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Ainsworth primed for digital expansion into real-money and social gaming

19th November 2014 8:20 am GMT

Australian gaming supplier Ainsworth Game Technology (AGT) said Wednesday that it remains on course to enter the European real-money online gaming market in partnership with Playtech during the first quarter of 2015, while the company will roll out its first social casino in January with a second mobile-first offering to follow later in the year.

Speaking at the company’s 2014 Annual General Meeting earlier today, AGT’s executive chairman Len Ainsworth said that the global gaming industry had recently seen significant changes with a proliferation of major corporate activity and consolidation, but that the greatest change was the emergence of online gaming in both the real-money and social gaming sectors.

“The proliferation of social networks have created massive user bases in the social casino segment which could provide the gateway to real-money gaming,” said Ainsworth. “Over the past 12 months our digital strategy has been established to service the key market segments of real-money wagering and social casino gaming and participate in these revenue opportunities.”

AGT expects to enter these markets during Q1 of next year following the signing of its recent content supply deal with Playtech for the UK and European regulated markets, and a joint venture with 616 Digital for social casino.

The supplier’s online games are already live in the New Jersey iGaming market through its partnerships with platform providers Bally Technologies and GameAccount Network.

“This strategic investment in the real-money and social online market segment will provide ongoing revenue contributions as well as increased brand recognition to further grow our land-based business in a number of international markets,” said Ainsworth.

The Playtech partnership will see AGT’s most popular game titles feature across all Playtech platforms in regulated UK and European online sites for desktop, mobile and tablet devices, allowing the establishment of business to business (B2B) offerings.

“I’m pleased to report systems integration is now well underway to incorporate the Ainsworth Gameconnect RGS, with the expected release on track for the first ten games in the second half of 2015,” said AGT CEO Gladstone.

Gladstone said that significant progress had been made during 2014 in bringing together a comprehensive digital product offering in the real-money and social casino online markets.

In June, AGT was awarded a license in Alderney, following its decision to utilise Comtrade to supply remote gaming server technology, which he said would enable the establishment of a major presence together with brand recognition in the regulated markets of the UK and Europe.

AGT has also entered into a JV with 616 Digital to create a social casino offering on both desktop and mobile devices, which will see the launch of the Players Paradise Casino in January, and further site releases through the remainder of year.

“This partnership has enabled the fast tracking of the company’s ability to enter this market with the launch of the Players Paradise casino scheduled for January 2015,” said Gladstone. “Whilst our timing to enter this market is behind our major competitors it has provided the company with the ability to develop a quality mobile offering complete with improved mobile technologies which now account for over 50 per cent of revenues in this online segment.

“It is the company’s intention to launch a second social casino during 2015 which will provide unique mobile and tablet game offerings.”

Having reported a 23 per cent increase in revenue to AUD$244m for the year ended June 30th, Gladstone said that based on current expectations, the company expects to achieve further overall revenue gains in its 2015 financial year, but warned that domestic and international revenues, primarily from the key international market of North America, will be more heavily weighted to the second half of FY15.
He explained that this was mainly due to US customer buying patterns which continue to be more heavily weighted to the beginning two quarters of the calendar year, when capital tends to be more available and capable of being allocated to equipment purchases.

Domestic revenue for the first half of FY15 is expected to be similar to the second half of FY14 and down approximately 30 per cent compared to a year ago.

“This revenue decline is largely due to timing as we progress product approvals and is expected to be largely regained in the second half of FY15 resulting in similar levels being achieved compared to the previous 2014 year,” said Gladstone.

Given the expected lower domestic revenue in the first half of FY15, the company advises that it expects to report a lower profit compared to the corresponding period, but in line with the second half of FY14.

“The increase in international revenues in half one of FY15 which are traditionally greater within the second half of the financial year and the investment to ensure the necessary infrastructure is in place to support future growth plans are the primary reasons for a lower expected profit,” said Gladstone. “It is expected that given the weighting more aligned to the second half overall profitability for FY15 should be ahead of the previous 2014 year.”

In conclusion, Ainsworth told shareholders that the company had now established a strong financial position and was well recognised within the global gaming industry.

“We expect to further increase our international revenue in FY15 and continue to pursue initiatives to enable us over the medium term to further strengthen our established position in domestic markets. We are well placed to continue to evaluate strategic and organic opportunities to create and enhance shareholder value,” he said.

Shares in Ainsworth Game Technology Limited (Co. Data) (ASX:AGI) fell by 8.46 per cent to a new 52-week low of AUD$2.49 per share earlier today in Sydney, having dropped 4.90 per cent in trading Tuesday.

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