Mergaert, Barford, Williams & Joly Chartered Accountants. EVERGREENS FOUNDATION Non-Consolidated Financial Statements Year Ended December 31, 2013

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1 Chartered Accountants Non-Consolidated Financial Statements

2 Index to Non-Consolidated Financial Statements INDEPENDENT AUDITOR'S REPORT 1-2 Page NON-CONSOLIDATED FINANCIAL STATEMENTS Non-Consolidated Statement of Financial Position 3 Non-Consolidated Statement of Revenues and Expenditures 4 Non-Consolidated Statement of Changes in Net Assets 5 Non-Consolidated Statement of Cash Flow 6 Notes to Non-Consolidated Financial Statements 7-11 Non-Consolidated Alpine Summit (Schedule 1) 12 Non-Consolidated Parkland Lodge (Schedule 2) 13 Non-Consolidated Pine Valley Lodge (Schedule 3) 14 Non-Consolidated Sunshine Place Lodge (Schedule 4) 15 Non-Consolidated Whispering Pines Lodge (Schedule 5) 16 Non-Consolidated Administration (Schedule 6) 17

3 Chartered Accountants INDEPENDENT AUDITOR'S REPORT To the Members of Evergreens Foundation We have audited the accompanying non-consolidated financial statements of Evergreens Foundation, which comprise the non-consolidated statement of financial position as at December 31, 2013 and the non-consolidated statements of revenues and expenditures, changes in net assets and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Non-consolidated Financial Statements Management is responsible for the preparation and fair presentation of these non-consolidated financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of nonconsolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these non-consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the non-consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the non-consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the non-consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the nonconsolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. (continues) rdAvenue, Edson, Alberta T7E 1R8 Telephone: (780) Fax: (780) admin@mrbca.com Website: 1

4 Independent Auditor's Report to the Members of Evergreens Foundation (continued) Opinion In our opinion, the non-consolidated financial statements present fairly, in all material respects, the financial position of Evergreens Foundation as at December 31, 2013 and the results of its operations and its cash flow for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Edson, Alberta April 1, 2014 CHARTERED ACCOUNTANTS 2 Chartered Accountants

5 Non-Consolidated Statement of Financial Position December 31, 2013 ASSETS CURRENT Cash $ 145,161 $ 143,382 Term deposits 1,017,071 1,010,000 Accounts receivable 148, ,379 Inventory 43,473 35,717 GST recoverable 2,600 85,392 Prepaid expenses 34,669 58,882 1,391,535 1,508,752 PROPERTY, PLANT AND EQUIPMENT (Note 4) 12,345,356 12,362,962 $ 13,736,891 $ 13,871,714 LIABILITIES AND NET ASSETS CURRENT Short term debt $ - $ 2,181 Accounts payable 503, ,959 Unearned revenue - operating 31, ,611 Unearned revenue - capital 52,038 25, , ,789 NET ASSETS Accumulated surplus - 416,045 Capital reserve 804, ,918 Capital funding (Note 5) 12,345,355 12,362,962 13,149,802 12,957,925 $ 13,736,891 $ 13,871,714 ON BEHALF OF THE BOARD Member 3 Chartered Accountants

6 Non-Consolidated Statement of Revenues and Expenditures SCHEDULES OF REVENUES AND EXPENDITURES Non-Consolidated Parkland Lodge (Schedule 2) $ (617,488) $ (589,450) Non-Consolidated Pine Valley Lodge (Schedule 3) (376,704) (408,289) Non-Consolidated Whispering Pines Lodge (Schedule 5) (32,719) (282,078) Non-Consolidated Alpine Summit (Schedule 1) (423,196) (383,368) Non-Consolidated Sunshine Place Lodge (Schedule 4) (334,778) (347,804) Non-Consolidated Administration (Schedule 6) (445,096) (474,733) (2,229,981) (2,485,722) Interest and bank charges 2,479 3,303 DEFICIENCY OF REVENUE OVER EXPENDITURES FROM OPERATIONS (2,232,460) (2,489,025) OTHER INCOME (EXPENSES) Amortization of capital funding 578, ,338 Amortization of capital assets (578,523) (578,338) - - DEFICIT - PRIOR TO LODGE ASSISTANCE GRANT AND ALLOCATION TO PARTICIPATION MUNICIPALITIES (Note 7) (2,232,460) (2,489,025) Lodge assistance grant 858, ,564 Received from participating municipalities (Note 6) 2,144,475 2,064,750 3,002,860 2,898,314 EXCESS OF REVENUES OVER EXPENSES $ 770,400 $ 409,289 4 Chartered Accountants

7 Non-Consolidated Statement of Changes in Net Assets Accumulated Capital Capital Surplus Reserve Funding NET ASSETS - BEGINNING OF YEAR $ 416,045 $ 178,918 $ 12,362,962 $ 12,957,925 $ 12,859,109 Excess of revenues over expenses 770, , ,289 Amortization of capital funding - - (578,523) (578,523) (577,828) Acquisition of capital assets funded by grants (429,881) - 429, Acquisition of capital assets funded by operations (131,035) - 131, Transfer payable to municipalities to surplus ,355 Transfer surplus to capital reserve (625,529) 625, NET ASSETS - END OF YEAR $ - $ 804,447 $ 12,345,355 $ 13,149,802 $ 12,957,925 See Note 12 for detail regarding the annual surplus. 5 Chartered Accountants

8 Non-Consolidated Statement of Cash Flow OPERATING ACTIVITIES Excess of schedules of revenues and expenditures over expenses $ 770,400 $ 409,289 Items not affecting cash: Amortization of property, plant and equipment 578, ,338 Amortization of capital funding (578,523) (578,338) 770, ,289 Changes in non-cash working capital: Accounts receivable 26,818 44,112 Inventory (7,756) (3,768) Accounts payable (117,290) 115,925 Prepaid expenses 24,213 (44,964) GST payable (receivable) 82,792 (28,460) Unearned revenue - operating (234,230) 21,041 Unearned revenue - capital 27,000 (9,175) (198,453) 94,711 Cash flow from operating activities 571, ,000 INVESTING ACTIVITY Purchase of equipment (560,916) (260,652) Cash flow used by investing activity (560,916) (260,652) FINANCING ACTIVITY Short term debt (2,181) 2,181 Cash flow from (used by) financing activity (2,181) 2,181 INCREASE IN CASH FLOW 8, ,529 Cash - beginning of year 1,153, ,853 CASH - END OF YEAR $ 1,162,232 $ 1,153,382 CASH CONSISTS OF: Cash $ 145,161 $ 143,382 Term deposits 1,017,071 1,010,000 $ 1,162,232 $ 1,153,382 6 Chartered Accountants

9 Notes to Non-Consolidated Financial Statements 1. BASIS OF PRESENTATION The Non-Consolidated financial statements were prepared in accordance with Canadian accounting standards for not-for-profit organizations (ASNFPO). These non-consolidated financial statements present only the lodge operations of the Evergreens Foundation. Each lodge statement is included in the schedules at the end of these financial statements. The Evergreens Foundation also operates a Social Housing department which manages housing operations for low income individuals. The results of the Social Housing operations are not included in these statements. 2. PURPOSE OF THE FOUNDATION The Evergreens Foundation is an organization operating with a goal of providing affordable accommodations to seniors. The Foundation qualifies as a not-for profit organization and is exempt from income taxes. The Foundation is also established as a management body by Provincial Ministerial Order and is governed by the Alberta Housing Act and its regulations. The Foundation manages and operates seniors' lodges in the following western Alberta communities: Edson, Evansburg, Grande Cache, Hinton and Jasper. The facility in Evansburg is operated as a joint care facility with the Good Samaritan Society. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and cash equivalents Cash includes cash and cash equivalents. Cash equivalents are investments in with maturities of three months or less or which have a cashable feature. Inventory Inventory is valued at the lower of cost and net realizable value. Cost is determined using the weighted average method. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated amortization. Land and buildings owned by the Alberta Government are not included in these financial statements. Property, plant and equipment are amortized over their estimated useful lives at the following rates and methods: Buildings 4% declining balance method Automotive equipment 30% declining balance method Furniture and fixtures 20% declining balance method Kitchen equipment 20% declining balance method Leasehold improvements 10 years straight-line method (continues) 7 Chartered Accountants

10 Notes to Non-Consolidated Financial Statements 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition Evergreens Foundation follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Endowment contributions are recognized as direct increases in net assets. Restricted investment income is recognized as revenue in the year in which the related expenses are incurred. Unrestricted investment income is recognized as revenue when earned. Allocation of expenses The costs of each site include items directly related to each project. The Evergreens Foundation also incurs a number of general support expenses that are common to the administration of the organization and each of its sites. The Evergreens Foundation allocates certain of its general support expenses proportionately based on the umber of units in each site. The allocation is applied consistently each year. Measurement uncertainty The preparation of financial statements in conformity with Canadian accounting standard for not-forprofit organizations requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Such estimates are periodically reviewed and any adjustments necessary are reported in earnings in the period in which they become known. Actual results could differ from these estimates. Financial instruments policy Financial instruments are recorded at fair value when acquired or issued. In subsequent periods, financial assets with actively traded markets are reported at fair value, with any unrealized gains and losses reported in income. All other financial instruments are reported at amortized cost, and tested for impairment at each reporting date. Transaction costs on the acquisition, sale, or issue of financial instruments are expensed when incurred. 8 Chartered Accountants

11 Notes to Non-Consolidated Financial Statements 4. PROPERTY, PLANT AND EQUIPMENT Cost Accumulated Net book Net book amortization value value Land - Evansburg $ 50,000 $ - $ 50,000 $ 50,000 Land - Hinton 161, , ,021 Automotive 83,570 49,126 34,444 49,206 Building - Evansburg 2,569, ,242 1,673,867 1,743,611 Building - Grande Cache 4,188,504 1,107,813 3,080,691 2,858,716 Building - Hinton 1,849, ,792 1,041,300 1,023,784 Building - Jasper 7,434,233 1,559,022 5,875,211 6,120,012 Furniture and fixtures - Edson 103,902 32,916 70,986 79,099 Furniture and fixtures - Evansburg 68,187 53,414 14,773 18,466 Furniture and fixtures - Grande Cache 53,746 19,948 33,798 29,626 Furniture and fixtures - Hinton 175, ,373 33,766 29,744 Furniture and fixtures - Jasper 286, ,091 89, ,335 Kitchen equipment - Grande Cache 212,385 83, ,336 21,324 Kitchen equipment - Hinton 102,498 86,003 16,495 20,618 Leasehold improvements - Edson 58,000 17,400 40,600 46,400 $ 17,395,545 $ 5,050,189 $ 12,345,356 $ 12,362, CAPITAL FUNDING Capital funding was received as follows: Yellowhead County $ 5,232,644 $ 5,232,644 Town of Hinton 1,345,691 1,345,691 Municipality of Jasper 1,104,070 1,104,070 Town of Edson 830, ,215 MD of Greenview No , ,381 Town of Grand Cache 288, ,184 Capital purchases funded from operations 586, ,451 Other funding (government grants and donations) 7,180,716 6,756,992 Total capital funding 17,395,545 16,834,628 Accumulated amortization of capital funding (5,050,189) (4,471,667) Net capital funding $ 12,345,356 $ 12,362,961 Capital funding is amortized and included in income at the same amounts as the associated property, plant and equipment are amortized. 9 Chartered Accountants

12 Notes to Non-Consolidated Financial Statements 6. RECEIVED FROM PARTICIPATING MUNICIPALITIES The Evergreens Foundation operates at a deficit with the balance funded by municipal requisition. The contributions were received from municipalities as follows: Town of Edson $ 150,166 $ 153,890 Town of Grand Cache 69,012 70,873 Town of Hinton 234, ,714 MD of Greenview No , ,711 Municipality of Jasper 180, ,438 Parkland County 43,645 41,200 Yellowhead County 1,140,867 1,086,924 $ 2,144,475 $ 2,064, DEFICIT ALLOCATION The Lodge Assistance grant reduces the operating deficit by $858,385 ( $833,564). This year's surplus is to be allocated to the capital reserve. 8. RELATED PARTY TRANSACTIONS The foundation received $70,500 ( $60,000) in management fees from the Social Housing Program, a program which is under the control of the Evergreens Foundation. The transactions are measured at the exchange amount. 9. ADVANCES TO RELATED PARTIES Amounts due from Social Housing are unsecured, non-interest bearing and have no set terms of repayment. The amounts due from Social Housing in the amount of $48,673 ( $50,345) are included in accounts receivable. 10. LOCAL AUTHORITIES PENSION PLAN Employees of the foundation participate in the Local Authorities Pension Plan (LAPP), which is one of the plans covered by the Alberta Public Sector Pension Plans Act. The LAPP serves about 223,000 members and 428 employers. The LAPP is financed by employer and employee contributions and by investment earnings of the LAPP Fund. Contributions for current service are recorded as expenditures in the year in which they become due. The foundation is required to make current service contributions to the LAPP of 9.91% of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 13.74% on pensionable earnings above this amount. Employees of the foundation are required to make current service contributions of 8.91% of pensionable salary up to the year's maximum pensionable salary and 12.74% on pensionable salary above this amount. At December 31, 2012, the LAPP disclosed an actuarial deficiency of $5.0 billion ( $4.6 billion) 10 Chartered Accountants

13 Notes to Non-Consolidated Financial Statements 11. FINANCIAL INSTRUMENTS The foundation is exposed to various risks through its financial instruments and has a comprehensive risk management framework to monitor, evaluate and manage these risks. The following analysis provides information about the foundation's risk exposure and concentration as of December 31, Credit risk Credit risk arises from the potential that a counter party will fail to perform its obligations. The foundation is exposed to credit risk from tenants. An allowance for doubtful accounts is established based upon factors surrounding the credit risk of specific accounts, historical trends and other information. The foundation has a significant number of tenants which minimizes concentration of credit risk. 12. ANNUAL SURPLUS Details of the annual surplus are as follows: Excess of revenues over expenses $ 770,400 $ 409,289 Acquisition of capital assets funded by grants (429,881) - Acquisition of capital assets funded by operations (131,035) (260,652) Annual Surplus $ 209,484 $ 148, COMPARATIVE FIGURES Some of the comparative figures have been reclassified to conform to the current year's presentation. 11 Chartered Accountants

14 Non-Consolidated Alpine Summit (Schedule 1) Revenue Rental revenue $ 630,018 $ 593,249 Sundry income 22,190 28,766 Management fees 26,270 25,635 Grant revenue - conditional - 16, , ,641 Administrative Expenses Advertising and promotion Dues - licences and insurance Employee benefits 89,455 89,674 Insurance 7,685 7,429 Legal and audit - 1,471 Office and equipment rental 2,034 1,374 Office supply 3,238 3, , ,419 Operating Expenditures Food supplies 252, ,380 Health and safety 5,865 2,685 Housekeeping and drycleaning 64,984 51,533 Kitchen supplies 1,947 1,472 Salaries 494, ,370 Security 1, Social and recreation 3,199 2,304 Staff development and conference 1,265 3,196 Travel expense Utilities, telephone and waste 85,720 85,703 Vehicle expense , ,574 Maintenance Expenditures Building maintenance 17,054 50,844 Contract maintenance 57,084 41,169 Equipment, furnishings and repair 10,550 7,714 Grounds maintenance 2,811 3,289 87, ,016 DEFICIENCY OF REVENUES OVER EXPENDITURES $ (423,196) $ (383,368) 12 Chartered Accountants

15 Non-Consolidated Parkland Lodge (Schedule 2) Revenue Rental revenue $ 764,836 $ 710,437 Sundry income 21,720 18,858 Management fees 16,418 16,024 Grant revenue - conditional 25,299 48, , ,395 Administrative Expenditures Advertising and promotion 576 1,033 Dues - licences and insurance Employee benefits 104, ,264 Insurance Office and equipment rental 1,976 1,576 Office supply 2,767 9, , ,678 Operating Expenditures Food supplies 164, ,701 Health and safety 18,091 7,268 Housekeeping and drycleaning 26,386 20,345 Kitchen supplies 10,240 10,003 Salaries 649, ,755 Security 1,717 5,374 Social and recreation 5,317 3,513 Staff development and conference 3,912 2,511 Travel expense 86 1,559 Utilities, telephone and waste 128, ,784 1,008, ,813 Maintenance Expenditures Building maintenance 223, ,326 Contract maintenance 70,141 63,558 Equipment, furnishings and repair 16,837 12,355 Grounds maintenance 16,270 21, , ,354 DEFICIENCY OF REVENUE OVER EXPENDITURES $ (617,488) $ (589,450) 13 Chartered Accountants

16 Non-Consolidated Pine Valley Lodge (Schedule 3) Revenue Rental revenue $ 429,707 $ 410,553 Sundry income 19,054 20,863 Grant revenue - conditional - 3,031 Donation revenue , ,813 Administrative Expenditures Advertising and promotion Dues - licences and insurance Employee benefits 80,062 73,777 Insurance 10,441 10,064 Office and equipment rental 1,732 1,576 Office supply 2,213 5,329 94,914 91,274 Operating Expenditures Food supplies 89,464 87,181 Health and safety 6,400 3,417 Housekeeping and drycleaning 15,641 11,862 Kitchen supplies 6,598 7,126 Salaries 438, ,320 Security 371 4,777 Social and recreation 3,509 2,090 Staff development and conference 3,664 2,408 Travel expense 83 1,054 Utilities, telephone and waste 70,113 65,447 Vehicle expense , ,682 Maintenance Expenditures Building maintenance 29,653 92,344 Contract maintenance 51,532 40,190 Equipment, furnishings and repair 6,645 7,974 Grounds maintenance 8,200 4,638 96, ,146 DEFICIENCY OF REVENUES OVER EXPENDITURES $ (376,704) $ (408,289) 14 Chartered Accountants

17 Non-Consolidated Sunshine Place Lodge (Schedule 4) Revenue Rental revenue $ 426,421 $ 386,795 Sundry income 5,083 5, , ,080 Administrative Expenditures Advertising and promotion Delivery, freight and express Dues - licences and insurance Insurance Office supply ,325 Operating Expenditures Housekeeping and drycleaning 845 4,374 Operating expense - Good Samaritan Society 757, ,009 Social and recreation 1,910 - Staff development and conference 1, Travel expense , ,182 Maintenance Expenditures Building maintenance 220 2,153 Equipment, furnishings and repair 3,711 6,250 Grounds maintenance ,931 9,377 DEFICIENCY OF REVENUES OVER EXPENDITURES $ (334,778) $ (347,804) 15 Chartered Accountants

18 Non-Consolidated Whispering Pines Lodge (Schedule 5) Revenue Rental revenue $ 374,598 $ 280,201 Sundry income 69,026 71,260 Management fees 16,418 19,918 Grant revenue - conditional 429, , , ,526 Administrative Expenditures Advertising and promotion - 95 Dues - licences and insurance Employee benefits 83,268 73,492 Insurance 4,388 4,191 Office supply 2,296 1,777 90,052 79,655 Operating Expenditures Food supplies 82,919 73,572 Health and safety 5,392 2,696 Housekeeping and drycleaning 34,953 22,537 Kitchen supplies 8,731 5,639 Salaries 497, ,825 Security 615 1,177 Social and recreation 2,856 1,123 Staff development and conference 3,811 1,725 Travel expense 1,044 1,485 Utilities, telephone and waste 72,880 56,209 Vehicle expense , ,988 Maintenance Expenditures Building maintenance 44,111 87,576 Contract maintenance 56,082 52,558 Equipment, furnishings and repair 19,588 10,439 Grounds maintenance 1,411 1, , ,961 DEFICIENCY OF REVENUES OVER EXPENDITURES $ (32,719) $ (282,078) 16 Chartered Accountants

19 Non-Consolidated Administration (Schedule 6) Revenue Management fees $ 70,500 $ 60,000 Sundry income 11,602 3,047 Interest income 12,668 10,764 94,770 73,811 Administrative Expenditures Advertising and promotion 1, Dues - licences and insurance 8,722 9,085 Employee benefits 100, ,716 Legal and audit 33,070 20,534 Office supply 15,116 24, , ,876 Operating Expenditures Board expense and travel 19,666 10,279 Food supplies Health and safety - 10,059 Housekeeping and drycleaning Salaries 301, ,771 Security Social and recreation 8,565 2,971 Staff development and conference 4,394 13,130 Travel expense 4,860 4,102 Utilities, telephone and waste 10,902 12,687 Vehicle expense 6,495 1, , ,897 Maintenance Expenditures Building maintenance Equipment, furnishings and repair Office and equipment rental 23,326 20,571 24,018 20,771 DEFICIENCY OF REVENUES OVER EXPENDITURES $ (445,096) $ (474,733) 17 Chartered Accountants