BDC's support of Canadian SME growth leads to a solid year
Montréal, Québec, July 19, 2007 – BDC made public its annual report yesterday which contains its financial statements for the year ended March 31, 2007. The results revealed a growth of $571 million or 6.6% in its net loan and investment portfolio in Canadian SMEs to reach a total portfolio of $9.3 billion which enabled BDC to generate a net income of $138 million during the year. Based on these results, dividends totalling $21.5 million were declared to BDC's shareholder, the Government of Canada. Since 1997, BDC has declared $140.2 million in dividends.
"This is a solid year for BDC as we have exceeded most of our performance objectives," said Jean-René Halde, President and CEO. "This year's results are testament to our success in helping SMEs thrive in an increasingly complex and competitive environment: from 94 locations, 1,700 BDC employees supported a record 27,000 businesses."
Highlights
BDC Financingi authorized $2.6 billion through 9,080 transactions. Income totalled $168.0 million in fiscal 2007, compared to $141.1 million in fiscal 2006.
BDC Consulting revenues increased 9% over last year and reached $23.5 million. This year, 2,451 mandates were started, an increase of 20.3% over fiscal 2006. BDC Consulting helps SMEs address a wide range of challenges, including growth, productivity improvement and strategic business planning.
BDC Subordinate Financing, through a joint venture, authorized $108 million through 112 transactions. BDC's share of the transactions accounted for $54 million in fiscal 2007. Income totalled $7.9 million in fiscal 2007, compared to $13.7 million in fiscal 2006. As of March 31, 2007, BDC's Subordinate Financing portfolio stands at a fair value of $148.3 million, a 3% increase over last year.
BDC Venture Capital was active in the market and authorized 68 direct investments for a total of $105.7 million versus 81 investments for $105.8 million in fiscal 2006. However, a persistent lack of divestiture opportunities has constrained profit realization. This is the case with the Canadian venture capital industry as a whole, which remains more affected than its U.S. counterpart since 2001, in terms of investment activities and delays in showing good returns. In fiscal 2007, BDC Venture Capital, on a fair value basis, recorded losses of $33.6 million of which $26 million was unrealized.
Consolidated net income totalled $138.0 million, almost the same as $138.2 million a year ago, while total assets reached $10.8 billion, compared to $10.3 billion last year.
Client satisfaction continued to be strong with a satisfaction rating of 93%, surpassing BDC's rating of 92% achieved last year.
"BDC serves only one market: Canadian SMEs. Today they are being pushed to adjust to powerful global forces – notably the rising influence of emerging economies such as China and India – while also being affected by the rising Canadian dollar," added Jean-René Halde, President and CEO. "Our role is to offer them the support they need to become more innovative and more productive."
Leading as a development bank
- BDC provides loans, investment and consulting services to Canadian entrepreneurs that complement those of private sector financial institutions. BDC is profitable and does not receive an appropriation from Parliament.
- As Canada's population ages, many small business owners are reaching retirement age without having planned for the change in ownership and management of their companies. In September 2006, BDC unveiled its new Transition program to provide financing and consulting expertise to help retiring entrepreneurs plan and manage their exits from their businesses.
- BDC Venture Capital is a Canadian leader in the critically important early stage (including seed) investment phase. In fiscal 2007, 81% of BDC's direct investments were in early stage, compared with the industry average of 42%. BDC pays particular attention to entrepreneurs who are working to commercialize the fruits of research and development – university or lab discoveries – to create attractive products and globally successful companies.
- BDC is active in the subordinate financing market. Subordinate financing investments are hybrid instruments that combine elements of both debt and equity financing. They go to mature businesses to support specific growth projects. In fiscal 2004, the Caisse de dépôt et placement du Québec and BDC each agreed to invest $150 million over three years in a joint partnership fund called AlterInvest Fund L.P., managed by BDC and invested in companies across the country. This fund has been fully committed. In November 2006, the Caisse and BDC set up a second fund, AlterInvest Fund II L.P., to invest an additional $330 million. Since 2003, BDC's activity in subordinate financing takes place via these funds.
- Globalization is proving to be a bracing challenge for Canada's manufacturers. BDC's approach is to help them become more innovative and competitive. The new Manufacturers Plus strategy offers tailored financing and consulting services to SME manufacturers to help them identify options and to mobilize them, in a variety of ways, to take competitive action and invest.
- Women entrepreneurs lead businesses of all sizes in all sectors and, over the past two decades, their number has grown by over 200%. The most important indicator of BDC's support for women entrepreneurs is the fact that they represent about one-quarter of BDC's clients. This portfolio is $1.8 billion in committed financing and subordinate financing. BDC has over 6,600 women clients, twice as many as a decade ago.
- Young entrepreneurs lead about 9% of Canadian SMEs, many of whom find it difficult to secure financing because they are in a start-up position, have little or no managerial experience and no proven track record or weaker balance sheets. Over the past five years, BDC has authorized over $715 million in financing to young entrepreneurs across the country.
- BDC helps create economic development in Aboriginal communities through a grassroots approach called the "Circle of Entrepreneurial Success." This strategy delivers small loans, with terms that vary depending on cash flow expectations of the project, management training and ongoing mentorship.
- BDC has formal partnerships with more than 200 Community Futures Development Corporations (CFDC), a cross-country network of organizations located mostly in rural areas. These partnerships enable BDC to reach entrepreneurs who live near these centres. Using this network, we supported close to 500 entrepreneurs with almost $75 million in financing.
About BDC
BDC is a financial institution wholly owned by the Government of Canada. BDC actively supports the development and growth of Canadian small and medium-sized businesses through its complementary financial, investment and consulting solutions. BDC is one of Canada's Top 100 Employers for 2007.
BDC's annual report can be viewed at: www.bdc.ca/annualreport.
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Contact:
Denise Arab
Director, Communications
(514) 283-3054
Contact by email
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iDuring fiscal 2007, BDC started analyzing results from BDC Financing separately from those for BDC Subordinate Financing. This approach was warranted by the increasing size of the portfolio and income, as well as the variability of Subordinate Financing ventures.
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