Ainsworth targets new online gaming revenue streams for further growth

2nd September 2013 8:14 am GMT

Australian gaming supplier Ainsworth Game Technology said that it expects to capitalise from additional revenues streams generated from its emerging online gaming business after recording a 32 per cent increase in revenues to AUD$198.1m for the year ended June 30th.

Revenues from Australia rose 21 per cent to $124.4m and now account for 63 per cent of total revenues, compared to a 68 per cent share in the previous year.

The company benefited from growth in the New South Wales and Queensland markets in H1, as well as a significant increase in revenues (up 349 per cent) from Victoria during the second half of the year.

International revenues were up 55 per cent to $47.5m, following strong growth in South America, up 77 per cent year-on-year. In addition, Ainsworth said that it continued to gain market share and revenue growth in the North American market, as expected, as new products progress through the necessary regulatory approval cycles.

Ainsworth CEO Mr Danny Gladstone said: “I am pleased with the progress to date and expect continued financial improvements in all markets in the 2014 financial year.”

The company confirmed that it had progressively completed the development of products available to regulated online markets in Europe and North America through GameAccount under an agreement signed last November.

“This online strategy is expected to enable the company to capitalise on additional revenue streams from this emerging market segment,” added Gladstone.

Ainsworth has already rolled out some of its online slots to Rank Interactive’s MeccaBingo.com brand, and has also signed a deal to add its content to Bally’s open iGaming platform.

Cost of sales rose 38 per cent to $67.5m, while total operating costs increased by 25 per cent to $67.7m. This included an 18 per cent rise in sales, service and marketing expenses to $27.5m, and a 23 per cent rise in administrative expenses to $15.2m.

In addition, research and development expenses were up 24 per cent to $23.2m.

“This investment is expected to position the group to grow revenue and continue to provide high performing innovative and technically advanced gaming products for our customers,” continued Gladstone.

Operating profit increased by 25 per cent to $63.1m, although the company’s results were further impacted by net finance costs of $6.2m and income tax expenses of $17.1m, which meant that net profit for the year fell by 19 per cent to $52.2m.

FY 2012/13 Results

Australian Dollars (AUD$) FY 2011/12FY 2012/13
Revenue 150.6m198.1m
Cost of Sales 48.9m67.5m
Gross Profit 101.8m130.6m
Sales, Service and Marketing Expenses 23.2m27.5m
Research and Development Expenses 18.6m23.2m
Administrative Expenses 12.3m15.2m
Other Expenses 0.1m1.8m
Results from Operating Activities 50.3m63.1m
Net Finance Costs (4.1m)6.2m
Profit Before Income Tax 46.2m69.3m
Income Tax Benefit/(Expenses) 18.1m(17.1m)
Profit After Tax 64.3m52.2m

Ainsworth recently introduced a new long term incentive plan for its staff following the successful implementation of previous programs.

“This plan will help ensure the retention of our most valuable asset, our people, across the company by linking incentives with performance,” said Gladstone. “This will further align the benefits to employees with earnings growth and increased shareholder returns.”

The company’s board has declared a final dividend of $0.05 per share after considering growth opportunities and a commitment to return profits to shareholders. The dividend results in a full year dividend of $0.08, a payout ratio of 49 per cent of profit after tax.

Ainsworth’s executive chairman, Leonard Ainsworth said: “The final dividend payment is a result of a conservative approach to capital management, coupled with strong trading over the preceding 12 months. The company continues to actively pursue opportunities to deliver growth and the payment of dividends is not expected to impact upon AGT’s ability to invest in new development initiatives which is a key driver of profitability.”

Based on internal forecasts, Ainsworth expects net profit for the first half of its new financial year to be at least 15 per cent ahead of last year year’s $22m.

“The company is an established and globally recognised provider of high-performing gaming products and has secured a solid financial position,” said Gladstone. “Further revenue growth is expected within all international markets in FY14 as recently developed products receive regulatory approvals for installation.

“We continue to pursue opportunities to further improve market share in all domestic markets, capitalising on the group’s established market leading position.”

As at June 30th the company held cash and cash equivalents of $40.1m compared to $22.9m a year ago.

Shares in Ainsworth Game Technology Limited (Co. Data) (ASX:AGI) closed at $4.10 per share in Sydney earlier today in trading.

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