2010 ANNUAL AND SUSTAINABILITY REPORT

Transcription

2010 ANNUAL
AND SUSTAINABILITY REPORT
Through its Fonds régional de solidarité FTQ
Saguenay–Lac-St-Jean, the Fonds de solidarité FTQ
is proud to be a financial partner of Cycles Devinci,
manufacturer of the Bixi bicycles,
Montréal’s public bike system.
The Fund encourages its shareholders and
the public to use the Bixi service, a good means
of transportation that fits within a sustainable
development approach.
www.bixi.com
1
MISSION
2
MESSAGE FROM THE CHAIRMAN OF THE BOARD
3
MESSAGE FROM THE PRESIDENT AND CEO
4
WHAT IS SUSTAINABLE DEVELOPMENT?
5
STRONG TIES TO OUR “STAKEHOLDERS”
6
OUR SOCIAL IMPACT
11
OUR SHAREHOLDERS
14
OUR LOCAL REPRESENTATIVES
15
OUR ECONOMIC IMPACT
17
OUR PARTNERS
22
OUR ENVIRONMENTAL HIGHLIGHTS
25
OUR EMPLOYEES
27
FINANCIAL INFORMATION
98
GLOSSARY
100
ETHICS AND GOVERNANCE
102
THE BOARD OF DIRECTORS
103
THE MANAGEMENT COMMITTEE, THE GOVERNING BODIES
OF THE FONDS DE SOLIDARITÉ FTQ AND THE UNION
104
MEMBERS OF OUR COMMITTEES AND BOARDS
WHO ARE INDEPENDENT FROM THE FUND AND THE FTQ
105
CONTEXT AND PARAMETERS
107
THE GRI INDEX
109
OUR NETWORK OF COMMITMENTS
OUR ECONOMIC AND SOCIAL
HIGHLIGHTS
KEY DATA
F O R T H E Y E A R S E N D E D M AY 3 1
(in millions of dollars, except Class A shares, in thousands) Statement of Operations
Revenues
Net earnings (net loss)
Balance Sheet
Net assets
Class A shares outstanding 2010 2009 2008
2007
2006
222
600
239
(919)
261
(89)
249
475
231
366
7,294
6,375
7,285
7,239
6,607
305,951 291,733 290,050 284,628 277,466
Ratio1
Total operating expenses
1.5%
1.7%
1.4%
1.3%
1.4%
1. The total operating expense ratio does not include capital tax and is calculated as stipulated in the Regulation Respecting Development Capital Investment Fund Continuous Disclosure.
126,035
122,460
116,644
2007
2006
142,902
2009
2008
150,133
3,333
2006
3,959
3,736
2007
2009
2010
2008
4,598
2010
1,681
2006
2006
1,696
1,881
2008
2007
2,000
2009
573,086
2006
2,052
574,794
2007
2010
575,394
2009
2008
NUMBER OF
PARTNER COMPANIES
(Fund and network)
570,889
2,052
NUMBER
OF SHAREHOLDERS
577,511
577,511
2010
6.0
7.1
(1.2)
2007
2009
2008
9.2
2010
(12.6)
23.74
2006
25.36
2009
2010
2007
NUMBER OF JOBS CREATED,
MAINTAINED OR PROTECTED
IN QUÉBEC BY THE FUND AND
ITS NETWORK
25.05
150,133
FAIR VALUE OF DEVELOPMENT
CAPITAL INVESTMENTS2
(in millions of dollars)
2008
$4,784 M
RATE OF RETURN OF THE FUND 1
(as a percentage)
21.78
9.2%
23.84
$23.84
NET VALUE PER SHARE
(in dollars)
4,784
AS AT MAY 31
FOR THE YEARS ENDED MAY 31
668
643
2007
2006
730
2008
2009
501
2010
329
2006
402
2007
2008
2009
2010
2006
2007
341
476
8483
647
614
611
2008
571
655
DEVELOPMENT CAPITAL
INVESTMENTS2
2009
$501 M
REDEMPTIONS OF SHARES
660
$341 M
SHARE ISSUES
2010
$660 M
1. Net earnings (net loss) per share divided by the share price at the beginning of the year. The return to the shareholder was 9.5%, and it does not take into account tax credits granted to shareholders.
2. These investments include funds committed but not disbursed as well as guarantees and suretyships.
3. $1,348 million taking into account the programs announced in the budget of the Government of Québec.
150,133 JOBS CREATED, MAINTAINED OR
TRAINING ACTIVITIES
PROTECTED IN QUÉBEC BY THE FUND AND ITS NETWORK*
FO R T H E Y E A R E N D E D M AY 3 1 , 20 10
AS AT MAY 31, 2010
A.Direct jobs
82,078
C
B.Indirect jobs
35,510
52,952
A
B
C.Induced jobs
32,545
Regional, local and
other funds
21,208
Specialized funds
7,918
Taking into account past and current partnerships, from 1990 to 2010, it is
estimated that more than 410,000 jobs were created, maintained or protected
in Québec by the Fund and its network.
Number
Retirement and
early retirement
27,215
Access to home ownership 3,722
Unforeseen events
(job loss or other)
5,822
Death, disability,
redemption within 60 days 1,798
Return to studies
393
Other criteria
SHAREHOLDER PROFILE
AS AT MAY 31, 2010
TOTAL NUMBER
OF SHAREHOLDERS
577,511
57.5%
253
110
59
26
448
FO R T H E Y E A R E N D E D M AY 3 1 , 20 10
Criteria
Non-unionized
245,481
Courses
2,819
1,917
1,366
491
6,593
REDEMPTION BREAKDOWN
BY CRITERION
* By partner companies in the portfolio as at May 31, 2010.
Unionized
332,030
Participants
Local representatives (LRs)
In the workplace
Network members
Students
Total
Fonds de solidarité FTQ
42.5%
(capital injection
into a business, emigration,
redemption of pension credits,
ineligibility for tax credits)
672
39,622
Total
$M
%
252
31
74
9
27
8
20
2
6
1
9
341
2
100
CHANGE IN DEVELOPMENT CAPITAL INVESTMENTS (AT COST)1
FOR THE YEAR ENDED MAY 3 1 , 20 10
Regions3
Western Québec
Montréal Region
Central Québec
Québec City Region
Eastern Québec
All of Québec
Outside Québec
Total
Sectors
Real estate
Regional development4
Industries, services,
natural resources
and consumer
New economy
Total
Balance as at May 31, 20092 No.
Investments
Disinvestments
Balance as at May 31, 2010
$M
%
No.
$M
%
No.
$M
%
12
100
124 1,900
16
139
31
460
29
140
48 1,612
36
335
296 4,686
2
41
3
10
3
34
7
100
4
30
9
8
8
2
7
68
17
382
21
20
29
28
4
501
3
76
4
4
6
6
1
100
3
45
5
8
11
16
8
96
22
290
6
31
13
295
3
660
3
44
1
5
2
45
-
100
342
454
7
10
1
1
27
3
5
1
2
1
34
1
5
-
170 2,612
91 1,278
296 4,686
56
27
100
51
15
68
407
64
501
81
13
100
70
23
96
533
92
660
81
14
100
11
24
No.
$M
%
13
95
117 1,992
18
154
31
449
28
156
46 1,345
40
336
293 4,527
2
44
3
10
3
30
8
100
9
23
335
456
7
10
171 2,486
90 1,250
293 4,527
55
28
100
1. These investments exclude the portfolio of shares held in Entreprises publiques québécoises à faible capitalisation and include funds committed but not disbursed, as well as guarantees
and suretyships.
2.The breakdown by region and sector as at May 31, 2009 was changed based on the reorganizations undergone by companies in the portfolio.
3. Regional groupings: Western Québec: Abitibi-Témiscamingue/Outaouais. Montréal Region: Montréal/Laval/Laurentides/Montérégie/Lanaudière. Central Québec: Estrie/Mauricie/
Centre-du-Québec. Québec City Region: Capitale-Nationale/Chaudière-Appalaches. Eastern Québec: Bas-Saint-Laurent/Saguenay–Lac-Saint-Jean/ Gaspésie–Îles-de-la-Madeleine/
Côte-Nord/Nord-du-Québec. All of Québec: Investments impacting more than one region. Outside Québec: Investments in companies headquartered outside Québec.
4.Regional funds, local funds and regional investment companies.
MISSION
CREATE, MAINTAIN OR
PROTECT JOBS
Invest in companies impacting the Québec economy and offer
them services to further their development and create, maintain
or protect jobs.
TRAIN WORKERS
Promote economic training for workers so they can increase
their influence on the economic development of Québec.
DEVELOP THE QUÉBEC
ECONOMY
Stimulate the Québec economy through strategic investments
that benefit both Québec workers and companies alike.
PREPARE FOR RETIREMENT
Make workers aware of the need to save for retirement and
encourage them to do so, as well as encourage them to participate
in the development of the economy by purchasing Fund shares.
FONDS DE SOLIDARITÉ FTQ | 2010
1
MESSAGE FROM THE CHAIRMAN OF THE BOARD
COMMITTED TO ECONOMIC
AND SOCIAL WELL-BEING
The Fonds de solidarité FTQ was
created in 1983 to innovate. Innovate
by investing to create jobs and support
social and economic development
here in Québec while producing a
return for its shareholders. Innovate
also by prioritizing economic training
and involving workers in the livelihood
of their companies while encouraging
them to adopt sound savings habits.
This concern for the economic
and social well-being of individuals
and society remains the motivating
principle of each of the Fund’s actions.
Before, discussing sustainable
development wasn’t even on the
agenda. Now, it is with great conviction
that we believe that we are following
a sustainable development approach,
and have since the Fund was
created. As a responsible investor,
we contribute to the socio-economic
development of Québec.
Our strategy is therefore intrinsically
tied to the goals of sustainable
development, which are economic,
social and environmental. The essence
of the Fund, even, is solidarity. In
prioritizing investments in small and
medium-sized enterprises in Québec, we
can create, maintain and protect jobs
as well as stimulate the Québec economy.
The social audits that we perform
before investing patient capital allow
us to make companies grow in much
more than just financial terms.
The global economic crisis showed us
the limits of a certain kind of economic
liberalism. If Québec has made it
through relatively unscathed, more
so than others, it’s particularly because
of public investments that met real
2
needs of the population. It’s also due
to the existence of institutions that,
like the Fund, act as a conscience in
economic development with individuals
in mind. In the context of an aging
population, retirement savings is more
important than ever. According to a
recent SECOR study, one out of two
workers will retire with insufficient
financial means. Retirement savings
is therefore a challenge that the Fund is
approaching in two ways: by introducing
many Quebeckers to RRSPs and
promoting more constant and growing
contributions. In this approach, the
Fund actively participates in economic
training for workers and in promoting
retirement savings.
To complete this portrait of sustainable development, we are also more
conscious of our environmental
footprint. This is why, in 2010, we have
adopted an environmental policy for
our head office. The policy covers
internal activities as well as procurement practices concerning the
products and services that we receive
from suppliers.
Loyal to our mission, our strategic
priorities in the area of sustainable
development concentrate, of course,
on the economic performance that
generates and distributes wealth, the
creation of quality jobs, the respect of
human rights, and strong governance
that encourages complying with social
and environmental standards. Along
the same lines, the Fund would like to
highlight and reiterate its commitment
to the Global Compact, which it began
adhering to in 2009.
To report on our efforts, we are proud
to present our annual report that
integrates the Fund’s first sustainability
report. We have prepared this triple
bottom line report (economic, social
and environmental) in accordance with
the guidelines of the Global Reporting
Initiative (GRI), which is the most
exhaustive and widespread international reference on the subject. This
way we can have a more transparent
reporting and improve the engagement
with our stakeholders. Beginning with
this first report, strengths as well
as areas of improvement will be highlighted. In our future reports we will
therefore be able to measure the
progress made year after year. What
you hold in your hands is a real tool
to measure our global impact and to
monitor continuous improvement.
To finish, I would like to sincerely
thank all the members of the Board
of Directors and the other governing
bodies for their exceptional contribution
and their unfailing commitment to
the Fund.
We will have the future that we prepare
for, individually and collectively. By
supporting the Fonds de solidarité FTQ,
we are doing both.
MICHEL ARSENAULT
CHAIRMAN
OF THE BOARD OF DIRECTORS
MESSAGE FROM THE PRESIDENT AND CEO
A YEAR
OF GOOD RESULTS
In 2009-2010, the Fonds de solidarité
FTQ saw an increase that confirms
the strength of its foundations in the
economy of all the regions of Québec,
as well as its skilled management of
its shareholders’ investments. For the
financial year ended May 31, its record
earnings of $600 million allowed
the share value to grow by 9.5%.
The total operating expense ratio
was 1.5%, compared to 1.7% for the
previous year.
The Investments sector achieved a
return of 11.0%, particularly buoyed
by the rebound in the stock markets
and the strength of our private
securities portfolio. The Other
investments sector generated a
return of 11.2%, which is particularly
explained by the effectiveness
of the sector-based investment
strategies implemented a few years
ago, the rise in the value of bonds
and interest revenues.
The Fonds de solidarité FTQ followed
through on its mission to create,
maintain and protect jobs and to
contribute to social and economic
development by investing $501 million
in companies.
Several of the Fund’s investments had
particularly structural effects on the
Québec economy. In particular, we can
highlight the agricultural and industrial
equipment producer Premier Tech
($25 million), the Fonds d’investissement pour la relève agricole (FIRA)
($25 million was authorized during
the last financial year), Fortress
Paper ($15 million), Groupe Smardt
Refroidisseurs ($15 million), furniture
maker Foliot Management ($5.5 million),
Groupe Bermex ($6 million), and
Teraxion, world leader in the design of
optical products used by technology
companies ($5.5 million).
As part of its strategic investments,
the Fund also invested in the following
companies: GLV, an international
technology solutions provider
($38.5 million), the Montréal
Canadiens Hockey Club ($58.1 million),
Stella-Jones, North American leader
in railroad ties ($30.8 million),
and Logibec Groupe Informatique
($30 million).
In 2009, venture capital investments
dwindled 27% in Canada and 37%
in the United States, yet increased
10% in Québec, which represents
43% of Canadian investments. This
performance is largely attributable to
labour-sponsored funds such as the
Fonds de solidarité FTQ. In addition to
making investments themselves, these
funds also promote the creation of
new private investment funds and the
influx of foreign funds to Québec. One
example, from 2009, is the Teralys fund
to support technology companies,
which was created by the Fonds
de solidarité FTQ ($250 million), in
collaboration with the Caisse de dépôt
et placement ($250 million) and the
Government of Québec ($200 million).
of 7.8% over 10 years, if we take into
account the tax credits granted by the
Governments of Québec and Canada
(but not RRSP-related tax deductions).
In addition, the governments recover
the amounts invested in this way
within a period of about three years
on average, according to a recent
SECOR study.
The success of the Fund starts with
its employees, who deserve the praise.
Accordingly, I would like to thank
them for the high-quality work they
do every day. I would also like to
thank our LRs for the vital work they
carry out. A thank you goes out, of
course, to our valuable entrepreneur
partners, and a special and heartfelt
thank you to our loyal shareholders.
Without all of you, the Fonds de
solidarité FTQ could not have become
the great sustainable development
tool it has become. This annual
report, which incorporates our first
sustainability report, is a tangible proof
of this.
YVON BOLDUC
PRESIDENT AND CEO
Québec society therefore benefits
from the Fund’s work. So do its shareholders: a shareholder who invested
through payroll deduction the same
amount each year obtained an
annual compound return of 15.1% over
5 years, of 11.5% over 7 years and
3
WHAT IS
SUSTAINABLE DEVELOPMENT?
Sustainable development, as defined in the Report of the Brundtland Commission (1987), is “development that meets the needs
of the present without compromising the ability of future generations to meet their own needs.” It is therefore development that is
more equitable, more balanced, and that has long-term benefits. It is also development that takes into account, in its implementation,
economic, social and environmental dimensions. Sustainable development is not solely based on environmental concerns; it integrates
them and goes even further.
WHAT IS
A SUSTAINABILITY
REPORT?
ENVIRONMENTAL
Viable
Livable
A sustainability report is intended to report the activities of
a company or an organization – in this case, the Fonds de
solidarité FTQ – in the three dimensions of sustainable
development: environmental, social and economic. This report
is a significant element for internally managing sustainable
development and an important basis for an open dialogue
with individuals or groups affected by our activities; it reports
on our actions, our successes and the challenges we must meet.
Sustainable
SOCIAL
Fair
ECONOMIC
TO BE SUSTAINABLE, DEVELOPMENT SHOULD INTEGRATE
THESE THREE DIMENSIONS:
SOCIAL, ECONOMIC AND ENVIRONMENTAL
WHY A SUSTAINABILITY
REPORT?
The Fonds de solidarité FTQ prepared
a sustainability report in order to:
– measure and disclose its
sustainability performance;
– gather in a single document
the main direct actions of the
Fund having the most significant
social, environmental and
economic impact;
– identify potential improvements.
This report is also a useful
communication tool in discussions
with our stakeholders.
4
WHAT IS THE GRI?
The Global Reporting Initiative (GRI)
was created in 1997. Its mission is to
establish sustainability standards
applicable worldwide that allow companies, governmental organizations
and non-governmental organizations
(NGOs) to report their economic, environmental and social performance.
Created by the Coalition for Environmentally Responsible Economies
(CERES), in collaboration with
the United Nations Environment
Programme (UNEP), the GRI is an
international network of active participants from business, civil society,
labour, professional institutions,
NGOs, accountancy organizations
and other organizations from all over
the world. Their commitment, through
a collective consensus-seeking
process, continuously improves the
framework that can be used by
companies and organizations to
analyze their performance and report
on it by issuing sustainability reports.
The companies’ ability to measure
and manage their economic, social
and environmental impact, and to
develop action plans based on this
information is fundamental to ensure
sustainable development.
STRONG TIES TO OUR “STAKEHOLDERS”
ENGAGING OUR STAKEHOLDERS:
A GUARANTEE OF SUCCESS
The GRI approach states that
“stakeholders” are all the entities and
individuals who are significantly
affected by the activities of an organization like ours, and who influence
the ability of this organization to reach
its goals and successfully achieve
its mission.
We are working so that all the means of
communications we have implemented
and used over the years allow us to fully
play our role (meeting the legitimate
expectations of these groups and
individuals, and thereby meeting social
and economic needs that motivated
the creation of the Fonds de solidarité
FTQ). To be assured of the relevance
and efficiency of our “engagement”
with our stakeholders, we have:
– identified the principal expectations these groups and individuals have of the Fund;
– identified information sources and the means used to obtain such information (surveys, annual meet ings, conferences and meetings with partners, publicity campaigns, mailings, field offices, personal contacts, Shareholder Services activities, training, etc.);
– established the methods and
means necessary to best meet the needs and expectations expressed while complying with the Fund’s
values and mission.
OUR SUSTAINABLE
DEVELOPMENT IMPACT
The social and economic contribution
of the Fonds de solidarité FTQ is
unique. During the last financial year,
it invested $501 million in companies
across Québec. As at May 31, 2010,
the Fund and its network had 2,052
partner companies that contributed to
creating, maintaining and protecting
150,133 jobs in Québec. These figures
show the effectiveness of the Fund
for Québec companies and the trust
of its 577,511 shareholders, a record
number. The net assets of the Fund now
total $7.3 billion. Thanks to the work of
its 2,000 or so local representatives,
among other factors, the Fund issued
$660 million of shares during the
financial year and recorded net
earnings of $600 million, which is also
a record. In addition, the value of its
shares increased by $2.06 since
May 31, 2009, for growth of 9.5% in
one year.
As a service organization, our environmental impact is limited. We nevertheless put in place management
processes and take actions to reduce
our environmental footprint. To that
end, we recently adopted an
environmental policy for our Montréal
head office building that will help us
minimize our impact.
Our sustainability report is a driver
of the integration of sustainable
development in all of our operations.
Prior to preparing the report, we
performed a materiality analysis that
allowed us to prioritize the issues,
the risks and the opportunities for
our organization.
Further to the analysis of the results
disclosed in this report and the
comments from our various
stakeholders, we will be able to set,
in the future, performance targets
based on the priorities identified.
By assessing the performance of the
companies in which it invests and,
in particular, by performing a social
audit of these companies that allows
identifying potential improvements,
the Fund is using tools to have a better
growth impact on these companies
as a value-adding partner.
As part of this engagement with
our stakeholders, we would like to
ask you to fill out the response card
inserted here to share your thoughts
on this report and the sustainable
development approach the Fund
has adopted.
5
150,133
OUR SOCIAL
JOBS CREATED,
MAINTAINED
OR PROTECTED
IMPACT
SOCIAL COMMITMENT: A PRACTICE FIRMLY ROOTED
IN THE FUND’S HISTORY
Through its mission centered on
creating jobs, the Fund is entrenched
in socio-economic development that
holds at heart strong local human
development that is integrated into
economic growth.
Repositioning humanity at the center
of development is the goal of the social
dimension of sustainable development.
The social aspect of a sustainability
report therefore aims to evaluate the
impact that a company or organization
has in the society in which it operates.
More specifically, the performance of
companies in this area can be measured
using various criteria such as working
conditions, rate of unionization, respect
of human rights, etc. The products
and services an organization provides
are also a factor of its social footprint.
In Québec, where there is an aging
demographic, everything affecting
retirement – the quality of pension
plans and savings possibilities for
workers – is a huge issue for society,
both now and for the future.
The Fonds de solidarité FTQ stands out
in many ways thanks to its involvement
in Québec society. Through its union
origins, its values and practices in
the area of labour relations and human
rights comply with the most rigorous
requirements. Through these actions,
the Fund adheres to the principles
of human rights and the right to work,
and promotes both.
The Fund fully assumes its responsibility for its products and services.
With a view to carrying out its mission
of educating and encouraging
1 . www.fondsftq.com/code-conduite-international
6
retirement savings, it offers Québec’s
workers a product that is beneficial
and easily accessible.
UNIQUE AND
RESPONSIBLE PRACTICES
Social audit: a tool that enriches
our investment
Assessing the social aspects of a
company before investing in it is an
innovative practice, and it was even
more so some 30 years ago when the
Fonds de solidarité FTQ decided to
implement the practice. In the 1980s,
the Fund was one of the few financial
institutions to include this aspect in
its investment objectives. To limit
ourselves only to the financial side of
our investments in companies would
have meant going against the social
focus that distinguishes our values
and objectives.
Accordingly, while assessing financial,
business, management and legal as
well as non-financial considerations
(including reputation and environmental risks), which is characteristic of all
due diligence reviews performed before
investing, the Fund reviews, through a
social audit, aspects such as the labour
profile, work conditions, the quality of
communications within the company,
compliance with health and safety
principles and respect of the
environment in the workplace, etc.
This undeniably responsible practice
considers both the views of the
workers and those of the employer.
The main objective of the social audit,
as we perform it for each partner
company in which we invest, is to
increase the value of our investment by
allowing, in particular, the professionals
in charge of evaluating a file and the
Fund’s governing bodies to better
assess certain elements of the risk
associated with the investment.
Where relevant, the social audit
establishes how to apply the code of
conduct for international business
dealings,1 developed by the Fund to
govern its international investments.
The objective of this code is to ensure
that our partner companies (and their
suppliers) respect human and workers’
rights as well as the environment in
every country they operate in.
Before exiting a company, the Fund
performs an “exit” audit, through which
it assesses not only the social and
financial impact its investment had
but also the impact of its departure. As
needed, we also meet with the union
or employee representatives to explain
to them the reasons underlying our
exit. We act transparently through to
the end.
6,593
PARTICIPANTS
TRAINING ACTIVITIES
FOR THE YEAR ENDE D M AY 3 1 , 20 10
Participants
Courses
2,819
1,917
1,366
491
6,593
253
110
59
26
448
Local representatives (LRs)
In the workplace
Network members
Students
Total
To sum up, for entrepreneurs, the social
audit is a useful tool that gives them
an external view on their business
and allows them to improve, where
appropriate, some of their practices.
During the last financial year, the Fund
performed more than one hundred
social audits in companies in which
it invested.
DUE DILIGENCE REVIEWS
To determine, as thoroughly as
possible, the level of risk associated
with each investment, the Fonds
de solidarité FTQ implemented a more
global due diligence process, which
also helps:
– to determine and quantify operational, financial and non-financial
(environment, reputation, etc.)
risk elements related to an
investment transaction;
– to determine the impact of the
elements analyzed on the overall risk.
TRAINING IN THE WORKPLACE:
MOBILIZATION AND TRUST
Training in the workplace is an
integral part of the mission of the
Fonds de solidarité FTQ. During the
last financial year, the Fondation
de la formation économique offered
448 courses, including 110 in the
workplace. By contributing to
improving communications between
management and employees through
increased transparency, training
creates an environment of trust and
helps employees understand the
issues and challenges the company
must address, to join forces and to
participate in searching for original
solutions to those challenges. Over the
years, the Fund has built a network of
partner entrepreneurs with whom it
can explore new avenues to improve
the training in the workplace program.
Consultations and assessments,
performed notably with UQAM in
February 2010, demonstrated that:
– training helps employees better
understand the company (business
plan, values, objectives, etc.) and
the factors that have an impact on
its financial results;
– the interventions by participants
during courses often set a precedent in terms of communications
between the employees and management and therefore resulted
in increased transparency and
reciprocity of communications;
– during the last few years, the
Economic Training team emphasized listening and demonstrated
flexibility. In particular, it adapted
the course format and contents
(for instance, the financial statement analysis and interpretation
course) to the needs recognized
“in the field” and created custom
training sessions on business
processes.
Since the program constantly evolves,
the Fund can offer a wide range of
flexible training sessions to businesses.
It can therefore better meet their needs
while remaining true to the objectives
of the training program.
7
O U R S O C I A L I M PA C T ( C O N T I N U E D )
THE FONDATION
DE LA FORMATION
ÉCONOMIQUE
A range of customized courses
The Fondation de la formation
économique1 is a not-for-profit
organization created in 1989 by
the Fonds de solidarité FTQ. It is
led by Mr. Denis Leclerc, Executive
Vice-President, Shareholder
Services, and its Board of Directors
is chaired by Mr. Michel Arsenault.
Funded by both the Fund and the
partner companies that attend
the training programs, the
Fondation has seven specialized
trainers. Its main mandate is to
provide economic training courses
to the employees of the Fund’s
partner companies.
Here are the key objectives of these
training sessions, which are offered
in the workplace:
– promote effective communications between management
and employees;
– lead participants to understand
the development of the company;
– encourage teamwork and
partnership;
– explain the role of the Fund in the
company as a financial partner;
– inform participants about the
company’s situation by presenting its business plan to them
so they will be motivated to
participate in the growth of the
organization and the improvement of its performance.
The four main courses offered may
be adapted based on the needs
expressed in the company:
1. THE FONDS DE SOLIDARITÉ FTQ,
A PARTNER OF THE COMPANY
This course explains to the
employees the role that the Fund
will play in the company as a new
investor, and informs them about
the business plan developed by
management.
2.UNDERSTANDING THE FINANCIAL
POSITION OF THE COMPANY
By the end of this course, the
participants will be able to apply
the basic methods learned to
assess the financial health of the
company and will therefore be
motivated to stay informed.
This course is designed in partnership with the management
of the company.
3.UPDATING THE FINANCIAL
INFORMATION OF THE COMPANY
This follow-up session is
designed to round the basic
financial knowledge of the
employees, to assess the recent
financial developments of the
company and to promote and
support healthy communications
within the company.
4.ANALYZING THE COMPANY’S
DEVELOPMENT
This course includes the
presentation of financial and
operational indicators, some
of which are selected by the
company’s management, to
enable participants to describe
recent developments and
the general condition of the
company based on available
financial information.
A program adapted from courses
2 and 3 was also designed
especially for the Fund’s partner
companies that operate in the new
economy sectors.
1 .To obtain a copy of the Fondation de la formation économique’s financial statements, contact the Fonds de solidarité FTQ Shareholder Services.
8
VOLUNTARY SOLIDARITY
The Fund also supported the
following initiatives:
The Fonds de solidarité FTQ supports
many community projects.
– together with the Montréal
Canadiens Children’s Foundation,
the Montréal Canadiens Hockey
Club and the FTQ, we are financing
the building of outdoor skating rinks
in less fortunate neighbourhoods
of Montréal; after building a skating
rink in the Villeray/Saint-Michel/
Parc-Extension Borough, which
opened in January 2008, a second
skating rink has been inaugurated
in the Montréal-Nord Borough in
January 2010;
First, the Fund and its employees
have supported, for many years and
in various ways, the Centraide
annual campaigns.
Solidarity at Heart, a mutual aid
project we carried out in 2008, is
a good example of this day-to-day
solidarity; as part of this project,
107 employees volunteered with
organizations supported by Centraide
of Greater Montréal, and the 420 work
hours spent were equally assumed
by the Fund and each volunteer. It
should be noted that the Fonds de
solidarité FTQ won the “Solidarity”
2008 campaign of Centraide of
Greater Montréal for this campaign
it engaged in with its employees.
Finally, the Fund’s many donations
to and sponsorships of social and
community organizations across
Québec strengthen its support of
a solidarity economy.
THE CONTRIBUTION OF
THE FONDS DE SOLIDARITÉ
FTQ AND ITS GENEROUS
EMPLOYEES WAS RECOGNIZED
BY CENTRAIDE OF GREATER
MONTRÉAL AS THE FUND IS
PART OF ITS 50 LARGEST
DONATING ORGANIZATIONS.
We also support the Fondation du
Maire de Montréal pour la jeunesse
through an annual financial contribution and volunteer involvement on the
Board of Directors of this organization.
Since its creation 13 years ago, the
Fund employees volunteering for Moisson Montréal (Centraide) as part
of the Solidarity at Heart project.
PHOTO : FRANÇOIS PESANT
PHOTO : JEAN-SÉBASTIEN COSSETTE
This activity highlighted the importance of volunteering and community
commitment. Many employees of the
Fund are involved in their community,
and we pay tribute to them, notably in
a section of our Intranet site.
– our contribution, since 2008, to the
Soutien aux premières expériences
de travail dans des fonctions liées au
domaine artistique program of the
Conseil des arts de Montréal allowed
32 young graduates to complete a
professional internship.
Fondation has awarded over $5 million
in grants to young entrepreneurs
from cultural and other communities
in Montréal to help them start their
business and create jobs.
On April 8, 2010, at the Montréal City Hall, Mr. Mario Tremblay, Vice-President, Public
and Corporate Affairs of the Fonds de solidarité FTQ, presented, as financial partner of
the Fondation du maire de Montréal, a grant to Mr. Samuel Gagnon-Tremblay, owner of
Artisans d’Azure. From left to right: Mr. Mario Tremblay; Mr. Harout Chitilian, Councillor
for the Bordeaux-Cartierville district and Associate Counsel for Youth to the Executive
Committee; Ms Helen Fotopulos, Executive Committee Member responsible for Culture,
Heritage and Women’s Issues; Mr. Samuel Gagnon-Tremblay; Mr. Gérald Tremblay,
Mayor of Montréal; Mr. Louis-P. Desmarais, Chairman of the Board of Directors of the
Fondation and Managing Partner of Capital St-Laurent.
9
O U R S O C I A L I M PA C T ( C O N T I N U E D )
© MENKÈS SHOONER DAGENAIS LETOURNEUX ARCHITECTES
ONE MORE STEP TOWARD
AFFORDABLE SOCIAL HOUSING
Through the Fonds immobilier de
solidarité FTQ, the Fonds
d’investissement de Montréal I and II,
which are presided over by Ms. Phyllis
Lambert and enable the renovation
of affordable community housing,
and the Fonds d’acquisition de
Montréal, created in 2007, the Fund
has already been present in the
affordable social housing area.
We recently established an additional
milestone that reaffirms this
commitment as a responsible investor
by creating the Fonds d’acquisition
québécois. This new investment
fund has already reserved the land,
on Louis-XIV Boulevard, in the
Charlesbourg Borough, in Québec
City, where 136 community housing
units will be built. Work on the first
phase of this project started last April.
The Fonds d’acquisition québécois and
the Fonds d’acquisition de Montréal
(whose projects are managed by the
Bâtir son quartier organization) were
created to pursue the same goal and
both are endowed with a total envelope
of $5 million. To date, they have
supported several major revitalization
projects, which are completed or in
the process of being completed.
These two acquisition funds evidence
our solidarity with lower-income
families; they can therefore benefit
from better access to decent housing
and to a better quality of life.
Architectural model of the Maison du développement durable construction project.
THE FIRST MAISON DU
DÉVELOPPEMENT DURABLE
IN NORTH AMERICA
The Fonds de solidarité FTQ is
extremely proud to be a partner in
financing the construction of the first
Maison du développement durable
(Centre for Sustainable Development)
in North America.
half of the electricity used compared
to a so-called “standard” office
building. Launched by Équiterre, the
six-story building will have an atrium,
and in addition to Équiterre offices,
it will house a daycare centre, a Green
Building Centre and office spaces,
several of which will be rented to
non-governmental organizations
(NGOs) and community groups.
The Maison du développement
durable is a not-for-profit organization
whose mission is to construct and
operate an ecological building
that is LEED Platinum (Leadership in
Energy and Environmental Design)
certified, the highest certification level
available. Located in Montréal, in the
middle of the Quartier des spectacles,
this building will be built following
innovative ecoenergy standards which
will particularly allow a reduction by
PROMOTING SOCIAL ECONOMY
To encourage the implementation of projects by social economy enterprises, the Fonds de solidarité
FTQ has supported the Fiducie du Chantier de l’économie sociale since its inception, in 2006, notably
through a $12 million investment. The main mission of this organization is to promote social economy
as an integral part of Québec’s socio-economic structure. The “Chantier” encourages and supports the emergence, development
and consolidation of social economy enterprises operating in various sectors of the economy. These community enterprises meet
the needs of their community with originality while creating long-term jobs.
www.fiducieduchantier.qc.ca
10
OUR SHAREHOLDERS
A RECORD NUMBER
OF SHAREHOLDERS!
Of all the people related to our activities,
our 577,511 shareholders are, it goes
without saying, very important.
Their satisfaction is most important
to us, and we are very careful of the
quality of our communications with
them: we try to make it human (people
answer their calls, not recordings),
personalized and effective. Our
Shareholder Services dealt with some
400,000 calls during the financial
year ended May 31, 2010.
We make sure we really understand
the expectations of our shareholders,
we ensure that they really understand
what we are offering them,1 and we
regularly evaluate their degree of
satisfaction with our services. We have
many ways of doing this: our surveys
and discussion groups, our mailings,
our call centre, our 52 field offices
during the RRSP period (including
14 field offices located in the offices
of the Fonds régionaux de solidarité
FTQ), our annual general meeting and,
of course, our more than 2,000 local
representatives (LRs) who are in touch
with close to 35% of our shareholders
in their workplaces. We regularly
consult our shareholders and gather
their comments to better understand
their needs and consequently improve
the quality of our services. Shareholders
are foremost in our thoughts.
These different ways to “engage” our
shareholders have allowed us to
greatly improve the processing time
for share redemption requests, for
example. We have therefore established,
for all the teams in the Shareholder
Services sector, performance
indicators linked to processing times
for all the transactions. We consult
them daily and if, for whatever reason,
the time periods exceed our strictly
established standards, we can immediately take measures to remedy the
situation (subscription processing time
is 48 hours and share redemption
processing time varies, depending
on the complexity, between 7 and
13 working days).
577,511
SHAREHOLDERS
The Shareholder’s Booklet remains
one of the tools that our shareholders
consult the most. Over the years
we have constantly personalized the
information included in it – relative
to each shareholder’s portfolio –
and integrated relevant financial
information about the Fund and the
importance of saving, that our
shareholders have told us they
truly appreciate.
1. To ensure, as much as possible, that our shareholders make decisions that are informed and financially sound, the Fund informs them of general investment risks through its simplified
prospectus (www.fondsftq.com/prospectus_en), its annual information form, its annual report (www.fondsftq.com/2010report) and its numerous leaflets. LRs have the mandate to fully inform
the current and future shareholders about the rights and obligations related to holding shares of the Fund.
11
OUR SHAREHOLDERS (CONTINUED)
Our shareholders are proud
and satisfied with the Fund
The surveys that we regularly take of
our shareholders show their high
degree of satisfaction with our
products and the quality of services
we offer them. In addition, a survey
carried out in March 2010 by CRA
Montréal showed that:
– nearly 70% of our shareholders are
satisfied or very satisfied with the
Fund’s return.
Our shareholders also had the opportunity, through research carried out by
Léger Marketing in January 2010, to
evaluate the quality of services offered
by the Fund:
– 85% said that the Fund offers good
service; and
– 86% said that the Fund is a good
company.
“My Account Online”
Our shareholders use our Website
more and more to make their
transactions: during the last financial
year, 14,265 transactions were
made through “My Account Online”.
Considering this, we are currently
proceeding with a modernization of our
Website and the general restructuring
of the information found on it so we can
more adequately and effectively meet
the growing needs of our shareholders.
An accessible RRSP
Widespread marketing campaigns,
information leaflets, an interactive
Website and the Shareholder’s Booklet
are all ways to inform our shareholders
and the larger public about our RRSP
product, its conditions and benefits,
and especially about the importance of
saving for retirement. The Fund offers
a product that is accessible to the whole
population of Québec. “Democratic”
by its very nature, by the possible
methods of subscribing and the benefits it offers, particularly the tax credits,
our RRSP makes saving easier and
even more attractive.
To optimize accessibility to our RRSP
product and the various benefits
that go with it, our next subscription
campaign will target, in an even more
focused way, the younger generation
and cultural communities.
Younger shareholders!
Despite the difficult economic
conditions that we have seen, we
consider our last RRSP campaign
a great success.
Compared to the 2009 RRSP
campaign, for example, not only has
total subscriptions increased, but
the number of new shareholders
who contributed through lump-sum
subscriptions also increased by 60%.
Subscriptions from our shareholders
also saw an increase of 19% during
the RRSP period.
The “rejuvenation” of our shareholders
is another piece of good news: the
average age of our new shareholders
has actually lowered; from 44 years
as at May 31, 2009 to 43 years as at
May 31, 2010. We know all about how
important it is to save, particularly for
retirement. In fact, when you retire, the
fact that you started saving at a young
age makes a huge difference. We are
therefore very proud to be able to have
a younger client base than before.
The Fund’s RRSP, especially when it’s
the first RRSP that they contribute to,
represents for the younger generation
an ideal savings tool since it allows
payroll deduction with immediate tax
savings. Our advertising campaigns,
which in fact aim to make Quebeckers
aware of saving – and the importance
of starting to save early – are therefore paying off.
INCREASE IN
SHARE VALUE:
9.5%
12
We are also organizing subscription
campaigns in workplaces, with the help
of our local representatives, to promote
the Fund’s RRSP and subscription
through payroll deduction. Close to
1,400 of these subscription campaigns
occurred during the last financial year.
In total, during the last financial year, we
issued $660 million in shares. Of this,
$415 million were collected through
bank withdrawal or payroll deduction.
Despite these advances, the number
of company closings – and other
“rationalizations” resulting from the
economic conditions – had an impact
on our subscription activities. Even
though the volume of share redemptions sharply decreased (by 47%)
compared to the previous year, we
saw an increase of 9% in redemption
requests related to job losses. The
situation also had a negative effect
on the volume of funds collected
through payroll deduction, which
decreased by 6%.
13
OUR LOCAL REPRESENTATIVES
AN ESSENTIAL NETWORK
OF DEDICATED LOCAL REPRESENTATIVES
To achieve its mission of raising workers’
awareness about the importance of
saving – particularly for retirement – the Fonds de solidarité FTQ relies on
a network of local representatives
called “LRs.” As at May 31, 2010, this
network was comprised of 2,044
dedicated persons from all regions
of Québec. They are mainly active
in their workplaces, where there are
unions affiliated with the Fédération
des travailleurs et travailleuses du
Québec (FTQ), the Centrale des
syndicats du Québec (CSQ) and the
Fédération interprofessionnelle de la
santé du Québec (FIQ). An agreement
was also entered into with the
Confédération nationale des cadres
du Québec (CNCQ).
Close to the people in these places –
which avoids a lot of travelling – the
LRs help their work colleagues in
subscribing to the Fund’s RRSP and
teach them about its economic
mission. They particularly encourage
subscription through payroll deduction,
as this type of systematic savings
allows tax savings on each paycheque.
Accordingly, net salary is only
slightly lowered.
The LRs participate in a continuing
education program that helps them
really understand their role and gives
them the necessary tools to fully play
it. Thanks to this training, they are able
to, among other things:
– explain the ways to subscribe to
the Fund’s RRSP (using the appropriate forms);
– demonstrate the benefits of the
Fund, the rights and obligations
that go along with buying shares of
the Fund;
So it can adequately meet their
needs, the training program for the LR
network was evaluated in May 2008.
This evaluation, carried out in collaboration with the Université du Québec
à Montréal, clearly demonstrated the
relevance of the training offered to the
LRs. The evaluation also resulted in
the proposal of certain changes to the
program to ensure a better knowledge
transfer to our LRs.
– clearly organize subscriptions in
their workplace.
LRs are well-integrated into the Fonds
de solidarité FTQ. They are supported
by subscription coordinators and have
access to call centres. The Fund has
also created an interactive extranet
site reserved just for them where they
can, in particular, order material online,
register for various activities and find
several reference tools.
This year, more than 10,100 subscriptions
by payroll deduction were collected.
2,044
LOCAL
REPRESENTATIVES
10,100
SUBSCRIPTIONS
BY PAYROLL
DEDUCTION
14
OUR ECONOMIC
IMPACT
A HUB OF KNOWLEDGE AND RESOURCES THAT BENEFITS
THE QUÉBEC ECONOMY
Building together with society a
dynamic economy that is growing and
will be viable in the long run: that’s
the economic dimension of sustainable development. The creation of
wealth puts companies at the center
of economic development; therefore
they have a capacity for direct intervention on sustainable development.
Given its mission, the Fonds de
solidarité FTQ plays a key role in
Québec’s economic development. By
investing patient capital in Québec
companies, it is involved in their
development and generates wealth
while contributing to creating,
maintaining or protecting jobs.
The Fund is a true stimulant to the
Québec economy, as much through
its investments as through its
relationships with entrepreneurs
and governments in all sectors of
the economy. Not only does it act
through economic training offered
to workers, but also through its work
educating Quebeckers about the
importance of saving.
To the Fund itself we can add a
whole network of regional, local and
specialized funds, as well as a real
estate fund, that target companies
in all the regions of Québec. All of
this makes the Fonds de solidarité
FTQ a hub of knowledge, resources
and contacts that benefits the
Québec economy.
Direct economic impact
The Fonds de solidarité FTQ is proud
of its contribution to creating individual
and collective wealth in Québec.
Here are a few numbers showing
the direct economic impact of our
investment activities and those of our
partner companies.
The table below presents both the economic value that the Fund generated
through its various investment activities (interest, dividends, gains, appreciation,
etc.), and the economic value that the Fund redistributed in the community
in general (goods and services purchased, taxes paid, amounts paid to its
shareholders, charitable donations, etc.).
DIRECT ECONOMIC IMPACT OF THE FUND
F O R T H E Y E A R E N D E D M AY 3 1 , 2 0 1 0
(in thousands of dollars)
Direct economic value created
Interest and dividend revenues
221,963
Realized gains on development
capital investments and other investments
and change in unrealized appreciation or depreciation
517,221
Direct economic value distributed
Operating costs
45,011
Salaries and related benefits
60,054
Payments to shareholders
341,940*
Payments to governments (income and other taxes)
28,605
Investments in the community (donations and sponsorships)
843
* Amount of shares redeemed. The Fund does not pay dividends.
15
O U R E C O N O M I C I M PA C T ( C O N T I N U E D )
Direct and indirect economic
impact of our partners
In addition to measuring its direct
economic contribution to the Québec
economy, the Fonds de solidarité
FTQ regularly evaluates the impact
generated by its partner companies.
Based on the last study performed
by SECOR (July 2010), the activities
of companies supported by the Fund
generated, in 2009, direct and indirect
added value to the Québec economy
of $8.6 billion. This significant
contribution is equivalent to 3% of
Québec’s total production.
Also according to that study, investments made by the Fonds de
solidarité FTQ also make up a sizable
revenue source for governments.
In fact, the activities of our partner
companies have allowed generating
revenues totalling more than
$1.5 billion in 2009. And the importance
of the economic value that our partners
generate allows governments, who
provide tax credits to shareholders
of the Fund, to recover these amounts
within a period of about three years
on average.
Our local procurement policy
In terms of the Fund’s economic
impact from its purchases, the Fund
sources goods and services from
suppliers in Québec. In accordance
with its procurement policy, the Fund
favours making purchases from
companies in which it has an interest,
those with unionized employees, as
well as Québec or Canadian companies.
Accordingly, over the last financial
year, 87% of our purchases of goods
and services were made from suppliers
located in Québec. Other criteria for
selecting suppliers are costs, product
quality, financial soundness of the
company and meeting deadlines.
This table summarizes the various economic impact of our partner companies,
which is particularly related to salaries paid to their employees and to income and
other taxes paid to governments, in addition to the companies’ activities.
DIRECT AND INDIRECT IMPACT OF PARTNERS OF THE FUND 1
(in thousands of dollars)
Salaries2 4,275,000
Other gross revenues
4,350,000
Government revenues
Government of Québec3 339,501
Government of Canada4 201,445
Incidental and indirect taxes5 987,073
1.As at May 31, 2009, according to a study performed by SECOR (July 2010).
2.Does not include induced jobs.
3.Includes income taxes on salaries, sales taxes and other specific taxes.
4.Includes income taxes on salaries, sales taxes and excise tax.
5.Includes QPP, HSF, CSST, employment insurance and indirect taxes.
Grants and government assistance
The Fonds de solidarité FTQ does not
receive any government grants. However, the Fund’s shareholders receive
tax credits of 30%, with 15% from the
Government of Québec and 15% from
the federal government.
2,052
PARTNER
COMPANIES
16
OUR PARTNERS
INVESTMENTS THAT DRIVE
OUR ECONOMY!
Examples of investments are numerous. Here are a few.
During the last financial year, the
Fonds de solidarité FTQ invested
$501 million to help drive the Québec
economy. Close to a quarter of this
amount, $123 million, was invested
in companies to finance acquisitions
projects; for example, an investment
of $38.5 million was made in GLV to
help it acquire a European water
treatment company. This type of
financing is particularly important
in a context of globalization and
increased competitiveness of Québec’s
companies. Including investments
by our regional and local funds, we
were able to support 283 companies
in total, including 71 new partners. We
supported Québec companies in the
manufacturing sector who were
determined to consolidate their
markets and conquer new ones by
financing several acquisition and
expansion projects. It is crucial that
Québec companies consolidate
their markets; several have done so,
and, loyal to our mission to better
meet the clear needs of SMEs, we
supported them.
– Premier Tech
An investment of $25 million in
this company specialized in
horticulture, industrial equipment
and environmental technologies,
which then acquired a company
in Ontario.
– Groupe Bermex
An investment of $6 million to
help fund a major acquisition in
the Québec furniture industry.
– Groupe Smardt Refroidisseurs
A $15 million investment to help
this company, which is specialized
in the design, production and
sale of water chilling systems
for commercial and industrial
buildings, to optimize its
distribution network, acquire
new equipment and modernize
its factory.
– Foliot Management
An investment of $5.5 million in a
project to expand into the United
States furniture sector as well as to
consolidate jobs in Québec.
– Stella-Jones
An investment of $30.8 million to help
the company acquire an American
company and thereby become a
North American leader in the railway
tie and wood preservation industry.
– Fortress Paper
An investment of $15 million
allowed the reopening and
conversion of the factory in
Thurso as well as the recall of
300 employees.
– Scierie Dion & Fils
An $8 million investment in this
Portneuf County company that is
specialized in hardwood lumber
so that it could acquire new
machinery equipped with cuttingedge technology.
– Bombardier
To support one of Québec’s largest
industrial clusters, a financial
commitment of $72 million to this
large manufacturing company to
help it continue to develop projects
that will create jobs.
IES
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17
18
O U R PA R T N E R S ( C O N T I N U E D )
A significant role
in the agrifood sector
We have also continued to play a
significant role in the agrifood sector.
We collaborated in creating a new
fund to support the future of
agricultural entrepreneurship in
Québec, the Fonds d’investissement
pour la relève agricole (FIRA), for
which the Fonds de solidarité FTQ
authorized $25 million during its last
financial year.
In addition, the Fund and the Fonds
régional de solidarité FTQ Estrie
invested $2.5 million in Les Viandes
Laroche to finance the construction
of a factory and to purchase
new equipment.
Solution Compétitivité
Because of its extensive familiarity
with the specificities of Québec’s SMEs,
the Fund was able to play a proactive
role by proposing versatile solutions
adapted to the particularities of
companies. Accordingly, we created
the Solution Compétitivité, which
is offered to well-performing companies
without requiring a guarantee from
them, so they can improve their
competitiveness by making investments
other than in capital assets or
equipment. This financing can be used,
for example, to pay indirect costs,
such as employee training, process
optimization or marketing plan
development. The Solution Compétitivité
is a debenture of $2 to $10 million,
and the reimbursement terms are
flexible and in line with the company’s
liquidity movement.
Leader in the Québec venture
capital market
The Fonds de solidarité FTQ continues
to be a leader in the Québec venture
capital market. Since 2004 the Fund
committed $935 million in around forty
specialized funds that then invested in
companies, mainly in the new economy
sector, that were in the start-up
phase or a further stage in their growth.
These Fund initiatives also helped
attract a large volume of foreign
capital to Québec. Today, these funds
are adequately capitalized and benefit
from the presence and expertise
of the Teralys Capital fund, in which
the Fonds de solidarité FTQ has
committed $250 million. During the last
financial year, the Fund focused
more on direct investments in more
mature companies. For example, we
invested $30 million in Logibec Groupe
Informatique to consolidate its
activities and keep its head office
in Québec, $5.5 million in TeraXion,
a telecommunications leader
and $1.5 million in Medicago, a Québec
City company that produces vaccines
using very innovative and costeffective technology.
THE INDICE DE CONFIANCE PME,
TO BETTER MEET THE
NEEDS OF ENTREPRENEURS
To monitor the changing needs of Québec entrepreneurs, the Fonds
de solidarité FTQ created a SME confidence index in 2009,
a first for a Québec-based financial institution. This index is created
based on four surveys per year, which allow us to measure the degree
of confidence of entrepreneurs in terms of the recovery and to
obtain valuable information on their concerns, needs, priorities, investment
intentions and the possibility of access to capital. For more details
on the Indice de confiance PME – Fonds de solidarité FTQ, visit our Website
at www.indicedeconfiancepme.com.
19
O U R PA R T N E R S ( C O N T I N U E D )
THE FUND NETWORK
Driving the economy throughout Québec!
The fonds régionaux de solidarité FTQ and the fonds locaux de solidarité FTQ share the same mission and the same values
as the Fund.
Investment decisions are made by people from the community and solicit their active involvement. Their boards
of directors are also comprised of dedicated contributors coming from the business and community sectors of
the regions.
Some figures about the regional and local funds:
FONDS RÉGIONAUX DE SOLIDARITÉ FTQ
FONDS LOCAUX DE SOLIDARITÉ FTQ
AS AT MAY 31, 2010
AS AT M AY 3 1 , 20 10
Number of partner
companies
Number of direct jobs created,
maintained or protected
Since its creation, the Fonds
de solidarité FTQ has chosen to be
present across Québec, even in
the regions that are the furthest
away from the largest cities. Involving
local people in the investment
decisions in their region is part of
our values and priorities. With their
strong regional presence, the
fonds régionaux de solidarité FTQ
and the fonds locaux de solidarité
FTQ play a dynamic role in the growth
of our companies and contribute
to Québec’s economic development.
The regional funds make investments
of up to $2 million in companies
located in all regions of Québec.
Investments of up to $100,000 are
made by the local funds and
investments exceeding $2 million are
made by the Fonds de solidarité FTQ
from its Montréal head office.
The regional funds and local funds
make up a large network of
investment and collaboration with
economic development organizations
across Québec, such as the
organizations managing the local
funds, namely the CLDs (Centres
20
279
11,402
Number of partner
companies
Number of direct jobs created,
maintained or protected
locaux de développement), the CDECs
(Corporations de développement
économique communautaire) and
the SADCs (Sociétés d’aide au
développement des collectivités).
In addition to the salaried employees,
some 700 individuals are involved,
on a volunteer basis, throughout this
investment network.
Fonds immobilier de solidarité FTQ
The Fonds immobilier de solidarité
FTQ is a fund specialized in real estate
investment and development. Created
in 1991 by the Fonds de solidarité
FTQ, its objective is to stimulate job
creation through office, commercial,
industrial, institutional and residential
property projects.
Since its creation, the Fonds immobilier
de solidarité FTQ has made many
investments and established several
strategic partnerships. It is currently
positioning itself as a quality partner
for institutions and companies active
on the Québec real estate market.
For instance, during the last financial
year, the Fonds immobilier acquired,
with other partners, the Ogilvy store in
601
7,667
Montréal and a nearby vacant lot on
which the construction of a 25-story
building is planned.
As at May 31, 2010, the Fonds
immobilier was involved in 23 projects
representing approximately 2.1 million
square feet for housing or other
purposes.
In addition, it has been involved in
the construction of 15 projects that
include 3,529 condo units.
Finally, the Fonds immobilier de
solidarité FTQ owns 41 million square
feet of land available to potentially
carry out 18 real estate projects.
Dialogue, proximity and proactivity
In addition to monitoring the evolution
of the perceptions of entrepreneurs
in each sector of activity through the
SME Confidence Index, the Fonds de
solidarité FTQ has extensive knowledge
of each of these sectors because of
the specialization of its Investment
teams and the proximity and
proactivity approach it has developed
over the years.
The fact that we have representatives
on the board of directors of our partner
companies is a value-added in the
assistance we offer them. We are also
present where entrepreneurs are
present, whether at conventions, trade
shows or various industry associations.
This way, we are always aware of the
major trends in each of the industries
in which we are involved.
We are also associated with the
Institute for Governance of Private
and Public Organizations (IGPPO),
which allows us to offer training
on governance practices adapted to
the context of SME directors.
During the last financial year, we began
a study on the services offered by
our Investments sector to position
ourselves even better with SMEs.
This will allow us to offer even more
competitive services and implement
measurable standards. We will
thereby be able to determine the
elements that will allow us to more
effectively meet the needs of our current
and future partners.
CONSERVING OUR
FOREST HERITAGE:
A RESPONSIBLE INVESTMENT
During the financial year ended May 31, 2010, the Fonds
de solidarité FTQ, through the Société de gestion d’actifs
forestiers Solifor limited partnership, made new investments
that allowed it to acquire forest land in the Saguenay,
Charlevoix and Mauricie regions, totalling 52,866 hectares.
These investments are in addition to those made during
the financial year ended May 31, 2009, when the Fund
acquired, in collaboration with Solifor, three forest properties
totalling 76,724 hectares.
Now, $150 million is committed to the management of some
150,000 hectares of forestry assets throughout Québec,
which allows Solifor to market annually 300,000 m3 to 400,000 m3
of hardwood and softwood.
These investments are an integral part of our mission and
goals for responsible long-term investments, and are made
together with people in the regions. Solifor is currently engaged
in a process that will allow it to comply with the standards of
the Forest Stewardship Council (FSC), which is an organization
that has established recognized principles for good forestry
management and sustainable forest development.
21
OUR ENVIRONMENTAL
HIGHLIGHTS
OUR DETERMINATION TO REDUCE OUR NEGATIVE
IMPACT ON THE ENVIRONMENT
As part of its continuous improvement
process, the Fund has adopted an
environmental policy for its head office
activities and its practices related to
the goods and services it obtains from
its suppliers. This policy also addresses
the best environmental practices of
the BOMA BESt (Building Environmental
Standards) program. Last April, the
Fund was awarded a Level 3 certification
by this program, which has 4 levels.
This level of certification attests
to the high quality of the environmental
practices related to the real estate
management of our head office.
By adopting such practices, the Fund
wishes to:
– reduce energy consumption,
drinking water consumption and
the quantity of waste generated;
– increase the multi-materials
recycling volume;
– increase construction waste
recycling;
– increase the use of materials that are healthy, recycled, reused and
certified by recognized organizations;
– eliminate or reduce the use of hazardous products or substances that deplete the ozone layer;
– maintain superior indoor air quality in accordance with the ASHRAE
(American Society of Heating,
Refrigerating and Air-Conditioning Engineers) standards.
The Fonds de solidarité FTQ has
implemented processes and undertaken actions that will contribute to
the improvement, on an ongoing
basis, of its “environmental” practices
and those of the employees of its
head office, located in Montréal.
As part of this policy, the Fund is also
committed to:
– raising employee awareness with respect to environment protection;
– ensuring that the improvement
process is ongoing, by annually measuring the level of achievement of its objectives and by taking into consideration the observations and recommendations of individuals and groups affected by its activities;
– favouring the acquisition of
goods and services from suppliers who adopt responsible environ mental practices.
1. This data relates to the internal activities of the Fund and the practices related to the management of its head office.
22
Comprised of Fund employees, a newly
created “Green Committee” ensures
that all actions related to this policy
and the Fund’s environmental commitments are implemented.
An action plan will be submitted once
a year to the Management Committee
of the Fund.
Through our efforts, we were able
to reduce our eco-footprint in several
ways. Here is an overview of
the environmental performance of
the Fund.1
RECYCLED
RESIDUAL MATERIALS
ENERGY
CONSUMPTION
(% BASED ON WEIGHT - IN TONNES)
(% BASED ON CONSUMPTION - IN GIGAJOULES (GJ))
Plastics/Metal/Glass
1%
Fuel oil/Propane
1%
Paperboard
7%
Natural gas
9%
Paper
35%
Electricity
90%
Construction waste
57%
Recycled paper and
material consumption
Paper is the most consumed material
at the Fund. As part of our environmentally responsible process, we
undertook to replace printing paper
made with 30% of recycled material with
paper made with 100% post-consumer
FSC-certified fibers. Manufactured
here, in Québec, this paper is also
“EcoLogo” and “Processed Chlorine
Free” certified. The energy used to
manufacture this paper is produced
from biogases and is therefore
less polluting.
Residual materials
Energy
For a few years we have had a multimaterial recycling program for all
occupants of our head office. Through
this programme, we were able to recycle 53 tonnes of residual materials of
various types and therefore contribute
to the reduction of the quantity of
waste ending up in landfills. Furniture
and computer hardware are reused, as
they are made available to community
organizations and schools in Québec.
As a result of an evaluation of the
various energy sources that we
consume for all the head office needs,
we know that electricity is our
main energy source. We consumed
25,957 GJ of energy, including
23,406 GJ (6,501,600 kWh) of electricity. Our electricity consumption
decreased by approximately 10%
compared to last year. Our other energy
sources are natural gas (2,426 GJ),
fuel oil (116 GJ) and propane (9 GJ).
For a few years now, the Fund
has invested in energy conservation
projects for its head office. These
investments helped to optimize the
annual energy performance by some
12% over two years.
During the last financial year, the Fund
consumed close to 147 tonnes of
various materials (paper, envelopes,
ink cartridges, kitchen supplies, tissue
paper, paper towels) of which 77%
was recycled materials. Using these
recycled materials helped reduce our
eco-footprint.
REDUCTION OF OUR ECO-FOOTPRINT MADE POSSIBLE
BY USING RECYCLED PAPER THIS YEAR*
– We were able to save 1,145 trees.
– We reduced our water consumption by approximately 3,105,000 litres.
– We reduced by close to 76,800 kg our emissions of polluting gases or
substances that can deplete the ozone layer.
– We generated 32,800 kg less of solid waste ending up in landfills.
* According to the Eco-calculator on the Cascades Website.
23
O U R E N V I R O N M E N TA L H I G H L I G H T S ( C O N T I N U E D )
GREENHOUSE GAS (GHG) EMISSIONS
(% BASED ON EMISSIONS OF TONNES OF CO2e - CARBON DIOXIDE EQUIVALENT)
Fuel oil/Propane
1%
Electricity
3%
Residual materials
7%
Refrigerant
3%
Natural gas
11%
Business
transportation
and courier
75%
Greenhouse gas (GHG) emissions
GREENHOUSE GAS (GHG) EMISSIONS
Overall, we have emitted 1,055 tonnes
of CO2e. Most of our GHG emissions
are attributable to business transportation (planes, cars and taxis), which
totalled 794 tonnes of CO2e. However,
the equipment used at head office
emits very little polluting gases or
substances that can deplete the ozone
layer, such as NOx (nitrogen oxides),
SOx (sulfur oxides) and VOCs (volatile
organic compounds).
Source
Carbon dioxide equivalent
(Tonnes of CO2e)
The ongoing review of our energy
consumption modes should help us
continue to reduce our GHG emissions.
The thought process we have just
initiated in order to find sustainable
transportation solutions should also
help us reduce our eco-footprint.
We also continued to raise our
employees’ awareness of global
warming, especially the impact that
their day-to-day acts can have on GHG
emissions if they participate in the
annual Défi-Climat campaign. In 2010,
165 employees participated in the
Défi-Climat campaign.
In addition, our annual meetings are
carbon-neutral.
24
Direct
emissions
Indirect
emissions
Natural gas
118
Residual materials
74
Electricity
31
Refrigerant
29
Fuel oil and propane
9
Business transportation
and courier
794
Total
261
794
Water
Water is mainly consumed in
bathrooms and kitchens as well as by
the building’s maintenance service.
We do not discharge residual materials
in the environment, and wastewater
is sent to the sewers.
During the last financial year, we
started installing meters to measure
water consumption at the head office.
This project will continue in the next
financial year. In the near future, we
will be able to know more precisely our
consumption, overall and by sector,
1,055
which will allow us to implement actions
aimed at reducing this consumption
at its source. In addition, for the last few
years, we have been making changes
to some of our equipment, and these
changes are already resulting in significant reductions in consumption.
As the Fund offers services and is not
involved with industrial processes, there
were no accidental spills. For the same
reasons, the Fund did not incur any fines
or sanctions for environmental matters.
OUR EMPLOYEES
COMMITTED IN THE ACHIEVEMENT
OF THE FUND’S MISSION
The Fonds de solidarité FTQ invests
in employee development so
they can realize their potential within
the organization and are mobilized
and committed in the achievement of
the Fund’s mission. We also place
significant importance on this element
because we want to attract, recruit
and retain talented candidates in a
forecasted context of labour shortage.
Our current and future employees
sometimes have, based on their own
reality, different expectations
about their work environment, and
we are taking this into account in
the activities we have implemented
to meet these needs. This is why in
2008 the Fund launched the Ma santé,
je m’en occupe ! program offered
by Acti-Menu, and implemented many
other initiatives dealing with personal
health and wellness.
The Fund also created an employee
assistance program, through
which employees have free access to
specialists who can advise and
support them with psychological,
legal and financial questions. To
support this program a joint employee
assistance committee (employees
and managers) organized various
prevention, awareness and training
activities addressing overall health,
including a week on mental health.
An overall vision
Last May, the inauguration of a gym
in the Fonds de solidarité FTQ building
was a special event that follows the
integrated vision of employee overall
health. Membership to the gym is
offered to employees at competitive
rates. What’s more, the gym was
designed and furnished almost
exclusively with natural and ecological
materials from Québec companies.
All these activities are part of an
approach that aims to continuously
improve the employees’ quality
of life and wellness in their workplace,
to ultimately have a culture of overall
health in place at the Fund: we want
the right, healthy people in the
right place in the organization to
ensure that it keeps going and
functions properly.
An employer of choice!
The Fonds de solidarité FTQ offers
its employees various work schedule
arrangements to encourage a better
work-life balance.
Last June, the Fund signed the
2010-2014 collective labour agreement.
Having a term of five years – a first
for the Fund – it consolidates our
approach where the implementation of
good working relations is an ongoing
process, and reconfirms the basis
of the mutual agreement on overall
working conditions, including work
schedule possibilities.
Through the importance it gives to its
employees’ working conditions and the
quality of life in their workplace, the
Fonds de solidarité FTQ is absolutely
an employer of choice!
25
O U R E M P L OY E E S ( C O N T I N U E D )
A culture of participation
This allowed it to:
A few years ago, the management
of the Fonds de solidarité FTQ
launched the Partners Vision project
to capitalize on the talents and skills
of many of the Fund’s employees
through an approach of continuous
improvement for the products and
services offered by the Fund. With
the objective of being the partner of
choice for Québec companies, the
Fund reviewed several of its processes.
– take steps toward “quality of
service” to improve the services
offered externally and internally
by the Fund employees;
– accentuate the working
partnerships among its employees,
and also between the Fund and
other entities in its network of
regional and local funds;
This project, led by employees, was
completed in November 2009. It
allowed the Fund’s management to
make a positive summary of the
project and to bring to bear notable
improvements in the services provided
in the day-to-day work environment
of its employees. Several initiatives
undertaken during this project led to
permanent changes to certain practices
and clear continued improvements.
– review and improve certain
services and products offered
to SMEs.
BREAKDOWN OF PERMANENT EMPLOYEES
A S AT M AY 3 1 , 2 0 1 0
Women
Age
Less than 35 years
35 to 44 years
45 to 54 years
55 years and up
Total
Average age
Gender
13
58
109
52
232
49 54.7%
Employment categories
Manager
Professional
Technical and office
Total
Men
24 92 116 232
Total
10 23
59 117
78 187
45 97
192 424
48
49
45.3%
43
120
29
192
67 212 145 424
%
5.4
27.6
44.1
22.9
100.0
100.0
15.8
50.0
34.2
100.0
The Fonds de solidarité FTQ offers quality jobs and has 424 permanent employees. In total, 84% of the Fund’s employees are unionized. The
remuneration structure of the Fund does not provide for bonuses to employees, including management. The employees are concentrated in Montréal,
in 98% of cases, while the rest are found in Québec City (2%). The positions are varied and broken down as follows: 16% management positions,
50% professional positions and 34% technical and office positions. The Fund also has good employee retention.
The number of work-related accidents is very low; only four cases during the period covered by this report. In addition, the absenteeism rate,
for professional or other reasons, is only 4.1%.
The difference between the average men salary and the average women salary (ratio of 1.4) is due, in part, to the higher concentration of men
in the Professional category than in the Technical and office category.
EMPLOYEE TRAINING *
F O R T H E Y E A R E N D E D M AY 3 1 , 2 0 1 0
Employment
categories
Salaried employees Total hours
who attended of training
training
Manager
Professional
Technical and office
Temporary or student
Total
54
103
85
31
273
1,983
2,126
1,159
394
5,662
* In addition to these hours, managers and professionals have attended external training sessions.
26
Average hours
of training per employee
37
21
14
13
21
5,662
HOURS
OF TRAINING
TO EMPLOYEES
INFORMATIONS FINANCIÈRES
FINANCIAL INFORMATION
28
MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED MAY 31, 2010
51
FINANCIAL STATEMENTS AS AT MAY 31, 2010 AND 2009
51 MANAGEMENT’S REPORT AND AUDITORS’ REPORT
52 BALANCE SHEETS
53 STATEMENTS OF OPERATIONS
54 STATEMENTS OF CHANGES IN NET ASSETS
55 STATEMENTS OF CASH FLOWS
56 NOTES TO FINANCIAL STATEMENTS
75
DEVELOPMENT CAPITAL INVESTMENTS MADE AS AT MAY 31, 2010
75 AUDITORS’ REPORT
76 STATEMENT OF DEVELOPMENT CAPITAL INVESTMENTS AT COST
83
INVESTMENTS MADE BY THE SPECIALIZED FUNDS AS AT MAY 31, 2010
83 INDEX OF THE SHARE OF THE FUND IN INVESTMENTS MADE BY
THE SPECIALIZED FUNDS, AT COST (UNAUDITED)
27
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED MAY 31, 2010
In 2008, the Autorité des marchés financiers issued the Regulation Respecting Development Capital Investment Fund Continuous
Disclosure (the “Regulation”). The Fonds de solidarité FTQ (the “Fund”) applied the requirements of this Regulation to its financial
statements and its Management Discussion and Analysis for the financial year ended May 31, 2010.
This Management Discussion and Analysis (“MD&A”) is intended to help the readers to assess, through the eyes of management,
the Fund’s results and financial condition and the material changes therein during the financial year ended May 31, 2010. The annual MD&A complements and supplements the financial statements and contains financial highlights, but does not contain
the complete annual financial statements of the Fund. To facilitate understanding of events and uncertainties, this MD&A should
be read together with the financial statements and the notes thereto.
This MD&A contains forward-looking statements about the Fund’s activities, results, and strategies that should be interpreted
with caution. Because, by their nature, forward-looking statements involve assumptions, uncertainties and risks, it is possible that a number of factors may cause forecasts not to materialize. For example, in a non-exhaustive manner, legislative or regulatory changes, economic and business conditions and the level of competition are major factors that could influence,
sometimes significantly, the accuracy of the forward-looking statements in this report. This MD&A is dated June 23, 2010.
You can get a copy of the annual financial statements at your request, and at no cost, by calling us at 514-383-3663 or toll free at 1-800-567-3663, by writing to us at 8717 rue Berri, Montréal, Québec H2M 2T9 or by visiting our Website at www.fondsftq.com
or the SEDAR Website at www.sedar.com. You can also obtain a copy of the interim documents in this same manner.
FINANCIAL HIGHLIGHTS
The following tables show selected key financial information about the Fund and are intended to help you understand the Fund’s
financial performance for the past 5 years. This information is derived from the Fund’s audited annual financial statements. The
Fund’s results are discussed under “Results of operations” on page 30.
RATIOS AND SUPPLEMENTAL DATA
YEARS ENDED MAY 31
2010
2009
2008
2007
2006
Revenues 222
239
261
249
231
Net earnings (net loss) 600
(919)
(in millions of dollars, except otherwise specified)
Net assets Class A shares outstanding (number, in thousands)
Total operating expense ratio* (%)
Portfolio turnover rate**:
- Development capital investments (%)
- Other investments (%)
(89)
475
366
7,294
6,375
7,285
7,239
6,607
305,951
291,733
290,050
284,628
277,466
1.54
1.70
1.36
1.34
1.40
18.35
113.45
15.15
83.22
7.93 233.20
6.71
179.65
12.22 118.80
0.03
0.02
0.03
0.03
0.04
577,511
570,889
575,394
574,794
573,086
Issues of shares 660
655
611
571
614
Redemptions of shares 341
647
476
402
329
4,784
4,598
3,959
3,736
3,333
Trading expense ratio*** (%)
Number of shareholders (number)
Fair value of development capital investments****
*
The total operating expense ratio is obtained as follows: by dividing expenses (excluding tax on capital) for the year, as shown on the Statement of Operations,
by the average net assets for that year.
** The portfolio turnover rate reflects the number of changes made to the composition of the portfolio. There is not necessarily a relationship between a high
turnover rate and the portfolio’s performance.
*** The trading expense ratio represents transaction costs expressed as a percentage of average net assets.
**** These investments include funds committed but not disbursed as well as guarantees and suretyships.
28
CHANGE IN NET ASSETS PER SHARE
YEARS ENDED MAY 31
(in dollars)
2010
2009
2008
2007
2006
Net assets per share, beginning of year*
21.78
25.05
25.36 23.74 22.41
Change in accounting policy
Increase (decrease) from operations**:
Interest and dividends
Income tax and tax on capital
Realized gains (losses)
Unrealized gains (losses)
(0.04)
–
2.01
0.74
(0.37)
(0.09)
0.22
1.51
–
(3.16)
0.82 (0.37)
(0.05)
(1.31)
(2.25)
–
(0.31)
0.90 (0.34)
0.00 0.35 (1.22)
–
1.68 1.35
0.87 0.85 (0.33)
(0.33)
(0.07)
(0.03)
0.61 0.04 0.60 0.82 Variance from issues and redemptions of shares
(0.02)
(0.11)
0.00
(0.02)
(0.02)
Variance from the transfer of Class G shares
Net assets per share, end of year* 0.07
23.84
–
21.78
–
25.05 –
25.36 –
23.74
* The amount of net assets per share is based on the actual number of shares outstanding at the relevant time.
** The increase (decrease) from operations is based on the weighted-average number of shares outstanding over the financial year.
ECONOMIC CONDITIONS
The last 12 months saw the end of the global recession. All evidence seems to indicate that the stimulus plans of governments
around the world, combined with the reduction to historic lows of key interest rates by central banks and massive cash injections
into the financial markets, have borne fruit. However, more recently, the troubled position of public finances in several countries in the Eurozone has weakened stock and financial markets again.
After being stuck in the turmoil of the mortgage credit and liquidity crises, and after seeing annualized growth rates of -6.4% and
-0.7% in the first and second quarter of 2009, respectively, the U.S. economy found back the path to growth in the third quarter,
with an annualized GDP growth rate of 2.2%. This growth was followed by an annualized GDP growth rate of 5.6% in the fourth
quarter of 2009, and 3.0% in the first quarter of 2010. After three months of stability at 9.7% (between January 2010 and March 2010), the unemployment rate climbed to 9.9% in April 2010 and then fell back to 9.7% in May 2010. While the savings
rate has fallen since the end of the crisis (3.6% in April 2010, compared to 4.1% on average from September 2008 to June
2009), consumer spending has recovered. The annual variation of the U.S. CPI has fluctuated between -2.1% and 2.7% since May 2009, and the key interest rate has remained unchanged at 0.25% since December 2008.
In Canada, economic growth was also positive in the third and fourth quarters of 2009, with an annualized GDP growth rate of 0.9% and 4.9%, respectively, compared to an annualized growth rate of -7.0% and -2.8%, respectively, in the first and second
quarter. This growth also continued in the first quarter of 2010, with an annualized GDP growth rate of 6.1%, which was the
strongest growth of the G7 countries. The annual variation of the Canadian CPI has fluctuated between -0.9% and 1.9% since
May 2009. After reaching a peak of 8.7% in August 2009, the unemployment rate settled at 8.1% in May 2010. With the benefit
of hindsight, many economists agree that the recession was less damaging to Canada than to the United States, particularly
because the rules governing credit in the Canadian banking industry are distinctly stricter. Nonetheless, as with our southern
neighbours, stimulus plans from different levels of government, combined with the Bank of Canada’s commitment to hold the
discount rate steady (at 0.25%) until June 2010 (if inflation remained contained), favourably contributed to the Canadian
economic recovery that began over the summer of 2009. The Bank of Canada honoured its commitment as, on June 1, 2010, it raised the discount rate from 0.25% to 0.50%.
In Québec, the annualized GDP growth rate, after returning to positive territory in the third quarter of 2009 (1.3%), was 5.2% in the fourth quarter of 2009. If we rely on various economic data, it seems that the recession was less sharp and job losses were
relatively smaller in Québec than the rest of the country. After reaching a peak of 9.1% in August 2009, the unemployment rate
settled at 8.0% in May 2010.
As at May 31, 2010, short-term interest rates on government bonds were higher compared to the rates prevailing a year earlier;
long-term interest rates were much more stable. The most remarkable change in interest rates was in the credit spreads of the provinces and corporations; they contracted over the 2009-2010 year (33 basis points from May 2009 to May 2010 for
5-year bank-issued notes). This is explained by the fact that the credit spreads at the beginning of the year reflected tougher
anticipated economic conditions. It should be noted that May 2010 saw a widening of the credit spreads of corporations issuing
lower quality bonds.
Raw material prices, particularly copper, gold and oil, fluctuated over the last 12 months; however, as at May 31, 2010, the price
of these raw materials was higher than as at May 31, 2009. This strengthened the Canadian dollar to the point where it reached
near parity with the U.S. dollar in May 2010. Stock markets around the world saw, overall, large recoveries as at May 31, 2010
compared to the conditions prevailing as at May 31, 2009. However, over this one year period, they saw many fluctuations,
particularly in spring 2010.
29
Despite all that has already been said, it is important to remember that a certain amount of uncertainty still permeates world
financial markets, particularly concerning the potential spreading, within the Eurozone, and ultimately, to the rest of the world, of the effects of the public finance crisis of the five most fragile countries in the Eurozone, namely Greece, Portugal, Spain, Ireland and Italy. To avoid the spread of the crisis, an assistance package of €110 billion was granted to Greece and an emergency
fund of €750 billion was created to stabilize the Eurozone (packages that are history-making in size, created by the European
Union and the International Monetary Fund).
These economic conditions made up the backdrop in front of which our activities for the financial year played out, and overall, they had positive effects on the performance of the Fonds de solidarité FTQ.
MANAGEMENT DISCUSSION OF FINANCIAL PERFORMANCE
RESULTS OF OPERATIONS
OVERALL RESULTS
Worldwide economic conditions improved during the financial year, but they remain uncertain, even fragile, in many respects,
especially concerning the possible impact on the world’s financial markets of the public finance crisis in many countries of the Eurozone.
In that context, the Fund recorded net earnings of $600 million for the financial year, compared to a net loss of $919 million for
the prior year. With this result, the Fund generated a positive return of 9.2%, sharply up from the previous year’s negative return
of 12.6%. It is worth noting that this gain was mainly achieved during the first half of the year (with a non-annualized positive
return of 8.0%), which coincides with the period when the stock markets experienced a significant rally. For the second half of the
year, the return was 1.2%.
As a result of its mission, a significant portion of the Fonds de solidarité FTQ’s portfolio is comprised of private securities and
specialized funds, which did not allow it to fully benefit from the recovery of the stock markets that occurred in the last 12 months.
Consequently, the Fund’s asset allocation tends to limit its return potential in a bull market as we have seen in the first half of the year; however, in a bear market, the opposite occurs. For instance, during the same period last year, while the financial
crisis was still hitting hard, the Fund was able to achieve a return that was higher than the average return of both the Canadian
balanced mutual funds and the main stock indices.
Investments and Other Investments sectors both significantly and positively influenced the results for the year.
The assets managed by the Investments sector are essentially mission-driven development capital investments in public and
private partner companies in the form of shares, units or loans. To stabilize its return, the Fund favours a fair balance between
investments in the form of loans, usually unsecured, that provide a current return through interest payments received, investments in shares, that potentially generate a higher return but involve an increased level of volatility, and investments in
specialized fund units that, while bringing significant private and foreign capital inflows to Québec, contribute to a better
diversification of the Fund’s portfolio. Development capital investments are governed by the Investment Policy, which is an
important component of the Integrated Financial Assets Management Policy.
The Investments sector earned a positive gross return of 11.0% for the year, significantly up from the negative return of 12.0%
generated last year. Taking into account this return and given the level of mission-driven investments made by the Fund during the
year, the assets in this sector increased and represented $3.6 billion or 49% of assets under management as at May 31, 2010
(compared to 47% a year ago).
The Other Investments sector manages the assets not invested in partner companies; these investments consist of bonds, money market securities, sector-based shares, funds of hedge funds, a portfolio of high-revenue securities1 and international
infrastructure funds. As with development capital investments, other investments are managed in accordance with the Integrated
Financial Assets Management Policy, which targets sound diversification of the Fund’s financial assets. Under this policy, a
sufficient portion of financial assets must be invested in a way that allows the Fund to meet its liquidity needs, to produce current
revenue sufficient to cover expenses and to contribute to the generation of a reasonable return to the shareholders.
For the year, the Other Investments sector earned a gross positive return of 11.2%, a significant increase compared to the
negative return of 10.4% recorded for the prior year. The assets of this sector represented $3.7 billion or 51% of the Fund’s
assets under management as at May 31, 2010 (compared to 53% a year ago).
The total operating expense ratio was 1.5% for the year, down from last year’s ratio (1.7%).
1. The portfolio of high-revenue securities is comprised of high-dividend shares.
30
FUND RETURN
YEARS ENDED MAY 31
Assets under management at
end of year*
M$
2010
Weight
%
Return
%
Assets under
management at
end of year*
M$
2009
Weight
%
Return
%
Development capital investments Other investments**
3,590
48.9
11.0
3,022
47.0
3,747
51.1
11.2 3,408
53.0
(10.4)
Income tax and tax on capital
7,337
100.0
11.1
(1.5)
(0.4)
6,430
100.0
(10.8)
(1.7)
(0.1)
(12.6)
(15.3)
Fund return (full year)
9.2
Fund return (1st half of the year)
8.0
Fund return (2nd half of the year)
1.2
(12.0)
3.2
* Assets under management at end of year refer to the fair value, at the end of the year, of the assets managed by the Investments and Other Investments sectors and used to generate
revenues presented in the Statement of Operations.
** Other investments represent the remaining assets not invested in partner companies. Managed by the Other Investments sector, this portfolio consists of bonds, money market securities,
sector-based shares, funds of hedge funds, a portfolio of high-revenue securities and international infrastructure funds.
SECTOR RESULTS
The performance of the Investments sector is influenced by various factors, particularly the behaviour of the financial markets as
well as the economic and business conditions in which our partner companies operate, and by the active management of our
investments. The positive gross return of 11.0% of the Investments sector for the most recently ended year is largely explained
by the following:
• The stock market rally that began in the spring of 2009 and continued throughout the first half of the year, which, despite a setback at the end of the second half of the year, contributed to the positive return of 21.9% earned by the listed securities
portfolio of the Investments sector, compared to a negative return of 34.3% for the prior year, when the stock markets were
extremely depressed. It should be noted that Québec small-cap companies contributed the most to the portfolio return;
• The improvement in the results (positive return of 8.3%) of our private securities and specialized funds portfolio during the
year; these results followed a negative return of 6.5% for the previous year. This improvement is attributable to the strength of the portfolio, combined with more favourable economic conditions and a significant reduction in the cost of credit.
The evolution of interest rates and the performance of the stock markets are the determining factors in analyzing the performance
of the Other Investments sector. Accordingly, the results achieved by this sector are influenced by the behaviour of the financial markets and the conditions affecting the Fund’s economic environment. The gross positive return of 11.2% of the Other
Investments sector for the year is largely explained by the following:
• The recovery of the stock markets during the first half of the year, which helped improve the results achieved through the
sector-based strategy implemented a few years ago and contributed to the positive return of 13.8% of the sector-based shares2
and other securities3 portfolios for the financial year. This performance followed a negative return of 27.6% for the prior year,
when the stock markets were highly affected by the financial crisis, both in Canada and abroad;
• A positive return of 9.0% on our fixed-income securities portfolio for the year, compared to a positive return of 2.0% for the
previous year. The increase in value of bonds (provincial and corporate) resulting from the reduction of credit spreads, combined
with interest income generated by the portfolio, enabled us to earn a very attractive overall return on this asset class.
RETURN BY ASSET CLASS
YEARS ENDED MAY 31
Assets under management at
end of year
M$
2010
2009
Weight
%
Return
%
Assets under
management at
end of year
M$
Weight
%
Return
%
Development capital investments Private securities and specialized funds
Listed securities
Other investments
Fixed income securities
Sector-based shares and other securities
2,845
745
2,234
1,513
38.8
10.1
30.5
20.6
8.3
21.9
9.0
13.8
2,480
542
1,927
1,481
38.6
8.4
(6.5)
(34.3)
30.0
23.0
2.0
(27.6)
7,337
100.0
11.1
6,430
100.0
(10.8)
2. These sectors are materials, energy, consumer staples, utilities and telecommunications.
3. Other securities are funds of hedge funds, a portfolio of high-revenue securities (comprised of high-dividend shares) and international infrastructure funds.
31
OPERATING EXPENSES
Operating expenses consist mainly of expenses related to assets under management, shareholder services, continuous improvement
of systems and controls, monitoring of partner companies, personnel and all other resources the Fonds de solidarité FTQ requires to
achieve its mission and meet its objectives. Although it is essential that the Fund has available resources to achieve its mission, it is also fundamental that it controls its expenses so that they increase at a slower pace than its average net assets. Year after year,
the Fund was able to maintain its total operating expenses at a level it considers to be low.
For the year ended May 31, 2010, the total operating expenses to net average assets ratio, calculated using the method prescribed in the Regulation, was 1.5%, compared to 1.7% for the previous year, down 0.2%. The “Ratios and supplemental data” table,
presented in the “Financial highlights” section above, shows the evolution of this ratio for the past five years. This table also shows that, during this period, the ratio experienced its most important increase between 2008 and 2009, mainly because of the significant decrease of average net assets as a result of the financial crisis, despite the Fund’s considerable efforts to limit the
increase of its expenses. The ratio recovered during the 2010 financial year with the increase of the Fund’s net average assets.
ANALYSIS OF CASH FLOWS, BALANCE SHEET AND OFF-BALANCE SHEET ITEMS
Cash flows
Cash flows from operating activities of the Fund totalled $100 million for the year, down from the $170 million for the previous
year. Changes in these cash flows mainly result from our current operations.
Cash flows from financing activities of the Fund totalled a positive amount of $296 million for the year, compared to an aggregate
negative amount of $27 million for the prior year. Overall, the balance of shares issued less shares redeemed was $318 million for the year, up from the $11 million for the previous year, which explains the increase in the corresponding cash flows. This
situation stemmed mainly from a decrease in the number of shares redeemed, which totalled $342 million for the year on a cash basis,4 compared to $645 million for the previous year. On the other hand, shares issued amounted to $660 million
for the year on a cash basis,4 an amount slightly higher than the issues of $655 million for the previous year.
Cash flows from investing activities of the Fund represented a net cash outflow of $404 million for the year, compared to $133 million
for the previous year. Cash needed to support its net investments (acquisitions less proceeds from sales) in partner companies was
chiefly provided by cash flows from financing activities of the Fund.
The Fund also has lines of credit available for its working capital requirements. As at May 31, 2010, these lines of credit were unused.
Balance sheet and off-balance sheet items
Balance sheet development capital investments increased from $3.4 billion as at May 31, 2009 to $3.9 billion as at May 31, 2010.
This increase essentially resulted from our net disbursed investments of $301 million (disbursed investments of $558 million less
disinvestments of $257 million) and the appreciation of our development capital investments during the year.
During the year, on a commitment basis, the Fund made direct investments of $501 million in its partner companies, down from
the $848 million5 recorded last year when needs of Québec’s companies were at their greatest as a result of the financial crisis.
In addition, amounts committed but not disbursed decreased from $1,209 million as at May 31, 2009 to $822 million as at May 31, 2010. Balance sheet other investments increased by $423 million during the year to settle at $3.7 billion as at May 31,
2010. This increase is mainly attributable to the increase in value of the securities in the portfolio, which results, amongst other
things, from the recovery in the stock and financial markets.
The bond hedge was gradually increased from $75 million as at May 31, 2009 to $135 million as at May 31, 2010 as part of the
hedging strategy implemented after the year ended May 31, 2009. The hedging coverage will be adjusted in the next months based on the actual and anticipated interest rate movements. In addition, during the year, we revised other hedging strategies previously
implemented to maintain the return/risk profile of the development capital investments and other investments portfolios at the desired level. For example, we eliminated all hedges on the benchmark indices for the sector-based shares portfolio in response to the actual and anticipated stock market fluctuations. Derivatives are also used to hedge the other investments portfolio against, in particular, exchange rate fluctuations when assets are denominated in foreign currencies. In that respect, in response to the
significant appreciation of the Canadian dollar, the Fund decided, during the year, to gradually reduce from 100% to 50% the hedge of its sector-based shares portfolio against currency risk which resulted in an increase in the Fund’s exposure to currency risk. This hedging ratio was 62.5% as at May 31, 2010. The Fund does not use derivatives for speculation purposes, except to improve
returns within allocated risk limits.
4. These amounts are presented on a cash basis and therefore include the change in amounts payable or receivable between May 31, 2009 and May 31, 2010.
5. Excluding an amount of $542 million that the Fund had agreed to invest in connection with the 2009 budget of the Government of Québec.
32
MISSION OF THE FONDS DE SOLIDARITÉ FTQ, OBJECTIVES AND STRATEGIES
MISSION AND OBJECTIVES
The Fonds de solidarité FTQ is a union-based development capital investment fund that was born out of the Fédération des
travailleurs et travailleuses du Québec (FTQ). Created in 1983 under the Act to Establish the Fonds de solidarité des travailleurs
du Québec (F.T.Q.), the Fund endeavours to collect the savings of Quebeckers who want to participate in creating and maintaining
jobs, in order to improve the situation of workers and to stimulate the Québec economy. The Fund also helps raise awareness and encourage workers to save for retirement as well as represents an aid for economic training for workers in the companies the Fund invests in. Focusing on its main objectives, the Fund developed the following vision: “place priority on creating and
maintaining jobs, as well as generating a return to its shareholders, by becoming the partner of choice for companies impacting
the Québec economy”.
The Fund’s mission is strongly supported by both levels of government since shares of the Fund qualify for RRSPs and give rise to a 15% tax credit at both the Québec and federal tax levels, for a total of 30%.6 The maximum tax credit is $1,500 per year,
which corresponds to a purchase of $5,000 of shares.
STRATEGIES
To implement its mission and to reach its objectives, the Fund deployed various strategies, both from a global management
perspective and by sector. The Fund therefore implemented an Integrated Financial Assets Management Policy under which it
manages its financial assets in an integrated and comprehensive way to produce a reasonable return for its shareholders while mitigating the volatility of the return from half-year to half-year. Accordingly, the assets in the other investments portfolio
are distributed in a way that is complementary to the portfolio of mission-driven investments made in partner companies. This strategy allows the Fund to obtain, overall, the desired return/risk ratio.
The Integrated Financial Assets Management Policy was revised in January 2010, in light of actual and expected changes regarding
the Fund’s business, particularly the decrease in net subscriptions (shares issued less shares redeemed) and the increase in the size of the portfolio of mission-driven development capital investments. In fact, the weight of investments disbursed by the Fund, which as at May 31, 2010 was at a level of 49% (47% as at May 31, 2009), should gradually increase until it reaches
56% of the Fund’s financial assets. The policy revision allowed us to maintain the desired balance among the various components
of the Fund’s balance sheet and to review the target weight of each asset class with a view to maintaining the desired return/risk
profile and continue to meet shareholders’ expectations. The Fund may modify its targets depending on the circumstances and
events that occur in the next few years.
The significant volatility of financial and stock markets during the last two financial years resulted in significantly modifying the
actual weight of these various asset classes, which led the Fund to rebalance its portfolio at different points during this period.
These rebalancings were made to comply with the limits and guidelines of the Integrated Financial Assets Management Policy
regarding the target asset allocation. They were also a way to actively manage the portfolio within the limits set out by the policy
to improve the return/risk profile, taking into consideration the movement and erratic behaviour of financial and stock markets.
The Shareholder Services sector
The Shareholder Services sector is built on three strategic axes: developing systematic savings, mobilizing the LR (local representatives) network and developing shareholder loyalty. To do so, the Shareholders Services sector principally relies on a
network of 2,044 LRs from FTQ-affiliated unions (as well as unions the Fund has agreements with) who work as volunteers to promote the Fund in their workplace. These LRs explain the Fund’s objectives and encourage workers to subscribe to Fund shares
and thereby contribute to Québec’s economic development while saving for retirement. Continuing education is provided, in
collaboration with the Fondation de la formation économique, to the entire LR network to mobilize them around the Fund’s mission
and the development of systematic savings.
There are three ways to subscribe to Fund shares: payroll deduction, which is the preferred way to subscribe to shares for workers,
automatic bank withdrawal and lump-sum subscriptions.
For the financial year ended May 31, 2010, the Fund collected subscriptions allowing it to make share issues totalling $660 million,
compared to $655 million for the previous financial year. Through the RRSP campaign we welcomed 16,326 new shareholders, which
helped the Fund reach a historic high of 577,511 shareholders as at May 31, 2010. Its financial performance and strength, publicity
campaign, targeted marketing mailings, increased presence through its LR network during the RRSP period throughout Québec have
all allowed the Fund to increase the volume of lump-sum subscriptions by 19%, reaching $165 million. In the same period of the last
financial year the Fund collected $139 million.
Subscriptions through payroll deduction saw a decrease of 6% compared to the previous financial year. This is mainly due to
numerous jobs lost, due to the recession, in sectors where the Fund has a high penetration rate. This situation also had an impact on
the volume of redemptions meeting the income reduction resulting from job loss criteria, which increased by 9% compared to the
previous financial year.
6. Please see the prospectus for more information.
33
Overall, the volume of redemptions decreased significantly this year, settling at $341 million at May 31, 2010, compared to $647 million as at May 31, 2009. It should be recalled that during the previous financial year, in a move underscoring its transparency
toward its shareholders, the Fund warned them that the share price would likely be lower, and then recorded an exceptional volume of redemptions during that period. In fact, shareholders eligible for redemption for retirement were able to redeem before the January
2009 announcement of the share price. With its shareholders getting closer and closer to retirement, the Fund expects an upward
trend in the annual volume of redemptions over the next few years.
The Fondation de la formation économique, created in 1989, encourages economic training for workers so they can increase their
influence on Québec’s economic development. The education program continues to adapt to the needs of companies and their employees, particularly in today’s economic conditions. The Fondation pursues its efforts to publicize the program to the
Fund’s partner companies to benefit the greatest number of workers possible.
The Investments sector
The Investment sector’s strategies focus on realizing the Fund’s mission regarding investing in companies impacting Québec’s
economy as well as strategic investments based on existing criteria. The Investments sector is made up of three main areas of intervention: i) aerospace, construction, services and transportation, ii) natural resources, industries and consumer goods and iii) new economy, which includes information technology, telecommunications and life sciences. Each of these areas is under the
responsibility of a Senior Vice-President and includes several specialized sub-sectors.
This segmentation allows the development of a sector-based expertise valued by our partner companies. The investment process is governed by an Investment Policy that is a significant component of the Integrated Financial Assets Management Policy.
Multidisciplinary teams also support our investment teams with their expertise: legal, tax, business valuation, market study, due diligence, labour relations and public market departments. A due diligence committee monitors the credit risk level to ensure it is acceptable and in line with the Fund’s mission. In addition, to deal with more difficult situations, the Senior Vice-President,
Turnaround Management and Special Projects, together with the Vice-President, Legal Affairs, very closely monitors investments that entail greater credit risk.
The last few years the Fund has supported the creation of specialized funds by making significant investments in them. This strategy
resulted in a considerable inflow of foreign and private capital which helped stimulate the Québec economy while allowing the Fund to
better diversify its investments. For a few years now the Fund has increased the volume of its investment in unsecured debentures.
This strategy has allowed the Fund to earn a current return on its investments through interest payments, which contributes to the
stability of its return.
In 2008, the Fund created the position of Vice-President, Majority Interests, whose responsibilities include promoting investments in
companies facing succession issues. Therefore, and contrary to its usual business practices, the Fund may, in certain specific
situations, make an investment that results in the Fund temporarily becoming the controlling shareholder.
The Fund makes significant investments in each category of development capital as defined by Canada’s Venture Capital & Private
Equity Association (CVCA). The CVCA proposes classifying private equity investments into three categories: buyout capital,
venture capital and mezzanine capital.7 Applying this definition, the following graph presents the breakdown of our $3.4 billion8
development capital investments portfolio, at cost.
BREAKDOWN OF DEVELOPMENT CAPITAL INVESTMENTS PORTFOLIO BY CATEGORY (AT COST)
AS AT MAY 31, 2010
26.2%
Buyout capital
42.2%
31.6%
Mezzanine capital
Venture capital
7. Based on the classification proposed by the CVCA, a buyout capital investment is made by purchasing shares of an established private or public company looking to grow organically or through
acquisition. A venture capital investment is made by purchasing shares of a company that is generally unlisted and in the start-up or early development stage. Mezzanine capital consists of
subordinated debt or preferred shares with or without a variable portion in equity warrants.
8. On a fund disbursement basis, excluding investments in real estate funds and in listed securities acquired on the secondary market.
34
The Other Investments sector
In managing the balance of assets not invested in partner companies (presented under “Other Investments” in the financial
statements), the Other Investments sector is governed by the Integrated Financial Assets Management Policy which targets
sound diversification of the Fund’s financial assets. A sufficient portion of financial assets must be invested in a way that allows
the Fund to meet its liquidity needs, to produce current revenue sufficient to cover expenses and to contribute to the generation
of a reasonable return to the shareholders. The Other Investments portfolio is a significant contributor to the Fund’s results.
All the portfolios in the Other Investments sector, except for the money market portfolio and part of the bond portfolio, are
managed by external specialized managers. The two portfolios that are managed internally at the Fund by a team of professionals
represented approximately $1.3 billion as at May 2010, or 35% of the total amount of other investments. To improve the overall
performance of these portfolios, the Fund’s specialists have a certain latitude in making securities purchases and sales. These
transactions must comply with the limits and guidelines of the Integrated Financial Assets Management Policy and are overseen by
the Financial Assets Management Committee.
For portfolios managed externally, the Fund retains the services of specialized managers which allows optimizing the management
of those portfolios. One of the benefits of this kind of management is the implementation of specialized management strategies,
such as active management of the duration of the bond portfolio, which targets generating added value for the portfolios in
question through the expertise the selected specialists have in the area.
Using derivative products provides active management of market risks the Fund is exposed to. When appropriate a risk management
strategy is established by the Other Investments sector and authorized by the appropriate governing bodies to minimize the Fund’s
exposure to volatility in interest rates, foreign exchange rates and stock market prices.
The revision of the Integrated Financial Assets Management Policy in January 2010 specifically led the Fund to aim for a gradual
reduction of its bond portfolio as well as liquidate a large part of its portfolio of high-revenue securities. In fact, as at May 31,
2010, the portfolio of high-revenue securities only comprised high-dividend shares, while in the past it also included preferred
shares and income trust units. The transactions required subsequent to these modifications to the target asset allocation were
executed in an orderly fashion so the Fund would not hurt its return.
The activities of the Other Investments sector fall under the responsibilities of two separate Vice-Presidents: the Vice-President,
Marketable Securities Portfolio Management and the Vice-President, Marketable Securities Portfolio Strategies and Québec Public
Market. This structure helps the Fund continue prioritizing the optimization of its return/risk ratio despite the increasing complexity
of financial markets.
60% RULE
The 60% rule set out in the Fund’s Incorporation Act stipulates that the Fund’s average unsecured investments in qualified
business enterprises must represent at least 60% of its average net assets of the previous financial year. The remaining assets
may be invested in other financial vehicles for asset diversification and sound management purposes. The calculation method for this rule is based on the value of the Fund’s assets, which depends in part on interest rate fluctuations and on the
performance of stock markets and the economy in general.
As at May 31, 2010, the value of average qualified investments9 amounted to $4.5 billion or 66.2% of the average net assets
of the previous financial year (compared to 61.7% as at May 31, 2009, which ratio reflected the temporary relaxation of the rule by the Government of Québec granted on November 9, 2007). Since the minimum percentage prescribed was reached as at May 31, 2010, the amount of share issues for the 2010-2011 financial year will not be limited by the 60% rule. As at May 31,
2010 the Fund was also in compliance with all other limits and rules set out in its Incorporating Act.
The Fund expects to comply with all the limits and rules set out in its Incorporating Act over the next several years.
RECENT DEVELOPMENTS
ACCOUNTING POLICIES
During the financial year, the Fund applied new accounting standards adopted by the Canadian Institute of Chartered Accountants
(CICA). These standards, which are described in Note 3 to the financial statements, did not affect net earnings and earnings per
share or net value per share as at May 31, 2010 and 2009.
The Fund does not anticipate adopting new accounting policies that would significantly affect its net earnings for the next financial
year or the value of its net assets as at May 31, 2011.
9. These investments include amounts committed but not disbursed as well as guarantees and suretyships.
35
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
The Accounting Standards Board of Canada (AcSB) confirmed that Canadian GAAP will be replaced by IFRS for the years
beginning on or after January 1, 2011 for publicly accountable enterprises. However, the AcSB recently proposed that entities,
such as the Fund, currently applying the Accounting Guideline on investment companies could continue to apply existing Canadian standards until fiscal years beginning on or after January 1, 2012. The Fund will monitor this proposal affecting its
applicable date of transition to IFRS.
IFRS conversion plan
The Fund adopted an IFRS conversion plan comprised of three phases: a diagnostic phase; a standards assessment, detailed analysis,
issue resolution and model financial statements preparation phase; and a change integration phase.
The first phase was completed before the end of the financial year ended May 31, 2009. This phase included identifying the IFRS having a significant impact on the Fund as well as the main issues and priorities to assess in the context of the Fund.
The part of the second phase dealing with standards assessment, detailed analysis and issue resolution, was completed in May 2010. It included a more detailed analysis of the IFRS and the differences with current Canadian standards and their interpretations in order to identify the impact the conversion will have on processes, systems and the financial statements. In the coming months, the Fund will
prepare its opening balance sheet as at the date of transition and its model financial statements.
During the change integration phase, we will keep accounting records both under Canadian GAAP and IFRS to be able to present
comparative information upon transition. In addition, the Fund will deploy its training plans, which are intended to upgrade the knowledge
of its accounting staff and other stakeholders of the organization that are affected by the IFRS conversion.
The Fund continuously monitors the development of IFRS to assess its impact on its operations.
Main expected changes
The following table presents only the significant differences between current Canadian GAAP and IFRS as they relate to the Fund.
While noteworthy, these differences do not necessarily have a significant impact on the Fund’s financial statements. This table
was prepared based on standards that will be effective as at the date of transition; however, certain standards could be amended
and the Fund could reassess its position as needed.
Accounting policy
Main differences between GAAP and IFRS
Impact on financial statements
Consolidation
Under Canadian GAAP, investment companies meeting certain
criteria recognize their investments at fair value, in accordance
with Accounting Guideline AcG-18, Investment Companies. This
rule applies to all investments, including those in entities in
which the investment company holds more than 50% of voting
shares and those in entities over which it exercises control.
The Fund does not currently prepare
consolidated financial statements and recognizes all its development capital
investments and other investments at fair value.
Currently, IFRS do not provide for an accounting treatment
equivalent to that of AcG-18 and, consequently, investment
companies that control entreprises will have to consolidate
their investments in such enterprises upon adopting IFRS.
Financial instruments
The international standard-setting organization, the International Accounting Standards Board (IASB), has been examining
since spring 2010 the option of exempting investment
companies from the requirement to consolidate investments in
entities they control; they would therefore account for these
investments at fair value. In the coming months, these
proposals will be included in an exposure draft that could lead
to the adoption of a new accounting standard on that topic.
In the event that IFRS include a consolidation exemption for investment
companies, there would be no impact on the Fund’s financial statements.
Under Canadian GAAP, the Fund recognizes all its development
capital investments and other investments at fair value, in accordance with accounting principles applicable to
investment companies.
Financial instrument recognition and
measurement under current IFRS could
have an impact on financial reporting.
As mentioned under “Consolidation” above, IFRS do not
provide for an accounting treatment specific to investment
companies. In the absence of such a treatment, the Fund
would have to recognize its financial instruments using the
categories prescribed by IFRS, measure them using the
methods required for each category and provide the required
disclosures in its financial statements.
36
Consolidating those investments would
have a major impact on information
disclosed in the Fund’s financial statements, which would not be at fair
value for consolidated entities.
Disclosure standards regarding controlled
entities are still being analyzed. The Fund
will assess the situation in due time.
In the event that IFRS allow investment
companies to use fair value measurement,
there would be no impact on the Fund’s
financial statements.
Accounting policy
Main differences between GAAP and IFRS
Impact on financial statements
Property, plant and equipment
(Capital assets)
IFRS require that each component of an item of property,
plant and equipment be depreciated separately when an item of property, plant and equipment is comprised of
components to which different depreciation rates apply. One impact of this requirement is that more components will be recognized than under Canadian GAAP.
The list of the specific components of the Fund’s building is currently being
developed. These components will be disclosed in a note to the financial statements.
Under IFRS, an item of property, plant and equipment can be measured using the cost model or the revaluation model.
Canadian GAAP preclude the remeasurement of property,
plant and equipment at fair value.
IFRS 1 First-Time Adoption of International Financial Reporting
Standards allows an entity to use, upon transition to IFRS,
the fair value of an item of property, plant and equipment as
its deemed cost as at the date of transition.
Investment property
Under IFRS, an investment property is defined as a property
held to earn rentals or for capital appreciation, or both. An investment property can be measured using the cost
model or the fair value model.
Canadian GAAP do not include a specific definition of
investment property.
Employee benefits
After the transition, the Fund expects to
continue using the cost model to measure
its capital assets.
Amounts involved (fair value of the building
and calculation of depreciation by
component) are currently being assessed,
but they are not expected to have a
significant impact on net assets, net
earnings and net earnings per share.
The Fund will reclassify the portion of its
building that it leases.
The Fund expects to measure its
investment property using the cost model,
as it does for the portion of the building it
occupies and its other capital assets. This measurement method is not expected
to have a significant impact on net assets,
net earnings and net earnings per share.
Under IFRS, past service cost of defined benefit pension plans
for which the benefits are already vested are recognized
immediately as an expense. Under Canadian GAAP, they are
usually amortized over the average remaining service period of
active employees.
The vested portion of past service cost will have to be immediately recognized in net assets. This adjustment does not have a material impact on the Fund’s
financial statements.
Under Canadian GAAP and IFRS, the actuarial gains or losses
of defined benefit pension plans that exceed a “corridor” are
amortized over the average remaining service period of active
employees. However, in a recently issued exposure draft, the
IASB proposes to amend this treatment to eliminate the
“corridor”.
The Fund is currently assessing the option
of recognizing in retained earnings all
actuarial gains and losses at transition and
the option of using or not using the
“corridor” method subsequent to transition.
IFRS 1 First-Time Adoption of International Financial Reporting
Standards allows an entity to recognize, upon transition
to IFRS, all cumulative actuarial gains and losses directly in
retained earnings.
Income taxes
The Fund is currently assessing the option
of using the fair value of its building as its
deemed cost as at the date of transition.
Amounts involved are currently being
assessed, but they are not expected to have
a significant impact on net assets, net
earnings and net earnings per share.
Under Canadian GAAP, refundable taxes must be accrued – as assets for mutual fund corporations – with respect to all
related elements of income recognized in the period, whether
the taxes with respect to such amounts are payable currently
or in the future.
As a result of this difference, refundable
tax balances will have to be written off as at the date of transition and the amount of future income taxes will have to be adjusted.
Under IFRS, refundable taxes are recognized as amounts
receivable only when dividends or transfers from retained earnings to capital stock giving right to a refund of
these taxes are approved by the Board of Directors.
Amounts involved are currently being
assessed, but they are not expected to have a significant impact on net assets,
net earnings and net earnings per share.
Consequently, these taxes will have to be recognized in the statement of operations only when such a transaction is approved.
The Fund believes that the IFRS conversion will not require major changes to its information systems or its data processing
procedures. The Fund also believes that its current internal control over financial reporting and disclosure controls and procedures will be sufficient and adequate for the adoption of the new IFRS and their disclosure requirements.
37
TRANSFER OF CLASS G SHARES
On May 31, 2010, the holders of Class G shares, namely the Fédération des travailleurs et travailleuses du Québec (FTQ)
and the Minister of Finance of Québec, waived the right to receive any distribution or return of capital attached to their shares.
Accordingly, the issued and paid-up capital on Class G shares was reduced by $20.1 million through a transfer to contributed
surplus. In consideration, the Fund will submit, at the shareholders’ meeting to be held on October 2, 2010, a resolution providing for the cancellation of Class G shares in exchange for equivalent unsecured debentures. This transfer increased, as at May 31, 2010, the net assets attributable to Class A shares by $20.1 million or $0.07 per share.
PAST PERFORMANCE
This section presents the past performance of the Fund. The past performance of the Fund does not necessarily indicate how it will
perform in the future.
YEAR-BY-YEAR RETURNS OF THE FUND
The following chart shows the Fund’s annual performance and illustrates how the Fund’s performance has changed from year to year for the last ten financial years.
5.2%
2.6%
5.0%
6.0%
9.2%
7.1%
-1.2%
-11.4%
2001
2002
-6.9%
-12.6%
2003
2004
(11 months)
2005
2006
2007
2008
2009
2010
The annual performance of the Fund is calculated by dividing net earnings (net loss) per share for the financial year by the price
per share at the beginning of the financial year. Such performance differs from the annual compound return to the shareholder
because the annual performance of the Fund is calculated taking into account share issuances and redemptions made during the
year, which have a dilutive or accretive effect on net earnings (net loss) per share, as the case may be. In addition, the Fund’s
annual performance does not include the transfer of Class G shares mentioned above, which had a positive effect of 0.3% on the
return to the shareholder for the financial year ended May 31, 2010.
ANNUAL COMPOUND RETURNS TO THE SHAREHOLDER
At the current price of $23.84 per share, a shareholder who has invested at the beginning of each of the periods indicated below
earns the following annual compound returns:
10 years
5 years
3 years
1 year
-0.2%
1.2%
-2.0%
9.5%
The annual compound return to the shareholder is calculated by taking into account the annualized change in the price per share over the periods indicated. This return differs from the annual performance of the Fund since, as mentioned above, it does not take into account the dilutive or accretive effect of share issuances and redemptions made during the year, but includes the effect of the transfer of Class G shares. This explains why the annual compound return to the shareholder was 9.5% for the
year, whereas the performance of the Fund was 9.2% for the same period.
Since the inception of the Fund, the annual compound return to the shareholder has been 3.5%.
ANNUAL COMPOUND RETURNS TO THE SHAREHOLDER (INCLUDING TAX CREDITS)
Let’s take, for example, a shareholder who has invested an equal amount each year through payroll deduction. Including the Québec and federal labour-sponsored funds tax credits (each amounting to 15%), at the current price of $23.84 per share, this shareholder earns an annual compound return of 11.5% and 7.8% for a 7-year and 10-year period, respectively. This return does not take into account the RRSP tax deductions.
38
SUMMARY OF INVESTMENT PORTFOLIO
As at May 31, 2010, the Fund’s assets under management, comprised of the development capital investments portfolio and the
other investments portfolio, were broken down as follows: Asset classes % of net assets
Development capital investments
Private securities
Specialized funds
Listed securities
24.9
14.1
10.2
49.2
Other investments
Cash and money market
Bonds
Sector-based shares
Funds of hedge funds
Portfolio of high-revenue securities
International infrastructure funds
2.7
27.9
15.8
3.0
1.1
0.9
51.4
As at May 31, 2010, the issuers of the top 25 positions held by the Fund, of which 16 are part of the development capital
investments portfolio and 9 are part of the other investments portfolio, were as follows:
Issuers
% of net assets
(16 issuers)*
Other investments
(9 issuers)**
28.3
17.8
46.1
* The 16 issuers representing, as a group, 28.3%
of the Fund’s net assets are: Atrium Innovations inc.
Cogeco Câble inc.
Corporation Financière L’Excellence ltée
Entreprises publiques québécoises à faible capitalisation10
Éthanol Greenfield inc.
Fonds immobilier de solidarité FTQ inc.10
Fonds immobilier de solidarité FTQ I, s.e.c. (formerly Solim)10
Fonds immobilier de solidarité FTQ II, s.e.c. (formerly Solim II)10
Gestion TFI, société en commandite
LJVH Holdings inc.
Metro inc.
Société de gestion d’actifs forestiers Solifor, société en commandite10
SSQ, Life insurance Company Inc.
Stella-Jones Inc.
Transcontinental Inc.
Trencap s.e.c.
** The 9 issuers representing, as a group, 17.8%
of the Fund’s net assets are:
Province of Ontario
Government of Canada
Financement Québec
Hydro-Québec
Canada Housing
Laurentian Bank of Canada
FRM Diversify II Fund SPC
Q-BLK Strategic Partners, inc.
The Bank of Nova Scotia
4.8%
3.7%
2.8%
1.6%
1.2%
1.2%
0.9%
0.8%
0.8%
This summary of investment portfolio may change due to ongoing portfolio transactions of the Fund.
CONTRIBUTION TO QUÉBEC’S ECONOMIC DEVELOPMENT
In keeping with its mission, the Fund made investments over the financial year that contributed to creating, maintaining or saving quality jobs in different sectors of the Québec economy. In the current economic conditions, still marked with uncertainty,
the Fund continues to play an active role in the development and growth of Québec companies. As such, during the financial year, the Fund invested $501 million, on a commitment basis, to support Québec entrepreneurs in their development projects. If we do not take into account the last four financial years where investment volume was very high, particularly in response, on the one hand, to the current capitalization needs of private venture capital funds, and on the other hand, to the needs of Québec companies dealing with the last economic and financial crisis, which saw the traditional sources of capital dry up even more, this significant volume of investments of $501 million further corresponds to financial markets and capital supply in
Québec returning to normal. In addition, this amount is close to the levels of investments for the financial years 2000 to 2005,
which on average were around $450 million.
10.Despite their relatively important weight in the overall portfolio of the Fund, these issuers do not constitute a significant concentration risk given their large number of investees.
39
Some of these investments had a particularly structural effect on the Québec economy. For example, an amount of $25 million
was granted to Premier Tech, a company in the agriculture and industrial equipment production industry, to support its development and long-term stability. A part of this amount allowed the company to realize a new step in its growth plan through
the acquisition of the Ontarian company Sure-Gro Holding, which is the main Canadian producer and distributor of horticulture
products for the consumer market.
Along the same lines, the Fund played an active role, through a $15 million investment in Fortress Paper Ltd., in the re-opening of the Fraser Paper mill in Thurso, in the Outaouais region, which had shut down in June 2009. Fortress’s very innovative project for the Thurso mill, which will see the rehiring of 290 employees, aims at converting the mill’s original activities, paper pulp production, to initially produce a high quality cellulose pulp and eventually build a cogeneration plant with the goal of producing 25 megawatts of electricity.
Among the other investments made over the financial year, we’d like to highlight the $15 million investment in Smardt Chiller
Group, a company that manufactures chilling systems that is active in several markets around the world, which will allow the company to optimize its distribution network, acquire new equipment and modernize its factory in Dorval. In the furniture
industry, the Fund invested $11.5 million: $5.5 million to help Foliot Management, which manufactures furniture out of melamine-coated particleboard for university residence halls and hotels, for its expansion projects, including opening a new
factory in the western part of the United States, and an amount of $6 million for the Bermex Group to acquire a majority interest in Shermag, one of the largest high-end residential furniture manufacturers in Québec.
In the context of its strategic investment program,11 the Fund made four large investments in 2009-2010. An investment
of $38.5 million was made in GLV, a global provider of technology solutions used in water treatment, recycling and purification, as well as in pulp and paper production; this investment by the Fund helped GLV complete its major acquisition of the Austrian company Christ Water Technology AG. The Fund also made an investment of $58.1 million in a transaction involving the Montréal Canadiens Hockey Club, the Bell Centre and the Gillet Entertainment Group to bring back ownership of the Club to Québec; part of this investment ($48.1 million) falls into the category of strategic investments. In addition, Stella-Jones
received an investment of $30.8 million from the Fund to help it join the ranks of the leaders in the North American railway ties industry by acquiring the American company Tangent Rail Corporation. Finally, an investment of $30 million was announced
as part of the offer made by OMERS to privatize Logibec Groupe Informatique, a company that currently ranks among the fastest
growing companies specialized in information systems for the health and social services industry.
The Fund also maintained its commitment to new economy companies by investing, for example, $5.5 million for a management
buyout of Teraxion, a global leader in the design of products for optical signal conditioning for high-speed data transmission for
the telecommunication, aerospace, energy and industrial markets.
To support the future of agricultural entrepreneurship in Québec, it was announced on March 30, 2010 in the provincial budget
that the Fund would earmark $25 million for the creation of the FIRA fund, which stands for Fonds d’investissement pour
la relève agricole. Two financial partners are joining the Fund in this project, including Financière agricole du Québec, and will
also invest $25 million each. The FIRA fund will help bring together the necessary elements to encourage start-ups and farm
business transfers.
POLICY FOR INVESTMENTS OUTSIDE QUÉBEC12
Investments made by the Fund over the years pursuant to the Policy for Investments Outside Québec have had significant
economic spin-offs for Québec as required by the policy. This year, a total of $47 million ($76 million for the previous year) was invested in the various eligible categories pursuant to this policy.
The eligibility of investments made by the Fund in private funds outside Québec, pursuant to the 60% rule, is conditional upon the private funds reinvesting in Québec companies an amount at least equal to the amount invested by the Fund. These
private funds should also bring to their partner companies a specific expertise or an international business network necessary for their development. During the year, the Fund invested $7.6 million in MMV Financial (a private fund outside Québec) and anticipates that, in addition to supporting the Fund’s efforts in terms of Québec’s economic development, this private fund
will invest in Québec companies an amount at least equal to the sum received from the Fund.
11 The 2003-2004 Québec budget granted the Fund the opportunity to make strategic investments in large Québec companies with assets of less than $500 million or with a maximum net worth of $200 million.
12.Since 1998, the Fund has been authorized by the Québec Minister of Finance to invest outside Québec provided certain clearly defined conditions are met, notably with regards to economic
spin-offs. The main groups of eligible investments are private funds outside Québec, companies impacting the Québec economy and large-scale investment projects (financing for expansion,
modernization, productivity improvement).
40
During the year the Fund qualified an investment of $23 million (of which $15 million was committed in the previous financial year)
in Meca Dev s.a.s., a company impacting the Québec economy that met the criteria of the Policy for Investments Outside Québec.
The Fund also invested amounts totalling $16.3 million in two companies that will undertake large-scale projects in Québec that
also qualified under the policy, including $15 million in Fortress Paper Ltd. (a company outside Québec).
THE FONDS DE SOLIDARITÉ FTQ NETWORK
Since its inception in 1983, the Fund has built a solid investment network that provides entrepreneurs who follow their ambitions
with patient capital based on their needs. A veritable business hub brimming with ideas, talent and knowledge, this network offers the Fund’s partner companies the opportunity to share common concerns with other SMEs, learn from past experiences
and forge new business ties. The Fund’s Investment network revolves around four levels of investment:
• The Fonds de solidarité FTQ offers $2 million and up for large companies.
• The 16 fonds régionaux de solidarité FTQ offer $100,000 to $2 million to meet the needs of businesses in every region of
Québec.
• The 86 local solidarity funds, or SOLIDEs (Sociétés locales d’investissement dans le développement de l’emploi), created by
the Fund and the Fédération québécoise des municipalités, offer $5,000 to $100,000 to small businesses.
• The 77 specialized funds form an investment network in Québec and abroad that invests in assorted industries. The Fund’s
commitment to this network continued in 2009-2010, with the continued goal to facilitate Québec SMEs’ access to capital in all their stages of development.
In November 2009 the Fund unveiled its new logo, which will maximize its visual impact. In addition, other components of the Fund’s investment network, namely the fonds régionaux de solidarité FTQ, the Fonds locaux de solidarité FTQ, real estate
funds and the Fondation de la formation économique, adopted a logo that recalls the Fund’s logo. At the same time, the name
of the real estate funds was changed. This unity of logos and names throughout the Fund’s network will maximize awareness for
this impressive network throughout Québec.
The following graph shows the breakdown of the Fund’s investments based on its various network components:
DISTRIBUTION OF INVESTMENTS BY NETWORK COMPONENTS (AT COST)
AS AT MAY 31, 2010
11.5%
9.5%
79.0%
Specialized funds
Regional and local funds (including the SOLIDEs)
OUTLOOK AND TRENDS
ECONOMIC AND FINANCIAL OUTLOOK
Stock and financial markets in large part have recovered from their state of crisis since the worst months of spring 2009,
particularly because of the numerous fiscal and financial aid policies implemented by government authorities across the world
over the last 12 months.
Having benefitted from the support of government authorities to pull it out of the crisis, the still fragile U.S. economy is in a period
of transition, and the next question to ask is if consumers and businesses will take over in the next few months so the economy
can get its second wind and become stronger.
The U.S. Federal Reserve should gradually reduce the extraordinary fiscal stimulus measures over the next few months, but at a very slow pace so as not to disrupt the still weak economic recovery. To that end, an increase in the U.S. Federal Reserve’s
interest rate would not be foreseeable in 2010.
The disparity between the Canadian and American economies is astonishing. Contrary to what we see in the United States,
economic recovery, employment and growth in credit are strong in Canada, so much that the Bank of Canada could probably
continue to increase the discount rate (in stages) after having raised it by 25 basis points (from 0.25% to 0.50%) on June 1,
2010. It will not be easy to gauge the intensity of the hikes in the discount rate, particularly because of the notable appreciation of the Canadian dollar and inflation holding steady.
Given current conditions, we foresee the Canadian dollar varying within a range of $US 0.95 and $US 1.05, while 10- and 30-year
Canadian bond rates should remain stable through the end of 2010.
41
The Québec economy has emerged from the tough situation it was dragged into by the American crisis. The numbers for
consumer spending, exports and employment are all encouraging. However, fiscal austerity measures of the Government of Québec and weak productivity, as well as conditions in the United States and the possible repercussions on global financial
markets of the public finance crisis in several countries in the Eurozone, remain key factors to monitor.
TRENDS IN THE VENTURE CAPITAL INDUSTRY13
While investments plummeted 27% in Canada and 37% in the United States in 2009 (in terms of amounts invested as well as
number of investments), Québec saw the opposite that year, with amounts invested in Québec companies climbing 10%. In terms
of the North American market, we are experiencing a slump in amounts invested for the second year in a row. Québec was not
spared in 2008, but, unlike the other Canadian provinces and the United States, we saw a turnaround in the trend in 2009.
This turnaround allowed Québec to receive 43% of investments made in Canada in 2009, compared to 29% in 2008. We see the
opposite in Ontario where the fall in investments reduced their share to 28% of investments made in Canada, which is Ontario’s
weakest market share in nearly 20 years.
Investment activity in Québec in 2009 was still dominated by tax-advantaged funds, including labour-sponsored funds. These
funds raised their investments by 11% compared to the previous year, which accounted for nearly one-third of all investment
activity in Québec in 2009.
After having significantly reduced their presence in Québec in 2008, U.S. and foreign funds returned in force in 2009, boosting
the amount invested in the province by 52% over the previous year. In 2009, Québec received 41% of total investments made in
Canada by foreign investors. Also in 2009 foreign investments represented 29% of all investments made in the province.
The considerable presence of foreign funds in Québec is a strong testament to the vitality of the Québec venture and development
capital industry, not to mention the quality of investment opportunities in the province. The Teralys Capital Fund, created in 2009 by the Fonds de solidarité FTQ in collaboration with the Caisse de dépôt et placement and the Government of Québec, is a
good example of initiatives that demonstrate the commitment of the key players in the venture and development capital industry
to encourage and help create private investment funds and the arrival of foreign funds in the Québec market.
THE SAVINGS MARKET AND RRSP
Even though the Québec economy seems to have been less affected by the 2008-2009 economic and financial crises than other provinces, there were still consequences for Québec. In fact, job losses increased and several factories shut down. The savings rate was directly affected, and is currently at its lowest point in 20 years. In terms of the risks that small investors are willing to take, we note that secured products remain popular. However, for those looking for a higher return, unsecured
products remain appealing.
In the current economic conditions that are still tainted with weakness and uncertainty, the Fund’s mission becomes even more
important in terms of both its work to teach about the importance of saving and its role as an investor in the Québec economy. It should also be noted that its competitive return for the financial year and its tax credits put the Fund in an advantageous
position. A recent survey of our shareholders revealed that in March 2010, 83% considered the Fund stable and financially sound.
FUND OUTLOOK14
Based on the currently foreseeable economic and financial outlook, and taking into consideration our mission and investment
strategies, we are targeting an annual return of 2.5% to 3.0%, on average, over the next few years. This return does not take into
account tax credits granted to shareholders upon purchasing shares of the Fund and is subject to significant half-year or annual
volatility. This target was revised downward in January 2010 (it had previously been 3.0% to 4.0%), following the revision of the Integrated Financial Assets Management Policy. The lowering of the Fund’s target return is essentially explained by the lower
expected return for the bond portfolio. In fact, we expect that this portfolio will be affected over the next few years by higher
Canadian bond rates, which clearly cannot remain at current historic lows forever. Accordingly, in addition to obtaining interest
income that is weakened by current low interest rates, and while not impacting the soundness of the portfolio, this scenario will also result in losses in value of bonds in the portfolio when interest rates begin rising.
13.As previously mentioned, Canada’s Venture Capital & Private Equity Association (CVCA) proposes classifying private equity investments into three categories: buyout capital, venture capital and mezzanine capital. As such, the information presented in this section only concerns the venture capital category and is therefore not representative of the Fund’s overall
development capital investments, which are allocated among all three categories. In addition, the information presented in this section covers the 2009 calendar year, which is different than the Fund’s financial year.
14.The outlook presented in this MD&A reflects the Fund’s expectations with respect to future events, based on information available to the Fund as at June 23, 2010, and presupposes certain risks, uncertainties and assumptions. Many factors, several of which are beyond our control, may cause the Fund’s actual results, performance, or achievements to differ materially
from explicit or implicit expected future results, performance, or achievements.
42
While the Fund is confident it will reach its return objective in the long term, the annual return depends on current economic
conditions and the ups and downs of the stock and financial markets. Therefore, the Fund’s return over the 2010-2011 year will
be greatly influenced by stock market returns. The return for private securities is also linked to the general performance of the economy and may be lower than their historic average returns, particularly because of an increase in the cost of credit,
adverse impact of economic conditions, the volatility of the Canadian dollar compared to the U.S. dollar and the effects of foreign
competition. The Fund is targeting a ratio of total operating expenses to average net assets comparable to the ratio achieved
during the financial year ended May 31, 2010.
In the coming years the Fund expects to continue using derivative products with respect to a portion of its bond portfolio to
lessen the negative impact an increase in Canadian interest rates would have on its earnings. Given the protection such a strategy
provides, we must therefore sacrifice a part of the earnings resulting from an increase in the value of our bond holdings should
the rates of the bonds issued by the Canadian government decline. The level of hedging of the bond portfolio will vary based on the economic outlook. This strategy is necessary to meet shareholder expectations and to avoid, inasmuch as possible, a decline in the Fund share price. We also use other hedging measures. For example, derivative products are used to reduce the
Fund’s exposure to currency risk or to reduce the impact of an anticipated fall in the value of certain sectors or specific securities on the stock markets. In such cases, we must also relinquish a part of the increase in the price of our investment if the corresponding currency or stock market price rallies.
With projected share issues higher than anticipated redemptions, the Fund’s net assets should increase over the 2010-2011 year.
On the other hand, the volume of investments made by the Fund will likely be closer to the level recorded during the 2009-2010
financial year than the very high levels reached over the four previous financial years. As has already been mentioned, investments were made at such high volumes to respond, on the one hand, to the current capitalization needs of private venture
capital funds, and on the other hand, to the needs of Québec companies dealing with the last economic and financial crisis in light of the drying up of traditional sources of capital.
RISK MANAGEMENT
Sound risk management practices are vital to the success of the Fonds de solidarité FTQ. We manage our risk within a framework
taking into account the nature of our activities and the risks we can reasonably assume considering the desired return/risk ratio and shareholder expectations. To that end, we capitalize on a structured process to determine, measure and control the
significant risks with which we must contend.
Notice to readers: The following three paragraphs and the sections on market risk, credit and counterparty risk and liquidity risk
form an integral part of the Financial Statements on which an auditors’ report without reservation was issued on June 23, 2010.
The Fund manages all its financial instruments in an integrated, comprehensive manner in accordance with the standards set out
in the Integrated Financial Assets Management Policy adopted by the Board of Directors. This policy covers both development
capital investments and other investments. It sets goals, guidelines and several limits so that the Fund’s management can ensure
that the target return/risk profile is reached on an operational basis. The Fund does not use derivatives for speculation purposes,
except to improve returns within allocated risk limits.
During the year ended May 31, 2010, the risk management approach evolved as the Fund undertook a process to implement an integrated risk management framework. This process was essentially intended to provide the Fund’s management with an
overall vision of all risks to ensure that they are managed in accordance with their degree of importance. The production of an integrated risk profile allowed prioritizing the key financial and non-financial risks to which the Fund is exposed, before and after considering the effectiveness of the controls implemented to mitigate the Fund’s exposure to these risks. A mitigation
strategy was developed for some of these risks, and action plans were set up. Other action plans are also intended to validate the controls implemented to manage certain risks.
In the normal course of business, the Fund is exposed to various risks; the principal ones are presented below.
43
MARKET RISK
Market risk, which is inherent to the Fund’s participation in financial markets, represents the risk of losses arising from fluctuations
in interest rates, exchange rates and prices of listed financial instruments. More specifically, this risk varies with the financial
markets’ conditions and certain market parameters, such as volatility, that may lower the value of the Fund’s financial assets and
thus have a negative impact on the Fund’s Balance Sheet and Statement of Operations. Difficult economic or financial conditions
may thus have a negative impact on the value of the Fund’s shares.
The Fund manages market risk by allocating its financial assets across several classes. In addition, it invests in various industries
(government and government agencies, financial institutions, technology, manufacturing and primary, services and tourism,
regional or local funds and real estate) and geographic areas, within the limits allowed by its Incorporation Act.
The Fund’s financial assets are especially sensitive to listed share prices and fluctuations in bond interest rates (Canada bond
rates and credit spreads). The Fund’s financial assets are also sensitive to exchange rate fluctuations, but since most of its transactions are in Canadian dollars, the Fund’s direct exposure to currency risk is relatively low. Furthermore, common
hedging mechanisms such as foreign currency forward contracts are generally used for other investments in a foreign currency.
In response to the significant appreciation of the Canadian dollar, the Fund decided, during the year, to gradually reduce from
100% to 50% the hedge of its sector-based shares portfolio against currency risk, which increased the Fund’s exposure to
currency risk. This hedging ratio was 62.5% as at May 31, 2010.
In addition, the bond hedge was gradually increased from $75 million as at May 31, 2009 to $135 million as at May 31, 2010 as part of the hedging strategy implemented after the year ended May 31, 2009. The hedging coverage will be adjusted in the
next months based on actual and anticipated interest rate movements.
Sensitivity analyses and simulations are used to inform senior management of material levels of market risk exposure. The Fund
uses derivative financial instruments to reduce its market risk exposure and safeguard the value of its assets. A sensitivity
analysis is presented below for each of the three market risk categories to which the Fund’s financial assets are exposed, namely
changes in interest rates, listed share prices and exchange rates. These analyses reflect the amendments made during the year to the hedging strategies implemented to reduce the Fund’s exposure to interest rate risk and currency risk.
SENSITIVITY OF THE FUND’S RESULTS TO MARKET RISK
Change in bond interest rates*
1% increase in bond interest rates
1% decrease in bond interest rates Change in listed share prices**
10% increase in listed share prices
10% decrease in listed share prices
Change in exchange rates***
10% appreciation of the Canadian dollar
10% depreciation of the Canadian dollar
May 31, 2010
May 31, 2009
(95)
95
(99)
99
186
(186)
172
(172)
(55)
55
(16)
16
*
This analysis is performed on bonds held by the Fund presented under Other investments in the financial statements. In this analysis, the impact on results takes
into account the use of derivative financial instruments in certain cases.
** This analysis is performed on listed shares held by the Fund presented under Development capital investments and Other investments in the financial statements.
In this analysis, the impact on results takes into account the use of derivative financial instruments in certain cases.
*** This analysis is performed on securities denominated in foreign currencies held by the Fund presented under Development capital investments and Other investments
in the financial statements. In this analysis, the impact on results takes into account the use of derivative financial instruments in certain cases.
The value of unlisted financial instruments in the development capital investments portfolio is established using approved and
accepted valuation techniques. These techniques are based on a set of assumptions that take into account market conditions
such as exchange rates, economic growth, credit spreads, etc. as at the valuation date. Since the assumptions used are highly interrelated, a sensitivity analysis that isolates the impact of only one of these variables on the private securities portfolio is not considered to fairly represent the sensitivity of the results. Despite this, management assessed the situation and determined that using possible alternative assumptions would not change significantly fair values.
44
CREDIT AND COUNTERPARTY RISK
The Fund’s exposure to credit risk stems mainly from its mission-driven development capital investment activities. In that regard,
the investments are generally unsecured. Its other investment activities generally entail less of this risk since the counterparties
concerned are typically more financially solid (governments, banks, etc.).
Credit risk is the potential for loss due to the failure of a partner company (financial instruments presented under Development
capital investments), issuer or counterparty in a transaction (financial instruments presented under Other investments) to honour
its contractual obligations or due to a degradation of its financial position. The Fund manages this risk through several means,
including a due diligence process to ensure that the credit risk level is acceptable.
The Fund maintains a sound diversification of its assets through the Integrated Financial Assets Management Policy. Compliance
with this policy therefore enables the management of concentration risk associated with the exposure to an issuer or group of
issuers with common characteristics (industries, credit ratings, etc.).
EXPOSURE TO CREDIT AND COUNTERPARTY RISK
(fair value as a percentage of net assets)
May 31, 2010
Weight of the five largest investments (Development capital investments)
15.1
14.6
Weight of the five largest issuers or counterparties (Other investments)
14.1*
12.6*
May 31, 2009
*The share attributable to securities issued or guaranteed by the Governments of Québec, Ontario and Canada represented 14.1% as at May 31, 2010 (May 31, 2009: 11.5%).
The summary of investment portfolio presented previously also discloses relevant information for assessing the credit and
counterparty risk concentration level.
Targets by industries, in keeping with the Fund’s internal structure, are approved each year for the development capital investments
portfolio. These targets are set using risk budget management. Based on an optimal risk level defined for this portfolio as a whole,
in light of the Fund’s mission, risk budget management facilitates a more effective monitoring and control of the portfolio profile and sector allocation by risk level. The return/risk balance of this portfolio is achieved through a sector-based risk budget allocation
that takes into account the higher risk of our investments in certain sectors.
We regularly re-examine the status of development capital investments to justify their classification in one of the following three
categories: compliant with internal criteria, under watch or in turnaround. To deal with the more difficult situations, an internal
committee closely monitors investments that entail greater credit risk.
CLASSIFICATION OF THE DEVELOPMENT CAPITAL INVESTMENTS PORTFOLIO
May 31, 2010
(fair value in millions of dollars)
Compliant with internal criteria
Under watch
In turnaround
3,662
212
46
3,109
213
31
3,920
3,353
May 31, 2009
In the case of the other investments portfolio, issuer and counterparty ratings and compliance with exposure limits by borrower
or counterparty contribute to managing credit and counterparty risk in the portfolio and to diversifying our assets. These criteria
are set based on the risks specific to each asset class and reduce the risk that our results will be materially affected in the event
of a payment default. As at May 31, 2010, the weighted average credit rating of bonds was A, as it was as at May 31, 2009,
which is in compliance with the requirements of the Integrated Financial Assets Management Policy.
FAIR VALUE OF BONDS INCLUDED IN THE OTHER INVESTMENTS PORTFOLIO BASED ON STANDARD & POOR’S RATINGS
May 31, 2010
AAA
AA
A BBB
Other
456
588
804
169
5
294
243
886
206
9
2,022
1,638
May 31, 2009
45
LIQUIDITY RISK
The Fund must make disbursements on a daily basis. Cash outflows occur when the Fund redeems Class A shares held by
shareholders, disburses amounts committed to partner companies, remits amounts under management and pays expenses. It is worth noting that the Fund is required to redeem its shares only in the circumstances set out in its Incorporation Act, or to purchase them by agreement in exceptional situations provided under a policy adopted for such purpose by the Board of Directors and approved by the Minister of Finance of Québec.
The Fund must be able to obtain the cash required to meet its commitments. Liquidity risk is therefore related to the potential for
loss due to its inability to meet such commitments. In certain cases, securities acquired on the market can be subject to resale
restrictions, thus potentially reducing their liquidity.
The Fund’s Incorporation Act provides that part of the financial assets may be invested in marketable securities on organized markets, such as stock and bond markets, so we can easily obtain cash. The Fund also has access to bank credit facilities for
additional sources of liquidity.
As at May 31, 2010, the ratio of liquid financial assets15 as a percentage of assets under management was 51.0% (51.2% as
at May 31, 2009), demonstrating, in management’s opinion, that the Fund has the required liquidity to fulfill all its obligations and commitments.
OPERATIONAL RISK
Inherent to all the Fund’s activities, operational risk is the risk of sustaining losses as a result of the inadequacy or failure of
certain processes or systems in place or due to human factors or external events. This risk also includes legal risk.
Effective policies, standards and procedures are implemented to manage this risk. Control principles and mechanisms are
monitored and periodically revised as part of a continuous improvement process. The Fund’s operational risk management and
the effectiveness of its management framework are underpinned by the following guiding principles:
• Competent, well-trained staff;
• A succession management program;
• A culture of integrity;
• Segregation of incompatible duties;
• Adoption of a concept of independence inspired by the securities regulations applicable to public companies;
• Delegation of decision-making authority to Special Boards whose majority of members are independent;
• Monitoring of the development capital investment valuation process;
• Implementation of a framework program of financial compliance;
• Monitoring of technology development and information security;
• A planning process for resumption of activities in the event of business interruption;
• Continuous monitoring of changes in applicable legislation, regulations and standards, including the Fund’s compliance therewith;
• Risk identification and assessment when new products or activities are introduced.
The Codes of Ethics and Conduct define, among other things, the rules of conduct to be followed by employees, officers and
directors to avoid, for instance, conflict of interest situations. All employees or officers must, in the execution of their duties, put the interests of the Fund ahead of their own or those of third parties. They must also avoid placing themselves in a conflict of interest situation, either real, potential or apparent. The Codes of Ethics and Conduct prohibit, among others, certain personal trading deemed conflictual, including receiving certain gifts and using any advantage, information or interest related to the Fund that would be incompatible with the professional duties and responsibilities of an employee. In addition, the Codes
forbid the disclosure by directors and employees, for purposes other than the execution of their duties, of confidential information
obtained through such execution. Each year, all employees must complete a statement of interests held and a statement on the
compliance of their conduct with the Code.
The Codes of Ethics and Conduct for management and unionized personnel was updated in 2009, and training was provided to all employees. The Codes now provide for a whistleblowing procedure for cases of non-compliance with the Code involving
financial or accounting information or illegal acts.
To diversify its financial assets management, the Fund also calls upon the services of specialized external managers and acquires
interests in specialized funds. Where appropriate, the Fund purchases insurance that transfers to insurers certain components of operational risk related to these activities.
15.Liquid financial assets are comprised of fixed-income securities (cash, bonds and money market securities), listed shares of the other investments portfolio and certain listed shares of the development capital investments portfolio.
46
OTHER RISKS
The Fund is also exposed to other risks such as strategic and reputation risks, which could result in negative financial consequences.
Strategic risk, which includes competitive risk and risk associated with regulatory changes, refers to the possibility of incurring
losses as a result of ineffective strategies, lack of integrated business strategies or the inability to adapt the strategies to changes in the business environment. This risk is managed through monitoring and strategic and operational planning processes that seek input from all levels of the organization before being submitted to the Board of Directors for approval. The Management Committee then periodically monitors each sector’s business plan. Any strategic decision or change to the Fund’s orientations that could have a material impact is authorized beforehand by the appropriate authorities, based on the powers delegated to them.
Reputation risk is the risk that negative publicity, whether founded or unfounded, will or may cause losses, a decrease in liquidity
or a decline in the customer base. The Fund controls and manages reputation risk through proper training, legal and financial due diligence for all its capital development investments, sound governance practices and the application of policies and
procedures as well as through the ownership of the Codes of Ethics and Conduct by all officers and employees. The Fund is a responsible corporate citizen that takes ethical, social and environmental aspects into consideration when making investment
decisions. We have also adopted a voting rights policy with regards to public companies and a code of conduct for international
business dealings. The Fund also ensures that any financial information released outside the organization is accurate and
validated beforehand.
In 2008, the Fund implemented a Disclosure Policy concerning all financial and non-financial information issued and/or
disclosed externally and the information that is communicated internally to a large number of employees. The main objectives of
this policy are to provide a disclosure framework and standards, to ensure that information disclosed is rigorously prepared and validated, to make the Fund’s employees aware of disclosure principles, and to specify the roles and responsibilities of the
main participants in the disclosure process.
The application of this policy is monitored by a Disclosure Committee composed of members of the Fund’s management. The main
responsibilities of this Committee are to set disclosure guidelines, to implement and keep up to date the Disclosure Policy and
ensure it is complied with, and to ensure that relevant and effective disclosure controls and procedures are in place. The Disclosure
Committee reports its activities to the Management Committee.
GOVERNANCE
RISK GOVERNANCE
The Management Committee, comprised of the President and CEO and executives, is responsible for the global management of
the Fonds de solidarité FTQ’s operations. Because risk governance is an essential part of integrated financial assets management,
the Fund has put in place a management framework to ensure that risk management and control strategies and resulting
operational decisions take the established level of acceptable risk into account. This management framework is as follows:
BOARD OF DIRECTORS
AUDIT COMMITTEE
ETHICS COMMITTEE
EXECUTIVE COMMITTEE
VALUATION COMMITTEE
Shareholders’ expectations in terms of return and volatility
FINANCIAL ASSETS MANAGEMENT COMMITTEE
Integrated financial assets
management by the Fund
SPECIAL BOARDS
Risks inherent to the Fund’s activities
because of its mission
Integrated Financial Assets Management Policy,
guidelines and procedures, standards, etc.
47
Our risk governance structure comprises a series of policies approved by the Board of Directors. Policies, standards, guidelines,
and procedures are regularly reassessed to ensure that we rely on only the best possible practices. It should be noted that the
functions of Chairman of the Board and President and CEO are separate.
The Integrated Financial Assets Management Policy is a key piece of this management framework. The policy sets out the
target financial asset allocation allowing the Fund to fulfill its mission while meeting the desired return/risk ratio through sound
diversification that helps mitigate the volatility of such return from half-year to half-year. This policy also provides objectives,
guidelines, and limits within which our managers and professionals perform their duties and carry out their mandates. In fact, the Integrated Financial Assets Management Policy is composed of several policies covering general principles, orientations,
and the limits and guidelines applicable to various asset classes, including a separate policy applicable to the Investments sector.
The detailed guidelines and procedures covering the management of financial assets on an operational basis are presented
separately to facilitate their application.
The process that was launched during the year to implement an integrated risk management framework also had some effects on the risk governance structure. The roles and responsibilities of the Fund’s governing bodies, internal committees and main
stakeholders involved were further defined. In this way the Fund’s Board of Directors reconfirmed its responsibility for integrated
risk management while delegating to the Executive Committee the monitoring of the work and their results in that respect. The Vice-President responsible for the integrated risk management framework reports directly to the President and CEO in
carrying out his duties.
KEY GOVERNING BODIES
BOARD OF DIRECTORS
The Board of Directors carries out specific duties, including:
• Ensuring the Fund’s mission is followed at all times as noted in its Incorporation Act;
• Approving the main directions, policies and business strategies of the Fund;
• Approving investment recommendations for which it is responsible;
• Ensuring the Fund, in its roles as an investor, behaves as a socially responsible company to the extent applicable;
• Evaluating the Fund’s performance on a regular basis.
Members of the Board of Directors are nominated or elected according to the rules set out in the Fund’s Incorporation Act. In carrying out its mandate, the Board delegates part of its responsibilities to the following committees:
EXECUTIVE COMMITTEE, SPECIAL BOARDS AND OTHER DELEGATE BOARDS
In addition to the Board of Directors, Delegate Boards also oversee development capital investment decisions. Delegate Boards
include the Executive Committee and the Special Boards created for the Traditional, New Economy, Mining Portfolio and
Turnaround and Majority Interests sectors. Each development capital investment of $5 million or more must be authorized by
the Board of Directors, or the Executive Committee if the Board of Directors is unable to meet in a timely fashion. Regardless,
each of these investments must be recommended by the Special Board overseeing the corresponding activities. All investments
of less than $5 million are under the authority of the corresponding Special Board. The Special Board for the Traditional
sector was created in May 2009. Prior to this its mandate was performed by the Executive Committee. The four Special Boards
are composed of a majority of independent members.
AUDIT COMMITTEE
The Audit Committee is comprised entirely of independent members and its mandate includes: recommending the audited
financial statements and MD&A for approval by the Board of Directors; approving the principles for valuing development capital
investments and receiving the Valuation Committee’s report; enquiring about the effectiveness of internal controls implemented
by management and the fact that they are not overridden; enquiring about the compliance and risk management process for preparing the Fund’s financial statements and provide feedback; and receiving the Ethics Committee report and overseeing the application of the Code of Ethics for Board members. The Committee also ensures the Fund complies with the statutes,
regulations and agreements that govern its operations and that may have a material financial impact. The Audit Committee
reports its activities to the Board of Directors and makes recommendations to it when necessary.
In addition, an Ethics Committee composed of members of management support the Audit Committee in monitoring the
application of the Fund’s Codes of Ethics and Conduct.
48
This committee is responsible for monitoring the implementation, compliance with and updating of the Integrated Financial
Assets Management Policy, including the Investment Policy and the policies applicable to the various asset classes of the Other
Investments sector. Its primary mandate is to ensure that asset management is coordinated and linked. In this capacity, it recommends the overall vision and orientation for financial assets management to the Board of Directors. This committee also monitors performance, changes in the return/risk ratio and ensures that the Fund’s activities are in compliance with all its financial assets management policies, and ensures that the Fund has adequate and sufficient guidelines and procedures.
The Financial Assets Management Committee reports twice yearly on its activities to the Board of Directors and makes recommendations to it when necessary.
VALUATION COMMITTEE
The Fund created the Valuation Committee, which is composed of a majority of independent qualified valuators, in the second half of the 2008-2009 financial year, and mandated it to provide a reasonable assurance that the procedure used for valuing the
development capital investments portfolio complies with the procedure set out in the Regulation Respecting Development Capital
Investment Fund Continuous Disclosure. The Valuation Committee reports twice yearly on its review to the Audit Committee.
VALUATION FRAMEWORK
Development capital investments and other investments are recorded on the balance sheet at their fair value.16 However, the
majority of the Fund’s development capital investments are made in private companies or specialized funds for which a fair value must be established because the securities issued by these companies or funds are not traded on organized, public
markets. Specialized valuators employed by the Fund determine the fair value of these investments. These valuators report to the Executive Vice-President, Finance and follow a structured process comprising several verification and validation steps to
ensure the quality, uniformity and integrity of the work performed and of the resulting fair value.
The management framework that should govern the procedure for valuing development capital investments is set out in the
Regulation Respecting Development Investment Fund Continuous Disclosure. In particular, the Regulation specifies the minimum
qualifications required for specialized valuators employed by the Fund as well as the governing body responsible for approving the valuation principles used. The Regulation also requires that all relevant information about the valuations (excluding publicly
traded issuers valued using market prices) should be provided to an independent valuation committee. In addition, the President
and Chief Executive Officer and the Chief Financial Officer must sign a certification stating that the valuation procedures set out in the Regulation were complied with and confirming the aggregate fair value of the development capital investments portfolio.
This certificate has been submitted to the Audit Committee on a quarterly basis since May 31, 2009.
FINANCIAL GOVERNANCE
The Fund completed its work over the financial year of developing a compliance program commonly known as Confor. While
not required to apply MI 52-109 issued by the Canadian Securities Administrators, the Fund has decided to base its work upon the principles stated in this rule, thereby demonstrating its willingness to respect best practices in financial governance. This framework applies to controls providing reasonable assurance that the financial information prepared and reported is reliable and that the financial statements are prepared in accordance with Canadian generally accepted accounting principles.
Management is responsible for designing and maintaining internal control over financial reporting and disclosure controls and
procedures. It must also periodically evaluate their design and effectiveness.
During the year, the Fund evaluated the design of internal control over financial reporting and the design and effectiveness of disclosure controls and procedures. In addition, as at May 31, 2010, the Fund carried out its first ever overall evaluation of the effectiveness of internal control over financial reporting. Certification was signed by the President and Chief Executive Officer
and the Chief Financial Officer as at May 31, 2010 and confirming their responsibility for this procedure. A certification was also signed by these same executives as at November 30, 2009 (interim period), confirming their responsibility for evaluating the design of internal control over financial reporting and disclosure controls and procedures. These certifications are available on SEDAR. A mechanism for sub-certification by several Fund executives also supports the certifications.
Management’s conclusions on the design and effectiveness of internal control over financial reporting and disclosure controls and procedures are presented below.
16.Using fair value is a best practice recognized by venture capital firms and private equity funds. Fair value is defined as the amount of the consideration that would be agreed upon in an
arms-length transaction between knowledgeable, willing partners who are under no compulsion to act.
49
MANAGEMENT’S REPORT ON INTERNAL CONTROLS
Management is responsible for designing and maintaining internal control over financial reporting and disclosure controls and
procedures. It must also periodically evaluate their design and effectiveness. Management evaluated the control design based on the COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework, and, for information
technology controls, the COBIT (Control Objectives for Information and Related Technology) framework, two recognized financial
governance frameworks.
CONCLUSIONS ON THE DESIGN AND EFFECTIVENESS OF INTERNAL CONTROL
OVER FINANCIAL REPORTING
As at May 31, 2010, management evaluated the design and effectiveness of internal control over financial reporting. Based on the work done, management can conclude that internal control over financial reporting is adequately designed and operates
effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements in accordance with Canadian generally accepted accounting principles. During the year ended May 31, 2010, there was no change in the Fund’s internal control over financial reporting that has materially affected, or is reasonably likely to affect, the Fund’s internal control over financial reporting.
CONCLUSIONS ON THE DESIGN AND EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES
As at May 31, 2010, management evaluated the design and effectiveness of disclosure controls and procedures. Based on the work done, management can conclude that disclosure controls and procedures are adequately designed and operate
effectively to provide reasonable assurance that information disclosed is recorded, processed, summarized and presented within the time periods specified in the regulations and that it is communicated to management on a timely basis for decision-making purposes.
50
FINANCIAL STATEMENTS
Management’s report
The financial statements of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) and the other financial information in this annual report are the responsibility of the Board of Directors, which has delegated the responsibility of their preparation to management.
The Board of Directors carries out its responsibility for financial statements through the Audit Committee, made up of outside,
unrelated directors. The auditors mandated by shareholders have unrestricted access to the Audit Committee, with or without
management’s presence.
To fulfill its responsibility about the accuracy and reliability of the financial information, management has a system of internal
controls to provide assurance the financial information is reliable, form a proper basis for preparing the financial statements, and the Fund’s assets are properly accounted for and safeguarded.
These financial statements, audited by Samson Bélair/Deloitte & Touche s.e.n.c.r.l., Chartered accountants, and Raymond Chabot
Grant Thornton LLP, Chartered accountants, present the financial information available as at June 23, 2010, and have been
prepared in accordance with Canadian Generally Accepted Accounting Principles.
The financial information presented elsewhere in this annual report conforms with the Fund’s financial statements, which have been
approved by the Board of Directors.
Executive Vice-President, Finance
Michel Pontbriand, CA
Montréal, June 23, 2010
Auditors’ report
To the Shareholders of the
Fonds de solidarité des travailleurs du Québec (F.T.Q.),
We have audited the balance sheets of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) as at May 31, 2010 and 2009, and the statements of operations, changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with Canadian Generally Accepted Auditing Standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Fund as at May 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in accordance with
Canadian Generally Accepted Accounting Principles.
1
1
Chartered accountant auditor permit no. 10881
2
2
51
BALANCE SHEETS
A S AT M AY 3 1
2010 $
Assets
Development capital investments (Note 5)
Other investments (Note 6)
Accounts receivable and other assets (Note 9)
Cash
Capital assets (Note 10)
Income taxes
Future income taxes (Note 18)
3,920,407
3,670,163
177,201
8,536
62,011
4,156
685
7,843,159
3,353,254
3,246,958
760,259
16,516
63,959
4,791
969
7,446,706
Liabilities
Amounts under management (Note 11)
Accounts payable and other liabilities (Note 13)
Future income taxes (Note 18)
Net assets (Note 14)
Number of Class A shares, Series 1 and Series 2 outstanding
Net assets per Class A share, Series 1 and Series 2
363,810
184,169
828
548,807
7,294,352
305,951
23.84
368,386
702,910
689
1,071,985
6,374,721
291,733
21.78
(In thousands, except net assets per share)
(Note 14)
Contingencies (Note 15)
The accompanying notes form an integral part of these financial statements.
On behalf of the Board of Directors,
YVON BOLDUC, DIRECTOR
52
MICHEL ARSENAULT, DIRECTOR
2009
$
STATEMENTS OF OPERATIONS
2010
$
2009
$
(In thousands, except earnings (loss) per share)
Revenues
Interest (Note 16)
Dividends
169,051
52,912
221,963
37,558
29,428
33,741
30,771
38,253
3,135
173,571
65,325
238,896
Expenses (Note 17)
Corporate expenses
Development capital investment and other investment expenses
Shareholder Services and Economic Training development and administration expenses
Capital tax
Amortization of information systems development and other capital assets
38,522
5,314
4,467
115,289
3,898
109,798
Net investment income before income taxes
Income taxes (Note 18)
Net investment income
106,674
21,806
84,868
129,098
11,750
117,348
Gains (losses) on development capital investments and other investments
Realized
Change in unrealized appreciation or depreciation Transaction costs
Net earnings (net loss)
Weighted average number of Class A shares, Series 1 and Series 2
Earnings (loss) per Class A share, Series 1 and Series 2 65,717
451,504
(1,830)
515,391
600,259
298,740
2.01
(380,929)
(653,834)
(1,566)
(1,036,329)
(918,981)
291,160
(3.16)
53
STATEMENTS OF CHANGES IN NET ASSETS
Share Capital (Note 14)
Series 1
$
Series 2
$
Class G
$
Contributed
Surplus
(Note 14)
Subscribed
$
$
5,844,350
649,311
72,019
10,774
20,125
443 1,230,575
–
148,755
(792,791) 6,374,721
451,504
600,259
660,085
(301,973)
85,000
6,276,688
(5,917)
76,876
(20,125)
–
(1)
(1,594)
20,125
442 1,249,106
(31,228)
(85,000)
32,527
(1)
(340,712)
–
(341,287) 7,294,352
6,586,758
645,093
78,538
10,231
20,125
377
368,883
369,190
(265,147)
(138,957) 7,284,914
(653,834) (918,981)
655,324
(567,501)
(820,000)
5,844,350
(16,750)
72,019
20,125
66
(11,676)
873,368
443 1,230,575
(50,675)
(53,368)
–
66
(646,602)
–
(792,791) 6,374,721
Class A
(In thousands)
2010
Balance at beginning of year
Net earnings
Share issues
Net change in share subscriptions
Share redemptions
Transfers (Note 14)
Balance at end of year
2009
Net loss
Share issues
Net change in share subscriptions Share redemptions
Transfers (Note 14)
54
Retained Earnings
(Deficit)
Realized
$
Unrealized
$
Net Assets
$ STATEMENTS OF CASH FLOWS
(In thousands)
2010
$
2009
$
Operating activities
Net investment income
Non-cash items and change in non-cash items
Capitalized income – development capital investments
Capitalized interest – amounts under management
Amortization of information systems development and other capital assets Future income taxes
Accounts receivable and other assets
Accounts payable and other liabilities
Income taxes
Other
Transaction costs
84,868
(4,738)
14,418
4,467
423
402,999
(409,111)
1,245
7,009
(1,893)
99,687
117,348
(5,117)
15,509
3,898
(3,001)
33,743
20,449
(19,790)
8,518
(1,566)
169,991
Financing activities
Contribution of amounts under management
Withdrawal of amounts under management
Shares issued and subscribed
Shares redeemed
83,257
(105,065)
660,084
(341,940)
296,336
92,713
(130,587)
655,390
(644,786)
(27,270)
Investing activities
Acquisition of development capital investments
Proceeds of disposal of development capital investments
Acquisition of other investments
Proceeds of disposal of other investments
Information systems development
Other capital assets
Increase (decrease) in cash
Cash at beginning of year
Cash at end of year
(642,054)
356,787
(15,173,076)
15,056,648
(875)
(1,433)
(404,003)
(7,980)
16,516
8,536
(792,256)
324,080
(14,047,794)
14,389,316
(725)
(5,499)
(132,878)
9,843
6,673
16,516
Cash flows from operating activities include income taxes paid of $20.7 million (2009: $34.5 million).
55
NOTES TO FINANCIAL STATEMENTS
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
1. INCORPORATION ACT
STATUTES AND OBJECTIVES OF THE FUND
The Fonds de solidarité des travailleurs du Québec (F.T.Q.) (the “Fund”), incorporated by an Act of the Québec National Assembly,
is a joint-stock company with the following objectives:
a) to invest in Québec business enterprises and provide them with services in order to create, maintain or protect jobs;
b) to promote the training of workers in economic matters to enable them to increase their influence on Québec’s economic development;
c) to stimulate the Québec economy by making strategic investments that will be of benefit to Québec workers and business enterprises;
d)to promote the development of qualified business enterprises by inviting workers to participate in that development by purchasing the Fund’s shares.
To this end, the Fund endeavours to concentrate most of its development capital investments in unsecured investments, mainly in small and medium-sized enterprises (“SMEs”), located in Québec. As a general rule, the Fund will take a minority
interest in the projects in which it invests.
60% RULE
The Fund may make development capital investments in any business enterprise with or without security. However, in any given financial year, the proportion of unsecured development capital investments made in qualified business enterprises must
represent an average of at least 60% of the Fund’s average net assets of the previous financial year.
If the Fund fails to reach this percentage, the share issues giving rise to tax credits for the following financial year are limited to a prescribed percentage of the total value of shares issued in the preceding financial year, except for shares acquired through
payroll deduction and employer contributions stipulated in agreements concluded at the end of the preceding financial year.
The percentage of average qualified development capital investments to the average net assets of the preceding year is 66.2% as at May 31, 2010 (2009: 61.7%, taking into account the temporary relaxation granted by the Government of Québec on
November 9, 2007).
Since the minimum percentage prescribed by the 60% rule has been reached as at May 31, 2010, the amount of share issues will not be limited for the 2010-2011 financial year.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is an investment company as defined in the Accounting Guideline on investment companies contained in the Canadian
Institute of Chartered Accountants (“CICA”) Handbook and, as such, applies the accounting principles stated therein.
A Statement of Comprehensive Income is not provided since net earnings (net loss) and comprehensive income are the same.
USE OF ESTIMATES
The preparation of financial statements in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”) requires
management to make estimates and assumptions, in particular when determining allowances and the fair value of development
capital investments and other investments, that affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
RECOGNITION OF FINANCIAL INSTRUMENTS
Financial instruments are recognized at fair value on the transaction date.
Accounts receivable and other assets are classified as loans and receivables, and Amounts under management and Accounts payable and
other liabilities are classified as other liabilities. These instruments are recognized at amortized cost, which approximates their fair value.
56
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MEASUREMENT OF FINANCIAL INSTRUMENTS
All development capital investments and other investments are measured at fair value, established as follows:
a)Unlisted financial instruments
Unlisted financial instruments consist of shares, partnership units, loans and advances, guarantees and suretyships, bonds and money market instruments.
These instruments are measured at fair value using appropriate valuation techniques and models that may not be principally
based on observable market information. Observable market information is used in valuation models if they are available.
The fair value is established based on reasonable assumptions that would be considered by parties to an arm’s length
transaction. Certain assumptions may have a significant impact on fair value, including those used to determine characteristic
cash flows and the level of risk and future growth rate associated with such cash flows considering economic conditions, the
outlook for the relevant industry segment and conditions specific to the business entreprise.
Units of funds of hedge funds are valued at the value set by their respective manager at the date closest to the Fund’s year-end.
b)Listed financial instruments
Listed financial instruments consist of shares, partnership units, bonds and money market instruments. These instruments are
valued at bid price at the close of trading at balance sheet date. In exceptional instances, when the market for a financial instrument
is not active, such instrument is then valued using appropriate valuation techniques, including the techniques used for unlisted
financial instruments.
c) Derivative financial instruments
These instruments are valued using appropriate valuation techniques, including option pricing models using in particular the bid price for assets and the ask price for liabilities at the close of trading at balance sheet date.
SECURITIES LENDING, SECURITIES PURCHASED UNDER REVERSE REPURCHASE AGREEMENTS
AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
To generate additional revenues, the Fund participates in the securities lending program put in place by its trustee for securities of which it is the custodian. Under this program, the Fund can enter into securities lending transactions and transactions involving the purchase of securities with a simultaneous commitment to resell them in the short-term at a specified price and
date. These reverse repurchase agreements are recorded as assets under Accounts receivable and other assets at the resale
price specified in the commitment. In addition, the program allows the Fund to enter into transactions involving the sale of
securities with a simultaneous commitment to repurchase them in the short-term at a specified price and date. These repurchase agreements are recorded as liabilities under Accounts payable and other liabilities at the repurchase price specified in the
commitment. The resulting revenues are recorded under Interest in the Statement of Operations.
CAPITAL ASSETS
Capital assets are stated at cost and are amortized over their estimated useful life using the following methods and annual rates:
Buildings
Office furniture and equipment
Computer hardware and software
Methods
Rates
straight-line
2.5%
diminishing balance
20.0%
straight-line
straight-line
25.0%
33.3%
Capital assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recorded when their carrying amount exceeds the undiscounted cash flows that would result from their use and eventual disposition. The recognized impairment loss is measured as the amount by which
the carrying amount of the asset exceeds its fair value.
57
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Interest
Interest is recorded on an accrual basis.
Dividends
Dividends are recorded as income when they are declared, except for cumulative dividends which are recorded on an accrual basis.
Gains and losses on development capital investments and other investments
Realized gains and losses on disposals of development capital investments and other investments, including derivative financial
instruments, are recorded at the time of sale and presented under Gains (losses) on development capital investments and other investments in the Statement of Operations. The amount is the difference between the proceeds of disposal and the
average cost, without considering the unrealized appreciation or depreciation recorded in prior years, which is reversed and taken into account under Change in unrealized appreciation or depreciation.
INCOME TAXES
The Fund uses the asset and liability method of accounting for income taxes. Under this method, future income taxes are
recognized based on the expected future tax consequences of differences between the carrying amounts of balance sheet items and their tax bases, multiplied by the enacted or substantively enacted income tax rates for the years in which the differences are expected to reverse. Future income tax assets are recognized to the extent that it is more likely than not that they will be realized.
FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities and assets and liabilities measured at fair value are translated into Canadian dollars at the year-end exchange rate. Revenues and expenses denominated in foreign currencies are translated at the exchange rate prevailing
at the transaction date. Foreign exchange gains and losses are recognized in the Statement of Operations.
EMPLOYEE FUTURE BENEFITS
The cost of pensions and other retirement benefits earned by managers and employees is actuarially determined using the
projected benefit method prorated on service and management’s best estimate of expected return on plan assets, salary
escalation and retirement ages of employees.
For the purposes of calculating the expected return on plan assets, those assets are valued at fair value.
Net actuarial gains or losses which are greater than 10% of the accrued benefit obligation or the fair value of the plan assets,
whichever is higher, are amortized over the average remaining service period of active employees. The average remaining service
period of covered active employees is between 9.8 and 12.8 years for 2010 (2009: between 9.8 and 14.5 years).
3. CHANGES IN ACCOUNTING POLICIES
GOODWILL AND INTANGIBLE ASSETS
Since June 1, 2009, the Fund has applied the recommendations of Section 3064, Goodwill and Intangible Assets, of the CICA
Handbook. This section establishes standards for the recognition, measurement, presentation and disclosure of goodwill and
intangible assets. The adoption of these standards had no impact on net earnings and net assets per share as at May 31, 2010.
58
3. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENT DISCLOSURES
The Fund applies the amendments to Section 3862, Financial Instruments – Disclosures, of the CICA Handbook, which apply to
years ended after September 30, 2009. The amendments relate to diclosures about fair value of financial instruments and liquidity
risk. The adoption of these amendments had no impact on net earnings and net assets per share as at May 31, 2010.
The Fund is now required to disclose, in the notes to the financial statements, the breakdown of fair value measurements for
financial instruments using a hierarchy that reflects the significance of the inputs used in making the measurements. The fair
value hierarchy has the following levels:
Level 1: Fair value based on quoted market prices (unadjusted) observed on active markets for identical financial instruments.
Level 2: Fair value based on quoted prices for similar financial instruments or based on valuation techniques for which all
significant inputs are based on observable market information.
Level 3: Fair value based on valuation techniques for which significant inputs are not based on observable market information.
Disclosures are presented in Note 7.
4. FUTURE CHANGES IN ACCOUNTING POLICIES
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
The Accounting Standards Board of Canada (“AcSB”) confirmed that Canadian GAAP will be replaced by IFRS for the years
beginning on or after January 1, 2011 for publicly accountable enterprises. The AcSB recently proposed that entities, such as the
Fund, currently applying the Accounting Guideline on investment companies could continue to apply existing Canadian standards
until fiscal years beginning on or after January 1, 2012.
The Fund complies with its IFRS conversion plan. Additional information is presented in the “Recent developments” section of the Management Discussion and Analysis for the year ended May 31, 2010, presented on pages 35 to 37 and available at the
Fund’s head office, on its Website at www.fondsftq.com or at www.sedar.com.
5. DEVELOPMENT CAPITAL INVESTMENTS
The audited Statement of Development Capital Investments, at Cost, is presented on pages 75 to 82 and available at the Fund’s
head office, on its Website at www.fondsftq.com or at www.sedar.com.
2010
Unrealized
appreciation
Cost (depreciation)
$
$
Fair value
$
(In thousands)
2009
Unrealized
Cost depreciation
$
$
Fair value
$
Unsecured
Listed shares and units 602,926
678,704
(214,322)
464,382
Unlisted shares and units
1,904,449
592,198
(25,623)
10,728
1,878,826
1,718,856
(73,618)
1,645,238
Loans, bonds and advances
1,485,819
(77,495)
1,408,324
1,380,457
(173,284)
1,207,173
Secured
45,548
(15,217)
30,331
39,589
(3,128)
36,461
4,028,014
(107,607)
3,920,407
3,817,606
(464,352)
3,353,254
Development capital investments include securities denominated in foreign currencies, mainly the U.S. dollar, with a fair value of $251 million (2009: $182.8 million).
Investment agreements may include clauses providing for conversion and redemption options.
59
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
5. DEVELOPMENT CAPITAL INVESTMENTS (CONTINUED)
BREAKDOWN OF LOANS, BONDS AND ADVANCES BY MATURITY
L
oans, bonds and advances at fair value
Variable rates
Maturity
(In thousands)
$
Less than
1 year $
37,838
253,315
Fixed rates
Total
1 to
5 years $
5 years
and more
$
$
441,944
675,227
1,408,324
2010
Unsecured
Average effective rate
12.0%
Secured
963
4.3%
1.6 1%
18,328
12.0%
9.5%
11,040
12.4%
7.4%
–
30,331
7.2%
2009
Unsecured
Secured
36,434
264,869
10.4%
1.0 1%
26,287
1,238
4.3%
13.4%
384,259
9.6%
8,936
10.4%
521,611
1,207,173
7.1%
–
36,461
7.2%
1. This average rate includes non-interest bearing advances repayable on demand of $236.1 million (2009: $242.2 million) to a wholly-owned company.
Excluding these advances, the average effective rate would be 9.1% (2009: 10.3%).
BREAKDOWN OF DEVELOPMENT CAPITAL INVESTMENTS BY INDUSTRY SEGMENT
Industry Segment
anufacturing
M
Technology and primary
$
$
(In thousands)
Regional or
Services local and real
and tourism estate funds $
$
Total
$
2010
Cost
859,021
Unrealized appreciation (depreciation)
(279,397)
1,117,891
(119,456)
1,368,965
682,137
143,699
147,547
Fair value
579,624
998,435
1,512,664
829,684
Allocation of investments made by
the regional or local funds
18,814
72,673
63,821
Funds committed but not disbursed1
508,889
116,837
113,623
(155,308)
82,519
4,028,014
(107,607)
3,920,407
–
821,868
Guarantees and suretyships2
11,985
8,431
21,500
41,916
Maximum risk
1,107,327
1,199,930
1,698,539
778,395
4,784,191
1,266,787
669,146
3,817,606
2009
Cost
887,644
994,029
Unrealized appreciation (depreciation)
(350,325)
(243,582)
Fair value
537,319
750,447
Allocation of investments made by
the regional or local funds
13,705
73,883
53,597
561,650
364,965
182,382
(2,477)
1,264,310
132,032
801,178
(141,185)
100,494
(464,352)
3,353,254
–
1,209,491
Guarantees and suretyships2
11,278
1,986
21,500
34,764
Maximum risk
1,112,674
1,200,573
1,502,275
781,987
4,597,509
1. Funds committed but not disbursed have maturities and represent development capital investments that have already been agreed to and for which amounts have been committed by the
Fund but have not been disbursed as at year-end. Commitments amounting to $193.5 million (2009: $193.2 million) are denominated in foreign currencies, mainly the U.S. dollar.
2. Under Section 17 of its Incorporation Act, when the Fund makes a development capital investment in the form of a guarantee or a suretyship, it must establish and maintain a reserve equal
to at least 50% of the guarantee or suretyship amount for the term thereof. This reserve is established from Other investments.
60
5. DEVELOPMENT CAPITAL INVESTMENTS (CONTINUED)
The Fund granted guarantees and suretyships that do not generally include a specific maturity and that are irrevocable commitments by the Fund to make the payments of partner companies that cannot meet their obligations to third parties for an undiscounted total maximum amount and for the following purposes:
(In thousands)
Loans on real estate projects – with recourse
Operating activities and operating lines of credit – without recourse
2010
$
2009
$
21,500
21,500
4,028
4,778
Operating activities and operating lines of credit – with recourse
16,388
8,486
41,916
34,764
As at May 31, 2010, the unrealized depreciation related to guarantees and suretyships amounts to $2.6 million (2009: no unrealized
depreciation) and is presented under Accounts payable and other liabilities.
As well, in the normal course of business, the Fund enters into various indemnification agreements, usually related to sales of
development capital investments, for the representations and warrantees made as well as to the liability of the Fund’s directors,
officers or representatives toward partner companies. The latter liability is covered, subject to certain conditions, by liability
insurance. Due to the nature of these agreements, it is impossible to reasonably estimate the maximum amount that the Fund
may have to pay to counterparties. In management’s opinion, it is highly unlikely that these commitments will result in material
additional expenses, taking into consideration the provisions recorded.
6. OTHER INVESTMENTS
The unaudited Relevé des autres investissements is available at the Fund’s head office, on its Website at www.fondsftq.com
or at www.sedar.com.
(In thousands)
Shares and units
Units of funds of hedge funds
Bonds
Money market instruments
Derivative financial instruments
2010
Unrealized
appreciation
Cost (depreciation)
$
$
Fair value
$
2009
Unrealized
appreciation
Cost (depreciation)
$
$
Fair value
$
1,390,033
(101,870)
1,288,163
1,354,078
(163,394)
230,307
(9,813)
220,494
249,701
(27,986)
221,715
2,022,302
1,696,472
(58,355)
1,638,117
2,011,697
116,487
3,748,524
1,692
3,750,216
10,605
103
(100,975)
20,922
(80,053)
116,590
119,106
3,647,549
3,419,357
22,614
–
3,670,163
3,419,357
104
(249,631)
77,232
(172,399)
1,190,684
119,210
3,169,726
77,232
3,246,958
Other investments include securities denominated in foreign currencies with a fair value of $1,109.9 million (2009: $911.1 million),
mainly including $636.3 million (2009: $512.5 million) in U.S. dollars, $167.7 million (2009: $160.8 million) in Euros and $135.8 million (2009: $106.2 million) in pounds sterling.
61
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
6. OTHER INVESTMENTS (CONTINUED)
BREAKDOWN BY MATURITY
BONDS
Maturity (In thousands)
Less than
1 year $
1 to
5 years $
5 to
10 years
$
10 to
20 years $
20 to
30 years $
30 years
and more $
Total
$
2010
Fair value
74,752
818,245
519,571
160,384
357,869
91,481
2,022,302
Cost
75,684
825,837
507,745
156,387
349,633
96,411
2,011,697
Par value
73,979
801,934
499,854
150,853
331,605
93,669
1,951,894
4.6%
3.0%
4.6%
5.2%
5.2%
4.1%
4.1%
Average nominal rate
5.8%
4.1%
4.7%
5.5%
5.7%
4.3%
4.7%
2009
Fair value
138,403
498,161
415,060
135,416
391,248
59,829
1,638,117
Cost
148,156
503,271
425,517
139,201
408,867
71,460
1,696,472
Par value
144,266
494,671
417,726
132,213
374,985
69,343
1,633,204
2.4%
4.5%
5.0%
5.8%
5.2%
4.3%
4.7%
Average nominal rate
5.0%
5.0%
5.3%
6.3%
5.8%
4.4%
5.3%
Less than
1 month $
1 to
6 months $
6 months
and more
$
Fair value
36,519
60,183
19,888
Fair value
MONEY MARKET INSTRUMENTS
Total
$
2010
0.4%
1.0%
116,590
0.7%
0.8%
2009
62
79,276
0.9%
39,934
0.2%
119,210
0.7%
BREAKDOWN BY MATURITY (CONTINUED)
DERIVATIVE FINANCIAL INSTRUMENTS1
Less than
1 month $
1 to
6 months $
6 months
and more
$
Total
$
2010
Fair value
Stock option contracts
Written call options
Purchased put options
20
Written put options
–
Stock index option contracts
Written put options
(920)
Purchase call options
348
348
(191)
(191)
Interest rate futures
–
(6,656)
Foreign currency forward contracts
(6,813)
157
(696)
1,030
(1,019)
1,050
(332)
(332)
(920)
(3,666)
3,267
(1,898)
–
–
(1,600)
(1,600)
2,240
(1,598)
(14,884)
Purchases
(3,548)
Sales
(5,165)
Stock index futures
Commodity futures
Interest rate swaps
(323)
(15,526)
(118)
–
–
Notional amount
Stock option contracts
727
11,462
12,189
Purchased put options
691
10,096
10,787
Written put options
380
8,355
8,735
Stock index option contracts
Written put options
11,840
11,840
Purchase call options
5,022
5,022
8,108
8,108
1,102,972
411,267
358,296
1,872,535
Purchases
589,954
44,691
634,645
Sales
845,027
599,803
1,444,830
30,082
Stock index futures
30,082
Commodity futures
641
641
Interest rate swaps
158,000
158,000
1. The net fair value of these derivative financial instruments is $-14.9 million (2009: $63.3 million). The fair value of instruments with positive values is $22.6 million (2009: $77.2 million)
and is presented under Other investments, whereas those with negative values is $37.5 million (2009: $13.9 million) and is presented under Accounts payable and other liabilities.
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A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
BREAKDOWN BY MATURITY (CONTINUED)
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Maturity
(In thousands)
Less than
1 month $
1 to 6
months $
(7)
(360)
6 months
and more
$
Total
$
(367)
2009
Fair value
Bond option contracts
Purchases
Sales
150
(6,834)
72,243
–
–
(372)
880
150
(7,206)
73,123
(2,446)
Interest rate swaps
(2,446)
65,552
148
(2,446)
36,169
60,263
96,432
733,889
48,287
252,124
1,034,300
63,254
Notional amount
Bond option contracts
Purchases
709,696
5,761
715,457
Sales
1,027,907
690,418
1,718,325
Interest rate swaps
25,000
25,000
Shares
and units $
Bonds
$
Money
market
instruments
$
Total
$
Government and government agencies
1,325,708
9,290
1,334,998
Financial institutions
77,927
434,636
48,159
560,722
Technology
186,999
43,526
9,299
239,824
Manufacturing and primary
768,730
148,174
49,842
966,746
Services and tourism
475,001
70,258
545,259
Fair value
1,508,657
2,022,302
116,590
3,647,549
36,321
36,321
Maximum risk
1,544,978
2,022,302
116,590
3,683,870
Government and government agencies
847,363
42,106
889,469
Financial institutions
211,386
474,445
27,117
712,948
Technology
162,959
58,351
221,310
Manufacturing and primary
670,966
177,747
49,987
898,700
Services and tourism
367,088
80,211
447,299
Fair value
1,412,399
1,638,117
119,210
3,169,726
BREAKDOWN OF FAIR VALUE BY INDUSTRY SEGMENT1
(In thousands)
2010
2009
57,194
57,194
Maximum risk
1,469,593
1,638,117
119,210
3,226,920
1. This breakdown does not take into account changes in asset allocation resulting from derivative financial instruments.
2. Funds committed but not disbursed have maturities and represent other investments that have already been agreed to and for which amounts have been committed by the Fund but have
not been disbursed as at year-end. These commitments are denominated in U.S. dollars.
64
7. FAIR VALUE HIERARCHY
Financial instruments measured at fair value are classified using a hierarchy that reflects the significance of the inputs used in
making the measurements. This hierarchy has the following levels:
Level 1: Fair value based on quoted market prices (unadjusted) observed on active markets for identical financial instruments.
Level 2: Fair value based on quoted prices for similar financial instruments or based on valuation techniques for which all
significant inputs are based on observable market information.
Level 3: Fair value based on valuation techniques for which significant inputs are not based on observable market information.
2010
(In thousands)
Level
1
$
2
$
3
$
Total
$
Unsecured
Listed shares and units
591,434
8,642
2,850
602,926
Unlisted shares and units
6,587
1,872,239
1,878,826
250,892
1,157,432
1,408,324
Secured
30,331
30,331
591,434
266,121
3,062,852
3,920,407
Shares and units
1,224,600
63,563
1,288,163
Units of funds of hedge funds
220,494
220,494
Bonds
2,014,021
8,281
2,022,302
Money market instruments
116,590
116,590
348
22,266
22,614
1,224,948
2,152,877
292,338
3,670,163
1,816,382
2,418,998
3,355,190
7,590,570
Cash
8,536
(1,112)
Other investments
1,823,806
(36,386)
2,382,612
3,355,190
8,536
(37,498)
7,561,608
The following tables shows the reconciliation of Level 3 fair values from May 31, 2009 to May 31, 2010.
DEVELOPMENT CAPITAL INVESTMENTS
Shares and units
(In thousands)
Fair value as at May 31, 2009
Listed Unlisted
Unsecured
Secured
$
$
$
$
$
2,721,759
20,404
1,645,238
1,019,656
36,461
(14,743)
(94,199)
(13,674)
(2,144)
Change in unrealized appreciation or depreciation
101,606
50,415
57,419
Purchases
14,022
364,804
185,639
Sales and settlements
(108,635)
Transfers of financial instruments out of Level 3
(9,804)
2,850
1,872,239
1,157,432
30,331
of development capital investments held as at
May 31, 2010
Total
Realized losses
(11,677)
(94,019)
(7,572)
(91,608)
38,039
(124,760)
(12,090)
197,350
19,070
583,535
(10,966)
(305,228)
(12,444)
(9,804)
3,062,852
6,346
65
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
7. FAIR VALUE HIERARCHY (CONTINUED)
OTHER INVESTMENTS
(In thousands)
Shares
and units
$
Units
of funds of
hedge funds $
Bonds
$
Total
$
44,050
221,715
8,077
273,842
(1,951)
(407)
1,285
Purchases
18,228
Sales and settlements
(18,821)
(1,023)
Realized losses
of other investments held as at May 31, 2010
18,173
1,378
1,634
(2,358)
21,092
19,606
(19,844)
63,563
220,494
8,281
292,338
1,285
18,173
1,634
21,092
For the year, the change in unrealized appreciation or depreciation of all financial instruments classified in Level 3 is $218.4 million
(2009: $-184 million).
The fair value is established based on reasonable assumptions that would be considered by parties to an arm’s length transaction.
Certain assumptions may have a significant impact on fair value, including those used to determine characteristic cash flows and the
level of risk and future growth rate associated with such cash flows considering economic conditions, the outlook for the relevant
industry segment and conditions specific to the business entreprise. Since the assumptions used are highly interrelated, a sensitivity
analysis that isolates the impact of only one of these variables on the private securities portfolio is not considered to fairly represent
the sensitivity of the results. Despite this, management assessed the situation and determined that using possible alternative
assumptions would not change significantly fair values.
8. SECURITIES LENDING
As part of the securities lending program, the trustee receives, in exchange for the securities loaned, guarantees or assets
equivalent to the minimum percentage prescribed by law or to a percentage that may vary according to best practices. As at May 31, 2010 and 2009, this percentage is between 102% and 105%, and the fair value of the securities loaned is $99 million (2009: $228 million).
9. ACCOUNTS RECEIVABLE AND OTHER ASSETS
2010
$
2009
$
Accounts receivable relating to development capital investments and other investments sold
76,326
257,689
Accrued dividends and interest
71,513
62,571
288,510
122,509
(In thousands)
Financial instruments related to securities sold under repurchase agreements
Securities purchased under reverse repurchase agreements
Other
66
29,362
28,980
177,201
760,259
10. CAPITAL ASSETS
Accumulated
Cost amortization
$
$
Net book
value
$
Buildings
70,048
13,951
56,097
16,979
14,919
2,060
9,575
6,864
2,711
14,081
12,938
1,143
110,683
48,672
62,011
(In thousands)
2010
2009
Buildings
70,048
12,045
58,003
16,993
14,763
2,230
8,466
5,938
2,528
13,170
11,972
1,198
108,677
44,718
63,959
The net book value of the portion of building held for rental amounts to $24.7 million (2009: $24.4 million).
11. AMOUNTS UNDER MANAGEMENT
Amounts under management are repayable on demand and renewable monthly. They bear interest at a rate based on the rate of return of Other investments. Consequently, the fair value of these amounts under management from excess liquidities of
regional and local funds and of certain specialized funds corresponds to their carrying amount. As at May 31, 2010 and 2009, the interest rate is 4.0%.
12. CREDIT FACILITIES
As at May 31, 2010 and 2009, the Fund has credit facilities amounting to $80 million, bearing interest at prime rate and
renewable annually. As at May 31, 2010 and 2009, these facilities are unused.
13. ACCOUNTS PAYABLE AND OTHER LIABILITIES
2010
$
2009
$
Accounts payable relating to development capital investments and other investments purchased
49,871
183,640
37,498
13,977
Share redemptions payable
13,802
15,030
288,510
122,509
(In thousands)
Securities sold under repurchase agreements
Financial instruments related to securities purchased under reverse repurchase agreements
Accrued expenses and other
82,998
79,244
184,169
702,910
67
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
14. NET ASSETS
SHARE CAPITAL
Authorized
CLASS A SHARES
Unlimited number of Class A shares to be issued in Series 1 and 2, without par value, voting, redeemable and inalienable unless
approved by a resolution of the Board of Directors.
Class A shares, Series 1 and 2 can be exchanged for shares of another series and rank pari passu. However, Class A shares,
Series 1 may be issued only to an individual requesting their transfer to a trustee under a registered retirement savings plan.
CLASS G SHARES
Unlimited number of Class G shares, without par value, non-voting, without dividends, non-transferable and non-redeemable. In the event of a dissolution, liquidation or any other distribution of the Fund’s assets in whole or in part, these shares entitle their
holders the right to be reimbursed after all Class A and B shareholders have been reimbursed.
CLASS B SHARES
Unlimited number of Class B shares, without par value, non-voting, entitled to a preferential dividend at the rate determined by
the Board of Directors. In the event of liquidation, the Class B shares rank prior to Class A and G shares.
Subscribed
Subscribed capital is money cashed but for which no Class A share can be issued in consideration thereof pursuant to the Fund’s purchase-by-agreement policy. These Class A shares will be issued at the time set out in such policy at the share price in effect at that date.
Redemption terms
The Fund is required to redeem shares in the circumstances set out in its Act or to redeem them by mutual agreement in
exceptional situations provided under a policy for such purpose adopted by the Fund’s Board of Directors and approved by the Minister of Finance of Québec. The redemption price is determined semi-annually based on the value of the Fund.
Contributed surplus
Contributed surplus results from a reduction in issued and paid-up capital and the excess of the average value of share capital
over the redemption price.
Transfers
During the year, the Board of Directors approved an increase in the issued and paid-up capital on Class A shares, Series 1 of $85 million through a transfer from retained earnings (2009: $180 million).
As at May 31, 2010, the Fund had transferred a cumulative amount of $1,517 million from retained earnings to share capital.
During the year ended May 31, 2009, the Board of Directors approved a resolution to reduce the issued and paid-up capital on Class A shares, Series 1 by $1 billion through a transfer to contributed surplus. Afterwards, an amount of $126.6 million was
transferred from contributed surplus to eliminate the realized deficit as at May 31, 2009.
On May 31, 2010, the holders of Class G shares, namely the Fédération des travailleurs et travailleuses du Québec (FTQ) and the Minister of Finance of Québec, waived the right to receive any distribution or return of capital attached to their shares.
Accordingly, the issued and paid-up capital on Class G shares was reduced by $20.1 million through a transfer to contributed
surplus. In consideration, the Fund will submit, at the shareholders’ meeting to be held on October 2, 2010, a resolution providing for the cancellation of Class G shares in exchange for equivalent unsecured debentures.
68
14. NET ASSETS (CONTINUED)
NET ASSETS BY SHARE CLASS AND SERIES
Class A
Series 1
(In thousands)
Class G
Subscribed
Total
Series 2
Number
$
Number
$
Number
and $
$
$
288,407
6,281,708
3,326
72,445
20,125
443
6,374,721
28,725
649,311
485
10,774
660,085
2010
Net assets at beginning of year
Share issues
Net change in share subscriptions
Share redemptions
(14,719)
(334,512)
(273)
(6,200)
(1)
(1)
(340,712)
600,259
Net earnings
593,162
7,097
Transfer
19,892
233
(20,125)
–
302,413
7,209,561
3,538
84,349
–
442
7,294,352
286,384
7,172,596
3,666
91,816
20,125
377
7,284,914
28,022
645,093
435
10,231
655,324
66
Net assets at end of year
2009
Net assets at beginning of year
Share issues
Net change
in share subscriptions
Share redemptions
Net loss
Net assets at end of year
(25,999)
288,407
(627,609)
(908,372)
6,281,708
(775)
3,326
(18,993)
(10,609)
72,445
20,125
443
66
(646,602)
(918,981)
6,374,721
15. CONTINGENCIES
In the normal course of business, the Fund is party to claims and litigations. The Fund records provisions for such contingencies
when necessary. Management believes that the contingent liabilities, net of the provisions recorded, would not have a material
adverse effect on the Fund’s financial position.
16. REVENUES
Interest totalling $14.4 million (2009: $15.5 million) on amounts under management is recorded against Interest and is capitalized
to Amounts under management.
69
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
17. EXPENSES
2010
$
2009
$
Salaries and benefits
65,770
66,436
Occupancy expenses and rent
11,104
11,102
Advertising and information
12,791
8,734
Management fees
7,271
8,067
Professional fees
8,933
7,485
Travel and entertainment
2,988
2,950
Stationery and office supplies
2,886
2,650
Shareholder reporting costs
2,500
2,600
(In thousands)
Custodial fees and trustee’s fees
904
892
Fees and other income
(5,786)
(4,386)
Rental income
(3,853)
(3,765)
5,314
3,135
Capital tax
Amortization of information systems development
Amortization of other capital assets
966
444
3,501
3,454
115,289
109,798
18. INCOME TAXES
For purposes of the Income Tax Act (Canada), the Fund is subject to the rules applicable to mutual fund corporations. As such,
the Fund can receive a refund of the income taxes paid on its capital gains by redeeming its shares or by increasing its issued and paid-up share capital through a transfer from retained earnings. Since these income taxes are refundable and that, in
management’s opinion, the issued and paid-up share capital will be increased sufficiently to recover them, these income taxes are not presented in the Statement of Operations, but are included in Accounts receivable and other assets. The balance of these income taxes is $6.5 million as at May 31, 2010 (2009: $7.2 million).
The Fund, as a private company, can receive a refund of a portion of the income taxes paid on its investment income through the refundable dividend tax on hand (RDTOH). The RDTOH is recoverable by increasing the issued and paid-up share capital
through a transfer from retained earnings. These income taxes of $26.4 million (2009: $32.8 million) were entirely applied against
income taxes payable following a transfer approved by the Board of Directors during the year in order to recover these taxes.
Under the Taxation Act (Québec), the Fund is an open-ended investment company. As such, the Fund can, in calculating its
Québec taxes, deduct taxable capital gains from its taxable income. Consequently, capital gains realized by the Fund are not subject
to taxes in Québec.
70
18. INCOME TAXES (CONTINUED)
Income taxes on net investment income before income taxes are detailed as follows:
(In thousands)
Current
Future
2010
$
2009
$
21,383
14,751
423
(3,001)
21,806
11,750
The above income taxes are different from the amounts that would be obtained by applying the combined basic tax rate (federal
and provincial) to net investment income before income taxes. The difference is explained as follows:
2010
$
(In thousands)
Income taxes based on combined income tax rate of 46.6% (2009: 46.3%)
49,710
Non-taxable dividends
Refundable dividend tax on hand
(12,822)
(26,356)
(32,761)
21,806
59,772
(8,213)
6,665
Other items
2009
$
(2,439)
11,750
Items giving rise to future income taxes are as follows:
(In thousands)
Development
capital
investments
Capital assets
and other
$
$
Total
$
2010
1,019
685
776
52
828
Future income tax assets
464
505
969
Future income tax liabilities
344
345
689
Future income tax assets
Future income tax liabilities
(334)
2009
71
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
19. EMPLOYEE FUTURE BENEFITS
On January 1, 2001, the Fund implemented funded and unfunded defined benefit pension plans, which guarantee pension
benefits to most of its employees. Pension benefits under these plans are based on years of service and average annual salary, which represents the average annual salary over the period of 36 months of consecutive service which results in the
highest average.
Also, since July 1, 2003, the Fund has had an optional personal insurance plan for retired employees.
The accrued benefit obligation of these plans as determined by independent actuaries and the fair value of plan assets are as at March 31, 2010. The most recent actuarial valuation of the pension plans for funding and solvency purposes was as of December 31, 2009 and the next valuation will take place as of December 31, 2010.
Information about the plans is as follows:
(In thousands)
2010
Pension
plans
$
Insurance
plan
$
Pension
plans
$
2009
Insurance
plan
$
Accrued benefit obligation
65,000
1,194
71,158
1,373
Current service cost
9,246
58
10,896
83
Interest cost
5,098
87
4,194
76
Benefits paid
(1,101)
(13)
(1,902)
(9)
Actuarial loss (gain)
23,946
353
(19,346)
(329)
102,189
1,679
65,000
1,194
52,978
–
55,329
–
Fund contributions
4,864
13
4,738
9
Employee contributions
4,445
4,911
Benefits paid
Actual return on plan assets
12,932
74,118
–
Plan assets
(1,101)
(13)
(1,902)
(9)
(10,098)
52,978
–
Reconciliation of accrued benefit obligation and plan assets
Funded status – deficit
(28,071)
(1,679)
(12,022)
Unamortized net actuarial loss
16,671
480
2,126
Unamortized past service cost (gain)
708
(218)
47
(257)
(1,417)
(9,849)
(1,324)
2010
%
2009
%
Equity mutual funds
62.3
61.4
Bond mutual funds
37.2
37.9
Accrued benefit liabilities
(10,692)
(1,194)
127
These accrued benefit liabilities are presented under Accounts payable and other liabilities.
ADDITIONAL INFORMATION ABOUT PLAN ASSETS
Funded plan assets are held in trust and their breakdown is as follows:
Cash and other
72
0.5
0.7
100.0
100.0
19. EMPLOYEE FUTURE BENEFITS (CONTINUED)
ADDITIONAL INFORMATION ABOUT PLAN ASSETS (CONTINUED)
Costs recognized in the year were as follows:
(In thousands)
2010
Pension
plans
$
2009
Insurance
plan
$
Pension
plans
$
Insurance
plan
$
Current service cost, net of employee contributions 3,967
58
5,985
83
Interest cost
5,098
87
4,194
76
Actual return on plan assets
(12,932)
Actuarial loss (gain)
23,946
353
10,098
(19,346)
Cost before adjustments to recognize the long-term nature
of employee future benefits
20,079
498
931
Difference between actual and expected return on plan assets
9,364
(13,798)
Difference between actuarial loss or gain recognized and
actual actuarial loss or gain on accrued benefit obligation
(23,909)
Difference between amortization of past service cost
or gain and actual plan amendments
173
(39)
7
Costs recognized in the year
5,707
106
6,603
(353)
(329)
(170)
19,463
356
(40)
146
Cash payments for employee future benefits, which comprise contributions made by the Fund to these funded pension plans and amounts paid directly to members under unfunded plans totalled $4.9 million (2009: $4.7 million).
SIGNIFICANT ACTUARIAL ASSUMPTIONS
The significant actuarial assumptions used to determine the accrued benefit obligation and the costs recognized for the plans are as follows:
2010
Pension
%
Insurance
%
Discount rate
5.25
Rate of compensation increase
3.50
2009
Plans
Pension
%
Insurance
%
5.25
7.00
7.00
3.50
Accrued benefit obligation
Rate at end of year
Accrued benefit costs recognized
Rate at end of previous year
Discount rate
7.00
7.00
5.25
Expected rate of return on plan assets
6.25
6.25
Rate of compensation increase
3.50
3.50
5.25
The Fund set the maximum annual insurance premium it will assume per retiree and does not expect any increases in the future.
73
(CONTINUED)
A S AT M AY 3 1 , 2 0 1 0 A N D 2 0 0 9
20. RELATED PARTY TRANSACTIONS
In the normal course of business, the Fund conducts transactions with related companies that are either controlled by the Fund or subject to significant influence by the Fund. Many of the development capital investments are of such an amount and nature
that the investee is considered a related company. These transactions consist predominantly of interest and dividend revenues on
investments and certain expenses, in particular premiums paid under insurance plans.
The Fund, of which a majority of directors are elected by the FTQ, paid $1.5 million to the QFL for the year ended May 31, 2010
(2009: $1.4 million) under a protocol and agreements that call for compensation to be paid for services rendered in respect of economic training, social audits, shareholder development, and support and guidance of certain activities. These transactions
are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
The Fund incorporated the Fondation de la formation économique du Fonds de solidarité des travailleurs du Québec (F.T.Q.) (the “Fondation”) under Part III of the Québec Companies Act and appoints the members of the Fondation’s Board of Directors.
The Fund granted a loan of $5 million to the Fondation at a variable, contingent interest rate, with a fair value of $3.2 million
(2009: $2.8 million).
The Fund granted non-interest bearing loans of $20 million with a fair value of $12.7 million (2009: $11.7 million) to the Fonds
étudiants solidarité travail du Québec (FESTQ), which are considered related to the Fund because the Fund appoints some of their
directors together with the Government of Québec.
These loans are presented in the Balance Sheet under Accounts receivable and other assets.
21. RISK MANAGEMENT
Risks arising from financial instruments are discussed in the “Risk management” section of the Management Discussion
and Analysis for the year ended May 31, 2010. This section forms an integral part of the audited Financial Statements.
The Management Discussion and Analysis for the year ended May 31, 2010 is available at the Fund’s head office, on its Website
at www.fondsftq.com or at www.sedar.com.
22. COMPARATIVE FIGURES
Certain prior year figures have been reclassified to be comparable with those of the current year.
23. ADDITIONAL INFORMATION
The audited Statement of Development Capital Investments, at Cost is presented on pages 75 to 82. The unaudited Index of
the Share of the Fund in Investments Made by the Specialized Funds, at Cost is presented on pages 83 to 97. These documents,
as well as the unaudited Relevé des autres investissements, are available at the Fund’s head office, on its Website at
www.fondsftq.com or at www.sedar.com.
74
STATEMENT OF DEVELOPMENT CAPITAL
INVESTMENTS AT COST
Auditors’ report
To the Directors of the
Fonds de solidarité des travailleurs du Québec (F.T.Q.)
We have audited the statement of development capital investments at cost of the Fonds de solidarité des travailleurs du Québec
(F.T.Q.) as at May 31, 2010. This financial information is the responsibility of the management of the Fonds de solidarité des travailleurs du Québec (F.T.Q.). Our responsibility is to express an opinion on this financial information based on our audit.
We conducted our audit in accordance with Canadian Generally Accepted Auditing Standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial information is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial information. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial information.
In our opinion, this statement presents fairly, in all material respects, the development capital investments at cost of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) as at May 31, 2010 in accordance with Canadian Generally Accepted
Accounting Principles.
1
1
75
INVESTMENTS AT COST
AS AT MAY 31, 2010
(In thousands $)
Investments
Unsecured
Year of Initial Investment
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
Shares Shares Bonds and Bonds and
and Units and Units Advances Advances
1,338 Guarantees
and
Suretyships
1988
Fonds de développement emploi-Montréal inc.
F
TransForce inc.
S
18,421
1,338
18,421
1989
Entreprises publiques québécoises à faible capitalisation
TI/M/P/S
276,847
1990
Bestar inc.
M
1,499
Transat A.T. inc.
S
37,147
1991
B.M.B. (Îles-de-la-Madeleine) inc.
S
750 750
R
28,975 28,975
• Fonds immobilier de solidarité FTQ I, s.e.c.
• Fonds locaux de solidarité FTQ, s.e.c.
F
1992
Polycor inc.
P
1993
European Medical Ventures Fund S.C.A.
TI
68 • Fonds immobilier de solidarité FTQ II, s.e.c.
R
25,000 1,106 38,000 Groupe Robert inc.
S
21,940 Le Devoir inc.
S
1,315 SSQ, Société d’assurance-vie inc.
S
29,413 2,605 37,147
10,993 276,847
38,000
10,993
68
25,000
5,000 26,940
1,315
36,100 65,513
1994
Corporation Financière Brome inc.
S
1,591 3,176 Groupe Pierre Belvédère inc.
S
312 1,350 Labopharm inc.
TI
4,284
4,284
1995
Château M.T. inc.
S
3,000 3,000 • Fonds régional de solidarité Abitibi-Témiscamingue, F
13,105 13,105
• Fonds régional de solidarité Côte-Nord, F
12,985 12,985
• Fonds régional de solidarité Estrie,
F
20,114 20,114 • Fonds régional de solidarité Île-de-Montréal,
F
25,090 25,090 • Fonds régional de solidarité Lanaudière,
F
12,587 12,587
• Fonds régional de solidarité Laurentides,
F
21,532
21,532
• Fonds régional de solidarité Laval,
F
21,524 21,524
• Fonds régional de solidarité Mauricie,
F
12,708 12,708
MethylGene inc.
TI
16,651
16,651
Mines Virginia inc.
P
2,245
2,245
Société en commandite de placements en logiciel Télésystème
TI
1,086 1,086
1996
• Fonds d’investissement de la culture
S
20,000 20,000
• Fonds régional de solidarité Bas-Saint-Laurent,
F
13,160 13,160
• Fonds régional de solidarité Chaudière-Appalaches,
F
15,574 15,574
• Fonds régional de solidarité
F
12,573 12,573
• Fonds régional de solidarité Montérégie,
F
18,478 18,478
• Fonds régional de solidarité Outaouais,
F
30,478 30,478
• Fonds régional de solidarité Québec,
F
24,976 24,976
76
société en commandite
et des communications, société en commandite
Gaspésie–Îles-de-la-Madeleine, société en commandite
4,767
1,662
Investments
Unsecured
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
1996
• Fonds régional de solidarité
Saguenay–Lac-Saint-Jean, société en commandite
F
GBO inc.
M
24,336
Gestion Renaud-Bray inc.
S
1
Groupe Solmax inc.
M
3,800 24,971 Guarantees
and
Suretyships
24,971
24,336
1
3,800
Mines Richmont inc.
P
893
893
Roctest ltée
M
4,124
4,124
284
6,439
52 1,761
12,000
Stageline Scène Mobile inc.
M
1997
Fonds de capital de risque GeneChem Technologies, s.e.c.
TI
6,439 Fonds d’investissement de Montréal (F.I.M.), société en commandite
R
1,709 • Fonds régional de solidarité Nord-du-Québec,
GSM Capital Limited Partnership
TI 948 Les Mines McWatters inc.
P
3,444 société en commandite
F
284 12,000 948
3,444
Mines Aurizon Ltd
P
206
206
Oxford Bioscience Partners II L.P.
TI
1,336 1,336
10,750
10,750
Société de gestion GLRD inc.
R
Société en commandite de Montmorency-Laval
R
1998
3539491 Canada inc. (ADF Industries Lourdes)
M
Cap sur mer inc.
M
528 Corporation d’exploitation minière Globestar
P
309
Exploration Azimut inc.
P
197
• Fonds régional de solidarité Centre-du-Québec,
F
9,616 Malaga inc.
P
21
21
Niocan inc.
P
339
339
Société en commandite Manoir Richelieu
S
44,929 1,254 Tranzyme Pharma inc.
TI
7,532 551 TSO3 inc.
TI
8,561
1999
A. & R. Belley inc.
S
Advitech inc.
TI
2,316
Æterna Zentaris inc.
TI
6,962
Corporation minière Osisko
P
9,864
TI
390 Harmonium International inc.
La Financière des entreprises culturelles (FIDEC), société en commandite
S
4,000 Le Groupe Cambium inc.
M
Minéraux Maudore ltée
P
45
2000
ARGO II: The Wireless-Internet Fund – Limited Partnership
TI
Atrium Innovations inc.
TI
• Fonds de développement des exportations Fodex,
S
Fonds de revenu Hélicoptères Canadiens
S
26,423
Genopole 1er Jour S.A.
TI
136 Groupe Riotel Hospitalité inc.
S
405 GTI V, société en commandite
TI
8,059 Marketing Léger inc.
S
1,000 Ressources Majescor inc.
P
368
1,705
309
497
9,616
361 20,000 753
2,316
6,962
29,864
390
4,000
311 8,083
8,561
46,183
311
45
11,783 11,783
13,407 51,176
37,769
963
1,177 300 392 963 16,003 16,003
26,423
79 1,130 136
484
8,059
2,130
368
77
INVESTMENTS AT COST
(CONTINUED)
AS AT MAY 31, 2010
(In thousands $)
Investments
Unsecured
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
2000
Ressources Strateco inc.
P
15
Simard-Beaudry Construction inc.
S
Société en commandite GeneChem Thérapeutique
TI
10,479 Yamana Gold inc.
P
351
2001
Aégera Thérapeutique inc.
TI
5,120 • Fonds Bio-Innovation, société en commandite
TI
19,416 Investissement Premières Nations du Québec, société en commandite
F
2,000 Kruger Wayagamack inc.
M
Multiple Capital Fonds II, s.e.c.
TI
Novacap II, société en commandite
S
39,125 Guarantees
and
Suretyships
15
39,125
10,479
351
5,120
19,416
2,000
12,136 12,136
8,534 8,534
14,470 14,470
Partenaires MidCap
S
495 495
SBV Venture Partners L.P.
TI
5,133 5,133
• SIDEX, société en commandite
P
15,000 15,000
T²C²/Bio2000, société en commandite
TI
9,229 9,229
Venture Coaches Fund LP
TI
2,569 2002
BioAxone Thérapeutique inc.
TI
3,000 1,321 FinTaxi, s.e.c.
S
7,800 31,200 • Fonds immobilier de solidarité FTQ inc.
R
Investissements BioCapital, société en commandite TI
Junex inc.
• Lumira Capital I Québec société en commandite
TI
16,548 Produits Intégrés Avior inc.
M
1,250 787 Thermetco inc.
M
1,800 642 Vimac Early Stage Fund L.P.
TI
9,659 9,659
2003
Enobia Pharma Corp.
TI
15,266 15,266
Le Fonds Entrepia Nord, s.e.c.
TI
7,808 7,808
Mines de la Vallée de l’or ltée
P
217
217
Ressources Plexmar inc.
P
126
126
Stella-Jones inc.
M
9,155
70,498
P
1 247,109 304
644 Tranzyme, inc.
TI
1
Vimac Milestone Medica Fund North L.P.
TI
4,435 2,569
4,321
39,000
247,110
644
304
61,343 16,548
2,037
2,442
1
4,435
2004
4262280 Canada inc. (Transat A.T.)
S
4,647 4,647
9143-4423 Québec inc. (Gestion MSBI)
TI
154 154
Advantech technique de pointe pour faisceaux hertziens inc.
TI
Alexis Minerals Corporation
P
169
Bois BSL inc.
M
Fonds Brightspark II, s.e.c.
TI
Fonds d’investissement MSBI, société en commandite
Groupe Plafolift inc.
Le Groupe Blue Mountain Wallcoverings inc.
M
Manac inc.
M
Matamec Explorations inc.
P
92
Octasic inc.
TI
14,832 4,000 300 469
1,617 1,617
7,115 TI
8,210 M
167 11,000 12,000 8,523 16,152 1,741 18,832
7,115
8,210
500 667
1,255 24,255
24,675
7,340
5,599 92
Sciences de la vie Bioniche inc.
TI
9,000 9,000
Trencap s.e.c.
S
132,250 132,250
Vimac ESF Annex Fund L.P.
TI
1,030 1,030
78
Investments
Unsecured
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
Guarantees
and
Suretyships
2005
9053-2698 Québec inc.
M
1
A.M. Pappas Life Science Ventures III, LP
TI
8,603 8,603
Addenda Capital inc.
S
71,331 71,331
Air Data inc.
M
5,500 2,036 Allianz Madvac inc.
M
1,200 7,800 Camoplast inc.
M
32,951 Château Bonne Entente inc.
S
3,200 331 F
16,448 16,448
• FIER Partenaires, société en commandite
• Fonds d’opportunités canadiennes HRS, s.e.c.
S
40,000 40,000
Groupe C.N.P. inc.
M
1,000 1,000
Groupe Canatal inc.
M
2,800 2,800
Média Groupe inc.
S
1,104 3,104
Metro inc.
S
94,934 94,934
ProQuest Investments III, L.P.
TI
5,105 5,105
RHO Fund Investors 2005, L.P.
TI
4,588 SAIL Plein Air inc.
S
1,000 3,842 4,842
2006
2023671 Ontario inc. (Acier Pointe-Claire)
M
3,375 3,375
6569293 Canada inc. (Maison des Futailles)
M
13,482 10,000 9166-1165 Québec inc. (Maison des Futailles)
M
1
1
9178-6590 Québec inc. (Excavation René-St-Pierre) S
25 25
BioSyntech, inc.
TI
4,236
Boutique Linen Chest (Phase II) inc.
S
Capital Financière Agricole inc.
S
2,366 Capital St-Laurent, s.e.c.
TI
9,302 Corporation développement Knowlton inc.
M
9,249 13,873 2,000 4,655
28,000
32,951
3,531
4,588
23,482
8,891
2,933
2,366
9,302
100,000 23,122
Corporation Financière L’Excellence ltée
S
Coveo Solutions inc.
TI
3,500 3,500
Emerald Cleantech Fund II L.P.
TI
4,594 4,594
Entreprises SMD ltée
S
3,500 1,040 4,540
Équipements Comact inc.
M
500 2,050 2,550
Éthanol Greenfield inc.
M
60,000 60,000
Excavation René St-Pierre inc.
S
5,000 5,000
Exploration Dios inc.
P
184
FCPR Aerofund
S
100,000
184
10,202 10,202
7,200 Fiducie du Chantier de l’économie sociale
S
7,200
Fonds CTI sciences de la vie, s.e.c.
TI
9,200 9,200
Fonds ID s.e.c.
TI
7,800 7,800
Fonds Propulsion III s.e.c.
TI
6,106 Gestion Rivière du Diable inc.
S
2,700 2,700 5,400
Groupe CVTech inc.
S
19,985
12,363 32,348
Groupe environnemental Labrie inc.
M
10,550 9,722 20,272
J.L. Albright IV Venture Fund L.P.
TI
2,998 2,998
Lab Recherche inc.
TI
22,718
22,718
Métal Perreault inc.
M
300 Promobois G.D.S. inc.
M
6,106
110 774
1,248 1,248
11,800
14,053
Ressources Cartier inc.
P
420
Rho Canada Capital de Risque, s.e.c.
TI
11,800 Soccrent 2006, société en commandite
F
8,653 364 5,400 2,778
7,536
19,000 2,933 1
420 FONDS DE SOLIDARITÉ FTQ | 2010
79
INVESTMENTS AT COST
(CONTINUED)
AS AT MAY 31, 2010
(In thousands $)
Investments
Unsecured
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
2006
Société en commandite AgeChem
TI
9,000 Sonaca S.A.
M
VantagePoint Venture Partners 2006 (Q), L.P.
TI
2007
6705341 Canada inc. (North Country Slate)
P
9184-7376 Québec inc. (Planchers Ancestral)
M
Bois Nobles Ka’N’Enda ltée
M
Camoguid Évolution inc.
M
Envivio inc.
TI
9,676 5,950 9,000
5,950
100 Guarantees
and
Suretyships
9,676
1,308 600 300 998 1,731 5,098 1,308
100
1,400 2,300
2,729 5,098
Exploration Midland inc.
P
436
436
Fonds d’acquisition de Montréal, société en commandite
R
5,000 5,000
Fonds d’investissement de Montréal (F.I.M.) II, société en commandite
R
980 980
Fonds d’investissement iNovia II, société en commandite
TI
1,989 1,989
Gemin X Pharmaceuticals, inc.
TI
6,033 6,033
GO Capital s.e.c.
TI
765 765
Groupe Bikini Village inc.
S
3,675 3,675
Investissement (12348) s.e.n.c. (Cellfish Media)
TI
11,785 11,785
Investissements Astra inc.
S
1,500 1,495 Les Industries Spectra Premium inc.
M
10,000 9,171 75,000
2,995
19,171
LJVH Holdings inc.
M
MMV Financial inc.
S
5,685 27,873 33,558
Nexsan Corporation
TI
8,687 3,880 12,567
Novacap Industries III, s.e.c.
M
7,033 7,033
Novacap Technologies III, s.e.c.
TI
5,429 5,429
Partenaires Médias Remstar, s.e.c.
S
2,000 2,000
ProQuest Investments IV, L.P.
TI
4,880 4,880
Québec-Alberta Construction, s.e.c.
S
7,612 7,612
Salerno pellicule et sacs de plastique (Canada) inc.
M
1,060 5,963
• Société de gestion d’actifs forestiers Solifor,
P
150,000
Stedfast inc.
M
1,125 Thallion pharmaceutiques inc.
TI
8,275
Vertex III (C.I.) Fund, L.P.
TI
8,741 Victhom Bionique Humaine inc.
TI
5,005
150,000 2008
147755 Canada inc. (Groupe B.M.R.)
S
9185-1337 Québec inc. (Groupe Benoît)
M
Administration LVER inc.
S
Alimentation Coop Port-Cartier
S
• BDR Capital s.e.c.
TI
2,750
9,000
242 Cogeco Câble inc.
TI
M
Donner Metals Ltd
P
185
Exploration NQ inc.
P
107
Fonds soutien Montréal parallèle, s.e.c.
TI
2,000 Gestion TFI, société en commandite
S
M
Groupe AGF inc.
M
Groupe GDG Environnement ltée
S
80
6,000 2,500 6,600
185
232
2,000
100,000
25,000 242
107,770
125 19,100
100,000
100,000 1,200 32,061
100,000 5,400 8,741
5,005
9,000 Dalkotech inc.
GLV inc.
107,770 8,275
3,300
1,250 2,175 75,000
19,100 1,500 4,903 57,061
383 2,883
6,000
2,250
Investments
Unsecured
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
2008
Groupe Gecko Alliance inc.
TI
Groupe GFI Solutions inc.
TI
7,000 HR Stratégies inc.
S
100 Mango Industrie du cuivre inc.
M
600 9,443 MBI Acquisition Corp.
S
20,070 31,000 Guarantees
and
Suretyships
7,000
31,000
100
10,043 Ontario Venture Capital Fund LP
TI
91 91
Ressources Breakwater ltée
P
170
170
Rho Ventures VI L.P.
TI
6,008 Sonaca NMF Canada inc.
M
Transport C.D.P. inc.
S
Trimag, s.e.c.
M
VantagePoint Cleantech Partners II, L.P.
TI
2009
5N Plus inc.
M
4,166
1,840 6,008
5,000 5,000
2,660 250 4,750
5,205 5,205
7,254 7,254
4,166
7244444 Canada inc. (Précibois)
M
360 A.M. Pappas Life Science Ventures IV, LP
TI
4,873 ADS inc.
M
3,600 5,400 Axtel SARL
S
Champlain Capital Partners, L.P.
S
Corporation Nuvolt inc.
M
CT-Paiement inc.
TI
3,000 Équipements vétérinaires Matvet inc.
S
1,180 638 FCPR Aerofund II
S
4,911 4,911
Fonds Cycle Capital I, s.e.c.
S
6,890 6,890
Fonds d’acquisition québécois, société en commandite
S
5,000 5,000
Fonds Élan d’entreprises, société en commandite
S
1
1
• Fonds Envol, société en commandite
1,327 1,327
S
9,215 360
4,873
9,000
811 240 811
9,215
240
3,000
1,818 Forum 5 inc.
S
8,250 8,250
Gestion hôtelière REVPAR inc.
S
1,094 1,094
Gestion Juste pour Rire inc.
S
3,750 3,750
Groupe Bermex inc.
M
1,250 1,250
Groupe Smardt Refroidisseurs inc.
M
10,000 10,000
Intercâble ICH inc.
S
1,400
L’Aréna des Canadiens inc.
S
Les Viandes Laroche inc.
M
2,000 Meca Dev s.a.s.
M
16,227 Medicago inc.
TI
1,519
Premier Tech ltée
P
Sécurité Kolossal inc.
S
Shermag inc.
M
Société d’exploration minière Vior inc.
P
6
Société en commandite Groupe CH
S
Teraxion inc.
S
Transcontinental inc.
• VC, société en commandite
M
TI
S
Yellow Média inc.
6,954 10,000 10,000
2,000
23,181
1,519
1,188 4,000 100 40,000
1,189 106
40,000 5,500 5,500
100,000 50,000 222
4,000
40,000 8,387 300
1,400
40,000 1
6,957
20,070
7,909
100,000
8,387
50,000
81
INVESTMENTS AT COST
(CONTINUED)
AS AT MAY 31, 2010
(In thousands $)
Investments
Unsecured
Industry
Segment
Secured
Total
Listed Unlisted
Loans,
Loans,
Guarantees
and
Suretyships
2010
4550358 Canada inc. (Saladexpress)
M
8,525 8,525
9220-2324 Québec inc. (Groupe C.N.P.)
M
2,500 2,500
Foliot Management inc.
M
5,500 5,500
Fortress Paper Ltd
M
15,000
Glendyne inc.
P
Les Diamants Stornoway (Canada) inc.
P
300
Les Métaux Focus inc.
P
200
Scierie Dion & Fils inc.
M
Xmet inc.
13 general partners of limited partnerships
Total
P
S
15,000 700 700
300
1
150
2,500 592,198 1,904,449 1,485,819
200
2,500
150
1
45,548 4,028,014
41,916
• The list of investments made by these specialty funds is shown in the unaudited Index of the share of the Fund in investments made
by the specialized funds, at cost.
This statement of development capital investments at a total cost of $4,028,014,000 itemizes by company the amounts invested by
the Fonds de solidarité des travailleurs du Québec (F.T.Q.). This amount appears in Note 5 to the financial statements as at May 31, 2010.
In addition, this statement presents a list of the guarantees and suretyships granted by the Fund.
Industry segment legend
F: Regional or local funds
R: Real estate
M:Manufacturing
P: Primary
S: Services/tourism
TI:Technology investments
82
INDEX OF THE SHARE OF THE FUND
IN INVESTMENTS MADE BY THE SPECIALIZED FUNDS,
AT COST
(UNAUDITED)
AS AT MAY 31, 2010
(In thousands)
Information from Annual Financial
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
05-31-09 BDR Capital s.e.c.
Accedian Networks Corporation
Bluestreak Network inc.
Coradiant (Canada) inc.
Coradiant inc.
Corporation DataCom Wireless
Énergie Afina inc.
Enerkem inc.
Hexago inc.
Irphotonique inc.
Les Réseaux Accedian inc.
Logiciel Iscopia Holding inc.
Logiciel Iscopia inc.
LxDonnées inc.
Microbridge Technologies Corp.
Nanogestion inc.
Omni-Med.com inc.
Provance Technologies inc.
Réseaux Trellia inc.
SolaCom Technologies inc.
Technologie Bluestreak (Canada) inc.
Technologies Microbridge Canada inc.
TelcoBridges inc.
Wavesat inc.
49,313
19,306
68,619
13,009
12-31-09 FIER Partenaires, société en commandite
AgeChem Venture Fund, L.P.
Capital St-Laurent, s.e.c.
Fonds Brightspark II, s.e.c.
Fonds CTI sciences de la vie, s.e.c.
Fonds d’investissement iNovia II, société en commandite
Fonds Propulsion III, s.e.c.
GO capital, s.e.c.
Novacap Industries III, s.e.c.
Novacap Technologies III, s.e.c.
Rho Canada Capital de Risque, s.e.c.
13,009
Funds committed but not disbursed
24,174
37,183
03-31-10 Fonds Bio-Innovation, société en commandite
Securities of ten companies Funds committed but not disbursed
2,700
12,236
7,455 2,081 9,536
83
AT COST
(UNAUDITED) (CONTINUED)
AS AT MAY 31, 2010
(In thousands)
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
12-31-09 Fonds de développement des exportations FODEX, société en commandite
Alex Pneu et Mécanique (Canada) inc. 1,000 Bioetik inc. 150 Gestion Steelhead inc. 200 TDM International inc. 250 250 500
1,600 1,973 3,573
1,425 298 2,425
150
498
03-31-10 Fonds d’investissement de la culture et des communications, société en commandite 9068-3848 Québec inc. (Les Productions Danse Sing)
9168-1478 Québec inc. (Laboratoires GSS)
Archipel Productions inc.
Attraction Média inc.
Audio Postproduction SPR inc.
Carpediem film & TV inc.
De Marque inc.
Édifice Club Soda inc.
Forum 5 inc.
Gestion Juste pour Rire inc.
Groupe Phaneuf inc.
Groupe Star Suites inc.
Guides de Voyages Ulysse inc.
GVGS inc.
Janidée inc.
Jeux Alary inc.
LC Média inc.
Marketing Senscity inc.
Media-Max inc.
Motorisés Star Suites inc.
Sarbakan inc.
Toon Boom Animation inc.
Tribal Nova inc.
Vivavision inc.
Wilson & Lafleur, limitée
Securities of two other companies
3,050 Funds committed but not disbursed
1,301
12,104
7,753 10,803
12-31-09 Fonds d’opportunités canadiennes HRS, s.e.c.
Securities of fourteen companies
28,534 02-28-10 Fonds Envol, société en commandite
Gestion Simulateur de vol – Capital inc.
4
4
Simulateur de vol – Capital, s.e.c.
1,322 1,322 1,326 1,326 84
28,534 FONDS DE SOLIDARITÉ FTQ | 2010
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
12-31-09 Fonds immobilier de solidarité FTQ inc.
81-83 Richelieu s.e.c.
435 875 Charest s.e.c.
2,159 880 Honoré-Mercier s.e.c.
6,250 9197-0921 Québec inc.
Bio Sherbrooke Phase I s.e.c.
2,368 11,002
Brossard-sur-le-Fleuve s.e.c.
2,067 2,000
4,067 Carré Chambord s.e.c.
500 2,300 2,800
Centre de développement des Biotechnologies de Laval s.e.c.
5,100 14,095 19,195 Complexe L.L. Phase II, s.e.c.
4,697 4,697 Condominiums Le George V s.e.c.
10 Condos Wanklyn-Milot s.e.c.
Constructions Louisbourg ltée
Côte de Terrebonne s.e.c.
CPA Fontainebleau, s.e.c.
Développements Graham inc.
Développements Wilfrid-Carrier s.e.c.
10,675 10,675 435
2,159
6,250
1,700 4,021 2,779 1,700 13,370 10 4,021 4,250 4,250 2,779
753 2,250
3,003
1,500 3,680
5,180
Espace MV1 s.e.c.
1,468 1,468 Espace MV2 s.e.c.
3,093 3,093 Espaces Lebourgneuf Phase III s.e.c.
1,800 Montée des Pionniers Phase I s.e.c.
550 1,550 2,100 Montée des Pionniers Phase II s.e.c.
500 2,895 3,395 R.P.A. 1 Lachenaie s.e.c.
590 R.P.A. Mont-Joli s.e.c.
813 R.P.A. Rawdon s.e.c.
1,352 1,352 SEC Laurin/St-Louis
6,586 6,586
Société en commandite 1057 de la Montagne
Société en commandite 1111 Saint-Laurent
7,359 Société en commandite 668 De Courcelle
1,746 1,746 Société en commandite Angus s.e.c. Phase II
1
14,640 14,641 Société en commandite Bourassa-Pelletier
9,803 9,803 Société en commandite Château Hymus
371 Société en commandite Clairevue
150 228 Société en commandite C.V.L.
809 Société en commandite des Pionniers
4,982 4,982 Société en commandite Édifice Le Soleil
11,728 11,728 Société en commandite Griffintown II
2,352 Société en commandite Héritage Pointe-Claire
195 Société en commandite Laurin/Saint-Louis Phase I
Société en commandite Le Sanctuaire de la Rive
500 500
Société en commandite Rose de Lima
1,000 1,000 Société en commandite Viau Ontario
1,640 Souvenir-Corbusier s.e.c.
650 2,300 2,950 St-Paul/Du Palais s.e.c. 6,699 8,080 14,779 Technoparc Bromont Phase I s.e.c.
523 385 908 Wanklyn-Milot s.e.c.
2,528 2,528 109,010 101,245 210,255 8,266 1,800 590
600 1,413 2,761 2,761 7,359 371
378
809
2,352 195
14,171 22,437 1,640 FONDS DE SOLIDARITÉ FTQ | 2010
85
AT COST
AS AT MAY 31, 2010
(In thousands)
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
12-31-09 Fonds immobilier de solidarité FTQ I, s.e.c.
1061 St-Alexandre, s.e.c.
1,250 576 9124-6215 Québec inc.
1,100 1,100 9170-4569 Québec inc.
2,900 2,900 C.C.L. II, société en commandite
559 Centre de Ressources du Parc Technologique du Québec Métropolitain inc.
2,709 510 Développement Parc St-Victor inc.
500 500 Édifice 255 Saint-Jacques société en commandite
895 455 1,350 Édifice 261 Saint-Jacques société en commandite
2,754 467 3,221 Immobilière St-Hippolyte s.e.c.
403 403 La société en commandite Godefroy de Lintôt
441 441
Promis (promotion – intégration – société nouvelle)
PTQM/Lutech s.e.c.
Société en commandite 400 Rang St-Joseph
Société en commandite Claude Baillif
1,045 Société en commandite de La Dauversière
3,563 Société en commandite Émilie-Gamelin
100 133 Société en commandite Inspecteur-William
10 10
Société en commandite Les Berges Brossard
11 5
16
Société en commandite Les tours des terrasses du golf Phase II
149 20 Société en commandite Milton
2,339 2,339 Société en commandite Place Dunant
150 150
Société en commandite Ste-Hélène
27 15 Terrains de stationnement de Montréal
6,151 6,151 25,178 7,651 32,829 770 2,622 200
1,826
559
3,219 770
2,622 200
1,045 3,563 233
169
42
12-31-09 Fonds immobilier de solidarité FTQ II, s.e.c.
3,689 3,689 1030-1040 de Bleury s.e.c.
1405 Henri Bourassa ouest s.e.c.
1,762 1,762
1405 PTQM s.e.c.
2,125 2,125
Brousseau Marine Sports inc.
150 150 Capital BLF inc.
3,042 3,042 Complexe L.L. phase l, s.e.c.
10,483 10,483 Complexe L.L. phase ll, s.e.c.
2,604 2,604 Espaces Lebourgneuf s.e.c.
2,042 2,042 Faubourg la Grande Place s.e.c.
1,108 Hôtel Particulier : Le Ste-Hélène s.e.c.
Immobilière Concorde-Corbusier s.e.c.
Résidence du Faubourg St-Jean s.e.c.
SEC St-Bruno-sur-le-Lac Phase 2
1,300 1,300
SEC St-Bruno-sur-le-Lac Phase 3
1,104 1,104
Société en commandite 75 boulevard Québec
483 Société en commandite African
500 Société en commandite Benadev
3,540 Société en commandite Cavelier de LaSalle
3,500 Société en commandite CDTI de Hull
Société en commandite d’investissement Germain-Calgary
2,063 2,000 Société en commandite du 1400
450 440 890
Société en commandite du 259 boulevard St-Joseph-Hull
125 125
86
500 2,610 92 100 1,108 3,886 4,386
2,610 92 483
49 549
3,540 1,500 5,000 100
4,063 Information from Annual Financial
Report dated
12-31-09 Fonds immobilier de solidarité FTQ II, s.e.c. (continued)
1,090 Société en commandite JBSL
Shares Loans and
and Units Advances
$
$
Total
$
1,090 Société en commandite Lac Clermoutier
2,465 2,465 Société en commandite Mansfield
2,075 2,075 Société en commandite RMI
239 239
Trois A, Société en commandite
850 49,941 8,025 850
57,966 08-31-09 Fonds locaux de solidarité FTQ, s.e.c.
165 165 150 SOLIDE Ahuntsic-Cartierville
SOLIDE Centre-Sud/Plateau Mont-Royal
150 SOLIDE Chibougamau
5
5
SOLIDE Côte-des-Neiges/Notre-Dame-de-Grâce
10 10 SOLIDE de Gatineau
10 10 SOLIDE de la Basse Côte-Nord Kégaska-Blanc-Sablon
10 10 SOLIDE de la MRC Brome-Missisquoi
10 10 SOLIDE de la MRC d’Acton
10 10 SOLIDE de la MRC d’Antoine-Labelle
80 80 SOLIDE de la MRC d’Argenteuil
40 40 SOLIDE de la MRC d’Autray
10 10 SOLIDE de la MRC d’Avignon
55 115 SOLIDE de la MRC de Beauce-Sartigan
225 SOLIDE de la MRC de Beauharnois-Salaberry
10 10
SOLIDE de la MRC de Bécancour
245 245
SOLIDE de la MRC de Bellechasse
70 70
SOLIDE de la MRC de Bonaventure
10 10
SOLIDE de la MRC de Caniapiscau
10 10
SOLIDE de la MRC de Charlevoix
125 125
SOLIDE de la MRC de Charlevoix-Est
203 203
SOLIDE de la MRC de Drummond
348 348
SOLIDE de la MRC de Francheville
50 50
SOLIDE de la MRC de Joliette
250 250
SOLIDE de la MRC de la Côte-de-Beaupré
112 112
SOLIDE de la MRC de la Haute-Côte-Nord
10 10
SOLIDE de la MRC de la Jacques-Cartier
10 SOLIDE de la MRC de la Mitis
SOLIDE de la MRC de la Nouvelle-Beauce
35 35
SOLIDE de la MRC de la Rivière-du-Nord
160 160
SOLIDE de la MRC de la Vallée-du-Richelieu
250 250
SOLIDE de la MRC de Lac-Saint-Jean-Est
92 92
SOLIDE de la MRC de l’Amiante
96 180
SOLIDE de la MRC de l’Île d’Orléans
10 10
SOLIDE de la MRC de Lotbinière
115 115
SOLIDE de la MRC de Maria-Chapdelaine
250 250
SOLIDE de la MRC de Maskinongé
80 80
SOLIDE de la MRC de Matane
320 320
SOLIDE de la MRC de Mékinac
370 370
SOLIDE de la MRC de Memphrémagog
350 350
SOLIDE de la MRC de Minganie
10 10
60 84 112
225
10
112
87
AT COST
AS AT MAY 31, 2010
(In thousands)
Report dated
08-31-09 Fonds locaux de solidarité FTQ, s.e.c. (continued)
60 60
SOLIDE de la MRC de Montmagny
Shares Loans and
and Units Advances
$
$
Total
$
SOLIDE de la MRC de Pontiac
10 10
SOLIDE de la MRC de Rimouski-Neigette
10 10
SOLIDE de la MRC de Rivière-du-Loup
10 10
SOLIDE de la MRC de Roussillon
81 81
SOLIDE de la MRC de Sept-Rivières
191 191
SOLIDE de la MRC de Témiscamingue
10 10
SOLIDE de la MRC de Vaudreuil-Soulanges
173 173
SOLIDE de la MRC des Basques
10 10
SOLIDE de la MRC des Collines-de-l’Outaouais
10 10
SOLIDE de la MRC des Etchemins
77 77
SOLIDE de la MRC des Îles-de-la-Madeleine
134 134
SOLIDE de la MRC des Jardins-de-Napierville
10 10
SOLIDE de la MRC des Laurentides
290 290
SOLIDE de la MRC des Pays-d’en-haut
10 10
SOLIDE de la MRC du Bas-Richelieu
64 64
SOLIDE de la MRC du Domaine-du-Roy
220 220
SOLIDE de la MRC du Fjord-du-Saguenay
65 65
SOLIDE de la MRC du Haut-Saint-François
200 200
SOLIDE de la MRC du Rocher-Percé
10 10
SOLIDE de la MRC du Val-Saint-François
190 190
SOLIDE de la MRC Lajemmerais
555 555
SOLIDE de la MRC Les Maskoutains
246 246
SOLIDE de la Ville de Longueuil
350
350
SOLIDE de Lachine
10 10
SOLIDE de Laval
10 10
SOLIDE de Lebel-sur-Quévillon
5
5
SOLIDE de l’Est de la Ville de Québec
10 10
SOLIDE de Lévis
115 115
SOLIDE de l’Ouest de la ville de Québec
10 10
SOLIDE de Matagami
40 40
SOLIDE de Mercier/Hochelaga-Maisonneuve
10 10
SOLIDE de Montréal-Nord
10 10
SOLIDE de Rosemont/Petite-Patrie
177 177
SOLIDE de Shawinigan
37 SOLIDE de Villeray/St-Michel/Parc-Extension
10 10 SOLIDE du Centre de la ville de Québec
415 415 SOLIDE du Sud-Ouest de Montréal
131 131 SOLIDE Rivière-des-Prairies/Pointe-aux-Trembles
210 210 SOLIDE Ville-Marie
10 144 8,679
19,846
28,669 88
37 10 8,823 Information from Annual Financial
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
03-31-10 Fonds régional de solidarité Abitibi-Témiscamingue, société en commandite
2965-5099 Québec inc. (Les Réclamations du Nord-Ouest)
500 3088-6469 Québec inc. (Centre Jardin Lac Pelletier)
800 800 7244444 Canada inc. (Précibois)
255 495 9026-0357 Québec inc. (Société de gestion Mario Massé)
500 500 9187-1186 Québec inc.
200 200 9187-8850 Québec inc. (Forage Boréal)
1,239 1,239 A. & L. Pinard inc.
220 Adventure Gold inc.
100 Alexis Minerals Corporation
280 Entrepreneur Minier Promec inc.
447 Exploration Azimut inc.
11 11 Exploration Midland inc.
150 150 Forage G4 ltée
856 856
Groupe Sogitex inc.
150 150
Industries Lignico inc.
92 92 Les Aciers J.P. inc.
80 80
Les équipements de forage VersaDrill inc.
416 416
Les mines d’or visible inc. Machines Roger lnternational inc.
MasséNor inc.
Palmapor inc.
150 Ressources Cartier inc.
Ressources Threegold inc.
Service Sani Tri inc.
Transport D. Barrette & fils inc.
192 192 1,706 7,790 9,496 Funds committed but not disbursed
240 95 500 220
100 200
480
447 95
235 235 801 801 121
271 133 133 100 100 933 933
655 10,151
03-31-10 Fonds régional de solidarité Bas-Saint-Laurent, société en commandite
9181-4244 Québec inc. (Carrière Neigette)
125 106 231 9198-8659 Québec inc. (Multi-Pièces D.L.)
209 209 Adélard Soucy (1975) inc.
250 250
AMH Canada ltée
418 398 816
Distributions Jacques-Cartier inc.
283 11 Érablières des Alléghanys inc.
Fabrication J.R. Tardif inc.
Fonderie BSL inc.
Fonds soutien Bas-Saint-Laurent, société en commandite
Gagnon Image inc.
157 Gestion H. Dickner ltée
31 Glendyne inc.
Les Constructions H.L. Thériault inc.
Menuiserie Roland Perreault inc.
Mon Joli Motel (1993) inc.
Productions Québec Multimédia inc.
250 1,000 14 294 546 546 250 500 100 100 1,000
157
31
694 708 250 250
80 80 75 75
260 FONDS DE SOLIDARITÉ FTQ | 2010
260 89
AT COST
AS AT MAY 31, 2010
(In thousands)
Report dated
03-31-10 Fonds régional de solidarité Bas-Saint-Laurent, société en commandite (continued)
497 497 Projexco inc.
Shares Loans and
and Units Advances
$
$
Total
$
Richard Poirier et Frères Électrique ltée
500 500
Sanibelle inc.
888 888 Topocom Technologie inc.
183 2,090 5,485 Funds committed but not disbursed
150 7,725 183 7,575
03-31-10 Fonds régional de solidarité Centre-du-Québec, société en commandite
110 110
Équipements d’incendie Levasseur inc.
Fruit d’Or inc.
467 467
Huppé Meubles inc.
500 500
Nitek Laser inc.
858 858
Recyclage Granutech inc.
1,350 1,350
Remorque Leblanc inc.
99 99
Rénovation Expo inc.
1,000 1,000
Vibrotech inc.
307 307
4,691 4,691
03-31-10 Fonds régional de solidarité Chaudière-Appalaches, société en commandite
48 9069-4654 Québec inc. (Supervac 2000)
48
9075-5349 Québec inc. (Fenêtres Météo)
27 27
Acier Majeau inc.
1,259 1,259
Cométal inc.
446 446
Compositech inc.
140 140
Équipements récréatifs Jambette inc.
90 90
Fini. U.V. International inc.
327 327
Groupe P.H.L. inc.
750 750
Groupe S.S. inc.
475 475
J.L. Leclerc & fils inc.
202 927
Les Productions Horticoles Demers inc.
L’usine Tac Tic inc.
Menuiserox inc.
Métal Bernard inc.
Multi-Brosses inc.
725 306 306
262 498
564 564
207 207
277 277
Portes Veilleux 2000 inc.
600 600
Quartz Industrie inc.
210 210
Usine Sartigan inc.
850 850
961 7,040 8,001
236 03-31-10 Fonds régional de solidarité Côte-Nord, société en commandite
79 79
32 110
150 150
2947-5399 Québec inc. (Boutique Mobilité B-C)
9058-2222 Québec inc. (Club Cap Natashquan)
Construction F.H.D. inc.
Croisière 2001 inc.
100 100
Équipement et Outillage Côte-Nord inc.
25 300 325
Fonds soutien Côte-Nord, société en commandite
90
78 1,000 1,000
Report dated
03-31-10 Fonds régional de solidarité Côte-Nord, société en commandite (continued)
125 Gestion S.S.G. inc.
Shares Loans and
and Units Advances
$
$
Total
$
125
Hôtel Mingan inc.
550 550
Lajoie Réfrigération inc.
250 250
Les Pétroles Paul Larouche inc.
450 450
Nord Industrie inc.
275 275
Pec-Nord inc.
Rechapage Longue-Rive inc.
Synergica Électrique inc.
775 775
1,628 2,982 4,610
300 300
121 121
03-31-10 Fonds régional de solidarité Estrie, société en commandite
500 500
Amecci inc.
Ani-Mat inc.
1,394 1,394
Beaudin Le Prohon inc.
357 357
Café Faro inc.
236 236
Caoutchouc Pro-Flex inc.
91 91
Domaines Pinnacle inc.
1,500 1,500
Groupe Lachar inc.
1
500 501
Kemestrie inc.
600 600
Laser AMP inc.
325 325
Les Entreprises Martin Lajeunesse inc.
587 1,037
Les fabricants de boyaux industriels Premier ltée
729 729
Les Industries Touch inc.
783 783
Les Viandes Laroche inc.
475 475
Motrec inc.
5
5
Oasis Tropik Nordik inc.
256 256
Oxybec Médical inc.
277 277
Remises Réal Lamontagne inc.
108 108
Scholer Industriel inc.
318 318
Signalisation de l’Estrie inc.
103 103
Soudure Brault inc.
280 280
Stedfast inc.
575 575
Transformateur Bemag inc.
300 300
1,051 9,699 10,750
75 10,825 450 03-31-10 Fonds régional de solidarité Gaspésie–Îles-de-la-Madeleine, société en commandite
100 9011-6641 Québec inc. (Riôtel Percé)
100
B.M.B. (Îles-de-la-Madeleine) inc. 524 524
Cap sur mer inc.
159 1,443 1,602
Fabrication Delta inc.
412 412
Gaspésie Diésel inc.
492 492
Junex inc.
Les entreprises Léo Leblanc & fils inc.
Les Industries Leblanc inc.
63 63
Les Pétroles C. Poirier inc.
200 200
Les Reboiseurs de la Péninsule inc.
146 146
46 282 FONDS DE SOLIDARITÉ FTQ | 2010
46
282
91
AT COST
AS AT MAY 31, 2010
(In thousands)
Report dated
Shares Loans and
and Units Advances
$
$
03-31-10 Fonds régional de solidarité Gaspésie–Îles-de-la-Madeleine, société en commandite (continued)
Total
$
Michaud technologies inc.
125
125 250
Pêcheries Vilo inc.
450 450
Philippe Day inc.
78 78
Serres Jardins-Nature inc.
60 407 467
4,198 5,112
914 Funds committed but not disbursed
450 5,562 03-31-10 Fonds régional de solidarité Île-de-Montréal, société en commandite
No investment
03-31-10 Fonds régional de solidarité Lanaudière, société en commandite
72 72
2973-8648 Québec inc. (Le Groupe R.G.F.M.)
Agro-100 ltée
750 750
Laboratoires Bi-Op inc.
795 795
Les Aliments Sibon (1985) ltée
640 640
Les Industries Harnois inc.
Nita Équipements inc.
Pneus Lanoraie inc.
Sécurité GMR inc.
12 63 75
200 200
550 550
270 270
Triotech Amusement inc.
780 780
Verre Select inc.
500 500
12 4,620 4,632
300 4,932 03-31-10 Fonds régional de solidarité Laurentides, société en commandite
117 2959-8828 Québec inc. (Palettes St-Janvier)
117
Aéroport International de Mont-Tremblant inc.
129 129
BMI Canada inc.
1,000 1,000
Boulangerie Les Moulins La Fayette inc.
250 29 279
Complexe Hôtelier St-Jovite / Mont-Tremblant inc.
750 Distributions Denis Fontaine inc.
175 175
Gestion hôtelière REVPAR inc.
1,103 1,103
Groupe Aviation et Puissance inc.
500 500
Groupe Star Suites inc.
121 121
La Petite Bretonne inc.
771 771
Les Matériaux Sima inc.
133 133
Montour ltée
425 425
Palmex International inc.
477 477
Service Alimentaire Desco inc.
200 200
Ventilex inc.
160 160
Vision Villégiature inc.
300 300
1,300 5,340 6,640
1,250 7,890 92
750
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
03-31-10 Fonds régional de solidarité Laval, société en commandite
383 383
Aliments Imex inc.
100 Auvents Multiples (2002) inc.
1,000 1,100
CVC / RDS inc.
109 109
Digico Fabrication Électronique inc.
392 392
Emballages Cré-O-Pack International inc.
389 389
Europe Cosmétiques inc.
188 188
Europharm International Canada inc.
689 689
Globale Géomatique inc.
338 338
Groupe Lincora inc. 429 429
Groupe Rojec inc.
375 375
Hydrolico International inc.
608 608
Les Bouteilles Recyclées du Québec (B.R.Q.) inc.
425 625
Les Contrôles Novatech G & P inc.
267 267
Les Équipements Power Survey ltée
270 270
Les Investissements Sylnic inc.
650 650
Les Productions Diamant ltée
810 810
Perlite Canada inc.
1,000 1,000
S.R.A.D. Communications inc.
40 40
Stylo Bankers (1991) inc.
1,917 1,917
Les laboratoires de recherche de Lan Wirewerks inc.
842 842
Tornatech inc.
429 429
300 11,550 11,850
200 03-31-10 Fonds régional de solidarité Mauricie, société en commandite
672
Concept Éco-Plein-Air Le Baluchon inc.
672 Déneigement Maska inc.
750 750
Produits Pylex inc.
125 125
Tuyauterie Borgia ltée
317 317
672 1,192 1,864
03-31-10 Fonds régional de solidarité Montérégie, société en commandite
300 300
3523462 Canada inc. (Délices de la forêt)
Agrocentre Belcan inc.
500 500
Aliments Horizon Nature inc.
500 500
Atelier d’usinage Quenneville inc.
110 110
Bousquet Frères Limitée
850 850
Dermolab Pharma ltée
500 500
Envitech Énergie inc.
600 600
Esthétique sans frontières inc.
624 624
Grillage Major inc.
240 240
Groupe Damafro inc.
1,467 1,467
Innovation Tootelo inc.
44 44
Investissements Brasco inc.
1,000 1,000
LC Média inc.
565
Les armoires de cuisines Denis Couture (2002) inc.
172 172
M.G.B. Électrique inc.
23 23
Martin inc.
57 57
Multi-Portions inc.
19 269
565 250 FONDS DE SOLIDARITÉ FTQ | 2010
93
AT COST
AS AT MAY 31, 2010
(In thousands)
Report dated
03-31-10 Fonds régional de solidarité Montérégie, société en commandite (continued)
1,300 Plombco inc.
Shares Loans and
and Units Advances
$
$
1,300
Ray-Mont Logistiques inc.
Service sérigraphique professionnel S.S.P. inc.
917 Soya Excel inc.
195 Techno P.O.S. inc.
TelcoBridges inc.
375 300 675
2,302 9,947 12,249
300 12,549 Total
$
750 750
350 1,267
195
241 03-31-10 Fonds régional de solidarité Nord-du-Québec, société en commandite
250 Blais & Langlois inc.
241
250
Cogitore Resources inc.
68 68
Donner Metals Ltd
405 405
Équipement de bureau Ungava inc.
400 400
Exploration Azimut inc.
105 105
Exploration Dios inc.
56 56
Exploration NQ inc. 60 60
Fonds Soutien Baie-James, société en commandite
500 500
Forage Eenou inc.
110 110
Gestion du Fonds Soutien Baie-James inc.
1
Les Consultants de l’Arctique inc.
331 331
Les Pétroles M.J. inc.
750 750
Les Ressources d’Arianne inc.
Lucien Senneville (2002) inc.
Mines Virginia inc.
Nord Décoration inc.
Pourvoirie Mirage inc.
389 389
Ressources Beaufield inc.
140 140
Ressources Métanor inc.
100 100
Ressources MSV inc.
400
400
Ressources Sirios inc.
214
Ressources Strateco inc.
10 Société d’Exploration Minière Vior inc.
9
St-Félicien Diesel (1988) inc.
708 708
2,248 4,108 6,356
400 6,756 100 91 214 859 150 150 1
100
859
91
150
10
159
03-31-10 Fonds régional de solidarité Outaouais, société en commandite
226 226
140689 Canada ltée (Taxi Loyal)
6096646 Canada inc. (Pépinière du Golf)
750 750
6227945 Canada inc. (Innovation Engineering Group)
125 125
9052-2756 Québec inc. (ProVance Technologies)
Alary, St-Pierre & Durocher Arpenteurs-géomètres inc.
Cactus Commerce inc.
Les Aliments Chebly inc.
Mr. Refill International inc.
94
250 1,000 250
869 869
219 1,219
172 172
161 161
Report dated
03-31-10 Fonds régional de solidarité Outaouais, société en commandite (continued)
Multicorpora R&D inc.
Shares Loans and
and Units Advances
$
$
926 Total
$
926
PCI Géomatiques Entreprises inc.
1,500 1,500
ProVance Technologies inc.
750 750
Restaurations Sélect inc.
300 300
Service de Pneus Lavoie Outaouais inc.
700 700
SolaCom Technologies inc.
Terrapro Construction inc.
Tomoye Corporation
Tubes & Jujubes Centre d’amusement familial inc.
VanillaSoft corp.
Zeligsoft inc.
196 550 196
1,250 1,250
550
197
197
306 1
1
2,923 7,525 10,448
125 10,573 306
03-31-10 Fonds régional de solidarité Québec, société en commandite
9099-7768 Québec inc. (E.B.M. Laser)
200 184 384
Armeco inc.
158 158
Aventures Norpaq inc.
Chemco inc.
Connexion Technic inc.
Corporation Eatsleepmusic.com
Distribution Sports Loisirs G.P. inc.
DK-SPEC inc.
Filtrum inc.
Fleurigros 1995 inc.
gp3 Groupe conseil inc.
Groupe Qualinet inc.
Les Distributions Marc Boivin (2007) inc.
Les Entreprises P.E.C. inc.
452 452
Les Industries Rouillard inc.
362 362
Les Vêtements Perlimpinpin inc.
211 211
Load Systems International inc.
269 269
Métafab (1996) inc.
400 400
Mode Avalanche inc.
Panavidéo inc.
400 400
Pelliko inc.
410 410
Porta Service inc.
400 400
Réfrigération Noël inc.
83 83
Savard Ortho confort inc.
167 167
Tapitec (Québec) inc.
442 442
Transport C.D.P. inc.
1,771 1,771
Usital Canada inc.
280 240 520
2,390 12,140 14,530
150 150
600 600
234 234
460 750 350 43 157 460
423 423
750
1,972
1,972
359 359
535
885
111 111
1,957
2,000
157
95
AT COST
AS AT MAY 31, 2010
(In thousands)
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
03-31-10 Fonds régional de solidarité Saguenay–Lac-Saint-Jean, société en commandite
2861-0467 Québec inc. (Notre Hôtel)
227 129 356
4145275 Canada inc. (Chlorophylle H Tech)
280 570 850
6482066 Canada inc. (Société P.C.P.)
100 100
9051-2500 Québec inc. (Les Jardins du Saguenay)
67 67
9052-0651 Québec inc. (Logistik 22)
75 46 121
9143-8945 Québec inc. (Maçonnex)
840 Atelier Boily ltée
Centre de Suspension des Routiers inc.
74 74
Cycles Devinci inc.
621 621
Équipements Mauvalin inc.
231 231
Excavation Michel Paradis inc.
174 174
Garage Marcel Simard inc.
500 500
Gestion LJ inc.
127 127
Gro-Mec inc.
119 119
Groupe Giroux Maçonnex inc.
960 960
Industrie Bois Lamontagne inc.
408 408
Industries T.L.T. inc.
350 350
Isumi Précision ltée
Les Fenêtres AGM inc.
Les Lignes du Fjord inc.
Les Pétroles R.L. inc.
Les Placements G.M.R. Maltais inc.
Nolicam Location de camions inc.
Novabrik International inc.
Oxygène Dolbeau inc.
Pétrolex St-Félicien inc.
Précicast ltée
Prowatt inc.
Remac innovateurs industriels inc.
SCP 89 inc.
297 Société de gestion Trois-Trois-Trois inc.
350 4,868 7,461 Funds committed but not disbursed
12,429
840
300 300
58 58
287 287
327 327
533 533
345 246 591
432 277 709
1,405 1,405
500 500
15 15
88 647
150 150
262
262
559 297
350
12,329 100 12-31-09 Lumira Capital I Québec société en commandite
Alexza Pharmaceuticals inc.
Archemix Corp.
Argos Therapeutics inc.
Cardiac Dimensions inc.
Cardiovascular Systems inc.
Ception Therapeutics inc.
KAI Pharmaceuticals inc.
Mako Surgical Corp.
Médical Resonant inc.
NVSS Corp.
Pharmasset inc.
Spinal Kinetics inc.
96
Report dated
Shares Loans and
and Units Advances
$
$
Total
$
12-31-09 Lumira Capital I Québec société en commandite (continued)
TransMolecular inc.
U-Systems, inc.
18,312 Funds committed but not disbursed
134 18,683 237 18,549 03-31-10 SIDEX, société en commandite
Canadian mining companies securities
7,838 513 8,351 09-30-09 Société de gestion d’actifs forestiers Solifor, société en commandite
Solifor Bloc A-RPF, société en commandite
Solifor Bloc B-LP, société en commandite
Solifor Bloc Monet, société en commandite
Solifor Charlevoix-Saguenay, société en commandite
Solifor Lac Métis, société en commandite
Solifor Lotbinière, société en commandite
Solifor Mauricie, société en commandite
Solifor Nicolas Riou, société en commandite
Solifor Perthuis, société en commandite
132,475 132,475 12-31-09 VC, société en commandite
102 102 Biotechnologies Conjuchem inc.
Genizon Biosciences inc.
1
1
Systèmes Médicaux LMS (Canada) ltée
32 32 Theratechnologies inc.
402 402 Vertex Pharmaceuticals Incorporated
4,785 4,785 5,322 5,322 This unaudited index details the investments made by the regional funds, by the specialized funds in which the Fonds de solidarité des travailleurs du Québec (F.T.Q) (the “Fund”) has invested more than 0.2% of its net assets and by the specialized funds
in which the Fund holds an interest of 50% or more and exercises significant influence over the management of these funds.
Amounts invested by business enterprise are disclosed only in the cases provided by the Regulation Respecting Development
Capital Investment Fund Continuous Disclosure.
97
GLOSSARY
Annual compound return
When the annual compound return is applied to an asset, it is assumed that the value of the asset increases by the annual return obtained and that the following year the new rate of return will consider this increased value.
Appreciation (depreciation)
Appreciation (depreciation) is the increase (decrease) of the value of an asset or a portfolio in relation to its reference value.
Assets under management
Refers to the fair value of the assets managed by the Investments and Other Investments sectors and used to generate income for the Fund.
Average net assets
Total of net assets at the end of the interim period and of the financial year, divided by two.
Credit spread
Difference in the yield of a benchmark bond (e.g., a Government of Canada bond) and the bond of another issuer. The greater the risk
associated with this bond, as perceived by the market, the wider the credit spread.
Derivative financial instrument or derivative product
Financial instrument whose price or return is tied to an underlying product. The most common derivative instruments are swaps,
forwards, futures and options. Derivative instruments are used to limit market risk and to preserve asset value, to facilitate changes
in asset allocation, to manage an indexed strategy for part of the portfolio, to facilitate portfolio management, and to improve returns
within established risk limits.
Development capital investment (or investment)
Acquisition of securities or commitment to acquire securities, generally from Québec SMEs, and purchased as part of the Fund’s mission. Most development capital investments are eligible under the 60% rule set out in the Fund’s Incorporation Act.
Direct jobs
Jobs held by workers in the partner companies of the Fonds de solidarité FTQ, the regional and local funds, the Fonds immobilier
de solidarité FTQ or the specialized funds, and their subsidiaries.
Disbursed funds
Authorized, committed amounts related to an investment that were paid to a partner company. Disbursed funds therefore exclude
funds committed but not disbursed as well as guarantees and suretyships.
Fixed-income security
Security that pays a pre-determined fixed income until maturity. The main fixed-income securities are bonds and money market securities.
Forward or futures contract
Contract to buy or sell a financial instrument (e.g., bond, share, or currency) on a pre-determined date and price.
Amounts committed for an investment that were agreed to but not yet disbursed.
Hedge fund
Investment fund with long and short positions on securities, markets, etc. These positions reflect the manager’s opinion on probable
securities price or market trends. A fund of hedge funds is a fund mostly made up of investments in hedge funds.
Hedging strategy
Strategy used to reduce variations in the Fonds de solidarité FTQ’s return resulting from changes in interest rates, exchange rates or stock market prices.
Indirect jobs
Jobs associated with economic spin-offs generated by partner companies located in Québec. The number of indirect jobs is calculated
by taking the number of direct jobs, and applying a factor based on the co-efficient of indirect jobs by productive sector published by the
Institut de la statistique du Québec.
98
Induced jobs
Jobs created, maintained or protected as a result of spending by workers holding direct and indirect jobs. The calculation of consumer
spending takes tax collection and the level of workers’ savings into account. The number of induced jobs is a function of personal disposable income spent, to which a ratio of 813 jobs for each $100 million is applied; this ratio is based on the intersectoral model
developed by the Institut de la statistique du Québec.
Integrated financial assets management
Financial asset management principle with the objective of diversifying the risks borne by the Fonds de solidarité FTQ while allowing it to fully achieve its mission.
International infrastructure fund
Investment fund composed mainly of shares of companies located outside Canada that are involved in developing, maintaining, repairing and managing infrastructures (e.g., airports, highways, bridges, railways, etc.) or that indirectly benefit from these activities.
Limited partnership (or Société en commandite)
Partnership consisting of two types of partners: limited partners and a general partner. Only the general partner is authorized to manage and represent the partnership. As a manager, the general partner’s liability is unlimited with regards to the partnership’s debts
and obligations. Limited partners provide the capital required for the partnership’s operations and are liable for its debts up to the
amount committed and to be paid to the partnership. The limited partnership is a legal structure designed to meet specific needs and to separate investment from the partnership’s management.
Local representative (LR)
The Fund has created a network of LRs within the unions affiliated with the FTQ (and in unions with which the Fund has concluded
agreements to that end) who promote the Fund in their workplace without receiving a commission. These LRs’ main task is to explain
the Fund’s objectives and to promote share purchases by their union members.
Money market security
Security with a pre-determined return that matures in less than one year. Easily marketable, and highly liquid, these securities include
T-bills, bankers’ acceptances and commercial paper.
Option
Contract that gives the holder the right to buy or sell a financial instrument (e.g., bond, share, stock index, currency or future) at a pre-determined price. The seller or writer of the option must buy or sell the security if the option holder exercises his/her right.
Other investments
Balance of assets not invested in our partner companies. This portfolio consists of bonds, money market securities, sector-based shares, funds of hedge funds, a portfolio of high-revenue securities and international infrastructure funds.
Private security
Direct investment in an unlisted company or in a listed company whose stock price exceptionally does not reflect its fair value at the
time of its valuation.
Specialized fund
Investment company in which the Fund invests as a limited partner or a shareholder. The partnership’s general partner or directors
manage the invested funds on behalf of the limited partners or shareholders.
Swap
Agreement used to exchange a security, an income or a currency for another security, income or currency at pre-determined conditions
and for a given period. The parties sign an agreement that respects international standards for this type of transaction.
99
ETHICS AND GOVERNANCE
GOVERNANCE
AND RESPECT OF VALUES
the execution of their duties, of
confidential information obtained
through such execution.
Compliance with the Fonds de solidarité
FTQ’s mission and ethical values and
risk management is supported by a
modern governance structure that is
built on a group of policies, standards,
guidelines and management procedures that are regularly re-evaluated from the
perspective of continuous improvement. This structure is under the responsibility of the Board of Directors, of which 10 of
the 17 members are nominated by the
FTQ’s General Council, as set out in the
Fonds de solidarité FTQ’s Incorporation
Act. General management of the Fund’s
operations is overseen by a Management
Committee comprised of the President
and CEO and five other senior executives.
Alongside this structure are other
committees and boards (including investment boards comprised of a majority of members who are
independent from the FTQ and the Fund)
that form an integrated governance
framework. The Audit and Valuation
Committees are comprised exclusively
of independent members.
Each year, all employees, officers and
directors must complete a statement of
interests held and a statement on the
compliance of their conduct with the
applicable Code.
For a more detailed description of our
governance, particularly in relation to
risk management, see pages 47 to 49.
To be certain that our partner
companies respect our values during
the entire period of our investment, the chief executive officer of each
company must regularly submit a
written declaration to the Fund
representative that the company is in compliance with all the laws, rules
and other obligations concerning, for example, labour standards, compensation, and source deductions.
This declaration also addresses the
company’s compliance with current
environmental laws and regulations.
In addition, the Fund’s Codes of Ethics
and Conduct define rules of conduct to
be followed by employees, officers and
directors to avoid, for instance, conflict
of interest situations. They must, in the
execution of their duties, put the
interests of the Fund ahead of their own
or those of third parties.
The Codes of Ethics and Conduct
prohibit, among others, certain
personal trading deemed conflictual,
including receiving certain gifts and
using any advantage, information or
interest related to the Fund that would
be incompatible with the professional
duties and responsibilities of an
employee. In addition, the Codes forbid the disclosure by directors and
employees, for purposes other than
100
The Codes of Ethics and Conduct were
updated in 2009, and all employees and directors received training on the update. The Code applicable to
employees now includes a whistleblowing
procedure for cases on non-compliance
with the Code involving financial or
accounting information or illegal acts.
Responsible policies
In constant dialogue with its partner
companies, in particular because of its investment advisors and
representatives who sit on the boards of directors of these companies, not
only is the Fund concerned with helping
companies it has invested in grow, but it is also making sure that they meet
their obligations as well.
In addition, the Fund subscribes to a
newsletter that is published periodically
by an organization specialized in
matters related to responsible
investment. This newsletter allows us to monitor various social and environ-
mental issues that public companies
are facing, and it represents a source of useful information for the Fund.
The Fund was also one of the first large
institutional investors in Québec to have
a document containing guidance on
voting rights with regards to public
companies (www.fondsftq.com/
droit-vote-entreprises). This document
describes the guidelines that its
representatives must follow when there is a shareholder vote. It also
expresses the wish that these companies develop policies on major
social issues in relation to their
activities and have their board of
directors implement practices that
comply with these policies in the
following areas:
– environmental repercussions of their activities;
–
the effect of the company’s strategies and decisions on communities and individuals affected by their products and operations;
– the company’s practices in terms of hiring, work conditions and compensation;
– training and continuing education for employees;
– the criteria for selecting and keeping suppliers, including those relating to social responsibility.
The Fund’s Integrated Financial Assets Management Policy is another
important policy. It includes statements
regarding responsible and ethical
investment which prohibit the Fund
from holding securities of companies
that generate more than 10% of their
gross sales from the production of
weapons or that have a history of
irresponsible behaviour toward the
environment, labour standards or
human rights.
Controls in place
We would also like to highlight that a
complete financial statement audit
process is performed twice a year by
two external chartered accountant firms.
In addition, the Fund’s Incorporation Act states that the Autorité des marchés
financiers is responsible for inspecting
the external affairs and activities of
the Fund to verify compliance with
this Act, in addition to other functions
it carries out in regards to the Fund,
which is a reporting issuer as defined in
the Securities Act.
The Fund completed its work over the
financial year of developing a financial
compliance framework program
commonly known as Confor.1 While not
required to apply MI 52-109 issued by
the Canadian Securities Administrators,
the Fund has decided to base its work on
the principles stated in this rule, thereby
demonstrating its willingness to respect
best practices in financial governance.
This framework applies to controls
providing reasonable assurance that the
financial information prepared and
reported is reliable and that the financial
statements are prepared in accordance
with Canadian Generally Accepted
Accounting Principles.
WE SUPPORT
THE GLOBAL COMPACT
a set of core values promoted in the 10 principles of the Global Compact
relating to human rights, labour
standards, the environment, and
anti-corruption.
These 10 principles are inspired by the
Universal Declaration of Human Rights,
the Declaration on Fundamental
Principles and Rights at Work, the Rio
Declaration on Environment and
Development, and the United Nations
Convention Against Corruption.
Joining the international movement
toward responsible finance, the Fonds
de solidarité FTQ began, in 2009,
adhering to the United Nations Global Compact.
Through this commitment, the Fund
applies, within its sphere of influence, THE 10 PRINCIPLES OF THE GLOBAL COMPACT
HUMAN RIGHTS
Principle 1: Businesses should support and
respect the protection of internationally
proclaimed human rights.
Principle 2: Businesses should make sure
that they are not complicit in human rights
abuses.
LABOUR STANDARDS
Principle 3: Businesses should uphold
the freedom of association and the effective recognition of the right to collective
bargaining.
Principle 4: Businesses should eliminate all
forms of forced and compulsory labour.
Principle 5: Businesses should abolish
child labour.
Principle 6: Businesses should eliminate
discrimination in respect of employment
and occupation.
ANTI-CORRUPTION
Principle 10: Businesses should work
against corruption in all its forms, including
extortion and bribery.
ENVIRONMENT
Principle 7: Businesses should support a
precautionary approach to environmental
challenges.
Principle 8: Businesses should undertake
initiatives to promote greater environmental
responsibility.
Principle 9: Businesses should encourage
the development and diffusion of environmentally friendly technologies. 1. For more details, consult the Management Discussion and Analysis on pages 49 and 50.
101
THE BOARD OF DIRECTORS
A S AT M AY 3 1 , 2 0 1 0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1. MICHEL ARSENAULT A, D, G
President, Fédération des travailleurs
et travailleuses du Québec (FTQ), and
Chairman of the Board of Directors,
2. LOUIS BOLDUC D, E, H
Executive Assistant to the National
President, United Food and Commercial Workers International
Union (UFCW), and Vice-President of the FTQ
3. YVON BOLDUC A, E
President and Chief Executive Officer,
4. DANIEL BOYER H
President, Québec Service Employees
Union (QSEU), Local 298, and Vice-President of the FTQ
5. ALAIN DEGRANDPRÉ
President of Joint Council 91, Teamsters
Canada, and Vice-President of the FTQ
6. JEAN-PIERRE FORTIN C
Québec Director, Canadian Auto Workers (CAW), and Vice-President of the FTQ
7. NADINE GIRAULT*
Corporate Director
8. DENISE MARTIN A, B, D, G
Corporate Director and Vice-Chair
of the Board of Directors, Fonds de
solidarité FTQ
102
9. MICHEL OUIMET Executive Vice-President – Québec,
Communications, Energy and Paperworkers Union of Canada (CEP),
and Vice-President of the FTQ
10. RÉJEAN PARENT
President, Centrale des syndicats du
Québec (CSQ)
11. DANIEL ROY F
Québec Director, United Steelworkers
(FTQ), and Vice-President of the FTQ
12. RENÉ ROY A, C, G, H
General Secretary, Fédération des travailleurs et travailleuses du
Québec (FTQ), and Secretary of the Board of Directors of the Fonds de solidarité FTQ
13. LOUISE ST-CYR A, B, G, I
Honorary Professor, HEC Montréal
14. JÉRÔME TURCQ D
Regional Executive Vice-President,
Québec Region, Public Service Alliance of Canada (PSAC), and Vice-President of the FTQ
15. PIERRE-MAURICE VACHON A, B, D, G
Corporate Director
A Member of the Executive Committee
B Member of the Audit Committee
C Member of the Special Board – New Economy
D Member of the Special Board – Turnaround
and Majority Interests
E Member of the Financial Assets Management Committee
F Member of the Special Board – Mining Portfolio
G Member of the Special Board – Traditional Sector
H Member of the Fonds immobilier de solidarité
FTQ I, s.e.c. and Fonds immobilier de solidarité
FTQ II, s.e.c. Advisory Committee, and the Fonds
immobilier de solidarité FTQ inc. Board of Directors
I Member of the Valuation Committee
* The Fonds de solidarité FTQ is pleased to welcome
Ms. Nadine Girault as a member of its Board of
Directors. The Fund is proud of the increase in the
number of women directors, who now account for 20%
of its directors.
THE MANAGEMENT COMMITTEE
A S AT M AY 3 1 , 2 0 1 0
( F RO M L E F T TO R I G H T )
YVON BOLDUC A, E
President and CEO MICHEL PONTBRIAND E
Executive Vice-President, Finance
DENIS LECLERC
Executive Vice-President, Shareholder Services, President of the Fondation
de la formation économique DANNY LE BRACEUR
Vice-President, Human Resources
GAÉTAN MORIN E
Executive Vice-President, Investments
MARIO TREMBLAY
Vice-President, Public and Corporate Affairs, and Corporate Secretary
A Member of the Executive Committee
E Member of the Financial Assets
Management Committee
THE GOVERNING BODIES OF THE FONDS DE SOLIDARITÉ FTQ
THE UNION
Note: In addition to the Board of Directors, the Executive Committee and the Audit Committee,
the Fund has the following governing bodies:
A S AT M AY 3 1 , 2 0 1 0
FONDS IMMOBILIER DE SOLIDARITÉ FTQ I, S.E.C.
AND FONDS IMMOBILIER DE SOLIDARITÉ II, S.E.C.
ADVISORY COMMITTEE, AND FONDS IMMOBILIER
DE SOLIDARITÉ FTQ INC. BOARD OF DIRECTORS 1
EXECUTIVE COMMITTEE
René Roy, Chair
Louis Bolduc
Daniel Boyer
Michel M. Lessard2
André Monette2
Claude Normandeau2
Yvon Tessier2
SPECIAL BOARD – TRADITIONAL SECTOR
SPECIAL BOARD – TURNAROUND
AND MAJORITY INTERESTS1
Michel Arsenault, Chair
Louis Bolduc
Michel M. Lessard2
Denise Martin2
Jean Perron2
Jérôme Turcq
Pierre-Maurice Vachon2
VALUATION COMMITTEE
1
(REVIEWS THE PRIVATE INVESTMENT
VALUATION PROCESS)
Michel Arsenault, Chair
Denise Martin2
René Roy
Louise St-Cyr2
Pierre-Maurice Vachon2
Louise St-Cyr, Chair2
Denis Labrèche2
Pierre Laflamme2
Michel Nadeau2
SPECIAL BOARD – MINING PORTFOLIO1
(ENSURES COMPLIANCE WITH THE INTEGRATED FINANCIAL
ASSETS MANAGEMENT POLICY)
Daniel Roy, Chair
Pierre Boudreault 2
Michel Gauthier2
SPECIAL BOARD – NEW ECONOMY 1
René Roy, Chair
J.V. Raymond Cyr2
Jean-Pierre Fortin
Sylvie Lalande2
Jean Martin
André Monette2
Jacques Simard2
Guy Trépanier, President
Marie-Claude Rouleau, Executive Vice-Chair
Robert Charpentier, Second Vice-Chair
David Boucher, Treasurer
Josée Lachapelle, Secretary
Julie Proulx, Advisor
LABOUR AND SOCIAL DELEGATES
AND WORKPLACE HEALTH AND
SECURITY OFFICIALS
Louise Bergeron, Conrad Bernadel, Nathalie Bilodeau, Ina Corbin, Joanne Daviault, Gilles de Montigny, Michel Desjardins, Linda Di Quinzio, Johanne Dupont, Jacques Grégoire,
Robert Montpetit, Jean-Claude Nadon,
Robert Paradis, Martin Rivest
Yvon Bolduc, Chair Louis Bolduc
Pierre Genest 2
Gaétan Morin Michel Pontbriand Michel Thérien2
Nycole Turmel2
1.All investments must be authorized by a governing body, depending on the appropriate economic sector. When an investment reaches a minimum amount of $5 million,
it must also be submitted to the Fund’s Board of Directors.
2.Indicates directors who are independent from the Fund and the FTQ.
103
MEMBERS OF OUR COMMITTEES AND BOARDS WHO ARE INDEPENDENT FROM THE FUND AND THE FTQ
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
1. PIERRE BOUDREAULT
Director and Manager of Mining
Companies
2. J.V. RAYMOND CYR
Chairman of the Board, Polyvalor Inc., and Corporate Director
3. MICHEL GAUTHIER
Consultant and Professor at UQAM
4. PIERRE GENEST
Chairman of the Board, SSQ, Mutual
Management Corporation and SSQ,
Life Insurance Company Inc.
5. NADINE GIRAULT
Corporate Director
6. DENIS LABRÈCHE, CA, CBV
Partner, Valuation & Business Modelling Services, Ernst & Young
7. PIERRE LAFLAMME
Consultant and Corporate Director
8. SYLVIE LALANDE
Corporate Director
104
9. MICHEL M. LESSARD
President, Sogexfi Inc., and Corporate Director
10. DENISE MARTIN
Corporate Director and Vice-Chair of the Board of Directors, Fonds de solidarité FTQ
11. ANDRÉ MONETTE
Advisor in Management, Strategic
Planning, Mergers and Acquisitions,
and Corporate Finance
12. MICHEL NADEAU
Executive Director, Institute for Governance of Private and Public Organizations
13. CLAUDE NORMANDEAU
Real Estate Consultant and Corporate Director
14. JEAN PERRON
President and Chief Executive Officer,
Association des cadres des collèges
du Québec
15. JACQUES SIMARD
Full Professor, Université Laval, and Director, Cancer Genomics Laboratory at the CHUQ/CHUL Research Centre
16. LOUISE ST-CYR
Honorary Professor, HEC Montréal
17. YVON TESSIER
Corporate Director
18. MICHEL THÉRIEN
Strategic Advisor and Corporate Director
19. NYCOLE TURMEL
Corporate Director
20. PIERRE-MAURICE VACHON
Corporate Director
CONTEXT AND PARAMETERS
REPORTING PERIOD AND
REPORT BOUNDARY
This annual report incorporates, for the
first time, the sustainability report of the
Fonds de solidarité FTQ, which covers the
period from June 1, 2009 to May 31, 2010.
It reflects all environmental, social and
economic indicators proposed by the GRI,
including the core indicators as well as
the supplementary indicators for financial
institutions, subject to a materiality analysis. All data were collected by a committee responsible for identifying
relevant data, and were validated by professionals responsible for the
sustainability report. Afterwards, a strict
review process involving members of
senior management was performed to validate all the information contained in this report. Our report therefore
complies with application level A, which is the level requiring the
discussion of the highest number of GRI indicators.
The report covers a group of direct
activities of the Fonds de solidarité FTQ.
As each organization is responsible for
reporting its activities, the Fund does not
have to include its 2,052 partner
companies within the boundary of this
report. However, in keeping with its
mission and values, the Fund encourages,
as it always has, its partner companies to adopt responsible behaviours in all respects.
Except for certain specific indicators,
such as the number of jobs created,
maintained or protected, the 16 fonds
régionaux de solidarité FTQ and the
86 fonds locaux de solidarité FTQ were not
included in this first sustainability report.
REPORTING PROCESS
This report has been prepared in
accordance with the principles
proposed by the GRI: materiality,
stakeholders inclusiveness, sustain-
ability context and completeness. MATERIALITY – We examined all
indicators to determine their materiality
to the specific situation of the Fonds de
solidarité FTQ. We therefore asked
ourselves the following questions for
each: does the issue at stake contribute
to the implementation of the Fund’s
strategy? Does it represent a risk or a valuable opportunity? Is it
considered significant by our peers and stakeholders? Is it governed by a
social standard that has strategic
importance to the Fund? The GRI Index,
presented on page 107, shows all the
indicators used.
STAKEHOLDERS – The stakeholders
are the individuals and groups who have
an impact on the Fonds de solidarité
FTQ, who are exposed to the impact of
the Fund’s activities or who are
interested in the Fund. To gain a good
understanding of their concerns and be
able to respond to them, the Fund
implemented various communication
processes. The questions and interests
of these stakeholders are essentially
related to our savings and investment
mission, and we try to answer them as
well as possible.
Here are the main stakeholders of the Fund
– Our top stakeholders are the
founders of the Fonds de solidarité
FTQ, the Fédération des travailleurs
et travailleuses du Québec (FTQ)
and its affiliated unions. The FTQ is
the largest labour federation in
Québec and represents more than a
half-million members. As part of its
savings mission, the Fund also has
institutional relationships with other
Québec unions, namely the Centrale
des syndicats du Québec (CSQ),
the Fédération interprofessionnelle
de la santé du Québec (FIQ) and
the Confédération nationale des
cadres du Québec (CNCQ).
– Its shareholders, who entrust it
with their retirement savings
because they wish to encourage job
creation and Québec’s economic
and social development, while
expecting a reasonable return on
their investment. The Fund
communicates with them through its
Shareholder Services, annual
general meeting of shareholders,
surveys and other means, such as
discussion groups.
– Its employees, who are responsible
for the sound operation of the Fund
and expect from it work environment and conditions that live up to
its mission and values. The Fund
communicates with them, among
other ways, through the Human
Resources department, which
manages all direct contacts related
to human resource management,
and also through the Public and
Corporate Affairs department,
which is responsible for internal
communications with employees
and implements solutions such as
meetings and various other
mechanisms specific to internal
communication management,
including an internal newspaper and an Intranet site. Also added are the 100 or so employees of the
members of the Fund network,
namely the regional funds, the local
funds (the responsible entity) and the
Fonds immobilier de solidarité FTQ.
– Its local representatives (LRs),
who are in daily contact with the
shareholders in the workplace and have the capacity to promote
the sale of the shares of the Fund and
its mission. The LRs act out of
conviction, since they believe in the
job creation and economic and
social development mission
resulting from the Fund’s investments. The Fund communicates
with them, among other ways,
through a department created
especially for them that provides
them with training, answers their day-to-day questions, takes
note of their concerns and takes
them into consideration.
105
C O N T E X T A N D PA R A M E T E R S ( C O N T I N U E D )
– All the business partners, namely
the entrepreneurs who manage the
partner companies, as well as the
directors, the suppliers, the
managers and the thousands of
employees of these partner
companies. Not only do they expect
from the Fonds de solidarité FTQ
supplemental development capital,
they expect value-added services
that focus on growth. The Fund
communicates with them through
various liaison mechanisms, in
particular by sitting on the boards of
directors of these companies and,
with respect to their employees, by providing economic training.
– Québec society, particularly the
Québec Ministry of Finance, the Québec Ministry of Economic
Development, Innovation and
Export Trade, and the Autorité des
marchés financiers, and, in addition
to these, the Canada Ministry of
Finance and Industry Canada. They
all expect the Fund to participate in the objective of growing the
Québec economy. The Fund
communicates with them formally
and as necessary, to keep them
informed of its activities and discuss topics mainly related to economic development.
Finally, as a privileged player in Québec
society, and especially as an investor in
companies and promoter of retirement
savings, the Fonds de solidarité FTQ
participates in many forums that bring
together members of the civil society
(in particular the business community)
all across Québec. The main goal of this
participation is to support development
initiatives that are consistent with the
mission of the Fund.
106
SUSTAINABILITY CONTEXT AND
COMPLETENESS – This report is
presented in the social and economic
context specific to Québec. Its
boundary and the treatment of the main themes and indicators present
fairly, in the opinion of the Fund’s
management, the economic, social and environmental impact of the Fund on Québec society.
MARKETING
COMMUNICATIONS
All our marketing communications are
managed to thoroughly inform the
public about its rights and obligations
with respect to the products and
services offered by the Fund. The Fonds
de solidarité FTQ ensures that it
complies with the rules and standards
in effect in that respect and makes
certain verifications with the Autorité
des marché financiers, as needed.
The Fund is particularly proud of the
compliance of its LRs and employees
with the rules in effect and the respect of its shareholders’ rights. No complaints were made against the
Fund and no fines were imposed on it with respect to the distribution of its
shares to the public.
QUESTIONS?
This report helps measure and
summarize our sustainability performance. It will allow us to set
improvement targets from a social,
environmental and economic point of
view. It is also a privileged tool to
engage our stakeholders. Conse-
quently, we welcome your questions
and comments. Please do not hesitate
to communicate with us. Here is our
contact information:
Public and Corporate Affairs Department
545 Crémazie Blvd. East
Montréal, Québec H2M 2W4
Telephone: 514 383-8383
www.fondsftq.com
THE GRI INDEX
In addition to providing the information needed to understand the Fund’s profile and strategies, we analyzed 66 indicators of which we selected around 50 that are key or material to the activities of the Funds. They
include some supplementary indicators for financial institutions. This index helps locate where in the annual
and sustainability report the selected indicators are discussed. To better understand these indicators, please visit the GRI Website at www.globalreporting.org. We have also linked certain sections of the report with the 10 principles of the United Nations Global Compact.
ASPECT
GRI INDICATOR
PAGE
COMMENTS
GLOBAL COMPACT
STRATEGY AND PROFILE
STRATEGY AND ANALYSIS
1.1, 1.2
2, 4-5, 33-35
ORGANIZATIONAL PROFILE
2.1-2.10
1, 9, 11-13, 15-16, 17, 33, 39-41, 47-48, 56,
HIGHLIGHTS
REPORT PARAMETERS
3.1-3.9, 3.12
105-107
GOVERNANCE
4.1-4.10
6-7, 26, 47-49, 100-104
4.10: A
PRINCIPLE 10
COMMITMENTS TO EXTERNAL INITIATIVES
4.11-4.13
4-5, 9-10, 101, 105-109
PRINCIPLES 1-10
STAKEHOLDER ENGAGEMENT
4.14-4.17
5, 11, 14, 105-106, 108-109
ECONOMIC
ECONOMIC PERFORMANCE
EC1-EC4
3, 15-16, 30-32, 52-55, 72-73
PRINCIPLE 7
MARKET PRESENCE
EC6, EC7
16, 26
PRINCIPLE 6
INDIRECT ECONOMIC IMPACTS
EC8, EC9
9-10, 15-16
ENVIRONMENTAL
MATERIALS EN1, EN2
22-23
PRINCIPLES 8-9
ENERGY
EN3, EN4
23
PRINCIPLE 8
WATER
EN8
24
PRINCIPLE 8
BIODIVERSITY
EN11, EN12
21
PRINCIPLES 7-8
EMISSIONS, EFFLUENTS, AND WASTE
EN16, EN17, EN19-EN23
23-24
PRINCIPLE 8
PRODUCTS AND SERVICES
EN26, EN27
B
COMPLIANCE
EN28
24
PRINCIPLES 7-8
SOCIAL
LABOUR PRACTICES, SOCIAL RELATIONS, AND DECENT WORK EMPLOYMENT
LA1, LA2
26
PRINCIPLE 6
LABOUR/MANAGEMENT RELATIONS
LA4, LA5
25-26
PRINCIPLES 1-6
OCCUPATIONAL HEALTH AND SAFETY
LA7, LA8
25-26
C
PRINCIPLES 1-2
TRAINING AND EDUCATION
LA10
26
DIVERSITY AND EQUAL OPPORTUNITY
LA13, LA14
25-26, 102
PRINCIPLES 1, 6
HUMAN RIGHTS
INVESTMENT AND PROCUREMENT PRACTICES
HR1, HR2
6-7
D
PRINCIPLES 1-10
NON-DISCRIMINATION
HR4
G
PRINCIPLES 1-2, 6
FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
HR5
G
PRINCIPLES 1-3
CHILD LABOUR
HR6
E
PRINCIPLES 1-2, 5
FORCED AND COMPULSORY LABOUR
HR7
E
PRINCIPLES 1-2, 4
SOCIETY
COMMUNITY
SO1
6-7, 9-10
CORRUPTION
SO2-SO4
6-7, 100-101
PRINCIPLE 10
PUBLIC POLICY
SO5
106
PRINCIPLES 1-10
COMPLIANCE
SO8
G
PRODUCT RESPONSIBILITY
CUSTOMER HEALTH AND SAFETY
PR1
F
PRINCIPLE 1
PRODUCT AND SERVICE LABELING
PR3
A
PRINCIPLE 8
MARKETING COMMUNICATIONS
PR6
106
COMPLIANCE
PR9
A
SECTOR SUPPLEMENT (FINANCIAL SERVICES)
PRODUCT AND SERVICE IMPACT
SPECIFIC DISCLOSURE ON MANAGEMENT APPROACH FS1-FS5
6-7, 22-26, 100-101
PRODUCT AND SERVICE IMPACT INDICATORS
PRODUCT PORTFOLIO
FS6-FS8
6-10, 22-24, HIGHLIGHTS
AUDIT
FS9
6-7, 47, 100-101
PRINCIPLES 1, 3-8, 10
ACTIVE OWNERSHIP
FS10-FS12
6-7, 100-101
PRINCIPLES 1-10
SOCIETY
COMMUNITY
FS13, FS14
11-14
PRODUCT PERFORMANCE
PRODUCT AND SERVICE LABELING
FS15, FS16
7-8, 26
FS15: A
The indicators B to F, although material, do not apply to the nature of the activites of the Fonds de solidarité FTQ.
A.See the prospectus, the annual information form and the notice of meeting to the annual general meeting of shareholders.
B.EN26, EN27: The Fund does not manufacture or sell products and does not offer services that have significant direct environmental impacts.
C.LA8: A very organized healthcare system exists in Québec; in addition, the Fund implemented a structured awareness plan for its employees during the H1N1 flu outbreak in 2009.
D.HR2: Substantially all of the Fund’s suppliers are located in Canada, where respect of human rights is a regulated issue.
E.HR6, HR7: Child labour and forced and compulsory labour are regulated issues in Canada.
F. PR1: The Fund’s services have no negative impact on the health or safety of the users of these services.
G.No case identified.
107
EDITORS
COLLABORATORS
Suzanne Hamel
André McDonald
Mario Tremblay
Daniel Bourcier
Robert Charpentier
Roch Dutil
François Girard
Alain Houle
Hubert Lavigueur
Sylvain Masse
Louise Sauvé
WRITER
Suzanne Hamel
MANAGEMENT
DISCUSSION AND
ANALYSIS
PHOTOGRAPHER
DESIGNER
Yves Lacombe
Gauthier Designers
Editor
Sylvain Paré
Writer
Ricardo Espera
TRANSLATOR
Jean Marois
WE WOULD LIKE TO THANK EVERYONE WHO CONTRIBUTED TO THE PRODUCTION OF THIS DOCUMENT.
Printed by the unionized workers of Transcontinental Litho Acme on Rolland Enviro 100 paper made in Québec using biogas energy, EcoLogo and FSC Recycled certified and containing 100% recycled post-consumer fibre.
100 %
108
OUR NETWORK
OF COMMITMENTS
The Fonds de solidarité FTQ developed and maintained, throughout the years, relationships with around fifty organizations
and associations that are very keen to represent, in a responsible manner, the social and economic interests of individuals,
communities and SMEs. Here are some of them:
MANUFACTURIERS ET EXPORTATEURS
DU QUÉBEC (MEQ)
INSTITUTE FOR GOVERNANCE OF PRIVATE
AND PUBLIC ORGANIZATIONS (IGPPO)
MEQ is the largest business and
industrial association in Québec. It
pursues various objectives: defending
the interests of manufacturers and
exporters; establishing a more competitive business environment; offering
crucial and timely business information; connecting its members to
business opportunities; consolidating
leadership through best practices;
and using networks to promote the
success of businesses. The Fund
supports the annual activities of this
important network.
A joint initiative of HEC Montréal and
Concordia University (The John Molson
School of Business), the IGPPO is a
centre for excellence both in Canada
and worldwide for governance research
and training and a centre for the
study of best practices at the senior
management level. The Fund chose this
organization to develop and provide
a training program tailored to SME
boards of directors.
INSTITUTE OF CORPORATE DIRECTORS (ICD)
With a view to enhancing the quality
of directorships in Canada, the ICD
acts as a valuable resource for
corporate directors, providing
members with the latest information
on governance trends. The Fund
supports the activities of the ICD
because this organization, through
its various training programs,
helps corporate directors improve
their skills and therefore contribute
to creating value for the companies of
which they are directors.
QUESTION RETRAITE
Question Retraite is the first publicprivate not-for-profit consortium
dedicated to the promotion of
financial security at retirement.
Comprised of several partners
from the union, employer, financial,
academic and government sectors,
Question Retraite aims at educating
the largest number of Quebeckers
possible about the importance of
being financially well-prepared for
retirement. Through the information,
tools and awareness activities,
it offers – such as the Mois de la
planification de la retraite, held each
October and in which the Fonds de
solidarité FTQ is actively involved –
Question Retraite hopes to change
the behaviour of Quebeckers towards
retirement so they can maintain,
when the time comes, an acceptable
standard of living.
RÉSEAU CAPITAL
Réseau Capital is the only private
equity association that brings together
all stakeholders in the investment
chain. The mission of Réseau Capital
is to contribute to the development
and efficient operation of the private
equity industry, which plays a major
role in the development and financing
of businesses in Québec. Founded
in 1989, Réseau Capital works to
promote the private equity industry
in Québec through activities in five
areas: training, information, networking,
promotion and representation.
PLANETAIR
Helping individuals, corporations
and institutions reduce their climate
footprint is the objective of Planetair,
a not-for-profit service offered by the
Unisféra International Center. The goals
of Planetair are to raise the awareness
of social players about how their
day-to-day activities impact the climate
and to foster the behavioural changes
required to reduce their greenhouse
gas (GHG) emissions. Concerned with
its environmental impact, the Fonds
de solidarité FTQ called on Planetair,
for a fourth consecutive year, to ensure
that its annual general meeting of
shareholders is, once again, “carbonneutral”. Planetair will calculate the
quantities of GHG emissions related
to the participants’ transportation,
lodging and meals. Once this number is
determined, the Fund will pay a certain
amount for each tonne of GHG, and
Planetair will invest this amount in
renewable energy or energy efficiency
programs that directly reduce GHG
emissions at their source.
HEC MONTRÉAL –
CHAIR OF SME DEVELOPMENT
AND SUCCESSION
The Chair’s directive is to thoroughly
investigate the sustainability of
SMEs and, especially the transfer of
businesses to successors. This research
is based on three principal lines of
inquiry: the development of SMEs
(sound management, growth and
finance); women entrepreneurs; and
the replacement of the entrepreneur/
manager – vital for the continuation
of the SME. The Fonds de solidarité FTQ
is proud to be a partner of the Chair
and to have been involved in developing
and putting online the From Success
To Succession Website, that is intended
for individuals considering the
purchase or the sale of a business
(www.fromsuccesstosuccession.com).
MOUVEMENT D’ÉDUCATION ET DE DÉFENSE
DES ACTIONNAIRES (MÉDAC)
The MÉDAC is the most active
organization in Canada with respect
to the protection and defence of minority
shareholders’ rights through the
submission of shareholder proposals
and position papers, research
and financial education. It thus helps
organizations improve their sound
governance. The Fonds de solidarité FTQ
is proud to support the annual
activities of the MÉDAC. In addition,
Mr. Fernand Daoust, Special Advisor
to the President of the Fund and
Honorary President of the FTQ, is
Vice-Chair of the Board of the MÉDAC.
109
THE LIFE CYCLE OF THE PURCHASE OF A SHARE
OF THE FONDS DE SOLIDARITÉ FTQ
A S AT M AY 3 1 , 2 0 1 0
SHAREHOLDERSOWNERS
577,511
NET ASSETS
$7,294 M
JOBS CREATED,
MAINTAINED OR
PROTECTED
150,133
PARTNER
COMPANIES
2,052
FONDS DE
SOLIDARITÉ FTQ
THE FUND AND ITS NETWORK:
LOCAL FUNDS
REGIONAL FUNDS
REAL ESTATE FUND
INVESTMENTS
IN COMPANIES
$4,784 M
SPECIALIZED FUNDS
SERVICES TO SHAREHOLDERS AND
LR NETWORK ECONOMIC TRAINING
www.fondsftq.com
Suite 200
545 Crémazie Blvd. East
Montréal, Québec H2M 2W4
Telephone: 514 383-8383
Fax: 514 383-2502
Toll free: 1 800 361-5017
Shareholder Services
Montréal: 514 383-3663
Toll free: 1 800 567-3663
Legal deposit – 3rd quarter 2010
Bibliothèque nationale du Québec
National Library of Canada
Ce document est également disponible en français.
B-08-00-0222

2010 ANNUAL AND SUSTAINABILITY REPORT

Transcription

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