2023 Annual Report
Contents
Company Profile
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
01
02
04
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2023 Annual Report
This 2023 Aristocrat Leisure Limited Annual Report for
the financial year ended 30 September 2023 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 2023 financial year.
2024 Annual General Meeting
The 2024 Annual General Meeting will be held at 11.00am on
Thursday, 22 February 2024.
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 2024.
2023 Corporate Governance Statement
The 2023 Corporate Governance Statement can be found on
the Group’s website: www.ir.aristocrat.com/governance.
Key Dates 1
2023
Record date for Final 2023 Dividend
1 December 2023
Payment date for Final 2023 Dividend 19 December 2023
2024
2024 Annual General Meeting
22 February 2024
Interim Results Announcement 2
16 May 2024
Full Year Results Announcement 3
13 November 2024
1. Dates subject to change.
2. 6 months ending 31 March 2024.
3. 12 months ending 30 September 2024.
Aristocrat Leisure Limited 2023 Annual Report
Bringing joy to life through the power of play
7,800+
employees located
around the world
325+
licensed
jurisdictions
Operating in
100+countries
Company Profile
Aristocrat Leisure Limited (ASX: ALL) is a global
entertainment and content creation company powered
by technology to deliver industry-leading casino games
and is a top-tier mobile games publisher, with more
than 7,800 employees in over 20 locations around the
world. Aristocrat offers a diverse range of products and
services including electronic gaming machines, casino
management systems, free-to-play mobile games and
online real money games. The company’s regulated
gaming products are approved for use in more than
325 licensed jurisdictions and are available
in more than 100 countries.
For further information visit the Group’s
website at www.aristocrat.com.
Aristocrat Leisure Limited 2023 Annual Report
01
A message from the Chairman
and CEO
We are proud of the high quality result that Aristocrat delivered for the
2023 financial year. Strong revenue and profit growth reflected the
ongoing resilience, scale, competitiveness and diversification of our
portfolio, and sound fundamentals in the markets in which we operate.
Aristocrat’s normalised Group profit result of around
$1.3 billion represented an increase of 21% in reported
terms, and 13% in constant currency, compared to the
corresponding 2022 result.
Strong operating cash flows and superior financial
fundamentals were also maintained, with a strong
balance sheet and ample liquidity, resulting in a net cash
position of $809 million and liquidity of $3.9 billion as at
30 September 2023. Cash of $811 million was returned
to shareholders through dividends and the on-market
share buy-back program, in line with the Group’s capital
allocation framework.
Aristocrat’s performance underlines the ongoing and
effective implementation of Aristocrat’s growth strategy.
Throughout the year, we continued to invest strongly in
competitive product portfolios to drive further share growth
across key segments. Strong performance in Aristocrat
Gaming more than offset the impact of an industry-wide
moderation in mobile game demand, again highlighting
diversification and scale as fundamental strengths of
our business.
Outstanding operational performance was delivered in the
Gaming business in 2023, particularly in North America.
We continued to strive to be a partner of choice to our
Gaming customers, delivering a market-leading portfolio
performance of 1.4 times floor average in the period –
exceeding all other gaming suppliers. Strong share growth
was further supported by penetration of new hardware along
with successful growth in priority adjacencies, led by the
VLT segments in Canada, Oregon, Illinois and New York.
Our mobile publishing business, Pixel United, delivered resilient
performance for the year compared to 2022, despite mixed
conditions across mobile gaming. The business retained
leading positions in key genres, including #1 position in the
Social Slots segment, #2 in the broader Social Casino genre,
#1 in the Squad RPG (Role-Playing Games) segment and #4
in the Casual Merge segments. At year end, Pixel United titles
accounted for 6 of the top 100 mobile games in the US across
multiple genres, showing the benefits of continued investment
in features, new content and best practices in Live Ops.
Last year, we announced a new brand for Aristocrat’s online
Real Money Gaming (RMG) business, Anaxi. Over financial
2023, Anaxi delivered our market entry commitments as we
accelerated implementation of our “build and buy” strategy to
grow in online RMG. Anaxi made considerable progress and,
at year end, was live with seven operators in six countries
across eight jurisdictions. We completed the acquisition of
Roxor, a leading studio and content publishing technology
company, and successfully integrated this core product
technology into the Anaxi business.
Aristocrat also announced the proposed acquisition of
NeoGames in May 2023 and expect the transaction to close
in the first half of calendar 2024. When combined with our
leading gaming content and strong relationships with both
commercial and tribal operators and gaming regulators, we
believe the acquisition will allow us to build a world class
online RMG company at scale, operating across the three
main verticals of iGaming, iLottery and Online Sports Betting.
We are also pleased to report that Aristocrat took significant
steps forward in leadership and capability during the 2023
financial year, including through key appointments to the
executive leadership team. Sally Denby was promoted to
Chief Financial Officer in November 2022, while Tracey
Elkerton, Chief Compliance Officer, was elevated to the
executive team in February 2023. In addition, post period
end, Superna Kalle was appointed Chief Strategy and
Content Officer. These appointments represent a mix of
effective internal talent development and the recruitment
of external expertise, consistent with the skills required to
continue to execute Aristocrat’s growth strategy.
02
Aristocrat Leisure Limited 2023 Annual Report The Board also continued to strengthen its capabilities and
skills mix, welcoming Jennifer Aument as a Non-Executive
Director (Elect) in April 2023. Jennifer was previously global
chief executive for transportation at AECOM, and has more
than 25 years of experience across large, US and Australian
listed companies, particularly in regulated environments.
We are delighted to have the benefit of Jennifer’s experience
and perspectives.
In summary, we are pleased to report that fiscal 2023 was a
successful year for Aristocrat. As we look ahead, we believe
our outstanding product portfolios, growing operational
resilience and capability, along with a highly engaged team and
strong culture, positions us well, despite uncertain conditions.
We will of course remain fully focused on advancing the long
term interests of you – our shareholders – and we thank you
for your ongoing interest and support.
Across the year, Aristocrat made significant steps forward
in delivering our ambitious sustainability commitments.
Responsible Gameplay (RG) remained Aristocrat’s highest
sustainability leadership priority. Among other highlights,
we completed Australia’s first cashless gaming trial, and
post period end, Aristocrat submitted Science-Based
emissions reduction Targets for our global enterprise
to the SBT initiative. We anticipate validation of these
targets in the first half of calendar 2024.
Throughout 2023, we continued to foster a ‘People First’
mindset, with the launch of a number of additional
initiatives to further enhance the wellbeing, engagement
and development of all team members. Supporting our
colleagues in Ukraine and, more recently, in Israel was a
particular focus, and a moving demonstration of our values
in action. We are continuing to build our business on a
foundation of integrity and strong governance, consistent
with our focus on delivering sustainable benefits over
the long term.
Shareholders are encouraged to peruse full details in
Aristocrat’s 2023 sustainability disclosures, available via
our Group website (www.aristocrat.com).
We recognise the extraordinary resilience and commitment
of our team of over 7,800 people around the world and
express our sincere thanks to each of them for their energy
and passion throughout the year.
Yours sincerely,
Neil Chatfield
Chairman
Trevor Croker
CEO and Managing Director
03
Aristocrat Leisure Limited 2023 Annual Report Directors’ Report
For the 12 months ended 30 September 2023
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 2023
(the financial year). The information in this report is current
as at 15 November 2023 unless otherwise specified.
Aristocrat is committed to being compliant with all applicable
environmental laws and regulatory obligations relevant to
its operations and has policies and procedures in place that
are designed to identify and appropriately address those
obligations and where required, provide notification to the
relevant authority of material breaches.
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).
The Company has not been prosecuted, is not subject to any
proceedings, and has not been convicted of any significant
breaches of environmental regulation during this financial year.
Review and results of Operations
A review of the operations of the Group for the financial
year and the results of those 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 2023 was a profit of
$1,454.1 million after tax (2022: profit of $948.5 million after
tax) and normalised profit after tax and before amortisation
of acquired intangibles (NPATA) for the financial year was
$1,326.6 million (2022: $1,099.3 million).
Further details regarding the financial results of the Group
are set out in the Operating and Financial Review and
Financial Statements.
Capital management – dividends and
share buy-back
Since the end of the financial year, the Directors have
authorised a final fully franked dividend of 34.0 cents
(2022: 26.0 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.
During the financial year, the Board approved an increase
to the existing on-market share buy-back program to allow
up to $1.5 billion to be bought up until 31 May 2024. As at
30 September 2023, $755 million of the share buy-back
program had been completed.
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 60 of the
Remuneration Report.
Environmental regulation
The Company is not subject to any particular or significant
environmental legislation under a law of the Commonwealth,
State or Territory of Australia or in any of the other
jurisdictions that the Group operates in. While the Company
is not required to register and report under the National
Greenhouse and Energy Reporting Act 2007 (Cth) (NGER Act),
it continues to receive reports and monitors its position to
ensure compliance with the NGER Act.
04
Aristocrat adopts a phased long-term approach to expansive
climate-related disclosures and has made progress in lifting
its Environmental, Social, and Governance capability and
core infrastructure, improving data capturing capabilities
to facilitate better quality disclosures and more accurate
emissions reporting.
Aristocrat currently discloses against the Task Force on
Climate-related Disclosures (TCFD) framework. Using the
TCFD framework, Aristocrat’s sustainability disclosures
provide a progress update across each of the TCFD pillars:
Governance, Strategy, Risk Management, Metrics and Targets.
These detailed sustainability disclosures are published
annually on the Company’s website.
Aristocrat has submitted its draft targets for reductions in
emissions to the Science-Based Targets Initiative (SBTi) and
anticipates obtaining the required SBTi approval in the first
half of calendar 2024.
Aristocrat’s sustainability disclosures can be found
on the Company’s website www.aristocrat.com
Principal activities
Aristocrat is a global entertainment and content creation
company that leverages technology to deliver industry-leading
casino games and is a top-tier mobile games publisher. 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, free-to-play mobile games
and online real money games. Aristocrat’s regulated gaming
products are approved for use in more than 325 licensed
jurisdictions and are available in more than 100 countries.
Significant changes in the state of affairs
Except as outlined elsewhere in this Directors’ Report, there
were no significant changes in the state of affairs of the Group
during the financial year.
Events after balance date
Other than the Board authorising the final dividend, since the
end of the financial 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.
Aristocrat Leisure Limited 2023 Annual Report 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.
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
Special responsibilities
Nominated December 2017. Appointed February 2018.
– Chairman of Costa Group Holdings Limited (since July 2015,
appointed as a Non-Executive Director in October 2011)
– Former Non-Executive Director of Transurban Group
(February 2009 – October 2021)
– Former Chairman of Seek Ltd (November 2012 – December
2018, appointed as a Non-Executive Director in June 2005)
and Virgin Australia Holdings Ltd (June 2007 – May 2015,
appointed as a Non-Executive Director in May 2006)
– Former Non-Executive Director of Recall Holdings Ltd
(September 2013 – May 2016) and Iron Mountain, Inc.
(May 2016 – September 2017)
– Former Executive Director and Chief Financial Officer of
Toll Holdings Ltd (until September 2008)
Appointed 1 March 2017.
– Director of the Cerebral Palsy Alliance Research Foundation
(since July 2023) and the American Gaming Association
(since January 2017, and former Chairman (January 2020 –
December 2021))
– Former Executive Vice President, Global Product & Insights,
Aristocrat Leisure Limited
– Former Managing Director, ANZ – Aristocrat Leisure Limited
– Former Sales Director – Fosters Australia Ltd
(until October 2009)
Nominated January 2014. Appointed February 2014.
– Chairman of Lynas Rare Earths Limited (since September 2020,
appointed as a Non-Executive Director in November 2011)
– Non-Executive Director of BlueScope Steel Limited
(since February 2020)
– Member of Chief Executive Women
– Chairman 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 REA Group Limited
(June 2007 – November 2021) and The Benevolent Society
(February 2013 – February 2022)
– Former Partner and Director, Boston Consulting Group (BCG)
(August 1989 – December 2004)
Neil Chatfield
M.Bus, FCPA, FAICD
Trevor Croker
Advanced Management
Program, GAICD
Kathleen Conlon
BEc, MBA, FAICD
Non-Executive
Chairman
Member,
Regulatory &
Compliance
Committee
Member,
People & Culture
Committee
Member,
Audit Committee
Managing
Director &
Chief Executive
Officer
Chairman,
People & Culture
Committee
Member,
Audit Committee
05
Aristocrat Leisure Limited 2023 Annual Report Directors’ Report
Director
Experience and other directorships
Special responsibilities
Nominated March 2016. Appointed July 2016.
– Non-Executive Director of McMillan Shakespeare Limited
(since November 2022), TPG Telecom Limited (since July 2020)
and Lendlease Real Estate Investments Limited
(since October 2010)
– Director of the Australian Institute of Company Directors
(NSW Division Council) (since November 2021)
– Member of Chief Executive Women, the International
Women’s Forum Australia and the Australian National
Maritime Museum Council
– Former Non-Executive Director of WiseTech Global Limited
(June 2020 – November 2022) and Healius Limited
(August 2012 – October 2020)
Chairman,
Audit Committee
Member,
Regulatory &
Compliance
Committee
Arlene Tansey
BBA, MBA,
Juris Doctor, FAICD
Nominated August 2016. Appointed September 2016.
– Independent Director of Semtech Corporation
(since April 2013)
– Former Independent Non-Executive Director of Alcatel-Lucent SA
(May 2015 – November 2016) and Headwaters Inc.
(January 2013 – May 2017)
– Former Chief Executive Officer of Trident Microsystems Inc.
(October 2007 – January 2011)
Member,
Audit Committee
Member,
People & Culture
Committee
Sylvia Summers Couder
Dip Electrical Engineering,
Masters in Electrical Engineering
and Computer Sciences,
Cycle de Perfectionnement
Option (Equivalent MBA),
MAICD
Pat Ramsey
BA, Economics,
MBA, MAICD
06
Nominated September 2016. Appointed October 2016.
– Non-Executive Director of Betr Holdings, Inc. (since May 2023)
and Chairman of Codere Online (since November 2021)
– Advisor to Arrow International and EPR Properties
– Former Vice Chairman of the Board of Trustees for the
Meadows School (Las Vegas, USA)
– Former Director of SimpleBet, Inc. (July 2021– March 2023)
– Former Chief Digital Officer of Aristocrat Leisure Limited
(January 2016 – October 2016) and former CEO of Multimedia
Games, Inc. (March 2010 – December 2014)
– Previously held various senior roles at Caesars Entertainment
(formerly Harrah’s)
Lead US
Director
Chairman,
Regulatory
& Compliance
Committee
Member,
Audit Committee
Aristocrat Leisure Limited 2023 Annual Report Director
Experience and other directorships
Special responsibilities
Nominated October 2019. Appointed November 2019.
– Chairman of Cleanaway Waste Management Limited
(since September 2023, appointed as a Non-Executive Director
in May 2014)
– Chairman and Non-Executive Director, Quantem
(since October 2017)
– Non-Executive Director of Lynas Rare Earths Limited
(since January 2015)
– Former Managing Director & CEO of Innovia Security Pty Ltd
– Former Non-Executive Director of Sedgman Limited
– Previously held various senior executive positions at
Orica Limited
Nominated October 2022. Appointed January 2023.
– Independent Director of BancFirst Corp (since August 2018)
– Honorary title of Secretary of State, Chickasaw Nation
(since May 2022). In this role, he represents the nation on
multiple Tribal and other national and state level organisations
across the United States, including on the Executive Committees
of the American Gaming Association and Greater Oklahoma
City Chamber
– Former Secretary of Commerce (January 2009 – May 2022)
and various other senior roles at the Chickasaw Nation
– Former member of the Board of Trustees for the University
of Oklahoma Foundation (June 2013 – September 2021) and
the Oklahoma Department of Commerce Advisory Council
(January 2019 – December 2020)
Nominated April 2023. Appointed August 2023.
– Former global chief executive for transportation, AECOM
(April 2021 – February 2023)
– Former CEO of North America for Transurban (2012 – 2021)
– Served as Commissioner and Executive Committee member
for Port of Virginia, which is among the largest shipping
enterprises in the U.S.
– Independent director for variety of private
infrastructure companies
– Visiting professor and advisory board member,
Cornell University
– Board member for major not-for-profit trade associations and
industry groups, including Eno Center for Transportation and
the American Road and Transportation Builders Association
Philippe Etienne
GradDip Marketing, BSc,
MBA, Advanced Management
Program, GAICD
Bill Lance
Master of Public Health,
BSc, Graduate of Leadership
Oklahoma class XXV
Jennifer Aument
B.S., MBA,
MAICD
Member,
People & Culture
Committee
Member,
Regulatory &
Compliance
Committee
Member,
Audit Committee
Member,
Regulatory &
Compliance
Committee
Member,
People & Culture
Committee
Member,
Regulatory &
Compliance
Committee
07
Aristocrat Leisure Limited 2023 Annual Report 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
Neil Chatfield 1
Trevor Croker
Kathleen Conlon 1
Philippe Etienne 1
Pat Ramsey 1
Sylvia Summers Couder 1
Arlene Tansey 1
Bill Lance 1, 4
Jennifer Aument 1, 5
Board 2
Audit
Committee
People
& Culture
Committee
Regulatory
& Compliance
Committee
Concurrent
Committee
meetings 3
12/12
12/12
12/12
12/12
12/12
12/12
12/12
8/8
1/1
5/5
—
5/5
—
5/5
5/5
5/5
3/3
—
4/4
—
4/4
4/4
—
4/4
—
—
—
5/5
—
—
5/5
5/5
—
5/5
4/4
—
1/1
—
1/1
1/1
1/1
1/1
1/1
1/1
1/1
1. During FY2023, the Board reviewed each Non-Executive Director’s independence and confirms that each Non-Executive Director is independent.
2. In addition to the Board and Committee meetings set out in the table, during the financial year, the Board established a number of special purpose sub-committees in relation
to financial reporting, M&A and capital management.
3. To support the determination of remuneration outcomes, the People & Culture Committee met concurrently with the Audit Committee on 21 September 2023.
4. Bill Lance was appointed as a director on 4 January 2023 and a member of the Audit Committee and Regulatory & Compliance Committee on 23 February 2023.
5. Jennifer Aument was appointed as a director on 1 August 2023 and a member of the People & Culture Committee and Regulatory & Compliance Committee
on 7 September 2023.
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, Aristocrat had the following Company Secretary:
Kristy Jo
BCom/LLB, GradDip Applied
Corporate Governance
Kristy Jo joined Aristocrat in April 2018 and was appointed as Company Secretary effective
10 June 2021.
She has over 15 years of legal experience in private and in-house roles. Prior to joining Aristocrat,
Kristy worked at NBN Co Limited, Newcastle Permanent Building Society and law firm
Allens Linklaters. She is a Fellow of the Governance Institute of Australia.
08
Aristocrat Leisure Limited 2023 Annual Report 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 indemnities in relation to identity theft with each Director
and nominated officers of the Company. No amount has been
paid pursuant to those indemnities during the financial year
and as at the date of this Directors’ Report.
The Company has paid a premium in respect of a contract
insuring Directors and 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.
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 Chairman
of the Audit Committee or CFO (based on fee quantum),
may decide to employ PwC, 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’s 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 $102,239. 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.
– 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
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.
Neil Chatfield
Chairman
15 November 2023
09
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
ARISTOCRAT AT A GLANCE
Revenue
$6.3 billion
Licensed Jurisdictions
327
Revenue by segment
Revenue by strategic segment
7.3%
57.9%
Aristocrat Gaming
42.1%
3.4%
Countries
103
ANZ
Americas
International Class III
Pixel United
42.1%
47.2%
29.3%
Gaming Operations
Class III Outright
Sales & Other
Pixel United
28.6%
Employees
7,800+
Proportion of headcount by country
Key
Under 5%
Between 5-20%
Between 20-40%
10
Aristocrat Leisure Limited 2023 Annual Report Business Strategy and Performance Summary
Robust fundamentals and strong investment deliver a high-quality
result in line with growth strategy
Over the twelve months to 30 September 2023, Aristocrat
delivered a high-quality Group result, reflecting the
competitiveness and diversification of our portfolio, and the
impact of sustained, market-leading investment in product,
technology and strategic capabilities, notwithstanding mixed
market conditions.
Net profit after tax and before amortisation of acquired
intangibles (NPATA) of $1,326.6 million increased 21% in
reported terms (13% in constant currency) compared to
$1,099.3 million delivered in the prior year. Earnings before
interest, tax, depreciation and amortisation (EBITDA) of
$2,105.4 million represented an increase of 14% in reported
terms (7% in constant currency). Group revenue rose 13% over
the same period in reported terms (7% in constant currency).
This was driven by strong performance in Aristocrat Gaming,
with outstanding portfolio performance and growth in North
America Outright Sales a highlight of the period. Pixel United
performance was impacted by mixed market conditions, as
overall mobile bookings moderated. However, the business
retained its leading positions in key mobile game genres
across the year, with growth in social casino, dynamic User
Acquisition (UA) allocation and cost management supporting
a resilient result.
Aristocrat demonstrated disciplined investment across the
key growth drivers of Design & Development (D&D), UA and
Capital Expenditure (Capex), to optimise returns across the
portfolio and execute our Group growth strategy. Across the
year, $820 million was committed to market-leading D&D,
further strengthening and broadening product portfolios.
This investment supported growth in Gaming and improved
performance in Pixel United, while accelerating Aristocrat’s
entry into online Real Money Gaming (RMG). Over $100 million
of D&D investment was made in Aristocrat’s online RMG
business, Anaxi, and our systems business (CXS) during the
year, in addition to the acquisition of Roxor in January 2023.
UA of US$433 million was also invested to support mobile
portfolio performance.
Anaxi delivered on its initial market entry commitments and
continued to establish solid foundations for growth. At period
end, Anaxi had signed content agreements with partners
representing over 80% of the US iGaming market, and had
live content placed with seven operators in six countries
across eight jurisdictions. The acquisition of Roxor completed
during the year. Roxor was successfully integrated into Anaxi
as a core product technology, accelerating delivery of our
market entry commitments and supporting our broader online
RMG strategy.
Aristocrat also announced the proposed acquisition of
NeoGames in May 2023, with the acquisition remaining on
track to close during the 2024 financial year. In combination
with Aristocrat’s content and strong operator and regulator
relationships, we believe that NeoGames’ technology,
distribution, new capabilities and talent will allow us to build
a world class online RMG company at scale and unlock our
potential to become the leading and most trusted online
RMG provider globally.
Strong free cash flow generation was applied to fund
both organic and inorganic growth, while surplus cash of
$811 million was returned to shareholders through dividends
and on-market share buy-backs in the period, in line with
the Group’s capital allocation framework. At period end,
Aristocrat had completed over 50 percent of our on-market
share buy-back program of up to $1.5 billion.
Aristocrat’s engaged team of over 7,800 people around the
world put shared values into practice and demonstrated
outstanding commitment to deliver these results. We
particularly recognise those impacted by conflict during the
year – including our people navigating the challenges of the
ongoing war in Ukraine, and, post period end, the outbreak of
conflict in Israel.
The business made meaningful strides forward in its
ambitious Environmental, Social & Governance (ESG) agenda
during the period. Aristocrat continued to invest in responsible
gameplay initiatives, with the completion of Australia’s first
cashless gaming technology trial conducted by Aristocrat
in New South Wales, in partnership with our customer, the
government and the regulator. The business also made
significant progress towards its commitment to publicly set
Group-wide, science-based emissions reduction targets by the
end of calendar 2023. Proposed targets were submitted to
the Science Based Targets initiative, post period end, and are
expected to be validated in the first half of the 2024 calendar
year. Across the year, Aristocrat made further advances in
lifting the representation of women, with the percentage of
women on the company’s Board increasing to 44%, and over
45% of the executive team, as at period end.
In summary, the Group delivered a high-quality result for the
2023 financial year, demonstrating strong portfolio quality and
robust fundamentals. Once again, Aristocrat’s performance
highlighted the benefit of sustained investment to grow and
diversify its operations, including in adjacent markets and
segment opportunities, as well as the Group’s ongoing focus
on capability, culture and sustainability. Aristocrat remains fully
focused on delivering long term performance for shareholders,
employees, customers, players and other stakeholders.
11
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Group Performance
Earnings Summary
Key performance indicators for the current and prior year 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 (cash)/debt
Gearing (net (cash)/debt to consolidated EBITDA 3)
Constant
currency 2
2023
2023
2022
Variance vs. 2022
Constant
currency 2
%
Reported
%
5,947.2
1,974.7
1,692.1
1,165.9
1,242.4
177.5c
189.2c
64.0c
5,947.2
1,375.2
1,451.7
2.3%
1,687.4
(810.0)
n/a
6,295.7
2,105.4
1,807.7
1,245.1
1,326.6
189.6c
202.0c
64.0c
6,295.7
1,454.1
1,535.6
5,573.7
1,850.9
1,592.9
1,000.9
1,099.3
150.2c
165.0c
52.0c
5,573.7
948.5
1,046.9
6.7
6.7
6.2
16.5
13.0
18.2
14.7
23.1
6.7
45.0
38.7
13.0
13.8
13.5
24.4
20.7
26.2
22.4
23.1
13.0
53.3
46.7
2.2%
1.2%
1.1pts
1.0pts
1,799.1
1,246.0
(809.1)
(0.4)x
(564.0)
(0.3)x
35.4
43.6
n/a
44.4
43.5
0.1x
1. Normalised results are statutory profit (before and after tax), excluding the impact of certain significant items detailed on page 18.
2. Results for 12 months to 30 September 2023 are adjusted for translational exchange rates using rates applying in 2022.
3. Consolidated EBITDA for the Group as defined in Aristocrat’s Syndicated Facility Agreement (also referred to as Bank EBITDA).
The information presented in this Operating and Financial Review has not been audited in accordance with Australian Auditing Standards.
12
Aristocrat Leisure Limited 2023 Annual Report
Operational Highlights
The Group’s portfolio of scaled, world-class Aristocrat Gaming
and Pixel United assets continued to deliver with normalised
profit after tax and before amortisation of acquired intangibles
(NPATA) of $1,327 million for the year ended 30 September 2023,
reflecting a high-quality product portfolio, ongoing investment
and effective execution, with mixed conditions across some key
segments. Key operational highlights are set out below.
Growth in Aristocrat Gaming driven by high
performing portfolio and superior execution
in North America
In North America:
– Exceptional growth in Outright Sales, with unit sales and
average selling price (ASP) per unit increasing 25.5% and
14.1% respectively over the year.
– Premium Class III and Class II installed base grew 8.2%
to exceed 64,000 units. Growth was fueled by continued
penetration of superior hardware configurations and high
performing game titles. Market-leading average fee per day
of US$54.97 was achieved across the expanded footprint,
compared to US$55.78 in the prior year.
– Aristocrat Gaming was the leading supplier in the US market,
achieving portfolio performance of 1.4x floor average 1.
Aristocrat games featured in 19 of the Top 25 Premium
Leased games, 17 of the Top 25 Class II Mechanical Reel
games, and 14 of the Top 25 Class II Video Reel games 2.
– The business continued to expand and scale strategic
adjacencies including the Video Lottery Terminal (VLT)
segments in Canada, Oregon, Illinois and New York, the
Central Determinant System (CDS) segment in Washington
and Historical Horse Racing (HHR) markets in Kentucky,
Louisiana, New Hampshire and Wyoming.
– At the 2023 EKG Slot Awards, Aristocrat Gaming was named
the “Best Overall Supplier of Slot Content”. Aristocrat won
6 out of an eligible 13 awards in the land-based gaming
segment, further underscoring the superior quality of the
business’ product portfolio.
– Aristocrat Gaming was awarded three Global Gaming Awards:
Land-Based Industry Supplier of the Year, Slot of the Year, and
Best Land-Based Product. These reputable and prestigious
awards recognise the most innovative companies and
individuals across the global gaming industry.
In Australia and New Zealand (ANZ):
– Maintained market-leading ship share, supported by the
continued penetration of the MarsXTM cabinet and a high
performing game portfolio, within a challenging operating
environment with regulatory uncertainty.
In International Class III:
– Growth driven by strong game performance and market
recovery in Asia and improved operating conditions in Europe.
Pixel United demonstrated resilience in mixed
conditions with lower market demand
– Pixel United’s bookings declined 4.3% compared to
contraction of 4.7% in the global mobile market during
the period 3.
– Average Bookings Per Daily Active User (ABPDAU) grew
13%, driven by robust performance in the Social Casino
and RPG, Strategy & Action genres.
– Pixel United retained leading positions in key genres,
including #1 position in the Social Slots segment, #2 in
the broader Social Casino genre, #1 in the Squad RPG
(Role-Playing Games) segment and #4 in the Casual
Merge segment 4.
– At year end, Pixel United titles accounted for 6 of the top
100 mobile games in the US 3 across multiple genres,
showing the benefits of continued investment in features,
new content and best practices in Live Ops.
– The casual game Merge GardensTM performed successfully
following a re-launch in January 2023.
Superior investment in great talent,
technology and product
– Aristocrat continued its fully funded organic investment in
our priority areas of D&D, capex and UA, to drive near and
longer-term competitiveness, capability and performance.
– D&D investment was proactively increased to 13% on a
percentage of revenue basis, above our historical 11-12%
range. Investment was directed into talent and product
technology to support sustained growth across priority
segments and genres.
– UA investment declined to 25% of Pixel United revenue
reflecting portfolio mix and a dynamic approach to
UA allocation.
– Capex of $453 million reflected continued investment in
Gaming Operations to support growth, with almost 5,000 net
additional units placed over the reporting period.
– Strong investment in talent and product technology also
accelerated execution of Anaxi’s iGaming strategy, including
completion of the Roxor acquisition, and lifted core product
technology infrastructure and capability across the Group.
Strong financial fundamentals, preserving
full investment optionality
– Gearing, net (cash)/debt to EBITDA, reduced to (0.4)x at
period end from (0.3)x at 30 September 2022.
– Aristocrat’s balance sheet remained strong, with $3.9 billion
in available liquidity at 30 September 2023 to support
future investments including the proposed acquisition of
NeoGames, enabling dividend payments, and $443 million
in shares purchased through the on-market share buy-back
program during the year.
1. Based on the average theoretical net win index versus house, Eilers September 2023 report for North America
2. Average performance per Eilers’ Game Performance reports in the 12 months to 30 September 2023
3. Bookings estimate for financial year ended 30 September 2023 as at October 2023, Sensor Tower
4. Twelve months to 30 September 2023, Sensor Tower
13
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Performance Summary
NPATA of $1,326.6 million for the year increased 21% (13% in constant currency) compared to $1,099.3 million in the prior year.
Revenue increased 13% (7% in constant currency), driven by strong performance in North America Outright Sales and Gaming
Operations partly offset by Pixel United’s lower result reflecting ongoing mixed market conditions. The strong Group profit result was
delivered in the context of continued industry leading investment in talent, technology and product, including the scaling of online
RMG. The result benefited from lower net interest expense and foreign exchange movements over the year, compared to the prior year.
Normalised fully diluted earnings per share before amortisation of acquired intangibles of 202.0c increased 22% (15% in constant
currency) on the prior year.
NPATA movement FY22 to FY23 (A$ million)
143.3
(4.3)
44.9
(36.2)
4.8
(89.6)
75.8
88.6
1,099.3
1,326.6
NPATA
FY22
Americas
ANZ
International
Class III
Pixel
United
Corporate &
Other costs
Group D&D
expense
Net
Interest
Foreign
exchange
NPATA
FY23
Movements above are on a constant currency basis and are tax effected at the prior year effective tax rate.
– In Aristocrat Gaming:
• Americas delivered a $143.3 million increase in post-tax
profit, due to a 26% increase in North America Outright
Sales units and an 8% increase in the Gaming Operations
footprint. Growth was driven by larger customer
capital spend, increased penetration of premium
portrait cabinets and further successful expansion
into strategic adjacencies.
• ANZ post-tax earnings declined by $4.3 million
amid challenging market conditions, with regulatory
uncertainty, higher competition, and increased input
costs due to cabinet components purchased in US
dollars, partly offset by higher average selling price
with further penetration of the MarsXTM cabinet.
• The International Class III segment grew post-tax
earnings by $44.9 million. This reflected improved
operating conditions in Europe, and all markets in
Asia being reopened since January, with faster than
anticipated recovery from COVID restrictions.
– Pixel United post-tax earnings decreased $36.2 million on
the prior year, reflecting a global mobile games market
decline of 4.7% 1, and the impact of ceasing games in Russia
from March 2022. Social Casino titles continued to take
market share including the high performing franchises
Lightning LinkTM, Cashman CasinoTM and Jackpot Magic
SlotsTM. Casual and RPG Strategy & Action games, including
the world-class game RAID: Shadow LegendsTM, delivered
resilient results supported by effective UA investments
across the portfolio.
– Corporate and other costs decreased $4.8 million post-tax
largely as the prior year included costs associated with the
lapsed Playtech acquisition offer. This was partly offset by
continued investment in strategic capabilities.
– The Group’s investment in talent and technology increased
year on year and remains at industry leading levels, in
line with our growth plans, and the scaling of online RMG,
including the acquisition of Roxor during the year.
– Net interest expense was significantly lower than the
prior year due to benefits from higher interest rates on
cash balances.
– Foreign exchange positively impacted the result by
$88.6 million.
1. Bookings estimate for financial year ended 30 September 2023 as at October 2023, Sensor Tower
14
Aristocrat Leisure Limited 2023 Annual Report Group Profit or Loss
Results in the current and prior year are in reported currency and normalised for significant items as outlined on page 18.
Segment profit is stated before amortisation of acquired intangibles.
2023
2022
Variance
%
A$ million
Segment revenue
Australia and New Zealand
Americas
International Class III
Pixel United
Total segment revenue
Segment profit
Australia and New Zealand
Americas
International Class III
Pixel United
Total segment profit
Unallocated expenses
Group D&D expense
Foreign exchange
Corporate
Total unallocated expenses
EBIT before amortisation of acquired intangibles (EBITA)
1,807.7
1,592.9
Amortisation of acquired intangibles
EBIT
Interest
Profit before tax
Income tax
Profit after tax (NPAT)
(106.3)
1,701.4
(40.6)
1,660.8
(415.7)
1,245.1
(127.5)
1,465.4
(137.7)
1,327.7
(326.8)
1,000.9
Amortisation of acquired intangibles after tax
81.5
98.4
Profit after tax and before amortisation of acquired intangibles (NPATA)
1,326.6
1,099.3
458.7
2,973.2
212.2
2,651.6
6,295.7
151.4
1,639.0
104.5
854.9
2,749.8
(820.2)
(5.2)
(116.7)
(942.1)
460.7
2,415.1
106.8
2,591.1
5,573.7
157.1
1,350.8
39.1
852.7
2,399.7
(666.5)
(11.4)
(128.9)
(806.8)
(0.4)
23.1
98.7
2.3
13.0
(3.6)
21.3
167.3
0.3
14.6
(23.1)
54.4
9.5
(16.8)
13.5
16.6
16.1
70.5
25.1
(27.2)
24.4
(17.2)
20.7
15
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Revenue
Segment revenue increased 13.0% in reported currency
(6.7% in constant currency) to $6,295.7 million, fueled by
Aristocrat Gaming, with outstanding growth in Gaming
Outright Sales combined with continued expansion of the
Class III Premium Gaming Operations footprint.
The percentage of revenue derived from recurring sources
(Gaming Operations and Pixel United) decreased from 75.5%
in the prior year to 71.4% reflecting the strength of Class III
Outright Sales performance in the period.
In Aristocrat Gaming, North America Outright Sales revenue
increased 40.3% in local currency, as customers committed
more capital to Aristocrat’s high performing products.
Increased penetration of Neptune SingleTM, launched in
August 2022, MarsXTM Portrait cabinets and successful
expansion into strategic adjacencies drove this result.
North America Gaming Operations revenue increased 7.0%
in local currency. Premium Class III and Class II footprint
increased 8.2%, off the back of increased penetration of high
performing products including Dragon LinkTM, Lightning Dollar
LinkTM and Jackpot CarnivalTM. Average fee per day remained
strong at a market leading US$54.97.
In the predominantly outright sales markets of ANZ, revenue
decreased marginally by 0.4% to $458.7 million in reported
currency, a resilient result amid challenging market and
regulatory conditions.
In the International Class III segment, revenue increased
98.7% to $212.2 million in reported currency, with faster than
anticipated post COVID market recovery and strong game
performance in Asia, and improved operating conditions
across Europe.
Pixel United revenue of US$1,764.0 million declined 3.9%,
in local currency, on the prior year reflecting the global mobile
markets decline of 4.7% 1 and the exit from the Russian
market. The Group’s more established RPG, Strategy & Action
titles and Casual games were most impacted by mixed market
conditions, whilst the Group’s Social Casino franchises of
Lightning LinkTM, Cashman CasinoTM and Jackpot Magic SlotsTM
performed strongly, gaining market share with further bookings
growth also delivered from the successfully re-launched
Casual game, Merge GardensTM.
Revenue by Strategic Segment
2023
29.3%
42.1%
$6.3
billion
28.6%
2022
46.5%
$5.6
billion
29.0%
24.5%
Gaming Operations
Class III Outright Sales & Other
Pixel United
1. Bookings estimate for financial year ended 30 September 2023 as at October 2023, Sensor Tower
16
Aristocrat Leisure Limited 2023 Annual Report Earnings
Segment profit increased 14.6% on the prior year, in reported
currency, to $2,749.8 million.
Americas Gaming margin decreased from 55.9% to 55.1%,
due to the mix impact of strong growth in the lower-margin
outright sales segment.
Pixel United’s margin decreased from 32.9% to 32.2%, largely
due to a decline in the global mobile games market which
lowered bookings from some higher margin legacy products,
as well as the impact of exiting Russia. This was partly offset
by efficient UA investment across the portfolio. Proactive
cost management further protected margins.
Segment Profit Margin % of Revenue
.
9
5
5
1
.
5
5
.
3
3
5
.
0
8
3
1
.
4
3
.
0
3
3
.
2
9
4
.
6
6
3
.
6
2
3
.
9
2
3
.
2
2
3
60%
40%
20%
0%
The Group continued to invest in talent and technology to
deliver competitive product across a broader range of priority
segments and genres, including investment to establish
and scale online RMG and acquire Roxor during the year.
Investment in D&D increased to 13.0% on a percentage of
revenue basis.
Corporate costs decreased $12.2 million reflecting costs
associated with the lapsed Playtech acquisition offer in the
prior year partially offset by continued investment in strategic
capabilities and talent.
Interest improved by $97.1 million largely attributable to higher
interest income on cash balances.
The effective tax rate (ETR) for the reporting period was 25.0%.
Other Key Margins % of Revenue and ETR
50%
40%
30%
20%
10%
.
0
3
1
.
0
2
1
1
.
1
1
.
7
3
4
1
.
3
4
.
5
0
4
.
2
3
3
.
4
3
3
.
6
2
3
.
7
4
2
.
6
4
2
.
0
5
2
1
.
1
2
.
7
9
1
.
3
8
1
Australia and
New Zealand
Americas
International
Class III 1
Pixel United
0%
2021
2022
2023
1. International Class III FY21 margin of (20.9%) was driven by the effective
closure of these markets in the reporting period.
Group D&D
expense/
revenue
Segment
Profit/
revenue
EBITDA/
revenue
NPATA/
revenue
Effective
Tax Rate
2021
2022
2023
17
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Reconciliation of statutory profit to NPATA
A$ 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
Litigation proceeds
Acquisition related transaction and integration costs
Onerous lease
Changes in deferred tax asset
Net gain from significant items
2023
1,454.1
81.5
1,535.6
(209.0)
1,326.6
2022
948.5
98.4
1,046.9
52.4
1,099.3
30 Sep 2023
Before tax
After tax
36.0
(13.9)
(12.5)
—
9.6
25.1
(13.7)
(9.6)
207.2
209.0
Significant Items included in the Group’s reported after-tax result:
Litigation proceeds of $25.1 million relating to an
intellectual property matter finalised during the year.
Acquisition related transaction and integration costs
of $13.7 million related to Roxor and the proposed
acquisition of NeoGames.
Onerous lease expense of $9.6 million relating to an
onerous lease for the Seattle premises, which was
committed to by previous ownership.
Changes in deferred tax asset with a net benefit of
$207.2 million relating to Group structure changes in
a prior period.
18
Aristocrat Leisure Limited 2023 Annual Report Balance Sheet
The balance sheet can be summarised as follows:
A$ 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 (cash) / debt
Gross debt
30 Sep 2023
31 Mar 2023
30 Sep 2022
Variance vs.
30 Sep 2022
%
3,151.0
485.9
4,000.5
3,284.9
2,743.2
377.4
3,882.5
3,008.8
3,021.3
357.8
3,891.2
2,850.1
10,922.3
10,011.9
10,120.4
99.6
2,242.3
1,854.3
6,726.1
95.7
2,207.4
1,555.6
6,153.2
99.9
2,357.4
1,640.4
6,022.7
10,922.3
10,011.9
10,120.4
139.6
2.2
(809.1)
2,341.9
318.3
5.4
(440.1)
2,303.1
64.1
1.2
(564.0)
2,457.3
4.3
35.8
2.8
15.3
7.9
(0.3)
(4.9)
13.0
11.7
7.9
117.8
1.0pts
43.5
(4.7)
Significant movements from 30 September 2022
Cash and cash equivalents: The increase reflects continued
strong cash flow generation partly offset by the $174.2 million
payment for the acquisition of Roxor along with increased
capital expenditure to support the Americas Gaming
Operations installed base, dividends and on-market
share buy-backs.
Net working capital: The movement reflects growth in Gaming
business revenue compared to the prior year, with continued
focus on maintaining customer order fulfillment resulting in
higher levels of inventory, as well as timing of receivables
and payables across the business.
Property, plant and equipment (PP&E): The increase in
PP&E primarily reflects the investment in Americas Gaming
Operations’ recurring revenue assets.
Other assets: The increase in other assets reflects movements
in trade receivables and inventory, that form part of working
capital, and deferred tax assets.
Intangible assets: The change in intangibles primarily reflects
the acquisition of Roxor.
Total equity: The change in total equity reflects the current
year’s result, currency movements, the on-market share
buy-backs and dividends paid.
19
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Statement of Cash Flows
The movement in cash, after eliminating foreign exchange movements is set out below:
Operating cash flow
A$ million
EBITDA
Change in net working capital
Interest and tax
Other 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 net of cash acquired
Payments for financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Investments and divestments
Investing cash flow
Proceeds from borrowings (net of transaction costs)
Repayments of borrowings
Proceeds from issue of shares (net of transaction costs)
Payments for shares bought back (net of transaction costs)
Lease principal payments
Dividends and Employee share purchases
Financing cash flow
Net increase in cash
2023
2022
Change %
2,105.4
(75.5)
(420.9)
9.6
180.5
1,799.1
1,346.4
1,850.9
(169.3)
(492.8)
(6.4)
63.6
1,246.0
977.2
13.8
55.4
14.6
n/a
183.8
44.4
37.8
2023
2022
Change %
1,799.1
(452.7)
(174.2)
—
—
(2.8)
(629.7)
—
(101.6)
—
(443.3)
(42.9)
(443.6)
(1,031.4)
138.0
1,246.0
(268.8)
(0.6)
(92.3)
28.7
(1.4)
(334.4)
2,551.8
(3,676.9)
1,277.2
(312.0)
(39.4)
(406.0)
(605.3)
306.3
44.4
(68.4)
n/a
n/a
n/a
(100.0)
(88.3)
n/a
97.2
n/a
(42.1)
(8.9)
(9.3)
(70.4)
(54.9)
Operating cash flow increased 44% on the prior year to
$1.8 billion, reflecting continued strong business performance
and underlying cash flow generation, increased interest income
on cash balances and receipt of litigation proceeds.
The net working capital movement during the year reflects
the continued growth in Aristocrat’s Gaming business
revenue compared to the prior year, timing of receivables and
payables, and increased inventory levels to ensure customer
order fulfilment.
The increase in other cash and non-cash movements
largely reflects the impact of share buy-backs transacted
on 30 September 2022 and settled during the current year,
and movements in share-based payments that are
non-cash in nature.
Interest and tax decreased 15%, reflecting higher interest
income on cash balances.
Capital expenditure was largely driven by investment to
support continued growth in the Americas Gaming Operations
installed base.
The $174.2 million acquisition of Roxor was completed
during the year.
During the year, a further $443 million of shares have been
purchased through the on-market share buy-back program,
with $755 million returned to shareholders to date.
Cash flow in the statutory format is set out in the
financial statements.
20
Aristocrat Leisure Limited 2023 Annual Report Funding and Liquidity
The Group maintained ample liquidity and a strong balance
sheet over the reporting period. The Group had committed loan
facilities of $3.1 billion as at 30 September 2023, comprising
a US$1.3 billion Term Loan A, US$250 million Term Loan B
and a US$500 million revolving credit facility.
At year end, Aristocrat had total liquidity of approximately
$3.9 billion, comprised of cash and $766 million of the
available revolving credit facility, net of $11 million supporting
letters of credit.
The Group’s facilities are summarised below:
Facility
Drawn as at
30 Sep 2023
Limit Maturity date
Term Loan A facility
US$1,265.6m US$1,265.6m
Term Loan B facility
US$250.0m
US$250.0m
Revolving facility
US$0.0m
US$500.0m
May 2027
May 2029
May 2027
Overdraft facilities
A$0.0m
A$8.1m Annual Review
The Group’s interest and debt coverage ratios are below:
19.7
17.5
17.5
20x
15x
10x
5x
0x
(5)x
1.2
1.2
1.1
(0.3)
(0.2)
(0.4)
EBITDA 1/interest
expense 2 (x)
Gross Debt/
EBITDA 1 (x)
Net debt (cash)/
EBITDA 1 (x)
30 Sep 2022
31 Mar 2023
30 Sep 2023
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 (cash)/debt to EBITDA, reduced to
(0.4)x at 30 September 2023, from (0.3)x in the prior year.
Credit Ratings
During the period, Aristocrat’s S&P’s credit rating was
increased to investment grade at BBB-, and Moody’s Ba1 and
Fitch’s BBB- credit ratings were maintained. These ratings
were affirmed during the reporting period.
Dividends
The Directors authorised a final fully franked dividend of
34.0 cents per share for the year ended 30 September 2023,
and is estimated at A$220.4 million based on the shares
issued at the date of the financial statements. The dividend
is expected to be declared and paid on 19 December 2023 to
shareholders on the register at 5.00pm on 1 December 2023.
Total dividends in respect of the 2023 financial year amount
to 64.0 cents per share (A$416.6 million) and represents an
increase of 23% (or 12 cents) on the prior year.
Foreign Exchange
Given the extent of the Group’s global operations, its reported
results are impacted by movements in foreign exchange rates.
In the 12 months to 30 September 2023, the Australian dollar
was, on average, weaker against the US dollar when compared
to the prior year. The impact of translating foreign currency
(translational impact) increased revenue by $348.5 million,
while increasing normalised NPATA by $84.2 million on a
weighted average basis when compared with rates prevailing
in the respective months in the prior year. In addition, as at
30 September 2023, 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 $625.3 million (compared to a credit balance of
$602.2 million as at 30 September 2022).
Based on the Group’s typical historical mix of profitability,
the major exposure to translational foreign exchange results
from the Group’s US dollar profits. A US 1 cent change in the
US$: A$ exchange rate resulted in an estimated annualised
$21 million translational impact on the Group’s annual
normalised NPATA, based on the last 12-month period.
This impact will vary in line with the magnitude and mix
of overseas profits.
Exchange rates compared with prior periods for the US dollar
are below.
A$:
USD
30 Sep
2023
31 Mar
2023
30 Sep
2022
2023
Average 1
2022
Average 1
0.6434
0.6683
0.6397
0.6655
0.7084
1. Average of monthly exchange rates only. No weighting applied.
21
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Segment Review
Segment profit represents earnings before interest and tax,
and before significant items detailed on page 18, charges for
D&D expenditure, amortisation of acquired intangibles and
corporate costs. These amounts are disclosed in the Group’s
statement of profit or loss. Constant currency amounts refer to
2023 results restated using exchange rates applying in 2022.
1. Aristocrat Gaming
Americas
Summary Profit or Loss
US$ million
2023
2022
Revenue
Profit
Margin
1,977.5
1,091.0
55.2%
1,704.6
956.4
56.1%
Variance
%
16.0
14.1
(0.9) pts
In local currency, Americas profit increased 14.1% to
$1,091.0 million, driven by continued growth in both Outright
Sales and the Class III Premium Gaming Operations footprint,
supported by the depth and strength of the portfolio.
Overall margin decreased 0.9 percentage points to 55.2%
due to the mix impact of the strong growth delivered in the
lower-margin outright sales segment.
Aristocrat’s Class III Premium and Class II Gaming Operations
installed base grew by over 4,800 units to exceed 64,000 units.
North America Outright Sales units grew 25.5% and ASP grew
14.1% reflecting continued penetration of leading hardware
configurations, high performing game titles and further
expansion into adjacent markets.
North America Gaming Operations units
and Average US$ fee/day
+8%unit growth
60,000
54,032
40,000
26,313
59,199
27,604
64,030
120.0
27,105
80.0
U
S
$
p
e
r
d
a
y
40.0
0.0
s
t
i
n
U
20,000
0%
$51.41
27,719
$55.78
$54.97
31,595
36,925
2021
2022
2023
Class III premium units
Class II units
Gaming operations US$/day
Aristocrat’s Class III Premium installed base grew 16.9%
to nearly 37,000 units. Key titles including Dragon LinkTM,
Lightning Dollar LinkTM and Jackpot CarnivalTM drove
momentum in the year.
Aristocrat’s Class II Gaming Operations installed base decreased
1.8% year on year to 27,000 units as tribal customers replaced
legacy Class II games with premium Class III games behind
stronger performance expectations.
Aristocrat Gaming achieved market-leading portfolio
performance of 1.4x floor average 1 in the period. Aristocrat
held 19 of the Top 25 Premium Leased games, 17 of the
Top 25 Class II Mechanical Reel games, and 14 of the Top 25
Class II Video Reel games in the period, demonstrating
exceptional portfolio strength 2.
The market leading FPD remained strong at US$54.97 across
the expanded footprint.
1. Based on the average theoretical net win index versus house, Eilers September 2023 report for North America
2. Average performance per Eilers’ Game Performance reports in the 12 months to 30 September 2023
22
Aristocrat Leisure Limited 2023 Annual Report
North America Outright Sales units
and Average US$ price/unit
+26%unit growth
Latin America Outright Sales units, Average US$ price/
unit and Recurring Revenue installed base
0
1
3
4
2
,
$18,524
6
6
3
9
1
,
$21,142
21,000
6,000
5
4
5
5
,
9
7
4
5
,
$12,265
$17,248
9
5
4
5
,
18,000
12,000
U
S
$
p
e
r
u
n
i
t
6,000
14,000
4,000
U
S
$
p
e
r
u
n
i
t
7,000
s
t
i
n
U
2,000
$7,171
24,000
16,000
s
t
i
n
U
8,000
$17,169
5
4
6
,
1
1
8
9
7
5
,
7
4
9
6
,
2
8
6
6
,
6
0
4
,
1
8
5
3
,
1
7
8
6
,
1
0%
0.0
0%
0.0
2021
2022
2023
2021
2022
2023
Platforms
Conversions
Average US$ price/platform unit
Platforms
Recurring revenue installed base
Average US$ price/platform unit
Latin America performance benefitted from improved
economic conditions compared to the prior year. Average
cabinet selling price increased from the prior year due to an
increased proportion of sales arising from new cabinets.
Outright Sales revenue increased 40.3% compared to the prior
year, supported by customer capital commitments, increased
penetration of premium portrait cabinets, and growth in
strategic adjacencies. ASP per unit increased 14.1%, and
unit sales grew by 25.5% over the prior year.
MarsXTM Portrait and Neptune SingleTM penetration
(launched August 2022) was enabled by continued strong
game performance, led by Coin TrioTM, Buffalo AscensionTM,
Bao Zhu Zhao FuTM, Mo’ MummyTM and Buffalo StrikeTM.
Successful expansion continued into attractive adjacencies,
including the Video Lottery Terminal (VLT) segments
in Canada, Oregon, Illinois, and New York, the Central
Determinant System (CDS) segment in Washington, and
Historical Horse Racing (HHR) markets in Kentucky,
Louisiana, New Hampshire, and Wyoming.
23
Aristocrat Leisure Limited 2023 Annual Report
Operating and Financial Review
Australia and New Zealand
Summary Profit or Loss
International Class III
Summary Profit or Loss
A$ million
Revenue
Profit
Margin
Constant
currency
2023
458.4
151.3
33.0%
2022
460.7
157.1
34.1%
Variance
%
(0.5)
(3.7)
(1.1) pts
A$ million
Revenue
Profit
Margin
Constant
currency
2023
200.0
98.6
49.3%
4,314
2022
106.8
39.1
36.6%
2,297
Variance
%
87.3
152.2
12.7 pts
87.8
Class III Platforms
International Class III revenue and profit increased 87.3% and
152.2% on the prior year, respectively, to $200.0 million and
$98.6 million.
Revenue and profit grew in the European market, which benefitted
from improved operating conditions.
In Asia, revenue and profit more than doubled compared to the
prior year, with all markets open from January and Aristocrat’s
participation in venue openings.
Aristocrat grew share year on year driven by strong new release
game performance, including Dragon LinkTM, Tian Ci Ji LuiTM and
5 Dragons PearlTM.
The strength of the Asia game portfolio was recognised
at the 2023 Asia Gaming Awards with Aristocrat awarded
“Best Slot Product (Land-based)”.
ANZ revenue was resilient in challenging market conditions,
with regulatory uncertainty. Revenue, which is predominately
Outright Sales, declined slightly to $458.4 million in constant
currency on the prior year. Profit decreased by 3.7% to
$151.3 million.
Margin decreased 1.1 percentage points to 33.0% due to
increased input costs with foreign exchange impacts for
product purchases largely made in US dollars, partly offset
by further penetration of the MarsXTM cabinet.
ANZ Outright Sales units and Average A$ price/unit
16,000
12,000
8,000
s
t
i
n
U
4,000
0%
$23,206
$23,641
$20,045
2
8
0
2
1
,
6
6
3
2
1
,
5
9
1
,
1
1
0
0
9
2
,
9
4
7
2
,
2021
2022
8
2
6
2
,
2023
24,000
18,000
12,000
A
$
p
e
r
u
n
i
t
6,000
0.0
Platforms
Conversions
Average A$ price/platform unit
The ANZ business maintained its market-leading ship share,
driven by the continued success of the Dollar StormTM and
Cash Express Luxury LineTM game families and the newly
released Aqua KingdomTM family.
Investment in responsible gameplay initiatives continued
during the reporting period, with the completion of
Australia’s first cashless gaming technology trial conducted
by Aristocrat in New South Wales, in partnership with the
government, regulatory bodies and Wests New Lambton.
Aristocrat has applied to participate in the next round
of cashless trials announced by the New South Wales
government, with a solution that builds on the lessons
of our initial trial, along with player experience and
customer feedback.
24
Aristocrat Leisure Limited 2023 Annual Report
2. Pixel United
Summary Profit or Loss
US$ million
2023
2022
Bookings
Revenue
Profit
Margin
1,748.0
1,764.0
567.6
32.2%
1,826.1
1,834.7
604.6
33.0%
Variance
%
(4.3)
(3.9)
(6.1)
(0.8) pts
Pixel United bookings declined 4.3% on the prior year to
US$1,748.0 million, against a decline in the global mobile
games market of 4.7% 1.
Social Casino franchises outperformed the market,
demonstrating portfolio resilience and effective player
engagement, supported by investments in Live Ops, features
and new content with revenue growth in the key franchises
of Lightning LinkTM, Cashman CasinoTM and Jackpot
Magic SlotsTM. Casual bookings were down due to mixed
demand across the genre and moderation in EverMergeTM.
Merge GardensTM positively impacted bookings following the
successful re-launch in January 2023. In the RPG, Strategy
& Action genre, exiting Russia in March 2022 impacted
bookings compared to the prior year, as well as the maturing
of RAID: Shadow LegendsTM.
Profit of US$567.6 million compared to US$604.6 million
in the prior year. Margin decreased 0.8 percentage points
to 32.2%, reflecting a reduction in bookings from some
higher margin legacy products as well as exiting Russia,
and costs associated with the conflict in Ukraine, partly
offset by disciplined and efficient investment in UA
across the portfolio.
Bookings 1 by Genre
1,844.4
632.6
1,826.1
630.3
1,748.0
562.2
304.5
907.3
242.8
953.0
215.5
970.3
2,000
1,500
1,000
m
$
S
U
500
0
2021
2022
2023
Social Casino
Casual
RPG, Strategy & Action
Note to the chart:
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.
1. Bookings estimate for financial year ended 30 September 2023 as at
October 2023, Sensor Tower
Social Casino
Social Casino contributed bookings of US$970.3 million,
an increase of 1.8% on the prior year, driven primarily by
the strong growth of Lightning LinkTM, and the ongoing
performance of Jackpot Magic SlotsTM, partly offset by some
softening of Big Fish CasinoTM and Heart of VegasTM. These
titles benefited from successful investment in Live Ops,
features, new slot content and effective investment in UA.
RPG, Strategy and Action (Midcore)
Role-Playing Games (RPG), Strategy and Action contributed
US$562.2 million in bookings, a decrease of 10.8% compared to
the prior year, impacted by the exit from Russia in March 2022.
Sustained profitability in RAID: Shadow LegendsTM was
supported by efficient UA investment as well as innovative
marketing initiatives including the animated YouTube series,
RAID: Call of the ArbiterTM.
Casual
Casual delivered US$215.5 million in bookings, a decrease of
11.2% on the prior year, due to a decline in EverMergeTM, after
successfully scaling the game over the last two years, and the
maturity of legacy titles. Positive growth in Merge GardensTM
followed its re-launch in January 2023.
25
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Daily Active Users (DAU) and Average
US$ bookings per DAU (ABPDAU)
+13%
ABPDAU growth
0.93
0.82
0.74
6.8
5.5
4.6
DAU Period end (million)
ABPDAU Full year (US$)
2022
DAU decreased to 4.6 million year on year driven by an overall
market decline and the maturing of the Pixel United portfolio.
2021
2023
ABPDAU grew 13% or US$0.11 compared to the prior year,
demonstrating strengthening player engagement across
the portfolio.
26
Aristocrat Leisure Limited 2023 Annual Report Principal Risks
Managing risk provides greater certainty in the delivery of our strategy and continued performance
of Aristocrat’s diversified business
Aristocrat recognises the need to integrate risk management into strategic and operational planning and decision making.
The identification and management of risks and opportunities that could impact Aristocrat’s strategic, operational, and financial
objectives is essential to good corporate governance, and the long-term creation and protection of shareholder value.
Aristocrat uses risk management across the organisation to mitigate potential threats, improve our preparedness to respond
to crises and emerging risks, and provide greater surety as we pursue opportunities.
Risk Management Framework
Aristocrat’s Enterprise Risk Management (ERM) Framework (the Framework) is core to our risk management program and approach.
The Framework establishes accountabilities for risk management and provides the tools and directions for the timely identification,
evaluation, treatment and reporting of material risks and opportunities, so that they remain within acceptable thresholds as set by
Aristocrat’s Board of Directors. The Framework is also designed to highlight, monitor and prepare for emerging risks.
The Framework is underpinned by Aristocrat’s Global Risk Management Policy (the Policy). The Policy establishes the Group’s
desired risk culture, commitment to risk management and makes clear that everyone in the Group has a role to play in effective
risk management. The Framework also includes our Board-approved Risk Appetite Statements, the Risk and Opportunity
Management Support Guide and the Significant Incidents Escalation Policy. These artefacts guide our leaders and employees
on how to practically identify, assess and manage, monitor and escalate risks in line with the appetite and tolerance Aristocrat
has established to achieve its strategic objectives. The Framework aligns with the International Risk Management Standard
ISO 31000, and encompasses the steps illustrated in Figure 1.
Figure 1: Risk Management Process
Record, Report and Communicate
Risk Appetite
Establish risk
tolerances and
boundaries
Discover
Identify our risks and
opportunities
Understand
Assess the size of risks
and prioritise
Act
Make decisions
and act
Manage
Ensure risks remain
within tolerance
Internal Audit
Assess
and validate
Monitor and Review
The Framework is designed to integrate risk management into our ways of working and facilitates the management of risk at both
an enterprise and business unit/functional level and connects risk across the enterprise. It addresses financial and non-financial
risk (strategic, brand and trust, operational, product, technology and innovation, cybersecurity, people and legal and regulatory),
with consideration of both internal and external factors. Figure 2 illustrates our ERM coverage.
Figure 2: Risk Identification, Review and Assessment Coverage
Enterprise
and Business
Unit Level
Financial and
Non-Financial
Short and Long
Term
Across our Aristocrat
Gaming, Pixel United,
Anaxi businesses &
Corporate Functions
Internal and
External inputs
Current and
Emerging
The Framework is overseen by Aristocrat’s Board of Directors. It is actively managed by our Chief Executive Officer and Executive
Steering Committee, with the support of business unit/functional leaders, in addition to a network of Risk Champions. The
Framework is maintained by the Group Risk and Audit function, and is reviewed and refreshed at least annually, in line with the
ASX Corporate Governance Principles and Recommendations.
27
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Principal Risks
Aristocrat has a strong track record of managing multiple and complex risks in an evolving operating environment, and we have
continued to navigate significant uncertainties throughout this year. In FY23, challenges associated with Ukraine and Russia,
macroeconomic uncertainty, a softer mobile gaming market, political and regulatory inquiries into the Gaming industry in Australia
and increasing sophistication of cyber-criminals have all been monitored and managed. These challenges combined with the
increasing complexity and diversity of business operations with our acceleration into the online real-money gaming market, have
underpinned the need for a robust Framework and resiliency program.
Aristocrat continues to proactively prepare and respond to these challenges by remaining agile, flexing the way we operate and
making swift and effective risk-based decisions. These decisions are informed by an Enterprise Risk Profile and Board Approved
Risk Appetite Statements that have been regularly reviewed and updated by our Executive Steering Committee and the Board
of Directors.
In FY24, we anticipate global economic uncertainty to continue. In addition, we expect that further disruption and changes within
the mobile gaming market, regulatory changes to both gaming and social casino industries, Aristocrat’s growing Anaxi business
and the proposed acquisition of NeoGames, will continue to create new and varied risks and opportunities that we are poised
to manage. We are also prepared to navigate complex geopolitical situations, including maintaining the health and safety of our
people and continuity of operations in Israel and Ukraine.
Principal risks currently identified as relevant to Aristocrat (in no particular order) are set out below.
Health, Safety and Wellbeing
Maintaining the Health and Wellbeing of Our People
Risk Description
Failure to properly protect the physical and mental wellbeing of our workforce resulting in harm.
Importance to Aristocrat
The health, safety and wellbeing of our people is key to our success. Some of our employees operate in inherently higher risk
environments which require effective health, safety and environment (HSE) controls, and a strong safety culture.
FY23 Commentary
In FY23, the key health and safety risk remained centred
around our employees in Ukraine. We continued to evaluate
the situation and offer support (including relocation) to our
impacted colleagues.
Outside of Ukraine, employee Health, Safety and Wellbeing
priorities for FY23 were centred around improving driver
safety through implementation of driver assistance tools,
preserving employee mental health and wellbeing, uplifting and
embedding emergency preparedness and response capabilities
through training of employees and heightened awareness by
leadership, and the implementation of tools to better utilise
data. These efforts have resulted in health and safety incident
rates consistently below industry benchmarks.
Management and Mitigation
– Global HSE Management System aligned to global
safety standards
– Strategic HSE Working Group and People, Culture
and Reputation Committee in place to govern global
HSE program, strategy and management system
– Regular pulse surveys driving improvements in
wellbeing program
– Broad reaching wellbeing initiatives including
new benefits, flexible work options and regular
leadership communication
– Periodic review of Employee Assistance Program data
to identify trends
– Ongoing HSE training for all employees
– Comprehensive incident management and near miss
reporting and lessons learned processes
– Driver Safety software implemented within fleet
28
Aristocrat Leisure Limited 2023 Annual Report People
Attraction and Retention of Talent
Risk Description
Ineffective recruitment, retention and engagement of talent impacting the delivery of our growth strategy.
Importance to Aristocrat
Our growth strategy depends on our ability to attract, engage and retain best-in-class talent and the maintenance of our
people-first approach.
FY23 Commentary
Aristocrat continued to invest strongly in the development
and retention of high performing employees in pursuit of our
growth strategy. This investment, in combination with labour
market softening, low churn rates across the business, and
implementation of key mitigating actions means the risk
surrounding talent attraction has fallen this year.
However, the challenges surrounding the attraction and
retention of key technology, digital and creative talent are
expected to continue in FY24, particularly as the organisation
continues to diversify into new segments and markets,
and the business continues to acquire new talent through
acquisition. Accordingly, the management of talent will be
a continued area of focus for Aristocrat.
Management and Mitigation
– Talent management and competency framework
– Continuous focus on Company culture and
improvement of Employee Value Proposition including
regular engagement and pulse surveys
– Review of salary benchmarks, incentives and
rewards programs
– Global talent mapping to maintain candidate pipeline
and support focused talent searches
– Enterprise leadership development programs
– Adoption of flexible work policies within a Group-wide,
permanent, hybrid work model
– Focus on diversity and inclusion
– Consistent global onboarding experience
– Monitoring of key talent metrics
Business Resilience
Responding to an unplanned Operational Incident or Other Business Disruptive Event
Risk Description
Failure to continue, adapt or recover critical activities in a timely manner as a result of unplanned operational incidents or
other business disruptions may impact employee health and wellbeing, our commercial objectives and reputation.
Importance to Aristocrat
As a global technology company, Aristocrat operates in locations where geopolitical tensions exist (e.g. Ukraine and Israel),
and technological disruptions or adverse health/weather incidents are likely. Failure to prepare for disruptive events or build
organisational resilience could cause adverse impacts to employee health and wellbeing, critical business operations, player
experience, financial performance, brand and trust.
FY23 Commentary
The unstable global geopolitical environment and other
unplanned operational incidents continue to present a risk to
Aristocrat. This year, all major business units have reviewed
and refreshed their Business Impact Analyses and Business
Resilience Plans and held tabletop exercises. Through these
assessments and exercises, we continue to learn and identify
opportunities to improve our business continuity and disaster
recovery plans.
Following the outbreak of conflict in Ukraine in 2022, we
have continued to support our Ukraine based employees by
providing mental health services, and the voluntary relocation
of our employees and their families including the provision
of transportation, visa, legal aid, housing and settling-in
assistance for relocated staff.
Management and Mitigation
– Business Resilience Framework with dedicated teams
at local, regional and executive levels
– Localised decision-making, with an active wellbeing
focus and monitoring of evolving government
guidelines and requirements
– Ongoing monitoring and evaluation of international
issues, economic, geopolitical and political indicators
and scenarios, and legislation with the support of
third-party specialists including external legal counsel
and geopolitical risk specialists where required
– Mass communication system to notify and account
for employees
– Business Impact Analyses and Business Resilience
Plans completed by all major areas of the business
and updated on a regular cadence
– Continued diversification of operations in line with
growth strategy
– Execution of crisis event tabletop exercises/
simulations and training across all regions
29
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Customer
Maintaining and Growing Market Share
Risk Description
Failure to innovate and expand our portfolio of games/products and services, and explore new markets and enabling
technologies, could impact our ability to grow market share and achieve our strategic objectives.
Importance to Aristocrat
Innovative products and services underpin our growth and competitive advantage. Entering new markets and genres provides
new distribution channels for our content.
FY23 Commentary
We continued to strengthen customer and player relationships
through the development and delivery of world class
technology and content.
Management and Mitigation
– Monitoring and re-evaluation of Company strategy to
account for changing trends, consumer behaviours,
technology changes and competitor initiatives
Gaming delivered another strong year through its strong
game performance and world class content, underpinned by
innovation in its products and revenue models. Anaxi delivered
on its initial market entry commitments and continued to
establish foundations for growth in online RMG, whilst Pixel
United continued to explore new markets. We recognise that
our operating environment remains highly competitive.
– Expansion and diversification of products, services,
and markets, in line with strategy
– Continued investment in differentiators that drive
competitive advantage, including market-leading
product portfolios, tailored to customer needs
– Establishment and scaling of Anaxi
– Voice of the Customer and Player programs and
strong focus on customer experience
– Continued investment in customer and market
insights programs
– Gaming revenue diversification strategy
Global Supply Chain
Managing Global Supply Chain Constraints
Risk Description
Global supply chain disruptions, including material/component shortages and logistical constraints impacting our ability
to serve our Gaming customers.
Importance to Aristocrat
Successfully managing supply chain challenges is critical to meeting business requirements and satisfying customer
demands for our products.
FY23 Commentary
During the COVID-19 pandemic, the supply chain was critically
impacted: materials and commodities were in limited supply,
worldwide logistics constrained, and manufacturing capacity
and labour availability compromised.
In FY23, the risk has stabilised and reduced due to:
– Improved material availability and reduced lead times with
order cycle times aligning with best-in-industry
– Continued build of supplier network strength and resiliency.
Management and Mitigation
– Dedicated team actioning a supply chain strategy to
deliver through market conditions
– Multi-tiered approach to governance for the review
and execution of key actions to manage supply chain
and inventory constraints
– Ongoing engagement with key suppliers to strengthen
relationships and ensure delivery commitments
– Diversified sourcing arrangements for critical supply,
and ongoing improvements in supply chain resiliency
– Safety stock holdings and forward purchasing
– Controlled spot buying processes to secure critical supply
– Product re-engineering to mitigate reliance on parts in
short supply
– Redesigned supply chain to deliver flexibility and
maximise used parts utilisation
– Supplier due diligence, performance and risk
assessment processes
30
Aristocrat Leisure Limited 2023 Annual Report Cyber Security
Securing and Controlling Information Assets and Systems
Risk Description
Enterprise disruptions to Aristocrat and/or its customers and consequential damage (e.g. reputational, intellectual property or
personally identifiable information data loss, financial, regulatory/standards breach) from a cyber breach.
Importance to Aristocrat
Failure to protect/secure Aristocrat assets could damage our business operations, player experience, financial performance,
brand and trust.
FY23 Commentary
Aristocrat continues to build robust internal capabilities, and
implement leading tools and systems to identify, respond to
and mitigate incidents and create a ‘Digital Trust’ competitive
advantage. We continue to monitor evolving cyber threats and
changes to cyber security laws and mature our cyber practices
in response, with focus on risks relating to ransomware, insider
threat, unsecure product configuration and supply chain attack.
In FY23, Aristocrat, like many other organisations, was
impacted by a cyber incident whereby a criminal hacker
exploited a newly identified (zero day) vulnerability in third-party
file sharing software (MOVEit) used by the company. The hacker
extracted data from a company server, including personal
information belonging to Aristocrat employees and other data.
We have taken comprehensive steps to contain the incident
and have compiled lessons learned to further mature the
cybersecurity program.
Management and Mitigation
– Cybersecurity Architecture Standards and Security Policies
– Combined Cyber and Privacy Operating Committee
with a documented Committee Charter to provide
program governance
– Strong controls in identity and access management,
endpoint detection and response, data loss prevention,
cloud security, email security, vulnerability management
and threat intelligence/dark web monitoring
– Third party/supply chain risk management
– Logging, monitoring and incident response
– Compulsory information security training program
– Monthly phishing campaign for the enterprise
– Continuous improvement of cyber security posture through
implementation of a robust cyber maturity roadmap
– Ransomware Playbook and formal cyber incident
response plan in place
– Routine penetration testing
– Annual cybersecurity internal audit
Data Privacy
Protecting Sensitive Consumer and Personal Data
Risk Description
Breach of data privacy and retention laws and regulations resulting in regulatory fines, litigation, and reputational damage.
Importance to Aristocrat
Failure to protect/secure Aristocrat’s personal data could damage our business operations, brand and trust as well as lead to
regulatory actions, litigation, and financial penalties.
FY23 Commentary
The independent maturity assessment of the Privacy Program
in FY23 indicated strong progress against our multi-year Privacy
Roadmap, reflecting further investment in policies, processes
and capabilities. In particular, FY23 saw the introduction of
Personal Data Quality Privacy Policy, Privacy Complaints
Policy, standardised privacy reporting and metrics, and further
establishment of an enterprise-wide data inventory and Record
of Processing Activities library.
As mentioned above, following a cyber incident in FY23, we
have taken lessons learned to augment the Privacy Roadmap.
We also recognise that as technology changes, Aristocrat
continues to grow and diversify, and privacy laws and
regulations continue to evolve at a rapid pace, Data Privacy will
continue to be a key risk for the Group to manage.
Management and Mitigation
– Global data privacy program framework, policies and
principles which are published on Aristocrat’s intranet
site for all staff to access
– Combined Cyber and Privacy Operating Committee
with a documented Committee Charter to provide
program governance
– Compulsory data privacy training program
– Data management practices, procedures, and
expertise, including detailed Privacy Roadmap
– Standardised privacy reporting and metrics
– Annual independent data privacy maturity assessment
31
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Social Responsibility
Maintaining our Social License to Operate
Risk Description
Community, regulator and government concerns around our product responsibility, how we conduct our business and
our employer responsibilities lead to negative stakeholder perceptions and legal or regulatory changes that cause a
significant loss of addressable market, loss of revenue and growth opportunities, inability to attract and retain talent and/or
reputational damage.
Importance to Aristocrat
Aristocrat recognises our stakeholders are increasingly informing their decisions based on our environmental, social
and governance (ESG) credentials and it is therefore critical that we actively improve performance and engagement in
these areas.
FY23 Commentary
The business continued to make meaningful strides forward
in its ESG agenda. Our Responsible Gameplay (RG) policies
were refreshed and expanded this year, supported by Group-
wide training, to reflect our increasing ambitions and the
expectations of stakeholders. With the support of the NSW
government and a major customer, Aristocrat’s Australian-
first trial of cashless Electronic Gaming Machine (EGM)
technology was successfully completed, and independently
assessed during the period. Insights gained are being
applied as Aristocrat develops further cashless technology,
ahead of the launch of a new and larger trial sponsored by
the NSW government.
Aristocrat’s decarbonisation journey took a significant step
forward, with the business on track to submit a Group-
wide, science-based emissions reduction target to the
SBTi organisation by the end of calendar 2023, and the
development of an initial abatement plan and governance
framework, in line with our commitment to decarbonise our
business and grow value.
Aristocrat published its annual Anti-Modern Slavery statement,
in FY22 providing more detail on the steps the business is
taking to recognise, assess and minimise these risks across
its supply chains. Additionally, we made progress towards our
40:40 gender priorities – at period end, the representation of
women increased to over 44% on our Board, and over 45% on
our executive team. We also launched a Tribal Advancement
program in the US Gaming business to deepen links with
Tribal customers including through scholarships and support
for charitable organisations.
Management and Mitigation
– Dedicated RG and Corporate Social Responsibility team
with active Board oversight and engagement
– CEO and key executives have performance metrics
addressing sustainability and RG priorities
– Group-wide RG policy and other RG policies covering
product design, marketing, player communication
and other core functions are updated and strengthened
periodically
– Compulsory RG training deployed to all employees
– Multiple employee RG education and engagement
programs and bespoke Board RG education
program in place
– Ongoing RG product innovation investment (including
funding for trials), with a dedicated budget and
governance framework
– Periodic RG Risk Assessment workshops conducted
for all major areas of the business, to inform
further progress
– Continued investment in driving progress, engagement
and awareness around people-related priorities
including employee health, safety and wellbeing,
diversity and inclusion and anti-modern slavery program
32
Aristocrat Leisure Limited 2023 Annual Report Laws and Regulations
Maintaining Compliance in a Changing Gaming and Non-Gaming Regulatory Environment
Risk Description
Gaming Laws and Regulations
Gaming and Anaxi
A change in government or regulatory policies or their interpretation or enforcement on land-based and online casinos 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.
Pixel United (PxU)
New laws or new interpretations of laws and regulations affecting loot boxes, age assurance or other aspects of PxU’s
portfolio (in particular Social Casino) may impact our game economics and design, resulting in reduced revenues and/or
competitive disadvantage.
Non-Gaming Laws and Regulations
Breach of non-gaming laws and regulations could result in financial penalties, sanctions, reputational damages and civil/
criminal proceedings.
Importance to Aristocrat
Failing to adhere to material laws and regulations could result in difficulties in obtaining or maintaining licenses for Gaming
and Anaxi, fines and penalties, sanctions, civil/criminal proceedings and reputational damage.
FY23 Commentary
Scrutiny of consumer uptake of both digital games and
gambling products continued in FY23. In particular,
we recognised escalating negative political and media
sentiment around gaming in Australia and the heightened
risk to our overall business.
In Australia, the federal government has stated its position
that ‘simulated gambling’ games should be rated R18+,
which would necessitate a restricted access system to
prevent minors playing these games. We will continue to
lead engagement with the government (and closely monitor
solutions proposed by platform providers) to develop
practical low-impact implementation options.
Across our regulated businesses and operations, Aristocrat takes
a scrupulous approach to compliance, and this will remain a
prominent focus as we scale Anaxi. Specific to Anaxi, we have
hired a new and highly experienced online RMG regulatory
compliance specialist in FY23.
Management and Mitigation
– Comprehensive regulatory compliance function and
governance framework across all regulated businesses
and functions
– Continuous dialogue with gaming regulators and
strong commitment to transparency and compliance
– Robust government relations, RG, and
sustainability functions
– Implementation of industry-leading standards in
RG across our regulated and unregulated businesses
– Active engagement with industry associations and
other stakeholders, active monitoring of expectations
and potential reform measures
– Increased focus on our Non-Gaming
Compliance Framework
– Global mandatory compliance training programs
– Engagement of external legal and regulatory
specialists where needed
33
Aristocrat Leisure Limited 2023 Annual Report Operating and Financial Review
Distribution Platforms
Overreliance on Third Party Distribution Platforms
Risk Description
If digital platform partners enforce unfavourable terms of use, including increased fees, tighter advertising tracking or privacy
requirements, or shutdown our applications, this could result in higher operating costs, and more difficulty attracting new
players. However, diversification of the distribution platform base is seen to also present opportunity if managed effectively.
Importance to Aristocrat
A significant portion of Aristocrat’s Pixel United revenue is generated through third party platforms. Any unfavourable changes
may significantly impact our distribution and commercial position.
FY23 Commentary
Third party platforms including Google Play and the Apple
App Store continue to be key distribution channels for our
mobile gaming content. Aristocrat strives to build constructive
commercial relationships with platform providers.
In FY23, we have continued to diversify our marketing and
platform mix to mitigate impacts. Additionally, we are closely
monitoring global regulatory developments, including the
European Union’s Digital Markets Act, which may impact
the competitive behaviours of major platforms.
Management and Mitigation
– Monitoring of latest developments, proposals and rules
enacted by platform partners
– Ongoing and proactive dialogue with platform partners
– Continued diversification into new channels, including
maintenance of a nimble and responsive technology
platform enabling quick compliance with rules put in
place by platform providers
– Continued investment in new and existing platform
strategies, including Plarium Play and PC, and push
of ad monetisation for games
– Digital government and industry relations strategy
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, reduced revenues, suppressed innovation, and/or reputation and brand damage.
Importance to Aristocrat
IP is one of Aristocrat’s most critical assets. Our product portfolio continues to be best-in-class, and we protect our IP and
innovative new products by investing in IP generation and acquisition.
FY23 Commentary
In FY23, an IP awareness campaign was launched with multiple
touchpoints scheduled covering various topics and stakeholder
groups, including a mandatory Trade Secret Protection
training for all employees. An IP management tool was also
implemented to allow central management of Branding and
Patent IP assets, providing better management of the process
with the various patent and trademark offices and allowing
visibility of the process to the business. While the strategy
and training initiatives are ongoing, they set the foundation
for increased awareness and protection of IP across the
entire business.
Additionally, a Brand Enforcement team was launched
to focus on detecting and preventing third parties from
using our brands.
Management and Mitigation
– Formalised processes for registering trademarks,
copyrights, and patents
– Automated infringement search tools
– Trademark and patent watches, clearance and searches
– Trade Secret Protection Program training in place for
Aristocrat’s Trade Secret Keepers
– 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
Generative Artificial Intelligence (AI) and its impact on IP has
also become a focus of Aristocrat.
– Brand enforcement process, including on-line detection
tools and direct ad-hoc detection and take-downs
– Establishment of cross-functional AI Working Group
to provide governance and guardrails surrounding
the use of AI
34
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
People & Culture Committee Chairman’s Letter
Dear Shareholder
On behalf of the Board, I am pleased to present our
Remuneration Report for the financial year ended
30 September 2023.
At the outset, I’d like to express appreciation to the leaders
across our business – particularly in Ukraine and more
recently in Israel – who have worked tirelessly to support
the wellbeing of our people and business in difficult and
distressing circumstances.
Aristocrat delivered a high quality Group result, underpinned
by market-leading investment in competitive and diversified
product portfolios. Strong operational performance drove the
result, most notably in our largest Gaming market in North
America. Pixel United demonstrated resilience in mixed
market conditions, supported by dynamic User Acquisition
allocation and cost management, and retained its leading
positions in key mobile game genres across the year. Our
online Real Money Gaming (RMG) business, Anaxi, delivered
its initial market entry commitments during the year. Aristocrat
continued to execute its ‘build and buy’ strategy to scale in this
important adjacency, including with the announcement of the
proposed acquisition of NeoGames.
Delivering in FY2023
Performance under our incentive programs is assessed
across core financial and non-financial outcomes,
considering both individual and collective accountabilities.
Key performance metrics underpinning Executive
remuneration outcomes for FY2023 include:
– Our share price finished FY2023 more than 20% higher
than at the start of the financial year.
– Our three-year relative total shareholder return (TSR)
performance against the S&P/ASX100 Index resulted in
that element of our long term incentive (LTI) vesting at
82.6%, while our three year earnings per share (EPS) growth
of 50.2% was well above the maximum target of 20% and
resulted in full vesting of that LTI tranche.
– The Free Cash Flow conversion threshold, which operates
as a STI gateway, was met. The cash flow generated
funded our growth plans, while allowing $811 million
of surplus cash to be returned to shareholders through
dividends and share buy backs in line with the Group’s
disciplined capital allocation framework.
– Strong growth in normalised NPATA of 20.7% for the
year (13.0% in constant currency) drove good outcomes
on the financial component of our STI.
Remuneration outcomes for FY2023
This performance resulted in the Board approving:
– STI outcomes for current Executive KMP of between
104% and 128% of target (with an outcome of 110%
for the CEO and Managing Director).
– In line with our performance against the relative TSR and
relevant EPS conditions outlined above and the LTI Individual
Performance Based Condition over the 3 year performance
period, LTI vesting (for the period 1 October 2020
to 30 September 2023) of 94.8%.
No risk-based or other adjustments to remuneration were
recommended by the Board Committees as a result of their
review of risks and behaviours.
Board renewal and management changes
The Board continued with its orderly renewal program
throughout the year. In addition to the nomination of Bill Lance,
which I mentioned in last year’s report, Jennifer Aument was
nominated to the Board in April 2023. Jennifer has more than
25 years of business experience, including holding leadership
roles in large, US and Australian listed companies in global
and regulated environments.
Sally Denby was promoted to Chief Financial Officer earlier in
the 2023 fiscal year (November 2022). Sally was previously
Aristocrat’s Deputy Chief Financial Officer, prior to which
she served seven years in senior finance leadership roles
in the Group. In addition, Tracey Elkerton, Chief Compliance
Officer, was elevated to the Executive Steering Committee in
February 2023, evidencing the careful succession planning and
ongoing investment in developing senior executive talent and
leadership bench strength.
Lastly, after four years as CEO of Pixel United, Michael Lang
departed the business in September although he remains available
to us through to mid-December 2023. We thank Michael for his
contribution and wish him all the best in his future endeavours.
Looking ahead
Our remuneration and employment strategies have served
us well and underpin our ability to compete successfully
in the truly global talent markets in which we operate.
Continuing to attract, motivate and retain the very best people
to support our strategy is absolutely vital and will remain
our focus. Your Board believes that the strong remuneration
and governance framework we have in place is effective
in driving management focus on our strategy, the delivery of
high quality, sustainable performance and close alignment
with shareholders’ interests throughout.
We invite you to read the Remuneration Report and welcome
your feedback.
Kathleen Conlon
People & Culture Committee Chairman
35
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
Remuneration Report Overview
This FY2023 Remuneration Report has been prepared and audited as required by the Corporations Act. Terms used in this
Remuneration Report are defined in the Glossary on page 62.
Who is covered by this report?
The composition of the Group’s KMP during FY2023 is set out below.
KMP
Position
Location
Term as KMP
Non-Executive Directors
Neil Chatfield
Chairman; Director
Kathleen Conlon
Philippe Etienne
Pat Ramsey
Arlene Tansey
Director
Director
Lead US Director 1
Director
Sylvia Summers Couder Director
Bill Lance
Jennifer Aument
Director
Director
Australia
Australia
Australia
Full financial year
Full financial year
Full financial year
United States
Full financial year
Australia
Full financial year
United States
Full financial year
United States Nominated on 19 October 2022
United States Nominated on 11 April 2023
Executive KMP
Trevor Croker
Sally Denby
Group CEO and Managing Director
United States
CFO
Australia
Mitchell Bowen
CEO, Anaxi and Chief Transformation Officer Australia
Full financial year
Commenced as KMP on 14 November 2022 2
Full financial year
Hector Fernandez
CEO, Aristocrat Gaming
Michael Lang
CEO, Pixel United
United States
United States
Full financial year
Ceased to be KMP on 8 September 2023 3
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 operations.
2. Sally Denby was appointed to the role of CFO on 14 November 2022. Prior to this, Sally Denby was Deputy CFO of Aristocrat.
3. Although Michael Lang ceased to be a member of the Executive KMP on 8 September 2023, his last day with the Company will be on 15 December 2023.
36
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report Overview continued
Aristocrat is one of a small group of ASX listed companies that derives the majority of its revenues from overseas markets
(with approximately 6.7% of revenue derived from the Australian Gaming 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 7,800 employees based
globally, is licensed in more than 325 jurisdictions and operates in over 100 countries around the world.
Aristocrat’s Executive team is majority 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, and in
many instances these awards are not subject to performance conditions.
Pixel United’s contribution of 42.1% of Group revenue during the Reporting Period, and the establishment of an online RMG
business unit, Anaxi, reinforces the need for Aristocrat’s remuneration structures to evolve and take into account global pay
philosophies, particularly those in the technology industry, while also being regionally appropriate.
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.
Proportion of headcount by country
Key
Under 5%
Between 5-20%
Between 20-40%
37
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
Remuneration Report Overview continued
Executive Remuneration Framework
OUR VALUES
It’s all about
the player
Talent
unleashed
Collective
brilliance
Good business
Good citizen
OUR REMUNERATION PRINCIPLES
The following principles guide Aristocrat’s remuneration strategy and ‘pay for performance’
philosophy, which are designed to attract, retain and motivate key talent.
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
EXECUTIVE REMUNERATION STRUCTURE
Fixed Remuneration
Base salary, superannuation
and other benefits
Short-Term Incentive (STI)
Reward for strong individual and Group
performance during the financial year
Long-Term Incentive (LTI)
Reward for sustainable
longer-term Group performance
AT-RISK
– Individual skills, performance, experience
and contribution to Aristocrat
– Benchmarked against equivalent roles
at companies of comparable size
and competitors
– Truly global operations and complex
probity requirements of Gaming regulators
Value determined by
Achievement of both annual financial
and non-financial performance
hurdles at a:
– Group level
– Individual level
Achievement of multi-year financial and
non-financial performance hurdles:
– Relative TSR – 30% weighting
– Relevant EPS – 30% weighting
– Individual Performance Based
Condition – 40% weighting
Provides competitive ongoing remuneration
in recognition of day-to-day responsibilities
and accountabilities
How does it link with strategy & performance
– Supports annual delivery of key
– Multi-year metrics that support
strategic targets and to recognise
and reward individual performance
– Deferral into equity supports
retention and aligns the interests
of executives and shareholders
sustained shareholder value creation
– Delivered in equity to align the
interests of executives and
shareholders
– Mix of financial and non-financial
– Pre-vest assessment of deferred equity
promotes sustained performance
measures recognises both the ‘what’
and the ‘how’ of performance
Executive Minimum Shareholding Policy
The Board has endorsed a minimum shareholding policy for the Group CEO and
Executives to promote the alignment of executive interests with the long-term interests
of shareholders and support long-term sustained value creation for the Group.
MSP as a proportion
of base salary
Group CEO
Executives
The Group CEO is required to acquire Aristocrat shares equal to 200% of base salary
and Executives are required to acquire shares equivalent to 100% of base salary. All
Executives have a three-year period commencing on the later of September 2022 or
their appointment (hire or promotion) to meet the minimum shareholding expectation.
Further details on Executive KMP shareholdings are provided on page 60.
38
%
0
0
2
%
0
0
1
Year 1
Year 2
Year 3
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report Overview continued
EXECUTIVE KMP 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 FY2023. It has been modelled on the average of
the Executive KMP’s target opportunity (but excluding any one-off equity, awards or bonuses).
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 and individual level.
CEO
At-Risk
78.3%
LTI
53.9%
66.1%
Deferred
equity
Other Executive KMP
Fixed
21.7%
At-Risk
76.5%
Fixed
23.5%
Fixed
23.5%
Cash
STI
13.0%
LTI
53.1%
33.9%
Cash
63.5%
Deferred
equity
Deferred
STI
10.4%
36.5%
Cash
Fixed
21.7%
Cash
STI
12.2%
Deferred
STI
12.2%
EXECUTIVE REMUNERATION TIME HORIZON
The following diagram provides an illustrative indication of how remuneration is typically (based on target opportunity) delivered
to the Executives.
LTI
STI deferred equity 1 (25%)
STI deferred equity 1 (25%)
STI cash (50%)
Fixed remuneration
Year 1
Year 2
Year 3
1. Vesting of deferred equity PSRs subject to additional pre-vest assessment.
39
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
How Variable Remuneration is Structured
Short-term incentive (STI) – how does it work?
This section summarises the terms of the FY2023 STI program.
Description
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 Executive remuneration.
STI opportunity
A target opportunity is set for each Executive, which is earned if Group and individual performance is on
target. The Board determines the total STI pool to be distributed.
Executive KMPs (other than the CEO) have a target STI of between 88% and 106% of fixed remuneration.
The CEO has a target STI of 113% of fixed remuneration. The maximum STI payout is capped at 200% of
a participant’s target STI opportunity.
Gateway and
Group Financial
Performance
Threshold
FCF Conversion remains a key metric, operating as an overarching gateway condition.
NPATA forms the basis of the Group financial performance condition. As set out in the diagram, scaling
applies using a formula which seeks to reward for outperformance, where achievement at 120% of target
creates a 200% payout and conversely, will ensure appropriate treatment where the Group financial
performance condition achieved is between 85% (Group Financial Performance Threshold) and 100%,
resulting in a payout between 50% to 100%.
Payments are made in
connection with the financial
performance condition if the
FCF Conversion gateway and
Group Financial Performance
Threshold are achieved.
)
%
(
t
u
o
y
a
P
I
T
S
200
150
100
50
0
200
120
130
110
100
100
50
85
0
50
100
150
200
Group Financial Performance (%)
Setting stretch
targets
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 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.
Individual
performance
condition
A rating scale is used to assess individual performance. Payments under this tranche are made when an
Executive has met or exceeded the minimum individual performance rating.
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.
Executives have a clear line of sight to OKRs and are able to directly affect outcomes through their own
actions. Executives are also assessed on behaviour metrics which contribute to that individual’s overall
performance rating.
Payments are only made in connection with the individual performance condition if the Group Financial
Performance Threshold is achieved.
40
Aristocrat Leisure Limited 2023 Annual Report
How Variable Remuneration is Structured continued
Short-term incentive (STI) – how does it work? continued
Reasons
for these
performance
conditions
The Board considers that a combination of individual and financial performance conditions is appropriate as
it supports annual delivery of key strategic objectives and rewards individual performance. In the case of the
FCF Conversion gateway, this measure was chosen as it ensures cash flow discipline, which in turn allows
Aristocrat to fund growth initiatives. In addition, 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 performance conditions during the
performance period (up or down) where significant unforeseen events have occurred which are outside
the control of management.
How STI
outcome is then
determined
The quantum of STI payment the Executive will receive is calculated as follows:
STI outcomes
Financial
performance
Individual
performance
Base
salary
+
Target
incentive
+
+
30%
=
STI
outcome
Targets and performance outcomes
Measures
Weighting
NPATA
Individual
performance
70%
30%
FCF conversion
GATEWAY
85%
Threshold
$m
50%
100%
Target
$m
120%
Max
$m
100%
185%
Challenging year
Successful year
Exceptional year
Payments are only made under the STI Plan if the overarching gateway condition of FCF conversion and the
Group Financial Performance Threshold, being 85% of the STI Plan financial performance condition, are met.
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.
A formal review process is conducted by the full Board to confirm whether the Executive’s individual
performance conditions are satisfied. The process includes taking feedback from the People & Culture
Committee, the CEO and Managing Director (in respect of other Executives) and the consideration at
a concurrent meeting of the People & Culture Committee and Audit Committee in September 2023 to
consider if there were any risk-based or other adjustments that may warrant consideration in the Board’s
determination of remuneration outcomes.
41
Aristocrat Leisure Limited 2023 Annual Report70% Remuneration Report
How Variable Remuneration is Structured continued
Short-term incentive (STI) – how does it work? continued
Who assesses
performance?
continued
In addition to developing and approving the OKRs of the CEO and Managing Director, the Board has oversight
and approves Executive OKRs 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 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 an 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.
An additional pre-vest assessment applies. The deferred STI PSRs will not vest unless the Executive has
met or exceeded the target individual performance rating for the period in which the deferred STI PSRs are
due to vest.
The number of PSRs granted to an Executive 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.
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.
If the Executive has ceased employment with the Company, and is a ‘qualifying 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, an Executive will not be deemed to be a ‘qualifying leaver’ to the extent they are terminated
for cause or underperformance, breach their terms of employment contract or they resign from Aristocrat.
If the Executive has ceased employment with the Company and is not a ‘qualifying 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.
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.
PSRs granted under the plan are not transferable and participants are prohibited from entering into hedging
arrangements in respect of unvested PSRs.
Eligibility for
dividends
Cessation of
employment
Clawback
Restrictions
on transfer or
hedging
42
Aristocrat Leisure Limited 2023 Annual 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 FY2023.
Description
Under the LTI Plan, annual grants of PSRs are made to Executives to align remuneration outcomes with the
creation of sustainable shareholder value over the long-term.
LTI opportunity
The number of PSRs to be granted to an Executive will be determined by calculating the Face Value of
Aristocrat’s shares and dividing the Executive’s LTI Opportunity by the Face Value and rounding down 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 FY2023:
– Relative TSR – 30%
– Relevant EPS – 30%
– Individual Performance Based Condition – 40%
Together, the
three tranches provide
a balance that incorporates
financial tests with a holistic
assessment across the full range
of objective key measures in
areas that will position the
Company for ongoing
success.
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%
For the purposes of calculating TSR over the performance period, the value of the relevant shares at the
start of the performance period is based on volume weighted average price (VWAP) of those shares over
the 90 calendar days prior to (but not including) the performance period start date. The value of the relevant
shares at the end of the performance period is based on the VWAP of those shares over the 90 calendar
days prior to (and including) the performance period end date.
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 may also exercise its discretion to ensure that the TSR vesting condition is adjusted
to reflect sustainable growth outcomes aligned to the interests of shareholders.
43
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
How Variable Remuneration is Structured continued
Long-term incentive (LTI) – how does it work? continued
This section summarises the terms of LTI grants made in FY2023.
Relevant EPS
– 30%
weighting
The Relevant EPS vesting condition is measured by comparing Aristocrat’s CAGR over a three-year
performance period (1 October 2022 to 30 September 2025 in respect of LTI grants in FY2023) 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 prior to the award as the base
year (FY2022), and the final financial year in the three-year performance period as the end year (FY2025).
The percentage of PSRs that may vest is determined based on the following vesting schedule:
Aristocrat’s
Relevant 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
PSRs subject to the Relevant EPS
vesting condition that vests (%)
0%
50%
Between 50% and 100%
increasing on a straight line basis
100%
The Board may adjust the Relevant EPS vesting condition to ensure that an Executive is neither
advantaged nor disadvantaged by matters outside of management’s control that affect achievement of the
vesting condition.
As is our practice, 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 Relevant EPS target for the 2021 LTI Grants that vest in 2023 is disclosed in Table 3.
Individual
Performance
Based Condition
– 40%
weighting
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.
This is distinct from the short-term nature of the STI program (12 months), noting that any overlap in metrics
across the STI and LTI programs are intentional and to create a strong link and ensure consistency in
behaviours across both the STI and LTI Plans.
The OKRs are aligned to supporting Aristocrat’s longer-term strategy and driving continued sustainable
growth as well as other non-financial and ESG goals in line with Aristocrat’s ESG priorities including
responsible gameplay and other sustainability initiatives.
The vesting process for the Individual Performance Based Condition considers a range of performance
indicators summarised on page 45 across a three-year performance period.
Pages 52 and 53 provide information on how achievement of incentive plan performance conditions delivers
sustainable growth and superior returns to shareholders as well as highlighting the alignment of FY2023
remuneration outcomes with business strategy and Group performance. Equivalent information is included
in the FY2022 and FY2021 Remuneration Reports.
44
Aristocrat Leisure Limited 2023 Annual Report How Variable Remuneration is Structured continued
Long-term incentive (LTI) – how does it work? continued
Individual
Performance
Based Condition
– 40%
weighting
continued
Business strategy & objectives Measures
Sustainable Core Growth
Growing in Adjacencies
Innovating Experiences
Operational Excellence
– Multiple financial measures and metrics
– Market share measures
– Cyber security and data privacy maturity targets
– Quality targets
– Risk management & Business Continuity Plan processes
– Health, Safety & Environment (including wellbeing) indicators
– Product portfolio optimisation
– Quality execution of new market opportunities (organic & inorganic)
– Establishment of online RMG business unit
– Transformation and integration projects
– Net promoter score targets
– Collaboration and synergies across Gaming, Pixel United and Anaxi
– Leverage industry-leading IP portfolio across three business units
– Execute on technology initiatives to improve operating scale and
organisational efficiency
– ESG program and disclosure maturity
– Diversity and inclusion metrics
– Talent acquisition, retention and succession
– Employee engagement / experience measure
Why were
these vesting
conditions
chosen?
Relative TSR
– Ensures alignment between comparative shareholder return and reward for the executive
– Provides relative, objective, external, market-based performance measure against those companies with
which Aristocrat competes for capital, customers and talent
– Is widely understood and accepted by key stakeholders
Relevant EPS
– Is a relevant indicator of increases in shareholder value
– 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 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, as well as other non-financial and ESG goals in line with Aristocrat’s
ESG priorities including responsible gameplay and other sustainability initiatives
– This hurdle allows the Board to take into account the behaviours and conduct relating to risk management
in determining outcomes
– 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 Executive team is
majority 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.
45
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
How Variable Remuneration is Structured continued
Long-term incentive (LTI) – how does it work? continued
Who assesses
performance
and when?
Relative TSR and Relevant EPS results are calculated by Aristocrat and an external remuneration advisor
tests the 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 following formal performance review process
is conducted annually, although vesting of this tranche requires consistent and sustained individual
performance for three years in a row:
– A formal review process is conducted by the full Board against the objective-balanced scorecard OKRs.
– The process includes taking feedback from the People & Culture Committee, the CEO and Managing
Director (in respect of other Executives) and the consideration at a concurrent meeting of the People &
Culture Committee and Audit Committee (typically held in September each year) of whether there were
any risk-based or other adjustments that may warrant consideration in the Board’s determination of
remuneration outcomes.
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’s individual contribution, and to determine their
remuneration outcomes.
Vesting
The Board has discretion to issue new shares, acquire shares on-market or cash settle any PSRs that vest.
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 ‘qualifying 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 ‘qualifying leaver’), unless the Board
determines otherwise;
– if the participant is a ‘qualifying 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 ‘qualifying 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, an Executive will not be deemed to be a ‘qualifying 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.
46
Aristocrat Leisure Limited 2023 Annual Report How Variable Remuneration is Structured continued
Long-term incentive (LTI) – how does it work? continued
What happens
in the event
of a change
of control?
Restrictions
on transfer
or hedging
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.
PSRs granted under the plan are not transferable and participants are prohibited from entering into hedging
arrangements in respect of unvested PSRs.
47
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
Stretch Performance Targets and Remuneration Outcomes in FY2023
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 2023 STI grant (performance period 1 October 2022 – 30 September 2023)
– the 2021 LTI Grant (performance period 1 October 2020 – 30 September 2023)
– tranche 3 of the Executive special equity award (performance period 1 October 2022– 30 September 2023)
STI GRANT TARGETS AND OUTCOMES IN 2023
2023 STI Grant Targets
The Board set a challenging NPATA target (70% weighting)
of $1,221.0m (on a constant currency basis 1) in connection
with the 2023 STI grant, which was a 27% increase on the
2022 STI target of $961.5m (on a constant currency basis).
The NPATA target was set in the context of:
– growth in key Gaming markets and adjacencies in North
America (other than in Class II North America Gaming
Operations, which was broadly flat) and broadly flat ANZ
Outright Sales. These markets and segments remained
in line with those assumptions over the course of the
STI performance period; and
– contracting Pixel United markets and segments, and these
markets and segments softened more than expected over
the course of the STI performance period.
In addition, the performance of the 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.
Performance and STI Outcomes in FY2023
Executive KMPs received on average 104% of their STI target
award (compared to the maximum target STI opportunity
of 200%), supported by achieving normalised NPATA
of $1,326.6 million (in reported currency), which is an
increase year on year of 20.7%.
– Strong normalised NPATA of $1,252.8 million on a constant
currency basis 1 ($1,326.6 million in reported currency), which
was 102.6% of target, reflecting a high quality product
portfolio, ongoing investment and effective execution,
despite challenging conditions across some key segments.
– Strong FCF Conversion of 106% which was 107.1% of target,
reflecting cash flow discipline and ability to fund organic
and inorganic growth.
Management delivered growth through the gain of market
share and performance highlights include:
– Gaming’s Class III Premium and Class II Gaming Operations
installed base grew 8.2% to exceed 64,000 units.
– Pixel United demonstrated resilience in challenging
conditions with lower market demand and retained leading
positions in key genres, including #1 position in the Social
Slots segment, according to industry data (Sensor Tower).
– Sustained investment in great talent, technology and product,
positioning the business for continued profit growth.
Table 1 below discloses financial performance conditions set by the Board and actual performance against those targets
FCF CONVERSION GATEWAY ACHIEVED
With the Group Financial Performance Hurdle and FCF Conversion Gateway achieved, the STI outcome is calculated by reference to NPATA.
Measure
Target
Actual Performance
STI outcome
FCF Conversion (Gateway)
NPATA (Financial Performance Condition)
99% 2
$1,221.0m
106%
$1,252.8m 1
Gateway achieved
106%
FCF
conversion
Gateway achieved
NPATA
% of Financial Performance Condition awarded – 106%
Threshold
85%
Target
100%
Stretch
120% (max)
1. Constant currency basis as set out in the approved budget.
2. FCF Conversion target is set annually based on the anticipated financial performance of the Group for the coming year.
48
Aristocrat Leisure Limited 2023 Annual Report
Stretch Performance Targets and Remuneration Outcomes in FY2023
continued
LTI GRANT TARGETS AND OUTCOMES IN 2023
The following three vesting conditions applied to the
2021 LTI Grant:
Stretch EPS targets were set by the Board in connection with the
2021 LTI Grants:
– a Relative TSR vesting condition (30% weighting);
– Targets were set in a COVID-disrupted environment, with
– a Relevant EPS vesting condition (30% weighting); and
– an Individual Performance Based Condition
(40% weighting).
assumptions made on speed of recovery in key Gaming markets
and segments while Pixel United was anticipated to build on
momentum from COVID-related tailwinds from FY2020.
– Both organic and inorganic growth was taken into account
by the Board in setting EPS growth targets.
Table 2 below discloses the Relevant EPS Targets for LTI Grants between FY2019 to FY2021
Relevant EPS
Award year
Threshold
Target
Maximum
Target
Actual
Performance
Period
Vesting Date
Award
Outcome
FY2021
FY2020
FY2019
15%
10%
10%
20%
15%
15%
50.2%
FY2021 – FY2023
After 30 September 2023
Achieved
8.4%
6.0%
FY2020 – FY2022
After 30 September 2022
Not achieved
FY2019 – FY2021
After 30 September 2021
Not achieved
Impact of Accounting Adjustments on Remuneration Outcomes
Normalised NPATA (not Reported NPATA) is used for determining remuneration outcomes as normalised NPATA is reflective of the
actual underlying operational performance of the Group. Therefore, normalised NPATA of $1,326.6 million ($1,252.8 million on a
constant currency basis 1) was used for the purposes of testing the EPS growth outcome in connection with the 2021 LTI Grant and
the testing of the outcome of the 2023 STI grant.
The impact of accounting adjustments as well as a reconciliation between normalised and reported NPATA is set out below:
Reconciliation of Statutory Profit to Normalised NPATA
A$ 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
Litigation proceeds
Acquisition related transaction and integration costs
Onerous lease
Changes in deferred tax asset
Net gain from significant items
2023
1,454.1
81.5
1,535.6
(209.0)
1,326.6
2022
948.5
98.4
1,046.9
52.4
1,099.3
30 Sep 2023
Before tax
After tax
36.0
(13.9)
(12.5)
—
9.6
25.1
(13.7)
(9.6)
207.2
209.0
Significant Items included in the Group’s reported result after tax:
Litigation proceeds of $25.1 million relating to an intellectual property matter finalised during the year.
Acquisition related transaction and integration costs of $13.7 million related to Roxor and the proposed acquisition of NeoGames.
Onerous lease expense of $9.6 million relating to an onerous lease for the Seattle premises, which was committed to by
previous ownership.
Changes in deferred tax asset with a net benefit of $207.2 million relating to Group structure changes in a prior period.
1. Constant currency basis as set out in the approved budget.
49
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
Stretch Performance Targets and Remuneration Outcomes in FY2023
continued
2021 LTI Grant Targets, Performance and Vesting Outcomes
Table 3 below discloses the targets set by the Board, performance against those targets and outcome of the 2021 LTI Grants
30 September 2023: three-year performance period ends for 2021 LTI Grants.
Performance is tested in November 2023 for Relative TSR and Relevant EPS
RELATIVE TSR (30% weighting)
170
160
150
140
130
120
110
100
90
Oct 2020
Apr 2021
Oct 2021
Apr 2022
Oct 2022
Apr 2023
Oct 2023
Aristocrat
ASX 100 Accumulation Index
With a TSR performance of 50.5%, Aristocrat was the 32nd performer (equivalent to 66th percentile) of its Peer Comparator Group.
82.6% OF THE PSRS LINKED TO THE RELATIVE TSR MEASURE VESTED
RELEVANT EPS (30% weighting)
100% of the PSRs linked to the Relevant EPS measure vested given that Aristocrat’s actual EPS CAGR of 50.2% across the
three-year performance period was well above the maximum target of 20%.
This was delivered through strong performance in North American Outright Sales and Gaming Operations partly offset by
Pixel United’s lower result in FY2023 reflecting ongoing challenging market conditions.
1 Oct 2020 to 30 Sept 2023
3 year CAGR
Threshold
EPS Target
Maximum
EPS Target
Actual
Outcome
Relevant EPS
Achievement
15%
20%
50.2%
100%
100% OF THE PSRS LINKED TO THE RELEVANT EPS MEASURE VESTED
INDIVIDUAL PERFORMANCE BASED CONDITION (40% weighting)
100% of PSRs linked to the Individual Performance Based Condition vested for those Executive KMP with 2021 LTI Grants,
which requires the Executive KMP to achieve or exceed the required performance rating based on calibration against a set
of objective balanced scorecard OKRs for three years in a row.
These OKRs are aligned to supporting Aristocrat’s longer-term strategy and driving continued sustainable growth as well
as other non-financial and ESG goals in line with Aristocrat’s ESG priorities including responsible gameplay and other
sustainability initiatives.
The vesting process for the Individual Performance Based Condition considered a range of performance indicators summarised
on page 45. Pages 52 and 53 provide information on how achievement of incentive plan performance conditions delivers
sustainable growth and superior returns to shareholders and the alignment of FY2023 remuneration outcomes with business
strategy and Group performance. Equivalent information is included in the FY2022 and FY2021 Remuneration Reports.
50
Aristocrat Leisure Limited 2023 Annual Report Stretch Performance Targets and Remuneration Outcomes in FY2023
continued
Executive Special Equity Awards Targets and Outcomes in 2023
Set out below are the outcomes of the third and final tranche of the Executive special equity awards made to certain key
executives (excluding the CEO and Managing Director) in 2021.
These awards were made following a Board initiated review of Aristocrat’s global remuneration framework which highlighted
that the then Executive remuneration arrangements were materially out of line with prevailing arrangements in Aristocrat’s key
global talent markets. The Board was keen to ensure that the Group did not lose executive talent as a result of its remuneration
arrangements and these one-off awards were designed to augment STI and LTI programs in place.
The PSRs are progressively tested and vested in equal tranches over three years against a broad range of performance indicators
embedded in the Executive’s OKRs.
Broadly these OKRs focus upon:
– growth through adjacent opportunities including accelerated entry into online RMG through execution of the ‘build and
buy’ strategy;
– sustainable growth in core businesses;
– ensuring technology and hardware innovation, quality and delivery, great game content and a customer centric culture;
– rewarding the effectiveness of leaders and the maintenance of a high performance culture that also empowers
Aristocrat’s people.
Reflecting back at the end of the three year program, the Executive special equity awards have been effective in securing
and motivating the Executive team to lead Aristocrat through a period of disruption (COVID-19 and macroeconomic related
uncertainty) and deliver on Aristocrat’s growth strategy. The Board believes that the awards have been successful in positioning
the business for sustainable growth and business over the three years since grant.
The vesting process for tranche 3 of the Executive special equity awards involved the Board assessing the performance of award
holders on the recommendation of the CEO and Managing Director. The Board considered a range of performance indicators as
discussed on page 45 and which are captured in Table 5, bringing together how remuneration outcomes in FY2023 align with
business strategy and Group performance.
Table 4 below discloses what was granted and has vested
Executive KMP
Trevor Croker
Mitchell Bowen
Hector Fernandez
Sally Denby
Former Executive KMP
Michael Lang
Vesting outcomes
of the third tranche
Total number
of PSRs granted
% of
third tranche
that vested
Number
of PSRs
that vested
0 1
98,784
0 2
0 2
N/A
100%
N/A
N/A
N/A
32,928
N/A
N/A
65,856
100% 3
21,952
1. Trevor Croker did not participate in the Executive special equity award.
2. As the Executive special equity awards were one-off grants made to Executives in FY2021, neither Hector Fernandez (who was promoted in FY2022) nor Sally Denby
(who was promoted in FY2023) were participants in the one-off Executive special equity award scheme.
3. Michael Lang’s last day with the Company is 15 December 2023 and therefore he was eligible to have his third tranche of the Executive special equity awards tested and
vested in the ordinary course.
51
Aristocrat Leisure Limited 2023 Annual Report
Remuneration Report
Link to Business Strategy and Shareholder Interests
Table 5 below discloses remuneration outcomes in FY2023 and alignment to business strategy and Group performance
Are reflected in LTI and
STI performance measures…
So, Aristocrat’s actual performance…
Directly affects
remuneration
outcomes
Business
strategy and
objectives…
Profitability
and financial
performance
Growing
adjacent
opportunities
STI performance measure of
NPATA and FCF:
Measures profitability across and free
cash flow generated by the Group.
LTI performance measure of Relative TSR:
Measures the benefit delivered to
shareholders over three years, including
dividends and share price movement over
and above a market benchmark.
LTI performance measure of Relevant EPS:
Measures profitability across the Group on
a per share basis.
STI Individual performance rating 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 market growth of
Pixel United.
Risk
management
and
governance
STI Individual performance rating and LTI
Individual Performance Based Condition:
Measures include continuing to embed
effective risk management and culture
throughout the organisation to support:
– achievement of business objectives
– corporate governance objectives
– risk-based identification of ESG priorities
and opportunities.
Product
quality and
innovation,
great game
content and
customer
centric culture
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.
Leadership
Effectiveness
and high
performing
People and
Culture
STI Individual performance rating and 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.
52
EXCEEDED
– NPATA increasing year-on-year by 20.7% to $1,326.6 million and EBITDA up
13.8% to $2,105.4 million (in reported currency)
– Achieved strong FCF Conversion of 106% (target 99%)
– TSR performance of 50.5% over the 2021 LTI Grant performance period,
32nd in its Peer Comparator Group and ranked in the 66th percentile
– Strong Group balance sheet with available liquidity of approximately $3.9bn,
to support committed and future investments
– Gearing (net (cash)/debt to EBITDA) of (0.4)x, improved on prior year
(FY2022: (0.3)x)
EXCEEDED
– Delivered on Aristocrat’s commitment to enter into online RMG, live with
7 operators globally, in 6 countries and in 8 jurisdictions
– Executed on the ‘buy’ portion of Anaxi’s ‘build and buy’ strategy by
completing the acquisition of Roxor in January 2023 and announcing the
proposed acquisition of NeoGames in May 2023
– Approximately 22% of volume of units sold in the Americas derived from
adjacent market sources
– Continued its successful expansion into strategic adjacencies including
the Video Lottery Terminal segments in Canada, Oregon, Illinois and New
York, the Central Determinant System segment in Washington and Historical
Horse Racing markets in Kentucky, Louisiana, New Hampshire and Wyoming
MET
– 71.4% of Group revenues (FY2022: 75.5%) derive from recurring sources,
with the decrease reflecting increased North America Outright Sales
– In North America, growth in the Class II and Class III Premium installed base
and the ANZ business maintained market-leading ship share
– Continued resilience demonstrated by Pixel United in mixed market
conditions – Pixel United contributed 42.1% of Group revenue
MET
– Alll major business units have reviewed and refreshed their business impact
analyses and business resilience plans and held tabletop exercises
– Enactment of crisis and resilience management framework to respond to
the economic and political volatility in Ukraine, and more recently in Israel
– Submission of a Group-wide, science-based emissions reduction target to
the SBTi organisation by the end of calendar year 2023
– Independent maturity assessment of the Privacy Program and Cyber Security
Program indicated strong progress against its respective multi-year
Roadmaps, reflecting further investment in policies, tooling, processes
and capabilities
MET
– Continued investment in talent and technology, with D&D investment at
market-leading levels at 13% of total revenue
– BuffaloTM and other classic Aristocrat slot titles now available across
Gaming, Anaxi and Pixel United
– Aristocrat was awarded the following at the Global Gaming Awards 2023:
• Land-Based Industry Supplier of the Year (5th consecutive year)
• Slot of the Year – Jackpot CarnivalTM (6th consecutive year)
– Quality metrics declined over FY2023, achieving 90.1% (FY2022: 94%;
FY2021: 93.9%) but Net Promoter Score of 63 (FY2022: 40) outperformed
other industry participants by at least 40 points
EXCEEDED
– Group Employee Engagement Scores stable at 8.6 (0.5 above benchmark)
(FY2022: 8.7; FY2021: 8.4)
– Key Executive appointments (Chief Financial Officer and Chief Compliance
Officer) are internal promotions
– Ranked 1st in the All-in Diversity Project’s annual All-Index survey measuring
diversity, inclusion and belonging practices among 29 participating global
gaming companies
– Talent mobility and seamless transition across the Aristocrat Group as
Anaxi scaled in line with Aristocrat’s growth strategy and Aristocrat Gaming
continued its operational momentum
Executive
remuneration
outcomes in
FY2023 were
as follows:
Total LTI vesting
outcome in
FY2023 =
91.3% of target
based on TSR and
EPS performance
measures
CEO STI outcome
in FY2023 =
110% of target
Average
STI outcome in
FY2023 for other
Executive KMP =
102% of target
Aristocrat Leisure Limited 2023 Annual 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 graphs and table below sets out information about movements in shareholder wealth for the financial years ended
30 September 2019 to 30 September 2023, highlighting alignment between Aristocrat’s remuneration strategy and framework
and Group performance over the past 5 years. It also highlights alignment between incentive plan performance conditions and
the delivery of sustainable growth and shareholder returns.
Further details about the Group’s performance over this period can be found in the Five-Year Summary contained in this Annual Report.
Summary of movement
in shareholder wealth
Continued strong
performance in mixed
market conditions
demonstrates disciplined
management and execution.
$811 million returned to
shareholders via dividends
and share buy-backs
during FY2023.
Measures of Group
Performance
Executive remuneration is
variable with consideration
of both financial and
non-financial outcomes
for STI and LTI Plans.
Financial targets are set
by the Board considering
the economic environment,
appropriate stretch and
market conditions.
Both financial and non-
financial targets are aligned
with strategic priorities
to create sustainable
shareholder value and
strong outcomes for our
customers and people.
2023
2022
2021
2020
2019
Share price as at
financial year-end
(A$)
Total dividends (cps)
Normalised EPS1
(fully diluted) / EPSA2
(fully diluted)(cps)
TSR (%)
.
0
2
0
2
.
0
5
6
1
.
6
5
3
1
.
2
0
4
1
.
7
4
7
5
8
.
0
4
2
9
.
2
3
6
7
.
6
4
7
9
.
9
2
3
0
6
.
0
3
0
.
4
6
0
.
2
5
0
.
1
4
0
.
0
1
0
.
6
5
6
.
9
8
1
2
.
0
5
1
0
.
0
2
1
0
.
6
5
0
.
8
1
1
Normalised EBITA
(A$m)
Normalised NPATA
(A$m)
Diversity4 (%)
0
.
6
2
0
.
8
2
-
0
.
7
5
0
.
2
-
0
.
0
1
Employee engagement
/ against benchmark
figures
.
1
8
2
8
.
.
1
8
8
7
.
7
.
7
0
8
1
,
9
.
2
9
5
1
,
4
.
7
7
2
1
,
3
.
1
7
7
9
.
6
4
3
1
,
6
.
6
2
3
1
,
3
.
9
9
0
1
,
7
.
4
6
8
6
.
6
7
4
4
.
4
9
8
7
.
9
3
5
.
7
3
6
.
5
3
3
.
9
2
6
.
8
7
.
8
4
.
8
5
.
8
Further details on how remuneration outcomes in FY2023 align with business strategy and achievement of financial and non-financial
targets can be found on Table 5. The table below summarises how the Group Performance set out above translated into Executive
remuneration outcomes over the past five financial years.
Table 6 Remuneration Outcomes
STI Financial Performance
Condition awarded (%)
LTI (% vesting) based on Relative TSR and
Relevant EPS performance measures 5
FY2023
FY2022
FY2021
FY2020
FY2019
106%
118%
200%
0%
91.3%
40.2%
46.5%
47.9%
104%
100%
1. Fully diluted earnings per share, normalised for significant items as disclosed in the Operating and Financial Review section of the Annual Report.
2. Fully diluted EPS before amortisation of acquired intangibles as disclosed in the Operating and Financial Review section of the Annual Report.
3. The opening share price for the 12 months to 30 September 2019 was $28.44.
4. The graph shows the percentage of female direct reports to Executives (Senior Leaders) and the direct reports of those Senior Leaders.
5. Percentage vesting based on financial performance conditions only. Percentage vesting does not include the Individual Performance Based Condition as outcomes
may vary for each Executive.
53
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
Remuneration Governance
Overview
The People and Culture Committee is 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 2023 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 FY2023.
The following diagram represents Aristocrat’s remuneration decision-making structure.
BOARD
Approve remuneration framework
Final approval of targets and goals for CEO and CEO’s direct reports and funding pools
PEOPLE AND CULTURE COMMITTEE
AUDIT COMMITTEE
Oversee remuneration governance framework and assist
the Board to ensure the Group’s remuneration strategy
and policies are appropriate and effective
Executive KMP and 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.
If external advisors that are defined as “remuneration consultants” for the purposes of the Corporations Act are engaged, they
are engaged by the Chairman of the People and Culture Committee within an agreed set of protocols to ensure there can be no
undue influence by Executive KMP to whom any recommendations may relate.
The People and Culture Committee did not seek or receive any remuneration recommendations, as that term is defined by the
Corporations Act, from remuneration consultants during the Reporting Period.
54
Aristocrat Leisure Limited 2023 Annual 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 Chairman of each committee receives an
additional fee for that service. The Chairman of the Board
does not receive separate Committee fees.
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 regard to:
– The responsibilities, time commitments and
workload expected
– ASX market and direct industry peers
– Being competitive across Aristocrat’s 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
– The Non-Executive Director Rights Plan has been
launched having received a class ruling from the
Australian Taxation Office in respect of the financial
years ending 2022, 2023 and 2024, and shareholder
approval obtained at the 2021 AGM. The Plan assists
Non-Executive Directors in building their shareholding
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.
Non-Executive Directors Minimum Shareholding Policy
Non-Executive Directors are encouraged to hold Aristocrat
securities and the Board has endorsed a minimum
shareholding policy for Non-Executive Directors to hold 100%
of the annual director base fee within five years, commencing
on the later of November 2018 or date of appointment.
Bill Lance and Jennifer Aument, both of whom were appointed
to the Board during this Reporting Period, have five years
from their respective appointment dates to meet their
minimum shareholding requirement under the policy. All other
Non-Executive Directors have met their minimum shareholding
requirement under the policy.
Further information on Non-Executive Director shareholdings
are set out in Table 14.
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$4,000,000
per annum approved by shareholders at the AGM in February 2022.
There was no change in FY2023 to fees paid to Non-Executive Directors, which remain at the level set in March 2022. Those fees
are set out in Table 7 below.
Table 7 Non-Executive Director fees payable during the Reporting Period
Board / Committee 1
Board
Lead US Director
Audit Committee
People & Culture Committee
Regulatory & Compliance Committee
Chairman fees
Member fees
A$695,000
A$250,000 / US$220,000
—
Additional US$50,000
A$60,000 / US$50,000
A$27,500 / US$22,500
A$60,000 / US$50,000
A$27,500 / US$22,500
A$40,000 / US$35,000
A$20,000 / US$15,000
1. Cap of two committees fees per Non-Executive Director. The Chairman of the Board does not receive separate Committee fees.
55
Aristocrat Leisure Limited 2023 Annual Report
Remuneration Report
Statutory Remuneration Tables and Data
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 Australian 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 8 Statutory Executive KMP remuneration table
Short-term benefits
Post Employment
Benefits
Long-term
benefits
Share-based payments6
Cash
salary 1
$
Cash
bonuses 2
$
Non-
monetary
benefits 3
$
Super-
annuation
$
Termin-
ation 4
$
Long
service
leave 5
$
STI
PSRs 7
$
Executive
Special
Equity
$
LTI
PSRs 8
$
% of
Share-
based
remuner
ation 9
%
Total
$
Executive KMP
Year
Trevor Croker
2023
2,159,298 1,353,198
2022
1,837,796 1,425,668
Mitchell Bowen
2023
858,359
494,950
2022
892,650
584,665
Hector Fernandez10 2023
1,176,474
797,078
2022
673,662 1,010,513
—
—
411
766
—
—
32,198
—
27,500
27,500
18,340
13,142
Sally Denby11
2023
714,910
634,195
1,578
24,292
—
2022
—
—
Former Executive KMP
Michael Lang12
2023
1,316,628
686,873
2022
1,402,144
787,947
J Cameron-Doe 13
2023
—
2022
491,803
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 1,397,378 4,215,891
— 9,157,963
— 1,282,335 2,547,867
— 7,093,666
14,602
585,202 1,862,552
341,782 4,185,358
28,671
582,018 1,508,524
862,192 4,486,986
—
—
575,372 1,454,714
— 4,021,978
258,270
778,046
— 2,733,633
12,046
118,182
528,229
— 2,033,432
46.0
35.9
52.7
52.8
36.2
28.5
26.0
—
—
—
—
—
—
18,340 1,323,782
—
—
11,382
—
—
—
—
—
—
208,370
210,601
227,854 3,992,448
695,944 1,612,490
574,795 5,073,320
—
—
—
—
— (291,739) (1,856,736)
(718,494) (2,363,784)
11.0
43.1
—
N/A
37.8
31.2
Total
2023
6,225,669 3,966,294
1,989
120,670 1,323,782
26,648 2,884,504 8,271,987
569,636 23,391,179
2022
5,298,055 3,808,793
766
52,024
—
28,671 2,526,828 4,590,191
718,493 17,023,821
1. Amounts shown as cash salary include annual leave entitlements and 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 outside of Australia have their
cash salary converted to AUD based on the monthly Group exchange rates.
2. Amounts reflect the non-deferred cash component of STI incentives and
other bonuses.
3. Non-monetary benefits include insurance premiums.
4. Termination payments for Michael Lang comprised of $360,788 of garden
leave, a $302,389 payment in lieu of notice and a $660,605 severance payment.
The termination benefits provided to Michael Lang were paid in compliance
with Part 2D.2, Division 2 of the Corporations Act.
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. For equity instruments that are due to
vest after the reporting period, the fair value 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 EPS model.
These models are further described in Note 5-2 of the Financial Statements.
Details of awards granted in prior years, including applicable service and
performance conditions, are summarised in prior Remuneration Reports
corresponding to the reporting period in which the awards were granted.
7. A component of STI awards payable to Executive KMPs will be satisfied by the
grant of deferred share rights. Half will vest after one year, with the remainder
vesting after two years, both subject to relevant forfeiture conditions. The
accounting expense for STI share rights represents the expense attributable to the
service period that has been completed for each deferred award. Any individual
who is internally promoted to an Executive role is only subject to a deferral of
25% of their STI outcome (as opposed to 50%) in their first year. Therefore, the
amounts reflected for FY2023 include the accounting accruals attributable to
deferred share rights pursuant to the 2021, 2022 and 2023 STI awards.
8. The share-based payments expense includes the impact of PSRs that were
granted in previous years that are being expensed for accounting purposes over
the vesting period, as well as the PSRs that were granted in the reporting period.
Share based payments also includes the writeback of unvested PSRs which
were forfeited during the year and the amortised value of PSRs that may vest or
best available estimates attributable to PSRs which may be lapsed or forfeited in
future reporting periods.
9. Percentage calculated by reference to LTI PSRs and Executive Special Equity.
10. Hector Fernandez became an Executive KMP upon his promotion to CEO, Gaming
on 24 February 2022. The details provided in the FY2022 figures are on and from
the date of Hector’s promotion.
11. Sally Denby was promoted to CFO on 14 November 2022. She was not an
Executive KMP during FY2022 nor prior to her appointment as CFO. The details
provided in the table above are on and from the date of Sally’s promotion.
12. Michael Lang ceased to be a member of the Executive KMP on 8 September 2023.
As his last day with the Company will be on 15 December 2023, Michael is eligible
to have his 2023 STI, his deferred STI rights related to the second tranche of his
2021 STI and first tranche of his 2022 STI, 2021 LTI and the third tranche of the
Executive special equity awards tested in the ordinary course. All of Michael Lang’s
unvested equity as at 15 December 2023 (184,864 PSRs) will lapse.
13. Julie Cameron-Doe ceased to be a member of the Executive KMP on 15 April 2022.
56
Aristocrat Leisure Limited 2023 Annual Report
Statutory Remuneration Tables and Data continued
Table 9 Details of 2023 STI outcomes (including deferred equity component)
Executive KMP
Total
award 1
$
Cash
payment 2
$
Deferred
component 3
$
No. of PSRs
vesting
1 Oct 2024 3
No. of PSRs
vesting
1 Oct 2025 3
Total award
as % of
target STI
Total award
as % of
max STI
% of total
award
deferred
Trevor Croker
2,706,396
1,353,198
1,353,198
16,442
16,442
Mitchell Bowen
989,900
Hector Fernandez
1,594,156
Sally Denby
845,593
494,950
797,078
634,195
494,950
797,078
211,398
6,013
9,685
2,568
6,014
9,685
2,569
110%
104%
128%
128%
55%
52%
64%
64%
50%
50%
50%
25%
Former Executive KMP
Michael Lang 4
686,873
686,873
—
—
—
49%
25%
0%
1. Amounts reflect the value of the total 2023 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 2023 STI award to be paid. Amounts in USD are translated at the FX rate on the reporting date.
3. Amounts reflect the value of 2023 STI awards deferred into PSRs. Part of the deferred component of awards will vest as soon as practicable following FY2024 results
announcement and the remainder as soon as practicable following FY2025 results announcement. The number of PSRs granted is determined using the five-day VWAP
up to and including 30 September 2023, being $41.15. Amounts in USD are translated at the FX rate on the grant date. Any individual who is internally promoted to an
Executive role (such as Sally Denby) is only subject to a deferral of 25% of their STI outcome (as opposed to 50%) in their first year.
4. Michael Lang’s last day with the Company will be on 15 December 2023. As all of Michael Lang’s unvested equity will lapse following 15 December 2023, only the
cash component of his 2023 STI award will be paid. He will not receive the deferred component of his 2023 STI award and the deferred PSRs will not be granted to
Michael Lang.
Table 10 Details of PSRs granted to Executive KMP during the Reporting Period
Performance rights were granted during the Reporting Period as follows:
Executive KMP
Trevor Croker
Mitchell Bowen
Hector Fernandez
Sally Denby 6
Former Executive KMP
Michael Lang
Short-term PSRs
Long-term PSRs
Rights granted 1,2
$ Rights granted 2,4
Value of grant 3
Value of grant 5
$
42,859
17,576
10,126
—
1,269,576
584,665
299,958
—
163,541
73,652
75,191
42,087
5,110,840
2,241,768
2,288,608
1,281,011
23,687
701,677
105,737
3,218,340
1. Further details on short-term PSRs granted to Trevor Croker, Hector Fernandez, Mitchell Bowen and Michael Lang are found in Table 9 of the FY2022 Remuneration Report.
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 11.
3. All PSRs were granted on 1 October 2022. The fair value of the rights at grant date is based on the share price at grant date ($33.26). The values shown represent the
maximum value of the grants made. The minimum value is zero.
4. The number of rights granted calculated based on the Face Value, as further explained on page 43. Long-term PSRs have a three-year performance period.
5. Trevor Croker’s PSRs were granted on 24 February 2023. The fair value of the rights at the grant date is $21.40 for rights with a total shareholder return condition and
$35.47 for rights with an Individual Performance Based Condition and EPS condition. The remaining Executive KMP’s PSRs were granted on 1 December 2022. The fair
value of the rights at the grant date is $20.94 for rights with a total shareholder return condition and $34.51 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.
6. Sally Denby became an Executive KMP upon her promotion to CFO on 14 November 2022. The table includes details of PSRs granted to Sally from that date to the end of
the Reporting Period.
57
Aristocrat Leisure Limited 2023 Annual Report
Remuneration Report
Statutory Remuneration Tables and Data continued
Table 11 Details of the movement in numbers of PSRs during the Reporting Period
Balance at
1 October 2022
421,513
234,894
93,278
25,025
Granted
during
the year 1
206,400
91,228
85,317
42,087
Short-term
PSRs vested 2,3
Long-term
PSRs Vested 3,4
Lapsed/
forfeited 5
Balance at
30 September 2023
(19,487)
(41,707)
(22,440)
(3,472)
(93,175)
(29,352)
(13,200)
(3,236)
(52,138)
(16,425)
(7,386)
(1,810)
463,113
238,638
135,569
58,594
Executive KMP
Trevor Croker
Mitchell Bowen
Hector Fernandez
Sally Denby 6
Former Executive KMP
Michael Lang 7
278,788
129,424
(32,391)
(46,587)
(26,069)
303,165
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 10. No options were granted during the
year to any Executive KMP. Trevor Croker’s grant of 163,541 PSRs under the Long-term Incentive Plan was approved at the 2023 Annual General Meeting of the Company
on 24 February 2023, 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
pages 43 to 47.
2. PSRs with performance periods of less than three years, and includes tranche 2 of the Executive special equity awards (which had a 12 month performance period) in the
case of Mitchell Bowen and Michael Lang.
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. Upon vesting of PSRs, no price is payable
and the exercise price is nil.
4. PSRs with three year performance periods.
5. These lapsed PSRs were granted in FY2020.
6. Sally Denby became an Executive KMP upon her promotion to CFO on 14 November 2022.This table details the balance of PSRs held by Sally on 14 November 2022
and the PSRs granted, vested and lapsed/forfeited between that date to the end of the Reporting Period.
7. Michael Lang ceased to be a member of the Executive KMP on 8 September 2023 and his closing balance is as at that date. All of Michael Lang’s unvested equity as at
15 December 2023 (184,864 PSRs) will lapse.
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 key provisions of the service agreements of the Executive KMP are as follows:
Table 12 Service agreements
Executive KMP
Trevor Croker
Mitchell Bowen
Hector Fernandez
Sally Denby
Former Executive KMP
Notice to be given
by Executive
Notice to be given
by Group 1
Termination payment
Post-employment
restraint
6 months
6 months
6 months
6 months
12 months
12 months (fixed remuneration)
12 months
6 months
6 months
6 months
6 months (fixed remuneration)
12 months
12 months (fixed remuneration)
12 months
12 months (fixed remuneration)
12 months
Michael Lang
6 months
6 months
12 months (fixed remuneration)
12 months
1. Payments may be made in lieu of notice period.
58
Aristocrat Leisure Limited 2023 Annual Report
Statutory Remuneration Tables and Data continued
Details of Non-Executive Director Remuneration
Table 13 Details of Non-Executive Director remuneration for the Reporting Period
Non-Executive Directors
Year
Neil Chatfield
Kathleen Conlon
Philippe Etienne
Patrick Ramsey
Sylvia Summers Couder
Arlene Tansey
Bill Lance 4
Jennifer Aument 4
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Short-term
benefits
Cash salary
and fees 1
$
Post-employment benefits
Super-
annuation 2
$
Retirement
benefits 3
$
Share based
payments
PSRs
$
667,500
652,169
345,627
336,472
286,118
275,379
458,881
422,624
399,087
363,669
330,453
311,101
345,259
—
162,926
—
27,500
27,500
6,875
6,323
27,500
26,496
—
—
—
—
13,198
12,215
—
—
—
—
2,995,851
2,361,414
75,073
72,534
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
$
695,000
679,669
352,502
342,795
313,618
301,875
458,881
422,624
399,087
363,669
343,651
323,316
345,259
—
162,926
—
3,070,924
2,433,948
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 benefits.
4. Bill Lance and Jennifer Aument were nominated as a Non-Executive Director on 19 October 2022 and 11 April 2023, respectively. The table includes details of fees paid to
Bill Lance and Jennifer Aument from those dates.
59
Aristocrat Leisure Limited 2023 Annual Report
Remuneration Report
Shareholdings and other Transactions
Movement in Shares
The tables below detail 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 14 Details of Non-Executive Director shareholdings
Neil Chatfield
Kathleen Conlon
Philippe Etienne
Patrick Ramsey
Sylvia Summers Couder
Arlene Tansey
Bill Lance 2
Jennifer Aument 2
Non-Executive Directors
Balance as at
1 October 2022
Purchased /
Transferred
Balance as at
30 September 2023
18,876
11,026
6,792
19,360
10,650
4,794
—
—
4,000
—
1,253 1
—
—
2,000
—
—
22,876
11,026
8,045
19,360
10,650
6,794
—
—
1. During FY2023, Philippe Etienne participated in the Non-Executive Directors Rights Plan, which is a rights plan that provides Non-Executive Directors with the opportunity
to salary sacrifice a portion of their fees as share rights (NED Rights). Each NED Right entitles the holder to receive one fully-paid ordinary share in Aristocrat on vesting
and the NED Rights are not subject to any performance conditions. At the start of the Reporting Period, Philippe Etienne held 559 NED Rights. He was granted 1,388
NED Rights on 24 November 2022 and 1,253 NED Rights vested during the Reported Period. 694 NED Rights remain unvested as at 30 September 2023. The NED Rights
Plan was approved at the 2021 Annual General Meeting of the Company and this approval was for all purposes, including ASX Listing Rule 10.14.
2. Bill Lance and Jennifer Aument’s opening balance is as at their date of nomination as a Non-Executive Director, being 19 October 2022 and 11 April 2023, respectively.
Table 15 Details of Executive KMP shareholdings
The table below excludes any unvested PSRs under the STI Plan, the LTI Plan and Executive special equity award.
The Executive Minimum Shareholding Policy came into effect in September 2022 and Executives have a three-year period to meet
the minimum shareholding expectation. Hector Fernandez and Sally Denby were internally promoted during calendar year 2022
and are within the timeframe to meet the Executive minimum shareholding expectation.
Executive KMP
Trevor Croker
Mitchell Bowen
Hector Fernandez
Sally Denby 3
Former Executive KMP
Michael Lang
Executive KMP
Balance as at
1 October 2022
Shares allocated
upon PSR vesting
Other net changes
during the year
Balance as at
30 September 2023
502,675
115,404
7,738
5,841
73,381 1
71,059
26,667 2
6,708
—
(80,000)
(22,618)
—
576,056
106,463
11,787
12,549
30,678
40,666 4
—
71,344 5
1. Although 112,662 PSRs vested, 39,281 of the vested PSRs were sold by the third party plan administrator for the purposes of satisfying US withholding tax liabilities on
vesting of PSRs.
2. Although 35,640 PSRs vested, 8,973 of the vested PSRs were sold by the third party plan administrator for the purposes of satisfying US withholding tax liabilities on
vesting of PSRs.
3. Sally Denby became an Executive KMP upon her promotion to CFO on 14 November 2022. This table details the balance of shares held by Sally Denby on 14 November
2022 and any net changes between that date to the end of the Reporting Period.
4. Although 78,978 PSRs vested, 38,312 of the vested PSRs were sold by the third party plan administrator for the purposes of satisfying US/UK withholding tax liabilities on
vesting of PSRs.
5. Michael Lang ceased to be a member of the Executive KMP on 8 September 2023 and his closing balance is as at that date.
60
Aristocrat Leisure Limited 2023 Annual Report Shareholdings and other Transactions continued
Disclosures under Listing Rule 4.10.22
A total of 2,100,000 securities were acquired on-market by
the Aristocrat Employee Equity Trust during the Reporting
Period (at an average price per security of $36.30) to satisfy
Aristocrat’s obligations under various equity and related plans.
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 2023
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.
Share Trading Policy
Aristocrat’s share trading policy prohibits hedging in relation
to unvested equity instruments, including PSRs and vested
securities which are subject to a holding lock or restriction.
Designated Persons (which includes Executives) are strictly
prohibited from entering into margin lending arrangements
in respect of Aristocrat shares or from transferring Aristocrat
shares into an existing margin loan account.
Breaches of Aristocrat’s share trading policy are regarded
very seriously and may lead to disciplinary action being taken
(including termination of employment).
61
Aristocrat Leisure Limited 2023 Annual Report Remuneration Report
Glossary
2021 LTI Grant
Awards made under the LTI Plan during FY2021 with a three-year performance period from
1 October 2020 to 30 September 2023
Aristocrat or Company
Aristocrat Leisure Limited and (where applicable) the Group
CAGR
Compound Annual Growth Rate
Corporations Act
Corporations Act 2001 (Cth)
EBIT
EBITA
EPS
Executive KMP
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
Those KMP who were also part of Aristocrat’s Executive Steering Committee during the Reporting
Period, being (i) Trevor Croker (CEO and Managing Director), (ii) Mitchell Bowen (CEO, Anaxi
and Chief Transformation Officer), (iii) Michael Lang (CEO, Pixel United) for part year, (iv) Hector
Fernandez (CEO Gaming) and (v) Sally Denby (Chief Financial Officer) for part year
Executive special
equity award
One-off grant of PSRs made in 2021 to selected Executives. Executive KMP that participated in the
Executive special equity award during the Reporting Period were: (i) Mitchell Bowen (CEO, Anaxi and
Chief Transformation Officer) and (ii) Michael Lang (CEO, Pixel United)
Executives
Face Value
FCF Conversion
Group
Group Financial
Performance Threshold
KMP
LTI Plan
NPATA
OKRs
The group of 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)
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
Target based on free cash flow as a percentage of NPATA
Aristocrat Leisure Limited and its related bodies corporate
The minimum threshold required to receive payment under the STI Plan (being 85% of the Group STI
financial performance condition) as described on page 40
Persons who, directly or indirectly, have authority and responsibility for planning, directing and
controlling the activities of Aristocrat and the Group during the Reporting Period
Aristocrat’s long-term incentive plan
Net profit after tax before amortisation of acquired intangibles. References to ‘normalised NPATA’
means NPATA 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
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
EPS over the performance period compared to a target set by the Board at the commencement of
the performance period
Reporting Period
12 month period ended 30 September 2023
STI Plan
TSR
62
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
Aristocrat Leisure Limited 2023 Annual Report Auditor’s Independence Declaration
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Aristocrat Leisure Limited for the year ended 30 September 2023, I
declare that to the best of my knowledge and belief, there have been:
As lead auditor for the audit of Aristocrat Leisure Limited for the year ended 30 September 2023, 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
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
relation to the audit; and
This declaration is in respect of Aristocrat Leisure Limited and the entities it controlled during the
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
period.
This declaration is in respect of Aristocrat Leisure Limited and the entities it controlled during the
period.
Mark Dow
Partner
Mark Dow
PricewaterhouseCoopers
Partner
PricewaterhouseCoopers
Sydney
15 November 2023
Sydney
15 November 2023
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000, GPO BOX 2650 Sydney NSW 2001
PricewaterhouseCoopers, ABN 52 780 433 757
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000, GPO BOX 2650 Sydney NSW 2001
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
T: +61 2 9659 2476, 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.
Liability limited by a scheme approved under Professional Standards Legislation.
63
Aristocrat Leisure Limited 2023 Annual Report 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.
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. 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.
64
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’s 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 any class 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 any class of a Registered
Corporation’s voting securities apply to the Nevada Commission
for a finding of suitability within thirty days after the Chair of the
Nevada Board mails a 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 any
class 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 Nevada Commission, may beneficially
own more than 10%, but not more than 11%, of any class 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 Chair of the Nevada Board, such an institutional investor is
not required to apply to the Nevada Commission for a finding
of suitability but shall be subject to reporting requirements as
prescribed by the Chair of the Nevada Board.
The applicant is required to pay all costs of investigation
incurred by the Nevada Gaming Authorities.
Aristocrat Leisure Limited 2023 Annual Report NRS 463.643(6-8) also requires that each person who,
individually or in association with others, acquires or
holds, directly or indirectly, the beneficial ownership of any
amount of any class of voting securities of a publicly traded
corporation registered with the Nevada Commission or
each plan sponsor of a pension or employee benefit plan
that acquires or holds any amount of any class of voting
securities in such a publicly traded corporation, and who has
the intent to engage in any proscribed activity shall:
a. Within 2 days after possession of such intent, notify the
Chair of the Nevada Board in the manner prescribed
by the Chair;
b. Apply to the Nevada Commission for a finding of suitability
within 30 days after notifying the Chair pursuant to
paragraph (a); and
c. Deposit with the Nevada Board the sum of money required
by the Nevada Board pursuant to subsection 8.
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.
Except as otherwise provided by the Nevada Commission, a
person who has beneficial ownership of less than 10 percent
of each class of voting securities of a publicly traded
corporation registered with the Nevada Commission, acquired
or held by the person through a pension or employee benefit
plan, or the plan sponsor of a pension or employee benefit
plan that has ownership of less than 10 percent of each class
of voting securities of such a publicly traded corporation,
need not notify the Nevada Commission, apply for a finding
of suitability with the Nevada Commission or deposit the
required sum of money with the Nevada Board pursuant to
subsection 6 before engaging in any proscribed activity.
Any person required by the Nevada Commission to be found
suitable shall apply for a finding of suitability within 30 days
after the Nevada Commission requests that the person do so;
and together with the application, deposit with the Nevada
Board a sum of money which, in the opinion of the Nevada
Board, will be adequate to pay the anticipated costs and
charges incurred in the investigation and processing of the
application, and deposit such additional sums as are required
by the Nevada Board to pay final costs and charges.
“Proscribed activity” is defined as:
i. An activity that necessitates a change or amendment
to the corporate charter, bylaws, management, policies
or operation of a publicly traded corporation that is
registered with the Nevada Commission;
ii. An activity that materially influences or affects the affairs
of a publicly traded corporation that is registered with
the Nevada Commission; or
iii. Any other activity determined by the Nevada Commission
to be inconsistent with holding voting securities for
investment purposes only.
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.
Additionally, the Nevada Commission has the authority to
request that an individual apply for a finding of suitability if it’s
determined that said individual has a material relationship to,
or material involvement with the Company. Moreover, the Nevada
Commission may require a finding of suitability, registration,
or licensing of agents, advisors, affiliates or beneficial owners,
of any stated percentage of outstanding equity securities of
the Company, that it determines exercises a significant
influence upon the management or the affairs of the Company.
65
Aristocrat Leisure Limited 2023 Annual Report Nevada Regulatory Disclosure
Information Statement
Approvals are, in certain circumstances, required from
the Nevada Commission before the Company can make
exceptional repurchases of voting securities above market
price and before a corporate acquisition opposed by
management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed
by the Company’s board of directors in response to a tender
offer made directly to the Company’s stockholders for the
purpose of acquiring control of the Company.
Any person who is licensed, required to be licensed, registered,
required to be registered, or who is under common control
with any such persons (collectively, Licensees) and who
proposes to become involved in a gaming operation outside
of Nevada, is required to deposit with the Nevada Board, and
thereafter maintain, a revolving fund of no less than $50,000
in order to pay for the investigation of his or her participation
in gaming external to Nevada. The revolving fund is subject
to increase or decrease at the discretion of the Nevada
Commission. Licensees shall comply with certain reporting
requirements imposed by the Nevada Act and could be subject
to disciplinary action by the Nevada Commission for knowingly
violating any law of the foreign jurisdiction pertaining to the
non-Nevada gaming operations; failing to conduct the foreign
gaming operations in accordance with the standards of
honesty and integrity required of Nevada gaming licensees;
engaging in activities or associations that are harmful to the
State of Nevada or its ability to collect gaming taxes and fees;
or employing, contracting or associating with a person in the
non-Nevada operations who has been denied a license or
found to be unsuitable in Nevada.
Other Regulatory requirements – Other Gaming Authorities
throughout the world may require any person who acquires
a beneficial ownership of more than 3% 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 3% 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
Any person who fails or refuses to apply for a finding of
suitability or a license within the time prescribed by law,
may be deemed unsuitable. The same restrictions apply to
a record owner if the record owner, after request, fails to
identify the beneficial owner.
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 22, 2023, the Nevada
Commission granted the Company prior approval to make
public offerings for a period of three years subject to certain
conditions (Shelf Approval). 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
for a new Shelf Approval (which can only be issued for a
maximum term of three years) will be lodged with the Nevada
Board when required.
Changes in control of the Company through merger,
consolidation, stock or asset acquisitions, management
or consulting agreements, or any act or conduct, by which
anyone obtains control, may not lawfully occur without the
prior approval of the Nevada Commission. Entities seeking
to acquire control of the Company must meet the strict
standards established by the Nevada Board and the Nevada
Commission prior to assuming control of the Company.
The Nevada Commission may require persons who intend to
become controlling stockholders, officers or directors, as well
as other persons who expect to have a material relationship
or involvement with the acquired company to apply for a
finding of suitability.
The Nevada Legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting
securities and corporate defense tactics affecting Nevada
corporate gaming licensees, and Registered Corporations
that are affiliated with those operations, may be injurious to
the stability and productivity of corporate gaming in Nevada.
Accordingly, the Nevada Commission has established a
regulatory scheme, which is intended to minimize the potential
adverse effects of these types of business practices upon
Nevada’s gaming industry and to further Nevada’s policy to:
i. assure the financial stability of corporate gaming licensees
and their affiliates;
ii. preserve the beneficial aspects of conducting business
in the corporate form; and
iii. promote a neutral environment for the orderly governance
of corporate affairs.
66
Aristocrat Leisure Limited 2023 Annual Report 5 year Financial Summary
A$’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 2
Profit after income tax expense 2
Significant items after tax – gain/(loss)
Reported profit after tax
Add: Amortisation of acquired intangibles after tax
Significant items after tax – (gain)/loss
Profit after tax and before amortisation of acquired
intangibles and significant items (NPATA) 2
Total dividends 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
Other information
Employees at year end
Return on Aristocrat shareholders’ equity 2
Basic earnings per share 2
Net tangible assets/(liabilities) per share
Total dividends per share – ordinary
Dividend payout ratio 2
Issued shares at year end (number)
Net cash/(debt) 3
Net cash/(debt) to equity
Number
%
Cents
$
Cents
%
‘000
$’m
%
12 months to
30 Sep 2023
12 months to
30 Sep 2022
12 months to
30 Sep 2021
12 months to
30 Sep 2020
12 months to
30 Sep 2019
6,295.7
2,105.4
(404.0)
1,701.4
(40.6)
1,660.8
(415.7)
1,245.1
209.0
1,454.1
81.5
(209.0)
1,326.6
367.4
1,237.0
579.4
4,909.7
6,726.1
3,151.0
1,396.3
485.9
4,000.5
1,888.6
5,573.7
1,850.9
(385.5)
1,465.4
(137.7)
1,327.7
(326.8)
1,000.9
(52.4)
948.5
98.4
52.4
1,099.3
347.8
1,651.9
547.8
3,823.0
6,022.7
3,021.3
1,159.3
357.8
3,891.2
1,690.8
10,922.3
10,120.4
1,229.2
99.6
198.3
2,242.3
40.4
386.4
4,196.2
6,726.1
7,800
18.5
190.5
3.90
64.0
34
648,560
809.1
12.0
1,084.1
99.9
132.6
2,357.4
41.1
382.6
4,097.7
6,022.7
7,500
16.6
150.8
2.94
52.0
34
659,793
564.0
9.4
4,736.6
1,542.9
(394.2)
1,148.7
(131.9)
1,016.8
(251.2)
765.6
54.4
820.0
99.1
4,139.1
1,078.9
(462.5)
616.4
(140.7)
475.7
(118.6)
357.1
1,020.6
1,377.7
119.5
(54.4)
(1,020.6)
864.7
159.4
715.1
(58.5)
3,222.3
3,878.9
2,431.6
867.1
325.4
3,527.7
1,520.2
8,672.0
1,004.7
7.0
187.6
3,229.1
44.6
320.1
4,793.1
3,878.9
7,000
19.7
120.1
0.30
41.0
34
638,544
(804.5)
(20.7)
476.6
217.1
715.1
(121.6)
2,561.7
3,155.2
1,675.7
840.3
353.2
3,567.6
1,415.3
7,852.1
791.5
7.0
247.0
3,236.2
24.3
390.9
4,696.9
3,155.2
6,000
11.3
56.0
(0.93)
10.0
18
638,544
(1,567.5)
(49.7)
4,397.4
1,596.8
(434.3)
1,162.5
(124.0)
1,038.5
(285.7)
752.8
(54.0)
698.8
141.6
54.0
894.4
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
6,400
35.1
118.1
(2.92)
56.0
47
638,544
(2,223.7)
(103.7)
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.
67
Aristocrat Leisure Limited 2023 Annual Report Financial Statements
Contents
Statement of profit or loss and other comprehensive income
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
1
Business performance
1-1 Segment performance
1-2 Revenues
1-3 Expenses
1-4 Taxes
1-5 Earnings per share
1-6 Dividends
2
Operating assets and liabilities
Inventories
Intangible assets
2-1 Trade and other receivables
2-2
2-3
2-4 Property, plant and equipment
2-5 Leases
2-6 Trade and other payables
2-7 Provisions
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 per share
3-6 Capital and financial risk management
3-7 Net debt reconciliation
4
Group structure
4-1 Subsidiaries
4-2 Business combinations
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
68
69
70
71
72
74
74
76
79
81
84
84
85
85
86
87
90
91
92
93
94
94
96
98
99
100
100
105
106
106
107
108
108
108
111
111
111
112
112
113
114
116
118
Aristocrat Leisure Limited 2023 Annual Report Statement of profit or loss and
other comprehensive income
for the year ended 30 September 2023
Consolidated
Revenue
Cost of revenue
Gross profit
Other income
Design and development costs
Selling, general and administrative expenses
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Exchange difference on translation of foreign operations
Net investment hedge
Changes in fair value of interest rate hedge
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Earnings per share attributable to ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
Note
1-2
1-2
1-3
1-3
1-4
3-3
3-3
3-3
1-5
1-5
2023
$’m
6,295.7
(2,746.5)
3,549.2
150.1
(820.2)
(1,055.0)
(153.7)
1,670.4
(216.3)
1,454.1
23.1
—
5.0
28.1
2022
$’m
5,573.7
(2,493.9)
3,079.8
26.0
(666.5)
(955.4)
(254.8)
1,229.1
(280.6)
948.5
592.2
(34.8)
53.7
611.1
1,482.2
1,559.6
Cents
222.5
221.4
Cents
142.9
142.3
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
69
Aristocrat Leisure Limited 2023 Annual Report Balance sheet
as at 30 September 2023
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
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.
70
Note
2023
$’m
2022
$’m
2-1
2-2
3-2
2-1
3-2
2-4
2-5
2-3
1-4
2-6
3-1
2-5
2-7
3-2
1-2
2-6
3-1
2-5
2-7
1-4
1-2
3-4
3-3
3-3
3,151.0
3,021.3
994.8
309.0
35.8
56.7
842.2
249.7
23.4
44.0
4,547.3
4,180.6
143.4
31.5
485.9
196.9
4,000.5
1,516.8
6,375.0
164.2
27.3
357.8
192.1
3,891.2
1,307.2
5,939.8
10,922.3
10,120.4
982.0
99.6
64.0
146.1
52.2
1.0
182.2
1,527.1
79.1
2,242.3
276.0
40.4
17.4
8.5
5.4
2,669.1
4,196.2
6,726.1
1,237.0
579.4
4,909.7
6,726.1
868.3
99.9
56.0
87.3
45.3
0.3
159.5
1,316.6
87.7
2,357.4
271.8
41.1
9.0
8.5
5.6
2,781.1
4,097.7
6,022.7
1,651.9
547.8
3,823.0
6,022.7
Aristocrat Leisure Limited 2023 Annual Report Statement of changes in equity
for the year ended 30 September 2023
Consolidated
Balance at 1 October 2021
Profit for the year ended 30 September 2022
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax
Buy-back of fully paid ordinary shares
Net movement in share-based payments reserve
Dividends provided for and paid
Balance at 30 September 2022
Balance at 1 October 2022
Profit for the year ended 30 September 2023
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Buy-back of fully paid ordinary shares
Net movement in share-based payments reserve
Dividends provided for and paid 1
Contributed
equity
$’m
Note
Reserves
$’m
Retained
earnings
$’m
Total
equity
$’m
715.1
(58.5)
3,222.3
3,878.9
—
—
—
—
611.1
611.1
948.5
—
948.5
611.1
948.5
1,559.6
3-4
3-4
3-3
1-6
3-4
3-3
1-6
1,277.2
(340.4)
—
—
936.8
—
—
(4.8)
—
(4.8)
—
—
—
(347.8)
(347.8)
1,277.2
(340.4)
(4.8)
(347.8)
584.2
1,651.9
547.8
3,823.0
6,022.7
1,651.9
547.8
—
—
—
(414.9)
—
—
(414.9)
—
28.1
28.1
—
3.5
—
3.5
3,823.0
1,454.1
—
6,022.7
1,454.1
28.1
1,454.1
1,482.2
—
—
(367.4)
(367.4)
(414.9)
3.5
(367.4)
(778.8)
Balance at 30 September 2023
1,237.0
579.4
4,909.7
6,726.1
1. Payment of dividends relates to the 2022 final dividend and 2023 interim dividend.
The above statement of changes in equity should be read in conjunction with the accompanying notes.
71
Aristocrat Leisure Limited 2023 Annual Report Cash flow statement
for the year ended 30 September 2023
Consolidated
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other income
Interest received
Interest and finance costs paid
Transaction costs paid relating to acquisitions
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for purchase of subsidiary, net of cash acquired
Payments for property, plant and equipment
Payments for financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Payments for intangibles
Proceeds from sale of investments
Payments for investments
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares (net of transaction costs)
Payments for shares acquired by the employee share trust
Payments for shares bought back (net of transaction costs)
Repayments of borrowings
Proceeds from borrowings (net of transaction costs)
Lease principal payments
Dividends paid
Net cash 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
Note
2023
$’m
2022
$’m
6,318.0
(4,118.9)
37.0
111.7
(147.8)
(16.1)
(384.8)
1,799.1
(174.2)
(352.0)
—
—
(100.7)
3.1
(5.9)
5,673.0
(3,935.3)
1.1
24.4
(152.2)
—
(365.0)
1,246.0
(0.6)
(208.2)
(92.3)
28.7
(60.6)
—
(1.4)
(629.7)
(334.4)
—
(76.2)
(443.3)
(101.6)
—
(42.9)
(367.4)
(1,031.4)
138.0
3,021.3
(8.3)
3,151.0
1,277.2
(58.2)
(312.0)
(3,676.9)
2,551.8
(39.4)
(347.8)
(605.3)
306.3
2,431.6
283.4
3,021.3
4-2
3-4
3-3
3-4
1-6
The above cash flow statement should be read in conjunction with the accompanying notes.
72
Aristocrat Leisure Limited 2023 Annual Report Reconciliation of net cash inflow from operating activities
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, intangibles and right-of-use assets
Loss on financial assets at fair value through profit or loss
Net foreign currency exchange differences
Non-cash borrowing costs
Change in operating assets and liabilities:
(Increase)/decrease in assets (adjusted for acquisitions of subsidiaries and businesses)
– Receivables and deferred revenue
– Inventories
– Tax balances
Increase/(decrease) in liabilities (adjusted for acquisitions of subsidiaries and businesses)
– Trade and other payables
– Provisions
Net cash inflow from operating activities
2023
$’m
1,454.1
404.0
76.4
35.9
—
6.4
5.3
(126.0)
(30.2)
(171.8)
137.0
8.0
2022
$’m
948.5
385.5
56.9
8.6
68.4
121.4
37.5
(116.7)
(68.4)
(215.3)
24.0
(4.4)
1,799.1
1,246.0
Depreciation and amortisation
The depreciation and amortisation amount above includes amortisation of $22.0m (2022: $15.0m) 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.
73
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
1 Business performance
This section provides the information that is most relevant to understanding the financial performance of the Group during
the financial year.
Details on the primary operating assets used and liabilities incurred to support the Group’s operating activities are set out
in Section 2 while the Group’s financing activities are outlined in Section 3.
1-1 Segment performance
1-2 Revenues
1-3 Expenses
1-4 Taxes
1-5 Earnings per share
1-6 Dividends
Identification of reportable segments
1-1 Segment performance
a)
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:
– Americas;
– Australia and New Zealand;
– International Class III; and
– Pixel United
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.
74
Aristocrat Leisure Limited 2023 Annual Report 1 Business performance continued
1-1 Segment performance continued
Americas
$’m
Australia and
New Zealand
$’m
International
Class III
$’m
Pixel United
$’m
Consolidated
$’m
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Revenue
Segment revenue from external customers 2,973.2 2,415.1
458.7
460.7
212.2
106.8 2,651.6 2,591.1 6,295.7 5,573.7
Segment results
– Interest income
– Finance costs
– Design and development costs
– Amortisation of acquired intangibles
– Expenses from significant items
– Other expenses
– Other income
Profit before income tax
Income tax expense
Profit for the year
Other segment information
Non-current assets other than financial
and deferred tax assets
1,639.0 1,350.8
151.4
157.1
104.5
39.1
854.9
852.7 2,749.8 2,399.7
113.1
24.9
(153.7)
(254.8)
(820.2)
(666.5)
(106.3)
(127.5)
(26.4)
(6.4)
(122.9)
(141.4)
37.0
1.1
1,670.4 1,229.1
(216.3)
(280.6)
1,454.1
948.5
2,220.8 2,154.4
152.7
160.1
270.6
39.8 2,182.6 2,251.0 4,826.7 4,605.3
Depreciation and amortisation expense
187.5
154.8
34.5
31.9
16.7
15.2
37.0
41.1
275.7
243.0
The amortisation of acquired intangibles amounting to $106.3m (2022: $127.5m) does not form part of segment results. The
depreciation and amortisation amounts above exclude amortisation of $22.0m (2022: $15.0m) that is classified as contra-revenue
in the segment results.
Other income includes a significant item amounting to $36.0m relating to a legal matter finalised during the year. In 2022, finance
costs included a significant item of $92.2m related to the lapsed Playtech plc acquisition offer. Refer to Note 1-3.
Anaxi is not considered a separate reportable segment. Any Anaxi revenues, expenses, assets or liabilities are allocated to
Americas, Australia and New Zealand, and International Class III depending on the region where the revenue is earned or expense
incurred, or where the asset or liability is geographically located.
75
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
1 Business performance continued
1-2 Revenues
Revenue disaggregated by business:
Gaming operations
Class III outright sales and other gaming revenue
Pixel United
Total revenue
2023
$’m
1,844.5
1,799.6
2,651.6
6,295.7
2022
$’m
1,618.9
1,363.7
2,591.1
5,573.7
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
Litigation proceeds
Sundry income
Total other income
Interest income is recognised using the effective interest method.
2023
$’m
113.1
36.0
1.0
150.1
2022
$’m
24.9
—
1.1
26.0
76
Aristocrat Leisure Limited 2023 Annual Report 1 Business performance continued
1-2 Revenues continued
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
consideration paid to customers, returns, trade allowances, settlement discounts and duties and taxes paid.
Revenue
by business
Gaming
operations
Revenue stream
Participation
revenue from
lease contracts
Revenue recognition methods
and payment timing
Over time recognition, with
payments received monthly
Fixed fee
lease income
Over time recognition, with
payments received monthly
Class III
outright sales
and other
revenue
Machine sales
Licence income
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
Description of revenue recognition
Participation revenue represents variable consideration
that is recognised over time based upon the turnover
or net win of the participating machine.
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.
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 contracts
Point in time and over time
recognition. Payment terms
include in advance as well
as other terms as negotiated
with customers
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
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
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.
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 outright sales, gaming operations
and systems contracts.
77
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
1 Business performance continued
1-2 Revenues continued
Revenue
by business
Pixel United
Revenue stream
Digital revenue
Revenue recognition
methods and payment timing
Point in time and over time
recognition, with payments
usually received monthly
Description of revenue recognition
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.
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 $182.2m (2022: $159.5m) expected to be recognised
as revenue in the next 12 months and $8.5m (2022: $8.5m) expected to be recognised in the 2025 and 2026 years. Deferred revenue
relates to performance obligations that are not satisfied at the end of the reporting period. Within other receivables, amounts totalling
$58.3m (2022: $69.6m) 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.
78
Aristocrat Leisure Limited 2023 Annual Report 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
Selling, general and administrative expenses (SG&A) reconciliation
SG&A before significant expense items and amortisation of acquired intangibles
Significant expense items in SG&A
Amortisation of acquired intangibles included in SG&A
Total selling, general and administrative expenses
Finance costs
Borrowing costs
Debt fees and hedging costs for Playtech acquisition offer
Total finance costs
Other expense/(income) items
Bad and doubtful debts expense/(write-back)
Write down of inventories to net realisable value
Legal costs
Net foreign exchange loss
2023
$’m
2022
$’m
38.7
34.8
0.4
174.8
10.1
185.3
50.2
13.7
56.9
22.7
14.5
158.0
382.0
1,150.7
50.5
11.7
76.4
7.4
147.3
13.0
167.7
46.5
10.9
76.7
17.4
16.5
168.0
370.5
937.6
42.8
9.6
56.9
1,289.3
1,046.9
922.3
26.4
106.3
1,055.0
153.7
—
153.7
0.1
17.8
42.7
5.2
821.5
6.4
127.5
955.4
162.6
92.2
254.8
(4.8)
24.9
41.6
11.4
79
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
1 Business performance continued
1-3 Expenses continued
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.
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.
80
Aristocrat Leisure Limited 2023 Annual Report 1 Business performance continued
1-4 Taxes
Major components of income tax expense are:
a) Income tax expense
Current
Current year
Adjustment for prior years
Deferred
Temporary differences
Adjustment for prior years
Income tax expense
Deferred income tax (benefit) included in income tax comprises:
Change in net deferred tax assets
Deferred income tax (benefit) included in income tax expense
b) Tax reconciliation
Profit before tax
Tax at the Australian tax rate of 30% (2022: 30%)
Net impact to tax expense due to internal reorganisation of the Group structure
Impact of changes in tax rates and law
Non-deductible expenses
Research and development tax credit
Difference in overseas tax rates
Adjustment in respect of previous years income tax
Income tax expense
Average effective tax rate
c) Amounts recognised directly in equity
Current income tax – (debited)/credited directly to equity
Net deferred tax – (debited) directly to equity
d) Revenue and capital tax losses
Unused gross revenue 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 benefits on losses
2023
$’m
2022
$’m
431.5
5.0
(212.4)
(7.8)
216.3
(220.2)
(220.2)
1,670.4
501.1
(217.3)
0.1
24.4
(12.8)
(76.4)
(2.8)
216.3
327.0
(34.8)
(49.4)
37.8
280.6
(11.6)
(11.6)
1,229.1
368.7
(55.1)
0.1
8.9
(7.8)
(37.2)
3.0
280.6
12.9%
22.8%
(0.7)
(7.5)
194.7
204.4
399.1
102.7
3.1
(11.2)
74.4
204.4
278.8
76.4
Unused revenue tax losses were incurred by the Company’s overseas subsidiaries. All unused capital tax losses were incurred by
Australian entities.
81
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
1 Business performance continued
1-4 Taxes continued
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.
e) Deferred tax
Gross deferred tax assets
Intangible assets arising from an internal reorganisation of the Group structure
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 assets
Right-of-use assets
Plant, equipment and intangible assets
Net deferred tax assets
Movements
Balance at the start of the year
Credited to profit or loss
(Charged) to equity
Movements due to acquisition of subsidiaries
Foreign exchange currency movements
Balance at the end of the year
2023
$’m
2022
$’m
1,453.0
1,235.7
83.5
78.0
4.4
12.1
75.4
33.4
—
3.5
73.9
79.3
5.5
8.2
81.2
17.6
0.8
4.8
1,743.3
1,507.0
(8.8)
(32.1)
(203.0)
1,499.4
—
(32.8)
(176.0)
1,298.2
1,298.2
1,166.4
220.2
(7.5)
(16.6)
5.1
11.6
(11.2)
—
131.4
1,499.4
1,298.2
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.
82
Aristocrat Leisure Limited 2023 Annual Report
1. Business performance continued
1-4 Taxes continued
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.
In a prior period a deferred tax asset and corresponding income tax benefit was recognised in respect of non-Australian tax
deductions due to an internal reorganisation of the Group structure and corresponding change in the tax base of the Group’s
intangible assets. The potential tax benefits recognised at 30 September 2023 were $1,453.0m (30 September 2022: $1,235.7m).
A further $122.1m of potential tax benefits remain unrecognised at 30 September 2023 (2022: $384.7m). The current year tax
expense includes recognition of previously unrecognised benefits.
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. A reassessment of the carrying
amount of the deferred tax assets is performed at each reporting period.
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. Where the amount of tax payable or recoverable is uncertain, the Group establishes provisions based on either the
Group’s judgement of the most likely amount of the liability or recovery; or, when there is a wide range of possible outcomes,
a probability weighted average approach. In all circumstances, the Group estimates its tax liabilities based on the Group’s
understanding of the tax law.
Judgement is required in determining the initial recognition and the subsequent carrying value of all deferred tax assets.
Deferred tax assets are only able to be recognised to the extent that utilisation is considered probable. With respect to
the deferred tax asset initially recognised in a prior period following an internal reorganisation of the Group structure, the
full benefits of this asset may be utilised over a minimum period of 15 years. In determining the amount of benefits to be
recognised as at the balance sheet date, regard must be had to various risk factors, including the risk of a change in profit
forecasts that could reduce or increase the amount of taxable profits that are available to use the benefits, as well as other
factors that could impact the portion of the tax benefits that are recognised at any point in time. It is reasonably possible
that a change in risk factors could result in a material change to the deferred tax asset and income tax expense in future
periods. Changes in business operations in different jurisdictions, foreign exchange rates or any regulatory or tax legislation
changes are examples of risks that may have a significant impact on amounts recognised.
A reassessment of the carrying amount of all deferred tax assets is performed at each reporting period based on the
above factors.
Where the final outcome of the reassessment is different from the amounts that were previously recorded, such differences
will impact the current and deferred tax assets and liabilities in the period in which such determination is made.
83
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
1. Business performance continued
1-5 Earnings per share
Basic and diluted earnings per share (EPS) calculations
Net profit attributable to members of Aristocrat Leisure Limited ($’m)
2023
1,454.1
2022
948.5
Weighted average number of ordinary shares (WANOS) used in calculating basic EPS (number)
653,547,145
663,876,734
Effect of Performance Share Rights (number)
WANOS used in calculating diluted EPS (number)
Basic EPS (cents per share)
Diluted EPS (cents per share)
3,264,933
2,529,681
656,812,078
666,406,415
222.5
221.4
142.9
142.3
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 related to Performance Share Rights are 511,165
(2022: 536,315) Performance Share Rights that had vested or been forfeited 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
earnings per share. At the end of the reporting period, there were 1,938,042 (2022: 1,265,455) shares held in the share trust.
1-6 Dividends
Ordinary shares
Dividend per share (cents)
Franking percentage (%)
Cost ($’m)
Payment date
2023
Final
34.0c
100%
220.4
2023
Interim
30.0c
100%
196.2
2022
Final
26.0c
100%
171.2
2022
Interim
26.0c
100%
173.8
19 December 2023
3 July 2023
16 December 2022
1 July 2022
Franking credits
The franking account balance at 30 September 2023 was $56.8m (2022: $88.1m).
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 2023 dividend had not been
declared at the reporting date and therefore is not reflected in the financial statements.
Dividends not recognised at year end
Since the end of the year, the Directors have recommended the payment of a final dividend of 34.0 cents (2022: 26.0 cents) per fully
paid ordinary share, franked at 100%. The aggregate amount of the proposed final dividend expected to be paid on 19 December 2023
out of retained earnings at 30 September 2023, but not recognised as a liability at the end of the year is $220.4m. This amount is based
on the shares issued at the date of these financial statements.
84
Aristocrat Leisure Limited 2023 Annual Report 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
2-3 Intangible assets
2-5 Leases
2-7 Provisions
2-2 Inventories
2-4 Property, plant and equipment
2-6 Trade and other payables
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
Provisions recognised during the year
Foreign currency exchange differences
Provisions no longer required
At the end of the year
The provision includes $54.4m (2022: $58.6m) of trade receivables past due and considered impaired.
Trade receivables past due but not impaired
Under 3 months
3 months and over
Total receivables past due but not impaired
2023
$’m
904.8
(60.7)
0.7
150.0
994.8
76.3
7.2
59.9
143.4
(63.1)
(1.9)
3.4
0.9
(60.7)
2023
$’m
77.9
1.3
79.2
2022
$’m
765.5
(63.1)
7.2
132.6
842.2
85.7
5.3
73.2
164.2
(63.2)
(1.0)
(2.6)
3.7
(63.1)
2022
$’m
68.2
2.4
70.6
85
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
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.
There were no other significant changes in trade receivables outside of normal sales and cash collections.
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.
Details about the Group’s exposure to credit risk are provided in Note 3-6.
Other receivables
These include prepayments, other receivables, long-term deposits and costs relating to entering sales contracts 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.
2-2 Inventories
Current
Raw materials and stores
Work in progress
Finished goods
Provision for obsolescence
Total inventories
2023
$’m
278.2
58.9
96.1
(124.2)
309.0
2022
$’m
287.7
32.2
52.5
(122.7)
249.7
Inventory expense
Inventories recognised as an expense for sales during the year ended 30 September 2023 amounted to $631.8m (2022: $427.9m).
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 and supply chain disruptions.
86
Aristocrat Leisure Limited 2023 Annual Report 2 Operating assets and liabilities continued
2-3 Intangible assets
Customer
relation-
ships and
contracts
Trade
names
and game
names
Intellectual
property
and
licences
Capitalised
develop-
ment costs
Technology
and
software
Total
$’m
Cost
Accumulated amortisation
Net carrying amount
Goodwill
3,170.4
—
3,170.4
786.5
(424.1)
362.4
176.3
(69.9)
106.4
Carrying amount at 1 October 2021
2,825.0
368.4
105.5
Additions
Additions on acquisition of subsidiaries
Disposals
Impairment losses
Amortisation charge
Foreign currency exchange movements
Carrying amount at 30 September 2022
Cost
Accumulated amortisation
Net carrying amount
—
0.6
—
—
—
344.8
3,170.4
3,275.4
—
3,275.4
—
—
—
—
(46.5)
40.5
362.4
793.2
(473.6)
319.6
—
—
—
—
(10.9)
11.8
106.4
175.3
(83.6)
91.7
Carrying amount at 1 October 2022
3,170.4
362.4
106.4
Additions
Additions on acquisition of subsidiaries
Impairment losses
Amortisation charge
Foreign currency exchange movements
—
112.0
—
—
(7.0)
Carrying amount at 30 September 2023
3,275.4
—
10.3
—
(50.2)
(2.9)
319.6
—
—
—
(13.7)
(1.0)
91.7
158.8
(69.8)
89.0
22.6
77.1
—
—
(2.5)
(17.4)
9.2
89.0
187.4
(93.0)
94.4
89.0
37.0
—
(8.4)
(22.7)
(0.5)
94.4
121.1
(77.6)
43.5
44.0
16.0
—
—
—
(16.5)
—
43.5
145.5
(92.0)
53.5
43.5
24.5
—
—
(14.5)
—
53.5
762.7
(643.2)
5,175.8
(1,284.6)
119.5
3,891.2
162.2
20.0
—
0.7
—
(76.7)
13.3
3,527.7
113.1
0.6
0.7
(2.5)
(168.0)
419.6
119.5
3,891.2
863.1
(697.2)
5,439.9
(1,439.4)
165.9
4,000.5
119.5
3,891.2
24.5
72.2
—
(56.9)
6.6
86.0
194.5
(8.4)
(158.0)
(4.8)
165.9
4,000.5
Intangible assets
Useful life
Amortisation method
Recognition and measurement
Goodwill
Indefinite
Not amortised
Customer
relationships
and contracts
Tradenames
Up to
15 years
Straight line
5 years
to indefinite
Straight line and
not amortised for
indefinite life
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 acquired in business
combinations are carried at cost less accumulated amortisation
and any accumulated impairment losses. The remaining useful
life of the customer relationships and contracts assets are
6 and 10 years.
The tradenames were acquired as part of business
combinations and recognised at fair value at the dates of
acquisition. Where there is an indefinite life, these assets
are not amortised, but rather tested for impairment at each
reporting date. One trade name is being amortised over 5 years.
The factors that determined that one trade name has an
indefinite useful life included the history of the business and
tradename, the market position, stability of the industry and the
expected usage.
87
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
2 Operating assets and liabilities continued
2-3 Intangible assets continued
Intangible assets
Useful life
Amortisation method
Recognition and measurement
Game names
Up to 15 years
Straight line
Intellectual
property and
licences
Capitalised
development
costs
Technology
and software
Up to 10 years
Straight line
Up to 3 years
Straight line
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.
Intellectual property and licences are carried at cost less
accumulated amortisation and impairment losses.
Capitalised development costs are costs incurred on
internal development projects. Development costs are
only capitalised when they relate to the creation of an
asset that can be used or sold to generate benefits and
can be reliably measured.
Technology and software is carried at cost less
accumulated amortisation and impairment losses.
Technology and software acquired through business
combinations is measured at the fair value at acquisition
date and is subsequently amortised.
Impairment tests
a)
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
Pixel United segment
Product Madness
Big Fish
Plarium
Anaxi
Other
2023
$’m
2022
$’m
114.7
1,070.2
1,065.0
237.5
664.0
121.8
2.2
115.3
1,076.3
1,069.9
238.9
667.8
—
2.2
Total goodwill at the end of the year
3,275.4
3,170.4
In addition to goodwill, the VGT CGU includes $19.2m relating to tradenames that are not amortised, and are tested for
impairment annually.
88
Aristocrat Leisure Limited 2023 Annual Report 2 Operating assets and liabilities continued
2-3 Intangible assets continued
b) Key assumptions used for value-in-use calculations
Discounted cash flow models have 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 key inputs and assumptions have
been adopted:
Inputs
Assumptions
Cash flow projections
Pre-tax annual discount rate
Terminal growth rate
Financial budgets and strategic plans approved by the Board to 2024 and
management projections from 2025 to 2028. These projections, which include
projected revenues, gross margins and expenses, have been determined
based on past performance and management expectations for the future.
Expected market conditions in which each CGU operates have been taken into
account in the projections.
Americas (excluding VGT)
VGT
Product Madness
Big Fish
Plarium
Anaxi
Americas (excluding VGT)
VGT
Product Madness
Big Fish
Plarium
Anaxi
2023
13.7%
13.7%
13.2%
13.5%
13.6%
14.2%
2023
2.0%
2.0%
3.0%
3.0%
3.0%
3.0%
2022
12.9%
12.5%
12.4%
13.2%
13.1%
Not applicable
2022
2.0%
2.0%
3.0%
3.0%
3.0%
Not applicable
Allocation of head office assets
The Group’s head office assets do not generate separate cash inflows and are
utilised by more than one CGU. Head office assets are allocated to CGUs on
a reasonable and consistent basis and tested for impairment as part of the
testing of the CGU to which the head office assets are allocated.
Impact of possible changes in key assumptions
c)
Growth in Pixel United 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.
For the Big Fish CGU, management projections are based on certain Casual genre games, both current and under development, to
achieve targeted revenue and profitability metrics. Going forward, should management projections fall below mid to high single
digit growth rates, an impairment may be required.
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. Judgement is also required in relation to the useful life of intangible assets.
89
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
2 Operating assets and liabilities continued
2-4 Property, plant and equipment
Land and buildings
$’m
Leasehold
improvements
$’m
Plant and equipment
$’m
Total
$’m
2023
2022
2023
2022
2023
2022
2023
2022
Cost
Accumulated depreciation/amortisation
Net carrying amount
35.0
(28.3)
6.7
35.1
(28.1)
7.0
Carrying amount at the start of the year
7.0
13.4
Additions
Disposals
Impairment losses
Transfers 1
Depreciation and amortisation
Foreign currency exchange differences
Carrying amount at the end of the year
—
—
—
—
(0.4)
0.1
6.7
—
—
—
—
(7.4)
1.0
7.0
173.2
(99.5)
73.7
73.7
18.0
(3.0)
(5.5)
—
(10.1)
0.6
73.7
161.2
1,447.9
1,266.8
1,656.1
1,463.1
(87.5)
(1,042.4)
(989.7)
(1,170.2)
(1,105.3)
73.7
405.5
277.1
485.9
357.8
69.4
12.2
(0.2)
—
—
277.1
340.3
(4.9)
(0.5)
(35.5)
(13.0)
(174.8)
3.8
5.3
73.7
242.6
186.7
(5.7)
—
(23.7)
(147.3)
24.5
357.8
358.3
(7.9)
(6.0)
(35.5)
(185.3)
4.5
325.4
198.9
(5.9)
—
(23.7)
(167.7)
30.8
405.5
277.1
485.9
357.8
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 or selling, general and administration expenses in the profit or loss in
the period the disposal occurs.
90
Aristocrat Leisure Limited 2023 Annual Report 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
Property
Motor vehicles
Equipment
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
2023
$’m
192.8
3.7
0.4
196.9
64.0
276.0
340.0
2022
$’m
188.3
3.8
—
192.1
56.0
271.8
327.8
Additions to the right-of-use assets were $50.1m (2022: $37.7m), and an impairment of $8.7m was recognised in 2023 (2022: nil).
The impairment charges mainly relate to a property lease that is not expected to be able to be fully utilised and has been made
available to be sub-leased. The impairment charge and related onerous lease provision is subject to estimates of sub-leasing
income. This includes estimates of the ability to sub-lease the property, 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
Property
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
The total cash out flow for leases was $64.6m (2022: $58.9m).
2023
$’m
36.3
2.3
0.1
38.7
17.4
4.1
0.2
2022
$’m
32.5
2.2
0.1
34.8
15.0
4.3
0.2
91
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
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.
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
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. Lease contracts amounting to $30.3m (2022: $41.9m) that had been signed but had not yet commenced
were not included in right-of-use assets and lease liabilities, and are included from the lease commencement date.
Right-of-use assets are generally depreciated over the shorter of the assets useful life 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
2023
$’m
304.6
677.4
982.0
79.1
79.1
2022
$’m
196.7
671.6
868.3
87.7
87.7
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.
The carrying amounts of trade and other payables are estimated to represent their fair value.
92
Aristocrat Leisure Limited 2023 Annual Report 2 Operating assets and liabilities continued
2-7 Provisions
Employee
benefits
$’m
Make good
allowances
$’m
Progressive
jackpot liabilities
$’m
Onerous lease and
other provisions
$’m
Total
$’m
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Current
Non-current
Carrying amount at the end of the year
23.7
2.2
25.9
24.5
0.3
24.8
0.3
6.6
6.9
3.0
4.6
7.6
22.0
2.5
24.5
13.4
1.9
15.3
6.2
29.1
35.3
4.4
34.3
38.7
52.2
40.4
92.6
45.3
41.1
86.4
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Make good
allowances
$’m
Progressive
jackpot liabilities
$’m
Onerous lease and
other provisions
$’m
2023
2022
2023
7.6
(0.8)
—
—
0.1
6.9
7.1
—
0.5
—
—
7.6
15.3
(98.7)
105.9
2.1
(0.1)
24.5
2022
22.0
(88.8)
79.5
—
2.6
15.3
2023
38.7
(5.3)
0.2
—
1.7
35.3
2022
37.8
(3.6)
0.2
—
4.3
38.7
Carrying amount at the start of the year
Payments
Additional provisions recognised
Additions on acquisition of subsidiaries
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.
93
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
3 Capital and financial structure
This section provides information relating to the Group’s capital structure and its exposure to financial risks, 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
3-7 Net debt
per share
reconciliation
3-6 Capital and financial
risk management
3-1 Borrowings
Current
Secured
Bank loans
Total current borrowings
Non-current
Secured
Bank loans
Total non-current borrowings
2023
$’m
99.6
99.6
2022
$’m
99.9
99.9
2,242.3
2,242.3
2,357.4
2,357.4
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.
94
Aristocrat Leisure Limited 2023 Annual Report 3 Capital and financial structure continued
3-1 Borrowings continued
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit (net of transaction costs):
Credit standby arrangements
Notes
2023
$’m
2022
$’m
Total facilities
– Bank overdrafts
– Bank loans
Total facilities
i)
ii)
Total
8.1
3,108.1
3,116.2
Unused
8.1
766.2
774.3
Total
8.1
3,227.9
3,236.0
Unused
8.1
770.6
778.7
i) The bank overdraft facilities (A$5,000,000 and US$2,000,000) are subject to annual review.
ii) Syndicated loan facilities:
– US$1,266 million US Term Loan A debt facility maturing 24 May 2027
– US$250 million US Term Loan B debt facility maturing 24 May 2029
– US$500 million multi-currency revolving facility maturing 24 May 2027
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 A facility are currently priced at a floating rate of 3-month Term SOFR with a fixed credit spread
adjustment plus a credit margin. Borrowings made under the Term Loan B facility are currently priced at a 0.50% 3-month
Term SOFR floor with a fixed credit spread adjustment plus a fixed credit margin. The Term Loan A facilities have mandatory
repayments of 1.25% quarterly.
A portion of the interest rate exposure has been fixed under separate interest rate swap arrangements. As of 30 September 2023
approximately 56% of the exposure was fixed, with hedging out to October 2025.
95
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
3 Capital and financial structure continued
3-2 Other financial assets and financial liabilities
Financial assets
Current
Debt securities held-to-maturity
Interest rate swap contracts – cash flow hedges
Total current financial assets
Non-current
Debt securities held-to-maturity
Convertible bonds
Interest rate swap contracts – cash flow hedges
Other investments
Total non-current financial assets
Financial liabilities
Current
Derivatives used for hedging
Total current financial liabilities
2023
$’m
2022
$’m
8.6
27.2
35.8
4.8
3.9
14.3
8.5
31.5
1.0
1.0
8.3
15.1
23.4
4.1
3.9
14.3
5.0
27.3
0.3
0.3
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 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.
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.
Impairment
c)
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.
96
Aristocrat Leisure Limited 2023 Annual Report 3 Capital and financial structure continued
3-2 Other financial assets and financial liabilities continued
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 A & 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 56% (2022: 43%) of the Term Loan A and B facilities outstanding. The fixed interest
rate of the swap is 3.21% (2022: between 2.71% and 2.78%) and the floating rate of the borrowings at the end of the reporting
period was 5.39% (2022: 3.55%). 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 – assets ($’m)
Notional amount in US$’m
Maturity dates
Hedge effectiveness ratio
Change in fair value of interest rate hedges since 1 October ($’m)
Weighted average hedged rate for the year
2023
41.5
854.0
2022
29.4
685.0
October 2025
October 2022
1:1
12.1
3.21%
1:1
62.7
2.76%
97
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
3 Capital and financial structure continued
3-3 Reserves and retained earnings
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Interest
rate
hedge
reserve
Non-
controlling
interest
reserve
Total
reserves
(61.8)
(34.4)
(7.1)
$’m
Balance at 1 October 2021
Profit for the year
Exchange difference on translation of
foreign operations
Net investment in foreign operations
Movement in fair value of interest rate hedges
Retained
earnings
3,222.3
948.5
—
—
—
44.8
—
592.2
(34.8)
—
Total comprehensive income for the year
948.5
557.4
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
(347.8)
—
—
—
—
—
—
—
Balance at 30 September 2022
3,823.0
602.2
Balance at 1 October 2022
Profit for the year
Exchange difference on translation of
foreign operations
Movement in fair value of interest rate hedges
3,823.0
1,454.1
—
—
Total comprehensive income for the year
1,454.1
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
(367.4)
—
—
—
—
23.1
—
23.1
—
—
—
—
Balance at 30 September 2023
4,909.7
625.3
—
—
—
—
—
—
56.9
(58.2)
(3.5)
(66.6)
—
—
—
—
—
76.4
(76.2)
3.3
(63.1)
—
—
—
53.7
53.7
—
—
—
—
19.3
19.3
—
—
5.0
5.0
—
—
—
—
—
—
—
—
—
—
—
—
—
(7.1)
(7.1)
—
—
—
—
—
—
—
—
24.3
(7.1)
(58.5)
—
592.2
(34.8)
53.7
611.1
—
56.9
(58.2)
(3.5)
547.8
547.8
—
23.1
5.0
28.1
—
76.4
(76.2)
3.3
579.4
602.2
(66.6)
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.
98
Aristocrat Leisure Limited 2023 Annual Report 3 Capital and financial structure continued
3-4 Contributed equity
Ordinary shares, fully paid
648,560,092
659,792,616
1,237.0
1,651.9
Shares
$’m
2023
2022
2023
2022
Movements in ordinary share capital
Ordinary shares at the beginning of the year
Shares issued during the year
Transaction costs arising from shares issued
Buy-back of fully paid ordinary shares
(11,232,524)
(9,830,678)
Ordinary shares at the end of the financial year
648,560,092
659,792,616
659,792,616
638,544,150
1,651.9
—
—
31,079,144
—
—
—
(414.9)
1,237.0
715.1
1,300.8
(23.6)
(340.4)
1,651.9
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.
In May 2022, the Group announced an on-market buy-back program, with up to $500 million of shares to be purchased, funded
from existing cash reserves. As of 30 September 2022, the Group had purchased 9,830,678 fully paid ordinary shares to be
cancelled. Of these, 8,979,525 were cancelled as at 30 September 2022, and 851,153 purchased for $28.4m were cancelled after
30 September 2022. The shares were acquired at an average price of $34.61 per share, with prices ranging from $32.67 to $37.00.
The total cost of $340.4m including after-tax transaction costs was deducted from equity.
In February and May 2023, the Group announced two increases to its existing on-market share buy-back program by up to a further
$500 million each. These brought the total program size to up to $1.5 billion and the program will run up to 31 May 2024. In the 12
months to 30 September 2023, the Group had purchased 11,232,524 fully paid ordinary shares to be cancelled. The shares were
acquired at an average price of $36.92 per share, with prices ranging from $30.93 to $40.37. The total cost of $414.9m including
after-tax transaction costs was deducted from equity. This brought the total buy-back purchases made for the up to $1.5 billion
program to $755.3m as of 30 September 2023.
99
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
3 Capital and financial structure continued
3-5 Net tangible assets per share
Net tangible assets per share
2023
$
3.90
2022
$
2.94
Net tangible assets is calculated based on net assets excluding intangible and right-of-use assets. A large proportion of the Group’s
assets are intangible in nature, including goodwill and identifiable intangible assets relating to businesses acquired.
Net assets per share at 30 September 2023 were $10.37 (2022: $9.13).
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 cash/bank EBITDA 1
Interest coverage ratio (bank EBITDA 1/interest expense 2)
2023
1.1x
(0.4)x
17.5x
2022
1.2x
(0.3)x
19.7x
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.
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.
100
Aristocrat Leisure Limited 2023 Annual Report 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
A and B facilities
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
Sensitivity analysis
– Use of floating to fixed interest rate swaps; and
– The mix between fixed and floating rate debt
is reviewed on a regular basis under the
Group Treasury policy.
Sensitivity
analysis and 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 and
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.
Liquidity risk
Borrowings and
other liabilities
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
Prior to a debt refinancing in May 2022, US$203.2m of the US Term Loan B debt facility that was held within an Australian
company was designated as a hedge of the net investment in subsidiaries with US dollar functional currencies. The foreign
exchange gains and losses on translation of the borrowing into Australian dollars was 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 was 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.
As part of the debt refinancing in the prior year, the US Term Loan B debt facility held within the Australian company was fully
repaid by a related company with a US dollar functional currency (100% owned subsidiary of the Group). The discontinuation of
net investment hedge does not result in reclassification of gains and losses accumulated in foreign currency translation reserve to
profit or loss, until the foreign operation is disposed of. As repayment of the US Term Loan B debt facility by a related US company
resulted in an intercompany loan in US dollars, and the loan was not intended to be settled during the year ended 30 September
2023, the foreign exchange gains and losses on translation of the loan into Australian dollars is accounted for similar to net
investment hedge and recognised in the foreign currency translation reserve.
101
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
3 Capital and financial structure continued
3-6 Capital and financial risk management continued
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s 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
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Financial assets
Cash and cash equivalents
Receivables
Debt securities held-to-maturity
Convertible bond and other investments
Financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Progressive jackpot liabilities
Total increase/(decrease)
3,151.0 3,021.3
(25.6)
(23.2)
25.6
23.2
1,138.2 1,006.4
13.4
12.4
12.4
8.9
—
(0.1)
(0.1)
—
(0.1)
(0.1)
—
0.1
0.1
—
0.1
0.1
11.0
11.6
—
—
1.1
10.5
—
—
(9.0)
(9.4)
—
—
(1.0)
(8.6)
—
—
1,061.1
956.0
—
—
—
—
(7.8)
(4.3)
9.6
5.3
2,341.9 2,457.3
23.6
24.7
(23.6)
(24.7)
340.0
327.8
24.5
15.3
—
0.2
(2.0)
—
0.2
1.5
—
(0.2)
2.0
—
(0.2)
(1.5)
—
—
—
—
—
—
—
—
—
—
—
—
14.8
7.3
(8.8)
(4.3)
Foreign exchange risk from intercompany balances is managed using forward contracts, resulting in no material net exposure.
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 $20.7m (2022: $36.1m) increase in the fair value of
swap contracts held at year end. A 1% decrease would cause a $21.2m (2022: $36.9m) decrease in the fair value of swaps held
at year-end.
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.
102
Aristocrat Leisure Limited 2023 Annual Report 3 Capital and financial structure continued
3-6 Capital and financial risk management continued
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.
Contractual maturities
of financial liabilities
Non-derivatives
Trade payables
Accrued expenses
Borrowings
Less than 1 year
$’m
Between
1 to 5 years
$’m
Over 5 years
$’m
Total contractual
cash flows
$’m
Carrying amount
(assets)/liabilities
$’m
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
304.6
677.4
99.6
196.7
671.6
–
–
79.1
87.7
–
–
–
–
304.6
756.5
196.7
759.3
304.6
756.5
196.7
759.3
99.9
1,853.7
1,966.6
388.6
390.8
2,341.9
2,457.3
2,341.9
2,457.3
Borrowings – interest payments
162.7
126.3
Lease liabilities
Progressive jackpot liabilities
66.4
22.0
57.1
13.4
436.1
195.6
1.0
443.2
183.5
0.8
19.7
15.1
164.9
161.7
1.5
1.1
618.5
426.9
24.5
584.6
402.3
15.3
–
–
340.0
327.8
24.5
15.3
Total non-derivatives
1,332.7
1,165.0
2,565.5
2,681.8
574.7
568.7
4,472.9
4,415.5
3,767.5
3,756.4
Derivatives
Net settled (interest rate swaps)
Gross settled (forward foreign
exchange contracts)
– (inflow)
– outflow
Total outflow
Total derivatives
(27.2)
(15.1)
(14.3)
(14.3)
(108.7)
109.7
1.0
(5.0)
5.3
0.3
–
–
–
–
–
–
(26.2)
(14.8)
(14.3)
(14.3)
–
–
–
–
–
–
–
–
–
–
(41.5)
(29.4)
(41.5)
(29.4)
(108.7)
109.7
1.0
(5.0)
(108.7)
5.3
0.3
109.7
1.0
(5.0)
5.3
0.3
(40.5)
(29.1)
(40.5)
(29.1)
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
2023
$’m
842.6
176.8
118.8
2022
$’m
727.1
211.4
67.9
1,138.2
1,006.4
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).
2023
$’m
835.8
108.5
116.8
1,061.1
2022
$’m
747.4
144.3
64.3
956.0
103
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
3 Capital and financial structure continued
3-6 Capital and financial risk management continued
d) Credit risk
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.
Refer above for more information on the risk management policy of the Group. The Group holds guarantees over the debts of
certain customers. The value of debtor balances over which guarantees are held is detailed below:
Trade receivables with guarantees
Trade receivables without guarantees
Total net trade receivables
2023
$’m
5.9
914.5
920.4
2022
$’m
1.5
786.6
788.1
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 2023 on the net fair value of the Group’s existing foreign exchange hedge contracts:
Currency pair
AUD/USD
Total
Weighted
average
exchange
rate
0.6383
Maturity profile 1
1 year or less
$’m
Over 1 year
$’m
109.7
109.7
—
—
Net fair
value loss 2
$’m
(1.0)
(1.0)
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
$’m
Level 2
$’m
Level 3
$’m
Total
$’m
2023
2022
2023
2022
2023
2022
2023
2022
Assets
Convertible bonds
Interest rate swap contracts
Total assets at the end of the year
Liabilities
Derivatives used for hedging
Contingent consideration
Total liabilities at the end of the year
—
—
—
—
—
—
—
—
—
—
—
—
3.9
41.5
45.4
1.0
—
1.0
3.9
29.4
33.3
0.3
—
0.3
—
—
—
—
—
—
—
—
43.2
43.2
38.0
38.0
3.9
41.5
45.4
1.0
43.2
44.2
3.9
29.4
33.3
0.3
38.0
38.3
104
Aristocrat Leisure Limited 2023 Annual Report
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
The fair value is determined using the unadjusted
quoted market price in an active market for
similar assets or liabilities.
The Group did not have any Level 1 financial
instruments at the end of the current and prior
reporting periods.
The fair value is calculated using predominantly
observable market data other than unadjusted
quoted prices for an identical asset or liability.
Level 3
The fair value is calculated using inputs that are
not based on observable market data.
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. Convertible bonds are not material.
The fair value of contingent consideration is based
on forecasts of the performance of the entity subject
to earn-out payments. Part of the liability has been
accounted for as acquisition consideration and
part as employee remuneration due to retention
requirements.
There were no transfers between levels in the fair value hierarchy and no changes to the valuation techniques applied since
30 September 2022. 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.
Cash and cash equivalents
Current borrowings
Non-current borrowings
Net cash
Net cash/(debt) – opening balance
Net increase in cash per cash flow statement
Debt repayments
Proceeds from borrowings (net of transaction costs)
Amortisation of borrowing costs
Foreign exchange movements
Net cash – end of year
2023
$’m
3,151.0
(99.6)
(2,242.3)
809.1
564.0
138.0
101.6
—
(5.3)
10.8
809.1
2022
$’m
3,021.3
(99.9)
(2,357.4)
564.0
(804.5)
306.3
3,676.9
(2,551.8)
(37.5)
(25.4)
564.0
105
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
4 Group structure
This section explains significant aspects of the Group structure, including its controlled entities and how changes affect
the Group structure. It provides information on business acquisitions and disposals made during the current and prior
financial years and the impact they had on the Group’s financial performance and position.
4-1 Subsidiaries
4-2 Business combinations
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:
Country of incorporation
Australia
Australia and USA
USA
USA
USA
USA
Canada
Israel
Finland
Macau
New Zealand
UK
Mexico
Mexico
Australia
Australia
India
UK
France
Spain
UK
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.
Aristocrat Technologies Canada Inc.
Plarium Global Limited
Futureplay Oy
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
Product Madness France SAS (formerly Playsoft SAS)
Aristocrat Technologies Spain S.L.
Roxor Gaming Limited (from January 2023)
106
Aristocrat Leisure Limited 2023 Annual Report 4 Group structure continued
4-2 Business combinations
Recognition and measurement
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is measured at fair value. Acquisition-related costs are expensed as incurred in the
profit or loss.
Current period acquisition
In September 2022, a contract was signed to acquire Roxor Gaming Limited. This acquisition was completed in January 2023.
Roxor Gaming Limited is a Business-to-Business Real Money Gaming supplier. The acquisition was funded from existing cash, and
the transaction did not have a material earnings impact in the current financial year.
Details of the purchase consideration, the provisional net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Total purchase consideration
The provisional assets and liabilities at the date of acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Intangible assets: Technology
Intangible assets: Customer relationships
Trade and other payables
Provisions
Deferred tax liabilities
Net identifiable assets acquired
Add: goodwill
Provisional net assets acquired
$’m
174.5
174.5
Fair value
$’m
0.3
3.1
72.2
10.3
(4.7)
(2.1)
(16.6)
62.5
112.0
174.5
The goodwill is attributable to future growth opportunities and synergies from combining operations with Roxor Gaming Limited.
The goodwill is not deductible for tax purposes. The purchase price accounting exercise is provisional, with any revisions to be
reflected as adjustments to goodwill up to 12 months following the acquisition date at January 2023.
Proposed business combination
On 15 May 2023, the Group announced the proposed acquisition of 100% of NeoGames S.A. (“NeoGames”) for an equity value of
$1.5 billion (US$1.0 billion) and enterprise value of $1.8 billion (US$1.2 billion) pursuant to a Business Combination Agreement.
NeoGames is a leading global content and technology solutions provider that provides platforms and develops content for the
global online Real Money Gaming (RMG) industry. Completion of the acquisition is subject to NeoGames shareholder approval and
certain regulatory approvals, and will be funded with existing cash.
On 19 July 2023, the Group announced that the shareholders of NeoGames voted to adopt the Business Combination Agreement
entered into with NeoGames on 15 May 2023. This shareholder approval is the first of two shareholder approvals required to
effect the proposed acquisition of NeoGames.
107
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
5 Employee benefits
This section provides a breakdown of the various programs the Group uses to reward and recognise employees and key
executives, including Key Management Personnel.
5-1 Key management personnel
5-2 Share-based payments
5-1 Key management personnel
Key management personnel compensation
Key management personnel includes all Non-Executive Directors, the Executive Director and Senior Executives who were
responsible for the overall planning, directing and controlling of activities of the Group.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Key management personnel compensation
2023
$
2022
$
13,189,803
11,469,028
195,743
26,648
1,323,782
124,558
28,671
—
11,726,127
7,835,512
26,462,103
19,457,769
Detailed remuneration disclosures are provided in the remuneration report.
5-2 Share-based payments
The below provides information on share-based payments arrangements. The Remuneration Report, presented in the Directors’
Report, also provides detailed disclosure on share-based payments.
Plan
Description
Long Term Incentive Plan
Aristocrat Equity Scheme Offer
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 Performance Share Plan are
identical in all respects other than performance conditions and periods.
Certain eligible employees are offered incentives of share rights that are based on
individual performance, subject to continued employment. These rights are subject to
the respective employees remaining with the Group for one, two and three year periods.
Deferred Short-Term Incentive Plan
Upon the vesting of short-term incentives, Executives receive the incentives as 50-75%
cash, with 25-50% deferred as Performance Share Rights.
Special grants
Contractual share rights are granted to retain key employees from time to time across
the Group, including after acquisitions, subject to continued employment.
The total Performance Share Rights are detailed in the tables below:
As at 1 October
Granted during the year
Vested during the year
Forfeited during the year
As at 30 September
2023
Number of rights
2022
Number of rights
4,041,929
3,572,149
(1,447,154)
(563,732)
5,603,192
4,755,258
1,837,908
(1,896,419)
(654,818)
4,041,929
All rights on issue are provided for no consideration, and are converted to shares upon meeting of the vesting conditions.
108
Aristocrat Leisure Limited 2023 Annual Report 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:
Long Term Incentive Plan
Aristocrat Equity Scheme Offer
Deferred Short-Term Incentive Plan
Special grants
Total share-based payments expense
2023
$’m
9.8
48.4
4.6
13.6
76.4
2022
$’m
10.8
31.9
5.6
8.6
56.9
Recognition and measurement
The fair value of rights granted is recognised as an employee benefits expense with a corresponding increase in equity. The total
amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market performance
conditions and the impact of non-vesting conditions but excludes the impact of any individual performance based and non-market
performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of rights that are expected to vest. The total
expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be
satisfied. At the end of each period, the Group revises its estimates of the number of rights that are expected to vest based on
the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
Shares issued through the Aristocrat Employee Equity Plan Trust continue to be recognised in the share-based payments reserve
in equity. Similarly, treasury shares acquired by the Aristocrat Employee Equity Plan Trust are recorded in share-based payments
trust reserves. Information relating to these shares is disclosed in Note 3-3.
b) Long Term Incentive Plan
Accounting fair value of Performance Share Rights granted
The assessed accounting fair values of Performance Share Rights granted during the financial years ended 30 September 2023
and 30 September 2022 are as follows:
Timing of
grant of rights
Performance
period start date
Performance
period expiry date
Performance condition
Accounting
valuation date
Accounting
valuation ($)
2023 financial year
1 October 2022
30 September 2025
TSR
EPSG
1 December 2022
Individual performance
TSR
EPSG
24 February 2023
Individual performance
TSR
2022 financial year
1 October 2021
30 September 2024
EPSG
25 February 2022
Individual performance
20.94
34.51
34.51
21.40
35.47
35.47
17.84
35.87
35.87
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.
109
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
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 2023 and year ended 30 September 2022 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.
2023
2022
1 December 2022 24 February 2023
25 February 2022
$36.03
38.8%
1.4%
3.1%
$36.88
29.1%
1.4%
3.6%
$37.38
38.2%
1.5%
1.7%
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.
110
Aristocrat Leisure Limited 2023 Annual Report 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
6-3 Remuneration of auditors
6-5 Parent entity
6-7 Basis of preparation
financial information
6-2 Events occurring after
6-4 Related parties
6-6 Deed of cross guarantee
reporting date
6-1 Commitments and contingencies
2023
$’m
2022
$’m
a) Commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities:
Property, plant and equipment
3.2
5.6
b) Contingent liabilities
The Group and parent entity may have contingent liabilities at 30 September 2023 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 may 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 Technologies Holdings Pty Limited, Aristocrat
Global Holdings Pty Ltd (formerly 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.
111
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
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
Other assurance services
Australia
Total remuneration for other assurance services
Total remuneration for assurance services
Tax and advisory services
Australia
Overseas
Total remuneration for advisory services
2023
$
2022
$
1,640,100
3,024,883
1,522,850
2,528,000
4,664,983
4,050,850
—
—
163,000
163,000
4,664,983
4,213,850
36,875
65,364
102,239
—
58,542
58,542
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.
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.
112
Aristocrat Leisure Limited 2023 Annual Report 6 Other disclosures continued
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/(loss) for the year after tax
Total comprehensive income/(loss) income after tax
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.
2023
$’m
2022
$’m
29.0
12,095.0
443.1
12,816.4
1.7
1.7
19.5
19.5
12,093.3
12,796.9
1,237.0
417.9
10,438.4
12,093.3
2.8
2.8
1,651.9
341.6
10,803.4
12,796.9
(36.3)
(36.3)
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.
113
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
6 Other disclosures continued
6-6 Deed of cross guarantee
Pursuant to ASIC Corporations Instrument 2016/785, the wholly owned subsidiaries listed below are relieved from the
Corporations Act 2001 requirements for preparation, audit and lodgement of a financial report and Directors’ Report.
It is a condition of the Instrument that the Company and each of the participating subsidiaries enter into a Deed of Cross Guarantee
(Deed). The effect of the Deed, dated 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
– Aristocrat Global Holdings Pty Ltd (formerly 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.
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
Total comprehensive income for the year
Set out below is a summary of movements in consolidated retained earnings of the
Closed Group:
Retained earnings at the beginning of the financial year
Profit for the year
Dividends paid
Retained earnings at the end of the financial year
2023
$’m
427.9
424.9
58.0
(270.0)
(204.2)
(3.4)
(34.2)
399.0
(127.5)
271.5
271.5
669.3
271.5
(367.9)
572.9
2022
$’m
424.3
289.3
6.2
(287.2)
(195.6)
(11.5)
(31.5)
194.0
(91.6)
102.4
102.4
915.1
102.4
(348.2)
669.3
114
Aristocrat Leisure Limited 2023 Annual Report 6 Other disclosures continued
6-6 Deed of cross guarantee continued
Set out below is the balance sheet of the Closed Group:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Trade and other receivables
Investments
Property, plant and equipment
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
Lease liabilities
Provisions
Deferred revenue and other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2023
$’m
211.8
230.6
43.5
485.9
89.6
1,639.3
19.4
21.4
71.4
53.0
1,894.1
2,380.0
802.1
12.6
102.4
16.7
28.7
962.5
18.8
8.6
6.7
34.1
996.6
1,383.4
1,237.0
(426.5)
572.9
1,383.4
2022
$’m
846.7
212.2
51.6
1,110.5
102.1
1,378.3
19.1
19.4
68.7
48.6
1,636.2
2,746.7
635.2
10.6
73.4
19.6
18.1
756.9
20.9
4.7
8.0
33.6
790.5
1,956.2
1,651.9
(365.0)
669.3
1,956.2
115
Aristocrat Leisure Limited 2023 Annual Report Notes to the financial statements
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 15 November 2023.
The Group’s registered office and principal place of business is:
Aristocrat Leisure Limited
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
Australia
The Group ensures that its corporate reporting is timely, complete and available globally. All press releases, financial statements,
and other information are available in the investor information section of the Company’s website: www.aristocrat.com
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB) and the Corporations Act 2001. The report presents information
on a historical cost basis, except for financial assets and liabilities (including derivative instruments), which have been measured
at fair value and for classes of property, plant and equipment which have been measured at deemed cost. Amounts have been
rounded off to the nearest whole number of million dollars and one decimal place representing hundreds of thousands of dollars,
or in certain cases, the nearest dollar in accordance with the relief provided under the ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 as issued by the Australian Securities and Investments Commission.
Policies have been applied consistently for all years presented, unless otherwise stated. Comparative information is reclassified
where appropriate to enhance comparability. The financial statements have been prepared on a going concern basis.
Significant judgements and estimates
The Group continues to navigate volatility in the global operating environment as well as managing impacts of the conflict
involving Russia and Ukraine.
The estimates and projections that these financial statements are prepared on the basis of are based on the best information
available at this time and the Directors have paid consideration to the key assumptions that underpin the forecast estimations.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of Aristocrat Leisure Limited (the Company) and its
subsidiaries as at 30 September 2023.
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.
116
Aristocrat Leisure Limited 2023 Annual Report 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
Income and expenses
Assets and liabilities
Equity
Reserves
Applicable exchange rate
Average exchange rate
Reporting date
Historical date
Historical date
Foreign exchange gains and losses resulting from translation are recognised in the statement of profit or loss, except for qualifying
cash flow hedges which are deferred to equity.
Foreign exchange differences resulting from translation of foreign operations are initially recognised in the foreign currency
translation reserve and subsequently transferred to the profit or loss on disposal of the foreign operation.
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 2022. These did not have a
material impact on the Group.
Change in accounting policy – Global minimum tax
The Group has adopted AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two
Model Rules issued by the Australian Accounting Standards Board in June 2023. The amendments provide a temporary mandatory
exception from deferred tax accounting for the Pillar Two global minimum top-up tax, which is effective immediately, however will
only require mandatory disclosures about the Pillar Two exposure for years commencing 1 January 2023 onwards, which for the
Group will be the year ended 30 September 2024.
The mandatory exception applies retrospectively. The retrospective application has no impact on the Group’s financial statements
as no new legislation implementing the top-up tax was enacted or substantively enacted at the end of the previous year
(30 September 2022) in any jurisdiction in which the Group operates and no related deferred taxes were recognised at that date.
117
Aristocrat Leisure Limited 2023 Annual Report Directors’ declaration
for the year ended 30 September 2023
In the Directors’ opinion:
a) the financial statements and notes set out on pages 68 to 117 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 2023 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.
Neil Chatfield
Chairman
Sydney
15 November 2023
118
Aristocrat Leisure Limited 2023 Annual Report Independent Auditor’s Report
Independent auditor’s report
To the members of Aristocrat Leisure Limited
Independent auditor’s report
Report on the audit of the financial report
To the members of Aristocrat Leisure Limited
Our opinion
Report on the audit of the financial report
In our opinion:
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:
In our opinion:
(a) giving a true and fair view of the Group's financial position as at 30 September 2023 and of its
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:
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(a) giving a true and fair view of the Group's financial position as at 30 September 2023 and of its
financial performance for the year then ended
What we have audited
The Group consolidated financial report comprises:
(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 2023
the statement of changes in equity for the year then ended
the cash flow statement for the year then ended
the balance sheet as at 30 September 2023
the statement of profit or loss and other comprehensive income for the year then ended
the statement of changes in equity for the year then ended
the notes to the financial statements, which include significant accounting policies and other
the cash flow statement for the year then ended
explanatory information
the statement of profit or loss and other comprehensive income for the year then ended
the directors’ declaration.
the notes to the financial statements, which include significant accounting policies and other
explanatory information
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
Basis for opinion
report section of our report.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
report section of our report.
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Independence
for our opinion.
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
Independence
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
fulfilled our other ethical responsibilities in accordance with the Code.
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
PricewaterhouseCoopers, ABN 52 780 433 757
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 9659 2476, F: +61 2 8266 9999
T: +61 2 8266 0000, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
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
Liability limited by a scheme approved under Professional Standards Legislation.
119
Aristocrat Leisure Limited 2023 Annual Report 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
● For the purpose of our audit we used overall Group materiality of $83 million, which represents
approximately 5% of the Group’s profit before tax.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
● We chose Group profit before tax because, in our view, it is the benchmark against which the performance
of the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
● The Group comprises entities located globally with the most financially significant operations being located
in the United States of America (USA), Australia and Israel. Accordingly, we structured our audit as
follows:
−
The group audit was led by our team from PwC Australia (group audit team). The group audit team
completed audit procedures in respect of the special purpose financial information of operations in
Australia used to prepare consolidated financial statements.
− Under instruction from and on behalf of the group audit team, component auditors in the USA and
Israel performed audits of the respective special purpose financial information of businesses
operating from those locations used to prepare the consolidated financial statements.
● The group audit team decided on the level of involvement needed in the work performed by the
component auditors, to be satisfied that sufficient appropriate evidence has been obtained for the
120
Aristocrat Leisure Limited 2023 Annual Report
purposes of our opinion. Regular dialogue between the group audit team and the component auditors up
to the reporting date, augmented the reporting provided by the component auditors. 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 controlled at the Group level, the Group consolidation and the audit of the financial report
and remuneration 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
Committee.
Key audit matter
Taxes
(Refer to note 1-4)
How our audit addressed the key audit matter
In obtaining sufficient, appropriate audit evidence, our
procedures included, amongst others:
The Group operates globally and is subject to tax
regimes and tax legislation administered by tax
authorities in a number of countries.
Taxes was a key audit matter due to the:
●
●
complexity of tax legislation and the
significant judgements applied by the Group
to assess some tax treatments and calculate
associated tax; and
financial significance of taxes to the
statement of profit or loss and other
comprehensive income and to the balance
sheet.
●
●
●
●
●
evaluating the relevant analyses conducted
by the Group to support significant
judgements made in respect of amounts
expected to be paid to tax authorities and
determination of recognised and
unrecognised deferred taxes;
testing, on a sample basis, the calculation of
current and deferred tax;
together with PwC Tax experts:
●
●
considering significant judgements
made by the Group in the
application of tax laws in significant
jurisdictions; and
reading selected correspondence
with tax authorities in significant
territories and with the Group’s
relevant tax advisors;
assessing the appropriateness of the key
assumptions included in the Group’s models
to support the determination of the amounts
expected to be paid to tax authorities and
deferred tax balances, including testing the
mathematical accuracy of the models; and
evaluating the related financial statement
disclosures for consistency with Australian
Accounting Standards requirements.
121
Aristocrat Leisure Limited 2023 Annual Report
Independent Auditor’s Report
Key audit matter
How our audit addressed the key audit matter
Estimated recoverable amount of goodwill and
indefinite life intangibles
(Refer to note 2-3)
Under Australian Accounting Standards, the Group is
required to test goodwill and other indefinite-lived
intangible assets annually for impairment at the cash
generating unit (CGU) level. This assessment is
inherently complex and requires judgement in
forecasting the operational cash flows and
determining discount rates and growth rates used in
the cash flow models (the models).
The recoverable amount of goodwill and other
indefinite life intangible assets was a key audit matter
given the:
●
●
financial significance of these intangible
assets to the balance sheet; and
judgement applied by the Group in
completing and concluding on the
impairment assessment.
We focussed our efforts on developing an
understanding and testing the overall calculation and
methodology of the Group’s impairment assessment,
including identification of the cash generating units
(CGUs) of the Group for the purposes of impairment
testing, and the attribution of assets, revenue and
costs to those CGUs.
In obtaining sufficient, appropriate audit evidence, our
procedures included, amongst others:
●
●
●
●
●
assessing the appropriateness of cash flow
forecasts included in the models with
reference to the historical earnings, Board
and/or management approved budgets and
forecasts;
testing the mathematical calculations within
the models;
assessing the appropriateness of the
discount rates and terminal value growth
rates, with the assistance of PwC Valuation
experts;
considering the sensitivity of the models by
varying key assumptions, such as terminal
growth rates and discount rates; and
evaluating the related financial statement
disclosures for consistency with Australian
Accounting Standards requirements.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 September 2023, but does not include
the financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Directors' Report and Operating and Financial Review. We
expect the remaining other information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon through our opinion on the financial
report. We have issued a separate opinion on the remuneration report.
122
Aristocrat Leisure Limited 2023 Annual Report
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 35 to 62 of the directors’ report for the
year ended 30 September 2023.
In our opinion, the remuneration report of Aristocrat Leisure Limited for the year ended 30 September
2023 complies with section 300A of the Corporations Act 2001.
123
Aristocrat Leisure Limited 2023 Annual Report Independent Auditor’s Report
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
Mark Dow
Partner
Sydney
15 November 2023
124
Aristocrat Leisure Limited 2023 Annual Report Shareholder Information
Distribution of Equity Securities as at 14 November 2023
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total
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
138
438
97
88
7
85,749
1,084,869
702,284
1,908,103
1,723,110
1.558%
19.710%
12.759%
34.667%
31.306%
39,291
7,956
838
461
64
11,380,727
16,418,454
5,793,409
9,986,841
1.755
2.532
0.893
1.540
604,980,661
93.281
768
5,504,115
100.000
48,610
648,560,092
100.000
Less than a marketable parcel of $500.00
0
0
0.000
879
3,728
0.00057
1. All share rights are allocated under the Company’s incentive and share purchase 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 as at 14 November 2023
As at 14 November 2023, 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
Vanguard Group
Blackrock Group
AustralianSuper Pty Ltd
State Street Corporation
Number of
ordinary
shares held
32,460,837
46,346,278
40,573,633
34,084,624
% of
issued capital
Date of notice
5.00%
7.06%
6.06%
5.09%
9/08/2023
29/03/2023
27/06/2022
1/04/2022
Twenty largest Ordinary Shareholders as at 14 November 2023
Name of shareholder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JP 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
PRIMECHIP PTY LTD
AEPRO PTY LTD
MAAKU PTY LIMITED
ARGO INVESTMENTS LIMITED
NETWEALTH INVESTMENTS LIMITED
SOLIUM NOMINEES (AUSTRALIA) PTY LTD
CERTANE CT PTY LTD
MUTUAL TRUST PTY LTD
BNP PARIBAS NOMINEES (NZ) LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
Number of
ordinary
shares held
237,019,663
142,049,746
83,263,824
31,590,560
20,539,665
16,549,161
15,977,667
15,116,938
8,712,171
5,085,895
4,981,032
4,614,127
3,973,787
2,077,977
2,032,863
1,938,042
1,911,380
1,165,952
949,560
862,503
% of
issued capital
36.546%
21.902%
12.838%
4.871%
3.167%
2.552%
2.464%
2.331%
1.343%
0.784%
0.768%
0.711%
0.613%
0.320%
0.313%
0.299%
0.295%
0.180%
0.146%
0.133%
125
Aristocrat Leisure Limited 2023 Annual Report
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 online. Aristocrat’s website,
www.aristocrat.com, has information on Company
announcements, share price information, presentations
and reports. Shareholders may also communicate with the
Company via its website. The Company's share registry,
Boardroom Pty Limited, 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 registry. Shareholders who have not
submitted valid Direct Credit payment instructions will receive
a notice from the Company’s share registry 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 Direct Credit payment 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 DRP Application or Variation Form are
available from the Company’s share registry, Boardroom Pty
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.
126
Aristocrat Leisure Limited 2023 Annual Report Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
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
Corporate Directory
Directors
Neil Chatfield
Non-Executive Chairman
Trevor Croker
Chief Executive Officer
and Managing Director
Kathleen Conlon
Non-Executive Director
Arlene Tansey
Non-Executive Director
Sylvia Summers Couder
Non-Executive Director
Pat Ramsey
Non-Executive Director
Philippe Etienne
Non-Executive Director
Bill Lance
Non-Executive Director
Jennifer Aument
Non-Executive Director
Company Secretary
Kristy Jo
Registered Office
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
Key Offices
Building A, Pinnacle Office Park
85 Epping Road
North Ryde NSW 2113
Australia
10220 Aristocrat Way
Las Vegas, Nevada 89135
USA
6th Floor
1 Finsbury Avenue
London EC2M 2PF
United Kingdom
Investor Contacts
Share Registry
Boardroom Pty Limited
Level 8, 210 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
127
Aristocrat Leisure Limited 2023 Annual Report Aristocrat Leisure Limited
Building A, Pinnacle Office Park
85 Epping Road, North Ryde NSW 2113, Australia
aristocrat.com