2009 was an eventful year at SGF. Indeed, the fiscal year began at the worst phase of the economic crisis and ended under signs of recovery. Overall, Québec managed to weather the storm admirably. Massive public investments in infrastructures and energy development helped support economic activity and the job market.

Nonetheless, the crisis took a heavy toll. our companies faced a credit crunch, value drops, a consumption downturn within our main export market, the united states, as well as a strong valuation
of the Canadian dollar, which impeded their competitive edge.

Throughout this unique year, sgf proved itself to be tailor-made to help companies and Québec’s economy to both deal with the crisis and prepare for the recovery.

New tools for SGF
Considering SGF as one of its key strategic assets, the government of Québec boosted our means within the first few days of 2009. it also authorized SGFto offer loans and debt financing on top of its traditional role as a equity investor. Within a few weeks, we deployed these tools, trained employees, and created a team focused on credit analysis. With these resources, sgf was able to offer companies exactly what they required to meet their specific needs… tailor-made solutions. 

During the last financial year, SGF made nine new investments, totaling $288 million and representing 15% of shareholder’s equity. Each individual investment has an average value of $30 million, which
reflects sgf’s specific role as a major investor within Québec’s financial landscape.

Supporting business people and workers
Among other things, these investments led to strategic acquisitions in the forest sector, which helped some leaders of our manufacturing industry maintain optimal operational levels. Furthermore, they paved the way for growth in the mining sector; helped speed up the recovery in the information technologies and life sciences sector; and, most importantly, enabled the creation or protection of over 12,100 jobs.

SGF saw significant losses during the last fiscal year, totaling $245 million. for the past several years, SGF has been deeply involved in the petrochemical and forest products sectors, which were hit particularly hard by the economic downturn, thereby incurring
significant declines in value and impairment losses,
totaling $208 million.

These results also reflect SGF’s mission, as it never shies away from an investment and has no shelter available. Indeed, the totality of its investments must be made in companies, regardless of the economic
context. As such, SGF tacks into the wind, and stands beside Québec’s business people and workers. This is the very essence of its mission and its point of pride.

Despite economic hardships, SGF’s operating fees dropped from $34 million, in 2008, to $31 million in fiscal 2009, representing 1.6% of total shareholder’s equity. Furthermore, even when faced with a considerable increase of its investment level, sgf managed its assets effectively.

Throughout the fiscal year, sgf spent considerable time advising its partners on the best ways to prepare themselves for the recovery.

SGF is evolving
During this very busy year, SGF also developed and submitted its 2009-2012 strategic plan to the government of Québec, which effectively mobilizes SGF’s new financial tools, thereby enabling it to expand its corporate partner pool. It also proposes an increased partnership with small and medium businesses, as well as more sustained support for Québec-based companies on the eve of their international expansion.

SGF also created its first sustainable development action plan that will impact all of its operations and will guide it along a forward-looking path bridging economic development and environmental
protection.

Finding strength in its evolution, SGF starts off 2010 more confident than ever. The upcoming year will bring its share of challenges, but will also show increasing signs of recovery. SGF already has several projects lined up and many investments on the horizon.

Thank you 
I wish to extend my deepest gratitude toward all of SGF’s employees, who brought their exceptional motivation to the table and made a difference for thousands of workers throughout this eventful year.

I also wish to thank the government of Québec for the trust it has shown us, which is a great honour, as well as the board of directors for its support and wisdom.

As a team, we helped Québec deal with the crisis, and with the same energy, we will make the recovery a reality.

President and General Manager