Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — H1 2009 Earnings Presentation
41 slides from Aristocrat Leisure's earnings presentation, Aug 25, 2009
Slide 1: Results Presentation Half Year to 30 June 2009
Results présentauidh Half Year to 30 June 2009. Ss NN 25 August 2009 1 < ARISTOCRAT
Slide 2: Disclaimer
Disclaimer For personal use only 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: Briefing Overview
Briefing Overview For personal use only Introduction Jamie Odell Results Summary Jamie Odell Results Presentation & Segment Review Toni Korsanos Outlook Comments Jamie Odell Strategy Presentation Jamie Odell Questions 3
Slide 4: Introduction
Introduction For personal use only Jamie Odell Chief Executive Officer & Managing Director 4
Slide 5: Result Summary
Result Summary For personal use only Revenue $441.7M 5.3% Operating profit after tax $44.2M 38.1% Net one-off abnormal items $77.4M Operating cash flow $74.7M 15.8% Closing net debt $111.5M 58.6% 5
Slide 6: Financial Results Presentation & Segment Review
Financial Results Presentation & Segment Review For personal use only Toni Korsanos Chief Financial Officer 6
Slide 7: Profit & Loss
7 For personal use only Profit & Loss
Slide 8: Operating Result in Line with Guidance
Operating Result in Line with Guidance For personal use only First Half NPAT of $44.2M (guidance $35.4M - $44.4M) Result in line with guidance despite materially adverse FX variance ($6M impact) 8
Slide 9: Abnormals Primarily Non-Cash
Abnormals Primarily Non-Cash For personal use only 9
Slide 10: Half vs Half EBIT
Half 1 09 vs Half 1 08 EBIT For personal use only 105.0 90.0 $30.0 75.0 $0.7 $2.2 EBIT A$m $2.1 $13.3 $13.5 60.0 $2.5 $102.7 $1.4 $5.0 $2.3 45.0 $3.5 $69.6 30.0 15.0 0.0 H1 2008 EBIT Japan ACE Share of Volume Price/Mix Other Net Participation Recurring SMG&A R&D D&D Other FX H1 2009 Elektroncek Marg
Slide 11: Strong Operating Cash Flow
Strong Operating Cash Flow For personal use only 140 275% 250% 120 Percentage of LTM PAT 225% 100 200% * 175% $Million 80 150% 60 125% 100% 40 75% 50% 20 25% - 0% Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Operating Cash Flow LTM*Operating Cash Flow % PAT LTM PAT * Last twelve months 11
Slide 12: Prudent Capital Management
Prudent Capital Management For personal use only • Capital raising of $236.7M (after costs) • Interim dividend declared of 4.5 cps fully franked • Dividend payout ratio 54.3% maintained within 50% – 70% (of operating earnings) • Dividend Reinvestment Plan (DRP) to operate at no discount • DRP partic
Slide 13: Segment Revenue Split
Segment Revenue Split For personal use only * * Increased revenues compared to 2008 excluding Japan 13
Slide 14: North America
North America • Tough conditions, ship share up slightly, pricing flat For personal use only • Unit sales down 18.8%, conversions up 18.8% • Systems revenue up 9% and services revenue up 10.3% vs. pcp • Over 10,000 VIRIDIAN™ GEN7™ machines installed • RFX™ stepper launched in Q2 – platform stable ™
Slide 15: US Gaming Operations Positive
US Gaming Operations Positive • Participation installed base up 9.7%, driven by successful launch of JAWS™ For personal use only • 900 units of JAWS™ installed, with a further 200 signed contracts • JAWS™ performing well above house average • JAWS™ set to benefit participation fee per day in H2 JAWS
Slide 16: Australia
Australia • Challenging conditions but some encouraging signs For personal use only • Successful launch of VIRIDIAN™ GEN7™ in QLD • Strong take up of licensing in NSW and QLD • Unit sales up 30.4%, conversions down 6.6% • Strong ship share in NSW, 58% vs. 40.6% in pcp, share of installed base stable
Slide 17: Japan
Japan For personal use only • Key driver of overall decline in Group revenue and PAT • Volatile conditions, pachislot market continued to decline • Lack of licensed games resulted in ¥341.8M loss • Two games (Judoz™ and Get the Ranker™) sold a total of 5,747 units • Gross profit per unit stable, but
Slide 18: Rest of World
Rest of World • Market share maintained or increased overall For personal use only • New Zealand profit up by 209.5% • Limited new venue openings in Asia Pacific, tough conditions in Europe • South Africa and South America sales declined by 14.4% and 30.6% respectively • ACE $3.2M loss, due to busin
Slide 19: Briefing Overview
Briefing Overview For personal use only Introduction Jamie Odell Results Summary Jamie Odell Results Presentation & Segment Review Toni Korsanos Outlook Comments Jamie Odell Strategy Presentation Jamie Odell Questions 19
Slide 20: Half Summary
Half 1 Summary For personal use only • A challenging half, operators continue to be cautious • Prices holding up well despite lower volumes • Traction building around VIRIDIAN™ GEN7™ and key game releases • Tight cost control • Strong operating cash flow • Conservative debt coverage ratios 20
Slide 21: Half Operational Outlook
Half 2 Operational Outlook For personal use only • Global market conditions challenging, demand generally soft • North America to benefit from further rollout of participation product • Robust games pipeline for Australia, subject to regulatory approvals, driving VIRIDIAN™ GEN7™ penetration • Japan
Slide 22: Briefing Overview
Briefing Overview For personal use only Introduction Jamie Odell Results Summary Jamie Odell Results Presentation & Segment Review Toni Korsanos Outlook comments Jamie Odell Strategy Presentation Jamie Odell Questions 22
Slide 23: A Four Stage Process
A Four Stage Process For personal use only 23
Slide 24: Building the fact base
Building the fact base For personal use only Examples: • Global market dominated by US and Japan • Markets are becoming more diverse • Technology increasingly driving the replacement cycle • Regulation shaping markets more directly 24
Slide 25: ~A$9B Industry, Dominated by US & Japan
~A$9B Industry, Dominated by US & Japan For personal use only Gross profits Non Aristocrat markets* Aristocrat markets Japan N America Europe Aus S America Asia S Africa NZ * Includes Pachinko, Class II, AWP, VLT 25
Slide 26: US: Compelling Participation Opportunity
US: Compelling Participation Opportunity Gross profit: global market Gross profit: North America market For personal use only A$9B $A3.5B 26
Slide 27: Markets More Diverse, ALL is Spread Thin
Markets More Diverse, ALL is Spread Thin For personal use only 16% 16% • Continued increase in number of gaming jurisdictions worldwide, and market differentiation 5% +1 • Potential emergence of new large markets 162 • Cost to serve growing, along with 141 need for focus 2006 2009 • ALL spread too t
Slide 28: Regulatory Impact can be Significant
Regulatory Impact can be Significant For personal use only Japan Pachislot Replacement Volumes Regulatory change has 2.0 Units '000,000 impacted the popularity of 1.5 pachislot (R5 vs. R4) 1.0 Pachislot Regulation 5 replaces Regulation 4 0.5 0 2004 05 06 07 08 North America Install Base North Americ
Slide 29: Define the Strategy & Build the Detailed Plan
Define the Strategy & Build the Detailed Plan For personal use only 29
Slide 30: Defining the Strategy
Defining the Strategy For personal use only Player led, Best games and Right markets World class technology driven systems and segments organisation Obtain privileged Apply insights to Focus on the most Build a lean, effective insights to generate build the best games profitable large organisation t
Slide 31: Player Led, Technology Driven
Player Led, Technology Driven For personal use only Player led, • Putting players and Establish global technology driven insights function Obtain privileged customers at the centre insights to generate of everything we do Technology competitive roadmap redefined advantage • Get ahead of the technolo
Slide 32: Best Games and Systems
Best Games and Systems For personal use only Best games and • Content is king Streamlined product systems development Apply insights to • Best games and build the best games and systems systems on a market by Product roadmap market basis Low cost production Systems / CMS investment Networked gaming
Slide 33: Right Markets, Right Segments
Right Markets, Right Segments For personal use only Right markets • Tailored focus by Double share of US and segments participation gaming Focus on the most market and segment profitable large More agile, customer markets and • ‘One size fits all’ no led in Australia segments longer applies Manage v
Slide 34: World Class Organisation
World Class Organisation For personal use only Business World class • Key enabling initiatives Transformation Team organisation established Build a lean, effective organisation to • Rigorous focus on Right-size the deliver the best execution organisation products High performance culture Process sim
Slide 35: The Right Team
The Right Team For personal use only * * • More executives in North America • Lift management capabilities with new skill sets • Retention of experienced personnel *Subject to regulatory approval 35
Slide 36: North America - Focus to Unlock Potential
North America - Focus to Unlock Potential For personal use only Key Deliverables: • Double participation market share over five years • Grow systems footprint • Develop stepper business ™ How: • Privileged player and customer insights • Dedicated US games development - video and stepper • Streamline
Slide 37: Australia - Agile & Customer Led
Australia - Agile & Customer Led For personal use only Key Deliverable: • Close gap between ship share and installed base How: • Privileged player and customer insights • Focus on games development for Australian market • Streamlined product development process • New licensing models to offer custom
Slide 38: Japan - Manage Volatility
Japan - Manage Volatility For personal use only Key Deliverable: • Manage earnings volatility • Consistently achieve a minimum of 2 licensed game releases and over 50,000 unit sales per annum How: • Optimise game approval slots • Greater use of licensed characters • Increase visibility over D&D and
Slide 39: Rest of World - a Focused Approach
Rest of World - a Focused Approach For personal use only Key Deliverable: • Improved ROI outside major markets How: • Exit approximately 30 low margin jurisdictions within 12 months • Adopt robust criteria and processes for future market / product entry decisions • Focus on markets with value and gr
Slide 40: The Big 5: Initiatives that Underpin Success
The Big 5: Initiatives that Underpin Success Double US participation market share (by value) over five years For personal use only Focus to unlock potential in North America Grow systems and stepper businesses Agile & customer led Close gap between ship share and installed base in Australia Manage v
Slide 41: Briefing Overview
Briefing Overview For personal use only Introduction Jamie Odell Results Summary Jamie Odell Results Presentation & Segment Review Toni Korsanos Outlook Comments Jamie Odell Strategy Presentation Jamie Odell Questions © Aristocrat Technologies Australia Pty Ltd. 41