Ainsworth Game Technology starts review in line with takeover discussions.

Ainsworth Game Technology, a supplier of Australian gambling machines, has started a strategic assessment in response to persistent claims it is looking for a sale.

Head office for New South Wales-based Ainsworth stated it has hired Macquarie Capital as its financial adviser to investigate all possible prospects. Suitors have not shown any expressions of interest, according ASX-listed Ainsworth.

Ainsworth's board of directors issued a statement verifying the review based on an Australian Financial Review analysis implying the company would enter private ownership. The paper claimed this was a result of the difficult market conditions it has lately experienced.

"The process will look to review and assess all strategic alternative which could assist the company in maximising shareholder value," the statement said. "There can be no guarantee that any transaction will result; the strategic review will include a wide range of possible organic and inorganic alternatives."

"The company is still dedicated to drive continuous, long-term expansion by delivering on our product strategy and ongoing R&D investments."

Review: strengthened by North American expansion
Once the review was announced, Ainsworth's share price skyrocketed. At the closing of trade on Tuesday, its stock was $1.20, up 22% from a week ago.

The most recent financial data from Ainsworth showed a notable year-on- year rise in sales for the six months to 30 June 2023. For the half-year, AU$143.6m ($91.0m/€85.1m) showed up 19.5% on H1 and 24.1% year-on-year.

But a write-down on Argentinean investments helped to somewhat stifle profits. From the same time in 2022, Ainsworth's underlying EBITDA of $29.4m was flat.

Comprising 48% of all income, North America remained the strongest segment performer, same as the previous half. With a 13% annual growth, it brought in $68.5 million for the area.

Ainsworth observed that low corporate sales, market conditions, and fixed costs with reduced income attained kept the conditions in the home Australian market difficult. Said the increased revenues in Asia and New Zealand helped to somewhat offset the declining revenues within Australia.

How Ainsworth is emphasising research and development
In its announcement on the strategy review, Ainsworth noted R&D expenditure; in its H1 results, she delved deeper. Said to be part of ongoing investments are Next-Gen Game and Mathematics engines, built on enlarged field testing. For affordable expansion, external content and game development companies are now being more and more used. Additionally under consideration is hardware and cabinet design with regard for world markets and trends.

Spending R&D in H1 increased 4.5% year-on-year to $21.8 million. Internal upgrades for better design tools and enhanced Sight, Sound and Action and talent development projects are part of future investments. The group is opening new offices in Texas, Mexico, and Nevada in addition to extending its facilities in Sydney and Las Vegas.

The CEO of Ainsworth Game Technology, Harald Neumann, said: "I am happy to announce that progress has continued in the current period against the initiatives implemented to boost profitability from Ainsworth. I am sure that more developments will come from the emphasis on R&D to essentially better our hardware, technology, and gaming performance.