NSW LOTTERIES ANNUAL REPORT 2008

FUN DREAMS FULFILLED LUCK EXCITEMENT JACKPOT GREAT RESULTS RECORD WINNINGS RECORD SALES HIGH RETURNS REVENUE RAISED INCREASED MARKET SHARE ANTICIPATIONSHAREHOLDER VALUE HONESTYGREAT PRODUCTS INTEGRITY RESPONSIBILITY IN MARKETING

NSW LOTTERIES ANNUAL REPORT 2008

OUR PLAYERS OUR RETAILERS OUR BUSINESS OUR SHAREHOLDERS OUR STAFF

2 ABOUT THIS REPORT

2 OUR VISION, MISSION & VALUES

3 LETTER TO SHAREHOLDER MINISTERS

4 QUICK FACTS ABOUT NSW LOTTERIES

5 RESULTS

6 SOME HISTORY

8 A MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

10 FINANCIAL OVERVIEW 2007/2008

11 KEY FACTS ON OUR GAMES FOR 2007/2008

12 THE YEAR IN BRIEF

16 WHO WE ARE AND WHAT WE DO Who We Are What We Do – Our Charter Our Games Business Planning Balanced Scorecard for Fiscal 2008

18 OUR PLAYERS Our games performed above

expectations Looking ahead Player Services

27 OUR RETAILERS The Retail Network Agency Services

31 OUR BUSINESS NSW Lotteries and Responsible Gaming Gaming System Telecommunications Network Electronic Service Delivery Information Management Business Continuity Plan

36 OUR SHAREHOLDERS Corporate Governance The Management Structure The Board of Directors The Executive Management Team Risk Management Insurance Reducing Our Environmental Footprint

47 OUR STAFF Listening to Our Staff Investing in the Success of Our Staff Involving Our Staff In Decision Making Rewarding Our Staff Occupational Health and Safety

FUN DREAMS FULFILLED LLED LUCK EXCITEMENT JACKPKPOT GREAT RESULTS RECORD WINWINNINGSRECORD SALES HIGH RETTURNSREVENUE RAISED INCREASED EASED MARKET SHARE ANTICIPATIONPATIOSHAREHOLDER VALUE HONESTYONE

RECEIVED A TOTAL OF $754.42 MILLION IN PRIZE MONEY

ACHIEVED A RECORD TOTAL COMMISSION OF $91 MILLIONACHIEVED 99.99 PERCENT SELLING SYSTEM UPTIME

RECEIVED LONG-TERM VALUE THROUGH CAREFUL GOVERNANCE & DIRECTION

HAVE ATTACHMENT & COMMITMENT TO OUR BUSINESS

NSW Lotteries is a State Owned Corporation that provides quality lottery products and services, contributing to the community of NSW by maximising the return to the NSW Government.

By operating with integrity, we provide excellent service to our customers, value our relationships with retailers, and acknowledge the contributions of our staff.

We aim to be successful by continuously improving our business, whilst being socially responsible.

NSW Lotteries Annual Report 2008 1

ABOUT THIS REPORTThis report provides an account of the operations of NSW Lotteries Corporation for the financial year ended 30 June 2008. 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.

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.

We openly report what our players and agents think of our services and on enhancements made to our products and processes throughout the year in our pursuit of an even greater level of service. Another way of measuring our success is our reporting on the performance of our product range, covering the highs and the lows of operating lottery games. We also clearly report on the outcome of Our Mission, to benefit the people of NSW by maximising the return to our shareholders.

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 and complies with all relevant annual reporting statutory requirements and disclosure guidelines.

The high standard for which we aim in reporting was recognised when the Corporation received a gold award for our 2006-07 annual report from the Australasian Reporting Awards. This follows seven consecutive silver awards in previous years.

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 provided at the back of the report.

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

OUR VISIONTo be Australia’s most successful lottery operator.

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

OUR VALUESIn all our activities we will:

our customers

our staff

Throughout this report we will highlight how we practice our values in our day to day business operations.

LEFT:Athol Heagney from

Heagney’s Plaza News in

Armidale Plaza welcomed

the news that one of

his customers had won

$100,000 in the $2 Jackpot

Lottery. (Courtesy of the

Armidale Express)

2 ABOUT THIS REPORT / OUR VISION, MISSION & VALUES NSW Lotteries Annual Report 2008

LETTER TO SHAREHOLDER MINISTERS

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

Dear Gentlemen

Report of Performance for the Year Ended 30 June 2008

We have pleasure in submitting the NSW Lotteries Corporation’s Annual Report for the year ended 30 June 2008 for presentation to Parliament.

The year proved to be a year of outstanding achievement for the Corporation and its various stakeholders.

As a result of record sales, which exceeded $1.2 billion for the first time, the Corporation was able to deliver:

This Annual Report provides a detailed insight into the key business activities of the organisation and the strategies underpinning this year’s successful 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.

We are also pleased to advise that the Auditor-General of NSW has certified the Corporation’s Financial Report without qualification.

John Bagshaw Michael Howell Chairman Chief Executive Officer

“ The year proved to be a year of outstanding achievement for the Corporation and its various stakeholders.”

NSW Lotteries Annual Report 2008 LETTER TO SHAREHOLDER MINISTERS 3

QUICK FACTS ABOUT NSW LOTTERIESHISTORY RESULTS WHO WE ARE CHAIRMAN & CEO MESSAGE KEY GAMING FACTS FINANCIAL OVERVIEW YEAR IN BRIEF

5 RESULTS

6 SOME HISTORY

8 A MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

10 FINANCIAL OVERVIEW 2007/2008

11 KEY FACTS ON OUR GAMES FOR 2007/2008

12 THE YEAR IN BRIEF

16 WHO WE ARE AND WHAT WE DO Who We Are What We Do – Our Charter Our Games Business Planning Balanced Scorecard for Fiscal 2008

4 QUICK FACTS ABOUT NSW LOTTERIES NSW Lotteries Annual Report 2008

RESULTSAs a State Owned Corporation, NSW Lotteries is accountable to its Shareholder Ministers for its commercial performance. A Statement of Corporate Intent 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 results for 2007/2008 were:

RESULTS FOR FISCAL 2008

PERFORMANCE MEASURE TARGET RESULT

Sales (including GST, excluding agent commission) $1,136.40 m $1,211.43 m

Profit from Continuing Operations Before Significant Item and Income Tax Equivalent $49.52 m $55.69 m

NSW Government Duty $287.40 m $305.85 m

Dividends and Income Tax Equivalent $49.52 m $55.57 m

Total $336.92 m $361.42 m

Return on Average Shareholder Equity (%) 98.89% 105.52%

Return on Corporate Assets (%) 49.83% 54.19%

SNAPSHOT OF KEY PERFORMANCE INDICATORS FOR THE LAST 7 YEARS

CATEGORY 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Sales ($M)** 1,020.8** 1,092.9** 1,108.9** 1,116.0** 1,133.2** 1,124.4** 1,211.4**

Total Government Revenue ($M)1 343.6** 373.6** 371.8** 375.8** $381.6** $381.0** $411.53**

Return on Average Shareholder Equity (%)

64 90 95 105 104 106 106

Return on Corporate Assets (%) 35 44 47 48 47 49 54

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

Average Staff Number 201 195 183 176 172 170 164

Sales per Employee ($M) 5.1 5.6 6.1 6.3 6.6 6.6 7.4

** Includes GST, excludes agent commission 1 Total Government Revenue includes Duty, GST, Dividends and Income Tax Equivalent payments, and excludes payments to the ACT Government

07/08

06/07

05/06

04/05

03/04

02/03

01/02

361.4

334.4

334.7

330.0

326.8

329.3

302.4

07/08

06/07

05/06

04/05

03/04

02/03

01/02

1,211.4

1,124.4

1,133.2

1,116.0

1,108.9

1,092.9

1,020.8

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.

NSW Lotteries Annual Report 2008 QUICK FACTS ABOUT NSW LOTTERIES 5

This was during the Great Depression, when money was as scarce as jobs and unemployment was nearly thirty percent. Queues of jobless people outside soup kitchens, single men with nowhere to live, poverty and increasing sickness were commonplace throughout the struggling city of Sydney.

Government revenue could not keep pace with the community demands of the time and as poverty increased, so too did sickness. The Government, bare of funds, could not afford to increase the hospital grants.

The announcement of a State Lottery created a political storm and was soundly denounced by the State Opposition, churches and other interested bodies. This was despite the fact that hospitals had been running various Art Unions and illegal betting was widespread throughout the community. In addition, lotteries in various other States of Australia were attracting considerable funds from New South Wales.

Premier Lang told them that a lottery was no more appealing to him than it was to them, but the reality was that unless money could be found, some hospitals would have to close their doors. He put a challenge to them – if they could raise the money needed for the hospitals within six months, then there would be no State Lottery.

History shows that the challenge was accepted, but despite significant effort, the funds just didn’t roll in and the opposition to the State Lottery was eventually withdrawn. The Lotteries Act

lottery went on sale on Monday 10 August 1931 and was drawn on 20 August 1931 in Her Majesty’s Theatre, Pitt Street, Sydney.

Since then, NSW Lotteries has developed into a well-established and highly successful organisation. Our name is associated with honesty, integrity and responsibility in marketing, managing and operating lotteries in New South Wales and the Australian Capital Territory. We are proud of our heritage, our reputation and of the commercial success achieved over 77 years.

We are also proud of our significant contribution to the community of New South Wales. From the beginning, the people of New South Wales embraced the lottery concept and in 1931/32, New South Wales State Lotteries provided the State Government with revenue of almost £700,000.

Over the years, other types of lottery games such as Lotto, OZ Lotto and Powerball have been added to our portfolio of games and our reputation has grown, with people from around the world contacting us regularly to play our games. In fiscal 2008, our contribution to Government revenues was $411.5 million, which benefits the entire community. The money we have raised has played an important role in the provision of ongoing Government services from the harsh days of the Great Depression to the better days of 2008.

SOME HISTORY In late 1930, the newly elected State Government, led by Jack Lang, decided that the only course of action to alleviate a critical funding situation in the State’s hospitals was to establish a State Lottery.

RIGHT:Drawn by four grey horses,

the barrel used to draw the

first lottery arrived at the

Government Savings Bank,

Sydney, in August 1931.


SOME IMPORTANT DATES IN OUR 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 A Jackpot prize was added to the Mammoth Lottery.

1957 Opera House Lottery tickets went on sale for a first prize of £100,000.

1963 The new Jackpot Lotteries commenced.

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 Lotto was available twice a week – Monday and Wednesday.

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. Players were able to play the Monday and Midweek games separately.

NSW Lotteries was granted a licence to sell 6 From 38 Pools – the first national game.

1991 NSW Lotteries was “commercialised’ and a Board of Management was appointed. 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 Lotto Strike was introduced – Monday and Thursday.

1996 The Midweek Lotto game changed back to Wednesday night and Powerball was introduced on Thursday night – the third national game.

The last Million Dollar Lottery was drawn and replaced by a new Lucky 7 lottery game.

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.

Lucky 7 was discontinued.

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 A single prize of $13.7 million was won in the $2 Jackpot Lottery – the biggest prize ever won in an Australian Draw Lottery.

A $30 million Powerball jackpot was won – the biggest single prize ever in NSW.

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

Lotto Strike was extended to include a Saturday draw as well as Monday and Wednesday.

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 1st customer care program to help players know exactly what their rights are and how they can manage their entries to ensure they receive all prize-money they are entitled to.

2008 A new sales record is set at $1,211.43 million for the year ended 30 June 2008.

Powerball jackpotted to nearly $58 million, which was the largest prize offered in the history of Australian lotteries.


In our year of records, we were able to achieve:

measured by sales of $7.4 million per

of almost $91 million.

A WINNING SET OF NUMBERSQuite simply these are a winning set of numbers in anyone’s language. Not only have records been broken, but the benchmarks have been raised for our future business targets and commercial performance.

A RECORD OF SUCCESSAfter three quarters of the fiscal year, the Corporation was well on the way to meeting its key business targets. However, an extraordinary run of high jackpots, up to and in excess of $50 million for OZ Lotto and Powerball during the last quarter of the year, provided the impetus for significant excess over budget at year end.

Further good news came from solid performances by the Instant Scratchies brand and our traditional Lucky Lotteries games, which also experienced long jackpot runs.

Without understating the effect of the extraordinary prize levels experienced late in the year, it is important to recognise that the vast proportion of turnover comes from players who play regularly regardless of the quantum of the prize being offered.

This means that the Corporation must have the right plans, processes and strategies in place to encourage participation each week during the year… not just on high jackpot occasions.

Our portfolio of games has been carefully and strategically managed, in conjunction with our Australian lottery partners, to offer a diverse suite of lottery games which appeal to a broad segment of the populace.

SUPPORTING OUR RETAIL NETWORK Record lottery commission earned by our retailers was boosted by an enhanced commission rate on large systems entries, which prove especially popular during large prize offers.

In addition, our business goal of delivering excellent support services enables the best possible collective service to be provided to our players.

With this objective in mind, a number of initiatives were implemented during the year, including: a self-paced interactive training system to supplement face-

telephone support for small agencies.

Work also began on the design and implementation of a new computer and communications architecture that will ensure agents have the latest technology available to support the selling systems into the future.

HIGH LEVELS OF SERVICE AND EFFICIENCYWe made further progress with our long-term strategy of continuous improvement of the Corporation’s business processes. As well as providing cost and efficiency benefits, we have delivered significant improvements in the quality of our service to our customers and retailers.

The success of this strategy was clearly reflected in the result of our customer satisfaction survey which indicated that 97% of players were satisfied with the service provided by our retailers.

Our internal and external customers also continue to receive outstanding reliability from our information technology systems, with on-line system uptime of 99.99% for scheduled selling hours.

A MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

2008 – A WINNING YEARIt is our great pleasure to be able to report the best ever set of financial and business results for NSW Lotteries Corporation.


“ Quite simply these are a winning set of numbers in anyone’s language. Not only have records been broken, but the benchmarks have been raised for our future business targets and commercial performance.”

A COMMITTED TEAMThese strong service ratings would not have been possible without the enthusiastic support of the NSW Lotteries dedicated team of staff.

The Board and Management would like to acknowledge the commitment and dedication of every staff member at NSW Lotteries and record our deep appreciation for their significant contribution to our winning year.

BUILDING ON SUCCESSThe achievements of the last 12 months provide a solid platform for growth and business success into the future.

While the prevailing difficult retail conditions are expected to linger in the short term, there are many reasons for the Corporation to look to the coming year with cautious optimism.

The roller coaster ride for the Australian lottery industry over the past few years, in which jackpots have ebbed and flowed quite dramatically, is likely to continue.

While the recent extreme run of jackpots may not reoccur with the same size and frequency each year, jackpots in the range of $20 to $30 million are expected to occur with greater frequency, in line with statistical probability.

The long term sales record achieved by NSW Lotteries has not been solely based on good luck, but rather on sound business strategy practices.

Our sales have more than doubled over the past 20 years. In 18 of those 20 years new sales records have been set… this represents a significant achievement in the lottery industry and one of which the Corporation is justly proud.

We are confident that the Corporation is well positioned to keep delivering winning years and maintaining our place in the lottery business and thereby growing the value of the Corporation to its stakeholders.

John Bagshaw Chairman

Michael Howell Chief Executive OfficerMi h l H ll

John Bagshaw, Chairman Michael Howell, Chief Executive Officer


NSW Lotteries’ profit before income tax equivalent expense climbed to a record $55.7 million and was $5.4 million (or 10.7%) above the previous year.

As depicted in the Financial Report, this record profitability flowed from the record sales revenues generated this year which increased by 7.6% from $1.163 billion to

retailer commissions).

Expenses increased by $2.6 million (or 3.6%) mainly due to increased marketing expenses associated with supporting the extraordinarily high jackpot offers for OZ Lotto and Powerball in the last quarter of the fiscal year.

However, the Corporation’s relative cost efficiency improved significantly as operating costs rose by less than half the rate of our increased revenues of 7.6%.

Based on this year’s results, the Corporation was able to provide its highest ever total return (excluding GST) to the NSW Government of $361.4 million for the year ($334.4 million in 2007). This comprised income tax equivalent payments ($22.2 million), dividends ($33.4 million) and duty ($305.8 million).

Subject to its anticipated capital funding requirements, 100% of profit earned each year is returned to Shareholders in the form of income tax equivalent and dividends.

At the end of the financial year, the balance of cash and cash equivalents stood at $30.2 million. At the same time, working capital increased from $5.9 million to $10.9 million over the course of the financial year.

NSW Lotteries’ strong sales and financial performance continues to provide a solid platform for its future business activities. The financial outlook for the Corporation remains strong.

FINANCIAL OVERVIEW 2007/2008NSW Lotteries’ profit before income tax equivalent expense climbed to a record $55.7 million and was $5.4 million (or 10.7%) above the previous year.

07/08

06/07

05/06

04/05

55.69

50.28

49.06

48.26

07/08

06/07

05/06

04/05

74.58

71.99

73.22

71.90

PROFIT BEFORE SIGNIFICANT ITEMS AND

INCOME TAX EQUIVALENT EXPENSE ($M):

EXPENSES ($M):

RIGHT:Former Top Shop of

the Year winner Mark

Munro from Orana Mall

Newsagency at Dubbo

was busily looking for a

customer who had won

$1.6 million in a Saturday

Lotto Superdraw. (Courtesy

of the Daily Liberal)


KEY FACTS ON OUR GAMES FOR 2007/2008

SALES GAME MATRIXNO. OF MILLIONAIRES & 1ST PRIZE WINNERS

PRIZES WON IN NSW

TOTAL NO. WINNERS

LARGEST FIRST / JACKPOT PRIZE

Lotto $181.9m 6 from 45 23 millionaires 74 Division One winners

$105.00m 2,740,471 $2.53m

Lotto Strike $10.4m First 4 Lotto numbers

0 millionaires (2 @ $0.9 m) 2 Strike 4 winners

$6.22m 887,695 $0.97m

Saturday Lotto

$266.6m 6 from 45 34 NSW millionaires 61 NSW Division One winners

$178.95m 2,536,935 $30m

OZ Lotto $207.6m 7 from 45 4 NSW millionaires 4 NSW Division One winners

$134.56m 3,825,936 $47.98m

Powerball $293.2m 5 from 45 & 1 from 45 drawn by a 2nd machine

6 NSW millionaires 6 NSW Division One winners

$171.24m 4,157,645 $58.74m

Instant Scratchies

$141.6m Game Pricepoints: $1 $2 $3 $5 $10

Number of Game Top Prizes: $1 9 $2 26 $3 22 $3 Merchandise 2 $3 Made For Life 4 $5 4 $5 Made For Life 2 $10 4

$93.25m 12,516,581 $1 - $20k $2 - $50k $3 - $75k $3 - $37.5k Qantas Travel Cash Equiv, $75k Gold Bullion $3 MFL - $0.65m $5 - $100k $5 MFL - $1.125m $10 - $250k

Lucky Lotteries

$104.0m $2 Jackpot Lottery – 200,000 tickets

174 x 1st Prize winners 1 x $2 Jackpot Lottery millionaire

$62.51m 10,147 Prizes in every $2 Jackpot Lottery draw

$100,000 was won in each of the 174 draws

was won in September 2007

$11.5 m as at 30 June 2008

$5 Jackpot Lottery – 160,000 tickets

43 x 1st Prize winners 1 x $5 Jackpot Lottery millionaire

12,880 Prizes in every $5 Jackpot Lottery draw

$200,000 was won in each of the 43 draws

was won in November 2007

6 From 38 Pools

$6.1m 6 from 38 3 Division One winners $2.69m 81,045 $1.275m

Total $1,211.4m $754.42m


THE YEAR IN BRIEF YEAR IN BRIEF OUR PLAYERSOBJECTIVE:

Measure Target Result

Sales $1,136.4 million $1,211.4 million

Bloc Market Share – combined Saturday Lotto/OZ Lotto/Powerball 24.7% 25.1%

Key Activities and issues Outlook and Future Challenges

$87 million (or 7.7%) up on the previous year

$104.2 million (or 12.2%) up on previous year




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

necessary degree of caution due to the continuing uncertain conditions in the economy and the retail environment

OBJECTIVE:


No. of on-line agencies 1,555 1,547

No. of complaints from players <200 72

Customer Hotline – average time taken to answer calls <15 secs 5.3 secs

Players Club Membership 950,000 885,490

No. of registered email addresses 100,000 108,409


and additional services provided by their Players Club membership


OUR RETAILERSOBJECTIVE:


Agent Satisfaction Survey The survey was not scheduled to be undertaken in 2007/08

Percentage of agents reaching individual sales targets 55% 95.8%

Percentage of agents with Business Plans 87% 90%

Customer Satisfaction Survey 95% 97%

Agent Hotline – average time taken to answer calls <15 secs 8.3 secs

Compliance with all statutory requirements 100% 100%


$90.9 million – 5.7% up on previous year

and recognition program ‘Top Shop’

retail image

package – was launched

new retail outlets in high traffic areas


OUR BUSINESSOBJECTIVES:


Compliance with the Corporation’s Responsible Gaming package 100% 100%

Gaming System uptime 99.99% 99.99%

Terminal availability – Mean Tickets Printed Between Failures 270,000 332,678


negative impacts from the sale and promotion of its range of products

policies were reviewed and amended and met all legislative requirements

st – our customer care program – was implemented

new agents

ensure that retailers understood, and complied with, various responsible gaming obligations

system - peak day was 24 December 2007 when over 2.4 million transactions were processed

improvements

the year – 17% up on the previous year

was rolled-out for the exclusive use by agents

ensure it meets regulatory requirements and encourages the responsible promotion and play of NSW Lotteries’ products

connects retail agents to the gaming system


OUR SHAREHOLDERSOBJECTIVES:


Duties paid to Governments $294.26 million $313.47 million

Profit from ordinary activities before significant items and Government Income Tax Equivalent

$49.52 million $55.69 million

Return on Corporate Assets 49.83% 54.19%

Return on Average Shareholders’ Equity 98.89% 105.52%

35.58% 37.15%

Operating expenses to sales 6.00% 5.63%

Profit to sales 4.36% 4.60%


the NSW Government in the form of duties, tax equivalents, dividends and GST

employee, increased to $7.4 million

jackpots in the various games will be crucial to growth

positions and build on their unique strengths

OUR STAFFOBJECTIVES:


Staff Turnover 5-10% 15.91%

Sick Leave per employee 5 days 4.1 days


completed

including influenza vaccinations, healthy living newsletters and ergonomic workplace assessments

future needs of both the Corporation and its employees

attitudes and opinions


WHO WE AREFollowing the passage of the State Lotteries Act, lottery sales were legalised in NSW in 1931, when The State Lotteries Office, as it was then known, was formed and 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:

conduct and otherwise participate in any lawful forms of gambling and

this end:

– to operate at least as efficiently

– to maximise the net worth of the State’s investment in the

– 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

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

towards 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:

and Saturday)

Wednesday and Saturday)

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

BUSINESS PLANNINGNSW Lotteries operates in a uniquely dynamic and challenging industry and the business planning process we follow seeks to identify the major issues that have the potential to impact our business over a three year period. From this

that will allow us to achieve our objectives and targets. In addition, each year our Board and Management re-assess the Corporation’s long term strategic issues to ensure we are prepared to handle the challenges of the future.

Key Areas for SuccessThere are five main aspects of our business that are imperative to the achievement of our goals:

Corporate Objectives for the Financial Year ended 30 June 2008

Our PlayersObjective: To ensure accessibility for

customers to play our games.

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

Objective: To increase sales.

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

Objective: To identify significant changes in player behaviour in a timely fashion.

Our RetailersObjective: To ensure we maintain a

motivated traditional retail network.

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

Our BusinessObjective: To be recognised as a

Responsible Gaming operator.

Objective: To ensure we continue to provide a sound and reliable gaming system.

Our ShareholdersObjective: To increase long-term

Our StaffObjective: To have the right people in the

right roles.

Objective: To have a motivated workforce that contributes positively to our commercial success.

Balanced Scorecard for Fiscal 2008The Business Plan incorporates an integrated set of measures, with strategies, actions and targeted outcomes that are continually reviewed and refined to ensure all critical aspects of business performance are monitored.

Our performance against each of the corporate objectives is detailed later in this report. The following table summarises performance against the key target areas:

WHO WE ARE AND WHAT WE DO


BALANCED SCORECARD FOR FISCAL 2008

OBJECTIVE MEASURE TARGET RESULT INDICATOR

OUR PLAYERSTo ensure accessibility for our customers to play our games

Number of on-line agencies 1,555 1,547

To maintain the high level of customer confidence in our operations

No. of complaints from players <200 72

Customer Hotline – average time taken to answer calls

<15 seconds 5.3 seconds

To increase sales Sales $1,136.4 m $1,211.4 m

To increase the Corporation’s share of total Bloc sales

Bloc Market Share – combined Saturday Lotto/OZ Lotto/Powerball

24.7% 25.1%

To identify significant changes in player behaviour in a timely fashion

Players Club Membership 950,000 885,490 Note 1

Number of registered email addresses recorded in database

100,000 108,409

OUR RETAILERS

To ensure we maintain a motivated traditional retail network

Agent Satisfaction Survey The survey was not scheduled to be undertaken in 2007/08

Percentage of agents reaching individual sales targets

55% 95.8%

Percentage of agents with Business Plans

87% 90%

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

Customer Satisfaction Survey 95% 97%

Agent Hotline – average time taken to answer calls

<15 seconds 8.3 seconds

Compliance with all statutory requirements

100% 100%

OUR BUSINESSTo be recognised as a Responsible Gaming operator

Compliance with the Corporation’s Responsible Gaming package

100% 100%

To ensure we continue to provide a sound and reliable gaming system

Gaming System Uptime 99.99% 99.99%

Terminal Availability: Mean Tickets Printed Between Failures

270,000 332,678

OUR SHAREHOLDERS

To increase long-term

Duties paid to Governments $294.26 m $313.47 m

Profit from ordinary activities before significant items and Government Income Tax Equivalent

$49.52 m $55.69 m

Return on Corporate Assets 49.83% 54.19%

Return on Average Shareholders’ Equity 98.89% 105.52%

35.58% 37.15%

Operating Expenses to Sales 6.00% 5.63%

Profit to Sales 4.36% 4.60%

OUR STAFFTo have the right people in the right roles

Staff turnover 5-10% 15.91% Note 2

To have a motivated workforce that contributes positively to our commercial success

Sick Leave per employee 5 days 4.1 days

Note 1: Games with extended jackpot sequences increase the number of casual players – these players are less likely to become members of Players Club. However the

number of registered players did increase this year.

Note 2: Staff turnover was unusually inflated this year due to a number of voluntary redundancies.


OUR PLAYERSFUN DREAMS FULFILLED LUCK EXCITEMENT RECORD WINNINGSANTICIPATION GAMES PRIZESPLAYERS CLUB BIG JACKPOTS

19 OUR GAMES PERFORMED ABOVE EXPECTATIONS

20 HOW OUR GAMES PERFORMED – AT A GLANCE

24 LOOKING AHEAD

25 PLAYER SERVICES

18 OUR PLAYERS NSW Lotteries Annual Report 2008

OBJECTIVE: > TO INCREASE SALES.> TO INCREASE THE

CORPORATION’S SHARE OF TOTAL BLOC SALES.

OUR GAMES PERFORMED ABOVE EXPECTATIONSIn our winning year, the Corporation achieved a sales record of $1,211.4 million in the face of challenging retail and economic conditions. This represented an increase of $87 million (or 7.7%) on the previous year and $75 million over our full year sales target of $1,136.4 million.

OZ Lotto sales reached $207.6 million which were 35% up, mainly due to the $48 million record jackpot run in April. Due to a record jackpot run to $58 million in June, Powerball achieved total sales of $293.2 million, which was 17.1% up on the previous year.

In addition, Lucky Lotteries also experienced healthy jackpot runs in both the $2 and $5 Jackpot Lotteries and performed well above expectations. Total sales were $104 million, which were up 8.8% on the previous year. By the end of the financial year, the jackpot in the $2 Jackpot Lottery had grown to $11.5 million.

Instant Scratchies had a pleasing result too and the benefits of the structural changes introduced to the game in 2006 were evident. Sales of $141.6 million were 2.4% up on the previous year.

The underlying economic factors dampened the performance of Monday, Wednesday and Saturday Lotto, which were further impacted by competition from the big jackpotting games. The combined sales total of Monday, Wednesday and Saturday Lotto, together with Lotto Strike sales, was $458.9 million and this was 4.5% down on the previous year.

Our smallest game, 6 From 38 Pools continued to be supported by a small but loyal group of players. Annual sales were $6.1 million, which was 5.8% up on the previous year.

portfolio, the slight softening in Lotto sales was more than compensated for by the exceptional sales generated during the jackpot runs in OZ Lotto and Powerball.

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:

WE ARE INNOVATIVE AND CREATIVE

07/08

06/07

05/06

04/05

03/04

02/03

01/02

959.7

884.7

855.5

836.5

814.1

808.0

740.0

SALES OF THE LOTTO GAMES PORTFOLIO ($M)

Lotto (Mon, Wed, Sat & Strike) 458.9

Powerball 293.2

OZ Lotto 207.6

Instant Scratchies 141.6

Lucky Lotteries 104.0

Pools 6.1

Total 1,211.4

TURNOVER BY PRODUCT TYPE ($M)

NSW Lotteries Annual Report 2008 OUR PLAYERS 19

HOW OUR GAMES PERFORMED – AT A GLANCE2007/08 LOTTO (MON, WED, SAT & STRIKE)

SLOGAN Live a Lotto Life

LAUNCHED 1979 (Monday), 1984 (Wednesday), 1995 (Lotto Strike), 2000 (Saturday)

HIGHLIGHTScoinciding with the $30 million Mega Draw to reinforce the “Live a Lotto Life” slogan and the theme “we don’t choose the dreams”.

number of Lotto millionaires created since the game launched in 1979 standing at 811 at the end of 2007/08.

the previous year as a result of the extraordinary Powerball and OZ Lotto jackpots throughout the year.

play despite significant jackpot activity in other products.

PERFORMANCEever from Powerball and OZ Lotto jackpot runs.

offers found it difficult to attract new players as a result of the more competitive offers from other products.

year, reflecting the failure of the jackpot not going past the $1 million level.

SALES $458.9 million

VARIANCE ON PREVIOUS YEAR Down 4.5%

SALES FOR SEVEN YEARS-GRAPH

SHARE OF NSWL TOTAL PORTFOLIO OF GAMES 37.9%

DIVISION ONE WINNERS 137 (57 millionaires). As at 30 June 2008, 811 Lotto millionaires had been created since the launch of the game in 1979.

LARGEST PRIZE OFFERED $30 million (Saturday Lotto Superdraw)

PRIZE MONEY PAID $290.2 million

OUTLOOKfrom larger Powerball and OZ Lotto jackpots.

should grow next year.

developed to make the game more competitive over the longer term.

SALES OF LOTTO – MON, WED, SAT & STRIKE ($M)

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


POWERBALL OZ LOTTO

Spend the rest of your life A truckload of cash

1996 1994

2008. This is the biggest lottery prize in Australian history. With this record event achieving widespread publicity, two million NSW players entered this draw.

sales for the year of $293.2 million.

in 2007/08, compared to $445 million for the previous year.

over 4.1 million NSW players and 6 Powerball millionaires created.

$20 million.

that time, it was the largest lottery prize in Australian history until Powerball shattered this record in June 2008. The previous record OZ Lotto jackpot was $30 million set in October 2007.

were $207.6 million, which was $53.7 million above the previous year’s result.

$544 million in 2007/08 compared to $396 million last year.

$8.6 million in the previous year.

over 3.8 million NSW players and 4 OZ Lotto millionaires created.

and underpinned the launch of a larger jackpot sequence and increases in lower Divisional prizes.

and sales were $130.0 million. Following strong jackpot activity in the second half of the year Powerball sales totalled $163.2 million in response to $295 million worth of jackpots.

and media outlets during the year with jackpot activity well beyond expectations.

following the launch of the revamped game in 2005.

previous year)


Up 17.1% Up 35%

24.2% 17.1%

6 (6 NSW millionaires) 4 (4 NSW millionaires)

$50 million (due to positive customer response, actual Division 1 prize paid was $58.74 million)

$40 million (due to positive customer response, actual Division 1 prize paid was $47.98 million)


and further customer support.

its sales target.

$40 million and $50 million jackpots in 2008/09.

game makes to overall revenue.

awareness of the product at retail level.

SALES OF POWERBALL ($M) SALES OF OZ LOTTO ($M)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

293.2

250.4

259.0

238.2

241.8

253.1

189.7

07/08

06/07

05/06

04/05

03/04

02/03

01/02

207.6

153.9

113.4

103.0

103.6

109.3

122.2


2007/08 INSTANT SCRATCHIES

SLOGAN Scratch Me Happy

LAUNCHED 1982

HIGHLIGHTSthat were designed to be fun and entertaining.

with the launch of its first holographic “25th Birthday” game.

major licensing opportunity for the Corporation and has proven to be our highest selling Licensed Property Instant Scratchie.

Day and Father’s Day as well as some exciting merchandise prizes in our “Scratch, Snack N Relax” promotion.

PERFORMANCEsecond half of the year was affected by the constant rises in petrol and interest rates as well as the record jackpots in Powerball and OZ Lotto.

SALES $141.6 million

VARIANCE ON PREVIOUS YEAR Up 2.4%

SALES FOR SEVEN YEARS-GRAPH

SHARE OF NSWL TOTAL PORTFOLIO OF GAMES 11.7%

DIVISION ONE WINNERS/FIRST PRIZE AND JACKPOT WINNERS 2 x $5 Made For Life – equivalent to $1.125 million each

LARGEST PRIZE OFFERED $5 Made For Life – equivalent to $1.125 million

PRIZE MONEY PAID $93.25 million

OUTLOOK

with a major Bathurst motor sport event and capitalise on the rivalry between Ford and Holden by offering a Ford XR8 and a Holden SS as the top prizes.

ensure premium offering.

SALES OF INSTANT SCRATCHIES ($M)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

141.6

138.3

151.0

167.4

166.2

172.3

176.1


LUCKY LOTTERIES 6 FROM 38 POOLS

You ought to buy yourself a lottery ticket Pools the smart choice

1931 Conducted by NSW Lotteries since 1989

30 June 2008, the jackpot stood at $11.5 million.

$11.79 million on 23 November 2007, passing the previous record in this lottery of $6.18 million set in May 2007.

promotion and three successful themed promotions with “Lucky Leap Year”, “St Patricks Day” and “Footy Fever”.

prizes compared to $15 million last year.

previous year.

runs largely due to the competition of more frequent high jackpots with Powerball and OZ Lotto.

immediately after the jackpot being won in November 2007.

reflected in the sales result.


Up 8.8% Up 5.8%

8.6% 0.5%

174 x First prize winners – $2 Jackpot Lottery 1 x $2 Jackpot Lottery millionaire 43 x First prize winners – $5 Jackpot Lottery 1 x $5 Jackpot Lottery millionaire

3

$11.79 million in the $5 Jackpot Lottery in November 2007 $1.28 million


help dramatise the key benefits of the brand in order to appeal to players under 40.

close as possible to the day after a draw has been sold out to ensure players remain interested in the jackpot.

the jackpot can run past the $1 million level, where largest sales increases are generated.

SALES OF LUCKY LOTTERIES ($M) SALES OF 6 FROM 38 POOLS ($M)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

104.0

95.6

120.7

105.4

121.9

105.1

97.4

07/08

06/07

05/06

04/05

03/04

02/03

01/02

6.1

5.8

6.0

6.7

6.7

7.5

7.3


Looking aheadThe overall business outlook for the next financial year is very positive.

The Corporation will seek to consolidate the significant revenue, cost and efficiency gains realised during our record 2008 financial year. This will provide a solid foundation for superior business performance over the medium term horizon.

Despite last year’s record sales, there are a number of major product structural challenges to be addressed if this year’s successes are to be continued:

revenues are being driven by jackpot size and frequency – and these factors

portfolio has to compete for attention and share of spending – bigger games will inevitably cannibalise smaller prize

frequency of large offers, over time, will desensitise players and lessen the response to jackpot offers.

There are no easy answers to these issues… but they need to be recognised and taken into account when considering any strategic game changes.

Through careful and responsible management of our total portfolio of lottery games we expect to be able to deliver a variety of game experiences and prize offers to meet the long-term needs of lottery players.

NSW Lotteries has a number of game developments planned for the year ahead to build on the record levels of player interest generated in financial year 2008. In addition, a number of major infrastructure projects are underway which will provide the necessary flexibility for NSW Lotteries to meet the likely retail preferences of our customers in the future.

RIGHT:Liverpool was Sydney’s

luckiest suburb in 2007 –

home to four first-division

winners, who took home

a total of $3.8 million.

This hopeful player tried

her luck at South West

Newsagency at Liverpool.

(Courtesy of the Sunday

Telegraph)

GOVERNMENT DUTIES 25.9%

PRIZES 60.8%

GROSS PROFIT FOR NSWL 9%

GST 4.3%

EVERY DOLLAR SPENT ON LOTTERY GAMES GOES TOWARDS:


WE PROVIDE EXCELLENT SERVICE TO OUR CUSTOMERS

OBJECTIVE: > TO ENSURE ACCESSIBILITY

FOR CUSTOMERS TO PLAY OUR GAMES.

> TO MAINTAIN THE HIGH LEVEL OF CUSTOMER CONFIDENCE IN OUR OPERATIONS.

> TO IDENTIFY SIGNIFICANT CHANGES IN PLAYER BEHAVIOUR IN A TIMELY FASHION.

PLAYER SERVICESIn our winning year, NSW Lotteries delivered winning customer service to the nearly 58% of the adult population of NSW and the ACT who played our lottery games at least once over the course of the year.

As well as working with our retail partners to promote and sell our products, we directly offer a number of player services that are aimed at making playing and winning lottery games a rewarding experience.

Players ClubAs at the end of this fiscal year, the Players Club has grown to 885,000 active members, which is an increase of 12,000 on last year’s figure. For a small annual fee, membership benefits for players include:

numbers thereby saving the need to fill

Prize Alert is a new terminal function which alerts registered players to prizes totalling $1,000 or less that they may have not yet claimed. When the Prize Alert message is displayed on the selling terminal screen, agents are prompted to encourage customers to produce any old tickets in order to check for any outstanding prizes which would normally be mailed. This allows players to receive their prizes earlier and saves processing and postal costs.

A number of Players Club promotions were run during the year aimed at increasing the awareness of the benefits of membership.

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.

Call CentreThe NSW Lotteries Call Centre helps retailers with issues such as the operation of selling terminals and handles enquiries from players about our games, promotions, winning numbers and prizes.

The Call Centre is increasingly focussed on maximising productivity by balancing inbound calls, with proactive assistance to the retail network.

The Call Centre manages an Interactive

upgraded to provide historical product results and dividends in addition to the current draw for each product and to enable customers to leave requests for further information.

During the year the Call Centre handled more than 112,000 calls from retailers and customers. Over 98% of calls were answered within 15 seconds, exceeding the benchmark target of 90%. In addition, some 295,000 customers accessed results services, with 31,000 callers requiring additional assistance from staff.

Network Syndicates NSW Lotteries offered over 18,000 network-wide syndicates for customers in major Powerball and OZ Lotto jackpot draws and Saturday Lotto Superdraws. These syndicates provide an attractive option for players, allowing them to share in a large system entry for a small outlay.

Network syndicates have proven to be extremely popular with players. Total network syndicate sales for the year exceeded $16 million.

NSW Government 293.73

ACT Government 6.93

Gross Income 104.83

GST on Gross Product Sales 49.37

Prizes 705.14

Total 1,160.00

PROJECTED SALES DISTRIBUTION 2008/2009 ($M)


Increased Security for PrizewinnersIn order to stay at the forefront of industry best practice in protecting our players’ interests, a number of independent reviews of our payment systems have been conducted. As a result, we have continued to strengthen the controls involved in processing prize claims and to reduce the business risk involved in the payment of prizes to winners.

As part of our ongoing process, a number of significant enhancements was made to our prize claim processes during the year, including:

of the selling terminal when a major unregistered Instant Scratchie prize greater than $10,000 is validated. Once the terminal is frozen a NSW Lotteries representative must speak directly to the ticket holder before functionality is

sound” for the Altura terminal when winning tickets are validated to ensure players are aware that they have won a prize.

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 by visiting our website at nswlotteries.com.au

Survey of Customer Satisfaction with Lottery Agencies It goes without saying that direct customer feedback is an essential element of the lottery business. This critical information helps to shape the future business direction of the Corporation and the type of services it must deliver to meet customers’ current and future expectations.

This year, in addition to our ongoing process of collecting information from players, a formal customer survey was undertaken.

Face-to-face interviews were conducted in retailer outlets with 600 customers who had just interacted with a lottery retailer.

It was extremely gratifying to note that NSW Lotteries customer satisfaction levels grew from 93% in the previous 2006 survey, to an excellent 97% rating in the 2008 survey.

Other key findings of the survey were:

were “extremely satisfied” has grown

satisfaction with key aspects of their relationship with agents. Significant improvements were recorded for the following measures:

– General store cleanliness (up from 91% to 96%)

– Tidiness of the NSW Lotteries dedicated counter (up from 83% to 95%)

– Enough room to easily fill out forms (up from 68% to 84%)

– Staff friendliness (up from 88% to 94%)

– Staff’s ability to answer questions and provide information (up from 79% to 91%)

– Speed of service (up from 80% to 94%)

– Ease of identifying a win when checking tickets (up from 90% to 96%)

– Ease of seeing jackpot information

a factor in the visit to the agency in 37% of cases. Convenience and habit

customers considered their NSW Lotteries agency to offer better service than any other retail businesses.

In the competitive retail environment in which we operate, these results would be envied by many other retail organisations.

RIGHT:Lynch Pharmacy at Rooty

Hill took the pain away for a

grandmother from Penrith.

“I went into the chemist for

some Deep Heat and I had

a feeling I should buy a $5

Lottery Ticket” she said.

The pain was somewhat

relieved when she won

a record $11.79 million!

(Courtesy of the Mt Druitt

St Marys Standard)

BELOW:The Corporation continually

reviews the services offered

to players. In the new

financial year, the Players

Club card will be given a

new look to make it more

appealing to players.


OUR RETAILERSMOTIVATED RETAIL NETWORK CUSTOMER SERVICE TRAINING PROMOTIONAL ACTIVITY RETAIL IMAGE AGENCY SERVICES

28 THE RETAIL NETWORK

30 AGENCY SERVICES

NSW Lotteries Annual Report 2008 OUR RETAILERS 27

OBJECTIVES: > TO ENSURE WE MAINTAIN

A MOTIVATED TRADITIONAL RETAIL NETWORK.

> TO ENSURE OUR RETAILERS MEET OUR STANDARDS WHEN SELLING OUR PRODUCTS AND SERVICING OUR CUSTOMERS.

THE RETAIL NETWORKOur winning year could not have been achieved without the hard work and dedication of our retail partners, who provide excellent service to more than 1.5 million customers purchasing NSW Lotteries products each week.

The agent network was rewarded with $91.0 million in lottery handling fees during the year, which was over $4.9 million (or 5.7%) above the previous year.

This increase reflects a deliberate strategy to improve the return to agents for selling lottery products. Over the past 10 years, agent income has grown by double the level of the increase in lottery sales.

The Corporation continued its strategy of seeking a presence in all new and redeveloped retail complexes and areas of increasing population growth. An additional 23 on-line agencies were connected to the on-line network, including the upgrade of eight existing Instant Scratchie only agencies.

By the end of the year, the NSW Lotteries network consisted of 1,547 agencies selling all lottery products and 48 Instant Scratchies-only outlets spread across New South Wales and the Australian Capital Territory.

Developing the NetworkImproved selection, training, support and income has seen agent turnover stabilise significantly, with only one in ten agents changing hands over the year, compared to one in six in 2004.

An initiative implemented this year allowed all prospective on-line selling applicants to attend a pre-appointment meeting, resulting in a better understanding of NSW Lotteries’ requirements prior to committing to purchase.

To further assist the retail network in meeting the needs of our customers, lottery agents are supported in the field by a team of Territory Managers based in metropolitan and regional locations around the State, who made 11,213 visits during the year.

Agents also receive a weekly newsletter with instructions, procedures and selling tips, along with regular memos and messages delivered through weekly courier deliveries and via their terminal display screens.

WE VALUE THE RELATIONSHIP WITH OUR RETAILERS

COMMISSION PAID TO AGENTS ($M)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

91.0

86.1

84.7

79.2

74.1

71.1

62.5

The agent network was rewarded with $91.0 million in lottery handling fees during the year, which was over $4.9 million (or 5.7%) above the previous year.

28 OUR RETAILERS NSW Lotteries Annual Report 2008

Top Shop AwardsTop Shop is NSW Lotteries’ agent reward and recognition program.

The voluntary incentive program remains a key initiative in motivating and rewarding lottery retailers and encouraging them to strive for excellence in the conduct of their agency. It has now been running for over 11 years, with steady growth in the number of agents competing for the Top Shop of The Year Award.

This year, more than 1,150 agents (or 72% of the total agency network) participated in the program, surpassing last year’s record. The value of retailer participation in the program is clearly demonstrated by the superior sales and revenues attained by participants. The Top Shop agents are able to enhance the value of their lottery business well above those of the average agent.

The annual Top Shop Awards Night was held at Sydney’s Star City Casino, celebrating the 11th year with an “Olympics” theme. The award winning agents for this year earned rewards totalling in excess of $145,000.

…and the winning outlets were:

Top Shop for 2007/2008 Theobalds Newsagency – Bathurst

Top Shop Finalists

Wincamden Newsagency – Camden Saigon Bookshop & Lottery – Cabramatta

NSW Lotteries Chairman’s AwardCooranbong Newsagency – Cooranbong

Merchandising AwardGreenhills Newsagency – East Maitland

Top Shop Agency Co-ordinator AwardAlison Broadhurst –

Top Selling Agency in the NSW Lotteries Retail NetworkEastgardens Newsagency – Eastgardens

The Top Shop for each NSW Lotteries Sales Territory Territory 1 & 7 Elanora Heights

Newsagency – Elanora Heights

Territory 2 Pikes New Gift – Burwood

Hurstville

Territory 4 Wincamden Newsagency – Camden

Saigon Bookshop & Lottery – Cabramatta

Territory 5 Prospect Newsagency – Prospect

Kenthurst

Territory 8 Maitland West End Newsagency – Maitland

Territory 9 Wauchope Newsagency – Wauchope

Territory 10 Theobalds Newsagency – Bathurst

Territory 11 Hunters Newsagency – Wagga Wagga

Territory 12 Marulan Newsagency – Marulan

LEFT:A year of hard work

was worth it for Robert

Theobald from Theobalds

Newsagency at Bathurst.

This outstanding agency

was named the NSW

Lotteries’ Top Shop of the

year…for the second year

running!

BELOW:Top Shop Finalists gathered

on stage to celebrate their

success.

NSW Lotteries Annual Report 2008 OUR RETAILERS 29

Retail Promotional Activity In-store promotions remain a valuable part of the Corporation’s promotional program, providing extra incentives to many players at their local agency. The promotions help to create excitement with players and retailers alike and contribute to increasing the awareness of players about a wide range of special events and offers.

Over 1,500 in-store promotions were conducted during the year. These promotions supported major events such as Mother’s Day, Father’s Day, Christmas, Friday 13th and Saturday Lotto Superdraws, as well as the record jackpot runs in Powerball and OZ Lotto late in the year. In addition, “Lucky the Cat” made some “live” in-store appearances to promote the growing Lucky Lotteries jackpots.

AGENCY SERVICES

Retail Training Effective training for agents and their staff has proven to be critical in giving the retail network a competitive edge. A comprehensive training program is offered to assist agents to reach the highest possible standards of retail operation and, ultimately, provide the best possible service to our customers. It also ensures that retailers are equipped with appropriate knowledge to ensure compliance with all operational requirements.

With a widely distributed network, NSW Lotteries constantly seeks better ways to provide cost-effective, convenient and relevant training to suit the business requirements of the many small retailers that act as lottery retailers.

In October 2007, we launched an internally developed computer based training program called “NSW Lotteries iLearn”. This self-paced learning tool lets agents and their staff improve their lottery product knowledge and terminal operation skills without leaving the agency.

“NSW Lotteries iLearn” covers every aspect of the NSW Lotteries business including responsible gaming, product knowledge, terminal functions, processing entries, paying prizes and reporting.

Since the new program began, over 5,300 individual training modules have been completed by 960 agency staff from over 400 agencies. The feedback on “NSW Lotteries iLearn” has been very positive with agents describing the program as easy to use and a valuable staff learning and knowledge development tool.

As well as the new electronic training service, we also continued to offer face-to-face training at our Homebush Bay headquarters. This year, over 516 agency owners and 807 staff participated in the following courses:

a comprehensive four day compulsory course for new and changeover

a half-day course for agency staff

including specialised training for our ACT Agents and staff in the separate regulations in force in that jurisdiction.

A number of specialised “High Performance Selling” seminars were also offered this year. These sessions provided over 180 agents and staff with various practical tips and professional selling skills aimed at building sales. Results have demonstrated that agents who use the skills from this seminar obtain significant real sales increases.

Retail ImageNSW Lotteries encourages agents to provide a dedicated lottery area that is well organised, easily identifiable and invites play.

Our retail image program ensures that outlets consistently represent the various brands and point of sale and maximise the impact of our retail presence.

By the end of the year, the current retail image had been installed into around 1,266 agencies – more than 81% of the on-line retail network.

Our retail image program ensures that outlets consistently represent the various brands and point of sale and maximise the impact of our retail presence.

RIGHT:NSW Lotteries encourages

agents to provide an easily

identifiable dedicated

selling area for NSW

Lottery products. This

image promotes the “shop

within a shop” concept

and invites players to try

their luck.

30 OUR RETAILERS NSW Lotteries Annual Report 2008

OUR BUSINESSRESPONSIBLE GAMES OPERATOR ENJOYABLE PLAYER EXPERIENCE RELIABLE GAMING SYSTEMS INFORMATION MANAGEMENT

32 NSW LOTTERIES AND RESPONSIBLE GAMING

34 GAMING SYSTEM

35 TELECOMMUNICATIONS NETWORK

35 ELECTRONIC SERVICE DELIVERY

35 INFORMATION MANAGEMENT

35 BUSINESS CONTINUITY PLAN

NSW Lotteries Annual Report 2008 OUR BUSINESS 31

OBJECTIVES: > TO BE RECOGNISED AS A

RESPONSIBLE GAMING OPERATOR.

NSW Lotteries and Responsible GamingWe want the positive feelings generated by our winning year to be shared by all our players. While of course we can’t guarantee that everyone who plays will win, we seek to ensure that lottery play itself is a safe and enjoyable experience.

We also want to ensure that, no matter how small, any win is identified and paid appropriately.

NSW Lotteries has a comprehensive Responsible Gaming Program, which covers all key functions associated with how our games are marketed, managed and conducted.

The NSW Lotteries Responsible Gaming Program comprises a statement of responsible gaming principles, codes of self-regulation, player awareness and security issues, as well as a compliance regime to ensure conformity with the existing regulatory framework in NSW and the ACT.

During the year, the program was reviewed and updated to ensure it continues to meet current community expectations and regulatory requirements. The Corporation, its advertising partners and its retail network aim to achieve 100% compliance.

The Corporation uses two self-regulatory codes to monitor its compliance with the NSW Lotteries Responsible Gaming Program:

Industry Code of Practice.

NSW Lotteries consulted with the other Australian lottery jurisdictions and raised the issue of updating the Australian Lotteries Industry Code of Practice to ensure it was relevant to the current industry environment. This review was still in progress as at the end of the financial year.

NSW Lotteries is also a signatory to the WLA Corporate Social Responsibility (CSR) Principles adopted by the World Lottery Association (WLA) in 2006.

NSW Lotteries is committed to ensuring the Corporation continues to benchmark against world’s best practice in the fields of Corporate Social Responsibility, responsible gaming, player protection and lottery security.

As part of this year’s review, the Corporation developed the NSW Lotteries Branded Communications Guide to supplement the internal Code of Practice. The guide sets out guidelines for the use of NSW Lotteries logos in all communications and provides specific examples of how advertising standards must be met.

Through player awareness activity we seek to ensure that players have information about the odds of playing NSW Lotteries’ games and that they know where to go for help with any problem gambling issues.

Through millions of entry forms, tickets and How to Play brochures, as well as in-store signage and Internet display, NSW Lotteries actively promotes the NSW Government’s G-line gambling referral service. The Corporation also distributes a brochure titled – “know the odds of your numbers coming up”, one of the Government’s Playsmart series of brochures, which provides the odds of winning lottery games and also publicises the G-line service.

WE ARE SOCIALLY RESPONSIBLE

BELOW:Van My at his Chester Hill

Newsagency sold one of

the two extra-lucky winning

tickets in the record-breaking

OZ Lotto jackpot draw, when

strong ticket sales boosted

the first division prize to

an amazing $47.98 million.

(Courtesy of the Bankstown

Canterbury Torch)

OPPOSITE PAGE:Co-owner Karlie Teaken

proudly promotes a $500,000

Lotto winner at Warragamba

Newsagency. (Courtesy of the

Penrith Press)

32 OUR BUSINESS NSW Lotteries Annual Report 2008

This year’s review confirmed that all current NSW Lotteries advertising and customer information complies with all relevant responsible gaming and harm minimisation regulations.

Players 1st This year, a major new awareness campaign called Players 1st was introduced, designed to help players understand their rights and become aware of how the system for paying prizes operates to ensure they receive all the prizes to which they are entitled.

Implementation of the program involved:

with Players 1st information to all 1,600

contact addresses to report any concerns and allow feedback on improving security and customer care:

– Hotline: 1300 PLAYER (1300 752 937)

about claiming prizes and player registration under the Players 1st banner and a dedicated brochure on the Players 1st

area on the NSW Lotteries website, which reproduces the information

on a simple easy-to-follow multi-step process for handling selling, ticket

along with the benefit of player registration through Players Club, to players. The Corporation urges all players to protect their prize money by registering all entries with a NSW Lotteries Players Club Card.

Through Players 1st we aim to maintain the high level of trust of our players and to encourage their ongoing support of the individual agents who make up our retail network.

We want the positive feelings generated by our winning year to be shared by all our players. While of course we can’t guarantee that everyone who plays will win, we seek to ensure that lottery play itself is a safe and enjoyable experience.


OBJECTIVES: > TO ENSURE WE CONTINUE

TO PROVIDE A SOUND AND RELIABLE GAMING SYSTEM.

The record outcomes achieved during this winning year have been delivered through an on-line computer system which operates with levels of reliability at the forefront of lottery industry best practice. It is supported by a dedicated group of experienced information technology professionals.

NSW Lotteries has a clear business objective to utilise technology in order to deliver smarter and more efficient outcomes for agents, customers and the Corporation itself.

Our Information Technology Strategic Plan is updated annually to reflect key technology challenges facing the organisation. This process identifies the key issues and 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.

Gaming System Over the course of the year, the gaming system continued to provide service levels which are at the forefront of industry standards, achieving its benchmark target of 99.99% availability during available selling hours.

More than 282 million lottery transactions were processed through the on-line gaming system during the year.

The highest value selling day this year occurred during the $60 million Powerball jackpot week when transactions with a sales value of $27 million were processed.

As part of the Corporation’s overarching business philosophy of continuous improvement, a program of regular software enhancements was implemented to improve business performance and service to players and agents.

Technology upgrades included:

function to cover an Instant Scratchie

which alerts registered players to

sound for the selling terminal.

WE CONTINUOUSLY IMPROVE OUR BUSINESS

SELLING SYSTEM UP-TIME (%)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

99.99

99.99

99.99

100.00

99.99

99.99

99.99

WEBSITE USER SESSIONS

07/08

06/07

05/06

04/05

03/04

02/03

01/02

10,460,270

8,966,086

7,364,200

4,882,140

3,247,025

2,473,168

1,977,000

Over the course of the year, the gaming system continued to provide service levels which are at the forefront of industry standards, achieving its benchmark target of 99.99% availability during available selling hours.

34 OUR BUSINESS NSW Lotteries Annual Report 2008

Telecommunications NetworkOur retail agencies are connected on-line to the central processing facility by a telecommunications network provided by an external carrier.

This year the Digital Data Service telecommunications network achieved 99.95% availability, which was slightly below the target of 99.96%.

As reported last year, the existing telecommunications service is being replaced by an Internet Protocol-based network using landline and wireless technologies.

The new network is scheduled to come into operation in early 2009. Progress and planning is well underway to ensure changeover is as seamless as possible.

This is a major infrastructure project with significant business implications for NSW Lotteries.

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

Corporate Website The NSW Lotteries website – nswlotteries.com.au – continued its long-term upward trend with 10,460,270 user sessions being recorded over the year – up 17% on last year.

Traffic to the site reaches a peak when players seek to check their winning numbers immediately following a big jackpot draw.

In view of the growing importance of this communication channel, the Corporation is dedicating additional resources to maximising the effectiveness of the website for users.

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

advertisements.

New Agent-specific WebsiteA new agent only website was established in October 2007. Known as the 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.

The site also provides access to the new computer based training program for agents and staff, NSW Lotteries iLearn. As outlined in Our Retailers, this e-learning training and education system will generate significant savings in time and travel for agents and their staff.

Information ManagementAn Information Management Strategy was formulated this year which seeks to optimise the management and flow of information within the Corporation. It aims to ensure that staff can access the right information, in the right form and at the right time to better serve our customers. A number of key projects were initiated as a result of the strategy including:

leading to a reduction in the number of paper based files. This project was aided by the installation of a number of high volume multifunction printers and

Intranet Portal which included the introduction of an electronic workflow

to improve the quality of information provided in the field by the Corporation’s Territory Managers to retailers.

Business Continuity PlanThe NSW Lotteries Business Continuity Plan focuses on ensuring the Corporation is as prepared as possible and can restore operations with a minimum of downtime following an unforeseen problem, whether a major disaster or minor outage.

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

As part of the overall plan, a major test of the back-up off-site processing system was conducted. This included switching our information technology processing from the primary computer site to our back-up site.

Similar tests for the non-gaming systems were also undertaken during the year to trial the capability of the Business Continuity Plan to ensure that other key business processes are operational as soon as possible.

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.

LEFT:Part owner of Nowra

Newsagency, Gai Quinn

(foreground) and staff

member, Sammy, think

they have the million dollar

touch having recently sold

a $1 million winner in a

Wednesday Lotto draw.

(Courtesy of the South

Coast Register)


OUR SHAREHOLDERSSHAREHOLDER VALUE HONESTY GOVERNANCE PERFORMANCE INTEGRITY GOOD LEADERSHIP REGULATION ENVIRONMENT

37 CORPORATE GOVERNANCE

38 THE MANAGEMENT STRUCTURE

42 THE BOARD OF DIRECTORS

44 THE EXECUTIVE MANAGEMENT TEAM

45 RISK MANAGEMENT

45 INSURANCE

46 REDUCING OUR ENVIRONMENTAL FOOTPRINT

36 OUR SHAREHOLDERS NSW Lotteries Annual Report 2008

OBJECTIVE: > TO INCREASE LONG-TERM

SHAREHOLDER VALUE.

CORPORATE GOVERNANCEEarning the trust of players is of fundamental importance for a successful lottery and NSW Lotteries operates within a strict framework of regulation and corporate governance to ensure that its well established reputation for honesty and integrity is maintained.

Corporate governance entails how an

to and protects the interests of its various

it meets its financial and social obligations. NSW Lotteries’ corporate governance process provides the framework for decision-making based on a set of clearly

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 2009.

Its key Governmental stakeholders are:

represent the owners – i.e. the NSW Government – and are responsible for

responsible for establishing and managing the regulatory framework governing the Corporation’s commercial

the 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 key pillar of the Corporatisation model adopted in NSW. It is intended to provide clear lines of accountability for the Corporation’s commercial performance.

WE OPERATE WITH INTEGRITY

OPERATING COSTS – % OF SALES

07/08

06/07

05/06

04/05

03/04

02/03

01/02

5.6

5.8

6.0

5.9

6.1

6.3

6.9

Earning the trust of players is of fundamental importance for a successful lottery and NSW Lotteries operates within a strict framework of regulation and corporate governance to ensure that its well established reputation for honesty and integrity is maintained.

NSW Lotteries Annual Report 2008 OUR SHAREHOLDERS 37

Role of the NSW Lotteries BoardThe 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 shareholders and other key stakeholders. 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:

appropriately identified and managed.

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

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

I. Two persons nominated by the

II. Two persons nominated by Unions NSW.

This Director is recommended by the committee from three persons

five other 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 skills and depth of experience in its current Board, with members from diverse industries, including lotteries, wagering, media, marketing, publishing, finance and politics.

Current members of the NSW Lotteries

Board members are profiled on pages 42 and 43.

Board ResponsibilitiesThe 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 has been formulated which provides the necessary guidance to ensure Directors are fully aware of the responsibilities and requirements of a Director.

THE MANAGEMENT STRUCTURE

BOARD

Corporate Services Customer and Agency Services

Finance Information Technology Services

Marketing and Sales

CHIEF EXECUTIVE OFFICER

OPERATIONAL DIVISIONS

BOARD COMMITTEES

and Review

Distribution

and Budgeting

Management

Public Relations

RIGHT:Trevor Kingham, owner

of Silva’s Newsagency

in Bathurst, was happy

to show customers how

they could share in Lotto’s

end of year $30 million

Superdraw. (Courtesy of

the Western Advocate)


The Board has established a sound operating framework to ensure the efficient and effective management of the Corporation’s commercial activities. Key features of the framework are:

all major areas of the Corporation’s

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.

Board MeetingsMeetings 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 Milton Cockburn 11 Michael Howell 11 John Johnson 10 Denis McCormack 11 Suzanne Walsh 8

Board CommitteesThe 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 were as follows:

AUDIT AND GOVERNANCE COMMITTEE

INFORMATION TECHNOLOGY COMMITTEE

HUMAN RESOURCES AND REMUNERATION COMMITTEE

John Bagshaw Chairman

Bonita Boezeman Chairman

Milton Cockburn

Michael Howell

John Johnson

Denis McCormack Chairman

Suzanne Walsh


Audit and Governance CommitteeThe Audit and Governance Committee assists the Board in discharging its responsibilities with regard to risk management, statutory financial reporting and corporate governance matters. The Committee:

plan and makes appropriate

management’s responses and actions to matters raised in internal and

assessing the effectiveness of internal

the Corporation’s Business Continuity Plan, assessments of business risks and insurance coverage and advises

proposed by management for submission through the Board to

corporate governance issues.

Major activities undertaken this year included a review of the Corporation’s overall risk management program, 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 Milton Cockburn 3 John Johnson 5 Suzanne Walsh 4

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:

implementation of the Corporation’s

matters associated with the current use of information technology by

designed to minimise interruption to

information technology opportunities and risks.

During the year the Committee considered a number of initiatives including the Wide Area Network replacement strategy, major changes to the Gaming System infrastructure, the Corporate Network infrastructure upgrade, 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:

Denis McCormack (Chairman) 4 John Bagshaw 4 Michael Howell 4 Suzanne Walsh 3

RIGHT:Players responded well

to the advertising of the

$40 million jackpot – the OZ

Lotto truck rolled-out nearly

$48 million in first division

prizes in a single draw.


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

the selection and terms and conditions of employment of the Chief Executive

Chief Executive Officer each year and making recommendations to the Board concerning the terms and conditions of

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

As a matter of practice, the Chief Executive Officer takes no part in discussions of any matters at the Committee which have a direct (or indirect) bearing on the terms and conditions of his 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 workforce planning.

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

John Bagshaw (Chairman) 4* Bonita Boezeman 4* Milton Cockburn 4* Michael Howell 2

*Two of the meetings held this year were for non-

executive committee members only. Michael Howell, the

Chief Executive Officer, did not attend those meetings.

Monitoring PerformanceA series of key performance indicators have been established for all areas of the business. These provide a quick “health check” on the organisation and its progress towards meeting its various financial and stakeholder targets.

These indicators are reported to the Board each month and progress is continuously monitored throughout the year. In addition, each quarter the Board also receives detailed reports on progress towards the achievement of Business Plan targets, strategies, action plans and product profitability.

Annual Review of Board PerformanceAs 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:

Directors concerning their perceptions about the Board and individual Director

Director and the Chairman.

Each Board Committee also has an obligation to annually assess its performance and, where necessary, make recommendations to the Board 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.

A series of key performance indicators have been established for all areas of the business. These provide a quick “health check” on the organisation and its progress towards meeting its various financial and stakeholder targets.


John Bagshaw (Chairman) (Independent Director) BSc, FAICDJohn 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, FAICDAppointed 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 background in marketing and financial 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 the Order of Australia and the Centenary Medal for significant contributions to business and philanthropy.

Milton Cockburn(Independent Director) B.Com (Hons) GAICDAppointed 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.

THE BOARD OF DIRECTORS


(Executive Director) Dip Tech (Comm), CPA, MAICDChief Executive of the Corporation (and predecessor organisations) since September 1988. Michael was a founding member of the Board and has more than 35 years experience in commerce and public sector finance. He has worked in the lottery industry for 25 years and is currently among the longest serving chief executives in the lottery industry worldwide. Michael has acted as an adviser to a number of overseas Governments on the introduction of lotteries into their jurisdictions and occupies the positions of Chairman of both the National Lotto Bloc and the Monday/Wednesday Lotto Bloc.

John Johnson(Independent Director) K.C.S.G.Appointed April 2002. John has a background in retail, 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 Randwick Labor Club and was appointed in 2003 and re-appointed in June 2005 as Chairman of the Board of The Catholic Press Newspaper Company Pty. Ltd. John is also a member of the National Cancer Advisory Committee.

Denis McCormack(Independent Director) FAMI, FAIA, MAMIAppointed January 1997. Denis is Managing Director of the marketing consultancy, Southside Six Pty. Ltd. His marketing background spans 40 years. A former advertising agency director, he joined St.George Building Society in the 1970s and as Chief General Manager–Marketing he played an integral role in building that brand over more than two decades. He also had a key involvement in the conversion to St.George Bank in 1992. 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-Australia Business Network) and Sutherland Credit Union Ltd. He is also a member of various charity committees.

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.


Michael Howell Dip Tech (Comm), CPA, MAICD Chief Executive Officer See Board of Directors biography in previous section.

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.

Martin Cassidy BSc (Hons), MBA Director Information Technology ServicesAppointed 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 and public sectors working for 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.

Brian McIntyre MComm, FCA, MAICD Director FinanceAppointed to this position in November 1994. Upon NSW Lotteries’ corporatisation in January 1997, Brian was also appointed Corporate Secretary. Brian has an extensive background in finance, audit and risk management 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 and risk management, legal affairs and corporate secretarial matters.

Nick Nichles B. Bus, Grad.Dip.Mktg. Director Marketing and SalesAppointed to this position in June 2005. Nick is one of a handful of people in the marketing industry in Australia to have been both a client and supplier of marketing services. Whilst most of Nick’s experience has been gained on the client side, he has also worked for media organisations as well as advertising agencies. Nick’s advertising agency experience comes from DDB Needham where he worked on the McDonald’s business for nearly seven years. More recently Nick was Managing Director of media agency Universal McCann. Most of Nick’s client experience has been gained at McDonald’s Australia where he was

FOXTEL where he was General Manager – Commercial Operations. Nick lectures part-time at the Graduate School of Business at UTS in the MBA programme.

Chris Patterson Dip Tech (Comm) Director Customer and Agency ServicesAppointed 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.

THE EXECUTIVE MANAGEMENT TEAM

ABOVE:Martin Cassidy, Susan

Browne, Brian McIntyre,

Nick Nichles and Chris

Patterson.


RISK MANAGEMENT Although NSW Lotteries is in the business of chance, every effort is made to identify and manage risk so as to 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. Each area of risk is assessed and prioritised according to its likelihood of occurrence and the significance of its impact. In turn, risk management procedures are reviewed and relevant strategies implemented to manage each area of risk.

In recent years, the Corporation has particularly focussed on risk associated with processes outsourced to the retail network, including ticket sales and prize redemption.

Following a detailed examination and assessment of risks associated with these processes, a number of new procedures were implemented, backed by enhanced technological solutions at the agency level.

Most importantly, the Corporation has established clearly defined standards of accountability.

Our Risk Management Program is based on the Australian/New Zealand Risk Management Standard – AS/NZS 4360:2004 and focuses on mitigation strategies as well as the transfer of risk. The Program covers all key areas of the Corporation’s activities including:

Freedom of Information.

NSW Lotteries continues to evolve its risk management strategies based on known risk factors both in Australian and international lottery jurisdictions and also monitors for any potential new risk factors.

The Board has acknowledged that it has received a report from management that indicates that material business risks have been managed effectively and that primary internal control systems are appropriately designed and have been implemented.

INSURANCEInsurance is one of the means by which the Corporation manages and mitigates any areas of identified risk. As part of its overall approach to risk management, the type and extent of insurance coverage is regularly reviewed and updated.

All areas of risk involving insurance, such as Worker’s Compensation, Property

Public Liability and Directors’ and Officer’s Liability, are reviewed at least annually.

Given the scope and diversity of the retail network and its broad responsibilities 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 and addressed in the overall risk management strategies.

Although NSW Lotteries is in the business of chance, every effort is made to identify and manage risk so as to ensure the continued success and integrity of its business activities.


Reducing Our Environmental FootprintNSW Lotteries, just like other responsible businesses, recognises its responsibilities to protect the environment by minimising its environmental footprint.

This year the Corporation met or exceeded its key environmental benchmarks by increasing sustainability levels within four main “green” targets.

Managing EnergyThe Corporation has adopted the overall NSW Government target of a minimum of 6% green power as part of its overall power usage. This target was met and exceeded and has resulted in a reduction of an estimated 112 tonnes of carbon dioxide emissions this year. NSW Lotteries intends to continue to increase the percentage of green power utilised each year.

While our use of green power reached benchmark, our overall energy consumption for the year still increased by some 8% to 1,863,098 kWh. The increase was largely due to increases in the amount of, and utilisation of, computer equipment installed in our Data Centre. The facility is required to operate on a 24 hours a day, seven days a week basis to service customers and deliver our business revenues.

A number of measures have been taken to reduce overall power usage associated with the computer equipment, including installation of auto power savers on computers and printers. In addition, we have ensured that any office equipment purchased is energy efficient and delivers equivalent or better performance than comparable models, while using less energy and saving money.

Greenhouse RatingThe Corporation has sought to meet and exceed the overall public sector standard of three stars or more under the Australian Building Greenhouse Rating. Our corporate headquarters building at Homebush Bay has achieved a three star rating. Fluorescent light tubes were replaced with more energy efficient tri-phosphorous tubes and compact fluorescents. We connected to local recycled water for our irrigation system and we reduced our water consumption by 41% to 1,601 kilolitres.

Less WasteNSW Lotteries continually investigates ways to reduce the generation of waste. The Corporation’s performance is compared to public sector recycling averages in the table below. These figures were obtained from the State Government’s 2008 Waste Reduction and Purchasing Policy (WRAPP) Progress Report.

Category of Waste

NSW Lotteries’ Recycling

Achievements

Public Sector

Recycling Averages

Paper and cardboard

95% 80%

100% 64%

Used toner cartridges

99% 47%

In addition, 99% of used fluorescent light tubes were recycled.

Cleaner VehiclesThe Corporation has adopted a policy of gradually introducing smaller engine capacity motor vehicles with better fuel economy and higher environmental friendly rating (13 out of a possible rating of 15 for the models used). During the year, overall fuel consumption remained stable compared to last year’s usage.

NSW Lotteries, just like other responsible businesses, recognises its responsibilities to protect the environment by minimising its environmental footprint.


OUR STAFFSUCCESS MOTIVATION SAFETY CONTRIBUTIONS INVESTING IN TRAINING REWARDS EMPLOYEE OF THE YEAR PERFORMANCE

48 LISTENING TO OUR STAFF

49 INVESTING IN THE SUCCESS OF OUR STAFF

49 INVOLVING OUR STAFF IN DECISION MAKING

49 REWARDING OUR STAFF

50 OCCUPATIONAL HEALTH AND SAFETY

NSW Lotteries Annual Report 2008 OUR STAFF 47

OBJECTIVES: > TO HAVE THE RIGHT PEOPLE IN

THE RIGHT ROLES. > TO HAVE A MOTIVATED

WORKFORCE THAT CONTRIBUTES POSITIVELY TO OUR COMMERCIAL SUCCESS.

One of the most pleasing aspects of our winning year is the high level of staff productivity achieved. Our sales per employee this year reached a record $7.4 million.

While the staff of NSW Lotteries rely on close to 10,000 retail workers and a number of specialist suppliers to help them achieve this figure, it nonetheless highlights the impressive level of commitment and capability of our team.

In line with many other businesses, structural and technological change have significantly impacted NSW Lotteries’ business operations over the last 10 years. It is certain that these changes will continue at a more rapid rate in the future.

Having the right people in the right roles with the motivation, skills and knowledge to meet the challenging demands of the future is a key business goal which we plan to achieve into the future.

Listening To Our StaffIn 2006 an independent staff survey was conducted aimed at gaining a clearer understanding of the feelings and attitudes of our employees towards the organisation, as an employer.

We continued to implement the strategies which had been formulated to address areas of concern identified in the survey, such as employee recognition, people practices and career opportunities.

The Corporation expects that the results of the next survey, to be conducted in September 2008, will clearly demonstrate the efficacy of the strategies adopted to improve the level of employee engagement and satisfaction.

Performance ReviewsA major overhaul of the Performance Review System was undertaken during the year. The new system aligns individual tasks and projects to Divisional Scorecards, which support the wider organisational targets outlined in the annual Business Plan. The system provides guidance for addressing any areas of an individual’s performance in need of improvement and sets a clear process for any corrective action.

The implementation of the new system has been evaluated based on feedback from employees and managers at the initial, mid-year and final reviews. All indications to date are that staff and supervisors are pleased with the new approach and we will continue to monitor results and fine tune if necessary.

WE ACKNOWLEDGE THE CONTRIBUTIONS OF OUR STAFF

BELOW:Staff members Tony

Clough, Marie Dulaurent

and Tippy Fitzpatrick discuss

the electronic capture of all

corporate documents. This

environmentally friendly

project has led to a reduction

in the number of paper based

files used throughout the

Corporation.

48 OUR STAFF NSW Lotteries Annual Report 2008

Investing In the Success Of Our StaffThis year saw the completion of the first twelve months of the inaugural Management Development Program. The program has provided participants with a structured program for developing the skills necessary to progress their careers within the Corporation. Critical positions within the organisation, which have the potential to be filled by existing employees, were identified through our succession planning process. A competency framework was established for each of the roles and a skill-gap analysis completed to determine the level of development each potential successor required.

The ten initial participants in the program undertook monthly workshops which focused on core leadership competencies and addressed topics such as Becoming a Change Catalyst, Demonstrating Empathy, Having Service Orientation and Conflict Management.

Each participant was mentored by a senior executive and a formal arrangement for monitoring was established for each participant in the program.

As part of the evolution of the program, all participants will be involved in a major corporate wide change project.

Learning And Development

Training and DevelopmentOne of the key benefits flowing from the changes to our Performance Review System is the increased emphasis on identifying the training needs of each staff member and areas where personal development can benefit the individual. Employees are encouraged to participate in both in-house and external training and to take up developmental opportunities as they arise.

This year, more than 80 staff members took part in training courses, seminars and on the job training programs. Courses attended covered a range of specialist programs for technical and professional roles, general management and supervisory skills.

External Study AssistanceEmployees who wish to enhance their capabilities though private study are helped with financial assistance and study time through NSW Lotteries’ External Study Assistance Program. During the past year, eight employees undertook tertiary studies in eligible courses relevant to the Corporation’s business needs.

Involving Our Staff In Decision MakingThe NSW Lotteries Leadership Team is a group of managers brought together to participate actively in the business planning process. This initiative arose out of the 2006 employee survey.

The Leadership Team played an important role in the development of our next Business Plan.

Rewarding Our Staff

Employee Reward and Recognition Program This year saw a significant increase in the number of staff nominations under NSW Lotteries’ Employee Reward and Recognition Program.

The program seeks to acknowledge and recognise employees who have made special or outstanding contributions to assist the Corporation in achieving its goals and objectives. Employees received awards for demonstrating positive attitudes or behaviours consistent with NSW Lotteries’ corporate values. They were also rewarded for excellence in the performance of their duties and achievements in activities beyond the normal expectations of their role.

A total of 49 employees received awards in acknowledgment of their efforts and exceptional performance.

Having the right people in the right roles with the motivation, skills and knowledge to meet the challenging demands of the future is a key business goal which we plan to achieve into the future.


Employee of the YearThe Employee of the Year Award is the major award provided under the Employee Reward and Recognition program. It recognises outstanding individual performance or achievement over the year. Our aim is to reinforce the pursuit of excellence within the Corporation by publicly acknowledging and rewarding exceptional contributions by our staff.

The Employee of the Year for this year

Resources Administrator.

Although having only been employed by the Corporation for a few short years,

attitude and commitment to delivering quality service to her customers.

She has forged strong relationships throughout the organisation based on her ability to provide ongoing assistance and support to managers and other employees

her supervisor’s expectations and has taken on many additional activities outside her normal work duties.

Her recognition as Employee of the Year was well earned and well received by her work colleagues.

Long Service AwardsThe Corporation formally acknowledges the valued contribution of its long-serving staff by recognising staff who achieve service milestones. This year, Brendan Doherty celebrated 25 years of service with the Corporation and was presented with an award in appreciation of his contribution to NSW Lotteries.

University Scholarship ProgramThe University of New South Wales Co-Operative Scholarship Program has been so successful over the past three years, that the program was extended to include Information Technology Services. This four-year scholarship program provides industry training to exceptional undergraduate students. Now, each year a designated trainee joins our Corporation’s Marketing and Sales Division and Information Technology Services Division for a six-month period to undertake structured training in a particular field of study.

Employee Assistance ProgramThe Employee Assistance Program provides a free counselling and advisory service for employees seeking professional assistance for personal or work related problems. This program has been in operation for the past seven years at NSW Lotteries and is available to all our staff. The program seeks to ensure that employees maintain a positive work/life balance and to minimise the impact of any external problems or issues.

Occupational Health And Safety (OH&S)NSW Lotteries places considerable emphasis in its day-to-day operations on the health and safety of its employees. It has long been recognised that the wellbeing of staff is fundamental to the success of any organisation. The Corporation has a key business objective of providing a safe, healthy and secure work environment for its employees.

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

Workers’ Compensation injuries and claims.

All managers, supervisors and staff are encouraged to assume personal responsibility for adopting effective work practices.

Staff are regularly updated on safety issues which have potential impact in the workplace and are actively involved in a planned program of emergency training, drills and procedures. In addition, there are a number of healthcare initiatives implemented including influenza vaccinations, healthy living newsletters and ergonomic workplace assessments.

RIGHT:Demonstrating a very positive

attitude and commitment

to delivering quality service

to her customers allowed

Vanessa Craze to be

popularly acknowledged as

the Corporation’s Employee

of the Year for 2007.

BELOW:Brendan Doherty was

recognised for 25 years

service with NSW Lotteries

in this year’s Long Service

Awards.

50 OUR STAFF NSW Lotteries Annual Report 2008

Key OH&S performance statistics are as follows:

OH&S STATISTICAL REPORT 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Average number of employees 195 183 176 172 170 164

Total number of work injuries 29 15 28 22 22 12

Actual expenditure on OH&S programs ($) 21,907 13,523 25,567 15,926 21,465 14,781

Total number of Workers Compensation Claims

12 10 14 7 7 3

Total number of employees who participated in a rehabilitation program

3 1 1 2 1 1

Number of hours in training in OH&S 280 150 203 91 192 35

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

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

* As employees did not support the formation of an OH&S Committee, OH&S items are raised by employees with their respective managers or a Human Resources representative.

Caring For OthersWhile our corporate mission is to contribute to the community, our staff also participate in regular fund raising activities for various charitable groups. This year, funds have been raised for many worthwhile causes including: the Salvation Army, National Breast Cancer Foundation (Pink Ribbon Day), Cancer Council (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).

Human Resources Statistical Report as at 30 June 2008

JUNE 2003 JUNE 2004 JUNE 2005 JUNE 2006 JUNE 2007 JUNE 2008

Executive 6* 6* 6* 6* 6* 6*

Senior Specialist Managers 7 7 7 5 5 7

Administrative Staff 168 156 149 148 149 143

Distribution Officers 14 11 11 11 10 10

*Includes one female

GOVERNMENT REVENUE PER EMPLOYEE ($M)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

2.51

2.24

2.22

2.14

2.03

1.92

1.71

SALES PER EMPLOYEE ($M)

07/08

06/07

05/06

04/05

03/04

02/03

01/02

7.4

6.6

6.6

6.3

6.1

5.6

5.1

STAFF NUMBERS

07/08

06/07

05/06

04/05

03/04

02/03

01/02

164

170

172

176

183

195

201


FINANCIAL REPORTAUDIT REPORT BALANCE SHEET INCOME CASH FLOWS WINNING NUMBERS PERFORMANCE

52 FINANCIAL REPORT NSW Lotteries Annual Report 2008

STATEMENT BY BOARD OF DIRECTORS 54

INDEPENDENT AUDIT REPORT 55

INCOME STATEMENT 56

BALANCE SHEET 57

CASH FLOW STATEMENT 58

STATEMENT OF CHANGES IN EQUITY 59

NOTES TO THE FINANCIAL STATEMENTS 60

NOTE 1 Summary of Significant Accounting Policies 60

2 Revenues 63

3 Profit from Continuing Operations Before Income Tax Equivalent Expense 63

4 Taxation 63

5 Cash and Cash Equivalent Assets 64

6 Financial Assets Held for Trading 64

7 Other Financial Assets Held to Maturity 64

8 Financial Instruments 64

9 Property, Plant and Equipment 66

10 Intangible Assets 68

11 Other Non-Current Asset 68

12 Payables 73

13 Provisions 73

14 NSW Government Dividends 74

15 Employee Benefits 74

16 Contributed Equity 74

17 Reserve 74

18 Retained Profits 74

19 Related Parties 75

20 Auditors’ Remuneration 75

21 Commitments not provided for in the Financial Statements 76

22 Contingent Assets 76

23 Segment Reporting 76

24 Changes in Australian Accounting Standards 76

FINANCIAL REPORTFOR THE YEAR ENDED 30 JUNE 2008

CONTENTS

NSW Lotteries Annual Report 2008 FINANCIAL REPORT 53

STATEMENT BY THE BOARD OF DIRECTORS

In accordance with a resolution of the Directors of New South Wales Lotteries Corporation and pursuant to Section 41C (1B) and (1C) of the Public Finance and Audit Act, 1983, we state that:

1 The attached is a general purpose Financial Report and presents a true and fair view of the financial position of New South Wales Lotteries Corporation at 30 June 2008 and the results of its financial performance and transactions for the year then ended;

2 The Financial Report has been prepared in accordance with the provisions of the Public Finance and Audit Act, 1983 and the Public Finance and Audit Act Regulation, 2005;

3 The Financial Report has been prepared in accordance with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board;

4 We are not aware of any circumstances which would render any particulars included in the Financial Report to be misleading or inaccurate; and

5 There are reasonable grounds to believe that New South Wales Lotteries Corporation will be able to pay its debts as and when they fall due.

Signed in accordance with a resolution of the Board of Directors.

Dated at Sydney this Eighteenth day of September 2008.

John Bagshaw Michael Howell Chair Director and Chief Executive Officer


INDEPENDENT AUDITOR’S REPORT


2008 2007 Notes $’000 $’000

Continuing Operations

Revenues 1(b), 2 1,251,012 1,162,644

Cost of Sales 3(b) (1,141,627) (1,061,296)

Gross Profit 109,385 101,348

Other Revenues 2, 3(a) 20,876 20,920

Retail Network Expenses (35,259) (33,158)

Printing & Distribution Expenses (5,897) (6,195)

Administration Expenses (33,420) (32,632)

Profit from continuing operations before income tax equivalent expense 3(c) 55,685 50,283

Less Income tax equivalent expense 4(a) (16,907) (15,195)

Profit for the year attributable to equity holders 38,778 35,088

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 2008


NSW LOTTERIES CORPORATION BALANCE SHEETAS AT 30 JUNE 2008

2008 2007 Notes $’000 $’000

Current Assets

Cash and Cash Equivalent Assets 5 30,230 113

Financial Assets Held for Trading 6 122,665 180,678

Other Financial Assets Held to Maturity 7 52,627 3,225

Trade Receivables 17,523 9,905

Other Current Assets 1,410 810

Total Current Assets 224,455 194,731

Non – Current Assets Other Receivables 2,073 2,073

Other Financial Assets Held to Maturity 7 18,929 18,356

Property, Plant and Equipment 9 25,758 29,289

Intangible Assets 10 7,533 8,165

Deferred Tax Assets 4(d) 14,883 9,593

Other Non – Current Asset 11 3,566 4,279

Total Non – Current Assets 72,742 71,755

Total Assets 297,197 266,486

Current Liabilities

Trade and Other Payables 12 110,534 100,198

Current Tax Liability 4(b) 10,383 634

Provisions 13 92,686 88,036

Total Current Liabilities 213,603 188,868

Non – Current Liabilities

Other Liabilities 12 18,929 18,356

Deferred Tax Liabilities 4(c) 4,423 4,436

Provisions 13 836 842

Total Non – Current Liabilities 24,188 23,634

Total Liabilities 237,791 212,502

Net Assets 59,406 53,984

Equity

Contributed Equity 16 – –

Reserve 17 7,613 7,613

Retained Profits 18 51,793 46,371

Total Equity 59,406 53,984

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


NSW LOTTERIES CORPORATION CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2008

2008 2007 Notes $’000 $’000

Cash Flows from Operating Activities

Receipts from customers 1,299,800 1,211,883

Payments to suppliers and employees (150,315) (145,555)

Prizes paid to customers (726,373) (685,258)

Duty payments to Governments (307,234) (296,832)

Goods & Services tax paid (50,796) (48,411)

Income tax equivalent paid (12,461) (22,391)

Investment revenue received 9,046 10,479

Investment revenue credited to prize funds (5,690) (6,189)

Other revenue received 9,834 9,853

Net cash from Operating Activities (a) 65,811 27,579

Cash Flows from Investing Activities

Proceeds from sale of plant and equipment 303 275

Payments for other financial assets held to maturity (49,975) (1,054)

Receipts of financial assets held for trading 58,013 6,427

Payments for property, plant and equipment (519) (2,586)

Payments for intangible assets (1,369) (1,727)

Net cash from Investing Activities 6,453 1,335

Cash Flows from Financing Activities

Dividends paid (36,529) (30,133)

Net cash from Financing Activities (36,529) (30,133)

Increase/(Decrease) in cash and cash equivalents 35,735 (1,219)

Cash and cash equivalents at the beginning of the financial year (5,505) (4,286)

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

Notes to the Cash Flow Statement

(a) Reconciliation of cash flows from operating activities

Profit for the year 38,778 35,088

Adjustments for non – cash items:

Depreciation 3,692 3,327

Amortisation 2,001 1,732

Increase/(Decrease) in income tax provided 9,749 (8,626)

(Increase)/Decrease in deferred taxes payable (5,303) 1,430

Loss on sale of plant and equipment 55 87

Changes in Assets and Liabilities

(Increase)/Decrease in receivables (7,618) 2,371

Decrease in other assets 113 276

Increase/(Decrease) in payables 16,527 (8,207)

Increase in provisions 7,817 101

Net cash from Operating Activities 65,811 27,579

(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 30,230 113

Cash Book Overdrafts – (5,618)

Cash at the end of the financial year 30,230 (5,505)


NSW LOTTERIES CORPORATION STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2008

Asset Contributed Revaluation Retained Total Equity Reserve Profits Equity $’000 $’000 $’000 $’000

Balance at 1 July 2006 – 5,695 47,812 53,507

Profit from continuing operations after income tax equivalent – – 35,088 35,088

NSW Government dividends – – (36,529) (36,529)

Tax effect of revaluation of property – (820) – (820)

Revaluation of property – 2,738 – 2,738

Balance at 30 June 2007 – 7,613 46,371 53,984

Profit from continuing operations after income tax equivalent – – 38,778 38,778

NSW Government dividends – – (33,356) (33,356)

Balance at 30 June 2008 – 7,613 51,793 59,406


NSW LOTTERIES CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

General InformationNew 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 2009.

Note 1 Summary of Significant Accounting Policies

(a) Basis of Preparation

Statement of complianceThe 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 approvalThe financial statements were approved by the Board of Directors on 18 September 2008.

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 costThe 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 concernThe Financial Report has been prepared on a going concern basis.

Change in Accounting PolicyIn applying AASB 107 “Cash Flow Statements”, NSW Lotteries has redefined Cash and Cash Equivalent Assets for Balance Sheet purposes from 1July 2007. Previously these assets comprised cash on hand and at bank and negotiable securities expected to be realised within twelve months. The revised policy, outlined at Note 1(e), excludes these negotiable securities that are now classified as Financial Assets Held for Trading.

The change in accounting policy did not affect the Income Statement or Statement of Changes in Equity for the year ended 30 June 2008; the effects of the change on the Balance Sheet and Cashflow Statement are as follows:

2008 2007

Previously Previously Stated Adjustment Restated Stated Adjustment Restated $’000 $’000 $’000 $’000 $’000 $’000

Balance Sheet

Cash and Cash Equivalent Assets 152,895 (122,665) 30,230 180,791 (180,678) 113

Financial Assets Held for Trading – 122,665 122,665 – 180,678 180,678

Cash Flow Statement

Receipts of financial assets held for trading – 58,013 58,013 – 6,427 6,427

(Decrease)/Increase in cash and cash equivalents (22,278) 58,013 35,735 (7,646) 6,427 (1,219)

Cash and cash equivalents at the beginning of the financial year 175,173 (180,678) (5,505) 182,819 187,105 (4,286)

Cash and cash equivalents at the end of the financial year 152,895 (122,665) 30,230 175,173 180,678 (5,505)

(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 revenueInvestment 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 assetsThe 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 maturites 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 AssetsProperty, 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. Revaluation increments are recognised in the asset revaluation reserve; decrements exceeding previous revaluation increments are recognised as expenses in the Income Statement.

DepreciationDepreciation is provided on property, plant and equipment, including freehold buildings and any related revaluation increment, but excluding leasehold land. 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.

AmortisationAmortisation 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 PrizesUnpaid 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 FundsPrize 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 LeaveSalaries 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 LeaveLong 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 Income Statement as income or expense. 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.

(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 the basis that NSW Lotteries will continue to operate its business beyond 1 July 2009.

Key Estimates –

ImpairmentNSW 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 LeaveThe 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 livesThe 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.


2008 2007 $’000 $’000

Note 2 Revenues

Product sales 1,251,012 1,162,644

Other Revenues comprise:

Investment revenue 10,295 10,479

Other revenues 10,581 10,441

20,876 20,920

Note 3 Profit from Continuing Operations before income tax equivalent expense includes:

(a) Gain

Superannuation – defined benefit funds actuarial gain 118 –

(b) Cost of Sales:

Retailer commission 90,965 86,058

Prizes 737,188 684,326

Government duties 313,474 290,912

1,141,627 1,061,296

(c) Expenses

Employee benefits 14,249 14,146

Superannuation – defined benefit funds 831 836

Superannuation – defined benefit funds actuarial loss – 11

Superannuation – defined contributions funds 530 511

Fair value movements in financial instruments 21 18

Depreciation (refer Note 9) 3,692 3,327

Amortisation (refer Note 10) 2,001 1,732

Loss on sale of plant and equipment 55 87

Operating lease rental expenses 655 614

Consultancies 5 12

Bad debts 22 6

Note 4 Taxation

(a) Income Tax Equivalent Expense

Prima facie income tax equivalent expense calculated at 30% (2007 - 30%) on the profit 16,706 15,085

Increase in income tax equivalent expense due to non-tax deductible or assessable items:

Non-deductible depreciation 46 27

Other 155 83

16,907 15,195

Income tax equivalent expense attributable to profit is made up of:

Current income tax equivalent provision 22,211 13,765

Deferred income tax equivalent assets (5,290) 1,740

Deferred income tax equivalent liabilities (14) (310)

16,907 15,195

(b) Current Tax Liability

Provision for current income tax equivalent

Movements during the year:

Balance at the beginning of the year 634 9,260

Less instalments of income tax paid (12,462) (22,391)

Current year’s income tax equivalent provision on profit 22,211 13,765

10,383 634


2008 2007 $’000 $’000

Note 4 Taxation continued

(c) Deferred Tax Liabilities

Deferred income tax equivalent liabilities comprise the estimated liability at the applicable rate of 30% (2007 - 30%) on the following items:

Tax effect of revaluation of buildings taken directly to reserve 2,999 2,999

Tax effect of superannuation asset 1,071 1,284

Income currently non-assessable for tax but recognised as revenue for accounting purposes 353 153

4,423 4,436

(d) Deferred Tax Assets

Deferred income tax equivalent assets comprise the estimated future benefit at the applicable rate of 30% (2007 - 30%) on the following items:

Provisions and accrued employee benefits not currently deductible 2,000 2,210

Jackpotting unpaid prizes not currently deductible 7,089 3,758

Prize funds components not currently deductible 5,435 3,213

Tax effect of leased assets make good 176 176

Difference in depreciation of property, plant and equipment and amortisation of intangibles for accounting and income tax purposes 183 236

14,883 9,593

Note 5 Cash and Cash Equivalent Assets

Cash at bank and on hand 230 113

Bank deposits 30,000 –

30,230 113

Note 6 Financial Assets Held for Trading

Negotiable Securities 122,665 180,678

Note 7 Other Financial Assets Held to Maturity

Current Assets

Bank deposits 49,000 –

Deposits held to maturity 3,627 3,225

52,627 3,225

Non – Current Assets

Deposits held to maturity 18,929 18,356

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 and financial liabilities. 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 2008

Carrying amount as 0 – 3 3 – 12 Over More than Non Interest per Balance Months Months 1 to 5 Years 5 Years Bearing Sheet Financial Instrument Note $’000 $’000 $’000 $’000 $’000 $’000

Financial Assets

Cash 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 Held to Maturity 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 Liabilities

Payables and Other Liabilities – – – – 97,679 97,679

Total Financial Liabilities – – – – 97,679 97,679

30 June 2007

Carrying amount as 0 – 3 3 – 12 Over More than Non Interest per Balance Months Months 1 to 5 Years 5 Years Bearing Sheet Financial Instrument Note $’000 $’000 $’000 $’000 $’000 $’000

Financial Assets

Cash and Cash Equivalent Assets 5 – – – – 113 113

Financial Assets Held for Trading 6 10,042 160,282 7,407 2,947 – 180,678

Other Financial Assets Held to Maturity 7 – 3,225 10,197 8,159 – 21,581

Receivables – – – – 11,978 11,978

Total Financial Assets 10,042 163,507 17,604 11,106 12,091 214,350

Weighted Effective Interest rate 6.35% 6.54% 5.84% 5.84%

Financial Liabilities

Payables and Other Liabilities – – – – 93,596 93,596

Total Financial Liabilities – – – – 93,596 93,596

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 2008 2007

Increase 100 basis points – $384,000 – $327,000

Decrease 100 basis points + $384,000 + $327,000

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 outstandings 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 cashflow 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.

2008 2007 $’000 $’000

Note 9 Property, Plant and Equipment

(a) Property, Plant and Equipment at Fair Value

Land & Buildings Leasehold land – at fair value 7,390 7,390

Buildings – at fair value 15,021 15,021

Less accumulated depreciation (5,332) (4,961)

9,689 10,060

Leasehold improvements – at fair value 687 687

Less accumulated amortisation (547) (424)

140 263

Total Land & Buildings 17,219 17,713

Plant and Equipment Computer equipment – at fair value 26,073 24,549


6,396 7,554

Other plant and equipment – at fair value 7,464 7,230


2,143 1,948

Work in progress – at fair value – 2,074

Total Plant and Equipment 8,539 11,576

Total Property, Plant and Equipment at Fair Value 25,758 29,289

(b) Valuations of Land & Buildings

Leasehold land and 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 was determined by the directors, taking into account the prior year independent valuation, depreciation of buildings during the year and any significant market movements. The valuation, based at 30 June 2008, resulted in a value of $7,390,000 for the leasehold land and $9,689,000 for the buildings, being the value attributed to the balance of their economic life.

2008 2007 $’000 $’000

(c) Carrying amounts if land and buildings were stated at cost less accumulated depreciation :

Leasehold landCost 1,838 1,838

Carrying amount at the end of the year 1,838 1,838

BuildingsCost 9,961 9,961




(d) Estimated fair value at directors’ valuation is:

Leasehold Improvements Estimated fair value of leasehold improvements at directors’ valuation is $140,000 (2007 – $263,000)

Plant and EquipmentEstimated fair value of plant and equipment at directors’ valuation is $8,539,000 (2007 – $11,576,000)

2008 2007 $’000 $’000

(e) Reconciliations of carrying amounts at the beginning and the end of the year:

Leasehold land – at fair value Carrying amount at the beginning of the year 7,390 5,850

Revaluation increment – 1,540


Buildings – at fair value Carrying amount at the beginning of the year 10,060 9,130

Additions – 13

Revaluation increment – 1,198

Depreciation (371) (281)


Leasehold improvements – at fair value Carrying amount at the beginning of the year 263 338

Additions – 50

Amortisation (123) (125)

Carrying amount at the end of the year 140 263

Computer equipment – at fair value Carrying amount at the beginning of the year 7,554 9,707

Additions 1,547 298

Disposals – (21)

Depreciation (2,705) (2,430)


Other plant and equipment – at fair valueCarrying amount at the beginning of the year 1,948 2,203

Additions 1,046 577

Disposals (358) (341)

Depreciation (493) (491)


Work in progress – at fair valueCarrying amount at the beginning of the year 2,074 426

Additions – 1,648

Transfer – completed projects (2,074) –

Carrying amount at the end of the year – 2,074

Total Property, Plant and Equipment at Fair Value 25,758 29,289



2008 2007 $’000 $’000

Note 10 Intangible Assets

(a) Intangible Assets at fair value

Gaming software Gaming software – at fair value 15,926 15,133

Less accumulated amortisation (9,246) (7,638)

6,680 7,495

Other softwareOther software – at fair value 3,135 2,561

Less accumulated amortisation (2,282) (1,891)

853 670

Total Intangible Assets 7,533 8,165

(b) Reconciliations of carrying amounts at the beginning and the end of the year:

Gaming softwareCarrying amount at the beginning of the year 7,495 7,641

Additions 793 1,181

Amortisation (1,608) (1,327)


Other softwareCarrying amount at the beginning of the year 670 529

Additions 576 546

Amortisation (393) (405)

Carrying amount at the end of the year 853 670

Total Intangible Assets at Fair Value 7,533 8,165

Note 11 Other Non-Current Asset

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 immediately in the Income Statement in the year in which they occur.

All fund assets are invested by SAS Trustee Corporation at arm’s length through independent fund managers.

There was no individually significant revenue or expense item with respect to the movement in the superannuation asset during both the current and comparative reporting years.

The following tables summarise the components of the net benefit expense recognised in the Income Statement and the funded status and amounts recognised in the Balance Sheet for the respective funds:


Note 11 Other Non-Current Asset – Superannuation continued

2008 2008 2008 2008 $’000 $’000 $’000 $’000 30 June 2008 SASS SANCS SSS Total

Reconciliation of the assets and liabilities recognised in the balance sheet

Present 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 obligation

Present 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 assets

Fair value of the fund assets at the beginning of the year 9,523 3,035 45,571 58,129

Expected return on fund assets 729 240 3,560 4,529

Actuarial gains (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 the 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 assets

The percentage invested in each asset class at the end of the year 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%

Expense components recognised in the income statement


Interest cost (464) (123) (2,153) (2,740)


Actuarial gains (814) (444) (5,943) (7,201)

Movement in adjustment for limitation on net asset 777 388 4,279 5,444

Net income/(expense) recognised in the income statement (111) (50) (552) (713)

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



30 June 2008 continued

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 funds, calculated in accordance with AAS25 “Financial Reporting by Superannuation Plans”, is summarised as follows:

2008 2008 2008 2008 $’000 $’000 $’000 $’000 SASS SANCS SSS Total

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: multiple-member contributions

% member salary multiple-member 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



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.




2007 2007 2007 2007 $’000 $’000 $’000 $’000 30 June 2007 SASS SANCS SSS Total

Reconciliation of the assets and liabilities recognised in the balance sheet

Present value of defined benefit obligations (7,506) (1,999) (34,163) (43,668)

Fair value of plan assets 9,523 3,035 45,571 58,129

2,017 1,036 11,408 14,461

Adjustment for limitation on net asset (1,420) (730) (8,032) (10,182)

Net asset recognised in the balance sheet 597 306 3,376 4,279

Reconciliation of the present value of the defined benefit obligation

Present value of the partly defined benefit obligation at the beginning of the year (7,157) (1,938) (35,098) (44,193)


Interest cost (415) (111) (2,046) (2,572)

Contributions by fund participants (172) – (285) (457)

Actuarial gains (16) 62 2,290 2,336

Benefits paid 587 103 1,294 1,984

Present value of the partly defined benefit obligation at the end of the year (7,506) (1,999) (34,163) (43,668)

Reconciliation of the fair value of fund asset

Fair value of fund assets at the beginning of the year 8,802 2,753 40,717 52,272


Actuarial gains 464 176 2,784 3,424

Contributions by fund participants 172 – 285 457

Benefits paid (587) (103) (1,295) (1,985)

Fair value of fund assets at the end of the year 9,523 3,035 45,571 58,129

Actual return on fund assets 1,251 385 5,755 7,391

Fund assets

The percentage invested in each asset class at 30 June 2007 was:

Australian equities 33.6%

Overseas equities 26.5%

Australian fixed interest securities 6.8%

Overseas fixed interest securities 6.4%

Property 10.1%

Cash 9.8%

Other 6.8%

Expense components recognised in the income statement


Interest cost on benefit obligations (415) (111) (2,046) (2,572)

Expected return on plan assets 672 209 3,080 3,961

Actuarial gains 448 238 5,074 5,760

Movement in adjustment for limitation on net asset (819) (432) (5,979) (7,230)

Net income/(expense) recognised in the income statement (447) (211) (189) (847)

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 326 124 456 906



30 June 2007 continued

Valuation method and principal actuarial assumptions at 30 June 2007:

a) Valuation methodThe 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 6.4% pa

Expected return on assets backing current pension liabilities 7.6% pa

Expected return on assets backing other liabilities 7.6% pa

Expected salary increase rate 4% pa to June 2008; 3.5% pa thereafter


Disclosures required under paragraphs Aus121.1 and Aus 121.2 of AASB 119 “Employee Benefits”:

Funding arrangements for employer contributions

The 30 June 2007 financial position of the fund, calculated in accordance with AAS25 “Financial Reporting by Superannuation Plans”, is summarised as follows:

2007 2007 2007 2007 $’000 $’000 $’000 $’000 SASS SANCS SSS Total

a) Net surplus

Accrued benefits (7,437) (1,979) (30,797) (40,213)

Net market value of fund assets 9,523 3,035 45,571 58,129

Net surplus 2,086 1,056 14,774 17,916

b) Contribution recommendations

Recommended contribution rates for NSW Lotteries:

1.9 2.5 1.6

Basis: multiple-member contributions

% member salary multiple-member 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



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.



2008 2007 $’000 $’000

Note 12 Payables

Current

Cash Book Overdrafts – 5,618

Trade Creditors and Accruals 10,543 7,755

Government Duties 28,529 22,289

Sales in Advance 13,664 8,640

Unpaid Prizes 57,396 55,192

Other 402 704

110,534 100,198

Non – Current

Unpaid Prizes 18,929 18,356

Note 13 Provisions

Current

Employee Benefits (refer Note 15(a)) 6,162 6,377

Prize Funds 53,168 45,130

Provision for Dividends (refer Note 14) 33,356 36,529

92,686 88,036

Non – Current

Provision for Make Good on Leases 586 586

Employee Benefits (refer Note 15(b)) 250 256

836 842

Reconciliations:

Reconciliations of the carrying amounts for each class of provisions except for employee provisions are set out below:

Prize FundsBalance at the beginning of the year 45,130 45,438

Allocations and transfers made during the year 64,823 58,001

Payments made during the year (56,785) (58,309)

Balance at the end of the year 53,168 45,130

Provision for Dividends Balance at the beginning of the year 36,529 30,133

Provisions made during the year 33,356 36,529

Payments made during the year (36,529) (30,133)


Provision for Make Good Balance at the beginning of the year 586 536

Provisions made during the year – 50

Balance at the end of the year 586 586



2008 2007 $’000 $’000

Note 14 NSW Government Dividends

Dividends provided 33,356 36,529

Note 15 Employee Benefits

(a) Current

Provision for Annual Leave 1,419 1,516

Provision for Long Service Leave 4,743 4,861

6,162 6,377

(b) Non – Current

Provision for Long Service Leave 250 256

Reconciliations:

Reconciliations of the carrying amounts for employee provisions are set out below:

Annual Leave Long Service Leave Total Total

2008 2007 2008 2007 2008 2007 $’000 $’000 $’000 $’000 $’000 $’000

Balance at the beginning of the year 1,516 1,385 5,117 4,889 6,633 6,274

Allocations and transfers made during the year 935 1,191 490 479 1,425 1,670

Payments made during the year (1,032) (1,060) (614) (251) (1,646) (1,311)

Balance at the end of the year 1,419 1,516 4,993 5,117 6,412 6,633

Note 16 Contributed Equity

Authorised Capital 100 Ordinary Shares of $1.00 each – $100 (2007 – $100)

Issued and Paid-up Capital 2 Ordinary Shares of $1 each fully paid – $2 (2007 – $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.

2008 2007 $’000 $’000

Note 17 Reserve

Asset Revaluation Reserve 7,613 7,613

Asset Revaluation Reserve – reconciliation

Balance at the beginning of the year 7,613 5,695

Increment on revaluation of land and buildings. – 1,918


Nature and Purpose of Asset Revaluation Reserve

The 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.

Note 18 Retained Profits

Retained Profits at the beginning of the year 46,371 47,812

Net profit 38,778 35,088

Total available for distribution 85,149 82,900

NSW Government – Dividends Provided (33,356) (36,529)

Retained Profits at the end of the year 51,793 46,371


Note 19 Related Parties

(a) Key Management Personnel – DirectorsThe 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, Mr J. Johnson, Mr D. McCormack, and Ms S. Walsh.

Mr M. Howell, 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 $407,235 ( 2007 – $391,899).

(b) Key Management Personnel – Other

Name Position

Ms S. Browne Director Corporate Services

Mr M. Cassidy Director Information Technology Services

Mr B. McIntyre Director Finance

Mr N. Nichles Director Marketing and Sales

Mr C. Patterson Director Customer and Agency Services

2008 2007 $ $

(c) Key Management Personnel Compensation

Short-term employee benefits 1,293,072 1,327,436

Post-employment benefits 635,377 493,845

Other long-term employee benefits 104,097 106,865

2,032,546 1,928,146

(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.

2008 2007 $’000 $’000

(e) Superannuation Contributions

Contributions to Superannuation Funds on behalf of employees 1,361 1,358

Note 20 Auditors’ remuneration

Audit fees: Auditors of the Corporation (audit and review of Financial Report) 139 134

Other services: Auditors of the Corporation (supervision of draws) 138 120

277 254



2008 2007 $’000 $’000

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 703 610

Payable 1 to 5 years 391 1,014

1,094 1,624

The property leases are leases with two or three year terms, rent payable monthly in advance.

Commitments for the purchase of non-current assets:

Payable within 1 year 4,224 –

Payable 1 to 5 years 1,440 –

5,664 –

Note 22 Contingent Assets

The total commitments under operating leases of $1,093,862 (2007 – $1,624,018 ) shown in Note 21 include $99,442 (2007 – $147,638) in input tax credits that are expected to be recoverable from the Australian Taxation Office under the Goods and Services Tax legislation.

The total commitments for the purchase of non-current assets shown in Note 21 include $514,930 (2007 - Nil) in input tax credits that 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 Changes in Australian Accounting Standards

The following Australian Accounting Standard has been issued or amended and is applicable to NSW Lotteries but is not yet effective. It has not been adopted in the preparation of the Financial Report at reporting date.

AASB 2007-8, “Amendments to Australian Standards” affecting AASB 101 “Presentation of Financial Statements”. The revised AASB 101 will apply to NSW Lotteries Financial Reports for reporting periods commencing from 1 July 2009. The revised standard requires the presentation of a Statement of Comprehensive Income and makes changes to the Statement of Changes in Equity. It is concerned with aspects of disclosure and presentation and does not appear to change the basis for recognition or measurement of transactions and events. It is unlikely to result in any direct impact on NSW Lotteries Financial Report when adopted.

A number of other Accounting Standards have been issued but are not yet effective. These have not been applied by NSW Lotteries and their application is expected to have no impact.

End of Audited Financial Statements


STATUTORY REPORTING APPENDIXFOR THE YEAR ENDED 30 JUNE 2008

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:

September December March June Ageing of Creditors at the end of each quarter 2007 2007 2008 2008

Current (within due date) $9,273,082 $8,559,082 $7,529,187 $10,542,808

< 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

September December March June Accounts paid on time during each quarter 2007 2007 2008 2008

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 $9,273,082 $8,559,082 $7,529,187 $10,542,808

Total dollars payable $9,273,082 $8,559,082 $7,529,187 $10,542,808

Standard Results 2005/2006 Results 2006/2007 Results 2007/2008

Number of complaints Less than 0.1% Nil Complaints Nil Complaints Nil Complaints for late or non-payment of all accounts

CONSULTANTS

Consultants equal to or more than $30,000There were no consultancies costing $30,000 or more.

Consultancies less than $30,000During the year, there was one consultancy engaged in the following area:

Category Cost

Finance & Accounting/Tax $5,000

Engineering Nil

Environmental Nil

Information Technology Nil

Legal Nil

Management Services Nil

Organisational Review Nil

Training Nil

Total Consultancies less than $30,000 $5,000

Total Consultancies $5,000

CREDIT CARD USEDuring the year, credit card use within the Corporation was in accordance with the Premier’s Memoranda and Treasurer’s Directions.

NSW Lotteries Annual Report 2008 STATUTORY REPORTING APPENDIX 77


EQUAL EMPLOYMENT OPPORTUNITY

2007/2008 Planned Results1. A new Performance Review System was implemented to assist in identifying and addressing specific development needs

of employees.

2. Training was conducted to enhance managers’ skills in delivering feedback, coaching and communication. This training was also aligned to the introduction of the new Performance Review System.

Strategies for 2008/20091. Implementation of a training program in Equal Employment Opportunity and Harassment Prevention for all managers

and employees.

2. Review possible strategies for Attracting and Retaining Female Employees as outlined in the CEO Kit developed by Chief Executive Women.

EEO Statistical Report

Table A. Trends in the Representation of EEO Groups1

% of Total Staff2

Benchmark EEO Group or target 2005 2006 2007 2008

Women 50% 46% 47% 46% 47%

Aboriginal people and Torres Strait Islanders 2% 0% 0% 0% 0%

People whose first language was not English 20% 33% 32% 33% 35%

People with a Disability 12% 10% 10% 9% 8%

People with a Disability Requiring Work-Related Adjustment 7% 2.9% 3.1% 3.2% 1.9%

Table B. Trends in the Distribution of EEO Groups1

Distribution Index3

Benchmark EEO Group or target 2005 2006 2007 2008

Women 100 83 81 82 79

Aboriginal people and Torres Strait Islanders 100 nc4 nc4 nc4 nc4

People whose first language was not English 100 87 90 87 87

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 2008.

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 2008 follows:

78 STATUTORY REPORTING APPENDIX NSW Lotteries Annual Report 2008

ETH

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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 36.7%

Treasury Corporation Portfolio 2 24.1%

NSW Lotteries Portfolio 3 39.2%

Gross returns on investments were:

Actual % per annum for year ended Benchmark % per annum for year ended

June 2007 June 2008 June 2007 June 2008

Portfolio 1 6.29 6.46 6.36 7.46

Portfolio 2 6.35 4.22 6.36 7.46

Portfolio 3 N/A 7.91 N/A 7.46

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 TRAVELOfficer Destination Purpose

Nick Nichles, Director Japan Attend the Asia Pacific Lottery Association 2007 Regional Conference Marketing and Sales

Brad Carter, Computer New Zealand Visit the New Zealand Lotteries Commission Operations and Support Manager

PROPERTY DISPOSALNo land was disposed of by the Corporation during the reporting year.

STATEMENT OF PERFORMANCE FOR EXECUTIVE OFFICERS Name: Michael Howell

Position: Chief Executive Officer

Period in Position: Full Year

Total Remuneration Package: $431,904

Performance Payment: $19,370

Performance assessed by: The NSW Lotteries Board Authorised by John Bagshaw, Chairman

Results:

– Sales

– Profitability

– Employee efficiency

– Commission to agents.

or exceeded.

the previous survey in 2006.

Corporation’s future business direction, including electronic selling strategy and resolution of the future technical system infrastructure.

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: Nick Nichles

Position: Director Marketing & Sales

Period in Position: Full Year

Total Remuneration Package: $243,500

Performance Payment: $5,000

Performance assessed by: Michael Howell, Chief Executive Officer

Results:

the previous survey.

completed within budget.

Management 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 FunctionsNSW 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 under the section titled 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 PublicMembers of the public are invited to participate in the drawing of Lucky Lotteries at the organisation’s Corporate Headquarters, 2 Figtree Drive, Homebush Bay, 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, Player Services on telephone (02) 9752 5541.


Policy DocumentsNSW Lotteries Corporation holds the following documents, which are available for public viewing:

st – Find out how we look after our customers’ brochure;

The following legislation relates to the conduct of our games and the operation of NSW Lotteries:

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 HOMEBUSH BAY NSW 2127.

A 50% reduction in fees and charges is available in the following circumstances:

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.

PublicationsIn 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:

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

An assessment of FOI requirements on NSW Lotteries’ activities found no major impact during the 2007/08 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.

Statistical Report for fiscal 2008 The following table shows all categories affected by the Freedom of Information Act 1989 (NSW) requests in 2007/08 compared to 2006/07.



Personal Other Total 2007/08 Total 2006/07

Numbers of new FOI requests

New (including transferred in) 0 0 0 2

Brought forward 0 0 0 0

Total to be processed 0 0 0 2

Completed 0 0 0 2

Total processed 0 0 0 2

Unfinished (Carried forward) 0 0 0 0

What happened to completed requests?

Granted in full 0 0 0 2

Granted in part 0 0 0 0

Refused 0 0 0 0

Deferred 0 0 0 0

Completed 0 0 0 2

Ministerial Certificates

Ministerial Certificates issued 0 0 0 0

Formal Consultations

Number of requests requiring formal consultation(s) 0 0 0 0

Amendment of personal records

Result of amendment – agreed 0 0 0 0

Result of amendment – refused 0 0 0 0

Total 0 0 0 0

Notation of personal records

Number of requests for notation 0 0 0 0

FOI requests granted in part or refused

Total 0 0 0 0

Costs and fees of requests processed during the period

Assessed Costs 0 0 0 0

FOI Fees Received 0 0 0 $60

Discounts allowed

Numbers of FOI requests processed during the period where discounts were allowed

0 0 0 0

Days to process

0 – 21 days 0 0 0 2

22 – 35 days 0 0 0 0

Over 35 days 0 0 0 0

Totals 0 0 0 2

Processing time

0 – 10 hours 0 0 0 2

11 – 20 hours 0 0 0 0

21 – 40 hours 0 0 0 0

Over 40 hours 0 0 0 0

Totals 0 0 0 2

Reviews and appeals

Number 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


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 and non-financial performance

Corporation to align the overall corporate strategic objectives with the goals of each division 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 strategies and 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 over 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.

G-line Counselling and referral service for people with gambling problems or concerns.

G-line message Compulsory message which must be included on all printed matter relating to the conduct or promotion of a NSW Lotteries game.

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.

GLOSSARY

84 GLOSSARY NSW Lotteries Annual Report 2008

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.

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; financials 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.

MissionCorporation in?”

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 PlaySmart 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.

Playsmart NSW Government brochure designed to provide consumers with the opportunity to make informed choices about gambling and to reduce the risk of some people becoming problem gamblers.

Powerball National Lotto-style with five balls drawn from a first ball-drawing machine and a single ball, the Powerball, drawn from a second ball-drawing machine. Hardest game to win and usually offers biggest prizes.

Prize The prize amount (money and/or a free ticket) paid from a winning ticket.

Prize division Games have prize divisions which are different amounts depending on different levels of winning entry. Division One is 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 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.

NSW Lotteries Annual Report 2008 GLOSSARY 85

INDEX

AA Message from the Chairman and Chief Executive Officer 8-9

About This Report 2

Access to Services [ARSBR Schedule 1] 88

Accounts Payable Performance 77 [ARSBR Schedule 1, TC 06/26]

Address (Corporate) 88

Agency Satisfaction Survey 17

Agency Services 30

Aims and Objectives [ARSBR Schedule 1] 16-17

Annual Report

– Availability [ARSBA s12, ARSBR c8, c18] 88

– Letter of submission [ARSBA s9A] 3

– Submission to Minister [ARSBA s10] 3

– Presentation to Parliament [ARSBA s11 (1)] 3

– Cost [ARSBR c8, TC 03/11] 88

Audit

– Internal audit arrangements, program and results 40

BBalanced Scorecard 16-17

Board [ARSBR Schedule 1] 38-43

Board Committees [ARSBR Schedule 1] 39-41

Board Attendance [ARSBR Schedule 1] 39

Business Continuity 35

Business Planning 16

CCall Centre 25

Charter [ARSBR Schedule 1] 16

Chief and Senior Executive Officers

– Name, position, level and performance 43-44, 80-81 of officer [ARSBR c11, c14]

– Number of executive positions [ARSBR c14] 51

– Number of female executive officers [ARSBR c14] 51

Consultants 77

– 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 improved 13, 25-26, 33 or changed [ARSBR Schedule 1]

Corporate Governance 37

Credit Card Usage [TD 205.01] 77

Customers 12-13

Customer Satisfaction Survey 13, 26

EEconomic and Other Factors Affecting Achievement 8-9, 19-24 of Operational Objectives [ARSBR Schedule 1]

Electronic Service Delivery [PM 00/12] 35

Email address (Corporate) 88

Employee Reward and Recognition 49-50

Energy Management Policy [PM 98-35] 46

Environmental Report 46

Equal Employment Opportunity 78

– Achievements and strategies [ARSBR Schedule 1, TC 07/20]

– Statistical information [ARSBR Schedule 1, TC 02/17]

Ethnic Affairs Priorities Statement [ARSBR Schedule 1] 78-79

Executive Management Team 44

Exemptions from the Reporting Provisions [ARSBR c19(4)] 78

FFinancial Overview 10

Financial Report 52-76

– Statement by Board of Directors 54

– Independent Audit Report [ARSBA s7(1)(a)(ii)] 55

– Financial Statements and Accompanying Notes 56-76 [ARSBA s7(1)(a)(i)]

Freedom Of Information (FOI) 81-83

– Contact officer

– Statement of Affairs

– FOI Report [FOIA s68, FOIR s10, FOIM App. B, ARSBA s5A (2)]

Funds granted to non-Government community 80 organisations [ARSBR Schedule 1, PM 91/34]

GGames at a Glance 20-23

Games – Key Facts 11

Gaming System 34

Glossary 84-85

Guarantee of Service - standards and 12-17 provision of service [ARSBR Schedule 1]

HHearing Impaired Service 88

History 6-7

Hours of Business (Corporate) 88

Human Resources

– Industrial relations policies and practices 47-51 [ARSBR Schedule 1]

– Number of employees by category 51 [ARSBR Schedule 1]

– Personnel policies and practices 47-51 [ARSBR Schedule 1]

IInformation Technology 34-35

Instant Scratchies 22

Internet address 88

Insurance [ARSBR Schedule 1] 45

Investment Management Performance 80 [ARSBR c12, TC 03/09]

KKey Facts 2007/2008 11

LLand Disposal (Property Disposal) [ARSBR Schedule 1] 80

Legal change (Legislative changes) - in Acts or significant legislation [ARSBA s9(1)(f), ARSBR Schedule 1] 80

86 INDEX NSW Lotteries Annual Report 2008

Letter to Shareholder Ministers [ARSBA s9A, SOCA s24A(5)] 3

Liability Management Performance [ARSBR c13, TC 03/09] 80

Looking ahead 24

Lotto 20

Lotto Strike 20

Lucky Lotteries 23

MManagement and Activities

– Benefits from management 16-17, 37-41, 45-46 and strategy reviews [ARSBR Schedule 1]

– Major problems and issues [ARSBR Schedule 1] 8-9, 19-24

– Measures of performance 5, 11-15, 17 [ARSBR Schedule 1, SOCA s24A(3)]

– Nature and range of activities [ARSBR Schedule 1] 8-9, 16-17

– Performance reviews [ARSBR Schedule 1] 5, 26,41, 80-81

Management and Structure

– Method and term of appointment of Board members, 38-41 frequency of Meetings and members’ attendance, Board committees [ARSBR Schedule 1]

– Names and qualifications of Board members 42-43 [ARSBR Schedule 1]

– Names, offices and qualifications of senior officers 44 [ARSBR Schedule 1]

– Organisation chart [ARSBR Schedule 1] 38

Mission 2

NNetwork Syndicates 25

OObjectives 16

Occupational Health and Safety [ARSBR Schedule 1] 50-51

Organisation Chart [ARSBR Schedule 1] 38

Our Business 31-35

Our Players 18-26

Our Retailers 27-30

Our Shareholders 36-46

Our Staff 47-51

Overseas travel [ARSBR Schedule 1] 80

OZ Lotto 21

PPayment of accounts [ARSBR Schedule 1, TC 06/26] 77

Performance of Executive Officers [ARSBR c11] 80-81

Performance Measures 5, 12-15, 17

Player Services 25

Players 1st 33

Players Club 25

Pools (6 From 38 Pools) 23

Powerball 21

Privacy 26

Promotion [ARSBR Schedule 1] 30, 82

Property Disposal [ARSBR Schedule 1] 80

Publications – summary list of promotional material 82 [ARSBR Schedule 1]

RResearch and Development

– New product development [ARSBR Schedule 1] 19-24

– New technology [ARSBR Schedule 1] 25-26, 30, 34-35

– Resources allocated 24-26, 28, 30, 34-35 [ARSBR Schedule 1]

Resources 46

Results 5

Retail Image 30

Retail Network 28

Retail Training 30

Responsible Gaming 32-33

Risk Management and Insurance Activities 35, 45 [ARSBR Schedule 1]

SSaturday Lotto 20

Service Standards 12-15, 17

Shareholders 37

Staff Training 49

Statement of Corporate Intent 5

Statement of Performance for Executive Officers 80-81

Summary Review of Operations

– Narrative summary of significant operations 8-9 [ARSBR Schedule 1]

– Operational information [ARSBR Schedule 1] 12-15

TTerritory Managers 28

The Games 16

The Year in Brief 12-15

Top Shop Awards 29

VValues 2

Vision 2

WWaste Reduction and Purchasing Policy [ARSBR Schedule 1] 46

Website Address (Corporate) 88

Websites – Staff and Agent 35

Who We Are and What We Do 16

Workforce Planning 49

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

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

NSW Lotteries Annual Report 2008 INDEX 87

ACCESS TO SERVICES

RETAIL SALESNSW Lotteries’ products are sold throughout NSW and the ACT through a network of over 1,600 agencies, including approximately 50 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

BRANCH SALES

Sydney CityPitt 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

Homebush BayLevel 2 2 Figtree Drive, Homebush Bay NSW 2127

Open (Public Holidays excepted):Monday to Friday 9:00 am to 5:00 pm

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:

selling terminal or the results notices;

– Customer Service 1300 363 444

– Results Service 1900 956 886

– SMS Service 19 756 886

CUSTOMER INQUIRIES

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.st (Customer Care Program)

Inquiries and Complaints 1300 752 937 (1300 PLAYER)

CORPORATE HEADQUARTERS2 Figtree Drive Homebush Bay 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 PRODUCTION

Formats 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

Design, Production & Photography $ 17,350

Print Management $ 19,457

Total external costs (ex GST) $ 36,807

RIGHT:Two winning entries shared

an unprecedented prize of

nearly $48 million in an OZ

Lotto jackpot draw this year.

These two members from a

syndicate of 16 jumped for

joy when they visited the

NSW Lotteries headquarters

to collect their half share

of the winnings which

amounted to $23,991,976.19.

88 ACCESS TO SERVICES NSW Lotteries Annual Report 2008

NSW Lotteries Annual Report 2008

7 GAMES 164 STAFF 1,600 AGENTS+880,000 PLAYERS CLUB MEMBERS +29,000,000 PRIZES IN FY2008 +$1,211,400,000 SALES IN FY2008

nswlotteries.com.au