Montréal, Québec, July 17, 2008 - The Business Development Bank of Canada (BDC) made public its annual report yesterday which contains its financial statements for the year ended March 31, 2008. The results revealed a growth of $865 million or 9% in its loan and investment portfolio to reach a total portfolio of $10.6 billion. This enabled BDC to generate a net income of $84.6 million for the year. In fiscal 2008, dividends totalling $21.5 million were declared to BDC's shareholder, the Government of Canada. Since 1997, BDC has declared $156.7 million in dividends to its sole shareholder.
"This year's record increase of our loan and investment portfolio shows that BDC plays a key role in supporting entrepreneurs, even when uncertainty in the marketplace reduces the credit supply for Canadian business owners," said Jean-René Halde, President and Chief Executive Officer. "BDC remained committed to helping entrepreneurs thrive by providing them with highly tailored financing solutions, by sharing their willingness to take risk, and by being a partner they can count on long-term."
Highlights
BDC Financing clients accepted $2.9 billion new loans through some 9,100 transactions. Income totalled $160.9 million in fiscal 2008, compared to $168.0 million in fiscal 2007. The closing portfolio, before allowance for credit losses, rose from $9.1 billion to $10.0 billion, an increase of $886 million, or 9.7% over 2007. At $10.0 billion, the financing portfolio was the driving force behind BDC's financial results. BDC believes this year's growth was due in part to uncertainty in the marketplace, which reduced the credit supply for Canadian entrepreneurs.
BDC Subordinate Financing clients accepted $97.4 million through 107 transactions executed by way of a limited partnership with the Caisse de dépôt et placement du Québec. BDC's share of the transactions accounted for $48.7 million in fiscal 2008. Income totalled $11.0 million in fiscal 2008, compared to $7.9 million in fiscal 2007. As of March 31, 2008, BDC's Subordinate Financing portfolio stands at a fair value of $156.2 million, a 5.3% increase over last year.
BDC Venture Capital authorized 85 direct investments for a total of $105.5 million versus 68 investments for $105.7 million in fiscal 2007. It also authorized investments of $25 million in two funds. However, the depressed state of Canada's venture capital market and the increased time horizon for exits in seed and early-stage companies has severely limited the number of possible exit opportunities and dramatically reduced valuation for new investors. In fiscal 2008, BDC Venture Capital, on a fair value basis, recorded a loss of $82.8 million of which $50 million was unrealized.
BDC Consulting revenues increased 5.4% over last year and reached $24.8 million. This year, 2,770 mandates were started, an increase of 13% over fiscal 2007. While revenues and number of mandates increased over fiscal 2007, BDC Consulting experienced a loss of $4.5 million, slightly higher than the 4.3 million loss in fiscal 2007. The revenues do not fully offset the operating and administrative expenses as a result of our strategy to maintain prices at an affordable level for SMEs. BDC Consulting offers entrepreneurs tailored, affordable, high-quality services to help them become more competitive.
Consolidated net income totalled $84.6 million, compared to $138.0 million reported in fiscal 2007. Total assets increased by $619 million from a year ago and reached $11.4 billion at year end. Client satisfaction continued to be strong with an overall satisfaction rating of 93%.
"Ambitious, risk-taking entrepreneurs are the basis of a vital, healthy economy. Today they are faced with a changing and tough environment. The fierce competition of emerging countries, the economic slowdown in the United States, and high energy costs are just a few examples of the kind of challenges they are facing," added Jean-René Halde. "BDC is dedicated to helping business owners tackle these challenges and exploit the opportunities that will accelerate their success, both globally and locally. We will do so by relentlessly offering financing, investments and consulting solutions that are driven by their needs as entrepreneurs."
Leading as a development bank
- BDC provides highly tailored loans, investment and consulting services to business owners across the country. From 94 locations, 1,700 BDC employees support a record 28,000 Canadian entrepreneurs across the country. BDC is commercially viable and does not receive an annual subsidy from Parliament.
- BDC pays special attention to start-ups, innovators, fast growth companies, manufacturers and exporters who face lower financing approval rates. BDC also pays special attention to entrepreneurs who are working to commercialize the fruits of research and development - university or lab discoveries - to create innovative products and globally successful companies in sectors such as life sciences and information technology.
- Over the past six years, about 14% of BDC authorizations went to clients in the start-up phase. Market data shows that approximately 5% of Canadian business are start-ups. This suggests that BDC is supporting more than twice as many start-ups as the market. Furthermore, survival rates of BDC start-up clients surpass industry benchmarks. Looking at the five-year survival threshold, BDC finds that after five years, 67% of the start-up businesses it supported survive, compared to the Statistics Canada industry benchmark of 36%.
- BDC Venture Capital is a Canadian leader in the critically important early-stage (including seed) investment phase. In fiscal 2008, BDC made 75% of the dollar value of its direct investments in early-stage firms. That figure compares with the industry average of 33%. This past year, direct seed investments in Canada totalled $56.7 million. BDC contributed $9.3 million of this total in eleven seed ventures.
- Each dollar BDC lends or invests leverages private sector sources of financing. Fiscal 2008 operational data indicate that including fund investments BDC Venture Capital leveraged $6.50 from other venture capitalists for every dollar it invested.
- BDC offers subordinate financing, a hybrid financing that combines debt and equity features, to entrepreneurs who need working capital to grow their businesses but do not have the tangible security that conventional lenders require, or who do not want to dilute their ownership of the firm. BDC anchors this service in a partnership with the Caisse de dépôt et placement du Québec. This year, BDC Subordinate Financing received $97 million acceptances, including the Caisse's portion.
- At 22 Entrepreneurship Centers across Canada, BDC offers specialized lending, consulting and resources dedicated to meeting the needs of younger, smaller businesses. In fiscal 2008, the Centers received $202 million acceptances in loans.
- Women entrepreneurs lead businesses of all sizes in all sectors. They also enter the small business marketplace at twice the rate men do. Over the past two decades, their number has grown by over 200%. BDC has more than 7,000 women clients, almost twice as many as it did a decade ago. Women represent about one quarter of BDC's client roster.
- Young entrepreneurs lead about 9% of Canadian small businesses. Many of them find it hard to secure financing because they have limited net worth, little or no managerial experience, and have no proven track record. Over the past five years, BDC authorized over $780 million in financing to young entrepreneurs across the country.
- BDC maintains formal partnerships with more than 200 Community Futures Development Corporations, a cross-country network of contact points located mostly in rural areas. These partnerships enable BDC to reach entrepreneurs who live near these centres. Using this network, BDC supported more than 800 entrepreneurs in fiscal 2008.
- BDC helps promote economic development in Aboriginal communities through a grassroots approach called the Circle of Entrepreneurial Success. This strategy delivers management training, ongoing mentorship and loans of $5,000 to $20,000, with terms that vary depending on the cash flow expectations for the project.
About BDC
BDC is Canada's business development bank. From 94 branches across the country, BDC promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs. BDC works with entrepreneurs in all industries, through all economic cycles and focuses on helping small and medium sized businesses in their development projects, both local and global. BDC manages a $10.6 billion loan and investment portfolio and serves over 28,000 clients. Small and medium sized businesses make up 99.7% of all employer businesses in Canada.
BDC's annual report can be viewed at www.bdc.ca/annualreport.
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