New South Wales-headquartered Ainsworth confirmed it has appointed Macquarie Capital as its financial advisor to undertake a review of all potential opportunities available. No expressions of interest have been received from suitors, the ASX-listed Ainsworth said.
Ainsworth’s board of directors released a statement confirming the review following an Australian Financial Review report suggesting the business could go private. The report said this was due to the challenging market conditions it has endured in recent years.
“The process will look to review and assess all strategic alternatives which could assist the company in maximising shareholder value,” the statement read. “The strategic review will include a broad range of potential organic and inorganic alternatives and there can be no assurance that any transaction will result.
“The company remains committed to driving sustained, long-term growth through delivering on our product strategy and continued investments in R&D.”
The review: boosted by North American growth
Ainsworth’s share price soared following the announcement of its review. Its stock stood at $1.20 at the close of trading on Tuesday, which was up 22% on a week ago.
Ainsworth’s most recent financial results highlighted a significant year-on-year increase in revenues for the six months to 30 June 2023. Revenue of AU$143.6m ($91.0m/€85.1m/£74.2m) for the half-year period was up 19.5% on H1 and 24.1% year-on-year.
However, profits were suppressed due in part to a write-down on investments made in Argentina. Ainsworth’s underlying EBITDA of $29.4m was flat compared to the same period in 2022.
North America continued to be the strongest segment performer, contributing 48% of total revenue, similar to the previous half. It generated revenue of $68.5m in the region, which was up 13% year-on-year.
Ainsworth noted that conditions in the domestic Australian market remained challenging due to minimal corporate sales, market conditions and fixed costs with lower revenue achieved. Increased revenues in Asia and New Zealand helped to partially offset the lower revenues within Australia, it said.
How Ainsworth is focusing on R&D
Ainsworth mentioned R&D investment in its statement on the strategic review and went into further details in its H1 results. It said continuing investments include Next-Gen Game and Mathematics engines, building on expanded field trials. It is also increasing utilisation of external content and game development providers for cost-effective growth. Another focus is investment on hardware and cabinet design with attention on global markets and trends.
R&D spending in H1 was up 4.5% year-on-year to $21.8m. Future investments include internal upgrades for better design tools and improved Sight, Sound and Action and talent development initiatives. The group is expanding its studios in Sydney and Las Vegas and opening new studios in Texas, Mexico and Nevada.
Harald Neumann, Ainsworth Game Technology’s CEO, said: “I am pleased to report that progress has continued in the current period against the strategies implemented to improve earnings from Ainsworth. I am confident that the focus on R&D to fundamentally upgrade our technology, hardware and improve game performance will deliver further improvements.”