Released on April 28, 2008
Investment Saskatchewan Inc. tabled its 2007 Annual Report before the Saskatchewan Legislature today and provided comments on its results.
The corporation's net earnings were $11.5 million, compared to $72.9 million in 2006 and an $87.7 million loss in 2005. Investment Saskatchewan's financial performance is closely tied to activities in its investment portfolio. The current year's reduction in earnings is attributable to a non-recurring charge for environmental liabilities and a write-down on a major investment.
Non-consolidated proceeds from the sale and collections of investments earned the corporation $131.7 million and dividends from investees yielded $55.1 million. The corporation's positive cash flow allowed it to provide a distribution of $100.3 million to its shareholder, Crown Investments Corporation, of which $90 million was paid during the year.
The corporation reported administration expenses of $8.9 million compared to $5.9 million in 2006, a $3 million or 51 percent increase. Administration expenses in 2005 were $6.3 million. The administration costs include the first full year of expenses related to the decision of the previous NDP government to manage investment activity through Victoria Park Capital. These costs include management and performance fees as well as the reimbursement of investment-related expenses.
"I am concerned about the significant increase in administrative expenses," Minister responsible for Investment Saskatchewan Lyle Stewart said. "A year ago the previous NDP government and the former Minister reported that the corporation was experiencing lower administration expenses in the first year of the contract. It now appears that the impact of managing investment services under this contract has contributed to much higher administrative costs."
Stewart said, the government is committed to protecting the interests of Saskatchewan taxpayers, and Investment Saskatchewan's Board of Directors will conduct a careful and thorough examination of Investment Saskatchewan and the investment management agreement.
"The government has expressed its concerns about the practice of 'picking winners and losers' by supporting public investment in individual companies as the previous NDP government did," Stewart said. "It is expected that the Investment Saskatchewan Board of Directors will consider the corporation's mandate and the level of transparency and accountability associated with its investment portfolio."
The 2007 Annual Report can be accessed at www.investsask.com.
Investment Saskatchewan was established in September 2003 as a designated Crown Corporation. The corporation presently holds a portfolio valued at approximately $380 million.
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For more information, contact:
Jan Carter
Investment Saskatchewan
Regina
Phone: 306-787-0122
Email: jcarter@investsask.com