A778.01 IS AR inside fp - Crown Investments Corporation

Chief Executive Officer’s Messagewas a year of building – building the organization, its business profile and its fundamental2004 infrastructure. The organization was in its first full year of operations as a stand-aloneentity and had assumed a legacy portfolio from its parent, Crown Investments Corporation of Saskatchewan(CIC). The portfolio was created through the amalgamation of a number of different governmententities, each operating under different mandates and all with a view to stimulating economic development.The mandate given to InvestmentSaskatchewan continues the focus onstimulating economic activity in the province,but with a slight twist. The Board ofDirectors has been delegated the authorityfor investment decisions in order to maintainan arms-length relationship with theshareholder and to ensure that decisionsare made by those best qualified. Inaddition, the mandate for the primaryfund is to operate on commercial termsand to leverage public capital with thatof private sector or other partners.Investment Saskatchewan can and may elect to establishsub-funds which would be driven more directly by public policyinterests than pure commercial returns and may take thisapproach where gaps exist in the Province’s financial markets.Unlike the past however, where sub-funds are created, they willbe branded differently and each will possess defined mandatesand clearly identified objectives for both returns and leverage sothat performance expectations on these particular funds are clear.When he established the organization, Premier Lorne Calvertstated that his government did not accept the view that publiccapital is unnecessary in the provincial marketplace andexpressed the opinion that through partnering on commercialterms, Investment Saskatchewan would be able to leveragepartners’ investments in the Province, replacing the need forpublic capital over the long-term.To put this mandate into action, Investment Saskatchewanmust build a foundation of fundamentals. This focus began midwaythrough the year in 2004 after I joined the organizationas President and CEO.At Investment Saskatchewan, wedefine fundamentals in tangible andintangible ways. Financially, it means astrong asset base, sound principles ofinvestment management – specificallybalancing risk with reward, operatingunder a well-defined governance andpolicy framework, achieving sustainablegrowth, and reporting on performance ina manner consistent with best-practices.It also means building fundamentalswhich are slightly less tangible – thevalues by which we operate, credibilityand a reputation as a partner who can be trusted.Even if an organization can achieve a top-quartileinvestment track record and has a compelling story to tell, theintangibles can derail the strongest. It is not sufficient to simplytalk strategy, investments and valuations in the private equityworld. A track record of results is demanded as “table stakes”– those elements that are the most basic requirements ofsucceeding in this business. Partners and potential investeesalso want to see behavioural evidence of a company that livesits values and to hear from others about the credibility andstrong reputation which comes from delivering results andbehaving with integrity.Building these fundamentals is the single-minded focus forInvestment Saskatchewan’s evolution. From this, we will translatethese fundamentals into results – we will grow our investmentportfolio, attract new capital to invest in business enterprises inSaskatchewan, divest at strategic opportunities and earn a returncommensurate with risk.As I review the operations in 2004, I am proud to report2