Message from the President and CEO

Results Meet Expectations

In line with an agreement reached with our shareholder, and as announced in the Québec Government’s last budget, the revenues generated from gaming activities will be lower this year than last.

At the end of the first quarter of fiscal 2011-2012, Loto-Québec’s earnings equalled $882.3 million, as compared to $916.8 million posted during the same period of the previous fiscal year. This represents a decline of 3.8%. Net results totalled $328.6 million, down 5.5% from the same reporting period in fiscal 2010-2011. This decrease is slightly less than anticipated in the budget.

The first quarter results are generally aligned with expectations. They are the product, in large part, of the performance of the Lottery sector.

In fact, the Lottery sector’s revenues for the first quarter of the current fiscal year declined by 5.1% to $427.7 million. The small number of large Lotto Max and Lotto 6/49 jackpots awarded had a significant effect on the results of the first three months of the year as compared to those of the previous year.

The new Lotto Poker lottery — Loto-Québec’s first online game to offer the chance to win instantly via Quick Pick as well as in an evening draw — generated sales in the order of $21 million during the first quarter, thus proving to be a resounding success! For their part, instant lotteries registered a $10.9 million increase in sales vis-à-vis the same period during the previous year.

The Casino sector’s decline in revenues was fundamentally attributable to the results of the Casino de Montréal, which has undertaken the most important phase of its modernization project. Although we recognize that this portion of the project will inconvenience our clientele to a certain degree, the work is essential, and we are convinced that the gaming house will be in a better position than ever to meet the expectations of patrons upon completion of the modernization effort. Up in the Laurentians, the Casino de Mont-Tremblant’s revenues increased by 11.3% as compared to the first quarter of last year.

At $242.8 million, the Video Lottery sector’s earnings also showed a nominal decline as compared to the $250.1 million posted in the first quarter of 2010-2011. However, we anticipate ending the current year with results equivalent to those of the last fiscal year.

The Bingo sector, for its part, saw its sales rise by 5.6%, due primarily to the new Kinzo game. Over the past several weeks, Loto-Québec has inaugurated four Kinzo Express satellite halls adjacent to the existing bingo halls in Repentigny, Longueuil,
St-Eustache and Joliette.

Finally, virtual gaming, which made its debut on the espacejeux.com site in December 2010, generated revenues in the order of 4.5 million during the first three months of the current year.

Tight Cost Controls
Loto-Québec is continuing its efforts to exercise tight controls over its spending. As a result, direct costs diminished by 4.4% during the first quarter of this year as compared to the same period in the previous fiscal year.

For more information about our first quarter results, I invite you to consult the Quarterly Report.

Nomination of the Next President and Chief Executive Officer
The provincial Cabinet has approved the nomination of Gérard Bibeau for the position of President and Chief Executive Officer of Loto-Québec. This decision came in the wake of the notification I submitted to the Board of Directors a number of months ago that I would not be seeking another mandate as President and CEO.

Mr. Bibeau has led a distinguished career within Québec’s public administration over the course of the past several years. He will be assuming his new mandate at Loto-Québec effective November 7 for a period of five years.

I extend my sincere congratulations to Mr. Bibeau. I am certain that he will meet the challenges in front of him with great success.