The findings of a survey by PricewaterhouseCoopers (PwC) has been released to show that, “A review of Canada’s more than 250 income trusts indicates that trusts have been making an important contribution to the economy, investing their capital and growing their businesses at impressive rates.”

The trusts considered included companies from “sectors as disparate as food products, telecommunications and finance as well as traditional oil and gas royalty trusts and real estate income trusts (REITs).” The clear conclusion is absolutely “counter to the contention of the federal government that income trusts do not reinvest in their business and amount to a long-term dead end for Canadian businesses.”

The study looked at the performance of income trusts over the five years from 2000 to 2005. The new findings show that:

1. Sales, net income and capital expenditure grew significantly;
2. Growth occured despite trusts “returning cash to their investors”;
3. The trusts sampled had combined increases in sales of more than 600% during that time;
4. Net income from these trusts increased 62% in 2005 and 22% in 2004;
5. More than $20 billion went to capital spending during each of 2004 and 2005.

The implication is that there was a net income reinvestment rate of more than 200% in 2005 and almost 400% in 2004.
A press release from PWC said, “In 2005, trusts enjoyed sales growth of 54% to $74.3 billion while net income improved 62% to $10.6 billion. Capital investment totalled $26.5 billion in 2005 or 230% of net income. Results for 2004 exhibited similar growth: Sales of $51.7 billion were ahead 39% over 2003 results. Net income grew 22% to $6.3 billion during the year. Capital spending in 2004 hit $21.8 billion.”

Ross Sinclair, the national leader of the PwC IPO and income trust services group said, “These facts represent an important contribution to the debate over income trusts—a debate that has been lacking factual context. The data confirm that, contrary to opinions expressed elsewhere, trusts are continuing to reinvest in productivity-enhancing projects and technologies. They raised cash for capital expenditures and new acquisitions. They are companies with demonstrated growth. The data clearly refutes the notion that the income trust structure is best suited to mature, low-growth companies in stable industries.”

PricewaterhouseCoopers can be found at pwc.com.

The company provides “industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (http://www.pwc.com/ca) and its related entities have more than 4,300 partners and staff in offices across the country. (Unless otherwise indicated, “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, Canada, an Ontario limited liability partnership. PricewaterhouseCoopers LLP, Canada, is a member firm of PricewaterhouseCoopers International Limited.)”

For further information: Susan MacDonald, MacDonald & Co.,\ (416) 975-1572, susan.e.macdonald@bellnet.ca or Carolyn Forest, PricewaterhouseCoopers LLP, (416) 814-5730, carolyn.forest@ca.pwc.com