Dreams live here. - SA Lotteries

Annual Report 2008-09Dreams live here.

a dreamrunFrom record game sales of $393.7 million,SA Lotteries returned the following to theSouth Australian community:Prize moneyOur players shared $271 million in prizemoney.HOSPITALSSouth Australia’s Hospitals Fund received$95 million for the provision, maintenance,development and improvement of publichospitals, taking the total since 1967 toalmost $2 billion.AGENT COMMISSIONOur network of agents earned$29.3 million in commission from the saleof SA Lotteries’ games.SUPPLIERSLocal suppliers received $9.8 million inexchange for goods and services.RECREATION AND SPORTSouth Australia’s Recreation and SportFund received $256 000 for the supportand development of South Australianrecreational and sporting facilities andservices, taking the total since 1987 to$8.5 million.SA LOTTERIES ANNUAL REPORT 2008-09

CONTENTSScorecard 410-Year Financial Summary 6Presiding Member and Chief Executive Report 7Corporate Governance 9Dreams come true 15Player services and security 23Dream partners 31Sharing the dream 37An environmental dream 43Our dream team 47Our future 56Annual Financial Statements 57Glossary 89DREAMS LIVE HERE3

SCORECARDSOUTH AUSTRALIA’S STRATEGIC PLAN OBJECTIVE: GROWING PROSPERITYOUR STRATEGY: GROW LOTTERIES REVENUE BY ENHANCING EXISTING GAMES AND INTRODUCING NEW GAMESAND INITIATIVES TO MEET PLAYERS’ EXPECTATIONS.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Gross sales $356.0 million $393.7 millionSales per capita $293.12 $315.44Tickets sold 53.7 million 55.6 millionEBITDA per Full-Time Equivalent (FTE) $339 000 $409 000OUR STRATEGY: ENSURE A SOUND, RESPONSIVE AND ADAPTIVE TECHNOLOGY INFRASTRUCTURE.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Online lotteries system down time: central system 0.05% 0.02%Online lotteries system down time: communications network 0.03% 0.02%Point of Sale terminal reliability (MTBF) 115 000 158 554our STRATEGY: MINIMISE OPERATING COSTS AS A PERCENTAGE OF SALES.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Total operating expenses as percentage of gross sales 7.3% 6.6%Operating expenses per FTE $315 000 $319 000Average Operating FTEs employed during the year 82.65 81.22OUR STRATEGY: STRIVE FOR A HIGHER PERFORMANCE CULTURE THROUGH A BROADER BASE OF STRONG LEADERSHIP,SYSTEM AND PROCESS INNOVATION AND EMPLOYEE DEVELOPMENT.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Percentage of employees with vocational or higher education qualifications 59% 63%Training and development costs as a percentage of base salary costs 3.02% 2.06%SOUTH AUSTRALIA’S STRATEGIC PLAN OBJECTIVE: IMPROVING WELLBEINGOUR STRATegy: MAXIMISE THE COMMUNITY BENEFITS AND PROMOTE THE BENEFICIARIES OF SA LOTTERIES’ OPERATIONS.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Return to Government (Hospitals Fund and Recreation and Sport Fund) $81.2 million $95.1 millionOUR STRATEGY: BUILD COMMUNITY AND STAKEHOLDER TRUST AND SUPPORT.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Non-compliance with the Codes of Practice 5.0% 5.1%Problem gambling reports 12 5Percentage of SA suppliers 74% 71%$ value of SA suppliers as a percentage of total suppliers 55% 59%Customer satisfaction 98% 95%Awareness of SA Lotteries’ beneficiaries 45% 42%SA LOTTERIES ANNUAL REPORT 2008-09

SOUTH AUSTRALIA’S STRATEGIC PLAN OBJECTIVE: ATTAINING SUSTAINABILITYOUR STRATEGY: ADOPT SOUND ENVIRONMENTAL PRACTICES IN ALL OPERATIONS.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Energy consumption 800 906 KWhrs 734 330 KWhrsGreenhouse gas emissions 655 068 Kg CO 2 598 602 Kg CO 2SOUTH AUSTRALIA’S STRATEGIC PLAN OBJECTIVE: FOSTERING CREATIVITY AND INNOVATIONOUR STRATEGY: ENSURE GROWTH AND SUSTAINABLE REVENUE OPPORTUNITIES ARE PURSUED.PERFORMANCE MEASURE TARGET 2008 - 2009 ACTUAL 2008 - 2009Number of visits to corporate website 2 531 344 2 387 368Sales per capita – based on South Australian adult (18+) population (ABS Cat 3101.0 and ABS Cat 3201.0).EBITDA – Earnings Before Interest, Tax, Depreciation and Amortisation.FTE – Average Operating Full-Time Equivalent employee numbers during the year.MTBF – Mean number of Transactions Between Failures – a measure of reliability of agent terminals.Return to Government – Actual 2008-09 includes distribution of unclaimed prizes ($2.2 million). The target does not include the distribution of unclaimed prizes.Total Operating Expenses include interest and depreciation expenses and exclude loss on disposal of non-current assets.DREAMS LIVE HERE5

10 YEARFINANCIAL SUMMARYYear ended 30 June 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000GROSS SALESLotto - Saturday 131 280 128 336 135 042 132 388 135 176 130 825 129 603 123 632 123 023 120 304Lotto - Monday and Wednesday * 36 718 31 782 32 607 35 936 40 670 41 706 28 931 23 380 21 468 21 292Oz Lotto 58 789 34 709 22 234 16 495 14 641 15 467 16 575 17 127 17 133 16 662Powerball 35 414 49 972 42 034 46 519 42 248 44 760 51 379 44 526 46 438 34 288Keno 90 753 79 506 78 523 76 581 73 821 70 425 67 155 64 838 61 689 68 620Instant Scratchies 38 886 39 929 37 139 38 383 40 343 39 812 39 864 37 920 37 099 30 866Super 66 1 171 1 108 1 149 1 228 1 333 1 479 1 662 1 828 2 027 2 379The Pools 694 581 518 558 586 622 742 605 716 607Lucky SA Lottery - 660 - - - - - - - -TOTAL GROSS SALES 393 705 366 583 349 246 348 088 348 818 345 096 335 911 313 856 309 593 295 018COST OF SALESAgents’ commission 29 310 26 938 25 779 25 755 25 795 25 443 24 694 23 100 22 707 21 853Prizes 236 931 221 283 211 236 209 439 207 172 207 886 202 336 187 217 180 604 174 519% of gross sales 60.2% 60.4% 60.5% 60.2% 59.4% 60.2% 60.2% 59.7% 58.3% 59.2%Gambling tax on NGR # 64 277 59 573 56 584 56 846 58 074 56 256 54 766 51 922 51 480 -% of gross sales 16.3% 16.3% 16.2% 16.3% 16.6% 16.3% 16.3% 16.5% 16.6% N.A.GST on NGR # 14 252 13 209 12 546 12 604 12 877 12 474 12 143 11 513 11 415 -% of gross sales 3.6% 3.6% 3.6% 3.6% 3.7% 3.6% 3.6% 3.7% 3.7% N.A.TOTAL COST OF SALES 344 770 321 003 306 145 304 644 303 918 302 059 293 939 273 752 266 206 196 372GROSS MARGIN 48 935 45 580 43 101 43 444 44 900 43 037 41 972 40 104 43 387 98 646Other Revenue 7 610 8 145 7 487 7 039 7 294 6 944 6 878 6 204 7 171 6 520TOTAL INCOME 56 545 53 725 50 588 50 483 52 194 49 981 48 850 46 308 50 558 105 166Operating expenses 25 921 26 855 23 602 23 249 25 978 24 926 24 415 22 756 20 856 20 297% of gross sales 6.6% 7.3% 6.8% 6.7% 7.4% 7.2% 7.3% 7.3% 6.7% 6.9%PROFIT BEFORE INCOME TAXEQUIVALENT 30 624 26 870 26 986 27 234 26 216 25 055 24 435 23 552 29 702 84 869% of gross sales 7.8% 7.3% 7.7% 7.8% 7.5% 7.3% 7.3% 7.5% 9.6% 28.8%RETURN TO GOVERNMENTGambling tax (total) 64 344 59 619 56 616 56 888 58 412 56 256 54 766 51 922 51 480 -Income tax equivalent ^ 9 187 8 061 8 096 8 170 7 799 7 516 7 542 7 066 10 099 31 336Dividend ## 19 446 21 703 19 476 18 956 22 911 17 869 17 673 15 369 15 689 53 128Unclaimed prizes 2 152 2 271 1 905 1 291 1 839 1 639 1 551 1 656 1 515 1 53595 129 91 654 86 093 85 305 90 961 83 280 81 532 76 013 78 783 85 999% of gross sales 24.2% 25.0% 24.7% 24.5% 26.1% 24.1% 24.3% 24.2% 25.4% 29.2%GST on NGR ** 14 252 13 209 12 546 12 604 12 877 12 474 12 143 11 513 11 415 -TOTAL RETURN TO GOVERNMENT 109 381 104 863 98 639 97 909 103 838 95 754 93 675 87 526 90 198 85 999% of gross sales 27.8% 28.6% 28.2% 28.1% 29.8% 27.7% 27.9% 27.9% 29.1% 29.2%* Lotto - Monday and Wednesday replaced SA Lotto from 27 April 2006. SA Lotto twice weekly draws on Monday and Wednesday commenced November 2003.# State Gambling Tax and GST introduced on 1 July 2000 and are levied on Net Gambling Revenue (NGR = Gross sales less monetary prizes).State Gambling Tax at the rate of 41% of NGR paid to the Hospitals Fund/Recreation and Sport Fund.GST at the rate of 9.09% of NGR paid to the Australian Taxation Office, which is subsequently returned to the State Government.^ Includes Sales Tax Equivalent amounts for the period to 2000.## Includes Special Dividend of $6 527 000 in 2005 resulting from proceeds on sale of SA Lotteries’ former Head Office in Rundle Mall.** GST on NGR is paid to the Commonwealth Government, which is subsequently returned to the State Government.SA LOTTERIES ANNUAL REPORT 2008-09

PRESIDING MEMBErAND Chief Executive REPORTThe Honourable Gail Gago, MLCMinister for GovernmentEnterprisesParliament House,Adelaide SA 5000We are pleased to submit the LotteriesCommission of South Australia’s annualreport for the year ended 30 June 2009in accordance with section 18B of theState Lotteries Act 1966, as amended.SA Lotteries’ financial performance in2008-09 has again generated benefits forthe community of South Australia.Record sales of $393.7 million wereachieved. These sales earned commission of$29.3 million for the Statewide distributionnetwork of agents.Prizes of $271 million were won by playersof our games. Of particular note is the prizeof $53.3 million that was won by a luckySouth Australian who shared the Division Oneprize in the Oz Lotto draw on 30 June 2009.Two of the largest jackpots in Australianlottery industry history occurred during theyear creating an unprecedented level ofplayer interest. These jackpots underscorethe value of our prize-pooling arrangementsvia national ‘Blocs’ for the majority of ourgames. Without those arrangements,SA Lotteries would not be in a position tooffer to South Australians the opportunityto participate in such high jackpots.We appreciate the co-operative nature ofour partners within the Australian Blocs.The return to the State’s Hospitals Fund andthe Recreation and Sport Fund was$95.1 million. The Hospitals Fund receivedgambling tax, an income tax equivalent,dividend and unclaimed prizes of$94.9 million for the provision, maintenanceand development of public hospitals and theRecreation and Sport Fund received$256 000 for the support and developmentof local recreational and sporting facilitiesand services.SA Lotteries and the agent networkremain vigilant in the responsible promotionand conduct of games; in particular, acommitment to the State LotteriesResponsible Gambling Code of Practice andthe State Lotteries Advertising Code ofPractice. During the year, the IndependentGambling Authority introduced amendmentsto the Codes of Practice. The significantamendment was the inclusion of rotatingexpanded warning messages on advertisingfor SA Lotteries’ games.An effective Statewide agency distributionnetwork is integral to SA Lotteries’ futureand it is important that the online lotteriessystem, including agency terminals, and thecommunications network between agenciesand the central computer system located inHead Office are state of the art. To this end,the key project over the past year andthe next year will be the implementation ofthe replacement system throughoutSouth Australia.On behalf of the Commission, weacknowledge the extraordinary effort by allour people to ensure a successful andseamless implementation of the new systeminto the agency network. This effort is inaddition to striving once again to haveanother successful year in 2009-10 whichwill benefit every member of the agencynetwork, our players and the community ofSouth Australia.Hans J OhffPresiding MemberJune RoacheChief Executive28 September 2009DREAMS LIVE HERE7

SA Lotteries’ Commission members and Chief Executive,from left: Wayne Jackson, Anne Lindsay, June Roache(Chief Executive), Hans Ohff (Presiding Member),Suzanne Mackenzie and Stephen Shirley.

CORPORATECORPORATEGOVERNANCEGOVERNANCE

CORPORATEGOVERNANCEoperating costs- percentage of sales08-0907-0806-0705-0604-056.6%6.9%6.8%6.7%7.4%A robust corporate governance structurehas earned SA Lotteries a reputation ofintegrity and trust among its stakeholders.SA Lotteries’ approach to corporategovernance is based on a set of values andbehaviours that underpin its operations.Role of the shareholderSA Lotteries is a statutory authorityestablished under the State Lotteries Act1966. SA Lotteries’ shareholder is theGovernment of South Australia.For the period 1 July to 22 July 2008, theHonourable Michael Wright MP, wasMinister for Government Enterprises,responsible for SA Lotteries. Effective from23 July 2008, the Honourable Gail Gago,MLC was appointed the Minister forGovernment Enterprises and assumedresponsibility for SA Lotteries.SA Lotteries is responsible for ensuringthat the Government, via the Minister, isinformed of all major developments affectingSA Lotteries’ state of affairs.The BoardThe Lotteries Commission ofSouth Australia, (referred to as the Board),has a formal charter that provides aframework for the effective operation ofSA Lotteries. The Board generally meetsmonthly to deliver strategic guidance andmonitor the performance of the organisation.The Chief Executive is accountable to theBoard and is responsible for the day-to-daymanagement of SA Lotteries’ business inaccordance with the directions set by theBoard. The Board clearly definesmanagement accountabilities throughapproved management operating authorities.The Board is appointed by the Governor ofSouth Australia and consists of not less thanthree nor more than five members, one ofwhom shall be nominated by the Governoras the Presiding Member.The Board membership as at 30 June 2009comprised:Name: H J Ohff, PhD, BA (Hons),B Com, FIEAust, CP EngPosition: Presiding MemberExpertise: EngineeringName: S J Mackenzie, B Comm(Accounting), LLB (Hons)Position: MemberExpertise: LawName: S K Shirley, BEc, FCA, CPAPosition: MemberExpertise: AccountingName: W R Jackson, BEc, FASAPosition: MemberExpertise: Business ManagementConsultantName: A E Lindsay, BA (Hons),LLB (Hons)Position: MemberExpertise: LawSA LOTTERIES ANNUAL REPORT 2008-09

A member is appointed for a term of officenot exceeding five years and on theexpiration of the term a member may beeligible for reappointment. The terms of twomembers, Suzanne Mackenzie and WayneJackson, expired on 19 April 2009 and24 May 2009 respectively. Both memberswere reappointed for a term of three years.Remuneration for a member is $24 765 perannum. The Presiding Member receives$37 148 per annum. Further details ofmembers’ remuneration payments are setout in Note 10 to the Annual FinancialStatements.Audit CommitteeThe Audit Committee assists the Board tofulfil its responsibilities in relation to theidentification of areas of significant businessrisk. The Audit Committee has a formalcharter outlining its formal responsibilities:• reviewing the General Purpose FinancialReport prior to its approval by theCommission;• liaising with SA Lotteries’ external auditor,the Auditor-General, on all mattersconcerning the outcome of audits;• reviewing the adequacy of theaccounting, internal auditing, reportingand other financial managementsystems and practices; and• performing the role of an executiveremuneration committee of the Board.attendance at meetings for 2008 - 09Commission Commission audit committee IT COMMITTEEMemberS meetings (11 held) Meetings (5 Held) MEETINGS (11 HELD)Hans Ohff 11 # 11Suzanne Mackenzie 11 # #Stephen Shirley 11 5 #Wayne Jackson 11 5 #Anne Lindsay 11 5 ## Not a memberThe internal auditors, KPMG, and externalauditor, the Auditor-General, may be invitedto Audit Committee meetings at thediscretion of the Committee.The Audit Committee comprises threeCommission members. During the year,membership comprised:• Stephen Shirley - Chair;• Wayne Jackson - Member; and• Anne Lindsay - Member.Audit Committee members receive a fee of$3714 per annum and the Chair receives afee of $5572 per annum.Information TechnologyCommitteeAn Information Technology (IT) Committeeassists the Board to oversee the use ofinformation technology within SA Lotteries.The IT Committee has a formal charter to:• monitor the development andimplementation of major technologyprojects;• evaluate risk management strategiesdesigned to minimise interruption toonline selling activities; and• provide advice to the Commission onall matters associated with majortechnology projects.The IT Committee comprises one Boardmember and members of the executivemanagement team. A representative fromthe Auditor-General’s Department is invitedto attend IT Committee Meetings.The Committee’s main focus is thereplacement of the Online Lotteries System,operational software and communicationsinfrastructure.DREAMS LIVE HERE11

BusinessManagementCorporate policy frameworkSA Lotteries maintains a corporate policyframework that is annually reviewed bythe Audit Committee and approved by theBoard. These policies are supported bydivisional policies, guidelines and proceduresthat are reviewed by management on anongoing basis.Internal cost controlframeworkThe Board has instigated an internal costcontrol framework to assist in the preclusionof errors and irregularities across the business,best described under the following headings:• Financial reportingA comprehensive budgeting system withan annual budget is approved by theBoard prior to submission to Government.Monthly actual results are reportedagainst budget.• Quality and integrity of personnelEmployees are bound by the Code ofConduct for South Australian PublicSector Employees and SA Lotteries’Code of Ethics.• Operating division controlsFinancial controls and procedures,including information systems controls,are in place. A Commission questionnairedetails compliance with these controlsand procedures to ensure soundprinciples of corporate governance andaccountability.• Functional specialty reportingPerformance measures are identified andregularly reported in a corporate scorecard.• Capital investment appraisalSA Lotteries has clearly definedguidelines for capital expenditure.These include levels of authority, annualbudgets, detailed cost benefit analysisand post-implementation reviews ofmajor expenditure.Risk ManagementSA Lotteries undertakes risk assessment onan ongoing basis and includes any newlyidentified operating risks in its RiskManagement Program. During 2008-09,management completed an annual review ofSA Lotteries’ Risk Register with an improvedrisk assessment approach to identifyingfuture mitigation strategies.Crisis planningSA Lotteries ensures that business activitiesare protected during a crisis and employeesare equipped to manage a crisis.Ethics and Culture CommitteeTo ensure that SA Lotteries’ values ofintegrity, accountability and respect areupheld, an Ethics and Culture Committeemeets regularly with the purpose of ensuringthat policy objectives are met, and thatissues of an ethical and cultural nature areraised and addressed by the Committee.Ethics is reinforced within the organisationon an ongoing basis through education,an annual ethics survey, and induction andperformance management processes.SA LOTTERIES ANNUAL REPORT 2008-09

FraudSA Lotteries has a Fraud Control Policy tominimise its exposure to fraudulent conduct byestablishing processes that identify potentialrisk areas and implement controls that reducethe risk of fraudulent action occurring.Suspected incidents of fraud are investigatedimmediately. There was one instance ofalleged fraud by a member of the public which,at 30 June 2009, was being prosecuted.Organisational structureCHIEF EXECUTIVE, JUNE ROACHETHE BOARDBOARD COMMITTEES• Audit Committee• Information Technology CommitteeFreedom of InformationUnder the Freedom of Information Act 1991,SA Lotteries is obliged to ensureappropriate and timely action is taken whenaccess to information is requested.A Freedom of Information Statement ispublished on SA Lotteries’ website. Therewere three requests for information duringthe year, one of which was withdrawn.Quality managementSA Lotteries is committed to theimplementation of quality practices andsystems in all aspects of its operations.A Quality Management System documentsthe processes and controls in place toachieve the objectives described in theorganisation’s Quality Policy Statement, andto maintain continuing certification to theQuality Standard AS/NZS ISO 9001.Regular internal reviews maintain the focuson continual improvement to practices andsystems, and the Quality Management Systemis audited biannually by external sources.Corporate security managementSA Lotteries has developed a CorporateSecurity Policy that identifies all aspects ofcorporate security that impact on day-to-daybusiness operations. The policy forms the basisfor the implementation of strategies to protectassets, operations, information and personnelagainst all possible security breaches.GENERALMANAGER- FINANCIAL &CORPORATESERVICES,IAN CLAYFIELDGENERALMANAGER- MARKETING& SALES,CALLUMMULVIHILLsecurity standardsSA Lotteries complies with the requirementsof the Information Security StandardAS/NZS 7799, verified via independentbiannual audits.During the year, SA Lotteries commencedprojects that will lead to compliance andformal accreditation under the followingsecurity standards:• Information Security StandardISO/IEC AS/NZS 27001;• World Lottery Association SecurityControl Standard; and• Government Protection SecurityManagement Framework.GENERALMANAGER- INFORMATION &COMMUNICATIONTECHNOLOGY,JOHN FAVRETTOGENERALMANAGER- LEGAL & RISKMANAGEMENT /COMPANYSECRETARY,DAVID HARDYIntellectual assets managementSA Lotteries regards the protection ofits intellectual property as important to itsongoing success. A register of all protectedtrademarks and names is maintained andmonitored on an ongoing basis. SA Lotteriesis also progressing the finalisation ofTrade Mark Management Agreements andTrade Mark Licence Agreements with itsinterstate Bloc counterparts.DREAMS LIVE HERE13

Photographer Mark Brake. Courtesy of The Advertiser.

DREAMSDREAMSCOME TRUE TRUECOME

WINNINGGAMESSALES - $ MILLIONS08-0907-08$366.6$393.7Outstanding game performanceSA Lotteries’ portfolio of eight lottery gamescontinues to deliver players a choice of prizepoint and purchase price options.06-0705-0604-05$349.2$348.1$348.8Saturday Lotto continues to attract interestamong players, making up 33 per cent oftotal sales. Regular Megadraws continue tobe popular with players.$393.7 million in grosssales, representing a7.4 per cent increase“on the previous year.Oz Lotto’s year of record jackpotting, inparticular the $106.5 million Division One prizepool on 30 June 2009, and unprecedentedlevel of player participation, resulted in a69.4 per cent increase in sales on theprevious year. Regular jackpot activity alsoprompted a 19 per cent increase in The Poolssales. In contrast, Powerball was unableto deliver significant jackpots throughout2008-09, resulting in a 29.1 per centdecrease in sales on the previous year.Another stand-out performer for the yearwas Monday and Wednesday Lotto whichattracted a 15 per cent increase in sales on2007-08, driven by increased prizes as aresult of the game’s expansion to includeTattersall’s Sweeps (Victoria, Tasmania,Northern Territory and Australian CapitalTerritory).With the successful expansion of SA TABoutlets, Keno produced good growth with a14 per cent increase on the previous year.Whilst Instant Scratchies continues to bea steady performer, the highlight was arecord sell through of the Christmas themedticket range.SA LOTTERIES ANNUAL REPORT 2008-09

LOTTO – SATURDAYPlayed every Saturday, Lotto is a nationalgame which offers players the chance toshare in a guaranteed minimum Division Oneprize pool of $4 million and seven Megadrawprize pools each year.Game Structure:Six numbered balls and two supplementarynumbered balls are randomly drawn from abarrel of 45.Sales Performance:$131.3 million ($2.9 million or 2.3 per centincrease from 2007-08).% of Sales: 33.3%.Highlights:The end-of-year and ‘Valentine’s Day’Megadraw campaigns.Prize Money Won: $78.5 million.Division One Winners:32 local players shared $29.5 million inprize money.LOTTO – MONDAY AND WEDNESDAYLotto – Monday and Wednesday offersplayers across Australia (excludingQueensland) the chance to share in aguaranteed Division One prize pool of$1 million every Monday and Wednesdayand periodic $5 million Superdraws.Game Structure:Six numbered balls and two supplementarynumbered balls are randomly drawn from abarrel of 45.Sales Performance:$36.7 million ($4.9 million or 15.5 per centincrease on 2007-08).% of Sales: 9.3%.Highlights:The successful game expansion includedplayers in Victoria, Tasmania, NorthernTerritory and Australian Capital Territoryeffective 13 October 2008. This enabled theguaranteed minimum $1 million Division Oneprize on Monday and Wednesday and theability to offer three successful Superdraws,with Division One prizes of $5 million.Prize Money Won: $19.7 million.OZ LOTTOPlayed every Tuesday, Oz Lotto is a nationalgame which offers players the chance towin bigger prizes more often.Game Structure:Seven numbered balls and twosupplementary numbered balls are randomlydrawn from a barrel of 45.Sales Performance:$58.8 million ($24.1 million or 69.4 per centincrease on 2007-08).% of Sales: 14.9 % .Highlights:A $53.3 million prize payout to aSouth Australian player from an Australianrecord $106.5 million Division One jackpot.Prize Money Won: $71.5 million.Division One Winners:One local player won a South Australianrecord $53.3 million in prize money.Division One Winners:11 local players shared $10.9 million inprize money.DREAMS LIVE HERE17

It HappensPOWERBALL – ThursdayPlayed every Thursday, Powerball is anational game which offers players thechance to win multi-million dollar prizes.Game Structure:Five numbered balls are randomly drawnfrom a barrel of 45, and one numbered ball(the Powerball) is drawn from a secondbarrel of 45.Sales Performance:$35.4 million ($14.6 million or 29.1 per centdecrease on 2007-08).% of Sales: 9.0%.Highlights:The launch of a new branding campaign,featuring ‘Thor’ the god of thunder.Prize Money Won: $11.0 million.KENOPlayed every 3.5 minutes, Keno offersplayers the chance to win a guaranteedSpot 10 prize of $1 million.Game Structure:20 numbers are randomly generated from apossible 80 every 3.5 minutes. Players canchoose to select one number (Spot 1) up to10 numbers (Spot 10).Sales Performance:$90.8 million ($11.2 million or 14.1 per centincrease on 2008-09).% of Sales: 23.1%.Highlights:Successful ‘Pick a Prize’ promotion anddistribution expansion.Prize Money Won: $65.9 million.Spot 8, 9 and 10 Top Prize Winners:10 local players shared $2.4 million inprize money.INSTANT SCRATCHIESInstant Scratchies providesSouth Australians with the opportunity toscratch an instant prize.Game Structure:Each ticket series has a unique prize matrixwith top prizes ranging from $10 000 to$300 000.Sales Performance:$38.9 million ($1.0 million or 2.6 per centdecrease on 2007-08).% of Sales: 9.9%.Highlights:Record sales of the annual Christmasthemed ticket range.Prize Money Won: $22.8 million.Top Prize Winners:19 local players shared $2.2 million inprize money.SA LOTTERIES ANNUAL REPORT 2008-09

prizes won 2008 - 09Simply SuperSUPER 66Played every Saturday, Super 66is a national game drawn immediatelybefore Lotto (excluding NSW).Game Structure:A six-digit number combination is chosen inthe range of 000000 to 999999. To win,players match their selected numbers withthe numbers in the order drawn.Sales Performance:$1.2 million ($0.06 million or 5.7 per centincrease on 2007-08).% of Sales: 0.3%.Prize Money Won: $0.6 million.Division One Winners:Three local players shared $79 895 in prizemoney.THE POOLSPlayed every weekend, The Pools is anational game based on the results of soccermatches played in either the NorthernHemisphere or Southern Hemisphere.Game Structure:Six numbers and one supplementarynumber are determined from 38, based onthe results of selected soccer matches.Sales Performance:$0.69 million ($0.11 million or 19.4 per centincrease on 2007-08).% of Sales: 0.2%.Highlights:Regular jackpot activity.Prize Money Won: $1.5 million.Division One Winners:Two local players shared $1.4 million inprize money.■ Lotto - SaturdayLotto - Monday & Wednesday $19.7M■■Oz Lotto$71.5M■ Powerball■ KenoInstant Scratchies$22.8M■■■$78.5M$11.0M$65.9MSuper 66 $ 0.6MThe Pools $ 1.5MDREAMS LIVE HERE19

Recordprize money wonPRIZES WON - $ MILLIONS08-0907-0806-0705-0604-05$209$209$207$226$271$271 million in prizes toplayers, or an averageof more than $5 million“in prizes won each weekThe year reached a record-breaking climaxwith the drawing of the largest Australianlottery jackpot. The $106.5 million DivisionOne prize pool in Oz Lotto on 30 June 2009attracted an unprecedented level of interestacross the nation. The history-making drawresulted in a $53.3 million prize win for aSouth Australian man and a couple fromQueensland. This rare jackpot event createda sense of excitement and energy acrossSouth Australia and is likely to be regardedas one of the most significant events inAustralian lottery history.Throughout the year, South Australians won$271 million in prize money, including 78local players who shared $99.7 million inDivision One prize money.Adelaide man winsSouth Australia’s largestlottery prizeOn 30 June 2009, a man in his 40s fromAdelaide’s western suburbs wonSouth Australia’s largest lottery prize of$53.3 million. The man’s good fortunemarked the single largest lottery win inSouth Australian history.SA Lotteries Public Relations Manager was pleasedto contact the $53.3 million winner. (PhotographerNaomi Jellicoe. Courtesy of The Advertiser.)Having registered his winning entry on hisEasiplay Club membership card,SA Lotteries was able to contact him afterthe draw with the multi-million dollar news.“I just watched the draw, matched threenumbers and the other four numbers just fellinto place,” he told SA Lotteries.“I couldn’t move, I couldn’t react, I couldn’t doanything but sit there and stare at my ticket.“So how much have I won? $2 million?$3 million?”SA LOTTERIES ANNUAL REPORT 2008-09

$53.3 million recordlottery win for“South AustraliaThe man wasn’t quite prepared for the prizefigure that was then read out to him.“Okay, now I’m sitting down – you just blewmy mind,” he said.“I’m numb and quite frankly I have no ideahow I’m ever going to sleep again!“I never expected to win and certainly neverexpected to win more than $50 million.“I’ll be sharing my prize with family membersand donating to numerous charities.”Apart from sharing his good fortune withothers, the man had modest plans for hismulti-million dollar prize: “I really have noclue what to do with that kind of money– a financial adviser will definitely be my firststop,” he said. “I might take a holiday toMelbourne or Sydney to give me time tothink about what I could possibly do with$50 million.”A regular Oz Lotto player for more than20 years, the man purchased his winning14-game Easi-Pick ticket for $15.05 atLizzy’s Café at the Queen ElizabethHospital, Woodville.His $53.3 million prize is the secondlargest win in Australia – $5.5 million shortof the $58.7 million won by four Victorianworkmates in Powerball last year.The win more than doubles the previousSouth Australian prize record in June 2007,when a couple from Adelaide’s southernsuburbs collected $25 million.Overall, South Australian players won morethan 230 000 prizes totalling $57 418 642in the record Oz Lotto draw and generatedmore than $4 million in SA Lotteries’ profitsfor South Australian hospitals.Lizzy’s Café manager, Lou Sitarenos, and daughterElen Babaniotis celebrate selling the $53.3 millionDivision One Winning entry in the record Oz Lottodraw. (Photographer Calum Robertson. Courtesy ofThe Advertiser.)DREAMS LIVE HERE21

SERVICES ANDPLAYERPLAYERSERVICES ANDSECURITYSECURITY

PlayerservicesSA Lotteries has in place a comprehensiverange of player services and securitymeasures to provide our customers with aquality playing experience. SA Lotteriesboasts the most accessible agency networkin Australia, offering the highest number ofagencies per head of population inconvenient locations across the State.Whether it’s the convenient access toresults, the security of players’ prize moneyor our reliable gaming system, the serviceswe provide to customers are paramount inensuring SA Lotteries remains relevant tothe South Australian community.Customer ServiceCustomer feedback is extremely importantto any business, especially a business whichrelies on a third party interface to sell itsproducts. Research reveals that 95 per centof our customers were either satisfied orextremely satisfied with the service theyreceived from SA Lotteries and its agencies.The average time for responding to the1027 customer enquiries and complaintsreceived during 2008-09 was again 2.2 days.Easiplay Club membershipEasiplay Club is a free service that providesa means for players to safeguard any prizeswon on lost, damaged or stolen tickets.SA Lotteries’ Easiplay Club has 177 000members, representing 15 per cent of theSouth Australian adult population. In 2008-09more than two million prizes totalling$69.7 million were automatically paid tomembers via cheque or a direct bank deposit.Members also benefit from a ‘good newstelephone call’ should they win a DivisionOne prize. During 2008-09, 23 EasiplayClub members were notified of their goodfortune following the draw.22 per cent increase inwebsite visits on the“previous year.Websitewww.salotteries.com.au features aresults-focused homepage to cater for the92 per cent of visitors who access our sitefor game results. Visitors to SA Lotteries’website can also:• generate the most frequently drawnnumbers;• test whether gambling may be affectingtheir health;• submit their winning story to the onlineWinners Gallery; and• view a map of the location of theirnearest SA Lotteries agency.Approximately 200 000 people visitSA Lotteries’ website each month.In 2008-09, the website attracted 2.4 millionvisits, representing an increase of 22 per centfrom 2007-08. The site was announced asthe number one website in the Government– South Australia industry for 2008 for thesecond consecutive year in the HitwiseOnline Performance Awards program.The program recognises excellence in onlineperformance through public popularity andbases its results on the Internet usageof approximately three million AustralianInternet users.Ninety five per cent of SA Lotteries customersare satisfied with the service they received fromour agencies.SA LOTTERIES ANNUAL REPORT 2008-09

Gaming SystemDuring the year, the gaming systemcontinued to deliver a reliable service tocustomers through 99.98 per cent availabilityof our central online lotteries system atagencies across South Australia.Over 68 million lottery transactions wereprocessed with accuracy and integritythrough the online gaming system duringthe year, including 55.6 million ticket sales.selling system up-time08-0907-0806-0705-0604-0599.98%99.98%99.90%99.99%99.98%communications network up-time08-0907-0899.98%99.99%Replacement Online LotteriesSystemTo ensure business continuity and to provideincreased functionality, SA Lotteries isreplacing its online lotteries system, a majorfocus for the organisation during the year.The key business drivers in replacing theonline lotteries system are to reduceoperational risk inherent in ageing computerequipment through the replacement of thecentral hardware and point-of-sale terminalsand to replace the current communicationsenvironment. The new system will deliver anonline lotteries software solution that will:• interface with the new communicationsenvironment; and• provide increased functionality.The installation of new modular point-of-saleequipment is due to commence towardsthe end of October 2009, with the secondstage of implementation scheduled forlate 2010 to include the launch of additionalsystem functionality and the installationof player ticket-checking devices ateach agency.SA Lotteries employees verify software in the QualityAssurance department.06-0705-0604-0599.98%99.98%99.98%By replacing its current 10-year-oldequipment with new technology,SA Lotteries will deliver an enhancedin-store experience for players and makeprocessing lottery transactions easierfor agents.DREAMS LIVE HERE25

delivering a secure prizePAYMENT processSA Lotteries is committed to delivering asecure prize payment process for itscustomers by employing an extensive rangeof prize payment measures to ensure thatour core purpose of operating lotterygames and paying prizes is transparent,secure and reliable.Prize claim processAll non-winning tickets returned to players with a validation slip. 3A validation slip is provided for every ticket validated. 3Terminal displays prize win information to customers. 3Division One and Two prizes must be claimed directly from SA Lotteries Head Office. 3Prize receipt, including information on the prize claim, is produced and provided to the customer. 3Player name printed on Easiplay Club members’ tickets. 3Prize claim receipts provide information on prize claim. 3Ex-gratia prize claim may be lodged for lost unregistered tickets. 3SA Lotteries Head Office offers prize payment by cheque or electronic funds transfer (EFT). 3PLAYER AWARENESSPlayer’s total receipts provided after each transaction. 3Player registration service offered free of charge. 3Active campaign to promote player registration. 3Dedicated information provided on website for claiming prizes. 3Dedicated player security page on website. 3Dedicated lottery scam alert area on website. 3List of unclaimed prizes published on website. 3RESULTS AVAILABILITYRegistered Division One prize winners contacted by telephone. 3Results available on free-to-air television. 3Results available on website. 3Results available via an Interactive Voice Response telephone system. 3Results disseminated to media. 3Results sent directly via email. 3Results sent directly via SMS to mobiles. 3AGENT INTEGRITY AND SECURITYAll prize claims over $5000 presented to Head Office must accompany a signed Statutory Declarationdeclaring if the prize claimant is an SA Lotteries agent, agent employee or relative of an agent. 3Agents required to obtain prescribed range of business insurance. 3Agents regularly reminded that they must return all non-winning tickets and receipts. 3National police checks undertaken for all agent applications. 3Agents are provided with South Australian Police fraud and scam alerts. 3Agents are encouraged to notify SA Lotteries of any suggested improvements to security procedures. 3Incidences of suspected fraud are investigated and, if necessary, referred to SA Police. 3Disciplinary process applies to agents or agency employees found to have breached security measures. 3Regular, random and comprehensive compliance audits are conducted at all agenciesat least once a year. 3Dedicated player security website page encourages reports of agency deficiencies 3A defined customer complaints process applies to allow for the identificationand escalation of security-based issues. 3Senior management level position responsible for security-based issues. 3Monthly reviews are undertaken to ensure responses to, and investigations of,customer complaints are conducted in a timely manner. 3SA LOTTERIES ANNUAL REPORT 2008-09

Responsiblegambling measuresAs problem gambling can have a devastatingeffect on individuals, their families and thewider community, SA Lotteries is committedto implementing harm minimisation measuresacross its agency network.SA Lotteries remains steadfast in theresponsible promotion and conduct of itsgames to ensure a safe playing environmentfor its customers by ensuring compliancewith the State Lotteries ResponsibleGambling Code of Practice and the StateLotteries Advertising Code of Practice(the Codes).satisfactory compliance audits08-0907-0806-0705-0604-0585%87%95%96%95%SA Lotteries’ comprehensive complianceprogram involves an annual audit of allagencies against 28 checks of compliancewith the Codes.During 2008-09, SA Lotteries conducted764 audits with approximately 95 per centof those audits found to satisfactorilycomply with the requirements of the Codes.In all instances of non-compliance,SA Lotteries worked with the agencies toensure they adequately addressedtheir issues to achieve compliance at asubsequent reaudit.Revised Codes of PracticeEffective 1 December 2008, revised Codes ofPractice were implemented by SA Lotteriesand its network of agents, following directionfrom the Independent Gambling Authority(IGA). The key amendments are theinclusion of a condensed warning message,‘Gamble Responsibly’, in advertising, whichSA Lotteries has proactively implementedsince November 2003, and expandedwarning messages. Rotated on a six-monthlybasis in line with all State gamblingoperators, the following expanded warningmessages are now included in all advertisingwhere reasonable and practicable:• Don’t chase your losses. Walk away.Gamble responsibly.• Don’t let the game play you.Stay in control. Gamble responsibly.• Stay in control. Leave before you lose it.Gamble responsibly.• You know the score. Stay in control.Gamble responsibly.• Know when to stop. Don’t go over the top.Gamble responsibly.• Think of the people who need yoursupport. Gamble responsibly.DREAMS LIVE HERE27

IGA Inquiry into BarringArrangementsIn February 2009, SA Lotteries presentedat the IGA hearing on barring arrangements.SA Lotteries considers it appropriate for astatutory provision to be included in theState Lotteries Act to support voluntary andoperator-driven barring practices, subject tothe following conditions:• barring should apply only to thegambling area(s) of retail agencies;• barring in licensed venues should mirrorthat provided in other gamblinglegislation; and• barring should apply only from agenciesat which patronage can be demonstrated.Responsible gambling trainingSA Lotteries provides responsible gamblingtraining for all agents and agencyemployees through Wesley 4 Training(UnitingCare Wesley). A total of 121 agentsand agency staff received responsiblegambling training accreditation in 2008-09.SA Lotteries also continued its trainingprogram specifically for agency staff agedunder 18 years, ensuring that individuals areappropriately prepared for their role in aresponsible gambling environment. A total of20 agency staff under the age of 18 receivedresponsible gambling training during the year.Agents must also undertake ResponsibleGambling Refresher training at least everytwo years. This comprises an abridged andupdated version of the original responsiblegambling training module. Responsiblegambling refresher training was undertakenby 312 agents and agency staff.All SA Lotteries staff undertake ResponsibleGambling training on commencement ofemployment.Problem Gambling Report GroupSA Lotteries’ internal Problem GamblingReport Group allows for the escalation ofproblem gambling reports for assessmentand determination of the best course ofaction. Five issues were addressed by theGroup in 2008-09, and appropriate actionwas undertaken on each occasion.SA LOTTERIES ANNUAL REPORT 2008-09

Responsible GamblingAwareness WeekHeld 18 to 22 May 2009, ResponsibleGambling Awareness Week (RGAW) is aninitiative of the Office for Problem Gamblingand involves community education activitiesacross the State. As a means of reinforcingour commitment to reducing the harm causedby gambling, SA Lotteries promotedGambling Awareness Week via customerand agent newsletters, the website newsarea and on terminal-generated lotterytickets. SA Lotteries also provided RGAWprograms and promotional pens to eachmember of its agency network, along with acondensed list of responsible gamblingcontacts by region.Online early intervention testSA Lotteries continues to proactively publishan early intervention gambling health test inthe dedicated responsible play area of itswebsite. Called the Eight Gambling Screen,the test was developed by Dr Sean Sullivanfor the Problem Gambling Foundation ofNew Zealand and the Department of GeneralPractice and Primary Health Care in theAuckland School of Medicine. The objectiveof the test is to determine whether gamblingis affecting the respondent’s health via aseries of eight questions.Agents ensure lottery players are aged at least18 years by asking for proof of age.DREAMS LIVE HERE29

DREAMDREAMPARTNERSPARTNERS

Our agencynetworkagents’ commission earned- $ Millions08-0907-0806-0705-0604-05$25.8$25.8$25.8$26.9$29.3SA Lotteries takes a partnership approachwith its agent network as the trustedcustomer interface for our products.SA Lotteries’ retailer network is one of themost diverse networks of any domesticlottery jurisdiction in Australia.Comprising both retail and licensedbusinesses, SA Lotteries’ retailers are spreadthroughout South Australia, including remoteoutback areas, and represent a variety ofbusiness types such as newsagencies,kiosks, supermarkets, chemists, hotels andselected SA TAB agencies (Keno only).Network expansionSA Lotteries completed its expandeddistribution of Keno through SA TAB outlets.As at 30 June 2009, there were 157SA TAB outlets operating Keno.Recognising business excellenceSA Lotteries’ annual Agency ExcellenceAwards program is aimed at recognising andrewarding excellence within SA Lotteries’retail and licensed agent network.The 2007-08 Agency Excellence Awardsgala presentation dinner was held at theHyatt Regency Adelaide in August 2008.Awards were presented in nine categories,with winners determined based on setperformance criteria:• Campbell’s Newsagency, Oaklands Park– Agency of the Year andBest Retail Agency - Gold;• Links Hotel, Seaton– Best Licensed Agency - Gold;• Paper Plus, Adelaide– Best Retail Agency - Silver;• Emu Hotel, Morphett Vale– Best Licensed Agency – Silver;• Adelaide City Central 7 Day– Best Retail Agency - Bronze;• Criterion Tavern, Gawler– Best Licensed Agency – Bronze;• Ardrossan Newsagency– Community Service Award; and• Chris Malzard from Hub Chemmart,Aberfoyle Park– Agency Employee of the Year.Distribution of agencies by business type as at 30 June 2009Business Type MetropolitaN regional TotalRetail 240 94 334Licensed 146 72 218SA TAB (Keno only) 102 55 157TOTAL 488 221 709SA LOTTERIES ANNUAL REPORT 2008-09

2007-08 award winners recognised at the AgencyExcellence Awards presentation dinner at the HyattRegency, Adelaide.agents earned$29.3 million incommission whileproviding customerswith convenient“access to our games.Agent training investmentDuring the year a partnership was enteredinto with accredited training provider,Business SA, to deliver training to allSA Lotteries’ agencies, most of which aresmall, family-owned and operated businesses.SA Lotteries will invest almost $500 000over three years to ensure the training programdelivers core commercial elements such asbusiness management and customer servicein addition to essential skills in terminaloperation and responsible gambling.Material distributionSA Lotteries is a market leader in themanagement and distribution of materials toits agency network. By providing a warehousedistribution function, SA Lotteries achievesor exceeds each measure of good practicebased on providing:• reliable service;• ready availability of materials;• quick turnaround time;• prompt resolution of queries; and• a cost-effective solution.Furthermore, SA Lotteries seeks tominimise the cost of supplying materials toagents via its tender process for highvolume and high value items; combiningsimilar product purchases; and seekingcompetitive quotes and volume discounts.Listening to our agentsSA Lotteries established the Agent ReferenceGroup in January 1996 to strengthen itsrelationship with its agency network and toprovide a forum for the presentation of newideas or concepts that may affect agents priorto finalisation. During the year, the AgentReference Group continued to providevaluable input into SA Lotteries’ marketingand promotional strategies and replacementonline lotteries system.SA Lotteries looks forward to the continuedsupport of its Agent Reference Group members:• Alf Spronk (Giftland, Noarlunga Centre);• Cameron Taylor (Para Hills CommunityClub);• Wally Woehlert (Bridgeway Hotel, Pooraka);• Dianne Dissel (Dissel’s Findon RoadNewsagency);• Paul Wright (Oak Plaza Newsagency,Stirling);• Bill Wareham (Tea Tree Plaza News Plus,Modbury);• Sandra Mahney (Campbell’sNewsagency, Oaklands Park);• Rose Pogas (Virginia Lotteries Kiosk);• Andrew Williamson (IGA EverydayMorphett Vale); and• Nicole Cavallo (Renmark Hotel Motel).InduSTry supportIn 2008-09, SA Lotteries continued itssponsorship support of the key industry bodiesthat represent members of its agency network,including the Australian Newsagents’Federation (SA Branch), Australian HotelsAssociation (SA) and Clubs SA.DREAMS LIVE HERE33

OursuppliersDuring the year, the total number of suppliersproviding services or products to SA Lotterieswas 390, accounting for $18.0 million ingoods and services. Seventy one per cent ofsuppliers were South Australian businesseswith these 278 local businesses receivingmore than $9.8 million.SA Lotteries’ transparent acquisitionprocess requires that the procurement ofgoods and services valued at $55 000(inclusive of GST) or greater are subject to atender process. Contracts are awarded onthe basis of pre-determined criteria toensure that SA Lotteries obtains the bestvalue for money and quality of services.SA Lotteries undertakes the followinginitiatives to ensure that best-practiceprocurement is achieved and maintained:• quarterly rating of existing suppliers toensure suppliers deliver on price, qualityand service;• quality management review of theSuppliers Register; and• assessing each tenderer’s corporate,social and environmental contributionsto the community during the tenderevaluation process.Contractual ArrangementsIn 2008-09, SA Lotteries entered into twocontractual arrangements where the totalvalue exceeded $4 million (inclusive of GST).They were:• GTECH Corporation and GTECHAustralasia Corporation, for theinstallation of a new online lotteriessystem, replacing existing computerhardware and terminals and lotteriessoftware. The contract duration is forten years (if extended); and• Telstra, for the provision of InternetProtocol Statewide communicationsservices, replacing the existing DigitalData Services network which will not beavailable beyond 31 December 2009.The contract duration is for five years.Account Payment Performance 2008 - 09NumbeR of % of Value % ofaCCounts Accounts oF Accounts account paidParticulars Paid Paid Paid (by value)Paid by due date 3528 99.49% $17 838 938 99.76%Paid late but paidwithin 30 days ofthe due date 17 0.48% $36 759 0.20%Paid more than30 days fromdue date 1 0.03% $6 798 0.04%Consultants EngagedExpenditure Range Consultant Services Provided$10 000 to $50 000 PricewaterhouseCoopers Probity auditErnst & YoungProbity adviceRichard Pryor & Associates Legal servicesOver $50 000 ABN AMRO Independent strategic assessmentSA LOTTERIES ANNUAL REPORT 2008-09

BusinessrelationsThe BlocSA Lotteries participates in multi-jurisdictional(Bloc) arrangements with the followingAustralian lottery operators:New South Wales Lotteries Corporation(New South Wales and Australian CapitalTerritory), Tatts Lotteries (Victoria,Queensland, Australian Capital Territory,Northern Territory and Tasmania) andLotterywest (Western Australia).The Bloc pools money to allow for largerjackpots while the licensing structure andoperations of each lottery operator remainindependent and autonomous.During the year the Executive Committeesof the various Blocs met regularly, withSA Lotteries hosting the November 2008meeting. SA Lotteries also continued itsrole as Bloc Secretariat Administrator andGame Administrator of the AustralianSoccer Pools Bloc.International associationsSA Lotteries values the information sharingand networking opportunities available as aresult of its membership of internationallotteries industry associations.SA Lotteries’ two key internationalassociation memberships are:• Asia Pacific Lottery Association (APLA)SA Lotteries is a Member of APLA,which is one of five regional associationsin the lotteries industry worldwide andrepresents lottery organisations fromcountries within the Asia Pacific region.SA Lotteries’ Chief Executive waselected as Chair of APLA’s ExecutiveCommittee in September 2008.SA Lotteries continued to host theSecretariat Administrator role on behalfof APLA. The APLA ExecutiveCommittee met on two occasions duringthe year.• World Lottery Association (WLA)SA Lotteries is a Member of the WorldLottery Association. SA Lotteries’ ChiefExecutive as Chair of APLA is therepresentative on the WLA ExecutiveCommittee. SA Lotteries is also anAPLA representative on the LegalNetwork Committee.Bloc Executive Committee, from left: Nick Nichles,Chief Executive Officer, NSW Lotteries; June Roache,Chief Executive, SA Lotteries; Sue van der Merwe,General Manager Group Lottery Operations,Golden Casket; Bill Thorburn, Chief Executive,Tatts Lotteries; Jan Stewart, Chief Executive Officer,Lotterywest.DREAMS LIVE HERE35

SHARINGSHARINGTHE DREAM DREAMTHE

profits tohospitals and sporthospital returns - $ MILLIONS08-09$9507-08$9106-0705-06$86$8504-05$91A record profit distribution of $95 million,equating to approximately $1.8 million eachweek, was contributed to South Australia’sHospitals Fund for the provision,maintenance, development and improvementof public hospitals.SA Lotteries further supports theSouth Australian community via returns tothe Recreation and Sport Fund, with$256 000 provided for the support anddevelopment of South Australian recreationaland sporting facilities and services.Since 1987, SA Lotteries has returned atotal of $8.5 million to the Recreation andSport Fund.Fringe comedian Damien Callinan performs forpatients at the Women’s and Children’s Hospital.Strengthening its vision to benefit thecommunity of South Australia, SA Lotteriesextends further support to the communityvia a range sponsorship and communityinitiatives.$95 millioncontributed toSouth Australia’s“public hospitalsSA LOTTERIES ANNUAL REPORT 2008-09

Promoting wherethe money goes50% increase inawareness ofSA lotteries returns“to hospitals.For more than 40 years, SA Lotteries hasbeen supporting the South Australiancommunity mainly through prizes to playersand profits to hospitals. SA Lotterieshas contributed almost $2 billion to theHospitals Fund since 1967.In order to promote the beneficiaries of itsoperations, SA Lotteries launched acorporate advertising campaign in August2008 titled Dreams Live Here.The successful and effective campaign hascontributed to an increase in awareness(from 28 per cent to 42 per cent) during theyear, that SA Lotteries profits are largelyreturned to hospitals.Last year, $271 millionwon in South Australia.$95 million toSouth Australian hospitals.Dreams live here.Dreams Live Here TV commercial.DREAMS LIVE HERE39

SponsorshipTour Down UnderSA Lotteries has sponsored the Tour DownUnder Sprint Jersey since 2002 and waspleased to continue its support in 2009.With Tour de France legend LanceArmstrong choosing to make his comebackto professional cycling at the 2009 TourDown Under, the South Australian ProTourevent drew record crowds. During eachstage of the 2009 race, SA Lotteries gaveaway caps and SA Lotteries Sprint Jerseys– the first time the jerseys had been madepublicly available. The lucky spectators wonthe jerseys at the SA Lotteries Sprint duringthe Snapper Point to Willunga stage of theTour Down Under.SA Lotteries in SymphonySA Lotteries Symphony Sessions is asponsorship program aimed at promotingthe positive effects of music on health andwellbeing in the hospital community.Adelaide Symphony Orchestra string andwind ensembles played in a variety of wardsat the Royal Adelaide Hospital, enhancingthe wellbeing of patients being treated forburns, cancer and spinal and facial injuries.Adelaide Fringe visits hospitalsSA Lotteries partnered with the AdelaideFringe to bring smiles to the faces ofpatients in South Australian hospitals inMarch 2009. The partnership is aimed atbringing the world’s second biggest artsevent to those not well enough to attendperformances. In 2009, Fringe funnymenLehmo, Damian Callinan and Mickey Dentertained patients at the Women’s &Children’s Hospital, Queen ElizabethHospital, Flinders Medical Centre and LyellMcEwin Hospital over three days of theAdelaide Fringe.SA Lotteries teams up with ASQSA Lotteries established a partnership withthe Australian String Quartet (ASQ) in May2009 that brought the Quartet’s music topatients in regional South Australianhospitals. The SA Lotteries String Sessionsprogram presented inspiring and soothingsounds for hospital patients and healthcentres at Tanunda, Port Pirie, Whyalla,Renmark and Mount Gambier.Christmas Wish promotionSA Lotteries’ Christmas Wish promotion,broadcast with radio partner Triple M, againfulfilled the dreams of 10 South Australiansduring the year. The two-week promotionencouraged adult listeners to register theirwishes on Triple M’s website in the lead-upto Christmas.Minor sponsorshipSA Lotteries extended support to theFlinders University Business School, QueenElizabeth Hospital Research Foundation,Women’s & Children’s Hospital, LyellMcEwin Hospital, Royal Adelaide Hospital,University of Adelaide Business School andUniversity of South Australia via minorsponsorship initiatives.SA lotteries footy tippingcompetitionSA Lotteries supported the inauguralSouth Australian National Football League(SANFL) and Australian Football League(AFL) Footy Tipping Competition during the2009 season. The only competition tocombine the AFL and SANFL competitions,the tipping site attracted more than 2100participants and almost 400 000 hits tothe SA Lotteries Footy Tipping pages on theSANFL website.From top: Allan Davis, 2009 SA Lotteries Sprintwinner, Tour Down Under.The Australian String Quartet perform for patients inregional hospitals.SA LOTTERIES ANNUAL REPORT 2008-09

Out and about INthe communityCorporate volunteeringSA Lotteries’ employees are granted oneday a year at full pay to volunteer their timeand skills to assist a not-for-profitorganisation. During the year employeesvolunteered at the following events:• Hutt Street Centre Christmas BBQ;• Cancer Council Daffodil Day;• Australian Red Cross Boys Day Out;• Leukaemia Foundation Light the NightWalk; and• RSPCA Million Paws Walk.Community event participationRegistration fees for participation incommunity-based events were reimbursedfor employees during the year, includingfun runs, walks and cycling events.Matching fundsThroughout the year, employees ofSA Lotteries donated their hard-earnedmoney as a part of quarterly departmentalcharity days. The employee donationswere matched dollar for dollar, taking thetotal to $3795 donated to the followingnot-for-profit organisations:• The Cancer Council;• Women’s & Children’s HospitalNeo-Natal ICU;• MS Society; and• Animal Welfare League.Employees give to The SmithFamilySA Lotteries employees extended generoussupport to The Smith Family’s Wishing Treeproject by donating new books and toys asChristmas gifts for South Australians in need.Rotary corporate membershipSA Lotteries continued its association withRotary through the year. The corporatemembership enables SA Lotteries’executives to attend regular networkingfunctions and participate in communityinitiatives. One such initiative is theCommunity Mentoring Program – InnerNorth East, whereby an SA Lotteries’executive spends one hour per week with aprimary school student as a role modelwith the aim to encourage their transition tohigh school and maximise their chancesof high school completion.Blood donor ProgramDuring 2008-09, employees donated inexcess of 14 litres of blood to Red Crossas part of SA Lotteries’ Corporate BloodDonor Program.Workplace givingA number of charities continue to receiveregular donations from employees as a partof SA Lotteries’ ongoing Workplace Givingprogram.Kitting out the communityMore than 150 local clubs, schools, sportinggroups and charities were equipped for theirlocal fundraising efforts in 2008-09 withSA Lotteries’ Community Fundraising Kits.DREAMS LIVE HERE41

ANENVIRONMENTALANENVIRONMENTALDREAM DREAM

minimisingour impactenergy consumption - KWhrs08-0907-0806-0705-0604-05734 330787 612811 703795 6221 059 319a 15 per cent reductionin greenhouse gasemissions wasachieved on the“previous year.ENERGY CONSUMPTIONSA Lotteries embraces sound environmentalpractices across its business operations,including using efficient and sustainableenergy to reduce greenhouse gas emissions,reducing waste, and encouraging recyclingof its products.From January 2008, renewable energy usageincreased from 15 per cent to 20 per cent.Also during the year, 100 per cent of energyused at SA Lotteries’ distribution warehouseand public lighting areas was converted torenewable energy sources.SA Lotteries’ use of renewable energy,combined with a 6.77 per cent reductionin energy used during 2008-09, hasresulted in an overall 14.95 per centreduction in greenhouse gas emissions onthe previous year.SA Lotteries Footy ExpressSA Lotteries continued its partnership withthe South Australian National FootballLeague during 2008-09, operating theSA Lotteries Footy Express bus service forfootball fans of South Australia.The free bus service for South Australianstravelling to AAMI Stadium for AdelaideCrows and Port Power matches, transportedmore than 130 000 fans (19 per cent ofmatch attendees) via 22 bus routes.The number of SA Lotteries Footy Expresspatrons equates to a 6000-tonne reduction ingreenhouse gas emissions by the eliminationof vehicles travelling to AAMI Stadium.Business Clean Up DayIn February 2009, SA Lotteries’ employeesonce again participated in Business Clean UpDay by collecting rubbish from the park landsarea adjacent to the SA Lotteries Head Office.Cleaner vehiclesSA Lotteries continued its program ofreplacing Unleaded Petrol fuelled vehicleswith dual-fuel models during 2008-09.SA Lotteries’ vehicle fleet now fully operateson emission-friendly, energy-efficient fuelsystems.Earth HourIn March 2009, SA Lotteries participated inEarth Hour to demonstrate its commitmentto the environment and to further assist in thereduction in greenhouse gases by switchingoff non-critical systems and lighting.RecyclingWhere possible, SA Lotteries chooses touse recyclable products and materialsobtained from renewable sources. Recyclingis also promoted amongst SA Lotteries’agency network.To encourage recycling and the responsibledisposal of SA Lotteries’ tickets a‘100% recyclable’ logo is incorporated onall terminal-generated tickets. A messagepromoting the responsible disposal oftickets is also included on the reverse of allSA Lotteries’ Instant Scratchies tickets.A similar message has been applied togame coupons printed during 2008-09.From top: SA Lotteries Footy Express proves just theticket for the community.SA Lotteries employees clean up.SA LOTTERIES ANNUAL REPORT 2008-09

Performance Against Annual Energy Use Targets - energy use (Gjs)400035003000250020003 8343 9613 8973 8613 8142 8642 9222 8352 8832 6443 2582 876150010005000base year year year year Year Year Year Year Target year interim final00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 08-09 target target09-10 13-14Performance Against Annual Energy Use Targets - greenhouse gas emissions (kg CO2)1 400 0001 200 0001 000 000800 000600 000400 000200 0001 181 7641 220 8941 201 0641 117 8891 129 975882 582813 081703 836655 068598 6021 004 499886 3230base year year year year Year Year Year Year Target year interim final00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 08-09 target target09-10 13-14Interim and Final Targets as set withinSouth Australia’s Strategic Plan. The Plantargets a reduction in energy consumptionin government buildings by 25 per centwithin 10 years and to achieve the first Kyototarget in relation to greenhouse emissions.SA Lotteries achieved this reduction ingreenhouse emissions in 2005-06.DREAMS LIVE HERE45

DREAMOUROURDREAMTEAM TEAM

Recognising andretaining staffEMPLOYEES WITH VOCATIONAL ORHIGHER EDUCATION QUALIFICATIONS08-0907-0806-0705-0604-0555%56%58%61%63%SA Lotteries’ success in achieving itsgoals continues to depend on its people;in particular, attracting and retaining theright people for the job. Raising the profileof SA Lotteries as an employer of choicethat provides a culture of development andinnovation is a core focus to ensure itshigh-performing employees remaindedicated to achieving SA Lotteries’business objectives.Attracting and retaining staffAn attraction and retention plan wasdeveloped focusing on initiatives that attractand retain quality staff. Such initiativesinclude career training and developmentopportunities; providing performancefeedback and recognition; and offering astimulating work environment whichfosters a culture of integrity, accountabilityand respect.Employee recognitionThe Staff Service Recognition Policy wasrevised during the year to include the formalrecognition of years of service at a monthlycelebration hosted on a rotational basis byeach division. Employees reaching eachfive-year service milestone are acknowledgedand presented with a commemorative gift.SA LOTTERIES ANNUAL REPORT 2008-09

Fostering growthand developmentQualified workforceSA Lotteries’ workforce includes a high levelof qualified personnel with 63 per cent ofemployees having a vocational or highereducation qualification.Leadership DevelopmentProgramSA Lotteries’ Leadership DevelopmentProgram is designed to build a leadershipbasedperformance culture and to ensureadequate succession planning.Four high-potential employees finalised theirleadership development program with alearning assignment on ‘Employer Branding’presented to executives in November 2008.A number of strategies identified have beenimplemented.In 2008-09 a new leadership competencyframework was developed and incorporatescompetencies in leadership, strategy, peoplemanagement and relationships.SA Lotteries’ executive and managementteam underwent a 360 degree survey usingthe new competency framework, receivingfeedback from peers and direct reports.Training and developmentTo meet planned training and developmentrequirements, 2.06 per cent of base salarycosts were committed to training during2008-09, with 74 employees (82 per centof staff) participating in training coursesthroughout the period.Study assistance and study leave is alsoavailable to SA Lotteries’ full-time andpermanent part-time employees, subject tothe relevance of the proposed study andoperational requirements.Performance developmentSA Lotteries has a performancemanagement process in place to ensure allstaff members understand their roles andreceive regular feedback and recognition oftheir performance.Through the use of a three-phaseperformance management system, 68 percent of all employees participated in adocumented individual performancedevelopment review or plan in 2008-09.Employee graduate programSA Lotteries offers a University ofSouth Australia marketing graduate aninternship. In February 2009, a marketinggraduate commenced a 12-monthplacement within the marketing department.The previous two marketing graduates haveassumed full-time positions within theMarketing and Sales department.The organisation hosted a booth at the 2009UniSA Employment and Careers Expo,aimed at showcasing graduate employmentopportunities. It also provided SA Lotterieswith the opportunity to raise its profile andpromote employment opportunities andbenefits of working at SA Lotteries.Equal employment opportunitySA Lotteries is an equal opportunityemployer, ensuring that all persons seekingemployment are treated fairly and equitablyand are not subjected to unlawfuldiscrimination or harassment.Leadership and Management Training ExpenditureTraining and Total % of TotalDevelopment Cost RemunerationeXPenditure*Total training and development expenditure** $206 405 3.2%Total leadership and management development expenditure $143 995 2.2%*Total remuneration expenditure is based on gross salaries plus employer superannuation.** Total training and development expenditure is based on course fees plus all associated costs.Members of the Leadership Development Program,from left: Peter Hayward, Kelly Walker, Fiona Ayresand David Hardy.DREAMS LIVE HERE49

A healthy workplace is ahappy workplaceLifestyle ProgramThe SA Lotteries’ Lifestyle Program isdesigned to improve employee health andwellbeing through awareness andparticipation. The program is reviewed on aregular basis to ensure relevance andinterest to employees.The program encompasses:• fully subsidised flu vaccinations;• quarterly onsite health education andawareness sessions;• fully subsidised First Aid Training;• access to Corporate Health plansproviding employees with discountedhealth cover premiums and specialoffers; and• health tips.Voluntary flexible workingarrangementsSA Lotteries provides a flexible workingenvironment to assist in balancing work andfamily responsibilities. During the year,28 per cent of employees participated in avoluntary flexible working arrangement.maleFemale TotalPurchased leave - - -Flexible hours 6 5 11Compressed weeks - 1 1Part-time job share 2 11 13Working from home - - -SA Lotteries provides asporting chanceSA Lotteries introduced its Staff SportSupport scheme in 2008, aimed at fosteringteamwork and increasing employeeparticipation in sport and physical activity.The program allows for SA Lotteries tosponsor four employee sporting teams eachyear, encouraging employees to keep fit.Artistic endeavoursEmployees were invited to unleashtheir artistic talents in 2008-09 by paintingcanvases to decorate office space.To celebrate the artists’ efforts, an exhibitionwas held and all artwork is now on display atSA Lotteries Head Office.Members of SA Lotteries Dream Team enjoy thebenefits of playing team sport.SA LOTTERIES ANNUAL REPORT 2008-09

Leave managementAll staff are encouraged to take their fullannual leave allocation in the year of accrual.Disability DiscriminationAction PlanSA Lotteries undertook a review of itsDisability Discrimination Action Plan,implemented in July 1998. The planidentifies barriers and recommendsstrategies for eliminating those barriers.Average Days Leave Taken per Full-Time Equivalent EmployeeLeave Type 2005-06 2006-07 2007-08 2008-09Sick leave taken* 6.0 6.8 7.0 7.0Family carer’s leave taken 0.9 0.7 0.8 1.0Miscellaneous special leave 0.3 0.5 0.8 0.2* Figures incorporate paid and unpaid sick leave, if applicable.Types of Employee DisabilitiesDisability male Female Total % of AgencyPhysical - 1 1 1.1Intellectual - - - -Sensory - - - -Psychological / Psychiatric - - - -Other - - - -TOTAL - 1 1 1.1number of Employees with Disabilities requiring workplace adaptationmale Female Total % of AgencyTOTAL - 1 1 1.1Employee BreakdownPersons (as at 30 June 2009) 90Full-Time Equivalent employee numbers as at 30 June 2009 84.51Number of persons separated from SA Lotteries during the 2008-09 financial year 7Number of persons recruited to SA Lotteries during the 2008-09 financial year 12Number of persons on leave without pay at 30 June 2009 -Employees by gendermaleFemale% persons % FTEs48.9 51.150.5 49.5DREAMS LIVE HERE51

Status of Employees in Current Position (as at 30 June 2009)Full-Time Short-Term Long-Term OtherEquivalents Ongoing Contract Contract (Casual) TotalFemale 38.41 1.4 2 - 41.81Male 37.4 1 4 0.3 42.7Total 75.81 2.4 6 0.3 84.51Short-Term Long-Term OtherEMPLOYEES Ongoing Contract Contract (Casual) TotalFemale 42 2 2 - 46Male 38 1 4 1 44Total 80 3 6 1 90Executives by Gender, Classification and StatusContractContractClassification TENURED UNTENURED TotalMale Female Male Female Male Female TotalLevel D - - - 1 - 1 1Level B - - 2 - 2 - 2Level A - - 2 - 2 - 2Total - - 4 1 4 1 5Employees by Age Bracket by GenderWorkforceAge Bracket Male Female Total % Total Benchmark*15-19 - - - - 6.520-24 1 4 5 5.6 10.325-29 4 7 11 12.2 11.130-34 8 6 14 15.6 10.735-39 9 5 14 15.6 11.740-44 5 8 13 14.4 11.445-49 5 5 10 11.1 11.950-54 6 4 10 11.1 10.355-59 2 2 4 4.4 8.260-64 4 4 8 8.9 5.365+ - 1 1 1.1 2.6Total 44 46 90 100.0 100.0*Source: Australian Bureau of Statistics Australian Demographic Statistics 6291.0.55.001, Labour Force Status(ST LM8) by sex, age, state, marital status – employed – total from Feb 78 Supertable, South Australia at May 2009.SA LOTTERIES ANNUAL REPORT 2008-09

Number of Employees by Salary BracketSalary BrackeT male Female Total$0-$47 999 5 12 17$48 000 - $60 999 16 14 30$61 000 - $78 199 10 14 24$78 200 - $98 499 9 5 14$98 500 + 4 1 5TOTAL 44 46 90*Part time and casuals reflected as what they would earn if they worked full time.Number of Aboriginal and / or Torres Strait Islander Employeesmale Female Total % of Agency Target *Aboriginal/Torres Strait Islander - - - - 2.0%* Target from South Australia’s Strategic PlanCultural and Linguistic Diversitymale Female Total % of Agency SA Community*Number of employeesborn overseas 8 8 16 17.8 20.3%Number of employeeswho speak language(s)other than English at home 3 2 5 5.6 16.6%Total 11 10 21 23.4* Benchmarks from ABS Publication Basic Community Profile (SA) Cat No. 2001.0, 2006 census.DREAMS LIVE HERE53

Occupational health and safetySA Lotteries is committed to ensuring, sofar as is reasonably practicable, that allemployees are safe from injury and risk tohealth while at work. This is achieved bystriving to continually improve health andsafety systems and practices, and bycomparing those against industry standards.During 2008-09, the following health andsafety activities took place:• an annual occupational health andsafety inspection of premises;• driver training and education foremployees who drive fleet vehicles;• ergonomic assessments of employeeworkstations;• first aid training for relevant employees;• quarterly occupational health and safetycommittee meetings;• review of all occupational health andsafety policies, guidelines andprocedures;• subsidised flu vaccinations foremployees; and• fire warden training for relevantemployees.Workers’ CompensationThrough the effective management of safework practices, SA Lotteries had nil workers’compensation claims for the 2008-09period. This result has assisted SA Lotteriesin achieving a further reduction in theirWorkCover levy rate for the 2009-10 period.Occupational health, safety and injury managemeNT1. OH&S legislative requirements 2008-09 2007-08 2006-07Number of notifiable occurrences pursuant toOHS&W Regulations Division 6.6 Nil Nil NilNumber of notifiable injuries pursuant to OHS&WRegulations Division 6.6 Nil Nil NilNumber of notices served pursuant toOHS&W Act s35, s39 and s40 Nil Nil Nil2. InjurY management legislative requirementsTotal number of employees who participatedin a rehabilitation program Nil Nil NilTotal number of employees rehabilitated andreassigned to alternative duties Nil Nil NilTotal number of employees rehabilitatedback to their original work Nil Nil NilNumber of open claims as at 30 June 2009 1 1 1Percentage of workers’ compensation expenditureover gross remuneration 0.28 0.29 0.323. Number of claimsNumber of new workers’ compensationclaims in this financial year Nil Nil 2Number of fatalities (F) Nil Nil NilNumber of lost-time injuries (LTI) Nil Nil 2Number of medical treatment only (MTO) Nil Nil NilTotal number of whole working days lost Nil Nil 114. Cost of workers’ compensationCost of new claims for financial year Nil Nil $1 897Cost of all claims excluding lump sum payments Nil Nil $4 066Amount paid for lump sum payments on the settlementof a claim (s42, s43, s44) Nil Nil NilTotal amount recovered from external sources (s54)including from a negligent third party Nil Nil NilBudget allocation for workers’ compensation $78 826 $81 879 $85 0965. TrendsInjury frequency rate for new lost-time injury/diseasefor each million hours worked Nil Nil 15.37Most frequent cause (mechanism) of injury Nil Nil Slips, tripsand falls /manualhandlingMost expensive cause (mechanism) of injury Nil Nil Slips, tripsand fallsSA LOTTERIES ANNUAL REPORT 2008-09

Overseas Travel by SA Lotteries EmployeesNo. ofTotalDestinatioN reason for Travel employees Cost *Asia Pacific LotteryAssociation (APLA) 2008Beijing, China Regional Conference 2 $23 207World LotteryAssociationRhodes, Greece Congress 2008 1 $18 132Asia Pacific LotteryAssociation: ExecutiveCommittee Meeting andMacau, China APLA/WLA Seminar 2 $10 580*Total cost includes airfares and, as applicable, accommodation, meals and registration fees. It does not includeany salary or salary-related costs.DREAMS LIVE HERE 55

OURFUTURESouth Australia’sStrategic Plan Objective SA Lotteries’ Goals SA Lotteries’ 2009 - 10 OutlookGrowing ProsperityFostering Creativityand InnovationImproving WellbeingAttaining SustainabilityExpanding OpportunityTo promote, conduct and distribute lotteriesgames in a responsible manner to generatewealth for the South Australian community.To improve productivity by optimising theuse of assets and pursuing the mosteffective work practices.Ensure growth and sustainable revenueopportunities are pursued.To be a corporately responsible andrespected organisation that has a broadbase of community support.Adopt sound environmental practices in alloperations.Strive for a higher performance culturethrough a broader base of strong leadership,system and process innovation andemployee development.• The implementation of SA Lotteries’Replacement Online Lotteries System.This project will generate benefits to agentsand players.• Increased focus on training to assist agents tomeet customer service expectations.• Ensure quality management standards andpractices are achieved whilst maximising returnon assets.• Increase level of internet use by agents,Easiplay Club members and SA Lotteries players.• Ensure continued compliance with the StateLotteries Responsible Gambling andAdvertising Codes of Practice.• Seek World Lottery Association ResponsibleGambling accreditation.• Seek compliance and accreditation withInformation Security StandardISO/IEC AS/NZS 27001; World LotteryAssociation Security Control Standard; andfulfil the requirements of the GovernmentProtection Security Management Framework.• Continue the Corporate Social Responsibilityprogram.• Reduce energy consumption and greenhousegas emissions to minimise our impact on theenvironment.• Enhance the existing recycling program athead office and the warehouse.• Continue to encourage recycling within theagency network.• Ensure employee training and developmentmeets the organisation’s current and futureskills requirements.SA LOTTERIES ANNUAL REPORT 2008-09

OF SOUTH AUSTRALIAANNUAL FINANCIAL2008-09LOTTERIES COMMISSION2008-09LOTTERIES COMMISSIONOF SOUTH AUSTRALIAANNUAL FINANCIALSTATEMENTSSTATEMENTS

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Statement of comprehensive incomefor the year ended 30 June 2009Note 2009 2008$’000 $’000IncomeSales revenue 6 393 705 366 583Cost of sales 7 344 770 321 003Gross Margin 48 935 45 580Interest revenue 2 902 3 628Other revenues 8 4 706 4 517Net gain on disposal of non-current assets 9 2 -Total Income 56 545 53 725ExpensesEmployee benefits expenses 10 8 313 7 080Supplies and services 11 15 049 14 876Depreciation and amortisation expense 12 2 559 3 346Net loss on disposal of non-current assets 9 - 1 542Borrowing costs - 11Total Expenses 25 921 26 855Profit before income tax equivalent 30 624 26 870Income tax equivalent expense 9 187 8 061Profit after income tax equivalent 21 437 18 809Total Comprehensive Result 21 437 18 809The profit after income tax equivalent and comprehensive result are attributable to the SA Government as owner.The above statement should be read in conjunction with the accompanying notes.SA LOTTERIES ANNUAL REPORT 2008-09

Statement of Financial Positionas at 30 June 2009Note 2009 2008$’000 $’000Current AssetsCash and cash equivalents 14 70 814 51 360Receivables 15 61 845 2 600Inventories 482 504Total Current Assets 133 141 54 464Non-Current AssetsProperty, plant and equipment 16 5 828 6 767Intangible assets 17 44 105Other non-current assets 18 - 542Total Non-Current Assets 5 872 7 414Total Assets 139 013 61 878Current LiabilitiesPayables 19 93 799 22 468Employee benefits 20 820 731Other current liabilities 21 10 103 8 230Total Current Liabilities 104 722 31 429Non-Current LiabilitiesPayables 19 100 52Employee benefits 20 1 173 685Other non-current liabilities 21 8 020 6 705Total Non-Current Liabilities 9 293 7 442Total Liabilities 114 015 38 871Net Assets 24 998 23 007EquityFunds retained for capital purposes 636 636Reserves 24 362 22 371Retained earnings - -Total Equity 24 998 23 007The Total Equity is attributable to the SA Government as owner.Unrecognised contractual commitments 23Contingent assets and liabilities 24The above statement should be read in conjunction with the accompanying notes.DREAMS LIVE HERE 59

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Statement of Changes in Equityfor the year ended 30 June 2009FundsRetained forCapitalPurposesAssetRevaluationReserveBuildingMaintenanceReserveCapitalAssetReserve(Note 22)Keno PrizeReserveRetainedEarningsTotal$’000 $’000 $’000 $’000 $’000 $’000 $’000Balance at 30 June 2007 636 8 253 94 16 722 196 - 25 901Total comprehensive result for 2007-08 - - - - - 18 809 18 809Transfers:• from Retained earnings - - - 2 000 1 274 (3 274) -• to Retained earnings - (2 779) - (1 929) (1 460) 6 168 -Dividend contribution to SA Government - - - - - (21 703) (21 703)Balance at 30 June 2008 636 5 474 94 16 793 10 - 23 007Total comprehensive result for 2008-09 - - - - - 21 437 21 437Transfers:• from Retained earnings - - - 2 000 3 290 (5 290) -• to Retained earnings - - ( 29) (1 456) (1 814) 3 299 -Dividend contribution to SA Government - - - - - (19 446) (19 446)Balance at 30 June 2009 636 5 474 65 17 337 1 486 - 24 998All Changes in Equity are attributable to the SA Government as owner.The above statement should be read in conjunction with the accompanying notes.SA LOTTERIES ANNUAL REPORT 2008-09

Statement of Cash Flowsfor the year ended 30 June 2009Note 2009 2008$’000 $’000Cash Flows from Operating ActivitiesCash InflowsReceipts from customers 361 388 340 286Interest received 3 090 3 555GST recovered from the Australian Taxation Office 4 358 4 170Cash generated from operations 368 836 348 011Cash OutflowsPrizes paid (220 119) (217 631)Payments to suppliers and employees (23 950) (22 015)GST paid to the Australian Taxation Office (13 881) (13 704)Interest paid - ( 22)Distribution to the Hospitals Fund and Recreation and Sport Fund• Gambling tax 26 (60 573) (59 816)• Dividends 26 (18 808) (20 298)• Unclaimed prizes 26 (2 296) (1 925)Distribution to the Hospitals Fund for income tax equivalent 26 (8 178) (8 930)Cash used in operations (347 805) (344 341)Net cash provided by operating activities 25 21 031 3 670Cash Flows from Investing ActivitiesCash InflowsProceeds from sale of property, plant and equipment 6 -Cash OutflowsPurchase of property, plant and equipment (1 583) ( 710)Purchase of intangible assets - ( 20)Net cash used in investing activities (1 577) ( 730)Cash Flows from Financing ActivitiesCash OutflowsRepayment of borrowings - ( 560)Net cash used in financing activities - ( 560)Net Increase in Cash and Cash Equivalents 19 454 2 380Cash and Cash Equivalents at the beginning of the financial year 51 360 48 980Cash and Cash Equivalents at the end of the financial year 25 70 814 51 360The above statement should be read in conjunction with the accompanying notes.DREAMS LIVE HERE 61

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Index to Notes to theFinancial StatementsEstablishment and Function of SA Lotteries Note 1Summary of Significant Accounting Policies Note 2New and Revised Accounting Standards and Policies Note 3Related Party Note 4Segment Reporting Information Note 5Income NotesSales revenue Note 6Cost of sales Note 7Other revenues Note 8Net gain (loss) on disposal of non-current assets Note 9Expense NotesEmployee benefits expenses Note 10Supplies and services Note 11Depreciation and amortisation expense Note 12Auditor’s remuneration Note 13Asset NotesCash and cash equivalents Note 14Receivables Note 15Property, plant and equipment Note 16Intangible assets Note 17Other non-current assets Note 18Liabilities NotesPayables Note 19Employee benefits Note 20Other liabilities Note 21Other NotesCapital asset reserve Note 22Unrecognised contractual commitments Note 23Contingent assets and liabilities Note 24Cash flow reconciliation Note 25Distribution of funds to SA Government Note 26Financial risk management Note 27Superannuation Note 28Transactions with SA Government Note 29SA LOTTERIES ANNUAL REPORT 2008-09

Notes to the Financial Statements1. Establishment and Function of SA LotteriesThe Lotteries Commission of South Australia (SA Lotteries), established under the State Lotteries Act 1966, commenced operations on 15 May 1967 withthe primary function of promoting and conducting lotteries in South Australia.2. Summary of Significant Accounting Policies(a) Statement of ComplianceThe financial statements are general purpose financial statements. The accounts have been prepared in accordance with relevant Australian accountingstandards and Treasurer’s Instructions and Accounting Policy Statements promulgated under the provisions of the Public Finance and Audit Act 1987.SA Lotteries has early adopted AASB 101 Presentation of Financial Statements (September 2007 version and AASBs 2007-8 and 2007-10), whichincludes the preparation of a single Statement of Comprehensive Income. Refer to Note 3.(b) Basis of PreparationThe preparation of the financial statements requires:• the use of certain accounting estimates and requires management to exercise its judgement in the process of applying SA Lotteries’ accountingpolicies. The areas involving a higher degree of judgement or where assumptions and estimates are significant to the financial statements areoutlined in the applicable notes;• accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevanceand reliability, thereby ensuring that the substance of the underlying transactions or other events are reported; and• compliance with Accounting Policy Statements issued pursuant to section 41 of the Public Finance and Audit Act 1987. In the interest of publicaccountability and transparency the Accounting Policy Statements require the following note disclosures that have been included in this financial report:(a) revenues, expenses, financial assets and liabilities where the counterparty/transaction is with an entity within the SA Government as at reportingdate, classified according to their nature;(b) expenses incurred as a result of engaging consultants (the term Consultant is defined in Accounting Policy Framework APF II General PurposeFinancial Reporting Framework, APS 4.6);(c) employee targeted voluntary separation package information; and(d) employees whose normal remuneration is $100 000 or more (within $10 000 bandwidths) and the aggregate of the remuneration paid or payableor otherwise made available, directly or indirectly by the entity to those employees.SA Lotteries’ Statement of Comprehensive Income, Statement of Financial Position, and Statement of Changes in Equity have been prepared on an accrualbasis and are in accordance with historical cost convention, except for certain assets that were valued in accordance with the valuation policy applicable.The Statement of Cash Flows has been prepared on a cash basis.The financial statements have been prepared based on a twelve month operating cycle and are presented in Australian currency.The accounting policies set out below have been applied consistently in preparing the financial statements for the year ended 30 June 2009 and thecomparative information presented.(c) Reporting EntityThe financial statements cover the Lotteries Commission of South Australia as an individual reporting entity. The Lotteries Commission of SouthAustralia was established by the State Lotteries Act 1966. The reporting entity comprises the Lotteries Commission of South Australia only.(d) Comparative InformationThe presentation and classification of items in the financial statements are consistent with prior periods except where adjusted to reflect the earlyadoption of AASB 101 Presentation of Financial Statements and specific revised accounting standards and Accounting Policy Statements.The restated comparative amounts do not replace the original financial statements for the preceding period.(e) RoundingAll amounts in the financial statements and accompanying notes have been rounded to the nearest thousand dollars ($’000).(f) TaxationTax Equivalent RegimeIn accordance with Treasurer’s Instruction 22 Tax Equivalent Payments, SA Lotteries is required to pay to the State Government an income taxequivalent. The income tax liability is based on the State Taxation Equivalent Regime, which applies the accounting profits method. This requires that thecorporate income tax rate be applied to profit. The current income tax equivalent liability (included in undistributed funds liability) relates to the incometax equivalent expense outstanding for the current period.DREAMS LIVE HERE 63

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009SA Lotteries is liable for payroll tax, fringe benefits tax, goods and services tax, emergency services levy, land tax equivalent and local governmentrate equivalent.Goods and Services Tax (GST)SA Lotteries, as a gambling operator, is required to pay GST of one eleventh of net gambling revenue (NGR), defined as gross sales less total monetaryprizes, direct to the Australian Taxation Office (ATO). The GST on NGR is treated as a cost of sales.Income, expenses and assets are recognised net of the amount of GST except:• when the GST incurred on a purchase of goods or services is not recoverable from the ATO, in which case the GST is recognised as part of the costof acquisition of the asset or as part of the expense item applicable; and• receivables and payables, which are stated with the amount of GST included.The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Statement of Financial Position.Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financingactivities which is recoverable from, or payable to, the ATO is classified as part of operating cash flows.Unrecognised contractual commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the ATO. If GST isnot payable to, or recoverable from, the ATO, the commitments and contingencies are disclosed on a gross basis.(g) IncomeIncome is recognised to the extent that it is probable that the flow of economic benefits to SA Lotteries will occur and can be reliably measured. Incomehas been aggregated according to its nature and has not been offset unless required or permitted by a specific accounting standard, or where offsettingreflects the substance of the transaction or other event.Note 29 discloses income where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classified accordingto their nature.The following are specific recognition criteria:Revenues are measured at fair value of consideration received or receivable. Revenue is recognised for major activities as follows:•••Sales revenue for Saturday Lotto, Monday/Wednesday Lotto, Oz Lotto, Powerball, Keno, Super 66, The Pools and Lucky SA Lottery is recognised asat the date of the draw or competition. For these games, sales revenue as at 30 June for draws or competitions subsequent to that date is treated assales in advance. Sales revenue for Instant Scratchies is recognised daily.Interest revenue is recognised on a time proportionate basis as it accrues, taking into account the effective yield on the financial asset.Revenues from services, fees and charges are derived from the provision of goods and services predominantly to agents. This revenue is recognisedupon delivery of the goods or services to the recipients.(h) ExpensesExpenses are recognised to the extent that it is probable that the flow of economic benefits from SA Lotteries will occur and can be reliably measured.Expenses have been aggregated according to their nature and have not been offset unless required or permitted by a specific accounting standard, orwhere offsetting reflects the substance of the transaction or other event.Note 29 discloses expenses where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classifiedaccording to their nature.The following are specific recognition criteria:Employee Benefits ExpensesEmployee benefits expenses include all costs related to employment, including salaries and leave entitlements. These are recognised when incurred.Recognition of superannuation expenses is described in note 2(o).Supplies and ServicesSupplies and services generally represent the day-to-day running costs, including maintenance and occupancy costs, incurred in the normal operationsof SA Lotteries. These items are recognised as an expense in the reporting period in which they are incurred.Depreciation and Amortisation of Non-Current AssetsAll non-current assets having a limited useful life are systematically depreciated/amortised over their useful lives in a manner that reflects theconsumption of their service potential. Amortisation is used in relation to leasehold improvements and intangible assets (software), while depreciation isapplied to tangible assets such as property, plant and equipment.Assets’ residual values, useful lives and depreciation/amortisation methods are reviewed and adjusted if appropriate, on an annual basis.Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted forprospectively by changing the time period or method, which is a change in accounting estimate.SA LOTTERIES ANNUAL REPORT 2008-09

The value of leasehold improvements is amortised over the estimated useful life of each improvement, or the unexpired period of the relevant lease,whichever is shorter.Land is not depreciated.Depreciation/amortisation is calculated on a straight line basis over the estimated useful life of the following classes of assets as follows:Class of AssetsBuildingsPlant and EquipmentOnline Lotteries SystemLeasehold ImprovementsIntangibles (software)Estimated Useful Life20 years3 - 10 years2 - 5 years10 years3 yearsBorrowing CostsAll borrowing costs are recognised as an expense.(i) Current and Non-Current ClassificationAssets and liabilities are characterised as either current or non-current in nature. SA Lotteries has a clearly identifiable operating cycle of twelve months.Assets and liabilities that are sold, consumed or realised as part of the normal operating cycle, even when they are not expected to be realised withintwelve months after the reporting date, have been classified as current assets or current liabilities. All other assets and liabilities are classified asnon-current.(j) AssetsAssets have been classified according to their nature and have not been offset unless required or permitted by a specific accounting standard, or whereoffsetting reflects the substance of the transaction or other event.Note 29 discloses financial assets where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classifiedaccording to their nature.Cash and Cash EquivalentsCash and cash equivalents in the Statement of Financial Position and the Statement of Cash Flows includes cash on hand, deposits held at call andother short-term, highly liquid investments that are readily converted to cash, and are used in the cash management function on a day-to-day basis.Short term deposits are held with the South Australian Government Financing Authority (SAFA) in At Call Deposit and Cash Management Fundaccounts. Interest is earned at a minimum of SAFA’s overnight at call deposit rate. The deposits principally reflect funds available for unclaimed prizesand for distribution to the Hospitals Fund and the Recreation and Sport Fund.Cash is measured at nominal value.ReceivablesReceivables include amounts receivable from agents and other parties, prize settlements receivable from Blocs, and prepayments. Receivables (otherthan prepayments) arise in the normal course of selling goods and services to agents and other parties and through prize settlement arrangements withother Bloc members.Agent Debtors and Sundry ReceivablesAgent debtors and sundry receivables are generally receivable within 7 days and 14 days respectively and are carried at amounts due.Collectability of agent debtors and sundry receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off whenidentified. An allowance for doubtful debts is raised when there is objective evidence that SA Lotteries will not be able to collect the debt.Prize Settlements Receivable from BlocsSaturday Lotto, Monday/Wednesday Lotto, Oz Lotto, Powerball, Super 66 and The Pools are games supported by inter-jurisdictional prize poolingarrangements. State lottery operators participating in individual games form Blocs for the relevant games. Amounts receivable from Blocs representmonies due from other jurisdictions for prizes won in South Australia. Settlement of amounts receivable from Bloc members are normally due 14 daysafter the date of the draw.InventoriesInventories are held for distribution and include Instant Scratchies tickets, online coupons, ticket rolls, and ribbons.Inventories are measured at the lower of actual cost or their net realisable value.DREAMS LIVE HERE 65

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Non-Current Asset Acquisition and RecognitionNon-current assets are initially recorded at cost, plus any incidental cost involved with the acquisition. Non-current assets are subsequently measured atfair value less accumulated depreciation/amortisation.All non-current assets with a value of $2 000 or more are capitalised.Componentisation of the online lotteries system (a complex asset) has been performed as the asset’s fair value at the time of acquisition was greaterthan $1 million.Revaluation of Non-Current AssetsAll non-current tangible assets are valued at fair value. Revaluation of non-current assets or groups of assets is only performed when their fair value isgreater than $1 million and estimated useful life is greater than three years.SA Lotteries obtains an independent valuation of such assets at least every five years. However, if at any time management considers that the carryingamount of an asset materially differs from its fair value then the asset will be revalued regardless of when the last valuation took place. Non-currenttangible assets that are acquired between revaluations are held at cost until the next valuation, where they are revalued to fair value.SA Lotteries has taken the exemption available under Accounting Policy Framework III Asset Accounting Framework paragraph APS 3.8 to take assetrevaluation adjustments to the asset revaluation reserve on a class basis rather than an individual asset basis.ImpairmentAll non-current tangible and intangible assets are tested for indication of impairment at each reporting date. If there was an indication of impairment, therecoverable amount would be estimated. An amount by which the asset’s carrying amount exceeds the recoverable amount would be recorded as animpairment loss. For revalued assets, an impairment loss would be offset against the asset revaluation reserve.Intangible AssetsAn intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are measured at cost. Following initialrecognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.The useful lives of intangible assets are assessed as either finite or indefinite. SA Lotteries only has intangible assets with finite lives.(k) LiabilitiesLiabilities have been classified according to their nature and have not been offset unless required or permitted by a specific accounting standard, orwhere offsetting reflects the substance of the transaction or other event.Note 29 discloses financial liabilities where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classifiedaccording to their nature.PayablesPayables include creditors, accrued expenses, prizes payable, undistributed funds (owing to SA Government), and employment on-costs.Creditors and Accrued ExpensesCreditors represent the amounts owing for goods and services received prior to the end of the reporting period that are unpaid at the end of thereporting period. Creditors include all unpaid invoices received relating to the normal operations of SA Lotteries.Accrued expenses represent goods and services provided by other parties during the period that are unpaid at the end of the reporting period and wherean invoice has not been received.All payables are measured at their nominal amount and are normally settled within 30 days from the date of the invoice or date the invoice is firstreceived.Prizes PayablePrizes payable represent amounts due to be paid to customers for prizes won in South Australia and settlements due to lottery operators in other Statesparticipating in inter-jurisdictional prize pooling arrangements. State lottery operators have formed Blocs to conduct the games of Saturday Lotto,Monday/Wednesday Lotto, Oz Lotto, Powerball, Super 66 and The Pools.Amounts payable for prizes won in South Australia are generally available for settlement the day following the draw, or in the case of Instant Scratchiesand minor Keno prizes, on the date of sale or draw. Division 1 and 2 prizes for Lotto type games are normally settled 14 days after the date of draw inaccordance with the Lotteries Rules. Amounts payable to Blocs represent monies due to other lottery operators for prizes won in interstate jurisdictions.Settlement of amounts payable to Bloc members are normally due 14 days after the date of the draw.Employment On-CostsEmployment on-costs include superannuation contributions, payroll tax and workers compensation with respect to outstanding liabilities for salaries, longservice leave and annual leave. Employment on-costs are settled when the respective employee benefit that they relate to is discharged.SA LOTTERIES ANNUAL REPORT 2008-09

Employee BenefitsThese benefits accrue for employees as a result of services provided up to the reporting date and remain unpaid. Long-term employee benefits aremeasured at present value and short-term employee benefits payable are measured at nominal amounts.Salaries, Annual Leave and Sick LeaveThe liability for salaries is measured as the amount unpaid at the reporting date at remuneration rates current at the reporting date.The annual leave liability is expected to be payable within twelve months and is measured at the undiscounted amount expected to be paid. No salariesor annual leave are expected to be payable later than twelve months.No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees is estimated tobe less than the annual entitlement of sick leave.Long Service LeaveThe liability for long service leave is recognised after an employee has completed 6½ years of service. An actuarial assessment of long service leaveundertaken by the Department of Treasury and Finance based on a significant sample of employees throughout the South Australian public sectordetermined that the liability measured using the short hand method was not materially different from the liability measured using the present value ofexpected future payments. This calculation is consistent with SA Lotteries’ experience of employee retention and leave taken.The portion of the long service leave liability classified as current represents the amount that may be expected to be paid as leave taken or paid ontermination of employment during SA Lotteries’ normal operating cycle.Unclaimed Prizes ReserveOther than a prize in a Special Appeal Lottery (note 2(l)), any prize in a lottery that has not been collected or taken delivery of within 12 months of thedate of the draw or relevant day is forfeited to SA Lotteries and transferred to the Unclaimed Prizes Reserve. Subsection 16C(4) of the State LotteriesAct 1966 requires SA Lotteries to pay:••50 per cent of the amount derived from unclaimed prizes in The Pools (and other sports lotteries or special lotteries) to the Recreation and SportFund; and50 per cent of the amount derived from unclaimed prizes in other lotteries to the Hospitals Fund.The balance in the Reserve is applied by SA Lotteries from time to time for the purposes of providing additional or increased prizes in a subsequentlottery or lotteries, providing prizes in promotional lotteries or making ex-gratia payments.T h e State Lotteries Act 1966 provides for an ex-gratia payment to a person who satisfies SA Lotteries that they are a winner of a prize in a lotteryconducted by SA Lotteries, despite the fact that a prize has been forfeited to SA Lotteries, the winning ticket has been lost or destroyed or a notice of aclaim for the prize has not been complied with.Ex-gratia payments are charged to the Unclaimed Prizes Reserve. The next payment to either the Hospitals Fund or Recreation and Sport Fund, asappropriate, is then reduced by an amount equivalent to 50 per cent of the ex-gratia payment, depending on the game played.Distribution of Funds to GovernmentIn accordance with Subsection 16(3) of the State Lotteries Act 1966, SA Lotteries is required to pay to the Hospitals Fund the balance of surplus fundsremaining after:•••••payment of gambling tax and GST on NGR;making allowances for operating and capital expenses;applying the net proceeds and gambling tax of The Pools to the Recreation and Sport Fund;in respect of Special Appeal Lotteries (note 2(l)), applying the net proceeds and unclaimed prizes less the GST on NGR to the beneficiary(s) of thoselotteries; andretaining funds for certain designated purposes.As detailed in note 2(f), SA Lotteries is required to make tax equivalent payments as a result of the application of the tax equivalent regime. Inrecognition of the provisions of the State Lotteries Act 1966, and in accordance with Treasurer’s Instruction 22 Tax Equivalent Payments, the transfer offunds to the Hospitals Fund is reflected in the financial statements in the form of:(i) a gambling tax of 41 per cent on NGR in respect of all lotteries conducted by SA Lotteries except sports lotteries and special lotteries;(ii) an income tax equivalent payment (calculated on the accounting profits method), recorded as an expense item in the Statement of ComprehensiveIncome;(iii) a dividend, represented by net profit after income tax equivalent payment and increased/decreased by funds retained for certain designatedpurposes; and(iv) unclaimed prizes.The composition of all amounts due and payable to Government on account of the Hospitals Fund and Recreation and Sport Fund is detailed in note 26.DREAMS LIVE HERE 67

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009(l) Special Appeal LotteriesWith effect from 30 April 2007, the State Lotteries Act 1966 was amended to facilitate the conduct of Special Appeal Lotteries for approved statebasedcauses and disasters. The beneficiary(s), as approved by the Minister, receive the net proceeds less GST on NGR plus unclaimed prizes in respectof the Special Appeal Lotteries.No Special Appeal Lotteries were conducted during the financial year.(m) Foreign CurrencyExchange differences arising up to the date of purchase are included in the measurement of the purchase and are reported in the Statement ofComprehensive Income.(n) Operating LeasesSA Lotteries has an accommodation lease agreement for its Head Office premises at 24-25 Greenhill Road, Wayville and an operating lease agreementfor a remote computer site at Kidman Park. In respect of these operating leases, the lessor effectively retains substantially the entire risks and benefitsincidental to ownership of the leased assets.Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight line basis over the lease term. Thestraight line basis is representative of the pattern of benefits derived from the leased assets.(o) SuperannuationSA Lotteries has an established superannuation plan for its employees, being the Lotteries Commission of South Australia Superannuation Plan (thePlan), which is a sub-plan of the Mercer Super Trust. The Plan provides lump sum benefits on retirement, death, disablement and withdrawal. Somecategories of members receive only defined contribution, accumulation style benefits. The defined benefit section of the Plan is closed to new members.All new members receive accumulation only benefits. The defined contribution (accumulation style) section receives fixed contributions from SALotteries and SA Lotteries’ obligation is limited to these contributions. The withdrawal benefit for defined benefit members may be taken immediately ordeferred until preservation age.The liability for the defined benefit section of the Plan has been determined via an actuarial valuation by Stuart Mules, FIAA (Mercer InvestmentNominees Limited) using the projected unit credit method. The report was dated 9 July 2009.Actuarial gains and losses are recognised in full, directly in profit and loss in the period in which they occur, and are presented in the Statement ofComprehensive Income.The superannuation expense of the defined benefit plan is recognised as and when the contributions become payable and consist of current servicecost, interest cost, actuarial gains and losses, and past service cost.The defined benefit superannuation plan asset/liability recognised in the Statement of Financial Position represents the surplus/deficit of the fair valueof the defined benefit superannuation plan assets over the present value of the defined benefit obligation to members. The expected payment to settlethe obligation has been determined using national government bond market yields with terms and conditions that match, as closely as possible, toestimated cash outflows.SA Lotteries also contributes to other externally managed superannuation plans. These contributions are expensed when they fall due and SA Lotteries’obligation is limited to these contributions.(p) Funds Retained for Capital PurposesSA Lotteries has retained funds which represent the historical cost of the investment in land and buildings at 24-26 Payneham Road, Stepney.(q) ReservesAsset Revaluation ReserveThis reserve was established to record increments and decrements in relation to the revaluation of land and buildings and the online lotteries system.Building Maintenance ReserveThis reserve was established to meet future major building maintenance costs.Capital Asset ReserveThis reserve was established to contribute to the financing of the cost of replacement of the online lotteries system hardware and software, and thepurchase of other non-current assets.Keno Prize ReserveThis reserve was established to meet Keno Spot 10 prizes. The reserve has been funded from retained earnings as a proportion of all Keno Spot 10gross sales through SA Lotteries’ agents and ACTTAB Limited. To the extent possible, the value of the Keno Spot 10 prize won is transferred from thereserve to retained earnings and paid to the Hospitals Fund.SA LOTTERIES ANNUAL REPORT 2008-09

(r) Unrecognised Contractual CommitmentsCommitments include those from capital and operating commitments arising from contractual sources and are disclosed at their nominal value.(s) InsuranceSA Lotteries has arranged, through the SAICORP Division of the South Australian Government Financing Authority, to insure all major risks of theorganisation. The excess payable under this arrangement varies depending on each class of insurance held.3. New and Revised Accounting Standards and PoliciesSA Lotteries has early adopted AASB 101 Presentation of Financial Statements (September 2007 version and AASBs 2007-8 and 2007-10), whichincludes the preparation of a single Statement of Comprehensive Income.Except for early adoption of AASB 101, the Australian accounting standards and interpretations that have recently been issued or amended, but are not yeteffective, have not been adopted for the reporting period ending 30 June 2009. SA Lotteries has assessed the impact of the new and amended standardsand interpretations and considers there will be no impact on the accounting policies or the financial statements of SA Lotteries.4. Related PartySA Lotteries is controlled by the SA Government. Transactions and balances between SA Lotteries and related parties (ie other SA Government controlledentities) are disclosed in Note 29.5. Segment Reporting InformationSA Lotteries’ business operations are conducted in the one main business and geographical segment. Lottery games are promoted and conducted withinthe economic environment of South Australia.SA Lotteries has not established any partnership, body corporate or trust to carry out any function of its business operations.6. Sales Revenue2009 2008$’000 $’000Saturday Lotto 131 280 128 336Monday/Wednesday Lotto 36 718 31 782Oz Lotto 58 789 34 709Powerball 35 414 49 972Keno 90 753 79 506Instant Scratchies 38 886 39 929Super 66 1 171 1 108The Pools 694 581Lucky SA Lottery - 660Total sales revenue 393 705 366 583Sales revenue includes agents’ commission.DREAMS LIVE HERE 69

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 20097. Cost of Sales2009 2008$’000 $’000Prizes 236 931 221 283Gambling tax on net gambling revenue 64 277 59 573Agents’ commission 29 310 26 938GST on net gambling revenue paid to ATO 14 252 13 209Total cost of sales 344 770 321 0038. Other Revenues2009 2008$’000 $’000Agents’ fees and charges 3 748 3 621Easiplay Club service fees 351 355Sundry 607 541Total other revenues 4 706 4 5179. Net Gain (Loss) on Disposal of Non-current Assets2009 2008$’000 $’000Proceeds from disposal 6 -Less: Net book value of assets disposed 4 1 542Net gain (loss) on disposal of non-current assets 2 (1 542)10. Employee Benefits Expenses2009 2008$’000 $’000Salaries (including annual leave) 5 938 5 476Long service leave 155 119Employment on-costs - superannuation contributions (note 28(j)) 737 397Decrease in carrying value of defined benefit superannuation plan net asset/liability (note 28(e)) 868 540Employment on-costs - other 466 429Commission Members’ fees 149 119Total employee benefits expenses 8 313 7 080Remuneration of employeesThe table covers all employees who received remuneration of $100 000 or more during the year. Remuneration reflects all costs of employment includingsalaries, superannuation contributions, fringe benefits tax, any other salary sacrifice benefits, and payment of leave entitlements on ceasing employment.Employer contributions for employees who are members of the defined benefit section of the SA Lotteries Superannuation Plan were reduced from1 July 2007 and subsequently increased from 5 January 2009 in accordance with actuarial advice and Commission endorsement.SA LOTTERIES ANNUAL REPORT 2008-09

2009 2008No.No.The number of employees whose remuneration received or receivable falls within the following bands:$100 000 to $109 999 3 2$120 000 to $129 999 - 1$130 000 to $139 999 - 1$140 000 to $149 999 2 1$160 000 to $169 999 1 -$170 000 to $179 999 1 1$260 000 to $269 999 - 1$280 000 to $289 999 1 -Total Number of Employees 8 72009 2008$’000 $’000Total remuneration received or receivable by employees whose remuneration was $100 000 or more 1 232 1 049Commission MembersThe following persons held the position of Member of the Lotteries Commission of South Australia for the full financial year unless otherwise stated:H J Ohff, PhD, BA (hons), B Com, FIEAust, CP EngS J Mackenzie, B Comm (Accounting), LLB (Hons)- term expired 19 April 2009 - reappointed 23 April 2009S K Shirley, BEc, FCA, CPAW R Jackson, BEc, FASAA E Lindsay, BA (Hons), LLB (Hons)Commission Members’ remunerationThe total remuneration received and receivable by Commission Members includes fees, superannuation contributions, fringe benefits tax and professionalindemnity insurance paid on behalf of Commission Members.The number of Commission Members whose remuneration received or receivable falls within the following bands:2009 2008$20 000 to $29 999 1 4$30 000 to $39 999 3 1$40 000 to $49 999 1 -No.No.2009 2008$’000 $’000The total remuneration received or receivable by Commission Members 175 145No Commission Member has entered into a contract with SA Lotteries since the end of the previous financial year and there were no material contracts withCommission Members’ interests at the end of the financial year.DREAMS LIVE HERE 71

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Key Management Personnel CompensationThe key management personnel are the Commission Members and the Senior Management Team (including the Chief Executive) who have responsibility forthe strategic direction and management of SA Lotteries.The compensation of key management personnel included in Employee Benefits Expenses is as follows:2009 2008$’000 $’000Short-term employee benefits 936 860Post-employment benefits * 298 212Long-term employee benefits 14 13Total key management personnel compensation 1 248 1 085* Post-employment benefits include an allocation of the change in the defined benefit superannuation plan asset to key management personnel basedon the share of the defined benefit obligation.Targeted Voluntary Separation Packages (TVSPs)No employees were paid TVSPs during the reporting period.11. Supplies and Services2009 2008$’000 $’000Marketing and promotions 6 468 6 400Computer operations 2 800 2 997Tickets, coupons, terminal rolls and ribbons 1 506 1 465Operating leases 653 632Other occupancy costs 613 578Temporary staff and contractors 400 459Agent distribution costs 245 234Consultancies 295 248Motor vehicle fleet costs 212 194Insurance 123 121External audit fees (note 13) 108 135Training costs 114 117Gambling tax - other 67 46Bad debts - 14Other 1 445 1 236Total Supplies and Services 15 049 14 8762009 2008 2009 2008No. No. $’000 $’000ConsultanciesThe number and dollar amount of consultancies paid/payable (included in Supplies andServices) that fell within the following bands:Below $10 000 - 2 - 9$10 000 to $50 000 3 1 56 20Above $50 000 1 2 239 219Total paid/payable to consultants engaged 4 5 295 248SA LOTTERIES ANNUAL REPORT 2008-09

12. Depreciation and Amortisation Expense2009 2008$’000 $’000DepreciationBuildings 38 38Plant and equipment 176 288Online lotteries system 2 035 2 719Total depreciation 2 249 3 045AmortisationLeasehold improvements 249 243Software 61 58Total amortisation 310 301Total depreciation and amortisation 2 559 3 34613. Auditor’s Remuneration2009 2008$’000 $’000Audit ServicesAudit fees payable for the financial year 134 142(Over) under accrual ( 26) ( 7)External audit fees expense 108 135The Auditor-General is the auditor of SA Lotteries.Other ServicesNo other services were provided by the Auditor-General.14. Cash and Cash Equivalents2009 2008$’000 $’000Bank balances and cash on hand ( 395) ( 315)Short-term deposits 71 209 51 675Total cash and cash equivalents 70 814 51 360Bank balances comprise unpresented cheques net of outstanding deposits and cash on hand.Short-term deposits are with the South Australian Government Financing Authority.Interest Rate RiskCash on hand is non-interest bearing. Bank balances and short-term deposits earn a floating interest rate based on daily bank deposit rates. The weightedaverage interest rate earned was 5.11% (2008: 7.00%).Net Fair ValuesThe carrying amount of cash and cash equivalents represents fair value.15. Receivables2009 2008$’000 $’000Agent debtors 6 298 1 933Prize settlements receivable from Blocs 54 917 78Sundry receivables 280 508Prepayments 350 81Total receivables 61 845 2 600DREAMS LIVE HERE 73

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Interest Rate RiskAll receivables are non-interest bearing.Credit RiskCredit risk represents the loss that would be recognised if parties owing monies to SA Lotteries at balance date fail to honour their obligations. SA Lotteriesminimises its credit risk in relation to agents by undertaking its sales transactions with a large number of agents and requiring those agents to remit outstandingson a twice weekly basis. It is not anticipated that counterparties will fail to discharge their obligations. In addition, there is no concentration of credit risk.Net Fair ValuesThe carrying amount of Receivables approximates net fair value due to being receivable on demand.16. Property, Plant and Equipment2009 2008$’000 $’000Land and buildingsLand at fair value 700 700Buildings at fair value 650 650Accumulated depreciation ( 76) ( 38)Total land and buildings 1 274 1 312Plant and equipmentPlant and equipment at cost (deemed fair value) 2 248 2 097Accumulated depreciation (1 880) (1 733)Total plant and equipment 368 364Online lotteries systemOnline lotteries system at cost (deemed fair value) 3 885 2 506Accumulated depreciation (1 973) (1 277)Online lotteries system at fair value 8 619 8 619Accumulated depreciation (7 781) (6 442)Total online lotteries system 2 750 3 406Leasehold improvementsLeasehold Improvements at cost (deemed fair value) 2 470 2 470Accumulated amortisation (1 034) ( 785)Total leasehold improvements 1 436 1 685Total property, plant and equipment 5 828 6 767SA LOTTERIES ANNUAL REPORT 2008-09

Reconciliation of Property, Plant and EquipmentThe following table shows the movement of Property, Plant and Equipment during 2008-09 and 2007-08.LandBuildingsPlant &EquipmentOnlineLotteriesSystemLeaseholdImprovementsTotal$’000 $’000 $’000 $’000 $’000 $’000Carrying amount at 1 July 2008 700 612 364 3 406 1 685 6 767Additions - - 184 1 379 - 1 563Disposals - - ( 4) - - ( 4)Depreciation and amortisation - ( 38) ( 176) (2 035) ( 249) (2 498)Carrying amount at 30 June 2009 700 574 368 2 750 1 436 5 828Carrying amount at 1 July 2007 700 650 560 7 515 1 896 11 321Additions - - 92 152 32 276Disposals - - - (1 542) - (1 542)Depreciation and amortisation - ( 38) ( 288) (2 719) ( 243) (3 288)Carrying amount at 30 June 2008 700 612 364 3 406 1 685 6 767Valuations of property, plant and equipment• The valuation of the 24-26 Payneham Road, Stepney property was performed by Simon Hickin AAPI, Certified Practicing Valuer, an independent valuerfrom Jones Lang LaSalle, as at 30 June 2007. The valuer arrived at fair value based on recent market transactions for similar land and buildings in thearea taking into account zoning and restricted use and was determined on an in-use value, assuming a fully tenanted (subject to a notional five plus fiveyear lease back) basis.• The valuation of the online lotteries system was performed by Andrew Lucas, MBA, BappSc (Val), AAPI, ASA, Certified Practicing Valuer, an independentvaluer from Valcorp Australia Pty Ltd, as at 30 June 2005. The valuer arrived at fair value based on market value of items in this group of assets.2009 2008$’000 $’000The carrying amount of property, plant and equipment that would have been recognised if these assetswere stated at cost is:Land and buildings 357 368Plant and equipment 368 364Online lotteries system 2 453 2 619Leasehold improvements 1 436 1 685Total carrying amount of property, plant and equipment that would have been recognised ifthese assets were stated at cost 4 614 5 036ImpairmentThere were no indications of impairment of property, plant and equipment assets at 30 June 2009.DREAMS LIVE HERE 75

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 200917. Intangible Assets2009 2008$’000 $’000SoftwareSoftware at cost 182 182Accumulated amortisation ( 138) ( 77)Total Intangible Assets 44 105Reconciliation of Intangible AssetsThe following table shows the movement of Intangible Assets during 2008–09 and 2007–08.Carrying amount at 1 July 105 143Additions - 20Amortisation ( 61) ( 58)Carrying amount at 30 June 44 10518. Other Non-Current Assets2009 2008$’000 $’000Defined benefit superannuation plan asset (note 28(d)) - 542Total other non-current assets - 54219. Payables2009 2008$’000 $’000CurrentCreditors and accrued expenses 2 877 2 663Prizes payable 76 325 11 185GST payable 1 339 652Undistributed funds (note 26) 13 155 7 881Employment on-costs 103 87Total current payables 93 799 22 468Non-currentEmployment on-costs 100 52Total non-current payables 100 52Total payables 93 899 22 520Based on an actuarial assessment performed by the Department of Treasury and Finance, the proportion of long service leave estimated to be taken asleave (rather than leave paid out on cessation of employment) has changed from 35% in 2008 to 45% in 2009. The rate is used in the employment on-costcalculation. The net financial effect of the change in the current financial year is an increase in the employment on-costs liability and employee benefitsexpenses of $14 000.Interest Rate RiskAll payables are non-interest bearing.Net Fair ValuesThe carrying amount of payables represents fair value due to the amounts being payable on demand.SA LOTTERIES ANNUAL REPORT 2008-09

20. Employee Benefits2009 2008$’000 $’000CurrentAnnual Leave 556 447Long Service Leave 74 155Accrued Salaries 190 129Total current employee benefits 820 731Non-CurrentLong Service Leave 847 685Defined benefit superannuation plan liability (note 28(d)) 326 -Total non-current employee benefits 1 173 685Total employee benefits 1 993 1 416The total current and non-current employee expenses (ie aggregate employeebenefit (above) plus related employment on-costs (note 19)) is: 2 196 1 555Based on an actuarial assessment conducted by the Department of Treasury and Finance the benchmark for measurement of the long service leave liabilityhas not changed from the 2008 benchmark of 6½ years.21. Other Liabilities2009 2008$’000 $’000CurrentPrize reserve fund (a) 8 700 6 759Unearned revenue - sales in advance 1 403 1 471Total current other liabilities 10 103 8 230Non-currentUnclaimed prizes reserve (b) 8 020 6 705Total non-current other liabilities 8 020 6 705Total other liabilities 18 123 14 935(a)Prize Reserve FundBalance at 1 July 6 759 6 813Allocated to prize reserve fund 10 511 10 263Applied to additional or increased prizes (8 570) (10 317)Balance at 30 June 8 700 6 759The prize reserve fund allocation comprises the following percentages of net sales (gross sales revenue less agents’ commission) for the following games:• 5.0 per cent for Lotto;• 3.5 per cent for Oz Lotto, Powerball and Super 66;• 2.0 per cent for The Pools.These funds are available for distribution at any time as additional or increased prizes in subsequent lottery draws in the respective games or as prizes inrespect of missed prize entries for previous lottery draws.DREAMS LIVE HERE 77

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009(b)2009 2008$’000 $’000Unclaimed Prizes ReserveBalance at 1 July 6 705 5 829Unclaimed monies forfeited 4 305 4 54111 010 10 370Monies provided for distribution to the Hospitals Fund (2 151) (2 270)Monies provided for distribution to the Recreation and Sport Fund ( 1) ( 1)Applied to additional or increased prizes in subsequent lottery draws,prizes in promotional lotteries or ex-gratia payments ( 838) (1 394)Balance at 30 June 8 020 6 70522. Capital Asset Reserve2009 2008$’000 $’000Capital asset reserve comprises:• Capital fund account 12 607 12 170• Capital fund assets (at written down value) 4 730 4 62317 337 16 793Capital fund accountBalance at 1 July 12 170 10 466Transfer from retained earnings 2 000 2 000Assets financed (1 563) ( 296)Balance at 30 June 12 607 12 170Capital fund assetsWritten down value at 1 July 4 623 6 256Assets financed 1 563 296Depreciation (1 452) (1 927)Written down value of assets disposed of ( 4) ( 2)Written down value at 30 June 4 730 4 62323. Unrecognised Contractual Commitments2009 2008$’000 $’000Capital commitmentsCapital expenditure contracted for at the reporting date but not recognised as liabilities are payable as follows:Within one year 10 809 -Later than one year but not longer than five years 2 557 -Total operating lease commitments 13 366 -SA Lotteries’ capital commitments are for the replacement online lotteries system hardware and software and replacement of the statewidetelecommunications infrastructure.Operating lease commitmentsCommitments in relation to operating leases contracted for at the reporting date but not recognised as liabilities are payable as follows:Within one year 669 712Later than one year but not longer than five years 2 238 2 502Later than five years - 558Total operating lease commitments 2 907 3 772Representing:Non-cancellable operating leases 2 907 3 772SA LOTTERIES ANNUAL REPORT 2008-09

The 10 year accommodation operating lease at 24-25 Greenhill Road (head office) is non-cancellable with rent payable monthly in advance. Contingentrental provisions within the lease agreement require lease payments to be increased by 3 per cent per annum with a rent review after five years. The currentfive-year rent review has not been finalised. The option for renewal of a further term of 5 years is available prior to the expiration of the current term.The operating lease for the remote computer site at Kidman Park is non-cancellable with rent payable monthly in advance. Contingent rental provisions withinthe lease agreement require the minimum lease payments to be increased by 5 per cent per annum.2009 2008$’000 $’000Other CommitmentsOther expenditure contracted for at the reporting date but not recognised as liabilities are payable as follows:Within one year 3 911 2 640Later than one year but not longer than five years 8 348 2 383Later than five years 1 725 -Total other commitments 13 984 5 023SA Lotteries’ other commitments are for existing and new agreements relating to online lotteries system software, hardware, communications and associatedservices and other fixed services.24. Contingent Assets and LiabilitiesSA Lotteries is not aware of any contingent assets.A claim for damages was received by SA Lotteries on 15 July 2008 for alleged loss of potential winnings. At this time it is not possible to estimate the dollareffect of this claim or whether the claim will be successful.Other than this claim, SA Lotteries is not aware of any contingent liabilities.SA Lotteries has made no guarantees.25. Cash Flow ReconciliationReconciliation of cash and cash equivalents2009 2008$’000 $’000Statement of Financial Position 70 814 51 360Statement of Cash Flows 70 814 51 360Reconciliation of Net Profit after income tax equivalent to Net Cash provided by Operating Activities:Profit after income tax equivalent 21 437 18 809Less: Dividend contribution provided (19 446) (21 703)Less: Unclaimed prizes distribution provided (2 152) (2 271)Add (less): Non-cash itemsDepreciation and amortisation expense 2 559 3 346Net (gain) loss on disposal of non-current assets ( 2) 1 542Decrease in carrying value of defined benefit superannuation plan net asset/liability 868 540Changes in Assets / Liabilities(Increase) Decrease in Receivables (59 245) 25 971(Increase) Decrease in Inventories 22 ( 31)Increase (Decrease) in Payables (including Undistributed funds) 71 399 (25 771)Increase (Decrease) in Employee benefits 251 16Increase (Decrease) in Other liabilities 5 340 3 222Net cash provided by operating activities 21 031 3 670DREAMS LIVE HERE 79

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 200926. Distribution of Funds to SA GovernmentBalance Distribution Balance1 July Provided (Paid) 30 June$’000 $’000 $’000 $’000Gambling tax (notes 7 and 11) 4 795 64 344 (60 573) 8 566Dividend and Income tax equivalent 2 603 28 633 (26 986) 4 250Unclaimed prizes 483 2 152 (2 296) 339Totals 2008-09 7 881 95 129 (89 855) 13 155Totals 2007-08 7 196 91 654 (90 969) 7 881Comprising:Distribution to Hospitals FundGambling tax 4 784 64 191 (60 422) 8 553Dividend and Income tax equivalent 2 595 28 531 (26 885) 4 241Unclaimed prizes 483 2 151 (2 295) 339Totals 7 862 94 873 (89 602) 13 133Distribution to Recreation and Sport FundGambling tax 11 153 ( 151) 13Dividend 8 102 ( 101) 9Unclaimed prizes - 1 ( 1) -Totals 19 256 ( 253) 2227. Financial Risk ManagementSA Lotteries is exposed to a variety of financial risks, including market risk (foreign exchange and price), credit risk and liquidity risk.Risk management is carried out by all areas of the organisation and risk management policies and practices are in accordance with the Australian RiskManagement Standards and internal written policies approved by the Commission.SA Lotteries has non-interest bearing assets (cash on hand, receivables and inventories) and liabilities (payables and other liabilities) and interest bearingassets (bank balances and short-term deposits). The maturity of financial assets and liabilities is disclosed separately in the relevant notes: current itemsmature in less than 12 months; non-current items mature between one and five years.SA Lotteries’ exposure to foreign exchange risk and cash flow interest risk is minimal. SA Lotteries is exposed to price risk for changes in interest rates thatrelate to investments at fair value.SA Lotteries’ exposure to credit risk is minimal. SA Lotteries has policies and procedures in place to ensure that transactions occur with agents withappropriate credit history. SA Lotteries has no significant concentration of credit risk.Liquidity risk arises where an organisation is unable to meet its financial obligations as and when they fall due. SA Lotteries has consistent and stable cashflows from operations, which means its exposure to liquidity risk is minimal. The continued existence of SA Lotteries in its present form, and with its presentsegment/service, is dependent on State Government policy to maintain SA Lotteries’ asset base. SA Lotteries’ exposure to liquidity risk is insignificant basedon past experience and current expectations regarding risk.SA LOTTERIES ANNUAL REPORT 2008-09

28. Superannuation(a)2009 2008$’000 $’000Expense (Income) Recognised in the Statement of Comprehensive IncomeAmounts recognised as expense (income) in respect of thedefined benefit superannuation plan as follows:Current service cost 285 290Interest cost 310 339Expected return on plan assets ( 372) ( 467)Actuarial loss (gain) 979 492Superannuation expense (income) 1 202 654The expense (income) is recognised in the following item in the Statement ofComprehensive Income:• Employee benefits expenses (note 28(e)) 1 202 654(b)Reconciliation of the Present Value of the Defined Benefit ObligationPresent value of defined benefit obligation at beginning of financial year 5 385 6 323Current service cost 285 290Interest cost 310 339Contributions by plan participants 249 237Actuarial losses (gains) ( 241) ( 618)Benefits paid ( 196) (1 125)Taxes, premiums and expenses paid ( 106) ( 61)Transfers in 31 -Present value of defined benefit obligation at end of financial year 5 717 5 385(c)Reconciliation of the Fair value of Defined Benefit Plan AssetsFair value of plan assets at beginning of financial year 5 927 7 405Expected return on plan assets 372 467Actuarial gains (losses) (1 220) (1 110)Employer contributions 334 114Contributions by plan participants 249 237Benefits paid ( 196) (1 125)Taxes, premiums and expenses paid ( 106) ( 61)Transfers in 31 -Fair value of plan assets at end of financial year 5 391 5 927The fair value of Plan assets includes no investments over which SA Lotteriesretains ownership control relating to:• any of SA Lotteries’ own financial instruments; or• any property occupied by, or other assets used by, SA Lotteries.(d)Reconciliation of the Asset (Liability) Recognised in the Statement of Financial PositionDefined benefit obligation 5 717 5 385Fair value of plan assets 5 391 5 927Surplus (Deficit) ( 326) 542Net superannuation asset (liability) ( 326) 542The amount included in the Statement of Financial Position arising from SALotteries’ net superannuation asset/liability in respect of its defined benefit plan isas follows:Note 18: Other Non-Current AssetsDefined benefit superannuation plan asset - 542Note 20: Employee Benefits (Non-current)Defined benefit superannuation plan liability 326 -DREAMS LIVE HERE 81

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009(e)2009 2008$’000 $’000Movement in Asset (Liability) Recognised in the Statement of Financial PositionNet superannuation asset at beginning of financial year 542 1 082Income (expense) recognised in Statement of Comprehensive Income (1 202) ( 654)Employer contributions 334 114Net movement ( 868) ( 540)Net superannuation asset (liability) at end of financial year ( 326) 542(f)Plan AssetsThe percentage invested in each asset class at the reporting date:Percentage Invested* Plan Assets2009 2008 2009 2008$’000 $’000Australian equity 32% 31% 1 725 1 837Overseas equity 27% 25% 1 456 1 482Fixed interest and bonds 10% 10% 539 593Property 12% 12% 647 711Alternative assets ** 8% 10% 431 593Cash 11% 12% 593 711Total Plan Assets 100% 100% 5 391 5 927* Asset allocation as at 30 June 2009 was not available. The asset allocation at 31 May 2009 has been used as an approximation of theallocation as at the reporting date.** Alternative assets generally comprise those investments which do not fit within the traditional broad asset classes (such as shares, property,fixed interest and cash).(g)Expected Rate of Return on Plan AssetsThe expected return on assets assumption is determined by weighting the expected long-term return for each asset class by the target allocation ofassets in each class and allowing for the correlations of the investment returns between asset classes. The returns used for each asset class are net ofinvestment tax, investment fees, and asset-based administration fees.Expected Rate of Return2009 2008The expected rate of return for each asset class at the end of the financial year is as follows:Australian equity 7.5% 7.7%Overseas equity 6.7% 7.2%Fixed interest and bonds 4.7% 4.4%Property 6.1% 6.5%Alternative assets 5.7% 3.9%Cash 3.8% 3.9%Weighted average expected return 6.75% 6.5%(h)(i)2009 2008$’000 $’000Actual Return on Plan AssetsActual return on plan assets ( 848) ( 643)Principal Actuarial AssumptionsThe principal actuarial assumptions at the reporting date (expressed as weighted averages):Discount rate (active members) 5.0% pa 5.9% paExpected rate of return on plan assets (active members) 6.75% pa 6.5% paExpected salary increase rate 2.5% pa for 3 years 3.5% pa3.5% pa thereafterSA LOTTERIES ANNUAL REPORT 2008-09

(j)2009 2008$’000 $’000ContributionsContributions paid/payable by SA Lotteries to superannuation plans:Defined benefit members 317 92Defined contribution (accumulation) members 414 301Private funds 6 4Total contributions 737 397(k)Expected Employer ContributionsThe estimated employer contributions expected to be paid tothe plan during the year beginning after the reporting date: 291 86The estimated employer contributions are based on a contribution rate of 13% of defined benefit members’ salaries (see note 28(m)(ii)).(l)2009 2008 2007 2006 2005$’000 $’000 $’000 $’000 $’000Historical InformationPresent value of defined benefit obligation 5 717 5 385 6 323 5 852 6 994Fair value of plan assets 5 391 5 927 7 405 6 640 7 065Surplus (deficit) in plan ( 326) 542 1 082 788 71Experience adjustments - gain (loss):• plan assets (1 220) (1 110) 655 566 434• plan liabilities 379 540 ( 561) ( 170) 20(m) Funding Arrangements for Employer Contributions(i) Surplus/DeficitThe following is a summary of the most recent financial position of the Lotteries Commission of South Australia Superannuation Plan calculated inaccordance with AAS25 Financial Reporting by Superannuation Plans.as at 30 June 2006$’000Defined benefit members:Accrued benefits 6 055Net market value of plan assets 6 658Net surplus (deficit) 603Accumulation members:Assets and benefits 1 529(The Plan is subject to a triennial review and is externally managed. The last full actuarial investigation was conducted as at 30 June 2006 byStuart Mules, FIAA, of Mercer Human Resource Consulting. The report was dated 18 June 2007.)(ii) Current Contribution RatesAs at 30 June 2009, the current contribution rates, in accordance with actuarial advice and Commission endorsement, are:• 13% of defined benefit members’ salaries effective from 5 January 2009;• at the Superannuation Guarantee rate for accumulation members.(iii) Funding MethodThe method used to determine the employer contribution recommendations at the last actuarial review was the “target” funding method. Themethod adopted affects the timing of the cost to SA Lotteries.Under the “target” funding method, the employer contribution rate is determined with the aim of maintaining the assets at or close to the value of AccruedBenefits and above the total of the Vested Benefits (leaving service benefits) by a margin sufficient to give security against adverse circumstances.DREAMS LIVE HERE 83

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009(iv) Economic AssumptionsThe long-term economic assumptions adopted for the last triennial actuarial review of the Plan as at 30 June 2006 were:Weighted-Average Assumptions• Expected rate of return on assets (discount rate) 13.3% in the 2006-07 year6.5% pa thereafter• Expected salary increase rate 3.5% pa(n) Nature of Asset/LiabilitySA Lotteries has recognised a liability in the Statement of Financial Position in respect of its defined benefit superannuation arrangements. If a surplusexists in the Plan, SA Lotteries is able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of thePlan’s actuary.SA Lotteries (the employer) may at any time by notice to the Trustee terminate its contributions. In this case the employer has a liability to pay themonthly contributions due prior to the effective date of the notice, but subject to any statutory obligations, there is no requirement for the employer to payany further contributions, irrespective of the financial condition of the Plan.The Plan does not impose a legal liability on SA Lotteries to cover any deficit that exists in the Plan if it is wound up. The Master Deed of the MercerSuper Trust and the Participation Agreement of the Plan state that if the Plan winds up, the remaining assets must be paid to Members, Dependants,former Members, deceased Members’ Dependants or legal personal representative in proportions the Trustee in its discretion determines areappropriate.29. Transactions with SA GovernmentAs required by APS 4.1 of Accounting Policy Framework II General Purpose Financial Reporting Framework, the following table discloses revenues,expenses, financial assets and liabilities where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classifiedaccording to their nature.SA Government Non-SA Government TotalNote 2009 2008 2009 2008 2009 2008$’000 $’000 $’000 $’000 $’000 $’000INCOME6. Sales Revenue - - 393 705 366 583 393 705 366 5837. Cost of SalesPrizes - - (236 931) (221 283) (236 931) (221 283)Gambling tax on NGR (64 277) (59 573) - - (64 277) (59 573)Agents’ commission - - (29 310) (26 938) (29 310) (26 938)GST on NGR paid to ATO - - (14 252) (13 209) (14 252) (13 209)Total cost of sales (64 277) (59 573) (280 493) (261 430) (344 770) (321 003)Interest Revenue 2 902 3 628 - - 2 902 3 6288. Other Revenues 22 29 4 684 4 488 4 706 4 5179. Net gain on disposal of non-current assets - - 2 - 2 -TOTAL INCOME (61 353) (55 916) 117 898 109 641 56 545 53 725SA LOTTERIES ANNUAL REPORT 2008-09

SA Government Non-SA Government TotalNote 2009 2008 2009 2008 2009 2008$’000 $’000 $’000 $’000 $’000 $’000EXPENSES10. Employee Benefits Expenses 400 369 7 913 6 711 8 313 7 08011. Supplies and ServicesMarketing and promotions 59 84 6 409 6 316 6 468 6 400Computer operations - - 2 800 2 997 2 800 2 997Tickets, coupons, terminal rolls and ribbons - - 1 506 1 465 1 506 1 465Operating leases - - 653 632 653 632Other occupancy costs 15 12 598 566 613 578Temporary staff and contractors - - 400 459 400 459Agent distribution costs - - 245 234 245 234Consultancies - - 295 248 295 248Motor vehicle fleet costs 211 194 1 - 212 194Insurance 123 121 - - 123 121External audit fees 108 135 - - 108 135Training costs - - 114 117 114 117Gambling tax - other 67 46 - - 67 46Bad debts - - - 14 - 14Other 57 86 1 388 1 150 1 445 1 236Total Supplies and Services 640 678 14 409 14 198 15 049 14 8769. Net loss on disposal of non-current assets - - - 1 542 - 1 542Borrowing Costs - 11 - - - 11TOTAL EXPENSES (excluding Depreciationand Amortisation) 1 040 1 058 22 322 22 451 23 362 23 509FINANCIAL ASSETS15. ReceivablesAgent debtors - - 6 298 1 933 6 298 1 933Prize settlements receivable from Blocs - - 54 917 78 54 917 78Sundry receivables 161 351 119 157 280 508Prepayments - - 350 81 350 81Total receivables 161 351 61 684 2 249 61 845 2 600FINANCIAL LIABILITIES19. PayablesCurrentCreditors and accrued expenses 187 184 2 690 2 479 2 877 2 663Prizes payable - - 76 325 11 185 76 325 11 185GST payable - - 1 339 652 1 339 652Undistributed funds 13 155 7 881 - - 13 155 7 881Employment on-costs 42 47 61 40 103 87Total current payables 13 384 8 112 80 415 14 356 93 799 22 468Non-currentEmployment on-costs 50 38 50 14 100 52Total non-current payables 50 38 50 14 100 52Total payables 13 434 8 150 80 465 14 370 93 899 22 520DREAMS LIVE HERE 85

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009Certification of the Financial StatementsWe certify that the attached general purpose financial statements for the Lotteries Commission of South Australia:• comply with relevant Treasurer’s Instructions issued under section 41 of the Public Finance and Audit Act 1987 and relevant Australianaccounting standards;• are in accordance with the accounts and records of the Lotteries Commission of South Australia; and• present a true and fair view of the financial position of the Lotteries Commission of South Australia as at 30 June 2009 and the results of itsoperations and cash flows for the financial year.In our opinion the internal controls employed by the Lotteries Commission of South Australia for the financial year over its financial reporting and itspreparation of the general purpose financial statements have been effective throughout the reporting period and there are reasonable grounds tobelieve the Lotteries Commission of South Australia will be able to pay its debts as and when they become due and payable.Signed in accordance with a resolution of the Commission.Hans J OhffPresiding MemberJune RoacheChief ExecutiveIan ClayfieldGeneral Manager - Financial & Corporate Services20 August 2009SA LOTTERIES ANNUAL REPORT 2008-09

DREAMS LIVE HERE 87

LOTTERIES COMMISSION OF SOUTH AUSTRALIAANNUAL FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2009SA LOTTERIES ANNUAL REPORT 2008-09

glossaryACTTAB Australian Capital Territory TotalisatorAgency Board.Agent Entity appointed under an AgentAgreement to operate an SA Lotteries agency.Agency Distribution outlet selling SA Lotteriesgames.Corporate Scorecard A performancemeasurement report linking targets with thecorporate strategic intent.CSR Corporate Social Responsibility.Division One The top prize in Lotto – Saturday,Lotto – Monday and Wednesday, Oz Lotto,Powerball, Super 66 and The Pools.Easiplay Club SA Lotteries’ free playerregistration service for ticket purchases whichprovides players with the ability to safeguard theirwinnings and store favourite numbers.EBITDA Earnings Before Interest, Tax,Depreciation and Amortisation.Lotto – Saturday A game of chance in whichsix numbered balls and two supplementary ballsare randomly drawn from a barrel of 45 everySaturday.Lotto – Monday and Wednesday A gameof chance in which six numbered balls and twosupplementary balls are randomly drawn from abarrel of 45 every Monday and Wednesday.LuckySA Lottery A traditional raffle-stylelottery with tickets generated via SA Lotteries’online terminals.Megadraw Lotto – Saturday draw that offersan augmented Division One prize pool, oftenexceeding $20 million.MTBF Mean number of Transactions BetweenFailures – a measure of the reliability of agentterminals.Online Lotteries System The centralcomputer system operating SA Lotteries’ games,which is connected to a Statewide network ofapproximately 700 Point of Sale terminals.Return to Government Total payments toGovernment from SA Lotteries’ activitiescomprising Gambling Tax, Income Tax Equivalent,Dividend and Unclaimed Prizes.SA TAB South Australian Totalisator AgencyBoard.Shareholder The Government ofSouth Australia, on behalf of the community ofSouth Australia.Special appeal lottery A lottery whichmay be conducted by SA Lotteries to raise fundsfor a State-based cause or disaster.Spot 10 jackpot The top prize in a game ofKeno that is won when a player correctly matches10 of the 20 numbers drawn. The Spot 10 prizeincludes a minimum guaranteed $1 million plusany jackpot amount.State Lotteries Codes of PracticeMandatory codes for responsible gambling andadvertising approved by the IndependentGambling Authority.Instant Scratchies Instant lottery ticketswhereby players can win a prize by scratching awaythe latex on the ticket to reveal symbols or prizeamounts.Jackpot Occurs when there are no DivisionOne winning entries recorded for a draw, whichresults in the Division One prize poolaccumulating to the Division One prize for thenext draw.Keno A numbers game of chance whereby20 numbers are randomly generated from apossible 80 every 3.5 minutes. Players canchoose to select one number (Spot 1) up to tennumbers (Spot 10).Oz Lotto A game of chance in which sevennumbered balls and two supplementary balls arerandomly drawn from a barrel of 45 everyTuesday.POS Point of Sale at SA Lotteries agencies.Powerball A game of chance in which fivenumbered balls are randomly drawn from onebarrel of 45, and one numbered ball (thePowerball) is drawn from a second barrel of 45.Responsible Gambling Occurs whenindividuals make informed decisions about theirgambling participation in lotteries games and playwithout harm to themselves, others and theircommunities.Super 66 A game of chance in which the playerselects a six-digit number combination in therange of 000000 to 999999. To win DivisionOne, players match their selected numbers in theorder of those drawn every Saturday.The Pools A game of chance in which thewinning numbers are based on the results soccermatches played in either the NorthernHemisphere or Southern Hemisphere.Top prize The highest prize available on anInstant Scratchies ticket, and the largest prizeavailable in Keno Spots 8, 9 and 10.DREAMS LIVE HERE 89

• $271 million prizes won inSouth Australia.• $95 million to South Australia’shospitals.Dreams live here.www.salotteries.com.au