Aristocrat pins recovery hopes on new games - The Sydney Morning Herald - 29th August 2008
Aristocrat Leisure is pinning its hopes on new games to improve market share and sales over the year but warned it did not expect market conditions to improve in the short term.
The manufacturer, distributor and servicer of gaming machines yesterday posted a 43.4 per cent fall in first half 2008 profit as challenging economic conditions and the high Australian dollar impacted on its earnings.
The company reported a net profit of $71.38 million for the six months to June 30, down from $125.87 million in the corresponding half last year.
The result was just above its guidance for a profit of $70 million.
The company yesterday also settled the largest class action in Australia in the Federal Court.
Aristocrat will pay out more than $144 million to thousands of shareholders after the court found it had misstated earnings on two occasions and issued a subsequent profit forecast that was unattainable.
This resulted in a share price plunge and losses for its shareholders when the true state of the company was revealed.
Outgoing chief executive Paul Oneile declined to comment on the outcome, concentrating instead on the interim result. Mr Oneile, who plans to leave Aristocrat at the end of the year, said the company was gaining traction with sales of a new machine and games on its Gen7 platform.
"We only got the approvals (for the games) in NSW in April, so for the first quarter we weren't selling much into the NSW market at all," Mr Oneile said. "Since those approvals have come through, our sales have picked up significantly so we're actually going into the second half obtaining a much greater market share of the overall new sales than we had in the first half."
Aristocrat blamed its disappointing first-half performance on unfavourable economic and regulatory conditions in the group's two largest regions, Australia and North America.
Total revenue for the half year was $466.3 million, down from $558.1 million in the first half of 2007.
Aristocrat posted earnings falls in Australia, New Zealand and North America, but improved profits in Japan.
Mr Oneile said the first half of 2008 had been particularly challenging, with replacement demand in the group's key markets running at historic lows.
"At the same time, we have suffered from operator reluctance to purchase product ahead of the availability of our new Viridian cabinet and Gen7 platform and a larger library of content."
In Australia, revenue fell 23.2 per cent while profits dropped 37.2 per cent.
Legal gamble pays off for shareholder - The Sydney Morning Herald - 29th August 2008
Australia's largest shareholder class action has been formally settled for $144.5 million in the Federal Court after plaintiff law firm Maurice Blackburn and its target, Aristocrat Leisure, jointly asked Justice Margaret Stone to approve a deal they struck in May.
The settlement outstrips the $112 million agreement struck by GIO shareholders in 2003.
Aristocrat shares gained 13 cents, or 2.3 per cent, to close at $5.72.
Unlike GIO, which settled before hearings began, the Aristocrat case was settled after a full trial in October.
Another difference is that the Aristocrat case was supported by a litigation funder, IMF (Australia), which paid the legal fees and took the risk of an adverse costs order.
In return, IMF expects to receive about $37 million from the settlement proceeds.
The settlement involves Aristocrat paying $109 million to clients of Maurice Blackburn who signed a funding agreement with IMF and $27 million to other shareholders.
The company will also pay $8.5 million in legal costs and incur expenses of up to $40 million.
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