The New Zealand Lottery Commission (Lotto NZ) was able to surpass expectations and post a profit during its 2019-20 fiscal year, with a strong digital performance offsetting the impact of the COVID-19 pandemic on retail sales, according to iGB.

Sales for the year to June 30 were up 17% to $1.38bn, beating the lottery’s target by 12.2%. Lotto, Powerball and Strike sales were up 23% on 2018-19 to $1.17bn, which Lotto NZ put down to higher sales activity driven by two high Powerball jackpots during the year.

Instant Kiwi sales decreased by 4.4% to $166.2m due to reduced retail trading as a result of COVID-19. Keno, Bullseye and Play3 sales were also down 3% to $49.3m due to the pandemic.

The lottery said: “We have continued to drive demand for our games in order to deliver positive results in the short term. This is reflected in the strong financial sales performance experienced during the year, despite the impact of the Covid-19 Alert Level 4 lockdown on retail sales.”

Retail remained Lotto NZ’s main source of income in 2019-20, with total sales reaching $953.8m, up 0.6% on last year. However, this was below its target of $984.4m as a result of COVID-19 restrictions closing retail outlets.

Digital sales amounted to $430.6m, an increase of 89.2% on last year. This was way ahead of the lottery’s $270.2m target, as platforms saw more traffic as a result of retail closures.

Lotto NZ added: “While many players returned to playing in retail after the lockdown, we saw a large proportion continue to engage with us through both channels reflecting the importance of an omni-channel approach.

“This has delivered performance that is significantly ahead of both MyLotto sales and player targets for the year.”

Revenue for the year, after goods and services tax, was up 12.9% on the previous year, amounting to NZ$1.31bn (£672.1m/€742.3m/US$871.3m), ahead of its $1.19bn projection for the period.

Cost of sales was up by 15.6% year-on-year to $907.5m as well, giving the lottery a $404.1m gross profit, up 20.1% on last year.

Looking at outgoings for the year, total expenses edged up 1.7% to $70.6m, though spending was reduced in some areas, including marketing and retail support, where costs were cut by 16.6% to $20.6m.

Gaming system expenses, excluding depreciation, fell from $7.5m to $7.2m, but intangible asset amortisation was 3.3% higher at $3.1m. Property, plant and equipment depreciation charges grew 29.6% to $7m, and employee remuneration increased 20.6% to $19.9m.

Profit before distributions to the NZ Lottery Grants Board amounted to $333.5m, up 27.7% on the previous year, with Lotto NZ paying $313.4m to the Board in 2019-19.

This resulted in a $20.1m profit for the year for the lottery, having not been able to post a profit in the previous 12-month period.

Confirmation of growth in 2019-20 comes after Lotto NZ in July warned of a possible decline in sales in 2020-21, taking a “conservative” approach to setting out its expectations for the year due to the unknown long-term impact of COVID-19.

Sales are expected to amount to NZ$1.23bn in the coming year, 6.1% lower than 2019-29, while the amount to be paid to the Lottery Grants Board is set to be around 10.7% lower at $280m.