LOTTO NZ STATEMENT OF PERFORMANCE EXPECTATIONS - MYLOTTO
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LOTTO NZ STATEMENT OF PERFORMANCE EXPECTATIONS for the financial year ending 30 June 2019
This Statement of Performance Expectations sets out the financial forecast of the New Zealand Lotteries Commission (Lotto New Zealand) for the financial year from 1 July 2018 to 30 June 2019, and has been prepared in accordance with the Crown Entities Act 2004. This Statement of Performance Expectations is written on behalf of the Board. Matthew Boyd Tony Mossman Chair Deputy Chair 23 May 2018 23 May 2018
CONTENTS Lotto New Zealand’s strategic direction 5 Strategic focus 6 Strategic priorities 7 Forecast financial statement 10 Notes to the financial statements 13 Directory 19 This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to Lotto New Zealand and abide by the licence terms. To view a copy of this licence, visit creativecommons.org. Please note that no logos may be used in any way that infringes on Lotto New Zealand’s copyright. Attribution to Lotto New Zealand should be in written form and not by reproduction of any such logo.
Statement of Performance Expectations 2019 5
Lotto New Zealand’s
strategic direction
This Statement of Performance Expectations (SPE) outlines Lotto New Zealand’s (Lotto NZ) performance
targets for 2018/19, and what we will do to achieve these targets. It should be read in conjunction with the
Statement of Intent 2019–2022, which sets out our medium-term strategy.
Lotto NZ’s statutory purpose is to provide safe gaming that allows New Zealanders to play and win while
contributing money back to New Zealand communities. As such, our overarching goal is to maximise profit
for transfer to the Lottery Grants Board, while minimising the risk of harm from problem and underage
gambling associated with our products.
Lotto NZ has one class of outputs – our games. Our focus is on responsibly promoting and running our games
in order to achieve the performance expectations set out in this document.
PROFIT MAXIMISATION
Actual Target Estimate Target
2018/19 SPE KPIs
2016/17 2017/18 2017/18 2018/19
Sales ($m) 1,206.7 1,081.3 1268.61 1,282.5
Operating expenses ($m) 68.8 68.0 68.6 2
74.93
Operating expenses (%) 5.7 6.3 5.4 5.8
Net profit ($m) 275.2 225.0 286.6 4
274.75
Paid to the Lottery Grants Board ($m) 272.8 225.0 278.66 274.7
HARM MINIMISATION
Actual Target Estimate Target
2018/19 SPE KPIs
2016/17 2017/18 2017/18 2018/19
Primary mode of gambling citations per 10,000 players7 1.46 Lotto New Zealand
Strategic focus
Lotto NZ has three areas of strategic focus over the GROWING DIGITAL
coming period. These reflect the shifts we would like
to affect in the business and where we will focus our As playing our games online becomes the norm
resources: for more and more of our customers, we want to
continue to offer more engaging ways to play our
existing games, offer new products in the digital
DRIVING DEMAND
space, and deliver engaging content that inspires
We need to ensure that we continue to drive New Zealanders to return to the MyLotto website.
demand for our games in order to deliver positive
results in the short term, by getting more people INCREASING DIVERSIFICATION
to play our games more often. We are focused
on what we know works today – the things that Over time, we need to lessen our dependency
will bring more players into the category – such on jackpot-fuelled growth and deliver a greater
as making it easy to purchase our games and proportion of sales from new customers through the
increasing awareness of the good things that evolution of our daily and instant games portfolio, in
happen as a result of lottery funding in the order to deliver more consistent results and ensure
community. long-term sustainability for the business.
STRATEGIC FOCUS
INCREASING
DRIVING DEMAND GROWING DIGITAL DIVERSIFICATION
Ensuring Kiwis want to play our Providing inspiring solutions in Developing our product proposition
games and can do the digital space and engaging with more
so easily New Zealanders
VISION STRATEGIC PRIORITIES
To be a world-leading
lottery for the maximum
Games I play
Enhancing traditional games and expanding the digital offering
benefit of New Zealand
communities – through
How I purchase
the delivery of great
Optimising online and omni-channel services and increasing
games that Kiwis feel
retail distribution
good about
playing What I see and hear
Emotive brand and community advertising and personalised
communications
BUSINESS FOUNDATIONS
STATUTORY Being world leading in Investing in technology Putting our people first
PURPOSE Responsible Gaming
To provide safe gaming
that allows New Zealanders
to play and win while contributing Uncompromising Risk Adhering to the highest Health
money back to New Zealand and Security and Safety standards
communitiesStatement of Performance Expectations 2019 7
Strategic priorities
Our strategic priorities for the coming period focus on growing sales and it remains fundamental to our
success that we grow in a socially responsible way.
In the 2018/19 financial year, we will focus on consumer-facing initiatives in the following three areas:
• Games I play
• How I purchase
• What I see and hear
GAMES I PLAY: Enhancing traditional games and expanding the digital offering
We want to continue to offer a compelling portfolio of digital accessibility, and we will continue to evolve
of games that inspire New Zealanders to play and our online instant offering with a wider range of
win. Recent product changes to the Lotto family of Instant Play games.
games (Lotto, Powerball, and Strike) have been
designed to create more Lotto winners and bigger Proposed game changes to Keno include the
Powerball prizes, and offer more ways to play our introduction of new game-play features, including
core games. A full review of the Lotto family of promotional activity, while Play 3 will be removed
games will be undertaken in 2018/19 to inform the from the category given the continued under-
shape and timing of future game improvements. performance of the game. We will continue to drive
improvements in Instant Kiwi by offering new tickets
The successful introduction of Instant Play (online and price points to increase the appeal of instant
instant win games) reflects the growing importance tickets to a wider audience.
of the MyLotto platform and customer expectations
Actual Target Estimate Target
2018/19 SPE KPIs
2016/17 2017/18 2017/18 2018/19
Sales ($m) 1,011.4 877.2 1,071.0 1,065.88
Lotto/Powerball/Strike
Gross margin ($m) 316.5 243.5 300.4 303.79
Instant games10 Sales ($m) 149.2 155.6 150.5 168.8
(Instant Kiwi and Instant Play) Gross margin ($m) 21.3 21.4 21.9 23.1
Other games Sales ($m) 46.0 48.5 47.0 11
47.9
(Keno, Bullseye and Play3) Gross margin ($m) 11.0 11.2 11.1 10.9
8.
The 2018/19 target assumes a slight decline in Lotto family sales due to previous downward trends experienced following previous game changes. Further game changes are
proposed for Lotto family in 2019/20 to re-engage sales.
9.
Gross margin for 2018/19 reflects a normalised year and therefore a higher level of jackpots, which attract a higher gross margin.
10.
Instant Play launched in December 2017.
11.
Daily games sales in 2017/18 are lower than target across the portfolio, however Keno games changes are proposed in the 2018/19 target to grow the category sales.8 Lotto New Zealand
HOW I PURCHASE: Optimising online and omni-channel services and increasing
retail distribution
In line with wider digital trends, MyLotto represents We want to be where our customers are shopping,
an increasingly important channel for Lotto NZ. making it easy for New Zealanders to purchase
As customers increasingly expect a seamless our games. There remains a strong correlation
experience when interacting through different between retail penetration and spend per capita
channels, MyLotto is no longer simply an and as such we will continue to increase our
e-commerce platform but increasingly is a way of retail footprint. This will be achieved through key
interacting with our players and will help enable an partnerships with supermarkets and fuel providers,
omni-channel experience. as well as through exploring new channels that
allow us the opportunity to gain a presence in
The introduction of in-store scanners will be the first locations where Lotto is underrepresented.
step in our ability to offer omni-channel services
to our customers, allowing players to scan their
smartphone in-store thereby linking MyLotto
customers with retail play for the first time.
Actual Target Estimate Target
2018/19 SPE KPIs
2016/17 2017/18 2017/18 2018/19
Retail sales ($m) 1,046.8 906.3 1,072.9 1,049.313
Number retail outlets 1,464 1,525 1,510 14
1,630
Supermarket penetration (%) 85 86 86 87
Digital sales ($m) 159.9 175.1 201.2 233.2
Number registered MyLotto players 637,000 710,000 740,000 810,000
WHAT I SEE AND HEAR: Emotive brand advertising and personalised
communications
Given the intangible nature of our products, having The Powerball brand is all about making an
loved brands that make New Zealanders feel emotional connection with New Zealanders, and
good about playing our games is imperative to the recently launched Powerball brand campaign
the success of our business. We will continue to use continues to inspire our players to dream big about
emotive storytelling to inspire people to play and the possibility of a win.
to remind our players of the important contribution
they’re making to the community. Reflecting the increasing importance of being able
to talk to people in a more meaningful way, we
Stories focused on the key lottery funding recipients will look to develop a much more personalised
of sport, art and film will remind New Zealanders of approach to our digital communications.
the vital role they play in supporting communities
through playing our games and will help increase
awareness of our reason for being.
Actual Target Estimate Target
2018/19 SPE KPIs
2016/17 2017/18 2017/18 2018/19
Lotto NZ brand health (%) 63 65 5415 55
Awareness of Lotto NZ link to community funding (%) 87 N/A 86 89
Average weekly transaction count (m) 1.5416 1.47 1.6217 1.69
13.
Retail sales exclude Instant Play sales and have further slight decline commenserate with total sales.
14.
The 2017/18 retail store target has been impacted by a slight delay on a pilot with a multi-chain retailer, which has now started.
15.
Our brand health metric reflects the percentage of people who respond ‘love or like’ to the question ‘How do you feel about Lotto NZ?’ as measured on an 11 point scale in our
monthly online brand tracking research. Our brand tracking provider and methodology changed to TNS in August 2017, which saw a drop in the Like/Love score for Lotto NZ.
Lotto NZ launched the Imagine 3.0 campaign in February to help drive customer engagement. The data captured from the Imagine 3.0 campaign was unable to be included
in the 2017/18 estimate due to timings.
16.
The actual for 2016/17 was previously reported at 1.63 and has been adjusted to 1.54 to reflect a more accurate methodology.
17.
Average weekly transactions were higher than anticipated post the 2017 Powerball game changes.Statement of Performance Expectations 2019 9
Our strategic priorities will continue to be underpinned by solid business foundations in:
RESPONSIBLE GAMING
Lotto NZ’s commitment to responsible gaming improvement of our programme, we will retain
remains a cornerstone of our business foundation. this accreditation over the coming year. Strong
Responsible gaming is all about our players having corporate governance will continue to guide our
fun, being informed and knowing their limits. programme, along with a focus on retailer and
employee training and providing information,
Our responsible gaming programme is certified tools and support for our players to encourage
to the highest possible level (Level 4) by the World responsible play in-store and online.
Lottery Association and, through continuous
TECHNOLOGY
The integrity and performance of our operations and digital infrastructure, to ensure that we can
and technology will always be paramount, and an continue to develop our games and channels with
extensive capital programme of work will be started few incidents and minimal disruption in the years
this year in order to maintain this integrity. This ahead.
will involve upgrades to our core gaming system
PEOPLE AND CULTURE
Engaged people who are passionate about the will continue to invest in employee development
role Lotto NZ plays in New Zealand communities through talent management and learning and
are critical to the successful execution of our development programmes, as well as ensuring we
strategic priorities. We are focused on attracting offer a modern workplace environment.
and retaining the best people at Lotto NZ and
RISK AND SECURITY MANAGEMENT
Reflecting the importance of secure and transparent best practice in the security management of our
operations for the business, we are now one of only information systems, and we will undergo an
63 lotteries worldwide to have obtained the World annual audit of all elements of our programme in
Lottery Association’s Security Control Standard. order to retain this certification.
This demonstrates that we follow international
HEALTH AND SAFETY
Lotto NZ aims to be a proactive leader in the area while also placing more emphasis on promoting
of Health and Safety. We will remain compliant with worker resilience and wellbeing.
strong Health and Safety practices and procedures,
Actual Target Estimate Target
2018/19 SPE KPIs
2016/17 2017/18 2017/18 2018/19
Retail network unplanned downtime 0 hours10 Lotto New Zealand
Forecast financial statements
PROSPECTIVE STATEMENT OF COMPREHENSIVE INCOME
For the period ending 30 June
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Revenues (note 3) 1,217,532 1,204,165 1,145,808
Cost of sales (note 4) 867,934 848,973 801,742
Gross profit 349,598 355,192 344,066
Expenses
Promotion and retail support (note 5) 27,389 22,981 29,153
Property, plant and equipment depreciation 6,002 5,916 4,524
Computer software amortisation 3,331 3,183 1,594
Gaming system 7,537 6,633 6,691
Employee benefits 16,505 15,915 14,573
Other 14,145 13,922 12,298
Total expenses 74,909 68,550 68,833
Profit 274,689 286,642 275,233
Distribution to the New Zealand Lottery Grants Board 274,689 278,642 270,115
Special distribution to the New Zealand Lottery Grants Board 2,718
Profit/(loss) after distribution to New Zealand Lottery Grants Board - 8,000 2,400
Other comprehensive income - net change in fair value of cash flow hedges - - -
Total comprehensive income - 8,000 2,400
The accompanying notes form part of this statement and should be read in conjunction with it.
STATEMENT OF MOVEMENTS IN EQUITY
For the period ending 30 June
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Total comprehensive income after distribution to the
New Zealand Lottery Grants Board - 8,000 2,400
Equity at the beginning of the year 33,513 25,513 23,113
Total comprehensive income for the period as above - 8,000 2,400
Equity at the end of the year 33,513 33,513 25,513
The accompanying notes form part of this statement and should be read in conjunction with it.Statement of Performance Expectations 2019 11
PROSPECTIVE STATEMENT OF FINANCIAL POSITION
As at 30 June
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Assets
Current assets
Cash and cash equivalents 60,052 62,184 53,086
Term deposits 35,000 38,000 64,282
Debtors and other receivables 10,500 9,100 5,710
Prepayments 5,000 5,500 5,699
Inventories 3,500 3,500 3,568
Total current assets 114,052 118,284 132,345
Non-current assets
Property, plant and equipment 24,814 18,201 17,090
Computer software 8,530 8,941 8,605
Total non-current assets 33,344 27,142 25,695
Total assets 147,396 145,427 158,040
Liabilities
Current liabilities
Creditors and other payables 74,762 79,043 96,912
Prize reserve account 37,320 30,835 33,037
Annuity prize liabilities - - 100
Employee entitlements 700 700 738
Provision - - 70
Lease incentive 235 235 235
Total current liabilities 113,017 110,813 131,092
Long term liabilities
Annuity prize liabilities 100 100 200
Lease Incentive 766 1,001 1,235
Total long term liabilities 866 1,101 1,435
Total liabilities 113,883 111,914 132,527
Equity
Retained earnings 33,513 33,513 23,113
Asset revaluation reserve - - -
Cash flow hedge reserve - - -
Total equity 33,513 33,513 25,513
Total liabilities and equity 147,396 145,427 158,040
The accompanying notes form part of this statement and should be read in conjunction with it.12 Lotto New Zealand
STATEMENT OF PROSPECTIVE CASH FLOWS
For the period ending 30 June
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Cash flows from operating activities
Ticket sales 1,207,882 1,193,915 1,141,471
Net GST received - - (1,966)
Other receipts 6,650 7,250 7,152
Prize payments (710,120) (696,110) (666,948)
Lottery duty (70,540) (69,772) (67,032)
Retailers' commission (76,952) (74,207) (75,159)
Employee costs (16,505) (15,915) (14,529)
Other payments (58,394) (51,420) (57,645)
Net cash inflow from operating activities 282,021 293,741 265,344
Cash flows from investing activities
Sale of property, plant and equipment 120 200 138
Interest received 3,000 3,000 4,397
(Increase)/decrease in term deposits 3,000 (300) (25,674)
Purchase of property, plant and equipment (12,615) (5,329) (3,602)
Purchase of computer software (2,920) (3,521) (3,676)
Net cash inflow from investing activities (9,415) (5,950) (28,417)
Cash flows from financing activities
Discharge of annuity prize liabilities (50) (50) (100)
Payments to the New Zealand Lottery Grants Board (274,689) (278,642) (251,257)
Net cash outflow from financing activities (274,739) (278,692) (251,357)
Net increase/(decrease) in cash balances (2,132) 9,098 (14,430)
Opening cash and cash equivalents balance 62,184 53,086 67,515
Closing cash and cash equivalents balance 60,052 62,184 53,086
The accompanying notes form part of this statement and should be read in conjunction with it.Statement of Performance Expectations 2019 13
Notes to the forecast
financial statements
1. ACCOUNTING POLICIES Comparatives
The 30 June 2017 figures are those published in the
REPORTING ENTITY Annual Report 2016/17.
The New Zealand Lotteries Commission (Lotto NZ) is When presentation or classification of items in the
a Crown entity as defined by the Crown Entities Act financial statements is amended or accounting
2004 and is domiciled in New Zealand. Lotto NZ’s policies are changed voluntarily, comparative figures
ultimate parent is the New Zealand Crown. are restated to ensure consistency with the current
period.
Lotto NZ has determined that it is a profit-oriented
entity for the purpose of complying with the New
Zealand equivalent to International Financial Computer software
Reporting Standards and applies Tier 1 For- Computer software that is not integral to the
profit Accounting standards. They comply with operation of hardware is recorded at purchase
International Financial Reporting Standards (IFRS) cost less any amortisation and impairment losses.
and New Zealand equivalents to International Amortisation is charged to the profit or loss on a
Financial Reporting Standards (NZ IFRS). straight line basis over the software’s useful life of
three to seven years.
BASIS OF PREPARATION The useful life of computer software is reviewed at
least annually to determine if there is any indication
Accounting compliance of impairment. Where any software’s recoverable
These forecast financial statements comprise amount is less than its carrying amount, it is reported
prospective financial information and have been at its recoverable amount and an impairment loss
prepared in compliance with New Zealand Financial will be recognised in profit or loss.
Reporting Standard No. 42 – Prospective Financial
Statements (FRS-42).
Contingent assets and contingent liabilities
Contingent liabilities are disclosed if the possibility
Basis of measurement that they will crystallise is not remote. Contingent
The measurement base applied is historical cost assets are disclosed if it is probable that the benefits
modified by the revaluation of certain assets and will be realised.
liabilities as identified in this statement of accounting
policies. The accrual basis of accounting has been
Employee entitlements
used unless otherwise stated.
Employee entitlements to salaries and wages,
These financial statements are presented in New annual leave, long service leave and other similar
Zealand dollars rounded to the nearest thousand. benefits are recognised in the profit or loss when
they accrue to employees.
ACCOUNTING POLICIES Obligations for contributions to the defined
The accounting policies set out below have been contribution retirement plan are recognised in
applied consistently to all periods presented in these surplus or deficit as they fall due.
financial statements.
Termination benefits are recognised in surplus
or deficit only when there is a demonstrable
Changes in accounting policies commitment to either terminate employment prior
There have been no changes in accounting policies to normal retirement date or to provide such benefits
since the date of the audited financial statements for as a result of an offer to encourage voluntary
the year ended 30 June 2017. redundancy.14 Lotto New Zealand
Financial instruments Goods and Services Tax (GST)
Cash and cash equivalents, and term deposits All items in the financial statements are exclusive
Cash and cash equivalents include cash on hand, of GST, with the exception of amounts due from
bank accounts and deposits with maturities of up to retailers for current games, trade receivables,
three months from acquisition date. moneys received for games not drawn at balance
date, and trade creditors.
Term deposits represent deposits and other
instruments with maturities of more than three Inventories
months from acquisition date.
Inventories held for sale are recorded at the lower
It is Lotto NZ’s policy to restrict its investments to of cost (calculated using the first in, first out (FIFO)
instruments issued or guaranteed by either the New method) and net realisable value.
Zealand Government or registered New Zealand
The write-down of inventories to net realisable value
banks. Although investments are normally held to
is recognised as an expense in the period the write-
maturity, they are readily marketable and therefore
down occurs.
may be regarded as liquid assets. The value of
investments held fluctuates as changes in market
interest rates occur. However, the extent of such Interest
fluctuations in value is relatively minor. Interest income is recognised by accruing on a time
proportion basis the interest due for the investment.
Cash and bank balance figures include any cash
overdrafts to reflect a total cash position.
Estimates and assumptions
Cash equivalents and term deposits are recorded In preparing these financial statements, Lotto NZ
at cost. has made estimates and assumptions concerning
the future. These estimates and assumptions may
Annuity prize liabilities
differ from the subsequent actual results. Estimates
These represent prizes payable for Instant Kiwi and judgements are continually evaluated and are
games where the payments are spread over a based on experience and other factors, including
period of greater than 12 months from the date expectations of future events that are believed to be
the prizes are claimed. These liabilities are initially reasonable under the circumstances. There are no
measured at fair value using the effective interest estimates and assumptions that have a significant
rate method. Any changes in value are recorded risk of causing a material adjustment to the carrying
through the prize reserve account. amounts of assets and liabilities within the next
financial year.
Foreign currency transactions
Foreign currency transactions are translated into Critical judgements in applying
New Zealand dollars using the exchange rates accounting policies
prevailing at the dates of the transactions.
Lotto NZ has assessed the prize reserve fund as
a liability as itemised in the prize reserve account
policy below. Lotto NZ has also classified the
payment to the NZ Lottery Grants Board as a
financial activity in the statement of cash flows due
to this payment being a distribution of profits. No
other critical judgement has been made when
applying accounting policies.Statement of Performance Expectations 2019 15
Leases Disposals
Operating leases, where the lessor substantially Gains and losses on disposals are determined by
retains the risks and rewards of ownership, are comparing the proceeds with the carrying amount
recognised in a systematic manner over the term of of the asset. Gains and losses on disposals are
the lease. Leasehold improvements are capitalised included in the profit or loss.
and the cost is amortised over the unexpired
Subsequent costs
period of the lease or the estimated useful life of
the improvements, whichever is shorter. Lease Costs incurred subsequent to initial acquisition are
incentives received are recognised evenly over the capitalised only when it is probable that future
term of the lease as a reduction in rental expense. economic benefits or service potential associated
with the item will flow to Lotto NZ and the cost of the
time can be measured reliably. The costs of day-to-
Prize reserve account
day servicing of property, plant and equipment are
A prize reserve account (PRA) has been established recognised in the profit or loss as they are incurred.
by Lotto NZ, as required by the Rules for each
game, to ensure sufficient funding is available to Depreciation
meet advertised division 1 prizes, promotions and Depreciation of property, plant and equipment,
the cost of other prizes as considered appropriate other than freehold land, which is not depreciated,
by Lotto NZ. Contributions to the PRA include a is calculated on a straight-line basis so as to allocate
percentage of sales, prizes unclaimed after 12 the cost of the assets, or the revalued amount, over
months, and other amounts as set out in the Rules the shorter of the economic life or the relevant lease
for each game. periods as follows:
Lotto New Zealand does not necessarily have
sufficient funds available to meet prize payments Gaming computers, associated 4-7 years
without calling on the PRA. It has therefore classified equipment and integral software
the PRA as a current liability in accordance with NZ Other computer hardware 3 years
IAS 1 (paragraph 69); in particular it intends to settle
the liability as part of its normal operating cycle Leasehold improvements 1-9 years
and it does not have an unconditional right to defer
Draw equipment 5 years
settlement of the liability for at least 12 months after
the reporting period. Furniture and fittings 10 years
Motor vehicles 4 years
Property, plant and equipment
Office equipment 5 years
Items of property, plant and equipment are initially
recorded at cost.
Work in progress included in property plant and
Additions equipment is not depreciated.
The cost of an item of property, plant and
equipment is recognised as an asset only when it is The residual value and useful life of an asset is
probable that future economic benefits or service reviewed, and adjusted if applicable, at each
potential associated with the item will flow to Lotto financial year end. If an adjustment to the useful life
NZ and the cost of the item can be measured of an asset is made then the remaining book value
reliably. Work in progress is valued at costs less at that point is depreciated on a straight line basis
impairment. over the adjusted remaining life of the asset.16 Lotto New Zealand
Revenue and expense recognition 2. PRINCIPAL ASSUMPTIONS
Revenues and corresponding direct expenses for The principal assumptions made in arriving at
Lotto (including Lotto Strike and Lotto Powerball), the forecasts for the remainder of 2017/18 and for
Keno, Bullseye, and Play3 are recognised when 2018/19 are as follows:
each lottery is drawn. Instant Kiwi revenue and
corresponding direct expenses are recognised • There will be no major outages affecting our
when retailers activate ticket stock prior to sale to lottery systems
players, making those tickets part of a game. Instant • There will be no changes in lottery duty or
Play revenues are recognised at time of game taxation which will continue to be levied on Lotto
purchase via MyLotto. NZ on the same basis as at March 2018
• There will be no statistically abnormal series of
Taxation jackpot runs for Powerball. Major variations in
Lotto NZ is exempt from income tax by virtue of jackpotting behaviour may have a significant
Section 264 of the Gambling Act 2003. effect on actual financial results
• There will be no major global lotteries initiative
The following taxes are paid by Lotto NZ:
over the internet during 2018/19.
• Lottery duty of 5.5 cents in the dollar on GST-
inclusive sales
• Problem gambling levy on GST-inclusive sales
less prizes payable
• GST charged on lottery sales less related prizes
payable
• Fringe benefit tax
• Non-resident withholding tax.Statement of Performance Expectations 2019 17
3. Revenues
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Sales including GST 1,282,546 1,268,586 1,206,657
GST 74,664 74,671 72,195
Sales excluding GST 1,207,882 1,193,915 1,134,462
Other revenue 9,650 10,250 11,346
Total revenues 1,217,532 1,204,165 1,145,808
4. Cost of sales
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Lottery duty 70,540 69,772 66,367
Problem gambling levy 2,215 2,219 2,238
Retailers' and interactive commission 76,952 74,207 74,355
Prizes paid and payable 658,880 622,462 584,021
Prize reserve account 51,240 73,648 67,985
Interest transferred to prize reserve account 1,000 1,000 1,151
Ticket costs 6,658 5,214 5,175
Cost of goods sold to retailers 450 450 450
Total cost of sales 867,934 848,973 801,742
5. Promotion and retail support
2019 2018 2017
Budget Projection Actual
$000 $000 $000
Media advertising 14,024 12,764 12,420
Media production and draw 6,904 4,892 7,184
Point of sale, game stationery and distribution 3,381 3,004 3,122
Retail revitalisation - (6) 2,553
Promotion and retail support other 3,079 2,327 3,874
Total promotion and retail support 27,389 22,981 29,153
Retailer revitalisation costs for 2016/17 are related to costs associated with the ‘Lotto NZ’ rebranding of our retail network.Statement of Performance Expectations 2019 19
Directory
AUCKLAND OFFICE BOARD MEMBERS
Level 1, 73 Remuera Road Matthew Boyd
Remuera, Auckland 1050 Chair
PO Box 8929, Symonds Street
Auckland 1150 Tony Mossman
Deputy Chair
Telephone 09 356 3800
Monique Cairns
Kim Gordon
WELLINGTON OFFICE
Level 1 Keiran Horne
The Woolstore Design Centre
258 Thorndon Quay
Logan Sears
PO Box 9448
David Tapsell
Wellington 6011
CHRISTCHURCH OFFICE SENIOR MANAGEMENT
66-68 Mandeville Street Chris Lyman
PO Box 8609 Chief Executive
Riccarton
Christchurch 8011 Dan Balasoglou
Chief Financial Officer
Ben Coney
CONTACT Chief Innovation and Technology Officer
Website mylotto.co.nz
Email info@lottonz.co.nz Kathryn Haworth
Telephone 0800 695 6886 General Manager, Strategy
Sonja Johnson
General Manager,
People and Culturemylotto.co.nz
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