Transcontinental - 2005 Annual Meeting of Shareholders

Dear shareholders, colleagues and business partners,
Dear friends,

Last year at the annual meeting I announced that with the unanimous support of the board of directors, I was entrusting the daily management of Transcontinental to Luc Desjardins, and that I would continue my involvement by becoming executive chairman of the board.

At the time, I told you that this new division of roles was an important stage in the evolution of Transcontinental. I had held the positions of chairman of the board and chief executive officer since we became a public corporation in 1984. Yet it is rare for a family-run business to hand over management to someone who is not a family member. The board was guided in its decision by a single concern: to protect the long-term interests of our employees, our customers and our shareholders, the three pillars of the Corporation.

A year later, I’d like to publicly state, on behalf of the board, that we made the right decision. In 2004, Transcontinental continued to grow even though market conditions were difficult and despite the unfavourable exchange rate, and we also started fiscal 2005 with a strong first quarter. Plus, as we have always done, we continued to invest in the future.

Luc, you set yourself the goal of turning Transcontinental into a world-class company and you’re right on track! Much has already been done. I am thinking in particular of our Horizon 2005 business project which you have led with such passion in every area. You were also able to implant your results- and execution-oriented philosophy while bringing the company the benefit of your knowledge of the U.S. market, a major area of development for us. Lastly, and I know this because I have worked with you daily for a number of years, you have an open, frank and honest management style, and always put the interests of Transcontinental as a whole first.

Luc also has a strong and stable team of senior managers at head office and in each operating sector. At Transcontinental, we ask our managers to be leaders, that is, to communicate the corporate vision to their teams, promote innovation and change, and continually motivate, guide and dialogue with their people. So it is that year after year, our success is built on the day-to-day actions taken by all of our employees as a team, united by the same values and sharing the same culture of continuous improvement.

Ladies and gentlemen, your company is doing well and will continue to distinguish itself in the North American industry for a long time to come.

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For my part, I embarked upon my new role as executive chairman of the board with great enthusiasm.

This position of being both close to Transcontinental’s major issues and, if I can express it this way, being one step removed from its daily operations, has led me, over the past year, to think more about our future. As you will see, my thoughts on this matter are in line with our past activities, yet turn toward certain promising avenues for development in areas where we have already made inroads.

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From the very beginning, the secret of Transcontinental’s success has been our willingness to adapt and even anticipate the new needs of our customers. I can see two emerging trends: our customers want to reduce the number of suppliers they deal with and they want to outsource certain services. In both cases, we are well positioned to find innovative solutions since doing so is a natural extension of our business model.

Let’s look at reducing the number of suppliers. Transcontinental was based on and has always acted on this principle. We were, for instance, the first to offer retailers a complete prepress, printing and distribution service at a one-stop shop. The name for it has changed over the years but the concept remains the same. In this area, the market is simply catching up with Transcontinental. So we must remain ahead of the market. For example, this is why, over the past few years, we have reorganized our sales process to focus on cross selling and market teams.

Another irreversible trend and one that is also a natural extension of our business model is outsourcing. For a number of years now the publishers of major daily newspapers such as The Globe and Mail and La Presse have entrusted us with the printing of their papers so that they can concentrate, with great success, on producing quality content. In a few minutes Luc will be announcing a major development in this area. We are also offering to take complete charge of campaigns run by our direct marketing customers in the United States.

You know, it takes trust to work with only one or two suppliers and to place entire production processes in the hands of a partner! Beyond our customer-focused business model, Transcontinental has another invaluable asset that owes nothing to chance: our business reputation. We have built that reputation slowly and patiently over the past 29 years, through thousands of small and large decisions related to our investors, customers, employees and our responsibility to society and the environment. In today’s environment, our business credibility is our most precious asset. Whether you are a Transcontinental investor, customer or employee, you are associated with a company that puts a set of core values, including respect and integrity, at the heart of its practice.

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Before closing I’d like to say a few words about succession.

Last year I told you that succession planning was a challenge to be taken up by all our employees and that we were in good shape in that area.

I also said that Transcontinental was a family business and it is my conviction that a family business creates more long-term value for shareholders. In terms of Transcontinental in particular, the continuity and stability it has brought has allowed us to create and implement a unique corporate vision. A recent study published by the Harvard Business School Press, called Management for the Long Run, takes an in-depth look at family operations. The authors make some very interesting points:

The average life of a family-run company has doubled.
Family-run companies account for close to 40% of Fortune 500 companies and create 78% of new jobs in that group.
They emphasize long-term rather than short-term results.
On average, family-run companies fire far fewer employees.
And, of course, there’s much more.

So it is very important to me that the members of my family continue to grow with Transcontinental and participate in its development to the best of their abilities and expertise.

Which means that I am very pleased that following a unanimous decision of the board of directors and on the recommendation of the Corporate Governance Committee, and now with the approval of shareholders, Isabelle and Pierre Marcoux will become directors of the Corporation. I know that the day-to-day knowledge of Transcontinental that Isabelle and Pierre bring to the board will be very useful.

Still, your board of directors will continue to be composed of a majority of independent members. You know how much importance I place on our reputation for good corporate governance. Two years ago the board of directors set up a Corporate Governance Committee headed by Lucien Bouchard. Transparency, ethical conduct and respect for others must be central to our practice at every level. I am very pleased therefore that for the second year in a row, Desjardins Securities has ranked Transcontinental tops in the media industry in Canada for its corporate governance.

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In closing, I’d like to state again that I have every confidence in the future of Transcontinental and its management team. We will continue to show that we are worthy of the loyalty of our employees, our customers and our shareholders, the three pillars of the Corporation.

I’ll now pass you over to Luc Desjardins, our president and chief executive office.

Thank you for listening.