recognised for the quality of the Group’s innovation. To achieve this,
the Board’s business strategy objectives are to:
Nektan’s core market is the regulated
mobile RMG sector. In the early
stages of the Group’s development
it has focused specifically on white
label casino.
Nektan aims to strengthen its
position as the international, B2B
mobile platform and gaming provider
of choice, recognised for being at
the forefront of innovation in mobile
gaming and through its revenue
share and licensing business model,
to generate high operational leverage
and high margins. The Group’s
strategy is focused on:
•operating, distributing and
monetising RMG entertainment for
white label partners with access to
large online audiences;
•continuing to develop and
enhance the Group’s end-to-end
platform, including the ability to
deploy content across mobile and
desktop and to continue innovating
content-rich and original gaming
products; and
•targeting the land based US casino
market with in-venue mobile
technology by adding a ‘bolt-on’
module or by refurbishing the
machines from the estimated
40 percent of slot machines in the
US casino market that are no longer
supported by manufacturers.
Nektan simplifies the route to
mobile gaming revenues for
its partners, managing the full
customer experience and back-office
operations, allowing the partner
solely to focus on marketing the
product to its consumers. Net
gaming revenue is split between the
Group and the partner, with limited
technical or integration cost attached
to each launch.
Read more on PG14
For a list of Strategic Risks
8
At the year-end there were 20 live
RMG casino partners, including the
landmark multi-year relationship
with The Sun newspaper in the UK to
develop and operate Sun Play, a best
in class gaming and entertainment
experience across mobile, tablet and
desktop.
Nektan monetises its content and
platform through four routes to
market: white label implementations,
house brands, content licensing and
joint ventures.
White labelling sits at the heart
of Nektan’s B2B business model,
which is focused on targeting large
commercial organisations and
media owners that have established
online audiences. The Group has to
develop a full end-to-end technology
platform, Evolve, which is focused
on supporting mobile gaming and
proprietary gaming assets. It has
been designed to offer industry
leading speed to market for partners,
be adaptable to brand look and
feel and to support the delivery of
the games to all internet-enabled
devices.
With white label implementations,
Nektan retains a share of the
net revenue generated, typically
between 30-35 percent. The size of
this share will depend on the scale
of the partner and the commercial
value access to its online audience
is deemed to deliver. Partners are
categorised as large, medium or
small based on the audience size
and, based on industry norms, the
average player is estimated to have
a lifetime value of £300 over an
average lifetime of 19 months.
The Group also has a number
of freemium bingo partners and
continues to monitor the growth
potential of this sector.
The Respin joint venture, targeting
the land based US casino market
with in-venue mobile technology,
operates a per unit leasing model
based on a fixed dollar amount per
day for each unit installed. The first
product developed by the joint
venture, Xtraspin, is priced at $12
per day per unit.
“Nektan simplifies the
route to mobile gaming
revenues for its partners,
managing the full
customer experience and
back-office operations.”
Strategic Report
Governance
Financial
Statements
BUSINESS
MODEL
Nektan focuses on the European and US markets for its mobile technology
solutions, powered by the proprietary Evolve platform, with simple, well
established business models in each territory.
EUROPE –
WHITE LABEL
MOBILE CASINOS
Operating, distributing and
monetising mobile RMG for
partners with large online audiences
US –
LAND BASED
CASINOS
Respin joint venture targets
the land based US casino market
with in-venue mobile technology
KEY STRENGTHS:
KEY STRENGTHS:
› End-to-end white label
› Already live in California
technology platform
and Nevada with Xtraspin
wheels
› Designed for mobile
solutions, scalability and
partner speed to market
› Exploiting huge opportunities
in large and fast growing market
› Growing portfolio of content-rich,
original gaming products
› Advanced functionality
› Proven revenue increases
from end-of-life slot
machines
THE
EVOLVE
PLATFORM
› Substantial target market
of c.40% of all US slot
machines
› First mover advantage and
first patent approved
for Xtraspin
drives partner revenues
REVENUE SHARE MODEL:
NEKTAN RETAINS 30-35%
› Fully managed
partner
experience
› Deep user analytical
capabilities
$12 PER DAY PER UNIT LEASING
MODEL PER XTRASPIN WHEEL
INSTALLED
› Automated customer
management
› Dynamic Content
Management System
› Real time reporting
9
STRATEGIC REPORT
MARKET
OVERVIEW
Mobile RMG in Europe
The Group is in a strong
position to gain significant
Nektan’s considerable market
opportunity is driven by the increase
share of the fast-growing
in ownership of smartphones and
mobile gaming market,
the reshaping of the internet by
underpinned by its focused
mobile devices. Within the gaming
sector, mobile is the fastest growing
strategy and end-to-end
segment, reflected by the estimation
gaming platform and content that mobile gambling – including
betting, gaming and lottery – will
portfolio specifically
generate just over €19 billion of gross
designed for the
win by 2018, reflecting a CAGR of
mobile channel.
29.5 percent (source: H2GC).
“Nektan is well positioned
within the expanding
mobile market, with its
content being built in
HTML5, a mobile
development technology
that allows games to be
built once and then
deployed across
multiple devices.”
10
user experience based on user
interface enhancements, and
content configured specifically for
mobile consumption. Consumers
have also become more accepting
of mobile based payments. These
drivers underpin the H2GC forecast
growth of the mobile based gaming
market from €0.95 billion in 2014
to €2.25 billion by 2018 and to
€2.81 billion by 2020.
Nektan is well positioned within
the expanding mobile market, with
its content being built in HTML5,
Forrester Research predicts that there a mobile development technology
could be 3.4 billion smartphones
that allows games to be built
and 905 million tablets in active use
once and then deployed across
worldwide by 2017, implying
multiple devices, from mobile
46 percent and 30 percent year on
phones to tablets, laptops and
year (‘YOY’) growth in smartphone
desktop PCs. In addition, to fully
and tablet adoption respectively.
leverage the opportunity, its endA study published by Deloitte
to-end platform, Evolve, simplifies
estimated that smartphone
the route to mobile RMG revenues
penetration is at 66 percent, while
for partners, by managing the full
54 percent of UK households now
customer experience and back-office
own a tablet (source: Ofcom). This
operations for the partner.
has driven consumer demand for
all forms of mobile entertainment,
US casinos and land based
including RMG.
Growth in RMG is also clearly
evidenced by the fact that many of
the established betting operators
have been building up their mobile
offerings in recent years and are
exhibiting strong growth in their
mobile channels.
Drivers for mobile gaming include
convenience, privacy, an improving
technology
The US casino market is estimated
to be worth c.US$66 billion in 2015
and is the second largest gambling
market in the world, after Macau in
China (source: Statista 2015). There
are two distinct types of casino in
the US: tribal and commercial. In
2012 the split between commercial
and tribal gaming revenues was
57 percent/43 percent.
There are 39 states that have some
form of legalised electronic gaming
device – including traditional slot
machines, video poker and bingo
– at tribal casinos, commercial
casinos, racetrack casinos, and/or
bars, restaurants or other licensed
establishments.
Strategic Report
Governance
Financial
Statements
“The Group’s Respin joint
venture has a genuinely
disruptive business model
in a potential $3 billion market.”
The Group’s Respin joint venture
is a genuinely disruptive business
in an estimated potential market
of $3 billion. 40 percent of slot
machines on casino floors are
estimated to be unsupported by
the original manufacturer, based
on the 2013 figure of 775,000
slot machines in commercial and
tribal casinos.
An opportunity has arisen, on
which Respin is capitalising and
has gained first mover advantage,
as a result of casino operators’
reluctance to purchase new machines
from manufacturers. Respin offers
casino operators an innovative and
capital efficient way of refreshing
their customer offer and increasing
revenue from unsupported end-oflife slot machines whilst providing
players new and innovative content
to play which includes functionality
on mobile devices.
The freemium opportunity
The social games market is estimated
to reach $3.5 billion this year, up from
$2.8 billion in 2014 (source: Cenkos
2015). With online RMG effectively
banned in most US states, social
casino games have grown strongly
in North America led by the likes of
Caesars and Zynga.
The Group’s freemium growth
strategy for mobile based social
gaming product will continue to be
secondary in focus at this point until
its revenue and profit potential is
demonstrated.
11
STRATEGIC REPORT
OPERATIONAL AND
FINANCIAL REVIEW
The Group has made
considerable operational
progress over the year,
signing high-profile B2B
customers and attracting an
impressive level of interest
from US casinos. The
successful signing of large
media groups and gaming
operators demonstrates the
quality of Nektan’s platform
and games.
Europe partners
Real money gaming KPIs
The Group’s early traction in
Europe reinforces the quality of
its technology-led mobile gaming
proposition capability to disrupt the
mobile gaming market. The Group’s
existing 20 live white label RMG
partners comprise a mix of media
companies with large audiences and
established gaming brands. On the
content licensing side, a further five
customers have signed a contract
to licence content. Nektan has also
signed a multi-year partnership with
News UK, which combines free-toplay skill games with a suite of real
money games that are designed to
be played on the go by the readers of
The Sun newspaper’s print and online
formats. This landmark deal will
significantly underpin the revenues
of the European RMG business.
Launched and live in June 2015, Sun
Play will reach The Sun’s 5.4 million
UK adult readership that has a strong
gaming heritage underpinned by Sun
Bingo. The Sun funds all marketing
including editorial promotion. This is
a multi-year contract with potentially
significant net gaming revenue share
to Nektan.
The performance of the Group
during the year demonstrates the
operational progress achieved. The
Directors regard, in addition to net
gaming revenue and EBITDA, the
growth in first time depositors,
player deposits and player cash
stakes as reliable measures of
performance that demonstrate
growing sustainable lifetime revenues
from players:
Given the depth of the pipeline
across all existing offerings,
management is confident that the
commercial future of the business
is exciting.
•first time depositors were 3,153 in
Q4 versus 416 in Q1;
•cash stakes in Q4 of the year were
£6.2 million versus £1.4 million in
Q1; and
•deposit amounts were £491k in Q4
versus £136k in Q1.
The US
In the US, Respin has generated
significant partner interest with
18 land based casinos contracted
or with letters of intent already for
delivery of in-venue mobile enabled
gaming in the current financial year
(currently 34). At the year-end there
were four casinos live with
25 Xtraspin wheels, across Nevada
and California, delivering increases
of ‘coin in’ revenues to the casinos in
excess of 30 percent.
WHITE LABEL PARTNER REVENUE JOURNEY
DEVELOP
DRIVE
GENERATE
MANAGE
COLLECT
Nektan develops and
operates Partner
Mobile Casino
Partner drives traffic
to their casino
Players generate
revenues from the
real money games
Nektan manages
all aspects of the
end-to-end player
lifecycle
Nektan collects
and shares revenues
with partners
12
Strategic Report
Revenue
EBITDA
The Group has seen material growth
in all RMG casino key performance
measures, since the launch of the
house RMG casino brand, Chomp
Casino, in April 2014. RMG net
gaming revenue in the year ending
June 2015 was £385k (2014: £10k)
from a total of £1,085k in RMG player
cash deposits (2014: £13k).
The operating loss for the year was
Adjusted EBITDA, which excludes
listing costs, exchange differences,
and non-cash charges relating to
share based payments, was a loss of
During the year Nektan contributed
£299k to the Broadcast Gaming
Revenue from content licensing
joint venture for the development
was £29k (2014: £1,614k) which was
of the freemium gaming US mobile
generated from a legacy revenue
opportunity, which has been included
share agreement with one third
within loans to joint ventures. The
party operator and from the mobile
Group’s share of the operating loss
games deal with LeoVegas. The prior
of Broadcast Gaming Limited was
year content licensing revenue was
£115k. Nektan contributed £1,749k
generated in respect of revenue share to the Respin joint venture for the
and other services provided by Nektan development of in-venue class II
UK Limited (formerly Mfuse Limited)
mobile gaming product. The initial
to third party operators in the sports
contribution to Respin of £315k
betting market that was terminated
(US$500k) and the further £1,434k in
in order for the Group to focus on its
respect of operating costs is included
core strategy and the development of in investments at the year-end. The
its proprietary Evolve platform.
Group’s share of the operating loss of
Respin was £685k.
Expenses
The marketing, partner and affiliate
costs were £724k for the year (2014:
£169k) of which £418k related to spend
on the two casino RMG house brands,
Chomp Casino and Sapphire Rooms.
Administrative expenses, excluding
listing costs, were reduced by
20 percent to £5.9 million (2014:
£7.4 million). The Company incurred
£1.3 million in one off costs in relation
to the admission of Nektan plc to the
Alternative Investment Market of the
London Stock Exchange and raising
additional financing during the year.
Cash flow
The Group’s cash balance at 30 June
2015 was £3.4 million (2014: £0.9
million). Net proceeds of £13.2 million
were raised in the year from issuing
new shares of £7.7 million (net of
transaction costs) and convertible
loan notes of £5.5 million (net of
transaction costs). During the year
the £1.9 million spent on purchase
of intangible fixed assets related
to the capitalisation of internal
development time.
Governance
Financial
Statements
In April and May 2015 the Company
issued convertible loan notes to
existing and new institutional
and private investors raising, in
aggregate, gross proceeds of
£5.9 million through the issue of,
in aggregate £0.5 million secured
unlisted series B loan notes due
for repayment on 28 April 2020
which are compliant with applicable
venture capital trust rules and
the issue of, in aggregate, £5.4
million secured listed series A loan
notes due for repayment on 28
April 2020 listed on the Channel
Islands Securities Exchange (the
‘CISE’). The convertible loan notes
attract accrued interest at a rate of
10 percent per annum, paid quarterly
in arrears and are secured by a first
ranking fixed and floating charge
on the assets of the Company and
each of the Company’s subsidiaries,
with all other loans to the Company
ranking behind the convertible loan
notes’ security.
Post period end, as planned, the
Company raised an additional
£2.75 million through the issue of
£2.39 million of convertible loan
notes and a placing of 232,258 new
Ordinary shares of 155p each.
Dependent on certain conditions, if
conversion were to occur in full the
Company would have to issue, in
aggregate, a minimum of 3,974,493
Ordinary shares. The new Ordinary
shares to be issued pursuant to the
conversion fall within the Directors’
existing authority to allot new
Ordinary shares for cash on a
non-pre-emptive basis.
PLAYER JOURNEY
REGISTER
DEPOSIT
PLAY
CONTROL
COLLECT
Player registers
with Partner
Mobile Casino
Player funds their
account by card
or mobile payment
and chooses to play
their games from
the casino lobby
Player places their
stakes in the game
and plays
Player can set play
and deposit limits
and review
games played
Player requests
winnings or balance
to be paid back
to them
13
STRATEGIC REPORT
PRINCIPAL
RISKS
There are a number of potential risks and uncertainties that could have a material impact on
the Group’s long-term performance and could cause results to differ materially from expected
and historical results. The principal risks to which the business is exposed are set out below:
Risk
Background
Mitigating controls
Loss of gambling licences
Failure to comply with the terms
of the Group’s existing or future
gambling licences may lead to
penalties, sanctions or ultimately
the revocation of relevant
operating licences.
The Group overall has a focused
compliance approach with a
dedicated in-house compliance
resource to develop relationships
with regulators, keep up to
date with legal and regulatory
developments, ensure necessary
staff training and enable
continuation of all necessary
licences to allow the Group to
continue its business.
Change in regulations and
restrictions on expansion
into target markets
The laws and regulations
governing remote gambling are
highly complex, vary greatly from
jurisdiction to jurisdiction and
are constantly evolving. Further,
there are often differences
between the activities and types
of games that are permitted
to be offered, the technical
requirements and restrictions
which apply to those games,
the manner and extent to which
they can be marketed and other
conditions of operation imposed
in different jurisdictions.
As an established regulated
supplier, the Group monitors
legal and regulatory
developments in all of its material
markets closely and generally
seeks to keep up to date on legal
and regulatory developments
affecting the remote gambling
industry as a whole.
Dependency on success of
partner marketing
The success of the Group’s
services is dependent on the
strength of its white label
partners’ brands and the
effectiveness of their marketing.
If its partners do not invest in the
marketing of the Group’s services
or do not market effectively, the
amount of revenue generated by
customers of those products is
likely to be impacted.
The Group works closely, through
its account management team,
with its broad base of partners to
ensure best marketing practice is
implemented and that partners
fulfil their obligations.
Competition
The online gambling and social
gaming markets are becoming
increasingly competitive as the
popularity and sophistication of
mobile technology rises. Failure
to compete effectively may result
in losing customers and market
share to existing and/or new
competitors.
The Group continues to invest
significant resources to improve
its technology and content
portfolio whilst also diversifying
its partner and geographical
base.
Legal and regulatory risks
The marketplace
14
Strategic Report
Governance
Financial
Statements
Risk
Background
Mitigating controls
Fraud
Online transactions, and in
particular online gambling
transactions, may be subject
to sophisticated schemes or
collusion to defraud, launder
money or other illegal activities.
There is a risk that the Group’s
products or systems may be
used for those purposes by its
customers.
The Group has implemented
policies and procedures
designed to minimise the risk
of fraud and money laundering,
including conducting anti-money
laundering checks on its
customers.
As a provider of online gambling
services, the Group’s business
is reliant on technology and
advanced information systems.
If the Group does not invest in
the maintenance and further
development of its technology
systems, there is a risk that these
systems may not cope with the
needs of the business and may
fail. The Group continues to invest
in its proprietary platform to
ensure the necessary features
and functionality meet their
partner needs. In addition it
has adopted industry standard
protections to detect intrusions
or other security breaches
and implements preventative
measures to protect against
sabotage, hackers, viruses and
other cyber-crime.
Technology
Dependence on technology
The Group is reliant on the
internet and is vulnerable to
activities such as distributed
denial of service attacks, other
forms of cyber-crime and a wide
range of malicious viruses.
Employees
Reliance on key personnel
The Group’s future success
depends on the continued
service of senior and key
management, the retention of
which cannot be guaranteed.
The Group ensures that key
personnel are appropriately
rewarded and incentivised. This is
through a mixture of short-term
and long-term incentives.
15
GOVERNANCE
BOARD OF
DIRECTORS
Nektan’s Board and
management team is a
key strength of the business,
with extensive experience
of operating both B2B and
B2C gaming businesses.
Gary Shaw
Executive Chairman
David Gosen
Chief Executive Officer
Gary founded the business as a spin
out from a joint venture with GTECH
in 2011. He is an entrepreneur with a
consistent track record of creating
significant shareholder value. In 1994
he left Johnson Press PLC to start
and self-fund Hughes Rae. Hughes
Rae became one of the pioneers of
internet application development
across Europe working in the retail
bank and pharmaceutical sectors,
which he sold in 1999 to Morse PLC
(at that point a FTSE 250 company).
In 2000, Gary left Morse to join
Victor Chandler establishing the
casino and poker products.
David has over 25 years’ experience
in consumer-facing and B2B
enterprises. Prior to joining Nektan
he led Nielsen’s European Media,
Digital and Mobile practice, delivering
market redefining online audience
measurement and advertising
effectiveness solutions.
He contributed to setting up the
world’s first poker network which
launched in conjunction with Tribeca
Tables, and also worked to establish
the first European white label
gaming business, launching white
label deals with the Racing Post and
Virgin Media.
Gary left Victor Chandler in 2002 to
establish his own gaming company,
St Enodoc, which acquired the
Gibraltar-based underperforming
assets of Gala Interactive.
He led the recovery of the business,
launching a series of gaming
business ventures, including both the
IPN Poker network with Boss Media,
and in 2004 the IBN Bingo Network.
St Enodoc became Europe’s largest
end-to-end white label operator with
84 partners in 24 countries including
Virgin Games, Yahoo, The Daily
Mail and Sportingbet. Gary was the
Executive Chairman when St Enodoc
was acquired by GTECH-Lottomatica
for $55 million in 2008. He remained
with GTECH-Lottomatica working in
the US, until forming Nektan.
16
David has a deep-rooted gaming
background from his time as VP at
Xbox Europe, with Microsoft and
Managing Director at Nintendo of
Europe. In addition, as CEO and
President of mobile entertainment
business I-play, he pioneered casual
gaming on mobile phones and led it
to become one of the top-five global
publishers. I-play was acquired by
Oberon Media in 2007.
He has also held senior positions at
BSkyB, Mercury One2One, PepsiCo
Restaurants and Coca-Cola.
Strategic Report
Governance
Financial
Statements
David Sparks
Chief Financial Officer
Sandeep Reddy
Non-executive Director
Jim Wilkinson
David joined Nektan as Chief
Financial Officer in September
2014 responsible for all aspects of
the Group’s finance, HR and legal
functions. A chartered management
accountant and economics graduate
of the University of Sheffield, he has
experience in managing financial
operations gained during a career
spanning more than 25 years, and
has held senior positions in London
as well as in Paris and Latin America.
Sandeep is the co-founder of
Peepul Capital, an Indian private
equity firm with approximately
$700 million of investments. Prior
to the launch of Peepul Capital
in 2000, he had 10 years of
experience in strategy consulting
with PricewaterhouseCoopers LLP
in San Francisco and with Andersen
Consulting in London. He has been
one of the early participants in the
rapidly evolving Indian private equity
industry having been active for over
ten years.
Jim is Chief Financial Officer of
Oxford Sciences Innovation plc, a
company recently established to
invest in companies transferring
technology created from Oxford
University’s research into
commercial enterprises.
Most recently he was chief financial
officer for London Capital Group
Holdings Plc, an AIM-listed provider
of online trading services for retail,
professional and institutional traders.
Authorised and regulated by the
FCA and trading as Capital Spreads,
the group also operated white
label partnerships for a number of
leading brands.
Previously David was at Sportingbet
where he was Director of Financial
and Strategic Projects, London
from 2004 to 2013 and Finance
Director, Americas from 2001 to
2004. Prior to this he held various
roles at Arjo Wiggins Appleton, the
global manufacturer of creative and
technical paper including Regional
Financial Controller for the Antalis
distribution division based in the UK,
Divisional Business Controller for
the Printing & Writing division based
in Paris and the Finance Director of
Witcel S.A. based in Argentina.
Sandeep takes overall responsibility
in defining and executing Peepul
Capital’s strategy. He is a Director
of VTA, a substantial shareholder in
the Company. He received a BS in
Computer Science and Finance from
Utah State University and an MBA
from IMD, Switzerland.
Prior to this role he held the
position of Chief Financial Officer
of Lonrho Limited, an African facing
conglomerate, from August 2013
until June 2015. He held the same
position at Sportingbet Plc between
2008 and 2013, Johnson Service
Group PLC between 2004 and 2007,
and Informa Group PLC between
1997 and 2004. Apart from Lonrho
all the companies were quoted on
the London Stock Exchange. Jim is
a qualified chartered accountant,
having trained with Touche Ross
where he worked for eight years.
Alan Turner
Alan is a co-founder, a director
and the chief operating officer of
Disruptive Tech Limited (‘DTL’), an
active investor in technology-centric
businesses. He represents DTL on the
boards of a number of its portfolio
companies, which includes Nektan,
and has been involved in various
aspects of early stage investing since
exiting his own technology company,
Pontis Consulting, in March 1999.
His primary areas of interest and
expertise are technology, gaming
and payments.
17
GOVERNANCE
CORPORATE GOVERNANCE
STATEMENT
As an AIM listed group, Nektan plc (‘Nektan’) is not
required to follow the provisions of the UK Corporate
Governance Code (the ‘Code’). The Board however
recognises the importance and value of good corporate
governance procedures and accordingly have selected
those elements of the Code they consider to be relevant
and appropriate to the Group, given its size and
structure.
Role of the Board
The Board comprises six Directors including the
Executive Chairman and two further Executive Directors
and three Non-executive Directors. The Board meets
regularly to consider strategy, performance and the
framework of internal controls.
The Board has been formed so that it has effective
composition, size and commitment to adequately
discharge its responsibilities and duties given the size
and scale of operations of the Company. The Director
appointments are based on the specific skills required
by the Company and the Board combines a group
of Directors with diverse backgrounds that combine
to provide the resources and expertise to drive the
continuing development of the Group and advance its
commercial objectives.
Board committees
The Directors have established an Audit Committee, a
Remuneration Committee and a Nominations Committee
with formally delegated rules and responsibilities. Each
of the committees currently comprises the Non-executive
Directors and meets at least twice a year.
Audit Committee
The Audit Committee meets at least twice a year and
is responsible for ensuring that the Group’s financial
performance is properly monitored, controlled and
reported. The Audit Committee is responsible for the
scope and effectiveness of the external audit and
compliance by the Group with statutory and other
regulatory requirements. It meets at least once per year
without the Executive Directors being present. The Audit
Committee is comprised of Jim Wilkinson (Chairman),
Alan Turner and Sandeep Reddy. Jim Wilkinson is
deemed to have recent and relevant financial experience
and is the Audit Committee financial expert.
Remuneration Committee
The Remuneration Committee determines and agrees
with the Board the framework or broad policy for the
remuneration of the Directors and determines the total
individual remuneration package of each Executive
Director, including bonuses, incentive payments and
share options, with due regard to the interests of
shareholders. The Remuneration Committee ensures
that contractual terms are fair to the individual and the
Company and determines the structure and targets for
18
any performance-related pay schemes operated by the
Company. The Remuneration Committee is comprised
of Sandeep Reddy (Chairman), Alan Turner and
Jim Wilkinson.
Nominations Committee
The Nominations Committee is responsible for reviewing
the size, structure and composition of the Board and for
identifying and nominating for the approval of the Board,
candidates to fill Board vacancies as and when they arise.
The Nominations Committee gives full consideration
to succession planning in the course of its work, taking
into account the challenges and opportunities facing the
Group, and the skills and expertise needed on the Board.
The Nominations Committee is comprised of Alan Turner
(Chairman), Sandeep Reddy and Jim Wilkinson.
Risk management and internal controls
The Board has ensured there has been an ongoing
process for identifying, evaluating and managing the
significant risks faced by the Group. The Board considers
the principal risk factors likely to impact the financial
position and prospects of the Group, including any
changes thereto. The identified risks are monitored
through the day to day operations with the involvement
of the relevant parties. This monitoring process is
guided by a risk template set out in the Group’s separate
Overview of Strategic Risk Management.
The Group’s internal control procedures continue to be
reviewed, progressively developed and formalised to
ensure that they sufficiently meet the requirements of
the Group. Executive members of the Board are involved
daily in all aspects of the business and attend regular
management meetings at which performance against
plan and business prospects are reviewed.
The Bribery Act 2010 (‘Bribery Act’) which came into
force in the UK on 1 July 2011 prescribes criminal offences
for individuals and businesses relating to the payment
of bribes and, in certain cases, a failure to prevent the
payment of bribes. The Group therefore has established
procedures designed to ensure that no member of the
Group engages in conduct for which a prosecution under
the Bribery Act may result.
External auditors
The Audit Committee meets periodically to review
the adequacy of the Group’s internal control systems,
accounting policies and compliance with applicable
accounting standards and to consider the appointment
of external auditors and audit fees.
As a matter of best practice and in accordance with
International Standard on Auditing 260, the auditors
have held discussions with the Audit Committee on the
subject of auditor independence and have confirmed
their independence.
Strategic Report
Financial
Statements
Governance
DIRECTORS’ REMUNERATION
REPORT
Nektan has elected voluntarily to prepare the unaudited Directors’ remuneration report set out below.
Remuneration policy overview
The aim of the remuneration policy is to encourage and reward superior performance by the Executive Directors and
senior management, with performance being measured by reference to the achievement of corporate goals, strong
financial performance and the delivery of value to shareholders.
The policy is designed to offer awards that enable the Group to attract and retain the management talent it needs
to ensure its success and to incentivise the achievement of the Group’s strategy and the delivery of sustainable
long-term performance of the Group.
The remuneration policy is reviewed by the Remuneration Committee on an annual basis to ensure it is in line with
the Group’s objectives and shareholders’ interests. The Remuneration Committee determines and agrees with the
Board the framework or broad policy for the remuneration of the Directors and determines the total individual
remuneration package of each Executive Director, including bonuses, incentive payments and share options.
Directors’ emoluments
The Directors received the following remuneration during the year:
Name
Executive Directors
Gary Shaw
David Gosen
David Sparks
Non-executive Directors
Sandeep Reddy
Alan Turner
Jim Wilkinson
Steven Caetano
Fees/
Basic salary
£’000
Benefits
£’000
Pension
£’000
Total
2015
£’000
80
85
87
4
2
3
–
–
8
84
87
98
18
18
18
1
–
–
–
–
–
–
–
–
18
18
18
1
307
9
8
324
Note: None of the above Directors were Directors of Nektan plc during the year ended 30 June 2014 except for Gary Shaw who did not receive any
emoluments during the comparative year. Nektan Plc became an AIM company during the current year on 3 November 2014 but the details of Directors’
remuneration earned in respect of the whole current financial year by each Director have been presented above. Details on the aggregate remuneration
of the Group Directors for the year ended 30 June 2014 are given in note 20.
The Executive Directors’ base salaries are reviewed annually. The Remuneration Committee seeks to assess the
market competitiveness of pay primarily in terms of total remuneration, with less emphasis on base salary.
The timing and amount of bonuses are decided by the Remuneration Committee with reference to the individual’s
performance and contribution to the Group.
The Group does not operate a Group pension scheme, but offers a salary sacrifice scheme for all employees.
19
GOVERNANCE
DIRECTORS’ REMUNERATION
REPORT CONTINUED
Directors’ interest in shares
The details of the Director’s interest as at 30 June 2015 were as follows:
Name
Gary Shaw
David Gosen
David Sparks
Jim Wilkinson
Number of
Ordinary
shares
Percentage of
issued share
capital
3,270,265
14,925
25,519
120,138
14.5%
0.1%
0.1%
0.5%
Share options
The Company has adopted the Nektan plc 2014 share plan to provide share incentives to employees and Directors
within the Group on a discretionary basis. The share plan provides for the grant of rights to acquire Ordinary shares
(awards) and will be administered by either the Board or the Remuneration Committee, depending on the type of
participant. No awards have yet been granted under the share plan.
Service contracts
Gary Shaw has a service agreement with the Company dated 28 October 2014 setting out the terms of his
appointment as Executive Chairman. Either party may terminate the agreement on six months’ notice.
David Gosen has a service agreement with the Company dated 8 January 2015 setting out the terms of his
appointment as Chief Executive Officer. Either party may terminate the agreement on six months’ notice.
David Sparks has a service agreement with the Company dated 15 September 2014 setting out the terms of his
appointment as Chief Financial Officer. Either party may terminate the agreement on six months’ notice.
The Non-executive Directors who have entered into letters of appointment with the Company are entitled to an
annual fee and reimbursement of reasonable expenses, but no other remuneration. The appointments may be
terminated by either party giving 90 days’ written notice.
20
Strategic Report
Governance
Financial
Statements
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Directors’ responsibilities
Auditors
The Directors are responsible for preparing the Annual
Report and consolidated financial statements in
accordance with the Gibraltar Companies (Consolidated
Accounts) Act 1999, the Gibraltar Companies (Accounts)
Act 1999, the Gibraltar Companies Act 1930 (as amended),
International Financial Reporting Standards (IFRSs) as
adopted for use in the European Union.
The current Directors have taken all the steps that they
ought to have taken to make themselves aware of any
information needed by the auditors for the purposes of
their audit and to establish that the auditors are aware
of that information. The Directors are not aware of any
relevant audit information of which the auditors are
unaware.
The Directors are also responsible for preparing the
Parent Company’s financial statements in accordance
with the Gibraltar Companies (Accounts) Act 1999
and the Gibraltar Companies Act 1930 (as amended).
The Directors have also chosen to prepare the Parent
Company’s financial statements in accordance with
GFRS 102: The Gibraltar Financial Reporting Standard.
A resolution in accordance with Section 255 of the
Gibraltar Companies Act for the reappointment of BDO
as auditors of the Company will be proposed at the next
annual general meeting.
In preparing the financial statements, the Directors are
required to:
•select suitable accounting policies and apply them
consistently;
•make judgements and estimates that are reasonable
and prudent;
•state whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the financial statements;
and
•prepare the financial statements on the going concern
basis unless this presumption is inappropriate.
The Directors are responsible for keeping proper
accounting records which disclose with reasonable
accuracy at any time the financial positions of the Group
and the Parent Company and enable them to ensure that
the financial statements comply with applicable laws
in Gibraltar. They are also responsible for safeguarding
the assets of the Group and the Parent Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
21
FINANCIAL STATEMENTS
INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF NEKTAN PLC
Report on financial statements
Opinion on financial statements
We have audited the financial statements of Nektan plc
for the year ended 30 June 2015 which comprise the
Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows, the Company
Balance Sheet, the Company Statement of Changes in
Equity and the related notes. The financial reporting
framework that has been applied in the preparation of
the consolidated financial statements is applicable law in
Gibraltar and International Financial Reporting Standards
(IFRSs) as adopted for use in the European Union. The
financial reporting framework that has been applied in
the preparation of the Parent Company financial
statements is applicable law in Gibraltar and GFRS 102:
The Gibraltar Financial Reporting Standard.
In our opinion:
•the financial statements give a true and fair view of the
state of the Group and Parent Company’s affairs as at
30 June 2015 and of the Group’s loss for the year then
ended;
•the Consolidated financial statements have been
properly prepared in accordance with IFRSs as
adopted by the European Union;
•the Parent Company financial statements have been
properly prepared in accordance with GFRS 102:
The Gibraltar Financial Reporting Standard; and
•the financial statements have been properly prepared
in accordance with the Gibraltar Companies Act 1930
(as amended), the Gibraltar Companies (Accounts)
Act 1999 and the Gibraltar Companies (Consolidated
Accounts) Act 1999, and other applicable legislation.
This report is made solely to the company’s members, as
a body, in accordance with Section 182 of the Gibraltar
Companies Act. Our audit work has been undertaken so
that we might state to the company’s directors those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company’s directors as a body, for our audit work, for
this report, or for the opinions we have formed.
Opinion on other matter prescribed by the
Companies Act
Respective responsibilities of directors
and auditors
We have nothing to report in respect of the following
matters where the Companies Act requires us to report
to you if, in our opinion:
•the company has not kept proper accounting records; or
•if information specified by law regarding directors’
remuneration and other transactions is not disclosed; or
•we have not received all the information and
explanations we require for our audit.
As explained more fully in the statement of directors’
responsibilities, the directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Financial
Reporting Council’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the company’s
circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the
overall presentation of the financial statements. In
addition, we read all the financial and non-financial
information in the annual report to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
22
In our opinion the information given in the Directors’
Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report
by exception
BDO LLP
Chartered Accountants
55 Baker Street
London
W1U 7EU
United Kingdom
14 October 2015
Christian Summerfield (Statutory Auditor)
For and on behalf of
BDO Limited
Registered Auditors
Regal House
PO Box 1200
Gibraltar
14 October 2015
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
BDO Limited, a Gibraltar Limited Company is registered in Gibraltar with
company number 52200.
Strategic Report
Financial
Statements
Governance
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Notes
Revenue
Cost of sales
Gross profit
Marketing, partner and affiliate costs
Administrative expenses
Other income
Adjusted EBITDA
Listing and fundraising costs
Depreciation
Amortisation of intangible assets
Share based payment charges
Operating loss
Finance income
Finance expense
Share of loss of joint ventures
Loss before taxation
Tax (charge)/credit
Loss for the year
Other comprehensive income for the year
Exchange differences arising on translation of foreign operations which may be
reclassified to profit or loss
Year ended
30 June
2014
£’000
528
(303)
1,865
(132)
4
225
(724)
(7,188)
478
1,733
(169)
(7,430)
140
10
9
25
(5,109)
(1,266)
(224)
(603)
(7)
(3,477)
–
(162)
(1,832)
(255)
3
7
7
11
(7,209)
1
(230)
(685)
(5,726)
1
(6)
–
8
(8,123)
(19)
(5,731)
310
(8,142)
(5,421)
4
3
(8,138)
(5,418)
(39.6)
(39.6)
(35.4)
(35.4)
2
3
Total comprehensive loss for the year
Earnings per share attributable to the Ordinary equity holders of the parent
Basic (pence)
Diluted (pence)
Year ended
30 June
2015
£’000
6
6
23
FINANCIAL
POSITION
Non-current assets
Intangible assets
Property, plant and equipment
Investments in equity accounted joint ventures
Current assets
Trade and other receivables
Cash and cash equivalents
Notes
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
9
10
11
3,146
115
1,064
1,843
315
–
4,325
2,158
1,473
3,396
857
877
4,869
1,734
9,194
3,892
1,442
583
811
–
2,025
811
4,507
24
–
44
12
13
Total assets
Current liabilities
Trade and other payables
Convertible loan notes
14
15
Non-current liabilities
Deferred tax
15
18
4,531
44
Total liabilities
6,556
855
Net assets
2,638
3,037
226
22,330
(2)
3,306
262
(56)
(23,428)
–
14,824
(2)
3,306
255
(60)
(15,286)
2,638
3,037
Equity attributable to equity holder:
Share capital
Share premium
Merger reserve
Capital contribution reserve
Share option reserve
Foreign exchange reserve
Retained earnings
Total equity
17
The financial statements on pages 23 to 48 were approved and authorised for issue by the Board on 14 October 2015
and were signed on its behalf by:
David Sparks
24
David Gosen
Chief Operating Officer
Strategic Report
Financial
Statements
Governance
CHANGES
IN EQUITY
Foreign
exchange
reserve
£’000
Share
capital
£’000
Share
premium
£’000
Shares to
be issued
reserve
£’000
Share
option
reserve
£’000
Capital
contribution
reserve
£’000
–
–
2
–
10,578
–
–
–
3,306
–
(2)
–
(63)
–
(9,865)
(5,421)
3,956
(5,421)
Merger
reserve
£’000
Total
equity
£’000
Retained
earnings
£’000
At 1 July 2013
Loss for the year
Other comprehensive
income
Issue of shares
Shares subscribed for (net
of costs)
Share based payments
–
–
–
10,578
–
(10,578)
–
–
–
–
–
–
3
–
–
–
3
–
–
–
4,244
–
–
–
–
255
–
–
–
–
–
–
–
–
4,244
255
At 30 June 2014
–
14,824
–
255
3,306
(2)
(60)
(15,286)
3,037
Loss for the year
Other comprehensive
income
Rebasing of shares
Issue of shares (net of
costs)
–
–
–
–
–
–
–
(8,142)
(8,142)
–
197
–
(197)
–
–
–
–
–
–
–
–
4
–
–
–
4
–
29
–
7,703
–
–
–
–
7
–
–
–
–
–
–
–
–
7,732
7
226
22,330
–
262
3,306
(2)
(56)
(23,428)
2,638
At 30 June 2015
The following describes the nature and purpose of each reserve within equity:
Share capital
Represents the nominal value of shares allotted, called up and fully paid.
Share premium
Represents the amount of subscribed for share capital in excess of nominal value.
Capital contribution reserve
Represents:
(a)Nominal value of shares held by a shareholder in a subsidiary Company and contributed to Nektan plc.
(b)The release of the Group’s obligation to repay borrowings of £3,304,000.
Merger reserve
The difference between the nominal value of the Nektan (Gibraltar) Limited shares acquired in May 2011 and the
nominal value of shares in Nektan plc issued to acquire these shares as part of a Group restructuring.
Foreign exchange reserve
Represents the gains/losses arising on retranslating the net assets of overseas operations into UK Pound Sterling.
Shares to be issued reserve
Represents the share subscriptions received by investors for shares issued in the following year.
Retained earnings
Represents the cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Represents the cumulative value of share option charges recorded in the consolidated statement of comprehensive income.
25
CASH
FLOWS
Notes
Cash flow from operating activities
Loss for the year
Adjustments for:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Share based payment expense
Loss on disposal
Finance expense
Finance income
Income tax expense/(credit)
Operating cash flow before movement in working capital
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Cash generated used in operations
Income taxes paid/Income tax credit received
Net cash outflow from operating activities
Cash flow from investing activities
Purchase of intangible fixed assets
Purchase of property, plant and equipment
Investments in joint ventures
Loans to joint ventures
Deferred and contingent consideration payments
Net cash used in investing activities
Cash flow from financing activities
Interest paid
Interest received
Issue of convertible debt (net of costs)
Proceeds on subscription for shares (net of costs)
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
(8,142)
(5,421)
10
7
7
11
8
603
224
7
3
230
(1)
685
19
1,832
162
255
–
6
(1)
–
(310)
12
14
(6,372)
(317)
23
(3,477)
1,439
169
(6,666)
–
(6,666)
(1,869)
–
(1,869)
(1,909)
(24)
(1,749)
(299)
–
(818)
(167)
–
(164)
(977)
(3,981)
(2,126)
(92)
1
5,525
7,732
(6)
1
–
4,244
13,166
4,239
2,519
244
9
10
9
10
11
12
15
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
13
877
633
Cash and cash equivalents at end of period
13
3,396
877
26
Strategic Report
Governance
Financial
Statements
NOTES TO THE CONSOLIDATED
1. Accounting policies
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards including International Accounting Standards (‘IASs’) and interpretations (collectively ‘IFRS’) as published
by the International Accounting Standards Board (‘IASB’) which have been adopted by the European Commission
and endorsed for use in the EU for the purposes of the Group’s full year financial statements.
The consolidated financial statements comply with the Gibraltar Companies (Consolidated Accounts) Act 1999 and
the Gibraltar Companies Act 1930 (as amended). The financial statements are presented in UK Pound Sterling
(‘Sterling’) and rounded to the nearest £’000.
Statutory accounts for the year ended 30 June 2015 will be filed with Companies House Gibraltar following the
Company’s Annual General Meeting.
The financial statements have been prepared on a going concern basis. After reviewing the Group’s forecast, annual
budget, liquidity requirements and new financing arrangements, including continued shareholders’ support, the
Directors are satisfied that the Group will have adequate resources to continue to operate for the foreseeable future.
Adoption of new and revised standards and interpretations
In the current reporting period, the Group has adopted a number of revised standards and interpretations
including IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests
in Other Entities. However, none of these have had a material impact on the Group’s reporting. In addition, the
IASB has issued a number of IFRS and IFRIC amendments or interpretations that are not yet effective including
IFRS 9 Financial Instruments and IFRS 15 Revenue from contracts with customers. It is not expected that any of
these will have a material impact on the Group.
Critical accounting policies, estimates and judgements
The preparation of consolidated financial statements under IFRS requires the Group to make estimates and
judgements that affect the application of policies and reported amounts. Estimates and judgements are continually
evaluated and are based on historical experience and other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Reference is made in this note to accounting policies which cover areas that the Directors consider require estimates
and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year. These policies together with references to the related notes to the financial
statements, can be found below:
•Revenue recognition (note 1)
•Capitalisation of Intangible assets and impairment of goodwill (note 9)
•Fair Value of Derivatives (note 19)
Basis of consolidation
The consolidated financial statements incorporate the financial information of the Company and entities controlled
by the Company made up to 30 June 2015. Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. Entities included within the
consolidation that have been acquired by the Company are accounted for using acquisition or merger accounting as
appropriate.
The consolidated financial statements include the combination of businesses achieved through a Group restructuring
that falls outside the scope of IFRS 3 Business Combinations. Accordingly, following the guidance regarding the
selection of an appropriate accounting policy provided by IAS 8 Accounting policies: Changes in accounting
estimates and errors, these financial statements have been prepared using the principles of merger accounting set
out in FRS 6 Acquisitions and Mergers and UK Generally Accepted Accounting Practice (‘UK GAAP’).
When merger accounting is applied, the investment is recorded in the Company’s balance sheet at the nominal value
of shares issued together with the fair value of any consideration paid.
In the consolidated financial statements, merged subsidiary undertakings are treated as if they had always been a
member of the Group. The corresponding figures for the previous year include its results for that period, the assets
and liabilities at the previous balance sheet date and the shares issued by the Company as consideration as if they
have always been in issue. Any differences between the nominal value of the shares acquired by the Company and
those issued by the Company to acquire them are taken to a separate merger reserve.
27
CONTINUED
1. Accounting policies continued
Where acquisition accounting is applied, the results of subsidiaries acquired or disposed of during the year are
included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the
effective date of disposal, as appropriate.
Uniform accounting policies have been adopted across the Group. All intra-Group transactions, balances, income and
expenses are eliminated on consolidation.
Foreign currencies
The consolidated financial statements of the Group are prepared in Sterling, this constitutes the functional and
presentational currency. Transactions and balances in foreign currencies are converted into Sterling as follows:
Transactions entered into by the Group in a currency other than the functional currency are recorded at the rates
ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling
at the reporting date. Exchange differences arising on retranslation of unsettled monetary assets and liabilities are
recognised immediately in the profit and loss.
On consolidation, the results of overseas operations are translated into Sterling at rates ruling when the transaction
took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those
operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the
opening net assets at the opening rate and the results of overseas operations at the actual rate are recognised in
other comprehensive income and accumulated in the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve
relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive
income as part of the profit or loss on disposal.
Revenue recognition
Revenue arises from the below sources:
Real money gaming (‘RMG’)
Net gaming revenue derives from online gambling operations and is defined as the difference between the amounts
of bets placed by players less amounts won by players. It is stated after deduction of promotional bonuses.
Net gaming revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and
the revenue can be reliably measured. Revenue is recognised in the accounting periods in which the transactions occur.
Game and platform development
Net revenue receivable from activities in respect of game and platform development comprises fees earned from
development of games for customers for use on the Group’s platforms and from the sale of platform software and
related services.
Revenue in respect of game development and the sale of platform software is recognised when certification for the
game has been obtained, delivery has occurred and the contract fee has been fixed, contractual or determinable and
collectability is probable.
Services revenue principally relates to implementation services. Such services are generally separable from the other
elements or arrangements. Revenue for such services is recognised over the period of delivery of these services.
Where an element of the fee is contingent on the successful delivery of the implementation project, the revenue is
not recognised until such time that it is probable that the requirements under that specific contract will be met.
Revenue share and other services
Net revenue receivable in respect of revenue share and other services comprises a percentage of the revenue
generated by the contracting party from use of the Group’s intellectual property in online gaming activities, and
from fees charged for the services rendered. Net revenue is recognised in the accounting periods in which the
gaming transactions occur or the services are rendered.
28
Strategic Report
Governance
Financial
Statements
Cost of sales
Cost of sales consists primarily of licensing fees, gaming taxes, regulatory and compliance expenses, merchant fees,
chargebacks and platform licensing expenses. All expenses are recognised on an accruals basis and in line with the
appropriate revenue.
The 2014 cost allocations have been restated to reflect the cost of sales definition as detailed above. The restatement
has no impact on the 2014 operating loss, loss before tax, or loss for the year.
Marketing, partner and affiliate costs
Marketing, partner and affiliate costs consists primarily of revenue share, commission, affiliate expenses and online
and offline advertising.
Other income
Other income consists of research and development taxation credits. The income is recognised when receipt is
virtually certain.
Goodwill
Goodwill represents the excess of the cost of a business combination over the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities acquired.
Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of
any non-controlling interests in the acquiree. Contingent consideration is included in cost at its acquisition date fair
value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through
profit or loss.
Goodwill is capitalised as an intangible asset with an impairment in carrying value being charged to the consolidated
statement of comprehensive income.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line
basis over their useful economic lives which is typically over a period of three years.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise
to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at using appropriate
valuation techniques (see section related to critical estimates and judgements below).
In process research and development programmes acquired in such combinations are recognised as an asset even if
subsequent expenditure is written off because the criteria specified in the policy for development costs below are
not met.
The significant intangibles recognised by the Group, their useful economic lives and methods used to determine the
cost of intangibles acquired in a business combination are as follows:
Intangible asset
Useful economic life
Valuation method
Developed software
Contractual relationships
Three years
Term of contract
Replacement cost
Discounted cash flows
Internally generated intangible assets (development costs)
Expenditure incurred on development activities including the Group’s software development is capitalised only
where the expenditure will lead to new or substantially improved products, the products are technically and
commercially feasible and the Group has sufficient resources to complete development.
Capitalised development costs are amortised over three years. The amortisation expenses are included within
administrative expenses in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal
projects are recognised in the consolidated statement of comprehensive income as incurred.
Subsequent expenditure on capitalised intangible assets is capitalised only where it clearly increases the economic
benefits to be derived from the asset to which it relates. All other expenditure, including that incurred in order to
maintain the level of performance of an intangible asset, is expensed as incurred.
29
CONTINUED
Property, plant and equipment
Depreciation is calculated to write off the cost of fixed assets on a straight-line basis over the expected useful lives
of the assets concerned. The principal annual rates used for this purpose are:
Fixtures, fittings and equipment – 20–33 percent straight-line
Office equipment
– 20–33 percent straight-line
Computer equipment
– 33 percent straight-line
Subsequent expenditures are included in the carrying amount of an asset or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits will flow to the Group and the cost of the item
can be measured reliably. All repairs and maintenance are charged to the consolidated statement of comprehensive
income during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in
the consolidated statement of comprehensive income.
Impairment of property, plant and equipment and internally generated assets
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken
annually at the financial year-end. Other non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of
an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is
written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out
on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash
generating units (‘CGUs’). Goodwill is allocated on initial recognition to each of the Group’s CGUs that are expected
to benefit from the synergies of the combination giving rise to the goodwill.
Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in
other comprehensive income. An impairment loss recognised for goodwill is not reversed.
Financial assets
The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which
the financial assets were acquired. Management determines the classification of its financial assets at initial
recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except for those with maturities greater than 12 months after
the balance sheet date. These are classified as non-current assets. The Group’s loans and receivables comprise
investments in equity accounted joint ventures, trade and other receivables, cash equivalents and loans to joint
ventures in the balance sheet.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and
receivables are carried at amortised cost using the effective interest method.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method less provision for impairment. Appropriate provisions for estimated irrecoverable amounts
are recognised in the statement of comprehensive income when there is objective evidence that the assets are
impaired. Interest income is recognised by applying the effective interest rate, except for short-term receivables
when the recognition of interest would be immaterial.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on
the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of
the amounts due under the net carrying amount and the present value of the future expected cash flows associated
with the impaired receivable. For trade receivables, which are reported net; such provisions are recorded in a
separate allowance account with the loss being recognised within administrative expenses in the statement of
comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of
the asset is written off against the associated provision.
30
Strategic Report
Governance
Financial
Statements
Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments
that have maturities of three months or less from inception, are readily convertible to a known amount of cash and
are subject to an insignificant risk of changes in value.
Financial liabilities
Financial liabilities are classified as financial liabilities at fair value through profit or loss or as financial liabilities
measured at amortised cost, as appropriate. The Group determines the classification of its financial liabilities at initial
recognition.
The measurement of financial liabilities depends on their classification: (i) financial liabilities at fair value through
profit or loss are carried on the balance sheet at fair value with gains or losses recognised in the income statement;
and (ii) financial liabilities measured at amortised cost are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account
any issue costs, and any discount or premium on settlement. Gains and losses arising on the repurchase, settlement
or cancellation of liabilities are recognised respectively in interest and other revenues and finance costs. The Group
derecognises a financial liability from its balance sheet when the obligation specified in the contract or arrangement
is discharged, cancelled or expires.
Trade payables are initially measured at their fair value and are subsequently measured at their amortised cost using
the effective interest rate method; this method allocates interest expense over the relevant period by applying the
‘effective interest rate’ to the carrying amount of the liability.
Convertible debt
Where the convertible debt issued converts into a variable number of shares the proceeds received on issue are
allocated between the derivative financial liability and the host debt based upon their fair values. Subsequently the
conversion option is measured at fair value through profit and loss and the debt component and as a financial
liability measured at amortised cost until extinguished on conversion or maturity of the debt.
Transaction costs directly attributable to the raising of convertible debt are allocated across the derivative financial
liability component and the debt liability component. Transaction costs allocated to the derivative financial liability
component are expensed to the income statement as they are incurred. Transaction costs allocated to the debt
liability component are deducted from the residual value recognised as the debt liability on recognition.
Share capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the
definition of a financial liability or financial asset.
Current and deferred tax
Taxation represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit reported in the
statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.
Tax losses arising as a result of research and development expenditure and subsequently surrendered for tax credit
are recognised within other income and as an other debtor.
Deferred tax
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax assets are recognised to the extent that it
is probable that taxable profits will be available against which deductible temporary differences can be utilised.
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CONTINUED
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is measured using tax rates that have been enacted or substantively enacted by the statement of
financial position date and are expected to apply when the related deferred tax asset or liability is realised or settled.
Deferred tax is not discounted.
Leased assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to
the Group (a ‘finance lease’), the asset is treated as if it had been purchased outright. The amount initially recognised
as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments
payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are
analysed between capital and interest. The interest element is charged to the consolidated statement of
comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of
the lease liability. The capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an
‘operating lease’), the total rentals payable under the lease are charged to the consolidated statement of
comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is
recognised as a reduction of the rental expense over the lease term on a straight-line basis.
Where equity-settled share options are awarded to employees or service providers, the fair value of the options at
the date of grant is charged to the consolidated statement of comprehensive income over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into
the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made
irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure
to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the consolidated statement of
comprehensive income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the consolidated statement of
comprehensive income is charged with the fair value of goods and services received.
Adjusted EBITDA
The Group defines adjusted EBITDA as the operating result before depreciation, amortisation, listing costs and
fundraising costs, exchange differences, and non-cash charges relating to share based payments.
Joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity
that is subject to joint control; that is, when the strategic, financial and operating policy decisions relating to the
activities require the unanimous consent of the parties sharing control.
The Group reports its interests in jointly controlled entities using the equity method of accounting. Under the equity
method, investments in joint ventures are carried in the consolidated statement of financial position at cost as
adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment
in the value of the investment. Losses of a joint venture in excess of the Group’s interest in that investment are not
recognised. Additional losses are provided for, and a liability is recognised, only to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the joint venture.
32
Strategic Report
Financial
Statements
Governance
2. Segmental information
Information reported to the Group’s Chief Executive, the strategic chief operating decision-maker, for the purposes
of resource allocation and assessment of the Group’s segmental performance, is primarily focused on the origination
of the revenue stream. The Group’s principal reportable segments under IFRS 8 are therefore as follows:
•Real money gaming
•Content licensing and revenue share
•Software development
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Real
money
gaming
£’000
Content
licensing
and revenue
share
£’000
Software
development
£’000
Total
£’000
Year ended 30 June 2015
Net revenue
Cost of sales
Marketing partner and affiliate costs
385
(303)
(724)
29
–
–
114
–
–
528
(303)
(724)
Segment result
(642)
29
114
(499)
Administration expenses
Other income
Net finance expense
Taxation
(7,188)
478
(229)
(685)
(19)
Loss for the year
(8,142)
Real
money
gaming
£’000
Content
licensing
and revenue
share
£’000
Software
development
£’000
Total
£’000
Net revenue
Cost of sales
Marketing partner and affiliate costs
10
(132)
(169)
1,614
–
–
241
–
–
1,865
(132)
(169)
Segment result
(291)
1,614
241
1,564
Administration expenses
Other income
Net finance expense
Taxation
(7,430)
140
(5)
310
Loss for the year
(5,421)
The accounting policies of the reportable segments follow the same policies as described in note 1. Segment result
represents the gross profit earned by each segment without allocation of the share of administration costs including
Directors’ salaries, finance costs and income tax expense. This is the measure reported to the Group’s Chief
Executive for the purpose of resource allocation and assessment of segment performance. Administration expenses
comprise principally the employment and office costs incurred by the Group.
Segment assets and liabilities
Assets and liabilities are not separately analysed or reported to the Group’s Chief Executive and are not used to
assist in decisions surrounding resource allocation and assessment of segment performance. As such, an analysis of
segment assets and liabilities has not been included in this financial information.
33
CONTINUED
2. Segmental information continued
Geographical analysis of non-current assets
The following table provides an analysis of the Group’s non-current assets, excluding goodwill and investments in
equity accounted joint ventures, by geographical segment:
Gibraltar
UK
US
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
2,282
59
1
1,026
211
2
2,342
1,239
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
112
389
–
27
1,270
506
52
37
528
1,865
Geographical analysis of revenues
The following table provides an analysis of the Group’s revenue by geographical segment:
Gibraltar
UK
Sweden
Rest of the World
Information about major customers
During the year ended 30 June 2014 the Group had two customers which generated revenue greater than 10 percent
of total net revenue. Customer 1 generated revenue of £1,126,000 representing 60 percent of total net revenue, all of
which was within the content licensing and revenue share segment. Customer 2 generated revenue of £241,000
representing 13 percent of total net revenue, all of which was within the content licensing and revenue share segment.
During the year ended 30 June 2015 the Group had one customer which generated revenue greater than 10 percent
of total net revenue. The customer generated revenue of £75,000 representing 14 percent of total net revenue, all of
which was within the software development segment.
3. Operating loss
Operating loss has been arrived at after charging:
Staff costs (note 5)
Auditor’s remuneration:
Audit of the Company’s annual accounts
Fees payable to the Company’s auditor and its associates for other services:
Audit of the subsidiaries’ annual accounts
Other assurance services
Tax compliance services
Tax advisory services
Other non-audit services
Rent payable under operating leases
Amortisation
Depreciation
Loss on disposal
Loss on foreign exchange
Listing and fundraising costs
34
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
2,787
1,770
43
–
31
6
2
–
50
287
603
224
3
4
1,266
25
65
3
14
115
310
1,832
162
–
3
–
Strategic Report
Governance
Financial
Statements
4. Other income
R&D tax credit
Other Income
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
338
140
–
140
478
140
Year ended
30 June
2015
Year ended
30 June
2014
5
62
4
54
67
58
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
3,510
318
34
107
2,282
169
13
38
3,969
2,502
5. Staff costs
The average number of employees (including Directors) employed was:
Management
Administration and technical staff
The aggregate remuneration of the above employees comprised (including Directors):
Wages and salaries
Social security costs
Pension costs
Benefits in kind
Staff costs capitalised in respect of internally generated intangible assets
(1,182)
(732)
2,787
1,770
In the statement of comprehensive income, total staff costs are included within administrative expenses.
6. Loss per share
Basic loss per share is calculated by dividing the loss attributable to Ordinary shareholders by the weighted average
number of Ordinary shares outstanding during the year.
Year ended
30 June
2015
£’000
Basic and diluted
Loss after tax (£’000)
Weighted average number of shares
Weighted average loss per share (pence)
(8,142)
20,559,033
(39.6)
Year ended
30 June
2014
£’000
(5,421)
15,315,450
(35.4)
The result for the year ended 30 June 2015 as well as the other period presented was a loss and therefore there was
no difference between the basic and diluted loss per share.
35
CONTINUED
7. Finance income and costs
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
1
1
Finance income
Interest income
Total finance income
Finance expense
Interest payable
1
1
(230)
(6)
Total finance costs
(230)
(6)
8. Taxation
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
Current tax
Deferred tax
39
(20)
71
(381)
Tax charge/(credit) on loss on ordinary activities
19
(310)
The total tax credit can be reconciled to the overall tax charge as follows:
Year ended
30 June
2015
£’000
Factors affecting tax charge for year:
The tax assessed for the relevant period is higher than the average standard rate of corporation
tax in Gibraltar of 10 percent (2014: 10 percent). The differences are explained below:
Loss before taxation
Year ended
30 June
2014
£’000
(8,123)
(5,731)
(812)
(573)
128
39
715
(31)
(8)
–
(12)
181
–
463
–
(414)
29
4
19
(310)
Loss before taxation multiplied by the average standard rate of tax in the year of 10 percent
(2014: 10 percent)
Effects of:
Expenses not deductible for tax purposes
Other tax differences
Current year tax losses not recognised
Income not taxable
Deferred tax credit on acquired intangibles
Reversal of deferred tax asset
Deferred tax movement
Tax charge/(credit) for year
The Group has maximum corporation tax losses carried forward at each period end as set out below:
Corporation tax losses carried forward
36
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
19,871
12,717
Strategic Report
Financial
Statements
Governance
8. Taxation continued
Details of the deferred tax asset recognised are as set out below:
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
At the beginning of the year
Credited to income statement, in respect of tax losses
Charged to income statement for tax losses not utilised
–
–
–
29
–
(29)
At the end of the year
–
–
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
2,053
1,274
2,053
1,274
Goodwill
£’000
Total
£’000
In addition, the Group has an unrecognised deferred tax asset as follows:
Tax losses carried forward
9. Intangible assets
Contract
intangible
£’000
Development
software
£’000
Licence
fees
£’000
Computer
software
£’000
Cost
At 30 June 2013
Additions
Disposals
–
808
–
88
–
–
229
10
–
2,152
–
(2,152)
919
–
–
3,388
818
(2,152)
At 30 June 2014
Additions
Disposals
808
1,909
–
88
–
–
239
–
(3)
–
–
–
919
–
–
2,054
1,909
(3)
At 30 June 2015
2,717
88
236
–
919
3,960
–
37
–
87
1
–
43
43
–
401
1,751
(2,152)
–
–
–
531
1,832
(2,152)
At 30 June 2014
Charge for the year
37
563
88
–
86
40
–
–
–
–
211
603
At 30 June 2015
600
88
126
–
–
814
Net book value
At 30 June 2013
At 30 June 2014
At 30 June 2015
–
771
2,117
1
–
–
186
153
110
1,751
–
–
919
919
919
2,857
1,843
3,146
Accumulated amortisation
At 30 June 2013
Charge for the year
Eliminated on disposal
The goodwill of £919,000 arose from the acquisition of Nektan UK Limited, formerly Mfuse Limited,
(mobile software development) in June 2013.
37
CONTINUED
9. Intangible assets continued
Impairment
In accordance with IAS 36 Impairment of Assets, the Group regularly monitors the carrying value of its intangible
assets. A detailed review was undertaken at 30 June 2015 to assess whether the carrying value of assets was
supported by the net present value of future cash flows derived from those assets.
The recoverable amount of the CGU attributable to goodwill and other intangible assets of £20,863,696 has been
determined using a value in use calculation. The calculation of the value in use is based on a three year forecast
model containing assumptions including the following key items:
•Discount rate of 20 percent
•Cash flows for FY 2016, FY 2017 and FY 2018 based on the Board approved budgets
•Terminal growth rate of 2 percent
These assumptions were based upon management’s experience, as well as industry data where available. The
Directors have concluded that, after applying sensitivities to the model, there is no reasonably possible change in the
key assumptions which would cause the carrying value of goodwill and other intangibles to exceed their value in use.
10. Plant, property and equipment
Computer
equipment
£’000
Office
equipment
£’000
Fixtures,
fittings and
equipment
£’000
Total
£’000
Cost
At 30 June 2013
Additions
At 30 June 2014
Additions
Disposals
428
155
583
20
–
40
12
52
4
–
24
–
24
–
–
492
167
659
24
–
At 30 June 2015
603
56
24
683
Accumulated depreciation
At 30 June 2013
Charge for the year
At 30 June 2014
Charge for the year
176
148
324
193
1
8
9
21
5
6
11
10
182
162
344
224
At 30 June 2015
517
30
21
568
Net book value
At 30 June 2013
At 30 June 2014
At 30 June 2015
252
259
86
39
43
26
19
13
3
310
315
115
11. Joint ventures
The following entities meet the definition of a joint venture and have been equity accounted in the consolidated
financial statements:
Name
Country of incorporation
Proportion of voting rights held
Nature of business
Broadcast Gaming Limited
Respin Games LLC
Gibraltar
USA
50%
50%
Freemium gaming services
Gaming software development
Total
£’000
At 30 June 2014
Additions
Share of losses
–
1,749
(685)
At 30 June 2015
1,064
38
Strategic Report
Governance
Financial
Statements
11. Joint ventures continued
Aggregated amounts relating to joint ventures are as follows:
Broadcast
Gaming
Limited
£’000
For the year ended 30 June 2015:
Non-current assets
Current assets
Total liabilities
Net assets/(liabilities)
Group’s share of net assets/(liabilities)
Revenues
Loss
–
251
481
(230)
(115)
–
(230)
Respin
Games LLC
£’000
255
59
163
148
74
–
(1,370)
The share of losses of the Broadcast Gaming Limited have not been recognised as they would reduce the investment
below zero. The Group’s share of losses totalled £115,000.
During the year, the Group became a joint venture partner in Respin Games LLC, providing an initial contribution of
£315,000 and further contractual £1,434,000, which is included in the cost of investments. The share of losses of the
joint venture totalling £685,000 have been deducted from the investment to leave a carrying value of £1,064,000.
As part of the Group’s investment into Respin Games LLC, the Group have a contractual commitment to provide
further contributions of up to US$2,324,000 to Respin Games LLC. No amounts have been included in the financial
statements in respect of this commitment.
12. Trade and other receivables
Trade receivables
Other receivables
Loan to joint ventures
Prepayments
At
30 June
2015
£’000
At
30 June
2014
£’000
12
776
463
222
392
151
164
150
1,473
857
The ageing of trade receivables that are past due but not impaired is shown below, these relate to customers with no
default history:
Between one and two months
Between two and three months
More than three months
At
30 June
2015
£’000
At
30 June
2014
£’000
4
–
–
–
–
75
4
75
No receivables have been impaired in the current financial year (2014: £98,000).
In determining the recoverability of trade receivables the Group considers any change in the credit quality of the
receivable from the date credit was granted up to the reporting date.
The Group does not have any significant credit risk exposure to any single counterparty.
The Directors consider that the carrying amount of the trade receivables, other receivables and the loan to the joint
ventures approximate to their fair value due to their short-term maturity. The maximum exposure to credit risk at the
reporting date is the carrying value of each class of receivable shown above. The Group does not hold any collateral
as security.
39
CONTINUED
13. Cash and cash equivalents
Cash in bank accounts
At
30 June
2015
£’000
At
30 June
2014
£’000
3,396
877
Interest is earned at floating rates on cash held on short-term deposit. All of the Group’s cash and cash equivalents
are held with major UK or US banks.
The following cash and cash equivalent amounts were held in foreign currencies. The remaining balance was
denominated in Sterling.
US Dollars
Euros
At
30 June
2015
£’000
At
30 June
2014
£’000
16
–
8
–
16
8
The Directors consider that the carrying value of cash and cash equivalents is approximate to their fair value.
14. Trade and other payables
Trade payables
Other payables
Accruals
Derivative financial liability
At
30 June
2015
£’000
At
30 June
2014
£’000
427
210
370
435
263
123
425
–
1,442
811
Player balances represent amounts due to customers including net deposits received, undrawn winnings and certain
promotional bonuses. Player balances for the year ended 30 June 2015 are £22,000 (2014: £3,000) and are included
in Other Payables above.
Derivative financial liability relates to the fair value derivative component of the convertible loan notes issued in the
year. Details of the convertible loan notes issued by the Group in the year can be found in note 15.
The Directors consider that the carrying value of trade and other payables is approximate to their fair value.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit
timeframe and no interest has been charged by any suppliers as a result of late payment of invoices.
40
Strategic Report
Governance
Financial
Statements
15. Convertible loan notes
During the year the Company raised £5,829,000 through the issue of convertible loan notes. The conversion price is
at a 25 percent premium to the price of the Ordinary shares at the date the convertible loan notes were subscribed
for, subject to a maximum conversion price of 209 pence a share. Interest of 10 percent per annum is payable
quarterly in arrears. Any notes that have not been converted will be redeemed in full on 28 April 2020. The notes can
be converted at any time through to 28 April 2020.
At
30 June
2015
£’000
At
30 June
2014
£’000
Current liabilities
583
583
–
–
Non-current liabilities
4,507
4,507
–
–
The number of shares that will be issued upon conversion of the notes are variable and therefore on recognition the
proceeds received from the issue of the notes, net of directly attributable transaction costs, have been allocated between
the derivative financial liability based upon the fair values on inception of the conversion option and the host debt.
The debt component has subsequently been measured at amortised cost based on an effective interest rate of 13.56
percent for Tranche 1 and 13.61 percent for Tranche 2. The difference between the carrying amount of the liability
component at the date of issue and the amount reported at 30 June 2015 represents the effective interest rate less
the interest paid to that date.
The derivative financial liability has been revalued at the balance sheet date (note 14), which has resulted in a fair value
movement of £43,000 that has been recognised as an expense in the income statement through finance expenses.
The restatement has no impact on the 2014 operating loss, loss before tax, or loss for the year.
16. Subsidiaries
Details of the Group’s subsidiaries as at 30 June 2015 are set out below:
Name
Proportion of voting rights and
Ordinary share capital held
Nature of business
Nektan UK Limited
Nektan Gibraltar Limited
Nektan America Limited
Nektan USA Inc
United Kingdom
Gibraltar
USA
USA
100%
100%
100%
100%
Mobile software development
Internet gaming services
Commercial development
41
CONTINUED
17. Share capital
Ordinary
shares
Number
Ordinary
shares
£
5,000,000
13,829,956
5
14
At 30 June 2014
Issued during the year
Bonus Issue
18,829,956
858,400
196,863,871,644
19
1
196,864
Total before rebasing (nominal value per share £0.000001)
Total after rebasing (nominal value per share £0.01)
196,883,560,000
19,688,356
2,886,021
196,884
196,884
28,860
22,574,377
225,744
Allotted, issued and fully paid
At 30 June 2013
At 30 June 2015
The issued and fully paid share capital of the Group amounts to £225,744 and is split into 22,574,377 Ordinary shares.
On 30 September 2014, by resolution of the members of the Company the sum of £196,863 being part of the share
premium account was capitalised and the Directors were authorised to make a bonus issue of 196,863,871,644
Ordinary shares to the members of the Company at the rate of 9,999 new shares for every one existing share held by
them. Conditional upon the Directors exercising their authority pursuant to this, the 196,863,871,644 Ordinary shares
were consolidated and divided into 19,688,356 new Ordinary shares of £0.01 each.
Authorised share capital
The authorised share capital of the Company is £1,000,000 divided into 100,000,000 Ordinary shares
(2014: 30,000,000 shares of £0.000001 each) of which 22,574,377 Ordinary shares have been issued, credited as
fully paid (2014: 18,829,956).
18. Deferred tax liability
Total
£’000
At 30 June 2013
Credited to the income statement on amortisation of acquired intangibles
Charged to the income statement in respect of accelerated capital allowances
455
(414)
3
At 30 June 2014
Credited to the income statement on amortisation of acquired intangibles
Charged to the income statement in respect of accelerated capital allowances
44
(8)
(12)
At 30 June 2015
24
There is no deferred tax arising in respect of other comprehensive income.
19. Financial instruments and risk management
The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives,
policies and processes of the Group for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout this financial information.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by management under policies approved by the Board of Directors. Management
identifies and evaluates financial risks in close co-operation with the Group’s operating segments. The Board
provides principles for overall risk management, as well as policies covering specific areas, such as interest rate risk
and currency risk.
42
Strategic Report
Governance
Financial
Statements
19. Financial instruments and risk management continued
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises are as follows:
•Trade and other receivables
•Trade and other payables
•Convertible loan notes and derivatives
•Cash and cash equivalents
•Investment in joint venture entities
Financial assets
The Group held the following financial assets:
Loans and receivables:
Investment in joint venture entities
Trade and other receivables
At
30 June
2015
£’000
At
30 June
2014
£’000
1,064
3,396
1,251
–
877
707
5,711
1,584
At
30 June
2015
£’000
At
30 June
2014
£’000
1,007
5,090
811
–
6,097
811
Financial liabilities
The Group held the following financial liabilities:
Amortised cost:
Financial instruments not measured at fair value within the financial statements
Financial instruments not measured at fair value include cash and cash equivalents, trade and other receivables,
trade and other payables and convertible loan notes.
The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables and
convertible loan notes approximate their fair value.
Included in level 3 of the fair value hierarchy is derivative financial liabilities, which is carried at fair value through
profit and loss and therefore movements in fair value are recognised in the income statement through finance
expenses. No other financial instruments are measured at fair value through profit and loss. There have been no
transfers between levels in any of the above periods.
The valuation technique used in determining the fair value measurement of derivative financial liabilities was the
Black-Scholes model. The significant unobservable inputs in this valuation model are the expected date of
conversion, volatility and dividend yield. At year-end, these inputs were as follows:
•Expected date of conversion – 2.8 years from year-end
•Volatility – 23.4 percent
•Dividend Yield – 0 percent
43
CONTINUED
The reconciliation of the opening and closing fair value balance of level 3 financial liabilities is as follows:
Derivative
financial
liability
£’000
As at 30 June 2014
Issues
Total gains or losses in profit or loss
–
392
43
As at 30 June 2015
435
Management controls and procedures
The Group’s Directors monitor and manage the financial risks relating to the operation of the Group. These risks
include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign
exchange rates.
Foreign currency risk management
The Group has exposure to foreign currency risk due to the number of jurisdictions in which it operates and the
number of currencies used.
The Board carefully monitors exchange rate fluctuations and reviews their impact on the net assets and position of
the Group and seeks to economically hedge the impact of foreign exchange by holding sufficient cash in the relevant
currencies. The Group does not enter into any derivative financial instruments to manage its exposure to foreign
currency risk.
All trade and other receivable are denominated in Sterling.
The following trade and other payable balances were held in foreign currencies. The remaining balance was
denominated in Sterling.
US Dollars
Swedish Krona
Euro
At
30 June
2015
£’000
At
30 June
2014
£’000
19
–
4
14
135
–
23
149
At each period end, if the US Dollar, Euro and Swedish Krona had strengthened or weakened by 10 percent against
Sterling with all other variables held constant, post-tax loss for the year/period would have increased/(decreased) by:
Strengthened by 10 percent
Increase in post-tax loss and impact on equity
Weakened by 10 percent
Decrease in post-tax loss and impact on equity
44
At
30 June
2015
£’000
At
30 June
2014
£’000
4
17
(4)
(14)
Strategic Report
Financial
Statements
Governance
Interest rate risk management
The Group has minimal exposure to interest rate risk. During the year to 30 June 2015 the Group was exposed to
interest rate risk on some of its financial assets, being cash held on bank deposit. The interest rate receivable on
these balances was at a rate less than 0.1 percent (2014: less than 0.1 percent). The Directors currently believe that
interest rate risk is at an acceptable level.
Due to its minimum exposure to interest rate risk, the Group has not prepared any sensitivity analysis.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. Credit risk arises principally from the Group’s cash balances and trade and other receivables. The
concentration of the Group’s credit risk is considered by counterparty, geography and currency.
The Group gives careful consideration to which organisations it uses for its banking services in order to minimise
credit risk.
An allowance for impairment is made where there is an identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of the cash flows, although there have been no such impairments over
the review period. Management considers the above measures to be sufficient to control the credit risk exposure.
Liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
This risk relates to the Group’s prudent liquidity risk management and implies maintaining sufficient cash. Ultimate
responsibility for liquidity risk management rests with the Board of Directors. The Board manages liquidity risk by
regularly reviewing the Group’s cash requirements by reference to short-term cash flow forecasts and medium-term
working capital projections prepared by management.
Maturity of financial liabilities
The following table sets out the non-discounted contractual maturities of financial liabilities:
One year
or less
£’000
Two to
five years
£’000
Five years
and over
£’000
Total
£’000
1,442
583
–
4,507
–
–
1,442
5,090
2,025
4,507
–
6,532
One year
or less
£’000
Two to
five years
£’000
Five years
and over
£’000
Total
£’000
811
–
–
811
811
–
–
811
Capital management
The Group is currently funded principally through shareholders’ funds. During the year ended 30 June 2015, £5.8
million was raised through convertible loan notes. Details of the convertible loan notes of the Group can be found in
note 15. If financing is required, the Board will consider whether debt or equity financing is more appropriate and
proceed accordingly. The Group is not subject to any externally imposed capital requirements.
Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values because of the short-term nature of such assets and the effect of discounting liabilities is negligible. The risk
in respect of fair value estimation is in respect of acquisition accounting.
45
CONTINUED
20. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
The remuneration of the Directors, who are the key management personnel of the Group, is set out below:
The aggregate remuneration comprised:
Wages and salaries
Fees
Benefits in kind
Year ended
30 June
2015
£’000
Year ended
30 June
2014
£’000
252
55
9
140
24
1
316
165
The following related party transactions took place during the period:
A Non-executive Director provided consultancy services through a service company to the Group in relation to the
admission to trading on AIM amounting to £45,000 (2014: nil). The amount outstanding at year-end was £nil (2014: £nil).
During the year ended 30 June 2014, the Group entered into a software licence agreement with a related Company
by virtue of a member of key management being a Director of the related Company. Revenue for the year ended
30 June 2015 of £23,000 (2014: £241,000) was recorded in respect of the software developed and this amount
remained due in full at the year-end.
During the year ended 30 June 2014, 137,510 share options were issued to a shareholder in lieu of services provided.
The options were capable of exercise on issue at nominal value and a charge of £200,000 was recorded in the
income statement. No further issue of options during the year ended 30 June 2015.
As at 30 June 2014, a Director and shareholder had a loan balance outstanding of £37,000 and this amount was
included in current liabilities. Repayment of £19,000 was made by the Group during the current year and the balance
outstanding at 30 June 2015 is £18,000. The loan is interest free and repayable on demand.
During the year ended 30 June 2015, the Group received loans from a shareholder totalling £1,370,000 which was
subsequently converted to Ordinary shares. Prior to conversion interest of £31,000 was charged.
A Director and shareholder of Nektan plc, loaned the Company £270,000 during the 30 June 2015 financial year
(2014: nil). The loan was repaid with accrued interest of £15,000 by 30 June 2015 (2014: nil).
A Non-executive Director and shareholder of Nektan plc, loaned the Company £50,000 during the 30 June 2015
financial year (2014: nil). The loan was repaid with accrued interest of £800 by 30 June 2015 (2014: nil).
During the year, the Group loaned a further £299,000 to Broadcast Gaming Limited, a joint venture of Nektan Plc.
The total balance as at 30 June 2015 was £463,000 (2014: £164,000), which has been included within loans to joint
ventures within trade and other receivables. No interest has been charged on this balance.
During the year, the Group became a joint venture partner in Respin Games LLC, providing an initial contribution of
£315,000 and further contractual £1,433,000, which is included in the cost of investments. The share of losses of the
joint venture totalling £786,000 have been deducted from the investment to leave a carrying value of £962,000.
As part of the Group’s investment into Respin Games LLC, the Group have a contractual commitment to provide
further contributions of US$2,324,000 to Respin Games LLC. No amounts have been included in the financial
statements in respect of this commitment.
21. Post-balance sheet events
On 6 October 2015 the Group announced additional financing raising gross proceeds of £2.75 million through the
issue of convertible loan notes and equity.
46
Strategic Report
Governance
Financial
Statements
22. Ultimate parent undertaking
The Directors consider that there is no one ultimate controlling party.
23. Operating leases
The total future value of minimum lease payments due is as follows:
Land and buildings
Operating leases
Expiring less than one year
Expiring between one and two years
Expiring between two and five years
At
30 June
2015
£’000
At
30 June
2014
£’000
229
70
207
223
3
1
506
227
24. Contingent liabilities
As part of the Board’s ongoing regulatory compliance process, the Board continues to monitor legal and regulatory
developments and their potential impact on the Group.
Management is not aware of any contingencies that may have a significant impact on the financial position of the Group.
25. Share based payments
Employees
Nektan Holdings Limited acquired Nektan UK Limited in June 2013. In prior years Nektan UK Limited had set up a
senior management long-term incentive scheme under which options were exercisable based on a target acquisition
price as stipulated in the agreements. On acquisition by Nektan Holdings Limited, employees exercised 7,974 options
under this scheme. At 30 June 2014 all remaining options under the scheme had lapsed or been forfeited.
Nektan UK Limited also operated an equity-settled share based remuneration scheme for employees. Postacquisition no options were granted or exercised under the scheme. At 30 June 2014 all remaining options had
lapsed or been forfeited.
Service providers
During the year ended 30 June 2015 options over 58,617 (2014: 521,218) shares were granted to service providers.
The options are exercisable at any time prior to their expiry five years from issue. During the year ended 30 June
2014, the remaining 137,510 options were exercisable immediately after grant.
A share based payment charge of £7,000 (2014:£255,000) has been recognised in respect of options granted.
2015
Number
2014
Weighted
average
exercise
price
(p)
2014
Number
0.91
2.36
521,218
58,617
–
0.91
–
521,218
1.05
579,835
0.91
521,218
2015
Weighted
average
exercise
price
(p)
Outstanding 1 July
Granted during the year
Outstanding at 30 June
The exercise price of options outstanding at 30 June 2015 ranged between £0.01 and £2.36 (2014: ranged between
£0.01 and £1.45) and their weighted average contractual life was three years seven months (2014: three years four
months).
The weighted average fair value of each option granted during the period was £0.02 (2014: £0.50).
47
CONTINUED
25. Share based payments continued
The following information is relevant in the determination of the fair value of options granted.
Option pricing model used
Share price at date of grant
Exercise price (weighted average)
Option life (years)
Risk free rate
Expected volatility
Expected dividend yield
Year ended
30 June
2015
Year ended
30 June
2014
Black-Scholes
£1.90
£2.36
0.6
0.89%
23.4%
Nil
Black-Scholes
£1.40
£0.91
0.7
0.89%
30.7%–34.2%
Nil
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a
statistical analysis of monthly share prices.
48
Strategic Report
Financial
Statements
Governance
PARENT
COMPANY BALANCE SHEET
Notes
Fixed assets
Intangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
ii
iii
iv
v
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
vi
Net assets
Called up share capital
Share premium
Profit and loss account
Shareholders’ funds
2015
£’000
vii
2015
£’000
2014
£’000
2014
£’000
2,089
12,827
772
11,078
14,916
11,850
5,707
3,196
2,805
737
8,903
3,542
(4,000)
(3,131)
4,903
411
19,819
(4,506)
12,261
–
15,313
12,261
226
22,330
262
(7,505)
–
14,824
255
(2,818)
15,313
12,261
The financial statements on pages 49 to 55 were approved and authorised for issue by the Board on 14 October 2015
and were signed on its behalf by:
David Sparks
49
PARENT COMPANY STATEMENT
OF
CHANGES IN EQUITY
Total
equity
£’000
Retained
earnings
£’000
Share
capital
£’000
Share
premium
£’000
Share option
reserve
£’000
At 30 June 2013
–
10,580
–
(447)
10,133
Loss for the year
Issue of shares
–
–
–
–
4,244
–
–
–
255
(2,371)
–
–
(2,371)
4,244
255
At 30 June 2014
–
14,824
255
(2,818)
12,261
Loss for the year
Rebasing of shares
Issue of shares
–
197
29
–
–
(197)
7,703
–
–
–
–
7
(4,687)
–
–
–
(4,687)
–
7,732
7
At 30 June 2015
226
22,330
262
(7,505)
15,313
The following describes the nature and purpose of each reserve within equity:
Share capital
Represents the nominal value of shares allotted, called up and fully paid.
Share premium
Represents the amount subscribed for share capital in excess of nominal value.
Represents the cumulative value of share option charges recorded in the condensed consolidated statement of
comprehensive income.
Retained earnings
Represents the cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
50
Strategic Report
Governance
Financial
Statements
NOTES TO THE PARENT COMPANY
i. Basis of preparation
The financial statements have been prepared in accordance with GFRS 102 The Gibraltar Financial Reporting Standard.
GFRS 102 is mandatory for accounting periods beginning on or after 1 January 2015. Early application of GFRS 102
is permitted subject to the early application provisions and the Company being required to comply with applicable
laws in Gibraltar. The Company has taken the option to apply the standard early in the preparation of these
financial statements.
The financial statements comply with the Gibraltar Companies (Accounts) Act 1999 and the Gibraltar Companies Act
1930 (as amended). The financial statements are presented in GBP and rounded to the nearest £’000.
Accounting policies
The financial statements have been prepared on a historical cost basis, other than for the valuation of certain
financial instruments which are held at their fair value. Under section 10(2) of the Gibraltar Companies (Consolidated
Accounts) Act 1999, the Company is exempt from the requirement to present its own statement of comprehensive
income. The loss for the year ended 30 June 2015 is £4,686,727 (2014: £2,371,749). The Company has not produced a
cash flow statement as it is a member of a group and a consolidated cash flow statement has been published.
These financial statements present the results of Nektan plc for the year ended 30 June 2015.
Foreign currencies
Transactions denominated in foreign currencies are recorded at exchange rates as of the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates
of exchange prevailing at that date.
Any gain or loss arising from a change in exchange rates subsequent to the date of the initial transaction is included
as an exchange gain or loss in the profit and loss account, except where financing of a foreign subsidiary through
long-term loans is intended to be as permanent as equity. Such balances are treated as part of the net investment
and any exchange differences are recorded in reserves.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line
basis over their useful economic lives which is typically over a period of three years.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise
to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at using appropriate
valuation techniques (see section related to critical estimates and judgements below).
In process research and development programmes acquired in such combinations are recognised as an asset even if
subsequent expenditure is written off because the criteria specified in the policy for development costs below are
not met.
The significant intangibles recognised by the Group, their useful economic lives and methods used to determine the
cost of intangibles acquired in a business combination are as follows:
Intangible asset
Useful economic life
Valuation method
Developed software
Contractual relationships
Three years
Term of contract
Replacement cost
Discounted cash flows
51
CONTINUED
i. Basis of preparation continued
Internally generated intangible assets (development costs)
Expenditure incurred on development activities including the Group’s software development is capitalised only
where the expenditure will lead to new or substantially improved products, the products are technically and
commercially feasible and the Group has sufficient resources to complete development.
Capitalised development costs are amortised over three years. The amortisation expenses are included within
administrative expenses in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal
projects are recognised in the consolidated statement of comprehensive income as incurred.
Subsequent expenditure on capitalised intangible assets is capitalised only where it clearly increases the economic
benefits to be derived from the asset to which it relates. All other expenditure, including that incurred in order to
maintain the level of performance of an intangible asset, is expensed as incurred.
Investments
Investments held as fixed assets are stated at cost, less any provision for impairment in value.
Trade debtors
Trade debtors are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method less provision for impairment. Appropriate provisions for estimated irrecoverable amounts are
recognised in the statement of comprehensive income when there is objective evidence that the assets are impaired.
Interest income is recognised by applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on
the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of
the amounts due under the net carrying amount and the present value of the future expected cash flows associated
with the impaired debtor. For trade debtors, which are reported net; such provisions are recorded in a separate
allowance account with the loss being recognised within administrative expenses in the statement of comprehensive
income. On confirmation that the trade debtor will not be collectable, the gross carrying value of the asset is written
off against the associated provision.
Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments
that have maturities of three months or less from inception, are readily convertible to a known amount of cash and
are subject to an insignificant risk of changes in value.
Trade and other creditors
Trade creditors are initially measured at their fair value and are subsequently measured at their amortised cost using
the effective interest rate method; this method allocates interest expense over the relevant period by applying the
‘effective interest rate’ to the carrying amount of the creditor.
Convertible debt
In accordance with FRS 102 the Company has the opted to follow IFRS for the presentation, recognition and
measurement of financial instruments.
Where the convertible debt issued converts into a variable number of shares the proceeds received on issue are
allocated between the derivative financial liability and the host debt based upon their fair values. Subsequently the
conversion option is measured at fair value through profit and loss and the debt component and as a financial
liability measured at amortised cost until extinguished on conversion or maturity of the debt.
Transaction costs directly attributable to the raising of convertible debt are allocated across the derivative financial
liability component and the debt liability component. Transaction costs allocated to the derivative financial liability
component are expensed to the income statement as they are incurred. Transaction costs allocated to the debt
liability component are deducted from the residual value recognised as the debt liability on recognition.
52
Strategic Report
Governance
Financial
Statements
i. Basis of preparation continued
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance
sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay
less tax in the future have occurred at the balance sheet date.
A net deferred tax asset is recognised as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover
carried forward tax losses and from which the future reversal of underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in the period in which the timing
differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by
the balance sheet date.
Where equity-settled share options are awarded to employees or service providers, the fair value of the options at
the date of grant is charged to the consolidated statement of comprehensive income over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on
the number of options that eventually vest.
Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long
as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions
are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the consolidated statement of
comprehensive income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the consolidated statement of
comprehensive income is charged with the fair value of goods and services received.
ii. Intangible assets
IT
development
£’000
Cost
At 30 June 2013
Additions
Disposals
–
809
–
At 30 June 2014
Additions
809
1,880
At 30 June 2015
2,689
Accumulated amortisation
At 30 June 2013
Charge for the year
–
37
At 30 June 2014
Charge for the year
37
563
At 30 June 2015
600
Net book value
At 30 June 2013
At 30 June 2014
At 30 June 2015
–
772
2,089
53
CONTINUED
iii. Investments
Investments in subsidiaries
Investments in joint ventures
Total investments
At
2015
£’000
At
2014
£’000
At
2015
£’000
At
2014
£’000
At
2015
£’000
At
2014
£’000
As at 1 July
Additions
11,078
–
11,078
–
–
1,749
–
–
11,078
1,749
11,078
–
As at 30 June
11,078
11,078
1,749
–
12,827
11,078
The Company’s investments represents interest in:
Name
Nature of investment
Proportion of voting rights and
Ordinary share capital held
Nature of business
Nektan UK Limited
Nektan Gibraltar Limited
Nektan America Limited
Nektan USA Inc
Broadcast Gaming Limited
Respin Games LLC
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Joint venture
Joint venture
United Kingdom
Gibraltar
USA
USA
Gibraltar
USA
100%
100%
100%
100%
50%
50%
Mobile software development
Commercial development
Dormant
Freemium gaming services
Gaming software development
Details of the investment in joint ventures of the Group can be found in note 11 of the consolidated financial
statements.
iv. Debtors
Amounts due from Group companies
Other debtors
Prepayments and accrued income
At
30 June
2015
£’000
At
30 June
2014
£’000
5,192
486
29
2,477
179
149
5,707
2,805
At
30 June
2015
£’000
At
30 June
2014
£’000
200
5
2,629
148
435
583
71
–
2,878
182
–
4,000
3,131
v. Creditors
Trade creditors
Other creditors
Amounts due to Group companies
Accruals and deferred income
Derivative financial liability
Convertible loan note
Derivative financial liability relates to the issue of convertible loan notes.
vi. Convertible loan notes
Details of the convertible loan notes of the Group and Company can be found in note 15 of the consolidated financial
statements.
54
Strategic Report
Governance
Financial
Statements
vii. Called up share capital
Details of the share capital of the Group and Company can be found in note 17 of the consolidated financial
statements.
Authorised share capital
The authorised share capital of the Company is £1,000,000 divided into 100,000,000 Ordinary shares (2014: £30
divided into 30,000,000 Ordinary shares) of which 22,574,377 Ordinary shares have been issued, credited as fully
paid (2014: 18,829,956).
viii. First time adoption of FRS 102
Under previous Gibraltar GAAP the profit for the year ended 30 June 2014 was £2,371k and equity at 30 June 2014
was £12,261. There were no transitional adjustments to the figures or disclosures arising as a result of first time
adoption of FRS 102.
ix. Parent Company result for the year
As permitted by section 10(2) of the Gibraltar Companies (Consolidated Accounts) Act 1999, a separate statement of
comprehensive income for the Company is not presented.
The Company’s loss for the financial year was £4,686,727 (2014: £2,371,749).
x. Share based payments
Details of the share based payments of the Group can be found in note 25 of the consolidated financial statements.
xi. Related party transactions
Details of the related party transactions of the Group can be found in note 20 of the consolidated financial
statements.
xii. Events after the reporting date
Details of events after the reporting date of the Group can be found in note 21 of the consolidated financial
statements.
55
NOTES
56
DIRECTORS, OFFICES AND ADVISORS
Directors
Gary Shaw (Executive Chairman) appointed 10 May 2011
David Neil Gosen (Chief Executive Officer) appointed 19 January 2015
David Neil Sparks (Chief Financial Officer) appointed 24 September 2014
Steven Caetano (Non-executive Director) appointed 11 November 2013, resigned 26 September 2014
Alan Turner (Non-executive Director) appointed 1 April 2014
James (Jim) Henry Wilkinson (Non-executive Director) appointed 1 April 2014
Nadigadda Sandeep Reddy (Non-executive Director) appointed 1 April 2014
Company Secretary
Lawyers to the Company
Trilex Secretaries Limited
Suite 1, Burn’s House
19 Town Range
Gibraltar
K&L Gates LLP
One New Change
London
EC4M 9AF
United Kingdom
Registered Office
Suite 1, Burn’s House
19 Town Range
Gibraltar
Website
Lawyers to the Company as to Gibraltar Law
ISOLAS Gibraltar
Portland House
Glacis Road
PO Box 204
Gibraltar
www.nektan.com
Financial PR
Principal Place of Business
2/1 Waterport Place
2 Europort Avenue
Gibraltar
Financial Advisor,
Nominated Advisor and Broker
Zeus Capital Limited
41 Conduit Street
London
W1S 2YQ
United Kingdom
Reporting Accountant and Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
United Kingdom
BDO Limited
Regal House
PO Box 1200
Gibraltar
Newgate Communications
Sky Light City Tower
50 Basinghall Street
London
EC2V 5DE
United Kingdom
Registrars
Capita Registrars (Guernsey) Limited
Mont Crevelt House
Bulver Avenue
St Sampson
GY2 4LH
Guernsey
Depository
Capita IRG Trustees Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Nektan plc
Gibraltar
2.1 Waterport Place
2 Europort Avenue, Gibraltar
+44 20 3478 2648
London
Portland House, Bressenden Place
London SW1E 5BH, United Kingdom
+44 20 7154 2070
Las Vegas
Tivoli Village, Suite 390
Office 310. 410 South Rampart
Las Vegas, Nevada, 89145
+1 702 726 6759

sunplay

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