Our Responsibilities Chief Executive's Introduction

I am very pleased to report a year of record sales and a significant increase in returns to the Good Causes. These results demonstrate the continuing strength of Camelot’s strategy of long-term, responsible growth, based on efficiency, innovation and diversification.

In the year to 31 March 2011, Camelot increased National Lottery sales to £5.8bn, breaking the previous sales record of £5.bn set in 1997/98. The record sales mean more money for the Good Causes, more prize money for players – and the Exchequer benefits too through an increase in the duty collected. Achieving this sales record would be worth celebrating at any time, but it’s especially so in challenging economic conditions and at a time when the worldwide trend for lottery sales is slowing. It’s a tribute to the hard work and commitment of Camelot’s staff – and to the enterprise of our many thousands of dedicated retail partners.

It is particularly encouraging that we grew sales across the board – in draw-based and instant play games, and in our retail as well as our direct channels.

Sales of draw-based games rose by £264.7m to £4388.3m. This strong performance shows the benefits of Camelot’s drive for continuous innovation – a new-look Thunderball game, for example, or the two special UK Millionaire Super Raffles. Innovations like these keep public interest in our games high and growing.

It’s a similar story with instant-play games, where sales grew by £105.9m to £1436.1m. Here too, innovation helped to drive growth. We launched more than 70 new Scratchcards and online Instant Win games, including more 3D games and different play-styles.

Camelot’s success depends heavily on the quality and drive of our retail partners. Corner shops and convenience stores, petrol forecourts and supermarkets – these account for 85% of our sales. We offer all 28,800 of our retail partners a comprehensive programme of training and support throughout the year. It pays dividends - our in-store sales rose by £237.5m to £4999.3m. It pays dividends for our partners too – National Lottery retailers have now earned more than £4bn in commission since the lottery began in 1994.

And our direct channels also have a good story to report. Interactive and subscription sales rose by £133.1m to £823.1m. Camelot now operates the biggest online lottery in the word, with more than six million people registered to play. Our website www.national-lottery.co.uk is now one of the top e-commerce sites in the UK by monthly visits. And the launch of the free National Lottery Official App for iPhones has proved hugely popular. It gives players an easy way to check the latest results as well as to find the nearest National Lottery retail outlet.

Now, all this commercial success is terrific and we’re really proud of what we’ve achieved. But at Camelot we never forget that commercial success is only a means to an end – and the end is more money for the Good Causes. And I’m happy to say that this is what we have delivered.

During the year we produced £1665.1m for the Good causes – an increase of £116.7m on 2009/10. Since the lottery began we’ve generated more than £26bn – a staggering amount – for Good Causes. This has translated into more than 350,000 individual awards right across the UK, transforming communities and changing lives for the better. It’s the biggest programme of social and civic regeneration seen in Britain since the 19th century.

One major beneficiary is the 2012 Olympics and Paralympics. I’m delighted to report that we’ve now raised more than £600m to help pay for London 2012 from sales of specially-designated games. And we’re firmly on track to hit our target of £750m.

Our sales success benefits lottery players too – the bigger the sales, the bigger the prize money we can pay out. In 2010/11 prize money topped £2884.0m. Since the lottery began we’ve paid out more than £38bn and created more than 2600 millionaires.

Although Camelot remains a company very firmly focused on our UK operations we have continued to explore the potential for diversification internationally. The corporate restructuring that we put in place at the start of the financial year – remaking Camelot as a group of five operating companies – is helping us work towards this goal. Camelot Global Services Limited, for example, provides consultancy and private management services to lotteries worldwide. The consultancy contract we have with the California State Lottery is showing how we can successfully export our expertise as a world leader in lotteries. Last year the California State Lottery, which raises money for schools, was the fastest growing state lottery in the US.

Of course, not all our moves to innovate and diversify bear such spectacular fruit. We were pipped at the post in our bid to manage the Illinois State Lottery (although we did come second). And we were disappointed when the National Lottery Commission turned down our proposal to add commercial services such as mobile-phone top-ups to our lottery terminals. But innovation implies risk, and risk means that sometimes not everything will go right. But that does not mean you stop trying!

One area where we certainly never stop trying is corporate responsibility. As I have said many times, running our business responsibly, behaving with integrity, doing the right thing by all our stakeholders – these are at the heart of what makes Camelot a great company. This report gives many examples of how we put those principles into practice across everything we do.

But the key piece of evidence for me remains the fact that our business model is based on very large numbers of people playing our games, but individually spending relatively small sums. This has not happened by accident. It reflects the care we take to ensure that nothing we do encourages problem gambling or stimulates people to spend more than they can afford. As a result, the National Lottery remains what it has always been, a bit of fun, a chance to dream, and along the way, an opportunity to do your bit for the Good Causes.

One big change for Camelot this year has been our change of ownership. I’m very happy to say that there is an exceptionally good fit between Camelot and our new shareholder, the Ontario Teachers’ Pension Fund (Teachers’). Teacher’s has a well-deserved reputation as a socially-responsible long-term investor. It understands and fully supports our strategy of diversifying beyond our core UK operations. I am confident we both have much to offer each other.

My thanks are due to the board, to the former Chairman, Sir Peter Middleton, and to his successor, Lee Sienna, for their advice, guidance and support during the past year. My thanks, too, go to my great colleagues at Camelot who have put in so much hard work to produce this year’s stellar results.

Dianne Thompson CBE
Chief Executive