GGRAsia – Aristocrat Leisure fiscal 2014 loss on strategy moves

Aristocrat Leisure fiscal 2014 loss on strategy moves

Nov 25, 2014 Newsdesk Industry Talk, Latest News, Top of the deck

Australia-based slot machine maker Aristocrat Leisure Ltd reported on Tuesday an unaudited after-tax loss of AUD16.4 million (US$14.1 million) in the 12 months to September 30. In the equivalent period in the previous year, it made an after-tax profit of AUD107.2 million.

The firm said factors affecting the result were: a AUD78 million impairment on the valuation of a pachislot business in Japan, “driven by uncertainty in regulatory environment”; a AUD43.4 million loss on disposal of a lottery business to Playtech Plc in September; and AUD13.1 million in transaction and restructuring costs relating to the acquisition of U.S.-based casino games maker Video Gaming Technologies Inc (VGT).

Aristocrat said that without those costs, the firm would have had a normalised after tax profit of AUD118.1 million.

Revenue during the period grew by nearly 7 percent, to AUD870.3 million, compared to AUD813.8 million a year earlier. Earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 11.5 percent, to AUD209.8 million, from AUD188.1 million in the year-prior period.

The firm added that operating cash flow increased 61.7 percent due to higher revenues and “cash management initiatives”.

Aristocrat authorised a final dividend per share of AUD0.08, which it said represented a 76 percent payout ratio.

Aristocrat said it had continued to maintain its top spot in market share in Asia during the period, despite “some regulatory churn in Macau” adding that there had been few new venues opening in the region during that financial year.

Outside of North America and Australia, revenues for ‘Class III’ machines – a term used in the sector to refer to slot machines supplied to the commercial casino industry – fell 18.4 percent and profit dropped by 26.6 percent compared to the prior period, on “lower Asia Pacific revenues and a soft European market”.

But Jamie Odell, Aristocrat Leisure’s chief executive and managing director, said in a statement accompanying the results that during the period the company had taken a “number of important decisions” to put the business in a better position for growth.

“The acquisition of VGT shortly after [financial] year-end was a bold step forward. In addition, the disposal of our non-core lotteries business and the adjustment in the carrying value of the unique and volatile pachislot business in Japan reduce risk and management distraction going forward.”

Mr Odell added that while Aristocrat expected its market share performance to lift further in financial year 2015, he warned that “generally flat to weaker demand in a number of key segments will be a constraint”.

He added: “Aristocrat will continue to focus on the things we can control – in particular improving our portfolio focus, competitiveness and earnings mix over the 2015 full year.”