Annual Report - Prince Edward Island

Annual Report
2012-2013
Table of Contents
Message from the Minister .................................................................................................................2
Message from the Chairman...............................................................................................................3
Message from the CEO ......................................................................................................................4
Sommaire .........................................................................................................................................6
Mandate of Finance PEI .....................................................................................................................7
Year in Review - Financing Portfolio....................................................................................................8
Year in Review - Strategic Initiatives and Properties .......................................................................... 11
Appendix A: Board of Directors & Organizational Chart ...................................................................... 12
Appendix B: Audited Financial Statements ........................................................................................ 14
5|Page
Sommaire
Finances Î.-P.-É. est une toute nouvelle société de la Couronne qui réunit en une entité les activités de
prêt gouvernementales et plusieurs des biens d’infrastructure stratégique (ex. parcs commerciaux) pour
le gouvernement de l’Île-du-Prince-Édouard (Î.-P.-É.). Il s’agit du premier rapport annuel de Finances Î.P.-É., couvrant l’année qui s’est terminée le 31 mars 2013.
La principale activité de Finances Î.-P.-É. est de travailler avec la communauté d’affaires de l’Île afin de
fournir de l’aide financière contribuant à établir de solides possibilités d’affaires stratégiques. Ces activités
de prêt servent à compenser les risques financiers de chaque projet, assurant une rentabilité économique
pour la province de l’Î.-P.-É. Chaque entreprise qui s’établit ou qui prend de l’expansion à l’Î.-P.-É. est
différente et Finances Î.-P.-É. travaille de concert avec les propriétaires d’entreprises et souvent avec
d’autres institutions financières et organismes gouvernementaux traditionnels pour offrir la meilleure
structure financière possible pour réussir.
Finances Î.-P.-É. compte plus de 1 000 clients d’affaires dans son portfolio de prêt qui vaut plus de 210
millions de dollars. Ce portfolio de prêt comprend des prêts à terme et des prêts pour les fonds de
roulement dans les secteurs suivants:
Petite entreprise
Aérospatiale
Agriculture
Tourisme
Fabrication et transformation
Technologie de l’information
Pêche / Aquaculture
Finances Î.-P.-É. administre également des programmes précis, y compris le Programme de prêts à
l’entreprenariat, le Programme de financement pour la production hivernale, le Programme pour les
pêcheurs à faible revenu et le Programme de prêts en matière d’énergie.
De plus, Finances Î.-P.-É. est responsable des opérations de diverses infrastructures et propriétés qui
appartiennent à la province, y compris les parcs commerciaux, les terres et les bâtiments. Ces éléments
d’actif comprennent les parcs suivants :
•
Le parc de recherche BioCommons de 58 acres offre de l’appui essentiel en matière de
commercialisation au secteur des sciences biologiques qui gagne en maturité.
•
Le parc alimentaire de Souris est un site de 60 acres qui offre de grands lots de développement
et des installations de traitement des eaux usées sur les lieux. Le parc se situe dans la
municipalité de Souris et tout près des services portuaires commerciaux et du service de
traversier qui se rend aux Îles-de-la-Madeleine.
•
Le parc commercial de Poole’s Corner se trouve près de la municipalité de Montague. Il compte
12 lots mesurant 2 acres chacun. Trois entreprises privées s’y trouvent.
•
Le parc commercial de Summerside mesure environ 35 acres et est complètement développé.
•
Le parc commercial de Prince-Ouest mesure 32 acres et se situe près des communautés
d’O’Leary, d’Alberton et de Tignish. À l’heure actuelle, il ne reste que 5 acres qui pourraient servir
au développement futur.
•
Le parc commercial de West Royalty mesure 90 acres et compte 41 entreprises.
Pour obtenir tout autre renseignement, veuillez communiquer avec Angie Cormier par courriel à
[email protected] ou par téléphone au 902-368-5368.
6|Page
Mandate of Finance PEI
Finance PEI was created to consolidate the government’s financing and strategic infrastructure services
for the Province of Prince Edward Island. The former Innovation PEI Lending Services, Innovation PEI
Strategic Initiatives and Properties, and P.E.I. Lending Agency were merged to form Finance PEI on
January 1, 2013 through the Finance PEI Act. This report covers the activities of FPEI, as well as the
former agencies that merged to create FPEI, from April 1, 2012 to March 31, 2013.
FPEI is a crown corporation under the Ministry of Innovation and Advanced Learning. FPEI, along with its
subsidiary companies, is the lead financing and strategic infrastructure division for the Province of Prince
Edward Island.
The directives of FPEI include to source, manage and supply financial capital for strategic business
opportunities; balance financial risk with economic return; work collaboratively with traditional finance
institutions and government agencies; and, operate as a professional lender. FPEI is governed by the
Finance PEI Act and Regulations.
Mission Statement of Finance PEI
FPEI has three divisions, each of which has their own mission statement.
The Commercial and Resource Lending division provides financial assistance through loan agreements in
support of economic development to support enterprises that demonstrate reasonable viability; and are
maintaining or expanding economic development.
The Developmental Lending division provides financing, strategic investment, and loan guarantees in
support of businesses that create, maintain, or expand priority sectors with emphasis on businesses
involved in exporting to domestic and international markets, import replacement, and value-added
processing.
The Strategic Initiatives and Properties division promotes the establishment of new business
opportunities and encourages the expansion of existing businesses through the provision of readily
accessible infrastructure.
7|Page
Year in Review - Financing Portfolio
FPEI provides financing to businesses and entrepreneurs that support the PEI economy by contributing to
job and wealth creation. The lending and investment activities are focused on assisting those businesses
in the primary, small business, and strategic industrial sectors with emphasis on businesses involved in
exporting to domestic and international markets, import replacement, and value added processing.
Clients of FPEI are provided with innovative financial solutions that generally involve multiple
stakeholders, including conventional lenders and other business development agencies. This is achieved
by using a variety of financial products depending on the client’s specific needs, including capital and
working capital loans, equity investments, and loan guarantees. Also, as part of its non-conventional
approach to commercial lending, FPEI can act as a financial intermediary, utilizing staff expertise in
banking and accounting to assist clients to assemble financial packages for their projects with other
lenders and government agencies.
FPEI provides both term and working capital loans to eligible borrowers in the following sectors:
Small Business
Aerospace
Agriculture
Tourism
Manufacturing and Processing
Information Technology
Fisheries / Aquaculture
FPEI also administers specific programs, including the Entrepreneur Loan program, the Fisher’s Low
Interest Loan program, and the Winter Production Financing program.
FPEI has more than 1,500 clients with a loan portfolio excess of $210 million. The largest sector of the
loan portfolio is the fishery industry with $72 million in long-term loans with an additional $2 million in
working capital loans. This portfolio has grown significantly due to the Low Interest Loan Program being
introduced in 2007. At that time, Department of Fisheries, Aquaculture and Rural Development, together
with FPEI introduced the Low Interest Loan Program to assist fishers in LFA 25 and 26A who were
experiencing financial hardship resulting from low pricing, landings, and increasing operational costs. The
program provided financial assistance, through loans, to a maximum of $200,000 at 4% for a term of 5
years. These loans did not provide any new money for capital or other acquisitions, but could only be
used for consolidation purposes, on existing fishing related debt. This program was expanded to include
fishers in LFA 24 in 2009. FPEI has recently extended the term of these loans in 2013 to allow for the
terms to be extended from 5 to 7 years.
In addition to the conventional loans provided by Agency staff, they also administer a number of Energy
Efficiency Loan Programs and an Alternative Heating Loan Program for the Office of Energy Efficiency.
Loans under these programs are provided in an effort to make homes more energy efficient and to
support the installation of renewable energy equipment. Application and management of this program is
the responsibility of the Office of Energy Efficiency with specific administration, funding and accounting
aspects handled by FPEI staff. At year end there were 743 borrowing clients and $3 million outstanding
for these specific loan programs.
The following analysis provides a more detailed look at the larger portfolios and includes information and
statistics for the Commercial and Resource Lending division with the Developmental Lending division
combined.
8|Page
Agriculture
The agriculture portfolio contains 100 clients representing a variety of farming operations including dairy,
beef, poultry, cultivated blueberries, cranberries and potatoes, the latter of which, according to Statistics
Canada, is Prince Edward Island’s largest agricultural commodity and represents 52% of 2012’s total farm
cash receipts. 1 Loans are available for the purchase of farm lands and buildings, livestock, farm
equipment, storage facilities, construction and repairs to barns and land improvements.
Operating credit is also available for annual cropping expenses such as seed, fertilizer, spray materials,
fuels, repairs to machinery, labour, living allowances, and utilities. This type of credit is short-term and is
repayable in full on an annual basis.
Fisheries and Aquaculture
The fisheries sector remains the largest sector of Finance PEI’s lending portfolio. The 437 borrowers in
this portfolio are represented by the three major fisheries in Prince Edward Island: lobster, with revenues
of $113,756,000; mussels, with revenues of $30,014,000; and oysters, with revenues $7,617,000 2.
In the fall of 2012 the province reintroduced the Low Interest Loan Program to the Area 25 fishery, due
to the low shore price that had been experienced by the fishers in that Area. The original program,
released in 2007, targets assistance to fishers who have suffered from rising operational costs and a
decrease in shore price. Qualified fishers receive an interest rate of 4% over a 6 year period. Subsequent
to the date of this report this has been extended to 7 years.
FPEI has considerable loan exposure to this sector and works closely with clients in developing effective
plans that ensure repayment is achieved while being mindful of the social impact lower landings and
prices may have on Island fishing families.
Manufacturing and Processing
FPEI provides both term financing for fixed asset acquisitions and operating capital to finance the
businesses accounts receivable and inventory for manufacturing and processing clients. This portfolio
has 79 clients and the sector is diverse including:
•
•
•
•
•
furniture manufacturing;
food processing;
wood processing;
wood product manufacturing; and,
heavy equipment manufacturing.
Capital loans are amortized over the life expectancy of the asset. Working capital loans are provided for
the purpose of acquiring inventory and access to capital primarily against contracts and signed purchase
orders.
Small Business
This program is designed to meet the special needs of local owner/operators who serve a local clientele.
Loans provided in this category are often unable to access financing from chartered banks and credit
unions that fit the individual needs of their establishments. Financing to these 98 borrowers are of a
capital nature for the acquisition, renovations, or expansion of real property assets. Working Capital
loans are not provided to businesses within this sector.
1
2
Prince Edward Island Thirty-Nine Annual Statistical Review 2012 - Table 59
Fishery Statistics 2012 brochure
9|Page
This sector is subject to swings in economic activity and constant changes in the marketplace, although
the effect of the most recent downturn was mitigated to some extent by large infrastructure projects
generated by both levels of government. This helped offset some of the job losses due to the downturn
in the economy which assisted in maintaining local service and retail revenues.
Tourism
FPEI provides capital financing to clients in this sector for the acquisition, renovation and expansion of
tourism related businesses. The existing portfolio is made up of 53 clients, primarily with loans for fixed
roof accommodations (motels/cottage operations) and campgrounds.
Projects to expand the shoulder tourist season and the development of integrated recreational complexes
are encouraged. Loans may be granted for accommodation units which are converted to other uses
during the off-season period.
Entrepreneur Loan
The newly revised Entrepreneur Loan Program is an initiative of the Province of Prince Edward Island
designed to help increase the availability of financing for the purpose of helping new businesses get
started and established firms make improvements. More specifically, the Program is designed to assist
small businesses throughout the Province providing entrepreneurs with up to $100,000 in financing for
business ventures with solid business plans and markets. 21 loans are currently sourced directly through
Finance PEI with terms up to a maximum of 7 years. Interest is charged at a floating rate of TD Bank
prime plus 3%.
Winter Production Financing
The Winter Production Financing Program provides financial assistance to Prince Edward Island craft and
giftware manufacturers for inventory production. There are currently 21 clients in this portfolio. The
primary objective of this program is to provide new and expanding craft and giftware manufacturers in all
areas of Prince Edward Island with the financing required to increase production of their products during
the winter months for sale in the peak selling periods.
10 | P a g e
Year in Review – Strategic
Initiatives and Properties
The Strategic Initiatives and Properties division is responsible for all real estate held by FPEI and its
subsidiary companies. The portfolio includes business parks, land, and buildings, including FPEI’s
corporate offices located at 94 Euston Street in Charlottetown.
The Atlantic Technology Centre (“ATC”) is Prince Edward Island’s showcase facility where Information
Technology and New Media companies seek a competitive business environment; where educational and
corporate training programs take place next to applied research and development operations. ATC is
equipped with the latest conveniences and technology necessary for full connectivity and prosperous
businesses. The facility provides an ideal setting for growing information technology and media
companies to expand their businesses, foster new partnerships, and exist in an atmosphere that
promotes and sustains business achievement. ATC currently has 16 tenants and these tenants employ
approximately 330 people.
The BioCommons Research Park is a 58 acre research park that provides essential commercialization
support to the maturing bioscience sector, with technology and infrastructure to accelerate products
through the development cycle and into the marketplace. The park is located in West Royalty off the
Trans Canada Highway at the western entrance to the City of Charlottetown. The BioCommons Research
Park is an important asset in the development of the Bioscience sector in Prince Edward Island. The Park
currently has four buildings and FPEI retains vacant land for future development.
The Fabrication Yard was opened in 1993 to support the building of the Confederation Bridge. It was
purchased by FPEI, and consists of 112 acres of land.
Gateway Village is dedicated to eco-tourism development consisting of 5 buildings and approximately 15
tourism retailers (privately owned). FPEI retains approximately 10 acres of land surrounding Gateway
Village for future development.
The Pooles Corner Business Park is located within a close proximity to the town of Montague. It consists
of 12 – 2 acres lots, and is currently occupied by three privately owned businesses.
The Souris Food Park is a 60 acre site that offers large development lots and on-site waste treatment
facilities. The park is located in the Town of Souris and is immediately adjacent to commercial port
services and ferry service to the Magdalene Islands.
The Summerside Business Park is approximately 35 acres which is fully developed. FPEI currently owns a
27,270 sq ft building which is available for lease to the general business community.
The West Prince Business Park is located on the Western Highway within close proximity to the
communities of O'Leary, Alberton and Tignish. This 32 acre business park is subdivided into 12 lots. FPEI
owns 2 buildings, and retains 5 acres in the Park for future development.
The West Royalty Business Park is a 90 acre park that consists of approximately 40 businesses. FPEI
owns two buildings and retains 3 vacant lots for future development.
FPEI also owns properties at 6246 Commercial Road and 4555 AA MacDonald Highway and land in
Malpeque Bay, Cousins Shore, St. Peters, Borden-Carleton, Brudenell, and Lakeside.
11 | P a g e
Appendix A:
Board of Directors
Board of Directors & Organizational Chart
Board of Directors
Ivan Shreenan
Chairman, Blooming Point, PE
Neil Stewart
Secretary-Treasurer, CEO, Finance PEI (non-voting member)
Melissa MacEachern
Deputy Minister, Innovation and Advanced Learning
Doug Clow
Secretary to Treasury Board and Controller
Louis Callaghan
Cardigan, PE
John Sullivan
Montague, PE
Gordon MacInnis
Charlottetown, PE
Donald Godfrey
Meadowbank, PE
Louise Arsenault
Howland Road, PE
12 | P a g e
Organizational Chart
13 | P a g e
Appendix B:
Audited Financial Statements
Appendix A
14 | P a g e