AINSWORTH GAME TECHNOLOGY
2015
A N N U A L
R E P O R T
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In 2015, Ainsworth’s motto – ‘Experience Counts’
resonates loudly with the launch of the A600™.
Ainsworth’s commitment to perform under the
highest engineering standards has resulted in a
truly advanced product to support an extensive
game library and offer the end user an elevated
level of engagement.
Executive Chairman Len Ainsworth describes
the release of the A600™ – “The A600™ continues
our innovation vision. Its classic design and game
promotion qualities are unsurpassed.”
Ainsworth not only provides quality and high
yielding land based games, it has now leveraged
its successful game content in the expanding
online social and real money gaming market
with the launch of the Players Paradise Slots™
social casino app.
KEY DATES
Annual General Meeting:
Tuesday 17 November 2015
Results announcement for six months
ending 31 December 2015:
Tuesday 23 February 2016
Results announcement for
year ending 30 June 2016:
Tuesday 23 August 2016
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
2015 Annual General Meeting of the members of
Ainsworth Game Technology Limited will be held at:
The Grace Hotel
“The Wilarra 1 Room”
Level 2, 77 York Street
SYDNEY NSW 2000
on Tuesday 17 November 2015 at 11.00am
AINSWORTH GAME TECHNOLOGY New and Relaunched A600™ Brands
CONTENTS
2015 Highlights ..................................................................02
Notes to the Financial Statements ..............................36
Chairman’s Report ............................................................04
Directors’ Declaration ......................................................75
Chief Executive Officer’s Report ..................................06
Independent Auditor’s Report ......................................76
Shareholder Information .................................................08
Lead Auditor’s Independence Declaration ...............78
Directors’ Report ................................................................10
Corporate Directory .........................................................79
Financial Statements ........................................................32
In accordance with ASX Listing Rule 4.10.3, Ainsworth Game Technology’s Corporate Governance Statement
can be found on its website at: www.ainsworth.com.au/investors/corporate-governance
01
2015 ANNUAL REPORT 2015 Highlights
Performance Highlights
Strong growth in international sales and profitability validates the
strategy to build a diversified gaming and technology Group with
greater profitability and higher quality earnings.
North America: Growth in Game Operations installed base to 1,316
units (+19% increase).
Strong A560SL™ sales, 3,100 total units sold
(+30% versus pcp).
Good contributions from new jurisdictions –
Wyoming, Mississippi, Arizona and Missouri
(+56% increase in units).
Continuing growth in existing markets – California
and Nevada (+19% increase in installed base).
Latin America: Growth in Game Operations installed base to 1,311
units (+48% increase).
2,219 total units sold (+39% versus pcp).
REVENUES - AUD (M)
(Fiscal years ended June 30)
H1
H2
122.3
CAGR
12%
128.7
101.6
96.5
82.3
68.3
121.8
111.9
FY12
FY13
FY14
FY15
EBITDA - AUD (M)
(Fiscal years ended June 30)
H1
H2
CAGR
18%
57.3
39.7
49.7
50.3
42.3
31.9
FY13
FY14
FY15
32.4
23.8
FY12
Mexico, largest market in region for the Company,
increased sales by 54%.
NPAT - AUD (M)
(Fiscal years ended June 30)
Australia:
Release of new A560SL™ cabinet in NSW and
QLD during 2015.
Loss of domestic ship share due to anticipated
transition to new A600™ cabinet, launched at
AGE in August 2015.
Other Regions: Strong sales revenue (+39%) and unit volume
growth (+30%).
Driven by good contribution from Asia, in
particular the Philippines (+115%).
Limited exposure to Macau, affected by
regulatory change.
Online:
Real Money Gaming – Alderney licence, initial
games and Game Connect™ RGS approved.
Social Gaming – Players Paradise™ Slots App
successfully launched in conjunction with
616 Digital LLC.
02
CAGR
2%
35.8
H1
H2
Tax benefit of $18.1m recognised in FY12
23.8
40.5
30.2
22.0
25.9
35.7
34.6
FY12
FY13
FY14
FY15
REVENUE/PROFITABILITY - AUD (M)
(Fiscal years ended June 30)
Profit Before Tax (PBT)
Total Revenue
244.1
240.6
150.5
69.3
82.0
94.4
FY13
FY14
FY15
98.0
46.2
FY12
AINSWORTH GAME TECHNOLOGY
“The quality of our earnings is rising
as units under gaming operation
grow. Our balance sheet is strong
and we have a confident outlook
for improved sales and profits in
Australia based on the A600™.”
Financial Highlights
REPORTED NPAT of $70 million (2014: $62 million)
EPS of $0.22 per share (2014: $0.19 per share)
EBITDA up 20% to $108 million
R&D as percentage of revenue maintained at 11%
STRONG Balance Sheet, Cash Position and Cash Flow and ROE
TOTAL DIVIDENDS of 10.0 cents per share (fully franked)
representing a payout ratio of 46%
Interim Dividend
5.0 cents
100% Franked
(Paid 21 April 2015)
R&D EXPENDITURE PERCENTAGE (M)
(Fiscal years ended June 30)
Total R&D Expenditure
R&D as a Percentage of Revenues
23.2
12%
18.6
12%
26.4
25.4
11%
11%
Final Dividend
5.0 cents
100% Franked
(Paid 29 Sept 2015)
FY12
FY13
FY14
FY15
HISTORICAL PERFORMANCE - AUD (M)
(Fiscal years ended June 30)
Domestic Revenue
International Revenue
Normalised Profit/(Loss) After Tax (PAT)
*Note: Normalised net profit for H2 FY11
and H1 FY12 excludes one off recognition
of $8.5 million and $21.8 million in deferred assets.
150.6
47.5
103.1
46.2
98.0
23.3
74.7
14.8
69.3
21.0
48.3
(2.7)
FY10
244.1
100.8
240.6
147.6
143.3
61.6
93.0
70.4
198.1
73.7
124.4
52.2
FY11*
FY12*
FY13
FY14
FY15
03
2015 ANNUAL REPORT
Chairman’s Report
Dear Shareholders,
I am pleased to report our FY15 results. They are
strong profit results. Importantly, they also show the
progress we are making in executing our long term
strategy and delivering the anticipated benefits to
shareholders.
Around five years ago we committed to our
strategy of building a stronger, more diversified and
profitable global gaming and technology Group.
We were determined to build a significant business
in large international markets, particularly the
Americas. We set out to leverage our proprietary
technology and gaming expertise to substantially
increase our profitability. We focused on improving
the quality of our earnings by developing a larger
participation business that would provide recurring
revenues. We invested in multiple new licenses
and their related markets, as we continue to do, to
ensure our ongoing growth and sustainability. These
include our online and social gaming businesses.
In 2015 we made real progress on each of these
fronts.
This is our sixth consecutive year of profit growth.
Overall net profit after tax for the year ended 30th
June 2015 was $70.4m. This was an increase of 14%.
The rising US dollar did assist us.
Within this overall profit increase our international
operations performed well. International revenues
grew by 46% in the year. They now represent 61%
of the Group’s total revenues. Profits from our
international operations grew by 58% to $66.8m.
This is a sizeable contribution to Group profits and
a tremendous performance.
04
The Americas region performed very well. It was
our fastest growing region. Revenues increased
by 47% to $133m. Profits from the region lifted to
$58.3m, an increase of 61%. Our business in the
Americas has come a long way over the last five
years. I am delighted to say the Ainsworth brand is
well established and recognized as a leading supplier
of high performing and quality gaming equipment.
As many of you will know we are investing in a new
facility in Las Vegas, Nevada to support further
growth. We look forward to the planned opening
in April 2016.
Ainsworth also performed well in the Rest of the
World. Sales and profits increased to $14.6m (40%
increase) and $8.5m (39% increase).
These are encouraging results from our expanding
international businesses.
We have also made progress in building scale
and the contribution from our gaming operations
where we lease and/or rent machines to customers.
These high quality revenues are recurring in nature.
At the end of FY15 we had 2,627 machines within
the Americas region on participation, rental and/
or lease, a rise of 32% versus the year before. We
expect this to increase in the coming year and
beyond as we progressively release an exciting
range of licensed theme products.
Pleasingly we are also making further progress in
our online and social businesses. Following a period
of investment, these operations are expected to
provide a positive contribution to the Group’s
financial results. This is an exciting space and with
our technology and deep gaming expertise we are
well positioned for further growth and a return on
this investment. Since the end of the year we have
exercised our option to acquire 40% of 616 Digital,
a social online gaming company. This provides us
with the opportunity to leverage our proven land
based content in these new arenas.
AINSWORTH GAME TECHNOLOGY Let me turn to our performance in the challenging
and competitive domestic market. Revenues fell by
35% and profits fell by 44%. This was due to several
factors, most of which were confined to last year. We
saw a general decline in business activity with large
corporate customers and casinos. We saw changes
in customer purchasing patterns which had an
adverse effect and with the consolidation of some
machine suppliers we saw some pricing pressure.
Our ship share fell. However, our high yielding
product performance ensured that the installed
base of Ainsworth products still experienced
moderate growth across domestic markets.
To put this into context, some of the decline
experienced was expected given our planned move
to a new product platform during the period. We
expect this to be reversed in the coming year. As
with all leading technology companies, we invest
to provide our customers with greater diversity and
innovative product offerings. This commitment to
invest in research and development has culminated
in the launch of the A600™ at the recently held
Australasian Gaming Exhibition in August. The
A600™ is Ainsworth at its best. The machine whilst
traditional in look is technically advanced. It is already
approved for sales in the core Queensland and New
South Wales markets. After making our first sales
we have received further positive market feedback.
We expect the A600™ to positively impact domestic
ship share gains in FY16 and future periods.
Let me close these remarks on our domestic
business by saying we are well placed with the
A600™ and a pipeline of innovative games and
expect strong sales and profit growth to follow.
To enable us to deliver our growth strategy the
Group maintains a strong balance sheet. This
strength allows us to actively seek out potential
high value investment opportunities. This has also
allowed us to enhance our investment in the future
pipeline of innovative core products for outright
sale and units under gaming operation, as well as
to underpin the execution of our online strategies.
“ We reaffirm our expectations
to deliver strong organic sales
in FY16.
and profit growth
We remain focused on the
execution of our strategies to
build a stronger, more diversified
and profitable global gaming
and technology group.”
With this strong performance and our confidence in
the future, I am pleased to report that the Board was
able to declare a fully franked dividend of 10 cents
per share for the full year. The dividend represents
a 46% payout ratio recognizing we are clearly in an
investment and growth phase in our development.
We remain firmly committed to building and
delivering value for all shareholders.
We reaffirm our expectations to deliver strong
organic sales and profit growth in FY16. We remain
focused on the execution of our strategies to build
a stronger, more diversified and profitable global
gaming and technology Group. We expect FY16 to
be an exciting and prosperous year for Ainsworth as
we develop and deliver new and exciting products
to our customers and players.
I am encouraged by the achievements of the Group
to date and would sincerely like to thank the hard
work and effort of our Board of Directors, our CEO
Mr Danny Gladstone and the executive team, along
with the invaluable contribution of our loyal and
dedicated employees, my fellow shareholders and
valued customers.
Len Ainsworth
Executive Chairman
05
2015 ANNUAL REPORT Chief Executive Officer’s Report
Dear Shareholders,
I am pleased to report that 2015 was another good
year for AGT.
Starting with the results for the year ended 30 June
2015, AGT has achieved another year of improved
financial performance. We delivered a profit after
tax of $70.4m, an increase of 14% on the previous
year. The profit includes $17.9m of foreign currency
gains after tax. Earnings per share increased to 22
cents per share up from 19 cents per share in 2014.
Return on equity was 25% and we finished the year
with $41.3m of net cash on the balance sheet to fund
the operations, including innovation and expansion.
More significantly, these results highlight our ability
to take our gaming expertise and proprietary
technology and build a profitable and successful
international business. Experience counts at
Ainsworth. We assembled a group of seasoned
and effective executives and a core group of game
designers, mathematicians and artists to drive
further creativity and performance. We extended
the long term incentive plan in 2015 to retain our
valued employees.
Our strategy to build a stronger, diversified and
more profitable gaming and technology Group has
been achieved. We are now well established with
solid foundations.
Our international business performed well. In fact,
with this growth, this is the first year that Ainsworth
is bigger offshore than it is domestically. Overall,
international revenue grew by 46%. Within this
our North American revenue grew by 41%, Latin
American revenues grew by 58% and the Rest of
the World grew by 40%. It is encouraging to see
that Ainsworth’s products and technology are
succeeding in international markets. We are building
good momentum for further success.
The large North American market has been a
key priority for us. In 2015, the Company’s share
increased. This was driven by the release of new
products and games. We sold 3,100 units in this
06
market last year. In our existing markets, California
and Nevada, we saw a strong increase in the
installed base. We added further jurisdictions in the
year which contributed to the 30% increase in units
sold. We look forward to a full years’ contribution
from these additional new markets in FY16. The
A560SL™ performed well for us. It’s a very good
machine and is well suited to the American market.
Average selling prices remained stable.
In 2016 we expect further growth and progress in
North America. We have a number of new initiatives
to drive sales and profits. We are examining
opportunities to expand into the complementary
Class II gaming market, where we can further
leverage our products and technology.
In April next year we plan to open our new facility in
Nevada. This is an exciting development for Ainsworth
and it should provide us with greater efficiencies
combined with an enhanced profile and presence.
We operate in a highly regulated environment.
These licenses provide the opportunity to operate
within gaming jurisdictions. To ensure we achieve
new licenses and maintain our current licenses, we
are committed to continuous improvement of our
already established compliance culture. With this
commitment to ensure best practice compliance, we
expect to receive more licenses, which should drive
further growth. In addition to the licenses granted
during last year in Louisiana, Oklahoma, Kansas
(temporary) and Massachusetts (temporary) we also
secured 36 new tribal licenses. We have submitted
gaming license applications to the states of Delaware,
the Gaming Board of Bahamas and additional
tribal licenses in Kansas, Louisiana, Michigan and
Oklahoma. We expect these to be granted in FY16.
We also have three new licensed games, Three
Amigos™, Cinderella™ and King Kong™, which were
launched at the G2E Gaming Exhibition in Las
Vegas. With an expanding library of license themed
products, we expect to increase our base of machines
under gaming operation in coming periods and are
confident they will be successful.
AINSWORTH GAME TECHNOLOGY Chief Executive Officer’s Report
In 2015 our business in Latin America had another
strong year driven by continuing high performance
products. We have been operating in the region
for a number of years and have developed a good
understanding of these markets. Profit in 2015
increased to $20.2m. We sold 2,219 units. Mexico,
our largest market, reported strong sales. Our base
of participation machines increased by 48%, again
demonstrating the improvement in our quality of
earnings.
I would point out two financial consequences of these
growth and diversification strategies. Increasing
the number of machines on participation changes
the timing of our cash receipts from customers and
requires us to maintain units as assets on our balance
sheet. Sales in Latin America typically require
extended payment terms and more working capital.
Given we see growth in both of these opportunities,
we are fortunate to have a strong balance sheet that
can fund our growth.
The Rest of the World has become a significant
market for Ainsworth. Profit increased to $8.5m. Unit
volumes increased by 30%. While we have a limited
exposure to Macau, we are optimistic for the future
as the replacement of machines in this market are
progressively rolled out under new gaming standards.
We also made good progress in our online real
money gaming operations. We were granted a
license to operate in Alderney and our initial games
and Remote Game Server were also approved.
Our social gaming business is making good progress
too. The Paradise Players Slots App was successfully
in conjunction with 616 Digital LLC
launched
desktop, Android and IOS. Additional Apps are in
development for release in the first quarter of FY16.
Given our confidence in this business we exercised
the option to acquire 40% of the equity in 616 Digital.
The remaining 60% of the equity is expected to be
acquired in FY16, subject to financial conditions. After
a period of investment these businesses are now
positioned to have a positive impact on earnings.
Let me address our performance in Australia last
year. The market was highly competitive. While the
downturn in our business was disappointing, neither
was it totally surprising. We transitioned to a new
gaming platform. In anticipation of the A600™, some
customers held off buying until this product was
available.
We have stablised our position and expect improved
returns in FY16. We launched the A600™ at the
Australasian Gaming Exhibition in August 2015 with
a number of new game concepts. This new wide
screen cabinet was well received and sales have
commenced.
We enter FY16 with confidence. We have a well-
established international business. The quality of our
earnings is rising as units under gaming operation
grow. Our balance sheet is strong and we have a
confident outlook for improved sales and profits in
Australia based on the A600™. We expect to deliver
strong organic sales and profit growth for the Group
in FY16.
I wish to express my appreciation to the Executive
Chairman for his commitment to the Company and
the wealth of his experience. I would also like to
thank the Board of Directors for their wise counsel,
our talented employees for their major contribution
to our continued success, our loyal and supportive
shareholders and importantly our customers for
whom we strive to deliver the best in gaming
experiences.
Danny Gladstone
Chief Executive Officer / Executive Director
07
2015 ANNUAL REPORT Distribution of shareholders
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
NUMBER OF EQUITY SHAREHOLDERS
Performance
Rights
Ordinary
Shares
Options
1,419
2,859
939
784
74
6,075
–
–
1
1
1
3
4
294
98
58
3
457
The number of shareholders holding less than a marketable
parcel of ordinary shares is 236 (17,127 ordinary shares).
On market buy-back
There is no current on market buy-back of ordinary shares.
Unquoted equity securities
At 11 September 2015, 227,345 unlisted non-transferable
options and 3,674,319 performance rights have been issued
to 3 and 457 employees, respectively. These options and
performance rights 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.
SHAREHOLDER
INFORMATION
INFORMATION ABOUT SHAREHOLDERS
Shareholder
the Australian
Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below:
required by
information
SHARE HOLDINGS (AS AT 11 SEPTEMBER 2015)
Number of shareholders and shares on issue
The issued shares in the Company were 322,339,031
ordinary shares held by 6,075 shareholders.
Substantial shareholders
The number of shares held by substantial shareholders
and their associates are set out below:
Shareholder
Mr LH Ainsworth
Votraint No. 1019 Pty Ltd
(MCA Private Investment A/C)
Number of
Ordinary Shares
171,901,587*
28,505,912
* Mr LH Ainsworth granted share options over a portion of his
existing personal shareholding
to Australian employees,
excluding directors. Share options outstanding as at
11th September 2015 were 300,764 (issued to 17 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.
Options and Performance Rights
Option and performance right holders have no voting rights.
08
AINSWORTH GAME TECHNOLOGY Twenty largest shareholders
Name
MR LH AINSWORTH
VOTRAINT NO 1019 PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ASSOCIATED WORLD INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
BNP PARIBAS NOMS PTY LTD
BACLUPAS PTY LTD
AMP LIFE LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
UBS NOMINEES PTY LTD
WRITEMAN PTY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
TRINITY MANAGEMENT PTY LTD
CASOLA HOLDINGS PTY LTD
CS FOURTH NOMINEES PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED
Total
Number of ordinary shares held
Percentage of total
157,949,404
49.00
28,475,912
14,758,645
14,014,409
9,165,240
8,265,240
7,727,830
7,260,757
4,654,043
4,468,366
3,726,033
2,598,918
2,427,376
1,900,000
1,157,237
1,157,109
1,070,000
1,016,511
991,906
971,233
273,756,169
8.83
4.58
4.35
2.84
2.56
2.40
2. 25
1 . 4 4
1 . 3 9
1 .1 6
0.81
0.75
0.59
0.36
0.36
0. 3 3
0. 32
0. 3 1
0. 3 0
84.92
09
2015 ANNUAL REPORT The directors present their report together with the consolidated financial statements of the Group comprising of Ainsworth
Game Technology Limited (the Company) and its subsidiaries for the financial year ended 30 June 2015 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
Age
Experience, special responsibilities and other directorships
Mr Leonard Hastings Ainsworth, DUniv,
FAICD, FAIM
Executive Chairman
92 yrs
– Sixty two years gaming industry experience
– Founder and former Managing Director of Aristocrat
– Fellow of the Institute of Company Directors in Australia and the
Australian Institute of Management
– Life member – Clubs NSW
– Founder of Australian Gaming Machines Manufacturers Association –
now Gaming Technology Association
– Founder of Australasian Gaming Exhibition
– Inducted into the Australian Gaming Hall of Fame and U.S Gaming Hall
of Fame in 1994 and 1995, respectively
– Recognition as export hero in 2002 by Australian Institute of Export
– G2E Asia Gaming Visionary Award Recipient in 2010
– Recipient of Clubs NSW award for outstanding contribution to the club
industry in 2011
– Recipient of Keno and Club Queensland Award for excellence in March
2014 for services to industry
– Awarded Higher Doctorate degree by the University of New South Wales
– Director and Chairperson since 1995 – Executive Chairperson since 2003
– Graeme has specialised in the area of liquor and hospitality for over
30 years in corporate consultancy services with particular emphasis on
hotels and registered clubs
– Former Chairman of Harness Racing NSW, recipient of J.P. Stratton
award and Ern Manea Gold Medal. Inducted into the Inter Dominion
Hall of Fame in February 2014
– Former Director of Central Coast Stadium and Blue Pyrenees Wines
– Director of Liquor Marketing Group Limited (Bottle Mart) since
September 2013
– Non executive Director of Lantern Hotels Group appointed June 2015
– Chairman of Audit Committee of Illawarra Catholic Club Group
– Director since 2007
– Chairperson of Audit Committee and member of Regulatory and
Compliance Committee
– Member of Remuneration and Nomination Committee since 31 March 2015
– Lead Independent Non-Executive Director since 2013
Mr Graeme John Campbell
Lead Independent Non-Executive Director
58 yrs
10
DIRECTORS’ REPORTfor the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY Name, qualifications
and independence status
CURRENT
Mr Michael Bruce Yates B.Com (with merit),
LLB
Independent Non-Executive Director
Mr Colin John Henson, Dip Law- BAB,
FCPA, FCIS, FAICD
Independent Non-Executive Director
67 yrs
Age
Experience, special responsibilities and other directorships
61 yrs
– Michael has extensive commercial and corporate law experience in a
career spanning over 34 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
– Director since 2009
– Chairperson of Regulatory and Compliance Committee and member of
Remuneration and Nomination Committee since 2013
– Member of Audit Committee since 31 March 2015
– Colin has had a lengthy career in senior corporate positions and as a
director of private and publicly listed companies across a broad range
of industries
– Currently the Non-Executive Chairman of Videlli Limited
– Lead associate with Madison Cross Corporate Advisory Pty Ltd,
effective 2 July 2014
– Formerly the Executive Chairman of Redcape Property Fund Limited,
an ASX Listed Property Trust and Chairman and non-executive director
of QuayPay Limited
– Fellow of the Australian Institute of Company Directors, CPA Australia and
Australian Institute of Corporate Managers, Secretaries and Administrators
– Non practising member of the Law Society of NSW
– Director since 2013
– Member of Audit Committee since 2013
– Member of Remuneration and Nomination Committee since 2013 and
Chairperson from 31 March 2015
Mr Daniel Eric Gladstone
Executive Director and Chief Executive
Officer
60 yrs
– Danny has held senior positions within the gaming industry over a
successful career spanning 40 years
– Inducted into the Club Managers Association Australia Hall of Fame in 2000
– Chairman of Gaming Technologies Association from 2011 until
resignation on 21 February 2012
– Chief Executive Officer since 2007 - Executive Director since 2010
– Member of Regulatory and Compliance Committee
FORMER
Mr David Hugh Macintosh, AM, BBus, FCA
Independent Non-Executive Director
59 yrs
– David has an extensive career spanning over 40 years experience in
transport and the construction industry specialising in the hospitality
and gaming industry
– Currently the Managing Director of a major Australian construction company
– Formerly the Executive Chairman and director of an ASX listed
Australian company for a period of approximately 20 years
– Inducted into the Club Managers Association Australia Hall of Fame in
March 2006
– Fellow of the Institute of Chartered Accountants Australia
– Member of the Order of Australia in June 2011
– Awarded the Australian National Medal in 2014
– Director since 2013, resigned 27 March 2015
– Chairperson of Remuneration and Nomination Committee and member
of Audit Committee since 2013 until 27 March 2015
11
2015 ANNUAL REPORT 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 had experience in providing audit, taxation and business advisory services.
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
LH Ainsworth
GJ Campbell
MB Yates
DE Gladstone
CJ Henson
DH Macintosh
Board Meetings
B
A
12
12
11
11
12
8
12
12
12
12
12
8
Audit Committee
Meetings
Remuneration
& Nomination
Committee Meetings
Regulatory
& Compliance
Committee Meetings
A
–
2
–
–
2
2
B
–
2
–
–
2
2
A
–
1
4
–
5
4
B
–
1
5
–
5
4
A
–
4
4
4
–
–
B
–
4
4
4
–
–
A Number of meetings attended
B Number of meetings held during the time the director held office during the year
4. PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the financial year were the design, development, production, lease,
sale and servicing of gaming machines and other related equipment and services. The Group also operates or has strategies to
expand its activities within the on-line gaming markets, including social gaming and licensed “Real Money” gambling markets.
There were no significant changes in the nature of the activities of the Group during the year.
Objectives
Ainsworth is a leading gaming machine developer, designer and manufacturer operating in local and global markets. Our
strategy is to profitably and sustainably expand this footprint by leveraging off our deep expertise and substantial experiences
for the benefit of all shareholders.
The Group’s objectives are to:
– focus on increasing revenue and profitability within geographical markets that are expected to achieve the greatest
contributions to the Group’s financial results, and creation of sustained growth;
– expand presence within on-line gaming markets, including social gaming and licensed “Real Money” gambling markets;
– continue investing in product research and development in order to provide quality market leading products that are innovative
and entertaining, and result in increased player satisfaction and therefore greater venue profitability;
– provide a growing return on shareholder equity through increasing profitability, payment of dividends and share price growth; and
– prudently manage levels of investment in working capital and further improve cash flow from operations to facilitate investment
in growth opportunities.
In order to meet these objectives the following priority actions will continue to apply in future financial years:
– grow the Group’s footprint and operating activities in domestic and international markets;
– continual investment in research and development to produce innovative products with leading edge technology;
– further reduce product and overhead costs through improved efficiencies in supply chain and inventory management;
– actively pursue initiatives to improve and reduce investment in working capital;
– maintain best practice compliance policies and procedures and increase stakeholder awareness of the Group’s regulatory
environment; and
– ensure retention and development of the Group’s talent base.
12
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 5. OPERATING AND FINANCIAL REVIEW
Overview of the Group
The Group’s performance for the current and prior corresponding period is set out below:
In millions of AUD
Reported results
Total segment revenue from ordinary activities
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Earnings before interest and tax (EBIT)
Profit before income tax
Profit after income tax
Earnings per share (fully diluted)
Total dividends per share
12 months to
30 June 2015
12 months to
30 June 2014
Variance
%
240.6
107.6
91.3
94.4
70.4
244.1
89.4
79.1
82.0
61.6
22.0 cents
19.0 cents
10.0 cents
10.0 cents
(1.4%)
20.4%
15.4%
15.1%
14.3%
15.8%
–
The Group’s profit for the year ended 30 June 2015 was a profit after tax of $70.4 million, an increase of 14% on the $61.6 million
in 2014. This result was achieved on revenue of $240.6 million, a decrease of 1% on the revenue of $244.1 million in 2014. Further,
revenue gains in the key market of the Americas have assisted in increasing the contribution of revenue from international
markets from 41% in 2014 to 61% in the current year. The current year result included a positive impact for net foreign currency
gains of $25.6 million compared to $0.8 million in 2014 as a result of $US currency movements and the related translation of US
denominated assets at the reporting date.
During the current year the Group also incurred one-off costs of $3.3 million in evaluating strategic investment opportunities
and the impairment of a terminated distributorship receivable.
Further expansion and market share gains within the Americas and Asia were achieved during the current period following
the previous development initiatives introduced within these geographical markets. The key growth market of the Americas
increased revenue by 47% in the period through the continued product performance of the A560SL™ in North America and
by the strong foundation of its Las Vegas operations. The Group continues to invest in new product development to assist in
further capturing market share and providing revenue growth in both new and established markets.
Shareholder returns
2015
2014
2013
2012
2011
Profit attributed to owners of the company
$70,353,000 $61,570,000 $52,202,000 $64,275,000 $23,121,000
Basic EPS
Dividends paid
Change in share price
$0.22
$0.19
$0.16
$32,227,000 $32,211,000
$9,661,000
($1.17)
($0.29)
$1.93
$0.23
$–
$1.74
$0.08
$–
$0.27
Net profit amounts for 2011 to 2015 have been calculated in accordance with Australian Accounting Standards (AASBs). The
profit amount for 2012 included an income tax benefit of $18.1 million following the recognition of previously unrecognised
deferred tax assets.
Investments for future performance
The Group continues to review and evaluate opportunities within the gaming sector. Further increases in research and
development expenditure in future periods will assist the continual expansion of innovative and technically advanced products
with a view to building on the consistently high performance achieved to date. The Group launched the A600™ at the Australasian
Gaming Exhibition (AGE) in August. This product was the result of the significant investment in research and development
undertaken in prior periods and is a cornerstone of the Group’s product transition strategies in all global markets.
The Group continues to execute strategies within on-line segments, both real money and social gaming. Completion of licenced
“Real Money” gambling technical integration of the Group’s Remote Gaming Server (RGS) “GameConnect™” has progressed with
registrations continuing with leading real money gambling operators within Europe, as well as selected Asian and South American
markets, where real money on-line gaming is regulated. It is expected that monetarisation of licensed “Real Money” on-line
gaming opportunities will commence during FY16 once the Group’s content is distributed by platform providers and operators.
13
2015 ANNUAL REPORT 5. OPERATING AND FINANCIAL REVIEW (continued)
Entry into the high growth social gaming sector was initially established through an initial investment with 616 Digital LLC. The
Group has converted this investment to a 40% equity shareholding in 616 Digital LLC subsequent to the reporting date. An
option exists to purchase the remaining 60% of 616 Digital LLC after evaluation of the financial due diligence and technical
performance of 616 Digital LLC within FY16.
As part of the Group’s strategic investment in 616 Digital LLC, the Company launched its new on-line casino “Players Paradise
Slots™” in February 2015 to complement 616 Digital LLC’s already established Pokie Magic on-line casino. The development
and marketing of 616 Digital LLC’s social gaming offering on both desktop and mobile platforms, has been leveraged and
enhanced by Ainsworth’s extensive land based game content library.
Significant changes in the state of affairs
Investment in research and development continues to help ensure new initiatives positively affect future product performance.
Further investment within the Americas through the commencement of the purpose built facility in Las Vegas was undertaken
in the 2015 financial year to ensure the Group is positioned to capitalise on the significant opportunities within this region. It is
expected that completion and occupation of this facility will occur in the second half of FY16 which will provide further operating
efficiencies.
Other than the matters noted above, there were no significant changes in the state of affairs of the Group during the financial year.
Review of principal businesses
Results in the current period and prior corresponding period are summarised as follows:
In millions of AUD
Segment revenue
Australia
Americas
Rest of World
Total segment revenue
Segment result
Australia
Americas
Rest of World
Total segment result
Unallocated expenses
Net foreign currency gains
R&D expenses
Corporate expenses
Other expenses
Total unallocated expenses
Less : interest included in segment result
EBIT
Net interest
Profit before income tax
Income tax
Profit after income tax
14
12 months to
30 June 2015
12 months to
30 June 2014
Variance
Variance
%
93.0
133.0
14.6
240.6
46.6
58.3
8.5
113.4
25.6
(25.4)
(18.6)
(1.9)
(20.3)
(1.8)
91.3
3.1
94.4
(24.0)
70.4
143.3
90.4
10.4
244.1
83.6
36.3
6.1
126.0
0.8
(26.4)
(20.3)
–
(45.9)
(1.0)
79.1
2.9
82.0
(20.4)
61.6
(50.3)
42.6
4.2
(3.5)
(37.0)
22.0
2.4
(12.6)
(35.1%)
47.1%
40.4%
(1.4%)
(44.3%)
60.6%
39.3%
(10.0%)
24.8
3100.0%
1.0
1.7
(1.9)
25.6
(0.8)
12.2
0.2
12.4
(3.6)
8.8
3.8%
8.4%
100.0%
55.8%
80.0%
15.4%
6.9%
15.1%
17.6%
14.3%
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY Key performance metrics
Segment result margin
Australia
Americas
Rest of World
Segment result margin
R&D expense
EBIT(1)
Profit before income tax(1)
Profit after income tax
Effective tax rate
% of revenue
Variance
12 months to
30 June 2015
12 months to
30 June 2014
Points
50.1
43.8
58.2
47.1
10.6
27.3
28.6
29.2
25.4
58.3
40.2
58.2
51.6
10.8
32.1
33.3
25.2
24.9
(8.2)
3.6
–
(4.5)
(0.2)
(4.8)
(4.7)
4.0
0.5
(1) Excludes net foreign currency gains of $25.6 million (2014: $0.8 million)
Revenue
Sales revenue of $240.6 million was recorded in the year under review compared to $244.1 million in 2014, a slight decrease of
1%. The revenue contributions from domestic and international markets were 39% and 61% respectively compared to 59% and
41% in 2014. The weaker domestic revenue was primarily impacted by lower corporate and casino sales compared to the 2014
year, and intensive competition.
Following a number of years of compound growth across the domestic markets of Australia, revenues of $93.0 million were
achieved during the reporting period, representing a reduction of 35% as compared to 2014. This reduction was experienced
across most jurisdictions and resulted from a number of factors, largely confined to the current period. A decline in business
activity with large corporate customers was one of those factors, resulting from an abnormally high level of activity in the
corresponding period in 2014, together with general changes in purchasing patterns. Consolidation across the spectrum of
competitors in Australia also manifested itself in additional pricing pressure during the period, and whilst ship-share came
under pressure, high-yielding product performance ensured that the installed base of Ainsworth products still experienced
moderate growth across most domestic markets.
The NSW Hotels market continued to prove challenging during the period, however additional focus on market-attuned games
for this segment is forecasted to provide a meaningful improvement in FY16. In the primary markets of NSW and QLD, the much
anticipated transition from the highly successful A560™ cabinet to the new A600™ cabinet, had an adverse impact on volume
towards the end of the reporting period, however the launch of the new product at the Australasian Gaming Exhibition in August
2015, is expected to provide positive momentum for the domestic business in FY16. The new A560SL™ cabinet was launched
to much acclaim in NSW and QLD during 2015, further diversifying the cabinet variations available within the A560™ portfolio.
This included much sought after game combinations involving multiple games and denominations available in a single cabinet
configuration.
In Victoria, the looming introduction of Voluntary Pre-Commitment in December 2015, has adversely impacted on the amount
of capital available to customers for the purchase of gaming machines with customers being required to purchase ‘pre-
commitment’ supporting software. In South Australia, the planned introduction of the $5 maximum bet regulation from January
2017 has also adversely impacted business activity during the reporting period, however this equally represents an opportunity
for additional business activity in FY16.
International revenue was $147.6 million compared to $100.8 million in 2014, representing an increase of 46%. The Group
expects to achieve further increases in international revenue in FY16 from the ongoing release of newly developed product
initiatives combined with an established operational base in Las Vegas, Nevada.
The key market of the Americas contributed 90% of total international revenue, with North America and Latin America
representing 56% and 34% respectively. The North American market realised revenue of $82.8 million in the current period, an
increase of 42% on the $58.5 million in 2014. The release of the A560SL™ within North America in March 2014 provided revenue
opportunities with game brands such as Sweet Zone™ and Whopper Reels™, among others. The recent granting of licenses and
the progression of product approvals in Missouri, Mississippi, Louisiana, Arizona, Kansas and Saskatchewan are expected to
contribute to further revenue opportunities and growth in the short term.
15
2015 ANNUAL REPORT 5. OPERATING AND FINANCIAL REVIEW (continued)
In conjunction with the revenue increase in outright sales the Group achieved a 19% increase in gaming units under participation
arrangements in the reporting period. At the reporting date the Group had 1,316 units under gaming operations in North
America, an increase of 211 units from those at 30 June 2014. Release of products such as Sound of Music™ and Showgirls™
together with the previously released Reels of Wheels™ as well as classic Ainsworth titles being developed in the A560™ Wide
Boy cabinet are expected to further increase the installed base of products under participation in this market.
Revenue from Latin America was $50.3 million, an increase of 58% on the corresponding period in 2014. In addition to the
above, the Group has increased its footprint and at the report date has 1,311 gaming machines under gaming operations in this
market. This represents an increase of 48% compared to the 884 units under gaming operation as at 30 June 2014. Continued
high performance of products such as the Multi Win™ multi game range, Rio Grande Rapids™ and Quad Shots™, along with
strategies previously undertaken have facilitated the achievement of the Group’s growth within this geographical region. The
Company is well positioned to build on its reputation as a provider of high performing gaming products in this region and
expects to continue to expand its established footprint of products under gaming operation.
Revenue from other international markets (“Rest of World” segment) of New Zealand, Europe and Asia contributed $14.6 million
and represented 10% of international revenue consistent with 2014. It is expected that revenue increases within Asia will be
steadily realised in future periods as the newly revised gaming standards are introduced, and new casino openings occur
during FY16/17.
Operating costs
Gross margin of 63% was achieved, compared to 64% in 2014. The Company noted that margins within domestic markets were
impacted by higher componentry costs through product transition and adverse currency movements, aggressive promotional
initiatives and reduced corporate and casino activity. The maintenance of gross margin was achieved despite further revenue
increases from Latin America, which represented 34% of total international revenue (2014: 32%), at a lower gross margin.
Continued cost reduction initiatives combined with higher sales volumes, production efficiencies, and a greater concentration
of premium progressive recurring revenue games are expected to assist in off-setting potential negative margin impacts as
international revenue increases its contribution to total revenue of the Group.
Operating costs, excluding cost of sales, other expenses and financing costs were $83.0 million, an increase of 7% over
2014. These costs included one-off costs of $3.3 million incurred in the evaluation of strategic opportunities ($1.9 million)
and the impairment of a terminated distributorship receivable within Latin America ($1.4 million). This increase was primarily
attributed to an overall increase in variable selling costs and increased sales representation within the Americas in line with
revenue increases and new licenses achieved in the period, increased expenditure on new product initiatives and the full
year depreciation impact of the gaming machines under gaming operations. Operating costs relating to global expansion are
continually assessed to ensure these costs are aligned to the achievement of revenue growth before being incurred.
Research and development (R&D) expense was $25.4 million, a decrease of $1.0 million over 2014 and represented 11% of
revenue (2014: 11%). Completion of development of A600™ occurred in the current period.
Administration costs were $18.6 million, a decrease of $1.7 million compared to 2014. These overhead costs as a percentage of
total revenue were 8% (2014: 8%) and are consistent with prudent resource and cost control.
Financing income and costs
Net financing income was $28.7 million in the current period, an increase of $24.9 million on the net financing income of
$3.8 million in 2014. This increase was primarily a result of net foreign exchange gains in the current year of $25.6 million
compared to $0.8 million in 2014, a positive change of $24.8 million.
Review of financial condition
Capital structure and treasury policy
The Company currently has on issue 322,339,031 ordinary shares. The Board continues to ensure a strong capital base is
maintained to invest in the future development of the business. Group performance is monitored to ensure an acceptable return
on capital is achieved and dividends are able to be provided to ordinary shareholders in future periods. There were no changes
in the Group’s approach to capital management.
The Group is exposed to foreign currency risks on sales and purchases that are denominated in currencies other than AUD.
The Group regularly monitors and reviews the financial impact of currency variations to determine strategies to minimise the
volatility of changes and adverse financial effects in foreign currency exchange rates. No hedging arrangements were utilised
in the current period and draw-downs of US dollar denominated borrowings were utilised to assist in providing a partial natural
hedge against future movements.
16
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY Liquidity and funding
The Group continues to generate positive cashflows from operating activities. In addition to cash and term deposits held of
$41.3 million (2014: $71.9 million), the Group has in place a $30 million facility with a leading Australian bank. This facility will
allow the Group to pursue traditional financing alternatives, including the ability to minimise working capital investment through
cash reserves and ability to utilise US dollar borrowings.
Cash flows from operations
Net cash inflows from operations for the year ended 30 June 2015 was $20.2 million, a decrease from $57.6 million in the
corresponding period in 2014. Cashflows in the period were adversely impacted by the commencement of Group income tax
payments, investment in working capital due to the timing of revenue achieved and increase in inventory held at reporting date.
It is expected that increased cashflows will be achieved within the first half of FY16 as the cash conversion of receivables and
inventory reductions occur through sales.
The Group actively monitors its working capital requirements and has further increased its investment in establishing machines
under gaming operation so as to pursue recurring revenue streams in the Americas under participation arrangements.
Impact of legislation and other external requirements
The Group continues to work with regulatory authorities to ensure that the necessary product approvals to support its
operations within global markets are granted on a timely and cost effective basis. The granting of such licenses will allow the
Group to expand its operations. The Group aims to conduct its business worldwide in jurisdictions where gaming is legal and
commercially viable. Accordingly, the Group is subject to licensing and other regulatory requirements of those jurisdictions.
The Group’s ability to operate in existing and new jurisdictions could be adversely impacted by new or changing laws or
regulations and delays or difficulties in obtaining or maintaining approvals and licenses.
6. DIVIDENDS
The following dividends were declared by the Company for year ended 30 June 2015:
Declared and paid during the year 2014
Final 2014 ordinary (unfranked)
Interim 2015 ordinary (franked)
Total amount
Cents
per share
Total amount
$’000
Date of
payment
5.0
5.0
16,110 26 September 2014
16,117
32,227
21 April 2015
Declared after end of year
The dividends have not been provided and there are no income tax consequences. After the balance sheet date the following
dividend was declared by the directors.
Final ordinary (franked)
Total amount
Cents
per share
Total amount
$’000
Date of
payment
5.0
16,117 29 September 2015
16,117
The financial effect of this dividend has not been brought to account in the consolidated financial statements for the year ended
30 June 2015 and will be recognised in subsequent financial reports, and there are no income tax consequences.
Dividends have been dealt with in the financial report as:
- Dividends
- Noted as a subsequent event
Note
19(c)
$’000
32,227
16,117
17
2015 ANNUAL REPORT 7. EVENTS SUBSEQUENT TO REPORTING DATE
After the reporting date, the Company declared a franked dividend of 5.0 cents per ordinary share amounting to $16,117,000
with an expected payment date of 29 September 2015. The financial effect of this dividend has not been brought to account in
the financial statements for the year ended 30 June 2015 and will be recognised in subsequent financial reports.
Other than the matter discussed above, 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.
8. LIKELY DEVELOPMENTS
The Group continues to pursue development initiatives and the necessary product approvals to help ensure sustainable
revenue growth and continued financial improvement in future periods.
Further execution of strategies through the investment in a social on-line gaming company is expected to provide complementary
revenue gains within on-line social and “Real Money” gaming segments in future periods. This strategy is aimed at achieving
increased market share in selected geographical business sectors so as to positively contribute to Group results in future
financial years.
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.
9. DIRECTORS’ INTERESTS
The relevant interest of each director in the shares and rights 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:
Ainsworth Game
Technology Limited
Ordinary shares
171,901,587
300,000
22,400
100,000
28,000
Performance
rights over
ordinary shares
–
–
–
–
400,592
Mr LH Ainsworth
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Mr DE Gladstone
18
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 10. SHARE OPTIONS/PERFORMANCE RIGHTS
Unissued shares under option or performance right
At the date of this report unissued ordinary shares of the Group under option or performance right are:
Expiry date
1 March 2016
22 July 2018
17 March 2020
Instrument
Exercise price
Number of
shares
Options (ESOT)
$0.225
227,345
Rights
Rights
$Nil
$Nil
1,369,706
2,552,346
4,149,397
There are no other shares of the Group under option or performance right.
All options and performance rights expire on the earlier of their expiry date or termination of the employee’s employment. In
addition, the ability to exercise the performance rights is conditional on the Group achieving annual growth in Earnings Per
Share of at least eight per cent each year over four years and ranking according to Total Shareholder Return in the fiftieth
percentile compared to companies in the ASX 300 index with the same Consumer Services GICS industry sector as the Group.
Further details about share based payments to directors and KMP are included in the Remuneration report in section 15. These
options and rights do not entitle the holder to participate in any share issue of the Company or any other body corporate.
In addition to the share options issued by the Company, an incentive plan introduced in a prior period whereby share options were
granted under the LH Ainsworth Share Option Trust (ASOT) to Australian employees, excluding directors. These share options
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 285,935 share options were exercised leaving a balance of 300,764 share options under issue.
The options under the ASOT plan have vesting conditions, which were satisfied on 1 March 2014. The vesting conditions were
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 employee’s employment. These options do not entitle the holder to participate in any share issue of the
Company or any other body corporate.
The share options outstanding at 30 June 2015 under the ASOT plan issued to key management personnel, totalled Nil
(2014: Nil). Share options exercised by key management personnel during the year were Nil (2014: 1,788,627) options following
completion of the final vesting condition during the year.
Shares issued on exercise of options
During or since the end of the financial year, the Group issued ordinary shares of the Company as a result of the exercise of
options under the Employee Share Option Trust (ESOT) as follows (there are no amounts unpaid on the shares issued):
Number of shares
145,700
Amount paid
on each share
$0.225
11. INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
Indemnification
The Group has agreed to indemnify current and former directors of the Group 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.
Neither the Group nor Company have indemnified the auditor in relation to the conduct of the audit.
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 senior executive officers
of the Company and directors, senior executive 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.
19
2015 ANNUAL REPORT 12. NON-AUDIT SERVICES
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review of the
financial statements.
The board has considered the non-audit services provided during the year by the auditor and in accordance with written advice
provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during the year by the
auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for
the following reasons:
– all non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed
by the audit committee to ensure they do not impact the integrity and objectivity of the audit; and
– the non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work,
acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks
and rewards.
Details of the amounts paid to the auditor of the Group, KPMG, and its network firms for audit and non-audit services provided
during the year are set out below:
Services other than audit and review of financial statements:
Other regulatory audit services
Controlled entity audit
Other services
Transaction support services
Taxation advisory services
Audit and review of financial statements
Total paid to KPMG
2015
$
30,000
515,240
192,519
737,759
260,000
997,759
13. LEAD AUDITOR’S INDEPENDENCE DECLARATION
The Lead auditor’s independence declaration is set out on page 78 and forms part of the directors’ report for the financial year
ended 30 June 2015.
14. ROUNDING OFF
The Group 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 consolidated financial statements and directors’ report have been rounded off to the nearest thousand dollars,
unless otherwise stated.
20
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 15. REMUNERATION REPORT – AUDITED
15.1 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 Group, directly or indirectly, including
directors of the Company and other executives. Key
management personnel comprise the directors of the
Company and senior executives for the Group that are
named in this report.
Compensation levels for 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 (“RNC”)
regularly reviews market surveys on the appropriateness
of compensation packages of the Group given trends in
comparative companies both locally and internationally,
and the objectives of the Group’s compensation strategy.
In addition independent remuneration consultants are used
to advise the RNC on compensation levels given market
trends.
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
individual
Indicators
Key Performance
contributions to the Group’s performance;
(KPIs) and
– the Group’s performance including:
– revenue and earnings;
– growth in share price and delivering returns on
shareholder wealth; and
– the amount of incentives within each key management
person’s compensation.
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 Fringe
Benefits Tax (FBT) charges related to employee benefits
including motor vehicles), as well as employer contributions
to superannuation funds.
is also
Compensation levels are reviewed annually by the RNC
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
reviewed on promotion and
performance.
The RNC undertook a review of fixed compensation levels
by commissioning an independent remuneration consultant
to assist with determining an appropriate mix between fixed
and performance linked compensation for senior executives
of the Group during the year. Based on recommendations
it was determined that the CEO’s and Executive Chairman’s
base salary should be increased in line with comparable
companies and market trends. These increases occurred
in line with recommendations provided and were effective
1 July 2014.
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 performance
rights over ordinary shares of the Company under the
rules of the Employee Share Option Plans (see Note 23 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 at each
vesting date.
As outlined a review was undertaken by an independent
remuneration consultant on behalf of the RNC to assess
current performance linked compensation arrangements
- STI and LTI plans. This review assisted the Board to
determine appropriate remuneration levels for FY15 taking
into consideration the Group’s growth objectives, industry
specific and market considerations and related retention of
key employees.
Short-term incentive bonus
Each year the RNC determines the objectives and KPIs of
the key management personnel. The KPIs generally include
measures relating to the Group, the relevant segment, and
the individual, and include financial, people, customer,
compliance, 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.
21
2015 ANNUAL REPORT the
recommendation by
The RNC 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.
Based on remuneration practices the STI was determined
for key management personnel and senior executives.
Following a
independent
remuneration consultant it was established that 75% of
the STI would be awarded in cash and 25% be deferred
for a 12 month period. The deferred component has not
been accrued at 30 June 2015 and is subject to service
conditions. The deferred component represented $138,368
for key management personnel.
For the year ended 30 June 2015, the Group exceed
certain of the minimum performance targets outlined in the
incentive plan approved by the Board in September 2014.
This resulted in short-term incentives being earned during
2015, which were confirmed by the Board on 23 June
2015. Currently, the performance linked component of
compensation comprises approximately 9% (2014: 30%)
of total payments to key management personnel due to
forfeitures under the STI during the current period.
Long-term incentive
Employee Share Option Plans
In prior years options for new shares were issued under
an Employee Share Option Trust (ESOT) to American
employees. Additionally, there is an option scheme entitling
Australian employees to options over a number of existing
shares personally held by the Company’s Executive
Chairman, Mr LH Ainsworth under the LH Ainsworth Share
Option Trust (ASOT). These share option plans provide for
employees to receive options over new or existing ordinary
shares at a pre-determined exercise price. The ability
to exercise the options is conditional on continuation of
employment.
Performance Rights Plan
During the year a new employee incentive plan was
established whereby performance rights were granted
under the Rights Share Trust (RST) on 17 March 2015.
Under the RST, eligible employees and executives were
allocated performance rights over ordinary shares in the
Company. The performance rights were granted at nil
consideration or exercise price however are dependent
on service conditions, vesting conditions and performance
hurdles. The performance rights convert to ordinary shares
of the Company on a one-for-one basis. The performance
rights were granted to all eligible Group employees and
executives in two tranches subject to separate performance
and vesting conditions. 50% of the performance rights vest
on 17 March 2018 and the remaining 50% vest on 17 March
2019 depending on the extent to which the performance
hurdles are achieved.
15. REMUNERATION REPORT – AUDITED
(continued)
15.1 Principles of compensation – audited (continued)
The financial performance objectives for FY15 were Group
‘profit before tax’ excluding foreign currency gains / (losses)
and any specific extra-ordinary items as assessed by the
RNC, and international revenue targets at minimum gross
margin levels, compared to budgeted amounts. These
financial performance targets represented a maximum
weighting of 80% (50% based on ‘profit before tax’ and 30%
international revenue growth at minimum margin levels).
It was determined by the RNC, subject to completion of
the audited financial report for 30 June 2015 that key
management personnel (excluding Mr LH Ainsworth and
non-executive directors) did not achieve the ‘profit before
tax’ minimum target and no STI was payable on this
component. Based on the results for the period the STI
component for international revenue at minimum gross
margin levels was achieved for the 30% weighting. These
objectives were 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 measures, and compliance with
established regulatory processes, customer satisfaction
and staff development. The non-financial objectives for key
management personnel, excluding directors (other than
Mr Danny Gladstone, the Chief Executive Officer (CEO))
represented a weighting of 20% of the maximum STI. The
CEO assessed senior executives under the criteria outlined
and recommended to the RNC and Board a percentage
achievement. The RNC and Board determined the CEO’s
performance. These ratings established achievement in the
range of 50% - 75% of the individuals performance against
these non-financial objectives.
The RNC assesses the actual performance of the Group,
the relevant segment and individual against the KPI’s set
at the beginning of the financial year. A pre-determined
maximum amount
for
stretch performance. No stretch bonus was awarded as
overall performance fell below the minimum performance
established. The performance evaluation in respect of the
year ended 30 June 2015 has taken place in accordance
with this process.
is capable of being awarded
22
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY Of each tranche that vests on 17 March 2018 and 17 March 2019 70% vest subject to Earnings Per Share (EPS) targets and 30%
vest subject to Total Shareholder Return (TSR) targets. The relevant weighting of performance conditions of 70% EPS and 30%
TSR were determined as appropriate due to the following:
– EPS is more reflective of the Group’s underlying performance in terms of long term sustainable growth;
– To ensure relevance of the LTI for international employees;
– International expansion requires looking beyond ASX listed companies for a more meaningful performance comparison;
– Inherent volatility of the gaming industry makes TSR less relevant and reflective of underlying performance; and
– There are limited numbers of gaming industry companies in the ASX.
EPS growth is an absolute performance measure that refers to consolidated results of operating activities. Relative TSR
measures the Group’s notional return in the form of share price increases and dividends over the term against a comparison
group of companies in the ASX300 that have the same Consumer Service GICS industry sector as the Company.
The Board believes that these two performance hurdles, in combination, serve to align the interests of the individual executives
and employees with the interests of the Company’s shareholders, as EPS growth is a key driver of company long-term share
price performance, and relative TSR compared to the ASX300 comparator companies provides a comparison of the entities
performance against potential alternative shareholder investment.
Vesting on each tranche is as follows:
Tranche 1
Tranche 2
EPS growth
Vesting
outcome
Company TSR
percentile ranking
Less than 8.0% per annum
Nil vesting
Below 50th percentile
Vesting
outcome
Nil vesting
8.0% per annum
10.0% per annum
25% vesting plus 1.25% for
each 0.1% increase in EPS
50% vesting plus 2.0% for
each 0.1% increase in EPS
50th percentile
Between 50th and
75th percentile
50% vesting
Pro-rata (sliding scale)
percentage vesting
12.5% per annum or more
100% vesting
At or above 75th percentile
100% vesting
Rights that do not vest at the end of the vesting periods will lapse, unless the Board in its discretion determine otherwise. Upon
cessation of employment prior to the vesting date, rights will be forfeited and lapse. Performance rights do not entitle holder to
dividends that are declared during the vesting period. No adjustments to reported results from operating activities are made
when the remuneration committee determines whether the EPS hurdle is achieved.
Short-term and long-term incentive structure
The RNC considers that the above performance-linked remuneration structure is generating the desired outcome. The
evidence of this is:
– the growth in profits in recent years;
– the strong growth in international revenue;
– the performance-linked element of the structure appears to be appropriate because senior executives achieved a level of
performance which qualifies them for performance limited incentives; and
– the high levels of retention among senior executives and key personnel.
In the current year the Group did not achieve the stretch targets although most segments met budgeted financial results. As a
result the maximum short-term incentives were not achieved.
23
2015 ANNUAL REPORT 15. REMUNERATION REPORT – AUDITED (continued)
15.1 Principles of compensation – audited (continued)
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the RNC have regard to the following indices in
respect of the current financial year and the previous four financial years.
2015
2014
2013
2012
2011
Profit attributable to owners of the company
$70,353,000 $61,570,000 $52,202,000 $64,275,000 $23,121,000
Dividends paid
Change in share price
$32,227,000 $32,211,000
$9,661,000
($1.17)
($0.29)
$1.93
$–
$1.74
$–
$0.27
Profit is considered as one of the financial performance targets in setting the short-term incentive bonus. Profit amounts for 2011
to 2015 have been calculated in accordance with Australian Accounting Standards (AASBs).
Other benefits
Key management personnel 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, and the Group pays
fringe benefits tax on these benefits.
Service contracts
It is the Group’s policy that service contracts for Australian key management personnel and key employees be unlimited in term
but capable of termination by either party on 12 months’ notice and that the Group retains the right to terminate the contracts
immediately, by making payment equal to 12 months’ pay in lieu of notice.
The Group has entered into service contracts with each Australian 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 accrued
superannuation.
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 and amended on 7 December 2010 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 a 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
Total compensation for all non-executive directors, last voted upon by shareholders at the 2012 Annual General Meeting, is not
to exceed $850,000 per annum, with effect from 1 July 2012. Directors’ base fees are presently $120,000 per annum (excluding
superannuation) and is set based on a review of fees paid to other non-executive directors of comparable companies. 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 Group operates. Fees incorporate an allowance for the
onerous probity requirements placed on non-executive directors by regulators of the jurisdictions in which the Group operates
or proposes to operate in. In addition to these fees the cost of reasonable expenses are reimbursed as incurred.
Non-executive directors do not participate in performance related compensation and are not provided with retirement benefits
apart from statutory superannuation.
24
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY The Executive Chairman, CEO and Company Secretary do not receive any additional fees for undertaking Board or Committee
responsibilities. Following a review undertaken by independent remuneration consultant, non-executive directors fees were
assessed based on current market levels for comparable companies. It was recommended that base and committee fees
be increased in line with these market conditions and to ensure the Board is appropriately compensated for the onerous
regulatory requirements. Other independent non-executive directors who also chair or are a member of a committee receive
a supplementary fee in addition to their annual remuneration. Current fees for directors, excluding superannuation were
increased by 22% on average effective 1 July 2014 and are set out below.
POSITION
Australian resident non-executive director
Lead Independent 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)
120,000
10,000
20,000
24,000
12,000
12,000
15,000
8,000
Services from remuneration consultants
The RNC, comprising of independent non-executive directors only, secured the services of an independent remuneration
consultant (Remuneration Strategies Group Pty Ltd) to review current compensation levels of senior executives, including
the structure, amount and elements of performance linked compensation of the key management personnel remuneration
and provide recommendations in relation thereto. This review was assessed and confirmed by the RNC and Board
and formed the basis for performance linked compensation for the FY15 STI and the expansion in March 2015 of current
LTI arrangements. A total of $19,500 (including valuation of LTI grant during the year) was paid or payable to remuneration
consultants during the year.
The engagement of a remuneration consultant by the RNC was subject to protocols where both members of the RNC and key
management personnel were required to follow in developing and recommending remuneration matters to the Board.
The protocols included the prohibition of the consultant providing advice or recommendations to key management personnel,
before the advice or recommendations were given to members of the RNC and only if the consultant was provided approval
by the RNC to do so.
These arrangements ensured that the independent consultant was able to carry out their work, including information capture
and the formation of its recommendations, free from undue influence by members of the key management personnel about
whom the recommendations may relate.
In addition, the Board made its own inquiries and reviewed the processes and procedures followed by the remuneration
consultant during the course of their assignment to ensure that they were satisfied that any remuneration recommendations are
made free from undue influence.
The Board’s inquiries included a summary of the way in which the remuneration consultant carried out any work, details of any
interaction with key management personnel in relation to the assignment and other services, and further questions in relation
to the assignment.
25
2015 ANNUAL REPORT %
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C
AINSWORTH GAME TECHNOLOGY
15.3 Analysis of bonuses included in remuneration – audited
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each director of the
Company, and other key management personnel are detailed below:
Short term incentive bonus
Included in remuneration
$ (A)
% vested in year
(B)
% Forfeited in year
(C)
Director
Mr DE Gladstone
Executives
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr PS Clarebrough
171,039
87,472
34,160
30,393
92,041
100%
100%
100%
100%
100%
55%
55%
65%
65%
60%
A.
B.
Amounts included in remuneration for the financial year represent the amount accrued in the financial year based on achievement of
personal goals and satisfaction of specified performance criteria. The RNC reviewed and approved these amounts on 23 June 2015
based on the criteria previously established and approved.
The amount vested in the year represented 75% of the STI amount awarded. The remaining 25% has been deferred for 12 months
subject to service conditions.
C. The amounts forfeited are due to the performance criteria not being met in relation to the current financial year.
15.4 Equity instruments – audited
All rights and options refer to rights and options over ordinary shares of Ainsworth Game Technology Limited, unless otherwise
stated, which are exercisable on a one-for-one basis under the ESOT and RST plans.
15.4.1 Rights over equity instruments granted as compensation – audited
Details on rights over ordinary shares in the Company that were granted as compensation to each key management person
during the reporting period are as follows:
Rights
Number of rights
granted during
2015
Vesting condition
Grant date
Fair value
at grant date ($)
Expiry date
Mr DE Gladstone
175,829
Earnings per share
17 March 2015
$2.27
17 March 2020
Mr ML Ludski
64,016
Earnings per share
17 March 2015
$2.27
17 March 2020
87,227
Relative TSR
17 March 2015
$1.96
17 March 2020
31,757
Relative TSR
17 March 2015
$1.96
17 March 2020
Mr V Bruzzese
35,085
Earnings per share
17 March 2015
$2.27
17 March 2020
17,405
Relative TSR
17 March 2015
$1.96
17 March 2020
Mr I Cooper
31,384
Earnings per share
17 March 2015
$2.27
17 March 2020
Mr PS Clarebrough
77,345
Earnings per share
17 March 2015
$2.27
17 March 2020
38,370
Relative TSR
17 March 2015
$1.96
17 March 2020
15,569
Relative TSR
17 March 2015
$1.96
17 March 2020
29
2015 ANNUAL REPORT 15. REMUNERATION REPORT – AUDITED (continued)
15.4 Equity instruments – audited (continued)
All rights expire on the earlier of their expiry date or termination of the individual’s employment. The rights are exercisable on
17 March 2018 and 17 March 2019. In addition to a continuing employment service condition, vesting of rights is conditional on
the Group achieving certain performance hurdles. Details of the performance criteria are included in the long-term incentives
discussion on pages 22-23. For rights granted in the current year, the earliest vesting date is 17 March 2018.
15.4.2 Modification of terms of equity-settled share-based payment transactions – audited
No terms of equity-settled share-based payment transactions (including performance rights granted as compensation to a key
management person) have been altered or modified by the issuing entity during the reporting period or the prior period.
15.4.3 Exercise of options granted as compensation – audited
During the reporting period 145,700 shares (2014: 167,455 shares) were issued under the ESOT plan on the exercise of options
previously granted as compensation. Options under the ASOT plan exercised during 2015 were 285,935 (2014: 4,814,459)
which were transferred to the ASOT on behalf of employees from the Company’s Executive Chairman, Mr LH Ainsworth.
15.4.4 Details of equity incentives affecting current and future remuneration – audited
Details of vesting profiles of rights held by each key management person of the Group are detailed below:
Mr DE Gladstone
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr PS Clarebrough
Instrument
(A)
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Number
Grant date
137,536
22 July 2013
263,056
17 March 2015
61,084
22 July 2013
95,773
17 March 2015
44,911
22 July 2013
52,490
17 March 2015
39,490
22 July 2013
46,953
17 March 2015
77,178
22 July 2013
115,715
17 March 2015
% vested
in year
% forfeited
in year (B)
Financial
years in which
grant vests
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
– %
2017-2018
2018-2019
2017-2018
2018-2019
2017-2018
2018-2019
2017-2018
2018-2019
2017-2018
2018-2019
A. The % forfeited in the year represents the reduction from the maximum number of rights available to vest.
15.4.5 Analysis of movements in equity instruments – audited
The movement during the reporting period, by value, of rights over ordinary shares in the Company held by each key
management person of the Group is detailed below.
Mr DE Gladstone
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr PS Clarebrough
Granted in year
$ (A)
Amount paid on
Exercise
$
Value of rights
exercised
in year
$ (B)
Forfeited
in year
$
570,642
207,758
113,866
101,854
251,018
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A.
The value of rights granted in the year is the fair value of the rights calculated at grant date. The total value of the rights granted is
included in the table above. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2015 to 30 June 2019).
B. No rights were exercised during the year.
30
DIRECTORS’ REPORT (continued)for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 15.4.6 Rights over equity instruments – audited
The movement during the reporting period, by number of rights 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 2014
Granted as
compensation
Exercised
Held at
30 June 2015
Vested during
the year
Vested and
exercisable at
30 June 2015
Rights
Mr DE Gladstone(1)
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr PS Clarebrough
137,536
61,084
44,911
39,490
77,178
263,056
95,773
52,490
46,953
115,715
–
–
–
–
–
400,592
156,857
97,401
86,443
192,893
–
–
–
–
–
–
–
–
–
–
(1)
The rights granted to Mr DE Gladstone during the year are conditional on shareholder approval at the 2015 Annual General Meeting
scheduled to be held in November 2015.
Rights held by key management personnel that are vested and exercisable at 30 June 2015 were Nil (2014: Nil). No rights or options were
held by related parties of key management personnel.
Movements in shares
The movement during the reporting period in the number of ordinary shares in Ainsworth Game Technology Limited held, directly, indirectly
or beneficially, by each key management person, including their related parties, is as follows:
Mr LH Ainsworth
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Mr DE Gladstone
Mr DH Macintosh(1)
Mr M Ludski
Mr V Bruzzese
Mr I Cooper
Mr PS Clarebrough
Held at
1 July 2014
Received on
exercise of
options/rights
Sales on
exercise of
options under
ASOT plan
Other
changes(2)
Held at
30 June 2015
202,660,645
300,000
22,400
50,000
5,000
40,000
–
3,500
–
–
–
–
–
–
–
–
–
–
–
–
(285,934)
873,438
203,248,149
–
–
–
–
–
–
–
–
–
–
–
50,000
23,000
25,000
10,000
7,000
6,000
15,385
300,000
22,400
100,000
28,000
65,000
10,000
10,500
6,000
15,385
(1) Mr DH Macintosh resigned as a director on 27 March 2015.
(2) Other changes represent shares that were purchased or sold during the year.
No shares were granted to key management personnel during the reporting period as compensation in 2015 or 2014.
There were no changes in key management in the period after the reporting date and prior to the date when the Financial
Report was authorised for issue.
This Directors’ report is made out in accordance with a resolution of the directors:
LH Ainsworth
Executive Chairman
Dated at Sydney this 18th day of August 2015
31
2015 ANNUAL REPORT
Note
2015
2014
18
17
16
17
15
13
14
24
21
22
25
21
22
15
41,300
110,722
58,424
6,177
4,557
71,929
93,663
39,862
1,404
–
221,180
206,858
36,312
2,771
55,279
33,090
127,452
21,690
3,467
35,096
21,549
81,802
348,632
288,660
29,391
28,582
175
9,202
12,960
754
347
11,343
11,601
687
52,482
52,560
9,250
905
5,508
15,663
68,145
116
682
–
798
53,358
280,487
235,302
182,360
116,385
(18,258)
182,327
74,491
(21,516)
280,487
235,302
In thousands of AUD
Assets
Cash and cash equivalents
Receivables and other assets
Inventories
Prepayments
Investments
Total current assets
Receivables and other assets
Deferred tax assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Current tax liability
Provisions
Total current liabilities
Loans and borrowings
Employee benefits
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
The notes on pages 36 to 74 are an integral part of these consolidated financial statements.
32
CONSOLIDATED STATEMENT OF FINANCIAL POSITIONas at 30 June 2015AINSWORTH GAME TECHNOLOGY In thousands of AUD
Revenue
Cost of sales
Gross profit
Other income
Sales, service and marketing expenses
Research and development expenses
Administrative expenses
Other expenses
Results from operating activities
Finance income
Finance costs
Net finance income
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income
Items that may be reclassified to profit and loss:
Foreign operations - foreign currency translation differences
Total other comprehensive income
Total comprehensive income for the year
Profit attributable to owners of the Company
Total comprehensive income attributable to the owners of the Company
Earnings per share:
Basic earnings per share (AUD)
Diluted earnings per share (AUD)
The notes on pages 36 to 74 are an integral part of these consolidated financial statements.
Note
8
9
12
12
2015
2014
240,643
(88,640)
152,003
445
(38,943)
(25,431)
(18,606)
(3,815)
65,653
28,712
(46)
28,666
94,319
244,118
(88,542)
155,576
396
(30,626)
(26,380)
(20,288)
(432)
78,246
3,857
(89)
3,768
82,014
15
(23,966)
(20,444)
70,353
61,570
5,428
5,428
75,781
70,353
75,781
$0.22
$0.22
284
284
61,854
61,570
61,854
$0.19
$0.19
20
20
33
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 30 June 20152015 ANNUAL REPORT In thousands of AUD
Issued
capital
Attributable to equity holders of the Company
Equity
compensation
reserve
Fair
value
reserve
Translation
reserve
Profits
reserve
Accumulated
losses
Total
equity
Balance at 1 July 2013
182,290
1,228
9,684
117
39,610
(28,511) 204,418
Total comprehensive income for the period
Profit
Transfer between reserves
Other comprehensive income
Foreign currency translation reserve
Total other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly
in equity
Issue of ordinary shares on exercise of share
options
Dividends to owners of the Company
Share based payment transactions
Share based payment adjustment on non-
vesting options
Total transactions with owners
–
–
–
–
–
37
–
–
–
37
–
–
–
–
–
–
–
1,204
(6)
1,198
–
–
–
–
–
–
–
–
–
–
–
–
284
284
284
–
61,570
61,570
54,581
(54,581)
–
–
–
–
–
284
284
54,581
6,989
61,854
–
–
–
–
–
–
(32,211)
–
–
(32,211)
–
–
–
6
6
37
(32,211)
1,204
–
(30,970)
Balance at 30 June 2014
182,327
2,426
9,684
401 61,980
(21,516) 235,302
Balance at 1 July 2014
182,327
2,426
9,684
401 61,980
(21,516) 235,302
Total comprehensive income for the period
Profit
Transfer between reserves
Other comprehensive income
Foreign currency translation reserve
Total other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly
in equity
Issue of ordinary shares on exercise of share
options
Dividends to owners of the Company
Share based payment transactions
Share based payment adjustment
on non-vesting options
Total transactions with owners
–
–
–
–
–
33
–
–
–
33
–
–
–
–
–
–
–
1,598
(64)
1,534
–
–
–
–
–
–
–
–
–
–
–
–
–
70,353
70,353
67,159
(67,159)
–
5,428
5,428
–
–
–
–
5,428
5,428
5,428
67,159
3,194
75,781
–
–
– (32,227)
–
–
–
–
– (32,227)
–
–
–
64
64
33
(32,227)
1,598
–
(30,596)
Balance at 30 June 2015
182,360
3,960 9,684
5,829 96,912
(18,258) 280,487
The notes on pages 36 to 74 are an integral part of these consolidated financial statements.
34
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY In thousands of AUD
Note
2015
2014
Cash flows (used in)/from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Income taxes paid
Borrowing costs paid
234,551
243,750
(196,996)
(183,775)
37,555
(17,305)
(47)
59,975
(2,288)
(90)
Net cash from operating activities
18(a)
20,203
57,597
Cash flows (used in)/from investing activities
Interest received
Acquisitions of property, plant and equipment
Proceeds from call deposits
Payment for business acquisition
Acquisition of investment
Development expenditure
Acquisition of other intangibles
3,358
(15,301)
–
–
(1,606)
(9,430)
(5,551)
2,590
(14,493)
26,518
(548)
–
(7,099)
–
14
14
Net cash (used in)/from investing activities
(28,530)
6,968
Cash flows (used in)/from financing activities
Proceeds from issue ordinary shares options
Dividend paid
Proceeds from borrowings
Payment of finance lease liabilities
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
The notes on pages 36 to 74 are an integral part of these consolidated financial statements.
33
37
(32,227)
(32,211)
9,142
(294)
–
(593)
(23,346)
(32,767)
(31,673)
71,929
1,044
41,300
31,798
40,135
(4)
71,929
35
CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 30 June 20152015 ANNUAL REPORT INDEX TO NOTES TO THE FINANCIAL
STATEMENTS AND SIGNIFICANT
ACCOUNTING POLICIES
1. Reporting entity
2. Basis of preparation
3. Changes in accounting policies
4. Significant accounting policies
a. Basis of consolidation
b. Foreign currency
c. Financial instruments
d. Property, plant and equipment
e. Intangible assets
f. Leased assets
g. Inventories
h. Impairment
i. Employee benefits
j. Provisions
k. Warranties
l. Revenue
m. Lease payments
n. Finance income and finance costs
o. Income tax
p. Earnings per share
q. Segment reporting
37
37
37
37
37
38
38
39
39
40
40
40
41
42
42
42
42
42
42
43
43
9. Other income
10. Expenses by nature
11. Employee benefit expenses
12. Finance income and finance costs
13. Property, plant and equipment
14. Intangible assets
15. Taxes
16. Inventories
17. Receivables and other assets
18. Cash and cash equivalents
48
48
49
49
50
51
53
54
55
56
18a. Reconciliation of cash flows from operating activities 56
19. Capital and reserves
20. Earnings per share
21. Loans and borrowings
22. Employee benefits
23. Share-based payments
24. Trade and other payables
25. Provisions
26. Financial instruments
27. Operating leases
28. Capital and other commitments
r. New standards and interpretations not yet adopted 43
29. Related parties
5. Determination of fair values
6. Financial risk management
7. Operating segments
8. Revenue
44
44
46
48
30. Group entities
31. Subsequent events
32. Auditor’s remuneration
33. Parent entity disclosures
36
57
58
59
60
61
65
65
65
70
70
71
73
73
73
74
AINSWORTH GAME TECHNOLOGY NOTES TO THE
FINANCIAL STATEMENTS
(the
1. REPORTING ENTITY
Ainsworth Game Technology Limited
‘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 2015 comprise
the Company and its subsidiaries (together referred to as
the ‘Group’ and individually as ‘Group entities’). The Group
is a for-profit entity and primarily is involved in the design,
development, manufacture, sale and servicing of gaming
machines and other related equipment and services.
2. BASIS OF PREPARATION
a. Statement of compliance
The consolidated financial statements are general
purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (AASBs)
adopted by the Australian Accounting Standards Board
(AASB) and the Corporations Act 2001. The consolidated
financial statements comply with International Financial
Reporting Standards (IFRSs) adopted by the International
Accounting Standards Board (IASB).
The consolidated financial statements were authorised for
issue by the Board of Directors on 18 August 2015.
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 were measured initially at
fair value and then subsequently carried at amortised cost.
c. Functional and presentation currency
The financial information of each of the Group’s entities
and foreign branches is measured using the currency of
the primary economic environment in which it operates (the
functional currency). As of 1 January 2014, The Company’s
US branch activities became a foreign operation.
These consolidated financial statements are presented
in Australian dollars, which is the Company’s primary
functional currency.
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 the consolidated financial statements
in conformity with IFRSs 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.
is required
The Group is subject to income taxes in Australia and
jurisdictions where it has foreign operations. Significant
judgement
in determining the worldwide
provision for income taxes. There are certain transactions
and calculations undertaken during the ordinary course of
business for which the ultimate determination is uncertain.
The Group estimates its tax liabilities based on the Group’s
understanding of the tax law. Where the final outcome
of these matters is different from the amounts that were
initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period
in which such determination is made.
Information
estimation
assumptions
about
uncertainties that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets
and liabilities within the next financial year are included
in Note 14 - Intangible assets and Note 26 – Financial
instruments (trade and other receivables).
and
3. CHANGES IN ACCOUNTING POLICIES
Except for the changes below, the Group has consistently
applied the accounting policies set out in Note 4 to all periods
presented in these consolidated financial statements.
The Group has adopted the following amendments to a
standard that is relevant to the Group with a date of initial
application of 1 July 2014.
AASB 8 Operating Segments
The amendments to AASB 8 require an entity (i) disclose
the judgements made by management in applying the
aggregation criteria to operating segments, including a
description of the operating segments aggregated and the
economic indicators accessed in determining whether the
operating segments have ‘similar economic characteristics’
and (ii) clarifies that a reconciliation of the total reportable
segments assets to the entity’s assets should only be
provided if the segments assets are regularly provided to
the chief operating decision-maker.
As a result of this amendment, the Group has applied
amendment (i) and additional disclosure has been made in
Note 7.
4. 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
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has right to,
variable returns from its involvement with the entity and has
the ability affect those returns through its power over the
entity. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that
control commences until the date that control ceases.
37
for the year ended 30 June 20152015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
When the settlement of a monetary item receivable from
or payable to a foreign operation is neither planned nor
likely in the foreseeable future, foreign exchange gains and
losses arising from such a monetary item are considered
to form part of a net investment in a foreign operation,
are recognised in other comprehensive income and are
presented in the translation reserve in equity.
c. Financial instruments
i. 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 ownership 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.
The assessment amount of current and non-current
receivable involves reviewing contractual term and how it
compares to the current payment trend. When the current
payment trend is less favourable from the contractual term,
the Group will base the current and non-current on payment
trend.
Cash and cash equivalents comprise cash balances and
call deposits with original maturities of three months or less
from the acquisition date that are subject to an insignificant
risk of changes in their fair value, and are used by the Group
in the management of its short-term commitments.
loans and
liabilities comprise
ii. Non-derivative financial liabilities
Non-derivative financial
borrowings and trade and other payables.
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.
4. SIGNIFICANT ACCOUNTING POLICIES
(continued)
ii. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial
statements in accordance with AASBs.
iii. 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
framework,
Australian GAAP.
the Group’s previous accounting
iv. 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.
b. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated to the
respective
functional currencies of Group entities at
exchange rates at the dates 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 during the period, and the amortised cost in
foreign currency translated at the exchange rate at the end
of the year.
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 the average exchange
rates for the period.
Foreign currency differences are recognised in other
comprehensive income and presented in the Translation
Reserve in equity. When a foreign operation is disposed
of such that control is lost, the cumulative amount in the
Translation Reserve related to that foreign operation is
transferred to the profit or loss, as part of gain or loss on
disposal.
When the Group disposes of only a part of its interest
in a subsidiary that includes a foreign operation while
retaining control, the relevant portion of cumulative amounts
is re-attributed to non-controlling interest.
38
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY Loans and borrowings and trade and other payables are
recognised initially at fair value plus any 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.
Where
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.
the
iii. 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 tax effects.
d. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at
cost less accumulated depreciation and impairment losses.
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.
Machines previously held as inventory are transferred to
property, plant and equipment when a rental or participation
agreement is entered into. When the rental or participation
agreements cease and the machines become held for sale,
they are transferred to inventory at their carrying amount.
Proceeds are reflected in revenue while value disposed
are recognised as cost of sale. These are treated as an
operating cash flow.
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 the property,
plant and equipment and are recognised net within “other
income” in profit and loss.
ii. Subsequent costs
The cost of replacing a 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.
iii. Depreciation
Depreciation is based on the cost of an asset less its
residual value. Significant components of individual assets
are assessed and if a component has a useful life that is
different from the remainder of that asset, that component is
depreciated separately.
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 unless it is reasonably certain that the Group will
obtain ownership by the end of the lease term. Land is not
depreciated.
Items of property, plant and equipment are depreciated
from the date that they are installed and are ready for use,
or in respect of internally constructed assets, from the date
that the asset is completed and ready for use.
The estimated useful lives for the current and comparative
periods are as follows:
– buildings
– leasehold improvements
– plant and equipment
– machines under rental or participation
39 – 40 years
10 years
2.5 – 20 years
3 years
agreements
Depreciation methods, useful lives and residual values
are reviewed at each financial year-end and adjusted if
appropriate.
e. Intangible assets
i. Goodwill
Goodwill that arises upon the acquisition of subsidiaries
is included in intangible assets. For the measurement of
goodwill at initial recognition, see Note 4(a)(iii) and (iv).
Goodwill is subsequently carried at cost less accumulated
impairment losses (refer Note 4(h)).
ii. 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 involve a plan or design for the
production of new or substantially improved products and
processes. Development expenditure is capitalised only 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 and
discontinued projects that are expected to have no further
economic benefit are recognised in profit or loss when
incurred.
Capitalised development expenditure is measured at cost
less accumulated amortisation and accumulated impairment
losses.
39
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
h. Impairment
i. Non-derivative financial assets
A financial asset not carried at fair value through profit
or loss 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 that can be estimated reliably.
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 otherwise consider and indications that a debtor will
enter bankruptcy.
Financial assets measured at amortised cost
The Group considers evidence of impairment for financial
assets measured at amortised cost (loans and receivables)
at both a specific and collective level. All individually
significant financial assets are tested for impairment on
an individual basis. The remaining financial assets are
assessed collectively in groups that share similar credit risk
characteristics.
In assessing collective impairment the Group uses historical
trends of the probability of default, timing of recoveries and
the amount of loss incurred, adjusted for management’s
judgement as to whether current economic, industry and
credit conditions are such that the actual losses are likely to
be greater or less than suggested by historical trends.
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.
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.
ii. Non-financial assets
The carrying amounts of the Group’s non-financial assets,
other than inventories and deferred tax assets, 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. An impairment loss is recognised if the
carrying amount of an asset or its related cash generating
unit (CGU) exceeds its estimated recoverable amount.
4. SIGNIFICANT ACCOUNTING POLICIES
(continued)
iii. Other intangible assets
Other intangible assets, which include service contracts,
that are acquired by the Group, which have finite useful
lives, are measured at cost less accumulated amortisation
and accumulated impairment losses.
iv. Subsequent expenditure
it
Subsequent expenditure
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.
is capitalised only when
v. Amortisation
Amortisation is based on the cost of an asset less its
residual value. 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
4 years
8 years
3 – 10 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
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
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.
in progress, cost
40
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY The recoverable amount of an asset or CGU 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, CGU or
group of CGUs. 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 “CGU or group of CGUs”). The goodwill acquired
in a business combination for the purpose of impairment
testing, is allocated to CGUs or group of CGUs that are
expected to benefit from the synergies of the combination.
The Group’s corporate assets do not generate separate
cash inflows and are utilised by more than one CGU.
Corporate assets are allocated to CGUs or group of CGUs
on a reasonable and consistent basis and tested for
impairment as part of the testing of the CGU or group of
CGUs to which the corporate asset is allocated.
An impairment loss is recognised if the carrying amount
of an asset or its CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to
reduce the carrying amount of any goodwill allocated to the
CGUs and then to reduce the carrying amount of the other
assets in the CGU or group of CGUs 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
i. 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
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.
for contributions
ii. 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 government bonds that have maturity
dates approximating the terms of the Group’s obligations.
iii. 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.
iv. 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.
v. 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.
41
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
m. 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.
n. Finance income and finance costs
Finance income comprises interest income and foreign
currency gains. Interest income is recognised in profit or
loss as it accrues using the effective interest method.
Finance costs 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 as either finance income or finance cost depending
on whether foreign currency movements are in a net gain
or net loss position.
is recognised
o. 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.
in respect of temporary
Deferred tax
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for taxation purposes. Deferred tax is not recognised
for temporary differences arising from: 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 not recognised for taxable temporary
differences arising from the initial recognition of goodwill.
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.
4. SIGNIFICANT ACCOUNTING POLICIES
(continued)
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.
k. Warranties
A provision for warranties is recognised when the underlying
products are sold. The provision is based on historical
warranty data and a weighting of all possible outcomes
against their associated probabilities.
l. Revenue
i. 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 gaming machines, games, conversions and other
incidental items are licensed to customers for extended
periods, revenue is recognised on delivery for gaming
including
machines and games and
conversions on a straight line basis over the licence term.
The revenue recognised for each item is based on the
relative fair values of the items included in the arrangement.
for other
items
ii. Services
Revenue from services rendered is recognised in profit or
loss when the services are performed.
iii. Participation and rental
Participation revenue is revenue earned when the Group’s
owned machines are placed in venues either directly by
the Group or indirectly through a licensed operator for a
fee. The fee is calculated as either a daily fee or an agreed
fee based upon a percentage of turnover of participating
machines, depending on the agreement.
Revenue from rental of gaming machines is recognised in
profit or loss on a straight line basis over the term of the
rental agreement.
42
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY In determining the amount of current and deferred tax
the Group takes into account the impact of uncertain tax
positions and whether additional taxes and interest may be
due. The Group believes that its accruals for tax liabilities
are adequate for all open tax years based on its assessment
of many factors, including interpretations of tax law and
prior experience. This assessment relies on estimates and
assumptions and may involve a series of judgements about
future events. New information may become available that
causes the Group to change its judgement regarding the
adequacy of existing tax liabilities; such changes to tax
liabilities will impact tax expense in the period that such a
determination is made.
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, see Note 15.
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.
q. Segment reporting
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.
Segment results that are reported to the CEO include items
directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
r. New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning
after 1 January 2014, and have not been applied in preparing
these consolidated financial statements. Those which may
be relevant to the Group are set out below. The Group does
not plan to adopt these standards early.
AASB 9 Financial Instruments (2014)
AASB 9 (2014), published in December 2014, replaces
the existing guidance AASB 9 (2009), AASB 9 (2010) and
AASB 139 Financial Instruments: Recognition and Measurement
and is effective for annual reporting periods beginning on or
after 1 January 2018, with early adoption permitted.
The key changes introduced in AASB 9 (2014) are:
i.
requirements for impairment of financial assets based on
a three-stage ‘expected loss’ approach:
ii.
limited amendments to classification and measurement
of financial assets to add a third measurement category
for debt instruments. The new category of fair value
through other comprehensive income is added to the
existing categories for debt instruments, i.e. amortised
cost and fair value through profit or loss; and
iii. amendments
Instruments:
to AASB 7 Financial
Disclosures that significantly expand the disclosures
required in relation to credit risk.
The Group is assessing the potential impact on its
the
consolidated financial statements
application of AASB 9 (2014).
resulting
from
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for
determining whether, how much and when revenue is
recognised.
It replaces existing revenue recognition
guidance, AASB 111 Construction Contracts, AASB 118
Revenue and AASB 1004 Contributions. AASB 15 is
effective from annual reporting periods beginning on or
after 1 January 2018, with early adoption permitted.
The Group is assessing the potential impact on its
consolidated financial statements
the
application of AASB 15.
to standards
No other new standards, amendments
and interpretations are expected to affect the Group’s
consolidated financial statements.
resulting
from
43
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
5. 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.
i. 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.
ii. 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.
iii. 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.
iv. Loans and borrowings
Fair value is calculated based on discounted expected
future principal and interest cash flows.
v. Finance lease liabilities
The fair value is estimated as the present value of future
cash flows, discounted at market
for
homogeneous lease agreements. The estimated fair values
reflect changes in interest rates.
interest rates
vi. Share-based payment transactions
The fair value of employee stock options is measured using
the Black Scholes Merton model. 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
(based on
dividends, and the risk-free
government bonds). Service and non-market performance
conditions attached to the transactions are not taken into
account in determining fair value.
interest rate
44
6. FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from their
use of financial instruments:
– Credit risk;
– Liquidity risk; and
– Market risk.
This note presents information about the Group’s exposure
to each of the above risks, its 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 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
Group’s activities. The Group, through its training and
management standards and procedures, aims to develop
a disciplined and constructive control environment in which
all employees understand their roles and obligations.
The Group’s Audit Committee oversees how management
monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the
risk management framework in relation to the risks faced by
the Group. The 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 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 receivables from customers.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by
the individual characteristics of each customer, including the
default risk of the industry and country in which customers
operate. The Group’s concentration of credit risk arises from
its two most significant receivable amounts represented by
a customer in Asia and customer in South America. They
account for $5,422 thousand (2014: $306 thousand) and
$7,843 thousand (2014: $4,369 thousand) of the trade
receivables carrying amount at 30 June 2015 respectively.
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY from
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 includes
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
the Board.
requiring approval
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.
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 within sales limits approved by the Chief Executive
Officer and Chief Financial Officer, and thereafter only with
Board approval.
The assessment amount of current and non-current
receivables involves reviewing contractual term and how
it compares to current payment trend. When the current
payment trend is less favourable from the contractual
term, the Group will base the current and non-current on
payment trend.
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 Group has established an allowance for impairment
that represents its 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.
Guarantees
The Group’s policy is to provide financial guarantees only for
wholly-owned subsidiaries. At 30 June 2015 no guarantees
were outstanding (2014: none).
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.
Market risk
Market risk is the risk that changes in market prices, such
as foreign exchange rates and interest rates 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.
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, USD, Euro and New Zealand
dollars (NZD). The Group regularly monitors and reviews,
dependent on available facilities, the hedging of net assets
denominated in a foreign currency. The Group has previously
utilised currency call options to hedge its currency risk,
most with a maturity of less than six months. No hedging
arrangements were utilised during 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 in
its exposure.
Interest rate risk
The Group’s main interest rate risk arises from floating rate
borrowings drawn under bank debt facilities.
Capital management
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 an
acceptable return on capital is achieved and that dividends
are able to be provided to ordinary shareholders in the
short term.
The Board continues to review alternatives to ensure
present employees will hold 3-5% of the Company’s
ordinary shares. This is expected to be partially achieved
assuming all outstanding share options issued vest and/or
are exercised. These share options were issued on 1 March
2011 to all Australian employees over a portion of the
Executive Chairman’s shareholding under the ASOT plan
and to US employees under the ESOT plan, see Note 23.
There were no changes in the Group’s approach to capital
management during the year. The Group is not subject to
externally imposed capital requirements.
45
2015 ANNUAL REPORT d
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47
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS (continued)
8. REVENUE
In thousands of AUD
Sale of goods
Rendering of services
Rental and participation revenue
9. OTHER INCOME
In thousands of AUD
Royalties income
Rental income from lease of machinery
Other income
10. EXPENSES BY NATURE
In thousands of AUD
Changes in raw material and consumables, finished goods and work in progress
Employee benefits expense
Depreciation and amortisation expense
Legal expenses
Evaluation and testing expenses
Marketing expenses
Operating lease expenses
Impairment loss
Other expenses
Note
2015
2014
213,278
225,479
6,919
20,446
240,643
5,692
12,947
244,118
2015
2014
364
76
5
445
2015
77,387
51,938
16,419
1,362
6,271
3,954
2,843
1,245
14,016
299
73
24
396
2014
79,944
50,455
10,364
1,949
4,903
3,320
2,612
595
12,126
175,435
166,268
16
11
13,14
27
48
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 11. EMPLOYEE BENEFIT EXPENSES
In thousands of AUD
Wages and salaries
Short term incentives
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
12. FINANCE INCOME AND FINANCE COSTS
In thousands of AUD
Interest income on trade receivables
Interest income on bank deposits
Interest income on investment
Net foreign exchange gain
Finance income
Interest expense on financial liabilities
Finance costs
Net finance income recognised in profit or loss
Note
2015
2014
43,368
39,099
22
22
2,973
3,034
97
850
20
1,596
51,938
6,303
3,229
166
446
8
1,204
50,455
2015
2014
1,562
1,386
209
25,555
28,712
(46)
(46)
28,666
1,037
1,997
–
823
3,857
(89)
(89)
3,768
49
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
13. PROPERTY, PLANT AND EQUIPMENT
In thousands of AUD
Cost
Balance at 1 July 2013
Re-classification of inventory to plant and equipment
Additions
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2014
Balance at 1 July 2014
Re-classification of inventory to plant and equipment
Additions
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2015
Depreciation and impairment losses
Balance at 1 July 2013
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2014
Balance at 1 July 2014
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2015
Carrying amounts
At 1 July 2013
At 30 June 2014
At 30 June 2015
Land and
buildings
Plant and
equipment
Leasehold
improvements
Total
–
–
7,833
–
–
7,833
7,833
–
8,768
–
1,287
17,888
–
–
–
–
–
–
14
–
–
14
–
7,833
17,874
30,462
15,461
6,598
(8,151)
684
45,054
45,054
18,346
4,258
(8,691)
4,853
63,820
16,845
5,859
(1,755)
201
21,150
21,150
11,331
(2,970)
2,168
31,679
13,617
23,904
32,141
3,192
–
1,100
(1)
–
4,291
4,291
–
2,473
–
431
33,654
15,461
15,531
(8,152)
684
57,178
57,178
18,346
15,499
(8,691)
6,571
7,195
88,903
274
658
–
–
932
932
850
–
149
1,931
2,918
3,359
5,264
17,119
6,517
(1,755)
201
22,082
22,082
12,195
(2,970)
2,317
33,624
16,535
35,096
55,279
Disposals in the table above includes sale of gaming machines previously under participation or rental agreements of
$5,582 thousand (2014: $430 thousand) at net book value.
Leased plant and equipment
The Group leases plant and equipment and motor vehicles under hire purchase agreements. At the end of each of these
agreements the Group has the option to purchase the equipment at a beneficial price. The leased equipment and guarantees
by the Group secure lease obligations. Acquisition of plant and equipment including computer equipment and motor vehicles,
by means of hire purchase agreements amounted to $38 thousand (2014: $48 thousand). At 30 June 2015, the net carrying
amount of leased plant and equipment was $618 thousand (2014: $764 thousand).
50
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 14. INTANGIBLE ASSETS
In thousands of AUD
Cost
Goodwill
Development
costs
Intellectual
property
Nevada
licence costs
Service
contracts
Total
9,430
5,551
Balance at 1 July 2013
2,436
20,540
Development costs capitalised
during the year
Balance at 30 June 2014
Balance at 1 July 2014
Development costs / intellectual
property capitalised during the year
Effects of movements in foreign
currency
–
2,436
2,436
–
–
7,099
27,639
27,639
–
Balance at 30 June 2015
2,436
37,069
Amortisation and impairment
losses
Balance at 1 July 2013
Amortisation for the year
Balance at 30 June 2014
Balance at 1 July 2014
Amortisation for the year
Effects of movements in foreign
currency
Balance at 30 June 2015
Carrying amounts
At 1 July 2013
At 30 June 2014
At 30 June 2015
–
–
–
–
–
–
–
2,436
2,436
2,436
7,028
3,763
10,791
10,791
2,061
–
12,852
13,512
16,848
24,217
836
–
836
836
959
7,346
503
84
587
587
2,018
175
2,780
333
249
4,566
1,583
–
1,583
1,583
–
–
–
25,395
433
433
433
–
–
7,532
32,927
32,927
14,981
959
1,583
433
48,867
–
–
–
–
–
–
–
1,583
1,583
1,583
–
–
–
–
145
–
145
–
433
288
7,531
3,847
11,378
11,378
4,224
175
15,777
17,864
21,549
33,090
51
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS (continued)
14. INTANGIBLE ASSETS (continued)
Amortisation charge and impairment loss
The amortisation charge is recognised in the following line items in the income statement:
In thousands of AUD
Cost of sales
Research and development expenses
2015
2014
2,163
2,061
4,224
84
3,763
3,847
Impairment testing for development costs
The carrying amount of the Group’s development costs amounts to $24,217 thousand (2014: $16,848 thousand), comprising of
$20,798 thousand in development costs relating to product development and $3,419 thousand in development costs relating to
online development activities. The impairment testing for these different development costs are performed separately as they
generate or are expected to generate independent cash flows and are therefore allocated to separate cash-generating units
(‘CGUs’). The disclosure relating to the product development costs of $20,798 thousand are outlined below.
Product development costs
The determination of CGUs for the purposes of testing product development costs for impairment is consistent with last financial
year. The Group has maintained that the most reasonable and consistent basis upon which to allocate development costs is
to have the Group’s research and development function (‘Development CGU’) recharge product development costs to the
Group’s other CGUs, which are in line with the Group’s geographic operating segments.
Product development costs include development costs relating to products that are not yet available for sale and as such their
recoverable amount is assessed at the end of each reporting period.
Product development costs are recharged from the Development CGU to individual CGUs, based on the forecasted unit sales
of each individual CGU. Other assets, primarily property, plant and equipment, are allocated to the individual CGUs to which
they relate. Assets that cannot be allocated to individual CGUs are allocated to the minimum collection of CGUs (‘Groups of
CGUs’) to which they can be allocated on a reasonable and consistent basis.
The three main CGUs or Group of CGUs are: Development, Australia and other (comprised of the New South Wales, Queensland,
South Australia, Victoria, Tasmania, Asia, New Zealand and Europe individual CGUs), and Americas (comprised of the North and
South America individual CGUs).
The recoverable amount of each CGU or Group of CGUs was estimated based on its value in use. Value in use for each
individual CGU and Group of CGUs was determined by discounting the future cash flows generated from continuing use of the
product development costs over a four year period. Future cash flows are expected to be generated from the sales of machines
and products and are based on the following key assumptions:
CGU / Groups of CGUs
Development
Australia and other
Americas
North America
South America
Average
annual
revenue
growth rate(2)
Discount
rate(1)
23.5%
20.4%
20.9%
20.2%
22.5%
24.6%
17.0%
24.7%
22.6%
28.1%
(1) Discount rates are pre-tax discount rates, which are based on the weighted average cost of capital.
(2) The average annual revenue growth rate presented above is calculated based on forecast revenue for 2016 to 2018, having regard to
Board approved budgets, the Group’s three year business plan, historical experience, actual operating results and strategic initiatives.
Australia and other CGU revenue growths for the fourth and fifth year were forecasted at 3%. Americas CGU revenue growths for the
fourth and fifth year were forecasted 18% and 15% respectively.
52
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY
The allocation of goodwill, indefinite useful life intangible assets and other assets to the Groups of CGUs are as follows:
CGU / Groups of CGUs
Development
Australia and other
Americas
North America
South America
Goodwill /
indefinite
useful life
intangible
assets
‘$000
–
–
1,583
1,583
–
Capitalised
development
costs
‘$000
20,798
–
–
–
–
Other assets
‘$000
Recoverable
amount
‘$000
6,073
12,778
40,005
8,123
10,634
51,221
136,341
162,749
122,229
45,559
Impairment testing for goodwill
Goodwill relates to acquired service businesses and entities in Australia. The recoverable amount of the Australian service
CGU was estimated based on its value in use.
Value in use for the CGU was determined by discounting the future cash flows generated from the servicing of gaming machines
and are based on the following key assumptions:
– Cash flows were projected based on actual operating results over a projected four year period. Cash flows for a further 10 year
period were extrapolated using a constant growth rate of 3 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;
– An average revenue annual growth rate of 4.4% for 2016 to 2018 based on the three year Board approved business plan,
historical experience and actual operating results. All future years of the model use a constant growth rate of 3.0% which does
not exceed the long term average growth rate for the industry; and
– A pre-tax discount rate of 14.1% based on the weighted average cost of capital.
As the recoverable amount of the CGU was estimated to be higher than the carrying amount of the Group, no impairment was
considered necessary.
15. TAXES
Current tax expense
In thousands of AUD
Tax recognised in profit or loss
Current tax expense
Current year
Prior year adjustments
Deferred tax benefit
Timing differences movement
Recognition of R&D tax credits
Total income tax expense
2015
2014
(33,570)
(31,450)
165
495
(33,405)
(30,955)
(79)
9,518
9,439
779
9,732
10,511
(23,966)
(20,444)
53
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS (continued)
15. TAXES (continued)
Reconciliation of effective tax rate
In thousands of AUD
Profit before income tax
2015
2015
94,319
2014
2014
82,014
Income tax expense using the Company’s domestic tax rate
(30.00%)
(28,296)
(30.00%)
(24,604)
Effective tax rates in foreign jurisdictions
Non-deductible expenses
Non-assessable income and concessions
Other tax concessions
Prior year adjustments
Recognition of previously unrecognised tax losses and timing
differences
Recognised deferred tax assets/liabilities
In thousands of AUD
Employee benefits
Provisions
Unrealised foreign exchange gain
Other items
Tax loss carry-forwards
Net tax assets/liabilities
(1.11%)
(6.25%)
10.09%
1.76%
0.18%
(0.08%)
(25.41%)
(1,046)
(5,892)
9,518
1,663
165
0.12%
(10.01%)
11.87%
1.54%
0.60%
102
(8,209)
9,735
1,259
495
(78)
0.95%
778
(23,966)
(24.93%)
(20,444)
Deferred Tax Assets
Deferred Tax Liabilities
2015
711
2,221
–
(305)
144
2,771
2014
2,002
1,739
–
(418)
144
2015
2014
1,624
319
(7,930)
479
–
3,467
(5,508)
–
–
–
–
–
–
The deductible temporary differences and tax losses do not expire under current tax legislation. R&D non-refundable tax offset
credits are available to be applied against income tax payable in future years and do not expire under current tax legislation.
Management has assessed that the carrying amount of the deferred tax assets of $2,771 thousand should be recognised as
management considers it probable that future taxable profits would be available against which they can be utilised.
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
2015
2014
12,731
40,688
5,005
58,424
13,519
22,231
4,112
39,862
During the year ended 30 June 2015 raw materials, consumables and changes in finished goods and work in progress
recognised as cost of sales amounted to $77,387 thousand (2014: $79,944 thousand).
A re-classification from inventory to property, plant and equipment of $18,346 thousand (2014: $15,461 thousand) was recorded
to reflect gaming products for which rental and participation agreements were entered into during the year.
During the year ended 30 June 2015, the write down of inventories to net realisable value amounted to $402 thousand
(2014: $6 thousand). The write down is included in cost of sales.
54
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 17. RECEIVABLES AND OTHER ASSETS
In thousands of AUD
Current
Trade receivables
Less impairment losses
Other assets
Non-current
Trade receivables
Note
2015
2014
26
112,061
(1,762)
110,299
423
95,384
(2,105)
93,279
384
110,722
93,663
36,312
36,312
21,690
21,690
The Group realised impairment losses of $1,245 thousand (2014: $363 thousand) for the year ended 30 June 2015.
Receivables denominated in currencies other than the functional currency comprise $102,593 thousand of trade receivables
denominated in US dollars (2014: $58,211 thousand), $1,281 thousand in New Zealand Dollars (2014: $1,406 thousand), and
$56 thousand in Great Britain Pounds (2014: $20 thousand).
Leasing arrangements
Included in trade receivables are receivables from gaming machines that have been sold under finance lease arrangement.
The lease payments receivable under these contracts is as follows:
In thousands of AUD
2015
2014
Minimum lease payments under finance leases are receivable as follows:
Within one year
Later than one year but not later than 5 years
Unearned finance income
Within one year
Later than one year but not later than 5 years
The present value of minimum lease payments is as follows:
Within one year
Later than one year but not later than 5 years
Lease receivables are classified as follows:
Within one year
Later than one year but not later than 5 years
2,793
3,103
5,896
232
349
581
2,561
2,754
5,315
2,561
2,754
5,315
1,900
2,918
4,818
177
350
527
1,723
2,568
4,291
1,723
2,568
4,291
The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed
in Note 26.
55
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
18. CASH AND CASH EQUIVALENTS
In thousands of AUD
Bank balances
Cash deposits
Cash and cash equivalents in the statement of cash flows
2015
27,573
13,727
41,300
2014
20,854
51,075
71,929
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 26.
18A. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
In thousands of AUD
Cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation
Impairment losses on trade receivables
Amortisation of intangible assets
Net finance income
Loss on sale of property, plant and equipment
Unrealised currency translation movements
Equity-settled share-based payment transactions
Income tax expense
Operating profit 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
Interest paid
Income taxes paid
Net cash from operating activities
Note
2015
2014
13
26
14
12
11
15
17
16
70,353
61,570
12,195
1,245
4,224
6,517
363
3,847
(28,666)
(3,768)
678
10,136
1,596
23,966
95,727
(34,251)
(18,109)
(4,773)
812
(1,851)
37,555
(47)
(17,305)
20,203
12
–
1,204
20,444
90,189
(12,725)
(24,947)
(638)
6,091
2,005
59,975
(90)
(2,288)
57,597
56
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 19. CAPITAL AND RESERVES
(a) Share capital
In thousands of shares
In issue at 1 July
Exercise of share options
In issue at 30 June – fully paid
Ordinary shares
2015
2014
322,193
322,026
146
167
322,339
322,193
(i) Ordinary shares
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. All
shares rank equally with regard to the Company’s residual assets.
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.
Issue of ordinary shares
During the year, 146 thousand ordinary shares were issued as a result of the exercise of vested options arising from the ESOT.
Options were exercised at a price of $0.225 per option (see Note 23).
(b) Nature and purpose of reserve
(i) Equity compensation reserve
The equity compensation reserve represents the cost of share options issued to employees.
(ii) 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 at below market rates.
(iii) 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.
(iv) Profits reserve
This reserve is comprised wholly of the profits generated by the Australian entity which would be eligible for distribution as a
frankable dividend.
(c) Dividends
The following dividends were declared and paid by the Company for the year:
In thousands of AUD
10.0 cents per qualifying ordinary share (2014: 10.0 cents)
2015
32,227
2014
32,211
After the reporting date, the following dividends were proposed by the board of directors. The dividends have not been
recognised as liabilities and there are no tax consequences.
In thousands of AUD
5.0 cents per qualifying ordinary share (2014: 5.0 cents)
2015
16,117
2014
16,110
57
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
20. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 30 June 2015 was based on the profit attributable to ordinary shareholders
of $70,353 thousand (2014: $61,570 thousand) and a weighted average number of ordinary shares outstanding during the
financial year ended 30 June 2015 of 322,255 thousand (2014: 322,092 thousand), calculated as follows:
Profit attributable to ordinary shareholders
In thousands of AUD
Profit for the period
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares
In thousands of shares
Issued ordinary shares at 1 July
Effect of shares issued
Weighted average number of ordinary shares at 30 June
Total basic earnings per share attributable to the ordinary equity holders of the
Company
Note
2015
70,353
70,353
2014
61,570
61,570
19
322,193
322,026
62
66
322,255
322,092
$0.22
$0.19
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2015 was based on the profit attributable to ordinary shareholders of
$71,949 thousand (2014: $62,774 thousand) and a weighted average number of ordinary shares outstanding after adjustment
for the effects of all dilutive potential ordinary shares of 324,586 thousand (2014: 323,830 thousand), calculated as follows:
Profit attributable to ordinary shareholders (diluted)
In thousands of AUD
Profit attributable to ordinary shareholders
Amortisation of performance rights (RST)
Profit 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 rights and options on issue
Weighted average number of ordinary shares (diluted) at 30 June
Total diluted earnings per share attributable to the ordinary equity holders of the
Company
2015
70,353
1,596
71,949
2014
61,570
1,204
62,774
322,255
322,092
2,331
1,738
324,586
323,830
$0.22
$0.19
58
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 21. LOANS AND BORROWINGS
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are
measured at amortised cost. For more information about the Group’s exposure to interest rate, foreign currency and liquidity
risk, see Note 26.
In thousands of AUD
Current
Finance lease liabilities
Non-current
Finance lease liabilities
Unsecured bank loan
2015
2014
175
347
111
9,139
9,250
116
–
116
Terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
In thousands of AUD
Currency
Nominal
interest rate
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
2015
2014
Finance lease
liabilities
AUD 0.90-8.39%
2015-2018
Unsecured bank loan
USD LIBOR+0.65%
2016
Total interest-bearing
liabilities
298
9,139
286
9,139
9,437
9,425
484
–
484
463
–
463
59
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
21. LOANS AND BORROWINGS (continued)
Finance lease liabilities
Finance lease liabilities of the Group are payable as follows:
In thousands of AUD
Less than one year
Between one and five years
Future
minimum
lease
payments
2015
Present value
of minimum
lease
payments
2015
Future
minimum
lease
payments
2014
Interest
2015
Present value
of minimum
lease
payments
2014
Interest
2014
184
114
298
9
3
12
175
111
286
362
122
484
15
6
21
347
116
463
The Group leases plant and equipment under finance leases with terms expiring from two to three years. At the end of the
lease term, there is the option to purchase the equipment at a discount to market value, a price deemed to be a bargain
purchase option.
2015
2014
752
3,340
3,009
2,101
9,202
905
905
667
6,290
2,912
1,474
11,343
682
682
22. EMPLOYEE BENEFITS
In thousands of AUD
Current
Accrual for salaries and wages
Accrual for short term incentive plan
Liability for annual leave
Liability for long service leave
Non–current
Liability for long service leave
60
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 23. SHARE-BASED PAYMENTS
(a) Description of share-based payment arrangements
(i) Share option and rights programmes (equity-settled)
The Group previously established share option programmes that entitled all eligible Group personnel to purchase shares
in the Company at an exercise price of $0.225 per share. The Employee Share Option Trust (ESOT) granted share options
over new ordinary shares to all American employees. The LH Ainsworth Share Option Trust (ASOT) granted share options to
all Australian employees, excluding directors apart from the CEO, Mr Danny Gladstone, over a portion of the personal share
holding of the Company’s Executive Chairman, Mr LH Ainsworth. The ESOT and ASOT share option plans were a replacement
to the employee share option plans previously granted.
On 22 July 2013 a new employee incentive plan was established whereby performance rights were granted to all eligible Group
employees under the Rights Share Trust (RST). On 17 March 2015, a further grant on similar terms was offered to all eligible
Group employees under the RST. Under the RST eligible employees were allocated performance rights over ordinary shares
in the Company at nil consideration or exercise price however are dependent on service conditions, vesting conditions and
performance hurdles.
The key terms and conditions related to the grants under these programmes are as follows; all options and rights are to be
settled by the physical delivery of shares.
Grant date/employee entitled
Option grant to senior and other employees
at 1 March 2011
Total share options ESOT
Option grant to senior and other employees
at 1 March 2011
Total share options ASOT
Number of
instruments
227,345
227,345
300,764
300,764
Vesting conditions
Three years of
service as per ESOT
below
Three years of
service as per ASOT
below
Rights grant to key management at 22 July 2013
360,199
Rights grant to senior and other employees
at 22 July 2013
Rights grant to key management
at 17 March 2015
Rights grant to senior and other employees
at 17 March 2015
Total rights RST
1,009,507
573,987
1,978,359
3,922,052
Four years service
and performance
hurdles from grant
date as per RST
below
Four years service
and performance
hurdles from grant
date as per RST
below
Four years service
and performance
hurdles from grant
date as per RST
below
Four years service
and performance
hurdles from grant
date as per RST
below
Contractual life of
options
5 years
5 years
5 years
5 years
5 years
5 years
61
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
23. SHARE-BASED PAYMENTS (continued)
(a) Description of share-based payment arrangements (continued)
(i) Share option and rights programmes (equity-settled) (continued)
To be eligible to participate in the ESOT and ASOT the employee was 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.
Both the ESOT and ASOT provide for employees to receive options for no consideration. Each option is convertible to one
ordinary share. Option holders have no voting or dividend rights. On conversion from option to ordinary shares, the issued
shares will have full voting and dividend rights. The exercise price of the options is determined in accordance with the rules
of the ESOT and ASOT. The ability to exercise the options is conditional on the continuing employment of the participating
employee.
All vesting conditions of the share options issued on 1 March 2011 under the ESOT and ASOT were achieved in the 30 June
2014 financial year.
The vesting conditions of the performance rights issued on 22 July 2013 under the RST are as follows :
Date
1 September 2016
1 September 2017
Vesting condition
(% of rights vesting)
50%
50%
In addition to the vesting conditions on rights granted under the RST, specific performance hurdles relative to Total Shareholder
Return (TSR) relative targets and Earnings per Share (EPS) targets are required to be met as follows:
Vesting date of 1 September 2016:
– 30% vest subject to the TSR target below with a fair value at grant date of $2.4349;
– 70% vest subject to the EPS target below with a fair value at grant date of $3.2375; and
The remaining 50% of the rights vest on 1 September 2017, of which:
– 30% vest subject to the TSR target below with a fair value at grant date of $2.3892; and
– 70% vest subject to the EPS target below with a fair value at grant date of $3.1693.
The vesting conditions of the performance rights issued on 17 March 2015 under the RST are as follows :
Date
17 March 2018
17 March 2019
Vesting condition
(% of rights vesting)
50%
50%
In addition to the vesting conditions on rights granted under the RST, specific performance hurdles relative to Total Shareholder
Return (TSR) relative targets and Earnings per Share (EPS) targets are required to be met as follows:
Vesting date of 17 March 2018:
– 30% vest subject to the TSR target below with a fair value at grant date of $1.9974;
– 70% vest subject to the EPS target below with a fair value at grant date of $2.3164; and
The remaining 50% of the rights vest on 17 March 2019, of which:
– 30% vest subject to the TSR target below with a fair value at grant date of $1.9290; and
– 70% vest subject to the EPS target below with a fair value at grant date of $2.2289.
62
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY The TSR and EPS targets for all performance rights granted are as follows:
Total Shareholder Return (TSR) Relative Targets
TSR rank
Less than 50% percentile
50th percentile
Proportion of TSR rights that vest
0%
50%
Between 50th and 75th percentile
Pro-rata (sliding scale) percentage
At or above 75th percentile
100%
The Comparison Group of Companies for the TSR hurdle is companies in the ASX 300 Index that have the same Consumer
Services GICS industry sector as Ainsworth.
EPS Targets
EPS achievement
Less than 8.0% p.a.
8.0% p.a.
10% p.a.
12.5% p.a.
Proportion of EPS rights that vest
0%
25% plus 1.25% for each 0.1% increase in EPS
50% plus 2.0% for each 0.1% increase in EPS
100%
(b) Reconciliation of outstanding share options and rights
ESOT plan
The number and weighted average exercise prices of Group issued share options under ESOT is as follows:
In thousands of options
outstanding at the beginning of the period
forfeited during the period
cancelled 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
2015
$0.225
$0.225
$0.225
Number
of options
2015
Weighted
average
exercise price
2014
Number
of options
2014
$0.225
$0.225
$0.225
$0.225
373
–
–
(146)
–
227
227
567
(27)
–
(167)
–
373
373
The options outstanding at 30 June 2015 have an exercise price of $0.225 and a remaining life of 0.67 years. The weighted-
average share price at the dates of exercise for share options exercised in 2015 was $2.81 (2014: $4.29).
63
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
23. SHARE-BASED PAYMENTS (continued)
(b) Reconciliation of outstanding share options and rights (continued)
ASOT plan
The share options granted under the ASOT to Australian employees on 1 March 2011 totalled 9,899,182. During the year no
previously granted share options were cancelled and 285,935 were exercised with 300,764 share options outstanding as at
30 June 2015. The weighted-average share price at the dates of exercise for share options exercised in 2015 was $3.22 (2014:
$4.32).
RST plan
The rights granted under the RST to all eligible Group employees totalled 4,046,289. During the year 124,237 were cancelled
with 3,922,052 rights outstanding as at 30 June 2015. No rights were exercisable as at 30 June 2015.
(c) Measurement of fair values
The fair value of the performance rights granted on 22 July 2013 under the RST were as follows:
Fair value at grant date
– Vesting date 1 September 2016
– Vesting date 1 September 2017
TSR target
EPS target
$2.43
$2.39
$3.24
$3.17
The inputs used in the measurement of the above fair values at grant date of the equity settlement share based payment plan
under the RST were as follows:
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate (based on Treasury Bonds)
The fair value of the performance rights granted on 17 March 2015 under the RST were as follows:
RST plan
$3.46
–
40.3%
5 years
2.1%
2.6%
Fair value at grant date
– Vesting date 17 March 2018
– Vesting date 17 March 2019
TSR target
EPS target
$2.00
$1.93
$2.32
$2.23
The inputs used in the measurement of the above fair values at grant date of the equity settlement share based payment plan
under the RST were as follows:
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate (based on Treasury Bonds)
64
RST plan
$2.60
–
24.1%
5 years
3.9%
2.5%
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY The estimate of the fair value of the services received is measured based on the Black Scholes Merton model. The fair value
of services received in return for share options and rights granted are measured by reference to the fair value of share options
and rights granted. The contractual life of the option and right 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 or rights), adjusted for any expected changes to future volatility due to publicly
available information.
(d) Expense recognised in profit or loss
For details on the related employee benefit expenses, see Note 11.
24. TRADE AND OTHER PAYABLES
In thousands of AUD
Current
Trade payables
Other payables and accrued expenses
Amount payable to director/shareholder controlled entities
2015
2014
8,008
21,129
254
12,544
15,958
80
29,391
28,582
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 26.
Trade and other payables denominated in currencies other than the functional currency comprise $13,961 thousand of payables
denominated in US Dollars (2014 $12,061 thousand), $120 thousand of payables denominated in Euro (2014: $13 thousand), $270
thousand of payables denominated in New Zealand Dollars (2014: $423 thousand), $42 thousand of payables denominated in
Great Britain Pounds (2014: $2 thousand), $nil thousand of payables denominated in Canadian Dollars (2014: $10 thousand) and
$20 thousand of payables denominated in Hong Kong Dollars (2014: $7 thousand).
25. PROVISIONS
In thousands of AUD
Balance at 1 July 2014
Provisions made during the year
Provisions used during the year
Balance at 30 June 2015
Service/
warranties
Legal
Total
549
738
(549)
738
138
16
(138)
16
687
754
(687)
754
26. FINANCIAL INSTRUMENTS
Credit risk
Exposure to credit risk
Trade and other receivables
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
17
Carrying amount
2015
146,611
146,611
2014
114,969
114,969
65
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
26. FINANCIAL INSTRUMENTS (continued)
Credit risk (continued)
Exposure to credit risk (continued)
Trade and other receivables (continued)
The Group’s gross maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
In thousands of AUD
Australia
Americas
Europe
New Zealand
Asia
2015
2014
39,848
98,781
241
1,991
7,512
55,278
59,500
63
1,406
827
148,373
117,074
The Group’s concentration of credit risk arises from its two most significant receivable amounts represented by a customer
in Asia and a customer in South America. They account for $5,422 thousand (2014: $306 thousand) and $7,843 thousand
(2014: $4,369 thousand) of the trade receivables carrying amount at 30 June 2015 respectively.
Cash and cash equivalents
The Group held cash of $27,573 thousand at 30 June 2015 (2014: $19,002 thousand) and $13,727 thousand of cash deposits
at 30 June 2015 (2014: $52,927 thousand), which represents its maximum credit exposure on these assets. The cash and cash
deposits are held with bank and financial institution counterparts, which are rated AA- to A-, based on rating agency Standard
& Poor ratings.
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
2015
Impairment
2015
Gross
2014
Impairment
2014
102,305
26,120
12,383
3,733
3,832
148,373
–
–
–
1,376
386
1,762
86,973
20,784
8,658
659
–
117,074
–
–
1,768
337
–
2,105
2014
2,089
(319)
363
(28)
2,105
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 written off
Provision during the year
Effect of exchange rate fluctuations
Balance at 30 June
2015
2,105
(1,864)
1,245
276
1,762
The provision of $1,245 thousand (2014: $363 thousand) was recognised in other expenses in the income statement.
Based on historic default rates and current repayment plans in place, the Group believes that apart from the above, no impairment
is necessary in respect of trade receivables not past due or on amounts past due as these relate to known circumstances that
are not considered to impact collectability.
66
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY At 30 June 2015, an impairment loss of $1,364 thousand was brought to account in relation to amounts receivable from the
termination of a distributor arrangement. The remainder of the impairment loss at 30 June 2015 related to several customers
that have demonstrated poor payment history or in the process of receivership. The remaining balance where no impairment
allowance has been provided relates to negotiated repayment plans from long standing customers and distributors who have
met or had their obligations previously re-negotiated.
The allowance for impairment losses in respect of receivables is used to record impairment losses unless the Group is satisfied
that no recovery of the amount owing is possible; at that point the amounts are considered irrecoverable and are written off
against the financial asset directly.
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements:
30 June 2015
In thousands of AUD
Non-derivative financial liabilities
Finance lease liabilities
Unsecured bank loan
Trade and other payables
Carrying
amount
286
9,139
29,391
38,816
Contractual
cash flows 6 mths or less
6-12 mths
1-2 years
2-5 years
(297)
(9,139)
(153)
–
(29,391)
(29,391)
(30)
–
–
(108)
(9,139)
–
(38,827)
(29,544)
(30)
(9,247)
(6)
–
–
(6)
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different
amounts.
30 June 2014
In thousands of AUD
Non-derivative financial liabilities
Finance lease liabilities
Unsecured bank loan
Trade and other payables
Carrying
amount
463
–
28,582
29,045
Contractual
cash flows 6 mths or less
6-12 mths
1-2 years
2-5 years
(484)
–
(232)
–
(28,582)
(28,582)
(130)
–
–
(29,066)
(28,814)
(130)
(70)
–
–
(70)
(52)
–
–
(52)
67
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2015
26. 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. No foreign currency call options were utilised during the year.
Exposure to currency risk
The Group’s significant exposures to foreign currency risk at balance date were as follows, based on notional amounts:
2015
2014
In thousands
Trade receivables
Unsecured bank loan
Trade payables
USD
Euro
102,593
(7,014)
–
–
NZD
1,281
–
GBP
USD
Euro
NZD
GBP
56
–
58,211
–
–
–
1,406
–
(13,961)
(120)
(270)
(42)
(12,061)
(13)
(423)
Net exposure in statement of financial
position
81,618
(120)
1,011
14
46,150
(13)
983
The following significant exchange rates applied during the year:
20
–
(2)
18
USD
Euro
NZD
GBP
Average rate
Reporting date spot rate
2015
2014
2015
2014
0.8377
0.6965
1.077
0.5429
0.9184
0.6771
1.1097
0.5674
0.7680
0.6866
1.1294
0.4885
0.9420
0.6906
1.0761
0.5531
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 2015 would have increased
(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain
constant. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably
possible at the end of the reporting period. The analysis is performed on the same basis for 2014.
Effect in thousands of AUD
30 June 2015
USD
Euro
NZD
GBP
HKD
30 June 2014
USD
Euro
NZD
GBP
HKD
68
Equity Profit or (loss)
(10,900)
(8,057)
11
(92)
(1)
2
11
(92)
(1)
2
(4,926)
(3,805)
1
(89)
(2)
–
1
(89)
(2)
–
AINSWORTH GAME TECHNOLOGY 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. This
analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end
of the reporting period. The analysis is performed on the same basis for 2014.
Effect in thousands of AUD
30 June 2015
USD
Euro
NZD
GBP
HKD
30 June 2014
USD
Euro
NZD
GBP
HKD
Equity Profit or (loss)
13,322
9,848
(13)
112
2
(2)
(13)
112
2
(2)
7,397
4,184
(1)
98
2
–
(1)
98
2
–
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:
In thousands of AUD
Assets carried at amortised cost
Receivables and other assets
Cash and cash equivalents
In thousands of AUD
Liabilities carried at amortised cost
Trade and other payables
Unsecured bank loan
Finance leases
Note
17
18
24
21
Carrying
amount
2015
Fair value
2015
Carrying
amount
2014
Fair value
2014
147,034
41,300
147,034
41,300
188,334
188,334
115,353
71,929
187,282
115,353
71,929
187,282
Carrying
amount
2015
Fair value
2015
Carrying
amount
2014
Fair value
2014
29,391
29,391
28,582
28,582
9,139
286
9,139
286
–
463
–
463
38,816
38,816
29,045
29,045
69
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
26. FINANCIAL INSTRUMENTS (continued)
Fair values (continued)
Estimates of fair values
The methods used in determining the fair values of financial instruments are discussed in Note 5.
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 2015 plus an adequate constant credit spread and are as follows:
Receivables
Unsecured bank loan
Leases
2015
2014
6.00% - 9.64% 6.00% - 10.25%
LIBOR + 0.65%
–
0.90% - 8.39%
2.90 - 8.39%
Interest rate risk
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased/ (decreased)
profit or loss. An increase in 100 basis points would lead to a decrease in profit by $21 thousand and a decrease in 100 basis
points would lead to an increase in profit by $21 thousand. This analysis assumes that all other variables, in particular foreign
currency exchange rates, remain constant.
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
More than five years
2015
2,470
8,983
1,190
12,643
2014
2,386
9,414
2,982
14,782
The Group leases a number of warehouse and office facilities under operating leases. The leases typically run for a period
of 1-10 years, with an option to renew the lease after that date. Lease payments are increased every year either by annual
increases of 2-4% per annum, or by market rent reviews at stipulated dates. None of the leases include contingent rentals.
During the year $2,843 thousand was recognised as an expense in profit or loss in respect of operating leases (2014:
$2,612 thousand).
The warehouse and office lease are combined leases of land and buildings. Since the land title does not pass, 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 determined that substantially all the risks and rewards of the building are with the landlord. As such,
the Group determined that the leases are operating leases.
28. CAPITAL AND OTHER COMMITMENTS
In thousands of AUD
Plant and equipment
Contracted but not yet provided for and payable:
Within one year
Employee compensation commitments
Key management personnel
Commitments under non-cancellable employment contracts not provided for in the financial
statements and payable:
Within one year
70
2015
2014
2,856
565
2,466
2,248
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY In addition to the amounts identified above, the Group has entered into various agreements with contractors in relation to the
construction of the Las Vegas facility. The contracts are cancellable by the Group for convenience with the exposure limited
to reasonable overhead and profit on work not executed. As this cannot be calculated with sufficient reliability, no amount for
this has been disclosed.
29. 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
Current
Mr GJ Campbell
Mr MB Yates
Executives
Current
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 CJ Henson - (subject to regulatory approval in the
jurisdictions of Missouri and Alberta)
Mr I Cooper (General Manager, Manufacturing,
Ainsworth Game Technology Limited)
Mr S Clarebrough (Group General Manager, Strategy and
Development, Ainsworth Game Technology Limited).
Former
Mr DH Macintosh - (subject to regulatory approval in the
jurisdictions of Missouri and Alberta)
Executive directors
Mr LH Ainsworth (Executive Chairperson)
Mr DE Gladstone (Executive Director and Chief Executive
Officer, Ainsworth Game Technology Limited)
Key management personnel compensation
The key management personnel compensation included in ‘employee benefit expenses’ (see Note 11) is as follows:
In AUD
Short-term employee benefits
Post-employment benefits
Share based payments
Other long term benefits
2015
2014
3,687,309
4,710,115
319,957
399,236
401,917
316,497
186,640
169,665
4,595,823
5,595,513
Individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation and some equity instruments disclosures as permitted
by 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 Group since the end of the
previous financial year and there were no material contracts involving directors’ interests existing at year-end.
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 those entities transacted with the Group during the year. Other than as described below the terms and conditions
of the transactions with key 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.
71
2015 ANNUAL REPORT NOTES TO THE
FINANCIAL STATEMENTS (continued)
29. RELATED PARTIES (continued)
The aggregate value of transactions and outstanding balances relating to key management personnel and their related parties
were as follows:
In AUD
Key management
person
Mr LH Ainsworth
Transaction
Leased plant and equipment
and other costs
Mr LH Ainsworth
Sales revenue
Mr LH Ainsworth
Purchases and other charges
for payments made on behalf
of the Company
Mr LH Ainsworth Operating lease rental costs
Transactions value
year ended 30 June
Balance receivable/
(payable) as at
30 June
Note
2015
2014
2015
2014
(i)
(ii)
(ii)
(iii)
62,400
62,400
–
1,381,806
931,326
48,974
174,617
343,514
–
–
–
–
1,582,824
1,550,935
(254,912)
(79,705)
(i)
(ii)
The Company leased associated plant and equipment from an entity controlled by Mr LH Ainsworth on normal commercial terms and
conditions.
Transactions were with Ainsworth (UK) Ltd and Associated World Investments Pty Ltd, entities controlled by Mr LH Ainsworth. These
sales are on normal commercial terms i.e. at arm’s length, but purchases are on a direct recharge.
(iii) Operating leases rental costs of the premises at Newington from an entity controlled by Mr LH Ainsworth on normal commercial terms
and conditions.
In addition to the transactions above, AGT Pty Argentina S.R.L. was incorporated in FY13 with the shareholding currently held
in trust by Mr D Gladstone and an officer of Ainsworth Game Technology Inc. on behalf of the Group. This shareholding is in the
process of being transferred and was originally structured to facilitate the incorporation within Argentina.
Amounts receivable from and payable to key management personnel and their related parties at reporting date arising from
these transactions were as follows:
In AUD
2015
2014
Assets and liabilities arising from the above transactions
Current receivables and other assets
Trade receivables
Current trade and other payables
48,974
–
Amount payable to director/shareholder controlled entities
254,912
79,705
72
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY
30. GROUP ENTITIES
Parent entity
Ainsworth Game Technology Limited
Subsidiaries
AGT Pty Ltd
AGT Pty Mexico S. de R.L. de C.V.
AGT Pty Peru S.A.C.
AGT Pty Argentina S.R.L.
AGT Alderney Limited
Ainsworth Game Technology Inc
Ainsworth Interactive Pty Ltd
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
Ownership Interest
Country of
Incorporation
2015
2014
Australia
Australia
Mexico
Peru
Argentina
Alderney
USA
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
100%
31. SUBSEQUENT EVENTS
After the reporting date, the Company declared a franked dividend of 5.0 cents per ordinary share amounting to $16,117 with
an expected payment date of 29 September 2015. The financial effect of this dividend has not been brought to account in the
financial statements for the year ended 30 June 2015 and will be recognised in subsequent financial reports.
Other than the matters discussed above, 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.
32. AUDITOR’S REMUNERATION
In AUD
Audit and review services
Auditors of the Company – KPMG
Audit and review of financial statements
Other regulatory audit services
Other services
Auditors of the Company – KPMG
2015
2014
260,000
258,000
30,000
–
290,000
258,000
In relation other assurance, due diligence and taxation
707,759
–
73
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS (continued)
33. PARENT ENTITY DISCLOSURES
As at and throughout the financial year ended 30 June 2015 the parent entity of the Group was Ainsworth Game Technology
Limited.
2015
2014
68,982
68,982
59,806
59,806
179,743
194,233
329,468
280,955
39,086
54,996
45,526
49,638
182,360
182,327
9,061
9,684
96,913
(23,546)
274,472
2,759
9,684
61,980
(25,433)
231,317
2015
2014
2,856
565
In thousands of AUD
Result of parent entity
Profit for the year
Total comprehensive income for the year
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of parent entity comprising of:
Share capital
Equity compensation reserve
Fair value reserve
Profit reserves
Accumulated losses
Total equity
Parent entity capital commitments for acquisitions of
property plant and equipment
In thousands of AUD
Plant and equipment
Contracted but not yet provided for and payable:
Within one year
74
for the year ended 30 June 2015AINSWORTH GAME TECHNOLOGY 1.
In the opinion of the directors of Ainsworth Game Technology Limited (the ‘Company’):
a.
the consolidated financial statements and notes that are set out on pages 32-74 and the Remuneration report in sections
15.1 to 15.4 in the Directors’ report, are in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its performance for the financial
year ended on that date; and
b.
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
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.
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 2015.
The directors draw attention to Note 2(a) to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
3.
LH Ainsworth
Executive Chairman
Dated at Sydney this 18th day of August 2015.
75
DIRECTORS’ DECLARATION2015 ANNUAL REPORT
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 consolidated statement of financial position as at 30 June 2015, and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, Notes 1 to 33
comprising a summary of significant accounting policies and other explanatory information 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 of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors
determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to
fraud or error. In Note 2, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements of the Group comply 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 repbrt 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 of the financial report that gives a true and fair view 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, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its 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 the Group is in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its performance for the year ended
on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
ii.
the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.
b.
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.
76
INDEPENDENT AUDITOR’S REPORTAINSWORTH GAME TECHNOLOGY
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 15.1 to 15.4 of the directors’ report for the year ended 30 June 2015. 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 2015, complies with
Section 300A of the Corporations Act 2001.
KPMG
Tony Nimac
Partner
Sydney
18 August 2015
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.
77
2015 ANNUAL REPORT LEAD AUDITOR’S INDEPENDENCE
DECLARATION
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 2015 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
Tony Nimac
Partner
Sydney
18 August 2015
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.
78
AINSWORTH GAME TECHNOLOGY
CORPORATE
DIRECTORY
CORPORATE DIRECTORY
Executive Chairman
Mr LH Ainsworth
Independent Non-Executive
Directors
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Chief Executive Officer
and 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 9648 4327
Email: enquiries@ainsworth.com.au
Queensland
Unit 5 / 3990 Pacific Highway
Loganholme QLD Australia 4129
Tel: +61 7 3209 6210
Fax: +61 7 3209 6510
Email: glen.coleman@ainsworth.com.au
Victoria
Mr Wayne Flood
State Sales Manager
Tel: +61 0419 551 454
Email: wayne.flood@ainsworth.com.au
South Australia
Mr Peter Black
State Sales Manager
Tel: +61 0427 465 645
Email: peter.black@ainsworth.com.au
Securities Exchange Listing
The Company is listed on the
Australian Securities 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
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.
THE AMERICAS
Nevada
6975 S. Decatur Blvd. Suite 140
Las Vegas, NV 89118 USA
Tel: +1 (702) 778-9000
Fax: +1 (702) 778-9001
Email: enquiries@ainsworth.com.au
Florida
6600 NW 12 Avenue, Suite 201
Ft. Lauderdale, FL 33309 USA
Tel: +1 (954) 317-5500
Fax: +1 (954) 317-5555
Email: enquiries@ainsworth.com.au
ASIA
Malaysia
Mr Jonathan Siah
Key Account Sales Executive
Tel: +60 1225 40866
Email: jonathan.siah@ainsworth.com.au
Macau
Mr Jim Tang
Key Account Sales Executive
Tel: +853 6648 5180
Email: jim.tang@ainsworth.com.au
79
2015 ANNUAL REPORT
www.ainsworth.com.au
80
AINSWORTH GAME TECHNOLOGY AINSWORTH GAME TECHNOLOGY
10 Holker Street, Newington
New South Wales, Australia 2127
T. +61 2 9739 8000
F. +61 2 9648 4327
www.ainsworth.com.au
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