The Era of Continuous Growth a Thing of the Past at Loto-Québec



    MONTREAL, June 20 /CNW Telbec/ - "Loto-Québec has been dealt a new hand,
and the era of continuous growth is a thing of the past. These circumstances
are fuelling a period of reflection that we have undertaken about the role,
mandates and future directions of Loto-Québec. The results of this reflection
process will be integrated into the Development Plan that we will be
submitting to the Government this fall."
    These are some of the remarks offered by Loto-Québec President and Chief
Executive Officer, Mr. Alain Cousineau, upon the release of the Corporation's
Annual Report focused on the fiscal year ended March 31, 2007. The document
reveals that Loto-Québec generated consolidated revenues of $3.799 billion and
net income of $1.468 billion, representing respective declines of 5.4% and 9%
as compared to the previous reporting period.
    Loto-Québec's Lottery, Casino and Bingo sectors maintained their earnings
at a level comparable to those of the past few years, thus confirming the
maturity of their respective markets. In actual fact, the Corporation's
overall drop in earnings is attributable to the Video Lottery sector, whose
sales plummeted during 2006-2007 by $200.9 million, or 15.5%, as compared to
the previous fiscal year.
    This decline can be attributed to two factors: the continuing
reconfiguration of the video lottery network in accordance with the directions
outlined in the Corporation's 2004-2007 Development Plan, and the new
stipulations of the anti-smoking legislation that came into effect on May 31,
2006. More specifically, these two factors account for 28% and 72% of the
Video Lottery sector's drop in earnings respectively.

    A Total of $1.6 Billion Remitted to the Québec Government in Dividends

    Dividends paid by the Corporation to the Québec Government during fiscal
2006-2007 totalled $1.391 billion, down $146 million, or 9.5%, from fiscal
2005-2006. When adding the $76.8 million remitted to the Government's various
designated funds and the $85.5 million to the Ministère du Revenu in the form
of tax on capital and provincial sales tax (QST), Loto-Québec's total
contributions to Government coffers during fiscal 2006-2007 amounted to close
to $1.6 billion.
    These figures are unveiled in the Corporation's Annual Report entitled,
New Hand, New Challenges, which was tabled by Finance Minister and Treasury
Board Chairwoman, Monique Jérôme-Forget, in the National Assembly today. The
decline in Loto-Québec's revenues is unprecedented. During the previous fiscal
year, the Corporation's revenues passed the $4 billion mark for the first time
ever.

    Further Reduction in Accessibility to Video Lotteries

    The efforts to reduce accessibility to video lotteries in economically
fragile zones and neighbourhoods were intensified during the past fiscal year.
At March 31, 2007, the province's video lottery network consisted of
2,905 sites, representing 217 fewer sites than at the end of the previous
fiscal year. In all, the network has lost 758 sites since the start of the
reconfiguration initiative.
    Other establishments will stop offering video lotteries during the
current and next fiscal years in accordance with an agreement concluded with
the Ministère de la Santé et des Services sociaux. This agreement calls for
the removal before the end of 2009 of all terminals from bars located within a
2.3-kilometre radius of the gaming centres to open their doors in
Trois-Rivières and Québec City this fall. A total of 47 sites will close
within the prescribed perimeter in Québec City, and another 19 in
Trois-Rivières.

    Operational Integrity

    In view of the importance Loto-Québec attributes to the integrity of its
operations and the trust of the population, the Corporation wasted no time in
reacting to the media revelations and the Ontario Ombudsman's report on the
vulnerability of that province's consumers to possible fraudulent acts
committed by lottery retailers.
    Subsequent to the comprehensive analysis it conducted between October
2001 and October 2006, Loto-Québec was able to conclude that its retailers who
win prizes of $50,000 and over do not win any more often than other lottery
players, when taking their respective estimated ticket consumption into
account. This finding was validated by the auditing firm of Samson Bélair /
Deloitte & Touche, s.e.n.c.r.l. on the basis of the hypotheses provided and
calculations of probability with respect to statistical norms. For the
purposes of this audit, the firm called upon the services of a mathematics
professor from the Université du Québec.
    "In order to further ensure the validity of our findings," explained
Mr. Cousineau, "we entrusted the firm KPMG with a mandate to examine our prize
payment processes and procedures so as to ascertain that risk is being
correctly managed and, if applicable, to recommend any improvements that may
need to be made."

    Parallel Game Offerings On the Fringe of the Legal Framework

    In view of the fact that parallel gaming is developing on the fringe of
legality, Mr. Cousineau is calling for immediate and enlightened reflection
and concerted action in this regard. "According to all observers, illegal
gambling has established a growing presence in our society, and this
phenomenon is depriving the State of major amounts of legitimate revenue," he
pointed out in his message appearing at the beginning of Loto-Québec's Annual
Report. In so doing, the Corporation's President is referring in particular to
the amusement machines being operated in violation of the law, to illegal
sports betting, to organized poker sessions, as well as to Internet gambling.
    In his message, Mr. Cousineau also discussed the spin-offs being
generated by Loto-Québec's presence abroad, the Corporation's sustainable
development policy, its operational planning over the past fiscal year, and
its application of the Act Respecting the Governance of Public Corporations.
Loto-Québec's entire 2007 Annual Report is available in both English and
French on the Corporation's Web site at http://loto-quebec.com.

    
    2006-2007 Financial Highlights (in thousands of dollars)

    -------------------------------------------------------------------------
                                    2006-2007      2005-2006  % Variation
    -------------------------------------------------------------------------
    Total Revenues                  3,798,832      4,016,030         (5.4)
    -------------------------------------------------------------------------
      Lotteries                     1,842,432      1,860,630         (1.0)
    -------------------------------------------------------------------------
      Casinos                         758,224        758,464          0.0
    -------------------------------------------------------------------------
      Restaurants                      87,786         86,164          1.9
    -------------------------------------------------------------------------
      Hotels                           16,214         14,716         10.2
    -------------------------------------------------------------------------
      Video Lotteries               1,097,917      1,298,805        (15.5)
    -------------------------------------------------------------------------
       Bingo                           39,370         39,857         (1.2)
    -------------------------------------------------------------------------
       Multimedia                       1,062          1,354        (21.6)
    -------------------------------------------------------------------------
    Net Income                      1,468,065      1,613,943         (9.0)
    -------------------------------------------------------------------------
    Dividends to the Québec
     Government                     1,391,000      1,537,000         (9.5)
    -------------------------------------------------------------------------
    




For further information:

For further information: Jean-Pierre Roy, Director of Media Relations,
(514) 499-5151


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