More than 2,000 years ago, the Chinese Confucian philosopher Mencius said friends are the siblings God never gave us. Those sage words ring ever truer in retirement when the opportunities to find friendship are more limited.
In what could be a harbinger for the coming year, the S&P/ASX 200 index has been on a roller coaster ride since the market opened on January 3. What’s making investors extremely jittery are fears incoming President Donald Trump’s policies will fuel inflation.
Lottery Corporation shareholders share winning dividend ticket
Shareholders in the Australia’s leading lottery and Keno operator, The Lottery Corporation (ASX:TLC), will await with keen interest the interim results for the first half of the 2025 financial year.
While the group posted a heathy 2024 result, with revenue increasing 13.8 per cent to $3.997 billion and EBITDA before significant items rising 16 per cent to $827.1 million, there are growing concerns that its monopoly position is being increasingly threatened by offshore lotteries, helping explain why this sound performance only prompted a six per cent increase in the share price for the past year. It closed at $4.85 yesterday.
Online lottery operators that give Australians access to international jackpots that can be as high as $1 billion are boosting their spend on television and stadium marketing in a bid to snare a larger slice of this appetising market.
Sue van der Werwe (pictured), The Lottery Corporation chief executive officer, downplayed the threat when announcing the 2024 results, but did acknowledge that overseas competitors had ramped up their marketing, a situation the group was monitoring closely.
The Lottery Corporation is not alone in its concerns, with the Australian Lottery and Newsagents Association saying customers are become increasingly confused about the difference between offshore competitions and local offers. It has taken up the issue with the Northern Territory government, which provides licences to companies selling offshore competitions, and Canberra.
The dark cloud of overseas competition on what is a very cosy monopoly should not detract from TLC’s 2024 results that showcased a robust performance, highlighting the resilience and long-term attractiveness of its balanced and diversified game portfolio.
As van der Werwe told shareholders, the strong financial results delivered record benefits of $2.6 billion to retail partners and the community, alongside increased returns for shareholders.
“Lotteries continue to be very popular among Australians, underpinned by a low-spend, mass participation model. This was evident in the second half with the record $200 million Powerball jackpot generating queues in retail outlets and sparking conversations in homes and workplaces.
“In the first half, Oz Lotto captivated Australia with the $90 million Boxing Day draw. These landmark events were driven by game changes in recent years designed to deliver bigger jackpots, more often. Most importantly, we are committed to delivering our games responsibly so they can be safely enjoyed by Australians and continue to deliver meaningful proceeds to governments and retail businesses.”
TLC, which can trace its long history back to 1881 when George Adams organised the first Tattersalls public sweep on the Sydney Cup, did not forget shareholders, who received a fully franked ordinary dividend payout of 16 cents a share (cps), as well as a special dividend of 2.5 cents – a 3.3 per cent increase compared with the previous corresponding year.
These figures underscore the strength of TLC’s business model, particularly its ability to generate consistent cash flow even in challenging economic conditions. And with several strategic initiatives in progress, it is well-positioned to continue delivering strong shareholder returns.
Looking ahead to 2025, shareholders can expect TLC to maintain its high payout ratio, with guidance indicating a target range of between 80 per cent and 100 per cent of full-year NPAT (before significant items).
The company’s strong cash flow generation and balance sheet flexibility, including a 2.6x net debt/EBITDA ratio, provide confidence in its ability to sustain and potentially grow dividends in the coming year.
On the revenue front, jackpot games such as Powerball® and Oz Lotto® were significant contributors to TLC’s record performance in 2024. The success of these games highlights the importance of active portfolio management and the company’s ability to capitalise on favourable jackpot sequences. For 2025, TLC will continue to focus on managing its jackpot portfolio to optimise turnover and maintain customer interest.
In addition, digital sales are accounting for a growing share of TLC’s turnover, driven by continued investments in digital platforms and personalised marketing, and in 2025 it aims to further enhance its capabilities through initiatives such as a new customer data platform and improved onboarding processes.
Despite its strong performance, TLC faces challenges in 2025. Aside from the overseas threat, consumer spending remains under pressure due to broader economic conditions, and regulatory reviews and potential changes in the gambling landscape may introduce new compliance requirements.
Still, TLC, which split from Tabcorp in 2022, has nearly 150 years of corporate memory to draw on as it faces these challenges. It’s a fair bet its chances are succeeding are far better than for those who buy its weekly lotto tickets
