Australia-based slot machine maker Aristocrat Leisure Ltd expects to record a year-on-year reduction of around 3 percentage points in the group’s effective tax rate for the fiscal year ending September 30, 2018, resulting in a US$6.5 million gain for the company.
The forecast was provided by chief executive and managing director Trevor Crocker on Thursday, during the firm’s annual general meeting. The estimate took into account the impact of the recent U.S. tax reform, he said.
“In terms of Aristocrat’s effective tax rate for the 2018 fiscal year, our initial assessment is that it will reduce by around 3 percentage points compared to the effective tax rate that applied over the 2017 fiscal year,” Mr Crocker said, according to a speech filed with the Australian Securities Exchange. “This includes a provisional non-cash net benefit of approximately US$6.5 million, reflecting the one-off revaluation of the group’s U.S. net deferred tax liability,” he added.
The United States introduced in December the Tax Cuts and Jobs Act, that significantly changed the country’s income tax law. It cut the corporate income tax rate from 35 percent to 21 percent.
“While Aristocrat derives a significant proportion of group earnings from North America, current transfer pricing agreements have the effect of repatriating earnings to Australia, which limits the potential benefits of the reduction in U.S. corporate tax rates for the group,” explained Mr Crocker.
Aristocrat said its net profit after tax for fiscal year 2017 was up 41.3 percent year-on-year, on revenue up a more modest 15.3 percent. Such profit was AUD495.1 million (US$386.2 million), compared to AUD350.5 million in the prior-year period.
Mr Crocker added: “We are continuing to work through a detailed analysis of the impacts of these reforms on our business, including potential re-investment of a portion of benefits back into the business.”
He also reiterated on Thursday a brief forecast for fiscal 2018 provided in November, saying it anticipated continued business growth. Mr Crocker again noted – referring to commercial casino gaming equipment in international markets including Asia Pacific – there was likely to be “moderating performance in the International Class III segment driven by a reduction in new casino openings over the full year.”
"The positive underlying contribution from each of our operating segments provides a strong start to the year"
Chief executive of lottery and gaming supplier IGT