Lottery Corporation Limited · ASX:TLC
Lottery — The Lottery — Investor Day (October 2024)
84 slides from Lottery's investor day presentation, Oct 10, 2024
Slide 1: ASX announcement: Investor Day presentation
10 October 2024 ASX Market Announcements Office ASX Limited 20 Bridge Street Sydney NSW 2000 INVESTOR DAY PRESENTATION Attached is The Lottery Corporation’s Investor Day presentation. For personal use only The Investor Day will be webcast live at https://www.thelotterycorporation.com/investors/prese
Slide 2: Investor Day 10 October 2024
For personal use only Investor Day 10 October 2024
Slide 3: Acknowledgement of Country
Acknowledgement of Country The Lottery Corporation would like to acknowledge the First Nations Peoples of Australia. We acknowledge that they For personal use only are the Traditional Custodians of the lands on which our offices, retail outlets and venues operate. As our nation and organisation cont
Slide 4: Running order
Running order Time Event Location 8.30 – 9.00am Registration and arrival coffee Lobby For personal use only 9.00 – 11.00am Presentation session 1 (Webcast commences) The Forum 11.00 – 11.30am Morning break / Trade show Expo zone 11.30 – 12.30pm Presentation session 2 The Forum 12.30 – 1.00pm Q&A pan
Slide 5: What to expect from today
What to expect from today Learn more about an exciting and unique world leader in For personal use only lotteries Deepen your understanding of our business model, strategy and multiple levers to drive sustainable growth and shareholder value Gain insight into our customer-focused approach to deliver
Slide 6: Agenda
Agenda GROUP OVERVIEW The Lottery Corporation – a world class lottery business 9.00am Sue van der Merwe Managing Director & CEO CUSTOMER & Portfolio of recognised brands inspiring Australians to dream 9.30am Andrew Shepherd MARKETING Chief Customer & Marketing Officer For personal use only TECHNOLOG
Slide 7: A world class lottery business
6 A world class For personal use only lottery business
Slide 8: Sue van der Merwe – Managing Director & CEO
Sue van der Merwe – Managing Director & CEO Appointed Managing Director and CEO 2022 following demerger from Tabcorp For personal use only 30+ years' Started industry career at Golden experience Casket in 1990 in lotteries WLA Chair of the Asia Pacific Lottery Association, Executive World Lottery As
Slide 9: Experienced Board and Management team
Experienced Board and Management team Non-Executive Directors For personal use only Doug McTaggart Harry Boon Megan Quinn Anne Brennan John O’Sullivan Stephen Morro Independent Non- Independent Non- Independent Non- Independent Non- Independent Non- Independent Non- Executive Chairman Executive Dire
Slide 10: TLC by the numbers – a business of scale and social significance
TLC by the numbers – a business of scale and social significance Financial and Operational1 EBITDA (before significant items)2 NPAT (before significant items)2 Market cap Total revenue $827m $412m c.$11bn $4.0bn EBITDA (Reported): $771m NPAT (Reported): $414m Lotteries channel mix Average licence #
Slide 11: The Australian market leader and one of the highest performing lotteries businesses globally
The Australian market leader and one of the highest performing lotteries businesses globally Exclusive and/or long dated licences (and approvals) For personal use only Low-spend, mass participation model underpins wide community acceptance Diversified and balanced portfolio of high-profile brands Si
Slide 12: Globally unique as the only large-scale listed pure-play lottery company
Globally unique as the only large-scale listed pure-play lottery company Global Pure-play diversified Suppliers lottery gambling For personal use only Non-government Multi-category gambling companies Primarily focused on particular owned lottery focused (e.g. lotteries, casinos, sports segments of t
Slide 13: A proven track record of delivering long-term market growth and resilience
A proven track record of delivering long-term market growth and resilience Growth in rolling 3-year average has always been positive, notwithstanding short-term fluctuations due to jackpot variability Australian Industry Turnover – Lotteries & Keno1, 2 COVID-19 +5.8% p.a. For personal use only Globa
Slide 14: Customer-focused approach driving continued Lotteries growth
Customer-focused approach driving continued Lotteries growth TLC - Lotteries Turnover ($bn) 6.3% 4.2 4.5 4.3 4.5 5.6 5.7 6.1 6.7 6.6 7.3 CAGR • Retail is our foundational channel, provides a strong community connection and underpins For personal use only omni-channel customer engagement 40.9% 37.7%
Slide 15: Our business has performed strongly since demerger
Our business has performed strongly since demerger Revenue EBITDA Leverage ($m) (before significant items2) ($m) (Net Debt / EBITDA (before significant items)2) Lotteries Keno Lotteries Keno 3.2x 3.1x 3,997 827 3,507 3,513 2.6x 288 685 713 103 252 281 92 106 For personal use only 3,709 725 3,255 3,2
Slide 16: Our business is underpinned by our exclusive and/or long-dated licences
Our business is underpinned by our exclusive and/or long-dated licences Lotteries Keno Licence expiry Licence expiry Indefinite (unless revoked) 2072 For personal use only 2072 Tasmanian lottery permit is a renewable 5-year 2052 2050 fixed term 2052 arrangement 2050 2032 2047 2028 2025 2042 AC T SA
Slide 17: A strong focus on our integrated ESG approach
A strong focus on our integrated ESG approach Operating our business Supporting Nurturing Reducing our and products responsibly our community our people environmental impact For personal use only Our Pillars We operate our business We have an important role to We strive to create a great We take act
Slide 18: The majority of our turnover relates to products which are low risk
The majority of our turnover relates to products which are low risk $15.8bn FY23 Australian Gambling Market – Customer expenditure and share by type 1, 2, 3 50% $8.4bn 27% $3.6bn $3.1bn For personal use only 10% 11% $0.5bn 2% Lotteries Keno Casino Wagering Electronic (In-venue and (All products) (Sp
Slide 19: Our strategy is designed to deliver on our ambition
Our strategy is designed to deliver on our ambition OUR VISION To be the world’s best lottery operator OUR PURPOSE For personal use only To create positive impacts STRATEGIC PILLARS DRIVE DEVELOP DISCOVER Customer centred initiatives to Guiding strategies to Complementary new earnings support sustai
Slide 20: Key takeaways
Key takeaways Strong brands and licences, and customer-focused strategy drives consistent growth For personal use only Proven track record of delivery over time Highly energised Board and leadership Actively preserving and enhancing value of licences Low-spend, mass participation model with strong f
Slide 21: Portfolio of recognised brands inspiring Australians to dream
Portfolio of recognised For personal use only brands inspiring Australians to dream
Slide 22: Andrew Shepherd – Chief Customer & Marketing Officer
Andrew Shepherd – Chief Customer & Marketing Officer Appointed Chief Customer & Marketing 2022 Officer after six years as General Manager Customer & Marketing For personal use only Deep Began career in lotteries in 1997 at lotteries Golden Casket, returned to Tatts experience Group in 2016 30+ years
Slide 23: Portfolio of recognised brands inspiring c.10m Australians to dream
Portfolio of recognised brands inspiring c.10m Australians to dream Our major national game brands enjoy awareness of more than 90% and are supported by a range of mid-tier and add-on games Channel and licensee brands The official home of Australia’s lotteries For personal use only Three of Australi
Slide 24: A portfolio approach to maximise our range of customer segments
A portfolio approach to maximise our range of customer segments Strategic NeedScope model guides our portfolio, aiming Sophisticated approach to managing the portfolio, to have at least one brand occupy each need state underpinned by deep customer insights For personal use only Monitoring Ideation a
Slide 25: Broad population reach with increasing growth from younger audiences
Broad population reach with increasing growth from younger audiences Participation by Age Group across Product Portfolio1 1 75% 64% Adult Australian FY24 Digital population (ex. WA) Share of Jackpot games Turnover 46% Powerball $200m of the customers For personal use only Powerball new registrations
Slide 26: Significant upside from large and growing Lotteries customer base
Significant upside from large and growing Lotteries customer base of c.10m Estimated customer numbers (m) (FY20 – FY24)1 Estimated customer numbers by age (m) (FY20 – FY24)1 +16.0% 10.03 +16.0% 10.03 For personal use only 8.65 8.65 +6.9% 4.28 5.28 +9.5% 3.91 4.94 1.74 +10.8% 1.57 +32.8% 1.82 +28.0%
Slide 27: Convenient channel choice with 'known customer' membership driving customer value
We offer our customers convenient channel choice with ‘known customer’ membership driving increased customer value Purchase channel by age1 Relative annual spend level per customer 60% For personal use only 50% 40% 1.0x 2.0x 4.5x 30% Unregistered Registered Omni-Channel (‘unknown’) (‘known’) (‘known
Slide 28: Sophisticated marketing approach to maximise conversion across the customer lifecycle
Sophisticated marketing approach to maximise conversion across the customer lifecycle Customer path Reach Act Convert Engage to purchase For personal use only Changes in consumer Customer Interaction and Value demographics, behaviour Ongoing Marketing Winning Experience The Lott Members Club Retail
Slide 29: Personalised marketing journeys at scale
Personalised marketing journeys at scale Alternate AI generated content For personal use only Meta PUSH Email targeting reminder Connected The Lott Post-draw social TV / Broadcast website winner’s story video-on- demand / Digital display Suppress Ads Cross-sell Saturday lotto to leverage increased t
Slide 30: Experience-led approach using AI and machine learning to deliver personalisation
Experience-led approach using AI and machine learning to deliver personalisation Early Next Best Adobe Engagement Cross-Sell Intervention Offer Model Sensei Model Model For personal use only Model Offer based Automated Communication Identifies risk of Market basket recommendation white label channel
Slide 31: Maximising efficiency through data-driven out of home media
Maximising efficiency through data-driven out of home media Target audience profiling across Office buildings Hotels Outdoor Shopping malls Train/bus stations Display panels Sports halls/ Supermarket TV screens/ billboards gyms checkouts monitors 13,000 screens For personal use only Tracking out of
Slide 32: Seamless omni-channel experience increasingly important to customers
Seamless omni-channel experience increasingly important to customers Potential experience enhancements For personal use only Starts In Ends In Physical tickets Digital or paper tickets Store Store Physical coupons App-enabled purchase Web Web Paper membership Digitally enhanced sign-up form Mobile M
Slide 33: Key takeaways
Key takeaways For personal use only Portfolio of recognised brands optimised for growth Sophisticated approach to brand and customer management Customer-centric approach drives higher lifetime value Significant upside from growing registered (‘known’) customers (and a plan to capture this opportunit
Slide 34: Technology capability driving leading customer experience
Technology capability For personal use only driving leading customer experience
Slide 35: Loren Somerville – Chief Information Officer
Loren Somerville – Chief Information Officer For personal use only Joined as Chief Information Officer in 2022 2022 post demerger from Tabcorp Experienced Previously Chief Digital & Information Technology Officer at Youi Insurance; held senior executive roles at Gartner and Rio Tinto 34
Slide 36: Technology that reliably powers the largest events in Australia
Technology that reliably powers the largest events in Australia 10,658 4,309 751 4,678 42,170 tickets sold retail tickets new accounts deposits per min account logins per min peak sold per min per min peak peak per min peak For personal use only peak 218k 1.6m 443k 4,283 new accounts deposits in las
Slide 37: Scalable technology ecosystem delivering specialised capability
Scalable technology ecosystem delivering specialised capability Digital Retail Core High levels of visitation and unique One of the largest retail networks Capable of serving multiple jurisdictions offerings in Australia and extreme jackpot traffic peaks For personal use only (c.7,200 sites) Web Mob
Slide 38: Delivering a leading digital customer experience
Delivering a leading digital customer experience Store Syndicates Online Digitally-Enabled Retail Membership A world-first lotteries syndication tool loved by Activating over 3,800 lottery retail outlets as customers and retailers affiliates to grow registered customer base For personal use only Exc
Slide 39: Building a technology foundation for growth
Building a technology foundation for growth Customer Product Innovation Data and AI Foundations For personal use only Enhancements and efficiencies across New products and innovative Emerging technologies to enhance Technology programs that omni-channel, retail technology and changes to current game
Slide 40: Delivering experiences to serve changing customer expectations
Delivering experiences to serve changing customer expectations Deliver intuitive and Use data, content, and AI engaging omni-channel to deliver Personalised experiences Customer For personal use only experiences Community-driven engagements Convenient and enabling customers to Instant access to conn
Slide 41: Customer Data Platform enabling personalisation at scale
Customer Data Platform enabling personalisation at scale For personal use only Mobile Website Social Engagement SEO/SEM Inbound Phone/ Email Programmatic Live Chat Paid Social Email Venue/ SMS & Push Outlet Real-Time Experience Platform TLC Customer and Trading Platforms Data Science / AI / Machine
Slide 42: Data and AI-enhanced operations and risk management
Data and AI-enhanced operations and risk management For personal use only Customer Care Retail & Venue Fraud Internal Operations Using data-driven models to Anomaly detection Improving the way we work identify and minimise risk of modelling to help reduce and shaping our long-term gambling harm risk
Slide 43: Delivering enhanced cyber resilience while addressing emerging threats
Delivering enhanced cyber resilience while addressing emerging threats Cyber strategy and program delivery Emerging threats 1 For personal use only Secure identity Proactive protection 2 Adaptability to emerging risks Secure foundations 3 Comprehensive security Secure data Real-time response 4 Manag
Slide 44: Key takeaways
Key takeaways Robust and proven technology platforms that handle significant scale For personal use only Scalable technology ecosystem delivering specialised capability, underpinned by high-performing teams Delivering a leading digital customer experience through an omni-channel offer Embedding Cust
Slide 45: Retail is a key foundation of our Lotteries business
Retail is a key For personal use only foundation of our Lotteries business
Slide 46: Antony Moore – Chief Channel Officer
Antony Moore – Chief Channel Officer Commenced as Chief Channel Officer in 2022 2022 post demerger from Tabcorp For personal use only Deep lotteries Joined Tatts Group in 2011 as Head of Retail experience Experience in senior roles with leading 25 years’ retailers including Retail Adventures, retail
Slide 47: The powerful role of retail in helping drive sustainable growth
The powerful role of retail in helping drive sustainable growth Large and diversified network offers unrivalled scale, brand presence and depth of customer connection For personal use only Low-cost model; highly variable costs Supports industry sustainability, including through advocacy Large upside
Slide 48: One of Australia's largest retail networks with a capital-lite lottery franchise model
One of Australia’s largest retail networks with a capital-lite lottery franchise model Broad network of key stakeholders Extensive retail network with 3,858 lottery outlets1 in Australian communities Industry Partners Northen Territory 23 For personal use only Queensland 938 Industry Associations We
Slide 49: Stakeholder and industry partnerships underpin network delivery and policy advocacy
Stakeholder and industry partnerships underpin network delivery and policy advocacy For personal use only “The Lottery Corporation has a very focused approach to partnering with us, evident from the step change in omni- channel commissions last year.” Ben Kearney – CEO Australian Lottery & Newsagent
Slide 50: Evolving channel mix to meet changing consumer preferences
Evolving channel mix to meet changing consumer preferences Number of outlets by type Strategic considerations +83 3,775 3,858 • Expansion into complementary FMCG channels For personal use only 421 445 +24 141 195 +54 148 224 232 +84 • Diversification reduces reliance on any 455 305 +81 single channe
Slide 51: Diversified retail footprint with a variety of formats
Diversified retail footprint with a variety of formats – a virtual store tour For personal use only Convenience Newsagent Convenience Fuel Bottle Shop Supermarket 50
Slide 52: Retail underpins strong omni-channel customer engagement
Retail underpins strong omni-channel customer engagement The combined strength of the digital and physical retail channels Retail Remuneration Model Store Syndicates Online Commercial model to better align our A truly omni-channel experience benefiting retailers, For personal use only retailers with
Slide 53: Retail plays a key role in our communities
® Retail plays a key role in our communities For personal use only Estimated FY24 Retail FY24 Omni-channel jobs Commissions Commissions c.20,000 $591m $42m Supporting employment in Paid to Lotteries retailers Paid to Lotteries lottery franchises and venue partners retailers 52
Slide 54: Key takeaways
Key takeaways Large, diversified retail network provides large-scale brand presence For personal use only Low-cost, capital-lite lottery franchise model Actively managing network to match changing consumer preferences Enables connection and convenience, drives registrations Strong partnership with f
Slide 55: Active portfolio and licence management
Active portfolio and For personal use only licence management
Slide 56: Callum Mulvihill – Chief Commercial Officer
Callum Mulvihill – Chief Commercial Officer Commenced as Chief Commercial 2022 Officer in 2022 post demerger from Tabcorp For personal use only Deep Started lotteries career at SA Lotteries in lotteries 2006 as General Manager of Marketing & experience Sales 25 years’ Previously worked for more than
Slide 57: Our product innovation pipeline continues to deliver balanced growth across the portfolio
Our product innovation pipeline continues to deliver balanced growth across the portfolio 52 week moving annual turnover - TLC portfolio FY17 – FY24 5,000 10,000 COVID-19 4,500 9,000 For personal use only 4,000 8,000 Powerball TOTAL TLC TURNOVER ($m) GAMES TURNOVER ($m) 3,500 7,000 Saturday Lotto 3,
Slide 58: Disciplined approach to maximising potential game performance
Disciplined approach to maximising potential game performance We implement variations of portfolio and jackpot sequence management dependent on the market conditions and circumstances to maximise outcomes For personal use only Game Development Portfolio Management Prize Reserve Fund Game adjustments
Slide 59: Creating Australia's big lottery events
Creating Australia’s big lottery events Our ability to combine long term game structuring and short/medium term game management levers has been proven over many years; key event draws offer players a gateway to the category; timing these draws and carefully managing new record events is an important
Slide 60: Powerball: Prize Reserve Fund risk/benefit of an accelerated sequence
Powerball: Prize Reserve Fund risk/benefit of an accelerated sequence $200m Roll Comparison – Standard vs Accelerated Sequence $200M Powerball sequence delivered immediate National Draw Turnover ($m) +c.250 turnover returns and extended benefits more For personal use only Cumulative Standard Sequenc
Slide 61: Case study: Powerball game restructure (2018) continues to drive growth
Case study: Powerball game restructure (2018) continues to drive growth Key 2018 changes Current state of play Intent • Price further increased to $1.20 in May 2023 • Unique opportunity to reposition the game and • Momentum and sequence management delivering new For personal use only brand record ja
Slide 62: Our products are different from other forms of gambling
Our products are different from other forms of gambling The majority of our turnover relates to products at the lower TLC product attributes and strong responsible gambling risk end of the gambling entertainment spectrum1 programs provide clear industry differentiation Instant Scratch-Its® tickets F
Slide 63: Focused on minimising gambling harm through our Responsible Play Program
Focused on minimising gambling harm through our Responsible Play Program Risk based approach, supported by evidence Global leader in responsible c.4.8m registered Internal & external For personal use only gambling customers research The Lottery Corporation programs Best Overall Program for Establish
Slide 64: Social licence and measured market responses critical to maximising licence value
Social licence and measured market responses critical to maximising licence value Focus Areas Levers Licence Value Enhancement Program Ensuring TLC remains effectively positioned in the market as an industry leader Commitment to our Responsible play social responsibility For personal use only Gi
Slide 65: Advocating for balanced and consistent policy reform
Advocating for balanced and consistent policy reform • Supportive of an effective lotteries regulatory framework to support industry sustainability and protect customers • Long-term sustainable growth preserves our model, the value of state-issued licences and their beneficiaries • A well-establishe
Slide 66: Key takeaways
Key takeaways Track record of innovation, leveraging scale and active For personal use only management to maximise results from game portfolio Focus on harm minimisation and preserving social licence reduces risk profile Actively managing our risks and opportunities to preserve and enhance value of
Slide 67: Keno – a complementary and differentiated offer
Keno – a For personal use only complementary and differentiated offer
Slide 68: Keno has delivered consistent and reliable growth over time
Keno has delivered consistent and reliable growth over time TLC - Keno Turnover ($bn) 4.0% CAGR 1.09 1.13 1.17 1.20 1.19 1.02 1.36 1.29 1.50 1.55 • Retail-centric product with particularly strong historical social presence in pubs and clubs, For personal use only COVID-19 especially in New South Wal
Slide 69: Keno is a social occasion-driven product
Keno is a social occasion-driven product • Keno is intentionally positioned as a lottery-style product For personal use only • ‘Fun is in the playing’ - easy to play - Kwikpiks, low-cost game with frequent wins • A social connector bringing people together • Thursday to Sunday are peak trading days
Slide 70: Large footprint within Australia's iconic pub and club network
Large footprint within Australia's iconic pub and club network Broad network of key stakeholders 3,354 retail points of presence in Australia1 Keno is partnered with 9 Northen Territory2 prominent industry Operated by associations Delaware North For personal use only Queensland Keno 1,064 licensed v
Slide 71: Diverse network of stakeholders supporting sustainable and responsible delivery of Keno
Diverse network of stakeholders supporting sustainable and responsible delivery of Keno For personal use only "Keno is really important in clubs because it provides yet another entertainment opportunity. It brings people together to enjoy the game and it also provides another ancillary revenue strea
Slide 72: Key takeaways
Key takeaways Established product centered around licensed venues For personal use only and social occasions Large network across the pub and club sector Provides earnings diversification with different purchase motivation and distribution Actively managing responsible play risk to help support our
Slide 73: Foundations for growth and financial discipline
Foundations for For personal use only growth and financial discipline
Slide 74: Adam Newman – Chief Financial Officer
Adam Newman – Chief Financial Officer 2022 Commenced at The Lottery Corporation post demerger For personal use only Joined Tabcorp as Chief Financial Foundation Officer in 2019, playing a key role in the role at TLC demerger and creation of The Lottery Corporation Previously CFO of AusNet Services,
Slide 75: Disciplined implementation of capital allocation framework
® Disciplined implementation of capital allocation framework A disciplined approach to Driving Operating Game Portfolio capital allocation Operating Efficiency Capital Productivity Cash Flow Management • Commitment to a strong investment-grade credit rating For personal use only (Current: BBB+) Robu
Slide 76: Exclusive and/or long-term licences deliver attractive returns
Exclusive and/or long-term licences deliver attractive returns for governments, communities and shareholders Composition (with of a typical lottery margin upside from digital) ticket 1 Composition of a typical lottery ticket1 • Digital turnover has a higher gross margin (20.5%) Price paid by than re
Slide 77: Highly flexible cost base with strong cash conversion
Highly flexible cost base with majority of expenses linked to turnover and strong cash conversion FTE (30 September 2024) Technology & Communication 300 Customer & Marketing (incl. Prize Payments) 150 Venues 125 Operational Contact Centre 100 Commercial (incl. Game Management & Government Relations)
Slide 78: Ongoing optimisation to drive efficiency and provide platform for growth
Ongoing optimisation to drive efficiency and provide platform for growth A focused program has been established to deliver bankable efficiencies, an optimised and sustainable cost base, and capability to deliver continued efficiencies For personal use only To date Reduced property footprint by 40%
Slide 79: Key takeaways
Key takeaways Strong cash generation and disciplined approach to For personal use only capital management helping drive returns for shareholders Leverage provides flexibility for potential licence opportunities in short-term Margin upside from increased digital penetration Cost base is primarily var
Slide 80: Q & A
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Slide 81: Recap
For personal use only Recap 80
Slide 82: Key takeaways
Key takeaways Strong brands and licences, and customer-focused For personal use only strategy drives consistent growth Proven track record of delivery over time Highly energised Board and leadership Actively preserving and enhancing value of licences Low-spend, mass participation model with strong f
Slide 83: Disclaimer
Disclaimer ® This presentation (Presentation) contains summary information about the current activities of The Lottery Corporation Limited (The Lottery Corporation) and its subsidiaries. It should be read in conjunction with The Lottery Corporation’s other periodic and continuous disclosure announce
Slide 84: For personal use only
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