FONDS de solidarité FTQ

rapport annuel et
de développement durable 2012

English
Table des matières
français

Our economic impact

A favourable comparison

In February 2012, the Montréal-based Institut de recherche en économie contemporaine (IRÉC) published the results of a study showing, among other things, the significance of the economic spinoffs of the tax credits granted to labour-sponsored fund shareholders by both levels of government.

The data from 2005 to 2010 compiled by Gilles L. Bourque, lead researcher on the study, indicate that, for a cost of $636 million for each level of government, the two Québec labour-sponsored funds (Fondaction and the Fonds de solidarité FTQ) have, in accordance with their mission, directly invested $4.24 billion in Québec companies. The study also highlights that, in addition to their positive impact on the development of Québec companies, the tax credits granted to labour-sponsored fund shareholders are beneficial as they promote better access to retirement savings as well as job creation, maintenance or protection.

Pioneers of development capital

Together, the two Québec labour-sponsored funds, which are amongst the pioneers of development capital, have actively participated in maintaining, protecting or creating hundreds of thousands of jobs and helped close to 800,000 Quebeckers accumulate supplemental retirement savings.

The study also confirms (like the 2010 SECOR study) that, through the tax revenues they collect, the governments recover the cost of the credits in less than three years on average. In short, the IRÉC confirms, once again, that the tax credits granted to labour-sponsored fund shareholders are not an expenditure but an investment that is profitable for governments as well as for fund shareholders and companies.

www.irec.net

As for the Fonds de solidarité FTQ, it is important to recall that no other Québec-based retirement savings vehicle collects such substantial amounts dedicated to financing private companies, which drive our economy. By investing almost half of its net assets in this critical form of financing, the Fonds clearly stands out from the other players in the financial sector.

No grants

The shareholders of the Fonds de solidarité FTQ receive tax credits of 30% (15% from the Government of Québec and 15% from the federal government) on a maximum annual contribution of $5,000. However, the Fonds itself does not receive any government grants.

Promoting local procurement

In accordance with its goods and services procurement policy, the Fonds de solidarité FTQ buys first and foremost from Québec suppliers. It also favours purchasing from its partner companies, either from Québec or Canada, whose employees are unionized. Product quality and cost, the financial health of companies and their social and environmental concerns as well as compliance with agreements entered into are other criteria that are considered when choosing a supplier.

During the last financial year,
90% of the Fonds' purchases
of goods and services
were made from Québec suppliers.

Direct economic impact of the Fonds

The following table shows summary financial data that help assess, at a glance, the significance of the Fonds de solidarité FTQ's activities and understand how the Fonds has created and creates wealth for its stakeholders. This table should not be used as a substitute for the Fonds' financial statements; it is intended to present certain financial data identified by the GRI as material in a sustainability report.

DIRECT ECONOMIC IMPACT
OF THE FONDS
for the Years ended
May 31

see table

The economic impact of our partner companies

Comments from Daniel Denis, Partner and Economist, SECOR Consulting

The contribution of the Fonds' partner companies to the Québec economy continued to grow in size in 2011: their activities generated an added value estimated at $10.9 billion in Québec. The economic wealth created by the Fonds' partner companies therefore climbed 9.6% compared to 2010. The Fonds' partner companies thus gained more weight in the Québec economy in 2011, as the overall growth rate in Québec was nearly 5% in the same period. This higher performance is the result of both the growth in the activities of companies already in the portfolio and an increased number of companies in the portfolio.

To demonstrate the extent of this contribution, we highlight that the total value added generated by the Fonds' partner companies in 2011 represented 3.2% of Québec's overall gross domestic product (GDP). In addition, the total number of jobs supported by these companies increased sharply compared to 2010 (+6%). Lastly, the value added per job supported was $80,735 in 2011, and over $83,000 for jobs offered directly by the Fonds' partner companies (+4.5%, which is more than the 2011 inflation rate).

ECONOMIC IMPACT
ON QUÉBEC
as at December 31, 2011

see table

DIRECT AND INDIRECT IMPACTS
as at December 31, 2011

see table

The Fonds' CEO is the 2011 MBA of the Year!

The Québec MBA Association honoured Yvon Bolduc, President and CEO of the Fonds de solidarité FTQ with the title of 2011 MBA of the Year at its 31st annual gala on November 25, 2011, "because throughout his distinguished career, he has made significant contributions to Québec's economic development."

Continued

Accounting firms, stakeholders who count!

To make its range of products and services for companies better known, the Fonds de solidarité FTQ arranged a series of meetings with the key players of those firms.

These meetings, which were initially held from May to November 2011, were aimed at initiating or continuing a constructive dialogue with these market intermediaries, who are very important to Québec entrepreneurs and business people. They allowed us to more adequately inform them about the Fonds' social and economic mission, its partners, its multisectoral teams, its sector expertise and its vast investment network throughout Québec. These meetings are valuable opportunities not only to strengthen business relations, but also to highlight the economic role of the Fonds as well as its social and economic impact on Québec. The Fonds' mission is to support Québec entrepreneurs, and accounting firms are indispensable allies to meet this objective.

Ensuring the future of the manufacturing sector

The Fonds de solidarité FTQ was among the first to partner with Deloitte when this firm organized a roadshow on the future of Québec's manufacturing sector. Deloitte is one of Canada's largest professional services firms (assurance, tax, consulting, etc.). This roadshow started in November 2011 and continued in 2012 in a dozen of towns across Québec.

The goal of the roadshow's organizers is to raise stakeholder awareness on the importance of the manufacturing sector for Québec and the necessity to make it a priority. More specifically, the roadshow aims at rallying all economic players around concrete solutions to improve the competitiveness of this sector.

Québec's manufacturing sector has a tremendous impact on the province's economy and creates wealth for all Quebeckers, but it has been operating in a highly competitive environment for several years. In addition to shedding light on the sector's current conditions, Deloitte and its partners wish to bring out its champions and thereby mobilize all players to ensure the growth and sustainability of this essential sector.

Record investments for the local solidarity funds

The recently ended financial year was a very important period for the Fonds locaux de solidarité FTQ: the limited partnership celebrated its 20th anniversary. More than 200 people from the local solidarity fund (LSF) network met over November 17-18, 2011 to celebrate this anniversary and discuss sustainability, the future and entrepreneurial culture.

At the same time, the Fonds locaux de solidarité FTQ launched a blog to provide their local partners with an information and discussion platform on local development capital.

http://bloguefls.fondsftq.com (in French only)

It goes without saying that the LSFs' greatest achievement was their record level of investments. From January 1 to December 31, 2011, the 85 LSFs financed 229 projects, investing $7 million across Québec. This brings the 20-year total to $86.8 million invested in 2,734 projects, and these investments created or maintained over 25,000 jobs!

In 1991, the Fonds de solidarité FTQ and the Québec Federation of Municipalities created the LSF network to support local economies in collaboration with the Local Development Centres (LDC) and the Community Economic Development Corporations (CEDC).

We wish them many more years of similar success!

Biking with hope and passion against cancer!

In July 2011, for the second year in a row, Éric Desaulniers, Development Capital Advisor at the Fonds locaux de solidarité FTQ in Québec City, participated in the Enbridge Ride to Conquer Cancer. To complete this challenge, Éric cycled from Montréal to Québec City, making only one stop for the night. He was on the Centre hospitalier universitaire de Québec (CHUQ) team, whose goal was to support research on new cancer therapies and improved care. In addition, he's registered once again for the 2012 event. In 2010, he had no idea that he would take up this challenge three years running, "We all have someone close to us who has lost or won the fight against cancer. I get back on the bike each year for those people," says Éric as he explains his motivation. In 2011, 1,886 cyclists rode in the event and raised $6.7 million.

Dialogue with Québec entrepreneurs

The SME Confidence Index survey of some 200 SME managers that we conduct four times per year, which measures their perceptions and business intentions in the current economic and social environment, is a good example of the ongoing dialogue we have with Québec entrepreneurs.

Conducted by Léger Marketing, this survey allows us to really identify and monitor the development of issues concerning them, such as the labour shortage, their financing conditions, the environment, and, more recently, their worries in light of economic uncertainty (Les Affaires, June 2012).

For more details on the SME Confidence Index - Fonds de solidarité FTQ surveys:

www.smeconfidenceindex.com

sme confidence index towards
the future of their company
as at May 2012

Effectively ensuring business succession

Ensuring business sustainability is a priority for the Québec economy. Entrepreneurial succession, which is an essential aspect of this question, is therefore a major issue. The Fonds de solidarité FTQ has always been a leader in succession matters, particularly by providing financing to facilitate business transfers. In the last financial year, the Fonds did even more, by organizing an important information gathering and networking activity, the Opération Relève Québec 2011, which visited 12 regions in Québec between February and October 2011. The goal was to reach both entrepreneurs who are interested in transferring their business and business people interested in taking them over. The presence of well-known partners such as Les Affaires, Raymond Chabot Grant Thornton, the law firm BCF and the Ministry of Economic Development, Innovation and Export Trade made this project a success.

The Fonds Relève Québec is launched!

Created in 2011, the Fonds Relève Québec's objective is to financially support purchasers-successors involved in the transfer of a business they would like to take control of, either alone or with partners. The Fonds Relève Québec provides attractive financing assistance for future business owners in the form of a loan (either personal or granted to a personal holding company) that allows purchasers to double their investment. The amount of the loan may equal the capital investment that the successor makes, and vary between $50,000 and $200,000 (and go up to $500,000 in the case of a group of successors).

The Fonds de solidarité FTQ thereby provides a flexible solution to those purchasing a business, which will give them the boost they need to take over from the previous owners.

Read the blog of our Portfolio Director specialized in entrepreneurial succession, Gabriel Nadon:

www.bloguereleve.fondsftq.com (in French only)

The Montréal Inc. of tomorrow

The Fonds de solidarité FTQ is proud to be a partner of the Fondation du maire : le Montréal inc. de demain since 2000. This organization, created to support a new generation of promising entrepreneurs, provides start-up bursaries totalling $400,000 each year. Since its founding in 1996, it has therefore injected over $5.2 million in some 770 companies, creating over 2,275 jobs in the Greater Montréal area.

The Fonds will contribute up to $5 million to a $15 million fund dedicated to financing the entrepreneurial bursaries awarded by the Fondation du maire : le Montréal inc. de demain. The Government of Québec will also provide
$5 million, which will be added to another $5 million from the business community.

In addition to providing annual financial support to the Fondation, the Fonds is also involved in managing the organization through Mario Tremblay, our Vice-President, Public and Corporate Affairs, who volunteers as a member of the board of directors, which is composed of 20 members from the Montréal business community.

Through its network of volunteer experienced business people, the Fondation offers training, coaching and mentoring free of charge to its bursary winners. These are valuable services that are ways to coach and guide these young entrepreneurs as they launch their businesses.

www.montrealinc.ca

The following are three good examples of businesses that received financial support from both a Fonds local de solidarité FTQ and the Fondation du maire : le Montréal inc. de demain.

Les Givrés

The owners of Les Givrés dessert bar on Saint-Denis Street in Montréal's Plateau Mont-Royal neighborhood are artisans to the core. They make all the products themselves, from the ice cream to the cones! They do not use any artificial colouring or flavouring, nor any purchased preparation or base. Soft serve or regular ice cream, sorbets, shaved ice, ice cream cakes, pastries, everything is made in house. www.lesgivres.ca

Inovae

Inovae, located in Southwest Montréal, is a company that specializes in designing technology solutions that increase its clients' productivity while reducing their eco-footprint. It offers energy and asset management solutions for buildings. Through the effective technology tools it designs, the company allows its clients to achieve savings through better energy management within their buildings. Inovae helps clients through all the stages of implementing an energy efficiency plan.
www.inovae.ca

Lufa Farms

Located on the roof of an office building in the Ahuntsic-Cartierville Borough, in Montréal, the first Lufa farm includes a 31,000 square foot greenhouse, where over 25 varieties of vegetables are grown all year long without pesticide, fungicide or herbicide.

continued

Builders of the future

To guarantee the success of Québec-based companies, it is clear that there must be adequate succession planning, but it is also necessary to ensure that there are young motivated leaders to drive the growth of these companies. To stimulate the renewal of entrepreneurial leadership in Québec, the Fonds partnered with Groupe Les Affaires, which launched in March 2011 a major competition: "Créateurs d'avenir". Using an interactive website, the competition aims to highlight the most promising leaders under 40 years old among the next generation of entrepreneurs in Québec.

The competition showcased 25 builders of the future - 10 entrepreneurs and 15 managers or professionals - from all regions of Québec.

www.lesaffaires.com/createurs-d-avenir