Full year results 2020

AGTech reduces losses despite revenue decline in 2020

| By Robert Fletcher
Chinese lottery solutions provider AGTech has reported a reduced net loss of HK$75.8m (£7.1m/€8.3m/$9.8m) for its 2020 financial year, despite a drop in hardware sales leading to a decline in revenue.

Total revenue for the 12 months to 31 December amounted to $161.6m, down 7.7% from $175.1m in the previous year.

AGTech put this primarily down to a decline in lottery hardware sales to $31.4m, due to a fall in national lottery hardware tenders, slower tendering processes and hardware deliveries, as a result of the novel coronavirus (Covid-19) pandemic.

Despite the decline, AGTech won 16 lottery hardware tenders to supply lottery terminals in the Anhui, Shanxi, Hubei, Jilin, Guizhou, Tianjin, Inner Mongolia, Hebei, Fujian, Sichuan, Zhejiang, Henan and Shaanxi provinces, accounting for over 21% of overall sports lottery traditional terminal tenders in China.

AGTech noted it did particular well with new android sports lottery terminal tenders, winning over 66% of these tenders during the year.

This decline was partially offset by an $8.8m increase in revenue from AGTech’s games and entertainment business, helped by a rise in in content provision revenue from the Paytm First Games platform in India.

AGTech also reported a $6.2m increase in revenue from its lottery distribution and ancillary services.

Other income amounted to $10.9m, while other net gains totalled $11.4m for the year.

“The group will proactively transform and build on our leading position within the Chinese lottery industry,” AGTech said.

“We will continue to partner with additional provincial lottery authorities of China in areas such as technology and business innovation, channel expansion and distribution, smart hardware terminals, data services, and other value added ancillary services.

“The group is also leveraging on our existing products and technology to innovate and improve on digitalisation of sporting content.”

Looking at costs for the year, AGTech was able to make savings across all areas, including employee costs – its main outgoing – where spending was lowered by 10.7% to $178.9m.

Reduced spending meant operating loss amounted to $131.1m, compared to $194.9m in the previous year.

Taking into account other income, including a $69.6m gain on derecognition of some debts and $44.1m on net financial income, as well as an $83.2m loss on certain investments, loss before tax was $83.2m, compared to $109.3m in 2019.

AGTech paid $8.8m in tax, resulting in a $109.5m loss, an improvement from the $113.6m loss posted in the previous year.

However, when also accounting for $33.6m in currency exchange differences, the group ended the year with a total los of $75.8m, compared to $124.7m in 2019.

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