international growth is the key

Check out the directors report. The lower margins this year was due to the rapid international expansion and were "largely one off costs". Margins will increase and will revenue in 2003 i.e. much bigger profit, perhaps even over $100m!!!

2003 and future years will see revenues boom. What a buying opportunity this latest profit warning has provided.

"10
LOOKING FORWARD
Outlook
The Company has strong businesses in Australia and around the world. In the United States, the
Company has a substantial presence that has grown significantly over the past twelve months.
Aristocrat’s products are very attractive to customers who recognise the outstanding entertainment
value created by Aristocrat’s highly skilled research and development teams. Aristocrat’s financial
position is strong. From this strong business base, the Company believes it will achieve its strategic
goals. The lessons learned from events in the United States and South America will result in
appropriate remedial action (which is already under way).
All of the Company’s businesses, including North and South America, are profitable and are
expected to remain so.
In Australia and New Zealand, a broad range of ‘responsible gaming’ measures have been
introduced and have impacted on the gaming industry. As a consequence, growth in Australia and
New Zealand has slowed as far as new machine orders are concerned but the replacement and
upgrade markets remain strong. Aristocrat is confident that its software and hardware will continue
to enhance the Company's reputation in every venue in which they are installed. An example of this
is the strong customer response to our XCite™ platform, launched during 2002.
Outside Australia and New Zealand, these are exciting times for the gaming industry. Governments
in many regions are looking to introduce or expand gaming operations as a means of raising
additional revenue with which to fund public works. This is evident across the United States of
America, across Europe (where the industry is excited about pending reforms in the United
Kingdom), throughout South America and, increasingly, in Asia.
In 2002, Aristocrat's international revenue rose to a record $611.8 million, representing 62.8% of
total segment revenue. The Company is pleased to have achieved another record in total revenue.
Aristocrat is dedicated to building further on this base while, at the same time, implementing
measures to enhance the profitability of the businesses generating this revenue. Many costs
incurred in achieving this revenue milestone were unforeseen costs associated with entering new
jurisdictions and are not expected to be incurred again.
Commitments for Future Performance
Aristocrat’s principal expenditure for future performance during 2002 has been in infrastructure,
people, logistics and research and development.
The major infrastructure investments during the year were the establishment of new offices in Las
Vegas, Nevada and Tokyo, Japan. The opening of each of these offices comprised a significant
element of growing Aristocrat’s presence in those markets.
Recruitment of capable, motivated staff to assist the Company to achieve its objectiv es in
international markets also comprised a significant investment during the year.
Investment in logistics management was a major focus during 2002. The Company is learning how
to operate efficiently in new jurisdictions and the organisation of warehousing, transportation,
supply chains and third parties in international jurisdictions was a major focus during the year.
The Company’s Research and Development teams, based in Rosebery, New South Wales, Las
Vegas, Nevada, Tucson, Arizona, and Tokyo, Japan are the principal vehicle through which the
Company invests in future performance.
Aristocrat’s expenditure on research and development increased by 18.4% year on year. The five
multifunctional teams based in the Rosebery facility achieved a number of new records in games
production during 2002.
Aristocrat’s investment in pioneering gas injection moulding, as utilised in the Xcite™ cabinet, has
placed the Company in an advantageous position in terms of facilitating future cabinet design
changes.
The Company will continue to invest in these areas and on improved methods, processes and
training throughout the Group."