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The Ainsworth Game Technology Limited (ASX: AGI) share price will be on watch on Friday following the release of another disappointing result from the gaming technology company.
What happened in FY 2020?
As with rival Aristocrat Leisure Limited (ASX: ALL), Ainsworth was negatively impacted by the pandemic.
For the 12 months ended 2020, Ainsworth reported a 36% decline in revenue to $149 million. This was mainly due to its performance in the second half. During that half, revenue came in at just $42 million, down 64% from $116 million in the prior corresponding period.
Things were even worse on the bottom line, with the company posting an adjusted net loss after tax of $34 million. This excludes the impacts of foreign exchange movements, one-off costs, JobKeeper, and costs associated with the acquisition of MTD.
At the end of the period the company had net debt of $17.5 million.
In light of its poor performance and debt load, Ainsworths’ final dividend has been cancelled. Management wants to ensure the company is well placed should a protracted downturn eventuate.
“Severely impacted”.
Management notes that the pandemic had a severe impact on its performance, particularly during a key period of the financial year.
It commented: “These results were severely impacted by Covid-19 primarily in quarter 4, traditionally the strongest period for the Group. Customers across all of our major markets suspended their operations from mid-March.”
The company attempted to offset some of this weakness with cost-savings.
“AGT implemented a series of cost saving measures to ensure the Company can endure a protracted downturn. In addition to voluntary salary and other overhead reductions, the Group has reduced employee numbers by eliminating 107 roles at an annual cost saving of approximately A$10 million, which is expected to carry forward into FY21,” it advised.
Trading conditions.
The company notes that some customers’ facilities have started to reopen. However, the majority of venues have indicated initial reductions in capital expenditure due to travel restrictions and the resultant impact on visitation.
Nevertheless, with a rationalised cost base, together with its new AStar range of cabinets which are incorporating a newly developed suite of game brands, management believes it is well positioned as customers progressively resume more typical business levels.
The company’s Chief Executive Officer, Lawrence Levy, commented, “While the Covid-19 pandemic hit our industry hard, we moved quickly to protect Ainsworth. We took proactive measures to streamline our overheads and restructure previous financing arrangements to ensure we can endure the current downturn. AGT is well positioned as customers across our major markets look to recover from the effects of the pandemic.”
No guidance has been given for the year ahead.
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