The Lottery Corporation enjoys ‘record’ revenue following ‘successful’ demerger

The Lottery Corporation CEO Sue van der Merwe has praised the company’s ‘defensive qualities’ after successfully executing its demerger from Tabcorp and going on to post record revenue figures
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The Lottery Corporation CEO Sue van der Merwe has praised the company’s ‘defensive qualities’ after successfully executing its demerger from Tabcorp and going on to post record revenue figures. 

The Lottery Corporation improves profitability in FY22

Publishing its FY22 report, The Lotteries Corporation recorded revenue of AUD $3.5bn, up 9.4% from the division’s previous year comparatives of $3.3bn when it was the lottery arm of Tabcorp. 

The Lottery Corporation completed its demerger with the Australian gaming and sports betting firm in June, leaving it with one month of operations in its new identity. 

A 10.7% increase in variable contribution up to $950m helped to offset rising operating costs of $256m, up 7.6% YoY, to elevate The Lottery Corporation’s revenue to $694m, up 11.9% YoY.

Following depreciation and amortisation, EBIT stood at $603m, up 13.8% YoY. 

Van der Merwe commented: “The successful completion of The Lottery Corporation’s demerger from Tabcorp enabled one of the world’s best-performing lottery businesses to operate on a standalone basis. 

“The Lottery Corporation has infrastructure-like and defensive asset qualities, low capital intensity, strong cash flows, significant and diverse retail distribution and upside potential from digital growth. 

“We operate a portfolio of popular lottery and Keno games, underpinned by long-dated licences, offered to customers through an omnichannel approach.

Lottery division growth offsets Keno stagnation

Explaining its strong year of operations, the company details that its lottery business unit’s comparable revenue stood at $3.3bn, up 10.3% on pcp, driven primarily by successful management of the jackpot games in the portfolio as well as the continuing shift to digital.

Moreover, the Powerball product experienced favourable market conditions, with 13 jackpot runs breaking the $50m mark, against seven in the previous period. 

The lottery’s active registered customers grew 8.7% to 4.1 million, reflecting growth in customers who purchased tickets in both digital and retail channels. 

Meanwhile, the Keno division revenue remained relatively stagnant at $252m, down 1.2% on the previous period. This was despite spending 16 weeks closed during F22 in New South Wales due to Covid-related closures. 

“The Lottery Corporation’s games have been adding excitement to the lives of Australians for decades,” van der Merwe added. 

“In FY22 we sold over 660 million lottery entries and delivered initiatives to enhance the customer experience. These included the Oz Lotto game change implemented in May that will deliver bigger prizes and more winners, and enhancements to our responsible play programs. 

“The Lottery Corporation is in the business of making positive impacts. In FY22, The Lottery Corporation’s operations generated $1.7bn in lottery and Keno taxes for governments and more than $500m in commissions for newsagents, licensed venues and other retail partners.” 

Following the demerger, the company stated that it is in a ‘strong and flexible financial position’, as it holds a gearing ratio of 3.1x net debt/EBITDA. 

Further investment to generate growth

Shareholders have been notified of their final FY22 dividend related to their shareholding of Tabcorp from the five months of earnings prior to the demerger. 

Finally, The Lottery Corporation expects to pay out its first dividend around March 2023 which is likely to be an interim dividend for FY23. 

Looking ahead, the firm explained that it is aiming to make further investments in products and channels to create further value. 

Van der Merwe concluded her update to investors: “We will continue to innovate the portfolio, with our next game change to focus on Monday & Wednesday Lotto. We will also continue to promote the benefits of our omnichannel offer so that we can grow our base of active customers and continue to give customers the choice of a diverse retail offer, digital experience or both. 

“With Keno, we will seek approval to leverage the digital element to the new Victorian licence and offer enhanced features and offers on the app for retail customers playing digitally in venues. 

“At the same time, we’ll continue to do what’s been at the heart of Australia’s official lottery games for 140 years – making a better future, and delivering winning moments to our people, our customers and our communities.”