aristocratARISTOCRAT LEISURE LIMITED ABN 44 002 818 368 changing the gaming environment no borders For personal use only ANNUAL REPort 2007 TWELVE MONTHS ENDED 31 DECEMBER 2007 “ 2007 was a particularly challenging year for the industry. I am disappointed by the modest growth, however, our result demonstrates the underlying strength and sustainability of our business in some of the most adverse operating conditions many in the gaming industry can recall. While these market conditions impacted trading in our core businesses, I am particularly pleased with our results in emerging markets, where we have captured a significant share of new opportunities.” Paul Oneile, Chief Executive Officer and Managing Director For personal use only Cover: During 2007, Aristocrat released its new Viridian Gen7 product which is now “changing the gaming environment.” The logo on the cover and each page of this report is the new Viridian logo. Contents Company Profile/Key Dates 2 Directors’ Report 3 Management Discussion and Analysis: – Financial Report 8 – Business Segment Review 17 Australia 17 The Americas 18 Japan 20 New Zealand 21 Other International 22 Remuneration Report 25 Auditor’s Independence Declaration 54 Corporate Governance Statement 55 Five Year Summary 62 Financial Statements 63 Independent Auditor’s Report to the members 136 Shareholder Information 138 Corporate Directory 142 For personal use only Aristocrat Leisure Limited (ASX: ALL) is a leading global provider Company of gaming solutions that consistently outperform the competition. The Company is licensed by over 200 regulators and its products Profile and services are available in over 90 countries around the world. Aristocrat offers a diverse range of products and services including electronic gaming machines, interactive video terminal systems, electronic tables and casino management systems. For further information visit the Company’s website at www.aristocratgaming.com. 2007 Results Key 2008 Annual General Meeting 29 April 2008 Dates* Announcement of Supplementary Unfranked Dividend (‘SUD’) 29 April 2008 Shares Trade Ex-SUD 3 June 2008 Record Date for SUD 10 June 2008 Payment Date for SUD 1 July 2008 Interim Results Announcement (6 months ending 30 June 2008) 28 August 2008 Shares Trade Ex-Interim Dividend 3 September 2008 Record Date for Interim Dividend 9 September 2008 Payment Date for Interim Dividend 30 September 2008 Announcement of SUD 24 November 2008 Shares Trade Ex-SUD 28 November 2008 Record Date for SUD 4 December 2008 Payment Date for SUD 5 January 2009 2008 Results Final Results Announcement for 2008 24 February 2009 Shares Trade Ex-Final Dividend 2 March 2009 Record Date for Final Dividend 6 March 2009 Payment Date for Final Dividend 30 March 2009 2009 Annual General Meeting 28 April 2009 * Dates subject to change. The Company’s Corporate Profile Document is available from the Company’s website, www.aristocratgaming.com For personal use only 2 . ANNUAL Report 2007 COMPANY PROFILE/KEY DATES Directors’ Report For the 12 months ended 31 December 2007 The directors present their report together with the financial statements of Aristocrat Leisure Limited and its controlled entities (‘Group’) for the 12 months ended 31 December 2007. The information in this report is current as at 26 February 2008 unless otherwise specified. The directors of Aristocrat Leisure Limited (‘Company’) during the 12 months ended 31 December 2007 and up to the date of this report are: Director Experience Special responsibilities DJ Simpson Nominated July 2003. Appointed February 2004. Chairman FCPA • Director, CSL Limited Member, Nomination and Governance Committee Age 67 • Former Finance Director, Tabcorp Holdings Limited Member, Audit Committee Member, Remuneration Committee PN Oneile Nominated December 2003. Appointed June 2004. Chief Executive Officer and Managing Director BEc • Director, Film Finance Corporation Australia Limited Age 59 • Former Chairman and Chief Executive Officer, United International Pictures (UIP) • Former Managing Director, The Greater Union Organisation Pty Limited WM Baker Nominated August 1998. Appointed May 1999. Chair, Regulatory and Compliance Committee BA • Director, J. Edgar Hoover Foundation and Fortress Age 68 Global Investigations, Inc • Former Assistant Director of the FBI • Former President, The Motion Picture Association RA Davis Nominated November 2004. Appointed June 2005. Chair, Nomination and Governance Committee BEc (Hons), Member, Audit Committee • Consulting Director – Investment Banking, Rothschild MPhilosophy Australia Limited Age 56 • Chairman, Centric Wealth Advisers Limited • Director, Territory Insurance Office, Trust Company Limited and Macquarie Office Management Limited • Former Senior Executive, Citicorp and Citigroup Inc. in the United States and Japan For personal use only • Former Group Managing Director, ANZ Banking Group Limited 3 . ANNUAL Report 2007 DIRECtors’ REPORT Directors’ Report Director Experience Special responsibilities SCM Kelly Nominated and appointed February 2007. Chief Financial Officer and Finance Director BA (Hons), FCA, • Former executive Goodman Fielder Limited – Chief CA, MAICD Financial Officer – Consumer Foods, Chief Information Age 44 Officer, General Manager – International, Finance Director – International, Group Accounting Manager • Former Senior Manager, PricewaterhouseCoopers (Sydney and London) • Member National Executive, Group of 100 P Morris Nominated August 2003. Appointed February 2004. Chair, Audit Committee AM, BArch (Hons), • Director, Mirvac Limited, Clarius Group Limited (formerly Member, Remuneration Committee MEnvSc, DipCD, Candle Australia Limited), NSW Institute of Teachers FRAIA, FAICD Member, Nomination and Governance Committee and Bowel Cancer and Digestive Research Institute Age 59 Australia • Former Director, Sydney Harbour Foreshore Authority, Landcom, Strathfield Group Limited, Jupiters Limited, Principal Real Estate Investors (Australia) Limited, Howard Smith Limited, Colonial State Bank, EnergyAustralia, Country Road Limited, Indigenous Land Corporation and Australia Post • Former Director of Commonwealth Property, Department of Administrative Services • Former Group Executive, Lend Lease Property Services SAM Pitkin Nominated November 2004. Appointed June 2005. Chair, Remuneration Committee LLB, LLM • Director, Chandler Macleod Limited and Export Finance Member, Regulatory and Compliance Committee Age 48 and Insurance Corporation • Former Director, Australian Leisure & Hospitality Group Limited, Ceramic Fuel Cells Limited, Energex Limited, Golden Casket Lottery Corporation Limited and National Leisure & Gaming Limited • Former Partner and Special Counsel, Clayton Utz, Lawyers AW Steelman Nominated August 1998. Appointed May 1999. Member, Audit Committee BA, MLA • Former US Congressman For personal use only Age 65 • Advisor, Proudfoot Consulting Plc • Former Board Member, Texas Growth Fund and Sterling Software 4 • Former President, Maxager Technology . • Management Consultant with international experience in software, gaming strategy and government regulation ANNUAL Report 2007 DIRECtors’ REPORT Principal activities Review and results of operations The principal activities of the Group during A review of the operations of the Group for the 12 months under review were the the 12 months ended 31 December 2007 design, development, manufacture and is set out in the attached Management marketing of gaming machines, software, Discussion and Analysis which forms part systems and other related equipment and of this Directors’ Report. The operating services. The Company’s objective is to result of the Group attributable to be the leading global provider of gaming shareholders for the 12 months ended 31 solutions. There were no significant changes December 2007 was a profit of $247.2 in the nature of those activities during the million after tax and minority interest. 12 months ended 31 December 2007. Corporate governance Dividends The Board is committed to maintaining the A final dividend in respect of the 12 months highest standards of corporate governance. ended 31 December 2007 of 25 cents per The Company’s Corporate Governance share ($116.1 million) has been declared Statement, Board and Committee charters and will be paid on 31 March 2008 to and key governance policies can be found shareholders on the register at 5:00pm on on the Company’s website. 7 March 2008. The final dividend will be fully franked. Significant changes in state of affairs Except as outlined below and elsewhere A supplementary unfranked dividend of in this report, there were no significant 10 cents per share ($46.4 million) was paid changes in the state of affairs of the Group on 7 January 2008 in respect of the 12 during the 12 months ended 31 December months ended 31 December 2007. 2007. A fully franked interim dividend of 14 cents Events after balance date per share ($65.0 million) was paid on Other than the refinancing of the Group’s 18 September 2007 in respect of the six debt facilities referred to in the Management months ended 30 June 2007. Discussion and Analysis, no material The total dividend paid or payable in respect matters requiring disclosure in this report of 2007 was 49 cents per share. have arisen subsequent to 31 December The Dividend Reinvestment Plan (‘DRP’) 2007. To the best of their knowledge, the was in operation for the interim and directors are not aware of any other matter supplementary unfranked dividend for or circumstance that has arisen since shareholders resident