The Chairman of Australian slot machine supplier Ainsworth Game Technology, Danny Gladstone, has described the ongoing suspension of dividend payments as necessary in order to maintain a strong balance sheet and self-fund product investments via greater research and development.
The comments from Gladstone preceded the company’s Annual General Meeting on Wednesday and follow an improved performance in FY25 when group-wide revenue grew by 10% year-on-year to AU$290.8 million (US$208 million) – mainly on the back of growth in Asia-Pacific.
Those results, Gladstone noted, included a 1% increase in R&D expenses, described as “critical to ensure our products are competitive within our global markets.”
On why this looms as a key component of the company’s growth plans, the chairman said, “It is worth highlighting that the gaming industry is one of the most highly regulated industries in existence and all products supplied require comprehensive technical testing to be undertaken, accreditation by Approved Testing Facilities prior to their submission to the necessary gaming regulators for approval.
“This investment is required not only to provide new products but also to ensure the company’s footprint across its markets is maintained. The Group needs to secure experienced and highly sought-after resources to continually develop technology for our product offerings, both to maintain and achieve market share gains in the increasingly competitive markets we operate within.”
Gladstone added that, in order to maintain a strong balance sheet and ensure AGT has the necessary liquidity to support R&D investments, the company had last year amended its loan facility with Western Alliance Bancorporation, resulting in an increased facility amount of US$75 million.
However, he also said such R&D investment needs meant the company could not yet resume dividend payments – which have now been suspended for eight years. This pause was previously attributable to the COVID-19 pandemic and more recently has been made difficult, Gladstone said, to a “significant payment to Mexican authorities to settle outstanding import duties and associated charges and the adverse economic conditions experienced in AGT’s key markets.”
The Board, he added, “remains committed to providing shareholders with a return through dividends, taking into consideration financial performance, liquidity to invest in R&D, operational requirements and working capital demands.
“Processes to ensure improvements in the output of our R&D initiatives are expected to progressively lift the competitiveness of our products with our customers, and we continue to review necessary organizational structure changes and financial capability to support these strategies,” he said.
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