Contact: Heath Applebaum
Deloitte
External Communications
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Toronto, September 20, 2006 — Showcasing a staggering five year average revenue growth of 4,954%, primarily achieved through cash flow from operations rather than external financing, Canada’s Deloitte 2006 Technology Fast 50 winners are at a peak confidence level to tackle the global markets. Announced today are the winners of the 2006 Deloitte Technology Fast 50 - the annual program that recognizes Canadian technology companies for their innovation and growth. Also revealed are the findings from Deloitte’s Fast 50 CEO Survey which provide insight into the winners’ secrets for success, opportunities, challenges and future planning. 

“This year’s Fast 50 winners have never been better positioned to compete on a global platform having achieved astounding growth over the last five years,” says John Ruffolo, National Leader for Deloitte’s Technology, Media and Telecommunication practice. “Although these winning companies know international expansion will bring new challenges, the vast majority have total confidence in their ability to compete globally without seeking external funding or through mergers and acquisitions. This is a testament to their exceptional business success in commercializing their technologies, and demonstrates their conviction in their products and business operations.”

For the vast majority of the 2006 Fast 50 winners, the exceptional pace of growth has been achieved through cash flow from operations rather than external financing (72%), with 76% also citing cash flow to be the primary source of future financing. Fast 50 CEOs consider the top three factors driving their companies' growth to be exceptional or unique product(s) (31%), followed by business strategy (17%), and early entry to market (14%).

None of the winning companies’ CEOs believe the Canadian domestic market provides additional future growth opportunities. Seventy-six percent of the 2006 Fast 50 CEOs consider international expansion as the most important step they will take over the next year to drive growth, with 59% stating that increasing international market share will likely be the main driver of long-term business growth. The United States is considered to provide the most opportunity by 64% of CEOs, followed by Europe (21%), and China (7%).

Additional insights for future growth from Fast 50 CEOs:
Staying competitive requires R&D investment - In preparation to face intensified competition at an international level, this year’s winning companies are heavily ramping up their R&D capability. Collectively, the winning companies invested nearly $220 million on R&D in 2005, with 72% planning to increase R&D spend and 86% planning to add headcount to R&D over the next 12 months. 

Seeking finance for growth - Of those Fast 50 winners who did not fund expansion solely through cash flow operations, other principal financing has been through a public offering of securities or venture capital (both 24%), with 48% of CEOs citing a public offering as a likely source of additional future financing, followed by commercial debt and venture capital (both 31%).  Of those companies who may consider a public offering, the TSX and NASDAQ stock markets are the most appealing to Fast 50 CEOs (both 28%), followed by the London AIM (21%).  Access to investors is considered to be the main consideration in selecting a stock market (by 79%), followed by compliance and governance issues (45%).     

Changing nature of the Canadian tech market - This year’s winners demonstrate that Canada’s technology market has matured over the last five years to become evermore innovative and creative. Compared to previous years, 2006 winners come from an increasingly diverse sector background including 54% in software, 18% in telecommunications/wireless, and 11% in emerging technologies (such as alternative technology, nanotech, clean air and fuel cells).  

Dealing with challenges - While international expansion is considered fundamental to success, CEOs are well aware of the new challenges and issues it brings citing it as the main challenge in sustaining growth (25%), with increased competition considered the biggest threat to the sustainability of the winning companies (69%). The labour/talent shortage is Fast 50 CEOs’ biggest concern that may hinder their company’s future growth (by 45%), indicating that the shrinking talent pool is already in effect in the tech sector. Other concerns are currency exchange rate (38%), and intellectual property protection (31%).

2006 Deloitte Technology Fast 50 Winners:
The fastest of the fast - Vancouver-based Westport Innovations Inc., which develops clean-technology engines, ranked top of the class as Canada’s 2006 fastest growing tech company, boasting 42,889% five-year average revenue growth. GTA-based wireless solution provider Redline Communications (37,583%) and Montreal-based mobile content provider Airborne Entertainment Inc. (33,322%) ranked second and third, respectively. Closing the top five ranking are GTA-based network solution developer RuggedCom Inc. (20,545%) and Kanata-based DragonWave Inc. (18,968%), a leading innovator of high capacity broadband wireless networking systems.

Eight provinces represented - Almost half (24) of the 2006 Deloitte Technology Fast 50 recipients are headquartered in Ontario, followed by Quebec and British Columbia (both fielding eight winners). Alberta comes third with seven Fast 50 winners, followed by Manitoba, Prince Edward Island and Newfoundland, each with one recipient.

Fifteen repeat winners - Close to one-third (15 companies) from this year’s Fast 50 recipients have been recognized as Canada’s fastest growing technology companies for two consecutive years or more. Of those, half (8 companies) boast multiple appearances on the Fast 50 ranking year-over-year, demonstrating their resiliency and ability to sustain high growth over the long term. Waterloo-based Research In Motion continues to uphold its unparalleled achievement as the longest-standing company, recognized as a Fast 50 winner for nine consecutive years (since the program’s inception).

Five companies gain special recognition - Each year, as part of the Fast 50 program, Deloitte awards five companies that not only demonstrate impressive revenue growth over a five-year term, but also excel in other parameters of business performance such as competitive advantage, profitability and management effectiveness. This year’s leadership award recipients include three GTA-based companies, energy solutions developer Hydrogenics Corporation (emerging technologies sector), Evertz Microsystems Ltd., which develops hardware solutions for broadcast (hardware sector), workforce optimization software developer Workbrain Inc. (software sector), as well as Calgary-based NovAtel Inc., which develops GPS systems (Telecom/wireless sector) and Vancouver-based Angiotech Pharmaceuticals, a market leader in the emerging field of drug-eluting medical devices and biomaterials.

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