The Lottery Corporation Limited (TLC.AX) Earnings Call Transcript & Summary

Good morning, everyone. I just got the 5-second countdown, so we're on our way. My name is Doug McTaggart, and I am Chairman of the Lottery Corporation Limited. On behalf of the Board, I welcome you to the 2025 Annual General Meeting of the Lottery Corporation Limited. I begin by acknowledging the traditional custodians of the land on which we are meeting the Yugara and the turbo peoples and pay my respects to their elders past, present and emerging. I also acknowledge the traditional custodians of the many lands where we are meeting online today. I have been informed that a quorum is present, and I declare the 2025 Annual General Meeting open. That was fast last year, not that fast issue. Allow me to introduce our Board -- joining us on nonexecutive directors, Harry Boon, Anne Brandon, Steve Morro, John O'Sullivan, Megan Quinn, and Tim Poole. Also joining me on stage is Sue van der Merwe, our Managing Director and Chief Executive Officer; and Nicholas Alton, our Company Secretary and Chief Legal and Risk Officer. I'd also like to introduce you to members of our executive leadership team. I will ask them to stand as I introduce them. Adam Newman, our Chief Financial Officer; Anthony Moore, our Chief Channel Officer; Galen Mulvehill, our Chief Commercial Officer. Andrew Shepherd, our Chief Customer and Marketing Officer; Lauren Summerville, there's lot of is, our Chief Information Officer; Robert Uhler; our Chief Corporate Development Officer; and Michelle Williams, our Chief People Officer. As you can see, we have a lot of chief, which is why our business runs so well. Before we move to the formal business of the meeting, I will outline procedures for asking questions and submitting votes. As set out in the Notice of Meeting, only shareholders and proxyholders are entitled to ask questions or to make comments or vote on resolutions. We will provide a reasonable opportunity for shareholders as a whole to ask questions and to make comments as each item of business is covered. Please ensure your question or comment is relevant to the item of business being considered and to shareholders as a whole. If you have a matter that you would like to raise as a customer of the lottery corporation, the -- these will be referred to our customer relations team for a response. To those wishing to ask a question, make a comment, please make your way to 1 of the microphones that stands that are placed in the room and make yourself known to the relevant staff member. Please show your voting or proxy holder card and when invited, introduce yourself to the meeting. If you are attending as a proxyholder, please also state the name of the shareholder you are representing today. Only those persons holding a yellow or blue voting card are entitled to speak. We respectfully asked that shareholders observe a 2-question limit per agenda item to ensure that as many shareholders as possible have an opportunity to ask questions. Thank you to those shareholders who submitted questions prior to the meeting. Some of those questions will be answered through my address or the CEO's address both of which have been released to the ASX market announcement platform prior to the commencement of this meeting. Or in the course of the meeting although this meeting will answer those questions. Raising on all resolutions will be conducted via a poll. I appoint the Lottery Corporation share registry, MUFG Corporate Markets as the returning officer for the conduct of the poll. I now declare the poll open. Shareholders and proxyholders wishing to vote today must complete ELA voting card. These will be collected by MUFG Corporate Markets staff following the close of the meeting. If you are voting today and need to leave the meeting early, please remember to submit your card to the share registry staff before you leave. The poll will close approximately 5 minutes after the conclusion of the meeting. Details of the proxies received prior to the meeting on each resolution will be shown in the presentation slides after discussion of that item. I am holding open proxies in my capacity as Chairman of the meeting, and I intend to vote all available proxies in favor of all resolutions. The final results of the poll will be lodged with the ASX as soon as possible after the meeting. In the unlikely event of a significant technical issue or an emergency here in this room, it may be necessary to adjourn the meeting. If this occurs, we will provide further details on our website and via the ASX market announcement platform. We have published on the ASX and on our website the Notice of Meeting, and the formal addresses and presentations to be delivered today. Following the conclusion of the meeting, a recording and transcript will be available on our website. It is now my pleasure to deliver the Chairman's address at this year's Annual General Meeting here in Queensland. The state whose historical ties to date back more than a century. Golden Cast had held its first draw in Queensland in 1917 to support veterans and war widows. Since then, lottery proceeds have helped fund vital services across the state, including the Royal Brisbane Women's Hospital and the Royal Children's Hospital. This heritage of community support continues today, and it is mirrored across the country. Of course, the lottery industry in Australia looks very different to what it was at Century ago. The Lottery Corporation, now the sole retail distributor across Australia, excluding Western Australia. What hasn't changed, however, is the joy of life-changing wins that many Australians dream of and of the impact lotteries have in supporting communities. Turning now to the 2025 financial year. The Lottery Corporation delivered a resilient financial performance in the face of challenging economic environment for Australian consumers. We navigated a more subdued revenue environment after the record jackpot year in fiscal year '24. And with the separation behind us, maintained strict cost discipline and leverage our strong balance sheet and high-quality earnings to deliver increased returns to shareholders. We lifted the dividend by 3%. We totaled ordinary dividend of $0.165 per share, up from $0.16 per share last year. This represented a payout ratio of approximately 100% of NPAT at the top end of our target range. This reflects the confidence we have in our future and the sustainability of our operating model. With approximately 85% of the company's debt either fixed or hedged and strong interest income from our cash holdings, -- our earnings profile remains high quality and materially insulated from movements in interest rates. Our long-term investment case remains compelling. We have a strong market position, supported by long-dated licenses, powerful brands, a resilient retail network, broad community acceptance and a balanced portfolio that delivers both defensive cash flows and attractive growth potential. Renewal was a key focus for the Board in fiscal year '25. We welcome Tim Pearl on to our Board as an observer in December. And following regulatory approvals, which take a little longer than we would like, His appointment as a Non-Executive Director was announced in August. Tim brings extensive listed company experience and stands for election today. Anne Brennan and John O'Sullivan are also standing for reelection. Their contributions continue to be invaluable, and they will address the meeting when we get to Item 2 shortly. Throughout fiscal year '25, the Board maintained strong oversight of strategy, risk management and stakeholder engagement. The Board and people and remuneration committee continues to monitor remuneration arrangements to help keep them fair, competitive, compliant and aligned with the performance and our risk appetite. Cyber resilience remains a priority as is the evolution of our technology ecosystem critical to long-term growth. Foundational investments across our core retail and digital platforms, are enabling more personalized customer experience and a stronger data governance, which is so important in today's world. Looking ahead, the company has announced plans to increase -- a planned increase in capital expenditure of approximately $100 million in fiscal year '26. It's coming forward. This investment marks the commencement of a 3-year strategic program to unlock long-term value through digital transformation and ecosystem modernization, thereby enhancing the customer experience. It will modernize our core infrastructure and accelerate our ability to bring innovative products to market through an even more seamless omnichannel offering. These initiatives are central to our strategy and reflect our commitment to meeting the evolving expectations of customers while positioning the business for future growth. At the conclusion of the 2025 financial year, the group's leverage ratio stood at 2.9x net debt to EBITDA. The Board continues to monitor the company's capital position through a rigorous capital management framework and remains committed to returning our target leverage range to 3 to 4x. This approach ensures we maintain financial flexibility and the capacity to support growth. Another key area of focus for the Board has been ensuring our licenses deliver broad value broadly to shareholders, to governments and the community and retail partners. For many of our retail partners, such as news agents Commissions on lottery sales can make up a large part of their income. So for them and others in the lottery and keno value chain, it's vital that we have a vibrant and sustainable industry. We are actively advocating for a more effective regulatory framework. The federal government continues to consider its response to several gambling-related reviews. We remain engaged advocating for a well-regulated industry that puts customer protection and community returns first and maintains the trust in the games that people play. Recent developments regarding the sales of foreign matched lottery tickets, which give Australian somewhat opaque access to lottery draws reinforce this objective. In the Northern Territory, a new minimum tax rate of 50% less GST has been introduced on foreign match lottery ticket profits. To be clear, we do not sell these products. In the U.S., the Oregon Lottery is moving to ban courier services, which what format lotteries are selling out of state -- tickets to out-of-state customers as several other states have. So this is a broader problem than just Australia, it's more global. To that extent, the world lottery operation has also stated its concerns warning that such services undermine regulated markets. These developments send a clear message. The global industry is taking steps to support the integrity of lotteries and the community contributions they deliver. In March, our Managing Director and CEO, Sue announced her intention to retire after nearly 35 years in the industry. And Sue probably doesn't remember, but my connection goes back to 1996, when so as a journey Clark in Golden Casket when we corporatized it. And Sue's been on this journey ever since and led the team to build this business into what it is today. Since Sue's leadership since our ASX listing in 2022 has been instrumental in shaping the Lottery Corporation into one of the world's leading lottery businesses. On behalf of the Board, I extend sincere thanks to Sue for her outstanding contribution, and we wish her the best on her well-earned retirement. In July, we were pleased to announce the appointment of Wayne Pickup, formerly of Allan and Loto New Zealand as our new Managing Director and CEO, subject to all the necessary regulatory approvals. Wayne brings 25 years of international lottery experience and will join us in November. He will be based in Brisbane. Until then, Sue will continue in her role driving this business and will ensure a smooth transition. Prior to receiving all regulatory approvals, Wayne will act as an reserved to the Board. And since he can't be an acting CEO until we get the regulatory approvals, the existing ELT, our executive leadership team who introduced earlier on, will continue to manage the business on a day-to-day basis under the -- of the company under the Board's oversight and until these approvals are received. So in closing, I would like to thank all our team members, the ELT team, my fellow directors for their dedication and contribution through fiscal year '25. Once again, the Lottery Corporation demonstrated its ability to deliver consistent and stable outcomes for shareholders. We did say while successfully strengthening the foundations for future growth through strategic investments in the game portfolio, distribution channels and customer experience. With a strong balance sheet, disciplined management and a clear strategy, we are well positioned to continue to deliver sustainable value to our stakeholders. Thank you, and I will now invite our Managing Director and CEO, Sue van der Merwe, to address shareholders. I look forward to your support going forward, and I'll address you later in the meeting. I will now pass to Sue, our CEO.

Thank you, Doug. Good morning, shareholders and guests. It's a privilege to be here with you today to talk about the Lottery Corporation. It is a wonderful company and industry, and it has been a part of my life for the last -- for the 35 years, as Doug mentioned. It's a business that we, the team at the Lottery Corporation are very passionate about. To that end, I'd like to acknowledge the commitment of our people whose efforts delivered results that once again highlight the strength of our business. Our Lotteries business has shown remarkable resilience over time, and that was again evident in the 2025 financial year. This was a year of disciplined execution, targeted investment and continued delivery for shareholders. On that note, I would like to thank you, our shareholders, for your ongoing support. The lottery industry long-term trend in turnover growth is in line with or above inflation and population growth. Profitability has also grown over time with digital share gains underpinning VC margin expansion. Over the last 6 years, Lottery's digital share has risen from 23% to 42% and Lottery's VC margin has grown from 23% to 20% -- almost 27%. The yellow line on the graph shown on the slide represents the 3-year average turnover, which smooths the impact of short-term jackpot fluctuations. In line with the long-term trend, this grew again in FY '25. It's a proven model that grows revenue sustainably and delivers for all stakeholders. Revenue in FY '25 was down 6% on the record FY '24 results impacted by a 13% reduction in Division 1 prizes across our 2 jackpot games and broader economic pressure on consumer discretionary spend. In that context, our portfolio performed well with healthy underlying customer participation and steady performance in our base or non jackpot games. We continue to prove the enduring and broad appeal of our products and the strength of our brands with 62% of newly acquired registered customers under the age of 45 years. We maintained a sharp focus on managing costs. Operating expenses were $307 million below our guided range of $310 million to $320 million. This was achieved through careful management of discretionary spend, headcount and procurement initiatives. Notwithstanding this, key headwinds included the full year run rate of separation, particularly in technology, cost inflation and the 13% lower jackpot price offers. EBITDA was $749 million and net profit after tax of $365 million was down 11.7%. With the impacts of separation now behind us, we have a clean operating expense base and an ongoing optimization program, which is expected to drive further efficiencies. In FY '25, we delivered initiatives that laid the groundwork for future growth and strengthen customer engagement. In lotteries, we accelerated jackpot sequences which resulted in 4,100,000,000 draws in FY '25, 3 for PowerBar and 1 for Oslo. These events drove excitement and reinforced the strength of our Jackpot portfolio. Game evolution remains central to our growth strategy, and I'm very pleased with the successful game changes delivered by our team. In May, we refreshed our second biggest game, Saturday Lotto lifting the Division 1 prize offer from $5 million to $6 million and introducing a $0.10 per game price rise. This game supported by a loyal customer base has the highest proportion of players who select their favorite numbers and early results show strong price retention and a positive customer response. Weekday Windfall also delivered a standout performance in its full year with the new Friday draw adding $90 million in incremental turnover. Customer experience remains a key focus. Our targeted investment supported another year of growth in higher-margin digital sales which now represent 42% of all lottery sales. We see significant upside in continuing to convert nonregistered into registered customers. To accelerate this, we launched simplified instant registration and personalized marketing campaigns, driving stronger onboarding rates and deeper engagement. In parallel, we began rolling out new lottery terminals in our retail network, completing Queensland on schedule. These terminals modernize our retail footprint, improve the customer experience in store and deliver cost efficiencies, supporting future innovation. We also deepened our community connection by integrating the 50-50 foundations, play for-purpose charity raffle into the lots app and website. This initiative supports hundreds of grassroots organizations and it makes it easier for customers to support causes that they care about. Turning to Keno. We delivered year-on-year revenue and earnings growth. Keno continues to be a retail central product with retail turnover increasing 8% on the prior corresponding period, a very pleasing result. This was supported by a refreshed branding, stronger local area marketing and increased venue visitation. We work closely with our venue partners to position Keno as a fun social game that can be enjoyed with friends and our strategy is working. The retail growth was partly offset by a near 20% decline in online turnover. This was largely driven by our decision to introduce mandatory weekly spend limits, a proactive step to better support customers with their online keno play. The introduction of mandatory spend limits, along with continuous play alerts introduced in May, underscores our commitment to responsible play and long-term sustainability. While Australians love playing lotteries and dreaming of a life-changing win, there is much more to our business. Most of the dollars spent on lottery and Keno tickets flow back to Australians to winners, large and small, to our retail and venue partners and to the broader community through our taxes paid and other contributions. In FY '25, lotteries and keno taxes and duties returned more than $1.7 billion to state and territory governments, on average, around 2% of their total tax receipts. Our retail and venue partners, most of them small businesses received $655 million in commissions on ticket sales. Commissions from the sale of lottery products alone are estimated to support more than 20,000 direct and indirect jobs across the country. This widespread distribution of value underpins trust in our games and their role in supporting communities. Beyond this, our broader community contributions supported initiatives in health and medical research, education, homelessness and mental health and disaster affected communities. Amplifying community impact is now 1 of 4 -- 5 core long-term strategic priorities. It's central to our purpose and strongly resonates with our people. We aim to create positive impacts through promoting responsible play, supporting stronger communities, and responsible environmental, social and governance practices. Over the past year, we continued to invest in initiatives that enrich our culture. Foster collaboration and belonging and support a high-performance environment. These investments strengthen the way our teams work together to ensure we can deliver better outcomes for our stakeholders. We were proud to launch our Reflect Reconciliation Action Plan strengthening respectful relationships and creating opportunities with Aboriginal and Torres Strait Islander peoples. In June, we set new greenhouse gas emissions reduction targets with a clear pathway to achieve net 0 Scope 1 and Scope 2 emissions by 2030. These initiatives represent meaningful progress in our sustainability practices and reflect our broader commitment to operate responsibly and create long-term impact. FY '25 was a year of strong execution and delivery, and we're focused on maintaining that momentum. Our strategy remains clear, innovate our product portfolio, drive registered customer growth across retail and digital, accelerate digital transformation and drive operational efficiency across the business. We're on track to implement changes to PowerBar in November with bigger prices supported by $0.20 per game price increase. Set for Life is the next game flagged for change after that. With its unique proposition of 20,000 a month for 20 years, it attracts different segment of players and enhances the diversity of our customer base. We will continue to invest in customer experience and improved customer conversion by rolling out new in-store payment options, expanding automation and self-service and extending our new retail terminal rollout. These initiatives are key enablers of our broader digital and omnichannel strategy, and they're helping us grow our registered customer base. From a financial perspective, we remain focused on cost discipline. Our intent is to keep operating expense growth below normalized revenue growth over time. We will seek to fund investments through savings with a focus on driving margin expansion and long-term value creation. We also remain committed to progressing license value enhancement initiatives. We started FY '26 with good momentum. The full year benefit of the Saturday auto price change will flow through alongside 8 months of benefit from the Powerball entry price increase. Continued digital share growth and further productivity gains should also support further margin expansion. Before I finish addressing shareholders for the final time, as your Managing Director and CEO, I'd like to share a few words. It has been an extraordinary privilege to spend 35 years in the lottery industry including the past 3 working with our talented team as CEO of the Lottery Corporation. I want to sincerely thank our Chairman and the Board for their support and guidance, our executive team for their unwavering support and the unwavering drive to deliver our TLC vision and every team member across the group for their dedication, commitment and passion. Together, we've built a strong business with an exciting future ahead. I wish Wayne Pickup all the very best when continues when he commences, should I say, as the new Managing Director and CEO later this year. Wayne brings deep experience in lotteries and has a proven track record. With all that talent and passion in the organization, I know the company will be in good hands. And finally, to our more than 140,000 shareholders, thank you for your continued support and trust in the Lottery Corporation. This is not just a high-performing lottery business, it's a company deeply embedded in the Australian community, creating positive impact for customers, small businesses and governments across Australia. I'm grateful to have been a part of it, and I look forward to continuing alongside you as a proud shareholder of the Lottery Corporation. Thank you, and I'll now hand back to the Chairman.

Thank you, Sue, and Sue's commitment and passion for this business is evident and she will continue to drive it through the rest of the year until Wayne starts with the support of the team, of course. So we now come to the formal business of today's meeting. The notice of meeting has been published and made available to shareholders, and I will take it as read. Each of the resolutions to be put to the meeting will be moved in the order set out in the notice of meeting. We're not done yet. At the end of each item of business, shareholders and proxyholders will be provided the opportunity to ask questions. May I please ask that you keep your questions relevant to the agenda item. The first item on the agenda is to receive and consider the financial report, the director's report and the auditor's report for the year ended 30 June 2025. These reports were approved by the Board and released on 20th of August '25. They were also published on the ASX market announcements platform and on our website. There is no vote on this item. However, in a moment, I will answer questions submitted prior to the meeting on these reports and on the performance of the company, which have not been addressed in my -- have not been covered in my address or Sue's address. I'll then invite questions from the floor. Ernst & Young is the company's external auditor and Michael Collins, Partner, Ernst & Young, who is responsible for the audit is present today and available to answer questions which should be restricted to audit matters. Thank you, Michael, and Amy. I'll now ask the Company Secretary, Nicholas to read out questions received prior to the meeting.

Thank you, Chairman. We have received 3 questions on this agenda item from Ms. Natasha Lee. The first question is, while there is the psychology of increasing the first division prize, such as the Saturday night Lotto from $5 million to $6 million as analysis been undertaken on the effect of expanding the range and number of smaller prices to attract a larger pool of players.

Thank you for your question, Ms. Lee. And the answer is yes. We have a robust process for game development that includes consumer research, commercial modeling and responsible gambling reviews. Each game enhancement involves a full review of the underlying mechanics, analysis was undertaken on the relative impact of increasing Saturday Lotto Division 1 price versus expanding lower division payouts. Both have played important roles. The size and excitement of the top price drives purchase decisions, while the smaller prices contribute to perceived value and player satisfaction. I think it's one of our strengths which we advertise or talk about that we do run a balanced portfolio of games, and we take great care in understanding the interaction of the various games with each other.

Ms. Lee's next question is the play for purpose provides funds to over 500 charities and community organizations. Could you advise how funds are allocated across the recipients -- and is it possible for customers to either select the individual charity they wish to support or the broad category, for example, health, sports, environmental, et cetera.

Thank you for your question, Ms. Lee. As Sue noted, we have brought the cable games on to our app, and we're very pleased to do that because we're proud to support the 50-50 foundations play for purpose charity raffle. -- from every $10 ticket supports an Australian charity. Customers choose the charity they wish to support when purchasing their ticket. Customers can search for charities that have registered to use play for purpose as a fundraising channel. It's free for charities to register on play for purpose and each a close -- after each raffle closes play for purpose distribute the funds to the nominated charities in line with the customer selection.

And the final question from Lee on this agenda item. The Board does not meet best practice of having at least 40% female nonexecutive directors and also the Board lacks other types of diversity. Boards that perform better generally have representation that better reflects that of the community.

Thank you again for your question, Ms. Lee. We are acutely aware that we are not currently meeting our gender diversity target for the Board with, I think it's 37% female participation. And we are mindful that, that gender diversity will change following Sue's departure. In fact, we'll fall beneath the target set by the AICD. Now we take this as a serious matter. We will keep our diversity targets in mind when considering renewal matters. Our Board skills matrix is another reference point for Board renewal considerations. And the Board will having settled the CEO succession, we'll turn our attention to Board succession board renewal early next year. Are there any questions from the floor?

Chairman, I'd like to introduce David Loosmore, representing the Australian Shareholders Association.

My name is David Lismore, and I'm a volunteer for the Australian Shareholders Association. Today, we hold proxies from members and nonmembers for about 1.5 million shares. I'd like to congratulate Sue, on her retirement and hope it will go as well. My first question is that the AGM is being rotated to different locations each year. But there's no live questions or voting allowed online during the meeting, the same as last year. Could you share the reasons why TLC has decided to save costs and not allow shareholders for online participation at this meeting?

Well, thank you, Dave, for your question. Shareholders can, of course, take the opportunity to lodge questions as Ms. Lee has done prior to the meeting, and we're happy to answer those questions. Hybrid meetings are expensive, and we have conducted hybrid meetings in the past, and our experience has been that the opportunity to ask questions online was really taken up. And so from a shareholder perspective, in terms of cost-benefit analysis, we restrict the meetings now to in-person meetings with the opportunity to lodge questions beforehand.

My second question is with online registrations rising, how will TLC support and incentivize the retail network.

Look, part of our -- the banking for our social license operator is our broad community participation. We are an organization where our product is low frequency, low spend, but broad community -- so having a strong retail network is very important to us. We have introduced a number of initiatives as Sue spoke about, to make it easier for customers to purchase, register online the retail outlets, and we keep class in commissions we pay our retailers in order to keep them incentivized and in the game. We are an omnichannel firm, and we intend to keep it that way.

Maybe the formalities, I'm a retired Royal Australian Navy Chief Pet Officer, Ted net. I had enough of formalities mines in the Navy. I worked with a lot of senior officers and public servants. What I'm getting at is with a new communications thing. I go in and say, all my dividends are paid into banks but now they can only give you your last fall winning type of thing. Can you tell me with your new system, why it is?

I'm sorry, first of all, I missed your name, sir.

Gary Russell.

Mr. Russell -- thank you. And what exactly are you asking? I didn't quite understand I can go into -- next into the news agents you use that as a floor front when you do on your advertiser, correct?

Yes. I know the owner of it is the 1 that started off extra on.

Sorry, sir, your question is?

The outcome you can only put in the last 4 winners on the sheet.

Last 4 minutes, again, is that right? So can we take that question on notice. So I'll get more details if you ask them follow -- does anyone around here know when not the publication came into being. And if the SP-15 Not for -- in not context. SP-16 Winners.

The win is privately being protected and that we win is going to elect to have not for publication SP-17 It goes back to the grain fan case. -- is farther on the first Opera House battery, and this kid was more. .

So -- and your question, sir?

Well, took a long time for Golden Casket to acknowledge that because people up here at the time said, "We want to know who's the winner of the.

Gold and casket. But we do have in place now the -- it is in place, people can choose to be totally anonymous, and we respect that working cost that all resonated from the MI. I believe at the time, the top price was $100,000. SP-21 Yes. Mr. Russell, thank you for that. I think it's been carbon. Rinow we've those 4 major $100 million lotteries, 1 for Azulao and tree for Tata outlook. SP-22 Yes. That was for the financial year first of July 2024 to the 30th of June -- did you actually budget for that? SP29090300 Look, we set a budget based on long-term probability outcomes of various sizes of lotteries. We call it a P50 budget. It's a statistical calculation -- and as the year rolls through, we either meet that budget last '23 to 24. We had a much better jackpot sequence run, '24 to '25, it wasn't as good. So while we look for what you might call a long-term average outcome, the year develops and delivers what it delivers.

Final question is I'm going to be phased out of paying extra money for payable because I think that's over the top, what you're doing there.

Well, thank you for the comment, Mr. Russell. A lot of our investors think we should increase prices a lot more often, but we can't price changes in this business are highly regulated. Mr. Russell, I think we're getting to the end of our discussion. Do you have another question question here.

I don't play Powerball until it gets up to $20 million. And when it gets up to the big money, $100 million, I'll go into -- you used to have a system where you could get a 40 share and it costs you $336,90, I think it was and you've got 500 power hits in that. But to me, I won't be plan because it's more ranging.

Well, your valuable case, let you play over $20 million, Mr. Russell. So thank you for your questions and your comments. Are there any further questions from the floor?

Chair. I have a question from Kieran Buller. Mr. Barve, was it? .

Yes. That's right. Ken. First of all, I'd like to thank Sue for all of our efforts in getting the company to this stage and would like to wish you an excellent further career, if I can call it that, in your retirement. Okay. I've got a particular question. What are the initiatives that the company is going to undertake for nonorganic growth? -- for nonorganic growth. For -- are you asking what M&A activity we have on mind that and other areas in which you can expand the growth apart from the current model SP29090300 Well, we have no -- there are no organizations out there that we are interested in buying or selling. .

We are looking at various options within the lotteries framework, but we will call that organic growth. So at the moment, we're focused on our 5G plan, which I think is a very good and very ambitious plan. and our new CEO will pick up the work of so and drive that forward.

What's the anticipated growth over the next 3 years that I'm sorry. What's the anticipated growth over the next 3 years with the current plan?

Look, the long-term growth has been roughly population plus inflation, and we intend to do better than that going forward.

Okay. Got another comment that I'd like to make on the difficulties for somebody to be a registered customer if somebody from your staff can approach me after the meeting, I'll discuss it with them.

That would be good. As Sue pointed out, we like our players registered and we like our players online. You tend to get twice the amount of play from registered players may do from unregistered plays. And of course, we get the commission from online play. So if you are having challenges, that's our problem, and we'd like to see them fixed. Any further questions?

Chairman, a question from Mr. Pure, a shareholder.

Yes. That's close to now. tags I'm not very good speaker, but I think Harry Boon might know me. I'm assuming when we vote we'll see the resolution and the percentage of votes or the tally. And then you'll ask someone the people who are present to vote.

We'll ask people to vote. And then we will show you the proxy holders voting at the end of that.

I guess, many years ago when Harry was involved, they used to -- you might remember I used to argue ILR,this is influencing people who are attending to vote. And -- but what I'm planning on or trying to say that we have moved a great deal with the digital technology with customer bases and experience and enjoyment. But there has been -- the presentation has been stagnant what -- I have a little bit of a technical background, right, but the way I see it, you people have the right to ask larger shareholders to alter their votes if things aren't treating your way. Is that correct?

There's -- we like to get the right outcome.

So you can the way or a red stuff and that. Why I ask larger shareholders to change the vote if the resolution doesn't follow your expectation. Is that correct? SP-33 We'd like to understand the intentions of voters across the board.

As far as I'm concerned, we've -- our people are pushing all this digital technology on the end user -- but what's your point? What is the point you're trying to get?

I'd like to see the president taste, the AGM presentation updated because this is an adequate stuff.

Okay. Well, why don't we meet you after the meeting can give us your advice. I'd like to say that there's no need for you people to be updated with incoming proxy votes from the registry company.

The way on the -- what I'm -- I've made some inquiry, new people are entitled to request proxy votes as they come in from the registry cut because -- all investors are entitled to vote as they see fit. -- on your new people -- you -- as a company, you are entitled to ask the registry company.

I could ask you the same thing, sir. There's a point here. I'd like you to finish your question and sit down.

Well, you see I know our people -- but what I'm proposing there is no need for you to be updated every. We have the technology. When you put up the resolution, the total should be black there shouldn't be any votes.

Because the resolutions, the outcome of the proxy votes will be put up after the vote internally here. and they won't influence the vote. So unless there's a further point, can we bring this to a close?

No, I think you trying to manipulate the voting on it. As far as I can ascertain, with the modern technology, you can implement more of the new technology where whatever the registry company is here that does all this stuff and they can sit on the panel or after and then after the voting has been taken, you display the result. That why it puts you in the same position as the investors.

Thank you, sir, you've made your point. Are there any further questions from the floor? Mr. Luca.

With the increasing digitalization of the business. Cybersecurity is a major risk -- and I'm sure a lot of your customers are worried about prior to C2. Can you provide an update on the company's recent investments in technology to ensure its resilience.

Look, it's a good question, Mr. Loosemore, particularly with what's happening externally today that's all being reported. We take our cybersecurity and our data protection risks very seriously. We had an external review of both data and cyber undertaken 2 years ago, was it so, and mapped out a strategy, a road map for us to bring us up to excellent standards. We are continuing to invest in both of those activities, data protection, data simplification, data elimination, where possible, bearing in mind that we have 6 or 7 different regulators. We have some requirements on healing we should keep data. And we, of course, are upgrading -- continually upgrading our cybersecurity protection. We employed a new CISO, Chief Information Security Officer. Alan Go is at Lauren 12 months ago, who has uplifted our capability. So you can rest assure that while I can't guarantee there won't be issues because all organizations are having issues today, not least, which is the Prime Minister. We will continue to take this very, very serious, very seriously. Any more questions from the floor. Look, thank you for your participation. I think it's important that there is another one, yes.

Chairman, a question from Brian Mitchell, shareholder.

Mr. Chairman. I've been a shareholder since I don't know when I think it started off with Jupiters who got taken over by tattoos who faded into Tabcorp who's split into lottery me the mines each time it change, I made a not so how I just have a comment. I noticed from the cash flow statement, that the cash receipts in the course of operations are nearly $3,900 million. I take it that's the money the hopeful paid, less the money whose hopes were realized and on prices, I couldn't find anywhere what those figures were, what the gross income was and what the value of the prices. Is it the...

The difference between turnover and price payments, is that what you're asking?

Yes.

Adam? I should know -- we returned roughly 60% of turnover 2 players, about 27% to governments what's that? That's 10% to 12% to commissions, and we take a small margin. SP-39 We don't get a lot back to it. Well, you shareholders are doing okay, I hope, I'm glad you're still a shareholder.

So I noticed that the gross amount $900 million. And then I noticed the government half of that.

So we're doing well for the government. Well, we paid $1.7 billion in state taxes. And of course, we pay corporate tax on top of -- out of our margin right. It's a pity we couldn't pay the government in a lot of tickets Mr. Michel as that along with the risk of the people now.

I'd just like to make that point to the huge amount. We are contributing in taxes to the government and with another. So we should get all our neighbors to buy a lot of tickets to help the government -- thank you, Mr. Mitchell. I'm glad that you've done well over the years, and I appreciate your sentiment.

Are there any more questions from the floor? We've got lots of people here, lots of time. Okay. And I do appreciate your question because having interested and engaged shareholder is important to ensuring that we run the business as you see it. But as there are no more questions, that concludes this item of business, and we will move to the next item. The next items of business relate to the election and reelection of directors. Item 2a on the agenda is the election of Tim Peal as a Director of the company. Tim was appointed a Nonexecutive Director of the Lottery Corporation on the 6th of August 2025, following the receipt of all necessary regulatory approvals and ministerial consents. Tim served as an observer to the Board between 16 December '24 and 5th of August '25. Temreties in accordance with the constitution and being eligible, has offered himself for election. -- reelection in this case for election. The Board considers team's significant experience as a nonexecutive director in a range of public and private companies across various sectors to be a value to the Lottery Corporation. He is considered by the Board to be independent. The Board, with Tim abstaining, unanimously supports his election as a Director of the company and recommends that shareholders vote in favor of this resolution. I'd like to invite Tim to address the meeting.

Thank you, Chairman, and good morning, ladies and gentlemen. I was born and educated in Melbourne. After qualifying as a chartered account and working with Pricewaterhouse, for around 6 years. I spent the next 12 years with Hastings Funds Management. I was part of a small team that helped build Hastings into a global investor in private market assets, principally equity and debt issued by infrastructure companies, and I was the Managing Director and CEO of Hastings from 2005 to 2007. Since retiring from Hastings, as the Chairman said, I've been an investor and Non-Executive Director of a range of public and private companies in a variety of sectors, including infrastructure, transport, mining, financial services and property. I am currently 56 years of age, and thoroughly enjoy working with companies as an investor and director and hope to assist on all major issues but with a special interest in strategy development and execution, capital allocation and particularly adequacy of returns, acquisitions and divestments building senior team capability and connection and also stakeholder engagement. Lottery Corporation has a valuable and long-term portfolio of licenses, brands and games. The Board and management team have done a terrific job executing the recent demerger and creating one of the best-performing lottery businesses in the world. Having said that, there is opportunity to further improve and deliver greater value to shareholders. And if I achieve your support, I look forward to working with our terrific team and Board to help realize many of these opportunities.

Thank you, Tim. I will now take questions on this item. Are there any questions?

Mr. Chair, the company has recently appointed well, we'll be appointing a new CEO and a subject to this meeting, a new director, Mr. Tim Paul, is it intended to increase the size of the Board? And what are the other objectives that you intend to look at when you're looking at board renewal. You've already mentioned the gender issue. Are there other issues that you need to address in Board renewal.

Thank you, Mr. Lucier, for that question. Look, there are -- there's a range of issues. First of all, we have a skills matrix. We like to see fully populated, and that covers a whole range of attributes directors bring to the business and not all directors bring -- can contribute equally on every aspect of it. So if we look at that, we will look at succession, we'll look at average age. I mean this is the youngest board apart from Tim, you reduce the average age of the Board by about half. So there are all matters that we will consider going forward. And subject to the various constraints, including sort of the diversity targets, we will and my position has always been to choose the best person in the field who is going to deliver the most value for shareholders and contribute to the board.

You mentioned the Board skills matrix, but it doesn't actually identify individual directors on that matrix. So it makes it harder for shareholders to actually work out, for example, where Mr. Paul fits in. You do mention why the Board supports the election, but you talk about the Board's skills matrix but then you don't actually identify who fits in where in that matrix -- so sorry, would you be willing to look at identifying individual directors on that matrix.

Look, I'll take that question on board, Mr. Lisa, I know to position the ASA holds. As I've said to you in the past, we as a Board make decisions collectively, we take elective responsibility for it. whether or not identifying specific skills or specific individuals helps you beyond knowing that the skills matrix is fully populated is something we'll consider. Are there any other questions from the floor? So as there are no other questions, we have now finalized discussion on this item. The proxy votes received prior to the meeting in relation to this resolution are now shown on the slide. It seems that the proxies received that this resolution will pass. Congratulations, Tim. We will now move on to the next item of business. This relates to the reelection of Anne Brandon as a director of the company. Anne has been a Non-Executive Director of the Lottery Corporation since May 19, '22. She is Chair of the Audit Committee and a member of the People and Remuneration Committee and the Nomination Committee. Anne retires in accordance with the constitution and being eligible, she has offered herself for reelection. The Board considers Anne's extensive experience and background in finance, accounting, risk and compliance and audit and the gaming and entertainment industry itself to be a value to the Lottery Corporation. She is considered by the Board to be independent. The Board, with Anne abstaining, unanimously supports answer election as the Director of the company and recommends that shareholders vote in favor of this resolution. I now invite Anne to address the meeting.

Thank you, Doug. And good morning, ladies and gentlemen. Thank you for the opportunity to stand for reelection to the Board of the Lottery Corporation. I joined the Board at the inaugural AGM in 2022 following the demerger from test. The Notice of Meeting contains details of my career, including executive experience at KPMG, Anderson and Ernst & Young, CSR and the Coats Group since 2019 I've become a full-time Nonexecutive Director. And in the last 5 years, I've sat on listed companies, Argo Investments, Charter Hall, Spark Infrastructure and Tabcorp I've also said on the Board of Rabobank Australia and Rebel Bank New Zealand and in the government sector, I've been a Board member of Top New South Wales. I currently sit on the board of GPT Group and Endeavour Group. And as announced recently, I'll be retiring from Endeavour Group at the conclusion of the AGM on the 17th of November. I've chaired the audit and risk committees for most of the companies that have served them and have also been a member of our Chair to the People and Remuneration Committee on those boards as well. The experience I've gained in my executive and Board careers provided me with detailed knowledge on business generally and in particular, commercial, financial, risk management and governance of listed private and government entities. The Lottery Corporation is a great business with long-dated or exclusive licenses and high-profile brands. The group is well placed to protect and enhance its game portfolio to deliver steady growth and returns to shareholders. The group has a strong social license to operate, and we continue to work with regulators and our communities to maintain the integrity of our licenses. If we elected today, I'll work with your Board and management team to continue to support all stakeholders and deliver strong returns to shareholders. Thank you.

Thank you, Anne. I'll now take questions on this item. Are there any questions from the floor?

Thank you for addressing your reelection. I was wondering if I could ask Director Brandon, if she could tell us the 2 or 3 things that she is most proud of in terms of her contribution on the Board to the company.

Good question. I think working with Tabcorp and working for what would have been 18 months or 2 years during Colvard, on the separation of the Lottery Corporation from Tabcorp would be a particular highlight for me. I worked with many of the executive team that are here today and the Board to achieve that. And I think, secondly, it's working with the Board and the management team in maturing the business as it separated from Tabcorp. And I think really helping the team to deliver at the same time managing all of the financial functions and risk -- and I guess, the compliance of what is a highly regulated business.

And can I say I have worked with Ann on other boards or another Board and when I was Chairman and as a Chairman knowing that Anne is in command of the Audit Committee does help me sleep at night. As there are no more questions, we now have finalized discussion on this item. The proxy votes received prior to the meeting in relation to this resolution is shown on the slide. It seems from the proxies received that this resolution will pass. Congratulations, Anne. . We will now move to the next item of business. Item 2 is the -- on the agenda is the reelection of John O'Sullivan as a Director of the company. John has been a non-Executive Director of the Lottery Corporation since October 2022. He is Chair of the Risk and Compliance Committee and a member of the Audit and Nomination Committees. The Board considers John's extensive experience and background in legal, corporate, governance, finance, risk and investment banking to be valued to the Lottery Corporation. He's considered by the Board to be independent. The Board with Dinabstaining unanimously supports his reelection as Director of the company and recommends that shareholders vote in favor of this resolution. I would now invite John to speak on his behalf.

Thank you, Doug. Good morning, shareholders. I'm honored to have been nominated for reelection as a Director of the Lottery Corporation. You first elected me in 2022, and it's been a pleasure and a privilege since then to serve on the Board. TLC occupies a special position in Australian corporate life. As has been mentioned, it's got long-dated exclusive licenses in every state and territory, except WA. Those are not only a source of great value for TLC, but also great obligations. -- and some risk. Your Board must not only oversee the profitable and sustainable operation of those licenses. -- but also has to ensure that TLC continues to meet its responsibilities and preserve its social license. I believe I've got the skills to help the Board to achieve those goals. My 25 years as a lawyer with 1 of Australia's great law firms, Herbert Smith Freehills Kramer, my 5 years as General Counsel of Commonwealth Bank, my 10 years as Executive Chairman of Credit Suisse in Australia have all helped equip me with operational, financial and legal skills. -- that, in turn, help the Board oversee key decisions. Additionally, I spent 12 years on the Takeovers Panel. I've had stents on the boards of companies such as AMP, WestConnex and Abacus Storage King. And all of those mean that I understand governance, compliance and risk management. I believe I've used those skills, not only in the boardroom, but as Chair of the Risk and Compliance Committee and is a member of the Audit Committee to your advantage. None of us can or should lay individual -- claim individual credit for the success of the company. But I do believe that I can play my part as a member of the team that delivers that success. I do wish to continue contributing to the Board to safeguard and strengthen the Lottery Corporation, its business and its people. So I, therefore, ask for your continued support and for your vote for my reelection. Thank you.

Thank you, John. I'll now take questions from the floor on this item.

I'd like to thank the -- most of the Board for ensuring that they have adequate shareholding in the company so that we can be assured that your interests are aligned with us as shareholders. And as a comment, I think the Australian Shareholders' Association will appreciate it when Director, Megan Quinn, brings her shareholding up to the base fee level.

Thank you, Mr. Lismore. Both Megan and the Board are acutely aware of the obligations and we'll meet them. Are there any other questions from the floor? As there are no more questions, you've now finalized discussion on this item. The proxy votes received prior to the meeting in relation to this resolution are shown on the slide presentation. It seems from the proxies received that this resolution will pass. Congratulations, John. We will now move on to the next item of business. Item 3 on the agenda relates to the adoption of the company's remuneration report for the financial year ended 30th of June. Lottery Corporation's remuneration philosophy is based on appropriately recognizing, rewarding and retaining high-performing talent. This enables us to, among other things, create value for shareholders. The remuneration report outlines the Lottery Corporation's approach to remuneration and the outcomes for the most recent financial year. The Board unanimously recommends that shareholders vote in favor of this resolution. The vote on this resolution is advisory only and does not bind the directors of the company. However, directors will take the outcome of the vote and shareholder feedback into consideration were in setting remuneration practices for future years. I will now ask the company secretary to read out questions received prior to the meeting on this item. Nicholas?

Thank you, Chairman. We have received 1 question on this item from Ms. Natasha Lee. Ms. Lee asks the short-term incentive remuneration outcomes seem too generous given there was a decrease across revenues, EBITDA, NPAT, et cetera, and targets were missed yet outcomes of 90.3% were awarded. There was insufficient stretch built into the reward system.

Thank you for your question, Ms. Lee. The FY '25 STI outcome of 90.3% reflects balanced assessment of performance across both financial and nonfinancial measures. While revenue was down 3.5% on target EBITDA and was 3% down on target, mainly due to unfavorable jackpot outcomes was higher than planned at 6% favorable -- it was better than 6% to Target. The STI framework also considered performance against a range of measures that the group achieved throughout the year. Although our customer numbers were below expectations, following a record year in fiscal year '24, good progress was made across other operational and strategic priorities. Taking these factors into account, the Board considered 90.3% of target STI payout, which equates to 60% of maximum opportunity for the MD and CEO and 45% for the executive key management personnel to be a fair and appropriate outcome that recognizes the overall delivery against group objectives while reflecting the shortfall in key financial outcomes. Are there questions from the floor?

The long-term incentive plan uses both relative TSR and return on capital hurdles return on capital invested is supported by the ASA as a good measure in LTI performance. But given that the return on capital invested is likely to be high for the Electric Corporation. -- how that be taken into account in the executive performance targets against it.

Thank you, Mr. Lisa. It is a good question and 1 we've addressed in the past in that -- on demerger, given the accounting procedures undertaken, our return on capital is in the high 20s -- mid- to high 20s. And as we have discussed out of board and with investors, it's unlikely that management could bring many initiatives forward. they're going to give us a higher return on investment than or on capital than that which exists. So will most certainly be dilutive. We were very clear when we introduced the target last year that the Board retains discretion to take into account matters brought forward by management for the benefit of shareholders that dilute the return on capital, return on invested capital, and we'll take that into account when making an assessment of performance.

Why was the absolute TSR gateway removed for financial year 2016 and what alternative protections ensure no large payouts occur when shareholders experience negative returns.

Yes. Look, I fundamentally believe that incentive schemes need to incentivate. And if we have too many challenges or too many hurdles in there that reduce the confidence of management in the fair outcomes, then we need to address that. We believe that the absolute TSR hurdle was probably unnecessary for a company like this given we will perform well against other companies in downturns and we want to keep management fully engaged. So it was a considered decision, and we did deliver it, as you noted. Are there any other questions from the floor? As there are no more questions, we have now finalized discussion on this item. The proxy votes received prior to the meeting in relation to this resolution as shown on the slide. It appears from the proxies that this resolution will pass. We'll now move on to the next item of business. Item 4 is the proposed grant of performance rights to the incoming MD and CEO under the Lottery Corporation's long-term incentive plan. On 28 July, the company announced that Wayne Pickup had been appointed as the Lottery Corporation's next Managing Director and CEO, and he would commence with the company on 24 November '25. Wayne will assume the role of Managing Director and CEO following the receipt of all necessary regulatory approvals in relevant jurisdictions. Shareholders are being asked to approve the grant of performance rights to Wayne as the long-term incentive component of his remuneration package for fiscal year '26. The FY offer will be made under Lotte Corporation's long-term incentive plan, which operates under the equity incentive plan rules on the terms set out in the explanatory notes to the Notice of Meeting. Dusaine commencing partway through the service period of the fiscal '26, a prorated grant will be offered. In accordance with the formula set out in the notice of meetings, it is proposed to grant 40 1,033 performance rights to Wayne. If shareholder approval is obtained vesting of the and CEO's grant of performance rights will be subject to 2 separate tranches with each tranche having its own performance measures and conditions. 50% of the less and CEO's performance rights will be subject to performance measures based on relative total shareholder return, TSR, as we've discussed, over a 3-year period commencing from 1 October 25 and ending 30 September 28. CA's performance rights will be subject to a performance measure based on the achievement of average return on invested capital, ROIC, as we just discussed, measured over 3 financial years from 1 July '25 to 30 June '28, inclusive. The Board has set threshold, target and stretch targets for the ROIC tranche that are considered to be challenging in relation to our strategic plan. Given the commercially sensitive nature of the targets, the ROIC threshold, target and stretch goals will be published following the end of the performance period. Vesting of all performance rights is also subject to a service condition. Performance rights will lapse if performance and service conditions are not satisfied at the end of the applicable performance and service periods, subject to limited exceptions. All performance and service conditions will be tested on or around 1 October 2028. Any performance rights at best will be held under a holding lock for a further 12 months from this date. As is a Lottery Corporation's practice, the LTI plan will be reviewed each year to ensure it continues to effectively incentivize and reward for the creation of long-term shareholder value. The Board recommends that shareholders vote in favor of this resolution. I will now take questions from the floor on this item. As there are no more questions, we have now finalized discussion of this item. The proxy votes received prior to the meeting in relation to this resolution is shown on the slide presentation. It appears from the proxies received that this resolution will pass. We now move to the final item of business, closing the meeting. That concludes the formal business of this meeting. If you haven't already done so, please submit your votes in respect of all resolutions now using the voting -- the paper voting card. We will leave the poll open for a further 5 minutes after the close of the meeting to enable shareholders to cast their votes. The results of the poll will be released to the ASX market announcements platform as soon as space after this meeting. On behalf of the Board and management and particularly, Sue, I would like to thank you for attending the Lottery Corporation's Annual General Meeting and for providing questions and comments to help make this an engaging meeting, which it has been. Thank you again for your time today and for your continued support of the Lottery Corporation. I now declare the meeting closed. Please join us for refreshments.