BNP PARIBAS NOMS PTY LTD
WARBONT NOMINEES PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
CASOLA HOLDINGS PTY LTD
AMP LIFE LIMITED
MR CHRISTIAN JOHN HASTINGS AINSWORTH
MR SASHA ALEXANDER CAJKOVAC
MISS PATTARAWADEE SMARNKEO
MR DAVID WARREN LARMENT + MRS CHIZURU LARMENT
Number of ordinary
shares held
163,511,546
30,133,804
19,695,446
15,265,353
1 1 , 3 7 1 , 1 3 1
10,241,215
9,884,656
7,012,189
4,759,697
3,039,366
2,911,622
2,828,553
1,320,726
1,079,828
1,070,000
882,536
770,650
690,000
684,999
650,000
Percentage
of total
49.39
9.10
5.95
4.61
3.43
3.09
2.99
2.12
1.44
0.92
0.88
0.85
0.40
0.33
0.32
0.27
0.23
0.21
0.21
0.20
Total
287,803,317
86.94
17
ANNUAL REPORT 2017 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 2017 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 Director
94 yrs
– Sixty four 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
– Recipient of Jens Halle Memorial Award honouring excellence in
commercial gaming professionalism in 2016
– Director and Chairman since 1995 – Executive Chairman since 2003
until 15 November 2016
– 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 2013
– Director of Lantern Hotels Group and Chairman since July 2016
– Director of NSW Harness Racing Club since October 2016
– Chairman of Audit Committee of Illawarra Catholic Club Group
– Chairman of Audit Committee until 1 April 2017 and member since
1 April 2017, member of Regulatory and Compliance Committee until
1 July 2017, member of Remuneration and Nomination Committee
since 2015
– Lead Independent Non-Executive Director since 2013 and appointed
Chairman on 15 November 2016
Mr Graeme John Campbell
Chairman and Independent Non-Executive
Director
60 yrs
1818
Directors’ Reportfor the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY Directors’ Report (continued)
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, FGIA, FAICD
Independent Non-Executive Director
Ms Heather Alice Scheibenstock
GAICD
Independent Non-Executive Director
Mr Daniel Eric Gladstone
Executive Director and Chief Executive
Officer
Age
Experience, special responsibilities and other directorships
63 yrs
– Michael has extensive commercial and corporate law experience in a
career spanning over 35 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
– Chairman of Regulatory and Compliance Committee and member of
Audit Committee
69 yrs
– 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
– Lead associate with Madison Cross Corporate Advisory Pty Ltd since
2014
– Former directorships (in recent years) include; Executive Chairman
of Redcape Property Fund Limited, an ASX Listed Property Trust;
Chairman and non-executive director of Videlli Limited
– Fellow of the Australian Institute of Company Directors, Fellow of
CPA (Certified Practising Accountants) Australia and Fellow of the
Governance Institute of Australia. Colin is also a non-practising
member of the Law Society of NSW
– Director since 2013
– Member of Audit Committee until 1 April 2017 and Chairman since
1 April 2017
– Chairman of Remuneration and Nomination Committee
49 yrs
– Heather has extensive leadership experience within the gaming and
hospitality industries specialising in strategic planning and offshore
growth spanning over 30 years
– She has previously held senior executive roles at Echo Entertainment
and Solaire Group
– Director of Southern Metropolitan Cemeteries Trust since 2014
– Director of Ability Options since February 2017
– Member of Australian Institute of Company Directors and Women on
Boards
– Appointed Director (subject to regulatory approval in Ohio and the
Canadian province of Saskatchewan) since 2016
– Member of Remuneration and Nomination Committee since 2016
– Member of Regulatory and Compliance Committee since 1 July 2017
62 yrs
– Danny has held senior positions within the gaming industry over
a successful career spanning 40 years
– Former Chairman of Gaming Technologies Association
– Inducted into the Club Managers Association Australia Hall of Fame
in 2000
– Chief Executive Officer since 2007 - Executive Director since 2010
– Member of Regulatory and Compliance Committee
19
for the year ended 30 June 2017ANNUAL REPORT 2017 1. DIRECTORS (continued)
Name, qualifications
and independence status
CURRENT
Age
Experience, special responsibilities and other directorships
Mr Harald Michael Karl Neumann
Non-Executive Director
55 yrs
– Harald has extensive leadership experience in senior executive
positions in a career spanning over 20 years mainly within technology
companies
– Former Regional Chief Executive Officer at Alcatel AG (now Alcatel–
Lucent) a global tele-communications equipment Company
– Former Managing Director at Bundesrechenzentrum GmbH, the
Austrian government’s information technology service provider, until
2006
– Former CEO of G4S Security Services Austria AG, the Austrian
subsidiary of one of the world’s leading integrated security companies
before joining Novomatic in 2011
– Currently Chief Executive Officer and Chairman of the Executive Board
of Novomatic since 2014
– Graduate of the Vienna University of Economics and Business, Board
Member of the American Chamber of Commerce. Member of the
Rotary Club Klosterneuburg and Member of the Supervisory Board of
Casinos Austria AG since March 2017
– Non-Executive Director of Ainsworth Game Technology (subject to
regulatory approval in Ohio) since 21 February 2017
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
HA Scheibenstock
HK Neumann
Board Meetings
B
A
10
10
10
10
10
10
4
10
10
10
10
10
10
4
Audit Committee
Meetings
Remuneration
& Nomination
Committee Meetings
Regulatory
& Compliance
Committee Meetings
A
–
2
2
–
2
–
–
B
–
2
2
–
2
–
–
A
–
4
–
–
4
4
–
B
–
4
–
–
4
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
2020
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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 continues to execute strategies
to expand and diversify its product offerings within both land based and 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;
– diversity and expansion of contributions from recurring revenue through units under gaming operation;
– 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;
– expand presence within on-line gaming markets, including social gaming and licensed “Real Money” gambling markets;
– prudently manage levels of investment in working capital and further improve cash flow from operations to facilitate investment
in growth opportunities; and
– provide a growing return on shareholder equity through increasing profitability, payment of dividends and share price growth.
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;
– review and evaluate growth opportunities both organically and through acquisitions;
– manage 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.
5. OPERATING AND FINANCIAL REVIEW
Overview of the Group
The Group’s profit for the year ended 30 June 2017 was a profit after tax of $37.9 million, a decrease of 32% on the $55.7 million
in 2016. The profit after tax excluding effect of net foreign currency loss was $47.6 million which is a decrease of 9% compared
to $52.4 million in 2016.
The current year profit before tax result, excluding the effect of currency losses was $57.4 million with half 2 representing
$42.2 million a significant improvement on half 1 of $15.2 million and 2.5% ahead of guidance provided in February 2017.
This result was achieved on revenue of $282.1 million with an increase in half 2 of 30% compared to half 1 of the current year.
This increase was assisted through revenue of $10.9 million achieved in FY17 within Europe through the relationship established
with Novomatic AG, revenue gains within the domestic market of New South Wales and in Latin America in the second half
of FY17.
21
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 5. OPERATING AND FINANCIAL REVIEW (continued)
The following table summarises the results for the year:
In millions of AUD
Total revenue
Underlying EBITDA
Reported EBITDA
EBIT
Profit before tax
Profit for the year
Total assets
Net assets
Earnings per share (fully diluted)
Total dividends per share
12 months to
30 June 2017
12 months to
30 June 2016
Variance
%
282.1
285.5
84.1
70.3
44.5
46.9
37.9
464.7
344.6
95.2
95.8
72.8
75.1
55.7
436.0
315.9
12.0 cents
17.0 cents
–
10.0 cents
(1.2)
(11.7)
(26.6)
(38.9)
(37.5)
(32.0)
6.6
9.1
(29.4)
(100.0)
A reconciliation of the reported EBITDA to the underlying EBITDA is shown in the following table:
In millions of AUD
Reconciliation:
Profit before tax
Net interest
Depreciation and amortisation
Reported EBITDA
Foreign currency loss / (gain)
Due diligence costs on strategic opportunites/acquisitions
Impairment losses
Accelerated expenses for vacated premises in North America
12 months to
30 June 2017
12 months to
30 June 2016
Variance
%
46.9
(2.4)
25.8
70.3
10.5
–
3.3
–
75.1
(2.3)
23.0
95.8
(4.7)
1.2
2.2
0.7
(37.5)
4.3
12.2
(26.6)
323.4
(100.0)
50.0
(100.0)
(11.7)
Underlying EBITDA
84.1
95.2
The information presented in this review of operations has not been audited in accordance with the Australian Auditing
Standards.
Shareholder returns
2017
2016
2015
2014
2013
Profit attributed to owners of the company
$37,930,000 $55,703,000 $70,353,000 $61,570,000 $52,202,000
Basic EPS
Dividends paid/declared
Change in share price
$0.12
$0.17
$0.22
$0.19
$0.16
$16,386,000 $32,245,000 $32,227,000 $32,211,000
$9,661,000
No Change
($0.41)
($1.17)
($0.29)
$1.93
Net profit amounts for 2013 to 2017 have been calculated in accordance with Australian Accounting Standards (AASBs).
2222
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY Investments for future performance
The Group continues to review and evaluate opportunities within the gaming sector. Further investments in research and
development are expected to assist the ongoing expansion and breadth of innovative, technically advanced and consistently
high performing products. The Group launched a new EVO™ hardware configuration at the Australasian Gaming Exhibition (AGE)
in August 2017 with a range of newly developed game concepts including Pac-Man Wild Edition™, King Kong™, Fire Power™ and
Big Hits Bonanza™. These products were the result of previous investment in research and development undertaken and are
expected to be the cornerstone of the Group’s product transition strategies in all global markets.
Digital
Ainsworth continues to pursue growth opportunities within market attractive digital/interactive channels for its premium game
content. These markets include the regulated online “real money” gambling sectors within Europe, Latin America and the USA
as well as the fast growing worldwide social casino gaming sectors for “free to play” digital games and supporting applications.
New developments include Ainsworth further enhancing its game content supply technologies such as its state of the art remote
gaming server technology. Ainsworth’s remote game server technology enables online real money and social casino operators
worldwide the ability to instantly, safely and securely access Ainsworth’s latest game library on desktop and mobile devices.
Ainsworth provides a simple plug-and-play approach to third party systems and partners.
New jurisdictions potentially opening up within the USA and Latin America in the online “real money” gambling sector, including
Mexico, Peru and Colombia, where Ainsworth already enjoys a strong land based casino market presence, will further enhance
Ainsworth’s growth opportunities within its digital/interactive businesses.
Significant changes in the state of affairs
The previous approval by shareholders of the sale of ordinary shares held by Mr LH Ainsworth and entities controlled by him
to Novomatic AG is expected to provide revenue opportunities and synergies in coming periods and provide access to new
research and development capabilities for the Group’s global markets. Management continues to explore opportunities to
leverage Novomatic’s product library and extensive infrastructure. The completion of this transaction is now solely dependant
on Novomatic receiving the necessary regulatory approvals.
Other than the matter noted above, there were no significant changes in the state of affairs of the Group during the financial year.
23
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 5. OPERATING AND FINANCIAL REVIEW (continued)
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 (loss) / gain
R&D expenses
Corporate expenses
Other expenses
Share of profit of equity-accounted investee
Total unallocated expenses
Less : interest included in segment result
EBIT
Net interest
Profit before income tax
Income tax
Profit after income tax
12 months to
30 June 2017
12 months to
30 June 2016
Variance
Variance
%
74.1
179.9
28.1
282.1
24.0
82.3
15.0
121.3
(10.5)
(34.2)
(26.2)
(2.5)
0.2
(73.2)
(3.6)
44.5
2.4
46.9
(9.0)
37.9
81.5
185.8
18.2
285.5
29.0
83.3
10.0
122.3
4.7
(28.6)
(19.8)
(3.4)
0.4
(46.7)
(2.8)
72.8
2.3
75.1
(19.4)
55.7
(7.4)
(5.9)
9.9
(3.4)
(5.0)
(1.0)
5.0
(1.0)
(9.1)
(3.2)
54.4
(1.2)
(17.2)
(1.2)
50.0
(0.8)
(15.2)
323.4
(5.6)
(6.4)
0.9
(0.2)
(26.5)
(0.8)
(28.3)
0.1
(28.2)
10.4
(17.8)
19.6
32.3
(26.5)
(50.0)
56.7
28.6
(38.9)
4.3
(37.5)
(53.6)
(32.0)
2424
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY Key performance metrics
Segment result margin
Australia
Americas
Rest of World
Segment result margin
R&D expense
Adjusted EBIT(1)
Adjusted profit before income tax(1)
Adjusted profit after income tax(1)
Effective tax rate
% of revenue
Variance
12 months to
30 June 2017
12 months to
30 June 2016
Points
32.4
45.7
53.4
43.0
12.1
19.5
20.3
17.2
19.2
35.6
44.8
54.9
42.8
10.0
23.9
24.7
19.5
25.8
(3.2)
0.9
(1.5)
0.2
2.1
(4.4)
(4.4)
(2.3)
(6.6)
(1) Excludes net foreign currency loss of $10.5 million (2016: Net foreign currency gain of $4.7 million)
Revenue
Strong revenue of $159.4 million was achieved in the second half of FY17 which assisted to offset the lower revenue in the first
half of the current period. The major contributors to the improved revenue in the second half was revenue of $8.0 million within
Europe through the relationship established with Novomatic AG and continued strong revenue gains within the Latin American
region.
The domestic markets of Australia generated revenues of $74.1 million during the reporting period, representing a reduction of
9% as compared to 2016. This reduction was primarily experienced in the first half with the second half improving by 6% on the
prior corresponding period. Overall domestic revenue showed signs of improvement with New South Wales revenue increasing
20% in the second half over the corresponding period in 2016. Overall domestic revenue continued to be impacted by reduced
business activity with large corporate customers and competitor activity as relates to product placements. Notwithstanding
these factors, consistent performance from an established range of Ainsworth products on both the A640 and A600 cabinets
ensured that the installed base still experienced moderate growth across most domestic markets.
FY17 saw the release of several successful proprietary games including Roarin’ Fortune, Blazin’ Fortune, Quackpot and Sky High
Link. During FY17 Ainsworth also released several successful licensed games including Pac Man and King Kong. The release
of the EVO cabinet at the Australasian Gaming Exhibition in August 2017 together with a more diverse and innovative range of
game content has been positively received. The additional focus on market-attuned concepts such as Big Hit Bonanza™, Fire
Power™ and Jackpot Strike will be key offerings in the multi-game multi-denomination product segments and are expected to
provide a meaningful improvement in future periods.
In line with the strategy to expand Ainsworth’s offshore operations, international revenue was $208.0 million compared to
$204.0 million in 2016, a slight increase of 2%.
The Americas now constitutes 64% ($179.9 million) of total revenues, consistent with the prior corresponding period. The Group
expects to capitalise on international revenue opportunities in FY18 from the ongoing release of newly developed games,
combined with the continued growth in Class II gaming on an expanded range of hardware configurations.
The Americas contributed 87% of total international revenue, with North America and Latin America representing 49% and
38% respectively. The North American market realised revenue of $101.4 million in the current period, a decrease of 9% on
the $111.0 million in 2016. The previous granting of licenses and the progression of product approvals in additional US States is
expected to provide revenue growth in coming periods. The markets of Oklahoma, Michigan, New York and Texas contributed
to 32% of total unit sales from North America compared to 18% in the previous corresponding period in 2016. These new
markets assisted to offset declines within markets of Wisconsin and California in the current year.
In conjunction with the revenue achieved from outright sales the Group maintained a base of 2,669 gaming units under
participation arrangements as at the reporting period in North America. Participation revenue contributed revenue of $26 million
(26%) in the current period compared to $21.7 million (20%) in the previous period. The release of the A640™ hardware and
the Pac-man™ combined with further hardware and game content offerings in Class II product offerings is expected to further
increase the installed base of products under participation in this market.
25
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 from other
international markets
5. OPERATING AND FINANCIAL REVIEW
(continued)
Revenue from Latin America was $78.5 million, an increase
of 5% on the corresponding period in 2016. In addition to
the above, the Group has increased its footprint and at the
reporting date has 2,648 units under gaming operations in
this market. This represents an increase of 48% compared
to the 1,794 units under gaming operations as at 30 June
2016. Continued high performance of products such as the
Multi Win™ multi game range and Quad Shots™, along with
strategies previously undertaken have driven the Group’s
growth within this geographical region. The Company is
positioned to build on its reputation as a provider of high
performing gaming products and expects to continue
to expand its established footprint of products under
gaming operation.
Revenue
(“Rest of
World” segment) of New Zealand, Europe, Asia and on-
line contributed $28.1 million representing an increase of
54% compared to the prior corresponding period in 2016.
These results were primarily achieved through revenue
of $10.9 million from Novomatic AG in the current period
within Europe. Continued revenue through commitments
with Novomatic AG as previously outlined is expected to be
achieved within the second half of FY18.
Further progress within the digital gaming sector was
achieved in the period with a revenue contribution of
$3.5 million compared to $0.6 million in 2016. This revenue
increase was primarily achieved in the social casino gaming
sector, which represented 76% of total revenue. Ainsworth
continues to work closely with its joint venture partner,
616 Digital LLC, as an operator focussed on the provision
of Ainsworth game content directly to end user players.
Ainsworth’s collaboration with 616 Digital LLC includes the
launch and continued growth and popularity of Ainsworth’s
“Players’ Paradise” app, which is accessible to players on a
range of the most popular platforms on mobile and desktop
including Facebook, Android and iOS.
Ainsworth continues to enjoy a competitive advantage in
these markets and remains a sought after strategic partner
and competitive operator in all of these sectors through its
continued ability to leverage its premium slot game content
(as developed for its core land based casino markets) in the
real money gambling and social casino sectors. This land
based content connection results in Ainsworth’s digital/
interactive games being more readily identifiable and
attractive to a broader audience of players and operators
alike in the competitive digital market place.
Operating costs
Gross margin of 60% was achieved for the full year FY17,
which was a slight decrease of 1% from the first half of FY17
and consistent with the 60% in 2016. As noted at the half
year, margins within domestic markets were impacted
by higher componentry costs through product transition
to the A600™, adverse currency movements, aggressive
promotional initiatives and reduced corporate and casino
activity.
2626
The maintenance of gross margin was achieved through an
increased contribution of international sales and favourable
currency movements in the period. Planned cost reduction
initiatives have been introduced with higher sales volumes,
production efficiencies, and a greater concentration of
premium progressive recurring revenue games expected to
assist in maintaining margins at current levels. International
revenues are expected to continue to increase their
contribution to total revenue of the Group.
Operating costs, excluding cost of sales, other expenses and
financing costs were $112.5 million, an increase of 12% over
2016. These costs include additional overheads following
the integration of Nova into the Group’s operations for the
period since completion. This increase was primarily due to
selling and marketing costs; additional sales representation
in America in line with expected revenue increases and new
market opportunities 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 $34.2 million,
an increase of $5.6 million over 2016, which represented
12% of revenue (2016: 10%). Continued progress to create
a more diverse range of product offerings was initiated
in the current period and is expected to provide revenue
opportunities in global markets the Group operates in.
Administration costs were $26.2 million, an increase of
$6.4 million compared to 2016. These overhead costs
as a percentage of total revenue were 9% (2016: 7%) and
are consistent with the planned infrastructure established,
primarily within the Americas, in the first half of FY17 which is
expected to be maintained at similar levels in FY18.
Financing income and costs
Net financing loss was $8.1 million in the current period,
compared to a net financing income of $7.0 million in 2016.
This adverse movement of $15.1 million was a result of
foreign exchange loss of $10.5 million in the current period
compared to a foreign currency gain of $4.7 million in 2016,
an unfavourable change of $15.2 million.
Review of financial condition
Capital structure and treasury policy
The Company currently has on issue 331,085,560 ordinary
shares. The Board continues to ensure a strong capital base
is maintained to enable investment in the development of
the business. Group performance is monitored to oversee
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 continually 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.
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY Cash flows from operations
The Group continues to generate positive cashflows from operating activities. Net cash inflows from operations for the year
ended 30 June 2017 was $5.2 million, a decrease from $52.9 million in the corresponding period in 2016. This reduction in
operating cashflows was temporarily impacted through investment in working capital including increased receivables due
to timing of sales, the build up of inventory and an increased footprint of recurring revenue units undergoing operation in
Latin America. It is expected that improved cashflows will be achieved within FY18 as the cash conversion of receivables and
inventory reductions progressively occur through sales and the receipt of monies for products on participation/lease.
Liquidity and funding
In addition to cash and cash equivalents held of $21.1 million (2016: $26.4 million), the Group has in place a A$90 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.
The Group has utilised borrowings under its established facility to fund the acquisition of Nova Technologies. The net debt
((debt less cash) / EBITDA) at the reporting date was 0.63 times which was considered within an acceptable range of gearing
for the Group.
The Group actively monitors its working capital requirements and has increased its investment particularly through the entry
into Class II gaming products enabling it to increase machines under gaming operation and provide a greater proportion of
recurring revenue 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 2017:
Declared and paid during the year 2017
Final 2016 ordinary (franked)
Total amount
Declared after end of year
No dividend has been declared after year end.
Dividends have been dealt with in the financial report as:
Dividends
Cents
per share
Total amount
$’000
Date of
payment
5.0
16,386
7 November 2016
16,386
Note
$’000
16,386
7. EVENTS SUBSEQUENT TO REPORTING DATE
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations
of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.
8. LIKELY DEVELOPMENTS
The Group continues to pursue development initiatives and the necessary product approvals to help ensure sustainable
revenue growth and 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.
27
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 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:
Mr LH Ainsworth(1)
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Ms HA Scheibenstock
Mr DE Gladstone(2)
Ainsworth Game
Technology Limited
Ordinary shares
178,291,817
307,785
30,600
131,156
–
Performance
rights over
ordinary shares
–
–
–
–
–
52,464
661,318
(1)
(2)
Included in shareholding above of Mr LH Ainsworth are 172,100,823 ordinary shares that are subject to a proposed sale to Novomatic
AG as approved at a General Meeting of Shareholders held on 27 June 2016. The completion of this share sale transaction requires
necessary gaming regulatory approvals as detailed in the Notice of Meeting dated 4 May 2016.
Included in performance rights above for DE Gladstone are 328,791 rights conditional on shareholder approval at the 2017 Annual
General Meeting (AGM) on 28 November 2017.
10. SHARE OPTIONS / PERFORMANCE RIGHTS
Unissued shares under performance right
At the date of this report unissued ordinary shares of the Group under performance right are:
Expiry date
22 July 2018
17 March 2020
01 March 2021
Instrument
Exercise price
Rights
Rights
Rights
$Nil
$Nil
$Nil
Number of
shares
563,334
2,052,129
4,363,798
6,979,261
There are no other shares of the Group under performance right.
All 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 granted in previous periods 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 ASX300 index with the same Consumer Services GICS industry sector as
the Group. The performance rights granted during the current period are subject to achievement of share price compounded
growth of at least 15% per annum measured at each vesting period. Further details about share based payments to directors
and KMP’s are included in the Remuneration report in section 15. These rights do not entitle the holder to participate in any
share issue of the Company or any other body corporate.
Shares issued on exercise of options
During or since the end of the financial year, the Group issued no ordinary shares of the Company as a result of the exercise of
options or performance rights.
2828
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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.
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
Audit and review of financial statements
Total paid/payable to KPMG
2017
$
22,500
35,451
57,951
260,000
317,951
13. LEAD AUDITOR’S INDEPENDENCE DECLARATION
The Lead auditor’s independence declaration is set out on page 93 and forms part of the directors’ report for the financial year
ended 30 June 2017.
14. ROUNDING OFF
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Report) Instrument 2016/191 and in
accordance with that Instrument, amounts in the consolidated financial statements and directors’ report have been rounded off
to the nearest thousand dollars, unless otherwise stated.
29
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 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.
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. This review resulted in increases between
3.0% to 7.0% being awarded in the current period.
The RNC undertook a review of fixed compensation levels
in 2017 to assist with determining an appropriate mix
between fixed and performance linked compensation for
senior executives of the Group during the year.
is also
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 Rights Share 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 the RNC to determine
and assess current performance linked compensation
arrangements - STI and LTI plans. This review was evaluated
by the Board to determine appropriate remuneration levels
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.
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.
3030
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY The financial performance objectives for FY17 comprise
50% for Group ‘profit before tax’ excluding foreign currency
gains / (losses) and 30% for ‘minimum international
revenue’. These financial performance targets were
assessed by the RNC for all key management personnel
(excluding Mr LH Ainsworth and non-executive directors)
and it was determined that the Group did not achieve
the ‘profit before tax’ minimum target and no STI was
payable in the current year relating to this criteria. The
RNC determined that the ‘minimum international revenue’
was achieved and 30% of the maximum STI under this
criteria was awarded.
The non-financial objectives comprising 20% 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)) were assessed and it was
determined that a portion of STI under these criteria would
be awarded in the current period.
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 2017 has taken place in accordance
with this process.
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 should a
STI amount be awarded 50% of the STI would be payable
in cash and 50% be deferred for a 12 month period. The
deferred component established for the 2017 financial year
has not been accrued at 30 June 2017 and is subject to
service conditions.
Currently,
linked component of
compensation comprises approximately 11% (2016: 3%) of
total payments to key management personnel.
is capable of being awarded
recommendation by
the performance
the
Long-term incentive
Performance Rights Plan
During a previous year an employee incentive plan
was established whereby performance
rights were
granted under the Rights Share Trust (RST). 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.
Details of the vesting conditions for each plans are outlined
as below :
22 July 2013 and 17 March 2015 Granted Plan
Of each tranche that vest, 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 at that time 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 believed when these incentive plans were
introduced
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.
two performance hurdles,
these
that
31
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 15. REMUNERATION REPORT – AUDITED (continued)
15.1 Principles of compensation – audited (continued)
Vesting on each tranche is as follows:
EPS growth
Tranche 1
Vesting
outcome
Tranche 2
Company TSR
percentile ranking
Vesting
outcome
Less than 8.0% per annum
Nil vesting
Below 50th percentile
Nil vesting
8.0% per annum
10.0% per annum
25% vesting plus 1.25% for
each 0.1% increase in EPS
50th percentile
50% vesting
50% vesting plus 2.0% for
each 0.1% increase in EPS
Between 50th and
75th percentile
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.
1 March 2017 Granted Plan
The performance hurdles for this plan are based on a 15% compound increase on the share price of $1.86, being the Volume
Weighted Average Price (VWAP) for 90 days ending 28/02/2017. The hurdles set for this plan was determined as appropriate
due to the following:
– Share Price growth is considered more reflective of the Group’s underlying performance and is aligned to shareholder wealth;
– To ensure relevance of the LTI for international employees;
– International expansion reflects ASX share price and is a more meaningful performance measure;
– Inherent volatility of the gaming industry makes TSR and EPS less relevant; and
– There are limited numbers of gaming industry companies in the ASX.
Vesting on each tranche is as follows:
Tranche 1
Tranche 2
Tranche 3
Tranche 4
20% will vest if the VWAP for 20 days preceding 01/03/2018 is equal or greater than $2.14
20% will vest if the VWAP for 20 days preceding 01/03/2019 is equal or greater than $2.46
20% will vest if the VWAP for 20 days preceding 01/03/2020 is equal or greater than $2.83
40% will vest if the VWAP for 20 days preceding 01/03/2021 is equal or greater than $3.25
Rights that do not vest at the end of the final vesting period 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.
Short-term and long-term incentive structure
The RNC considers that the above performance-linked remuneration structure will generate the desired outcomes. The evidence
of this is:
– 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 linked incentives; and
– the high levels of retention among senior executives and key personnel.
3232
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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.
2017
2016
2015
2014
2013
Profit attributable to owners of the company
$37,930,000 $55,703,000 $70,353,000 $61,570,000 $52,202,000
Dividends paid/declared
Change in share price
$16,386,000 $32,245,000 $32,227,000 $32,211,000
$9,661,000
No change
($0.41)
($1.17)
($0.29)
$1.93
Profit is considered as one of the financial performance targets in setting the short-term incentive bonus. Profit amounts for 2013
to 2017 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 periods 3 to 12 months’ notice and that the Group retains the right to terminate the
contracts immediately, by making payment equal to the notice period.
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 market
conditions, 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.
33
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 Directors’ Report (continued)
for the year ended 30 June 2017
15. REMUNERATION REPORT – AUDITED (continued)
15.1 Principles of compensation – audited (continued)
The CEO and Company Secretary do not receive any additional fees for undertaking Board or Committee responsibilities.
Following a review previously undertaken by an independent remuneration consultant, non-executive director’s fees were
assessed based on current market levels for comparable companies, demands and responsibilities associated with their roles
and the global nature of the Group’s operations within a highly regulated environment to ensure the Board is appropriately
compensated. 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 and are set
out below.
POSITION
Independent Chair of Board(1)
Australian resident non-executive director
Lead Independent non-executive director(2)
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)
250,000
120,000
10,000
20,000
24,000
12,000
12,000
15,000
8,000
(1)
Mr GJ Campbell was appointed Chairman of the Board on 15 November 2016 and received remuneration on a pro-rata basis from
this date.
(2) This amount was not required since the appointment on 15 November 2016 of Mr GJ Campbell as independent Chairman of the Board.
3434
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY %
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f
ANNUAL REPORT 2017
15. REMUNERATION REPORT – AUDITED (continued)
15.3 Analysis of bonuses included in remuneration – audited
Details of the vesting profile of the short-term incentive cash bonuses included as remuneration to each director of the Company,
and other key management personnel for 2016 and 2017 are detailed below:
Included in remuneration
$ (A)
% Vested in year
(B)
% Forfeited in year
(C)
Short term incentive bonus
Director
Mr DE Gladstone
Executives
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr K Power
229,502
144,923
62,157
55,325
15,360
76%
82%
76%
76%
100%
60%
60%
60%
60%
60%
A.
B.
C.
Amounts included in remuneration for the 2017 financial year represent the amount accrued in the current year for the short term
incentive bonus achieved in FY17, a deferred component subject to service conditions and the previously deferred component paid
during the period.
The amount vested in the 2017 year represented any STI amounts awarded and either paid in the current period or to be paid
in September 2017.
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 refer to rights over ordinary shares of Ainsworth Game Technology Limited, unless otherwise stated, which are
exercisable on a one-for-one basis under the RST plans.
3838
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 15.4.1 Rights over equity instruments granted as compensation – audited
Details on options over ordinary shares in the Company that were granted as compensation to each key management person
during the reporting period are as follows:
Number of rights
granted during
2017
Grant date
Fair value per
option at grant
date
($)
Exercise price
per right
($)
Expiry
date
Director
Mr DE Gladstone
Executives
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr K Power
61,179
1 March 2017
64,958
1 March 2017
66,969
1 March 2017
135,685
1 March 2017
22,152
1 March 2017
23,521
1 March 2017
24,249
1 March 2017
49,131
1 March 2017
11,561
1 March 2017
12,275
1 March 2017
12,655
1 March 2017
25,640
1 March 2017
10,214
1 March 2017
10,845
1 March 2017
11,181
1 March 2017
22,654
1 March 2017
20,882
1 March 2017
22,173
1 March 2017
22,859
1 March 2017
46,314
1 March 2017
$0.56
$0.49
$0.42
$0.37
$0.56
$0.49
$0.42
$0.37
$0.56
$0.49
$0.42
$0.37
$0.56
$0.49
$0.42
$0.37
$0.56
$0.49
$0.42
$0.37
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
1 March 2022
All rights expire on the earlier of their expiry date or termination of the individual’s employment. The rights are exercisable
over the four years from grant date. In addition to a continuing employment service condition, the ability to exercise 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 31-32. For rights granted in the current year, the earliest exercise date is 1 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 NIL shares (2016: 227,345 shares) were issued under the ESOT plan on the exercise of options
previously granted as compensation. Options under the ASOT plan exercised during 2017 were NIL (2016: 300,764) which were
transferred to the ASOT on behalf of employees from the then Company’s Executive Chairman, Mr LH Ainsworth.
39
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 15. REMUNERATION REPORT – AUDITED (continued)
15.4 Equity instruments – audited (continued)
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 K Power
Instrument
Number
Grant date
% vested
in year
% forfeited
in year (A)
Financial
years in which
grant vests
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
69,471
22 July 2013
263,056 17 March 2015
328,791 01 March 2017
30,854
22 July 2013
95,773 17 March 2015
119,053 01 March 2017
22,685
22 July 2013
52,490 17 March 2015
62,131 01 March 2017
19,947
22 July 2013
46,953 17 March 2015
54,894 01 March 2017
112,228 01 March 2017
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
50%
2017-2018
–%
–%
2018-2019
2018-2021
50%
2017-2018
–%
–%
2018-2019
2018-2021
50%
2017-2018
–%
–%
2018-2019
2018-2021
50%
2017-2018
–%
–%
–%
2018-2019
2018-2021
2018-2021
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 K Power
A.
No rights were exercised during the year.
Granted in year
$
Amount paid
on exercise
$
Value of rights
exercised
in year
$(A)
144,420
52,293
27,291
24,112
49,296
–
–
–
–
–
–
–
–
–
–
Forfeited
in year
$
200,531
89,063
65,481
57,577
–
4040
Directors’ Report (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH 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 2016
Granted as
compensation
Exercised
Other
Changes*
Held at
30 June 2017
Vested during
the year
Vested and
exercisable at
30 June 2017
Rights
Mr DE Gladstone(1)
Mr ML Ludski
Mr V Bruzzese
Mr I Cooper
Mr K Power
400,592
156,857
97,401
86,443
–
328,791
119,053
62,131
54,894
112,228
–
–
–
–
–
(68,065)
661,318
(30,230)
245,680
(22,226)
137,306
(19,543)
–
121,794
112,228
–
–
–
–
–
–
–
–
–
–
* Other changes represent rights that were forfeited during the year.
(1)
Included in performance rights above for DE Gladstone are 328,791 rights conditional on shareholder approval at the 2017 Annual
General Meeting (AGM) on 28 November 2017.
Rights held by key management personnel that are vested and exercisable at 30 June 2017 were NIL (2016: 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(1)
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Mr DE Gladstone
Mr M Ludski
Mr V Bruzzese
Mr I Cooper
Held at
1 July 2016
Purchases
Sales
Dividend
Re-Investment
Plan (DRP)
allotment
Held at
30 June 2017
209,124,124
305,108
–
3,045,872
212,475,104
300,000
26,600
127,838
51,136
10,000
10,739
6,137
–
4,000
–
4,400
–
–
–
–
–
–
–
–
(10,000)
–
7,785
–
3,318
1,437
–
20
160
307,785
30,600
131,156
56,973
10,000
759
6,297
(1)
Included in shareholding above of Mr LH Ainsworth are 172,100,823 ordinary shares that are subject to a proposed sale to Novomatic
AG as approved at a General Meeting of Shareholders held on 27 June 2016. The completion of this share sale transaction requires
necessary gaming regulatory approvals as detailed in the Notice of Meeting dated 4 May 2016.
No Shares were granted to key management personnel during the reporting period as compensation in 2017 or 2016.
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:
GJ Campbell
Chairman
Dated at Sydney this 29th day of August 2017
41
Directors’ Report (continued)for the year ended 30 June 2017ANNUAL REPORT 2017
In thousands of AUD
Assets
Cash and cash equivalents
Receivables and other assets
Current tax assets
Inventories
Prepayments
Total current assets
Receivables and other assets
Deferred tax assets
Property, plant and equipment
Intangible assets
Equity-accounted investee
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
Note
2017
2016
18
17
16
17
15
12
13
14
24
21
22
25
21
22
15
21,094
128,646
3,168
74,732
9,360
26,433
118,800
–
55,717
7,112
237,000
208,062
39,877
4,727
109,560
68,902
4,683
37,903
1,569
109,493
74,124
4,831
227,749
227,920
464,749
435,982
32,993
30,298
178
8,367
7,335
938
49,811
65,512
676
4,114
70,302
120,113
344,636
118
6,950
9,527
813
47,706
67,777
679
3,933
72,389
120,095
315,887
200,245
152,867
193,754
133,610
(8,476)
(11,477)
344,636
315,887
The notes on pages 46 to 85 are an integral part of these consolidated financial statements.
4242
Consolidated Statement of Financial Positionas at 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH 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 (loss)/income
Share of profit of equity accounted investee
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)
Note
7
8
11
11
15
2017
2016
282,080
285,477
(112,065)
170,015
719
(52,158)
(34,161)
(26,187)
(3,347)
54,881
3,657
(11,738)
(8,081)
153
46,953
(9,023)
37,930
(1,417)
(1,417)
36,513
37,930
36,513
(113,779)
171,698
887
(52,028)
(28,580)
(19,781)
(4,413)
67,783
7,679
(689)
6,990
365
75,138
(19,435)
55,703
951
951
56,654
55,703
56,654
20
20
$0.12
$0.12
$0.17
$0.17
The notes on pages 46 to 85 are an integral part of these consolidated financial statements.
43
Consolidated Statement of Profit or Loss and Other Comprehensive Incomefor the year ended 30 June 2017ANNUAL REPORT 2017 Attributable to owners of the Company
Issued
capital
Equity
compensation
reserve
Fair
value
reserve
Translation
reserve
Profits
reserve
Accumulated
losses
Total
equity
182,360
3,960 9,684
5,829 96,912
(18,258) 280,487
In thousands of AUD
Balance at 1 July 2015
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
–
–
–
–
–
52
–
Issue of ordinary shares under the Dividend
Reinvestment Plan
11,342
Share-based payment transactions
Share based payment adjustment on
non-vesting options
Total transactions with owners
Balance at 30 June 2016
–
–
11,394
193,754
–
–
–
–
–
–
–
–
(403)
(141)
(544)
–
–
–
–
–
–
–
–
–
–
–
–
–
55,703
55,703
– 49,063
(49,063)
–
951
951
–
–
–
–
951
951
951 49,063
6,640
56,654
–
–
– (32,245)
–
–
–
–
–
–
– (32,245)
–
–
–
–
52
(32,245)
11,342
(403)
141
141
–
(21,254)
3,416
9,684
6,780 113,730
(11,477) 315,887
Balance at 1 July 2016
193,754
3,416
9,684
6,780 113,730
(11,477) 315,887
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 under the Dividend
Reinvestment Plan
6,491
Dividends to owners of the Company
Share-based payment transactions
Share based payment adjustment on
non-vesting options
–
–
–
Total transactions with owners
6,491
–
–
–
–
–
–
–
2,131
–
2,131
–
–
–
–
–
–
–
–
–
–
–
–
37,930
37,930
– 34,929
(34,929)
–
(1,417)
(1,417)
–
–
–
–
(1,417)
(1,417)
(1,417) 34,929
3,001
36,513
–
–
– (16,386)
–
–
–
–
– (16,386)
–
–
–
–
–
6,491
(16,386)
2,131
–
(7,764)
Balance at 30 June 2017
200,245
5,547
9,684
5,363 132,273
(8,476) 344,636
The notes on pages 46 to 85 are an integral part of these consolidated financial statements.
4444
Consolidated Statement of Changes in Equityfor the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY for the year ended 30 June 2017
In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Income taxes paid
Borrowing costs paid
Net cash from operating activities
Cash flows from/(used in) from investing activities
Proceeds from sale of property, plant and equipment
Interest received
Acquisitions of property, plant and equipment
Payment for business acquisition
Acquisitions of equity-accounted investee
Development expenditure
Net cash from/(used in) investing activities
Cash flows (used in) / from financing activities
Proceeds from issue of ordinary shares
Proceeds from borrowings
Repayment of borrowings
Proceeds from finance lease
Payment of finance lease liabilities
Dividend paid
Net cash (used in)/from financing activities
Net decrease 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
Note
2017
2016
18(a)
12
13
269,433
300,713
(247,434)
(223,888)
21,999
(16,053)
(708)
5,238
6,297
3,657
(5,351)
–
–
(4,534)
76,825
(23,283)
(689)
52,853
56
2,974
(49,123)
(54,224)
(2,045)
(6,204)
69
(108,566)
–
–
–
136
(118)
(9,895)
(9,877)
(4,570)
26,433
(769)
52
68,824
(7,617)
–
(115)
(20,903)
40,241
(15,472)
41,300
605
21,094
26,433
The notes on pages 46 to 85 are an integral part of these consolidated financial statements.
45
Consolidated Statement of Cash FlowsANNUAL REPORT 2017
1. Reporting entity
2. Basis of preparation
3. 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
47
47
47
47
48
48
49
50
50
50
50
51
52
52
52
52
53
53
53
53
9. Expenses by nature
10. Employee benefit expenses
11. Finance income and finance costs
12. Property, plant and equipment
13. Intangible assets
14. Equity-accounted investee
15. Taxes
16. Inventories
17. Receivables and other assets
18. Cash and cash equivalents
59
60
60
61
62
64
65
66
67
68
18a. Reconciliation of cash flows from operating activities 68
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
(r) Change in new standards and interpretations
28. Capital and other commitments
not yet adopted
4. Determination of fair values
5. Financial risk management
6. Operating segments
7. Revenue
8. Other income
53
54
55
56
59
59
29. Related parties
30. Group entities
31. Subsequent events
32. Auditor’s remuneration
33. Parent entity disclosures
4646
69
70
71
72
72
76
76
76
81
81
82
84
84
85
85
Index to Notes to the Financial Statements and Significant Accounting Policiesfor the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY Notes to the
Financial Statements
1. REPORTING ENTITY
Ainsworth Game Technology Limited (the ‘Company’)
is a company domiciled in Australia. The address of the
Company’s registered office is 10 Holker Street, Newington,
NSW, 2127. The consolidated financial statements of the
Company as at and for the year ended 30 June 2017
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 29 August 2017.
(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.
in which
the primary economic environment
(c) Functional and presentation currency
The financial information of each of the Group’s entities
and foreign branches is measured using the currency
of
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 Corporations
(Rounding
Instrument
in Financial/Directors Reports)
2016/191 and in accordance with that Instrument, 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.
The Group is subject to income taxes in Australia and
jurisdictions where it has foreign operations. Significant
in determining the worldwide
judgement
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 about assumptions and estimation 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 13 – Intangible assets and
Note 26 – Financial instruments (trade and other receivables).
is required
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by
Group entities.
(a) Basis of consolidation
(i) Business combination
The Group accounts for business combinations using the
acquisition method when control is transferred to the Group
(see (a)(ii)). The consideration transferred in the acquisition
is generally measured at fair value as are the identifiable
net assets acquired. Any goodwill that arises is tested
annually for impairment (refer Note 3(h)). Any gain on a
bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if
related to the issue of debt of equity securities.
The consideration transferred does not include amounts
related to the settlement of pre-existing relationships. Such
amounts are generally recognised in profit or loss.
47
for the year ended 30 June 2017ANNUAL REPORT 2017 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
(ii) 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.
(iii) Interest in equity-accounted investee
A joint venture is an arrangement in which the Group
has joint control, and whereby the Group has rights to
the net assets of the arrangement, rather than rights to
its assets and obligations for its liabilities. Interest in a
joint venture accounted for using the equity method. It is
recognised initially at cost, which includes transactions
costs. Subsequently to initial recognition, the consolidated
financial statements include the Group’s share of the profit
or loss and Other Comprehensive Income (“OCI”) of the
equity-investee, until the date on which significant influence
of joint control ceases.
(iv) 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.
(v) Acquisitions prior to 1 July 2004
As part of its transition to AASBs, the Group elected to
restate only those business combinations that occurred on
or after 1 July 2004. In respect of acquisitions prior to 1 July
2004, goodwill represents the amount recognised under the
Group’s previous accounting framework, Australian GAAP.
(vi) 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.
4848
(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.
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.
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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.
(ii) Non-derivative financial liabilities
Non-derivative financial liabilities comprise loans and
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.
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.
terms and conditions of borrowings are
Where
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
39 – 40 years
10 years
2.5 – 20 years
The useful lives of capitalised machines leased under rental
or participation agreements are included in the plant and
equipment useful lives.
Depreciation methods, useful lives and residual values
are reviewed at each financial year-end and adjusted if
appropriate.
49
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
(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 3(a)(v) and (vi).
Goodwill is subsequently carried at cost less accumulated
impairment losses (refer Note 3(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.
(iii) Other intangible assets
Other intangible assets, which include intellectual property,
technology and software assets, customer relationships,
tradenames and trademarks, and service contracts, that
are acquired by the Group through business combinations,
which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment
losses. Refer Note 3(a)(i) for details on the determination of
cost of these acquired assets.
(iv) Subsequent expenditure
Subsequent expenditure
it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure,
including expenditure on internally generated goodwill and
brands, is recognised in profit or loss when incurred.
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
– intellectual property
– technology and software
– customer relationships and contracts
acquired
– tradenames and trademarks
– service contracts
4-5 years
3-10 years
5-10 years
3-10 years
3 years
3 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.
in acquiring the
(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
inventories, production or
incurred
conversion costs and other costs incurred in bringing
them to their existing location and condition. In the case
of manufactured inventories and work in progress, cost
includes an appropriate share of production overheads
based on normal operating capacity. Net realisable value
is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and
selling expenses.
(h) Impairment
(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.
5050
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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.
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
or CGU. 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 asset (the “CGU”).
The goodwill acquired in a business combination for the
purpose of impairment testing, is allocated to CGU that is
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 on a reasonable
and consistent basis and tested for impairment as part of the
testing of the CGU 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 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.
51
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
(iv) Short term benefits
Liabilities for employee benefits for wages, salaries and
leave represent present obligations resulting
annual
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. Where
such adjustments result in a reversal of previous expenses
these are recognised as a credit to profit or loss in the
period that it is assessed that certain vesting conditions will
not be met.
(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.
5252
(l) Revenue
(a) Sale of goods and related licences
(i) Machine and part sales
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.
Multi element arrangements
(ii)
When gaming machines, games, conversions and other
incidental items are licensed to customers for extended
periods, revenue is recognised on delivery for gaming
machines and games and
including
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
(iii) Licence income
Licence income, including those received from online
business, is recognised when all obligations in accordance
with the agreement have been met which may be at the
time of sale or over the life of the agreement.
(b) Services
Revenue from services rendered is recognised in profit
or loss when the services are performed.
(c) 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.
(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.
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY (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.
Deferred tax
in respect of temporary
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.
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)
Change in new standards and interpretations not
yet adopted
Certain new accounting standards and interpretations have
been publishes that are not mandatory for 30 June 2017
reporting periods. Those which may have a significant
impact 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.
53
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
The new standard results in changes to accounting policies
for financial assets and liabilities covering classification
and measurement, hedge accounting and impairment. The
Group has assessed these changes and determined that
based on the current financial assets and liabilities held
at reporting date, the Group will need to reconsider its
accounting policies surrounding impairment recognition.
The new impairment requirements for financial assets are
based on a forward looking ‘expected loss model’ (rather
than the current ‘incurred loss model’).
The Group does not expect a significant effect on the
financial statements resulting from the change of this
standard however the Group is in the process of evaluating
the impact of the new financial instrument standard.
The changes in the Group’s accounting policies from
the adoption of AASB 9 will be applied from 1 July 2018
onwards.
including
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for
determining whether, how much and when revenue is
recognised,
in respect of multiple element
arrangements. 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 core principle of AASB 15 is that it requires identification
of discrete performance obligations within a transaction
and associated
these
obligations. Revenue is recognised upon satisfaction of
these performance obligations, which occur when control
of goods or services is transferred, rather than on transfer
of risks and rewards. Revenue received for a contract that
includes a variable amount is subject to revised conditions
for recognition, whereby it must be highly probable that
no significant reversal of the variable component may
occur when the uncertainties around its measurement are
removed.
The Group has commenced the process of evaluating the
impact of the new standard on existing revenue streams
and will first apply AASB 15 in the financial year beginning
1 July 2018.
transaction price allocation
to
AASB 16 Leases
AASB 16 replaces the current AASB 17 Leases standard.
AASB 16 removes the classification of leases as either
operating leases or finance leases – for the lessee -
effectively treating all leases as finance leases. Most leases
will be capitalised on the balance sheet by recognising a
‘right-of-use’ asset and a lease liability for the present value
obligation. This will result in an increase in the recognised
assets and liabilities in the statement of financial position as
well as a change in expense recognition, with interest and
deprecation replacing operating lease expense.
5454
is effective
Lessor accounting remains similar to current practice, i.e.
lessors continue to classify leases as finance and operating
leases.
AASB 16
from annual reporting periods
beginning on or after 1 January 2019, with early adoption
permitted for entities that also adopt AASB 15.
This standard will primarily affect the accounting for the
Group’s operating lease. As at 30 June 2017, the Group
has $11,447 thousand of non-cancellable operating lease
commitments, predominantly relating to property lease.
The Group is considering the available options to account
for this transition but the Group expects an increase in
reported earnings before interest, tax, depreciation and
amortisation (EBITDA) and increase in lease assets and
liabilities recognition. This will however be dependent on
the lease arrangements in place when the new standard
is effective. The Group has commenced the process of
evaluating the impact of the new lease standard.
to standards
No other new standards, amendments
and interpretations are expected to affect the Group’s
consolidated financial statements.
4. DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures
require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes
based on the following methods. Where applicable, further
information about the assumptions made in determining
fair values is disclosed in the notes specific to that asset or
liability.
Intangible assets
(i)
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.
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY (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
dividends, and the risk-free
(based on
government bonds). Service and non-market performance
conditions attached to the transactions are not taken into
account in determining fair value.
interest rate
5. 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.
from
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
is disclosed in Note 26.
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
the Board.
requiring approval
amount without
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.
55
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 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 equity in the Company’s
ordinary shares. This is expected to be an ongoing process
establishing long term incentive plans to further align
shareholders and employees interests.
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.
to
6. OPERATING SEGMENTS
the Group’s Chief Executive
Information reported
Officer (CEO) for the purposes of resource allocation and
assessment of performance is focused on the geographical
location of customers of gaming machines. The primary
geographical location of customers and therefore the
Group’s reportable segments under AASB 8 are outlined in
the table on the following page.
The NSW and North and South America segments include
the aggregation of the Group’s other operating segments
that are not separately reportable. Included in the NSW
and North and South America segments are the results of
the operating segments related to the servicing of gaming
machines in those geographical regions. These operating
segments are considered
to have similar economic
characteristics as the nature of the products and services is
complementary and the nature of the regulatory environment
and type of customer are consistent. Performance of each
reportable segment is based on segment revenue and
segment result as included in internal management reports
that are reviewed by the Group’s CEO. Segment result
only takes into account directly attributable costs, which
management believes is the most relevant approach in
evaluating segment performance.
The Group has a large and dispersed customer base. The
Group’s largest customer accounts for only 3.85% of the
total reportable revenue.
5. FINANCIAL RISK MANAGEMENT (continued)
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 2017 no guarantees
were outstanding (2016: 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) and the US dollar (USD). The
currency in which these transactions primarily denominated
is in USD for the Australian business operations. 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.
5656
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 9
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C
AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
7. REVENUE
In thousands of AUD
Sale of goods
Rendering of services
Rental and participation revenue
8. OTHER INCOME
In thousands of AUD
Royalties income
Rental income from lease of machinery
Other income
9. 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
2017
2016
232,936
243,464
7,890
41,254
7,670
34,343
282,080
285,477
2017
584
63
72
719
2016
798
76
13
887
2017
2016
103,571
64,255
25,831
290
9,905
4,633
2,276
3,347
13,810
227,918
101,342
54,540
23,000
1,584
6,919
3,735
3,217
2,170
22,074
218,581
16
10
12,13
27
59
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 10. 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
11. FINANCE INCOME AND FINANCE COSTS
In thousands of AUD
Interest income on trade receivables
Interest income on bank deposits
Net foreign exchange gain
Finance income
Interest expense on financial liabilities
Net foreign exchange loss
Finance costs
Net finance (costs)/income recognised in profit or loss
Note
22
22
2017
55,441
2,822
3,547
8
168
138
2,131
2016
50,455
–
3,350
752
351
35
(403)
64,255
54,540
2017
3,578
79
–
3,657
(1,207)
(10,531)
(11,738)
(8,081)
2016
2,785
189
4,705
7,679
(689)
–
(689)
6,990
6060
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 12. PROPERTY, PLANT AND EQUIPMENT
In thousands of AUD
Cost
Balance at 1 July 2015
Re-classification of inventory to plant and equipment
Additions
Additions through business combinations
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2016
Balance at 1 July 2016
Re-classification of inventory to plant and equipment
Re-classification of PPE category
Additions
Additions through business combinations
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2017
Depreciation and impairment losses
Balance at 1 July 2015
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2016
Balance at 1 July 2016
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2017
Carrying amounts
At 1 July 2015
At 30 June 2016
At 30 June 2017
Note
Land and
buildings
Plant and
equipment
Leasehold
improvements
Total
17,888
63,820
7,195
88,903
–
41,385
–
–
612
59,885
59,885
–
(2,858)
303
–
(193)
(2,071)
55,066
14
663
–
1
678
678
1,765
–
(57)
18,381
7,669
8,485
(14,277)
634
84,712
84,712
29,799
(873)
4,806
–
(15,674)
(1,756)
101,014
31,679
13,904
(6,693)
(327)
38,563
38,563
15,394
(6,591)
(1,434)
2,386
45,932
17,874
59,207
52,680
32,141
46,149
55,082
–
69
–
(2,195)
93
5,162
5,162
–
3,731
242
–
(6,036)
(8)
3,091
1,931
811
(1,849)
132
1,025
1,025
309
(35)
(6)
1,293
5,264
4,137
1,798
18,381
49,123
8,485
(16,472)
1,339
149,759
149,759
29,799
–
5,351
–
(21,903)
(3,835)
159,171
33,624
15,378
(8,542)
(194)
40,266
40,266
17,468
(6,626)
(1,497)
49,611
55,279
109,493
109,560
Disposals in the table above includes sale of gaming machines previously under participation or rental agreements of $8,901
thousand (2016: $7,078 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. At 30 June 2017, the net carrying amount of leased plant and
equipment was $96 thousand (2016: $314 thousand).
61
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 l
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A
AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
Impairment testing for development costs
The carrying amount of the Group’s development costs amounts to $28,063 thousand (2016:$27,089 thousand), comprising of
$24,377 thousand in development costs relating to product development and $3,686 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 determination of CGUs for the purposes of testing 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.
Development costs include development costs relating to products and online 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, consisting of intangible assets and property, plant and equipment, are allocated to the
individual CGUs to which they relate.
The four main CGUs or Group of CGUs are: Development, Australia and other (comprised of Asia, New Zealand, South Africa
and Europe individual CGUs), North America and South America.
The recoverable amount of each CGU was estimated based on its value in use. Value in use for each individual CGU was
determined by discounting the future cash flows generated from continuing use of the product development costs over a five
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:
CGUs
Development
Australia and other
North America
South America
Average
annual
revenue
growth rate(2)
4.8%
2.4%
7.8%
4.6%
Discount
rate(1)
14.4%
14.5%
17.2%
23.5%
(1) Discount rates are pre-tax discount rates.
(2)
The average annual revenue growth rate for 5 years (2018 to 2022) presented above is calculated based on historical experience,
actual operating results and estimated financial results based on planned strategic initiatives.
The allocation of goodwill, indefinite useful life intangible assets and other assets to the Groups of CGUs are as follows:
CGUs
Development
Australia and other
North America
South America
Goodwill/
indefinite
useful life
intangible
assets
‘$000
Capitalised
development
costs
‘$000
–
28,063
2,436
21,385
–
–
–
–
Other
assets
‘$000
Recoverable
amount
‘$000
361
9,824
100,175
16,219
105,244
28,497
177,600
36,073
63
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 13. INTANGIBLE ASSETS (continued)
Impairment testing for goodwill and indefinite life intangibles
Goodwill arising from the Class II gaming business and Nevada license indefinite intangibles were allocated to the North
America CGU. The recoverable amount of this CGU was estimated based on its value in use, determined by discounting future
cash flows to be generated from the continuing use of the CGU.
The key assumptions used in estimation of value in use were as follows:
– The discount rate of 17.2% used is a pre-tax rate;
– Five years of cash flows were included in the discounted cash flow model. A long-term growth rate into perpetuity of 1.8% has
been determined based on growth prospects of this CGU industry and the overall economy; and
– The projected average revenue growth rate over the five years is 7.8% is based on past experience, adjusted for anticipated
revenue growth in the Class II markets in which this CGU operates.
As the recoverable amount of the CGU was estimated to be higher than the carrying amount of the CGU’s assets, no impairment
was considered necessary.
Goodwill arising from service business in Australia was allocated to the Australia and other CGU. The recoverable amount
of this CGU was estimated based on its value in use, determined by discounting future cash flows to be generated from the
continuing use of the CGU.
The key assumptions used in estimation of value in use were as follows:
– The discount rate of 14.5% used is a pre-tax rate;
– Five years of cash flows were included in the discounted cash flow model. A long-term growth rate into perpetuity of 1.8% has
been determined based on growth prospects of this CGU industry and the overall economy; and
– The projected average revenue growth rate over the five years is 2.4% based on past experience, adjusted for anticipated
revenue growth.
As the recoverable amount of the CGU was estimated to be higher than the carrying amount of the CGU’s assets, no impairment
was considered necessary.
Impact of possible changes in key assumptions
Based on the net recoverable amount for each CGU illustrated above, Management does not believe a reasonable change in
key assumptions will result in a material impairment charge.
14. EQUITY-ACCOUNTED INVESTEE
616 Digital LLC (“616”) is a joint venture in which the Group has 40% ownership interest.
616 is an online social platform provider established in Delaware, USA and operates from Romania and Australia. This
arrangement allows both parties to jointly progress development and marketing of social gaming offering on both desktop
and mobile, leveraging the extensive game content library established for land based markets. An agreement has also been
established where the Group has the ability to purchase the remaining 60% interest in 616 at a future date. The investment in
equity accounted investee for the Group comprise the following:
In thousands of AUD
616 Digital LLC
Ownership
30-Jun-17
Ownership
30-Jun-16
40%
40%
Carrying
amount
30-Jun-17
4,683
Carrying
amount
30-Jun-16
4,831
The Group’s share of profit of equity accounted investee is $153 thousand (2016: $365 thousand). During the current year, the
Group did not receive dividends from its investments in equity accounted investee.
6464
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY Summary financial information for the equity accounted investee, not adjusted for the percentage ownership held by the Group,
is as follows:
In thousands of AUD
Non-current assets
Current assets (including cash and cash equivalents)
Current financial liabilities (excluding trade and other payables and provisions)
Income
Expenses
Elimination of upstream purchases
Profit
15. TAXES
Current tax expense
In thousands of AUD
Tax recognised in profit or loss
Current tax expense
Current year
Prior year adjustments
Recognition of R&D tax credits
Deferred tax benefit
Timing differences movement
Total income tax expense
Reconciliation of effective tax rate
In thousands of AUD
Profit before income tax
2017
2
1,717
–
2,271
(2,222)
334
383
2016
1
1,865
13
2,575
(2,280)
601
896
2017
2016
(24,312)
(29,019)
8,325
8,669
(7,318)
(1,705)
(1,705)
(9,023)
2017
2017
2016
46,953
(594)
9,091
(20,522)
1,087
1,087
(19,435)
2016
75,138
Income tax expense using the Company’s domestic tax rate
(30.00%)
(14,086)
(30.00%)
(22,541)
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
(5.03%)
(20.28%)
18.46%
0.00%
17.73%
(0.11%)
(19.22%)
(2,360)
(9,519)
8,669
–
8,325
(0.87%)
(7.75%)
12.10%
0.00%
(0.80%)
(656)
(5,824)
9,091
–
(592)
(52)
1.45%
(9,023)
(25.87%)
1,088
(19,435)
65
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 15. TAXES (continued)
Recognised deferred tax assets/liabilities
In thousands of AUD
Employee benefits
Provisions
Unrealised foreign exchange loss/(gain)
Other items
Tax loss carry-forwards
Net tax assets/liabilities
2017
2016
2017
2016
Deferred tax assets
Deferred tax liabilities
2,204
1,887
619
(127)
144
4,727
374
1,789
–
(738)
144
1,569
307
–
–
(4,535)
114
(4,114)
2,205
459
(6,139)
(458)
–
(3,933)
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 $4,727 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
2017
2016
37,859
31,699
5,174
74,732
13,958
34,966
6,793
55,717
During the year ended 30 June 2017 raw materials, consumables and changes in finished goods and work in progress
recognised as cost of sales amounted to $103,571 thousand (2016: $101,342 thousand).
A re-classification from inventory to property, plant and equipment of $29,799 thousand (2016: $18,381 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 2017, the write down of inventories to net realisable value amounted to $1,174 thousand (2016:
$30 thousand). The write down is included in cost of sales.
6666
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 17. RECEIVABLES AND OTHER ASSETS
In thousands of AUD
Current
Trade receivables
Less impairment losses
Other assets
Amount receivable from director/shareholder controlled entities
Non-current
Trade receivables
Note
2017
2016
26
125,095
122,054
(3,017)
122,078
3
6,565
(3,349)
118,705
1
94
128,646
118,800
39,877
39,877
37,903
37,903
Information about the Group’s exposure to credit and market risks and impairment losses for trade and other receivables is
included in Note 26.
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
2017
2016
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
4,730
5,659
10,389
400
238
638
4,330
5,421
9,751
4,330
5,421
9,751
3,555
4,105
7,660
313
350
663
3,242
3,755
6,997
3,242
3,755
6,997
67
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 18. CASH AND CASH EQUIVALENTS
In thousands of AUD
Bank balances
Cash and cash equivalents in the statement of cash flows
2017
2016
21,094
21,094
26,433
26,433
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 and provision for obsolescence
Amortisation of intangible assets
Net finance cost/(income)
(Gain)/loss on sale of property, plant and equipment
Unrealised (gain)/loss on 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
Net transfers between inventory and leased assets(i)
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
2017
2016
37,930
55,703
12
13
11
10
15
17,468
4,521
8,363
8,081
(26)
(241)
2,131
9,023
87,250
(21,101)
(22,315)
(20,793)
(6,521)
4,489
990
21,999
(708)
15,378
2,094
7,622
(6,990)
891
997
(403)
19,435
94,727
(16,249)
429
(10,895)
191
5,015
3,607
76,825
(689)
(16,053)
(23,283)
5,238
52,853
(i)
The Group has re-presented as a separate line item cash flows arising from transfers of gaming machines between inventory and
leased assets which are considered to be a part of the Group’s cash flows from operating activities.
6868
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 19. CAPITAL AND RESERVES
(a) Share capital
In thousands of shares
In issue at 1 July
Exercise of share options
Shares issued under dividend reinvestment plan
In issue at 30 June – fully paid
Ordinary shares
2017
2016
327,716
322,339
–
3,370
227
5,150
331,086
327,716
(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, 3,370 thousand ordinary shares were issued as a result of shareholders participation in the dividend
reinvestment plan.
(b) Nature and purpose of reserve
(i) Equity compensation reserve
The equity compensation reserve represents the expensed 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
5.0 cents per qualifying ordinary share (2016: 10.0 cents)
2017
2016
16,386
32,245
After the reporting date, no dividends were proposed by the board of directors (2016: $16,386 thousand). The dividends have
not been recognised as liabilities and there are no tax consequences.
69
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 20. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 30 June 2017 was based on the profit attributable to ordinary shareholders
of $37,930 thousand (2016: $55,703 thousand) and a weighted average number of ordinary shares outstanding during the
financial year ended 30 June 2017 of 329,673 thousand (2016: 323,299 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
2017
2016
37,930
37,930
55,703
55,703
19
327,716
322,339
1,957
960
329,673
323,299
$0.12
$0.17
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2017 was based on the profit attributable to ordinary shareholders of
$40,061 thousand (2016: $55,300 thousand) and a weighted average number of ordinary shares outstanding after adjustment
for the effects of all dilutive potential ordinary shares of 333,735 thousand (2016: 326,745 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
2017
2016
37,930
2,131
40,061
55,703
(403)
55,300
329,673
323,299
4,062
3,446
333,735
326,745
$0.12
$0.17
7070
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH 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
Secured bank loan
2017
2016
178
11
65,501
65,512
118
53
67,724
67,777
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
2017
2016
Finance lease liabilities
AUD 0.90-8.39%
Secured bank loan
USD LIBOR+0.65%
2019
2018
194
65,501
189
65,501
180
67,724
171
67,724
Total interest-bearing
liabilities
65,695
65,690
67,904
67,895
The bank loan is secured by fixed and floating charges over identified assets of the Company and certain of its Australia and US
wholly owned subsidiaries, and imposes certain customary financial covenants measured on a six-monthly basis.
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
2017
183
11
194
Present value
of minimum
lease
payments
2017
178
11
189
Interest
2017
5
–
5
Future
minimum
lease
payments
2016
125
55
180
Present value
of minimum
lease
payments
2016
118
53
171
Interest
2016
7
2
9
The Group leases plant and equipment under finance leases with terms expiring from one to two 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.
71
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 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
2017
2016
464
1,285
3,769
2,849
8,367
676
676
380
131
3,761
2,678
6,950
679
679
23. SHARE-BASED PAYMENTS
(a) Description of share-based payment arrangements
(i) Performance rights programmes (equity-settled)
On 22 July 2013 and 17 March 2015, employee incentive plans were established whereby performance rights were granted
to all eligible Group employees under the Rights Share Trust (RST). On 1 March 2017, a further grant 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 rights are to be settled by the
physical delivery of shares.
Grant date/employee entitled
Rights grant to key management at 22 July 2013
Rights grant to senior and other employees at
22 July 2013
Number of
instruments
outstanding
142,957
420,377
Rights grant to key management at 17 March 2015
458,272
Rights grant to senior and other employees at
17 March 2015
1,593,857
Rights grant to key management at 1 March 2017
677,097
Rights grant to senior and other employees at
1 March 2017
Total rights RST
3,686,701
6,979,261
Vesting conditions
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
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
7272
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY To be eligible to participate in the RST the employee was selected by the directors and reviewed by the remuneration and
nomination committee. The RST provide for employees to receive shares for no consideration. Each right is convertible to one
ordinary share. Right holders have no voting or dividend rights. On conversion from right to ordinary shares, the issued shares
will have full voting and dividend rights. The ability to exercise the right is conditional on the continuing employment of the
participating employee.
All vesting conditions of the share performance rights issued under the RST are detailed below.
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.
The TSR and EPS targets for performance rights granted on 22 July 2013 and 17 March 2015 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.
73
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 23. SHARE-BASED PAYMENTS (continued)
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%
The vesting conditions of the performance rights issued on 1 March 2017 under the RST are as follows:
Achievement of the performance hurdle is determined by a 15% compound increase on the share price of $1.86, being the
Volume Weighted Average Price (VWAP) for 90 days ending 28/02/2017.
– Tranche 1 - 20% will vest if the VWAP for 20 days preceding 01/03/2018 is equal to or greater than $2.14.
– Tranche 2 - 20% will vest if the VWAP for 20 days preceding 01/03/2019 is equal to or greater than $2.46.
– Tranche 3 - 20% will vest if the VWAP for 20 days preceding 01/03/2020 is equal to or greater than $2.83.
– Tranche 4 - 40% will vest if the VWAP for 20 days preceding 01/03/2021 is equal to or greater than $3.25.
(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
2017
Number
of options
2017
Weighted
average
exercise price
2016
Number
of options
2016
–
–
–
–
–
–
–
$0.225
–
–
$0.225
–
–
–
–
–
–
–
–
227
–
–
(227)
–
–
–
The weighted-average share price at the dates of exercise for share options exercised in 2017 was $nil (2016: $2.35).
ASOT plan
The share options granted under the ASOT to Australian employees on 1 March 2011 totalled 9,899,182. There were no share
options outstanding during the year, as the plan has expired. The last share options (300,764) were exercised in 2016 with a
weighted average share price at the dates of exercise of $2.34.
RST plan
The rights granted under the RST to all eligible Group employees totalled 8,454,014. During the year 876,416 were cancelled
with 6,979,261 rights outstanding as at 30 June 2017. No rights were exercisable as at 30 June 2017.
(c) Measurement of fair values
(i) Performance rights programmes (equity-settled)
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.
7474
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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:
Fair value at grant date
– Vesting date 17 March 2018
– Vesting date 17 March 2019
RST Plan
$3.46
–
40.3%
5 years
2.1%
2.6%
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)
The fair value of the performance rights granted on 1 March 2017 under the RST were as follows:
Fair value at grant date
– Vesting date 1 March 2018
– Vesting date 1 March 2019
– Vesting date 1 March 2020
– Vesting date 1 March 2021
RST Plan
$2.60
–
24.1%
5 years
3.9%
2.5%
Fair Value per
option
$0.56
$0.49
$0.42
$0.37
75
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 23. SHARE-BASED PAYMENTS (continued)
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)
(d) Expense recognised in profit or loss
For details on the related employee benefit expenses, see Note 10.
24. TRADE AND OTHER PAYABLES
In thousands of AUD
Current
Trade payables
RST Plan
$1.77
–
36.90%
5 years
5.65%
2.31%
Note
2017
2016
15,017
17,834
142
11,496
18,649
153
32,993
30,298
Other payables and accrued expenses
Amount payable to director/shareholder controlled entities
29
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 26.
25. PROVISIONS
In thousands of AUD
Balance at 1 July 2016
Provisions made during the year
Provisions used during the year
Balance at 30 June 2017
Service/
warranties
Legal
Total
746
828
(746)
828
67
110
(67)
110
813
938
(813)
938
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
7676
Note
17
Carrying amount
2017
2016
168,520
168,520
156,608
156,608
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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
2017
26,306
132,841
7,241
2,160
2,989
2016
27,923
124,199
832
2,059
4,944
171,537
159,957
The Group’s concentration of credit risk arising from its two most significant receivable amounts is represented by a customer
in North America and a customer in Latin America. They account for $8,751 thousand (2016: $14,571 thousand) and $10,414
thousand (2016: $7,781 thousand) of the trade receivables carrying amount at 30 June 2017 respectively.
Cash and cash equivalents
The Group held cash of $21,094 thousand at 30 June 2017 (2016: $26,433 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
In thousands of AUD
Balance at 1 July
Impairment loss written off
Provision during the year
Recovered
Effect of exchange rate fluctuations
Balance at 30 June
Gross
2017
Impairment
2017
Gross
2016
Impairment
2016
115,811
36,841
10,574
3,186
5,125
171,537
51
–
–
169
2,797
3,017
103,832
26,456
22,671
980
6,018
159,957
–
–
209
8
3,132
3,349
2016
1,762
(566)
2,094
–
59
2017
3,349
(3,569)
3,347
(37)
(73)
3,017
3,349
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
The provision of $3,347 thousand (2016: $2,094 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.
At 30 June 2017, an impairment loss of $1,499 thousand was brought to account in relation to an amount receivable from a Latin
American customer that has demonstrated poor payment history.
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.
77
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 26. FINANCIAL INSTRUMENTS (continued)
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements:
30 June 2017
In thousands of AUD
Non-derivative financial liabilities
Finance lease liabilities
Secured bank loan
Trade and other payables
Carrying
amount
189
65,501
32,993
98,683
Contractual
cash flows 6 mths or less
6-12 mths
1-2 years
2-5 years
(194)
(65,501)
(32,993)
(98,688)
(166)
–
(32,993)
(33,159)
(17)
–
–
(17)
(11)
(65,501)
–
(65,512)
–
–
–
–
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different
amounts.
30 June 2016
In thousands of AUD
Non-derivative financial liabilities
Finance lease liabilities
Secured bank loan
Trade and other payables
Carrying
amount
171
67,724
30,298
98,193
Contractual
cash flows 6 mths or less
6-12 mths
1-2 years
2-5 years
(180)
(67,724)
(30,298)
(98,202)
(94)
–
(30,298)
(30,392)
(31)
–
–
(31)
(55)
–
–
–
(67,724)
–
(55)
(67,724)
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.
Exposure to currency risk
The Group’s significant exposures to foreign currency risk at balance date were as follows, based on notional amounts:
2017
2016
USD
Euro
NZD
USD
Euro
NZD
135,556
6,666
2,148 125,642
(65,501)
(21,279)
–
(1)
– (67,724)
40
–
2,052
–
(118)
(16,691)
(104)
(179)
48,776
6,665
2,030
41,227
(64)
1,873
In thousands of AUD
Trade receivables
Secured bank loan
Trade and other payables
Net exposure in statement of
financial position
7878
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY The following significant exchange rates applied during the year:
USD
Euro
NZD
Average rate
Reporting date spot rate
2017
2016
2017
2016
0.7547
0.6919
1.0588
0.7286
0.6561
1.0909
0.7692
0.6730
1.0500
0.7426
0.6699
1.0489
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 or (loss).
A 10 percent strengthening of the Australian dollar against the following currencies at 30 June 2017 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.
Effect In thousands of AUD
30 June 2017
USD
Euro
NZD
30 June 2016
USD
Euro
NZD
Equity Profit or (loss)
(23,071)
(19,331)
(606)
(184)
(606)
(184)
(21,515)
(17,958)
6
(170)
6
(170)
A 10 percent weakening of the Australian dollar against the following currencies at 30 June 17 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.
79
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 26. FINANCIAL INSTRUMENTS (continued)
Effect In thousands of AUD
30 June 2017
USD
Euro
NZD
30 June 2016
USD
Euro
NZD
Equity Profit or (loss)
28,167
23,626
741
225
741
225
26,299
21,952
(7)
208
(7)
208
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
Secured bank loan
Finance leases
Note
17
18
24
21
21
Carrying
amount
2017
Fair value
2017
168,523
168,523
21,094
189,617
Carrying
amount
2017
32,993
65,501
189
21,094
189,617
Fair value
2017
32,993
65,501
189
98,683
98,683
Carrying
amount
2016
156,703
26,433
183,136
Carrying
amount
2016
30,298
67,724
171
98,193
Fair value
2016
156,703
26,433
183,136
Fair value
2016
30,298
67,724
171
98,193
Estimates of fair values
The methods used in determining the fair values of financial instruments are discussed in Note 4.
Interest rates used for determining fair value
The interest rates used to discount estimated cash flows, where applicable, are based on the government yield curve as of 30
June 2017 plus an adequate constant credit spread and are as follows:
Receivables
Secured bank loan
Leases
2017
2016
6.00% - 7.99%
6.00% - 9.64%
LIBOR+0.65%
LIBOR+0.65%
0.90% - 8.39% 0.90% - 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 $194 thousand and a decrease in 100 basis
points would lead to an increase in profit by $194 thousand. This analysis assumes that all other variables, in particular foreign
currency exchange rates, remain constant.
8080
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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
2017
2,489
8,956
2
2016
2,338
8,315
–
11,447
10,653
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 $2,276 thousand was recognised as an expense in profit or loss in respect of operating leases (2016: $3,217 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
2017
2016
4,780
899
Commitments under non-cancellable employment contracts not provided for in the financial
statements and payable:
Within one year
2,059
1,902
81
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 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
Mr CJ Henson
Ms HA Scheibenstock(i)
Mr HK Neumann(ii)
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 I Cooper (General Manager Manufacturing, Ainsworth
Game Technology Limited)
Mr K Power (Chief Technology Officer, Ainsworth Game
Technology Limited - appointed 16 Jan 2017)
Executive directors
Mr LH Ainsworth (Executive Director)
Mr DE Gladstone (Executive Director and Chief Executive
Officer, Ainsworth Game Technology Limited)
(i) Ms HA Scheibenstock is subject to approval in Ohio and the Canadian province of Saskatchewan
(ii) Mr HK Neumann is subject to approval in Ohio
Key management personnel compensation
The key management personnel compensation included in ‘employee benefit expenses’ (see Note 10) is as follows:
In AUD
Short-term employee benefits
Post-employment benefits
Share based payments
Other long term benefits
2017
2016
3,590,014
3,111,533
314,674
267,799
376,550
(41,171)
170,679
167,705
4,451,917
3,505,866
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.
8282
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 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.
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
payments made on behalf of the
Company
Mr LH Ainsworth Other charges payments made on
Mr LH Ainsworth
behalf of Mr LH Ainsworth
Sales of property, plant and
equipment
Mr LH Ainsworth Operating lease rental costs
Mr HK Neumann
Sales revenue
Mr HK Neumann
Purchases and other charges
payments made on behalf of the
Company
Transactions value
year ended 30 June
Balance receivable/
(payable) as at
30 June
Note
2017
2016
2017
2016
(i)
(ii)
(ii)
(ii)
(iii)
(iv)
(v)
(v)
62,404
62,400
–
–
–
1,511,963
99,857
93,955
5,988,167
–
–
–
–
–
–
–
–
–
93,955
–
1,549,115
1,580,980
(142,002)
(153,133)
7,957,275
288,740
–
–
6,565,428
(78,003)
–
–
(i)
(ii)
The Company leased associated plant and equipment from an entity controlled by Mr LH Ainsworth on normal commercial terms and
conditions. This lease was terminated at 30 June 2017 and no further obligation will occur from this date.
Transactions were with Ainsworth (UK) Ltd and Associated World Investments Pty Ltd (AWI), 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. On 15th April 2016,
Mr LH Ainsworth sold his 100% interest in Ainsworth(UK) held by AWI to Novomatic AG. Any subsequent transaction between
the Group and Ainsworth(UK) ceased to be a related party transaction effective from this date. AWI remains a related party of
Mr LH Ainsworth and the Group.
(iii) The Company sold its car park building at Newington to an entity controlled by Mr LH Ainsworth. The car park was sold at the cost of
construction.
(iv) Operating leases rental costs of the premises at Newington from an entity controlled by Mr LH Ainsworth on normal commercial terms
(v)
and conditions.
During the year, the Group transacted with Novomatic AG and its related entities of which Mr HK Neumann holds a directorship role
in Novomatic AG. The terms and conditions of these transactions were no more favourable than those available, or which might
reasonably be expected to be available, in similar transactions with non-key management personnel related companies on an arm’s
length basis. Transactions with Novomatic AG and its related entities are considered as related parties transactions when Mr HK
Neumann became a Key Management Person of the Group effective from his appointment on 21 Feb 2017.
83
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017 29. RELATED PARTIES (continued)
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
2017
2016
Assets and liabilities arising from the above transactions
Current receivables and other assets
Amount receivable from director/shareholder controlled entities
6,565,428
93,955
Current trade and other payables
Amount payable to director/shareholder controlled entities
220,005
153,133
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 Pty Colombia SAS
AGT Alderney Limited
Ainsworth Game Technology Inc
Ainsworth Interactive Pty Ltd
AGT Gaming Services S. de R.L de C.V.
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
31. SUBSEQUENT EVENTS
Ownership Interest
Country of
incorporation
2017
2016
Australia
Australia
Mexico
Peru
Argentina
Colombia
Alderney
USA
Australia
Mexico
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%
100%
100%
100%
100%
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.
8484
Notes to the Financial Statements (continued)for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
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
2017
2016
260,000
255,000
22,500
35,000
282,500
290,000
In relation other assurance, due diligence and taxation
35,451
36,077
33. PARENT ENTITY DISCLOSURES
As at and throughout the financial year ended 30 June 2017 the parent entity of the Group was Ainsworth Game Technology
Limited.
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 and translation 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
2017
2016
36,503
36,503
52,235
52,235
156,205
421,344
156,641
348,926
36,783
87,387
37,573
42,346
200,245
193,754
10,414
9,684
132,271
(18,657)
9,786
9,684
113,730
(20,374)
333,957
306,580
2017
2016
1,034
899
85
Notes to the Financial Statements (continued)for the year ended 30 June 2017ANNUAL REPORT 2017
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 42 to 85 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 2017 and of its performance for the financial
year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2.
3.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief
executive officer and chief financial officer for the financial year ended 30 June 2017.
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:
GJ Campbell
Chairman
Dated at Sydney this 29th day of August 2017.
8686
Directors’ Declarationfor the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Ainsworth Game Technology Limited
Report on the audit of the Financial Report
To the shareholders of Ainsworth Game Technology Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Ainsworth Game Technology Limited (the
Company).
Opinion
In our opinion, the accompanying Financial
We have audited the Financial Report of
Report of the Company is in accordance
Ainsworth Game Technology Limited (the
with the Corporations Act 2001, including:
Company).
•
giving a true and fair view of the
In our opinion, the accompanying Financial
Group’s financial position as at 30
Report of the Company is in accordance
June 2017 and of its financial
with the Corporations Act 2001, including:
performance for the year ended on
that date; and
giving a true and fair view of the
Group’s financial position as at 30
complying with Australian Accounting
June 2017 and of its financial
Standards and the Corporations
performance for the year ended on
Regulations 2001.
that date; and
•
•
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2017
• Consolidated Statement of profit or loss and other
The Financial Report comprises:
comprehensive income, Consolidated statement of
• Consolidated statement of financial position as at 30
changes in equity, and Consolidated statement of
June 2017
cash flows for the year then ended
• Consolidated Statement of profit or loss and other
• Notes including a summary of significant accounting
comprehensive income, Consolidated statement of
policies
changes in equity, and Consolidated statement of
cash flows for the year then ended
• Directors’ Declaration.
The Group consists of the Company and the entities it
• Notes including a summary of significant accounting
controlled at the year-end or from time to time during
the financial year.
• Directors’ Declaration.
policies
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Basis for opinion
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
the audit of the Financial Report section of our report.
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
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.
88
88
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.
87
for the year ended 30 June 2017ANNUAL REPORT 2017
Independent Auditor’s Report (continued)
Key Audit Matters
The Key Audit Matters we identified are:
• Revenue recognition
• Recoverability of trade receivables
• Carrying value of goodwill and
intangible assets
Key Audit Matters are those matters that, in our
professional judgment, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Revenue recognition
Refer to note 7 of the Financial Report ($282m AUD)
The key audit matter
How the matter was addressed in our audit
Revenue recognition was a key audit matter
due to the audit effort associated with multiple
revenue streams across different geographic
locations with differing recognition criteria for
us to assess, and evaluate the application
thereof to the Group’s transactions.
These include; outright machine and spare parts
sales, rendering of services, revenue from fixed
and participation rental, royalty revenue
including online gaming royalties and revenue
from multi-element arrangements which
consist of several components within the
revenue stream.
Due to varying revenue recognition and
measurement principles of the revenues
generated by the Group, it necessitated greater
involvement by our senior team members to
understand and challenge the complexities
behind the timing of recognition and
measurement.
Our audit procedures included:
•
•
•
•
evaluating of the Group’s process for
establishing criteria to determine the
appropriate revenue stream based on the
characteristics of each sale and the
recognition of this revenue across different
geographic locations in accordance with
AASB 118 Revenue and/or AASB 117
Leases;
identifying key controls of the Group in
recognising revenue, and testing the control
for operating effectiveness. The key control
identified by us was in relation to the
Group’s process of matching documents
such as customer contracts, purchase
orders and sales orders to delivery notes
and invoices, used to determine the timing
of revenue recognition;
testing of statistical samples of transactions
in key revenue streams by checking them
to underlying records and inspecting the
terms and conditions of the revenue
contract for consistency to the Group’s
timing and measurement of revenue
recognition;
testing a sample of revenue transactions
from immediately before and immediately
after year end, across different geographic
locations and revenue streams, comparing
the year in which the revenue was
recognised to terms of the underlying
contract;
89
8888
for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
Independent Auditor’s Report (continued)
•
testing the accuracy of the methodology
used to calculate the multi-element
arrangement revenue by checking samples
of revenue transactions against contract
terms and rates and then recalculating
these samples for accuracy.
Recoverability of trade receivables
Refer to note 17 of the Financial Report ($168.5m AUD)
The key audit matter
How the matter was addressed in our audit
Our audit procedures included:
•
•
Recoverability of trade receivables was a key
audit matter because payment terms, prevailing
industry practices and market conditions vary
significantly across the different customers and
the geographic locations in which the Group
operates.
These conditions give rise to heightened
exposure to credit risk across the Group, thus
requiring greater audit focus.
The prevailing practice in certain locations in
which the Group operates is to provide
payment terms which are extended beyond
traditional payment terms observed in
Australian. This required a heightened element
of judgement, and scrutiny to be applied when
assessing the recoverability of trade
receivables, such as an:
•
•
•
•
assessment of amounts overdue compared
to contractual payment terms;
evidence from internal diligence performed
by the Group on the continued credit
worthiness of customers;
settlement history of previous sales with
the Group;
•
evidence of ongoing dialogue and
correspondence with the Group and
willingness of the customer to confirm the
receivable balance.
identifying key controls performed by the
Group and testing this control for its
operating effectiveness. The key control
identified by us was in relation to credit
limits approvals by senior management
within the Group;
performing an assessment of the credit risk
of the Group’s trade receivables by
selecting samples in certain locations with
overdue customer balances. Enquiries with
management were conducted on the
samples selected to understand the
rationale behind the Group’s recoverability
assessment. We challenged the Group’s
recoverability assessment with our
understanding of market practice, ongoing
correspondence between the debtor and
the Group, the Group’s internal diligence
check on the credit worthiness of the
debtor, customer payment history and
customer contract to evidence
recoverability;
for those locations determined by us at a
heightened risk of non-recoverability, the
trade receivable balance by customer at
year end was compared against established
credit limits. Our assessment of those
locations at higher risk of non-recoverability
was based on the historical pattern for long
outstanding trade receivables in those
locations.
90
89
for the year ended 30 June 2017ANNUAL REPORT 2017
Independent Auditor’s Report (continued)
Carrying value of goodwill and intangible assets
Refer to note 13 of the Financial Report ($68.9m AUD)
The key audit matter
How the matter was addressed in our audit
Annual testing of goodwill and intangible assets
is a key audit matter, due to the significant
judgement applied by us when evaluating the
significant forward looking assumptions
including:
•
•
•
forecast cash flows and the growth rates
(including terminal growth rates) applied to
those forecasts in light of current market
conditions. Whilst the Group continues to
generate a significant profit before interest
and tax, the performance of the Group has
been declining in recent years. These
conditions increase the risk of inaccurate
forecasting and the possibility of goodwill
and intangible assets being impaired.
value in use model prepared is sensitive to
the assumptions adopted by the Group
including future growth rate of the business
and the discount rate applied for various
locations. Such assumptions have a
significant impact on the calculated
recoverable amount of the assets within
the identified Cash Generating Units (CGU).
This drives additional audit effort to assess
the assumptions adopted by the Group.
discount rates are complex in nature and
vary according to the conditions and
environment in which the CGU operates.
The Group operates in various jurisdictions
and is therefore subject to different
discount rates for each CGU. This drives
additional audit effort in challenging the
assumptions used by the Group in
determining the discount rate for each
CGU.
The Group uses complex models to perform
their annual impairment testing of goodwill and
intangibles. The models are developed with
significant judgement incorporated within.
Complex modelling, particularly those
containing highly judgemental allocations of
corporate assets and costs to CGU’s, using
forward-looking assumptions tend to be prone
to greater risk of potential bias, error and
Working with our valuation specialists, our
procedures included:
•
evaluating the appropriateness of the model
used for goodwill and intangibles impairment
testing against the requirements of the
accounting standards;
• working with our valuation specialists we
independently developed a discount rate
range, across different jurisdictions and
geographic locations applicable to each
identified CGU, using publicly available market
data for comparable entities, adjusted by risk
factors specific to the Group and the industry
it operates in.
•
•
•
considering the Group’s determination of their
CGUs based on our understanding of the
operations of the Group, and how independent
cash inflows are generated in line with the
accounting standards;
assessing the Group’s allocation of corporate
assets and corporate costs to CGUs for
consistency based on the requirements of the
accounting standards;
challenging the Group’s forecasted cash flow
and growth assumptions in light of market
competition. We compared key assumptions
to the Board approved plan and strategy. We
applied increased scepticism to assumptions
in areas where previous forecasts were not
achieved. We compared forecast growth rates
and the terminal growth rates to published
studies of industry trends and expectations
with inputs from our valuation specialist, and
considered differences for the Group’s
operations. In doing so, we applied our
knowledge of the Group, their past
performance, business and customers, and
our industry experience; and
•
considering the sensitivity of the models by
varying key assumptions, such as forecast
91
9090
for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
Independent Auditor’s Report (continued)
inconsistent application. Such conditions
necessitate additional scrutiny by us, in
particular to address the objectivity of sources
used to derive assumptions, and their
consistent application.
growth rates, terminal growth rates and
discount rates, within a reasonably possible
range, to identify those assumptions at higher
risk of bias or inconsistency in application and
to focus our further procedures;
•
assessing the appropriateness and adequacy
of the disclosures in the financial report using
our understanding obtained from our testing
and against the requirements of the
accounting standards.
Other Information
Other Information is financial and non-financial information in Ainsworth Game Technology Limited’s
annual reporting which is provided in addition to the Financial Report and the Auditor's Report. The
Directors are responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors
Report, and Remuneration Report. The 2017 Highlights, Chairman’s Report, Chief Executive Officer’s
Report, Shareholder Information and Corporate Directory are expected to be made available to us
after the date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception
of the Remuneration Report.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
•
implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group’s ability to continue as a going concern. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
92
91
for the year ended 30 June 2017ANNUAL REPORT 2017
Independent Auditor’s Report (continued)
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf.
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
In our opinion, the Remuneration Report
of Ainsworth Game Technology Limited
for the year ended 30 June 2017,
complies with Section 300A of the
Corporations Act 2001.
To the Directors of Ainsworth Game Technology Limited
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.
Directors’ responsibilities
Our responsibilities
We have audited the Remuneration Report included in
on pages 30 to 41 of the Directors’ report for the year
ended 30 June 2017.
I declare that, to the best of my knowledge and belief, in relation to the audit of Ainsworth Game
Technology Limited for the financial year ended 30 June 2017 there have been:
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
no contraventions of any applicable code of professional conduct in relation to the audit.
i.
ii.
KPM_INI_01
KPMG
KPMG
Tony Nimac
Tony Nimac
Partner
Partner
29 August 2017
29 August 2017
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
9292
93
94
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.
for the year ended 30 June 2017AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
Lead Auditor’s
Independent Declaration
Independent Auditor’s Report
To the shareholders of Ainsworth Game Technology Limited
Independent Auditor’s Report
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Report on the audit of the Financial Report
To the shareholders of Ainsworth Game Technology Limited
To the Directors of Ainsworth Game Technology Limited
Report on the audit of the Financial Report
Opinion
I declare that, to the best of my knowledge and belief, in relation to the audit of Ainsworth Game
Technology Limited for the financial year ended 30 June 2017 there have been:
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2017
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
• Consolidated Statement of profit or loss and other
The Financial Report comprises:
comprehensive income, Consolidated statement of
no contraventions of any applicable code of professional conduct in relation to the audit.
• Consolidated statement of financial position as at 30
changes in equity, and Consolidated statement of
June 2017
cash flows for the year then ended
ii.
We have audited the Financial Report of
Ainsworth Game Technology Limited (the
Company).
Opinion
i.
In our opinion, the accompanying Financial
We have audited the Financial Report of
Report of the Company is in accordance
Ainsworth Game Technology Limited (the
with the Corporations Act 2001, including:
Company).
•
giving a true and fair view of the
In our opinion, the accompanying Financial
Group’s financial position as at 30
Report of the Company is in accordance
June 2017 and of its financial
KPM_INI_01
with the Corporations Act 2001, including:
performance for the year ended on
KPMG
that date; and
•
giving a true and fair view of the
Group’s financial position as at 30
•
complying with Australian Accounting
June 2017 and of its financial
Standards and the Corporations
performance for the year ended on
Regulations 2001.
that date; and
Tony Nimac
•
Partner
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
29 August 2017
Basis for opinion
PAR_NAM_01
PAR_SIG_01
• Consolidated Statement of profit or loss and other
• Notes including a summary of significant accounting
comprehensive income, Consolidated statement of
policies
changes in equity, and Consolidated statement of
cash flows for the year then ended
• Directors’ Declaration.
The Group consists of the Company and the entities it
• Notes including a summary of significant accounting
controlled at the year-end or from time to time during
the financial year.
• Directors’ Declaration.
policies
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Basis for opinion
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
the audit of the Financial Report section of our report.
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
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.
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.
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.
Liability limited by a scheme approved under
Professional Standards Legislation.
88
88
94
93
for the year ended 30 June 2017ANNUAL REPORT 2017
Corporate Directory
Stock Exchange Listing
The Company is listed on the Australian
Stock Exchange.
The Home Exchange is Sydney.
CODE: AGI
Website
www.agtslots.com.au (Australasia)
www.agtslots.com (The Americas)
Auditor
KPMG
Level 38, Tower Three
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW Australia 2000
Tel:
Fax:
+61 2 9335 7000
+61 2 9299 7001
Other Information
Ainsworth Game Technology Limited,
incorporated and domiciled in Australia,
is a publicly listed company limited
by shares.
ASIA
Macau
Mr Jim Tang
Key Account Sales Executive
Tel:
+853 6648 5180
Email: jtang@agtslots.com
Singapore
Mr Alfred Hwee
Key Account Sales Executive
Tel:
+65 9667 1375
Email: ahwee@agtslots.com
Share Registry
Computershare Investor Services Pty Ltd
Level 4, 60 Carrington Street,
Sydney NSW Australia 2001
Tel:
1300 850 505 (within Aust)
+61 3 9415 4000 (outside Aust)
+61 3 9473 2500
Fax:
THE AMERICAS
Nevada
5800 Rafael Rivera Way,
Las Vegas, NV 89118
Tel:
Fax:
Email: sales@agtslots.com
+1 (702) 954-3000
+1 (954) 317-5555
Florida
1011 SW 30th Avenue,
Deerfield Beach, FL 33442
Tel:
Fax:
Email: sales@agtslots.com
+1 (954) 944-3800
+1 (954) 317-5555
EUROPE
Astra Games Ltd / Novomatic AG
Astra House, 1 Kingsway
Bridgend Industrial Estate
Bridgend. CF31 3RY. UK
Tel:
Fax:
Email: sales@astra-games.com
+44 (0) 1656 658658
+44 (0) 1656 672849
CORPORATE DIRECTORY
Independent Non-Executive
Directors
Mr GJ Campbell - Chairman
Mr MB Yates
Mr CJ Henson
Ms HA Scheibenstock
Executive Director
Mr LH Ainsworth
Non-Executive Director
Mr HK Neumann
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
+61 2 9739 8000
Tel:
Fax:
+61 2 9648 4327
Email: sales@agtslots.com
Queensland
Unit 5 / 3990 Pacific Highway
Loganholme QLD Australia 4129
+61 7 3209 6210
Tel:
+61 7 3209 6510
Fax:
Email: sales@agtslots.com
Victoria
Mr Wayne Flood
State Sales Manager
Tel:
Email: wflood@agtslots.com
+61 0419 551 454
South Australia
Mr Michael Queale
State Sales Manager
Tel:
Email: mqueale@agtslots.com
+61 0408 462 321
9494
AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY
Notes
95
ANNUAL REPORT 2017 Notes
9696
AINSWORTH GAME TECHNOLOGYAINSWORTH GAME TECHNOLOGY 10 Holker Street, Newington
New South Wales, Australia 2127
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