Australia-based slot machine maker Ainsworth Game Technology Ltd on Tuesday announced a net profit after tax of AUD34.6 million (US$27.2 million) for the six-month period ended December 31, 2014, a decrease of 3 percent on the previous corresponding period.
Profit before tax for the firm – which trades on the Australian Securities Exchange – was AUD45.5 million, similar to the corresponding period in 2013.
Total sales revenue for the six months to December 31, 2014, reached AUD111.9 million, down by 8 percent from the prior-year period. Revenue in Australia dropped 34 percent year-on-year to AUD53.5 million, while that of the international segment went up by 45 percent to AUD58.4 million.
The company said revenue gains in the Americas “assisted in increasing the contribution of revenue from international markets which now represent 52 percent of total revenue compared to 33 percent in [the] previous corresponding period”.
The Ainsworth board declared an interim fully franked dividend for the six months ending December 31 of AUD.05 per ordinary share with no ‘conduit foreign income’ (CFI). In the Australian tax system, CFI is foreign income that is ultimately received by a non-resident through one or more interposed Australian corporate tax entities.
The firm’s executive chairman Len Ainsworth said in a statement accompanying the results: “The declared dividend is fully franked and represents a payout ratio of 47 percent of after-tax profits in line with the board’s objective of returning profits to shareholders and our previously stated dividend policy. It is particularly pleasing that all the tax losses accumulated since starting the business have now been utilised, and we can reward shareholders with a fully franked dividend.”
Matthew Ryan and Olivia Bible of JP Morgan Australia Securities Ltd said in a note that the first half fiscal 2015 results were in line with second half fiscal 2014 operational performance and previous management guidance for net profit after tax.
“The highlight of the result was another strong performance from both Latin America (with unit sales up 62 percent year-on-year) and North America (with unit sales up 39 percent year-on-year. The weakness in Australia (unit sales down 39 percent year-on-year) meant that revenue from international jurisdictions was 52 percent of total revenue (up from 33 percent in the previous corresponding period),” said the analysts.
They added: “We believe this has two major implications: Ainsworth has permanently restructured its business mix to markets outside of Australia; and investors should start to see Ainsworth as more of a currency play (something we believe has been underappreciated so far).”
Ainsworth has been tipped by some commentators as likely to build its ship share in Asia in the next few years.
“The Asian market is still on track to expand within the coming two years as a number of new properties come on stream in Macau, Philippines and eventually [South] Korea,” the company said in an investor presentation accompanying the results.
But the firm added: “Ainsworth Game Technology’s position is still dependent on game acceptance and performance within the Asian market.”
Ainsworth posted an after-tax profit that was up 18 percent at AUD61.6 million for the financial year ending June 30, 2014.
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”Given that the blanket casino closure [in Macau due to Typhoon Mangkhut] happened on an all-important weekend day… we expect that somewhere between MOP1.1 billion [US$136.2 million] and MOP1.5 billion in GGR will be lost”
Analyst at Union Gaming Securities Asia