Canadian income trusts have been making an important contribution to the economy, investing their capital and growing their businesses at impressive rates, a survey by PricewaterhouseCoopers (PwC) shows.

A study of the five-year performance of more than 250 income trusts reveals that sales, net income and capital expenditure grew significantly during the period 2000-2005 even as the trusts were returning cash to their investors.

The combined population of trusts reported an accumulated increase in sales of more than 600% during the period, with net income increasing 62% in 2005 and 22% in 2004. Significantly, a total of more than $20 billion went to capital spending during each of 2004 and 2005, representing a net income reinvestment rate of more than 200% in 2005 and almost 400% in 2004, the report showed.

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.

“These facts represent an important contribution to the debate over income trusts — a debate that has been lacking factual context,” said Ross Sinclair, national leader of the PwC IPO and income trust services group.

“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,” said Sinclair. “The data clearly refutes the notion that the income trust structure is best suited to mature, low-growth companies in stable industries.”

The findings of the survey are 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. Income trusts 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) were included in the survey.