Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — FY2003 Earnings Presentation
31 slides from Aristocrat Leisure's earnings presentation, Feb 24, 2004
Slide 1: Aristocrat Leisure Limited Results for the Year Ended December 2003
Aristocrat Leisure Limited Results for the Year Ended 31 December 2003 Chief Executive Officer Chief Financial Officer Paul Oneile Simon Kelly
Slide 2: Agenda
Agenda Introduction Review of Financials Review of Operations Australia North America Japan Other Final Dividend Priorities Future
Slide 3: Events that shaped 2003
Events that shaped 2003 Asset and Liability Review Systems Business in the U.S. Litigation Regulatory Issues Management Changes Japan Results
Slide 4: Summary of Results
Summary of Results Revenue $995.2m Loss after tax of $106m One-off adjustments of $160m Normalised Profit of $54m Revenue declines in Australia, North America, New Zealand Outstanding result from Japan Strong cash flow Bank debt repaid
Slide 5: Review of Financials
ancials Review of Fir
Slide 6: Profit & Loss Summary
Profit & Loss Summary FY 2003 FY 2002 #£Variance Total Revenue EBITDA EBIT Profit before tax Profit after tax Basic EPS (pre goodwill amortisation) (cents) Basic EPS (post goodwill amortisation) (cents) Dividends per share (cents) Smee CE ict od aie $m $m % 995.2 976.5 1.9% (39.4) 174.0 nla (84.0) 1
Slide 7: One-Off Items
One-Off Items ($m Pretax) Casino Data Systems (CDS) Goodwill (86.3) Corporation Meier re-negotiation (19.5) South American contract (21.4) Obsolete and excessive inventory (27.6) American accounts receivable (8.8) Land and Buildings revaluation (5.5) Intellectual Property rights (7.4) Other (11.0) T
Slide 8: Profit & Loss (Normalised)
Profit & Loss (Normalised) Total Revenue Gross Profit GP% Expenses Profit Before Tax Income Tax Expense Profit After Tax Reported FY2003 $m 995.2 364.1 36.6% (477.8) (99.8) (6.2) (106.0) FY2003 One-off Adjustments || $m |Reported | FY2002
Slide 9: Cost Reduction Plan Update
Cost Reduction Plan Update Annualised Delivered $m Salaries and wages 9 Travel and entertainment 1 Marketing 2 Infrastructure/Office consolidation/Other 4 Total Delivered 16 Work-in-progress 5 Total Annualised Savings 21
Slide 10: Management Cash Flow
Management Cash Flow Net Debt - Opening Balance EBIT pre one-off adjustments Depreciation and amortisation pre one-off adjustments EBITDA pre one-off adjustments Net loss on sale of non-current assets Net foreign exchange differences Interest Paid Tax (Paid) / Refund Cash impact of one-off adjustmen
Slide 11: Working Capital
Working Capital Dec-03 Dec-02 Variance Inventory % of revenue Accounts receivable % of revenue Accounts Payable % of revenue Working capital % of revenue $m 78.6 7.9% 231.4 23.3% 199.2 20.0% $m 206.1 21.1% 338.6 34.7% 248.4 25.4% 296.3 30.3% % -61.9% -13.2 Points -31.7% -11.4 Points -19.8% -5.4 Poin
Slide 12: Balance Sheet Summary
Balance Sheet Summary FY2003 FY2002 Working Capital Other Current/Non-Current Assets Property, Plant and Equipment Intangibles Other Current/Non-Current Liabilities Net Tax Balances Funds Employed Net Debt Shareholders’ Funds $m $m 110.8 296.3 61.6 128.8 109.5 135.0 70.6 254.6 (99.5) (152.4) 35.9 27
Slide 13: Key Financials and Ratios
Key Financials and Ratios Dec-03 Dec-02 $m $m EBITDA* 143.4 174.0 EBIT* 103.5 137.2 Operating Cash Flow 204.4 79.0 Operating Cash Flow/Revenue (%)* 20.0% 8.1% Net Debt 70.2 292.1 Net Debt/Equity (%) 32.1% 73.4% Debt/EBITDA* 1.2X 2.1X EBITDA*/Interest Expense 6.8X 8.7X Net Tangible Assets 148.0 143.5
Slide 14: Segment Review
Slide 15: Australia
Australia Segment Revenue Segment Contribution Profit Segment Contribution Profit pre one-off adjustments FY2003 $m 302.4 83.5 84.3 FY2002 $m 361.7 116.5 116.5 Difficult market environment Revenue down 16.4% Market share maintained at 66% Prices and margins maintained Hyperlink continues to outperfo
Slide 16: Initiatives and Outlook - Australia
Initiatives and Outlook - Australia INITIATIVES * Ticket-out Ticket-in « Innovative new products « Business and cost efficiencies OUTLOOK °* Mature market Ongoing regulatory Change Initiatives to enhance market share Cost reduction °
Slide 17: North America
North America Segment Revenue segment Contribution Loss Segment Contribution Profit pre one-off adjustments FY 2003 $m 241.4 (24.2) 8.2 FY 2002 $m 294.1 46.2 46.2 * Revenue flat in local currency terms « Large one-off adjustments * Disappointing systems sales and flat unit sales « Participation unit
Slide 18: Initiatives and Outlook - Nth America
Initiatives and Outlook — Nth America INITIATIVES « Resolve legacy systems issues ¢ Participation revenue growth ¢ New stepper product ¢ More aggressive marketing « Key account focus OUTLOOK * Systems business likely to remain flat * Growth in MKVI platform sales * Continuing growth in participation
Slide 19: Japan
Japan Segment Revenue: Segment Contribution Profit: FY2003 FY2002 Revenue increased by 99% Units sold up by 121% to 83K New management Strong relationship with Sammy Corporation Market anomaly accounted for 25% - 35% of sales Two games, Kyojin No Hoshi and Mahha-Go-Go-Go very successful
Slide 20: Initiatives and Outlook - Japan
Initiatives and Outlook - Japan INITIATIVES « Maximise product in pipeline * Strengthened R&D teams * Continuing development of relationship with Sammy « Alternative revenue sources being explored OUTLOOK « Return to more normalised market conditions « Regulation 5 introduction * Impact of new regul
Slide 21: Other Markets
Other Markets Europe * Strong growth driven by sales in Russia New Zealand « Revenue down 21.8% due to new legislation and regulations South Africa « Revenue growth despite difficult trading conditions Asia Pacific * Success in Philippines; first order from Macau South America ¢« Low risk distributo
Slide 22: Initiatives and Outlook - Other
Initiatives and Outlook - Other INITIATIVES ¢ Exploit new market opportunities ¢ Content licensing * New distributorships * TITO « LPM market OUTLOOK ¢ Well positioned to exploit new markets
Slide 23: Final Dividend
Final Dividend Final dividend of 3 cents per share Franked to 40% Ex dividend 10 March Payable 24 March Total 2003 dividend 6 cents per share
Slide 24: Current Business Objectives
Current Business Objectives Enhance market leadership position in Australia and New Zealand Establish profitable and growing business in North America Build on success in Japan Internal control, risk management and corporate governance Open and transparent communication Business and cost efficiencie
Slide 25: We will be the leading global supplier of gaming machines and systems
We will be the leading global supplier of gaming machines and systems Competitive Advantages Development of world class games Global presence — multi jurisdictional licenses IP library Established market positions e e e e
Slide 26: We will be the leading global supplier of gaming machines and systems
We will be the leading global supplier of gaming machines and systems Strategic Model Local content Infrastructure in larger markets / distributor model in emerging markets Strategic relationships Cost efficient supply chain Content licensing arrangements IP protections Revenue participation Leading
Slide 27: Summary
SUMMARY ¢ Reported loss of $106M * Normalised profit of $54M * Strong cash flow * Healthy balance sheet ¢ Clean slate ¢ Control / governance focus * Well positioned to exploit global opportunities * Core competitive advantages ¢ Shareholder value focus
Slide 28: Aristocrat Leisure Limited Full Year Results Appendix
Aristocrat Leisure Limited -ull Year Results Appendix
Slide 29: Summary
Summary SEGMENT CONTRIBUTION PROFIT Australia North America South America Japan New Zealand Other Total Countries Contribution Inter-segment eliminations Group R&D Expense Amortisation - Intangibles Foreign Exchange Corporate (incl Mfg under recoveries & Other) Subtotal Group Segment Contribution Pr
Slide 30: Pre one-off adjustments Segment Results
Pre one-off adjustments Segment Results ‘eported Segment Contribution )ne-offs Half 1 Ine-offs Half 2: -DS Goodwill larification of South American Contract Ibsolete and Excessive inventory \dditional Doubtful Debts Provisioning Vrite down of Land & Buildings ther Asset and Intangible Write downs sub
Slide 31: WOR PETOTER USES TSLCUT yy
WOR PETOTER USES TSLCUT yy Ref to 7 North South ' “ a saattane 7, Mpga} A222 | gmeriea | America | 2228" NZ | Other ninations| Total 12003 Reported Revenue 143.7] 120.3 (is) 95.7] 24.6 1 6. 390.7] One-off Adjustments Restructuring of South America contacts G) 12.2 12.2) 2003 Revenue Pre one-off adju