Société Générale de financement du Québec records a net loss of $261 million in 2008



    SGF's results were affected directly by the financial crisis, especially
    the difficulties in the petrochemical and forest products sectors

    MONTREAL, April 9 /CNW Telbec/ - Société générale de financement du
Québec (SGF) was not immune to the difficult economic context in 2008 and
recorded a net loss of $261 million. This loss represents a rate of return of
-14.3%. SGF also invested $176 million in economic development projects during
the year.
    "The speed and scope of this crisis that hit us in 2008 was
unprecedented. The manufacturing sector, which was already struggling in 2007,
was severely shaken. This sharp decline had a direct impact on our results,"
stated Pierre Shedleur, President and General Manager of SGF. "Even so, we
succeeded in maintaining the most stringent investment and management criteria
to ensure that SGF and its partners can weather the crisis and prepare for the
recovery."

    Results linked to a difficult context

    As part of its mission to take part in economic development projects in
Québec, SGF is exposed to substantial risks, which it must contend with. Its
portfolio consists of equity investments in companies and involves a high
level of risk. Most of SGF's portfolio companies are exposed to global
economic conditions and are subject to such factors as fluctuating exchange
rates and changes in the prices of commodities and substitute products. An
unfavourable variation in any of these factors can have a major impact on the
value of the portfolio companies. Moreover, many of SGF's partners depend
partially on exports and were affected directly by the decrease in demand,
especially from the United States.
    More than 80% of SGF's portfolio consists of manufacturers that were hit
hard by the crisis. In 2007, these companies were already experiencing
significant difficulty as a result of the surging price of oil and the slowing
of the U.S. economy. In 2008, SGF had to contend once again with the
difficulties experienced by companies in these sectors.
    In this respect, SGF recorded a loss of $238 million solely as a result
of operating losses, closure costs and the writedown of its investments in the
petrochemical companies Pétromont and PTT Poly Canada and in the forest
products company Temlam. Without these losses, SGF's rate of return would have
been -1.2%.
    Moreover, in terms of its cash management, SGF had to increase to 41% the
writedown of the $138-million held in non-bank asset-backed commercial paper
(ABCP), which represents an additional loss of $37 million in 2008.
    SGF would like to point out that its operating expenses did not increase
in 2008, holding steady at $34 million.
    Moreover, some of SGF's partners recorded positive results despite the
crisis. SGF's investments overall improved their profitability, with
investment results of $36 million in 2008, versus $29 million in 2007.

    SGF's main investments in 2008

    During the year, SGF invested $176 million in growth and support
projects, in accordance with the three strategic orientations of its
development plan.
    More specifically, SGF invested $60 million in TPG Capital's acquisition
of Axcan Pharma Inc., thereby participating in the $1.3-billion transaction to
take the company private.
    Axcan is a leading multinational pharmaceutical company focused on
gastroenterology. The company develops and markets a broad line of
prescription products to treat a range of gastrointestinal diseases and
disorders, such as inflammatory bowel disease, irritable bowel syndrome,
cholestatic liver diseases and complications related to pancreatic
insufficiency. Axcan's products are marketed by its own specialized sales
forces in North America and Europe and through commercial collaborations in
many markets around the world.
    Axcan, whose head office is in Mont-Saint-Hilaire, Québec, employs more
than 450 people, including 150 in Québec. It also has offices in the United
States and Europe.
    SGF also invested in Médiamed Technologies on Montréal's South Shore. SGF
purchased 30% of the information technology and communications company, also
located in Mont-St-Hilaire. MédiaMed designs and develops innovative software
solutions for the management of clinical information by hospitals and health
care and social services centres. In addition to superior technological
solutions, MédiaMed offers consulting services adapted to the realities of
Québec's health care system.
    Also, SGF reinvested $4 million in the Ungava project. In partnership
with Stornoway Diamond Coporation, this investment aims at the development of
a diamond deposit located north of the Otish Mountains.

    Government confidence

    In January 2009, the Québec government announced that it would make a
special contribution of $1 billion over two years to SGF's capital to help
companies with a positive development outlook withstand the financial crisis.
With this special mandate, SGF was authorized to go beyond its traditional
role as an equity investor by offering complementary solutions, such as loans,
debentures or preferred share investments.
    Moreover, when the government brought down its budget in March 2009, it
announced the creation of a $500-million business recovery emergency fund.
This fund also involves SGF. It will be managed jointly by SGF and the
Solidarity Fund QFL and will support medium-sized and large businesses
affected by the economic conditions and short-term liquidity problems.
    This announcement is a strong vote of confidence on the part of SGF's
shareholder in recognition of the work done by SGF's employees in recent
years.
    As a result of this renewed confidence, SGF is now in an excellent
position to help its partners weather the crisis and prepare for the recovery.

    Société générale de financement du Québec (www.sgfqc.com), an industrial
and financial holding company, has a mission to carry out economic development
projects, with emphasis on the industrial sector, in co-operation with
partners and on standard profitability conditions, in accordance with the
economic development policy of the Québec government.

    
    SUMMARY OF CONSOLIDATED RESULTS
    for the year ended December 31

    (in millions of $)                 2008    2007    2006    2005    2004
    -------------------------------------------------------------------------

    CONSOLIDATED RESULTS:
    Income
      Investment results                36       29      62      39     (66)
      Gain on divestitures and
       miscellaneous                    73      167     102     135     159
    -------------------------------------------------------------------------
                                       109      196     164     174      93
    -------------------------------------------------------------------------
    Expenses
      Operating expenses                34       34      33      29      28
      Investment losses                336      105      56      75     117
    -------------------------------------------------------------------------
        Net earnings (loss)           (261)      57      75      70     (52)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Shareholder's equity (*)
       (in millions of $)            1 691    1 952   1 900   1 824   1 755
      Annual rate of return (%)      (14,3)     3,0     4,1     3,9    (2,9)
      Operating expenses as a
       percentage of share-
       holder's equity (*) (%)         1,9      1,8     1,8     1,6     1,6
    -------------------------------------------------------------------------
        Investments
         (in millions of $)            176      233     233      78     181
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Shareholder's equity excludes the accumulated other comprehensive
        income
    

    Source:
    Marie-Claude Lemieux
    Senior Adviser
    Communications and Media Relations
    Société générale de financement du Québec
    (514) 876-9368
    mclemieux@sgfqc.com
    -%SU: TAX
    -%RE: 40




For further information:

For further information: Marie-Claude Lemieux, Senior Adviser,
Communications and Media Relations, Société générale de financement du Québec,
(514) 876-9368, mclemieux@sgfqc.com

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SOCIETE GENERALE DE FINANCEMENT DU QUEBEC

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