Report: Ethical and Governance Practices of Aristocrat Leisure (ALL)

This report provides a critical analysis of the ethics and governance of Aristocrat Leisure (ALL), focusing on its corporate governance, board orientation, and corporate communications. The study examines the company's compliance with laws and regulations, its commitment to transparency, and its approach to stakeholder engagement using legitimacy theory. It includes an overview of Aristocrat Leisure's business operations, corporate governance structure, including board composition and reports from the Chairman and CEO, and its remuneration report. The analysis highlights the importance of ethics and governance for the company's sustainability and ethical culture, concluding that Aristocrat Leisure (ALL) demonstrates responsible corporate conduct. The report also explores the company's board orientation, including the roles and responsibilities of board members and directors. The study uses the legitimacy theory to interpret company communications and understand how the company operates within the bounds of society's norms.

Ethics and Governance

Executive Summary
Ethics and governance is a key aspect of the knowledge and ability base of modern professional
accountant. Being core business decision makers, they are required to be competitive in
regulatory regimes, governance measures and compliance requirements to ensure optimal
corporate conduct and operations. The present study aims to critically analyze and evaluate the
operations of Aristocrat leisure (all) by emphasizing on its corporate governance, board
orientation and corporate communications with using legitimacy theory. The study shows that
ethics and governance are highly important for the company to ensure sustainability and ethical
culture, and it can be thereby defined as the insurance for successful business. The study
summarizes that Aristocrat Leisure Ltd(ALL) has complied with all applicable laws and
regulations, while disclosed significant information in a full and viable way, with being
respective towards society and environment as well.

Table of Contents
Introduction.................................................................................................................................................4
Summary ofAristocratLeisure (all) corporate governance...........................................................................4
Corporate governance of Aristocrat leisure (all)..........................................................................................5
Report of Chairman and the CEO............................................................................................................6
Remuneration Report...............................................................................................................................7
Board Orientation........................................................................................................................................7
Interpretation of Aristocrat Leisure Ltd by making use of legitimacy theory............................................10
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

INTRODUCTION
The present study is based on the critical evaluation and analysis of the ethics and governance in
the aristocrat leisure (all). It covers the products and services offered by the company and from
which industry it belongs. The study also provides the summary of corporate governance which
includes the board composition, considering the ratio of independent to non-independent
directors, along with emphasising on the reports from Chairperson and the CEO and the
remuneration report. The study also covers the overall board orientation of the company, which
research about the new board members, the senior leadership and the board directors, supported
by the duties and responsibilities of each member. Along with this, the study also considers the
interpretation of company communication by making use of legitimacy theory. The purpose of
the study is to gain deep insights on the ethics and corporate governance of the cited company,
by researching their annual reports, official ASX and company website and board composition.
The relevant theory of legitimacy has been also applied to report to yield best results and
consider that company is operating in the bounds as well as norms of their respective society.
SUMMARY OFARISTOCRATLEISURE (ALL) CORPORATE
GOVERNANCE
Aristocrat leisure (all) is an Australian based manufacturer of gambling machine, it offers best
gaming solutions. The principle activities of company are inclusive of designing, developing and
distributing of gaming content, solutions and platforms. The segments of company comprise of
New Zealand, Australia and the Americas, Digital as well as International Class III. In addition
to this, the company provides a variety of products and services comprising of casino
management system as well as electronic gaming machines(ARISTOCRAT, 2019). It also has
operations in the social online gaming as well as actual money wager markets. The company by
making use of Video Gaming Technologies, Inc. (VGT), develops, produces and distributes
casino games meant for emerging markets.
It is considered as one of the leading gambling machine manufacturers and the most dominant
slot machine manufacturers across Australia and the world. Furthermore, the company is
licensed is to make distribution of slot machines and other related gaming products in more than

200 jurisdictions. Despite of the spinning slot machines, the company also has major interest
within gambling systems, associated jackpots systems, computerized card stimulations and
electronic table game(Bryant, Bennett, & Walker, 2019). The company is proud to be an
international games powerhouse, who offers a unique mix of products and services. The
company belongs to casino, gaming and gambling industry. The corporation made production of
its first machine in the year 1953, and has listing on the ASX in the year 1996. The recent history
of the company is that it is the 2nd largest casino gaming system manufacturer, after the
International Game Technology of US. It is has the dominant position in Australia, with certain
60% market share. It also makes the representation of over half of the sales, although with the
market tightening in the country because of rules over new poker machine placements, it has
promised to improvise its global sales to 50%. Moreover, it recent history shows that the
company is closer to the objectives after gaining the licence of all significant market in the year
2001. The sales of the company in US are accounted for 26%. It also seen that company is
actively participating in South America, South Africa, Europe and New Zealand. Apart from the
gaming services the company also generates casino furniture, signage as well as accessories
(Reuters, 2019). The company also offers technical support services comprising casino
consulting as well as design services, it has also been listed on Australia stock exchange and
stays as controlled for certain 40% by the founder. In the year 2002, the company sales arrived to
A$976 million. In short, it can be stated that it has founding in the Gaming market of Australia in
the 1950s, and the video revolution came in 1980s, with a change of command in 1990s, now it
aims for the jackpot in the new century (Bloomberg, 2019).
CORPORATE GOVERNANCE OF ARISTOCRAT LEISURE (ALL)
Director Special Responsibility
ID Blackburne Non-Executive Chairman
TJ Croker Managing Director and Chief Executive
Officer
NG Chatfield Chairman, Non Exec. Director

KM Conlon Non Exec. Director
SW Morro Non Exec. Director
PJ Ramsey Non Exec. Director
S Summers Couder Non Exec. Director
AM Tansey1 Non Exec. Director
Table 1: ARISTOCRAT LEISURE LIMITED Annual Report, 2018
By considering the above table it can be noticed that Chairperson of the committee is non-
Executive director i.e. he is an independent director. Annual Report of the company consists of
appropriate description of each director supported by their roles and responsibilities and their
participation in respective committees(ARISTOCRAT LEISURE LIMITED Annual Report,
2018).
Ratio:
Apart from CEO, all the directors are non-executive, therefore the ratio of independent to non-
independent directors 1/8.
Report of Chairman and the CEO
The report of Chairman and the CEO shows that the company has reported some powerful
organic as well as inorganic performance in the 2018 fiscal year, rendering a record profit
outcome and further enlarging the track record of business of top-notch growth. The report
provided by the CEO shows that revenue rose by 48% and more than 46% in the constant
currency to an unsurpassed of more than $3.6 billion(ARISTOCRAT LEISURE LIMITED
Annual Report, 2018).. The report reflect growth in the strategy of company to service sustained
performance for a long-term, which also showcased affirmative operational performance
rendered throughout the international portfolio of Group. The report also emphasized on its
recent acquisitions and development in emerging markets. Furthermore, the Report also sheds
light on the robust balance sheet that makes sure that the company supports the longer-term
vision of shareholders by making investments in organic and inorganic growth (Lumsden, 2018).
The company has realized a remarkable growth, with strong cash flows as well as capacity to
make reduction in gearing levels, allowing Board to come up with considerable increment in

earnings per share. Summing up the facts, it can be stated that 2018 fiscal year has been a
successful year for the company, being a reward for Aristocrat and its shareholders.
Remuneration Report
The remuneration strategy and structure of the Aristocrat is conducted on the basis of ‘pay for
performance’ philosophy. The Board believes that their existing remuneration structure has
promoted and driven its business strategy as well as Group out performance(Hughes, 2019). In
addition, it is evidenced that the Board continues to monitor the framework of incentive schemes
of company to make sure that are internationally competitive while effective in assisting the
business to attract, hold and inspire the talent and leadership it requires to propel business
strategy and progress in the stakeholder’s interests (ARISTOCRAT LEISURE LIMITED Annual
Report, 2018). By considering their remuneration report, it can be stated that the senior
executives gain a competitive fixed remuneration inclusive of cash salary, superannuation and
other related benefits which comprise of the fixed remuneration element of their total
remuneration package. The strategy and the remuneration structure are based on core principle
namely; alignment to the shareholder interest and value creation, market competitive and
performance based. In addition, the preparation of the Remuneration Report is conducted as per
the section 300A of the Corporations Act 2001 (Cth) (the Act) for Aristocrat Leisure Limited and
its controlled entities (Group).
BOARD ORIENTATION
Orientation Broad Composition Broad Focus Key communications
Stakeholder-
Managerial
Branch
Independent director
are part of Strategic
Risk Committee.
To develop common interest
between Senior executives
and stakeholders through
aligning rewards with
management performance.
Voluntary disclosures
and key audit matter
specified
Stakeholder-Managerial Branch

The managerial branch of stakeholder theory specifies that the power of stakeholders to impact
management is related to stakeholder’s power over application of sources required by
organization. In accordance with specified theory it is necessary to accomplish the requirement
of important stakeholders in case they are important for organization in order to attain pre-
established aims or objectives. The disclosure of appropriate information in form of voluntary
information or notes to accounts is one of the methods to manage powerful stakeholders group.
The strategies applied by management of Aristocrat Leisure Ltd in compliance with stakeholder-
managerial branch has been discussed below in appropriate manner.
Strategies applied by independent directors
Independent directors are part of strategic risk management committee which emphasizes on
accomplishment of most powerful stakeholders. The needs are attainment of high quality and
sustainable growth. Thus its objective is protecting and enhancing core business market through
enduring opportunities available in new market both organic and merger & acquisition. It is
attained through focusing on alignment of shareholder interest and value creation. Voluntary
disclosures have been provided in form of key audit matters which comprises revenue
recognition, income tax, related party dealings, and accounting relating to acquisition of Plarium
and Big Fig acquisition and estimation of goodwill so that matter required additional
consideration could be assessed by stakeholders in detail (ARISTOCRAT LEISURE LIMITED
Annual Report, 2018). Engagement of shareholder is believed as key to good corporate
governance. The reason behind same is that it improves accountability as well as performance.
Further appropriate stakeholders are appointed by the management such as Strategic risk
committee which focus on provide required disclosures to ensure that channel of communication
are available to engaged shareholders. It is done through development of comprehensive
regulatory assurance function as well as governance structure in order to assure that political
environment as well as regulations is in adherence with internal process. Further capital
management strategy of Aristocrat Leisure Ltd. is applied with assess periodic dent payments
and continue assessment of interest rate hedging strategy in order to reduce risk relating to same
(ARISTOCRAT LEISURE LIMITED Annual Report, 2018). The overall capital management
strategy is develop to maintain funding structure which provides flexibility of funds required for
operations of business and to avail any strategic opportunities. The results relating to funding and

liquidity has been present through operating and financial review which represent that strong
cash balance and liquidity is available which provide flexibility to repay debt.
Attempts made by chairmen to satisfy main stake holders
The Chairman is appointed to assure that balance sheet encourages important shareholder’s and
stakeholders long term interest through making investment in organic and inorganic growth
through making appropriate use of ascertained accretive and compelling opportunities.
Shareholder agency theory is applied to analyse the relationship between shareholders and agents
and principals of company (Keay, 2017). Directors, Chairmen and other senior executives are
referred as agents and principals of organization. Dr Ian Blackburne as chairman of Board of
Aristocrat Leisure attempt to assure that the organization can continue to encourage shareholders
long term interest through investing in organic as well as inorganic growth (ARISTOCRAT
LEISURE LIMITED Annual Report, 2018). Its main emphasis is to provide positive operational
performance across group global portfolio. Further significant investment is being done for
future of organization through enhancing investment is Design and Development (it is
organization top investment priority). The communication is done through balance sheet, profit
and loss and statement presenting changes in equity. These statements provide details relating to
growth and profits attained through business operations in order to accomplish the requirement
of shareholders.
Regulatory and compliance committee provisions for accomplishing ethical requirements to
provide assurance to important stakeholders
The committee is part of organization which is responsible for compliance with ethical provision
and policies for each operation. It emphasizes on compliance with required law and regulation in
order to conduct business operations ethically. Further voluntary disclosure has been provided
that company receives reports and analyze its position to assure compliance with NGER Act.
The committee does assess performance of individual directors in order to assess social, ethical
and environmental impact of management compliance with sustainable policies and practices.
The key governance policy of Aristocrat Leisure Ltd comprises to act honestly, deal with
professionalism with each operation, uphold values and behaviour in accordance with outline
code of conduct.
Application of available resources in appropriate manner to encourage main stakeholders to be
part of company

Capital and financial risk management department emphasizes to maintain funding structure in a
manner so that sufficient flexibility in availability of funds is available for operational demand of
business. Financial risk management is assessed by central treasury department with assistance
of board of directors. Even risk management program exist which emphasizes on
unpredictability of financial market in order to reduce relevant adverse impact on financial
performance of company (Lok, Hwang and Höllerer, 2016). The risk relating to capital
management strategy applied by the organization in terms of periodic debt pay down with
interest rate hedging strategy.
It can be concluded that overall the board of Aristocrat Leisure Ltd is focused on providing high
quality and sustainable growth through satisfying requirements of powerful stakeholders. The
same is represented through strong balance sheet and increasing revenues which provide
optimality to the company to consider organic as well as non-organic opportunities in order to
develop required value for the shareholders. Further, adequate emphasis has been made on
ethical consideration along with profit earning motive. Even the company complies with the
policy of assessing independence of each director as well as non-executive director throughout
the financial year so that the decisions are not affected by any personal influence. The
requirement information relating to compliance with ethical requirement and legal regulations
have been provided through voluntary disclosures which ensures powerful stakeholders that
business operation are conducted in legal and prominent manner. Even adequate skills such as
understanding of corporate finance, trading and contemporary risk is available with board so that
it can take appropriate decision in diversified scenarios. Thus, the board is capable of attaining
its oriented goals in appropriate manner so that it could assure that the needs and demands of
powerful stakeholders are accomplished within specified time period.
INTERPRETATION OF ARISTOCRAT LEISURE LTD BY MAKING USE
OF LEGITIMACY THEORY
The legitimacy theory is considered as a means that promotes firms in adopting, establishing
voluntary as well as environmental disclosures for fulfilling their social contracts that allows the
recognition of their goals and survival in the competitive environment (Mousa, & Hassan, 2015).
It can be stated that voluntary disclosure of the intellectual capital as well as human resources

information create a considerable and positive over the firm’s value. The Aristocrat Leisure Ltd
has powerful corporate governance which helps them to operate in an effective way and increase
value to their stakeholders. The company continuously thrive to reinforce their corporate
governance regime inclusive of making sure that the Aristocrat’s Constitution provisions, the
rules and regulations as described under ASX Listing and the Corporation Act are applicable and
complied on full basis(ARISTOCRAT, 2019). Since, the legitimacy theory states that
organizations must support the environmental disclosures and promote communities, in the same
aspect, company believes in making effective contribution to the society, by supporting charities
that showcase corporate value(Milne, & Patten, 2002). For the disclosure purpose, The Board of
Directors of company are highly concentrated on the optimal business oversight, with managing
a transparent and relevant governance structure with corporate governance issues being a
standing agenda meant for each Board meeting. In addition to this, the objective of the company
is to offer best practice disclosure with making proper compliance with the specified laws as well
as Group policies. Thus, all disclosures are carried out by or with the consent of CEO, or CFO or
the Head of Investor Relations.
The company also follows a continuous disclosure policy which reflects to comply with
disclosure requirements, avoid a false market, while not commenting on the rumours or
speculation. Furthermore, the company continuously tracks its risk exposure, comprising
economic, social and environmental risks, and disclose these material business risks, while
outlining the activities and key performance undertaken by the Group in order to be sustainable
towards environment and society(ARISTOCRAT, 2019). The company has also considered an
assessment, which further endorsed the four key work areas namely; Responsible Gaming,
Employee relations, Diversity& Inclusion, and Corporate Governance/Cyber Security. The
company has also followed continuous development by implementing and concentrating on the
areas of Energy & Environment, Community &Society and Ethical Sourcing. Therefore, it can
be asserted that managerial authorities disclose affirmative social as well as environmental
information in regards with the avoiding unfavourable media attention, and such outcomes helps
in supporting legitimating motives for the social and environment disclosure of the
company(Deegan, 2002). Along with this, the company has high commitment in being socially,
ethically and sustainably responsible, and the same are reflected in their environmental initiates,
inclusive of energy efficiency and recycling programs, severe environmental controls etc. It

commits to comply with several environmental laws, and ensure the attainment of higher
standard of environmental performance(ARISTOCRAT, 2019). They also makes planning for
any new Australian regulatory requirements on climatic change, thereby they are well-prepared
for reformed regulatory regimes and making reduction in their carbon footprint.
CONCLUSION
On the basis of above analysis, it can be concluded that ethics and corporate governance are
extremely significant for the organizations to ensure sustainability, create more value, and retain
the interest of stakeholders. Therefore, high-quality financial reporting financial information
users to trust business, and thereby creates overall business value. For better functioning of
corporate governance, business ethics is highly essential, and the study shows thatAristocrat
Leisure Ltd has maintained the same through rigorous financial statement reporting and ethical
disclosures which are all supported with compliance towards all regulatory regimes and
regulations. In this turbulent market environment, it is significant for the organization to
maintain standard corporate governance, which also helps them in avoiding conflict of interest
and frauds, and ensuring commendable success thereof.