eBet - Gaming Solutions Company

Hi all,

The proposed company for my assignment is eBet. I'm not too familiar with financial lingo and this caused some confusion in completing  step 2 of the assignment. Thankfully there is Google, which I used throughout my research to clarify financial jargon.

A brief overview of the company:

From the information provided on the webpage under the company tab, I discovered eBet is a gaming solutions company listed on the Australian Securities Exchange. Their primary service is providing gaming systems and machines to business which offer gambling services. Electronic gaming machines, Licensed Monitoring Operator and gaming management systems summarizes the main products that eBet provides.

eBet operates both locally and globally with over 800 customers currently in contract with the company and over 55,000 gaming machines in operation in Australia, New Zealand and Asia.

Please see webpage:

http://www.ebetgroup.com/about-overview.php  

My personal feelings towards gambling are negative due to my past experiences working in bars in the gaming division where I noticed a select few who would spend all their money to gain nothing, in most cases.

I struggle to agree with creating profit from an industry which causes addiction, alters the relationship and bond between families, causes loss of employment, bankruptcy and homelessness.

eBet appear to be a sustainable and profitable business however, I do have some concerns with the overall operations of the company, the level of Government control over the business and how this could impact profitability in the future.

While 2006-2009 financial year were stable, the 2010-2011 period resulted in the company impairing some of its gaming assets worth 5.77 million due to uncertainty in the gaming industry.

Directly after the 2010-2011 tax period, the 2011-2012 period achieved a profit increase of 136% and a debt decrease from 3.917 million to just $446,000. In this case, I believe the decision to sell some of their assets lead to this positive result. 

Please see article:

http://australiansmall-capcompanies.blogspot.com.au/2012/09/ebet-2013-shaping-up-strongly.html

I have had extreme difficulty finding any correspondence relating to the financial position for the 2012-2013 period but, from what I can gather from the financial statement for that year, it doubled it's share prices and profit.

Although 2011-2013 ended on a positive note for eBet, the current financial year is at an all time low. The company has generated only 2% growth and made a net profit of 1.14 million (7.4 cents per share) thus far.

I believe the implementation of the mandatory pre-commitment scheme enforced by the Labour party may have contributed to part of this extensive loss.

Please see article:

http://australiansmall-capcompanies.blogspot.com.au/2014/02/ebet-first-half-falls-short.html

The current party in power, the Liberal team, support and have implemented the voluntary pre-commitment scheme. This change will assist eBet in achieving a positive financial result. However, this may not be the only change made towards the gaming industry. 

Please see articles:

http://www.theglobalmail.org/feature/the-house-wins-gaming-reforms-ditched/764/

http://www.liberal.org.au/helping-problem-gamblers

Some of the business decisions made by eBet I found questionable. For example, eBet decided to go into partnership with WMS (a gaming solutions company) in order to eliminate costs and risk from the business.

It became evident this partnership was ineffective to the business when reviewing the 2012-current financial results. The sale of WMS machines were causing a loss to the business (-22%). 

In February 2014, eBet announced that the agreement between the company and WMS had changed and support of sales and marketing costs towards WMS will cease while technical services would continue.

Please see articles: 

http://www.asx.com.au/asxpdf/20140204/pdf/42mjkbfjqgl07c.pdf

http://australiansmall-capcompanies.blogspot.com.au/2014/02/ebet-steps-back-from-wms-gaming-machines.html

http://australiansmall-capcompanies.blogspot.com.au/2014/02/ebet-first-half-falls-short.html 
 

To conclude this post, I feel that the company financial performance is dependent on the value of the Australian dollar, which Government is in power and what rules they enforce around the gaming industry.

Please feel free to leave any comments, feedback or questions. 
 

Thanks,
 

Erikai