ANNUAL REPORT
2020
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
Independent Auditor’s Report
Shareholder Information
Corporate Directory
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2020 ANNUAL REPORT
This 2020 Aristocrat Leisure Limited Annual Report
for the financial year ended 30 September 2020
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 2020 financial year.
2021 ANNUAL GENERAL MEETING
The 2021 Annual General Meeting will be held at at 11.00am
on Friday, 26 February 2021.
In response to Government restrictions and the potential
health risks arising from coronavirus (COVID-19) pandemic,
the Company’s 2021 AGM will be held as a virtual meeting.
Details of the business of the meeting will be contained
in the notice of Annual General Meeting, which will be
made available to shareholders in late January 2021.
2020 CORPORATE GOVERNANCE STATEMENT
The 2020 Corporate Governance Statement can be found
on the Group’s website: www.aristocrat.com.
ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
COMPANY PROFILE
Aristocrat Leisure Limited (ASX: ALL) is a leading gaming
provider and games publisher, with more than 6,000
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 80 countries.
For further information visit the Group’s website at
www.aristocrat.com.
KEY DATES 1
2020 Record date for Final 2020 Dividend
2 December 2020
Payment date for Final 2020 Dividend
18 December 2020
2021
2021 Annual General Meeting
26 February 2021
Interim Results Announcement 2
24 May 2021
Full Year Results Announcement 3
18 November 2021
1. Dates subject to change.
2. 6 months ending 31 March 2021.
3. 12 months ending 30 September 2021.
1
A MESSAGE FROM THE CHAIRMAN AND CEO
The 2020 financial year was uniquely challenging for Aristocrat, as our people
and business responded to the profound impacts wrought by the COVID-19
pandemic on our people, customers, players and communities. The resilience
and commitment of our team of over 6,000 employees across the year has
been nothing short of extraordinary.
Employee engagement scores above gaming and technology company benchmarks were achieved throughout 2020,
reflecting the many steps Aristocrat took through the crisis to safeguard wellbeing, energise our culture and express
our ‘people first’ commitment. The safety and wellbeing of our people, customers, suppliers and other stakeholders
will continue to be our first priority as a business.
A Group NPATA result of $476.6 million for the 2020 fiscal year was 47% lower in reported terms than the $894.4 million
delivered in 12-month period to 30 September 2019. While the Group was on track to deliver growth in line with our plans
pre-pandemic, financial results for the full year were materially impacted by COVID-related customer venue closures,
and the implementation of social distancing measures that have been in place across all regions of the gaming business.
This impact was partly offset by excellent growth in our Aristocrat Digital business; demonstrating the benefits of our
long-term strategy to diversify our revenue base.
Aristocrat nevertheless enhanced our financial fundamentals and further accelerated our underlying operational
momentum across the year, and maintained strong investment behind our long term growth strategy.
Aristocrat Gaming (formerly referred to as Land) continued to take share and maintained its leadership of key Gaming
markets and segments, with an increased focus on customer service and engagement. Continued market-leading
investment in new hardware and games delivered superior operational performance and supported resilient demand.
Aristocrat Digital delivered exceptional operational performance, while continuing to diversify and strengthen its
portfolio and pipeline of new games. Aggressive and dynamic investment in User Acquisition supported momentum and
allowed the business to fully leverage COVID-19 related tailwinds, while taking further significant strides forward in
organisational scale, capability and effectiveness.
Aristocrat also maintained significant investment in the strategic capabilities that will power future growth, including in
customer experience, cyber security, data and transformation management.
We also strengthened our liquidity and balance sheet, with approximately $2 billion in available liquidity as at
30 September 2020. This positions us well to not only weather economic and industry volatility, but also to take
advantage of organic and inorganic opportunities to accelerate our progress, consistent with shareholders’ interests.
In this context, Aristocrat also took the opportunity to review our Group growth strategy during the year, given the
changes and uncertainties driven by the pandemic. While we made some adjustments in terms of emphasis and details,
the foundations of our strategy were strongly validated by this review. Aristocrat is therefore entering the new fiscal
year fully aligned behind a refreshed growth vision, with updated priorities and the confidence to accelerate execution
in the period ahead.
The Board’s program of regular face-to-face engagement with Aristocrat’s global employee and customer base pivoted
online in 2020, as a result of the suspension of business travel. Through frequent virtual engagement opportunities,
Directors continued to receive direct feedback from employees and other stakeholders in order to effectively oversee and
monitor the business, its culture and employee safety and wellbeing. The Board also revised its meeting cadence and
structures, and met virtually on a more frequent basis to support and supervise the Group’s COVID-19 response.
Throughout the year, the Board maintained its strategic focus, while ensuring Aristocrat continued to have strong
corporate governance practices in place. Remuneration structures were updated to ensure Aristocrat can attract and
retain the critical capabilities required to execute our growth strategy and advance shareholders’ interests. These
changes reflect strong competition for top talent, particularly in the US technology sector in which we operate, as
detailed in the Remuneration section of this report.
2 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NEIL CHATFIELD
Chairman
TREVOR CROKER
Chief Executive Officer & Managing Director
Aristocrat has also continued to expand our sustainability disclosures, consistent with our values, our focus on the
long term and commitment to transparency. Building on progress made over the last two years, further disclosures
were published on the Group website (www.aristocrat.com) at the end of November 2020. In addition to updating and
expanding existing content on topics such as responsible gameplay, employee relations and climate related issues, we
have also shared more insights into our management of COVID-19 across the year. We will continue to expand these
disclosures in line with stakeholder interests and relevance to our long term business success.
In summary, fiscal year 2020 was a year of unprecedented challenge for our business, from which we are emerging strongly.
We wish to particularly acknowledge and thank the Board and senior management for their commitment, focus and
leadership throughout the period. We also reiterate our gratitude to our employees, whose compassion and care for
each other, along with their absolute determination to deliver on commitments and willingness to adapt and innovate
has been vital to getting the business to where it is today.
While we cannot predict how the pandemic will affect our operating environment in future, we are fully focused on
what we can control, and are entering the 2021 financial year with excellent operation momentum, a proven strategy,
strong team engagement and belief. We believe we are well placed to maintain our long-term trajectory of high-quality
sustainable growth for the benefit of our shareholders and all stakeholders.
Thank you for your ongoing interest and support.
Yours sincerely,
NEIL CHATFIELD
Chairman
TREVOR CROKER
CEO and Managing Director
3
DIRECTORS’ REPORT
FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2020
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 2020 (the financial year). The information in this report is current as at 18 November 2020 unless otherwise specified.
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 and the results of those operations, including a discussion on the impacts of the
COVID-19 pandemic on the Group’s operations, 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 2020 was a profit of $1,377.7 million
after tax (2019: profit of $698.8 million after tax).
Further details regarding the financial results of the Group are set out in the Operating and Financial Review and Financial Statements.
DIVIDENDS
Since the end of the financial year, the Directors have authorised a final fully franked dividend of 10.0 cents (2019: 34.0 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.
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. Details of Directors’ interests in shares of the Company as at the end of the reporting period are set out
on page 50 of the Remuneration Report.
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, and the UK. 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 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. Where identified, climate related risks are managed and mitigated through Aristocrat’s
enterprise risk management processes, which explicitly encompasses climate related risks and opportunities. These risks are also considered
as part of core business processes, including strategy development and business continuity planning.
Aristocrat has adopted a phased approach to expanding climate-related disclosures, with improvements being driven over three years,
with an initial focus on Risk Management, Governance and Strategy disclosures. Aristocrat undertakes a materiality assessment to identify
Environmental, Social, and Governance (ESG) issues relevant to the business on a periodic basis, and environmental issues are considered
as part of this assessment.
SUSTAINABILITY
Further details on sustainability can be found on
the Company’s website www.aristocrat.com
PRINCIPAL ACTIVITIES
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.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than the impacts of the COVID-19 pandemic discussed in this Directors’ Report (including in the Operating and Financial Review), there
were no significant changes in the state of affairs of the Group during the financial year.
EVENTS AFTER BALANCE DATE
Other than the Board authorising the final dividend, since the end of the year and to the date of this Directors’ Report, no other matter or
circumstance has arisen that has significantly affected or may significantly affect the Group’s operations, results of those operations or state
of affairs in future 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.
4 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
DIRECTORS’ REPORT
DIRECTORS’ PARTICULARS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
The Directors of the Company throughout the financial year and up to the date of this report are:
Director
Experience and other directorships
CURRENT DIRECTORS
NG Chatfield
Nominated December 2017. Appointed February 2018.
M.Bus, FCPA, FAICD
– Chairman of Costa Group Holdings Limited (since July 2015, appointed as
a Non-Executive Director October 2011)
– Non-Executive Director of Transurban Group (since February 2009)
– Former Chairman of Seek Ltd (June 2005 – December 2018)
– Former Chairman of Virgin Australia Holdings Ltd
– Former Non-Executive Director of Recall Holdings Ltd and Iron Mountain, Inc.
– Former Executive Director and Chief Financial Officer of Toll Holdings Ltd
(until September 2008)
Special responsibilities
Non-Executive Chairman
Member, Regulatory &
Compliance Committee
Member, People &
Culture Committee
Member, Audit Committee
TJ Croker
Appointed 1 March 2017.
Advanced Management
Program, MAICD
– Director and Chairman of the American Gaming Association
(Chairman effective January 2020)
Managing Director and
Chief Executive Officer
– Former Executive Vice President, Global Product & Insights,
Aristocrat Leisure Limited
– Former Managing Director, ANZ – Aristocrat Leisure Limited
– Sales Director – Fosters Australia Ltd
KM Conlon
Nominated January 2014. Appointed February 2014.
BEc, MBA, FAICD
– Chair of Lynas Corporation Limited (since September 2020, appointed
as a Non-Executive Director November 2011).
– Non-Executive Director of REA Group Limited (since June 2007),
BlueScope Steel Limited (since February 2020), and the Benevolent Society
(since February 2013)
– Member of Chief Executive Women
– Member of the Australian Institute of Company Directors (AICD) Corporate
Governance Committee and a former National Board Member of the AICD
– Former Non-Executive Director of CSR Limited
– Former Partner and Director, Boston Consulting Group (BCG)
PJ Ramsey
Nominated September 2016. Appointed October 2016.
BA, Economics, MBA,
MAICD
– Consultant, EPR Properties (a publicly traded REIT)
– Board of Trustees for the Meadows School (Las Vegas, USA)
– Executive Committee member for the TPC Shriners Hospital for Children
Open
– Former Independent Director of VizExplorer
– Former Chief Digital Officer of Aristocrat Leisure Limited and former
CEO of Multimedia Games
– Various senior roles at Caesars Entertainment (formerly Harrah’s)
S Summers Couder
Nominated August 2016. Appointed September 2016.
Dip Electrical
Engineering, Masters in
Electrical Engineering
and Computer Sciences
Cycle de Perfectionnement
Option (Equivalent MBA)
MAICD
– Independent Director of Semtech Corporation (since April 2013)
– Former Independent Non-Executive Director of Alcatel-Lucent SA
and Headwaters Inc.
– Former Chief Executive Officer of Trident Microsystems Inc.
Chair, People &
Culture Committee
Member, Audit Committee
Lead US Director
(from 20 February 2020)
Chair, Regulatory &
Compliance Committee
Member, Audit Committee
Member, Audit Committee
Member, People &
Culture Committee
5
DIRECTORS’ REPORT
Director
Experience and other directorships
AM Tansey
Nominated March 2016. Appointed July 2016.
CURRENT DIRECTORS
BBA, MBA,
Juris Doctor, FAICD
– Non-Executive Director of WiseTech Global Limited (since June 2020),
– TPG Telecom Limited (since July 2020), Lendlease Real Estate Investments
Limited (since October 2010), and the Australian National Maritime Foundation
(since December 2019)
– Member of Chief Executive Women and Fellow of the Australian Institute
of Company Directors
– Former Non-Executive Director of Healius Limited
(formerly Primary Health Care Ltd) (August 2012 – October 2020)
and Adelaide Brighton Ltd (April 2011 – October 2019)
PG Etienne
Nominated October 2019. Appointed November 2019.
GradDip Marketing,
BSc, MBA, Advanced
Management Program,
GAICD
– Chairman and Non-Executive Director, ANZ Terminals (since October 2017).
– Non-Executive Director of Lynas Corporation Limited (since January 2015)
and Cleanaway Waste Management Limited (since May 2014)
– Former Managing Director & CEO of Innovia Security Pty Ltd
– Former Non-Executive Director of Sedgman Limited
– Various senior executive positions, Orica Limited
Director
Experience and other directorships
FORMER DIRECTORS
SW Morro
BA, Business
Administration
Nominated December 2009. Retired 20 February 2020.
– Former Chief Operating Officer and President, IGT Gaming Division
Special responsibilities
Chair, Audit Committee
Member, Regulatory &
Compliance Committee
Member, People &
Culture Committee
Member, Regulatory &
Compliance Committee
Special responsibilities
Lead US Director
(to 20 February 2020)
Member, Regulatory &
Compliance Committee
(to 20 February 2020)
Member, People &
Culture Committee
(to 20 February 2020)
6 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
DIRECTORS’ REPORT
DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS DURING THE FINANCIAL YEAR
The attendance of directors at Board meetings and attendance of committee members at committee meetings of which they are voting
members is set out below.
Meetings attended/held
Director
Board
Audit Committee
People &
Culture Committee
Regulatory &
Compliance Committee
Concurrent
Committee meetings 4
Current Directors
NG Chatfield 1
TJ Croker
KM Conlon 1
PG Etienne 1,2
PJ Ramsey 1
S Summers Couder 1
AM Tansey 1
Former Directors
19/19
19/19
19/19
19/19
19/19
18/19
19/19
SW Morro 1,3
7/7
4/4
—
4/4
—
4/4
4/4
4/4
—
5/5
—
5/5
5/5
—
5/5
—
2/2
5/5
—
—
5/5
5/5
—
5/5
2/2
1/1
—
1/1
1/1
1/1
1/1
1/1
—
1. During FY2020, the Board reviewed each Non-Executive Director’s independence and confirms that each Non-Executive Director is independent.
2. PG Etienne was appointed as a Non-Executive Director on 7 November 2020.
3. SW Morro retired from the Board on 20 February 2020.
4. To support the determination of remuneration outcomes, the People & Culture Committee met concurrently with the Audit Committee on 30 September 2020.
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 Secretary:
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.
OPTIONS OVER SHARE CAPITAL
No options over Company shares were granted to executives or Directors during or since the end of 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.
INDEMNITIES AND INSURANCE PREMIUMS
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.
7
DIRECTORS’ REPORT
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 (PwC) 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 low value 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 an Auditor Independence Policy which specifies those non-audit services which cannot be
performed by the Company auditor. The Policy 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.
During the financial year, the fees paid or payable for non-audit services provided by the Company’s auditor and its related practices totalled
$1,056,477. Details of the amounts paid or payable to the Company’s auditor, for 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.
– PwC is engaged on low value assignments additional to their statutory audit duties where PwC’s expertise and experience with the Group are
important. During the current and prior year, PwC was primarily engaged for tax services relating to assistance with one off changes to the
Group Structure (refer to Note 6-3 to the Financial Statements). These services are not recurring.
– 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
As the Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in
the Director’s Report and the Financial Statements have been rounded off, except where otherwise stated, 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.
NG CHATFIELD
Chairman
18 November 2020
8 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Aristocrat at a Glance
Revenue
Licensed Jurisdictions
$4.1 billion
328
REVENUE BY SEGMENT
REVENUE BY STRATEGIC SEGMENT
6.8%
43.0%
20.5%
22.5%
57.0%
33.0%
Aristocrat Gaming
ANZ
Americas
International Class III
Digital
Gaming Operations
Digital
Class III Outright Sales
& Other
3.2%
57.0%
Countries
Employees
84
6,000+
The world map below displays the location of Aristocrat’s employees, with the size of each circle illustrating the relative number of employees
based in that country.
Canada
Great Britain
European Union
United States of America
Mexico
Israel
Argentina
Russia
Ukraine
India
Macau
Philipinnes
Singapore
Australia
New Zealand
9
OPERATING AND FINANCIAL REVIEW
COVID-19 Recovery and Business Strategy
We focused on project portfolio prioritisation in D&D to maintain
our investment principles in this area and none of our creative studios
were affected.
Continuous improvement initiatives included a significant rebasing
of Big Fish following a strategic review of the business. Big Fish is
now poised for sustainable and profitable growth, with the benefit
of refreshed leadership and focus.
STRONG OPERATIONAL PERFORMANCE
We sharpened our operational priorities in Gaming and focused on
supporting customers with higher levels of service, flexibility and
tailored commercial options to help them recover as quickly as
possible. Furloughed staff were brought back to work earlier than
anticipated, to help customers prepare to re-open.
The long-term focus on lifting our competitiveness through
outstanding people and product positioned us to benefit in Digital, and
in Gaming, as demand began to return through the latter half of the
reporting period.
This is evident in the share gains achieved by our Gaming business in
key markets over the year, along with outstanding customer feedback
and industry data on portfolio performance – particularly in our largest
markets in North America and Australia. Our Digital business also
took share across core genres, reflecting our investments in improving
the Product Madness portfolio and scaling the world-class title
RAID: Shadow LegendsTM along with broader portfolio performance
and COVID-19 related tailwinds.
IDEALLY PLACED FOR GROWTH
The Group is entering the 2021 financial year with strong momentum
and is well placed to maintain our long-term trajectory of high
quality, sustainable growth. We have excellent liquidity, low debt
and a balance sheet that provides us with full optionality. We have a
revitalised team, strong belief, and a people first culture. Our strategy
has been affirmed, and we are focused on accelerating it and making
the most of the opportunities presented by disruption, while we
continue to manage the near-term impacts and volatility driven by
the pandemic across global markets.
A CHALLENGING YEAR
The 2020 financial year was uniquely challenging. Throughout the
year, our first priority was – and remains – the health and wellbeing
of our people, customers and other stakeholders.
Financial results in our Gaming (Land-based) business for the
2020 financial year were materially impacted by COVID-19 related
customer venue closures and the implementation of social distancing
measures that have been in place in key gaming markets globally
since March 2020.
A RESILIENT BUSINESS
At the same time, our performance for the period demonstrates the
Group’s deep strengths, including our robust financial fundamentals
and the soundness of our long-term strategy.
We have accelerated our diversification over the past several years, as
we have entered more adjacent markets, segments, and game genres.
We have driven scale in Digital, adding a material B2C operational
engine to the Group and delivering further diversity to a revenue base
that is now predominantly recurring rather than one-off in nature.
The benefits of this diversification are evident in our results for
the period, during which we achieved Group revenue in excess of
$4 billion, while protecting the business and maintaining investment
behind our strategic differentiators for the future.
SUSTAINED INVESTMENT IN DIFFERENTIATORS
Throughout 2020, we have maintained our commitment to being
an industry-leading Design & Development (D&D) organisation,
while also maintaining strong investment in Digital games and User
Acquisition and continuing to commit capital to further growing our
Gaming Operations footprint. We also invested more in strategic
capabilities, including customer experience, cyber security, and data
capability, among other priorities. Our Customer Experience function
deployed a suite of new mobile applications, as we look to offer more
connected services and further diversify revenue streams.
CONTINUOUS IMPROVEMENT FOR GROWTH
At the same time, we took the opportunity presented by the crisis to
improve. We pivoted to an explicitly ‘people first’ focus, energising
our culture and offering more support, flexibility, and recognition to
our global team of over 6,000 Aristocrat people. Engagement scores
above industry benchmarks were achieved through the period, with
no loss of business momentum, despite the disruptions and remote
working arrangements.
We made difficult but important changes to enhance operating
leverage, further supporting our liquidity and allowing us to invest
more behind our growth strategy.
In Gaming, we prioritised liquidity preservation when we prepared
our COVID-19 response plan in April 2020. This included a significant
reduction in contractors, consultants and other discretionary spend,
reducing both operating and capital expenditure. Approximately 800
people in customer facing roles were temporarily furloughed, and an
additional 1,700 people took a temporary 10-20% pay cut or reduction
in hours. A small number of redundancies were made, and a hiring
freeze was implemented.
10 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance
EARNINGS SUMMARY
Key performance indicators for the current period and prior period are set out below.
A$ million
Normalised results 1
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
Closing net debt/(cash) 3
Gearing (net debt/consolidated EBITDA 3,4)
Constant
currency 2
2020
4,035.6
1,056.3
745.8
343.8
459.6
53.9c
72.0c
10.0c
4,035.6
1,226.0
1,341.8
1.0%
991.8
1,653.5
n/a
2020
2019
Variance vs. 2019
Constant
currency 2
%
Reported
%
4,139.1
1,089.4
771.3
357.1
476.6
56.0c
74.7c
10.0c
4,139.1
1,377.7
1,497.2
0.9%
1,022.9
1,567.5
1.4x
4,397.4
1,596.8
1,346.9
752.8
894.4
118.0c
140.2c
56.0c
4,397.4
698.8
840.4
5.6%
1,085.5
2,223.7
1.4x
(8.2)
(33.8)
(44.6)
(54.3)
(48.6)
(54.3)
(48.6)
(82.1)
(8.2)
75.4
59.7
(5.9)
(31.8)
(42.7)
(52.6)
(46.7)
(52.5)
(46.7)
(82.1)
(5.9)
97.2
78.2
(4.6) pts
(4.7) pts
(8.6)
25.6
n/a
(5.8)
29.5
0.0x
1. Normalised results are statutory profit (before and after tax), excluding the impact of certain significant items detailed on page 17.
2. Results for 12 months to 30 September 2020 are adjusted for translational exchange rates using rates applying in 2019 as referenced in the table on page 20.
3. Net debt excludes lease liabilities recognised under AASB 16 from 1 October 2019.
4. Consolidated EBITDA as defined by the Credit Agreement.
The information presented in this Operating and Financial Review has not been audited in accordance with the Australian Auditing Standards.
11
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
Significant growth and continued diversification in Digital:
– Aristocrat strengthened its position as the clear #2 in the
Social Casino genre globally.
– Strong performance of Lightning LinkTM and Cashman CasinoTM
through the successful delivery of Live Ops, features and slot
content, and COVID-19 “stay at home” mandates an added tailwind.
– RAID: Shadow LegendsTM continued its impressive growth trajectory.
– The business continued to build portfolio diversity, with the
successful launch of EverMergeTM in the casual merge genre.
– Rebased the Big Fish business for profitable growth.
– Continued, disciplined investment in User Acquisition and retention,
and leveraging of best practices across Digital operations.
– Average Bookings Per Daily Active User (ABPDAU) grew 44%
to US$0.59 driven mainly by Social Casino and the continued
scaling of RAID: Shadow LegendsTM.
Sustained investment in our future through great talent and technology:
– Despite the impact of COVID-19, Aristocrat maintained its
investment in game design, development, and technology to deliver
long term performance.
– Gaming and Digital portfolios were reviewed and reprioritised for
growth post COVID-19.
Robust financial fundamentals maintained:
– EBITDA margin moderated to 26.3% due to the impact of COVID-19
on the Aristocrat Gaming business.
– Capital expenditure of $248 million during the period supported
growth in our Gaming Operations installed base, of which
$96 million occurred in the second half.
– A gearing (Net Debt/EBITDA) result of 1.4x at 30 September 2020
was in line with the prior year.
– Aristocrat’s balance sheet is strong, with approximately $2 billion
in available liquidity at 30 September 2020.
OPERATIONAL HIGHLIGHTS
Despite the disruptions driven by COVID-19, Aristocrat’s strong
operational momentum was maintained throughout the period.
Key highlights are set out below.
Increased share achieved in North America Gaming Operations:
– Aristocrat’s Class III Premium installed base grew 5.9% to
24,366 units, with continued penetration of leading hardware
configurations and high-performing game titles. ~74% (~18,000 units)
of the installed base were operating at 30 September 2020 as
a result of social distancing restrictions and venue closures.
– Aristocrat’s Class II installed base grew 0.3% to 25,302 units.
~85% (~21,500 units) of the installed base were operating at
30 September 2020.
– Total adjusted average fee per day (FPD) increased 1.1% to
US$51.01 (FPD unadjusted for the number of days machines
were not operating in the period was US$35.55), with continued
strength in product performance due to resilient demand for
Aristocrat games.
– Based on the Eilers’ Game Performance report for September
2020, Aristocrat’s premium leased game themes accounted for
14 of the top 25; and Aristocrat’s premium Wide Area Progressive
games represented 11 of the top 25.
– Aristocrat’s Multi Site Progressive performance improved over 2019
levels, driven mainly by performance in California and Oklahoma.
Continued portfolio momentum in Outright Sales:
– COVID-19 lockdowns drove significant customer capital
constraints across all geographies, reducing Outright Sales
opportunities in the second half.
– Aristocrat continued to expand its portfolio into attractive
North American adjacencies, including Video Lottery Terminal
(VLT), in Canada, Illinois, and Oregon (trial), Washington Central
Determinant System (CDS) and the Multigame and Poker
segments.
– In North America, Aristocrat led the Core (Low Denom, Video
Reel) game category with 12 of the top 25 games according to the
Eilers’ Game Performance Report for September 2020:
• Buffalo GoldTM remains #1, Wonder 4 Tall FortunesTM at #4
and Fu Dai Lian PandaTM at #5.
• Gold Stacks 88TM Turtle KingdomTM ranked #1 in the top indexing
new games (Core, Video Reel) category with a performance
index of 2.63x.
– ANZ maintained its market-leading ship share.
12 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
PERFORMANCE SUMMARY
Normalised profit after tax and before amortisation of acquired intangibles (NPATA) of $476.6 million for the period represented a 47% decrease
(49% in constant currency) compared to the prior corresponding period (pcp). The decrease was driven by the impact of COVID-19 on the
Aristocrat Gaming business. Revenue decreased 6% (8% in constant currency) with COVID-19 impacts largely offset by strong growth in Digital.
Normalised fully diluted earnings per share before amortisation of acquired intangibles of 74.7c represents a 47% decrease (49% in constant
currency) on the prior corresponding period.
Strong focus on cash preservation and liquidity along with the benefits of our diversified and largely recurring revenue business, allowed us to
maintain net gearing in line with the prior corresponding period, at 1.4x.
NPATA movement FY19 to FY20 (A$ million)
894.4
(414.0)
129.4
9.0
10.9
16.4
(12.3)
(112.2)
(45.0)
476.6
NPATA
FY 2019
Americas
ANZ
International
Class III
Digital
Corporate
Costs / Interest
Group D&D
expense
Income tax
rate movement
Foreign
exchange
NPATA
FY 2020
Movements in the graph above are on a constant currency basis and are tax effected at the prior year tax rate.
Summary of COVID-19 related impacts:
– Significant reduction in global Outright Sales volumes
compared to the prior corresponding period.
– US$15 reduction in the Gaming Operations average FPD
(unadjusted) due to venue closures, social distancing measures
and customer incentives.
– Increase in bad and doubtful debt expense.
– Increase in inventory provisioning in the period.
– Benefits in Digital driven by ‘stay at home’ mandates.
– NPATA declines across all Aristocrat Gaming businesses in
the period were driven by COVID-19 impacts, which resulted in
a significant reduction in capital spend by customers and lower
Gaming Operations revenue due to venue closures and social
distancing measures from March 2020.
– The Americas business achieved a 5.9% expansion in the Class
III Premium Gaming Operations footprint, a 0.3% expansion in
the Class II Gaming Operations footprint and the overall adjusted
average fee per day (FPD) was maintained at over US$50. On an
unadjusted basis, the average FPD for the period was US$35.55.
– Digital delivered post-tax earnings growth of $129.4 million due
largely to outstanding performance across the Social Casino
portfolio and continued scaling of RAID: Shadow LegendsTM.
– Corporate costs and interest increased by $12.3 million, largely
driven by lease interest.
– The Group’s strategic investment in talent and technology was
maintained, to position the business for growth, including in the
Gaming business as demand returns.
– The decrease in the Group’s effective tax rate (ETR) from
27.5% to 24.9%, resulted in a $10.9 million NPATA benefit with the
recognition of a deferred tax asset of approximately $1.1 billion,
reflecting the impact of the changes in Group structures announced
in November 2019.
– Foreign exchange positively impacted performance by $16.4 million.
13
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
GROUP PROFIT OR LOSS
Results in the current and prior corresponding periods are in reported currency and normalised for significant items outlined on page 17.
Segment profit is stated before amortisation of acquired intangibles.
A$ 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)
2020
2019
Variance
%
280.6
1,367.6
131.4
2,359.5
4,139.1
58.9
517.3
34.3
726.9
1,337.4
(497.9)
(0.7)
(67.5)
(566.1)
771.3
(154.9)
616.4
(140.7)
475.7
(118.6)
357.1
119.5
476.6
456.2
1,948.0
204.5
1,788.7
4,397.4
213.6
1,073.2
94.3
528.9
1,910.0
(500.4)
0.3
(63.0)
(563.1)
1,346.9
(184.4)
1,162.5
(124.0)
1,038.5
(285.7)
752.8
141.6
894.4
(38.5)
(29.8)
(35.7)
31.9
(5.9)
(72.4)
(51.8)
(63.6)
37.4
(30.0)
0.5
n/a
(7.1)
(0.5)
(42.7)
16.0
(47.0)
(13.5)
(54.2)
58.5
(52.6)
(15.6)
(46.7)
14 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
REVENUE
Segment revenue decreased $258 million or 6% in reported currency
(8% in constant currency), with the percentage of total revenue
derived from recurring sources increasing by 11 percentage points
to 79.5% compared to the prior corresponding period. This was
principally driven by strong performance in Digital, robust pre-
COVID-19 performance and a faster than expected recovery across
North America Gaming Operations, coupled with significantly lower
global Outright Sales due to COVID-19.
Digital revenue grew 28.5% to a new record result of US$1,609
million, driven by substantial growth in RAID: Shadow LegendsTM,
strong performance in Lightning LinkTM and Cashman CasinoTM
and the successful launch of EverMergeTM in the period.
Revenue across all Aristocrat Gaming businesses was significantly
impacted by COVID-19 as previously flagged. In Class III Gaming
Operations, revenue declined 26%, however underlying performance
remained strong with Aristocrat’s Premium Class III and Class II
footprints increasing 5.9% and 0.3% respectively and the adjusted
average fee per day increasing 1.1%.
In North America Outright Sales, revenue decreased 46% in
local currency.
Aristocrat’s industry-leading product performance was again
recognised in the annual Global Gaming Awards. In 2020,
Aristocrat was named overall Land-based Industry Supplier of
the Year (for the second year in a row), and also recognised for Land-
based Product of the Year for the MarsXTM cabinet, as well as Slot
of the Year for Dollar StormTM.
In the outright sales markets of Australia and New Zealand,
revenue decreased 39% to $281 million in reported currency,
reflecting the impacts of droughts, bushfires, COVID-19 and the
timing of new product releases.
In International Class III, revenue decreased 36% to $131 million
in reported currency.
Across all regions, our Gaming businesses intensified their focus
on customers during the period, bringing forward new commercial
and product offerings, boosting service and working flexibly to
support customers’ COVID-19 response to position them for a strong
recovery.
Revenue by Strategic Segment
2020
20.5%
22.5%
$4.14bn
57.0%
Gaming Operations
Digital
Class III Outright Sales & Other
Revenue by Strategic Segment
2019
31.6%
27.7%
$4.40bn
40.7%
Gaming Operations
Digital
Class III Outright Sales & Other
All amounts are in reported currency unless otherwise stated.
15
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
EARNINGS
Segment profit decreased $573 million in reported currency,
down 30% compared to the prior corresponding period, again
reflecting COVID-19 impacts on the Aristocrat Gaming business.
Margins in Gaming were significantly compressed in the period
due to lower revenue and an increase in bad debt and inventory
provisioning in our highest margin segments.
The Digital margin increased from 29.6% to 30.8% due to
strong performance across the portfolio, supported by increased
investment in User Acquisition, at 28% of Digital revenue, to
support long-term profitability.
The Group continued to invest significantly in talent and technology
to deliver competitive product across a broader range of Gaming
segments and Digital genres. Investment in D&D decreased
fractionally in absolute terms by $2.5 million to $498 million but
remained at a market-leading 12.0% on a percentage of revenue basis.
Corporate costs increased by $4.5 million compared to the prior
corresponding period including legal settlement costs incurred.
Net interest expense increased $16.7 million due mainly to interest on
lease liabilities recognised for the first time in this period (AASB 16).
The effective tax rate (ETR) for the reporting period was 24.9%
compared to 27.5% in the prior corresponding period, reflecting
changes in the Group structure announced in November 2019,
which reduce the amount of foreign cash tax paid and tax expense.
Segment profit margin % of revenue
Other key metrics % of revenue and ETR
60%
50%
40%
30%
20%
10%
%
8
.
6
4
%
6
.
5
4
%
0
.
1
2
%
4
.
4
5
%
1
.
5
5
%
1
.
9
4
%
1
.
6
4
%
8
.
7
3
%
7
.
2
3
%
8
.
0
3
%
6
.
9
2
%
1
.
6
2
%
9
.
4
4
%
4
.
3
4
%
1
.
7
3
%
3
.
6
3
%
3
.
2
3
50%
40%
30%
20%
10%
0%
%
5
.
1
1
%
4
.
1
1
%
0
.
2
1
%
9
.
8
2
%
5
.
7
2
%
9
.
4
2
%
3
.
6
2
%
4
.
0
2
%
3
.
0
2
%
5
.
1
1
Australia and
New Zealand
Americas
International
Class III
Digital
Group D&D
expense /revenue
Segment
profit/revenue
EBITDA/
revenue
NPATA/
revenue
Effective
tax rate
20181
2019
2020
20181
2019
2020
1. Comparative period has been restated to reflect the impact of AASB 15 effective
1. Comparative period has been restated to reflect the impact of AASB 15 effective
from 1 October 2018.
from 1 October 2018.
16 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
RECONCILIATION OF STATUTORY PROFIT TO NPATA
A$ 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)
(Less)/add back net (gain)/loss from significant items after tax
Normalised Profit After Tax before amortisation of acquired intangibles (Normalised NPATA)
SIGNIFICANT ITEMS
A$ million
Government stimulus benefits
Contingent retention arrangements
Big Fish onerous lease
Kater and Thimmegowda cases - legal settlement
Recognition of deferred tax asset
Net (loss)/gain from significant items
Significant Items included in the Group’s reported result after tax:
Government stimulus benefits: The result includes an adjustment
of $13.3 million relating to COVID-19 related government stimulus
benefits received. The JobKeeper employment subsidy in Australia
contributed $11 million post-tax.
Contingent retention arrangements: The result includes an expense
of $36 million relating to the contingent retention arrangements for
the acquisition of Plarium.
Big Fish onerous lease: The result includes an expense of
$38.7 million relating to an onerous lease for the Big Fish Seattle
premises, which was committed to by previous ownership.
2020
1,377.7
119.5
1,497.2
(1,020.6)
476.6
2019
698.8
141.6
840.4
54.0
894.4
30 Sep 2020
Before tax
After tax
19.0
(44.4)
(44.2)
(46.5)
—
(116.1)
13.3
(36.0)
(38.7)
(40.7)
1,122.7
1,020.6
Kater and Thimmegowda cases – legal settlement: The result
includes an expense of $40.7 million relating to the settlement
agreed in the period for Big Fish.
Recognition of deferred tax asset: The result includes an
adjustment of over $1.1 billion for the recognition of a deferred
tax asset relating to the Group structural changes announced in
November 2019.
17
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
BALANCE SHEET
A$ million
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)
30 Sep 2020
31 Mar 2020
30 Sep 2019
1,675.7
353.2
3,623.8
2,224.2
7,876.9
7.0
3,236.2
1,453.7
3,180.0
7,876.9
38.6
0.9
1,567.5
871.7
458.8
4,286.5
2,589.3
8,206.3
—
3,122.2
1,573.0
3,511.1
8,206.3
275.3
6.1
2,250.5
568.6
431.2
4,008.3
1,328.9
6,337.0
—
2,792.3
1,401.1
2,143.6
6,337.0
248.0
5.6
2,223.7
Variance
%
194.7
(18.1)
(9.6)
67.4
24.3
n/a
15.9
3.8
48.3
24.3
(84.4)
(4.7) pts
29.5
Significant balance sheet movements from
30 September 2019 are set out below:
Cash and cash equivalents: The increase in cash reflects the
underlying cash flow generation capability of the business and the
new US$500 million incremental Term Loan B facility drawn down
in May 2020.
Net working capital: The decrease reflects the lower trading of the
Gaming business in the second half due to the impacts of COVID-19;
together with increased debtor and inventory provisions, and the
higher relative share of revenue from the Digital business which
requires minimal working capital.
Other assets: The increase is due to the recognition of a deferred
tax asset of approximately $1.1 billion following changes to the
Group structure, and right of use assets from the adoption of a new
lease accounting standard in the current period of approximately
$178 million, partly offset by a reduction in trade receivables.
Non-current borrowings: The increase is due to the draw down
on a new US$500 million incremental Term Loan B facility on
21 May 2020, partly offset by a repayment of US$50 million of
the existing Term Loan B facility in the first half.
Property, plant and equipment: The decrease largely reflects the
lower EGM capex on the Gaming Operations impacted by COVID-19
in the second half of the year.
Total equity: The change in total equity reflects the result for the
period and changes in reserves due to currency movements, net of
dividends paid during the period.
18 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
STATEMENT OF CASH FLOWS
The movement in net debt (debt less cash), after eliminating foreign exchange movements is set out below:
Operating cash flow
A$ million
EBITDA
Change in net working capital
Subtotal
Interest and tax
Significant items (cash and non-cash)
Other cash and non-cash movements
Operating cash flow
Operating cash flow less capex
Consolidated cash flow
A$ million
Operating cash flow
Capex
Acquisitions and divestments
Investing cash flow
Proceeds from borrowings
Repayments of borrowings
Lease principal payments
Dividends and share payments
Financing cash flow
Net increase in cash
2020
1,089.4
209.4
1,298.8
(193.5)
(114.0)
31.6
1,022.9
775.1
2020
1,022.9
(247.8)
—
(247.8)
869.3
(217.7)
(36.6)
(257.5)
357.5
1,132.6
2019
1,596.8
(186.0)
1,410.8
(349.7)
(63.5)
87.9
1,085.5
768.9
2019
1,085.5
(316.6)
(20.8)
(337.4)
—
(292.4)
(0.7)
(337.2)
(630.3)
117.8
Change
%
(31.8)
n/a
(7.9)
44.7
(79.5)
(64.1)
(5.8)
0.8
Change
%
(5.8)
21.7
100.0
26.6
n/a
25.5
(5,128.6)
23.6
n/a
861.5
Operating cash flow decreased 5.8% to $1,023 million compared to
the prior corresponding period, reflecting strong underlying cash flow
capabilities across the businesses in a challenging environment.
Capital expenditure relates primarily to investment in hardware
to support continued growth in the Americas Gaming Operations
installed base.
Interest and tax expense decreased 44.7% with a refund of 2019
Australian tax instalments received, together with a reduction in
Australia’s tax instalment rate, driven by business performance.
Significant items in the period include provisions relating to
contingent retention arrangements for Plarium, the Big Fish
legal settlement and an onerous lease expense, partly offset by
government stimulus benefits received, mainly in Australia and
North America due to COVID-19.
Cash flow in the statutory format is set out in the financial
statements.
19
OPERATING AND FINANCIAL REVIEW
Review of Operations — Group Performance continued
FUNDING AND LIQUIDITY
The Group had committed loan facilities of $3.6 billion at
30 September 2020, comprising Term Loan B (TLB) facilities of
US$2.35 billion as well as a $286 million revolving credit facility.
CREDIT RATINGS
The Group maintains credit ratings from both Moody’s Investor
Services and Standard & Poor’s to support its Term Loan B facility
arrangements.
To help manage any potential financial impacts of COVID-19,
Aristocrat successfully negotiated the following transactions to
bolster overall liquidity and maintain financial flexibility:
As at 30 September 2020, Aristocrat holds credit ratings of BB+
from Standard & Poor’s and Ba1 from Moody’s. These ratings were
affirmed by both agencies during the reporting period.
DIVIDENDS
As communicated on 27 April 2020, the Directors cancelled the
FY2020 interim dividend to preserve liquidity due to the impacts
of COVID-19.
The Directors have authorised a final fully franked dividend of
10.0 cents per share (A$63.9 million), in respect to the period ended
30 September 2020.
The dividend is expected to be declared and paid on 18 December 2020
to shareholders on the register at 5.00pm on 2 December 2020.
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 2020, 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 $103.5 million, while
increasing normalised profit after tax and before amortisation of
acquired intangibles by $17.0 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
2020, 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 $28.1 million (compared
to a credit balance of $139.2 million as at 30 September 2019).
Based on the Group’s typical historical mix of profitability, the major
exposure to translational foreign exchange results from the Group’s
US dollar profits. A US dollar 1 cent change in the US$: A$ exchange
rate resulted in an estimated annualised $9 million translational
impact on the Group’s annual profit after tax and before amortisation
of acquired intangibles based on the last twelve-month period. This
impact will vary as the magnitude and mix of overseas profits change.
Foreign exchange rates compared with prior corresponding periods
for key currencies are as follows:
A$:
USD
NZD
EUR
GBP
ZAR
ARS
30 Sep
2020
31 Mar
2020
30 Sep
2019
2020
Average ¹
2019
Average ¹
0.7163
1.0837
0.6113
0.5550
0.6163
1.0257
0.5580
0.4967
0.6751
1.0780
0.6819
1.0614
0.6193
0.6045
0.5492
0.5308
0.7018
1.0573
0.6245
0.5519
11.9900
11.0491
10.2293
11.1411
10.0755
54.5603
39.6794
38.8778
45.2258
30.5052
1. Average of monthly exchange rates only. No weighting applied.
– Increased the Group’s revolving credit facility limit from $150 million
to $286 million on 24 April 2020, an increase of $136 million.
This facility remains primarily undrawn at 30 September 2020.
– Issuance of a new US$500 million incremental Term Loan B
facility on 21 May 2020. This facility is fully drawn and adds to
the Group’s overall liquidity.
The Group repaid US$51.2 million of Term Loan B debt during the
period, including a voluntary US$50 million repaid in November 2019.
At 30 September 2020, Aristocrat had total liquidity of just under
$2 billion, comprised of cash and $277 million of the available
revolving credit facility, net of $9 million supporting letters of credit.
Accordingly, the Group’s balance sheet and overall liquidity remains
strong and positions the business with full optionality for the future.
The Group’s facilities are summarised as follows:
Facility
Drawn as at
30 Sep 2020
Limit
Term Loan B facility
US$2,348.8m US$2,348.8m
Revolving facility
Overdraft facilities
A$0.0m
A$0.0m
A$286.0m
A$7.8m Annual Review
Maturity
date
Oct 2024
Jul 2024
The Group’s interest and debt coverage ratios are as follows (x):
15x
10x
5x
0x
0
.
3
1
7
.
2
1
8
.
8
9
.
2
7
.
1
9
.
1
EBITDA1/
interest expense 2 (x)
Gross debt/EBITDA1 (x)
4
.
1
4
.
1
4
.
1
Net debt(cash)/
EBITDA1 (x)
30 Sep 2019
31 Mar 2020
30 Sep 2020
1. EBITDA refers to Consolidated EBITDA for the Group as defined in
Aristocrat’s Syndicated Facility Agreement (also referred to as Bank EBITDA).
2. Interest expense shown above includes ongoing finance fees relating to
bank debt facility arrangements, such as line fees.
The Group’s leverage (net debt / EBITDA) remained steady over
the reporting period at 1.4x at 30 September 2020.
20 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Business Unit review
Segment profit represents earnings before interest and tax, and before
significant items detailed on page 17, charges for D&D expenditure,
amortisation of acquired intangibles and corporate costs. The total
amount of these items is disclosed in the Group’s statement of profit
or loss. Constant currency amounts refer to 2020 results restated using
exchange rates applying in 2019.
The Class III Premium Gaming Operations installed base grew 5.9%
fuelled by the combination of market-leading cabinets, with strong
growth in MarsXTM, and game content, with Dragon LinkTM still the
#1 premium game family, and Buffalo DiamondTM and Dollar StormTM
scaling during the period. This momentum was further supported by
the implementation of the Aristocrat Assist customer support program.
1. ARISTOCRAT GAMING
AMERICAS
Summary Profit or Loss
US$ million
Revenue
Profit
Margin
2020
934.7
356.1
38.1%
2019
1,363.1
750.6
55.1%
Variance
%
(31.4)
(52.6)
(17.0) pts
In local currency, Americas profit decreased by 52.6% to US$356.1 million
driven by the impact of COVID-19 related venue shutdowns and social
distancing protocols implemented across the region.
Margin declined 17.0 ppts to 38.1% due to reduced revenue driven
by COVID-19, with minimal revenue for several months from the
highest margin segments of Gaming Operations. This was coupled
with the implementation of the Aristocrat Assist program to
support key customers, product mix and an increase in bad debt and
inventory provisioning.
Pre-pandemic, the Americas business was on track to deliver
profit growth compared to the prior corresponding period, with
strong performance across Class III Premium Gaming Operations,
Class II Gaming Operations and Outright Sales. This underlying
competitiveness was reflected in the delivery of further share and
average fee per day gains over the reporting period.
North America Gaming Operations units and average US$ fee/day
+3%UNIT
GROWTH
48,218
49,668
100
44,378
4
6
2
,
4
2
0
2
2
,
5
2
2
0
3
,
5
2
$49.79
$50.46
$51.01
4
1
1
,
0
2
8
9
9
,
2
2
$35.55
6
6
3
,
4
2
U
S
$
P
E
R
D
A
Y
1
80
60
40
20
0
50,000
40,000
30,000
I
S
T
N
U
20,000
10,000
0
2018 1
Class III premium units
Gaming operations US$/day
2019
2020 2
Class II units
Gaming operations US$/day unadjusted
1. Comparative period has been restated to reflect the impact of AASB 15 effective
from 1 October 2018.
2. FY20 fee per day has been adjusted to exclude the number of days machines
were not operating in the period due to COVID-19 social distancing restrictions or
venue closures and therefore reflects the underlying performance of the business.
Unadjusted FPD for FY20 was US$35.55.
In addition, Lightning LinkTM and Buffalo GrandTM continued to be a
mainstay on gaming floors and contributed to Aristocrat’s installed
base stability during COVID-19.
Class II Gaming Operations installed base grew 0.3% supported by
continued strength of the mechanical installed base, coupled with
increased game performance on the OvationTM platform supported by
key games including Hunt for Neptune’s GoldTM, Buffalo XtremeTM and
Welcome to Fantastic JackpotsTM.
On a combined and adjusted basis, the average Class II and Class III
fee per day increased 1.1% to US$51.01 (unadjusted average FPD of
US$35.55), due to sustained portfolio strength and resilient demand.
North America Outright Sales units and average US$ price/unit
20,000
16,000
12,000
I
S
T
N
U
8,000
4,000
0
24,000
20,000
$18,682
$18,097
$17,190
16,000
8
1
3
,
3
1
2
6
2
,
7
1
9
8
5
,
9
12,000
7
4
1
,
3
4
6
4
,
2
8,000
3
1
6
1,
4,000
U
S
$
P
E
R
U
N
T
I
2018
2019
2020
Platforms
Conversions
Average US$ price/platform unit
Outright Sales revenue decreased by 46% compared to the prior
corresponding period, reflecting COVID-19 impacts. The prior
corresponding period also benefited from several new products
launched into adjacent markets including Washington CDS and VLT,
with lower demand in the reporting period reflecting COVID-19 impacts.
MarsX DualTM continued to be an outstanding performer, driving over
40% of cabinet sales supported by Buffalo Gold RevolutionTM, Fu Dai
Lian LianTM and Mighty Cash UltraTM. In addition, Aristocrat released the
years most anticipated title, Buffalo ChiefTM, on the Helix XTTM cabinet.
Aristocrat continued its strategic expansion into adjacent markets
during the period, including VLT Canada, VLT Illinois, VLT Oregon
(trial), Washington CDS and the Multigame and Poker segments.
21
6,000
5,000
4,000
3,000
I
S
T
N
U
2,000
1,000
0
OPERATING AND FINANCIAL REVIEW
Review of Operations — Business Unit review continued
Average Sales Price (ASP) remained strong, however slightly lower
than the prior corresponding period due to product mix in adjacent
markets, particularly the Bartop and VLT segments. Video ASP was
roughly in line with prior period driven by the strong performance of
the MarsXTM cabinet.
Latin America Outright Sales units, average US$ price/unit
and recurring revenue installed base
ANZ Outright Sales units and average A$ price/unit
16,000
12,000
18,000
$20,487
$21,252
$20,786
$15,081
$14,870
$15,362
15,000
12,000
4
4
6
,
4
6
3
0
,
5
9,000
8
7
6
,
4
8,000
I
S
T
N
U
4,000
0
U
S
$
P
E
R
U
N
T
I
9
7
0
,
4
1
5
2
4
,
3
1
8
1
8
,
7
4
9
2
,
6
5
2
2
,
4
26,000
22,000
18,000
14,000
A
$
P
E
R
U
N
T
I
9
3
7
,
2
10,000
6
3
0
,
2
2
1
5
,
1
2018
2019
Platforms
Recurring revenue installed base
Average US$ price/platform unit
6,000
3,000
0
6
8
4
2020
2018
2019
2020
Platforms
Conversions
Average A$ price/platform unit
The average cabinet selling price decreased slightly from the prior
corresponding period driven by increased maturity of the product
portfolio and promotional activity through the Aristocrat Assist
program to aid in customer recovery.
The ANZ business sustained its market-leading ship share, reflecting
the ongoing success of our product portfolio and customer support
provided through the Aristocrat Assist program.
Latin America revenue decreased 63% compared to the prior
corresponding period primarily driven by COVID-19 related customer
venue closures combined with economic and political impacts across
the region.
AUSTRALIA AND NEW ZEALAND
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Constant
currency
2020
280.5
58.8
21.0%
2019
456.2
213.6
46.8%
Variance
%
(38.5)
(72.5)
(25.8) pts
ANZ revenue decreased by 38.5% to $280.5 million in constant
currency compared to the prior corresponding period, while overall
profit decreased by 72.5% to $58.8 million. This result reflected
challenging market conditions, which included the impact of droughts,
bushfires and COVID-19 on customers and the broader economy.
Margin declined 25.8 ppts to 21.0% driven by lower revenue, a change
in product mix, a weaker Australian dollar impacting material costs,
and an increase in bad debt and inventory provisioning in response
to COVID-19.
INTERNATIONAL CLASS III
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Class III Platforms
Constant
currency
2020
126.3
32.3
25.6%
3,009
2019
204.5
94.3
46.1%
5,664
Variance
%
(38.2)
(65.7)
(20.5) pts
(46.9)
International Class III revenue and profit decreased 38.2% and 65.7%
respectively to $126.3 million and $32.3 million compared to the prior
corresponding period, due to COVID-19 related venue closures across
all regions and an increase in bad debt and inventory provisioning.
In Asia, Macau closed for two weeks in February, however, it has since
been significantly impacted by COVID-19 related travel restrictions.
In other Asia markets, most venues re-opened between May and
August, with social distancing restrictions in place.
In EMEA, most markets moved from full to partial lockdowns during
the second half of the year.
22 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Review of Operations — Business Unit review continued
2. ARISTOCRAT DIGITAL
Summary Profit or Loss
US$ million
Bookings
Revenue
Profit
Margin
2020
1,612.1
1,609.1
494.9
30.8%
2019
1,227.8
1,252.2
370.2
29.6%
Variance
%
31.3
28.5
33.7
1.2 pts
Digital bookings grew 31.3% compared to the prior corresponding
period, driven by:
– The successful rebuilding of performance in Product Madness and
continued investment in Live Ops, features and new slot content,
combined with ongoing investment in diversification across the
Digital portfolio;
– An increase in User Acquisition (UA) investment supporting the profitable
growth of RAID: Shadow LegendsTM, the scaling of Social Casino games,
especially Lightning LinkTM and Cashman CasinoTM and the successful
launch of EverMergeTM in the growing casual merge genre; and
– COVID-19 social restrictions contributing to an uplift in performance
as players sought more in-home entertainment options.
Digital profit increased 33.7% to US$495 million with an improved
segment margin compared to the prior year. UA investment
represented 28% of Digital revenue, an increase of 1.7 percentage
points compared to the prior corresponding period, demonstrating
highly efficient and effective UA allocation. A strategic rebasing of the
Big Fish business was completed in the second half. This positions the
business for sustainable, profitable growth and facilitates increased
investment behind growing Big Fish’s pipeline of quality games.
Bookings 1 by Genre
2,000
1,500
M
$
S
U
S
G
N
K
O
O
B
I
1,000
1,013.9
2
.
0
3
2
9
.
4
1
2
8
.
8
6
5
500
0
+31%BOOKINGS
GROWTH
1,612.1
4
.
9
3
5
6
.
7
5
2
.1
5
1
8
1,227.8
5
.
0
0
3
3
.
9
8
2
0
.
8
3
6
2018
2019
2020
Social Casino
Social Casual
Strategy & RPG
Social Casino
The Social Casino segment contributed US$815 million in bookings in the
period, an increase of 28% on the prior corresponding period, driven mainly
by continued strong performance of Lightning LinkTM and Cashman CasinoTM;
and moderate growth in Big Fish CasinoTM and Jackpot Magic SlotsTM.
Performance benefited from the tailwind of the COVID-19 pandemic,
along with higher UA investment, and investments in Live Ops,
features and new slot content.
Strategy and RPG
The Strategy and Role-Playing Games (RPG) segments contributed
US$539 million in bookings in the period, an increase of 80% on
the prior corresponding period, driven by significant growth of
RAID: Shadow LegendsTM.
Social Casual
The Social Casual segment delivered US$258 million in bookings in the
period, a decrease of 11% on the prior corresponding period, with newly
launched titles Undersea Solitaire TripeaksTM and EverMergeTM enhancing top
line performance and legacy titles continuing to contribute to profitability.
The business continued to focus on Daily Active User (DAU) quality.
The Aristocrat Digital business took further strides forward during
the period, as it continues to grow in scale and sophistication, with
targeted investment in leadership, creativity and capability. The
business is focused on expanding its product pipeline, portfolio quality
and diversity, while leveraging insights and best practices across core
functions such as insights, data, marketing and market intelligence.
Daily Active Users (DAU) and Average US$ Bookings per DAU (ABPDAU)
1
.
8
5
.
7
+44%ABPDAU
GROWTH
7
.
6
9
5
.
0
0
4
.
0
1
4
.
0
DAU period end (million)
ABPDAU full year (US$)
2018
2019
2020
DAU decreased to 6.7 million in the period, driven by our focus on
DAU quality across the Digital portfolio.
ABPDAU grew 44% or US$0.18 compared to the prior corresponding
period, driven by the continued focus on player engagement,
investment in the portfolio, the substantial growth of RAID: Shadow
LegendsTM and tailwinds associated with COVID-19 social restrictions.
1. Bookings are an operational metric reflecting the amount of virtual currency,
virtual goods and premium games the consumer has purchased. Reported revenue
comprises bookings adjusted for deferred revenue.
Reconciliation of Revenue to Bookings (US$ millions)
US$ million
2020
Revenue
Deferred revenue
Bookings
1,609.1
3.0
1,612.1
2019
1,252.2
(24.4)
1,227.8
23
OPERATING AND FINANCIAL REVIEW
Principal Risks
MANAGING RISK IS ESSENTIAL TO THE CONTINUED EFFICIENCY AND EFFECTIVENESS OF OUR BUSINESS
Aristocrat recognises the need to integrate risk management into its strategic and operational planning and decision making. The identification
and management of risks that could impact Aristocrat’s strategic, operational, and financial objectives is essential to good corporate
governance, and the protection of long-term shareholder value.
We use risk management at all levels in the organisation to safeguard against potential threats, improve our preparedness to respond to crises
and emerging risks, and provide greater surety as we pursue opportunities.
RISK MANAGEMENT FRAMEWORK
The Group’s Enterprise Risk Management (ERM) Framework (the Framework) is pivotal to our risk management program and approach. The
Framework supports the timely identification, evaluation, reporting and treatment of material risks, so that risks remain within acceptable
thresholds as set by the Board of Directors. It is also designed to highlight emerging risks.
The Framework is underpinned by Aristocrat’s Global Risk Management Policy (the Policy). The Policy establishes the Group’s commitment
to risk management and makes clear that everyone in the Group has a role to play in risk management. The Framework also includes Board
approved Risk Appetite Statements, which determine the level of risk the Group is willing to accept in the execution of its strategy. The
Framework aligns with the International Risk Management Standard ISO 31000, and encompasses the steps as illustrated in Figure 1.
Figure 1: Enterprise Risk Management Process
Record, Report and
Communicate
Risk Appetite
Establish
risk tolerance &
boundaries
Discover
Discover what
could happen in
the future
Understand
Understand
current actions
& prioritise
Act
Make decisions
& act
Manage
Manage risk until
aligned with risk
tolerance
Internal Audit
Assess
& validate
Monitor and Review
The Framework facilitates the management of risk at both an enterprise and business unit / functional level. This ensures a ‘top down’ and
‘bottom up’ approach to risk management. It addresses both financial and non-financial risk (legal and regulatory, reputation, environmental,
people, health and safety, operational, information security and product and technology), with consideration of internal and external factors.
Figure 2 illustrates our ERM coverage.
Figure 2: Risk Identification, Review and Assessment Coverage
Enterprise &
Business Unit Level
Financial &
Non-Financial
Short &
Long Term
Across our global
Gaming, Digital
& Corporate
functions
Internal & External
inputs
Current &
Emerging
The Framework is overseen by our Board of Directors. It is actively managed by our Chief Executive Officer and Executive Steering Committee
and maintained by Group Risk and Audit. The Framework is regularly reviewed and refreshed, in line with the ASX Corporate Governance
Principles and Recommendations.
24 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Principal Risks continued
PRINCIPAL RISKS
While Aristocrat has a strong track record of managing multiple and complex risks, some inherent risks remain, including a number not directly
within the Group’s control.
This year the impacts of COVID-19 on our industry and business have been strongly felt, and we have faced a raft of new operating challenges.
Aristocrat has responded to these by remaining agile, flexing the way we operate and making swift and effective decisions. These decisions have
been risk based, and informed by our Enterprise Risk Profile, that has been regularly reviewed, updated and monitored by our Executive Steering
Committee and the Board of Directors.
Principal risks currently identified as relevant to Aristocrat (in no particular order) are set out below.
BUSINESS RESILIENCE
Responding in the Face of a Pandemic or Unplanned Operational Incident
Risk Description
Failure to respond to pandemics or operational incidents within the business which impact employee health and well-being, or the ability to
deliver upon our commercial objectives, resulting in lost revenue and reputational impacts.
FY2020 Commentary
COVID-19 brought unprecedented awareness to this risk in FY2020.
While we are managing through the current crisis effectively, future
waves of COVID-19, the outbreak of another pandemic, or other
unplanned operational incidents present a risk to Aristocrat.
Management and Mitigation
– Business Resilience Framework including Business Continuity,
Crisis Management and Disaster Recovery Plans and
dedicated teams
– Localised decision-making, with an active well-being focus and
monitoring of evolving government guidelines and requirements
Maintaining and Growing Aristocrat Gaming Customer Market Share
CUSTOMER
Risk Description
Aristocrat’s strategy to support customers and grow share in Aristocrat Gaming markets coming out of the COVID-19 crisis is not effective, or is
not effectively implemented, resulting in the weakening of operator relationships, deteriorating portfolio performance in Gaming, and a failure to
grow share.
FY2020 Commentary
COVID-19 has led to Aristocrat Gaming customer venue closures
and reductions in customer OPEX/CAPEX. Aristocrat implemented
a customer-centric response, protecting our investment in product,
people, and customer service, which positions us well. However,
the market’s COVID-19 recovery is unpredictable, and we expect
competition will remain fierce.
Management and Mitigation
– Close monitoring of three-year plan and achievement of strategic goals
– Strong governance and approvals processes
– Continued investment in differentiators, including market-leading
product portfolios, tailored to customer needs
– Voice of the Customer program and strong focus on
customer experience
PEOPLE
Attraction and Retention of Talent
Risk Description
Ineffective recruitment, retention and engagement of talent impacting the delivery of growth strategy.
FY2020 Commentary
Aristocrat has continued to invest strongly in the development
and retention of high performing employees, including through
the COVID-19 pandemic. We have continued to attract world-class
talent across the business, including in Digital, D&D, commercial
and other core skillsets in 2020.
However, we recognise that there is heightened competition for
great talent globally, accelerated by COVID-19 impacts.
Management and Mitigation
– Refreshed talent management and competency framework
– Continuous focus on Company culture and improvement of
Employee Value Proposition including regular engagement and
pulse surveys
– Review of incentive and rewards programs
– Enterprise leadership development programs
– Organisational focus on well-being (See below)
25
OPERATING AND FINANCIAL REVIEW
Principal Risks continued
HEALTH AND SAFETY
Maintaining the Health and Well-being of Our People
Risk Description
Failure to properly protect the physical and mental well-being of our workforce resulting in harm to our people.
FY2020 Commentary
The health and well-being of our people has always been paramount.
However, COVID-19 has heightened both physical and mental health
risks, with mental well-being a particular concern as a result of
lockdowns and social distancing.
Aristocrat has completed a refresh of our Health and Safety (H&S)
Framework and systems, implemented regular employee pulse
checks, rolled out a comprehensive well-being program and developed
Return to Workplace protocols that are continuously reviewed.
Management and Mitigation
– Group-wide H&S Framework including policies, procedures, and
risk management program
– Regular pulse surveys driving improvements in well-being offer
– Rigorous COVID-19 H&S requirements including mandatory PPE,
temperature checks, and compliance checks
– Broad reaching well-being initiative including new benefits, flexible
work options and increased leadership communication
CYBER SECURITY / DATA PRIVACY
Securing and Controlling Information Assets
Risk Description
Uncontrolled access to information assets resulting in business disruption, financial loss and loss of trust/reputation with employees,
customers and shareholders, or breach of data privacy and retention regulations resulting in fine, prosecution and impact to reputation.
FY2020 Commentary
Aristocrat has continued to invest in and mature its cyber security
and data privacy programs, with strong progress achieved to
strengthen processes, awareness and tools to protect against cyber-
attacks and data breaches. COVID-19 has heightened the general risk
of cyberattack, with a transition to Working from Home and increased
opportunism from ‘bad actors’. The business has put in place stricter
controls to manage these risks.
Management and Mitigation
– Implementation of a global information security policy
– Compulsory information security and data privacy training program
– Robust cyber maturity roadmap
– Enhancement of data management practices, procedures, and
expertise, including detailed Data Privacy Roadmap
– Maintenance of a business resilience program
SOCIAL RESPONSIBILITY
Maintaining our Social License to Operate
Risk Description
Community concerns around social games / gambling lead to negative legal or regulatory changes that cause a significant loss of addressable
market, loss of revenue and growth opportunities, talent loss and/or reputational damage.
FY2020 Commentary
Aristocrat seeks to take a leadership position in promoting
responsible gameplay and sustainability in all we do. In 2020,
we made significant strides in further embedding our commitments,
particularly across our Gaming and Social Casino businesses.
Our Group sustainability disclosures continue to expand and are
focused on material business issues.
Management and Mitigation
– Dedicated Responsible Gameplay and Corporate Social
Responsibility team and strategy established, with Board oversight
– CEO and executives have OKRs addressing sustainability and
Responsible Gameplay
– Group-wide Responsible Gameplay policy approved and embedded
in product design, marketing, and other core functions
– Compulsory Responsible Gameplay training rolled out across
global organisation
26 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Principal Risks continued
ECONOMIC AND INDUSTRY CONDITIONS
Responding to Macro and Gaming Industry Conditions
Risk Description
A decline in economic/gaming industry conditions could adversely affect the ability of our Aristocrat Gaming customers to finance their
operations. A decline could also impact the disposable incomes of players and, therefore, spending on entertainment activities. This could
decrease demand for our products and services impacting Group revenues.
FY2020 Commentary
Macroeconomic and Gaming industry conditions have been severely
impacted by COVID-19. Closures and patronage restrictions across
pubs, clubs, and casinos, has impacted customer and player spend
patterns in Gaming. Conditions have rebounded faster than forecast,
however we cannot predict long term impacts. We continue to
monitor and be prepared to respond quickly to developments.
Management and Mitigation
– Monitoring of economic and gaming industry conditions
– Ongoing diversification and expansion of revenue base, driving of
further growth in recurring revenues, in line with strategy
GEOPOLITICAL
Operating in Unstable Geopolitical Environments
Risk Description
Unstable geopolitical environment impacts employee engagement, health and well-being, innovation pipeline and revenue.
FY2020 Commentary
2020 has been an extremely turbulent year. Geopolitical tensions,
social upheaval and civil unrest have all escalated. Tensions have
been exacerbated by COVID-19 and severe natural disasters,
amongst other factors.
Management and Mitigation
– Robust assessment of geopolitical conditions prior to new market entry
– Monitoring and evaluation of international issues, economic and
political indicators, and legislation as relevant to our operations
– Maintenance of strong relationships with key stakeholders in
affected markets
– Enhancement of our business continuity, resilience and
redundancy measures
– Diversification of studios / locations
DISRUPTION
Responding to Increasing Competition including Disruption
Risk Description
Failure to adequately respond to disruption and rising competition (consolidation and new market participants) through innovation, creation of
new content and robust market strategies, in the Aristocrat Gaming and Digital businesses, could impact our market share, and financial and
strategic objectives.
FY2020 Commentary
COVID-19 has accelerated change and will create disruption and
opportunities. This includes the uptake by consumers of online
entertainment options, including mobile games. The changes will
produce competitive responses that have the potential to reshape
our operating environments.
Management and Mitigation
– Continuous monitoring and re-evaluation of Company strategy to
account for changing trends, consumer behaviours, technology
changes and competitor initiatives
– Expansion and diversification of products, services, and markets,
in line with strategy
– Design and Development investment to address disruption and
rigorous focus on returns
– Active approach to considering inorganic growth opportunities
and strategic portfolio moves
27
OPERATING AND FINANCIAL REVIEW
Principal Risks continued
Risk Description
Aristocrat Gaming
GAMING REGULATIONS
Changing Government Gaming Regulations
A change in government or regulatory policies or their interpretation or enforcement may impact our operations or our customers’ operations.
Difficulties or delays in obtaining or maintaining required licences or approvals could negatively impact our business as well.
Aristocrat Digital
Social games are generally not subject to product-level regulation, beyond consumer laws, platform requirements and self-regulatory standards.
However, the industry is relatively new and stakeholder expectations are evolving. New regulations have the capacity to impact our operations.
FY2020 Commentary
COVID-19 has amplified scrutiny of consumer uptake of both digital
games and gambling products. Across our regulated operations,
Aristocrat takes a scrupulous approach to compliance. More
generally, we continuously monitor stakeholder expectations and
seek to improve our own standards and processes to remain at
best practice, or better. We contribute actively to consideration of
any reform measures, to ensure changes are effective, practical
and affordable.
Management and Mitigation
– Comprehensive regulatory compliance function and governance
framework across all regulated business and functions
– Continuous dialogue with gaming regulators and strong
commitment to transparency and compliance
– Robust government relations, responsible gameplay, and
sustainability functions
– In digital games, implementation of best practice (or better)
standards in responsible gameplay
– Active engagement with industry associations and other
stakeholders, active monitoring of expectations and potential
reform measures
DISTRIBUTION PLATFORMS
Overreliance on Third Party Distribution Platforms
Risk Description
If digital platform partners enforce unfavourable terms of use, including increased fees or shutdown of our applications, this could result
in higher operating costs, lower margins, and restricted access to customers/players.
FY2020 Commentary
Third party platforms including Google Play and the Apple App
Store continue to be key distribution channels for our Digital content.
Aristocrat strives to build constructive commercial relationships with
platform providers, whilst continuing to invest to grow our business
and diversify channels by which our content can reach players.
Management and Mitigation
– Monitoring of latest developments, proposals and rules enacted
by platform partners
– Ongoing and proactive dialogue with platform partners
28 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
OPERATING AND FINANCIAL REVIEW
Principal Risks continued
INTELLECTUAL PROPERTY
Protecting our Intellectual Property
Risk Description
Theft of, or inability to protect our intellectual property (IP) could result in a loss of competitive advantage due to loss of exclusivity,
suppressed innovation, and/or reputation and brand damage. This could impact our revenues.
FY2020 Commentary
IP is one of Aristocrat’s most critical assets. Our product continues
to be best-in-class and we maintain a rigorous approach to
protecting our IP and the resulting competitive advantage.
Management and Mitigation
– Formalised processes for registering trademarks, copyrights,
and patents
– Investment in capability and engagement of internal/external
legal counsel to support IP management
– Third party contracts preclude improper use of Aristocrat IP
– Continued ‘zero tolerance’ approach to IP breaches, and
rigorous enforcement culture
– Government relations strategy includes active approach to
IP policy in key jurisdictions
BALANCE SHEET AND LIQUIDITY
Financial Strain Heightened by COVID-19
Risk Description
Failure to maintain a robust balance sheet to fund the ongoing operations and growth of the business.
FY2020 Commentary
FY2020 and the financial impacts of COVID-19 required us to
enhance liquidity and bolster our already strong balance sheet.
Aristocrat increased its debt facilities, positioning us well to
not only weather this economic / industry downturn but also to
attack opportunities.
Management and Mitigation
– Increased debt funding and maintenance of access to key
debt markets
– Monitoring target gearing levels and debt covenant and credit
rating metrics
– Robust fiscal management including cash preservation measures,
cash forecasting and cost efficiency review
29
REMUNERATION REPORT
People & Culture Committee Chair’s Letter
Dear Shareholder
On behalf of the Board, I am pleased to present our Remuneration Report for the financial year ended 30 September 2020.
COVID-19 AND OUR RESPONSE
FY2020 has been a challenging year for Aristocrat. We delivered strong performance pre-COVID, while also growing share in key Gaming
(Land-based) markets and segments and delivering outstanding growth in our Digital business over the full year. Despite this, our overall
financial performance was materially impacted by mandated venue closures and the implementation of social distancing measures that
have been in place in key markets globally since March 2020.
Our first priority throughout has been - and remains - ensuring the health and wellbeing of our people and their families, our customers,
suppliers and other stakeholders. Management acted quickly to support well over 90% of our global workforce to work from home, safely
and securely. Aristocrat entered the crisis in excellent financial shape, and the business took a number of early and prudent steps to further
enhance liquidity and minimise cash burn. We made the difficult decision to temporarily stand down a significant portion of our non-Digital
workforce earlier in the year, and removed a number of roles across our businesses. We also cut discretionary spend and quickly reprioritised
activity and investment.
As outlined further in the ‘Remuneration actions and outcomes for FY2020’ section below, Aristocrat’s Board and management team agreed
to a material reduction in remuneration from 1 May 2020 to 30 September 2020. A number of full-time roles were made part-time, and cuts
of 10 – 20% of base salary were applied to around 1,700 staff globally during 1 May 2020 to 30 September 2020.
A portion of the savings generated by the voluntary reduction in Board and senior management remuneration was set aside as a hardship
fund to assist employees struggling with the economic impacts of the pandemic – for example, due to having their work hours reduced, or
a spouse losing employment. Aristocrat also accessed $13.3 million (after tax) in COVID-19 related government stimulus benefits, mainly
JobKeeper employment subsidy in Australia, and other support where eligible in other jurisdictions. This assistance minimised the impact
of workforce planning initiatives on staff and helped us to bring back staff as quickly as possible.
In the context of having benefited from government support, and in order to further strengthen our liquidity and balance sheet position, the
Board decided to cancel the FY2020 interim dividend, noting that it has authorised a final fully franked dividend of 10.0 cents per share. Prior
to March, Group performance was in line with expectations and tracking positively. With excellent momentum in Digital and an improvement
in Gaming performance in the latter part of the year, the Group ultimately delivered results that came close to meeting at-risk compensation
targets. Despite this, management and the Board agreed that no Short-Term Incentives (STIs) would be awarded to Gaming, D&D and Group
employees in FY2020.
KEY HIGHLIGHTS FOR FY2020
As a Board, we would like to acknowledge the way our global employee group has responded to these unprecedented challenges,
guided by our values, and the leadership shown by senior management. The global nature of Aristocrat’s business and workforce, the need
to work across multiple time-zones and the complex and dynamic nature of the crisis placed particular strains on our leaders this year.
The Board is proud of their effort and impact, exemplified by the fact that Aristocrat took the opportunity presented by the crisis to improve,
energising our culture and offering more support, flexibility and recognition to our global team of over 6,000 Aristocrat people. Engagement
scores above both target and industry benchmarks were achieved through the period, with no loss of business momentum, despite the
disruptions and remote working arrangements.
While managing the immediate impacts of the pandemic during the year, Aristocrat has remained focused on longer term sustainability,
including:
– continuing to invest strongly in industry-leading talent and product portfolios, with market leading levels of investment in D&D as a
percentage of revenue (at 12%), while also driving investment in Digital games and User Acquisition. The business also continues to
commit capital to further growing our gaming operations footprint;
– continuing to invest in strategic capabilities, including customer experience, cyber security, data and transformation management
capabilities;
– strengthening our liquidity and balance sheet, with approximately $2 billion in available liquidity as at 30 September 2020. This positions
us well to not only weather economic and industry volatility and COVID-19 driven contractions, but to also take advantage of organic and
inorganic opportunities to accelerate our growth strategy.
The Board also notes that our share price, while initially down around 30% as a result of the pandemic, has shown significant resilience.
At the time of writing, our share price has recovered strongly to close to pre-COVID levels and the Board considers this to be a strong
endorsement from the market of the actions that have been taken to safeguard the Group, as well as recognition of Aristocrat’s strong
financial and operational fundamentals and strategy.
30 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
People & Culture Committee Chair’s Letter continued
REMUNERATION ACTIONS AND OUTCOMES FOR FY2020
As noted above, during FY2020, notwithstanding strong performance at Group level prior to the advent of the pandemic, the following
actions were taken and outcomes generated under our remuneration framework:
– our Managing Director and CEO volunteered a 30% reduction in base salary between 1 May and 30 September 2020;
– our senior executives volunteered a 20% reduction in base salary and our Non-Executive Directors volunteered a 20% reduction
in fees over the same period;
– management and the Board agreed no STIs would be awarded to senior executives in relation to FY2020;
– in line with good governance practices, the People and Culture Committee and Audit Committee met concurrently to consider if
there were risk based or other adjustments that may warrant consideration in the Board’s determination of remuneration outcomes.
The directors are pleased with management continuing to embed effective risk management throughout the organisation to support
achievement of business priorities and fulfill corporate governance objectives. Also noted is the organisation’s continued focus on
ESG and other sustainability initiatives; and
– LTIs vested at a relatively modest level, 68.74%, compared to historic vesting levels. This vesting outcome reflected our solid total
shareholder returns over the 3 year performance period of the LTI, which ranked at the 73rd percentile of the peer group and senior
executives achieving or exceeding against their individual performance based vesting conditions. The EPS performance condition did not
vest, notwithstanding being on track to vest prior to the impact of the pandemic. As part of testing against the EPS performance target,
the Board excluded the impact of gains associated with certain significant items.
LOOKING AHEAD – CHANGES FOR FY2021
Recognising that the senior executive leadership team is a skilled and successful group whose skills are in demand in global markets,
in December 2019 the Board commenced an objective wide-ranging review of Aristocrat’s remuneration framework to assess whether
it remains fit for purpose. This included benchmarking executive remuneration arrangements in the key global markets that Aristocrat
competes in for talent, which specifically involves the US technology sector. The review highlighted that our remuneration framework
had become significantly out of line with prevailing arrangements in Aristocrat’s key global markets, particularly in terms of STI and LTI
levels. This is largely a legacy of internal promotions and significant increases in complexity, scope and scale of our business, which has
consequently expanded the remits of key executives.
In addition, we have continued to see an intensifying war for talent over the past 12-18 months, with competitors (and the US market in
general) offering higher STI opportunities and LTI grants at a quantum of 2 to 3 times fixed remuneration, further reinforced by the fact that
in many instances these grants are unhurdled. Your Board’s view is that it is imperative for shareholders that Aristocrat secure and attract
the critical leadership it requires to fully execute its medium-term growth strategy. In the context of a competitive talent environment
where there is a “live” retention risk, the Board has taken a number of proactive steps. Specifically, the Board has reworked the at-risk ratios,
adjusted fixed remuneration where it is out of benchmark and provided special equity grants to address the near-term substantial gaps in
our offer. These special equity grants apply only to senior executives and not to the CEO and Managing Director. We have put robust strategic
hurdles against these special equity grants (which the Board will continually test) in order to ensure they are aligned with shareholder
interests and deliver sustainable benefits.
Special equity grants will be earned progressively over the next three years, subject to executives achieving performance-based hurdles
(including annual deliverables against our medium-term growth strategy). Outcomes against these hurdles will subsequently be reported
to shareholders. Equity will vest in three equal tranches following testing after the end of each applicable financial year, ensuring that the
incentive is appropriately structured to reward genuine performance and delivery of shareholder interests.
There will be no change in FY2021 to fees of Non-Executive Directors, which remain at the levels set in April 2018.
The Board believes that your company has a very strong senior management team that is well positioned to lead Aristocrat through the
challenges ahead, and we are focused on taking appropriate actions to retain and motivate that team.
We invite you to read the Remuneration Report and welcome your feedback.
KATHLEEN CONLON
People & Culture Committee Chair
31
REMUNERATION REPORT
Remuneration Report Overview
This Remuneration Report for the 12 months ended 30 September 2020 has been prepared in accordance with section 300A of the
Corporations Act, and has been audited as required by section 308(3C) of the Corporations Act. Terms used in this Remuneration Report are
defined in the Glossary on page 51.
LIST OF KMPS – FY2020
Table 1 below outlines the KMP and their movements during FY2020
KMP
Position
Location
Term as KMP
Non-Executive Directors
NG Chatfield
Chair; Director
KM Conlon
P Etienne
PJ Ramsey
AM Tansey
S Summers Couder
Director
Director
Lead US Director 1
Director
Director
Australia
Australia
Australia
Full financial year
Full financial year
Nominated on 1 October 2019
United States
Full financial year
Australia
Full financial year
United States
Full financial year
SW Morro
Lead US Director 1
United States
Retired on 20 February 2020
Executive KMP
T Croker
CEO and Managing Director
J Cameron-Doe
CFO
United States
Full financial year
United States
Full financial year
M Bowen
M Lang
CEO Global Land Based and Chief Transformation Officer
Australia
Full financial year
CEO Digital
Great Britain
Commenced on 18 November 2019
1. One Non-Executive Director acts as the Lead US Director. The Lead US Director assists the Board with review and oversight of Aristocrat’s North American business. S Morro
acted as Lead US Director until his retirement on 20 February 2020 and P Ramsey commenced acting as Lead US Director thereafter.
Aristocrat is one of a small group of ASX listed companies that derives the majority of its revenues from overseas markets (with 6% of revenue
derived from the Australian Land-based business this financial year) and is genuinely global in its structure and operations. Although Aristocrat
is listed on the Australian Securities Exchange, it has over 6,000 employees based globally across 84 countries and is licensed in more than
320 jurisdictions.
Aristocrat’s senior leadership is predominantly US based, and the business must increasingly attract and retain leaders in US and other
markets with technology and global management skillsets. US market practice (in particular) places a greater emphasis on at-risk opportunity,
and significant equity grants are more commonly used for talent attraction and retention (than in Australia).
The continued expansion of Aristocrat’s digital business, which now contributes over half of Group revenue, reinforces the need for Aristocrat’s
remuneration structures to evolve and take into account global pay philosophies, particularly those in the technology industry.
The Board therefore continues to review the structure of Aristocrat’s incentive schemes to ensure they are globally competitive and effective
in retaining, attracting and motivating the leadership and talent it needs to drive business strategy and financial performance in the interests
of shareholders, while continuing to reflect our ‘pay for performance’ philosophy.
The world map below displays the location of Aristocrat’s employees, with the size of each circle illustrating the relative number of employees
based in that country.
Canada
Great Britain
European Union
United States of America
Mexico
Israel
Argentina
32 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
Russia
Ukraine
India
Macau
Philipinnes
Singapore
Australia
New Zealand
REMUNERATION REPORT
Remuneration Report Overview continued
SENIOR EXECUTIVE REMUNERATION FRAMEWORK
OUR VALUES
IT’S ALL ABOUT THE PLAYER
TALENT UNLEASHED
COLLECTIVE BRILLIANCE
GOOD BUSINESS. GOOD CITIZEN
The following principles guide Aristocrat’s remuneration strategy and ‘pay for performance’ philosophy, which are designed to attract,
retain and motivate key talent.
OUR REMUNERATION PRINCIPLES
Alignment to shareholder interests and
sustainable shareholder returns
Encourage behaviours consistent with values
and deliver good customer outcomes
Reflect the
markets we
recruit from and
need to be
competitive in
Performance based – link rewards
to business results and strategy
Robust governance with focus
on risk management
Fixed
FIXED REMUNERATION
Base salary, superannuation
and other benefits
– 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
– Global geographic location
– Complex probity requirements
by regulators also considered
Provides competitive ongoing
remuneration in recognition of
day-to-day responsibilities and
accountabilities
SENIOR EXECUTIVE REMUNERATION STRUCTURE
STI
SHORT-TERM INCENTIVE (STI)
Reward for strong individual
and Group performance
during the Performance Period
VALUE DETERMINED BY
Achievement of both annual financial
and non-financial performance
hurdles at a:
– Group level
– Business unit level
– Individual level
AT RISK
LTI
LONG-TERM INCENTIVE (LTI)
Reward for sustainable longer-term
Group performance
– Relative TSR – 30% weighting
– Relevant EPS – 30% weighting
– Individual performance based
vesting condition – 40% weighting
HOW DOES IT LINK WITH STRATEGY & PERFORMANCE
– Supports annual delivery of key
strategic targets and to recognise
and reward individual performance
– Deferral into equity supports
sustained performance, retention
and more closely aligns the interests
of executives and shareholders
– Focuses on multi-year metrics that
support sustained shareholder
value creation
– Delivered in equity to align the
interests of executives and
shareholders
AT RISK
33
REMUNERATION REPORT
Remuneration Report Overview continued
EXECUTIVE REMUNERATION MIX
Total remuneration includes both a fixed component and an at-risk or performance-related component (comprising both short-term and
long-term incentives). The Board views the at risk component as an essential driver of a high performance culture and one that contributes
to achievement of superior shareholder returns.
The following illustration shows the remuneration mix for the Executive KMP in FY2020. 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.
While there was strong Group performance pre-COVID and outstanding growth in the digital business during the year, the CEO volunteered a
30% reduction in base salary and the other Executive KMPs volunteered a 20% reduction in base salary during 1 May 2020 to 30 September 2020.
The below reflects the remuneration mix for the Executive KMPs prior to the advent of the COVID-19 pandemic and the abovementioned
reduction in fixed remuneration.
CEO
At-risk: 77.8%
Fixed: 22.2%
LTI:
55.6%
Deferred STI:
11.1%
Cash STI:
11.1%
Fixed:
22.2%
Deferred equity: 66.7%
Cash: 33.3%
Other Executive KMP
At-risk: 74.4%
LTI:
50.3%
Deferred STI:
7.9%
Cash STI:
16.2%
Fixed: 25.6%
Fixed:
25.6%
Deferred equity: 58.2%
Cash: 41.8%
SENIOR EXECUTIVE REMUNERATION TIME HORIZON
The following diagram provides an illustrative indication of how remuneration is typically delivered to the Senior Executives. For FY2020,
notwithstanding strong performance at a Group level prior to the advent of the COVID-19 pandemic, no STI awards were awarded.
Fixed remuneration
STI cash component (50%)
STI deferred equity component (25%)
STI deferred equity component (25%)
LTI
Year 1
Year 2
Year 3
Year 4
Date granted
End of deferral/performance period
Date paid/eligible for vesting
34 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
How Variable Remuneration is Structured
SHORT TERM INCENTIVE (STI) – HOW DOES IT WORK?
Description
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.
The STI Plan is considered to be at-risk remuneration and is not a guaranteed part of Senior Executive remuneration.
Notwithstanding strong performance at Group level prior to the advent of the COVID-19 pandemic, the Business Score
Threshold was not met and Senior Executives received no STI award this Reporting Period.
STI opportunity
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. The Board determines the total STI pool to be distributed.
Senior Executives (other than the CEO) have a target STI of between 43% and 100% of fixed remuneration. The CEO
has a target STI of 100% of fixed remuneration. The maximum STI payout is capped at 200% of a participant’s target
STI opportunity.
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 using a formula which seeks to reward for
outperformance and conversely, will ensure appropriate treatment where the Business Score achieved is between
85% (Business Score Threshold) and 100%.
Setting stretch
financial
performance
conditions
The Board utilises the annual budget as the primary input to determine appropriate stretch financial targets. When
approving the budget, the Board reviews the core principles and assumptions underpinning the budget. In addition,
the Board also considers expected market growth at the time of setting targets with the expectation that management
will outperform expected market growth (if any) and, in the context of broadly flat markets and segments, that
management will deliver growth through the gain of market share.
Subsequent to the budget having been finalised, the Board determines the STI financial targets. In order to ensure
sufficient stretch is incorporated, consideration is given to both the quantifiable risks and opportunities that can
influence the Group’s financial performance. The Board considers significant items in the context of target setting.
Non-financial
performance
conditions
A ratings scale is used to assess individual performance. No payment is made for a Senior Executive who has not met
or exceeded a minimum individual performance rating.
Senior Executives are assessed on delivery against individual OKRs. Individual targets as set out in OKRs include
consideration as to role-related accountabilities and responsibilities in the context of business strategy and objectives,
as set out in Table 5.
Individuals have a clear line of sight to OKRs and are able to directly affect outcomes through their own actions.
Individuals are also assessed on behaviour metrics (the ‘how’) which contribute to that individual’s overall
performance rating.
How STI
outcome
is then
determined
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
Reasons for these
performance
conditions
The Board considers that a combination of individual and financial performance conditions is 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 the control of management.
35
REMUNERATION REPORT
How Variable Remuneration is Structured continued
SHORT TERM INCENTIVE (STI) – HOW DOES IT WORK? continued
Who assesses
performance?
NPATA and FCF Conversion results are calculated by Aristocrat as soon as practicable after the end of the
performance period. The calculations are considered by the Board to determine STI outcomes.
The Board assesses performance of the CEO and Managing Director against the performance conditions with the
benefit of recommendations from the People and Culture Committee.
The CEO and Managing Director assesses the other Executive KMP’s performance against the performance
conditions and makes recommendations to the People and Culture Committee which in turn advises the Board
in relation to the CEO and Managing Director’s recommendations and the review process.
In addition to developing and approving the OKRs of the CEO and Managing Director, the Board has oversight
and visibility over OKRs of direct reports of the CEO at both the time of setting and assessing performance against
OKRs.
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 People and Culture Committee and the Board.
The Board believes the abovementioned methods in assessing performance are an appropriate way to assess
the performance of the Company and the Executive KMP’s individual contribution, and to determine their
remuneration outcomes.
Deferral terms
If the STI outcome is between 50% and 100% of target STI, then half of the Senior Executive’s STI outcome is
delivered in cash and the remaining half is deferred in the form of an equity award of PSRs, with these PSRs vesting
as follows:
– 50% after 12 months;
– 50% after 24 months.
Any individual who is internally promoted to a Senior Executive role is subject to a deferral of 25% of his/her STI
outcome (as opposed to 50%) in his/her first year in the role. 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, with the exception of the continued employment
by the relevant Senior Executive as described below.
The number of PSRs is calculated using the volume-weighted average price over the five trading days immediately
prior to and including the last day of the performance period.
Eligibility 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 if the PSRs vest.
Cessation of
employment
If the Senior Executive has ceased employment with the Company, and is a ‘good leaver’, then the unvested PSRs will
remain on foot and will vest in the ordinary course, unless the Board determines otherwise.
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.
If the Senior Executive has ceased employment with the Company and is not a ‘good leaver’, then all unvested
PSRs will automatically lapse on or around the date of cessation of employment with the Group, unless the Board
determines otherwise.
Clawback
In the event of a material misstatement of performance, or where vesting is not justified, appropriate or supportable
in the opinion of the Board, including if a participant joins a competitor, the Board has the discretion to lapse
unvested PSRs. The clawback policy that applies to vested incentives permits clawback of any shares allocated on
vesting of the PSRs, as well as cash payments received on vesting of PSRs or proceeds from the sale of shares.
Restrictions on
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.
36 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
How Variable Remuneration is Structured continued
LONG TERM INCENTIVE (LTI) – HOW DOES IT WORK?
This section summarises the terms of LTI grants made in FY2020.
Description
Under the LTI Plan, annual grants of PSRs are made to eligible participants to align remuneration outcomes with the
creation of sustainable shareholder value over the long term. Executive KMPs as well as any employee of the Group
who is invited by the Board are eligible to participate.
Non-Executive Directors are not eligible to participate in the LTI Plan.
LTI opportunity
The 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 Senior Executive’s 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.
Vesting conditions
Three vesting conditions apply to LTI grants made during FY2020:
– Relative TSR
– Relevant EPS
– 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 and provides
a relative, objective, external market-based performance measure against those companies with which Aristocrat
competes for capital, customers and talent.
The percentage of PSRs that may vest is determined based on the following vesting schedule:
Aristocrat’s TSR ranking relative
to Peer Comparator Group
Below the median ranking
At the median ranking
Above the median ranking but below
the 75th percentile
At or above the 75th percentile
PSRs subject to Relative
TSR vesting condition that vests (%)
0%
50%
Between 50% and 100%
increasing on a straight-line basis
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. The Board will also
exercise its discretion to ensure that the TSR vesting conditions are adjusted to reflect sustainable growth outcomes
aligned to the interests of shareholders.
Relevant EPS –
30% weighting
The People and Culture Committee reviewed the appropriateness of the LTI Plan Performance Measures in FY2019
taking into account feedback from investors and other external shareholders. Following this review, the Board
determined to transition from a Relevant EPSA hurdle to a Relevant EPS hurdle for future LTI grants, commencing
with grants made in FY2020.
The Relevant EPS vesting condition is measured by comparing Aristocrat’s CAGR over a three-year performance
period (1 October 2019 to 30 September 2022 in respect of LTI grants in FY2020) against the ‘minimum’ EPS growth
and the ‘maximum’ EPS growth thresholds, as set by the Board at the beginning of this performance period.
Relevant EPS 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 EPS performance
Less than the minimum EPS growth threshold
Equal to the minimum EPS growth threshold
Greater than the minimum EPS growth threshold,
up to the maximum EPS growth threshold
Greater than the maximum EPS growth threshold
% of vesting of PSRs
0%
50%
Between 50% and 100%,
increasing on a straight-line basis
100%
37
REMUNERATION REPORT
How Variable Remuneration is Structured continued
LONG TERM INCENTIVE (LTI) – HOW DOES IT WORK? continued
Relevant EPS –
30% weighting
continued
The Board may adjust the Relevant EPS 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.
As is our practice, the EPSA or EPS growth thresholds (as applicable) 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.
The 2018 LTI Grants had a Relevant EPSA target and accordingly, the Relevant EPSA target for the 2018 LTI Grants
that vested in 2020 are disclosed in Table 3.
Individual
performance
based vesting
condition – 40%
weighting
Why were these
vesting conditions
chosen?
The individual performance-based element of the LTI Plan will vest subject to the participant having achieved or
exceeded against objective-balanced scorecard OKRs over the entire course of the three-year performance period in
addition to continuous service for the performance period (Individual Performance Based Condition). Vesting of this
tranche requires consistent and sustained individual performance for three years in a row – if OKRs are not met in
any one year then the entire tranche is forfeited. There is no catch-up or retesting.
The OKRs are aligned to supporting Aristocrat’s longer-term strategy and driving continued sustainable growth.
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 EPS
– Is a relevant indicator of increases in shareholder value
– Taking into account feedback from investors and other external stakeholders, the Board ultimately approved a
transition from a Relevant EPSA to a Relevant EPS hurdle in connection with future LTI grants, commencing with
grants in FY2020
– Is a target that provides a suitable line of sight to encourage executive performance
Individual Performance Based Condition
– Importantly, this is a performance-based hurdle requiring that an Executive KMP meets or exceeds against
objective-balanced scorecard OKRs
– The objective-balanced scorecard OKRs are aligned to supporting Aristocrat’s longer-term strategy and driving
continued sustainable growth
– This hurdle allows the Board to take into account ‘the how’ (behaviours) and conduct relating to risk management
in determining outcomes relating to this hurdle
– The balanced scorecard approach ensures that safeguards are in place to protect against the risk of unintended
and unjustified outcomes
– 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 global markets with technology and global
management skillsets
– This hurdle supports our LTI Plan being competitive to global peers who have elements of service-based vesting
(restricted stock)
The Board is confident that it has the right arrangements in place to drive performance and retention in line
with shareholders’ interests.
Who assesses
performance
and when?
Relative TSR and Relevant EPS results are calculated by Aristocrat and an 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.
In respect of the Individual Performance Based Condition, the Board assesses performance of the CEO and Managing
Director against the objective-balanced scorecard OKRs with the benefit of recommendations from the People and
Culture Committee.
The CEO and Managing Director assesses the other Executive KMP’s performance against the performance
conditions and makes recommendations to the People and Culture Committee which in turn advises the Board in
relation to the CEO and Managing Director’s recommendations and the review process.
The vesting conditions are therefore tested only at the end of the performance period. There is no re-testing of
vesting conditions.
The Board believes the abovementioned methods in assessing performance are an appropriate way to assess the
performance of the Company and the Executive KMP’s individual contribution, and to determine their remuneration outcomes.
38 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
How Variable Remuneration is Structured continued
LONG TERM INCENTIVE (LTI) – HOW DOES IT WORK? continued
Vesting
If PSRs vest, the Board has discretion to issue new shares, acquire shares on-market or cash settle 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?
Cessation of
employment
Holders of LTI PSRs are not entitled to dividends until the PSRs have vested and converted into shares.
If a participant ceases employment during the first 12 months of the three year performance period then, regardless
of whether the participant is a good or bad leaver, all unvested PSRs lapse, unless the Board determines otherwise.
If a participant ceases employment after the first 12 months of the performance period but before the end of the
performance period:
– the portion of unvested PSRs that are subject to the Individual Performance Based Condition will lapse (regardless
of whether or not the participant is a ‘good leaver’), unless the Board determines otherwise;
– if the participant is a ‘good leaver’, a pro-rata portion of unvested PSRs that are subject to financial performance
hurdles will remain ‘on foot’ and will be tested in the ordinary course, unless the Board determines otherwise.
If the participant is not a ‘good leaver’, then all of these unvested PSRs will automatically lapse on or around
the date of cessation of employment, unless the Board determines otherwise.
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.
Clawback
In the event of a material misstatement of performance, or where vesting is not justified, appropriate or supportable
in the opinion of the Board, including if a participant joins a competitor, the Board has the discretion to lapse
unvested PSRs. The clawback policy that applies to vested incentives permits clawback of any shares allocated on
vesting of the PSRs, as well as cash payments received on vesting of PSRs or proceeds from the sale of shares.
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.
Restrictions on
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.
39
REMUNERATION REPORT
Stretch Performance Targets and Remuneration Outcomes in FY2020
This section of the Remuneration Report provides detail on target setting by the Board (including how targets are determined to ensure
challenging stretch) and also discloses the outcome of awards made under:
– the 2020 STI grant (performance period 1 October 2019 – 30 September 2020)
– the 2018 LTI Grant (performance period 1 October 2017 – 30 September 2020)
STI GRANT TARGETS AND OUTCOMES IN 2020
A challenging NPATA target (70% weighting) of $956.3m (on a constant currency basis 1) was set by the Board in connection with the FY2020
STI grant, which was a 14.7% year-on-year increase on the FY2019 STI target.
The NPATA target was set in the context of broadly flat key markets and segments, and these markets and segments remained broadly flat over
the course of the STI performance period.
In addition to assessing actual financial performance measures against targets, performance of participants was also assessed against
individual OKRs in order to determine STI remuneration outcomes. Individual targets as set out in OKRs included consideration as to role-related
accountabilities and responsibilities in the context of delivery against Aristocrat’s business strategy and objectives, as set out in Table 5, as well
as assessment against behaviour metrics (‘the how’).
PERFORMANCE AND STI OUTCOMES IN FY2020
Prior to the advent of the COVID-19 pandemic, the Group was on track to achieve STI targets. Notwithstanding strong performance at a Group
level, including Gearing (Net Debt/EBITDA) of 1.4x as at 30 September 2020 (in line with prior year) and a strong balance sheet with approximately
$2 billion in available liquidity at 30 September 2020, as a result of COVID-19 impacts on the Group, Senior Executives received no STI outcome this
Reporting Period. Further information on Aristocrat’s performance against business strategy and objectives is set out in Table 5.
Table 2 below discloses actual quantitative STI targets set by the Board and actual performance against those targets
Business Score of 83.9% — STI gateway (Business Score Threshold) of 85% not achieved
The Business Score is calculated by reference to the NPATA and FCF Conversion figures as follows. Despite the FCF Conversion result being
significantly above target, due to the multiplicative nature of the STI plan, and notwithstanding achieving a Business Score of 83.9%, as the
Business Score Threshold of 85% was not met, Senior Executives received no STI outcome this Reporting Period.
Measure + Weighting
Target
Actual Performance
STI outcome
NPATA (70%)
FCF Conversion (30%)
$956.3m (14.7% on FY2019 target)
104% (9 percentage points on FY2019 target) 2
$421.8m1
184%
0%
0%
1. Constant currency basis as set out in the approved budget.
2. The FCF Conversion target is set annually based on the anticipated financial performance of the Group for the coming year.
LTI GRANT TARGETS AND OUTCOMES IN 2020
The following three vesting conditions applied to the 2018 LTI Grant:
– a Relative TSR vesting condition (30% weighting);
– a Relevant EPSA vesting condition (30% weighting); and
– an Individual Performance Based Condition (40% weighting).
Challenging EPSA targets were set by the Board in connection with the 2018 LTI Grants:
– Targets were set in the context of broadly flat key markets and segments.
– Both organic and inorganic growth was taken into account by the Board in setting EPSA growth targets. Specifically, the 7.5%/12.5% min/max
EPSA targets set in respect of previous grants were set on the basis that both organic and inorganic growth would be required in order for
those targets to be achievable.
– The Board then applied further stretch to the EPSA targets under the 2017 and 2018 LTI grant (10% min/15% max). This is illustrated in table
3 below which shows the EPSA targets for LTI Grants between FY15 – FY18 (inclusive).
Table 3 below discloses the Relevant EPSA Targets for LTI Grants between FY15 to FY18
Relevant EPSA
Award year
Threshold Target
Maximum Target
Actual
Performance Period
Vesting Date
Award Outcome
FY18
FY17
FY16
FY15
10%
10%
7.5%
7.5%
15%
15%
12.5%
12.5%
(4.0%)
31.0%
45.4%
54.4%
FY18 – FY20
After 30 September 2020
Not achieved
FY17 – FY19
FY16 – FY18
FY15 – FY17
After 30 September 2019
After 30 September 2018
After 30 September 2017
Achieved
Achieved
Achieved
40 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
Stretch Performance Targets and Remuneration Outcomes in FY2020 continued
IMPACT OF ACCOUNTING ADJUSTMENTS ON REMUNERATION OUTCOMES
Normalised NPATA (not reported NPATA) is used for purposes of determining remuneration outcomes as normalised NPATA is reflective of
the actual underlying operational performance of the Group. Therefore, NPATA of $476.6m was used for purposes of testing the EPSA growth
outcome in connection with the 2018 LTI Grant and the testing of the outcome of the 2020 STI grant.
The impact of accounting adjustments as well as a reconciliation between normalised and reported NPATA is set out below:
RECONCILIATION OF STATUTORY PROFIT TO NPATA
A$ 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)
(Less)/add back net (gain)/loss from significant items after tax
Normalised Profit After Tax before amortisation of acquired intangibles (Normalised NPATA)
SIGNIFICANT ITEMS
A$ million
Government stimulus benefits
Contingent retention arrangements
Big Fish onerous lease
Kater and Thimmegowda cases – legal settlement
Recognition of deferred tax asset
Net (loss)/gain from significant items
2020
1,377.7
119.5
1,497.2
(1,020.6)
476.6
2019
698.8
141.6
840.4
54.0
894.4
30 Sep 2020
Before tax
After tax
19.0
(44.4)
(44.2)
(46.5)
—
13.3
(36.0)
(38.7)
(40.7)
1,122.7
(116.1)
1,020.6
Significant items included in the Group’s reported result after tax:
Government stimulus benefits: The result includes an adjustment of $13.3 million relating to COVID-19 related government stimulus benefits
received. The JobKeeper employment subsidy in Australia contributed $11 million post-tax.
Contingent retention arrangements: The result includes an expense of $36 million relating to the contingent retention arrangements for the
acquisition of Plarium.
Big Fish onerous lease: The result includes an expense of $38.7 million relating to an onerous lease for the Big Fish Seattle premises, which
was committed to by previous ownership.
Kater and Thimmegowda cases – legal settlement: The result includes an expense of $40.7 million relating to the settlement agreed in the
period for Big Fish.
Recognition of deferred tax asset: The result includes an adjustment of over $1.1 billion for the recognition of a deferred tax asset relating to
the Group structural changes announced in November 2019.
41
REMUNERATION REPORT
Stretch Performance Targets and Remuneration Outcomes in FY2020 continued
2018 LTI GRANT VESTING OUTCOMES
Disclosed below is the outcome of the 2018 LTI Grant (tested over the three-year performance period ended 30 September 2020).
FINANCIAL TARGETS AND PERFORMANCE
Table 4 below discloses the LTI financial targets set by the Board and performance against those targets.
30 SEPTEMBER 2020: THREE-YEAR PERFORMANCE PERIOD ENDS FOR 2018 LTI GRANTS.
Performance is tested in November 2020 for Relative TSR and Relevant EPSA
Relative TSR (30% weighting)
180
160
140
120
100%
80
Sep 17
Mar 18
Sep 18
Mar 19
Sep 19
Mar 20
Sep 20
Aristocrat
ASX 100 Accumulation Index
With a TSR performance of 37.69%, Aristocrat was the 27th top performer (equivalent to 72.9th percentile) of its Peer Comparator Group.
95.8% of the PSRs linked to the Relative TSR measure vested
Relevant EPSA (30% weighting)
Prior to the advent of the COVID-19 pandemic, the Group was on track to achieve the Relevant EPSA target. Notwithstanding strong
performance at a Group level, including growth in Digital revenue by 28.5% to US$1,609 million and Aristocrat’s increased share in the Land-
based North America Gaming Operations business, as a result of COVID-19 impacts on the Group, 0% of the Relevant EPSA component vested
given that Aristocrat’s actual EPSA CAGR across the consecutive three-year performance period was -4.0% . Further information on Aristocrat’s
performance against business strategy and objectives is set out in Table 5.
Relevant EPSA
1 Oct 2017 to 30 Sept 2020
Threshold EPSA Target
Maximum EPSA Target
Actual Outcome
Relevant EPSA Achievement
3 year CAGR
10%
15%
(4%)
0%
0% of the PSRs linked to the Relevant EPSA measure vested
Individual Performance-Based Condition (40% weighting)
100% of PSRs linked to the Individual Performance-Based Condition vested for those Executive KMP with 2018 LTI awards, which requires
the Executive KMP to achieve or exceed the required performance rating based on calibration against a set of objective balanced scorecard
OKRs. These OKRs are aligned to supporting Aristocrat’s longer term strategy and driving continued sustainable growth.
42 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
Link to Business Strategy and Shareholder Interests
Table 5 below discloses remuneration outcomes in FY2020 and alignment to business strategy and Group performance.
Business
strategy and
objectives…
Profitability
and financial
performance
Growing
adjacent
opportunities
Are reflected in LTI
and STI performance measures…
STI performance measure of NPATA
Measures profitability across the Group
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 EPSA Measures profitability
across the Group on a per share basis
STI Individual performance rating
and LTI Individual performance
based condition Measures include
increasing the size of Aristocrat’s
addressable markets and generating
revenue from adjacent opportunities
Sustainable
core growth
STI Individual performance rating
and LTI Individual performance
based condition Measures include
growth in US Gaming Operations,
sustainability of strong market position
in Australia and continued growth in
profitability of the digital business
STI Individual performance rating
and LTI Individual performance
based condition Measures include
continuing to embed effective
risk management throughout the
organisation to support:
– achievement of business objectives
– corporate governance objectives
– risk-based identification of ESG
priorities and opportunities
STI Individual performance rating
and LTI Individual performance
based condition Measures include
product quality and delivery, product
innovation, great game content
and embedding customer centric
culture across the Group
Risk
management
Product
quality and
innovation,
great game
content and
customer
centric
culture
Directly affects
remuneration
outcomes
Notwithstanding
strong
performance
at a Group
level prior to
the advent of
the COVID-19
pandemic,
Senior Executive
remuneration
outcomes in
FY2020 were
as follows:
Total LTI vesting
outcome in
FY2020 = 47.9%
of target based
on TSR and EPSA
performance
measures
CEO STI
outcome in
FY2020 = 0%
of target
Average
STI outcome
in FY2020 for
other Executive
KMP = 0%
of target
So, Aristocrat’s actual performance…
PARTIALLY MET
– Notwithstanding strong performance at Group level prior to
the advent of the COVID-19 pandemic, NPATA and Relevant EPSA
targets were not met
– Achieved FCF Conversion significantly above target of 184%
(Group target of 104%)
– Aristocrat achieved a TSR performance of 37.69% over the
2018 LTI Grant performance period, 27th in its Peer Comparator Group
and ranked in the 72.9th percentile
– Strong Group balance sheet with total liquidity of just under $2.0bn,
which positions the business well for the future
– Gearing (Net Debt/EBITDA) of 1.4x, in line with prior year
EXCEEDED
– Approximately 15% of volume of units sold in the Americas derive from
adjacent market sources
– Continued expansion into adjacent markets, including Video Lottery
Terminal (VLT) Canada, VLT Illinois, Washington Central Determinant
System and the Multigame and Poker segments
– Successful launch by Big Fish Games of EverMergeTM in May 2020
– Highly successful entry into an adjacency – the collection role playing
game (CRPG) genre – RAID: Shadow Legends™ now the #2 CRPG in
Tier 1 markets and #19 Top Grossing Game in the US 1
EXCEEDED
– In excess of 79% of Group revenues now derive from recurring sources
– Share gains continued across Class III Premium installed bases and
ANZ business sustained market-leading ship share
– Digital revenues increased by 31.9% to $2.4bn (in reported currency)
and Digital profits increased by 33.7% to US$495m
– Increased diversity of earnings – digital business contributes 57%
of Group revenue
EXCEEDED
– Continued evolution of enterprise risk management framework and
global refresh of Business Continuity Plans
– Improvement in Aristocrat’s ESG reporting by Australian Council of
Superannuation Investors (ACSI), which is above sector average
– Achievement of Group & Land-based cyber security maturity rating of
2.3 (FY2019:1.4)
– Lost Time Frequency Rates lower than the US NAICS and Australian Safe
Work Standards targets for the US and Australian businesses, respectively
– Mandatory Responsible Gaming training for all staff
EXCEEDED
– Aristocrat was awarded the following at the Global Gaming Awards
2020:
– Land-Based Product of the Year – MarsXTM Cabinet
– Land-Based Industry Supplier of the Year
– Slot of the Year – Dollar StormTM
– Eilers-FANTINI October 2020 Survey:
– Aristocrat Top Ranked Supplier Overall
– Aristocrat had 15 of Top 25 Premium leased games
(Dragon Link™, Lightning Link™)
– Continued investment in talent and technology, with D&D investment
remaining at market-leading levels at 12.0% of total revenue
– Net Promoter Score (which indicates customer satisfaction) of 50,
which is above Tech industry benchmark of 30
– Quality metrics stable over FY2020, achieving 92.4% (FY2019: 95%;
FY2018: 90.5%)
Leadership
Effectiveness
and high
performing
People and
Culture
STI Individual performance
ratiand LTI Individual performance
based condition Measures include
development, retention and succession
planning across all management levels
and for creative talent
Measures also include attracting,
developing and retaining gaming
design talent
EXCEEDED
– Group Employee Engagement Scores of 8.5, which is above Tech
industry benchmark and Group target of 7.8
– Investment in talent and leadership bench strength through the Senior
Executive Develop Plan, the Aristocrat Leadership Academy and in-
business development programs
– Key senior executive appointments during the Reporting Period
includes CEO Digital, Chief Legal Officer and Chief Technology Officer.
1 of 3 appointments was an internal candidate
1. 2020 App Annie data. Based on Top 1,000 games in Tier 1 market (Australia, Canada, France, Germany, UK and US)
43
REMUNERATION REPORT
Link to Business Strategy and Shareholder Interests continued
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 2016 to 30 September
2020, 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 6 Summary of movement in shareholder wealth
12 months to
30 Sep 2020
12 months to
30 Sep 2019
12 months to
30 Sep 2018
12 months to
30 Sep 2017
12 months to
30 Sep 2016 1
Share price as at financial year-end (A$)
Total dividends (cps)
29.97
10.0
30.60
56.0
28.44
46.0
21.00
34.0
15.81
25.0
Normalised EPS (fully diluted) / EPSA (fully diluted) (cps) 2
56.0/74.7
118.0/140.2
96.5/114.1
77.5/85.0
54.9/62.4
TSR (%)
Short-term cash incentives (% of Group target)
LTI (% vesting) based on Relative TSR
and Relevant EPSA performance measures
(2%)
0%
47.9%
10%
104%
100%
38%
130%
100%
35%
172%
100%
87%
176%
100%
1. The opening share price for the 12 months to 30 September 2016 was $8.61.
2. Excluding the effect of significant items which are not representative of the underlying operational performance of the Group.
Historical earnings performance – NPATA and EBITA (A$m)
1,400
1,200
1,000
800
600
400
200
0
1,346.9
1,129.3
729.6
894.4
771.3
476.6
858.1
543.4
673.4
398.2
FY2016
FY2017
FY2018
FY2019
FY2020
Normalised EBITA
Linear (Normalised EBITA)
Normalised NPATA
Linear (Normalised NPATA)
44 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
Remuneration Governance
OVERVIEW
The People and Culture Committee are responsible for developing, monitoring and assessing remuneration strategy, policies and practices
across the Group and endorses recommendations made by management for Board approval. It oversees the overall remuneration governance
framework approved by the Board.
The People and Culture Committee and Audit Committee met concurrently in September 2020 to consider if there were risk based or other
adjustments that may warrant consideration in the Board’s determination of remuneration outcomes. No risk based or other adjustments to
remuneration outcomes were recommended by the Committees in FY2020.
The following diagram represents Aristocrat’s remuneration decision-making structure.
BOARD
Approve remuneration framework
Final approval of targets, goals or funding pools
PEOPLE AND CULTURE COMMITTEE
AUDIT COMMITTEE
Oversee remuneration governance framework and assist
the Board to ensure the Group’s remuneration strategy
and policy are appropriate and effective
Executive KMP & NED remuneration
outcome recommendations
Assesses and advises the
People & Culture Committee of any audit/risk
matters of significance which may warrant
any risk based adjustments to
incentive outcomes
MANAGEMENT
REMUNERATION ADVISORS
Proposals on executive remuneration outcomes
implementing remuneration policies
May be engaged to provide external and independent
remuneration advice and information
Details of the composition and responsibilities of the People and Culture Committee and Audit Committee are set out in the Corporate
Governance Statement (and can be found at www.aristocrat.com).
USE OF REMUNERATION ADVISORS
In making recommendations to the Board, the People and Culture Committee seeks advice from external advisors from time to time to assist
in its deliberations. The People and Culture Committee appointed Ernst & Young as Aristocrat’s ‘Remuneration Consultant’ for the purposes
of the Corporations Act.
Remuneration advisors are engaged by the Chairperson of the People and Culture 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 Corporations Act, were made by the remuneration advisors during the Reporting Period.
45
REMUNERATION REPORT
Non-executive Director Remuneration
Details of the Non-Executive Directors of Aristocrat during the
Reporting Period are provided in the Directors’ Report.
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.
The Non-Executive Directors accepted a 20% reduction in their fees
from 1 May 2020 to 30 September 2020. There were no increases
in Board or Committee fees for the Reporting Period.
Securing and retaining talented, qualified
Non-Executive Directors
Non-Executive Director fee levels are set having regards to:
– The responsibilities, time commitments and
workload expected
– ASX market and direct industry peers
– Being competitive across Aristocrat’s two major
jurisdictions (US and Australia)
Preserving independence and impartiality
Non-Executive Director remuneration consists of base
(Director) fees and Committee fees. No element of
Non-Executive Director remuneration is ‘at risk’
(i.e. fees are not based on the performance of the Group
or individual Non-Executive Director)
Aligning Director and security holder interests
Directors are encouraged to hold Aristocrat securities
and the Board has endorsed a minimum shareholding
policy for Non-Executive Directors
Competitive fee levels have been a particular 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, 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.
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.
There will be no change in FY2021 to fees of Non-Executive Directors,
which remain at the levels set in April 2018. Those fees are set out in
Table 7 below.
Table 7 Non-Executive Director fees payable during the Reporting Period (prior to the Non-Executive Directors accepting a 20% reduction in their
fees from 1 May 2020 to 30 September 2020)
Board fees per annum
Chairman
Non-Executive Director
Lead US Director
Committee Chair (Audit, People & Culture)
Committee Chair (Regulatory & Compliance)
Committee member (per committee, capped at two committees per person)
Amount (inclusive of all statutory superannuation obligations)
A$625,000
A$250,000 / US$220,000
Additional US$40,000
Additional A$45,000 / US$35,000
Additional A$35,000 / US$30,000
Additional A$15,000 / US$10,000
46 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
Statutory Remuneration Tables and Data
KEY KMP MOVEMENTS IN FY2020
Mike Lang was appointed as the CEO, Digital on 18 November 2019 and is responsible for overall digital performance and for executing
Aristocrat’s growth strategy across its digital footprint. This includes protecting and growing our digital operations (Plarium, Big Fish Games
and Product Madness), fully leveraging combined capabilities and unlocking sustained performance.
Given the strategic importance of this role in a highly competitive global market for talent, the Board determined it was appropriate to
provide a competitive remuneration package, including an one-off sign-on award with the following vesting schedule and vesting conditions.
Further information on how the Individual Performance-Based Vesting Condition is assessed is set out on page 38.
Table 8 below outlines the sign-on award offered to M Lang:
Grant date
Grant details
Vesting Schedules
Vesting Conditions
18 November 2019
18,586 PSRs (grant date value of $656,272)
18 November 2020
Subject to continued employment at
vesting date and achievement of Individual
Performance-Based Vesting Condition
18,586 PSRs (grant date value of $656,272)
18 November 2021
Cash award (grant date value of $656,272)
18 November 2021
As above
As above
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 with non-market conditions 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.
Table 9 Statutory Executive KMP remuneration table
Short-term benefits
Post-employment
benefits
Cash
Salary 1
Cash
Bonuses 2
Executive
Year
$
CEO & Managing Director
T Croker
2020
1,546,011
$
—
2019
1,627,064
1,011,036
Executive KMP
J Cameron-Doe 2020
847,779
—
2019
825,159
388,860
M Bowen 9
M Lang 10
2020
2019
2020
2019
593,750
—
542,974
262,500
905,289
—
Total
2020
3,892,829
2019
2,995,197
1,662,396
—
—
—
Non-
monetary
Benefits 3
$
Super
annuation
$
3,254
37,939
15,052
62,152
787
1,130
—
—
—
—
—
—
25,000
25,000
—
—
19,093
101,221
25,000
25,000
Long-
term
benefits
Long
Service
Termin-
ation 4
Leave 5
Share-based
payments 6
STI
PSRs 7
$
LTI
PSRs 8
$
Total
$
% of
Share Based
remuneration
(LTI PSRs)
%
$
—
—
—
—
—
—
—
—
—
—
$
—
—
—
—
503,031
2,405,121
4,457,417
763,371
2,166,867
5,606,277
167,806
811,723
1,842,360
234,762
371,895
1,882,828
35,969
144,541
1,102,180
1,902,227
32,542
234,792
392,145
1,491,083
—
—
— 1,849,980
2,755,269
—
—
—
35,969
815,378
6,169,004 10,957,273
32,542
1,232,925
2,930,907
8,980,188
54.0%
38.7%
44.1%
19.8%
57.9%
26.3%
67.1%
0.0%
56.3%
32.6%
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. Executive KMPs based in the US have their cash salary denominated in USD which is converted to AUD based on
the monthly Group exchange rates. Accordingly, notwithstanding the 20% reduction in base salary volunteered by Executive KMPs during 1 May 2020 to 30 September 2020,
J Cameron-Doe’s cash salary for FY2020 was higher due to the conversion of her cash salary from USD to AUD for the purposes of this report.
2. Amounts reflect the non-deferred cash component of STI incentives.
3. Non-monetary benefits include professional fees for tax advice. In the case of J Cameron-Doe, part of the 2019 amounts also relate to relocation costs in connection with her
permanent relocation to the US.
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.
47
REMUNERATION REPORT
Statutory Remuneration Tables and Data continued
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 2020 include the accounting accruals attributable to deferred share rights pursuant to the
2018 and 2019 STI awards (there were no STI awards in 2020).
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. The sign-on award granted to M Lang upon his appointment as CEO Digital is included in the 2020 calculations.
9. M Bowen’s FY2019 remuneration reflects his role as Managing Director, ANZ & International, prior to his promotion to CEO Land-Based (1 July 2019) and Chief Transformation
Officer (9 May 2019).
10. M Lang commenced with the Company on 18 November 2019.
Table 10 Details of 2020 short-term awards paid and deferred
For the 12 months ended
30 September 2020
T Croker
Other Executive KMP
J Cameron-Doe
M Bowen
M Lang
Total
award 1
$
—
—
—
—
Cash 2
payment
$
Deferred 3
component
$
No. Share
Rights vesting
1 Oct 2021 3
No. Share
Rights vesting
1 Oct 2022 3
Total award
as % of
target STI
% of total
award
deferred
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0%
0%
0%
0%
0%
0%
0%
0%
1. Amounts reflect the value of the total 2020 STI 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 2020 awards.
3. As the Executive KMPs did not receive any 2020 short term awards, there was no deferred component.
Table 11 Details of PSRs granted to Executive KMP, including their related parties, during the Reporting Period
Performance rights were granted during the Reporting Period as follows:
T Croker
J Cameron-Doe
M Bowen
M Lang
Short-term PSRs
Long-term PSRs
Number granted 1,2
$ Number granted 2,3
Value of grant
33,058
12,714
8,583
37,172
901,228
346,626
262,500
1,312,544
145,313
58,125
45,777
72,656
Value of grant 4
$
4,837,043
1,807,519
1,423,528
2,259,391
1. Further details on the short-term PSRs granted to T Croker, J Cameron-Doe and M Bowen are found in Table 11 of the FY2019 Remuneration Report. Further details on the
short-term PSRs granted to M Lang is found in Table 8 above. Short-term PSRs have a performance period of less than three years.
2. The rights that were vested or forfeited during the Reporting Period are set out in Table 12. Long-term PSRs have a three year performance period.
3. The number of rights granted calculated based on the Face Value, as further explained on page 37.
4. Other than T Croker’s PSRs, all PSRs were granted on 29 January 2020. The fair value of the rights that were granted on 29 January 2020 are $23.88 for rights with a total
shareholder return condition and $34.19 for rights with an individual performance based condition and EPS condition. T Croker’s PSRs were granted on 20 February 2020 and
the fair value for rights with a total shareholder return condition are $26.56 and $36.17 for rights with an individual performance based condition and EPS condition. The values
shown in the above table represent the maximum value of the grants made. The minimum value is zero.
Table 12 Details of the movement in numbers of PSRs during the Reporting Period
Balance at
1 October 2019
Granted during
Short-term
Long-term
the year 1
PSR vested 2,3
PSRs Vested 3,4
Lapsed/
forfeited
Balance at
30 September 2020
T Croker
J Cameron-Doe
M Bowen
M Lang
353,617
63,975
102,511
—
178,371
70,839
54,360
109,828
(24,039)
(8,913)
(9,189)
—
(62,838)
—
(10,054)
—
—
—
—
—
445,111
125,901
137,628
109,828
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 11. No options were granted during the year to any
Executive KMP. Trevor Croker’s grant of 145,313 PSRs under the Long Term Incentive Plan was approved at the 2020 Annual General Meeting of the Company on 20 February 2020,
and this approval was for all purposes, including ASX Listing Rule 10.14. Further information about the Long Term Incentive Plan can be found on page 37.
2. PSRs with performance periods of less than three years.
3. 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. 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. PSRs with three year performance periods.
48 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
Statutory Remuneration Tables and Data continued
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 LTI Plan.
Other major provisions of the service agreements of the Executive KMP are as follows:
Table 13 Service agreements
CEO and Managing Director
Notice to be
given by Executive
Notice to be
given by Group 1
Termination payment
Post-employment
restraint
T Croker
6 months
12 months
12 months (fixed remuneration)
12 months
Other Executive KMP
J Cameron-Doe
M Bowen
M Lang
1. Payments may be made in lieu of notice period.
6 months
6 months
6 months
6 months
12 months (fixed remuneration)
6 months
6 months (fixed remuneration)
6 months
12 months (fixed remuneration)
12 months
12 months
12 months
DETAILS OF NON-EXECUTIVE DIRECTOR REMUNERATION
Table 14 Details of Non-Executive Director remuneration for the Reporting Period
Directors
NG Chatfield 4
KM Conlon
P Etienne
PJ Ramsey
S Summers Couder
A Tansey
Former Non-Executive Director
S Morro 5
Total
Short-term
benefits
Cash salary
and fees 1
$
548,250
465,373
271,667
285,000
228,961
—
391,234
370,690
324,343
370,690
266,243
285,000
166,095
384,959
2,196,793
2,161,712
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Post-employment benefits
Super-
annuation 2
$
Retirement
Benefits 3
$
Share-based
payments
options
and PSRs
$
25,000
24,764
12,500
25,000
24,667
—
—
—
—
—
17,923
25,000
—
—
80,090
74,764
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
$
573,250
490,137
284,167
310,000
253,628
—
391,234
370,690
324,343
370,690
284,166
310,000
166,095
384,959
2,276,883
2,236,476
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. Superannuation contributions include amounts required to satisfy the Group’s obligations under applicable Superannuation Guarantee legislation.
3. Non-Executive Directors are not entitled to any retirement benefit.
4. N Chatfield’s fees for FY2019 comprises of Non-Executive Director fees for the period between 1 October 2018 and 21 February 2019 and Chairman fees from
21 February 2019 onwards.
5. S Morro retired from his Non-Executive Director role effective 20 February 2020 and his remuneration reflects time in the role.
49
REMUNERATION REPORT
Shareholdings and Other Transactions
MOVEMENT IN SHARES
The tables below details movements during the year in the number of ordinary shares held by KMP, their close family members, and entities
controlled, jointly controlled or significantly influenced by KMP or their close family members.
No amounts are unpaid on any of the shares issued.
Table 15 Details of Non-Executive Director shareholdings
NG Chatfield
KM Conlon
P Etienne
PJ Ramsey
S Summers Couder
A Tansey
SW Morro
Non-Executive Directors
Balance at
1 October 2019
Purchased/
Transferred
Balance as at
30 September 2020
18,000
10,514
5,943 1
19,360
10,650
3,570
40,000
—
—
—
—
—
1,000
—
18,000
10,514
5,943
19,360
10,650
4,570
40,000 2
1. As at 7 November 2019, which is the date that P Etienne was appointed as a Non-Executive Director.
2. As at 20 February 2020, given S Morro ceased to be a Non-Executive Director on that date.
The table below excludes any unvested PSRs under the STI Plan and the LTI Plan.
Table 16 Details of Executive KMP shareholdings
T Croker
J Cameron-Doe
M Bowen
M Lang
Executive Director and other Executive KMP
Balance at
1 October 2019
Shares allocated
upon PSR vesting
Other net changes
during the year
Balance as at
30 September 2020
306,227
5,263
11,171
—
60,876 1
7,682 2
19,243
—
—
(3,500)
(30,414)
—
367,103
9,445
—
—
1. Although 86,877 PSRs vested, 26,001 PSRs were cash settled for the purposes of satisfying US withholding tax liabilities on vesting of PSRs.
2. Although 8,913 PSRs vested, 1,231 PSRs were cash settled for the purposes of satisfying US withholding tax liabilities on vesting of PSRs.
DISCLOSURES UNDER LISTING RULE 4.10.22
A total of 1,184,000 securities were acquired on-market by the Aristocrat Employee Equity Trust during the Reporting Period (at an average
price per security of $34.12) to satisfy Aristocrat’s obligations under various equity and related plans.
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 arrangements 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).
LOANS OR OTHER TRANSACTIONS 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 2020 or prior year. Apart
from the details disclosed in this Report, there were no transactions between KMP (or their related parties) and the Company or any of its
subsidiaries during the Reporting Period.
50 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
REMUNERATION REPORT
Glossary
2018 LTI Grant
Awards made under the LTI Plan during FY2018 with a three-year performance period from 1 October 2017
to 30 September 2020
Aristocrat
Aristocrat Leisure Limited and (where applicable) the Group
Business Score
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
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
The minimum Business Score required to receive payment under the STI Plan (being 85% of the Business
Score Goals)
Business Score
Goals
Business Score
Threshold
CAGR
Compound Annual Growth Rate
Corporations Act
Corporations Act 2001 (Cth)
EBIT
EBITA
EPS
EPSA
Executive KMP
Face Value
FCF Conversion
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 of acquired intangibles, on a normalised basis excluding significant
items as disclosed in the Operating and Financial Review section of the Annual Report
Fully diluted EPS disclosed in the Operating and Financial Review section of the Annual Report
Fully diluted EPS before amortisation of acquired intangibles disclosed in the Operating and Financial Review
section of the Annual Report
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), (iii) M Bowen (CEO Global Land
Based and Chief Transformation Officer) and (iv) M Lang (CEO Digital – for part year)
The volume-weighted average price of Aristocrat shares for the 5 trading days up to and including the day before
the start of the performance period
In the case of Executive KMP, this is a target based on free cash flow as a percentage of NPATA. For all employees
(other than Big Fish Games and Product Madness employees), it is a percentage of NPATA (Group Score) or EBITA
(Business Unit Score), as applicable. The exceptions are Big Fish Games and Product Madness employees, as they
do not have FCF targets, and Plarium employees as they do not participate in the STI Plan
KMP
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
LTI Plan
Aristocrat’s long-term incentive plan
Normalised EPS
Fully diluted earnings per share, normalised for significant items as disclosed in the Operating and Financial Review
section of the Annual Report
NPATA
OKRs
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
Organisational Key Results
Peer Comparator Group Constituents of the S&P/ASX100 Index, defined at the commencement of the performance period
PSR
Relative TSR
Relevant EPS
Relevant EPSA
Performance Share Right, with each right entitling the holder to receive one fully-paid ordinary share in Aristocrat
on vesting (or if the Board determines, an equivalent cash payment). 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
Cumulative EPSA over the performance period compared to a target set by the Board at the commencement of the
performance period
Reporting Period
12 months period ended 30 September 2020
Senior Executives
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)
STI Plan
TSR
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
51
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Aristocrat Leisure Limited for the year ended 30 September 2020, 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
18 November 2020
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.
52 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NEVADA REGULATORY DISCLOSURE
INFORMATION STATEMENT
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 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 five subsidiaries. Two subsidiaries (collectively, the
“Operating Subsidiaries”), have been licensed as manufacturers and
distributors of gaming devices and Internet Gaming System (“IGS”)
Service Providers, with one also having been licensed as an operator
of a slot machine route.
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
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.
53
NEVADA REGULATORY DISCLOSURE
INFORMATION STATEMENT
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 Chair 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 after it receives notice that
a person is unsuitable to be the holder of the debt securities of
the Registered Corporation and 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.
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 Chair 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 waiver
of the requirement to be found suitable or apply 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
www.aristocrat.com/contact
54 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
FIVE YEAR SUMMARY
$’m (except where indicated)
Profit and loss items
Revenue 1
EBITDA 2
Depreciation and amortisation
EBIT 2
Net interest expense
Profit before income tax expense 2
Income tax expense
Profit after income tax expense 2
Significant items after tax
Reported net profit 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
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
12 months
to 30 Sep 2020
12 months
to 30 Sep 2019
12 months
to 30 Sep 2018
12 months
to 30 Sep 2017
12 months
to 30 Sep 2016
3,583.8
2,453.8
2,128.7
4,139.1
1,089.4
(473.0)
616.4
(140.7)
475.7
(118.6)
357.1
1,020.6
1,377.7
217.1
715.1
(121.6)
2,586.5
3,180.0
1,675.7
836.1
353.2
3,623.8
1,388.1
7,876.9
791.5
7.0
247.0
3,236.2
24.3
390.9
4,696.9
3,180.0
4,397.4
1,596.8
(434.3)
1,162.5
(124.0)
1,038.5
(285.7)
752.8
(54.0)
698.8
312.4
715.1
2.6
1,425.9
2,143.6
568.6
1,164.6
431.2
4,008.3
164.3
6,337.0
856.3
—
185.1
2,792.3
30.4
329.3
4,193.4
2,143.6
1,328.6
(355.6)
1,001.2
(220.0)
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
821.1
—
196.4
2,881.1
13.8
201.9
4,114.3
1,732.5
781.2
(53.1)
728.1
(233.0)
495.1
—
495.1
185.2
715.1
(116.8)
747.3
1,345.6
547.1
647.9
241.3
1,687.7
168.9
3,292.9
460.0
0.1
193.0
1,199.3
13.8
81.1
1,947.3
1,345.6
Other information
Employees at year end
Return on Aristocrat shareholders’ equity 2
Basic earnings per share 2
Net tangible (liabilities) per share
Total dividends per share - ordinary
Dividend payout ratio 2
Issued shares at year end
Net debt 3
Net (debt)/equity
Number
6,000
6,400
6,100
3,640
%
Cents
$
Cents
%
‘000
$’m
%
11.2
56.0
(0.97)
10.0
18
638,544
1,567.5
(49.3)
35.1
118.1
(2.92)
56.0
47
638,544
2,223.7
(103.7)
35.6
96.7
(3.39)
46.0
48
638,544
2,453.0
(141.6)
36.8
77.7
(0.54)
34.0
44
638,544
652.3
(48.5)
1. Revenue as per segment results.
2. Before the impact of significant 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.
806.0
(208.9)
597.1
(89.9)
507.2
(156.7)
350.5
—
350.5
121.0
693.8
(55.7)
437.4
1,075.5
283.2
591.9
217.5
1,736.5
158.6
2,987.7
434.9
—
114.3
1,287.8
13.4
61.8
1,912.2
1,075.5
3,200
32.6
55.1
(1.04)
25.0
45
637,120
1,004.6
(93.4)
55
FINANCIAL STATEMENTS
for the year ended 30 September 2020
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 Leases
2-6 Trade and other payables
2-7 Provisions
2-8 Other liabilities
3
Capital and financial structure
3-1 Borrowings
3-2 Other 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
4
Group structure
4-1 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
56 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
56 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
57
58
59
60
62
64
66
67
70
70
71
72
73
75
76
77
78
78
79
80
82
83
83
83
88
89
90
90
93
93
94
94
94
95
97
99
STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
for the year ended 30 September 2020
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
Income tax benefit/(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 in foreign operations
Changes in fair value of interest rate hedge
Other comprehensive (loss)/income 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
Notes
1-2
1-2
1-3
1-4
3-3
3-3
3-3
1-5
1-5
2020
$’m
4,139.1
(2,182.7)
1,956.4
27.5
(497.9)
(291.1)
(684.1)
(151.2)
359.6
1,018.1
1,377.7
(128.4)
17.3
(8.0)
(119.1)
1,258.6
Cents
216.0
216.0
2019
$’m
4,397.4
(1,970.8)
2,426.6
11.1
(500.4)
(217.1)
(611.6)
(135.1)
973.5
(274.7)
698.8
108.0
(20.7)
(64.7)
22.6
721.4
Cents
109.6
109.5
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
57
BALANCE SHEET
as at 30 September 2020
Consolidated
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Current tax liabilities
Provisions
Other financial liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Other 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
The above balance sheet should be read in conjunction with the accompanying notes.
58 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
Note
2020
$’m
2019
$’m
2-1
2-2
3-2
1-4
2-1
3-2
2-4
2-5
2-3
1-4
2-6
3-1
2-5
1-4
2-7
3-2
2-6
3-1
2-5
2-7
3-2
1-4
2-8
3-4
3-3
3-3
1,675.7
624.6
160.2
7.1
44.2
568.6
941.3
163.0
6.5
53.8
2,511.8
1,733.2
101.9
7.9
353.2
178.3
3,623.8
1,100.0
5,365.1
7,876.9
646.7
7.0
43.3
193.2
53.8
2.0
99.5
105.0
6.5
431.2
—
4,008.3
52.8
4,603.8
6,337.0
720.0
—
—
122.1
63.0
—
136.3
1,045.5
1,041.4
55.3
3,236.2
232.7
24.3
61.7
27.9
9.3
4.0
3,651.4
4,696.9
3,180.0
715.1
(121.6)
2,586.5
3,180.0
50.6
2,792.3
0.4
30.4
48.4
152.4
14.7
62.8
3,152.0
4,193.4
2,143.6
715.1
2.6
1,425.9
2,143.6
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2020
Consolidated
Balance at 1 October 2018
Profit for the year ended 30 September 2019
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Net movement in share-based payments reserve
3-3
Dividends provided for and paid
Balance at 30 September 2019
Balance at 1 October 2019
Profit for the year ended 30 September 2020
Other comprehensive loss
Total comprehensive (loss)/income for the year
Transactions with owners in their capacity as owners:
Net movement in share-based payments reserve
Dividends provided for and paid 1
3-3
1-6
Contributed
equity
$’m
Note
Reserves
$’m
Retained
earnings
$’m
Total
equity
$’m
715.1
(23.5)
1,039.5
1,731.1
—
—
—
—
—
—
715.1
715.1
—
—
—
—
—
—
—
22.6
22.6
3.5
—
3.5
2.6
2.6
—
(119.1)
(119.1)
(5.1)
—
(5.1)
698.8
—
698.8
—
(312.4)
(312.4)
698.8
22.6
721.4
3.5
(312.4)
(308.9)
1,425.9
2,143.6
1,425.9
2,143.6
1,377.7
—
1,377.7
—
(217.1)
(217.1)
1,377.7
(119.1)
1,258.6
(5.1)
(217.1)
(222.2)
Balance at 30 September 2020
715.1
(121.6)
2,586.5
3,180.0
1. Payment of dividends relates to the 2019 final dividend.
The above statement of changes in equity should be read in conjunction with the accompanying notes.
59
CASH FLOW STATEMENT
for the year ended 30 September 2020
Consolidated
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other income
Interest received
Interest paid
Income tax paid
2020
$’m
2019
$’m
4,362.5
(3,162.7)
16.6
6.1
(143.5)
(56.1)
4,314.2
(2,880.2)
1.2
7.0
(123.8)
(232.9)
Net cash inflow from operating activities
1,022.9
1,085.5
Cash flows from investing activities
Payments for 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 (net of transaction costs)
Lease principal payments
Dividends paid
Net cash inflow/(outflow) from financing activities
Net 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.
(196.1)
(51.7)
—
(247.8)
(40.4)
(217.7)
869.3
(36.6)
(217.1)
357.5
1,132.6
568.6
(25.5)
1,675.7
(247.9)
(68.7)
(20.8)
(337.4)
(24.8)
(292.4)
—
(0.7)
(312.4)
(630.3)
117.8
428.1
22.7
568.6
60 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
CASH FLOW STATEMENT
for the year ended 30 September 2020
Consolidated
Reconciliation of net operating cash flows
Profit for the year
Non-cash items
Depreciation and amortisation
Equity-settled share-based payments
Loss on sale and impairment of property, plant and equipment and right-of-use assets
Net foreign currency exchange differences
Non-cash borrowing costs amortisation
Change in operating assets and liabilities:
(Increase)/decrease in assets
– Receivables and deferred revenue
– Inventories
– Other operating assets
– Tax balances
Increase/(decrease) in liabilities
– Payables
– Provisions
Net cash inflow from operating activities
2020
$’m
2019
$’m
1,377.7
698.8
473.0
34.4
41.6
(31.6)
6.4
289.4
13.7
(41.6)
(1,090.9)
(44.3)
(4.9)
434.3
26.0
6.7
(28.2)
6.0
(222.4)
12.5
(20.6)
13.2
134.3
24.9
1,022.9
1,085.5
Depreciation and amortisation
The depreciation and amortisation amount above includes amortisation of $23.4m (2019: $20.8m) that is classified as contra-revenue in the
profit and loss.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and at bank.
61
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance
This section provides the information that is most relevant to understanding the financial performance of the Group during the financial year.
During the reporting period, the COVID-19 pandemic resulted in the temporary closure of Aristocrat Gaming’s customer venues, followed
by subsequent re-openings with social distancing measures in place as well as unprecedented measures put in place by both the
Australian government and governments around the globe. These financial statements have been prepared using the best available
information at this time in relation to areas of significant estimates and judgements. Refer to Note 6-7.
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
1-2 Revenues
1-3 Expenses
1-4 Taxes
1-5 Earnings per share
1-6 Dividends
1-1 SEGMENT PERFORMANCE
a) Identification of reportable segments
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.
b) Segment results
Segment results represent earnings before interest and tax, and before significant items, design and development expenditure, amortisation
of acquired intangibles, selected intercompany charges and corporate costs.
Segment revenues and expenses are those that are directly attributable to a segment and the relevant portion that can be allocated to the
segment on a reasonable basis.
Segment revenues, expenses and results exclude transfers between segments. The revenue from external parties reported to the chief
operating decision maker is measured in a manner consistent with that in the statement of profit or loss and other comprehensive income.
62 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-1 SEGMENT PERFORMANCE continued
The Americas
Australia
and New Zealand
Digital
International Class III
Consolidated
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
1,367.6
1,948.0
280.6
456.2
2,359.5
1,788.7
131.4
204.5
4,139.1
4,397.4
517.3
1,073.2
58.9
213.6
726.9
528.9
34.3
94.3
1,337.4
1,910.0
8.4
9.6
(151.2)
(135.1)
(497.9)
(500.4)
(154.9)
(184.4)
(133.0)
(68.3)
19.1
(63.5)
(63.9)
1.2
359.6
973.5
1,018.1
(274.7)
1,377.7
698.8
1,936.3
2,108.2
195.4
178.5
2,073.9
2,224.7
51.6
33.1
4,257.2
4,544.5
195.3
173.0
42.1
21.7
37.5
22.3
19.8
12.1
294.7
229.1
Revenue
Segment revenue from
external customers
Results
Segment results
– Interest revenue
– Interest expense
– Design and development
costs
– Amortisation of acquired
intangibles
– Expenses from significant
items
– Other expenses
– Sundry income
Profit before income tax
Income tax benefit/(expense)
Profit for the year
Other segment information
Non-current assets other than
financial and deferred tax assets
Depreciation and
amortisation expense
Expenses from significant items include the legal settlement relating to the Kater and Thimmegowda cases ($46.5m), onerous expenses relating to
the Big Fish Seattle premises recognised in the year ($44.2m), and contingent retention payments related to the acquisition of Plarium.
The amortisation of acquired intangibles amounting to $154.9m (2019:$184.4m) does not form part of segment results.
63
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-2 REVENUES
Revenue from contracts with customers disaggregated by business:
Gaming operations
Digital
Class III outright sales and other revenue
Total revenue
2020
$’m
930.8
2,359.5
848.8
4,139.1
2019
$’m
1,218.1
1,788.7
1,390.6
4,397.4
Gaming operations revenue is derived from contracts with customers in the Americas reporting segment, while Class III outright sales and other
revenue is derived from contracts with customers across the Americas, Australia and New Zealand, and International Class III reporting segments.
Other income
Interest
Foreign exchange gains
Sundry income
Total other income
2020
$’m
8.4
—
19.1
27.5
2019
$’m
9.6
0.3
1.2
11.1
Interest income is recognised using the effective interest method. Sundry income includes $19.0m in government grants and assistance
received as a result the COVID-19 pandemic (including $16.2m for JobKeeper). This income is recognised in the period that the grants and
assistance relate to.
Recognition and measurement for contracts with customers
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of jackpot liability
expenses, returns, trade allowances, settlement discounts and duties and taxes paid.
64 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-2 REVENUES continued
Revenue by
business
Revenue
stream
Revenue recognition
methods and payment timing
Description of revenue recognition
Gaming
operations
Participation
revenue
from lease
contracts
Over time recognition, with
payments received monthly.
Participation revenue is a variable consideration that is recognised over
time on a monthly basis. The amount of revenue recognised monthly is
calculated by an agreed fee based upon a percentage of turnover or the
net win of participating machines.
Fixed fee
lease income
Over time recognition, with
payments received monthly.
Digital
Digital
revenue
Point in time and over time
recognition, with payments
usually received monthly.
Class III
outright
sales and
other
revenue
Machine
sales
Licence
income
Systems
contracts
Point in time recognition,
with payments received over
various terms depending on
negotiations with customers.
Point in time and over time
recognition, with payment
received either upfront or on a
monthly basis.
Point in time and over time.
Payment terms include in
advance as well as other
terms as negotiated with
customers.
Operating leases rental income is recognised on a straight line basis over
the term of the lease contract. Rental income is calculated by multiplying
a daily fee by the total number of days the machine has been operating
on the venue floor. 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.
Revenue is recognised when credits purchased by customers 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 relating to credits not used at year end are included in
deferred revenue. Statistical analysis is used to determine the average
consumption periods of credits within games based on historical
information such as repurchase intervals.
When control of the goods has 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 hardware and software is recognised when control has
transferred, usually upon delivery of goods to the customer. Revenue from
the installation of the system is recognised over time as the performance
obligation is satisfied.
Service
revenue
Over time recognition, with
payments usually received
monthly or in advance.
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.
Multiple
element
arrangements
Point in time and over time
recognition depending on the
component, with payments
received over various terms
depending on negotiations
with customers.
The transaction price for multiple element arrangements is allocated to
each performance obligation based on the proportion of their stand-alone
selling prices. Stand-alone selling prices are determined based on the
current market price of each of the performance obligations when sold
separately. Where there is a discount on the arrangement, such discounts
are allocated proportionally between the performance obligations.
Revenue is then recognised for each performance obligation as control
passes to the customer. Multiple element arrangements may include
revenue from sales of goods as well as gaming operations revenue.
Note 2-1 shows the assets relating to contracts with customers under trade receivables. The balance sheet shows liabilities from contracts
with customers as deferred revenue, with the current amount of $99.5m (2019: $136.3m) expected to be recognised as revenue in the next
12 months and $9.3m (2019: $14.7m) expected to be recognised in the 2022 and 2023 years. Deferred revenue relates to performance
obligations that are not satisfied at the end of the reporting period. Within other receivables, amounts totalling $24.4m (2019: $45.3m) relate to
payments made to customers for entering sales contracts. These payments are amortised as contra-revenue over the period of the agreement.
Changes in transaction price only impact a small portion of the revenues generated by the Group, usually in connection with multiple element
arrangements. For contracts with variable consideration, the Group uses an expected value to estimate the amount of revenue that should
be recognised, based on historical and forecast information. The amount of consideration allocated to the contract is regularly reassessed
to ensure it represents the most recent information.
Standard warranties are provided for goods sold, with provision made for costs expected to arise from these obligations. These costs are
typically not material.
65
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-3 EXPENSES
Depreciation and amortisation
Depreciation of right-of-use assets
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 including bonuses and leave entitlements
Superannuation costs
Post-employment benefits other than superannuation
Share-based payments expense
Total employee benefits expense
General and administration costs reconciliation
General and administration before significant expense items and amortisation of acquired intangibles
Significant expense items
Amortisation of acquired intangibles included in general and administration costs
Total general and administration costs
Other expense/(income and write-back) items
Bad and doubtful debts expense/(write-back)
Write down of inventories to net realisable value
Legal costs (including significant item of $46.5m)
Net foreign exchange loss/(gain)
2020
$’m
2019
$’m
39.9
—
0.9
197.8
12.6
211.3
50.4
13.7
105.0
15.8
13.5
198.4
449.6
716.2
35.3
25.9
34.4
811.8
396.2
133.0
154.9
684.1
57.1
43.0
98.3
0.9
0.8
182.4
13.9
197.1
54.1
13.3
125.3
15.9
7.8
216.4
413.5
732.7
33.7
6.1
26.0
798.5
363.7
63.5
184.4
611.6
(2.4)
8.8
20.8
(0.3)
Recognition and measurement
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 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.
66 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-3 EXPENSES continued
Bonus plans
The Group recognises a liability and an expense for bonuses based on criteria that takes into account the profit attributable to the Company’s
shareholders. The Group recognises a liability where contractually obliged or where there is past practice that has created a constructive obligation.
Where bonus plans are settled by way of the issue of shares in the Company, the expense is accounted for as part of the share-based payments expense.
Employee benefit on-costs
Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee
benefits to which they relate are recognised as liabilities.
1-4 TAXES
Major components of income tax (benefit)/expense are:
a) Income tax (benefit)/expense
Current
Current year
Adjustment for prior years
Deferred
Temporary differences
Adjustment for prior years
Income tax (benefit)/expense
Deferred income tax (benefit)/expense included in income tax (benefit)/expense comprises:
Change in net deferred tax assets
Deferred income tax (benefit)/expense included in income tax expense
b) Tax reconciliation
Profit before tax
Tax at the Australian tax rate of 30% (2019: 30%)
Net impact to tax expense due to Group structure changes (refer below)
Impact of changes in tax rates and law
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 (benefit)/expense
Average effective tax rate
2020
$’m
2019
$’m
131.3
7.8
(1,162.8)
5.6
(1,018.1)
(1,157.2)
(1,157.2)
359.6
107.9
(1,122.7)
24.2
(2.4)
8.4
(1.2)
—
(45.7)
13.4
(1,018.1)
237.6
(2.4)
41.0
(1.5)
274.7
39.5
39.5
973.5
292.1
—
8.9
(15.6)
10.5
(12.3)
1.2
(6.2)
(3.9)
274.7
(283.1%)
28.2%
67
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-4 TAXES continued
c) Income tax (benefit)/expense
Income tax expense on profit before tax
Significant item - Group structure changes (refer below)
Income tax (benefit)/expense
d) Amounts recognised directly in equity
Net deferred tax - credited directly to equity
e) 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
2020
$’m
104.6
(1,122.7)
(1,018.1)
2019
$’m
274.7
—
274.7
2.1
0.7
417.6
204.4
622.0
118.0
1.0
204.4
205.4
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.
2020
$’m
2019
$’m
f) Deferred tax
Gross deferred tax assets
Intangible assets arising from changes to Group structure (refer below)
Employee benefits
Accruals and other provisions
Provision for stock obsolescence
Unrealised foreign exchange losses
Lease liabilities
Share-based equity
Financial liabilities
Other
Gross deferred tax assets
Deferred tax liabilities:
Financial liabilities
Right-of-use assets
Plant, equipment and intangible assets
Net deferred tax (liabilities)/assets
Movements
Balance at the start of the year
Credited/(charged) to profit or loss
Credited directly to equity
Reclassification from current tax provision
Foreign exchange currency and other movements
Balance at the end of the year
68 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
1,083.3
37.6
45.0
15.1
4.4
55.6
4.9
13.4
4.2
1,263.5
—
(29.2)
(162.2)
1,072.1
(99.6)
1,157.2
2.1
8.2
4.2
1,072.1
—
41.7
31.8
5.9
5.1
—
2.8
—
5.4
92.7
(3.5)
—
(188.8)
(99.6)
(50.4)
(39.5)
0.7
-
(10.4)
(99.6)
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
1. Business performance continued
1-4 TAXES continued
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.
Changes were made during the year to the Group structure to ensure that it remains fully aligned to the underlying business model. The
completion of these changes as well as receipt of the necessary regulatory approvals resulted in the Group being entitled to additional non-
Australian tax deductions. In October 2019, a deferred tax asset amounting to $1,120.1m was recognised in respect of future non-Australian tax
deductions due to a change in the tax base of the Group’s intangible assets.
Judgement is required in determining the initial recognition and the subsequent carrying value of the deferred tax assets. Deferred tax assets
are only able to be recognised to the extent that utilisation is considered probable. $929.7m of the potential tax benefits were not initially
recognised due to risk factors that are used to estimate the carrying value of the deferred tax asset over the period of the potential benefits.
A reassessment of the carrying amount of the deferred tax assets is performed at each reporting period. Following a reassessment of the
recoverability of the potential tax benefits able to be utilised at 30 September 2020, the balance recorded as a deferred tax asset relating to the
these tax benefits was $1,083.3m. A further $20.8m was reclassified as a current tax asset relating to non-Australian tax losses that are able to
be carried back and offset against prior year taxable income. $589.6m of the potential tax benefits have not been recognised at 30 September
2020. The net income tax benefit of changes to the Group structure during the period was $1,122.7m, inclusive of the impact of translating the
deferred tax asset, which is denominated in foreign currency, into Australian dollars at the year end rate.
It is reasonably possible that a change in profit forecasts or risk factors could result in a material change to the income tax expense and
deferred tax assets in future periods. Changes in foreign exchange rates may also have a significant impact on amounts recognised.
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 and deferred tax assets
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 and carrying value of deferred tax assets. 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.
The carrying amount of deferred tax assets is dependent on a range of factors including expectations of future taxable income. Judgement
is required in determining the initial recognition and the subsequent carrying value of the deferred tax assets. Deferred tax assets are only
able to be recognised to the extent that utilisation is considered probable. The full benefits of the changes made to the Group structure
are able to be utilised over a minimum period of 15 years. Risk factors include the risk of insufficient taxable profits to use the benefits, and
other factors that would reduce the ability to realise the tax benefits. Growth rates in profits are forecast consistently with impairment
testing on goodwill, subject to adjustments to derive expected taxable income.
A reassessment of the carrying amount of the deferred tax assets is performed at each reporting period based on the above factors.
This reassessment takes into account the current COVID-19 situation and management’s best estimate of the likely impacts on future
near-term profitability as a result (refer to Note 6-7), as well as changes in government legislation during the year. Actual results will
often differ from forecasts.
Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred tax assets and liabilities in the period in which such determination is made.
69
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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)
2020
1,377.7
2019
698.8
Weighted average number of ordinary shares (WANOS) used in calculating basic EPS (number)
637,692,570
637,371,843
Effect of Performance Share Rights (number)
248,365
532,631
WANOS used in calculating diluted EPS (number)
637,940,935
637,904,474
Basic EPS (cents per share)
Diluted EPS (cents per share)
216.0
216.0
109.6
109.5
Basic earnings per share
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.
Information concerning the classification of securities
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 are 64,744 (2019: 97,470) 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 1,175,972 (2019: 1,198,754) shares held in the share trust.
1-6 DIVIDENDS
Ordinary shares
Dividend per share (cents)
Franking percentage (%)
Cost ($’m)
Payment date
2020
Final
10.0c
100%
63.9
2020
Interim
—
0%
—
2019
Final
34.0c
100%
217.1
2019
Interim
22.0c
100%
140.0
18 December 2020
Not applicable
17 December 2019
2 July 2019
Franking credits
The franking account balance at 30 September 2020 was $116.0m (2019: $145.8m).
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 2020 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 authorised a final fully franked dividend of 10.0 cents (2019: 34.0 cents) per fully paid
ordinary share. The aggregate amount of the proposed final dividend expected to be paid on 18 December 2020 out of retained earnings
at 30 September 2020, but not recognised as a liability at the end of the year is $63.9m.
70 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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
2-2 Inventories
2-3 Intangible assets
2-4 Property, plant and equipment
2-5 Leases
2-6 Trade and other payables
2-7 Provisions
2-8 Other liabilities
2-1 TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for impairment
Loan receivables
Other receivables
Total current receivables
Non-current
Trade receivables
Loan receivables
Other receivables
Total non-current receivables
Movements in the provision:
At the start of the year
Restatement through opening retained earnings - change in accounting policy
Provisions recognised during the year
Foreign currency exchange differences
Provisions no longer required
At the end of the year
2020
$’m
593.7
(63.8)
4.0
90.7
624.6
73.1
8.4
20.4
101.9
(12.2)
—
(52.8)
0.5
0.7
(63.8)
2019
$’m
814.9
(12.2)
9.2
129.4
941.3
70.9
7.1
27.0
105.0
(14.5)
(1.4)
—
(0.9)
4.6
(12.2)
The Group has applied a provision matrix based on historical credit loss rates for different customer segments, adjusted for the risks of non-
collection as a result of the impacts of COVID-19 on customers. The provision includes $57.3m (2019: $10.1m) of trade receivables past due and
considered impaired.
Included in the provision is $28.1m (2019: $7.3m) relating to Latin America trade receivables.
Trade receivables past due but not impaired
Under 3 months
3 months and over
Total receivables past due but not impaired
2020
$’m
43.1
11.8
54.9
2019
$’m
72.3
10.3
82.6
71
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-1 TRADE AND OTHER RECEIVABLES continued
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 credit terms of up to 120 days. If the contract with the
customer has a significant financing component, receivables are recognised at present value, and interest is recognised over the contract term.
Trade receivables were impacted by increased impairment charges due to COVID-19. There were no other significant changes in trade
receivables outside of normal sales and cash collections. Lower revenue as a result of COVID-19 led to lower trade receivables balances.
Impairment of trade receivables
The Group measures expected credit losses using a lifetime expected loss allowance for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. A provision matrix is then
determined based on the historic credit loss rate for each group, adjusted for forward looking information on factors affecting the ability of the
customers to settle trade receivables. This forward looking information includes the expected impacts of COVID-19 on collections.
Details about the Group’s exposure to credit risk are provided in Note 3-6.
Other receivables
These include prepayments, other receivables and long-term deposits incurred under normal terms and conditions and which do not earn
interest. They do not contain impaired assets and are not past due.
Fair value
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.
Key judgements and estimates: Recoverability of trade and other receivables
The Group reviews at each reporting date whether trade and other receivables are recoverable, including assessing the expected payments
to be received from customers. This process involves estimates and assumptions that are based on current expectations of customers ability
to pay amounts due. Due to the COVID-19 pandemic, this area has become a key judgement and estimate in the current reporting period.
2-2 INVENTORIES
Current
Raw materials and stores
Work in progress
Finished goods
Provision for obsolescence and impairment
Total inventories
2020
$’m
164.5
21.1
40.9
(66.3)
160.2
2019
$’m
141.0
6.3
42.6
(26.9)
163.0
Inventory expense
Inventories recognised as an expense for sales during the year ended 30 September 2020 amounted to $288.9m (2019: $452.3m).
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 performs an assessment 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.
The COVID-19 pandemic has reduced opportunities for selling products into the markets that the Group operates in. The carrying value
of inventory reflects best estimates of the conditions of markets in which the Group operates.
72 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-3 INTANGIBLE ASSETS
$’m
Cost
Accumulated amortisation
Goodwill
2,923.1
—
745.3
(253.8)
Net carrying amount
2,923.1
491.5
Carrying amount at 1 October 2018
2,731.5
Additions
Amortisation charge
Foreign currency exchange movements
Carrying amount at 30 September 2019
Cost
Accumulated amortisation
—
—
191.6
2,923.1
2,754.9
—
511.8
—
(54.1)
33.8
491.5
702.4
(287.1)
Net carrying amount
2,754.9
415.3
167.1
(27.9)
139.2
143.0
—
(13.3)
9.5
139.2
157.5
(39.3)
118.2
Carrying amount at 1 October 2019
2,923.1
491.5
139.2
Additions
Transfers
Disposals
Amortisation charge
Foreign currency exchange movements
Carrying amount at 30 September 2020
—
—
—
—
(168.2)
2,754.9
—
—
—
(50.4)
(25.8)
415.3
—
—
—
(13.7)
(7.3)
118.2
Intangible assets
Useful
life
Amortisation
method
Recognition and measurement
Customer
relationships
and contracts
Tradenames
and game
names
Intellectual
property and
licences
Capitalised
development
costs
Technology
and software
96.5
(46.7)
49.8
57.6
4.4
(15.9)
3.7
49.8
98.3
(60.4)
37.9
49.8
5.6
1.0
—
(15.8)
(2.7)
37.9
82.9
(36.2)
46.7
31.4
23.0
(7.8)
0.1
46.7
89.6
(41.5)
48.1
46.7
17.2
(1.6)
—
(13.5)
(0.7)
48.1
Total
4,723.9
(715.6)
709.0
(351.0)
358.0
4,008.3
423.5
37.6
(125.3)
22.2
3,898.8
65.0
(216.4)
260.9
358.0
4,008.3
688.6
(439.2)
4,491.3
(867.5)
249.4
3,623.8
358.0
4,008.3
7.0
1.5
(0.3)
(105.0)
(11.8)
29.8
0.9
(0.3)
(198.4)
(216.5)
249.4
3,623.8
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.
Tradenames
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 has 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
Intellectual
property and
licences
Up to 15
years
Up to 8
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.
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
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
Up to 7
years
Straight line
Technology and software is carried at cost less accumulated amortisation and impairment
losses. Technology and software acquired through business combinations is measured at
the fair value at acquisition date and is subsequently amortised.
73
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-3 INTANGIBLE ASSETS continued
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:
Americas segment
Americas (excluding VGT)
VGT
Digital segment
Product Madness
Big Fish
Plarium
Total goodwill at the end of the year
2020
$’m
102.8
961.2
25.0
1,132.1
533.8
2,754.9
2019
$’m
109.1
1,019.9
26.5
1,201.2
566.4
2,923.1
The VGT CGU also includes $17.3m and the Big Fish CGU $44.0m relating to tradenames that are not amortised, and are tested for
impairment annually.
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
2020
2019
Cash flow projections
Financial budgets and strategic plans approved by the Board to 2021 and management projections from
2022 to 2025. 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, including the impact of COVID-19, have been taken into account in
the projections.
Pre-tax annual discount rate
Americas (excluding VGT)
VGT
Product Madness
Big Fish
Plarium
Terminal growth rate
Americas (excluding VGT)
VGT
Product Madness
Big Fish
Plarium
9.7%
9.1%
9.5%
10.8%
10.6%
2.0%
2.0%
3.0%
3.0%
3.0%
10.0%
9.0%
10.2%
11.1%
11.7%
2.0%
2.0%
3.0%
3.0%
3.0%
Allocation of head office assets
The Group’s head office assets do not generate separate cash inflows and are utilised by more than
one CGU. Head office assets are allocated to CGUs on a reasonable and consistent basis and tested for
impairment as part of the testing of the CGU to which the head office assets are allocated.
c) Impact of possible changes in key assumptions
With regard to the assessment of the value-in-use of the 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.
For Plarium and Big Fish, growth in Digital businesses is dependent on the success of existing games and those that are being developed or
will be developed in future periods. Assumptions do not include all games developed being successful.
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. Refer to Note 6-7 for further
information on the preparation of forecasts and the impact of the COVID-19 pandemic.
74 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-4 PROPERTY, PLANT AND EQUIPMENT
Land and buildings
Leasehold improvements
Plant and equipment
Total
2020
$’m
31.3
(17.0)
14.3
13.9
1.9
—
—
—
(0.9)
(0.6)
2019
$’m
32.0
(18.1)
13.9
12.7
2.2
(0.2)
—
(0.8)
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
141.0
124.0
959.8
920.1
1,132.1
1,076.1
(51.6)
89.4
90.7
27.4
(0.8)
(8.2)
—
(33.3)
90.7
78.8
25.8
(5.5)
—
(0.3)
(710.3)
(593.5)
(778.9)
(644.9)
249.5
326.6
353.2
431.2
326.6
170.1
(7.1)
—
(25.8)
297.8
214.0
—
—
(24.9)
431.2
199.4
(7.9)
(8.2)
(25.8)
389.3
242.0
(5.7)
—
(26.0)
(0.8)
(12.6)
(13.9)
(197.8)
(182.4)
(211.3)
(197.1)
0.8
(7.1)
5.8
(16.5)
22.1
(24.2)
28.7
14.3
13.9
89.4
90.7
249.5
326.6
353.2
431.2
Cost
Accumulated
depreciation/amortisation
Net carrying amount
Carrying amount
at the start of the year
Additions
Disposals
Impairment losses
Transfers 1
Depreciation and
amortisation
Foreign currency exchange
differences
Carrying amount
at the end of the year
1. Transfers predominantly relate to gaming operations assets that have been transferred to and from inventory.
Recognition and measurement
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
Plant and equipment
Land
Useful life
Up to 40 years
Up to 12 years
Up to 10 years
Indefinite
Depreciation method
Straight line
Straight line
Straight line
No depreciation
Derecognition
An item of property, plant and equipment is derecognised when it is sold or disposed, or when its use is expected to bring no future economic
benefits. Gains and losses on disposals are determined by comparing disposal proceeds with the carrying amount of the asset and are
recognised within ‘other income’ in the profit or loss in the period the disposal occurs.
75
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-5 LEASES
This note provides information for leases where the Group is a lessee.
a) Amounts recognised in the balance sheet
The balance sheet includes the following amounts relating to leases:
Right-of-use assets
Buildings
Motor vehicles
Equipment
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
2020
$’m
173.4
4.0
0.9
178.3
43.3
232.7
276.0
1 October
2019
$’m
224.4
3.4
2.8
230.6
46.0
250.4
296.4
In the prior year the Group only recognised lease assets and liabilities in relation to leases that were finance leases under AASB 117 Leases,
amounting to $0.4m. The assets were presented in property, plant and equipment and the liabilities as part of the Group’s borrowings. For
adjustments recognised on adoption of AASB 16 on 1 October 2019, refer to Note 6-7.
Additions to the right-of-use assets in the 2020 year were $27.4m, and an impairment of $20.4m was recognised. The impairment charge relates to
a building lease that is not expected to be able to be fully utilised and will be sub-leased. The impairment charge and related onerous lease provision
is subject to estimates of sub-leasing income. This includes estimates of rental rates that the property will be able to be sub-leased at, and the time
required to locate a tenant. These estimates are subject to change based on the latest available information in future reporting periods.
b) Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts related to leases:
Depreciation charge for right-of-use assets
Buildings
Motor vehicles
Equipment
Total depreciation of right-of-use assets
Interest expense (included in finance costs)
Expense relating to short-term leases
Expense related to lease of low-value assets that are not shown as short term leases
Expense relating to variable lease payments not included in lease liabilities
The total cash out flow for leases in 2020 was $54.0m.
2020
$’m
36.4
2.5
1.0
39.9
14.9
2.1
0.2
0.2
76 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-5 LEASES continued
c) Leasing activities and accounting
The Group leases various offices, warehouses, equipment and vehicles. Rental contracts are for various periods and in some cases include
extension options. Contracts may include lease and non-lease components. Non-lease components such as outgoings are not included in the
amount recognised for right-of-use assets and lease liabilities.
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating leases. Refer to
Note 6-7 for further information. From 1 October 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date
which the leased asset is available for use by the Group. Lease liabilities include the present value of fixed payments less any lease incentives
received, and variable payments that are based on an index or rate, initially measured using the index or rate at the commencement date of the
lease. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The Group’s
incremental borrowing rate is used as the discount rate. Lease liabilities are adjusted when based on an index or rate at the time that changes
occur. Lease payments are allocated between repayments of principal and finance cost. Lease contracts amounting to $35.5m that have been
signed but have not yet commenced are not included in right-of-use assets and lease liabilities until the lease commencement date.
Right-of-use assets are generally depreciated over the shorter of the assets useful live and the lease term on a straight-line basis.
Payments associated with short-term leases of less than 12 months of equipment and motor vehicles and leases of low value assets are
recognised on a straight-line basis as an expense in the profit and loss.
Some leases include variable lease payments that do not depend on an index or a rate. Such payments are not included in the measurement
of the lease liability and are expensed as incurred.
2-6 TRADE AND OTHER PAYABLES
Current
Trade payables
Accrued expenses
Total current payables
Non-current
Accrued expenses
Total non-current payables
2020
$’m
121.2
525.5
646.7
55.3
55.3
2019
$’m
188.8
531.2
720.0
50.6
50.6
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 120 days of recognition. Accrued expenses include accruals
for short-term employee benefits, employment taxes, user acquisition costs, legal fees and other administrative expenses. Settlement of the
Kater and Thimmegowda cases forms part of accrued expenses.
The carrying amounts of trade and other payables are estimated to represent their fair value.
77
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
2. Operating assets and liabilities continued
2-7 PROVISIONS
Employee benefits
Make good
allowances
Progressive jackpot
liabilities
Onerous lease and
other provisions
Total
2020
$’m
22.1
1.9
2019
$’m
23.7
1.7
2020
$’m
0.4
6.2
2019
$’m
0.6
5.6
2020
$’m
26.3
2.5
2019
$’m
35.0
3.1
2020
$’m
5.0
13.7
2019
$’m
3.7
20.0
2020
$’m
53.8
24.3
2019
$’m
63.0
30.4
24.0
25.4
6.6
6.2
28.8
38.1
18.7
23.7
78.1
93.4
Current
Non-current
Carrying amount
at the end of the year
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Make good allowances
Progressive
jackpot liabilities
Onerous lease
and other provisions
2020
$’m
6.2
—
0.4
—
—
—
6.6
2019
$’m
10.0
—
0.4
—
(4.5)
0.3
6.2
2020
$’m
38.1
(43.4)
36.3
—
—
(2.2)
28.8
2019
$’m
36.4
(48.3)
49.0
—
(1.5)
2.5
38.1
2020
$’m
23.7
(0.4)
14.0
(17.9)
—
(0.7)
18.7
2019
$’m
0.6
(0.2)
23.3
—
(0.1)
0.1
23.7
Carrying amount at the start of the year
Payments
Additional provisions recognised
Transfers to right-of-use assets
Reversal of provisions recognised
Foreign currency exchange differences
Carrying amount at the end of the year
Recognition and measurement
Provisions are recognised when:
a) the Group has a present legal or constructive obligation 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.
Provision is made for the estimated cash flows expected to be required to settle the obligation.
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.
Onerous leases
Provision is made for onerous leases when the expected costs of the contract exceed the expected benefits. This usually arises when property
is not able to be fully utilised, and sub-lease rents are lower than required payments. The provision includes the non-lease components of
the contract such as outgoings, in the current year. In the prior year all payments related to onerous lease contracts were included in the
calculation of provisions. The new lease standard changed the accounting for onerous lease contracts, with the lease portion recognised as an
impairment to the right-of-use asset. Refer to Note 2-5 for further information.
2-8 OTHER LIABILITIES
Non-current
Lease incentives and accruals
Other
Total other liabilities
2020
$’m
—
4.0
4.0
2019
$’m
59.1
3.7
62.8
Lease incentives and accruals were offset against right-of-use assets on 1 October 2019 in accordance with the new lease accounting standard.
Refer to Note 6-7.
78 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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
3-2 Other 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
3-1 BORROWINGS
Current
Secured
Bank loans
Total current borrowings
Non-current
Secured
Bank loans
Total non-current borrowings
2020
$’m
2019
$’m
7.0
7.0
—
—
3,236.2
3,236.2
2,792.3
2,792.3
Lease liabilities are shown separately on the balance sheet.
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 Group’s borrowings are denominated in USD.
For an analysis of the sensitivity of borrowings to interest rate and foreign exchange risk, refer to Note 3-6.
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit (net of transaction costs):
Credit standby arrangements
Total facilities
– Bank overdrafts
– Bank loans
Total facilities
2020
$’m
2019
$’m
Notes
Total
Unused
Total
Unused
(i)
(ii)
7.8
3,520.2
3,528.0
7.8
277.0
284.8
8.0
2,942.3
2,950.3
8.0
150.0
158.0
i) The bank overdraft facilities (A$5,000,000 and US$2,000,000) are subject to annual review.
ii) Syndicated loan facilities:
– US$1,850 million US Term Loan B debt facility maturing 19 October 2024.
– US$498.8 million Incremental US Term Loan B debt facility maturing 19 October 2024.
– A$286 million Revolving facility maturing 22 July 2024.
79
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-1 BORROWINGS continued
These secured facilities are provided by a syndicate of banks and financial institutions and are supported by guarantees from certain members
of the Company’s wholly owned subsidiaries. Various affirmative and negative covenants on the Group are imposed, 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. The Group was in compliance with all debt covenants.
Borrowings under the Term Loan B facility are currently priced at a floating rate of LIBOR plus a fixed credit margin as specified in the relevant
Credit Agreement. A portion of the interest rate exposure has been fixed under separate interest rate swap arrangements. Approximately 48%
of the exposure is fixed with hedging out to 2022.
Borrowings made under the Incremental Term Loan B facility are currently priced at a 1% LIBOR floor plus a fixed credit margin as specified in
the relevant Credit Agreement.
3-2 OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES
2020
$’m
2019
$’m
FINANCIAL ASSETS
Current
Debt securities held-to-maturity
Derivatives used for hedging
Interest rate swap contracts - cash flow hedges
Total current financial assets
Non-current
Debt securities held-to-maturity
Convertible bond
Other investments
Total non-current financial assets
FINANCIAL LIABILITIES
Current
Interest rate swap contracts - cash flow hedges
Total current financial liabilities
Non-current
Interest rate swap contracts - cash flow hedges
Total non-current financial liabilities
6.7
0.4
—
7.1
4.8
2.1
1.0
7.9
2.0
2.0
6.4
—
0.1
6.5
5.8
—
0.7
6.5
—
—
61.7
61.7
48.4
48.4
a) Classification
The Group classifies its financial assets as those measured at amortised cost and those to be measured subsequently at fair value.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
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.
Amortised cost
The Group classifies its financial assets as at amortised cost only if the asset is held with the objective to collect contractual cashflows and
these cashflows are solely principal and interest.
Financial assets at amortised cost comprise trade and other receivables, debt securities held-to-maturity and other investments.
80 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-2 OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
b) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at FVPL are expensed in profit or loss.
Financial assets at amortised cost are subsequently 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.
c) Impairment
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement
in making these assumptions and selecting the inputs to impairment calculations, based on the Group’s past history and existing market
conditions as well as forward-looking estimates at the end of each reporting period.
Refer to Note 2-1 regarding the expected credit losses approach used to assess impairment of trade and other receivables.
d) Derivatives and hedging
Derivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to
their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged.
Hedge effectiveness for interest rate swaps is determined at inception of the hedge relationship, and through periodic prospective effectiveness
assessments. As all critical terms matched during the year, the economic relationship was 100% effective, and there was no hedge
ineffectiveness.
Cash flow hedges
The Group designates interest-rate swaps contracts as hedges of interest rate risk associated with floating interest cash flows of borrowings
drawn under Term Loan B facilities (cash flow hedges). Group policy is to maintain at least 30-70% of its borrowings at fixed rate using floating-
to-fixed interest rate swaps to achieve this when necessary. The Group’s borrowings are carried at amortised cost.
Swaps currently in place cover approximately 48% (2019 – 60%) of the Term Loan B facility outstanding. The fixed interest rates of the swaps
range between 2.71% and 2.75% (2019: 2.02% and 2.75%) and the floating rate of the borrowings at the end of the reporting period was 0.27%
(2019: 2.28%). The swap contracts require settlement of net interest receivable or payable every quarter. The settlement dates coincide with
the dates on which interest is payable on the underlying debt.
The effects of interest rate swaps on the Group’s financial position and performance are as follows:
Carrying amount – liabilities ($’m)
Notional amount in US$’m
Maturity dates
Hedge ratio
Change in fair value of interest rate hedges since 1 October ($’m)
Weighted average hedged rate for the year
2020
(63.7)
1,132.8
2019
(48.3)
1,133.0
2021 – 2022
2020 – 2022
1:1
(15.4)
2.72%
1:1
(64.7)
2.20%
81
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-3 RESERVES AND RETAINED EARNINGS
$’m
Balance at 1 October 2018
Profit for the year
Currency translation differences
Net investment in foreign operations
Change in accounting policy
Movement in fair value of interest rate hedges
Retained
earnings
1,040.9
698.8
—
—
(1.4)
—
51.9
—
108.0
(20.7)
—
—
Total comprehensive income for the year
697.4
87.3
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
(312.4)
—
—
—
—
—
—
—
Balance at 30 September 2019
1,425.9
139.2
Balance at 1 October 2019
Profit for the year
Currency translation differences
Net investment in foreign operations
Movement in fair value of interest rate hedges
1,425.9
1,377.7
—
—
—
139.2
—
(128.4)
17.3
—
Total comprehensive income/(loss) for the year
1,377.7
(111.1)
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
(217.1)
—
—
—
—
—
—
—
Balance at 30 September 2020
2,586.5
28.1
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Interest
rate
hedge
reserve
Non-
controlling
interest
reserve
Total
reserves
(83.0)
14.7
(7.1)
—
—
—
—
—
—
—
26.0
(24.8)
2.3
(79.5)
—
—
—
—
(64.7)
(64.7)
—
—
—
—
(50.0)
(79.5)
(50.0)
—
—
—
—
—
—
34.4
(40.4)
0.9
(84.6)
—
—
—
(8.0)
(8.0)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(7.1)
(7.1)
—
—
—
—
—
—
—
—
—
(23.5)
—
108.0
(20.7)
—
(64.7)
22.6
—
26.0
(24.8)
2.3
2.6
2.6
—
(128.4)
17.3
(8.0)
(119.1)
—
34.4
(40.4)
0.9
(58.0)
(7.1)
(121.6)
Nature and purpose of reserves:
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.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of all shares 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.
Interest rate hedge reserve
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.
82 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-4 CONTRIBUTED EQUITY
Ordinary shares, fully paid
Movements in ordinary share capital
Ordinary shares at the beginning of the year
Shares issued during the year
Ordinary shares at the end of the financial year
Shares
$’m
2020
2019
638,544,150
638,544,150
638,544,150
638,544,150
—
—
638,544,150
638,544,150
2020
715.1
715.1
—
715.1
2019
715.1
715.1
—
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.
3-5 NET TANGIBLE ASSETS/(LIABILITIES) PER SHARE
Net tangible liabilities per share
2020
$
(0.97)
2019
$
(2.92)
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 2020 were $4.98 (2019: $3.36).
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT
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 1
Net debt/(cash)/bank EBITDA 1
Interest coverage ratio (bank EBITDA 1/interest expense 2)
1. Bank EBITDA refers to Consolidated EBITDA for the Group as defined in Aristocrat’s Syndicated Facility Agreement.
2. Interest expense includes ongoing finance fees relating to bank debt facility arrangements, such as line fees.
2020
2.9x
1.4x
8.8x
2019
1.7x
1.4x
12.7x
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.
83
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT continued
Risk
Exposure arising from
Measurement
Management
Market risk:
Interest rate
Floating rate
borrowings drawn under
a Term Loan B facility
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.
Market risk:
Foreign
exchange
Market risk:
Price risk
Credit risk
Future commercial
transactions and
recognised assets and
liabilities denominated
in a currency that is not
the entity’s functional
currency
The Group’s exposure
to commodity price risk
is indirect and is not
considered likely to be
material
Cash and cash
equivalents, trade
and other receivables,
derivative financial
instruments and held-
to-maturity investments
Liquidity risk
Borrowings and other
liabilities
Sensitivity
analysis & cash
flow forecasts
– The Group’s foreign exchange hedging policy reduces the risk
associated with transactional exposures; and
– Unrealised gains/losses on outstanding foreign exchange contracts
are taken to the profit or loss on a monthly basis.
Nil
Nil
Ageing analysis
& credit ratings
– Customers and suppliers are appropriately credit assessed per
Group policies;
– Derivative counterparties and cash transactions are limited to high
credit quality financial institutions; and
– Cash and cash equivalents are predominately held with counterparties
which are rated ‘A’ or higher.
Cash flow
forecasts and
debt covenants
– Maintaining sufficient cash and marketable securities;
– Maintaining adequate amounts of committed credit facilities and the
ability to close out market positions; and
– Maintaining flexibility in funding by keeping committed credit
lines available.
Hedge of net investment in foreign entity
At 30 September 2020, US$203.2m (2019: US$203.2m) 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). Hedges of net investments in foreign operations are accounted for
similar to cash flow hedges. There was no ineffectiveness to be recorded in the profit or loss from net investment foreign entity hedges.
84 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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 non-derivative 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
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Financial assets
Cash and cash equivalents
Receivables
1,675.7
568.6
726.5
1,046.3
Debt securities held-to-maturity
11.5
12.2
(2.7)
—
(0.1)
Convertible bond and other
investments
3.1
0.7
—
Financial liabilities
Payables
Borrowings
Lease liabilities
Progressive jackpot liabilities
Total increase/(decrease)
702.0
770.6
3,243.2
2,792.3
276.0
28.8
0.4
38.1
—
7.6
—
0.3
5.1
(5.7)
—
(0.1)
—
—
28.1
—
0.4
22.7
16.8
—
0.1
—
—
5.7
—
0.1
—
—
0.5
7.4
—
—
0.4
9.6
—
—
(0.4)
(6.0)
—
—
(0.3)
(7.8)
—
—
(3.4)
(6.5)
2.8
5.3
(32.8)
—
(0.3)
(28.1)
—
(0.4)
—
—
—
—
—
—
—
—
—
—
—
—
(16.2)
(22.7)
4.5
3.5
(3.6)
(2.8)
Refer to Notes 3-1 and 3-2 for details of hedging undertaken to manage interest rate risk. Changes in the fair value of interest rate swaps are
recognised in equity. A 1% increase in interest rates would cause a $25.3m (2019: $42.4m) increase in the fair value of swap contracts held at
year end. A 1% decrease would cause a $25.9m (2019: $43.7m) decrease in the fair value of swaps held at year-end.
85
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT continued
Maturities of financial liabilities
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.
ii) based on the remaining period to the expected 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.
Less than 1 year
Between 1 to 5 years
Over 5 years
Total contractual
cash flows
Carrying amount
(assets)/liabilities
Contractual maturities of
financial liabilities
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
Non-derivatives
Trade payables
Accrued expenses
Borrowings
Borrowings - interest payments
Lease liabilities
Progressive jackpot liabilities
121.2
525.5
7.0
85.2
47.0
26.3
188.8
531.2
—
—
55.3
50.6
—
—
—
—
121.2
580.8
188.8
581.8
121.2
580.8
188.8
581.8
— 3,236.2
109.4
—
35.0
256.0
132.2
1.5
—
438.1
0.4
1.5
— 2,792.3
3,243.2
2,792.3
3,243.2
2,792.3
—
166.2
1.0
5.7
—
1.6
341.2
345.4
28.8
553.2
0.4
38.1
—
276.0
28.8
—
0.4
38.1
Total non-derivatives
812.2
864.4
3,681.2
490.6
167.2
2,799.6
4,660.6
4,154.6
4,250.0
3,601.4
Derivatives
Net settled (interest rate swaps)
Gross settled (forward foreign
exchange contracts)
2.0
(0.1)
61.7
48.4
– (inflow)
– outflow
(15.7)
(103.5)
15.3
103.5
Total (inflow)/outflow
(0.4)
—
—
—
—
—
—
—
Total derivatives
1.6
(0.1)
61.7
48.4
—
—
—
—
—
—
—
—
—
—
63.7
48.3
63.7
48.3
(15.7)
(103.5)
15.3
103.5
(15.7)
15.3
(0.4)
—
(0.4)
—
—
—
63.3
48.3
63.3
48.3
c) Foreign currency risk
The carrying amounts of the Group’s current and non-current receivables are denominated in the following currencies:
US dollars
Australian dollars
Other 1
Total carrying amount
The carrying amounts of the Group’s current and non-current payables are denominated in the following currencies:
US dollars
Australian dollars
Other 1
Total carrying amount
1. Other refers to a basket of currencies (including Euro, Pound Sterling, Israeli New Shekel and New Zealand Dollar).
86 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
2020
$’m
527.4
128.0
71.1
726.5
537.2
121.3
43.5
702.0
2019
$’m
778.0
191.4
76.9
1,046.3
578.8
135.5
56.3
770.6
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
3. Capital and financial structure continued
3-6 CAPITAL AND FINANCIAL RISK MANAGEMENT continued
d) Credit risk
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.
Refer above for more information on the risk management policy of the Group. The Group holds guarantees over the debts of certain customers.
The value of debtor balances over which guarantees are held is detailed below:
Trade receivables with guarantees
Trade receivables without guarantees
Total net trade receivables
2020
$’m
13.6
589.4
603.0
2019
$’m
14.8
858.8
873.6
e) Forward exchange contracts
The Group enters into derivatives in the form of forward exchange contracts to hedge foreign currency denominated receivables and also
to manage the purchase of foreign currency denominated inventory and capital items. The following table provides information as at
30 September 2020 on the net fair value of the Group’s existing foreign exchange hedge contracts:
Currency pair
AUD/EUR
AUD/USD
AUD/ZAR
AUD/NZD
Total
Maturity profile 1
Weighted
average
exchange rate
1 year or less
$’m
1 to 7 year(s)
$’m
0.6031
0.7126
11.5783
1.0806
41.0
(28.1)
1.1
1.7
15.7
—
—
—
—
—
Net fair value
gain/(loss) 2
$’m
0.4
(0.1)
0.1
—
0.4
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.
Level 1
Level 2
Level 3
Total
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
2020
$’m
2019
$’m
Assets
Interest rate swap contracts
Convertible bond
Derivatives used for hedging
Total assets at
the end of the year
Liabilities
Interest rate swap contracts
Total liabilities at
the end of the year
—
—
—
—
—
—
—
—
—
—
—
—
—
2.1
0.4
2.5
0.1
—
—
0.1
63.7
48.4
63.7
48.4
—
—
—
—
—
—
—
—
—
—
—
—
—
2.1
0.4
2.5
0.1
—
—
0.1
63.7
48.4
63.7
48.4
87
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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 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. Interest rate swap contracts are valued
using the present value of estimated future cashflows based on
observable yield curves. The convertible bond was purchased shortly
before the reporting date.
The fair value is calculated using inputs
that are not based on observable
market data.
The convertible bond was purchased shortly before the reporting
date, with the carrying amount approximating fair value.
There were no transfers between levels in the fair value hierarchy and no changes to the valuation techniques applied since 30 September 2019.
The carrying amount of financial instruments not measured at fair value approximates fair value.
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 - opening balance
Net increase in cash per cash flow statement
Debt repayments
Proceeds from borrowings
Amortisation of borrowing costs
Foreign exchange movements
Net debt - end of year
2020
$’m
1,675.7
(7.0)
(3,236.2)
2019
$’m
568.6
—
(2,792.3)
(1,567.5)
(2,223.7)
(2,223.7)
1,132.6
217.7
(869.3)
(6.4)
181.6
(2,451.9)
117.8
292.4
—
(6.0)
(176.0)
(1,567.5)
(2,223.7)
88 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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 current and prior financial years and the impact
they had on the Group’s financial performance and position.
4-1 Subsidiaries
4-1 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
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 Technologies Macau 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.
Country of incorporation
Australia
Australia and USA
USA
USA
USA
USA
Israel
Macau
New Zealand
UK
Mexico
Mexico
Australia
Australia
India
UK
Spain
89
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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 2020, 4 Executives (2019: 6 Executives) were
designated as key management personnel.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Key management personnel compensation
2020
$
2019
$
6,108,715
8,508,099
105,090
35,969
130,525
32,542
6,984,382
3,606,897
13,234,156
12,278,063
Detailed remuneration disclosures are provided in the remuneration report.
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”)
Deferred equity
employee plan
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.
42 employees (2019: 40)
were entitled to 1,312,437 rights
(2019: 1,073,102)
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 2020 result from the meeting of
performance criteria in the 2018 financial year. These rights are subject to the
respective employees remaining with the Group until October 2020.
47,876 (2019: 364,346)
Key employee
equity program
Certain eligible employees are offered incentives of share rights that are
based on individual performance, subject to continued employment for two
years. These rights are subject to the respective employees remaining with
the Group until October 2020 and October 2021.
1,059,153 (2019: 244,102)
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.
107,798 (2019: 172,700)
General
employee share
plan (“GESP”)
Other grants
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 (2019: Nil)
Contractual share rights are granted to retain key employees from time to
time across the Group, including after acquisitions, subject to continued
employment. The value of share rights granted are expensed over the
respective vesting periods.
669,770 (2019: 940,924)
90 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
5. Employee benefits continued
5-2 SHARE-BASED PAYMENTS continued
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
Deferred Equity Employee Plan
Key Employee Equity Program
Deferred Short-Term Incentive Plan
General Employee Share Plan
Other grants
2020
$’m
9.5
—
15.7
1.9
—
7.3
34.4
2019
$’m
6.6
1.6
7.6
1.7
0.8
7.7
26.0
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 2020 and
30 September 2019 are as follows:
Timing of grant
of rights
Performance period
start date
Performance period
expiry date
2020 financial year
1 October 2019
30 September 2022
2019 financial year
1 October 2018
30 September 2021
Performance condition
TSR
EPSG
Individual performance
TSR
EPSG
Individual performance
TSR
EPSG
Individual performance
Accounting
valuation date
29 January 2020
20 February 2020
22 March 2019
Accounting
valuation
($)
23.88
34.19
34.19
26.56
36.17
36.17
10.38
23.20
23.20
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.
91
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
5. Employee benefits continued
5-2 SHARE-BASED PAYMENTS continued
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.
The model inputs for share rights granted during the year ended 30 September 2020 and year ended 30 September 2019 included:
Input
Share rights granted
Grant date
Share price at grant date
Price volatility of Company’s shares
Dividend yield
Risk-free interest rate
Consideration
Zero consideration and have a three year life
2020
2019
29 January 2020 20 February 2020
22 March 2019
$35.74
25.4%
1.6%
0.7%
$37.69
25.5%
1.5%
0.7%
$24.41
25.5%
1.9%
1.4%
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.
Performance Share Rights are detailed in the tables below:
Consolidated – 2020
Grant date
28 March 2017
27 April 2018
22 March 2019
Performance
period expiry date
30 September 2019
30 September 2020
30 September 2021
29 January 2020
30 September 2022
20 February 2020
30 September 2022
Consolidated – 2019
Grant date
3 March 2016
28 March 2017
27 April 2018
22 March 2019
Performance
period expiry date
30 September 2018
30 September 2019
30 September 2020
30 September 2021
Rights at
start of year
New rights
issues
Rights
vested
Number
Number
Number
216,672
415,180
441,250
—
—
—
—
—
603,849
145,313
(216,672)
—
—
—
—
Rights
lapsed
Number
—
(90,187)
(107,904)
(95,064)
—
Rights at
end of year
Number
—
324,993
333,346
508,785
145,313
1,073,102
749,162
(216,672)
(293,155)
1,312,437
Rights at
start of year
New rights
issues
Number
Number
542,304
231,023
473,874
—
—
—
—
463,637
Rights
vested
Number
(542,304)
—
—
—
Rights
lapsed
Number
—
(14,351)
(58,694)
(22,387)
Rights at
end of year
Number
—
216,672
415,180
441,250
1,247,201
463,637
(542,304)
(95,432)
1,073,102
92 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
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
6-2 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
6-1 COMMITMENTS AND CONTINGENCIES
a) Commitments
Capital commitments
2020
$’m
2019
$’m
Capital expenditure contracted for at the reporting date but not recognised as liabilities:
Property, plant and equipment
0.9
5.3
b) Contingent liabilities
The Group and parent entity have contingent liabilities at 30 September 2020 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; and
iv) Aristocrat Leisure Limited, Aristocrat International Pty Ltd, Aristocrat Technologies Australia Pty Ltd, Aristocrat (Holdings) Pty Limited,
Aristocrat (Asia) Pty Limited, Aristocrat (Macau) Pty Limited, Aristocrat (Holdings) Pty Limited, System 7000 Pty Limited and Aristocrat
Technical Services 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.
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.
93
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
6. Other disclosures continued
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
Tax and advisory services
Australia
Overseas
Total remuneration for advisory services
2020
$
2019
$
1,607,806
2,473,131
1,113,000
2,285,826
4,080,937
3,398,826
111,437
945,040
3,291,362
1,569,090
1,056,477
4,860,452
It is the Group’s policy to employ PricewaterhouseCoopers (PwC) on low value assignments additional to their statutory audit duties where
PwC’s expertise and experience with the Group are important. During the current and prior year, PricewaterhouseCoopers was primarily
engaged for tax services relating to assistance with one-off changes to the Group Structure (refer to note 1-4). These services are not recurring.
Any future non-audit services are expected to be at lower levels.
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 4-1.
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
Total equity
Profit for the year after tax
Total comprehensive income after tax
2020
$’m
2019 1
$’m
78.1
12,356.9
173.0
173.0
36.0
12,272.4
111.9
111.9
12,183.9
12,160.5
715.1
218.7
715.1
184.2
11,250.1
11,261.2
12,183.9
12,160.5
206.0
11,582.2
206.0
11,582.2
1. Comparatives have been adjusted as a result of the Group structure changes as outlined in Note 1-4. These changes in the parent entity had no impact on the Group balances
due to being eliminated on consolidation.
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.
94 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
6. Other disclosures continued
6-5 PARENT ENTITY FINANCIAL INFORMATION continued
Recognition and measurement
The financial information for the parent entity, Aristocrat Leisure Limited, disclosed above has been prepared on the same basis as the
consolidated financial statements, except for investments in subsidiaries where they are accounted for at cost less impairment charges in the
financial statements of Aristocrat Leisure Limited.
6-6 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations Instrument 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 28 August 2019, 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
– Aristocrat Technologies Holdings Pty Limited
– System 7000 Pty Limited
– Aristocrat Technical Services 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. Aristocrat Technologies Holdings Pty Limited, System 7000
Limited and Aristocrat Technical Services Pty Limited joined the cross guarantee group during 2019. This did not have a material impact on the
results or financial position of the cross guarantee group.
Set out below is the statement of profit or loss and other comprehensive income of the Closed Group:
Revenue
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
Restatement through opening retained earnings
Profit for the year
Dividends paid
Retained earnings at the end of the financial year
2020
$’m
255.1
145.6
2.8
(130.1)
(151.2)
(12.7)
(41.7)
67.8
(39.9)
27.9
1.3
1.3
2019
$’m
493.7
462.9
2.5
(173.7)
(150.5)
(12.2)
(21.8)
600.9
(171.4)
429.5
(3.5)
(3.5)
29.2
426.0
1,025.1
—
27.9
(217.1)
835.9
909.4
(1.4)
429.5
(312.4)
1,025.1
95
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
6. Other disclosures continued
6-6 DEED OF CROSS GUARANTEE continued
Set out below is the balance sheet of the Closed Group:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Total current assets
Non-current assets
Trade and other receivables
Investments
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Provisions
Deferred revenue and other liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Deferred revenue and other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
96 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
2020
$’m
101.0
75.1
33.2
0.4
209.7
171.2
1,375.8
26.0
9.7
49.9
108.0
1,740.6
1,950.3
142.1
7.4
171.0
13.7
8.4
342.6
—
280.7
4.7
8.0
5.9
299.3
641.9
2019
$’m
97.7
142.7
23.8
—
264.2
345.7
1,375.8
13.5
—
37.7
115.3
1,888.0
2,152.2
174.0
—
110.1
15.0
19.1
318.2
0.2
298.1
—
8.7
6.5
313.5
631.7
1,308.4
1,520.5
715.1
(242.6)
835.9
1,308.4
715.1
(219.7)
1,025.1
1,520.5
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
6. Other disclosures continued
6-7 BASIS OF PREPARATION
Corporate information
Aristocrat Leisure Limited is a for-profit company incorporated
and domiciled in Australia and limited by shares publicly traded
on the Australian Securities Exchange. This financial report covers
the financial statements for the consolidated entity consisting of
Aristocrat Leisure Limited and its subsidiaries (together referred to
as the Group). A description of the nature of the Group’s operations
and its principal activities is included in the Directors’ Report and
the Operating and Financial Review. The financial report was
authorised for issue in accordance with a resolution of Directors on
18 November 2020.
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.
Going concern assumption
The financial statements have been prepared on a going concern
basis, which assumes the continuity of normal activities and
realisation of assets and settlement of liabilities in the ordinary
course of business. As at 30 September 2020, the Group had cash
of $1,675.7m and net current assets of $1,466.3m. Of the $3,243.2m
of debt, $7.0m is repayable within the next 12 months with the
remainder with maturity dates in 2024. Undrawn funding facilities
of $284.8m are available if required.
The majority of the Group’s Land-based customers have
recommenced operations since they were closed in mid-March 2020
in response to COVID-19. Cash flow forecasts have been prepared
which incorporate a gradual increase in the Land-based business
during the recovery stage, and Digital businesses remaining largely
unaffected by COVID-19. The most significant assumptions that have
been made in the preparation of these forecasts are outlined below.
After assessing detailed cashflow forecasting based on the revenue
and cost assumptions above, and based on the best available
information at this time, the directors believe that the going concern
assumption is considered the appropriate basis to prepare these
financial statements.
Significant assumptions relating to the impact of COVID-19
The 2020 financial year was uniquely challenging as a result of the
COVID-19 pandemic. The full magnitude and length of time of the
disruption to the Group requires continual assessment, and as a
result, there has been an increase in estimation uncertainty when
preparing the financial statements. Based on the best information
available at this time the Directors consider the most significant
assumptions that underpin forecast estimations, over management’s
five year projection period, when preparing the financial
statements are:
– a continued gradual ramping up of gaming floors in Land-based
businesses in line with an increase in consumer confidence
– a continuation of social distancing requirements
– a gradual reduction in travel restrictions
– continued demand for digital gaming experiences during periods
of stay at home mandates, and
– that the recovery stage for the business from COVID-19 is not
impacted by further significant closures of customer venues.
The key judgements and estimates that could be impacted if actual
outcomes are different to these forecasts are:
– Deferred tax assets and income tax expense (Note 1-4)
– Trade and other receivables (Note 2-1)
– Inventories (Note 2-2)
– Intangible assets (Note 2-3)
Principles of consolidation
The consolidated financial statements incorporate the financial
statements of Aristocrat Leisure Limited (the Company) and its
subsidiaries as at 30 September 2020.
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.
97
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2020
On adoption of AASB 16, the right-of-use assets were equal to the lease
liabilities, adjusted for existing lease incentives, straight line rent accruals
and onerous lease provisions. The method used to adopt the new
standard does not result in any changes to opening retained earnings.
For leases previously classified as finance leases the Group recognised
the carrying amount of the lease asset and lease liability immediately
before transition as the carrying amount of the right-of-use asset and
the lease liability at the date of initial application. The measurement
principles of AASB 16 are only applied after that date.
Financial impact of transition
Previously the Group did not recognise operating leases on the
balance sheet under the principles of AASB 117 Leases, with
expenses recorded on a straight-line basis, and commitments for
future payments disclosed in the financial statements. On 1 October
2019, right-of-use assets of $230.6m and lease liabilities of $296.4m
were recognised, with $65.8m of existing lease incentives, straight-line
rent accruals and onerous lease liabilities offset against the right-of-use
asset. The right-of-use assets and lease liabilities mainly result from
property leases of the Group in various locations around the world.
In relation to leases recognised on the balance sheet, depreciation
of $39.9m and interest of $14.9m were recognised during the year.
$36.6m of lease payments that would have previously been recorded
as part of operating cashflow are now classified as part of financing
cashflows. The balance of right-of-use assets was $178.3m and lease
liabilities $276.0m at 30 September 2020. Amounts recognised in
relation to the new lease standard are subject to tax-effect accounting.
Interpretation 23 Uncertainty over Income Tax Treatments
The Group applied for the first time Interpretation 23 Uncertainty
over Tax Treatments from 1 October 2019. The interpretation outlines
recognition and measurement requirements of AASB 112 Income
Taxes, and how they should be applied when there is uncertainty
over income tax treatments. The Group recognises uncertain tax
positions in accordance with methods allowed under AASB 112 and
Interpretation 23, with the Interpretation not having a material impact
on the Group.
6. Other disclosures continued
6-7 BASIS OF PREPARATION continued
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
Assets and liabilities
Equity
Reserves
Average exchange rate
Reporting date
Historical date
Historical date
Foreign exchange gains and losses resulting from translation are
recognised in the statement of profit or loss, except for qualifying
cash flow hedges which are deferred to equity.
Foreign exchange differences resulting from translation of foreign
operations are initially recognised in the foreign currency translation
reserve and subsequently transferred to the profit or loss on disposal
of the foreign operation.
New accounting standards and interpretations
The Group adopted all relevant new and amended accounting
standards and interpretations issued by the Australian Accounting
Standards Board which are effective for annual reporting periods
beginning on or after 1 October 2019. The impact of these new
standard and interpretations is set out below:
AASB 16 Leases (‘AASB 16’)
The Group has applied AASB 16 Leases for the first time from
1 October 2019. Comparatives for the 2019 reporting period have not
been restated, as permitted under the specific transition provisions
in the Standard. AASB 16 has introduced a single, on-balance sheet
accounting model for leases as lessee.
A contract is a lease if it contains a right to control an identified asset
for a period of time for consideration. Non-lease components of the
contract, such as outgoings are not accounted for as part of the lease
accounting, and remain unchanged.
As a result of the first time application of the standard to the leases
of the Group, right-of-use assets representing the right to use the
underlying assets, and lease liabilities, representing the obligation to
make lease payments have been recognised. Future lease payment
commitments of $403.4m were disclosed in the 2019 financial
statements. Lease liabilities are recognised at the present value of
future payments from the lease commencement date, discounted at
the incremental borrowing rate. The weighted average incremental
borrowing rate used was 4.95%.
98 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
DIRECTORS’ DECLARATION
for the year ended 30 September 2020
In the Directors’ opinion:
a) the financial statements and notes set out on pages 56 to 98 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 2020 and of its performance, for the 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.
N CHATFIELD
Chairman
Sydney
18 November 2020
99
INDEPENDENT AUDITOR’S REPORT
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 2020 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 2020
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 & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (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.
100 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
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.
Materiality
Audit scope
● For the purpose of our audit we used
overall Group materiality of $33
million, which represents
approximately 5% of the Group’s
weighted average profit before tax
over the last three years.
● We chose Group profit before tax
because, in our view, it is the
benchmark against which the
performance of the Group is most
commonly measured. Due to the
COVID-19 impact on profit and loss in
the current year, we chose a three year
weighted average.
● We applied this threshold, together
with qualitative considerations, to
determine the scope of our audit and
the nature, timing and extent of our
audit procedures and to evaluate the
effect of misstatements on the
financial report as a whole.
● We utilised a 5% threshold based on
our professional judgement, noting it
is within the range of commonly
acceptable thresholds.
● 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,the
United States of America (“USA”) and Israel. Accordingly, we
structured our audit as follows:
○ The group team was led by our team from PwC Australia
("group audit team"). The group audit team conducted an
audit of the financial information of businesses operating
in Australia used to prepare consolidated financial
statements.
○ Under instructions from and on behalf of the group audit
team, component auditors in the USA and Israel
performed an audit of the respective financial information
for those locations used to prepare the consolidated
financial statements.
● The group audit team had continuous involvement in the work
performed by the component auditors, with each component
team being provided with direct written instructions and
regular dialogue between component and group teams
throughout the audit. The group audit team also held meetings
with local management of each financially significant
operation.
● The group audit team undertook the remaining audit
procedures, including over significant financial statement items
at the Group level and the Group consolidation.
101
INDEPENDENT AUDITOR’S REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Estimated recoverable amount of
goodwill - Americas, VGT, Plarium
and Big Fish
(Refer to note 2-3)
The Group assesses goodwill and other
indefinite lived intangible assets for
impairment annually at the cash generating
unit (CGU) level.
Assessment of the recoverability of goodwill
and other indefinite lived intangibles was a
key audit matter due to:
● The magnitude of the goodwill and
indefinite lived intangible asset balances
● The inherent uncertainty regarding the
duration and severity of COVID-19 and
its potential impact on future cashflows
●
the estimates and assumptions used in
determining cashflow projections,
discount rates and terminal growth rates
requiring significant judgement
Assisted by PwC valuation experts in aspects of our work, our
audit procedures included, amongst others:
● developed an understanding of the impact of COVID-19 on
the Group, the Group’s planned response and the potential
subsequent impact on future cash flows;
●
●
●
●
assessing the identification of CGUs and the allocation of
carrying values of assets and liabilities and cash flows to
those CGUs for consistency with the teams knowledge of the
Group;
assessing whether the value in use models applied by the
Group for impairment testing were prepared in accordance
with the requirements of the Australian Accounting
Standards;
comparing the cash flow forecasts and capital expenditure
assumptions to the Board and/or management approved
budgets and forecasts;
testing the mathematical accuracy of the models on a sample
basis;
● assessing the terminal growth rates and discount rates
applied in the models by comparing them to external
information sources;
●
●
●
assessing cash flow forecasts, which include key growth
assumptions, within the models against historical
performance, future strategic plans, the impact of COVID-19
and other market information;
considering the sensitivity of the models by varying key
assumptions, such as terminal growth rates and discount
rates, within a reasonably possible range; and
evaluating the related financial statement disclosures for
consistency with Australian Accounting Standards
requirements.
102 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Income tax expense and Deferred tax
assets
(Refer to note 1-4)
Our procedures included amongst others:
● developing an understanding the potential impact of COVID-
The Group operates globally and is subject to
tax regimes and tax legislation administered
by separate tax authorities in a number of
countries, including bilateral agreements
between different tax authorities.
●
●
19 on future cashflows;
evaluating whether the forecasts were consistent with
approved budgets and impairment models;
assessing the Group’s application of risk factors in
comparison to our knowledge of the group and external
information;
The recognition, remeasurement and
recoverability of deferred tax assets is a key
audit matter due to the inherent complexity
in the Group’s estimation of the deferred tax
asset which involves assumptions related to
future taxable income (including the impact
of COVID-19) and risk factors that reduce the
potential benefits.
● assessing adjustments between accounting and taxable
profits;
● with the assistance of PwC Tax experts, considering the
Group’s ability to claim the deductions in compliance with
US and Australian tax laws;
● with the assistance of PwC Valuation experts, assessing the
maximum value of future non-Australian tax deductions,
including:
Income tax expense is a key audit matter due
to the complexity of global tax legislation and
the significant judgement required to assess
some tax treatments and calculate relevant
income tax expense amounts.
The Group has recognised deferred tax assets
of $1,083.3 million as at 30 September 2020
in respect of benefits from future non-
Australian tax deductions.
The Australian Accounting Standards require
deferred tax assets to be recognised only to
the extent that it is probable that sufficient
taxable profits will be generated in the
foreseeable future in order for the benefits of
the deferred tax assets to be realised.
Under the relevant legislation in certain
territories some tax interpretations remain
open to challenge for an extended period.
Some uncertainty exists that the positions
adopted by the Group could be challenged by
tax authorities.
○
○
considering the valuation methodology, including an
assessment of the key assumptions in relevant models
and;
assessing the competence and capability of the Group’s
expert who assisted with the valuation;
●
●
testing mathematical accuracy on a sample basis and
reperforming the calculations of the deferred tax asset
balance;
evaluating the analysis conducted by the Group for key
judgements made in respect of the ultimate amounts
expected to be paid to tax authorities;
● assessing the consistency of key assumptions inherent in
accounting positions, in years where tax assessments are still
open, to historically agreed positions with tax authorities;
●
●
reading correspondence between tax authorities and the
Group's tax advisors, including the status of any agreements
between tax authorities in different jurisdictions;
together with PwC tax experts, considering potential global
tax risks within the Group; and
● assessing the appropriateness of the Group's disclosure in
the financial report in light of Australian Accounting
Standard requirements.
103
INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Revenue from contracts with
customers
(Refer to note 1-2)
Revenue was a key audit matter given the
financial significance of revenue to the
financial statements and the complexity of
some contractual arrangements entered into
with customers.
Aristocrat has multiple revenue streams. For
some streams (excluding digital) contracts
can include different elements including
delayed settlement, delayed delivery,
bundling of products and multiple element
agreements. For the digital revenue stream,
determining the timing of revenue
recognition is complex due to the
determination of when game credits
purchased by customers are consumed,
which varies by game.
Other information
Our procedures included, amongst others:
●
considering the Group’s accounting policy in line with
Australian Accounting Standard requirements;
● developing an understanding and evaluating controls
over the revenue and receivables business process;
●
obtaining a sample of contractual arrangements and
testing underlying transactions, including identifying
performance obligations, assessing whether the
transaction was recognised in the right period and
understanding any manual revenue adjustments;
● where material contracts included bundling of different
products, comparing revenue allocation methods and
considering whether any discounts were allocated across
different elements of the contract in line with Australian
Accounting standard requirements;
●
evaluating related financial statement disclosures for
consistency with Australian Accounting Standard
requirements.
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 2020, but does not include
the consolidated 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 consolidated financial report does not cover the other information and we do not
and will not express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated 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, 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.
104 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
105
INDEPENDENT AUDITOR’S REPORT
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 30 to 51 of the directors’ report for the
year ended 30 September 2020.
In our opinion, the remuneration report of Aristocrat Leisure Limited for the year ended 30 September
2020 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.
PricewaterhouseCoopers
MK Graham
Partner
Sydney
18 November 2020
106 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
SHAREHOLDER INFORMATION
DISTRIBUTION OF EQUITY SECURITIES AS AT 17 NOVEMBER 2020
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 Rights 1
Number of
Performance
Share Rights 1
% of
Performance
Share Rights
Holders
of shares 2
Number
of shares 2
% of issued
capital
839
267
36
44
6
1,192
223
115,554
542,090
256,683
1,240,869
1,431,155
3.222
15.115
7.157
34.600
39.906
32,766
7,704
877
474
72
10,520,102
16,277,470
6,184,596
9,992,054
1.650
2.550
0.970
1.560
595,569,928
93.270
3,586,351
100.000
41,893
638,544,150
100.000
1,833
0.05111
759
3,344
0.00052
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 17 NOVEMBER 2020
As at 17 November 2020, 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
AustralianSuper Pty Ltd
The Vanguard Group, Inc.
TWENTY LARGEST ORDINARY SHAREHOLDERS AS AT 17 NOVEMBER 2020
Name of shareholder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
WRITEMAN PTY LIMITED
THUNDERBIRDS ARE GO PTY LTD
ARMINELLA PTY LIMITED
ECA 1 PTY LIMITED
MAAKU PTY LIMITED
ARGO INVESTMENTS LIMITED
BNP PARIBAS NOMS (NZ) LTD
NETWEALTH INVESTMENTS LIMITED
AVANTEOS INVESTMENTS LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
AMP LIFE LIMITED
UBS NOMINEES PTY LTD
INVIA CUSTODIAN PTY LIMITED
NAVIGATOR AUSTRALIA LIMITED
SARGON CT PTY LTD
Number of ordinary
shares held
% of issued capital
Date of notice
38,342,681
32,265,043
32,730,782
6.00%
5.05%
5.126%
31/08/2020
27/07/2020
6/12/2018
Number of
ordinary shares held
% issued capital
235,813,320
140,602,372
68,837,459
35,396,968
28,687,622
26,566,720
16,077,754
14,692,200
8,532,904
5,284,127
3,264,665
1,203,890
1,094,409
930,379
898,136
855,109
795,100
782,750
669,676
645,791
36.930%
22.019%
10.780%
5.543%
4.493%
4.161%
2.518%
2.301%
1.336%
0.828%
0.511%
0.189%
0.171%
0.146%
0.141%
0.134%
0.125%
0.123%
0.105%
0.101%
107
SHAREHOLDER INFORMATION
VOTING RIGHTS
At meetings of shareholders, each shareholder may vote in person
or by proxy, attorney or (if the shareholder is a body corporate)
corporate representative. On a show of hands, every person present
who is a shareholder or a representative of a shareholder has
one vote and on a poll every shareholder present in person or by
proxy or attorney has one vote for each fully paid ordinary share.
Performance share right holders have no voting rights.
REGULATORY CONSIDERATIONS AFFECTING SHAREHOLDERS
Aristocrat Leisure Limited and its subsidiaries could be subject to
disciplinary action by gaming authorities in some jurisdictions if,
after receiving notice that a person is unsuitable to be a shareholder,
that person continues to be a shareholder. Because of the importance
of licensing to the Company and its subsidiaries, the Constitution
contains provisions that may require shareholders to provide
information and also gives the Company powers to divest or require
divestiture of shares, suspend voting rights and withhold payments
of certain amounts to shareholders or other persons who may
be unsuitable.
SHAREHOLDER ENQUIRIES
You can access information about Aristocrat Leisure Limited and your
holdings via the internet. Aristocrat’s website, www.aristocrat.com,
has the latest information on Company announcements, presentations
and reports. Shareholders may also communicate with the Company
via its website. In addition, there is a link to the Australian Securities
Exchange to provide current share prices. The share registry manages
all your shareholding details. Visit www.boardroomlimited.com.au and
access a wide variety of holding information, make changes to your
holding record and download forms. You can access this information
via a security login using your Securityholder Reference Number (SRN)
or Holder Identification Number (HIN).
DIVIDENDS
Electronic Funds Transfer
The Company has a mandatory direct payment of dividends program
for all shareholders who were requested to complete and submit
Direct Credit payment instructions with the Company’s share
registrar. Shareholders who have not submitted valid Direct Credit
payment instructions will receive a notice from the Company’s
share registrar advising that:
i) the relevant dividend amount is being held as direct credit
instructions have not been received;
ii) the relevant dividend will be credited to the nominated bank account
as soon as possible on receipt of direct credit instructions; and
iii) no interest is payable on the dividend being withheld.
Such notices are sent to shareholders who have not completed and
submitted a Direct Credit of Dividends instructions on the record date
of the relevant dividend.
Dividend Reinvestment Plan
The Directors consider whether the Company’s Dividend Reinvestment
Plan (DRP) should operate each time a dividend is declared.
The DRP Rules and the ‘Dividend Reinvestment Plan Application or
Variation Form’ are available from the Company’s share registrar,
Boardroom Limited on 1300 737 760 (in Australia), or +61 2 9290 9600
(international) or email enquiries@boardroomlimited.com.au
Shareholders should note that: (i) Shareholders who elect to
participate in the DRP and who do not revoke their elections will
automatically participate on the next occasion the DRP is activated;
(ii) the fact that the DRP operated in respect of any dividend does not
necessarily mean that the DRP will operate in respect of any further
dividends (a separate decision is made for each dividend); and (iii)
when the DRP does operate, the DRP rules provide that the number of
shares that DRP participants will receive will not be determinable on
the Record Date determined by the Board.
108 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
CORPORATE DIRECTORY
DIRECTORS
NG Chatfield
Non-Executive Chairman
TJ Croker
Chief Executive Officer and Managing Director
KM Conlon
Non-Executive Director
PG Etienne
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
Aristocrat Technologies Australia Pty Limited
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
Aristocrat Technologies NZ Limited
Unit E, 7 Echelon Place Highbrook
Auckland 2013 New Zealand
Telephone: +649 259 2000
Facsimile: +649 259 2001
THE AMERICAS
NORTH AMERICA
Aristocrat Technologies Inc.
10220 Aristocrat Way
Las Vegas Nevada 89135 USA
Telephone: + 1 702 270 1000
Facsimile: + 1 702 270 1001
Video Gaming Technologies, Inc.
3401 Mallory Lane Suite 300
Franklin Tennessee 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
LATIN AMERICA
Aristocrat Technologies México, S.A. de C.V.
Av. Paseo de las Palmas 425 Piso 14
Col. Lomas de Chapultepec
México, CDMX 11000
Telephone: + 52 55 5282 4800
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
SINGAPORE
Aristocrat (Singapore) Pty Limited
61 Kaki Bukit Avenue 1
Shun Li Industrial Park #04-29 Singapore 417943
Telephone: + 656 444 5666
Facsimile: + 656 842 4533
EUROPE
GREAT BRITAIN
Aristocrat Technologies Europe Limited
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
www.aristocrat.com
INVESTOR EMAIL ADDRESS
Investors may send email queries to:
investor.relations@aristocrat.com
109
109
110 ARISTOCRAT LEISURE LIMITED | ANNUAL REPORT 2020
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WWW.ARISTOCRAT.COM