2018 ANNUAL REPORT
This 2018 Aristocrat Leisure Limited Annual Report for the
financial year ended 30 September 2018 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 2018 financial
year.
2019 ANNUAL GENERAL MEETING
The 2019 Annual General Meeting will be held at 11.00am
on Thursday, 21 February 2019 at the Marble Room,
Radisson Blu Plaza Hotel, 27 O’Connell Street, Sydney, New
South Wales, 2000.
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 and 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
2018 CORPORATE GOVERNANCE
STATEMENT
The 2018 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
32
56
57
60
62
109
116
119
COMPANY PROFILE
Aristocrat Leisure Limited (ASX: ALL) is a leading gaming
provider and games publisher, with more than 6,100
employees located in offices around the world. Aristocrat
offers a diverse range of products and services including
electronic gaming machines, casino management systems
and digital social games. The Company’s land-based
products are approved for use in more than 300 licensed
jurisdictions and are available in over 90 countries.
For further information visit the Group’s website at
www.aristocrat.com.
KEY DATES*
2018
Record date for Final 2018 Dividend
5 December 2018
Payment date for Final 2018 Dividend
19 December 2018
2019
2019 Annual General Meeting
21 February 2019
Interim Results Announcement
(6 months ending 31 March 2019)
23 May 2019
Full Year Results Announcement
(12 months ending 30 September 2019) 21 November 2019
* Dates subject to change.
1
ARISTOCRAT LEISURE LIMITED Annual Report 2018
MESSAGE FROM THE
CHAIRMAN AND CEO
Welcome to Aristocrat’s 2018 Annual Report.
Aristocrat reported strong organic and inorganic performance
over the 2018 fiscal year, delivering a record profit result and
further extending the business’ track record of high quality
NPATA1 growth.
Group revenue increased 48% in reported terms and over
46% in constant currency to an all-time high of over $3.6
billion. Around two-thirds of total Group revenues derived
from recurring sources in 2018, representing further progress
in the Company’s strategy to deliver sustained and sustainable
performance over the long term.
This result reflected the positive operational performance
delivered across the Group’s global portfolio. Notable features
of the result included further gains in the Americas and in
Australian markets, together with transformational growth in
Digital, where sustained organic growth was supported by
the performance of our recently acquired businesses Plarium
Global and Big Fish Games.
Over the course of the year, Aristocrat also continued to invest
in its future with a significant increase in absolute Design &
Development (D&D) spend, including around $100 million of
additional investment in Digital. D&D remains Aristocrat’s top
investment priority, as it is a core growth enabler that helps
the Company to defend and expand existing market positions
while also ensuring it is positioned to unlock opportunities in
priority adjacencies.
A robust balance sheet ensures Aristocrat can continue to
promote shareholders’ longer-term interests by investing for
both organic and inorganic growth, wherever compelling,
accretive opportunities are identified.
Aristocrat’s operational momentum, strong cash flows and
capacity to continue to reduce gearing levels has allowed the
Board to deliver another significant increase in earnings per
share, consistent with our commitment to grow dividends over
time.
The Board’s orderly renewal process also continued over the
course of the year, with the nomination of Mr Neil Chatfield
to succeed Dr Ian Blackburne as Chairman of the Board of
Aristocrat Leisure at the Group’s Annual General Meeting
in February 2019. Neil’s nomination reflects his extensive
experience as an Executive and Non-Executive Director
of a number of large and complex Australian corporates,
his particular experience as a Chairman, the significant
contribution he has made since joining Aristocrat in 2017
and the esteem of his Board colleagues. We have every
confidence that under Neil’s leadership, and with the ongoing
oversight of the Board, Aristocrat will continue its growth
journey with confidence and focus.
In summary, fiscal year 2018 has been another highly
successful and rewarding year for Aristocrat and its
shareholders.
Thank you for your interest, and support.
Ian Blackburne
Chairman
Trevor Croker
Chief Executive Officer &
Managing Director
1. Net Profit After Tax and before Amortisation of Acquired Intangibles
2
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ REPORT
For the 12 months ended 30 September 2018
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 2018 (the financial
year). The information in this report is current as at 29
November 2018 unless otherwise specified.
Since the end of the financial year, the Directors have
recommended the payment of a final dividend of 27.0 cents
(2017: 20.0 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 2018 was a profit of
$542.6 million after tax (2017: profit of $495.1 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.
website www.aristocrat.com
3
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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:
Director
ID Blackburne
BSc (Hons), MBA, PhD
TJ Croker
Advanced Management
Program (Wharton
School, University of
Pennsylvania)
Experience and other directorships
CURRENT DIRECTORS
Nominated December 2009. Appointed September 2010.
— 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
Special responsibilities
Non-Executive Chairman
Member of each Board
Committee
Appointed 1 March 2017.
— Director of the Australasian Gaming Council and the
Managing Director and Chief
Executive Officer
American Gaming Association
— Former Executive Vice President, Global Product & Insights,
Aristocrat Leisure Limited
— Former Managing Director, ANZ – Aristocrat Leisure Limited
— Sales Director – Fosters Australia Ltd
NG Chatfield
M.Bus, FCPA, FAICD
Nominated December 2017. Appointed February 2018.
— Chairman of Costa Group Holdings Limited and Seek Ltd
(retiring effective 31 December 2018)
— Director of Transurban Group
— Former Chairman Virgin Australia Holdings Ltd
— Former Director of Recall Holdings Ltd and
Iron Mountain, Inc.
— Former Executive Director and Chief Financial Officer,
Toll Holdings Ltd
Member, Strategic Risk
Committee
Member, Strategic Risk
Committee
(from 21 February 2018)
Member, Regulatory and
Compliance Committee
(from 21 February 2018)
KM Conlon
BEc, MBA
Nominated January 2014. Appointed February 2014.
— Director of REA Group Limited and Lynas Corporation
Chair, Human Resources and
Remuneration Committee
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, Strategic Risk
Committee
4
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ REPORT Director
SW Morro
BA, Business
Administration
CURRENT DIRECTORS
Experience and other directorships
Special responsibilities
Nominated December 2009. Appointed December 2010.
Lead US Director
— Former Chief Operating Officer and President, IGT Gaming
Division
PJ Ramsey
Nominated September 2016. Appointed October 2016.
BA, Economics, MBA
— Director, VizExplorer
— Former Chief Digital Officer, Aristocrat Leisure Limited
— Former Director & CEO, Multimedia Games
— Various senior roles at Caesars Entertainment (formerly
Harrah’s)
Member, Regulatory and
Compliance Committee
Member, Human Resources
and Remuneration Committee
Chair, Regulatory and
Compliance Committee
(from 1 March 2018)
Member, Regulatory and
Compliance Committee
(to 28 February 2018)
Member, Strategic Risk
Committee
S Summers Couder
Nominated August 2016. Appointed September 2016.
Chair, Strategic Risk Committee
— Director, Semtech Corporation
— Former Director, Alcatel-Lucent SA and Headwaters Inc.
— Former Chief Executive Officer of Trident Microsystems Inc.
Member, Audit Committee
Dip Electrical
Engineering, Masters in
Electrical Engineering
and Computer Sciences
Cycle de
Perfectionnement Option
(Equivalent MBA)
AM Tansey
Nominated March 2016. Appointed July 2016.
BBA, MBA, Juris Doctor
— Director, Adelaide Brighton Ltd, Primary Health Care Ltd and
Lend Lease Investment Management Limited
— Member of Chief Executive Women and Fellow of the
Australian Institute of Company Directors
Chair, Audit Committee
(from 1 December 2017)
Member, Audit Committee
(to 30 November 2017)
Member, Strategic Risk
Committee
5
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ REPORT Director
DCP Banks
BBus (Mgt)
FORMER DIRECTORS
Experience and other directorships
Appointed July 2011. Retired 31 March 2018.
— 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
RV Dubs
Appointed June 2009. Retired 22 February 2018.
BSc (Hons), Dr ès Sc,
FTSE, FAICD
— 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, Audit Committee
(to 30 November 2017)
Member, Regulatory and
Compliance Committee
(to 31 March 2018)
Chair, Regulatory and
Compliance Committee
(to 21 February 2018)
Member, Human Resources
and Remuneration Committee
(to 22 February 2018)
6
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 Blackburne1
16/16
4/4
16/16
10/11
16/16
TJ Croker
N Chatfield1,4
KM Conlon1
SW Morro1
PJ Ramsey1
16/16
S Summers Couder1 16/16
AM Tansey1
16/16
16/16
DCP Banks2
RV Dubs3
7/7
7/7
-
-
-
-
-
4/4
4/4
2/2
-
4/4
-
-
4/4
4/4
-
-
-
Former Directors
-
2/2
6/6
-
3/3
-
6/6
6/6
-
-
3/3
3/3
2/2
2/2
1/2
2/2
-
2/2
2/2
2/2
-
-
1. During the FY2018, the Board reviewed each Non-Executive Director’s
independence and confirms that each Non-Executive Director is independent.
2. Mr Banks retired from the Board on 31 March 2018.
3. Dr Dubs retired from the Board on 22 February 2018.
4. Mr Chatfield was nominated by the Board on 12 December 2017 as a Non-
Executive Director, subject to receipt of all relevant regulatory pre-approvals.
Pending regulatory approval, Mr Chatfield was a Director (Elect). Necessary
regulatory pre-approvals were received and Mr Chatfield’s appointment as a
Non-Executive Director was confirmed by the Board on 7 February 2018.
Company Secretary
The Company Secretary is directly accountable to the Board,
through the Chairman, for all governance matters that relate
to the Board’s proper functioning.
During the financial year, the Group had the following
Company Secretaries:
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).
Antonia Korsanos Bachelor of Economics (Major in
Accounting & Finance) and Chartered Accountant
Mrs. Korsanos resigned from the position of Company
Secretary effective 29 March 2018.
7
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ REPORT Principal activities
Indemnities and insurance premiums
The principal activities of the Group during the financial year
were the design, development and distribution of gaming
content, platforms and systems, including electronic gaming
machines, casino management systems and digital social
games. The Company’s objective is to be the leading global
provider of gaming solutions. In October 2017, the Group
acquired 100% of Plarium Global Limited (Plarium), a free-to-
play, social and web-based game developer. The acquisition
significantly expands Aristocrat’s Digital addressable market in
adjacent gaming segments.
In January 2018, the Group acquired 100% of Big Fish Games,
Inc. (Big Fish), a global publisher of free-to-play games that is
focused on specific game segments, including social casino,
social gaming, and premium paid games. The acquisition
provides a platform for growth through existing successful
applications and an attractive pipeline of new applications.
Significant changes in the state of affairs
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
In the interval between the end of the financial year and the
date of this report, there has not arisen 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.
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
8
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ REPORT 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.
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.
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.
Dr ID Blackburne
Chairman
29 November 2018
9
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ REPORT OPERATING AND FINANCIAL REVIEW
ARISTOCRAT AT A GLANCE
REVENUE
LICENSED JURISDICTIONS
$3.62 BILLION
317
Revenue by Segment
Revenue by Strategic Segment
ANZ
12.5%
Digital
36.9%
44.7%
Americas
5.9%
International
Class III
COUNTRIES
99
Class III
Outright Sales
& Other
34.6%
47.7%
Gaming
Operations
28.5%
36.7%
15.6%
36.9%
Digital
EMPLOYEES
6,100+
CAN
USA
EU
UKR
GBR
RUS
IND
MAC
MEX
ARG
ISR
MYS
PHL
SGP
AUSAUS
NZ
10
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
Aristocrat made further
progress in unlocking organic growth
opportunities in adjacent markets and
segments in addition to investing in
the high growth social games market
through the acquisitions of Plarium
and Big Fish
The acquisitions of Plarium Global Ltd (Plarium), and Big Fish
Games, Inc. (Big Fish), completed during the period, also
demonstrated Aristocrat’s willingness to invest for growth,
consistent with our strategy.
Plarium and Big Fish significantly increased Aristocrat’s
presence in the high-growth social games market. They also
immediately expanded our addressable digital opportunity
by around 8 times – to approximately US$22 billion of value
– to encompass the Strategy, Role Playing Game (RPG) and
Casual Games segments. Big Fish also operates in the Social
Casino segment, adding to Aristocrat’s existing presence
through the Product Madness business.
The acquisitions substantially lift the Digital segment’s pro-
forma earnings contribution to the Group, and contribute
additional diversity, scale and strength to Aristocrat’s global
operations.
Aristocrat’s strong balance sheet and growing recurring
revenues give the business broad optionality to continue to
consider both organic and inorganic opportunities to sustain
our growth momentum and create value for shareholders.
BUSINESS STRATEGY
BUSINESS STRATEGIES AND PROSPECTS
FOR FUTURE FINANCIAL YEARS
Aristocrat’s consistent focus has been on delivering
high quality, sustainable growth. We’ve done this by
protecting and expanding our core business, and capturing
opportunities in new markets and segments, both organically
and through disciplined M&A.
Over the course of FY18, Aristocrat continued to grow across
its core operations, while positioning to unlock adjacent
opportunities. Highlights included:
— Increased share and yield in the land-based North
Americas Gaming Operations business, off the back
of broadening product portfolios and outstanding
performance;
— Held share across key global outright sale markets, in
generally flat and competitive conditions, reflecting
market-leading game and cabinet portfolios;
— Increased investment in growth, with higher Design
& Development (D&D) spend, and increased User
Acquisition investment behind a broader range of digital
games;
— Product Madness’ successful launch and scaling of two
new applications – FaFaFa Gold™ and Lightning Link™;
— The introduction of the RELM XL™ Class III Premium
Gaming Operations stepper, and positive customer
response;
— Sustained performance in the Class II Ovation™ video
product, with the launch of new hardware configurations
(Arc Single™ and Helix™ XT cabinets);
— Launch of a Video Lottery Terminal (VLT) product, with trial
commenced and early conversions expected in 2019;
— Development of a competitive offering for the
Washington Central Determinant System (CDS) market,
with first product shipments made in October 2018.
11
ARISTOCRAT LEISURE LIMITED Annual Report 2018
EARNINGS SUMMARY
Key performance indicators for the current period and prior period are set out below.
A$ million
Normalised results1
Operating revenue
EBITDA
EBITA
NPAT
NPATA
Earnings per share (fully diluted)
EPS before amortisation of acquired intangibles (fully diluted)
Total dividend per share
Reported results
Revenue
Profit after tax
NPATA
Balance sheet and cash flow
Net working capital/revenue
Operating cash flow
Normalised operating cash flow1
Normalised operating cash flow conversion1
Closing net debt/(cash)
Gearing (net debt/consolidated EBITDA3)
Constant
currency2
2018
2018
2017
Variance vs. 2017
Constant
currency2
%
Reported
%
46.1
31.6
30.5
23.5
33.2
23.4
33.2
35.3
43.0
8.5
19.5
47.7
32.7
31.6
24.6
34.3
24.5
34.2
35.3
44.7
9.6
20.6
3,583.9
3,624.1
2,453.8
1,317.4
1,328.6
1,001.2
1,120.1
1,129.3
611.4
723.7
95.6c
113.2c
46.0c
616.9
729.6
96.5c
114.1c
46.0c
858.1
495.1
543.4
77.5c
85.0c
34.0c
3,509.2
3,549.8
2,453.8
495.1
543.4
537.4
649.6
1.7%
925.9
979.6
542.6
655.3
1.7%
933.8
987.9
7.1%
(5.4)pts
(5.4)pts
799.1
799.1
15.9
22.6
16.9
23.6
135.3%
135.4%
147.1% (11.8)pts
(11.7)pts
2,276.6
2,453.0
652.3
(249.0)
(276.1)
n/a
1.7x
0.6x
n/a
(1.1x)
1. Normalised results and operating cash flow are statutory profit (before and after tax) and operating cash flow, excluding the impact of certain significant
items and adjustments. Significant items and adjustments are items which are either individually or in aggregate, material to Aristocrat and are either
outside the ordinary course of business or part of the ordinary activities of the business but unusual due to their size and nature as detailed on page 18. The
operating revenue and results reflect the ongoing revenue recognition principles for the acquired businesses since the date of acquisition, and corresponds
to the revenue and results that would have been recognised under Accounting Standards had the businesses not been acquired to explain the underlying
performance of the entity and the drivers of its profit.
2. Results for 12 months to 30 September 2018 adjusted for translational exchange rates using rates applying in 2017 as referenced in the table on page 22.
3. Consolidated EBITDA as defined by the Credit Agreement.
The information presented in this Review of Operations has not been audited in accordance with the Australian Auditing Standards.
12
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE Investment in talent and technology:
— During the reporting period, Aristocrat invested strongly
in talent and technology in order to drive core growth,
attack land-based adjacencies, execute on our multi-app
strategy and integrate new Digital businesses.
— Aristocrat’s Design & Development (D&D) team now
represents almost half of the global employee base. The
business has continued to lift investment in D&D in both
absolute terms and as a percentage of revenue.
Strong financial metrics:
— Strong EBITDA margin maintained at 37%, with expansion
in land-based margins absorbing some of the impact
from expected lower margin digital acquisitions.
— Growth funded within the balance sheet and borrowings
preserving the strength of the business.
— Gearing (Net Debt/EBITDA) decreased to 1.7x pro-forma
leverage – from 2.2x pro-forma at 30 September 2017.
— US$2.2 billion debt successfully repriced in May 2018 and
maturity of all debt extended to 7 years (maximum under
the TLB facility).
— Cash generating fundamentals remain strong,
demonstrated by US$165 million paydown of TLB.
— Capital expenditure increased 26% to $269 million
supporting further growth in Americas Gaming
Operations installed base.
OPERATIONAL HIGHLIGHTS
Key operational highlights for the period are set out below:
Increased share and yield in the land-based North Americas
Gaming Operations business:
— Class III Premium Gaming Operations grew 25% to 20,114
units, with continued penetration of leading hardware
configurations and high-performing game titles.
— Class II grew 8.1% to 24,264 units, driven by the success
of the Class II video product Ovation™.
— Average fee per day increased 2.2% to US$51.81,
demonstrating strengthened product performance in the
period.
Held share in land-based outright sales segment:
— North America – achieved stable ship share in an
increasingly competitive market.
— ANZ – sustained market-leading ship share in a flat market.
— International Class III – transitioning from a strategy
focused on openings to floor optimisation.
In addition, Aristocrat’s land-based business improved its
customer focus during the year with the introduction of a
best-in-class CRM system in key markets.
Transformation of the Digital business:
— Significant increase in revenue and profit driven by
growth in Product Madness, together with the acquisitions
of Plarium and Big Fish.
— Total Daily Active Users (DAU) increased almost five-fold
to 8.1 million.
— Product Madness ending DAU exceeded 2 million,
reflecting growth in Cashman Casino™ and the launch
of Lightning Link™ and FaFaFa Gold™ in line with the
successful multi-app strategy.
— Completion and integration of two major digital
acquisitions, which closed on 19 October 2017 and 10
January 2018, respectively.
13
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE PERFORMANCE SUMMARY
Normalised profit after tax and before amortisation of
acquired intangibles (NPATA) of $729.6 million for the
period represented a 34% increase (33% in constant
currency) compared to $543.4 million in the prior
corresponding period. Revenue increased by more than
47% (46% in constant currency) driven by growth in
Americas and ANZ, and in Digital with organic growth
NPATA movement FY17 to FY18 (A$ million)
in Product Madness along with two significant digital
acquisitions. Normalised fully diluted earnings per share
before amortisation of acquired intangibles of 114.1c
represents a 34% increase on the prior year.
Net gearing increased to 1.7x from 0.6x in the prior
corresponding period, due to the acquisitions of Plarium
and Big Fish, funded via cash and incremental Term Loan B
debt facility.
186.7
(8.3)
(31.6)
(96.2)
37.1
6.9
(36.5)
(37.8)
80.1
11.5
543.4
NPATA
FY 2017
729.6
655.3
Americas
ANZ
Digital
International
Class III
Corporate
costs /
interest
Group D&D
expense
Income
tax rate
movement
Foreign
exchange
Normalised
NPATA
FY 2018
Significant
items
Adjustments Reported
NPATA
FY 2018
— Strong growth in the Americas business drove an $80
— Corporate costs and interest increased by $31.6
million improvement in post-tax profit compared to the
prior corresponding period. This growth was driven
by a 25% expansion in the Class III Premium Gaming
Operations footprint, together with further expansion in
the Class II Gaming Operations footprint and average fee
per day (FPD).
— The ANZ business delivered $11.5 million in incremental
post-tax profit, driven by the top performing Helix™
cabinet and further penetration of the Dragon Link™ and
Dragon Cash™ product families.
— Digital delivered strong post-tax earnings growth of
$186.7 million due to the scaling of Cashman Casino™,
the continued success of Heart of Vegas™ and the launch
of two new applications in the period, FaFaFa Gold™
and Lightning Link™. Digital performance was also
significantly enhanced by the acquisitions of Plarium and
Big Fish in the period.
— International Class III post-tax profit declined $8.3 million
as the business cycled over a concentration of openings
in this segment in the prior corresponding period.
million taking into account the incremental funding of
acquisitions, partially offset by lower one-off consulting
costs.
— The Group’s strategic investments in talent and
technology, represented in higher D&D spend at 11.4%
of revenue, is delivering competitive product across an
expanded range of markets and segments in line with the
Group’s growth strategy.
— The decrease in the Group’s effective tax rate (ETR) from
32% to 29%, reflecting recent US tax reform combined
with the change in geographic business mix following the
acquisitions, resulted in a $37.1 million benefit.
— Foreign exchange impacted the business performance by
$6.9 million.
— Significant items and adjustments relate to the
acquisitions of Plarium and Big Fish and are explained on
page 18.
14
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE GROUP PROFIT OR LOSS
Results in the current period and prior corresponding period are in reported currency and normalised for significant items
and adjustments as outlined on page 18. Segment profit is stated before amortisation of acquired intangibles.
A$ 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 (NPAT)
Amortisation of acquired intangibles after tax
Profit after tax and before amortisation of acquired intangibles (NPATA)
2018
2017
Variance
%
454.5
1,620.2
210.5
1,338.9
3,624.1
207.1
859.2
103.4
438.2
431.6
1,424.5
214.7
383.0
2,453.8
190.5
736.4
112.5
158.9
1,607.9
1,198.3
(413.6)
(3.4)
(61.6)
(478.6)
1,129.3
(156.3)
973.0
(105.4)
867.6
(250.7)
616.9
112.7
729.6
(268.4)
(4.9)
(66.9)
(340.2)
858.1
(76.9)
781.2
(53.1)
728.1
(233.0)
495.1
48.3
543.4
5.3
13.7
(2.0)
249.6
47.7
8.7
16.7
(8.1)
175.8
34.2
(54.1)
30.6
7.9
(40.7)
31.6
(103.3)
24.6
(98.5)
19.2
(7.6)
24.6
133.3
34.3
15
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE REVENUE
Segment revenue increased $1,170 million or 48% in
reported currency (46% in constant currency), principally
driven by growth in Gaming Operations and Digital.
In Gaming Operations, the Premium Class III installed base
grew 25% and the Class II footprint grew 8%, while overall
average fee per day increased 2%. Performance was fuelled
by continued penetration of the high-performing products
Lightning Link™, 5 Dragons Grand™ and Buffalo Grand™
including the successful launches of Dragon Link™ and
RELM XL™ and further penetration of Ovation™.
Digital revenue grew 245% to US$1,009 million. The Plarium
and Big Fish acquisitions delivered US$614 million in
additional revenue compared to the prior corresponding
period. The scaling of Cashman Casino™ and the launches
of FaFaFa Gold™ and Lightning Link™ in Product Madness
drove US$113.5 million of incremental growth in the period.
In North America Class III Outright Sales, revenue increased
4.7% with ship share remaining broadly in line with the prior
year in an increasingly competitive environment. Continued
strength in average sales price (ASP) reflected Aristocrat’s
portfolio depth, the performance of Helix™ and Arc™
cabinets and the introduction of both the Helix™ XT cabinet
and new linked progressive content.
Australia & New Zealand Class III revenue grew 5.3% to $455
million in reported currency, reflecting sustained market-
leading ship share.
In International Class III, revenue decreased 2% to $211
million in reported currency as the business cycled over
a concentration of openings in the prior corresponding
period.
Revenue by Strategic Segment
2018
34.6%
28.5%
$3.62bn
36.9%
2017
36.7%
47.7%
$2.45bn
15.6%
Gaming
Operations
Digital
Class III Outright
Sales & Other
16
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE EARNINGS
Segment profit increased $410 million in reported currency,
up 34% compared with the prior corresponding period.
Margin expansion was achieved in both the Americas and
ANZ due to product mix. Following the acquisitions of Plarium
and Big Fish, which introduced the lower margin Social Games
business to our Digital portfolio, the overall Digital margin
moderated from 41.5% to 32.7%, in line with expectations.
Net interest expense increased $52.3 million to $105.4
million, reflecting increased debt levels to support the
acquisitions in the period.
The effective tax rate (ETR) for the reporting period was 29%
compared to 32% in the prior corresponding period. This
was largely attributable to the changes driven by US tax
reform that came into effect from 1 January 2018, including
a one-off gain from revaluation of Aristocrat’s deferred tax
liability.
Segment Profit Margin % of Revenue
Other Key Margins % of Revenue and ETR
60%
50%
40%
30%
20%
0
.
3
5
7
.
1
5
4
.
2
5
1
.
9
4
5
.
4
4
8
.
7
4
6
.
5
4
1
.
4
4
1
.
0
4
2
.
2
4
5
.
1
4
7
.
2
3
Australia and
New Zealand
Americas
International
Class III
Digital
60%
50%
40%
30%
20%
10%
0%
2
.
1
1
9
.
0
1
4
.
1
1
8
.
8
4
5
.
5
4
4
.
4
4
8
.
0
4
9
.
7
3
7
.
6
3
0
.
2
3
9
.
0
3
9
.
8
2
1
.
2
2
1
.
0
2
7
.
8
1
Group D&D
expense/
revenue
Segment
Profit/
revenue
EBITDA/
revenue
NPATA/
revenue
Effective
Tax Rate
2016
2017
2018
2016
2017
2018
The Group continued to invest significantly in talent and
technology to deliver competitive product across a broader
range of land-based and digital segments. The Group’s
investment in D&D, as a percentage of revenue, was 11.4%
during the period compared to 10.9% in the prior financial
year. Total reported spend increased $145 million or 54%
(53% in constant currency) including the D&D spend
associated with the Plarium and Big Fish acquisitions.
Corporate costs decreased by $5 million compared to the
prior corresponding period mainly driven by lower one-off
consulting costs. Corporate costs as a percentage of revenue
decreased to 1.7%.
17
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE Reconciliation of statutory revenue to operating revenue
A$ million
Statutory revenue as reported in the financial statements
Add back fair value adjustments relating to the acquisitions
Operating revenue
Reconciliation of statutory profit to NPATA
A$ million
Statutory profit as reported in the financial statements
Amortisation of acquired intangibles (tax effected)
Reported profit after tax before amortisation of acquired intangibles
(Reported NPATA)
Add back net loss from significant items and adjustments after tax
Normalised Profit After Tax before amortisation of acquired intangibles
(Normalised NPATA)
Significant items & adjustments
A$ million
Contingent retention arrangements relating to Plarium
Acquisition related transaction, integration and restructuring costs of Plarium and
Big Fish
Net loss from significant items
Fair value adjustments relating to the acquisitions
Net loss from adjustments
Net loss from significant items & adjustments
Significant Items & Adjustments:
Adjustments:
2018
3,549.8
74.3
3,624.1
2018
542.6
112.7
655.3
74.3
729.6
2017
2,453.8
-
2,453.8
2017
495.1
48.3
543.4
-
543.4
30 Sep 2018
Before tax
After tax
(14.8)
(36.5)
(51.3)
(53.2)
(53.2)
(104.5)
(10.5)
(26.0)
(36.5)
(37.8)
(37.8)
(74.3)
Contingent retention arrangement related to the acquisition
of Plarium: The Group’s reported result after tax for the period
includes an expense of $10.5 million relating to the contingent
retention arrangement for the acquisition of Plarium.
Acquisition related transaction, integration and restructuring
costs: The Group’s reported result after tax for the period
includes an expense of $26.0 million relating to the
acquisitions of Plarium and Big Fish. Costs incurred primarily
represent transaction fees payable on completion to
advisors, in addition to legal, consulting and restructuring
costs connected to the acquisitions.
Fair value adjustments: The Group’s normalised results
after tax for the period include an adjustment relating to
the fair value of deferred revenue of Plarium and Big Fish
on acquisition. In accordance with Accounting Standards,
these pre-acquisition balances were not carried forward
in the statutory earnings. They have been included in
the presentation of normalised earnings to explain the
underlying performance of the Group and the drivers of its
profit.
18
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE BALANCE SHEET
The balance sheet can be summarised as follows:
A$ million
30 Sep 2018
31 Mar 2018
30 Sep 2017
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
Net debt / (cash)
428.1
389.3
3,898.8
1,130.6
5,846.8
-
2,881.1
1,233.2
1,732.5
5,846.8
62.0
1.7
2,453.0
357.6
321.5
3,749.4
1,114.5
5,543.0
12.9
2,902.6
1,114.1
1,513.4
5,543.0
171.3
6.0
2,557.9
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
652.3
Variance
%
(21.8)
61.3
131.0
38.4
77.6
(100.0)
140.2
64.9
28.8
77.6
(64.4)
(5.4)pts
(276.1)
Balance sheet movements largely reflect the acquisitions of
Plarium and Big Fish on 19 October 2017 and 10 January
2018, respectively.
Non-current borrowings: The increase relates to the
acquisitions of Plarium and Big Fish, largely funded by the
Term Loan B debt facility.
Significant balance sheet movements from 30 September
2017 are:
Net working capital: The decrease was driven by the
acquisitions of the two Digital businesses which have low
working capital requirements, combined with a continued
focus on cash management.
Intangible assets: The increase reflects the intangible assets
of acquired businesses during the period – predominantly
goodwill.
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.
19
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP 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
Subtotal
Interest and tax
Acquisition related items (cash and non-cash)
Other cash and non-cash movements
Operating cash flow
One-off and significant items
Operating cash flow (normalised)
Operating cash flow (normalised) less capex
Consolidated cash flow
A$ million
Operating cash flow
Capex
Acquisitions and divestments
Investing cash flow
Proceeds from borrowings
Repayment of borrowings
Dividends and share payments
Financing cash flow
Net (decrease)/increase in cash
2018
1,328.6
69.1
1,397.7
(313.0)
(107.3)
(43.6)
933.8
54.1
987.9
718.9
2018
933.8
(269.0)
(1,938.6)
(2,207.6)
1,660.0
(225.8)
(299.0)
1,135.2
(138.6)
2017
1,001.2
(51.9)
949.3
(171.0)
-
20.8
799.1
-
799.1
585.6
2017
799.1
(213.5)
(23.0)
(236.5)
-
(65.5)
(231.1)
(296.6)
266.0
Change
%
32.7
n/a
47.2
(83.0)
n/a
n/a
16.9
n/a
23.6
22.8
Change
%
16.9
(26.0)
(8,328.7)
(833.4)
n/a
(244.7)
(29.4)
n/a
n/a
Normalised operating cash flow increased 23.6% to $988
million compared to the prior corresponding period,
reflecting strong performance across the businesses with a
higher mix of recurring revenues, partly driven by the digital
acquisitions, as well as effective cash management.
Interest and tax increased significantly due to funding
the acquisitions and increased tax payments in Australia
following a period of utilisation of historic tax losses.
Acquisition related items of $107 million included the non-
cash fair value adjustments relating to deferred revenue,
transaction costs, retention payments and other related costs.
Capital expenditure relates primarily to investment in
hardware to support continued strong growth in Americas
Gaming Operations installed base.
Cash flow in the statutory format is set out in the financial
statements.
20
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE FUNDING AND LIQUIDITY
The Group had committed loan facilities of $3.0 billion as at
30 September 2018, comprising total Term Loan B facilities
of US$2.1 billion and a $100 million revolving facility. During
the period new incremental drawings of US$425 million and
US$890 million were made under the accordion feature of
the Group’s Term Loan B facility arrangements, which mature
in October 2024. These incremental tranches were used to
fund the acquisitions of Plarium and Big Fish. Additionally,
during the period, Aristocrat successfully extended the
maturity of the existing US$950 million Term Loan B tranche
by a further 3 years from October 2021 to October 2024,
reflecting the longest term available for a TLB facility. The
$100 million revolving facility is currently undrawn and
matures in October 2019.
The Group repaid US$165 million of the Term Loan B facility
during the period, reflecting Aristocrat’s strong cash balance
and liquidity position providing the business with flexibility to
repay debt.
The Group’s facilities are summarised as follows:
Facility
Term Loan B
facility
Revolving
facility
Overdraft
facilities
Drawn as at
30 Sep 2018
Limit
Maturity
date
US$2,100.2m US$2,100.2m
Oct 2024
A$0.0m
A$100.0m
Oct 2019
A$0.0m
A$7.8m
Annual
Review
The Group’s interest and debt coverage ratios are as follows
(x):
19.1
11.4
10.8
20x
15x
10x
5x
0x
2.3
2.0
1.2
2.0
1.7
0.6
EBITDA*/interest
expense** (x)
Gross debt/
EBITDA* (x)
Net debt (cash)/
EBITDA* (x)
30 Sep 2017
31 Mar 2018
30 Sep 2018
* 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.
On 30 November 2017, Aristocrat announced the acquisition
of Big Fish, together with a calculation of the Group’s
leverage ratio (net debt / EBITDA) on a pro-forma basis of
2.2x. This included the impact of funding for the acquisition
of Plarium which was also completed during the period.
The Group’s pro-forma leverage reduced over the reporting
period, from 2.2x at 30 September 2017 to 1.7x at 30
September 2018 reflecting both earnings growth and free
cash flow generation across the Group.
CREDIT RATINGS
The Group maintains credit ratings from both Moody’s
Investor Services and Standard & Poor's to support our Term
Loan B facility arrangements.
As at 30 September 2018, Aristocrat holds credit ratings of
BB+ from Standard & Poor’s and Ba1 from Moody’s.
21
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE
DIVIDENDS
The Directors have authorised a final dividend in respect
of the full year to 30 September 2018 of 27.0 cents per
share ($172.4 million). Total dividends in respect of the
2018 year amount to 46.0 cents per share ($293.7 million)
and represent an increase of 35% (or 12.0 cents), reflective
of growth in performance, strength of cash flows and
improvement in gearing levels.
The dividend is expected to be declared and paid on 19
December 2018 to shareholders on the register at 5.00pm
on 5 December 2018. The dividend will be fully franked.
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 2018, the Australian
dollar was, on average, weaker against the US dollar when
compared to the prior corresponding period. The impact of
translating foreign currency (translational impact) increased
revenue by $40.2 million, while increasing normalised profit
after tax and before amortisation of acquired intangibles by
$5.9 million on a weighted average basis when compared
with rates prevailing in the respective months in the prior
corresponding period. In addition, as at 30 September 2018,
the cumulative effect of the retranslation of the net assets of
foreign controlled entities (recognised through the foreign
currency translation reserve) was a credit balance of $51.9
million (compared to a debit balance of $38.0 million as at
30 September 2017).
Based on the Group’s mix of profitability, the major exposure
to translational foreign exchange results from the Group’s
US dollar profits. A US dollar 1 cent change in the US$:A$
exchange rate results in an estimated $9 million translational
impact on the Group’s annual profit after tax and before
amortisation of acquired intangibles. This impact will vary as
the magnitude and mix of overseas profits change.
Foreign exchange rates compared with prior corresponding
periods for key currencies are as follows:
A$:
USD
NZD
EUR
GBP
ZAR
ARS
30 Sep 2018
31 Mar 2018
30 Sep 2017
0.7224
1.0902
0.6223
0.5541
10.2183
29.8258
0.7683
1.0605
0.6236
0.5475
9.0840
15.4690
0.7842
1.0860
0.6639
0.5850
10.6324
13.5804
2018
Average¹
0.7573
1.0892
0.6362
0.5621
9.9573
18.3765
2017
Average¹
0.7624
1.0649
0.6870
0.5983
10.2028
12.3371
1. Average of monthly exchange rates only. No weighting applied.
22
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEWREVIEW OF OPERATIONSGROUP PERFORMANCE OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
Normalised segment profit represents earnings before
interest and tax, and before significant items and
adjustments, 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 profit
or loss. Constant currency amounts refer to 2018 results
restated using exchange rates applying in 2017.
AMERICAS
Summary Profit or Loss
US$ million
Revenue
Profit
Margin
2018
2017 Variance %
1,224.2
1,084.7
649.9
53.1%
560.3
51.7%
12.9
16.0
1.4 pts
In local currency, Americas profits increased by 16%, or
US$90 million to US$650 million, representing 140 basis
points (bps) of margin expansion. This was driven by strong
growth in the Gaming Operations segment and sustained
momentum across the balance of the business.
North America Gaming Operations units
50,000
40,000
30,000
s
t
i
n
U
20,000
35,102
21,427
$48.19
13,675
10,000
+15%
100.0
44,378
24,264
38,598
22,437
$50.70
$51.81
20,114
16,161
U
S
$
p
e
r
d
a
y
80.0
60.0
40.0
20.0
0.0
0
2016
2017
2018
Class III
premium units
Class II units
Gaming operations
US$/day
The Class III Premium Gaming Operations installed base
grew 25% fuelled by continued penetration of leading
hardware configurations including the Arc Single™,
Arc Double™ and Helix™ cabinets together with high-
performing titles such as Buffalo Grand™, 5 Dragons
Grand™, Timberwolf Grand™, Dragon Link™ and Lightning
Link™. In addition, the Class III Premium Gaming Operations
business successfully launched the Flame55™ cabinet with
Game of Thrones: Fire & Blood™ (named Global Gaming
Business Game of the Year) and RELM XL™ Stepper with the
popular Liberty Link™.
In Class II Gaming Operations placements increased by 8.1%
due to the ongoing success of Ovation™ with increased
penetration outside of the core Oklahoma market.
Average fee per day across Class II and Class III markets
increased 2.2%, driven by game performance across the
portfolio.
23
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
Class III Premium Gaming Operations will continue to be
supported with a strong product portfolio across a diverse
range of product segments. At G2E 2018, Aristocrat unveiled
two titles on the Flame55™ cabinet; Buffalo Diamond™ and
Westworld™ and will commercialise the Edge X™ cabinet
with its launch title based on the pop icon Madonna™.
Aristocrat’s core segment is also expected to benefit with
further growth in Dragon Link™ through Dragon Link
Dens™ and the rollout of RELM XL™ content across all
denominations, including Buffalo™ and Liberty Link™ titles.
The Class II Gaming Operations installed base will continue
to be supported by the launch of additional games under
the licensed product Professional Bull Riders™, together
with a portfolio of new games developed for Ovation™ and
additional hardware configurations on Arc Single™ and
Helix™ XT cabinets.
North America Outright Sales units
and Average US$ Price / unit
+6% Platform
Growth
28,000
24,000
20,000
16,000
12,000
U
S
$
p
e
r
u
n
i
t
$18,104
$18,892
$18,682
3
0
5
,
1
1
5
7
5
,
2
1
8
1
3
,
3
1
7
8
4
,
2
6
0
5
,
2
7
4
1
,
3
8,000
4,000
2016
2017
2018
Platforms
Conversions
Average US$
price/platform unit
Class III Outright Sales revenue increased by 4.7% compared
to the prior corresponding period with ship share broadly
consistent with the prior corresponding period, in a highly
competitive market.
The Class III Outright Sales portfolio delivered market-
leading game performance, with the introduction of two
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
s
t
i
n
U
new cabinets; Helix™ XT and Helix™ Tower, coupled
with continued investment in linked progressive content.
Aristocrat achieved strong game performance during the
period with innovative titles including the linked progressive
Gold Stacks 88™ game, Dancing Foo™ and a new Wonder
4™ extension Wonder 4 Boost™.
Aristocrat will continue to support all cabinets with
content on Helix™ + and Arc™, including Mighty Cash™
and the Wonder 4™ series. RELM™ Stepper investment
continues to be robust with over 20 titles approved and
strong performance evident in high denomination variants
including the virtual wheel products Diamond Jewel™ and
Cherry Riches™, and our Triple 7 Wildfire™ series.
Class III Outright Sales will continue to grow as Aristocrat
expands into adjacent markets including the VLT segment
in Canada, Washington CDS and the Bartop / Multi-Game
segment.
Latin America Outright Sales units, Average US$ Price / unit
and Recurring Revenue install base
6,000
5,000
4,000
$13,597
$14,008
$15,081
4
4
6
,
4
4
4
6
,
3
7
9
3
,
2
5
1
4
,
2
5
3
9
,
1
6
3
0
,
2
s
t
i
n
U
3,000
2,000
1,000
0
18,000
16,000
14,000
12,000
10,000
U
S
$
p
e
r
u
n
i
t
8,000
6,000
2016
2017
2018
Platforms
Recurring revenue
install base
Average US$
price/platform unit
Latin America revenue increased 22.4% compared to the
prior corresponding period driven by growth in the Class III
Gaming Operations segment with strong Lightning Link™
performance.
24
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
AUSTRALIA AND NEW ZEALAND
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Constant currency
2018
455.2
207.4
45.6%
2017
431.6
190.5
44.1%
1.5 pts
ANZ revenue increased by 5.5% to $455.2 million in constant
currency compared to the prior corresponding period, while
overall profit increased by 8.9% to $207.4 million.
ANZ margin expanded by 150 bps to 45.6%. This growth
was achieved, despite a 2% decline in unit sales, as a result
of a continued shift in revenue mix towards the ACCESS fee
per day product. This commercial model provides customer
choice and availability to utilise the full range of game
content on a subscription basis.
ANZ Outright Sales units and Average A$ Price / unit
16,000
12,000
$20,903
$20,348
$20,487
8,000
s
t
i
n
U
4
8
7
,
3
1
7
7
3
,
4
1
9
7
0
,
4
1
26,000
22,000
18,000
A
$
p
e
r
u
n
i
t
4
9
2
,
6
14,000
2
8
6
,
4
4
1
2
,
4
4,000
0
2016
2017
2018
Platforms
Conversions
10,000
Average
A$ price/unit
product family.
The ANZ business also sustained strong ship share across the
market, driven by the top performing game family Dragon
Cash™ and Dragon Link™ with the successful introduction of
an expanded game library during the year.
Variance
%
5.5
8.9
The Helix™ + cabinet continues to be the cabinet of choice
in ANZ, with the Helix™ XT gaining traction during the year
with the benefit of an expanded game portfolio.
INTERNATIONAL CLASS III
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Class III
Platforms
Constant currency
2018
202.3
100.2
49.5%
2017
214.7
112.5
Variance
%
(5.8)
(10.9)
52.4%
(2.9) pts
6,018
7,125
(15.5)
International Class III revenue and profit decreased 5.8%
and 10.9% respectively to $202 million and $100 million
compared to the prior corresponding period as the business
cycled over a concentration of openings.
Underlying performance remained strong, with continued
penetration of Lightning Link™ across the Asia Pacific region
delivering market-leading performance and enabling a
transition to a strategic focus on floor optimisation rather
than new openings.
Mighty Cash™, the innovative Linked Progressive product,
was launched in the region during the period with strong
initial performance.
The EMEA business launched Helix™ + into South Africa
during the reporting period, which drove further expansion
of Premium Gaming Operations footprint, primarily driven by
Lightning Link™.
The average cabinet selling price increased to $20,487
driven by product mix with further penetration of the Helix™
25
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
DIGITAL
Summary Profit or Loss
US$ million
2018
2017
Bookings
Revenue
Profit
Margin
1,013.9
1,009.2
330.8
32.8%
Variance
%
246.3
244.7
172.5
292.8
292.8
121.4
41.5%
(8.7) pts
The Digital business grew significantly compared to the
prior corresponding period, supported by strong growth in
Product Madness as well as the acquisitions of Plarium and
Big Fish.
Segment margin moderated to 32.8%, in line with
expectations, due to a more diverse portfolio and significant
marketing investment during the period behind new product
launches including FaFaFa Gold™, Family Zoo™, Lightning
Link™ and the growth of Cashman Casino™, Vikings™ and
Cooking Craze™.
Bookings1 by Type
1,200
1,000
m
$
S
U
s
g
n
k
o
o
B
i
800
600
400
200
0
+246%
Bookings Growth
1,013.9
445.1
568.8
292.8
206.8
2016
2017
2018
Social Casino
Social Gaming
1. Bookings are an operational metric reflecting the amount of virtual
currency, virtual goods and premium games the consumer has purchased.
Reported revenue comprises bookings adjusted for deferred revenue.
Social Casino
Cashman Casino™, Heart of Vegas™, FaFaFa Gold™ and the
newly launched Lightning Link™ app contributed US$395
million in bookings during the period, an increase of 35%
over the prior corresponding period, reflecting the success
of Product Madness’ multi-app strategy.
Performance was further enhanced by the inclusion of Big
Fish Casino™ and Jackpot Magic Slots™ in the Digital
portfolio from 10 January 2018, the date of acquisition of Big
Fish.
Social Gaming
Social Gaming combines the social games of both Plarium
and Big Fish and the legacy PC business of Big Fish.
Within Big Fish, Cooking Craze™ scaled over the reporting
period, delivering strong performance that was partially
offset by the maturity of the Gummy Drop™ and Fairway
Solitaire™ titles.
Vikings™ and Family Zoo™ remain key contributors in this
segment for Plarium, along with the recently launched Lost
Island™.
26
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
Daily Active Users (DAU) and Average US$ bookings per
DAU (ABPDAU)
8.1
+376%
DAU Growth
0.53
0.42
0.40
ABPDAU
Full year
(US$)
1.7
1.3
DAU
Period end
(million)
2016
2017
2018
The acquisitions of Plarium and Big Fish significantly
impacted Daily Active Users (DAU), driving an increase of 6.1
million DAU in the period.
Growth in Cashman Casino™ and the launch of FaFaFa
Gold™ and Lightning Link™ in the period contributed
an additional 0.3 million DAU compared to the prior
corresponding period with Product Madness apps reaching
more than 2 million DAU at the period end.
Plarium and Big Fish have introduced a new, diverse
portfolio of customers and products that monetise differently
to Aristocrat’s established Digital business. This, along with
the launch of new games in the period, impacted ABPDAU
compared to prior corresponding periods. The Digital
business remains focussed on great content, customer
acquisition and retention.
Reconciliation of Revenue to Bookings (US$ millions)
US$ million
2018
2017
2016
Revenue
1,009.2
292.8
206.8
Deferred revenue
4.7
-
-
Bookings
1,013.9
292.8
206.8
Plarium disclosures including pro-forma values for the prior
corresponding period
Plarium
2018
2017
Variance
%
Bookings
(US$ million)
DAU period end
(million)
272.0
277.8
(2.1)
2.5
2.7
(7.4)
Strong performance in the year across Vikings™, and the
new casual games Family Zoo™ and Lost Island™ which
was partially offset by the performance of online and mobile
legacy games, driving a reduction in bookings of 2.1%
compared to the prior corresponding period.
New game releases launched during the period reflect
the strategy of entering multiple genres and reducing the
business’ focus on strategy legacy games.
Growth in Mobile was achieved with higher quality DAU.
As a result of the decrease in Facebook and legacy Mobile
games, total DAU declined by 7.4% compared to the prior
corresponding period.
Plarium has a strong pipeline of games in development
across multiple genres to support future growth.
27
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
REGIONAL SEGMENT REVIEW
Big Fish disclosures including pro-forma values for the prior
corresponding period
Big Fish
2018
2017
Variance
%
Bookings
(US$ million)
DAU period end
(million)
494.6
458.4
7.9
3.6
4.0
(10.0)
Big Fish bookings increased 8% to US$495 million driven by
the continued focus on Social Casino (both Big Fish Casino™
and Jackpot Magic Slots™), and also the scaling of new
Social Gaming titles including Cooking Craze™.
Social Casino bookings grew 21% in the year, reflecting
the delivery of new meta features and live ops events. The
Social Gaming business grew 4% on prior year, with Cooking
Craze™ quickly scaling to over 1 million DAU.
DAU at 3.6 million was 10% lower than pro-forma, with the
scaling of Cooking Craze™ more than offset by declines in
older legacy titles Gummy Drop™ and Fairway Solitaire™.
28
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
PRINCIPAL RISKS
Material business risks to strategy and financial
performance in future periods
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.
As the business continues to grow both organically and
inorganically the material business risk profile continues to
evolve.
The key 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.
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.
A decline in economic conditions and the difficulty or
inability of our land-based 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 continue working to diversify our product
offerings and geographic spread of our business.
Geopolitical environment
We are exposed to regulatory, legal, political and
macroeconomic risks in the international markets in which
we operate.
Some of our operations and development partners are
located in geographic regions of the world that continue to
experience military and insurgency conflicts, and political
turmoil and unrest. Any of these factors could impact the
ability of these operations or our development partners to
create and deliver content in a timely fashion or at all.
We mitigate these risks by keeping abreast of international
issues, economic and political indicators and changes
in legislation, maintaining strong relationships with key
stakeholders in these markets and by enhancing our
business continuity, resilience and redundancy measures.
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 and ability to manage and
frequently introduce innovative products on a timely basis
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.
Mobile gaming is characterised by frequent product
introductions and rapidly emerging platforms and
technologies. We compete with other game developers
and content providers for the leisure time, attention, and
discretionary spending of our players.
The Group’s success is dependent on its ability to develop
and sell new products that are attractive to operators and
players. 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.
Third Party Development Partners
In addition to the games we develop internally, we acquire
or license games from third party development partners
located around the world. Our success depends in part
on our ability to attract and retain talented and reliable
development partners to source new content and update
existing content. Our agreements with these development
partners are in some instances not exclusive to us and will
expire at various times.
29
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
PRINCIPAL RISKS
To mitigate these risks, we have a team dedicated to
sourcing new third party developer partner relationships and
maintaining and strengthening existing third party developer
partner relationships; we are also constantly monitoring
game pipeline timing and flow, and reviewing developer
terms.
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.
Social gaming regulation
With respect to our Social Gaming business, although largely
unregulated at this time, there are movements in some
jurisdictions to review social gaming and possibly implement
social gaming regulations.
We continue to monitor the latest developments, proposals
and rules enacted from time to time by regulatory bodies
and digital platform providers. We are also examining how
best to proactively address the issues, including how to
effectively engage in the global discourse, influence the
conversation and educate legislators and the public.
Cyber risk and privacy regulation
Our information technology systems and the data stored
on those systems may be subject to cyber-attacks, security
breaches or computer hacking. Hackers and data thieves
are increasingly sophisticated and operate large-scale and
complex automated attacks.
There are local and international laws regarding privacy
and the storing, sharing, use, processing, disclosure and
protection of personal information and other data. Any
failure or perceived failure by us to comply with our privacy-
related legal obligations, or any compromise of security that
results in the unauthorised release or transfer of personally
identifiable information or other player data, may result
in governmental enforcement actions, litigation or public
statements against us which could have an adverse impact
on our business.
To minimise the impact of these risks we continue to
invest in enhancing our cyber security measures and
data management practices and procedures, including
preventative, detective and responsive capabilities, to
respond to the ever-changing threat landscape, changes in
laws and community expectations.
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
30
ARISTOCRAT LEISURE LIMITED Annual Report 2018
OPERATING AND FINANCIAL REVIEW
PRINCIPAL RISKS
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.
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 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.
Debt issued used to partly fund recent acquisitions resulted
in an increase in the Group’s total debt and also resulted
in 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.
31
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT
This Remuneration Report for the 12 months ended 30
September 2018 (Reporting Period or FY2018) 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 which is driving an evolution in
Aristocrat’s approach to remuneration. US market practice (in
particular) places a greater emphasis on at-risk opportunity,
and significant equity grants are commonly and broadly
used for talent attraction and retention.
The Board will continue to review the structure of Aristocrat’s
incentive schemes to ensure they are globally competitive
and effective in helping the business to retain, attract and
motivate 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 132% of their STI
target award, supported by NPATA increasing by 34.3%
to $729.6 million (in reported currency) from the prior
corresponding period.
This strong NPATA growth was driven by sustained
growth across all key segments and through continued
share gains across broadly flat markets. Another
highlight of the reporting period was the successful
completion and integration of two major acquisitions,
Plarium Global Limited on 19 October 2017 and Big Fish
Games, Inc. on 10 January 2018.
Strong FCF Conversion of 123% of target.
LTI outcome
Based on sustained long term performance over
the three year period to 30 September 2018, 100%
of PSRs awarded under the 2016 LTI Grant vested
following testing against the Relative TSR and Relevant
EPS performance measures in November 2018, and
converted into shares.
The Relative TSR component (30% of total grant) vested
as Aristocrat’s annual compounded TSR of 282.57%, with
Aristocrat 2nd in its Peer Comparator Group and ranked
at the 98.9th percentile.
The Relevant EPS component (30% of total grant) vested
at 100% based on the delivery of a three-year EPS CAGR
of 45.4%.
32
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 2018.
In light of the increasing scale and diversity of Aristocrat’s global business, we conduct a review annually of our list of Executive
KMPs and, as a result of this review, have increased the number of our Executive KMPs to 6.
Table 1 below outlines the KMP and their movements during FY2018
KMP
Position
Location
Term as KMP
Non-Executive Directors
ID Blackburne
Chair; Director
DCP Banks
NG Chatfield
KM Conlon
RV Dubs
SW Morro
PJ Ramsey
AM Tansey
Director
Director1
Director
Director
Lead US Director2
Director
Director
S Summers Couder
Director
Australia
Australia
Australia
Australia
Australia
Full financial year
Retired on 31 March 2018
Nominated on 12 December 2017
Full financial year
Retired on 22 February 2018
United States
Full financial year
United States
Full financial year
Australia
Full financial year
United States
Full financial year
Executive KMP
T Croker
J Cameron-Doe
M Wilson
M Bowen
J Sevigny
CEO and Managing Director
CFO3
United States
Full financial year
United States
Commenced as CFO on 31 January 2018
Managing Director, Americas
United States
Full financial year
Managing Director, ANZ &
International
President, Video Gaming
Technologies
Australia
Full financial year
United States
Full financial year
J Goldstein
Chief Digital Officer4
United States
Full financial year
A Korsanos
CFO, Global Services and
Company Secretary
Australia
Ceased to be employed on 31 March 2018
1. Mr Chatfield was nominated by the Board on 12 December 2017 as a Non-Executive Director, subject to receipt of all relevant regulatory pre-approvals. Pending regulatory
approval, Mr Chatfield was a Director (Elect). Necessary regulatory pre-approvals were received and Mr Chatfield’s appointment as a Non- Executive Director was
confirmed by the Board on 7 February 2018.
2. 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 the Group’s land-based business.
3. Mrs Cameron-Doe was appointed as CFO (Elect) on 13 December 2017, pending regulatory approval. Necessary regulatory pre-approvals were received, and Mrs
Cameron-Doe formally assumed the role of CFO on 31 January 2018.
4. Mr Goldstein ceased to be employed by the Company on 4 October 2018.
33
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT Although Aristocrat is listed on the Australian Securities Exchange, it has offices in approximately 21 global locations, with the
senior leaders based in the United States, Australia, the United Kingdom and Israel, and over 6,100 employees based globally
across 99 countries. Aristocrat’s global nature is further reflected in the fact that it is licensed in 317 jurisdictions.
CAN
USA
MEX
ARG
EU
UKR
GBR
ISR
RUS
IND
MAC
MYS
PHL
SGP
AUS
NZ
The world map above displays the global location of Aristocrat’s employees, with the size of each circle being proportionate to the number of employees based in
that country.
34
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 ‘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 is increasingly requiring 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 FY2018. 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.
CEO
LTI
50.0%
Deferred STI
12.5%
Cash STI
12.5%
Fixed
25.0%
Other Executive KMP
LTI
31.1%
Deferred STI
11.8%
Cash STI
13.9%
Fixed
43.2%
Deferred
equity
62.5%
Cash
37.5%
Deferred
equity
42.9%
Cash
57.1%
At-risk
75.0%
Fixed
25.0%
At-risk
56.8%
Fixed
43.2%
1. Senior Executives comprise Executive KMP as well as other members of Aristocrat’s Executive Steering Committee (details of which can be found on www.aristocrat.com).
35
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT Table 2 Senior Executive Remuneration structure and framework
SENIOR EXECUTIVE REMUNERATION STRUCTURE
Fixed
Between 25% - 51% of total target
remuneration
At-risk
Between 49% - 75% of total target remuneration
Fixed remuneration
Base salary, superannuation and
other benefits
Short-term incentive (STI)
Reward for strong individual and
Group performance during the
Performance Period
Long-term incentive (LTI)
Reward for longer-term
Group performance
— Individual 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
— Individual performance based
vesting condition – 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
36
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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) have a target STI
of between 47% and 71% of fixed remuneration, and a
maximum STI opportunity of between 71% and 106% 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 Conversion as follows:
— NPATA – 70% weighting
— FCF Conversion – 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 an Individual Performance Rating of “Meets Most
Requirements” or better.
Senior Executives are assessed on delivery against (non-
financial) objective 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 an 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%
37
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
Why were these performance conditions chosen?
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 Conversion, 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.
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. Any individual who is internally
promoted to a Senior Executive role is only subject to a
deferral of 25% of their STI outcome (as opposed to 50%) in
his/her first year. 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 2018 STI Plan, this was 30 September 2018).
Are Senior Executives eligible for dividends?
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
or underperformance, breach their terms of employment
contract 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.
38
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT 3.3.3 LTI Plan
This section summarises the terms of LTI grants made in
FY2018.
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
FY2018:
— Relative TSR
— Relevant EPSA
— Individual performance-based vesting condition
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, is 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
2017 to 30 September 2020 in respect of LTI grants in
FY2018) 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.
39
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT 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.
Individual performance based vesting condition – 40%
weighting
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.
The individual performance-based element of the LTI
Plan will vest subject to the participant having achieved or
exceeded against objective-balanced scorecard KPOs over
the entire course of the three-year performance period
(Individual Performance Based Condition).
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
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.
acquired intangibles, which is a non-cash charge and not
representative of underlying performance of the business
and cash flow generation
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.
— Is a target that provides a suitable line of sight to
encourage executive performance
Individual Performance 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
— This hurdle supports our LTI Plan being competitive to
global and US peers who have elements of service-based
vesting (restricted stock)
— Importantly, this is a performance-based hurdle requiring
that an Executive KMP meets or exceeds against
objective-balanced scorecard KPOs
— These KPOs are aligned to supporting Aristocrat’s longer-
term strategy and driving continued sustainable growth
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.
40
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT SECTION 4 REMUNERATION OUTCOMES IN
FY2018 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
FY2018).
Remuneration strategy and link to business strategy
and Group performance in connection with FY2018
remuneration outcomes
This Remuneration Report discloses the outcome of awards
made under the 2016 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
— Individual Performance Based vesting condition (40%
weighting).
41
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT Table 3 below discloses remuneration outcomes in FY2018 and alignment to business strategy and Group performance
Are reflected in LTI
and STI performance measures…
So, Aristocrat’s
actual performance…
STI performance measure of NPATA
Measures profitability across the Group
EXCEEDED
Business
strategy and
objectives…
Financial
performance
Grow
recurring
revenue
base and
successful
integration
of new
acquisitions
STI performance measure of FCF Conversion
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
STI Individual performance rating
Measures include sustainable growth in
US Gaming Operations and successful integration
of new acquisitions
Market share
– continue
momentum
STI Individual performance rating
Measures include sustainability of strong
market position in Australia and growth in North
American market share
Cost
efficiencies
STI Individual performance rating
Measures include managing and improving cost
efficiency as a proportion of revenue
Product
quality,
product
innovation,
great game
content and
customer
satisfaction
STI Individual performance rating
Measures include product quality and delivery,
product innovation, great game content and
customer satisfaction
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
Directly affects
remuneration
outcomes
Total LTI
vesting
outcome in
FY2018
= 100% of
target based
on TSR
and EPSA
performance
measures
CEO STI
outcome
in FY2018
= 109% of
target
Average STI
outcome
in FY2018
for other
Executive
KMP = 139%
of target
NPATA increasing by 34.3% to $729.6 million (in reported currency)
significantly exceeded STI target
Achieved strong FCF Conversion of 123% of target
Aristocrat achieved a TSR of 282.57% over the 2016 LTI grant
performance period, 2nd in its Peer Comparator Group and ranked
at the 98.9th percentile
Compounded EPS growth rate of 45.4% exceeded set targets
Revenue increased by more than 47% in broadly flat markets to a
new record level of above $3.6bn
EXCEEDED
In excess of 65% of Group revenues now derive from recurring
sources
Digital revenues increased by 250% to over $1.3bn (in reported
currency)
Successful completion and integration of two major acquisitions,
Plarium Global Limited and Big Fish Games, Inc., which significantly
expands Aristocrat’s digital portfolio and addressable digital
opportunity and the proportion of Aristocrat’s revenues that derive
from recurring sources
In the Digital business, two new applications - FaFaFa Gold™ and
Lightning Link™ – were successfully launched and scaled during
the period in line with our multi-app strategy
EXCEEDED
Market leading share maintained in ANZ and Asia Pacific with
continued growth
Continued strong growth in North American segment driven by
significant expansion in premium gaming operations footprint
Continued share gains were achieved across broadly flat key
markets and segments
MET
Continue to achieve significant ROI in both D&D and corporate
expenses, and meaningful operating leverage achieved across
land-based businesses
EXCEEDED
For the 3rd year running, Product Madness was awarded the
prestigious ‘Social Operator’ of the year award 2018 at the
eGaming Review Awards in London
EILERS Slot Survey Q2 2018 (July 2018):
—
top three performing premium leased games – Lightning
Link™, Dragon Link™ and Buffalo Grand™
—
—
top performing casino owned game – Buffalo Gold™
two of top three most anticipated games – Game of Thrones
and Dragon Link™
— Aristocrat now the #1 supplier of outright sale games
Winner at the Global Gaming Awards for Land-Based Product
and Slot of the Year for Lightning Link™ and Game of Thrones,
respectively
Continued focus on the customer experience with the
introduction of Salesforce CRM in key land-based markets
Development of multi-year quality road map and focus on 3
strategic goals on quality: embed a culture of quality, develop
core quality capabilities and striving to be #1 in industry leading
quality
MET
Strong investment in culture-building across the business, with the
goal to inspire and motivate, as well as attracting, recruiting and
retaining the highest level of talent
Global culture assessment, with results highlighting that Aristocrat
has a fun and friendly working environment and that employees are
proud of working for Aristocrat
Increased level of talent and capability across the Group, with focus
on critical talent retention
Our D&D team now represents almost half of our employee base
and we have continued to lift our investment in both absolute terms
and as a percentage of revenue
42
ARISTOCRAT LEISURE LIMITED Annual Report 2018
4.2 Performance and remuneration outcomes in FY2018
STI grant outcomes
130% of Group target STI was awarded in FY2018.
Business Score was in excess of the Business Score Threshold
Threshold 85%
Target 100%
Stretch 120%
STI gateway (Business Score Threshold) achieved
NPATA (weighting = 70%)
% of plan awarded = 104%
FCF Conversion (weighting = 30%)
% of plan awarded = 123%
2016 LTI Grant vesting outcomes
This Remuneration Report discloses the outcome of the 2016 LTI Grant (tested over the three-year performance period ended
30 September 2018).
30 September 2018: Three-year performance period ends for 2016 LTI Grants.
Performance is tested in November 2018 for Relative TSR and Relevant EPSA
Relative TSR (30% weighting)
Aristocrat’s TSR performance versus that of the Peer Comparator Group over the 2016 LTI Grant performance period 1 October 2015 to 30 September 2018:
Aristocrat TSR Performance v Peer Comparator Group (%)
ALL
ASX 100 Accumulation Index
)
%
(
e
u
a
V
l
40 0
35 0
30 0
25 0
20 0
15 0
10 0
50
C T 2 0 1 5
J A N 2 0 1 6
D E C 2 0 1 5
FE B 2 0 1 6
O V 2 0 1 5
A P R 2 0 1 6
M A R 2 0 1 6
SE P 2 0 1 6
A U G 2 0 1 6
J U L 2 0 1 6
J U N 2 0 1 6
M A Y 2 0 1 6
C T 2 0 1 6
J A N 2 0 1 7
D E C 2 0 1 6
FE B 2 0 1 7
O V 2 0 1 6
A P R 2 0 1 7
M A R 2 0 1 7
SE P 2 0 1 7
A U G 2 0 1 7
J U L 2 0 1 7
J U N 2 0 1 7
M A Y 2 0 1 7
C T 2 0 1 7
J A N 2 0 1 8
D E C 2 0 1 7
FE B 2 0 1 8
O V 2 0 1 7
A P R 2 0 1 8
M A R 2 0 1 8
SE P 2 0 1 8
A U G 2 0 1 8
J U L 2 0 1 8
J U N 2 0 1 8
M A Y 2 0 1 8
O
O
N
N
N
O
With a TSR performance of 282.57%, Aristocrat was the 2nd top performer (equivalent to 98.9th 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 45.4%.
This growth was delivered through gain of market share achieved across broadly flat key markets and segments.
1 Oct 2015 to 30 Sept 2018
Threshold EPS Target
Maximum EPS Target
Actual Outcome
Relevant EPS Achievement
3 year CAGR
7.5%
12.5%
45.4%
100%
Relevant EPSA
100% of the PSRs linked to the Relevant EPSA measure vested
Individual Performance-Based Condition (40% weighting): Executive KMP: 100% of PSRs linked to the individual performance
based condition vested for those who remained employed over the entire three-year performance period and achieved or
exceeded the required performance rating based on calibration against a set of objective balanced scorecard KPOs. These KPOs
are aligned to supporting Aristocrat’s longer term strategy and driving continued sustainable growth.
100% vesting of the total 2016 LTI Grant awards
43
ARISTOCRAT LEISURE LIMITED Annual Report 2018
4.3 Outcome of testing of former CEO’s 2016 LTI grant
As disclosed in last year’s remuneration report, given Mr Odell ceased to be employed in February 2017 (before expiry of the
2016 LTI Grant performance period, which ended on 30 September 2018), he 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).
At the time of grant, the Board set three defined categories of Strategic Objectives for the then CEO: (i) strategy and growth,
(ii) people and succession planning, and (iii) improving business efficiency. At the end of the 2016 LTI Grant performance
period the Board measured achievement of the Strategic Objectives condition based on a qualitative assessment of
performance against these objectives over the course of the three-year LTI grant performance period.
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 2016 LTI Grant performance period). 85% of the amount of the Strategic Objectives component
that was eligible for testing vested given continued strong performance across all three of the abovementioned defined
categories of Strategic Objectives.
4.4 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
2014 to 30 September 2018, 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 (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 2018
12 months to
30 Sep 2017
12 months to
30 Sep 2016
12 months to
30 Sep 2015
12 months to
30 Sep 2014
28.44
46.0
21.00
34.0
15.81
25.0
8.61
17.0
5.84
16.0
96.5/114.1
77.5/85.0
54.9/62.4
30.1/37.1
22.8/23.1
38%
130%
35%
172%
87%
176%
50%
170%
30%
110%
100%
100%
100%
94%
30%
1. Excluding the effect of significant items which are not representative of the underlying operational performance of the Group.
44
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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.
45
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
J Cameron-Doe
M Bowen
M Wilson
J Sevigny
J Goldstein
6 months
3 months
3 months
2 months
3 months
1. Payments may be made in lieu of notice period.
6 months
3 months
-
-
-
12 months (fixed remuneration)
12 months
6 months (base salary)
6 months (base salary)
12 months (base salary)
6 months (base salary)
12 months
12 months
12 months
12 months
The key terms of Mrs Korsanos’ service agreement have been outlined in previous years’ Remuneration Reports and are not
restated here given her departure from the position of CFO, Global Services and Company Secretary.
5.4 Disclosures under Listing Rule 4.10.22
A total of 1,662,694 securities were acquired on-market by the Aristocrat Employee Equity Trust during the Reporting Period
(at an average price per security of $30.0704) to satisfy Aristocrat’s obligations under various equity and related plans.
5.5 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).
46
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT The fee increases will ensure that fee levels are competitive,
including for US-based Directors. This has been a particular
area of focus for the Board due to its ongoing commitment
to an orderly renewal and succession planning process.
Aristocrat has increasingly transformed into a truly global
business with extensive scale, complexity and diversity,
which has in turn significantly increased both Board and
Committee workloads and overseas travel expectations. In
addition, recent developments in the corporate governance
landscape are leading to increased expectations and
demands of Non-Executive Directors on ASX boards.
Fees also reflect the regulatory requirements of the
environment in which Aristocrat operates, which imposes
considerable demands 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.
Certain global companies pay a supplemental travel
payment to non-resident Directors who are required to
attend Board meetings away from their principal residential
domicile, which Aristocrat does not do. 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.
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$3,200,000 per annum approved by shareholders at the
AGM in February 2018.
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.
A review of Non-Executive Directors’ fees was conducted
during the reporting period by the Board. The focus of the
review was to consider if:
— Fees are in line with ASX market and direct industry peers.
— Fee levels remain competitive across Aristocrat’s two
major jurisdictions (the US and Australia).
— Fees are appropriate in light of increased workloads and
expectations in connection with Aristocrat’s global and
highly regulated business.
— A Committee fee should be introduced for Committee
membership given increased Committee workloads and
expectations.
As a result of the review and taking into consideration the
current and future expectations associated with an Aristocrat
Non-Executive Director role, Board fees were increased
and a Committee fee was introduced during the Reporting
Period (as outlined in Table 6 below), with the increases
taking effect on 1 April 2018.
47
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT Table 6 Non-Executive Director fees payable during the Reporting Period
From 1 April 2018
Board fees per annum
Chairman
Non-Executive Director
Lead US Director
Amount (inclusive of all statutory superannuation
obligations)
A$625,000
A$250,000 / US$220,000
Additional US$40,000
Committee Chair (Audit, HR & Remuneration)
Additional A$45,000 / US$35,000
Committee Chair (Strategic, Regulatory & Compliance)
Additional A$35,000 / US$30,000
Committee member (per committee, capped at two
committees per person)
Additional A$15,000 / US$10,000
From 1 October 2017 to 31 March 2018
Board fees per annum1
Chairman
Non-Executive Director
Lead US Director
Committee Chair
Amount (inclusive of all statutory superannuation
obligations and committee service)
A$460,000
A$215,000
Additional A$40,000
Additional A$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$1.
Inclusive of statutory superannuation obligations made on behalf of Australian-based Non-Executive Directors.
48
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT SECTION 7 STATUTORY REMUNERATION TABLES AND DATA
7.1 Details of Executive KMP remuneration
The following table reflects the accounting value of remuneration attributable to Executive KMP, derived from the various
components of their remuneration. This does not necessarily reflect actual amounts paid to Executive KMP due to the
conditional nature (for example, performance criteria) of some of these accrued amounts.
As required by the Accounting Standards, the table includes credits for PSRs which were forfeited during the year and the
amortised value of PSRs that may vest or best available estimates attributable to PSRs which may be lapsed or forfeited in
future reporting periods.
Mr Croker’s FY2017 remuneration in the table below reflects 7 month’s remuneration in his role as CEO & Managing Director
and 5 month’s remuneration in his previous role of Executive VP – Global Products & Insights.
The Non-Monetary Benefits for Mr Croker and Mrs Cameron-Doe relate to their approved relocation costs as part of the
relocation of the CEO and CFO roles, respectively, from Australia to the US.
Table 7 Statutory Executive KMP remuneration table
Short-term benefits
($)
Post-employment
benefits
($)
Executive
Year
Cash
Salary1
Cash
Bonuses2
Non-
Monetary
Benefits³
Superannu-
ation
Termination4
Share-based payments6
($)
Total
% of Share
Based
remuner-
ation (LTI
PSRs)
STI PSRs7
LTI PSRs8
$
%
Long-Term
Benefits
($)
Long
Service
Leave5
CEO & Managing Director
T Croker9
2018
2017
1,457,094
804,590
220,526
857,917
414,375
23,686
2,083
28,333
Executive KMP
-
-
512,859
1,541,831
4,538,983
78,090
365,156
577,821
2,345,378
34.0%
24.6%
444,240
290,506
119,845
4,563
-
-
-
-
599,259
306,710
30,712
15,405
-
-
-
-
466,250
216,974
18,065
25,000
-
-
748,288
313,614
742,185
288,956
754,910
225,802
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
782,115
-
380,000
-
J Cameron-
Doe10
M Wilson11
M Bowen11
2018
2017
2018
2017
2018
2017
2018
J Sevigny
2017
J Goldstein11 2018
2017
A Korsanos12 2018
2017
19,556
87,468
112,762
1,078,940
10.5%
-
-
-
-
-
2,694
368,493
222,656
1,545,929
14.4%
-
-
-
-
-
15,379
218,906
191,541
1,152,115
16.6%
-
-
-
-
-
-
-
-
-
68,781
372,178
11,360
1,924,158
413,454
1,816,773
-
-
-
-
1,360,712
-
0.6%
22.8%
0.0%
-
9.8%
11.5%
17.1%
18.4%
414,976
252,356
797,740
572,000
4,029
7,797
10,024
19,760
(31,123)
800,000
6,855
33,769
489,114
124,944
1,271,175
700,583
381,511
3,313,160
Total
Total
2018
2017
4,885,017
2,410,552
393,177
57,075
1,130,992
44,484
1,745,621 2,205,094
12,872,012
2,397,842
1,275,331
31,483
48,093
800,000
111,859
1,437,917
1,372,786
7,475,311
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 2018 STI incentives.
3. Non-monetary benefits include insurance and travel costs, relocation costs, expatriate related costs and associated FBT.
4. Amounts reflect accruals in connection with the termination of employment (inclusive of any accruals for 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 Deloitte. In undertaking the
valuation of the PSRs, Deloitte has used a TSR model and an EPSA model. These models are described below:
TSR model – Deloitte 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.
49
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT EPSA and individual performance model – The Black-Scholes-Merton 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. Any individual who is internally promoted to a Senior Executive role is only subject to a deferral of 25% of their
STI outcome (as opposed to 50%) in his/her first year. 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 2018 include the accounting accruals attributable to deferred share
rights pursuant to the 2016, 2017 and 2018 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. Also includes best available estimates attributable to PSRs which may be lapsed or forfeited in future
reporting periods.
9. T Croker’s remuneration arrangements were adjusted effective 1 October 2017 to reflect the completion of Mr Croker’s relocation to the USA, together with the results of
remuneration benchmarking for several US based senior executive positions. The adjustments also align with US market practice, particularly the higher weighting of at-risk
components of compensation. Mr Croker’s remuneration arrangements were adjusted from Fixed Remuneration of A$1,100,000, STI (at target) of A$600,000 and LTI (at
target) of A$1,000,000 to Fixed Remuneration of US$1,100,000, STI (at target) of US$1,100,000 and LTI (at target) of US$2,200,000.
10. J Cameron-Doe was appointed CFO from 31 January 2018. Mrs Cameron-Doe was not an Executive KMP during FY2017 nor prior to her appointment as CFO.
11. M Wilson, M Bowen and J Goldstein were not Executive KMP during FY2017.
12. T Korsanos left the Company on 31 March 2018.
Table 8 Details of 2018 short-term awards paid and deferred
For the 12
months ended
30 September
2018
T Croker
Total award1
$
1,584,576
Cash
payment2
$
792,288
Deferred
component3
$
792,288
No. Share
Rights vesting
1 Oct 20193
13,967
No. Share
Rights vesting
1 Oct 20203
13,967
Other Executive KMP
J Cameron-Doe
M Wilson
M Bowen
J Sevigny
J Goldstein
Former Executive KMP
387,341
594,216
422,000
627,228
225,802
290,506
297,108
211,000
313,614
225,802
96,835
297,108
211,000
313,614
-
1,707
5,238
3,720
5,529
-
1,707
5,238
3,720
5,529
-
Total award as
% of target STI
% of total
award
deferred
109%
157%
180%
180%
140%
50%
50%
25%
50%
50%
50%
0
50%
A Korsanos
468,562
234,281
234,281
4,130
4,130
130%
1. Amounts reflect the value of the total 2018 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 2018 awards paid to participants. Amounts in USD are translated at the average rate for the year.
3. Amounts reflect the value of 2018 awards deferred into PSRs. Part of the deferred component of awards will vest on 1 October 2019 and the remainder on 1 October 2020. The
number of PSRs is determined using the five day VWAP up to and including 30 September 2018, being $28.36. Amounts in USD are translated at the FX rate on the grant date.
Table 9 Details of LTI PSRs granted to Executive KMP, including their related parties, during the Reporting Period
Performance rights with a three-year performance period were granted during the Reporting Period as follows:
T Croker
J Cameron-Doe
M Wilson
M Bowen
J Sevigny
J Goldstein
A Korsanos
Rights granted1
136,383
21,077
18,597
13,125
24,796
35,335
-
Value of grant2 ($)
3,283,426
507,429
447,723
315,987
596,964
850,693
-
1. The number of rights granted calculated based on the Face Value, as further explained in Section 3.3.3. The rights that were vested or forfeited during the Reporting Period are
set out in Table 10.
2. The fair value of the rights that were granted on 27 April 2018 are $20.22 for rights with a total shareholder return condition and $25.73 for rights with an individual
performance based condition and EPSA condition. The values shown in the above table represent the maximum value of the grants made. The minimum value is zero. The
performance conditions for the grants are set out in Section 3.3.3.
50
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT
Table 10 Details of the movement in numbers of LTI PSRs during the Reporting Period
T Croker
J Cameron-Doe
M Wilson
M Bowen
J Sevigny
J Goldstein4
A Korsanos
Balance at
1 October 2017
167,315
Granted during
the year1
136,383
Vested2,3
(61,853)
Lapsed/ forfeited
-
Balance at 30
September 2018
241,845
-
14,351
21,829
129,114
-
227,254
21,077
18,597
13,125
24,796
35,335
-
-
-
-
(41,251)
-
(108,303)
-
-
-
-
-
(67,973)
21,077
32,948
34,954
112,659
35,335
50,978
1. The value of the PSRs granted to Executive KMP during the year (including the aggregate value of PSRs granted) is set out in Table 9. No options were granted during the
year to any Executive KMP.
2. The value of each PSR on the date of vesting is the closing price of the Company’s shares on the ASX on the preceding trading day.
3. As shares are immediately allocated upon the vesting of PSRs, there will be no instances where PSRs are vested and exercisable, or vested but not yet exercisable.
4. Mr Goldstein’s PSRs were lapsed/forfeited after the Reporting Period.
7.2 Details of Non-Executive Director remuneration
Table 11 Details of Non-Executive Director remuneration for the Reporting Period
Short-term benefits
($)
Post-employment benefits
($)
Share-based
payments ($)
Total
Cash salary and
fees1
Fees for extra
services2
Superannuation3 Retirement benefits4 Options and PSRs
$
517,500
428,334
187,513
-
347,373
334,742
252,089
219,178
248,284
196,347
330,930
298,422
317,521
282,237
88,416
219,178
101,979
219,178
2,391,605
2,197,616
15,000
15,000
-
-
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
120,000
120,000
25,000
31,666
17,814
-
-
-
23,257
20,822
22,895
18,653
-
-
-
-
8,222
20,822
11,488
20,822
108,676
112,785
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
557,500
475,000
205,327
-
362,373
349,742
290,346
255,000
286,179
230,000
345,930
313,422
332,521
297,237
111,638
255,000
128,467
255,000
2,620,281
2,430,401
Directors
ID Blackburne
NG Chatfield
SW Morro
KM Conlon
AM Tansey
S Summers Couder
PJ Ramsey
Year
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Former Non-Executive Director
RV Dubs
DCP Banks
Total
2018
2017
2018
2017
2018
2017
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 Big Fish
Games acquisition and associated debt financing, it was determined that each Non-Executive Director will receive a fixed sum of A$15,000. Each Non-Executive Director
received a fixed sum of A$15,000 in FY2017 in relation to the diligence, negotiation and execution of the Plarium acquisition and associated debt financing.
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.
51
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 2018 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 control 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
Non-Executive Directors
Balance as at
1 October 2017
Performance
shares vested
Other net
changes during
the year
Balance as at
30 September
2018
Type
Beneficially held
-
ID Blackburne
NG Chatfield
(nominated on 12
December 2017)
DCP Banks (retired
on 31 March 2018)
KM Conlon
RV Dubs (retired on
22 February 2018)
SW Morro
PJ Ramsey
AM Tansey
Non-beneficially held
137,851
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
-
-
-
30,851
-
10,514
32,851
-
-
40,000
19,360
-
-
Non-beneficially held
1,570
S Summers Couder
Beneficially held
Non-beneficially held
-
-
1. As at 31 March 2018.
2. As at 22 February 2018.
-
-
-
-
(47,851)
8,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,050
-
-
90,000
8,000
-
-
30,8511
-
10,514
32,8512
-
-
40,000
19,360
-
-
1,570
6,050
-
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.
52
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT -
6,993
-
-
-
-
-
-
-
-
-
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 2017
Performance
shares vested
Other net
changes during
the year
Balance as at
30 September
2018
Beneficially held
264,107
91,649
(100,000)
255,756
T Croker
J Cameron-Doe
Non-beneficially held
Beneficially held
Non-beneficially held
-
5,132
-
-
-
13,861
(12,000)
-
-
Beneficially held
11,866
72,960
(84,826)
Non-beneficially held
-
-
-
Beneficially held
32,129
20,054
(52,183)
Non-beneficially held
-
-
-
Beneficially held
10,730
14,000
(24,730)
Non-beneficially held
Beneficially held
Non-beneficially held
-
-
-
-
-
-
-
-
-
J Sevigny
M Wilson
M Bowen
J Goldstein
A Korsanos
Beneficially held
503,107
152,115
(300,000)
355,222
Non-beneficially held
-
-
-
-
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 2018 or
prior year.
53
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT SECTION 9 GLOSSARY
2016 LTI Grant
Aristocrat
Business Score
Awards made under the LTI Plan during FY2016 with a three-year performance period 1 October
2015 to 30 September 2018
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
Conversion
For Employees in a region or business unit (including Big Fish Games and Product Madness) – is
the result that is based in part on the actual performance of Aristocrat (as above) and in part on
the actual regional or business unit performance, using EBITA in place of NPATA for both profit
and FCF Conversion 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
EBITA
EPS
EPSA
Executive KMP
Face Value
FCF
FCF Conversion
KMP
KPO
LTI Plan
NPAT
NPATA
54
Earnings before interest and tax, on a normalised basis excluding significant items as disclosed in
the Operating and Financial Review section of the Annual Report
Earnings before interest, taxes and amortisation, on a normalised basis excluding significant items
as disclosed in the Operating and Financial Review section of the Annual Report
Fully diluted earnings per share, normalised for significant items 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), (ii) J Cameron-Doe (Chief Financial
Officer – for part year), (iii) M Bowen (Managing Director, ANZ & International), (iv) M Wilson
(Managing Director, Americas), (v) J Sevigny (President, Video Gaming Technologies), (vi) J
Goldstein (Chief Digital Officer), and (vii) A Korsanos (Former Chief Financial Officer, Global
Services and Company Secretary – 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
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 Executive KMP and all employees (other than Big Fish Games and Product Madness
employees), this is the target based on FCF as a percentage of NPATA. The exceptions are Big
Fish Games and Product Madness employees, as they do not have FCF targets
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
Key Performance Objective
Aristocrat’s long-term incentive plan
Net profit after tax normalised for significant items 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 as
disclosed in the Operating and Financial Review section of the Annual Report
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT Peer Comparator Group Constituents of the S&P/ASX100 Index, defined at the commencement of the performance
PSR
Relative TSR
Relevant EPS
Relevant EPSA
Senior Executives
STI Plan
TSR
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 2017
Performance Share Right, with each right entitling the holder to receive one fully-paid ordinary
share in Aristocrat on vesting. Vesting of PSRs may be subject to vesting conditions and
performance hurdles
Aristocrat’s compounded TSR measured against the ranking of constituents of the Peer
Comparator Group
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 Steering Committee (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
55
ARISTOCRAT LEISURE LIMITED Annual Report 2018
REMUNERATION REPORT Auditor’s Independence Declaration
As lead auditor for the audit of Aristocrat Leisure Limited for the year ended 30 September 2018, 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
29 November 2018
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
56
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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”);
(ii) and 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
57
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NEVADA REGULATORY DISCLOSURE 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 a 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.
58
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NEVADA REGULATORY DISCLOSURE 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) will
be lodged with the Commission when required.
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 copy 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 9151 1495
59
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NEVADA REGULATORY DISCLOSURE FIVE YEAR SUMMARY
$’m (except where indicated)
12 months to
30 Sep 2018
12 months to
30 Sep 2017
12 months to
30 Sep 2016
12 months to
30 Sep 2015
12 months to
30 Sep 2014
Profit and loss items
Revenue1
EBITDA2
Depreciation and amortisation
EBIT2
Net interest expense
Profit before income tax expense2
Income tax expense
Profit after income tax expense2
Significant items and discontinued
operations after tax
Reported net profit/(loss) attributable to
members of Aristocrat Leisure Limited
Total dividend paid
Balance sheet items
Contributed equity
Reserves
Retained earnings
Total equity
Cash and cash equivalents
Other current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Total assets
3,624.1
1,328.6
(355.6)
973.0
(105.4)
867.6
(250.7)
616.9
(74.3)
542.6
249.0
715.1
(23.5)
1,040.9
1,732.5
428.1
924.0
389.3
3,898.8
206.6
5,846.8
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
-
-
(5.1)
(146.6)
495.1
185.2
350.5
121.0
186.4
101.1
715.1
(116.8)
747.3
1,345.6
547.1
647.9
241.3
1,687.7
168.9
3,292.9
693.8
(55.7)
437.4
1,075.5
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
60
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
12 months to
30 Sep 2018
12 months to
30 Sep 2017
12 months to
30 Sep 2016
12 months to
30 Sep 2015
12 months to
30 Sep 2014
821.1
-
196.4
2,881.1
13.8
201.9
4,114.3
1,732.5
460.0
0.1
193.0
1,199.3
13.8
81.1
1,947.3
1,345.6
434.9
-
114.3
1,287.8
13.4
61.8
1,912.2
1,075.5
402.7
0.1
39.5
1,779.5
14.7
64.8
2,301.3
917.4
209.3
114.4
48.0
0.2
13.2
21.5
406.6
706.1
Employees at year end
Number
6,100
3,640
3,200
2,912
2,274
Return on Aristocrat
shareholders' equity2
Basic earnings per share 2
Net tangible assets/(liabilities)
per share
Total dividends per share -
ordinary
Dividend payout ratio2
Issued shares at year end
Net (cash)/debt3
Net cash (debt)/equity
%
Cents
35.6
96.7
36.8
77.7
32.6
55.1
20.9
30.3
$
(3.39)
(0.54)
(1.04)
(1.61)
Cents
%
'000
$'m
%
46.0
48
638,544
2,453.0
(141.6)
34.0
44
25.0
45
17.0
56
638,544
637,120
637,120
630,022
652.3
(48.5)
1,004.6
(93.4)
1,450.6
(158.1)
(171.3)
24.3
18.4
23
0.91
16.0
70
1. Revenue as per segment results.
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.
61
ARISTOCRAT LEISURE LIMITED Annual Report 2018
FIVE YEAR SUMMARY
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
3-5 Net tangible assets/(liabilities) per share
3-6 Capital and financial risk management
3-7 Net debt reconciliation
63
64
65
66
68
68
70
71
72
74
75
76
76
77
78
81
82
83
84
84
85
86
87
88
88
93
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
Directors’ declaration
94
94
96
97
97
98
102
102
103
103
103
104
104
106
108
Significant changes in the reporting period
During the year, the Group acquired Plarium Global and Big
Fish Games Inc. Further information on these acquisitions is
set out in Note 4-1.
For a detailed discussion of the Group’s financial
performance and position, refer to the Operating and
Financial Review.
62
ARISTOCRAT LEISURE LIMITED Annual Report 2018
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2018
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 income/(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
2018
$'m
1-2
3,549.8
(1,577.5)
1,972.3
1-2
13.5
1-3
(413.6)
(181.3)
(512.5)
(115.3)
763.1
1-4
(220.5)
542.6
3-3
3-3
3-3
1-5
1-5
115.0
(25.1)
15.6
105.5
648.1
Cents
85.0
84.9
2017
$'m
2,453.8
(967.6)
1,486.2
10.0
(268.4)
(116.8)
(320.2)
(62.7)
728.1
(233.0)
495.1
(30.8)
3.9
10.0
(16.9)
478.2
Cents
77.7
77.5
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
63
ARISTOCRAT LEISURE LIMITED Annual Report 2018
BALANCE SHEET
AS AT 30 SEPTEMBER 2018
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
2018
$'m
2017
$'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
428.1
720.0
159.9
7.4
36.7
1,352.1
112.1
22.2
389.3
3,898.8
72.3
4,494.7
5,846.8
669.2
-
141.7
54.7
3.2
148.7
1,017.5
26.5
2,881.1
13.8
-
122.7
18.2
34.5
3,096.8
4,114.3
1,732.5
715.1
(23.5)
1,040.9
1,732.5
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
44.2
1,199.3
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
The above balance sheet should be read in conjunction with the accompanying notes.
64
ARISTOCRAT LEISURE LIMITED Annual Report 2018
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Consolidated
Balance at 1 October 2016
Profit for the year ended 30 September 2017
Other comprehensive loss
Total comprehensive (loss)/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
Balance at 30 September 2017
Profit for the year ended 30 September 2018
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Net movement in share-based payments reserve
Dividends provided for and paid*
Contributed
equity
$'m
Reserves
$'m
Retained
earnings Total equity
$'m
$'m
Note
693.8
(55.7)
437.4
1,075.5
21.3
(44.2)
715.1
(116.8)
747.3
1,345.6
-
-
-
21.3
-
-
-
-
-
-
-
-
(16.9)
(16.9)
-
(44.2)
-
-
495.1
495.1
(16.9)
-
495.1
478.2
-
-
(185.2)
(185.2)
21.3
(44.2)
(185.2)
(208.1)
-
542.6
105.5
105.5
-
542.6
542.6
105.5
648.1
(12.2)
-
(12.2)
(23.5)
-
(249.0)
(249.0)
(12.2)
(249.0)
(261.2)
1,040.9
1,732.5
3-4
3-3
3-3
1-6
Balance at 30 September 2018
715.1
*Payment of dividends relates to the 2017 final dividend and 2018 interim dividend.
The above statement of changes in equity should be read in conjunction with the accompanying notes.
65
ARISTOCRAT LEISURE LIMITED Annual Report 2018
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Consolidated
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other income
Interest received
Interest paid
Transaction costs paid relating to the acquisition of subsidiaries
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)
Net cash outflow from investing activities
Cash flows from financing activities
Payments for shares acquired by the employee share trust
Repayments of borrowings
Proceeds from borrowings
Finance lease payments
Dividends paid
Net cash inflow/(outflow) from financing activities
Net (decrease)/increase 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.
2018
$'m
2017
$'m
3,684.1
2,469.4
(2,412.8)
(1,499.7)
3.6
7.1
(85.8)
(28.1)
(234.3)
933.8
0.4
8.1
(52.1)
-
(127.0)
799.1
(198.1)
(123.9)
1.1
(72.0)
(1,938.6)
(2,207.6)
(50.0)
(225.7)
1,660.0
(0.1)
(249.0)
1,135.2
(138.6)
547.1
19.6
428.1
0.8
(90.4)
(23.0)
(236.5)
(45.9)
(65.4)
-
(0.1)
(185.2)
(296.6)
266.0
283.2
(2.1)
547.1
66
ARISTOCRAT LEISURE LIMITED Annual Report 2018
CASH FLOW STATEMENT CONTINUED
FOR THE YEAR ENDED 30 SEPTEMBER 2018
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
Non-cash borrowing costs amortisation
Change in operating assets and liabilities (adjusted for the impact of acquisitions):
(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
2018
$'m
2017
$'m
542.6
495.1
355.6
24.2
0.6
3.7
6.5
(25.0)
(58.1)
(35.8)
127.5
10.4
(18.4)
933.8
220.0
16.1
12.4
(9.5)
4.6
(85.9)
(20.8)
(16.7)
68.5
12.3
103.0
799.1
Depreciation and amortisation
Cash and cash equivalents
The depreciation and amortisation amount above includes
amortisation of $17.1m (2017: $13.6m) that is classified as
contra-revenue in the profit and loss.
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.
67
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 games and systems.
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.
Plarium Global Limited and Big Fish Game Inc., which were
acquired during the year, form part of the Digital segment.
Segment results represent earnings before interest and
tax, and before significant items and adjustments, 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.
68
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-1 SEGMENT PERFORMANCE CONTINUED
The Americas
Australia and
New Zealand
$'m
$'m
Digital
$'m
International
Class III
Consolidated
$'m
$'m
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Revenue
Revenue from external
customers
Acquisition accounting fair
value adjustments
1,620.2 1,424.5
454.5
431.6 1,338.9
383.0
210.5
214.7 3,624.1 2,453.8
-
-
-
-
(74.3)
-
-
-
(74.3)
-
Statutory revenue
1,620.2 1,424.5
454.5
431.6 1,264.6
383.0
210.5
214.7 3,549.8 2,453.8
Results
Segment results
859.2
736.4
207.1
190.5
438.2
158.9
103.4
112.5 1,607.9 1,198.3
Interest revenue
Interest expense
Design and
development costs
Amortisation of
acquired intangibles
Expenses from
significant items
Acquisition fair value
adjustments not allocated
to a segment
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
9.9
9.6
(115.3)
(62.7)
(413.6)
(268.4)
(156.3)
(76.9)
(51.3)
(53.2)
(65.0)
-
-
(71.8)
763.1
728.1
(220.5)
(233.0)
542.6
495.1
2,040.1 1,903.1
143.5
116.3 2,189.1
1.5
27.5
15.1 4,400.2 2,036.0
142.9
111.3
17.5
13.3
14.7
0.4
7.1
4.5
182.2
129.5
The amortisation of acquired intangibles amounting to $156.3m (2017:$76.9m) does not form part of segment results.
69
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-2 REVENUES
2018
$'m
2017
$'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
992.2 1,076.0
Gaming operations, digital and services 2,557.6 1,377.8
Total revenue
Other income
Interest
Sundry income
Total other income
3,549.8 2,453.8
9.9
3.6
9.6
0.4
13.5
10.0
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, digital
and services
Machine sales
Licence income
When significant risks and rewards have transferred, usually upon delivery of
goods to the customer.
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.
Amount of revenue recognised monthly is calculated by either:
Participation
revenue
— 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.
Rental income
Service revenue
Digital revenue
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.
Revenue is recognised when credits are consumed, or if the items purchased
with credits are available to the player for the entire time that they play the game,
the average player life. Amounts not used at year end are included in deferred
revenue.
70
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-3 EXPENSES
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
reconciliation
General and administration before
acquisition costs and amortisation of
acquired intangibles
Acquisition related transaction, integration,
restructuring and retention costs
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 (including acquisition
transaction costs)
Net foreign exchange loss
2018
$'m
2017
$'m
Recognition and measurement
Lease payments
3.1
143.6
8.8
4.9
101.4
5.3
155.5
111.6
48.5
10.6
107.0
12.4
4.5
183.0
338.5
43.1
0.7
37.4
10.3
3.3
94.8
206.4
614.5
28.5
393.9
13.9
6.2
24.2
673.4
4.5
16.1
428.4
42.2
28.5
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
304.9
243.3
51.3
-
156.3
512.5
76.9
320.2
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
8.2
9.8
43.6
3.2
24.9
5.0
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.
71
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
(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
2018
$'m
2017
$'m
1.0
1.0
204.8
205.8
204.8
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.
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.
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
2018
$'m
2017
$'m
243.2
214.6
(11.6)
(9.4)
(22.8)
11.7
20.4
7.4
220.5
233.0
Deferred income tax (benefit)/expense
included in income tax expense
comprises:
Change in net deferred tax
(11.1)
27.8
Deferred income tax (benefit)/expense
included in income tax expense
(11.1)
27.8
(b) Tax reconciliation
Profit before tax
763.1
728.1
Tax at the Australian tax rate of 30%
(2017: 30%)
228.9
218.4
Impact of changes in tax rates and law
(4.4)
22.3
Exempt income
Non-deductible expenses
Research and development tax credit
Tax credits written off
Difference in overseas tax rates
Adjustment in respect of previous
years income tax
Income tax expense
(14.9)
(26.6)
16.9
(7.2)
0.6
0.5
13.3
(6.5)
-
14.1
0.1
(2.0)
220.5
233.0
Average effective tax rate
28.9% 32.0%
(c) Amounts recognised directly in
equity
Net deferred tax – credited directly to
equity
12.9
3.6
72
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
Share-based equity
Unrealised foreign exchange losses
Other
Gross deferred tax assets
Deferred tax liabilities:
Financial liabilities
Share-based equity
2018
$'m
2017
$'m
46.5
41.8
9.1
-
6.7
-
33.0
48.9
14.4
3.5
1.7
1.8
104.1
103.3
(1.7)
(2.3)
(4.3)
-
Plant, equipment and intangible assets
(150.5)
(57.6)
Net deferred tax (liabilities)/assets
(50.4)
41.4
Movements
Balance at the start of the year
Credited/(charged) to profit or loss
Credited directly to equity
Deferred tax liabilities recognised on
acquisitions
Reclassification to current tax provision
Foreign exchange currency movements
Balance at the end of the year
41.4
11.1
12.9
55.1
(27.8)
3.6
(92.6)
-
(23.2)
(50.4)
-
10.6
(0.1)
41.4
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.
73
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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)
2018
542.6
2017
495.1
638,123,160 637,565,360
1,179,478
1,580,860
639,302,638 639,146,220
85.0
84.9
77.7
77.5
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
172,409 (2017: 287,461) 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 1,686,397 (2017: 2,083,839)
shares held in the share trust.
74
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
1. BUSINESS PERFORMANCE CONTINUED
1-6 DIVIDENDS
Ordinary shares
Dividend per share (cents)
Franking percentage (%)
Cost ($'m)
Payment date
Franking credits
2018
Final
27.0c
100%
172.4
2018
Interim
19.0c
100%
121.3
2017
Final
20.0c
100%
127.7
2017
Interim
14.0c
25%
89.6
19 December 2018
3 July 2018
20 December 2017
3 July 2017
The franking account balance at 30 September 2018 was
$105.6m (2017: $51.6m).
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 2018
dividend had not been declared at the reporting date and
therefore is not reflected in the financial statements.
Dividends not recognised at year end
Since the end of the year, the Directors have recommended
the payment of a final dividend of 27.0 cents (2017: 20.0
cents) per fully-paid ordinary share, franked at 100%. The
aggregate amount of the proposed final dividend expected
to be paid on 19 December 2018 out of retained earnings at
30 September 2018, but not recognised as a liability at the
end of the year is $172.4m.
75
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
2018
$'m
2017
$'m
613.6
459.8
(14.5)
(17.8)
2.7
118.2
2.6
67.7
720.0
512.3
69.0
8.0
35.1
60.9
10.2
35.9
Total non-current receivables
112.1
107.0
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.
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
(17.8)
(14.7)
(0.9)
(1.4)
5.6
(3.9)
0.4
0.4
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.
(14.5)
(17.8)
Fair value
The above provision for impairment includes $11.0m
(2017: $9.0m) of trade receivables past due and
considered impaired. Included in the provision is $9.4m
(2017: $10.9m) 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
94.2
4.2
61.9
0.6
98.4
62.5
76
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-2 INVENTORIES
Current
Raw materials and stores
Work in progress
Finished goods
Inventory in transit
Provision for obsolescence and
impairment
Total inventories
2018
$'m
2017
$'m
129.5
10.2
42.4
1.7
96.6
10.6
32.2
1.7
(23.9)
(24.7)
159.9
116.4
Inventory expense
Inventories recognised as an expense during the year ended
30 September 2018 amounted to $396.7m (2017: $410.8m).
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 assess 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.
77
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-3 INTANGIBLE ASSETS
$’m
Cost
Accumulated amortisation
Net carrying amount
Carrying amount at
1 October 2016
Additions
Transfers
Amortisation charge
Foreign currency exchange
movements
Carrying amount at
30 September 2017
Carrying amount at
1 October 2017
Additions
Additions on acquisition of
subsidiaries
Disposals
Amortisation charge
Foreign currency exchange
movements
Carrying amount at
30 September 2018
-
-
-
-
-
Customer
relationships
and contracts
Tradename
and game
names
Intellectual
property and
licences
Capitalised
development
costs
Technology
and software
Goodwill
Total
973.4
628.5
-
(123.5)
973.4
505.0
26.3
(2.1)
24.2
996.2
559.7
25.5
-
-
-
-
72.4
(14.1)
58.3
32.1
38.5
-
34.5
(18.3)
16.2
228.2
1,963.3
(117.6)
(275.6)
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
973.4
505.0
24.2
58.3
-
-
-
1,547.0
13.0
117.7
-
-
-
5.3
-
16.2
18.5
1.1
-
110.6
1,687.7
47.8
66.3
338.2
2,022.3
(0.2)
(0.2)
(48.5)
(10.6)
(12.4)
(4.5)
(107.0)
(183.0)
211.1
42.3
11.7
6.4
0.1
34.1
305.7
2,731.5
511.8
143.0
57.6
31.4
423.5
3,898.8
Cost
Accumulated amortisation
2,731.5
696.4
-
(184.6)
Net carrying amount
2,731.5
511.8
156.1
(13.1)
143.0
87.2
(29.6)
57.6
59.4
637.0
4,367.6
(28.0)
(213.5)
(468.8)
31.4
423.5
3,898.8
The additions on acquisition of subsidiaries in the table above includes the Plarium and Big Fish acquisitions as detailed in
Note 4-1, as well as a further acquisition that is not material.
78
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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.
Customer
relationships and
contracts
Up to 15
years
Straight-line
Customer relationships and contracts acquired in business combinations
are carried at cost less accumulated amortisation and any accumulated
impairment losses.
Tradename
Indefinite
Not
amortised
The tradenames were acquired as part of business combinations and
recognised at fair value at the dates of acquisition. These have an
indefinite life so are 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
Up to 15
years
Straight-line
Game names were acquired as part of business combinations. Game
names are recognised at their fair value at the date of acquisition and are
subsequently amortised.
Intellectual property
and licences
Up to 8
years
Straight-line
Intellectual property and licences are carried at cost less accumulated
amortisation and impairment losses.
Capitalised design
and development
costs
Up to 4
years
Straight-line
Technology and
software
Up to 10
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.
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.
(a) Impairment tests
Goodwill and other assets 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:
2018
$'m
2017
$'m
Americas segment
Americas (excluding VGT)
VGT
Digital segment
Product Madness
Big Fish
Plarium
101.9
72.6
953.1
878.0
24.8
22.8
1,122.4
529.3
-
-
Total goodwill at the end of the year
2,731.5
973.4
The VGT CGU also includes $17.2m and Big Fish $43.6m
relating to tradenames that are not amortised, and are tested
for impairment annually.
79
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 2019 and management
projections from 2020 to 2023. 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)
VGT
Product Madness
Big Fish
Plarium
Americas (excluding VGT)
VGT
Terminal growth rate
Product Madness
Big Fish
Plarium
2018
10.6%
9.5%
10.7%
11.4%
11.7%
2.0%
2.0%
3.0%
3.0%
3.0%
2017
11.0%
10.3%
13.3%
Not applicable
Not applicable
2.0%
2.0%
3.0%
Not applicable
Not applicable
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
Americas, VGT and Product Madness CGUs, management
do not believe that a reasonably possible change in any one
of the key assumptions would lead to a material impairment
charge.
Plarium and Big Fish were acquired in the current year.
Impairment testing was performed for 2018, and no
impairment was required to be recorded as a result. Going
forward, should management projections fall below low
single-digit growth rates, an impairment may result in future
financial years.
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.
80
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
2018
2017
2018
2017
2018
2017
2018
2017
Cost
28.8
20.2
119.9
57.1
746.8
554.4
895.5
631.7
Accumulated depreciation/
amortisation
Net carrying amount
Carrying amount at the start
of the year
Additions
Additions on acquisition of
subsidiaries
Disposals
Transfers*
Depreciation and
amortisation
Foreign currency exchange
differences
Carrying amount at the end
of the year
(16.1)
12.7
(11.4)
8.8
(41.1)
78.8
(31.4)
(449.0)
(347.6)
(506.2)
(390.4)
25.7
297.8
206.8
389.3
241.3
8.8
0.2
6.5
-
(0.4)
14.1
-
-
-
-
25.7
41.8
16.3
-
0.4
24.9
6.5
206.8
185.7
178.5
118.7
241.3
227.7
217.5
125.2
-
-
-
19.0
(2.8)
12.7
-
(3.1)
18.7
41.8
(2.8)
12.7
-
(3.1)
18.7
(3.1)
(4.9)
(8.8)
(5.3)
(143.6)
(101.4)
(155.5)
(111.6)
0.7
(0.4)
3.4
(0.4)
20.0
(4.6)
24.1
(5.4)
12.7
8.8
78.8
25.7
297.8
206.8
389.3
241.3
*Transfers predominantly relate to gaming operations assets that have been transferred to and from inventory.
Recognition and measurement
Derecognition
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
Buildings
Leasehold
improvements
Useful life
Depreciation
method
Up to 40 years
Straight-line
Up to 12 years
Straight-line
Plant and equipment
Up to 10 years
Straight-line
Land
Indefinite
No depreciation
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.
81
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
2. OPERATING ASSETS AND LIABILITIES CONTINUED
2-5 TRADE AND OTHER PAYABLES
Current
Trade payables
Deferred consideration
Other payables
Total current payables
Non-current
Deferred consideration
Other payables
Total non-current payables
2018
$'m
2017
$'m
216.2
130.5
20.8
432.2
669.2
-
274.2
404.7
-
26.5
26.5
18.6
25.6
44.2
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 deferred consideration relates to the final payment for
the VGT acquisition.
The carrying amounts of trade and other payables are
estimated to represent their fair value.
82
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 provisions
Employee
benefits
$'m
Make-good
allowances
$'m
Progressive
jackpot liabilities
$'m
Other provisions
$'m
Total
$'m
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
20.2
1.3
12.5
1.5
0.6
9.4
0.4
8.8
33.3
3.1
31.4
3.5
0.6
-
21.5
14.0
10.0
9.2
36.4
34.9
0.6
-
-
-
54.7
13.8
44.3
13.8
68.5
58.1
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Make-good
allowances
$'m
Progressive
jackpot liabilities
$'m
Other provisions
$'m
2018
2017
2018
2017
2018
2017
Carrying amount at the start of the year
Payments
Additional provisions recognised
Additions on acquisition of subsidiaries
Reversal of provisions recognised
Foreign currency exchange differences
Carrying amount at the end of the year
9.2
-
0.4
-
-
0.4
10.0
8.8
34.9
23.8
-
-
(38.5)
(32.5)
(0.6)
0.6
37.1
44.0
-
-
-
-
-
-
(0.2)
9.2
2.9
36.4
(0.4)
34.9
0.5
0.7
(0.2)
0.2
0.6
-
-
-
-
-
-
-
Provision is made for the estimated cash flows expected to
be required to settle the obligation based on a percentage
of jackpot funded revenue.
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.
Recognition and measurement
Provisions are recognised when:
(a) the Group has a present legal or constructive obligation
as a result of past events;
(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.
83
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
3-5 Net tangible assets per share
3-2 Financial assets and financial liabilities
3-6 Capital and financial risk management
3-3 Reserves and retained earnings
3-7 Net debt reconciliation
3-4 Contributed equity
3-1 BORROWINGS
Current
Secured
Lease liabilities
Total current borrowings
Non-current
Secured
Bank loans
Lease liabilities
Total non-current borrowings
Financing arrangements
2018
$'m
2017
$'m
-
-
0.1
0.1
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.
2,880.2 1,198.6
0.7
2,881.1 1,199.3
0.9
Unrestricted access was available at balance date to the following lines of credit:
Credit standby arrangements
Notes
Total
Unused
Total
Unused
2018
$'m
2017
$'m
Total facilities
— Bank overdrafts
— Bank loans
Total facilities
(i) The bank overdraft facilities (A$5,000,000 and
US$2,000,000) are subject to annual review.
(ii) Syndicated loan facilities:
— US$2,100.2 million fully underwritten US Term Loan B
debt facility maturing 19 October 2024.
— 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
(i)
(ii)
7.8
2,980.2
2,988.0
7.8
100.0
107.8
7.6
1,298.6
1,306.2
7.6
100.0
107.6
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. A portion of the interest rate
exposure has been fixed under separate interest rate swap
arrangements.
84
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
2018
$'m
2017
$'m
maturities that the Group has the positive intention and
ability to hold to maturity. 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.
6.5
6.4
(b) Recognition and derecognition
3-2 FINANCIAL ASSETS AND
FINANCIAL LIABILITIES
Financial assets
Current
Debt securities held-to-maturity
Interest rate swap contracts – cash flow
hedges
Other investments
Total current financial assets
Non-current
Debt securities held-to-maturity
Interest rate swap contracts – cash flow
hedges
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
0.2
0.7
7.4
-
-
6.4
5.2
4.7
16.7
0.3
22.2
3.2
3.2
-
-
-
3.1
7.8
0.5
0.5
0.9
0.9
(a) Classification
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
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.
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.
Further information on financial assets and liabilities is
disclosed in Note 3-6.
(d) Impairment
The Group assess 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.
85
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
3. CAPITAL AND FINANCIAL STRUCTURE CONTINUED
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Interest
rate hedge
reserve
Non-
controlling
interest
reserve
Total
reserves
(11.1)
(26.6)
(10.9)
(7.1)
(55.7)
3-3 RESERVES AND RETAINED EARNINGS
$'m
Balance at 1 October 2016
Profit for the year
Currency translation differences
Net investment hedge
Movement in fair value of interest rate hedges
Retained
earnings
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)
-
-
-
-
-
-
-
Balance at 30 September 2017
747.3
(38.0)
(70.8)
(38.0)
(70.8)
Balance at 1 October 2017
Profit for the year
Currency translation differences
Net investment hedge
Movement in fair value of interest rate hedges
747.3
542.6
-
-
-
-
115.0
(25.1)
-
Total comprehensive income for the year
542.6
89.9
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
(249.0)
-
-
-
-
-
-
-
-
-
-
-
-
-
16.1
(67.2)
6.9
-
-
-
-
-
-
24.2
(50.0)
13.6
-
-
-
10.0
10.0
-
-
-
-
(0.9)
(0.9)
-
-
-
15.6
15.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30.8)
3.9
10.0
(16.9)
-
16.1
(67.2)
6.9
(7.1)
(116.8)
(7.1)
(116.8)
-
-
-
-
-
-
-
-
-
-
115.0
(25.1)
15.6
105.5
-
24.2
(50.0)
13.6
(23.5)
Balance at 30 September 2018
1,040.9
51.9
(83.0)
14.7
(7.1)
86
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
Shares
$'m
2018
2017
2018
2017
Ordinary shares, fully paid
638,544,150
638,544,150
715.1
715.1
Movements in ordinary share capital
Ordinary shares at the beginning of the year
638,544,150 637,119,632
715.1
Shares issued during the year
-
1,424,518
-
Ordinary shares at the end of the financial year
638,544,150 638,544,150
715.1
693.8
21.3
715.1
Ordinary shares
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.
87
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
2018
$
2017
$
Net tangible liabilities per share
(3.39)
(0.54)
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 2018 were $2.71
(2017: $2.11).
(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**)
2018
2017
2.0x
1.7x
1.2x
0.6x
11.4x
19.1x
* 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.
88
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
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
— Customers and suppliers are appropriately credit assessed
per Group policies;
Ageing analysis &
credit ratings
— 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.
— 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.
Liquidity risk
Borrowings and other
liabilities
Cash flow
forecasts and
debt covenants
Hedge of net investment in foreign entity
At 30 September 2018, US$228.6m of the US Term Loan B debt facility shown in Note 3-1 that is held within an Australian
company has been designated as a hedge of the net investment in an American subsidiary. The foreign exchange gains
and losses on translation of the borrowing into Australian dollars at the end of the reporting period are 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.
89
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Financial assets
Cash and cash
equivalents
Receivables
Debt securities
held-to-maturity
Other financial assets
Other investments
Financial liabilities
Payables
Borrowings
Progressive jackpot
liabilities
Other financial
liabilities
Total increase/
(decrease)
428.1
832.1
547.1
619.3
(4.3)
(5.5)
-
-
4.3
-
5.5
-
0.1
5.8
0.4
2.3
(0.1)
(4.8)
(0.3)
(1.9)
11.7
16.9
1.0
-
3.1
695.7
448.9
11.1
(0.1)
(0.1)
0.1
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5.6)
(2.7)
4.6
2.2
2,881.1 1,199.4
29.1
12.1
(29.1)
(12.1)
36.4
34.9
0.4
0.3
(0.4)
(0.3)
3.2
1.4
-
-
-
-
-
-
-
25.1
6.8
(25.1)
(6.8)
0.3
-
-
-
-
-
-
-
(0.3)
-
-
-
-
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.
90
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
Between 1 to 5
years
Over 5 years
Total contractual
cash flows
Carrying amount
(assets)/liabilities
$'m
$'m
$'m
$'m
$'m
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Non-derivatives
Trade payables
Other payables
Deferred
consideration
Borrowings
Borrowings – interest
payments
Progressive jackpot
liabilities
216.2
130.5
-
-
432.2
274.2
26.5
25.6
20.8
-
-
19.1
-
-
-
-
0.1
15.7
1,199.3
2,865.4
-
-
-
-
216.2
130.5
216.2
130.5
458.7
299.8
458.7
299.8
20.8
19.1
20.8
18.6
2,881.1
1,199.4
2,881.1
1,199.4
121.9
39.6
489.4
120.4
122.6
-
733.9
160.0
-
-
33.3
31.4
1.8
1.6
1.3
1.9
36.4
34.9
36.4
34.9
Total non-derivatives
824.4
475.8
533.4
1,366.0
2,989.3
1.9
4,347.1
1,843.7
3,613.2
1,683.2
Derivatives
Net settled (interest
rate swaps)
Gross settled (forward
foreign exchange
contracts)
— (inflow)
— outflow
Total (inflow)/outflow
Total derivatives
(c) Foreign currency risk
(0.2)
0.1
(16.7)
0.8
-
-
(16.9)
0.9
(16.9)
0.9
(162.4)
(65.5)
66.0
0.5
165.6
3.2
3.0
-
-
-
-
-
-
0.6
(16.7)
0.8
-
-
-
-
-
-
-
-
(162.4)
(65.5)
165.6
3.2
66.0
0.5
-
3.2
3.2
(13.7)
1.4
(13.7)
-
0.5
0.5
1.4
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)
2018
$’m
2017
$’m
617.1
396.2
US dollars
176.4
191.2
38.6
31.9
Australian dollars
Other(1)
Total carrying amount
832.1
619.3
Total carrying amount
(1) Other refers to a basket of currencies (including Euro, Pound Sterling, Israeli New Shekel and New Zealand Dollar).
2018
$’m
2017
$’m
521.8
310.2
143.4
124.5
30.5
14.2
695.7
448.9
91
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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:
2018
$’m
2017
$’m
Trade receivables with guarantees
8.5
12.7
Trade receivables without guarantees
659.6
490.2
Total trade receivables
668.1
502.9
(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 2018 on the net fair value of the Group’s existing foreign exchange hedge contracts:
Currency pair
AUD/EUR
AUD/USD
AUD/ZAR
Total
Weighted average
exchange rate
Maturity profile(1)
1 year or less
$'m
1 to 7 year(s)
$'m
0.6162
0.7391
10.2940
16.9
144.1
1.4
162.4
-
-
-
-
Net fair value
gain/(loss)(2)
$’m
-
(3.2)
-
(3.2)
(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 financial assets/(liabilities).
(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
Interest rate swap contracts
Total assets at the end of the year
Liabilities
Contingent consideration
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
2018
2017
2018
2017
2018
2017
2018
2017
-
-
-
-
-
-
-
-
-
-
-
-
16.9
16.9
-
-
3.2
3.2
-
-
-
0.9
0.5
1.4
-
-
-
-
-
-
-
-
-
-
-
-
16.9
16.9
-
-
3.2
3.2
-
-
-
0.9
0.5
1.4
92
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 contingent consideration liability forms part of trade
and other payables, and is measured based on forecasted
earnings before interest and tax (EBITDA) of the Plarium
Group. Refer to Note 4-1 for further information.
(g) Fair value measurements using significant unobservable
inputs (Level 3)
Contingent consideration liability
There were no transfers between levels in the fair value
hierarchy and no changes to the valuation techniques
applied since 30 September 2017. The carrying amount
of financial instruments not measured at fair value
approximates fair value.
The valuation process for the Level 3 contingent
consideration liability uses forecasts developed by Plarium
finance team members as an input into the valuations. The
forecasts are reviewed by group finance team members,
including the chief financial officer (CFO), with fair value
estimates made following this review.
Opening balance
Acquisitions
Foreign exchange movements
Payments
Closing balance
3-7 NET DEBT RECONCILIATION
This section sets out an analysis of net debt and the movements in net debt.
Net Debt
Cash and cash equivalents
Current borrowings
Non-current borrowings
Net debt
Net debt as at 1 October 2017
Cashflows and non-cash amortisation of borrowing costs
Foreign exchange movements
Net debt as at 30 September 2018
2018
$’m
-
69.8
2.5
(72.3)
-
2018
$’m
428.1
-
2017
$’m
547.1
(0.1)
(2,881.1)
(1,199.3)
(2,453.0)
(652.3)
(652.3)
(1,579.4)
(221.3)
(2,453.0)
93
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 DURING
THE YEAR
The goodwill is attributable to key employees, future growth
opportunities and synergies from combining operations with
Plarium. The goodwill is not deductible for tax purposes.
Recognition and measurement
(i) Contingent consideration
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.
(a) Plarium Global Limited
On 19 October 2017 the Group acquired 100% of Plarium
Global Limited (Plarium). Plarium is a free-to-play, social
and web-based game developer, headquartered in Israel.
The acquisition significantly expands Aristocrat’s Digital
addressable market in adjacent gaming segments.
Details of the purchase consideration, the net assets
acquired and goodwill are as follows:
Purchase consideration
Cash paid
Contingent consideration
Total purchase consideration
$’m
630.5
69.8
700.3
The assets and liabilities at the date of acquisition are as
follows:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets: Technology
Intangible assets: Game names
Other assets
Trade and other payables
Deferred tax liabilities
Net identifiable assets acquired
Add: goodwill
Net assets acquired
Fair Value
$’m
40.0
37.1
19.8
182.4
30.9
13.6
(72.7)
(38.4)
212.7
487.6
700.3
The contingent consideration arrangement requires the
Group to pay the former owners of Plarium based on
a multiple of 10 times earnings before taxes, interest,
depreciation and amortisation (EBITDA) for the 2017 and
2018 calendar years. The fair value of the amount payable at
the acquisition date was $69.8m (US$54.7m), which was paid
during the 2018 financial year.
(ii) Acquisition related costs
Acquisition related costs of $9.6m are included in general
and administration costs in the statement of profit or loss
and other comprehensive income for the year and $11.7m in
operating cash flows in the statement of cash flows.
(iii) Acquired receivables
The fair value of trade and other receivables on acquisition
was $37.1m, of which $24.1m were trade receivables.
The gross contractual amount for trade receivables due
was $24.1m. The fair value of the receivables have been
recovered from customers.
(iv) Revenue and profit contribution
The acquired business contributed revenues of $307.5m
and a statutory net loss after tax of $17.9m to the Group for
the period from 19 October 2017 to 30 September 2018.
The statutory net loss includes the amortisation of acquired
intangibles of $38.4m (before tax), as well as fair value
adjustments to deferred revenue resulting from acquisition
accounting. Had the acquisition occurred on 1 October
2017, the revenue would have been $323.8m, and the
statutory net loss after tax $15.9m.
Refer to the Review of Operations for information on
normalised results.
(v) Purchase consideration – cash outflow
Outflow of cash to acquire subsidiary
Less: Cash acquired
Outflow of cash – investing activities
$’m
702.8
(40.0)
662.8
94
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
4. GROUP STRUCTURE CONTINUED
4-1 BUSINESS COMBINATIONS DURING
THE YEAR CONTINUED
(b) Big Fish Games Inc.
On 10 January 2018 the Group acquired 100% of Big
Fish Games Inc. (Big Fish). Big Fish is a global publisher of
free-to-play games that operates across three key business
lines that are focused on specific game segments, including
social casino, social gaming and premium paid games. The
acquisition provides a platform for growth through existing
successful applications and an attractive pipeline of new
applications.
(i) Acquisition related costs
Acquisition related costs of $14.0m are included in general
and administration costs in the statement of profit or loss
and other comprehensive income for the year and $16.4m in
operating cash flows in the statement of cash flows.
(ii) Acquired receivables
The fair value of trade and other receivables on acquisition
was $52.0m, of which $40.5m were trade receivables.
The gross contractual amount for trade receivables due
was $40.5m. The fair value of the receivables have been
recovered from customers.
(iii) Revenue and profit contribution
Details of the purchase consideration, the net assets
acquired and goodwill are as follows:
Purchase consideration
Cash paid
Total purchase consideration
The acquired business contributed revenues of $434.9m
and a statutory net profit after tax of $7.3m to the Group for
the period from 10 January 2018 to 30 September 2018.
The statutory net profit includes the amortisation of acquired
intangibles of $32.7m (before tax), as well as fair value
adjustments to deferred revenue resulting from acquisition
accounting.
$’m
1,257.9
1,257.9
Had the acquisition occurred on 1 October 2017,
consolidated pro-forma revenue and profit after tax of
the Group would have been $3,727.9m and $558.5m
respectively.
Refer to the Review of Operations for information on
normalised results.
(iv) Purchase consideration – cash outflow
Outflow of cash to acquire subsidiary
Less: Cash acquired
Outflow of cash – investing activities
(c) Other acquisitions
$’m
1,257.9
(0.3)
1,257.6
The Group made a further acquisition during the year that
was not material to these financial statements.
The assets and liabilities at the date of acquisition were as
follows:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets: Technology
Intangible assets: Game names
Intangible assets: Trade name
Intangible assets: Customer relationships
Other assets
Trade and other payables
Other liabilities
Deferred tax liabilities
Net identifiable assets acquired
Add: goodwill
Net assets acquired
Fair Value
$’m
0.3
52.0
22.0
155.8
46.6
40.2
13.0
0.6
(39.7)
(14.7)
(54.2)
221.9
1,036.0
1,257.9
The goodwill is attributable to key employees, future growth
opportunities and synergies from combining operations with
Big Fish Games Inc. The goodwill is not deductible for tax
purposes.
95
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
4. GROUP STRUCTURE CONTINUED
4-2 SUBSIDIARIES
The principal controlled entities of the Group are listed below. These were wholly owned during the current and prior year,
unless otherwise stated:
Controlled entities
Country of incorporation
Aristocrat Technologies Australia Pty Ltd
Aristocrat International Pty Ltd
Aristocrat Technologies, Inc.
Video Gaming Technologies, Inc.
Product Madness Inc.
Big Fish Games Inc.*
Plarium Global Limited*
Aristocrat (Macau) Pty Limited
Aristocrat Technologies NZ Limited
Aristocrat Technologies Europe Limited
Aristocrat Technologies Mexico, S.A. DE C.V.
Aristocrat Service Mexico, S.A. DE C.V.
AI (Puerto Rico) Pty Limited
Aristocrat (Argentina) Pty Limited
Aristocrat Technologies India Private Ltd
Product Madness (UK) Limited
Aristocrat Technologies Spain S.L.
* Ownership interest at 30 September 2018: 100% (2017: 0%)
Australia
Australia
USA
USA
USA
USA
Israel
Australia
New Zealand
UK
Mexico
Mexico
Australia
Australia
India
UK
Spain
96
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 2018, 7 Executive Directors and
Senior Executives (2017: 5 Executive Directors and Senior
Executives) were designated as key management personnel.
2018
$
2017
$
Short-term employee benefits
10,200,351
7,679,267
Post-employment benefits
Long-term benefits
Termination benefits
165,751
44,484
182,315
123,005
1,130,992
3,267,430
Share-based payments
3,950,715
4,722,109
Key management personnel
compensation
15,492,293 15,974,126
Detailed remuneration disclosures are provided in the
remuneration report.
97
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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.
36 employees (2017:
14) were entitled
to 1,247,201 rights
(2017: 1,663,201)
Deferred equity
employee plan
Key employee
equity program
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 2018 result from the meeting of
performance criteria in the 2016 and 2017 financial years. These rights are
subject to the respective employees remaining with the Group until October
2018 and October 2019.
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. There are no shares outstanding at 30 September 2018 resulting from
employees meeting the performance criteria.
882,386 (2017:
1,140,739)
Nil (2017: Not
applicable as new in
2018)
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.
339,031 (2017:
529,603)
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 (2017: Nil)
Other grants
Contractual share rights are granted to retain key employees from time to time
across the Group, subject to continued employment. Share rights are expensed
over the respective vesting periods.
629,399 (2017:
556,449)
(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
Key Employee Equity Program
Other grants
2018
$’m
2017
$’m
5.9
0.7
3.8
3.7
3.6
6.5
3.7
0.5
3.9
5.2
-
2.8
24.2
16.1
98
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 individual performance-
based 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 the Aristocrat Employee Equity Plan Trust continue to be recognised in the share-based payments
reserve in equity. Similarly, treasury shares acquired by the 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
2018 and 30 September 2017 are as follows:
Timing of grant of
rights
Performance
period start date
Performance period
expiry date
Performance condition
Accounting
valuation date
Accounting
valuation ($)
2018 financial year 1 October 2017
30 September 2020
EPSG
27 April 2018
TSR
Individual performance
TSR
2017 financial year 1 October 2016
30 September 2019
EPSG
28 March 2017
Individual performance
20.22
25.73
25.73
11.91
16.82
16.82
99
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
5. EMPLOYEE BENEFITS CONTINUED
The model inputs for share rights granted during the year
ended 30 September 2018 and year ended 30 September
2017 included:
Input
Consideration
Share rights granted
Zero consideration and have
a three year life.
2018
2017
Share price at grant date
$26.90
$17.75
Price volatility of Company's
shares
Dividend yield
Risk-free interest rate
24.8%
1.7%
2.3%
25.0%
2.0%
1.8%
The expected price volatility is based on the 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 Deloitte using Total Shareholder Return
(‘TSR’), Earnings Per Share Growth (‘EPSG’) and individual
performance 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
Deloitte has developed a Monte-Carlo Simulation-based
model which simulates the path of the share price according
to a probability distribution assumption. The pricing model
incorporates the impact of performance hurdles and the
vesting scale on the value of the share rights. The model
considers the Relative TSR hurdles to be market hurdles
and any individual performance conditions attached to the
Relative TSR rights are not used in the determination of the
fair value of the rights at the valuation date. 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, individual
performance condition
Deloitte has utilised a Black-Scholes-Merton 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.
100
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 – 2018
Grant date
Performance period
expiry date
Rights at start
of year
New rights
issues
Rights
vested
Rights
lapsed
Rights at
end of year
Number
Number
Number
Number
Number
1 October 2014
30 September 2017
27 February 2015
30 September 2017
3 March 2016
30 September 2018
28 March 2017
30 September 2019
529,532
329,589
542,304
261,776
-
-
-
-
27 April 2018
30 September 2020
-
508,345
(529,532)
(329,589)
-
-
-
-
-
-
(30,753)
(34,471)
-
-
542,304
231,023
473,874
1,663,201
508,345
(859,121)
(65,224)
1,247,201
Consolidated – 2017
Grant date
Performance period
expiry date
Rights at start
of year
New rights
issues
Number
Number
20 February 2014
30 September 2016
1 October 2013
30 September 2016
1 October 2014
30 September 2017
27 February 2015
30 September 2017
3 March 2016
30 September 2018
435,000
827,845
611,468
409,556
851,554
-
-
-
-
-
28 March 2017
30 September 2019
-
291,480
Rights
vested
Number
(435,000)
(827,845)
-
-
-
-
Rights
lapsed
Rights at
end of year
Number
Number
-
-
(81,936)
(79,967)
(309,250)
(29,704)
-
-
529,532
329,589
542,304
261,776
3,135,423
291,480
(1,262,845)
(500,857)
1,663,201
101
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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:
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
2018
$’m
2017
$’m
0.5
0.1
35.3
121.3
170.9
327.5
26.7
84.3
81.4
192.4
Future minimum lease payments expected to be received in relation to non-cancellable sub-leases
of operating leases
1.5
3.7
(b) Contingent liabilities
The Group and parent entity have contingent liabilities at 30
September 2018 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) In April 2015, Cheryl Kater filed a purported class action
lawsuit against Churchill Downs Incorporated (CDI) in
the U.S. Federal District Court for the Western District of
Washington. The litigation relates to the operation of the
online social gaming platform Big Fish Casino, which is part
of Big Fish Games, Inc. Aristocrat completed its acquisition
of Big Fish Games, Inc from CDI in January 2018.
102
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-1 COMMITMENTS AND CONTINGENCIES
CONTINUED
The case is currently going through the court process and
Aristocrat and CDI continue to work together to vigorously
defend the action and believe that there are meritorious
legal and factual defences against the Plaintiff’s allegations
and requests for relief. Aristocrat is not aware of any other
US Court having found in favour of a plaintiff in a matter
involving similar facts and issues to those in the Kater
litigation case.
Aristocrat has a number of contractual protections from CDI,
including broad indemnity protection relating specifically to
the Kater litigation.
6-2 EVENTS OCCURRING AFTER
REPORTING DATE
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
Tax and advisory services
Australia
Overseas
2018
2017
$
$
1,015,000
837,000
2,303,000 1,489,500
3,318,000 2,326,500
-
-
789
789
3,318,000 2,327,289
1,837,866 1,784,441
1,621,478
792,277
Total remuneration for advisory
services
3,459,344 2,576,718
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 in
accordance with the non-audit services policy.
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.
103
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-6 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations Instrument 2016/785, 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.
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
Retained profits/(Accumulated
losses)
Total equity
2018
$’m
2017
$’m
63.3
995.0
129.8
129.8
865.2
715.1
158.2
(8.1)
865.2
105.0
984.4
148.4
148.4
836.0
715.1
134.0
(13.1)
836.0
Profit for the year after tax
254.0
323.8
Total comprehensive income
after tax
254.0
323.8
(b) Guarantees entered into by the parent entity
Cross guarantees given by the parent entity are set out in
Note 6-6.
(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.
104
ARISTOCRAT LEISURE LIMITED Annual Report 2018
Set out below is the balance sheet of the Closed Group:
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-6 DEED OF CROSS GUARANTEE CONTINUED
Set out below is the statement of profit or loss and other
comprehensive income of the Closed Group:
2018
$’m
2017
$’m
Revenue
546.9
573.5
Current assets
Dividends received from related
parties
Other income from related parties
Other income from non-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 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
503.5
374.5
-
264.5
6.7
5.1
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
(221.9)
(161.5)
(15.3)
(181.6)
(163.7)
(10.6)
Trade and other receivables
Investments
Property, plant and equipment
(17.6)
1,015.3
(13.4)
473.8
Deferred tax assets
Intangible assets
Total non-current assets
(163.8)
(139.3)
Total assets
851.5
334.5
Current liabilities
2.3
2.3
1.9
1.9
853.8
336.4
306.9
851.5
157.6
334.5
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
(249.0)
(185.2)
Net assets
Retained earnings at the end of
the financial year
909.4
306.9
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2018
$’m
2017
$’m
86.5
153.6
37.6
277.7
347.4
1,375.5
11.8
41.9
80.7
325.4
153.6
32.9
511.9
95.6
705.0
13.2
39.1
47.6
1,857.3
900.5
2,135.0
1,412.4
189.9
136.6
13.6
22.3
362.4
1.3
312.7
6.5
12.9
333.4
695.8
1,439.2
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
715.1
(185.3)
(132.5)
909.4
1,439.2
306.9
889.5
105
ARISTOCRAT LEISURE LIMITED Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
6. OTHER DISCLOSURES CONTINUED
6-7 BASIS OF PREPARATION
Corporate information
Principles of consolidation
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 29 November 2018.
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.
Comparative information is reclassified where appropriate to
enhance comparability.
The consolidated financial statements incorporate the
financial statements of Aristocrat Leisure Limited (the
Company) and its subsidiaries as at 30 September 2018.
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 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
Applicable exchange rate
Income and expenses
Average exchange rate
Assets and liabilities
Reporting date
Equity
Reserves
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.
106
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
2018 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
Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
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.
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, the
doubtful debts provision will not be materially different on
transition to the new Standard, and is expected to increase by
an amount that is not material to the financial statements.
Changes in the standard resulting from new hedge accounting
requirements will not have a material impact.
The assessment of impact 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.
The main change as a result of the standard is Jackpot liability
expenses will be classified as contra revenue rather than as
expenses. For 2018, $35.0m of these expenses were incurred.
2019
Financial statements presented for 2019 will have the
comparatives amended for the impact of the changes to show
results on a like-for-like basis.
Overall, there will be a low magnitude of impact on adoption of
the new standard.
The Group has continued to assess the impact of the new lease
standard in preparation for it being applied from 1 October
2019. 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 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.
2020
107
ARISTOCRAT LEISURE LIMITED Annual Report 2018
DIRECTORS’ DECLARATION
for the year ended 30 September 2018
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 62 to 107 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 2018 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
29 November 2018
108
ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 2018 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 consolidated financial report comprises:
●
●
●
●
●
●
the balance sheet as at 30 September 2018
the statement of changes in equity for the year then ended
the cash flow statement for the year then ended
the statement of profit or loss and other comprehensive income 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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
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 group wide functions such as design & development, supply chain, human resources
and finance are structured on a global basis.
Materiality
● For the purpose of our audit we used overall Group materiality of $38m, which represents approximately 5%
of the Group’s profit before tax, along 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
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
● The Group comprises entities located globally with the most financially significant operations being located
in Australia and the United States of America (USA). Accordingly, we structured our audit as follows:
− The group audit team was led by our team from PwC Australia (“group audit team”). The group audit
team conducted an audit of the special purpose financial information of businesses operating in
Australia used to prepare the consolidated financial statements.
− Under instructions from and on behalf of the group audit team, PwC component auditors in:
○
○
Three USA locations (Las Vegas, Nashville and Seattle) performed an audit of the respective special
purpose financial information for these locations used to prepare the consolidated financial
statements.
Israel performed specified audit procedures over selected financial statement items within the
respective special purpose financial information used to prepare the consolidated financial
statements.
− Ongoing dialogue was held throughout the year between the group audit team and component audit
teams including consideration of how component audit work was planned and executed.
● Each year, the group audit team rotates its site visits. During the current period, the group audit team have
visited management and finance teams from Aristocrat businesses in the following locations: Sydney,
Nashville, Las Vegas, Seattle, Tel-Aviv, Uxbridge and the Sydney integration facility to develop an
understanding of their operations.
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
Board Audit Committee.
Key audit matter
How our audit addressed the key audit
matter
Revenue recognition
Refer to Note 1-2 Revenues $3,549.8m
A material proportion of the Group’s total revenue is
represented by machine sales and systems contracts
which contain multiple arrangements as described in
the accounting policy note 1-2.
Accounting for revenue from machine sales and
system contracts is complex due to 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 and multiple
element arrangements with the customers of Class III
gaming machines and casino management systems.
We developed an understanding of the systems,
controls and processes associated with the recording
of sales transactions. We identified, selected and
tested transactions and 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 had transferred the inventory risk
to the customer before the balance date of 30
September 2018 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 we selected for testing
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.
Income taxes
Refer to Note 1-4 Taxes
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 is a
complex tax and accounting area. Judgement by the
Group is involved in accounting for uncertain tax
positions that had not been assessed by the relevant
tax authorities at the date of this financial report.
The Group has recognised provisions for uncertain tax
positions in relation to some of its international
We worked with our internal taxation experts to
assess the Group’s accounting for uncertain tax
positions that existed at 30 September 2018 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
the consistency of assumptions inherent in
accounting positions, in years where tax
assessments were still open, to historically
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
Key audit matter
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.
Accounting of Plarium and Big Fish
acquisitions
Refer to Note 4-1 Business combinations
In the year ended 30 September 2018 the Group
completed two acquisitions:
● On 19 October 2017 the Group acquired 100% of
Plarium Global Limited (Plarium) for a total
consideration of $700.3m.
● On 10 January 2018 the Group acquired 100% of
Big Fish Games Inc. (Big Fish) for a total
consideration of $1,257.9m.
The accounting for the acquisitions was a key audit
matter because of:
●
●
●
the financial significance of the purchase
considerations
the judgement applied by the Group in
allocating the total consideration to the
underlying assets and liabilities of Plarium
and Big Fish and;
estimating the purchase consideration,
particularly in respect of contingent
consideration arrangements for Plarium
Estimated recoverable amount of goodwill –
Video Gaming Technology Inc. (VGT),
Plarium and Big Fish
Refer to Note 2-3 Intangible assets – Goodwill
$2,731.5m
The total goodwill balance of $2,731.5m is
significantly greater than materiality. The goodwill
primarily relates to the VGT ($953.1m), Plarium
($529.3m) and Big Fish ($1,122.4m) businesses. We
How our audit addressed the key audit
matter
●
●
agreed positions with tax authorities
relevant tax legislation
assessing the appropriateness of the Group’s
disclosure in the financial report in light of
Australian Accounting Standard
requirements.
Assisted by PwC valuation experts in aspects of our
work, our procedures included the following,
amongst others:
●
●
●
●
●
evaluating the Group’s accounting against the
requirements of Australian Accounting
Standards
reading the executed purchase contracts between
the relevant parties
assessing whether the basis and composition of
the purchase consideration in the executed
contracts was consistent with the Group’s
accounting for the acquisitions
assessing if the calculation of the contingent
consideration was in accordance with the
contractual arrangements and the requirements
of Australian Accounting Standards
assessing the fair values of the acquired assets
and liabilities recognised, including:
o
o
o
o
o
considering key assumptions used in
the models (the models) that estimated
fair value
considering the discount rate
assumptions used in the models
subjecting the key assumptions in the
models to sensitivity analysis
considering the valuation methodology
in the models in light of the
requirements of Australian Accounting
Standards
assessing the competence and capability
of management’s expert who assisted
the Group in estimating fair values
●
considering the adequacy of the business
combination disclosures against the
requirements of Australian Accounting
Standards.
Assisted by PwC valuation experts in aspects of our
work, our audit procedures assessing the recoverable
amount of goodwill (amongst others) are detailed
below:
● We evaluated and challenged the Group’s
cash flow forecasts and the process by which
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
Key audit matter
How our audit addressed the key audit
matter
focussed on the recoverable amount testing relating to
the VGT, Plarium and Big Fish businesses’ goodwill
because of the judgement involved in the assessment
of recoverable amount as at 30 September 2018.
The Group’s recoverable amount assessment includes
assumptions about the forecasted future results of the
businesses, terminal growth rates, revenue forecasts
and the discount rates applied to future cash flow
forecasts in order to assess the recoverable amount of
goodwill.
they were developed.
● We compared these forecasts to the
Board/Group’s approved plan and found
them to be consistent.
● We corroborated the Group’s cash flow
forecasts with external information where
appropriate
● We evaluated the Group’s analysis for VGT
of previous forecasts to actual results, to
assess the performance of the business and
the historical accuracy of the Group’s
forecasting of future results.
● We compared the Group’s investment case
for Plarium and Big Fish to the Group’s cash
flow forecasts to assess the reasonableness
of any changes.
● We challenged:
o
the terminal growth rate by
comparing it to economic and
industry forecasts
the discount rate by 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 for the VGT business.
● We tested the sensitivity of the calculations
o
o
by varying the above mentioned key
assumptions. We determined the
recoverable amount testing result was most
sensitive to assumptions for growth rates
and discount rates. We checked the
valuation calculations used in the
recoverable amount testing for
mathematical accuracy.
● We assessed the adequacy of disclosures
relating to the Group’s assessment of
recoverable amount of goodwill.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 September 2018, but does not include
the financial report and our auditor’s report thereon. Prior to the date of this auditor’s report, the
other information we obtained included the Directors’ Report and Operating and Financial Review.
We expect the remaining other information to be made available to us after the date of this auditor’s
report.
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.
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
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. 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 32 to 55 of the directors’ report for the
year ended 30 September 2018.
In our opinion, the remuneration report of Aristocrat Leisure Limited for the year ended 30 September
2018 complies with section 300A of the Corporations Act 2001.
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
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
Sydney
29 November 2018
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
SHAREHOLDER INFORMATION
Distribution of equity securities as at 28 November 2018
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
26
124
43
35
4
232
-
17,764
6,277
860
472
65
25,438
735
6,918,177
13,667,258
6,103,498
10,208,868
601,646,349
638,544,150
4,673
1.083
2.140
0.956
1.599
94.222
100.000
0.00073
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 28 November 2018
As at 28 November 2018, 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
Blackrock Group
Number of ordinary
shares held
% of issued capital
Date of notice
44,884,870
7.02%
17/07/2017
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION
Twenty largest ordinary shareholders as at 28 November 2018
Name of shareholder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
WRITEMAN PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
THUNDERBIRDS ARE GO PTY LTD
ARMINELLA PTY LIMITED
ECA 1 PTY LIMITED
MAAKU PTY LIMITED
UBS NOMINEES PTY LTD
ARGO INVESTMENTS LIMITED
BNP PARIBAS NOMS (NZ) LTD
AMP LIFE LIMITED
CS THIRD NOMINEES PTY LIMITED
BOND STREET CUSTODIANS LIMITED
FORSYTH BARR CUSTODIANS LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
INVIA CUSTODIAN PTY LIMITED
Number of ordinary
shares held
% issued capital
261,452,677
114,757,072
71,297,099
32,441,705
27,378,475
25,810,798
19,527,754
14,692,200
8,562,904
5,284,127
4,577,023
3,064,665
2,286,883
2,135,619
1,729,365
1,475,971
1,384,256
732,961
685,394
643,713
40.945%
17.972%
11.166%
5.081%
4.288%
4.042%
3.058%
2.301%
1.341%
0.828%
0.717%
0.480%
0.358%
0.334%
0.271%
0.231%
0.217%
0.115%
0.107%
0.101%
117
ARISTOCRAT LEISURE LIMITED Annual Report 2018
SHAREHOLDER INFORMATION 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:
(a) the relevant dividend amount is being held as direct
credit instructions have not been received;
(b) the relevant dividend will be credited to the nominated
bank account as soon as possible on receipt of direct
credit instructions; and
(c) 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.
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
SHAREHOLDER INFORMATION 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
NG Chatfield
Non-Executive Director
KM Conlon
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
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
Australia
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
Australia
Telephone: + 61 2 9013 6300
Facsimile: + 61 2 9013 6200
New Zealand
10220 Aristocrat Way
Las Vegas Nevada 89135
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
Big Fish Games, Inc.
906 Alaskan Way
Seattle Washington 98104
USA
Telephone: + 1 206 213 5753
Facsimile: + 1 206 213 3696
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
25 Riverside Way Uxbridge
Middlesex UB8 2YF U.K.
Telephone: + 44 1895 618 500
Facsimile: + 44 1895 618 501
Israel
Plarium Global Limited
2 Abba Eban Blvd
Herzliya
Israel
Telephone: + 972 9 9540211
Facsimile: + 972 9 9607827
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
Internet Site
Aristocrat Technologies NZ Limited
Singapore
Unit E, 7 Echelon Place Highbrook
Auckland 2013
New Zealand
Telephone: +649 259 2000
Facsimile: +649 259 2001
Aristocrat (Singapore) Pty Limited
www.aristocrat.com
61 Kaki Bukit Avenue 1
Shun Li Industrial Park #04-29
Singapore 417943
Telephone: + 656 444 5666
Facsimile: + 656 842 4533
Investor Email Address
Investors may send email queries to:
investor.relations@aristocrat.com
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ARISTOCRAT LEISURE LIMITED Annual Report 2018
aristocrat.com
Aristocrat Leisure Limited
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
P.O. Box 361
North Ryde BC NSW 1670
AUSTRALIA
Tel +61 2 9013 6000
Fax +61 2 9013 6200
ABN 44 002 818 368