annual report 2006 social responsibility report

Transcription

ANNUAL REPORT 2006
SOCIAL RESPONSIBILITY REPORT
DEAR READER,
Veikkaus’ operations and existence are based on responsibility.
In this report, you can read not only about what happened
and how we did financially in 2006 but also, and above all,
about Veikkaus’ social responsibility. Further, this report
covers Veikkaus’ economic and environmental responsibility.
A company operating on the basis of an exclusive right has
a great responsibility towards its customers and society.
Veikkaus offers gaming entertainment to Finnish players in
a reliable and responsible manner. Veikkaus’ year 2006 was
successful, generating welfare to all Finns. Our proceeds are
vital to Finnish arts, science, sports, and youth work. On the
pages of this report, you will find a number of well-known
Finns telling about themselves and their role in society.
The contents and reporting principles of the present report are
in compliance with the new recommendations of the international Global Reporting Initiative (GRI 3), laid down in autumn
2006. The report ends with a table comparing the topics
dealt with in the report and the GRI recommendations. Our
contact data can also be found in the final part of the report.
Veikkaus Oy
CONTENTS
Key indicators ................................................................................................... 5
Veikkaus in brief ................................................................................................ 6
CEO’s review ..................................................................................................... 8
PART OF SOCIET Y
Joy and benefit for all Finns .......................................................................... 11
Large group of stakeholders ......................................................................... 12
Veikkaus’ programme of social responsibility and key indicators ...................... 14
SOCIAL RESPONSIBILIT Y
Veikkaus—socially responsible game provider .................................................
A Finn to win ...............................................................................................
Big dreams, small stakes —safe products ........................................................
Gaming is no children’s play ..........................................................................
Gaming organizations finance research into problem gambling ........................
Reliability and openness —communications keywords ......................................
Contented employees—cornerstone of success ..............................................
17
18
20
21
23
25
26
ENVIRONMENTAL RESPONSIBILIT Y
Environmental responsibility—natural part of Veikkaus’ operations .................. 31
The specially rewarded Ecological Team acts at the grassroot level ................. 35
ECONOMIC RESPONSIBILIT Y
Economic responsibility for everyone’s benefit ..............................................
Veikkaus games provide livelihood to many people .........................................
Game provider’s great responsibility ..............................................................
Minimising abuse as a joint objective .............................................................
Veikkaus’ retail network—personal service in all parts of Finland ......................
Close to our customers every day ..................................................................
Players choose the internet more often .........................................................
Dreams, sports, entertainment .....................................................................
Governance ....................................................................................................
Organization ...................................................................................................
Board of Directors ...........................................................................................
Executive Team ...............................................................................................
37
38
40
43
44
45
46
48
52
55
56
58
FINANCIAL STATEMENT 2006
Board of Directors’ report ............................................................................. 62
Income statement ........................................................................................ 66
Balance sheets ............................................................................................ 67
Cash-flow statement ................................................................................... 68
Changes in shareholders’ equity .................................................................... 69
Accounting principles ................................................................................... 70
Notes to the financial statement .................................................................. 73
Auditors’ report ........................................................................................... 85
Statement by the Supervisory Board ............................................................. 85
Comparison with the GRI recommendations ....................................................... 86
Glossary ......................................................................................................... 89
Contacts ........................................................................................................ 90
KEY INDICATORS
DEVELOPMENT OF TURNOVER
EUR MILLION
2006
2005
EUR million
EUR million
Turnover
Gross margin on sales
1,090 1,159 1,261 1,316 1,361
1,400
1,200
1,315.8
+3.4
489.6
468.3
+4.6
Operating profit
403.3
397.2
+1.5
Profit before appropriations
407.7
400.7
+1.7
Profit for the financial year
407.7
400.4
+1.8
31 Dec 2006
1,000
Employees
Registered customers
31 Dec 2005
373
372
3,569
3,692
440,850
315,305
Points of sales
800
Change in %
1,361.2
600
400
200
0
BREAKDOWN OF VEIKK AUS’ EURO
DISTRIBUTION OF VEIKK AUS FUNDS
2006
2006
2002 2003 2004 2005 2006
DEVELOPMENT OF
FINANCIAL RESULT
EUR MILLION
357 376 398 401 408
500
400
PRIZE PAYOUT
51.6 cents
ARTS
13.5 cents
300
SPORTS
6.9 cents
SCIENCE
5.5 cents
YOUTH WORK
2.5 cents
200
100
0
2002 2003 2004 2005 2006
CONTINGENCY FUND
1.5 cents
LOTTERY TAX
4.6 cents
RETAIL COMMISSIONS
5.9 cents
OPERATING EXPENSES
8.0 cents
ARTS
including LIBRARIES
47.5%
9.9%
EUR 190.6 million
EUR 39.9 million
SPORTS
24.4%
EUR 97.8 million
SCIENCE
19.4%
EUR 77.9 million
8.8%
EUR 35.2 million
YOUTH WORK
Annual report 2006
5
MISSION
A FINN TO WIN
Veikkaus generates versatile value to Finnish society
by organizing games reliably and responsibly.
VISION
VEIKKAUS IS A PIONEER
Veikkaus will be the world’s leading lottery in terms of customer
orientation, know-how, and efficiency in 2010. Veikkaus is a
pioneer in the midst of the changing operating environment and
entertainment market. For its owner, Veikkaus will provide the
best option for a sustained promotion of the necessary facilities
for Finnish arts, sports, science and youth work.
VALUES
WE WORK
FOR THE COMMON GOOD
Veikkaus generates versatile value to Finns. We
offer Finns an opportunity to participate in the
promotion of the common good safely and reliably
by playing Veikkaus’ games. Veikkaus offers Finns
a chance to work for the common good. We employ indirectly tens of thousands of Finns.
RESPONSIBLY
Social responsibility is a central part of Veikkaus’
strategy and operations in practice. Our customers must be able to rely on Veikkaus one hundred
percent. We must report our activities widely and
openly, since we are responsible for our actions to
Finnish society.
RELIABLY
Veikkaus’ employees can rely on each other in all
situations. Open interaction is an essential part of
reliability. Our customers can always trust in the
game products we offer.
CREATIVELY
We want our games, services, and the way we operate reflect creativity and joy. We also encourage
our staff to be innovative.
STRATEGY OF
BUSINESS ACTIVITIES
FINANCIAL
OBJECTIVES
THE CORNERSTONES OF OUR BUSINESS
STRATEGY ARE CUSTOMER STRATEGY
AND OPERATING ENVIRONMENT
STRATEGY.
Veikkaus aims at a growth of 3 % of its turnover
in 2007. The return objective of Veikkaus funds
recorded in the State Budget 2007 is EUR 397.3
million, i.e. 2.6 % more than our contribution to the
Ministry of Education in 2006.
Social responsibility is a natural part of
Veikkaus’ operations. It entails responsibility for
the environment, the customers, and the staff.
It also means good corporate governance, workplace equality, as well as ethically sustainable
business operations.
Veikkaus develops its offerings in an ethically
sustainable way. Our games are based on wide
participation and small stakes.
Veikkaus operates its games reliably and responsibly. This is ensured by strict supervision by
authorities and our own measures to control and
restrict gaming.
Veikkaus returns the bulk of its business profit
to Finnish society, to be distributed to various
organisations in the fields of arts, sports, science
and youth work in a way that benefits all Finns.
Veikkaus operates on the leisure and experience market. We offer our customers a chance
to win money as a significant additional value, as
well as very important social benefits.
Customers are at the core of Veikkaus’ business
operations. Our objective is to diversify our offerings to meet our customers’ different needs.
Our customer strategy is based on the ability
to offer our customers unique value which provides the basis of long-term customer relations.
We want to be present in places and situations
where people dream, spend their free time, and
attend or take part in sports events.
Annual report 2006
7
CEO’S REVIEW
VIEW
A Finn to win! That is Veikkaus’ Mission. Veikkaus
generates versatile value to Finnish society by
operating games reliably and responsibly.
The core message of Veikkaus’ Vision is that we
want to be at the forefront in our field. Being at
the forefront is demanding! These demands we
respond to on the solid basis of our Values: we
work for the common good, responsibly, reliably,
and creatively.
Veikkaus’ Mission, Vision and Values are no empty
words. On the one hand, they illustrate the basis
for the exclusive right principle applied to gaming.
On the other hand, they demonstrate our ambitious goal: to offer Finns services that are of as
high quality as possible.
A gaming organization that has been granted
the licence to operate by virtue of an exclusive
right must be able to offer a reliable, yet attractive
alternative. To succeed in this, it must be able to
make available a wide selection of games making
use of modern technologies, and it must also be
allowed to market and advertise these games.
The previous paragraph was not taken from
Veikkaus’ promotional materials, although it well
could have been. This characterization of the task
of a gaming organization was taken from the latest ruling by the European Court of Justice in a
case concerning gaming activities, the Placanica
ruling, which supported—once again—the national
discretion power in gaming-related matters. In the
past ten years, the ECJ has complied with the same
policy consistently.
In 2006, the European Commission sent a letter
of formal notice to Finland and eight further EU
Member States. Finland was inquired about the
provision and marketing of betting games and
Football Pools. The procedure, which complies with
the EU standards, was based on complaints about
the national exclusive right applied to betting filed
by private bookmakers to the Commission.
Whilst asking the Member States to give their
responses to the letter of formal notice, the
Commission has emphasized, on several occasions,
that it is not aiming to threaten or abolish the exclusive right, but rather to ensure that the national
systems are consistent. Of course, there are private
operators who would be more than willing to steal
away the gaming proceeds from Finnish society
into their own pockets around the world. These operators do whatever they can to make this happen.
Fortunately, we think otherwise in Europe. The
European Parliament already decided to exclude
gaming from the scope of the EU services Directive
in February 2006—with an overwhelming majority vote. The initial idea had been to liberalize the
gaming market through the Directive. Many rulings
by national courts of justice around the world have
reinforced the strong status of the exclusive right
system. For example, foreign gaming provision over
the internet was banned categorically and made
subject to severe penalties in the US, by virtue of
national legislation in the autumn of 2006.
By applying the principle of the exclusive right to
gaming, society can decide the quantity and quality of acceptable gaming on the basis of its own
values. Therefore, it is extremely important that
the national gaming policy, legislation, and the
measures taken by the authorities are in line and
comply consistently with the basis of the exclusive
right. The Finnish National Gaming Forum, with
wide representation from the different sectors of
society, compiled the basic guidelines for Finnish
gaming policy at the beginning of the year. At the
end of the year under review, the Council of State
awarded new gaming licences to Veikkaus, the
Finnish Slot Machine Association RAY and Fintoto
for the period between 2007 and 2011.
Above, I made a reference to our ambitious
goal of being at the forefront. In 2006, we continued to develop our operations strenuously in
accordance with this vision. The vision takes its
strategic basis from our customer strategy and
the model of business operations based on it.
Veikkaus’ offerings were developed and individualized according to a constantly increasing amount of
customer information, to better meet the different
demands of our varied customer groups. We introduced an analytical and operative customer information system. The first stage of Veikkaus’ game
system technology, the reform of the internet gaming service, was carried out in the autumn. It will be
followed by the replacement of the online terminals
in our retail outlets by new generation equipment
in the spring and summer of 2007. Finally, in the
summer of 2008, we will go over to a completely
new game system.
All things considered, Veikkaus’ success is
based on our relations to the customers. What
counts in this respect, is the high quality and suitability of our products and services to the Finnish
players. Their reliability and creativity. A shared
way of thinking. The shared understanding of and
support to the fact that the game proceeds are
used for purposes significant to every Finn.
We launched our new brand identity in accordance
with Veikkaus’ brand strategy in April 2006. The
primary goal of the brand strategy is that our players can recognize Veikkaus’ products. That way,
they can be sure that the products they are faced
with are offered by a national gaming operator
working for the benefit of the entire society.
A concrete example of the development of our
customer relations is Veikkaus Card, which was
introduced in the autumn. By using Veikkaus Card,
as well as by playing identified in general, our
players have access to customer benefits and are
rewarded for playing responsibly—in positive ways
typical of Veikkaus that can be pleasantly surprising. By the end of the year, we had already nearly
100,000 Veikkaus Card holders in Finland!
Social responsibility is an inseparable part of
Veikkaus’ activities. A company operating on the
basis of an exclusive right has a vast responsibility
towards its customers and society. We respond to
the demand for games in accordance with our gaming tradition, in a way which is ethically planned,
and rationally and naturally regulated. Veikkaus’
CSR program includes a long list of concrete actions that prevent the harmful effects of gaming.
Whilst developing new game ideas and distribution
channels, we make use of a tool for ethical analysis.
Responsibility also means reliable consumer protection and stake limits that have been considered
necessary. Veikkaus has made all of is games
subject to age limits and some of them subject to
stake limits.
In its 66th year of operations, Veikkaus
attained a turnover of EUR 1,361.2 million, the
highest in the company’s history. In a period of
five years, our turnover has grown by nearly 30%.
Veikkaus’ financial result amounted to EUR 407.7
million, of which we returned EUR 387.2 million to
the Ministry of Education, to be further distributed
to Finnish arts, sports, science, and youth work in
accordance with the State Budget.
In 2006, Veikkaus paid out a total of EUR 701.8 million (+3.4%) of prizes to players. The costs of product advertisement amounted to EUR 10.3 million
(+2.2%), i.e. 0.8% of the turnover. The retail commissions paid out to retailers represented 5.9% of the
turnover, i.e. EUR 80.3 million. During the year under
review, we paid EUR 62.9 million of lottery tax
(+3.8%) and EUR 17.7 million (+22.4%) of VAT, in addition to returning our profit of EUR 387.2 million to
the Ministry of Education. Further, we contributed
EUR 14 million from the prize fund of the previous
years to the Ministry of Education.
Since its establishment in 1940, Veikkaus has returned the bulk of its profit to society to be used
to promote sports, and, later on, arts, science and
youth work. Veikkaus truly generates versatile
value to Finns—for the common good, responsibly,
reliably and creatively!
I wish to express my sincerest thanks for a successful and splendid year to Veikkaus’ customers,
partners, and staff!
Risto Nieminen
Annual report 2006
9
JOY AND BENEFIT
TO ALL FINNS
VEIKKAUS’ YEAR 2006
JANUARY
Lotto turned 35.
Veikkaus games have meant dreams, fun and benefits to Finns
We introduced the new Super/Multi Bet.
for over 65 years. We could say that Veikkaus is present in the
FEBRUARY
lives of nearly all grown-up Finns in some way. Almost all Finns
The Olympic Games in Turin generated
a record turnover in betting.
have some time spent a euro or two on a Veikkaus game in the
APRIL
pursuit of a dream or to bet on a favourite sports team.
Veikkaus’ mission is to generate versatile value to Finnish society
by operating games reliably and responsibly. Our games are based
on wide participation with reasonable stakes. We seek to meet the
demand for games in accordance with our gaming traditions: by offering ethically designed games in a sensible and natural way. This
way, we can also minimize the possible detriments of gaming.
Veikkaus launched its new brand.
Wednesday Joker was introduced.
The European Commission sent a letter of
formal notice on sports betting to Finland
and six other EU members.
MAY
We launched the new Football World Cup
eInstant.
JUNE
The new instants Satumaa and Jazz were
introduced.
Ässä eInstant was launched.
The Finnish gaming system is based on an ideology of responsibil-
JULY
ity. By granting exclusive rights to gaming operators, the authori-
Record-high turnover in betting during
the World Cup in Football.
ties seek to manage gaming and competition that would lead to
aggressive manipulation of players if it was left unregulated.
SEPTEMBER
Veikkaus Card was introduced.
OCTOBER
Veikkaus holds the exclusive right to operate pools and betting
games and lotteries in Finland. The Council of State has also awarded the licence to operate games to two further gaming operators, the Finnish Slot Machine Association RAY and Fintoto. In 2006
the three operators posted a turnover of a total of EUR 2,216 million, generating EUR 968 million of funds to Finnish society. The current gaming licences will be effective until the end of 2011.
We started the first face of the reform
of our game system.
Mini-Ässä Instant was launched.
NOVEMBER
We celebrated the 10th anniversary of our
internet gaming service Veikkaus.fi.
Veikkaus, The Finnish Broadcasting Company
Yle and the Finnish Sports Channel signed an
agreement of cooperation.
Risto Nieminen was elected Vice President
of WLA.
Part of society
11
LARGE GROUP
OF STAKEHOLDERS
Veikkaus has an exceptionally large group of
stakeholders. Nearly all grown-up Finns have been
Veikkaus’ customers at some stage of their lives.
Whether they played or not, all Finns are beneficiaries of our gaming activities in various everyday
situations, including hobbies and other activities.
Veikkaus funds are vital for thousands of beneficiary organizations and their employment effects
are huge.
We have a comprehensive network of 3,500 retailers around the country. From a societal point
of view, gaming is associated with significant
economic and social responsibility. In all of our
operations, we also consider the perspective of
environmental responsibility.
ARTIST PAOL A SUHONEN
Girl Scout 1980—2000
“There was, like, some kind of a Scout skills competition, and it was freezing cold, around minus twentyfive degrees Celsius. First you ski until you get all
sweaty and then you sleep in a lean-to shelter out in
the open. During the night, the frost keeps getting
more and more biting, and since we’ve played a bit
with fire, all our equipment has got soaked.
In a sense, there are pieces in your life that you
don’t necessarily link with the moment here and
now; you haven’t realized what they have meant to
you. Or that they aren’t linked in any clear and direct
way. But they still have some kind of an essential
role as building blocks of your current self.”
12
Part of society
BAL ANCING BETWEEN DIFFERENT
EXPECTATIONS
Veikkaus manages its stakeholder relations in
many ways and at multiple levels. We have developed feedback systems, research methods and
practices to collect feedback from our customers
systematically in order to develop our game offerings. To find out about the expectations of our
different stakeholder groups, we are in constant
dialogue with our stakeholders in many ways.
Whilst evaluating the results of Veikkaus’ social
responsibility, all our stakeholders have their
own expectations which may be contradictory.
Successful stakeholder relations thus require
balancing between the different expectations.
We measure our success in the fulfilment of this
goal by several surveys. As a responsible gaming
operator, Veikkaus aims at open and interactive
dialogue with its customers.
VEIKKAUS’ CORE STAKEHOLDERS
STAKEHOLDER
STAKEHOLDER EXPECTATIONS
VEIKK AUS’ MEASURES
STANDARDS
PL AYERS, CUSTOMERS
Interesting, entertaining and reliable gaming
entertainment. Fulfilling the promises of our
products and services. Secure and reliable
prize payout. Correct and explicit information
on games and gaming.
Entertaining games; dreams, excitement, and
entertainment. Versatile offerings targeted at
different customer groups. Comprehensive
sales network. Reliable prize payout. Accurate
customer guidance and game instructions.
Transparent activities. Consumer protection
and responsible product development. Financing of research into problem gambling and
Problem Gamblers’ helpline Peluuri.
Sales development. Changes in consumer
behaviour and customer profiles. Analyses of
corporate image and customer satisfaction.
Quality and quantity of feedback and recommended decision procedures. Quality and
quantity of calls to Peluuri helpline.
OWNER
Ministry of Education
Moderate, sustainable and secure profit development. Efficient activities. Responsible gaming.
Regular proceeds. Regular contacts with the
owner. Open information about the development of the result and the operations in general.
Achieving the return objective. International
comparisons within the sector.
PARLIAMENT,
RELEVANT MINISTRIES
Regular proceeds, tax revenue. Responsible
gaming, especially measures taken to prevent
the social problems of gaming. Nationwide
employment effects.
Strict compliance with the Lotteries Act and
the national gaming policy. Efficient and responsible activities. Active work for the prevention of the detriments of gaming. Direct
and indirect employment effects.
Proceeds and taxes returned. Coverage of
retailer network. Occurrence of social detriments of gaming. Number of jobs, salaries
paid.
STAFF
Secure workplace. Equal opportunities. Career
and development opportunities. Motivating
workplace community and rewarding jobs. Responsible and equal management.
Solid economy. Versatile training programme,
rotation opportunities within the company,
maintenance of working capacity, encouraging
incentive scheme, investing in internal communications. Equal opportunities programme. Active development of leadership and planning of
operations.
Surveys concerning the staff and their working capacity, performance evaluation discussions. Turnover of employees, absence from
work, age of retirement. Incentive scheme.
RETAILERS
AND GAME SALES CLERKS
Source of livelihood. Explicit operating guidelines. Reliable and responsible partner. Competitive offerings. Sales support functions.
Up-to-date, comprehensive information and
training.
Versatile offerings, reliable prize payout. Responsibility for information systems, terminals,
sales equipment, information, marketing and
communications. Comprehensive retailer training programme.
Sales development and distribution by districts and outlet types. Changes of points of
sales, payment times of sales profits. Customer and retailer satisfaction surveys.
BENEFICIARIES
in the fields of arts, sports, science
and youth work
Proceeds, return of funds. Ensuring the continuity of the system. Possible forms of marketing cooperation.
Regular proceeds. Efficient operations. Open,
interactive cooperation.
Development of proceeds. Achieving the objectives of marketing and game event cooperation. Corporate image surveys.
PARTNERS
and other cooperation organizations
Open, fair and innovative activities. Dependable agreements. Long-lasting cooperation
relations.
Strategic partnerships, partner agreements
and strategies. Versatile cooperation agreements. Providing the cooperative activities
with gaming expertise.
Number, contents and nature of partnerships.
Number, contents and nature of cooperation
agreements. New offerings, product development.
NATIONAL GAMING ORGANIZ ATIONS
OF OTHER COUNTRIES,
the cooperative organizations EL and WLA
Securing the continuity of the exclusive right
system. Promoting responsible gaming activities. Active cooperation and information exchange, benchmarking.
Being an active player in the Executive Committees and working groups of the cooperative organizations. Taking initiatives and being
advanced as a cooperative partner. Encouraging others to information exchange and cooperation.
Reinforcing the system of national exclusive
rights. Participating in seminars and meetings. International comparisons, statistics
and research projects.
EUROPEAN COMMISSION
and MEPs
Responsible gaming policy. Prevention of social problems and crime. Channelling gaming to
legally accepted games.
Promoting social responsibility, taking especially measures to prevent social problems and
crime. Open and active information sharing.
Active contacts with the Finnish MEPs.
Development and nature of the social problems of gaming. Peluuri statistics. Studies by
the Ministry of Social Affairs and Health. International comparisons, statistics and research projects.
THE MEDIA
Open cooperation. Social responsibility and
reliability. Efficient, fast and transparent activities. Accessibility.
Open, fast, reliable, and many-sided communications. Availability and active provision of
information. Extensive cooperation.
Nature of public discussions, daily media follow-up. Number of contacts and communications. Corporate image and communications
surveys.
IMMEDIATE COMMUNITIES
Interaction. Predictability. Constructive and
active local actor and employer.
Contacts and cooperation. Responsible,
steady activities.
Environmental load. Number of jobs.
Corporate image surveys.
Part of society
13
VEIKKAUS’ PROGRAMME OF CORPORATE
SOCIAL RESPONSIBILITY
Veikkaus aims at a wide customer basis playing
with reasonable stakes. This is to make sure that
the sums individual customers spend on gaming
do not constitute an excessive financial burden
for them.
Veikkaus develops its offerings in a socially
responsible manner—this entails, e.g., restrictions
on gaming:
– Age limits—15 years at our points of sales
and 18 years on the electronic channels.
– Limitations on stakes and daily gaming in
games with high event frequency such as
Live Betting and the eInstants.
– The players on the internet can impose selflimitations to prevent them from gaming for
three months at a time.
– Selling games on credit is forbidden.
– Veikkaus games cannot be played in the night
time.
Whilst developing new game ideas and distribution channels, Veikkaus uses a tool for ethical
evaluation in order to recognise the possible
addiction-provoking features that might lead to a
gambling problem. The ethical evaluation is part of
our process of product development.
Veikkaus’ marketing communications
comply with strict ethical guidelines.
– In its advertising, Veikkaus does not give
erroneous information or a misleading picture
of the real chances of winning.
– In its marketing, Veikkaus avoids the
idealisation of gaming and advertisements
encouraging people to play, respecting the
consumers’ individual rights.
– Marketing communications shall not be
directed to consumer groups that are
especially vulnerable in view of their age,
social position, or other special features.
14
Part of society
Veikkaus bears its responsibility for problem
gambling:
– Veikkaus offers information on problem
gambling at its points of sales and website.
– Veikkaus makes sure that its staff and game
sales personnel are aware of problem gambling
and know where to refer the customer to for
help.
– Veikkaus takes part in the funding and
development of Peluuri helpline meant for
people suffering from a gambling problem and
to their families and friends.
– Veikkaus finances research into the problems
caused by gaming.
Veikkaus aims to work against crime and for
the prevention of money laundering.
Veikkaus bears its environmental responsibility
in its own activities and its partner relations.
– Veikkaus requires that all of its partners shall
act in compliance with the principle of
corporate social responsibility.
Veikkaus aims at a moderate long-term
financial growth.
Promoting Veikkaus’ social responsibility
involves every employee and is a natural part
of all the company’s operations and its work in
practice.
“In a survey carried out
in the autumn of 2006, Veikkaus’
customer service was rated excellent.”
KEY INDICATORS OF CORPORATE SOCIAL RESPONSIBILITY
Economic responsibility
Turnover (EUR million)
Profit from business operations (EUR million)
2006
2005
2004
1,361.2
1,315.8
1,260.8
403.3
397.2
394.5
Investments (EUR million)
38.6
22.5
6.7
Prize payout (EUR million)
701.8
678.7
631.2
Salaries and wages (EUR million)
Number of employees (end of the year)
Number of points of sales (end of the year)
18
16.5
15.6
373
372
377
3,569
3,692
3,748
Retail commissions (EUR million)
80.3
80.6
80.8
Lottery tax (EUR million)
62.9
60.6
60.0
401.4
381.4
375.8
Contribution to the
Ministry of Education (EUR million)
VEIKKAUS’ SOCIAL RESPONSIBILITY HELD IN HIGH ESTEEM
People associate Veikkaus with mainly positive
issues. In a brand survey conducted in 2006, half
of the respondents considered Veikkaus brand
good or very good. The survey was carried out by
Taloustutkimus.
Veikkaus’ customer service was rated as a
top-class service in a survey made in autumn 2006.
Of the customers to respond to the questionnaire,
96 % said their problem had been solved during the
first call. The respondents graded the service as
excellent 3.7 on the scale from 1 to 4. The survey
was carried out by TNS Gallup.
Social responsibility
Work enjoyment (scale 1—5)
Turnover of personnel (%)
– newly recruited
3.87
8.7
3.91
10.9
3.82
8.0
33
38
34
– gave their notice
22
24
19
– retired
10
19
Average age of employees
42.2
42.5
42.4
Average length of employment agreements
12.7
13.1
13.5
Sick leaves (workdays/person)
11.4
14.5
Occupational health care costs (EUR)
Recreational and employee club activities (EUR)
Average salary (EUR)
Training days / all employees
7
12.8
340,032
398,508
388,059
70,309
67,149
81,555
3,157
3,092
2,951
658
454 *
413 *
Environmental responsibility
*
Electricity consumption / head office (MWh)
4,090
3,750
3,500
Heat energy consumption / head office (MWh)
2,689
2,785
2,791
Water consumption / head office (m3)
5,500
4,000
4,100
only include training by the Game Academy
Of all Finns, 69 % regard it as important that companies comply with social responsibility. This was
the outcome of a survey on corporate social responsibility by Marketing Radar in 2006. According to
the survey, the way Veikkaus takes care of its social
responsibility is regarded as very good. In fact, of
the 28 companies covered in the survey, Veikkaus
was given the second best grades.
The overall esteem of Veikkaus’ social responsibility increased from the previous year to 3.71 (3.61)
on a scale from 1 to 5. More specifically, Veikkaus’
social responsibility was rated as an average of 3.83,
whereas our economic responsibility was given the
average grade 3.81 and our environmental responsibility was graded as 3.57.
Veikkaus’ social reporting was estimated as
excellent: our annual report and corporate social
report 2005 were given a special mention award
for the way they handled social responsibility in the
“Reporting Environmental and Social Responsibility
2006” competition in Finland.
Part of society
15
VEIKKAUS—SOCIALLY
RESPONSIBLE GAME PROVIDER
One of the three areas of corporate social responsibility has always been at the core of Veikkaus’ operations: social responsibility. We generate versatile value to Finnish society by providing games
reliably and responsibly. A gaming provider has always an especial-
“In gaming, the
operator’s responsibility
towards the players is
emphasized.”
ly strong responsibility towards its customers. This means above all
comprehensive customer protection and transparent operations.
Our social responsibility is also illustrated in the fact that the bulk of our
proceeds are used to benefit Finns. Veikkaus’ players are the biggest individual group to finance Finnish sports, arts, science and youth work.
Veikkaus holds the exclusive right to operate pools, betting and lottery
games in Finland. This has been laid down by Finnish decision-makers, and
the majority of Finns are in favour of this system. The Finnish lottery legislation is based on the principle that each type of game shall be provided
by just one operator. As a result, we have been able to develop an operational model in Finland which can be controlled easily and monitored efficiently. Our model is by no means exceptional: most EU member states
also apply the principle of the exclusive right to gaming. Further, the principle is widely accepted as the most functional system around the world.
Corporate social responsibility
17
A FINN TO WIN
Veikkaus’ activities benefit all Finns. Every one
of us can enjoy Veikkaus funds, e.g., whilst using
the various sports facilities, going to the cinema,
theatre, or taking part in the activities of the
Scout Organisation. Without a carefully planned
distribution of the euros lost on Veikkaus games,
many good things would be left undone and many
unforgettable experiences would not be experienced. Thus, because of Veikkaus gaming activities, a Finn will always win.
In 2006 Veikkaus returned a total of EUR 401.4
million to the Finnish Ministry of Education. That
is over one million euros each day. Veikkaus games
constitute a significant source of income to
Finnish society: the majority of the funds distributed by the Ministry of Education to sports (99%),
youth work (88%) and arts (48%) were covered
with Veikkaus funds. Further, 29 percent of the
Ministry’s financial support to science came from
Veikkaus funds.
ARTS, SPORTS, SCIENCE
AND YOUTH WORK
The Finnish Ministry of Education distributes
funds from Veikkaus’ proceeds to the Finnish
culture in accordance with the Funds Distribution
Act1 laid down by the Parliament of Finland.
According to the act, 38.5% of the funds are allocated to arts, 25% to sports, 17.5% to science
and 9% to youth work. Further, 10% of the funds
are channelled each year to the above-mentioned
beneficiaries as separately specified in the State
Budget.
The Funds Distribution Act was laid down in 2001,
and its regulations on the distribution of funds
will be introduced gradually by the year 2010. In
2005, the original schedule according to which the
budget funding of libraries was to be excluded
from the scope of Veikkaus funds by 2012 was
amended by cutting two years from the transfer
Veikkaus funds vs. all funds distributed by the Ministry of Education 2006
Arts and culture
Total funds EUR million
364
Share of Veikkaus funds %
48%
Sports
Science
96
258
99%
Youth work
39
29%
88%
Veikkaus funds distribution to beneficiary groups
EUR million
2006
%
2005
2004
2003
Arts*
190.6
47.5
185.1
187.5
190.5
Sports
97.8
24.4
90.0
84.2
83.7
83.5
Science
77.9
19.4
75.7
75.5
75.5
76.2
Youth work
Total
183.0
35.2
8.8
31.7
28.6
20.7
20.4
401.4
100.0
382.6
375.8
370.4
363.1
* The funds distributed to arts include the statutory funding of libraries by the Ministry of Education.
They amounted to EUR 39.9 million in 2006.
18
2002
“Without a carefully
planned distribution
of the euros lost
on Veikkaus games,
many unforgettable
experiences would not
be experienced.”
period of implementation of the act. By 2010, the
statutory state funds to libraries will be financed
with tax revenue again.
THOUSANDS OF COMMUNITIES RECEIVE
VEIKKAUS FUNDS EACH YEAR
In all, Veikkaus funds were allocated to over
2,000 different communities in 2006. These com-
munities can distribute funds further to various
projects. For example, the funds distributed to
sports are further allocated to the building of
recreational sports facilities, sports associations,
sports research, and recreational sports for children and young people. One of the beneficiaries of
the sports funds, the Young Finland Association,
granted over EUR 1.4 million of financial support
from Veikkaus funds to sports clubs. As a result,
nearly a thousand clubs around Finland received
Veikkaus funds in the year under review.
In science, the greatest beneficiary is the
Academy of Finland, financing hundreds of scientific research projects each year. Of the funds
to youth work, the majority are channelled to
promote young people’s involvement in citizen
organisations and to leisure activities, e.g., young
people’s associations.
1 Act on the distribution of the funds from lotteries,
betting and pools games.
AUTHOR K ARI HOTAK AINEN
“Style needs to involve something unconscious, something you
don’t grasp yourself. You develop your own style for 25 years.
Once your style is ready, it’s called mannerism. And then you
spend the rest of your life trying to get away from that
mannerism. It’s so unfair.
I always try to write intensively, so that in the end, I’m half
dead. So if you’re spiritually and physically on the edge, the
ending will be like the world, that is, somehow open and
suitably loose. So if an author is in terrific shape all the time,
he’s bound to write like a wise man.
“Martikainen stared into the distance and understood the
meaning of the heritage of his mother and father.” “That won’t
look good in the long run.”
19
BIG DREAMS, SMALL STAKES
—SAFE PRODUCTS
A lottery’s sphere of activities is unique in many
ways. Games offer players a chance to dream and
make their dreams come true if they happen to
win. Game providers shall not only offer gaming
experiences but they shall also assume responsibility, providing safe and reliable games.
In the year under review, Veikkaus took part in a
survey on corporate social responsibility carried
out by Marketing Radar. The survey covered 28
Finnish companies. Veikkaus was given the second-best grades for the way it had reported its
social responsibility. We also did very well in all of
the different sectors of social responsibility, ranking among the top three in each of them.
EXPENDITURE ON VEIKKAUS GAMES COMPARED TO THE FINNISH HOUSEHOLD INCOME
PERCENT
5
4
3
2
1
0
1975
20
1980
1985
1990
1995
2000
Veikkaus has the right to run pools and betting
games and lotteries. We offer an extensive game
supply, which covers nearly 30 products. By
maintaining a wide supply, we aim to attract a
wide range of customers playing with reasonable
stakes.
2006
GAMING IS NO CHILDREN’S PLAY
A responsible game provider must consider the
disadvantages of gaming, such as gaming by
young people and the possibility of problem
gambling. Therefore, secure gaming provision also
involves limitations.
The Finnish Ministry of Social Affairs and Health
commissioned a survey from the market research
company Taloustutkimus Oy to analyse young
people’s gaming behaviour in 2006. The results
were published in January 2007.
A total of 5,000 young people, aged between
twelve and seventeen, were interviewed. The survey showed that slightly over a half of the youngsters played games involving monetary stakes,
in the vast majority of cases slot machines. The
second most popular games among young people
were instants, lotto and Joker games.
PL AYING VEIKKAUS GAMES
SUBJECT TO AGE LIMITS VOLUNTARILY
IMPOSED BY THE COMPANY
Veikkaus decided to impose voluntary age limits
on all of its games in 2005. The age limit for
playing at our points of sales is fifteen and the
limit for playing through the electronic channels
is eighteen. We made the decision in a situation
where the event frequency of our games was rising and the electronic channels were making the
games easier to access. We wanted to be prepared
for the future development and to prevent gaming by children and young people, and the possible
related detriments.
There are two age limits because there are two
different sales channels. The limit is fifteen at
points of sales, since the social control in them is
bigger—you always have to buy your games from
a sales person. Internet gaming was made subject
to a higher limit because it is less easy for the
parents to control what their children are up to on
the net and social control on the web is generally
loose. Further, the electronic channels offer more
games with high event frequency than the traditional points of sales.
In 2006, we introduced game-specific limitations
on the internet instants. You can only buy the eInstants for a total of one hundred euros a day. We
had previously made Live Betting subject to a respective game-specific limitation. In Live Betting
you have an electronic game wallet where you
can transfer the maximum of one hundred euros
of gaming funds a day. After each day, the credit
balance in your wallet is returned automatically to
your game account. Further, there is a stake limit
of twenty euros per game in Live Betting.
“Ethical
evaluation is
part of Veikkaus’
product
development.”
VEIKKAUS CARD PROMOTES
RESPONSIBLE GAMING
In September 2006 Veikkaus introduced a customer card, “Veikkaus Card”. The card is granted
to Finns over eighteen and is personal and free
of charge. By showing their Veikkaus Cards whilst
playing, our customers can make sure that the
possible prize will be paid directly to their bank or
gaming account.
Veikkaus Card is part of Veikkaus’ responsible
gaming policy, allowing us to gather information
we can use in the development of our products
and services and in risk assessment. By using the
card, our customers also become more conscious
about their gaming: the card comes with a player
ID to be used on our internet gaming service
where you can follow your gaming history. We do
not reward our players for playing much, nor do we
offer bonuses.
There are several other measures we take to
prevent possible problem gambling and abuse. You
cannot play Veikkaus games on credit. Nor can
you play our games in the night time. Our game
system is open from Monday to Saturday from 7
am to 10 pm, and on Sundays from 8 am to 10 pm.
The restrictions on gaming hours also cover our
internet games. Further, people suffering from a
gambling problem can ask for a personal self-ban
lasting for three months at a time in our internet
gaming service.
HIGH-STANDARD CONSUMER
PROTECTION
Consumer protection is part of all well-administered gaming activities. Through proper consumer
protection, we can guarantee our players’ legal
rights in possible problematic situations. Veikkaus’
players can seek assistance in unclear situations
concerning the prize payout by filing an application for recommended decision with the Ministry
of the Interior.
»
21
»
In 2006, we recorded 339 gaming transactions at
Veikkaus. There were 78 applications for recommended decision, i.e. 19 fewer than in 2005. Most
of the applications for recommended decision had
to do with betting.
MODEL FOR GAME CL ASSIFICATION
FURTHERS ETHICAL EVALUATION
Ethical evaluation is part of Veikkaus’ product
development. We use it to analyse the characteristics of games and game ideas from the perspective of possible gaming addiction. Veikkaus and
the Finnish Slot Machine Association RAY have
established a joint model for game classification
that was introduced gradually in 2006. It is a commensurable model for classification to facilitate
22
the recognition of the possible addiction-provoking features of new games and game ideas.
The model for game classification was completed
in February 2006. It was already implemented
in Veikkaus in spring 2006, when we used it to
evaluate all of Veikkaus’ existing games. In the
autumn, the model was made part of the product
development of all our new games. In 2007 we
aim to establish the model as an inherent part of
our product development and its documentation.
Veikkaus wants to achieve a wide group of customers playing with small stakes. We are continuously developing our games to meet our players’
demands. Whilst working for this, we consider it
important to analyse the nature of the games:
their event frequency, how rewarding they are,
the payout intervals, skills, and the range of the
supply.
By analysing these elements we can find out
about the different features of the games that
will help us to consider, e.g., what limitations
we should impose on the games when they are
launched. The model for game classification offers us better chances of preventing the social
problems that might arise from gaming.
GAMING ORGANIZATIONS FINANCE RESEARCH
INTO PROBLEM GAMBLING
The Finnish national gaming organizations work in cooperation to prevent problem gambling. Veikkaus, Fintoto,
and the Finnish Slot Machine Association RAY finance research carried out by the Finnish Ministry of Social Affairs
and Health to investigate the detriments of gaming.
The latest large-scale research project concerning gaming was completed in May 2003. It indicated that 1.5%
of Finns, i.e. 65,000 people; belong to the risk group that
plays excessively. A person is considered to belong to
the risk group if s/he plays to the extent that s/he, or his/her
friends and family should start paying special attention to it. Some 25,000 participants in the
survey fulfilled the criteria for a problem gambler. A new study will be carried out in 2007.
The Ministry of Social Affairs and Health currently focuses on more detailed analyses of
the gaming problem in the research it coordinates. In 2006 the Ministry’s research projects
covered gaming by young people, the evaluation of the open-ward treatment of people with
a gambling problem, and the awareness in municipalities about the treatment of problem
gamblers. The Ministry is also engaged in a research programme on substance use and addiction administered by the Academy of Finland, which will be started in 2007. The programme
will continue until 2010 and its objective will be, e.g., to support interdisciplinary research into
substance use and addiction, as well as to reinforce the national and international networking of researchers.
PELUURI HELPLINE FOR PROBLEM GAMBLERS
The national gaming organizations finance collectively Problem Gamblers’ helpline Peluuri.
Peluuri is operated by the Finnish Blue Ribbon and the A-Clinic Foundation, which also offer
treatment to problem gamblers. Peluuri is a toll-free helpline meant for problem gamblers and
their families and friends. In 2006 Peluuri answered a total of 1,698 calls. Of the callers, 84%
were gamblers and the rest were, e.g., family members and friends of gamblers. Just 10% of
the callers said they were having problems primarily with Veikkaus games.
Peluuri helpline administers the website www.peluuri.fi, offering comprehensive information
on problem gambling and an email advice service eNeuvontapalvelu, where people can ask
about problem gambling anonymously and free of charge. In 2006 Peluuri’s website had a total of 43,357 visitors. The email advice service answered 188 questions on problem gambling.
In 2006, Peluuri extended its service portfolio, as the discussion forum “Valtti” for peer
support was opened on the net. The forum was launched jointly by Peluuri, the A-Clinic
Foundation and Päihdelinkki service. By the end of the year under review, 83 discussion
strings had been started and a total of 508 related messages had been received on the
forum.
23
ACADEMY PROFESSOR LEENA PALOTIE
“I investigate people’s hereditary factors, genes. We have the best
possible opportunities for that in many ways in Finland. We’ve
been living here at the edge of the populated world and mixing
with other populations to just a small degree—partly because of our
geography, partly because of our language.
It’s much easier to spot pathological genes here in Finland than,
for example, in Los Angeles. For example, men’s high death
rates caused by cardiologic diseases and suicides, as well as the
occurrence of type 1 diabetes, are exceptionally wide-spread in
Finland.
What we do is find out about such big patterns in order to develop
more and more accurate medication; to make people fall ill less
often and stay healthy for longer. People do live to be rather old
these days, and if they could live their lives in good shape, it would
be a great blessing for us all.”
24
RELIABILITY AND OPENNESS—COMMUNICATIONS KEYWORDS
Gaming is always a random activity where you
cannot know for sure what the outcome will
be—regardless of whether we are talking about
lotteries or sports games. This is an issue we want
to draw special attention to in all our communications and marketing. We distribute open information about our games, without creating illusions
about gaming as an easy way to make money.
We want to offer our customers open information
about Veikkaus as a company, our games, and the
changes related to them. We communicate actively to both the media and our customers. Veikkaus’
website is very popular, with over 100,000 users
on the liveliest days.
To measure the success of our communications,
we take part each year in an annual survey on
corporate communications realised by the Finnish
market research company Taloustutkimus Oy. In
the survey of 2006, Veikkaus’ communications
were rated as the fifth best of the forty-five
companies involved. We were given the grade 7.68.
The average grade of all the major companies in
the survey was 7.27. Veikkaus was rated as the
best company in terms of the reliability of the
communications.
VEIKKAUS—HOW CAN WE HELP YOU?
Every day, we record tens of thousands of gaming transactions. Thus, our customers frequently
need advice on the games, game results, winnings and Veikkaus in general. Advice is available
through Veikkaus’ customer service which is open
during the opening hours of the game system,
seven days a week. We answer the queries of
around 3,100 customers each week. Most of our
customers still prefer to pick up the phone, but
internet queries are on constant increase.
ETHICAL COUNCIL—PART OF
VEIKKAUS’ SOCIAL
RESPONSIBILITY
Veikkaus’ Ethical Council is an advisory expert
organ which was nominated by Veikkaus’ Board of
Directors in 2003. The Council’s task is to provide
Veikkaus’ Board of Directors and operative management with an external perspective to issues
related to the ethics of gaming, especially games
and their marketing, as well as to topics such as
addictive gambling.
RESPONSIBLE MARKETING
Veikkaus pays special attention to its marketing
communications, which are regulated by strict
ethical guidelines. Responsibility is the guiding
principle: we will not encourage people to play
excessively.
Our ethical guidelines for marketing communications were specified at the beginning of 2005.
Veikkaus spent EUR 10.3 million (+2.2 %) on product
advertising last year. This represents a total of
0.8 % of our total turnover.
In 2006 the Ethical Council convened four times.
The Council’s term of office is two years; the
Council of the period under review ended its term
of office on 31 December 2006. A new Ethical
Council will be appointed by Veikkaus’ Board of
Directors at the beginning of 2007.
MEMBER OF VEIKKAUS’ ETHICAL
COUNCIL 2006
K A L E V I K I V I S T Ö , Licentiate of Political
Science (Chairman)
R I N G A J U N N I L A , Entrepreneur (Vice chairman)
ETHICAL GUIDELINES FOR MARKETING IN A NUTSHELL
S A R I E S S AYA H , Member of Parliament, Member
of the National Gaming Forum
The guiding principle of Veikkaus’ marketing
communications shall be social responsibility:
we respect the consumers’ individual rights,
minimising the idealisation and encouragement of large-scale consumption.
There shall be no attempts to attract consumers to gaming that might jeopardise their
financial status or family relations.
There shall be no abuse of the players’ trust
in gaming and game providers, nor exploitation
of their inexperience or lack of knowledge.
All Veikkaus’ marketing partnership agreements shall include regulations on fraud and
doping (sports-related agreements). The
agreements thus drafted will enable Veikkaus
to withdraw instantly from any cooperation
in which the other party has been engaged in
fraudulent activities.
Marketing communications shall not be directed to consumer groups that are especially
vulnerable in view of their age, social position,
or other special features. Children are one such
group.
Veikkaus will guarantee the security of its
web environment.
O L L I A L H O , Professor
J U K K A G U S TA F S S O N , Member of Parliament
V E S A - P E K K A KO L J O N E N , lehdistöneuvos
(Finnish honorary title)
T I M O L A I T I N E N , Chairman, Finnish Sports
Federation
S A N N A - M A R I M Y L LY N E N , Manager of Human
Risk and Work Welfare Services
M A R I A K A I S A A U L A , Ombudsman for Children
T U O M O P E LT O N E N , Professor
H A N N U S A H A , Doctor of Philosophy
P E K K A VÄ H ÄTA L O , Secretary General,
the Young Finland Association
25
CONTENTED EMPLOYEES
—CORNERSTONE OF SUCCESS
For Veikkaus’ staff, the year 2006 brought with it numerous changes, as the new operational models that had been introduced in 2005 were gradually established and finetuned. Intense management training was continued to enhance the functionality and
efficiency of the different workplace communities. We also invested heavily in safety at
work and working capacity to support our staff in the middle of the changes.
In accordance with the Equal Opportunities Programme laid down in 2005, we carried
out an evaluation of the level of requirements of the different tasks within the organization. The requirement level-based classification is necessary for an accurate salary
definition. Further, it enables us to identify the possible gender differences in salaries.
At the beginning of the year under review, a new staff records system “Heppa” was introduced in
Veikkaus. The system was designed in 2005 and it is meant to support the different operational models
and practices belonging to the life-span of an employment contract, as well as to facilitate cooperation
between the management and the employees.
A staff survey carried out in September 2006 indicated that we have managed to implement the new models well and that the majority of the staff was satisfied with Veikkaus
and its operations. On a scale from 1 to 5, Veikkaus’ staff rated their satisfaction with
their workplace with an average grade of 3.87.
The survey also showed that the organizational development and strategic planning had
been successful: the staff felt that the things they were doing in their work were in accordance with Veikkaus’ objectives both at the personal level (average grade 4.24) and at
the unit level (average grade 4.30). The survey was answered by 92 % of the staff.
SECURE EMPLOYER
Employment contracts generally last for a long time in Veikkaus: nearly a half of our staff have stayed
with us over ten years. An average Veikkaus’ employment contract lasts for 12.7 years. However, as new
people have been recruited and baby-boomers have gradually reached the retirement age, the share of
employees who have been working for Veikkaus for less than five years has gone up to 36 %.
Veikkaus attracts people. It was rated as the third most interesting workplace out of 28 companies in
Marketing Radar’s Social Responsibility survey in 2006.
At the end of 2006 Veikkaus employed 373 people. Of them, 211 were women and 162 men. More than
half (62 %) of the staff were aged between 30 and 50 years. The share of employees under 30 years of
age was 10 %, whereas 26 % were over 50. The average age of the employees was 42.2 years.
Veikkaus provides a secure workplace to its employees. As many as 95 % of the staff, i.e. 355 people had
permanent employment contracts. In 2006 we recruited 19 permanent and 14 fixed-term employees.
26
The new employees were recruited to managerial
and expert positions. Ten employees retired and
22 gave their notice. The employment contracts
of seven fixed-term employees ended. The total
turnover of the personnel was nine percent in
2006 (10.9 % in 2005).
of the Executive Team participated in different
manager and expertise training programmes and
in a joint training of the Nordic Lotteries, the
Nordic Frontier Programme.
The mean salary in Veikkaus was EUR 3,157 a
month in 2006 (+1%). This figure does not include
the Executive Team’s salaries.
Game Academy, the training programme for
Veikkaus’ personnel, offered 59 different training
events in 2006. A total of 248 Veikkaus’ employees took part in the Game Academy training and
other programmes supporting them in their tasks.
Our personnel expenses amounted to EUR 21.6
million (–2 %) in 2006. The salaries represented
EUR 18 million of this, whereas the indirect personnel expenses were EUR 3.6 million.
We also continued to offer our employees the
opportunity to take the Veikkaus Diploma, a versatile training programme on Veikkaus’ operating
environment, activities and products.
MANAGEMENT TRAINING ON CUSTOMER
REL ATIONS
OCCUPATIONAL HEALTHCARE PROMOTES THE WELL-BEING OF EMPLOYEES
In the year under review, we continued the
implementation of our new customer relations
strategy in the organization that had already begun in 2005. The training in this area focused on
Veikkaus’ management. All of Veikkaus’ employees in a managerial position took the “Manage the
Game” training programme in 2006.
Veikkaus’ occupational health care services focused on mental well-being and preventive health
care in 2006. A total of 147 physical examinations
were made, along with 27 follow-ups. The figure
includes the examinations made by both the occupational health care nurse and the company
physician.
The comprehensive six-unit training programme
covered several areas and a total of 71 employees
belonging to Veikkaus’ management took part in
it. The training was very practical, providing the
managers with knowledge and skills to run their
organizations in a customer-focused manner, to
reinforce the implementation of the ongoing
change and to promote new models and ways of
operating in all workplace communities.
Besides the statutory occupational health care
services, Veikkaus’ employees are entitled to
health care of the GP standard, and to specialist
consultations in connection with, e.g., spectacle
prescription renewals. The employees are compensated for health care expenses after an initial
four-month trial period of employment.
In addition to the Manage the Game programme,
Veikkaus’ Executive Team took part in a specifically designed training programme which covered,
e.g., change management and the creation of a
managerial culture. Further, some of the members
EQUAL OPPORTUNITIES
IN VEIKKAUS
In recruitments (external and internal),
the most qualified applicant shall be recruited. Whilst recruiting from amongst
equally qualified and competent applicants, positive discrimination shall be complied with, and the applicant representing
the minority gender shall be recruited.
Jobs with the same requirement standards
shall entitle to the same salary, irrespective of the employee’s gender.
Equal opportunity issues shall be
made part of the training of Veikkaus
managers and leadership to enhance their
ability to take into account the equal opportunities perspective in their work.
We shall establish explicit and comprehensive requirement standards for
the evaluation of the recruitment of male
and female employees to different positions and for the follow-up of their salary
development.
The development of equal opportunities shall be followed carefully, and their
status shall be communicated openly to
the employees.
The expenses of occupational health care
amounted to EUR 340,032 (–14.7 %), i.e. EUR 911
(–14.9 %) per employee in 2006.
In 2006 Veikkaus’ employees were on sick leave
for a total of 5,159 days. The sick leave percentage
was thus 5.7 (–0.5 %). The sick leaves lasted for
»
27
»
an average of 6.3 days and were most frequently
caused by musculoskeletal disorders.
Veikkaus has an active Health and Safety
Committee elected for one year at a time, to take
care of the workplace safety issues at Veikkaus.
The committee aims to ensure the health and
working capacity of each employee. It also analyses the health hazards caused by the working
environment and methods. Veikkaus employees
can contact the committee if they have problems
with health and safety issues.
Veikkaus also has a Health and Safety Delegate,
elected for two years at a time. The Health and
Safety Committee has at least four statutory
meetings a year. The meetings are also attended
by the occupational health nurse and, if necessary,
the company physician.
VEIKKAUS PROMOTES RECREATIONAL
ACTIVITIES AND EMPLOYEE CLUBS
Veikkaus has a long tradition of promoting activities that improve the staff’s working capacity, e.g.,
active employee clubs. In 2006, the activities for
the improvement of the staff’s overall working
capacity centred on recreational sports and taking
into account the fellow employees.
In 2006 Veikkaus’ clubs spent a total of EUR
42,560 on their various activities. The amount
was used to support, e.g., the sports, arts, travel
and fishing clubs.
The most important staff event of the year was
Veikkaus Cup at the Sports Institute of Finland
in October. In the event, spiced up with a glint of
humour, our entire staff were given the chance to
do various recreational sports. They also had the
opportunity to take a walking test.
Besides the events and the club activities,
Veikkaus’ staff received a recreational bonus,
which totalled EUR 24,249 (EUR 24,337 in 2005).
The recreational bonus is paid as a one-time payment amounting to EUR 70 per person at the max-
28
imum. Veikkaus’ leisure facilities in Kirkkonummi
on the south coast and Saariselkä in Lapland,
which are open to the staff, also contribute to
work enjoyment.
umbrella organization Confederation of Finnish
Industries. Our Head of Personnel is a member of
the Board of the Employers’ Association of the
Special Branches.
INTERNAL COMMUNICATIONS CREATE
THE WORKPL ACE ATMOSPHERE
Veikkaus’ actual collective bargaining agreements are negotiated centrally at the union level.
Further, we have the opportunity of making local
agreements. The current collective bargaining
agreement will be effective until 30 September
2007. Veikkaus Oy and Veikkaus’ officials’ association can make local exceptions to this union-level
agreement. In local agreements, the negotiations
cover the provisions of the actual bargaining
agreement, the non-mandatory regulations of the
law, and other issues agreed by the parties. The
condition for starting such negotiations is that
the parties are unanimous on the issues to be
negotiated.
In 2005, Veikkaus’ internal communications
focused on the communication of the new operational models to the staff. This was also prominent
on the agendas of the (12) internal infos. The
webcast system introduced in 2006 enables
Veikkaus’ staff to follow the infos organized at the
main office live on their own computer screens or
as a video clip through the intranet. The webcasts
have proved very popular, since the individual info
broadcasts were viewed up to 237 times.
Seven casual Friday events (“Hilperi” theme afternoons) were arranged for the staff at the headquarters. The objective of these events was to
reinforce the community spirit, offering information about topical issues and the different units in
the company in a casual way. The themes varied
from the World Cup in Football to the celebration
of various special days in Veikkaus.
Veikkaus’ internal communications take place
mainly through the intranet. Moreover, we publish
a personnel magazine YksiXKaksi (1 X 2), which
is distributed to the entire personnel four times
a year. The magazine provides background and
specifies the themes dealt with in the daily communications via the intranet.
COOPERATION BETWEEN EMPLOYEES
AND EMPLOYER
Of Veikkaus’ staff, 52.5 % are members of Veikkauksen Virkailijat ry (Veikkaus officials’ association), a trade association under the Trade Union
SUORA . We do not keep a record of the trade union
membership of the rest of the staff.
Veikkaus is a member of Employers’ Association
of the Special Branches, which belongs under the
SOLOIST DANCER OF THE NATIONAL BALLET OF FINL AND MINNA TERVAMÄKI
“Words are so limited; I guess that’s why I became a dancer.”
29
ENVIRONMENTAL
RESPONSIBILITY—NATURAL
PART OF VEIKKAUS’
OPERATIONS
Veikkaus wants to bear its responsibility for the environment. Thus, we take into
account the environmental perspective in all our operations. In 2006, we paid
special attention to, e.g., energy consumption and the environmental considerations associated with office work.
Gaming takes place mostly electronically. Its most significant environmental effects occur primarily at the end of the production chain, at the points of sales.
Gaming generates waste mainly in the form of playslips, instant tickets, and
receipt rolls of online and instant lottery terminals, and materials used for promotional campaigns. The materials Veikkaus delivers to its points of sales, such
as playslips, receipts, posters, and instruction leaflets, together with their cardboard wrappings, are recyclable. All of the plastic wrapping materials can be
burnt, so they can be sorted as plastic waste or energy waste. In the course of
the year, our retailers were given instructions on how to sort waste correctly.
»
31
»
Service calls at points of sales
BY SERVICE DISTRICT
2006
2005
2004
1,553
1,536
1,584
Tampere
462
488
607
Kuopio
398
411
489
Oulu
409
369
444
Outsourced terminal changing service
758
773
780
Other than service calls *
1,782
–
–
Total
5,362
3,577
3,904
Vantaa
*
The thermal paper used in the receipts is recyclable, and the paper spools of the receipt rolls
can be collected as energy waste. In 2006, ca.
300,000 receipt rolls were used, which was 20,000
more than in the year before. Our playslip and
receipt roll suppliers are entitled to use the Nordic
Environmental Label.
In 2006 the service function started to make separate non-service calls at points of sales.
Waste generated at Veikkaus’ head office
TONS
2006
Energy waste
23
2005
20.1
2004
–
Recyclable carton
0.6
0.9
0.6
Recyclable paper
31.2
31.6
26.2
Glass
1.5
1.7
2.0
Metal
4.4
2.6
1.1
Treated timber
7.4
9.6
5.7
Plastic
0.2
–
Cardboard
10.8
7.5
–
Mixed waste
1.1
1.7
41.8
Confidential paper
5.9
7.8
6.9
64.6
45.4
–
5.8
4.5
–
Office paper
Biological waste
Waste, Electrical and Electronic Equipment
ca 11
0.1
11.6
Building and renovation waste
Instant tickets
Our playslips are printed on environment-friendly
paper, with printing inks that are primarily plantbased. The playslips are packed in recyclable
corrugated cardboard boxes. In 2006, a total of
135 million playslips were submitted, i.e. 39 % more
than in the previous year. The increase can be explained by, e.g., the brand reform, carried out in the
spring: it brought new playslips to our points of
sales. The old playslips were used along with the
new ones until the end of the year.
ca 26
14.4
3.3
2.4
3.3
2.3
1.6
Instant tickets are not recyclable, but they have
to be destroyed by shredding for security reasons.
In 2006, some 59.1 million instant tickets were
printed, i.e. 6 % fewer than in 2005. Unsold and
withdrawn tickets are disposed of as energy
waste.
Veikkaus Card, launched in the autumn of 2006 is
made of PVC plastic, which is non-recyclable. The
environmental regulations are taken into account
in the manufacturing process of the Card. By the
end of the year, a total of 87,000 cards had been
ordered. Our goal is to replace the traditional
Winnings to Bank Account -forms with the use
of Veikkaus Card. Until now, around 3.5 million
Winnings to Bank Account -forms have been used
annually.
Office paper has been recorded as separate waste since 2005.
The disposal of building and renovation waste is at the subcontractor’s responsibility, which is why there are no figures available
for 2006.
Veikkaus’ headquarters’ consumption of water, electricity, and district heat
2006
32
2005
2004
District heat
2,689 MWh
2,785 MWh
2,791 MWh
Water
5,500 m3
4,000 m3
4,100 m3
Electricity
4,090 MWh
3,750 MWh
3,500 MWh
ABANDONED TERMINALS REUSED
The game terminals used by our retailers last
many years. The current 3,080 online terminals
and 810 instant game terminals that have been
in use since 1997 will be renewed in 2007. The
terminal components and circuit cards of the
equipment count as hazardous waste, but the
mechanical parts can be collected as metal and
plastic waste. The abandoned terminals will be
»
ATHLETE TOMMI EVIL Ä
“I’m cruising around here in the midst of molecules of
oxygen and nitrogen for my own moment, in my own
space. You’re like in a state that you’d normally think
of being for birds and other winged animals… you’re
like away from all this, in the middle of everybody.
This is the whole I’m going through, and no-one’s
gonna go through this whole again after me. Now
you’re loose, there’s nothing that would make
you stick to the earth again. I’m not gonna touch
anything all the others are touching. It’s just a tiny
moment, but it’s so important.”
33
»
delivered to Kuusakoski Oy for secure disassembly.
The valuable components are collected for further
use. Further, some of the old terminals will be delivered to another gaming organization abroad, to
be reused there.
The servicing of the gaming equipment requires
greases, paints, detergents, and solvents that
are classified as hazardous waste. The chemicals
are sorted carefully and delivered to the hazardous waste disposal plant. Our four service offices
generate less than 50 kg of waste in all, of which
the waste generated at the service office at the
headquarters in Vantaa represents 70—85 %.
Veikkaus takes care of the servicing and replacement of the equipment jointly with a subcontractor. Damaged terminals are replaced with new
ones, and equipment that needs repairing is
taken to the office for service. In 2006, the Mean
Distance between Failures, MDBF, for our terminals was 344 days. In other words, each terminal is
serviced once a year on the average.
SAVINGS ON L ARGE ONE-TIME
DELIVERIES
Our terminal maintenance network is dense, covering the entire country. In 2006 we made a total
of 3,580 service calls, of which 758 were bought
from a subcontractor. The year’s special focus
was on the uniform Veikkaus-design of the points
of sales, which manifested itself in the service
function as a total of 1,782 additional calls at the
points of sales. The calls involved, e.g., updating
the points of sales in accordance with the new
image and checking that the campaigns were
properly visible. The kilometres accumulated on
the 4,604 service calls made by Veikkaus’ own
service personnel amounted to a total of 361,300.
Besides the servicing kilometres, a non-specified
number of kilometres accumulated on, e.g., the
work-related travel by the regional managers and
the training personnel.
We aim at planning our product transportation
routes carefully, combining several transporta-
34
tions. Transportations to retailer outlets and sales
offices are managed from a central depot. In 2006
the Logistics Unit delivered 137,000 orders containing, e.g., receipt rolls, playslips, instant tickets,
and products used for marketing and sales promotion. Large one-time deliveries lead to savings on
the transport costs.
In the autumn of 2006 the Logistics Unit piloted a
new order system which enables the combining of
deliveries and transport routes. The objective is to
implement the new system during 2007.
IT ACQUISITIONS LED TO INCREASED
ELECTRICITY AND WATER
CONSUMPTION
tion for the game system reform. In all, Veikkaus
consumed ca. 4,950 MWh of electricity in 2006.
Veikkaus’ head office uses environment-friendly
district heat. In 2006 the consumption of district
heat decreased by 3 % from the previous year. The
decrease can be explained by the warm and dry
year. Water consumption increased by 37 %. The
increase resulted from a bigger need for cooling,
as the number of IT appliances had grown. The
cooling equipment at the head office required the
use of cold water to work more efficiently. In 2007,
they will be replaced by new ones with bigger capacity. Further, the construction work and the dry
summer added to the consumption of water.
EFFECTS OF SORTING MANIFESTED IN
THE AMOUNT OF WASTE
In addition to the headquarters in Vantaa (3.3 ha)
and the district centre in Tampere, we have small
sales offices around the country. They are located
in Vaasa on the west coast, Turku in the south,
Kuopio in the east, and Oulu in the north. We also
have facilities for recreational and meeting purposes in the city centre of Helsinki, in Kirkkonummi
on the south coast (13.3 ha), in Saariselkä, Lapland
(0.3 ha) and in Vierumäki Sports Institute in the
south.
We have paid special attention to the efficient
sorting of waste in Veikkaus. In 2005 the amount
of mixed waste dropped dramatically by 96 %, following the strenuous work done by the Ecological
Team. Sorting has now become an established
part of our activities, since we only generated a
total of 1.1 tons of mixed waste, which is 4 % less
than in 2005.
We only have access to the accurate figures of
energy consumption from the premises owned
by Veikkaus, i.e. from Vantaa, Kirkkonummi and
Saariselkä. The specified consumption details of
the rented facilities are not accessible. The largest
part of Veikkaus’ energy consumption and waste
is generated at the head office in Vantaa, where
there were a total of 283 employees in the year
under review.
The effects of sorting can also been seen in the
amount of biological waste which has increased
more than four times over the previous year. The
collection of biological waste has been made more
effective, e.g., in the staff’s break rooms. A large
part of the waste that was previously treated
as mixed waste is now sorted as energy waste,
which can be used as an additional fuel in, e.g.,
thermal power stations.
The year 2006 was a time for large renovations of
Veikkaus’ offices; this led to increased electricity
consumption. The electricity consumption at the
head office increased by 9 %, as compared with
the previous year. Besides the renovations, the
increase can be traced to the exceptionally big
need for cooling during the hot summer, the new
server acquisitions, and an increase in the number
of electronic appliances due to, e.g., the prepara-
The district sales offices do not have the same
opportunities to sort waste as the offices on the
premises owned by Veikkaus. The offices sort the
waste they generate as best they can, but the
ones which are located in rented offices in large
office complexes, cannot collect, e.g., energy
waste, if the collection is not organized by the
real estate.
THE SPECIALLY REWARDED ECOLOGICAL TEAM
ACTS AT THE GRASSROOT LEVEL
“One percent of the
sales of Nature Instant
are distributed to WWF
and the Finnish Association for Nature Conservation. In 2006, these
funds amounted to over
EUR 75,000.”
Veikkaus’ Ecological Team is a working group established Veikkaus’ employees. It works to carry
out the environmental responsibility in practice
and to promote the staff’s awareness of environmental issues. Thanks to the Ecological Team, we
have invested in the sorting of waste, and the
amount of mixed waste has decreased significantly during the past two years. Nearly all waste that
was still treated as mixed waste two years ago is
now sorted as energy waste.
In 2006, the Ecological Team focused on the saving of energy and the avoidance of excessive consumption of electricity. In the course of the year,
the Team compiled information on these topics on
the intranet and the staff magazine, and organized
various environmental campaigns.
In the spring, dozens of Veikkaus’ employees took
part in the cleaning project of the woodland area
next to the head office in Vantaa. In October Veikkaus participated in the campaign of the Energy
Saving Week arranged by Motiva Oy. During that
week, the Ecological Team distributed information
about saving energy and heat, offered advice to
users of the photocopiers on how to make twosided copies and organized a recycling forum
where the employees could exchange their old belongings and talk about recycling.
During the month before the Energy Saving Week,
the Ecological Team attached stickers on the doors
at the head office, drawing people’s attention to
the saving of energy. The messages printed on the
stickers included: “Switch off in time” and “Even 10
minutes are worth it”. The campaign was rewarded
as one of the best entries in the “From Idea into
Event” competition for the realization of the
Energy Saving Week.
At the end of 2006 Veikkaus decided to join the
cooperative programme Green Office organized by
WWF, with the target of promoting sustainable
development and the environmental perspective in
the office environment.
35
ECONOMIC RESPONSIBILITY
FOR EVERYONE’S BENEFIT
Veikkaus’ economic success benefits the entire Finnish society: customers, retailers,
staff, and the owner, the Finnish State. Veikkaus funds are used to finance over a
thousand different beneficiaries. In practice, this means that every Finn benefits
from our funds—whether they played or not. Veikkaus generates versatile value to
society. In 2006, we contributed a total of EUR 481.8 million to the State.
“All Finns
are winners,
whether
they play or
not.”
Finns played Veikkaus games for EUR 1,361.2 million in 2006. Over a half of this
amount was returned to the players as prizes, EUR 701.8 in all. Of the other half, Veikkaus returned the majority, i.e. a total of EUR 387.2 million to the Ministry of Education
to be further distributed to the good causes. Further, Veikkaus contributed EUR 14.0
million of the funds from the previous years to the Ministry of Education.
The distribution of Veikkaus funds is laid down by law. They cannot be allocated to purposes other than those determined in the lottery legislation: to
promote sports, science, arts, and youth work. Veikkaus does not distribute
PRIZE PAYOUT TO
PL AYERS
EUR MILLION
the funds on its own, nor does it make donations to other beneficiaries.
Veikkaus paid a total of EUR 80.6 million of tax during the year under re-
539 561
631 679
702
700
600
view: EUR 62.9 million of lottery tax and EUR 17.7 million of VAT. The retai500
ler commissions amounted to EUR 80.3 million. Veikkaus’ operating costs were
EUR 108.5 million, of which EUR 21.6 million were personnel expenses.
400
300
Contributions and taxes paid to the State in 2006
Returned profit to the Ministry of Education in 2006
Contribution from the prize fund of the previous years
Taxes
Total (35.4 % of the turnover)
200
387.2 EUR million
14.0 EUR million
100
80.6 EUR million
481.8 EUR million
0
2002 2003 2004 2005 2006
37
VEIKKAUS GAMES PROVIDE LIVELIHOOD
TO MANY PEOPLE
Veikkaus employs directly ca. 370 Finns. However, our employment effect is far more extensive than that. Our retailers employ
around 15,000 game sales clerks whose livelihood depends largely
on Veikkaus games.
Further, the different beneficiary organizations financed with
Veikkaus funds employ thousands of people. If we count the multiplier impacts of the production, services, and consumption related to
Veikkaus’ and its beneficiaries’ activities, the employment effect is vast.
Thanks to the exclusive right system, Veikkaus has wide societal significance. The valuable work among, e.g., children and young people, sports
associations, and several arts organizations, would not be possible to the
current extent without Veikkaus funds. Without the support provided by
the euros spent on our games, the funding of scientific research would not
be possible at the present level, and many innovations would be left unmade.
It has been estimated that the total employment effects of the three Finnish
gaming organizations Veikkaus, the Slot Machine Association RAY, and Fintoto,
would amount to 50,000 person years of employment.
EFFICIENCY BASED ON LOW EXPENSE LEVEL
AND NEW TECHNOLOGIES
Veikkaus is one of the most efficient gaming companies in the world. Our expenses
represented a mere 7.97 % of the turnover in 2006. Our small company of just a couple
of hundred employees generated a profit of over EUR 400 million.
Our extraordinary efficiency is based on, e.g., the ability to apply the newest technologies to gaming. Finns seem to be especially apt to adopt innovations of IT and data communications. For example, the internet connections in Finnish households have developed
quickly over the past few years. Veikkaus’ game sales via electronic channels increased by
nearly 28 % in 2006.
Veikkaus worked to make its internal operations more uniform and efficient in the year under
review. Our training and development functions focused on supporting the managers to lead
their organizations better in accordance with the new model of operations. Human resources
continued to be allocated to activities that were considered essential from the point of view of
the strategy in 2006.
The growth expectation budgeted for Veikkaus funds in 2007 is EUR 397.3 million. There seems to
be a growing demand for games with high event frequency and smaller margins. Thus, we have to
work in a very cost-effective manner to secure the growth of our profit.
38
DEVELOPMENT OF TURNOVER
EUR MILLION
348 371
395 397
403
500
400
300
200
100
0
2002 2003 2004 2005 2006
VEIKK AUS OPERATING EXPENSES
% OF TURNOVER
7.40 7.50 7.20 7.20
7.97
10
8
6
4
2
0
2002 2003 2004 2005 2006
PROFESSOR HELENA RANTA
“It’s hard to say how this work has affected my
relationship with my own death. Death is just a part
of life. You’ve got to be able to experience sorrow
and joy, no matter if you did the most dreadful
work of all.
I feel hatred, but I can’t show it, because it’s
extremely important to keep unbiased in the
research you do in the conflict areas. Hatred gets
you when you see killed children; children are never
to blame for whatever has happened.
Music acts as a counterbalance to working. When I
listen to music, especially requiems, I weep freely.
I feel that my soul has found peace.”
39
GAME PROVIDER’S GREAT RESPONSIBILITY
A gaming organization operating on the basis
of an exclusive right has a great responsibility.
Veikkaus must be able to offer products interesting enough to make Finns want to keep playing
legal and controlled games. Whilst developing our
offerings, we must take into account the possible
related security issues. Our offerings are aimed at
a wide participation with reasonable stakes and
the prevention of problem gambling.
Veikkaus offers Finns a secure and reliable gaming
environment, together with the opportunity to win
money. A positive implication of the exclusive right
system is that the bulk of Veikkaus’ proceeds are
allocated to the promotion of arts, sports, science,
and youth work. The euros spent on our games
do not flow out of the country, but over a million
euros are channelled through Veikkaus games to
support the well-being of Finns every day.
EXCLUSIVE RIGHT PRINCIPLE ENJOYS
EXTENSIVE SUPPORT
Although the gaming systems of different countries differ from each other, they have a common
basis: the system of the exclusive right is the predominant model in Europe, as well as elsewhere in
the world. The overwhelming majority of the EU
Member States are in favour of a national gaming
system similar to the one we have in Finland. In
February 2006, the European Parliament decided
to exclude gaming from the scope of the Services
Directive. Before that, all EU Member States had
expressed their wish that gaming should be left
out of the scope of application of the Directive.
This means a uniform view that the decisions
concerning gaming should be made at the national
level even in the future.
The European Union does not have separate
legislation that would cover gaming in particular.
However, the European Court of Justice has issued several rulings on gaming. Not once has the
ECJ questioned the exclusive right as such in its
40
decisions. Its rulings have been in favour of the
Member States’ right to restrict game provision by
foreign operators outside their territory.
At the beginning of March 2006, the European
Commission sent a letter of formal notice regarding sports betting and pools games to Finland and
six other Member States of the EU. The formal
notice was based on several complaints about the
national exclusive right system applied to betting.
Finland sent its response to the Commission at
the beginning of June. The European Commission
will be commenting on Finland’s response in 2007.
EU MEMBER STATES
IN ONE UNITED FRONT
Within the past year, the Courts of Justice in
Finland, Sweden, Norway, and Denmark have
handled gaming-related cases. The rulings issued
in all of the three countries have been incontestably in favour of the exclusive right model applied
to national gaming activities, indicating the approval of the ways of operating adopted by the
national lotteries. The Finnish Supreme Court
issued its judgement in a case concerning Åland’s
Slot Machine Association PAF in February 2005.
The Supreme Court considered that the Finnish
Lotteries Act is in compliance with the decisions
made by the ECJ. Our national legislation, gaming
policy and the measures taken by the authorities
are consistently in favour of the exclusive right,
and the national gaming organizations operate in
strict compliance with these guidelines.
The National Gaming Forum, set by the Ministry
of the Interior, published its guidelines for a
national gaming policy in March 2006. According
to the Forum’s view, the Finnish gaming system
has a sound basis. The Forum believes that the
exclusive right system in which the holder of the
license is controlled by the State is an efficient
way of preventing the social problems caused by
gaming.
“The exclusive
right-based
system is
prevalent all over
the world.”
According to the National Gaming Forum, there is
no need for immediate changes in the Finnish legislation. However, it recommends that the marketing of games should be regulated and the current
age limits should be laid down by law. The gaming
organizations have already made limitations to
marketing and imposed restrictions on gaming by
themselves. Further, the Forum recommends that
the independent monitoring and research of detriments caused by gaming should be reinforced. As
regards the law amendments concerning marketing, age limits, and supervision by the authorities,
the preparations should be started without delay.
ACTIVE INTERNATIONAL ENGAGEMENT
Gaming has a strong foothold in society, although
the European system of the exclusive right is
under systematic attacks. Extensive international
cooperation has a central influence on the future
of the national exclusive right system.
Veikkaus is actively involved in both the European
organisation (European Lotteries, EL) and the
global organisation (World Lottery Association,
WLA) of the gaming sector. Veikkaus’ CEO Risto
Nieminen is the Vice President of WLA and a
member of the Executive Committee of EL. From
Veikkaus’ perspective, the most important task of
the two international organizations is to promote
the interests of their members, defending the
principle of the exclusive right at the national
level. For this purpose, comprehensive exchange
of information, mutual communication and regular
meetings between specialists in the field are important in the international cooperation.
In February 2006 WLA member organizations
signed a joint document containing the principles
of responsible gaming activities. This was made
to ensure that the member organizations will keep
securing the continuity of the national exclusive
right principles and that they will commit themselves to the promotion of social responsibility
in their organizations in cooperation with their
stakeholders. In addition to this, the WLA members
approved a model of responsible gaming operations in November. The purpose of the model is to
guide, promote, analyse and compare the activities of the member organizations. The organizations have thus proved their strong commitment
to the promotion of social responsibility.
European Lotteries (EL) and its members worked
to establish the principles of responsible gaming
in the year under review. The aim is to advance
responsibility and to support the necessary
practical measures to attain responsibility at the
European level, as well as to set objectives to the
European member organizations that are even
higher than those of the global level.
RULINGS BY THE EUROPEAN
COURT OF JUSTICE
Schindler
1994
Läärä
1999
Zenatti
1999
Anomar
2003
Gambelli
2003
Lindman
2003
41
ACTOR MIKKO LEPPIL AMPI
“It’s the moment you’ve been rehearsing for; the moment
you’ve been sweating and working for. It must feel disgusting
in a positive way; if it didn’t feel like anything, it would be
unimportant to you.
Occasionally, it makes you think when you’re going onto the
stage or in front of the audience and you feel like I don’t want to
go there, this doesn’t feel good, why am I doing this. Why do you
get yourself into a situation where you feel like vomiting because
you’re so excited?
But maybe that’s exactly what’s so fascinating about wanting to
overcome it, yourself. That’s when you appreciate your audience
and the people you’re working with.”
42
MINIMISING ABUSE AS A JOINT OBJECTIVE
Guaranteeing the players’ legal protection and
preventing criminal activities are well-grounded
justifications for the exclusive right system. Finns
can play our games securely, since we make use of
several different monitoring and control systems
in our activities, and our information security is
certified. Further, our games are closely monitored
by the Finnish authorities.
Certification and DNV conducted one follow-up
audit related to the certificates. The audits
showed that Veikkaus’ security system fulfils the
standard requirements.
EXTERNAL SUPERVISION GUARANTEES
RELIABILITY
In spite of careful supervision, gaming always
involves risks. We do not have an infallible way
to prevent criminal ventures even in the gaming
business.
Veikkaus gaming activities are supervised by the
Lottery and Firearms Administration Unit of the
Ministry of the Interior. The Ministry also approves
the rules of the games and appoints the supervisors who control the draws and verify that the
rules are complied with. Our drawing equipment,
e.g., the legendary Lotto draw machine, is under
the custody of the supervisors, instead of being
controlled by Veikkaus. The supervisors also control the results of the pools and betting games, as
well as the number of prizes.
INTERNATIONAL SECURITY
COOPERATION BETWEEN GAMING
ORGANIZATIONS
in connection with cases of suspected fraud in
2005. World Lottery Association ( WLA) and the
Federation of International Football Associations
signed a respective agreement in 2006. In practice
this means that the gaming organizations will inform each other and UEFA , if they detect deviant
gaming behaviour in football matches belonging
under the control of UEFA and FIFA .
During the year under review, Veikkaus and the
other EL member organizations exchanged information weekly. Veikkaus complies with a similar
“Finns can play Veikkaus games
securely on the web, since we apply
several systems of monitoring and
control to our activities.”
Veikkaus’ extensive security system also ensures
the quality of our activities. We comply with a
comprehensive risk management system (ERM).
The ERM framework determines the risk management processes in the company, together with the
related responsibilities and procedures. The ERM
framework is integrated in the planning processes
of the company’s activities in a way which ensures
the regular and many-sided evaluation of the risks
inherent in the business objectives and the company’s preparedness for tackling them.
Veikkaus takes into account both the risks involved in its own operations and those involved
in its partnerships. We monitor the distribution of
stakes carefully, and follow the sports events to
which our betting objects are related in order to
spot possible deviations. Veikkaus’ supervision
and control systems will give the alarm if they
detect clear deviations in, e.g., game sales. If we
notice that, e.g., one betting object attracts exceptionally big bets, we can close the object.
The external auditors of the standards are Det
Norske Veritas (DNV ), which audits Veikkaus’
compliance with the World Lottery Association
Security Standards WLA SCS 2003-10-10 (in continuation, WLA SCS 2006), and Inspecta Certification,
which audits the compliance with the Information
security standard BS 7799—2:2002 (in continuation ISO 27001:2005). In 2006 both Inspecta
Moreover, the national gaming companies from
different countries work in close cooperation
in security matters. The cases of suspected
fraud related to football matches were among
heated topics of debate in Finland, as elsewhere
in Europe. European Lotteries (EL) and the Union
of European Football Associations UEFA signed a
cooperation agreement for information exchange
practice regarding the Finnish sports events with
all the ball game leagues whose matches are used
as betting objects.
VEIKKAUS AND RETAILERS ACT IN
COMPLIANCE WITH THE ACT ON MONEY
L AUNDERING
A player’s identity must be verified if the stake
or several interlinked stakes s/he places exceed a
total of EUR 3,000. Further, although the euro limit
is not exceeded, a report must always be filed in
cases of suspected misuse. Veikkaus and its retailers are under obligation to report suspected cases
of money laundering to the authorities. The prevention of money laundering and the coordination
of the related preventive measures belong under
the Centre for investigation of money laundering
of the National Bureau of Investigation.
43
VEIKKAUS RETAIL NETWORK
—PERSONAL SERVICE IN ALL PARTS OF FINLAND
The vast majority, ca. 85 % of Veikkaus’ turnover,
comes from gaming via retailers, while the remaining ca. 15 % come from the various electronic channels. Veikkaus’ most important electronic sales
channel is the internet gaming service, which has
increased its popularity steadily year by year. As
for the retail outlets, they offer our customers the
chance to receive personal service.
The retailers are Veikkaus’ face towards its customers. Our sales network is one of the densest
per capita in the world. At the end of 2006, we had
ca. 2,900 online points of sales and ca. 650 points
of sales selling only instant tickets.
Kiosks and convenience stores have maintained
their position as the most popular outlet type for
long, but the overall trend towards centralized
trade is also reflected in player behaviour: they
submit their entries more and more often in large
grocery stores. Cooperation with large trade
chains, such as Rautakirja, the K-Group and the
S-Group enables us to work efficiently and conceptualise our operations, as well as to market our
products everywhere in Finland.
The points of sales are paid an average commission
of 7% of Veikkaus’ game sales. In 2006 we paid a
total of EUR 80.3 million of retail commissions.
Veikkaus pursues business-focused retail policy.
All our retailers have sales objectives which they
have to attain to ensure that they can continue to
sell our games. However, we also have around 250
separately identified service points of sales to secure the accessibility of our services in regions and
places where they would not be offered if business
operations were used as the sole criterion.
INVESTING IN RETAILER SKILLS
AND MOTIVATION
Points of sales and sales personnel have a central
role in our contact with the customers: the sales
44
clerks are Veikkaus’ face towards its customers. In
all, Veikkaus’ points of sales employ some 15,000
game sales clerks. Veikkaus offers them basic retailer training and aims at improving their professional skills through regular further training.
In the year under review, Veikkaus’ training personnel organised a total of 352 courses in game
sales in different parts of the country, with nearly
4,400 participating game sales clerks. In addition
to offering know-how on games and game sales,
the training includes a section on responsible
gaming. This section covers questions related to,
e.g., gaming control and problem gambling.
Motivated sales personnel are the most important factor in successful retail sales. In 2006 we
invested especially in meeting our game sales
clerks and retailers face-to-face. The theme
events and chain-specific motivating events
attracted a total of 2,600 game sales clerks and
retailers. Further, a thousand sales clerks took
part in Veikkaus’ Retailer Cruise in the autumn. In
the course of the year, we also organised competitions for our game sales personnel, with trips to
various foreign destinations as prizes. We also had
a bonus system to reward our points of sales.
In 2006, Veikkaus’ sales organization focused on
field work more strongly than before. The sales
managers’ responsibilities were made clearer,
and two new regional sales managers started
their work. The maintenance responsibilities of
Veikkaus’ points of sales have been divided regionally between nine regional managers.
Implementing the brand reform started in the
spring is a long project: in 2006 300 out of Veikkaus’ 1,800 Key Red Concept points of sales were
updated with product and business labels following the new image. The points of sales were given
instructions on how to make the campaigns visible
in order to achieve uniform visibility. Veikkaus Card,
launched in the autumn, enabled our customers to
play identified even at our points of sales.
NEW TERMINALS AT POINTS OF SALES
In the autumn of 2006, we launched a reform
of our gaming system and terminals, which will
last until 2008. The terminal reform was started
with the installation of new data communications
connections in August. This entailed a broadband
subscription which is the largest in the entire
country, with the installation of new connections
at a total of 3,200 points of sales.
FOCUS ON THE FIELD
We invest in the development of our sales network, serving our retailers as efficiently as possible. We supply our retailers with online and instant
game terminals, taking care of their servicing and
maintenance, and establishing the necessary data
connections. The marketing and sales promotion
materials are included in Veikkaus’ retail agreements. We also inform the sales personnel regularly on the different developments in the field to
support them in their sales work. The game sales
clerks also have access to help in different sales
situations and problems through a special retailer
helpline, which is available every day during the
opening hours of the online system.
Along with the terminal reform, Veikkaus will be
giving up separate instant terminals. In December
2006 Veikkaus gave notice of termination to 700
points of sales that had been selling nothing but
instant tickets. The agreements were terminated
at the end of January 2007. The sales of instant
tickets have had little commercial importance to
both Veikkaus and the points of sales. The liveliest
instant ticket-selling outlets were granted online
rights in connection with the terminal reform. In
2007 Veikkaus has ca. 3,200 points of sales offering all of Veikkaus’ services to their customers.
DISTRIBUTION OF SALES
PER OUTLET T YPE
CLOSE TO OUR CUSTOMERS EVERY DAY
2006
KIOSKS AND CONVENIENCE STORES
46.5%
LARGE GROCERY STORES
16.9%
INTERNET SALES
15.1%
SERVICE STATIONS
11.4%
SMALL GROCERY STORES
3.8%
CAFES, RESTAURANTS
3.1%
OTHER POS
3.2%
In the year under review, Veikkaus invested especially in the development of customer relations
management and customer-focused operations.
Veikkaus’ offerings are developed and individualized to better meet the needs of different customer groups. This demands an ability to collect,
refine, and make use of information related to the
customer relations. Thus, we made considerable
investments in, e.g., the reinforcement of customer data systems and brand enforcement in 2006.
Veikkaus’ new image and brand identity, based on
the company’s brand strategy, were launched in
April. It is important that our players can recognize
the games that we provide as Veikkaus’ products.
That way they will know when they are faced with
products offered by a responsible gaming operator working for the benefit of the entire Finnish
society.
In 2006 Veikkaus was present where many
Finns spent their free time: e.g. at the Nordic
Travel Fair Matka, the Finnish Housing Fair,
World Championships in the Nordic Tango
(Tangomarkkinat), and Pori Jazz. The new Jade
Warrior Instant, launched in October, opened up a
new form of cultural cooperation for us, associating Veikkaus with the world of the cinema.
YLE and Finnish Sport Television Company signed a comprehensive cooperation agreement in
November, with the purpose of guaranteeing
Finns the opportunity to continue to watch as
much sports as possible on the free-to-air channels. Making sports broadcasts widely accessible
constitutes an essential part of Veikkaus’ customer strategy.
RETAIL COMMISSIONS
EUR MILLION
74
77
81
81
80
90
GAMES OFFERED IN EASILY
ACCESSIBLE SETTINGS
We continued to implement our customer strategy at the end of September, when we introduced
a customer card, Veikkaus Card. Veikkaus Card is
easy to use whilst playing at our points of sales,
and the possible prizes are paid directly to the
customers’ bank or gaming accounts. Veikkaus
Card holders are issued an internet gaming ID,
which enables them to follow their gaming history at Veikkaus’ website. We also reformed our
website in 2006, making it easier to use and more
functional than before. Our game offerings were
also developed further.
80
70
60
50
40
“Veikkaus wants to be
present in places naturally associated with
dreams, entertainment,
and viewing sports.”
30
Veikkaus wants to be present in places that
have to do with dreaming, free time and sports.
Accurate customer data and customer recognition
require strong responsibility. Gaming should be
good entertainment without endangering the
players’ financial capacity.
20
10
0
2002 2003 2004 2005 2006
45
PLAYERS CHOOSE THE INTERNET MORE OFTEN
More and more Finns like to play Veikkaus games
over the internet, although the majority of our
players still want to make their entries with a retailer. Our internet gaming service www.veikkaus.
fi is one of the biggest web stores in Finland
with its annual turnover of over EUR 205 million.
Besides the internet, our players can also access
the games via wap terminals and by sms.
Veikkaus’ internet gaming service was described
as clear and convenient in the Online Shops
and Usability Survey published by TNS Gallup
Finland in September. The visual design of our
website was reformed following the new brand in
September. At the same time, the internet gaming
service was made faster and easier to use. In a
survey carried out by the Finnish market research
company Taloustutkimus in the autumn of 2006,
internet users rated the www.veikkaus.fi service
as very good.
TURNOVER FROM
INTERNET GAMES
EUR MILLION
57
73
As compared to the year 2005, the sales from the
internet gaming service increased by 28 %, making
up ca. 15.1% of Veikkaus’ turnover (12.2 % in 2005).
At the end of 2006, we had nearly 360,000 registered internet players. Since Veikkaus only offers
internet games to Finnish citizens, we control the
identity of people registering as players with the
Population Register Centre. Playing on the internet is subject to an age limit of 18 years.
The new Veikkaus Card, which we have offered to
our customers since September, enables identified playing event at retail outlets. Further, the
Veikkaus Card holders are granted a user ID to our
internet gaming service, by which they can follow
their entire gaming history on the web.
Every week, around 150,000 players choose our
internet gaming service to take part in the games
we offer—and the figure keeps increasing. In all,
we recorded a total of 65 million gaming transactions at our website. Sports games are the Finnish
favourites on the web, but Lotto and Keno are
also popular.
In December 2006, ten years had passed since
Veikkaus started to sell its games on the internet as the first national lottery in the world. We
started with a pilot group in 1996, and the service
was opened to the public in 1997. Since then,
internet gaming has been increasing constantly:
in December 2006, we attained a weekly sales
record of EUR 4.9 million on the web, 16 % of our
total weekly sales.
111 160 205
250
200
Turnover by game group in internet gaming 2006
150
100
50
EUR million
Share in %
Change in %
Betting games
94.2
46.0
21.1
Lotto games
45.0
22.0
37.2
Other sports games
18.3
8.9
10.9
Other games
0
2002 2003 2004 2005 2006
46
Total
47.5
23.1
42.3
205.0
100.0
27.8
MUSICIAN PAUL A VESAL A
“Music takes you so much further in all senses. For
some people, it helps in maths, and for others, it’s such
a channel for expressing your feelings that you can’t
vent things like that anywhere else.
When I used to go to violin lessons, they were the only
moments of contact with an adult; moments when just
the two of us were there, and the adult was there just
for me.
Throughout my childhood and as a teenager, the adult
was always there, the person with whom I would meet
at a symbolic level, as it were, and concentrate on the
music that was still not all that serious. If you played
wrong, nothing happened.”
47
DREAMS, SPORTS, ENTERTAINMENT
Gaming is not always just about money. Veikkaus
wants to offer its customers comprehensive and
pleasant gaming experiences, a hint of excitement, an opportunity to measure one’s own
knowledge, a chance to dream and spend free
time in an enjoyable way. Finns are eager players:
according to a recent survey, ca. 70 % play some
Veikkaus game at least once a year, and as many
TURNOVER OF LOTTO GAMES
EUR MILLION
460
455 494
496 508
500
LOT TO
VIKING LOT TO
as 42 % play at least once a week. (Atlas Survey,
TNS Gallup 12 /2006).
We have a large number of players, but the stakes
are small: In 2006, Finns played our games for an
average of EUR 260 per capita, i.e. for five euros
a week.
During the year under review, a total of 339 million
gaming transactions were recorded in Veikkaus’
gaming system. We paid out over 61 million prizes
to players, worth EUR 701.8 million in all. There
were 88 large prizes of over EUR 168,188, of which
19 amounted to over one million euros. By the end
of the year 2006, a total of 310 Finns had become
millionaires by playing Veikkaus games.
400
LOTTO, KENO AND FIXED ODDS
BETTING —FINNISH FAVOURITES
300
The popularity of Fixed Odds Betting and Keno
continued in 2006. Fixed Odds Betting is Veikkaus’
by far most popular sports game. Its sales
amounted to EUR 139 million (+4.0 %) in 2006.
200
100
0
2002 2003 2004 2005 2006
TURNOVER OF SPORTS GAMES
EUR MILLION
302
288 329
366 369
500
LIVE BET TING
MULTIBET
FIXED ODDS BET TING
400
RESULT ODDS BET TING
FOOTBALL POOLS
300
WINNER ODDS BET TING
The daily drawn Keno continued to excel. With its
sales of EUR 268.8 million (+9.1%), Keno ranked
as Veikkaus’ second most popular game. Keno
passed the one-million euro total sales limit in
November.
Lotto continued its career as the Finnish favourite: it was sold for a total of EUR 429.7 million
(+1.9 %) in 2006. The largest Lotto prize of the year,
EUR 4.3 million was landed in Helsinki in July (round
30). The sizeable prize was the third biggest in the
history of Finnish Lotto.
V-GAMES
200
LEAP TO CULTURE AND
ENTERTAINMENT
100
0
2002 2003 2004 2005 2006
48
Recently, Veikkaus has been investing in internet
instants, sold on the web. In the year under review,
we continued to offer new instant games on the
internet for our customers to scratch out: Football
Instants and Ässä eInstant, based on the popular
Ässä ticket. Finns really seem to like their internet
instants: in all, they were played for the worth
of EUR 8.4 million in 2006. The Finnish favourite
among the instant games was Casino Instant,
which turned 20 in 2006. Veikkaus’ oldest instant
game Ässä was accompanied by a new game MiniÄssä Instant in October. The game soon gained
wide popularity.
In the year under review, Veikkaus took over a
new area, as it launched product cooperation
projects with events in the worlds of culture and
entertainment. The former Labyrinth Instant was
given a new design and turned into Satumaa (The
Fabulous Land) Instant and Jazz Instant. Later in
the autumn we broadened the scope of cultural
cooperation to cover the world of the cinema, as
Labyrinth Instant was designed after the FinnoChinese film as the Jade Warrior Instant.
At the beginning of the year, Veikkaus launched
the sales of the new game SuperMultibet. In this
game, the players are expected to guess the results of four different football matches. Multibet,
which has been developed by Veikkaus and played
since 1998 is one of Veikkaus’ most popular sports
games. In 2006, Finns played Multibet with a total
of EUR 87.7 million.
In the spring, Veikkaus launched a second Joker
game, Wednesday Joker. It was designed especially as an add-on game of Viking Lotto, which is
drawn on Wednesday. The launch of Wednesday
Joker affected the total sales in a positive manner.
SPORTS EXPERTS WERE REWARDED
FOR THEIR SKILLS
Along with the games, Veikkaus organized two
Finnish Championship competitions in pools and
betting games in 2006: in V75 and Football Pools.
The competition for horse-race enthusiasts, which
took place in April and May, attracted 7,500 players. As for the Finnish Championships in Football
Pools, it drew as many as 25,000 participants.
The prizes were attractive, as well: the Finnish
Champion in V75 knowledge won a trip to a major
horse racing event in Paris, whereas the Football
Pools Champion was flown to a British Premier
League match.
TURNOVER OF INSTANT GAMES
EUR MILLION
144
144 147
139 142
500
CASINO INSTANT
HOROSCOPE INSTANT
CHRISTMAS CALENDAR
INSTANT
400
L ABYRINTH INSTANT
300
NATURE INSTANT
MINI-ÄSSÄ INSTANT
LUCKY WORDS INSTANT
200
ÄSSÄ INSTANT
NATURE eINSTANT
100
HOROSCOPE eINSTANT
ÄSSÄ eINSTANT
0
2002 2003 2004 2005 2006
FOOTBALL INSTANT
TURNOVER OF OTHER GAMES
EUR MILLION
183
272 292
315 343
500
SATURDAY JOKER
WEDNESDAY JOKER
KENO
400
MEDALS GAME
VEIKK AUS BINGO
300
200
100
0
2002 2003 2004 2005 2006
49
LOT TO
KENO
Life could be different.
Excitement for every day of the week.
HIGHLIGHTS IN 2006
Lotto turned 35.
Played for over EUR 1 billion already.
L AUNCH YEAR
1971
2002
DEVELOPMENT OF TURNOVER, EUR MILLION
395 388 421 422 430
104 198 220 246 269
500
500
400
400
300
300
200
200
100
100
0
0
2002 2003 2004 2005 2006
2002 2003 2004 2005 2006
*
TURNOVER 2006
EUR 429.7 million (+1.9%)
SHARE OF ALL GAMING
31.6%
19.7%
PL AYED PER CAPITA IN 2006
EUR 82
EUR 51
L ARGEST PRIZE IN 2006
EUR 4.3 million (round 30/06)
EUR 600,000 (round 24/06)
L ARGEST PRIZE EVER
EUR 5.7 million (round 45/04)
EUR 1 million (round 41/05)
NUMBER OF PRIZES 2006
6.6 million
35.8 million
* Since round 22.
50
FOOTBALL POOLS
FIXED ODDS BET TING
MULTIBET
This is where it all began.
Betting booster.
Finnish Betting hit.
Finnish Championships attracted over
25,000 Football Pools fans.
Up to 300 weekly objects.
SuperMultibet launched in January.
1940
1993
1998
55
58
54
54
50
62
52
97
134 139
121 119
500
500
500
400
400
400
300
300
300
200
200
200
100
100
100
0
0
2002 2003 2004 2005 2006
83
87
88
0
2002 2003 2004 2005 2006
2002 2003 2004 2005 2006
**
EUR 50.0 million (– 7.3%)
87,7 million (+0.2%)
3.7%
10.2%
6.4%
EUR 10
EUR 27
EUR 17
EUR 148,139 (round 40/06)
EUR 199,858 (round 35/06)
EUR 287,504 (round 39/06)
EUR 539,220 (round 51/03)
EUR 199,858 (round 35/06)
EUR 412,856 (round 40/01)
870,000
2.3 million
515,000
** In the Result Odds betting category until 2003.
51
GOVERNANCE
Veikkaus’ mission is to generate versatile value to
Finnish society by operating games reliably and
responsibly. Veikkaus is a state-owned limited
company which belongs under the management
of the Finnish Ministry of the Interior. The State’s
responsibilities for the company’s operations are
determined solely by its share capital.
Veikkaus’ governance is based on the Lotteries
Act (1047/2001) and the gaming licence granted
by virtue of the Lotteries Act, as well as the
Finnish Companies Act and the company’s Articles
of Association. The Council of State has granted
Veikkaus a licence to operate lotteries, betting,
and pools games. The current gaming licence will
be effective until the end of 2011.
GENERAL MEETING
Veikkaus’ superior administrative organ is the
General Meeting, which appoints the Board of
Directors and the Supervisory Board in accordance
with the Articles of the Association. During the period under review, two General meetings convened,
which were attended by the Minister of Culture as
the representative of the Finnish State; officials of
the Ministry of Education, the chairmen of the company’s Board of Directors and Supervisory Board, as
well as company representatives. Further, an extraordinary General Meeting was held in February,
where it was decided that Veikkaus would make
an additional return of funds to the Ministry of
Education from its contingency fund.
BOARD OF DIRECTORS
According to the Articles of Association of the
company, the Board of Directors has five members at the minimum and seven members at the
maximum in addition to the chairman. In 2006 the
Board of Directors had eight members including
the chairman. The General Meeting appoints the
Chairman and Vice Chairman of the Board for two
calendar years at a time. In accordance with a
52
Annual report 2006
recommendation on state companies issued by
the Ministry of Trade and Industry, none of the
members of the Board belong to the company’s
executive management.
The tasks and responsibilities of Veikkaus’
Board are determined according to the Finnish
Companies Act. The Board considers all issues
that have far-reaching significance for the company. These include the company’s strategic guidelines and core investments, the annual operation
plan, and the budget, as well as the monitoring of
all of them. The Board also appoints the CEO and
the Vice Presidents, and determines their salaries
and other benefits.
The Board of Directors convened nine times in
2006, and the participation percentage in the
meetings amounted to an average of 96. The
Board drafts an annual operations timetable, with
a schedule of the meetings and the topics handled
in them. At the end of the year under review, the
Board conducted a self-evaluation of its activities
and their effectiveness.
The Board has two internal committees, the Audit
Committee and the Personnel Committee.
The Audit Committee
– assesses the financial reporting system and
– works to develop the financial statement and
annual report
– monitors the legality of the operations, the possible security risks, and the external auditing.
The Personnel Committee
– determines the general principles of compensations to the management and the staff,
– prepares the management’s employment contracts
– is in charge of the management’s development
plans.
The committees report to the Board on their
regular work. In 2006 the members of the Audit
Committee were: Ari Lahti (Chairman), Jouko
Ahtola, Leena Paananen and Paula Tuomikoski.
The members of the Personnel Committee were
Juha Niemelä (Chairman), Timo Kenakkala, MaijaRiitta Ollila and Matti Saarinen. The Personnel
Committee convened four times and the Audit
Committee six times in the course of the year
under review.
In accordance with the stock market practices, the
members of the Board file annual insider reports,
for the evaluation of their independency. On the
basis of the reports, all the members of Veikkaus’
Board are independent of the company.
SUPERVISORY BOARD
Veikkaus’ Supervisory Board has 14 members, one
of whom is a representative of the personnel. The
General Meeting elects the Supervisory Board for
a two-year term at a time. The Supervisory Board
appoints two of its members to be the Chairman
and Vice Chairman for one year at a time. In 2006
the Supervisory Board convened six times.
The Supervisory Board is responsible for supervising the management of the company by the Board
of Directors and the CEO, and for issuing a statement on the financial statement and Auditors’
report to the General Meeting.
COMPANY MANAGEMENT
The CEO is in charge of the day-to-day management
of the company in accordance with the Finnish
Companies Act and the instructions and orders
given by the company’s Board of Directors. The
Executive Team assists the CEO in this task. During
the year under review, Veikkaus’ Executive Team
consisted of seven members in addition to the CEO.
The Executive Team convened 33 times in 2006.
The Board of Directors appoints Veikkaus’ CEO and
the Vice Presidents. All members of the Executive
Committee file an annual stakeholder report
in accordance with the stock market practices.
On the basis of the reports, all members of the
Executive Team are independent of the company’s stakeholders.
BENEFITS, INCENTIVES AND
COMPENSATION
Board of Directors’ monthly and meeting compensations in 2006 (euro)
Monthly
compensation
Meeting
compensation
Chairman
1,400
240
Vice Chairman
1,200
240
Other members
1,000
240
Total
compensations
2006
125,360
2005
112,312
The employees who joined Veikkaus before
1 January 1994 may retire at 63 years of age. The
Board members and company management do
not enjoy special benefits, except for the CEO’s
and Executive Vice President’s additional pension
schemes (63 years/66 %). Nor have the company
executives been granted option rights.
Veikkaus has an incentive scheme that covers
the entire personnel. The scheme includes the
discretionary performance-based bonuses to the
salaries, special perquisites, and performance incentives. The performance incentive is an annual
one-time payment based on the achievement of
the strategic goals and success of the company.
The objectives and standards of the various activities and units are determined as the operations
are planned. The achievement of the objectives
is assessed at the end of the financial year, and
the amount of the incentive is determined according to the annual salary of each employee. The
incentives vary between 7 % and 37.5 % of the salary, and in order that the incentive can be paid in
whole, all the objectives must be attained.
The special perquisites and performance-based
bonuses to the staff are determined by Veikkaus’
Executive Team, whereas the rewards to the
Executive Team and the performance incentives
to the entire personnel are determined by the
Board of Directors.
Supervisory Board’s monthly and meeting compensations in 2006 (euro)
Monthly
compensation
Meeting
compensation
1,000
200
Chairman
Vice Chairman
600
200
Other members
500
200
Total
compensations
2006
98,200
2005
111,800
Salaries, wages and other benefits granted to company management (euro)
2006
CEO
Other members of the Executive Team
2005
304,303 *
219,510
1,054,734 *
820,947
* Includes the performance incentive in accordance with the new compensation system
Compensations to the auditors (euro)
2006
2005
Audit compensations
66,542
47,963
Other services
51,309
151,228
Annual report 2006
53
SUPERVISION AND RISK MANAGEMENT
By virtue of the Lotteries Act (1047/2001), the
lottery, pools and betting operations conducted
by the company are supervised by the Ministry of
the Interior. The Ministry confirms the rules of the
games. Player complaints related to prize payout
are processed by the Ministry, which issues recommended decisions on them. The gaming activities
are supervised by the official supervisors appointed by the Ministry. The official supervisors
also confirm the results of the games and the
prizes on each round.
Since the games are supervised from outside
of the company, even the company’s staff can
play Veikkaus games. However, betting games
with fixed odds constitute an exception: they
cannot be played by the CEO, the Executive Vice
President, the personnel responsible for sports
games in the Product Management Unit, nor by
the employees of the game management and
online units.
In accordance with the company’s Articles of
Association, the General Meeting appoints two
regular auditors. One of them must be an auditor
or audit firm authorised by the Central Chamber of
Commerce (APA auditor or APA audit firm). At the
moment, this task is carried out by the audit firm
KPMG Oy Ab. The auditors are chosen through a
bidding process, and appointed to perform their
task until further notice, in accordance with the
company’s Articles of Association. The auditors
report to the Board of Directors’ Audit Committee.
The company’s internal audit evaluates the sufficiency, reliability and effectiveness of the process
of risk management, supervision and management, in accordance with the confirmed operating
principles. Further, the objective of the internal
audit is to develop control systems related to
management, ensuring legality and preventing
abuse. The internal audit is conducted by a per-
54
Annual report 2006
son nominated by the company, together with
an external partner in cooperation. In 2006, the
external partner was PricewaterhouseCoopers.
The internal auditors work directly under the CEO,
reporting to the Audit Committee, and covering
the entire organization.
company’s profits are returned to the customers—to Finnish society—to be used for the benefit
of arts, sports, science and youth work. At the
same time, Veikkaus responds to the demand of
games in Finland with ethically planned and regulated offerings.
Veikkaus’ Executive Team is in charge of the company’s risk management. It makes sure that the
risk management process is operated smoothly
and makes decisions on the management of individual risks. In this task, the Executive Team is
assisted by a specially appointed risk group, which
develops the risk management process, and coordinates risk evaluation and the operation of the
management measures.
Veikkaus aims at increasing its profit moderately
in spite of the competition which is becoming
tougher and involving more and more operators.
The medium-term objective of the company and
its owner is to increase the company’s return
objective recorded in the State Budget by an
average of 2%.
Veikkaus complies with the comprehensive risk
management system Enterprise Risk Management
(ERM). The ERM framework describes the risk management process in use in the company, together
with the related responsibilities and procedures.
It is integrated in the planning processes of the
company’s activities in a way which ensures the
regular and comprehensive assessment of the
risks related to the business objectives and the
company’s preparedness for tackling them.
Norske Veritas (DNV ), which audits the company’s
Security Standards ( WLA SCS 2003-10-10), and
Inspecta Oy, which audits the compliance with the
Information security standard BS 7799—2:2002.
In 2006 both Inspecta Oy and DNV conducted one
follow-up audit related to the certificates. The
audits showed that Veikkaus’ security system
fulfils the standard requirements.
GENERATION AND SUPERVISION OF
FINANCIAL ADDITIONAL VALUE
By operating games in a socially responsible way
Veikkaus generates value to Finnish society. The
The strategy approved by Veikkaus’ Board of
Directors serves as the basis for an annual operations plan and budget, the realisation of which the
Board supervises with the help of tools related to
the management system. The return objectives
are followed by monthly result reports and prognoses. Comparable information on the development of the gaming industry, especially from the
other Nordic countries, is also analysed regularly.
The European Union requires that all public companies within the EU should draft their financial
statements in accordance with the IAS /IFRS
standards for financial statements from the beginning of 2005. Although the requirement does
not concern Veikkaus, the company has decided to
voluntarily introduce the IFRS standard. Veikkaus
started the preparations for the introduction of
the IFRS standard in 2005, and the financial statement in this report is the company’s first one to
comply with the new standard.
Further, the company complies, where applicable
to its activities, with the Recommendation for
corporate governance of listed companies issued
by Hex Oyj, the Central Chamber of Commerce,
and the Confederation of Finnish Industry and
Employers (2 December 2003).
ORGANIZATION
CEO
RISTO NIEMINEN
BUSINESS
DEVELOPMENT
PRODUCTION
GAMING BUSINESS
OPERATIONS
STRATEGY AND
PLANNING
Vice President,
Corporate Planning
Vice President
Vice President,
Production
Executive Vice President
JARI VÄHÄNEN
ESA VALTONEN
JUSSI ISOTALO
LEGAL AND
INTERNATIONAL
AFFAIRS
General Counsel
Depot and Logistics
Technology Services
Service Unit
Security
OLLI
SAREKOSKI
DREAMS MARKET
Strategic Development
Personnel Services
Internal Services
SPORTS MARKET
PEKKA ILMIVALTA
Legal Affairs
International Affairs
Internal Auditing
COMMUNICATIONS
AND SOCIAL
RESPONSIBILITY
Vice President,
Communications
ENTERTAINMENT
MARKET
Customer Relations
Game System Development
Brand and Marketing
Communications
Product Management
Sales and Distribution
FINANICAL
MANAGEMENT
Vice President,
Finances
MARILENE
MÄKIPÄÄ
Internal and External
Accounting
Accounts Ledger
Real Property
Services
ILKKA JUVA
Marketing Communications
and Sponsorship
Communications
Graphic Design
TV Unit
Responsible Gaming
Annual report 2006
55
BOARD OF DIRECTORS 2006 —2007
JUHA NIEMEL Ä
Chairman, b. 1946
ARI L AHTI
b. 1963
M.Sc. (Econ.), Vuorineuvos (Finnish
honorary title)
Dr.Sc.(Econ.), h.c.
Dr.Sc. (Tech.), h.c.
Lic. Soc. Science
Member of the Board since 10 October 2000,
Chairman of the Personnel Committee
Current memberships of other board of
directors: Beltton Group plc. (Chairman),
Companies in the ICECAPITAL Group
MAIJA-RIIT TA OLLIL A
Vice Chairman, b. 1956
LEENA PA ANANEN
b. 1950
D.Soc.Sc
M.Sc. (Econ.)
Member of the Board since 1 January 2006,
Member of the Personnel Committee
Partneri, Ovia Oy
Member of the Audit Committee
directors: A-Lehdet Oy, Kalevala Koru Oy,
Lapponia Jewellery Oy, Entre Marketing Oy
JOUKO AHTOL A
b. 1952
MAT TI SA ARINEN
b. 1950
M.Sc. (Econ.)
M.Soc.Sc.
Financial Manager, the Finnish Literature
Society
CEO, Kreab Oy
directors: Taluttaja Oy
directors: Kreab Oy, K.J. Ståhlberg Foundation
TIMO KENAKK AL A
b. 1957
PAUL A TUOMIKOSKI
b. 1948
PhD
PhD, Docent
Manager of R&D Centre, Kemira Oyj
Senior Adviser of Cultural Affairs,
Ministry of Education
directors: Oulu Innovation Oy
Annual report 2006
Chairman of the Audit Committee
directors: Powerflute Oy
directors: Väinö Tanner Foundation
56
Managing Director, ICECAPITAL
Securities Ltd.
SUPERVISORY BOARD 2006—2007
Deputy Speaker of Parliament I L K K A K A N E R VA , Chairman
Member of Parliament M AT T I S A A R I N E N , Vice Chairman
Member of Parliament E VA B I A U D E T
Member of Parliament K A A R I N A D R O M B E R G
Member of Parliament J U K K A G U S TA F S S O N
Member of Parliament K A U KO J U H A N TA L O
Member of Parliament J A R I L E P P Ä
Member of Parliament M A I J A - L I I S A L I N D Q V I S T
Member of Parliament M I N N A L I N T O N E N
Member of Parliament A I L A P A L O N I E M I
Member of Parliament P I R K KO P E LT O M O
Member of Parliament I R J A T U L O N E N
Member of Parliament K A R I U O T I L A
PERSONNEL REPRESENTATIVES
IT Planner T E I J A K A L L I O P E R Ä
Secretary J A A N A P I I R O N E N , Deputy Personnel representative
SUPERVISORS
Adviser H A N N E L E J U U S E L A
Inspector General of the Police S E P P O J U V O N E N
Chief Superintendent K I R S I KO I V U N I E M I
Inspector general of the Police S E P P O KO L E H M A I N E N
Chief Superintendent L E E N A P I I P P O N E N
Inspector General of the Police R E I J O P Ö Y H Ö N E N
Deputy Police Chief R A U N O S I N T O N E N
Chief Information Officer for the Police K A I J A U U S I S I LTA
AUDITORS
Authorised Public Accountant L A S S E H O L O P A I N E N , KPMG Oy Ab
Certified Accountant O S M O VA LT O N E N
Annual report 2006
57
EXECUTIVE TEAM
CEO R I S T O N I E M I N E N
b. 1951
Vice President, Finances
Master of Arts
M A RILENE M Ä K IPÄ Ä
b. 1950
Veikkaus career 1989—2000; and since 2001
M.Sc. (Econ.), Authorised Public Accountant
Appointed CEO in 2001
Joined Veikkaus in 2002
Professional experience as a CEO,
Communications Director, and Museum
Director
Professional experience as an Authorised
Public Accountant and a Financial Director in
various small and medium-sized enterprises
Member of the Executive Team since 1991
Executive Vice President J U S S I I S O TA L O
b. 1947
Vice President, Strategy and Planning
Diploma in Business and Administration
O L L I S A R E KO S K I
b. 1965
M.Sc. (Econ.)
Professional experience in the shipping
industry and executive positions in various
national organisations
General Counsel P E K K A I L M I VA LTA
b. 1970
Professional experience includes various
executive positions
Vice President, Production
Master of Laws (trained on the bench)
E S A VA LT O N E N
b. 1952
B.Sc.
Professional experience as an advocate and
positions in sports organisations
Professional experience includes positions
within Information Technology and
executive positions in software production
58
Annual report 2006
Vice President, Communications
Vice President, Business Development
I L K K A J U VA
b. 1952
J A R I VÄ H Ä N E N
b. 1965
M.Soc.Sc
Professional experience as an Editor of, e.g.,
Uusi Suomi and Turun Sanomat newspapers,
and most recently as the Editor-in-chief of
Länsi-Savo newspaper
Professional experience as Betting Director
and Acting CEO of the Finnish Trotting and
Breeding Association Hippos
BISHOP EERO HUOVINEN
“In the city, many people are much more forsaken
than they are ready to show. I was rather timid as a
boy, too, and slightly fearful. I did try to look fearless
and courageous but at the same time, I felt inner
shyness and forsakenness.
The correct answer is not always that you should
just accept yourself for what you are, because many
people realize that you can’t be the way you are; you
don’t succeed in being who you are.
People need love and security coming from the
outside, love given by other people and God. You
won’t get far with nothing but your own love.”
Annual report 2006
59
FINANCIAL STATEMENT 2006
Board of Directors’ report ................................................................................
Income statement ...........................................................................................
Balance sheets ...............................................................................................
Cash-flow statement ......................................................................................
Changes in shareholders’ equity .......................................................................
Accounting principles ......................................................................................
62
66
67
68
69
70
Notes to the financial statements
1. Turnover by games and game groups ........................................................
2. Development of financial result ...............................................................
3. Other operating income ..........................................................................
4. Depreciations .........................................................................................
5. Other operating expenses .......................................................................
6. Financial income and expenses ................................................................
7. Tangible assets and depreciations ...........................................................
8. Intangible assets and depreciations .........................................................
9. Investments ...........................................................................................
10. Investments available for sale .................................................................
11. Short-term receivables ............................................................................
12. Liquid assets ..........................................................................................
13. Share capital ..........................................................................................
14. Short-term liabilities ...............................................................................
15. Liabilities from employee benefits ...........................................................
16. Related party transactions ......................................................................
17. Contingent liabilities and amounts payable on leasing agreements .............
18. Adoption of the IFRS reporting standard ..................................................
19. Signatures .............................................................................................
20. List of accounting books 2006 ................................................................
73
74
74
74
75
75
76
77
77
78
78
78
78
79
79
80
80
81
84
84
Auditors’ report .............................................................................................. 85
Statement by the Supervisory Board ................................................................ 85
Financial report 2006
61
BOARD OF DIRECTORS’ REPORT 2006
TURNOVER
BY GAME GROUP
EUR MILLION
1,090 1,159 1,261 1,316 1,361
1,400
OTHER DRAW GAMES
INSTANT GAMES
1,200
SPORTS GAMES
LOTTO GAMES
1,000
800
600
400
200
0
2002 2003 2004 2005 2006
SHARE OF TURNOVER BY GAME
GROUP 2006
2005 IN BR ACKETS
LOTTO GAMES
*
62
37.3% (37.7%)
SPORTS GAMES
27.1% (27.8%)
OTHER DRAW GAMES
25.2% (24.0%)
INSTANT GAMES
10.4% (10.5%)
Specified game by game on page 73
of the financial statement.
The year under review was the 66th year of operations of Veikkaus Oy. The company’s economy
developed favourably during the period. Veikkaus
attained a turnover of EUR 1,361.2 million, the
highest in the company’s history. This meant an
increase of EUR 45.4 million (+3.4 %) over the previous year. The gross margin on sales was EUR 489.6
million, which is EUR 21.3 million (+4.6 %) more than
in the year before.
The result of the financial year amounted to EUR
407.7 million, of which the company returns EUR
387.2 million (+1.5 %) to the Ministry of Education,
to be distributed to Finnish arts, sports, science,
and youth work. The comparable result of the business operations amounted to EUR 12.1 million, improving by 3.1% over the previous year, since during
the comparable financial period of 2005, Veikkaus
sold stocks that had been in its ownership, with a
sales profit of EUR 4.8 million. Thus, the financial
development of the year under review can be considered to be good.
During the year under review, Veikkaus carried out
depreciations from the present game system according to an accelerated schedule as a result of the
introduction of the new game system and the IFRS
standard. This meant an increase of EUR 6.7 million
in the company’s depreciations. Further, the result
was affected by the expenses incurred by the maintenance and testing of the current game system
and by the brand reform. The outsourced services
related to the development of the game products
and technologies, as well as business concepts, also
caused more expenses than before.
KENO AND LOTTO GAMES AS
PACESETTERS
Veikkaus’ game selection included the following
games in the year under review: the lotto games
Lotto and Viking Lotto; the other draw games Joker,
Keno, Medals Game and Veikkaus Bingo; the betting
games Live Betting, Multibet, Fixed Odds Betting,
Result Odds Betting, Winner Odds Betting; the other
sports games Football Pools, V5 and V75 Off-track
Horse Betting and the other V-games; as well as the
instant games Casino Instant, Horoscope Instant,
Labyrinth Instant, Mini-Ässä Instant, Lucky Words
Instant, Nature Instant, Ässä Instant, and the various internet and theme instants.
In the year under review, all of Veikkaus’ game
groups increased their sales. The turnover of lotto
games EUR 507.7 million increased by EUR 12.1 million (+2.4%) over the previous year. Sports games
showed an increase in turnover of EUR 369.1 million,
which was EUR 2.7 million (+0.8%) more than in the
year before. The other draw games generated a
turnover of EUR 342.5 million, with an increase of
EUR 27.1 million (+8.6%). The turnover of instant
games of EUR 141.9 million meant an increase of
EUR 3.4 million (2.5%) compared to the previous year.
The lotto games represented 37.3% of the company’s total turnover (37.7% in 2005), while the share
of sports games was 27.1% (27.8%), that of the
other draw games 25.2% (24.0%) and that of instant
games 10.4% (10.5%).
The games that increased their popularity most
were Keno and the lotto games. Lotto’s success
was especially affected by the number of jackpots
which was larger than in 2005. In all, Lotto was
played with EUR 429.7 million (+1.9 %) in the year
under review. Finns played Veikkaus’ second largest game Keno with EUR 268.8 million (+9.1%).
PRIZE PAYOUT EUR 702 MILLION
In 2005, Veikkaus paid out a total of EUR 701.8 million (+3.4%) of prizes to players. The expenses incurred by the draws and result information were EUR
9.7 million (–5.0%). The company spent EUR 9.7 million
(–10.4%) on game event cooperation, whereas playslip and ticket expenses were EUR 7.3 million (+8.3%).
The costs of product advertisement amounted to
EUR 10.3 million (+2.2%), i.e. 0.8% of the turnover.
The retail commissions paid out to retailers represented 5.9 % of the turnover, i.e. EUR 80.3 million
(–0.4 %). The growing popularity of internet gaming
had an essential effect on the fact that the retailer
commissions remained at the previous year’s level.
During the year under review, the company paid
EUR 62.9 million of lottery tax (+3.8 %) and EUR 17.7
million (+22.4 %) of VAT, in addition to returning
its profit of EUR 387.2 million to the Ministry of
Education. Further, as was decided in the company’s two Extraordinary General Meetings held
in September 2005 and February 2006, Veikkaus
yielded a total of EUR 14.0 million of its funds generated during the previous years to the Ministry of
Education in 2006.
INVESTING IN CUSTOMER
REL ATIONS
In the year under review, Veikkaus invested
strongly on the reinforcement of its model of
business operations, based on the company’s
customer focused strategy. Veikkaus’ offerings
are developed and individualized to better meet
the needs of different customer groups. This
demands a capacity to collect, refine and make
use of data related to customer relations. This
entailed considerable investments in, e.g., the reinforcement of customer data systems and brand
enforcement in 2006.
Veikkaus’ new image and brand identity, based
on the company’s brand strategy were launched
in April. One of the most important goals of the
brand strategy is that the players can recognize
the game products as products provided by
Veikkaus. This is to ensure that the customers will
know when they are faced with products offered
by a responsible gaming operator working for the
benefit of the entire Finnish society.
At the end of September, Veikkaus introduced
a customer card, the Veikkaus Card. By showing
their Veikkaus Cards whilst playing, the customers
can ensure that the prizes are paid directly to their
bank or gaming accounts—easily and securely. The
players are not rewarded for playing much, nor
are they offered bonuses. Veikkaus Card is part of
Veikkaus’ responsible gaming activities. The data
collected as people use their Veikkaus Cards to
play can be used for the purposes of product and
service development and sales support. Veikkaus
Card also enables the customers to follow their
gaming history on Veikkaus website.
YLE and Finnish Sport Television Company signed
a comprehensive cooperation agreement in
November, with the purpose of guaranteeing Finns
the opportunity to continue to watch as much
sports as possible on the free-to-air channels. The
more Finnish sports events are broadcast, the
better chances Veikkaus has to develop its gaming
services and demonstrate the importance of the
game proceeds to Finnish sports. Thus, making the
sports broadcasts widely accessible constitutes a
part of Veikkaus’ customer strategy.
PRODUCT DEVELOPMENT
AND RESEARCH
Veikkaus spent EUR 15.3 million (+44.7%) on product
development and research. The expenditure consisted of, e.g., surveys related to the development of
the offerings and of the costs incurred by the development of the internet games and piloting.
In January, Veikkaus launched a new game, SuperMultibet. In this game, the players are expected to
guess the results of four different football matches.
Multibet, which has been developed by Veikkaus
and played since 1998 is one of Veikkaus’ most popular sports games. In 2006, Finns played Multibet
with a total of EUR 87.7 million.
In April Veikkaus launched a second Joker game,
Wednesday Joker. It was designed especially as
an add-on game of Viking Lotto, which is drawn
on Wednesday. The launch of Wednesday Joker
affected the total sales in a positive manner. In
the year under review, Veikkaus also introduced
new instant games. At the beginning of June, two
new instants, Jazz and Satumaa (“the Fabulous
Land”) Instants, related to popular Finnish summer
happenings, were launched. In October, Veikkaus’
oldest instant, Ässä Instant, was accompanied by
a new Mini-Ässä Instant. The game soon gained
immense popularity.
Veikkaus has been investing in eInstants offered
over the internet at its web service veikkaus.fi. The
new eInstants of the financial period included the
Football Instants and Ässä eInstant. Many people
have found this new type of instant games—eIn-
stants have been increasing their popularity
continuously.
Veikkaus invests in the development of new distribution channels both in the retail network and
in the electronic channels. The company’s internet
gaming service was developed strongly during
the year under review. The website veikkaus.fi
is one of Finland’s biggest web stores open to
consumers, with around 100,000 daily visitors.
People played Veikkaus games with around EUR
205.0 million (+27.8 %) in the course of the year.
This represents 15.1% of the total game sales. In
December, ten years had passed since Veikkaus
started to offer games over the internet to its
customers.
GAME SYSTEM TECHNOLOGY
TO BE REFORMED
The technology of Veikkaus’ game system will be
reformed in its entity in the years to come. The
first phase of the project, the reform of Veikkaus’
internet gaming service, was already carried out
in the autumn. It will be followed by the replacement of the online terminals with new equipment
in the spring and summer of 2007. In the summer
of 2008, the company will have adopted the new
game system entirely.
Along with the change of the terminals, Veikkaus
is making its service network more uniform and
will abandon its separate instant game sales
system. As a consequence, the retail network will
become less complex: the customers will have
access to the same services at all Veikkaus’ points
of sales. After the change, the network will cover
around 3,200 online points of sales around the
country, whereas it consisted of slightly over
2,900 online points of sales and 660 points of
sales selling instant games at the end of 2006.
The reform project was seen as an increase in
Veikkaus’ total investments; the company spent
EUR 38.6 million (+71.7%) on investments in the year
under review. The objective of the demanding reform is to ensure Veikkaus’ capability to serve the
Finnish customers and society even in the future in
a high-quality and responsible manner.
63
EMPLOYEES KNOW THE OBJECTIVES
AND ARE COMMITTED TO VEIKKAUS
At the end of 2006 Veikkaus had 336 salaried and
37 part-time employees, most of whom (95.2%) had
permanent employment contracts. In other words,
the total number of employees was 373, i.e. one
more employee as compared to the previous year. Of
the staff, 211 were women and 162 were men.
In the year under review 33 new people were
recruited, whereas 10 retired. Further, 22 persons
gave their notice in 2006. The average turnover of
the personnel was thus 8.7 % (10.9 % in 2005). For
the staff, the year 2006 meant the establishing and
fine-tuning of the new operational models introduced in the previous year. The staff’s work enjoyment in the midst of the reforms was supported
with, e.g., measures related to workplace safety
and working ability. On the average, Veikkaus’ employees were on sick leave for 11.4 days per person;
there were no work-related accidents.
Veikkaus has adopted an incentive scheme which
covers the entire staff. The staff policy also
involves regular performance evaluation talks
700
NUMBER OF PERSONNEL
600
47
47
45
38
37
300 324 332 334 336
500
400
PART-TIME
SALARIED
300
with all the employees. The professional training
focused on managerial skills in 2006. The versatile,
multidisciplinary training programme aimed at
providing the managers with knowledge and skills
to run their organizations in a customer-focused
manner, to reinforce the implementation of the
ongoing change in all workplace communities.
The Game Academy, the training programme for
Veikkaus’ personnel, offered 59 different training
events in 2006. The Game Academy offers training
to support the employees in their various tasks,
focusing on IT skills and foreign languages.
In addition to the headquarters in Vantaa, Veikkaus
has sales offices in five other major cities in
Finland: Turku, Vaasa, Kuopio, Oulu, and Tampere,
where there is also a district office carrying out
activities such as customer service supporting
internet gaming.
In 2006 the company’s personnel expenses were
EUR 21.6 million, with a decrease of 1.3 % from the
previous year. The salaries represented EUR 17.0
million of this, whereas the indirect personnel expenses were EUR 4.6 million. The voluntary pension
expenses were significantly lower in 2006 than in
the previous year, as the option of early retirement
was taken less often than before.
A staff survey conducted in the autumn was
responded to by 92% of the personnel. It showed
that the employees were mostly happy with the
company and its activities. They were given the
average grade of 3.87 (the respective figure was
3.91 in 2005) on a scale of 1 to 5. Veikkaus’ employees are committed to the company and their
own work. They feel that they know both the
company’s and their own objectives, as well as the
company strategies well. The development program invests heavily in the flexibility of the core
processes and in the organizational functionality
by developing leadership and management.
200
100
0
2002 2003 2004 2005 2006
64
RESPONSIBILITY IN FOCUS
Social responsibility is an inherent part of all
Veikkaus’ operations. It entails caring for the environment, the customers and the staff, as well as
complying with good corporate governance and
the principle of equality. It also means ethically
sustainable business operations. Veikkaus’ gaming
activities are organized reliably and responsibly.
This is ensured by close control by the authorities,
international audits, and the company’s own measures to supervise and restrict gaming. Veikkaus offers its customers a safe channel of gaming. Above
all, this entails guaranteed consumer protection, but
it also means taking the necessary restrictive measures, such as age and stake limits.
Different games require different restrictions.
Veikkaus has developed a model of game analysis
in cooperation with the Finnish Slot Machine
Association RAY in order to analyse, e.g., the accessibility, attractiveness and social features of
the games. All of Veikkaus’ present games are
analysed using the model, and it is also used in all
of the game development processes. The model of
classification aims at identifying the features that
may potentially lead to problem gambling of both
the current products and the ideas for new games.
In the year under review, Veikkaus introduced a
service enabling the customers to impose self-restrictions on their gaming at Veikkaus’ web service.
The self-ban is effective at least 90 days from
its imposition. During this period, the customer in
question cannot play any of Veikkaus games on
the net. Further, the company made all of its internet instants subject to a 100 -euro daily gaming
limit in the autumn.
CONTROL AND RISK MANAGEMENT
In accordance with the Finnish Lotteries Act
(1047/2001), Veikkaus’ lottery, pools, and betting
activities are supervised by the Ministry of the
Interior. The Ministry approves the rules of the
games. Player complaints concerning prize payout
are processed in the Ministry as a recommended
decision process. The gaming activities are supervised by official supervisors appointed by the
Ministry, who also confirm the game results and
number of prizes on each round.
Veikkaus complies with a comprehensive risk
management system (ERM). The ERM framework
describes the risk management process in the com-
pany, together with the related responsibilities and
procedures. The ERM is integrated in the planning
processes of Veikkaus’ activities in a way which
ensures the regular and many-sided evaluation of
the risks inherent in the business objectives and
the company’s preparedness for tackling them.
Norske Veritas (DNV ), which audits Veikkaus’
Security Standards ( WLA SCS 2003-10-10), and
Inspecta Oy, which audits the compliance with the
Information security standard BS 7799—2:2002.
THE PRESENT SYSTEM
ENJOYS WIDE SUPPORT
Although the gaming systems of different countries differ from each other, they have a common
basis: society grants the licence to run games. This
applies to both Europe and the rest of the world.
It offers society the opportunity to ensure that
gaming business activities are reliable, responsible
and of high quality. It also enables us to focus on
gaming that provides the players with good entertainment, yet remaining at a reasonable level in
relation to the players’ financial capacity.
In February 2006, the European Parliament decided
that the provisions of the Services Directive shall
not cover gaming because of its special nature. The
Commission had originally made a proposition to the
contrary. However, before the Parliament’s decision,
all of the 25 EU Member States had expressed their
wish that the scope of application of the Directive
should not cover gaming.
In their meeting in March, the leaders of the
Member States gave their support to the continued organization of gaming on a national basis,
instead of opening it to international competition.
The same policy has been supported in the joint
statements by the European Ministers of Culture
and Foreign Affairs and various citizen organizations. There is a strong consensus in Europe over
the view that the decisions concerning gaming
should be made at the national level even in the
future, in accordance with independent decisions
made by the Member States.
In April, the European Commission asked seven
Member States of the EU, including Finland, to
give their comments on complaints regarding the
gaming system, filed by international bookmakers. This procedure, the Commission’s letter of
formal notice, is a normal practice within the EU,
and is always followed by complaints filed to the
Commission. By this procedure, the Commission
controls that the EU legislation is being complied
with, and it does not necessarily lead to legal proceedings. International private bookmakers, mainly
operators on the internet, have been complaining
about the gaming system to the Commission for
years.
Finns are strongly in favour of their present national system. The National Gaming Forum, set by
the Ministry of the Interior, finalized its guidelines
for a national gaming policy in April. According to
the Forum’s unanimous view, the Finnish gaming
system has a sound basis, and the Finnish legislation is appropriate.
FUTURE PROSPECTS
Veikkaus operates on the market of leisure and
entertainment, offering dreams, excitement and
entertainment to Finns. On the entertainment
market, Veikkaus provides its customers with the
significant additional value of having an opportunity to win money and having access to important
social benefits.
Veikkaus returns the bulk of its profits to Finnish
society, to be used for the benefit of arts, sports,
science, and youth work in a way which benefits
every Finn. Veikkaus develops its offerings in a
socially sustainable way, and social responsibility
provides the basis for the development of the company’s business operations. An example of this is
the adoption of the international model of operations established by the global umbrella organization of the industry, World Lottery Association
(WLA). Veikkaus, together with the other member
organizations, will adopt the model in 2007.
customer strategy. Veikkaus has been investing
heavily in recognizing the customers and their
needs. The goal for 2007 is to make the customer
strategy concrete for the customers through actions and to thus reach positive effects on how
the players experience Veikkaus.
The international trend in gaming today is that
games with high event frequency and small margins are becoming more popular. This can be seen
as a structural change in the company’s turnover:
the sales are increasing in games which involve
higher payout percentages. In spite of this trend,
Veikkaus’ objective is to ensure the positive development of its sustainability. The major challenge
of 2007 is to make sure that the new game system
will be implemented smoothly.
Although the system of the exclusive right which
is applied to gaming in nearly all of the EU Member
States is under constant attacks, the legal position
of gaming is stable and the system enjoys wide
support. International cooperation, especially in
Europe and the Nordic countries, is becoming more
and more important. Veikkaus strives for the advancement of international cooperation between
state lotteries.
Veikkaus aims at a moderate 3-% growth of its
turnover in 2007. The profit expectation for
Veikkaus funds recorded in the State Budget for
the year 2007 is EUR 397.3 million, i.e. 2.6 % more
than the contribution to the Ministry of Education
in 2006.
BOARD OF DIRECTORS’ PROPOSAL
FOR THE DISTRIBUTION OF PROFITS
The Board of Directors propose that a total of EUR
387,239,452.05 of the profit of EUR 407,689,452.05
for the financial year of 2006, be returned to the
Ministry of Education, while EUR 20,450,000.00 shall
be transferred to the contingency fund. Further,
the Board of Directors proposes that a total of
10,634,796.44 from other shareholders’ equity shall
be transferred to the contingency fund.
In order to succeed in its mission, Veikkaus needs
to work in a customer-focused manner. This is
why the company’s business model is based on
65
INCOME STATEMENT
NOTES
Euro
1 Jan 2006—31 Dec 2006 and 1 Jan 2005—31 Dec 2005
2006
2005
1,315,826,839.57
TURNOVER
1
1,361,209,561.82
Other operating income
3
1,895,182.95
5,825,857.51
701,784,280.31
678,743,858.75
62,886,990.01
60,567,873.17
80,336,803.68
80,565,058.38
Prizes
Lottery tax
Raw materials and services
Retail commissions
Playslips and instant tickets
7,298,491.49
6,742,194.35
Drawing expenses and result service
9,669,372.97
10,175,832.26
9,651,491.11
10,774,402.26
10,260,790.98
10,036,997.21
Game event cooperation
Product advertisement
Data communications
607,813.80
726,599.31
117,824,764.03
119,021,083.77
Expenses incurred by employee benefits
Salaries and compensations
17,036,786.31
16,475,843.55
Pensions
3,441,045.27
4,408,978.67
Other indirect personnel expenses
1,130,235.91
1,008,816.61
21,608,067.49
21,893,638.83
Outsourcing
Depreciations and write-downs
Other operating expenses
15,565,495.15
12,986,550.27
4.7.8
16,024,576.94
10,339,849.29
5
24,122,505.98
20,871,045.23
403,288,064.86
397,228,797.77
3,447,007.34
OPERATING PROFIT
Financial income and expenses
Financial income
6
4,385,500.12
Financial expenses
6
1,086.61
3,617.94
4,384,413.51
3,443,389.40
407,672,478.37
400,672,187.17
Tax on profit from stock sales
NET PROFIT FOR THE FINANCIAL YEAR
– 16,973.68
407,689,452.05 ¤
275,034.02
400,397,153.15 ¤
Earnings/share (Earnings per share was counted by dividing the net profit for the financial year by the number of shares.)
66
Number of shares
498
498
Earnings per share (thousand euros)
819
804
BALANCE SHEETS
31 Dec 2006 and 31 Dec 2005
NOTES
Euro
ASSETS
2006
2005
NON-CURRENT ASSETS
Tangible assets
7
29,728,574.50
23,863,667.68
Intangible assets
8
31,766,138.73
25,325,158.96
10
10,567,700.42
567,217.24
297,743,895.30
291,748,145.12
Investments available for sale
OTHER RECEIVABLES
Advance payments
Receivables
11
24,632,458.22
18,738,010.66
Current assets
12
161,822,036.79
166,657,644.50
556,260,803.96
526,899,844.16
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Subscribed capital
13
169,320.00
169,320.00
Reserve funds
13
276,378.01
276,378.01
Contingency fund
13
34,132,653.01
24,732,653.01
Other equity
13
10,634,796.44
11,117,717.99
Net profit for the financial year
407,689,452.05
400,397,153.15
Total shareholders’ equity
452,902,599.51
436,693,222.16
LIABILITIES
LONG-TERM LIABILITIES
Liabilities incurred by employee benefits
15
2,722,000.00
2,971,000.00
Other long-term liabilities
15
219,480.00
166,307.00
SHORT-TERM LIABILITIES
Advances for multi-week subscriptions
14
10,059,773.10
9,384,679.10
Trade payable
14
12,173,986.16
4,022,785.48
Liabilities to players
14
25,208,782.98
25,490,492.48
Settlement debts to the State
14
14,742,908.42
12,066,127.30
Accruals and deferred income
14
23,247,599.80
19,013,263.82
Other short-term liabilities
14
14,983,673.99
17,091,966.82
556,260,803.96 ¤
526,899,844.16 ¤
TOTAL SHAREHOLDERS’ EQUITY
AND LIABILITIES
67
CASH-FLOW STATEMENT
Thousand euros
2006
2005
Cash-flow from business operations
Operating profit
403,288
397,229
15,948
2,214
Adjustments
Operations with no related payment transaction
Change in working capital
Change in non-interest bearing receivables
Change in trade and other payables
Dividends received
Interest received
– 5,930
3,907
3,152
1,769
2
344
4 384
3,103
Interests paid
–1
–4
Tax paid
17
– 275
420,858
408,288
– 38,574
– 22,468
320
6,707
Net cash-flow from business operations
Cash-flow from investments
Investments in tangible
and intangible assets
Sales of tangible and intangible assets
and investments
Repayments on loan receivables
Net cash-flow from investments
36
67
– 38,218
– 15,694
Cash-flow from financing
Returned to the Ministry of Education
– 387,476
– 382,173
Net cash-flow from financing
– 387,476
– 382,173
Change in liquid funds
68
– 4,836
10,421
Liquid funds at the beginning of the financial year
166,658
156,237
Liquid funds at the end of the financial year
161,822
166,658
CHANGES IN SHAREHOLDERS’ EQUITY
Thousand euros
Shareholders’ equity 1 Jan 2005 FAS
Share
capital
Reserve
fund
169
276
IFRS adjustments to the opening balance sheet
Shareholders’ equity 1 Jan 2005 IFRS
Fair value
fund
Contingecy
fund
6,833
5,205
169
276
Other
shareholders’
equity
5,205
Retained
earnings
Total
shareholders’
equity
397,735
405,014
397,735
420,970
10,751
6,833
10,751
Stocks available for trade
—change in value
– 5,205
400,397
Return to the Ministry of Education
– 375,835
Adjustments
367
Transferred to the contingency fund
Shareholders’ equity 31 Dec 2005
17,900
169
276
24,733
– 21,900
11,118
436,693
407,689
Returned to the Ministry of Education
– 381,480
Adjustments
– 483
Transferred to the contingency fund
Shareholders’ equity 31 Dec 2006
400,397
9,400
169
276
34,133
483
– 19,400
10,635
407,689
452,903
69
ACCOUNTING PRINCIPLES 2006
CORPORATE INFORMATION
Veikkaus Oy is a Finnish lottery domiciled in the
City of Vantaa. Its operations are regulated in accordance with the Lotteries Act and the gaming licence, effective until 31 December 2011. Veikkaus
is owned by the Finnish Ministry of Education and
supervised by the Ministry of the Interior.
BASIS OF PRESENTATION
This is Veikkaus’ first IFRS-based financial statement, and the standard has been adopted using
the IFRS 1 First adoption of the IFRS standard.
The opening balance sheet was prepared at the
date of the transition, on 31 January 2005. The
financial statement was prepared on 31 December
2006 using the effective IFRS standards. The
term ‘IFRS standards’ refers to the international
accounting standards accepted for use within the
EU. Section 18 shows the reconciliation statements together with a summary of the effects of
the transition to the IFRS standard on the financial statement and the balance sheet.
GENERAL REMARKS
The accounting data are shown in thousand euros,
except for the result statement and the balance
sheet, and they are based on the initial acquisition
costs, unless otherwise indicated in the accounting principles below.
Whilst preparing a financial statement in accordance with international accounting standards, it is
necessary to make estimates for the future. The
estimates have an effect on the asset and liability
figures in the balance sheet, as well as on the net
profits and losses for the financial year. The most
important estimates in Veikkaus’ financial statement have to do with the write-down periods of
70
fixed assets and the assumptions used as a basis
for counting the pension-based liabilities. The
realized values may deviate from the estimates.
Further, applying the accounting principles always
requires consideration.
ITEMS IN FOREIGN CURRENCY
Veikkaus’ operating currency is euro. Business
transactions in foreign currency have been recorded as euros using the prevailing exchange rate.
Receivables and liabilities have been translated
into the operating currency using the prevailing
rate at the date of the financial statement. Profits
and losses caused by business transactions in
foreign currency and the translation of the receivables and liabilities have been entered into
the income statement. The translation profits and
losses of the business operations are included in
the respective items above the net profit.
Prevailing rate at
the date of the
Currency
financial statement
USD ........................................... 1.3170
CHF ........................................... 1.6069
GBP ........................................... 0.6715
FIXED ASSETS
Fixed assets have been measured at acquisition
cost, less the accumulated depreciations in the
balance sheet. The share of the company’s own
work, entered into the intangible assets is activated as part of the acquisition cost. The expenses
concerning an asset at a later date are activated
when they correspond to the economic profit.
Other expenses, such as the normal measures of
maintenance and repair, are recorded as costs in
the income statement at their date of occurrence.
Write-down periods of fixed assets
(years):
Buildings and constructions ................... 25
Renovations of the apartments ................ 5
Machinery, equipment, and instalments
in the real estates ................................. 5
Other machinery and equipment ................ 4
IT software and appliances .................. 1— 6
The profits and losses resulting from the sales or
assignment of fixed assets are recorded in other
operating income and expenses in the income
statement.
RESEARCH AND DEVELOPMENT
Research costs are entered as expenses into the
income statement for the financial year during
which they have occurred. Expenses related to
the development of new products, offerings, and
processes are activated if the intangible asset
resulting from the development work generates
economic profit in the future. Further, the costs
incurred by development shall be such that they
can be determined reliably.
LEASES
In accordance with the rental agreements made
by Veikkaus, the risks and benefits of ownership
are retained by the lessor, and payments made
under operating leases are charged to the income
statement on a straight-line basis over the period
of the lease.
FINANCIAL ASSETS
AND FINANCIAL LIABILITIES
Financial assets are divided into different categories at the time of acquisition. The categorization
depends on the purpose the financial asset has
been acquired for. The purchases and sales of
financial assets are recorded at the date of the
transaction.
Long-term investments held for sale include
stocks, shares and interest instruments. They are
measured at fair value. The untraded stocks are
measured at acquisition cost because their fair
value cannot be determined reliably. The book
value of the investments included in the financial
assets is measured at fair value due to the short
term of maturity of the investments.
Loans and other receivables include sales and
other receivables. The difference between the retailers’ sales and retail commissions and the prizes
they pay out is recorded in the sales receivables.
The short-term investments held for sale consist
of cash in hand, short-term bank deposits, and
other short-term liquid investments. The financial
assets in the cash-flow statement correspond to
the current assets in the balance sheet.
The financial liabilities include the short-term liabilities with no interest.
The maturity periods for the loans and other receivables group, the short-term investments held
for sale and the financial liabilities are short and
their fair values are thus considered to correspond
to the book values.
ADVANCE PAYMENTS TO
THE MINISTRY OF EDUCATION
Veikkaus makes quarterly advance payments on
its result for the financial year to its owner. The
result for the financial year is charged from the
shareholders’ equity following a decision by the
General Meeting.
POST-EMPLOYMENT BENEFITS
LONG-TERM EMPLOYEE BENEFITS
In accordance with the IFRS, the pension settlements are classified as either payment-based or
benefit-based. The payment-based settlements
include settlements in which Veikkaus pays fixed
amounts to a pension corporation without an
obligation to make additional payments even if
the fund lacked the sufficient assets to pay the
pensions. Payments made to the payment-based
pension settlements are recorded as pension expenses in the income statement. The payments to
the TEL pension insurance system are regarded as
payment-based.
A one-time compensation equalling a month’s
salary is paid as a bonus for years of service once
the employee has served 30, 35, 40 and 45 years
at Veikkaus. The compensation liability has been
counted on the basis of the personnel’s starting
years at Veikkaus, by discounting the compensation liability realized at the end of each year to the
present.
The rest of the pension settlements are benefit-based. For them, a liability based on certain
assumptions is recorded in the balance sheet,
illustrating the pensions to be paid in the future
on the basis of the settlement. The pension cost
recorded in the income statement illustrates, e.g.,
the increase in liabilities arising from the work
done by the staff during the financial period.
The items recorded from the benefit-based pension settlements are based on actuarial calculations. The calculations are made on the basis of
assumptions concerning, e.g., the termination of
employment of persons belonging to the pension
settlement before the age of retirement; the
future level of salaries and the discount rate used
in the calculations. The differences between the
assumptions and realizations or the changes in
the realizations cause actuarial gains and losses.
To record them, Veikkaus uses a corridor method in
accordance with the IFRS standard. At the date of
transition to the IFRS standards, all accumulated
actuarial gains and losses are recorded in the
shareholders’ equity.
OTHER SHORT-TERM
LIABILITIES—PRIZE FUND
The prize fund is not an actual fund, but rather
the company’s liability to the players. The cents
accumulated by the rounding of the prize sums
and the share of prizes undistributed in the prize
distribution of Veikkaus games in accordance with
the gaming licence, are transferred immediately
to the prize fund in connection with the prize
distribution. After a claim period of one year, the
unclaimed prizes in the prize distribution of the
different games are transferred to the prize fund.
The assets in the prize fund are used for additional prize distributions in the different games.
Thus, the company is liable to distribute the entire
prize amounts pursuant to the gaming licence to
the players.
TURNOVER
The sales of Veikkaus games are divided into
turnover according to the draw date. The draws
take place either weekly or daily. The turnover of
Live Betting consists of gaming income less prizes
charged to the game in question.
71
OTHER OPERATING INCOME
AND EXPENSES
The other operating income includes indemnifications, profit from sales of assets, and profits from
operations other than those related to the company’s actual business operations, such as income
from message service and leasing.
The other operating expenses include the losses
from sales of assets and expenses related to the
actual business operations.
PRIZES
The income statement includes the prizes in
accordance with the game rules charged to the
turnover.
The prizes unclaimed in the previous year and the
assets from the rounding of the prizes shall be
paid out according to the gaming licence on the
later rounds of different games during the following calendar year at the latest.
RAW MATERIALS AND SERVICES
The retail commissions consist of compensations
paid to the retailers on the basis of their game
sales. The commission percentages vary according
to the games.
The printing expenses of the lottery tickets, the
playslips, the receipt rolls, and the expenses related to Veikkaus Card are recorded as expenses
at the date of acquisition.
The drawing and result information expenses
include costs related to game supervision, TV- cooperation agreements and other expenses connected with the publishing of the results.
72
The game event cooperation covers the expenses
arising from the usability of the object information of the games. The expenses may be based
on agreement, or they can be determined totally
according to the round-specific or annual turnover
of the games.
TAXES
The lottery tax covers 9.5% of the amount of the
income from game and lottery ticket sales allocated to a calendar month in bookkeeping less the
prizes recorded as expenses on their basis. The
amount of funds recorded in the prize fund/ from
the prize fund is added to/deduced from the difference thus received.
In accordance with section 59 of the Value Added
Tax Act, Veikkaus is not liable to pay VAT. The
company’s expenses and investments include the
prevailing VAT.
In accordance with section 21 of the Income Tax
Act, Veikkaus is only liable to pay income tax on
income other than that determined in the Lottery
Tax Act.
APPLICATION OF NEW
OR REFORMED IFRS STANDARDS
Veikkaus will adopt the following new or reformed
standards in 2007:
IFRS 7 Financial instruments: the information
to be presented in the financial statement. The
standard requires more comprehensive attached
information on the effects of the financial instruments on Veikkaus’ financial statement and on
the risks arising from the financial instruments.
The adoption of the standard affects mainly the
notes to the financial statement.
IAS 1 Presentation of the financial statement: The
asset information given in the financial statement.
The change of standard requires information on
the amount and management of the company’s
equity. The adoption of the standard affects
mainly the notes to the financial statement.
NOTES TO THE FINANCIAL STATEMENTS
1. TURNOVER BY GAMES AND GAME GROUPS
Thousand euros
2006
2005
% share of
turnover
Lotto
% share of
turnover
429,719
31.6
421,842
77,996
5.7
73,772
5.6
507,715
37.3
495,614
37.7
Keno
268,818
19.7
246,417
18.7
Joker
72,171
5.3
66,739
5.1
1,514
0.1
2,240
0.2
24.0
Viking Lotto
Lotto games
Other online games
Other online draw games
32.1
342,503
25.2
315,395
Football Pools
50,017
3.7
53,951
4.1
V75 Off-track Horse Betting
27,299
2.0
28,577
2.2
V5 Off-track Horse Betting
24,381
1.8
25,575
1.9
67
0.0
153
0.0
Fixed Odds Betting
139,435
10.2
134,030
10.2
Result Odds Betting
30,645
2.3
26,983
2.1
Multibet
87,674
6.4
87,470
6.6
9,418
0.7
9,411
0.7
166
0.0
204
0.0
369,102
27.1
366,354
27.8
46,754
3.4
46,816
3.6
3,630
0.3
0
–
47,532
3.5
49,958
3.8
Other V-games
Winner Odds Betting
Live Betting
Sports games
Ässä Instant
Mini-Ässä Instant
Casino Instant
Nature Instant
6,126
0.5
6,587
0.5
22,362
1.6
22,190
1.7
– 62
– 0.0
1,619
0.1
Labyrinth Instant
3,152
0.2
3,898
0.3
Theme Instants
3,966
0.3
3,500
0.3
Nature eInstant
1,455
0.1
1,251
0.1
Horoscope eInstant
3,134
0.2
2,643
0.2
Ässä eInstant
3,325
0.2
0
–
516
0.0
0
–
Lucky Words Instant
Horoscope Instant
Football eInstant
Instant games
Total
141,890
10.4
138,463
10.5
1,361,210
100.0
1,315,827
100.0
The turnover of daily drawn games and Veikkaus Bingo, round 1/07; and betting games, round 52 /06, played
between 28 and 31 December 2006 are included in the turnover of 2006 judging by the draw dates of the games.
73
2. FINANCIAL RESULT 2002—2006
Thousand euros
Turnover
Gross margin on sales
share of turnover %
Net profit
share of turnover %
Result before appropriations
share of turnover %
Result for the financial year
share of turnover %
3. OTHER OPERATING INCOME
IFRS
2006
IFRS
2005
FAS
2004
FAS
2003
FAS
2002
1,361,210
1,315,827
1,260,829
1,159,290
1,089,558
489,582
468,258
461,362
438,417
413,698
36.0 %
35.6 %
36.6 %
37.8 %
38.0 %
403,288
397,229
394,517
371,034
347,512
29.6 %
30.2 %
31.3 %
32.0 %
31.9 %
407,672
400,672
397,297
374,206
353,960
29.9 %
30.5 %
31.5 %
32.3 %
32.5 %
407,689
400,397
397,735
375,718
357,209
30.0 %
30.4 %
31.5 %
32.4 %
32.8 %
Thousand euros
2006
Rental income
2005
10
12
Messaging service income
105
102
Indemnifications
451
Profit from stock sales
47
Returned prizes from fixed-match gaming
Other income
Total
4. DEPRECIATIONS
5,169
920
361
543
1,895
5,826
Thousand euros
Intangible assets
2006
2005
11,638
7,187
Buildings and constructions
1,158
1,089
Machinery and equipment
3,229
2,063
16,025
10,340
Total
Fixed assets are subject to straghtline depreciations according to their
economic lifespan. Due to the transition into the new game system, depreciations for the worth of EUR 9.7 million were recorded in 2005—2006 in an
accelerated schedule. In 2007—2008, an estimated EUR 3.0 million of depreciations will be made according to an accelerated schedule. Lands, housing
stocks and works of art are not subject to depreciations.
74
5. OTHER OPERATING EXPENSES
Thousand euros
Other advertising and marketing
2006
2005
6,600
5,001
Other voluntary personnel expenses
1,157
1,188
Travel expenses
1,448
1,248
Representation and negotiation expenses
591
472
Car expenses
678
715
Equipment and freight charges
3,461
1,950
2,427
2,163
Real estate expenses
2,066
1,928
Maintenance and servicing of software
2,101
2,220
Banking expenses
1,131
1,016
Mailing expenses
454
1,109
Phone expenses
739
701
1,268
1,158
24,123
20,871
Other office expenses
Total
6. FINANCIAL INCOME AND EXPENSES
Dividend income
Thousand euros
2006
2005
2
344
Interest income
Long-term investments
464
Short-term investments
3,896
3,086
Other financial income
24
18
Financial income total
4,386
3,447
Interest expenses
1
4
Financial expenses total
1
4
4,384
3,443
Translation differences
Total
75
7. TANGIBLE ASSETS AND DEPRECIATIONS
Thousand euros
Tangible assets
Land and
waters
Buildings and
constructions
Machinery and
equipment
Other
1,899
26,351
50,944
579
79,774
6
2,974
7,502
13
10,495
243
36
29,082
58,410
592
89,989
Accumulated depreciations 1 Jan 2006
9,068
46,842
Depreciations for the financial year
1,158
3,193
4,350
10,225
50,035
60,261
Acquisition cost 1 Jan 2006
Increase
Decrease
Acquisition cost 31 Dec 2006
1,906
Accumulated depreciations 31 Dec 2006
Total
279
55,910
Book value 31 Dec 2006
1,906
18,857
8,375
592
29,729
Book value 1 Jan 2006
1,899
17,283
4,102
579
23,864
Land and
waters
Buildings and
constructions
Machinery and
equipment
Other
1,854
26,242
49,527
575
78,199
45
109
1,443
4
1,601
579
79,774
Tangible assets
Increase
Decrease
76
26
1,899
Total
26
26,351
50,944
7,978
44,779
1,089
2,063
3,152
9,068
46,842
55,910
52,758
1,899
17,283
4,102
579
23,864
1,854
19,082
4,523
575
26,035
8. INTANGIBLE ASSETS AND DEPRECIATIONS
Intangible assets
Thousand euros
2006
2005
Computer software and
activated development costs
Computer software and
activated development costs
59,909
47,645
Increase
18,079
Increase
12,264
Decrease
Decrease
77,988
59,909
34,584
27,397
11,638
46,222
7,187
34,584
31,766
25,325
25,325
12,156
The technology of Veikkaus’ game system will be reformed entirely in the next few years. The first phase of the reform, Veikkaus’ internet gaming
service was introduced in November 2006. It will be followed by the replacement of the online terminals during the spring and summer of 2007. In the
summer of 2008, the transition to an entirely new game system will be finalized.
9. INVESTMENTS
Thousand euros
2006
Software
2005
23,541
12,264
IT appliances
958
886
Office equipment
972
250
11
0
Equipment, other installations
Real estates
Basic improvements
494
Machinery, equipment, fittings
293
Company cars
155
787
339
152
307
155
Works of art
13
4
Investments
11,685
3
Investments in progress
269
8,599
38,574
22,468
77
10. INVESTMENTS AVAIL ABLE FOR SALE
Untraded shares
Other investments available for sale
12. LIQUID ASSETS
Thousand euros
2006
2005
568
567
10,568
567
Total
2006
2005
2,051
1,472
159,771
165,186
161,822
166,658
The other investments available for sale include an untraded bond released
on 1 February 2006 and which will fall due on 1 Feb 2016. In the first year, the
loan has a fixed annual interest rate of 5 %. In the following years, the annual
interest rate will be 5 % for the days when the 3-month euribor stays within a
separately specified fixed interest range. For the other days, a 0.5 %-interest
is paid. The fair value of the loan is not considered to have changed from the
original acquisition cost when it is compared with the trading of a loan of respective term and conditions at the time of the financial statement.
Investments available for sale are short-term certificates of deposit and deposits.
11. SHORT-TERM RECEIVABLES
13. SHARE CAPITAL
Thousand euros
Trade receivables
Accrued income
Other receivables
Total
Essential items of accrued income
Periodic interest income
Periodic game event cooperation
Gtech receivables
2006
2005
15,681
15,907
8,806
2,461
146
370
24,632
18,738
Thousand euros
2006
2005
1,158
511
272
619
7,189
Trade and dividend receivables from
sales of shares of Edita Kvarto
Other accrued income
Total
78
Cash in hand and at bank
10,000
Total
Thousand euros
483
187
849
8,806
2,461
Interest rate risk
Short-term financial investments expose Veikkaus to an interest rate risk, but
their importance is low as a whole. The income and operative cash-flows are
mainly independent of the changes in market interest rates.
The shares are 498 in number, and their nominal value is EUR 340 per share.
Reserve fund
The reserve fund has remained unchanged whilst going over to the IFRS.
Contingency fund
The difference between the net profit for the financial year and the return to
the Ministry of Education is entered into the contingency fund in accordance
with the decision by the General Meeting. The use of the contingency fund is
determined by the General Meeting.
Other shareholders’ equity
The other shareholders’ equity includes, e.g., the depreciation difference in
accordance with FAS, resulting from the transition from the previous standard of financial statement to the IFRS.
14. SHORT-TERM LIABILITIES
15. LIABILITIES FROM EMPLOYEE BENEFITS
Thousand euros
2006
2005
Advance payments for multi-week subscriptions
10,060
9,385
Trade payable
12,174
4,023
Allocated personnel expenses
Accrued winnings payable
Other accruals
5,045
5,106
16,013
11,713
2,190
2,194
Total
23,248
19,013
25,209
25,490
Benefit-based pension schemes
The benefit-based pension schemes include the settlements made for part of
Veikkaus’ staff including the benefit and additional pensions that enable the
employees to retire at an earlier age without losing part of their pension. The
special pension settlements have been awarded to persons having started
their employment at Veikkaus before 1985, and additional pension settlements have been awarded to persons having started before 1994.
The benefit-based pension liabilities are determined
in the balance sheet as follows:
Thousand euros
Present value of liabilities
Settlement debt to the State
Lottery tax
Fair value of funds
11,669
10,914
Withholding tax liability
430
493
Social security liability
40
39
2,604
620
14,743
12,066
Value-added tax
Balance underfund/overfund
2006
2005
2,591
2,874
0
0
2,591
2,874
131
97
0
0
2,722
2,971
Actuarial gains (+) and
losses (–) not yet recognized
Costs based on past service not yet recognized
Net post-employment scheme liabilities
Total
14,984
17,092
100,417
87,069
in the balance sheet
Benefit-based pension costs have been determined in the income
Liabilities to players include uncashed prizes and return payments on betting games, as well as the funds deposited on the internet players’ game
accounts.
Other short-term liabilities include, e.g., the prize funds. In the balance sheet
of 31 Dec 2005, they amounted to a total of EUR 12.0 million. A total of EUR
14.8 million of funds accumulated in 2006, and EUR 12.3 million of them were
used for prize payout The funds total EUR 14.6 million in the balance sheet
of 31 Dec 2006. This balance value includes EUR 3.9 million of funds that can
only be used for prize payout in Lotto according to the rules.
statement as follows:
Thousand euros
2006
2005
Costs based on service during the financial period
104
127
Interest costs
134
168
Expected gain from the funds in the settlement
0
0
Actuarial gains (–) and losses (+)
0
0
Costs based on past service
0
0
Losses/gains for curtailment of the settlement
Costs (+) / income (–) in the income statement
0
0
238
295
Actual return on funds in the settlement was EUR 131,000 in 2006 and EUR
97,000 in 2005.
79
16. REL ATED PARTY TRANSACTIONS
Change in present value of pension liabilities in the balance sheet
At the beginning of the financial year
Changes in foreign exchange rates
Pension costs in the income statement
At the end of the financial year
2006
2005
2,971
3,230
0
0
– 249
– 259
2,722
2,971
Thousand euros
Veikkaus’ related parties include the CEO, the rest of the Executive Team, the
Board of Directors, the Supervisory Board, and the other state-owned companies.
Salaries paid;
compensations and employee benefits
CEO
Other members of the Executive Team
Board of Directors
Change in the present values of the funds in the settlement
2006
Costs (+) / income (–) in the income statement
Payments made to the settlement
2,971
2005
3,230
238
295
– 487
– 554
2,722
2,971
Supervisory Board
Total
2006
2005
304
220
1,055
821
125
112
98
112
1,583
1,265
The CEO has a six-month notice period. In case certain specific conditions are
fulfilled, he is entitled to a compensation corresponding to a twelve-month
salary if his employment is terminated by notice.
Veikkaus expects to pay EUR 475,000 to the settlement in 2007.
Most important actuarial assumptions made
in the settlement
2006
2005
Discount rate
4.10 %
4.50 %
Assumed future pay rise
3.00 %
3.00 %
Assumed inflation
2.00 %
2.00 %
Neither the members of the Board of Directors nor the company management
are entitled to extraordinary benefits different from those determined in a
regular employment contract, with the exception of the additional pension
schemes of the CEO and the Executive Vice President 63 years/66%. The
company management is not entitled to option rights.
OTHER REL ATED PARTY TRANSACTIONS
Veikkaus may purchase goods or services from other state-owned companies. The purchasing prices and delivery conditions for the goods and services
are the same as with any other group of customers and they are small in
number.
Other long-term employee benefits:
bonus for years of service
17. CONTINGENT LIABILITIES AND AND AMOUNTS
Veikkaus grants its staff a bonus for years of service, classified as a longterm employee benefit.
PAYABLE ON OTHER LEASING AGREEMENTS
2006
Thousand euros
Lease payments due during the next financial year
Increase
334
Lease payments due at a later date
Liability recorded in the balance sheet
Thousand euros
304
2005
2006
2005
166
137
53
29
219
166
in five years
Lease liabilities total
384
488
688
822
Most vehicle lease agreements are made for 3 years.
Veikkaus has committed to cover annually 60 %, yet one million euros at the
maximum, of Innoka Oy’s expenses until 30 September 2010. Veikkaus owns
19 % of Innoka’s shares.
80
18. ADOPTION OF THE IFRS REPORTING STANDARD
The adoption of the IFRS standard has resulted in certain changes in the financial statement, its notes, and the preparing principles.
INCOME STATEMENT 2005
Thousand euros
1—12 / 2005
TURNOVER
Adjust- 1—12 / 2005
ments
IFRS
1,315,827
1,315,827
5,826
5,826
678,744
678,744
60,568
60,568
80,565
80,565
Other operating income
The reconciliation statements and the reports below illustrate the differences between IFRS reporting and FAS reporting as they were in 2005 and on
1 January 2006, at the date of the transition to the IFRS standard.
Other income
Prizes
Lottery tax
The principal differences between the adopted IFRS standard and
the Finnish accounting standards are as follows:
Raw materials and services
Retail commissions
The depreciation difference in accordance with FAS, EUR 10.6 million, has
been recorded in other shareholders’ equity.
The liabilities resulting from employee benefits and the share of the company’s own input related to the development expenses have been considered
in accordance with the IFRS standards 19 and 38.
The traded shares available for sale have been measured against their fair
value and recorded through the fair value fund.
Playslips and lottery tickets
Drawing expenses and result service
6,742
6,742
10,176
10,176
Game event cooperation
10,774
10,774
Product advertising
10,037
10,037
Data Communications
727
727
119,021
119,021
Personnel expenses
Salaries and compensations
16,480
–4
16,476
Pensions
4,438
– 29
4,409
Other indirect personnel expenses
1,009
– 33
21,894
Indirect personnel expenses
The reconciliation statements of shareholders’ equity and financial result,
shown in connection with the financial statements, illustrate the differences
between a financial statement in compliance with the IFRS standard and the
Finnish accounting standards (page 84).
21,927
1,009
according to plan
10,340
10,340
33,858
33,858
397,195
397,229
Other operating expenses
Operating profit
Financial income and expenses
Interest income & other financial income
3,447
Interest expenses & other financial expenses
3,447
4
4
3,443
3,443
400,639
400,672
400,639
400,672
Profit before extraordinary items
and appropriations
Extraordinary items
Extraordinary expenses
Profit before appropriations
Appropriations
Direct taxes
275
NET PROFIT for the financial year 400,364
Profit per share (Thousand euros)
275
– 33
400,397
804
81
BAL ANCE SHEETS 2005
Thousand euros
31.12.2005
Adjustments
31.12.2005 IFRS
31.12.2004
ASSETS
Non-current assets
Tangible assets
20,184
3,680
23,864
26,035
Intangible assets
10,885
14,441
25,325
12,156
3,492
– 2,925
567
6,466
15,025
– 15,025
291,748
291,748
285,410
18,738
18,738
22,712
166,658
166,658
156,237
526,900
509,016
169
Advance payments and investments in progress
Current assets
Advance payments
Receivables
TOTAL ASSETS
526,729
171
LIABILITIES
Shareholders’ equity
Subscribed capital
169
169
Reserve funds
276
276
276
24,733
24,733
6,466
Contingency fund
Fair value fund
5,205
10,601
516
11,118
11,118
Net profit from previous financial years
Net profit for the financial year
Obligatory provisions
400,880
– 483
400,397
397,735
436,660
33
436,693
420,970
3,000
– 3,000
2,971
2,971
3,230
166
166
137
9,385
17,823
Liabilities
Long-term liabilities
Pensions payable
Short-term liabilities
Deferred tax liabilities
Trade payable
4,023
4,023
2,812
25,490
25,490
18,172
Settlement debt to the State
12,066
12,066
12,433
19,013
19,013
20,568
17,092
17,092
12,596
526,900
509,016
TOTAL LIABILITIES
The comparative IFRS figures for 2005 on p. 84.
82
275
9,385
526,729
171
BAL ANCE SHEETS 2004 and IFRS
Thousand euros
2004
IFRS transfer
Balance according to
IFRS 2004
4,025
18,971
ASSETS
Non-current assets
Tangible assets
Land and waters
Buildings and constructions
1,854
1,854
14,946
Unfinished buildings
112
4,961
Unfinished equipment
112
4,961
21,761
137
137
5,808
6,348
6,348
26,035
Intangible assets
Computer software
5,808
Unfinished computer software
5,808
12,156
Shares and holdings
Advance payments and investments in progress
5,010
1,456
6,597
– 6,597
6,466
Current assets
Advance payments
285,410
285,410
Receivables
Sales receivables
14,074
Accrued income
1,842
Other receivables
6,796
TOTAL ASSETS
14,074
1,842
22,712
6,796
22,712
156,237
156,237
503,536
509,016
LIABILITIES
Shareholders’ equity
Subscribed capital
169
Reserve funds
276
Contingency fund
169
446
276
6,833
Fair value fund
Net profit for the financial year
446
6,833
5,205
5,205
10,751
10,751
397,735
397,735
397,735
Accumulated appropriations
Depreciation difference
Obligatory provisions
11,118
– 11,118
3,000
– 3,000
Liabilities
Long-term liabilities
Pensions payable
3,230
3,230
137
137
3,367
Short-term liabilities
Deferred tax liabilities
275
275
Advances received
Trade payable
17,823
17,823
2,812
2,812
Other creditors
18,172
Settlement debts to the State
12,433
18,172
30,605
12,433
30,605
20,568
12,596
12,596
503,536
509,016
TOTAL LIABILITIES
20,568
83
19. SIGNATURES OF THE BOARD OF DIRECTORS REVIEW
2005 IFRS COMPARATIVE INDICATORS
AND THE FINANCIAL STATEMENTS
Equity reconciliation
Thousand euros
Vantaa, 12 March 2007
Shareholders’ equity FAS
31.12. 2004
31.12. 2005
405,014
426,058
Employee benefits
– 367
– 137
Measurement of stocks
5,480
Measurement of fixed assets*
11,118
Other adjusting items
10,601
JUH A N IE M E L Ä
M AIJA-RIIT T A O L L IL A
Chairman of the Board
Vice Chairman of the Board
JO UK O AH T O L A
T IM O K E N AK K AL A
ARI L AH T I
L E E N A P AAN AN E N
M AT T I SAARIN E N
P AUL A T UO M IK O SK I
171
Deferred tax on the adjustments
– 275
Shareholders’ equity IFRS
420,970
436,693
* Depreciation difference in accordance with FAS and IFRS adjustments.
RIST O N IE M IN E N
Reconciliation for the net profit of the financial year
CEO
Thousand euros
1—12/2005
Net profit for the financial year FAS
400,880
Employee benefits
137
Adjustments to fixed assets
516
Other adjustments
Total adjustments to the net profit
Net profit for the financial year FAS
A report on the audit has been issued today. The Financial statements have
been conducted in accordance with the generally accepted accountning
principles.
– 171
483
400,397
O SM O VAL T O N E N
L ASSE H O L O P AIN E N
Certified Accountant
Authorised Public Accountant
20. LIST OF ACCOUNTING BOOKS AND RECORD FORMATS
84
General ledger
in electronic format
Journal
Cash accounting and payment transaction redords
printed documents
Travel expense claim records
printed documents
Memorandum records
printed documents
Accounts receivable ledger
printed documents
Onnet accounts receivable ledger
printed documents
Accounts payable ledger
printed documents
Payroll accounting records
printed documents
Depreciation records
printed documents
Prize records
AUDITORS’ REPORT
STATEMENT BY THE SUPERVISORY
BOARD
To the shareholders of Veikkaus Oy
We have audited the accounts, the accounting record and the administration
of Oy Veikkaus Ab for the financial year 1 January to 31 December 2006. The
Board of Directors and the CEO have prepared the financial statement in accordance with the international auditing standards (IFRS) approved for use
in the EU, including a balance sheet, income statement, cash-flow statement,
statement on the changes in equity, and notes to the financial statements,
as well as a report on operations pursuant to the regulations effective in
Finland. Based on our audit, we give our opinion on the financial statements
and administration.
In our opinion, the financial statements have been prepared in accordance
with the approved standards of accounting. The accounts, the accounting principles, the contents and the presentation have been examined to
a sufficient degree to conclude that the report on operations and financial
statement do not include crucial mistakes or deficiencies. Whilst auditing the
administration, we have examined the legality of the operations by the CEO
and the Members of the Board of Directors and the Supervisory Board in compliance with the provisions in the Finnish Companies Act.
In accordance with the international accounting standards (IFRS) approved for
use in the EU, the prepared financial statements give correct and sufficient
information on the result of the company’s operations and financial status as
determined in these standards and the Accounting Act.
The report on operations has been prepared in accordance with the provisions
of the Accounting Act and other regulations concerning the preparation of
the report on operations. The report on operations is in harmony with the
financial statements and provides sufficient information on the result of the
company’s operations and financial status as defined in the Accounting Act.
In its meeting of today, the Supervisory Board of Veikkaus Oy examined
the financial statements for the financial year between 1 January 2006 and
31 December 2006 and the Auditors’ report. The Supervisory Board has decided to propose in its statement to the regular General Meeting that the income statement and balance sheets be approved and the profit in the financial statement be used in accordance with the Board of Directors’ proposal.
The Supervisory Board finds that its decisions and guidelines have been complied with and that it has been given the information it has deemed necessary by the company’s Board of Directors and CEO.
Helsinki, 12 March 2007
IL K K A K AN E RVA
M AT T I SAARIN E N
Chairman
Vice Chairman
E VA BIAUD E T
K AARIN A D RO M BER G
JUK K A GUST AFSSO N
K AUK O JUH AN T ALO
JARI L E P P Ä
M AIJA-L IISA L IN D QV I ST
M IN N A L IN T O N E N
AIL A P AL O N IE M I
P IRK K O P E L T O M O
IRJA T UL O N E N
K ARI UO T IL A
T E IJA K AL L IO P E RÄ
The financial statements can be approved, and the members of the Board of
Directors and Supervisory Board, and the CEO can be discharged from liability
for the period audited by us. The proposal of the Board of Directors on the
distribution of profit for the year is in compliance with the Companies Act.
OSMO VA LT ONE N
L A S S E H O L O PA I N E N
Certified Public Accountant
Authorised Public Accountant
85
COMPARISON WITH THE GRI RECOMMENDATIONS
Global Reporting Initiative (GRI) is an international
organization which develops and publishes guidelines for sustainability reporting. GRI’s objective is
to promote the reporting of reliable and comparable information for the needs of different stakeholders and for social debate. The guidelines aim
at openness, credibility, clarity and comparability.
The use of the GRI recommendations is completely
voluntary, but hundreds of companies in the world
are already using the guidelines to report the economic, environmental, and social facets of their
activities according to the GRI reporting recommendations. The contents and reporting principles
INDICATOR
GRI CONTENTS
1.
Strategy and analysis
INCLUDED
1.1
Statement from the CEO
Yes
8—9
1.2
Description of key impacts risks, and opportunities
In part
7
2.
Organizational profile
2.1—2.9
Basic information about Veikkaus
Yes
7, 62
2.10
Awards and recognition received in the reporting period
Yes
15
3.
Report profile
3.1—3.4
Report profile
In part
3
3.5—3.11
Report scope and boundaries
In part
3
3.12
GRI content index
Yes
86—88
3.13
External assurance
No
used in Veikkaus’ annual report 2006 comply,
where applicable, with the recommendations of
GRI G3 reformed in the autumn of 2006.
PAGE
COMMENTS
From the perspective of business operations
The information in the social responsibility report has not
been assured by a third party, except for the audited
financial statements
4.
Governance, commitment, and engagement
4.1—4.10
Governance
Yes
52—54
4.11—4.13
Commitments to initiatives concerning social responsibility
Yes
22—23, 40—41
4.14—4.17
Stakeholder engagement
Yes
12—13
5.
Governance structure and key indicators
Yes
52—54
Governance
In part
15, 37
Information is included in the report; not presented in
the table format recommended by GRI
79—80
Notes to the financial statement 15. Liabilities from
employee benefits
Governance
ECONOMIC RESPONSIBILIT Y
Governance structure
Indicators
Economic results
EC1 *
Economic value generated and distributed, including revenues, operating costs,
employee compensation, donations and other community investments, retained
earnings, and payments to capital providers and governments
EC2 *
Financial implications and other risks and opportunities for the organization’s
activities due to climate change
No
EC3 *
Coverage of the organizational pension commitments
Yes
EC4 *
Significant financial assistance received from government
No
Irrelevant to Veikkaus’ activities
Market
EC5
Range of ratios of standard entry level wage compared to local minimum wage at
significant locations of operation
EC6 *
Policy, practices, and proportion of spending on locally-based suppliers at significant
locations of operation
No
EC7*
Procedures for local hiring and proportion of senior management hired from the local
community at significant locations of operation
No
In part
15, 27
Average wage in Finland
Indirect financial impacts
86
EC8 *
Development and impact of infrastructure investments and services provided
primarily for public benefit through commercial, in-kind, or pro bono engagement
Yes
18, 20
EC9
Understanding and describing significant indirect economic impacts, including
the extent of impacts
Yes
37—38
Annual report 2006
Distribution of Veikkaus’ funds
INDICATOR
GRI CONTENTS
INCLUDED
PAGE
COMMENTS
Yes
14, 31, 35
Veikkaus’ social responsibility programme,
ENVIRONMENTAL RESPONSIBILIT Y
Indicators
Materials
EN1 *
Materials used by weight or volume
Yes
31—32
EN2 *
Percentage of materials used that are recycled input materials
In part
31—32
Described in writing
Energy
EN3 *
Direct energy consumption by primary energy source
No
EN4 *
Indirect energy consumption by primary source
Yes
15, 34
Heat and energy consumption at
the head office reported
Yes
15, 34
Water consumption at the head office
Water
EN8 *
Total water withdrawal by source
Biodiversity
EN11—EN12 * Biodiversity
No
Emissions and waste
EN16 *
Total direct and indirect greenhouse gas emissions by weight
No
Not reported.
EN17 *
Other relevant indirect greenhouse gas emissions by weight
No
EN19 *
Emissions of ozone-depleting substances by weight
No
EN20 *
NOx, SOx, and other significant air emissions by type and weight
No
EN21 *
Total water discharge by quality and destination
No
EN22 *
Total weight of waste by type and disposal method
Yes
EN23 *
Total number and volume of significant spills
No
34
Waste generated at the head office
Products and services
EN26 *
Initiatives to mitigate environmental impacts of products and services,
and extent of impact mitigation
Yes
EN27 *
Percentage of products sold and their packaging materials that are
reclaimed by category
No
No
31—32
Compliance with regulations
EN28 *
Monetary value of significant fines and total number of non-monetary sanctions for
non-compliance with environmental laws and regulations
Transportation
EN29
Significant environmental impacts of transporting products and other goods and materials used
for the organization’s operations, and transporting members of the workforce
Yes
15, 32
Distribution transports and service calls
Yes
14, 17, 20—25
Veikkaus’ social responsibility programme,
Social responsibility
SOCIAL RESPONSIBILIT Y
Indicators
PRACTICES CONCERNING EMPLOYEES AND WORKING CONDITIONS
Workforce
LA1 *
Total workforce by employment type (full-time/part-time), employment contract
(permanent/fixed-term), and region
Yes
15, 26, 64
LA2 *
Total number and rate of employee turnover by age group, gender, and region
Yes
15, 26—27
28
Relationship between employees and employer
LA4 *
Percentage of employees covered by collective bargaining agreements
Yes
LA5 *
Minimum notice period(s) regarding significant operational changes,
including whether it is specified in collective agreements
No
In compliance with the Finnish legislation on cooperation
within undertakings
Occupational health care and workplace safety
LA6
Percentage of total workforce represented in formal joint management-worker
health and safety committees that help monitor and advise on occupational
health and safety programs
Yes
28
LA7 *
Rates of injury, occupational diseases, lost days, and absenteeism, and number of
work-related fatalities by region
In part
15, 27
Sick-leaves reported
Annual report 2006
87
INDICATOR
GRI CONTENTS
INCLUDED
LA8 *
Education, training, counseling, prevention, and risk-control programs in place
to assist workforce members, their families, or community members regarding
serious diseases
No
PAGE
COMMENTS
Education
LA10 *
Average hours of training per year per employee by employee category
Yes
15, 27
Training days
LA11
Programs for skills management and lifelong learning that support the continued
employability of employees and assist them in managing career endings
Yes
27
The Gaming Academy
LA12
Percentage of employees receiving regular performance and career
development reviews
In part
53, 64
Compensation system
Diversity and opportunities
LA13
Composition of governance bodies and breakdown of employees per category according to
gender, age group, minority group membership, and other indicators of diversity
Yes
26, 64
LA14 *
Ratio of basic salary of men to women by employee category
27
In part
Requirement level of the Equal Opportunities Plan;
basic salary ration not reported
HR1—2, 4—7 * HUMAN RIGHTS
HR3, 8—9”
Human rights
No
SOCIETY
Local communities
SO1 *
Nature, scope, and effectiveness of any programs and practices that assess and
manage the impacts of operations on communities, including entering, operating,
and exiting
Yes
12—14
In part
43
Corruption
SO2 *
Percentage and total number of business units analyzed for
risks related to corruption
SO3 *
Percentage of employees trained in organization’s anti-corruption policies
and procedures
No
Not reported
SO4 *
Actions taken in response to incidents of corruption
No
Not reported
Monitoring system described
Political involvement
SO5 *
Public policy positions and participation in public policy development and lobbying
Yes
40—41
Covered from the point of view of the exclusive right
SO8 *
Monetary value of significant fines and total number of non-monetary sanctions
for non-compliance with laws and regulations
No
Not reported
PRODUCT RESPONSIBILITY
Customers’ health and safety
PR1 *
Life cycle stages in which health and safety impacts of products and services are
assessed for improvement, and percentage of significant products and services
categories subject to such procedures
PR2
Total number of incidents of non-compliance with regulations and voluntary codes
concerning health and safety impacts of products and services during their life cycle,
by type of outcomes
Yes
Yes
14, 20—25
Ethical evaluation in the game classifi cation model
22
Requests for recommended decisions
Product information
PR3 *
Type of product and service information required by procedures, and percentage of
significant products and services subject to such information requirements
Yes
14, 20—25
PR5
Practices related to customer satisfaction, including results of surveys measuring
customer satisfaction
Yes
15
Results of the customer service survey
Programs for adherence to laws, standards, and voluntary codes related to marketing
communications, including advertising, promotion, and sponsorship
Yes
25
Ethical guidelines for Veikkaus’ marketing
communications
45
Marketing communications
PR6 *
Protection of customer privacy
PR8
Total number of substantiated complaints regarding breaches of customer privacy
and losses of customer data
In part
PR9 *
*
88
Monetary value of significant fines for non-compliance with laws and regulations
concerning the provision and use of products and services
Core indicator recommended in the GRI standards
Annual report 2006
No
Not reported
GLOSSARY
Beneficiaries receive support for their activities
from Veikkaus funds, distributed by the Ministry
of Education. In practice, all Finns benefit from
Veikkaus funds. All of us win in Veikkaus games
when engaging in the activities of, e.g., recreational sports facilities, cinemas, theatres, and the
Scout organization.
Ecological Team is a team consisting of staff
representatives and an external consultant, in
charge of the practical implementation of environmental responsibility and the motivation and encouragement of the staff in environmental issues,
as well as the communication of them to the staff.
Ethical Council is an advisory expert organ with
12 members from outside of the company, set up
by Veikkaus’ Board of Directors.
European Lotteries and Toto Association
(EL) is an organization of the European gaming
operators in the gaming sector.
Funds Distribution Act is an act on the distribution of funds from lotteries, betting, and pools
games. The distribution of the funds, as it is specified in the Funds Distribution Act, which was laid
down in 2001, will be introduced gradually by the
year 2011. The act determines the distribution as
follows: 38.5 % of the funds shall be allocated to
arts, 25.0 % to sports, 17.5 % to science, and 9.0 %
to youth work. Moreover, 10.0 % of the funds shall
be distributed between the said beneficiaries as
separately specified.
Game event cooperation promotes the objectives of Veikkaus’ business operations by safeguarding the required conditions for the offerings.
It also makes Veikkaus games part of different
sports events, helps in achieving rightly-focused
product visibility, and supports the acquisition
of new customers and reinforces old customer
relations.
Gaming Forum is a forum of 16 members, set
up by the Council of State. In March 2006, it
published guidelines for the Finnish national
gaming policy. The members of the Forum represent different parliamentary groups, the gaming
organizations, and the Ministries of Education,
Social Affairs and Health, Agriculture and Forestry,
Finance, and the Ministry of the Interior.
Gaming licence. The Council of State has
granted Veikkaus the exclusive right to operate
lotteries and pools and betting games by virtue
of the Lotteries Act. The present licence will be
effective until 2011.
Gaming restrictions can be imposed to ensure
secure gaming. The age limit for playing Veikkaus
games at the POS is 15 and the limit for playing
on the web is 18. Veikkaus games can neither be
played on credit, nor in the night time; the system
is closed at 22:00 hrs. Live betting has been made
subjects to stake limits.
HEPPA is an employee data register system and
electronic tool, which supports the operational
models and practices belonging to the different
stages of the life-span of employment contracts,
and the cooperation between managers and the
staff.
The Lotteries Act lays down the rules concerning the operation and supervision of lotteries, the
accounting and use of lottery funds, as well as the
control of the allocation of the funds.
Marketing cooperation promotes Veikkaus’
corporate image and objectives related to the
operating environment and business operations
of the different marketspaces.
National exclusive right. Finnish lottery
legislation is based on the idea that each type of
game shall be provided by just one operator. The
exclusive right is a means used by the authorities
to control gaming and restrict competition that
would lead to aggressive attracting of players if it
was left unregulated. Veikkaus has been granted
the exclusive right to provide pools and betting
games, and lotteries.
Official supervisors are persons nominated by
the Ministry of the Interior, who supervise gaming
activities and confirm the game results and the
number of prizes on each round.
Online point of sales is a retail outlet selling all
of the playslip-based games, and instant tickets.
With the help of the online terminal of the outlet,
the gaming transactions are recorded in Veikkaus’
game system real time.
Peluuri helpline is a toll free helpline for people
worried about or suffering from problem gambling,
as well as for their families and friends. Veikkaus
finances the helpline’s activities jointly with the
other national gaming organizations in Finland.
Request for recommended decision. In
questions related to prize payout, Veikkaus’ players can file an appeal to the supervisory authority,
the Ministry of the Interior, which processes the
requests. In 2006 Veikkaus had a total of 339
million gaming transactions. In all, 78 requests for
recommended decision were handled.
Retailer, retail network. Retail agreements
are made between Veikkaus and the company
or business acting as a retailer. One retailer may
have several points of sales. The largest individual
Veikkaus’ retailer is Rautakirja Oyj. The points of
sales managed by Veikkaus’ retailers constitute
a nation-wide network of retail outlets selling
Veikkaus games.
Veikkaus Card is Veikkaus’ customer card. It is
free of charge and personal, and is granted to customers over 18 and living permanently in Finland.
Veikkaus funds are funds that Veikkaus returns
to the Ministry of Education, to be distributed
further to the beneficiaries: arts, sports, science,
and youth work. In 2006 the Ministry of Education
distributed EUR 401.4 million of Veikkaus funds.
Veikkaus’ offerings include the products and
the ways of offering and distributing them to different target groups through multiple channels in
various situations.
World Lottery Association ( WLA) is a worldwide member organization of the national gaming
organizations with members in over 70 countries.
Its mission is to promote safe and controlled gaming around the world.
Annual report 2006
89
CONTACTS
Veikkaus’ annual and social responsibility report is published in
THE REPORT WAS EDITED BY:
P R I N T E D AT:
Finnish and English. The report can also be read in Swedish at
Veikkaus’ Communications in cooperation with
HardWorkingHouse Oy and Proventia Solutions Oy.
WellPrint Oy, 2007
our website www.veikkaus.fi /yritys.
PAPER:
Up-to-date information is also available in our monthly
newsletter Veikkaus’ eNews. To order the newsletter and the
L AY O U T:
Cover: Gallerie Art Matt 300 g
HardWorkingHouse Oy
Inside pages: Gallerie Art Silk 130 g
Pages of the financial statement: Dito 120 g
annual report, please contact Veikkaus’ Communications:
PHOTOS:
Tel. +358 20 750 7141, tiedotus@veikkaus.fi, or
Picture design Design Agency TANGO,
www.veikkaus.fi /yritys.
Kari Ylitalo/Potkastudios,
Cover picture and p. 4, 10, 16, 20, 22, 30, 31, 35, 36, 41, 49
and 60
Jukka Köresaar/Veikkaus Oy, p. 12
V E I K K A U S O Y , the Finnish National Lottery
Lehtikuva Oy, p. 19, 24, 33, 39, 42, 47 and 59
Karhunkierros 4
Kimmo Lehtonen/Studio Skaala Oy, p. 8, 56 and 58
FI–01640
Sakari Viika, p. 29
Vantaa, Finland
T R A N S L AT I O N I N TO E N G L I S H :
Tel. +358 20 750 750
www.veikkaus.fi
Marja Heikkinen, TransEarly

annual report 2006 social responsibility report

Transcription

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