Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — H1 2007 Earnings Presentation
31 slides from Aristocrat Leisure's earnings presentation, Aug 23, 2007
Slide 1: Results for the 6 months ended 30 June 2007
For personal use only Aristocrat Leisure Limited Results for the 6 months ended 30 June 2007 Chief Executive Officer Chief Financial Officer & Managing Director & Finance Director Paul Oneile Simon Kelly
Slide 2: Disclaimer
For personal use only Disclaimer This document and any oral presentation accompanying it has been prepared in good faith. However, no express or implied warranty is given as to the accuracy or completeness of the information in this document or the accompanying presentation. All statutory representa
Slide 3: Paul Oneile, Chief Executive Officer and Managing Director
For personal use only Paul Oneile Chief Executive Officer and Managing Director
Slide 4: Summary of Results
Summary of Results • Total Revenue $566 million – up 14.1% For personal use only • Profit After Tax $126 million – up 19.8% • Underlying constant currency growth approx 10 pp higher • Investment in research and development – up 24.2% • Solid underlying operating cash • 14 cps Interim dividend – up 1
Slide 5: Simon Kelly, Chief Financial Officer and Finance Director
For personal use only Simon Kelly Chief Financial Officer and Finance Director
Slide 6: Actual vs. Guidance Overview
Actual vs. Guidance Overview Actual Guidance Actual For personal use only Half 1 Half 1 Half 1 2007 2007 2006 Revenue Japan Units no 11,063 20,000 1,787 Non-Japan Underlying Growth vs pcp % 16.4% 20% Research and Development R&D/LTM Revenue % 9.1% 9% 6.2% Profit after Tax $m 126.1 120 - 125 104.7 Gr
Slide 7: Actual vs. Guidance PAT
For personal use only Actual vs. Guidance PAT $m Guidance 120 - 125 Shortfall in Japan -5 Net other businesses +4 Net unallocated costs +2 ACE tax losses +2 Reported 126
Slide 8: Foreign Exchange Impacts
For personal use only Foreign Exchange Impacts Appreciation of A$ has been significant Impact vs. H1 2006 (H1 2007 vs. H1 2006 average rates): Revenue PAT A$/USD +9%; A$/Yen +14% $m $m Translational (33.2) (7.4) - Conversion of local currency results into A$ - Main impacts (H1 2007) USD and Yen busi
Slide 9: H1 2007 vs. H1 2006 EBIT
EBIT A$m H1 2007 vs. H1 2006 EBIT 220 For personal use only $18.8m -$8.6m $9.6m -$13.0m 210 200 -$20.2m 190 $35.1m $3.0m -$13.5m 180 170 $168.2m 160 $12.7m -$1.9m 150 $146.2m 140 130 120 110 100 ek rgin c ron T s Ma T EB I Sale lekt EB I Net ix &E 7 &A t of me 6 e/M 200 200 er er an SMG R&D ACE Volu
Slide 10: Segment Revenue Split
For personal use only Segment Revenue* Split 2007 Segment Revenue by region 2006 Segment Revenue by region Japan Japan "Unique" Australia/ Other "Unique" 2% Australia/ 7% NZ "Growth" NZ "Mature" 19% "Mature" Other 22% 25% "Growth" 25% $579.4 $508.0 million million North North America America "Growth
Slide 11: Business Segmentation
Business Segmentation* $m Revenue Segment Profit Profit After Tax 600 For personal use only 500 21.4% Check %SCP vs PAT – why diff? 400 Add note re Growth at Const Curr 300 200 18.6% (1.3)% 24.8% 100 368.8% (2.7)% na (2.7)% na - Australia/NZ Growth markets Japan *Actual revenue and percentage change
Slide 12: Management Cash Flow
Management Cash Flow H1 2007 H1 2006 For personal use only $m $m Net (debt)/cash - opening balance (40.8) 183.7 EBIT 168.2 146.2 Depreciation and amortisation 18.3 15.1 Share of Elektronček Profit after Tax (6.6) (4.0) Other non-cash adjustments 16.8 3.0 Net interest (paid)/received (2.5) 0.9 Net ta
Slide 13: Management Cash Flow
Management Cash Flow H1 2007 H1 2006 For personal use only $m $m Net cash inflow from operating activities 65.5 18.9 Acquisitions (3.1) (141.4) Net other investing activities (25.0) (17.3) Shares bought back/employee share trust (70.4) (60.1) Dividends paid (111.6) (93.8) Net other cash flows 2.1 2.
Slide 14: Operating Cash Flow
Operating Cash Flow 300 35% For personal use only 30% 250 Percentage of LTM Revenue 25% 200 20% 150 15% $m 100 10% 5% 50 0% - -5% Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun -50 01 01 02 02 03 03 04 04 05 05 06 06 07 -10% Operating Cash Flow LTM Operating Cash Flow % LTM Revenue
Slide 15: Working Capital
Working Capital Net Working Capital - % of Last 12 Months Revenue use only 40% 35% 30% % of LTM Revenue 25% 20% For personal 10% target 15% 10% 5% 0% Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun 01 01 02 02 03 03 04 04 05 05 06 06 07
Slide 16: Capital Management – H1 2007
For personal use only Capital Management – H1 2007 On-market Share Buyback - 3.4 million shares acquired - Second program completed taking total buyback to $200 million Employee Share Based Contingent Obligations - 1.2 million shares acquired via trust structure - 92% of contingent obligations cover
Slide 17: Capital Management – Next Phase
Capital Management – Next Phase For personal use only • Ongoing flow of fully franked dividends to approximate 60% – 70% of annual earnings, subject to the Company’s franking ability • Ongoing supplementary unfranked dividends totalling 20 cents per annum • On-market share buyback program of up to $
Slide 18: Capital Management - Specifics
Capital Management - Specifics 2007 Interim Dividend For personal use only - 14 cps fully franked vs 12 cps fully franked - Franking outlook remains positive - Dividend Reinvestment Plan to operate, shares acquired on-market Supplementary Dividend - Ongoing 6 monthly unfranked dividend of 10 cps - P
Slide 19: Key Financials and Ratios
Key Financials and Ratios H1 2007 H1 2006 FY 2006 For personal use only $m $m $m EBITDA 186.5 161.3 366.7 EBIT before R&D 222.1 189.7 430.5 EBIT 168.2 146.2 335.3 Working Capital/Revenue (%)* 13.3% 7.7% 7.7% Operating Cash Flow 65.5 18.9 204.8 Operating Cash Flow/Revenue (%)* 21.6% 22.7% 18.7% Net D
Slide 20: Segment Review
For personal use only Segment Review
Slide 21: Australia/New Zealand
For personal use only Australia/New Zealand Constant Currency^ H1 2007 H1 2006 Variance $m $m % Revenue 127.3 129.0 (1.3)% Profit 43.0 44.2 (2.7)% Margin 33.8% 34.3% (0.5)pts ^ Adjusted for translational and transactional exchange rates using rates applying in H1 2006 • Challenging market conditions
Slide 22: Initiatives and Outlook: Australia/New Zealand
Initiatives and Outlook Australia/New Zealand For personal use only STRATEGIES • Premium product focus • Recurring revenue focus • Elektronček and PokerTek products • Ongoing business efficiency and cost reduction OUTLOOK • Continuing market leadership • Progressive improvement in Australia • Well p
Slide 23: North America
For personal use only North America Constant Currency^ H1 2007 H1 2006 Variance $m $m % Revenue 289.7 274.2 +5.7% Profit 123.4 123.1 +0.2% Margin 42.6% 44.9% (2.3)pts ^ Adjusted for translational and transactional exchange rates using rates applying in H1 2006 • Lower overall market volumes – low in
Slide 24: Initiatives and Outlook: North America
Initiatives and Outlook North America For personal use only STRATEGIES • Premium product performance and stepper to video trend continue to represent significant opportunities • New markets • Recurring revenue • Systems competitive positioning • Expansion of new product lines – Elektronček, 5-reel s
Slide 25: Japan
For personal use only Japan Constant Currency^ H1 2007 H1 2006 Variance $m $m % Revenue 45.0 9.6 368.8% Profit 3.1 (9.6) na Margin 6.9% na na ^ Adjusted for translational and transactional exchange rates using rates applying in H1 2006 • Short term market uncertainties - Regulation 5 transition • Fo
Slide 26: Initiatives and Outlook: Japan
Initiatives and Outlook Japan For personal use only STRATEGIES • Larger number of game titles, lower average sales/title • Strong pipeline of games in development • 8 games approved, 10 more in progress • Independent supply chain capability established • Casino style gaming potential OUTLOOK • Short
Slide 27: Other Markets
For personal use only Other Markets Constant Currency^ H1 2007 H1 2006 Variance $m $m % Revenue 158.6 95.2 +66.6% Profit 57.7 29.6 +94.9% Margin 36.4% 31.1% +5.3pts ^ Adjusted for translational and transactional exchange rates using rates applying in H1 2006 • Strong growth in emerging markets: • As
Slide 28: Initiatives and Outlook: Other Markets
Initiatives and Outlook Other Markets For personal use only STRATEGIES • 40% share of new markets • Establishing infrastructure/resources in key locations • Tailored business model • Lower risk OUTLOOK • Strong growth • Dependent on new market openings • Well placed to capture opportunities
Slide 29: Growth Opportunities 2007-2011
Growth Opportunities 2007 2008 2009 2010 2011 - Replacement cycle For personal use only Australia - Software/licencing model - Replacement cycle - Stepper - video migration - 5 reel stepper - New markets, Class II, III, VLT Americas - Wide area products - Conversions - South America - Mexico - Regul
Slide 30: Outlook
For personal use only Outlook 2007 - balance of year • Issues in major markets improving but likely to persist • Key factors influencing overall result: • Unpredictable nature of Japanese market • Level of success of 5 reel stepper in North America • Exchange rates 2008 and beyond - strong growth po
Slide 31: Questions
For personal use only Questions