Quarterly Financial Report Q1 2012 - Export Development ... - EDC

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TABLE OF CONTENTSMANAGEMENT’S DISCUSSION AND ANALYSISOverview ................................................................................................................................. 1Summary of Financial Results ................................................................................................ 2First Quarter Highlights .......................................................................................................... 4Financial Results – Year to DatePrior Year Comparison ......................................................................................... 5Corporate Plan Comparison .................................................................................. 6Non-IFRS Performance Measures .......................................................................................... 8Statement of Management Responsibility .............................................................................. 9CONDENSED CONSOLIDATED FINANCIAL STATEMENTSCondensed Consolidated Statement of Financial Position ..................................................... 10Condensed Consolidated Statement of Comprehensive Income ............................................ 11Condensed Consolidated Statement of Changes in Equity .................................................... 12Condensed Consolidated Statement of Cash Flows ............................................................... 13Notes to the Condensed Consolidated Financial Statements ................................................. 14Note 1. Significant Accounting Policies ......................................................... 14Note 2. Loans Receivable ............................................................................... 15Note 3. Individually Impaired Loans .............................................................. 15Note 4.Allowance for Losses on Loans, Loan Commitments andGuarantees .......................................................................................... 16Note 5. Recoverable Insurance Claims ........................................................... 17Note 6. Policy and Claims Liabilities ............................................................. 17Note 7. Contingent Liabilities ......................................................................... 18Note 8. Loan Revenue..................................................................................... 18Note 9. Interest Expense ................................................................................. 18Note 10. Net Insurance Premiums and Guarantee Fees .................................... 19Note 11. Other Income (Expenses) .................................................................. 19Note 12. Provision for (Reversal of) Credit Losses .......................................... 20Note 13. Claims-Related Expenses ................................................................... 21Note 14. Administrative Expenses .................................................................... 21Note 15. Share Capital ...................................................................................... 21Note 16. Capital Management .......................................................................... 22Note 17. Financial Instruments Risk ................................................................. 23Note 18. Related Party Transactions ................................................................. 24Caution regarding forward-looking statementsThis document contains projections and other forward-looking statements regarding future events. Such statementsrequire us to make assumptions and are subject to inherent risks and uncertainties. These may cause actual resultsto differ materially from expectations expressed in the forward-looking statements.
MANAGEMENT’S DISCUSSION AND ANALYSISOVERVIEWEDC, Canada's export credit agency, offers innovative commercial solutions to help Canadian exporters andinvestors expand their international business. EDC is a Crown corporation, wholly owned by theGovernment of Canada and accountable to Parliament through the Minister of International Trade. Weprovide insurance, financing, bonding products, small business solutions as well as online credit riskmanagement tools to Canadian exporters and investors. Each year 7,800 Canadian companies and theirglobal customers in up to 200 markets worldwide use our knowledge and partnerships. EDC is financiallyself-sustaining and does not receive parliamentary appropriations. We generate revenue primarily bycollecting interest on our loans and premiums on our insurance products.For the last three years the Government of Canada temporarily broadened EDC’s mandate and scope ofactivity because of the severe and ongoing credit crunch affecting a large number of Canadian businesses.Although the credit conditions are improving, some areas continue to have limited credit availability. In thefirst quarter of 2012, the Government further extended EDC’s domestic powers until March 2013 to supportfurther assessment and consultation with stakeholders on EDC’s role in the domestic market. The expandedmandate enables us to provide domestic financing and insurance services, in partnership with private sectorfinancial institutions, credit insurance and surety companies, and with the Business Development Bank ofCanada (BDC).Facilitating Integrative Trade(in millions of Canadian dollars)Three months endedMar2012Mar2011Financing trade facilitated 2,800 1,940Insurance trade facilitated 17,533 20,029Trade facilitated in emergingmarkets 6,723 6,642$ in millions20,00015,00010,0005,0000DirectFinancingTrade FacilitatedThree months ended Mar 31CreditInsuranceFinancialInstitutionsInsurance2011 2012ContractInsuranceandBondingPoliticalRiskInsuranceThe uncertainty and volatility that marked the global economy in 2011 continued into the first quarter of2012. Unrest in the Middle East and the European debt crisis are still causes for concern. Despite theuncertainty, we are seeing opportunities for global growth on a number of fronts. Commodity prices remainhigh, U.S. demand continues to move upwards and Canadian trade activity continues to climb. Althoughemerging market growth has softened in some areas, growth in emerging markets still outperforms advancedeconomies.There was strong demand for EDC’s financing products in the first quarter and we saw our financing tradefacilitated increase by 44% over the same period in 2011. This translated to net loan disbursements of $750million for the quarter, the highest level of first quarter disbursement activity in four years.Trade facilitated within our insurance portfolio declined by 12% over the same period last year. This waslargely influenced by the timing of business declared by two large customers and a decline in businessdeclared by another large customer.QUARTERLY FINANCIAL REPORT 1
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Quarterly Financial Report Q1 2012 - Export Development ... - EDC

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