Loto-Québec - 2014-2015 Annual report

ORIENTATION 2
TO GUARANTEE THE EFFECTIVE
AND EFFICIENT MANAGEMENT
OF RESOURCES
ANNUAL REPORT
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L OTO-QUÉBEC 2014-2015
REVIEW OF ACTIVITIES
SIGNIFICANT GAINS IN EFFICIENCY
Numerous initiatives have been undertaken to enhance the Corporation’s entertainment offering,
but there have been just as many to improve performance. During the 2014-2015 fiscal year, a
wide-ranging plan to optimize human, material and financial resources was implemented across the
organization to ensure maximum efficiency.
A comprehensive, in-depth review of all sectors
At the SCQ, the organization of work and the responsibilities
of the administrative teams were reviewed. Development
projects were also reassessed based on current and future
needs. This exercise entailed a review of administrative staff
and the manager-to-staff ratio, which was also examined
across the organization.
All Loto-Québec sectors have been reviewed over the past
year, or will be soon. Various restructuring initiatives have
taken place and a budget review has led to a hiring and
overall payroll freeze, as well as a spending freeze in some
units, notably in information technologies. Efficiency gains in
the order of $68.5 million were generated in the 2014-2015
fiscal year. Organizational efficiency is essential to stay
focused on business goals and ensure the Corporation’s
longevity.
Elsewhere, the use of space in all Loto-Québec buildings was
studied with a view to optimization. As a rationalization of
space proved necessary, operations in the Laval regional
office were transferred to the Montréal regional office, located
at the corner of Mill and Bridge streets. Meanwhile, the
Québec City office will be put up for sale as the building is
no longer being used to its full potential. However, there will
still be a winner payout centre in Québec City.
EFFICIENCY GAINS IN THE ORDER
OF $68.5 MILLION WERE GENERATED
IN THE 2014-2015 FISCAL YEAR.
On December 15, 2014, two subsidiaries of Loto-Québec, the
Société des loteries vidéo du Québec (SLVQ) and the Société
des bingos du Québec (SBQ), were merged. The new entity
formed by the merger is the Société des établissements de
jeux du Québec (SEJQ). Its mission is to manage a network of
video lottery terminals, gaming halls, network bingo and
Kinzo venues responsibly, with a view to providing quality
entertainment and with proceeds being used for the benefit
of all Quebecers.
ORGANIZATIONAL EFFICIENCY
IS ESSENTIAL TO STAY FOCUSED
ON BUSINESS GOALS AND ENSURE
THE CORPORATION’S LONGEVITY.
Bringing these sectors together has allowed for significant
gains in efficiency, particularly through greater operational
effectiveness. As the SLVQ and SBQ faced similar challenges
and issues and targeted related customer bases—not to
mention sharing part of the same network of business
partners—the synergy between these two groups was assured.
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L OTO-QUÉBEC 2014-2015
REVIEW OF ACTIVITIES
A review of practices
investment is better aligned with the organization’s needs.
With this in mind, it has revised its sponsorship allocation
policy in favour of sponsorships that present added value to
the Corporation’s entertainment offering, in regions where
gaming facilities are located. Loto-Québec will continue to be
there for its customers in all regions and remain an important
player with regard to sponsorship in Québec. The new policy
applies as of the 2015-2016 fiscal year.
In 2014, Loto-Québec launched an initiative to redefine the
ticket distribution model for the 8,500 lottery retailers across
Québec. A new model is needed, as logistics and administrative tasks currently take up too much of the sales force’s
time. The Corporation would like to refocus the sales force on
marketing products and developing the retail network to its
full potential.
This review of programs and activities also affects the
Collection Loto-Québec. As such, the art acquisition program
was temporarily suspended for the current fiscal year.
However, Loto-Québec’s mission to promote the work of
Québec artists remains firm. The collection will continue to be
showcased, particularly by means of touring exhibitions.
The option chosen in 2015, which will be deployed during the
2015-2016 fiscal year, is the activation of tickets at points of
sale, meaning that they will have no value until activated by
the retailer. As a result, tickets can be delivered with less
stringent security measures and, therefore, at lower cost. This
change will give rise to a whole host of decisions to be made,
such as the number of products to be launched on the market and at what pace. The modernization of the ticket distribution model is a major project for the Corporation, which will
ensure it is better equipped to take on the challenges ahead.
Another measure to reduce costs in this area concerns the
printing of lottery tickets. In fact, changing printers and reducing the number of tickets printed has lowered printing costs
by $2.5 million over the course of the last fiscal year, compared to the previous twelve months.
With regard to corporate affairs, a cross-organizational
governance structure has been put in place to optimize
and prioritize social responsibility considerations in daily
operations. For instance, the procurement and social
responsibility departments have worked together to assign
consistent sustainable development criteria to seven targeted
product categories which must be taken into account in
the tendering process. There is also a plan to assess
Repositioning social commitment programs
Over the past year, Loto-Québec has reviewed its budget for
all social commitment programs and activities so that each
THE CORPORATION WOULD LIKE TO REFOCUS THE SALES FORCE
ON MARKETING PRODUCTS AND DEVELOPING THE RETAIL NETWORK
TO ITS FULL POTENTIAL.
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L OTO-QUÉBEC 2014-2015
REVIEW OF ACTIVITIES
Despite its withdrawal from JOAGROUPE, Loto-Québec
maintains an interest in two casinos, one in La Seyne-sur-Mer
and one in Giffaumont Lac du Der. As of March 31, 2015,
Loto-Québec’s investment in this regard consists of loans
totalling an estimated $12.4 million. The value of these loans
has not depreciated and both casinos are profitable.
SOCIAL RESPONSIBILITY
ACTIONS CONTRIBUTE TO
THE CORPORATION’S FINANCIAL
PERFORMANCE AS WELL AS ITS
ENVIRONMENTAL AND SOCIAL
PERFORMANCE.
opportunities for synergy among some calls for tenders,
which should reduce costs and, potentially, the environmental
impact of acquisitions through the application of responsible
procurement principles.
Social responsibility actions contribute to the Corporation’s
financial performance as well as its environmental and social
performance.
Withdrawal of Loto-Québec’s interest in
JOAGROUPE
In 2005, through its Casino Mundial subsidiary and the
Casinos Développement Europe (CDE) holding company,
Loto-Québec became co-owner of JOAGROUPE Holding Inc.,
a French corporation that runs some 20 casinos in France as
well as the JOA Online, a gaming company.
Through CDE, Casino Mundial held 35% of the share
capital of JOAGROUPE, while the European investment firm
Bridgepoint Capital and JOAGROUPE’s management team
respectively held 55% and 10% of shares in JOAGROUPE.
Although the investment started out well, the situation
deteriorated as the European economy faltered.
In 2014, two investment funds made an offer to JOAGROUPE,
under the terms that they would become shareholders and
provide financial support in return. Following analysis, the
Corporation concluded that, given the circumstances, it should
favour a solution that would free it from this investment.
Hence, on October 22, 2014, the government of Québec
authorized Loto-Québec and its subsidiaries to cede interest
held in any business involved in managing casinos in France.
Loto-Québec therefore divested its interest in JOAGROUPE,
thus transferring a loan estimated at a9.9 million to a new
holding. In return, Loto-Québec received the right to a portion
of receipts should the holding be resold.
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L OTO-QUÉBEC 2014-2015