Digital Growth Spins Aristocrat Higher

By Glenn Dyer | More Articles by Glenn Dyer

Pokie machine and gaming group, Aristocrat Leisure has boosted interim dividend 35% to 19 cents has share from 14 cents a share a year ago after reporting a solid performance for the six months to March 31.

The company said its digital revenue more than tripling in the six months and accounted for nearly 34% of total revenues of $1.6 billion in the half, up from a 16% share of revenues of $1.2 billion a year ago.

Reported net profit after tax for the six months to March 31 rose to $A256.5 million from $A249.6 million a year ago.

Investors loved the result, and the outlook, sending the shares up nearly 8% to $30.02.

The company bought two mobile game developers last year, in an effort to diversify its business through a larger online presence. Seattle-based Big Fish Games, the more recent of the two acquisitions, had cost the company about $990 million.

Write downs, acquisition and other one off costs of around $74 million trimmed a 30% gain in pre tax-earnings.

Directors said in yesterday’s statement the company expects “double-digit growth in normalised profit after tax and before amortisation to continue over the twelve months to 30 September 2018, compared to the 2017 full-year result”.

The company said what it called “normalised profit after tax and before amortisation of acquired intangibles (NPATA)” rose 32% to $361.5 million (or 36% in constant currency, compared to the $273 million delivered in the six months to 31 March 2017.”

"This result was driven by strong growth in the Group’s Americas and Digital businesses, including the recent acquisitions of Plarium and Big Fish, together with a further lift in performance in the ANZ region,” directors said.

"Earnings before interest, tax, depreciation and amortisation (EBITDA) increased more than 28% in reported terms and 32% in constant currency, demonstrating Aristocrat’s ability to grow top line revenue and sustain industry-leading margins, leading to profitable growth for shareholders.

"Normalised operating cash flow of $302 million was generated in the period, demonstrating the continued strength of the Group’s recurring revenue profile and cash flow generation capability,” directors added.

Aristocrat CEO Trevor Croker said in yesterday’s statement said “Aristocrat has delivered another period of strong growth and operational performance, built on outstanding talent, product, technology and improved front end execution. The strong 32% profit improvement over the six months to 31 March 2018 demonstrates the soundness of our strategy whilst highlighting our broadening ambition, as we make substantial progress in expanding our addressable market across both digital and land-based segments.

“Aristocrat will continue to push for growth by increasing our strategic investment in design and development, in order to protect and extend market leading positions, whilst attacking attractive adjacencies.

“We will also maintain our focus on successfully integrating our new digital businesses, while accelerating collaboration, in order to fully leverage our deepening digital and land-based capabilities. And we will embed a people first, innovative and customer centric culture, that supports our growth ambitions over the long term” Mr Croker concluded in the statement.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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