Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — FY2004 Earnings Presentation
33 slides from Aristocrat Leisure's earnings presentation, Feb 22, 2005
Slide 1: Results for the Year Ended 31 December 2004
Aristocrat Leisure Limited Results for the Year Ended 31 December 2004 Chief Executive Officer & Managing Director Chief Financial Officer Paul Oneile Simon Kelly
Slide 2: Agenda
=” Agenda Introduction Review of Financials Review of Operations ¢ Australia ¢« North America « Japan ¢« Other Markets Business Objectives Growth Framework Outlook
Slide 3: Summary of Results
Summary of Results” Total Revenue $1,148.9 million — up 12.5% Profit After Tax $174.7 million — up $120.7 million Strong international growth — 70% of segment profit Operating cash flow $250.0 million — up $45.6 million Final dividend — 4 cents per share, unfranked — up 33% Capital management — prop
Slide 4: Review of Financials
Review of Fina
Slide 5: Profit & Loss
eee le—="ERR9' ....___Sa_—_«daC Profit & Loss 2004 2003* Variance $m $m % Total Revenue 1,148.9 1,021.3 12.5% Gross Profit 558.2 438.6 27.3% GP% 48.6% 42.9% 5.7 Points Expenses 300.0 364.8 -17.8% EBIT 274.8 103.5 165.5% Profit Before Tax 270.4 87.7 208.3% Income Tax Expense 95.7 33.7 184.0% Profit A
Slide 6: Actual vs Guidance PAT
eee le—="ERR9' ....___Sa_—_«daC Actual vs Guidance PAT Guidance ($150—170m) Additional Japanese Sales North America Europe/South America Other Regions Actual Reported Result Mid point +13,900 units Participation/Unit sales Russia/Legacy contracts
Slide 7: 2003 vs 2004 EBIT
2003* vs 2004 EBIT EBIT A$m +$8.8m $274.8m +$12.3m -$11.1m +$12.3m +$6.2m +$2.1m +$16.8m -$3.6m +$25.6m +$56.0m +$46.9m $103.5m 300;— 230 260 240-—- 220-— 200F- 180};— 160;— 140};— 120;— * 2003 results are pre one-off adjustments
Slide 8: Segment Revenue Split
Segment Revenue’ Split 2003 Segment Revenue by region million North America 23% * Revenue excluding interest * 2003 results are pre one-off adjustments 2004 Segment Revenue by region $1,142 million North America 32%
Slide 9: Segment Contribution Profit Split
=. Segment Contribution Profit* Split 2003 Segment Contribution 2004 Segment Contribution Profit by region Profit by region $205.1 million $328.1 million Nth America 32% Nth America 4% * Excludes unallocated expenses, interest and tax * 2003 results are pre one-off adjustments
Slide 10: Foreign Exchange Sensitivity
Oe Foreign Exchange Sensitivity Transactional Exposure* * Predominantly on USD revenue and cost transactions * Partially hedged, but timing impact * USD 1 cent change impacts PAT by c$0.2m Translational Exposure* « Accounting in nature * USD 1 cent change impacts PAT by c$1.0m * 1 Yen change impacts
Slide 11: Management Cash Flow
i Nee de Management Cash Flow 2004 2003 $m $m Net Debt - opening balance (70.2) (292.1) EBIT pre one-off adjustments 274.8 103.5 Depreciation and amortisation pre one-off adjustments 39.8 39.9 EBITDA pre one-off adjustments 314.6 143.4 Net loss on sale of non-current assets 0.7 0.7 Net foreign excha
Slide 12: Working Capital
Working Capital - % of Last 12 Month's Revenue 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Net Working Capital - % of Last 12 Month's Revenue 1 | Jun 01 On Oe ec OD 03 03 Jun 04 Od
Slide 13: Capital Management
GD Ne Capital Management Strong Ongoing Financial Capacity/Flexibility - Substantial cash on hand - Strong cash flows - $107 million facilities - Convertible bonds called - Expectation of solid future cash flow Objectives - Maintain conservative funding structure - Strategic and operational flexibil
Slide 14: Capital Management
Ce FE) Capital Management 2004 Final Dividend - 4 cents per share, unfranked - DRP does not operate - Expect return to some level of franking for 2005 interim dividend Capital Return - $100 million - Subject to ATO and Shareholder approval On-market Share Buyback - $10.7 million of $100 million prog
Slide 15: Key Financials and Ratios
ee ee a Key Financials and Ratios 2004 2003* $m $m EBITDA 314.6 143.4 EBIT 274.8 103.5 Working Capital/Revenue (%) 9.3% 10.9% Operating Cash Flow 250.0 204.4 Operating Cash Flow/Revenue (%) 21.8% 20.0% Net Cash/(Debt) 119.6 -70.2 Debt/EBITDA 0.5X 1.2X EBITDA/interest Expense 26.7X 6.8X Return on Equ
Slide 16: Segment Review
Segment Review
Slide 17: Australia
Australia 2004 2003* Variance $m $m % Segment Revenue 290.3 302.4 (4.0)% Segment Contribution Profit 98.1 84.3 16.4% Segment Margin 33.8% 27.9% 5.9Pts * Operating environment remains difficult * Replacement cycle at historic lows « Margin improvement reflects improved product mix and cost initiative
Slide 18: Initiatives and Outlook - Australia
oe lrUcer—rcii_._.._..._._._ ddd Initiatives and Outlook - Australia STRATEGIES * Premium product focus * Recurring revenue * Ongoing business efficiency and cost reduction OUTLOOK * Stable revenue with improving margins
Slide 19: North America
eee —e—=#REABRN’— »'=':'......___ North America 2004 2003* Variance $m $m % Segment Revenue 368.4 241.4 52.6% Segment Contribution Profit 105.6 8.2 1,187.8% Segment Margin 28.7% 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 (
Slide 20: Initiatives and Outlook - North America
Initiatives and Outlook — North America KEY STRATEGIES *« Continue to capitalise on product performance and overall momentum * Participation revenue focus * Enhance product range — Multi Site Progressive, stepper * Content licencing * Key account focus OUTLOOK * Continuing growth in participation re
Slide 21: Japan
Japan 2004 2003 Variance $m $m % Segment Revenue 336.8 360.7 (6.6)% Segment Contribution Profit 78.2 87.7 (10.8)% Segment Margin 23.2% 24.3% (1.1)Pts 85,387 games sold Success of Daruma-Neko and Kyojin-no-hoshi 2 games Higher trade-ins and inventory provisioning impacted margin Strong relationship w
Slide 22: Initiatives and Outlook - Japan
i Initiatives and Outlook - Japan KEY STRATEGIES * Optimisation of old Regulation 4 games * Development and approval of Regulation 5 compliant games * Maintain Sammy relationship * Revenue diversification and reduction in trading volatility * Positioning for casino trial OUTLOOK * Short term depende
Slide 23: Other Markets
ee t—=#REAA.K...._._._CUizsWw_i‘((C. Other Markets 2004 2003* Variance $m $m % Segment Revenue 146.1 111.4 31.1% Segment Contribution Profit 46.2 24.9 85.5% Segment Margin 31.6% 22.4% 9.2 Pts « Russia and Macau drove strong revenue growth * New Zealand impacted adversely by new legislation and regul
Slide 24: Initiatives and Outlook - Other Markets
Initiatives and Outlook — Other Markets KEY STRATEGIES Focus on emerging opportunities: - Macau - Singapore, Thailand - Russia - UK Low risk distributor model in emerging markets OUTLOOK Well positioned to leverage 2004 performance in key emerging markets South American legacy contract dispute will
Slide 25: Business Objectives
=” Business Objectives * Enhance market leadership position in Australia and NZ * Capitalise on product performance/momentum in North America * Build on success in Japan - Continue to focus on new markets — Asia, Russia, UK * Focus on R&D and product development * Financial control, risk management
Slide 26: Growth Framework
eee le—="ERR9' ....___Sa_—_«daC Growth Framework * Global gaming growth potential « Leverage core competencies * Focus on organic opportunities * Lower risk model * Targeted M&A principles
Slide 27: Outlook
eee le—="ERR9' ....___Sa_—_«daC Outlook Key Factors * Changing regulatory environment * Japanese volatility * North American momentum Overall * Further profit growth in the current year
Slide 28: Summary
eg Summary * Revenue up 12.5% to $1.15 billion * Profit after tax of $174.7 million * Strong operating cash flow — 21.8% of revenue * Cash exceeds debt * Final dividend of 4 cents per share * Capital return of $100 million (subject to approvals) * Continuation of on-market buyback program ¢ Sharehol
Slide 29: Thank You. Questions?
Oe ieee sisCOisisCi«iésCw#NOw’#CNti((((‘(( Aristocrat Leisure Limited Thank You. Questions?
Slide 30: Appendix - Segment Summary
"=". Appendix - Segment Summary 2004 2003* $m $m SEGMENT CONTRIBUTION PROFIT Australia 98.1 84.3 North America 105.6 8.2 South America 13.5 (7.6) Japan 78.2 87.7 New Zealand 11.1 14.9 Other 21.6 17.6 Total Trading Segment Profit 328.1 205.1 R&D expense (59.0) (63.4) Amortisation - intangibles (5.0)
Slide 31: Appendix - Balance Sheet Summary
a Appendix - Balance Sheet Summary Dec-04 Dec-03 $m $m Working Capital 107.0 110.8 Other Current/Non-Current Assets 72.4 61.6 Property, Plant and Equipment 120.8 109.5 Intangibles 64.4 70.6 Other Current/Non-Current Liabilities (117.1) (99.5) Net Tax Balances 7.1 35.9 Funds Employed 254.6 288.9 Net
Slide 32: Appendix - Receivables
Appendix - Receivables Receivables - % of Last 12 Months Revenue 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% + 10.0% + 5.0% + 0.0% + 1 ; - - + - ; Jun01 Dec01 Jun02 DecO2 Jun03 Dec03 Jun04 Dec 04 1, it J, % of LTM Revenue
Slide 33: Appendix - Inventories
Appendix - Inventories Inventories - $ of Last 12 Months Revenue 30.0% 25.0% - 20.0% + 15.0% 10.0% 5.0% Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 L n % of LTM Revenue n