22 December 2017
Company Announcements Office
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney NSW 2000
Aristocrat Leisure Limited
2017 Annual Report
Please find attached the Company’s Annual Report for the twelve months ended
30 September 2017.
The Annual Report together with the Notice of Meeting for the Annual General Meeting
to be held on 22 February 2018 are expected to be despatched to shareholders on or
around 19 January 2018.
The Annual Report is available on the Group’s website at www.aristocrat.com
Yours sincerely
Richard Bell
Company Secretary
Aristocrat Leisure Limited abn 44 002 818 368
Building A, Pinnacle Office Park, 85 Epping Road, North Ryde NSW 2113
PO Box 361, North Ryde BC NSW 1670, Australia
Telephone +61 2 9013 6000 fax +61 2 9013 6200 web www.aristocrat.com
2017 ANNUAL REPORT
This 2017 Aristocrat Leisure Limited Annual Report for the
financial year ended 30 September 2017 complies with
reporting requirements and contains statutory financial
statements.
This document is not a concise report prepared under
section 314 (2) of the Corporations Act. The Aristocrat
Group has not prepared a concise report for the 2017
financial year.
2018 ANNUAL GENERAL MEETING
The 2018 Annual General Meeting will be held at 11.00am
on Thursday, 22 February 2018 at the Aristocrat Head
Office, Building A, Pinnacle Office Park, 85 Epping Road,
North Ryde, 2113.
Details of the business of the meeting will be contained
in the notice of Annual General Meeting, to be sent to
shareholders separately.
CONTENTS
Company Profile & Key Dates
Message from the Chairman and CEO
Directors' Report
Operating and Financial Review
Remuneration Report
Auditor's Independence Declaration
Nevada Regulatory Disclosure
Five Year Summary
Financial Statements
2017 CORPORATE GOVERNANCE
STATEMENT
The 2017 Corporate Governance Statement can be found
on the Group’s website: www.aristocrat.com.
Independent Auditor's Report
Shareholder Information
Corporate Directory
1
2
3
10
28
50
51
54
56
103
110
113
COMPANY PROFILE
Aristocrat Leisure Limited (ASX: ALL) is a leading global
provider of gaming solutions. The Company is licensed
by over 200 regulators and its products and services are
available in over 90 countries around the world. Aristocrat
offers a diverse range of products and services including
electronic gaming machines and casino management
systems. The Group also operates within the online
social gaming and real money wager markets. For further
information visit the Group’s website at www.aristocrat.com.
KEY DATES*
2017
Record date for Final 2017 Dividend
6 December 2017
Payment date for Final 2017 Dividend
20 December 2017
2018
2018 Annual General Meeting
22 February 2018
Interim Results Announcement
(6 months ending 31 March 2018)
24 May 2018
Full Year Results Announcement
(12 months ending 30 September 2018) 29 November 2018
* Dates subject to change.
1
ARISTOCRAT LEISURE LIMITED Annual Report 2017
MESSAGE FROM THE
CHAIRMAN AND CEO
Welcome to Aristocrat’s 2017 Annual Report.
Aristocrat delivered strong performance over the 2017 fiscal
year, further extending the business’ track record of consistent
and high quality growth in NPATA (net profit after tax and
before amortisation of acquired intangibles). Group revenue
increased by more than 15% in reported terms and over 18%
in constant currency compared to the prior corresponding
year, to a record result of over $2.45 billion. This reflected
performance across the Group’s global portfolio, in particular
outstanding momentum in the Americas, significant growth
in the Digital and International CIII segments and sustained
strength in Australian markets.
A robust balance sheet ensures Aristocrat can continue to
promote shareholders’ longer-term interests by investing
for growth both organically and inorganically, wherever
compelling, accretive opportunities are identified.
The acquisition of the social games business Plarium Global
Ltd, announced during the fiscal year and closed in October
2017, is a further demonstration of Aristocrat’s increasingly
global orientation. It also signals our readiness to invest
in M&A that meets our rigorous criteria wherever those
opportunities may be located around the world. The addition
of Plarium to our business significantly increases our presence
in the high-growth social games market and materially
expands our addressable digital market. The acquisition will
also further lift Aristocrat’s recurring revenue base and digital
capabilities, consistent with our ambitious growth strategy.
While it was announced after the close of the 2017 financial
year, it is also relevant to note Aristocrat’s agreement to
acquire the social games business Big Fish. Big Fish is one
of the top six digital social casino game publishers globally.
It also has a significant presence in the casual free to play
segment, and strong capability in the fast-growing Social
Casino meta-game segment that is complementary to
Aristocrat’s existing strength in content-only driven apps. On
a combined basis, the revenues of Product Madness and Big
Fish will position Aristocrat as the clear #2 social digital casino
publisher in the world, and further cement our status as a
leading digital game content business, in addition to being a
market-leading CIII and CII gaming company.
Aristocrat’s sustained momentum, strong cash flows and
swift progress in reducing gearing levels over the course of
the 2017 fiscal year allowed the Board to deliver another
significant increase in earnings per share, consistent with our
commitment to lift dividends over time.
The Board has also continued to renew in an orderly way,
and expand its skill set in line with the business’ growth and
evolving needs. In December 2017, we were pleased to
nominate Neil Chatfield to the Board as a Director (Elect). Neil
is an established Executive and Non-Executive Director, having
previously served on the Boards of Toll Holdings Ltd, Virgin
Australia Holdings Ltd and Recall Holdings Ltd. Neil is currently
Chair and non-Executive Director of Seek Ltd and Costa
Group Holdings Ltd respectively, among other appointments.
The Board supports Neil’s election by shareholders at the
Annual General Meeting on Thursday, 22 February 2018. In
addition, Dr Rosalind (Ros) Dubs intends to retire from the
Board at the end of the upcoming Annual General Meeting,
and will therefore not be standing for re-election at that
time. We would like to take this opportunity to thank Ros for
her long standing and valuable service to Aristocrat and its
shareholders over the past nine years, particularly in her roles
as Chair of the Regulatory & Compliance, Human Resources &
Remuneration and Innovation & Development Committees.
The business also completed a successful CEO leadership
transition during the year, with Trevor Croker taking over
from Jamie Odell on 1 March 2017. Our focus on ensuring
appropriate continuity, in the interests of shareholders and
other key stakeholders, is evident in the business’ sustained
performance momentum and progress in executing our
growth strategy delivered during the year.
In short, fiscal year 2017 has been another highly successful
and rewarding year for Aristocrat, as we have taken another
significant step forward in our mission to ‘deliver the world’s
greatest gaming experience, every day’.
Thank you for your interest and support.
Ian Blackburne
Chairman
Trevor Croker
Chief Executive Officer
2
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
For the 12 months ended 30 September 2017
Dividends
The Directors present their report together with the financial
statements of the Company and its subsidiaries (the Group)
for the 12 months ended 30 September 2017 (the financial
year). The information in this report is current as at 30
November 2017 unless otherwise specified.
Since the end of the financial year, the Directors have
recommended the payment of a final dividend of 20.0 cents
(2016: 15.0 cents) per fully paid ordinary share. Details of the
dividends paid and declared during the financial year are set
out in Note 1-6 to the financial statements.
This Directors’ Report has been prepared in accordance
with the requirements of Division 1 of part 2M.3 of the
Corporations Act 2001 (Cth) (the Act).
Review and results of operations
A review of the operations of the Group for the financial year
is set out in the Operating and Financial Review which forms
part of this Directors’ Report.
Financial results
The reported result of the Group attributable to shareholders
for the 12 months ended 30 September 2017 was a profit
of $495.1 million after tax (2016: profit of $350.5 million
after tax).
Further details regarding the financial results of the Group
are set out in the Operating and Financial Review and
financial statements.
Remuneration Report
Details of the remuneration policies in respect of the
Group’s Key Management Personnel are detailed in the
Remuneration Report which forms part of this Directors’
Report.
Sustainability
Further detail on sustainability can be found on the
Company’s website and forms part of this Directors’ Report
and integrates a wider range of non-financial management
issues as the Group moves to improve its sustainable
reporting standards.
3
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
Directors’ particulars, experience and special responsibilities
Current Directors
The Directors of the Company throughout the financial year and up to the date of this report are:
TJ Croker
Appointed 1 March 2017.
Director
ID Blackburne
BSc (Hons), MBA, PhD
Advanced Management
Program (Wharton
School, University of
Pennsylvania)
DCP Banks
BBus (Mgt)
K Conlon
BEc, MBA
CURRENT DIRECTORS
Experience and other directorships
Special responsibilities
Nominated December 2009. Appointed September 2010.
Non-Executive Chairman
— Former Chairman, Recall Holdings Limited, CSR Limited and
Australian Nuclear Science and Technology Organisation
— Former Director, Teekay Corporation (listed on the NYSE),
Suncorp-Metway Limited and Symbion Health Limited
— Former Managing Director, Caltex Australia Limited
Member of each Board
Committee
Managing Director and
Chief Executive Officer
(from 1 March 2017)
— Former Executive Vice President, Global Product & Insights –
Aristocrat Leisure Limited
— Former Managing Director, ANZ – Aristocrat Leisure Limited
— Sales Director – Fosters Australia Ltd
Member, Strategic Risk
Committee
Nominated October 2010. Appointed July 2011.
Chair, Audit Committee
— Former Group Chief Operating Officer of Galaxy
Entertainment Group (Macau)
— Former Chief Executive (Casinos Division) of Tabcorp
Holdings Limited
— Former Chief Executive Officer, Star City Holdings Limited
— Former President, Australasian Casinos Association
— Former Director, Australian Gaming Council
Nominated January 2014. Appointed February 2014.
— Director of REA Group Limited and Lynas Corporation
Limited
— Member of Chief Executive Women, Chair of Audit
Committee for the Commonwealth Department of Health
and Director of the Benevolent Society
— Former President of the NSW Council, former Director of
CSR Limited and former National Board Member of the
Australian Institute of Company Directors
— Former Partner and Director, Boston Consulting Group
(BCG)
Member, Regulatory and
Compliance Committee
Chair, Human Resources and
Remuneration Committee
Member, Regulatory and
Compliance Committee
(to 10 May 2017)
Member, Strategic Risk
Committee
4
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
Director
RV Dubs
BSc (Hons), Dr ès Sc,
FTSE, FAICD
SW Morro
BA, Business
Administration
CURRENT DIRECTORS
Experience and other directorships
Nominated December 2008. Appointed June 2009.
— Director, ASC Pty Ltd, ANU Enterprise Pty Ltd, and
Astronomy Australia Ltd
— Former Chair, Space Industry Innovation Council
— Former Deputy Vice-Chancellor (External Relations),
University of Technology Sydney
— Former VP Operations, Thales ATM SA (France)
— Former Director, Structural Monitoring Systems Plc, Thales
ATM Pty Limited, Thales ATM Inc (USA) and Thales ATM
Navigation GmbH (Germany)
— Former Chairman, Thales ATM spA (Italy)
Special responsibilities
Chair, Regulatory and
Compliance Committee
Member, Audit Committee
(to 1 March 2017)
Member, Human Resources
and Remuneration Committee
(from 1 March 2017)
Nominated December 2009. Appointed December 2010.
Lead US Director
— Former Chief Operating Officer and President, IGT Gaming
Division
Member, Regulatory and
Compliance Committee
Member, Human Resources
and Remuneration Committee
Member, Regulatory and
Compliance Committee
(from 24 February 2017)
Member, Strategic Risk
Committee
Chair, Strategic Risk
Committee
Member, Audit Committee
(from 24 February 2017)
PJ Ramsey
Nominated September 2016. Appointed October 2016.
BA, Economics,
MBA
— Former Chief Digital Officer, Aristocrat Leisure Limited
— Former Director & CEO, Multimedia Games
— Various senior roles at Caesars Entertainment (formerly Harrah’s)
S Summers Couder
Nominated August 2016. Appointed September 2016.
— Director, Semtech Corporation.
— Former Director, Alcatel-Lucent SA and Headwaters Inc.
— Former Chief Executive Officer of Trident Microsystems Inc.
Dip Electrical
Engineering, Masters in
Electrical Engineering
and Computer Sciences
Cycle de
Perfectionnement
Option (Equivalent MBA)
AM Tansey
Nominated March 2016. Appointed July 2016.
Member, Audit Committee
BBA, MBA, Juris Doctor
— Director, Adelaide Brighton Ltd, Primary Health Care
Ltd, Lend Lease Investment Management Limited and
Infrastructure New South Wales
— Member of Chief Executive Women and Fellow of the
Australian Institute of Company Directors
Member, Strategic Risk
Committee
5
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
Director
JR Odell
MBA
RA Davis
BEc (Hons),
M Philosophy
FORMER DIRECTORS
Experience and other directorships
Special responsibilities
Appointed May 2009; Ceased employment on 28 February 2017.
— Former Board Member, American Gaming Association
— Former Managing Director, Australia, Asia and Pacific,
Foster’s Group Limited
— Former Executive, Allied Domecq in the UK and Asia Pacific
— Former Managing Director, Lyons Tetley Australia
Former Managing Director and
Chief Executive Officer
Appointed June 2005; Retired 27 February 2017.
Member, Audit Committee
Member, Human Resources
and Remuneration Committee
— Consulting Director Investment Banking, Rothschild
Australia Limited
— Chairman, Bank of Queensland Limited
— Director, Argo Investments Limited, AIG Australia Limited,
Ardent Leisure Management Limited and Ardent Leisure
Limited
— Former Chairman, Centric Wealth Advisors Limited and
Charter Hall Office REIT
— Former Director, Territory Insurance Office and Trust
Company Limited.
— Former Senior Executive, Citicorp and CitiGroup Inc in the
United States and Japan
— Former Group Managing Director, ANZ Banking Group
Limited
6
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
Directors’ attendance at Board and committee meetings during the financial year
The attendance of members of the Board at Board meetings and attendance of members of committees at committee
meetings of which they are voting members is set out below.
(Meetings attended/held)
Director
Board
Audit Committee
Human Resources
and Remuneration
Committee
Regulatory and
Compliance
Committee
Strategic Risk
Committee
Current Directors
ID Blackburne
TJ Croker
DCP Banks
KM Conlon
RV Dubs
SW Morro
P Ramsey***
15/15
7/7
15/15
15/15
15/15
14/15
14/14
S Summers Couder
14/15
A Tansey
15/15
JR Odell*
RA Davis**
8/8
8/8
4/4
-
4/4
-
2/2
-
-
1/2
4/4
-
2/2
4/4
-
-
4/4
2/2
4/4
-
-
-
Former Directors
-
2/2
4/4
-
4/4
2/2
4/4
4/4
2/2
-
-
-
-
2/2
2/2
-
2/2
-
-
2/2
2/2
2/2
-
-
* Mr Odell ceased employment with Aristocrat Leisure Limited on 28 February
2017.
** Mr Davis retired from the Board on 27 February 2017.
*** Mr Ramsey was nominated by the Board on 13 September 2016 as a Non-
Executive Director, subject to receipt of all relevant regulatory pre-approvals.
Pending regulatory approval, Mr Ramsey was a Director (Elect). Necessary
regulatory pre-approvals were received and Mr Ramsey’s appointment as a
Non-Executive Director was confirmed by the Board on 28 October 2016.
Company Secretaries
The Company Secretaries are directly accountable to the
Board, through the Chairman, for all governance matters that
relate to the Board’s proper functioning.
As at the date of this report, the Group had the following
Company Secretaries:
Antonia Korsanos Bachelor of Economics (Major in
Accounting & Finance) and Chartered Accountant
Mrs A Korsanos was appointed as Company Secretary
in March 2011 and is also the Chief Financial Officer of
the Group. Mrs Korsanos is a member of the Institute of
Chartered Accountants in Australia (ACA).
Richard Bell LLB, BComm (Law)
Richard Bell joined Aristocrat in April 2015 and was
appointed as Company Secretary in May 2017. Before joining
Aristocrat, Mr Bell specialised in Mergers & Acquisitions at
Australian law firm Allens Linklaters (previously Allens Arthur
Robinson).
Principal activities
The principal activities of the Group during the financial year
were the design, development and distribution of gaming
content, platforms and systems. The Group also operates
within the online social gaming and real money wager
markets. The Company’s objective is to be the leading global
provider of gaming solutions. There were no significant
changes in the nature of those activities during the financial
year.
7
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
Significant changes in the state of affairs
Indemnities and insurance premiums
Except as outlined below and elsewhere in this Directors’
Report, there were no significant changes in the state of
affairs of the Group during the financial year.
Events after balance date
On 20 October 2017, the Group completed the acquisition
of 100% of Plarium Global Limited, for a total consideration
of an upfront amount of US$500m cash, subject to
adjustments and an earn-out arrangement payable to
Plarium shareholders following the end of calendar years
2017 and 2018 respectively. A debt draw down of US$425m
was made to finance the transaction.
On 30 November 2017, the Group signed an agreement
to acquire 100% of Big Fish Games, Inc. from Churchill
Downs Inc. for a purchase price of US$990m, subject to
customary completion adjustments. The acquisition is
subject to receiving regulatory approval, and will be funded
by an incremental Term Loan B debt facility as well as cash
holdings. The entity to be acquired operates as a publisher
of social casino, casual free-to-play and premium paid
games.
Other than the matters above, there has not arisen in the
interval between the end of the financial year and the date
of this report any item, transaction or event of a material
and unusual nature likely, in the opinion of the Directors, to
affect significantly the operations of the Group, the results of
those operations, or the state of affairs of the Group, in future
financial reporting periods.
Likely developments and expected results
Likely developments in the operations of the Group in future
financial years and the expected results of operations are
referred to in the Operating and Financial Review which
forms part of this Directors’ Report.
Options over share capital
No options over Company shares were granted to
executives or Directors during the financial year. There were
no unissued shares or interests in the Company subject to
options at the date of this Directors’ Report and no Company
shares or interests issued pursuant to exercised options
during or since the end of the financial year.
The Company’s Constitution provides that the Company will
indemnify each officer of the Company against any liability
incurred by that officer in or arising out of the conduct of the
business of the Company or in or arising out of the discharge
of that officer’s duties to the extent permitted by law.
An officer for the purpose of this provision includes any
Director or Secretary of the Company or the Company’s
subsidiaries, executive officers or employees of the
Company or its subsidiaries and any person appointed
as a trustee by, or acting as a trustee at the request of, the
Company, and includes former Directors.
In accordance with the Company’s Constitution, the
Company has entered into deeds of access, indemnity and
insurance and deeds of indemnity for identity theft with each
Director and nominated officers of the Company. No amount
has been paid pursuant to those indemnities during the
financial year to the date of this Directors’ Report.
The Company has paid a premium in respect of a contract
insuring officers of the Company and its related bodies
corporate against any liability incurred by them arising out
of the conduct of the business of the Company or in or
arising out of the discharge of their duties. In accordance
with normal commercial practices, under the terms of the
insurance contracts, the details of the nature and extent of
the liabilities insured against and the amount of premiums
paid are confidential.
Environmental regulation
The Group’s operations have a limited impact on the
environment. The Group is subject to a number of
environmental regulations in respect of its integration
activities. The Company does not manufacture gaming
machines, it only integrates (assembles) machines and
systems in Australia, the USA, Macau, the UK and New
Zealand. The Company uses limited amounts of chemicals
in its assembly process. The Directors are not aware of
any breaches of any environmental legislation or of any
significant environmental incidents during the financial year.
8
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ REPORT
Based on current emission levels, the Company is not
required to register and report under the National
Greenhouse and Energy Reporting Act 2007 (Cth) (NGER
Act). However, the Company continues to receive reports
and monitors its position to ensure compliance with the
NGER Act.
The Company is committed to not only complying with
the various environmental laws to which its operations
are subject, but also to achieving a high standard of
environmental performance across all its operations. The
Company is aware of, and continues to plan for, any new
Australian regulatory requirements on climate change. It is
the Company’s view that climate change does not pose any
significant risks to its operations in the short to medium term.
Throughout the Group, new programs and initiatives have
been introduced to ensure the Company is well prepared for
new regulatory regimes and to reduce its carbon footprint.
Proceedings on behalf of the Company
No proceedings have been brought on behalf of the
Company under section 236 of the Act nor has any
application been made in respect of the Company under
section 237 of the Act.
Auditor
PricewaterhouseCoopers continues in office in accordance
with section 327 of the Act.
Non-audit services provided by the auditor
The Company, with the prior approval of the Chair
of the Audit Committee, may decide to employ
PricewaterhouseCoopers, the Company’s auditor, on
assignments additional to its statutory audit duties where the
auditor’s expertise and experience with the Company and/
or the Group are important. The Company has a Charter of
audit independence which specifies those non-audit services
which cannot be performed by the Company auditor. The
Charter also sets out the procedures which are required
to be followed prior to the engagement of the Company’s
auditor for any non-audit related service.
The Board of Directors has considered the position and,
in accordance with the advice received from the Audit
Committee, is satisfied that the provision of the non-audit
services as set out in Note 6-3 to the financial statements is
compatible with the general standard of independence for
auditors imposed by the Act for the following reasons:
— All non-audit services have been reviewed by the Audit
Committee to ensure they do not impact the impartiality
and objectivity of the auditor.
— None of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, including
reviewing or auditing the auditor’s own work, acting in
a management or a decision-making capacity for the
Company, acting as advocate for the Company or jointly
sharing economic risk and rewards.
A copy of the auditor’s independence declaration is attached
to this Directors’ Report.
Loans to Directors and executives
No Director or executive held any loans with the Company
during the financial year.
Rounding of amounts to nearest thousand dollars
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191 as issued by the Australian Securities and
Investments Commission. Amounts in the Director’s Report
and the financial statements have been rounded off to the
nearest whole number of million dollars and one decimal
place representing hundreds of thousands of dollars, or in
certain cases, the nearest dollar in accordance with that
class order.
This report is made in accordance with a resolution of the
Directors and is signed for and on behalf of the Directors.
Details of the amounts paid or payable to the Company’s
auditor, for audit and non-audit services provided during
the financial year, are set out in Note 6-3 to the financial
statements.
Dr ID Blackburne
Chairman
30 November 2017
9
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
ARISTOCRAT AT A GLANCE
REVENUE
LICENSED JURISDICTIONS
$2.45 BILLION
291
Revenue by Segment
Digital
ANZ
15.6%
17.6%
International
Class III
8.7%
Revenue by Strategic Segment
Class III
Outright Sales
& Other
47.7%
Gaming
Operations
36.7%
58.1%
Americas
COUNTRIES
100
US
15.6%
Digital
EMPLOYEES
3,640+
UK
EU
IN
MACAU
LATAM
SING
AU
SA
10
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
BUSINESS STRATEGY
Aristocrat made progress
in unlocking organic growth
opportunities in adjacent markets and
segments in addition to investing in
the high growth social games market
through the acquisition of Plarium.
BUSINESS STRATEGIES AND PROSPECTS
FOR FUTURE FINANCIAL YEARS
Aristocrat’s consistent focus has been on delivering high
quality, sustainable growth, by protecting and expanding our
core business, capturing opportunities in adjacent and new
markets and segments, and investing in outstanding talent
and a high performance culture.
The acquisition of Plarium Global Ltd (‘Plarium’), announced
during the period, is an example of Aristocrat’s willingness
to invest in new markets, consistent with our strategy and
rigorous approach to M&A. Plarium significantly increases
Aristocrat’s presence in the high-growth social games
market. It has also immediately expanded our addressable
digital opportunity by around eight times – to approximately
US$22 billion of value – encompassing the Strategy, Role
Playing Game (‘RPG’) and Casual games segments in which
Plarium competes.
This acquisition will substantially lift the Digital segment’s
pro forma earnings contribution to the Group. It will also
further expand Aristocrat’s recurring revenue base, thereby
enhancing the Group’s ability to drive sustainable returns
over time.
Over the course of FY2017, Aristocrat also made further
progress in unlocking organic growth opportunities in
adjacent markets and segments.
In the Digital business, a new application – Cashman
CasinoTM – was successfully launched and scaled, while a new
Asian-themed app FaFaFa GoldTM will be launched in the
coming period.
In addition, the RELMTM Class III stepper product was
introduced, with significant progress made during the
reporting period in building out a broad and deep game
portfolio to support the product in market.
The Class II OvationTM video product was another successful
launch into an adjacent segment executed during the year.
Early performance is exceeding expectations and driving
strong customer interest and momentum.
Progress was also made in developing a competitive VLT
(video lottery terminal) offer during the year, leveraging new
and existing Aristocrat content and offering a mix of games
to appeal to multiple player segments.
Aristocrat’s strong balance sheet and growing recurring
revenues give us broad optionality to continue to consider
both organic and inorganic opportunities to sustain our
growth momentum and create value for shareholders.
11
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
EARNINGS SUMMARY
Key performance indicators for the current period and prior period are set out below.
A$ million
Reported Results
Operating revenue
EBITDA
EBITA
NPAT
NPATA
Earnings per share (fully diluted)
EPS before amortisation of acquired intangibles (fully diluted)
Total dividend per share
Balance sheet and cash flow
Net working capital/revenue
Operating cash flow
Operating cash flow conversion
Closing (net debt)/cash
Gearing (net debt/consolidated EBITDA2)
Constant
currency1
2017
2017
2016
Variance vs 2016
Constant
currency1
%
Reported
%
2,513.7
2,453.8
2,128.7
1,030.1
1,001.2
806.0
673.4
350.5
398.2
54.9c
62.4c
25.0c
18.1
27.8
31.1
45.3
40.4
45.2
40.2
36.0
15.3
24.2
27.4
41.3
36.5
41.2
36.2
36.0
858.1
495.1
543.4
77.5c
85.0c
34.0c
7.1%
799.1
883.0
509.3
559.1
79.7c
87.5c
34.0c
6.9%
822.2
147.1%
(671.5)
n/a
5.7%
(1.2)pts
(1.4)pts
680.5
20.8
17.4
147.1%
170.9% (23.8)pts
(23.8)pts
(652.3)
(1,004.6)
0.6
1.2
33.2
n/a
35.1
50.0
1. Results for 12 months to 30 September 2017 adjusted for translational exchange rates using rates applying in 2016 as referenced in the table on page 20.
2. Consolidated EBITDA as defined by the Credit Agreement.
The information presented in this Operating and Financial Review has not been audited in accordance with the Australian Auditing Standards.
12
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
PERFORMANCE SUMMARY
Profit after tax and before amortisation of acquired intangibles (‘NPATA’) of $543 million for the period represented a 36%
increase (40% in constant currency) compared to $398 million in the prior corresponding period. There are no significant
items or discontinued operations reported this period. Revenue increased by more than 15% (18% in constant currency)
driven by growth across all key segments in broadly flat markets. Normalised fully diluted earnings per share before
amortisation of acquired intangibles of 85.0c represents a 36.2% increase on the prior corresponding period.
Operating cash flow increased by more than 17% and net gearing reduced to 0.6x from 1.2x compared to the prior
corresponding period reflecting the strong performance across the business as well as the continued focus on cash
management.
NPATA movement FY2016 to FY2017 (A$ million)
31.7
14.8
23.9
16.2
(23.9)
(8.3)
(18.3)
109.1
+36%
NPATA Growth
543.4
398.2
NPATA
FY 2016
Americas
ANZ
Digital
International
Class III
Corporate
Costs/Interest
Group D&D
Expense
Income Tax
Rate Movement
Foreign
Exchange
NPATA
FY 2017
— Strong growth in the Americas business drove a $109
million improvement in post-tax profit compared to the
prior period. This growth was driven by an 18% expansion
in the Class III premium gaming operations footprint,
together with further growth in the Class II gaming
operations footprint and average fee per day (‘FPD’).
A 9% lift in Class III Outright Sales and an improved
average selling price (ASP) further supported this result.
— The ANZ business delivered almost $15 million in
incremental profit, driven by the top performing HelixTM
cabinet, penetration of the Lightning LinkTM and Player’s
ChoiceTM family of games, the recent introduction of
Dragon LinkTM and continued performance of the broader
Aristocrat game portfolio.
— Digital delivered strong earnings growth of $31.7m due
to the continued success of Heart of VegasTM and the
success of Cashman CasinoTM which was launched
in the year.
— International Class III drove a $23.9 million improvement
in post-tax profit compared to the prior period mainly
driven by large scale openings in the region. The
completion of the 1.1 regulatory churn cycle in Macau in
FY2016 was more than offset by the growth across the
region.
— The Group’s strategic investments in talent and
technology, represented in higher D&D spend, are
delivering strong competitive product across all key
markets and segments in line with its strategic objectives.
— Foreign exchange impacted the business performance
by $18.3 million which was partially offset by a decrease
in interest.
13
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
GROUP PROFIT OR LOSS
Results in the current period and prior corresponding period are at reported currency and there were no significant items or
discontinued operations. Segment profit is stated before amortisation of acquired intangibles.
A$ million
Segment revenue
Australia and New Zealand
Americas
International Class III
Digital
Total segment revenue
Segment profit
Australia and New Zealand
Americas
International Class III
Digital
Total segment profit
Unallocated expenses
Group D&D expense
Foreign exchange
Corporate
Total unallocated expenses
EBIT before amortisation of acquired intangibles (EBITA)
Amortisation of acquired intangibles
EBIT
Interest
Profit before tax
Income tax
Profit after tax
Amortisation of acquired intangibles after tax
Profit after tax and before amortisation of acquired intangibles (NPATA)
2017
2016
Variance
%
431.6
1,424.5
214.7
383.0
412.7
1,255.2
181.1
279.7
2,453.8
2,128.7
190.5
736.4
112.5
158.9
1,198.3
(268.4)
(4.9)
(66.9)
(340.2)
858.1
(76.9)
781.2
(53.1)
728.1
169.1
600.3
80.5
118.1
968.0
(239.2)
(1.0)
(54.4)
(294.6)
673.4
(76.3)
597.1
(89.9)
507.2
(233.0)
(156.7)
495.1
48.3
543.4
350.5
47.7
398.2
4.6
13.5
18.6
36.9
15.3
12.7
22.7
39.8
34.5
23.8
(12.2)
(390.0)
(23.0)
(15.5)
27.4
(0.8)
30.8
40.9
43.6
(48.7)
41.3
1.3
36.5
14
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
REVENUE
Segment revenue increased $325 million or 15% in reported
currency (18% in constant currency) with growth across all
three of our strategic segments: Gaming Operations; Digital
and Class III Outright Sales & Other.
In Gaming Operations, the Premium Class III install base
grew 18%, the Class II footprint grew almost 5% and overall
average fee per day grew 5%. The OvationTM (Class II Video)
product was launched in the period.
Digital revenue grew 41% to A$395 million in constant
currency terms due to an increase in average revenue
per daily active user (‘ARPDAU’) driven by strong content
releases and growth in daily active users (‘DAU’) as a result of
the launch and scaling of Cashman CasinoTM in the period.
In Class III Outright Sales, the overall North American ship
share was maintained in line with the growth in market size.
Unit sales revenue was up 14%, driven by the sales volume
increase and an improvement in ASP due to favourable
product mix supported by the performance from ArcTM
Single.
In Australia & New Zealand Class III, revenue increased by
4.6% to $432 million in constant currency terms compared to
the prior corresponding period, while overall profit increased
by 12.7% reflecting the continued strength in market share.
In International Class III, revenue was up by 21.5% to $220
million in constant currency terms, driven by large scale
openings in the region.
Revenue by Strategic Segment
2017
36.7%
47.7%
$2.45b
15.6%
2016
50.2%
$2.13b
36.7%
13.1%
Gaming
Operations
Digital
Class III Outright
Sales & Other
15
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
EARNINGS
Segment profit increased $230 million in reported currency,
up 24% compared with the prior corresponding period (27%
in constant currency) ahead of revenue delivery primarily
due to the growth in install base and improved margins
across all businesses from a combination of higher average
selling prices and operating leverage.
Net interest expense decreased $36.8 million to $53.1
million, reflecting the repricing of the Term Loan B facility and
the reduced debt levels.
The effective tax rate (‘ETR’) for the reporting period was 32%
compared to 30.9% in the prior corresponding period due
to the geographical mix of earnings.
Other Key Margins % of Revenue and ETR
60%
50%
40%
30%
20%
10%
0%
8
.
8
4
5
.
5
4
2
.
2
4
1
.
2
1
2
.
1
1
9
.
0
1
5
.
1
3
9
.
0
3
0
.
2
3
0
.
5
3
6
.
1
3
2
.
7
2
1
.
2
2
7
.
8
1
9
.
4
1
Group D&D
expense/
revenue
Segment
Profit/
revenue
EBITA/
revenue
NPATA/
revenue
Effective
Tax Rate
2015
2016
2017
Segment Profit Margin % of Revenue
60%
50%
40%
30%
20%
7
.
1
5
8
.
7
4
0
.
6
4
4
.
2
5
5
.
4
4
8
.
6
3
1
.
4
4
1
.
0
4
2
.
6
3
2
.
2
4
5
.
1
4
0
.
4
3
Australia and
New Zealand
Americas
International
Class III
Digital
2015
2016
2017
The Group continues to invest significantly in better games
through new talent and new technology, with ongoing
efficiencies reinvested in core product development and
capability targeting strategic growth opportunities. The
Group’s investment in D&D spend, as a percentage of
revenue, was 10.9% compared to 11.2% of revenues in the
prior corresponding period. Total reported spend increased
$29.2 million or 12% (14% in constant currency).
Corporate costs increased by $12.5 million compared to the
prior corresponding period mainly driven by higher variable
employee compensation, higher legal costs and one-off
consulting costs. Corporate costs as a percentage of revenue
remained broadly in line with the prior corresponding period.
16
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
BALANCE SHEET
The balance sheet can be summarised as follows:
A$ million
30 Sep 2017
31 Mar 2017
30 Sep 2016
Cash and cash equivalents
Property, plant and equipment
Intangible assets
Other assets
Total assets
Current borrowings
Non-current borrowings
Payables, provisions and other liabilities
Total equity
Total liabilities and equity
Net working capital
Net working capital % revenue
Normalised net working capital % revenue
Net debt / (cash)
547.1
241.3
1,687.7
816.8
3,292.9
0.1
1,199.3
747.9
1,345.6
3,292.9
174.2
7.1
7.5
652.3
394.5
239.2
1,738.7
760.1
3,132.5
0.1
1,227.5
661.1
1,243.8
3,132.5
148.7
6.3
7.9
283.2
217.5
1,736.5
750.5
2,987.7
-
1,287.8
624.4
1,075.5
2,987.7
122.3
5.7
7.3
Variance
%
93.2
10.9
(2.8)
8.8
10.2
n/a
(6.9)
19.8
25.1
10.2
42.4
24.6
2.7
833.1
1,004.6
(35.1)
Significant balance sheet movements from 30 September
2016 are:
Net working capital: Normalised for deferred consideration
on the VGT acquisition, net working capital as a percentage
of annual revenue remained in line with the prior period at
7.5% reflecting the continued focus on cash management.
Intangible assets: The decrease relates primarily to the
impact of foreign exchange on the US dollar denominated
assets combined with amortisation of the acquired
intangibles of the VGT business – predominantly customer
relationships and technology.
Non-current borrowings: The reduction in non-current
borrowings primarily relates to the repayment of US$50
million of the Term Loan B facility during the reporting
period and the impact of foreign exchange on the US dollar
denominated loan facility.
Total equity: The change in total equity reflects the result for
the period, changes in reserves due to currency movements,
net of dividends paid during the period.
17
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
STATEMENT OF CASH FLOWS
The movement in net debt (debt less cash), after eliminating foreign exchange movements is set out below:
Operating cash flow
A$ million
EBITDA
Change in net working capital
Interest and tax
Other cash and non-cash movements
Operating cash flow
Operating cash flow less capex
Operating cash flow % NPATA
Operating cash flow % EBITDA
Consolidated cash flow
A$ million
Operating cash flow
Capex
Acquisitions and divestments
Investing cash flow
Repayment of borrowings
Payments for loans advanced
Dividends and share payments
Financing cash flow
Net increase/(decrease) in cash
2017
1,001.2
(51.9)
(171.0)
20.8
799.1
585.6
147.1
79.8
2017
799.1
(213.5)
(23.0)
(236.5)
(65.5)
-
(231.1)
(296.6)
266.0
2016
806.0
20.4
(152.3)
6.4
680.5
487.9
170.9
84.4
2016
680.5
(192.6)
(16.7)
(209.3)
(359.1)
(13.5)
(133.8)
(506.4)
(35.2)
Variance
%
24.2
n/a
(12.3)
225.0
17.4
20.0
(13.9)
(5.5)
Variance
%
17.4
(10.9)
(37.7)
(13.0)
81.8
100.0
(72.7)
41.4
n/a
Operating cash flow increased 17% compared to the prior
corresponding period.
The increase in operating cash flows is due to the strong
performance across the business with higher mix of recurring
revenues as well as continued focus on cash management.
Net interest paid at $44.0 million was $23.7 million lower than
the prior corresponding period due to favourable repricing
of the Term Loan B facility and the reduced debt levels with
US$50 million repaid during the year.
Taxes paid in the year increased from $84.6 million to $127
million driven by the growth in the Americas and Digital
businesses and the prior year benefit from tax losses which
were fully utilised during FY2016.
Capital expenditure relates primarily to investment in hardware
to support the Americas gaming operations install base.
Cash flow in the statutory format is set out in the financial
statements.
18
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
FUNDING AND LIQUIDITY
The Group had committed loan facilities of A$1.3 billion as
at 30 September 2017, comprising a US$950 million Term
Loan B facility maturing in October 2021 and a A$100 million
revolving facility maturing in October 2019. The Group
repaid US$50 million of the Term Loan B facility during the
period, reflecting the Group’s strong cash balance and
liquidity position providing it with flexibility to repay debt.
The Group’s facilities are summarised as follows:
The Group’s leverage ratio (net debt / EBITDA) continued
to decline in the reporting period, falling from 1.2x as at
30 September 2016 to 0.6x as at 30 September 2017. The
reduction in gearing over the reporting period reflects
debt paydown, earnings growth and strong free cash flow
generation across the Group.
The company completed the acquisition of Plarium
Global Limited on 19 October 2017. Aristocrat funded the
acquisition via existing cash and an incremental US$425
million 7 year Term Loan B debt facility which matures in
October 2024.
Drawn as at
30 Sep 2017
Limit Maturity date
Pro forma debt coverage ratios are set out below:
Facility
Term Loan
B facility
Revolving
facility
Overdraft
facilities
US$950.0m US$950.0m
Oct 2021
A$0.0m A$100.0m
Oct 2019
A$0.0m
A$7.6m Annual Review
The Group’s interest and debt coverage ratios are as
follows (x):
20x
15x
19.1
14.7
10x
10.7
5x
0x
0.6x
Net Debt ratio
1.6
1.3 1.2
1.2 0.9 0.6
EBITDA*/interest
expense** (x)
Debt/EBITDA* (x) Net debt (cash)/
EBITDA* (x)
30 Sep 2016
31 Mar 2017
30 Sep 2017
* EBITDA refers to Consolidated EBITDA for the Group as defined in
Aristocrat’s Syndicated Facility Agreement (also referred to as Bank EBITDA)
** Interest expense shown above includes ongoing finance fees relating to
bank debt facility arrangements, such as line fees.
Proforma Ratio
Debt / EBITDA* (x)
Net debt (cash) / EBITDA* (x)
FY2017
1.6x
1.2x
CREDIT RATINGS
The Group obtained credit ratings from both Moody’s
Investor Services and Standard & Poor's in order to support
the launch of the US$1.3 billion Term Loan B facility in 2014.
As at 30 September 2017, Aristocrat holds credit ratings of
BB+ from Standard & Poor’s and Ba1 from Moody’s. Moody’s
upgraded Aristocrat’s credit rating by one notch from Ba2 in
December 2016 and Standard & Poor's upgraded from BB
in May 2017.
Aristocrat continues to target financial metrics in line with an
investment grade level.
DIVIDENDS
The Directors have authorised a final dividend in respect of
the full year to 30 September 2017 of 20.0 cents per share
($127.7 million). Total dividends in respect of the 2017
year amount to 34.0 cents per share ($217.3 million) and
represent an increase of 36% (or 9.0 cents), reflective of
growth in performance, strength of cash flows and continued
improvement in gearing.
The dividend is expected to be declared and paid on 20
December 2017 to shareholders on the register at 5.00pm
on 6 December 2017. The dividend will be fully franked.
19
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
GROUP PERFORMANCE
FOREIGN EXCHANGE
Given the extent of the Group’s global operations and
the percentage of its earnings derived from overseas, its
reported results are impacted by movements in foreign
exchange rates.
In the 12 months to 30 September 2017, the Australian
dollar was, on average, stronger against the US dollar when
compared to the prior corresponding period. The impact of
translating foreign currency (translational impact) decreased
revenue by $59.9 million while decreasing normalised profit
after tax and before amortisation of acquired intangibles
by $15.7 million on a weighted average basis when
compared with rates prevailing in the respective months in
the prior period. In addition, as at 30 September 2017, the
cumulative effect of the retranslation of the net assets of
foreign controlled entities (recognised through the foreign
currency translation reserve) was a debit balance of $38.0
million (compared to a debit balance of $11.1 million as at
30 September 2016).
Based on the Group’s mix of profitability, the major exposure
to translational foreign exchange results from the Group’s
US dollar profits. A US dollar 1 cent change in the US$:A$
exchange rate results in an estimated $6 million translational
impact on the Group’s annual profit after tax and before
amortisation of acquired intangibles. This impact will vary as
the magnitude and mix of overseas profits change.
Foreign exchange rates compared with prior corresponding
periods for key currencies are as follows:
A$:
USD
NZD
EUR
GBP
ZAR
ARS
30 Sep 2017
31 Mar 2017
30 Sep 2016
0.7842
1.0860
0.6639
0.5850
10.6324
13.5804
0.7647
1.0902
0.7160
0.6102
10.2421
11.7668
0.7663
1.0517
0.6817
0.5903
10.5100
11.7692
2017
Average¹
0.7624
1.0649
0.6870
0.5983
10.2028
12.3371
2016
Average¹
0.7383
1.0706
0.6675
0.5251
10.8931
10.1781
1. Average of monthly exchange rates only. No weighting applied.
20
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
Segment profit represents earnings before interest and tax,
and before significant items, charges for D&D expenditure,
amortisation of acquired intangibles and corporate costs.
The total amount of these items is disclosed in the Group’s
statement of comprehensive income. There are no significant
items or discontinued operations in the current period.
Constant currency amounts refer to 2017 results restated
using exchange rates applying in 2016.
AMERICAS
Summary Profit or Loss
US$ million
Revenue
North America
Latin America
1,033.7
51.0
Total Revenue
1,084.7
Profit
North America
Latin America
Total Profit
Margin
546.6
13.7
560.3
51.7%
2017
2016
Variance
%
890.1
38.0
928.1
434.0
9.9
443.9
47.8%
16.1
34.2
16.9
25.9
38.4
26.2
3.9 pts
In local currency, Americas profits increased by 26%, or
US$116 million to US$560 million representing 3.9 pts of
margin expansion. This was driven by strong performance in
both the premium and Class II gaming operations segments
and growth in outright sales with improved unit mix.
North America Gaming Operations Units
40,000
30,000
30,489
20,681
s
t
i
n
U
20,000
$42.70
10,000
9,808
38,598
38,598
22,437
35,102
21,427
$48.19
$50.70
16,161
13,675
0
2015
2016
2017
80.0
60.0
40.0
20.0
0.0
U
S
$
p
e
r
d
a
y
Class III
premium units
Class II units
Gaming operations
US$/day
Aristocrat’s Class III premium gaming operations install
base grew 18%, fuelled by continued penetration of the
high-performing products Lightning LinkTM Buffalo GrandTM,
Walking Dead 3TM, and Game of ThronesTM as well as the
successful launch of innovative products such as Fast CashTM
and 5 Dragons GrandTM.
The Class III premium gaming operations install base will
continue to be supported by a strong product portfolio
across a diverse range of product segments with Dragon
LinkTM on the ArcTM Single cabinet and the introduction of two
new hardware innovations as shown at G2E: the RELM XLTM
Aristocrat’s stepper cabinet, launching with Buffalo InfernoTM
and Buffalo Thundering 7sTM; and the Flame55TM portrait
cabinet launching with Mariah CareyTM, and the second
Aristocrat title made in partnership with HBO’s #1 TV show,
Game of ThronesTM.
21
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
In Class II Gaming Operations placements increased by 4.7%
driven by the opening of new sites, additions at existing
locations and the successful launch of the Class II video
product OvationTM .
Average fee per day across Class II and Class III markets
increased 5%, driven by game performance across the
portfolio supported by new form factors.
North America Outright Sales units and
Average US$ Price / unit
14,000
12,000
10,000
s
t
i
n
U
8,000
6,000
4,000
2,000
0
28,000
24,000
5
7
5
,
2
1
$18,892
$18,892
20,000
3
0
5
,
1
1
$18,104
$18,104
16,000
12,000
8,000
7
8
4
,
2
6
0
5
,
2
$16,814
6
3
6
,
9
0
1
2
,
3
U
S
$
p
e
r
u
n
i
t
5,000
4,000
3,000
s
t
i
n
U
2,000
2015
2016
2017
4,000
1,000
Platforms - Video
Conversions
Average
US$ price/unit
Class III Outright Sales revenue increased by 14% compared
to the prior period primarily driven by the depth of strong
portfolio performance, the introduction of the HelixTM+ cabinet
and the continued performance of HelixTM and ArcTM Single.
HelixTM+ is an enhanced version of the HelixTM footprint,
featuring High Definition Dual 27” screens including a fully
integrated virtual button deck.
The Class III Outright Sales portfolio performed well
during the period across all categories with new content
and continued success from Aristocrat’s existing library.
The C-SeriesTM portfolio included new releases in Extra
Bonus WildsTM, a brand extension of Whales of CashTM and
a strong addition to the Wonder 4TM suite with Wonder 4
Tall FortunesTM. The E-SeriesTM performance and depth of
library continued to grow with strong titles such as Sacred
GuardiansTM and 8 PetalsTM, supported by the new top
performing Mighty CashTM – Long Teng Ju XiaoTM. J-SeriesTM
was also a key category across both HelixTM and ArcTM footprint
with the new Gold BonanzaTM, Pure GoldTM and the extension
of Gold StacksTM.
The RELMTM Stepper was introduced in the period with 18
titles, a reflection of the commitment to this market segment.
Key performing games include Golden TreeTM, Stars and
SevensTM, Triple 7 Wildfire DoubleTM and 3x7 2xLotusTM.
Latin America Outright Sales units, Average US$ Price / unit
and Recurring Revenue install base
16,000
$14,413
$13,597
$14,008
14,000
4
4
6
,
3
2
0
3
,
2
5
9
9
,
1
5
3
9
,
1
7
9
3
,
2
5
1
4
,
2
12,000
10,000
U
S
$
p
e
r
u
n
i
t
8,000
6,000
0
2015
2016
2017
Platforms
Recurring revenue
install base
Average US$
price/platform unit
Latin America revenue increased 34% compared to the
prior period, as a result of strong product performance in
both outright sales and recurring revenue, with continued
momentum of ArcTM Single and Lightning LinkTM in addition
to the introduction of the HelixTM+.
There was growth in the Latin America recurring revenue
footprint in the year with an increase of 52% in ending install
base.
22
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
AUSTRALIA AND NEW ZEALAND
Summary Profit or Loss
The ANZ business maintained its leading ship share through
ongoing expansion in the game portfolio, together with an
expanded HelixTM cabinet offering.
A$ million
Revenue
Profit
Margin
Constant currency
2017
431.7
190.6
44.2%
2016
412.7
169.1
Variance
%
4.6
12.7
41.0%
3.2 pts
Aristocrat continues to deliver strong performance across
a number of product segments including Multigame,
Standalone and Linked Progressives. Top performing new
game releases supported this momentum, including 5
Dragons EmpireTM, Lightning LinkTM , Lightning CashTM,
Player’s Choice Emerald EditionTM and most recently the
Dragon LinkTM & Dragon CashTM titles.
ANZ revenue increased by 4.6% to $431.7 million in constant
currency terms compared to the prior corresponding period,
while overall profit increased by 12.7% to $190.6 million.
These gains reflected sustained market-leading ship share,
4% platform growth and further margin expansion compared
to the prior corresponding period.
Average selling price decreased slightly from the prior
corresponding period to $20,348, while the ANZ profit
margin increased to 44.2% from 41.0%, reflecting the focus
on efficiency improvements throughout the business and the
expansion of commercial models.
ANZ Outright Sales units and Average A$ Price / unit
16,000
12,000
$20,564
$20,903
$20,348
s
t
i
n
U
8,000
7
3
5
,
0
1
4
8
7
,
3
1
7
7
3
,
4
1
26,000
22,000
18,000
A
$
p
e
r
u
n
i
t
4,000
0
3
0
7
,
2
2
8
6
,
4
14,000
4
1
2
,
4
2015
2016
2017
Platforms
Conversions
10,000
Average
A$ price/unit
The combination of a strong performing games portfolio and
differentiated cabinet offering continues to provide greater
choice and flexibility for customers. Aristocrat will continue to
invest in core game innovation and cutting edge technology
to deliver market leading player experiences.
INTERNATIONAL CLASS III
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Constant currency
2017
220.1
115.1
Variance
%
21.5
43.0
2016
181.1
80.5
52.3%
44.5%
7.8 pts
Class III Platforms
7,125
5,978
19.2
International Class III revenue and profit increased 21% and
43% respectively to $220 million and $115 million compared
to the prior corresponding period.
Asia Pacific performance was strong, mainly driven by large
scale openings in the region where market leading ship
share was achieved. Lightning LinkTM was launched in the
region during the period.
Europe experienced strong growth over the period primarily
due to a new casino opening in South Africa in addition
to growth in recurring revenue backed by the success of
Lightning LinkTM and Game of ThronesTM.
23
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
DIGITAL
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Constant currency
2017
395.0
163.9
41.5%
2016
279.7
118.1
Variance
%
41.2
38.8
42.2%
(0.7) pts
Digital revenues increased by 41% to A$395 million in
constant currency (A$383 million in reported currency) driven
by the ongoing success of Heart of VegasTM and the launch
and scaling of Cashman CasinoTM in the period.
Segment profit margin of 41.5% is slightly lower that the prior
corresponding period due to costs associated with the launch
of Cashman CasinoTM.
Daily active user (‘DAU’) numbers increased 36% primarily due
to the launch and scaling of Cashman CasinoTM, both on the
Android platform from December 2016 and the iOS platform
from June 2017.
Overall average revenue per daily active user (ARPDAU)
increased 26% to US 53c compared to the prior
corresponding period driven by increasingly sophisticated
product and marketing features, and strong content releases,
in particular Lightning LinkTM.
Daily Average Users (DAU) and Average US$ net revenue
per DAU (ARPDAU)
9
5
8
,
9
2
7
,
1
3
3
7
,
8
6
2
,
1
4
8
5
,
9
8
0
,
1
DAU
Year end
(#)
+36%
DAU Growth
3
5
.
0
8
3
.
0
2
4
.
0
ARPDAU
Full year
(US$)
2015
2016
2017
The shift toward mobile continued throughout 2017, with
users on mobile channels representing 85% of average DAU,
up from 65% in the prior corresponding period.
24
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
PRINCIPAL RISKS
Material risks to business strategies and prospects for future
financial years
risks in order to avoid adverse impacts on its financial
standing, some risks are outside the control of the Group.
Identifying and managing risks which may affect the success
of our strategy and financial prospects for future years is
an essential part of our governance framework. While the
Group has a strong track record of managing a multitude
of risks, some inherent risks remain, many of which are not
directly within the control of the Group.
Our risk management approach involves the ongoing
assessment, monitoring and reporting of risks which could
impede our progress in delivering our strategic priorities.
Key management and staff are responsible for the day-
to-day management of risks and implementation of risk
management plans. The Group also has an Internal Audit
and Risk Management function which, supported by external
advisors, provides independent and objective assurance on
the effectiveness of our internal control processes.
A separate Strategic Risk Committee of the Board has
been established given the increased scale, complexity
and breadth of the Group’s business. The Strategic Risk
Committee will assist the Board by monitoring key identified
strategic (enterprise-wide) risks and overseeing the Group’s
risk management strategy in connection with these identified
risks. This facilitates and integrated, entreprise-wide
approach to identifying and managing key risks and a strong
focus on specific critical strategic risks.
The Group has established a formal risk management
framework, which is based on ISO3100 Risk Management
and the ASX Principles and Recommendations. This
framework is supported by the Group’s Code of Conduct
and risk management policy. The policy defines ‘Extreme’
and ‘Very High’ business risks which, once identified, are
also captured on the global risk register. Extreme and Very
High business risks are regularly reported to the Board via
the Board Audit Committee along with treatment plans
and controls. Any Extreme or Very High Strategic risk,
which would prevent a material part of the strategy from
being executed is regularly reported to the Strategic Risk
Committee.
The main risks affecting the Group are set out below. The
Group may also face a range of other risks from time to time
in conducting its business activities. While it aims to manage
Changing economic conditions and other factors affecting
the gaming industry
Demand for our products and services can be dependent
upon favourable conditions in the gaming industry, which is
highly sensitive to players’ disposable incomes and gaming
preferences. Discretionary spending on entertainment
activities could decline for reasons beyond the Group’s
control; for example, due to negative economic conditions
or natural disasters.
A decline in the relative health of the gaming industry and
the difficulty or inability of our customers to obtain adequate
levels of capital to finance their ongoing operations might
reduce the resources available to purchase products and
services, which could affect Group revenues.
To address this we are working to develop and deliver new
and innovative technologies and products to meet customer
needs and working to partner with our customers to provide
value adding solutions.
Litigation and contingent liabilities
From time to time, the Group may be subject to material
litigation, regulatory actions, legal or arbitration proceedings
and other contingent liabilities which, if they crystallise, may
adversely affect the Group’s results.
Increasing competition
Competition in the gaming industry (both land-based and
online) has intensified from the consolidation of existing
competitors as well as the entry of new competitors.
Increasingly, price, reliability and product innovation are
among the factors affecting a provider’s success in selling its
products.
As traditional land-based markets continue to mature, the
Group’s success and profitability is dependent in part on our
ability to successfully enter new segments in existing markets
and new markets as well as new distribution channels, such
as mobile and online gaming.
25
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
PRINCIPAL RISKS
To address this we continue to invest in key skills and talent
and have also strengthened our insights function to enhance
our ability to produce innovative new product portfolios to
drive entry into new markets and support share growth.
Government gaming regulation
The global gaming industry is subject to extensive
governmental regulation. While the regulatory requirements
vary by jurisdiction, most require:
(a) licences and/or permits;
(b) findings of suitability;
(c) documentation of qualifications, including evidence of
financial stability; and
(d) individual suitability of officers, directors, major
shareholders and key employees.
Changes in laws or regulations or the manner of their
interpretation or enforcement could impact the Group’s
financial performance and restrict our ability to operate our
business or execute our strategies. Difficulties or delays in
obtaining or maintaining required licences or approvals
could also have a negative impact on the business.
A material breach of internal processes may result in violation
of existing regulations which could also impact our ability to
maintain required licenses or approvals.
Gaming laws and regulations serve to protect the public
and ensure that gaming related activity is conducted
honestly, competitively, and free of corruption. A change
in government (or governmental policy towards gaming)
may also impact our operations. This political risk increases
in jurisdictions where there is significant anti-gaming
opposition or vocal minority interests.
The Group has established a comprehensive regulatory
assurance function and governance framework to ensure
that we continue to monitor the political environment and
regulations in the jurisdictions in which we operate and to
monitor our adherence to internal processes to ensure we
comply with existing regulations.
Cyber risk and privacy regulation
The cyber security and privacy regulatory environment
is continuing to evolve. Aristocrat is focused on further
strengthening its governance, processes and technology
controls to continue to protect the integrity and privacy of
data, and maintain compliance with regulatory requirements.
The Group’s ongoing investment in cyber transformation
initiatives, together with its Control and Risk Framework
operate to reduce the likelihood of cyber security incidents,
ensuring early detection and the mitigation of impact.
Tax
The risk that changes in tax law (including goods and
services taxes and stamp duties), or changes in the way tax
laws are interpreted in the various jurisdictions in which the
Group operates, may impact the tax liabilities of the Group
and the assets in which it holds an interest. The Group seeks
to manage this risk by monitoring changes in legislation,
utilising external tax and legal advisors and employing
highly experienced qualified accounting and tax experts
who regularly monitor the taxation relevant to the Group’s
operations. Aristocrat has implemented a Tax Governance
Framework which sets out the Company’s approach to tax
risk management and governance, tax strategy and dealing
with revenue authorities. In addition Aristocrat has chosen
to adopt the Board of Taxation’s Voluntary Tax Transparency
Code of 2016 and prepares a Voluntary Tax Transparency
Code Report. In accordance with that code, Aristocrat
discloses details such as corporate income taxes paid by
and effective tax rates of, Aristocrat. This report is posted
on the Aristocrat website. The report can also be viewed
at the Voluntary Tax Transparency Code central website,
administered by the ATO.
26
ARISTOCRAT LEISURE LIMITED Annual Report 2017
OPERATING AND FINANCIAL REVIEW
PRINCIPAL RISKS
Fluctuations in foreign exchange rates and interest rates
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures,
primarily with respect to the US dollar and Euro.
Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional
currency. The risk is measured using sensitivity analysis
and cash flow forecasting. The Group’s foreign exchange
hedging policy is to reduce the foreign exchange risk
associated with transactional exposures, primarily over a
12 month horizon. External foreign exchange contracts
are designated at the Group level as hedges of foreign
exchange risk on specific foreign currency denominated
transactions. The debt issue used to partly fund the
acquisition of Video Gaming Technologies Inc. resulted in
an increase in the Group’s total debt and also resulted in a
level of debt which is exposed to a floating rate of interest.
The Group is therefore exposed to movements in interest
rates. The Group seeks to mitigate this risk with a capital
management strategy which examines periodic debt
pay down and with the implementation, and continued
assessment, of an interest rate hedging strategy.
Ability to manage and frequently introduce innovative
products on a timely basis
The Group’s success is dependent on its ability to develop
and sell new products that are attractive to casino operators
and other gaming enterprises and their customers, for both
land-based and online gaming operations. If the Group’s
land-based or online gaming content does not meet or
sustain revenue and profitability expectations, it may be
replaced or we may experience a reduction in revenue
generated and an increased exposure to obsolete inventory.
Therefore, success depends upon the Group’s ability to
continue to produce technologically sophisticated land-
based and online products that meet its customers’ needs
and achieve high levels of player appeal and sustainability.
Further, newer products are generally more sophisticated
than those produced in the past and the Group must
continually refine design, production and approval
capabilities to meet the needs of its product innovation.
The Group has invested, and intends to continue to invest,
significant resources into its insights function, research and
development efforts and the acquisition of key talent to
mitigate this risk.
27
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT
This Remuneration Report for the 12 months ended 30
September 2017 (Reporting Period or FY2017) forms part of
the Directors’ Report and has been audited as required by
section 308(3C) of the Corporations Act 2001 (Cth) (the Act).
SECTION 1 MAINTAINING SUSTAINABLE
PERFORMANCE
Aristocrat’s remuneration strategy and framework is
based on a ‘pay for performance’ philosophy. The Board
is confident the current remuneration framework has
supported and driven its business strategy and Group out-
performance.
Aristocrat is one of a small group of ASX listed companies
that derives the majority of its revenues from overseas
markets and is genuinely global in its structure and
operations. Aristocrat’s senior leadership is predominantly
US based, and the business must increasingly attract and
retain leaders in the US market with technology and global
management skillsets that will require an evolution in its
approach to remuneration. US market practice (in particular)
places a greater emphasis on at-risk opportunity, and
significant equity grants are more commonly used for talent
attraction and retention, than is typically the case in Australia.
The Board will continue to review the structure of Aristocrat’s
incentive schemes to ensure they are competitive and
effective in helping the business to retain and attract the
leadership and talent it needs to drive business strategy and
financial performance in the interests of shareholders.
Any changes will continue to reflect Aristocrat’s ‘pay for
performance’ philosophy and drive shareholder value.
STI outcome
Senior Executives received on average 176% of their STI
target award, supported by NPATA increasing by 36.5%
to $543.4 million (in reported currency) from the prior
corresponding period.
This strong NPATA growth was driven by continued
growth across all key segments and through continued
share gains across broadly flat markets.
Strong FCF of 129% of target.
LTI outcome
Based on sustained long term performance over
the three year period to 30 September 2017, 100%
of PSRs awarded under the 2015 LTI Grant vested
following testing against the Relative TSR and Relevant
EPS performance measures in November 2017, and
converted into shares.
The Relative TSR component (30% of total grant) vested
as Aristocrat’s annual compounded TSR of 296.07%, with
Aristocrat 2nd in its Peer Comparator Group and ranked
at the 98.95th percentile.
The Relevant EPS component (30% of total grant) vested
at 100% based on the delivery of a three-year EPS CAGR
of 54.4%.
28
ARISTOCRAT LEISURE LIMITED Annual Report 2017
SECTION 2 REMUNERATION REPORT OVERVIEW
This Remuneration Report has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth) (the Act)
for Aristocrat Leisure Limited and its controlled entities (Group) for the year ended 30 September 2017.
Table 1 below outlines the KMP and their movements during FY2017
KMP
Position
Non-Executive Directors
ID Blackburne
Chair; Director
DCP Banks
KM Conlon
RA Davis
RV Dubs
SW Morro
Director
Director
Director
Director
Lead US Director1
P Ramsey
Director2
AM Tansey
Director
S Summers Couder
Director
Executive KMP
Term as KMP
Full financial year
Full financial year
Full financial year
Retired on 27 February 2017
Full financial year
Full financial year
Full financial year
Nominated on 13 September 2016
Full financial year
Full financial year
T Croker
A Korsanos
J Sevigny
JR Odell
M Sweeny
CEO and Managing Director (from 1 March 2017)3 Full financial year
CFO, Global Services and Company Secretary
Full financial year
President, Video Gaming Technologies
Full financial year
CEO and Managing Director
Chief Commercial Officer
Ceased to be employed on 28 February 2017
Ceased to be employed on 31 December 2016
1. One Non-Executive Director acts as the Lead US Director. The Lead US Director assists the Board with review and oversight of Aristocrat’s North American
business, which accounts for approximately 70% of Group revenue.
2. Mr Ramsey was nominated by the Board on 13 September 2016 as a Non-Executive Director, subject to receipt of all relevant regulatory pre-approvals.
Pending regulatory approval, Mr Ramsey was a Director (Elect). Necessary regulatory pre-approvals were received and Mr Ramsey’s appointment as a Non-
Executive Director was confirmed by the Board on 28 October 2016.
3. Mr Croker was appointed as CEO and Managing Director (Elect) on 9 November 2016, and formally assumed the role of CEO and Managing Director on 1
March 2017. Prior to his appointment as CEO and Managing Director (Elect), Mr Croker held the role of Executive VP - Global Products and Insights.
29
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT SECTION 3 SENIOR EXECUTIVE1
REMUNERATION PHILOSOPHY AND
FRAMEWORK
3.1 Core principles
The following three core principles guide Aristocrat’s Senior
Executive remuneration strategy and a ‘pay for performance’
framework:
Alignment to shareholder interests and value creation
Provide a common interest between Senior Executives
and shareholders by aligning the rewards that accrue to
management to Aristocrat’s performance and, ultimately,
the creation of sustainable shareholder returns.
Market competitive
As a global organisation, be competitive in the markets
in which Aristocrat operates to attract, motivate and
retain high calibre people. Aristocrat’s senior leadership
is predominantly US based, and the business must
increasingly attract and retain leaders in the US market
with technology and global management skills sets
that will require an evolution in Aristocrat’s approach to
remuneration.
Performance-based
Support the short, medium and long-term financial
targets and business strategies of the Group as set out in
the strategic business plans endorsed by the Board.
3.2 Executive remuneration mix
Total remuneration includes both a fixed component and an
at-risk or performance related component (governing both
short-term and long-term incentives).
The Board views the at-risk component as an essential driver
of a high performance culture and superior shareholder
returns.
The following illustration shows the remuneration mix for
the Executive KMP in FY2017. It has been modelled on
the average of the Executive KMP’s target opportunity (but
excluding any contractual severance entitlements).
The Board aims to achieve a balance between fixed and
performance related components of remuneration. The
actual remuneration mix for the Executive KMP will vary
depending on the level of performance achieved at a Group,
business unit and individual level.
LTI
36.2%
Deferred STI
15.6%
Cash STI
15.6%
Fixed
32.6%
CEO
LTI
32.4%
Deferred STI
13.9%
Cash STI
13.9%
Fixed
39.8%
Deferred
equity
51.8%
Cash
48.2%
Deferred
equity
46.3%
Cash
53.7%
At risk
67.4%
Fixed
32.6%
At risk
60.2%
Fixed
39.8%
Other Executive KMP
The chart above reflects weighted average CEO
remuneration of J Odell from 1 October 2016 to 28 February
2017, and T Croker from 1 March 2017 to 30 September
2017.
1. ‘Senior Executives’ comprise Executive KMP as well as other members of Aristocrat’s Executive Leadership Team
(details of which can be found on www.aristocrat.com)
30
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT Table 2 Senior Executive Remuneration structure and framework
SENIOR EXECUTIVE REMUNERATION STRUCTURE1
Fixed
Between 36-59% of total target
remuneration
At risk
Between 64% - 41% of total target remuneration
Fixed remuneration
Base salary, superannuation and
other benefits
Short-term incentive (STI)
Reward for strong individual and
company performance during the
Performance Period
Long-term incentive (LTI)
Reward for longer-term
company performance
— Individual’s skills, performance,
experience and contribution
to Aristocrat with reference
to similar roles in global
competitors and companies
within a range of Aristocrat’s
market capitalisation
— Geographic location
— Onerous probity requirements by
regulators also considered
Value determined by
Achievement of both annual
financial and non-financial
performance at a:
— Group level
— Business unit level
— Individual level
— Relative TSR - 30% weighting
— Relevant EPSA - 30% weighting
— Service based objectives - 40%
weighting
Cash and superannuation
(or equivalents)
Provides competitive ongoing
remuneration in recognition of day
to day accountabilities
Delivered as
50% cash
25% deferred for 12 months
as an award of PSRs
25% deferred for 24 months
as an award of PSRs
Why it is paid?
— Supports annual delivery of
key strategic targets and to
recognise and reward individual
performance
— Deferral into equity supports
sustained performance and more
closely aligns the interests of
executives and shareholders
Award of PSRs vesting after
36 months
— Focuses on multi-year metrics
that support sustained
shareholder value creation
— Delivered in equity to align
the interests of executives and
shareholders
31
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT 3.3 Elements of executive remuneration
3.3.1 Fixed remuneration
Senior Executives receive a competitive fixed remuneration
comprising cash salary, superannuation and other benefits
which make up the ‘fixed remuneration’ component of their
total remuneration package.
Senior Executives have the choice to have a combination of
benefits including additional superannuation contributions
and the provision of a vehicle provided from their fixed
remuneration. Senior Executives also (in certain instances)
receive other benefits, including salary continuance, trauma,
death and disability insurance. Senior Executives are able
to maintain memberships to appropriate professional
associations. As appropriate, expatriate executives receive
additional support including accommodation allowances,
travel and ad hoc taxation advice.
Senior Executives do not receive retirement benefits other
than those disclosed in Table 7.
3.3.2 STI Plan
What is the STI Plan?
Senior Executives have the opportunity to earn an annual
incentive award which is delivered in cash and deferred
equity awards (in the form of PSRs). The STI Plan recognises
and rewards short-term performance.
How much can Senior Executives earn?
A target opportunity is set for each Senior Executive, which
is earned if Group and individual performance is on target.
For certain Senior Executives, in a region or business unit,
a target opportunity is set which is earned if regional
performance and individual performance is on target.
Senior Executives (other than the CEO) (on average) have a
target STI of between 44% and 73% of fixed remuneration,
and a maximum STI opportunity of (on average) 108% of
fixed remuneration. The CEO has a target STI of 100% of
fixed remuneration.
Participants have the opportunity to earn up to 200% of their
target STI opportunity for achieving stretch performance.
What are the financial performance conditions?
No payment is made unless the STI gateway of the Business
Score Threshold (being 85% of the Business Score Goals) is met.
For employees whose role is multi-regional or global in nature
– including all Executive KMP – their ‘Business Score Goal’ is
the result that is based on the actual financial performance of
Aristocrat in a financial year, calculated by reference to NPATA
and FCF as follows:
— NPATA – 70% weighting
— FCF – 30% weighting
The Business Score is converted into the Business Score
Multiplier according to the following chart:
r
e
i
l
p
i
t
l
u
M
e
r
o
c
S
s
s
e
n
i
s
u
B
250%
200%
150%
100%
50%
0%
85%
100%
105%
110%
120%
Business Score
What are the non-financial performance conditions?
A ratings scale of “Exceeds Requirements”, “Meets
Requirements”, “Meets Most Requirements” and
“Underperforms” is used to assess individual performance.
No payment is made unless the relevant Senior Executive
achieves a minimum Individual Performance Rating of “Meets
Most Requirements”.
Senior Executives are assessed on delivery against (non-
financial) KPOs of the Group such as product quality,
product innovation, great game content and driving a high
performing culture through development, retention and
succession planning.
Individual Performance Rating is converted into Individual
Performance Multiplier according to the following ranges:
Rating
Underperforms
Outcome
0%
Meets Most Requirements
60% - 90%
Meets Requirements
80% - 120%
Exceeds Requirements
120% - 150%
32
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT
The Individual Performance Multiplier is then used to
determine the quantum of STI payment the Senior Executive
will receive.
Once the Business Score Multiplier and Individual
Performance Multiplier are determined, an individual’s
STI award is calculated as follows:
Individual STI Payment
Individual STI Target
Business Score Multiplier
Individual Performance Multiplier
Special mitigating circumstances may be accepted,
determined or approved on a case by case basis by the CEO
and Managing Director, and subject to approval by the HR
and Remuneration Committee and the Board.
Are there deferral terms?
Yes - if the STI award is between 50% and 100% of target
STI, then 50% of the target STI is delivered in cash and a
minimum of 50% of the award is deferred as an equity award
of PSRs, with half of these PSRs vesting after 12 months and
the remaining half vesting 24 months after the end of the
performance period. The Board has discretion to determine
the percentage which will be deferred as an equity award if
the award is less or greater than target.
No additional performance conditions apply to vesting of
the PSRs to the Senior Executive, with the exception of the
continued employment by the relevant Senior Executive.
The number of PSRs is calculated using the volume-weighted
average price (VWAP) over the five trading days immediately
prior to and including the last day of the performance period (for
awards under the 2017 STI Plan this was 30 September 2017).
Why were these performance conditions chosen?
Are Senior Executives eligible for dividends?
The Board considers these performance measures to be
appropriate as they are aligned with Aristocrat’s objectives
of delivering sustainable growth and sustainable superior
returns to shareholders. In the case of FCF, this measure
was chosen as it ensures cash flow discipline, which in turn
allows Aristocrat to fund growth initiatives. In addition, Senior
Executives have a clear line of sight to the targets and are
able to affect results through their actions.
Performance measures and conditions are reviewed annually
and are subject to change as considered appropriate. The
Board has discretion to review and amend the Business
Score Goals during the performance period (up or down)
where significant unforeseen events have occurred which are
outside of the control of management.
Who assesses performance and when?
The Board assesses performance of the CEO and Managing
Director against the performance conditions with the benefit
of advice from the HR and Remuneration Committee.
The CEO and Managing Director assesses the other
Executive KMP’s performance against the performance
conditions and makes recommendations to the HR and
Remuneration Committee which advises the Board in relation
to the CEO and Managing Director’s recommendations and
the review process.
An amount (based upon dividends paid by Aristocrat during
the deferral period) accrues on the PSRs and is paid in cash at
the end of the deferral period to the extent that the PSRs vest.
What happens if a Senior Executive leaves?
Unvested PSRs will be forfeited if the Senior Executive
ceases to be employed, although the Board has discretion to
determine otherwise for reasons such as death, redundancy
or if the participant is a ‘good leaver’.
As a general rule, a Senior Executive will not be deemed
to be a ‘good leaver’ to the extent they are terminated
for cause, breach their terms of employment contract or
underperformance or they resign from Aristocrat.
Is there a clawback?
Yes - in the event of a material misstatement of performance,
or other factors deemed by the Board to be materially
significant, the Board has the discretion to clawback STI
payments from deferred amounts and (if necessary) future
earnings of the Senior Executive.
No transfer or hedging
PSRs granted under the plan are not transferable and
participants are prohibited from entering into hedging
arrangements in respect of unvested PSRs.
33
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT 3.3.3 LTI Plan
This section summarises the terms of LTI grants made in
FY2017.
What is the LTI Plan and who participates?
Under the LTI Plan, annual grants of PSRs are made to
eligible participants to align remuneration with the creation
of shareholder value over the long-term.
Executive KMP as well as any employee of the Group who is
invited by the Board is eligible to participate.
Non-Executive Directors are not eligible to participate in the
LTI Plan.
How is the LTI award calculated?
The actual number of PSRs to be granted to a Senior
Executive will be determined by calculating the Face Value
of Aristocrat’s shares and dividing the LTI Opportunity by
the Face Value and rounding to the nearest whole figure.
In determining the ‘LTI Opportunity’, the Board will take
into account the nature of the position, the context of the
current market, the function and purpose of the long-term
component and other relevant information.
What are the vesting conditions?
Three vesting conditions apply to LTI grants made during
FY2017:
— Relative TSR
— Relevant EPSA
— Service (time) based vesting conditions
Relative TSR – 30% weighting
Relative TSR performance is assessed over a three-year
period which will commence at the start of the financial year
during which the PSRs are granted.
For any PSRs to vest pursuant to the Relative TSR vesting
condition, Aristocrat’s compound TSR must be equal to or
greater than the median ranking of constituents of the Peer
Comparator Group. The Peer Comparator Group, being
constituents of the S&P/ ASX100 Index, defined at the
commencement of the performance period.
The percentage of PSRs that may vest is determined based
on the following vesting schedule:
Aristocrat’s TSR ranking relative
to Peer Comparator Group
PSRs subject to Relative
TSR vesting condition
that vest (%)
Below the median ranking
At the median ranking
0%
50%
Above the median ranking but
below the 75th percentile
Between 50% and 100%,
increasing on a straight
line basis
At or above the 75th percentile
100%
The Board may adjust the TSR vesting conditions to ensure
that an executive is neither advantaged nor disadvantaged
by matters outside of management’s control that affect
achievement of the vesting conditions.
Relevant EPSA - 30% weighting
The Relevant EPSA vesting condition is measured by
comparing Aristocrat’s compound annual EPSA growth rate
(CAGR) over a three-year performance period (1 October
2016 to 30 September 2019 in respect of LTI grants in
FY2017) against the ‘minimum’ EPSA growth and the
‘maximum’ EPSA growth thresholds, as set by the Board at
the beginning of this performance period.
Relevant EPSA performance will be measured using the most
recent financial year-end prior to the award as the base year,
and the final financial year in the three-year performance
period as the end year.
The percentage of PSRs that may vest is determined based
on the following vesting schedule:
Aristocrat’s EPSA performance
% of vesting of PSRs
Less than the minimum EPSA
growth threshold
0%
Equal to the minimum EPSA growth
threshold
50%
Greater than the minimum EPSA
growth threshold, up to the
maximum EPSA growth threshold
Between 50% and
100%, increasing on a
straight line basis
Greater than the maximum EPSA
growth threshold
100%
The Board may adjust the Relevant EPSA vesting conditions
to ensure that an executive is neither advantaged nor
disadvantaged by matters outside of management’s control
that affect achievement of the vesting conditions.
34
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT The vesting conditions are therefore tested only at the end
of the performance period. There is no re-testing of vesting
conditions.
Vesting
If PSRs vest, the Board has discretion to either issue new
shares or to acquire shares on-market to satisfy the vestings.
Shares allocated on vesting of the PSRs are subject to the
terms of Aristocrat’s Share Trading Policy, and carry full
dividend and voting rights upon allocation.
Are PSRs eligible for dividends?
Holders of LTI PSRs are not entitled to dividends until the
PSRs have vested and converted into shares.
What happens if a Senior Executive leaves?
If a participant ceases employment during the first 12
months of the performance period then, regardless of the
reason, any unvested PSRs lapse.
If a participant ceases employment after the first 12 months
of the performance period, the Board has the express
discretion to determine that some or all PSRs vest or lapse.
Where a participant acts fraudulently, dishonestly, joins
a competitor or, in the Board’s opinion, is in breach of
obligations owed to Aristocrat, then any unvested PSRs will
lapse and unallocated shares are forfeited.
What happens in the event of a change of control?
There is no automatic vesting of PSRs on a change of control.
The Board will (in its discretion) determine the appropriate
treatment regarding PSRs in the event of a change of control.
Where the Board does not exercise this discretion, there will
be a pro rata vesting of PSRs based on the proportion of
the performance period that has passed at the time of the
change of control event.
No transfer or hedging
PSRs granted under the plan are not transferable and
participants are prohibited from entering into hedging
arrangements in respect of unvested PSRs.
As is our practice, the EPSA growth thresholds set by the
Board for the performance period are disclosed in the
Remuneration Report published in respect of the year in
which the PSR vesting is tested.
Service (time) based vesting conditions - 40% weighting
The service (time) based element of the LTI Plan will vest
subject to the participant being employed by a member
of the Group for the entire three-year performance period,
and having maintained at least a “Meets Most” individual
performance rating (Service/Time Based Conditions).
Why were these vesting conditions chosen?
Relative TSR
— Ensures alignment between comparative shareholder
return and reward for the executive
— Provides relative, objective, external, market-based
performance measure against those companies with which
Aristocrat competes for capital, customers and talent
— Is widely understood and accepted by key stakeholders
Relevant EPSA
— Is a relevant indicator of increases in shareholder value
— Neutralises the tax effected amortisation expense of
acquired intangibles (most notably VGT), which is a
non-cash charge and not representative of underlying
performance of the business and cash flow generation
— Is a target that provides a suitable line of sight to
encourage executive performance
Service (Time) Based
— Aristocrat is one of a small group of ASX listed companies
that derives the majority of its revenues from overseas
markets and is genuinely global in its structure and
operations. Aristocrat’s senior leadership is predominantly
US based, and the business must increasingly attract
and retain leaders in the US market with technology and
global management skillsets.
— A service based condition supports our LTI Plan being
competitive to global and US peers who have elements of
service based vesting (restricted stock).
Who assesses performance and when?
Relative TSR and Relevant EPSA results are calculated by
Aristocrat and the external remuneration advisor tests
these TSR results as soon as practicable after the end of
the relevant performance period. The calculations are
considered by the Board to determine vesting outcomes.
35
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT SECTION 4 REMUNERATION OUTCOMES IN
FY2017 AND LINK TO BUSINESS STRATEGY
AND GROUP PERFORMANCE
4.1 Senior Executive remuneration
Senior Executive remuneration outcomes disclosed
in this Remuneration Report are linked and aligned to
delivery of shareholder value over the short and longer
term, rewarding the strong results delivered across the
relevant STI and LTI performance periods (including in
FY2017).
Remuneration strategy and link to business strategy
and Group performance in connection with FY2017
remuneration outcomes
This Remuneration Report discloses the outcome of awards
made under the 2015 LTI Grant, under which the following
three vesting conditions apply:
— a Relative TSR vesting condition (30% weighting);
— a Relevant EPSA vesting condition (30% weighting); and
— Strategic Objectives (for Mr Odell, who was CEO at the
time of the grant) and Service (Time) Based (for others)
vesting condition (40% weighting).
36
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT Table 3 below discloses remuneration outcomes in FY2017 and alignment to business strategy and Group performance
Business
strategy and
objectives…
Are reflected in LTI
and STI performance measures…
So, Aristocrat’s
actual performance…
Financial
performance
STI performance measure of NPATA
Measures profitability across the Group
STI performance measure of FCF
Measures free cash flow generated by the
Group
LTI performance measure of Relative TSR
Measures the benefit delivered to shareholders
over three years, including dividend payments
and movement in the share price over and
above a market benchmark
LTI performance measure of Relevant EPS
Measures profitability across the Group on a per
share basis
Grow
recurring
revenue
base
STI Individual performance rating
Measures include sustainable growth in
US Gaming Operations
Market share
– continue
momentum
STI Individual performance rating
Measures include sustainability of strong
market position in Australia and growth in North
American market share
EXCEEDED
NPATA increasing by 36.5% to $543.4 million (in reported
currency) significantly exceeded STI target
Achieved strong FCF of 129% of target
Aristocrat achieved a TSR of 296.07% over the 2015 LTI grant
performance period, 2nd its Peer Comparator Group and
ranked at the 98.95th percentile
Compounded EPS growth rate of 54.4% exceeded set targets
Revenue increased by more than 15% in broadly flat markets to
a new record level of above $2.45b
EXCEEDED
In excess of 50% of Group revenues now derive from recurring
sources
Digital revenues increased by 36.9% to $383 million (in
reported currency)
Launch of multi app strategy, with successful new apps such as
Cashman Casino
Acquisition of Israeli-based social gaming company (Plarium
Global Ltd), which significantly expands Aristocrat’s addressable
digital opportunity by around eight times – to around US$25bn
of value - and the proportion of Aristocrat’s revenues that derive
from recurring sources
EXCEEDED
Market leading share maintained in ANZ and Asia Pacific with
continued growth
Strong growth in North American segment driven by significant
expansion in premium gaming operations footprint and
outright sales
Continued share gains were achieved across broadly flat key
markets and segments
Cost
efficiencies
STI Individual performance rating
Measures include managing and improving cost
efficiency as a proportion of revenue
MET
Continued to increase ROI in both D&D and corporate
expenses, and consolidation of suppliers driving efficiencies in
supply chain
Product
quality,
product
innovation
and great
game
content
STI Individual performance rating
Measures include product quality and delivery
and product innovation and great game content
Measures also include attracting, developing
and retaining gaming design talent
High
performing
People and
Culture
STI Individual performance rating
Measures include development, retention and
succession planning across all management
levels and for creative talent
EXCEEDED
For the 2nd year running, Product Madness was awarded the
prestigious ‘Social Operator’ of the year award 2016 at the
eGaming Review Awards in London. EILERS Slot Survey Q2
2017 (July 2017):
—
—
top performing premium leased game – Lightning Link –
5th quarter in a row, Buffalo 3rd (2 of top 3)
top performing casino owned games –Buffalo and Wonder
Wheels (2 of top 3)
— most anticipated games – Dragon Link
Aristocrat voted industry’s top G2E supplier for the 4th year
in a row
MET
Year over year improvement in our global engagement survey
results with both participation levels and overall results well
above industry and global benchmarks
Ongoing focus on developing leaders resulting in high levels of
internal promotions including onto the Senior Leadership Team
Successful CEO transition
Increased level of talent and capability across the Group, with
focus on critical talent retention
Directly
affects
remuneration
outcomes
Total LTI
vesting
outcome
in FY2017
= 100% of
target based
on TSR
and EPSA
performance
measures
CEO STI
outcome
in FY2017
= 170% of
target
Average STI
outcome
in FY2017
for other
Executive
KMP = 145%
of target
37
ARISTOCRAT LEISURE LIMITED Annual Report 2017
4.2 Performance and remuneration outcomes in FY2017
2017 STI grant outcomes
172% of Group target STI was awarded in FY2017.
STI gateway (Business Score Threshold) achieved
Business Score was in excess of the Business Score Threshold
NPATA (weighting = 70%)
% of plan awarded = 120%
FCF (weighting = 30%)
% of plan awarded = 129%
2015 LTI Grant vesting outcomes
Threshold 85%
Target 100%
Stretch 120%
This Remuneration Report discloses the outcome of the 2015 LTI Grant (tested over the three-year performance period ended
30 September 2017).
30 September 2017: Three-year performance period ends for 2015 LTI Grants.
Performance is tested in November 2017 for Relative TSR and Relevant EPSA
Relative TSR (30% weighting)
Aristocrat’s TSR performance versus that of the Peer Comparator Group over the 2015 LTI Grant performance period 1 October 2014 to 30 September 2017:
)
%
(
e
u
a
V
l
450
350
250
150
0
Aristocrat TSR Performance v Peer Comparator Group (%)
ALL
ASX 100 Accumulation Index
4
1
T
C
O
4
1
V
O
N
5
1
N
A
J
5
1
R
A
M
5
1
Y
A
M
5
1
L
U
J
5
1
P
E
S
5
1
V
O
N
5
1
C
E
D
6
1
B
E
F
6
1
R
P
A
6
1
N
U
J
6
1
G
U
A
6
1
T
C
O
6
1
C
E
D
7
1
B
E
F
7
1
R
A
M
7
1
Y
A
M
7
1
L
U
J
7
1
P
E
S
With a TSR performance of 296.07%, Aristocrat was the 2nd top performer (equivalent to 98.95th percentile) of its Peer Comparator Group.
100% of the PSRs linked to the Relative TSR measure vested
Relevant EPSA (30% weighting)
100% of the Relevant EPS component vested given that Aristocrat’s actual EPSA CAGR across the consecutive three-year performance period was 54.4%.
This growth was delivered through gain of market share achieved across broadly flat key markets and segments.
1 Oct 2014 to 30 Sept 2017
Threshold EPS Target
Maximum EPS Target
Actual Outcome
Relevant EPS Achievement
3 year CAGR
7.5%
12.5%
54.4%
100%
Relevant EPSA
100% of the PSRs linked to the Relevant EPSA measure vested
Service (Time) Based Condition (40% weighting): Executive
KMP other than CEO: 100% of PSRs linked to the Service
based condition vested for those who remained employed
over the entire three-year performance period and maintained
a “Meets Most” or better performance rating.
Strategic Objectives Condition (40% weighting): CEO at
the time of the grant: At the time of grant, the Board agreed
an aggressive growth strategy with the CEO and used key
elements of this strategy to determine a selected number of
CEO Strategic Objectives as a component of the CEO’s 2015
LTI grant.
See section 4.2 below for further disclosure on testing outcomes.
100% vesting of the total 2015 LTI Grant awards
38
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Outcome of CEO Strategic Objectives Testing
At the time of grant, the Board set three defined categories of Strategic Objectives for the then CEO: (i) digital strategy
and growth, (ii) Foundations for recurring revenue growth (including in the Class II market), and (iii) people and succession
planning.
At the end of the 2015 LTI grant performance period the Board measured achievement of the Strategic Objectives condition
based on a qualitative assessment of performance against these objectives during the three year LTI grant performance
period.
80.47% of the Strategic Objectives component was eligible for testing given that Mr Odell ceased to be employed in February
2017 (before expiry of the performance period, which ended on 30 September 2017). 85% of the amount of the Strategic
Objectives component that was eligible for testing vested given strong performance across all three of the abovementioned
defined categories of Strategic Objectives.
4.3 Alignment between remuneration and Group performance
Numerous elements of Aristocrat’s remuneration strategy and framework are directly linked to Group performance.
The table below sets out information about movements in shareholder wealth for the financial years ended 30 September
2013 to 30 September 2017, highlighting alignment between Aristocrat’s remuneration strategy and framework and Group
performance over the past 5 years.
Further details about the Group’s performance over this period can be found in the Five-Year Summary contained in this
Annual Report.
Table 4 Summary of movement in shareholder wealth
Share price as at financial
year-end (A$)
Total dividends paid (cps)
EPS (fully diluted)/EPSA
(fully diluted) (cps)1
TSR (%)
Short term cash incentives
(% of Group target)
LTI (% vesting) based on
Relative TSR and Relevant
EPSA performance
measures
12 months to
30 Sep 2017
12 months to
30 Sep 2016
12 months to
30 Sep 2015
12 months to
30 Sep 2014
12 months to
30 Sep 2013
21.00
34.0
77.5/85.0
35%
172%
15.81
25.0
8.61
17.0
5.84
16.0
54.9/62.4
30.1/37.1
22.8/23.1
87%
176%
50%
170%
30%
110%
4.62
14.5
19.4
77%
66%
100%
100%
94%
30%
0%
1. Excluding the effect of significant items which are not representative of the underlying operational performance of the Group.
39
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT
SECTION 5 REMUNERATION GOVERNANCE
5.1 Overview
The following diagram represents Aristocrat’s remuneration decision making structure.
Board
Review and approval
Exercise of discretion in relation to targets, goals or funding pools
HR and Remuneration Committee
Board remuneration framework and policy
Executive KMP & NED remuneration outcome recommendations
Management
Proposals on executive remuneration outcomes
Implementing remuneration policies
Remuneration advisors
External and independent remuneration
advice and information
Details of the composition and responsibilities of the Human Resources (HR) and Remuneration Committee are set out in the
Corporate Governance Statement (and can be found at www.aristocrat.com).
5.2 Use of remuneration advisors
In making recommendations to the Board, the HR and Remuneration Committee seeks advice from external advisors from
time to time to assist in its deliberations. The HR and Remuneration Committee appointed Ernst & Young (EY) as Aristocrat’s
‘Remuneration Consultant’ for the purposes of the Corporations Act.
Remuneration advisors are engaged by the Chairperson of the HR and Remuneration Committee with an agreed set of
protocols that determine the way in which remuneration recommendations would be developed and provided to the
Board. This process is intended to ensure there can be no undue influence by Executive KMP to whom any recommendations
may relate.
No remuneration recommendations, as defined by the Act, were made by the remuneration advisors during the Reporting
Period.
40
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT 5.3 Service agreements
The remuneration and other terms of employment for the Executive KMP are formalised in service agreements, which have no
specified term. Each of these agreements provide for performance related bonuses under the STI program, and participation,
where eligible, in the Group’s LTI program. Other major provisions of the service agreements of the Executive KMP are as follows:
Table 5 Service agreements
Notice to be given
by Executive
Notice to be given
by Group1
Termination
payment
Post-employment
restraint
CEO and Managing Director
T Croker
6 months
12 months
12 months (fixed remuneration)
12 months
Other Executive KMP
A Korsanos
J Sevigny
6 months
2 months
1. Payments may be made in lieu of notice period.
6 months
12 months (fixed remuneration)
12 months
-
12 months (fixed remuneration)
12 months
The key terms of Mr Odell and Mrs Sweeny’s service
agreements have been outlined in previous years’
Remuneration Reports and are not restated here given their
departures from the positions of CEO & Managing Director
and Chief Commercial Officer, respectively.
5.4 Key terms of JR Odell’s arrangements relating to
cessation of employment
Jamie Odell departed the business on 28 February 2017
after a remarkably successful eight-year tenure.
Mr Odell’s termination entitlements were in accordance with
those previously announced to the market. In particular:
— Payment: Mr Odell received $1,655,412 as payment in
connection with termination of his employment (inclusive
of any payment in lieu of notice).
— 2017 STI: Mr Odell remained eligible for a pro rata
FY2017 STI award, meaning his total STI award in FY2017
was $1,168,750. Mr Odell’s STI outcome in FY2017 STI
was 170% of target and he will consequently receive a
cash payment of $584,375, and $584,375 will be deferred
for up to 24 months in the form of PSRs.
— 2015 LTI grant: 94% of Mr Odell’s total 2015 LTI grant
awards vested (on a pro rata basis, relative to the portion
of the performance period he remained employed) as
follows:
• 100% of PSRs linked to the Relative TSR measure vested
• 100% of PSRs linked to the Relevant EPSA measure vested
• 85% of the Strategic Objectives component that was
eligible for testing vested.
— 2016 LTI grant: Mr Odell remains eligible for a pro rata
portion of his unvested 2016 LTI grant (subject to testing
in the normal course of Aristocrat’s incentive process and
in the same way as other participants).
Mr Odell was not granted an LTI award in FY2017.
As announced to the market on 27 February 2017, Mr Odell
agreed a twelve-month consultancy arrangement with
Aristocrat to support a smooth transition with an appropriate
level of continuity.
5.5 Disclosures under Listing Rule 4.10.22
A total of 2,001,145 securities were acquired on-market by
the Aristocrat Employee Equity Trust during the Reporting
Period (at an average price per security of $22.9185) to
satisfy Aristocrat’s obligations under various equity and
related plans.
5.6 Share trading policy
Aristocrat’s share trading policy prohibits the use of
Derivatives (as defined in the policy) in relation to unvested
equity instruments, including PSRs and vested securities
which are subject to disposal restrictions. Derivatives may be
used in relation to vested positions which are not subject to
disposal restrictions, subject to compliance with the other
provisions of the share trading policy.
Senior Executives are strictly prohibited from entering into
a margin loan or similar funding arrangement to acquire
Aristocrat’s securities and from using Aristocrat securities as
security for a margin loan or similar funding arrangements.
Breaches of Aristocrat’s share trading policy are regarded
very seriously and may lead to disciplinary action being
taken (including termination of employment).
41
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT SECTION 6 NON-EXECUTIVE DIRECTOR
REMUNERATION
Details of the Non-Executive Directors of Aristocrat during
the Reporting Period are provided in the Directors’ Report.
6.1 Overview of policy
The remuneration of the Non-Executive Directors is not
linked to the performance of the Group in order to maintain
their independence and impartiality. In setting fee levels,
the HR and Remuneration Committee, which makes
recommendations to the Board, obtains advice from an
independent remuneration advisor and takes into account
the demands and responsibilities associated with the
Directors’ roles and the global scope and highly regulated
environment in which the Group operates. The Board will
continue to review its approach to Non-Executive Director
remuneration to ensure it remains in line with high standards
of corporate governance.
6.2 Components and details of Non-Executive Director
remuneration
Non-Executive Directors receive a fixed fee (inclusive of
superannuation and committee memberships) for services
to the Board. The Chair of each committee receives an
additional fee for that service.
Table 6 Non-Executive Director fees payable during the Reporting Period
Board fees per annum1
Chairman
Non-Executive Director
Lead US Director
Committee Chair
Amount (inclusive of all statutory superannuation
obligations and committee service)
$460,000
$215,000
Additional $40,000
Additional $25,000
1. Fees paid to Australian-based Non-Executive Directors are paid in AUD. Fees paid to US-based Non-Executive Directors are paid in USD converted at a rate of
A$1 to US$1. Inclusive of statutory superannuation obligations made on behalf of Australian-based Non-Executive Directors.
There were no increases in Board or Committee fees for the
Reporting Period.
The regulatory requirements of the environment in which
Aristocrat operates impose a considerable burden on the
Non-Executive Directors and their families who are required
to disclose detailed personal and financial information and
submit to interviews, including in foreign jurisdictions. These
requirements are taken into account in determining the fees
payable to Non-Executive Directors.
Regard is also had to time commitments required of Non-
Executive Directors in connection with the number of Board
and Committee meetings that Non-Executive Directors
attend each year.
Non-Executive Directors are entitled to be reimbursed for all
reasonable business related expenses, including travel, as
may be incurred in the discharge of their duties.
Aristocrat does not make sign-on payments to new Non-
Executive Directors and the Board does not provide for
retirement allowances for Non-Executive Directors.
Given the large amount of work undertaken by the Board
during the Reporting Period, particularly in relation to
the diligence, negotiation and execution of the Plarium
acquisition and associated debt financing, it was determined
that each Non-Executive Director will receive a fixed sum of
A$15,000 in addition to the fees noted above.
6.3 Aggregate fee pool approved by shareholders
Non-Executive Directors’ fees (including committee fees)
are set by the Board within the maximum aggregate amount
of A$2,750,000 approved by shareholders at the AGM in
February 2016.
42
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT T Croker
JR Odell
2017
2016
2017
2016
Executive KMP
A Korsanos
M Sweeny9
J Sevigny
Total
Total
2017
2016
2017
2016
2017
2016
2017
2016
SECTION 7 STATUTORY REMUNERATION TABLES AND DATA
7.1 Details of Executive KMP remuneration
The following table reflects the accounting value of remuneration attributable to Executive KMP, derived from the various
components of their remuneration. This does not necessarily reflect actual amounts paid to Executive KMP due to the
conditional nature (for example, performance criteria) of some of these accrued amounts.
As required by the Accounting Standards, the table includes credits for PSRs which were forfeited during the year and the
amortised value of PSRs that may vest in future reporting periods.
Table 7 Statutory Executive KMP remuneration table
Short Term Benefits
Post-Employment Benefits
Long Term
Benefits
Share-Based Payments6
Total
% of Share
Based
Executive
Year Cash Salary1
CEO & Managing Director
Cash
Bonuses2
Non-
Monetary
Benefits3 Superannuation Termination4
Long Service
Leave5
STI PSRs7
LTI PSRs8
TOTAL
%
857,917
414,375
23,686
557,000
330,000
103,303
28,333
30,000
-
-
78,090
365,156
577,821
2,345,378
9,303
315,000
382,218
1,726,824
673,836
584,375
1,617,205
1,650,000
36,107
17,497
13,665
1,655,412
11,146
1,821,875
706,070
5,502,486
32,795
-
27,010
1,430,000
2,136,896
6,911,403
797,740
572,000
695,616
495,000
282,880
-
804,760
521,989
742,185
288,956
767,522
443,690
7,797
150
19,760
19,385
-
-
-
-
-
-
-
-
800,000
-
812,018
-
-
-
33,769
14,399
700,583
381,511
3,313,160
422,250
613,347
2,260,147
(398,241)
(218,298)
478,359
(45.6%)
-
-
-
-
613,472
479,706
2,419,927
372,178
413,454
1,816,773
327,842
256,129
1,795,183
3,354,558
1,859,706
67,590
61,758
3,267,430
123,005
2,861,551
1,860,558 13,456,156
4,442,103
3,440,679
120,950
82,180
-
50,712
3,108,564
3,868,296 15,113,484
1. Amounts shown as cash salary and fees include amounts sacrificed in lieu of other benefits at the discretion of the individual. To the extent that benefits are paid
and subject to Fringe Benefits Tax (FBT), the above amount includes FBT.
2. Amounts reflect the non-deferred cash component of the 2017 STI incentives.
3. Non-monetary benefits include insurance and travel costs, relocation costs, expatriate related costs and associated FBT.
4. Termination payments reflect payments in connection with the termination of employment (inclusive of any payments in lieu of notice).
5. The amounts provided for by the Group during the financial year in relation to accruals for long service leave.
6. In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the fair value of equity compensation granted
or outstanding during the year. The fair value of equity instruments which do not vest during the reporting period is determined as at the grant date and is
progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual Executive
KMP may ultimately realise should the equity instruments vest. An independent accounting valuation for each tranche of PSRs at their respective grant dates has
been performed by EY. In undertaking the valuation of the PSRs, EY has used a TSR model and an EPSA model. These models are described below:
TSR model – EY uses the Monte-Carlo simulation-based model which incorporates the impact of performance hurdles and the vesting scale on the value of the PSRs.
This pricing model takes into account factors such as the Company’s share price at the date of grant, volatility of the underlying shares, the risk-free rate of return,
expected dividend yield and the likelihood that vesting conditions will be met. The accounting valuation of rights issued is allocated equally over the vesting period.
EPSA model – The Binomial Tree model was used to determine the fair value of PSRs. This pricing model takes into account factors such as the Company’s share
price at the date of grant, the risk-free rate of return, expected dividend yield and time to maturity. The accounting valuation of rights issued is allocated over the
vesting period so as to take into account the expected level of vesting over the performance period. For the purposes of remuneration packaging, the ’face value’
(volume-weighted average price for the 5 trading days up to and including the day before the start of the performance period) is adopted for determining the
total number of PSRs to be allocated as this valuation best reflects the fair value of PSRs to each executive at that time. The requirements of AASB 2 in relation
to the treatment of non-market vesting conditions, such as earnings per share growth and share-based remuneration requiring shareholder approval, results in
accounting expense and disclosures differing from the value allocated for the purposes of remuneration packaging.
7. A component of STI awards payable to Executive KMP will be satisfied by the grant of deferred share rights. Half will vest after one year, with the remainder vesting
after two years, both subject to relevant forfeiture conditions. The accounting expense for STI share rights represents the expense attributable to the service period
that has been completed for each deferred award. Therefore, the amounts reflected for the 12 months to 30 September 2017 include the accounting accruals
attributable to deferred share rights pursuant to the 2015, 2016 and 2017 STI awards.
8. The share-based payments expense includes the impact of PSRs that were granted in previous years that are being expensed for accounting purposes over the
vesting period, as well as the PSRs that were granted in the reporting period. Remuneration in the form of PSRs includes credits for the earnings per share (EPS)
component of 2015 LTI grant forfeited during the period.
9. M Sweeny left the Company on 31 December 2016.
43
ARISTOCRAT LEISURE LIMITED Annual Report 2017
24.6%
22.1%
12.8%
30.9%
11.5%
27.1%
19.6%
22.8%
14.3%
13.8%
25.6%
REMUNERATION REPORT
Table 8 Details of 2017 short term awards paid and deferred
For the 12
months
ended 30
September
2017
Total award1
Cash
payment2
Deferred
component3
No. Share
Rights vesting
No. Share
Rights vesting
$
$
$
1 Oct 20183
1 Oct 20193
Total award
as % of target
STI
% of total
award
deferred
CEO and Managing Director
T Croker
828,750
414,375
414,375
10,072
10,072
170%
Other Executive KMP
A Korsanos
J Sevigny
1,144,000
569,879
572,000
288,956
572,000
280,923
13,904
6,828
13,904
6,828
Former Executive KMP
JR Odell
M Sweeny
1,168,750
584,375
584,375
14,205
14,205
-
-
-
-
-
160%
130%
170%
-
50%
50%
50%
50%
-
1. Amounts reflect the value of the total 2017 awards. See footnotes 2 and 3 for an explanation of the cash and deferred components of the total award.
2. Amounts reflect the cash component of the 2017 awards paid to participants. Amounts in USD are translated at the average rate for the year.
3. Amounts reflect the value of 2017 awards deferred into PSRs. Part of the deferred component of awards will vest on 1 October 2018 and the remainder on
1 October 2019. The number of PSRs is determined using the five day VWAP up to and including 30 September 2017, being $20.57. Amounts in USD are
translated at the FX rate on the grant date.
Table 9 Details of LTI PSRs granted to Executive KMP, including their related parties, during the Reporting Period
Performance rights with a three year performance period were granted during the Reporting Period as follows:
Rights granted
Value of grant ($)
T Croker
A Korsanos
J Sevigny
62,838
42,416
30,753
964,377
650,962
471,971
The fair value of the rights that were granted on 28 March 2017 are $11.91 for rights with a total shareholder return condition
and $16.82 for rights with a service condition. The values shown in the above table represent the maximum value of the grants
made. The minimum value is zero. The performance conditions for the grants are set out in Section 3.3.3.
44
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT
Table 10 Details of the movement in numbers of LTI PSRs during the Reporting Period
T Croker
A Korsanos
J Sevigny
JR Odell
M Sweeny
Balance at
1 October 2016
Granted during
the year1
Vested2,3
Lapsed/ forfeited
Balance at 30
September 2017
220,781
326,142
98,361
1,127,148
186,672
62,838
42,416
30,753
-
-
(116,304)
(141,304)
-
(435,000)
-
-
-
-
-
(122,704)
167,315
227,254
129,114
692,148
63,968
1. The value of the PSRs granted to Executive KMP during the year (including the aggregate value of PSRs granted) is set out in Table 9. No options were granted
during the year to any Executive KMP.
2. The value of each PSR on the date of vesting is the closing price of the Company’s shares on the ASX on the preceding trading day.
3. As shares are immediately allocated upon the vesting of PSRs, there will be no instances where PSRs are vested and exercisable, or vested but not yet
exercisable.
7.2 Details of Non-Executive Director remuneration
Table 11 Details of Non-Executive Director remuneration for the Reporting Period
Directors
ID Blackburne
RA Davis
RV Dubs
SW Morro
DCP Banks
KM Conlon
A Tansey
S Summers Couder
PJ Ramsey
Total
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Short-term benefits
Cash salary and
fees1
Fees for extra
services2
Post-employment benefits
Retirement
benefits4
Superannuation3
Share-based
payments
Total
Options and PSRs
$
428,334
436,769
79,797
196,347
219,178
219,178
334,742
345,684
219,178
219,178
219,178
219,178
196,347
98,929
298,422
28,088
282,237
-
15,000
-
-
-
15,000
-
15,000
-
15,000
-
15,000
-
15,000
-
15,000
-
15,000
-
31,666
23,231
7,772
18,653
20,822
20,822
-
-
20,822
20,822
20,822
20,822
18,653
9,398
-
-
-
-
2,277,413
1,763,351
120,000
-
120,557
113,748
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
475,000
460,000
87,569
215,000
255,000
240,000
349,742
345,684
255,000
240,000
255,000
240,000
230,000
108,327
313,422
28,088
297,237
-
2,517,970
1,877,099
1. Amounts shown as cash salary and fees include amounts sacrificed in lieu of other benefits at the discretion of the individual. To the extent that any non-
monetary benefits are subject to Fringe Benefits Tax (FBT), amounts shown include FBT.
2. Given the large amount of work undertaken by the Board during the reporting period, particularly in relation to the diligence, negotiation and execution of the
Plarium acquisition and associated debt financing, it was determined that each Non-Executive Director will receive a fixed sum of A$15,000.
3. Superannuation contributions include amounts required to satisfy the Group’s obligations under applicable Superannuation Guarantee legislation.
4. Non-Executive Directors are not entitled to any retirement benefit.
45
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT
SECTION 8 SHAREHOLDINGS
8.1 Movement in shares
The number of shares (excluding those unvested under the STI Plan and the LTI Plan) in Aristocrat held during the year ended
30 September 2017 by each Non-Executive Director and Executive KMP, including their personally related entities, are set out
below.
No amounts are unpaid on any of the shares issued. Where shares are held by the Director or Executive KMP and any entity
under the joint or several controls of the Director or Executive KMP, they are shown as ‘beneficially held’. Shares held by those
who are defined by AASB 124 Related Party Disclosures as close members of the family of the Director or Executive KMP or
are held through a nominee or custodian are shown as ‘non-beneficially held’.
The following sets out details of the movement in shares in Aristocrat held by Non-Executive Directors or their related parties
during the year:
Table 12 Details of Non-Executive Director shareholdings
ID Blackburne
DCP Banks
KM Conlon
RA Davis (retired on
27 February 2017)
RV Dubs
SW Morro
P Ramsey
AM Tansey
S Summers Couder
Type
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Beneficially held
Non-beneficially held
Non-Executive Directors
Balance as at
1 October 2016
Performance
shares vested
Other net
changes during
the year
Balance as at
30 September
2017
-
137,851
-
30,851
-
10,514
19,335
14,005
32,851
-
-
35,000
19,360
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000
-
-
-
-
137,851
-
30,851
-
10,514
19,335
14,005
32,851
-
-
40,000
19,360
-
-
1,570
1,570
-
-
-
-
All equity instrument transactions between the Non-Executive Directors, including their related parties, and Aristocrat during
the year have been on arm’s length basis.
46
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT The following sets out details of the movement in shares in Aristocrat held by Executive KMP or their related parties during
the year:
Table 13 Details of Executive KMP shareholdings not held under an employee share plan
Executive Director and other Executive KMP
Type
Balance as at
1 October 2016
Performance
shares vested
Other net
changes during
the year
Balance as at
30 September
2017
Beneficially held
332,897
156,210
(225,000)
264,107
Non-beneficially held
-
-
-
-
Beneficially held
360,353
177,754
(35,000)
503,107
Non-beneficially held
Beneficially held
Non-beneficially held
-
-
-
-
-
-
-
-
-
-
-
-
Beneficially held
1,404,505
560,298
(435,000)
1,529,803
Non-beneficially held
Beneficially held
Non-beneficially held
-
32,263
-
-
16,729
-
-
-
-
-
48,992
-
T Croker
A Korsanos
J Sevigny
JR Odell
M Sweeny
Other than share-based payment compensation effected through an employee share plan, all equity instrument transactions
between Executive KMP, including their related parties, and Aristocrat during the year have been on arm’s length basis.
8.2 Loans with KMP
No KMP or their related parties held any loans from the Group during or at the end of the year ended 30 September 2017 or
prior year.
47
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT SECTION 9 GLOSSARY
2015 LTI Grant
Aristocrat
Business Score
Awards made under the LTI Plan during FY2015 (in October 2014) with a three-year performance
period 1 October 2014 to 30 September 2017
Aristocrat Leisure Limited and (where applicable) the Group
For Executive KMP and employees in corporate functions - is the result that is based on the actual
financial performance of Aristocrat in a financial year, calculated by reference to NPATA and FCF
For Employees in a region or business unit - is the result that is based 50% on the performance of
Aristocrat (as above) and 50% on the regional performance, using EBIT in place of NPATA for both
profit and FCF calculations
Business Score Goals
Aristocrat’s and individual business unit’s/region’s financial performance goals, approved by the
Board at the start of the performance period, that need to be achieved under the STI Plan
Business Score Threshold The minimum Business Score required to receive payment under the STI Plan (being 85% of the
Business Score Goals)
EBIT
EPS
EPSA
Executive KMP
Face Value
FCF
KMP
LTI Plan
NPAT
NPATA
Earnings before interest and tax, on a normalised basis excluding significant items and results
of discontinued operations as disclosed in the Operating and Financial Review section of the
Annual Report
Fully diluted earnings per share, normalised for significant items and discontinued operations as
disclosed in the Operating and Financial Review section of the Annual Report
Fully diluted EPS before amortisation of acquired intangibles
Those KMP who were also part of Aristocrat’s Executive Steering Committee during the Reporting
Period, being (i) ) T Croker (CEO and Managing Director – for part year – and Executive VP - Global
Products and Insights – for part year), (ii) A Korsanos (Chief Financial Officer, Global Services and
Company Secretary), (iii) J Sevigny (President, Video Gaming Technologies), (iv) JR Odell (former
CEO and Managing Director – for part year), and (v) M Sweeny (former Chief Commercial Officer
– for part year)
The volume-weighted average price of Aristocrat shares for the 5 trading days up to and including
the day before the start of the performance period
In the case of Executive KMP and employees in corporate functions, this is free cash flow
(measured as operating cash flow according to the Operating and Financial Review net of capital
expenditure on gaming machines). In the case of employees in a region or business unit, EBIT is
used in place of NPATA for FCF calculations
Persons who, directly or indirectly, have authority and responsibility for planning, directing and
controlling the activities of Aristocrat and the Group during the Reporting Period
Aristocrat’s long-term incentive plan
Net profit after tax normalised for significant items and discontinued operations as disclosed in
the Operating and Financial Review section of the Annual Report
Net profit after tax before amortisation of acquired intangibles, normalised for significant
items and discontinued operations as disclosed in the Operating and Financial Review section of
the Annual Report
Peer Comparator Group
Constituents of the S&P/ASX100 Index, defined at the commencement of the performance
period. For grants made during the Reporting Period, the entities comprising the Peer
Comparator Group are the constituents of the S&P/ASX100 Index as at 1 October 2016
Relative TSR
Aristocrat’s compounded TSR measured against the ranking of constituents of the Peer
Comparator Group
48
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT Relevant EPS
Relevant EPSA
Senior Executives
STI Plan
TSR
Cumulative EPS over the performance period compared to a target set by the Board at the
commencement of the performance period
EPSA for the final financial year of the relevant performance period
The group of senior executives consisting of: (i) the Executive KMP, and (ii) other members of
Aristocrat’s Executive Leadership Team (details of which can be found on
www.aristocrat.com)
Aristocrat’s short-term incentive plan
Total shareholder return measures the percentage growth in the share price together with the
value of dividends received during the relevant three year performance period, assuming all
dividends are reinvested into new securities
49
ARISTOCRAT LEISURE LIMITED Annual Report 2017
REMUNERATION REPORT Auditor’s Independence Declaration
As lead auditor for the audit of Aristocrat Leisure Limited for the year ended 30 September 2017, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Aristocrat Leisure Limited and the entities it controlled during the
period.
MK Graham
Partner
PricewaterhouseCoopers
Sydney
30 November 2017
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
50
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NEVADA REGULATORY DISCLOSURE
The Nevada Gaming Commission has requested that the
following be brought to the attention of shareholders.
Summary of the Nevada Gaming Regulations
The manufacture, sale and distribution of gaming devices,
internet and mobile gaming, and cashless wagering systems
for use or play in Nevada and the operation of slot machine
routes and inter-casino linked systems are subject to:
(i) the Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, the “Nevada Act”);
and
(ii) various local ordinances and regulations.
Gaming and manufacturing and distribution operations in
Nevada are subject to the licensing and regulatory control of
the Nevada Gaming Commission (“Nevada Commission”),
the Nevada State Gaming Control Board (“Nevada Board”)
and various other county and city regulatory agencies,
collectively referred to as the “Nevada Gaming Authorities”.
Nevada Regulatory Disclosure
The laws, regulations and supervisory procedures of the
Nevada Gaming Authorities are based upon declarations of
public policy which are concerned with, among other things:
(i) the prevention of unsavory or unsuitable persons from
having a direct or indirect involvement with gaming,
manufacturing or distributing activities at any time or in
any capacity;
(ii) the establishment and maintenance of responsible
accounting practices and procedures;
(iii) the maintenance of effective controls over the financial
practices of licensees, including the establishment of
minimum procedures for internal fiscal affairs and the
safeguarding of assets and revenues, providing reliable
record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities;
(iv) the prevention of cheating and fraudulent practices; and
(v) providing a source of state and local revenues through
taxation and licensing fees.
Aristocrat Leisure Limited (“the Company”) is registered with
the Nevada Commission as a publicly traded corporation
(a “Registered Corporation”) and has been found suitable
to directly or indirectly own the stock of two subsidiaries
(collectively, the “Operating Subsidiaries”), one subsidiary
has been licensed as a manufacturer and a distributor of
gaming devices and an Internet Gaming System (“IGS”)
Service Provider, the other subsidiary has been licensed
as a manufacturer and a distributor of gaming devices, an
operator of a slot machine route and an IGS Service Provider.
A manufacturer’s and distributor’s license permits the
manufacturing, sale and distribution of gaming devices and
cashless wagering systems for use or play in Nevada or for
distribution outside of Nevada. A license as an operator of
a slot machine route permits the placement and operation
of gaming devices upon the business premises of other
licensees on a participation basis and also permits the
operation of inter-casino linked systems consisting of gaming
devices only. The IGS Service Provider license allows the
provision of certain services of internet gaming to licensed
Internet Operators.
If it were determined that the Nevada Act was violated by the
Company or the Operating Subsidiaries, the registration of
the Company and the licenses of the Operating Subsidiaries
could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory
procedures. In addition, the Company, the Operating
Subsidiaries and the persons involved could be subject to
substantial fines for each separate violation of the Nevada
Act at the discretion of the Nevada Commission.
Any beneficial owner of a Registered Corporation’s voting
securities (in the case of the Company its ordinary shares),
regardless of the number of voting securities owned, may
be required to file an application, be investigated, and
have their suitability as a beneficial owner of the Registered
Corporation’s voting securities determined if the Nevada
Commission has reason to believe that such ownership
would otherwise be inconsistent with the declared policies
of the state of Nevada. The applicant must pay all costs of
investigation incurred by the Nevada Gaming Authorities in
conducting any such investigation.
The Nevada Act requires any person who acquires a
beneficial ownership of more than 5% of a Registered
Corporation’s voting securities to report the acquisition
to the Nevada Commission. The Nevada Act requires
that beneficial owners of more than 10% of a Registered
Corporation’s voting securities apply to the Nevada
51
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NEVADA REGULATORY DISCLOSURE
Commission for a finding of suitability within thirty days after
the Chairman of the Nevada Board mails the written notice
requiring such filing.
Under certain circumstances, an “institutional investor”, as
defined in the Nevada Act, which acquires the beneficial
ownership of more than 10%, but not more than 25% of a
Registered Corporation’s voting securities may apply to the
Nevada Commission for a waiver of such finding of suitability
if such institutional investor holds the voting securities for
investment purposes only. An institutional investor that has
been granted a waiver by the Nevada Commission may
beneficially own more than 25%, but not more than 29%,
of the voting securities of a Registered Corporation, only if
such additional ownership results from a stock repurchase
program conducted by Registered Corporation, and
upon the condition that such institutional investor does
not purchase or otherwise acquire any additional voting
securities of the Registered Corporation that would result
in an increase in the institutional investor’s ownership
percentage. Further, an institutional investor that is subject
to NRS 463.643(4) as a result of its beneficial ownership
of voting securities of a Registered Corporation and that
has not been granted a waiver by the Commission, may
beneficially own more than 10%, but not more than 11%, of
the voting securities of such Registered Corporation, only if
such additional ownership results from a stock repurchase
program conducted by the Registered Corporation,
upon the condition that such institutional investor does
not purchase or otherwise acquire any additional voting
securities of the Registered Corporation that would result
in an increase in the institutional investor’s ownership
percentage. Unless otherwise notified by the chairman,
such an institutional investor is not required to apply to the
commission for a finding of suitability, but shall be subject to
reporting requirements as prescribed by the chairman.
The applicant is required to pay all costs of investigation
incurred by the Nevada Gaming Authorities.
The Nevada Act provides that any person who fails or
refuses to apply for a finding of suitability or a license within
thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be
found unsuitable. The same restrictions apply to a record
holder (in the case of the Company a registered holder) if
the record owner, after request, fails to identify the beneficial
owner.
Any person found unsuitable and who holds, directly
or indirectly, any of the voting securities of a Registered
Corporation beyond such period of time as may be
prescribed by the Nevada Commission may be guilty
of a criminal offence under Nevada law. A Registered
Corporation can be sanctioned, including the loss of its
approvals if, after it receives notice that a person is unsuitable
to be the holder of the voting securities of the Registered
Corporation or to have any other relationship with the
Registered Corporation, it:
(i) pays that person any dividend or interest upon its voting
securities,
(ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by that
person,
(iii) pays remuneration in any form to that person for services
rendered or otherwise, or
(iv) fails to pursue all lawful efforts to require such unsuitable
person to relinquish his voting securities including,
if necessary, the immediate purchase of said voting
securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the
holder of any debt security of a Registered Corporation to
file applications, be investigated and be found suitable to
own the debt security of a Registered Corporation. If the
Nevada Commission determines that a person is unsuitable
to own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss
of its approvals, if without the prior approval of the Nevada
Commission, it:
(i) pays to the unsuitable person any dividend, interest, or
any distribution whatsoever;
(ii) recognises any voting right by such unsuitable person in
connection with such securities;
(iii) pays the unsuitable person remuneration in any form; or
(iv) makes any payment to the unsuitable person by
way of principal, redemption, conversion, exchange,
liquidation, or similar transaction.
52
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NEVADA REGULATORY DISCLOSURE
A Registered Corporation may not make a public offering
of its securities without the prior approval of the Nevada
Commission if the securities or proceeds therefrom are
intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations
incurred for such purposes. On June 21 2001, the Nevada
Commission granted the Company prior approval to make
public offerings for a period of two years subject to certain
conditions (“Shelf Approval”). This approval has been
extended and remains in place today. However, the Shelf
Approval may be rescinded for good cause without prior
notice upon the issuance of an interlocutory stop order by
the Chairman of the Nevada Board. The Shelf Approval does
not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy
or adequacy of the prospectus or the investment merits of
the securities offered. Any representation to the contrary is
unlawful. An application to renew the Shelf Approval (which
can only be issued for a maximum term of three years) is
being lodged with the Commission.
Other Regulatory requirements – Other Gaming Authorities
throughout the world may require any person who acquires
a beneficial ownership of more than 5% of a Registered
Corporation’s voting securities to report the acquisition
to the Gaming Authority and in some cases, apply to the
Gaming Authority for a finding of suitability within thirty days
of acquiring more than 5% of the Registered Corporation’s
voting securities. The applicant is subject to the same rules as
in Nevada in relation to an unsuitable finding. The applicant
is required to pay all costs of investigation incurred by the
Gaming Authorities.
A more complete summary of the Nevada Act is available on
request from:
The Secretary, Aristocrat Leisure Limited
Building A, Pinnacle Office Park, 85 Epping Road
North Ryde NSW 2113 Australia
Telephone: +61 2 9013 6000 Fax: +61 2 9013 6274
53
ARISTOCRAT LEISURE LIMITED Annual Report 2017
FIVE YEAR SUMMARY
$’m (except where indicated)
2017
2016
2015
2014
2013
Profit or loss items
Revenue (1)
EBITDA (2)
Depreciation and amortisation
EBIT (2)
Net interest expense
Profit before income tax expense (2)
Income tax expense
Profit after income tax expense (2)
Significant items and discontinued
operations after tax
Reported net profit/(loss) attributable to
members of Aristocrat Leisure Limited
Total dividend paid - parent entity only
Balance sheet items
Contributed equity
Reserves
Retained earnings
Non-controlling interest
Total equity
Cash and cash equivalents
Other current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Total assets
2,453.8
1,001.2
(220.0)
781.2
(53.1)
728.1
(233.0)
495.1
2,128.7
1,582.4
806.0
(208.9)
597.1
(89.9)
507.2
(156.7)
350.5
523.1
(162.3)
360.8
(81.3)
279.5
(88.0)
191.5
839.1
219.2
(43.3)
175.9
(8.0)
167.9
(37.7)
130.2
813.8
188.1
(42.8)
145.3
(11.3)
134.0
(26.8)
107.2
-
-
(5.1)
(146.6)
-
495.1
185.2
350.5
121.0
186.4
101.1
715.1
(116.8)
747.3
-
693.8
(55.7)
437.4
-
1,345.6
1,075.5
547.1
647.9
241.3
1,687.7
168.9
3,292.9
283.2
591.9
217.5
1,736.5
158.6
2,987.7
693.8
15.7
207.9
-
917.4
329.0
569.5
203.4
1,941.8
175.0
3,218.7
(16.4)
85.5
641.6
(58.1)
122.6
-
706.1
285.9
415.6
121.4
130.5
159.3
1,112.7
107.2
49.6
233.1
(78.1)
224.4
(4.0)
375.4
29.7
434.4
106.9
151.1
151.1
873.2
54
ARISTOCRAT LEISURE LIMITED Annual Report 2017
FIVE YEAR SUMMARY
$’m (except where indicated)
Current payables and other liabilities
Current borrowings
Current tax liabilities and provisions
Non-current borrowings
Non-current provisions
Other non-current liabilities
Total liabilities
Net assets
Other information
2017
460.0
0.1
193.0
1,199.3
13.8
81.1
1,947.3
1,345.6
2016
434.9
-
114.3
1,287.8
13.4
61.8
1,912.2
1,075.5
2015
402.7
0.1
39.5
1,779.5
14.7
64.8
2,301.3
917.4
2014
2013
209.3
114.4
48.0
0.2
13.2
21.5
406.6
706.1
202.4
0.1
14.3
237.8
14.1
29.1
497.8
375.4
Employees at year end
Number
3,640
3,200
2,912
2,274
2,173
Return on Aristocrat
shareholders' equity (2)
Basic earnings per share (2)
Net tangible assets/(liabilities)
per share
Total dividends per share -
ordinary
Dividend payout ratio (2)
Issued shares at year end
Net (cash)/debt (3)
Net cash (debt)/equity
(1) Revenue as per segment results.
%
Cents
36.8
77.7
32.6
55.1
20.9
30.3
$
(0.54)
(1.04)
(1.61)
Cents
%
'000
$'m
%
34.0
44
25.0
45
17.0
56
638,544
637,120
637,120
630,022
551,418
652.3
(48.5)
1,004.6
(93.4)
1,450.6
(158.1)
(171.3)
24.3
208.2
(55.5)
18.4
23
0.91
16.0
70
28.6
19.5
0.41
14.5
74
(2) Before the impact of abnormal and one-off items that are not representative of the underlying operational performance of the Group. The non-IFRS information
presented above has not been audited in accordance with the Australian Auditing Standards.
(3) Current and non-current borrowings net of cash and cash equivalents.
55
ARISTOCRAT LEISURE LIMITED Annual Report 2017
FINANCIAL STATEMENTS
CONTENTS
Statement of profit or loss and other
comprehensive income
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
1 Business performance
1-1 Segment performance
1-2 Revenues
1-3 Expenses
1-4 Taxes
1-5 Earnings per share
1-6 Dividends
2 Operating assets and liabilities
2-1 Trade and other receivables
2-2 Inventories
2-3 Intangible assets
2-4 Property, plant and equipment
2-5 Trade and other payables
2-6 Provisions
3 Capital and financial structure
3-1 Borrowings
3-2 Financial assets and financial liabilities
3-3 Reserves and retained earnings
3-4 Contributed equity
57
58
59
60
62
62
64
65
66
68
69
70
70
71
72
75
76
77
78
78
79
80
81
3-5 Net tangible assets/(liabilities) per share 82
3-6 Capital and financial risk management 82
4 Group structure
4-1 Business combinations
4-2 Subsidiaries
5 Employee benefits
5-1 Key management personnel
5-2 Share-based payments
6 Other disclosures
6-1 Commitments and contingencies
6-2 Events occurring after reporting date
6-3 Remuneration of auditors
6-4 Related parties
6-5 Parent entity financial information
6-6 Deed of cross guarantee
6-7 Basis of preparation
88
88
89
90
90
91
96
96
97
97
97
97
98
99
Directors’ declaration
102
56
ARISTOCRAT LEISURE LIMITED Annual Report 2017
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2017
CONSOLIDATED
Revenue
Cost of revenue
Gross profit
Other income
Design and development costs
Sales and marketing costs
General and administration costs
Finance costs
Profit before income tax expense
Income tax expense
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange difference on translation of foreign operations
Net investment hedge
Changes in fair value of interest rate hedge
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year
Earnings per share attributable to ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
Note
2017
$'m
2016
$'m
1-2
2,453.8
(967.6)
1,486.2
1-2
10.0
1-3
(268.4)
(116.8)
(320.2)
(62.7)
728.1
1-4
(233.0)
495.1
3-3
3-3
3-3
1-5
1-5
(30.8)
3.9
10.0
(16.9)
478.2
Cents
77.7
77.5
2,128.7
(872.7)
1,256.0
11.6
(239.2)
(119.5)
(301.5)
(100.2)
507.2
(156.7)
350.5
(92.5)
18.6
(5.7)
(79.6)
270.9
Cents
55.1
54.9
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
57
ARISTOCRAT LEISURE LIMITED Annual Report 2017
BALANCE SHEET
AS AT 30 SEPTEMBER 2017
CONSOLIDATED
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
Current tax assets
Total current assets
Non-current assets
Trade and other receivables
Financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Financial liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Provisions
Financial liabilities
Deferred tax liabilities
Deferred revenue
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Note
2017
$'m
2016
$'m
2-1
2-2
3-2
2-1
3-2
2-4
2-3
1-4
2-5
3-1
2-6
3-2
2-5
3-1
2-6
3-2
1-4
3-4
3-3
3-3
547.1
512.3
116.4
6.4
12.8
1,195.0
107.0
7.8
241.3
1,687.7
54.1
2,097.9
3,292.9
404.7
0.1
148.7
44.3
0.5
54.8
653.1
283.2
432.9
124.3
7.0
27.7
875.1
96.9
6.6
217.5
1,736.5
55.1
2,112.6
2,987.7
371.1
-
81.8
32.5
-
63.8
549.2
44.2
37.5
1,199.3
1,287.8
13.8
0.9
12.7
19.6
3.7
1,294.2
1,947.3
1,345.6
715.1
(116.8)
747.3
1,345.6
13.4
10.8
-
10.3
3.2
1,363.0
1,912.2
1,075.5
693.8
(55.7)
437.4
1,075.5
The above balance sheet should be read in conjunction with the accompanying notes.
58
ARISTOCRAT LEISURE LIMITED Annual Report 2017
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2017
CONSOLIDATED
Balance at 1 October 2015
Profit for the year ended 30 September 2016
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Net movement in share-based payments reserve
3-3
Dividends provided for and paid
Contributed
equity
$’m
Note
Reserves
$’m
Retained
earnings
$'m
Total equity
$'m
693.8
15.7
207.9
917.4
-
-
-
-
-
-
-
350.5
350.5
(79.6)
-
350.5
270.9
(79.6)
(79.6)
8.2
-
8.2
-
8.2
(121.0)
(121.0)
(121.0)
(112.8)
Balance at 30 September 2016
693.8
(55.7)
437.4
1,075.5
Profit for the year ended 30 September 2017
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax
Net movement in share-based payments reserve
Dividends provided for and paid*
3-4
3-3
1-6
Balance at 30 September 2017
*Payment of dividends relates to the 2016 final dividend and 2017 interim dividend.
-
-
-
-
495.1
(16.9)
(16.9)
-
495.1
495.1
(16.9)
478.2
21.3
-
-
-
(44.2)
-
21.3
(44.2)
-
-
(185.2)
(185.2)
21.3
(44.2)
(185.2)
(208.1)
715.1
(116.8)
747.3
1,345.6
The above statement of changes in equity should be read in conjunction with the accompanying notes.
59
ARISTOCRAT LEISURE LIMITED Annual Report 2017
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2017
CONSOLIDATED
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other income
Interest received
Interest paid
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangibles
Payment for acquisition of subsidiaries (net of cash acquired)
Proceeds from sale of subsidiaries (net of cash disposed)
Net cash outflow from investing activities
Cash flows from financing activities
Payments for shares acquired by the employee share trust
Repayments of borrowings
Payments for loans advanced
Finance lease payments
Dividends paid
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes
Cash and cash equivalents at the end of the year
The above cash flow statement should be read in conjunction with the accompanying notes.
2017
$'m
2016
$'m
2,469.4
2,251.6
(1,499.7)
(1,420.1)
0.4
8.1
(52.1)
(127.0)
799.1
1.3
9.1
(76.8)
(84.6)
680.5
(123.9)
(182.5)
0.8
(90.4)
(23.0)
-
-
(10.1)
(30.2)
13.5
(236.5)
(209.3)
(45.9)
(65.4)
-
(0.1)
(185.2)
(296.6)
266.0
283.2
(2.1)
547.1
(12.8)
(359.0)
(13.5)
(0.1)
(121.0)
(506.4)
(35.2)
332.7
(14.3)
283.2
60
ARISTOCRAT LEISURE LIMITED Annual Report 2017
CASH FLOW STATEMENT CONTINUED
FOR THE YEAR ENDED 30 SEPTEMBER 2017
Reconciliation of net operating cash flows
CONSOLIDATED
Profit for the year
Non-cash items
Depreciation and amortisation
Equity-settled share-based payments
Net loss on sale and impairment of property, plant and equipment
Net foreign currency exchange differences
Gain on sale of subsidiaries
Non-cash borrowing costs amortisation
Change in operating assets and liabilities:
(Increase)/decrease in assets
— Receivables and deferred revenue
— Inventories
— Other operating assets
Increase/(decrease) in liabilities
— Payables
— Other provisions
— Tax balances
Net cash inflow from operating activities
Cash and cash equivalents
2017
$'m
2016
$'m
495.1
350.5
220.0
16.1
12.4
(9.5)
-
4.6
(85.9)
(20.8)
(16.7)
68.5
12.3
103.0
799.1
208.9
19.3
11.0
(32.2)
(0.1)
13.0
49.0
(5.4)
(5.3)
(2.5)
3.0
71.3
680.5
Cash and cash equivalents include cash on hand, bank overdrafts, deposits held at call with financial institutions and other
short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
61
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE
This section provides the information that is most relevant to understanding the financial performance of the Group during
the financial year.
Details on the primary operating assets used and liabilities incurred to support the Group’s operating activities are set out in
Section 2 while the Group’s financing activities are outlined in Section 3.
1-1 Segment performance
1-4 Taxes
1-2 Revenues
1-3 Expenses
1-5 Earnings per share
1-6 Dividends
1-1 SEGMENT PERFORMANCE
(a) Identification of reportable segments
(b) Segment results
The activities of the entities in the Group are predominantly
within a single business which is the development, assembly,
sale, distribution and service of gaming machines and
systems. The Group also operates within the online social
gaming and real money wager markets.
Management has determined the operating segments
based on the reports reviewed by the chief operating
decision maker. Reports reviewed consider the business
primarily from a geographical perspective. The following
reportable segments have been identified:
— The Americas;
— Australia and New Zealand;
— Digital; and
— International Class III.
Segment results represent earnings before interest and
tax, and before significant items, design and development
expenditure, amortisation of acquired intangibles, selected
intercompany charges and corporate costs.
Segment revenues and expenses are those that are directly
attributable to a segment and the relevant portion that can
be allocated to the segment on a reasonable basis.
Segment revenues, expenses and results exclude transfers
between segments. The revenue from external parties
reported to the chief operating decision maker is measured
in a manner consistent with that in the statement of profit or
loss and other comprehensive income.
62
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-1 SEGMENT PERFORMANCE CONTINUED
The Americas
$’m
Australia and
New Zealand
$’m
Digital
$’m
International
Class III
$'m
Consolidated
$'m
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
1,424.5 1,255.2
431.6
412.7
383.0
279.7
214.7
181.1 2,453.8 2,128.7
Revenue
Revenue from external
customers
Results
Segment results
736.4
600.3
190.5
169.1
158.9
118.1
112.5
80.5 1,198.3
968.0
Interest revenue
Interest expense
Design and
development costs
Amortisation of acquired
intangibles
Other expenses
Profit before income
tax expense
Income tax expense
Profit for the year
Other segment information
Non-current assets other
than financial and deferred
tax assets
Depreciation and
amortisation expense
9.6
10.3
(62.7)
(100.2)
(268.4)
(239.2)
(76.9)
(71.8)
(76.3)
(55.4)
728.1
507.2
(233.0)
(156.7)
495.1
350.5
1,903.1 1,931.7
116.3
106.7
1.5
0.8
15.1
11.7 2,036.0 2,050.9
111.3
107.4
13.3
17.1
0.4
0.3
4.5
3.5
129.5
128.3
63
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-2 REVENUES
2017
$'m
2016
$'m
Revenue
Recognition and measurement
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances, settlement discounts and
duties and taxes paid.
Sale of goods and related licences
1,076.0
910.5
Gaming operations, online and services 1,377.8 1,218.2
Total revenue
Other income
Interest
Sundry income
Total other income
2,453.8 2,128.7
9.6
0.4
10.0
10.3
1.3
11.6
Interest income is recognised using the effective interest
method.
Revenue type
Revenue stream Recognition
Revenue from
sale of goods and
related licences
Revenue
from gaming
operations, online
and services
Machine sales
When significant risks and rewards have transferred, usually upon delivery of goods
to the customer.
Licence income
When all obligations in accordance with the agreement have been met, which may
be at the time of sale or over the life of the agreement.
Systems contracts
On installation of the system or customer acceptance if significant risk that
customer will not accept the installed system.
Multiple element
arrangements
Recognised over the period that the obligations are satisfied. The fair values of each
element are determined based on the current market price of each of the elements
when sold separately. Where there is a discount on the arrangement, such discount
is allocated proportionally between the elements.
Participation
revenue
Rental income
Service revenue
Amount of revenue recognised monthly is calculated by either:
— multiplying a daily fee by the total number of days the machine has been
operating on the venue floor; or
— an agreed fee based upon a percentage of turnover or the net win of
participating machines.
Operating leases rental income is recognised on a straight line basis over the term
of the lease contract. Selling profit on finance leases is recognised in accordance
with machine sales. Finance income is recognised based on a constant periodic
rate of return on the remaining balance of the finance lease investment.
Recognised evenly over the period of the service agreement or as services are
performed. Revenue received in advance on prepaid service contracts is included
in deferred revenue.
Online gaming
revenue
Recognised when the player uses the credits purchased. Amounts not used at
period end are included in deferred revenue.
64
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-3 EXPENSES
2017
$’m
2016
$’m
Depreciation and amortisation
Property, plant and equipment
— Buildings
— Plant and equipment
— Leasehold improvements
Total depreciation and amortisation of
property, plant and equipment
Intangible assets
— Customer relationships and contracts
— Game names
— Technology and software
— Intellectual property and licences
— Capitalised development costs
Total amortisation of intangible assets
Total depreciation and amortisation
Employee benefits expense
Remuneration, bonuses and on-costs
Superannuation costs
Post-employment benefits other than
superannuation
Share-based payments expense
Total employee benefits expense
Lease payments
Rental expense relating to operating
leases
— Minimum lease payments
General and administration costs
General and administration before
amortisation of acquired intangibles
Amortisation of acquired intangibles
included in general and administration costs
Total general and administration costs
Other expense items
Write down of inventories to net
realisable value
Legal costs
Net foreign exchange loss
4.9
0.9
101.4 110.3
4.4
5.3
111.6 115.6
43.1
0.7
37.4
10.3
3.3
94.8
44.5
0.7
31.4
2.1
10.3
89.0
206.4 204.6
393.9 355.6
12.4
13.9
4.5
16.1
5.8
19.3
428.4 393.1
28.5
24.2
243.3 226.8
76.9
74.7
320.2 301.5
9.8
24.9
5.0
11.4
23.4
1.0
Recognition and measurement
Lease payments
Payments made under operating leases (net of any incentives
received from the lessor) are recognised in the profit or loss
on a straight-line basis over the period of the lease. Finance
leases are capitalised at the lease’s inception at the fair value
of the leased property, or, if lower, the present value of
the minimum lease payments. The rental obligation cost is
charged to profit or loss over the lease period.
Finance and borrowing costs
Finance costs comprise interest expense on borrowings,
the costs to establish financing facilities (which are expensed
over the term of the facility) and finance lease interest
charges.
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits and annual leave are recognised in other payables
in respect of employees’ services up to the reporting date.
The amounts are measured at the amounts expected to be
paid when the liabilities are settled.
Long-term benefits
The liability for long service leave which is not expected
to be settled within 12 months after the end of the period
is recognised in the provision for employee benefits and
measured as the present value of expected future payments
to be made in respect of services provided by employees
up to the reporting date. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Expected future payments
are discounted using market yields at the reporting date
on corporate bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash
outflows.
Bonus plans
The Group recognises a liability and an expense for
bonuses based on criteria that takes into account the
profit attributable to the Company’s shareholders. The
Group recognises a liability where contractually obliged or
where there is past practice that has created a constructive
obligation. Where bonus plans are settled by way of the
issue of shares in the Company, the expense is accounted for
as part of the share-based payments expense.
Employee benefit on-costs
Employee benefit on-costs, including payroll tax, are
recognised and included in employee benefit liabilities and
costs when the employee benefits to which they relate are
recognised as liabilities.
65
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-4 TAXES
Major components of income tax
expense are:
(a) Income tax expense
Current
Current year
Adjustment for prior years
Deferred
Temporary differences
Adjustment for prior years
Income tax expense
2017
$’m
2016
$’m
214.6 146.2
(9.4)
(9.4)
20.4
13.6
7.4
6.3
233.0 156.7
Deferred income tax expense included in
income tax expense comprises:
Decrease in net deferred tax assets
27.8
19.9
Deferred income tax expense included in
income tax expense
27.8
19.9
(d) Revenue and capital tax losses
Unused gross tax losses for which no
deferred tax asset has been recognised
Unused gross capital tax losses for
which no deferred tax asset has been
recognised
Revenue and capital tax losses
Potential tax benefit
2017
$’m
2016
$’m
1.0
1.0
204.8 204.8
205.8 205.8
61.7
61.7
Unused revenue losses were incurred by Aristocrat Leisure
Limited’s overseas subsidiaries. All unused capital tax losses
were incurred by Australian entities.
Current taxes
The income tax expense for the year is the tax payable on
the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities, current income tax of prior
years and unused tax losses/credits.
(b) Tax reconciliation
Profit before tax
Tax at the Australian tax rate of 30%
(2016: 30%)
728.1
507.2
218.4
152.2
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the Company’s
subsidiaries operate and generate taxable income.
Impact of changes in tax rates and law
22.3
7.7
Exempt income
Non-deductible expenses
Research and development tax credit
Difference in overseas tax rates
Adjustment in respect of previous years
income tax
Income tax expense
(26.6)
(7.2)
13.3
(6.5)
14.1
3.7
(6.4)
9.8
(2.0)
(3.1)
233.0 156.7
Average effective tax rate
32.0% 30.9%
(c) Amounts recognised directly in equity
Net deferred tax - credited directly
to equity
3.6
7.1
66
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-4 TAXES CONTINUED
(e) Deferred tax
Gross deferred tax assets
Employee benefits
Accruals and other provisions
Provision for stock obsolescence
Financial liabilities
Share-based equity
Unrealised foreign exchange losses
Other
Gross deferred tax assets
Deferred tax liabilities:
Financial liabilities
2017
$’m
2016
$’m
33.0
48.9
14.4
-
3.5
1.7
1.8
27.1
30.3
9.8
3.6
6.8
3.0
3.0
103.3
83.6
(4.3)
-
Plant, equipment and intangible assets
(57.6)
(28.5)
Net deferred tax assets
41.4
55.1
Movements
Balance at the start of the year
Charged to profit or loss
Charged to other comprehensive income
Credited directly to equity
Tax losses utilised
55.1
81.2
(27.8)
(19.9)
-
(14.9)
3.6
7.1
-
(13.7)
Reclassification to current tax provision
10.6
16.6
Deferred tax assets on entity held for sale
Foreign exchange currency movements
Balance at the end of the year
-
(0.1)
41.4
(0.2)
(1.1)
55.1
Deferred taxes
Deferred tax is recognised for all taxable temporary
differences and is calculated based on the carrying amounts
of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. Deferred tax is not
recognised for temporary differences relating to:
— initial recognition of goodwill;
— initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither
accounting nor taxable profit;
— investments in subsidiaries, where the Group is able
to control the timing of the reversal of the temporary
difference and it is probable that they will not reverse in
the foreseeable future.
Deferred tax is accounted for in respect of temporary
differences arising from differences between the carrying
amount of assets and liabilities and the corresponding tax base.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and
the Company/Group intends to settle its current tax assets
and liabilities on a net basis.
Tax consolidation
The Company and its wholly-owned Australian controlled
entities are part of a tax-consolidated group under Australian
taxation law. Aristocrat Leisure Limited is the head entity in the
tax-consolidated group. Entities within the tax-consolidated
group have entered into a tax funding arrangement and a tax
sharing agreement with the head entity. Under the terms of
the tax funding arrangement, Aristocrat Leisure Limited and
each of the entities in the tax-consolidated group have agreed
to pay (or receive) a tax equivalent payment to (or from) the
head entity, based on the current tax liability or current tax
asset of the entity. Each entity in the tax-consolidated group
measures its current and deferred taxes as if it continued to be
a separate taxable entity in its own right.
Key judgements and estimates:
Income tax provision
The Group is subject to income taxes in Australia
and jurisdictions where it has foreign operations.
Significant judgement is required in determining
the worldwide provision for income taxes.
There are certain transactions and calculations
undertaken during the ordinary course of business
for which the ultimate determination is uncertain.
The Group estimates its tax liabilities based on the
Group’s understanding of the tax law. Where the
final outcome of these matters is different from
the amounts that were initially recorded, such
differences will impact the current and deferred
income tax assets and liabilities in the period in
which such determination is made.
67
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-5 EARNINGS PER SHARE
Basic and diluted earnings per share (EPS) calculations
Net profit attributable to members of Aristocrat Leisure Limited ($’m)
Weighted average number of ordinary shares (WANOS) used in calculating basic EPS
(number)
Effect of Performance Share Rights (number)
WANOS used in calculating diluted EPS (number)
Basic EPS (cents per share)
Diluted EPS (cents per share)
2017
495.1
2016
350.5
637,565,360 636,383,164
1,486,325
1,580,860
639,146,220 637,869,489
77.7
77.5
55.1
54.9
Basic earnings per share
Information concerning the classification of securities
The calculation of basic earnings per share is based on the
profit attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding.
Diluted earnings per share
The calculation of diluted earnings per share is based on the
profit attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding after
adjustments for the effects of all dilutive potential ordinary
shares.
Share-based payments
Rights granted to employees under share-based payments
arrangements are considered to be potential ordinary shares
and have been included in the determination of diluted
earnings per share. Details relating to the rights are set out in
Note 5-2.
Included within the weighted average number of potential
ordinary shares related to Performance Share Rights are
287,461 (2016: 380,902) Performance Share Rights that had
lapsed during the year.
Share-based payments trust
Shares purchased on-market and issued shares through the
Aristocrat Employee Equity Plan Trust have been treated as
shares bought back and cancelled for the purpose of the
calculation of the weighted average number of ordinary
shares in calculating basic earnings per share. At the end of
the reporting period, there were 2,083,839 (2016: 1,097,867)
shares held in the share trust.
68
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-6 DIVIDENDS
Ordinary shares
Dividend per share (cents)
Franking percentage (%)
Cost ($’m)
Payment date
2017
Final
20.0c
100%
127.7
2017
Interim
14.0c
25%
89.6
2016
Final
15.0c
0%
95.6
2016
Interim
10.0c
0%
63.7
20 December 2017
3 July 2017 20 December 2016
1 July 2016
Franking credits
Dividends not recognised at year end
The franking account balance at 30 September 2017 is
$51.6m (2016: $nil).
Recognition and measurement
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the financial
year but not distributed at reporting date. The final 2017
dividend had not been declared at the reporting date and
therefore is not reflected in the financial statements.
Since the end of the year, the Directors have recommended
the payment of a final dividend of 20.0 cents (2016: 15.0
cents) per fully paid ordinary share, franked at 100%. The
aggregate amount of the proposed final dividend expected
to be paid on 20 December 2017 out of retained earnings at
30 September 2017, but not recognised as a liability at the
end of the year is $127.7m.
69
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES
This section provides information relating to the operating assets and liabilities of the Group which contribute to the business
platform for generating revenues and profits.
2-1 Trade and other receivables
2-4 Property, plant and equipment
2-2 Inventories
2-3 Intangible assets
2-5 Trade and other payables
2-6 Provisions
2-1 TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for impairment
Loan receivables
Other receivables
Total current receivables
Non-current
Trade receivables
Loan receivables
Other receivables
Total non-current receivables
Movements in the provision:
At the start of the year
Provision recognised during the year
Foreign currency exchange differences
Provisions no longer required
At the end of the year
2017
$’m
2016
$’m
459.8 387.1
(17.8)
(14.7)
2.6
3.3
67.7
57.2
512.3 432.9
60.9
10.2
35.9
107.0
55.2
11.4
30.3
96.9
(14.7)
(13.3)
(3.9)
(4.5)
0.4
0.4
1.1
2.0
(17.8)
(14.7)
Trade receivables
Trade receivables are recognised initially at fair value and
subsequently at amortised cost using the effective interest
method, less an allowance for impairment. Current trade
receivables are non-interest bearing and generally have
terms of up to 120 days.
Impairment of trade receivables
Collectability of trade receivables is reviewed on an ongoing
basis. A provision for impairment of trade receivables is
established when there is objective evidence that the Group
will not be able to collect all amounts due. Debts which are
known to be uncollectible are written off by reducing the
carrying amount directly.
Other receivables
These include prepayments, other receivables and long-term
deposits incurred under normal terms and conditions and
which do not earn interest. They do not contain impaired
assets and are not past due.
Fair value
The above provision includes $9.0m (2016: $6.6m) of trade
receivables past due and considered impaired. Included
in the provision is $10.9m (2016: $7.7m) relating to Latin
America trade receivables.
Due to their short-term nature, the carrying amount of
current receivables are estimated to represent their fair value.
Non-current receivables are carried at discounted carrying
values which are estimated to represent their fair value.
Trade receivables past due but not
impaired
Under 3 months
3 months and over
Total receivables past due but not
impaired
61.9
41.3
0.6
1.7
62.5
43.0
70
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-1 TRADE AND OTHER RECEIVABLES CONTINUED
Leasing arrangements
Included in trade receivables are receivables from gaming machines that have been sold under finance lease arrangements.
The lease payments receivable under these contracts are as follows:
Minimum
lease payments
$'m
Unearned
finance income
Present value of minimum
lease payments
$'m
$'m
2017
2016
2017
2016
2017
2016
2.4
0.6
3.0
6.3
1.7
8.0
0.4
-
0.4
0.7
-
0.7
2.0
0.6
2.6
Current - Under one year
Non-current -
Between one and five years
2-2 INVENTORIES
Current
Raw materials and stores
Work in progress
Finished goods
Inventory in transit
5.6
1.7
7.3
2016
$’m
109.5
9.8
21.0
9.3
(25.3)
124.3
2017
$’m
96.6
10.6
32.2
1.7
(24.7)
116.4
Provision for obsolescence and impairment
Total inventories
Inventory expense
Inventories recognised as an expense during the year ended
30 September 2017 amounted to $410.8m (2016: $376.6m).
Recognition and measurement
Inventories are valued at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and
an appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated on the basis of normal
operating capacity. Net realisable value is the estimated
selling price in the ordinary course of business less the
estimated costs to sell.
Key judgements and estimates:
Carrying value of inventory
The Group assesses at each reporting date whether
inventory is recorded at the lower of cost and net
realisable value, including assessing the expected
sales of slow moving inventories. These assessments
involve estimates and assumptions that are based
on current expectations of demand and market
conditions, including opportunities to sell into new
markets.
71
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-3 INTANGIBLE ASSETS
$'m
Cost
Accumulated amortisation
Net carrying amount
Goodwill
996.2
-
996.2
643.2
(83.5)
559.7
Carrying amount at 1 October 2015
1,089.0
658.7
Customer
relationships
and contracts
Tradename
and game
names
Intellectual
property and
licences
Capitalised
development
costs
Technology
and software
Total
26.9
(1.4)
25.5
28.6
-
-
36.3
(4.2)
32.1
9.3
25.5
-
(2.1)
24.5
(14.9)
9.6
11.5
8.4
-
196.2
1,923.3
(82.8)
(186.8)
113.4
1,736.5
144.7
1,941.8
10.1
(0.9)
44.0
(0.9)
(10.3)
(31.4)
(89.0)
(44.5)
(0.7)
(92.8)
(54.5)
(2.4)
(0.6)
-
(9.1)
(159.4)
996.2
559.7
25.5
32.1
9.6
113.4
1,736.5
Cost
Accumulated amortisation
Net carrying amount
973.4
628.5
-
(123.5)
973.4
505.0
Carrying amount at 1 October 2016
996.2
559.7
26.3
(2.1)
24.2
25.5
-
-
72.4
(14.1)
58.3
32.1
38.5
-
34.5
228.2
1,963.3
(18.3)
(117.6)
(275.6)
16.2
110.6
1,687.7
9.6
9.9
-
113.4
1,736.5
36.5
(0.2)
84.9
(0.2)
(43.1)
(0.7)
(10.3)
(3.3)
(37.4)
(94.8)
(22.8)
(11.6)
(0.6)
(2.0)
-
(1.7)
(38.7)
973.4
505.0
24.2
58.3
16.2
110.6
1,687.7
Additions
Transfers
Amortisation charge
Foreign currency exchange
movements
Carrying amount at
30 September 2016
Additions
Transfers
Amortisation charge
Foreign currency exchange
movements
Carrying amount at
30 September 2017
-
-
-
-
-
-
-
-
-
-
72
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-3 INTANGIBLE ASSETS CONTINUED
Intangible assets
Useful life
Amortisation
method
Recognition and measurement
Goodwill
Indefinite
Not
amortised
Goodwill acquired in a business combination is measured at cost and
subsequently measured at cost less any impairment losses. The cost
represents the excess of the cost of a business combination over the
fair value of the identifiable assets and liabilities acquired.
Technology and
software
Customer
relationships and
contracts acquired
3 - 8 years
Straight line
15 years
Straight line
Tradename
Indefinite
Not
amortised
Game names
15 years
Straight line
Technology and software is carried at cost less accumulated
amortisation and impairment losses. Technology and software
acquired through a business combination is measured at the fair
value at acquisition date and is subsequently amortised.
Customer relationships and contracts acquired in a business
combination are carried at cost less accumulated amortisation and
any accumulated impairment losses.
The tradename was acquired as part of a business combination
and recognised at its fair value at the date of acquisition. It has an
indefinite life so is not amortised, but rather tested for impairment at
each reporting date.
The factors that determined that this asset had an indefinite useful
life included the history of the business and tradename, the market
position, stability of the industry and the expected usage.
Game names were acquired as part of a business combination. Game
names are recognised at their fair value at the date of acquisition and
are subsequently amortised.
5 - 8 years
Straight line
Intellectual property and licences are carried at cost less accumulated
amortisation and impairment losses.
2 - 4 years
Straight line
Capitalised development costs are costs incurred on internal
development projects. Development costs are only capitalised when
they relate to the creation of an asset that can be used or sold to
generate benefits and can be reliably measured.
Intellectual property
and licences
Capitalised design
and development
costs
(a) Impairment tests
Goodwill and other intangibles are allocated to the Group’s
cash-generating units (CGUs) for the purpose of impairment
testing. A CGU is the smallest identifiable group of assets
that generate cash inflows that are largely independent of
the cash inflows from other assets or groups of assets.
A summary of the goodwill allocation by CGU is presented
below:
Americas (excluding VGT)
Product Madness (part of
Digital segment)
VGT
Total goodwill at the
end of the year
2017
$'m
72.6
22.8
878.0
2016
$'m
74.4
23.3
898.5
973.4
996.2
The VGT CGU also includes $15.8m relating to a tradename
that is not amortised, and is tested for impairment annually.
73
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-3 INTANGIBLE ASSETS CONTINUED
(b) Key assumptions used for value-in-use calculations
A discounted cash flow model has been used based on operating and investing cash flows (before borrowing costs and
tax impacts) in valuing the Group’s CGUs that contain intangible assets. The following inputs and assumptions have been
adopted:
Inputs
Assumptions
Cash flow projections
Financial budgets and strategic plans approved by the Board to 2018 and management
projections from 2019 to 2022. These projections, which include projected revenues,
gross margins and expenses, have been determined based on past performance and
management expectations for the future. Expected market conditions in which each CGU
operates have been taken into account in the projections.
Pre-tax annual discount rate
Americas (excluding VGT)
Product Madness
VGT
Americas (excluding VGT)
Terminal growth rate
Product Madness
VGT
2017
11.0%
13.3%
10.3%
2.0%
3.0%
2.0%
2016
12.0%
15.2%
11.0%
3.0%
3.0%
2.0%
Allocation of head
office assets
The Group’s head office assets do not generate separate cash inflows and are utilised
by more than one CGU. Head office assets are allocated to CGUs on a reasonable and
consistent basis and tested for impairment as part of the testing of the CGU to which the
head office assets are allocated.
(c) Impact of possible changes in key assumptions
With regard to the assessment of the value-in-use of the
CGUs, management do not believe that a reasonably
possible change in any one of the key assumptions would
lead to a material impairment charge.
Key judgements and estimates:
Recoverable amount of intangible assets
The Group tests annually whether goodwill and
other intangible assets that are not amortised
have suffered any impairment. The recoverable
amounts of cash-generating units have been
determined based on value-in-use calculations.
These calculations require the use of assumptions.
The above note details these assumptions and the
potential impact of changes to the assumptions.
74
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-4 PROPERTY, PLANT AND EQUIPMENT
Land and buildings
$’m
Leasehold
improvements
$’m
Plant and equipment
$’m
Total
$’m
2017
2016
2017
2016
2017
2016
2017
2016
Cost
20.2
20.7
57.1
51.5
554.4
468.4
631.7
540.6
Accumulated depreciation/
amortisation
Net carrying amount
Carrying amount at the
start of the year
Additions
Disposals
Impairment losses
Transfers*
(11.4)
8.8
14.1
-
-
-
-
Depreciation and amortisation
(4.9)
(6.6)
14.1
16.6
0.1
-
(0.5)
-
(0.9)
(31.4)
25.7
24.9
6.5
-
-
-
(26.6)
(347.6)
(289.9)
(390.4)
(323.1)
24.9
206.8
178.5
241.3
217.5
28.2
2.7
(0.1)
-
-
178.5
118.7
(3.1)
-
158.7
180.0
(3.7)
(6.6)
217.5
125.2
(3.1)
-
203.5
182.8
(3.8)
(7.1)
18.7
(23.4)
18.7
(23.4)
(5.3)
(4.4)
(101.4)
(110.3)
(111.6)
(115.6)
Foreign currency exchange
differences
Carrying amount at the
end of the year
(0.4)
(1.2)
(0.4)
(1.5)
(4.6)
(16.2)
(5.4)
(18.9)
8.8
14.1
25.7
24.9
206.8
178.5
241.3
217.5
*Transfers predominantly relate to gaming operations assets that have been transferred to and from inventory.
Recognition and measurement
Derecognition
An item of property, plant and equipment is derecognised
when it is sold or disposed, or when its use is expected to
bring no future economic benefits. Gains and losses on
disposals are determined by comparing disposal proceeds
with the carrying amount of the asset and are recognised
within ‘other income’ in the profit or loss in the period the
disposal occurs.
All property, plant and equipment are stated at historical cost
less accumulated depreciation/amortisation and impairment.
The expected useful lives and depreciation and amortisation
methods are listed below:
Asset
Useful life
Depreciation
method
Buildings
Leasehold
improvements
25-40 years Straight line
2-10 years
Straight line
Plant and equipment
1-10 years
Straight line
Land
Indefinite
No depreciation
75
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-5 TRADE AND OTHER PAYABLES
2017
$’m
Current
Trade payables
Deferred consideration
Other payables
Total current payables
Non-current
Deferred consideration
Other payables
Total non-current payables
130.5
-
274.2
404.7
18.6
25.6
44.2
2016
$’m
104.9
22.8
243.4
371.1
18.3
19.2
37.5
Recognition and measurement
Trade payables and other payables are recognised when the
Group becomes obliged to make future payments resulting
from the purchase of goods and services. The amounts
are unsecured and are usually paid within 30-120 days of
recognition. Other payables include short-term employee
benefits.
The carrying amounts of trade and other payable are
estimated to represent their fair value.
76
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-6 PROVISIONS
Current
Non-current
Carrying amount at the
end of the year
Movements in provision
Employee
benefits
$’m
Make good
allowances
$’m
Progressive
jackpot liabilities
$’m
Total
$’m
2017
2016
2017
2016
2017
2016
2017
2016
12.5
1.5
11.5
1.8
0.4
8.8
0.2
8.6
31.4
3.5
20.8
3.0
44.3
13.8
32.5
13.4
14.0
13.3
9.2
8.8
34.9
23.8
58.1
45.9
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Carrying amount at the start of the year
Payments
Additional provisions recognised
Reversal of provisions recognised
Foreign currency exchange differences
Carrying amount at the end of the year
Recognition and measurement
Provisions are recognised when:
(a) the Group has a present legal or constructive obligation
Make good
allowances
$’m
Progressive
jackpot liabilities
$’m
2017
2016
2017
2016
8.8
-
0.6
-
(0.2)
9.2
8.7
23.8
-
(32.5)
0.6
44.0
(0.1)
(0.4)
8.8
-
(0.4)
34.9
21.8
(6.3)
10.2
-
(1.9)
23.8
Provision is made for the estimated cash flows expected to
be required to settle the obligation based on a percentage
of jackpot funded revenue.
as a result of past events;
Make good allowances
Provision is made for the estimated discounted cash flows
expected to be required to satisfy the make good clauses in
the lease contracts.
(b) it is probable that an outflow of resources will be required
to settle the obligation; and
(c) the amount has been reliably estimated.
Progressive jackpot liabilities
In certain jurisdictions in the United States, the Group is liable
for progressive jackpots, which are paid as an initial amount
followed by either:
(a) an annuity paid out over 19 or 20 years after winning; or
(b) a lump sum amount equal to the present value of the
progressive component.
77
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE
This section provides information relating to the Group’s capital structure and its exposure to financial risk, how they affect the
Group’s financial position and performance, and how the risks are managed.
The Directors review the Group’s capital structure and dividend policy regularly and do so in the context of the Group’s ability
to invest in opportunities that grow the business, enhance shareholder value and continue as a going concern.
3-1 Borrowings
3-4 Contributed equity
3-2 Financial assets and financial liabilities
3-5 Net tangible assets per share
3-3 Reserves and retained earnings
3-6 Capital and financial risk management
3-1 BORROWINGS
Current
Secured
2017
$’m
2016
$’m
Lease liabilities
Total current borrowings
0.1
0.1
-
-
Non-current
Secured
Bank loans
Lease liabilities
1,198.6
1,287.3
0.7
0.5
Total non-current borrowings
1,199.3
1,287.8
Recognition and measurement
Borrowings are initially recognised at fair value, net of
transaction costs. Borrowings are subsequently measured at
amortised cost using the effective interest method. Fees paid
on the establishment of loan facilities are included as part of
the carrying amount of the borrowings.
The fair value of borrowings approximates the carrying amount.
The carrying amounts of the Group’s borrowings are
denominated in USD.
For an analysis of the sensitivity of borrowings to interest rate
and foreign exchange risk, refer to Note 3-6.
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Credit standby arrangements
Notes
Total
Unused
Total
Unused
2017
$’m
2016
$’m
Total facilities
— Bank overdrafts
— Bank loans
Total facilities
(i)
(ii)
7.6
1,298.6
1,306.2
7.6
100.0
107.6
7.6
1,387.3
1,394.9
7.6
100.0
107.6
(i) The bank overdraft facilities (A$5,000,000 and
US$2,000,000) are subject to annual review.
(ii) Syndicated loan facilities:
— US$950 million fully underwritten 7 year US Term
Loan B debt facility maturing 20 October 2021.
— A$100 million 5 year Revolving facility maturing 20
October 2019.
These facilities are provided by a syndicate of banks and
financial institutions. These secured facilities are supported
by guarantees from certain members of the Company’s
wholly owned subsidiaries and impose various affirmative
and negative covenants on the Company, including
restrictions on encumbrances, and customary events of
default. As part of the corporate facility, the Group is subject
to certain customary financial covenants measured on a six-
monthly basis.
Borrowings are currently priced at a floating rate of LIBOR
plus a fixed credit margin as specified in the Term Loan
B Syndicated Facility Agreement. The credit margin was
successfully renegotiated during 2017 on two separate
occasions as part of overall pricing amendments effective
from 3 March 2017 and 22 September 2017 respectively.
A portion of the interest rate exposure has been fixed under
separate interest rate swap arrangements.
78
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-2 FINANCIAL ASSETS AND
FINANCIAL LIABILITIES
Financial assets
Current
Debt securities held-to-maturity
Derivatives used for hedging
Total current financial assets
Non-current
Debt securities held-to-maturity
Other investments
Total non-current financial assets
Financial liabilities
Current
Derivatives used for hedging
Total current financial liabilities
Non-current
Interest rate swap contracts - cash
flow hedges
Total non-current financial liabilities
(a) Classification
2017
$’m
2016
$’m
6.4
-
6.4
4.7
3.1
7.8
0.5
0.5
0.9
0.9
If the Group were to sell other than an insignificant amount
of held-to-maturity financial assets, the whole category would
be tainted and reclassified as available-for-sale.
(b) Recognition and derecognition
Regular purchases and sales of financial assets are
recognised on trade-date - the date on which the Group
commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss. Financial
assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all
the risks and rewards of ownership.
(c) Measurement
Loans and receivables and held-to-maturity investments are
carried at amortised cost using the effective interest method.
5.9
1.1
7.0
3.5
3.1
6.6
-
-
10.8
10.8
Gains or losses arising from changes in the fair value of the
‘financial assets at fair value through profit or loss’ category
are presented in the statement of comprehensive income
within other income or other expenses in the period in which
they arise.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of
selling in the short term. Derivatives are classified as held for
trading unless they are designated as hedges.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. Loans and receivables are included in trade
and other receivables in the balance sheet.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial
assets with fixed or determinable payments and fixed
maturities that the Group has the positive intention and
ability to hold to maturity.
Further information on financial assets and liabilities is
disclosed in Note 3-6.
(d) Impairment
The Group assesses at the end of each reporting period
whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a
group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment
as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event
(or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be
reliably estimated.
All held-to-maturity investments are denominated in US
dollars. Details regarding interest rate and foreign exchange
risk exposure are disclosed in Note 3-6. There is no exposure
to price risk as the investments will be held to maturity. The
maximum exposure to credit risk at the reporting date is the
carrying amount of the investments. None of the held-to-
maturity investments are either past due or impaired.
79
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-3 RESERVES AND RETAINED EARNINGS
$’m
Balance at 1 October 2015
Profit for the year
Currency translation differences
Net investment hedge
Deferred tax
Movement in fair value of interest rate hedges
Retained
earnings
207.9
350.5
-
-
-
-
-
(92.5)
31.1
(12.5)
-
Total comprehensive income/(loss) for the year
350.5
(73.9)
Transactions with owners in their capacity
as owners
Dividends paid or provided for
Share-based payments expense
Issues of shares to and purchases of shares by
the Aristocrat Employee Share Trust
Share-based tax and other adjustments
(121.0)
-
-
-
-
-
-
-
Balance at 30 September 2016
437.4
(11.1)
Balance at 1 October 2016
Profit for the year
Currency translation differences
Net investment hedge
Movement in fair value of interest rate hedges
437.4
495.1
-
-
-
-
(30.8)
3.9
-
Total comprehensive income/(loss) for the year
495.1
(26.9)
Transactions with owners in their capacity
as owners
Dividends paid or provided for
Share-based payments expense
Issues of shares to and purchases of shares by
the Aristocrat Employee Share Trust
Share-based tax and other adjustments
(185.2)
-
-
-
-
-
-
-
Reserves
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Interest
rate hedge
reserve
Non-
controlling
interest
reserve
Total
reserves
62.8
(34.8)
(5.2)
(7.1)
-
-
-
-
-
-
-
19.3
(12.8)
1.7
(26.6)
-
-
-
(2.4)
(3.3)
(5.7)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10.9)
(7.1)
15.7
-
(92.5)
31.1
(14.9)
(3.3)
(79.6)
-
19.3
(12.8)
1.7
(55.7)
-
-
-
-
-
-
16.1
(67.2)
6.9
-
-
-
10.0
10.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30.8)
3.9
10.0
(16.9)
-
16.1
(67.2)
6.9
(11.1)
(26.6)
(10.9)
(7.1)
(55.7)
Balance at 30 September 2017
747.3
(38.0)
(70.8)
(0.9)
(7.1)
(116.8)
80
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-3 RESERVES AND RETAINED EARNINGS
CONTINUED
Nature and purpose of reserves:
Interest rate hedge reserve
Foreign currency translation reserve
The foreign currency translation reserve records the foreign
currency exchange differences arising from the translation of
foreign operations, the translation of transactions that hedge
the Company’s net investment in a foreign operation or the
translation of foreign currency monetary items forming part
of the net investment in foreign operations.
The interest rate hedge reserve is used to record gains or
losses on interest rate hedges that are recognised in other
comprehensive income.
Non-controlling interest reserve
The non-controlling interest reserve is used to record
transactions with non-controlling interests that do not result
in the loss of control.
Share-based payments reserve
The share-based payments reserve is used to recognise
the fair value of all shares, options and rights both issued
and issued but not exercised under the various employee
share plans, as well as purchases of shares by the Aristocrat
Employee Share Trust.
3-4 CONTRIBUTED EQUITY
Ordinary shares, fully paid
638,544,150
637,119,632
715.1
2017
Shares
2016
Shares
2017
$’m
Movements in ordinary share capital
Ordinary shares at the beginning of the year
Shares issued during the year
Ordinary shares at the end of the financial year
Ordinary shares
637,119,632 637,119,632
1,424,518
-
638,544,150 637,119,632
693.8
21.3
715.1
2016
$’m
693.8
693.8
-
693.8
Ordinary shares have no par value and entitle the holder to participate in dividends and the winding up of the Company in
proportion to the number of, and amounts paid on, the shares held. Holders of ordinary shares are entitled to one vote per
share at meetings of the Company.
Recognition and measurement
Incremental costs directly attributable to the issue of new shares are shown in contributed equity as a deduction, net of tax,
from the proceeds.
If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the
consideration paid including any directly attributable incremental cost (net of income taxes) is recognised directly in equity.
There is no current on-market buy back.
81
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-5 NET TANGIBLE ASSETS/(LIABILITIES)
PER SHARE
3-6 CAPITAL AND FINANCIAL RISK
MANAGEMENT
2017
$
2016
$
Net tangible assets/(liabilities)
per share
(0.54)
(1.04)
A large proportion of the Group’s assets are intangible in
nature, including goodwill and identifiable intangible assets
relating to businesses acquired. These assets are excluded
from the calculation of net tangible assets per share, which
results in a negative amount.
Net assets per share at 30 September 2017 were $2.11
(2016: $1.69).
(a) Capital management
The Group’s overall strategic capital management objective
is to maintain a funding structure, which provides sufficient
flexibility to fund the operational demands of the business
and to underwrite any strategic opportunities.
The Group has managed its capital through interest and
debt coverage ratios as follows:
Gross debt/bank EBITDA*
Net debt/(cash)/bank EBITDA*
Interest coverage ratio (bank
EBITDA*/interest expense**)
2017
2016
1.2x
0.6x
1.6x
1.2x
19.1x
10.7x
* Bank EBITDA refers to Consolidated EBITDA for the Group as defined in
Aristocrat’s Syndicated Facility Agreement.
** Interest expense includes ongoing finance fees relating to bank debt facility
arrangements, such as line fees.
This section explains the Group’s exposure to financial risks
and how these risks could affect the Group’s future financial
performance.
(b) Financial risk management
Financial risk management is carried out by a central treasury
department (Group Treasury) under policies approved by the
Board of Directors. Group Treasury identifies, evaluates and
hedges financial risks in close co-operation with the Group’s
operating units. The Board provides written principles for
overall risk management, as well as policies covering specific
areas, such as foreign exchange risk, interest rate risk, credit
risk, use of derivative financial instruments and investment of
excess liquidity.
The Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial
performance of the Group. The Group uses derivative
financial instruments such as foreign exchange contracts
and interest rate swaps to hedge certain risk exposures.
Derivatives are exclusively used for hedging purposes, i.e.
not as trading or other speculative instruments.
82
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT CONTINUED
Risk
Exposure arising from Measurement
Management
Market risk:
Interest rate
Market risk:
Foreign
exchange
Market risk:
Price risk
Credit risk
Floating rate
borrowings drawn
under a Term Loan B
facility
Future commercial
transactions and
recognised assets and
liabilities denominated
in a currency that is not
the entity’s functional
currency
The Group’s exposure
to commodity price risk
is indirect and is not
considered likely to be
material
Cash and cash
equivalents, trade
and other receivables,
derivative financial
instruments and held-
to-maturity investments
Liquidity risk Borrowings and other
liabilities
Sensitivity
analysis
— Use of floating to fixed swaps; and
— The mix between fixed and floating rate debt is reviewed on a
regular basis under the Group Treasury policy.
Sensitivity
analysis & cash
flow forecasts
— The Group’s foreign exchange hedging policy reduces the risk
associated with transactional exposures; and
— Unrealised gains/losses on outstanding foreign exchange
contracts are taken to the profit or loss on a monthly basis.
Nil
Nil
Ageing analysis
& credit ratings
— Customers and suppliers are appropriately credit assessed per
Group policies;
— Derivative counterparties and cash transactions are limited to
high credit quality financial institutions; and
— All cash and cash equivalents are held with counterparties
which are rated ‘A’ or higher.
Cash flow
forecasts & debt
covenants
— Maintaining sufficient cash and marketable securities;
— Maintaining adequate amounts of committed credit facilities
and the ability to close out market positions; and
— Maintaining flexibility in funding by keeping committed credit
lines available.
Hedge of net investment in foreign entity
In 2015, the Group entered into a Term Loan B amounting to US$1,300.0m which was taken out to acquire an American
subsidiary and is denominated in United States Dollars (US$). At 30 September 2017, US$130.0m of this loan, held within an
Australian company has been designated as a hedge of the net investment in this American subsidiary. The fair value and
carrying amount of the borrowing at 30 September 2017 was $1,198.6m (2016: $1,287.3m). The foreign exchange gain on
translation of the borrowing to Australian dollars at the end of the reporting period is recognised in other comprehensive
income and accumulated in the foreign currency translation reserve within shareholders equity (Note 3-3). There was no
ineffectiveness to be recorded in the profit or loss from net investments in foreign entity hedges.
83
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT CONTINUED
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk
and foreign exchange risk. These sensitivities are prior to the offsetting impact of hedging instruments, and are shown on
a pre-tax basis:
Carrying amount
Interest rate risk
Foreign exchange risk
$’m
-1% Profit
$’m
+1% Profit
$’m
-10% Profit
$’m
+10% Profit
$’m
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Financial assets
Cash and cash equivalents
Receivables
Debt securities held-to-
maturity
Other investments
Financial liabilities
Payables
Borrowings
Progressive jackpot
liabilities
Other financial liabilities
Total increase/(decrease)
547.1
619.3
283.2
529.8
(5.5)
(2.8)
-
-
5.5
-
2.8
-
11.1
3.1
9.4
4.2
448.9
408.6
(0.1)
(0.1)
0.1
0.1
-
-
-
-
-
-
-
-
1,199.4 1,287.8
12.1
1.3
(12.1)
(13.1)
34.9
1.4
23.8
10.8
0.3
-
0.2
(0.3)
(0.2)
-
-
-
6.8
(1.4)
(6.8)
(10.4)
0.4
2.3
-
-
0.6
4.4
(0.3)
(1.9)
(0.5)
(3.6)
-
-
-
-
-
-
(2.7)
(2.6)
2.2
2.1
-
-
-
-
-
-
-
2.4
-
-
-
-
-
-
-
(2.0)
Maturities of financial liabilities
(ii) based on the remaining period to the expected
The table below analyses the Group’s financial liabilities into
relevant maturity groupings as follows:
(i) based on their contractual maturities:
— all non-derivative financial liabilities; and
— net and gross settled derivative financial instruments
for which the contractual maturities are essential for an
understanding of the timing of cash flows.
settlement date:
— derivative financial liabilities for which the contractual
maturities are not essential for an understanding of
the timing of cash flows.
The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months
equal their carrying balances, as the impact of discounting
is not significant.
84
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT CONTINUED
Contractual maturities of financial liabilities
Less than
1 year
$’m
Between
1 to 5 years
$’m
Over
5 years
$’m
Total contractual
cash flows
Carrying amount
(assets)/liabilities
$’m
$’m
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Non-derivatives
Trade payables
Other payables
Deferred consideration
Borrowings
Borrowings - interest payments
Progressive jackpot liabilities
130.5
104.9
274.2
243.4
-
22.8
-
25.6
19.1
- 1,199.3
-
19.2
19.6
-
-
-
-
-
-
-
130.5
104.9
130.5
104.9
299.8
262.6
299.8
262.6
19.1
42.4
18.6
41.1
- 1,305.0 1,199.4 1,305.0 1,199.4 1,287.8
46.2
120.4
185.4
20.8
1.6
1.8
-
1.9
2.5
1.2
160.0
234.1
-
-
34.9
23.8
34.9
23.8
0.1
39.6
31.4
Total non-derivatives
475.8
438.1 1,366.0
226.0
1.9 1,308.7 1,843.7 1,972.8 1,683.2 1,720.2
Derivatives
Net settled (interest rate swaps)
0.1
-
0.8
10.8
Gross settled (forward
foreign exchange contracts)
— (inflow)
— outflow
Total (inflow)/outflow
(65.5)
(43.6)
66.0
0.5
42.5
(1.1)
-
-
-
-
-
-
Total derivatives
0.6
(1.1)
0.8
10.8
-
-
-
-
-
-
0.9
10.8
0.9
10.8
-
-
-
-
(65.5)
(43.6)
-
(1.1)
66.0
0.5
42.5
(1.1)
1.4
9.7
0.5
0.5
1.4
-
(1.1)
9.7
(c) Foreign currency risk
The carrying amounts of the Group’s current and non-current
receivables are denominated in the following currencies:
The carrying amounts of the Group’s current and non-current
payables are denominated in the following currencies:
US dollars
Australian dollars
Other(1)
Total carrying amount
2017
$’m
396.2
191.2
31.9
619.3
2016
$’m
320.0
156.0
53.8
529.8
US dollars
Australian dollars
Other(1)
Total carrying amount
2017
$’m
310.2
124.5
14.2
448.9
2016
$’m
307.1
90.8
10.7
408.6
(1) Other refers to a basket of currencies (including Euro and New Zealand
Dollar).
(1) Other refers to a basket of currencies (including Euro and New Zealand
Dollar).
85
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-6 CAPITAL AND FINANCIAL RISK
MANAGEMENT CONTINUED
(d) Credit risk
The maximum exposure to credit risk at the reporting
date is the carrying amount of each class of receivables
mentioned above. Refer above for more information on
the risk management policy of the Group. The Group holds
guarantees over the debts of certain customers.
The value of debtor balances over which guarantees are
held is detailed below:
Trade receivables with guarantees
Trade receivables without guarantees
Total trade receivables
2017
$’m
2016
$’m
12.7
13.0
490.2
414.6
502.9
427.6
(e) Forward exchange contracts
The Group enters into derivatives in the form of forward exchange contracts to hedge foreign currency denominated receivables
and also to manage the purchase of foreign currency denominated inventory and capital items. The following table provides
information as at 30 September 2017 on the net fair value of the Group’s existing foreign exchange hedge contracts:
Currency pair
Weighted average
exchange rate
Maturity profile(1)
1 year or less
1 to 7 year(s)
$’m
$’m
Net fair value
gain/(loss)(2)
$’m
AUD/EUR
AUD/USD
AUD/NZD
AUD/ZAR
USD/MXN
Total
0.6658
0.7849
1.0879
10.1095
20.0980
21.2
38.2
3.6
1.5
1.0
65.5
-
-
-
-
-
-
(0.4)
(0.1)
-
0.1
(0.1)
(0.5)
(1) The foreign base amounts are converted at the prevailing period end exchange rate to AUD equivalents.
(2) The net fair value of the derivatives above is included in receivables/(payables).
(f) Fair value measurements
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs
used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the
accounting standards. An explanation of each level follows below the table.
Assets
Derivatives used for hedging
Total assets at the end of the year
Liabilities
Interest rate swap contracts
Derivatives used for hedging
Total liabilities at the end of the year
Level 1
$’m
Level 2
$’m
Level 3
$’m
Total
$’m
2017
2016
2017
2016
2017
2016
2017
2016
-
-
-
-
-
-
-
-
-
-
-
-
1.1
1.1
0.9
0.5
1.4
10.8
-
10.8
-
-
-
-
-
-
-
-
-
-
-
-
1.1
1.1
0.9
0.5
1.4
10.8
-
10.8
86
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT CONTINUED
Fair value hierarchy levels
Definition
Valuation technique
Level 1
Level 2
Level 3
The fair value is determined using the
unadjusted quoted market price in an active
market for similar assets or liabilities.
The fair value is calculated using
predominantly observable market data other
than unadjusted quoted prices for an identical
asset or liability.
The fair value is calculated using inputs that
are not based on observable market data.
The Group did not have any Level 1 financial
instruments at the end of the current and prior
reporting periods. The quoted market price
used for financial assets held by the Group is
the current bid price.
Derivatives used for hedging are valued using
forward exchange rates at the balance sheet
date.
The Group did not have any Level 3 financial
instruments at the end of the current and prior
reporting periods.
87
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
4. GROUP STRUCTURE
This section explains significant aspects of the Group structure, including its controlled entities and how changes affect the
Group structure. It provides information on business acquisitions and disposals made during the financial year and the impact
they had on the Group’s financial performance and position.
4-1 Business combinations
4-2 Subsidiaries
4-1 BUSINESS COMBINATIONS
Business combination subsequent to reporting date
Recognition and measurement
The Group accounts for business combinations using the
acquisition method when control is transferred to the Group.
The consideration transferred in the acquisition is measured
at fair value. Acquisition-related costs are expensed as
incurred in the profit or loss.
On 20 October 2017, the Group completed the acquisition
of 100% of Plarium Global Limited. Plarium was a privately
owned free-to-play mobile, social and web-based game
developer headquartered in Herzliya, Israel.
The purchase consideration includes an upfront amount
of US$500m cash, subject to adjustments and an earn-out
arrangement payable to Plarium shareholders following the
end of calendar years 2017 and 2018 respectively. US$425m
debt was drawn under a new incremental Term Loan B facility
to finance the transaction. The accounting for the acquisition
is in progress. Acquisition related costs of $2.8m were
incurred during the year ended 30 September 2017.
88
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
4. GROUP STRUCTURE CONTINUED
4-2 SUBSIDIARIES
The controlled entities of the Group listed below were wholly owned during the current and prior year, unless otherwise stated:
Region
Controlled entities
Country of incorporation
Australia and New Zealand
Americas
Asia Pacific
Europe, Middle East and Africa
Aristocrat Technical Services Pty Ltd
Aristocrat Properties Pty Ltd
Aristocrat (Holdings) Pty Ltd
Aristocrat Technologies Australia Pty Ltd
ASSPA Pty Ltd
Aristocrat Technology Gaming Systems Pty Limited
System 7000 Pty Ltd
Aristocrat Employee Equity Plan Trust
Aristocrat International Pty Ltd
Aristocrat Technologies NZ Limited
Aristocrat Technologies Mexico, S.A. DE C.V.
Aristocrat Service Mexico, S.A. DE C.V.
Aristocrat Technologies, Inc.
Aristocrat Funding Corporation Pty Ltd
Aristocrat Technologies Canada, Inc.
Product Madness Inc.
Video Gaming Technologies, Inc.
Aristocrat C.A.
AI (Puerto Rico) Pty Limited
Aristocrat (Latin America) Pty Ltd
Aristocrat (Argentina) Pty Limited
Aristocrat (Asia) Pty Limited
Aristocrat (Macau) Pty Limited
Aristocrat (Philippines) Pty Limited
Aristocrat (Singapore) Pty Limited
Aristocrat (Cambodia) Pty Limited
Aristocrat (Malaysia) Pty Limited
Aristocrat Leisure Technology Development (Beijing) Co. Ltd
Aristocrat Technologies India Private Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Mexico
Mexico
USA
Australia
Canada
USA
USA
Venezuela
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
China
India
Aristocrat Technologies Hong Kong Limited*
Hong Kong
Aristocrat Hanbai KK
Aristocrat Leisure Cyprus Limited
Aristocrat Gaming LLC*
Aristocrat Technologies Europe (Holdings) Limited
ASSPA (UK) Limited
Aristocrat Technologies LLC*
Product Madness (UK) Limited
Aristocrat Technologies Europe Limited
Aristocrat Technologies Spain S.L.
Japan
Cyprus
Russia
UK
UK
Russia
UK
UK
Spain
Aristocrat Research & Development (Africa) Pty Ltd
Aristocrat Plarium Global Holdings Limited**
South Africa
UK
*Ownership interest at 30 September 2017: 0% (2016: 100%)
**Ownership interest at 30 September 2017: 100% (2016: 0%)
89
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS
This section provides a breakdown of the various programs the Group uses to reward and recognise employees and key
executives, including Key Management Personnel.
5-1 Key management personnel
5-2 Share-based payments
5-1 KEY MANAGEMENT PERSONNEL
Key management personnel compensation
Key management personnel includes all Non-Executive
Directors, Executive Directors and Senior Executives who
were responsible for the overall planning, directing and
controlling of activities of the Group. During the year
ended 30 September 2017, 5 Executive Directors and
Senior Executives (2016: 5 Executive Directors and Senior
Executives) were designated as key management personnel.
Short-term employee
benefits
Post-employment benefits
Long-term benefits
Termination benefits
2017
$
2016
$
7,679,267
9,767,083
182,315
123,005
3,267,430
195,928
50,712
-
Share-based payments
4,722,109
6,976,860
Key management personnel
compensation
15,974,126
16,990,583
Detailed remuneration disclosures are provided in the
remuneration report.
90
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS CONTINUED
5-2 SHARE-BASED PAYMENTS
The Remuneration Report, presented in the Directors’ Report, also provides detailed disclosure on share-based payments.
Plan
Description
Shares outstanding at
the end of the year
Performance
share plan
("PSP")
A long-term employee share scheme that provides for eligible employees to be
offered conditional entitlements to fully paid ordinary shares in the parent entity
(‘Performance Share Rights’). Performance Share Rights issued under the PSP are
identical in all respects other than performance conditions and periods.
14 employees (2016:
19) were entitled to
1,663,201 rights (2016:
3,135,423).
Deferred
equity
employee plan
Certain eligible employees are offered incentives of share rights that are based
on individual and company performance, subject to continued employment.
Should the performance criteria be met, an amount of share rights are granted.
The shares outstanding at 30 September 2017 result from the meeting of
performance criteria in the 2015 and 2016 financial years. These rights are
subject to the respective employees remaining with the Group until October
2017 and October 2018.
1,140,739 (2016:
593,681)
Deferred short-
term incentive
plan
Upon the vesting of short-term incentives, Executives receive the incentives as
50% cash, with 50% deferred as Performance Share Rights. These share rights are
expensed over the vesting periods, being two and three years.
529,603 (2016:
631,834)
General
employee
share plan
("GESP")
GESP is designed to provide employees with shares in the parent entity under
the provisions of Division 83A of the Australian Income Tax Assessment Act. The
number of shares issued to participants in the Plan is the offer amount divided
by the weighted average price at which the Company’s shares are traded on the
Australian Securities Exchange during the five days immediately before the date
of the offer.
Nil (2016: Nil)
(a) Share-based payments expense
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefits
expense were as follows:
Performance Share Plan
General Employee Share Plan
Deferred Short-Term Incentive Plan
Deferred Equity Employee Plan
Other grants
2017
$’m
2016
$’m
3.7
0.5
3.9
5.2
2.8
5.3
0.5
5.5
3.9
4.1
16.1
19.3
91
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS CONTINUED
5-2 SHARE-BASED PAYMENTS CONTINUED
Recognition and measurement
The fair value of rights granted is recognised as an employee benefits expense with a corresponding increase in equity. The
total amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market
performance conditions and the impact of non-vesting conditions but excludes the impact of any service and non-market
performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of rights that are expected to vest. The total
expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be
satisfied. At the end of each period, the Group revises its estimates of the number of rights that are expected to vest based on
the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
Shares issued through Aristocrat Employee Equity Plan Trust continue to be recognised in the share-based payments reserve
in equity. Similarly, treasury shares acquired by Aristocrat Employee Equity Plan Trust are recorded in share-based payments
trust reserves. Information relating to these shares is disclosed in Note 3-3.
The market value of shares issued to employees for no cash consideration under the General Employee Share Plan is
recognised as an employee benefits expense with a corresponding increase in reserves.
(b) Performance Share Plan (‘PSP’)
Accounting fair value of Performance Share Rights granted
The assessed accounting fair values of Performance Share Rights granted during the financial years ended 30 September
2017 and 30 September 2016 are as follows:
Performance
Share Right series
Performance
period start date
Performance period
expiry date
Performance
condition
Accounting
valuation date
Accounting
valuation
Issued 2017
Series 32A
Series 32B
Series 32C
Issued 2016
Series 30A
Series 30B
Series 30C
Series 31A
Series 31B
Series 31C
1 October 2016
30 September 2019
EPSG
28 March 2017
TSR
1 October 2015
30 September 2018
Service
TSR
EPSG
Strategic
TSR
EPSG
Service
3 March 2016
$11.91
$16.82
$16.82
$7.16
$9.59
$9.59
$7.16
$9.59
$9.59
92
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS CONTINUED
The model inputs for share rights granted during the year
ended 30 September 2017 and year ended 30 September
2016 included:
Input
Share rights granted
Consideration
Zero consideration and have
a three year life.
Share price at grant date
Price volatility of Company's
shares
Dividend yield
Risk-free interest rate
2017
$17.75
25.0%
2.0%
1.8%
2016
$10.21
25.0%
2.3%
1.9%
The expected price volatility is based on the two year
historical volatility of the share price of the Company due to
the long-term nature of the underlying share rights.
5-2 SHARE-BASED PAYMENTS CONTINUED
The accounting valuation represents the independent
valuation of each tranche of Performance Share Rights
at their respective grant dates. The valuations have been
performed by EY using Total Shareholder Return (‘TSR’),
Earnings Per Share Growth (‘EPSG’), service condition and
strategic objective condition models. Performance Share
Rights with a market vesting condition (for example, TSR)
incorporates the likelihood that the vesting condition will be
met. The accounting valuation of Performance Share Rights
with a non-market vesting condition (for example, EPSG)
does not take into account the likelihood that the vesting
condition will be met.
(i) Total Shareholder Return (‘TSR’) model
EY has developed a Monte-Carlo Simulation-based model
which incorporates the impact of performance hurdles and
the vesting scale on the value of the share rights. This pricing
model takes into account such factors as the Company’s
share price at the date of grant, volatility of the underlying
share price, expected dividend yield, risk free rate of return
and time to maturity.
(ii) Earnings Per Share Growth (‘EPSG’) model, service
condition and strategic objective condition
EY has utilised a Binomial Tree model to determine the fair
value of share rights. This pricing model takes into account
such factors as the Company’s share price at the date of
grant, volatility of the underlying share price, expected
dividend yield, risk-free rate of return and time to maturity.
The accounting valuation of the rights has been allocated
equally over the vesting period.
93
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS CONTINUED
5-2 SHARE-BASED PAYMENTS CONTINUED
Performance Share Rights are detailed in the tables below:
Consolidated
- 2017
Grant date Performance period
expiry date
Rights at
start of year
New rights
issues
Rights
vested
Rights
lapsed
Rights at
end of year
Right series
PSP
Series 25A
Series 25B
Series 26A
Series 26B
Series 28A
20 February 2014
1 October 2013
30 September 2016
Series 28B
1 October 2014
Series 28C
Series 29A
Series 29B
27 February 2015
30 September 2017
Series 29C
Series 30A
Series 30B
Series 30C
Series 31A
Series 31B
Series 31C
Series 32A
Series 32B
Series 32C
3 March 2016
3 March 2016
30 September 2018
28 March 2017 30 September 2019
Number
Number
Number
Number
Number
130,500
304,500
248,353
579,492
188,563
188,564
234,341
122,867
122,867
163,822
84,778
84,778
113,036
170,691
170,691
227,580
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
87,438
87,438
116,604
(130,500)
(304,500)
(248,353)
(579,492)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,851)
171,712
(16,851)
171,713
(48,234)
186,107
(23,990)
(23,990)
98,877
98,877
(31,987)
131,835
(44,787)
(44,787)
(59,715)
39,991
39,991
53,321
(33,931)
136,760
(33,931)
136,760
(92,099)
135,481
(6,368)
(6,368)
(16,968)
81,070
81,070
99,636
3,135,423
291,480 (1,262,845)
(500,857)
1,663,201
94
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS CONTINUED
5-2 SHARE-BASED PAYMENTS CONTINUED
Grant date Performance period
Consolidated
expiry date
- 2016
Right series
PSP
Series 22A
Series 22B
Series 23A
Series 23B
Series 25A
Series 25B
Series 26A
Series 26B
Series 28A
Series 28B
Series 28C
Series 29A
20 February 2013
1 October 2012
20 February 2014
1 October 2013
1 October 2014
30 September 2015
30 September 2016
30 September 2017
Series 29B
27 February 2015
Rights at
start of year
New rights
issues
Rights
vested
Rights
lapsed
Rights at
end of year
Number
Number
Number
Number
Number
229,850
536,150
315,416
735,105
130,500
304,500
248,353
579,492
205,475
205,476
256,890
122,867
122,867
163,822
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(229,850)
-
(493,254)
(42,896)
(315,416)
-
(676,305)
(58,800)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,912)
(16,912)
(22,549)
-
-
-
-
-
-
(39,867)
(39,867)
(53,158)
-
-
-
-
130,500
304,500
248,353
579,492
188,563
188,564
234,341
122,867
122,867
163,822
84,778
84,778
113,036
170,691
170,691
227,580
Series 29C
Series 30A
Series 30B
Series 30C
Series 31A
Series 31B
Series 31C
3 March 2016
3 March 2016
30 September 2018
-
-
-
-
-
-
84,778
84,778
113,036
210,558
210,558
280,738
4,156,763
984,446
(1,714,825)
(290,961)
3,135,423
95
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES
This section provides details on other required disclosures relating to the Group to comply with the accounting standards and
other pronouncements.
6-1 Commitments and contingencies
6-5 Parent entity financial information
6-2 Events occurring after reporting date
6-6 Deed of cross guarantee
6-3 Remuneration of auditors
6-7 Basis of preparation
6-4 Related parties
6-1 COMMITMENTS AND CONTINGENCIES
(a) Commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities:
Intangible assets - Technology and software
Property, plant and equipment
Lease commitments
Non-cancellable operating leases
The Group leases various offices and plant and equipment under non-cancellable operating leases.
Commitments for minimum lease payments are as follows:
Under one year
Between one and five years
Over five years
Commitments not recognised in the financial statements
Sub-lease payments
Future minimum lease payments expected to be received in relation to non-cancellable sub-leases
of operating leases
2017
$’m
2016
$’m
-
0.1
0.4
0.5
26.7
84.3
81.4
192.4
21.2
54.1
13.5
88.8
3.7
5.4
(b) Contingent liabilities
The Group and parent entity have contingent liabilities at
30 September 2017 in respect of the following matters:
(i) a contingent liability may exist in relation to certain
guarantees and indemnities given in the ordinary course
of business by the Group;
(ii) controlled entities within the Group are and become
parties to various legal actions in the ordinary course of
business and from time to time. The Directors consider
that any liabilities arising from this type of legal action are
unlikely to have a material adverse effect on the Group;
(iii) controlled entities within the Group may become parties to
various legal actions concerning intellectual property claims.
Intellectual property claims can include challenges to the
Group’s patents on various products or processes and/or
assertions of infringement of third party patents.
Most intellectual property claims involve highly
complex issues. Often, these issues are subject to
substantial uncertainties and therefore the probability of
damages, if any, being sustained and an estimate of the
amount of damages is difficult to ascertain. Based on the
information currently available, the Directors consider that
there are no current claims likely to have a material adverse
effect on the Group;
(iv) Aristocrat Leisure Limited, Aristocrat International Pty
Ltd, Aristocrat Technologies Australia Pty Ltd, Aristocrat
(Holdings) Pty Limited, Aristocrat (Asia) Pty Limited and
Aristocrat (Macau) Pty Limited are parties to a deed
of cross guarantee which has been lodged with and
approved by the Australian Securities & Investments
Commission as discussed in Note 6-6; and
(v) a notice of action has been filed against a company in
the Group by an individual in relation to the operation
of its Dolphin Treasure electronic gaming machines
in Australia. No damages are sought. Aristocrat has
defended the action vigorously. The action went to trial in
September 2017 and judgment is presently reserved.
96
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-2 EVENTS OCCURRING AFTER
REPORTING DATE
On 20 October 2017, the Group completed the acquisition
of 100% of Plarium Global Limited, for a total consideration
of an upfront amount of US$500m cash, subject to
adjustments and an earn-out arrangement payable to Plarium
shareholders following the end of calendar years 2017 and
2018 respectively. US$425m debt was drawn under a new
incremental Term Loan B facility to finance the transaction.
Further information can be found in Note 4-1.
On 30 November 2017, the Group signed an agreement to
acquire 100% of Big Fish Games Inc. from Churchill Downs
Inc. for a purchase price of US$990m subject to customary
completion adjustments. The acquisition is subject to receiving
regulatory approval, and will be funded by an incremental
Term Loan B debt facility as well as cash holdings. The entity
to be acquired operates as a publisher of social casino, casual
free-to-play and premium paid games.
Other than the matters above, there has not arisen in the
interval between the end of the year and the date of this
report any item, transaction or event of a material and unusual
nature likely, in the opinion of the Directors of the Company, to
affect significantly the operations of the Group, the results of
those operations, or the state of affairs of the Group, in future
financial reporting periods.
Refer to Note 1-6 for information regarding dividends
declared after reporting date.
6-3 REMUNERATION OF AUDITORS
During the year, the following fees were paid or payable to
the auditor of the parent entity, PricewaterhouseCoopers
and its related practices:
Audit or review of financial reports
Australia
Overseas
Total remuneration for audit/
review services
Other assurance services
Overseas
Total remuneration for other
assurance services
Total remuneration for
assurance services
2017
$
2016
$
837,000
585,019
1,489,500 1,307,230
2,326,500 1,892,249
789
789
-
-
2,327,289 1,892,249
Advisory services
Australia
Overseas
Total remuneration for
advisory services
2017
$
2016
$
1,784,441
792,277
5,000
101,950
2,576,718
106,950
It is the Group’s policy to employ PricewaterhouseCoopers on
assignments additional to their statutory audit duties where
PricewaterhouseCoopers’ expertise and experience with
the Group are important. These assignments are principally
tax advice, due diligence on acquisitions, consulting, cyber
reviews or where PricewaterhouseCoopers is awarded
assignments on a competitive basis. It is the Group’s policy to
seek competitive tenders for all major consulting projects.
6-4 RELATED PARTIES
(a) Other transactions with key management personnel
There were no other related party transactions aside from
disclosures under key management personnel. Refer to Note 5-1.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 4-2.
6-5 PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the parent entity show
the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Reserves
Accumulated losses
Total equity
Profit for the year after tax
Total comprehensive
income after tax
2017
$’m
2016
$’m
105.0
984.4
148.4
148.4
836.0
715.1
134.0
(13.1)
836.0
323.8
67.2
742.8
82.8
82.8
660.0
693.8
117.9
(151.7)
660.0
102.8
323.8
102.8
97
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
(b) Guarantees entered into by the parent entity
Cross guarantees given by the parent entity are set out in Note 6-6.
Set out below is the statement of profit or loss and other
comprehensive income of the Closed Group:
(c) Contingent liabilities of the parent entity
Contingent liabilities of the parent entity are set out in Note 6-1.
Recognition and measurement
The financial information for the parent entity, Aristocrat
Leisure Limited, disclosed above has been prepared on the
same basis as the consolidated financial statements, except
for investments in subsidiaries where they are accounted for
at cost less impairment charges in the financial statements of
Aristocrat Leisure Limited.
6-6 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations Instrument 2017/785, the
wholly owned subsidiaries listed below are relieved from the
Corporations Act 2001 requirements for preparation, audit
and lodgement of a financial report and Directors’ Report.
It is a condition of the Instrument that the Company and
each of the participating subsidiaries enter into a Deed
of Cross Guarantee (Deed). The effect of the Deed, dated
22 December 2006, is that the Company guarantees to
each creditor payment in full of any debt in the event of
winding up of any of the participating subsidiaries under
certain provisions of the Corporations Act. If a winding up
occurs under other provisions of the Corporations Act, the
Company will only be liable in the event that after six months,
any creditor has not been paid in full. The subsidiaries have
also given similar guarantees in the event the Company is
wound up.
The subsidiaries subject to the Deed are:
— Aristocrat Technologies Australia Pty Limited
— Aristocrat International Pty Limited
— Aristocrat (Asia) Pty Limited
— Aristocrat (Macau) Pty Limited
— Aristocrat (Holdings) Pty Limited
The above named companies represent a Closed Group for
the purposes of the Instrument, and as there are no other
parties to the Deed that are controlled by the Company, they
also represent the Extended Closed Group.
Revenue
Other income from
non-related parties
Other income from
related parties
Cost of revenue and other
expenses
Employee benefits expense
Finance costs
Depreciation and amortisation
expense
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Changes in fair value of interest
rate hedge
Other comprehensive
income/(loss) net of tax
Total comprehensive income
for the year
Set out below is a summary of
movements in consolidated
retained earnings of the Closed
Group:
Retained earnings at the
beginning of the financial year
Profit for the year
Dividends paid
Retained earnings at the end of
the financial year
2017
$’m
573.5
2016
$’m
601.3
5.1
5.8
264.5
119.8
(181.6)
(163.7)
(10.6)
(13.4)
473.8
(139.3)
334.5
(166.9)
(148.6)
(23.0)
(17.1)
371.3
(102.4)
268.9
1.9
1.9
(0.5)
(0.5)
336.4
268.4
157.6
334.5
(185.2)
9.8
268.9
(121.1)
306.9
157.6
98
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-6 DEED OF CROSS GUARANTEE
CONTINUED
Set out below is the balance sheet of the Closed Group:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Trade and other receivables
Investments
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Deferred revenue and other
liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Provisions
Deferred revenue and other
liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2017
$’m
2016
$’m
325.4
153.6
32.9
511.9
95.6
705.0
13.2
39.1
47.6
170.5
130.0
55.9
356.4
53.7
705.3
14.1
45.6
38.5
900.5
857.2
1,412.4
1,213.6
153.7
147.4
12.7
19.6
333.4
2.3
163.0
6.5
17.7
189.5
522.9
889.5
715.1
(132.5)
306.9
889.5
144.0
81.8
11.7
16.9
254.4
5.1
166.0
6.4
8.6
186.1
440.5
773.1
693.8
(78.3)
157.6
773.1
6-7 BASIS OF PREPARATION
Corporate information
Aristocrat Leisure Limited is a for-profit company
incorporated and domiciled in Australia and limited by
shares publicly traded on the Australian Securities Exchange.
This financial report covers the financial statements for the
consolidated entity consisting of Aristocrat Leisure Limited
and its subsidiaries (together referred to as the Group). A
description of the nature of the Group’s operations and its
principal activities is included in the Directors’ Report and
the Operating and Financial Review. The financial report
was authorised for issue in accordance with a resolution of
Directors on 30 November 2017.
The Group’s registered office and principal place of business is:
Aristocrat Leisure Limited
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
Australia
The Group ensures that its corporate reporting is timely,
complete and available globally. All press releases, financial
statements, and other information are available in the
investor information section of the Company’s website:
www.aristocrat.com
Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the
Australian Accounting Standards Board, International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB) and the
Corporations Act 2001. The report presents information
on a historical cost basis, except for financial assets and
liabilities (including derivative instruments), which have
been measured at fair value and for classes of property,
plant and equipment which have been measured at
deemed cost. Amounts have been rounded off to the
nearest whole number of million dollars and one decimal
place representing hundreds of thousands of dollars, or
in certain cases, the nearest dollar in accordance with the
relief provided under the ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 as issued
by the Australian Securities and Investments Commission.
Policies have been applied consistently for all years
presented, unless otherwise stated.
99
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-7 BASIS OF PREPARATION CONTINUED
Comparative information is reclassified where appropriate to
enhance comparability.
Principles of consolidation
The consolidated financial statements incorporate the
financial statements of Aristocrat Leisure Limited (the
Company) and its subsidiaries as at 30 September 2017.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated
from the date that control ceases. The Group controls an
entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the
activities of the entity.
In preparing the consolidated financial statements, all
intercompany balances, transactions and unrealised gains
have been eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency
with the policies adopted by the Group.
The Group has formed a trust to administer the Group’s
employee share scheme. This trust is consolidated as it is
controlled by the Group.
Foreign currency
The consolidated financial statements are presented in
Australian dollars. Items included in the financial statements
of each of the Group’s entities are measured using the
currency of the primary economic environment in which the
entity operates (the functional currency).
The results and financial position of foreign operations are
translated into Australian dollars at the reporting date using
the following applicable exchange rates:
Foreign currency amount
Income and expenses
Assets and liabilities
Equity
Reserves
Applicable exchange rate
Average exchange rate
Reporting date
Historical date
Historical date
Foreign exchange gains and losses resulting from translation
are recognised in the statement of profit or loss, except for
qualifying cash flow hedges which are deferred to equity.
Foreign exchange differences resulting from translation of
foreign operations are initially recognised in the foreign
currency translation reserve and subsequently transferred to
the profit or loss on disposal of the foreign operation.
100
ARISTOCRAT LEISURE LIMITED Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-7 BASIS OF PREPARATION CONTINUED
New accounting standards and interpretations
A number of new accounting standards and interpretations have been published that are not mandatory for 30 September
2017 reporting periods and have not been early adopted by the Group. The status of the Group’s assessment of the impact of
these new standard and interpretations is set out below:
Reference
Description
Financial Year
of Application
by Aristocrat
Impact on the Group
AASB 9 addresses
the classification,
measurement and
derecognition of financial
assets and financial
liabilities. It also includes
an expected loss
impairment model and
a reformed approach to
hedge accounting.
The new standard is
based on the principle
that revenue is recognised
when control of goods
or services transfers to
the customer. The notion
of control replaces the
existing notion of risks
and rewards. AASB 15
replaces existing revenue
recognition standards
including AASB 118
Revenue and AASB 111
Construction Contracts.
AASB 16 removes the
classification of leases as
either operating leases
or finance leases for
the lessee. The lease
becomes an on-balance
sheet liability that attracts
interest, together with a
new asset on the balance
sheet.
AASB 9
Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
2019
The Group has reviewed AASB 9 to determine the impact of
the new standard and to develop accounting policies that
will be followed from FY2019.
The Group has assessed the impact of the new ‘expected
loss model’ whereby doubtful debts provisions will need
to incorporate the risk that receivables will not be collected
regardless of whether customers are making payments.
Given that historical bad debts of the Group are relatively
low, it is not expected that the doubtful debts provision will
be materially different on transition to the new Standard.
The Group does not expect the impact of these changes to
be material.
The assessment of impact to date has focused on the
Group’s main revenue streams by reviewing arrangements
with customers to identify the impacts of the new standard
and to develop an accounting policy to be followed from
FY2019.
2019
Overall, the Group expects a low magnitude of impact on
adoption of the new standard.
2020
Changes to the leases standard will impact the Group
on leases of property, plant and equipment. By bringing
operating leases on the balance sheet, there will be
an increase in assets and a corresponding increase in
liabilities. Furthermore, the Group will no longer recognise
‘rent expense’ in relation to operating leases, but rather
depreciation expense on the right of use asset and interest
expense on the operating lease liability.
Note 6-1 provides information on operating lease
commitments that are currently recorded off-balance sheet.
On transition to the new standard these will be recognised
on-balance sheet after discounting to present value.
101
ARISTOCRAT LEISURE LIMITED Annual Report 2017
DIRECTORS’ DECLARATION
for the year ended 30 September 2017
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 56 to 101 are in accordance with the Corporations Act 2001 including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 September 2017 and of its
performance, for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
identified in Note 6-6 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue
of the deed of cross guarantee described in Note 6-6.
Note 6-7 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given declarations by the Chief Executive Officer and Managing Director and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Dr ID Blackburne
Chairman
Sydney
30 November 2017
102
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Independent auditor’s report
To the members of Aristocrat Leisure Limited
Report on the audit of the Financial Report
Our opinion
In our opinion:
The accompanying financial report of Aristocrat Leisure Limited (the Company) and its controlled
entities (together, the Group) is in accordance with the Corporations Act 2001, including:
a)
giving a true and fair view of the Group’s financial position as at 30 September 2017 and of its
financial performance for the year then ended
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
●
●
●
●
●
the balance sheet as at 30 September 2017
the statement of profit and loss and comprehensive income for the year then ended
the statement of changes in equity for the year then ended
the cash flow statement for the year then ended
the notes to the financial statements, which include a summary of significant accounting
policies
●
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
103
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Aristocrat provides gaming solutions involving Class II and Class III gaming machines and casino
management systems. Aristocrat also operates within the on-line social gaming and real money wager
markets. The group is structured into Australia and New Zealand, The Americas, International Class
III and Digital businesses. Key operations such as design & development and supply chain are
structured on a global basis and managed from the head office in Sydney, Australia.
Materiality
● For the purpose of our audit we used overall Group materiality of $35.9 million, which represents
approximately 5% of the Group’s profit before tax from continuing operations.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
● We chose the Group’s profit before tax from continuing operations because, in our view, it is the metric against
which the performance of the Group is most commonly measured and it is a generally accepted benchmark.
● We selected 5% based on our professional judgement noting that it is also within the range of commonly
acceptable profit related thresholds.
Audit scope
● We conducted audit work over Australia and New Zealand and International Class III (excluding Europe)
businesses. We engaged component audit teams to conduct audit work over The Americas, Digital and
International Class III (for Europe) businesses under our instructions. On-going dialogue was held throughout
the year between us and component audit teams including consideration of how component audit work was
planned and executed.
● We visited Aristocrat offices in the following locations: Sydney, Nashville, Las Vegas, Uxbridge and the Sydney
and Las Vegas integration facilities.
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
104
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition
Refer to Note 1-2 Revenue $2,454m
A material proportion of the Group’s total
revenue is represented by sales of Class III
gaming machines and casino management
systems resulting from multi-element
arrangements as described in the accounting
policy note 1-2.
Accounting for revenue from sales of Class
III gaming machines and casino
management systems is complex due to
bespoke contractual arrangements with
customers such as delayed settlement,
delayed delivery and bundling of products.
Where sales are made to distributors there is
a risk that the contractual arrangements may
not result in the transfer of inventory risk
and that sales may not be recognised in the
correct financial reporting period. This may
potentially result in a material misstatement
of the reported revenue for the financial
year.
For this reason, we have focused on revenue
recognition of the bespoke contractual
arrangements with the customers of Class III
gaming machines and casino management
systems.
We obtained an understanding of the systems, controls and
processes associated with the recording of sales transactions.
We identified, selected and tested contracts that had a higher
risk of sales not being recognised in the correct period.
Where delayed settlement terms were identified during our
testing we re-calculated the Group’s calculation of present
value of the consideration and found it to be accurate for the
sample of contracts we tested.
Where delayed delivery was identified we considered whether
the Group has transferred the inventory risk to the customer
before the balance date of 30 September 2017 and found that
they had in the sample of contracts we tested.
Where bundling of different products was identified we
compared the revenue allocation of the products sold in the
sample of contracts to recent examples of sales of that product
on a standalone basis. We found that the implied discounts had
been appropriately allocated pro-rata across the products sold
and had been recognised in the correct period for the sample
we tested.
For a sample of sales made to distributors we considered the
commercial substance of the contractual arrangement and we
tested to satisfy ourselves that inventory risks such as
obsolescence had passed to the distributor such that the
distributor was not acting as an agent of Aristocrat and that it
was appropriate to recognise the revenue on delivery to the
distributor rather than the end customer.
105
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Income taxes
Refer to Note 1-4 Taxes $233m
The Group operates globally and is subject to
tax regimes and tax legislation administered
by separate tax authorities in a number of
countries. Transfer pricing arrangements
between different countries are a complex
tax and accounting area. Judgement is
involved in accounting for uncertain tax
positions that had not been assessed by the
relevant tax authorities at the date of this
report.
The Group has recognised provisions for
uncertain tax positions in relation to some of
its international related party dealings.
Under the relevant legislation in certain
territories some tax assessments remain
open to challenge for an extended period.
There is a risk that the position adopted by
the Group could be challenged by tax
authorities. This may potentially result in a
material change in the accounting estimate.
We worked with our internal taxation experts to assess the
Group’s accounting for uncertain tax positions that existed at
30 September 2017 including considering possible alternate
positions. We considered a number of matters, including:
●
●
●
●
relevant correspondence with tax authorities
relevant correspondence with the Group’s tax advisors
consistency of assumptions, in years where tax
assessments were still open, to historically agreed
positions with tax authorities
relevant tax legislation.
We considered whether the accounting positions adopted for
years open to amendment of assessment were calculated on a
basis that was consistent with historically agreed positions
with revenue authorities.
106
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Estimated recoverable amount of goodwill
– Video Gaming Technology Inc. (VGT)
Refer to Note 2-3 Intangible assets $878m
The total goodwill balance of $973m is
significantly greater than materiality. The
largest proportion of the goodwill relates to
the VGT business ($878m). We focussed on
the impairment testing relating to the VGT
business goodwill recoverable amount
because of the judgement involved in the
assessment of potential impairment as at 30
September 2017.
The Group’s impairment assessment
includes assumptions about the forecasted
future results of the VGT business, terminal
growth rate, revenue forecasts and the
discount rates applied to future cash flow
forecasts in order to assess the impact on the
valuation of goodwill.
Our audit procedures over VGT’s goodwill (amongst others) are
detailed below.
We evaluated and challenged the Group’s cash flow forecasts
and the process by which they were developed.
We compared these forecasts to the Board approved one year
plan and the strategic 5 year forecast and found them to be
consistent.
We compared previous forecasts to actual results, to assess the
performance of the business and the accuracy of the Group’s
forecasting of future results.
We challenged:
- the terminal growth rate - comparing it to economic and
industry forecasts
- the discount rate – assessing the costs of capital applied to
the Group and comparable organisations, as well as
considering territory specific factors.
- the installed base and win per unit assumptions including
considering historical growth rates of the Group.
We tested the sensitivity of the calculations by varying the
above mentioned key assumptions. We determined the
impairment testing result was most sensitive to assumptions
for revenue growth rates and discount rates.
We checked the valuation calculations used in the impairment
testing for mathematical accuracy.
We also noted that the market capitalisation of the Group was
significantly higher than the Group’s net assets of $1,346
million as at 30 September 2017 (which includes VGT’s
goodwill).
107
ARISTOCRAT LEISURE LIMITED Annual Report 2017
Other information
The directors of the Company are responsible for the other information. The other information
comprises the Director’s Report and Operating and Financial Review for the year ended 30 September
2017 (but does not include the financial report and our auditor’s report thereon), which we obtained
prior to the date of this auditor’s report. We expect other information to be made available to us after
the date of this auditor’s report, including the 2017 Online Business Review and 2017 Corporate
Governance Statement on the Group’s website referenced from the 2017 Group’s Annual Report and
Company Profile and Key Dates, Nevada Regulatory Disclosure, Five Year Summary, Shareholder
Information and Corporate Directory included in the Group’s annual report for the year ended 30
September 2017.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received as identified above, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to the directors and use
our professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
108
ARISTOCRAT LEISURE LIMITED Annual Report 2017
This description forms part of our auditor’s report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 28 to 49 of the directors’ report for the year
ended 30 September 2017.
In our opinion, the remuneration report of Aristocrat Leisure Limited for the year ended 30 September
2017 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
MK Graham
Partner
Scott Walsh
Partner
Sydney
30 November 2017
Sydney
30 November 2017
109
ARISTOCRAT LEISURE LIMITED Annual Report 2017
SHAREHOLDER INFORMATION
Distribution of equity securities as at 29 November 2017
Size of holding
1- 1,000
1,001- 5,000
5,001- 10,000
10,001- 100,000
100,001- over
TOTAL
Less than a marketable parcel of $500.00
Holders of
Performance
Share Rights1
Shareholders
Number of
shares2
% of issued
capital
24
60
33
24
6
147
-
10,841
5,075
765
477
73
4,492,008
11,554,707
5,451,914
10,065,912
606,979,609
17,231
638,544,150
713
4,344
0.703
1.810
0.854
1.576
95.057
100.000
0.00068
1. All share rights are allocated under the Company’s incentive programs to take up ordinary shares in the capital of the Company. These share rights are subject
to the rules of the relevant program and are unquoted and non-transferable.
2. Fully paid ordinary shares (excludes unvested performance share rights that have not been converted into shares).
Substantial shareholders 29 November 2017
As at 29 November 2017, the following shareholders were registered by the Company as a substantial shareholder, having
notified the Company of a relevant interest in accordance with Section 671B of the Corporations Act 2001 (Cth), in the voting
shares below:
Name of shareholder
Commonwealth Bank of Australia
Blackrock Group
Number of ordinary
shares held
36,247,522
44,884,870
% of issued capital
Date of notice
5.68%
7.02%
01/06/2017
17/07/2017
110
ARISTOCRAT LEISURE LIMITED Annual Report 2017
SHAREHOLDER INFORMATION
Twenty largest ordinary shareholders as at 29 November 2017
Name of shareholder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
WRITEMAN PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
THUNDERBIRDS ARE GO PTY LTD
UBS NOMINEES PTY LTD
ARMINELLA PTY LIMITED
ECA 1 PTY LIMITED
MAAKU PTY LIMITED
ARGO INVESTMENTS LIMITED
AMP LIFE LIMITED
SBN NOMINEES PTY LIMITED
FORSYTH BARR CUSTODIANS LTD
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
BOND STREET CUSTODIANS LIMITED
CS FOURTH NOMINEES PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
CS THIRD NOMINEES PTY LIMITED
Number of ordinary
shares held
% issued capital
251,536,565
99,474,546
87,023,569
32,503,349
31,330,975
24,925,778
20,027,754
16,500,969
14,692,200
8,617,713
5,284,127
2,485,130
2,060,074
1,174,500
1,124,054
1,068,145
1,003,953
981,684
981,149
790,526
39.392%
15.578%
13.628%
5.090%
4.907%
3.904%
3.136%
2.584%
2.301%
1.350%
0.828%
0.389%
0.323%
0.184%
0.176%
0.167%
0.157%
0.154%
0.154%
0.124%
111
ARISTOCRAT LEISURE LIMITED Annual Report 2017
SHAREHOLDER INFORMATION
Voting Rights
At meetings of shareholders, each shareholder may vote
in person or by proxy, attorney or (if the shareholder is a
body corporate) corporate representative. On a show of
hands, every person present who is a shareholder or a
representative of a shareholder has one vote and on a poll
every shareholder present in person or by proxy or attorney
has one vote for each fully paid ordinary share. Performance
share right holders have no voting rights.
Regulatory Considerations affecting Shareholders
Aristocrat Leisure Limited and its subsidiaries could be
subject to disciplinary action by gaming authorities in
some jurisdictions if, after receiving notice that a person is
unsuitable to be a shareholder, that person continues to
be a shareholder. Because of the importance of licensing
to the Company and its subsidiaries, the Constitution
contains provisions that may require shareholders to provide
information and also gives the Company powers to divest
or require divestiture of shares, suspend voting rights and
withhold payments of certain amounts to shareholders or
other persons who may be unsuitable.
Shareholder enquiries
You can access information about Aristocrat Leisure Limited
and your holdings via the internet. Aristocrat’s website,
www.aristocrat.com, has the latest information on Company
announcements, presentations and reports. Shareholders
may also communicate with the Company via its website. In
addition, there is a link to the Australian Securities Exchange
to provide current share prices. The share registry manages
all your shareholding details. Visit www.boardroomlimited.
com.au and access a wide variety of holding information,
make changes to your holding record and download forms.
You can access this information via a security login using
your Securityholder Reference Number (SRN) or Holder
Identification Number (HIN).
Dividends
Electronic Funds Transfer
The Company has a mandatory direct payment of dividends
program for all shareholders who were requested to
complete and submit Direct Credit payment instructions
with the Company’s share registrar. Shareholders who have
not submitted valid Direct Credit payment instructions will
receive a notice from the Company’s share registrar advising
that:
(i) the relevant dividend amount is being held as direct
credit instructions have not been received;
(ii) the relevant dividend will be credited to the nominated
bank account as soon as possible on receipt of direct
credit instructions; and
(iii) no interest is payable on the dividend being withheld.
Such notices are sent to shareholders who have not
completed and submitted a Direct Credit of Dividends
instructions on the record date of the relevant dividend.
Dividend Reinvestment Plan
The Directors consider whether the Company’s Dividend
Reinvestment Plan (DRP) should operate each time a
dividend is declared.
The DRP Rules and the ‘Dividend Reinvestment Plan
Application or Variation Form’ are available from the
Company’s share registrar, Boardroom Limited on
1300 737 760 (in Australia), or +61 2 9290 9600
(international) or email enquiries@boardroomlimited.com.au
Shareholders should note that: (i) Shareholders who elect to
participate in the DRP and who do not revoke their elections
will automatically participate on the next occasion the DRP is
activated; (ii) the fact that the DRP operated in respect of any
dividend does not necessarily mean that the DRP will operate
in respect of any further dividends (a separate decision
is made for each dividend); and (iii) when the DRP does
operate, the DRP rules provide that the number of shares that
DRP participants will receive will not be determinable on the
Record Date determined by the Board.
112
ARISTOCRAT LEISURE LIMITED Annual Report 2017
CORPORATE DIRECTORY
Directors
The Americas
North America
Europe
Great Britain
Aristocrat Technologies Inc.
Aristocrat Technologies Europe Limited
ID Blackburne
Non-Executive Chairman
TJ Croker
Chief Executive Officer and
Managing Director
DCP Banks
Non-Executive Director
KM Conlon
Non-Executive Director
RV Dubs
Non-Executive Director
SW Morro
Non-Executive Director
AM Tansey
Non-Executive Director
S Summers Couder
Non-Executive Director
PJ Ramsey
Non-Executive Director
Company Secretary
A Korsanos
RH Bell
Global Headquarters
Aristocrat Leisure Limited
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
Australia
Telephone: + 61 2 9013 6300
Facsimile: + 61 2 9013 6200
Internet Site
7230 Amigo Street
Las Vegas
Nevada 89119
USA
Telephone: + 1 702 270 1000
Facsimile: + 1 702 270 1001
Video Gaming Technologies, Inc.
308 Mallory Station Road
Franklin
TN 37067
USA
Telephone: + 1 615 372 1000
Facsimile: + 1 615 372 1099
South America
Aristocrat (Argentina) Pty Limited
Acassuso Office Park
Dardo Rocha No 78 1er Piso
(1640) Acassuso
Partido de San Isidro
Provincia de Buenos Aires
Telephone: + 5411 4708 5400
Facsimile: + 5411 4708 5454
Asia
Macau
Aristocrat (Macau) Pty Limited
17th Floor, Hotline Centre
335-341 Alameda Drive
Carlos d’ Assumpcao
Macau
Telephone: + 853 2872 2777
Fax: + 853 2872 2783
www.aristocrat.com
Singapore
Australia
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
Australia
Telephone: + 61 2 9013 6300
Facsimile: + 61 2 9013 6200
Aristocrat Technologies
61 Kaki Bukit Avenue 1
Shun Li Industrial Park #04-29
Singapore 417943
Telephone: + 656 444 5666
Facsimile: + 656 842 4533
25 Riverside Way
Uxbridge
Middlesex UB8 2YF U.K.
Telephone: + 44 1895 618 500
Facsimile: + 44 1895 618 501
New Zealand
Aristocrat Technologies NZ Limited
Unit E, 7 Echelon Place
Highbrook, Auckland 2013
New Zealand
Telephone: +649 259 2000
Facsimile: +649 259 2001
Investor Contacts
Share Registry
Boardroom Limited
Grosvenor Place, Level 12
225 George Street
Sydney, NSW 2000, Australia
Telephone: 1300 737 760 (in Australia)
Telephone: +61 2 9290 9600
(international)
Email: enquiries@boardroomlimited.com.au
Website: www.boardroomlimited.com.au
Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay, Barangaroo
Sydney, NSW 2001, Australia
Stock Exchange Listing
Aristocrat Leisure Limited
Ordinary shares are listed on the
Australian Securities Exchange
CODE: ALL
Investor Email Address
Investors may send email queries to:
investor.relations@aristocrat.com
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