ANNUAL REPORT 2020
AINSWORTH GAME TECHNOLOGY
A
I
N
S
W
O
R
T
H
G
A
M
E
T
E
C
H
N
O
L
O
G
Y
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
Ainsworth 2020 Annual Report
Contents
Performance Overview
New Products
Chairman’s Report
Chief Executive Officer’s Report
Board of Directors
Shareholder Information
Directors’ Report
2
4
6
8
11
12
14
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Lead Auditor’s Independent
Declaration
Corporate Directory
40
44
93
94
102
103
RESULTS ANNOUNCEMENT FOR SIX
MONTHS ENDING 31ST DECEMBER 2020:
Tuesday 23rd February 2021
Dates may be subject to change
RESULTS ANNOUNCEMENT FOR YEAR
ENDING 30TH JUNE 2021:
Tuesday 24th August 2021
Dates may be subject to change
In accordance with ASX Listing Rule 4.10.3, Ainsworth Game
Technology’s Corporate Governance Statement can be found on its
website at: https://www.agtslots.com/investor/corporate-governance
AINSWORTH GAME TECHNOLOGY | ANNUAL REPORT 2020
Notice of Annual General MeetingAinsworth Game Technology Limited ABN 37 068 516 665Notice is hereby given that the 2020 Annual General Meeting of the members of Ainsworth Game Technology Limited will be held at:Bankstown Sports Club “Georges River Room” 8 Greenfield Parade (Cnr Greenfield Parade and Mona Street) Bankstown NSW 2200 on Thursday 26th November 2020 at 10:00am
ANNUAL REPORT 2020
1
North America
Latin America
• COVID-19 pandemic imposed challenging times
• Delivered profit of $2.3m in challenging market
for AGT, revenue -37%, profit -46%.
conditions.
• Decline in revenue to $42.0 due to closures
the primary markets of Mexico,
across
Argentina, and Peru.
• An impairment review of this Cash Generating
Unit (CGU) has resulted in a one-off (non-cash)
impairment charge of $12 million.
• Units under gaming operations declined due to
difficult conditions in this region, - 10% to 4,137.
• Reduced participation revenue and the delayed
launch of new AStar® hardware have impacted
operators across the region which is expected
to continue
into H1FY21 with progressive
recovery in H2FY21.
Rest of the World
• Revenues, -39%, profit -59%, due to the reduced
contribution from Novomatic compared to the
pcp and challenging market conditions in Asia
and New Zealand.
• Profit was down by 59% to $2.8 million.
• Online contributed $4.6 million of revenues, up
10% compared to pcp.
Online Gaming
• Further progress in accelerating monetisation
of on-line real money and social gaming was
achieved in the period.
• The Group has now gone live with several
leading operators in New Jersey to leverage
proven and recognised game titles within their
database of players.
• An extension to established agreements with
Zynga is expected to at least maintain current
royalty levels in FY2021.
intended
• Revenue decline was predominately due to
reduced outright unit sales expected following
the
the new AStar®
Curve cabinet at the National Indian Gaming
Association (NIGA) Trade Show in April 2020,
which was cancelled due to the pandemic.
launch of
• Operating leverage margin reduced to 35%
(41% in the pcp).
• The number of machines on participation was
2,327 (Class II: 1,412 and Class III: 915), +6%.
• Participation revenue fell by A$5 million due to
the closure of venues in quarter 4 of FY2020.
Australia
• Profit was down to $0.4 million given reduced
fixed overhead recovery due to low sales.
• Decrease in revenue of 26%, impacted by
closures of customer venues due to COVID-19.
2
AINSWORTH GAME TECHNOLOGY
Performance Overview • Positive underlying EBITDA of A$5.8 million
(excludes one-off items).
• Strong balance sheet to self-fund growth
strategies.
• Net debt of $17.5 m compared to net cash
of $36.2 m at pcp.
• H2 FY20 revenues impacted, $42 million
compared to $116 million in the prior
comparative period; a decline of 63%.
• Strategic redundancies across the Group, at
an annualised cost saving of A$10.2 million.
• R&D as a percentage of revenue at 28%
(2019: 17%).
Historical Performance - AUD (M)
(Fiscal years ended June 30)
282.1
208.0
265.6
202.0
74.1
47.6
FY17
*Note 1
63.6
29.3
FY18
234.3
198.2
36.1
6.5
FY19
Domestic Revenue
Normalised Profit /(Loss) After Tax
International Revenue
149.4
121.1
28.3
FY20
-44.6
*Note 2
*Note 1: NPAT H1 FY17 includes $8M reversal of prior year
DTL recognition
*Note 2: H2 FY20 results impacted due to COVID-19
EBITDA - AUD (M)
(Fiscal years ended June 30)
38.4
43.4
31.9
24.6
15.1
29.7
FY17
FY18
FY19
H1
H2
14.6
FY20
-23.6
Note 1*
Revenues - AUD (M)
(Fiscal years ended June 30)
159.3
145.3
116.3
122.8
120.3
118.0
FY17
FY18
FY19
H1
H2
42.1
107.3
FY20
Note 1*
*Note 1: H2 FY20 results impacted due to COVID-19
*Note 1: H2 FY20 results impacted due to COVID-19
Revenue/Profitability - AUD (M)
(Fiscal years ended June 30)
R&D Expenditure - AUD (M)
(Fiscal years ended June 30)
282.1
265.6
234.3
57.4
FY17
39.2
FY18
8.6
FY19
149.4
-50.0
Note 1*
FY20
Profit/(Loss) Before Tax excluding foreign exchange effects
Total Revenue
34.2
34.4
12%
13%
41.2
28%
40.4
17%
FY17
FY18
FY19
FY20
Note 1*
Total R&D Expenditure
R&D as a percentage of Revenues
*Note 1: H2 FY20 results impacted due to COVID-19 and
includes a $12 million non-cash impairment charge
*Note 1: Increase in R&D as a percentage of revenue
is due lower revenues as a result of COVID-19
ANNUAL REPORT 2020
3
Financial Highlights gaming venues. The A-Star™ game portfolio
includes a wide variety of core and Standalone
Progressive titles, as well as an exceptional line of
new Link Progressives designed with the player in
mind; demonstrating the company’s commitment to
the market through our vast, specially developed
product range and successful long-term content.
The new A-Star™ cabinet configurations, the Dual
Screen featuring 2 x 27” full HD monitors and the
Curve, with its 43” curved monitor, flaunt a unique and
elegant design that integrates effortlessly with any
casino décor. This all-new, minimalist line of cabinets
takes design to a whole new level with an ultra-thin
form factor, providing genuine space integration
and an element of futuristic luxury, elevating their
surroundings with stellar picture quality and newly
added gaming features.
a diverse variety of gaming options such as Slots,
Bingo, Live Casino Tables, Virtual Sports and Slot
Jackpots. Mustang Money.mx also offers a wide
variety of sports betting options including NFL, NBA,
MLB, NHL, MLS, Liga MX, English Premiere League,
La Liga, Bundesliga and Serie A.
Historical Horse Racing (HHR)
Ainsworth’s
award-winning Historical Horse
Racing System offers a proven blend of content
for operators across the country. Most recently,
the Company deployed more than 400 units
to Kentucky Downs Gaming near Nashville to
add ito its more than 1,000 units installed in
the U.S. Today Ainsworth offers more than 100
unique games on its full suite of gaming cabinets
including the new A-Star™ Curve.
A-Star™
introduced
In February 2020, Ainsworth Game Technology
(“Ainsworth”)
impressive new
A-Star™ cabinet to the global gaming market which
incorporates
the Company’s experience and
extensive knowledge of the industry, into an exciting
new product for its customers.
its
The A-Star™ takes Ainsworth to the next level with
a meticulously crafted cabinet that encompasses a
sleek modular design, spectacular new curved and
dual screen format, dynamic LED lighting, and a
state-of-the-art LCD touchscreen button deck.
Whilst focus for the development of this cabinet was
on supreme engineering and best-in-class reliability,
the A-Star™ launched with a comprehensive library
of new game titles – including the proven Multi
Games brand that continues to evolve internationally,
throughout
displaying exceptional performance
Online
B2B Real Money Gaming
(RMG) - Ainsworth
Interactive developed and certified 20 new online
games for RMG European operators and certified 40
online games in New Jersey for the US RMG market
in FY20. The US based remote gaming server (RGS)
was launched and approved by the New Jersey
Division of Gaming Enforcement (DGE) in April 2020
which went live on Golden Nugget casino.
B2B Social Casino Business - Ainsworth has licensed
land-based slot content to 2 of the top 10 performing
social casino apps in the world, Zynga’s “Hit It Rich”
& Playstudio’s “MyVegas.com”. Ainsworth and Zynga
have extended the partnership for an additional
4 years with 6 new exclusive titles per year and
has developed and launched 40 slot games on
the Greentube Pro social casino gaming platform
targeting Australian and US casino customers.
Mustang Money, Online Casino Operator, Mexico -
Mustang Money has accumulated a player database
of 151,331 registered players, with a monthly average
active player database of 62,358. The platform offers
over 600 unique games, 75 Ainsworth games and
4
AINSWORTH GAME TECHNOLOGY
New Products Rise Up™
Mega Choice Quad Shot™
Mega Choice takes the multi-game market segment
to a higher level, with flexible operator and player-
selectable options such as: multi
lines, multi
denomination, multi RTP, and multi-language. Mega
Choice includes the new multi-game package, Mega
Choice Quad Shot ™, which is filled with the most
successful games in Ainsworth’s history. Games like
Diamond Dreams, Dragon Climber, Golden Zone 2,
Golden Lion 2, Heart Queen, Jungle Princess, Mayan
Beauty, Mystique Queen & Run with the Wolves are
part of the game selection. Mega Choice Quad Shot
breaks the standard by offering numerous options for
operator settings, allowing casinos to maintain custom,
successful math that entertains players of all levels.
Super Charged 7s Classic™/
Reel Hot 7s Classic™
The three-reel versions of Ainsworth’s popular
QuickSpin fits perfectly in High or Mid Denom areas.
These three-reel titles offer five or-nine-line play at
denoms of 25c and up. Each game can be set as
multidenom or single denom. Just like every other
QuickSpin title, players will win a Wheel Spin about
every 56 plays.
Rise Up™ is Australia’s latest game series in the Multi-
denomination segment encapsulating a multi-ladder
feature with two Jackpot Progressive levels and two
scalable bonus prizes. The Rise Up™ feature includes
multiple awards during the ladder feature with
chances to win the Progressive Jackpots. Additional
free games feature provide an attractive feature hit
rate desirable to players. Rise Up™ is a stand-alone
progressive that has been launched with two game
titles, Born Free and Wizards Wand both of which are
performing above average in all venues.
Rio Grande Los Toritos™
Rio Grande Los Toritos ™ This new progressive Link type
is a continuation of the incredible success of Ainsworth’s
traditional Rio Grande Rapids ™, which has performed
tremendously in casinos over the years. The iconic
Bull character is one of the most recognizable figures
in gaming and was the basis for the development of
the 3-level progressive concept, offering Jackpots with
multiple configurations that adapt to different locations.
Rio Grande Los Toritos ™ includes titles such as Rio
Nights ™, Rio Fiesta ™, Rio Fortune ™, and Rio Treasures
™, all with remarkably varied bonus selections, re spins,
and wild bonusing, making Rio Grande Los Toritos ™
the leading product for the Latin American division of
Ainsworth which will also be introduced to the Australian
market for the first time in FY21.
Lucky Empress™
Lucky Empress offers players a never-ending chase
experience as they aim to gather Multipliers and
capitalize with huge wins throughout a persistent state
gaming experience. This 243-ways game is built for
the big player. It can be extremely volatile as players
collect Multipliers that lead to massive opportunities.
ANNUAL REPORT 2020
5
as our customers were severely restricted
by Governments around the world imposing
mandatory closures.
We remained focussed and productive during
this period. Our goals to expand our international
footprint, invest in technology to enhance the
product suite, and build our participation fleet to
improve the quality of earnings, have not changed.
We pursued development plans to enhance
the new A-Star™ hardware released prior to the
emergence of the pandemic. We strongly believe
that this new hardware and more competitive
to
game content will enable us
profitability and deliver better results over time.
to return
We also took the necessary steps to rationalise
our operations across all areas of the Company.
Ainsworth is now well positioned to capitalise
on emerging opportunities as the global gaming
market progressively recovers and deliver long
term positive results for shareholders.
Ainsworth’s FY20 results reflect the financial
consequences experienced from COVID-19. For
FY20, sales revenue was $149 million, a decline of
36% compared to $234 million
in FY19. With reduced trading
in quarter four, the second half of
the year contributed approximately
87% of this decline, which is traditionally
the strongest period. Our opportunities to
operate and sell new machines were inhibited
as customers temporarily closed venues and cut
capital expenditure programs.
The Loss after Tax for the year was $43 million.
On a pre currency basis and excluding one-off
items, the Loss before Tax was $35 million.
We closed the year with cash on hand of $26.5
million and a net debt position of $17.5 million.
This followed the payment for the acquisition
of MTD assets announced in early March 2020.
MTD has performed resiliently and we remain
confident that this acquisition will provide good
returns over coming periods.
Our balance sheet and liquidity are also in a
strong position. The current financing facilities
have been re-negotiated with the previous
financial covenants being replaced
the
remaining term to de-risk the potential for breach.
Given the effects of the pandemic, the Board
has prudently decided to place the dividend
for
Dear Shareholders,
Since assuming the role of chair at the conclusion
of last year’s Annual General Meeting, the
unforeseen consequences of
the COVID-19
pandemic have clearly had a significant impact
on the global economy, the gaming industry in
general, and your Company.
I am proud of the way Ainsworth reacted quickly to
the pandemic, protecting the safety and well-being
of our employees whilst initiating the necessary
actions to preserve shareholders’ funds.
I acknowledge the commitment of the Board and
senior executive team who have personally sacrificed
and overseen the actions required to ensure that
Ainsworth was able to endure the downturn.
We also recognise and appreciate the assistance
we have been provided by all of our stakeholders
in these challenging times, including suppliers,
customers and most importantly, our employees.
Their dedication to serving our customers and
driving innovative new products never wavered
and bodes well for our future recovery.
We express our thanks to our founder Mr Len
Ainsworth. Len did not hesitate to support the
Company with significant rental concessions on
the Newington facility. This generosity assisted
our ability to withstand the financial downturn
6 AINSWORTH GAME TECHNOLOGY
Chairman’s Report policy on hold. We will retain this position until
the current uncertainties in our markets become
more predictable.
Combined with the actions we took to minimise
capital expenditure and operational overheads;
we are able to continue development activities
as the industry returns to traditional activity levels.
While the FY20 results were significantly affected by
COVID-19, AGT has ensured it is positioned to deliver
improved performance. We have a professional
workforce, an excellent industry reputation and a well-
established footprint across our markets. A renewed
focus of our R&D investment continues to be a
primary objective allowing the efficient production of
innovative products.
Acknowledgements
I would like to thank my fellow board members
for their continued support which has assisted
us to navigate through this period. We would
like to recognise the leadership of our CEO, Mr
Lawrence Levy. Since his appointment on 1st July
2019, his commitment to execute our strategies
and position the Group for improved performance,
have been impressive. We also acknowledge
our CFO, Mr Mark Ludski, the rest of the highly
capable executive team in both Australia and
the Americas, as well as our dedicated and
loyal employees, my fellow shareholders and of
course, our customers.
Danny Gladstone
Chairman
ANNUAL REPORT 2020
7
workforce to work remotely, maintaining daily
contact with management, establishing new game
feature parameters and creating a pipeline of new,
innovative and intuitive core products.
Looking to FY21 and beyond, I consider that the
Company is in a strong position to recover. We
had just launched our new A-Star™ cabinets in
February 2020, prior to the global lockdown.
We are now starting to roll out this hardware
regionally, with Australia, North and Latin America
already receiving positive feedback and strong
performance numbers from our initial installations.
FY20 Results
The adverse impacts COVID-19 had on our
business with closure of gaming venues and
borders is reflected in our FY20 results. On a pre-
currency basis, we reported a Loss before Tax of
$50.0 million compared to a Profit of $8.7 million in
FY19. Sales revenue for the year was $149.4 million,
a decrease of 36%. International revenues were
$121.1 million, a decline of $77.1 million compared
to FY19 predominately from the Americas. Gross
profit was down by 35% to $90.4 million with gross
margins maintained at 60%. Group EBITDA was
negative $9.0 million compared to $44.8 million
in FY19. Underlying EBIDTA, adjusted for currency
and out of ordinary items including $12.0 million
non-cash impairment charge recognised, was
$5.8 million.
North America, our largest segment, delivered
revenue of $72.1 million, a decline of 37%.
Consequently, profitability was down by 46% to
$25.3 million. The pandemic delayed the planned
launch of the A-Star™ cabinet at the NIGA show
in April 2020, where we were expecting to see
some uplift in sales during the last quarter of FY20.
I remain confident that this segment will return to a
higher profit level with the progressive reopening
of gaming venues and the continued success of
our Class II Historical Horse Racing (HHR) products.
Unit sales closed at 1,430 compared to 2,952 in
FY19. Last year, in Q4 alone, we delivered 1,364
units. This demonstrates that the pandemic has
had a significant impact on this market with just
over 100 units being delivered in this period.
The number of machines under gaming operations
in North America increased by 6% to 2,327. The
increase in the gaming operations installed base
is a result of additional HHR units installed at Red
Dear Shareholders,
I am pleased to provide this report after completing
my first full year as CEO. This was a year that none
of us could have imagined; a year that has tested all
of our resolve, both professionally and personally.
We are clearly living and operating in extraordinary
times with Covid-19. The majority of customers
across AGT’s major markets suspended operations
from mid-March onwards. As you would expect, the
pandemic severely impacted our results, primarily
in Q4 FY20, which is usually our busiest period.
Throughout the pandemic, AGT’s priorities have
been the health and wellbeing of its employees
and the preservation of shareholders’ funds.
The forced break in our normal activities due
to Covid-19 compelled us to restructure the
workforce, re-evaluate our processes and review
our objectives. I believe we did this in a timely
and forward-thinking manner. This has resulted in
Ainsworth being able to maintain a positive cash
balance, even reporting a positive underlying
EBITDA for FY20.
During this down time, we focused on our game
development strategies. We set up our entire
8
AINSWORTH GAME TECHNOLOGY
Chief Executive Officer’s Report in the last quarter of FY20, encouragingly with
the lower cases of COVID-19 compared to other
regions, we are expecting a positive progressive
recovery in FY21 with market reopening’s, as well
as the release of the A-Star™ cabinet and refocus
game development to deliver an improved game
library for this region.
Total operating costs have decreased by 6%
although the true underlying rate for the year was
much lower at 10%.
Sales service and marketing expenses decreased
by $5.6 million. Excluding the adverse current
impact of $3.1 million, the decrease was $8.7
million. The decrease in costs is a direct result
of reductions in direct variable selling costs
associated with sales and COVID-19 restrictions.
R&D expenses were at $41.2 million, similar
to FY19. The higher amortisation costs due to
the commercialisation of previously capitalised
projects and third-party contractor costs offset
the reductions in personnel costs resulting from
stand downs, furloughs and JobKeeper subsidies.
Despite the initial reduced working hours in
the R&D workforce, a gradual re-introduction of
normal working hours has occurred to ensure
that timely approval of new games is achieved in
preparation for when markets fully recover from
the pandemic.
Mile and Ellis Park. Yield per day was maintained at
US$26 despite the competitive nature of the market.
The acquisition of the assets of MTD in March 2020
has so far provided positive results, contributing
positive EBITDA to our overall group results. This
acquisition is expected to complement our current
product lines with MTD’s top performing Poker,
Keno and Video Reel content and is expected to
further grow AGT’s footprint in North America.
Latin America revenue was $42.0 million, a
reduction of 42% compared to FY19. The segment
profit was $2.3 million, down from the $24.0
million that was delivered in the previous year.
We sold 1,404 units in FY20, compared to 2,931
units in FY19. This region continues to be severely
impacted by closures across the primary markets
in Mexico, Argentina and Peru.
Given the uncertainty on the timing of recovery
in the Latin America region and the increasing
pressure on this region’s working capital, we
have prudently recorded a non- cash impairment
charge of $12.0 million against the leased assets
within this region.
In our Rest of the World segment, revenues fell by
39% to $7.0 million. We had a reduced contribution
from Novomatic compared to last year. The Asia
market has been adversely impacted by COVID-19
with some closures and travel restrictions still in
place. To mitigate the declining profits within this
region, we have signed agreements with several
new, third-party distributors in both Asia and
Europe. Additionally, we have collaborated with
Novomatic to act as its sales and service unit in the
Asia Pacific regions and this is expected to create
new revenue streams for AGT.
Online gaming contributed $4.6 million, an
increase of 10% compared to last year. With the
launch of US based RGS (remote gaming server),
which was approved by the New Jersey Division
of Gaming Enforcement in April 2020, and an
extension of partnerships with top performing
social gaming providers, we are expecting to
increase our online revenue contribution in
coming periods.
Turning to Australia, the revenue dropped
by 22% to $28.3 million. Segment profit was
low at $0.4 million, due to the fixed overheads
within
closures of venues in March 2020
has affected our domestic sales
this segment. Although
the
ANNUAL REPORT 2020
9
3. Increase
the number of units
in gaming
operations by developing specific game content
to generate high quality recurring revenues.
4. Continue with the restructuring of our R&D
department, launching new, innovative and
intuitive games to reenergise and improve our
performance in the domestic and international
markets.
5. Increased strategic cooperation with Novomatic
through new distribution channels, shared
technical expertise and online
interactive
synergies with Greentube, Novomatic’s online
interactive division.
6. Further expand our online capabilities with a
focus on content distribution and interactive
product innovation for online markets in Europe
and the Americas.
7. Maintain strong capital disciplines and cost
controls to enhance our financial strength,
provide flexibility, and self-fund our organic
growth strategies.
I wish to express my appreciation to Danny
Gladstone as the Chairman for his ongoing
commitment to the Company. Danny, along with
the other Board directors have offered significant
guidance and support through these complicated
times brought on by Covid-19.
I would also like to thank the executive teams
from North America, Latin America and Australia
for their hard work and dedication throughout the
year. Finally, thanks to our talented employees,
our supportive shareholders and, importantly, our
customers who are at the centre of everything
we do.
Lawrence Levy
Chief Executive Officer
Administrative expenses of $22.2 million was 11%
lower than FY19, predominately due to a decline
in personnel costs resulting from a reduction
in working hours, voluntary pay reductions and
contribution of JobKeeper subsidies. These cost
disciplines are expected to continue for at least
the first half of FY21.
We repaid $27.3 million of debt during the year
and had a net debt balance of $17.5 million with a
closing cash balance of $26.5 million. To support
our customers during the mandatory closure
periods, we suspended our recurring fees and
extended payment terms to our customers. This
has contributed to the decline in our net cash
from operating activities, with some offset in the
reduction of operating cash outflows.
Our facility with the ANZ Bank has now reduced
to $60 million and has been restructured,
with previous covenants being replaced with
maintenance of minimum liquidity levels and
quarterly sales targets. We remain focused on
ensuring that our liquidity and balance sheet
strengthen during this challenging time.
Outlook
AGT has the liquidity required to sustain the
Company through the current recovery period. I
anticipate that FY21 will be a year of two distinct
halves. Half 1 will be about safety and security
through the reopening phase; Half 2 will be about
recuperation and development as we enter the
“new normal” phase.
I am confident AGT can drive improved long-term
growth by first focusing on our customers; working
closely with the operators to ensure maximum
returns on potentially rationalized resources.
We will also focus on strengthening our R&D/
game development and consolidating business
practices across all regions.
Our execution priorities to deliver
performance are clear:
improved
1. Our proprietary HHR product is performing
exceptionally well in North America and we
see excellent opportunities to leverage our
expertise in this area and expand our footprint.
2. Continue to grow unit sales in the key Class II
and Class III North American markets.
10 AINSWORTH GAME TECHNOLOGY
Chief Executive Officer’s Report (Continued) Danny Gladstone
Chairman and Non-Executive Director
Former Chief Executive Officer
and Executive Director until
30 June 2019
Appointed Non-Executive Director
1 July 2019
Chairman since 26 November 2019
Graeme Campbell
OAM
Michael Yates
B.Com (with merit), LLB
Lead Independent Non-Executive Director
Independent Non-Executive Director
Chairman - Audit Committee
Member - Remuneration and
Nomination Committee
Appointed 18 September 2007
Chairman – Regulatory and
Compliance Committee
Member - Remuneration and
Nomination Committee
Member – Audit Committee
Appointed 15 December 2009
Colin Henson
Dip-Law BAB, FCPA, FCG
(CS, CGP) FAICD
Independent Non-Executive Director
Chairman – Remuneration and
Nomination Committee
Member – Regulatory and
Compliance Committee
Member – Audit Committee
Appointed 3 April 2013
Harald Neumann
Non-Executive Director
Former Chief Executive Officer and
Chairman of the Executive Board of
Novomatic until February 2020
Currently Senior Advisor to
Novomatic AG
Appointed 21 February 2017
ANNUAL REPORT 2020
11
Board of Directors Distribution of shareholders
NUMBER OF EQUITY SHAREHOLDERS
Performance
Rights
Ordinary
Shares
Options
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
1,053
1,949
642
819
75
–
143
79
62
1
1
23
25
335
5
389
Total
4,538
285
The number of shareholders holding less than a marketable
parcel of ordinary shares is 1,428 (948,008 ordinary shares).
On market buy-back
There is no current on market buy-back of ordinary shares.
Unquoted equity securities
At 30 September 2020, 2,622,010 performance rights and
9,635,402 unlisted non-transferable options have been
issued to 285 and 389 employees, respectively. These
performance rights and options remain unexercised.
Regulatory considerations affecting shareholders
The Company is subject to a strict regulatory regime
in regard to the gaming licences and operations within
the gaming industry. It is necessary for the Company to
regulate the holding of shares to protect the businesses of
the Company in respect of which a gaming licence is held.
By accepting shares, each potential investor acknowledges
that having regard to the gaming laws, in order for the
Company to maintain a gaming licence, the Company must
ensure that certain persons do not become or remain a
member of the Company. The Constitution of the Company
contains provisions that may require shareholders to provide
certain information to the Company and the Company has
powers to require divesture of shares, suspend voting rights
and suspend payments of certain amounts to shareholders.
Shareholder Information
INFORMATION ABOUT SHAREHOLDERS
Shareholder
the Australian
Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below:
required by
information
SHARE HOLDINGS (AS AT 30 SEPTEMBER 2020)
Number of shareholders and shares on issue
The issued shares in the Company were 336,793,929
ordinary shares held by 4,538 shareholders.
Substantial shareholders
The number of shares held by substantial shareholders and
their associates are set out below:
Shareholder
Novomatic AG
Votraint No. 1019 Pty Ltd (MCA
Private Investment A/C)
Allan Gray Investment
Management
Spheria Asset Management
Number of
Ordinary Shares
178,150,817
30,133,804
28,342,992
2 1 ,1 1 1 , 7 25
Voting rights
Ordinary shares
The voting rights attaching to ordinary shares are that on
a show of hands every member present in person or by
proxy has one vote and upon a poll, each share shall have
one vote.
Options and Performance Rights
Option and performance right holders have no voting rights.
12 AINSWORTH GAME TECHNOLOGY
Shareholder Information (continued)
Twenty largest shareholders
Name
NOVOMATIC AG
VOTRAINT NO 1019 PTY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
ASSOCIATED WORLD INVESTMENTS PTY LTD
NATIONAL NOMINEES LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
THE PAVILION MOTOR INN OF WAGGA WAGGA PTY LTD
BNP PARIBAS NOMS (NZ) LTD
WRITEMAN PTY LIMITED
CASOLA HOLDINGS PTY LTD
BNP PARIBAS NOMS PTY LTD
MR CHRISTIAN JOHN HASTINGS AINSWORTH
MR SASHA ALEXANDER CAJKOVAC
MISS PATTARAWADEE SMARNKEO
MR RICHARD JAMES GOLDSACK + MS AMANDA JANE HAY
RATCLIFFE SMSF PTY LTD
MS AMY WAI-CHUN CHAN
Total
Number of ordinary
shares held
Percentage
of total
178 ,150, 8 17
52.90
30,133,804
22,633,016
20,953,175
12,292,590
10,616,580
5,228,460
1,788,035
1,736,693
1,500,000
1,338,190
1,291,200
1,070,000
1,032,004
770,650
692,819
684,999
546,273
533,451
490,000
293,482,756
8.95
6.72
6.22
3.65
3.15
1.55
0.53
0.52
0.45
0.40
0.38
0.32
0.31
0.23
0.21
0.20
0.16
0.16
0.15
87.16
ANNUAL REPORT 2020
13
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 2020 and the auditor’s
report thereon.
1. DIRECTORS
The directors of the Company at any time during or since the end of the financial year are:
Name, qualifications
and independence status
CURRENT
Mr Daniel Eric Gladstone
Chairman and Non-Executive Director
Age
Experience, special responsibilities and other directorships
65 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
Mr Graeme John Campbell OAM
Lead Independent Non-Executive Director
63 yrs
2000.
– Member of Regulatory and Compliance Committee since 2010 until
30 June 2019.
– Chief Executive Officer since 2007 (Executive Director since 2010) until
30 June 2019.
– Non-Executive Director since 1 July 2019, appointed Chairman on
26 November 2019.
– 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, Former Director of Central
Coast Stadium and Blue Pyrenees Wines.
– Former Director and Chairman of Lantern Hotels Group.
– Recipient of J.P. Stratton award and Ern Manea Gold Medal. Inducted
into the Inter Dominion Hall of Fame in February 2014. Awarded Order
of Australia medal in January 2018 for services to harness racing.
– Director of Liquor Marketing Group Limited (Bottle Mart) since 2013.
– Director of NSW Harness Racing Club since October 2016.
– Chairman of Audit Committee of Illawarra Catholic Club Group.
– Member of Audit Committee since 2017 until 26 November 2019 -
appointed Chairman from 26 November 2019, 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 until appointed
Chairman in 2016 until 26 November 2019. Lead independent
Non-Executive Director since 26 November 2019.
Mr Michael Bruce Yates B.Com (with merit),
LLB
Independent Non-Executive Director
66 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 since 2013,
member of Audit Committee since 2015 and member of Remuneration
and Nomination Committee since 26 November 2019.
14 AINSWORTH GAME TECHNOLOGY
Directors’ Reportfor the year ended 30 June 2020 Name, qualifications
and independence status
CURRENT
Age
Experience, special responsibilities and other directorships
Mr Colin John Henson,
Dip-Law BAB; FCPA; FCG (CS, CGP) FAICD
Independent Non-Executive Director
72 yrs
Mr Harald Michael Karl
Neumann
Non-Executive Director
58 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.
– Former directorships
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 since 2017 and Chairman from 1 April
2017 until 26 November 2019. Member of Audit Committee from
26 November 2019.
– Chairman of Remuneration and Nomination Committee since 2015.
– Member of Regulatory and Compliance Committee since 26 November
2019.
– 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.
– Chief Executive Officer and Chairman of the Executive Board of
Novomatic from 2014 until 29 February 2020. From February 2020
undertakes role as Senior Advisor to Novomatic AG.
– 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 2017.
– Non-Executive Director since 2017.
FORMER
Ms Heather Alice Scheibenstock
GAICD, FGIA
Independent Non-Executive Director
52 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.
– Former director of Southern Metropolitan Cemeteries Trust.
– Director of Ability Options since 2017 and SenSen Networks Ltd from
7 September 2018.
– Chair of Audit and Risk Committee at SenSen Networks Ltd.
– Member of Australian Institute of Company Directors and Women on
Boards.
– Fellow of Governance Institute of Australia.
– Member of Remuneration and Nomination Committee since 2016.
– Member of Regulatory and Compliance Committee since 2017
– Director since 2016, resigned on 26 November 2019.
ANNUAL REPORT 2020
15
Directors’ Report (continued)for the year ended 30 June 2020 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
GJ Campbell
MB Yates
DE Gladstone
CJ Henson(1)
HK Neumann(2)
HA Scheibenstock(3)
Board Meetings
A
B
14
14
14
14
8
4
14
14
14
14
8
4
Audit Committee
Meetings
Remuneration
& Nomination
Committee Meetings
Regulatory
& Compliance
Committee Meetings
A
2
2
–
2
–
–
B
2
2
–
2
–
–
A
3
2
–
3
–
1
B
3
2
–
3
–
1
A
–
4
–
2
–
1
B
–
4
–
2
–
1
A - Number of meetings attended
B - Number of meetings held during the year (excluding approved leave of absence and meetings held whilst not a director/member)
(1) Mr CJ Henson was appointed a member of the Regulatory & Compliance Committee on 26 November 2019 and had approved leave of
absence for one meeting during the year due to international travel commitments.
(2) Mr HK Neumann had approved leave of absence for six Board meetings during the financial year due to time difference difficulties and
his international country of residence.
(3) Ms HA Scheibenstock resigned on 26 November 2019 and meetings held are recorded during her tenure as a director.
All associated Board documentation and discussions held during these meetings were provided to ensure their knowledge of any
Company business was appropriately made available.
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 online 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 well-established and recognised 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:
– reduce operating expenditure and maintain liquidity whilst the economic effects of COVID-19 continue;
– focus on regaining market share decline in domestic market and growing international revenue;
– improve profitability within geographical markets that are expected to achieve the greatest contributions to the Group’s
financial results, and creation of growth;
– diversify and expand on contributions from recurring revenue through units under gaming operation;
16 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 – prudently invest 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 online 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 an improved return on shareholder equity through 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;
– 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 recorded a statutory net loss after tax of $43.4 million for the year ended 30 June 2020, compared to the $10.9 million
profit recorded in 2019. The loss after tax, excluding the effect of net foreign currency movement was $44.2 million which is a
decrease of 780% compared to $6.5 million profit in 2019. The current year loss before tax result, excluding the effect of net
foreign currency gains, was $50.0 million.
The Group recorded a statutory net loss before tax of $48.8 million which includes a non-cash impairment charge of $12.0 million
relating to the write down of assets within the Latin America Cash Generating Unit (“CGU”), other one-off non-recurring costs of
$7.0 million and $3.8 million of other benefits received as a result of COVID-19, including JobKeeper subsidies. Excluding these
out of ordinary items and currency, the Group reported an underlying net loss before tax of $34.8 million.
The following table summarises the results for the year:
In millions of AUD
Total Revenue
Underlying EBITDA
Reported EBITDA
EBIT
(Loss)/profit before tax
(Loss)/profit for the year
Total assets
Net assets
12 months to
30 June 2020
Statutory
AASB 16
Leases
12 months to
30 June 2020
Underlying
12 months to
30 June 2019
Variance
%
149.4
5.8
(9.0)
(49.0)
(48.8)
(43.4)
465.5
354.6
–
(2.2)
(2.7)
(0.3)
0.6
0.4
(15.8)
(0.7)
149.4
234.3
3.6
(11.7)
(49.3)
(48.2)
(43.0)
449.7
353.9
43.0
44.8
11.4
14.7
10.9
483.3
393.5
(36.2%)
(91.6%)
(126.1%)
(532.5%)
(427.9%)
(494.5%)
(7.0%)
(10.1%)
Earnings per share (fully diluted)
(13.0 cents)
–
(13.0 cents)
3.0 cents
(533.3%)
ANNUAL REPORT 2020
17
Directors’ Report (continued)for the year ended 30 June 2020 5. OPERATING AND FINANCIAL REVIEW (continued)
A reconciliation of the reported EBITDA to the underlying EBITDA is shown in the following table:
In millions of AUD
Reconciliation:
(Loss)/profit before tax
Net interest income
Depreciation and amortisation
Reported EBITDA
Foreign currency gains
Impairment losses (LATAM CGU)
Impairment losses (616 Digital LLC)
Impairment losses (Receivables)
Impairment losses (NSW Service Goodwill)
Bad debt recoveries
Legal costs and settlement claims
Redundancy costs
JobKeeper subsidies
US payroll tax refund
Rent concessions
Underlying EBITDA
12 months to
30 June 2020
Statutory
AASB 16
Leases
12 months to
30 June 2020
Underlying
12 months to
30 June 2019
Variance
%
(48.8)
(0.2)
40.0
(9.0)
(1.2)
12.0
0.7
3.4
–
(0.2)
2.7
1.2
(2.8)
(0.5)
(0.5)
5.8
0.6
(0.9)
(2.4)
(2.7)
–
–
–
–
–
–
–
–
–
–
0.5
(2.2)
(48.2)
(1.1)
37.6
(11.7)
(1.2)
12.0
0.7
3.4
–
(0.2)
2.7
1.2
(2.8)
(0.5)
–
3.6
14.7
(3.3)
33.4
44.8
(6.0)
–
1.9
0.9
2.4
(1.0)
–
–
–
–
–
(427.9%)
(66.7%)
12.6%
(126.1%)
(80.0%)
N/A
(63.2%)
277.8%
N/A
(80.0%)
N/A
N/A
N/A
N/A
N/A
43.0
(91.6%)
The information presented in this review of operations has not been audited in accordance with the Australian Auditing
Standards.
18 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 Shareholder returns
$’000
2020
2019
2018
2017
2016
(Loss)/profit attributed to owners of the company
($43,433)
$10,895
$31,936
$37,930
$55,703
Basic EPS ($A)
Dividends paid
Change in share price ($A)
($0.13)
–
($0.26)
$0.03
$8,313
($0.37)
$0.10
$0.12
$0.17
$4,966
$16,386
$32,245
($1.12)
No Change
($0.41)
Net profit amounts for 2016 to 2020 have been calculated in accordance with Australian Accounting Standards (AASBs).
Investments for future performance
As a result of the COVID-19 pandemic a re-evaluation of business operations was required to reduce all operational expenditure
across the Group to protect liquidity and mitigate financial results whilst revenue declines are experienced. The Group has
conducted a comprehensive review to evaluate opportunities within domestic and international gaming sectors during the
period. Further investments in research and development have been evaluated to ensure previously implemented changes in
game development are pursued to complement the release of the new A-Star™ hardware in February 2020. This investment is
expected to assist the ongoing expansion and breadth of innovative, technically advanced and consistently high performing
products.
During the year, the Group continued to execute previously identified strategies and plans across its global product development
operations, which most notably includes game development, software and hardware activities. The Group has significantly
bolstered its ability to develop highly competitive game content as a consequence of expanding its internal studios through
the appointment of additional experienced game developers to its internal studios in Australia and Las Vegas. Furthermore,
the Group has in place agreements with third-party game development studios located in Australia and overseas to further
diversify the Group’s game content and complement the innovation capabilities of the Group’s internal studios.
The Group has now started to secure key regulatory approvals for a new EGM software platform that will power the Group’s
future range of games. This software platform provides a more “off-the-shelf” development environment that allows the Group
to deliver a broader and more complex range of gaming content as well as to benefit from the efficiencies provided by modern
software development methodologies and tools. This has also enabled the Group to attract new software development talent
from a larger pool of highly skilled software developers.
Ainsworth Interactive is now a self-contained division that is engaged in the design, development and distribution of digital
gaming solutions for regulated online real-money gaming, social casino and mobile gaming worldwide. This strategy is to focus
on expanding our game content distribution network throughout the online markets of Europe, Latin America (“LATAM”) and
the USA, continuing to invest in interactive product innovation.
We have extended our game content development and licensing agreement with the NASDAQ listed Zynga Inc that will extend
and deepen Ainsworth and Zynga’s existing strategic relationship through the addition of new Ainsworth interactive content to
Zynga’s “Hit It Rich” social casino app.
Our B2C casino, Mustang Money, continues to grow its player database and its revenues in line with expectations. We have
launched strategic advertising campaigns with Facebook, Instagram and Twitter geared at positioning Ainsworth’s iconic
brands as a premiere online wagering offering in Mexico.
Ainsworth’s recent acquisition of MTD, a Montana-based game development company that specializes in video poker and
keno products, is focused on expanding delivery of these products into more traditional Class III markets, such as Nevada and
California.
The Group’s Class II Historical Horse Racing (HHR) products are experiencing more placements into existing and new markets,
with Ainsworth already integrating products from other manufactures such as IGT, SciGames and Konami. This niche product
is a top performer in its class.
The synergies with Group’s majority shareholder, Novomatic AG (NAG), continue to expand. Ainsworth has been appointed
non-exclusive distributor for NAG’s products across Asia Pacific. Improved cooperation for technical, commercial and content
sharing will benefit both companies moving forward.
Significant changes in the state of affairs
Other than matters arising from the impacts of the COVID-19 pandemic discussed in the operating and financial review in the
Directors’ report and elsewhere in this financial report, there were no significant changes in the state of affairs of the Group
during the financial year.
ANNUAL REPORT 2020
19
Directors’ Report (continued)for the year ended 30 June 2020 OPERATING AND FINANCIAL REVIEW (continued)
5.
Review of principal businesses
Results in the current period and prior corresponding period are summarised as follows:
In millions of AUD
Segment revenue
Australia and the Rest of the World
Australia
Rest of the World
Total Australia and the Rest of the World
Americas
North America
Latin America
Total Americas
Total segment revenue
Segment result
Australia and the Rest of the World
Australia
Rest of the World
Total Australia and the Rest of the World
Americas
North America
Latin America
Total Americas
Total segment result
Unallocated expenses
Net foreign currency gains
R&D expenses
Corporate expenses
Other expenses
Share of loss of equity-accounted investee
Total unallocated expenses
Less : interest included in segment result
EBIT
Net interest income
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit after income tax
20 AINSWORTH GAME TECHNOLOGY
12 months to
30 June 2020
12 months to
30 June 2019
Variance
Favourable/
(Unfavourable)
Variance %
Favourable/
(Unfavourable)
28.3
7.0
35.3
72.1
42.0
114.1
149.4
0.4
2.8
3.2
25.3
2.3
27.6
30.8
1.2
(41.2)
(22.2)
(15.4)
–
(77.6)
(2.2)
(49.0)
0.2
(48.8)
5.4
(43.4)
36.1
11.5
47.6
114.0
72.7
186.7
234.3
2.8
6.8
9.6
47.1
24.0
71.1
80.7
6.0
(40.4)
(25.0)
(4.3)
(0.1)
(63.8)
(5.5)
11.4
3.3
14.7
(3.8)
10.9
(7.8)
(4.5)
(21.6%)
(39.1%)
(12.3)
(25.8%)
(41.9)
(30.7)
(72.6)
(84.9)
(2.4)
(4.0)
(6.4)
(21.8)
(21.7)
(43.5)
(49.9)
(4.8)
(0.8)
2.8
(11.1)
0.1
(13.8)
3.3
(36.8%)
(42.2%)
(38.9%)
(36.2%)
(85.7%)
(58.8%)
(66.7%)
(46.3%)
(90.4%)
(61.2%)
(61.8%)
(80.0%)
(2.0%)
11.2%
(258.1%)
N/A
(21.6%)
(60.0%)
(60.4)
(529.8%)
(3.1)
(93.9%)
(63.5)
(432.0%)
9.2
242.1%
(54.3)
(498.2%)
Directors’ Report (continued)for the year ended 30 June 2020 Key performance metrics
Segment result margin
Australia and the Rest of the World
Australia
Rest of the World
Total Australia and the Rest of the World
Americas
North America
Latin America
Total Americas
Segment result margin
R&D expense
Adjusted EBIT(1)
Adjusted (loss)/profit before income tax(1)
Adjusted (loss)/profit after income tax(1)
Effective tax rate
(1) Excludes net foreign currency gain of $1,245 thousand (2019: $6,045 thousand)
% of revenue
Variance
12 months to
30 June 2020
12 months to
30 June 2019
Points
1.4
40.0
9.1
35.1
5.5
24.2
20.6
27.6
(33.6)
(33.5)
(29.9)
7.8
59.1
20.2
41.3
33.0
38.1
34.4
17.2
2.3
3.7
2.1
(6.4)
(19.1)
(11.1)
(6.2)
(27.5)
(13.9)
(13.8)
10.4
(35.9)
(37.2)
(32.0)
%
Variance
11.1
25.9
(14.8)
The COVID-19 pandemic has created a very challenging period for AGT’s people, the gaming industry it operates in, particularly
the land-based sector and customers. The pandemic has materially impacted our FY20 results. COVID-19 restrictions mean
that customers across all AGT’s markets had to suspend their operations from mid-March 2020. Some reopening of customers’
facilities have occurred since that time, although venues have reduced capital expenditure due to visitations being well below
pre-pandemic levels.
During this period, AGT’s priorities are the health and wellbeing of its employees and the preservation of shareholders’ funds.
The Group is providing flexibility for staff to work safely and remotely.
Revenue
Revenue for the period was $149.4 million, compared to $234.3 million in 2019, a decrease of 36%. International revenue
contributed 81% of total revenue, compared to 85% in prior corresponding period.
Revenue across all land-based business was adversely impacted by closures of customer venues due to COVID-19, resulting
in an overall decline in the Group’s primary markets, North America, Latin America and Australia. The closure in March 2020
impacted the Group’s revenue in quarter 4, which typically is the Group’s strongest quarter. Revenue from the Group’s online
market reported an increase of 10% compared to prior corresponding period.
International revenue was $121.1 million compared to $198.2 million in 2019, a decrease of 39%, mainly driven by the decrease
in sales in the Americas. The Americas contributed 94% of total international revenue, with North America and Latin America
representing 59% and 35% respectively.
The North American region reported revenue of $72.1 million, compared to $114.0 million the previous corresponding period in
2019, a decline of 37%. Participation revenue fell by $4.8 million due to the closure of venues in quarter 4 of FY20. The overall
revenue decline was predominately due to reduced outright unit sales expected following the intended launch of the new
A-Star™ Curve cabinet at the National Indian Gaming Association (NIGA) Trade Show in April 2020, which was cancelled due
to the pandemic.
ANNUAL REPORT 2020
21
Directors’ Report (continued)for the year ended 30 June 2020 To assist with the impact of the pandemic and restrictions
established in global markets, various cost minimisation
measures were implemented in quarter 4 of FY20 which
includes but not limited to the following:
– the executive management and other paid directors
voluntarily took 20% reductions in base salaries for the
June 2020 quarter. This has now been extended for
the September 2020 quarter. In addition, the Chairman
waived his fees for the June 2020 quarter;
– rent concessions for the Newington, Australia facility
were provided. The June 2020 quarter rent was waived
and 50% reduction in rent for 6 months to 31st December
2020. Other rental concessions were provided for
service premises occupied;
– stand downs were
initiated across
the Australian
operations as well as reduced working days
to
2-3 days across operational departments. In the USA,
111 employees and 15 contractors were placed on
furlough with a freeze on all new hires; and
– included in FY20 are 67 redundancies (23 in Australia
and 44 in Americas) at an annualised cost reduction of
$6.4 million. In addition, 40 roles have been eliminated at
a further cost reduction of $3.8 million per annum.
Financing income and costs
Net financing income was $1.4 million in the current period,
compared to a net financing income of $9.3 million in
2019. This adverse movement of $7.9 million was a result
of foreign exchange gain of $1.2 million in the current
period compared to a foreign currency gain of $6.0 million
in 2019, an unfavourable change of $4.8 million and an
interest income on trade receivables of $2.2 million in the
current period compared to an interest income on trade
receivable of $5.5 million in 2019, an unfavourable change
of $3.3 million.
Review of financial condition
Capital structure and treasury policy
The Company currently has on issue 336,793,929 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.
5.
OPERATING AND FINANCIAL REVIEW
(continued)
Revenue from Latin America was $42.0 million, compared to
$72.7 million in the previous corresponding period in 2019,
a reduction of 42%. This region continues to be severely
impacted by closures across the primary markets of Mexico,
Argentina and Peru. Reduced participation revenue and the
delayed launch of new A-Star™ hardware have impacted
operators across the region which is expected to continue
into H1FY21 with progressive recovery in H2FY21.
Australia and Rest of the World revenue was $35.3 million in
FY20 compared to $47.6 million in the prior corresponding
period, a decline of 26%. The core markets of New South
Wales, Asia and Europe/Other regions contributed 50% and
31% of the overall decline respectively.
Further progress in accelerating monetisation of online
real money and social gaming was achieved in the period.
Online revenue included under Rest of World (Europe/
Other) was $4.6 million compared to $4.2 million in the prior
corresponding period. The Group has now gone live with
several leading operators in New Jersey to leverage proven
and recognised game titles within their database of players.
An extension to established agreements with Zynga is
expected to at least maintain current royalty levels in FY21.
Operating costs
Despite challenging conditions for the Group, gross margin
of 61% was achieved for the full year FY20, which was broadly
consistent with prior corresponding period of 60%. North
America, the largest contributor to the overall gross margin
for the Group, increased its margin by 3%. This increase was
however offset by the drop in margin in the Australia segment
due to higher production overhead recovery costs as a result
of lower unit sales.
Operating costs, excluding cost of sales, other expenses
and financing costs were $122.7 million, a decrease of 6%
over 2019. This decrease was primarily due to reduced
sales, service & marketing (SSM) expense as a result of low
sales due to COVID-19.
Sales, service and marketing expenses were $59.3 million,
a decrease of $5.6 million compared to 2019. This decrease
is associated with lower sales and COVID-19 restrictions
e.g. warranty expenses, commissions, travel expenses and
trade show expenses.
Research and development (R&D) expense was $41.2 million,
an increase of $0.8 million over 2019, and now represents
28% of revenue (2019: 17%). This increase is due to higher
amortisation costs because of the commercialisation of
previously capitalised projects as well as an increase in third
party contractors and license fees.
Administration costs were $22.2 million, a decrease of
$2.8 million compared to 2019. This decrease was because
of a reduction in personnel costs as a result of JobKeeper
subsidies and reduced working hours due to the COVID-19
pandemic.
22 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 Cash flows from operations
The Group continues to generate positive cash flows from
operating activities. Net cash inflows from operations for
the year ended 30 June 2020 was $16.7 million, a decrease
of $44.5 million compared to the corresponding period
in 2019. This was mainly attributable to the reduction in
debtors’ collections as a result of the closure of venues in
quarter 4 in FY20.
Liquidity and funding
AGT had cash balances at 30 June 2020 of $26.5 million,
compared to $61.7 million at 30 June 2019. Net debt of
($17.5 million) compared to net cash of $6.2 million.
In H2FY20 the completion of the MTD acquisition in
March 2020 required US$18.0 million of consideration
including US$5.0 million to be held subject to re-signing of
a key contract in Montana or attaining set financial targets.
US$10.0 million was drawn down to facilitate this acquisition.
In H1FY20, $26.8 million of loans were repaid, resulting in
an overall reduction of $11.5 million in loans during the year.
The Group has a secured bank loan with a carrying amount
of $43.9 million as at 30 June 2020 with ANZ bank. On
24 August 2020, the Group signed a deed of amendment
for the ANZ loan facility and renegotiated the terms of the
facility with amendments to the facility limit and financial
covenants as at 30 June 2020. The facility limit has been
reduced to $60.0 million with progressive reductions of
$10.0 million in each of December 2020, March 2021,
and April 2021, which will result in a reduced facility of
$30.0 million by end of April 2021. The amended covenants
will be in place for the remaining term of the loan, which
expires on 30 September 2021 and relate to maintenance of
minimum liquidity levels, monthly reporting obligations and
achievement of quarterly sales targets for the Group, based
on the Group’s 18 month forecasted cash flows.
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
No dividends were declared and paid by the company for
the year ended 30 June 2020.
EVENTS SUBSEQUENT TO REPORTING DATE
7.
On 24 August 2020, the Group signed a deed of amendment
for the ANZ loan facility and renegotiated the terms of the
facility with amendments to the facility limit and financial
covenants as at 30 June 2020. The facility limit has reduced
to $60.0 million with progressive reductions of $10.0 million
in each of December 2020, March 2021, and April 2021,
which will result in a reduced facility of $30.0 million by end
of April 2021.
The amended covenants will be in place for the remaining
term of the loan, which expires on 30 September 2021 and
relate to maintenance of minimum liquidity levels, monthly
reporting obligations and achievement of quarterly sales
targets for the Group, based on the Group’s 18 month
forecasted cash flows.
Other than the matter discussed above, there has not arisen
in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material
and unusual nature likely, in the opinion of the directors of
the Company, to affect significantly the operations of the
Group, the results of those operations, or the state of affairs
of the Group, in future financial years.
8. LIKELY DEVELOPMENTS
The Group continues to navigate through government
restrictions imposed by COVID-19 across global markets.
Development initiatives previously implemented have been
progressed to ensure the necessary product approvals,
helping to achieve improved product performance and
financial improvement in future periods as markets recover.
Further execution of strategies in online gaming markets
with extensions of partnerships with top performing social
game providers and the launch of our US based remote
gaming server in North America are expected to provide
complementary revenue gains within online social and “Real
Money” gaming segments in future periods. This strategy
is aimed at achieving increased market share in selected
geographical business sectors 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.
ANNUAL REPORT 2020
23
Directors’ Report (continued)for the year ended 30 June 2020 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 GJ Campbell
Mr MB Yates
Mr CJ Henson
Ms HA Scheibenstock
Mr DE Gladstone
Mr HK Neumann
Ainsworth Game
Technology Limited
Ordinary shares
Performance
rights over
ordinary shares
389,241
43,600
135,189
15,344
174,765
–
–
–
–
–
–
–
10. SHARE OPTIONS/PERFORMANCE RIGHTS
Unissued shares under share options/performance rights
At the date of this report unissued ordinary shares of the Group under performance right are:
Expiry date
01 March 2022
30 August 2024
Instrument
Exercise price
Number of
shares
Performance Rights
$nil
2,716,877
Share Options
$0.73
9,898,621
12,615,498
There are no other shares of the Group under performance rights/share options.
All performance rights outstanding were granted in FY17 (i.e. 1 March 2017) and 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.
All share options outstanding were granted in FY20 (i.e. 30 August 2019) and are subject to achievement of share price growth
of at least 50% in the exercise price of $0.73 at the first vesting date, followed by compounded growth of at least 20% in the
second and third vesting dates respectively. 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/performance rights
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.
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
11.
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.
24 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 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
In relation to taxation services
Audit and review of financial statements
Total paid/payable to KPMG
2020
$
22,500
69,116
91,616
282,000
373,616
LEAD AUDITOR’S INDEPENDENCE DECLARATION
13.
The Lead auditor’s independence declaration is set out on page 102 and forms part of the directors’ report for the financial year
ended 30 June 2020.
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.
ANNUAL REPORT 2020
25
Directors’ Report (continued)for the year ended 30 June 2020 15. REMUNERATION REPORT
Message from the Chairman of the Remuneration
and Nomination Committee
On behalf of the Remuneration and Nomination Committee
(RNC) and with the authority of the Board of Directors I provide
the FY20 Remuneration Report. The commencement of the
COVID-19 pandemic in March 2020 and the consequential
government-imposed restrictions negatively affected the
earnings of venues and of all the Group’s customers. The
global gaming industry has been significantly impacted
and the Group has acted to mitigate reduced revenue for
the immediate period. In particular within the FY20 period
(quarter 4 ended 30 June 2020) the RNC in consultation
with the Board, adopted measures to immediately reduce
salary related expense. These measures included:
– the Group’s Chairman (Mr DE Gladstone) waived his
Board fees for the 30 June quarter resulting in a saving
of $68,440. Since the reporting date (30 June 2020)
the Chairman has agreed to a further 20% reduction in
his fees for the period ending 30 September 2020, an
additional saving of $13,688;
– voluntary reductions by independent directors of 20% of
Board fees (including Sub-Committee fees and related
from
superannuation payments) became effective
1 April 2020. This resulted in a monthly saving of $8,778
and a $26,334 saving in FY20. It was agreed by the
independent directors to extend these reductions for the
period ending 30 September 2020;
– executive Key Management Personnel
similarly
volunteered a 20% reduction in Base Salary for the
three months ended 30 June 2020 which resulted in
savings of $73,668 for FY20, including superannuation
payments. These reductions were also extended to the
quarter ending 30 September 2020;
– in addition to the above, other key executives throughout
the Group had base salary reduced by up to 20% for the
periods stated above resulting in savings in FY20 of
$415,785;
– reduced working days, stand downs and employees
within the Americas being placed on furlough were
maintained throughout the period; and
– the remuneration of directors, executives and staff will be
reviewed on 1 October 2020 and, subject to prevailing
conditions, may revert to pre COVID-19 levels.
The 2019 Annual General Meeting (AGM) approved the
2019 Remuneration Report with 0.35% of shareholders
voting against the resolution. During the lead-up to the
2019 AGM the Company engaged with major shareholders
to discuss any concerns and ensure robust remuneration
strategies were established. This followed the appointment
of an independent remuneration consultant (Remuneration
Strategies Pty Ltd (RS)) during 2019 to review current
remuneration practices and proxy service reports.
26 AINSWORTH GAME TECHNOLOGY
The objective of the engagement
involved assisting
the RNC to develop remuneration structures including
Fixed Remuneration (FR), Short-Term Incentives (STI) and
Long-Term Incentives (LTI) that align with appropriate
financial objectives.
The Committee’s approach to remuneration structures
includes the following:
– to align executive remuneration with
the Group’s
business strategy; and
– to support, retain and motivate our people by providing
competitive rewards.
The remuneration of key executives is fully aligned to
our key business objectives listed in section 15.2 which
underpin future remuneration structures, including STI and
LTI compensation programs.
The Performance Rights Plan granted on 1st March 2017
remains in place, based on 15% compound increases in the
Volume Weighted Average Price (VWAP) – refer to section
15.1.5.
A new grant of share options under the LTI Plan was
established on 30 August 2019. These share options have
an exercise price of $0.73 based on the share price at the
grant date. The share options vest progressively over a four
year period – 25% on 30 August 2021, 25% on 30 August
2022 and 50% on 30 August 2023, providing share price
hurdles are met. The share price hurdles are increased
at each relevant vesting date and the share options are
cumulative on the basis that the higher share price is
achieved when measured. Vesting is also dependant on
service conditions. The structure and terms of these share
options are designed to align shareholder interests with
Board objectives of improving financial results translating
into share price gains.
FY20 remuneration outcomes
The key remuneration outcomes for FY20 included:
– voluntary reductions to base salaries as outlined
previously;
– no remuneration increases for the Board directors
(last adjustment 1 July 2014). No increases in Key
Management Personnel remuneration since 1 July 2016.
No recommendations for fixed annual remuneration
changes in FY21;
– short-term incentives (STI) for the FY20 period were
not awarded given the COVID-19 financial impact on
the Group. It was determined that no discretionary
non-financial payments would be awarded given the
affect of the pandemic. The current expense recorded
as short-term incentive represents solely deferred
components of prior year amounts with no amounts
provided for the FY20 period;
Directors’ Report (continued)for the year ended 30 June 2020 – following a review of the long-term incentive (LTI) by RS and as outlined in the 2019 Remuneration Report a new LTI grant
was made in August 2019 to assist in incentivising and retaining our workforce;
– the LTI grants in place during the year are summarised below:
– grant of 17 March 2015 Performance Rights where 50% lapsed on each of 17 March 2019 and 2020, respectively. No
performance rights under this LTI grant vested and all applicable grants have been forfeited;
– grant of 1 March 2017 Performance Rights. Performance conditions were not met at the relevant vesting date of 1 March
2020. These will be re-tested at the next applicable performance date being 1 March 2021 and will be subject to the
higher performance condition; and
– on 30 August 2019 share options were granted subject to vesting, performance and service conditions as detailed
above.
Remuneration strategies will be continually reviewed to ensure they align with Board objectives over the coming year.
CJ Henson,
Chairman, Remuneration and Nomination Committee
ANNUAL REPORT 2020
27
Directors’ Report (continued)for the year ended 30 June 2020 Contents
15.1 Remuneration Framework – audited
15.1.1 Fixed compensation
15.1.2 Performance linked compensation
15.1.3 Short-term incentive bonus
15.1.4 Non-Financial KPI’s
15.1.5 Long-term incentive
15.1.6 Short-term and long-term incentive structure
15.1.7 Other benefits
15.2
Linking the Remuneration Framework to business outcomes- audited
15.2.1 Consequences of performance on shareholder wealth
15.3 Service contracts – audited
15.4 Non-executive directors- audited
15.5 Services from remuneration consultants- audited
15.6 Directors’ and executive officers’ remuneration – audited
15.7 Analysis of bonuses included in remuneration – audited
15.8 Equity instruments – audited
15.8.1 Rights and options over equity instruments granted as compensation
15.8.2 Modification of terms of equity-settled share-based payment transactions
15.8.3 Exercise of options granted as compensation
15.8.4 Details of equity incentives affecting current and future remuneration
15.8.5 Analysis of movements in equity instruments
15.8.6 Rights and options over equity instruments
15.8.7 Movements in shares
29
29
29
30
30
30
31
31
32
32
32
33
33
34
37
37
37
38
38
38
38
39
39
28 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 15.1 Remuneration Framework – 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.
(RNC)
remuneration and nomination committee
The
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.
15.1.1 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 marketplace. A senior executive’s
compensation
reviewed on promotion and
performance under the overall financial performance of
the Group. This review determined that no increases were
awarded from the previous year to any key management
personnel.
The RNC undertook a review of fixed compensation
levels in 2020 to assist with determining an appropriate
mix between fixed and performance linked compensation
for senior executives of the Group during the year. Given
the overall financial performance in the current period no
increases in base compensation were recommended for
the ensuing year until the broader objective of financial
performance was achieved.
is also
15.1.2 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.
ANNUAL REPORT 2020
29
Directors’ Report (continued)for the year ended 30 June 2020 Details of the vesting conditions for outstanding plan are
outlined as follows:
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 (VWAP) for
90 days ending 28/02/2017. The hurdles set for this plan
were 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
This plan currently remains in place.
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.
During the year, Tranche 3 of these rights did not vest at
the third vesting date of 1 March 2020 due to performance
conditions not being met. The grant of this Tranche under
the RST will be re-tested at the end of the next applicable
performance vesting date of 1 March 2021 subject to
the higher performance conditions. If the performance
conditions at the end of the next applicable performance
period are satisfied, then the performance rights for
the current performance period and any non-vested
performance rights from prior performance periods will vest.
15. REMUNERATION REPORT (continued)
15.1 Remuneration Framework – audited (continued)
15.1.3 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.
The financial performance objectives for FY20 comprise
50% for Group ‘profit before tax’ excluding foreign currency
gains/(losses) and 30% for ‘minimum international revenue’
with the remaining 20% being non-financial. These financial
performance targets were assessed by the RNC for all
key management personnel
(excluding non-executive
directors) and it was determined that the Group did not
achieve either the ‘profit before tax’ minimum target or the
minimum international revenue and no STI was payable for
the current year relating to these criteria.
15.1.4 Non-Financial KPI’s
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 for FY20 were assessed on 23 June
2020 by the RNC and it was determined that given the
COVID-19 pandemic and the consequences on financial
performance in the current period, no STI under this
criterion would be awarded in the current period.
linked component of
Currently,
compensation comprises approximately 4% (2019: 1%) of
total payments to key management personnel.
the performance
15.1.5 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.
30 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 Share Options Plan
On 30 August 2019, the Group offered to eligible employees the opportunity to participate in a share option over ordinary
shares in Ainsworth Game Technology Limited, under the Ainsworth Game Technology Limited Option Share Trust (OST). To
be eligible to participate in the OST, the employees were selected by the directors and reviewed by the Remuneration and
Nomination Committee. The OST provides for employees an option to purchase allocated shares at the valuation price at
grant date. Each option is convertible to one ordinary share. Option holders have no voting or dividend rights. On conversion
from option to ordinary shares, the issued shares will have full voting and dividend rights. The ability to exercise the right is
conditional on the continuing employment of the participating employee.
The performance hurdles and vesting conditions for this plan are as follows:
Tranche 1
Tranche 2
Tranche 3
Performance Hurdles
Vesting conditions
On 30 August 2021 (“first vesting
date”), the share price shall be 50%
greater than exercise price of $0.73.
25% will vest if the VWAP for 20 days
preceding the first vesting date is
equal or greater than $1.10
On 30 August 2022 (“second vesting
date”), the share price shall be
20% greater than the hurdle price
established at the first vesting date
On 30 August 2023 (“third vesting
date”), the share price shall be
20% greater than the hurdle price
established at the second vesting date
25% will vest if the VWAP for 20 days
preceding the second vesting date is
equal or greater than $1.32
50% will vest if the VWAP for 20 days
preceding the third vesting date is
equal or greater than $1.58
The hurdles set for this plan were 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.
The share options granted are cumulative whereby should the performance hurdles not be met at the respective vesting
dates, the grant relating to these tranches will be re-tested at the next applicable performance vesting date subject to higher
performance conditions. If the performance conditions at the end of the next applicable performance period are satisfied,
then the share options for the current performance period and any non-vested share options from prior performance periods
will vest.
Options 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, these options will be forfeited and lapse. These share options do not
entitle holder to dividends that are declared during the vesting period.
This plan currently remains in place.
15.1.6 Short-term and long-term incentive structure
Given the highly competitive nature of the gaming industry and to ensure retention of key employees, the RNC has and
continues to consider performance linked remuneration is appropriate.
The current review of both short-term and long-term incentive plans is ongoing to ensure these are aligned to Board and
shareholder interests.
15.1.7 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.
ANNUAL REPORT 2020
31
Directors’ Report (continued)for the year ended 30 June 2020 15. REMUNERATION REPORT (continued)
15.2 Linking the Remuneration Framework to business outcomes- audited
In the Chairman’s introduction to the Remuneration Report, we indicated that the key business objectives will underpin future
remuneration structures. The objectives are:
– invest in product development to create a diverse and creative product offering to increase market share in global markets;
– improve the Group’s performance through revenue and earnings growth in domestic and international markets;
– improve cash flows through reduction in working capital investment and maintain a strong balance sheet to support growth
and deliver value; and
– maintain a strong focus on best practice compliance throughout the Group in adherence to gaming laws and regulations.
The following remuneration structures are being considered by the Remuneration Consultant to achieve these business
objectives:
– short-term incentives that measure and reward increased market share in selected global markets, adherent to the Good
Governance and Compliance with Gaming Laws and Regulations;
– long-term incentives that measure and reward revenue and earnings growth in domestic and international markets, as well as
the achievement of the Balance Sheet and using Capital Investment Targets; and
– the objective of these incentive programs is to increase shareholder value for investors and key management stakeholders.
15.2.1 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. Profit is considered as one of the financial performance
targets in setting the short-term incentive bonus. (Loss)/profit amounts for 2016 to 2020 have been calculated in accordance
with Australian Accounting Standards (AASBs).
$’000
2020
2019
2018
2017
2016
(Loss/profit) attributable to owners of the company
($43,433)
$10,895
$31,936
$37,930
$55,703
Dividends paid
Change in share price ($A)
–
($0.26)
$8,313
($0.37)
$4,966
$16,386
$32,245
($1.12) No change
($0.41)
15.3 Service contracts – audited
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 personnel that provide for the payment
of benefits where the contract is terminated by the Group. The key management personnel 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 Lawrence Levy was appointed as Chief Executive Officer (CEO) effective 1 July 2019 as per his contract with the company
dated 2 May 2019. 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.
32 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 15.4 Non-executive directors- audited
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 was 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 is reimbursed as incurred.
There was no increase in non-executive compensation including Board and Committee fees during the period.
Non-executive directors do not participate in performance related compensation and are not provided with retirement benefits
apart from statutory superannuation.
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 are set
out below.
POSITION
Chair of Board
Lead Independent Director (in addition to directorship fees where applicable)
Australian Resident Non-executive Director
Chair of Audit Committee
Chair of Regulatory and Compliance Committee
Chair of Remuneration and Nomination Committee
Member of Audit Committee
Member of Regulatory and Compliance Committee
Member of Remuneration and Nomination Committee
$
(per annum)
250,000
10,000
120,000
20,000
24,000
12,000
12,000
15,000
8,000
15.5 Services from remuneration consultants- audited
The RNC, comprising of independent non-executive directors only, has utilised the services of an independent remuneration
consultant (Remuneration Strategies Pty Ltd (RS)) to assist the RNC review and evaluate remuneration practices of the Group.
The RNC received a report from RS in 2019 to assist in establishing a long-term incentive aligned to Board objectives and
shareholder interests. The grant of share options on 30 August 2019 was in line with recommendations provided by RS. A total
of $nil (2019: $12,900) was paid during the year for these services.
The Board made its own inquiries and reviewed the processes and procedures followed by the remuneration consultant during
the course of their assignment to ensure that they were satisfied that any remuneration recommendations are made free from
undue influence.
The Board’s inquiries included a summary of the way in which the remuneration consultant carried out any work, details of any
interaction with non-executive directors in relation to the assignment and other services, and further questions in relation to
the assignment.
ANNUAL REPORT 2020
33
Directors’ Report (continued)for the year ended 30 June 2020 f
o
e
u
a
V
l
s
a
s
n
o
i
t
p
o
f
o
n
o
i
t
r
o
p
o
r
p
n %
o
i
t
a
r
e
n
u
m
e
r
d %
e
t
a
e
r
l
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
d
e
s
a
b
-
e
r
a
h
S
s
t
n
e
m
y
a
p
-
g
n
o
l
r
e
h
t
O
m
r
e
t
-
t
s
o
P
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
l
m
r
e
t
-
t
r
o
h
S
l $
a
t
o
T
) $
B
(
s $
t
i
f
e
n
e
b
) $
C
(
s
t
h
g
R
i
n
o
i
t
a
n
m
r
e
T
i
s $
t
i
f
e
n
e
b
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
l $
a
t
o
T
s $
t
i
f
e
n
e
b
) $
A
(
s $
e
e
f
-
n
o
N
h
s
a
c
I
T
S
y
r
a
t
e
n
o
m
s
u
n
o
b
&
y
r
a
a
S
l
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
6
9
3
1
2
,
0
5
6
5
9
2
,
6
6
9
5
6
1
,
0
2
8
0
7
1
,
7
4
3
2
6
1
,
0
4
4
6
6
1
,
7
8
7
7
4
1
,
–
–
–
5
6
6
9
5
,
5
8
5
6
5
1
,
6
2
7
9
4
7
,
5
9
4
9
8
7
,
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3
6
5
8
1
,
8
9
3
5
9
1
,
0
5
6
5
2
,
0
0
0
0
7
2
,
9
9
3
4
1
,
0
2
8
4
1
,
5
8
0
4
1
,
0
4
4
4
1
,
2
2
8
2
1
,
–
–
–
–
–
–
7
6
5
,
1
5
1
0
0
0
6
5
1
,
2
6
2
8
4
1
,
0
0
0
2
5
1
,
5
6
9
4
3
1
,
6
7
1
,
5
5
8
5
3
1
,
5
4
0
5
6
,
5
9
4
8
6
,
9
8
4
4
5
,
0
0
0
3
4
1
,
,
1
8
6
4
8
6
0
0
0
,
1
2
7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
9
3
5
9
1
,
0
0
0
0
7
2
,
7
6
5
,
1
5
1
0
0
0
6
5
1
,
2
6
2
8
4
1
,
0
0
0
2
5
1
,
5
6
9
4
3
1
,
–
–
–
9
8
4
4
5
,
0
0
0
3
4
1
,
,
1
8
6
4
8
6
0
0
0
,
1
2
7
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
:
e
r
a
y
t
i
t
n
e
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
f
o
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
r
e
h
t
o
d
n
a
,
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
d
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
f
o
l
t
n
e
m
e
e
r
o
a
m
h
c
a
e
j
f
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
N
D
U
A
n
I
l
l
e
b
p
m
a
C
J
G
r
M
t
n
e
r
r
u
C
s
e
t
a
Y
B
M
r
M
n
o
s
n
e
H
J
C
r
M
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
d
e
i
t
n
o
p
p
A
(
e
v
i
t
c
e
f
f
e
n
a
m
r
i
a
h
C
,
9
1
0
2
y
u
J
l
1
)
9
1
0
2
r
e
b
m
e
v
o
N
6
2
e
n
o
l
t
s
d
a
G
E
D
r
M
’
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
l
a
t
o
t
-
b
u
S
n
o
i
t
a
r
e
n
u
m
e
r
)
9
1
0
2
r
e
b
m
e
v
o
N
6
2
d
e
n
g
s
e
r
(
i
i
k
c
o
t
s
n
e
b
e
h
c
S
A
H
s
M
r
e
m
r
o
F
n
n
a
m
u
e
N
K
H
r
M
)
d
e
u
n
i
t
n
o
c
(
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
d
e
t
i
d
u
a
–
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
e
c
ffi
o
e
v
i
t
u
c
e
x
e
d
n
a
’
s
r
o
t
c
e
r
i
D
.
6
5
1
)
d
e
u
n
i
t
n
o
c
(
I
T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R
.
5
1
34 AINSWORTH GAME TECHNOLOGY
–
–
–
–
–
%
2
%
2
%
3
%
2
%
2
–
%
3
–
%
1
–
–
%
3
1
%
2
%
1
1
%
2
f
o
e
u
a
V
l
s
a
s
n
o
i
t
p
o
f
o
n
o
i
t
r
o
p
o
r
p
n %
o
i
t
a
r
e
n
u
m
e
r
d %
e
t
a
e
r
l
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
l $
a
t
o
T
–
) $
B
(
–
6
5
6
7
2
7
,
)
4
0
8
7
6
2
,
(
6
2
7
9
4
7
,
–
1
5
1
,
7
1
5
,
1
)
4
0
8
7
6
2
,
(
-
–
3
2
5
,
1
6
8
5
3
8
7
1
,
8
6
1
,
0
2
6
2
9
2
5
1
,
,
4
9
5
9
3
5
3
9
4
,
1
0
4
3
0
3
6
7
3
,
1
4
3
7
1
,
3
2
6
8
,
5
9
1
,
9
d
e
s
a
b
-
e
r
a
h
S
s
t
n
e
m
y
a
p
-
g
n
o
l
r
e
h
t
O
m
r
e
t
-
t
s
o
P
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
l
m
r
e
t
-
t
r
o
h
S
)
d
e
u
n
i
t
n
o
c
(
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
s
t
h
g
R
i
n
o
i
t
a
n
m
r
e
T
i
s $
t
i
f
e
n
e
b
) $
C
(
s $
t
i
f
e
n
e
b
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
l $
a
t
o
T
s $
t
i
f
e
n
e
b
) $
A
(
s $
e
e
f
-
n
o
N
h
s
a
c
I
T
S
y
r
a
t
e
n
o
m
s
u
n
o
b
&
y
r
a
a
S
l
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
E
D
U
A
n
I
r
e
m
r
o
F
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0
2
0
2
e
v
i
t
u
c
e
x
E
f
i
e
h
C
(
e
n
o
l
t
s
d
a
G
E
D
r
M
2
9
1
,
0
7
9
0
2
3
7
,
9
5
0
2
5
8
,
4
3
4
,
1
8
5
2
6
0
2
,
0
0
0
0
5
7
,
9
1
0
2
e
n
u
J
0
3
O
E
C
s
a
d
e
n
g
s
e
r
i
-
)
r
e
c
i
f
f
O
e
v
i
t
u
c
e
x
e
-
n
o
n
d
e
i
t
n
o
p
p
a
d
n
a
9
1
0
2
r
o
t
c
e
r
i
d
2
9
1
,
0
7
4
0
7
,
1
4
1
,
9
5
0
3
7
5
,
1
4
3
4
,
1
8
5
2
6
0
2
,
0
0
0
,
1
7
4
,
1
9
1
0
2
–
5
4
0
5
6
,
,
1
8
6
4
8
6
–
–
,
1
8
6
4
8
6
0
2
0
2
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
o
t
c
e
r
i
d
l
a
t
o
T
–
–
–
–
3
1
5
5
6
,
5
7
1
,
3
6
0
0
0
5
1
7
,
0
0
0
0
5
,
–
–
0
0
0
5
6
6
,
0
2
0
2
r
e
c
i
f
f
O
e
v
i
t
u
c
e
x
E
f
i
e
h
C
–
y
v
e
L
L
S
r
M
s
e
v
i
t
u
c
e
x
E
t
n
e
r
r
u
C
–
9
1
0
2
)
9
1
0
2
y
u
J
l
1
d
e
i
t
n
o
p
p
a
(
8
8
8
3
3
,
6
3
4
5
3
,
9
2
9
2
5
4
,
5
1
9
9
7
,
0
2
9
0
1
,
4
9
0
2
6
3
,
9
1
0
2
8
8
8
3
3
,
9
1
4
0
4
,
9
6
5
0
3
5
,
9
0
1
,
5
0
1
1
7
4
,
1
8
9
8
9
3
4
3
,
0
2
0
2
/
r
e
c
i
f
f
O
l
i
a
c
n
a
n
F
i
f
i
e
h
C
-
i
k
s
d
u
L
L
M
r
M
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
8
2
5
6
2
,
1
0
7
9
2
,
,
1
4
6
6
3
3
0
0
0
4
2
,
9
6
3
,
3
4
,
2
7
2
9
6
2
0
2
0
2
r
e
g
a
n
a
M
l
a
r
e
n
e
G
-
e
s
e
z
z
u
r
B
V
r
M
8
2
5
6
2
,
6
6
4
7
2
,
4
1
1
,
3
1
3
0
0
0
4
2
,
9
6
6
5
,
,
5
4
4
3
8
2
9
1
0
2
i
s
e
c
v
r
e
S
l
i
a
c
n
h
c
e
T
ANNUAL REPORT 2020
35
f
o
e
u
a
V
l
s
a
s
n
o
i
t
p
o
f
o
n
o
i
t
r
o
p
o
r
p
n %
o
i
t
a
r
e
n
u
m
e
r
d %
e
t
a
e
r
l
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
l $
a
t
o
T
d
e
s
a
b
-
e
r
a
h
S
s
t
n
e
m
y
a
p
-
g
n
o
l
r
e
h
t
O
m
r
e
t
-
t
s
o
P
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
l
s
t
h
g
R
i
n
o
i
t
a
n
m
r
e
T
i
) $
B
(
s $
t
i
f
e
n
e
b
) $
C
(
s $
t
i
f
e
n
e
b
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
l $
a
t
o
T
s $
t
i
f
e
n
e
b
–
%
2
%
1
%
3
%
1
–
–
%
1
%
5
%
1
%
4
%
1
6
4
4
,
0
2
5
)
0
7
4
7
1
(
,
0
0
0
4
8
3
,
8
0
7
7
,
0
0
0
6
4
,
8
0
2
0
0
1
,
9
3
7
,
1
7
4
6
1
1
,
1
1
–
8
3
9
5
3
,
5
4
8
6
3
,
0
4
8
7
8
3
,
–
–
,
0
3
6
3
0
4
2
,
0
8
2
4
2
,
0
0
0
4
8
3
,
7
3
6
3
3
1
,
5
9
2
9
7
1
,
,
8
1
4
2
8
6
,
1
9
0
1
,
9
7
1
0
4
8
4
2
1
,
9
6
4
8
7
3
,
,
1
0
2
0
2
n
o
i
t
a
r
e
n
u
m
e
r
’
s
e
v
i
t
u
c
e
x
e
l
a
t
o
T
6
3
6
7
8
3
,
,
1
2
5
6
7
3
,
–
4
5
3
6
9
,
7
4
7
9
9
,
,
3
8
8
3
5
1
,
1
5
1
9
3
0
1
,
9
2
4
0
2
,
,
9
3
5
9
2
0
,
1
9
1
0
2
6
5
3
,
3
5
1
,
3
0
8
2
4
2
,
0
0
0
4
8
3
,
7
3
6
3
3
1
,
0
4
3
4
4
2
,
,
9
9
0
7
6
3
2
,
9
0
1
,
9
7
1
0
4
8
4
2
1
,
0
5
1
,
3
6
0
2
,
0
2
0
2
e
v
i
t
u
c
e
x
e
d
n
a
’
s
r
o
t
c
e
r
i
d
l
a
t
o
T
,
7
8
7
4
0
9
2
,
)
2
5
1
,
0
3
2
(
–
6
4
5
6
6
1
,
1
5
4
,
1
4
2
,
2
4
9
6
2
7
2
,
9
4
3
5
8
1
,
4
5
0
,
1
4
,
9
3
5
0
0
5
2
,
9
1
0
2
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
e
c
i
f
f
O
y
b
e
r
e
h
w
,
s
m
a
r
g
o
r
p
e
v
i
t
n
e
c
n
i
m
r
e
t
-
t
r
o
h
s
i
s
u
o
v
e
r
p
h
t
i
w
e
c
n
a
d
r
o
c
c
a
n
I
.
d
o
i
r
e
p
t
n
e
r
r
u
c
e
h
t
r
o
f
i
d
a
p
e
b
s
e
v
i
t
n
e
c
n
i
m
r
e
t
-
t
r
o
h
s
o
n
t
a
h
t
d
e
d
n
e
m
m
o
c
e
r
o
h
w
C
N
R
e
h
t
y
b
0
2
0
2
e
n
u
J
3
2
n
o
d
e
r
e
d
s
n
o
c
s
a
w
p
u
o
r
G
e
h
t
i
s
t
n
e
s
e
r
p
e
r
e
v
i
t
n
e
c
n
i
m
r
e
t
-
t
r
o
h
s
s
a
d
e
d
r
o
c
e
r
e
s
n
e
p
x
e
t
n
e
r
r
u
c
e
h
T
.
9
1
0
2
r
e
b
m
e
t
i
p
e
S
1
n
o
d
a
p
d
n
a
d
e
e
r
g
a
e
r
e
w
s
t
n
u
o
m
a
l
l
u
f
e
h
t
r
o
f
l
a
v
o
r
p
p
a
,
s
r
a
e
y
i
s
u
o
v
e
r
p
m
o
r
f
d
e
r
r
e
e
d
y
f
l
l
i
r
a
t
n
u
o
v
n
e
e
b
d
a
h
s
t
n
u
o
m
a
I
T
S
n
o
t
c
e
ff
e
l
i
a
c
n
a
n
fi
t
n
a
t
l
u
s
e
r
e
h
t
d
n
a
9
1
-
i
I
D
V
O
C
g
n
d
n
u
o
r
r
u
s
s
e
c
n
a
t
s
m
u
c
r
i
c
e
h
T
.
3
.
1
.
5
1
n
o
i
t
c
e
s
n
i
t
u
o
t
e
s
a
i
r
e
t
i
r
c
e
h
t
s
e
s
u
r
a
e
y
l
i
a
c
n
a
n
fi
0
2
0
2
e
n
u
J
0
3
e
h
t
g
n
i
r
u
d
e
c
n
a
m
r
o
f
r
e
p
r
o
f
s
u
n
o
b
e
v
i
t
n
e
c
n
i
m
r
e
t
-
t
r
o
h
s
e
h
T
.
A
d
e
t
i
d
u
a
-
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
e
c
ffi
o
e
v
i
t
u
c
e
x
e
d
n
a
’
s
r
o
t
c
e
r
i
d
f
l
o
e
b
a
t
e
h
t
o
t
n
o
i
t
a
e
r
n
l
i
s
e
t
o
N
.
d
o
i
r
e
p
0
2
Y
F
e
h
t
r
o
f
i
d
e
d
v
o
r
p
s
t
n
u
o
m
a
o
n
h
t
i
w
s
t
n
u
o
m
a
r
a
e
y
r
o
i
r
p
f
o
s
t
n
e
n
o
p
m
o
c
d
e
r
r
e
e
d
y
e
o
s
f
l
l
s
n
o
i
t
i
d
n
o
c
h
t
w
o
r
g
e
c
i
r
p
e
r
a
h
s
d
n
a
S
P
E
,
R
S
T
e
h
t
f
o
t
c
a
p
m
i
e
h
t
t
n
u
o
c
c
a
o
t
n
i
i
g
n
k
a
t
r
e
t
f
a
l
e
d
o
m
n
o
l
i
t
a
u
m
s
n
o
i
l
t
r
e
M
s
e
o
h
c
S
k
c
a
B
e
h
t
l
i
g
n
s
u
t
n
a
r
g
f
o
e
t
a
d
e
h
t
t
a
d
e
l
t
a
u
c
a
c
s
l
i
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
f
o
e
u
a
v
l
r
i
a
f
e
h
T
.
B
y
b
d
e
s
s
e
s
s
a
n
e
e
b
e
v
a
h
s
d
r
a
w
a
i
s
u
o
v
e
r
p
f
o
s
e
h
c
n
a
r
t
i
n
a
t
r
e
C
.
d
o
i
r
e
p
g
n
i
t
r
o
p
e
r
h
c
a
e
n
i
e
s
n
e
p
x
e
n
a
i
s
a
d
e
s
n
g
o
c
e
r
s
t
h
g
i
r
e
h
t
f
o
e
u
a
v
l
r
i
a
f
e
h
t
f
o
n
o
i
t
r
o
p
e
h
t
s
i
i
l
d
e
s
o
c
s
d
e
u
a
v
e
h
T
l
.
d
o
i
r
e
p
g
n
i
t
s
e
v
e
h
t
g
n
i
r
u
d
e
v
a
h
s
e
s
u
n
o
b
e
v
i
t
n
e
c
n
i
m
r
e
t
-
t
r
o
h
S
.
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
s
h
t
i
f
o
1
.
5
1
n
o
i
t
c
e
s
n
i
d
e
s
s
u
c
s
d
s
i
i
d
e
l
t
a
e
r
e
c
n
a
m
r
o
f
r
e
p
s
i
t
a
h
t
n
o
i
t
a
r
e
n
u
m
e
r
f
o
n
o
i
t
r
o
p
o
r
p
e
h
t
o
t
n
o
l
i
t
a
e
r
n
i
y
c
i
l
’
o
p
s
p
u
o
r
G
e
h
t
f
o
s
l
i
a
t
e
D
.
0
2
0
2
e
n
u
J
0
3
t
a
s
a
e
b
a
y
a
p
e
r
a
e
s
e
h
t
l
t
a
h
t
t
n
e
t
x
e
e
h
t
o
t
i
d
e
d
v
o
r
p
n
e
e
b
d
e
t
i
d
u
a
-
n
o
i
t
a
r
e
n
u
m
e
r
d
e
t
a
e
r
e
c
n
a
m
r
o
l
f
r
e
p
f
o
s
l
i
a
t
e
D
.
t
fi
e
n
e
b
e
e
y
o
p
m
e
m
r
e
l
t
-
g
n
o
l
r
e
h
t
o
s
a
d
e
fi
i
s
s
a
c
l
s
i
e
v
a
e
l
l
a
u
n
n
a
,
l
s
t
fi
e
n
e
B
e
e
y
o
p
m
E
9
1
1
B
S
A
A
h
t
i
w
e
c
n
a
d
r
o
c
c
a
n
I
.
C
.
l
e
b
a
c
i
l
p
p
a
s
n
o
i
t
i
d
n
o
c
e
c
n
a
m
r
o
f
r
e
p
n
o
d
e
s
a
b
t
s
e
v
o
t
l
y
e
k
i
l
i
n
u
g
n
e
b
s
a
C
N
R
e
h
t
m
r
e
t
-
t
r
o
h
S
-
n
o
N
h
s
a
c
I
T
S
y
r
a
t
e
n
o
m
s
u
n
o
b
&
y
r
a
a
S
l
)
d
e
u
n
i
t
n
o
c
(
d
e
t
i
d
u
a
–
n
o
i
t
a
r
e
n
u
m
e
r
’
s
r
e
c
ffi
o
e
v
i
t
u
c
e
x
e
d
n
a
’
s
r
o
t
c
e
r
i
D
.
6
5
1
)
d
e
u
n
i
t
n
o
c
(
I
T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R
.
5
1
)
d
e
u
n
i
t
n
o
c
(
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
36 AINSWORTH GAME TECHNOLOGY
) $
A
(
–
s $
e
e
f
D
U
A
n
I
r
e
m
r
o
F
8
0
2
0
0
1
,
0
2
0
2
l
y
g
o
o
n
h
c
e
T
f
i
e
h
C
-
r
e
w
o
P
K
r
M
0
4
8
3
,
0
0
0
4
8
3
,
9
1
0
2
)
9
1
0
2
r
e
b
o
t
c
O
4
d
e
n
g
s
e
R
i
(
r
e
c
i
f
f
O
15.7 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 2020 are detailed below:
Included in remuneration $
(A)
% vested in year
(B)
% forfeited in year
(C)
Short-term incentive bonus
Executives
Mr ML Ludski
Mr V Bruzzese
81,471
43,369
100%
100%
100%
100%
A. Amounts for short-term incentive (“STI”) bonuses included in remuneration for the 2020 financial year relates to a previously established
STI scheme whereby the first 50% of the STI was to be paid on 1 September 2018 and the remaining 50% on 1 September 2019, subject
to individual performance targets and service conditions. Although the executives were eligible for the 1 September 2018 payment,
they volunteered to have this first 50% STI amount to be re-evaluated on 1 September 2019. Following an evaluation of individual
performance and the meeting of continuous service criteria, the Board determined that it was appropriate to pay 100% of these deferred
STI amounts on 1 September 2019.
B. The amount vested in the 2020 year represented all previous STI amounts awarded and paid on 1 September 2019 in the current period.
There is no further STI outstanding at 30 June 2020.
C. The amounts forfeited are due to the performance criteria not being met in relation to the current financial year.
All rights and options refer to rights and options over ordinary shares of Ainsworth Game Technology Limited, unless otherwise
stated, which are exercisable on a one-for-one basis under the OST/RST plans.
15.8 Equity instruments – audited
15.8.1 Rights and options over equity instruments granted as compensation
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 options
granted during FY20
Grant
date
Fair value per option
at grant date ($)
Exercise price per
option ($)
Expiry
date
Executives
Mr SL Levy
125,000
30 August 2019
125,000
30 August 2019
250,000
30 August 2019
Mr ML Ludski
59,264
30 August 2019
59,264
30 August 2019
118,528
30 August 2019
Mr V Bruzzese
35,431
30 August 2019
35,431
30 August 2019
70,861
30 August 2019
$0.1327
$0.1282
$0.1229
$0.1327
$0.1282
$0.1229
$0.1327
$0.1282
$0.1229
$0.73
$0.73
$0.73
$0.73
$0.73
$0.73
$0.73
$0.73
$0.73
30 August 2024
30 August 2024
30 August 2024
30 August 2024
30 August 2024
30 August 2024
30 August 2024
30 August 2024
30 August 2024
All share options expire on the earlier of their expiry date or termination of the individual’s employment. For options granted
in the current year, the earliest exercise date is 30 August 2021. In addition to a continuing employment service condition,
the ability to exercise options is conditional on the Group achieving certain performance hurdles. Details of the performance
criteria are included in the long-term incentive’s discussion on page 30 to 31.
ANNUAL REPORT 2020
37
Directors’ Report (continued)for the year ended 30 June 2020 15. REMUNERATION REPORT (continued)
15.8 Equity instruments – audited (continued)
15.8.2 Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions (including performance rights and options 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.
15.8.3 Exercise of options granted as compensation
During the reporting period nil shares (2019: nil shares) were issued on the exercise of rights or options previously granted as
compensation.
15.8.4 Details of equity incentives affecting current and future remuneration
Details of vesting profiles of rights and options held by each key management person of the Group are detailed below:
Mr SL Levy
Mr ML Ludski
Mr V Bruzzese
Mr K Power
Instrument
Number
Grant Date
Options
500,000
30 August 2019
Rights
119,053
01 March 2017
Options
237,056
30 August 2019
Rights
Options
Rights
62,131
141,723
112,228
01 March 2017
30 August 2019
01 March 2017
% vested
in year
% forfeited
in year (A)
Financial
years in which
grant vests
– %
– %
– %
– %
– %
– %
–%
–%
–%
–%
–%
2022-2024
2018-2021
2022-2024
2018-2021
2022-2024
100%
–
A. The % forfeited in the year represents the reduction from the maximum number of rights and options available to vest at the beginning
of the year.
15.8.5 Analysis of movements in equity instruments
The movement during the reporting period, by value, of rights and options over ordinary shares in the Company held by each
key management person of the Group is detailed below:
Current
MR SL Levy
Mr ML Ludski
Mr V Bruzzese
Former
Mr K Power
A. No rights or options were exercised during the year.
Granted in year
$
Amount paid
on exercise
$
Value of rights
exercised
in year
$(A)
Forfeited
in year
$
63,337
30,029
17,953
–
–
–
–
–
–
–
–
–
–
–
–
17,470
38 AINSWORTH GAME TECHNOLOGY
Directors’ Report (continued)for the year ended 30 June 2020 15.8.6 Rights and options over equity instruments
The movement during the reporting period, by number of rights and options over ordinary shares in Ainsworth Game Technology
Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
30 June 2019
Granted as
compensation
Exercised
Other
Changes*
Held at
30 June 2020
Vested during
the year
Vested and
exercisable at
30 June 2020
Rights/Share Options
Current
Mr SL Levy
Mr ML Ludski
Mr V Bruzzese
Former
Mr K Power
–
500,000
119,053
237,056
62,131
141,723
112,228
–
–
–
–
–
–
–
–
500,000
356,109
203,854
(112,228)
–
–
–
–
–
–
–
–
–
* Other changes represent rights that were forfeited during the year.
Rights and options held by key management personnel that are vested and exercisable at 30 June 2020 were nil (2019: nil). No
rights or options were held by related parties of key management personnel.
15.8.7 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:
Current
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Mr DE Gladstone
Mr M Ludski
Mr V Bruzzese
Former
Ms HA Scheibenstock
Mr Kieran Power
Held at
30 June 2019
Purchases
Sales
Dividend
Re-Investment
Plan (DRP)
allotment
Held at
30 June 2020
389,241
43,600
135,189
146,346
10,000
783
15,344
4,662
–
–
–
40,000
–
2,500
–
–
–
–
–
(9,200)
–
–
–
–
–
–
–
–
–
–
–
–
389,241
43,600
135,189
177,146
10,000
3,283
15,344
4,662
No Shares were granted to key management personnel during the reporting period as compensation in 2019 or 2020.
There were no other changes in key management personnel 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.
DE Gladstone
Chairman
Dated at Sydney this 23rd day of September 2020
ANNUAL REPORT 2020
39
Directors’ Report (continued)for the year ended 30 June 2020
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
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Employee benefits
Current tax liability
Provisions
Total current liabilities
Loans and borrowings
Lease liabilities
Employee benefits
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Note
30-Jun-20
30-Jun-19*
18
17
16
17
15
12
27
13
24
21
27
22
25
21
27
22
15
19
19
19
26,543
88,039
3,524
91,377
8,723
61,661
119,964
2,813
66,851
8,436
218,206
259,725
25,844
5,520
107,434
15,750
92,738
28,648
2,786
130,548
–
61,555
247,286
223,537
465,492
483,262
36,726
44,021
1,320
9,173
–
3,395
94,635
20,945
12,661
–
9,590
618
1,015
44,829
–
42,778
15,094
605
603
16,302
110,937
–
525
1,585
44,888
89,717
354,555
393,545
207,709
160,468
(13,622)
207,709
187,454
(1,618)
354,555
393,545
*
The Group has initially applied AASB 16 at 1 July 2019. Under the transition methods chosen, comparative information is not restated.
The notes on pages 44 to 92 are an integral part of these consolidated financial statements.
40 AINSWORTH GAME TECHNOLOGY
Consolidated Statement of Financial Positionas at 30 June 2020 In thousands of AUD
Revenue
Cost of sales
Gross profit
Other income
Sales, service and marketing expenses
Research and development expenses
Administrative expenses
Impairment of trade receivables
Other expenses
Results from operating activities
Finance income
Finance costs
Net finance income
Share of loss of equity accounted investee
(Loss)/profit before tax
Income tax benefit/(expense)
(Loss)/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 (loss)/income for the year
(Loss)/profit attributable to owners of the Company
Total comprehensive (loss)/income attributable to the owners of the Company
Earnings per share:
Basic earnings per share (AUD)
Diluted earnings per share (AUD)
Note
30-Jun-20
30-Jun-19*
7
149,396
234,344
(59,011)
(94,395)
90,385
139,949
8
11
11
14
15
984
(59,272)
(41,192)
(22,191)
(3,410)
(15,561)
(50,257)
3,686
(2,229)
1,457
–
(48,800)
5,367
(43,433)
3,881
3,881
(39,552)
(43,433)
(39,552)
1,228
(64,851)
(40,428)
(25,065)
(875)
(4,539)
5,419
11,559
(2,242)
9,317
(54)
14,682
(3,787)
10,895
8,277
8,277
19,172
10,895
19,172
$(0.13)
$(0.13)
$0.03
$0.03
*
The Group has initially applied AASB 16 at 1 July 2019. Under the transition methods chosen, comparative information is not restated.
The notes on pages 44 to 92 are an integral part of these consolidated financial statements.
ANNUAL REPORT 2020
41
Consolidated Statement of Profit or Loss and Other Comprehensive Incomefor the year ended 30 June 2020 In thousands of AUD
Balance at 1 July 2018
Adjustment from intial application
of AASB 15 (net of tax)
Adjustment from initial application
of AASB 9 (net of tax)
Attributable to owners of the Company
Issued
Capital
Equity
compensation
reserve
Fair
value
reserve
Translation
reserve
Profit
reserve
Retained
Earnings /
(Accumulated
losses)
Total
Equity
203,032
4,329
9,684
10,987 154,787
(4,020) 378,799
–
–
–
–
–
–
–
–
–
–
34
34
(812)
(812)
Adjusted balance at 1 July 2018
203,032
4,329
9,684
10,987 154,787
(4,798) 378,021
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
4,677
Dividends to owners of the Company
Share-based payment amortisation
Total transactions with owners
Balance at 30 June 2019
Balance at 1 July 2019*
–
–
4,677
207,709
207,709
Total comprehensive loss for the period
–
–
–
–
–
–
–
(12)
(12)
–
–
–
–
–
–
–
–
–
–
–
–
7,715
10,895
10,895
(7,715)
–
8,277
8,277
8,277
–
–
–
–
8,277
8,277
7,715
3,180
19,172
–
–
–
–
(4,677)
(3,636)
–
(8,313)
–
–
–
–
–
(3,636)
(12)
(3,648)
4,317
9,684
19,264 154,189
(1,618) 393,545
4,317
9,684
19,264 154,189
(1,618) 393,545
Loss
Transfer between reserves
Other comprehensive income
Foreign currency translation reserve
Total other comprehensive income
Total comprehensive loss for the period
Transactions with owners, recorded
directly in equity
Share-based payment amortisation
Total transactions with owners
–
–
–
–
–
–
–
–
–
–
–
–
562
562
–
–
–
–
–
–
–
–
–
–
(43,433)
(43,433)
(31,429)
31,429
–
3,881
3,881
–
–
–
–
3,881
3,881
3,881
(31,429)
(12,004)
(39,552)
–
–
–
–
–
–
562
562
Balance at 30 June 2020
207,709
4,879
9,684
23,145 122,760
(13,622) 354,555
*
The Group has initially applied AASB 16 at 1 July 2019. Under the transition methods chosen, comparative information is not restated.
The notes on pages 44 to 92 are an integral part of these consolidated financial statements.
42 AINSWORTH GAME TECHNOLOGY
Consolidated Statement of Changes in Equityfor the year ended 30 June 2020 In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest received
Income taxes refunded/(paid)
Net cash from operating activities
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment
Interest received
Acquisitions of property, plant and equipment
Payment for business acquisition
Development expenditure
Net cash used in investing activities
Cash flows used in financing activities
Borrowing costs paid
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Dividend paid
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
Note
30-Jun-20
30-Jun-19*
179,156
307,693
(165,784)
(245,515)
18(a)
12
13, 34
13
13,372
2,326
1,023
16,721
45
115
(6,382)
(27,877)
(4,386)
(38,485)
(2,034)
16,198
62,178
5,503
(6,473)
61,208
29
11
(6,521)
–
(3,340)
(9,821)
(1,887)
–
(27,275)
(20,676)
(1,449)
–
(14,560)
(36,324)
61,661
1,206
26,543
(929)
(3,636)
(27,128)
24,259
35,667
1,735
61,661
*
The Group has initially applied AASB 16 at 1 July 2019. Under the transition methods chosen, comparative information is not restated.
The notes on pages 44 to 92 are an integral part of these consolidated financial statements.
ANNUAL REPORT 2020
43
Consolidated Statement of Cash Flowsfor the year ended 30 June 2020 Index to Notes to the Financial Statements
and Significant Accounting Policies
1.
2.
3.
Reporting entity
Basis of preparation
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
(r) Changes in new significant accounting
policies
(s) Changes in new standards and
interpretations not yet adopted
4.
5.
6.
7.
8.
Determination of fair values
Financial risk management
Operating segments
Revenue
Other income
45
45
47
47
47
47
49
50
50
50
51
52
52
52
52
53
53
53
54
54
54
56
56
57
58
61
63
9.
Expenses by nature
10.
Employee benefit expenses
11.
12.
13.
14.
Finance income and finance costs
Property, plant and equipment
Intangible assets
Equity-accounted investee
15.
Taxes
16.
Inventories
17.
Receivables and other assets
18.
Cash and cash equivalents
18a. Reconciliation of cash flows from operating
activities
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.
Leases
28. Capital and other commitments
29.
Related parties
30. Group entities
31.
Subsequent events
32. Auditor’s remuneration
33.
Parent entity disclosures
34.
Business Combinations
63
64
64
65
66
69
70
71
72
73
73
74
75
76
77
77
79
80
80
85
87
87
89
89
90
90
91
44 AINSWORTH GAME TECHNOLOGY
for the year ended 30 June 2020
(the
1. REPORTING ENTITY
Ainsworth Game Technology Limited
‘Company’)
is a company domiciled in Australia. The address of the
Company’s registered office is 10 Holker Street, Newington,
NSW, 2127. The consolidated financial statements of the
Company as at and for the year ended 30 June 2020
comprised of 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 were authorised for
issue by the Board of Directors on 23rd September 2020.
Going Concern
The financial statements have been prepared on a going
concern basis, which assumes continuity of normal activities
and realisation of assets and settlement of liabilities in
the ordinary course of the business. For the year ended
30 June 2020, the Group incurred net losses after tax of
$43.4 million (2019: Profit after tax of $10.9 million) and
had a cash balance of $26.5 million (2019: $61.7 million).
As at 30 June 2020, the Group was required to reclassify
$43.9 million of non-current loans/borrowings to current
due to a breach of the debt covenants. The Group has
prepared an 18 month cash flow projection based on best
available information at this time, indicating that the Group
expects to maintain sufficient liquidity to meet its obligations
as they fall due, and remain in compliance with the terms of
its revised debt arrangement.
Current Period Impact
The COVID-19 outbreak was declared a pandemic by the
‘World Health Organization’ in March 2020. The outbreak
and the response of Governments in dealing with the
pandemic is impacting the general activity levels within
the community and the economy, which has caused a
significant impact to the operations of the Group’s business.
For the year ended 30 June 2020, COVID-19 has impacted
the Group, specifically as follows:
– the FY20 financial performance and cash flows due to
the mandatory closure of gaming venues and restrictions
on travel and public gatherings which have adversely
impacted our business partners and customers;
– breach of financial covenants for the ANZ loan, in
particular, the interest cover ratio and leverage ratio
calculated based on EBITDA for the 12 months ended
30 June 2020 and as a result, the full loan balance
was classified as a current liability as at 30 June 2020.
Subsequent to year end, on 24 August 2020, the Group
signed a deed of amendment for the ANZ loan facility
and agreed on revised terms to the facility, including
a reduction to the facility limit and the replacement of
the financial covenants. The facility limit has reduced to
$60 million as at 24 August 2020. Progressive reductions
of $10 million required in each of December 2020,
March 2021, and April 2021, which will result in a total
reduced facility of $30 million by end of April 2021. The
new covenants will be in place for the remaining term
of the loan, which expires on 30 September 2021, and
requires maintenance of minimum liquidity levels, monthly
reporting obligations, and achievement of quarterly sales
targets for the Group, based on the Group’s 18 month
forecast; and
– the Company successfully applied for the Australian
Government’s JobKeeper subsidies and was assessed
as eligible in March 2020. The majority of the Company’s
employees in Australia were eligible and the total payment
received for the period 30 March 2020 to 30 June 2020
was approximately $1.7 million and this is reflected within
the operating cash flows. This Government assistance
has benefited the Group in maintaining productivity of
employees, as well as liquidity.
Future Impact and Going Concern
The full magnitude and adverse impact of the pandemic
and Government response is highly uncertain. The Group
has remained focused on its liquidity and has prepared an
18 month cash flow projection, which has considered the
current state of the pandemic as it relates to the impact
on the industry and judgements have been made in
determining the timing of the recovery period. The following
key assumptions have been made:
– assessment of the impacts of COVID-19 based on
regions has been performed and
geographical
assumptions have been made on
the expected
re-opening of global markets in which the Group
operates when forecasting revenue, in particular, for
regions in Latin America that were and still are adversely
impacted by the pandemic. Overall, a gradual re-opening
of all jurisdictions is expected to take place over the
next 18 months and should return to pre-COVID-19 levels
during FY22;
– the recovery stage from COVID-19 incorporated in the
forecast is not impacted by a second wave of infections;
– the Group’s receivables at 30 June 2020 were
$113.9 million, of which $88.0 million was classified as
current. Since the declaration of the pandemic in March
2020, the Group maintained an ongoing engagement
with its customers. Customer receipts projections have
been adjusted to reflect the current economic conditions
of customers in all regions, and in particular, of Latin
American customers which typically have extended
repayment terms;
ANNUAL REPORT 2020
45
Notes to the Financial Statements (continued)for the year ended 30 June 2020 2. BASIS OF PREPARATION (continued)
– the Group has suspended non-critical operating and
capital expenditure and is undertaking pro-active working
capital management including ongoing negotiations with
suppliers on payment terms;
– the Group has suspended dividends;
– the Group has successfully negotiated rent concessions
for the Newington facility to 31 December 2020;
– the senior management team agreed to reduce their
salaries by 20% for the June and September 2020
quarters. The paid independent directors have also
reduced their fees by 20% from 1 April 2020 until
30 September 2020 and the Chairman waived his June
2020 quarterly fees and agreed to a 20% reduction for
the September 2020 quarter;
– the Group is forecasting to be able to meet the amended
bank covenant requirements as noted above and repay
$15 million of the ANZ loan by April 2021, as the facility
limit is progressively reduced;
– no further material government assistance is expected to
be received, other than JobKeeper subsidies included in
the forecasted cash flows up until 30 September 2020;
– the Group has not experienced to date, material issues
over receivables collectability, or its supply chains. As
the market in each region re-opens, the Group is geared
with the new cabinets as well as games that have been
developed to recover to pre-COVID-19 levels; and
– the Group’s facilities in Nevada and Florida have recently
been appraised with market values greater than their
respective carrying amounts.
After assessing detailed cash flow forecasting based on
key revenue, cost, capital expenditure, working capital
assumptions, along with reassessments of significant
judgements and estimates, including but not limited to,
provisions against debtors and
impairment
of non-current assets, and based on the best available
information at this time, the Directors believe that the going
concern assumption remains appropriate.
inventory,
(b) Basis of measurement
The consolidated financial statements have been prepared
on the historical cost basis except for loans and borrowings
from a related entity, which were measured initially at fair
value and then subsequently carried at amortised cost.
(c) Functional and presentation currency
The financial information of each of the Group’s entities
and foreign branches is measured using the currency of
the primary economic environment in which it operates
(the functional currency).
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
46 AINSWORTH GAME TECHNOLOGY
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.
The COVID-19 pandemic has led to additional estimates and
judgements which involves assumptions when preparing
these financial statements. The revisions to accounting
estimates were recognised during the year and will require
ongoing assessment due to the inherent uncertainty of the
COVID-19 impact. Key judgements involve an assessment
of forecast performance of the Group and the industry it
operates in, and at the time of preparation of these financial
statements, those assessments have inherent uncertainty.
The following were the key areas, but not limited to, that
required additional judgements as a result of the pandemic:
– the going concern assumption;
– the recoverability of receivables;
– the appropriateness of stock obsolescence provisions;
– impairment testing on non-financial assets; and
– the recoverability of deferred tax assets.
Should actual performance differ significantly from the
assumptions used for the estimates and judgements
mentioned above, it is likely that there may be material
changes to the carrying value of the assets and liabilities
listed above in future reporting periods.
The Group is subject to income taxes in Australia and
jurisdictions where it has foreign operations. Significant
judgement is required in determining the worldwide
provision for income taxes. There are certain transactions
and calculations undertaken during the ordinary course of
business for which the ultimate determination is uncertain.
The Group estimates its tax liabilities based on the Group’s
understanding of the tax law. Where the final outcome
of these matters is different from the amounts that were
initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period
in which such determination is made.
Information
estimation
assumptions
about
uncertainties that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets
and liabilities within the next financial year are included
in ‘Note 13 – Intangible assets’ and ‘Note 26 – Financial
instruments (trade and other receivables)’.
and
(e) Comparative figures
Where necessary, comparative figures have been
reclassified to conform with changes in presentation in the
current year.
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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.
Business combination
(a) Basis of consolidation
(i)
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.
(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 to 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.
Interest in equity-accounted investee
(iii)
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 is 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-accounted investee, until the date on which
significant influence of joint control ceases.
(iv) Transactions eliminated on consolidation
transactions, and any
Intra-group balances and
unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated
financial statements in accordance with AASBs.
(v) 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.
Foreign currency transactions
(b) Foreign currency
(i)
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.
Foreign operations
(ii)
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.
Recognition and initial measurement
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.
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.
ANNUAL REPORT 2020
47
Notes to the Financial Statements (continued)for the year ended 30 June 2020 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
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.
Classification and subsequent measurement
On initial recognition, a financial asset is classified as
measured at amortised cost. Financial assets are not
reclassified subsequent to their initial recognition unless
the Group changes its business model for managing
financial assets, in which case all affected financial assets
are reclassified on the first day of the first reporting period
following the change in the business model.
The assessment amount of current and non-current
receivable involves reviewing the 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 assessment on payment trend.
A financial asset is measured at amortised cost if it meets
both of the following conditions and is not designated as
at Fair Value Through Profit or Loss (“FVTPL”):
– it is held within a business model whose objective is to
hold assets to collect contractual cash flows; and
– its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on
the principal amount outstanding.
Financial assets - Business model assessment
The Group makes an assessment of the objective of
the business model in which a financial asset is held at
a portfolio level because this best reflects the way the
business is managed, and information is provided to
management. The information considered includes:
– the stated policies and objectives for the portfolio and
the operation of those policies in practice. These include
whether management’s strategy focuses on earning
contractual interest income, maintaining a interest rate
profile, matching the duration of the financial assets to the
duration of any related liabilities or expected cash outflows
or realising cash flows through the sale of the assets;
– how the performance of the portfolio is evaluated and
reported to the Group’s management;
– the risks that affect the performance of the business
model (and the financial assets held within that business
model) and how those risks are managed;
– how managers of the business are compensated - e.g.
whether compensation is based on the fair value of the
assets managed or the contractual cash flows collected;
and
– the frequency, volume and timing of sale of financial
assets in prior periods, the reasons for such sales and
expectations about future sales activity.
48 AINSWORTH GAME TECHNOLOGY
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered
sales for this purpose, consistent with the Group’s
continuing recognition of the assets.
Financial assets that are held for trading or are managed
and whose performance is evaluation on a fair value basis
are measured at FVTPL.
Financial assets - Assessment whether contractual cash
flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined
as the fair value of the financial asset on initial recognition.
‘Interest’ is defined as consideration for the time value of
money and for the credit risk associated with the principal
amount outstanding during a particular period of time and
for other basic lending risks and costs (e.g. liquidity risk
and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are
solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This
includes assessing whether the financial asset contains a
contractual term that could change the timing or amount
of contractual cash flows such that it would not meet this
condition. In making this assessment, the Group considers:
– contingent events that would change the• amount or
timing of cash flows;
– terms that may adjust the contractual coupon rate,
including variable-rate features;
– prepayment and extension features; and
– terms that limit the Group’s claim to cash flows from
specified assets (e.g. non-recourse features).
Financial assets – Subsequent measurement and gains
and losses.
Financial assets at amortised cost are subsequently
measured at amortised cost using the effective interest
method. The amortised cost is reduced by impairment
losses. Interest income, foreign exchange gains and losses
and impairment are recognised in profit or loss. Any gain
or loss on derecognition is recognised in profit or loss.
Derecognition
The Group derecognises a financial asset when the
contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset
are transferred or in which the Group neither transfers
nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial
asset.
The Group enters into transactions whereby it transfers
assets recognised in its statement of financial position but
retains either all or substantially all of the risks and rewards
of the transferred assets. In these cases, the transferred
assets are not derecognised. Financial assets at fair value
through profit or loss.
Notes to the Financial Statements (continued)for the year ended 30 June 2020 (ii) Non-derivative financial liabilities
Non-derivative financial liabilities comprise loans and
borrowings and trade and other payables.
Recognition and initial measurement
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 expired.
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.
Classification and subsequent measurement
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL
if it is classified as held-for-trading, it is a derivative or it
is designated as such on initial recognition. Financial
liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognised
in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest
method. Interest expense and foreign exchange gains and
losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
Where the terms and conditions of borrowings are
modified, the carrying amount is remeasured to fair value.
Any difference between the carrying amount and fair value
is recognised in equity.
Derecognition
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or
expired. The Group also derecognises a financial liability
when its terms are modified and the cash flows of the
modified liability are substantially different, in which case
a new financial liability based on the modified terms is
recognised at fair value.
On derecognition of a financial liability, the difference between
the carrying amount extinguished and the consideration
paid (including any non-cash assets transferred or liabilities
assumed) is recognised in profit or loss.
(iii) Offsetting
Financial assets and financial liabilities are offset and the
net amount presented in the statement of financial position
when, and only when, the Group currently has a legally
enforceable right to set off the amounts and it intends
either to settle them on a net basis or to realise the asset
and settle the liability simultaneously.
(iv) 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.
Recognition and measurement
(d) Property, plant and equipment
(i)
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” or “other expenses” 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.
ANNUAL REPORT 2020
49
Notes to the Financial Statements (continued)for the year ended 30 June 2020 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
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.
Intangible assets
(e)
(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.
50 AINSWORTH GAME TECHNOLOGY
(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.
Leased assets
(f)
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.
Inventories
(g)
Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on the first-
in first-out principle, and includes expenditure incurred in
acquiring the inventories, production or conversion costs and
other costs incurred in bringing them to their existing location
and condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share of
production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and selling expenses.
Notes to the Financial Statements (continued)for the year ended 30 June 2020 Impairment
(h)
(i) Non-derivative financial assets
The Group recognises loss allowances for expected credit
losses (“ECLs”) on financial assets measured at amortised
cost. The Group measures loss allowances for trade
receivables at an amount equal to lifetime ECLs. When
determining whether the credit risk of a financial asset
has increased significantly since initial recognition and
when estimating ECLs, the Group considers reasonable
and supportable information that is relevant and available
without undue cost or effort. This includes both quantitative
and qualitive information and analysis, based on the Group’s
historical experience and informed credit assessment and
including available forward-looking information.
The Group assumes that the credit risk on a financial asset
has increased significantly if there is significant difficulty
of the borrower or issuer. Lifetime ECLs are the ECLs that
result from possible default events over the expected life
of a financial instrument. The maximum period considered
when estimating ECLs is the maximum contractual period
over which the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the cash
flows that the Group expects to receive).
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit-impaired. A
financial asset is ‘credit-impaired’ when one or more events
that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes
the following observable data:
– significant financial difficulty of the borrower or issuer;
– the restructuring of a loan or advance by the Group on
terms that the Group would not consider otherwise;
– a breach of contract such as a default or shortfall of
agreed payment plans; or
– it is probable that the borrower will enter bankruptcy or
other financial reorganisation.
Presentation of allowance for ECL in the statement of
financial position
Loss allowances for financial assets measured at amortised
cost are deducted from the gross carrying amount of the
assets.
Write-off
The gross carrying amount of a financial asset is written
off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion
thereof. The Group expects no significant recovery from
the amount written off. However, financial assets that are
written off could still be subject to enforcement activities in
order to comply with the Group’s procedures for recovery
of amounts due.
(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 assets (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
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.
losses are recognised
in profit or
ANNUAL REPORT 2020
51
Notes to the Financial Statements (continued)for the year ended 30 June 2020 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
Employee benefits
(i)
(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.
for contributions to defined contribution
Obligations
superannuation funds are recognised as an employee
benefit expense in profit or loss in the periods during
which services are rendered by employees.
(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 corporate bonds
that have maturity dates approximating the terms of the
Group’s obligations.
(iii) Termination benefits
Termination benefits are recognised as an expense when
the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to
terminate employment before the normal retirement date
or to provide termination benefits as a result of an offer
made to encourage voluntary redundancy. Termination
benefits for voluntary redundancies are recognised if
the Group has made an offer encouraging voluntary
redundancy, it is probable that the offer will be accepted,
and the number of acceptances can be estimated reliably.
(iv) Short-term benefits
Liabilities for employee benefits for wages, salaries and
annual
leave represent present obligations resulting
from employees’ services provided to reporting date
and are calculated at undiscounted amounts based
on remuneration wage and salary rates that the Group
expects to pay as at reporting date including related
on-costs, such as workers remuneration insurance and
payroll tax. Non-accumulating non-monetary benefits,
such as cars and free or subsidised goods and services,
are expensed based on the net marginal cost to the Group
as the benefits are taken by the employees.
A liability is recognised for the amount expected to be
paid under short-term cash bonus plans if the Group has a
present legal or constructive obligation to pay this amount
as a result of past service provided by the employee and
the obligation can be estimated reliably.
(v) Share-based payment transactions
The grant date fair value of options granted to employees is
recognised as an employee expense, with a corresponding
increase in equity, over the period in which the employees
52 AINSWORTH GAME TECHNOLOGY
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.
for warranties
(k) Warranties
A provision
is recognised when the
underlying products are sold. The provision is based on
historical warranty data and a weighting of all possible
outcomes against their associated probabilities.
(l) Revenue
(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.
(ii) Multi element arrangements
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 for other items 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.
Notes to the Financial Statements (continued)for the year ended 30 June 2020 (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
The transition from AASB 117 Leases to AASB 16 Leases is
disclosed under Note 3(r)
Policy applicable after 1 July 2019
The Group recognises assets and liabilities for all property
and equipment leases with terms of more than 12 months,
unless the underlying asset is of low value. A right-of-
use asset is recognised representing its right to use the
underlying asset and a lease liability representing its
obligations to make lease payments.
Right of use assets are measured similarly to other non-
financial assets (such as property, plant and equipment)
and lease liabilities similarly to other financial liabilities. As
a consequence, the Group recognises depreciation of the
right-of-use asset and interest on the lease liability. The
lease payments reduce the lease liability.
Policy applicable before 1 July 2019
Payments made under operating leases are recognised in
profit or loss on a straight-line basis over the term of the
lease. Lease incentives received are recognised as an
integral part of the total lease expense, over the term of
the lease.
Minimum lease payments made under finance leases
are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense
is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining
balance of the liability.
(n) Finance income and finance costs
Finance income comprises interest income and foreign
currency gains. Interest income is recognised in profit or
loss as it accrues using the effective interest method.
Finance costs comprise interest expense on borrowings
and foreign currency losses. 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.
Income tax
is recognised
(o)
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.
ANNUAL REPORT 2020
53
Notes to the Financial Statements (continued)for the year ended 30 June 2020 3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
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, performance rights 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) Changes in new significant accounting policies
The Group initially applied AASB 16 Leases from 1 July 2019.
A number of other new standards and pronouncements
are also effective from 1 July 2019, but they do not have a
material impact on the Group’s financial statements.
AASB 16 introduced a single, on-balance sheet accounting
model for lessees. As a result, the Group, as a lessee, has
recognised right-of-use assets representing its right to use
the underlying assets and lease liabilities representing its
obligation to make lease payments. Lessor accounting
remains similar to previous accounting policies.
the modified
The Group applied AASB
retrospective approach. Accordingly,
the comparative
information presented for 2019 has not been restated –
i.e. it is presented, as previously reported, under AASB 117
and related interpretations. The details of the changes in
accounting policies are disclosed below. Additionally, the
disclosure requirements in AASB 16 have not generally
been applied to comparative information.
16 using
54 AINSWORTH GAME TECHNOLOGY
(a) Definition of a lease
Previously, the Group determined at contract inception
whether an arrangement was or contained a lease under
Interpretation 4 Determining whether an Arrangement
contains a Lease. The Group now assesses whether a
contract is or contains a lease based on the new definition
of a lease. Under AASB 16, a contract is, or contains,
a lease if the contract conveys a right to control the use
of an identified asset for a period of time in exchange for
consideration.
On transition to AASB 16, the Group elected to apply the
practical expedient to grandfather the assessment of which
transactions are leases. The Group applied AASB 16 only
to contracts that were previously identified as leases.
Contracts that were not identified as leases under AASB 117
and Interpretation 4 were not reassessed. Therefore, the
definition of a lease under AASB 16 has been applied only
to contracts entered into or changed on or after 1 July 2019.
At inception or on reassessment of a contract that contains
a lease component, the Group allocates the consideration
in the contract to each lease and non-lease component on
the basis of their relative stand-alone prices. However, for
leases of properties in which it is a lessee, the Group has
elected not to separate non-lease components and will
instead account for the lease and non-lease components
as a single lease component.
(b) As a lessee
The Group leases many assets including properties, motor
vehicles and IT equipment. As a lessee, the Group previously
classified leases as operating, or finance leases based on its
assessment of whether the lease transferred substantially
all of the risks and rewards incidental to ownership of the
underlying asset to the Group. Under AASB 16, the Group
recognises right-of-use assets and lease liabilities for most
of these leases - i.e. these leases are on-balance sheet.
However, the Group has elected not to recognise right-of-
use assets and lease liabilities for some leases of low-value
assets (e.g. IT equipment). The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
The Group presents its right-of-use assets and lease
liabilities separately in the statement of financial position.
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, and subsequently at cost
less accumulated depreciation and impairment losses and
adjusted for certain remeasurements of the lease liability.
The lease liability is measured at the present value of the
lease payments that are not paid at the commencement
date, discounted using the Group’s incremental borrowing
rate.
Notes to the Financial Statements (continued)for the year ended 30 June 2020 The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made.
It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the
estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment
of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain
not to be exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term,
which significantly affects the amount of lease liabilities and right-of-use assets recognised.
Transition
(i)
Previously, the Group classified property leases as operating leases under AASB 117. These include office, warehouse, factory
facilities and office equipment. The leases typically run for a period of 1-10 years. Some leases include an option to renew the
lease after the end of the non-cancellable period. Some leases provide additional rent payments that are based on changes
in local price indices.
At transition, for leases classified as operating leases under AASB 117, lease liabilities were measured at the present value of
the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 July 2019. Right-of-use assets are
measured at either:
– their carrying amount as if AASB 16 had been applied since the commencement date, discounted using the lessee’s incremental
borrowing rate at the date of initial application – this approach was not applicable to the Group; or
– an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied
this approach to all leases, which resulted in a nil impact on retained earnings related to the cumulative effect of initial
application.
The Group used the following practical expedients when applying AASB 16 to leases previously classified as operating leases
under AASB 117:
– applied the exemption not to recognise right-of-use assets and liabilities for leases with less than or equal to 12 months of
lease term;
– excluded initial direct costs from measuring the right-of-use asset at the date of initial application; and
– used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
(c) As a lessor
The accounting policies applicable to the Group as a lessor are not different from those under AASB 117. The Group is not
required to make any adjustments on transition to AASB 16 for leases in which it acts as a lessor. However, the Group has
applied AASB 15 Revenue from Contracts with Customers to allocate consideration in the contract to each lease and non-lease
component.
Impacts on Financial Statements
Impact on transition
(d)
(i)
On transition to AASB 16, the Group recognised additional right-of-use assets to the equal value of lease liabilities recognised.
The impact on transition is summarised below:
In thousands of AUD
Right-of-use assets
Deferred tax asset
Lease liabilities
1 July 2019
17,910
87
17,910
ANNUAL REPORT 2020
55
Notes to the Financial Statements (continued)for the year ended 30 June 2020 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.
When measuring lease liabilities for leases that were previously classified as operating leases, the Group discounted lease
payments using its incremental borrowing rate at 1 July 2019 of 5.1%.
In thousands of AUD
Operating lease commitments at 30 June 2019 as disclosed in the Group’s consolidated financial statements
Discounted using the incremental borrowing rate 1 July 2019
– Recognition exemption for leases of low-value assets
– Recognition exemption for leases with less than 12 months of lease term at transition
– Extension options reasonably certain to be exercised
Lease liabilities recognised at 1 July 2019
1 July 2019
10,997
9,785
(34)
(183)
8,342
17,910
Impact for the period
(ii)
As a result of initially applying AASB 16, in relation to the leases that were previously classified as operating leases, the Group
recognised $15,750 thousand of right-of-use assets and $16,414 thousand of lease liabilities as at 30 June 2020.
In addition, for leases recognised under AASB 16, the Group has recognised depreciation and interest expense, instead
of operating lease expense. During the twelve months ended 30 June 2020, the Group recognised $2,393 thousand of
depreciation charges and $864 thousand of interest expenses from these leases.
During the year, the Group received rental concessions as a result of COVID-19. Under AASB 16 Leases, rent concessions
often meet the definition of a lease modification. In light of the effects of the COVID-19 pandemic, the Australian Accounting
Standards Board has issued amendments to AASB 16 to simplify how lessees account for rent concessions and introduced a
practical expedient for lessees.
Under this practical expedient, lessees are not required to assess whether eligible rent concessions are lease modifications, and
instead are permitted to account for them as if they were not lease modifications. AASB 16.46A–B rent concessions are eligible for
the practical expedient if they occur as a direct consequence of the COVID-19 pandemic and if all of the following criteria are met:
– the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change;
– any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
– there is no substantive change to the other terms and conditions of the lease.
As such, the Group recognised $467 thousand in ‘other income’ for the period in relation to the rental concessions predominantly
received for the Newington facility in Australia.
(s) Changes in new standards and interpretations not yet adopted
A number of new standards and amendments to standards are effective for annual periods beginning after 1 July 2019 and
earlier application is permitted. However, there are currently no new standards, amendments to standards or accounting
interpretations that are expected to affect the Group’s consolidated financial statements in future periods.
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
(a)
The fair value of intangibles 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.
(b) 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.
56 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 (c) 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.
(d) Loans and borrowings
Fair value is calculated based on discounted expected
future principal and interest cash flows.
(e) 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
(f) 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
interest rate (based on government bonds). Service and non-
market performance conditions attached to the transactions
are not taken into account in determining fair value.
5. FINANCIAL RISK MANAGEMENT
Overview
The 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.
the
Risk management framework
The Board of Directors has overall responsibility for the
risk management
establishment and oversight of
framework. The Board has established processes through the
Group’s Audit Committee, which is responsible for developing
and monitoring risk management policies. The Audit Committee
reports regularly to the Board of Directors on its activities.
Risk management policies are established to identify and
analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to
limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the
Group’s activities. The Group, through its training and
management standards and procedures, aims to develop
a disciplined and constructive control environment in which
all employees understand their roles and obligations.
The Group’s Audit Committee oversees how management
monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the
risk management framework in relation to the risks faced by
the Group. The Audit Committee is assisted in its oversight
role by Internal Audit. Internal Audit undertakes reviews of
risk management controls and procedures, the results of
which are reported to the Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from
the Group’s receivables from customers.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by
the individual characteristics of each customer, including
the default risk of the industry and country in which
customers operate. The Group’s concentration of credit risk
is disclosed in Note 26.
Each new customer is assessed by the compliance division
as to suitability and analysed for creditworthiness before the
Group’s standard payment and delivery terms and conditions
are offered. The Group’s review includes investigations,
external ratings, when available, and in some cases bank
references. Purchase limits are established for each customer,
which represents
the maximum open amount without
requiring approval from the Board. Customers that fail to meet
the Group’s creditworthiness criteria may only transact with
the Group within established limits unless Board approval is
received or otherwise only on a prepayment basis.
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 and
the local economy operating conditions of these customers.
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.
Goods are sold subject to retention of title clauses, so that
in the event of non-payment the Group may have a secured
claim. The Group does not require collateral in respect of
trade and other receivables.
The Group has established an allowance for impairment
that represents its estimate of incurred and expected credit
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.
ANNUAL REPORT 2020
57
Notes to the Financial Statements (continued)for the year ended 30 June 2020 5. FINANCIAL RISK MANAGEMENT (continued)
Guarantees
The Group’s policy is to provide financial guarantees only for
wholly owned subsidiaries. At 30 June 2020, no guarantees
were outstanding (2019: 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 and pandemic.
During FY20, the Group commenced discussions with ANZ
bank to restructure the facility terms due to the impending
breach in financial covenants by the Group as a result of
the adverse impacts of COVID-19 pandemic on the Group’s
operations. On 24 August 2020, the Group managed to
renegotiate the terms of the facility with amendments to
the facility limit and financial covenants as at 30 June 2020
and has assisted the Group with preserving its liquidity and
mitigating the financial impacts of the pandemic. Detailed
disclosures are outlined in Notes 2(a) and Note 31.
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 are primarily denominated is in
USD for the Australian business operations.
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. No hedging
arrangements were utilised during the reporting period.
In
liabilities
denominated in foreign currencies, the Group monitors its net
exposure to address short-term imbalances in its exposure.
respect of other monetary assets and
Interest rate risk
The Group’s main interest rate risk arises from floating rate
borrowings drawn under bank debt facilities.
58 AINSWORTH GAME TECHNOLOGY
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.
6. OPERATING SEGMENTS
The activities of
the Group are
the entities within
predominantly within a single business which is the design,
development, manufacture, sale and service of gaming
machines and other related equipment and services.
Information reported
the Group’s Chief Executive
Officer (CEO) as the chief operating decision maker for
the purposes of resource allocation and assessment of
performance is focused on the geographical location
of customers of gaming machines. As such, the Group’s
reportable segments are as follows:
– Australia and other (‘other’ consists of Asia, New Zealand,
to
South Africa and Europe);
– North America; and
– Latin America.
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 results includes segment revenues and expenses that
are directly attributable to the segment, which management
believes is the most relevant approach in evaluating segment
performance. The revenue from external parties reported
to the CEO is measured in a manner consistent within the
statement of profit or loss and other comprehensive income.
During the year ending 30 June 2020, the Group has
changed the presentation of its reportable segments
compared to previously disclosed information in the last
financial statements in order to clearly identify the Group’s
reportable segments. This change did not affect the prior
reporting period’s approach in deriving these respective
geographical region’s segment results but rather related
to aggregating the Australia, Asia, New Zealand and
Europe jurisdictions as one reportable segment, Australia
and other. Accordingly, the Group has reflected this in the
operating segment information for the year ended 30 June
2020 and the comparative period.
The Group has a large and dispersed customer base. The
Group’s largest customer accounts for only 4% of the total
reportable revenue.
Notes to the Financial Statements (continued)for the year ended 30 June 2020 .
i
s
e
n
h
c
a
m
g
n
m
a
g
i
f
i
i
o
g
n
c
v
r
e
s
d
n
a
s
e
a
s
o
l
t
s
e
l
t
a
e
r
d
n
a
s
r
e
m
o
t
s
u
c
f
o
n
o
i
t
a
c
o
l
l
i
a
c
h
p
a
r
g
o
e
g
e
h
t
n
o
d
e
s
a
b
s
i
e
u
n
e
v
e
r
t
n
e
m
g
e
s
,
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
l
f
o
s
i
s
a
b
e
h
t
n
o
n
o
i
t
a
m
r
o
n
f
i
g
n
i
t
n
e
s
e
r
p
n
I
:
s
w
o
l
l
o
f
s
a
d
e
d
u
c
n
l
i
l
o
s
a
s
i
x
a
t
r
e
t
f
a
t
fi
o
r
p
t
e
n
o
t
t
l
u
s
e
r
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
r
A
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
l
t
u
o
b
a
n
o
i
t
a
m
r
o
f
n
I
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
l
a
t
o
T
n
i
t
a
L
a
c
i
r
e
m
A
h
t
r
o
N
a
c
i
r
e
m
A
l
a
t
o
T
a
i
l
a
r
t
s
u
A
r
e
h
t
O
d
n
a
r
e
h
t
O
/
e
p
o
r
u
E
r
e
h
t
o
d
n
a
a
i
l
a
r
t
s
u
A
w
e
N
h
t
u
o
S
l
d
n
a
a
e
Z
i
a
s
A
a
i
l
a
r
t
s
u
A
S
A
T
/
C
V
I
/
T
N
D
L
Q
W
S
N
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
6
9
3
9
4
1
,
5
3
0
2
4
,
8
3
0
2
7
,
3
2
3
5
3
,
6
2
8
4
,
3
0
6
,
1
8
9
5
9
8
6
,
1
9
4
7
6
,
4
3
6
4
,
4
2
2
5
1
,
e
u
n
e
v
e
r
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
R
l
–
5
1
1
)
9
2
2
2
,
(
5
4
2
,
1
0
6
8
0
3
,
2
7
2
2
,
2
3
3
5
2
,
6
5
2
3
,
1
2
4
4
,
9
9
3
)
2
9
9
,
1
(
8
3
2
8
0
1
,
2
9
2
)
7
4
9
,
1
(
)
2
9
1
,
1
4
(
)
1
9
1
,
2
2
(
)
8
0
4
5
1
(
,
)
)
7
6
3
5
,
0
0
8
8
4
,
(
3
3
4
3
4
,
(
.
)
d
n
a
s
u
o
h
t
7
5
3
,
3
4
$
:
9
1
0
2
(
,
d
n
a
s
u
o
h
t
3
9
6
0
5
$
e
r
a
0
2
0
2
e
n
u
J
0
3
t
a
s
a
)
a
i
l
a
r
t
s
u
A
(
e
l
i
i
c
m
o
d
f
’
o
y
t
n
u
o
c
s
y
t
i
t
n
e
e
h
t
n
i
d
e
t
a
c
o
l
,
s
t
e
s
s
a
x
a
t
f
d
e
r
r
e
e
d
d
n
a
s
t
n
e
m
u
r
t
s
n
i
l
a
c
n
a
n
fi
n
a
h
t
r
e
h
t
i
t
i
f
e
n
e
b
x
a
t
e
m
o
c
n
I
x
a
t
f
e
r
o
e
b
s
s
o
L
x
a
t
r
e
t
f
a
s
s
o
l
t
e
N
o
,
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
s
t
n
e
m
g
e
s
o
t
d
e
t
a
c
o
l
l
a
t
o
n
s
e
s
n
e
p
x
e
r
e
h
t
O
i
h
c
h
w
f
o
,
)
d
n
a
s
u
o
h
t
,
6
4
7
8
4
1
$
:
9
1
0
2
(
d
n
a
s
u
o
h
t
,
9
2
2
5
6
1
$
l
a
t
o
t
0
2
0
2
e
n
u
J
0
3
t
a
s
a
s
e
i
r
t
n
u
o
c
i
n
g
e
r
o
f
n
i
d
e
t
a
c
o
l
,
s
t
e
s
s
a
x
a
t
d
e
r
r
e
e
d
f
d
n
a
s
t
n
e
m
u
r
t
s
n
i
l
i
a
c
n
a
n
fi
n
a
h
t
r
e
h
t
o
,
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
.
a
c
i
r
e
m
A
h
t
r
o
N
n
i
e
r
a
,
)
d
n
a
s
u
o
h
t
,
5
4
0
6
1
1
$
:
9
1
0
2
(
d
n
a
s
u
o
h
t
,
9
4
6
3
4
1
$
.
’
s
t
n
e
m
g
e
s
o
t
d
e
t
a
c
o
l
l
a
t
o
n
s
e
s
n
e
p
x
e
r
e
h
t
o
‘
n
i
d
e
d
r
o
c
e
r
s
i
d
n
a
s
u
o
h
t
8
5
9
,
1
1
$
f
o
s
t
e
s
s
a
d
e
s
a
e
l
a
c
i
r
e
m
A
n
i
t
a
L
f
o
n
w
o
d
e
t
i
r
w
o
t
g
n
i
t
a
e
r
l
s
e
s
n
e
p
x
e
t
n
e
m
r
i
a
p
m
I
ANNUAL REPORT 2020
59
s
t
n
e
m
g
e
s
o
t
d
e
t
a
c
o
l
l
a
t
o
n
e
u
n
e
v
e
r
t
s
e
r
e
t
n
I
e
s
n
e
p
x
e
t
s
e
r
e
t
n
I
t
l
u
s
e
r
t
n
e
m
g
e
S
t
l
u
s
e
R
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
-
y
t
i
u
q
e
f
o
s
s
o
l
f
o
e
r
a
h
S
s
e
s
n
e
p
x
e
D
&
R
i
n
a
g
y
c
n
e
r
r
u
c
n
g
e
r
o
F
i
s
e
s
n
e
p
x
e
e
v
i
i
i
t
a
r
t
s
n
m
d
a
d
n
a
e
t
a
r
o
p
r
o
C
l
a
t
o
T
n
i
t
a
L
a
c
i
r
e
m
A
h
t
r
o
N
a
c
i
r
e
m
A
l
a
t
o
T
a
i
l
a
r
t
s
u
A
r
e
h
t
O
d
n
a
r
e
h
t
O
/
e
p
o
r
u
E
w
e
N
h
t
u
o
S
r
e
h
t
o
d
n
a
a
i
l
a
r
t
s
u
A
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
l
d
n
a
a
e
Z
i
a
s
A
a
i
l
a
r
t
s
u
A
S
A
T
/
C
V
I
/
T
N
D
L
Q
W
S
N
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
4
4
3
4
3
2
,
2
0
7
2
7
,
7
6
0
4
1
1
,
5
7
5
7
4
,
9
3
6
6
,
8
2
3
2
,
0
4
5
2
,
8
4
8
,
1
0
9
9
6
,
1
5
8
5
,
9
7
3
,
1
2
e
u
n
e
v
e
r
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
R
l
)
8
2
4
0
4
,
(
)
2
4
2
2
,
(
)
4
5
(
5
4
0
6
,
1
1
9
2
7
0
8
,
2
9
9
3
2
,
3
4
1
,
7
4
4
9
5
9
,
7
7
8
4
,
6
4
6
7
7
2
,
1
3
6
5
0
9
4
2
,
6
8
5
)
5
4
8
(
s
t
n
e
m
g
e
s
o
t
d
e
t
a
c
o
l
l
a
t
o
n
e
u
n
e
v
e
r
t
s
e
r
e
t
n
I
e
s
n
e
p
x
e
t
s
e
r
e
t
n
I
t
l
u
s
e
r
t
n
e
m
g
e
S
t
l
u
s
e
R
e
e
t
s
e
v
n
i
d
e
t
n
u
o
c
c
a
-
y
t
i
u
q
e
f
o
s
s
o
l
f
o
e
r
a
h
S
s
e
s
n
e
p
x
e
D
&
R
i
n
a
g
y
c
n
e
r
r
u
c
n
g
e
r
o
F
i
)
5
6
0
5
2
,
(
s
e
s
n
e
p
x
e
e
v
i
i
i
t
a
r
t
s
n
m
d
a
d
n
a
e
t
a
r
o
p
r
o
C
)
4
1
3
4
,
(
2
8
6
4
1
,
)
7
8
7
3
,
(
5
9
8
0
1
,
s
t
n
e
m
g
e
s
o
t
d
e
t
a
c
o
l
l
a
t
o
n
s
e
s
n
e
p
x
e
r
e
h
t
O
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
I
x
a
t
r
e
t
f
a
t
i
f
o
r
p
t
e
N
x
a
t
e
r
o
e
b
f
t
i
f
o
r
P
.
)
d
n
a
s
u
o
h
t
9
9
1
,
6
4
$
:
8
1
0
2
(
d
n
a
s
u
o
h
t
7
5
3
,
3
4
$
e
r
a
9
1
0
2
e
n
u
J
0
3
t
a
s
a
)
a
i
l
a
r
t
s
u
A
(
e
l
i
i
c
m
o
d
f
’
o
y
t
n
u
o
c
s
y
t
i
t
n
e
e
h
t
n
i
d
e
t
a
c
o
l
,
s
t
e
s
s
a
x
a
t
f
d
e
r
r
e
e
d
d
n
a
s
t
n
e
m
u
r
t
s
n
i
l
i
a
c
n
a
n
fi
n
a
h
t
r
e
h
t
o
,
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
i
h
c
h
w
f
o
,
)
d
n
a
s
u
o
h
t
,
0
9
8
9
3
1
$
:
8
1
0
2
(
d
n
a
s
u
o
h
t
,
6
4
7
8
4
1
$
l
a
t
o
t
9
1
0
2
e
n
u
J
0
3
t
a
s
a
s
e
i
r
t
n
u
o
c
i
n
g
e
r
o
f
n
i
d
e
t
a
c
o
l
,
s
t
e
s
s
a
x
a
t
d
e
r
r
e
e
d
f
d
n
a
s
t
n
e
m
u
r
t
s
n
i
l
i
a
c
n
a
n
fi
n
a
h
t
r
e
h
t
o
,
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
.
a
c
i
r
e
m
A
h
t
r
o
N
n
i
e
r
a
,
)
d
n
a
s
u
o
h
t
9
4
0
7
1
1
$
,
:
8
1
0
2
(
d
n
a
s
u
o
h
t
,
5
4
0
6
1
1
$
e
r
a
d
n
a
s
u
o
h
t
8
7
8
,
1
$
o
t
g
n
i
t
n
u
o
m
a
/
r
e
h
t
O
e
p
o
r
u
E
s
a
d
e
t
n
e
m
g
e
s
C
L
L
l
a
t
i
i
g
D
6
1
6
f
o
n
w
o
d
e
t
i
r
w
d
n
a
d
n
a
s
u
o
h
t
6
3
4
2
$
,
f
o
l
l
i
w
d
o
o
g
i
e
c
v
r
e
s
W
S
N
f
o
n
w
o
d
e
t
i
r
w
o
t
g
n
i
t
a
e
r
l
s
e
s
n
e
p
x
e
t
n
e
m
r
i
a
p
m
I
.
’
s
t
n
e
m
g
e
s
o
t
d
e
t
a
c
o
l
l
a
t
o
n
s
e
s
n
e
p
x
e
r
e
h
t
o
‘
n
i
d
e
d
r
o
c
e
r
.
i
s
e
n
h
c
a
m
g
n
m
a
g
i
f
i
i
o
g
n
c
v
r
e
s
d
n
a
s
e
a
s
o
l
t
s
e
l
t
a
e
r
d
n
a
s
r
e
m
o
t
s
u
c
f
o
n
o
i
t
a
c
o
l
l
i
a
c
h
p
a
r
g
o
e
g
e
h
t
n
o
d
e
s
a
b
s
i
e
u
n
e
v
e
r
t
n
e
m
g
e
s
,
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
l
f
o
s
i
s
a
b
e
h
t
n
o
n
o
i
t
a
m
r
o
n
f
i
g
n
i
t
n
e
s
e
r
p
n
I
)
d
e
u
n
i
t
n
o
c
(
S
T
N
E
M
G
E
S
G
N
T
A
R
E
P
O
I
.
6
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
60 AINSWORTH GAME TECHNOLOGY
l
a
t
o
T
n
i
t
a
L
a
c
i
r
e
m
A
h
t
r
o
N
a
c
i
r
e
m
A
l
a
t
o
T
a
i
l
a
r
t
s
u
A
r
e
h
t
O
d
n
a
r
e
h
t
O
/
e
p
o
r
u
E
w
e
N
h
t
u
o
S
r
e
h
t
o
d
n
a
a
i
l
a
r
t
s
u
A
l
d
n
a
a
e
Z
i
a
s
A
a
i
l
a
r
t
s
u
A
S
A
T
/
C
V
I
/
T
N
D
L
Q
W
S
N
9
6
4
9
8
,
5
0
9
5
2
,
9
5
4
2
4
,
4
4
5
8
2
5
4
,
2
6
2
0
1
,
9
3
7
5
,
–
9
2
4
–
6
6
1
4
5
8
8
3
,
5
3
5
5
1
,
6
9
3
9
4
1
,
5
3
0
2
4
,
–
5
1
1
0
2
9
5
2
2
5
,
9
1
3
,
3
2
8
3
0
2
7
,
5
0
1
,
1
2
8
2
5
4
,
–
–
7
3
0
5
,
3
5
6
4
,
–
–
–
–
7
4
6
4
,
–
–
–
–
–
–
–
–
3
1
–
9
7
1
3
0
6
,
1
5
8
5
–
–
–
–
3
7
9
6
1
7
–
–
–
–
–
–
–
–
6
5
6
3
9
0
6
,
7
1
4
3
,
7
1
2
,
1
9
3
9
,
1
5
5
2
8
,
–
7
3
0
5
,
)
7
(
–
3
2
3
5
3
,
6
2
8
4
,
3
0
6
,
1
8
9
5
9
8
6
,
1
9
4
7
6
,
4
3
6
4
,
4
2
2
5
1
,
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
s
e
n
i
l
e
c
i
v
r
e
s
/
s
t
c
u
d
o
r
p
r
o
a
M
j
s
t
n
e
m
e
g
n
a
r
r
a
t
n
e
m
e
e
l
i
t
l
u
M
s
e
a
s
l
t
r
a
p
d
n
a
e
n
h
c
a
M
i
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
i
s
e
c
v
r
e
s
f
o
g
n
i
r
e
d
n
e
R
s
e
s
a
e
l
e
p
y
t
l
e
a
S
e
m
o
c
n
i
e
s
n
e
c
L
i
n
o
i
i
t
a
p
c
i
t
r
a
p
d
n
a
l
a
t
n
e
R
n
o
i
t
i
n
g
o
c
e
r
e
u
n
e
v
e
r
f
o
g
n
m
T
i
i
s
r
e
m
o
t
s
u
c
h
t
i
w
s
t
c
a
r
t
n
o
c
m
o
r
f
d
e
v
i
r
e
d
s
i
e
u
n
e
v
e
r
’
s
p
u
o
r
G
e
h
T
.
s
t
n
e
m
e
t
a
t
s
l
i
a
c
n
a
n
fi
l
a
u
n
n
a
t
s
a
l
e
h
t
n
i
d
e
b
i
r
c
s
e
d
e
s
o
h
t
e
r
a
s
m
a
e
r
t
s
e
u
n
e
v
e
r
n
a
m
d
n
a
s
n
o
i
’
i
t
a
r
e
p
o
s
p
u
o
r
G
e
h
T
E
U
N
E
V
E
R
.
7
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
.
n
o
i
t
i
n
g
o
c
e
r
e
u
n
e
v
e
r
f
o
g
n
m
i
i
t
d
n
a
s
e
n
i
l
i
e
c
v
r
e
s
d
n
a
s
t
c
u
d
o
r
p
r
o
a
m
j
,
t
e
k
r
a
m
l
i
a
c
h
p
a
r
g
o
e
g
y
r
a
m
i
r
p
y
b
d
e
t
a
g
e
r
g
g
a
s
d
s
i
i
e
u
n
e
v
e
r
,
l
e
b
a
t
i
g
n
w
o
l
l
o
f
e
h
t
n
I
e
u
n
e
v
e
r
f
o
n
o
i
t
a
g
e
r
g
g
a
s
i
D
)
a
(
4
3
1
,
4
9
2
6
2
5
5
,
7
2
2
6
2
,
8
0
8
5
1
,
6
9
3
9
4
1
,
5
3
0
2
4
,
8
3
5
2
4
,
0
0
5
9
2
,
8
3
0
2
7
,
9
6
3
5
2
,
4
5
9
9
,
3
2
3
5
3
,
9
7
1
7
4
6
4
,
6
2
8
4
,
3
0
6
,
1
–
3
0
6
,
1
–
8
9
5
8
9
5
8
1
8
6
,
1
9
8
6
,
1
9
4
6
6
,
0
0
1
9
4
7
6
,
1
6
3
7
5
4
,
4
3
6
4
,
6
8
0
0
1
,
8
3
1
,
5
4
2
2
5
1
,
e
m
i
t
n
i
i
t
n
o
p
a
t
a
d
e
r
r
e
f
s
n
a
r
t
i
s
e
c
v
r
e
s
d
n
a
s
t
c
u
d
o
r
P
e
m
i
t
r
e
v
o
d
e
r
r
e
f
s
n
a
r
t
i
s
e
c
v
r
e
s
d
n
a
s
t
c
u
d
o
r
P
ANNUAL REPORT 2020
61
l
a
t
o
T
n
i
t
a
L
a
c
i
r
e
m
A
h
t
r
o
N
a
c
i
r
e
m
A
l
a
t
o
T
a
i
l
a
r
t
s
u
A
r
e
h
t
O
d
n
a
r
e
h
t
O
/
e
p
o
r
u
E
w
e
N
h
t
u
o
S
r
e
h
t
o
d
n
a
a
i
l
a
r
t
s
u
A
l
d
n
a
a
e
Z
i
a
s
A
a
i
l
a
r
t
s
u
A
S
A
T
/
C
V
I
/
T
N
D
L
Q
W
S
N
3
2
9
6
,
2
4
6
5
,
7
7
5
0
1
,
0
2
3
6
,
0
1
0
6
4
,
–
5
3
–
6
8
5
2
,
4
9
8
7
1
,
–
6
5
0
3
,
5
6
1
,
4
7
5
9
6
1
1
,
8
2
–
3
2
9
6
,
2
1
4
6
,
8
2
3
5
,
–
–
–
–
–
2
2
2
5
,
–
–
–
7
3
–
–
–
–
8
1
–
2
7
8
8
5
1
,
7
8
1
,
2
5
3
7
7
7
7
,
2
1
9
8
2
,
7
1
4
,
1
1
9
2
2
,
2
2
5
2
,
–
–
–
–
9
4
9
9
9
8
–
–
2
1
–
–
–
8
–
7
9
1
,
5
1
8
7
,
1
3
2
5
4
,
0
2
3
,
1
3
1
0
2
1
,
3
2
9
2
,
–
2
1
4
6
,
1
3
–
4
4
3
4
3
2
,
2
0
7
2
7
,
7
6
0
4
1
1
,
5
7
5
7
4
,
9
3
6
6
,
8
2
3
2
,
0
4
5
2
,
8
4
8
,
1
0
9
9
6
,
1
5
8
5
,
9
7
3
,
1
2
0
6
8
,
1
7
1
4
8
4
2
6
,
4
2
7
5
5
,
8
7
9
6
1
,
4
4
3
4
3
2
,
2
0
7
2
7
,
7
2
8
9
7
,
0
4
2
4
3
,
7
6
0
4
1
1
,
9
0
3
6
3
,
6
6
2
,
1
1
5
7
5
7
4
,
1
5
4
2
,
8
8
1
,
4
9
3
6
6
,
–
–
8
2
3
2
,
0
4
5
2
,
8
2
3
2
,
0
4
5
2
,
8
0
8
,
1
0
4
8
4
8
,
1
1
0
2
9
8
7
6
,
0
9
9
6
,
8
6
6
5
,
3
8
1
1
5
8
5
,
5
2
7
4
1
,
4
5
6
6
,
9
7
3
,
1
2
e
m
i
t
n
i
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
)
d
e
u
n
i
t
n
o
c
(
E
U
N
E
V
E
R
.
7
s
e
n
i
l
e
c
i
v
r
e
s
/
s
t
c
u
d
o
r
p
r
o
a
M
j
s
t
n
e
m
e
g
n
a
r
r
a
t
n
e
m
e
e
l
i
t
l
u
M
s
e
a
s
l
t
r
a
p
d
n
a
e
n
h
c
a
M
i
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
i
s
e
c
v
r
e
s
f
o
g
n
i
r
e
d
n
e
R
s
e
s
a
e
l
e
p
y
t
l
e
a
S
e
m
o
c
n
i
e
s
n
e
c
L
i
n
o
i
i
t
a
p
c
i
t
r
a
p
d
n
a
l
a
t
n
e
R
n
o
i
t
i
n
g
o
c
e
r
e
u
n
e
v
e
r
f
o
g
n
m
T
i
i
i
t
n
o
p
a
t
a
d
e
r
r
e
f
s
n
a
r
t
i
s
e
c
v
r
e
s
d
n
a
s
t
c
u
d
o
r
P
e
m
i
t
r
e
v
o
d
e
r
r
e
f
s
n
a
r
t
i
s
e
c
v
r
e
s
d
n
a
s
t
c
u
d
o
r
P
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
62 AINSWORTH GAME TECHNOLOGY
8. OTHER INCOME
In thousands of AUD
Royalties income
Bad debts reversed
Rent concessions
Other income
9. EXPENSES BY NATURE
In thousands of AUD
Employee benefits expense
Depreciation and amortisation expense
Impairment of property, plant and equipment
Impairment of intangibles
Impairment of equity-accounted investee
Changes in raw material and consumables, finished goods and work in progress
Legal expenses
Evaluation and testing expenses
Marketing expenses
Impairment of trade receivables
Operating lease expenses
Other expenses
Note
2020
26
27
10
12,13, 27
12
13
14
16
26
27
188
196
467
133
984
2020
58,515
39,995
11,958
–
–
45,847
1,234
7,604
4,971
3,410
102
2019
257
958
–
13
1,228
2019
65,201
33,419
–
2,436
1,878
77,673
1,015
7,681
5,720
875
2,331
27,001
31,924
200,637
230,153
ANNUAL REPORT 2020
63
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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/(decrease) in liability for long service leave
Termination benefits
Equity settled share-based payment transactions
Note
2020
2019
52,876
60,495
22
22
339
3,368
195
81
1,094
562
1,172
3,439
23
(97)
181
(12)
58,515
65,201
Included in the decline in wages and salaries in 2020 are JobKeeper subsidies received by the Australian companies within the
group amounting to $2,766 thousand (2019: nil).
11. FINANCE INCOME AND FINANCE COSTS
In thousands of AUD
Interest income
Net foreign exchange gain
Finance income
Interest expense on financial liabilities
Finance costs
Net finance income recognised in profit or loss
2020
2,441
1,245
3,686
(2,229)
(2,229)
1,457
2019
5,514
6,045
11,559
(2,242)
(2,242)
9,317
64 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 12. PROPERTY, PLANT AND EQUIPMENT
In thousands of AUD
Cost
Balance at 1 July 2018
Re-classification of inventory to plant and equipment
Additions
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2019
Balance at 1 July 2019
Re-classification of inventory to plant and equipment
Additions
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2020
Depreciation and impairment losses
Balance at 1 July 2018
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2019
Balance at 1 July 2019
Depreciation charge for the year
Impairment Loss
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2020
Carrying amounts
At 1 July 2018
At 30 June 2019
At 30 June 2020
Note
Land and
buildings
Plant and
equipment
Leasehold
improvements
Total
59,266
–
116
–
3,194
62,576
103,170
36,206
5,246
(22,292)
4,722
127,052
3,052
–
1,159
–
17
165,488
36,206
6,521
(22,292)
7,933
4,228
193,856
62,576
127,052
4,228
193,856
–
14
–
1,368
63,958
4,421
2,005
–
278
6,704
6,704
2,147
–
–
100
8,951
54,845
55,872
55,007
13,737
6,360
(13,345)
2,344
136,148
41,052
22,751
(11,080)
2,134
54,857
54,857
24,906
11,958
(6,118)
222
85,825
62,118
72,195
50,323
–
8
–
8
13,737
6,382
(13,345)
3,720
4,244
204,350
1,422
313
–
12
1,747
1,747
389
–
–
4
46,895
25,069
(11,080)
2,424
63,308
63,308
27,442
11,958
(6,118)
326
2,140
96,916
1,630
2,481
2,104
118,593
130,548
107,434
9
13
Disposals in the table above includes sale of gaming machines previously under participation or rental agreements of $6,683
thousand (2019: $10,852 thousand) at net book value.
The carrying amount of plant and equipment on participation and fixed rental leases is $34,877 thousand (2019: $57,426 thousand).
Impairment loss of $11,958 thousand recognised during the year relates to the recoverability of the carrying value of assets
within the Latin American cash generating unit. See ‘Note 13 – Intangible assets’ for further details.
ANNUAL REPORT 2020
65
Notes to the Financial Statements (continued)for the year ended 30 June 2020 r
e
m
o
t
s
u
C
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
e
t
a
t
S
d
n
a
s
e
m
a
n
e
d
a
r
T
i
s
p
h
s
n
o
i
t
a
e
r
l
d
n
a
l
y
g
o
o
n
h
c
e
T
a
d
a
v
e
N
l
a
u
t
c
e
l
l
e
t
n
I
t
n
e
m
p
o
e
v
e
D
l
s
k
r
a
m
e
d
a
r
t
e
c
r
o
f
k
r
o
w
e
r
a
w
t
f
o
s
d
n
a
s
t
s
o
c
e
c
n
e
c
i
l
y
t
r
e
p
o
r
p
s
t
s
o
c
l
l
i
w
d
o
o
G
e
t
o
N
l
a
t
o
T
5
1
8
6
8
,
0
4
3
,
3
)
1
4
6
,
1
(
1
1
7
,
1
5
2
2
0
9
,
5
2
2
0
9
,
6
8
3
4
,
0
9
0
8
3
,
)
1
7
6
(
)
7
6
0
,
1
(
3
6
9
0
3
1
,
9
1
3
9
1
,
0
5
3
8
,
)
1
4
6
,
1
(
6
3
4
2
,
6
0
2
0
7
6
8
2
,
0
7
6
8
2
,
0
6
1
,
0
1
)
1
7
6
(
–
6
6
5
2
2
8
3
,
6
9
4
7
6
,
5
5
5
,
1
6
8
3
7
2
9
,
–
3
3
4
)
3
3
4
(
e
c
i
v
r
e
S
s
t
c
a
r
t
n
o
c
–
–
–
–
–
–
–
–
–
3
3
4
)
3
3
4
(
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
7
6
1
7
6
1
7
6
–
)
1
7
6
(
)
7
5
(
3
9
1
,
1
6
3
1
,
1
–
–
–
8
4
5
3
2
1
1
7
6
1
7
6
2
7
)
1
7
6
(
–
)
2
(
0
7
8
2
1
,
1
1
9
9
5
9
,
3
8
5
,
1
–
–
0
0
6
8
2
7
,
1
1
8
2
7
,
1
1
–
2
7
1
,
5
–
2
1
–
–
–
9
9
5
9
,
9
9
5
9
,
–
–
)
4
3
5
(
7
1
3
,
1
1
–
–
–
3
8
5
,
1
3
8
5
,
1
–
–
–
–
2
1
9
6
1
,
2
8
3
0
2
,
3
8
5
,
1
6
4
3
,
3
6
3
2
,
1
–
–
6
0
2
8
8
7
4
,
8
8
7
4
,
0
7
2
,
1
–
–
6
7
6
8
0
3
,
5
5
2
,
1
–
–
–
1
4
3
4
,
1
4
3
4
,
2
9
5
,
1
–
–
)
8
(
4
3
1
,
6
5
2
9
5
,
–
–
–
–
–
–
–
–
–
–
–
–
–
3
2
1
6
6
0
,
1
2
8
7
7
,
0
4
9
6
,
8
7
7
0
1
,
3
1
5
6
,
8
5
2
5
,
7
5
4
4
1
,
3
8
5
,
1
3
8
5
,
1
3
8
5
,
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0
4
3
,
3
)
8
0
2
,
1
(
7
5
3
0
4
,
–
9
8
4
2
4
,
9
8
4
2
4
,
6
8
3
4
,
–
–
–
–
–
4
4
0
3
2
,
–
1
1
1
,
1
5
5
1
,
4
2
5
5
1
,
4
2
8
0
4
0
2
,
–
)
8
8
4
(
5
7
8
6
4
,
5
7
0
4
4
,
6
0
9
,
1
1
6
3
7
5
,
)
8
0
2
,
1
(
–
–
4
3
4
6
1
,
4
3
4
6
1
,
6
2
2
7
,
–
–
–
–
–
–
–
6
3
4
2
,
6
3
4
2
,
6
3
4
2
,
–
–
–
–
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
S
T
E
S
S
A
E
L
B
G
N
A
T
N
I
I
.
3
1
8
1
0
2
y
u
J
l
1
t
a
e
c
n
a
a
B
l
s
n
o
i
t
i
d
d
A
t
s
o
C
D
U
A
f
o
s
d
n
a
s
u
o
h
t
n
I
4
3
n
o
i
i
t
a
n
b
m
o
c
i
s
s
e
n
s
u
b
h
g
u
o
r
h
t
s
n
o
i
t
i
d
d
A
9
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
9
1
0
2
y
u
J
l
1
t
a
e
c
n
a
a
B
l
s
n
o
i
t
i
d
d
A
y
c
n
e
r
r
u
c
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
f
o
s
t
c
e
f
f
E
f
f
o
n
e
t
t
i
r
w
d
n
a
d
e
s
i
t
r
o
m
a
y
l
l
u
f
s
t
e
s
s
a
e
b
g
n
a
t
n
l
i
I
f
f
o
n
e
t
t
i
r
w
d
n
a
d
e
s
i
t
r
o
m
a
y
l
l
u
f
s
t
e
s
s
a
e
b
g
n
a
t
n
l
i
I
9
9
9
9
y
c
n
e
r
r
u
c
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
f
o
s
t
c
e
f
f
E
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
i
d
n
a
n
o
i
t
a
s
i
t
r
o
m
A
0
2
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
r
a
e
y
e
h
t
r
o
f
n
o
i
t
a
s
i
t
r
o
m
A
8
1
0
2
y
u
J
l
1
t
a
e
c
n
a
a
B
l
f
f
o
n
e
t
t
i
r
w
d
n
a
d
e
s
i
t
r
o
m
a
y
l
l
u
f
s
t
e
s
s
a
e
b
g
n
a
t
n
l
i
I
y
c
n
e
r
r
u
c
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
f
o
s
t
c
e
f
f
E
9
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
r
a
e
y
e
h
t
r
o
f
n
o
i
t
a
s
i
t
r
o
m
A
9
1
0
2
y
u
J
l
1
t
a
e
c
n
a
a
B
l
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
I
f
f
o
n
e
t
t
i
r
w
d
n
a
d
e
s
i
t
r
o
m
a
y
l
l
u
f
s
t
e
s
s
a
e
b
g
n
a
t
n
l
i
I
y
c
n
e
r
r
u
c
n
g
e
r
o
i
f
n
i
s
t
n
e
m
e
v
o
m
f
o
s
t
c
e
f
f
E
s
e
s
s
o
l
t
n
e
m
r
i
a
p
m
I
0
6
6
3
2
,
6
3
4
2
,
0
2
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
1
5
4
8
2
,
5
5
0
6
2
,
5
1
2
3
2
,
4
4
0
3
2
,
9
1
7
,
1
2
9
3
6
,
1
4
s
t
n
u
o
m
a
g
n
y
r
r
a
C
i
9
1
0
2
e
n
u
J
0
3
t
A
0
2
0
2
e
n
u
J
0
3
t
A
8
1
0
2
y
u
J
l
1
t
A
66 AINSWORTH GAME TECHNOLOGY
Impairment testing for development costs
The four main CGUs are: Development, Australia and other (comprised of Asia, New Zealand, South Africa and Europe), North
America and Latin America.
The determination of CGUs for the purposes of testing development costs for impairment is consistent with last financial year.
During the financial year, the Group completed an asset acquisition from a US privately held company, MTD Gaming Inc. – see
‘Note 34 - Business combinations’ for further details of this acquisition. The Group assessed and determined it was appropriate
to incorporate the acquired intangible assets of $17,682 thousand and goodwill of $20,408 thousand as part of the North
America CGU. Other than the MTD acquisition, the allocation of goodwill remains 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.
The carrying amount of the Group’s development costs amounts to $23,215 thousand (2019: $26,055 thousand), comprising of
$19,968 thousand in development costs relating to product development and $3,247 thousand in development costs relating
to online development activities.
Development costs include costs relating to products and online gaming 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 Group’s corporate assets largely comprises of building facilities, IT infrastructure and manufacturing equipment. The
allocation of the corporate assets is based on the usage pattern by each CGU.
Allocation of right-of-use assets under AASB 16 Leases
The Group applied AASB 16 Leases for the first-time from 1 July 2019 and as a result the ‘other assets’ within each CGU includes
the carrying amount of right-of-use (“ROU”) assets as at 30 June 2020. This is consistent with the previous approach for assets
under finance lease in accordance with AASB 117 Leases whereby a lessee applies AASB 136 Impairment of Assets to assess
the ROU assets for impairment.
The allocation of goodwill, indefinite useful life intangible assets and other assets to the Groups of CGUs are as follows:
In thousands of AUD
CGUs
Development
Australia and other
North America
Latin America
In thousands of AUD
CGUs
Development
Australia and other
North America
Latin America
Indefinite life
intangible
assets
–
–
1,583
–
Indefinite life
intangible
assets
–
–
1,583
–
Goodwill
–
–
41,639
–
Goodwill
–
–
21,719
–
2020
Capitalised
Development
costs Other assets
23,215
–
–
–
41,512
9,075
74,172
24,620
2019
Capitalised
Development
costs Other assets
26,055
–
–
–
20,200
4,810
73,604
44,132
Recoverable
amount
88,599
24,777
212,687
24,620
Recoverable
amount
76,367
5,244
128,215
72,296
ANNUAL REPORT 2020
67
Notes to the Financial Statements (continued)for the year ended 30 June 2020 INTANGIBLE ASSETS (continued)
13.
Impairment testing for goodwill and indefinite life intangibles
Goodwill acquired through business combinations (Nova Tech in 2016 and MTD Gaming in 2020) and Nevada license indefinite
life intangibles were allocated to the North America CGU as this CGU is expected to benefit from the business combination’s
synergies from impairment testing. The recoverable amount of this CGU was estimated based on its value in use (“VIU”),
determined by discounting future cash flows to be generated from the continuing use of the CGU.
The key assumptions used in estimation of VIU were as follows:
– the discount rate of 14.0% (30 June 2019: 13.5%) used is a pre-tax rate;
– five years of forecast cash flows were included in the discounted cash flow model. A long-term growth rate into perpetuity of
1.8% (30 June 2019: 1.8%) has been determined based on growth prospects of this CGU industry and the overall economy; and
– the projected average annual revenue growth rate over the five years is 17.6% (30 June 2019: 3.4%) and is based on past
experience, adjusted for anticipated revenue growth in the Class II, Poker, Keno, and video reel content for use in Multi-Game
and Video Lottery Terminal 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.
Key assumptions used in determining the recoverable amount
The recoverable amount of each CGU was estimated based on its VIU. The cash flow projections included specific estimates
for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management’s estimate
of the long-term compound annual EBITDA growth rate, consistent with the assumptions that a market participant would make.
The key assumptions used when assessing the recoverable amount of each CGU is outlined as below.
CGUs
Development
Australia and other
North America
Latin America
2020
2019
Pre-tax
Discount rate
Average
annual
revenue
growth rate(1)
Pre-tax
Discount rate
Average
annual
revenue
growth rate
15.6%
14.7%
14.0%
18.8%
0.4%
25.5%
17.6%
17.3%
17.2%
16.6%
13.5%
18.7%
5.6%
15.8%
3.4%
8.1%
(1) The 5 years forecast average annual revenue growth rates (FY21 to FY25) has been calculated based on FY20 revenue as the base
year, which has been adversely impacted by COVID-19, resulting in an increased average growth rate compared to the last financial
year. When estimating the revenue growth rates, management have considered and incorporated the effects of the pandemic by
forecasting growth rate based on a staggered recovery in Half 2 FY21 and a gradual return to pre-COVID-19 levels during FY22, and
normalised business performance/ growth rates thereafter.
Australia and other CGU
As at 30 June 2020, Australia and other CGU has a forecasted VIU exceeding carrying amount (“headroom”) of $15,702
thousand, compared to $434 thousand at 30 June 2019. The increase in headroom is primarily driven by the decrease in the
pre-tax discount by 190 basis points due to change in local external economic factors such as government bond rates. When
estimating the revenue growth rates, the historical experience, and forecasted financial results based on the release of new
hardware configuration, A-Star™, improved game performance and other planned strategic initiatives have been considered.
Given that this headroom is highly dependent on the forecasted revenue growth, an adverse change in this key assumption
may result in a deficiency in the net recoverable amount when compared to the carrying value of the CGU, which may result
in impairment charges recognised in future periods.
From a sensitivity perspective, based on the current carrying amount of assets in the CGU, an overall reduction in average
revenue growth rate from 25.5% to 22.6% will result in the elimination of any headroom. This sensitivity assumes the specific
assumption moves in isolation, whilst all other assumptions are held constant. In reality, a change in this assumption may
accompany a change in another assumption.
68 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 North America CGU
The average annual revenue growth projection of 17.6% is derived from a low FY20 result due to the impacts of COVID-19. This
growth rate also incorporates growth projections contributed by the MTD acquisition. The pre-tax discount rate for the North
America CGU has been adjusted accordingly to reflect the risk associated with this new acquisition, resulting in a 50-basis point
increase in discount rate.
As the headroom of this CGU is $95,293 thousand, Management does not believe that a reasonable possible change in key
assumptions will result in a material impairment charge.
Latin America CGU
As at 30 June 2020, the Latin America CGU recorded an impairment charge of $11,958 thousand against its leased assets as
a result of reduction in revenue projections and the deterioration of working capital assumptions. The impairment charge has
been recognised in the ‘Consolidated statement of profit and loss and other comprehensive income’ under ‘Other expenses’.
The material decrease in its recoverable amount compared to last financial year is due to the revised future forecasted revenue
growth given the underperformance of this CGU, coupled with the adverse effects of COVID-19 on the future operations
particularly noted in the regions in which this CGU operates in. In addition, taking into consideration the impact of COVID-19,
the working capital assumptions has been adjusted for, in particular the timing of customer receipt projections, as customers
within this CGU typically have extended repayment terms.
As there is nil headroom within this CGU, an adverse change in any of the key assumptions used may result in further
impairment charges in future periods. The following sensitivities assume a specific assumption moves in isolation, whilst all
other assumptions are held constant:
– A reduction in forecasted revenue by 10% for the next 18-month period would cause additional material impairment
of approximately $1,967 thousand;
– A reduction in discount rate by 50 basis points would cause additional material impairment of $2,348 thousand.
This sensitivity assumes the specific assumption moves in isolation, whilst all other assumptions are held constant. In reality,
a change in an assumption may accompany a change in another assumption.
Development CGU
The recoverable amount of the Development CGU is significantly driven by the performance of the other CGUs’ and a change in
key assumptions will impact both the geographical and the Development CGUs’. As the revenue projections of the Australia and
other, North America and Latin America CGUs are also dependent on the success of products supplied by the Development
CGU, impairment could also potentially arise at the Development CGU level shall any of the other CGUs have deficiencies in
their recoverable amounts compared to their carrying amounts. Other than the recoverable amount of the Development CGU
being significantly driven by the performance of the other CGUs, management does not believe a reasonable possible change
in key assumptions will result in a material impairment charge.
In addition, for all CGUs, whilst the achievement of forecast revenue growth rates is dependent on the success of current
strategic initiatives, market conditions, improved product performance, a change in implemented product development and
recently released new hardware configurations, Management, based on historical experience and industry specific factors, has
reviewed and assessed that forecasted revenue growth rates are expected to be achieved. However, the full magnitude and
the adverse impact of the pandemic is highly uncertain.
14. EQUITY-ACCOUNTED INVESTEE
616 Digital LLC (“616”) is a joint venture in which the Group had 40% ownership interest.
616 is an online social platform provider established in Delaware, USA and operates from Romania and Australia. This
arrangement allowed 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 had also been
established where the Group had the ability to purchase the remaining 60% interest in 616 at a future date.
During the year ended 30 June 2020, the Group disposed its 40% ownership interest in 616 Digital LLC. The investment
in equity accounted investee for the Group comprise the following:
In thousands of AUD
616 Digital LLC
Ownership
30-Jun-20
Ownership
30-Jun-19
Carrying
amount
30-Jun-20
Carrying
amount
30-Jun-19
0%
40%
–
–
The Group’s share of profit or loss of equity accounted investee is $nil thousand (2019: $54 thousand loss).
ANNUAL REPORT 2020
69
Notes to the Financial Statements (continued)for the year ended 30 June 2020 14. EQUITY-ACCOUNTED INVESTEE (continued)
616’s earnings growth profile continued to be affected by the ongoing maturation of the North American and Australian social
gaming market and an increase in player acquisition and retention costs. These market changes has been to the disadvantage
of smaller operators like 616 in favour of larger scale competitors and are reflected in lower than previously anticipated year on
year revenue and EBITDA growth.
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
Cash and cash equivalents
Current assets (excluding cash and cash equivalents)
Non-current assets
Current financial liabilities (excluding trade and other payables and provisions)
Current financial liabilities (including trade and other payables and provisions)
Net Assets
Income
Expenses
Elimination of upstream purchases
Loss
01-Jan-2020
(Date of
Disposal)
30-Jun-19
164
3
3
(11)
(90)
69
671
(707)
–
(36)
206
9
3
(11)
(112)
95
1,923
(2,393)
334
(136)
The movement of the Group’s investment in 616 during the year, adjusted for the percentage ownership held by the Group was
as follows:
Carrying amount at beginning of period
Share of loss
Write down of carrying amount
Effects of movements in foreign exchange
Carrying amount at end of period
15. TAXES
Current tax expense
In thousands of AUD
Tax recognised in profit or loss
Current tax benefit/(expense)
Current year
Prior year adjustments
Recognition of R&D tax credits
Deferred tax benefit/(expense)
Origination and movement of timing differences
Total income tax benefit/(expense)
70 AINSWORTH GAME TECHNOLOGY
–
–
–
–
–
2,001
(54)
(1,878)
(69)
–
2020
2019
1,135
(319)
835
1,651
3,716
3,716
5,367
(9,842)
(179)
7,216
(2,805)
(982)
(982)
(3,787)
Notes to the Financial Statements (continued)for the year ended 30 June 2020 Reconciliation of effective tax rate
In thousands of AUD
(Loss)/Profit before income tax
2020
2020
2019
(48,800)
Income tax expense using the Company’s domestic tax rate
(30.00%)
14,640
Effective tax rates in foreign jurisdictions
Non-deductible expenses
Non-assessable income and concessions
Prior year adjustments
Recognition of previously unrecognised tax losses and timing
differences
Recognised deferred tax assets/liabilities
1.12%
21.49%
(4.26%)
0.65%
0.00%
(11.00%)
(547)
(30.0%)
4.19%
(10,487)
(43.66%)
2,080
(319)
53.71%
(1.22%)
–
(8.81%)
5,367
(25.79%)
2019
14,682
(4,405)
615
(6,409)
7,885
(179)
(1,294)
(3,787)
In thousands of AUD
Employee benefits
Provisions
Property, plant and equipment
Unrealised foreign exchange gain
Other items
Tax loss carry forwards
Net deferred tax assets/(liabilities)
2020
2019
2020
2019
Net deferred tax assets
Net deferred tax liabilities
2,260
2,284
792
139
(1,496)
1,799
2,026
5,520
677
120
(1,510)
807
408
2,786
355
3,733
(5,977)
–
1,285
1
(603)
377
3,446
(6,021)
–
609
4
(1,585)
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.
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.
Management has assessed that the carrying amount of the deferred tax assets of $5,520 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
2020
2019
47,495
43,390
492
91,377
31,613
33,550
1,688
66,851
During the year ended 30 June 2020 raw materials, consumables and changes in finished goods and work in progress
recognised as cost of sales amounted to $45,847 thousand (2019: $77,673 thousand).
A re-classification from inventory to property, plant and equipment of $13,737 thousand (2019: $36,206 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 2020, the write down of inventories to net realisable value amounted to $4,620 thousand (2019:
$2,726 thousand). The write down is included in cost of sales.
ANNUAL REPORT 2020
71
Notes to the Financial Statements (continued)for the year ended 30 June 2020 17. RECEIVABLES AND OTHER ASSETS
In thousands of AUD
Current
Trade receivables
Less impairment losses
Other assets
Amount receivable from shareholder-controlled entities
Non-current
Trade receivables
Note
2020
2019
26
29
92,435
(6,249)
86,186
1,188
665
122,998
(5,002)
117,996
593
1,375
88,039
119,964
25,844
25,844
28,648
28,648
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
2020
2019
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 as follows:
Within one year
Later than one year but not later than 5 years
The present value of minimum lease payments and lease receivables classification is as
follows:
Within one year
Later than one year but not later than 5 years
3,920
1,258
5,178
247
52
299
3,673
1,206
4,879
5,614
3,703
9,317
366
197
563
5,248
3,506
8,754
72 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 18. CASH AND CASH EQUIVALENTS
In thousands of AUD
Bank balances
Cash deposits
Cash and cash equivalents in the statement of cash flows
2020
2019
26,528
59,695
15
26,543
1,966
61,661
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
(Loss)/profit for the period
Adjustments for:
Rent concessions
Equity-settled share-based payment transactions
Net finance income
Depreciation
Impairment losses on trade receivables and provision for obsolescence
Write-down of goodwill
Amortisation of intangible assets
Impairment of LATAM CGU
Impairment of 616 Digital LLC
Write-down of Equity-accounted investee
Loss on sale of property, plant and equipment
Unrealised currency translation movements
Income tax (benefit)/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
Change in other assets
Change in trade and other payables
Change in provisions and employee benefits
Interest received
Income taxes refunded/(paid)
Net cash from operating activities
Note
2020
2019
(43,433)
10,895
8
10
11
12,27
13
13
12,13
14
15
(467)
562
(1,457)
29,835
8,030
–
10,160
11,958
745
–
153
(4,510)
(5,367)
6,209
26,827
(28,081)
(5,151)
(4,479)
16,310
1,737
13,372
2,326
1,023
16,721
–
(12)
(9,317)
25,069
3,601
2,436
8,350
–
–
1,878
224
6,062
3,787
52,973
46,608
15,745
(25,942)
(405)
(21,732)
(5,069)
62,178
5,503
(6,473)
61,208
ANNUAL REPORT 2020
73
Notes to the Financial Statements (continued)for the year ended 30 June 2020 19. CAPITAL AND RESERVES
(a) Share capital
In thousands of shares
In issue at 1 July
Shares issued under dividend reinvestment plan
In issue at 30 June – fully paid
Ordinary shares
2020
2019
336,794
332,513
–
4,281
336,794
336,794
(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, no ordinary shares were issued.
(b) Nature and purpose of reserve
(i)
Equity compensation reserve
The equity compensation reserve represents the expensed cost of share options issued to employees.
Fair value reserve
(ii)
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 paid by the Company during the year:
In thousands of AUD
0.0 cents per qualifying ordinary share (2019: 2.5 cents)
2020
–
2019
8,313
During the year and subsequent to the reporting date, no dividend was proposed by the board of directors (2019:nil).
The amount of franking credits available to shareholders for subsequent financial years is $28,017 thousand (2019:
$30,185 thousand). The ability to utilise the franking credits is dependent upon the ability to declare dividends.
74 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 20. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 30 June 2020 was based on the loss attributable to ordinary shareholders of
$43,433 thousand (2019: $10,895 thousand profit) and a weighted average number of ordinary shares outstanding during as at
30 June 2020 of 336,794 thousand (2019: 335,000 thousand) calculated as follows:
(Loss)/profit attributable to ordinary shareholders
In thousands of AUD
(Loss)/profit for the period
(Loss)/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
2020
2019
(43,433)
(43,433)
10,895
10,895
19
336,794
332,513
–
2,487
336,794
335,000
($0.13)
$0.03
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2020 was based on the loss attributable to ordinary shareholders
of $42,871 thousand (2019: $10,883 thousand profit) and a weighted average number of ordinary shares outstanding after
adjustment for the effects of all dilutive potential ordinary shares of 336,794 thousand (2019: 338,224 thousand), calculated as
follows:
(Loss)/profit attributable to ordinary shareholders (diluted)
In thousands of AUD
(Loss)/profit attributable to ordinary shareholders
Amortisation of share-based payment arrangement
(Loss)/profit attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares (diluted)
In thousands of shares
2020
2019
(43,433)
10,895
562
(12)
(42,871)
10,883
Weighted average number of ordinary shares at 30 June
19
336,794
335,000
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
–
3,224
336,794
338,224
($0.13)
$0.03
As at 30 June 2020, 10,988 thousand options (2019: nil options) were excluded from the diluted weighted average number of
ordinary shares calculation because their effect would have been anti-dilutive.
ANNUAL REPORT 2020
75
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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
Insurance premium funding
Secured bank loan
Non-current
Secured bank loan
2020
2019
87
43,934
44,021
–
–
295
12,366
12,661
42,778
42,778
Terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
In thousands of AUD
Nominal
interest rate
Year of
maturity
Insurance premium funding
Secured bank loan
1.38%
LIBOR+0.85%
2020
2021
Total interest-bearing liabilities
Change in loan covenant
2020
Face
value
88
43,934
44,022
Carrying
amount
87
43,934
44,021
2019
Face
value
Carrying
amount
299
55,144
55,443
295
55,144
55,439
The Group has a secured bank loan with a carrying amount of $43,934 thousand as at 30 June 2020 with ANZ bank. The bank
loan is secured by fixed and floating charges over identified assets of the Company and certain subsidiaries within the Group,
and imposes financial covenants measured on a six-monthly basis. Following the asset acquisition of MTD Gaming Inc. (“MTD”),
the financial covenant ratios were amended, and the measurement period was reduced from a six-monthly basis to a quarterly
basis, with the first measurement period being 31 March 2020.
Consequent to the outbreak of the COVID-19 pandemic which caused significant disruption in the markets in which the Group
operates, management forecasted an impending breach in financial covenants, calculated based on EBITDA for the 12 months
ending 30 June 2020, and commenced discussion with ANZ bank to restructure the facility.
As at year end, the Group breached its financial covenants for the interest cover and leverage ratios and as a result, the full loan
payable balance was classified as a current liability. Subsequent to year end on 24 August 2020, the Group signed a deed of
amendment for the ANZ facility and renegotiated the terms of the facility - See ‘Note 31 – Subsequent Events’ for further details
of this amendment.
Insurance premium funding
Finance lease liabilities of the Group are payable as follows:
Future
minimum
lease
payments
2020
Present value
of minimum
lease
payments
2020
Interest
2020
88
–
88
1
–
1
87
–
87
Future
minimum
lease
payments
2019
299
–
299
Present value
of minimum
lease
payments
2019
295
–
295
Interest
2019
4
–
4
In thousands of AUD
Less than one year
Between one and five years
76 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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
2020
2019
1,452
101
4,383
3,237
9,173
605
605
1,245
921
4,188
3,236
9,590
525
525
23. SHARE-BASED PAYMENTS
At 30 June 2020, the Group had the following share-based payment arrangements:
1 March 2017 Performance rights
Performance rights programme (equity-settled)
(i)
(a) Description of programme
On 1 March 2017, the Group established an employee incentive plan whereby performance rights were granted to all eligible
Group employees under the Rights Share Trust (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. These rights are to be settled by the physical delivery of shares. The last vesting
date for this performance rights is 1 March 2021 with 5 years contractual life since grant date.
During the year, Tranche 3 of these rights did not vest at the third vesting date of 1 March 2020 due to performance conditions
not being met. The grant of this Tranche along with Tranches 1 and 2 under the RST will be re-tested at the end of the next
applicable performance vesting date of 1 March 2021, subject to the higher performance conditions. If the performance
conditions at the end of the next applicable performance period are satisfied, then the performance rights for the current
performance period and any non-vested performance rights from prior performance periods will vest. During the year, 507,272
rights were cancelled due to termination of employees during the year with 2,716,877 rights outstanding as at 30 June 2020.
Performance hurdles
– 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) Measurement of fair value
The fair value of the performance rights granted on 1 March 2017 under the RST are 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
Fair Value per
option
$0.56
$0.49
$0.42
$0.37
ANNUAL REPORT 2020
77
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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)
RST plan
$1.77
–
36.90%
5 years
5.65%
2.31%
30 August 2019 Share options
(ii)
(a) Description of programme
On 30 August 2019, the Group offered to eligible employees the opportunity to participate in a share option over ordinary
shares in Ainsworth Game Technology Limited, under the Ainsworth Game Technology Limited Option Share Trust (OST). To
be eligible to participate in the OST, the employees were selected by the directors and reviewed by the Remuneration and
Nomination Committee. The OST provides for employees an option to purchase allocated shares at the valuation price at
grant date. Each option is convertible to one ordinary share. Option holders have no voting or dividend rights. On conversion
from option to ordinary shares, the issued shares will have full voting and dividend rights. The ability to exercise the right is
conditional on the continuing employment of the participating employee. The total issued share options under this programme
was 11,062,029 units. During the year, 1,163,408 options were cancelled due to termination of employees during the year with
9,898,621 rights outstanding as at 30 June 2020.
The key terms and conditions related to the grants under the programme are as follows, with all options to be settled by the
physical delivery of shares.
Grant date/employee entitled
Options granted to key management personnel
Number of
instruments
issued
878,779
Options granted to senior and other employees
10,183,250
Total rights OST
11,062,029
Vesting conditions
Contractual life of
options
Four years’ service and
performance hurdles from grant
date as per OST below
Four years’ service and
performance hurdles from grant
date as per OST below
5 years
5 years
Performance hurdles
– Tranche 1 - 25% will vest if the VWAP for 20 days preceding to 30/08/2021 is equal to or greater than $1.10.
– Tranche 2 - 25% will vest if the VWAP for 20 days preceding to 30/08/2022 is equal to or greater than $1.32.
– Tranche 3 - 50% will vest if the VWAP for 20 days preceding to 30/08/2023 is equal to or greater than $1.58.
The share options granted are cumulative whereby should the performance hurdles not be met at the respective vesting
dates, the grant relating to these tranches will be re-tested at the next applicable performance vesting date subject to higher
performance conditions. If the performance conditions at the end of the next applicable performance period are satisfied, then
the share options for the current performance period and any non-vested share options from prior performance periods will
vest. The last date whereby all tranches can be re-tested is on the final vesting date, being 30 August 2023, at which time any
unvested share options will lapse.
78 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 (b) Measurement of fair value
The fair value of the performance rights granted on 30 August 2019 under the OST are as follows:
Fair value at grant date
– Vesting date 30 August 2021
– Vesting date 30 August 2022
– Vesting date 30 August 2023
Fair value per
option
$0.1327
$0.1282
$0.1229
The fair value of the share option has been measured using the Black-Scholes formula. The inputs used in the measure of the
fair value at grant date of the equity settlement shared based payment plan under the OST were as follows:
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate (based on Treasury Bonds)
OST plan
$0.737
$0.73
27.1006%
5 years
3.38%
0.6940%
The expected volatility has been based on an evaluation of the historical volatility of the Company’s share price, particularly
over the historical period commensurate with the expected term. The volatility rate under this option has been determined
based on the daily share price returns over the 5-year period leading up to the date of valuation.
24. TRADE AND OTHER PAYABLES
In thousands of AUD
Current
Trade payables
Other payables and accrued expenses
Deferred consideration on MTD Gaming Inc acquisition
Amount payable to shareholder-controlled entities
Note
2020
2019
34
29
14,829
8,519
10,326
3,052
5,418
15,527
–
–
36,726
20,945
The Group recognised $10,563 thousand as payable for consideration on MTD Gaming Inc as at date of acquisition – see Note
34 for details. As at year end, this amount payable was revalued at spot rate and a foreign currency gain of $237 thousand was
recorded.
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 26.
ANNUAL REPORT 2020
79
Notes to the Financial Statements (continued)for the year ended 30 June 2020 25. PROVISIONS
In thousands of AUD
Balance at 1 July 2019
Provisions made during the year
Provisions used during the year
Balance at 30 June 2020
Service/
warranties
925
736
(925)
736
Legal
90
2,659
(90)
2,659
Total
1,015
3,395
(1,015)
3,395
26. FINANCIAL INSTRUMENTS
Credit risk
Exposure to credit risk
Trade and other receivables
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure
to credit risk at the reporting date was:
In thousands of AUD
Receivables
Note
17
Carrying amount
2020
2019
112,695
112,695
148,019
148,019
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
South Africa
2020
9,869
105,225
1,692
217
1,899
42
2019
14,658
133,911
1,488
694
2,172
98
118,944
153,021
The Group’s concentration of credit risk arises from its two most significant receivable amounts is represented by customers in
North America. They account for $9,908 thousand (2019: $10,147 thousand) and $6,757 thousand (2019: $3,799 thousand) of
the trade receivables carrying amount at 30 June 2020 respectively.
Cash and cash equivalents
The Group held cash of $26,528 thousand at 30 June 2020 (2019: $59,695 thousand) and $15 thousand of cash deposits at
30 June 2020 (2019: $1,966 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.
80 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 Impairment Losses
During the financial year the group has applied a provision matrix to capture the different historical credit loss rates for different
customers in geographical segments and the movement of these customer’s ageing compared to prior financial year. The
increase in expected credit loss over total receivable recognised for the year compared to the prior financial year is due to the
increase risk of collection from customers as a result of COVID-19.
In thousands of AUD
Geographical region
Australia & Other
North America
Latin America
In thousands of AUD
Geographical region
Australia & Other
North America
Latin America
2020
Debtor
Balance
13,719
26,184
79,041
118,944
2019
Debtor
Balance
19,109
45,961
87,951
153,021
Loss rate
12.9%
0.5%
5.5%
Loss rate
1.8%
3.4%
3.6%
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
In thousands of AUD
Balance at 1 July
Impairment loss written off
Provision during the year
Reversal of provision
Effect of exchange rate fluctuations
Balance at 30 June
Impairment
loss
allowance
under AASB 9
1,767
139
4,343
6,249
Impairment
loss
allowance
under AASB 9
336
1,541
3,125
5,002
2019
3,931
(309)
2,128
(958)
210
2020
5,002
(2,260)
3,410
(196)
293
6,249
5,002
ANNUAL REPORT 2020
81
Notes to the Financial Statements (continued)for the year ended 30 June 2020 26. FINANCIAL INSTRUMENTS (continued)
Based on historic default rates and current repayment plans in place, the Group believes that apart from the above, no further
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.
The allowance for impairment losses in respect of receivables is used to record impairment losses unless the Group is satisfied
that no recovery of the amount owing is possible; at that point the amounts are considered irrecoverable and are written off
against the financial asset directly.
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements:
30 June 2020
In thousands of AUD
Non-derivative financial liabilities
Insurance premium funding
Finance lease liabilities
Secured bank loan
Trade and other payables
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
87
16,414
43,934
36,726
97,161
(88)
(16,414)
(88)
(951)
(43,934)
(43,934)
(36,726)
(97,162)
(36,726)
(81,699)
–
(845)
–
–
–
–
(6,479)
(8,139)
–
–
–
–
(845)
(6,479)
(8,139)
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different
amounts.
30 June 2019
In thousands of AUD
Non-derivative financial liabilities
Insurance premium funding
Secured bank loan
Trade and other payables
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
295
55,144
20,945
76,384
(299)
(299)
(55,144)
(12,366)
(20,945)
(76,388)
(20,945)
(33,610)
–
–
–
–
–
–
–
–
–
(42,778)
–
(42,778)
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:
In thousands of AUD
Trade and other receivables
Secured bank loan
Trade and other payables
Net exposure in statement of financial position
82 AINSWORTH GAME TECHNOLOGY
2020
2019
USD
Euro
NZD
USD
Euro
105,906
(43,934)
(27,702)
34,270
138
–
(452)
(314)
216 134,903
1,394
–
–
(55,144)
(14,773)
–
–
216
64,986
1,394
682
NZD
682
–
–
Notes to the Financial Statements (continued)for the year ended 30 June 2020 The following significant exchange rates applied during the year:
USD
Euro
NZD
Average rate
Reporting date spot rate
2020
2019
2020
0.6711
0.6080
1.0548
0.7156
0.6270
1.0669
0.6863
0.6111
1.0703
2019
0.7013
0.6171
1.0462
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 2020 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 2020
USD
Euro
NZD
30 June 2019
USD
Euro
NZD
Equity Profit or (loss)
(24,353)
(11,445)
29
(20)
29
(20)
(26,673)
(13,197)
(127)
(62)
(127)
(62)
A 10 percent weakening of the Australian dollar against the following currencies at 30 June 20 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 2020
USD
Euro
NZD
30 June 2019
USD
Euro
NZD
Equity Profit or (loss)
33,500
13,987
(35)
24
(35)
24
36,341
16,129
155
76
155
76
ANNUAL REPORT 2020
83
Notes to the Financial Statements (continued)for the year ended 30 June 2020 26. FINANCIAL INSTRUMENTS (continued)
Fair values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position,
are as follows:
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
Secured bank loan
Insurance premium funding
Trade and other payables
Finance leases
Note
17
18
21
21
24
27
Carrying
amount
2020
Fair value
2020
Carrying
amount
2019
Fair value
2019
113,883
26,543
113,883
26,543
148,612
61,661
148,612
61,661
140,426
140,426
210,273
210,273
Carrying
amount
2020
Fair value
2020
Carrying
amount
2019
Fair value
2019
43,934
43,934
87
36,726
16,414
97,161
87
36,726
16,414
97,161
55,144
295
20,945
–
55,144
295
20,945
–
76,384
76,384
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 2020 plus an adequate constant credit spread and are as follows:
Receivables
Secured bank loan
Insurance premium funding
Finance leases
2020
2019
3.79% - 6.00%
4.24% - 6.00%
LIBOR + 0.85%
LIBOR+0.85%
1.38%
5.10%
1.73%
–
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 $115 thousand and a decrease in 100 basis points
would lead to an increase in profit by $115 thousand. This analysis assumes that all other variables, in particular foreign currency
exchange rates, remain constant.
84 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 27. LEASES
(a) Leases as lessee (AASB 16)
The Group leases a number of warehouse and office facilities. The leases 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
rental reviews at stipulated dates. None of the leases include contingent rentals.
The warehouse and office facilities were entered into many years ago as combined leases of land and buildings. Previously,
these leases were classified as operating leases under AASB 117.
The Group leases plant and equipment. The leases typically run for a period of 5 years. Previously, these leases were classified
as operating leases under AASB 117.
The Group leases other IT equipment with contract terms of one to three years. These leases are short-term and/or of low value
items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
(i)
Right-of-use assets
In thousands of AUD
2020
Balance as at 1 July 2019
Depreciation charge for the year
Additions to right-of-use assets
Effect of movements in foreign exchange
Balance as at 30 June 2020
(ii)
Lease Liabilities
In thousands of AUD
2020
Balance as at 1 July 2019
Additions of lease liabilities
Payments made
Interest expense
Rent concessions
Effects of movements in foreign exchange
Balance as at 30 June 2020
Note
Land and
buildings
Plant and
Equipment
9
17,560
(2,297)
170
21
350
(96)
41
1
Total
17,910
(2,393)
211
22
15,454
296
15,750
Note
Land and
buildings
Plant and
Equipment
Total
(17,560)
(170)
2,007
(850)
467
(11)
(350)
(17,910)
(41)
109
(14)
–
(1)
(211)
2,116
(864)
467
(12)
(16,117)
(297)
(16,414)
3
ANNUAL REPORT 2020
85
Notes to the Financial Statements (continued)for the year ended 30 June 2020 27. LEASES (continued)
Maturity analysis – contractual undiscounted cashflows
The table below presents the contractual undiscounted cash flows associated with the Group’s lease liabilities, representing
principal and interest. The figures will not necessarily reconcile with the amount disclosed in the consolidated statement of
financial position.
In thousands of AUD
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at 30 June 2020
Current
Non-current
Lease liabilities included in the consolidated statement of financial position at 30 June 2020
(iii) Amounts recognised in profit or loss
In thousands of AUD
2020 – Leases under AASB 16
Interest on lease liabilities
Rent concessions recognised in profit and loss
Depreciation charge for the year
Expenses relating to leases of low-value assets, excluding short-term leases of low value assets
2019 – Operating leases under AASB 117
Lease expense
(iv) Amounts recognised in statement of cash flows
In thousands of AUD
Total cash outflow for leases
2020
2,102
8,791
8,924
19,817
1,320
15,094
16,414
2020
(864)
467
(2,393)
(102)
(2,331)
2020
(2,116)
(v) Extension options:
Some property leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable
contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational
flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease
commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is
reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control.
The Group has estimated that the potential future lease payments, should it exercise the extension option, would result in an
increase in lease liability of $6,542 thousand.
86 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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
2020
2019
308
3,234
Commitments under non-cancellable employment contracts not provided for in the financial
statements and payable:
Within one year
990
1,214
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 DE Gladstone
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Mr HK Neumann
Executives
Current
Mr Lawrence Levy (Chief Executive Officer, Ainsworth Game
Technology Limited)
Mr ML Ludski (Chief Financial Officer and Company Secretary,
Ainsworth Game Technology Limited)
Mr V Bruzzese (General Manager Technical Services,
Ainsworth Game Technology Limited)
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
Termination benefit
2020
2019
2,285,980
2,726,942
231,518
241,451
24,280
(230,152)
133,637
166,546
384,000
–
3,059,415
2,904,787
Individual directors and executives compensation disclosures
Information regarding individual directors and executive’s 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.
ANNUAL REPORT 2020
87
Notes to the Financial Statements (continued)for the year ended 30 June 2020 29. RELATED PARTIES (continued)
Other key management personnel transactions
A number of key management persons, or their related parties, hold positions in other entities that result in them having control
or significant influence over the financial or operating policies of those entities.
A number of 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
Transaction
Transactions value year ended
30 June
Balance receivable/
(payable) as at
30 June
Note
2020
2019
2020
2019
Sales to Novomatic and its related entities
Purchases from Novomatic and its related entities
Other charges made on behalf of Novomatic
Purchases and other charges made on behalf of the
Group
(i)
(i)
(i)
(i)
20,387
2,450,269
111,684
1,327,918
4,495,089
589,793
(3,052,494)
–
1,659,159
1,488,008
553,174
47,021
3,076,589
1,504,359
–
–
(i) Transactions with Novomatic AG and its related entities are considered related party transactions as Novomatic AG holds the controlling
interest in the Group.
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
2020
2019
Assets and liabilities arising from the above transactions
Current receivables and other assets
Amount receivable from shareholder-controlled entities
664,858
1,374,939
Current trade and other payables
Amount payable to shareholder-controlled entities
3,052,494
–
Transaction with joint ventures in which entity is a joint venture
616 Digital LLC (“616”) is a joint venture in which the Group had 40% ownership interest. The portions of transactions with 616
that was not eliminated in applying equity accounting is $nil thousand (2019: $200 thousand).
Further information regarding the joint venture is provided in Note 14.
88 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020
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.R.L.
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 Interactive S. de R.L de C.V.
AGT Service Pty Ltd
AGT Service (NSW) Pty Ltd
J & A Machines Pty Ltd
Bull Club Services Pty Ltd
Ownership Interest
Country of
incorporation
2020
2019
Australia
Australia
Mexico
Peru
Argentina
Colombia
Alderney
USA
Australia
Mexico
Mexico
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%
100%
31. SUBSEQUENT EVENTS
On 24 August 2020, the Group signed a deed of amendment for the ANZ loan facility and renegotiated the terms of the facility
with amendments to the facility limit and financial covenants as at 30 June 2020. The facility limit has reduced to $60 million
with progressive reductions of $10 million in each of December 2020, March 2021, and April 2021, which will result in a total
reduced facility of $30 million by end of April 2021.
The amended covenants will be in place for the remaining term of the loan, which expires on 30 September 2021 and relate
to maintenance of minimum liquidity levels, monthly reporting obligations and achievement of quarterly sales targets for the
Group, based on the Group’s 18 month forecasted cash flows.
Other than the matter discussed above, there has not arisen in the interval between the end of the financial year and the date of
this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company,
to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future
financial years.
ANNUAL REPORT 2020
89
Notes to the Financial Statements (continued)for the year ended 30 June 2020
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
In relation to taxation services
2020
2019
282,000
262,000
22,500
22,500
304,500
284,500
69,116
116,215
33. PARENT ENTITY DISCLOSURES
As at and throughout the financial year ended 30 June 2020 the parent entity of the Group was Ainsworth Game Technology
Limited.
In thousands of AUD
Result of parent entity
(Loss)/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
90 AINSWORTH GAME TECHNOLOGY
2020
2019
(32,650)
(29,881)
1,382
3,192
59,132
68,836
400,218
428,003
49,994
65,477
24,988
68,394
207,709
207,709
13,630
9,684
122,760
(19,042)
12,311
9,684
154,189
(24,284)
334,741
359,609
2020
2019
241
3,226
Notes to the Financial Statements (continued)for the year ended 30 June 2020
34. BUSINESS COMBINATIONS
On 9 March 2020, the Group completed an asset acquisition of a US privately held company, MTD Gaming Inc. (“MTD”) at an
initial purchase price of US$13,000 thousand, with an additional US$13,000 thousand of deferred/contingent consideration
payable on the successful delivery of financial targets and contract renewals.
MTD is a proven developer and supplier of premium performing and unique Poker, Keno and video reel content for use in
Multi-Game and Video Lottery Terminal (VLT) markets. Prior to acquisition, MTD was operating in three markets (Montana,
Louisiana and South Dakota) within North America. Through the Group’s licensing structure and distribution network, the Group
will be expanding MTD’s product offerings into other markets in North America including Nevada and California. The Group is
also able to incorporate MTD’s products as an additional offering to its existing Class II and Class III markets in North America
as these products complement the Group’s existing game suite.
The acquired business contributed revenues of $923 thousand and a net profit of $251 thousand to the Group for the period
from 9 March 2020 to 30 June 2020.
Details of the purchase consideration, the net assets acquired, and goodwill at acquisition date fair value are as follows:
(a) Consideration transferred
The following table summarises the acquisition date fair value of each major class of consideration transferred.
In thousands of AUD
Purchase consideration, paid in cash
Purchase consideration, deferred
Contingent consideration
Total consideration
(i)
Cash flow
In thousands of AUD
Payment for business acquisition
Outflow of cash - investing activities
19,881
7,646
10,563
38,090
27,877
27,877
The difference between the purchase price consideration recorded at acquisition date of $27,527 thousand and cash outflow
of $27,877 thousand relates to the effects of foreign currency movements due to the timing of the payment of the acquisition.
Included in the outflow is deferred consideration of US$5,000 thousand (AU$7,646 thousand) which is held subject to re-signing
of a key contract in Montana or attaining set financial targets.
(ii) Contingent consideration
The contingent consideration of $10,563 thousand as above is subject to meeting cumulative Gross Profit target and this
consideration is payable at any time before the end of FY24. This consideration represents the fair value of contractual cash
flow or equity in equivalent of cash amounting to US$8,000 thousand and measured based on the income approach. In
this approach, prospective financial information based on projections prepared by the Group, was used as the basis for the
forecasted earnings and in turn, determines the timing of these payments; which is then discounted at 8% over the cash flow
period.
Apart from the contingent consideration of $10,563 thousand as above, the Group has agreed to pay MTD additional earnings
based on the growth of MTD assets in the form of an earnout. Upon closing and for each of the following four years thereafter,
MTD is entitled to an annual payment of 15% of cumulative gross profits associated with the commercialisation of the assets
and/or software sold and is subject to employment service conditions. Therefore, this consideration falls outside the scope
of AASB 3 Business Combinations and will be recognised as a remuneration expense from 1 July 2020 which is the effective
employment commencement date of key personnel acquired as part of the acquisition.
ANNUAL REPORT 2020
91
Notes to the Financial Statements (continued)for the year ended 30 June 2020 34. BUSINESS COMBINATIONS (continued)
(b)
The fair value of assets recognised at date of acquisition are as follows:
Identifiable assets acquired
In thousands of AUD
Intangible assets: core technology
Intangible assets: customer relationships
Intangible assets: trade names
Intangible assets: work force
Total identifiable net assets acquired
Add: goodwill
Net assets acquired
11,317
5,062
1,193
110
17,682
20,408
38,090
The goodwill is attributable to the synergies expected to be achieved from integrating MTD’s unique Poker and Keno games
into the Group’s existing Class II and III product offerings within North America and leveraging off the Group’s wide customer
base in this market. The total amount of goodwill that is expected to be deductible for tax purposes is $20,408 thousand.
(c) Acquisition related costs
The total acquisition related costs amounting to $52 thousand have been recognised as an expense in the statement of
comprehensive income, within the ‘Administrative expenses’ line item.
92 AINSWORTH GAME TECHNOLOGY
Notes to the Financial Statements (continued)for the year ended 30 June 2020 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 40 to 92 and the Remuneration report in
sections 15.1 to 15.8 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 2020 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 2020.
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:
Dated at Sydney this 23rd day of September 2020.
DE Gladstone
Chairman
ANNUAL REPORT 2020
93
Directors’ Declarationfor the year ended 30 June 2020
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
We have audited the Financial Report of
Ainsworth Game Technology Limited (the
Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
•
(cid:120)
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 with
June 2017 and of its financial
the Corporations Act 2001, including:
performance for the year ended on
giving a true and fair view of the Group’s
that date; and
financial position as at 30 June 2020 and
•
complying with Australian Accounting
of its financial performance for the year
Standards and the Corporations
ended on that date; and
Regulations 2001.
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
(cid:120)
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2017
The Financial Report comprises:
• Consolidated Statement of profit or loss and other
comprehensive income, Consolidated statement of
(cid:120) Consolidated statement of financial position as at 30
changes in equity, and Consolidated statement of
June 2020;
cash flows for the year then ended
(cid:120) 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.
(cid:120) Notes including a summary of significant accounting
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
(cid:120) Directors’ Declaration.
policies; and
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
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.
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.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
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 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.
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
���
94 AINSWORTH GAME TECHNOLOGY
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 2020
Independent
Auditor’s Report (continued)
Key Audit Matters
The Key Audit Matters we identified are:
(cid:120) Revenue recognition;
(cid:120) Recoverability of trade receivables;
(cid:120) Carrying value of goodwill and intangible
assets;
(cid:120) Acquisition of MTD Gaming Inc.; and
(cid:120) Going concern basis of accounting.
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 ($149.4m 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 with different recognition
criteria across different geographic locations.
Key revenue streams include:
(cid:120)
(cid:120)
(cid:120)
outright machine and spare parts sales;
revenue from fixed and participation rental;
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 the audit team to evaluate timing
and measurement of revenue recognised.
Our procedures included:
•
•
•
•
•
evaluating the appropriateness of the Group’s
revenue recognition policies against the
requirements of AASB 15 Revenue from
contracts with customers and/or AASB 117
Leases;
testing key revenue recognition controls of
the Group, across different geographic
locations, such as the Group’s process of
matching underlying documents to determine
the timing of revenue recognition. In testing
these controls we inspected underlying
documents such as invoices, delivery notes,
customer contracts, purchase orders and
sales orders;
testing statistical samples of transactions in
key revenue streams, across different
geographic locations, to underlying records.
We inspected the terms and conditions of the
revenue contract for consistency to the
Group’s policy for timing and measurement
of revenue recognition;
testing a sample of revenue transactions,
across different geographic locations, from
immediately before and immediately after
year end. We compared the year in which the
revenue was recognised by the Group to
terms of the underlying contract;
assessing the methodology used to calculate
the Group’s multi-element arrangement
ANNUAL REPORT 2020
(cid:20)(cid:19)(cid:21)
95
for the year ended 30 June 2020 Independent
Auditor’s Report (continued)
revenue by checking samples of multi-
element revenue transactions recorded by
the Group against contract terms and rates
and then recalculating these samples for
accuracy.
Recoverability of trade receivables
Refer to note 17 of the Financial Report ($113.9m AUD)
The key audit matter
How the matter was addressed in our audit
Recoverability of trade receivables was a key
audit matter because payment terms, prevailing
industry practices and adverse market conditions
due to COVID-19 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 by the Group in certain
locations in which the Group operates is to
provide payment terms which are extended
beyond traditional payment terms observed in
Australia. This required a heightened element of
judgement, and scrutiny to be applied by us
when assessing the recoverability of trade
receivables, such as:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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; and
evidence of ongoing dialogue and
correspondence with the Group.
Our audit procedures included:
•
•
•
•
testing control in relation to credit limit
approvals and review of customers
adherence to the payment plan by senior
management within the Group;
testing the recoverability of selected samples
of overdue receivable balances held by the
Group across geographic locations through:
-
-
enquiries with the Group on the samples
selected to understand the rationale
behind the Group’s recoverability
assessment;
challenging the Group’s recoverability
assessment with our understanding of:
- market practice;
-
-
-
-
ongoing correspondence between the
customer and the Group;
the Group’s internal diligence check on
the credit worthiness of the customer;
customer payment history; and
customer contract to evidence
recoverability;
evaluating the appropriateness of the
expected credit loss model for the
geographical locations in which the Group
operates in accordance with AASB 9 Financial
Instruments;
for those locations with a heightened risk of
non-recoverability, the trade receivable
balance by customer at year end was
compared against established credit limits.
96 AINSWORTH GAME TECHNOLOGY
(cid:20)(cid:19)(cid:22)
for the year ended 30 June 2020 Independent
Auditor’s Report (continued)
Carrying value of goodwill and intangible assets
Refer to note 13 of the Financial Report ($92.7m 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 disruptions
caused by COVID-19 and the significant
judgement applied when evaluating the forward
looking assumptions, including:
Working with our valuation specialists, our
procedures included:
(cid:120)
reviewing key assumptions in the Group’s value
in use model, we:
(cid:120)
(cid:120)
(cid:120)
forecast cash flows and the growth rates
(including terminal growth rates) applied to
those forecasts in light of current competitive
market conditions as well as significant
business disruption caused by COVID-19.
These factors increase the uncertainty and
provide a risk of inaccurate forecasts. We
focused on the expected rate of recovery for
the Group when assessing feasibility of the
Group’s revised COVID-19 forecast cash
flows. In addition, the market capitalisation
was less than net assets as at 30 June 2020.
These conditions increase the possibility of
goodwill and intangible assets being
impaired.
value in use model prepared is sensitive to
the assumptions adopted by the Group
including forecast growth rates and the
discount rates applied for different
jurisdictions and geographic locations
applicable to each identified Cash Generating
Unit (CGU). Such assumptions have a
significant impact on the calculated
recoverable amount of the assets within the
identified CGUs. 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. In addition, an assessment of
the forecasting risk applied in the discount
rate required significant judgement during
these uncertain times. This drives additional
audit effort in challenging the assumptions
used by the Group in determining the
discount rate for each CGU.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
challenged the Group’s forecast cash flow
and growth rates’ assumptions which
reflects COVID-19 expected rate of recovery
approved by the board;
applied increased scepticism to
assumptions in areas where previous
forecasts were not achieved;
compared forecast growth rates and the
terminal growth rates to published studies
of industry trends and expectations across
different jurisdictions and geographic
locations , and considered differences for
the Group’s operations;
applied our knowledge of the Group, their
past performance, business and customers,
and our industry experience;
(cid:120) we considered the sensitivity of the models by
varying key assumptions, such as forecast
growth rates, terminal growth rates and
discount rates, within a reasonably possible
range.
(cid:120) we independently developed a discount rate
range, across different jurisdictions and
geographic locations applicable to each
identified CGU. We did this using publicly
available market data for comparable entities,
adjusted by risk factors specific to the Group
and the industry it operates in;
(cid:120)
evaluating the appropriateness of the value in
use model used for goodwill and intangibles
impairment testing against the requirements of
the accounting standards;
(cid:120) we assessed the integrity of the value in use
models used, including the accuracy of the
ANNUAL REPORT 2020
(cid:20)(cid:19)(cid:23)
97
for the year ended 30 June 2020 Independent
Auditor’s Report (continued)
underlying calculation formulas; and
(cid:120) we assessed the appropriateness and adequacy
of the disclosures in the financial report using
our understanding of the issue obtained from
our testing and against the requirements of the
accounting standards.
(cid:120) We assessed the Group’s allocation of corporate
assets to CGUs for reasonableness and
consistency based on the requirements of the
accounting standards.
The Group uses complex models to perform their
annual impairment testing of goodwill and
intangible assets. Complex modelling, particularly
those containing highly judgemental forward
looking assumptions tend to be prone to greater
risk of potential bias, error and 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.
In addition to the above, the Group recorded an
impairment charge of $11.9m against leased
assets resulting from the Latin American CGU
due to uncertainties surrounding COVID-19.
Accounting of MTD Gaming Inc.
Refer to note 34 of the Financial Report
The key audit matter
How the matter was addressed in our audit
During the year, the Group acquired MTD Gaming
Inc. for consideration of $23.7 on 6 March 2020.
The accounting for the acquired business is a
key audit matter due to the size of the acquisition
and the level of judgment and complexity relating
to the valuation and preliminary purchase price
allocation (PPA).
The key areas of judgment included:
-
-
-
-
determination of the purchase
consideration;
identification of acquired intangible assets,
such as technology, customer
relationships and trademarks;
the assumptions and estimates used
when performing intangible asset
valuations; and
the fair value of any contingent
consideration.
The preliminary acquisition accounting, which
remains provisional at year end increases the
possible range of outcomes for the auditor to
consider and in impacted by the reduced
precision of audit evidence.
These conditions and associated complex
acquisition accounting required significant audit
Our procedures included:
(cid:120) Obtaining the Purchase Agreement to
understand the structure, key terms and
conditions and nature of certain payments.
(cid:120) We evaluated the accounting treatment of the
acquisition consideration against the criteria in
the Accounting Standards to determine whether
the acquisition had been appropriately
accounted for.
(cid:120) Working with our valuation specialist to assess
and challenge key assumptions used in the PPA
to identify and value separate assets. This
involved:
(cid:120) Assessing the objectivity, competence,
experience and scope of the Group’s
independent valuation expert;
(cid:120) Comparing inputs used by the Groups
independent valuation expert to the group’s
strategic plans and approved business
forecasts; and
(cid:120) Challenging the Group’s significant
judgmental assumptions such as
identification of separate identifiable
intangible assets and the Group’s
independent expert’s approach and
methodology to valuing the assets and
assessing the useful life estimates by
98 AINSWORTH GAME TECHNOLOGY
(cid:20)(cid:19)(cid:24)
for the year ended 30 June 2020 Independent
Auditor’s Report (continued)
effort and greater involvement by senior team
members.
comparing to the requirements of the
accounting standards.
(cid:120) Assessing the mathematical accuracy of the
Group's calculation of goodwill arising on
acquisition.
(cid:120) Assessing the adequacy of the Group’s
disclosure of the quantitative and qualitative
consideration in relation to the business
acquisition, by comparing these disclosures to
our understanding of the acquisition and the
requirements of the accounting standards.
Going concern basis of accounting
Refer to note 2(a) of the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s has $44m of external debt classified
as current. The use of going concern basis of
accounting and the associated extent of
uncertainty is a key audit matter due to the high
level of judgement required by us in evaluating
the Group’s assessment of going concern.
The Directors have determined that the use of
the going concern basis of accounting is
appropriate in preparing the financial report.
Their assessment of going concern was based on
cash flow projections. The preparation of these
projections incorporated judgements and the
Directors have concluded that it does not give
rise to a material uncertainty casting significant
doubt on the Group’s ability to continue as a
going concern.
We critically assessed the levels of uncertainty,
as it related to the Group’s ability to continue as a
going concern, within these assumptions and
judgements, focusing on the following:
(cid:120)
the Group’s planned levels of operational
expenditures over the next twelve months
and incorporating potential business
disruptions arising from COVID-19, and the
ability of the Group to manage cash outflows
within available funding, particularly in light of
recent losses due to the impacts of COVID-
19.
(cid:120)
the Group’s ability to meet financing
commitments and covenants. This included
Working with our risk management partner, our
procedures included:
•
Evaluating the underlying data used to
generate the projections which was
reviewed by us, as set out in the ‘carrying
value of goodwill and intangible assets’ key
audit matter, their consistency with the
Group’s intentions, and their comparability
to past practices. We specifically assessed
this against our understanding of
management COVID-19 impact plans,
obtained from our additional inquiries with
management. Critical elements considered
included the current impact of the
pandemic on the Group, the estimated rate
of recovery, and the expected return to
pre-COVID 19 levels of operations;
• Analysing the impact of reasonably
possible changes in projected cash flows
and their timing, to the projected periodic
cash positions.
• We read correspondence and agreements
with existing financiers to understand and
assess the options available to the Group
including renegotiation of existing debt
facilities and waivers in meeting financial
loan covenants, particularly in considering
the expected market conditions due to
COVID-19;
(cid:120) As part of our sensitivity analysis, where
ANNUAL REPORT 2020
(cid:20)(cid:19)(cid:25)
99
for the year ended 30 June 2020 Independent
Auditor’s Report (continued)
nature of planned methods to achieve this,
feasibility, particularly in light of sustained
uncertain market conditions due to COVID-
19.
In assessing this key audit matter, we involved
our risk management partners and senior audit
team members who understand the Group’s
business, industry and the economic
environment in which the business operates.
adverse assumptions were applied, we
considered available funding options
(including the sale of non-current assets
and capital raising) should operating cash
flows be insufficient to meet the Groups
obligations as and when due.
We evaluated the Group’s going concern
disclosures in the financial report by comparing
them to our understanding of the matter and the
events or conditions incorporated into the cash flow
projection assessment.
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. Chairman’s Report, Performance Overview, New Games, 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:
(cid:120) preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
(cid:120)
(cid:120)
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 and Company’s ability to continue as a going concern and whether the use of
the going concern assumption is appropriate. 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 and Company or to cease operations, or have no realistic alternative but to do so.
100 AINSWORTH GAME TECHNOLOGY
(cid:20)(cid:19)(cid:26)
for the year ended 30 June 2020 Independent
Auditor’s Report (continued)
Independent Auditor’s Report
Our objective is:
Auditor’s responsibilities for the audit of the Financial Report
To the shareholders of Ainsworth Game Technology Limited
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
Report on the audit of the Financial Report
(cid:120)
(cid:120)
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.
To the Directors of Ainsworth Game Technology Limited
Opinion
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
I declare that, to the best of my knowledge and belief, in relation to the audit of Ainsworth Game
basis of the Financial Report.
Technology Limited for the financial year ended 30 June 2019 there have been:
We have audited the Financial Report of
Ainsworth Game Technology Limited (the
Company).
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_responsibilities/ar1.pdf.
In our opinion, the accompanying Financial
This description forms part of our Auditor’s Report.
Report of the Company is in accordance
with the Corporations Act 2001, including:
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
Report on the Remuneration Report
• Consolidated Statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of
cash flows for the year then ended
• Consolidated statement of financial position as at 30
The Financial Report comprises:
June 2017
ii.
•
i.
Opinion
giving a true and fair view of the
Group’s financial position as at 30
June 2017 and of its financial
performance for the year ended on
that date; and
In our opinion, the Remuneration Report of
Ainsworth Game Technology Limited for the
year ended 30 June 2020, complies with
complying with Australian Accounting
Section 300A of the Corporations Act 2001.
Standards and the Corporations
Regulations 2001.
KPMG
•
• Notes including a summary of significant accounting
Directors’ responsibilities
policies
• Directors’ Declaration.
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.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
Stephen May
the financial year.
Our responsibilities
Partner
We have audited the Remuneration Report included in
Sydney
on pages 26 to 39 of the Directors’ report for the year
27 August 2019
ended 30 June 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
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.
KPM_INI_01
PAR_SIG_01
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
PAR_NAM_01
PAR_DAT_01
PAR_POS_01
PAR_CIT_01
KPMG
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.
Julie Cleary
Partner
Sydney
23 September 2020
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
108
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.
(cid:20)(cid:19)(cid:27)
ANNUAL REPORT 2020
101
for the year ended 30 June 2020
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Ainsworth Game Technology Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Ainsworth Game
Technology Limited for the financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
KPM_INI_01
Julie Clearly
Partner
Sydney
23 September 2020
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
102 AINSWORTH GAME TECHNOLOGY
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.
109
Lead Auditor’s Independent Declarationfor the year ended 30 June 2020 Securities Exchange Listing
The Company is listed on the
Australian Securities Exchange.
The Home Exchange is Sydney.
CODE: AGI
Website
www.agtslots.com
Share Registry
Computershare Investor Services
Pty Ltd
Level 3, 60 Carrington Street,
Sydney NSW Australia 2001
Tel:
1300 850 505 (within Aust)
+61 3 9415 4000 (outside Aust)
Fax: +61 3 9473 2500
Auditor
KPMG
Level 38, Tower Three
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW Australia 2000
Tel: +61 2 9335 7000
Fax: +61 2 9335 7001
Other Information
Ainsworth Game Technology Limited,
incorporated and domiciled in
Australia, is a publicly listed company
limited by shares.
ASIA PACIFIC/EUROPE
Mr Robert Dijkstra
VP Business Development
and Sales Asia Pacific
Tel: +61 2 9739 8119
Tel: +61 419 449 628
Email: rdijkstra@agtslots.com
THE AMERICAS
Nevada
5800 Rafael Rivera Way,
Las Vegas, NV 89118
Tel: +1 (702) 954-3000
Fax: +1 (702) 954-3001
Email: enquiries@agtslots.com
Florida
1011 SW 30th Avenue,
Deerfield Beach, FL 33442
Tel: +1 (954) 944-3800
Fax: +1 (954) 317-5555
Email: enquiries@agtslots.com
CORPORATE DIRECTORY
Non-Executive Directors
Mr DE Gladstone – Chairmann
Mr HK Neumann
Independent Non-Executive
Directors
Mr GJ Campbell
Mr MB Yates
Mr CJ Henson
Chief Executive Officer
Mr SL Levy
Company Secretary
and Chief Financial Officer
Mr ML Ludski
OFFICES
AUSTRALIA
Corporate and Head Office
10 Holker Street,
Newington NSW Australia 2127
Tel: +61 2 9739 8000
Fax: +61 2 9648 4327
Email: enquiries@agtslots.com
Queensland
Unit 5/3916 Pacific Highway
Loganholme QLD Australia 4129
Tel: +61 7 3209 6210
Fax: +61 7 3209 6510
Email: gcoleman@agtslots.com
Victoria
Mr Wayne Flood
State Sales Manager
Tel: +61 0419 551 454
Email: wflood@agtslots.com
South Australia
Mrs Kelly Frackowski
Snr Sales Manager
Tel: +61 0409 171 616
Email: kfrackowski@agtslots.com
ANNUAL REPORT 2020
103
Corporate Directory
A
I
N
S
W
O
R
T
H
G
A
M
E
T
E
C
H
N
O
L
O
G
Y
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
Continue reading text version or see original annual report in PDF
format above