Ainsworth Game Technology starts reviewing in the midst of takeover rumours.

Ainsworth Game Technology starts reviewing in the midst of takeover rumours.

 In the midst of rumours that it is looking for a buyer, Australian gaming machine producer Ainsworth Game Technology has started a strategic assessment.

 Ainsworth, a company based in New South Wales, said that it has chosen Macquarie Capital as its financial advisor to conduct an evaluation of all possible options.  According to Ainsworth, which is listed on the ASX, no indications of interest have been received from suitors.

 Following a story by the Australian Financial Review that suggested the company would go private, Ainsworth's board of directors issued a statement confirming the review.  According to the study, this is because of the difficult market conditions it has faced recently.

 The statement stated that the process would analyse and evaluate all strategic options that could help the business maximise shareholder value.  "There can be no guarantee that any transaction will occur, and the strategic evaluation will include a wide range of possible organic and inorganic possibilities.

 "The business is still dedicated to achieving long-term, steady growth by fulfilling our product strategy and making further R&D investments."

 The review: enhanced by expansion in North America
 After the study was announced, Ainsworth's stock price skyrocketed.  At the end of trading on Tuesday, its stock was trading at $1.20, up 22% from a week earlier.

 According to Ainsworth's most recent financial statements, revenues for the six months ending June 30, 2023, increased significantly year over year.  The half-year revenue of AU$143.6m ($91.0m/€85.1m/£74.2m) was up 24.1% year over year and 19.5% over H1.

 However, a write-down on assets made in Argentina contributed to the suppression of profits.  At $29.4 million, Ainsworth's underlying EBITDA was unchanged from the same time in 2022.

 As in the previous half, North America remained the best-performing segment, accounting for 48% of total revenue.  In the region, it brought in $68.5 million, a 13% increase from the previous year.

 Ainsworth pointed out that low corporate sales, market conditions, and fixed expenses with lesser revenue achieved were the key reasons why the domestic Australian market was still difficult.  It claimed that decreasing revenues in Australia were somewhat compensated by higher revenues in Asia and New Zealand.

 How R&D is a priority for Ainsworth
 In its strategic review statement, Ainsworth made reference to R&D investment; its H1 results provided more specifics.  Building on extended field trials, it stated that further expenditures include Next-Gen Game and Mathematics engines.  For cost-effective expansion, it is also using outside content and game development companies more frequently.  Investing in hardware and cabinet design while keeping an eye on international markets and trends is another area of focus.

 Spending on R&D increased 4.5% year over year to $21.8 million in H1.  Future expenditures will go into talent development programs, enhanced Sight, Sound, and Action, and internal upgrades for better design tools.  The group is opening new facilities in Texas, Mexico, and Nevada in addition to growing its existing studios in Sydney and Las Vegas.

 "I am happy to report that progress has continued in the current period against the strategies implemented to improve earnings from Ainsworth," stated Harald Neumann, CEO of Ainsworth Game Technology.  I have no doubt that the emphasis on research and development to radically improve our hardware, technology, and gaming experience will result in more advancements.