G44 Annual Report 2019/20 Lotto New Zealand exists to generate essential funding for Kiwi communities — it's why we do what we do! Every time Kiwis play our games, they are a Kiwi helping other Kiwis. We are proud that Lotto NZ funding, via the Lottery Grants Board, is making a positive difference in the lives of people all around New Zealand. With 100% of our profits supporting thousands of great causes and charities every year, our players are helping build strong and sustainable communities. But we cannot achieve our goal of maximising benefits for New Zealand communities if playing our games causes undue harm. Our commitment to keeping our players safe is central to everything we do. We are firmly focused on the sustainability of our business and communities, ensuring we can keep benefiting New Zealand, and making a meaningful difference in our country’s future. About This Report 02 Society 20 Highlights 04 Sustainability 28 Chair and Chief Executive’s Report 06 Leadership 32 Our Business 08 Statement of Performance 34 Our Strategy 10 Statement of Responsibility 40 Creating Value 12 Independent Auditors Report 41 Corporate Social Responsibility 14 Financial Statements 44 Responsibility 16 Directory 65 Surf Lifesaving – Volunteer Surf Lifesaver, Elena, joined the team at United North Piha after being rescued when she got into trouble swimming. The university student now spends her summers helping to keep beach goers safe. Surf Life Saving New Zealand has been saving lives since 1910, rescuing over 1,000 people every year at more than 80 sites across the country. About Lotto Annual Report 2019/20 Introduction About This Report Welcome to our new-look annual report as we start our transition to integrated reporting. In this report we present Lotto New Zealand’s (Lotto NZ) performance for the year ended 30 June 2020. In addition to this, you will find a more detailed story about who we are, and how our purpose drives decision making so we can deliver the best possible outcomes for New Zealanders. We are working towards embedding a best practice integrated reporting framework over the coming year. By doing this we will be able to show our impact and value creation over the short, medium and long term. This year’s report describes how we create value through our business activities with the inclusion of our Corporate Social Responsibility strategy. The report covers our financial performance, as well as how we continue to deliver on our purpose. We are pleased to be able to show the critical role that lottery funding plays in building strong and sustainable communities, and our commitment to minimising harm from our games. Volunteer Jono Svendsen is joined by children attending the 2020 Heart Kids Camp in West Auckland. Jono is one of a team of volunteers who help make the camp happen every year, providing lots of fun and excitement for children with congenital heart defects. Through their national network of trained support workers, Heart Kids is dedicated to providing lifelong support to families impacted by congenital heart defects. 02 Lotto New Zealand Lotto New Zealand 03 Annual Report 2019/20 Performance Highlights Play Smart First ever launched new responsible $50 million gaming programme – ‘Play Smart’, with the call to Must Be action “Know your limit, 13 first division play within it” Won! Powerball Shared by two lucky winners from Auckland and the wins Hawke’s Bay Re-certified to Level 4 responsible Transferred gaming certification 64% 1.2m 31% by the World Lottery INSTANT KIWI ONLINE MYLOTTO PLAYERS MYLOTTO SALES Association – the $313 million highest level possible Grew Instant Kiwi MyLotto registered MyLotto made-up to the Lottery Grants Board to support online by 64% – players increased by 31% of sales, up from charities and organisations all over the contributing 46% to 1.2 million 19% last year $40 million in sales country – that’s an average of $6 million every week! 23% of lottery grants were Parents Marie and Lee, with their twins under $10,000 – helping Lachlan and Ayra, who small projects make a big were supported by the Wellington Hospitals difference in Kiwis’ lives Foundation when in the Neonatal Intensive Care became Unit following the twins’ premature birth. kiwisovernight millionaires 54% – that’s a millionaire Awareness that 100% of profits every 8 days! go back to New Zealand communities increased by * 45 14% to 54% . * Source: TRA Brand and Behaviour Monitor, June 2020. Percentage of New Zealand adults responding yes, to “100% of Lotto NZ’s profits support over 3,000 good causes, every year. Before today, had you heard or read this about Lotto NZ?”. 04 Lotto New Zealand Lotto New Zealand 05 Annual Report 2019/20 Chair and Chief Executive’s report Chair and Chief Executive’s Report Roger Sharp, Chair Chris Lyman, Chief Executive E ngā Iwi, e ngā reo, e ngā mana, Thanks to our players, thousands of Cost control remains a focus for the the increasing need for customers are making a meaningful difference Farewell e ngā rau rangatira mā – tēnā charities and organisations will benefit business, and additional cost control moving to play online. We also took in our communities. During the year we said farewell from this year’s lottery funding, and it measures were put in place during the additional measures to prevent harm koutou. Nei ā māua mihi maioha During 2019/20 Lotto NZ developed to former Lotto NZ Chair Matt Boyd will be hard to find a community that lockdown period to partially offset the from our games, including additional ki a koutou katoa i runga i ngā tini its first Corporate Social Responsibility and Board Member Monique Cairns. will not feel the benefits. This includes reduction in sales. Operating expenses responsible gaming information (CSR) strategy, which reflects our We would like to thank Matt and āhuatanga o te wā. our sports people, film makers and for the year were $70.6 million, which and communication. commitment to managing the social, Monique for their significant and artists, with around half of the funding was $5.4 million (7%) below budget. Nā reira, tēnā koutou, tēnā koutou, Many customers have since returned to environmental and economic impacts valued contributions to the Lotto NZ allocated to three statutory bodies: Sport tēnā rā koutou katoa. Impact of COVID-19 primarily purchasing in retail, however of our business. This is reflected in our Board, and wish them all the best. New Zealand, the New Zealand Film a larger portion now use a mix of both three CSR pillars – Responsibility, Society We are pleased to report exceptional Commission, Creative New Zealand, As with many businesses, Lotto NZ was Thank you retail and MyLotto. As a result, MyLotto and Sustainability. More details about financial results for the year ended and the charitable trust Ngā Taonga impacted by the closure of retail stores has grown from accounting for 19% of our strategy can be found in this report. The results achieved in the 2019/20 year 30 June 2020, and a record transfer Sound & Vision. during the Alert Level 4 lockdown. While sales in 2018/19 to 31% of sales in 2019/20, were made possible by our people, of $313 million back to New Zealand we operated online during this time, store Our strategic direction The funding generated by Lotto NZ with further growth predicted in 2020/21. suppliers and retail partners who all communities. closures had a substantial impact on sales. this year has also been used for the The environment within which Lotto NZ responded well to the challenges faced throughout the year, and played an Lotto NZ exists to generate funding Government’s recently established Supporting our customers was a priority operates has evolved significantly, largely integral role in delivering a year of for the benefit of New Zealand lottery fund which will focus on over this period, and we provided “We continue to focus on driven by advances in technology, and exceptional performance. communities. We are proud to be community and social initiatives in additional guidance to help people the wellbeing of our people, an increase in online play. register to play online, launched a able to provide essential funding that response to COVID-19. The COVID-19 We have shifted our strategic direction new webchat function and made and ensuring we provide a will support Kiwis at a time when it is Wellbeing Fund is worth $40 million to better reflect both our commitment to ‘how to’ guides available on our safe working environment for needed more than ever. and will be administered by the Lottery ensuring Lotto NZ continues to be world- Grants Board. It was created so those website. To achieve this, and continue all employees remains a key The funding created by Lotto NZ, leading in minimising the potential for impacted by the pandemic can apply to generate sales during the period, for distribution by the Lottery Grants priority for the business.” harm from our products, as well as 3,000 we hired new temporary customer for financial support. the fact that we are now in increasing Board, plays a critical role in building service staff to ensure we could meet Good causes every year strong sustainable communities. We are Financial performance competition with online offshore gambling providers. It is important that We would like to thank our players who committed to providing a safe, secure 2019/20 delivered record sales and It is important to acknowledge the our strategy reflects how Lotto NZ needs help make a meaningful difference in and friendly gaming environment that profit, despite the impact of COVID-19. extraordinary efforts of our entire Lotto to operate in order to continue to deliver New Zealand communities.