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Aspire Global
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==Sensitivities<ref name=":0" />== Edison Investment Research highlights below what it feels are the key sensitivities for AG’s businesses. * Competition: the online gaming market, in which AG’s customers operate, is highly competitive and many markets are fragmented. AG’s revenue and profitability, due to its revenue-sharing business model, is closely aligned with the success of its customers. In addition, AG’s online B2B peers have greater scale with larger customer bases. These mean that AG needs to continue investing internally and externally. * Gaming industry is highly regulated: the global gaming market is highly regulated and characterised by frequent changes. AG holds a number of licences that permit it to offer its services so AG must continue to fulfil the regulatory requirements of those licences and adapt to changes. As more markets become regulated, some clients may decide not to operate in a market due to the higher costs. As a result, AG’s revenue and profitability could be impaired by less favourable changes in regulation that affect its customers, or its growth prospects could be restricted by its inability to gain licences in new countries of interest. * User preferences: AG is exposed to potential changes in user preferences in the online gaming industry, which is continuously evolving in terms of the games and activities offered, including due to regulatory changes that may permit new activities or restrict prior activities of the operators. * Major shareholders and related parties: AG is majority owned by members of the supervisory board and other private investors, and although this certainly brings many benefits, it is important to note majority shareholders may not always have the same interests as outside investors. Major shareholders and related parties (NeoGames, which shares two board members with AG) have provided loan funding to the company as fully disclosed in the annual report and other financial releases. The receivable loan including accrued interest of c €14.5m is reported in non-current assets. * M&A: the changing dynamics of the markets and the products and services required by customers could require further M&A to maintain or enhance AG’s market position. M&A activity has stepped up in the last two financial years with the acquisitions of Pariplay and BtoBet, which have initially generated strong growth and results following acquisition. Further M&A presents integration risk but management’s track record so far appears to have been good. * Third-party service providers: the group relies heavily on its suppliers, including payment processing and technology infrastructure, so is vulnerable to disruption in these services. * Dividend: since IPO, the company’s dividend policy has been to distribute annual dividends of at least 50% of net profit after taxes, subject to its capital requirements, impending financial liabilities, or commitment. Following a high payout ratio (c 129%) in FY17, the dividend payout ratio was c 26% for FY18 and zero for FY19 and FY20 as the company pursued M&A. * Global shocks to demand such as pandemics: the underlying demand for online gaming can be affected by global demand, which can influence whether sporting events take place and how much time is spent online versus in physical locations such as casinos. * Forex: most of AG’s operating costs are in euros but as it seeks to grow more globally, there may be an increasing currency mismatch between revenues and costs.
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