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Aristocrat's Woes Also Hit Home Turf

11 August 2003

AUSTRALIA – As reported by the Australian Mercury: “Battered Aristocrat Leisure investors will need more patience as evidence of a declining domestic market threatens to slow the company's recovery.

“When the disgraced poker machine maker reports first half-results tomorrow, its forecast net loss - the first since the company listed in 1995 - is widely expected to be within its guidance range of $32 million to $37 million.

“Troubles with the company's US operations are largely to blame for the loss.

“But in late May, Aristocrat indicated a challenging Australian environment - caused by smoking bans, reduced operating hours and tax increases - would see its domestic profit drop 30-35 per cent and revenues drop 20-25 per cent compared with the previous half year.

“…`While the prospect of recovery in Aristocrat's American operations has driven some optimism reflected in the share price, we expect the reality of a declining Australian market to drive a major de-rating,’ Deutsche Bank gambling and wagering analyst David Leslie wrote.

“…It started in February with a shock full-year profit downgrade - reducing the result by $26 million to $80.2 million - blamed on a failed South American contract.

“Investors fled, wiping $1 billion off the stock, and Aristocrat found itself under investigation from the regulator over its handling of the downgrade…”

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