Lotto New Zealand Half Year Report 2021 - Lotto NZ
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Lotto New Zealand Half Year Report 2021
Contents Contents Statement of Comprehensive Income 3 Statement of Movements in Equity 4 Statement of Financial Position 5 Statement of Cash Flows 6 Notes to the Financial Statements 8 Directory 24
Income
Statement of
Comprehensive
Income
STATEMENT OF COMPREHENSIVE NOTE 31/12/2020 31/12/2020 31/12/19 30/06/20
INCOME FOR THE HALF YEAR 6 MONTHS BUDGET 6 MONTHS 12 MONTHS
ENDED 31 DECEMBER 2020 $000 $000 $000 $000
CONTINUING OPERATIONS
Revenue from contracts 3 777,373 597,443 680,145 1,307,903
Interest income 787 850 1,376 3,066
Other income 360 450 422 669
REVENUE 778,520 598,743 681,943 1,311,638
Cost of sales 4 531,348 413,174 475,573 907,547
Gross profit 247,172 185,569 206,370 404,091
EXPENSES
Promotion and retail support 10,065 12,832 12,379 20,583
Property, plant and equipment 5 3,105 3,630 3,443 6,956
depreciation
Intangible asset amortisation 1,459 1,492 1,544 3,131
Gaming system expenses 3,594 4,536 3,609 7,236
excluding depreciation
Employee remuneration 10,871 9,971 9,534 19,901
Finance costs 34 30 44 83
Other expenses 6 6,018 7,008 6,461 12,713
Total expenses 35,146 39,499 37,014 70,603
Profit before distributions to the 212,026 146,070 169,356 333,488
New Zealand Lottery Grants Board
Distribution of profit to the 140,006 146,070 140,000 313,380
New Zealand Lottery Grants Board
Profit/(loss) for the period 72,020 - 29,356 20,108
Total comprehensive income 72,020 - 29,356 20,108
The accompanying notes form part of this statement and should be read in conjunction with it.
LOTTO NZ 3Equity Statement of
Movements in Equity
STATEMENT OF MOVEMENTS NOTE 31/12/2020 31/12/2020 31/12/2020 30/06/20
IN EQUITY FOR THE HALF YEAR 6 MONTHS BUDGET 6 MONTHS 12 MONTHS
ENDED 31 DECEMBER 2020 $000 $000 $000 $000
Equity at beginning of the period 53,416 53,416 33,513 33,513
Adjustment from the adoption of - - (205) (205)
NZ IFRS 16 Leases
Adjusted equity at beginning 53,416 53,416 33,308 33,308
of the period
COMPREHENSIVE INCOME
Profit/(loss) for the period 72,020 - 29,356 20,108
Total comprehensive income/ 72,020 - 29,356 20,108
(expense)
Equity at the end of the period 15 125,436 53,416 62,664 53,416
The accompanying notes form part of this statement and should be read in conjunction with it.
4 HALF YEAR REPORT • 2021Position
Statement of
Financial Position
STATEMENT OF FINANCIAL POSITION NOTE 31/12/2020 31/12/2019 30/06/2020
AS AT 31 DECEMBER 2020 $000 $000 $000
ASSETS
Current Assets
Cash and cash equivalents 7 76,185 65,926 82,349
Term deposits 8 127,273 75,744 54,096
Receivables and contract assets 10 3,964 8,513 5,370
Prepayments 9,812 8,371 10,672
Inventories 4,003 4,515 4,288
Total current assets 221,237 163,069 156,775
Non-current assets
Property, plant and equipment 11 15,678 19,530 16,779
Intangibles 12 20,138 10,584 15,962
Total non-current assets 35,816 30,114 32,741
Total assets 257,053 193,183 189,516
LIABILITIES
Current liabilities
Creditors, other payables and contract liabilities 13 79,270 83,190 79,910
Prize reserve account 14 47,061 41,539 50,438
Annuity prize liabilities 364 360 312
Employee entitlements 1,530 939 1,494
Lease incentive 235 235 235
Lease liabilities 814 869 843
Total current liabilities 129,274 127,132 133,232
Long term liabilities
Annuity prize liabilities 516 512 532
Lease incentive 412 647 529
Lease liabilities 1,415 2,228 1,807
Total long term liabilities 2,343 3,387 2,868
Total liabilities 131,617 130,519 136,100
EQUITY
Retained earnings 125,436 62,664 53,416
Total equity 125,436 62,664 53,416
Total liabilities and equity 257,053 193,183 189,516
The accompanying notes form part of this statement and should be read in conjunction with it.
Roger Sharp David Tapsell
Chair Deputy Chair 23 March 2021
LOTTO NZ 5Cash Flows Statement of
Cash Flows
STATEMENT OF CASH FLOWS FOR THE NOTES 31/12/2020 31/12/19 31/06/20
HALF YEAR ENDED 31 DECEMBER 2020 6 MONTHS 6 MONTHS 12 MONTHS
$000 $000 $000
CASH FLOWS FROM OPERATING ACTIVITIES
Sales 774,066 686,043 1,316,181
Net GST received 2,042 6,701 147
Other receipts 3,400 4,057 6,655
Prize payments (438,992) (361,695) (729,676)
Lottery duty (44,854) (39,790) (76,084)
Retailers’ commission (37,247) (39,515) (68,441)
Employee costs (11,040) (9,439) (19,225)
Other payments (18,023) (33,456) (56,569)
Net cash flow from operating activities 229,353 212,905 372,988
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in term deposits (73,177) (36,143) (14,495)
Sale of property, plant and equipment 107 26 37
Interest received 787 1,376 3,066
Purchase of property, plant and equipment (2,117) (2,122) (2,838)
Purchase of computer software (7,102) (3,323) (8,891)
Net cash flow from investing activities (81,503) (40,186) (23,122)
CASH FLOWS FROM FINANCING ACTIVITIES
Discharge of annuity prize liabilities (172) (112) (348)
Repayment of borrowings and leasing liabilities (422) (445) (893)
Interest paid (33) (45) (83)
Payments to the New Zealand Lottery Grants Board (153,386) (141,290) (301,291)
Net cash flow from financing activities (154,013) (141,892) (302,615)
Net (decrease)/increase in cash balances (6,163) 30,828 47,250
Opening cash and cash equivalents balance 82,349 35,098 35,098
Closing cash and cash equivalents balance 7 76,185 65,926 82,349
The net GST component of operating activities reflects the net GST paid to, or received from,
the Inland Revenue. The net term deposits component of investing activities reflects the term
deposits placed less the amounts that matured during the period. To provide more meaningful
information for financial statement purposes, GST and term deposits components have been
presented on a net basis.
The accompanying notes form part of this statement and should be read in conjunction with it.
6 HALF YEAR REPORT • 2021RECONCILIATION OF NET PROFIT/(LOSS) TO NOTE 31/12/2020 31/12/19 30/06/20
NET CASH FLOW FROM OPERATING ACTIVITIES $000 $000 $000
Profit/(loss) after distribution to the New Zealand 72,020 29,356 20,108
Lottery Grants Board
ADJUSTMENTS FOR NON-CASH ITEMS:
Depreciation of property, plant and equipment 3,105 3,443 6,955
Amortisation of computer software 1,459 1,544 3,131
CHANGES IN ASSETS AND LIABILITIES
(Increase)/decrease in receivables and contract assets 1,406 913 4,056
(Increase)/decrease in prepayments 860 (2,101) (4,402)
(Increase)/decrease in inventories 285 173 400
Increase/(decrease) in contract liabilities (295) 5,054 3,081
Increase/(decrease) in prize liabilities 5,006 13,868 (1,497)
Increase/(decrease) in trade creditors 9,564 3,404 3,855
Increase/(decrease) in annuity prizes 36 96 68
Increase/(decrease) in employee entitlements 36 (422) 133
Increase/(decrease) in lease incentive (117) (118) (236)
Increase/(decrease) in prize reserve account (3,377) 18,050 26,949
Increase/(decrease) in lease liabilities (421) 445 2,650
ADD/(LESS) ITEMS CLASSIFIED AS INVESTING
OR FINANCING ACTIVITIES
Interest receipts (787 (1,376) (3,066)
(Gain)/loss on sale of property, plant and equipment (60) (26) (13)
Annuity prize liabilities 172 112 348
Repayment of borrowings and leasing liabilities 422 445 (2,995)
Interest paid 33 45 83
New Zealand Lottery Grants Board 140,006 140,000 313,380
Net cash inflow from operating activities 229,353 212,905 372,988
LOTTO NZ 7Notes
Notes to the
Financial Statements
1. Statement of accounting Changes in accounting policies
policies for the six months ended
These financial statements have been
31 December 2020
prepared in accordance with the accounting
policies adopted in the most recent annual
REPORTING ENTITY financial statements for the year ended
30 June 2020.
The New Zealand Lotteries Commission
(Lotto New Zealand) is a Crown entity as
SUMMARY OF SIGNIFICANT
defined by the Crown Entities Act 2004
and is domiciled in New Zealand. ACCOUNTING POLICIES
Lotto New Zealand's ultimate parent is the
New Zealand Crown. Lotto New Zealand Significant accounting policies are included
has determined that it is a Tier 1 for profit in the notes section to which they relate.
entity for the purpose of complying with Significant accounting policies that do not
generally accepted accounting practice. relate to a specific note are outlined below.
The financial statements for Lotto New Foreign currency transactions
Zealand are for the six months 31 December
2020 and were approved by the Board on Foreign currency transactions are
23 March 2021. translated into New Zealand dollars using
the exchange rates prevailing at the dates
of the transactions.
BASIS OF PREPARATION
Goods and Services Tax (GST)
Basis of measurement
All items in the financial statements are
These financial statements are presented in
exclusive of GST, with the exception of
New Zealand dollars rounded to the nearest
amounts due from retailers for current
thousand. games, trade receivables, moneys received
for games not drawn at balance date,
Statement of compliance and trade creditors.
These financial statements have been
prepared in accordance with the
requirements of the Crown Entities Act 2004,
which includes the requirement to comply
with generally accepted accounting practice
in New Zealand (NZ GAAP). They comply
with International Financial Reporting
Standards (IFRS) and New Zealand
equivalents to International Financial
Reporting Standards (NZ IFRS).
8 HALF YEAR REPORT • 2021Taxation Estimates and assumptions
Lotto New Zealand is exempt from In preparing these financial statements,
income tax by virtue of Section 264 of Lotto New Zealand has made estimates and
the Gambling Act 2003. assumptions concerning the future. These
estimates and assumptions may differ from
The following taxes are paid by the subsequent actual results. Estimates and
Lotto New Zealand: assumptions are continually evaluated and
are based on experience and other factors,
• Lottery duty of 5.5 cents in the dollar including expectations of future events
on GST-inclusive sales that are believed to be reasonable under
the circumstances. There are no estimates
• Problem gambling levy on GST-inclusive and assumptions that have a significant
sales less prizes payable risk of causing a material adjustment to the
carrying amounts of assets and liabilities
• GST charged on lottery sales less related within the next financial year.
prizes payable and operating expenses
Critical judgements in applying
• Fringe benefit tax accounting policies
• Non resident withholding tax Lotto New Zealand has assessed the prize
reserve account as a current liability as
Budget figures itemised in the prize reserve account policy
below. Lotto New Zealand has also classified
The budget figures are those approved the payment to the New Zealand Lottery
by the Board prior to the beginning Grants Board as a financing activity in the
of the financial year and published in statement of cash flows due to this payment
Lotto New Zealand's Statement of being a distribution of profits. No other
Performance Expectations. critical judgements have been made
when applying accounting policies.
Comparative figures
When presentation or classification of items
in the financial statements is amended or
accounting policies are changed voluntarily,
comparative figures are restated to ensure
consistency with the current period.
LOTTO NZ 92. Impact of Covid-19 3. Revenue from contracts
On 11 March 2020, the World Health ACCOUNTING POLICY
Organisation declared the outbreak of
COVID-19 a pandemic and two weeks later Revenues and corresponding direct
the New Zealand Government declared expenses for Lotto (including Lotto Strike
a State of National Emergency. From this, and Lotto Powerball), Keno and Bullseye
the country was in lockdown at Alert Level are recognised when each lottery is drawn.
4 for the period 26 March 2020 to 27 April Instant Kiwi and Instant Kiwi Online revenue
2020 and remained in lockdown at Alert and corresponding direct expenses are
Level 3 until 13 May 2020. From 14 May to recognised when tickets are sold to players,
8 June, New Zealand was on Alert Level making those tickets part of a game.
2. On 8 June 2020, New Zealand moved Revenue is based on the cost of the ticket
into Alert Level 1, which lifted all (apart from purchased by the player for entry into a
international travel) previous restrictions. selected game and is payable immediately
at time of purchase of the ticket.
During Alert Level 4, the retail network was
closed, and all sales were conducted online A ticket purchased by a player may be
via the MyLotto website. All staff moved to a cancelled only if it is returned to the issuing
‘work from home’ model. After 13 May, the retailer on the same day of purchase and
retail network gradually reopened and sales before the close of ticket sales on that day.
through the retail channel recommenced. Cancellation of the ticket entitles the player
to a refund from the retailer equal to the
Since then, there have been three separate cost of the ticket.
changes to alert levels, with Auckland being
moved to Alert Level 3 on 12 to 30 August
2020, 14 to 17 February 2021 and 28 February
to 7 March 2021. The rest of New Zealand
was moved to Alert Level 2 on the same
dates. The retail network remained open
during these alert level changes.
The effect on our operations is reflected in
these financial statements based on the
information available to the date these
financial statements are signed. At this time,
it is difficult to determine the full on-going
effect of COVID-19 and therefore some
material uncertainties remain. There could
also be other matters that affect the entity
going forward that we are not yet aware of.
We have also disclosed in the financial
statements our significant assumptions and
judgements regarding the future potential
impacts that may have a material impact
on the entity. These uncertainties may have a
material impact on the entity going forward.
10 HALF YEAR REPORT • 20213. Revenue from contracts
BREAKDOWN OF REVENUE FROM CONTRACTS 31/12/2020 31/12/2020 31/12/19 31/12/20
6 MONTHS BUDGET 6 MONTHS 12 MONTHS
$000 $000 $000 $000
REVENUE FROM CONTRACTS WITH CUSTOMERS
Ticket Sales
Lotto, Powerball and Strike 699,853 525,856 600,174 1,168,900
Instant Kiwi 71,745 60,954 77,871 126,103
Instant Kiwi Online 23,520 21,891 16,659 40,115
Keno 22,301 16,651 18,469 36,148
Bullseye 6,544 6,796 6,340 13,134
Sales including GST 823,963 632,148 719,513 1,384,400
Less GST 49,676 37,933 42,778 82,220
Sales excluding GST 774,287 594,215 676,735 1,302,180
REVENUE FROM CONTRACTS WITH RETAILERS
Telecommunications and terminal maintenance 2,881 2,833 3,080 5,168
cost recovery
Retailers’ establishment fees 205 395 330 555
3,086 3,228 3,410 5,723
Total revenue from contracts 777,373 597,443 680,145 1,307,903
4. Cost of sales
COST OF SALES 31/12/2020 31/12/2020 31/12/19 31/12/20
6 MONTHS BUDGET 6 MONTHS 12 MONTHS
$000 $000 $000 $000
Lottery duty 45,318 34,768 39,573 76,142
Problem gambling levy 1,608 1,171 1,472 2,787
Retailers’ commission and MyLotto transaction fees 37,679 32,197 38,831 68,044
Prizes paid and payable 399,871 308,830 355,045 681,526
Prize reserve account 43,145 31,501 36,960 72,065
Interest transferred to prize reserve account 110 1,000 230 462
Ticket costs 3,312 3,257 3,083 5,629
Cost of goods sold to retailers 305 450 379 892
531,348 413,174 475,573 907,547
LOTTO NZ 115. Property, plant and equipment depreciation
PROPERTY, PLANT AND EQUIPMENT 31/12/2020 31/12/2020 31/12/19 31/12/20
DEPRECIATION 6 MONTHS BUDGET 6 MONTHS 12 MONTHS
$000 $000 $000 $000
The total depreciation charge for each class
of assets is as follows:
Right to use - office buildings 406 398 441 877
Gaming computers and associated equipment 2,292 2,786 2,633 5,324
Other computer hardware 99 116 91 188
Leasehold improvements 100 100 99 200
Furniture and fittings 27 28 28 56
Motor vehicles 116 121 101 210
Office equipment 14 23 17 34
Draw equipment 51 58 33 67
3,105 3,630 3,443 6,956
6. Other expenses
OTHER EXPENSES 31/12/2020 31/12/2020 31/12/19 31/12/20
6 MONTHS BUDGET 6 MONTHS 12 MONTHS
$000 $000 $000 $000
Fees paid to Audit New Zealand:
- Audit of annual financial statements 108 93 100 199
- Scrutineering function 60 58 57 153
Board members’ fees 137 137 137 263
Interest - - 3 3
Premises costs 247 309 240 444
IT and Telecommunications 3,804 4,150 3,457 7,753
Other 1,662 2,261 2,467 3,898
6,018 7,008 6,461 12,713
12 HALF YEAR REPORT • 20217. Cash and cash equivalents
ACCOUNTING POLICY
Cash and cash equivalents include cash on hand, bank accounts and deposits with maturities
of up to three months from acquisition date.
It is Lotto New Zealand’s policy to restrict its investments to instruments issued or guaranteed by
either the New Zealand Government or registered New Zealand banks. Although investments
are normally held to maturity, they are readily marketable and therefore may be regarded as
liquid assets. The value of investments held fluctuates as changes in market interest rates occur.
However, the extent of such fluctuations in value is relatively minor.
Cash and bank balance figures include any cash overdrafts to reflect a total cash position.
Cash equivalents and term deposits are recorded at cost.
CASH EQUIVALENTS AND TERM DEPOSITS 31/12/2020 31/12/19 31/12/20
$000 $000 $000
Cash and bank balance 24,681 31,413 24,339
Short term deposits 51,500 34,500 58,000
Accrued interest 4 13 10
76,185 65,926 82,349
The carrying value of cash at bank and short term deposits with maturities less than three
months approximates their fair value.
LOTTO NZ 138. Term deposits
ACCOUNTING POLICY
Term deposits represent deposits and other instruments with maturities of more than three
months from acquisition date.
TERM DEPOSITS 31/12/2020 31/12/19 31/12/20
$000 $000 $000
Term deposits 127,000 39,500 54,000
Accrued Interest 273 101 96
127,273 39,601 54,096
The carrying value of term deposits with maturities between three and 12 months approximates
their fair value. No term deposits from date of investment have terms greater than 12 months.
9. Restrictions on cash and cash equivalents, and term deposits
RESTRICTIONS ON CASH AND CASH EQUIVALENTS, 31/12/2020 31/12/19 31/12/20
AND TERM DEPOSITS $000 $000 $000
Payment of unpaid prizes 77,790 75,500 75,990
MyLotto player funds 12,778 244 11,371
Total restricted amount 90,568 75,744 87,361
Unpaid prizes represent prize payments owed to players, but as yet unclaimed and unpaid as at
period end. MyLotto player funds are deposits made by customers via the online channel for use
in Lotto NZ online games or ticket purchases.
14 HALF YEAR REPORT • 202110. Receivables and contract assets
ACCOUNTING POLICY
Trade receivables are amounts due from customers for goods sold in the ordinary course of
business. They are generally due for settlement within 30 days and therefore are all classified as
current. Trade receivables are recognised at fair value and are assessed annually for impairment
based on collectibility.
RECEIVABLES AND CONTRACT ASSETS 31/12/2020 31/12/19 31/12/20
$000 $000 $000
Receivables from retailers for current games 3,879 286 143
Receivables from net ticket sales 85 8,227 5,227
3,964 8,513 5,370
Amounts due from retailers, representing sales collected less prizes paid (net sales), are swept
from retailers via direct debit twice a week. Amounts receivable from net ticket sales are net sales
due from retailers for games drawn/played but not received from the retailer at year end due to
the timing of funds being swept via direct debit. Amounts due from retailers for current games
are amounts received by the retailer for purchase of game tickets where the game is still to be
drawn in the future after year end and not swept by Lotto New Zealand. Other trade receivables
are amounts outstanding for retailer fitout and miscellaneous expenditure.
We do not expect COVID-19 to have any significant impact on accounts receivable recoverability
as retailers are required to ensure sufficient funds are available in their account to enable the
sweep processes to proceed as normal.
Lotto New Zealand payment terms are that accounts are due on the 20th of the month following
invoicing. All receivables not settled on the 20th of the month following invoicing are considered
to be past due. The carrying value of debtors and other receivables approximates their fair value.
There is no impairment of receivables.
AGEING OF TRADE AND RETAILER RECEIVABLES 31/12/2020 31/12/19 31/12/20
$000 $000 $000
Not past due 3,896 8,500 5,425
Past due 1-30 days 46 17 1
Past due 31-60 days 23 (7) 9
Past due 61-90 days (3) 3 (62)
Past due > 91 days 1 - (3)
3,964 8,513 5,370
All receivables greater than 30 days in age are considered to be past due but are deemed
recoverable. For those items not deemed recoverable a specific provision for uncollectibility
is recognised.
LOTTO NZ 1511. Property, plant and equipment Depreciation
ACCOUNTING POLICY Depreciation of property, plant and
equipment is calculated on a straight line
basis so as to allocate the cost of the assets,
Items of property, plant and equipment
over the shorter of the economic life or the
are initially recorded at cost.
relevant lease periods as follows:
Additions
Right to use - office buildings 2 - 9 years
The cost of an item of property, plant and
Gaming system equipment 4 - 7 years
equipment is recognised as an asset only
when it is probable that future economic Other computer hardware 3 years
benefits or service potential associated Leasehold improvements 1 - 9 years
with the item will flow to Lotto New Zealand Draw equipment 5 years
and the cost of the item can be measured Furniture and fittings 10 years
reliably.
Motor vehicles 4 years
Office equipment 5 years
Work in progress included in property plant
and equipment is recognised at cost less
impairment and is not depreciated.
The residual value and useful life of an
Disposals asset is reviewed, and adjusted if applicable,
at each financial year end. If an adjustment
Gains and losses on disposals are to the useful life of an asset is made then
determined by comparing the proceeds the remaining book value at that point, is
with the carrying amount of the asset. depreciated on a straight line basis over
Gains and losses on disposals are included the adjusted remaining life of the asset.
in the profit or loss.
Impairment of property, plant
Subsequent costs and equipment
Costs incurred subsequent to initial Property plant and equipment are reviewed
acquisition are capitalised only when it is annually for impairment to determine
probable that future economic benefits or if events or changes in circumstances
service potential associated with the item indicate that the carrying amount might
will flow to Lotto New Zealand and the cost not be recoverable. An impairment loss
of the item can be measured reliably. The is recognised for the amount by which
costs of day-to-day servicing of property, the asset’s carrying amount exceeds its
plant and equipment are recognised in recoverable amount less any costs to sell
the profit or loss as they are incurred. or dispose. If an asset’s carrying amount
exceeds its recoverable amount, the
asset is regarded as impaired and the
carrying amount is written down to the
recoverable amount.
16 HALF YEAR REPORT • 2021BREAKDOWN OF
GAMING COMPUTER
WORK IN PROGRESS
OFFICE EQUIPMENT
PROPERTY, PLANT
DRAW EQUIPMENT
OTHER COMPUTER
OFFICE BUILDINGS
IMPROVEMENTS
AND EQUIPMENT
RIGHT TO USE -
AND FITTINGS
EQUIPMENT
HARDWARE
LEASEHOLD
FURNITURE
VEHICLES
MOTOR
TOTAL
$000’S
$000’S
$000’S
$000’S
$000’S
$000’S
$000’S
$000’S
$000’S
$000’S
COST OR VALUATION
Balance 1 July 2019 - 2,038 46,674 2,117 620 1,183 889 325 1,085 54,931
Adjustment on transition to 7,115 - - - - - - - - 7,115
NZ IFRS 16
Additions - 84 951 191 - 51 73 7 380 1,736
Disposals - - - - - - (63) (10) - (73)
Balance 31 December 2019 7,115 2,122 47,625 2,308 620 1,234 899 321 1,465 63,709
Additions - - 225 104 - 3 73 - 2,140 2,546
Disposals - (385 (1,396) (201) - (335) (34) (51) (1,762) (4,164)
Balance 30 June 2020 7,115 1,737 46,454 2,211 620 902 938 271 1,843 62,091
Additions - - 183 22 263 6 151 - 1,384 2,009
Disposals - - (9) (7) - - (152) - - (168)
Balance 31 December 2020 7,115 1,737 46,628 2,226 883 908 937 271 3,227 63,932
ACCUMULATED
DEPRECIATION
Balance 1 July 2019 - 1,301 32,046 1,885 366 822 377 234 - 37,031
Adjustment on transition to 3,777 - - - - - - - - 3,777
NZ IFRS 16
Depreciation 441 99 2,633 91 33 28 101 17 - 3,443
Disposals - - - - - - (62) (10) - (72)
Balance 31 December 2019 4,218 1,400 34,679 1,976 399 850 416 241 - 44,178
Depreciation 436 101 2,691 97 34 28 109 17 - 3,513
Disposals - (387) (1,396) (201) - (318) (32) (46) - (2,380)
Balance 30 June 2020 4,654 1,114 35,974 1,872 433 560 493 212 - 45,311
Depreciation 406 100 2,292 99 51 27 116 14 - 3,105
Disposals - - (9) (6) - - (147) - - (162)
Balance 31 December 2020 5,060 1,214 38,257 1,965 484 587 462 226 - 48,254
CARRYING AMOUNTS
At 1 July 2019 - 737 14,628 232 254 361 512 91 1,085 17,900
At 31 December 2019/ 2,897 722 12,946 332 221 384 483 80 1,465 19,530
1 January 2020
At 30 June 2020 2,461 623 10,480 339 187 342 445 59 1,843 16,779
Balance 31 December 2020 2,055 523 8,371 261 399 321 475 45 3,227 15,678
The right-of-use assets relate to operating leases for office premises, which are disclosed in line
with the requirements of NZ IFRS 16 Leases. There are no other restrictions over the title of property,
plant and equipment, nor is any property, plant and equipment pledged as security for liabilities.
LOTTO NZ 1712. Intangible assets
ACCOUNTING POLICY
Computer software that is not integral to the operation of hardware is recorded at purchase cost
less any amortisation and impairment losses. Amortisation is charged to the profit or loss on a
straight line basis over the software’s useful life of three to seven years. Amortisation begins when
the asset is available and ceases at the date when the asset is derecognised. The amortisation
charge for each financial year is expensed in the profit or loss.
Impairment of intangible assets is in accordance with the impairment of property plant and
equipment in note 11.
BREAKDOWN OF INTANGIBLE ASSETS COMPUTER WORK IN TOTAL
SOFTWARE PROGRESS $000
$000 $000
COST OR VALUATION
Balance 1 July 2019 22,973 2,285 25,258
Additions 916 2,022 2,938
Disposals - - -
Balance 31 December 2019 23,889 4,307 28,195
Additions 298 6,675 6,973
Disposals (180) - (180)
Balance 30 June 2020 24,007 10,982 34,989
Additions 458 5,176 5,634
Disposals - - -
Balance 31 December 2020 24,465 16,158 40,623
ACCUMULATED AMORTISATION
Balance 1 July 2019 16,068 - 16,068
Depreciation 1,544 - 1,544
Disposals - - -
Balance 31 December 2019 17,612 - 17,612
Amortisation 1,587 - 1,587
Disposals (173) - (173)
Balance 30 June 2020 19,026 - 19,026
Amortisation 1,459 - 1,459
Disposals - - -
Balance 31 December 2020 20,485 - 20,485
CARRYING AMOUNTS
At 1 July 2019 6,905 2,285 9,190
At 31 December 2019/1 January 2020 6,277 4,307 10,584
At 30 June 2020 4,980 10,982 15,962
Balance 31 December 2020 3,980 16,158 20,138
There are no restrictions over the title of computer software, nor is any computer software
pledged as security for liabilities.
18 HALF YEAR REPORT • 202113. Creditors, other payables and contract liabilities
ACCOUNTING POLICY
These amounts represent liabilities for goods and services provided to Lotto New Zealand prior to
the end of financial year which are unpaid, and amounts unpaid and received in advance from
gaming activities. Creditors, other payables and contract liabilities are unsecured and are usually
paid within 30 days of recognition and recognised at their fair value.
CREDITORS, OTHER PAYABLES AND CONTRACT LIABILITIES 31/12/2020 31/12/19 31/06/20
$000 $000 $000
Contract liabilities 5,394 7,662 5,689
Prize liabilities 30,730 40,681 25,552
MyLotto player accounts 10,716 6,643 9,983
Trade creditors 12,906 13,691 9,225
Payable to the New Zealand Lottery Grants Board - - 13,380
Accrued expenses 19,524 14,513 16,081
79,270 83,190 79,910
Contract liabilities represent moneys received and receivable for games not drawn at balance
date. All liabilities are non-interest bearing and are normally settled within two months of
becoming due. Accordingly, the carrying value of creditors and other payables approximates
their fair value.
Credit Facilities
Lotto New Zealand has a bank overdraft facility of $1 million with Westpac Banking Corporation.
The interest rate on the overdraft facility at 31 December 2020, was was 7.75% (31 December 2019:
8.85%; 30 June 2020: 7.75%). The balance of the overdraft as at 31 December 2020 was nil
(31 December 2019: nil; 30 June 2020: nil).
LOTTO NZ 1914. Prize reserve account
ACCOUNTING POLICY
A prize reserve account (PRA) has been established by Lotto New Zealand, as required by
the Rules for each game, to ensure sufficient funding is available to meet advertised division 1
prizes, promotions and the cost of other prizes as considered appropriate by Lotto New Zealand.
Contributions to the PRA include a percentage of sales, prizes unclaimed after 12 months, and
other amounts as set out in the Rules for each game.
Lotto New Zealand does not necessarily have sufficient funds available to meet prize payments
without calling on the PRA. It has therefore classified the PRA as a current liability in accordance
with NZ IAS 1 (paragraph 69); in particular it intends to settle the liability as part of its normal
operating cycle and it does not have an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period.
BREAKDOWN OF PRIZE RESERVE FUND 31/12/2020 31/12/19 31/06/20
$000 $000 $000
Opening balance 50,438 23,489 23,489
Amounts transferred based on game sales 43,145 36,960 72,065
Interest 110 230 462
Unclaimed prizes over twelve months old 4,797 4,315 8,869
Transfers to prize pools (51,429) (23,455) (54,447)
47,061 41,539 50,438
15. Equity
ACCOUNTING POLICY
Equity is measured as the difference between total assets and total liabilities.
BREAKDOWN OF EQUITY 31/12/2020 31/12/19 31/06/20
$000 $000 $000
RETAINED EARNINGS
Opening balance 53,416 33,513 33,513
Adjustment from the adoption of NZ IFRS 16 - (205) (205)
Adjusted opening balance 53,416 33,308 33,308
Profit/(loss) 72,020 29,356 20,108
Retained earnings at the end of period 125,436 62,664 53,416
Lotto New Zealand’s equity comprises accumulated profits/(losses).
20 HALF YEAR REPORT • 202116. Related party information
Lotto New Zealand is controlled by the Crown and has transacted with other entities significantly
influenced or controlled by the Crown. Related party transactions have not been individually
disclosed for transactions with other government agencies when they are on normal terms and
conditions consistent with the normal operating arrangements between government agencies.
Related party transactions required to be disclosed
The Gambling Act 2003 requires that Lotto New Zealand distribute all profits to the New Zealand
Lottery Grants Board unless the Minister of Internal Affairs consents to a request from the Board
for a retention. Distribution in respect of the 2020 interim results amounted to $140.0 million (2019:
$140.0 million). No funding was provided by the Crown to Lotto New Zealand.
Collectively, but not individually, significant, transactions with government-related entities
In conducting its activities, Lotto New Zealand is required to pay various taxes and levies (such
as GST, FBT, PAYE, ACC levies, Lottery Duty and the Problem Gambling Levy) to the Crown and
entities related to the Crown. Payment of these taxes and levies is based on the standard terms
and conditions that apply to said taxes and levies. Lotto New Zealand is exempt from income
tax by virtue of Section 264 of the Gambling Act 2003.
17. Categories of financial assets and liabilities
CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES 31/12/2020 31/12/19 31/06/20
$000 $000 $000
FINANCIAL ASSETS MEASURED AT AMORTISED COST
Cash and cash equivalents 76,185 65,926 82,349
Term deposits 127,273 75,744 54,096
Debtors and other receivables 3,964 8,513 5,370
207,422 150,183 141,815
FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
Creditors and other payables 79,270 83,190 79,910
Prize reserve account 47,061 41,539 50,438
126,331 124,729 130,348
LOTTO NZ 2118. Financial instrument risks
Lotto New Zealand’s activities expose it to a variety of financial instrument risks, including
market risk, credit risk and liquidity risk. Lotto New Zealand has policies to manage the risks
associated with financial instruments. These policies do not allow any transactions that are
speculative in nature.
Market Risk
Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due
to changes in market interest rates. Lotto New Zealand exposure to this is limited to its bank
deposits which are held at fixed rates of interest.
Credit risk
Credit risk is the risk that a third party will default on its obligation to Lotto New Zealand, causing
Lotto New Zealand to incur a loss. Due to the timing of cash inflows and outflows, surplus cash is
invested with registered banks. Lotto New Zealand Investment policy limits the amount of credit
exposure to any one bank.
Liquidity risk
Liquidity risk is the risk that Lotto New Zealand will encounter difficulty raising liquid funds to meet
commitments as they fall due. In meeting its liquidity requirements, Lotto New Zealand ensures
sufficient funds are available by managing investments that mature within specified timeframes.
19. Operating lease arrangements and capital commitments
OPERATING LEASE ARRANGEMENTS AND CAPITAL COMMITMENTS 31/12/2020 31/12/19 31/06/20
$000 $000 $000
CAPITAL COMMITMENTS APPROVED AND CONTRACTED
Property, plant and equipment 6,284 2,604 5,059
Total capital commitments 6,284 2,604 5,059
OTHER NON-CANCELLABLE CONTRACTS
Not later than one year 19,981 22,460 20,424
Later than one year and not later than two years 3,454 3,949 4,069
Later than two years and not later than five years 5,266 9,570 8,008
Later than five years - - -
Total other non-cancellable contracts 28,701 35,979 32,501
Total commitments 34,985 38,583 37,560
There are no restrictions placed on Lotto New Zealand by any of its leasing arrangements.
Other non-cancellable contracts primarily relate to the retailer network, gaming system
maintenance, media placement and other contracts for service.
22 HALF YEAR REPORT • 202120. Contingent liabilities and assets
ACCOUNTING POLICY
Contingent liabilities are disclosed if the
possibility that they will crystallise is not
remote. Contingent assets are disclosed if it
is probable that the benefits will be realised.
There were no contingent liabilities or
contingent assets at 31 December 2020,
31 December 2019 or 30 June 2020.
21. Events after balance date
COVID alert levels were raised to Alert Level
3 in Auckland on 14 February 2021 for a
period of 5 days, then again on 28 February
2021 for week. The rest of New Zealand were
at Alert Level 2 for the same dates and time
periods. Retail stores were still allowed to
trade at Alert Levels 3 and 2, and there was
no significant adverse impact on retail sales.
As of the date of publishing these interim
financial statements, New Zealand remains
at Alert Level 1.
There were no other significant events
subsequent to balance date (31 December
2019: none; 30 June 2020: none).
LOTTO NZ 23Directory
Directory
Auckland Office Board Members
Level 1, 73 Remuera Road Roger Sharp
Remuera, Auckland 1050 Chair
PO Box 8929, Symonds Street
Auckland 1150 David Tapsell
Deputy Chair
Telephone 09 356 3800
Kim Gordon
Keiran Horne
Contact Trish Oakley
Roanne Parker
Website mylotto.co.nz Mark Todd
Email info@lottonz.co.nz
Telephone 0800 695 6886
Senior management
Chris Lyman
Chief Executive
Dan Balasoglou
Chief Financial Officer
Rachel Barrow
Chief Customer Officer
Annemarie Browne
Chief Marketing Officer
Ben Coney
Chief Innovation and Technology Officer
Kathryn Haworth
GM, Strategy and Communications
Sonja Johnson
GM, People & Culture
Sarah Thirlwall
Chief Transformation Officer
24 HALF YEAR REPORT • 2021mylotto.co.nz
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