AGTech continues to diversify after 56.7% revenue growth in 2021

Alibaba-owned lottery hardware and services provider AGTech said it would continue to diversify even as its revenue rose 56.7% to HK$253.2 million (HK$24.5 million). sterling / 29.3 million euros / 32.4 million euros) in 2021.

Lottery hardware sales made up the majority of AGTech’s revenue, with the total climbing 129.1% to HK$168.0 million. In 2021, AGTech won 27 lottery hardware tenders to supply lottery terminals in a number of Chinese regions, municipalities and provinces such as Hubei, Shanghai and Henan.

Revenue from lottery distribution services soared 75.3% to HK$42.9 million, while gaming and entertainment revenue rose 22.9% to HK$21.6 million.

Additionally, the company earned HK$21.6 million from non-lottery material. This was a new revenue stream for 2021, made possible by the business diversification into POS terminals for retail stores in China.

Looking at revenue geographically, mainland China brought in HK$235.1 million, with the remaining HK$18.1 million coming from the rest of the world. Rest of the world revenue was primarily gaming and entertainment revenue in India and payment-related services in Macau.

AGTech also noted that three clients each accounted for more than 10% of its revenue, bringing in HK$39.3 million, HK$32.1 million and HK$25.3 million respectively. While three customers also accounted for 10% of revenue in 2020, two of those customers were different for 2021.

In addition to the HK$253.2 million in revenue, AGTech earned an additional HK$16.0 million – up 46.9% – from other revenue, plus HK$13.3 million from other net gains.

Despite the increase in revenue, benefits expenses decreased by 34.7% to HK$116.8 million.

However, the company also incurred $119.8 million in costs related to inventory purchases. This represents an increase of 166.2% compared to 2020.

Depreciation expense decreased by 13.5% to HK$20.6 million while other operating expenses increased by 35.5% to HK$91.2 million.

As a result, AGTech recorded an operating loss of $65.8 million for 2021, almost exactly half of its 2020 operating loss.

The company recorded an additional loss of $18.6 million due to changes in the fair value of its financial assets, but realized $17.2 million of other financial income.

This resulted in a pre-tax loss of HK$67.2 million. Pre-tax income in 2020, meanwhile, was impacted by a gain of HK$69.6 million due to not having to make certain contingent consideration payments, as well as a loss of HK$83.2 million. dollars from businesses in which he has a non-controlling interest. As a result, the company had realized a pre-tax loss of $100.6 million in 2020.

After a $4.2 million tax credit, AGTech posted a loss of $63.1 million, down 43.4% from a year earlier.

After also recording a gain of $14.8 million related to exchange rate fluctuations, the company recorded a final net loss of $48.2 million.

During the year, AGTech announced that it had agreed to acquire the patent firm Macau Pass Holdings. At the time, AGTech said the acquisition would create “tremendous” synergies for its existing business, particularly in terms of mobile games and entertainment and the provision of non-lottery hardware businesses.

Last week, AGTech received all relevant regulatory consents and approvals to proceed with this deal. In announcing its results, it said the deal would allow for greater diversification of its operations.

“With the recent announcement of the acquisition of Macau Pass Holding Ltd, the group will continue to dedicate its commitment and support to the growth of its business in order to further capitalize on diversification opportunities,” he said.