Here's why the Ainsworth Game (ASX:AGI) share price gained today

The Ainsworth Game Technology share price gained nearly 2% today, even as the All Ords dropped by nearly 2%. We take a look at why.

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Ainsworth Game Technology Limited (ASX: AGI) shares closed the day up 1.8%. There looks to have been some late afternoon profit taking, with the Ainsworth share price up more than 10% only an hour before market close at at 3pm AEST. This rollercoaster followed the release of the company's 2020 annual report to the market this morning.

Still, Ainsworth's share price gains today while the All Ordinaries Index (ASX: XAO) lost 1.7% demonstrates the old investor axiom that it's not so much a share market but a market of shares.

Despite today's gains, the Ainsworth share price remains down 62% year to date.

What does Ainsworth Game Technology do?

Ainsworth Game Technology develops, manufactures, sells and maintains gaming machines, or 'pokies' to you and me. Headquartered in Sydney, Ainsworth has operations across New Zealand, the United States, Europe and Asia.

The company manages all facets of its product's life cycle, from conceptualisation and design through to production, distribution, installation, service and support.

Ainsworth shares first began trading on the ASX in 2001.

What's moving the Ainsworth share price?

Ainsworth Games' 2020 annual report confirmed some of the negative impacts the company has been suffering due to the fallout from COVID-19. These included a 37% decline in revenues and a 46% fall in profit in North America as well as a 26% decline in revenue in Australia. Also reported was a 39% drop in revenue and 59% fall in profits across the rest of the world, excluding Latin America.

On the positive front, the company reported it has made additional progress in accelerating the monetisation of its online, real money and social gaming. Ainsworth also reported it has gone live with several leading operators in the US state of New Jersey.

Addressing the results, chair Danny Gladstone said:

Our opportunities to operate and sell new machines were inhibited [by the pandemic] 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 for the remaining term to de-risk the potential for breach.

With the Ainsworth share price enjoying a 10% intraday surge and closing 1.8% higher, investors look to have mostly priced in the bad news and focused instead on the good.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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