Talks of a takeover have prompted Ainsworth Game Technology to launch a review.
Macquarie Capital has been engaged as the financial advisor for Ainsworth, a company based in New South Wales, to investigate all relevant opportunities. According to Ainsworth, which is listed on the ASX, no suitors have expressed interest.
The review was confirmed by Ainsworth's board of directors in a statement issued after a story in the Australian Financial Review indicated that the company may consider going private. The report attributed this to the difficult market conditions it has faced over the past few years.
The process will evaluate all potential strategic options that could help the company maximise shareholder value, according to the statement. Although several organic and inorganic options will be considered throughout the strategic review, we cannot promise that a deal will come out of it.
"The company is dedicated to achieving long-term growth by implementing our product strategy and maintaining our investment in research and development."
Enhanced by expansion in North America: the review
After Ainsworth announced its review, the share price skyrocketed. As the market closed on Tuesday, its shares were trading at $1.20, a 22% increase from the previous week.
For the six months ending 30 June 2023, Ainsworth's most recent financial statements showed a considerable rise in revenues compared to the previous year. For the half-year period, revenue of AU$143.6m ($91.0m/€85.1m/£74.2m) was up 19.5% from H1 and 24.1% from year-on-year.
A write-down on investments in Argentina, however, reduced profits. When compared to the same time in 2022, Ainsworth's underlying EBITDA of $29.4m remained unchanged.
Just as in the first half, North America remained the top sector performer, accounting for 48% of overall revenue. In the region, it made $68.5 million, a 13% increase from the previous year.
Minimal corporate sales, market conditions, and fixed costs with lesser revenue realised continued to make the local Australian market hard, according to Ainsworth. It added that lower revenues in Australia were somewhat offset by increased revenues in Asia and New Zealand.
Exactly how Ainsworth is investing in research and development
Research and development spending was brought up by Ainsworth in its strategy review statement and was further upon in its H1 results. Next-Gen Game and Mathematics engines, which are based on increased field trials, are included in the continued investments, according to the company. As a means of achieving cost-effective expansion, it is also making more use of third-party content and game development companies. Hardware and cabinet design investments that take into account worldwide trends and markets are another area of concentration.
There was a 4.5% year-on-year increase in R&D investment to $21.8m in H1. Investments in the future will go towards enhancing internal design tools, bolstering Sight, Sound, and Action, and launching talent development programs. New studios are being established in Nevada, Mexico, and Texas, and the existing ones in Sydney and Las Vegas are being expanded.
This period, progress has continued against the initiatives undertaken to boost revenues from Ainsworth', stated Harald Neumann, CEO of Ainsworth Game Technology. I have faith that the investment in research and development to radically enhance our hardware, software, and game performance will yield even greater results.
