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nSW lotterieS AnnuAl report 2009

This annual report summarises the performance and activities of NSW Lotteries Corporation for the financial year ended 30 June 2009. It analyses our achievements against the performance measures and targets in the NSW Lotteries Business Plan and the annual Statement of Corporate Intent negotiated with the Corporation’s Shareholder Ministers.

At the end of an extraordinary year, we report openly on the performance of our product range, covering the highs and the lows of operating lottery games. We outline what we did for players and agents and what they think of the Corporation’s services. In addition, the report clearly states how we performed against Our Mission, to ‘Benefit the people of NSW by maximising the return to our shareholders through providing quality lottery products and services’. We believe that the outstanding results attained during the past year validate our Vision ‘To be Australia’s most successful lottery operator’.

The Corporation’s operational framework is detailed in the report, which is a key accountability document in reporting on the management of its activities. It provides all key stakeholders, including the Shareholder Ministers, the Portfolio Minister, the NSW Treasury, our players and agents, as well as the general community, with timely access to relevant information concerning the financial and business performance of the Corporation in carrying out its role.

This annual report was produced in accordance with the requirements of the Annual Reports (Statutory Bodies) Act 1984 and Annual Reports (Statutory Bodies) Regulation 2005. The report has been independently audited to ensure that it complies with all relevant annual reporting statutory requirements and disclosure guidelines.

An index is provided at the back of this report to assist in searching for specific information. For ease of reference, a glossary of technical and industry terminology is also provided at the back of the report.

We trust that you will find this report informative and helpful in gaining a better appreciation of our business and we welcome your feedback.

our viSion

To be Australia’s most successful lottery operator.

our miSSion

Benefit the people of NSW by maximising the return to our shareholders through providing quality lottery products and services.

our vAlueS

Integrity

We maintain the highest standards of honesty and fairness individually and collectively – without compromise.

Teamwork

We work as a team where every member is crucial to success.

Excellence

We believe in excellence in everything we do.

Innovation

We embrace change and continuously improve the way we do things.

Responsibility

We are all accountable for our actions.

About thiS report

contents

2 Letter to shareholder Ministers

3 Quick Facts About nsW Lotteries

4 Results

5 A Message from the chairman and chief executive officer

9 Financial overview 2008/09

10 Key Facts on our Games For 2008/09

11 A brief history

12 the Year in Brief

16 Who We Are and What We DoWho We Are

What We Do – Our Charter

Our Games

Business Planning

Balanced Scorecard for Fiscal 2009

20 our Players Our games continued to perform way above expectations

How our games performed – at a glance

Looking ahead

Player Services

32 our RetailersThe Retail Network

Agency Services

38 our BusinessResponsible Gaming

The Gaming System

Corporate Systems

Business Improvement

Business Continuity Plan

46 our shareholders The Management Structure

Corporate Governance

The Board of Directors

The Executive Management Team

Risk Management

Insurance

A Sustainable Environment

58 our staff New Information Channel

We Listened to Our Staff

Cross Team Work Opportunities

Involving Our Staff In Decision Making

Review of Values

Learning and Development

Rewarding Our Staff

Occupational Health and Safety

Human Resource Statistical Report as at 30 June 2009

65 Financial Report

93 statutory Reporting Appendix

100 Glossary

102 Index

104 Access to services

NSW Lotteries Annual Report 2009 | contents 1

2

Dear Gentlemen

Report of Performance for the Year Ended 30 June 2009

We have pleasure in submitting NSW Lotteries Corporation’s Annual Report for the year ended 30 June 2009 for presentation to Parliament.

Our results confirm NSW Lotteries as the most successful lottery operator in Australia. As a result of a year of exceptional achievements for the organisation, which included record sales exceeding $1.3 billion, the Corporation was able to improve on the accomplishments of last year by delivering:

• Recordprofits;

• RecordrevenuestoGovernment;

• Recordstaffproductivity;and

• Recordcommissiontoourretailnetwork.

ThisAnnualReportprovidesadetailedinsightintothekeybusinessactivitiesoftheorganisationandthestrategiesunderpinning this year’s outstanding results.

The report has been prepared in accordance with the relevant provisions of the State Owned Corporations Act 1989 and the Annual Reports (Statutory Bodies) Act 1984.

In addition, the Auditor-General of NSW has certified the Corporation’s Financial Report without qualification.

For the second year in succession, we are pleased that the high standard for which we aim in reporting was again recognised when the Corporation received a gold award for our 2007-08 annual report from the Australasian Reporting Awards.

John Bagshaw Nick NichlesChairman Chief Executive Officer

LetteR to shARehoLDeR MInIsteRs | NSW Lotteries Annual Report 2009

LetteR to shARehoLDeR MInIsteRs

The Hon. Eric Roozendaal, MLC Treasurer

The Hon. Joseph Tripodi, MP Minister for Finance Minister for Infrastructure Minister for Regulatory Reform Minister for Ports and Waterways

4 ResultsResults for 2008/09

Snapshot Of Key Performance Indicators For The Last 7 Years

5 A Message from the chairman and chief executive officer

9 Financial overview 2008/09

10 Key Facts on our Games for 2008/09

11 A brief history

12 the Year in BriefOur Players

Our Retailers

Our Business

Our Shareholders

Our Staff

16 Who We Are and What We DoWho we Are

What We Do – Our Charter

Our Games

Business Planning– Key Areas For Success

– Corporate Objectives for 2008/09

– Our Business Planning Process

– Corporate Objectives for 2009/10

– Balanced Scorecard for 2008/09

QuIcK FActs ABout nsW LotteRIes

3NSW Lotteries Annual Report 2009 | QuIcK FActs ABout nsW LotteRIes 3

4 QuIcK FActs ABout nsW LotteRIes | NSW Lotteries Annual Report 2009

ResuLts FoR 2008/09

PeRFoRMAnce MeAsuRe tARGet ResuLt

Sales (including GST, excluding agent commission) $1,160.00m $1,327.62m$167.62m (14.5%) above target

Profit from Continuing Operations Before Significant Item and Income Tax Equivalent

$48.05m $67.40m$19.35m (40.3%) above target

NSW Government Duty $293.74m $335.01m

Dividends and Income Tax Equivalent $48.05m $67.40m

Total $341.79m $402.41m

Return on Average Shareholder Equity (%) 58.16% 90.42%

Return on Average Assets (%) 16.82% 19.58%

snAPshot oF KeY PeRFoRMAnce InDIcAtoRs FoR the LAst 7 YeARs

cAteGoRY 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Sales ($M)** 1,092.9** 1,108.9** 1,116.0** 1,133.2** 1,124.4** 1,211.4** 1,327.6**

Total Government Revenue ($M)1 373.6** 371.8** 375.8** $381.6** $381.0** $411.53** $457.24**

Return on Average Shareholder Equity (%)

60 67 66 69 65 71 90

Return on Average Assets (%) 17 19 19 19 19 20 20

Selling System Up-time (%) 99.99 99.99 100.00 99.99 99.99 99.99 99.99

Average Staff Number 195 183 176 172 170 164 166

Sales per Employee ($M) 5.6 6.1 6.3 6.6 6.6 7.4 8.0

** Includes GST/Excludes Agent Commission1 Total Government Revenue includes Duty, GST, Dividends and Income Tax Equivalent payments, and excludes payments to the ACT Government

As a State Owned Corporation, NSW Lotteries is accountable to its Shareholder Ministers for its commercial performance. A Statement of Corporate Intent (SCI) is negotiated annually between NSW Lotteries and the Shareholder Ministers and sets out the agreed performance measures and financial targets to be achieved by the Corporation each financial year. Key targets and results for 2008/09 were:

totAL Revenue to nsW GoveRnMent ($M)* PRoDuct sALes ($M)†

* Excludes GST By agreement between the Commonwealth and State Governments, with the introduction

of the GST, the rate at which NSW Lotteries pays duty to the NSW Government was reduced to compensate for the GST payable to the Commonwealth Government.

1 Included a Special Dividend of $10m

† Includes GST

ResuLts

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402.

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334.

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0

326.

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7.6

1,12

4.4

1,13

3.2

1,11

6.0

1,10

8.9

1,09

2.9

† Includes GST

NSW Lotteries is able to report another year of record sales, alongside yet another set of the best ever financial and business results achieved by the Corporation.

Long-serving Chief Executive Officer, Michael Howell, was succeeded in January 2009 by former Director of MarketingandSales,NickNichles,who continued to build on the amazing success story of NSW Lotteries.

Another year of record resultsIn 2008/2009 NSW Lotteries achieved:

• Recordsalesof$1,327.62million,against a target of $1,160 million.

• Recordprofitof$67.40million,against a target of $48.05 million.

• RecordtotalreturntoGovernmentof$457.24million(includesGST);

• Recordallocationstoprizestotalling$807.06million;

• Recordemployeeproductivity,asmeasured by sales of $8.00 million peremployee;and

• Recordrevenuesearnedbyourretail partners of $98.92 million.

Australia’s most successful lottery operatorBy any objective measure, NSW Lotteries is delivering on its vision to be the most successful lottery operator in Australia.

Not only do we regularly achieve an exceptional share of national sales, but we offer our players the most diverse range of products and the best total packageofprizeoffersinthecountry.

Most importantly we temper our efforts to create awareness and generate excitement with a strongly focused responsible gaming program.

Jackpots boost results againLast fiscal year, our Annual Report outlookcautionedthat,whilebigjackpotswouldcontinuetooccur,we could not necessarily expect to seethelongjackpotrunsandbrokenrecords of 2008 repeated anytime in the near future.

Happily, we did it all over again in 2009, only on an even bigger scale!

This year the record $106.5 million OZLottojackpotgotalltheheadlines,delivering a June month that none of us will ever forget… and neither will the two winners who each received an unbelievable $53 million dollars!

RIGHT:John Bagshaw, Chairman.

FAR RIGHT:Nick Nichles, Chief Executive Officer.

5NSW Lotteries Annual Report 2009 | QuIcK FActs ABout nsW LotteRIes

A MessAGe FRoM the chAIRMAn AnD chIeF executIve oFFIceR2009 – DeLIveRInG MAxIMuM vALue In AnotheR WInnInG YeAR


EachweekoftherecordOZLottojackpotrun,therelativemeritsofdifferentpointsinthejackpotsequence were carefully considered by the Australian lottery operators in consultation, before each new prize level was guaranteed.

While all the attention was on the jackpotasitgrew,weshouldn’tforgetthatthejackpotrungeneratedmillionsof winners of lower divisional prizes.

An attractive portfolioIt is important to remember that a fewbigjackpotsalonecannotdeliverthe regular play experience that the majorityofcustomersarelookingfor.

The NSW Lotteries games portfolio has been carefully crafted to offer a wide range of prize offers and price points to suit the large cross-section of the community who enjoy our games.

NSW Lotteries proudly offers its players the most diversified portfolio of games of any lottery operator in Australia. Some players enjoy having the same numbers on Lotto style games,weekin,weekout,andwouldneverthinkofmissingadraw.Yetother players hop from game to game, lookingforthebestvalueonoffer,

allowing the selling system to choose their numbers for them. Still others enjoy the thrill of an instant win on an Instant Scratchie, or the fun of playing ourheritagegame,LuckyLotteries.

Wecontinually“tweak”andtailorgames to meet the different requirements of each player group, to ensure that the overall portfolio remains fresh and attractive.

Game enhancementsThere were a number of changes made to our Lotto game this year. The Monday and Wednesday Lotto draw was extended to players in Victoria, Tasmania and the Northern Territory for the first time. In addition, the entry price of the Monday/Wednesday and Saturday games was increased. These changes provided bigger prize pools for all players as well as a range of game enhancements including a higher guaranteed minimum first division prize of $1 million in our Wednesday Lotto game and increased value in lower division prizes. The changes alsocontributedtolargerjackpots and regular Superdraws.

Another significant game change this year was the enhancement of theLuckyLotteriesgames.Thiswas

done after extensive consultation withplayersthroughmarketresearch.We’ve introduced strategic changes to this product many times over the years tomakesurethegamemaintainsitsappeal to players in the face of the soaringjackpotsintheportfolioofLotto style games.

We plug a revenue gapWhilst NSW residents have been able to purchase Lottery products over the Internet for over 10 years, the NSW Government did not receive appropriate duties, estimated at up to $2.5 million per annum, as the sales were lodged with interstate lottery operators.

The launch of our Internet selling site on 4 December 2008, in partnership with our long term Mail Sales Agency, TMS Global Services (NSW) Pty Ltd, has provided NSW customers with a convenient way to purchase NSW Lotteries products. This new sales channel is especially convenient for customers living in remote areas, for those who cannot get to their local agent during normal trading hours, or on those occasions when the local agency is closed. The product range is currently limited to Lotto, OZ Lotto, Powerball and Pools, but will be

This year, we achieved a record sales of $1,327.62 million against a target of $1,160 million.


expandedtoincludeLuckyLotteriesandLottoStrikeduring2009/10.

Sales via the NSW Lotteries website exceeded expectations, reaching $5.38 million during the first seven months ofoperation,thankslargelytotherecordOZLottoJackpotrun.

While our sales rely heavily on the face-to-face contact between player and agent, the Internet channel is expected to generate strong incremental sales in the coming years. However, NSW Lotteries will always ensure that players have equal information about all sales channels so that they can purchase in accordance with their individual needs and preferences.

Role of a lotteryThe strong public interest created by theyear’sbigjackpotsthrowsintorelief some core issues about the role of a lottery.

It goes without saying that a lottery operator must be scrupulously fair in ensuring every entry has an equal chance of winning and in providing players with all the information they need to form a realistic appraisal of their chances.

By their very nature, lotteries are really just giant raffles, relying on the contribution of all players to generate prize pools big enough to offer attractive prizes.

Whileonlyahandfulwillbeluckyenough to win the top prize, millions more will win smaller divisional prizes.

Players also recognise that, even if they don’t win, their money will be used to fund important community infrastructure such as schools, hospitals and roads.

These features of lottery play have generated loyal player involvement and widespread support for our games for more than seven decades.

Proposed licence changesThere has been some political and community debate about possible changes to licence arrangements and new ownership models that may apply to NSW Lotteries in the future.

Likeanybusiness,adecisiononcontinuedownership or divestment of an asset is entirely a matter for the business owners, in our case the NSW Government.

It should be noted that during the year, the Government proposed a plan whereby eligible organisations may have the opportunity to bid for a long term exclusive licence to distribute NSW Lotteries products.

While the profit from operating a lottery would go to a prospective buyer of the licence, under this model, the lion’s share of revenue – about 26% of sales – would continue to flow to the Government. The brands and intellectual property of NSW Lotteries would be retained by the Government.

This will allow NSW Lotteries to continue to generate a return for community benefit into the future.

A focused teamThequestionmarkoverthefuturelicensing arrangements has naturally had the potential to distract the Corporation from the main game.

Wewanttotakethisopportunityto say that the NSW Lotteries Team has not only maintained a strongworkfocusand“businessasusual”attitude,ithasexceededallexpectations in responding to the challenges it faced.

Thisisevidenceofthestrongworkethic, dedication and professionalism of the entire team.

The team’s enthusiasm was matched by that of the 10,000 agents and staff who manage and run almost 1,600 lottery outlets around New South Wales and the Australian Capital Territory.

This year, more than ever, the biggest taskforagentswassimplytomanagethe constant stream of customers. Overall, this year there were in excess of 286 million transactions processed through our gaming system, with an unbelievable 2.7 million processed on 24 December 2008 as players rushed to makelastminuteChristmaspurchases.


The broad customer base and low transaction value – $5 here and $10 there – ensured that although record sales were achieved for the year, outlay was widely spread, minimising any possible negative social impact.

But it also ensured that agents were run off their feet. It is a sign of the character of our agents, and the excellent selection and training supportingthenetwork,thatthepeakdemands were met with good grace and tireless enthusiasm and patience.

A whole segment of the community who weren’t traditional lottery players, including a generation of younger players, was encouraged to sample lottery play.

A big first division lottery prize alone cannot guarantee continued play. This can only be achieved by regular prize wins in the lower divisions, as well as a positive experience at the retail level whenbuyingandcheckingentries.

TheNSWLotteriesretailnetworkdelivered this positive experience in spades, and will no doubt reap the benefits from this excellence in service for some time to come.

Guided by strong valuesDuring the year the whole team at NSW Lotteries was involved in a fundamental review of the Corporation’s core values.

The degree of commitment and ownership felt by staff is witnessed by the feedbackfromonestaffmemberwho

said that an icon, developed to symbolise our core value of Innovation, should be represented by an energy saving globe, rather than the traditional light bulb.

Of course, that is exactly what we now use to portray this value, along with similarly carefully selected images forourothervaluesofTeamwork,Excellence, Responsibility and Integrity.

The enthusiasm with which the values have been embraced by staff shows that theteamislookingforward,andreadytoface the challenges of the future.

Reward for retailersApart from the relatively small percentage of entries sold directly by NSW Lotteries, or over the Internet, everylotteryticketsoldmustbemanaged by an agent before the details are recorded at NSW Lotteries.

As our business partners, lottery retailerssharethattaskofmeetingtherequirements of our mutual customers andweseektomaximisetheirrewards for doing so.

Commission payments of $98.9 million in 2008/09 were up 8.7% on the previous year, bringing the growth in agent commission over the last ten years to 72%.

This represents almost twice the growth of sales during the same period, reflecting a deliberate strategy to reward retailers for excellent service.

Looking aheadWefinishedoffaremarkableyearwitharemarkablejackpot–theOZLottodrawof 30 June 2009 with a first prize offer of $106.5 million. While we can expect morebigjackpotsinthefuture,itwillbe up to the vagaries of the games, to determine how big they are and when we will see them.

We are confident that we have the team,theskillsandthedeterminationto once again rise to the challenge.

Moreover, we can say with certainty that, whatever the future holds, NSW Lotteries is fulfilling its Mission to benefit the people of NSW by maximising the return to our shareholders through providing quality lottery products and services, and achieving its Vision to be the best lottery operator in Australia.

John BagshawChairman

Nick Nichles Chief Executive Officer

RIGHT:Staff participated in a celebratory morning tea to launch the revised Corporate Values.


Once again, NSW Lotteries achieved a new record profit before income tax equivalent expense in fiscal year 2009. The $67.4 million result surpassed the previous year’s then record by a massive 17.4% (or $10.0 million).

This outcome flowed from record sales revenues which increased by 9.6% from $1.25 billion to $1.37 billion (excludingGST;includingretailercommissions) that produced a gross profit of $120.2 million, up $10.8 million on the previous year. Non-sales related revenue items rose by $0.5 million.

Expenses increased by almost $1.3 million (1.7%) mainly due to game development costs and employee

related expenses. The Corporation’s relative efficiency continued to improve as expenses rose by less than the Consumer Price Index and by less than one-fifth of the rate of the increase in sales revenues.

Based on these results, NSW Lotteries was able to deliver its highest ever total return to the NSW Government of $402.4 million (excluding GST) in the form of duty ($335.0 million) and income tax equivalent and dividends (totalling ($67.4 million). This total return represented an increase of $39.1 million on the $363.3 million generated in respect of the previous year.

At the end of the fiscal year, cash and cash equivalent assets were $37.0 million, increasing $6.8 million during theyear.Workingcapitalincreasedmarginally by $0.3 million over the course of the period and stood at $11.2 million at year end.

Buoyed by its 2008/09 results, the outlookforNSWLotteries’futurebusiness activities and financial performance continues to be strong.

FInAncIAL oveRvIeW 2008/09

PRoFIt BeFoRe IncoMe tAx eQuIvALent exPense ($M)

exPenses ($M)

BELOW:Luck was definitely on the side of this group of players who were one of six winners in a Saturday Lotto Superdraw – their syndicate collected $769,230.77 (courtesy of the Daily News).

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KeY FActs on ouR GAMes FoR 2008/09

sALesGAMe MAtRIx

no. oF MILLIonAIRes & 1st PRIze WInneRs

PRIzes Won In nsW

totAL no. WInneRs

LARGest FIRst / JAcKPot PRIze

Lotto $202.2m 6 from 45 23 millionaires

78 Division One winners

$113.55m 2,570,220 $6m

Lotto Strike $9.8m First 4 Lotto numbers

3Strike4winners $6.14m 834,028 $0.9m

Saturday Lotto

$285.9m 6 from 45 24 NSW millionaires

59 NSW Division One winners

$169.03m 2,538,939 $30m

OZ Lotto $359.0m 7 from 45 4 NSW millionaires


$152.00m 6,635,204 $106.5m

Powerball $207.5m 5 from 45 & 1 from 45 drawn by a 2nd machine

9 NSW millionaires


$124.73m 2,867,787 $20m

Instant Scratchies

$150.1m Game Pricepoints:

$1

$2

$3

$5

$10

Number of Game Top Prizes:

$1 22

$2 24

$3 19

$3 Merchandise 1

$3 Made For Life 3

$5 10

$5 Win For Life 4

$10 11

$97.58m 13,526,879 $1–$20k

$1 – $50K

$2–$50k

$3–$75k

$3 – V8

$3–Made4Life–$600k

$5–$100k

$5 – Win 4 Life – $1.125m

$10–$50k

$10–$250k

Lucky Lotteries

$106.5m $2JackpotLottery – 225,000 ticketsfromDraw 9258

(previously 200,000)

237 x 1st Prize winners

2x$2JackpotLotterymillionaires

$72.68m 9,646 Prizes in every $2 JackpotLottery draw from Draw 9258. (previously 10,147)

• The1stprizeof$100,000 was won in each of the 237 draws

• $16.03mJackpotwaswon in September 2008 and $7.03m won in January 2009

• Jackpotstoodat$7.52m as at 30 June 2009

$5JackpotLottery – 180,000 ticketsfromDraw 683

(previously 160,000)

13 x 1st Prize winners

1x$5JackpotLotterymillionaire

12,880 Prizes in every $5 JackpotLottery draw

• The1stprizeof$200,000 was won in each of the 13 draws

• $3.55mJackpotwaswon in September 2008

• Jackpotstoodat$2.36m as at 30 June 2009

6 From 38 Pools

$6.6m 6 From 38 4 Division One winners $2.35m 84,455 $1.5m

Total $1,327.6m $738.06m


A BRIeF hIstoRY

1931• The Lotteries Act was proclaimed – 22 June.• The first State Lottery went on sale – 10 August.• The first State Lottery was drawn with a first prize of £5,000 – 20 August.

1947 • A Special Lottery commenced with a first prize of £12,000.

1954 • Mammoth Lotteries were introduced with a first prize of £30,000.

1956 • AJackpotprizewasaddedtotheMammothLottery.

1957 • OperaHouseLotteryticketswentonsaleforafirstprizeof£100,000.

1963 • ThenewJackpotLotteriescommenced.

1974 • The first $10 Lottery went on sale offering a first prize of $250,000.

1975 • The Half-Million Dollar Lottery was introduced.

1979 • Monday Lotto was introduced with a 6 from 40 game matrix.

1982 • Instant Scratchies launched.

1984 • Lottowasavailabletwiceaweek–MondayandWednesday.

1986 • The Million Dollar Lottery and a $20 Peace Lottery were introduced.

1987 • A new computer gaming system was introduced, which allowed all agencies to sell Lotto on-line.

1989• Lotto was changed to a 6 from 44 game matrix and the Wednesday draw was moved to Thursday. • PlayerswereabletoplaytheMondayandMidweekgamesseparately.• NSW Lotteries was granted a licence to sell 6 From 38 Pools – the first national game.

1991 • NSWLotterieswas“commercialised”andaBoardofManagementwasappointed. The inaugural meeting of the Board was held on 14 March 1991.

1993 • The $20 Olympic Bid Lottery was launched.

1994 • OZ Lotto was introduced – the second national game.

1995 • LottoStrikewasintroduced–MondayandThursday.

1996• TheMidweekLottogamechangedbacktoWednesdaynightandPowerballwasintroducedon

Thursday night – the third national game.• ThelastMillionDollarLotterywasdrawnandreplacedbyanewLucky7lotterygame.

1997 • NSW Lotteries was incorporated as a State Owned Corporation.

2000• A new state-of-the-art Gaming System was implemented.• Saturday Lotto, the fourth national game, was introduced.• Lucky7wasdiscontinued.

2001• As at 30 June, NSW Lotteries becomes the first Australian lottery operator to achieve $1 Billion dollars

in sales during a financial year.• In August, NSW Lotteries celebrated 70 years of operation.

2003• Asingleprizeof$13.7millionwaswoninthe$2JackpotLottery–thebiggestprizeeverwoninan

Australian Draw Lottery. • A$30millionPowerballjackpotwaswon–thebiggestsingleprizeeverinNSW.

2004 • Lotto – Monday and Wednesday – was changed to a 6 from 45 game matrix.• LottoStrikewasextendedtoincludeaSaturdaydrawaswellasMondayandWednesday.

2005 • OZ Lotto was changed to a 7 from 45 game matrix.

2006• The sale of Lotto – Monday and Wednesday – is extended to South Australia and Western Australia.• Instant Scratchies was restructured to return more prizes to players.• A new sales record is set and NSW Lotteries celebrates 75 years of serving the community of NSW.

2007 • NSW Lotteries launches the Players 1stcustomercareprogramtohelpplayersknowexactlywhattheirrights are and how they can manage their entries to ensure they receive all prize-money they are entitled to.

2008 • InJunePowerballjackpottedtonearly$58million,whichwasthelargestprizeeverofferedinAustralianlotteriesat that time.

• A new sales record is set at $1,211.43 million for the year ended 30 June 2008.• Monday and Wednesday Lotto is extended to include players in Victoria, Tasmania and the Northern Territory.• NSW Lotteries commenced direct selling via the Internet to registered NSW Lotteries players on 4 December 2008.

2009 • OZLottosetsanewrecordinAustralianlotterieswithajackpotprizereaching$106.5millioninthedraw of 30 June 2009.

• A new sales record is set at $1,327.6 million for the year ended 30 June 2009.


the YeAR In BRIeFouR PLAYeRsOBJECTIVE:

• Toincreasesales.

• ToincreasetheCorporation’sshareoftotalBlocsales.

• ToimprovethereturnonMarketinginvestment.

Measure Target Result

Total Sales $1,160.0 million $1,327.6 million ✔

Salesfromthetraditionalnetworkofagents $1,151.3 million $1,322.2 million ✔

Sales from 7-Eleven outlets (full roll-out) $2.7 million Included in traditional networksales

–

Sales from the Internet $6.0 million $5.4 million ✘

BlocMarketShare–combinedSaturdayLotto/OZLotto/Powerball

24.9% 25.2% ✔

Key Activities and issues Outlook and Future Challenges

• Sales totalled $1,327.6 million (GST inclusive) – $116.2 million (or 9.6%) up on the previous year

• Prizes totalled $738.1 million

• Combined turnover for Lotto style games of $1,064.4 million – $104.7 million (or 10.9%) up on the previous year

• LuckyLotteriessalesof$106.5million– $2.5 million (or 2.4%) up on the previous year

• Instant Scratchie sales of $150.1 million – $8.5 million (or 6.0%) up on previous year

• 6 From 38 Pools sales of $6.6 million – $0.5 million (or 8.2%) up on previous year

• Focusing on enhancing existing games

• Researching new games

• ItisanticipatedthattheincidenceofPowerballjackpotswillbetter reflect statistical probability and will be evident in the level of sales

• StrongsalesareforecastforLuckyLotteriesduetothebenefits of the recent game restructures

• Theoutlookfortheoverallportfolioremainspositive,butstill with a degree of caution due to the continuing uncertain economic conditions

OBJECTIVE:

• Toincreaseaccesstoourproductsbytradingattimes,inlocationsandutilisingpaymentmethodsconvenienttoplayers.

• Tomaintainthehighlevelofcustomerconfidenceinouroperations.


Numberoftraditionalnetworkon-lineagencies 1,570 1,552 ✘

Number of 7-Eleven outlets 103 17 (trial) ✘

Number of complaints from players <200 78 ✔

CustomerHotline–averagetimetakentoanswercalls <15 seconds 5.25 seconds ✔

Players Club Membership 875,000 889,308 ✔

Number of registered players email addresses recorded in database

250,000 283,836 ✔


• Membership of the Players Club grew to more than 889,000 members.

• Internet selling, direct to NSW Lotteries registered players, commenced on 4 December 2008

• October 2008 saw the launch of the Corporation’s Customer Relationship Management Program

• More than 437,000 calls were received through the Call Centre

• Nearly26,000NetworkSyndicateswereofferedto players

• A new ‘Prize Claim Kit’ was launched to further improve player privacy in the case of major prize wins and reduce the involvement of retail staff in the prize claims process

• Improvingaccesstoourproductstomakethemmoreconvenient to players

• Retaining existing customers while attracting new players

• Continual improvement of service delivery

QuIcK FActs ABout nsW LotteRIes | NSW Lotteries Annual Report 200912

ouR RetAILeRsOBJECTIVE:

• Toensurewemaintainamotivatedtraditionalretailnetwork.

• Toincreasesalesfromthetraditionalretailnetwork.

• Toensureretailersmeetourstandardswhensellingourproductsandservicingourcustomers.

• Tomaximisetheeffectivenessofthenewretailertelecommunicationsnetwork.


Agent Satisfaction Survey 95% 90% ✘

Percentage of agents reaching individual sales targets 60% 75.4% ✔

Percentage of agents with Business Plans 90% 96.7% ✔

Value of Commission earned on sales $87.5 million $98.9 million ✔


Customer Satisfaction Survey Not scheduled Not scheduled

AgentHotline–averagetimetakentoanswercalls < 15 seconds 9.5 seconds ✔

Number of breaches of statutory requirements by agents 0 0 ✔

Networkavailability 99.93% 99.95% ✔


• 1,552 on-line and 31 Instant Scratchies retail outlets

• Record commission on product sales exceeded $98.9 million – 8.7% up on previous year

• Over 9,900 visits to agencies by Territory Managers

• 1,271agencies(or80%ofthetotalnetwork)participatedin the agent reward and recognition program, ‘Top Shop’

• Over 970 agencies now using ‘iLearn’ – the dedicated on-line training program. As at 30 June 2009, 541 agencies (or 34.5%ofthenetworkhadcompletedthe‘iLearn’program.

• 85%ofthenetworkofagentsnowshowcasetheCorporation’s latest retail image

• 90% of agents are extremely satisfied or very satisfied with the service provided by the Corporation

• Over1,100promotionswereconductedatkeyretailoutlets

• Aiming to deliver another year of record commissions

• Buildingonourwell-establishedretailnetworkbyidentifyingnew retail outlets in high traffic areas

• Introduction of a niche distribution channel through 7-Eleven outlets


ouR BusInessOBJECTIVE:

• Toberecognisedasaresponsiblegamingoperator.


Compliance with the Corporation’s Responsible Gamingpackage

100% 100% ✔


• The Corporation continued to ensure that there were no negative impacts from the sale and promotion of its range of products

• NSW Lotteries’ comprehensive Responsible Gaming policies were reviewed and amended and met all legislative requirements

• Theagencynetworkadheredtoallregulatoryrequirements

• The Australian Lottery Blocs Code of Practice was updated as well as the NSW Lotteries Advertising Code of Practice

• The“PlaySmart”brochurewasreviewedandrenamed“GamblingHelp”

• NSW Lotteries achieved accreditation at the first of four levels of the World Lottery Association’s corporate social responsibilityframework–abestpracticebenchmarkforlottery operators around the world

• We will continue to refine our Responsible Gaming Program to ensure it meets regulatory requirements and encourages the responsible promotion and play of NSW Lotteries’ products

• WewillseektoachieveLevel2oftheWorldLotteryAssociation’scorporatesocialresponsibilityframework

OBJECTIVE:

• Tolaunchthenew(retailertelecommunication)network.

• Improvetheefficiencyandeffectivenessofbusinessprocesses.


Gaming System uptime 99.99% 99.99% ✔

Terminalavailability–MeanTicketsPrintedBetweenFailures 250,000 210,231 ✘

User Satisfaction Survey with Service Management System 66% Scheduled for 1st Q 09/10

✔

Profit per employee $0.29 million $0.41 million ✔


• The on-line gaming system achieved 99.99% availability during available selling hours

• Thetelecommunicationsnetworkrecorded99.95%uptime

• Over 286 million transactions were processed through theon-linegamingsystem-peakdaywas24December2008 when over 2.7 million transactions were processed

• Software releases provided a range of system and game improvements

• Commencedupgradingthetelecommunicationsnetworkthat connects retail agents to the gaming system

• AnelectronicWorkflowsystemwasintroducedwhichhasimprovedthespeedofdecisionmakingwithin the Corporation

• A Service Management System was developed to provide more efficient handling of all telephone calls into the organisation

• nswlotteries.com.au attracted 12,052,567 user sessions during the year – 15% up on the previous year

• Successfully tested the Corporation’s Business Continuity Plan

• Completionoftheupgradeofthetelecommunicationsnetwork

• Continuing improvement in our core activities


ouR shARehoLDeRsOBJECTIVE:

• Toimprovelong-termshareholdervalue.


Duties paid to Governments $300.67 million $344.09 million ✔

Profit from ordinary activities before significant items and Government Tax Equivalent

$48.05 million $67.40 million ✔

Return on Average Assets 16.82% 19.58% ✔

Return on Average Shareholders’ Equity 58.16% 90.42% ✔

Operating expenses to sales 6.20% 5.15% ✔

Profit to sales 4.14% 5.08% ✔


• Total revenues exceeding $457.2 million were paid/payable to the NSW Government in the form of duties, tax equivalents, dividends and GST

• Employee efficiency, as measured by total sales per employee, increased to $8 million

• In an uncertain economic environment, the occurrence of jackpotsinthevariousgameswillagainbecrucialtogrowth

• Aiming to achieve the agreed return to Government

• We will continue to focus on our profitability and costs

• Changes to our games will enhance their competitive positions and build on their unique strengths

ouR stAFFOBJECTIVE:

• Tohaveanengaged,motivatedandskilledworkforcethatcontributespositivelytoourcommercialsuccess.

• Toengenderagreatercommercialfocusinourworkforce.


Staff Turnover 5-10% 7.82% ✔

SickLeaveperemployee ≤5 days 5.75 days ✘

Employee engagement 75% 71.9% ✘


• Internal communications have been improved

• A Staff Engagement Survey was conducted to gauge employee attitudes and opinions

• We reviewed our Corporate Values

• A second Management Development Program commenced

• A range of health programs continued throughout the year including influenza vaccinations, healthy living newslettersandergonomicworkplaceassessments

• Wewillcontinuetodeveloptheskillsnecessarytomeetthefuture needs of both the Corporation and its employees



Who We AReFollowing the passage of the State Lotteries Act, lottery sales were legalised in NSW in 1931, when The State Lotteries Office,asitwasthenknown,wasformedand commenced operations. Since 1 January 1997, the organisation has operated as a State Owned Corporation, established under the provisions of the NSW Lotteries Corporatisation Act 1996.

NSW Lotteries Corporation is licensed by the Minister for Gaming and Racing to sell lottery games in NSW pursuant to the provisions of the Public Lotteries Act 1996. The Corporation is also licensed to conduct lottery games in the Australian Capital Territory (ACT).

WhAt We Do – ouR chARteRIn line with its statutory charter, NSW Lotteries has an obligation to:

• Successfullydevelop,promote,conduct and otherwise participate in any lawful forms of gambling and gambling-relatedactivities;

• Beasuccessfulbusinessand, to this end:

– To operate at least as efficiently asanycomparablebusinesses;

– To maximise the net worth of the State’s investment in the Corporation;

– To be a successful participant (whether directly or indirectly) in any other business or activity that the Corporation determines is, or may be, of sound commercial benefittotheCorporation;

• Exhibitasenseofsocialresponsibilityby having regard to the interests of the community in which it operates and by endeavouring to accommodate these interestsifitispossibletodoso;and

• Exhibitasenseofresponsibilitytowards regional development and decentralisation in the way in which the Corporation operates.

ouR GAMesThe Corporation is licensed to conduct these games in NSW and the ACT:

• Lotto(drawnMonday,Wednesday and Saturday)

• LottoStrike(drawnMonday,Wednesday and Saturday)

• Powerball(drawnThursday)

• OZLotto(drawnTuesday)

• InstantScratchies

• LuckyLotteries (drawnmostweekdays)

• 6From38Pools (conducted Saturdays)

Saturday Lotto, Powerball, OZ Lotto and 6 From 38 Pools are national games operated in conjunction with all other Australian lottery operators. The Monday and Wednesday Lotto game is operated in conjunction with the lottery operators in South Australia, Western Australia, Victoria, Tasmania and the Northern Territory.

BusIness PLAnnInG

Key areas for success

There are five main pillars of our business that are imperative to the achievement of our goals. We believe that we must effectively address these areas in order to succeed in our business:

• OurPlayers

• OurRetailers

• OurBusiness

• OurShareholders

• OurStaff

Corporate objectives for 2008/09…the past year

Our Players

• Increasesales.

• IncreasetheCorporation’sshareoftotal Bloc sales.

• ImprovetheReturnonMarketingInvestment.

• Increaseaccesstoourproductsby trading at times, in locations and utilising payment methods convenient to players.

• Maintainthehighlevelofcustomerconfidence in our operations.

Our Retailers

• Ensurewemaintainamotivatedtraditionalretailnetwork.

• Increasesalesfromthetraditionalretailnetwork.

• Ensureretailersmeetourstandardswhen selling our products and servicing our customers.

Who We ARe AnD WhAt We Do


• Maximisetheeffectivenessofthenew retailer telecommunications network.

Our Business

• Berecognisedasaresponsible gaming operator.

• Launchthenew(retailertelecommunications)network.

• Improvetheefficiencyandeffectiveness of business processes.

Our Shareholders

• Improvelong-termshareholdervalue.

Our Staff

• Haveanengaged,motivatedandskilledworkforcethatcontributespositively to our commercial success.

• Engenderagreatercommercial focusinourworkforce.

Balanced scorecard for 2008/09

We continue to use the Balanced Scorecard methodology to measure the performance of the Corporation. The method is designed to translate vision and strategy into objectives and a realistic set of financial and non-financial performance measures which gives us a ‘balanced’ view of organisational performance. Importantly, it allows us to align the overall corporate strategic objectives with both Team and individual staff goals.

Our performance against each of the corporate objectives is detailed later in this report. The table over the page summarises performance against the keytargetareas.

Our Business Planning Process

This year we produced our 20th annual business plan. Each year a broad formal business planning process is followed which ensures that NSW Lotteries remainsfocusedonachievingitskeybusiness objectives. However, the process is not rigid and continues to evolve as we adapt to changes in the operating, regulatory and competitive landscape in which we trade.

This year, the process commenced a little differently from previous years – the Executive started planning without any reference to last year’s Business Plan!Thegoalwastodetailthekeyissues that were ‘top of mind’ in the current operating environment and to ensure that last year’s issues were notjustreworked.However,oncethetaskofidentifyingthekeyissueswascompleted, last year’s issues were reviewed to see if anything different had been identified.

Asexpected,manyofthekeyissuespersist from year to year, but some of the issues to be addressed in the 2010 financial year reflect the fresh approach to the process. The issues identified are of critical importance to theCorporationandlikelytoimpactour operations in the immediate future. The result is a comprehensive Business Plan that outlines what we will do in order to achieve our targets and meet theexpectationsofallstakeholders–Players, Retailers, Staff, Shareholders and the Community of NSW.

Corporate objectives for 2009/10…the future

Our Players• Increasetheparticipationofregular

players.

• Increasenumberofnewplayers.

• IncreasesalesandBloc/marketshare.

• IncreasethenumberofPlayersClub members.

• Increasethenumberofuniqueemail addresses and mobile phone numbers for all players.

Our Retailers• Ensureretailersmeetallbusiness

requirements.

• Increasesalesandcommissionsinthetraditionalretailnetwork.

• Increasesalesinthe7-ElevenandInternet distribution channels.

• ExploitthenewITinfrastructuretopursue new distribution channels.

Our Business• Improvetheefficiencyofthebusiness.

• Improveandoptimisethecapture,delivery and use of business information within the organisation.

• Begloballyrecognisedasaresponsible gaming operator.

• IncreaseourBlocshare.

• PreservetheloyaltyofNSWLotteries customers.

Our Shareholders

• Improveshorttermshareholdervalue.

Our Staff

• Havefullyengagedstaff.

LEFT:Lucky the Cat and promotions staff visited retailers to promote the growing $2 Jackpot as it reached a record $16.03 million in September 2008.


BALAnceD scoRecARD FoR 2008/2009oBJectIve MeAsuRe tARGet ResuLt InDIcAtoR note

ouR PLAYeRs

To increase access to our products by trading at times, in locations and utilising payment methods convenient to players.

Numberoftraditionalnetwork on-line agencies

1,570 1,552 ✘ 1

Number of 7-Eleven outlets 103 17 (trial) ✘ 2

To maintain the high level of customer confidence in our operations.

No. of complaints from players <200 78 ✔

CustomerHotline–averagetimetakentoanswer calls

<15 seconds

5.25 seconds

✔

Increase sales. Total Sales $1,160.0m $1,327.6m ✔

Salesfromthetraditionalnetworkofagents $1,151.3m $1,322.2m ✔

Sales from 7-Eleven outlets $2.7m Included in traditional networksales

Sales from Internet $6.0m $5.4m ✘ 3

To increase the Corporation’s share of total Bloc sales.

BlocMarketShare–combinedSaturdayLotto/OZ Lotto/Powerball

24.9% 25.2% ✔

To improve the Return ofMarketingInvestment.


Number of unique player’s email addresses recorded in database

250,000 283,836 ✔

ouR RetAILeRs

To ensure we maintain a motivated traditional retail network.

Agent Satisfaction Survey 95% 90% ✘ 4

Percentage of agents reaching individual sales targets

60% 75.4% ✔


Value of commission earned on sales $87.5m $98.9m ✔

To ensure retailers meet our standards when selling our products and servicing our customers.

Customer Satisfaction Survey Not scheduled this year

AgentHotline–averagetimetaken to answer calls

<15 seconds

9.5 seconds

✔

Number of breaches of statutory requirements by agents

0 0 ✔

To maximise the effectiveness of the new retailer telecommunicationsnetwork.



oBJectIve MeAsuRe tARGet ResuLt InDIcAtoR note

ouR BusIness

To be recognised as a Responsible Gaming operator.

Compliance with the Corporation’s ResponsibleGamingpackage

100% 100% ✔

To launch the new (retailer telecommunications)network.

Gaming System Uptime 99.99% 99.99% ✔

Terminal Availability: MeanTicketsPrintedBetweenFailures

250,000 210,231 ✘ 5

Improve the efficiency and effectiveness of business processes.

User Satisfaction Survey with Service Management System

Scheduled for 1st quarter 2009/10

ProfitperemployeeYTD Av. No. Employees = 166

$0.29m $0.41m ✔

ouR shARehoLDeRs

To improve long-term Shareholder Value.

Duties paid to Governments $300.67m $344.09m ✔

Profit from ordinary activities before significant items and Government Tax Equivalents

$48.05m $67.40m ✔



Operating Expenses to Sales 6.20% 5.15% ✔

Profit to Sales 4.14% 5.08% ✔

ouR stAFF

To have an engaged, motivated andskilledworkforcethatcontributes positively to our commercial success.

Staff turnover 5-10% 7.82% ✔

SickLeaveperemployee ≤5 days 5.75 days ✘ 6

To engender a greater commercial focusinourworkforce.

Employee engagement 75% 71.9% ✘ 7

Note 1: A slowdown in commercial retail development due to the global financial crisis resulted in a reduced number of new agency opportunities emerging during the year.Note 2: The highly technical nature of the software development and system integration, and long lead times for hardware delivery and configuration, delayed the commencement

of the full rollout.Note 3: Selling commenced 4 December 2008, achieving $5.4 million in sales over seven months compared to the nine month budget of $6 million.Note 4: Whilst this rating is slightly lower than the 95% recorded from the previous survey, it is at the upper end of our expectations.Note 5: Replacement of the agency ticket printer equipment commenced in March 2009 following a significant decline in their reliability

– it is expected that this work will be completed by December 2009.Note 6: Target not achieved due to a slight general increase in sick leave, in addition to extended illness suffered by a small number of staff.Note 7: Target not achieved but in light of uncertainty over the Corporation’s future, the result is considered acceptable and is an improvement on the previous result.

ouR PLAYeRs

21 our games continued to perform way above expectations Lotto – Monday/Wednesday/Saturday/Strike

Powerball

OZ Lotto

Instant Scratchies

Lucky Lotteries

6 From 38 Pools

26 Looking Ahead

hoW We PeRFoRMeD:MeAsuRe tARGet ResuLt

Total Sales $1,160.0 million $1,327.6 million ✔


Sales from 7-Eleven outlets (full roll-out) $2.7 million Included in traditional networksales

✘

Sales from the Internet $6.0 million $5.4 million ✘

BlocMarketShare–combinedSaturdayLotto/OZLotto/Powerball 24.9% 25.2% ✔

coRPoRAte oBJectIves: • Toincreasesales.• ToincreaseThecorporaTion’sshareofToTalBlocsales.• ToimproveThereTurnonmarkeTinginvesTmenT.

ouR PLAYeRs | NSW Lotteries Annual Report 200920

21NSW Lotteries Annual Report 2009 | ouR PLAYeRs

In 2008/09 we had record sales of $1,327.62 million, an increase of $116.19 million, or 9.6% on last year. This result was an amazing $167.62 million (or 14.5%) above the full year target of $1,160.00.

OZ Lotto was the stand out product of the year with sales reaching a record $359.00 million, which were $178.8 million up on the target for the year. This was mainly due to the record jackpotruninJune2009whenweoffered the highest prize in Australian lottery history - $106.5 million.

The excitement surrounding the OZ Lotto jackpotrunsetthesceneforaseriesofrecords for the Corporation including:

• HighestsellingmonthintheCorporation’s history – June 2009 – $210.5million;

• Highestweeklysales–$72.9million

• Highestsellingday–30June2009 –$33.8million;

• Mosttransactionsinaminute–4,829;

• Averagebetofaround$18.00;and

• HighestInternetsellingday–$250,000.

In spite of the overwhelming competitionfromtheOZLottojackpotrun, which commenced in April and ran through to the end of June, Monday / Wednesday / Saturday Lotto and Lotto Strike sales also performed well reaching $497.9 million, 8.5% up on the previous year.

In addition, Lucky Lotteries performed well above expectations with sales of $106.5 million being 2.5% above the previousyear.Arecordjackpotin the$2JackpotLotteryearlyintheyear enabled the relatively strong performance of the brand. At the end oftheyear,the$2Jackpothadclimbedto $7.52 million which ensured a strong finish to the year. Expectations for the product are good following the launch oftherestructured$2and$5LuckyLotteries in the latter part of the year.

Instant Scratchies had a pleasing result too and the benefits of the structural changes introduced to the game in recent years are evident. Sales of $150.1 million were 6.05% up on the previous year.

Jackpotrunsthatwerebelowstatistical probabilities dampened the performance of Powerball this year. The game was also affected by the underlying economic factors and further impacted by competition from the OZ Lottojackpots.Salesfortheyearwere$207.5 million, down 29.2% on the previous year.

A small but loyal group of players continued to demonstrate their support for 6 From 38 Pools. In spite of the global financial crisis and in the wakeofcompetitionfromthelargerjackpottinggames,annualsaleswere$6.6 million, which was 8% up on the previous year.

Performance for each game, along with highlights for the year and other points of interest, are summarised in How Our Games Performed – at a glance which follows:

sALes oF the Lotto GAMes PoRtFoLIo ($M)

Lotto (Mon, Wed, Sat & Strike) 497.9

Powerball 207.5

OZ Lotto 359.0

Instant Scratchies 150.1

Lucky Lotteries 106.5

Pools 6.6

Total 1,327.6 (includes GST)

tuRnoveR BY PRoDuct tYPe ($M)

ouR GAMes contInueD to PeRFoRM WAY ABove exPectAtIons

In 2008/09, sales for OZ Lotto reached a record $359.00 million – $178.8 million up on the target for the year.

08/0907/0806/0705/0604/0503/0402/03

959.

7

1,06

4.4

884.

7

855.

5

836.

5

814.

1

808.

0


hoW ouR GAMes PeRFoRMeD – At A GLAnce2008/09 Lotto (Mon, WeD, sAt & stRIKe) PoWeRBALL oz Lotto

sLoGAn Live a Lotto Life Spend the rest of your life Atruckloadofcash

LAuncheD 1979(Monday),1984(Wednesday),1995(LottoStrike),

2000 (Saturday)

1996 1994

hIGhLIGhts • Monday/Wednesday Lotto game changes were implemented in October 2008 with the game expanding to include players from Victoria, Tasmania and the Northern Territory. The Wednesday first division prize was increased to $1 million and there were increases in lower divisional prizes. The price of Monday/Wednesday Lotto increased by 10 cents a game to 40 cents.

• The price of Saturday Lotto increased in October 2008 by 5 cents a game to 55 cents.

• Monday Lotto Superdraws were re-introduced with the first $5 million Monday Superdraw conducted on 20 October 2008. Two more $5 million Monday Superdraws were also conducted on 19 January 2009 and 6 April 2009.

• A new Lotto branding television advertisement was launched in October2008called“Fishing”whichreinforcedtheemotionalattachment to the brand.

• Despitelowjackpotactivitythatwaswellbelowprobability,Powerball contributed in excess of $207 million in sales to the portfolio.

• The underlying strength of Powerball is the draw day falling on Thursday–oneofthestrongestretaildaysintheweek.

• Despite lower than anticipated sales, Powerball’s strong jackpotsequenceof$3,$6,$10,$15,$20,$30,$40and$50million was maintained.

• ThefirstdivisionprizeinOZLottojackpottedtoanunbelievable $106.5 million in June 2009. This was well above the $90m guaranteed prize. This is the biggest lottery prize in Australian history, with the previous record held by Powerball at $58.7 million in June 2008. The previous record OZLottojackpotstoodat$47.98millioninApril2008.

• Asaresultofthismassivejackpotrun,OZLottoachievedrecord sales for the year of $359 million which were $151 million above last year.

• Theincrediblejackpoteventcapturedtheimaginationoflottery players around Australia and achieved widespread publicity with over three and half million entries purchased in NSW in a single draw.

PeRFoRMAnce • Total Lotto sales were $497.9 million, up $38.9 million (or 8.5%) on the previous year mainly due to the sales growth experienced through the game changes implemented in October 2008.

• The performance of Saturday Superdraws was generally positive throughout the year. However, the June $20 million Superdraw did comeundercompetitivepressurefromlargejackpotrunsinotherproducts,particularlyfromtherecordOZLottojackpotinJune2009,whenthefirstdivisionprizejackpottedto$106.5million.

• LottoStrikesalesof$9.8millionweredown6.1%onlastyear,withthejackpotfailingtoreachthe$1millionmarkatanystageduringtheyearandthe game constantly under pressure from more competitive prize offers from other games.

• Jackpotsdidnotfallintoprobabilitythisyearwiththetotaljackpotvalueofdivisiononeprizesofferedin2008/09being$347 million compared to $535 million in 2007/08. This trend was experienced across all Australian Lottery jurisdictions.

• Powerballwillcontinuetoberecognisedasthebigjackpottinggame,providingthatthegamejackpotstomodelledprobability.

• OZLottojackpottedaboveprobabilityduringtheyearfollowingtheimplementationofacceleratedjackpotsequencesthatwereintroducedtokeeppacewithgrowingsalesandincreasesinthegames’ popularity.

• Thetotaljackpotvalueofdivisiononeprizesofferedin2008/09was $737 million compared to $544 million in 2007/08.

• OZ Lotto truly positioned itself as the game with “A truckloadofcash”.

sALes $497.9 million $207.5 million $359 million

vARIAnce on PRevIous YeAR Up 8.5% Down 29.2% Up 73%

shARe oF nsWL totAL PoRtFoLIo oF GAMes 37.5% 15.7% 27.0%

DIvIsIon one WInneRs 140 (47 millionaires). As at 30 June 2009, 892 Lotto millionaires had been created since the launch of the game in 1979.

9 (9 NSW millionaires) 4 (4 NSW millionaires)

LARGest PRIze oFFeReD $30 million (Saturday Lotto Superdraw) $20 million $90millionrecordjackpot(duetopositivecustomerresponse, the actual Division 1 prize pool rose to $106.5 million).

PRIze MoneY PAID $288.7 million $124.7 million $152 million

outLooK • MondayandWednesdayLottobaseweeksareexpectedtocontinueto perform strongly and further growth is expected in 2009/10 with additional Superdraw events planned.

• Saturday Lotto’s strong performance is expected to continue and an anticipatedSuperdrawprogramof$20millionandaboveforFY2010will assist in achieving solid sales results.

• Powerball sales growth is expected with a return to jackpottingaccordingtoprobability.

• Workwillcommenceondevelopingoptionstoincreasejackpotofferstofurtherboostsales.

• OZ Lotto’s strong growth cycle should continue provided it issupportedbyOZLottojackpotsfallingtoprobability.

• Withanacceleratedjackpotsequencetobeimplementedin July 2009, OZ Lotto’s player base and sales should continue to grow.

sALes FoR seven YeARs-GRAPh sALes oF Lotto – Mon, WeD, sAt & stRIKe ($M) sALes oF PoWeRBALL ($M) sALes oF oz Lotto ($M)

08/0907/0806/0705/0604/0503/0402/03

459.

0

497.

9

480.

4

483.

1

495.

3

468.

7

445.

6


hoW ouR GAMes PeRFoRMeD – At A GLAnce2008/09 Lotto (Mon, WeD, sAt & stRIKe) PoWeRBALL oz Lotto

sLoGAn Live a Lotto Life Spend the rest of your life Atruckloadofcash

LAuncheD 1979(Monday),1984(Wednesday),1995(LottoStrike),

2000 (Saturday)

1996 1994

hIGhLIGhts • Monday/Wednesday Lotto game changes were implemented in October 2008 with the game expanding to include players from Victoria, Tasmania and the Northern Territory. The Wednesday first division prize was increased to $1 million and there were increases in lower divisional prizes. The price of Monday/Wednesday Lotto increased by 10 cents a game to 40 cents.

• The price of Saturday Lotto increased in October 2008 by 5 cents a game to 55 cents.

• Monday Lotto Superdraws were re-introduced with the first $5 million Monday Superdraw conducted on 20 October 2008. Two more $5 million Monday Superdraws were also conducted on 19 January 2009 and 6 April 2009.

• A new Lotto branding television advertisement was launched in October2008called“Fishing”whichreinforcedtheemotionalattachment to the brand.

• Despitelowjackpotactivitythatwaswellbelowprobability,Powerball contributed in excess of $207 million in sales to the portfolio.

• The underlying strength of Powerball is the draw day falling on Thursday–oneofthestrongestretaildaysintheweek.

• Despite lower than anticipated sales, Powerball’s strong jackpotsequenceof$3,$6,$10,$15,$20,$30,$40and$50million was maintained.

• ThefirstdivisionprizeinOZLottojackpottedtoanunbelievable $106.5 million in June 2009. This was well above the $90m guaranteed prize. This is the biggest lottery prize in Australian history, with the previous record held by Powerball at $58.7 million in June 2008. The previous record OZLottojackpotstoodat$47.98millioninApril2008.

• Asaresultofthismassivejackpotrun,OZLottoachievedrecord sales for the year of $359 million which were $151 million above last year.

• Theincrediblejackpoteventcapturedtheimaginationoflottery players around Australia and achieved widespread publicity with over three and half million entries purchased in NSW in a single draw.

PeRFoRMAnce • Total Lotto sales were $497.9 million, up $38.9 million (or 8.5%) on the previous year mainly due to the sales growth experienced through the game changes implemented in October 2008.

• The performance of Saturday Superdraws was generally positive throughout the year. However, the June $20 million Superdraw did comeundercompetitivepressurefromlargejackpotrunsinotherproducts,particularlyfromtherecordOZLottojackpotinJune2009,whenthefirstdivisionprizejackpottedto$106.5million.

• LottoStrikesalesof$9.8millionweredown6.1%onlastyear,withthejackpotfailingtoreachthe$1millionmarkatanystageduringtheyearandthe game constantly under pressure from more competitive prize offers from other games.

• Jackpotsdidnotfallintoprobabilitythisyearwiththetotaljackpotvalueofdivisiononeprizesofferedin2008/09being$347 million compared to $535 million in 2007/08. This trend was experienced across all Australian Lottery jurisdictions.

• Powerballwillcontinuetoberecognisedasthebigjackpottinggame,providingthatthegamejackpotstomodelledprobability.

• OZLottojackpottedaboveprobabilityduringtheyearfollowingtheimplementationofacceleratedjackpotsequencesthatwereintroducedtokeeppacewithgrowingsalesandincreasesinthegames’ popularity.

• Thetotaljackpotvalueofdivisiononeprizesofferedin2008/09was $737 million compared to $544 million in 2007/08.

• OZ Lotto truly positioned itself as the game with “A truckloadofcash”.

sALes $497.9 million $207.5 million $359 million

vARIAnce on PRevIous YeAR Up 8.5% Down 29.2% Up 73%


DIvIsIon one WInneRs 140 (47 millionaires). As at 30 June 2009, 892 Lotto millionaires had been created since the launch of the game in 1979.

9 (9 NSW millionaires) 4 (4 NSW millionaires)

LARGest PRIze oFFeReD $30 million (Saturday Lotto Superdraw) $20 million $90millionrecordjackpot(duetopositivecustomerresponse, the actual Division 1 prize pool rose to $106.5 million).

PRIze MoneY PAID $288.7 million $124.7 million $152 million

outLooK • MondayandWednesdayLottobaseweeksareexpectedtocontinueto perform strongly and further growth is expected in 2009/10 with additional Superdraw events planned.

• Saturday Lotto’s strong performance is expected to continue and an anticipatedSuperdrawprogramof$20millionandaboveforFY2010will assist in achieving solid sales results.

• Powerball sales growth is expected with a return to jackpottingaccordingtoprobability.

• Workwillcommenceondevelopingoptionstoincreasejackpotofferstofurtherboostsales.

• OZ Lotto’s strong growth cycle should continue provided it issupportedbyOZLottojackpotsfallingtoprobability.

• Withanacceleratedjackpotsequencetobeimplementedin July 2009, OZ Lotto’s player base and sales should continue to grow.

sALes FoR seven YeARs-GRAPh sALes oF Lotto – Mon, WeD, sAt & stRIKe ($M) sALes oF PoWeRBALL ($M) sALes oF oz Lotto ($M)

08/0907/0806/0705/0604/0503/0402/03

293.

2

207.

5250.

4

259.

0

238.

2

241.

8

253.

1

08/0907/0806/0705/0604/0503/0402/03

207.

6

359.

0

153.

9

113.

4

103.

0

103.

6

109.

3


07/08

06/07

05/06

04/05

03/04

02/03

01/02

458.9

480.4

483.1

495.3

468.7

445.6

428.1

to Be uPDAteD

2008/09 InstAnt scRAtchIes LucKY LotteRIes 6 FRoM 38 PooLs

sLoGAn Scratch Me Happy Yououghttobuyyourselfalotteryticket Pools the smart choice

LAuncheD 1982 1931 Conducted by NSW Lotteries since 1989

hIGhLIGhts • 57 new games were launched during the year offering a variety of fun and exciting designs for players.

• There were three major licensing opportunities: new release movies ‘The Mummy 3’ and ‘Angels & Demons’. In addition, the ‘State of Origin’ scratchie was released to coincide with the excitement surrounding the annual NSW versus Queensland rugby league series. These scratchie games provided strong sales at the $5 and $3 price points respectively.

• Incorporationof$1ticketsaspartoftheChristmasandMother’sDay BonusOfferswaswellsupportedbyagentsandplayersalike.

• ContinuationofthepopularScratch,Snack‘N’RelaxPromotion.

• Thejackpotinthe$2JackpotLotteryreachedarecord$16.03million on 5 September 2008 passing the previous record of $13.7 million set in July 2003.

• Are-structureofboththe$2and$5JackpotLotteries.• Afullyearof“LuckyDays”promotionaloffersincludinga

Friday 13th promotion.

• Pools offered a total of $25.03 million worth of Division 1 prizes compared to $20.3 million last year.

• As a result, sales of $6.6 million were 8% up on the previous year.

• Pools performed solidly throughout the year despite larger jackpotsofferedbyothergamesintheportfolio.

PeRFoRMAnce • Sales have been consistent over the year. However, competition from large jackpotstowardstheendoftheperiodshiftedplayerloyaltyforashorttime.Sales were supported in part by reductions in the price of petrol and the easing of interest rates.

• Sales at the $5 and $10 price points have continued to grow over the past 12 months in support of enhanced prize payouts.

• Arecordjackpotinthe$2JackpotLotteryenabledtherelativelystrong performance of the brand.

• AnoverallimprovementinbaseweeksaleshasbeenachievedsincetherecordjackpotinSeptember2008.

• $5JackpotLotterysaleshavestruggledthroughtheearlystagesofitsjackpotcycle.

• Pools continues to be supported by a loyal customer base which isattractedbyboththegame’slinkwithsocceranditsappealing6 From 38 odds.

sALes $150.1 million $106.5 million $6.6 million

vARIAnce on PRevIous YeAR Up 6.05% Up 2.45% Up 8%


DIvIsIon one WInneRs / FIRst PRIze AnD JAcKPot WInneRs

4 x $5 Win For Life – equivalent to $1.125 million each 237Firstprizewinners–$2JackpotLottery


13Firstprizewinners–$5JackpotLottery


4

LARGest PRIze oFFeReD $5 Win For Life – equivalent to $1.125 million $16.03millioninthe$2JackpotLottery,wonon5September2008. $1.5 million

PRIze MoneY PAID $97.6 million $72.7 million $2.4 million

outLooK • NewLicensedPropertiesincluding“DealorNoDeal”.• Continuationof$1ticketsforBonusOffers.• Increased sales through the rollout of new distribution channels

including 7-Eleven.

• Newgamestructureswillassistindrivingjackpotmomentumforboththe$2and$5JackpotLotteries.

• Thefocuswillbetocommunicatethekeybrandbenefitsand its unique selling proposition.

• The new frequency of the draw schedule will be maintained with investigation of opportunities to further reduce the delay between sale and draw.

• Salesgrowthwillbedependantonjackpotactivity.• The 6 From 38 Pools loyal customer base will provide some insulationfromlargerjackpotsofferedbyothergames.

sALes FoR seven YeARs-GRAPh sALes oF InstAnt scRAtchIes ($M) sALes oF LucKY LotteRIes ($M) sALes oF 6 FRoM 38 PooLs ($M)

08/0907/0806/0705/0604/0503/0402/03

141.

6

150.

1

138.

3

151.

0

167.

4

166.

2

172.

3


2008/09 InstAnt scRAtchIes LucKY LotteRIes 6 FRoM 38 PooLs

sLoGAn Scratch Me Happy Yououghttobuyyourselfalotteryticket Pools the smart choice

LAuncheD 1982 1931 Conducted by NSW Lotteries since 1989

hIGhLIGhts • 57 new games were launched during the year offering a variety of fun and exciting designs for players.

• There were three major licensing opportunities: new release movies ‘The Mummy 3’ and ‘Angels & Demons’. In addition, the ‘State of Origin’ scratchie was released to coincide with the excitement surrounding the annual NSW versus Queensland rugby league series. These scratchie games provided strong sales at the $5 and $3 price points respectively.

• Incorporationof$1ticketsaspartoftheChristmasandMother’sDay BonusOfferswaswellsupportedbyagentsandplayersalike.

• ContinuationofthepopularScratch,Snack‘N’RelaxPromotion.

• Thejackpotinthe$2JackpotLotteryreachedarecord$16.03million on 5 September 2008 passing the previous record of $13.7 million set in July 2003.

• Are-structureofboththe$2and$5JackpotLotteries.• Afullyearof“LuckyDays”promotionaloffersincludinga

Friday 13th promotion.

• Pools offered a total of $25.03 million worth of Division 1 prizes compared to $20.3 million last year.

• As a result, sales of $6.6 million were 8% up on the previous year.

• Pools performed solidly throughout the year despite larger jackpotsofferedbyothergamesintheportfolio.

PeRFoRMAnce • Sales have been consistent over the year. However, competition from large jackpotstowardstheendoftheperiodshiftedplayerloyaltyforashorttime.Sales were supported in part by reductions in the price of petrol and the easing of interest rates.

• Sales at the $5 and $10 price points have continued to grow over the past 12 months in support of enhanced prize payouts.

• Arecordjackpotinthe$2JackpotLotteryenabledtherelativelystrong performance of the brand.

• AnoverallimprovementinbaseweeksaleshasbeenachievedsincetherecordjackpotinSeptember2008.

• $5JackpotLotterysaleshavestruggledthroughtheearlystagesofitsjackpotcycle.

• Pools continues to be supported by a loyal customer base which isattractedbyboththegame’slinkwithsocceranditsappealing6 From 38 odds.

sALes $150.1 million $106.5 million $6.6 million

vARIAnce on PRevIous YeAR Up 6.05% Up 2.45% Up 8%


DIvIsIon one WInneRs / FIRst PRIze AnD JAcKPot WInneRs

4 x $5 Win For Life – equivalent to $1.125 million each 237Firstprizewinners–$2JackpotLottery


13Firstprizewinners–$5JackpotLottery


4

LARGest PRIze oFFeReD $5 Win For Life – equivalent to $1.125 million $16.03millioninthe$2JackpotLottery,wonon5September2008. $1.5 million

PRIze MoneY PAID $97.6 million $72.7 million $2.4 million

outLooK • NewLicensedPropertiesincluding“DealorNoDeal”.• Continuationof$1ticketsforBonusOffers.• Increased sales through the rollout of new distribution channels

including 7-Eleven.

• Newgamestructureswillassistindrivingjackpotmomentumforboththe$2and$5JackpotLotteries.

• Thefocuswillbetocommunicatethekeybrandbenefitsand its unique selling proposition.

• The new frequency of the draw schedule will be maintained with investigation of opportunities to further reduce the delay between sale and draw.

• Salesgrowthwillbedependantonjackpotactivity.• The 6 From 38 Pools loyal customer base will provide some insulationfromlargerjackpotsofferedbyothergames.

sALes FoR seven YeARs-GRAPh sALes oF InstAnt scRAtchIes ($M) sALes oF LucKY LotteRIes ($M) sALes oF 6 FRoM 38 PooLs ($M)

08/0907/0806/0705/0604/0503/0402/03

104.

0

106.

5

95.612

0.7

105.

4121.

9

105.

1

08/0907/0806/0705/0604/0503/0402/03

6.1 6.

6

5.86.06.

7

6.77.

5


LooKInG AheADTheoverallbusinessoutlookcontinuesto remain very positive for the year ahead. However, it is clear from the sizeofthejackpotsreachedinrecentyears that sales performance is more volatile than ever and becoming increasingly harder to predict. At the end of fiscal 2008, a first prize of over $100 million was a dream – 12 months later it became a reality.

NSW Lotteries has a number of game developments planned for the year ahead to build on the record levels of player interest generated this year. In addition, the implementation of a number of major infrastructure projects which are well underway will provide the Corporation with the flexibilitynecessarytomeetthelikelyretail preferences of our customers in the future.

In the year ahead, we will continue toseekthebestpossiblemeansof distributing and promoting our products to players. While many service industries continue to reduce their service points, NSW Lotteries plans to continue to expand its retail presence and channels of distribution to ensure we are meeting the demands of our customers.

GOVERNMENT DUTIES 25.9%

PRIZES 60.8%

OPERATING ALLOWANCE FOR NSWL 9%

GST 4.3%

eveRY DoLLAR sPent on LotteRY GAMes Goes toWARDs:

PRoJecteD sALes DIstRIButIon 2009/2010 ($M)

NSW Government 315.21

ACT Government 8.21

Gross Income 112.64

GST on Gross Product Sales 53.23

Prizes 760.71

Total 1,250.00

NSW Government 315.21

ACT Government 8.21

Gross Income 112.64

GST on Gross Product Sales 53.23

Prizes 760.71

Total 1,250.00

ouR PLAYeRs Continued

28 Player services Players Club

Sale of NSW Lotteries products over the Internet

Players Club Direct Marketing

Unique Player Email Addresses

Call Centre

Network Syndicates

Increased Security for Prize-winners

Customer Privacy


Number of traditional on-line agencies 1,570 1,552 ✘

Number of 7-Eleven outlets 103 17 (trial) ✘

Number of complaints from players <200 78 ✔

CustomerHotline–averagetimetakentoanswercalls <15 seconds 5.25 seconds ✔


Number of registered players email addresses recorded in database 250,000 283,836 ✔

coRPoRAte oBJectIves: • ToincreaseaccessToourproducTsByTradingaTTimes,

In LocAtIons AnD utILIsInG PAYMent MethoDs convenIent to PLAYeRs. • TomainTainThehighlevelofcusTomerconfidenceinouroperaTions.



PLAYeR seRvIcesWith two thirds of the adult population of NSW and the ACT playing our games at least once in a year, it is crucial for NSW Lotteries to deliver services that meet the ever-changing expectations of players. While we rely heavilyonourretailnetworktosellourproducts, we directly offer a number of player services that are aimed at makingplayingandwinninglotterygames a rewarding experience.

PLAYeRs cLuBAt the end of the 2009 financial year the Players Club had grown to over 889,000 active members. Club membership increased by 4,000 on last year’s figure, continuing the upward trend of recent years.

For a small annual fee, membership benefits for players include:

• Immediatenotificationofmajorprizewins;

• Smallerunclaimedprizesautomatically mailed to home address;

• Electronicstorageof‘favourite’numbers thereby saving the need to filloutentryforms;

• Aconvenientlysizedcard,easilycarriedinapurseorwallet;

• Additionalsecurityifticketsarelost orstolen;and

• APrizeAlertatagencies.

A number of Players Club promotions were run during the year aimed at increasing the awareness of the benefits of membership and encouraging members to use their cards on all occasions they play NSW Lotteries games. Early in the new fiscal year, the Corporation will relaunch the Players Club program to offer customers extended membership options and other new benefits.

Players can join Players Club, or update existing membership details, at any of NSW Lotteries’ on-line agencies, or on the Internet at nswlotteries.com.au.

Although Players Club membership is not compulsory when playing NSW Lotteries games through the retailer network,itisapre-requisiteforplayingour games through the Corporate Internet facility, which ensures the protection of all entries and any subsequent prize winnings.

At the end of the 2009 financial year the Players Club had grown to over 889,000 active members.


sALe oF nsW LotteRIes PRoDucts oveR the InteRnetFor over 10 years NSW residents have been able to purchase Lottery products over the Internet. However, as those sales were lodged with interstate Lottery operators, the NSW Government did not receive appropriate duties.

On 4 December 2008, in partnership with our long term Mail Sales Agency, TMS Global Services (NSW) Pty Ltd, the Corporation launched an Internet selling site which provides NSW customers with a convenient additional option to purchase, for the first time, NSW Lotteries’ products. This has improved customer service and provided NSW

Lotteries Players Club members with the added protections that go with registering their entries. The site was launched with Lotto, OZ Lotto, Powerball and Pools available to customers.

Sales improved steadily over the first seven months, aided by a series of SuperdrawsandJackpots;especiallytheOZLottoJackpotrunwhichsawthe Division One prize pool reach a massive $106.5 million. This first seven months of operation resulted in sales of $5.38 million from NSW Lotteries customers.

Further development, planned for 2009/10,willseeLuckyLotteriesandLottoStrikeadded,plusanumberofother purchase options for customers.

PLAYeRs cLuB DIRect MARKetInGThis year saw significant development intheareaofdirectmarketingcontactwith our players. In October 2008 we launched our Customer Relationship Management (CRM) program. This was part of our strategy to utilise technology and better data management to develop a meaningful one-to-one relationship with our players.

Integral to the launch of the CRM program was the development of a system that manages and reports on player communications. This was completed in late September.

The CRM program is under continuous development and refinement and comprises various communications, including:

• Welcomeemails–tonewplayersand existing players who provide us theiremailaddress;

• Cardusestimulationemails–thatensures a player has received their PlayersClubcardandisusingit;

• Renewalemails–toexistingplayerswhosecardisdueforrenewal;and

• Jackpotnotifications.

As developments are made in this area wewillcontinuetoseekimprovementto our existing communications to improve our results.


unIQue PLAYeR eMAIL ADDRessesAt the beginning of the year, the number of email addresses that we had recorded for our players was 140,000. By the end of the year this figure had reached 283,836. We now hold email addresses for 23% of our Players Club members.

Still,inordertomakeourCRMprogramcost effective we need to continue to grow our database of players. The 2009/10 year will see continued focus on the collection of email addresses.

cALL centReThe NSW Lotteries Call Centre is a critical source of service and information for our retailers and players. These services range from providing technical support to retailers experiencing problems with selling terminals and telecommunications, through to assistance with operating procedures or general product information. Players are provided with information on our games, promotions, winning numbers and prizes.

The Call Centre’s focus on productivity continued this year with the launch of our Service Management System. This system allows the Corporation to manage, record and monitor all agency contacts with NSW Lotteries. Via an Interactive Voice Response (IVR) system, callers are directed to the Customer Service Representative best equipped to respond to the call.

The Call Centre also manages the product oriented IVR system, which continues to provide current and historical, product results and prizes for all games.

During the year the Call Centre handled more than 107,000 calls from retailers and customers. Over 92% of calls were answered within 30 seconds, exceeding thebenchmarktargetof90%.Inaddition,some 330,000 customers accessed the results services, with nearly 28,000 requiring additional assistance from staff.

netWoRK sYnDIcAtes Thepopularityofnetworksyndicatesincreased this year and we continued toofferthemforallmajorJackpotand Superdraw events. In addition, in response to customer demand, we extendednetworksyndicatestocoverall draws for Powerball, OZ Lotto and Monday and Wednesday Lotto. As a result, NSW Lotteries offered nearly 26,000network-widesyndicatesforcustomers, an increase of 44% on the previousyear.Totalnetworksyndicatesales for the year exceeded $20.8 million. These syndicates continue to be an attractive option for players, allowing them to participate in a large system entry for a small outlay.

IncReAseD secuRItY FoR PRIze-WInneRsNSWLotteriestakesthesecurityofour prize-winners very seriously and a program of continuous improvement ensures players’ interests are protected. We continue to strengthen the controls involved in processing prize claims and toreducethebusinessriskinvolvedinthe payment of prizes to winners.

As part of our ongoing process, a number of important changes were made to our prize claim processing during the year, including:

• Anupgradeoftheon-linePlayersClub registration functionality over the Internet. Seamless processing now allows players to receive Players Club registration details immediately on registering, a reduction from the previous 24 hour response.

• Theongoingupgradeoftheretailerselling terminals to produce a more distinctive ‘winning’ sound that alerts players to the result of their entry.

RIGHT:Jenny Boyd and her daughter Elly from Highlands Marketplace Newsagency were hoping for a big win at Mittagong (courtesy of Southern Highlands News).

PRIZE CLAIM KITNSW LOTTERIES CORPORATION

THIS KIT CONTAINS THE FOLLOWING ITEMS:

µ A Prize Claim Form (if you are claiming more than one prize, ask the agent for additional prize claim forms)

µ ‘Prize Claim Kit’ instructions

µ ‘A Player’s Guide to Claiming Prizes’ brochure

µ A reply paid envelope for you to send your claim and winning ticket(s) to NSW Lotteries

CONGRATULATIONS!

what you need to do to claim your prize

unregistered tickets only

1. Ensure that you read the ‘A Player’s Guide to Claiming Prizes’

brochure included in this kit.

2. Complete your name (one name only; multiple names,

company or social club names will not be accepted) and

address details on both the Prize Claim Form and the reverse

side of your winning ticket.

3. Inaccurate or incomplete information may lead to a delay in

payment or the claim being rejected.

4. Attach the winning ticket to the original copy of the Prize

Claim Form and post to NSW Lotteries in the reply paid

envelope provided (no stamp required).

5. Retain the Prize Claim Receipt, which the agent will give you

from the terminal, and record Ticket Details on “Customer

Record” section of Prize Claim Form.

6. Ensure you take a photocopy of the winning ticket and Prize Claim

Form before lodging your claim and retain for your records.

7. If you have elected to receive payment via EFT, and to ensure

your winnings go to the correct account, please ensure all details

are written clearly and are accurate.

It is your responsibility as the ticket holder to successfully lodge

the prize claim either by post using the pre-paid envelope provided

in this kit, or in person to NSW Lotteries, 2 Figtree Drive, Homebush

Bay NSW 2127.

Please note that if you personally deliver a prize claim you will not

be paid ‘on the spot’, with the exception of ‘Instant Scratchies’.

Prizes are paid after the expiry of the provisional period following

the draw (usually 14 days) or 6 days after receipt of the prize

claim, which ever is the later.

1. You are bound by the Rules (Rule 3) – if required, ask the

agent to see a copy of the Rules, applicable to the specific

product or visit nswlotteries.com.au.

2. The date of lodgement of a prize claim in accordance with the

Game Rules, is the day of receipt by NSW Lotteries Head Office

– refer to the relevant Game Rules relating to the Procedures for

Claiming and Payment of Prizes and Provisional Prizes.

3. A claim not received in accordance with the Rules will be

rejected by NSW Lotteries and NSW Lotteries will have

no liability in relation to the claim.

4. The Chief Executive Officer may, in his/her absolute discretion,

require a person claiming to be entitled to a prize to furnish

such evidence as the Chief Executive Officer deems necessary

to prove that the person is the player entitled to the prize.

5. All cheques will be crossed and marked “Not Negotiable”

and will be drawn in favour of the claimant in accordance

with the Rules.

6. Where payment of a prize or share of a prize is made by

cheque and mailed, it shall be posted to the name and

address shown on the Prize Claim Form, and NSW Lotteries

shall not be held liable for any loss, delay in the delivery or

any negotiation of such cheque.

7. The payment of a prize pursuant to the Rules will discharge

NSW Lotteries from liability. Where NSW Lotteries has paid

a player and the Chief Executive Officer is, after payment has

been made, of the view that the player was not the player to

whom such payment should have been made, the player shall,

upon being requested to do so by NSW Lotteries in writing,

refund to NSW Lotteries the moneys forwarded to him or her.

important inFormation For players

Where a reference is made to the “Rules” this means the

game rules made under the Public Lotteries Act 1996 any

amendment, modification, variation, or abrogation therefore

for the time being in force.

PRIZE CLAIM FORMNSW LotteRieS CoRPoRAtioN

PCF/

MA

Y09

How do I become a member of NSW Lotteries Players Club?It’s easy to protect your future winnings with NSW

Lotteries Players Club. Just visit your NSW Lotteries

agency to complete an application form or visit

nswlotteries.com.au and apply online. Submit your

application together with your payment for 1, 3 or 5 years

of membership and a temporary Players Club card will be

issued which is active immediately. A plastic card will be

issued within 21 days.

Where can I get more information about claiming prizes?You can ask any NSW Lotteries agent, or for general

prize payment enquiries please ring the Customer

Services line on 1300 363 444 during business hours.For enquiries for prizes over $10,000 please ring

(02) 9752 5547 between the hours of 9am and 5pm

Monday to Friday.

NSW Lotteries Corporation2 Figtree DriveHomebush Bay NSW 2127 nswlotteries.com.auEmail: [email protected]

PLA

YG

UID

E/M

AY

09

evidence of ownership of the original ticket. If you are

unable to provide the Prize Claim Receipt, produced by

the agent terminal, prize payment may be withheld until

NSW Lotteries has received conclusive evidence of

ticket ownership.

I’m not a member of the NSW Lotteries Players Club (unregistered) and I’ve lost my ticket, what can I do?NSW Lotteries has no obligation under the Game

Rules to pay a prize if a ticket has been lost or stolen.To trace an unregistered ticket, NSW Lotteries requires

very specific information relating to the purchase of the

ticket including; the location and time of purchase, type

of entry purchased, details of any other tickets purchased

around the same time, and any other relevant information

which may assist with our search.A request to trace an unregistered ticket needs to be

submitted in writing, ensuring that all the above details

are addressed, and forwarded to our Customer Services

Team. Instant Scratchies tickets are unable to be traced.I’m a member of the NSW Lotteries Players Club (registered) – do I still need to present a ticket and claim form?Registration through the NSW Lotteries Players Club service provides important protection for players including:µAll prizes between $1,000 and $20,000 are paid directly from NSW Lotteries -- you will automatically receive your prize cheque in the post and in cases of prizes

over $10,000, will be sent notification of the prize win

by post after the draw takes place.µ You must present the winning ticket for major prize

wins of $20,000 and greater. A letter will be sent to

you after the draw takes place, notifying you of the

win and providing everything you need to know about

claiming these prizes. Please ensure you retain your

ticket, even if you check it at a NSW Lotteries agency.µYou should always ensure your contact details are

correct. Checking your details with our Customer

Service line is recommended when you win a prize.

A PLAYER’S GUIDE TO CLAIMING PRIZES

nswlotteries.com.auThink! About your choices. Call Gambling Help 1800 633 635 www.gamblinghelp.gov.au

How do I know if I’ve been paid the right amount?Winning tickets that have won $1,000 or less are

branded by the agency terminal with the date the

ticket was checked and the prize amount won.All tickets that have won between $1,000 and $10,000

are branded with the messaging “Winner (date) See Prize

Claim Receipt”. The amount won is printed on the Prize

Claim Receipt – see examples inside this brochure.For unregistered prizes over $10,000 you will be required to

speak with a NSW Lotteries Customer Service Representative

to confirm your prize and to have your name and address

details recorded. The ticket will be branded “Winner, see

Prize Claim Receipt”. The amount won is not printed on

the Prize Claim Receipt but will be confirmed to you

when you speak to a NSW Lotteries Customer Service

Representative at the time of ticket validation. Non-winning tickets are branded “Not a winning ticket”.

On occasions you may receive a “No Prize Due” message

when the ticket is checked. This either means that the ticket

is a non-winner or that the prize has already been paid.Always ask to view your ticket if you have any doubt about

whether you have won a prize or not.If you are in doubt about what to do with a major prize

win or you have any concerns about the way a lottery

transaction has been handled, call the Players 1st* hotline

on 1300 PLAYER (1300 752 937). You can also contact

Players 1st by emailing [email protected]* For more details on the NSW Lotteries PLAYERS 1st program

refer to the NSW Lotteries brochure titled ‘Players 1st’.Is there a time limit for me to collect my prize?Yes. In the case of a prize won on or before 30 November 2010 the prize must be claimed on or before 1 December 2016. Tickets that are more than five years old, or instant

scratchies games that are no longer on sale, cannot be

verified through a NSW Lotteries terminal. In this case

the agent will advise that it is an “old game”. You can

either elect to check the results of the tickets via the NSW

Lotteries website – nswlotteries.com.au (excluding Instant

Scratchies) or you will be required to complete a Prize

Claim Form and submit to NSW Lotteries.


• Thedevelopmentofanew‘PrizeClaimKit’ that reduces the intervention of retailer staff in the prize claim process and protects player privacy in the case of major prize wins.

custoMeR PRIvAcYNSW Lotteries values the privacy of its customers and ensures that the confidentiality of player details is scrupulously maintained. There are strong protective mechanisms and associated controls in place to safeguard both physical and electronic access to player information.

All personal and sensitive information held by the Corporation is treated in accordance with the Privacy Act 1988 and the National Principles for the Fair Handling of Personal Information. Further information on our Privacy Policy can be obtained by contacting NSW Lotteries or visiting our website at nswlotteries.com.au.

Total network syndicate sales for the year exceeded $20.8 million.

RIGHT:As the $2 Jackpot grew Lucky the Cat greeted visitors to NSW Lotteries headquarters reminding them of the increasing jackpot prize.

ouR RetAILeRs

33 the Retail networkAgency Network Upgrade

Developing the Network

Top Shop Agent Reward and Recognition Program

Retail Promotional Activity

36 Agency servicesRetail Training

Retail Image

Agency Satisfaction Survey

Distribution Centre


Agent Satisfaction Survey 95% 90% ✘

Percentage of agents reaching individual sales targets 60% 75.4% ✔


Value of commission earned on sales $87.5 million $98.9 million ✔


Customer Satisfaction Survey Not scheduled Not scheduled

AgentHotline–averagetimetakentoanswercalls < 15 seconds 9.5 seconds ✔

Number of breaches of statutory requirements by agents 0 0 ✔


coRPoRAte oBJectIves: • ToensurewemainTainamoTivaTedTradiTionalreTailneTwork.• ToincreasesalesfromTheTradiTionalreTailneTwork.• ToensurereTailersmeeToursTandardswhensellingourproducTs

AnD seRvIcInG ouR custoMeRs.• TomaximiseTheeffecTivenessofThenewreTailerTelecommunicaTionsneTwork.

ouR RetAILeRs | NSW Lotteries Annual Report 200932

33NSW Lotteries Annual Report 2009 | ouR RetAILeRs

Our outstanding results this year could not have been achieved without thehardworkanddedicationofourretail partners, who provide excellent service to more than 1.6 million customers purchasing NSW Lotteries productseachweek.

During the year the Corporation continueditsstrategyofseekingapresence in all new and redeveloped retail complexes and areas of increasing population growth. This year,theon-linenetworkincreasedbyfive agencies across New South Wales and the Australian Capital Territory. Bytheendoftheyear,thenetworkconsisted of 1,552 on-line agencies selling all lottery products. In addition, there were 31 outlets selling Instant Scratchies only – down from 48 outlets in the previous year. The decline in Instant Scratchie only outlets was as a result of two outlets converting to full on-line status and 15 outlets leaving thenetwork.

As was shown generally throughout the retail sector in the 2009 financial year, the tough economic climate created by the world financial crisis made it difficult for many agencies to survive. However, in spite of this trading environment, the profile of the NSW Lotteries agency

networkcontinuedtochangethroughthe year, although the rate of change was slower than in recent years. There were 99 agencies that changed owners, compared to 122 last year.

Lottery handling fees totalled $98.9 million this year, which was over $7.9 million (or 8.7%) above the previous year. In addition to the increase resulting from record sales, this year also saw an adjustment of handling fees on higher value system entries for Lotto, Powerball and OZ Lotto. This increase in handling fees continues NSW Lotteries’ commitment to providing its agents with increased returns and has seen these fees grow by more than 72% in the last ten years.

AGencY netWoRK uPGRADeA major infrastructure project scheduled for this year was the replacement of the existing telecommunications service used by agents with an Internet Protocol-basednetworkusinglandlineandwireless technologies. This project has significant business implications for NSW Lotteries and is more fully covered in the Our Business section of this report.

While the switch to the new telecommunicationsnetworkhasmany advantages, it will not support our Instant Scratchie-only agency

infrastructure. This means that by the end of calendar year 2009, all remaining Instant Scratchie agencies will either be converted to the on-line networkorceasetotradeasNSWLotteries agents.

DeveLoPInG the netWoRK This year saw the introduction of a more targeted call strategy by Territory Managers which capitalised on a segmentation of the agency networkbysalesvalue.Anoutboundcall strategy was also introduced that targeted the lower category agencies to ensure they continued to receive sales support from the Corporation. ThefeedbackfromtheAgencySatisfaction Survey was very positive and demonstrated that this approach andoutboundstrategywereontrack.

The number of Territory Manager visits exceeded 9,900, with each call benefiting from the introduction of the new Agency Business Plan and updated Agency Performance Appraisal. Territory Managers now have an expanded range of sales data to assist in monitoring the performance of each agency.

coMMIssIon eARneD on sALes ($M)

the RetAIL netWoRK

08/0907/0806/0705/0604/0503/0402/03

91.0 98

.9

86.0

84.7

79.2

74.1

71.1


‘toP shoP’ AGent ReWARD & RecoGnItIon PRoGRAMOur Agent Reward and Recognition Program,knownas‘TopShop’,aims to motivate agent performance and reward excellence in our retail network.Nowinits12thyearofoperation, the 2008/09 year saw 1,271 agencies (or 80% of our total network)participateintheTopShopprogram, which surpassed last year’s record of over 1,150 and our target of 1,200 agencies. Top Shop agents now contribute 85% of the total sales for the Corporation.

The annual Top Shop Awards Night was held at Sydney’s Star City Casino again this year with a “Top Shop’s Got Talent”theme.TheawardwinningAgents for this year earned rewards totalling over $145,000. The major award winners this year were:

Top Shop for 2008/2009

PikesNewGift,Burwood

Top Shop Finalists

Theobalds Newsagency, Bathurst Mitchum’s Newsagency, Cabramatta Kenthurst Village News, Kenthurst AppletreeNewsagency,Cherrybrook

NSW Lotteries Chairman’s Award

Marulan Newsagency, Marulan

Merchandising Award

Kenthurst Village News, Kenthurst

Top Shop Agency Co-ordinator Award

Annie Davey, Ballina Fair Newsagency, Ballina

Top Selling Agency in the NSW Lotteries Retail Network

Mitchum’s Newsagency, Cabramatta

RIGHT:Rosemary Oxley (NSW Lotteries Territory Manager) congratulates Rob Mourched and Joanne El Rahim from Pikes New Gift, Burwood – this year’s outstanding ‘Top Shop’ of the Year.

BELOW OPPOSITE:Sydney’s Star City Casino exploded in a sea of glitter as the Top Shop is announced.

The Top Shop for each NSW Lotteries Sales Territory

Territory 1 &

Territory 7

Sydney Central Business District, North Shore and Northern Beaches

Elanora Heights Newsagency, Elanora Heights

Territory 2 Eastern and Inner Western Sydney Suburbs

PikesNewGift,Burwood

Territory 3 Southern Sydney Suburbs Hurstville Lotteries, Hurstville

Territory 4 South Western Sydney Suburbs Mitchum’s Newsagency, Cabramatta

Territory 5 Outer North Western Sydney Suburbs Quigley’s Kurmond Newsagency, Kurmond

Territory 6 North Western Sydney Suburbs and Central Coast Kenthurst Village News, Kenthurst

Territory 8 Hunter, Newcastle and Lower North Coast Wyee Mini Mart, Wyong

Territory 9 North Coast and New England Grafton Lotto Plus, Grafton

Territory 10 Central West NSW Theobalds Newsagency, Bathurst

Territory 11 ACT, Riverina and South West NSW Supanews Canberra Centre, Canberra

Territory 12 Illawarra, NSW South Coast / Highlands Robertson Newsagency, Robertson


RetAIL PRoMotIonAL ActIvItY In-store promotions remained a valuable part of the promotional programfortheretailnetworkthisyear. These promotions provided a valuable reinforcement of mainstream media advertising and continued to be an effective way of generating store traffic, creating excitement for players and increasing sales at agencies. Over 1,100 in-store promotions were conducted during the year. The record

jackpotrunstowardstheendofthefinancial year prompted an increase in the number of promotional events withthehistoricOZLottojackpotsbeing supported with appearances of theOZLottoTruckatsuitablelocationsacrossthenetwork.Otherpromotionsincluded‘LuckytheCat’makingin-storeappearances in the lead up to higher LuckyLotteriesjackpotsaswellasforagency-based 2nd Chance Draws.

The promotions used a range of different strategies to draw the attention of players including having balloon arches and promotional spruikersatselectedagencies.Anewstrategy introduced this year was the Lotto branded inflatable arches. These provided a lower cost and longer lasting addition to the traditional balloon arches and have increased the coverage and impact of our promotionsacrossthenetwork.

This year’s Top Shop award winning Agents earned rewards totalling over $145,000.


RetAIL tRAInInG The NSW Lotteries Retail Training Program gives small retailers the necessaryskillsanddevelopmenttoensure they meet the expectations of customers. Friendly, efficient and trustworthy service is paramount, whichalongwithsalesknow-how,giveour front line operators a competitive edge. As there are potentially serious consequences arising from even minor errors at the point of sale, technical and operational training is extremely detailed and thorough.

WithanetworkofagenciesspreadacrossNSW and the ACT, the Corporation is constantlyseekingbetterwaystoprovidecost-effective, convenient and relevant training to suit the business requirements of the many small retailers that act as lottery retailers.

One popular initiative is the ‘NSW Lotteries iLearn’ program, which has continued to grow steadily with over 970 agencies enrolled at the end of the year. iLearn is a self-paced learning tool that lets agents and their staff improve their lottery product knowledgeandterminal

operationskillswithoutleavingtheagency. The program covers every aspect of the NSW Lotteries business including responsible gaming, product knowledge,terminalfunctions,processing entries, paying prizes and reporting.

At the end of the year, over 2,400 agency staff were actively enrolled in iLearn and had completed over 15,000 basic modules and over 1,100 advanced modules. Over 1,100 agency staff from 541 agencies (or 34.5% of thenetwork)havecompletedthefull12 basic modules, with almost 300 of those also having completed the 3 advanced modules.

In addition to the electronic training option, traditional face to face training has continued to be an important element of the overall training resources offered. Over 729 agency staff from 432 agencies participated in the 4 day Lottery Management course or the 1 day Terminal Operation course this year.

As well as the core training courses, the number of our very successful “HighPerformanceSelling”seminarswas increased this year with nine seminars being run across NSW during the year involving 290 staff from 152 agencies. These sessions provide participants with various practical tips andprofessionalsellingskillsaimedatbuilding sales. Agents have reported significant benefits from attending these sessions.

RetAIL IMAGeTo ensure NSW Lotteries’ selling outlets continue to maintain prominenceinthemarketplace,

RIGHT:The NSW Lotteries retail image promotes the “shop within a shop” concept and invites players to try their luck.

BELOW:The NSW Lotteries iLearn training software allows agents and staff to improve their lottery selling skills without the cost of leaving their agency

AGencY seRvIces


the Corporation continues to manage the ongoing enhancement of the appearance of agencies through the Retail Image Program which is now in its 18th year.

The Second Generation Retail Image (2GRI) effectively displays our product range to achieve maximum incremental salesacrosstheagencynetwork.Theretail image team delivers coordinated shopfit advisory services to agents, retail designers, architects, shopfitters and cabinetmakerswithintheretailindustry.

During this financial year 103 agencies had the new retail image shopfit installed and over 118 agencies were upgraded to the current retail image standard. This brings the 2GRI coverage toover85%oftheon-linenetwork.

AGencY sAtIsFActIon suRveYProviding agents with the support they need to sell our products remains a high priority of the Corporation. Our success in providing that support is measured through a biennial survey of agent satisfaction with the services we provide. During March 2009, 419 of our agents provided us with their opinions either over the telephone, or through the Internet.

This year 90% of respondents rated the level and quality of service that they receive through our Call Centre, Territory Managers, Terminal Technicians, Retail Trainers and Distribution Centre as either extremely satisfied or very satisfied. Whilst this rating is slightly lower than the 95% recorded from the

previous survey, it is at the upper end of our expectations. Information collected from the survey is used to redress highlighted deficiencies and in planning future promotions, product launches and agency communications. Survey results werealsopublishedinourweeklyretailnewsletter“NetworkNews”.

The Corporation is committed to maintaining and improving the levels of satisfaction into the future and plans to survey our agents again in 2010/11 to ensure that services continue to be delivered to agent expectations.

DIstRIButIon centRexOur Distribution Centre plays a crucial role in supplying all consumables used in the sale of NSW Lotteries’ products. The Centrepackagesanddistributesentryforms, bet receipts, promotional and point of sale items and Instant Scratchie tickets,aswellasmailingprizechequesandfreeticketstoprize-winners.

Thisyear’sstockissuestoourRetailNetworkincludedmorethan998,000booksofInstantScratchietickets,12.4 million entry forms, and 94,000 thermal paper rolls (about 21,000 kilometresofpaper)forprintinglotteryticketsandbetreceipts.

ABOVE:Lucky the Cat celebrated a long climb towards a record jackpot of $16.03 million in the $2 Jackpot Lottery in September 2008.

This year’s stock issues to our Retail Network included more than 998,000 books of Instant Scratchie tickets, 12.4 million entry forms, and 94,000 thermal paper rolls (about 21,000 kilometres of paper) for printing lottery tickets and bet receipts.

ouR BusIness

39 Responsible Gaming

39 Lotteries and problem gambling

40 Responsible Play Brochure

40 Lottery odds

40 Annual Review


CompliancewiththeCorporation’sResponsibleGamingpackage 100% 100% ✔

coRPoRAte oBJectIves: • ToBerecognisedasaresponsiBlegamingoperaTor.

ouR BusIness | NSW Lotteries Annual Report 200938

39NSW Lotteries Annual Report 2009 | ouR BusIness

ResPonsIBLe GAMInG Since 1931, NSW Lotteries has developed a reputation for probity and social responsibility in the way it conducts its business activities. While many players would not classify a lottery purchaseattheirlocalagencyas“real”gambling, NSW Lotteries is committed to doingeverythingpossibletokeeptheminformed of the odds and ensure that lottery play remains safe and enjoyable.

The Corporation has been a leader in the gaming industry in Australia in actively responding to community concern over problem gambling.

The NSW Lotteries Responsible Gaming Program, introduced in 1998, is tailored to specific requirements of the lottery industry and players. The program comprises a number of elements covering the sale and promotion of lottery products – the Australian Lottery Blocs Code of Practice, an Advertising Code of Practice, the World Lottery Association (WLA) responsible gaming framework,andcomplianceactivities.These initiatives demonstrate the Corporation’s commitment to ensuring thatallpossibleactionistakentominimise any negative impacts from the sale and promotion of our products.

Since November 2001, NSW Lotteries hasbeenworkingwithitsretailnetworktoimplementtherequirementsof the NSW Government’s Responsible Gaming Regulation, which required:

• Theoddstobedisplayedinanyhowtoplayinformation;

• Theoddsandanapprovedresponsible gaming message to be availableonthecorporatewebsite;

• Provisionofapprovedgambling informationbrochures;

• Allon-lineticketsandentryformsto carry an approved responsible gamingmessage;

• Posterscarryingtheapprovedresponsiblegamingmessage;

• Theapprovedresponsiblegaming messageonallprintadvertising;and

• Noofferorsupplyofliquorasaninducement to participate in a lottery.

LotteRIes AnD PRoBLeM GAMBLInGLotterygamesareunlikelytobeasignificant factor in problem gambling comparedto“continuous”formssuchasgamingmachines.Thekeyfeaturesof lottery games are:

• Thereislimitedopportunityforrepeat betting, either in terms of the nature of the sales outlet or in theformatofthegame;

• Thetimebetweendrawsisgenerally days, rather than seconds orminutes;

• Thesizeoftheprospectiveprizesisnot directly proportionate to the sum invested (compared with race betting where the prize received is entirely dependentontheamountwagered);

• Lotterypurchasesoftenformanincidental part of many players’ normalliferoutine;

• Playersclearlydifferentiatelotterygamesfrom“continuous”forms ofgambling;

• Retaillotteryactivitytakesplacein an atmosphere, circumstances or location which is familiar and acceptable to virtually the entire community;

• Chancesareessentiallyrandom;and

• Verylittleornoplayerskillisinvolved.

LEFT:The OZ Lotto Cash Crew helped promote the biggest jackpot prize in Australian lottery history – $106.5 million was shared by two players in June 2009.


ResPonsIBLe PLAY BRochuReThe NSW Government has developed a series of brochures to provide consumers with the opportunity to makeinformedchoicesaboutgamblingandtoreducetheriskofsomepeoplebecoming problem gamblers.

Formerlyknownas‘PlaySmart’,thenew‘Gambling Help’ series of responsible play and gambling information brochures is designed to provide gambling consumers with easy to understand information about gambling, the chances of winning and where to get help for a gambling problem.

The ‘Gambling Help’ brochure “...INFO about the odds – betting on lotto,lotteriesorkeno?”focusesonthe chances of winning lotto games, lotteries or Keno. Other brochures in the series cover the odds of machine gaming and casino games, as well as information for problem gamblers and their families and friends.

The ‘Gambling Help’ brochure is available on the website and in Arabic, Chinese,Greek,Italian,Korean,Turkishand Vietnamese.

LotteRY oDDsIn addition to the general lottery odds contained in the ‘Gambling Help’ brochure, detailed information on the odds of winning the different games sold by NSW Lotteries is available at nsw.lotteries.com.au.

AnnuAL RevIeWEach year, NSW Lotteries reviews its Responsible Gaming Program to ensure that it continues to meet all regulatory requirements and best practice standards.

This year’s review had a particular focus on new distribution channels, such as the Internet, and on compliance with World Lottery Association (WLA) responsiblegamingbenchmarks.

The review found that NSW Lotteries met all its internal responsible gaming goals and external regulatory requirements.

A review of the major issues and actionsundertakenthroughouttheyear confirmed that:

• Asat30June2009,NSWLotterieshad achieved full compliance with existing and new regulations, in accordance with the Business Plantarget;

• Theagencynetworkhadadhered toallregulatoryrequirements;

• ThePlayers1st program remains an effective channel of communication for players to communicate easily and directly with NSW Lotteries in relationtoretailers;

• TheAustralianLotteryBlocsCodeof Practice was updated and the necessary changes to NSW Lotteries Advertising Code of Practice were identified, arising from new Regulations promulgated inJune2009;

• TheCorporationworkedcloselywith the Office of Liquor, Gaming and Racing to develop the new ‘Gambling Help’ brochure, which waspublishedinJune2009;

• TheInternetsellingchannelwasevaluated to ensure compliance with regulations, internal policies and Australian and international best practiceinresponsiblegaming;and

• InDecember2008,NSWLotteriesobtained the first of the four levels of achievement available in the World Lottery Association (WLA) corporate socialresponsibilityframework.This is the first step in acquiring full accreditation under WLA’s “best practice”benchmarksforlotteryoperators around the world.

NSW Lotteries was 100% compliant with the Corporation’s Responsible Gaming Package in 2008/09.

ouR BusIness Continued

42 the Gaming system Performance

Agency Telecommunications Network Upgrade

42 corporate systems


Gaming System uptime 99.99% 99.99% ✔

Terminalavailability–MeanTicketsPrintedBetweenFailures 250,000 210,231 ✘

User Satisfaction Survey with Service Management System 66% Scheduled for 1st Q 09/10

Profit per employee $0.29 million $0.41 million ✔

coRPoRAte oBJectIves: • TolaunchThenew(reTailerTelecommunicaTions)neTwork• improveTheefficiencyandeffecTiveness

oF BusIness PRocesses.


43 Business ImprovementInformation Management

Workflow Efficiencies

Electronic Service Delivery – Websites– Customer Website– Ecommerce Channel– Agent Website

45 Business continuity Plan


In order to maintain high levels of customer satisfaction, all our business processes must be at the forefront of industry best practice, particularly where the on-line gaming system is concerned. Our business systems are supported by a group of dedicated and experienced information technology professionals.

Each year, we review and refine our Information Technology Strategic Plan toensurethatweidentifythekeytechnology issues facing the business and the business solutions needed to maintain the reliability and integrity of the Corporation’s business systems. The underlying objective is to provide our players and retailers with the best and most reliable access to our products and services. In addition, it is crucial that NSW Lotteries staff are provided with reliable information and appropriate technology to allow them to perform to theexpectationsofallstakeholders.

the GAMInG sYsteM

Performance

NSW Lotteries’ on-line gaming system continued to provide high levels of service. Average monthly system availability for the year was over 99.99% during available selling hours, against a target of 99.99%. In all but two months of the year there was 100% availability. The telecommunicationsnetworkthatlinksthe on-line agencies also performed well with 99.95% uptime against a target of 99.93%.

More than 286 million transactions were processed through the on-line gaming system in the 2009 financial year. Our highest selling day this year was on 30 June 2009, the final day of selling for the OZ Lotto draw where the first prize reached a record $106.5 million – 2.47 million transactions were processed valued at $35 million. However, the most intense activity, from a transaction processing point of view, was 24 December 2008 when the system handled almost 2.7 million transactions.

Gaming System Infrastructure

Significant changes were made to the gaming system’s technical infrastructure in 2008/09 to support the introduction of two new distribution channels – the direct selling of our games over the Internet, which was made available in December 2008, and the planned launch of selling through all 7-Eleven stores in late 2009.

Agency Telecommunications Network Upgrade

As noted in the previous annual report, a major infrastructure project scheduled for this year was the upgrade of the telecommunications networkusedbytheagentsthatsell the Corporation’s products. This service is provided by Telstra who made a decision in 2007 to close the existing Digital Data Service (DDS)networkbyDecember2009.Consequently, NSW Lotteries initiated a project to convert to an Internet Protocol(IP)network.

ThenewIPnetwork(alandlineADSL/BDSLsystembackedupbyawirelessservice should the landline service malfunction) was designed and built in late 2008. This service will provide NSW Lotteries’ retailers with the ability to continue to sell should the primary telecommunications system not be operative, reducing down time and improving customer service and access to NSW Lotteries’ products. A successful trialofthenewnetworkwasundertakenin January/February 2009 and rollout of thenewnetworkcommencedinMarch2009. The project requires significant changes to cabling and equipment in all agents’ premises as well as changes tothebackofficeprocesseswhichsupport agents. The project is due to be completed in late 2009.

Another project that commenced during theyear,wasthetaskofreplacingtheprinter hardware in all agencies, ensuring thatplayersreceiveticketsthatarelegibleand in good condition. The original printers were first installed in 2000 and are now reaching the end of their useful life.

coRPoRAte sYsteMs

Significant changes were made to the infrastructure used by the Corporation’s corporate systems this year. The Virtualisation project, which was completed in June 2009, resulted in a reduction in the number of physical servers deployed in the Corporation. The new infrastructure will provide greater redundancy, ease of maintenance and reduced licensing and support costs.

seLLInG sYsteM uP-tIMe (%) WeBsIte useR sessIons

08/0907/0806/0705/0604/0503/0402/03

100.

00

99.9

9

99.9

9

99.9

9

99.9

9

99.9

9

99.9

9

08/0907/0806/0705/0604/0503/0402/03

10,4

60,2

70

12,0

52,5

67

8,96

6,08

6

7,36

4,20

04,88

2,14

0

3,24

7,02

5

2,47

3,16

8


BusIness IMPRoveMent

Information Management

Information is recognised as a valuable asset within the Corporation and suitable governance, policies, standards and infrastructure are in placetomakebestuseofthisasset.

The use of the Corporation’s rich data assets has been enhanced with the introduction of the ‘Lotteries Launchpad’facility;aPortal-basedsystem developed internally which allows authorised staff to view up-to-date summaries of sales, product and agency information. The facility also allows for complex ‘drilling down’ of the data, which has reduced the need for staff to develop their own reports, resulting in more efficient delivery and consistency of information, lower training costs and a reduction in printed reports and unmanaged data sources.

Workflow Efficiencies

Agenericworkflowsystemhasbeencreated which enables documents requiring review and/or authorisation by more than one person to be distributed and processed electronically around the Corporation. This has led to improved efficiencies in document handling and enabledfasterdecisionmakingwithinthe Corporation.

In the past year, numerous other processes within the Corporation have also been improved, including purchase order processing, distribution of management reports, leave processing, agency administration and the agents’ business planning process. The significant changes in the Human Resources processes have enabled the discontinuation of physical Personnel files as all correspondence is now being captured electronically.

Electronic Service Delivery – Websites

NSW Lotteries aims to provide customers and agents with the best possible access to its services utilising dedicated websites.

Workbeganinearly2009toenhance hosting facilities for the Corporation’s external websites. The upgrade will enable better handling ofpeaksindemandforthe Corporation’s web sites. Implementation of the upgrade commenced in June for completion in September 2009.

Customer Website

The NSW Lotteries website – nswlotteries.com.au – continued its long-term upward trend with 12,052,567 user sessions being recorded over the year – up 15% on last year.

Website users are able to access all the information that is available at retail outlets including copies of how to play material, prices and odds information. NSW Lotteries is dedicated to ensuring the effectiveness of the website for the growing number of users who utilise this communication channel.

Our highest selling OZ Lotto draw this year had a record first prize of $106.5 million.


During the year, a number of major enhancements were made to provide players with more information and easier access to our services.

New features included:

• Optiontopurchaseticketson-lineviaalinktotheexclusiveon-lineagent, nsw.ozlotteries.com;

• OptiontopurchaseandrenewPlayersClubmembershipson-line;

• Specialevent“landingpages”forbigjackpoteventstomakeiteasyfor players to enter the draw, and checktheirresults;

• Fasterandeasieraccessduringpeaktrafficloadsthroughadditionalservercapacity;and

• Acentralisedcollectionoftranslated downloadable ‘How To Play’ documents.

Other enhancements included:

• AnongoingSecondChancepromotional draw for Players Club members, with easier access for people with disabilities to all on-line promotionsandcompetitions;

• ImprovedpromotionalsitessuchasInstantScratchies‘ScratchSnack‘nRelax’;and

• Enhancedsecuritytoprotectpersonaldata entered in on-line forms.

Ecommerce channel nsw.ozlotteries.com

Players Club members are now able topurchaseticketsviathelinkfrom NSW Lotteries corporate website nswlotteries.com.au to that of the specially created OzLotteries sub-domain nsw.ozlotteries.com.

Aprominentlinkwasaddedtothehome page of nswlotteries.com.au, which allows Players Club members to be transferred from the general customer site to the OzLotteries secure transactional sub-domain.

The flow utilises user-focused design and iconology, such as a shopping cart with Lotto-type balls, which give players a recognition icon that is easy to recall.

The page also includes an educational flashbannerthattakesauserthroughthe steps of becoming a Players Club member and accessing the selling site.

Agent-specific Website

Ouragent-onlywebsiteisknownasthe Agent Information Resource (or AIR). It provides a range of pertinent and easily accessible information aimed at helping retailers provide the best possible service to customers. Launched in October 2007, the site grew in popularity this year as agents became more familiar with the content of the site.

AIR also provides access to the computer based training program for agents and staff, ‘NSW Lotteries iLearn’. This e-learning training and education system generates significant savings in time and travel for agents and their staff, allowing them to improve their lottery product knowledgeandterminaloperationskillswithoutleavingtheagency.

The NSW Lotteries website had 12,052,567 user sessions – up 15% on last year.


BusIness contInuItY PLAn

For any business, it is prudent to plan to maintain core business activities following an unforeseen problem, whether a major disaster or minor outage. The NSW Lotteries Business Continuity Plan continued to focus on ensuring the Corporation is as prepared as possible and can restore operations with a minimum of downtime. The overall program is aimed at ensuring corporate resources are secure, operations continue regardless of circumstances and a strong public image of the Corporation is maintained.

The Information Technology component of the overall plan provides a comprehensive list of steps and procedures to manage a serious, unplanned disruption to information technology processing at the corporate data centre.

Regulartestingoftheback-upoff-siteprocessing system is conducted as part of the overall plan. This includes restoring our information technology processing from the primary computer sitetoouroff-siteback-updatacentre.

LEFT:Celebrations erupt as a new record jackpot was won in the $2 Jackpot Lottery – $16.03 million in September 2008.

BELOW:The Agent Information Resource (or AIR as it is known) is the NSW Lotteries agent-only website – helping agents provide the best possible service to customers.

ouR shARehoLDeRs

47 the Management structure

48 the Board of Directors

50 the executive Management team

52 corporate GovernanceRole of the NSW Lotteries Board

Composition of the Board

Board Responsibilities

Board’s Operating Framework

Board Meetings

Board Committees

• AuditandGovernanceCommittee

• InformationTechnologyCommittee

• HumanResourcesandRemuneration Committee

Monitoring Performance

Annual Review of Board Performance

56 Risk Management

56 Insurance

57 A sustainable environmentManaging Energy

Less Waste

Smaller Fleet of Pool Vehicles

Earth Hour

hoW We PeRFoRMeD:

MeAsuRe tARGet ResuLt

Duties paid to Governments $300.67 million $344.09 million ✔

Profit from ordinary activities before significant items and Government Tax Equivalent

$48.05 million $67.40 million ✔



Operating expenses to sales 6.20% 5.15% ✔

Profit to sales 4.14% 5.08% ✔

coRPoRAte oBJectIves: • Toimprovelong-Termshareholdervalue.

ouR shARehoLDeRs | NSW Lotteries Annual Report 200946

47NSW Lotteries Annual Report 2009 | ouR shARehoLDeRs

the MAnAGeMent stRuctuRe

BoARD

Corporate Services* Customer and Agency Services Finance* Information

Technology Services Marketing and Sales

chIeF executIve oFFIceR

oPeRAtIonAL teAMs

BoARD coMMIttees

• Audit and Governance Committee• Human Resources and Remuneration Committee• Information Technology Committee

• Business Planning• Human Resources• Property

and Records Management

• Support Services• Executive Support

• Customer Service• Agency Appointment

and Review• Prize Payments• Player Registration• Call Centre • Lotto/Lottery Draws• Warehousing and

Distribution• Corporate Retail Sales• Investigations

and Compliance

• Company Secretary• Legal• Financial Planning

and Budgeting• Funds Management• Financial Reporting• Retailer Accounting• AuditandRisk

Management

• IT Strategic Planning• Gaming Systems • Corporate Systems• Operations and

Support• Telecommunications

• Product Management

• Communications and Public Relations

• Sales• Business Development• RetailNetworkTraining• Retail Image• Promotions• Research Information

and Strategy

The Corporation operates within a strict framework of regulation and corporate governance to ensure that its well established reputation for honesty and integrity is maintained.

* On 6 July 2009, due to a restructure of the Management Team, the Finance and Corporate Services functions were combined, resulting in four operational teams.


John Bagshaw(Chairman)

(Independent Director) BSc, FAICD

John is the inaugural Chairman of the corporatised Board of NSW Lotteries and a founding member of the first Board established in 1991. He was formerly Chairman and Chief Executive of Bell and Howell Australia Group Limited and has 33 years Board experience primarily in gaming, computer technology and technology related fields. John is a commercial breeder of standardbred horses and is past Chairman of the Australian Harness Racing Council.

Bonita Boezeman Ao (Deputy Chairman)

(Independent Director) PMD Harvard, FAMI, FAICD

Appointed March 1994. Currently Managing Director of Business Benefits International, Bonita was formerly an international executive with Time Warner Inc. for 23 years and was Chairperson and Chief Executive Officer of Time Life (Australia) Pty. Ltd. for 13 years. A graduate of the Harvard Business School Executive Program in 1987, Bonita has an extensive backgroundinmarketingandfinancial management. She is currently a Director of the Sydney Harbour Foreshore Authority, Chairman of PayPal, a subsidiary of eBay, member of The Order of Australia Foundation Board, member of the Corporate Olympic Committee and Chair of the East West Foundation. Bonita has been awarded an officer in the Order of Australia and the Centenary Medal for significant contributions to business and philanthropy.

Milton cockburn(Independent Director) B.Com (Hons) GAICD

Appointed February 2005. Milton has been Executive Director of the Shopping Centre Council of Australia Ltd since April 2001. He was a journalist for 16 years with The Sydney Morning Herald, in Sydney and in Canberra and is a former Editor of that newspaper. He was also General Manager, Media, of the Sydney Organising Committee for the Olympic Games (SOCOG). Milton is also a former director of the University of NSW Press and a former member of the Australia Abroad Council.

John Johnson(Independent Director) K.C.S.G.

Appointed April 2002. John hasabackgroundinretail,which led to an extensive involvement in the union movement where he held numerous official positions. He served as a member of the Parliament of NSW for 26 years and was President of the Legislative Council for 13 years. During his time in Parliament John sat on a range of Parliamentary Committees and retired from Parliament in 2001. John is a former director of Prince Henry and Prince of Wales Hospital Group and was former Guildmaster of the Catholic Evidence Guild. He is Treasurer and a Board member of the RandwickLaborClubandwas appointed in 2003 and re-appointed in June 2005 as Chairman of the Board of The Catholic Press Newspaper Company Pty. Ltd.

the BoARD oF DIRectoRs

NSW Lotteries is fortunate to be able to draw on a wide range of skills and depth of experience in its current Board, with members from diverse industries, including lotteries, wagering, media, marketing, publishing, finance and politics.


Denis Mccormack(Independent Director) FAMI, FAIA, MAMI

Appointed January 1997. Denis is Managing Directorofthemarketingconsultancy, Southside SixPty.Ltd.Hismarketingbackgroundspans40years. A former advertising agency director, he joined St.George Building Society in the 1970s and as Chief GeneralManager–Marketinghe played an integral role in building that brand over more than two decades. He alsohadakeyinvolvementin the conversion to St.GeorgeBankin1992.Denis previously served as Deputy Chairman of the Lotto Board of Control in the 1980s and he is a former Director of the Sydney Festival and IOOF Building Society. His current Directorships include Fantastic Holdings Ltd., the Lansdowne Club (Ireland-AustraliaBusinessNetwork)and Sutherland Credit Union Ltd. He is also a member of various charity committees.

nick nichles (Chief Executive Officer)

(Executive Director) B. Bus, Grad.Dip.Mktg., GAICD

Appointed to this position in January2009.Nickpreviouslyheld the role of Director MarketingandSalesbeforebeing appointed as Chief Operating Officer effective from1October2008.Nick is one of a handful of people inthemarketingindustryinAustralia to have been both a client and supplier of marketingservices.WhilstmostofNick’sexperience has been gained on the client side,hehasalsoworkedformedia organisations as well as advertising agencies. Nick’sadvertisingagencyexperience comes from DDB Needhamwhereheworkedon the McDonald’s business for nearly seven years. More recentlyNickwasManagingDirector of media agency Universal McCann. Most of Nick’sclientexperiencehasbeen gained at McDonald’s Australia where he was Assistant Vice President –MarketingandFOXTEL where he was General Manager – Commercial Operations.Nickalsolecturedpart-time at the Graduate School of Business at UTS in the MBA programme.

suzanne Walsh (Reserved Director – Unions NSW Nominee)

Appointed July 2000. Sue is the Unions NSW representative on the Board. She is President of the Public Service Association of NSW, the union representing State Public Sector employees with 47,000 members, covering a wide range of Government departments, corporations and trading enterprises. Sue was elected as Director of SGE Credit Union in November 2000 and is on the Executive of Unions NSW. She is a former Director of the Bowlers’ Club of NSW. In addition, Sue is a Federal Councillor on the State Public Service Federation, which is part of the Community and Public Sector Union with 180,000 members nationwide. She also represents NSW on a Federal Education Industry Committee.

ABOVE:Board of Directors (L-R), John Bagshaw, John Johnson, Milton Cockburn, Suzanne Walsh, Nick Nichles, Denis McCormack, Bonita Boezeman.


nick nichles B. Bus, Grad.Dip.Mktg., GAICD Chief Executive Officer

Full biographical details can be found in the previous section – ‘The Board of Directors’.

susan Browne B. Comm, CA. Director Corporate Services

Appointed to this position in December 2000. Susan is a Chartered Accountant who commenced her accountancy career with Ernst and Whinney in Sydney. Since then she has held senior finance and corporate services positions in local government in both Sydney and regional NSW. Susan currently has responsibility for business planning, human resources, property management, executive support and other support services. Following the retirement of Brian McIntyre from full-time employment with the Corporation, Susan was appointed as Director Finance and Corporate Services from 6 July 2009.

Mark carterB Arts Director Marketing and Sales

Appointed to this position permanently in January 2009. Markpreviouslyheldtheroleof Group Product Manager before acting in the role of DirectorMarketingandSalesfrom1October2008.Markhas 30 years experience in the lottery industry. He has takenaleadingroleinmanyof NSW Lotteries’ major innovations over that period, including the implementation of the first on-line selling system in 1987, and the launches of Instant Scratchies in 1982, OZ Lotto in 1994 and Saturday Lotto in 2000. MarkhasrepresentedtheCorporation at national lottery (Bloc) conferences for the last 10 years. He is responsible for product management and advertising, communications and public relations, business development, retail image, retailer training and the sales force.

Martin cassidy BSc (Hons), MBA Director Information Technology Services

Appointed to this position in January 2002. Martin has 12 years experience in the lottery industry and joined NSW Lotteries from the New Zealand Lotteries Commission where he was General Manager IT. Prior to that he was the General Manager IT at New Zealand Post. Martin gained extensive consultancy experience in the private andpublicsectorsworkingfor GCS Ltd., a Wellington-based consultancy where he specialised in IT strategic planning and project management. Martin began his career in the telecommunications and IT industries with British Telecom, based in London and Cardiff.

the executIve MAnAGeMent teAM

The Executive Management Team meets weekly and provides the leadership necessary for the Corporation to achieve its strategic direction and goals, maintain its services and comply with all relevant laws.


Brian McIntyre MComm, FCA, MAICD Director Finance

Appointed to this position in November 1994. Upon NSW Lotteries’ corporatisation in January 1997, Brian was also appointed Corporate Secretary. Brian has an extensivebackgroundinfinance,auditandriskmanagement developed over 38 years – this includes

more than 24 years experience in the lottery industry and 10 years with a major Chartered Accounting firm. He has responsibility for financial planning and budgeting, financial management and reporting, funds management, audit andriskmanagement,legalaffairs and corporate secretarial matters. On 3 July 2009, after over 14 years with the Corporation, Brian retired from full-time employment with NSW Lotteries. However, Brian’s exemplaryworkandtirelesscommitment to NSW Lotteries is not lost as he willcontinueworkingonreduced hours with the Corporation in the 2010 financial year.

chris Patterson Dip Tech (Comm) Director Customer and Agency Services

Appointed to this position in May 2000. Chris has over 35 years experience in commerce, information technology and customer service roles. Joining NSW Lotteries in 1980, following the launch of Lotto in NSW, he has held various positions encompassing financial, operational, administration and customer service responsibilities. Chris currently has responsibility for agency appointments, prize payments, Players Club, warehousing and distribution, Lotto and Lottery draw activities and call centre services.

executive team changeOn 31 December 2008, the former Chief Executive Officer, Michael Howell, retired from the Corporation after nearly 25 years of service.

LEFT:The Executive Management Team (L-R), Chris Patterson, Martin Cassidy, Susan Browne, Mark Carter.

BELOW: Brian McIntyre.


coRPoRAte GoveRnAnce

NSW Lotteries is a State Owned Corporation, established under the provisions of the NSW Lotteries Corporatisation Act 1996. The Corporation is licensed by the NSW Government to sell lottery games under the Public Lotteries Act 1996. The licences are due for renewal on 1 July 2010.

The Corporation operates within a strict frameworkofregulationandcorporategovernance to ensure that its well established reputation for honesty and integrity is maintained. This section of the AnnualReportrevealsthekeyaspectsof NSW Lotteries’ corporate governance framework.Theframeworkdetailshowtheorganisationiscontrolled;howitresponds to and protects the interests ofitsvariousstakeholders;howitisfinanced;andhowitmeetsitsfinancialand social obligations.

NSW Lotteries’ corporate governance processprovidestheframeworkfordecision-makingbasedonasetofclearlydefined Corporate Values and Objectives.

TheCorporation’skeyGovernmentalstakeholdersare:

• TwoShareholderMinisters,whorepresent the owners – i.e. the NSW Government – and are responsible forprotectingitsinterest;

• ThePortfolioMinister,whoisresponsible for establishing and managingtheregulatoryframeworkgoverning the Corporation’s commerciallotteryactivities;and

• TheNSWTreasury,whichoversightsthe business performance on behalf of the Shareholder Ministers.

The separation of the Shareholder Ministers’ role from the Portfolio Minister’s role as the Regulator is a keypillaroftheCorporatisationmodeladopted in NSW. It is intended to provide clear lines of accountability for the Corporation’s commercial performance.

Role of the NSW Lotteries Board

The NSW Lotteries Board is accountable to the Shareholder Ministers and is responsible for establishing the overall strategic direction of the organisation and representing the interests of the shareholdersandotherkeystakeholders.There are six non-executive Directors on the Board who are appointed by the Shareholder Ministers. The non-executive Directors appoint the Chief Executive Officer, also a member of the Board, after consultation with the Shareholder Ministers.

The Board’s corporate governance functions include:

• Providingstrategicdirection;

• Validating,approvingandmonitoringstrategicissues;

• DeterminingkeypolicieswhichimpactontheCorporation’sactivities;

• Approvingstrategicalliances;

• Approvingmajorcapitalexpenditure;

• Monitoringorganisationalperformanceagainsttargets;

• LiaisingwiththeShareholderMinistersandthePortfolioMinister;

• Ensuringcompliancewithstatutory,financialandsocialresponsibilities;

• EnsuringcompliancewithrelevantGovernmentpolicies;and

• Ensuringbusinessrisksareappropriately identified and managed.

oPeRAtInG costs – % oF sALes

08/0907/0806/0705/0604/0503/0402/03

5.6

5.25.

86.0

5.96.16.3


Composition of the Board

The enabling legislation provides that the Board of NSW Lotteries shall consist of:

• TheChiefExecutiveOfficer;

• OneDirectortobeappointedbythe Shareholder Ministers on the recommendation of a selection committee comprising:

I. Two persons nominated by thePortfolioMinister;and

II. Two persons nominated by Unions NSW.

This Director is recommended by the committee from three persons nominatedbyUnionsNSW;and

• Atleasttwoandnotmorethanfiveother Directors to be appointed by the Shareholder Ministers at their discretion.

Each non-executive Director may be appointed to hold office for a period not exceeding five years, renewable at the sole discretion of the Shareholder Ministers. Their level of remuneration is determined by these Ministers. The Executive Director does not receive any additional remuneration for acting as an ex-officio Director.

Directors’ and Officers’ liability insurance is provided to cover Directors and Officers of NSW Lotteries. This coverage does not extend to deliberate acts of fraud or dishonesty.

NSW Lotteries is fortunate to be able to draw on a wide range of skillsanddepthofexperienceinits current Board, with members from diverse industries, including lotteries,wagering,media,marketing,publishing, finance and politics.

Current members of the NSW Lotteries Board are: John Bagshaw (Chairman);BonitaBoezeman(DeputyChairman);MiltonCockburn;JohnJohnson;DenisMcCormack;NickNichles (Chief Executive Officer) and Suzanne Walsh. The Board members are profiled on pages 48/49.

Board Responsibilities

The Board is accountable for setting the overall direction and monitoring the performance of the Corporation. The Chief Executive Officer is responsible for the day-to-day management of the business in accordance with the various directions and policies of the Board.

Board members have significant responsibilities and duties as Directors, and additional obligations flowing from the State Owned Corporations Act 1989.

A Code of Conduct for Board Members is maintained and provides the necessary guidance to ensure Directors are fully aware of the responsibilities and requirements of a Director.

Board’s Operating Framework

The Board has established a sound operatingframeworktoensuretheefficient and effective management of the Corporation’s commercial activities. Keyfeaturesoftheframeworkare:

• ActiveinvolvementinstrategicplanningfortheCorporation;

• Regularmonitoringandreviewingofall major areas of the Corporation’s performance;and

• SharingtheindividualskillsofDirectors in important areas of the business by participation in Board Committees.

Board approval is required for all publicly advertised tenders and items of capital expenditure exceeding $150,000 as well as annual budgets, Business Plans and major strategic items such as Statutory Financial Reports.

LEFT:Tony Simon, John Vineburg, Stuart McNamara and Vanessa Craze – some of the members of the Leadership Team – a group of senior managers who are strategically brought together to participate actively in the running of the business.


Board Meetings

Meetings of the Board are usually held at monthly intervals. However, additional meetings may be held to discuss matters of an urgent or significant nature. This year, 11 monthly Board meetings were held, with the following attendance:

John Bagshaw (Chairman) 11

Bonita Boezeman 11

MiltonCockburn 10

John Johnson 9

DenisMcCormack 11

NickNichles 5(Appointed as Chief Executive Officer 1.1.09)

Suzanne Walsh 11

Michael Howell 6 (Contract completed as Chief Executive Officer 31.12.08)

Board Committees

The Board has established three standing Committees, each with its own documented charter, to assist in the good governance of the Corporation. These Committees provide the flexibility for more detailed consideration of major strategic matters or items of significance, than would be possible within normal monthly Board meetings. The role and composition of the Committees are examined regularly, as part of the annual review of Board performance and varied to meet the changing needs of the Corporation.

The composition of the Board Committees at the end of the financial year are displayed in the table above.

Audit and Governance Committee

The Audit and Governance Committee assists the Board in discharging its responsibilitieswithregardtoriskmanagement, statutory financial reporting and corporate governance matters. The Committee:

• ConsidersthedraftinternalauditplanandmakesappropriaterecommendationstotheBoard;

• Reviewstheadequacyofmanagement’s responses and actions to matters raised in internal andexternalauditreports;

• Evaluatestheprocessinplaceforassessing the effectiveness of internalcontrols;

• Annuallyconsiderstheadequacyof the Corporation’s Business Continuity Plan, assessments ofbusinessrisksandinsurancecoverageandadvisestheBoard;

• Reviewsstatutoryfinancialinformation proposed by management for submission through the Board to the ShareholderMinisters;and

• AlertstheBoardtoanysignificantcorporate governance issues.

Majoractivitiesundertakenthisyearinclude a review of the Corporation’s overallriskmanagementprogram,scheduled reviews of major financial operational policies referred by the Board and monitoring progress against the internal audit plan.

During the year, five Audit and Governance Committee meetings were held, with the following attendance:

Bonita Boezeman (Chairman) 5

MiltonCockburn 5

John Johnson 4

Suzanne Walsh 3

The Chief Executive Officer is not a member of the Committee but is invited to attend meetings when matters of particular significance are being considered.

Information Technology Committee

The Information Technology Committee is responsible for assisting the Board to oversee the use of information technology within the Corporation. Its role includes:

• Overseeingthedevelopmentandimplementation of the Corporation’s InformationTechnologyStrategicPlan;

• ProvidingadvicetotheBoardonallmatters associated with the current use of information technology by NSWLotteries;

AuDIt AnD GoveRnAnce coMMIttee

InFoRMAtIon technoLoGY coMMIttee

huMAn ResouRces AnD ReMuneRAtIon coMMIttee

John Bagshaw • Chairman

Bonita Boezeman Chairman •MiltonCockburn • •MichaelHowell/NickNichles • •John Johnson •DenisMcCormack Chairman

Suzanne Walsh • •


• Evaluatingriskmanagementstrategies designed to minimise interruption to on-line selling activities;and

• Monitoringnewandemerginginformation technology opportunitiesandrisks.

During the year the Committee considered a number of initiatives includingtheWideAreaNetworkreplacement strategy, major changes to the Gaming System infrastructure, theCorporateNetworkinfrastructureupgrade, review of the Disaster Recovery Plan, including escalation procedures, and on-going software enhancements.

Four meetings of the Information Technology Committee were held this year and attendance was as follows:

DenisMcCormack(Chairman) 4

John Bagshaw 4

Michael Howell 2(former Chief Executive Officer)

NickNichles 2

Suzanne Walsh 2

Human Resources and Remuneration Committee

The Human Resources and Remuneration Committee provides advice to the Board on human resources and remuneration matters affecting the Corporation. Its major responsibilities include:

• ProvidingadvicetotheBoardregarding the selection and terms and conditions of employment of theChiefExecutiveOfficer;

• ReviewingtheremunerationoftheChief Executive Officer each year andmakingrecommendationstothe Board concerning the terms and conditionsofemployment;and

• Consideringsuccessionplanningissues relating to the Chief Executive Officer and other senior executives of the Corporation.

As a matter of practice, the Chief ExecutiveOfficertakesnopartindiscussions of any matters at the Committee which have a direct (or indirect) bearing on his terms and conditions of employment with the Corporation.

Over the course of this year, the Committee reviewed a range of matters including Industrial Agreement negotiations, changes to the executive performance incentive scheme, succession planning and workforceplanning.

Six Human Resources and Remuneration Committee meetings were held, with the following attendance:

John Bagshaw (Chairman) 6

Bonita Boezeman 6

MiltonCockburn 6

Michael Howell 1

NickNichles 4

Monitoring Performance

Aseriesofkeyperformanceindicatorshas been established for all areas of the business. These provide a “health check”ontheorganisationanditsprogress towards meeting its various financialandstakeholdertargets.

These indicators are reported to the Board each month and progress is continuously monitored throughout the year. Each quarter the Board also receives detailed reports on progress towards the achievement of Business Plan targets, strategies and action plans. In addition, the Executive highlight to the Board the main issues faced in the preceding quarter and challenges that lie ahead to ensure that we remain focused on the achievements of our goals. A report on product profitability is considered on a 6-monthly basis.

The Board has established three standing Committees, each with its own documented charter, to assist in the good governance of the corporation.


Annual Review of Board Performance

As part of a philosophy of continuous improvement in all aspects of its operations, an annual review is conducted of the performance of the Board as a whole, each individual Director and each Board Committee.

The review is conducted annually to identify any areas for improvement, so that the Board is able to maximise its contribution to the Corporation’s business objectives.

Assessment of individual Directors’ performance includes:

• SurveysofBoardandindividualDirectors concerning their perceptions about the Board and individualDirectorperformance;and

• One-on-oneinterviewsinvolvingeach Director and the Chairman.

Each Board Committee also has an obligation to annually assess its performance and, where necessary, makerecommendationstotheBoard concerning any suggestions for improving the effectiveness of the Committee. The evaluation is the responsibility of the Committee Chairman and is conducted along similar lines to the Board evaluation process adopted for the full Board.

RIsK MAnAGeMent

Although NSW Lotteries is in the business of chance, every effort is madetoidentifyandmanagerisksoasto ensure the continued success and integrity of its business activities.

A significant element in the effective management of the Corporation’s resources is regular scanning of the operating environment to identify major risks.Eachareaofriskisassessedandprioritisedaccordingtoitslikelihoodof occurrence and the significance of itsimpact.Inturn,riskmanagementprocedures are reviewed and relevant strategies implemented to manage eachareaofriskwithinclearlydefinedstandards of accountability.

In recent years, the Corporation has particularlyfocussedonriskassociatedwith processes outsourced to the retailnetwork,includingticketsalesand prize redemption.

OurRiskManagementProgramisbased on the Australian/New Zealand RiskManagementStandard–AS/NZS4360:2004 and focuses on mitigation strategies as well as the transfer ofrisk.TheProgramcoversallkeyareas of the Corporation’s activities including:

• InternalAuditActivities;

• FraudPrevention;

• Anti-CorruptionActivities;

• Governance;

• BusinessContinuity;

• Insurance;

• LegislativeCompliance;

• Investigations;

• AssetManagementandSecurity;

• InformationandIntellectualPropertySecurity;and

• Privacy,InformationDisclosureandFreedom of Information.

NSW Lotteries continues to evolve its riskmanagementstrategiesbasedonknownriskfactorsbothinAustralianand international lottery jurisdictions and also monitors for any potential newriskfactors.

TheBoardhasacknowledgedthatithasreceived a report from management that indicates that material business riskshavebeenmanagedeffectivelyand that primary internal control systems are appropriately designed and have been implemented.

InsuRAnce

Insurance is one of the means by which the Corporation manages and mitigates anyareasofidentifiedrisk.Aspartofitsoverallapproachtoriskmanagement,thetype and extent of insurance coverage is regularly reviewed and updated.

RIGHT:Staff were ecstatic when they heard the Orange Mall Newsagency had sold a first prize in a $20 million Saturday Lotto Superdraw (Courtesy of the Daily Liberal).


Allareasofriskinvolvinginsurance,suchasWorker’sCompensation,Property and Consequential Loss, Motor Vehicle, Public Liability and Directors’ and Officer’s Liability, are reviewed at least annually.

Given the scope and diversity of theretailnetworkanditsbroadresponsibilities in handling hundreds of millions of individual player transactions each year, the on-going identification and mitigation strategy is an absolutely essential business practice. In addition, the increasing value of top prizes offered and the consequential financial liabilities involved have been recognised andaddressedintheoverallriskmanagement strategies.

A sustAInABLe envIRonMent

NSW Lotteries uses strategies and practices that are designed to meet the needs and expectations of our stakeholderstoday,whileprotecting,supporting and enhancing the human and natural resources that will be needed in the future.

We contribute to a sustainable environmentbyworkingtoreduceourenvironmental impact, improving our management practices and utilising natural resources efficiently.

Managing Energy

NSW Lotteries purchases 6% green power as part of the energy supply agreement with Energy Australia. This has resulted in a reduction of 114 tonnes of carbon dioxide emissions this year. A new supply agreement has recently been negotiated and provides for an increase in the use of renewable energy to 10% from 1 July 2009.

The Corporation’s energy consumption fellby4%thisyearto1,787,631kWh.This includes the power consumed by the Data Centre which is an essential operationworking24hoursaday,sevendaysaweek.

Energy consumption is monitored on an ongoing basis and energy efficient lighting is installed in both the main office and data centre buildings and non essential lights are switched off after hours. Corporate policy prescribes that energy efficient equipment is purchased and timers on the equipment ensure the conservation of energy. In addition, the electronic capture of all documents has led to a dramatic reduction in paper-based files and the use of paper generally.

Less Waste

The Corporation continues to implement strategies and initiatives aimed at reducing waste in line with the NSW Government’s Waste Reduction and Purchasing Policy (WRAPP). We constantly encourage

our employees to be committed to the principles of reducing waste and to engage in energy saving practices such as reducing printing where possible and printing both sides of the paper. In this regard, 99% of our waste covering paper, cardboard, toner cartridges, fluorescent tubes and vegetation from our property is recycled. In addition, 75% of copy paper and 100% of corporate letterhead stationery and envelopes are purchased with at least 50% recycled content. This year, we also improved our recycling effortinthevariouskitchensthroughoutthe organisation through the installation of commingled recycling bins for plastic, glass, aluminium and steel containers. Foamandpolystyrenepackagingisalsobeing recycled.

Smaller Fleet of Pool Vehicles

This year, we reduced our fleet of pool cars from five to two. Pool cars are usedbystaffforgeneralworkpurposesand an analysis of usage identified that three cars were under utilised. Overall fuel consumption remained stable compared to last year’s usage.

Earth Hour

On 28 March 2009, the Corporation participated in Earth Hour to demonstrate its commitment to the environment and to further assist in the reduction in greenhouse gasses by switching off non essential lights and equipment.

We contribute to a sustainable environment by working to reduce our environmental impact, improving our management practices and utilising natural resources efficiently.

ouR stAFF

59 Licence transfer

59 new Information channel created

59 We Listened to our staff

59 cross team Work opportunities

60 Involving our staff In Decision Making

60 Review of values

61 Learning and DevelopmentPerformance Reviews

Continuation Of Management Development Program

Continuing the Investment in Our Staff

Training and Development

External Study Assistance

62 Rewarding our staffReward and Recognition Program Enhanced

Employee of the Year

Long Service Awards

62 university scholarship Program

63 employee Assistance Program

63 caring For others

63 occupational health And safety (oh&s)Key Performance Statistics

64 human Resources statistical Report as at 30 June 2009


Staff Turnover 5-10% 7.82% ✔

SickLeaveperemployee ≤ 5days 5.75 days ✘

Employee engagement 75% 71.9% ✘

coRPoRAte oBJectIves: • Tohaveanengaged,moTivaTedandskilledworkforceThaT

contRIButes PosItIveLY to ouR coMMeRcIAL success.• ToengenderagreaTercommercialfocusinourworkforce.

ouR stAFF | NSW Lotteries Annual Report 200958

59NSW Lotteries Annual Report 2009 | ouR stAFF

Clearly NSW Lotteries could not have achieved another winning year without the valuable contribution of thousands of people – players, agents, their employees and suppliers. There is also another group of dedicated people who have faced the challenges of the year in an outstanding fashion – the dedicated staff of NSW Lotteries. Theircommitmentandhardworksawsales per employee reach a record $8 million this year – up from $7.4 million in the previous year.

In a climate of global financial challenges, the Corporation’s goal is to have an engaged, motivated and skilledworkforcethatcontributespositively to our future commercial success. We plan to do this by ensuringthatourstaffhaveakeencommercial focus in order to meet the challenging times that lie ahead.

LIcence tRAnsFeR

After some period of speculation, in April 2009, the NSW Government formally announced its intention to issue a long term exclusive licence to the private sector for the operation of NSW Lotteries. An Employee Information Kit was provided to all employees outlining the arrangements associated with the proposed licence transfer.

To ensure employees are provided with correct and up-to-date information regarding the proposed transfer, the Board, Chief Executive Officer and Executive Team have been providing

updates to employees through various channels. Staff meetings have been held and an internal web page is maintained where employees are able toaskquestionsandreceivethelatestinformation available. Responses are made available to all employees.

At the time of preparing this report, the Government has commenced a transaction process with the release of a Request for Qualifications document to interested parties.

neW InFoRMAtIon chAnneL cReAteD

“TheWeekAhead”–Anemailfromthe Chief Executive Officer – was initiatedtokeepemployeesinformedand to focus their efforts on the prioritiesoftheweek.NSWLotteriesis attempting to empower employees withknowledgeofwhatishappeningwithin the Corporation. This is particularly important in the current period of uncertainty regarding the licence transfer.

We LIsteneD to ouR stAFF

We survey staff to allow management to better understand the feelings and attitudes of the whole team. Staff are surveyedabouttheirworkexperienceatNSWLotteriesandtheirfeedbackreflects where the Corporation is doing well and where we need to focus attention to address areas of concern.

In September 2008, 146 employees (or 86% of staff) completed the biennial Staff Engagement Survey. The survey resulted in an overall engagement level of 71.90%, slightly more than the 70.21% rating in 2006. This result rates as moderate engagement.

The survey identified areas of high and low engagement of NSW Lotteries employees and the result remains a good foundation for developing programs and building on the success of the business. A strategic plan was formulated to address the areas identified as low-moderate engagement.

cRoss teAM WoRK oPPoRtunItIes

Results from the employee survey overwhelmingly indicated that career opportunities are of paramount importance to our employees. To address this issue, we subsequently requested employees to provide an indicationofwheretheywouldliketogainworkexperienceinanyareaofthe organisation.

A number of employees were provided withtemporaryworkopportunitiesoutside of their normal positions andfeedbackhasbeenextremelypositive. To ensure this initiative continues, the performance review documentation has been updated to capture employees’ interest for future opportunities as they arise.

GoveRnMent Revenue PeR eMPLoYee ($M)

sALes PeR eMPLoYee ($M)

08/0907/0806/0705/0604/0503/0402/03

2.51 2.

75

2.24

2.22

2.14

2.03

1.92

08/0907/0806/0705/0604/0503/0402/03

7.4 8.

0

6.6

6.6

6.3

6.1

5.6


InvoLvInG ouR stAFF In DecIsIon MAKInG

An initiative that arose out of the 2006 employee survey was the creation of the NSW Lotteries Leadership Team – a group of senior managers who are strategically brought together to participate actively in the running of the business.

The Leadership Team continued to play a crucial role in the development of the Corporation’s Business Plan for the 2010-2012 period by identifying the keystrategicimperativesfacingtheCorporation and preparing an action plan for the future. It also played a keyroleinleadingareviewoftheCorporation’s values, in addition to cascading the corporate objectives to all levels of the organisation through the Performance Review process.

RevIeW oF vALues

AkeypriorityfortheBoardandManagement Team was to prepare employees for the transition process associated with the proposed licence transfer and the challenges of operating in the private sector. All employees wereinvolvedinworkshopswheretheycould put forward ideas for the values they wanted to exhibit and embed in the Corporation. Consensus was reached with five refreshed values and definitions.

Workshopswereheldwithteamstodevelop action statements that made the new values meaningful to each team and its members. Numerous communication materials were launched to further embed the values into the Corporation. These included: computer screensavers, mouse mats, posters and mugs.

Our Corporate Values are shown on the inside front cover.

The dedicated staff of NSW Lotteries’ commitment and hard work saw sales per employee reach a record $8 million.


LeARnInG AnD DeveLoPMent

Performance Reviews

After the previous year’s overhaul of the Performance Review Program, managers and employees consolidated the usage of the new process and documentation.Basedonfeedbackreceived from employees and managers, minor refinements were made to the documentation and further communication with managers andemployeeswasundertakentoclarify the process.

Continuation of Management Development Program

Building the capability of our employees is fundamental to NSW Lotteries’ continued growth and achievements. In 2007 we commenced our first structured Management Development Program and due to its success a second program commenced late in fiscal 2009. A further ten staff have been selected based on their potential todeveloptheirskillsandmakesignificant contributions to the ongoing success of the business.

Through the continual review of the NSW Lotteries Succession Plan, we have identified critical roles which have the potential to be filled by existing staff. Acompetencyframeworkhasbeenestablishedandaskill-gapanalysishasbeen completed to determine the level of development each participant

will require. The aim is to identify competencies and develop critical skillsrequiredbyeachparticipanttomove to his or her next level of career progression within NSW Lotteries.

Each participant will be mentored by a senior manager. Mentorees will gain the opportunity to explore their strengths andweaknessesinaconfidentialenvironment. Mentors will be able to share their experiences while gaining an insight into issues being faced in the various parts of the Corporation.

Continuing the Investment in Our Staff

In fiscal 2009, the ten participants from the first Management Development Program moved from the formal structured learning phase into an organisational based project activity.

Over the last twelve months, these participants were involved in leading a corporate wide change project that focused on improving the service management of all areas of NSW Lotteries. The Management Development Program participants brought to the project expertise from various technical and corporate backgroundsandwerethedrivingforce behind the successful implementation of the project.

Training and Development

Allemployeesareencouragedtotakeresponsibility for their own development and are encouraged to participate in both in-house and external training andtakeadvantageofdevelopmentopportunities. To assist with this continual development, training and development needs of employees are identified through the bi-annual performance reviews. Our Performance Review Program has been designed to identify training needs for employees and to strategically plan for each individual’s development.

Over the last twelve months, a total of 167 employees participated in 71 internal and external courses, seminars and on the job training programs covering a range of management, technical/professionalandgeneralskilldevelopment topics.

External Study Assistance

Employeesseekingtoenhancetheirprofessional development through private study are provided with financial assistance and study leave toundertakeeligiblecoursesrelevantto the Corporation’s needs. There were11employeeswhoundertooktertiarystudiestoenhancetheirskillsandknowledgethroughthisprogramduring the past year.

LEFT:Representatives from the NSW Lotteries Player Services Team – from left to right: Karina Stehlin, Sandra Josifovska, Kevin Kendrick, Lisa Toovey and Alecia Jensen.


ReWARDInG ouR stAFF

Reward and Recognition Program Enhanced

We are very proud of our employees and aim to recognise their achievements as often as possible. The aim of our Reward and Recognition Program is to provide formal recognition to staff atalllevels.Followingfeedbackfromthe employee survey, the program was enhanced to allow managers to provide immediate recognition to employees. Smallerrewardssuchasmovieticketsare now able to be provided “on the spot”torecognise“ajobwelldone.”

Nominations are still sought from all employees and managers with a formal award presentation ceremony held each quarter. Through both formal nominations and immediate recognition rewards, a total of 50 employees received awards, which included individual employee recognition, as well as team awards.

Employee Of The Year

TheEmployeeoftheYearAwardisour most eminent award under the Employee Reward and Recognition program. It recognises an employee’s outstanding contribution to the Corporation during the year. Our aim is to reinforce the pursuit of excellence within the Corporation by publiclyacknowledgingandrewardingexceptionalwork.

The 2008/2009 Employee of the YearAwardwaspresentedtoCarlaPorteous, Quality Assurance Analyst, at a ceremony in December 2008. Carlaworkswithemployeesfromallareas of the Corporation as well as a number of NSW Lotteries suppliers and contractors. She was recognised for consistently providing exemplary customer service and high quality work,andinparticular,hersignificantcontribution to major projects throughout the year.

Carlaworkedmanyadditionalhoursover a number of months to assist in achieving aggressive deadlines for these projects. Carla is highly regarded by peers and managers, as well as external contacts. She displays and exemplifiesa“can-do”attitudeandbelieves her role is integral to the success of the Corporation.

Long Service Awards

In conjunction with the Employee of theYearAward,theCorporationalsoformallyacknowledgesthevaluedcontribution of its long-serving staff by recognising those who achieve service milestones. Maria Fornito and Carla Porteous celebrated 25 years of service during the year and were presented with an award and gift in appreciation for their contributions and service to NSW Lotteries.

unIveRsItY schoLARshIP PRoGRAM

For the past four years, NSW Lotteries has participated in the University of New South Wales Co-Op Scholarship Program. This year saw students placedwithinboththeMarketingand Sales Team and the Information Technology Services Team.

RIGHT:Carla Porteous, Employee of the Year .

BELOW:Long-serving employees Carla Porteous (left) and Maria Fornito (right) received an award for 25 years service from John Bagshaw, Chairman of the NSW Lotteries Board (Centre).


Each scholarship is a four year commitment providing exceptional undergraduate students with structured industry training for a six month period each year.

eMPLoYee AssIstAnce PRoGRAM

The Employee Assistance Program provides a free counselling and advisory service for employees seekingprofessionalassistanceforpersonalorworkrelatedproblems.This program has been in operation for the past eight years at NSW Lotteries and is available to all our staff.

cARInG FoR otheRs

NSW Lotteries staff participate regularly in fund raising activities for various charitable groups. These occasions allow staff to enjoy each other’s company while contributing to a worthy cause. This year, funds have been raised for many worthwhile causes including: the Salvation Army, National Breast Cancer Foundation (PinkRibbonDay),CancerCouncil(Daffodil Day and Australia’s Biggest Morning Tea), Children’s Medical Research Institute (Jeans for Genes), SIDS and Kids (Red Nose Day) and the Shepherd Centre (Loud Shirt Day).

occuPAtIonAL heALth AnD sAFetY (oh&s)

NSW Lotteries is committed to protecting the health and safety of all itsemployees.Thisisanissueofkeyimportance to our operations and we are proud of our safety record to date. The Corporation consults with employees in implementing safety practices and systems that ensure the health, safety and welfare of employees.

This year an OH&S Committee was re-established to help promote safety practices and health in the workplace.TheCommitteeconsistsof three employee and three employer representatives and meets quarterly with the aim of identifying and eliminating any issues which could jeopardise the wellbeing of employees.

Our approach to OH&S is built on the following principles:

• Regularconsultationbetweenmanagementandstaff;

• Preventionofincidentsratherthanreactiontoincidents;

• Effectiveincident/injurymanagement;

• Effectivepost-incidentmanagement;

• Timelyandplannedreturntowork;and

• EfficientandproactivemanagementofWorker’sCompensationinjuriesand claims.

Employee involvement at all levels is criticalforensuringasafeworkplaceand managers, supervisors and staff are encouraged to assume personal responsibility for adopting effective workpractices.

Staff are regularly updated on safety issues which have potential impact in theworkplaceandareactivelyinvolvedin a planned program of emergency training, drills and procedures. In addition, NSW Lotteries provides access for employees to a number of healthcare initiatives including influenza vaccinations, counselling, executive healthchecks,wellbeingarticlesandergonomicworkplaceassessments.


Key OH&S performance statistics are as follows:

oh&s stAtIstIcAL RePoRt 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Average number of employees 183 176 172 170 164 166

Totalnumberofworkinjuries 15 28 22 22 12 11

Actual expenditure on OH&S programs ($) 13,523 25,567 15,926 21,465 14,781 71,576*

TotalnumberofWorkersCompensationClaims 10 14 7 7 3 5

Total number of employees who participated in a rehabilitation program

1 1 2 1 1 0

Number of hours in training in OH&S 150 203 91 192 35 28

Number of OH&S representatives 8 7 6 6 0 6

Number of OH&S committees 2 2 1 1 0 1

* The increase in expenditure this year was partly due to the introduction of a comprehensive training program on EEO and Harassment Prevention which was attended by all employees.

human Resources statistical Report as at 30 June 2009

June 2004 June 2005 June 2006 June 2007 June 2008 June 2009

Executive 6* 6* 6* 6* 6* 6*1

Senior Specialist Managers 7 7 5 5 7 8

Administrative Staff 156 149 148 149 143 141

Logistics Assistants 11 11 11 10 10 10

* Includes one female1 As at 30 June 2009, there was a total of 6 Executive positions which received the

equivalent of the NSW Government’s Senior Executive Service Level 1 pay or higher.

stAFF nuMBeRs (AveRAGe)

08/0907/0806/0705/0604/0503/0402/03

164

166

170

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176

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CONTENTS TO BE INSERTED

FINANCIAL REPORT

65NSW Lotteries Annual Report 2009 | FINANCIAL REPORT

CONTENTS

67 Statement By Board Of Directors

68 Independent Auditor’s Report

70 Income Statement

71 Balance Sheet

72 Statement of Recognised Income and Expense

73 Cash Flow Statement

74 Notes to the Financial Statements

74 Note 1. Summary of significant accounting policies

79 Note 2. Revenues79 Note 3. Profit from Operations79 Note 4. Taxation80 Note 5. Cash and Cash

Equivalent Assets80 Note 6. Financial Assets Held

for Trading80 Note 7. Other Financial Assets81 Note 8. Financial Instruments82 Note 9. Property, Plant

and Equipment84 Note 10. Intangible Assets

FINANCIAL REPORT | NSW Lotteries Annual Report 200966

84 Note 11. Other Non-Current Assets84 Note 12. Payables84 Note 13. Provisions90 Note 14. NSW Government

Dividends90 Note 15. Employee Benefits90 Note 16. Contributed Equity90 Note 17. Reserve91 Note 18. Retained Profits91 Note 19. Related Parties92 Note 20. Auditors’ remuneration92 Note 21. Commitments not

provided for in the Financial Statements

92 Note 22. Contingent Assets92 Note 23. Segment Reporting92 Note 24. Subsequent Event

statement by board oF directors

67NSW Lotteries Annual Report 2009 | Financial report

independent auditor’s report

68 Financial report | NSW Lotteries Annual Report 2009

independent auditor’s report


notes

2009

$’000

2008

$’000

Revenues 1(b),2 1,370,221 1,251,012

Cost of Sales 3(a) (1,250,071) (1,141,627)

Gross Profit 120,150 109,385

Other Revenues 2 22,364 21,857

Retail Network Expenses (34,472) (35,259)

Printing & Distribution Expenses (5,916) (5,897)

Administration Expenses (34,724) (32,663)

Profit before income tax equivalent expense 3 67,402 57,423 Less Income tax equivalent expense 4(a) (20,358) (17,428)

Profit for the year 47,044 39,995

The Income Statement should be read in conjunction with the Notes to the Financial Statements

nsW lotteries corporation

income statementFor the Year Ended 30 June 2009



balance sheetas at 30 June 2009

notes

2009

$’000

2008

$’000

Current AssetsCash and Cash Equivalent Assets 5 37,019 30,230

Financial Assets Held for Trading 6 239,271 122,665

Other Financial Assets Held to Maturity 7 18,986 52,627

Trade Receivables 32,622 17,523

Other Current Assets 1,609 1,430

Total Current Assets 329,507 224,475

Non – Current Assets Other Receivables – 2,073

Other Financial Assets Held to Maturity 7 20,428 18,929

Property, Plant and Equipment 9 19,920 18,368

Intangible Assets 10 7,794 7,533

Deferred Tax Assets 4(d) 17,515 14,919

Other Non – Current Asset 11 1,677 5,263

Total Non – Current Assets 67,334 67,085

Total Assets 396,841 291,560

Current LiabilitiesTrade and Other Payables 12 194,238 110,534

Current Tax Liabilities 4(b) 5,692 10,383

Provisions 13 118,342 92,601

Total Current Liabilities 318,272 213,518

Non – Current LiabilitiesOther Liabilities 12 20,428 18,929

Deferred Tax Liabilities 4(c) 1,802 2,819

Provisions 13 7,743 836

Total Non – Current Liabilities 29,973 22,584

Total Liabilities 348,245 236,102

Net Assets 48,597 55,458

EquityContributed Equity 16 – –

Reserve 17 4,220 3,665

Retained Profits 18 44,377 51,793

Total Equity 48,597 55,458

The Balance Sheet should be read in conjunction with the Notes to the Financial Statements


notes

2009

$’000

2008

$’000

Profit for the year 47,044 39,995Buildings – revaluation increment 1(h), 9(b) 793 –

Income tax on buildings – revaluation increment 4(e) (238) –

Superannuation actuarial loss 1(a),13 (11,267) (1,758)

Income tax on superannuation actuarial loss 4(e) 3,380 527

Net expense recognised directly in equity (7,332) (1,231)

Total recognised income and expense for the year 39,712 38,764

Effect of change in accounting policy and correction of errorProfit for the period as reported in 2008 38,778

Change of policy – superannuation actuarial loss 1(a) 1,231

Correction of error – leasehold land 1(a) (14)

Restated profit for the period 39,995

The Statement of Recognised Income and Expense should be read in conjunction with the Notes to the Financial Statements


statement oF recognised income and expenseFor the Year Ended 30 June 2009



cash FloW statementFor the Year Ended 30 June 2009

notes

2009

$’000

2008

$’000

Cash Flows from Operating ActivitiesReceipts from customers 1,409,835 1,299,800

Payments to suppliers and employees (153,126) (150,315)

Prizes paid to customers (743,881) (726,373)

Duty payments to Governments (316,928) (307,234)

Goods & Services tax payments (56,322) (50,796)

Income tax equivalent paid (28,900) (12,461)

Investment revenue received 10,612 9,046

Investment revenue credited to prize funds (6,016) (5,690)

Other revenue received 10,559 9,834

Net cash from Operating Activities (a) 125,833 65,811

Cash Flows from Investing ActivitiesProceeds from sale of plant and equipment 379 303

Receipts/(Payments) for other financial assets held to maturity 32,142 (49,975)

(Payments)/Receipts of financial assets held for trading (116,606) 58,013

Payments for property, plant and equipment (5,005) (519)

Payments for intangible assets (2,495) (1,369)

Net cash from Investing Activities (91,585) 6,453

Cash Flows from Financing ActivitiesDividends paid (33,470) (36,529)

Net cash from Financing Activities (33,470) (36,529)

Increase in cash and cash equivalents 778 35,735

Cash and cash equivalents at the beginning of the financial year 30,230 (5,505)

Cash and cash equivalents at the end of the financial year (b) 31,008 30,230

Notes to the Cash Flow Statement

(a) Reconciliation of cash flows from operating activities

Profit for the year 47,044 39,995

Adjustments for non-cash items:Depreciation 3,718 3,692

Amortisation 2,234 2,001

(Decrease)/Increase in income tax provided (4,691) 9,749

(Increase) in deferred taxes payable (3,851) (5,303)

Loss on sale of plant and equipment 149 55

Superannuation actuarial loss - tax effect 3,380 527

Changes in Assets and Liabilities(Increase) in receivables (15,099) (7,618)

Decrease/(Increase) in other assets 1,259 (1,631)

Increase in payables 79,192 16,527

Increase in provisions 12,498 7,817

Net cash from Operating Activities 125,833 65,811

(b) Reconciliation of cash at the end of the financial year with related items in the Balance Sheet

Cash comprises:Cash and Cash Equivalent Assets 37,019 30,230

Cash Book Overdrafts (6,011) –

Cash at the end of the financial year 31,008 30,230

The Cash Flow Statement should be read in conjunction with the Notes to the Financial Statements



notes to the Financial statementsFor the Year Ended 30 June 2009

General Information

New South Wales Lotteries Corporation (NSW Lotteries) is a Statutory State Owned Corporation established on 1 January 1997 under the provisions of the New South Wales Lotteries Corporatisation Act, 1996.

NSW Lotteries holds licences to conduct public lotteries. These licences have been issued under the provisions of the Public Lotteries Act 1996 and currently expire on 1 July 2010.

Note 1 – Summary of Significant Accounting Policies(a) Basis of Preparation

Statement of compliance

The Financial Report is a general purpose financial report which has been prepared on an accrual basis and in accordance with the New South Wales Lotteries Corporatisation Act, 1996, Public Finance and Audit Act, 1983, regulations issued thereunder, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”). Unless otherwise stated, the accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The Financial Report also complies with the International Financial Reporting Standards (IFRS) and interpretations adopted by the International Standards Board.

Board approval

The financial statements were approved by the Board of Directors on 24 September 2009.

Functional and presentation currency, roundings.

The Financial Report is presented in Australian dollars, which is NSW Lotteries’ functional currency and, unless otherwise stated, all financial information has been rounded to the nearest thousand dollars.

Historical cost

The Financial Report has been prepared on the basis of historical cost except for financial assets held for trading, property, plant and equipment and intangible assets which have been measured at fair value.

Going concern

In April 2009, the Government announced its intention to offer to the market a long term licence for the distribution of NSW Lotteries products. As mentioned in Note 24 Subsequent Event, the enabling legislation supporting this transaction was passed by the Parliament on 9 September 2009.

The financial report has been prepared on a going concern basis.

Correction of Error in Accounting for Leasehold Land in Prior Year

NSW Lotteries has retrospectively applied AASB 117: “Leases” on a $2,000,000 upfront payment for a 99-year lease on land where its leased office premises are located. The lease commenced on 30 June 1994. Prior to 1 July 2008, this upfront lease payment was included in Property, Plant and Equipment as leasehold land and measured at a fair value of $7,390, 000 comprised of an amortised cost of $1,838,000 and revaluation increment of $5,552,000. The original amount of $2,000,000 was amortised on a straight-line basis for 8 years from the commencement of the lease to 30 June 2002.

Prospectively, this change will lead to a recognition in the accounts of an annual amortisation of $20,200 against the remaining balance of $1,838,400 from 1 July 2008. This change has also led to the restatement of the 2008 financial statements due to the recognition of amortisation for 6 years from 1 July 2002 to 30 June 2008, reversal of revaluation increment and other related accounts. The land is now accounted for as an operating lease rather than a purchase.

Change in Accounting Policy

Defined Benefits Superannuation Funds:

In accordance with a revised NSW Treasury policy, NSW Lotteries has changed its policy on the recognition of defined benefits superannuation actuarial gains and losses. Such actuarial gains and losses are now recognised in the Statement of Recognised Income and Expense instead of the Income Statement where such gains and losses were previously recognised. Both options are permissible under AASB 119 “Employee Benefits”.

The change in policy has been adopted on the basis that recognition outside profit or loss provides reliable and more relevant information as it better reflects the nature of actuarial gains and losses as actuarial gains/ losses are re-measurements, based on assumptions that do not necessarily reflect the ultimate cost of providing superannuation. Recognition outside the Income Statement also harmonises better with the Government Finance Statistics / GAAP comprehensive income presentation for the whole of government and general government sector required under AASB 1049 “Whole of Government and General Government Sector Financial Reporting”. A comprehensive income presentation will also be available at the entity level from 2009/10 under AASB 101 “Presentation of Financial Statements”.

The combined effects of the change in accounting policy increased 2009 “Profit for the Year” to $47.04 million from $39.16 million (2008: to $40 million from $38.78 million) by excluding superannuation actuarial loss ( 2009: $11.27 million, 2008: $ 1.76 million), along with the associated and offsetting income tax effects (2009:$3.38 million, 2008:$0.53 million). These items are now recognised in the Statement of Recognised Income and Expense rather than the Income Statement.

The effects of the correction of the prior period error and the change in accounting policy are detailed as follows:




Changes from the previous year: 2009 2008

Based on Prior

Accounting Policy $’000

Adjustment $’000

Restated $’000

Previously Stated

$’000Adjustment

$’000Restated

$’000

Income Statement

Profit before income tax 56,135 – 56,135 55,685 – 55,685Superannuation actuarial loss(1) – 11,267 11,267 – 1,758 1,758

Rent expensed(2) – – – – (20) (20)

56,135 11,267 67,402 55,685 1,738 57,423

Less Income tax equivalent expense (16,978) – (16,978) (16,907) – (16,907)

Income tax effect of superannuation actuarial loss(1) – (3,380) (3,380) – (527) (527)

Income tax effect of rent expense(2) – – – – 6 6

(16,978) (3,380) (20,358) (16,907) (521) (17,428)

Profit for the year 39,157 7,887 47,044 38,778 1,217 39,995

Statement Of Recognised Income And Expense

Profit for the year 39,157 7,887 47,044 38,778 1,217 39,995

Buildings – revaluation increment – 793 793 – – –

Income tax on buildings – revaluation increment – (238) (238) – – –

Superannuation actuarial loss(1) – (11,267) (11,267) – (1,758) (1,758)

Income tax on superannuation actuarial loss(1) – 3,380 3,380 – 527 527

Net (expense) recognised directly in equity – (7,332) (7,332) – (1,231) (1,231)

Total recognised income and expense for the year 39,157 555 39,712 38,778 (14) 38,764

Balance Sheet

Other Current Assets(2) 1,410 – 1,410Add Current Portion of Prepaid Rent – 20 20

Other Current Assets 1,410 20 1,430

Property Plant & Equipment(2) 25,758 – 25,758Less Leasehold land – carrying amount – (1,838) (1,838)

Less Revaluation increment – (5,552) (5,552)

Property Plant & Equipment 25,758 (7,390) 18,368

Deferred Tax Asset(2) 14,883 – 14,883 Add Deferred Tax Asset on rent expensed from 2003 – 36 36

Deferred Tax Asset 14,883 36 14,919

Other Non-Current Assets(2) 3,566 – 3,566Add Non-current portion of Prepaid rent – 1,818 1,818

Less Rent Expensed from 2003 – (121) (121)

Other Non-Current Assets 3,566 1,697 5,263

Provisions(2) 92,686 – 92,686Less Overpaid Dividends from 2003 to 2008 – (85) (85)

92,686 (85) 92,601

Asset Revaluation Reserve(2) 7,613 – 7,613Less Leasehold land revaluation – (5,552) (5,552)

Add Tax effect of Leasehold land revaluation – 1,604 1,604

7,613 (3,948) 3,665

Total Equity 59,406 (3,948) 55,458

(1) Change due to adoption of new accounting policy(2) Change due to correction of prior year error




Changes from the previous year: 2009 2008

Based on Prior

Accounting Policy $’000

Adjustment $’000

Restated $’000

Previously Stated

$’000Adjustment

$’000Restated

$’000

Cash Flow Statement

Changes due to adoption of new accounting policy

(a) Reconciliation of cash flows from operating activities

Profit for the period 39,157 7,887 47,044 38,778 1,217 39,995

Adjustments for non-cash items:Depreciation 3,718 – 3,718 3,692 – 3,692

Amortisation 2,234 – 2,234 2,001 – 2,001

(Decrease)/Increase in income tax provided (4,691) – (4,691) 9,749 – 9,749

(Increase) in deferred taxes payable (3,851) – (3,851) (5,303) – (5,303)

Loss on sale of plant and equipment 149 – 149 55 – 55

Superannuation actuarial loss tax effect – 3,380 3,380 – 527 527

Changes in Assets and Liabilities(Increase) in receivables (15,099) – (15,099) (7,618) – (7,618)

Decrease (Increase) in other assets 12,526 (11,267) 1,259 113 (1,744) (1,631)

Increase in payables 79,192 – 79,192 16,527 – 16,527

Increase in provisions 12,498 – 12,498 7,817 – 7,817

Net cash from Operating Activities 125,833 – 125,833 65,811 – 65,811

(b) Revenue Recognition

Revenues are recognised at the fair value of the consideration received, net of the amount of Goods and Services Tax (GST).

Product sales (Subscriptions)

Revenue from product sales is recognised exclusive of GST, which is charged on the basis of operator margin. Revenue from Instant Scratchies is recognised when tickets are sold. For all other products, revenue is recognised when each game is drawn.

Investment revenue

Investment revenue is recognised as it accrues, taking into account the effective yield on deposits with an original maturity of three months or less, the market value of negotiable securities and the effective yield on deposits held for over three months or to maturity.

Sale of non-current assets

The gross proceeds of non-current asset sales are included as income at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

(c) Receivables

All Receivables are carried at amortised cost. Revenue from product sales is due for collection from retailers each week. Collectibility of receivables is regularly reviewed and debts which are known to be uncollectible are written off.

(d) Income Tax Equivalent

NSW Lotteries is exempt from Commonwealth Taxation, however, pursuant to the State Owned Corporations Act,1989, it is subject to the National Tax Equivalent Regime. NSW Lotteries adopts the balance sheet method of tax effect accounting. Under this method income tax expense equivalent for the year comprises current and deferred taxes (Note 4). Current tax is the expected tax payable on the taxable income for the year using current tax rates. Deferred tax is provided using temporary differences between the carrying amount of assets and liabilities for reporting purposes in the balance sheet and the amounts for taxation purposes. The amount of deferred tax provided will be based on the expected manner of realisation of the asset or settlement of the liability using current tax rates. Deferred tax assets are not brought to account unless it is probable that taxable income is available to utilise these assets.

(e) Cash and Cash Equivalent Assets

Cash and cash equivalent assets comprise cash on hand and at bank and bank deposits with a maturity of three months or less from the date of acquisition.

Cash book overdrafts are shown within Payables in Current Liabilities in the Balance Sheet and are included as a component of cash and cash equivalents for the purposes of the Cash Flow Statement.




(f) Financial Assets Held for Trading

Financial Assets at fair value comprise negotiable securities expected to be realised within one year and are carried at market value, being their fair value. Gains and losses on these assets are recognised in the Income Statement.

(g) Other Financial Assets Held to Maturity

Other financial assets held to maturity comprise bank deposits with maturities over three months from the dates of acquisition and other deposits.

Non-derivative financial assets which are deposits with fixed or determinable repayments and fixed maturities are classified as held to maturity when the intention is to hold these assets to maturity. These deposits held to maturity are stated at amortised cost using the effective interest rate method less any impairment losses. Amortised cost is calculated by taking into account any discount on acquisition over the period to maturity.

(h) Property, Plant and Equipment

Revaluations of Physical Non-Current Assets

Property, plant and equipment is measured at fair value in accordance with AASB 116 and TPP 07-1. At reporting date, each physical non-current asset is reviewed for impairment. If its carrying amount differs materially from fair value at that date, the carrying amount is then written down to its recoverable amount. Movements in the asset revaluation reserve are recognised in the Statement of Recognised Income and Expense in accordance with AASB 101.

Depreciation

Depreciation is provided on property, plant and equipment, including freehold buildings and any related revaluation increment. Depreciation is calculated on a straight line basis so as to write off each class of asset over its estimated useful life to its estimated residual value. The estimated useful lives for the current and comparative periods of each class of asset are:

Buildings 30 to 40 years

Leasehold improvements the leased term

Gaming and Other Computer equipment 3 to 10 years

Other equipment 3 to 8 years

(i) Intangible Assets

Intangible assets are identifiable assets that are without physical substance; are separable from other assets; and arise from contractual or other legal rights. Intangible assets are stated at cost less accumulated amortisation and impairment losses.

Amortisation

Amortisation is provided on a straight line basis over the estimated useful lives of intangible assets from the date they are available for use. The estimated useful lives for the current and comparative periods of each class of intangible asset are:

Gaming software 3 to 12 years

Other software 2 to 5 years

(j) Impairment of Assets

At each reporting date NSW Lotteries reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If impairment exists, the asset’s carrying value is written down to its recoverable amount. The recoverable amount is the lower of the asset’s fair value (less the costs to sell) and the value in use.

Any excess of the asset’s carrying value over its recoverable amount is expensed to the Income Statement.

(k) Payables

All payables are carried at cost which is the fair value of the consideration to be paid in the future for goods delivered and services rendered up to the reporting date, whether or not yet billed to the Corporation.

(l) Prizes

For all products, the prescribed percentage of subscriptions payable as prizes is allocated to the respective prize account from which payment to prize winners is made.

Unpaid Prizes

Unpaid Prizes represents prizes that have been won but which have not yet been paid to or claimed by prize winners up to twelve months after the drawing of the relevant game or, in relation to Instant Scratchies, after the game was closed, together with prize allocations that have not been won and have jackpotted at the reporting date.

Prize Funds

Prize Funds, comprise the balance of prescribed allocations, prizes unclaimed after twelve months from the drawing of the relevant game or, in relation to Instant Scratchies, from the date the game was closed and revenues generated through the investment of prizes payable, reduced by payments of additional prizes.


(m) Employee Benefits

Salaries and Annual Leave

Salaries and annual leave (including any associated on-costs) that are payable within one year represent present obligations resulting from employees’ services provided up to the reporting date calculated at remuneration rates that NSW Lotteries expects to pay when the liability is settled.

Long Service Leave

Long service leave, calculated at remuneration rates that NSW Lotteries expects to pay when the liability is settled, is provided for all employees. Long service leave expected to be settled within one year has been measured at the amounts expected to be paid when the liability is settled. The liability that is payable later than one year is measured at the present value of future cash payments.

Superannuation

NSW Lotteries contributes to various employee superannuation funds and charges are expensed as incurred.

In respect of defined contributions superannuation funds, NSW Lotteries’ obligations are determined by the amounts to be contributed for that reporting period so no actuarial assumptions are required to measure the obligation or the expense and there is no possibility of any actuarial gain or loss.

NSW Lotteries also contributes to three defined benefit superannuation funds. Its net obligations to these funds are calculated separately for each fund by estimating the amount of future benefit that employees have accrued in return for their services in the current and prior reporting periods, discounted to present value based on the long term Commonwealth Government bond rate less the fair value of any assets of the funds. All three funds are closed to new members. To the extent that a surplus or deficit is generated due to variations in actuarial valuations, these variances will be reflected in the Balance Sheet as an asset or liability and recognised in the Statement of Recognised Income and Expense as income or expense and associated income tax effect. A surplus resulting in a superannuation asset may allow NSW Lotteries to have a reduction in its contributions. A deficit resulting in a superannuation liability may require NSW Lotteries to increase the level of its contributions.

(n) Financial Instruments

Financial Instruments give rise to financial assets of NSW Lotteries and financial liabilities owing to other parties and account for the majority of NSW Lotteries’ current assets and current liabilities. In accordance with AASB 132 “Financial Instruments: Disclosure and Presentation“ and AASB 7 “Financial Instruments: Disclosures”, information is disclosed in Note 8 in respect of the credit risk, interest rate risk and liquidity risk. All such amounts are carried in the Financial Report at the values disclosed in the Balance Sheet and applicable Notes to the Financial Statements.

(o) Goods and Services Tax

Receivables and payables are stated with the amount of the Goods and Services Tax (GST) included. Revenues, expenses and all other assets and liabilities are recognised net of the amount of GST except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the item of expense.

The net amount of GST recoverable from, or payable to, the ATO is included as a receivable, or payable, in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable, to the ATO are classified as operating cash flows.

(p) Provision for Dividends

Dividends declared, determined or publicly recommended on or before the reporting date are recognised as a liability for the entire amount that remains undistributed at that date.

Due to the changed treatment of superannuation actuarial gains and losses in calculating dividends, there is no longer a need to adjust profit to exclude these gains/ losses, as they are now recognised outside the Income Statement. The dividend is calculated following TPP 02-3 Financial Distribution Policy for Government Businesses. The dividend payable of $46.37million (2008:$33.47 million) is calculated based on an after tax “Profit for the Year” of $47.04 million (2008:$40.00 million) adjusted for accrued defined benefits superannuation funds income in the Income Statement (See Note 13, Superannuation).

(q) Critical Accounting Estimates and Judgements

Management evaluates estimates and judgements incorporated into the Financial Report based on historical knowledge and best available current information. Estimates and judgements assume a reasonable expectation of future events and are based on current trends and economic data, obtained both external to and within NSW Lotteries.

The financial report has been prepared on a going concern basis. As mentioned in Note 1(a) Going Concern and Note 24 Subsequent Event, the Parliament has passed the legislation offering to the market a long-term licence for lotteries.

Key Estimates –

Impairment

NSW Lotteries assesses impairment at each reporting date by evaluating conditions specific to it that may lead to impairment of assets. Where an impairment is found the recoverable amount of the asset is determined (See Note 1(j)).

Make Good

NSW Lotteries estimates the restoration costs of its leased premises at each reporting date by evaluating conditions specific to the premises that may lead to impairment of the asset. Where an impairment is found the recoverable amount of the asset is determined (See Note 1(j)).




Recovery of Deferred Tax Assets

Deferred tax assets are recognised for tax deductible temporary differences as management considers that it is probable that future taxable income will be available to utilise the temporary differences.

Long Service Leave

The liability for long service leave is recognised and measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date discounted using the long term Commonwealth Government bond rate that reflects the time value of money and the risks specific to the liability (See Note 1(m)).

Estimation of useful lives

The estimation of useful lives of assets has been based on historical experience as well as manufacturer’s warranties (for gaming, computer and other equipment and software), lease terms (for leasehold improvements) and retention policies (for motor vehicles). The condition of the assets is assessed at each reporting date and considered against their useful lives. Adjustments are made when considered necessary. Depreciation charges are included in Note 9; amortisation charges are included in Note 10.

(r) Comparatives

Comparatives have been reclassified and repositioned for consistency with current year disclosures.

2009$’000

2008$’000

Note 2 – RevenuesProduct sales 1,370,221 1,251,012

Other Revenues comprise:Investment revenue 11,118 10,295

Other revenues (refer also Note 13, Superannuation) 11,246 11,562

22,364 21,857

Note 3 – Profit from operations includes:(a) Cost of Sales:Retailer commission 98,923 90,965

Prizes 807,055 737,188

Government duties 344,093 313,474

1,250,071 1,141,627

(b) ExpensesEmployee benefits 14,765 14,249

Superannuation – defined contributions funds 1,076 530

Fair value movements in financial instruments 16 21

Depreciation (refer Note 9) 3,718 3,692

Amortisation (refer Note 10) 2,234 2,001

Loss on sale of plant and equipment 149 55

Operating lease rental expenses 671 675

Consultancies 21 5

Bad debts – 22

Doubtful Debts 60 –

Note 4 – Taxation(a) Income Tax Equivalent ExpensePrima facie income tax equivalent expense calculated at 30% (2008 – 30%) on the profit. 20,221 17,227

Increase in income tax equivalent expense due to non-tax deductible or assessable items:

Non-deductible depreciation 47 45

Other 90 156

Income tax equivalent expense 20,358 17,428Income tax equivalent expense attributable to profit is made up of:

Current income tax equivalent provision 20,828 22,211

Deferred income tax equivalent assets (480) (5,296)

Deferred income tax equivalent liabilities 10 513

20,358 17,428




2009$’000

2008$’000

(b) Current Tax LiabilityProvision for current income tax equivalent

Movements during the year:

Balance at the beginning of the year 10,383 634

Less instalments of income tax paid (25,519) (12,462)

Current year’s income tax equivalent provision on profit 20,828 22,211

5,692 10,383

(c) Deferred Tax LiabilitiesDeferred income tax equivalent liabilities comprise the estimated liability at the applicable rate of 30% (2008 – 30%) on the following items:

Tax effect of revaluation of buildings taken directly to reserve 1,633 1,395

Tax effect of superannuation asset 2 1,071

Income currently non-assessable for tax but recognised as revenue for accounting purposes 167 353

1,802 2,819

(d) Deferred Tax AssetsDeferred income tax equivalent assets comprise the estimated future benefit at the applicable rate of 30% (2008 – 30%) on the following items:

Provisions and accrued employee benefits not currently deductible 2,232 2,000

Jackpotting unpaid prizes not currently deductible 3,990 7,089

Prize funds components not currently deductible 8,825 5,435

Tax effect of leased assets make good 176 176

Tax effect of Superannuation Liability 2,116 –

Differences in tax depreciation and amortisation of property, plant and equipment 28 –

Tax effect of prepaid leasehold land rent amortised – 36

Intangibles for accounting and income tax purposes 148 183

17,515 14,919

(e) Aggregate deferred tax arising in the reporting period and not recognised in the Income Statement but directly (debited)/credited to equity:Income tax on buildings – revaluation increment (notes 1(h), 9(b)) (238) –

Income tax on superannuation actuarial loss (notes 1(a),13) 3,380 527

3,142 527

Note 5 – Cash and Cash Equivalent AssetsCash at bank and on hand 19 230

Bank Deposits 37,000 30,000

37,019 30,230

Note 6 – Financial Assets Held for TradingNegotiable Securities 239,271 122,665

Note 7 – Other Financial AssetsCurrent AssetsBank Deposits 16,173 49,000

Deposits held to maturity 2,813 3,627

18,986 52,627

Non-Current AssetsDeposits held to maturity 20,428 18,929




Note 8 – Financial Instruments

Financial Risk Management and Investment Policies

The Corporation’s investment and risk policy regarding financial instruments is essentially to preserve the capital of the business while optimising the rate of return on invested funds, using a mixture of investment products as authorised by relevant legislation. Management’s policies for controlling these risks include avoidance of undue concentrations of risk, use of internal audit and regular review of benchmarks.

The Corporation’s principal financial instruments comprise bank deposits, negotiable securities and deposits held to maturity. The main purpose of these financial instruments is to earn income to assist in funding the Corporation’s operations.

(a) Market risk

Market risk is the risk that the value of the financial instruments will fluctuate due to changes in market interest rates. Based on contractual maturity dates, the Corporation’s exposure to interest rate risks and the effective interest rates of financial assets and liabilities at reporting date are as follows:

30 June 2009

Financial instrument note

0 – 3months

$’000

3 – 12months

$’000

over 1 to5 years

$’000

morethan 5years$’000

noninterestbearing

$’000

carryingamount as per

balance sheet$’000

Financial AssetsCash and Cash Equivalent Assets 5 37,019 – – – – 37,019

Financial Assets Held for Trading 6 231,913 – 6,919 439 – 239,271

Other Financial Assets Held to Maturity 7 1,173 17,813 11,088 9,340 – 39,414

Receivables – – – – 32,622 32,622

Total Financial Assets 270,105 17,813 18,007 9,779 32,622 348,326

Weighted Effective Interest rate 3.54% 5.35% 6.29% 5.85%

Financial Liabilities

Payables and Other Liabilities – – – – 158,972 158,972

Total Financial Liabilities – – – – 158,972 158,972

30 June 2008

Financial instrument note

0 – 3months

$’000

3 – 12months

$’000

over 1 to5 years

$’000

morethan 5years$’000

noninterestbearing

$’000

carryingamount as per

balance sheet$’000

Financial AssetsCash and Cash Equivalent Assets 5 30,230 – – – – 30,230

Financial Assets Held for Trading 6 115,709 – 6,503 453 – 122,665

Other Financial Assets 7 1,106 51,521 10,524 8,405 – 71,556

Receivables – – – – 19,596 19,596

Total Financial Assets 147,045 51,521 17,027 8,858 19,596 244,047

Weighted Effective Interest rate 7.25% 7.96% 9.09% 7.33%

Financial LiabilitiesPayables and Other Liabilities – – – – 97,679 97,679

Total Financial Liabilities – – – – 97,679 97,679

Sensitivity Analysis

At the end of the reporting period, based on interest rate exposures in existence at that date, if interest rates had moved as shown below with all other variables held constant, post-income tax equivalent profit would have been affected as follows:

Interest Rate Change 2009 2008Increase 100 basis points -$337,000 -$384,000

Decrease 100 basis points $337,000 $384,000

Equity would not be affected by these interest rate changes.




(b) Credit Risk

Credit risk represents the loss that would be recognised if parties holding financial assets of NSW Lotteries at reporting date fail to

honour their obligations under contract. The Corporation’s maximum exposure to credit risk is represented by the carrying amounts

of the financial assets included in the Balance Sheet.

NSW Lotteries minimises its credit risk on receivables by undertaking its sales transactions with a large number of retailers and requiring those retailers to remit monies outstanding on a weekly basis. The Corporation’s cash equivalent assets included in current assets are held in A grade securities, and will mature within three months. Financial Assets Held for Trading are held in A grade securities and will mature, or be sold generally within twelve months. Other Financial Assets Held to Maturity are held in A grade deposits and earn a fixed rate of interest. The Corporation is therefore not materially exposed to credit risk.

(c) Liquidity Risk

Liquidity risk is the risk that the Corporation will be unable to meet its payment obligations as they fall due. This risk is managed by

cash flow planning and placement of at-call and short term deposits in addition to access to approved bank overdraft facilities.

(d) Net Fair Values of Financial Assets and Liabilities

Net fair values of financial assets and liabilities are determined by the Corporation on the following bases:

Negotiable securities, being Financial Assets Held for Trading, are traded in an organised financial market and are carried at market value. Financial instruments held to maturity in fixed interest deposits are shown as Other Financial Assets Held to Maturity and are carried at amortised cost.

Cash at Bank and on Hand, Cash Equivalent Assets, Bank Deposits, Cash Book Overdrafts, Trade Creditors and Accruals, Sales in Advance, Unpaid Prizes and Other Payables are carried at historical cost.

2009$’000

2008$’000

Note 9 – Property, Plant and Equipment(a) Property, Plant and Equipment at Fair Value

Buildings and ImprovementsBuildings – at fair value 10,111 9,689Leasehold improvements – at fair value 687 687

Less accumulated amortisation (667) (547)

20 140

Total Buildings and Improvements 10,131 9,829

Plant and EquipmentComputer equipment – at fair value 27,069 26,073

Less accumulated depreciation (22,433) (19,677)

4,636 6,396Other plant and equipment – at fair value 7,476 7,464


2,077 2,143Work in Progress – at fair value 3,076 –

Total Plant and Equipment 9,789 8,539

Total Property, Plant and Equipment at Fair Value 19,920 18,368

(b) Valuations of Buildings

Buildings are measured on a fair value basis, being the amount for which the assets could be exchanged between knowledgeable and willing parties in an arm’s-length transaction, having regard to the highest and best use of the asset for which other parties would be willing to pay.

The current year’s valuation as determined by an independent valuer was performed in accordance with NSW Treasury Policy Paper 07-1 “Accounting Policy: Valuation of Physical non-current assets at fair value”. The valuation, based at 30 June 2009, resulted in a value of $10,111,000 for the buildings, being the value attributed to the balance of their economic life and resulting in a revaluation increment of $793,000.




2009$’000

2008$’000

(c) Carrying amounts if buildings were stated at cost less accumulated depreciation:

BuildingsCost 9,961 9,961


Carrying amount at the end of the year 4,874 5,089

(d) Estimated fair value at directors’ valuation is:

Leasehold ImprovementsEstimated fair value of leasehold improvements at directors’ valuation is $20,000 (2008 – $140,000)

Plant and EquipmentEstimated fair value of plant and equipment at directors’ valuation is $9,789,000 (2008 – $8,539,000)

(e) Reconciliations of carrying amounts at the beginning and the end of the year:

Buildings – at fair valueCarrying amount at the beginning of the year 9,689 10,060

Additions – –

Revaluation increment 793 –

Disposals – –

Depreciation (371) (371)


Leasehold improvements – at fair valueCarrying amount at the beginning of the year 140 263

Additions – –

Amortisation (120) (123)

Carrying amount at the end of the year 20 140

Computer equipment – at fair valueCarrying amount at the beginning of the year 6,396 7,554

Additions 1,010 1,547

Disposals – –

Depreciation (2,770) (2,705)


Other plant and equipment – at fair valueCarrying amount at the beginning of the year 2,143 1,948

Additions 918 1,046

Disposals (528) (358)

Depreciation (456) (493)


Work in Progress – at fair valueCarrying amount at the beginning of the year – 2,074

Additions 3,076 –

Transfer – completed projects – (2,074)

Carrying amount at the end of the year 3,076 –

Total Property, Plant and Equipment at Fair Value 19,920 18,368




2009$’000

2008$’000

Note 10 – Intangible Assets(a) Intangible Assets at fair value

Gaming softwareGaming software – at fair value 17,928 15,926

Less accumulated amortisation (11,078) (9,246)

6,850 6,680

Other softwareOther software – at fair value 3,628 3,135

Less accumulated amortisation (2,684) (2,282)

944 853

Total Intangible Assets 7,794 7,533

(b) Reconciliations of carrying amounts at the beginning and the end of the year.

Gaming softwareCarrying amount at the beginning of the year 6,680 7,495

Additions 2,002 793

Amortisation (1,832) (1,608)


Other softwareCarrying amount at the beginning of the year 853 670

Additions 493 576

Amortisation (402) (393)

Carrying amount at the end of the year 944 853

Total Intangible Assets at Fair Value 7,794 7,533

Note 11 – Other Non-Current AssetsPrepaid Rent – Leased Land 1,677 1,697

Superannuation – Refer also Note 13 – 3,566

Total Non-Current Assets 1,677 5,263

Note 12 – PayablesCurrentCash Book Overdrafts 6,011 –

Trade Creditors and Accruals 15,252 10,543

Government Duties 55,694 28,529

Sales in Advance 9,982 13,664

Unpaid Prizes 107,055 57,396

Other 244 402

194,238 110,534

Non-CurrentUnpaid Prizes 20,428 18,929

Note 13 – ProvisionsCurrentEmployee Benefits (refer Note 15(a)) 6,784 6,162

Prize Funds 65,184 53,168

Provision for Dividends 46,374 33,271

118,342 92,601




2009$’000

2008$’000

Note 13 – Provisions (con’t)

Non-CurrentSuperannuation Liability 7,047 –

Provision for Make Good on Leases 586 586

Employee Benefits (refer Note 15(b)) 110 250

7,743 836

Reconciliations:Reconciliations of the carrying amounts for each class of provision except for employee provisions are set out below:

Prize FundsBalance at the beginning of the year 53,168 45,130

Allocations and transfers made during the year 67,000 64,823

Payments made during the year (54,984) (56,785)

Balance at the end of the year 65,184 53,168

Provision for DividendsBalance at the beginning of the year 33,271 36,458

Provisions made during the year (Refer Note 14) 46,573 33,342

Payments made during the year (33,470) (36,529)


Provision for Make GoodBalance at the beginning of the year 586 586

Provisions made during the year – –

Balance at the end of the year 586 586

Superannuation

Superannuation contributions are made by the Corporation to three NSW public sector defined benefit employee superannuation funds as follows:

State Authorities Superannuation Scheme (SASS)

State Authorities Non-contributory Superannuation Scheme (SANCS)

State Superannuation Scheme (SSS)

These three funds are closed to new members. The SAS Trustee Corporation holds the investments of these funds in trust.

The superannuation funds provide for defined benefits based on years of service and final average salary. Employees contribute to the schemes at various percentages of their salaries. The Corporation’s contributions are generally at a multiple of the employees’ contributions, depending on the fund.

Actuarial gains and losses are recognised in the Statement of Recognised Income and Expense in the year in which they occur as follows:

2009$’000

2008$’000

Actuarial loss (11,267) (1,758)

Total superannuation expense , including actuarial loss recognised in the Statement of Recognised Income and Expense is $12.34 million (2008:$2.29 million). Net income accrued from defined benefit superannuation funds of $0.65 million (2008:$1.04 million) is included in the line item “Other Revenues” in the Income Statement.

The cumulative amount of actuarial gains and losses recognised in the Statement of Recognised Income and Expense since 1 July 2004 is a cumulative loss of $8.5 million.

Before 1 July 2004 and the adoption of AEIFRS, it is not practical to determine the cumulative actuarial gain/loss as if the new accounting policy had always been applied, given that the actuarial gains and losses were not separately identified and accumulated and the superannuation expense was calculated on a different basis.

All fund assets are invested by SAS Trustee Corporation at arm’s length through independent fund managers.




The following tables summarise the components of the net income and expense recognised in the Income Statement, the actuarial loss recognised in the Statement of Recognised Income and Expense and the funded status and amounts recognised in the Balance Sheet for the respective funds:

superannuation 30 June 2009

2009$’000

sass

2009$’000

sancs

2009$’000sss

2009$’000total

Reconciliation of the assets and liabilities recognised in the balance sheetPresent value of defined benefit obligations (7,488) (2,077) (42,810) (52,375)

Fair value of plan assets 7,333 2,085 35,910 45,328

(155) 8 (6,900) (7,047)Adjustment for limitation on net liability – – – –

Net liability recognised in the balance sheet (155) 8 (6,900) (7,047)

Reconciliation of the present value of the defined benefit obligationPresent value of the partly defined benefit obligation at the beginning of the year (6,777) (1,987) (34,571) (43,336)

Current service cost (306) (103) (281) (690)

Interest cost (430) (124) (2,225) (2,779)

Contributions by fund participants (160) – (342) (502)

Actuarial gains/(losses) (27) (93) (7,059) (7,179)

Benefits paid 213 231 1,668 2,112

Present value of the partly defined benefit obligation at the end of the year (7,488) (2,077) (42,810) (52,375)

Reconciliation of the fair value of fund assetsFair value of the fund assets at the beginning of the year 7,906 2,586 41,148 51,640

Expected return on fund assets 626 202 3,296 4,124

Actuarial gains/(losses) (1,146) (473) (7,207) (8,827)

Contributions by fund participants 160 – 342 502

Benefits paid (213) (231) (1,668) (2,112)

Fair value of the fund assets at the end of the year 7,333 2,085 35,910 45,328

Actual return on fund assets 779 271 3,954 5,004

Fund assetsThe percentage invested in each asset class at the end of the year was:

Australian equities 32.1%

Overseas equities 26.0%

Australian fixed interest securities 6.2%

Overseas fixed interest securities 4.7%

Property 10.0%

Cash 8.0%

Other 13.0%

Income and Expense components recognised in the income statementCurrent service cost (306) (103) (281) (690)

Interest cost (430) (124) (2,225) (2,779)


Net Income recognised in the Income Statement (110) (25) 790 655

Expected return on fund assetsThe expected return on assets assumption is determined by weighting the expected long-term return for each class by the target allocation of assets in each class. The return used for each class is net of investment tax and investment fees.

Expected employer contributions – – – –




superannuation continued 30 June 2009

2009$’000

sass

2009$’000

sancs

2009$’000sss

2009$’000total

Valuation method and principal actuarial assumptions at 30 June 2009:a) Valuation method

The Projected Unit Credit (PUC) valuation method was used to determine the present value of the defined benefit obligations and the related current service cost. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

b) Economic assumptions

Discount rate 5.6%

Expected return on assets backing current pension liabilities 8.1%

Expected return on assets backing other liabilities –

Expected salary increase rate 3.5%

Expected rate of CPI increase 2.5%

Disclosures required under paragraphs Aus121.1 and Aus 121.2 of AASB 119 “Employee Benefits”:

Funding arrangements for employer contributions The 30 June 2009 financial position of the funds, calculated in accordance with AAS25 “Financial Reporting by Superannuation Plans”, is summarised as follows:

a) Net surplus

Accrued benefits (7,048) (1,903) (31,141) (40,092)

Net market value of fund assets 7,333 2,085 35,910 45,328

Net surplus 285 182 4,769 5,236

b) Contribution recommendations

Recommended contribution rates for NSW Lotteries: 0 0 0

Basis: multiplemember

contributions

% membersalary

multiplemember

contributions

c) Funding method

The method used to determine the employer contribution recommendations at the last actuarial review was the Aggregate Funding method. The method adopted affects the timing of the cost to the employer.

Under the Aggregate Funding method, the employer contribution rate is determined so that sufficient assets will be available to meet benefit payments to existing members, taking into account the current value of assets and future contributions.

d) Economic assumptions adopted for the last actuarial review of the fund were:

Weighted average assumptions:

Expected rate of return on fund assets backing current pension liabilities 8.3%

Expected rate of return on fund assets backing other liabilities 7.3%

Expected salary increase rate 4.0%

Expected rate of CPI increase 2.5%

Nature of asset/ liability

If a surplus exists in the employer’s interest in the fund, the employer may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the fund’s actuary.

Where a deficiency exists, the employer is responsible for any difference between the employer’s share of fund assets and the defined benefit obligation.




superannuation continued30 June 2008

2008 $’000

sass

2008$’000

sancs

2008 $’000sss

2008 $’000total

Reconciliation of the assets and liabilities recognised in the balance sheetPresent value of defined benefit obligations (6,777) (1,987) (34,571) (43,336)

Fair value of plan assets 7,906 2,586 41,148 51,640

1,129 599 6,577 8,304

Adjustment for limitation on net asset (644) (342) (3,753) (4,739)

Net asset recognised in the balance sheet 485 257 2,824 3,566

Reconciliation of the present value of the defined benefit obligationPresent value of the partly defined benefit obligation at the beginning of the year (7,506) (1,999) (34,163) (43,668)

Current service cost (338) (111) (296) (745)

Interest cost (464) (123) (2,153) (2,740)

Contributions by fund participants (177) – (324) (502)

Actuarial gains/(losses) 661 (28) 596 1,229

Benefits paid 1,047 273 1,769 3,090

Present value of the partly defined benefit obligation at the end of the year (6,777) (1,987) (34,571) (43,336)

Reconciliation of the fair value of fund assetsFair value of fund assets at the beginning of the year 9,523 3,035 45,571 58,129


Actuarial gains/(losses) (1,475) (416) (6,538) (8,430)

Contributions by fund participants 177 – 324 502

Benefits paid (1,047) (273) (1,769) (3,090)

Fair value of fund assets at the end of the year 7,906 2,586 41,148 51,640

Actual return on fund assets 559 176 2,887 3,622

Fund assetsThe percentage invested in each asset class at 30 June 2008 was:

Australian equities 31.6%

Overseas equities 25.4%

Australian fixed interest securities 7.4%

Overseas fixed interest securities 7.5%

Property 11.0%

Cash 6.1%

Other 11.0%

Income and Expense components recognised in the Income StatementCurrent service cost (338) (111) (296) (745)

Interest cost on benefit obligations (464) (123) (2,153) (2,740)

Expected return on plan assets 729 240 3,560 4,529

Net income recognised in the Income Statement (74) 6 1,111 1,044

Expected return on fund assets

The expected return on assets assumption is determined by weighting the expected long-term return for each class by the target allocation of

assets in each class. The return used for each class is net of investment tax and investment fees.

Expected employer contributions 337 125 519 981



Financial report | NSW Lotteries Annual Report 200988

superannuation continued30 June 2008

2008 $’000

sass

2008$’000

sancs

2008 $’000sss

2008 $’000total

Valuation method and principal actuarial assumptions at 30 June 2008:a) Valuation method

The Projected Unit Credit (PUC) valuation method was used to determine the present value of the defined benefit obligations and the related current service cost. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

b) Economic assumptions

Discount rate 6.6% pa

Expected return on assets backing current pension liabilities 8.3% pa

Expected return on assets backing other liabilities 7.3% pa

Expected salary increase rate 3.5% pa

Expected rate of CPI increase 2.5% pa

Disclosures required under paragraphs Aus121.1 and Aus 121.2 of AASB 119 “Employee Benefits”:

Funding arrangements for employer contributions The 30 June 2008 financial position of the fund, calculated in accordance with AAS25 “Financial Reporting by Superannuation Plans”, is summarised as follows:

a) Net surplus

Accrued benefits (6,779) (1,996) (31,900) (40,675)

Net market value of fund assets 7,906 2,586 41,148 51,640

Net surplus 1,127 590 9,248 10,965

b) Contribution recommendations

Recommended contribution rates for NSW Lotteries: 1.9 2.5 1.6

Basis: multiplemember

contributions

% membersalary

multiplemember

contributions

c) Funding method

The method used to determine the employer contribution recommendations at the last actuarial review was the Aggregate Funding method. The method adopted affects the timing of the cost to the employer.

Under the Aggregate Funding method, the employer contribution rate is determined so that sufficient assets will be available to meet benefit payments to existing members, taking into account the current value of assets and future contributions.

d) Economic assumptions adopted for the last actuarial review of the fund were:

Weighted average assumptions:

Expected rate of return on fund assets backing current pension liabilities 7.7% pa

Expected rate of return on fund assets backing other liabilities 7.0% pa

Expected salary increase rate 4.0% pa

Expected rate of CPI increase 2.5% pa

Nature of asset/ liabilityIf a surplus exists in the employer’s interest in the fund, the employer may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the Fund’s actuary.

Where a deficiency exists, the employer is responsible for any difference between the employer’s share of fund assets and the defined benefit obligation.




2009$’000

2008$’000

Note 14 – NSW Government Dividends

Dividends provided 46,573 33,342

Note 15 – Employee Benefits

(a) Current

Provision for Annual Leave 1,652 1,419

Provision for Long Service Leave 5,132 4,743

6,784 6,162

(b) Non–Current

Provision for Long Service Leave 110 250

Reconciliations:

Reconciliations of the carrying amounts for employee provisions are set out below:

2009$’000

2008$’000

2009$’000

2008$’000

2009$’000

2008$’000

annual leave long service leave total total

Balance at the beginning of the year 1,419 1,516 4,993 5,117 6,412 6,633

Allocations and transfers made during the year 394 935 876 490 1,270 1,425

Payments made during the year (161) (1,032) (627) (614) (788) (1,646)

Balance at the end of the year 1,652 1,419 5,242 4,993 6,894 6,412

Note 16 – Contributed Equity

Authorised Capital

100 Ordinary Shares of $1.00 each – $100 (2008 – $100)

Issued and Paid-up Capital

2 Ordinary Shares of $1 each fully paid – $2 (2008 – $2)

NSW Lotteries was corporatised on 1 January 1997 with authorised capital of 100 ordinary shares at $1 each. The issued capital of two (2) $1 shares are issued to the Treasurer and the Minister for Finance on behalf of the NSW Government. The $2 issued share capital has been rounded to zero in the Balance Sheet.

2009$’000

2008$’000

Note 17 – Reserve

Asset Revaluation Reserve 4,220 3,665

Asset Revaluation Reserve – reconciliation

Balance at the beginning of the year 3,665 3,665

Net increment on revaluation of buildings 555 –


Nature and Purpose of Asset Revaluation ReserveThe purpose of the asset revaluation reserve is to record increments and decrements as a result of the revaluation of physical non-current assets measured at fair value in accordance with AASB 116 and TPP 07-1.




2009$’000

2008$’000

Note 18 – Retained Profits Retained Profits at the beginning of the year 51,793 46,371

Net profit for year 47,044 39,995

Net (loss)/ gain recognised directly in equity:

Buildings revaluation increment 793 –

Tax effect of building revaluation (238) –

Superannuation actuarial (loss)/gain (11,267) (1,758)

Superannuation actuarial tax effect 3,380 527

Net (loss)/ gain recognised directly in equity (7,332) (1,231)

Total recognised income and expense for the year 39,712 38,764

Less amount recognised in Asset Revaluation Reserve (555) –

Total available for distribution 90,950 85,135

NSW Government – Dividends Provided (46,573) (33,342)

Retained Profits at the end of the year 44,377 51,793

Note 19 – Related Parties

(a) Key Management Personnel – Directors

The names of each person holding the position of director of the Corporation during the financial year are:

Mr J. Bagshaw, Ms B. Boezeman, Mr M. Cockburn, Mr M. Howell (to 31 December 2008), Mr J. Johnson, Mr D. McCormack, Mr N. Nichles (from 1 January 2009) and Ms S. Walsh. Mr N. Nichles, Chief Executive Officer of the Corporation, is the sole full-time director.

The total emoluments paid or payable, directly or indirectly, by the Corporation to directors, excluding the salary of the full-time director, was $412,347 (2008 – $407,235).

(b) Key Management Personnel – Other

Name Position

Ms S. Browne Director Corporate Services

Mr M. Cassidy Director Information Technology Services

Mr M. Carter Director Marketing and Sales (from 1 October 2008)

Mr B. McIntyre Director Finance

Mr N. Nichles Director Marketing and Sales (to 30 September 2008)

Mr N. Nichles Chief Operating Officer (from 1 October to 31 December 2008)

Mr N. Nichles Chief Executive Officer (from 1 January 2009)

Mr C. Patterson Director Customer and Agency Services

2009$’000

2008$’000

(c) Key Management Personnel CompensationShort-term employee benefits 1,499,410 1,293,072

Post-employment benefits 581,856 635,377

Other long-term employee benefits 178,470 104,097

Termination benefits 229,892 –

2,489,628 2,032,546




(d) Principles of Compensation

Compensation paid or payable to directors, excluding the full-time director, is determined by the Shareholders.

The full-time director and other key management personnel are employed by the Corporation under individual contracts of employment. The nature of compensation paid or payable to these personnel is approved by the Board having regard to relevant legislation and current market practice. The amount of compensation paid or payable to the full-time director is approved by the Board; the amounts of compensation paid or payable to other key management personnel is set by the full-time director within parameters approved by the Board. In relation thereto, the advice of an independent external consultant is obtained to ensure that fixed annual compensation is aligned to the market at the 50th percentile for each individual. Fixed annual compensation is reviewed annually and adjusted subject to assessed individual performance and contribution to the Corporation, market movements, movements in the Consumer Price Index and the Corporation’s financial performance.

Short-term employee benefits paid or payable to the full-time director and other key management personnel include a performance-related incentive that is approved by the Board and conditional upon the achievement of corporate targets. Incentive payments account for only a minor proportion of the total compensation paid to each of these individuals.

The duration of the employment contract for the full-time director and other key management personnel varies generally within the range of one to five years. Six months notice or six months payment in lieu of notice is normally required for the Corporation to terminate a contract.

2009$’000

2008$’000

(e) Superannuation ContributionsContributions to Superannuation Funds on behalf of employees 1,076 529

Note 20 – Auditors’ remuneration

Audit fees: Auditors of the Corporation (audit and review of Financial Report) 145 139

Other services: Auditors of the Corporation (supervision of draws) 141 138

286 277

Note 21 – Commitments not provided for in the Financial Statements

Commitments under operating leases for motor vehicles, plant, office and warehouse accommodation:

Payable within 1 year 670 703

Payable 1 to 5 years 566 391

1,236 1,094 The property leases are leases with three year terms, rent payable monthly in advance. Options have been exercised to renew each lease for an additional period of two years.

Commitments for the purchase of non-current assets:

Payable within 1 year 3,246 4,224

Payable 1 to 5 years – 1,440

3,246 5,664

Note 22 – Contingent Assets

The total commitments under operating leases of $1,236,408 (2008 – $1,093,862 ) shown in Note 21 include $112,401 (2008 – $99,442) in input tax credits that are expected to be recoverable from the Australian Taxation Office under the Goods and Services Tax legislation.

At the date of this report commitments for the purchase of non-current assets not provided for in the financial statements amounted to $3,245,906 (2008: $5,664,231) and includes input tax credits of $295,082 (2008: $514,930) which are expected to be recoverable from the Australian Taxation Office under the Goods and Services Tax legislation.

Note 23 – Segment Reporting

NSW Lotteries Corporation operates solely in the business of selling Lottery tickets in the state of New South Wales and the Australian Capital Territory.

Note 24 – Subsequent Event

On 9 September 2009, the NSW Parliament passed the legislation providing for the NSW Government to grant to the private sector a long-term licence to distribute lottery products (excluding KENO) in New South Wales; and authorising and facilitating the transfer to the licensee of the assets, rights and liabilities of NSW Lotteries Corporation. The Government is currently preparing the Corporation for the transfer.

End of Audited Financial Statements




accounts payable perFormanceNSW Lotteries’ policy is to pay all accounts within the suppliers’ terms of trade. No interest was paid or payable as a result of late payment of accounts.

The following indicators summarise the Corporation’s performance and give a snapshot of accounts payable by the Corporation at the end of each quarter and the indicative payment timeframe:

ageing of creditors at the end of each quarterseptember

2008december

2008march

2009June2009

Current (within due date) $8,682,027 $7,645,451 $9,123,470 $15,252,419

< 30 days overdue Nil Nil Nil Nil

30-60 days overdue Nil Nil Nil Nil

60-90 days overdue Nil Nil Nil Nil

> 90 days overdue Nil Nil Nil Nil

Total overdue Nil Nil Nil Nil

accounts paid on time during each quarterseptember

2008december

2008march

2009June2009

Target % for Accounts paid within 30 days 100% 100% 100% 100%

Actual % of Accounts paid within 30 days 100% 100% 100% 100%

Total dollars paid within 30 days $8,682,027 $7,645,451 $9,123,470 $15,252,419

Total dollars payable $8,682,027 $7,645,451 $9,123,470 $15,252,419

standard results 2006/07 results 2007/08 results 2008/09

Number of complaints for late or non-payment

Less than 0.1% of all accounts

Nil Complaints Nil Complaints Nil Complaints

consultants

Consultants equal to or more than $30,000

There were no consultancies costing $30,000 or more.

Consultancies less than $30,000

During the year, there were two consultants engaged in the following areas:

category cost

Finance & Accounting/Tax $9,750.00

Engineering Nil

Environmental Nil

Information Technology Nil

Legal Nil

Management Services $10,800.00

Organisational Review Nil

Training Nil

Total Consultancies less than $30,000 $20,550.00

Total Consultancies $20,550.00

credit card useDuring the year, credit card use within the Corporation was in accordance with the Premier’s Memoranda and Treasurer’s Directions.

statutory reporting appendixFor the Year Ended 30 June 2009

93NSW Lotteries Annual Report 2009 | statutory reporting appendix

eQual employment opportunity 2008/2009 Planned Results

1. Implementation of a training program in Equal Employment Opportunity and Harassment Prevention for all managers and employees.

2. Continued review of possible strategies for Attracting and Retaining Female Employees as outlined in the CEO Kit developed by Chief Executive Women.

3. Implementation of cross-team work experience opportunities for employees in roles outside their normal position.

Strategies for 2009/2010

1. Implementation of a second Management Development Program in line with the Corporation’s Succession Plan.

2. Continuation of cross-team work experience opportunities for employees.

EEO Statistical Report

Table A. Trends in the Representation of EEO Groups1

% of total staff2

eeo groupbenchmark

or target 2006 2007 2008 2009

Women 50% 47% 46% 47% 47%

Aboriginal people and Torres Strait Islanders 2% 0% 0% 0% 0%

People whose first language was not English 20% 32% 33% 35% 35%

People with a Disability 12% 10% 9% 8% 8%

People with a Disability Requiring Work-Related Adjustment 7% 3.1% 3.2% 1.9% 1.9%

Table B. Trends in the Distribution of EEO Groups1

distribution index3

eeo groupbenchmark

or target 2006 2007 2008 2009

Women 100 81 82 79 79

Aboriginal people and Torres Strait Islanders 100 nc4 nc4 nc4 nc4

People whose first language was not English 100 90 87 87 88

People with a Disability 100 nc4 nc4 nc4 nc4

People with a Disability Requiring Work-Related Adjustment 100 nc4 nc4 nc4 nc4

Notes:1. Staff numbers are as at 30 June 2009.2. Excludes casual staff.3. A Distribution Index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff. Values less than 100 mean

that the EEO group tends to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. In some cases the index may be more than 100, indicating that the EEO group is less concentrated at lower salary levels. The Distribution Index is automatically calculated by the software provided by the Public Sector Workforce Office.

4. nc = not calculated. The Distribution Index is not calculated where EEO group or non-EEO group numbers are less than 20.

exemptions From the reporting proVisionsIn accordance with section 7 (2) of the Annual Reports (Statutory Bodies) Act 1984, the Treasurer has exempted NSW Lotteries from disclosing in its Annual Report a detailed budget and an outline budget.

ethnic aFFairs priorities statement NSW Lotteries conducts its affairs in recognition of the Community Relations Commission and Principles of Multiculturalism Act 2000. Each year, the Corporation develops an Ethnic Affairs Priorities Statement Plan, which identifies strategies to improve our services to the diverse community of NSW.

We report to the Community Relations Commission on the implementation of this plan and detail our progress in our Annual Report. The Corporation’s Performance Report for fiscal 2009 follows:


94 statutory reporting appendix | NSW Lotteries Annual Report 2009

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Funds granted to non-goVernment community organisationsNo funds were granted to non-Government community organisations.

inVestment management perFormanceAt the end of the financial year investment funds were apportioned between NSW Treasury Corporation and NSW Lotteries:

Treasury Corporation Portfolio 1 67.8%

Treasury Corporation Portfolio 2 14.3%

NSW Lotteries Portfolio 3 17.9%

Gross returns on investments were:

actual % per annum for year ended benchmark % per annum for year ended

June 2009 June 2008 June 2009 June 2008

Portfolio 1 5.75 6.46 5.60 7.46

Portfolio 2 4.69 4.22 5.60 7.46

Portfolio 3 6.60 7.91 5.60 7.46

The comparative Hour Glass facility return was 5.35% for the year ended 30 June 2009.

legislatiVe changesThere were no significant legislative changes or judicial decisions which affected the Corporation’s operations during the year.

liability managementNSW Lotteries has no borrowings, debt or unfunded liabilities.

oVerseas traVel

officer destination purpose

Nick Nichles, Chief Executive Officer Greece Attend the World Lottery Association 2008 Conference

Kathryn Hoban, Executive Assistant to the Chief Executive Officer

Greece Attend the World Lottery Association 2008 Conference – selected by the conference organisers to work as a volunteer – approved by the NSW Lotteries Board

property disposalNo land was disposed of by the Corporation during the reporting year.

statement oF perFormance For executiVe oFFicers Name: Nick Nichles

Position: Chief Executive Officer*

Period in Position: 1 January to 30 June 2009

Total Remuneration Package: $216,208 (includes Performance Payment)

Performance Payment: $30,500 (included in Total Remuneration Package)* Mr Nichles also held two other positions within NSW Lotteries. The positions held

and remuneration received from 1 July 2008 to 31 December 2008 are as follows: Director Marketing and Sales ($65,766); and Chief Operating Officer ($68,994)

Performance assessed by: The NSW Lotteries Board

Authorised by John Bagshaw, Chairman

Results:

• FinancialYear2009-mostfinanciallysuccessfulyearintheCorporation’shistory.Lotterysaleswere$1,327.62million(includingGST, excluding agent commission), which was $167.62 million (or 14.5%) ahead of target.

• Recordswereestablishedinallkeybusinessmetricsviz:

– Sales

– Profitability

– Employee efficiency

– Commission to agents.

• AllkeyperformancestandardscontainedintheStatementofCorporateIntentandBalancedScorecardservicestandardsweremet or exceeded.



• 90%ofNSWLotteries’retailagentssurveyedindicatedthattheywereeitherverysatisfiedorextremelysatisfiedwiththequality of support services provided by the Corporation.

• Anumberofmajorstrategicprojectsweresuccessfullycompletedduringtheyear,whichprovidesasolidplatformfortheCorporation’s future business direction.

• Asoundworkingrelationshipwasmaintainedwithallkeystakeholdergroups.

• Allstatutoryresponsibilitieswerecompletedontimeandnomajorshortcomingsininternalcontrolswereidentifiedinauditreports during the year.

Performance Payment Criteria:

Payment is subject to meeting or exceeding annual sales, profit and key accountability targets contained in the Corporation’s Business Plan, Statement of Corporate Intent and the Chief Executive Officer’s Performance Agreement.

The level of incentive payment and associated performance hurdles are set annually by the Board and are independently assessed and measured against actual results.

Name: Martin Cassidy

Position: Director Information Technology Services

Period in Position: Full Year

Total Remuneration Package: $250,999 (includes Performance Payment)

Performance Payment: $20,000 (included in Total Remuneration Package)

Performance assessed by: Nick Nichles, Chief Executive Officer

Results:

• Lotterysaleswere$1,327.62million(includingGST,excludingagentcommission),whichwas$167.62million(or14.5%) ahead of target.

• Managedtheday-to-dayactivitiesoftheInformationTechnologyServicesteaminaneffectivemannerandensuredthat critical functions were completed within budget.

• Achievedanaverageofover99.99%monthlyavailabilityforthegamingsystemduringtheyear.

• Managedthesuccessfullaunchofanumberofgameandinfrastructurechanges,inadditiontonumerousinternalbusinessimprovements, which contributed additional sales revenue and improved in-house work processes.

• MadeasignificantcontributiontowardstherecordresultsachievedbytheCorporationthisyear,aspartoftheExecutiveManagement team.

Performance Payment Criteria:

Payment is subject to meeting or exceeding specific sales and profitability targets contained in the Corporation’s Business Plan, Statement of Corporate Intent and individual Performance Agreement.

The level of incentive payment and associated performance hurdles are set annually at the beginning of each financial year by the Board. Actual results for each performance indicator are assessed and measured against the pre-established targets.

Freedom oF inFormation Under Section 14 of the Freedom of Information Act 1989, NSW Lotteries is required to publish an annual Statement of Affairs describing the structure and functions of the Corporation and how these functions affect the public. Additionally, the Statement of Affairs requires the inclusion of Policy documents held by the Corporation and how these can be accessed by members of the public.

Statement of Affairs

Structure and Functions

NSW Lotteries Corporation is the only Government-owned gaming and wagering operator in NSW and is licensed to develop, promote and conduct lotteries in NSW and the ACT. The day-to-day functions of the Corporation are reported under the section titled: Who We Are and What We Do, in addition to the five sections that cover our day-to-day operations and titled: Our Players, Our Retailers, Our Business, Our Shareholders and Our Staff. The structure of NSW Lotteries is outlined in this report in the section Our Shareholders under the heading The Management Structure. Information on the functions of NSW Lotteries is also publicly available by visiting the Corporation’s website – nswlotteries.com.au

Effects of Functions on Members of the Public

Members of the public are invited to participate in the drawing of Lucky Lotteries at the organisation’s Corporate Headquarters, 2 Figtree Drive, Sydney Olympic Park, NSW 2127, and should contact the Draw Administrator on telephone (02) 9752 5548. Lotto draws (Monday, Wednesday and Saturday) are televised from the studios of Channel 9, Sydney, and attendance can be arranged by contacting the Manager, Customer Services on telephone (02) 9752 5541.



Policy Documents

NSW Lotteries Corporation holds the following documents, which are available for public viewing by visiting the Corporation’s website at nswlotteries.com.au or at the corporate headquarters – please see inside back cover for location details. Game-related information is also available at all selling agencies.

• Rulesforallproducts(Lotto,LottoStrike,OZLotto,Powerball,LuckyLotteries,InstantScratchiesand6From38Pools);

• ‘HowtoPlay’pamphletsforallgames;

• ‘PlayersClub–Areyourprizesfullyprotected?’brochure;

• ‘GamblingHelp…INFOabouttheodds–bettingonlotto,lotteriesorkeno?’brochure;

• ‘APlayer’sGuidetoClaimingPrizes’brochure;

• ‘Players1st – Find out how we look after our customers’ brochure;

• BrochuresrelatingtoNSWLotteries’PolicyforAppointingAgencies;

• LotteryBlocsCodeofPractice;

• AdvertisingCodeofPractice;

• NSWLotteriesCodeofConduct;

• NSWLotteriesPrivacyPolicy;and

• AnnualReports.

The following legislation relates to the conduct of our games and the operation of NSW Lotteries:

• PublicLotteriesAct,1996

• NSWLotteriesCorporatisationAct,1996

• StateOwnedCorporationsAct,1989.

Documents relating to internal administration, including Board minutes, recruitment, personnel files, accommodation, staff and establishment, financial matters and internal audit are also held by NSW Lotteries.

Members of the public may contact the Freedom of Information Officer to ascertain which of these documents may be available under FOI legislation. In these cases application and processing fees may apply.

Formal requests made under the Freedom of Information Act for access to documents held by the Corporation should be accompanied by a $30 application fee and directed to:

The FOI Co-ordinator NSW Lotteries Corporation 2 Figtree Drive Sydney Olympic Park NSW 2127.

A 50% reduction in fees and charges is available in the following circumstances:

• wheretheapplicantisapensionerorunder18yearsofage;

• wheretheapplicant,asanon-profitorganisation,demonstratesfinancialhardship;

• wheretheapplicantseeksinformationwhichdoesnotconcernhisorherpersonalaffairs,andwhichtheapplicantdemonstratesis in the public interest to be made available.

The telephone number for all Freedom of Information inquiries is 9752 5783. Arrangements can also be made to view the documents listed above between the hours of 9am and 5pm Monday to Friday by contacting the FOI Co-ordinator at the above address.

Publications

In addition to the Policy Documents listed above, NSW Lotteries prepares other publications relating to its products and operations which assist in keeping our customers and retailers informed. These publications include:

• Network News – product and event information for retailers;

• Promotionalmaterialforspecialproductevents;and

• ResultsofgamesinThe Daily Telegraph and The Sydney Morning Herald.

The Corporation’s Annual Report is available (free of charge) and can be obtained by contacting the FOI Co-ordinator. The Annual Report is also available by visiting the Corporation’s website at nswlotteries.com.au.



Statistical Report for fiscal 2009

The following table shows all categories affected by the Freedom of Information Act 1989 (NSW) requests in 2008/09 compared to 2007/08.

personal other total 2008/09 total 2007/08

Numbers of new FOI requestsNew (including transferred in) 0 2 2 0

Brought forward 0 0 0 0

Total to be processed 0 0 0 0

Completed 0 2 2 0

Total processed 0 2 2 0

Unfinished (Carried forward) 0 0 0 0

What happened to completed requests?Granted in full 0 2 2 0

Granted in part 0 0 0 0

Refused 0 0 0 0

Deferred 0 0 0 0

Completed 0 2 2 0

Ministerial Certificates Ministerial Certificates issued 0 0 0 0

Formal ConsultationsNumber of requests requiring formal consultation(s) 0 0 0 0

Amendment of personal recordsResult of amendment – agreed 0 0 0 0

Result of amendment – refused 0 0 0 0

Total 0 0 0 0

Notation of personal recordsNumber of requests for notation 0 0 0 0

FOI requests granted in part or refusedTotal 0 0 0 0

Costs and fees of requests processed during the periodAssessed Costs 0 0 0 0

FOI Fees Received 0 $60 $60 0

Discounts allowedNumbers of FOI requests processed during the period where discounts were allowed

0 0 0 0

Days to process0 – 21 days 0 2 2 0

22 – 35 days 0 0 0 0

Over 35 days 0 0 0 0

Totals 0 2 2 0

Processing time0 – 10 hours 0 2 2 0

11 – 20 hours 0 0 0 0

21 – 40 hours 0 0 0 0

Over 40 hours 0 0 0 0

Totals 0 2 2 0

Reviews and appealsNumber of internal reviews finalised 0 0 0 0

Number of Ombudsman reviews finalised 0 0 0 0

Number of District Court appeals finalised 0 0 0 0

An assessment of FOI requirements on NSW Lotteries’ activities found no major impact during the 2008/09 financial year. There were no major issues that arose with regard to the Corporation’s annual reporting compliance on FOI issues. There was no involvement by the Ombudsman or courts in relation to any inquiries or appeals under the FOI Act.



This glossary is designed to provide a better understanding of certain terms used in this Annual Report, as they relate to NSW Lotteries and the games it offers. Where the meaning provided in this document differs in any way from similar information provided in the game rules for each product, the definition in the game rules is correct.

Term Meaning

Agency A place at which an agent is permitted operate. (See Agent)

Agent A person appointed by NSW Lotteries as its agent in handling lottery transactions with customers, including selling and checking tickets, and processing prize claims.

Autopick Numbers for the games are selected automatically by the system. No entry form is required for Autopick.

Altura terminal The terminal used to process lottery transactions.

Balanced Scorecard A methodology that allows NSW Lotteries to measure its performance and manage the organisation. The method is designed to translate vision and strategy into objectives and a realistic set of financial andnon-financialperformancemeasures.ThisgivestheCorporationa‘balanced’viewoforganisationalperformance. Importantly, it allows the Corporation to align the overall corporate strategic objectives with the goals of each team and every individual staff member.

Bloc A body of Australian lottery operators licensed to conduct certain national games on a joint basis.

Board of Directors The Board is accountable to the Shareholder Ministers and is responsible for establishing the overall strategic direction of the organisation and representing the interests of the shareholders and other key stakeholders.

Business Plan The Corporation’s Business Plan: highlights key strategic issues of most concern to NSW Lotteries; addresses the expectations of stakeholders; identifies actions in areas critical to our success; and sets targets for the Corporation to work towards.

Business targets The main corporate goals for NSW Lotteries over the next three years.

Chief Executive Officer (CEO)

The senior officer in charge of NSW Lotteries, the licensed lottery operator in NSW.

Commission The amount of money received by agents on each entry as a handling fee for selling products.

Corporate objectives Statements that describe what NSW Lotteries wants to achieve in partnership with its Stakeholders.

Gaming system The on-line gaming system connects the network of nearly 1,600 agencies with the Corporation’s central computer system.

Draw The selection of the winning numbers at random using a drawing device, such as a ball drawing machine or computer. The draw is on different days for different games. Each draw is allocated a draw number.

Draw Lottery game Lucky Lotteries – the $2 and $5 Jackpot Lotteries – are Draw Lottery games. The game is drawn after all tickets are sold.

Draw date The date on which a draw is conducted.

Drawing device Equipment approved by the Minister to conduct a Draw, such as a ball drawing machine or a computerised random number generator.

Employee (of an agent)

An employee of an agent is not an employee of NSW Lotteries. The employing agent is responsible for their employee’s actions and should ensure they are well trained and aware of their obligations under the relevant game rules.

Entry The numbers in a game recorded in the gaming system for a ticket that has been issued and for which a fee has been paid.

Entry form The form completed by a player to enter a game, allowing them to choose their own numbers. Lucky Lotteries entry forms do NOT allow players to choose their own numbers.

Favourite numbers The facility on a Players Club Registration to store a player’s regular entries for easier future processing against their Player’s registration number.

Fee The sum of the Subscription and Commission amount paid for an entry – the entry price.

Gambling Help A series of brochures developed by the NSW Government to provide customers with the opportunity to make informed choices about gambling and to reduce the risk of some people becoming problem gamblers.

How to play Information about how to play a NSW Lotteries game, including cost of entries, etc.

Instant Scratchie A lottery game where the prizes are pre-determined at printing, and revealed by players on purchase by removing a covering on the ticket.

Jackpot The amount that the first prize division increases to after each draw if the first division prize is not won.

Licence The Licence granted to New South Wales Lotteries Corporation to sell lottery products under the Public Lotteries Act 1996.

Licensee New South Wales Lotteries Corporation.

Lottery products The lottery products offered by NSW Lotteries are: Lotto & Lotto Strike (Mon, Wed & Sat), Powerball, OZ Lotto, 6 From 38 Pools, Lucky Lotteries and Instant Scratchies.

Lotto Lotto is a form of lottery game where the player tries to match a set of six winning numbers, which are selected by an air-agitated ball-drawing machine.

glossary

100 glossary | NSW Lotteries Annual Report 2009

Lotto Strike An add-on game for Lotto which is won if a player selects the first four numbers of the main Lotto draw, in the exact order that the balls are drawn.

Mail service NSW Lotteries sells entries directly by mail to a small number of customers who have difficulty accessing agents, or who live outside NSW.

Matrix Game structure, for example 6 from 45 in Lotto. Different games have different structures and different chances of winning.

Measure The means we use to check whether or not we have achieved our targets (e.g. surveys; financial statements; sales reports).

Minister The Minister administering the Act. Also known as the Portfolio Minister. Other Ministers known as Shareholder Ministers oversee NSW Lotteries’ financial performance and business affairs.

Mission AstatementexpressingthefundamentalpurposeoftheCorporation…itanswersthequestion, “WhatbusinessistheCorporationin?”

Monday Lotto The Game of Lotto drawn on Monday each week.

Odds The chance of an event occurring. By law, odds for winning in NSW Lotteries games must be displayed in any how to play information and on the corporate website. Lottery odds are also contained in the Gambling Help brochure.

OZ Lotto National Lotto-style game with 7 from 45 game matrix.

Player A person who has submitted an Entry in a game and/or submits a Ticket for the purposes of receiving a Prize.

Players 1st A customer care program designed to help players understand their rights and how the system for paying prizes operates.

Players Club A registration service for players ensuring they are notified of any prize wins from registered entries.

Powerball National Lotto-style game with five balls drawn from a first ball-drawing machine and a single ball, the Powerball, drawn from a second ball-drawing machine.

Prize The prize amount (money and/or a free ticket) paid for a winning ticket.

Prize division Some games have prize divisions which are different amounts depending on different levels of a winning entry. Division One is the top prize division. Most games have 5 prize divisions, and Powerball has 7.

Prize pool The amount allocated for the payment of prizes from all subscriptions received for a particular Draw.

Registered player A Player registered with the Players Club Registration service.

Registered ticket An entry that is processed after scanning, or entering a Player’s Registration card, or number so that it is registered with the Players Club Registration service.

Rules Rules made under the Public Lotteries Act determining how a lottery game can be conducted.

Saturday Lotto National game of Lotto with a bigger prize pool drawn on the Saturday of each week unless the Licensee determines otherwise. Features 6 from 45 game matrix.

Six (6) From 38 pools National Lotto-style game with winning numbers determined by results of European or Australian Soccer matches. Features 6 from 38 game matrix.

Stakeholders The people and organisations with whom NSW Lotteries Corporation interacts and on whom it depends for success.

Supplementary numbers

The additional numbers drawn for each Game after the main wining numbers are drawn. Allow the calculation of Divisional prizes.

Syndicate A group of two or more Syndicate Players who collectively hold all the Syndicate Entry Shares in a Syndicate Entry. Players are able to share in a higher cost game entry than what they would individually be able to purchase.

Systems entry An entry (either by entry form or Autopick) containing more than the minimum amount of numbers. E.g. A systems 7 entry in Lotto is a game with 7 numbers marked in the game panel.

Target Targets tell us exactly what we will achieve – usually in numerical terms.

Ticket The receipt which is the official confirmation that a Player has submitted an Entry.

Unregistered ticket An entry that is processed without scanning or entering a Player’s Registration card or number.

Values Outline the fundamental ethics and beliefs of the organisation and translate into the behaviours for operation on a daily basis.

Vision A statement describing how we want to be recognised in the future.

Wednesday Lotto Lotto Game drawn on the Wednesday of each week, unless the Licensee determines otherwise.

Winning numbers The first set of numbers in a game matrix drawn for each Game draw. For example, Lotto is 6 from 45, and the first six numbers drawn are the winning numbers. Depending on the game, additional supplementary number(s) may also be drawn to allow the calculation of additional prize divisions.

glossary

101NSW Lotteries Annual Report 2009 | glossary

aA Message from the Chairman 5-8 and Chief Executive Officer

About This Report IFC

Access to Services [ARSBR Schedule 1] 104

Accounts Payable Performance 93 [ARSBR Schedule 1, TC 06/26]

Address (Corporate) 104

After Balance Date Events 7, 59, 92

Agency Satisfaction Survey 37

Agency Services 36

Aims and Objectives [ARSBR Schedule 1] 16-19

Annual Report

– Availability [ARSBA s12, ARSBR c8, c18] 104

– Letter of submission [ARSBA s9A] 2

– Submission to Minister [ARSBA s10] 2

– Presentation to Parliament [ARSBA s11 (1)] 2

– Cost [ARSBR c8, TC 03/11] 104

Audit

– Internal audit arrangements, program and results 54

bBalanced Scorecard 18-19

Board [ARSBR Schedule 1] 48-49, 52-56

Board Committees [ARSBR Schedule 1] 54-55

Board Attendance [ARSBR Schedule 1] 54

Budget (see Exemptions from the Reporting Provisions) 94

Business Continuity 45

Business Planning 16-17

cCall Centre 30

Charter [ARSBR Schedule 1] 16

Chief and Senior Executive Officers

– Name, position, level and performance 49-51,96-97 of officer [ARSBR c11, c14]

– Number of executive positions [ARSBR c14] 64

– Number of female executive officers [ARSBR c14] 64

Consultants 93

– Costing greater than $30,000 [ARSBR Schedule 1, PM 02/07]

– Costing less than $30,000 [ARSBR Schedule 1, PM 02/07]

Consumer response – services 6, 28-31,39-40 improved or changed [ARSBR Schedule 1]

Corporate Governance 52

Credit Card Usage [TD 205.01] 93

Customers 12-13

Customer Satisfaction Survey 13

eEconomic and Other Factors Affecting Achievement 5-8,21-25 of Operational Objectives [ARSBR Schedule 1]

Electronic Service Delivery [PM 00/12] 43-44

Email address (Corporate) 104

Employee Reward and Recognition 62

Energy Management Policy [PM 98-35] 57

Environmental Report 57

Equal Employment Opportunity 94

– Achievements and strategies [ARSBR Schedule 1, TC 07/20]

– Statistical information [ARSBR Schedule 1, TC 02/17]

Ethnic Affairs Priorities Statement [ARSBR Schedule 1] 94-95

Executive Management Team 50-51

Exemptions from the Reporting 94 Provisions [ARSBR c19(4)]

FFinancial Overview 9

Financial Report 65-92

– Statement by Board of Directors 67

– Independent Audit Report [ARSBA s7(1)(a)(ii)] 68-69

– Financial Statements and Accompanying Notes [ARSBA s7(1)(a)(i)] 70-92

Freedom Of Information (FOI) 97-99

– Contact officer

– Statement of Affairs

– FOI Report [FOIA s68, FOIR s10, FOIM App. B, ARSBA s5A (2)]

Funds granted to non-Government community 96 organisations [ARSBR Schedule 1, PM 91/34]

gGames at a Glance 22-25

Games – Key Facts 10

Gaming System 42

Glossary 100-101

Guarantee of Service – standards and 12-15, 18-19 provision of service [ARSBR Schedule 1]

hHearing Impaired Service 104

History 11

Hours of Business (Corporate) 104

Human Resources

– Industrial relations policies and practices 58-64 [ARSBR Schedule 1]

– Number of employees by category 64 [ARSBR Schedule 1]

– Personnel policies and practices 58-64 [ARSBR Schedule 1]

iInformation Technology 41-45

Instant Scratchies 24

Internet address 104

Internet selling 6, 29, 44, 104

Insurance [ARSBR Schedule 1] 56

Investment Management Performance 96 [ARSBR c12, TC 09/07]

KKey Facts 2008/2009 10

lLand Disposal (Property Disposal) [ARSBR Schedule 1] 96

Legal change (Legislative changes) – in Acts or 96 significant legislation [ARSBA s9(1)(f), ARSBR Schedule 1]

index

102 index | NSW Lotteries Annual Report 2009

Letter to Shareholder Ministers 2 [ARSBA s9A, SOCA s24A(5)]

Liability Management Performance 96 [ARSBR c13, TC 09/07]

Looking ahead 8, 26

Lotto 22

Lotto Strike 22

Lucky Lotteries 25

mManagement and Activities

– Benefits from management and strategy 16-19,52-57 reviews [ARSBR Schedule 1]

– Major problems and issues [ARSBR Schedule 1] 5-8, 21-25

– Measures of performance [ARSBR 4,10, 12-15, 18-19 Schedule 1, SOCA s24A(3)]

– Nature and range of activities [ARSBR Schedule 1] 5-8,16-19

– Performance reviews [ARSBR Schedule 1] 4,56,96-97

Management and Structure

– Method and term of appointment of Board 52-55 members, frequency of Meetings and members’ attendance, Board committees [ARSBR Schedule 1]

– Names and qualifications of Board members 48-49 [ARSBR Schedule 1]

– Names, offices and qualifications of senior officers 50-51 [ARSBR Schedule 1]

– Organisation chart [ARSBR Schedule 1] 47

Mission IFC

nNetwork Syndicates 30

oObjectives 16-17

Occupational Health and Safety [ARSBR Schedule 1] 63-64

Organisation Chart [ARSBR Schedule 1] 47

Our Business 38-45

Our Players 20-31

Our Retailers 32-37

Our Shareholders 46-57

Our Staff 58-64

Overseas travel [ARSBR Schedule 1] 96

OZ Lotto 23

pPayment of accounts [ARSBR Schedule 1, TC 06/26] 93

Performance of Executive Officers [ARSBR c11] 96-97

Performance Measures 4, 12-15, 18-19

Player Services 28

Players 1st 40, 101

Players Club 28

Pools (6 From 38 Pools) 25

Powerball 23

Privacy 31

Promotion [ARSBR Schedule 1] 35, 98

Property Disposal [ARSBR Schedule 1] 96

Publications – summary list of promotional 98 material [ARSBR Schedule 1]

rResearch and Development

– New product development [ARSBR Schedule 1] 21-26

– New technology [ARSBR Schedule 1] 6, 29, 33, 42-45

– Resources allocated 7, 26, 28-30, 33, 35-37, 42-45 [ARSBR Schedule 1]

Resources 57

Results 4

Retail Image 36

Retail Network 33

Retail Training 36

Responsible Gaming 39-40

Risk Management and Insurance Activities 45, 56 [ARSBR Schedule 1]

sSaturday Lotto 22

Service Standards 12-15,18-19

Shareholders 52

Staff Training 61

Statement of Corporate Intent 4

Statement of Performance for Executive Officers 96-97

Subsequent Event 92

Summary Review of Operations

– Narrative summary of significant 5-8 operations [ARSBR Schedule 1]

– Operational information [ARSBR Schedule 1] 12-15

Succession Plan 61

Sustainable Environment 57

tTerritory Managers 33

The Games 16

The Year in Brief 12-15

Top Shop Awards 34

VValues IFC

Vision IFC

WWaste Reduction and Purchasing Policy [ARSBR Schedule 1] 57

Website Address (Corporate) 104

Websites – Staff, Customers and Agents 43-44, 104

Who We Are and What We Do 16

abbreviationsARSBA Annual Report (Statutory Bodies) Act 1984

ARSBR Annual Report (Statutory Bodies) Regulation 2005

FOIA Freedom of Information Act 1989

FOIR Freedom of Information Regulation 2005

FOIM Freedom of Information Manual 2007

IFC Inside front cover

PC Premier’s Circular

PF&AA Public Finance and Audit Act 1983

PM Premier’s Memorandum

SOCA State Owned Corporations Act 1989

TC Treasury Circular

TD Treasurer’s Direction

index

103NSW Lotteries Annual Report 2009 | index

access to serVices

general retail salesNSW Lotteries’ products are currently sold throughout NSW and the ACT through a network of nearly 1,600 agencies, including a small number of agencies that retail Instant Scratchies only.

On-Line Selling Hours:

Monday to Friday 5:00 am to 9:00 pm Saturday 5:00 am to 7:30 pm Sunday 5:00 am to 6:00 pm

nsW lotteries operates retail selling locations at:

Sydney City

Pitt Street Store City Tattersalls Building, 200 Pitt Street, Sydney NSW 2000

Open (Public Holidays excepted):

Monday to Friday 8:00 am to 5:30 pm Thursday evenings until 7:30 pm Saturday 9:00 am to 1:00 pm

Sydney Olympic Park

Level 2 2 Figtree Drive, Sydney Olympic Park NSW 2127

Open (Public Holidays excepted):

Monday to Friday 9:00 am to 5:00 pm

internet salesGo to nswlotteries.com.auandclickonthe‘BuyOnline’linkto purchase tickets for Lotto, OZ Lotto, Powerball, 6 From 38 Pools and Lucky Lotteries.

mail salesMail sales are available by writing to: Customer Sales Unit PO Box 6687, Silverwater NSW 2128. Email address: [email protected]

hoW to checK your ticKetsYou can check your tickets:

• AtanyNSWLotterieson-lineagency–eitherthroughthe selling terminal or the results notices;

• Bytelephone:

– Customer Service 1300 363 444 – Results Service 1900 956 886 (19009 LOTTO) – SMS Service 19 756 886 (197 LOTTO)

• HearingImpairedService–(02)97525560

• OntheInternet:nswlotteries.com.au

• BywatchingthetelevisedDrawsforselectedgames (Lotto, Powerball and OZ Lotto).

• ByNewspaperResults

customer inQuiries• TheCustomerServicesUnitprovidesatelephoneinquiry

service between the hours of 8.00 am and 5.00 pm, Monday to Friday (Public Holidays excepted).

Inquiries may be directed to 1300 363 444.

• Players1st (Customer Care Program)

Inquiries and Complaints – 1300 752 937 (1300 PLAYER)

corporate headQuarters2 Figtree Drive Sydney Olympic Park NSW 2127 Australia

Telephone (+61 2) 9752 5500

Fax (+61 2) 9752 5511

Hours of business: 8:00 am to 5:00 pm Monday to Friday.

Website addressnswlotteries.com.au

email [email protected]

annual report productionFormats available

This report is available in bound hard copies and on the Corporation’s website at nswlotteries.com.au

Hard copies of the report are available by contacting the Corporation’s headquarters – see Postal or Email addresses at the rear of this report.

Total external costs incurred in the production of the report: $41,382 (Ex GST)

RIGHT:NSW Lotteries was at the forefront in responding to the unprecedented media interest generated by the record $106.5 million OZ Lotto jackpot in June 2009.

104 access to serVices | NSW Lotteries Annual Report 2009

This annual report summarises the performance and activities of NSW Lotteries Corporation for the financial year ended 30 June 2009. It analyses our achievements against the performance measures and targets in the NSW Lotteries Business Plan and the annual Statement of Corporate Intent negotiated with the Corporation’s Shareholder Ministers.

At the end of an extraordinary year, we report openly on the performance of our product range, covering the highs and the lows of operating lottery games. We outline what we did for players and agents and what they think of the Corporation’s services. In addition, the report clearly states how we performed against Our Mission, to ‘Benefit the people of NSW by maximising the return to our shareholders through providing quality lottery products and services’. We believe that the outstanding results attained during the past year validate our Vision ‘To be Australia’s most successful lottery operator’.

The Corporation’s operational framework is detailed in the report, which is a key accountability document in reporting on the management of its activities. It provides all key stakeholders, including the Shareholder Ministers, the Portfolio Minister, the NSW Treasury, our players and agents, as well as the general community, with timely access to relevant information concerning the financial and business performance of the Corporation in carrying out its role.

This annual report was produced in accordance with the requirements of the Annual Reports (Statutory Bodies) Act 1984 and Annual Reports (Statutory Bodies) Regulation 2005. The report has been independently audited to ensure that it complies with all relevant annual reporting statutory requirements and disclosure guidelines.

An index is provided at the back of this report to assist in searching for specific information. For ease of reference, a glossary of technical and industry terminology is also provided at the back of the report.

We trust that you will find this report informative and helpful in gaining a better appreciation of our business and we welcome your feedback.

our viSion

To be Australia’s most successful lottery operator.

our miSSion

Benefit the people of NSW by maximising the return to our shareholders through providing quality lottery products and services.

our vAlueS

Integrity

We maintain the highest standards of honesty and fairness individually and collectively – without compromise.

Teamwork

We work as a team where every member is crucial to success.

Excellence

We believe in excellence in everything we do.

Innovation

We embrace change and continuously improve the way we do things.

Responsibility

We are all accountable for our actions.

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