Société générale de financement du Québec invested $288 million in 2009

MONTREAL, April 1 /CNW Telbec/ - In 2009, Société générale de financement du Québec (SGF) invested $288 million, thereby exceeding its $250 million annual investment objective. SGF played a key role in supporting high-performance companies through a difficult economic context. Benefiting from new financial tools, SGF was able to offer financial solutions such as debt and equity investments. Thus, it invested in growth, acquisition and support projects, in accordance with its strategic orientations.

"In 2009, SGF once again proved its importance by supporting Québec-based, high-performance companies in a difficult economic context, stated Mr. Pierre Shedleur, President and General Manager of SGF. Economic benefits are all the more important in such a context, since joining forces with our partners enabled us to help protect the jobs of over 11,200 workers this year alone."

2009 Economic Impacts

SGF actively participates in Québec's economic development, and is the only institution to focus all of its investments on corporate projects.

Its investments in 2009 represent:

    
    - involvement in projects with a global value of nearly $1.250 billion;
    - the creation of 900 value-added jobs with a total payroll of
      $50 million per year;
    - the creation of 4,200 jobs (person-year) during the investment or
      construction phases of the projects, representing a total payroll of
      over $300 million;
    - additional protection for over 11,200 manufacturing employees working
      for companies made vulnerable by the recession;
    - strategic support to the repositioning of forest product companies.
    

The Economic Crisis Impacts the Results of SGF's Portfolio

The difficult economic context has nonetheless led to significant operational and asset impairment losses for some of the companies comprising its portfolio, resulting in a net loss of $245 million for SGF, representing a negative return of 13.3%.

As part of its mission to implement economic development projects in Québec, SGF exposes itself to significant risks that it must consistently manage. SGF's portfolio is mainly comprised of high-risk share capital investments in enterprises. Most of these corporations are exposed to global market conditions and subject to risks related to fluctuating currencies and the prices of raw materials and substitute products, among others. Furthermore, several of SGF's investments are partly dependent on their exports, and were therefore directly affected by the decrease in demand, specifically from the United States. As such, over 80% of SGF's portfolio is comprised of enterprises in the manufacturing sector that continue to suffer from the aftermath of the crisis, which began in 2008.

SGF's net loss of $245 million is comprised mainly of $208 million in investment losses related to asset impairments and shutdown costs in petrochemical and forest product companies. Furthermore, SGF incurred negative investment results totaling $19 million, notably in the aluminum sector due to unfavorable economic circumstances in 2009.

However, SGF points out that its operating expenses decreased compared to last year, dropping from $34 million in 2008 to $31 million in fiscal 2009, despite a high level of activity; which represents a 9% decrease compared with the previous financial year.

About SGF

Société générale de financement du Québec (sgfqc.com), an industrial and financial holding company, has a mission to carry out economic development projects, particularly in the industrial sector, in cooperation with partners and in compliance with accepted profitability requirements and with the economic development policy of the Québec government. As part of its new mandate, SGF is authorized by the Québec government to go beyond its traditional role as an equity investor by offering complementary solutions, such as loans, debentures or preferred capital-share investments.

SGF Investments in 2009

Osisko Mining Corporation: $75 million to develop the Canadian Marlartic gold mining project, which will require investments totaling roughly $1 billion.

Paladin Laboratories: $5.1 million in a Montréal-based company leading the field of specialized pharmaceutical products. This transaction is part of a $51 million firm underwriting announced on May 21, 2009.

Transcontinental: $50 million to launch growth development projects in the new media and Internet technology fields.

BRP: $50 million to enable the company to maintain optimal operations and better protect jobs within Québec.

Gestion forestière St-Maurice: $60 million for nearly 4,000 km2 of forest area in order to reinforce SGF's strategic role as a forest area manager.

Temrex: $12 million to foster resource preservation, ensure dynamic supply of neighbouring companies, and contribute to industry consolidation. Through this transaction, SGF becomes the sole owner.

CAE: In collaboration with the Fonds de solidarité FTQ. $30 million for the creation of a limited partnership offering competitive financing to eligible clients through financial leasing for the development of CAE civilian flight simulation equipment built in Québec and exported worldwide.

Lions Gate: $6.1 million for the production of 13 episodes of "Blue Mountain State" filmed in Montréal, leading to a total of $10 million in economic benefits.

    
    SUMMARY OF CONSOLIDATED RESULTS
    for the year ended December 31

    (in millions of $)                  2009    2008    2007    2006    2005
    -------------------------------------------------------------------------

    CONSOLIDATED RESULTS:
    Income
      Investment results                 (19)     36      29      62      39
      Gain on divestitures and
       miscellaneous                      13      73     167     102     135
    -------------------------------------------------------------------------
                                          (6)    109     196     164     174
    -------------------------------------------------------------------------
    Expenses
      Operating expenses                  31      34      34      33      29
      Investment losses                  208     336     105      56      75
    -------------------------------------------------------------------------
        Net earnings (loss)             (245)   (261)     57      75      70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Shareholder's equity* (in
       millions of $)                  1 951   1 691   1 952   1 900   1 824
      Annual rate of return (%)        (13,3)  (14,3)    3,0     4,1     3,9
      Operating expenses as a
       percentage of shareholder's
       equity* (%)                     1,6     1,9     1,8     1,8     1,6
    -------------------------------------------------------------------------
        Investments (in millions
         of $)                           288     176     233     233      78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Shareholder's equity excludes the accumulated other comprehensive
        income
    

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