Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — Investor Presentation (March 2005)
43 slides from Aristocrat Leisure's investor presentation, Mar 11, 2005
Slide 1: Presentation to Analysts and Investors in Las Vegas, USA
© ARISTOCRAT PRESENTATION TO ANALYSTS AND INVESTORS IN LAS VEGAS, USA Sydney, 11 March 2005 Aristocrat Leisure Limited (ASX: ALL) today gave a presentation to analysts and investors in Las Vegas, USA. The presentation provides information on our American operations and the American gaming market. A
Slide 2: Investor and Analyst Tour
Investor and Analyst Tour Las Vegas, Nevada USA March 10, 2005
Slide 3: Executive Team
awOle Executive Team >» Gavin Isaacs President > Melissa Adams Senior Director, Business Development > Simon Ashley VP Finance > Robert DelRossi VP R&D >» Sean Evans VP Sales > Ron Jeffrey VP Systems > Jennifer Martinez VP Human Resources > Michi Scola VP Operations > Walt Stowe VP Legal and Complia
Slide 4: Disclaimer
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 representations and warranties a
Slide 5: North America Market Overview
North America Market Overview
Slide 6: North America Gaming Category Definitions
North America Gaming Category Definitions Class Ill Class Il + Random number generator * Bingo electronic device * State regulated (gaming body)/ * Centrally determined outcome Compact related « Game must replicate ‘bingo game’ * Tribal, land based, water based * NIGC regulations VLTs (can be Class
Slide 7: North America Total Installed Base
North America Total Installed Base Estimated numberof Number Gaming form slots of states Primary states Class fil Commercial casinos 342k 11 Nevada, New Jersey, Mississippi Native American gaming/casinos 170k 26 California, Minnesota, Arizona Racetracks & VLTs (Class Ill) 110k 8 Montana, New York, W
Slide 8: U.S. Central System Markets
U.S. Central System Markets: (Monitoring & Determination) Maine New Legislation Central Monitoring __ Central _ - 7 Determination _
Slide 9: Canadian Central System Markets
Canadian Central System Markets: (Monitoring) Prince Edward Is. GIECH Saskatchewan WCL¢ Brunswick GTECH Central Monitoring
Slide 10: Installed base by region
Easter Region _ Southern Region *As of September 2004 V7 BS VhIFe FIZ 5.8% CANADA British Columbia: 4,939-9.8% Alberta: 6,510-5.82% Saskatchewan: 2,014: .11.5% Ontario: 22,412: .79% ok codapectiout iow Jemey 42,408 Baek CARIBBEAN & CRUISE SHIPS Cruise Ships: 30,000-.17% Caribbean: 18,210-4%
Slide 11: With the largest Class III markets being.....
With the largest Class Ill markets being..... State/Jurisdiction Primary form of Total Total ATI All gaming Video Video Reel Video Reei Slots Slots” Share Nevada Corporate Casinos 217k 61k 8k 13% 4% California Native American 52k 24k Ak 19% 9% Mississippi Riverboat casinos 44k 12k 2k 13% 3% New Jers
Slide 12: North America Installed Base Shift
North America Installed Base Shift: (Stepper, Video Reel, Video Other) 800,000 7 r 80% 700,000 + Video other 70% = Video reel 600,000 + ey Stepper 60% Video reel share 500,000 5 |; 50% 400,000 7 |p 40% 300,000 + “1r 30% 200,000 | + 20% 100,000 10% o ee oe 0% 1990 1992 1994 1996 1998 2000 2002 2004 2
Slide 13: Key Jurisdiction Updates
Key Jurisdiction Updates * California Both ballot propositions failed in the recent election TILG machines downgraded to Class Il bingo games Tribes now negotiating new compacts to increase number of slots over the 2,000 Class III limit in return for revenue share with state * Florida The state rece
Slide 14: Market Development: 2005 Opportunities
Market Development: 2005 Opportunities * Maryland « Senate passed a bill proposing 15,500 slots at 7 sites (4 tracks, 3 stand-alones) « The House version authorized 9,500 slots at 4 locations (no guaranteed track sites) and prohibits gaming in Suburban Washington D.C. and Baltimore * Acompromise wil
Slide 15: Legislative Watch List
Legislative Watch List State Maryland Texas New Jersey Florida Minnesota Kansas Slots Legislation Proposed 9,500-15,500 Medium 2007/08 Casino Legislation Proposed 40,000 | Low: 2007/08 Meadowland Slot Legislation : eas Proposed 1,500-2,000 | Low- 2006/07 Me eee cit | Casino Legislation Proposed 5,00
Slide 16: IGT dominates the slot supply market
500,000 450,000 + 400,000 + 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 IGT IGT dominates the slot supply market having a market share of Aristocrat Bally approximately 70%. Aristocrat, Bally and WMS have market shares between 7%-10% with the WMS residual to smaller players like Atronic
Slide 17: Installed Base by Manufacturer
Installed Base by Manufacturer North America Class lll Market Competitors Aristocrat Atronic Bally IGT Konami WMS Other Total Total Installed Market Share % Ship Share 09/04 (Q4/04)* 48,349 7.22% 18.0% 12,543 4.87% coos “62,044. 9.27% 9.3% 464,218 0 “69.35% 55:7% “10,288 1.54% - 49,442 SO 789% 17.0%
Slide 18: Competitors vs. Aristocrat: Recurring Revenue
Competitors vs. Aristocrat: (Recurring Revenue - Class Ill, Class Il, VLTs) Installed Base 12/04 Fee Per Day Per Unit IGT 37,000 IGT $ 84 Aristocrat §,294 Aristocrat $ §3 WMS §,021 WMS $ 53 Bally 10,514 Bally $ 32 North America Recurring Revenue Install Fee Per Day Per Unit by Manufacturer Base $90
Slide 19: The Operators
fevOces The operators * There are more than 750 commercial and Native American casinos (Class Ill, Class Il, VLTs). « The destination casino sector is relatively concentrated, soon to be dominated by two key players -- Harrah's Entertainment/Caesars Entertainment (50+ properties and 80k+ slots) and
Slide 20: Systems Market Share By EGMs
Systems Market Share By EGMs North American Systems Market Share By EGMs (Land-based Casinos) Progressive None Gaming 2% 0% Bally 36% Aristocrat-OASIS 30% 19
Slide 21: North American Systems Market Share By Venue
North American Systems Market Share By Venue (Land-based Casinos) ; Progressive Konami cst Unknown Gaming Bally 9 2 132 0% 20% None 45 T% Aristocrat-OASIS 17% 180 28% 20
Slide 22: Our Business
Our Business
Slide 23: Aristocrat Technologies At-A-Glance
Aristocrat Technologies At-A-Glance Established in the late 1960’s under distributor model The delay in licensure resulted in limited penetration in key markets such as Nevada, Mississippi, New Jersey Received Nevada approval in 2000 Acquired Casino Data Systems for approximately US$181 million in 2
Slide 24: North America 2004 Performance
North America 2004 Performance 20037 Variance AUD$m % Segment Revenue 241.4 52.6% Segment Contribution Profit 8.2 1,187.8% Segment Margin 3.4% 25.3Pts Unit sales increased 35.8% to 12,312 Recurring revenue units increased to 5,294 (up 92.2%) at US$53/day (up US$19/day) Total participation recurring
Slide 25: Recent Achievements
Recent Achievements Reduced barriers to entry Management changes Customer focus Process alignment Cost control Communication improvement Corporate governance Culture change 24
Slide 26: North America Sales: Streamlined Sales Structure
North America Sales: Streamlined Sales Structure Regional Sale | Benier Regional 10 Account Executives 9 Account Executives 25
Slide 27: North America Sales: U.S. State-by-State Overview
North America Sales: U.S. State-by-State Overview Ilingis 9,826 Eastern Region
Slide 28: North America Sales: Canada and Caribbean Overview
North America Sales: Canada and Caribbean Overview Canada Caribbean FL a ~* Bahamas a, « Turks and Caicos Islands y 2 Puerto Rico iy < SY “Se e Western Region Eastern Canada 27
Slide 29: From Australia to Customer
From Australia Oasis Player Tracking (Optional) Final Quality Assurance Checks Package For : Shipping 7, ustomer 7 C i a. 28
Slide 30: North America 2005 Key Strategies
North America 2005 Key Strategies * Continue to capitalize on product performance and overall momentum * Participation revenue focus * Enhance product range ¢ Multi-site progressive (MSP) ¢ Stepper * Content licensing * Key account focus 29
Slide 31: Key Financials
Key Financials |
Slide 32: Key Lines of Business (US$)
Key Lines of Business (US$) FY 2004 FY 2003 Revenue GM$ GM% Revenue GMS GM% Platform/Game Sales 146.6 61.5 42% 94.3 35.3 37% Recurring Revenue 77.1 46.4 60% 22.8 8.8 38% Systems 27.1 16.2 60% 19.7 11.0 56% Other 21.6 2.2 10% 23.7 6.7 28% TOTAL 272.4 126.2 46% 160.4 61.8 39% Platform!Game Sales: FY04
Slide 33: Recurring Revenue Margin (US$)
Recurring Revenue Margin (US$) FY 2004 Jackpot Non-Jackpot Total Installation Base Opening 173 2,582 2,755 Closing 1,105 4,189 5,294 Net Change 932 1,607 2,539 Average 639 3,386 4,025 $'M Revenue 21.5 55.6 77.1 Costs 14.8 16.0 30.7 GM$ 6.8 39.6 46.4 GM% 31% 11% 60% Average $/day Revenue 92 45 53 Gro
Slide 34: Recurring Revenue (US$) Hypothetical
Recurring Revenue (US$) Hypothetical * Jackpot Non-Jackpot Total Installation Base FY 2004 Annualised FY 2005 Additions FY 2005 Dec '03 Dec ‘04 Avg ‘04 $iday Rev Revenue Units | $/day Rev $/iday Rev 173 1,105 639 92 21.5 37.1 1,000 80 14.6 88 51.7 2,582 4,189 3,386 45 55.6 68.6 1,000 45 82 45 76.8 2
Slide 35: Leverage Fixed Cost Base (US$)
Leverage Fixed Cost Base (US$) FY 2004 FY 2003 Revenue 272.4 160.4 Gross Margin 126.2 61.8 GM% 46% 39% SMG8&A 47.6 56.9 Segment Contribution 78.7 5.0 29% 3% Translated into AUD 105.6 8.2 34
Slide 36: Positive Free Cash Flow (US$)
Positive Free Cash Flow (US$) FY 2004 FY 2003 North America 78.7 5.0 Latin America 9.8 (4.7) Segment Contribution 88.5 0.2 Add back depreciation 14.7 9.8 Change in operating assets & liabilities 11.0 91.0 Tax paid (11.2) (5.9) Operating Cash 103.0 95.0 PPE - Participation (23.8) (12.2) PPE - Mainten
Slide 37: Corporate Governance Framework
aOce’ Corporate Governance Framework . Formal Policies and Procedures « "Quote to Cash’ standard contracts, pricing, credit, revenue recognition . Deloitte Internal Audit . Commenced in 2004, self assessment maintained * Dedicated Risk/Process Resourcing * Confirms self assessment * Global Business
Slide 38: Corporate Governance Framework
Corporate Governance Framework * Authority Limits « Approved by Board Audit Committee, managed globally, upheld locally * Monthly Management Representations * General Controls, Treasury, Taxation * External Audit « Local regulations e.g. MSP controls * Quarterly Reviews * CEO/CFO and Americas Execut
Slide 39: Games
Slide 40: 2004 Class III Installed Base by Product Category (U.S.)
2004 Class Ill Installed Base by Product Category (U.S.) Video Poker 18% Stepper 47% Video Reel 35% Source: Internal Company Research/ September 2004 39
Slide 41: 2005 Class III Installed Base vs. Available Units (U.S.)
2005 Class Ill Installed Base vs. Available Units (U.S.) Current U.S. Installed Base (Including Participation Units) Draw Poker, 105,604 Stepper 1B% 275,522 ATE <1% 47% ATE <1% Video 202,173 35% ATE 24% 2004 Total U.S Installed Base: 585k Source: Internal Company Research 2005 U.S. Available Units (
Slide 42: South America
South America
Slide 43: Low-Risk Business Model
Low-Risk Business Model Direct sale to key customers based.on: * Compliance approval * Credit investigation These customers are well-known, established companies in the countries in which they operate Stringent terms and conditions * Tied to the credit investigation of the customer * Defined maximum
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