2010 A N N U A L
R E P O R T
QUALITY
INNOVATION
EXCELLENCE
Ainsworth’s passion for product innovation through technology delivers
to it’s players a highly entertaining experience. The A560™ cabinets
and the GamePlus™ game range, couple technology advancement
with creative, unique and industry leading performing game content.
Ainsworth is synonomous for its culture of innovation, quality and
sustainable game performance. The Company’s product range and
customer service are now recognised as global leaders.
The Ainsworth A560™ and GamePlus™ range are a true reflection
of the Company’s core aspirational values, of quality, innovation
and excellence.
KEY DATES
Annual General Meeting:
Wednesday 24 November 2010
Results announcement for six months
ending 31 December 2010:
Wednesday 23 February 2011
Results announcement for
year ending 30th June 2011:
Thursday 25 August 2011
Dates may be subject to change.
NOTICE OF ANNUAL
GENERAL MEETING
Ainsworth Game Technology Limited
ABN 37 068 516 665
Notice is hereby given that the 2010 Annual General Meeting of the
members of Ainsworth Game Technology Limited will be held at:
Bankstown Sports Club
“Georges River Room”
8 Greenfield Parade (Cnr Greenfield Parade and Mona Street)
BANKSTOWN NSW 2200
on Wednesday 24 November 2010
at 10.00am.
01
CONTENTS
Executive Chairman’s Report
Chief Executive Officer’s Report
Operational Review
Information About Shareholders and Noteholders
Corporate Governance Statement
Annual Financial Report
Corporate Directory
PAGE
2
3
5
9
11
18
Inside Back Cover
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
02 EXECUTIVE CHAIRMAN’S REPORT
“The recently secured Nevada licence
will provide the Company with
access to the largest market within
the Americas, once the necessary
equipment approvals are received.”
Dear Shareholder,
I am pleased with the Company’s progress thus far and encouraged to see that the product strategy and licensing initiatives previously
implemented have enabled AGT to produce a financial turnaround marked by a small profit in the second half of FY10.
Further investment in product initiatives should ensure the Company continues to be recognised as a supplier of premium, high
performance gaming products. The Company has successfully established itself as a major supplier within domestic markets and is
endeavouring to increase its presence in key international jurisdictions as the current difficult market conditions recover.
The A560™ machine range, first launched in Macau and subsequently in New South Wales and Queensland, has been very well
received. I congratulate our people involved in the completion of this innovative machine. The initial development concept for this
new gaming machine was commenced in 2007 and has taken 3 ½ years development from initial concept to commercial release.
The recently secured Nevada licence will provide the Company with access to the largest market within the Americas, once the
necessary equipment approvals are received. Continuing investment in gaming licenses, product submissions and the development
of additional hardware derivatives leveraging off the new A560™ product, provide the Company with the opportunity to grow
revenue as we move forward. The Company will continue to reinvest in the business to maintain progress and allow commencement
of shareholder returns.
Difficult economic conditions within international markets, primarily North America, have restricted the Company from capitalising
in the short-term on the significant opportunities available in this very large market. Conversely domestic revenues have grown
strongly through the solid performance of the current suite of products offered and this growth is expected to continue.
I am pleased to have been able to support the Company financially, which has facilitated the timely investment in new markets,
innovative product strategies and research and development, necessary to compete in an evolving and dynamic market place.
Under the leadership of our Chief Executive Officer, Mr Danny Gladstone, the Company has in place a highly experienced executive
team with significant gaming industry expertise, backed by a multi disciplined, skilled and hardworking staff.
I wish to thank the Board, staff and shareholders for their continued support. I believe the Company is well positioned to achieve
profitability once international economic conditions improve.
Len Ainsworth
Executive Chairman
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
CHIEF EXECUTIVE OFFICER’S REPORT
03
“the recent release of the A560™,
which is now approved for sale
in targeted domestic markets,
will assist in continued revenue
growth within FY11.”
Dear Shareholder,
I am pleased to report that the profit of $1.5 million achieved by the Company in the second half of the year ended 30 June 2010
confirmed the success of the reform strategies implemented over previous periods.
The full year loss after income tax of $2.7 million is a significant improvement on the corresponding 2009 year loss of $12.5 million.
I believe AGT is well positioned to continue this turnaround.
The Company continued its recovery in performance during FY10 and I am particularly pleased with the substantial increase achieved in
domestic revenues, arising from the successful product development, improved gross margins and cost control measures to minimise
operating costs.
Sales revenue achieved for FY10 was $69 million, an increase of 53% on the prior period. This increase was primarily due to the success
of innovative product development strategies and market leading game performance in domestic markets. In international markets
further diversification and minimisation of fixed overheads limited the impact of the difficult market conditions generally prevailing.
Domestic revenue contributed 70% of total revenue and resulted in a 110% increase on the prior year. The Australian geographical
segments contributed $7.7 million in profit compared to a loss of $2.3 million in 2009. All domestic markets increased their revenue
contributions, with New South Wales, Victoria and Queensland experiencing significant growth. The growth was attributable to a strong
uplift in sales as a result of the Company’s increased range of innovative product offerings and improved game performance.
I believe the recent release of the A560™, which is now approved for sale in targeted domestic markets, will assist in continued revenue
growth within FY11. The next generation A560™ cabinet range is the result of the Company’s continued commitment to research
and development and provides leading edge game presentation, features and cabinet configurations. Following its launch at the G2E
gaming show in Macau, the A560™ was approved for sale in New South Wales and Queensland in July and September, respectively.
Approvals in other domestic jurisdictions and in selected international jurisdictions with the greatest opportunity for increased revenue
in the short-term, are expected progressively throughout FY11.
Continuing investment in research and development has positioned the Company at the forefront of gaming product technology
and has ensured a pathway for the development of innovative high quality equipment. In addition, improved operating systems and
streamlined development procedures have reduced regulatory approval timeframes and enabled a faster release to market.
Improved gross margins of 54% were achieved, due to a range of factors including, increased selling prices, reductions in product and
overhead costs, efficiencies in the production process and reduced material costs.
Cost control measures implemented by the Company were successful in reducing operating overhead costs, excluding research and
development, to 33% of total revenue, down from 46% in the previous period. This reduction assisted the Company to offset the impact
of the global financial crisis which resulted in lower international revenue.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
04
CHIEF EXECUTIVE OFFICER’S REPORT (continued)
“The Company is now well positioned to
achieve improved financial performance
as we continue to produce and sell to
world markets, innovative next generation
game technology, with increased player
appeal and entertainment value.”
A560™ Launch - Star City Casino, Sydney
Improved working capital and cash management initiatives, including reduction in receivables and inventory holdings, continued to
be a priority and resulted in net cash inflow from operating activities of $10.6 million compared to a $1.6 outflow in the previous year.
The resultant falls in receivables and inventory levels despite the launch of the new A560™ model in July, assisted in achieving the
positive turnaround in operating cashflows.
The granting of a Nevada gaming licence was a major achievement for the Company during the year. Since then the Company has
commenced its initial Nevada product submissions and plans a progressive targeted expansion within the Americas, based on having
an increased local presence and management structure. This will enable the Company to capitalise on the revenue opportunities as
and when market conditions improve.
I would like to thank the Chairman and Directors, the management team, external consultants and staff for their ongoing dedication
and commitment.
The Company is now well positioned to achieve improved financial performance as we continue to produce and sell to world markets,
innovative next generation game technology, with increased player appeal and entertainment value.
Danny Gladstone
Chief Executive Officer / Executive Director
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
OPERATIONAL REVIEW
05
“Continued strong
performance from the
Double Shot™ standalone
range of games in 5c and
1c denominations has
Ainsworth placed as market
leaders in this product range.”
National Sales Manager Peter Black at the Australasian Gaming Expo, Sydney
Sales and Service
Domestic Markets:
The year 2010 saw a continuation of improved product performance and in turn increased sales throughout all domestic markets,
resulting in revenue growth of 110% distributed across all States. Contributions to revenue growth during this period included additional
product diversity and mix, with increased sales personnel coverage.
While the major markets in NSW and Queensland remain largely static due to uncertainty relating to the Productivity Commission’s
recommendations, the Company has continued to grow floor space percentage in both States.
The Players Paradise® linked progressive jackpot system launched at the 2009 Australasian Gaming Expo enhanced mid denomination
market share providing the Company with a market leading Linked Progressive jackpot package. Additional new product lines including
Triple Shot and Super Games created greater product diversity and allowed Ainsworth to gain market share in the low denomination
market, whilst expanding existing product lines of 50 line games.
Continued strong performance from the Double Shot™ standalone range of games in 5c and 1c denominations has Ainsworth placed
as market leaders in this product range.
Throughout the year the increased sales of premium products, specifically Players Paradise® which contributed almost 30% of sales,
further increased the average selling price and gross revenues. Initiatives were undertaken during the year with the introduction of
more flexible purchasing options offered by Ainsworth, specifically related to hardware and software licensing.
The NSW service division again provided strong customer service links with sales by maintaining timely and quality installation of new
machines and an innovative preventative maintenance program. The current maintenance contracts cover in excess of 9,000 machines
in Metropolitan and Regional venues.
International Markets:
International revenue fell 5% to $21.0 million in the FY10 period as a result of continuing difficult financial conditions, particularly in
North America. The Company experienced an increase in revenues from the South American market of 41% and a reduction in the North
America market of 18%.
Revenues within Europe experienced a reduction of $2.3 million, while revenues from Asian and New Zealand markets were similar to those
achieved in the prior period.
The Company has implemented a number of strategies in Europe and other international markets, including the diversification of
distribution channels and minimisation of fixed overheads to limit the impact of the global financial crisis and to explore opportunities
to increase revenue as they arise
The Company is reviewing opportunities within the South American market to establish new distribution relationships thus increasing
sales coverage in that region in order to further increase sales revenue. Potential opportunities relating to the ability to offer machines
on a participation basis are also being explored.
The North American market continues to be impacted by the reduction in capital purchases by venues which have restricted
opportunities for the Company to provide product.
Another key objective is the pursuit of necessary product approvals following the recent granting of further licences in North America.
To further provide the opportunity for increased revenue contributions in this key market the Company plans to build on its currently
established presence by expanding its operations and management structure in the Americas in coming periods.
The Ambassador® SL product continues to perform well. The A560™ will be released in selected North American markets at the upcoming
G2E trade show in Las Vegas, enabling the Company to provide additional hardware configurations and product offerings in those markets.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
06
OPERATIONAL REVIEW (continued)
”The expanding game
library has been further
complemented by the
in-built flexibility of
the A560™ hardware
platform.”
Product Development
The Company continues its commitment to fostering a culture of innovation and quality whilst maintaining a focus on reducing lead
times to market.
Strategic game library expansion continues across a variety of game categories and denominations. In excess of 50 games were added
during FY10 with the emphasis being placed on international markets.
Major achievements were made in domestic markets with new game performance firmly establishing the Company as an industry
leader. Notably the dominant performing games were Players Paradise® and the Double Shot™ standalone double progressives range.
These products performed well in excess of floor average in New South Wales, Queensland and Victoria contributing over 70% of sales
volumes. A key highlight during the year was the launch of the Big Shot Statewide Link progressive in New South Wales in conjunction
with Max Gaming.
In international markets Play 50 Line games and the custom designed 4 level link progressive Players Paradise® were leading performers.
An expanded “World of Jackpots” link progressive strategy will be unveiled at the November G2E in Las Vegas featuring the new wide
screen A560™ platform.
The expanding game library has been further complemented by the in-built flexibility of the A560™ hardware platform. This will allow
the marketing of games in multiple cabinet configurations and provide players with an enhanced level of choice and entertainment
value. Further diversity on the current suite of games is planned for release in the 2011 calendar year.
Research and Development (R&D) / Engineering
The Technical Services Division continues to pursue research and development initiatives which will play an instrumental role in the
Company’s current and future business plans.
The key objectives achieved during FY10 include approval of the newly developed A560™ High Boy dual screen, A560™ Low Boy single
screen and the A560™ video topper in NSW and Queensland.
The recent platform approvals received for the new A560™ gaming machine have been a culmination of significant investment over a
period of three and a half years. Further A560™ product submissions in domestic and selected international markets are planned over
FY11, including associated hardware derivatives which will provide additional product choices and entertainment appeal for customers.
The Company’s research and development initiatives are optimised by leveraging off previously proven technology, while the department’s
extensive experience in gaming design processes ensures the ongoing development of strategic, diverse and innovative gaming platforms.
Processes and procedures on product submissions are regularly monitored and upgraded to facilitate timely approvals by gaming regulators.
Compliance and Licensing
The Company continues to maintain a high level of regulatory compliance based on recognised Australian and international standards
and accreditation.
The Company is approved to conduct business in 20 US states and three provinces in Canada. The highlight for the past year was
the approval by the Nevada Gaming Commission of the Company’s manufacturer’s and distributor’s licence. Other major approvals
were granted by the States of Illinois, Maryland and West Virginia, the Seneca tribe in New York, the Canadian province of Alberta, and
Singapore. In total, the Ainsworth Group has 73 tribal licences (compared to 61 as at 30 June 2009) across California, Connecticut, Florida,
Michigan, Minnesota, New Mexico, New York, North Dakota, Oklahoma, Oregon and Wisconsin.
The Company reinforced its commitment to continuing improvement by successfully renewing and extending its accreditation to June
2013 for its quality management system against the AS/NZ ISO 9001:2008 standard.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
07
“Domestic revenue
represented $48.2 million of
total revenue, a 110% increase
on 2009. All domestic markets
contributed toward the
growth experienced.”
Manufacturing
Further reductions in both raw material inventory and assembly times have been achieved through changes in operational flow through
the Enterprise Resource Planning (ERP) system. This has enabled global sales forecasts to be accurately entered into the Material Resource
Planning (MRP) module, resulting in accurate purchasing and delivery of components.
With the incorporation of the ERP system into our USA operation during the year, a fully configured machine is now managed for both
hardware and firmware through a unique, customised program.
The main emphasis for the year was to further streamline assembly processes including the implementation of supply chain management
strategies for the new A560™ product. The release of the new product in August 2010 was achieved with no interruptions to the current
process and material costs were below expectations.
Additional work will take place in this financial year with the aim of achieving further reductions in material costs, overheads and
assembly times by relocating tooling to local vendors.
Finance
As outlined in the enclosed Annual Financial Report, significant financial performance was achieved in the FY10 period. Despite the loss
of $2.7 million, the full year included the following highlights:
• A profit of $1.5 million was achieved in the second half compared to the $4.2 million loss in the first half of FY10;
• Revenue increased by 53% to $69.3 million for the year ended 30 June 2010;
• Gross margin achieved on sales revenue was 54%, compared to 48% in the corresponding period in 2009;
• Operating expenses were $33.1 million and represented 48% of revenue, compared to 73% of revenue in 2009; and
• Operating cashflows were $10.6 million positive, compared to an outflow of $1.6 million in 2009.
Included in the FY10 result was $0.5 million in net foreign exchange losses compared to gains of $5.3 million in the corresponding
period. Excluding the impact of foreign currency, FY10 resulted in a $15.6 million turnaround on 2009.
Domestic revenue represented $48.2 million of total revenue, a 110% increase on 2009. All domestic markets contributed toward the
growth experienced. The core markets of New South Wales and Queensland represented 85% of the increase achieved. The recent
launch of the A560™ product and the success of previous product development strategies can be expected to maintain the current
performance turnaround and provide sustainable growth in earnings and profitability in the years ahead.
International revenue achieved was $21.0 million compared to $22.2 million for the prior year, a fall of 5%, as a result of the extended
global financial crisis. International revenue represented 30% of total revenue for the year compared to 49% in the prior period.
Gross margins continue to increase with a 54% margin being achieved in FY10 compared to 48% in 2009 and 39% in 2008. This result
was a combination of higher selling prices, reduced material costs and continued overhead efficiencies in production activities.
Operating costs, excluding cost of sales and financing costs, were $33.1 million compared to $33.0 million in the corresponding period
in 2009. Included in operating costs were research and development expenditure of $10.2 million, a decrease of $2.2 million over
the previous year in 2009. This investment in product development programs allows the Group to remain at the forefront of product
innovation in the global gaming market.
The cash inflow from operations for the period under review was $10.6 million compared to an outflow of $1.6 million in the corresponding
period in 2009. The Company continues to closely monitor its working capital requirements and has significantly reduced the extent of
credit offered on sales made in all jurisdictions. Reduction in receivables and inventory holdings have occurred which have assisted in
the turnaround and improvement of cashflows from operating activities.
For further commentary on the results refer to the “Operating and Financial Review” on page 26 of this report.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
08
OPERATIONAL REVIEW (continued)
“Ongoing training and
development initiatives,
along with a comprehensive
performance management
system, support our people
in providing for future growth
and profit performance.”
Human Resources
Ainsworth has in place a team of dedicated executives, management and staff with the necessary skills and industry knowledge to
successfully take the Company forward.
The Company has implemented a range of Human Resources strategies that are closely aligned with our overarching business objectives.
Ongoing training and development initiatives, along with a comprehensive performance management system, support our people in
providing for future growth and profit performance.
The Company is revisiting its incentive program, including short and long term bonus structures, to help ensure retention of key
employees and the creation of a performance culture where achievement is recognised and rewarded.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
INFORMATION ABOUT SHAREHOLDERS AND NOTEHOLDERS
09
Securityholder information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this
report is set out below.
SECURITY HOLDINGS (as at 14 September 2010)
Number of securityholders and securities on issue
The issued shares in the Company were 278,942,304 ordinary shares held by 3,372 shareholders.
The issued convertible notes in the Company were 19,714,717 held by 718 noteholders.
Substantial shareholders / noteholders
The number of shares and convertible notes held by substantial securityholders and their associates are set out below:
Shareholder / Noteholder
Mr LH Ainsworth
Votraint No 1019 Pty Ltd (Braesyde Super Fund A/C)
Number of Convertible Notes
Number of Ordinary Shares
10,385,282
1,898,286
174,044,331*
30,115,528
* Mr LH Ainsworth previously granted share options over a portion of his personal shareholding to all Australian employees, excluding
directors and four key management personnel. Share options outstanding as at 14 September 2010 were 7,346,907 (issued to 124
employees) and remain unexercised.
Voting rights
Ordinary shares
The voting rights attaching to ordinary shares are that on a show of hands every member present in person or by proxy has one vote
and upon a poll, each share shall have one vote.
Convertible notes
The convertible notes do not give their holders any voting rights at shareholders’ meetings.
Options
Option holders have no voting rights.
Distribution of securityholders
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
NUMBER OF CONVERTIBLE NOTE AND EQUITY SECURITYHOLDERS
Convertible Notes
Ordinary Shares
Options
308
250
66
78
16
718
309
1,562
637
763
101
3,372
-
-
-
4
1
5
The number of securityholders holding less than a marketable parcel of ordinary shares and convertible notes respectively is 1,475
(3,102,635 ordinary shares) and 146 (40,698 convertible notes).
On market buy-back
There is no current on market buy-back.
Unquoted equity securities
At 14 September 2010, 420,810 unlisted non-transferable options have been issued to 5 option holders and remain unexercised.
Regulatory considerations affecting shareholders
The Company is subject to a strict regulatory regime in regard to the gaming licences and operations within the gaming industry. It is
necessary for the Company to regulate the holding of shares to protect the businesses of the Company in respect of which a gaming
licence is held. By accepting shares, each potential investor acknowledges that having regard to the gaming laws, in order for the
Company to maintain a gaming licence, the Company must ensure that certain persons do not become or remain a member of the
Company. The Constitution of the Company contains provisions that may require shareholders to provide certain information to the
Company and the Company has powers to require divesture of shares, suspend voting rights and suspend payments of certain amounts
to shareholders.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
10
INFORMATION ABOUT SHAREHOLDERS AND NOTEHOLDERS
(continued)
SECURITY HOLDINGS (as at 14 September 2010) (continued)
Twenty largest shareholders
Name
Mr L H Ainsworth
Votraint No. 1019 Pty Ltd (Braesyde Super Fund A/C)
Associated World Investments Pty Ltd
Writeman Pty Limited (PLA Investment Fund A/C)
Serioso Pty Limited (GGHA Trading Account)
HSBC Custody Nominees (Australia) Limited
Reserve Properties Pty Ltd (NBF Investment A/C)
Coastwide Poker Machine Sales & Services Pty Ltd (R&V Turner Super Fund A/C)
JP Morgan Nominees Australia Ltd
HFT Nominees Pty Ltd (HFT Super Fund A/C)
Mr D Piliouras & Mrs K Piliouras (Energia Super Fund A/C)
Hotel Bondi Pty Ltd (Bondi Unit A/C)
Miss P Smarnkeo
Mr A D Schneller & Mrs K U Schneller (A & K Super Fund A/C)
Custodial Services Limited (Beneficiaries Holding A/C)
Anvil Properties Pty Ltd
Mrs C Larment
Mr D W Larment & Mrs C Larment (D&C Larment Super Fund A/C)
ANZ Nominees Limited (Cash Income A/C)
Mrs C E Coghlan
Total
Twenty largest noteholders
Name
Baclupas Pty Ltd (Valhalla A/C)
Associated World Investments Pty Ltd
Votraint No 1019 Pty Ltd (Braesyde Super Fund A/C)
Citadel Investments Limited
Anvil Properties Pty Ltd
JP Morgan Nominees Australia Limited
ANZ Nominees Limited (Cash Income A/C)
Ms D R Lowes
CJHA Pty Ltd (CJHA Family A/C)
Casola Holdings Pty Ltd (Nordiv Holdings Super Fund A/C)
Mrs M M & Mr V M (Murone Family Super Fund A/C)
Tie Fabrications Pty Ltd (Tie Fabrications Super Fund A/C)
Mr K Arculli
Kjerulf David Pty Limited
Mr R Y (Jarsey Super Fund A/C)
Wing Sing Capital Pty Ltd (Wing Sing Capital A/C)
Boardwalk Pty Ltd
Mr R Burow
Mr D M Fite
Mr W P McBride & Mrs K M McBride
Total
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Number of
ordinary shares held
167,131,473
30,115,528
Percentage
of total
59.92
10.80
6,912,858
4,311,123
3,841,984
3,816,688
2,433,204
1,420,144
1,250,033
1,000,000
838,544
660,000
659,999
650,250
603,179
601,100
600,637
588,645
588,430
550,000
228,573,819
Number of
convertible notes held
8,000,000
2,252,382
1,898,286
800,287
630,000
480,684
405,606
354,254
281,797
230,000
200,000
173,699
153,846
132,900
110,000
108,460
100,000
100,000
80,225
77,927
16,570,353
2.47
1.55
1.38
1.37
0.87
0.51
0.45
0.32
0.30
0.24
0.24
0.23
0.22
0.22
0.22
0.21
0.21
0.20
81.93
Percentage
of total
40.58
11.42
9.63
4.06
3.20
2.44
2.06
1.80
1.43
1.17
1.01
0.88
0.78
0.67
0.56
0.55
0.51
0.51
0.41
0.40
84.07
CORPORATE GOVERNANCE STATEMENT
11
THE COMPANY’S APPROACH TO
CORPORATE GOVERNANCE
The Company’s Board of Directors and management strongly
support the principles of good corporate governance to
create long-term value for shareholders and maintaining the
Company’s strong reputation for integrity. This is particularly
important given the highly regulated nature of the industry
within which the Company operates and is essential for
securing new gaming licences and protection of current
licences.
The following are the Company’s main corporate governance
principles placed in the order as set out in the “Corporate
Governance Principles and Recommendations, 2nd edition”
which was published by the Australian Securities Exchange
(ASX) Corporate Governance Council
in August 2007.
Statements to this corporate governance section have been
referenced to the applicable ASX Recommendations and
compliance is indicated by .
Principle 1
Lay solid foundations for
management and oversight
Role of the Board
The Board’s primary role is the protection and enhancement of long-
term shareholder value. To fulfill this role, the Board is responsible for
the overall corporate governance of the Company, including guiding
its strategic direction, approving and monitoring capital expenditure,
monitoring financial performance, setting
remuneration and
reviewing the performance of the Chief Executive Officer. The Board
is responsible for ensuring appointments, removals and succession
plans for directors and where necessary, seeking shareholder approval.
In addition, the Board is responsible for appointing, removing and
creating succession polices for the Chief Executive Officer and senior
executives. The Board establishes and monitors the achievement
of management’s goals, ensuring the integrity of internal control
and management information systems and approves and monitors
financial and other business related reporting.
In his role as Executive Chairman, Mr LH Ainsworth provides input into
technical design, strategic guidance and overview of the Company
with the responsibility for management of the day to day operations
delegated to the Chief Executive Officer. Responsibilities are delineated
by formal authority delegations.
Board Processes
To assist in the execution of its responsibilities, the Board has
established three Board Sub-Committees namely the Remuneration
and Nomination Committee, the Regulatory and Compliance
Committee and the Audit Committee. Each Committee has a Charter
which includes a more detailed description of their duties and
responsibilities. These Charters are regularly reviewed and approved
by the Board and are available in the Corporate Governance section
of the Company’s website. The Board has also established a framework
for the management of the Company including a system of internal
control, a business risk management process and the establishment of
appropriate ethical standards.
The Board currently holds monthly scheduled meetings throughout
the year and any extraordinary meetings at such other times as may be
necessary to address any specific significant matters that may arise.
The agenda for the Board meetings is prepared in conjunction with
the Chairperson, Chief Executive Officer and the Chief Financial Officer
/ Company Secretary. Standing items include declaration of interests
or conflicts, the Chief Executive Officer’s report, financial reports and
any issues relating to strategic matters, governance and compliance
requirements of the Company. Board papers and submissions are
circulated in advance. Executives are regularly involved in Board
discussions and directors have the opportunity for contact with a
wider group of employees and other stakeholders.
During the year under review, the Board met ten times and the Board
members’ attendance record is disclosed in the table of directors’
meetings on page 19 of this Report.
Performance of Key Executives
The non-executive directors of the Remuneration and Nomination
Committee review the performance of the Company’s Chief
Executive Officer and senior executives who directly report
to the Chief Executive Officer. Their findings are reported to
the Board. A performance management review process is
undertaken which involves self-assessment and review against
previously established goals and objectives set by the Board.
The performance of the Company’s senior executives has been
assessed this year in accordance with this process. Key aspects of
the review process are described below.
The Chief Executive Officer annually presents a self-assessment
to the Non-Executive Directors of the Remuneration and
Nomination Committee, who formally review the performance
of the Chief Executive Officer. The key aspects of the assessment
include financial performance measures, strategic initiatives, staff
and human relations indicators and compliance performance.
The Remuneration and Nomination Committee reports on the
performance of the Chief Executive Officer to the Board.
The Chief Executive Officer evaluates, at least annually, the
performance of the following key executives: Chief Financial
Officer / Company Secretary, General Manager of Technical
Services, General Manager of Manufacturing, Group Compliance
Manager and Division Sales Managers. Both qualitative and
quantitative measures are used that vary according to an
individual’s role. Factors that are taken into consideration when
assessing performance include relative contributions to profit,
how business is conducted, people leadership and adherence to
the Company’s Code of Conduct and compliance policies. These
performance assessments are reviewed by the non-executive
directors of the Remuneration and Nomination Committee and
reported to the Board.
ASX Corporate Governance Council’s Recommendations 1.1, 1.2, 1.3
Principle 2
Structure the Board to add value
Composition of the Board
The names and details of the directors of the Company in office
at the date of signing the Financial Report are set out on page 19
of this Report.
The composition of the Board is evaluated and reviewed to
ensure it provides a broad range of skills, personal qualities,
expertise, ability to exercise independent judgment and diversity
required to discharge its responsibilities. Provision of such skills
and experience is aimed to assist the Company to achieve its
objectives and continual development. The Remuneration and
Nomination Committee assists the Board in regularly evaluating
the effectiveness, size and composition of the Board. It identifies
and evaluates suitability qualified candidates as directors and
makes recommendations to the Board for consideration.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
12 CORPORATE GOVERNANCE STATEMENT (continued)
Principle 2
Structure the Board to add value
(continued)
Composition of the Board
(continued)
An objective of the Company is to ensure that the majority of the
Board should comprise independent, non-executive directors
with no other significant business or other links to the Company.
An independent director is a director who is not a member of the
management (i.e. a non-executive director) team and who:
• holds less than five percent of the voting shares of the Company
and is not an officer of the Company, or otherwise associated,
directly or indirectly, with a shareholder of more than five percent
of the voting shares of the Company;
• has not within the last three years been employed in an executive
capacity by the Company or another group member, or has been
a director after ceasing to hold any such employment;
• within the last three years has not been a principal or employee
of a material* professional adviser or a material* consultant to
the Company or another group member;
•
is not a material* supplier or customer of the Company or another
group member, or an officer of the Company or otherwise
associated, directly or indirectly, with a material* supplier or
customer;
• has no material* contractual relationship with the Company
or another group member other than as a director of the
Company;
• has not served on the Board for a period which could, or could
reasonably be perceived to, materially interfere with the director’s
ability to act in the best interests of the Company; and
•
is free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially
interfere with the director’s ability to act in the best interests of
the Company.
* the Board considers, “material”, in this context to be where any
director-related business relationship has represented, or is likely
in future to represent the lesser of at least 10% of the relevant
segment’s or the director-related business’s revenue. The Board has
considered the nature of the relevant industries’ competition and
the size and nature of each director-related business relationship,
in arriving at this threshold.
The majority of the Board comprises independent non executive
directors with the roles of the Chairperson and Chief Executive
Officer not being exercised by the same individual. Each director
has the right of access to all Company information and to the
Company’s executives. Further, subject to informing the Board, a
director may seek independent professional advice from a suitably
qualified adviser at the Company’s expense. A copy of the advice
received by the director is made available to all other members of
the Board.
The Company has a formal process to educate new directors about
the nature of the business, current issues, the corporate strategy
and the expectations of the Company concerning performance
of directors. Directors also have the opportunity to meet with
management to gain a better understanding of business
operations. Directors are able to access continuing education
opportunities to update and enhance their skills and knowledge.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Board Performance Review
The Chairman of the Board is responsible for evaluating the
performance of the Board, its committees and individual directors.
The performance of the Board is currently under assessment in
accordance with the process described below.
The process for conducting the Board’s performance review
consists of individual interviews with each director. The review
includes an assessment of the individual contribution of each
Board member as well as the performance of the Board as a
whole. The performance criteria that is taken into account include
each director’s contribution to setting the direction, strategy and
financial objectives of the group and monitoring compliance with
regulatory requirements and ethical standards. A written report
discussing the results, issues for discussion and recommendations
is to be presented to the Board and discussed at a Board Meeting.
Each of the Board Committees undertakes a periodic review of their
performance in accordance with their Charters. The results of these
reviews are then presented and discussed at a Board meeting.
Sub-Committees of the Board
1. Audit comittee
Details regarding the composition of the Committee, its role and
responsibilities are provided under Principle 4 of this statement.
2. Remuneration and Nomination Committee
Details regarding the composition of the Committee and its role and
responsibilities are provided under Principle 8 of this statement.
3. Regulatory and Compliance Committee
The members of the Committee during the year are set out
below:
Composition of Regulatory and Compliance Committee
Chairman: Mr SL Wallis AO (Independent Non-Executive Director)
Members: Mr GJ Campbell (Independent Non-Executive Director)
Mr SM Cohn (Independent Member)
Mr JF O’Reilly (Independent Member, appointed as
member on 18 November 2009)
Mr DE Gladstone (Executive Director / Chief Executive Officer)
Due to the highly regulated nature of the gaming industry within
which the Company operates, the securing of new gaming
licences and protection of current licences is an on-going
process which is of great importance to the Company. The
Regulatory and Compliance Committee Charter, which
is
reviewed regularly and has been approved by the Board, outlines
responsibilities to monitor, review, advise and assist the Board
to ensure all compliance related matters and procedures have
been established and are operating effectively. The Charter is
available on the website of the Company. A majority of members
are independent, including two non-executive directors and the
chairman is not the Chairman of the Board.
The Regulatory and Compliance Committee monitors probity
related matters, technical compliance issues and compliance
conduct and issues, systems and procedural requirements to
ensure that the Company maintains a high standard of compliance
with all of its gaming regulatory and licence obligations. In
addition, the Regulatory and Compliance Committee advises
and makes recommendations to the Board regarding regulatory
compliance matters, including the suitability of key employees
and other persons or entities with whom the Company has or
intends to have an association or affiliation, in line with gaming
regulations.
13
The Group Compliance Manager and the Technical Compliance
Manager are
invited to the Regulatory and Compliance
Committee meetings to present and discuss their reports and
recommendations. The Regulatory and Compliance Committee
met five times during the year and the directors’ attendance
record is disclosed in the table of directors’ meetings on page
19 of this Report. Due to the importance of the regulatory
environment within which the Company operates, and to ensure
the commitment by the Board within this important area, the
Committee is scheduled to meet at least four times each financial
year and as required to address any specific issues that may arise.
The main responsibilities of the Regulatory and Compliance
Committee are to:
• oversees activities of the compliance, licencing and technical
compliance functions;
• regularly review the application of compliance to ensure that
the Company meets all requirements outlined in its Compliance
Policy;
• deal with and investigate any breaches, complaints and
derogatory information of which it becomes aware;
• provide assistance and advice to the Board on matters
pertaining to the Company’s continuing suitability to obtain
and maintain gaming licences;
• review operational policies and recommendations relating to
compliance issues; and
• perform, at least annually, a performance evaluation of the
Committee members to ensure delivery on its Charter and
continually enhance the Committee’s contribution to the
Board.
The Regulatory and Compliance Committee may seek
independent professional advice, at the Company’s expense,
in carrying out these duties, subject to informing the Board.
The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities and is provided with
the right to direct access to any person within the Company.
ASX Corporate Governance Council’s Recommendations
2.1, 2.3, 2.4, 2.5, 2.6
Non-compliance to the ASX Corporate Governance Council’s
Recommendations is as below:
Principle 2.2
The chair
should be an
independent
director
Given that the Chairman, Mr LH Ainsworth,
is a substantial shareholder of the Company,
he is not considered to be an independent
director. The Board intends to consider the
succession of the Chairperson when trading
performance of the Company is improved.
Mr SL Wallis AO has been appointed as the
lead independent director to ensure that any
conflicts which may arise are dealt with in line
with ASX Corporate Governance Principles
and Recommendations.
Principle 3
Promote ethical and responsible
decision-making
Ethical Standards
All directors, managers and employees are expected to act with
complete integrity and objectivity in all their activities related to
the Company, striving at all times to enhance the reputation and
performance of the Company. Every employee has a nominated
supervisor to whom they may refer any issues or complaints
arising from their employment. To further promote a culture
within the Company where ethical standards are maintained in
accordance with Company policy, the Company has established
a “Whistleblower” Policy which ensures protection of individuals
reporting any incidents of misconduct or unethical behaviour.
Conflict of Interest
Directors must keep the Board advised, on an on-going basis,
of any interest that could potentially conflict with those of the
Company. The Board has developed procedures to ensure that
directors disclose any potential conflicts of interest.
Where the Board believes that a significant conflict exists for a director
on a Board matter, the director concerned does not participate in any
discussion and voting on the applicable matter and, if considered
appropriate, the director is requested not to be present whilst the
matter is considered. Details of director related transactions with the
Company are set out in Note 33 in the financial statements.
Code of Conduct
The Company has established a Code of Conduct that embraces
high standards of personal and corporate conduct. Each director,
manager and employee has been advised that they must comply
with this Code. The full Code may be viewed on the Company’s
website and it requires all directors and officers to:
• conduct all dealings with internal and external stakeholders in
a truthful, honest and trustworthy manner;
• value and maintain professionalism;
• treat all persons with whom they interact, with respect and
dignity;
• respect the rights of individuals;
• act towards others without discrimination;
• comply with the Company’s internal policies and procedures;
• report unethical behaviour or wrongdoing;
• use authority in a fair and unbiased way;
• comply with all applicable laws, regulations and licensing
conditions; and
• not knowingly make a misleading statement.
A copy of the Code of Conduct is made available to all staff. The
Code is reviewed regularly by the Board and processes are in place
to communicate any amendments to the Code to all staff. New
employees are issued with an employee handbook containing
the Code of Conduct and prior to commencing their respective
employment, they are required to certify that they have read and
understood the requirements contained within it. The Company
has established procedures to monitor compliance with the Code
of Conduct.
In addition to the Code of Conduct and the Whistleblower policy,
the Company also has policies which govern:
• Occupational Health and Safety;
• Dealing in Company’s securities; and
• Equal Employment Opportunity.
All employees are required to complete the harassment, discrimination
and compliance training conducted by the Company.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
14 CORPORATE GOVERNANCE STATEMENT (continued)
Principle 3
Promote ethical and responsible
decision-making
(continued)
Trading in Company Securities by Directors and Employees
The Company has in place a policy which outlines the rules
that directors, senior executives and all employees must follow
when dealing in the Company’s securities. The policy also details
the insider trading provision of the Corporations Act 2001 and is
available on the website of the Company.
The key elements of the Company’s policy regarding trading in
Company securities by directors and employees are:
• that directors, senior executives and employees may acquire
shares in the Company, but are prohibited from dealing in
Company shares or exercising options:
- whilst in possession of information, which if disclosed
publicly, would be likely to materially affect the market price
or value of those securities; and
- at any time outside a Window Period*, unless there are
exceptional circumstances and in accordance with the
procedure as laid down in the policy.
• to raise the awareness of legal prohibitions on trading, including
transactions involving associates, colleagues and external
advisers;
• to require details to be provided of any intended trading in the
Company’s shares as well as subsequent confirmation of the
trade; and
• to
identify the process for unusual circumstances where
discretions may be exercised in cases such as financial hardship.
* Window Period:
(a) commence on the day following the release of the
Company’s Half-Yearly and Preliminary Final Results and
Dividend announcements for a 30 day period;
(b) commence on the day following the Annual General Meeting
for a 30 day period; and
(c) during the offer or application period specified in a prospectus
or supplementary prospectus issued for a new share issue.
The policy stipulates a number of notification and approval
procedures that must be carried out before any director or
employee can deal in securities of the Company. The Company
has in place internal mechanisms to review compliance with the
policy.
ASX Corporate Governance Council’s Recommendations
3.1, 3.2, 3.3
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Principle 4
Safeguard integrity in
financial reporting
Audit Committee
The members of the Committee during the year are set out below:
Composition of the Audit Committee
Chairman: Mr GJ Campbell (Independent Non-Executive Director)
Member: Mr SL Wallis AO (Independent Non-Executive Director)
Mr MB Yates (Independent Non-Executive Director,
appointed as member on 15 December 2009)
The Audit Committee has a documented Charter, which is
regularly reviewed and approved by the Board. All members are
currently independent non-executive directors. The chairman of
the Committee is not the Chairman of the Board. The company has
adopted the ASX Corporate Governance Council’s recommendation
4.2 during the year whereby the Audit Committee now comprises
of three members following the appointment of Mr MB Yates.
The Committee advises on the establishment and maintenance
of a framework of internal financial control for the management
of the Company.
The external auditors, the Chief Executive Officer and Chief Financial
Officer / Company Secretary, are invited to attend Audit Committee
meetings at the discretion of the Committee. The Committee met
two times during the year and Committee members’ attendance
record is disclosed in the table of directors’ meetings on page 19 of
this Report. The external auditor met with the Audit Committee and
the Board during the year, without management being present.
The Chief Executive Officer and the Chief Financial Officer /
Company Secretary declared in writing to the Board that the
Company’s financial reports for the year ended 30 June 2010
present a true and fair view, in all material respects, of the Company’s
financial condition and operational results and are in accordance
with relevant accounting standards. This statement is required for
the full year and half year reporting periods.
The main responsibilities of the Audit Committee are to:
• assist the Board to discharge its fiduciary responsibilities with
regard to the Company’s accounting, control and reporting
practices by monitoring the risk and internal control environment
and management over corporate assets;
• review internal controls and any changes thereto approved and
submitted by the Company’s Chief Financial Officer / Company
Secretary;
• provide assurance regarding the quality and reliability of financial
information used by the Board;
• oversee the activities of the internal audit function and external
audit staff of the Company and to review the Company’s risk
management policies and internal control processes;
• review and recommend to the Board the adoption of the
Company’s half year and annual financial statements;
•
liaise with and review the performance of the external auditor;
• consider whether non-audit services provided by the external
auditor are consistent with maintaining the external auditors’
independence; and
• perform, at least annually, a performance evaluation of the
Committee members to ensure delivery on its Charter and
continually enhance the Committee’s contribution to the Board.
15
The Audit Committee reviews the performance of the external
auditors on an annual basis and meets with them during the
year to:
• discuss the external audit and internal audit plan;
•
identify any significant changes in structure, operations, internal
controls or accounting policies likely to impact the financial
statements;
• review the fees proposed for the audit work to be performed;
• review the half-year and preliminary final reports and any
significant adjustments required as a result of the auditor’s
findings prior to lodgment with the ASX;
• review the results and findings of the auditor and monitor the
implementation of any recommendations made; and
• organize, review and report as required on any special reviews
or investigations deemed necessary by the Board subject to the
engagement not impairing audit independence.
The Audit Committee’s Charter is available on the Company’s
website. The Audit Committee also considers the selection and
appointment of external auditors and the rotation of external
audit engagement partners.
ASX Corporate Governance Council’s Recommendations
4.1, 4.2, 4.3, 4.4
Principle 5
Make timely and balanced
disclosure
The Company is listed on the ASX and is committed to ensuring
that information which is expected to have a material effect of the
price or value of its shares is notified to the ASX in a timely and
balanced manner, with regard to the Corporations Act 2001 and
ASX Listing Rules outlining continuous disclosure requirements for
listed companies.
All senior executives must follow a process which involves
monitoring all areas of the Company’s internal and external
environment to identify and communicate significant matters in a
timely manner to the Chief Financial Officer / Company Secretary.
The Chief Executive Officer and Chief Financial Officer / Company
Secretary are responsible for determining whether matters are
required to be disclosed in accordance with the above continuous
disclosure requirements and for informing the Board accordingly.
The Chief Financial Officer / Company Secretary is responsible
for co-ordinating disclosure to the ASX and ensuring that such
information is not released to any person until the ASX has
confirmed its release to the market. Such matters are advised to
the ASX on the day they are identified as being material.
ASX Corporate Governance Council’s Recommendations
5.1, 5.2
Principle 6
Respect the rights of shareholders
The Company is committed to keeping shareholders fully informed
of significant developments and activities of the Company. This
commitment is fulfilled as follows:
• all announcements made to the market and related information
(including
information provided to
analysts or the media during briefings), are placed on the
Company’s website after lodgment with the ASX;
investor presentations,
• the Annual Report (including relevant information about the
operations of the Company during the year and changes in
the state of affairs) is distributed to all shareholders (unless
a shareholder has specifically requested not to receive the
document);
• the half yearly report contains summarised financial information
and a review of the operations of the Company during the
period. The half year reviewed financial report is lodged with the
Australian Securities and Investments Commission and the ASX
and sent to any shareholder who requests it;
• the full texts of notices of meetings and associated explanatory
material are placed on the Company’s website;
• the Board encourages full participation of shareholders at the
AGM, to ensure a high level of accountability and identification
with the Company’s strategy and goals;
•
important issues are presented to shareholders as single
resolutions;
• shareholders are requested to vote on the appointment and
aggregate remuneration of directors as well as changes to the
Constitution. The Constitution is available on the website of the
Company and copies are also given to shareholders who request
for the same; and
• the external auditor is requested to attend the AGM to answer
any questions concerning the audit and the content of the
Auditor’s report.
ASX Corporate Governance Council’s Recommendations
6.1, 6.2
Principle 7
Recognise and manage risk
Oversight of the risk management system
The Board oversees the establishment, implementation and annual
review of the Company’s risk management system. Management
has established and implemented the risk management system
for identifying, assessing, monitoring and managing operational,
financial reporting, and compliance risks for the Company. The
Chief Executive Officer and the Chief Financial Officer / Company
Secretary have declared, in writing to the Board, that the financial
reporting risk management and associated compliance and
controls have been assessed and found to be operating efficiently
and effectively. All risk assessments covered the whole financial
year and the period up to the signing of the annual financial
report for all material operations in the Company and material
associates.
Risk profile and the Audit Committee
The Audit Committee reports to the Board on the status of risks
through integrated risk management processes and programs
aimed at ensuring that risks are
identified, assessed and
appropriately managed.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
16 CORPORATE GOVERNANCE STATEMENT (continued)
Principle 7
Recognise and manage risk
(continued)
Risk profile and the Audit Committee
(continued)
Each business operational unit is responsible and accountable for
implementing and managing the standards required by the risk
management system.
The major risks that the Company faces are allocated to individual
executives and are reviewed to determine progress and to provide
updates as to the individual status and to ensure the identification
of any further risks.
Risk management and compliance and control
The Company has implemented a compliance program which
complies with the Australian Standard for Compliance Programs
AS 3806. This Standard was prepared by the Standards Australia
Committee following a request by the Australian Competition and
Consumer Commission and details the essential elements of an
effective compliance program. The Standard provides principles
for the development, implementation and maintenance of an
effective compliance program, whilst emphasising the need for
continuous improvement. The use of these principles will enable
the Company to identify risks and to develop processes to ensure
compliance with relevant laws and regulations, including gaming
regulatory and licence obligations.
The Company was initially accredited in 2007 and following a
re-certification audit of the Company’s quality management
system
in June 2010, this accreditation was renewed for
a further three year period. This accreditation confirmed
the Company’s compliance with the AS/NZ ISO 9001:2008
standard Quality Management Systems-Requirements, published
by the
International Organisation for Standardisation (ISO).
Further to receiving the above accreditations, the Company
has demonstrated its ongoing commitment to continuous
improvement by successfully maintaining its quality accreditation
through regular independent surveillance audits of its quality
management system during the year.
In addition to the above, the Company continually reviews internal
controls and operating procedures, to enable compliance with
Gaming Machine National Standards and the Company’s Control
System Manual.
To ensure that these standards are maintained, there are a number of
internal reporting measures including monthly Compliance Reports
from all department managers and monthly Continuous Disclosure
Reports from all senior executives. The Regulatory and Compliance
Committee receives details from the above reports and reviews the
Company’s reporting and processes on all these matters.
The Board is responsible for the overall internal control framework,
but recognises that no cost effective internal control system will
preclude all errors and irregularities. The Board’s policy on internal
control is continually under review to ensure it keeps pace with
internal and external changes. The Board oversees the Company’s
internal compliance and control systems, including:
Operating unit controls - Operating units confirm compliance
with financial controls and procedures, including information
systems controls detailed in procedures manuals;
Functional specialty reporting - Key areas subject to regular
reporting to the Board include Treasury and Risk Management,
Environmental, Legal and Insurance matters; and
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Investment appraisal - Guidelines for capital expenditure include
annual budgets, detailed appraisal and review procedures, levels
of authority and due diligence requirements where businesses
are being acquired or divested.
Comprehensive practices have been established to ensure:
• capital expenditure and revenue commitments above a certain
size, obtain prior Board approval;
• occupational health and safety standards and management
systems are monitored and reviewed to achieve high standards
of performance and compliance with regulations;
• business transactions are properly authorised and executed;
• the quality and integrity of personnel is maintained (see below);
• financial reporting accuracy and compliance with the financial
reporting regulatory framework (see below); and
• environmental regulation compliance (see below).
Quality and integrity of personnel
Written confirmation of compliance with policies of the
Company is obtained from all operating units. Formal appraisals
are conducted at least annually for all employees. Training and
development and appropriate remuneration and incentives
with regular performance reviews create an environment of co-
operation and constructive dialogue with employees and senior
management. A formal succession plan has been established
to ensure competent and knowledgeable employees fill senior
positions, as and when retirements or resignations occur.
Financial reporting
The Chief Executive Officer and the Chief Financial Officer /
Company Secretary have declared, in writing to the Board, that
the Company’s financial reports are founded on a sound system
of risk management and internal compliance and control.
Monthly actual results are reported against budgets approved
by the directors and revised forecasts for the year are prepared
regularly.
Environmental regulation
The Company’s operations are not subject to significant
environmental regulations under either Commonwealth or State
legislation. The Board believes that the Company has adequate
systems in place for the management of its environmental
requirements and is not aware of any breaches of those
environmental requirements as they apply to the Company.
Assessment of effectiveness of risk management
Internal audit
To further assist the Board in ensuring compliance with these
internal controls and risk management programs, the Company
allocated the responsibilities of the Internal Audit function to a
key employee within the Company’s compliance department.
This role is to oversee and regularly review the effectiveness of the
abovementioned compliance and control systems and conduct
regular audits against the International and Australian Standards
as well as against all operating policies and procedures. The Audit
Committee is responsible for approving the internal audit plan to
be undertaken during the year and for the scope of the work to
be performed.
ASX Corporate Governance Council’s Recommendations
7.1,7.2,7.3,7.4
Principle 8
Remunerate fairly and responsibly
Remuneration and Nomination Committee
The members of the Committee during the year are set out below:
Composition of the Remuneration and
Nomination Committee
Chairman: Mr SL Wallis AO (Independent Non-Executive Director)
Members: Mr GJ Campbell (Independent Non-Executive Director)
Mr ML Ludski (Chief Financial Officer / Company Secretary)
The Remuneration and Nomination Committee has a documented
Charter which is regularly reviewed and approved by the Board.
A majority of members are independent non-executive directors
and the chairman of the Committee is not the Chairman of the
Board.
The Chief Executive Officer and Human Resources/Payroll
Manager are invited to attend the Remuneration and Nomination
Committee meetings, as required, to discuss senior executives’
performance and remuneration packages. The Chief Executive
Officer and Chief Financial Officer / Company Secretary are not
involved in matters pertaining to their own remuneration. During
the year under review, the Committee met three times and the
directors’ attendance record is disclosed in the table of directors’
meetings on page 19 of this Report.
The main responsibilities of the Remuneration and Nomination
Committee are to:
• review the composition of the Board and make evaluations and
recommendations thereon;
•
identify and evaluate potential candidates as non-executive
directors and report findings to the Board;
• recommend the selection, appointment, induction process and
succession planning process for the Chief Executive Officer, the
Chief Financial Officer / Company Secretary and other senior
executives;
• recommend to the Board ways in which the skills, experience
and expertise levels of existing directors and senior executives
can be enhanced and developed;
• conducts an annual review of performance of the Chief Executive
Officer, the Chief Financial Officer / Company Secretary and the
senior executives reporting directly to them, and report findings
to the Board;
• review and make
the Board on
recommendations
remuneration packages and incentive policies applicable to
the Chief Executive Officer, Chief Financial Officer / Company
Secretary, senior executives and directors themselves; and
to
• perform, at least annually, a performance evaluation of the
Committee members to ensure delivery on its Charter and
continually enhance the Committee’s contribution to the Board.
Further details of the Remuneration and Nomination Committee’s
responsibilities are outlined in its Charter, which is available on the
Company’s website. The policy and procedure for appointment of
directors also forms a part of the Committee’s Charter.
17
Remuneration Report
The Remuneration Report is set out on pages 20 to 25 of this
Report.
Remuneration policies
Remuneration levels for key personnel of the Company are
competitively set to attract and retain appropriately qualified
and experienced executives and directors. The Remuneration
and Nomination Committee obtains independent advice on
the appropriateness of remuneration packages, given trends in
comparative companies both locally and internationally.
The remuneration structures explained below are designed to
attract suitably qualified candidates, reward the achievement
of strategic objectives and achieve the broader outcome of
creation of value for shareholders. The remuneration structures
take into account:
• the capability and experience of key management personnel;
• management performance against key performance indicators
the Company’s
individual contributions
to
(KPIs) and
performance;
• the Company’s performance includes;
- revenue and earnings; and
- growth in share price and delivering increased returns to
shareholders.
Remuneration packages include a mix of fixed and variable
remuneration and short-term and long-term performance-based
incentives. In addition to salaries, the Company also provides non-
cash benefits to its key management personnel and contributes
to defined contribution superannuation plans on their behalf.
Senior executives may receive bonuses based on the achievement
of specific performance hurdles. The performance hurdles are
a blend of the Company’s and each relevant segment’s result.
In the year under review, no incentive payments were made as
Company performance did not reach the minimum threshold
levels. The Company does not have any profit-share plan.
Total remuneration for all non-executive directors, last voted
upon by shareholders is not to exceed $500,000 per annum.
The base fee for individual non-executive directors for the
financial year under review was $70,000 per annum, excluding
superannuation and covers all main Board activities. Membership
of Committees is remunerated in addition to the base fee as
outlined in the Remuneration Report on page 21 of this Report.
Non-executive directors do not receive any performance related
remuneration or bonuses or retirement benefits other than
statutory superannuation payments.
ASX Corporate Governance Council’s Recommendations
8.1, 8.2, 8.3
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
18 Annual Financial Report
For the year ended 30 June 2010
CONTENTS
PAGE
Directors’ report. ...........................................................................................................................................................................................19
Consolidated statement of comprehensive income ............................................................................................................31
Consolidated statement of changes in equity ..........................................................................................................................32
Consolidated statement of financial position ...........................................................................................................................34
Consolidated statement of cash flows ...........................................................................................................................................35
Notes to the financial statements .....................................................................................................................................................36
Directors’ declaration .................................................................................................................................................................................78
Independent auditor’s report ..............................................................................................................................................................79
Lead auditor’s independence declaration ...................................................................................................................................80
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
DIRECTORS’ REPORT
For the year ended 30 June 2010
19
The directors present their report together with the financial report of Ainsworth Game Technology Limited (‘the Company’) and of the Group
(‘the Company and its subsidiaries and any interest in associates’) for the financial year ended 30 June 2010 and the auditor’s report thereon.
1. Directors
The directors of the Company at any time during or since the end of the financial year are:
Name, qualifications and
independence status
Current
Mr Leonard Hastings Ainsworth
Executive Chairman
Age Experience, special responsibilities and other directorships
87 yrs • Fellow of the Institute of Company Directors in Australia and the Australian Institute of Management
• Fifty-six years gaming industry experience
• Founder and former Managing Director of Aristocrat
• Life member – Clubs N.S.W.
•
• G2E Asia Gaming Visionary Award Recipient in June 2010
• Director and Chairperson since 1995 – Executive Chairperson since 2003
Inducted into the Australian Gaming Hall of Fame in 1994 and U.S Gaming Hall of Fame in 1995
Mr Stewart Laurence Wallis AO, BCE (Hon),
FIE Aust
Lead Independent
Non-Executive Director
76 yrs • Fellow of the Institute of Engineers, Australia
• Advisory Board member of St Hilliers Contracting Pty Ltd
• Former Chief Executive and Director of Leighton Holdings Limited
• Director since 2002
• Chairperson of Remuneration and Nomination Committee and Regulatory and Compliance Committee
• Member of Audit Committee
Mr Graeme John Campbell
Independent
Non-Executive Director
53 yrs • Graeme has specialised in the area of liquor and hospitality for over 27 years in corporate
consultancy services with particular emphasis on hotels and registered clubs
• Chairman of Harness Racing NSW
• Director of Central Coast Stadium
• Director of Blue Pyrenees Wines
• Chairman of Operational Committee of Panthers Group/ING Entertainment Fund Joint Venture
• Director since 2007
• Chairperson of Audit Committee
• Member of Regulatory and Compliance Committee and Remuneration and Nomination Committee
Mr Michael Bruce Yates
Independent
Non-Executive Director
56 yrs • Michael has extensive commercial and corporate law experience in a career spanning over 30 years
• He is a former senior corporate partner of Sydney Law practices Holding Redlich and Dunhill
Madden Butler and has acted for a number of clients involved in the gaming industry.
• Appointed Director on 15 December 2009
• Member of Audit Committee from appointment
Mr Daniel Eric Gladstone
Executive Director
and Chief Executive Officer
55 yrs • Danny has held senior positions within the gaming industry over a successful career spaning 36 years
Inducted into the Club Managers Association Australia Hall of Fame in 2000
•
• Chief Executive Officer since 2007
• Appointed Executive Director on 25 February 2010
• Member of Regulatory and Compliance Committee
2. Company secretary
Mr Mark L Ludski has held the position of Company Secretary since 2000. Mr ML Ludski previously held the role of Finance Manager
with another listed public company for ten years and prior to that held successive positions in two leading accounting firms where he
was employed in each of their respective audit, taxation and business advisory divisions.
Mr ML Ludski is a Chartered Accountant holding a Bachelor of Business degree, majoring in accounting and sub-majoring in economics.
3. Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors
of the Company during the financial year are:
Director
Current
Mr LH Ainsworth
Mr SL Wallis
Mr GJ Campbell
Mr MB Yates
Mr DE Gladstone
Board Meetings
Audit Committee
Meetings
Remuneration
& Nomination
Committee Meetings
Regulatory
& Compliance
Committee Meetings
A
10
10
10
6
4
B
10
10
10
6
4
A
-
2
2
1
-
B
-
2
2
1
-
A
-
3
3
-
-
B
-
3
3
-
-
A
-
5
5
-
1
B
-
5
5
-
2
A - Number of meetings attended
B - Number of meetings held during the time the director held office during the year
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
20 DIRECTORS’ REPORT (continued)
For the year ended 30 June 2010
4. Remuneration report
4.1 Principles of compensation - audited
Remuneration is referred to as compensation throughout this report.
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company
and the Group, including directors of the Company and other executives. Key management personnel comprise the directors of the
Company and executives for the Company and the Group including the five most highly remunerated Company and Group executives.
Compensation levels for key management personnel and secretaries of the Company, and key management personnel of the Group
are competitively set to attract and retain appropriately qualified and experienced directors and executives. The Remuneration and
Nomination Committee reviews market surveys on the appropriateness of compensation packages of both the Company and the Group
given trends in comparative companies both locally and internationally and the objectives of the Company’s compensation strategy.
The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:
• the capability and experience of the key management personnel;
• the key management personnel’s performance against key performance indicators (KPI’s) and individual contributions to the Group’s
performance;
• the Group’s performance includes:
- revenue and earnings; and
- growth in share price and delivering returns on shareholder wealth.
Compensation packages include a mix of fixed and variable compensation and short-term and long-term performance-based incentives.
In addition to their salaries, the Group also provides non-cash benefits to its key management personnel, and contributes to post-
employment defined contribution superannuation plans on their behalf.
Fixed compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to
employee benefits including motor vehicles), as well as employer contributions to superannuation funds.
Compensation levels are reviewed annually by the Remuneration and Nomination Committee through a process that considers
individual, segment and overall performance of the Group. In addition market surveys are obtained to provide further analysis so as to
ensure the directors’ and senior executives’ compensation is competitive in the market place. A senior executive’s compensation is also
reviewed on promotion.
Performance-linked compensation
Performance linked compensation includes both short-term and long-term incentives and is designed to reward key management
personnel for meeting or exceeding their financial and personal objectives. The short-term incentive (STI) is an ‘at risk’ bonus provided in
the form of cash, while the long-term incentive (LTI) is provided as options over ordinary shares of the Company under the rules of the
Employee Share Option Plan (see note 24 to financial statements).
In addition to their salaries, selected key sales management personnel receive commission on sales within their specific business
segments as part of their service contracts.
Short-term incentive bonus
Each year the Remuneration and Nomination Committee sets the Key Performance Indicators (KPIs) for the key management personnel.
The KPIs generally include measures relating to the Group, the relevant segment, and the individual, and include financial, people,
customer, strategy and risk measures. The measures are chosen as they directly align the individual’s reward to the KPIs of the Group
and to its strategy and performance.
The financial performance objective is ‘profit after tax’ compared to budgeted amounts which is designed to reward key management
personnel for the Group’s performance and not simply the achievement of individual segment results. The non-financial objectives vary
with position and responsibility and include measures such as achieving strategic outcomes, safety and environmental performance,
customer satisfaction and staff development.
At the end of the financial year the Remuneration and Nomination Committee assess the actual performance of the Group, the relevant
segment and individual against the KPI’s set at the beginning of the financial year.
The Remuneration and Nomination Committee recommends the cash incentive to be paid to the individuals for approval by the board.
The method of assessment was chosen as it provides the Committee with an objective assessment of the individual’s performance.
Long-term incentive
Options are issued under the Employee Share Option Plan (ESOP) (made in accordance with thresholds set in plans approved by
shareholders at the 2001 Annual General Meeting (AGM)) and it provides for key management personnel to receive options over ordinary
shares for no consideration. The ability to exercise the options is conditional on the Group achieving certain performance hurdles.
Performance hurdles are based on share price growth and are only exercisable once the Company’s share price achieves levels ranging
from 100 – 300% of the exercise price established when the share options are granted.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
21
In assessing whether the performance hurdles have been met, the Remuneration and Nomination Committee receives independent
data from the Australian Securities Exchange (ASX) which provides information required to assess Volume Weighted Average Price
(VWAP).
Short-term and long-term incentive structure
The Remuneration and Nomination Committee considers that the above performance-linked remuneration structure is appropriate because
the key management personnel have the ability to reach a level of performance which qualifies them for the maximum bonus and options.
In the current year the Group did not reach its targets and has resulted in no short-term incentives being recommended for payment.
Other benefits
Key management personnel can receive additional benefits such as non-monetary benefits, as part of the terms and conditions of their
appointment. Non-cash benefits typically include payment of club memberships and motor vehicles. The Company pays fringe benefits
tax on these benefits.
Service contracts
It is the Group’s policy that service contracts for key management personnel are unlimited in term but capable of termination by either
party on 3 months notice and that the Group retains the right to terminate the contracts immediately, by making payment equal to 3
months pay in lieu of notice.
The Group has entered into service contracts with each key management person that provide for the payment of benefits where the
contract is terminated by the Group. The key management persons are also entitled to receive on termination of employment their
statutory entitlements of accrued annual and long service leave, together with any superannuation benefits.
The service contract outlines the components of remuneration paid to the key management personnel but does not prescribe how
remuneration levels are modified year to year. Remuneration levels are reviewed each year to take into account cost-of-living changes,
any change in the scope of the role performed by the senior executive, retention of key personnel and any changes required to meet
the principles of the remuneration policy.
Mr Danny Gladstone, Executive Director and Chief Executive Officer (CEO), has a contract of employment dated 5 February 2007 with the
Company. The contract specifies the duties and obligations to be fulfilled by the CEO and provides that the board and CEO will early in
each financial year, consult and agree objectives for achievement during that year.
The CEO has no entitlement to termination payment in the event of removal for misconduct as specified in his service contract.
Refer to note 28 of the financial statements for details on the financial impact in future periods resulting from the Group’s commitments
arising from non-cancellable contracts for services with key management personnel.
Non-executive directors
The fees paid to non-executive directors reflect the demands and responsibilities associated with their roles and the global nature of
the operations within the highly regulated environment within which the Company operates. Fees incorporate an allowance for the
onerous probity requirements placed on non-executive directors by regulators of the global jurisdictions in which the Company is or
proposes to operate in.
The Company’s non-executive directors only receive fees, including superannuation, for their services as compensation. In addition to
these fees the cost of reasonable expenses which are reimbursed as incurred.
Non-executive directors do not currently receive or participate in any performance related remuneration. The level of fees paid to non-
executive directors has been established based on the demands and responsibilities of their positions and have been set with reference
to fees paid to other non-executive directors of comparable companies.
Current fees for directors effective 1 July 2006, excluding superannuation, are set out below. The Executive Chairman and CEO do not
receive any additional fees for undertaking Board or Committee responsibilities. Other non-executive directors who also chair or are a
member of a committee receive a supplementary fee in addition to their annual remuneration.
POSITION
Australian resident non-executive director
Chair of Audit Committee
Chair of Regulatory and Compliance Committee
Chair of Remuneration and Nomination Committee
Member of Audit Committee
Member of Regulatory and Compliance Committee
Member of Remuneration and Nomination Committee
$
(per annum)
70,000
10,000
10,000
6,000
6,000
6,000
4,000
Total remuneration for all non-executive directors, last voted upon by shareholders at the 2000 AGM, is not to exceed $500,000
per annum.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
22
)
d
e
u
n
i
t
n
o
c
(
T
R
O
P
E
R
’
S
R
O
T
C
E
R
D
I
0
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
)
d
e
u
n
i
t
n
o
c
(
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
R
.
4
i
e
h
t
e
v
e
c
e
r
o
h
w
s
e
v
i
t
u
c
e
x
e
p
u
o
r
G
l
t
n
a
v
e
e
r
d
n
a
s
e
v
i
t
u
c
e
x
e
y
n
a
p
m
o
C
d
e
m
a
n
e
v
i
f
e
h
t
f
o
h
c
a
e
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
d
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
f
l
o
t
n
e
m
e
e
r
o
a
m
h
c
a
e
f
j
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
d
e
t
i
d
u
a
–
)
p
u
o
r
G
d
n
a
y
n
a
p
m
o
C
(
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
e
c
ffi
o
e
v
i
t
u
c
e
x
e
d
n
a
’
s
r
o
t
c
e
r
i
D
2
4
.
s
n
o
i
t
p
o
f
o
e
u
l
a
V
f
o
n
o
i
t
r
o
p
o
r
p
s
a
n
o
i
t
a
r
e
n
u
m
e
r
%
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
f
o
d
e
t
a
l
e
r
e
c
n
a
m
r
o
f
r
e
p
%
l
a
t
o
T
$
d
e
s
a
b
-
e
r
a
h
S
s
t
n
e
m
y
a
p
d
n
a
s
n
o
i
t
p
O
)
B
(
s
t
h
g
i
r
$
n
o
i
t
a
n
m
r
e
T
i
n
o
i
t
a
u
n
n
a
r
e
p
u
S
y
r
a
t
e
n
o
m
-
n
o
N
h
s
a
c
I
T
S
s
e
l
a
S
-
t
s
o
P
t
n
e
m
y
o
p
m
e
l
m
r
e
t
-
t
r
o
h
S
:
e
r
a
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
r
e
h
t
o
d
n
a
n
o
i
t
a
r
e
n
u
m
e
r
t
s
e
h
g
h
i
s
t
i
f
e
n
e
b
$
s
t
i
f
e
n
e
b
$
l
a
t
o
T
$
s
t
i
f
e
n
e
b
$
)
A
(
s
u
n
o
b
n
o
i
s
s
i
m
m
o
c
s
e
e
f
&
y
r
a
l
a
S
$
$
$
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
N
t
n
e
r
r
u
C
-
S
R
O
T
C
E
R
D
I
D
U
A
n
I
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
8
2
0
0
1
,
0
8
2
0
0
1
,
-
0
0
1
8
9
,
0
0
1
8
9
,
8
7
2
5
4
,
-
0
0
0
0
3
2
,
0
0
0
0
3
2
,
4
0
9
8
2
2
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
8
2
8
,
0
8
2
8
,
0
0
1
8
,
0
0
1
8
,
9
3
7
3
,
-
-
-
-
4
3
5
5
1
,
0
0
0
2
9
,
0
0
0
2
9
,
0
0
0
0
9
,
0
0
0
0
9
,
9
3
5
1
4
,
-
-
-
-
-
-
-
0
0
0
0
3
2
,
0
0
0
0
3
,
0
0
0
0
3
2
,
0
0
0
0
3
,
-
-
0
7
3
3
1
2
,
1
9
4
7
2
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
0
2
9
,
0
0
0
2
9
,
0
0
0
0
9
,
0
0
0
0
9
,
9
3
5
1
4
,
-
-
,
0
0
0
0
0
2
0
0
0
0
0
2
,
9
7
8
5
8
1
,
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
)
9
0
0
2
r
e
b
m
e
c
e
D
5
1
d
e
t
n
o
p
p
A
i
(
l
l
e
b
p
m
a
C
J
G
r
M
s
e
t
a
Y
B
M
r
M
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
E
h
t
r
o
w
s
n
A
H
L
r
i
M
s
i
l
l
a
W
L
S
r
M
)
n
a
m
r
i
a
h
C
e
v
i
t
u
c
e
x
E
(
)
0
1
0
2
y
r
a
u
r
b
e
F
5
2
d
e
t
n
o
p
p
A
i
(
)
1
(
e
n
o
t
s
d
a
G
E
D
l
r
M
-
-
-
-
-
-
-
-
%
1
-
-
-
-
%
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
s
n
o
i
t
p
o
f
o
e
u
l
a
V
f
o
n
o
i
t
r
o
p
o
r
p
s
a
n
o
i
t
a
r
e
n
u
m
e
r
%
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
f
o
d
e
t
a
l
e
r
e
c
n
a
m
r
o
f
r
e
p
%
l
a
t
o
T
$
s
t
h
g
i
r
$
s
t
i
f
e
n
e
b
$
s
t
i
f
e
n
e
b
$
l
a
t
o
T
$
s
t
i
f
e
n
e
b
$
1
9
1
4
3
4
,
7
9
4
8
6
6
,
0
6
0
5
9
3
,
7
7
6
1
9
3
,
8
6
7
8
9
2
,
8
6
7
8
8
2
,
1
2
5
0
9
2
,
1
8
2
2
0
2
,
-
-
-
-
-
-
-
-
-
7
4
2
9
0
4
,
-
-
6
5
1
8
5
,
7
6
3
,
1
4
9
4
8
5
0
2
4
3
,
-
6
6
7
2
5
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
4
3
1
,
0
4
6
6
2
,
6
6
4
9
2
,
0
0
0
5
4
,
2
4
5
2
2
,
2
4
5
2
2
,
2
9
1
1
2
,
2
9
1
1
2
,
5
2
1
9
1
,
8
3
0
3
1
,
-
1
9
4
3
,
0
8
2
4
,
9
4
0
6
,
-
7
5
1
2
,
5
2
7
4
0
4
,
5
4
1
2
5
,
7
9
4
3
2
6
,
6
3
0
5
8
,
8
1
5
2
7
3
,
7
0
6
8
9
,
5
3
1
9
6
3
,
4
2
2
5
9
,
6
7
5
7
7
2
,
0
0
0
4
2
,
6
7
5
7
6
2
,
0
0
0
4
1
,
6
9
3
1
7
2
,
0
5
5
2
4
,
3
4
2
9
8
1
,
8
2
2
3
3
,
-
-
8
9
2
4
5
,
3
0
6
6
,
-
9
6
9
3
2
,
-
-
9
1
6
3
0
4
,
5
7
6
2
2
,
2
7
4
5
7
5
,
0
1
8
5
2
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
A
(
s
u
n
o
b
n
o
i
s
s
i
m
m
o
c
s
e
e
f
&
y
r
a
l
a
S
$
$
$
-
-
-
-
-
-
-
-
,
0
8
5
2
5
3
1
6
4
8
3
5
,
1
1
9
3
7
2
,
1
1
9
3
7
2
,
6
7
5
3
5
2
,
6
7
5
3
5
2
,
6
4
8
8
2
2
,
5
1
0
6
5
1
,
-
-
5
2
9
5
,
0
7
7
1
4
,
2
3
7
7
2
2
,
2
1
2
3
5
1
,
7
6
0
6
3
3
,
5
9
5
3
1
2
,
-
-
-
9
6
9
3
2
,
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
0
1
0
2
9
0
0
2
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
/
r
e
c
ffi
O
l
i
i
a
c
n
a
n
F
f
e
h
C
i
t
n
e
r
r
u
C
-
S
E
V
I
T
U
C
E
X
E
)
1
(
e
n
o
t
s
d
a
G
E
D
l
r
M
D
U
A
n
I
r
e
c
i
f
f
O
e
v
i
t
u
c
e
x
E
f
e
h
C
i
i
k
s
d
u
L
L
M
r
M
s
a
c
i
r
e
m
A
-
R
H
&
e
c
n
a
n
F
i
,
s
n
o
i
t
a
r
e
p
O
P
V
)
2
(
s
o
r
d
a
u
C
M
r
M
r
e
l
z
t
i
e
M
R
r
M
r
e
m
r
o
F
s
n
o
i
t
a
r
e
p
O
d
n
a
s
e
a
S
P
V
r
o
n
e
S
l
i
s
n
o
i
t
a
r
e
p
O
g
n
i
r
u
t
c
a
f
u
n
a
M
,
r
e
g
a
n
a
M
a
r
e
n
e
G
l
)
8
0
0
2
t
s
u
g
u
A
2
2
d
e
n
g
i
s
e
r
(
n
a
r
r
u
C
P
r
M
)
0
1
0
2
l
i
r
p
A
0
3
d
e
n
g
i
s
e
r
(
)
a
c
i
r
e
m
A
h
t
r
o
N
(
g
n
i
r
u
t
c
a
f
u
n
a
M
r
e
g
a
n
a
M
a
r
e
n
e
G
l
r
e
p
o
o
C
I
r
M
)
9
0
0
2
r
e
b
o
t
c
O
7
d
e
t
n
o
p
p
A
i
(
i
s
e
c
v
r
e
S
l
i
a
c
n
h
c
e
T
-
r
e
g
a
n
a
M
a
r
e
n
e
G
l
e
s
e
z
z
u
r
B
V
r
M
d
e
s
a
b
-
e
r
a
h
S
s
t
n
e
m
y
a
p
-
t
s
o
P
t
n
e
m
y
o
p
m
e
l
m
r
e
t
-
t
r
o
h
S
d
n
a
s
n
o
i
t
p
O
n
o
i
t
a
n
m
r
e
T
i
n
o
i
t
a
u
n
n
a
r
e
p
u
S
y
r
a
t
e
n
o
m
-
n
o
N
h
s
a
c
I
T
S
s
e
l
a
S
)
d
e
u
n
i
t
n
o
c
(
d
e
t
i
d
u
a
–
)
p
u
o
r
G
d
n
a
y
n
a
p
m
o
C
(
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
e
c
ffi
o
e
v
i
t
u
c
e
x
e
d
n
a
’
s
r
o
t
c
e
r
i
D
2
4
.
)
d
e
u
n
i
t
n
o
c
(
t
r
o
p
e
r
n
o
i
t
a
r
e
n
u
m
e
R
.
4
23
.
r
e
l
z
t
i
e
M
R
r
M
f
o
n
o
i
t
a
n
g
i
s
e
r
e
h
t
g
n
w
o
i
l
l
o
f
0
1
0
2
y
a
M
1
e
v
i
t
c
e
ff
e
r
e
c
ffi
o
t
n
e
m
e
g
a
n
a
M
y
e
K
a
s
a
d
e
fi
i
s
s
a
c
s
a
w
s
o
r
d
a
u
C
M
l
r
M
i
.
t
n
e
m
t
n
o
p
p
a
s
i
h
t
o
t
p
u
s
d
o
i
r
e
p
e
h
t
o
t
l
s
e
t
a
e
r
e
v
o
b
a
e
h
t
d
n
a
0
1
0
2
y
r
a
u
r
b
e
F
5
2
n
o
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
n
a
s
a
t
n
e
m
t
n
o
p
p
a
s
i
h
i
l
i
t
n
u
p
u
e
v
i
t
u
c
e
x
e
n
a
s
a
w
e
n
o
t
s
d
a
G
D
l
r
M
)
1
(
)
2
(
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
24
DIRECTORS’ REPORT (continued)
For the year ended 30 June 2010
4. Remuneration report (continued)
4.2 Directors’ and executive officers’ remuneration (Company and Group) - audited (continued)
Notes in relation to the table of directors’ and executive officers’ remuneration - audited
A. The short-term incentive bonus is for performance during the 30 June 2010 financial year using the criteria set out on page 20. The amount
was considered on 17 June 2010 by the Remuneration and Nomination Committee who recommended that no bonuses be paid for the
current period, subject to a complete review which is scheduled for September 2010.
B. The fair value of the options is calculated at the date of grant using the Black Scholes and binomial lattice option-pricing models and
allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value
of the options allocated to this reporting period. In valuing the options, market conditions have been taken into account.
The following factors and assumptions were used in determining the fair value of options on grant date:
Grant date
2 July 2007
Expiry date
2 July 2012
Fair value
per option
Exercise
price
Price of shares
on grant date
Expected
volatility
Risk free
interest rate
Dividend
yield
$0.06
$0.50
$0.38
50%
6.35%
-
Details of performance related remuneration
Details of the Group’s policy in relation to the proportion of remuneration that is performance related is discussed on page 20. No short term
incentive bonuses have been provided for the year ended 30 June 2010.
4.3 Equity instruments
All options refer to options over ordinary shares of Ainsworth Game Technology Limited, unless otherwise stated, which are exercisable
on a one-for-one basis under the ESOP.
4.3.1 Options and rights over equity instruments granted as compensation – audited
Details on options over ordinary shares in the Company that were granted as remuneration to each key management person during the
reporting period and details on options that vested during the reporting period are as follows:
Number of
options granted
during 2010
Number of
options vested
during 2010
Grant date
Fair value
per option
at grant date
($)
Exercise price
per option
($)
Expiry date
EXECUTIVES
Current
Mr M Cuadros
Former
Mr R Meitzler
-
-
02/07/2007
02/07/2007
40,000
40,000
0.06
0.06
0.50
0.50
02/07/2012
02/07/2012
All options issued from 1 July 2007 expire on the earlier of their expiry date or termination of the individual’s employment. The options
are exercisable on an annual basis three years from grant date. In addition to a continuing employment service condition, the ability to
exercise options is conditional on the Group achieving certain performance hurdles. Details of the performance criteria are included in
the long-term incentives discussion on page 20.
Further details, including grant dates and exercise dates regarding options granted to executives under the ESOP are in note 24 to the financial
statements.
4.3.2 Modification of terms of equity-settled share-based payment transactions – audited
No terms of equity-settled share-based payment transactions (including options and rights granted as remuneration to a key management
person) have been altered or modified by the issuing entity during the reporting period or the prior period.
4.3.3 Exercise of options granted as compensation – audited
During the reporting period no shares were issued on the exercise of options previously granted as compensation (2009: Nil).
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
25
4.3.4 Analysis of options and rights over equity instruments granted as compensation - audited
Details of vesting profiles of the options granted as remuneration to each director of the Company and each of the five named Company
executives and relevant Group executives and other key management personnel are detailed below.
Options granted
Number
Date
%
Vested
in year
%
Forfeited
in year
(A)
Value yet to vest $
Financial years in
which grant vests
Min (B)
Max (C)
EXECUTIVES
Current
Mr ML Ludski
Mr M Cuadros
Former
Mr R Meitzler
50,000
31/08/2004
200,000
02/07/2007
-
20%
100%
31/08/2005 - 31/08/2007
-
02/07/2008 - 02/07/2010
200,000
02/07/2007
20%
100%
02/07/2008 - 02/07/2010
Nil
Nil
Nil
-
-
-
A. The % forfeited in the year represents the reduction from the maximum number of options available to vest due to the highest level
performance criteria not being achieved.
B. The minimum value of options yet to vest is $Nil as the performance criteria may not be met and consequently the option may not vest.
C. The maximum value of options yet to vest is not determinable as it depends on the market price of shares of the Company on the
ASX at the date the option is exercised. The share price of the Company at 30 June 2010 was $0.09. This compares to an exercise price
of $0.50 in respect of the share options.
4.3.5 Analysis of movements in options - audited
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each Company director
and each of the five named Company executives and relevant Group executives is detailed below:
Granted in year
($)
Exercised in year (A)
($)
Fortified in year (B)
($)
Total option value in year
($)
EXECUTIVES
Current
Mr M Cuadros
Former
Mr R Meitzler
-
-
-
-
-
9,280
2,200
-
A. No options were exercised during the year.
B. The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the option lapsed using
the Black Scholes model with no adjustments for whether the performance criteria have or have not been achieved.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
26 DIRECTORS’ REPORT (continued)
For the year ended 30 June 2010
5. Principal activities
The principal activity of the Group during the course of the financial year was the design, development, production, sale and servicing
of gaming machines and other related equipment and services.
There were no significant changes in the nature of the activities of the Group during the year.
Objectives
The Group’s objectives are to:
• maintain strong operational focus on geographical markets which are expected to achieve positive contributions to the Group’s
financial results;
• manage and further reduce levels of investment in working capital and continue to achieve positive cash flow from operations in the
ensuing financial year;
• continue investment in research and development;
• provide a positive return on equity through profitability and share price growth;
• secure new gaming jurisdictional licences through selective entry into new international markets via distributors or direct sales
channels; and
• provide quality market leading products that are innovative and entertaining providing increased player satisfaction and therefore
greater venue profitability.
In order to meet these objectives the following action priorities will continue to apply in future financial years:
• grow market share for existing business and increase revenue and operating activities, particularly in the North American market;
• further reduce product and overhead costs through improved efficiencies in supply chain and inventory management;
• continue to improve management of working capital;
• to maintain best practice compliance policies and procedures and increase stakeholder awareness of the Group’s regulatory
environment; and
• ensure retention and development of key employees.
6. Operating and financial review
Overview of the Group
The loss after income tax for the year ended 30 June 2010 was $2.7 million compared to a loss in the corresponding 2009 year of $12.5
million. The above loss resulted in a second half profit of $1.5 million compared to the previously reported loss of $4.2 million for the six
month period ended 31 December 2009.
Sales revenue achieved was $69.3 million compared to $45.2 million in the corresponding period in 2009, an increase of 53%, primarily
due to further improvements in product performance in domestic markets in the current period. Further diversification and less
reliance on a relatively small number of international markets has minimised the impact of difficult market conditions presently being
encountered.
Domestic revenue was $48.2 million, an increase of 110% on the corresponding period in 2009. This increase is attributed to an increased
range of innovative product offerings and sustainable high product performance in the period under review resulting from the re-
enforcement and expansion of changes in product development strategies undertaken. Domestic revenue in the period under review
represented 70% of total revenue, compared to 51% in the previous corresponding period.
Continued investment and focus within the Americas, primarily within North American, including progression of the necessary product
approval in the Nevada market should ensure progressive revenue growth once the impact of global economic conditions improve.
Revenue from the Americas was $18.2 million, an increase of 7% on the previous year in 2009. Revenue within Europe was minimal in the
current period compared to $2.4 million in 2009 due to continued financial uncertainties due to global financial conditions.
Investments for future performance
Increased investment during the current period in licensing and research and development will enable the Group to be at the forefront
of technology in gaming related products. The global product development strategy previously introduced has ensured an extensive
product range is available to targeted markets. Operating system upgrades and the streamlining of product development procedures
have reduced lead times to market, including the time for regulatory approvals.
The regulatory nature of the gaming industry results in significant delays between securing a jurisdictional licence and obtaining the
necessary game approvals before sales can be made to that jurisdiction. The Company continues to pursue product development in
all jurisdictions where licences have been secured and is progressively obtaining product approvals to enable commercial realisation of
additional revenue opportunities.
Significant compliance related costs are an inherent part of the supply of equipment to the gaming industry which assists in maintaining
a high standard of integrity within the industry. The Company continues to invest in the future and through its licensing strategy has
expanded its reach into North America. The North America market remains a key focus for the Company’s compliance and licensing
strategic plan. The Company continues to maintain a high level of regulatory compliance based on recognised Australian and
International standards and accreditation. The Company reinforced its commitment regarding continuous improvement by successfully
renewing and extending its accreditation to June 2013 for its quality management system against the AS/NZ ISO 9001:2008 standard.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
27
The Company has consolidated its licensing strategy targeting incremental tribal applications in the US particularly focusing on
developing medium to long term commercial relationships as well as emerging global markets in Asia, Europe and the Americas. As
at 30 June 2010, the Company renewed 50 licences and is approved to conduct business in 20 US states, three (3) provinces in Canada
and in Singapore. As previously announced the Company was granted a licence in November 2009 to distribute its range of products,
once approvals are received within Nevada. Other major approvals were granted by the states of Illinois, Maryland and West Virginia,
the Seneca tribe in New York, the Canadian province in Alberta and Singapore. In addition, the states of Indiana and Michigan granted
permanent licences to replace the temporary licences that were previously issued. The Group has 71 tribal licences (compared to 61 at
the same period last year) across California, Connecticut, Florida, Michigan, Minnesota, New Mexico, New York, North Dakota, Oklahoma,
Oregon and Wisconsin.
The Company continues to follow a licensing strategy to gain further state and tribal licenses in North America and additional Canadian
provinces. This strategy targets jurisdictions where the necessary product approvals are either transferrable or can be readily adapted.
Review of financial conditions
Capital structure and treasury policy
The Company currently has on issue 278,942,304 ordinary shares and 19,714,717 convertible notes. In December 2008 the Company
received the necessary approval from security holders to extend the maturity date of the convertible notes from 31 December 2009 to
either 31 December 2011 or 2014. Mr LH Ainsworth and his spouse (including entities they control) who collectively own 62% of the
notes on issue at the time of seeking approval agreed to extend the maturity of their convertible notes until 31 December 2014. All
registered noteholders are given a right to extend their notes for the same period should they elect to do so.
The Company has the right to redeem all convertible notes that are extended, including those held by Mr LH Ainsworth and his spouse
on 31 December 2011 or at the end of every six months until the maturity date of 31 December 2014. The interest rate payable on the
convertible notes has been varied from 8% per annum to 10% per annum with effect from 1 January 2010.
The Group is exposed to foreign currency risks on sales and purchases that are denominated in currencies other than AUD. The Group
continually monitors and reviews the financial impact of currency variations and should facilities be available looks at establishing call
options to minimise the volatility of changes in foreign currency exchange rates. No call options were placed in the current period due
to the expectation of a reduction in the Group’s net asset exposure and the favourable reversal of previous translational impacts.
Liquidity and funding
The Company currently has a loan facility in place of $40 million with an entity controlled by the Executive Chairman, Mr LH Ainsworth,
of which $26 million is unutilised at the reporting date. The maturity date of this facility was formally amended to a date that is 4 years
from the will of Mr LH Ainsworth coming into effect and does not call for repayment of interest accrued until this maturity date.
In addition to the above an additional $6 million trade finance facility has been established with an entity controlled by the Executive
Chairman, Mr LH Ainsworth of which $1.0 million is unutilised at the reporting date.
Cash flows from operations
The cash inflow from operations for the period under review was $10.6 million compared to an outflow of $1.6 million in the corresponding
period in 2009. The Group continues to monitor closely its working capital requirements and has significantly reduced the extent of
credit offered on sales made in all jurisdictions.
Continued efforts to reduce the Group’s investment in working capital have been made during the current period under review. Reduction
in receivables and inventory holdings have occurred which have assisted in the turnaround and improvement of cashflows from operating
activities.
Impact of legislation and other external requirements
The Group continues to work with regulatory authorities to ensure that the necessary licences to support its operations within Australia
and overseas are granted on a timely and cost effective basis. The granting of such licences will allow the Group to expand its operations
into new international markets.
Market conditions within Australia presented opportunities during the year under review as previously introduced legislative and
regulatory changes have become established. These changes specifically in relation to smoking legislation and increased government
taxes were progressively offset by the Group’s innovative product development and the implementation of new strategies.
Review of principal businesses
Revenue
Sales revenue of $69.3 million was recorded in the period under review compared to $45.2 million in the corresponding period in 2009, an
increase of 53%. Within domestic markets revenue achieved was $48.2 million, an increase of 110% over the corresponding period in 2009.
The increased revenue within Australia was primarily due to the product development strategies previously introduced providing improved
game performance.
Within New South Wales positive signs of recovery emerged in the period following the previously introduced legislative and regulatory
changes, resulting in increased revenue of 118 % compared to the corresponding period in 2009. Further growth due to development
investment within the Victorian market resulted in revenue of $6.4 million, an increase of 59% over the previous year. This market
represented 13% of total domestic revenue in the period, however recent licensing changes which impact the two major operators
continue to create uncertainties. Continued growth within Queensland followed product initiatives introduced during the financial year.
This market achieved a 106% increase in revenue compared to the previous corresponding period in 2009.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
28
DIRECTORS’ REPORT (continued)
For the year ended 30 June 2010
6. Operating and financial review (continued)
Review of principal businesses (continued)
Revenue (continued)
International revenue represented 30% of total revenue for the period compared to 49% in the prior period in 2009. Total international
revenue fell by 5% to $21.0 million in the period. The fall in international revenue was attributable to minimal revenue within Europe
which fell by $2.3 million in the current period compared to the prior period in 2009. Excluding Europe international revenue increased
by 6% on 2009. The revised distribution arrangements previously initiated within Europe, have assisted in minimising the adverse
impacts of legislative changes and global financial uncertainties.
The Group continues to explore the strategic game content licensing agreement entered into with Bally Gaming within the United
States of America and Canada. This licensing agreement will expand the Group’s distribution channels through Bally’s extensive sales
and marketing activities, as well as their currently installed base in the subject territory. The agreement has an initial term of three years
and is expected to positively contribute to the Group’s result when further games licensed under the agreement receive the necessary
regulatory approval.
Operating costs
Cost of sales in the period were $31.8 million compared to $23.3 million in the corresponding period in 2009. Gross margins for the year
under review were 54% compared to 48% in the previous period in 2009. It is expected that margins will be further increased in the 2011
financial year due to higher selling prices of the recently released A560 electronic gaming machine, continued overhead efficiencies
through production processes and reduced material costs.
Operating costs, excluding cost of sales and financing costs, were $33.1 million compared to $33.0 million in the corresponding period
in 2009. Included in operating costs were research and development expenditure of $10.2 million, a decrease of $2.2 million over
the previous year in 2009. This investment in product development programs provides the Group with an ongoing product platform
release strategy. Research and development, excluding the impact of capitalisation, amortisation and impairment losses on capitalised
development expenditure, resulted in an increase in expenditure of 5% and represented 18% of revenue compared to 25% in the
corresponding period in 2009.
Continued cost reductions assisted the Group to offset the immediate impact of lower international revenue resulting from the global
financial crisis and further align cost structures with realistic revenue expectations. Further investment within the key North American
market occurred during the current period which is expected to allow the Group to sell product under a direct sales model thus providing
the opportunity to increase revenue contributions in FY11 and beyond as economic market conditions improve.
Administration costs include impairment losses in the current period of $0.2 million on previously acquired goodwill and development
costs capitalised. Excluding impairment losses administration costs fell by 1% over the prior corresponding period in 2009.
Financing costs
Net financing costs were $7.0 million in the period, an increase of $6.3 million on the corresponding period in 2009. This increase was
primarily a result of net foreign exchange losses of $0.5 million in the current period compared to currency gains of $5.3 million in the
corresponding period in 2009.
Significant changes in the state of affairs
There has been increased investment in research and development to ensure product development changes continue to positively affect
product performance. The reduced operating cost structure is now geared to continue the financial turnaround experienced in the second
half of the current financial year. The Global Financial Crisis (GFC) adversely impacted international revenue during the current period.
Further investment is envisaged in 2011 within the Americas following the recent granting of a Nevada licence, to ensure the Group is
positioned to capitalise on the significant opportunities within this region.
The development and recent release of new product in selected markets is expected to enable the Group to continue to improve
performance. The continued commercial relationship with Bally Gaming will provide ongoing revenue and further opportunities following
the recent approval of the Group’s games on Bally’s gaming platform.
Other than the matters noted above, there were no significant changes in the state of affairs of the Group during the financial year.
7. Dividends
No dividends were paid or declared by the Company since the end of the previous financial year. The directors do not recommend that
any dividends be paid in respect of the 2010 financial year.
8. Events subsequent to reporting date
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material
and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future financial years.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
29
9. Likely developments
The Group will continue to evaluate and pursue further gaming licences and seek the necessary product approvals of the Company’s
products to ensure sustainable revenue growth and continued improvement in results is achieved in future. This strategy is expected to
achieve increased market share in targeted geographical business sectors which will positively contribute to Group results during future
financial years. Further investment in product development for current and new products is expected to provide increased revenue and
profitable results in the coming financial year.
The difficult market conditions caused by the GFC has impacted international revenue opportunities in the short term. Further investment
is planned in the Americas which will ensure the Company is positioned to capitalise on revenue opportunities as and when conditions
improve.
Further information about likely developments in the operations of the Group and the expected results of those operations in future
financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable
prejudice to the Group.
10. Directors’ interests
The relevant interest of each director in the shares, convertible notes and rights or options over such instruments issued by the
companies within the Group and other related bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of
the Corporations Act 2001, at the date of this report is as follows:
Current
Mr Leonard H Ainsworth
Mr Stewart L Wallis
Mr Graeme J Campbell
Mr Daniel E Gladstone
Ainsworth Game Technology Limited
Ordinary shares
Convertible notes
174,024,331
716,703
489,674
100,000
10,385,282
232,000
-
-
11. Share options
Options granted to directors and officers of the Company
During or since the end of the financial year, the Company granted no share options over unissued ordinary shares in the Company to
any of the directors or to any of the five most highly remunerated officers of the Company as part of their remuneration:
Unissued shares under options
At the date of this report unissued ordinary shares of the Company under option are:
Expiry date
2 July 2012
Exercise price ($)
0.50
Number of shares
420,810
420,810
The Company granted 1,020,555 share options to all American employees on 2 July 2007 under an incentive plan. During or since the
end of the financial year 310,250 options expired due to cessation of employment and 425,000 options lapsed leaving a balance of
420,810 under issue. The share options under this incentive plan included 200,000 options granted to Mr M Cuadros.
In addition to the share options issued by the Company an incentive plan was previously introduced whereby share options were
granted to all Australian employees, excluding directors and four key management personnel. The share options granted on 2 July 2007
to Australian employees totalled 10,994,707 and were granted over a portion of the personal shareholding of the Company’s Executive
Chairman, Mr LH Ainsworth. During or since the end of the financial year 440,035 (2009: 808,414) options expired due to cessation of
employment leaving a balance of 7,404,952 share options under issue (2009: 7,844,987). The share options under this incentive plan
issued to key management personnel totalled Nil (2009: Nil) share options.
An exercise price of $0.50 per Share Option has been established and exercise is subject to vesting and performance conditions being
met. The number of Share Options granted to each employee reflects the number of dollars comprising their individual base salary.
The vesting of these Share Options is over a three year period with performance hurdles based on the market value of the shares in the
Company. The Share Options lapse automatically on cessation of employment for any reason.
The options above have vesting and performance conditions, which must be satisfied prior to any of the options being exercised. The
vesting condition is set with reference to the anniversary of the issue date of the option. All options expire on the earlier of their expiry
date or termination of the option holders’ employment.
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
Shares issued on exercise of options
During or since the end of the financial year, the Company issued no ordinary shares as a result of the exercise of options.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
30
DIRECTORS’ REPORT (continued)
For the year ended 30 June 2010
12. Indemnification and insurance of officers
Indemnification
The Company has agreed to indemnify current and former directors of the Company against all liabilities to another person (other than
the Company or a related body corporate) that may arise from their position as directors of the Company and its controlled entities,
except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the
full amount of any such liabilities, including costs and expenses.
The Company has also agreed to indemnify the current directors of its controlled entities for all liabilities to another person (other than the
Company or a related body corporate) that may arise from their position, except where the liability arises out of conduct involving a lack
of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.
Insurance premiums
Since the end of the previous financial year, the Company has paid insurance premiums in respect of directors’ and officers’ liability
and legal expenses’ insurance contracts, for current and former directors and officers, including executive officers of the Company and
directors, executive officers and secretaries of its controlled entities.
The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the
directors’ and officers’ liability and legal expenses contracts, as such disclosure is prohibited under the terms of the contract.
13. Non-audit services
During the year KPMG, the Company’s auditor, has performed no other services in addition to its statutory duties.
Details of the amounts paid to the auditor of the Company, KPMG, for audit services provided during the year are set out below.
Audit services:
Auditors of the Company
Consolidated
2010
$
2009
$
Audit and review of financial reports (KPMG Australia)
179,750
200,000
14. Lead auditor’s independence declaration
The Lead auditor’s independence declaration is set out on page 80 and forms part of the directors’ report for the financial year ended
30 June 2010.
15. Rounding off
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in
the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.
This report is made with a resolution of the directors.
LH Ainsworth
Executive Chairman
Dated at Sydney this 25th day of August 2010
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2010
31
In thousands of AUD
Revenue
Cost of sales
Gross profit
Other income
Sales, service and marketing expenses
Research and development expenses
Administrative expenses
Profit / (loss) before financing costs
Financial income
Financial expenses
Net finance expenses
Share of loss of equity accounted investees
(net of income tax)
(Loss) before income tax
Income tax
Note
7
Consolidated
Company
2010
69,278
(31,784)
2009
45,164
(23,306)
2010
64,027
(27,129)
2009
43,960
(21,428)
37,494
21,858
36,898
22,532
198
(14,192)
(10,213)
(8,699)
161
(11,888)
(12,378)
(8,751)
197
(14,083)
(10,213)
(9,619)
367
(13,696)
(12,378)
(8,751)
4,588
(10,998)
3,180
(11,926)
798
(7,752)
6,023
(6,662)
789
(7,729)
6,023
(6,656)
(6,954)
(639)
(6,940)
(633)
-
(407)
-
-
(2,366)
(12,044)
(3,760)
(12,559)
(355)
(498)
-
-
8
11
11
17
12
(Loss) for the period
(2,721)
(12,542)
(3,760)
(12,559)
Other comprehensive income
Foreign currency translation reserve
(29)
(119)
-
-
Total comprehensive income for the period
(2,750)
(12,661)
(3,760)
(12,559)
Earnings per share:
Basic (loss) per share (AUD)
Diluted (loss) per share (AUD)
13
13
($0.01)
($0.05)
($0.01)
($0.05)
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
32
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2010
In thousands of AUD
Balance at 1 July 2008
Total comprehensive income for the period
Loss
Other comprehensive income
Foreign currency translation reserve
Total other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly
in equity
Equity component of related party borrowings
Share-based payment transactions
Total transactions with owners
Balance at 30 June 2009
Consolidated
Attributable to equity holders of the Company
Equity
compensation
reserve
Fair value
reserve
Translation
reserve
Accumulated
losses
Total
equity
866
4,981
345
(104,038)
24,527
Issued
capital
122,373
-
-
-
-
-
-
-
-
-
-
-
-
146
146
-
-
-
-
5,063
-
5,063
-
(12,542)
(12,542)
(119)
(119)
(119)
-
-
-
-
-
(119)
(119)
(12,542)
(12,661)
-
-
-
5,063
146
5,209
122,373
1,012
10,044
226
(116,580)
17,075
Balance at 1 July 2009
122,373
1,012
10,044
226
(116,580)
17,075
Total comprehensive income for the period
Loss
Other comprehensive income
Foreign currency translation reserve
Share based payment adjustment on non-vesting
options
Total other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly
in equity
Equity component of related party borrowings
Share-based payment transactions
Total transactions with owners
Balance at 30 June 2010
-
-
-
-
-
-
-
-
-
-
(435)
(435)
(435)
-
88
88
-
-
-
-
-
720
-
720
-
(29)
-
(29)
(29)
-
-
-
(2,721)
(2,721)
-
435
435
(29)
-
(29)
(2,286)
(2,750)
-
-
-
720
88
808
122,373
665
10,764
197
(118,866)
15,133
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2010
33
In thousands of AUD
Balance at 1 July 2008
Total comprehensive income for the period
Loss
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Equity component of related party borrowings
Share-based payment transactions
Total transactions with owners
Balance at 30 June 2009
Company
Attributable to equity holders of the Company
Issued
capital
122,373
Equity
compensation
reserve
Fair value
reserve
Accumulated
losses
866
4,981
(102,680)
Total
equity
25,540
-
-
-
-
-
122,373
-
-
-
146
146
1,012
-
-
(12,559)
(12,559)
(12,559)
(12,559)
5,063
-
5,063
10,044
-
-
-
5,063
146
5,209
(115,239)
18,190
Balance at 1 July 2009
122,373
1,012
10,044
(115,239)
18,190
Total comprehensive income for the period
Loss
Other comprehensive income
Share based payment adjustment on non-vesting options
Total other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Equity component of related party borrowings
Share-based payment transactions
Total transactions with owners
Balance at 30 June 2010
-
-
-
-
-
-
-
-
(435)
(435)
(435)
-
88
88
-
-
-
-
720
-
720
(3,760)
(3,760)
435
435
-
-
(3,325)
(3,760)
-
-
-
720
88
808
122,373
665
10,764
(118,564)
15,238
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
34
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2010
In thousands of AUD
Assets
Cash and cash equivalents
Receivables and other assets
Inventories
Prepayments
Total current assets
Receivables and other assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current Liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Provisions
Total current liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Note
2010
2009
2010
2009
Consolidated
Company
14
15
16
15
19
20
21
22
23
25
21
22
23
6,144
18,703
13,091
980
958
19,630
17,531
550
5,091
18,010
12,803
930
804
18,801
17,241
500
38,918
38,669
36,834
37,346
10,325
23,055
12,966
7,999
23,446
10,943
13,666
22,200
10,147
12,289
22,653
7,972
46,346
42,388
46,013
42,914
85,264
81,057
82,847
80,260
6,875
6,162
2,287
140
7,764
3,311
1,787
216
5,386
5,962
1,568
140
5,676
3,136
1,481
216
15,464
13,078
13,056
10,509
-
54,242
425
-
50,432
472
388
53,849
316
1,169
50,120
272
Total non-current liabilities
54,667
50,904
54,553
51,561
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
70,131
63,982
67,609
62,070
15,133
17,075
15,238
18,190
122,373
11,626
122,373
11,282
122,373
11,429
122,373
11,056
(118,866)
(116,580)
(118,564)
(115,239)
15,133
17,075
15,238
18,190
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2010
35
In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Income taxes paid
Borrowing costs paid
Note
2010
2009
2010
2009
Consolidated
Company
73,640
(59,801)
13,839
(355)
(2,863)
52,939
(51,597)
1,342
(449)
(2,489)
49,588
(36,719)
12,869
31,623
(28,067)
3,556
-
-
(2,804)
(2,475)
Net cash from operating activities
31
10,621
(1,596)
10,065
1,081
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Interest received
Acquisitions of property, plant and equipment
Acquisition of subsidiary, net of cash and overdraft acquired
Development expenditure
Acquisition of other intangibles
20
20
188
750
(932)
-
(3,517)
(542)
210
556
(677)
(68)
(2,048)
(1,018)
161
27
(902)
-
(3,517)
(477)
210
31
(674)
-
(2,048)
(226)
Net cash from investing activities
(4,053)
(3,045)
(4,708)
(2,707)
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of finance lease liabilities
500
(500)
(1,285)
2,450
(250)
(874)
500
(500)
(1,040)
2,450
(250)
(846)
Net cash from financing activities
(1,285)
1,326
(1,040)
1,354
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
5,283
958
(97)
(3,315)
3,735
538
4,317
804
(30)
(272)
1,033
43
Cash and cash equivalents at 30 June
14
6,144
958
5,091
804
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
36 Ainsworth Game Technology Limited
INDEX TO NOTES TO THE FINANCIAL STATEMENTS
Page
Reporting entity ..........................................................................................................................................................................37
Basis of preparation ...................................................................................................................................................................37
Significant accounting policies..........................................................................................................................................38
Determination of fair values ................................................................................................................................................43
Financial risk management ..................................................................................................................................................43
Segment reporting ....................................................................................................................................................................44
Revenue............................................................................................................................................................................................47
Other income ................................................................................................................................................................................47
Personnel expenses ..................................................................................................................................................................47
Auditors’ remuneration ...........................................................................................................................................................47
Finance income and expense.............................................................................................................................................48
Income tax expense .................................................................................................................................................................48
Earnings per share .....................................................................................................................................................................49
Cash and cash equivalents ...................................................................................................................................................50
Receivables and other assets ..............................................................................................................................................50
Inventories ......................................................................................................................................................................................50
Equity accounted investees .................................................................................................................................................51
Tax assets and liabilities ..........................................................................................................................................................51
Property, plant and equipment .........................................................................................................................................52
Intangible assets .........................................................................................................................................................................54
Trade and other payables ......................................................................................................................................................57
Loans and borrowings.............................................................................................................................................................57
Employee benefits .....................................................................................................................................................................61
Share-based payments ...........................................................................................................................................................62
Provisions .........................................................................................................................................................................................63
Capital and reserves ..................................................................................................................................................................64
Operating leases .........................................................................................................................................................................64
Other commitments ................................................................................................................................................................65
Regulatory matters ....................................................................................................................................................................65
Group entities ...............................................................................................................................................................................65
Reconciliation of cash flows from operating activities .......................................................................................66
Financial instruments ...............................................................................................................................................................66
Related parties ..............................................................................................................................................................................73
Subsequent events....................................................................................................................................................................77
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS
37
1. Reporting entity
Ainsworth Game Technology Limited (the ‘Company’) is a
company domiciled in Australia. The address of the Company’s
registered office is 10 Holker Street, Newington, NSW, 2127.
The consolidated financial statements of the Company as at
and for the year ended 30 June 2010 comprise the Company
and its subsidiaries (together referred to as the ‘Group’) and
the Group’s interest in associates. The Group primarily is
involved in the design, development, sale and servicing of
gaming machines and other related equipment and services.
2. Basis of preparation
(a) Statement of compliance
(‘AASBs’)
(including Australian
The financial report is a general purpose financial report which
has been prepared in accordance with Australian Accounting
Standards
Interpretations)
adopted by the Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 2001. The consolidated
financial report of the Group and the financial report of
the Company also comply with the International Financial
Reporting Standards (IFRS’s) and interpretations adopted
by the International Accounting Standards Board. Certain
comparative amounts have been reclassified to conform with
the current years’ presentation.
The financial statements were approved by the Board of
Directors on 25 August 2010.
(b) Basis of measurement
The consolidated financial statements have been prepared on
the historical cost basis except for loans and borrowings with
a Director related entity, which are measured at fair value.
(c) Functional and presentation currency
These consolidated financial statements are presented in
Australian dollars, which is the Company’s functional currency
and the functional currency of the majority of the Group. The
Company is of a kind referred to in ASIC Class Order 98/100
dated 10 July 1998 and in accordance with that Class Order, all
financial information presented in Australian dollars has been
rounded to the nearest thousand unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements requires management
to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual
results may differ to these estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which
the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation
uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount
recognised in the financial statements are described in Note
20 – Intangibles and Note 24 – Share-based payments.
(e) Changes in accounting policies
Starting as of 1 July 2009, the Group has changed its accounting
policies in the following areas:
• Presentation of financial statements; and
• Determination and presentation of operating segments.
(f) Going concern
The financial statements have been prepared on the going
concern basis of accounting, which assumes that the
continuity of normal business activities and the realisation of
assets and settlement of liabilities in the ordinary course of
business.
For the year ended 30 June 2010, the Group recorded a loss
of $2.7 million (2009:$12.5 million). The Group’s operations are
dependent on established facilities and funding by its major
shareholder.
In relation to the directors’ assessment of the going concern
assumption, the directors have considered the following:
• The Company has a loan facility of $40.0 million from
its majority shareholder, Mr LH Ainsworth which was
extended on 21 October 2008 and matures on a date 4
years subsequent to the will of Mr LH Ainsworth coming into
effect. At 30 June 2010, $13.7 million of this facility has been
drawn, leaving $26.3 million available. Interest on the facility
is not payable until the maturity date;
• The Company and Group do not expect to require funding
beyond these facilities in the foreseeable future, or at least
one year from the signing of these financial statements. Of all
available facilities, $18.3 million was drawn at 30 June 2010,
leaving $27.7 million in unutilised facilities;
• At balance date, the Group had positive net working capital
of $23.5 million and in the current period generated net
operating cash inflows of $10.6 million;
• Operating cost efficiencies were achieved in the current
period under review;
• The investment in research and development as well
as servicing
licenses within the key
North American market is expected to achieve revenue
opportunities beyond the 2010 financial year;
further gaming
• Progression of development strategies within domestic
and targeted international markets is expected to create
additional revenue opportunities in future periods; and
• The directors have reviewed the cashflow forecasts and
believe that these initiatives will enable the company to be
to be able fund its operations for at least the next 12 months.
The Directors have concluded that it is appropriate to prepare
the financial report on a going concern basis, as they are
confident the Company and the Group, has secured sufficient
funding by way of support from its majority shareholder, can
pay its debts as and when they fall due for the foreseeable
future, being at least one year from the date of approval of the
financial statements.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
38 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by
Group entities.
(a) Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists
when the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from
its activities. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
In the Company’s
subsidiaries are carried at cost.
financial statements,
investments
in
Associates (equity accounted investees)
Associates are those entities in which the Group has significant
influence, but not control, over the financial and operating
policies. Significant influence is presumed to exist when the
Group holds between 20 and 50 percent of the voting power
of another entity. Associates are accounted for using the
equity method (equity accounted investees). The consolidated
financial statements include the Group’s share of the income
and expenses of equity accounted investees, after adjustments
to align the accounting policies with those of the Group, from
the date that significant influence commences until the date
that significant influence ceases. When the Group’s share of
losses exceeds its interest in an equity accounted investee,
the carrying amount of that interest (including any long term
investments) is reduced to nil and the recognition of further
losses is discontinued except to the extent that the Group has
an obligation or has made payments on behalf of the investee.
In the Company’s
associates are carried at cost.
financial statements,
investments
in
Transactions eliminated on consolidation
Intra-group balances and any unrealised
income and
expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised
gains arising
from transactions with equity accounted
investees are eliminated against the investment to the extent
of the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
Gains and losses are recognised when the contributed assets
are consumed or sold by the equity accounted investees or,
if not consumed or sold by the equity accounted investees
when the Group’s interest in such entities is disposed of.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign
exchange rate at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the
balance date are retranslated to the functional currency at
the foreign exchange rate at that date. The foreign currency
gain or loss on monetary items is the difference between
amortised cost in the functional currency at the beginning
of the period, adjusted for effective interest and payments
in foreign
during the period, and the amortised cost
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
currency translated at the exchange rate at the end of the
period. Non-monetary assets and liabilities denominated
in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange
rate at the date that the fair value was determined. Foreign
currency differences arising on retranslation are recognised
in profit or loss. Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated
to Australian dollars at exchange rates at the reporting date.
The income and expenses of foreign operations are translated
to Australian dollars at exchange rates at the dates of the
transactions.
recognised
Foreign currency differences are
in other
comprehensive income. Since 1 July 2004, the Group’s date of
transition to AASBs under AIFRS, such differences have been
recognised in the Foreign Currency Translation Reserve (FCTR).
When a foreign operation is disposed of, in part or in full, the
relevant amount in the FCTR is transferred to profit or loss, as part
of profit or loss on disposal.
(c) Financial instruments
Non-derivative financial assets
Non-derivative financial assets comprise trade and other
receivables and cash and cash equivalents.
Trade and other receivables are recognised on the date that
they are originated. Financial assets are derecognised if the
Group’s contractual rights to the cash flows from the financial
assets expire or if the Group transfers the financial asset to
another party without retaining control or substantially all risks
and rewards of the financial asset are transferred.
Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and
only when the Group has a legal right to offset the amounts
and intends either to settle on a net basis or to realise the asset
and settle the liability simultaneously.
Trade and other receivables are financial assets with fixed
or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value.
Subsequent to initial recognition trade and other receivables
are measured at amortised cost using the effective interest
method, less any impairment losses.
Cash and cash equivalents comprise cash balances and call
deposits with original maturities of three months or less.
Non-derivative financial liabilities
Non-derivative
financial
borrowings and trade and other payables.
liabilities comprise
loans and
Debt securities issued and subordinated liabilities are initially
recognised on the date that they are originated. All other
financial liabilities are recognised initially on the trade date at
which the Group becomes a party to the contractual provisions
of the instrument. The Group derecognises a financial liability
when its contractual obligations are discharged or cancelled
or expire. Financial assets and liabilities are offset and the
net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the
amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
Loans and borrowings and trade and other payables are
recognised initially at fair value plus any less directly attributable
transaction costs. Subsequent to initial recognition, these
financial liabilities are measured at amortised cost with
any difference between cost and redemption value being
recognised in the income statement over the period of the
borrowings on an effective interest basis.
Subsequent costs
The cost of replacing part of an item of property, plant and
equipment is recognised in the carrying amount of an item if it
is probable that the future economic benefits embodied within
the part will flow to the Group and its cost can be measured
reliably. The costs of the day-to-day servicing of property, plant
and equipment are recognised in profit or loss as incurred.
39
Where the terms and conditions of borrowings are modified,
the carrying amount is remeasured to fair value. Any difference
between the carrying amount and fair value is recognised in
equity.
Compound financial instruments
Compound
financial
issued by the Group
instruments
comprise convertible notes that can be converted to share
capital at the option of the holder, and the number of shares
to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument
is recognised initially at the fair value of a similar liability that does
not have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of the
compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction costs
are allocated to the liability and equity components in proportion
to their initial carrying amounts.
Subsequent to initial recognition, the liability component of
a compound financial instrument is measured at amortised cost
using the effective interest method. The equity component of a
compound financial instrument is not remeasured subsequent
to initial recognition. Interest relating to the financial liability is
recognised in the income statements.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs
directly attributable to issue of ordinary shares and share
options are recognised as a deduction from equity, net of any
related income tax benefit.
(d) Property, plant and equipment
Recognition and measurement
Depreciation
Depreciation is recognised in profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment since this most closely reflects
the expected pattern of consumption of the future economic
benefits embodied in the assets. Leased assets are depreciated
over the shorter of the lease term and their useful lives. Land is
not depreciated.
The estimated useful lives for the current and comparative
periods are as follows::
• buildings
• leasehold improvements
• plant and equipment
40 years
10 years
2.5 – 20 years
Depreciation methods, useful lives and residual values are
reviewed at each financial year-end and adjusted if appropriate.
(e) Intangible assets
Goodwill
Goodwill (negative goodwill) arises on the acquisition of
subsidiaries and associates.
Acquisitions prior to 1 July 2004
As part of its transition to AASBs, the Group elected to restate
only those business combinations that occurred on or after 1
July 2004. In respect of acquisitions prior to 1 July 2004, goodwill
represents the amount recognised under the Group’s previous
accounting framework, Australian GAAP.
Acquisitions on or after 1 July 2004
For acquisitions on or after 1 July 2004, goodwill represents the
excess of the cost of the acquisition over the Group’s interest
in the net fair value of the identifiable assets, liabilities and
contingent liabilities of the acquiree. When the excess is negative
(negative goodwill), it is recognised immediately in profit or loss.
Items of property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment
Cost includes expenditures that are directly attributable to the
acquisition of the asset. Purchased software that is integral to
the functionality of the related equipment is capitalised as part
of that equipment.
When parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant
and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and
equipment and are recognised net within “other income” in
profit and loss.
losses.
Research and development
Expenditure on
research activities, undertaken with
the prospect of gaining new technical knowledge and
understanding, is recognised in profit or loss when incurred.
Development activities
is capitalised only
involve a plan or design for the
production of new or substantially improved products and
processes. Development expenditure
if
development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic
benefits are probable, and the Group intends to and has sufficient
resources to complete development and to use or sell the
asset. The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable
to preparing the asset for its intended use. Other development
expenditure is recognised in profit or loss when incurred.
Capitalised development expenditure is measured at cost
less accumulated amortisation and accumulated impairment
losses.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
40 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Significant accounting policies (continued)
(e) Intangible assets (continued)
Other intangible assets
Other intangible assets that are acquired by the Group, which
have finite useful lives, are measured at cost less accumulated
amortisation and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure on
internally generated goodwill and brands, is recognised in profit
or loss when incurred.
Amortisation
Amortisation is recognised in profit or loss on a straight-line basis
over the estimated useful lives of intangible assets, other than
goodwill, from the date that they are available for use, since this
most closely reflects the expected pattern of consumption of the
future economic benefit embodied in the asset. The estimated
useful lives for the current and comparative periods are as follows:
• capitalised development costs
• service contracts
• intellectual property
2 – 5 years
8 years
10 years
(f) Leased assets
Leases in terms of which the Group assumes substantially all
the risks and rewards of ownership are classified as finance
leases. Upon initial recognition the leased asset is measured at
an amount equal to the lower of its fair value and the present
value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with the
accounting policy applicable to that asset.
Other leases are operating leases and the leased assets are not
recognised on the Group’s statement of financial position.
(g) Inventories
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories is based on the first-in first-out
principle, and includes expenditure incurred in acquiring the
inventories, production or conversion costs and other costs
incurred in bringing them to their existing location and condition.
In the case of manufactured inventories and work in progress,
cost includes an appropriate share of production overheads
based on normal operating capacity. Net realisable value is the
estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
(h) Impairment
Financial assets
A financial asset is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired.
A financial asset is considered to be impaired if objective
evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset.
Objective evidence that financial assets are impaired can include
default or delinquency by a debtor, restructuring of an amount
due to the Group on terms that the Group would not consider
otherwise, indications that a debtor will enter bankruptcy.
An impairment loss in respect of a financial asset measured
at amortised cost is calculated as the difference between its
carrying amount, the present value of the estimated future
cash flows discounted at the original effective interest rate.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
financial assets are
Individually significant
for
impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar
credit risk characteristics.
tested
All impairment losses are recognised in profit or loss and
reflected in an allowance account against receivables. An
impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss
was recognised. When a subsequent event causes the amount
of impairment loss to decrease, the decrease in impairment
loss is reversed through profit and loss.
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other
than inventories, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such
indication exists then the asset’s recoverable amount is estimated.
For goodwill and intangible assets that have indefinite lives or that
are not yet available for use, recoverable amount is estimated at
each reporting date.
The recoverable amount of an asset or cash-generating unit
is the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value
of money and the risks specific to the asset. For the purpose
of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows
of other assets or groups of assets (the “cash generating unit”).
The goodwill acquired in a business combination for the
purpose of impairment testing, is allocated to cash-generating
units that are expected to benefit from the synergies of the
combination.
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to
the units and then to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
(i) Employee benefits
Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts.
Obligations
for contributions
to defined contribution
superannuation funds are recognised as an employee benefit
expense in profit or loss in the periods during which services
are rendered by employees.
41
Other long term employee benefits
The Group’s net obligation in respect of long-term employee
benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods
plus related on-costs; that benefit is discounted to determine its
present value, and the fair value of any related assets is deducted.
The discount rate is the yield rate at the reporting date on AA
credit rated or government bonds that have maturity dates
approximating the terms of the Group’s obligations.
Termination benefits
Termination benefits are recognised as an expense when the
Group is demonstrably committed, without realistic possibility of
withdrawal, to a formal detailed plan to terminate employment
before the normal retirement date or to provide termination
benefits as a result of an offer made to encourage voluntary
redundancy. Termination benefits for voluntary redundancies are
recognised if the Group has made an offer encouraging voluntary
redundancy, it is probable that the offer will be accepted, and the
number of acceptances can be estimated reliably.
Short-term benefits
Liabilities for employee benefits for wages, salaries and annual
leave represent present obligations resulting from employees’
services provided to reporting date and are calculated at
undiscounted amounts based on remuneration wage and
salary rates that the Group expects to pay as at reporting date
including related on-costs, such as workers remuneration
insurance and payroll tax. Non-accumulating non-monetary
benefits, such as cars and free or subsidised goods and
services, are expensed based on the net marginal cost to the
Group as the benefits are taken by the employees.
A liability is recognised for the amount expected to be paid
under short-term cash bonus plans if the Group has a present
legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation
can be estimated reliably.
Share-based payment transactions
The grant date fair value of options granted to employees is
recognised as an employee expense, with a corresponding
increase in equity, over the period in which the employees
become unconditionally entitled to the options. The amount
recognised as an expense is adjusted to reflect the actual
number of share options for which the related service and
non-market vesting conditions are expected to be met,
such that the amount ultimately recognised is based on the
number of awards that meet the related service and non-
market performance conditions at the vesting date.
(j) Provisions
A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
The unwinding of the discount is recognised as a finance cost.
Warranties
A provision for warranties is recognised when the underlying
products or services are sold. The provision is based on historical
warranty data and a weighting of all possible outcomes against
their associated probabilities.
(k) Revenue
Goods sold
Revenue from the sale of goods in the course of ordinary
activities is measured at the fair value of the consideration
received or receivable, net of returns, allowances and trade
discounts. Revenue is recognised when persuasive evidence
exists usually in the form of an executed sales agreement,
that the significant risks and rewards of ownership have been
transferred to the buyer, recovery of the consideration is
probable, the associated costs and possible return of goods
can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue
can be measured reliably. Transfer of risks and rewards vary
depending on the individual terms of the contract of sale.
When two or more revenue generating activities or deliverables
are sold under a single arrangement, each deliverable that is
considered to be a separate unit of account is accounted for
separately. The consideration from a revenue arrangement is
based on the relative fair values of each separate unit.
Services
Revenue from services rendered is recognised in profit or loss
when the services are performed.
(l) Lease payments
Payments made under operating leases are recognised in profit
or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the
total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are
apportioned between the finance expense and the reduction
of the outstanding liability. The finance expense is allocated to
each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether
such an arrangement is or contains a lease. A specific asset is the
subject of a lease if fulfilment of the arrangement is dependent
on the use of that specified asset. An arrangement conveys
the right to use the asset if the arrangement conveys to the
Group the right to control the use of the underlying asset. At
inception or upon reassessment of the arrangement, the Group
separates payments and other consideration required by such
an arrangement into those for the lease and those for other
elements on the basis of their relative fair values. If the Group
concludes for a finance lease that it is impracticable to separate
the payments reliably, an asset and a liability are recognised
at an amount equal to the fair value of the underlying asset.
Subsequently the liability is reduced as payments are made and
an imputed finance charge on the liability is recognised using
the Group’s incremental borrowing rate.
(m) Finance income and expense
Finance income comprises interest income and foreign
currency gains. Interest income is recognised as it accrues in
profit or loss using the effective interest method.
Finance expenses comprise interest expense on borrowings,
foreign currency losses and impairment losses recognised
on financial assets. Borrowing costs that are not directly
attributable to the acquisition, construction or production
of a qualifying asset are recognised in profit or loss using the
effective interest method.
Foreign currency gains and losses are reported on a net basis.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
42 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Significant accounting policies (continued)
(n) Income tax
Income tax expense comprises current and deferred tax. Current
and deferred tax are recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it
is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted
at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognised in respect of temporary differences
liabilities
between the carrying amounts of assets and
for financial reporting purposes and the amounts used
for taxation purposes. Deferred tax is not recognised for
the following temporary differences: initial recognition of
goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that
they will probably not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to
be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively
enacted by the reporting date. Deferred tax assets and
liabilities are offset if there is a legally enforceable right to
offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or their tax
assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that
it is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
(o) Goods and services tax
Revenue, expenses and assets are recognised net of the amount
of goods and services tax (GST), except where the amount of
GST incurred is not recoverable from the taxation authority. In
these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST
included. The net amount of GST recoverable from, or payable
to, the Australian Taxation Office (ATO) is included as a current
asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross
basis. The GST components of cash flows arising from investing
and financing activities which are recoverable from, or payable to,
the ATO are classified as operating cash flows.
(p) Earnings per share
The Group presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary
shareholders and the weighted average number of ordinary
shares outstanding for the effects of all dilutive potential
ordinary shares, which comprise convertible notes and share
options granted to employees.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
(q) Segment reporting
Determination and presentation of operating segments
As of 1 July 2009 the Group’s determines and presents operating
segments based on the information that internally is provided
to the CEO, who is the Group’s chief operating decision maker.
This change in accounting policy is due to the adoption of
IFRS 8 Operating Segments. Previously operating segments
were determined and presented in accordance with AASB 114
Segment Reporting. The new accounting policy in respect of
segment operating disclosures is presented as follows.
An operating segment is a component of the Group that
engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate
to transactions with any of the Group’s other components. All
operating segments’ operating results are regularly reviewed
by the Group’s CEO to make decisions about resources to be
allocated to the segment and assess its performance, and for
which discrete financial information is available.
Comparative segment information has been re-presented
in conformity with the transitional requirements of such
standard. Since the change in accounting policy only impacts
presentation and disclosure aspects, there is no impact on
earnings per share.
(r) Presentation of financial statements
The Group applies revised AASB 101 Presentation of Financial
Statements (2007), which became effective as of 1 January 2009.
As a result, the Group presents in the consolidated statement
of changes in equity all owner changes in equity, whereas all
non-owner changes in equity are presented in the consolidated
statement of comprehensive income.
Comparative information has been re-presented so that it also
is in conformity with the revised standard. Since the change in
accounting policy only impacts presentation aspects, there is
no impact on earnings per share
(s) New standard and interpretations not yet adopted
The
following standards, amendments to standards and
interpretations have been identified as those which may
impact the entity in the period of initial application. They are
available for early adoption at 30 June 2010, but have not
been applied in preparing this financial report.
• AASB 2009-5 Further amendments to Australian Accounting
Standards arising from the Annual Improvements Process affect
various AASBs resulting in minor changes for presentation,
disclosure, recognition and measurement purposes. The
amendments, which become mandatory for the Group’s 30
June 2011 financial statements, are not expected to have a
significant impact on the financial statements.
• AASB 2010-3 Amendments to Australian Accounting Standards
arising from the Annual Improvements Process affect various
AASBs resulting in minor changes for presentation, disclosure,
recognition and measurement purposes. The amendments,
which become mandatory for the Group’s 30 June 2011
financial statements, are not expected to have a significant
impact on the financial statements.
• AASB 2010-4 Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Process affect
various AASBs resulting in minor changes for presentation,
disclosure, recognition and measurement purposes. The
amendments, which become mandatory for the Group’s 30
June 2011 financial statements, are not expected to have a
significant impact on the financial statements.
43
• AASB 9 Financial Instruments includes requirements for the
classification and measurement of financial assets resulting
from the first part of Phase 1 of the project to replace AASB
139 Financial Instruments: Recognition and Measurement.
Retrospective application is generally required, although there
are exceptions, particularly if the entity adopts the standard for
the year ended 30 June 2012 or earlier. The Group has not yet
determined the potential effect of the standard.
• AASB 124 Related Party Disclosures (revised December 2009)
simplifies and clarifies the intended meaning of the definition
of a related party and provides a partial exemption from the
disclosure requirements for government-related entities. The
amendments, which will become mandatory for Group’s 30
June 2012 financial statements, are not expected to have any
impact on the financial statements.
4. Determination of fair values
A number of the Group’s accounting policies and disclosures
require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been
determined for measurement and / or disclosure purposes
based on the following methods. Where applicable, further
information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or liability.
Intangible assets
The fair value of customer contracts acquired in a business
combination is based on the discounted cash flows expected to
be derived from the use or eventual sale of these contracts. The
fair value of other intangible assets is based on the discounted
cash flows expected to be derived from the use and eventual sale
of the assets.
Trade and other receivables / payables
For receivables / payables with a remaining life of less than one year,
the notional amount is deemed to reflect the fair value. The fair value
of all other receivables / payables is estimated as the present value
of future cash flows, discounted at the market rate of interest at the
reporting date.
Non-derivative financial instruments
Fair value, which is determined for disclosure purposes, is
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest
at the reporting date. In respect of the liability component of
convertible notes, the market rate of interest is determined by
reference to similar liabilities that do not have a conversion
option. For finance leases the market rate of interest is
determined by reference to similar lease agreements.
Loans and borrowings
Fair value is calculated based on discounted expected future
principal and interest cash flows.
Finance lease liabilities
The fair value is estimated as the present value of future cash
flows, discounted at market interest rates for homogeneous
lease agreements. The estimated fair values reflect changes in
interest rates.
Share-based payment transactions
The fair value of employee stock options is measured using
the Black Scholes and binomial lattice models. Measurement
inputs include share price on measurement date, exercise
price of the instrument, expected volatility (based on weighted
average historic volatility adjusted for changes expected
due to publicly available information), weighted average
expected life of the instruments (based on historical experience
and general option holder behaviour), expected dividends,
and the risk-free interest rate (based on government bonds).
Service and non-market performance conditions attached to
the transactions are not taken into account in determining
fair value.
5. Financial risk management
Overview
The Company and Group have exposure to the following risks
from their use of financial instruments:
• Credit risk;
• Liquidity risk; and
• Market risk.
This note presents information about the Company’s and
Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and
the management of capital. Further quantitative disclosures
are included throughout this financial report.
Risk management framework
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management
framework. The Board has established processes through the
Group Audit Committee, which is responsible for developing
and monitoring risk management policies. The Committee
reports regularly to the Board of Directors on its activities.
Risk management policies are established to identify and
analyse the risks faced by the Company and Group, to set
appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions
and the Company’s and Group’s activities. The Company and
Group, through their training and management standards
and procedures, aim to develop a disciplined and constructive
control environment in which all employees understand their
roles and obligations.
The Group Audit Committee oversees how management
monitors compliance with the Company’s and Group’s
risk management policies and procedures and reviews the
adequacy of the risk management framework in relation
to the risks faced by the Company and Group. The Group
Audit Committee is assisted in its oversight role by Internal
Audit. Internal Audit undertakes reviews of risk management
controls and procedures, the results of which are reported to
the Group Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer
or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s
and Company’s receivables from customers.
Trade and other receivables
is
The Company’s and Group’s exposure to credit risk
influenced mainly by the
individual characteristics of
each customer, including the default risk of the industry
and country in which customers operate. Approximately
2 percent (2009: 2 percent) of the Group’s revenue is
attributable to sales transactions in a geographical region
with a single distributor. This distributor has been transacting
business with the Group for over five years and losses have
occurred infrequently.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
44 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. Financial risk management (continued)
Credit risk (continued)
Credit policy guidelines have been introduced under which
each new customer is assessed by the compliance division
as to suitability and analysed for creditworthiness before the
Group’s standard payment and delivery terms and conditions
are offered. The Group’s review
investigations,
external ratings, when available, and in some cases bank
references. Purchase limits are established for each customer,
which represents the maximum open amount without
requiring approval from the Board. Customers that fail to meet
the Group’s creditworthiness criteria may only transact with
the Group within established limits unless Board approval is
received or otherwise only on a prepayment basis.
includes
In monitoring customer credit risk, customers are grouped
according to their credit characteristics, including whether
they are an individual or legal entity, whether they are a
distributor, operator or customer, geographic location, aging
profile, maturity and existence of previous financial difficulties.
The Group’s trade and other receivables relate mainly to
the Group’s direct customers, operators and established
distributors. Customers that are graded as “high risk” require
future sales to be made on a prepayment basis with approval
of the Chief Executive Officer and Chief Financial Officer up to
approved limits and thereafter only with Board approval.
Goods are sold subject to retention of title clauses, so that
in the event of non-payment the Group may have a secured
claim. The Group does not require collateral in respect of
trade and other receivables.
The Company and Group have established an allowance
for impairment that represents their estimate of incurred
losses in respect of trade and other receivables. The main
components of this allowance are a specific loss component
that relates to individually significant exposures.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet
its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring
unacceptable
losses or risking damage to the Group’s
reputation.
Typically the Group ensures that it has access to sufficient
cash on demand to meet expected operational expenses
for a period of 60 days, including the servicing of financial
obligations; this excludes the potential impact of extreme
circumstances that cannot reasonably be predicted, such
as natural disasters. In addition, the Group maintains the
following lines of credit:
• $40 million facility that can be drawn down to meet
short-term financing needs; and
• $6 million trade facility.
Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable
parameters, while optimising the return.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Currency risk
The Group is exposed to currency risk on sales and purchases
that are denominated in a currency other than the respective
functional currencies of Group entities, primarily the Australian
dollar (AUD), but also the US dollar (USD). The currencies in
which these transactions primarily are denominated are AUD,
New Zealand dollar (NZD), Euro and USD.
The Group regularly monitors and reviews, dependant on
available facilities, the hedging of net assets denominated
in a foreign currency. The Group has at various times utilised
currency call options to hedge its currency risk, most with a
maturity of less than six months. No currency call options were
utilised throughout the reporting period.
In respect of other monetary assets and liabilities denominated
in foreign currencies, the Group monitors its net exposure to
address short-term imbalances.
Interest rate risk
The Group’s borrowing rates are fixed and no interest rate risk
exists.
Capital management
Capital is defined as the total equity of the Group.
The Board’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. The Board continues to
monitor group performance so as to ensure a turnaround is
affected, an acceptable return on capital is achieved and that
dividends will be provided to ordinary shareholders in the
medium term.
The Board continues to review alternatives to ensure present
employees will hold at least 5% of the Company’s ordinary
shares. This is expected to be achieved assuming all outstanding
share options issued vest and/or are exercised. These share
options were issued to all Australian employees over a portion
of the Executive Chairman’s shareholding under a share option
incentive plan provided on 2 July 2007. Refer Note 24.
There were no changes in the Group’s approach to capital
management during the year.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
6. Segment reporting
The Group has nine reportable segments as identified below,
which are the Group’s strategic business units. For each of
the strategic business units, the Chief Executive Officer (CEO)
reviews internal management reports on a monthly basis. The
Group’s corporate head office is located in New South Wales,
Australia where all design and development is undertaken and
manufacturing facilities are operated. Sales offices are operated in
New South Wales, Queensland and the Americas (Florida).
Information regarding the results of each reportable segment is
included below. Performance is measured based on segment
profit before financing costs and income tax as included in
the internal management reports that are reviewed by the
Group’s CEO. Segment profit is used to measure performance
as management believes that such information is the most
relevant in evaluating the results of certain segments relative
to other entities that operate within these industries. Inter-
segment pricing is determined on an arm’s length basis.
Comparative segment information has been represented in
conformity with the requirement of AASB 8 Operating Segments.
d
e
t
a
d
i
l
o
s
n
o
C
r
e
h
t
O
/
e
p
o
r
u
E
d
n
a
l
a
e
Z
w
e
N
a
i
s
A
a
c
i
r
e
m
A
h
t
u
o
S
a
c
i
r
e
m
A
h
t
r
o
N
2
5
3
2
,
3
4
2
7
,
2
9
6
9
,
A
S
8
5
2
I
C
V
D
L
Q
W
S
N
1
0
0
4
,
1
5
6
5
,
9
5
0
3
1
,
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
e
u
n
e
v
e
r
t
n
e
m
g
e
S
s
a
c
i
r
e
m
A
a
i
l
a
r
t
s
u
A
.
s
r
e
m
o
t
s
u
c
f
o
n
o
i
t
a
c
o
l
l
a
c
i
h
p
a
r
g
o
e
g
e
h
t
n
o
d
e
s
a
b
s
i
e
u
n
e
v
e
r
t
n
e
m
g
e
s
,
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
l
f
o
s
i
s
a
b
e
h
t
n
o
n
o
i
t
a
m
r
o
f
n
i
g
n
i
t
n
e
s
e
r
p
n
I
9
0
0
2
e
n
u
J
0
3
d
e
d
n
e
d
o
i
r
e
p
e
h
t
r
o
F
s
t
n
e
m
g
e
s
e
l
b
a
t
r
o
p
e
r
t
u
o
b
a
n
o
i
t
a
m
r
o
f
n
I
)
d
e
u
n
i
t
n
o
c
(
g
n
i
t
r
o
p
e
r
t
n
e
m
g
e
S
.
6
45
4
6
1
5
4
,
7
5
4
2
,
)
8
9
9
0
1
(
,
)
8
0
1
(
1
5
4
)
9
3
(
)
7
0
4
(
)
9
3
6
(
)
8
9
4
(
)
2
4
5
2
1
(
,
7
5
0
1
8
,
7
5
0
1
8
,
)
2
8
9
3
6
(
,
)
2
8
9
3
6
(
,
)
6
9
5
1
(
,
)
5
4
0
3
(
,
6
2
3
1
,
7
0
7
2
,
1
7
1
-
-
-
-
-
-
-
-
-
8
8
3
7
,
-
)
3
9
6
(
-
-
-
-
-
-
-
-
-
-
-
-
)
0
5
3
(
)
6
4
7
1
(
,
)
7
5
4
6
(
,
)
1
6
1
(
8
8
)
5
7
8
(
)
0
5
3
1
(
,
t
l
u
s
e
r
t
n
e
m
g
e
S
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
9
4
4
(
5
6
5
5
6
5
)
6
1
5
(
)
6
1
5
(
-
0
6
-
7
5
4
4
1
,
)
9
2
3
4
1
(
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
4
8
4
-
-
-
-
-
-
-
)
7
0
4
(
-
)
9
4
(
4
4
4
0
8
,
4
4
4
0
8
,
)
6
6
4
3
6
(
,
)
6
6
4
3
6
(
,
)
1
4
4
3
2
(
,
)
5
4
0
3
(
,
8
4
3
6
1
,
1
7
1
7
4
6
2
,
s
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
y
t
i
u
q
e
n
i
)
s
e
s
s
o
l
(
f
o
e
r
a
h
S
s
t
s
o
c
g
n
c
n
a
n
i
i
f
t
e
N
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
I
d
o
i
r
e
p
e
h
t
r
o
f
)
s
s
o
L
(
s
t
e
s
s
a
t
n
e
m
g
e
S
s
t
e
s
s
a
l
a
t
o
T
s
e
i
t
i
v
i
t
c
a
g
n
i
t
a
r
e
p
o
m
o
r
f
s
w
o
l
f
h
s
a
C
s
e
i
t
i
v
i
t
c
a
g
n
i
t
s
e
v
n
m
o
r
f
i
s
w
o
l
f
h
s
a
C
s
e
i
t
i
v
i
t
c
a
g
n
c
n
a
n
i
i
f
m
o
r
f
s
w
o
l
f
h
s
a
C
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
C
s
e
i
t
i
l
i
b
a
i
l
l
a
t
o
T
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
I
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
46
d
e
t
i
i
l
m
L
y
g
o
o
n
h
c
e
T
e
m
a
G
h
t
r
o
w
s
n
A
i
.
s
r
e
m
o
t
s
u
c
f
o
n
o
i
t
a
c
o
l
l
a
c
i
h
p
a
r
g
o
e
g
e
h
t
n
o
d
e
s
a
b
s
i
e
u
n
e
v
e
r
t
n
e
m
g
e
s
,
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
l
f
o
s
i
s
a
b
e
h
t
n
o
n
o
i
t
a
m
r
o
f
n
i
g
n
i
t
n
e
s
e
r
p
n
I
s
t
n
e
m
g
e
s
e
l
b
a
t
r
o
p
e
r
t
u
o
b
a
n
o
i
t
a
m
r
o
f
n
I
)
d
e
u
n
i
t
n
o
c
(
g
n
i
t
r
o
p
e
r
t
n
e
m
g
e
S
.
6
)
d
e
u
n
i
t
n
o
c
(
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
E
H
T
O
T
S
E
T
O
N
d
e
t
a
d
i
l
o
s
n
o
C
r
e
h
t
O
/
e
p
o
r
u
E
d
n
a
l
a
e
Z
w
e
N
a
i
s
A
a
c
i
r
e
m
A
h
t
u
o
S
a
c
i
r
e
m
A
h
t
r
o
N
A
S
I
C
V
s
a
c
i
r
e
m
A
a
i
l
a
r
t
s
u
A
D
L
Q
W
S
N
4
1
7
7
2
0
2
,
7
4
2
0
1
,
1
1
9
7
,
6
9
7
1
,
4
6
3
6
,
2
6
6
1
1
,
4
1
4
8
2
,
0
1
0
2
e
n
u
J
0
3
d
e
d
n
e
d
o
i
r
e
p
e
h
t
r
o
F
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
e
u
n
e
v
e
r
t
n
e
m
g
e
S
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
8
7
2
9
6
,
8
8
5
4
,
-
)
4
5
9
6
(
,
)
5
5
3
(
)
1
2
7
2
(
,
4
6
2
5
8
,
4
6
2
5
8
,
)
1
3
1
0
7
(
,
)
1
3
1
0
7
(
,
1
2
6
0
1
,
)
3
5
0
4
(
,
)
5
8
2
1
(
,
1
7
1
7
1
5
3
,
3
4
1
3
1
-
-
-
-
-
-
-
-
-
-
-
-
3
6
1
)
4
9
(
)
9
7
1
1
(
,
)
9
8
9
1
(
,
9
4
1
1
6
7
1
,
1
2
4
2
,
3
4
3
3
,
t
l
u
s
e
r
t
n
e
m
g
e
S
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
5
4
3
(
3
1
4
1
,
3
1
4
1
,
)
7
4
3
1
(
,
)
7
4
3
1
(
,
-
8
0
7
9
,
)
5
3
7
8
(
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
8
1
2
8
1
-
-
-
-
-
-
-
-
-
)
0
1
(
9
6
6
3
8
,
9
6
6
3
8
,
)
4
8
7
8
6
(
,
)
4
8
7
8
6
(
,
3
1
9
)
3
5
0
4
(
,
0
5
4
7
,
7
1
5
3
,
1
7
1
s
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
y
t
i
u
q
e
n
i
)
s
e
s
s
o
l
(
f
o
e
r
a
h
S
s
t
s
o
c
g
n
c
n
a
n
i
i
f
t
e
N
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
I
d
o
i
r
e
p
e
h
t
r
o
f
)
s
s
o
L
(
s
t
e
s
s
a
t
n
e
m
g
e
S
s
t
e
s
s
a
l
a
t
o
T
s
e
i
t
i
v
i
t
c
a
g
n
i
t
a
r
e
p
o
m
o
r
f
s
w
o
l
f
h
s
a
C
s
e
i
t
i
v
i
t
c
a
g
n
i
t
s
e
v
n
m
o
r
f
i
s
w
o
l
f
h
s
a
C
s
e
i
t
i
v
i
t
c
a
g
n
c
n
a
n
i
i
f
m
o
r
f
s
w
o
l
f
h
s
a
C
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
C
s
e
i
t
i
l
i
b
a
i
l
l
a
t
o
T
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
I
47
Note
Consolidated
Company
2010
64,051
5,227
69,278
2009
44,285
879
45,164
2010
63,637
390
64,027
2009
43,960
-
43,960
7. Revenue
In thousands of AUD
Sales
Services
8. Other income
In thousands of AUD
Dividends received and income from subsidiaries
Other
-
198
198
-
161
161
-
197
197
219
148
367
9. Personnel expenses
In thousands of AUD
Wages and salaries
Contributions to defined contribution superannuation funds
Increase in liability for annual leave
Increase in liability for long service leave
Termination benefits
Equity settled share-based payment transactions
23
23
20,030
1,466
18,629
1,218
13,393
1,227
14,124
1,181
281
208
29
88
399
280
121
146
34
152
29
88
223
137
121
146
22,102
20,793
14,923
15,932
10. Auditors’ remuneration
In AUD
Audit services:
Auditors of the Company
KPMG Australia
Audit and review of financial reports
179,750
200,000
179,750
200,000
All amounts payable to the Auditors of the Group were paid by the parent of the Group.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
48 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. Finance income and expense
In thousands of AUD
Interest income on trade receivables
Interest income on bank deposits
Net foreign exchange gain
Financial income
Interest expense on financial liabilities
Net foreign exchange loss
Financial expenses
Net financing (expenses)
12. Income tax expense
Recognised in the income statement
In thousands of AUD
Current tax expense
Current period
Effect of tax losses recognised
Deferred tax expense
Origination and reversal of temporary differences
Effect of tax losses recognised
Consolidated
Company
2010
2009
2010
2009
739
59
-
798
(7,252)
(500)
(7,752)
(6,954)
355
-
355
-
-
-
740
27
5,256
6,023
(6,662)
-
(6,662)
(639)
498
-
498
-
-
-
730
59
-
789
(7,202)
(527)
(7,729)
(6,940)
-
-
-
-
-
-
-
740
27
5,256
6,023
(6,656)
-
(6,656)
(633)
-
-
-
-
-
-
-
Total income tax expense
355
498
Numerical reconciliation between tax expense and pre-tax net (loss)
(Loss) for the period
Total income tax expense
(Loss) excluding income tax
(2,721)
355
(2,366)
(12,542)
498
(12,044)
(3,760)
(12,559)
-
-
(3,760)
(12,559)
Income tax using the Company’s domestic tax rate of 30%
(2009 30%)
(710)
(3,613)
(1,128)
(3,768)
Non-deductible expenses
Non-assessable income and concessions
Deferred tax not recognised
3,593
(4,669)
2,141
355
4,583
(3,485)
3,013
498
3,548
(4,669)
2,249
-
4,583
(3,557)
2,742
-
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
49
13. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 30 June 2010 was based on the loss attributable to ordinary shareholders of $2,721,000
(2009: loss of $12,542,000) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June
2010 of 278,942,000 (2009: 278,942,000), calculated as follows:
(Loss) attributable to ordinary shareholders
In thousands of AUD
(Loss) for the period
(Loss) attributable to ordinary shareholders
Weighted average number of ordinary shares
In thousands of shares
Issued ordinary shares at 1 July
Weighted average number of ordinary shares at 30 June
Note
Consolidated
2010
(2,721)
(2,721)
2009
(12,542)
(12,542)
26
278,942
278,942
238,492
238,492
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2010 was based on the loss attributable to ordinary shareholders of $2,721,000
(2009: loss of $12,542,000) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June
2010 of 278,942,000 (2009: 278,942,000), calculated as follows:
(Loss) attributable to ordinary shareholders (diluted)
In thousands of AUD
(Loss) attributable to ordinary shareholders
Interest expense on convertible notes, net of tax
(Loss) attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares (diluted)
In thousands of shares
Weighted average number of ordinary shares at 30 June
Effect of conversion of convertible notes
Effect of share options on issue
Weighted average number of ordinary shares (diluted) at 30 June
(a)
(a)
(a)
2010
(2,721)
-
2009
(12,542)
-
(2,721)
(12,542)
278,942
278,942
-
-
-
-
278,942
278,942
(a)
For the year ended 30 June 2010 the effect of the convertible notes was anti-dilutive as the Group recorded a loss for the period.
For the year ended 30 June 2010, the calculation of loss attributable to ordinary shareholders (diluted) and weighted average
number of ordinary shares (diluted) also excludes the after-tax effect of interest on convertible notes (see note 22) and the effect
of conversion of convertible notes, respectively, as the effect would be anti-dilutive.
The outstanding share options on issue were not considered to be potential ordinary shares for the year ended 30 June 2010 or
30 June 2009 as they were anti-dilutive.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
50 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. Cash and cash equivalents
In thousands of AUD
Bank balances
Cash and cash equivalents in the statements of cash flows
Note
Consolidated
Company
2010
6,144
6,144
2009
958
958
2010
5,091
5,091
2009
804
804
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 32.
15. Receivables and other assets
In thousands of AUD
Current
Trade receivables
Less impairment losses
Other assets
Non-current
Term receivables
Other
Receivables due from subsidiaries
Less impairment losses
18,967
(351)
18,616
87
18,703
23,574
(4,268)
19,306
324
19,630
10,230
7,999
33
95
-
-
-
-
-
18,209
(287)
17,922
88
18,010
10,230
95
4,261
(920)
22,990
(4,219)
18,771
30
18,801
7,999
-
4,290
-
10,325
7,999
13,666
12,289
Impairment losses on receivables and other assets realised by the Company for the year ended 30 June 2010 were $1,199 thousand
(2009: $Nil). The Group realised impairment losses of $351 thousand (2009: $Nil) for the year ended 30 June 2010.
Receivables denominated in currencies other than the functional currency comprise $20,116 thousand of trade receivables
denominated in US dollars (2009: $25,371 thousand), $Nil in Euro (2009: $145 thousand) and $560 thousand in New Zealand
Dollars (2009: $237 thousand).
The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in
note 32.
16. Inventories
In thousands of AUD
Raw materials and consumables
Finished goods
Stock in transit
Inventories stated at the lower of cost and net realisable value
Consolidated
Company
2010
6,749
6,041
301
13,091
2009
6,647
10,770
114
17,531
2010
6,461
6,041
301
12,803
2009
6,357
10,770
114
17,241
During the year ended 30 June 2010 raw materials, consumables and changes in finished goods and work in progress recognised
as cost of sales amounted to $26,951 thousand (2009: $18,493 thousand). During the year ended 30 June 2010 the write-down of
inventories to net realisable value amounted to $350 thousand (2009: $1,658 thousand). The write-down is included in cost of sales.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
-
)
7
0
4
(
)
7
0
4
(
-
-
-
-
)
1
6
5
4
(
,
)
1
6
5
4
(
,
-
4
5
1
4
,
4
5
1
4
,
-
4
5
2
2
,
4
5
2
2
,
-
5
1
2
1
,
5
1
2
1
,
-
9
3
0
1
,
9
3
0
1
,
0
3
1
8
3
3
2
,
8
6
4
2
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
3
1
7
7
4
1
,
7
0
6
1
,
-
-
-
-
1
6
8
1
6
8
-
-
-
%
9
4
%
9
4
-
-
)
s
s
o
l
(
/
t
i
f
o
r
P
s
e
s
n
e
p
x
E
s
e
u
n
e
v
e
R
l
a
t
o
T
s
e
i
t
i
l
i
b
a
i
l
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
c
-
n
o
N
t
n
e
r
r
u
C
s
e
i
t
i
l
i
b
a
i
l
l
a
t
o
T
s
t
e
s
s
a
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
s
t
e
s
s
a
t
n
e
r
r
u
C
i
p
h
s
r
e
n
w
O
:
s
m
e
t
i
i
g
n
w
o
l
l
o
f
e
h
t
f
o
t
c
e
p
s
e
r
n
i
9
0
0
2
2
7
4
2
,
4
4
6
2
3
,
6
1
1
5
3
,
0
1
0
2
5
2
9
1
,
0
3
1
7
3
,
5
5
0
9
3
,
9
0
0
2
5
7
4
2
,
5
0
9
2
3
,
0
8
3
5
3
,
0
1
0
2
5
5
9
1
,
9
8
3
7
3
,
4
4
3
9
3
,
y
n
a
p
m
o
C
d
e
t
a
d
i
l
o
s
n
o
C
i
)
e
t
a
c
o
s
s
a
(
i
d
t
L
y
t
P
s
e
t
a
c
o
s
s
A
&
r
e
k
a
B
R
&
E
R
i
)
e
t
a
c
o
s
s
a
(
d
t
L
y
t
P
s
e
n
h
c
a
M
A
&
J
i
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
9
0
0
2
i
)
e
t
a
c
o
s
s
a
(
i
d
t
L
y
t
P
s
e
t
a
c
o
s
s
A
&
r
e
k
a
B
R
&
E
R
i
)
e
t
a
c
o
s
s
a
(
d
t
L
y
t
P
s
e
n
h
c
a
M
A
&
J
i
0
1
0
2
d
e
s
i
n
g
o
c
e
r
n
e
e
b
t
o
n
e
v
a
h
s
t
e
s
s
a
x
a
t
d
e
r
r
e
f
e
D
s
t
e
s
s
a
x
a
t
d
e
r
r
e
f
e
d
d
e
s
i
n
g
o
c
e
r
n
U
s
e
i
t
i
l
i
b
a
i
l
d
n
a
s
t
e
s
s
a
x
a
T
.
8
1
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
i
s
e
c
n
e
r
e
ff
d
y
r
a
r
o
p
m
e
t
e
b
i
t
c
u
d
e
D
l
s
e
s
s
o
l
x
a
T
.
e
t
a
d
s
i
h
t
m
o
r
f
s
t
l
u
s
e
r
p
u
o
r
G
o
t
n
i
d
e
t
a
d
i
l
i
o
s
n
o
c
s
a
w
h
c
h
w
9
0
0
2
y
a
M
1
3
t
a
s
a
s
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
y
t
i
u
q
e
r
o
f
n
o
i
t
a
m
r
o
n
f
i
l
i
a
c
n
a
n
i
f
y
r
a
m
m
u
S
,
.
)
)
0
0
0
7
0
4
$
(
:
9
0
0
2
(
l
i
N
$
s
a
w
r
a
e
y
e
h
t
r
o
f
s
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
y
t
i
u
q
e
s
t
i
n
i
t
i
f
o
r
p
/
)
s
e
s
s
o
l
(
f
’
o
e
r
a
h
s
s
p
u
o
r
G
e
h
T
s
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
y
t
i
u
q
E
7.
1
51
l
t
a
h
t
e
b
a
b
o
r
p
t
o
n
s
i
t
i
e
s
u
a
c
e
b
s
m
e
t
i
e
s
e
h
t
f
o
t
c
e
p
s
e
r
n
i
d
e
s
i
n
g
o
c
e
r
n
e
e
b
t
o
n
e
v
a
h
s
t
e
s
s
a
x
a
t
d
e
r
r
e
f
e
D
.
n
o
i
t
a
l
s
i
g
e
l
x
a
t
t
n
e
r
r
u
c
r
e
d
n
u
e
r
i
p
x
e
t
o
n
o
d
s
e
s
s
o
l
x
a
t
d
n
a
s
e
c
n
e
r
e
f
f
i
d
y
r
a
r
o
p
m
e
t
e
b
i
t
c
u
d
e
d
e
h
T
l
.
m
o
r
f
s
t
i
f
e
n
e
b
e
h
t
e
s
i
l
i
t
u
n
a
c
p
u
o
r
G
e
h
t
h
c
h
w
i
i
t
s
n
a
g
a
e
b
a
l
l
i
a
v
a
e
b
l
l
i
w
t
i
f
l
o
r
p
e
b
a
x
a
t
e
r
u
t
u
f
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
52
l
a
t
o
T
l
d
o
h
e
s
a
e
L
s
t
n
e
m
e
v
o
r
p
m
i
d
n
a
t
n
a
l
P
t
n
e
m
p
u
q
e
i
y
n
a
p
m
o
C
d
n
a
d
n
a
L
s
g
n
d
i
l
i
u
b
l
a
t
o
T
l
d
o
h
e
s
a
e
L
s
t
n
e
m
e
v
o
r
p
m
i
d
n
a
t
n
a
l
P
t
n
e
m
p
u
q
e
i
d
e
t
a
d
i
l
o
s
n
o
C
s
g
n
d
i
l
i
u
b
d
n
a
d
n
a
L
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
l
p
,
y
t
r
e
p
o
r
P
.
9
1
)
d
e
u
n
i
t
n
o
c
(
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
E
H
T
O
T
S
E
T
O
N
d
e
t
i
i
l
m
L
y
g
o
o
n
h
c
e
T
e
m
a
G
h
t
r
o
w
s
n
A
i
1
4
4
1
3
,
4
2
-
-
7
9
9
1
,
)
8
1
2
1
(
,
0
2
2
2
3
,
0
2
2
2
3
,
-
4
1
0
2
,
)
5
5
7
(
-
-
)
4
1
(
-
0
1
0
1
-
-
-
9
7
4
3
3
,
0
1
-
6
8
1
2
1
,
-
2
1
2
1
,
)
4
0
2
1
(
,
4
9
1
2
1
,
4
9
1
2
1
,
-
4
1
0
2
,
)
5
5
7
(
3
5
4
3
1
,
-
5
8
7
-
-
1
3
2
9
1
,
6
1
0
0
2
,
6
1
0
0
2
,
-
-
-
6
1
0
0
2
,
9
4
8
1
3
,
9
4
6
0
6
0
2
,
)
8
1
2
1
(
,
6
6
6
0
4
3
3
,
6
0
4
3
3
,
5
6
3
2
,
)
6
6
1
1
(
,
)
5
2
(
0
8
5
4
3
,
-
6
7
5
3
)
4
1
(
0
1
7
0
1
7
0
1
-
-
)
5
(
2
0
1
2
4
5
2
1
,
9
4
6
0
4
2
1
,
)
4
0
2
1
(
,
6
5
3
8
2
3
1
,
3
8
2
3
1
,
5
6
3
2
,
)
6
6
1
1
(
,
)
0
2
(
2
6
4
4
1
,
-
5
8
7
-
-
1
3
2
9
1
,
6
1
0
0
2
,
6
1
0
0
2
,
-
-
-
i
s
n
o
i
t
a
n
b
m
o
c
s
s
e
n
i
s
u
b
h
g
u
o
r
h
t
s
n
o
i
t
i
s
i
u
q
c
A
e
g
n
a
h
c
x
e
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
f
o
t
c
e
f
f
E
9
0
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
s
n
o
i
t
i
d
d
A
s
l
a
s
o
p
s
i
D
e
g
n
a
h
c
x
e
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
f
o
t
c
e
f
f
E
s
n
o
i
t
i
d
d
A
s
l
a
s
o
p
s
i
D
l
9
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
t
s
o
C
l
8
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
6
1
0
0
2
,
0
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
l
a
t
o
T
1
4
7
8
,
8
3
6
1
,
)
2
1
8
(
-
7
6
5
9
,
-
7
6
5
9
,
3
4
2
2
,
)
1
3
5
(
5
1
1
)
6
(
-
0
1
0
1
-
-
-
9
7
2
1
1
,
0
1
0
0
7
2
2
,
3
5
6
2
2
,
3
5
6
2
2
,
0
0
2
2
2
,
9
-
-
-
l
d
o
h
e
s
a
e
L
s
t
n
e
m
e
v
o
r
p
m
i
d
n
a
t
n
a
l
P
t
n
e
m
p
u
q
e
i
y
n
a
p
m
o
C
d
n
a
d
n
a
L
s
g
n
d
i
l
i
u
b
4
2
4
7
,
8
8
2
1
,
)
6
0
8
(
-
6
0
9
7
,
6
0
9
7
,
0
9
8
1
,
)
1
3
5
(
-
5
6
2
9
,
2
6
7
4
,
8
8
2
4
,
8
8
2
4
,
8
8
1
4
,
-
-
9
4
3
2
0
3
1
,
1
5
6
1
,
3
5
3
1
5
6
1
,
-
-
4
0
0
2
,
9
2
9
7
1
,
5
6
3
8
1
,
5
6
3
8
1
,
2
1
0
8
1
,
d
e
t
a
d
i
l
o
s
n
o
C
l
a
t
o
T
8
6
9
8
,
8
6
7
1
,
)
2
1
8
(
6
3
0
6
9
9
,
0
6
9
9
,
3
4
4
2
,
)
0
6
8
(
)
8
1
(
5
2
5
1
1
,
1
8
8
2
2
,
6
4
4
3
2
,
6
4
4
3
2
,
5
5
0
3
2
,
l
d
o
h
e
s
a
e
L
s
t
n
e
m
e
v
o
r
p
m
i
d
n
a
t
n
a
l
P
t
n
e
m
p
u
q
e
i
d
n
a
d
n
a
L
s
g
n
d
i
l
i
u
b
4
2
0
3
)
6
(
2
0
5
0
5
1
3
-
)
2
(
9
7
2
5
7
5
7
5
3
2
2
4
6
7
,
9
8
3
1
,
)
6
0
8
(
4
3
9
5
2
8
,
9
5
2
8
,
9
5
0
2
,
)
0
6
8
(
)
6
1
(
2
4
4
9
,
0
0
9
4
,
4
2
0
5
,
4
2
0
5
,
0
2
0
5
,
-
-
9
4
3
2
0
3
1
,
1
5
6
1
,
3
5
3
1
5
6
1
,
-
-
4
0
0
2
,
9
2
9
7
1
,
5
6
3
8
1
,
5
6
3
8
1
,
2
1
0
8
1
,
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
i
d
n
a
n
o
i
t
a
i
c
e
r
p
e
D
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
l
8
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
r
a
e
y
e
h
t
r
o
f
e
g
r
a
h
c
n
o
i
t
a
c
e
r
p
e
D
i
e
g
n
a
h
c
x
e
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
o
t
c
e
f
f
E
f
s
l
a
s
o
p
s
i
D
9
0
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
l
9
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
r
a
e
y
e
h
t
r
o
f
e
g
r
a
h
c
n
o
i
t
a
c
e
r
p
e
D
i
e
g
n
a
h
c
x
e
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
o
t
c
e
f
f
E
f
s
l
a
s
o
p
s
i
D
0
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
s
t
n
u
o
m
a
g
n
i
y
r
r
a
C
l
8
0
0
2
y
u
J
1
t
A
9
0
0
2
e
n
u
J
0
3
t
A
l
9
0
0
2
y
u
J
1
t
A
0
1
0
2
e
n
u
J
0
3
t
A
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
d
e
s
a
e
L
l
53
f
o
s
n
a
e
m
y
b
,
i
l
s
e
c
h
e
v
r
o
t
o
m
d
n
a
t
n
e
m
p
u
q
e
r
e
t
u
p
m
o
c
g
n
d
u
c
n
l
i
i
i
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
l
f
o
n
o
i
t
i
s
i
u
q
c
A
.
s
n
o
i
t
a
g
i
l
b
o
e
s
a
e
l
e
r
u
c
e
s
d
e
h
s
i
l
b
a
t
s
e
s
e
e
t
n
a
r
a
u
g
d
n
a
t
n
e
m
p
u
q
e
d
e
s
a
e
i
l
e
h
T
.
e
c
i
r
p
l
i
a
c
fi
e
n
e
b
,
.
)
0
0
0
6
6
9
1
$
,
:
,
9
0
0
2
(
0
0
0
1
4
1
2
$
s
a
w
,
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
d
e
s
a
e
l
l
f
o
t
n
u
o
m
a
g
n
y
r
r
a
c
t
e
n
e
h
t
i
,
0
1
0
2
e
n
u
J
0
3
t
A
,
.
)
0
0
0
6
4
2
$
:
,
9
0
0
2
(
0
0
0
9
1
9
$
o
t
d
e
t
n
u
o
m
a
s
t
n
e
m
e
e
r
g
a
e
s
a
h
c
r
u
p
e
r
i
h
.
i
s
g
n
w
o
r
r
o
b
d
n
a
s
n
a
o
l
e
r
u
c
e
s
o
t
e
g
a
g
t
r
o
m
e
r
u
t
n
e
b
e
d
a
o
t
j
t
c
e
b
u
s
s
i
,
)
0
0
0
5
6
3
8
1
$
,
:
9
0
0
2
(
0
0
0
2
1
0
8
1
$
f
,
,
o
t
n
u
o
m
a
g
n
y
r
r
a
c
a
h
t
i
i
w
y
t
r
e
p
o
r
p
a
0
1
0
2
e
n
u
J
0
3
t
A
y
t
i
r
u
c
e
S
a
t
a
i
t
n
e
m
p
u
q
e
e
h
t
e
s
a
h
c
r
u
p
o
t
n
o
i
t
p
o
e
h
t
s
a
h
p
u
o
r
G
e
h
t
s
t
n
e
m
e
e
r
g
a
e
s
e
h
t
f
o
h
c
a
e
f
o
d
n
e
e
h
t
t
A
.
s
t
n
e
m
e
e
r
g
a
e
s
a
h
c
r
u
p
e
r
i
h
r
e
d
n
u
s
e
c
h
e
v
l
i
r
o
t
o
m
d
n
a
i
t
n
e
m
p
u
q
e
d
n
a
l
t
n
a
p
s
e
s
a
e
l
p
u
o
r
G
e
h
T
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
6
3
8
9
5
6
3
1
,
6
3
8
9
5
6
3
1
,
54
y
n
a
p
m
o
C
d
e
t
a
d
i
l
o
s
n
o
C
)
d
e
u
n
i
t
n
o
c
(
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
E
H
T
O
T
S
E
T
O
N
l
s
t
e
s
s
a
e
b
g
n
a
t
n
i
I
.
0
2
d
e
t
i
i
l
m
L
y
g
o
o
n
h
c
e
T
e
m
a
G
h
t
r
o
w
s
n
A
i
a
d
a
v
e
N
l
a
u
t
c
e
l
l
e
t
n
I
t
n
e
m
p
o
e
v
e
D
l
l
a
t
o
T
s
t
s
o
c
e
c
n
e
c
i
l
y
t
r
e
p
o
r
p
*
s
t
s
o
c
l
l
i
w
d
o
o
G
l
a
t
o
T
e
c
i
v
r
e
S
s
t
c
a
r
t
n
o
c
s
t
s
o
c
e
c
n
e
c
i
l
y
t
r
e
p
o
r
p
*
s
t
s
o
c
a
d
a
v
e
N
l
a
u
t
c
e
l
l
e
t
n
I
t
n
e
m
p
o
e
v
e
D
l
l
l
i
w
d
o
o
G
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
t
s
o
C
0
6
6
5
1
,
)
3
2
8
(
-
-
8
1
0
1
,
8
1
0
1
,
8
4
0
2
,
-
3
0
9
7
1
,
8
1
0
1
,
3
0
9
7
1
,
8
1
0
1
,
)
5
6
0
1
(
,
-
7
1
5
3
,
-
2
4
5
2
4
5
-
-
-
6
3
8
6
3
8
-
-
-
-
-
8
4
0
2
,
7
0
7
5
1
,
7
0
7
5
1
,
)
5
6
0
1
(
,
-
7
1
5
3
,
9
5
1
8
1
,
5
6
1
1
,
)
3
2
8
(
-
-
2
4
3
2
4
3
-
-
-
)
3
2
8
(
1
7
2
3
,
8
4
0
2
,
-
-
-
6
6
0
7
1
,
3
2
2
1
,
-
-
-
8
1
0
1
,
2
6
5
1
2
,
3
2
2
1
,
8
1
0
1
,
2
6
5
1
2
,
3
2
2
1
,
8
1
0
1
,
)
5
6
0
1
(
,
2
4
5
7
1
5
3
,
-
-
-
-
-
2
4
5
-
-
-
6
3
8
6
3
8
-
-
-
7
9
8
0
2
,
0
6
5
1
,
6
3
8
2
4
3
6
5
5
4
2
,
3
2
2
1
,
0
6
5
1
,
6
3
8
-
-
8
4
0
2
,
7
0
7
5
1
,
7
0
7
5
1
,
)
5
6
0
1
(
,
-
7
1
5
3
,
9
5
1
8
1
,
8
4
3
1
,
)
3
2
8
(
3
5
2
2
,
-
8
7
7
2
,
8
7
7
2
,
-
-
-
d
e
s
i
l
a
t
i
p
a
c
s
t
s
o
c
t
n
e
m
p
o
e
v
e
D
l
s
t
s
o
c
t
n
e
m
p
o
e
v
e
d
l
t
s
o
c
t
a
–
n
o
i
t
i
s
i
u
q
c
A
9
0
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
r
a
e
y
e
h
t
g
n
i
r
u
d
l
9
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
s
t
s
o
c
n
w
o
d
n
e
t
t
i
r
w
y
l
l
u
f
k
c
a
b
e
t
i
r
W
d
e
s
i
l
a
t
i
p
a
c
s
t
s
o
c
t
n
e
m
p
o
e
v
e
D
l
r
a
e
y
e
h
t
g
n
i
r
u
d
t
s
o
c
t
a
–
n
o
i
t
i
s
i
u
q
c
A
n
w
o
d
n
e
t
t
i
r
w
y
l
l
u
f
k
c
a
b
e
t
i
r
W
l
8
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
8
7
7
2
,
0
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
.
i
s
g
n
d
n
fi
h
c
r
a
e
s
e
r
f
l
o
t
n
e
m
p
o
e
v
e
d
o
t
e
t
a
e
r
e
s
e
h
T
*
l
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
y
n
a
p
m
o
C
d
e
t
a
d
i
l
o
s
n
o
C
l
a
t
o
T
s
t
s
o
c
e
c
n
e
c
i
l
a
d
a
v
e
N
y
t
r
e
p
o
r
p
l
a
u
t
c
e
l
l
e
t
n
I
*
s
t
s
o
c
t
n
e
m
p
o
e
v
e
D
l
l
l
i
w
d
o
o
G
l
a
t
o
T
e
c
i
v
r
e
S
s
t
c
a
r
t
n
o
c
s
t
s
o
c
e
c
n
e
c
i
l
y
t
r
e
p
o
r
p
*
s
t
s
o
c
a
d
a
v
e
N
l
a
u
t
c
e
l
l
e
t
n
I
t
n
e
m
p
o
e
v
e
D
l
l
l
i
w
d
o
o
G
t
n
e
m
r
i
a
p
m
i
d
n
a
n
o
i
t
a
s
i
t
r
o
m
A
s
e
s
s
o
l
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
1
5
5
7
,
)
3
2
8
(
2
3
0
3
,
1
7
1
1
3
9
9
,
1
3
9
9
,
)
4
6
0
1
(
,
1
7
1
2
1
7
1
,
0
5
7
0
1
,
-
-
-
-
-
-
-
-
-
-
9
0
1
8
,
2
7
9
7
,
2
7
9
7
,
7
4
1
0
1
,
-
8
1
0
1
,
8
1
0
1
,
0
6
5
1
,
4
8
-
3
8
-
7
6
1
7
6
1
-
4
8
-
1
5
2
2
5
7
9
6
6
9
6
6
5
8
5
4
4
6
6
,
-
9
4
9
2
,
-
3
9
5
9
,
3
9
5
9
,
8
2
6
1
,
)
4
6
0
1
(
,
-
7
5
1
0
1
,
5
1
0
7
,
4
1
1
6
,
4
1
1
6
,
2
0
0
8
,
3
2
8
6
8
0
8
,
5
3
5
-
1
7
1
1
7
1
1
7
1
-
-
1
7
1
2
4
3
2
4
3
1
7
1
1
7
1
-
)
3
2
8
(
)
3
2
8
(
5
8
1
3
,
1
7
1
-
-
3
5
1
9
1
6
0
1
,
8
8
6
9
1
6
0
1
,
8
8
6
)
4
6
0
1
(
,
-
1
7
1
4
6
8
1
,
-
2
5
1
0
9
5
1
1
,
0
4
8
0
8
9
8
,
3
4
9
0
1
,
3
4
9
0
1
,
6
6
9
2
1
,
8
8
6
5
3
5
5
3
5
3
8
3
-
-
-
-
-
-
-
-
-
-
-
8
1
0
1
,
8
1
0
1
,
0
6
5
1
,
3
8
9
0
0
2
9
4
9
2
,
2
3
0
3
,
4
8
-
3
8
-
7
6
1
7
6
1
-
4
8
-
1
5
2
2
5
7
9
6
6
9
6
6
5
8
5
4
4
6
6
,
-
9
4
9
2
,
-
3
9
5
9
,
3
9
5
9
,
8
2
6
1
,
)
4
6
0
1
(
,
-
7
5
1
0
1
,
5
1
0
7
,
4
1
1
6
,
4
1
1
6
,
2
0
0
8
,
3
2
8
)
3
2
8
(
-
1
7
1
1
7
1
1
7
1
-
-
1
7
1
2
4
3
5
2
5
7
0
6
2
,
7
0
6
2
,
6
3
4
2
,
y
l
l
u
f
n
o
n
o
i
t
a
s
i
t
r
o
m
a
k
c
a
b
e
t
i
r
W
l
8
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
l
s
t
s
o
c
t
n
e
m
p
o
e
v
e
d
n
w
o
d
n
e
t
t
i
r
w
r
a
e
y
e
h
t
r
o
f
n
o
i
t
a
s
i
t
r
o
m
A
y
l
l
u
f
9
0
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
n
o
n
o
i
t
a
s
i
t
r
o
m
a
k
c
a
b
e
t
i
r
W
s
t
s
o
c
n
w
o
d
n
e
t
t
i
r
w
r
a
e
y
e
h
t
r
o
f
n
o
i
t
a
s
i
t
r
o
m
A
l
9
0
0
2
y
u
J
1
t
a
e
c
n
a
a
B
l
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
I
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
I
t
n
e
m
r
i
a
p
m
i
d
n
a
n
o
i
t
a
s
i
t
r
o
m
A
0
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
9
0
0
2
e
n
u
J
0
3
t
A
l
9
0
0
2
y
u
J
1
t
A
0
1
0
2
e
n
u
J
0
3
t
A
l
8
0
0
2
y
u
J
1
t
A
s
e
s
s
o
l
.
i
s
g
n
d
n
fi
h
c
r
a
e
s
e
r
f
l
o
t
n
e
m
p
o
e
v
e
d
o
t
e
t
a
e
r
e
s
e
h
T
*
l
s
s
o
l
t
n
e
m
r
i
a
p
m
i
d
n
a
e
g
r
a
h
c
n
o
i
t
a
s
i
t
r
o
m
A
y
n
a
p
m
o
C
:
t
n
e
m
e
t
a
t
s
e
m
o
c
n
i
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
n
i
s
m
e
t
i
e
n
i
l
i
g
n
w
o
l
l
o
f
e
h
t
n
i
4
8
0
1
0
2
8
2
6
1
,
2
1
7
1
,
3
8
9
0
0
2
2
0
1
3
,
5
8
1
3
,
4
8
0
1
0
2
0
8
7
1
,
4
6
8
1
,
d
e
s
i
n
g
o
c
e
r
s
i
e
g
r
a
h
c
n
o
i
t
a
s
i
t
r
o
m
a
e
h
T
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
s
e
s
n
e
p
x
e
g
n
i
t
a
r
e
p
o
r
e
h
t
O
l
s
e
a
s
f
o
t
s
o
C
55
.
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
f
o
t
n
e
m
e
t
a
t
s
e
h
t
n
i
s
e
s
n
e
p
x
e
n
o
i
t
a
r
t
s
i
n
m
d
a
n
i
i
d
e
s
i
n
g
o
c
e
r
e
r
a
)
0
0
0
1
7
1
$
,
:
9
0
0
2
(
0
0
0
1
7
1
$
f
,
o
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
i
e
h
T
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
56 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
20. Intangible assets (continued)
Recoverability of development costs
The carrying amount of the Group’s development expenditure amounts to $8,003,000. An impairment test was triggered in the
year due to the loss experienced by the Group for the year ended 30 June 2010. The recoverable amount of each cash generating
unit was estimated based on its value in use, and using a pre-tax discount rate of 20%. Development costs were segregated
into their respective cash generating units, on a geographical or customer specific basis, where possible. The remainder of
development costs were allocated based on the jurisdictional/customer specific revenue they are expected to generate.
The recoverable amount of each cash generating unit was estimated to be higher than the carrying amount of the unit and as
such no impairment was required.
Value in use for individual cash generating units, excluding North America, were determined by discounting the future cash flows
generated from the continuing use of the development and based on the following key assumptions:
•
Cash inflows of $72 million in the 2011 year from the sale of the Group’s products and services. These cash inflows were determined
through board approved budgets, historical experience and actual operating results;
Annual revenue growth of between 2 and 7.5% throughout the useful life of the development based on current actual performance,
•
market conditions and strategic actions included in the Company’s three year Business Plan;
•
•
The development will generate cash flows for 5 years; and
Discount rate of 20% based on the weighted average cost of capital adjusted for volatility of regulatory conditions.
The carrying amount of the North American cash generating unit was $3,839,000, comprising of $1,070,000 development costs,
$1,209,000 other assets and $1,560,000 Nevada licence costs. The assessment of any related impairment for this cash generating
unit was based on the projected forecasts included in the Group’s 2011 budget and 2012-2013 Business Plan and included the
following key assumptions:
•
•
•
•
•
•
Cash inflows of $16 million in the 2011 year from the sale of the of the Group’s products and services. These cash inflows were
determined through a comprehensive review of the market undertaken as part of the budget and business planning process;
Revenue growth to $27 million and $43 million in 2012 and 2013, respectively. This growth is based on the planned expansion
and the establishment of activities in the Americas and the resultant growth from recent development undertaken. Annual
revenue growth of 5% subsequent to 2013 for the remaining useful life of the development;
Increased market share resulting from higher performance through recently developed product initiatives;
Access to new markets following the recent granting of licences in North America and the release of the newly developed
gaming machines in these markets;
The development will generate cash flows for 5 years; and
Discount rate of 20% based on the weighted average cost of capital adjusted for volatility of regulatory conditions.
The value in use will be re-assessed at each reporting date for which an indicator of impairment exists. Should the above assumptions
not remain valid, an impairment may be required.
Impairment testing for Nevada licence costs
The Nevada licence costs capitalised are classified as an intangible asset with an indefinite life, and as such the recoverable amount
is assessed at each reporting date. The carrying amount of $1,560,000 was allocated to the North American cash generating unit
which was assessed for impairment under the key assumptions noted above. As the recoverable amount of the North American
cash generating unit was estimated to be higher than the carrying amount of the unit, no impairment was considered necessary.
Impairment testing for goodwill
Goodwill relates to acquired business and entities. The recoverable amount is assessed using calculation methodologies based
on value-in-use calculations which utilise projected cashflows from financial budgets approved by the Board of Directors. The
cashflow models consider growth over the medium term, being five years, discounted to present value using a discount rate
determined by reference to its weighted average cost of capital (WACC) adjusted if necessary to reflect the specific characteristics
of each entity. A capitalisation multiple is then applied to this medium term cumulative discounted cashflow and an acceptable
valuation range is formulated and tested against the carrying value of goodwill associated with each business and entity.
The recoverable amount was estimated to be lower than the carrying amount of the goodwill on a previous acquisition due
to product transition to new generation gaming machines, and an impairment of $171,000 was required in the current period.
The carrying amount as at the report date was $Nil (2009: $171,000).
The recoverable amount of the Australian service cash-generating unit was based on its value in use. Value in use was determined
by discounting the future cash flows generated from the continuing use of the service unit and was based on the following key
assumptions:
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
57
•
•
Cash flows were projected based on actual operating results and a projected four year period. Cash flows for a further 10 year
period were extrapolated using a constant growth rate of 5 percent, which does not exceed the long term average growth
rate for the industry. Management believes that this forecast period was justified due to the long term nature of the service
business; and
Revenue was projected at about $4,214,000 in the first year with anticipated annual revenue growth included in the cash flow
projections of 5 percent for the years 2010 to 2013. Management plans to achieve annual revenue of $4,886,000 by the fourth year.
The values assigned to the key assumptions represent management’s assessment of future trends in the service industry and are based
on internal sources via historical data.
The above estimates are particularly sensitive in the following areas:
•
An increase of 1 percentage point in the discount rate used would have reduced the recoverable amount of the cash generating unit
by $167,000 and no impairment would have resulted; and
A 5 percent decrease in future planned revenues would have resulted in an impairment loss of $1,338,000.
•
21. Trade and other payables
In thousands of AUD
Current
Trade payables
Other payables and accrued expenses
Amount payable to director/shareholder controlled entities
Non Current
Payables due to subsidiaries
33
Note
Consolidated
2009
2010
2,682
4,094
99
6,875
-
-
2,813
4,918
33
7,764
-
-
Company
2010
2,353
2,934
99
5,386
388
388
2009
2,535
3,108
33
5,676
1,169
1,169
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 32.
Payables denominated in currencies other than the functional currency comprise $2,688 thousand of payables denominated
in US Dollars (2009 $3,439 thousand), $Nil of payables denominated in Pounds Sterling (2009: $1 thousand), $14 thousand of
payables denominated in Euro (2009: $Nil), $2 thousand of payables denominated in NZD (2009: $2 thousand), $Nil of payables
denominated in Canadian Dollars (2009: $26 thousand) and $Nil of payables denominated in Japanese Yen (2009: $48 thousand).
22. Loans and borrowings
This note provides information about the contractual terms of the Company’s and Group’s interest-bearing loans and borrowings,
which are measured at amortised cost. For more information about the Company’s and Group’s exposure to interest rate, foreign
currency and liquidity risk, see note 32.
In thousands of AUD
Current
Current portion of finance lease liabilities
Amount payable to director / shareholder controlled entities
Loan from director / shareholder controlled entity - unsecured
Non Current
Finance lease liabilities
Amount payable to director / shareholder controlled entity
Loan from director / shareholder controlled entity - unsecured
Loan from director / shareholder controlled entity - secured
Convertible notes
Consolidated
2009
2010
820
4,992
350
6,162
882
12,970
3,380
11,667
25,343
54,242
768
2,193
350
3,311
725
10,855
2,915
10,917
25,020
50,432
Company
2010
620
4,992
350
5,962
489
12,970
3,380
11,667
25,343
53,849
2009
593
2,193
350
3,136
413
10,855
2,915
10,917
25,020
50,120
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
58 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. Loans and borrowings (continued)
Terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
In thousands of AUD
Consolidated
Nominal
interest
rate
Currency
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
30 June 2010
30 June 2009
Amount payable to director / shareholder
Amount payable to director / shareholder
Loans from director / shareholder
controlled entity
Convertible notes
AUD
AUD
AUD
AUD
8%
8%
8%
2011
2014
5,173
4,992
2,193
2,193
12,970
12,970
10,855
10,855
2014
18,507
15,397
18,507
14,182
8-10%
2011-2014
25,629
25,343
25,629
25,020
Finance lease liabilities
AUD
4.4-12.8% 2010 - 2013
1,702
1,702
1,493
1,493
Total interest-bearing liabilities
63,981
60,404
58,677
53,743
In thousands of AUD
Company
Nominal
interest
rate
Currency
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
30 June 2010
30 June 2009
Amount payable to director / shareholder
Amount payable to director / shareholder
Loans from director / shareholder
controlled entity
Convertible notes
AUD
AUD
AUD
AUD
8%
8%
8%
2011
2014
5,173
4,992
2,193
2,193
12,970
12,970
10,855
10,855
2014
18,507
15,397
18,507
14,182
8 - 10%
2011-2014
25,629
25,343
25,629
25,020
Finance lease liabilities
AUD
4.4-12.8%
2010-2013
1,109
1,109
1,006
1,006
Total interest-bearing liabilities
63,380
59,811
58,190
53,256
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Financing facilities
In thousands of AUD
Trade/credit facility
Loan from director / shareholder controlled entity
Facilities utilised at reporting date
Trade/credit facility
Loan from director / shareholder controlled entity
Facilities not utilised at reporting date
Trade/credit facility
Loan from director / shareholder controlled entity
59
Consolidated
2009
2010
6,000
40,000
46,000
5,036
13,706
18,742
964
26,294
27,258
5,000
40,000
45,000
2,132
13,706
15,838
2,868
26,294
29,162
Company
2010
6,000
40,000
46,000
5,036
13,706
18,742
964
26,294
27,258
2009
5,000
40,000
45,000
2,132
13,706
15,838
2,868
26,294
29,162
Trade/credit facility
A trade facility of $6 million has been established from a director / shareholder controlled entity under more favourable terms than
those that could be achieved from the Company’s bankers and at arms length in the open market. Refer note 33.
Loan from director/shareholder controlled entity
The loan facility is provided by an entity controlled by Mr LH Ainsworth, a director and shareholder of the Company. This facility
is secured by a debenture mortgage over the Group’s freehold land and buildings at 10 Holker Street, Newington, NSW and a
fixed and floating charge over the Company. The facilities of $13,706,000 utilised at the reporting date exclude interest payable of
$12,179,000.
A further unsecured loan of $4,801,000 has been provided to expand the Company’s Sydney facility and relocate all manufacturing
operations from leased premises in Melbourne. This loan is under similar terms and conditions to the above facility with interest
accruing from an agreed date at the rate of 8.0% per annum. The proposed terms of reimbursement are that an annual principal
amount of $350,000 will be repaid monthly in arrears or as mutually agreed with the full repayment of the remaining balance and
interest not required to be paid until the Company has sufficient operating cashflows to do so and until amounts owing on the
$40 million facility has been repaid.
Convertible notes
In thousands of AUD
Proceeds from issue of 19,714,717 convertible notes on 20 December 2004
Transaction costs
Net proceeds
Amount classified as equity
Transaction costs classified as equity
Accreted interest capitalised
Carrying amount of liability at 30 June
Consolidated
2009
2010
25,629
(1,085)
24,544
(2,842)
121
3,520
25,343
25,629
(1,085)
24,544
(2,842)
121
3,197
25,020
Company
2010
25,629
(1,085)
24,544
(2,842)
121
3,520
25,343
2009
25,629
(1,085)
24,544
(2,842)
121
3,197
25,020
In December 2011 note holders have the option to extend their notes for a further 3 years to 31 December 2014. The Company
has the right to redeem the convertible notes on 31 December 2011 or at the end of every six months from 31 December 2011
until the final maturity date of 31 December 2014. If the Company notifies a holder of convertible notes of its intention to redeem
their convertible notes, the noteholder may elect to convert their notes on the proposed redemption date. Notes that are not
converted to ordinary shares will be redeemed at face value on either 31 December 2011 or 2014 subject to the early redemption
by the Company.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
60 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. Loans and borrowings (continued)
Loans – secured
This loan was recorded at fair value at 1 July 2005, given that the interest rate applied to the facility is lower than that which could
be obtained commercially and was subsequently carried at amortised cost. The maturity date of the loan was extended during the
current period and as such the loan was restated to its fair value, based on the extended terms. Subsequent to the restatement on 23
May 2008, the loan will be carried at amortised cost (refer note 3(c)).
In thousands of AUD
Fair value of the loan at 1 July
Additional borrowings
Repayment of borrowings
Set-off arrangement
Net proceeds
Amount classified as equity
Accreted interest capitalised
Carrying amount of liability at 30 June
Consolidated
2009
2010
10,917
500
(500)
-
10,917
(97)
847
11,667
13,513
2,450
(250)
(2,616)
13,097
(2,853)
673
10,917
Company
2010
10,917
500
(500)
-
10,917
(97)
847
11,667
2009
13,513
2,450
(250)
(2,616)
13,097
(2,853)
673
10,917
Loans – unsecured
These loans are recorded at fair value, given that the interest rate applied is lower than that which could be obtained commercially.
Subsequently these loans will be carried at amortised cost (refer note 3(c)).
In thousands of AUD
Fair value of the loan at 1 July
Borrowings for building improvements
Borrowings under trade facility established
Repayment on borrowings
Net borrowings
Amount classified as equity
Accreted interest capitalised
Carrying amount of liability at 30 June
(a)
Consolidated
2009
2010
5,435
-
7,320
(4,373)
8,382
(623)
942
8,701
-
4,801
2,331
-
7,132
(2,210)
513
5,435
Company
2010
5,435
-
7,320
(4,373)
8,382
(623)
942
8,701
2009
-
4,801
2,331
-
7,132
(2,210)
513
5,435
(a) Amount classified as equity relates to the restatement of borrowings to fair value.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
61
Finance lease liabilities
Finance lease liabilities of the Group entity are payable as follows:
Consolidated
In thousands of AUD
Less than one year
Between one and five years
Future minimum
lease payments Interest
2010
2010
Present value of
minimum lease
payments
2010
Future minimum
lease payments
2009
Interest
2009
Present value of
minimum lease
payments
2009
939
976
1,915
118
95
213
821
881
1,702
873
798
1,671
105
73
178
768
725
1,493
Company
In thousands of AUD
Less than one year
Between one and five years
Future minimum
lease payments Interest
2010
2010
Present value of
minimum lease
payments
2010
Future minimum
lease payments
2009
Interest
2009
Present value of
minimum lease
payments
2009
687
547
1,234
68
57
125
619
490
1,109
660
445
1,105
67
32
99
593
413
1,006
The Company and Group lease plant and equipment under finance leases expiring from three to five years. At the end of the lease
term, there is the option to purchase the equipment at a discount of market value, a price deemed to be a bargain purchase option.
The terms of the leases require that additional debt and further leases are not undertaken without prior approval of the lessor.
23. Employee benefits
In thousands of AUD
Current
Salaries and wages accrued
Liability for annual leave
Liability for long service leave
Non Current
Liability for long service leave
Consolidated
2009
2010
Company
2010
2009
40
1,763
484
2,287
425
425
76
1,482
229
1,787
472
472
19
1,212
337
1,568
316
316
74
1,178
229
1,481
272
272
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
62 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
24. Share-based payments
The Company has in place an ESOP approved on 30 July 2001.
The terms and conditions of the grants are as follows, whereby all options are settled by physical delivery of shares:
Grant date / employee entitled
Number of
instruments
Vesting conditions
Option grant to key management at 2 July 2007
200,000
Three years of service as per ESOP below
Option grant to senior employees at 2 July 2007
331,060
Three years of service as per ESOP below
Contractual life
of options
5 years
5 years
Total share options
531,060
To be eligible to participate in the ESOP the employee must be selected by the directors and reviewed by the Remuneration and
Nomination Committee. Options may be exercised within a five-year period, starting on the first anniversary of the issue of the
options (subject to earlier exercise where a takeover offer or takeover announcement is made, or a person becomes the holder of
a relevant interest in 50% or more of the Company’s voting shares).
The ESOP provides for employees to receive options for no consideration. Each option is convertible to one ordinary share. There are
no voting or dividend rights attached to the unissued ordinary shares. Voting and dividend rights will be attached to the unissued
ordinary shares when the options have been exercised. The exercise price of the options is determined in accordance with the
rules of the ESOP. The ability to exercise the options is conditional on the achievement of performance hurdles. Accordingly, the
plan does not represent remuneration for past services.
The vesting and performance conditions of the share options issued on 2 July 2007 are as follows:
Date
First Anniversary of Grant Date
Second Anniversary of Grant Date
Third Anniversary of Grant Date
Vesting Condition
(% of Options vesting)
Performance Condition
(VWAP* must equal or exceed)
% of Exercise Price
20%
20%
60%
200%
250%
300%
* The performance conditions measure the volume weighted average price at which Shares traded on the ASX for the most recent
20 Business Days upon each of which any shares were traded on ASX within 60 business days immediately preceding the relevant
vesting date of those Options..
In addition to the share options issued by the Company an incentive plan was introduced whereby share options were granted
to all Australian employees, excluding directors and four key management personnel. The share options granted to Australian
employees on 2 July 2007 totalled 10,994,707 and were granted over a portion of the personal shareholding of the Company’s
Executive Chairman, Mr LH Ainsworth. During the year 380,035 share options expired as a result of cessation of employment with
the Company and Group leaving 7,464,952 share options outstanding as at 30 June 2010.
The number and weighted average exercise prices of share options is as follows:
In thousands of options
Outstanding at the beginning of the period
Forfeited during the period
Exercised during the period
Granted during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average
exercise price
2010
Number of
options
2010
Weighted average
exercise price
2009
Number of
options
2009
$0.56
$0.61
-
-
$0.50
1,156
(625)
-
-
531
-
$0.59
$0.66
-
-
$0.56
1,736
(580)
-
-
1,156
-
The options outstanding at 30 June 2010 have an exercise price of $0.50 and a remaining life of 2.0 years.
During the 2010 financial year, no share options were exercised or granted.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
63
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted.
The estimate of the fair value of the services received is measured based on the Black Scholes and binomial lattice models. The contractual
life of the option is used as an input into this model. Expectations of early exercise are incorporated into these models.
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share
options), adjusted for any expected changes to future volatility due to publicly available information.
Share options are granted under a service condition and, for grants to key management personnel, market and non-market
performance conditions. Non-market performance conditions are not taken into account in the grant date fair value measurement
of the services received.
25. Provisions
In thousands of AUD
Restructuring
Service/warranties
Legal
Movements during the year
Restructuring
Balance at 1 July
Provisions made during the year
Provisions used during the year
Balance at 30 June
In thousands of AUD
Service / Warranties
Balance at 1 July
Provisions made during the year
Provisions used during the year
Balance at 30 June
In thousands of AUD
Legal
Balance at 1 July
Provisions made during the year
Provisions used during the year
Balance at 30 June
Consolidated
2009
2010
Company
2010
2009
-
-
140
140
-
-
-
-
216
-
(216)
-
-
140
-
140
-
216
-
216
403
-
(403)
-
359
60
(203)
216
-
-
-
-
-
216
140
140
-
-
-
-
216
-
(216)
-
-
140
-
140
-
216
-
216
403
-
(403)
-
359
60
(203)
216
-
-
-
-
Legal
The Group provided for $140,000 which is the maximum exposure under the Company’s insurance relating to a claim made by a
former contractor.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
64 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
26. Capital and reserves
Share capital
In thousands of shares
On issue at 1 July
On issue at 30 June – fully paid
Company
Ordinary Shares
2010
278,942
278,942
2009
278,942
278,942
The Group has also issued share options (see note 24).
The Company does not have authorised capital or par value in respect of its issued shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Equity compensation reserve
The equity compensation reserve represents the cost of share options issued to employees that the Group is required to include
in the consolidated financial statements.
Fair value reserve
The fair value reserve comprises the cumulative net change in fair value of related party loans and borrowings where interest is charged
below market value.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations where their functional currency is different to the presentation currency of the reporting entity, as well as from the translation
of liabilities that hedge the Company’s net investment in a foreign subsidiary.
Dividends
No dividends were recommended or paid during or since the end of the financial year (2009: Nil).
27. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
In thousands of AUD
Less than one year
Between one and five years
Consolidated
2009
338
127
2010
187
510
697
465
Company
2010
31
32
63
2009
29
63
92
The Group leases a number of warehouse and office facilities under operating leases. The leases typically run for a period of 1-5
years, with an option to renew the lease after that date. Lease payments are increased every five years to reflect market rentals.
None of the leases includes contingent rentals.
During the financial year ended 30 June 2010, $455,000 was recognised as an operating expense in the income statement in
respect of operating leases (2009: $465,000).
The warehouse and office leases are combined leases of land and buildings. When the Group adopted AASBs at 1 July 2004, it was not
possible to obtain a reliable estimate of the split of the fair values of the lease interest between land and buildings at inception of the
leases. Therefore, in determining lease classification, the Group evaluated whether both parts were clearly operating leases or finance
leases. Firstly, land title does not pass. Secondly, because the rent paid to the landlord for the building is increased to market rent at regular
intervals, and the Group does not participate in the residual value of the building, it was judged that substantially all the risks and rewards
of the building are with the landlord. Based on these qualitative factors it was concluded that the leases are operating leases.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
65
Consolidated
Company
2010
2009
2010
2009
28. Other commitments
In thousands of AUD
Employee compensation commitments
Key management personnel
Commitments under non-cancellable employment contracts not
provided for in the financial statements and payable:
Within one year
376
350
352
330
29. Regulatory matters
The manufacture and distribution of gaming machines and associated products are subject to extensive local and foreign laws,
regulations and taxes. Many of these jurisdictions require licences, registrations, findings of suitability, permits, documentation and
qualification and other forms of approval for manufacturers of gaming machines.
No matter is currently the subject of investigation by any regulatory authorities.
30. Group Entities
Parent entity
Ainsworth Game Technology Limited
Subsidiaries
AGT Pty Ltd
Ainsworth Game Technology Inc
AGT Service Pty Ltd
AGT Service (NSW) Pty Ltd
J & A Machines Pty Ltd
RE & R Baker & Associates Pty Ltd
Bull Club Services Pty Ltd
Country of
Incorporation
Ownership interest
2010
2009
Australia
-
-
Australia
USA
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
In the financial statements of the Company, investments in subsidiaries are measured at cost. The Company’s investment in
controlled entities amounted to $2. This investment is included in other assets. Investments in associates are also accounted for at
cost value. The Company has no jointly controlled entities.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
66 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
31. Reconciliation of cash flows from operating activities
In thousands of AUD
Note
2010
2009
2010
2009
Consolidated
Company
Cash flows from operating activities
(Loss) for the period
Adjustments for:
Depreciation
Amortisation of intangible assets
Impairment losses on intangible assets
Net finance costs
Share of loss of equity accounted investees
Loss on sale of property, plant and equipment
Equity-settled share-based payment transactions
Income tax expense
Operating profit / (loss) before changes in working
capital and provisions
Change in trade and other receivables
Change in inventories
Change in other assets
Change in trade and other payables
Change in provisions and employee benefits
19
20
20
11
17
9
12
Interest paid
Net cash from operating activities
32. Financial instruments
(2,721)
(12,542)
(3,760)
(12,559)
2,443
1,864
171
6,954
-
30
88
355
9,184
2,760
4,276
(95)
734
(3,375)
13,484
(2,863)
10,621
1,769
3,185
171
639
407
133
146
498
(5,594)
2,210
3,758
(110)
819
(190)
893
(2,489)
(1,596)
2,243
1,712
171
6,940
-
14
88
-
7,408
2,945
4,273
(96)
2,051
(3,712)
12,869
(2,804)
10,065
1,638
3,032
171
633
-
133
146
-
(6,806)
6,372
4,049
(283)
762
(538)
3,556
(2,475)
1,081
Credit risk
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit
risk at the reporting date was:
In thousands of AUD
Receivables
Note
15
Carrying amount
2010
28,846
28,846
2009
27,305
27,305
The Company’s maximum exposure to credit risk at the reporting date was $28,846 thousand (2009: $27,305 thousand) for receivables.
The Group’s gross maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Carrying amount
2010
8,488
20,116
-
560
33
-
29,197
2009
5,183
24,267
145
242
705
1,031
31,573
In thousands of AUD
Australia
Americas
Europe
New Zealand
Asia
Africa
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
67
The Company’s gross maximum exposure to credit risk for receivables at the reporting date by geographic region was $20,116
thousand (2009: $24,267 thousand) for Americas, $8,488 thousand (2009: $5,183 thousand) for Australia, $Nil thousand (2009: $145
thousand) for Europe, $33 thousand (2009: $705 thousand) for Asia and $560 thousand (2009: $1,273 thousand) for New Zealand,
totalling $29,197 thousand (2009: $31,573 thousand).
The Group’s most significant customer, a distributor within South America, accounts for $10,239 thousand of the trade receivables
carrying amount at 30 June 2010 (2009: $10,423 thousand). Two subsidiaries account for $1,176 thousand and $2,016 thousand
(2009: $2,096 thousand and $2,194 thousand) of the Company’s receivables carrying amount.
Impairment losses
The aging of the Group’s trade receivables at the reporting date was:
In thousands of AUD
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days to one year
More than one year
Gross
2010
Impairment
2010
Gross
2009
Impairment
2009
26,711
736
125
91
1,534
29,197
-
-
-
-
351
351
19,152
744
2,238
3,254
6,185
31,573
-
-
-
49
4,219
4,268
2009
4,086
(558)
-
740
4,268
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
In thousands of AUD
Balance at 1 July
Impairment loss
Provision during the year
Effect of exchange rate fluctuations
Balance at 30 June
2010
4,268
(4,638)
292
429
351
The impairment loss of $292,000 (2009: $Nil) was recognised in sales, service and marketing expenses in the income statement.
Based on historic default rates and current repayment plan in place, the Group believes that no impairment is necessary in respect
of trade receivables not past due or on amounts past due up to 120 days as these relate to known circumstances that are not
considered to impact collectibility.
An impairment allowance of $351,000 has been provided for past due amounts more than 121 days and relates to customers and
distributors where the Group has either commenced legal action or has assessed potential collectability issues. The remaining
balance where no impairment allowance has been provided relate to negotiated repayment plans from long standing customers
and distributors who have met or had their obligations re-negotiated during the period.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
68 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
32. Financial instruments (continued)
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of
netting agreements:
Consolidated
30 June 2010
In thousands of AUD
Non-derivative financial liabilities
Convertible notes
Payable to director/shareholder
controlled entities
Other note holders
Finance lease liabilities
Amounts payable to director/shareholder
controlled entities
Loans from director/shareholder
controlled entity
Trade and other payables
30 June 2009
In thousands of AUD
Non-derivative financial liabilities
Convertible notes
Payable to director/shareholder
controlled entities
Other note holders
Finance lease liabilities
Amounts payable to director/shareholder
controlled entities
Loans from director/shareholder
controlled entity
Trade and other payables
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2
years
2-5
years
More than
5 years
15,687
9,656
1,702
(23,001)
(11,214)
(1,915)
(790)
(492)
(675)
(790)
(492)
(263)
(1,580)
(19,841)
(10,230)
(476)
-
(501)
17,962
(18,143)
(5,173)
-
15,397
6,875
67,279
(18,507)
(6,875)
(79,655)
(175)
(6,875)
(175)
-
(14,180)
(1,720)
(12,286)
(51,469)
-
-
-
(12,970)
(18,157)
-
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2
years
2-5
years
More than
5 years
13,180
11,840
1,493
(20,791)
(15,779)
(1,671)
(540)
(485)
(473)
(675)
(606)
(400)
(1,350)
(1,213)
(437)
13,048
(13,048)
(2,193)
-
14,182
7,807
61,550
(18,507)
( 7,807)
(77,603)
(175)
(7,807)
(175)
-
(11,673)
(1,856)
(3,000)
(61,074)
(18,226)
(13,475)
(361)
(10,855)
(18,157)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Company
30 June 2010
In thousands of AUD
Non-derivative financial liabilities
Convertible notes
Payable to director/shareholder
controlled entities
Other note holders
Finance lease liabilities
Amounts payable to director/shareholder
controlled entities
Loans from director/shareholder
controlled entity
Trade and other payables
30 June 2009
In thousands of AUD
Non-derivative financial liabilities
Convertible notes
Payable to director/shareholder
controlled entities
Other note holders
Finance lease liabilities
Amounts payable to director/shareholder
controlled entities
Loans from director/shareholder
controlled entity
Trade and other payables
69
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2
years
2-5
years
More than
5 years
15,687
9,656
1,109
(23,001)
(11,214)
(1,234)
(790)
(492)
(539)
(790)
(492)
(148)
(1,580)
(19,841)
(10,230)
(254)
-
(293)
17,962
(18,143)
(5,173)
-
15,397
5,386
65,197
(18,507)
(5,386)
(77,485)
(175)
(5,386)
(175)
-
(12,555)
(1,605)
(12,064)
(51,261)
-
-
-
(12,970)
(18,157)
-
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2
years
2-5
years
More than
5 years
13,180
11,840
1,006
(20,791)
(15,779)
(1,105)
(540)
(485)
(358)
(675)
(606)
(302)
(1,350)
(1,213)
(298)
13,048
(13,048)
(2,193)
-
14,182
5,717
58,973
(18,507)
( 5,717)
(74,947)
(175)
( 5,717)
(9,468)
(175)
-
(1,758)
(2,861)
(60,860)
(18,226)
(13,475)
(147)
(10,855)
(18,157)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
70 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
32. Financial instruments (continued)
Currency risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the AUD.
The Group monitors and assesses under its Treasury Risk policy and facilities available whether hedging of all trade receivables and
trade payables denominated in a foreign currency from time to time is considered appropriate. The Group uses foreign currency
call options to hedge its foreign currency risk. Most of the foreign currency call options have maturities of less than one year after
the balance date. No foreign currency call options were in place at the reporting date due to expiry in the current period.
Exposure to currency risk
The Group’s significant exposure to foreign currency risk at balance date was as follows, based on notional amounts:
In thousands of AUD
Trade receivables
Trade payables
Net exposure in statement of financial position
USD
Euro
30 June 2010
20,116
(2,688)
17,428
-
(14)
(14)
NZD
560
(2)
558
USD
Euro
30 June 2009
25,665
(3,439)
22,226
145
-
145
The Company’s exposure to foreign currency risk was as follows, based on notional amounts:
In thousands of AUD
Trade receivables
Trade payables
Net exposure in statement of financial position
USD
Euro
30 June 2010
20,116
(1,549)
18,567
-
(14)
(14)
NZD
560
(2)
558
USD
Euro
30 June 2009
25,371
(1,926)
23,445
145
-
145
NZD
237
(2)
235
NZD
237
(2)
235
The following significant exchange rates applied during the year:
AUD
USD
Euro
NZD
GBP
Average rate
Reporting date
spot rate
2010
0.8895
0.6526
1.2770
0.5697
2009
0.7469
0.5461
1.2445
0.4680
2010
0.8567
0.7019
1.2309
0.5686
2009
0.8117
0.5810
1.2574
0.4930
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Sensitivity analysis
In managing currency risks the Group aims to reduce the impact of short-term fluctuations on the Group earnings. Over the longer-term,
however, permanent changes in foreign exchange will have an impact on profit/(loss).
A 10 percent strengthening of the Australian dollar against the following currencies at 30 June would have increased (decreased) equity
and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed
on the same basis for 2009.
71
Effect in thousands of AUD
30 June 2010
USD
Euro
NZD
30 June 2009
USD
Euro
NZD
Consolidated
Company
Equity
Profit or
(loss)
Equity
Profit or
(loss)
(1,591)
(1,585)
(1,688)
(1,688)
1
(51)
1
(51)
1
(51)
1
(51)
(2,026)
(2,021)
(2,132)
(2,132)
(13)
(21)
(13)
(21)
(13)
(21)
(13)
(21)
A 10 percent weakening of the Australian dollar against the following currencies at 30 June would have increased (decreased)
equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis
is performed on the same basis for 2009.
Effect in thousands of AUD
30 June 2010
USD
Euro
NZD
30 June 2009
USD
Euro
NZD
Consolidated
Company
Equity
Profit or
(loss)
Equity
Profit or
(loss)
1,750
1,743
1,857
1,857
(1)
56
(1)
56
(1)
56
(1)
56
2,228
2,223
2,345
2,345
14
23
14
23
14
23
14
23
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
72 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
32. Financial instruments (continued)
Fair values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position,
are as follows:
Consolidated
In thousands of AUD
Assets carried at amortised cost
Receivables and other assets
Cash and cash equivalents
Liabilities carried at amortised cost
Trade and other payables
Finance liabilities
Convertible notes
Amount payable to director/shareholder controlled entity
Loans from director / shareholder controlled entity - unsecured
Loans from director / shareholder controlled entity - secured
Note
Carrying
amount
2010
Fair
value
2010
Carrying
amount
2009
15
14
21
22
22
22
22
22
28,933
6,144
35,077
Carrying
amount
2010
6,875
1,702
25,343
17,962
3,730
11,667
67,279
28,933
6,144
35,077
Fair
value
2010
6,875
1,702
25,343
17,962
3,730
11,667
67,279
28,179
958
29,137
Carrying
amount
2009
7,764
1,493
25,020
13,048
3,265
10,917
61,507
Fair
value
2009
28,179
958
29,137
Fair
value
2009
7,764
1,493
25,020
13,048
3,265
10,917
61,507
Estimates of fair values
The methods used in determining the fair values of financial instruments are discussed in note 4.
Interest rates used for determining fair value
The interest rates used to discount estimated cash flows, where applicable, are based on the government yield curve as of 30 June
2010 plus an adequate constant credit spread and are as follows:
Loans and borrowings
Receivables
Leases
2010
11.7% - 22.3%
4.7%
4.4% - 12.8%
2009
11.7% - 27.2%
3.2%
7.4% - 10.4%
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
73
33. Related parties
The following were key management personnel of the Group at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period:
Non-executive directors
Mr SL Wallis
Mr GJ Campbell
Mr MB Yates
(Appointed 15 December 2009)
Executive directors
Mr LH Ainsworth
(Executive Chairperson)
Mr DE Gladstone
(Executive Director and Chief Executive Officer, Ainsworth
Game Technology Limited), appointed Executive Director
on 25 February 2010
Executives
Mr DE Gladstone
(Chief Executive Officer, Ainsworth Game Technology Limited),
for period up to appointment as Executive Director on 25 February 2010
Mr ML Ludski
(Chief Financial Officer and Company Secretary,
Ainsworth Game Technology Limited)
Mr V Bruzzese
(General Manager Technical Services,
Ainsworth Game Technology Limited)
Mr I Cooper
(General Manager Manufacturing,
Ainsworth Game Technology Limited)
Mr M Cuadros
(Vice President Operations Finance & HR Americas,
Ainsworth Game Technology Inc) classified as key management
on 1 May 2010
Former
Mr R Meitzler
(Senior VP Sales and Operations, Ainsworth Game Technology Inc.),
ceased employment on 30 April 2010
Key management personnel compensation
The key management personnel compensation included in ‘personnel expenses’ (see note 9) is as follows:
In AUD
Short-term employee benefits
Post-employment benefits
Termination benefits
Share based payments
Consolidated
2009
2010
Company
2010
2009
2,451,040
2,468,901
1,993,124
1,893,430
135,749
126,359
127,978
1,348
367
26,640
3,420
-
-
120,310
26,640
-
2,588,504
2,625,320
2,121,102
2,040,380
The key management personnel receive no compensation in relation to the management of the Company. The compensation
disclosed above represents an allocation of the key management personnel’s estimated compensation from the Group in relation
to their services rendered to the Company.
Individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation and some equity instruments disclosures as permitted
Corporations Regulations 2M.3.03 and 2M.6.04 is provided in the Remuneration Report section of the Directors’ Report.
Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the Group since the
end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
74 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
33. Related parties (continued)
Other key management personnel transactions
A number of key management persons, or their related parties, hold positions in other entities that result in them having control or
significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Company or its subsidiaries in the reporting period. Other than as described below
the terms and conditions of the transactions with management persons and their related parties were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s
length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows:
In AUD
Key management
persons
Mr LH Ainsworth
Transaction
Leased property and equipment
Mr LH Ainsworth
Sales revenue
Mr LH Ainsworth
Purchases and other charges for payments made
on behalf of the Company
Mr LH Ainsworth
Consultancy services
Mr LH Ainsworth
Interest paid/payable on financing facilities
Mr LH Ainsworth
Convertible note interest
Transactions value year
ended 30 June
2010
2009
Note
Balance receivable /
(payable) as at 30 June
2009
2010
(i)
(ii)
(ii)
(iii)
(iv)
(v)
87,400
134,400
73,676
2,281,146
(6,250)
26,085
-
(30,117)
99,066
230,000
226,593
230,000
(99,066)
(226,593)
-
-
2,542,007
1,997,862 (13,129,507)
(10,613,452)
1,214,708
1,076,967
(3,699)
(2,959)
Mr LH Ainsworth
Loan from director / shareholder controlled entity
(vi)
-
703,043
(3,729,164)
(3,265,352)
(i)
(ii)
The Company leased associated plant and equipment and reimbursed financial consultancy costs incurred from and to an
entity controlled by Mr LH Ainsworth on normal commercial terms and conditions.
Transactions were with Ainsworth (UK) Ltd, an entity controlled by Mr LH Ainsworth. These sales and purchases/charges were
on normal commercial terms and conditions.
(iii) Mr LH Ainsworth received fees during the financial year for the provision of services under a consultancy agreement in
relation to his role as Executive Chairman.
(iv) As disclosed in note 22 a company controlled by Mr LH Ainsworth has extended a loan to the company. The maturity date
of this loan was amended on 21 October 2008 until a date that is 4 years after the will of Mr LH Ainsworth coming into effect.
The terms of this loan are more favourable than could be obtained from the Group’s bankers and at arms length in the open
market.
(v)
Interest paid/payable during the financial year to Mr LH Ainsworth and entities controlled by him for convertible notes held.
This interest was under the same terms and conditions as all convertible note holders.
(vi) An additional, unsecured loan was provided by a company controlled by Mr LH Ainsworth. This loan was unsecured and
is under similar terms and conditions to the loan identified in (iv) above. Agreement has been reached that $350,000 per
annum is to be repaid monthly in arrears or as mutually agreed. The full repayment of the remaining balance and interest is
not required to be paid until such time as the Company or Group has sufficient operating cash flows to do so, and until the
$46 million facility has been repaid.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
75
Amounts receivable from and payable to key management personnel at reporting date arising from these transactions were as
follows:
In AUD
Assets and liabilities arising from the above transactions
Current trade and other payables
Consolidated
2009
2010
Company
2010
2009
Amount payable to director/shareholder controlled entities
98,735
33,076
98,735
33,076
Current loans and borrowings
Amount payable to director/shareholder controlled entities
Loan from director / shareholder controlled entity - unsecured
4,992,444
350,000
2,193,225
350,000
4,992,444
350,000
2,193,225
350,000
Non-current loans and borrowings
Amount payable to director/shareholder controlled entity
Loan from director/shareholder controlled entity - unsecured
Loan from director/shareholder controlled entity - secured
12,970,273
3,380,000
11,666,785
10,855,396
2,915,352
10,917,466
12,970,273
3,380,000
11,666,785
10,855,396
2,915,352
10,917,466
Convertible notes
13,802,467
13,179,989
13,802,467
13,179,989
Options and rights over equity instruments
The movement during the reporting period in the number of options over ordinary shares in Ainsworth Game Technology Limited
held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2009
Granted as
remuneration Exercised
Other
changes*
Held at
30 June 2010
Vested
during
the year
Vested and
exercisable at
30 June 2010
Directors
Executives
Current
Mr ML Ludski
Mr M Cuadros
Former
Mr R Meitzler
(resigned 30/04/10)
Directors
Executives
Current
Mr ML Ludski
Mr R Meitzler
Former
Mr K Orchard
(retired 30/06/08)
Mr PW Walford
50,000
200,000
200,000
-
-
-
-
-
(50,000)
-
-
200,000
-
40,000
-
(200,000)
-
40,000
-
-
-
Held at
1 July 2008
Granted as
remuneration Exercised
Other
changes*
Held at
30 June 2009
Vested
during
the year
Vested and
exercisable at
30 June 2009
50,000
200,000
315,375
140,000
-
-
-
-
-
-
-
-
-
-
50,000
200,000
-
40,000
(315,375)
(140,000)
-
-
-
-
-
-
-
-
* Other changes represent options that expired or were forfeited during the year.
No options held by key management personnel are exercisable at 30 June 2009 or 2010 as performance hurdles have not been achieved.
No options were held by key management person related parties.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
76 Ainsworth Game Technology Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
33. Related parties (continued)
Movements in shares
The movement during the reporting period in the number of options over ordinary shares in Ainsworth Game Technology Limited
held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2009
Purchases
Note (1)
Received on
exercise
of options
Sales
Note (1)
Held at
30 June 2010
Directors
Current
Mr LH Ainsworth
Mr SL Wallis
Mr GJ Campbell
Mr D Gladstone
Executives
Current
Mr I Cooper
Mr M Cuadros
Mr V Bruzzese
Former
Mr R Meitzler
Directors
Current
Mr LH Ainsworth
Mr SL Wallis
Mr GJ Campbell
Executives
Current
Mr D Gladstone
Mr V Bruzzese
212,556,330
629,980
289,674
100,000
9,095,533
92,423
200,000
-
-
15,000
50,000
-
30,000
-
-
37,000
-
-
-
-
-
-
-
-
(8,333,333)
-
-
-
213,318,530
722,403
489,674
100,000
-
-
(47,300)
(37,000)
30,000
15,000
2,700
-
Held at
1 July 2008
Purchases
Received on
exercise
of options
Sales
Held at
30 June 2009
211,428,611
629,980
87,500
1,127,719
-
202,174
-
-
100,000
50,000
-
-
-
-
-
-
-
-
-
-
212,556,330
629,980
289,674
100,000
50,000
NOTE
(1) Included in purchases and sales during the current period were 8,333,333 ordinary shares transacted between Ainsworth family
members.
No shares were granted to key management personnel during the reporting period as compensation in 2009 or 2010.
There were no changes in key management in the period after the reporting date and prior to the date when the Financial Report is
authorised for issue occurred.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
77
Non-key management personnel disclosures
Subsidiaries
Loans operate between the Company and wholly owned subsidiaries for trading purposes. At 30 June 2010, the amount owed to
the Company from controlled entities was $4,261,107 (2009: $4,290,000). At 30 June 2010, the amount owed by the Company to
controlled entities was $388,126 (2009: $1,169,000). Loans outstanding between the Company and its controlled entities are interest
free and repayable on demand.
During the year ended 30 June 2010 the Company was provided management services from controlled entities. Management fees
charged during the year by controlled entities were $8,032,115 (2009: $8,338,496). The Company provided management services
to a controlled entity of $10,000 (2009: $15,000).
The Company utilised the services of controlled entities in the amount of $939,934 (2009: $48,936). Transactions with these controlled
entities were priced on an arm’s length basis and were related to service and installation of machines at gaming venues.
Equity accounted investees
During the financial year ended 30 June 2010, equity accounted investees purchased goods from the Group in the amount of $Nil
(2009: $36,345) and provided services to the Group in the amount of $Nil (2009: $388,328). Transactions with equity accounted
investees are priced on an arm’s length basis and in the financial year ended 30 June 2009 relate to the 11 month period to 31 May
2009 at which date effective control and consolidation of these equity investees occurred.
34. Subsequent events
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the
Group, the results of those operations, or the state of affairs of the Group, in future financial years.
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
78
DIRECTORS’ DECLARATION
1.
In the opinion of the directors of Ainsworth Game Technology Limited ‘the Company’:
(a)
the financial statements and notes that are contained in paragraphs 1 to 34, and the Remuneration report in the Directors’ report, set
out on pages 20 to 25, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2010 and of their performance, for
the financial year ended on that date;
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(iii) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable .
2.
3.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the financial year ended 30 June 2010.
The directors draw attention to note 2(a) to the financial statements which includes a statement of compliance with International
Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Dated at Sydney this 25th day of August 2010.
LH Ainsworth
Executive Chairman
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
79
Independent auditor’s report to the members of Ainsworth Game Technology Limited
Report on the financial report
We have audited the accompanying financial report of Ainsworth Game Technology Limited (the Company), which comprises the
statements of financial position as at 30 June 2010, and statements of comprehensive income, statements of changes in equity and
statements of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1
to 34 and the directors’ declaration of the Group comprising the company and the entities it controlled at the year’s end or from time
to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with
Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility
includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is
free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances. In note 2(a), the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report of the Group, comprising the financial
statements and notes, complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the
Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is
consistent with our understanding of the Company’s and the Group’s financial position and of their performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of Ainsworth Game Technology Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2010 and of their performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001.
(b) the financial report of the Group also complies with International Financial Reporting Standards as disclosed in note 2(a).
Liability limited by a scheme approved under
Professional Standards Legislation
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
80
Independent auditor’s report to the members of Ainsworth Game Technology Limited (continued)
Report on the remuneration report
We have audited the Remuneration Report included in pages 20 to 25 of the directors’ report for the year ended 30 June 2010. The
directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted
in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of Ainsworth Game Technology Limited for the year ended 30 June 2010, complies with Section 300A
of the Corporations Act 2001.
KPMG
Carlo Pasqualini
Partner
Sydney
25 August 2010
Lead auditor’s independence declaration under Section 307C of the Corporations Act 2001
To: the directors of Ainsworth Game Technology Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2010 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Carlo Pasqualini
Partner
Sydney
25 August 2010
AINSWORTH GAME TECHNOLOGY ANNUAL REPORT 2010
Liability limited by a scheme approved under
Professional Standards Legislation
Auditor
KPMG
10 Shelley Street
Sydney NSW Australia 2000
Tel: +61 2 9335 7000
Fax: +61 2 9299 7001
Other Information
Ainsworth Game Technology Limited,
incorporated and domiciled in Australia,
is a publicly listed
company limited by shares.
CORPORATE DIRECTORY
Directors
Executive Chairman
Mr LH Ainsworth
Stock Exchange Listing
The Company is listed on the Australian
Stock Exchange. The Home Exchange is Sydney.
CODE: AGI
Website
www.ainsworth.com.au
Share Registry
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street,
Sydney NSW Australia 2001
Tel: 1300 850 505 (within Aust)
+61 3 9415 4000 (outside Aust)
Fax: +61 3 9473 2500
THE AMERICAS
6600 N.W 12 Avenue,
Suite 201 Ft. Lauderdale,
FL 33309 USA
(954) 317 5500
Tel:
Fax: (954) 317 5555
Independent
Non-Executive Directors
Mr SL Wallis AO
Mr GJ Campbell
Mr MB Yates
Chief Executive Officer
& Executive Director
Mr DE Gladstone
Company Secretary and
Chief Financial Officer
Mr ML Ludski
OFFICES
AUSTRALIA
Corporate and Head Office
10 Holker Street,
Newington NSW Australia 2127
Tel: +61 2 9739 8000
Fax: +61 2 9737 9483
Queensland
Unit 6, 3990 Pacific Highway
Loganholme QLD Australia 4129
Tel: +61 7 3209 6210
Fax: +61 7 3209 6510
South Australia
Ms Toni Odgers
P.O. Box 379
Fullerton SA Australia 5063
Tel: +61 413 728 766
Fax: +61 8 8294 1094
10 Holker Street,
Newington NSW Australia 2127
Phone +61 2 9739 8000
Fax +61 2 9737 9483
www.ainsworth.com.au
QUALITYINNOVATION EXCELLENCE