A N N U a L R E P O R T 2 0

annual report 2010 1 Our mission

2 Key figures

3 Our contributions

4 Message from the Chairwoman of the Board

7 Message from the President and Chief Executive Officer

12 40th anniversary

16 Social commitment

20 Lotteries

24 Casinos

28 Video lotteries

32 Bingo

36 Ingenio

40 Casino Mundial

42 Financial review

44 Consolidated financial statements

49 Notes to the consolidated financial statements

72 Comparative results

73 Follow-up on the actions outlined in the 2008-2013 Sustainable development action plan

83 Code of ethics and rules of professional conduct

94 Access to information and protection of personal information

96 Board of Directors and Corporate Secretariat

99 Board and Committee reports

108 Organizational structure

110 Contact Our mission Loto-Québec’s primary mission is to assure the systematic and effective operation of games of chance in the province. Created in 1969 to implement a public lottery, the Corporation has diversified its activities over the years in order to carry out new mandates entrusted to it by the Government. In addition to a public lottery, through its subsidiaries, Loto-Québec operates four casinos, related restaurant and hotel services, a video lottery network, including two gaming halls, along with network bingo activities. In addition, the Corporation exports multimedia products to international markets and holds a financial interest in Casinos Développement Europe, the third largest casino operator in France. Loto-Québec returns the fruits of its commercial activities to the Government and to all of Québec society. In recognition of its social responsibilities, the Corporation is committed to combating excessive gaming and to promoting healthy gaming behaviour. Moreover, it manifests its social commitment through the sponsorship of numerous events that bring people together throughout the province.

LOTO-QUÉBEC 2rapport 0 1 0 annual annuel report 2 0 1 0 p. 1 Key figures

As at March 31 (in thousands of dollars) 2010 2009 $ Variation % Variation

Total revenues 3,810,283 3,870,272 (59,989) (1.5) Lotteries 1,850,171 1,901,534 (51,363) (2.7) Casinos 935,307 915,443 19,864 2.2 Video lotteries 1,043,332 1,062,720 (19,388) (1.8) Bingo 32,025 35,392 (3,367) (9.5) Ingenio 771 1,083 (312) (28.8) International – 1,582 (1,582) (100.0) Inter-sector transactions (51,323) (47,482) (3,841) 8.1 Prizes awarded – Lotteries 977,560 1,015,208 (37,648) (3.7) Prizes awarded – Bingo 16,521 16,804 (283) (1.7) Gross margin 2,363,961 2,384,954 (20,993) (0.9) Operating expenses 847,258 800,333 46,925 5.9 Net earnings 1,340,687 1,455,759 (115,072) (7.9) Dividends 1,251,597 1,375,400 (123,803) (9.0) Other amounts contributed to the Québec and Canadian Governments 236,806 226,646 10,160 4.5 Total assets 1,185,789 1,205,049 (19,260) (1.6) Shareholder’s equity 134,477 134,477 – –

TOTAL REVENUES (in thousands of dollars) 2010 2009 2008 2007 2006

3,810.3 3,870.3 3,850.2 3,798.8 4,016.0

NET EARNINGS (in millions of dollars) 2010 2009 2008 2007 2006

1,340.7 1,455.8 1,436.2 1,468.1 1,613.9

p. 2 LOTO-QUÉBEC 2 0 1 0 annual report Our contributions

ECONOMIC CONTRIBUTIONS

Commissions and Dividends to Prizes awarded other compensations to the Government to lottery and lottery, video lottery and of Québec bingo winners bingo network partners $1.252 B $994.1 M $360.5 M

Purchases from companies conducting Salaries and Taxes to Special contributions business in Québec employee benefits governments to governments $399.4 M $413.1 M $132.5 M $104.3 M

social CONTRIBUTIONS

Contributions to the Ministère de la Santé et des Contributions to the Contributions to Services sociaux in aid to the Ministère de l’Agriculture, Contributions and the fight against elderly who have lost their des Pêcheries et commissions to excessive gaming autonomy de l’Alimentation non-profit organizations $31.2 M $30.0 M $14.2 M $18.0 M

Fonds d’aide à l’action Fonds d’aide à l’action communautaire autonome – communautaire autonome – Assistance for independent Assistance for international Collection community action humanitarian action Sponsorships Loto-Québec $15.8 M $3.2 M $14.2 M $0.4 M

LOTO-QUÉBEC 2 0 1 0 annual report p. 3 Message from the Chairwoman of the Board

HÉLÈNE F. FORTIN, FCA, ICD.D Chairwoman of the Board

In 2009-2010, the Board of Directors and its committees worked [...] to ensure the ongoing integration of governance-related measures within a clear structure, enabling the Corporation to maintain the highest standards of good corporate governance.

p. 4 LOTO-QUÉBEC 2 0 1 0 annual report M e s s a g e f r o M t h e C h a i r w o m a n o f t h e B o a r d

My first full year as Chairwoman of Loto-Québec’s Board Also with a commitment to continuous improvement, the Board of Directors was marked by continuity in the composition of furthered its work on sound risk management. It monitored the the Board and its committees. My fellow Directors and I actively Internal Audit annual plan and the implementation of certification pursued our mandate of ensuring that the Corporation was programs for internal controls and the integrated risk management managed in compliance with the provisions of its Act of framework. Each decision taken at Loto-Québec undergoes a Incorporation and its regulations along with the other laws rigorous process of analysis, in the interests of compliance with the and regulations that govern it, including the Act Respecting many requirements and the added value of interventions, thereby the Governance of State-Owned Enterprises. maximizing the Corporation’s ability to fulfil its mission long-term. The Board of Directors made several important decisions during RULES OF GOVERNANCE fiscal 2009-2010, including authorizing a regulatory amendment In 2009-2010, the Board of Directors and its committees worked request to allow the Corporation to develop an online gaming with Loto-Québec’s Internal Auditor and the Auditor General to offering. This decision was taken for a number of reasons ensure the ongoing integration of governance-related measures connected with Loto-Québec’s mission, first and foremost to within a clear structure, enabling the Corporation to maintain redirect illegal gaming activity to a secure, controlled site. This the highest standards of good corporate governance. It was this evolution of its mandate enables the Corporation to adjust to new approach that set in motion the process for adopting measures market realities. for evaluating the Corporation’s efficiency and performance. Board The Board also decided to approve the opening of a Kinzo hall, a new members began a process to determine the best performance game to be launched as a pilot project by the Société des bingos du indicators to use and commissioned an outside firm to benchmark Québec (SBQ). Kinzo will make it possible for the SBQ to ultimately it against similar organizations. maintain its average annual contribution of $10 million to non-profit organizations (NPOs), to provide timely assistance to NPOs that Furthermore, the Governance and Ethics Committee initiated the became “orphans” when many bingo halls were closed in recent annual review process of the mandates and performance of each years, and to create a regional development fund for this industry. committee and the Board of Directors, as well as the annual review by each committee of the Corporation’s operational policies under Throughout the year, the Board followed the progress of day-to-day their respective governance. The codes of ethics and professional matters at the Corporation to ensure that its business plan objectives conduct applicable to Board members, managers and employees were achieved. It also continued its work on the 2010-2013 strategic of Loto-Québec were also subject to an annual review. The purpose planning exercise. I can confirm that the organization’s mission, of these systematic reviews is to maintain best governance practices its major orientations and its established policies and regulations with a view to compliance, efficiency and added value, all within are respected. a context of optimizing resources. FINANCES AND RISK MANAGEMENT The Loto-Québec Board fulfilled its responsibilities with respect to auditing and monitoring the Corporation’s finances. On the recommendation of the Audit Committee, the Board approved Loto-Québec’s quarterly and annual financial statements as well as its budget. Works in regards to co-auditing with the Auditor General and KPMG as well as the transition to IFRS were also carried out. Here again, I can attest to the rigourous standards and quality of the financial information produced by the Corporation, as well as the ongoing efforts to comply with the best accounting practices.

LOTO-QUÉBEC 2 0 1 0 annual report p. 5 Message froM the ChairwoMan of the Board

BETTER VALUE FOR MONEY ACKNOWLEDGEMENTS Throughout the year, the Board and its committees made resource It is with the utmost sincerity that I thank Mr. Alain Cousineau, optimization a core priority. What this means in real terms is ensuring who fulfi ls his role as President and Chief Executive Offi cer of that the interests of sound management are factored into the Loto-Québec with heartfelt enthusiasm, diligence and integrity. strategic planning exercise and that measures taken in this respect His ability to identify priorities and mobilize a team around clear are integrated into the action plan and Internal Audit plan so that, objectives inspires confi dence. I would also like to thank my fellow in short, this priority comes to permeate every sphere of the members of the Board and the members of the Executive organization’s activities. Committee. I am very pleased that the Corporation can count on such competent and dedicated people. In exercising its functions, the Loto-Québec Board also took into account the diffi cult budgetary situation. The Corporation does not Lastly, I commend the work of all those who contributed directly evolve in a vacuum, and it believes in the importance of efforts being or indirectly to the success of Loto-Québec, which has been part made to restore public fi nances. Loto-Québec has been a major of the Québec landscape for 40 years. To make so many people economic engine for the province for 40 years and intends to continue experience so many emotions while giving back to the community as such. Accordingly, it will participate in this collective effort as for four decades is praiseworthy indeed! Congratulations and happy a stakeholder in Québec society. 40th anniversary!

SUSTAINABLE DEVELOPMENT Several measures related to the three pillars of sustainable development, namely social, environmental and economic, continue to be integrated into Loto-Québec’s activities. The Board received a report at each of its meetings on the progress of the Corporation’s HÉLÈNE F. FORTIN, FCA, ICD.D sustainable development initiatives. It also approved the establishment Chairwoman of the Board of a corporate volunteer program, which fi ts perfectly into the Corporation’s sustainable development framework.

p. 6 LOTO-QUÉBEC 2 0 1 0 annual report Message from the President and Chief Executive Officer

ALAIN COusINEAu President and Chief Executive Offi cer

Great challenges await the Corporation in coming years, as it continues to adjust to new market realities while maintaining the balance between its corporate mission and its social responsibility.

LOTO-QUÉBEC 2 0 1 0 annual report p. 7 M e s s a g e f r o M t h e P r e s i d e n t a n d C h i e f e x e c u t i v e o f f i c e r

Forty years ago, the Société d’exploitation des loteries et courses Every sector of Loto-Québec was affected, with the exception du Québec — now Loto-Québec — was created. Four decades of the Casino sector, whose consolidated earnings rose 2.2% due later, it is clear that the lottery and gaming industry has changed to the opening of the Casino de Mont-Tremblant. Lotteries and video considerably. Loto-Québec participated in each major stage of this lotteries saw their revenues decline by 2.7% and 1.8% respectively. evolution. Whether in the implementation of casinos, the video However, of the four areas of gaming, bingo revenues suffered the lottery network or network bingo, not to mention the design of largest decline, 9.5%. In addition to the economic conditions, several a host of innovative lottery products, the Corporation has always factors explain these results. Further analysis is also presented in been able to adapt to new market realities. the financial review on page 42 of this document. Fiscal 2009-2010 was busy. The Casino de Mont-Tremblant opened its doors to the public, a new Canada-wide lottery, , was Lotto Max HIGHLIGHTS launched, renovations at the Casino de Montréal got underway and the Government of Québec authorized the Corporation to move to- OPENING OF THE CASINO DE MONT-TREMBLANT ward the development of an online gaming offering. Other highlights The Casino de Mont-Tremblant opened in summer 2009. This fourth of the year just ended include the settlement of a class action suit in casino in Québec enhanced the tourism offering of Tremblant, a connection with video lottery terminals (VLTs). resort of international renown. It is worth noting that this investment of more than $66 million made it possible to create a great many jobs. Despite satisfactory customer traffic, the Casino de Mont-Tremblant THE ECONOMIC SITUATION is behind compared to initial forecasts. Eight months after its AND THE FINANCIAL RESULTS opening, the establishment had to adjust its business strategy, For fiscal 2009-2010, Loto-Québec posted consolidated revenues most notably by shortening its opening hours during slow periods of $3.810 billion and net income of $1.341 billion, or decreases and implementing a series of marketing initiatives aimed at of 1.5% and 7.9% respectively over 2008-2009. After managing stimulating its growth. The difficult economic context, particularly to maintain its revenues and net income in recent years, the in the entertainment and tourism sector, clearly had an impact on Corporation is now feeling the repercussions of the difficult the Casino’s revenues. However, we are confident about the future economic climate. of the Casino, which will certainly be able to build its reputation through its many assets.

p. 8 LOTO-QUÉBEC 2 0 1 0 annual report M e s s a g e f r o M t h e P r e s i d e n t a n d C h i e f e x e c u t i v e o f f i c e r

THE LAUNCH OF LOTTO MAX ONLINE GAMING Lotto Max is the second Canada-wide game sold by terminal brought In January 2010, Loto-Québec submitted a regulatory amendment to market after the launch of Lotto 6/49 in 1982. It replaced the request allowing it to develop an online gaming offering. There were Super 7, which bowed out after 15 years. This new game, created several reasons behind this decision, such as the exponential spread in collaboration with four other Canadian lottery corporations of online gaming in recent years. There are currently more than grouped under the Interprovincial Lottery Corporation, was born of 2,000 illegal sites without responsible gaming mechanisms and a thorough analysis of customer expectations. Lotto Max is gradually whose integrity is sometimes questionable. Our mandate is therefore taking hold with consumers. Revenues from its sales have surpassed to direct this existing activity to a gaming site with the utmost integrity those generated by the Super 7. that provides security and promotes responsible gaming. This will help minimize the social costs currently borne entirely, without any MAJOR RENOVATIONS UNDERWAY AT THE CASINO benefit to it whatsoever, by the Government. DE MONTRÉAL The first shovel of earth was turned in autumn 2009, kicking off We are very aware of public concerns about problem gambling. To the start of a major renovation project at the Casino de Montréal. create our online gaming website, we will leverage our internationally This investment of approximately $305.7 million over four years recognized expertise in responsible gaming and draw inspiration from includes relocation of the administrative offices to two new galleries models that have proved effective elsewhere in the world, including and renovation of the gaming areas as well as construction of Sweden and England. We will introduce several control and prevention a central entrance, a multifunctional hall and an entire floor for measures, many in the forefront of the industry, such as verification restaurants. This project will result in a more modern Casino de of player age and the ability for players to set certain limits for their Montréal, able to continue holding its own among strong competition gaming session. A gaming self-exclusion program will also be offered. from the U.S. Northeast and standing out for the quality of its customer service. The Casino will meet a major logistical challenge We expect to launch our online gaming website in the fall of 2010. by remaining open throughout the construction period. To this end, we are working with the British Columbia and Atlantic lottery corporations on a shared online gaming platform.

LOTO-QUÉBEC 2 0 1 0 annual report p. 9 M e s s a g e f r o M t h e P r e s i d e n t a n d C h i e f e x e c u t i v e o f f i c e r

SETTLEMENT OF THE VIDEO LOTTERY MACHINE SUSTAINABLE DEVELOPMENT CLASS ACTION SUIT The principles of sustainable development are taken into account in Loto-Québec is pleased with the settlement of a class action lawsuit all our sectors. We are also continuing to implement our 2008-2013 brought in 2002 on VLTs, which thereby recognized that VLTs are Sustainable Development Action Plan. To find out the status of its not the cause of compulsive gambling. For the sake of fairness, various initiatives, see the section starting on page 73 of this report. compulsive gamblers treated between 1994 and 2002 can obtain reimbursement for their therapy fees upon presentation of their TOURING FORUMS receipts as required proof. Concerned citizens have been accorded The touring forums that started in January 2009 continue. Aimed an 18-month claims deadline from the date of publication in at informing the business community about the Corporation’s newspapers of a notice, on May 1, 2010, to send their claims mission and its contributions to the community, this tour throughout to the Fondation Mise sur toi. the province’s cities and towns excites a lot of interest along the way. The many people we meet are keen to learn more about us, and to express their concerns as well as creating fruitful exchanges. LOTO-QUÉBEC: A RESPONSIBLE ORGANIZATION RESPONSIBLE GAMING LOTO-QUÉBEC’S NEXT CHALLENGES By obtaining, in 2009, the highest certification for responsible gaming, Level 4, from the World Lottery Association, the quality Proud of its past achievements and future-oriented, Loto-Québec of our programs and our ability to integrate responsible gaming will continue to make every effort necessary to remain an important initiatives into our operational activities on a daily basis was economic engine for Québec society, with responsible gaming a top confirmed. We are proud of this recognition and we are constantly priority. Great challenges await the Corporation in coming years, as striving to meet the highest standards in the field of responsible it continues to adjust to new market realities while maintaining the gaming. We also continue to pay significant subsidies to the balance between its corporate mission and its social responsibility. Ministère de la Santé et des Services sociaux and to the Fondation This pursuit of balance has been a core priority of management since Mise sur toi, which has been a separate entity from Loto-Québec 2003, and will remain so especially in the case of online gaming. since February 2009. Loto-Québec will carry out this project with the utter thoroughness and integrity that have characterized it for the past 40 years.

CERTIFICATION OF TERMINALS AND GAMING SYSTEMS In April 2007, a new agreement protocole to optimize the quantity of certified equipment was endorsed by the Ministère de la Sécurité publique du Québec, by Québec’s forensic lab the Laboratoire de sciences judiciaires et de médecine légale, and by Loto-Québec. The following year, a team dedicated to the compliance of devices and gaming systems was established at Loto-Québec. In 2008-2009, this team developed processes that led to a record number of certifications of new games and devices. In 2009-2010, the team optimized these processes, which resulted in surpassing the total number of the previous year’s certifications. As a result, three platforms and 93 games were certified, making it possible to diversify the game offering while continuing to ensure device reliability.

p. 10 LOTO-QUÉBEC 2 0 1 0 annual report M e s s a g e f r o M t h e P r e s i d e n t a n d C h i e f e x e c u t i v e o f f i c e r

In light of Québec’s difficult budgetary context, we shall also implement a program to reduce expenses and increase productivity to meet the targets set by government. We are well aware of the efforts needed to improve public finances. That is why we will ensure that all expenses incurred are mission-critical to achieving our goals and that they are driven by the principles that guide our activities, namely the quality of customer service, the integrity of the games and the responsible marketing of our products. The next effort will complement the measures already taken, which since 2003 have had the effect of holding increases in operating expenses to a level comparable to that of inflation and reducing the operating expenses budget by $19 million during fiscal 2009-2010 in anticipation of less favourable economic conditions.

ACKNOWLEDGEMENTS I would like to thank the Government of Québec for the support and confidence it has shown in us. I also thank Ms. Hélène F. Fortin for the thoroughness and diligence she has shown in carrying out her mandate since her arrival in August 2008. I am very grateful to her. I would also like to acknowledge the fine work of my colleagues on the Board of Directors and the Executive Committee. Each individual’s skills are essential to the success of the organization. Lastly, I would be remiss if I did not salute the invaluable contribution of all the employees of Loto-Québec and its subsidiaries, present and past, who contributed to the success of the Corporation and who make it a jewel in the crown of Québec’s economy. Thank you for your involvement!

alain co u s inea u President and Chief Executive Officer

LOTO-QUÉBEC 2 0 1 0 annual report p. 11 Maurice T. Custeau is appointed President. 1970 1982

The first draw of a Canada-wide online lottery Loto-Québec holds IS HELD. Lotto 6/49 its first draw: OFFERS CONSUMERS A WEEKLY GUARANTEED 1988 Inter-Loto, a passive 1978 $2 lottery with a JACKPOT OF $500,000. Roue de fortune, the $125,000 GRAND PRIZE. first instant lottery to take place in front of a television audience, is launched. Yves Corbeil becomes Loto-Québec’s draw host. Loto-Québec implements a Loto-Québec posts program to provide revenues of $1 billion. Loto-Québec 1981 grants and subsidies The first three develops a sales to students and products were La Mini, network for teachers studying Inter and Super. online lotteries, gaming in general La Mini still exists a world first. and the phenomenon after 40 years. of compulsive

1969 gambling. 1983

Loto-Québec is the first lottery The Criminal Code of corporation in Canada is amended to 1977 Canada to develop permit provinces to and launch instant Lotim, the subsidiary operate lotteries. The lotteries. The Loterie 1979 responsible for Société d’exploitation des Québécois is acquiring Loto-Québec’s des loteries et courses the first product head office, located du Québec (Loto-Québec) in this category. at 500 Sherbrooke becomes Canada’s Street West in Montréal, first such lottery is created. It will corporation, and The Corporation become sole owner North America’s third. acquires the first of the building in 2007 work of art for the and responsible for Collection Loto-Québec, its property management Following a draw to be officially created as of January 1, 2008. for Super-Loto, the a few years later. The Corporation awards artist is Louis Pelletier, 1976 its very first $1 million now curator of the GRAND PRIZE. Collection.

Loto-Québec is celebrating its fortieth anniversary. This large public corporation has been part of the lives of Québecers since 1969, when the Government of Québec awarded it the mandate to operate games of chance throughout the province. From a single public lottery, Loto-Québec has seen its mandate expand over the years. The Corporation has become an international benchmark for innovation and the management of lottery products, and is ranked among the world leaders in responsible gaming. Here are some of the steps that brought Loto-Québec to where it is now.

p. 12 LOTO-QUÉBEC 2 0 1 0 annual report 1993 Casiloc, the subsidiary responsible for building, leasing and managing the casinos as well as acquiring the furniture and equipment needed to operate them, is created. 1994

Super 7, a new Canada-wide online lottery, The teleactive lottery is launched. La Poule aux œufs d’or, whose concept On January 31, the is based on a popular Casino de Montréal television show from welcomes its 1992 The Société des the 60s, is launched. 1996 10 millionth visitor. casinos du Québec, responsible for building and over- Internet users seeing the operation can now obtain draw of government-run The Casino de results through casinos, is created. Charlevoix opens. Loto-Québec’s The Société des website. loteries vidéo du Québec, responsible for establishing, marketing and managing a network of video lottery

1990 terminals, is created.

Mise-o-jeu, Loto-Québec’s 1995 sports lottery, is launched. The first sport offered is hockey, The Casino de Hull, and several other to become the Casino sports are added du Lac-Leamy in 2002, shortly thereafter. the Société des casinos opens. du Québec acquires the building housing The Casino de the Casino de Montréal, The Cabaret du Montréal opens. AS WELL AS THE former Casino de Montréal Expo 67 Québec Pavilion, opens its doors parking lots and to the public. adjacent lots to carry out expansion work.

LOTO-QUÉBEC 2 0 1 0 annual report p. 13 loto-QuéBeC’S ContrIButIon to CoMBat CoMpulSIve 2001 GaMBlInG rISeS to $20 MIllIon annually. ManaGeMent oF the preventIon anD treatMent proGraM IS GIven to the MInIStère De la Santé et DeS ServICeS SoCIaux. 1998 2000 InGenIo, loto-QuéBeC’S a law prohIBItInG reSearCh anD Develop- the Sale oF lottery Ment SuBSIDIary, proDuCtS to MInorS IS CreateD. (unDer 18 yearS oF aGe) IS aDopteD. 2003 loto-QuéBeC launCheS the hIlton laC-leaMy a new MultIMeDIa anD anD ItS ConFerenCe InteraCtIve lottery Centre, aDJaCent to playeD wIth a CD-roM, the CaSIno De hull, aS a worlD FIrSt DeSIGneD well aS the théÂtre anD DevelopeD Du CaSIno, open. alaIn CouSIneau By ItS reSearCh BeCoMeS loto-QuéBeC’S 1997 on aprIl 24, the anD DevelopMent Seventh preSIDent. the SoCIété DeS CaSIno De hull SuBSIDIary InGenIo. BInGoS Du QuéBeC, welCoMeS ItS 1999 reSponSIBle For 10 MIllIonth vISItor. DevelopInG anD MarketInG network the CorporatIon BInGo proDuCtS launCheS an aD In QuéBeC’S BInGo CaMpaIGn to CoMBat teChnoloGIeS nter, hallS, IS CreateD. CoMpulSIve GaMBlInG, reSponSIBle For 2002 unDer the theMe DevelopInG or aCQuIrInG, “So the GaMe reMaInS InteGratInG anD a GaMe.” the FonDatIon MISe operatInG the CoMputer Sur toI IS CreateD. SySteMS that Support loto-QuéBeC’S BuSIneSS the newly reStoreD oBJeCtIveS, BeCoMeS ManoIr rIChelIeu IS a wholly-owneD InauGurateD. loCateD SuBSIDIary. the CoMpany rIGht BeSIDe the CaSIno waS FounDeD In 2000. De CharlevoIx, It IS the CaSIno MunDIal the property oF a SuBSIDIary IS CreateD. ConSortIuM ConSIStInG ItS MISSIon IS to leveraGe oF loto-QuéBeC, CanaDIan QuéBeC know-how In paCIFIC hotelS anD DeSIGnInG, IMpleMentInG QuéBeC’S unIon- anD operatInG CaSInoS SponSoreD InveStMent anD relateD BuSIneSSeS FunD, the FonDS De anD apply It worlDwIDe SolIDarIté FtQ. aS a MeanS oF GeneratInG eConoMIC SpIn-oFFS For QuéBeC.

p. 14 LOTO-QUÉBEC 2 0 1 0 annual report Reconfiguration of the lottery video terminal network 2009 is completed, with 2009 a reduction of more than 36% in the number of sites, surpassing the initial goal by approximately 5%. A group of 12 people from the Montérégie region wins $32,912,981 The Fondation Mise in a Lotto 6/49 draw, the The Loto-Québec Board sur toi becomes an largest jackpot ever of Directors complies independent entity. awarded by Loto-Québec. with the gender

2008 equality goal set by the Government of Québec for 2011.

Loto-Québec is 2005 awarded Level 4 certification of the World Lottery

2007 The Casino de Association’s Mont-Tremblant opens. Responsible Gaming Framework, the Espace Création, highest international a multidisciplinary certification of In January 2010, Loto-Québec exhibition and event its kind. submitted a regulatory venue located on the amendment request to the

ground floor of 2010 government allowing it to Loto-Québec’s head develop an online offering office in Montréal, is of games of chance. inaugurated with an Replacing Super 7, exhibition in homage a new Canada-wide to Gilles Carle. online lottery is launched: Lotto Max. The gaming halls in Trois-Rivières and Québec City open.

Loto-Québec’s 2004-2007 Development Plan provides,

2004 most notably, for Loto-Québec adopts decreasing acces- a sustainable sibility to video development policy: lottery terminals 2006 Act Responsibly and (including a 31% Develop Sustainably. reduction in the Major renovations number of sites). at the Casino de Montréal get underway.

On October 6, the Casino de Charlevoix welcomes its 10 millionth visitor.

LOTO-QUÉBEC 2 0 1 0 annual report p. 15 2005

Espace Création, a multidisciplinary exhibition and event venue located on the ground floor of Loto-Québec’s head office in Montréal, is inaugurated with an exhibition in homage to Gilles Carle. 2006

Loto-Québec adopts a TMENT

1979 sustainable development policy: Act Responsibly and Develop Sustainably. I

Loto-Québec’s sponsorship program is launched. MM

The Corporation acquires the first work of art for the Collection Loto-Québec. The artist is Louis Pelletier, now curator of the Collection. social CO s o C i a L C O MM i t M e n t

EVENT SPONSORSHIPS Les Entrées en scène took off right from the start in August 2009, when the very first tour of emerging artists got underway. Over During fiscal 2009-2010, Loto-Québec dedicated some $13 million the next ten months, they gave 102 performances on 78 stages to event sponsorships. in 60 cities and towns in Québec.

Most of these funds went to Les Rendez-vous Loto-Québec AMATEUR SPORT and Les sorties signées Casino. These two programs supported For several years, Loto-Québec has been providing support to 138 events spread throughout Québec’s 17 administrative regions, various organizations working with disabled athletes. During fiscal with the vast majority held outside large urban centres. They made 2009-2010, the Corporation renewed its major partnerships with it possible for Loto-Québec to reach more than 10 million visitors Défi Sportif, the Québec Special Olympics and the Québec Foundation over the past year, while generating significant tourism, economic, for Athletic Excellence. social and cultural benefits for the various communities. the COLLECTION LOTO-QUÉBEC To qualify for assistance from Les Rendez-vous Loto-Québec — and in keeping with the sponsorship policy adopted by the Corporation In 2009, the Collection Loto-Québec celebrated its 30th anniversary. in 2004 — the events must be held mainly outdoors, have popular Since 1979, Loto-Québec has been actively supporting the visual appeal, be available free or at a low cost, and generate significant arts in Québec and working to get more contemporary art on display economic and social benefits for the community. throughout the province by allocating one hundredth of 1% of its revenues to the acquisition of works of art. Sustainable development criteria now round out this list. While in recent years, the Corporation encouraged sponsored events to put During fiscal 2009-2010, the Corporation invested $385,200 to in place measures to minimize their impact on the environment, purchase 159 new works by 70 artists. As at March 31, 2010, the these criteria are now an integral part of the evaluation of sponsor- Collection Loto-Québec comprises 4,212 works by 1,084 Québec ship requests. artists, making it one of the largest corporate collections in the country. LES ENTRÉES EN SCÈNE LOTO-QUÉBEC In addition to being active in event sponsorships, in February 2008 Loto-Québec launched a new funding program for cultural activities in partnership with the Réseau indépendant des diffuseurs d’événements artistiques unis (RIDEAU): Les Entrées en scène Loto-Québec. This program provides financial and logistical support for up-and-coming artists from every region of Québec and all areas of the performing arts. It also targets support for promoters and PR networks at every stage of a tour.

OSM Loto-Québec Concerts in the Parks Casino du Lac-Leamy Sound of Light Some of the performers selected in 2010 for Les Entrées en scène Loto-Québec

LOTO-QUÉBEC 2 0 1 0 annual report p. 17 s o C i a L C O MM i t M e n t

The Collection’s 30th anniversary was marked in several ways. FIVE YEARS OF SUSTAINABLE DEVELOPMENT First, it made its entrance into the Montreal Museum of Fine Arts. Through a five-year partnership between Loto-Québec and this In 2006, Loto-Québec was the first public corporation to adopt Montréal institution, new contemporary art galleries have been opened a sustainable development policy based on the economic, social there. This endowment from Loto-Québec makes contemporary and environmental dimensions of its activities. Since then, this policy art far more accessible by providing free entry to the galleries. has enjoined efforts from every business sector of the Corporation To celebrate the opening of these new exhibition spaces, some fifty and called on the services of all its employees and managers. works from the Collection Loto-Québec, selected by the curator The Corporation is also progressively involving its business of contemporary art at the Museum of Fine Arts and the Collection’s partners, who are invited to collaborate on achieving its sustainable curator, were presented as an exhibition from November 2009 development objectives. to February 2010. The selected works showcased the scope and diversity of the Collection Loto-Québec. PUTTING THE ACTION PLAN IN MOTION A milestone was reached during fiscal 2009-2010. For the first The Collection was also featured at the Musée national des beaux-arts time, the 2008-2013 Sustainable Development Action Plan was du Québec, which hosted the exhibition La Collection Loto-Québec, actually in effect for a full year. Loto-Québec used the opportunity 30 ans d’arts visuels from June to August 2009. This is how thirty or to take stock of its practices in this area. What followed was the so works came to adorn the walls of the cells in Québec City’s historic development of more aggressive targets, such as adding criteria prison, now the museum’s Charles-Baillairgé Pavilion. related to sustainable development in the selection process of sponsored events, drawing up a sustainable transportation plan At the same time, works from the Collection were on a province-wide and holding eco-friendly events. tour to give the public every opportunity to discover the treasures Another big stride forward: All Loto-Québec business units are of this collective heritage. now required to factor in the 16 principles of the Sustainable Development Act when they draft their operational plan. Tools to Espace Création, the venue for exhibitions and activities located help managers integrate these principles into their decision-making at Loto-Québec’s Montréal head office, was also put to excellent have been developed and are explained in the documents En route use in celebration of the Collection’s 30th anniversary. Along with vers un développement durable and Guide pour la prise en compte Nomade, the exhibitions L’oeuvre et la manière, La Collection selon… des principes de développement durable. and Diane Dufresne et Richard Langevin Mur à Mur drove Espace Création to a new peak in attendance by welcoming more than ATTENTIVENESS AND AWARENESS 18,000 visitors. An initiative to foster dialogue among certain Loto-Québec stakeholders, or individuals and target groups affected by Lastly, the Collection Loto-Québec now enjoys a new graphic and the Corporation’s activities, is now underway. visual identity. It also made its entrance into cyberspace with its launch of lotoquebec.com/collection.

Two employees of the Collection Loto-Québec in the From The Montreal Museum of Fine Arts, Stéphane At Loto-Québec’s Grande-Allée offices in Québec City, warehouse: Lyne Vaillancourt, secretary, and Marc Aquin, Curator of Contemporary Art, and Nathalie Bondil, table scraps are composted. Beauchamp, clerk Director and Chief Curator, in the company of Alain Cousineau, President and Chief Executive Officer of Loto-Québec, and Louis Pelletier, Curator of the Collection Loto-Québec p. 18 LOTO-QUÉBEC 2 0 1 0 annual report s o C i a L C O MM i t M e n t

The first phase involved consulting all members of Loto-Québec – 2009-2010 BOMA Québec Earth Award for the Loto-Québec personnel to determine their concerns and expectations in regard Multifunctional Complex in Montréal to sustainable development. These consultations revealed that the – Pilier d’Or Award in the “Human Resources” category presented employees have a good understanding of Loto-Québec’s approach by the Association des gestionnaires de parcs immobiliers and they support it, while hoping that the Corporation now gives institutionnels in 2009 for the quality of customer service provided more priority to the economic and social components of sustainable by the Corporate Department of Real Estate Operations at all development. Loto-Québec buildings

The next stage will be set in motion over the course of 2010. This time, – Contech Innovation Trophy in 2009 in the Sustainable it will be a matter of consulting external stakeholders. Altogether, Development Category – Innovative Practices (industrial, this will allow the Corporation to improve its development and commercial and institutional buildings) for the implementation implementation processes for sustainable development initiatives. of a series of measures to reduce energy consumption at the Loto-Québec Multifunctional Complex in Montréal Lastly, as set forth in the Sustainable Development Act, Loto-Québec provides a synopsis in this annual report, on page 73, of the progress Loto-Québec also distinguished itself by obtaining ICI ON RECYCLE! made during fiscal 2009-2010 with respect to each of the 14 actions levels 2 (Implementation) and 3 (Performance) certification awarded called for in its Action Plan. by RECYC-QUÉBEC.

REAL ESTATE MANAGEMENT AND ENVIRONMENTAL AWARDS ESTABLI S HMENT CITY LEVEL In 2009-2010, Loto-Québec received several awards, yet again confirming its commitment to implement the measures necessary Montréal and Northwestern Québec Laval to reduce the impact of its real estate activity on the environment. regional centre 3

– 2009-2010 BOMA Québec Building of the Year Award in Loto-Québec building Québec City 3 the “Corporate Building” category for the corporate head office in Montréal 500 Sherbrooke Street West Montréal (head office) 2 – 2009-2010 BOMA Québec Pinnacle Award - Customer Service for the quality of customer service provided by the Corporate Loto-Québec multifunctional complex Montréal 2 Department of Real Estate Operations at all Loto-Québec buildings – 2009-2010 BOMA Québec Building of the Year Award Pierre-de-Coubertin building Montréal 2 in the “Under 100,000 Square Feet” category for the Montréal and Northwestern Québec Regional Centre in Laval Québec City gaming hall Québec City 2 Trois-Rivières gaming hall Trois-Rivières 2

LOTO-QUÉBEC 2 0 1 0 annual report p. 19 lotteries

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Forty years of innovating Forty years ago, on March 14, 1970 to be specific, one event created tremendous public enthusiasm and media interest: Broadcast live from Théâtre St-Denis, Loto-Québec presented a variety show and held its inaugural draw.

This made Loto-Québec the first Canadian lottery corporation The highlight of the year, however, was the launch of Lotto Max, and only the third in North America, after those in New Hampshire which burst onto the scene in September 2009 after three years of and New York, to hold draws. The 40 years that followed were analysis and preparations. A huge operation, the launch of this new marked by many innovations, including the launches of the first Canada-wide lottery mobilized and called for the concerted efforts instant lottery in Canada, the first online lottery in the industry, the of employees of the Lottery sector and the corporate units, our first televised game in North America and the first teleactive and business partners and the retailer network. A worthy successor to multimedia lotteries in the world, winning Loto-Québec a reputation Super 7, Lotto Max offers consumers something utterly unprecedented: as a forerunner on the international scene. The same lively When the grand prize jackpot tops $50 million, the excess amount innovative spirit still drives the employees of the Lottery sector, as is divided into additional prizes of $1 million each, called Maxmillions. evidenced by the many innovations that peppered fiscal 2009-2010, This innovation is unique in the lottery industry. during which sales totalled $1.850 billion. PROMISING PROJECTS A CONTINUOUSLY RENEWED PRODUCT LINE Completed in April 2009, the installation of new terminals was Loto-Québec offers its customers a range of lotteries that evolves the opportunity to standardize the network. All retailers now have on a weekly basis. Again this year, hundreds of instant games a sales terminal, so they can offer the full line of Loto-Québec were designed, printed and marketed. A brand new game show, products and services. The new unit includes many technological Paquet voleur, joined the television offering, which already boasted improvements that are part of a sustainable development approach: La Poule aux oeufs d’or in its regular version along with its country thanks to a digital read-out and training available online, it is now and gala spin-offs, Le Banquier and Roue de fortune chez vous, possible to transmit information to consumers and retailers more which was completely reformatted this year. Several permanent efficiently while significantly reducing paper consumption. products offered bonus prizes and five special editions were In an ongoing effort to adapt our business practices to the needs produced, including Celebration 2010, which set a new sales expressed by our business partners, a pilot project was conducted record with its 20th edition. to test multi-lane sales equipment designed for superstores. The test having proved successful, a deployment is in preparation, mainly in the sectors of grocery and drug stores. The implementation of handheld sales devices using wireless technology is a world first in the lottery industry.

LOTO-QUÉBEC 2 0 1 0 annual report p. 21 r e v i e w o f C O MM e r C i a L a C t i v i t i e s – L o t t e r i e s

Again this year, major efforts were invested in the retail network THE WINNERS, ALWAYS AT THE HEART OF OUR ACTIVITIES to enforce the ban on the sale of lottery products to minors. These actions reflect Loto-Québec’s firm commitment to make responsible During fiscal 2009-2010, 31 prizes of $1 million or more were gaming a priority. won in Québec, and the payment centres in Montréal and Québec City issued a total of 353,805 cheques to the winners. In 40 years To carry out one of the recommendations in a 2007 KPMG report of operation, Loto-Québec has issued a total of 1,115 prizes of dealing with how to improve prize payment processes and procedu- $1 million or more to winners of its various lotteries. res, the installation of self-serve ticket verification units at all points Virtually everything in the lottery world has changed since the first of sale was completed in April, coinciding with the completion of the lottery draw in March 1970, from products to the technological terminal replacement. These devices allow consumers to check their environment and the means of communication to the distribution own tickets in a simple, safe and efficient manner. networks and how products are purchased. In contrast, one thing has remained the same: it is always a great privilege to make Lastly, development continued on the new Pari sportif computing people happy. The Lottery sector is quite capable of taking on platform. Implementation of the new environment, which will result the challenge of updating its offering in order to renew its in greater flexibility of the wagering offer, is scheduled for fall 2010, customer base, and keep making people happy for a long time just in time for the next hockey season. to come. GREATER ACCESSIBILITY TO DRAWS Since summer 2009 launch of the Video Zone on the Loto-Québec website, the full version of recent draws can be viewed at any time. This new service is more practical for consumers because it lets them watch draws at their convenience.

The colourful launch of Lotto Max on September 18, 2009 at the Atrium Le 1000 De La Gauchetière Multi-lane sales equipment designed for superstores in Montréal

p. 22 LOTO-QUÉBEC 2 0 1 0 annual report r e v i e w o f C O MM e r C i a L a C t i v i t i e s – L o t t e r i e s

Lotteries As at March 31

(in thousands of dollars) Sales 2010 Sales 2009 Variation

ONLINE LOTTERIES Lotto 6/49 483,331 534,635 (51,304) Lotto Max 150,609 – 150,609 Super 7 94,195 199,053 (104,858) Québec 49 82,023 88,255 (6,232) Extra 146,764 158,989 (12,225) Banco 142,692 137,884 4,808 La Quotidienne 41,092 40,018 1,074 Jour de Paye 7,883 10,792 (2,909) Astro 4,913 4,792 121 Tango 2,984 1,795 1,189 Triplex 6,965 7,755 (790) Vie de Millionnaire – 6,695 (6,695) Subtotal 1,163,451 1,190,663 (27,212)

Instant Lotteries Regular 136,186 130,704 5,482 Entertainment 351,665 389,427 (37,762) Televised 20,189 13,639 6,550 Multimedia 2,767 1,919 848 Subtotal 510,807 535,689 (24,882)

Traditional Lotteries La Mini 11,799 11,717 82 Teleactives 54,857 55,482 (625) Special editions 59,051 56,300 2,751 Subtotal 125,707 123,499 2,208

Pari sportif 50,206 51,683 (1,477)

Total 1,850,171 1,901,534 (51,363)

LOTO-QUÉBEC 2 0 1 0 annual report p. 23 Casinos

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We’re all play! The Société des casinos du Québec, responsible for the operation and development of Québec’s casinos, stayed right on course toward realizing its vision: to become, in the immediate competitive market, the best casinos in terms of customer service while offering games that stand out for their innovation and diversity.

Every day, some 5,600 employees keep their eyes on the prize of MODERNIZING OUR INFRASTRUCTURES delivering a “We’re all play!” experience to customers. For the fiscal The major renovations at the Casino de Montréal announced year ended March 31, 2010, the Société des casinos du Québec in March 2009 by the President and Chief Executive Officer of (SCQ) earned revenues in the order of $935.3 million, an increase Loto-Québec, Alain Cousineau, began last fall. An investment of 2.2% compared to the results of the previous year due to the of $305.7 million over four years will enable the Casino to maintain opening of Casino de Mont-Tremblant. its position among its competitors in the U.S. Northeast. In addition, it will create a total of 3,400 direct and indirect jobs spread through MOUNTING AWARENESS FOR THE CASINO the renovation period. DE MONT-TREMBLANT June 24, 2009 was the day the Casino de Mont-Tremblant officially During this time, the Casino will continue to welcome its clientele. opened for business. Nestled into outstanding surroundings, the The Casino will also do everything possible to minimize any Casino de Mont-Tremblant provides a memorable gaming experience inconvenience to customers and employees as well as people and is an added attraction for the thousands of convention-goers using Île Notre-Dame and Parc Jean-Drapeau. and vacationers who converge on the area every year. Several redevelopment projects are also planned at the It is worth noting that, like several other Corporation buildings, Casino du Lac-Leamy. Particularly noteworthy are the alterations the establishment obtained LEED certification (Silver Level) from to the Théâtre du Casino, which was transformed into a the Canada Green Building Council, in line with Loto-Québec’s multi-purpose venue. sustainable development policy. As for the Casino de Charlevoix, it celebrated its 15th anniversary The Casino de Mont-Tremblant enjoys considerable customer with a number of activities in its expanded facilities. traffic and is well on its way to achieving its objective of more than 700,000 visits during its first year of operation.

LOTO-QUÉBEC 2 0 1 0 annual report p. 25 r e v i e w o f C O MM e r C i a L a C t i v i t i e s – C a s i n o s

p. 26 LOTO-QUÉBEC 2 0 1 0 annual report r e v i e w o f C O MM e r C i a L a C t i v i t i e s – C a s i n o s

labour relations Regarding its personnel, the SCQ continued to upgrade its internal Following a long conflict, mainly over work schedules, the 174 security means of communication. During fiscal 2009-2010, it offered guards and management of the Casino de Montréal reached an its approximately 5,600 employees the opportunity to connect agreement last October. to an extranet, iCasino, and made it possible for the President of Operations to exchange views with employees in four locations Consequently, all the collective agreements with the SCQ’s unionized through a blog. Access to corporate information outside the walls personnel are valid for terms of three to ten years, with the exception of institutions is an emerging trend in today’s organizations, and it of employment contracts with employees of the Casino de addresses the needs of younger generations of workers. Mont-Tremblant. RESPONSIBLE CASINOS MAINTAINING A CUSTOMER-BASED CULTURE The SCQ’s numerous economic, social and environmental Achieving the service positioning adopted by the SCQ falls largely contributions remain largely unknown to its clientele and the to the employees of these establishments, who are on the front lines general public. Because of this, the subsidiary decided to better every day. That is why a training process called Résolument client demonstrate the commitment of casinos to the community and has been made available to them. By March 31, 2010, nearly the resulting positive benefits. 95% of employees in direct contact with customers had completed the required courses. The first stage of the process consists of deploying a social communication campaign in the gaming areas and areas reserved In addition, managers now have a set of training modules and for employees, illustrating the contributions of Québec’s casinos. development tools available to them to guide them through their During fiscal 2009-2010, the economic contributions were featured supervisory and leadership role with their teams. (total amount paid to the Consolidated Revenue Fund, purchases of goods and services and the number of jobs created by casinos). CURRENT AND FUTURE CUSTOMER EXPECTATIONS The social and environmental components of the campaign run The SCQ is working closely with Ingenio, Loto-Québec’s research until December 2010. and development subsidiary, on the design of new and original games. This partnership will allow Québec’s gaming establishments Other sustainable development initiatives were also pursued to offer the current clientele a diverse gaming experience and on-site in the casinos, such as the reduction of paper consumption, to get set to welcome the clientele of the future. participation in awareness campaigns and a booth on responsible gaming at the Casino de Charlevoix, etc. It is also worth noting that the SCQ, in collaboration with the relevant organizations, coordinated the certification of 60 new games that are currently, or about to be, offered in the casinos.

1. The Casino de Mont-Temblant welcomed its first visitors on June 24, 2009. 1 2. Major renovation work underway at the Casino de Montréal. 3. During the festivities marking the 15th anniversary of the Casino de Charlevoix and the 110th anniversary of the Fairmont Le Manoir Richelieu resort, the two establishments set a Guinness world record for the largest cake decorating event thanks to 1,293 participants. 2 4. as part of its sustainable development process, the Casino du Lac-Leamy decked itself out with fountains of energy-efficient lights. 3 4

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Responsible gaming: Everybody wins! In 2009-2010, the Société des loteries vidéo du Québec posted total revenues of $1.043 billion.

This is a decrease of 1.8% over the previous fiscal year, largely PARTNERING WITH THE RETAILERS due to the reduction of the size of the video lottery network and The SLVQ counts continually on the collaboration of its retailers the economic downturn. These revenues enabled a net profit of to promote responsible management of VLTs and come to the $661.5 million and payments of retailer commissions totalling aid of players who so desire, and such is the case in all the network’s $225.0 million. establishments. Throughout the year, the SLVQ continued its work with retailers through its program for the assessment and ongoing ENTERTAINMENT OFFERING IN THE GAMING HALLS improvement of responsible management methods. These efforts At the end of fiscal 2009-2010, the Société des loteries vidéo proved productive, as compliance with the code of responsible du Québec (SLVQ) was pleased to report that the entertainment commercialization adhered to in the establishments is close offering in the two gaming halls successfully met customer to 100%. expectations. The gaming halls in Québec City and Trois-Rivières saw their revenues rise by 16.4% over the last fiscal year. Several Under the code of responsible commercialization, retailers must promotional activities showcasing electronic Texas Hold’em poker ensure that there is always a person who received the Taking risks and themed activities helped both create a friendly atmosphere is no game training in their establishment during opening hours. and develop the clientele. On March 31, 2010, more than 21,000 bar owners and employees had been trained since its introduction in 2001. MANAGING ACCESS TO THE TERMINALS In its concern to efficiently manage the network, the SLVQ Over the last fiscal year, 2,168 retailers and bar employees took increased its efforts in recent years to provide appropriate and the training online. Of these, 95% considered this training useful sufficient access to the video lottery terminals (VLTs). To this in their work and judged it to be an excellent initiative. In addition to end, the SLVQ set up rigorous network management parameters, being sensitized to the issue of excessive gaming, the retailers and allowing it to ensure a balanced geographic distribution of the bar employees complete the training better informed and equipped number of units throughout the province and thereby curb the to help players in difficulty. proliferation of illegal networks and terminals.

At the end of fiscal 2009-2010, the SLVQ intends to keep its network at about 12,000 gaming positions spread throughout close to 2,000 establishments, including the gaming halls in Trois-Rivières and Québec City, in order to properly fulfil its mandate. This is the lowest ratio of equipment and establishments per capita in Canada.

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Ratio of establishments per 5,000 inhabitants 1.27 1.39 3.12 2.10 3.29 2.17 4.69 2.30

LOTO-QUÉBEC 2 0 1 0 annual report p. 29 r e v i e w o f C O MM e r C i a L a C t i v i t i e s - v i d e o L o t t e r i e s

p. 30 LOTO-QUÉBEC 2 0 1 0 annual report r e v i e w o f C O MM e r C i a L a C t i v i t i e s - v i d e o L o t t e r i e s

RESPONSIBLE GAMING: EVERYBODY WINS! OUTLOOK This past fiscal year was also the occasion to replace the prevention As an integral part of its activities, the SLVQ intends to continue message on VLTs and commercial signage. The new message, its initiatives reflecting its commitment to provide tools that ensure built around responsible gaming and entertainment, is aimed at the gaming is well monitored and managed in a socially responsible retailers and players alike. The new commercial signage suggests manner. It will constantly strive to promote responsible gaming entertainment in a supervised environment and again uses the behaviour in compliance with the World Lottery Association’s theme line “Responsible Gaming: Everybody wins!” which recalls responsible gaming certification. the SLVQ’s mission.

NEW TERMINALS IN 2012 DISTRIBUTION OF THE NUMBER OF ESTABLISHMENTS The SLVQ began the process of replacing its pool of VLTs and AND GAMING POSITIONS BY REGION* the central operating system. Calls for proposals were launched As at March 31, 2010 in January and March 2010 after obtaining the Government of Québec’s permission to acquire new equipment. The cost of the Number of Number of gaming 12,000 VLTs and the central system is estimated at $265 million. Region establishments positions** The first terminals should be delivered in 2012. These terminals will be equipped with a new technology, most notably allowing Laval, Laurentides and Lanaudière 310 2,055 greater flexibility in the management of measures promoting responsible gaming. Montréal 530 3,355

Capitale-Nationale and SLVQ NETWORK* Chaudière-Appalaches 223 1,513 As at March 31, 2010 Mauricie—Bois-Francs 122 819 Number of Number of gaming establishments positions** Estrie 114 626

Saguenay— Bars and brasseries 1,936 11,204 Lac-Saint-Jean and Côte-Nord 113 542 Québec City gaming hall 1 335 Bas-Saint-Laurent and Gaspésie— Trois-Rivières Îles-de-la-Madeleine 72 315 gaming hall 1 200 Abitibi-Témiscamingue and Nord-du-Québec 73 367 Total 1,938 11,739

Montérégie 254 1,465 * Including the 85 establishments and 495 VLTs awaiting installation. ** Including the electronic poker and roulette units, totalling 125 gaming positions. Outaouais 127 682

Total 1,938 11,739

* Including the 85 establishments and 495 VLTs awaiting installation. ** Including the electronic poker and roulette units, totalling 125 gaming positions.

1. The atmosphere in the gaming halls favours greater social interaction. 2. The gaming halls attract electronic Texas Hold’em poker enthusiasts. 1 2 3. The VLTs display a new prevention message.

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Network bingo The bingo industry has been experiencing a major decline across North America for several years. Québec is no exception to this state of affairs despite efforts by the Société des bingos du Québec and its various partners to modernize this pastime that holds such an important place in our history.

For fiscal 2009-2010, the Société des bingos du Québec The star network bingo products are Le Petit Tour, in the afternoon, (SBQ) recorded revenues of $32.0 million, down for a second and Le Grand Tour, in the evening. These games offer large jackpots consecutive year. that make it possible to spice up in-hall programming as well as create a real leveraging effect on regular bingo. The prelude SBQ’S CONCERNS game, La Course de cochons, offered before Le Grand Tour and Among the most dominant aspects of the bingo industry for the next Le Petit Tour, also ran from September 2009 to March 2010. Offered few years is the natural erosion of its clientele. Low renewal rates simultaneously in 70 bingo halls, the network games enjoy great top this subsidiary’s concerns. popularity among customers.

– According to surveys conducted by the SBQ, the average age During fiscal 2009-2010, the SBQ’s tangible financial contribution of customers rose from age 42 in 1998 to age 53 in 2009. to the NPOs would not have been as high without the innovative This means that in 11 years, the clientele aged by as many and increasingly dynamic product offering, including the new years, implying a very low customer renewal rate. ticket formats for Le Grand Tour and Le Petit Tour. While the SBQ successfully maintained customer interest thanks to these new A SIGNIFICANT CONTRIBUTION TO NON-PROFIT items, about twenty bingo halls closed, jeopardizing the financial ORGANIZATIONS health of the NPOs that depended on them to fulfil their commitments Founded in 1997, the SBQ has a mandate to market network to the community. At the end of fiscal 2009-2010, this made “orphans” bingo products in support of non-profit organizations (NPOs) of more than 110 NPOs in Québec, most of which are located on the whose main source of financing is bingo. Every year, all profits from Island of Montréal, while the number of halls participating in network the sale of network bingo products are distributed to these NPOs bingo dropped from 176 in 1997 to 70 in 2010. to fund their activities. Consequently, for 12 years, and despite difficulties in the industry, close to $120 million has been paid to some 1,000 NPOs with a bingo licence located throughout Québec. This amount represents an average annual contribution to society of about $10 million.

LOTO-QUÉBEC 2 0 1 0 annual report p. 33 review of CoMMerCiaL aCtivities - Bingo

p. 34 LOTO-QUÉBEC 2 0 1 0 annual report r e v i e w o f C O MM e r C i a L a C t i v i t i e s - B i n g o

A NEW INITIATIVE TO ASSIST ORPHAN NPOs As a result, following an analysis of the issues and market conditions, In light of this situation, the SBQ decided to explore possible in fall 2010 the SBQ will launch — as a pilot project — a fresh new solutions that would enable it to maintain an average annual collective game concept called Kinzo, that will most notably make contribution of $10 million to the NPOs. However, before making it possible to assist NPOs deprived of their main source of funding. any decision whatsoever, the SBQ wanted to get the opinion of This avant-garde game is clearly distinct from bingo. It is a fast-paced the organizations concerned. It was in this context that its Managing and dynamic game backed by an electronic draw method and Director undertook a tour of the NPOs that had benefited from multimedia animation. Kinzo will be played in a welcoming and the spin-offs of network bingo. He met with close to 400 of comfortable gaming environment that will foster social interaction their representatives during this tour, which ran from January among players. to March 2010. These information-gathering meetings allowed the SBQ to identify the possibilities most likely to ensure income This initiative will allow the SBQ to continue to pay all network sustainability for the NPOs. bingo profits to the NPOs, as per its mission. By offering the public this new game, the SBQ will be able to add the profits fromKinzo to those earned through network bingo. This in turn will make it possible to maintain the SBQ’s annual contribution of $10 million to the NPOs. As a result, thanks to Kinzo, the orphaned organizations will be able to receive timely funding and the bingo industry will benefit from a regional fund created for its development.

1. a winner of the prelude game La Course de cochons 1 2 3 2. A winner of the game Le Petit Tour 3. A winner of the game Le Grand Tour 4 4. The bingo session at the 2009 Festival Western de St-Tite 5. The model of the hall for the new game Kinzo 6. François-Patrick Allard, Managing Director of the SBQ, at the press conference announcing the Kinzo launch 5 6

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A hub of innovation for Loto-Québec and its subsidiaries Faced with the many challenges that arise with the modernization of the product offering in a constantly evolving consumption framework, Ingenio is progressively establishing itself as a hub that fosters the synergy necessary for creativity and innovation in Loto-Québec as a whole.

The subsidiary’s every effort is directed toward accomplishing the NEW OFFERINGS IN THE CASINOS mandate entrusted to it in 1998, namely research and development As a result, Dog Show and Groovy Machine, two slot machines aimed to further the development of games of chance and the way designed by Ingenio and marketed worldwide by Bally Technologies, they are marketed in order to meet the needs of future clienteles. were introduced in all four of Québec’s casinos in the summer and fall of 2009. The next game in the pipeline, Cash Meteor, Over the past 11 years, the Ingenio team has carried out an array has already been marketed in certain U.S. states. Its Québec of projects for all the gaming sectors operated by the public certification should be obtained in 2010.Cash Meteor is an original corporation, which benefited from the commercial spinoffs of concept by Ingenio whose game mechanism is awaiting patent as its initiatives. Through these projects, it has developed a unique it contains features considered highly innovative in terms of slot perspective on all the activities of Loto-Québec, and coupled with machine technology. the multidisciplinarity of its resources and the establishment of best practices in innovation management, it instils added value The subsidiary’s roster of casino clients now includes IntuiCode in terms of creativity, concepts and innovative products within Gaming Corporation (IGC), a Florida-based company dedicated the operational teams allied with Ingenio. to developing and marketing casino products. In December 2009, Ingenio announced the signing of an agreement for the development CREATIVITY AND SYNERGY of innovative casino games. Production of an initial multiplayer More than ever, in 2009-2010, Ingenio put forward unique creative type game was completed in spring 2010. This game will use processes adapted to the public corporation’s context and applied IGC’s electronic platform. Its marketing in Québec is scheduled an approach based on collaboration and maximizing the creative for fiscal 2010-2011, following certification. potential of resources already in place. The past fiscal year was marked by projects developed by various multidisciplinary teams that looked into the possibilities of upgrading products and revitalizing the offering in the mid to long term. A number of game concepts, some futuristic, others applicable over the short term were thereby developed and submitted to the Corporation’s business units. Some of them were also introduced this year.

LOTO-QUÉBEC 2 0 1 0 annual report p. 37 r e v i e w o f C O MM e r C i a L a C t i v i t i e s – i n g e n i o

p. 38 LOTO-QUÉBEC 2 0 1 0 annual report r e v i e w o f C O MM e r C i a L a C t i v i t i e s – i n g e n i o

CONTINUITY FOR THE LOTTERIES COMMITMENTS ENCOURAGING THE NEXT GENERATION The gaming portal lotoclic.com continues to improve with instant In an effort to foster and support initiatives that benefit Québec multimedia lottery games of short duration. It now has a good thirty community sectors related to Ingenio’s activities, the subsidiary of them, nine more than in March 2009. financially supports certain organizations in their efforts to carry out promotional and networking activities as well as initiatives in support The Danish lottery corporation Danske Spil also added two new of the next generation. For several years, Ingenio’s involvement has Ingenio games to its Web portal of multimedia lotteries launched in most notably included granting a special research and development 2008, which already contained six. Also on the international scene, award through the Concours québécois en entrepreneuriat, and but in this case the U.S., Ingenio partners GTech and GameLogic funding awards for excellence for projects completed by graduating conducted market tests on multimedia lotteries in Kentucky and students at the National Animation and Design Centre (Centre NAD). Rhode Island respectively. Market launches resulting from these This year, it added the awarding of a scholarship at both the Master’s tests could take place during 2010. and PhD levels to financially support enrolment in the Summer School on Management of Creativity in an Innovation Society REVITALIZING BINGO GAMES offered by HEC Montréal in the summer of 2009. Work on revitalizing the in-hall bingo game offering continued with the Société des bingos du Québec (SBQ). The network bingo Furthermore, in 2009-2010, Ingenio became partners with MosaiC, game La Course de cochons, an original concept jointly developed HEC Montréal’s multidisciplinary centre for research and knowledge by the SBQ and Ingenio, was a resounding success during its run transfer on the management of creativity in an innovation society, from September 2009 to March 2010. It replaced the first game which pools the resources of companies recognized for their based on the two subsidiaries’ joint work, Le Lièvre et la tortue, innovative practices. which also performed very well during its presence in the market in the first half of the fiscal year. All these partnering initiatives dovetail with the value and importance Ingenio extends to research and development as well as the management of innovation and creativity, key elements for ensuring the gaming industry’s sustainability and responsible development.

Dog Show, the second slot machine game created and developed by Ingenio, was introduced into Québec casinos in summer 2009.

LOTO-QUÉBEC 2 0 1 0 annual report p. 39 CASINO MUNDIAL

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Toward recovery Through its Casino Mundial subsidiary and its holding in Casinos Développement Europe, Loto-Québec is co-proprietor of JOAGROUPE, a French holding company that owns and operates a network of 20 casinos in France.

Casino Mundial holds a 35% interest in the group. Its co-shareholders Despite the difficult economic situation, JOAGROUPE continued are the European investment firm Bridgepoint Capital and the to generate strong cash flow. However, like other French casino enterprise’s management team, which hold 55% and 10% of corporations, the group had to renegotiate the repayment schedule the capital respectively. of its debts with its creditors, which was completed in May 2010.

JOAGROUPE has garnered an 8.4% share of the French casino Also during the fiscal year, in light of the global recession market. The third-largest casino operator in Metropolitan France, and difficulties in the French casino industry, the Corporation the company employs 1,500 people. It operates 2,000 slot machines, conducted, with the assistance of an independent appraiser, 57 gaming tables and such related businesses as restaurants, bars, an estimate of JOAGROUPE Holding loans. Consequently, the book discotheques and hotels. Some 3.7 million visits were registered last value was reduced to the estimated realizable value. The capital year at its various establishments. value of the loans to JOAGROUPE was lowered by $29.6 million at March 31, 2010. Similarly, capitalized interest (uncollected) on The fourth year of Loto-Québec’s business partnership with these loans since April 2006, $24.9 million, was reduced to zero. JOAGROUPE was marked by the consequences of the difficult These two accounting entries represent an unusual expense of economic context that prevailed in Europe and France’s ban on $54.5 million in Loto-Québec’s 2009-2010 income statement. smoking in public places. Consequently, JOAGROUPE’s revenues On the other hand, the devaluation of the euro against the Canadian from gaming and related activities amounted to €209 million for the dollar in early 2010, due most notably to the debt problems facing year ended December 31, 2009, down 10.4% against 2008. This some European countries, had the effect of depreciating the loans decline in earnings is comparable to that observed across the board to JOAGROUPE by $22.4 million on Loto-Québec’s balance sheet. in establishments of similar size in the French casino industry. However, this euro depreciation is offset by a comparable gain on foreign exchange hedging instruments in the Corporation’s In 2009 and 2010, the French government continued its regulatory 2009-2010 results. and tax relief efforts with regard to casino operators. The application of new tax levy rates on gaming revenue represents an additional The calculation of the reduction in value of loans to JOAGROUPE annual profit of €6 million per year in 2010. Likewise, online gaming is a theoretical exercise, as Casino Mundial does not intend to divest should be authorized by fall 2010, thereby enabling new business its investment for a few years. Given the regulatory and fiscal relief opportunities for JOAGROUPE. measures, the current outlook for economic recovery in France and the restructuring of JOAGROUPE’s debt, Loto-Québec is optimistic about this company’s future and remains confident of recovering the sums invested.

LOTO-QUÉBEC 2 0 1 0 annual report p. 41 Financial review As at March 31, 2010

CONSOLIDATED REVENUES At the end of fi scal 2009-2010, Loto-Québec reported consolidated revenues of $3.810 billion. This represents a decrease of $60.0 million from the previous fi scal year (-1.5%), of which $51.4 million is attributable Lotteries to the Lottery sector. The Corporation recorded a consolidated gross margin of $2.364 billion, as compared to $2.385 billion for 48.6% fi scal 2008-2009. This represents a decrease of $21.0 million Video lotteries (-0.9%). Consolidated net earnings totalled $1.341 billion, down $115.1 million (-7.9%) from the previous fi scal year.

27.4% LOTTERIES Casinos With sales of $1.850 billion, the Lottery sector showed a $51.4 million (-2.7%) decline from the previous fi scal year. This drop is attributable 23.2% to lower sales in online lotteries ($27.2 million or 2.3%) and Bingo instant lotteries ($24.9 million or 4.6%). Gross profi t amounted to $712.4 million, a decrease of $7.8 million (-1.1%) from the previous fi scal year. A total of $977.6 million was awarded to lottery winners 0.8% and $124.9 million was paid out in the form of commissions to retailers.

CASINOS Revenues from casinos rose by $19.9 million (+2.2%) from the previous ﬁ scal year, reaching an unprecedented $935.3 million. This increase is due to the opening last June of the Casino de CONSOLIDATED NET EARNINGS Mont-Tremblant, which registered revenues of $20.2 million for nine months of operations. Combined promotional cash allowances remitted to players by the four gaming houses totalled $32.5 million. Video lotteries 49.3% Lotteries REVENUES 34.8% As at March 31, 2010 Casinos 2009-2010 2008-2009 Variation Variation (in millions of dollars) ($) (%)

20.3% Casino Bingo de Montréal 592.8 595.6 (2.8) (0.5) Casino -0.2% de Charlevoix 56.5 52.8 3.7 7.0 International Casino du Lac-Leamy 265.8 267.0 (1.2) (0.4) Casino de -4.2% Mont-Tremblant 20.2 0.0 20.2 – Total 935.3 915.4 19.9 2.2

P. 42 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT FINANCIAL REVIEW

VIDEO LOTTERIES The increase resulted primarily from the opening of the Casino The Video lottery sector registered revenues of $1.043 billion, lower de Mont-Tremblant and related installation costs of $22.6 million. by $19.4 million (-1.8%) than the previous fi scal year. This drop in earnings is mainly due to the completion of the bar and brasserie For the Lottery sector, there was an increase in amortization expense network reconfi guration plan as at March 31, 2009 and to the of $4.9 million, including $4.5 million due to the replacement of closure of racetracks in October 2009. A total of $225.9 million the gaming terminal network. Lastly, for the Video lottery sector, was paid out in commissions and fi nancial compensation to retailers, the closure of racetracks led to higher operating expenses of compared to $239.2 million in 2008-2009. $3.1 million following various write-offs.

BINGO OTHER ITEMS With sales of $32 million, the Bingo sector showed a $3.4 million Other items totalled $176.0 million. This represents an increase or 9.5% decline compared to the previous reporting period. Since of $47.2 million (+36.6%) from the previous fi scal year, mainly April 1, 2008, there have been several hall closures and a drop due to the devaluation of investments. In the wake of France’s in customer traffi c. At that time, there were 100 halls in operation, prohibition on smoking and the global recession, the French casinos against 70 as at March 31, 2010. The Société des bingos du suffered revenue losses of about 30% between 2007 and 2009. Québec contributed a total of $6.1 million to non-profi t organizations Consequently, in 2009-2010, the loans that Casino Mundial that hold bingo licences. In addition, the SBQ awarded prizes to authorized to JOAGROUPE were devalued by $29.6 million and winners and commissions to hall operators amounting to $16.5 capitalized interest on these loans from 2006 to 2009 was written and $2.6 million respectively. off in the amount of $24.9 million. However, the current stabilization of the situation for casinos in France together with the prospects INGENIO for economic recovery and the regulatory and tax relief measures Ingenio posted revenues of $0.8 million, as compared to $1.1 million granted are cause for the International sector to be confi dent for the previous fi scal year. Of its total earnings, $0.3 million originated of eventually recovering its investment in JOAGROUPE. from outside Canada, while $0.4 million was earned through services rendered to Loto-Québec and its subsidiaries. CONTRIBUTIONS TO GOVERNMENTS Loto-Québec’s contribution in the form of dividends to the Ministère INTERNATIONAL des Finances stood at 1.252 billion dollars, representing a reduction The contract for the supply of services to Casinos Développement of $123.8 million compared to last year. An additional $89.1 million Europe having ended March 31, 2009, no revenue is recognized was paid into the Québec Government’s various designated funds, for 2009-2010 ($1.6 million for the previous fi scal year). along with a sum of $81.6 million to the Ministère du Revenu in tax on capital and Québec Sales Tax (QST). The total contributions to OPERATING EXPENSES the Québec Government consequently equalled close to $1.423 billion. Operating expenses totalled $847.3 million, representing an Furthermore, the Corporation contributed $15.2 million to the increase of $46.9 million (+5.9%) from the previous fi scal year. Government of Canada as compensation for its withdrawal from The ratio of operating expenses to total revenues was 22.2%, the Lottery sector and $50.8 million in the form of Goods and compared to 20.7% in 2008-2009. Services Tax (GST).

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 43 CONSOLIDATED FINANCIAL STATEMENTS

Management’s report

The consolidated financial statements of Loto-Québec have been prepared by management, who is responsible for their preparation and presentation, including making significant estimates and judgments. This responsibility also includes selecting appropriate accounting policies that are in accordance with Canadian generally accepted accounting principles. Financial information provided elsewhere in the Annual Report on Activities is consistent with that shown in the financial statements. To meet its obligations, management maintains internal control systems that are designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded at the desired time, that they are duly approved, and that they enable management to produce reliable consolidated financial statements. Corporate Management of the internal audit performs periodic audits to ensure the adequacy and maintenance of the internal controls that are applied consistently by Loto-Québec. Loto-Québec recognizes that it is responsible for managing its business in compliance with the laws and regulations that govern it. The Board of Directors, assisted by its Audit Committee, which consists solely of outside directors, oversees the manner in which management carries out its financial reporting responsibilities and approves the consolidated financial statements. The Audit Committee meets with management and the Auditor General of Québec and the accounting firm KPMG s.r.l./s.e.n.c.r.l (“KPMG”), reviews the consolidated financial statements and recommends their approval to the Board of Directors. The Auditor General of Québec and KPMG have jointly audited the consolidated financial statements of Loto-Québec, in compliance with Canadian generally accepted auditing standards, and their auditors’ report states the nature and scope of this audit and their statement of opinion. The Auditor General and KPMG have free access to the Audit Committee to discuss audit-related issues.

President and Chief Executive Officer, Senior Vice-President Financial Affairs of Loto-Québec,

Alain Cousineau Gille Dufour

Montréal, may 20, 2010

p. 44 LOTO-QUÉBEC 2 0 1 0 annual report CONSOLIDATED FINANCIAL STATEMENTS

Auditor’s report

To the Minister of Finance

We have audited the consolidated balance sheet of Loto-Québec as at March 31, 2010 and the consolidated statements of earnings, retained earnings and cash fl ows for the year then ended. These fi nancial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. In our opinion, these consolidated fi nancial statements present fairly, in all material respects, the fi nancial position of the Corporation as at March 31, 2010, and the results of its operations and its cash fl ows for the year then ended in accordance with Canadian generally accepted accounting principles. As required by the Auditor General Act (R.S.Q., chapter V-5.01), we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding year.

The Auditor General of Québec,

CHARTERED ACCOUNTANTS RENAUD LACHANCE, FCA AUDITOR MONTRÉAL, QUÉBEC QUÉBEC CITY, QUÉBEC MAY 20, 2010 MAY 20, 2010

* CA auditor permit no. 8240

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 45 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of earnings Year ended March 31, 2010

(in thousands of dollars) 2010 2009

Revenues 3,810,283 3,870,272 Cost of sales (Note 5) 1,446,322 1,485,318 Gross margin 2,363,961 2,384,954 Operating expenses Operating costs 727,010 691,594 Amortization of property, plant and equipment 95,341 87,288 Amortization of intangible assets 13,748 11,915 Financial expenses (Note 6) 11,159 9,536 847,258 800,333 Earnings before the undernoted 1,516,703 1,584,621 Special payments (Note 7) 32,205 34,175 Goods and Services Tax 34,620 33,959 Québec Sales Tax 54,694 54,417 Share in a company subject to significant influence, Casinos Développement Europe (Note 12) – 6,311 JOAGROUPE Holding (Note 12) Write-down of loans 29,583 – Write-off of capitalized interest 24,914 – 176,016 128,862 Net earnings 1,340,687 1,455,759

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated statement of retained earnings Year ended March 31, 2010

(in thousands of dollars) 2010 2009

Balance, beginning of year 134,307 134,301 Net earnings 1,340,687 1,455,759 1,474,994 1,590,060 Dividends (1,251,597) (1,375,400) Fonds d’aide à l’action communautaire autonome (Note 8) Aide à l’action communautaire autonome (15,818) (15,267) Aide à l’action humanitaire internationale (3,164) (3,053) Contributions to the Government of Québec (Note 9) (70,108) (62,033) (89,090) (80,353) Balance, end of year 134,307 134,307

The accompanying notes are an integral part of the consolidated financial statements.

p. 46 LOTO-QUÉBEC 2 0 1 0 annual report CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet As at March 31, 2010

(in thousands of dollars) 2010 2009

ASSETS Current assets Cash on hand - casinos 61,470 49,911 Cash 33,908 20,604 Accounts receivable (Note 10) 90,865 72,060 Inventories (Note 11) 5,499 5,670 Prepaid expenses 32,213 25,682 Current portion of financial assets related to life annuities( Note 17) 1,249 1,160 225,204 175,087 Investments (Note 12) 83,322 161,476 Property, plant and equipment (Note 13) 732,556 741,825 Intangible assets (Note 14) 93,031 82,464 Financial assets related to life annuities (Note 17) 48,215 44,197 Accrued benefit asset (Note 22) 3,461 – 1,185,789 1,205,049 LIABILITIES Current liabilities Bank loans (Note 15) 365,730 263,321 Prizes to winners 66,578 54,699 Dividends payable 171,597 295,400 Accounts payable and accrued charges (Note 16) 170,848 182,957 Current portion of life annuities payable (Note 17) 1,249 1,160 Deferred revenues 18,217 20,991 Current portion of long-term debt (Note 18) 75,000 – 869,219 818,528 Life annuities payable (Note 17) 48,215 44,197 Accrued benefit liability (Note 22) 8,878 7,847 Long-term debt (Note 18) 125,000 200,000 1,051,312 1,070,572 SHAREHOLDER’S EQUITY Share capital authorized, issued and paid: 1,700 shares with a par value of $100 each 170 170 Retained earnings 134,307 134,307 134,477 134,477 1,185,789 1,205,049 Contingencies and commitments (Note 19)

The accompanying notes are an integral part of the consolidated financial statements.

Approved by the Board of Directors

Hélène F. Fortin, FCA Alain Cousineau Chairperson of the Board President and Chief Executive Officer

LOTO-QUÉBEC 2 0 1 0 annual report p. 47 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of cash flows Year ended March 31, 2010

(in thousands of dollars) 2010 2009

OPERATING ACTIVITIES Net earnings 1,340,687 1,455,759 Items not affecting cash: Amortization of property, plant and equipment and intangible assets 109,089 99,203 Loss on disposal of property, plant and equipment 4,055 3,528 Share in the results of Manoir Richelieu, Limited Partnership 1,306 1,241 Partners’ share of Manoir Richelieu, Limited Partnership 5,969 5,311 Share in a company subject to significant influence, Casinos Développement Europe – 6,311 Interest income on long-term investment, JOAGROUPE Holding – (7,819) Exchange loss (gain) on JOAGROUPE Holding loans 22,376 (4,456) Write-down of JOAGROUPE Holding loans 29,583 – Write-off of capitalized interest of the JOAGROUPE Holding loans 24,914 – Change in non-cash operating working capital items (Note 21) (13,621) (20,685) Cash flows from operating activities 1,524,358 1,538,393

FINANCING ACTIVITIES Dividends paid (1,375,400) (1,311,000) Bank loans 102,409 (184,479) Long-term debt – 200,000 Contributions to the Government of Québec (70,108) (62,033) Fonds d’aide à l’action communautaire autonome (Note 8) Aide à l’action communautaire autonome (15,818) (15,267) Aide à l’action humanitaire internationale (3,164) (3,053) Cash flows used in financing activities (1,362,081) (1,375,832)

I NVEST I NG ACT IVI T I ES Acquisitions of property, plant and equipment (109,889) (132,610) Acquisitions of intangible assets (22,364) (17,720) Proceeds from disposal of property, plant and equipment 285 99 Acquisition of loan – (2,513) Investment, net of distributions, in Manoir Richelieu, Limited Partnership and payments to partners (5,446) (7,034) Cash flows used in investing activities (137,414) (159,778)

NET CHANGE IN CASH AND CASH EQUIVALENTS 24,863 2,783 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 70,515 67,732 CASH AND CASH EQUIVALENTS, END OF YEAR (Note 21) 95,378 70,515

The accompanying notes are an integral part of the consolidated financial statements.

p. 48 LOTO-QUÉBEC 2 0 1 0 annual report Notes to the consolidated financial statements As at March 31, 2010

Note 1 INCORPORATION AND activities The Société des loteries du Québec (the Corporation), designated under the name Loto-Québec, is a joint-stock company whose shares are part of the domain of the State and are allocated to the Québec Minister of Finance. Under An Act respecting the Société des loteries du Québec (R.S.Q., chapter S-13.1), the functions of the Corporation are to conduct and administer lottery schemes and to operate businesses that contribute to the operation of a State casino. The Corporation may also offer, for consideration, consulting and implementation services in areas of its expertise. Under the Income Tax Act, (R.S.C. (1985), Ch. 1 (5th supplement)) and the Taxation Act (R.S.Q., Ch. I-3), the Corporation is exempt from income taxes.

Note 2 Accounting policies The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s best estimates. The main items that are subject to estimates include the value of the JOAGROUPE Holding loans, the useful life of property, plant and equipment and intangible assets, the valuations of life annuities payable and assets related to those annuities, and valuations of the accrued benefit asset and liability.

Consolidation The consolidated financial statements include the accounts of the Corporation and those of its wholly owned subsidiaries, namely: – Lotim inc. – La Société des casinos du Québec inc. – Casiloc inc. – La Société des loteries vidéo du Québec inc. – Ingenio, filiale de Loto-Québec inc. – La Société des bingos du Québec inc. – World Gaming Consultants inc. – 9059-3849 Québec inc. – Casino Mundial inc. – Casino Capital 2006 inc. – Technologies Nter, société en commandite – Technologies Nter inc. The investments in Manoir Richelieu, Limited Partnership, the general partner 9064-1812 Québec inc., and Casinos Développement Europe are recorded using the equity method.

Revenues Lotteries and bingo Revenues from sales of lottery tickets and bingo cards are recorded on the date of the draw, except for revenues from sales of instant lottery tickets, which are recorded at the time of sale. Lottery tickets sold as at March 31 for draws subsequent to that date, with the exception of instant lotteries, are recorded as deferred revenues. Retailer commissions associated with these sales are carried to prepaid expenses.

LOTO-QUÉBEC 2 0 1 0 annual report p. 49 N otes to t h e consolidated financial statements

Accounting policies (cont’d)

Casinos and video lotteries Revenues generated from these business segments consist of the difference between wagers made and prizes awarded.

Restaurants and lodging Revenues are recognized when services are rendered to customers, when the selling price is fixed or determinable, and when collection is reasonably assured.

Ingenio Revenues consist primarily of royalties. These royalties are recognized as they are earned in accordance with the contractual agreements specific to each of the agreements signed with the various business partners. Other revenues are recognized when the significant risks and rewards of ownership have been transferred to the buyer or when the services have been rendered to customers. In addition, the selling price must be fixed or determinable and collection reasonably assured.

Cost of sales Lotteries and bingo Prizes awarded from ticket sales related to bingo products are determined using a theoretical rate applied to sales. In addition to lottery prizes that are payable in cash or merchandise, the Corporation also awards free tickets. The value of these prizes is equal to the selling price and is included in sales as revenues and in expenses as prizes awarded.

Casinos Promotional discounts are the cash amounts paid to casino players.

Commodity taxes Taxes paid on products and services acquired and attributable to gaming activities are not recoverable by the Corporation. These taxes are recorded as part of the cost of the item to which they relate. Furthermore, rather than collecting the Québec Sales Tax (QST) and the Goods and Services Tax (GST) on revenues generated by gaming activities, the Corporation pays the taxes normally payable by the consumer and absorbs the cost. These taxes are presented separately in the consolidated statement of earnings. Net taxes attributable to gaming activities therefore represent about 26% of the bulk of taxable gaming expenses, while those attributable to non-gaming activities are calculated in the same way as those for other entities subject to commodity taxes.

Employee future benefits Defined contribution plan accounting is applied to the multiemployer governmental defined benefit plans due to the fact that Loto-Québec has insufficient information to apply defined benefit plan accounting. The Régime de retraite des employés de la Société des casinos du Québec inc. (the Employee Plan) and the Régime de retraite du personnel cadre et professionnel de la Société des casinos du Québec inc. (the Executive Plan) are funded in accordance with the applicable laws, and the plan assets are held by an independent trustee. The obligations of Loto-Québec’s Supplementary Pension Plan for Executive Management are funded. Other employee benefits consist primarily of sick leaves convertible to cash upon the departure or retirement of applicable employees, extended coverage during family and disability leaves, and lump-sum on retirement.

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Accounting policies (cont’d)

The Corporation accrues the defined benefit plan cost based on actuarial methods and assumptions determined by the Corporation, which include management’s best estimate of future changes in salaries, other cost increases, retirement age of employees and other actuarial factors. The net periodic pension plan cost includes: - The cost of pension benefits provided in exchange for services rendered by employees during the year; - The interest expense on obligations; - The expected return on pension plan assets based on the fair value of plan assets; - Gains or losses on settlements or curtailments. When the restructuring of a plan gives rise to both a settlement and a curtailment, the curtailment is accounted for prior to the settlement; - Amortization of cumulative unrecognized net actuarial gains and losses in excess of 10% of the greater of the accrued benefit obligations or fair value of plan assets at the beginning of the year, over the average remaining service life of the employee group covered by the defined benefit pension plans or the average remaining lifetime of employees entitled to benefits for plans covering only inactive participants. Plan obligations are calculated using the projected benefit method prorated on services.

Financial instruments Categories of financial instruments Assets and liabilities held for trading include cash and cash equivalents as well as the forward foreign exchange contract. Also, the corporation has designated the following financial assets and liabilities as held for trading: accounts receivable, financial assets related to life annuities, bank loans, prizes to winners, dividends payable, accounts payable and accrued charges, and life annuities payable. The Corporation has classified loans to JOAGROUPE Holding and to Manoir Richelieu, Limited Partnership in the loans and receivables category. Long-term debt is classified under other financial liabilities.

Initial measurement The financial instruments are recognized at fair value at the transaction date.

Subsequent measurement Financial assets and financial liabilities held for trading are valued at their fair value and, if applicable, the gains and losses that would result from a fair value revaluation would be recognized in net earnings. Loans and receivables as well as long-term debt are measured at amortized cost using the effective interest rate method.

Fair value The Corporation classifies financial instruments recognized at fair value using a three-level hierarchy that reflects the type of inputs used in making the measurements: - level 1: prices (unadjusted) in active markets for identical assets or liabilities; - level 2: inputs, other than level 1 prices, that are directly observable for the asset or liability (i.e., prices) or indirectly (i.e., derivatives of prices); - level 3: inputs for the asset or liability that are not based on market data (unobservable inputs).

Comprehensive income During the year, the Corporation did not carry out any transactions that had an impact on comprehensive income, and no opening or closing balance of accumulated comprehensive income has been presented.

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Accounting policies (cont’d)

Inventories Restaurants Inventories are valued at the lower of cost or net realizable value. The cost of food and beverages is established using the average cost method.

Property, plant and equipment Property, plant and equipment are presented at cost and, except for works of art, are amortized over their estimated useful lives using the straight-line method at the following annual rates:

Buildings 2% to 14.29% Improvements to parking lots 2.5% to 14.29% Improvements to rented parking lots 2.86% and 33.33% Interior layout 2.5% to 20% Landscaping 2.5% to 14.29% Leasehold improvements 4% to 20% Office furniture 10% Automotive equipment 10% and 30% Equipment 10% to 33.33%

Unused and uncommissioned equipment is not amortized.

Intangible assets Intangible assets consist of software and computer development. They are presented at cost and amortized over their estimated useful lives using the straight-line method at rates varying from 10% to 20%. Computer projects under development are amortized when the development phase is completed and implementation has begun.

Impairment of property, plant and equipment and intangible assets Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. The impairment test compares the net carrying amounts of long-lived assets with the undiscounted future cash flows expected to be generated from their use. Impaired assets are recorded at fair value, which is determined using estimated discounted future cash flows arising from their use and eventual disposition.

Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect on the balance sheet date. Non-monetary assets and liabilities are translated at historical rates, and revenue and expense items are translated at the exchange rate prevailing on the transaction date. All exchange gains and losses are included in earnings for the year. The Corporation uses derivative instruments to manage its exposure to the foreign exchange risks related to its loans to JOAGROUPE Holding. The Corporation’s policy, in accordance with Government of Québec’s Regulation respecting currency exchange or interest rate exchange agreements concluded by an entity, stipulates that it cannot use derivative financial instruments for trading or speculation purposes.

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Accounting policies (cont’d)

The Corporation does not use hedge accounting for its financial instruments. Derivative instruments that are economic hedges but are not designated in a hedging relationship are recorded in the balance sheet at fair value, and changes in fair value are recorded in earnings.

Cash and cash equivalents The Corporation’s policy consists of presenting the following as cash and cash equivalents: cash on hand at casinos, bank balances and short-term investments that are readily convertible into known amounts of cash, that present an insignificant risk of change in value and that have a maturity of at most 90 days.

Note 3 a) NEW ACCOUNTING STANDARDS On April 1, 2009, the Corporation adopted the new recommendations of the Canadian Institute of Chartered Accountants (CICA) with respect to Section 3064 “Goodwill and Intangible Assets,” which replaced Section 3062 “Goodwill and Other Intangible Assets” and Section 3450 “Research and Development Costs.” This new section establishes recognition, measurement and disclosure standards applicable to goodwill and intangible assets, including internally developed intangible assets. On April 1, 2009, the Corporation adopted the amendments made to CICA Handbook Section 3862 “Financial Instruments – Disclosures.” The amendments are intended to improve disclosures on fair value measurements of financial instruments. The required disclosures are provided in Note 2, Accounting Policies – Financial Instruments and Note 20, Financial Instruments. The adoption of these new standards did not have a significant impact on the amounts recorded in the financial statements. b) FUTURE CHANGES IN ACCOUNTING POLICIES In December 2008, the CICA issued new Section 1582 “Business Combinations” (which replaces Section 1581 “Business Combinations,”) and sections 1601 “Consolidated Financial Statements” and 1602 “Non-controlling Interests,” (which together replace Section 1600 “Consolidated Financial Statements.”) Section 1582 establishes accounting principles for the acquirer, including the measurement and recognition of identifiable assets acquired, the liabilities assumed, and the non-controlling interests in the acquiree; the measurement and recognition of goodwill subsequent to the business combination and the standardization of disclosures. Section 1601 applies specifically to the preparation of consolidated financial statements subsequent to a business combination in which a corporation has acquired an interest in another corporation. Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in the consolidated financial statements. These sections will apply to financial statements for years beginning on or after January 1, 2011. Accordingly, the Corporation will have to adopt these standards for the year ending March 31, 2012. In management’s opinion, the adoption of these new accounting standards will not have a significant impact on the Corporation’s financial statements.

International Financial Reporting Standards Canada’s Accounting Standards Board (AcSB) has confirmed that publicly accountable enterprises will be required to apply IFRS for financial statements of years beginning on or after January 1, 2011. For the Corporation, the requirement will be applied to the annual financial statements for periods beginning on April 1, 2011. Accordingly, in financial disclosures published after April 1, 2011, the Corporation will have to provide comparative figures for the year-earlier period, which means that April 1, 2010 will be the transition date for the Corporation. The Corporation has completed its IFRS conversion plan and is currently evaluating the future impact of these new standards on its consolidated financial statements.

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Note 4 CAPITAL DISCLOSURES The Corporation defines its capital as being shareholder’s equity, as follows:

(in thousands of dollars) 2010 2009

Shareholder’s equity Capital stock 170 170 Retained earnings 134,307 134,307 134,477 134,477

Under the Act related to the Corporation, dividends are set by the Québec Minister of Finance, who determines the payment terms. Dividends declared are deducted from retained earnings and correspond to the consolidated net earnings less amounts payable to the Fonds d’aide à l’action communautaire autonome and contributions to the Government of Québec. The Corporation is subject to certain capital requirements, which it met throughout the year. The Corporation manages its capital through careful management of its revenues, expenses, assets, liabilities, investments and other financial transactions to ensure it meets the objectives set out in its incorporating act.

Note 5 CoST of sales

(in thousands of dollars) 2010 2009

Lotteries Prizes awarded 977,560 1,015,208 Commissions to retailers 124,898 128,705 Printing of tickets 35,303 37,282 1,137,761 1,181,195 Casinos, restaurants and lodging Promotional discounts 32,516 25,021 Restaurants 29,719 27,636 62,235 52,657 Video lotteries Commissions to retailers 225,016 229,919 Printing of coupons 910 1,250 225,926 231,169 Bingo Prizes awarded 16,521 16,804 Commissions to operators 2,562 2,325 Printing of cards 1,317 1,168 20,400 20,297 1,446,322 1,485,318

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Note 6 FINANCIAL EXPENSES

(in thousands of dollars) 2010 2009

Interest expense on: Bank loans 2,824 10,892 Long-term debt 7,180 6,140 Interest income on: Term deposits (283) (526) Long-term investment, JOAGROUPE Holding – (7,819) (Gain) loss on foreign exchange contracts (20,938) 5,305 Exchange loss (gain) on JOAGROUPE Holding loans 22,376 (4,456) 11,159 9,536

Note 7 SPECIAL PAYMENTS

(in thousands of dollars) 2010 2009

Compensation to the Government of Canada 15,249 15,290 Net contribution to Manoir Richelieu, Limited Partnership 7,275 6,552 Guaranteed payments - gaming halls 2,513 3,880 Special commissions to NPOs 1,071 1,111 Compensation to participating NPOs 5,646 6,778 Compensation to non-participating NPOs 451 564 32,205 34,175

Compensation to the Government of Canada Following an agreement reached between provincial governments and the Government of Canada regarding the federal government’s withdrawal from the administration of lotteries, the provinces pay the federal government an annual amount of $24.0M in 1979 dollars, i.e., $65.0M for the year ended March 31, 2010 ($65.0M in 2009). The Government of Québec’s share is payable by the Corporation in accordance with the agreement reached between the provinces and the regional lottery corporations.

Net contribution to Manoir Richelieu, Limited Partnership Pursuant to a guarantee agreement, and according to the distribution terms and conditions specified in the partnership agreement, the net contribution amount represents the minimum portion of cash generated by the operations of the Casino de Charlevoix payable to the partners, while taking into account the Corporation’s share in the earnings generated by Manoir Richelieu.

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SPECIAL PAYMENTS (cont’d)

Guaranteed payments – gaming halls Under the guaranteed payments agreement, the guaranteed payments equal 22% of the net revenues from 535 gaming positions located in two gaming halls connected to the hippodromes of Trois-Rivières and Québec City. Until October 13, 2009, the guaranteed payments were made by a subsidiary of the Corporation that acts as an agent of the Government of Québec. On October 14, 2009, in accordance with the penalties set out in article 17.10 of the agreement for the sale of assets and commitments relative to the horseracing industry, the Minister of Finance instructed the Corporation to stop making any guaranteed payments as of that date.

Special commissions to non-profit organizations (NPOs) Further to the shareholder’s decision, a commission equal to the discount provided to retailers is paid to NPOs that sell lottery tickets through the Lotomatique subscription system.

Compensation to non-profit organizations (NPOs) Participating La Société des bingos du Québec inc. awards the following amount to charitable or religious organizations that hold bingo licences: an amount equal to 36.4% of bingo ticket sales less the value of prizes awarded to game winners or 50% of net earnings generated by bingo, not counting compensation to non-participating NPOs, whichever is higher.

Non-participating La Société des bingos du Québec Inc. awards an amount equal to 5.45% of pari-mutuel ticket sales generated by Le Grand Tour less the value of prizes paid to game winners to charitable or religious organizations that hold bingo licences but do not participate in the Corporation’s bingo games.

Note 8 FONDS D’AIDE À L’ACTION COMMUNAUTAIRE AUTONOME The Corporation makes annual contributions to the Fonds that are equal to 6% of the previous year’s net earnings with respect to the operations of State-run casinos and the contributing businesses. Under its incorporating act, 5% of the amounts are allocated to the Fonds d’aide à l’action communautaire autonome, and 1% is allocated to the Fonds d’aide à l’action humanitaire internationale.

Note 9 CONTRIBUTIONS TO THE GOVERNMENT OF Québec

(in thousands of dollars) 2010 2009

Ministère de l’Agriculture, des Pêcheries et de l’Alimentation (MAPAQ) 14,207 6,132 Ministère de la Santé et des Services sociaux 52,000 52,000 Ministère de la Sécurité publique 3,901 3,901 70,108 62,033

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Note 10 ACCOUNTS RECEIVABLE

(in thousands of dollars) 2010 2009

Wholesalers 29,317 28,066 Retailers 24,260 21,315 Miscellaneous 37,288 22,679 90,865 72,060

Note 11 INVENTORIES

(in thousands of dollars) 2010 2009

Lotteries Modules - game terminals – 25 Restaurants Food and beverages 5,499 5,645 5,499 5,670

Note 12 INVESTMENTS

(in thousands of dollars) 2010 2009

JOAGROUPE Holding and its wholly owned subsidiaries Loans, in euros, cashable in May 2016(1) 52,822 129,696 Manoir Richelieu, Limited Partnership and 9064-1812 Québec inc., General Partner, interest equal to 50% of the operations of Manoir Richelieu and Casino de Charlevoix 27,992 29,272 Manoir Richelieu, Limited Partnership Loan, without terms of repayment, bearing interest at a fixed rate of 5%, payable annually 2,508 2,508 83,322 161,476

The Corporation holds a 35% equity interest in Casinos Développement Europe. The value of the shares was written down by $6.3M as at March 31, 2009 to reflect 35% of the loss as at December 31, 2008 up to the cost of the equity held by the Corporation of $6.3M. The share of unrecognized losses for the year was $3.7M, for a cumulative total of $11.2M ($7.5M in 2009).

(1) During the year, following the global recession and difficulties in the French casino industry, the Corporation, with the assistance of an independent valuator, estimated the value of the JOAGROUPE Holding loans. The carrying amount was reduced to the estimated realizable value, which is equal to the discounted expected future cash flows at an initial loan interest rate of 8%. The carrying amount of the loans was written down by $29.6 million. In addition, capitalized interest in the amount of $24.9 million was written off. Also, the decrease of the euro compared to the Canadian dollar had a $22.4 million negative impact on the loans. This depreciation was compensated by a similar gain on the foreign exchange contracts denominated in euros.

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Note 13 PROPERTY, PLANT AND EQUIPMENT

(in thousands of dollars) 2010 2009

Accumulated Cost Amortization Net Net

Land 42,339 – 42,339 42,339 Buildings 408,913 138,722 270,191 249,759 Improvements to parking lots 130,980 86,444 44,536 50,584 Improvements to rented parking lots 5,485 3,935 1,550 1,671 Interior layout 227,509 119,898 107,611 95,122 Landscaping 37,377 25,883 11,494 10,596 Leasehold improvements 63,527 36,172 27,355 20,530 Office furniture 22,858 13,395 9,463 9,055 Automotive equipment 921 562 359 181 Equipment 560,567 378,648 181,919 193,415 Works of art 6,479 – 6,479 6,094 Unused property, plant and equipment 29,260 – 29,260 62,479 1,536,215 803,659 732,556 741,825

Unused property, plant and equipment consists of equipment awaiting commissioning in the amount of $6.2M ($9.4M in 2009), buildings undergoing renovations in the amount of $7.5M ($8.9M in 2009) as well as $15.6M in costs related to the Casino de Montréal modernization project ($44.2M related to the implementation of Casino de Mont-Tremblant in 2009).

Note 14 INTANGIBLE ASSETS

(in thousands of dollars) 2010 2009

Accumulated Cost Amortization Net Net

Software and computer development 144,524 75,952 68,572 71,491 Computer projects under development 24,459 – 24,459 10,973 168,983 75,952 93,031 82,464

Note 15 BANK LOANS The Corporation is authorized by the Government of Québec to make short-term borrowings of up to $575.0M from financial institutions or the Québec Minister of Finance, in its capacity of manager of the Fonds de financement, and long-term borrowings of up to $1.0B from the same fund. Despite the aforementioned, the total amount of the Corporation’s short-term and long-term borrowings may at no time exceed $1.3B. Short-term bank loans totalled $365.7M ($263.3M in 2009) of which $102.0M is with the Fonds de financement du gouvernement du Québec, and they bear interest at the market rate, i.e., 0.33% to 0.94% (0.56% to 3.28% in 2009).

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Note 16 ACCOUNTS PAYABLE AND ACCRUED CHARGES

(in thousands of dollars) 2010 2009

Accounts payable and accrued charges 150,696 160,698 Manoir Richelieu, Limited Partnership 5,667 6,242 Provision for unclaimed prizes 5,249 6,039 Goods and Services Tax 3,484 4,039 Québec Sales Tax 5,752 5,939 170,848 182,957

The provision for unclaimed prizes is comprised of the unclaimed prizes of all the Corporation’s products, excluding Canada-wide games. The amount is used to pay bonus prizes and commissions to retailers.

Note 17 LIFE ANNUITIES The Corporation offers life annuities on lottery products. When large prize winners opt for life annuities instead of lump sums, the Corporation assigns the issuance and administration of the annuity to a third party. Amounts paid to the third party are recorded as financial assets and amortized based on the life expectancy of the winners upon issuance of the annuity. The financial liability is measured by independent actuaries based on assumptions, including life expectancy. For the year, the Corporation’s disbursements to third parties for life annuities stood at $5.3M ($3.1M in 2009).

Note 18 LONG-TERM DEBT

(in thousands of dollars) 2010 2009

Loans from the Fonds de financement du gouvernement du Québec, interest payable semi-annually, repayable at maturity on: December 1, 2010, fixed rate of 3.382% 75,000 75,000 May 5, 2014, fixed rate of 3.113% 50,000 50,000 December 1, 2015, fixed rate of 4.117% 75,000 75,000 200,000 200,000 Less current portion (75,000) – 125,000 200,000

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Note 19 CONTINGENCIES AND COMMITMENTS Contingencies In the normal course of business, the Corporation is subject to claims and lawsuits. The Corporation’s management disputes these claims and lawsuits. No provision has been made in the Corporation’s records with respect to these contingencies, because, in management’s view, no settlement that could arise from these lawsuits would have a significant impact on the Corporation’s consolidated financial statements.

Commitments Leases The Corporation is committed under long-term leases expiring on various dates through May 2035 for the rental of administrative offices and land. In certain cases, these leases carry an implied two-to five-year renewal option up to a maximum term of 60 years. Future minimum payments, in thousands of dollars, are as follows:

2011 24,692 2012 19,245 2013 15,642 2014 13,072 2015 11,138 2016 and thereafter 19,905 103,694

Casinos Modernization of the Casino de Montréal The Casino de Montréal modernization budget is $305.7M and the project will continue until 2012-2013. As at March 31, 2010, investments totalled $15.6M and commitments stood at $31.0M.

Fondation Mise sur toi The Corporation has committed to make an annual contribution to the Fondation equivalent to 2.25/10 of 1% of actual net earnings of the lotteries, casinos, video lotteries, and bingo business segments. For the coming year, the estimated payment is $6.4M. The Fondation mission is to build awareness and inform Québecers about games of chance so they can make responsible and informed decisions and thereby maintain a healthy approach to gambling. Its main objectives are to promote responsible gaming behaviour, prevent the harmful effects of excessive gambling, and protect at-risk individuals.

Contributions to the Government of Québec Ministère de l’Agriculture, des Pêcheries et de l’Alimentation (MAPAQ) Following the repeal of fairground casinos, the Government has authorized the Corporation to conclude an agreement with MAPAQ, starting in fiscal year 2008-2009, for the annual payment of $6.1M to a specified purpose account for a period of five years ending March 31, 2013. The Corporation is also committed to the MAPAQ to pay $9.2M into a specified purpose account, including $8.1M for fiscal year 2009-2010, $1.0M for fiscal year 2010-2011 and $0.1M for fiscal year 2011-2012, to finance the Programme d’aide ponctuelle aux éleveurs de chevaux Standardbred.

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CONTINGENCIES AND COMMITMENTS (cont’d)

Ministère de la Santé et des Services sociaux With the authorization of the Government of Québec, the Corporation is committed to make an annual contribution of $22.0M to the Ministère de la Santé et des Services sociaux (MSSS) into a specified purpose account to finance prevention measures, treatment services and research programs and awareness campaigns to help compulsive gamblers. Furthermore, the Corporation is also committed to the MSSS to make an annual contribution of $30.0M into a specified purpose account to finance assistance and support services for the elderly who are no longer autonomous but who live on their own or in home-care centres. The Corporation is not in a position to assess the total amount of these commitments.

Ministère de la Sécurité publique With the authorization of the Government of Québec, the Corporation is committed to the Ministère de la Sécurité publique to make an annual contribution of $3.0M into a specified purpose account to finance intensive control measures and activities that will be implemented by the Régie des alcools, des courses et des jeux to ensure the management of control measures regarding access to video lottery terminals. The Corporation is not in a position to assess the total amount of this commitment. Furthermore, the Corporation is also committed to the Ministère de la Sécurité publique to make an annual contribution of approximately $0.9M into a specified purpose account, indexed annually according to the consumer price index, and to do so for a five-year period ending March 31, 2012 to finance additional resources that would help reduce the certification delays for new games and devices operated by the Corporation.

Note 20 FINANCIAL INSTRUMENTS Risk management policy The Corporation has control and management policies and procedures in place that ensure proper management of the risks inherent to financial instruments.

Credit risk The carrying amount of financial assets represents the entity’s maximum exposure to credit risk. The line item “Cash on hand – casinos” includes the cash inventory of the casinos. Accounts receivable are primarily from transactions concluded with a significant number of wholesalers and retailers. Other financial assets represent life annuities paid to large insurance companies. Except for the credit risk related to the JOAGROUPE Holding loans presented in Note 12, management considers that the Corporation is not exposed to any other significant credit risk.

The table below provides an analysis of the receivables:

(in thousands of dollars) 2010 2009

Gross value Loss in value Net value Gross value Loss in value net value

Net receivables 90,865 – 90,865 72,060 – 72,060 0-120 days overdue 13 13 – 16 16 – 121-365 days overdue 75 75 – 419 419 – More than 365 days overdue 78 78 – 111 111 – 91,031 166 90,865 72,606 546 72,060

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FINANCIAL INSTRUMENTS (cont’d)

Information about the change in the provision for losses on receivables is as follows:

(in thousands of dollars) 2010 2009

Balance, beginning of year 546 1,546 Recognized loss in value 88 460 Use of provision (58) (1,327) Reversal of provision (410) (133) Balance, end of year 166 546

Foreign exchange risk The Corporation has investment loans denominated in euros in JOAGROUPE Holding, with a carrying amount of $52.8M (38.5M€) as at March 31, 2010 ($129.7M (77.4M€) in 2009). On September 30, 2009, the Corporation signed a forward foreign exchange contract denominated in euros for an amount of $123.9M (77.4M€) that expired on March 31, 2010 to protect itself against any future changes in the exchange rate with respect to this investment. Similar protection expiring on March 31, 2011 was renewed for an amount of $53.2M (38.5M€). The fair value of the foreign exchange contract as at March 31, 2010 is nil, as it was entered into on that date. Furthermore, the Corporation carries out other transactions in foreign currencies. It does not hold or issue financial instruments as a way to manage the foreign exchange risk to which it is exposed through these transactions. However, this risk does not have a significant impact on the Corporation’s earnings or financial position. The impact on earnings of foreign exchange hedging transactions is recorded under Financial expenses.

Liquidity risk Contractual cash flows related to the entity’s financial liabilities are as follows:

(in thousands of dollars) Maturity

Total contractual less than Carrying amount cash flows 12 months 1 to 2 years 2 to 5 years 5 to 6 years

Financial liabilities Bank loans 365,730 366,908 366,908 – – – Prizes to winners 66,578 66,578 66,578 – – – Dividends payable 171,597 171,597 171,597 – – – Accounts payable and accrued charges 170,848 170,848 170,848 – – – Accrued benefit liability 8,878 8,878 – – – – Long-term debt 200,000 228,068 82,181 4,644 63,155 78,088 983,631 1,012,877 858,112 4,644 63,155 78,088

The entity considers that it has sufficient assets readily convertible to cash and credit facilities to ensure it has the necessary funds to meet current and long-term financial needs, if necessary, and at a reasonable cost.

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FINANCIAL INSTRUMENTS (cont’d)

Interest rate risk Interest rates on loans and long-term debt are fixed. Interest rates on bank loans are also fixed. Bank loans are taken out to meet temporary liquidity needs for a period of less than 365 days with financial institutions or the Minister of Finance in its capacity as the manager of the Fonds de financement. Careful loan management helps reduce cash flow risk with respect to interest paid.

Fair value

(in thousands of dollars) 2010 2009

Carrying Fair Carrying Fair Level amount value amount value

Assets held for trading* 1 95,378 95,378 70,515 70,515 Assets designated as held for trading* 3 140,329 140,329 117,417 117,417 Loans and receivables** n/a 55,330 – 132,204 – Liabilities designated as held for trading* 3 824,217 824,217 841,734 841,734 Other liabilities*** n/a 200,000 – 200,000 –

* All financial instruments recognized at fair value are short-term instruments whose fair values equal their carrying amounts due to their short-term maturities. ** Loans to JOAGROUPE Holding and Manoir Richelieu, Limited Partnership resulted from related party transactions and, consequently, the terms and conditions of these loans may differ from those that would be negotiated between unrelated companies. *** The long-term debt resulted from related party transactions (Fonds de financement du gouvernement du Québec).

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Note 21 CONSOLIDATED CASH FLOWS

(in thousands of dollars) 2010 2009

Cash and cash equivalents, end of year Cash on hand - casinos 61,470 49,911 Cash 33,908 20,604 95,378 70,515

Change in non-cash operating working capital items Accounts receivable (18,805) 8,283 Inventories 171 19 Prepaid expenses (5,561) 2,842 Financial assets related to life annuities (4,107) (2,035) Accrued benefit asset (3,461) – Prizes to winners 11,879 (7,597) Accounts payable and accrued charges 3,899 (26,159) Life annuities payable 4,107 2,035 Deferred revenues (2,774) 1,144 Accrued benefit liability 1,031 783 (13,621) (20,685)

Additional information Property, plant and equipment included in prepaid expenses 970 – Prepaid expenses transferred to property, plant and equipment – 1,516 Acquisitions of property, plant and equipment financed by accounts payable and accrued charges 14,627 33,134 Acquisitions of intangible assets financed by accounts payable and accrued charges 3,917 1,966 Partners’ share in Manoir Richelieu, Limited Partnership included in accounts payable 5,910 5,362 Interest paid 10,011 16,951

p. 64 LOTO-QUÉBEC 2 0 1 0 annual report N otes to t h e consolidated financial statements

Note 22 EMPLOYEE FUTURE BENEFITS Defined benefit plans Employees of the parent company, La Société des loteries vidéo du Québec inc., La Société des bingos du Québec inc., Ingenio, filiale de Loto-Québec inc. and since January 1, 2010, Technologies Nter, société en commandite, participate in the Régime de retraite des employés du gouvernement et des organismes publics (RREGOP), the Régime de retraite des fonctionnaires (RRF) or the Régime de retraite du personnel d’encadrement (RRPE). These are defined benefit plans and include guarantees upon retirement or death. Contributions charged to consolidated earnings for the year for these multiemployer plans totalled $5.1M ($4.8M in 2009). The employer’s obligations toward these government plans are limited to its contributions as an employer. Employees of La Société des casinos du Québec inc. participated in the defined contribution plan until December 31, 2009. Employees of Technologies Nter, société en commandite, participated in a group RRSP until December 31, 2009. Contributions charged to consolidated earnings for the year for these plans totalled $7.8M ($10.0M in 2009). On December 31, 2009, La Société des casinos du Québec inc. set up two new defined benefit pension plans, the Régime de retraite des employés de la Société des casinos du Québec inc. (the Employee Plan) and the Régime de retraite du personnel cadre et professionnel de la Société des casinos du Québec inc. (the Executive Plan). Membership in these plans is mandatory for all of the Corporation’s employees who meet the eligibility criteria. These plans will provide pension benefits determined based on indexed yearly pensionable earnings (maximum annual indexing of 2%) for the Employee Plan and number of years of service and average salary of the best three consecutive years for the Executive Plan. The annuities paid to pensioners will be increased each year based on 50% of the rise in the consumer price index (maximum annual indexing of 2%). The Corporation’s annual contribution will be equal to that of employees unless the actuary deems that it should be higher in order to fund the employees’ accrued benefits and amortize any plan deficit. Surplus assets will be used to repay the Corporation, in the form of an annual contribution holiday up to the balance of the amortization payments. The balance of surplus assets will be used to reduce employee and Corporation contributions equally. The Corporation offers a Supplementary Pension Plan for Executive Management (the Supplementary Plan) to executive officers to pay life benefits exceeding the limits provided under theIncome Tax Act.

LOTO-QUÉBEC 2 0 1 0 annual report p. 65 N otes to t h e consolidated financial statements

EMPLOYEE FUTURE BENEFITS (cont’d)

Funding policy The Corporation’s funding policy for registered defined benefit plans is to pay, each year, the amount required to cover accrued benefits for the year and to fund the past service obligation over periods not exceeding the time limit allowed by the appropriate regulatory authorities. At the end of each fiscal year, for accounting purposes, independent actuaries measure the benefit obligations and the fair value of plan assets for the Employee Plan, the Executive Plan, the Supplementary Plan and other recorded employee benefits. The most recent actuarial valuations for funding purposes of the Employee Plan and the Executive Plan were completed as of December 31, 2009 and the next valuations must be completed no later than December 31, 2010. The most recent actuarial valuations for funding purposes of the Supplementary Plan and other employee benefits were completed as of March 31, 2010 and the next valuations must be completed no later than March 31, 2011.

Investment policy The plan administrator uses a disciplined strategy that provides investment diversification by asset class, currency, industry and company. The Board of Directors has approved an investment policy that establishes the long-term target asset mix based on the historical returns of global investment markets. The long-term target asset mix also includes an interest rate risk hedging strategy. Manager performance is assessed based on the market performance of the target mix. The assets of the registered defined benefit plans are held by an independent trustee and are recorded separately in the Corporation’s pension funds. According to the fair value of assets held as at March 31, 2010, the pension plan assets were composed of 4.5% cash, 57.5% bonds and 38.0% Canadian, U.S. and foreign equity.

p. 66 LOTO-QUÉBEC 2 0 1 0 annual report N otes to t h e consolidated financial statements

EMPLOYEE FUTURE BENEFITS (cont’d)

The following table presents information on the Corporation’s plans:

pension other employee plans benefits

(in thousands of dollars) 2010 2010

Accrued benefit obligation Balance, beginning of year 2,500 (1) 6,375 (2) Current service cost 2,707 600 Interest expense 1,891 – Employee contributions 3,542 – Benefits paid (42) – net transfer amount 97,192 – Actuarial loss 11,131 1,903 Balance, end of year 118,921 8,878 Fair value of plan assets Balance, beginning of year 1,072 (1) – Actual return on plan assets 1,228 – Employer contributions 7,910 – Employee contributions 3,542 – Benefits paid (42) – net transfer amount 105,926 – Plan administration expenses (62) – Balance, end of year 119,574 – Funded status - surplus (deficit) 653 (8,878) Unamortized net actuarial loss 2,808 – Accrued benefit asset (liability) on the consolidated balance sheet 3,461 (8,878)

(1) For the Supplementary Plan (2) Sick leave convertible to cash upon departure or retirement of applicable employees

LOTO-QUÉBEC 2 0 1 0 annual report p. 67 N otes to t h e consolidated financial statements

EMPLOYEE FUTURE BENEFITS (cont’d)

In accordance with Canadian GAAP, the difference between the funded status and the net amount presented in the consolidated balance sheet is the portion of the surplus or deficit not yet recognized for accounting purposes. This approach allows for gradual recognition of changes in the accrued benefit obligation and plan performance over the expected average remaining life of the employee group covered by the plans, as described in Note 2. The accrued benefit obligations in excess of the fair value of plan assets at year-end for plans that are not fully funded include the following amounts:

pension other employee plans benefits

(in thousands of dollars) 2010 2010

Fair value of plan assets 114,179 – Accrued benefit obligation 115,210 8,878 Plan deficit (1,031) (8,878)

Components of the net cost charged to consolidated earnings are as follows:

pension other employee plans benefits

(in thousands of dollars) 2010 2010

Current service cost 2,895 600 Interest expense 1,891 – Actual return on plan assets (1,228) – Actuarial loss 11,131 1,903 Cost established for the period 14,689 2,503 Difference between expected and actual return on plan assets (618) – Difference between net actuarial loss (gain) and actual actuarial loss (gain) (11,131) – Difference between temporary obligation (assets) 37 – Cost recognized for the period 2,977 2,503

p. 68 LOTO-QUÉBEC 2 0 1 0 annual report N otes to t h e consolidated financial statements

EMPLOYEE FUTURE BENEFITS (cont’d)

The weighted averages of significant actuarial assumptions used by the Corporation are:

pension other employee plans benefits

2010 2010

Accrued benefit obligations, end of year Discount rate 6.00% 4.75% Rate of compensation increase 3.75% 3.75% Net cost of plans for the year Discount rate 6.50% 4.75% Rate of compensation increase 3.50% 3.75% Expected long-term return on plan assets 6.75% (1) n/a

(1) nil for the Supplementary Plan

Note 23 RELATED PARTY TRANSACTIONS In addition to the related party transactions already disclosed and recorded at the exchange amount, the Corporation is related to all departments and special funds as well as all agencies and enterprises directly or indirectly controlled by the Government of Québec or subject to either joint control or significant influence of the Government of Québec. Except for the aforementioned transactions, the Corporation has not concluded any business transactions with these related parties other than in the normal course of business and usual business terms and conditions. These transactions have not been disclosed separately in the financial statements.

Note 24 COMPARATIVE FIGURES Certain prior year figures have been reclassified to conform to the presentation adopted for 2010.

LOTO-QUÉBEC 2 0 1 0 annual report p. 69 N otes to t h e consolidated financial statements

Note 25 SEGMENTED INFORMATION

(in thousands of dollars) 2010

elimination of Video intersegment Consolidated Business segments Lotteries Casinos lotteries Bingo Ingenio International transactions figures

Revenues Games 1,850,171 829,810 1,043,332 32,025 771 – – 3,756,109 Restaurants – 90,320 – – – – (51,323) 38,997 Lodging – 15,177 – – – – – 15,177 1,850,171 935,307 1,043,332 32,025 771 – (51,323) 3,810,283 Cost of sales Games 1,137,761 32,516 225,926 20,400 – – – 1,416,603 Restaurants – 29,719 – – – – – 29,719 1,137,761 62,235 225,926 20,400 – – – 1,446,322 Gross margin 712,410 873,072 817,406 11,625 771 – (51,323) 2,363,961 Operating expenses Operating costs(1) 171,006 520,345 79,237 6,811 346 588 (51,323) 727,010 Amortization of property, plant and equipment 13,166 50,980 31,048 93 54 – – 95,341 Amortization of intangible assets 8,456 3,693 1,593 6 – – – 13,748 Financial expenses 3,015 3,114 3,595 (2) (1) 1,438 – 11,159 195,643 578,132 115,473 6,908 399 2,026 (51,323) 847,258 Earnings before the undernoted: 516,767 294,940 701,933 4,717 372 (2,026) – 1,516,703 Special payments 16,320 7,275 2,513 6,097 – – – 32,205 Goods and Services Tax 13,409 6,154 14,731 326 – – – 34,620 Québec Sales Tax 20,930 10,049 23,201 514 – – – 54,694 JOAGROUPE Holding Write-down of loans – – – – – 29,583 – 29,583 Write-off of capitalized interest – – – – – 24,914 – 24,914 50,659 23,478 40,445 6,937 – 54,497 – 176,016 Net earnings (loss) 466,108 271,462 661,488 (2,220) 372 (56,523) – 1,340,687

p. 70 LOTO-QUÉBEC 2 0 1 0 annual report N otes to t h e consolidated financial statements

SEGMENTED INFORMATION (cont’d)

(in thousands of dollars) 2009

elimination of Video intersegment Consolidated Business segments Lotteries Casinos lotteries Bingo Ingenio International transactions figures

Revenues Games 1,901,534 811,135 1,062,720 35,392 1,083 – (484) 3,811,380 Restaurants – 87,807 – – – – (46,998) 40,809 Lodging – 16,501 – – – – – 16,501 Provision of services – – – – – 1,582 – 1,582 1,901,534 915,443 1,062,720 35,392 1,083 1,582 (47,482) 3,870,272 Cost of sales Games 1,181,289 25,021 231,169 20,297 – – (94) 1,457,682 Restaurants – 27,636 – – – – – 27,636 1,181,289 52,657 231,169 20,297 – – (94) 1,485,318 Gross margin 720,245 862,786 831,551 15,095 1,083 1,582 (47,388) 2,384,954 Operating expenses Operating costs(1) (2) 163,111 486,948 81,830 5,901 329 863 (47,388) 691,594 Amortization of property, plant and equipment 9,305 47,057 30,720 167 39 – – 87,288 Amortization of intangible assets 7,378 3,229 1,296 12 – – – 11,915 Financial expenses 5,214 5,095 6,212 (7) (4) (6,974) – 9,536 185,008 542,329 120,058 6,073 364 (6,111) (47,388) 800,333 Earnings before the undernoted: 535,237 320,457 711,493 9,022 719 7,693 – 1,584,621 Special payments 16,401 6,552 3,880 7,342 – – – 34,175 Goods and Services Tax 12,626 6,657 14,379 297 – – – 33,959 Québec Sales Tax 20,170 10,854 22,925 468 – – – 54,417 Share in a company subject to significant influence, Casinos Développement Europe – – – – – 6,311 – 6,311 49,197 24,063 41,184 8,107 – 6,311 – 128,862 Net earnings 486,040 296,394 670,309 915 719 1,382 – 1,455,759

(1) Expenses are assumed by the Corporation’s corporate management team. Certain operating costs and related commodity taxes, attributable directly to the segments, are allocated based on their use. Other expenses are allocated based on the net revenues of the main business segments. (2) The Board of Directors decided that the contribution to participating NPOs would be increased annually with the payment of a subsidy equal to the net earnings from the bingo segment. The amount of $0.9M is assumed by the Corporation’s corporate segment and distributed according to the net revenues of the main segments.

LOTO-QUÉBEC 2 0 1 0 annual report p. 71 Comparative results As at March 31, 2010

(in thousands of dollars) 2010 2009 2008 2007 2006

Consolidated earnings Revenues 3,810,283 3,870,272 3,850,177 3,798,832 4,016,030 Cost of sales Lotteries Prizes awarded 977,560 1,015,208 1,031,365 964,941 966,350 Commissions to retailers 124,898 128,705 130,028 124,004 126,919 Printing of tickets 35,303 37,282 36,097 32,507 31,640 Lotteries subtotal 1,137,761 1,181,195 1,197,490 1,121,452 1,124,909 Casinos Promotional allowances 32,516 25,021 23,153 21,821 23,154 Restaurants 29,719 27,636 27,556 27,248 26,992 Casinos subtotal 62,235 52,657 50,709 49,069 50,146 Video lotteries Commissions to retailers 225,016 229,919 229,317 241,542 285,738 Printing of coupons 910 1,250 1,430 1,121 1,312 Video lotteries subtotal 225,926 231,169 230,747 242,663 287,050 Bingo Prizes awarded 16,521 16,804 19,187 18,010 18,294 Commissions to operators 2,562 2,325 2,499 2,387 2,297 Printing of cards 1,317 1,168 1,570 1,107 825 Bingo subtotal 20,400 20,297 23,256 21,504 21,416 Total 1,446,322 1,485,318 1,502,202 1,434,688 1,483,521 Gross margin 2,363,961 2,384,954 2,347,975 2,364,144 2,532,509 Operating expenses Lotteries 171,006 163,111 160,275 153,534 154,143 Casinos 469,022 439,560 426,280 434,123 438,778 Video lotteries 79,237 81,830 71,682 65,635 63,044 Bingo 6,811 5,901 6,006 5,486 5,562 Ingenio 346 329 5,389 6,216 6,092 International 588 863 933 998 1,010 Amortization of property, plant and equipment 95,341 87,288 84,525 80,742 84,754 Amortization of intangible assets 13,748 11,915 9,797 11,557 9,920 Financial expenses 11,159 9,536 16,598 6,910 11,328 847,258 800,333 781,485 765,201 774,631 Earnings before the undernoted 1,516,703 1,584,621 1,566,490 1,598,943 1,757,878 Special payments 32,205 34,175 33,551 32,008 32,459 Goods and Services Tax 34,620 33,959 41,025 44,073 51,964 Québec Sales Tax 54,694 54,417 56,230 55,814 59,512 Holding in the Casinos Développement Europe satellite corporation – 6,311 (479) (1,017) – JOAGROUPE Holding Write-down of loans 29,583 – – – – Write-off of capitalized interest 24,914 – – – – 176,016 128,862 130,327 130,878 143,935 Net earnings 1,340,687 1,455,759 1,436,163 1,468,065 1,613,943

p. 72 LOTO-QUÉBEC 2 0 1 0 annual report Follow-up on the actions outlined in the 2008-2013 Sustainable Development Action Plan FOR FISCAL 20092010

In March 2009, Loto-Québec unveiled its 2008-2013 Sustainable Development Action Plan. In accordance with the stipulations of the Sustainable Development Act, the present Status Report serves as an update on the activities undertaken by the Corporation during ﬁ scal 2009-2010 for each of the 14 actions set forth in the aforementioned Plan.

ACTIONS 1 TO 4 ARE ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 1

MAKE PEOPLE INCREASINGLY AWARE OF SUSTAINABLE DEVELOPMENT CONCEPT AND PRINCIPLES. PROMOTE KNOWLEDGE AND EXPERIENCE SHARING IN THIS AREA AND ASSIMILATE KNOWLEDGE AND KNOWHOW FACILITATING ITS IMPLEMENTATION

ACTION 1

ORGANIZATIONAL OBJECTIVE

Promote the integration of the concept and principles of sustainable development among employees

ACTION MEASURES STATUS

Implement sensitization − Conduct forums and presentations on the theme of sustainable Ongoing activities that contribute to the development understanding of sustainable development as a concept − Organize thematic campaigns and events on subjects related Ongoing and the successful realization to the Corporation’s sustainable development activities of Loto-Québec’s sustainable development initiative* − Distribute periodic bulletins and structured features via the Corporation’s Ongoing internal communications vehicles

INDICATOR

− Percentage of employees reached by the sustainable development awareness activities

TARGET

− 80% of employees by 2011

20 0 9 2010 R E S U LT S

− Extent of awareness to be measured over the course of 2010-2011 − Consultation conducted with managers and employees of Loto-Québec and its subsidiaries through surveys, discussion forums and individual interviews to determine their understanding of the sustainable development concept − Exact definition of sustainable development known by 43% of respondents − Participation in the following thematic events: Earth Day, Climate Challenge, In Town Without My Car!, Bearers of Hope, Earth Hour − Execution of an awareness campaign among employees focused on how to manage residual material and hazardous waste

* The wording of the action was changed to build further commitment to Loto-Québec’s initiative among the Corporation’s employees.

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 73 FOLLOWUP ON THE ACTIONS OUTLINED IN THE 20082013 SUSTAINABLE DEVELOPMENT ACTION PLAN

ACTION 2

ORGANIZATIONAL OBJECTIVE

Promote integration of the concept and principles of sustainable development among employees

ACTION MEASURES STATUS

Implement training initiatives − Develop an internal training program on the different themes related Initiated that contribute to the successful to sustainable development realization of the Government’s sustainable development − Train employees in targeted sectors on the different themes related Ongoing training plan to sustainable development

INDICATOR

− Percentage of employees in the targeted sectors having acquired sufficient knowledge of the sustainable development initiative to take it into account in the course of their regular activities

TARGET

− 50% of employees in the targeted sectors having acquired sufficient knowledge of the concept in order to take it into account while carrying out their regular activities, by 2013

20 0 9 2010 R E S U LT S

− Three training programs offered during the year on: • The use of fine papers • Responsible event management • Integrating sustainable development principles into the strategic planning process

ACTION 3

ORGANIZATIONAL OBJECTIVE

Share and communicate the Corporation’s experiences and competencies in the area of sustainable development among stakeholders

ACTION MEASURES STATUS

Convey the Corporation’s − Publish the progress made by Loto-Québec’s sustainable development Ongoing initiatives and accomplishments initiative in the Corporation’s Annual Report, including results of the in the area of sustainable administrative performance indicators and the status of the 2008-2013 development to external Sustainable Development Action Plan stakeholders − Periodically distribute Loto-Québec’s Profile of Societal Contributions Update planned in 2010-2011

− Present the sustainable development initiative and its accomplishments Ongoing on the corporate Web site, in specialized publications, and by way of different forums

INDICATOR

− External stakeholders reached with activities related to sustainable development

TARGET

− Conduct outreach activities targeting at least four of the following five stakeholder categories: the general public, the business community, sustainable development professionals, the public service and the education community

20 0 9 2010 R E S U LT S

− Outreach activities conducted during the year targeting four categories of stakeholders: • Advertising campaigns in the following newspapers and magazines: Le Soleil, La Presse, L’actualité and Métro (general public) • Participation in the Salon national de l’environnement (general public) • Advertising campaign in the magazine Les Affaires (business community) • Partnership with Novae and Vision durable (sustainable development professionals) • Lectures on Loto-Québec’s sustainable development initiative at UQAM and Université de Sherbrooke (education community)

P. 74 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT FOLLOWUP ON THE ACTIONS OUTLINED IN THE 20082013 SUSTAINABLE DEVELOPMENT ACTION PLAN

ACTION 4

ORGANIZATIONAL OBJECTIVE

Share and communicate the Corporation’s experiences and competencies in the area of sustainable development among stakeholders

ACTION MEASURES STATUS

Contribute to improving the − Participate in roundtables aimed at developing tools to promote Ongoing responsible management responsible management of activities within departments and of organizations by sharing government agencies the Corporation’s experience − Present the Corporation’s accomplishments to other departments Ongoing and government agencies via different forums in order to promote their engagement in a sustainable development initiative

INDICATOR

− Projects in which the Corporation participates

TARGET

− The Corporation hopes to integrate at least one work group each year in response to the needs of the Ministère du Développement durable, de l’Environnement et des Parcs and other organizations

20 0 9 2010 R E S U LT S

− Ongoing participation of the Corporation in three work groups focused on sensitization and training, responsible procurement and responsible financing within the Ministère du Développement durable, de l’Environnement et des Parcs, as well as the roundtable Espace québécois de concertation sur les pratiques d’approvisionnement responsable (ECPAR) − Inclusion in the Canadian Gaming Environmental Sustainability Working Group, which brings together representatives of Canada’s major lottery corporations

ACTIONS 5 AND 6 ARE ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 4

CONTINUE DEVELOPING AND PROMOTING A CULTURE OF PREVENTION AND DEFINE CONDITIONS TO IMPROVE HEALTH, SAFETY AND THE ENVIRONMENT.

ACTION 5

ORGANIZATIONAL OBJECTIVE

Obtain and maintain the World Lottery Association’s responsible gaming certification

ACTION MEASURES STATUS

Undertake initiatives to promote − Structure internal and external initiatives and programs focused on Ongoing responsible gaming behaviour the responsible gaming offered at the Corporation’s establishments among clients and employees of Loto-Québec and its subsidiaries − Systematically sensitize Loto-Québec employees to responsible gaming Ongoing in accordance with the World Lottery Association’s certification criteria

INDICATORS

− World Lottery Association responsible gaming certification status − Percentage of employees sensitized

TARGETS

− Obtaining and maintaining World Lottery Association Level 4 certification − 100% of employees sensitized

20 0 9 2010 R E S U LT S

− World Lottery Association Level 4 responsible gaming certification maintained − Loto-Québec employees sensitized in a proportion of 76.7% via responsible gaming training sessions as at March 31, 2010

Note: Following a review of the calculation method, the rate of sensitized employees stood at 76.2% as at March 31 2009, not 83.6% as shown in the 2009 Annual Report.

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 75 FOLLOWUP ON THE ACTIONS OUTLINED IN THE 20082013 SUSTAINABLE DEVELOPMENT ACTION PLAN

ACTION 6

ORGANIZATIONAL OBJECTIVE

Promote prevention and conditions favourable to maintaining good health through the implementation of a “health culture” within the Corporation

ACTION MEASURES STATUS

Offer the Take Care of − Promote employee participation in the program Ongoing Your Health! program aimed at promoting good life − Organize forums and activities related to the different program themes Ongoing habits among Loto-Québec employees

INDICATOR

− State of progress of program activities

TARGET

− Respect the initial timetable

20 0 9 2010 R E S U LT S

− Take Care of Your Health! program: • Program underway • The Casino de Montréal and the Casino du Lac-Leamy one semester behind schedule due to operational constraints • Implementation of the following program steps: – steps 4 and 5 for SCQ employees located at head office – steps 3 and 4 for the Casino de Charlevoix – steps 2 and 3 for the Lac-Leamy complex – step 1 for the Casino de Montréal – steps 2 and 3 for corporate and other business units (SBQ, SLVQ, Ingenio and Casino Mundial)

ACTION 7 IS ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 6

APPLY ENVIRONMENTAL MANAGEMENT MEASURES AND AN ECORESPONSIBLE PROCUREMENT POLICY TO DEPARTMENTS AND GOVERNMENT AGENCIES

ACTION 7.1

ORGANIZATIONAL OBJECTIVE

Assure the application of the policy for an ecoresponsible government’s measures within the Corporation

ACTION MEASURES STATUS

Implement practices and − Take sustainable development principles into account as part Ongoing activities that contribute to of the procurement process meeting the provisions of the policy for an ecoresponsible − Develop decision-making support tools for procurement personnel Ongoing government and their internal customers

Deploy the responsible − Train procurement personnel and their internal customers about sustainable Ongoing procurement initiative development principles

− Sensitize suppliers to the responsible procurement practices applied within To be implemented the Corporation

INDICATOR

− State of progress of the responsible procurement initiative

TARGET

− 100% of the responsible procurement initiative realized by 2013

20 0 9 2010 R E S U LT S

− Successful application of 15.5% of the initiative − Integration of environmental specifications in several requests for proposals, including those for sanitary products and maintenance products for the restoration and replacement of 12,000 video lottery terminals − Establishment of a mechanism allocating a preferential margin to foster suppliers from Québec and more environmentally-friendly products − Development of a guide on how to include the total cost of ownership

P. 76 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT FOLLOWUP ON THE ACTIONS OUTLINED IN THE 20082013 SUSTAINABLE DEVELOPMENT ACTION PLAN

ACTION 7.2

ORGANIZATIONAL OBJECTIVE

Assure the application of the policy for an ecoresponsible government’s measures within the Corporation

ACTION MEASURES STATUS

Implement practices and − Obtain, maintain and update the certifications related to the various building Ongoing activities that contribute to environmental management programs for all assets, aiming for continuous meeting the provisions of the improvement and exemplary performance policy for an ecoresponsible government − Develop and implement energy saving programs for all establishments Ongoing Structure the environmental management system for the − Develop and implement water saving programs for all establishments Ongoing Corporation’s infrastructures − Develop and implement a program to reduce the quantity of landfill waste Ongoing at all establishments

INDICATORS

− Certifications for the different establishments − Average energy efficiency of Loto-Québec buildings* − Rate of reduction of water consumption − Reclamation rate of potentially recoverable residual materials**

TARGETS

− Obtain and maintain up-to-date certification for all corporate establishments − Increase the energy efficiency of buildings by 10% in 2009-2010 from the 2006-2007 baseline* − Reduce water consumption in 2012-2013 from the 2009-2010 baseline (percentage of reduction to be determined following a series of water consumption analyses)*** − Reclaim 80% of potentially recoverable residual materials in 2013

20 0 9 2010 R E S U LT S

− 12 of a total of 14 establishments certified BOMA BESt as at March 31, 2010; the Casino de Mont-Tremblant and the Au pays des anges ECC (Early Childhood Centre) expected to be certified by the end of 2011. The Québec City and Trois-Rivières gaming halls are under review by the Canada Green Building Council for LEED certification and the certification file for the Casino de Mont-Tremblant is in progress. − Increase of 3.1% in the average energy efficiency of buildings in 2008-2009 over 2006-2007

* Changes in the indicators and targets were made to take into account the Corporation’s commercial imperatives and better integrate the Corporation into the spirit of the BOMA BESt certification. ** The change in this indicator enables better alignment with 4RV-E principles. *** The change in this target is due to the inability to measure real water consumption prior to 2009-2010, the year meters were installed in all establishments.

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 77 FOLLOWUP ON THE ACTIONS OUTLINED IN THE 20082013 SUSTAINABLE DEVELOPMENT ACTION PLAN

ACTION 7.3

ORGANIZATIONAL OBJECTIVE

Assure the application of the policy for an ecoresponsible government’s measures within the Corporation

ACTION MEASURES STATUS

Implement practices and − Institute a system for measuring the Corporation’s transportation-related Initiated activities that contribute to GHG emissions meeting the provisions of the policy for an ecoresponsible − Minimize the GHG emissions related to business travel and employee Initiated government transportation

Implement a greenhouse − Launch initiatives to promote the reduction of GHG emissions related To be implemented gas (GHG) emissions to business travel and employee transportation reduction plan

INDICATORS

− Calculation of GHG emissions related to business travel and the transportation of the Corporation’s employees (equivalent tons of CO2) − Review of initiatives implemented by the Corporation related to business travel and employee transportation − Review of transportation habits within the Corporation

TARGETS

− Reduction of GHG emissions related to business travel and employee transportation from 2008 to 2013* − Annual publication of the reviews

20 0 9 2010 R E S U LT S

− Completion of a review of initiatives implemented by the Corporation related to sustainable transportation

* The analysis of the Corporation’s transportation practices and the development of a transportation plan and targets for the reduction of GHG emissions will be completed by the end of 2011.

ACTION 7.4

ORGANIZATIONAL OBJECTIVE

Assure the application of the policy for an ecoresponsible government’s measures within the Corporation

ACTION MEASURES STATUS

Implement practices and − Establish a profile of practices for the internal and external events organized Initiated activities that contribute to by the Corporation meeting the provisions of the policy for an ecoresponsible − Progressively integrate responsible practices into the management Ongoing government of events

Structure the responsible − Implement an information gathering system and follow up on Ongoing management of events event performance at Loto-Québec − Develop appropriate tools to facilitate responsible event management Ongoing

INDICATOR

− Percentage of events organized by the Corporation that respect responsible management principles

TARGET

− To reach or exceed the minimum threshold of sustainability in 80% of events during 2013

20 0 9 2010 R E S U LT S

− Start of performance measurement of events in 2010-2011

P. 78 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT FOLLOWUP ON THE ACTIONS OUTLINED IN THE 20082013 SUSTAINABLE DEVELOPMENT ACTION PLAN

ACTION 8 IS ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 9

APPLY MORE ECOCONDITIONALITY AND SOCIAL ACCOUNTABILITY IN PUBLIC ASSISTANCE PROGRAMS AND ENCOURAGE THEIR IMPLEMENTATION IN FINANCIAL INSTITUTIONS’ PROGRAMS

ACTION 8

ORGANIZATIONAL OBJECTIVE

Enhance the event sponsorship and sponsored public event promotion program with a sustainable development approach

ACTION MEASURES STATUS

Implement initiatives aimed − Sensitize event organizers and prompt them to adopt responsible Ongoing at taking sustainable management practices development principles into account in the event − Integrate sponsored event selection criteria that take responsible practices Ongoing sponsorship and sponsored in line with sustainable development into account event promotion program

INDICATOR

− Score obtained by sponsored events on questions related to sustainable development in the post-event report*

TARGET

− To reach or exceed the minimum threshold of sustainability in 80% of events in 2013

20 0 9 2010 R E S U LT S

− Organization of the fourth annual meeting of event promoters − Production of the Guide du partenaire, including a section on responsible event management for event promoters

* The indicator was changed to measure the achievement of responsible practices by event promoters rather than their intention to implement such practices.

ACTION 9 IS ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 16

INCREASE PRODUCTIVITY AND THE QUALITY OF JOBS THROUGH ECOLOGICALLY AND SOCIALLY RESPONSIBLE MEASURES

ACTION 9

ORGANIZATIONAL OBJECTIVE

Increase the efficiency of the Corporation’s human resources by promoting employee mobilization

ACTION MEASURES STATUS

Implement an employee − Periodically conduct a survey to measure the Corporation’s mobilization index Ongoing mobilization initiative that promotes quality of life − Implement the action plans developed by the Corporation’s employee Ongoing in the workplace mobilization committees

− Implement corporate initiatives to promote employee mobilization Ongoing

INDICATOR

− Employee mobilization index

TARGET

− Maintain or increase the mobilization index in accordance with established objectives

20 0 9 2010 R E S U LT S

− Obtained a result of +23 in the third employee mobilization survey, an increase of 1 point, thereby respecting the established objectives − Met objectives in 9 of 12 divisions

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ACTIONS 10 AND 11 ARE ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 17

KEEP PUBLIC FINANCES HEALTHY FOR THE GENERATIONS TO COME

ACTION 10

ORGANIZATIONAL OBJECTIVE

Optimize economic spin-offs for Québec society while taking sustainable development into account

ACTION MEASURES STATUS

Channel games of chance − Manage the online gaming offering Initiated into controlled venues featuring legal, competitive − Carry out a pilot project through the Société des bingos du Québec that could Initiated and secure game offerings represent a new revenue stream

INDICATORS

− Launch date of the online gaming platform − Annual contributions paid to NPOs

TARGETS

− Launch an online marketing platform for gaming by the end of 2010 − Maintain an average annual contribution of $10 million to NPOs

20 0 9 2010 R E S U LT S

− Total contributions of $6.1 million to NPOs in 2009-2010

ACTION 11

ORGANIZATIONAL OBJECTIVE

Optimize economic spin-offs for Québec society while taking sustainable development into account

ACTION MEASURES STATUS

Increase the Corporation’s − Improve the efficiency of activities, including day-to-day application Initiated overall efficiency and of best governance and management practices as part of business performance so as to establish decision-making and maintain its position as a leader in responsible − Develop new income-generating sources outside Québec by remaining Initiated commercialization alert to business development opportunities that build on the competitive advantage of the Corporation’s expertise and know-how in the various gaming sectors

INDICATOR

− Percentage of the net profit margin

TARGET

− Maintain the net profit margin percentage in accordance with the Corporation’s development strategy

20 0 9 2010 R E S U LT S

− Net profit margin of 35.2% in 2009-2010

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ACTIONS 12 AND 13 ARE ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 21

STEP UP CONSERVATION AND DEVELOPMENT OF THE CULTURAL AND SCIENTIFIC HERITAGE

ACTION 12

ORGANIZATIONAL OBJECTIVE

Contribute to the preservation and promotion of Québec’s cultural heritage

ACTION MEASURES STATUS

Consolidate the program − Program and run a series of exhibitions at the Espace Création Loto-Québec Ongoing for the acquisition and gallery each year aimed at showcasing and promoting the province’s circulation of the work cultural heritage of Québec artists − Assure the development of the Collection Loto-Québec and the circulation Ongoing and promotion of the work of Québec artists

− Develop and run special exhibitions and events in the various regions of the Ongoing province to promote public awareness and appreciation of cultural heritage

− Measure visitors’ level of appreciation Ongoing

INDICATORS

− Amount allocated to the acquisition of contemporary artworks created by Québec artists − Number of events held annually

TARGETS

− Allocate 1/100th of 1% of the Corporation’s revenues to the acquisition of artwork − Five annual events, including exhibitions at Espace Création Loto-Québec, exhibit-sales and tours

20 0 9 2010 R E S U LT S

− Acquisition of 159 new works for a total of $385,200, which corresponds to one hundredth of 1% of the Corporation’s revenues − Organization of fourteen events: four exhibitions at Espace Création Loto-Québec, one exhibit-sale and nine regional tours of the Collection − Conclusion of the festivities marking the 30th anniversary of the Collection Loto-Québec

ACTION 13

ORGANIZATIONAL OBJECTIVE

Contribute to supporting up and coming talents and the circulation of their creations

ACTION MEASURES STATUS

Implement the support − Offer financial support to the new wave of professional performing artists Ongoing program for the new wave of professional performing − Organize events to facilitate the presentation of works by the new wave Ongoing artists of professional performing artists

INDICATORS

− Number of artists selected for a tour across Québec − Number of spectators reached by this tour

TARGETS

− Four artists selected annually − 6,200 spectators reached during each annual tour

20 0 9 2010 R E S U LT S

− Four artists selected in 2008-2009 for a province-wide tour from June 2009 to May 2010

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ACTION 14 IS ALIGNED WITH THE GOVERNMENT’S OBJECTIVE 25

INCREASE CITIZENS’ INVOLVEMENT IN DECISIONMAKING

ACTION 14

ORGANIZATIONAL OBJECTIVE

Cultivate the Corporation’s relations with its stakeholders

ACTION MEASURES STATUS

Implement new initiatives − Review and analyze the Corporation’s practices related to sustainable Initiated to promote dialogue development with its stakeholders with stakeholders − Implement initiatives aimed at consolidating relations with the various To be implemented stakeholders

− Monitor, control and measure the initiatives undertaken to consolidate To be implemented relations with stakeholders

INDICATOR

− Frequency and levels of communication with the various stakeholders

TARGET

− Target to be established after conducting the review and analysis of the practices in place

20 0 9 2010 R E S U LT S

− Survey conducted among employees on the Corporation’s sustainable development initiative − Six discussion groups held with employees of the Corporation to discuss the sustainable development initiative

GOVERNMENT OBJECTIVES NOT INCLUDED For the Government objectives not included in Loto-Québec’s 2008-2013 Sustainable Development Action Plan, refer to Appendix 2 of the present document online at lotoquebec.com.

P. 82 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT Code of ethics and rules of professional conduct for directors and managers of Loto-Québec and its subsidiaries

PREAMBLE

Whereas the members of the Board of Directors are required to have a code of ethics and rules of professional conduct that respects the principles and rules prescribed by the Regulation Respecting the Ethics and Professional Conduct of Public Ofﬁ ce Holders (hereinafter referred to as the “Regulation”) adopted in accordance with the Act Respecting the Ministère du Conseil exécutif (R.S.Q. c. M-30, a. 3.01 and 3.02; 1997, c.6, a. 1) (hereinafter referred to as the “Act”);

Whereas the Act and the Regulation prescribe certain ethical principles and rules of professional conduct that apply to Directors (contained in Appendix 1 of present Code);

Whereas the members of the Board of Directors wish to provide the Corporation with its own Code of Ethics and Rules of Professional Conduct;

The members of the Board of Directors have adopted the following Code of Ethics and Rules of Professional Conduct.

1. DEFINITIONS

In the present Code, unless a different meaning is indicated by context, the terms below are defi ned as follows: a) “Act”: the Act Respecting the Québec Lottery Corporation (L.R.Q., c. S-13.1), as amended and modifi ed from time to time. b) “Board”: the Board of Directors of the Corporation or of one of its subsidiaries. c) “Committee”: the Board’s Governance and Ethics Committee, as prescribed by the Act Respecting the Governance of State-Owned Enterprises. d) “Confi dential information”: all information concerning the Corporation, trends in an industry or sector, or any and all information of a strategic nature that is not known to the public and that, if known by a person who is not a Director or a Manager, would be liable to give the person an advantage or compromise an operation in which the Corporation participates. e) “Confl ict of interest”: any real, perceived, potential or eventual situation in which Directors or Managers may be prompted to favour a person (including themselves and any related persons) to the detriment of another. Any situation that could be prejudicial to the loyalty, integrity or judgement of a Director or Manager is also subject to the present defi nition. f) “Contract”: a draft agreement. g) “Control”: direct or indirect ownership by a person of securities, including partnership shares, that confer more than 50% of voting or shareholder rights and that does not depend on a special event having occurred and allows for the election of a majority of Directors. h) “Corporation”: Loto-Québec. i) “Director”: any contractual Manager whose conditions of employment are subject to Board approval. j) “Enterprise”: any form of organization for the production of goods or services, or any other business of a commercial, industrial or fi nancial nature, and any group intended to promote specifi c securities, interests or opinions or infl uence public authorities. However, this does not include the Corporation or associations or non-profi t groups with no fi nancial relationship to the Corporation or no incompatibility with its objectives. k) “Manager”: with respect to the Corporation, any contract executive whose conditions of employment are subject to approval by the Board. l) “Related enterprise”: any body corporate or company in which the Corporation directly or indirectly holds securities, including shares, conferring more than 10% voting or shareholder rights.

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m) “Related persons”: persons who are related to Directors or Managers via: i. blood ii. marriage iii. civil union iv. common-law marriage v. adoption For the purposes of the present Code, the following persons are also deemed to be related: vi. the child of a person deﬁ ned in sections ii to iv vii. any member of the immediate family living under the same roof viii. any person with whom a Director or Manager is associated, or the partnership with which either may be associated ix. a body corporate in which the Director or Manager directly or indirectly holds 10% or more of any category of voting shares x. a body corporate controlled by a Director or Manager or a person deﬁ ned in sections i through iv and vi, or by a group of such persons acting jointly xi. any person that a Director or Manager may be prompted to give preference to because of his relationship to that person or to a third party, or because of his status, title or any other reason. n) “Spouse”: husbands and wives, as well as persons living together maritally for more than one year. o) “Subsidiary”: any company wholly owned by the Corporation.

2. GENERAL PROVISIONS

2.1 The present Code is intended to maintain and strengthen public trust with respect to the integrity and impartiality of the Corporation’s administration, encourage transparency within the Corporation, and to instil a sense of responsibility in its Directors and Managers. 2.2 The present Code is also intended to establish ethical principles and rules of professional conduct for the Corporation. The ethical principles take into account the Corporation’s mission, the values on which its actions are based, and its general principles of management. The rules of professional conduct relate to the duties and obligations of Directors and Managers, clarifying and illustrating them in an indicative manner. 2.3 The present Code is applicable to Directors and Managers of the Corporation and its subsidiaries, all of whom are required to respect its provisions. 2.4 The present Code has been established in accordance with the Act, the Corporation’s internal governance regulation and the Regulation. It reﬂ ects and, as applicable, completes the provisions of the aforementioned. 2.5 The Board approves the present Code upon the recommendation of the Committee, which is responsible for its review. 2.6 In the context of the present Code, the prohibition of an act includes the attempt to commit the act and participation in or inducement to commit the act. 2.7 The Corporation shall take all necessary measures to ensure the conﬁ dentiality of information provided by Directors and Managers in conjunction with the application of the present Code.

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3. ETHICAL PRINCIPLES AND GENERAL RULES OF PROFESSIONAL CONDUCT

3.1 Directors or Managers are appointed to contribute to the fulﬁ llment of the Corporation’s mission in the best interests of Québec. As such, they must employ their knowledge, capabilities, experience and integrity for the efﬁ cient, equitable and effective attainment of the objectives assigned to the Corporation by law and for the proper administration of the assets it possesses as a Government agent.

Their contribution must be made in accordance with the law and with honesty, loyalty, prudence, diligence, efﬁ ciency, rigour and fairness.

3.2 In discharging their duties, Directors are required to respect the ethical principles and rules of professional conduct prescribed by the Act and the Regulation that constitute an integral part of this Code, as applicable, as well as those stipulated in the present Code. Managers are also required to respect these rules to the extent that they apply to them. In case of discrepancy, the strictest principles and rules are deemed to apply. In case of any doubt, Directors and Managers are to act in accordance with the spirit of these principles and rules. Directors and Managers who serve as Directors or Managers or are members of another organization or enterprise at the request of the Corporation are bound by the same obligations. Subject to their obligations of confi dentiality, honesty, loyalty and, generally speaking, to obligations of a similar nature in accordance with the Act and Code of Ethics of any organization or enterprise in which Directors or Managers exercise functions at the request of the Corporation, such Directors or Managers are required to inform the Corporation of any question brought up on the agenda of a meeting of the Board of Directors of such organizations or enterprises that may have a signifi cant impact on the fi nances, reputation or operations of the Corporation. They are required to inform the Corporation within a reasonable delay and prior to any vote by Directors on such matters.

3.3 Directors and Managers are required to collaborate with the Chairman of the Board or the Committee on questions of ethics or professional conduct whenever asked to do so.

3.4 In exercising their functions, Directors and Managers are required to keep their knowledge current and employ independent professional judgement in the best interests of the Corporation.

They are required to be familiar with, promote the respect of, and conform to the present Code, applicable laws and regulations, and policies, directives and rules as set forth by the Corporation. They are also required to keep themselves informed as to the economic, social and political climate in which the Corporation acts.

3.5 Directors and Managers are required to maintain relations with all persons and with the Corporation based on respect, cooperation and professionalism.

3.6 Directors and Managers shall make decisions in a manner so as to ensure and maintain the relationship of trust with clients, suppliers and partners of the Corporation, as well as with the Government.

3.7 In exercising their functions, Directors and Managers must respect the Corporation’s mission and the following objectives: – Minimize the social costs associated with games of chance and adopt new measures to combat compulsive gambling – Increase the Corporation’s efﬁ ciency and general performance so as to maintain the level of net proﬁ ts remitted annually to the Government – Work in collaboration with sector stakeholders to contribute to the development and success of the tourism industry – Refrain from increasing overall game offerings

3.8 Directors and Managers may not, either directly or indirectly, offer, solicit or accept an undue favour or benefi t for themselves or any persons related to a Director or Manager or a third party, nor can they accept any gift, hospitality or benefi t other than what is customary and of modest value. Any gift, hospitality or benefi t that does not correspond to these criteria must be returned to the donor or to the State.

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3.9 Door prizes in excess of $100 won by any Directors or Managers must be returned to the event organizers if the Corporation has paid event participation costs. Persons accompanying Directors or Managers in such cases are subject to the same rule.

3.10 In carrying out their functions, Directors and Managers must seek to defend only the Corporation’s interests, to the exclusion of their own or those of a third party.

3.11 Directors and Managers shall not undertake any obligations to third parties nor afford them any guarantees with respect to any vote that they may be called upon to participate in or any decision whatsoever that the Board may be called upon to render.

3.12 A vote by a Director that is in violation of the provisions of the present Code or that is lodged while the Director is in default with respect to the production of the declaration mentioned in section 4.11 may not be considered a deciding vote.

3.13 Directors or Managers who assume responsibilities in other entities may occasionally fi nd themselves in situations of confl ict of interest. Whenever the present Code does not provide for the specifi c situation, they must determine whether their actions meet the behavioural standard the Corporation may reasonably expect in such circumstances. They must also determine if a reasonably informed person would conclude that their interests in the other entity are liable to infl uence their decisions and affect their objectivity and impartiality when discharging their duties to the Corporation.

3.14 Within a reasonable delay of assuming their position, Directors and Managers are required to organize their personal affairs so as not to prejudice the exercise of their functions and avoid incompatibility or conﬂ ict of interest between their personal interests and the duties of their position. As applicable, they are required to take all necessary measures in order to comply with the provisions of the present Code.

3.15 Directors and Managers may not mix the Corporation’s assets with their own. They may not utilize the Corporation’s assets or conﬁ dential information received in the course of carrying out their functions for personal or third party proﬁ t. These obligations remain in effect even after they have ceased to occupy their functions.

3.16 Directors and Managers are bound by discretion with respect to all confi dential information to which they are party in the exercise of their functions and are required to respect the confi dential nature of information received at all times. Furthermore, Board deliberations, positions held by, and votes taken by its members are confi dential.

3.17 Directors and Managers are required to respect any and all restrictions and apply protective measures with regard to confi dential information as follows: – They must only convey confi dential information to authorized persons. – If they use a system of electronic mail, they must comply with all practices and directives issued or approved by the Corporation regarding the storage, use and transmission of information by this system. They must not forward confi dential information received from the Corporation via this system to anyone. – They are responsible for taking measures to protect the confi dentiality of information to which they have access. These measures include:

• not allowing documents containing conﬁ dential information to be casually seen by third parties or unauthorized employees

• taking appropriate measures to ensure the physical protection of documents

• avoiding discussions in public that could reveal conﬁ dential information

• identifying documents that may circulate as containing conﬁ dential information that must be treated as such

• discarding any and all conﬁ dential documents using appropriate means (shredding, archiving, etc.) whenever they are no longer necessary for the execution of their mandate as Directors or Managers

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3.18 While exercising their functions, Directors and Managers may not have dealings with any persons that have ceased being a Director or Manager of the Corporation for less than one year if such persons are acting on behalf of another party with respect to a procedure, negotiation or any other operation to which the Corporation is party and about which such persons possess information that is not publicly available.

3.19 Once no longer exercising their functions, no Director or Manager may disclose any conﬁ dential information received, or provide anyone with advice based on conﬁ dential information unavailable to the public concerning the Corporation or any other organization or enterprise with which they had direct and important relations during the year preceding the date on which their functions were terminated.

During the course of the 12 months following this date, they are prohibited from acting on or on behalf of others relative to any procedure, negotiation or other operation to which the Corporation is party and about which they possess conﬁ dential information not available to the public.

3.20 Directors or Managers who intend to become electoral candidates are required to inform the Chairman of the Board of their intention.

If the Chairman of the Board or the Chief Executive Ofﬁ cer has such intentions, they must so inform the Secretary General of the Executive Committee.

3.21 In exercising their functions, Directors and Managers must make decisions independently of all partisan considerations.

4. DUTIES AND OBLIGATIONS OF DIRECTORS AND MANAGERS WITH RESPECT TO CONFLICTS OF INTEREST

Prevention of conflicts of interest 4.1 Directors and Managers must avoid placing themselves in situations of confl ict between their personal interests and their offi cial duties, or in situations that may cast reasonable doubt as to their ability to discharge their duties with uncompromised loyalty. Directors and Managers must avoid situations in which they or related persons could profi t directly or indirectly from a contract signed by the Corporation or by infl uencing decisions taken by them in accordance with their offi cial functions within the Corporation. Full-time Directors or Managers of the Corporation or of any of its subsidiaries are also required to avoid taking positions or being bound by engagements that may prevent them from fully giving their duties the time and attention that would normally be required.

Other Directors are required to ensure that they are able to devote the appropriate time and attention to the exercise of their functions reasonably required in the circumstances.

4.2 Directors and Managers with full-time duties within the Corporation may not possess direct or indirect interests in an organization, enterprise or association that create a conﬂ ict between their personal interests and the interests of the Corporation. If they do, they may be subject to dismissal. However, such dismissal shall not take place if the interest accrues through an inheritance or gift that is diligently renounced or disposed of. In the interval, sections 4.5, 4.6, 4.8 and 4.11 shall apply.

All other Directors holding interests in an enterprise must comply with sections 4.5, 4.6, 4.8 and 4.11. Failure to do so may make them subject to dismissal.

4.3 In order to be deemed independent, Directors may not: – be or have been (during the three years preceding the date of their nomination) employed by the Corporation or be related to a person described in section k) that has been so employed – be employed by the Government, a Government agency, or a Government enterprise within the meaning of sections 4 and 5 of the Auditor General Act (R.S.Q. c. V-5.01) – have any relations as determined by the Government under section 5 of the act respecting governance.

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Upon assuming their position, and annually thereafter, Directors must declare to the Committee the existence or absence of relations described in the preceding fi rst and second paragraphs. They are also required to declare any changes to their declaration as soon as they become aware of such changes. 4.4 Directors and Managers of the Corporation who are also Directors or Managers of a related enterprise are required to be specifi cally authorized by the controlling shareholder or shareholders of the enterprise to: – hold shares, partnership equity or any other security issued by the related enterprise that confers voting rights or interest with respect to the related enterprise, or any and all options for subscription or purchase rights concerning such shares, partnership equity, securities or interests – benefi t from any profi t-sharing plan, unless the Directors or Managers are engaged full-time within the related enterprise and the profi t-sharing plan is directly related to the individual performance of the Directors or Managers within the related enterprise – benefi t from a retirement plan offered by the related enterprise if they are not full-time Directors or Managers of the related enterprise – benefi t from any and all advantages extended in advance in case of a change in control of the related enterprise.

Renunciation and abstention

4.5 Directors or Managers who: a) are party to a contract with the Corporation or a subsidiary, or b) who possess a direct or indirect interest in an enterprise that is party to a contract with the Corporation or a subsidiary, or are Directors, Managers or employees of this enterprise are required to disclose the nature and scope of their interest in writing to the Chairman of the Board. The same applies for Directors or Managers who have a direct or indirect interest in matters taken up by the Board. Directors or Managers must abstain at all times from communicating any information whatsoever regarding such contract or interest to any and all employees, Managers or Directors of the Corporation. Directors must abstain from deliberation and voting on any question related to such interest and avoid any attempts to inﬂ uence related decisions. They must also excuse themselves from meetings for the duration of deliberations and voting on such matters. Any such exclusion must appear in the minutes of the Board meeting. 4.6 In the case of a Director, disclosure required under section 4.5 must occur during the ﬁ rst meeting: a) at which the contract or matter of concern is being discussed b) subsequent to when Directors with no previous interest in the contract or matter acquire such interest c) subsequent to when Directors acquire an interest in an already concluded contract d) subsequent to when any and all persons with an interest in the contract or matter under study become Directors

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4.7 Managers who are not also Directors must offer the required disclosure under section 4.5 immediately after: – having learned that the contract or matter of interest was or will be discussed during a meeting – having acquired an interest, if subsequent to the conclusion of the contract or decision involved – having become a Manager, if subsequent to the acquisition of such interest

Managers may not attempt to inﬂ uence decisions made by Directors in any way.

4.8 Directors and Managers must make the disclosure required under section 4.5 as soon as they have any knowledge of a contract that falls within the bounds of this section and that, in the normal course of the Corporation’s business, does not require Director approval.

4.9 Sections 4.5 through 4.8 also apply to cases where such interest is held by a person related to a Director or Manager.

4.10 Directors and Managers shall denounce all rights they may possess against the Corporation or any of its subsidiaries in writing to the Chairman of the Board, indicating their nature and value, as soon as such rights come into existence or as soon as they become aware of them.

4.11 Within 30 days of their nomination, and on March 31 of each year in which they remain in service, Directors and Managers must forward a declaration in the form prescribed in Appendix 2 to the Chairman of the Board containing the following information: a) The names of any and all enterprises in which they directly or indirectly hold securities or equity (including shares), stipulating the nature and quantitative and proportional amounts of securities held, as well as their equity value b) The names of any and all enterprises in which they exercise functions or in which they have a direct or indirect interest in the form of a claim, right, priority, mortgage or signifi cant fi nancial or commercial benefi t c) To the best of their knowledge, the information stipulated in the preceding sections concerning their employer and the body corporate, corporation or enterprise of which they are owner, shareholder, director, Manager or controller d) The name of any and all associations in which they exercise functions or of which they are members, stipulating their functions, as applicable, as well as the purposes of the association Directors or Managers to whom the provisions of sections a) through d) do not apply are required to sign a declaration to that effect and remit it to the Chairman of the Board. Directors or Managers are also required to produce a similar declaration within 30 days of any signifi cant change occurring to its contents.

Declarations made subject to this section shall be treated as conﬁ dential.

4.12 The Chairman of the Board shall remit declarations received pursuant to the application of sections 4.5 to 4.11 to the Secretary of the Corporation, who shall make them available to the members of the Board and of the Governance and Ethics Committee.

In addition, the Secretary of the Corporation shall notify the Chairman of the Board and the Governance and Ethics Committee of any breach of obligations under sections 4.5 to 4.11 immediately upon becoming aware of such a breach.

4.13 Directors and Managers may notify the Corporation in advance of Board of Directors discussions pertaining to speciﬁ c corporations or other entities from which they wish to be excluded.

4.14 In all cases where a matter may engender a conﬂ ict of interest related to the function of a Director or Manager, or in the case of a corporation or entity declared by Directors or Managers under section 4.13, the Secretary shall apply the deliberative procedures concerning conﬂ icts of interest as prescribed in Appendix 3 of this Code.

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4.15 Directors who are members of the Board’s Auditing Committee may not hold any interest in the Corporation or in any of its subsidiaries. Moreover, they may not accept fees from the Corporation for consulting or any other similar services.

Dispensations

4.16 The present Code is not applicable to: a) interests held through the intermediary of mutual investment funds in whose management the Directors or Managers do not participate either directly or indirectly b) interests held through the intermediary of a blind trust with no beneﬁ ciary right of review or right to know the composition of c) holding the minimum number of shares required to be eligible to become a Director of a body corporate d) an interest which, due to its nature and scope, is common to the population at large or to a particular sector in which Directors who do not exercise full-time functions within the Corporation or its subsidiaries work e) a liability insurance contract for Directors f) shares issued or guaranteed by a government or municipality on terms that are identical for all.

5. APPLICATION OF THE CODE

5.1 The present Code is an integral part of the professional duties of Directors and Managers. Directors and Managers undertake to become familiar and comply with it, as well as with any directive or particular instruction that may be supplied as to its application. In addition, they must conﬁ rm their adherence to the Code each year. In case of any doubt as to the scope or application of a provision, Directors and Managers are required to consult the Committee. 5.2 Within 30 days of the adoption of the present Code by the Board, all Directors and Managers must submit the attestation described in Appendix 4 to the Chairman of the Board and the Secretary of the Corporation.

New Directors and Managers must do the same within 30 days of their nomination.

5.3 The Associate Secretary General responsible for senior positions at the Ministère du Conseil exécutif is the competent authority for the application of the present Code with respect to the Chairman of the Board and other Directors appointed by the Government.

5.4 The Chairman of the Board is the competent authority with respect to all Directors and Managers of subsidiaries in which the Corporation holds 100% of the shares.

5.5 The Committee may, as it sees ﬁ t, provide dispensation to a Director or Manager from one or more of the provisions of the present Code if it is of the opinion that such dispensation does not prejudice the objectives of the present Code as described in section 2.1 and that the provisions of the act and the Regulation have been met. The Committee designates the Secretary to assist it in this function.

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5.6 The Committee may advise Directors and Managers as to the interpretation of the provisions of the present Code and their application to particular or even hypothetical cases. It is not required to limit an opinion to the terms of the request.

5.7 The Committee must: – review the present Code on an annual basis and submit any changes for approval to the Board – engage and oversee the process of preparing and assessing the Code of Ethics and Rules of Professional Conduct – ensure that Directors and Managers are provided with information and training about the contents and application procedures of the present Code – give its opinion and offer its support to the Board (Corporation) and to any and all Directors or Managers confronted with a problem – handle any requests for information related to the present Code – investigate any irregularity with respect to the present Code on its own initiative or upon receipt of an allegation.

5.8 The Committee may consult with and receive opinions from outside advisers or experts on any matter it deems relevant.

5.9 The Committee and the competent authority concerned shall preserve the anonymity of complainants, petitioners and informers except when there exists manifest intention to the contrary. They cannot be bound to reveal information likely to identify such persons except if required by the Act or by a court of law.

5.10 The Secretary shall assist the Committee and the Chairman of the Board in matters concerning the application of the present Code.

The Secretary shall maintain archives containing declarations, disclosures and attestations required to be submitted under the provisions of the present Code, as well as reports, decisions and advisory opinions with respect to ethics and professional conduct. Moreover, the Secretary is required to take all necessary measures to ensure the conﬁ dentiality of information supplied by Directors and Managers pursuant to the application of the present Code.

5.11 Directors or Managers who are aware of or suspect the existence of a violation of the present Code, including the use of or irregular communication of confi dential information or an undisclosed confl ict of interest, are required to report this to the Committee. Such disclosure is to be made confi dentially and must include the following information: – The identity of the perpetrator or perpetrators of the violation – A description of the violation – The date or period of time over which the violation took place – A copy of any documents that support the claim

5.12 Directors and Managers of the Corporation may, on their own initiative, submit a complaint against any Director or Manager to the competent authority.

5.13 In order for an appropriate decision to be taken in an emergency situation requiring rapid intervention, or in case of presumed gross negligence, the competent authority may provisionally remove Directors or Managers accused of breaches of ethics or professional conduct from their functions with remuneration.

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5.14 Whenever a Director or Manager is accused of a breach of ethics or professional conduct, the Committee is responsible for gathering all pertinent information. The Committee shall report its conclusions to the appropriate competent authority and recommend any appropriate action that may be required.

5.15 Directors and Managers are not deemed to have violated the provisions of the present Code if prior favourable opinion has been obtained from the Committee under the following conditions: a) Notifi cation is received prior to the occurrence of events on which it is based b) The Board has been notifi ed c) All pertinent facts have been fully revealed to the Committee in an exact and complete manner d) Directors or Managers have complied with all the requirements of the notifi cation

6. DISCIPLINARY PROCESS

6.1 If it concludes that a violation of the Act, the Regulation, or the present Code has occurred, the competent authority may impose one of the following penalties: a) In the case of a Manager, any appropriate penalty up to and including dismissal b) In the case of a Director, reprimand, suspension without remuneration for a maximum of three months, or dismissal

Notwithstanding the preceding, when the competent authority is the Associate Secretary General as deﬁ ned in section 5.3, the penalty shall be imposed by the Secretary General of the Executive Committee. In addition, if the proposed penalty is the dismissal of a Public Administrator named or designated by the Government, it may only be imposed by the latter. In that case, the Secretary General of the Executive Committee may immediately suspend the Public Administrator for a period not exceeding 30 days without remuneration.

6.2 The competent authority shall inform Directors or Managers of any breach of conduct with which they have been charged, as well as of the penalty that may be imposed.

Within seven days of being informed about a breach of conduct accusation, Directors or Managers may submit comments to the Committee. They may also request a Committee hearing on the matter.

6.3 In case of a violation as described in section 4.2, the dismissal of the offender shall be placed on the record by competent authorities.

6.4 Directors and Managers are required to account for any and all proﬁ ts made or beneﬁ ts received due to or on the occasion of any violation of the provisions of the present Code, and they must reimburse the Corporation.

6.5 Any vote by Directors provided in violation of the provisions of the present Code or related to any such violation, or while the Directors are in default with respect to the production of the declaration mentioned in section 4.11, shall not be a deciding vote.

P. 92 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT CODE OF ETHICS AND RULES OF PROFESSIONAL CONDUCT

7. EFFECTIVE DATE

7.1 The present Code came into effect on November 29, 2007.

LANGUAGE POLICY

Making language quality a top priority

In accordance with the Government’s policy on the use of French in public administration, on November 24, 2000, the Corporation adopted a language policy that refl ects its business mission and covers the use and quality of French within each of its activity sectors. During the past fi scal year, Loto-Québec continued to collaborate actively with the Offi ce québécois de la langue française to ensure the consistent application of this policy throughout the organization and its subsidiaries.

During the past ﬁ scal year, Loto-Québec continued to collaborate actively with the Ofﬁ ce québécois de la langue française to ensure the consistent application of this policy throughout the organization and its subsidiaries.

AWARDING OF CONTRACTS

The procurement policy of Loto-Québec and its subsidiaries reﬂ ects the transparency and integrity that govern the awarding of contracts to suppliers. This policy can be consulted on the Loto-Québec website.

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 93 Access to information and protection of personal information

REQUESTS FOR ACCESS TO INFORMATION

– The Corporation received 152 requests for information over the course of ﬁ scal 2009-2010, of which:

• 75 were accepted

• 23 were partially accepted

• 16 were for records that the Corporation did not have

• 24 were refused

• 5 were submitted to the Commission d’accès à l’information for review (These 5 ﬁ les are awaiting hearings before the Commission.)

• 14 were being processed as at March 31, 2010

– In general, the reasons for refusing access to documents are the following:

• the documents contain commercial, technical or ﬁ nancial information

• the documents state advice or recommendations

• the documents concern third parties who do not consent to their disclosure

• the documents contain personal information

ACTIVITIES RELATED TO ACCESS TO INFORMATION AND PROTECTION OF PERSONAL INFORMATION

– Since November 29, 2009, the Regulation Respecting the Distribution of Information and the Protection of Personal Information (hereinafter “the Regulation”), adopted under the Act Respecting Access to Documents held by Public Bodies and the Protection of Personal Information, requires public bodies to distribute speciﬁ c documents through their website.

– On November 24, 2009, the Corporation posted a new section on its website entitled “Access to Information” to comply with the Regulation. This section allows the public to access all documents whose disclosure is required under the Regulation and provides information on how to request access to a document.

P. 94 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT ACCESS TO INFORMATION AND PROTECTION OF PERSONAL INFORMATION

– Furthermore, to ensure transparency, the Corporation voluntarily posts the outcome of each public call for tender awarded by publishing:

• the date the contract was awarded

• the name of the selected supplier

• the dollar amount of the contract awarded

• the nature of goods or services to be provided The results of 52 public calls for tender were posted online between November 24, 2009 and March 31, 2010.

– Furthermore, procedures to ensure that the Access to Information section is regularly updated were developed and implemented by the business units concerned. – An announcement on the Corporation’s Intranet informed all employees of the launch of the Access to Information section.

– Lastly, a committee on access to information and the protection of personal information was formed, as set out in the Regulation.

• The committee’s mission is to: - raise awareness among personnel to the obligations related to access to information and the protection of personal information - ensure the diligent distribution of documents targeted by the Regulation on the distribution of information - make proposals to the Executive Committee on the distribution of documents in response to a request for access to a document, and on any studies or research reports that may be of interest as public information - monitor the speciﬁ c measures to be respected to protect personal information in the following circumstances: • when conducting surveys • throughout projects to acquire, develop or overhaul an information or electronic service system that processes personal information

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 95 Board of Directors and Corporate Secretariat

As at March 31, 2010

HÉLÈNE F. FORTIN, FCA, ICD.D ALAIN COUSINEAU JULIE BERNIER

Saint-Lambert Montréal Westmount Chairwoman of the Board of Directors, President and Chief Executive Ofﬁ cer, Senior Partner, Loto-Québec Loto-Québec eRing Solutions Inc. Associate with the accounting ﬁ rm Board appointment date: Board appointment date: of Demers Beaulne September 29, 2003 June 27, 2007 Board appointment date: August 27, 2008 Member of the Audit Committee

Holding a Graduate diploma in Public Accounting Subsequent to obtaining his Master of Business Holding an MBA in Project Management from with honours from McGill University, Hélène F. Sciences degree from Université Laval and HEC Montréal, Julie Bernier has more than Fortin also has an honours Bachelor of Business completing doctoral studies at the University of 20 years of professional consulting experience Administration degree with specialization in Illinois, Alain Cousineau occupied several senior in the areas of project management, information accounting and fi nance from Concordia University. management positions within the university and technologies (IT), risk management, compliance She became a chartered accountant in 1982 business sectors, including serving as Dean and business process improvement. During and earned the title of ICD.D from the Institute of the Université de Sherbrooke’s Faculty of the course of her career, Ms. Bernier has of Corporate Directors in 2006 after completing Administration, President and Chief Executive managed strategic mandates on behalf of the Directors Education Program. A member Offi cer of SECOR, and Chairman of the Board major corporations involved primarily in the of the Ordre des comptables agréés du Québec and of the Executive Committee at the Société fi nancial and telecommunications fi elds. Today, (OCAQ), Ms. Fortin was a member of the des alcools du Québec. A Director of numerous her practice is principally focused on the Canadian Institute of Chartered Accountants’ Canadian corporations, Mr. Cousineau also held management of business projects encompassing (CICA) Auditing and Assurance Standards the post of President of Tourisme Montréal for process reengineering, governance and the Board from 2006 to 2009. Between 1982 a number of years. implementation of management frameworks and 2005, she also played an active role in the within the IT sector. CICA’s interprovincial examination jury. After practicing public accounting for 30 years, in June 2008, Ms. Fortin became an associate with the Montréal accounting fi rm of Demers Beaulne. In addition, she has sat on numerous Boards since 2003, as well as having served as Chairwoman of various auditing, governance, human resources and retirement fund management committees. She actively contributes to training on the governance of corporations and boards of directors as an author, guest speaker and leader of various workshops. She earned the title of Fellow of the OCAQ in February 2010.

P. 96 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT BOARD OF DIRECTORS AND CORPORATE SECRETARIAT

PAULE BOUCHARD, FCA MARC G. BRUNEAU, BBA, ICD.D MEL HOPPENHEIM

Hampstead Montréal Montréal Partner, RSM Richter Vice-President and Partner, Location Michel Trudel Inc. Chamberland (LLP) GBC Asset Management Mel’s Cité du cinéma Ltd. Board appointment date: Board appointment date: Board appointment date: September 12, 2007 September 10, 2003 March 31, 2004 Chairwoman of the Audit Committee Member of the Audit and Human Member of the Audit Committee Resources Committees

Paule Bouchard is a Certifi ed Public Accountant A graduate of HEC Montréal with a Bachelor’s The owner of a vast fi lm and television (CPA) with a Bachelor’s degree in Accounting degree in Business Administration, Marc production installation and equipment from Université du Québec à Montréal. Her G. Bruneau also studied Administration operation, Mel Hoppenheim is a leading professional affi liations include being a fellow at Pepperdine University in California. He fi gure within his industry, both in Montréal and (FCA) of the Ordre de comptables agréés du occupied positions at BMO Nesbitt Burns and the rest of Canada. Mr. Hoppenheim founded Québec (OCAQ) and the Canadian Institute for the Business Development Bank of Canada Concordia University’s Mel Hoppenheim Chartered Accountants (CICA). Currently, she is before joining GBC Asset Management in School of Cinema, which enrols more than a partner in the public accounting fi rm of 2002, where he has been a partner since 500 students each year. He is also one of the RSM Richter Chamberland, where she is 2004. The 2002 recipient of the Hommage co-founders of the Institut national de l’image responsible for professional standards. Over bénévolat-Québec award in recognition of et du son (INIS). Mr. Hoppenheim is involved the course of her 20-year career, Ms. Bouchard his outstanding volunteerism, Mr. Bruneau in the fi nancing of numerous charitable and has carried out numerous mandates for serves (or has served) on the Boards of the community organizations, and he sits on the businesses in the manufacturing, real estate Sainte-Justine Hospital Foundation, the Kids Boards of the Montréal Children’s Hospital and health sectors. She is also a member of for Kids organization, and the Cirque Éloize and the Montréal Heart Institute Foundation. both the International Accounting Education and McCord Museum Foundations. In addition, Standards Board and the OCAQ’s Professional he was Chairman of the Board of the Montréal Discipline Committee. Millennium Summit from 2007 to 2009. Mr. Bruneau has also been a member of the Institute of Corporate Directors (ICD) since 2009.

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 97 BOARD OF DIRECTORS AND CORPORATE SECRETARIAT

CHRISTIANE JODOIN SERGE LEBEL, ASC LYNNE ROITER

Montréal Québec City Montréal Partner, Osler, Hoskin Lawyer, BCF (LLP) & Harcourt (LLP) Corporate Secretary and Vice-President Board appointment date: of Legal Affairs, Loto-Québec Board appointment date: October 29, 2003 June 27, 2007 Chairman of the Governance Member of the Governance and Ethics Committee and Ethics Committee

A Université de Montréal Law graduate and A Université Laval Law graduate since 1982, A graduate of Université Laval’s Law Faculty member of the Québec Bar since 1984, member of the Québec Bar since 1983, and and member of the Québec Bar since 1972, Christiane Jodoin is currently a partner at Collège des administrateurs de sociétés Lynne Roiter joined Loto-Québec in 1985 the law fi rm Osler, Hoskin & Harcourt, where certifi ed administrator, Serge LeBel specializes as Director of Legal Affairs. Prior to that, she she has been practising commercial law since in litigation and business law. A member of practised her profession at the Commission 2002. Prior to that, she was a partner and several Boards of private corporations, he also des droits de la personne and the Régie attorney at McCarthy Tétrault. With extensive sits on the Board of the Interprovincial Lottery de l’assurance automobile du Québec. Now experience in corporate fi nance, mergers Corporation and the Québec Port Authority. serving as Loto-Québec’s Corporate Secretary and acquisitions, she has handled numerous Moreover, Mr LeBel is actively involved in and Vice-President of Legal Affairs, Ms. Roiter business purchase and sale transactions, as community affairs. For example, he is a strong is also Corporate Secretary of the World well as the restructuring of a number of public supporter of the Foundation of the Maison au Lottery Association (WLA), an organization and private companies. Ms. Jodoin sits on the Seuil de l’Harmonie, a centre for individuals comprised of lottery corporations from some Board of Directors of the MIRA Foundation, struggling with addiction, as well as the 80 different countries around the world. was actively involved in the 2008 Centraide Foundation of Stars, which helps advance campaign, and has served as a Board member research into children’s diseases. of the Douglas Hospital Foundation.

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Board of Directors report

MANDATE COMPOSITION The Board manages Loto-Québec in accordance with the provisions As at March 31, 2010, Loto-Québec’s Board of Directors consists of of its Act of Incorporation and the regulations pertaining to it as well nine members (one position vacant), all appointed by the Government as those of the other laws and regulations that govern it. The Board and all independent, with the exception of Loto-Québec’s President ensures that the Corporation takes the necessary measures to achieve and Chief Executive Offi cer. In 2009-2010, no changes were made the objectives arising from its mission. It adopts the gaming regulations to the composition of the Board, chaired by Ms. Hélène F. Fortin. There and approves the Corporation’s principal policy directions and annual are two new members as of April 29, 2010, Mr. André Dicaire and business plan. Ms. Céline Trépanier. Since June 2007, at least half of the directorships have been held by women, thereby achieving the gender parity objective As provided by the Act Respecting the Governance of State-Owned set for 2011. Enterprises, the Loto-Québec Board of Directors is supported in its decisions by three statutory committees: the Audit Committee, PRESENCE the Governance and Ethics Committee and the Human Resources Regular meetings of the Board of Directors are scheduled at the Committee. The Board may also create other committees as needed. beginning of the fi scal year and special meetings are organized as Accordingly, it formed the Commercial Affairs Committee during needed over the course of the year. fi scal 2008-2009. Advance notice to members of committee meetings varies according to the needs of the committee in question. During fi scal 2009-2010, there were ten regular Board meetings and two special meetings, including one by conference call. A closed session without management present was held at the end of each meeting.

DIRECTOR ATTENDANCE REPORT AS AT MARCH 31, 2010

Governance Human Commercial Board of Audit and Ethics Resources Affairs Members Directors Committee Committee Committee Committee

Regular Special Regular Regular Regular Regular 10 2 12 6 6 5

Hélène F. Fortin 10/10 2/2 12/12 6/6 6/6 5/5 Alain Cousineau 10/10 2/2 – – – 5/5 Julie Bernier 9/10 2/2 10/12 – – 4/5 Paule Bouchard 10/10 1/2 12/12 – – 5/5 Marc G. Bruneau 10/10 2/2 10/12 – 6/6 5/5 Mel Hoppenheim 9/10 2/2 12/12 – – 4/5 Christiane Jodoin* 1/10 1/2 – 4/6 – 1/5 Serge LeBel 10/10 2/2 – 6/6 – 4/5

* Excused absences

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 99 BOARD AND COMMITTEE REPORTS

REMUNERATION Independent Directors of Loto-Québec are remunerated pursuant to Order in Council 610-2006 adopted by the Government of Québec on June 28, 2006. This remuneration was increased by 2% in June 2007, 2008 and 2009 in compliance with the order in council.

REMUNERATION OF INDEPENDENT DIRECTORS

Directors Total remuneration

Hélène F. Fortin(1) (2) (3) (4) (5) $51,736 Julie Bernier (1) (2) (5) $22,920 Paule Bouchard(1) (2) (5) $25,873 Marc G. Bruneau(1) (2) (4) (5) (6) $32,767 Mel Hoppenheim(1) (2) (5) $22,421 Christiane Jodoin(1) (3) (5) $11,632 Serge LeBel(1) (3) (5) $22,441 $189,790

(1) Board of Directors (2) Audit Committee (3) Governance and Ethics Committee (4) Human Resources Committee (5) Commercial Affairs Committee (6) Pension plan committees of employees, management personnel and professional personnel of the Société des casinos du Québec (SCQ)

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ACTIVITIES

STRATEGIC PLANNING AND BUSINESS PLAN The Board of Directors also approved a pilot project from the Société At each Board meeting, management reported on Loto-Québec’s des bingos du Québec (SBQ) for a new collective game concept called business progress as it related to the Corporation’s 2009-2010 business Kinzo, which will enable the SBQ to continue to assist NPOs with a plan and current projects. The Board also approved the 2009 annual bingo licence from the Régie des alcools, des courses et des jeux. report and the 2010-2011 action plan following presentations by the various business and corporate units. In addition, during the fi scal FINANCIAL RESULTS AND INTERNAL CONTROL year ended March 31, 2010, the Directors worked on preparing the After each meeting of the Audit Committee, the Board received a verbal 2010-2013 strategic plan, which will be submitted for Government report on the Committee’s activities. The Board was also informed of the approval as required by the Act Respecting the Governance of fi ndings of internal control certifi cations. State-Owned Enterprises. The fi nancial statements for the year ended March 31, 2009 were (1) A progress report on the implementation of sustainable development approved by the Board on the Audit Committee’s recommendation. initiatives outlined in the 2008-2013 Sustainable Development Action The Board also approved the Loto-Québec budget and received a report Plan was also tabled at each Board meeting. on the Corporation’s fi nancial statements along with related fi nancial highlights at all of its regular meetings. The current projects monitored by the Board include the construction and opening of the Casino de Mont-Tremblant and major renovations Discussions were held on the transition to joint co-auditing, involving at the Casino de Montréal. By monitoring projects, the Board ensures the Auditor General of Québec and KPMG. In fi scal 2009-2010, that deadlines and budgets are respected. The Directors also tracked the fees paid to KPMG for auditing the fi nancial statements amounted the progress of Casino Mundial’s investment in the French holding to $1,272,400. company JOAGROUPE. The Board members also met with the Auditor General regarding The Board also gave its approval to the modifi cation of Here, we card!, the Corporation’s adoption of effi ciency and performance measures, a program of unannounced visits to retailers that serves to uphold the including benchmarking against similar organizations. Determining the respect of the Law prohibiting the sale of lottery products to minors. best performance indicators for this benchmarking was initiated by The replacement of video lottery terminals and the central operating the Board and the mandate was awarded to an outside fi rm. system was also authorized by the Board, and subsequently approved Moreover, the Board monitored the work undertaken on integrated risk by the Government. management and the resource optimization plan. With a view to channelling gaming within controlled circuits, the Board On the Audit Committee’s recommendation, the Board of Directors also members authorized the amendment of the By-law respecting interactive approved the amendment of certain internal operational policies related television games in order to allow Loto-Québec to offer online gaming, to procurement and fi nance. in turn allowing it to keep pace with market developments. It was made clear that the purpose of this course of action was not to develop a new offering but to direct already existing gaming activity to a secure and regulated site. To effi ciently develop the new site, the Board authorized Loto-Québec to move forward, in concert with the lottery corporations of British Columbia and the four Atlantic provinces, on the acquisition of a shared online gaming platform.

(1) At its meeting of June 9, 2010, on the recommendation of the Audit Committee, the Board approved the ﬁ nancial statements for the year ended March 31, 2010.

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CORPORATE GOVERNANCE HUMAN RESOURCES MANAGEMENT After each meeting of the Governance and Ethics Committee, the Board After each meeting of the Human Resources Committee, the Board received a verbal report on the Committee’s activities. received a verbal report on the Committee’s activities. As part of its annual review, the Code of Ethics and Rules of Professional The Board of Directors approved the remuneration parameters for Conduct for employees of Loto-Québec and its subsidiaries, as well as non-unionized personnel and management personnel of Loto-Québec the expertise and experience profi les of Board members, were modifi ed and its subsidiaries for 2009-2010. In addition, on the recommendation on the recommendation of the Governance and Ethics Committee. of the Human Resources Committee, the results of the 2008-2009 Furthermore, the Board reviewed its own mandate and approved incentive plan and the administering methods of the 2009-2010 plan changes clarifying the mandates of the statutory committees. A decision for employees covered under them were adopted in accordance with was also taken to the effect that the chairpersons of each Committee the Government-approved program. The Board also gave its approval shall annually submit a written report on their Committee’s performance to the 2009-2010 remuneration parameters for the President and in relation to its mandate, a decision also taken for the Board. The Chief Executive Offi cer and those for senior executives, again on Corporation’s operational policies are also subject to annual review. the recommendation of the Human Resources Committee. Furthermore, the Board approved a template checklist for management The Board also approved, on the recommendation of the Human to use for the presentation of major projects. On the recommendation Resources Committee, the investment policy and the governance plan of the Governance and Ethics Committee, it was also established that for the pension funds of casino employees as well as the wording of a member’s absence at three consecutive regular meetings held on the pension plans of casino and SCQ employees, which came into effect scheduled dates constitutes a vacancy, unless said absence is the result on December 31, 2009. The Board appointed one of its members to of illness or some other valid reason. sit as a representative of the Loto-Québec Board of Directors on the pension plan committees of the SCQ’s employees, management and professional personnel. In addition, the establishment of a corporate volunteer program received Board approval. The Board of Directors also approved, on the recommendation of the Human Resources Committee, the amendment of certain internal operational policies related to human resources.

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Audit Committee report

MANDATE – conducted a follow-up on the application of KPMG’s The role of the Audit Committee, under the terms of its mandate, recommendations on prize payment is primarily to support the Board of Directors by monitoring the integrity – conducted a follow-up on the conversion to International of fi nancial information submitted by the Corporation. The Committee Financial Reporting Standards (IFRS) oversees the implementation of adequate and effective internal control mechanisms and an integrated risk management process, in addition to – conducted a follow-up on certifi cation programs for internal supervising internal auditing activities. It also acts as a communication control and resource optimization link between the external co-auditors, Internal Auditing and the Board – conducted a follow-up on the implementation of the integrated of Directors. risk management project – recommended approval to the Board of Directors of the COMPOSITION Corporation’s performance indicators for benchmarking purposes The Audit Committee is composed of fi ve independent members. – approved and monitored Internal Audit annual and three-year plans Chairwoman: Paule Bouchard, FCA – received the quality evaluation report from the Department Members: Julie Bernier, Marc G. Bruneau and Mel Hoppenheim of Internal Auditing Ex-offi cio member: Hélène F. Fortin, FCA – ensured that the Department of Internal Auditing was able to All the members have the requisite skills and knowledge in accounting perform its role independently of Loto-Québec management or fi nance. The Chairwoman is a member of the Ordre des comptables – monitored the activities of the group responsible for security agréés du Québec. – approved the modifi cation of various corporate operational ACTIVITIES policies under its governance The Audit Committee met 12 times during fi scal 2009-2010 and – reviewed its mandate held a closed session without management present at the end of each – carried out a performance evaluation in relation to its mandate meeting. Activities at these meetings included the following: – held closed meetings with the Auditor General and the Internal The Committee reported its activities to the Board of Directors Auditor after each meeting. – approved Loto-Québec’s quarterly fi nancial statements – reviewed the Corporation’s 2008-2009 fi nancial statements with the Auditor General and recommended their approval to the Board of Directors (1)

(1) At its meeting of June 9, 2010, the Audit Committee reviewed the 2009-2010 ﬁ nancial statements with the external co-auditors and recommended their approval to the Board.

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Human Resources Committee report

MANDATE ACTIVITIES The Human Resources Committee examines and offers recommendations The Human Resources Committee met six times during fi scal 2009-2010 to the Board of Directors regarding policies and strategic directions in and held a closed session without management present at the end of each the area of human resources management. It also sees to the institution meeting. Activities at these meetings included the following: of norms and remuneration scales for Loto-Québec managers and – recommended that the Board of Directors approve the results employees, and participates in planning for the new wave of corporate of the 2008-2009 incentive plan and the administering methods management personnel. Moreover, the Committee’s responsibilities for the 2009-2010 plan for employees covered under them include developing the expertise and experience profi le for the appointment of the President and CEO, as well as recommending the remuneration – recommended that the Board of Directors approve the remuneration for that individual in accordance with the parameters established by of the President and Chief Executive Offi cer as well as that of the Government. senior executives for 2009-2010 – revised the expertise and experience profi le of the President COMPOSITION and Chief Executive Offi cer The Human Resources Committee is composed of three independent – recommended that the Board of Directors approve the investment members. policy and the rules of governance for the pension plans of the Chairwoman: Hélène F. Fortin Société des casinos du Québec Members: Marc G. Bruneau and a vacant position (as at March 31, 2010) – presented the program to identify the Corporation’s emerging leaders to the Board – recommended that the Board of Directors approve the establishment or modifi cation of various corporate operational policies under its governance – reviewed its mandate – carried out a performance evaluation in relation to its mandate

The Committee reported its activities to the Board of Directors after each meeting.

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REMUNERATION AND BENEFITS OF THE SIX HIGHESTPAID EXECUTIVES OF THE CORPORATION

Automobile

Base Variable Additional Group Name and title salary remuneration Description Expenses beneﬁ ts* insurance plan

Alain Cousineau Company President and Chief Executive Ofﬁ cer $292,803 $43,920 car $7,942 $6,859 $3,084

PENSION PLAN AND SUPPLEMENTARY BENEFITS PROGRAM Mr. Cousineau participates in the Retirement Plan for Senior Ofﬁ cials – Public Service (RPSO) and in the Supplementary Beneﬁ ts Program.

Jean Royer Senior Vice-President and Chief Operating Ofﬁ cer $249,823 $53,912 $10,011 $2,500 $4,397

Robert Ayotte President of Lottery Operations $230,533 $50,487 $8,937 $2,500 $4,283 Provision Marcel Croux of a vehicle Senior Vice-President of Corporate Affairs $230,533 $42,049 and parking $8,861 $2,500 $3,049

Gille Dufour Senior Vice-President of Financial Affairs $230,533 $43,986 $9,817 $2,500 $4,283

Claude Poisson President of Operations, Société des casinos du Québec $239,210 $47,459 $9,817 $2,500 $4,334

PENSION PLAN AND SUPPLEMENTARY BENEFITS PROGRAM Basic pension plan – Mr. Royer participates in the Retirement Plan for Senior Ofﬁ cials – Public Service (RPSO). – Messrs. Ayotte, Croux, Dufour and Poisson participate in the Québec Government Pension Plan for Management Personnel (PPMP). The contribution and beneﬁ ts are calculated in accordance with the standard provisions of the plan in which they participate.

Supplementary pension plan – Messrs. Royer, Ayotte, Croux, Dufour and Poisson participate in Loto-Québec’s Supplementary Pension Plan for Executive Management. – The retirement benefi t is calculated using the basic pension plan benefi t formula without regard for the limits prescribed in the Income Tax Act, and by using a percentage credited for each year of service of 2.0% for Messrs. Ayotte and Poisson, and 2.5% for Messrs. Royer, Croux and Dufour. This benefi t is deducted from that offered by the basic plan.

* Health assessment, ﬁ nancial and estate planning, sports club membership and the Cercle des gens d’affaires

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Governance and Ethics Committee report

MANDATE – recommended that the Board of Directors approve the defi nition The Governance and Ethics Committee assists the Board of Directors of a vacancy as the absence of a member at three consecutive in applying the highest standards of ethics and corporate governance. It regular meetings held on the scheduled dates, unless said develops, and subsequently proposes to the Board, Loto-Québec’s rules absence is the result of illness or any other reason deemed valid of governance and the codes of ethics that apply to the Corporation’s by the Governance and Ethics Committee Directors, executives and personnel. – studied the curriculum vitae of candidates for vacancies on the Board of Directors, taking into account their expertise and COMPOSITION experience profi les, which had also been reviewed The Governance and Ethics Committee is composed of three independent members. – approved the change to the program welcoming new Board members Chairman: Serge LeBel – revised the Corporation’s organizational structure Members: Hélène F. Fortin and Christiane Jodoin – conducted the annual review of the Corporation’s operational ACTIVITIES policies under its governance and ensured that each Committee The Governance and Ethics Committee met six times during fi scal did so as well 2009-2010 and held a closed session without management present – reviewed its mandate as a committee and asked the other at the end of each meeting. Activities at these meetings included Committees and the Board of Directors to do the same the following: – carried out a performance evaluation in relation to its mandate – reviewed the code of ethics in effect for the members of the Board of Directors and senior management as well as The Committee reported its activities to the Board of Directors after the declaration of interests form each meeting. – recommended that the Board of Directors amend the Code of Ethics for employees of Loto-Québec and its subsidiaries

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Commercial Affairs Committee report

MANDATE ACTIVITIES Created in 2009 by the Board of Directors on the recommendation of The Commercial Affairs Committee met ﬁ ve times during ﬁ scal the Governance and Ethics Committee, the Commercial Affairs Committee 2009-2010. Its main activities dealt with: has a dual mandate: to discuss Loto-Québec’s commercial activities and – Loto-Québec’s strategic planning exercise to better equip the Directors in their respective roles through customized training on matters affecting the Corporation’s activities. – the management process of major construction projects as well as the Corporation’s real estate management projects COMPOSITION – the pilot project of the Société des bingos du Québec, The Commercial Affairs Committee is composed of all members of the the new game Kinzo Board of Directors. Chairwoman: Hélène F. Fortin Members: Julie Bernier, Paule Bouchard, Alain Cousineau, Marc G. Bruneau, Mel Hoppenheim, Christiane Jodoin and Serge LeBel

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 107 Organizational structure

As at March 31, 2010

Raymond Bachand Minister of Finance

Board of Directors Audit Committee Martin Larose Hélène F. Fortin Paule Bouchard Corporate Director Chairwoman Chairwoman Internal Auditing

Alain Cousineau Lynne Roiter Marie-Christine Tremblay President and Chief Corporate Secretary Corporate Director Executive Officer Vice-President Legal Affairs Legal Affairs

Jean Royer Robert Ayotte Claude Poisson François Hanchay Carole Drolet Senior Vice-President President of Operations President of Operations General Manager President of Operations and Chief Operating Officer Lotteries Société des casinos Casino de Montréal Société des loteries vidéo du Québec du Québec

Simon Patenaude Germain Guitor François Tremblay Patrick Lamy Managing Director Vice-President General Manager Director Marketing Marketing Casino de Charlevoix Gaming Halls

Victor Devito Kevin Taylor Managing Director General Manager Sales and Business Relations Casino du Lac-Leamy Casino de Mont-Tremblant

Marcel Croux André Dumouchel Senior Vice-President Corporate Vice-President Corporate Affairs Human Resources

Sylvain Carrier Philippe Lafortune Danielle Leblanc Corporate Director Corporate Director Corporate Director Global Remuneration Organizational Development Human Resources Head Office and Subsidiaries

Danielle Milot Gilles Naud Jean Ouellette Corporate Director Corporate Director Corporate Director Human Resources Human Resources Pension Plans and Payroll and Information Systems Société des casinos du Québec Employee Benefits

Gille Dufour Johanne Rock Jean-Claude Champagne Senior Vice-President Corporate Vice-President Corporate Vice-President Financial Affairs Finance and Administration Real Estate

Stéphane Duquette Michelle Lizotte Mario Pessoa Project Director Corporate Director Corporate Director Procurement Real Estate Operations

Normand Paré Marie-Claude Tremblay Michel Gasse Corporate Director Director and Corporate Corporate Director Taxation and Supplier Accounts Controller Real Estate Development

Pierre Bibeau Lucie Lamoureux Department of Corporate Jean-Pierre Roy Christiane Boucher Senior Corporate Vice-President Corporate Director Communications Corporate Director Corporate Director Communications Sponsorships and and Public Relations Media Relations Graphic and Digital and Public Affairs Social Commitment Communications and Publications

P. 108 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT ORGANIZATIONAL STRUCTURE

Daniel Collette Corporate Director Corporate Secretariat

François-Patrick Allard Nathalie Rajotte Roger Garceau Managing Director Managing Director Corporate Director Société des bingos du Québec Ingenio Gaming Equipment and Systems Compliance

Richard Bégin Bernard Séguin Corporate Vice-Presidency André Galipeau Corporate Vice-President Managing Director Information Technologies Director Security Technologies Nter Operations

Lynda Vachon Danielle Hudon Corporate Director Director Security Operations Administrative and Game Management Systems Dev.

Harold Côté Luc Rochette Corporate Director Director Information Security Infrastructure and Support

Denis Daly Director Game Systems Development

Serge Décary Director Online Game Systems Development

François Huot Marco Labelle Corporate Director Managing Director Analysis and Planning Casino Mundial

LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT P. 109 Contact

Head ofﬁ ce Casino de Charlevoix 500 Sherbrooke Street West 183 Richelieu Street Montréal, Québec H3A 3G6 La Malbaie, Québec G5A 1X8 Telephone: 514-282-8000 Telephone: 418-665-5300 1-800-350-9033 1-800-665-2274 Fax: 514-499-8660 Fax: 418-665-5322 lotoquebec.com casino-de-charlevoix.com

Québec City ofﬁ ce Casino du Lac-Leamy 955 Grande Allée West 1 Casino Boulevard Québec City, Québec G1S 4Y2 Gatineau, Québec J8Y 6W3 Telephone: 418-686-7575 Telephone: 819-772-2100 1-800-463-4560 1-800-665-2274 Fax: 418-643-2690 Fax: 819-772-3710 casino-du-lac-leamy.com Société des casinos du Québec 500 Sherbrooke Street West, 15th Floor Casino de Mont-Tremblant Montréal, Québec H3A 3G6 300 Pléiades Road Telephone: 514-282-8080 Mont-Tremblant, Québec J8E 0A7 1-800-730-5686 Telephone: 819-429-4150 Fax: 514-285-3121 1-800-665-2274 casinosduquebec.com casino-mt-tremblant.com

Société des loteries vidéo du Québec Québec City gaming hall 500 Sherbrooke Street West, 16th Floor 250G Wilfrid-Hamel Boulevard Montréal, Québec H3A 3G6 Québec City, Québec G1L 5A7 Telephone: 514-282-8090 Telephone: 418-529-7878 1-800-454-8090 1-877-700-5836 Fax: 514-499-5073 Fax: 418-529-2001 slvq.com salondejeuxquebec.com

Société des bingos du Québec Trois-Rivières gaming hall 500 Sherbrooke Street West, 6th Floor 1900 Hippodrome Street Montréal, Québec H3A 3G6 Trois-Rivières, Québec G8Z 0A3 Telephone: 514-842-2464 Telephone: 819-693-4774 1-888-430-2464 1-877-700-5836 Fax: 514-864-7332 Fax: 819-693-5059 bingos-quebec.com salondejeuxtroisrivieres.com

Ingenio REGIONAL CENTRES 500 Sherbrooke Street West, 20th Floor Montréal, Québec H3A 3G6 Montréal and Northwestern Québec Telephone: 514-282-0210 1945 Maurice-Gauvin Street Fax: 514-282-2028 Laval, Québec H7S 2M5 lotoquebec.com/ingenio Telephone: 450-682-2525 1-800-361-9026 Casino de Montréal Fax: 450-687-4818 1 Casino Avenue Montréal, Québec H3C 4W7 Montréal and Southeastern Québec Telephone: 514-392-2700 325 Bridge Street 1-800-665-2274 Montréal, Québec H3K 2C7 Fax: 514-864-4950 Telephone: 514-409-3190 casino-de-montreal.com 1-800-361-1244 Fax: 514-931-0655

Québec City and Eastern Québec 955 Grande-Allée West Québec City, Québec G1S 4Y2 Telephone: 418-686-7575 1-800-463-4560 Fax: 418-643-2690

P. 110 LOTOQUÉBEC 2 0 1 0 ANNUAL REPORT You may consult Loto-Québec’s 2010 annual report online at lotoquebec.com. Loto-Québec’s annual report is produced by the Senior Corporate Vice-Presidency of Communications and Public Affairs. Concept and design Gauthier Designers

Legal deposit ISBN 978-2-550-59219-8 ISSN 0709-5740 lotoquebec.com