CORPORATION OF THE CITY OF TIMMINS

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1 CORPORATION OF THE CITY OF TIMMINS CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017

2 CORPORATION OF THE CITY OF TIMMINS INDEX INTRODUCTORY Mayor and Members of Council Municipal Officials FINANCIAL STATEMENTS Management s Responsibility for the Consolidated Financial Reporting Independent Auditor's Report Consolidated Statement of Financial Position Statement 1 Consolidated Statement of Operations and Accumulated Surplus 2 Consolidated Statement of Changes in Net Debt 3 Consolidated Statement of Cash Flows 4 Notes to Consolidated Financial Statements ANALYTICAL SCHEDULES Schedule of Consolidated Accumulated Surplus Schedule A Schedule of Consolidated Reserves and Reserve Funds B Schedule of Consolidated Segmented Disclosure C Schedule of Consolidated Tangible Capital Assets D TRUST FUNDS Independent Auditor's Report Statement of Financial Position Statement 1 Statement of Continuity 2 Notes to Financial Statements CONSOLIDATED LOCAL BOARDS, CORPORATION AND ENTERPRISE BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA Management s Responsibility for Financial Reporting Independent Auditor's Report Statement of Financial Position Statement of Operations and Accumulated Surplus Statement of Change in Net Financial Assets Statement of Cash Flows Notes to Financial Statements TIMMINS ECONOMIC DEVELOPMENT CORPORATION Independent Auditor's Report Statement of Financial Position Statement of Financial Activities Statement of Change in Net Financial Assets Statement of Cash Flows Notes to Financial Statements NON-CONSOLIDATED LOCAL BOARDS AND CORPORATION PORCUPINE HEALTH UNIT Management s Responsibility for the Financial Reporting Independent Auditor's Report Statement of Financial Position Statement of Operations and Accumulated Surplus Statement of Changes in Net Financial Assets Statement of Cash Flows Notes to Financial Statements

3 CORPORATION OF THE CITY OF TIMMINS INDEX (CONT'D) THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST Independent Auditor's Report Statement of Financial Position Statement of Operations and Accumulated Surplus Statement of Change in Net Financial Assets Statement of Cash Flows Notes to Financial Statements COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD Management s Responsibility for the Financial Reporting Independent Auditor's Report Statement of Financial Position Statement of Financial Activities and Accumulated Surplus Statement of Change in Net Debt Statement of Re-Measurement Gains Statement of Cash Flows Notes to Financial Statements THE CITY OF TIMMINS NON-PROFIT HOUSING CORPORATION Management s Responsibility for Financial Reporting Independent Auditor's Report Statement of Financial Position Statement of Operations and Changes in Net Assets Statement of Cash Flows Notes to Financial Statements MATTAGAMI REGION CONSERVATION AUTHORITY Management s Responsibility for the Financial Reporting Independent Auditor's Report Statement of Financial Position Statement of Financial Activities and Accumulated Surplus Statement of Changes in Net Financial Assets Statement of Cash Flows Notes to Financial Statements CITY OF TIMMINS - FINANCIAL INFORMATION RETURN

4 CORPORATION OF THE CITY OF TIMMINS (PROVINCE OF ONTARIO) CITY COUNCIL MAYOR S. Black COUNCILLORS Ward 1 - V. Farrell (January 2017) Ward 5 - A. Marks Ward 2 - W. Wawrzaszek - R. Dubeau Ward 3 - J. Campbell - M. Doody Ward 4 - P. Bamford - N. Rinaldo OFFICERS Chief Administrative Officer D. Landers City Clerk S. Palmateer, AMCT Director of Finance and Treasurer J. Howie, CPA, CGA (to April 2018) N. Moore, CPA, CA (from April 2018) Fire Chief M. Pintar (retired November 2017) N. Beauchamp (November 2017) Police Chief J. Gauthier Director of Public Works & Engineering Vacant Director of Development, Maintenance & Transit Services M. Jensen AUDITORS MNP LLP, Chartered Professional Accountants, Licensed Public Accountants BANKERS The Bank of Nova Scotia 1

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6 INDEPENDENT AUDITOR'S REPORT To the Councillors, Inhabitants and Ratepayers of Corporation of the City of Timmins. We have audited the accompanying consolidated financial statements of Corporation of the City of Timmins, which comprise the consolidated statement of financial position as at December 31, 2017, and the consolidated statements of operations and accumulated surplus, changes in net debt and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of 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 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Corporation of the City of Timmins as at December 31, 2017 and the results of its operations and accumulated surplus and the changes in net debt and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Timmins, Ontario MNP LLP June 19, 2018 Chartered Professional Accountants Licensed Public Accountants 3

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8 STATEMENT 2 CORPORATION OF THE CITY OF TIMMINS CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS YEARS ENDED DECEMBER 31 BUDGET REVENUES TAXATION AND USER CHARGES Residential and farm taxation $ 51,811,172 $ 50,090,638 $ 47,943,163 Commercial and industrial taxation 16,379,771 15,835,835 21,451,839 Taxation from other governments 1,502,637 1,452,738 1,418,152 User charges and sale of goods 34,803,711 42,375,580 34,663, ,497, ,754, ,476,769 GRANTS AND OTHER Government transfers for operating (Note 23) Provincial 21,979,431 22,355,570 22,197,275 Federal 103, , ,612 Investment income 215, , ,360 Penalties and interest on taxes 750, , ,402 Licences and permits 818, , ,907 Gain (loss) on sale of land - 212,497 (284,199) Donated tangible capital assets ,444 Other 13,363,899 2,484,031 2,391,495 TOTAL REVENUE 141,726, ,137, ,974,065 EXPENDITURES General government 13,809,849 8,960,907 8,979,438 Protection to persons and property 27,596,516 25,997,192 25,488,199 Transportation services 29,188,194 29,850,326 29,752,889 Environmental services 26,700,206 27,791,327 26,319,482 Health services 6,303,638 7,650,117 7,963,513 Social and family services 22,267,308 21,181,237 22,368,950 Recreation and cultural services 9,032,605 9,397,328 9,143,163 Planning and development 8,416,738 9,456,833 3,934,680 TOTAL EXPENDITURES 143,315, ,285, ,950,314 ANNUAL SURPLUS (DEFICIT) - BEFORE OTHER (1,588,433) (3,148,171) (1,976,249) OTHER Government transfers for capital Provincial 1,622, ,889 6,347,830 Federal 8,855,500 4,398,900 4,946,490 ANNUAL SURPLUS $ 8,889,197 1,789,618 9,318,071 ACCUMULATED SURPLUS, BEGINNING OF YEAR 259,051, ,733,842 ACCUMULATED SURPLUS, END OF YEAR (Schedule A) $ 260,841,531 $ 259,051,913 See accompanying notes. 5

9 STATEMENT 3 CORPORATION OF THE CITY OF TIMMINS CONSOLIDATED STATEMENT OF CHANGES IN NET DEBT YEARS ENDED DECEMBER ANNUAL SURPLUS $ 1,789,618 $ 9,318,071 Acquisition of tangible capital assets (18,270,517) (25,976,203) Tangible capital assets received as contributions - (25,444) Amortization of tangible capital assets 16,513,208 16,134,359 Loss on sale of tangible capital assets (97,242) 307,840 Proceeds on disposal of tangible capital assets 105,342 58,473 Net adjustments and write offs of capital assets 53, ,692 (1,695,593) (9,043,283) Utilization (acquisition) of inventory (180,086) 21,884 Acquisition of prepaid assets 238,211 (672,701) 58,125 (650,817) CHANGE IN NET DEBT 152,150 (376,029) NET DEBT, BEGINNING OF YEAR (41,381,881) (41,005,852) NET DEBT, END OF YEAR $ (41,229,731) $ (41,381,881) See accompanying notes. 6

10 STATEMENT 4 CORPORATION OF THE CITY OF TIMMINS CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER OPERATING ACTIVITIES Annual surplus $ 1,789,618 $ 9,318,071 Items not affecting cash: Amortization of tangible capital assets 16,513,208 16,134,359 Loss on disposal of tangible capital assets (97,242) 307,840 Net adjustments and write offs of capital assets 53, ,692 18,259,200 26,217,962 Changes in non-cash working capital: Decrease (increase) in taxes and grants in lieu receivable (1,682,172) 2,432 Decrease (Increase) in trade and loan receivables 7,015,210 (6,833,878) Increase in prepaid expenditures and inventory 58,125 (650,817) Decrease (increase) in other financial assets 1,204 (8,636) Decrease in accounts payable and accrued liabilities 2,029,207 (1,430,823) Increase in deferred revenue (49,540) 33,782 Increase (decrease) in deferred revenue - obligatory reserve fund (172,209) (10,864) Increase in post employment benefits 793,366 1,014,389 CASH PROVIDED BY OPERATING ACTIVITIES 26,252,391 18,333,547 CAPITAL TRANSACTIONS Acquisition of tangible capital assets (18,270,517) (25,976,203) Acquisition of donated tangible capital assets - (25,444) Proceeds on sale of tangible capital assets 105,342 58,473 CASH USED IN CAPITAL TRANSACTIONS (18,165,175) (25,943,174) FINANCING TRANSACTIONS Proceeds from debenture issue - 21,600,000 Long-term debt repaid (2,073,278) (1,203,352) Bank indebtedness repaid - - CASH PROVIDED BY FINANCING ACTIVITIES (2,073,278) 20,396,648 CHANGE IN CASH 6,013,938 12,787,021 CASH, beginning of year 19,581,506 6,794,485 CASH, end of year $ 25,595,444 $ 19,581,506 CASH FLOW SUPPLEMENTARY INFORMATION Interest paid $ 1,696,953 $ 1,272,555 See accompanying notes. 7

11 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017 Corporation of the City of Timmins is a municipality in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes including the Municipal Act 2001, Provincial Offences Act and other related legislation. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of Corporation of the City of Timmins (the "City") are the representation of management and have been prepared in accordance with Canadian public sector accounting standards established by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants of Canada ("CPA Canada"). The more significant of these accounting policies are summarized below. (a) REPORTING ENTITY The consolidated financial statements reflect the assets, liabilities, revenues, expenditures and fund balances of the reporting entity. The reporting entity is comprised of all organizations, committees and local boards accountable for the administration of their financial affairs and resources to the City and which are owned or controlled by the City. These consolidated financial statements include: Timmins Airport Timmins Economic Development Corporation Board of Management of the Downtown Business Improvement Area All interfund assets and liabilities and sources of financing and expenditures have been eliminated. (i) NON-CONSOLIDATED ENTITIES These consolidated financial statements do not reflect the assets, liabilities, sources of financing, expenditures and the activities of the following boards, organizations and entities which are not under the control of the City: Mattagami Region Conservation Authority City of Timmins Non-Profit Housing Corporation District of Cochrane Social Services Administration Board (Joint Local Board) Porcupine Health Unit (Joint Local Board) The Board of Health for the Porcupine Health Unit Building Trust (Joint Local Board) Separate audited financial statements have been prepared for the above organizations. (ii) TRUST FUNDS Trust funds and their related operations administered by the City are not included in the consolidated financial statements, but are reported separately on the Trust Funds Statement of Continuity and Trust Funds Statement of Financial Position. (iii) ACCOUNTING FOR SCHOOL BOARD TRANSACTIONS Revenues, expenditures, assets and liabilities with respect to the operations of the school boards are not reflected in the municipal fund balances of these financial statements. (b) BASIS OF ACCOUNTING (i) Accrual accounting The consolidated financial statements of the City have been prepared using the accrual basis of accounting. Operating grants from all levels of government are recorded as revenue in the period to which they relate. Grants approved but not received at the end of an accounting period are accrued. Where a portion of a grant relates to a future period, it is deferred and recognized in that subsequent period. These financial statements reflect agreed arrangements with respect to the year ended December 31, Other revenues are recognized as they become available and are measurable. Expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. 8

12 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (b) BASIS OF ACCOUNTING (CONT'D) (ii) Use of estimates and measurement uncertainty The preparation of financial statements in conformity with Canadian public sector accounting standards 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 expenditures during the period. Such estimates include amortization of tangible capital assets, actuarial valuation of post-employment benefits, and accrued accounts payable. Actual results could differ from these estimates. (iii) Investments Investments are recorded at cost. (iv) Inventory for own consumption Inventory for own consumption is recorded at the lower of cost and replacement cost. (v) Leases Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the related lease payments are charged to expenditures as incurred. (vi) Post employment benefits The City accrues its obligations under employment benefit plans as the employees render the services necessary to earn employee future benefits. The cost of retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on service and management's best estimate of expected plan performance, salary escalation, retirement ages and expected health care costs. Actuarial valuations, where necessary for accounting purposes, are performed triennially. The discount rate used to determine the accrued benefit obligation was the expected cost of long term debt. Unamortized actuarial gains or losses are amortized on a straight-line basis over the expected average remaining service life of the employee group. Where applicable, the City has set aside reserve funds intended to fund these obligations, either in full or in part. These reserve funds were created under municipal by-law and do not meet the definition of a plan asset under CICA PS 3250 Retirement Benefits. Therefore, for the purposes of these consolidated financial statements, the plans are considered unfunded. (vii) Non-Financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives beyond the current year and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the annual surplus, provides the change in net financial assets for the year. 9

13 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (b) BASIS OF ACCOUNTING (CONT'D) (viii) Tangible capital assets Tangible capital assets are recorded at cost, which includes all amounts directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets is amortized on a straight-line basis over the estimated useful lives as follows: Land improvements years Leasehold improvements restricted to lease term of related asset type Buildings 40 years Machinery and equipment 5-20 years Vehicles and mobile equipment 3-20 years Communication, IT equipment and software 5-10 years Furniture, fixtures and appliances 10 years Water and waste plants and networks Underground networks years Sewage treatment plants and lift stations years Water pumping stations and reservoirs years Transportation Roads years Bridges and structures years Assets under construction are not amortized until the asset is available for productive use. (ix) Contribution of tangible capital assets Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and also recorded as revenue. (x) Deferred revenue Deferred revenue represents user charges and other fees which have been collected for which the related services have yet to be performed. These amounts will be recognized as revenue in the fiscal year the services are performed, as this is the time the eligibility criteria have been met and the revenue is earned. (xi) Deferred revenue - Obligatory reserve fund Deferred revenue - obligatory reserve fund represents recreational land contributions and gasoline tax contributions under the authority of provincial or federal legislation and municipal by-laws. These amounts have been collected but the related services have yet to be performed. These amounts will be recognized as revenue in the fiscal year the services are performed, as this it the time the eligibility criteria have been met and the revenue is earned. (xii) Reserves and reserve fund Certain amounts, as approved by Council, are set aside in reserves and reserve funds for future operating and capital purposes. Transfers to and/or from reserves and reserve funds are recorded as an adjustment to the respective fund when approved. 10

14 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, 2017 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (b) BASIS OF ACCOUNTING (CONT'D) (xiii) Government transfers Government transfers are transfers from senior levels of government that are not the result of an exchange transaction and are not expected to be repaid in the future. Government transfers without eligibility criteria or stipulations are recognized as revenue when the transfer is authorized. A transfer with eligibility criteria is recognized as revenue when the transfer is authorized and all eligibility criteria have been met. A transfer with or without eligibility criteria but with stipulations is recognized as revenue in the period the transfer is authorized and all eligibility criteria have been met, except where and to the extent that the transfer gives rise to an obligation that meets the definition of a liability for the City. Government transfers that meet the definition of a liability are recognized as revenue as the liability is extinguished. (xiv) Taxation and related revenues Property tax billings are prepared by the City based on assessment rolls issued by the Municipal Property Assessment Corporation ("MPAC"). Tax rates are established annually by City Council, incorporating amounts to be raised for local services and amounts the City is required to collect on behalf of the Province of Ontario in respect of education taxes. A normal part of the assessment process is the issue of supplementary assessment rolls, which provide updated information with respect to changes in property assessment. Once a supplementary assessment roll is received, the City determines the taxes applicable and renders supplementary tax billings. Taxation revenues are recorded when they meet the definition of an asset, the tax is authorized and the taxable event has occurred. Assessments and the related property taxes are subject to appeal. Tax adjustments as a result of appeals are recorded when the results of the appeal process are known. The City is entitled to collect interest and penalties on overdue taxes. These revenues are recorded in the period the interest and penalties are levied. (xv) User charges User charges relate to transit fees, utility charges (water, wastewater and solid waste), licensing fees, recreational fees, fees for use of various programs, and fees imposed based on specific activities. Revenue is recognized when the activity is performed or when the services are rendered. (xvi) Fines and Penalties Fines and penalties revenue is primarily generated from the Provincial Offences Act (POA) office. Balances arising from operation of the POA office have been consolidated with these financial statements. The City cannot reliably estimate the collections of this revenue, accordingly, revenue is recognized on the cash basis. (xvii) Other Revenue Other revenues are recognized in the year that the events giving rise to the revenues occur and the revenues are earned. Amounts received which relate to revenues that will be earned in a subsequent year, are deferred and reported as liabilities. (xviii) Landfill closure and post-closure liabilities The costs to close existing landfill sites are based on estimated future expenditures in perpetuity in current dollars, adjusted for estimated inflation. The estimated liability for active sites is recognized as the landfill's capacity is used. These costs are reported as a liability on the Consolidated Statement of Financial Position. (xviii) Landfill closure and post-closure liabilities Cash includes cash and cash equivalents. Cash equivalents are investments in guaranteed investment certificates and are valued at cost plus accrued interest. The carrying amounts approximate fair value because they have maturities at the date of purchase of less than ninety days. 11

15 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, ADOPTION OF ACCOUNTING STANDARDS DURING THE YEAR No new accounting standards were adopted during the year. 3. OPERATIONS OF SCHOOL BOARDS During 2017, the City collected property taxes totaling $11,538,532 ( $12,701,698) on behalf of area school boards, which have been excluded from reported revenue. 4. CONTRIBUTIONS TO NON-CONSOLIDATED JOINT LOCAL BOARDS Further to Note 1(a)(i), contributions were made by the City to the non-consolidated joint local boards as follows: Cochrane District Social Services Administration Board ("CDSSAB") $ 9,002,988 $ 10,136,982 Porcupine Health Unit ("PHU") $ 1,270,848 $ 1,230,113 The City is contingently liable for its share, which is approximately 63% ( %) for the CDSSAB and 54% ( %) for the PHU, of any deficits at the end of the year for these boards. Neither board incurred a deficit in 2017 or LOAN RECEIVABLE The loan receivable from Cochrane District Social Services Administration Board is repayable in blended semiannual instalments of $326,322 beginning on May 17th, 2010 up to and including November 16th, The loan bears interest at 5.06%. Principal payments required for each of the next five years and thereafter are approximately as follows: 2018 $ 282, , , , ,152 Thereafter 5,816,963 $ 7,382,489 12

16 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, TAXES RECEIVABLE Current year $ 3,833,004 $ 2,847,733 Arrears previous years 2,653,429 2,171,822 Tax registered properties 533, ,986 $ 7,019,713 $ 5,337, TRUST FUNDS Trust funds administered by the City amounting to $2,808,840 ( $2,864,047) have not been included in the "Consolidated Statement of Financial Position" nor have their operations been included in the "Consolidated Statement of Operations" as such balances are held in trust by the City for the benefit of others. Separate financial statements, which provide details of individual trusts and balances, are prepared for trust funds. 8. PENSION AGREEMENTS The City makes contributions to the Ontario Municipal Employees Retirement System (OMERS), which is a multiemployer plan on behalf of all permanent, full-time and qualifying part-time members of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for 2017 was $4,321,463 ( $4,202,699) for current service. 13

17 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, POST EMPLOYMENT BENEFIT LIABILITY The City provides certain employee benefits, which will require funding in future periods. Under the sick-leave benefit plan, unused sick leave can accumulate and eligible employees may become entitled to cash payment upon termination, death or retirement. The payout is 50% of the accumulated credits limited to 50% of annual salary at termination, death or retirement. The City provides these benefits through an unfunded defined benefit plan. The benefit costs and liabilities related to this plan are included in the City's consolidated financial statements. In addition, the City continues to provide health care benefits to eligible full-time members in retirement until age 65. In addition, the City will provide an HCSA benefit to all full-time Police Senior Officers when the retiree turns 65 up to and including age 70. The City provides these benefits through an unfunded defined benefit plan. The benefit costs and liabilities related to this plan are included in the City's consolidated financial statements. With respect to responsibilities under provisions of the Workplace Safety and Insurance Board (WSIB) Act, the City has elected to be treated as a Schedule 1 employer and remits monthly premiums to the WSIB. An actuarial estimate of future liabilities was completed as of December 31, The following table sets out the actuarial results for each of the plans as at December 31, Retirement Benefits Other Employee Future Benefits Total Employee Future Benefits Total Employee Future Benefits LIABILITIES Projected accrued employee future benefit obligations, end of year $10,927,170 $5,235,173 $16,162,343 $16,704,181 Unamortized Net Actuarial Losses (2,417,266) 67,433 (2,349,833) (3,685,037) Employee Future Benefits Liability $8,509,904 $5,302,606 $13,812,510 $13,019,144 Retirement Benefits Other Employee Future Benefits Total Employee Future Benefits Total Employee Future Benefits Accrued Benefit Obligation (ABO), beginning of year $11,185,261 $5,518,920 $16,704,181 $17,114,232 Unamortized actuarial (gain)/loss (785,767) (216,208) (1,001,975) (1,019,248) Add: Benefit/service cost 832, ,829 1,333,419 1,227,685 Add: interest 293, , , ,416 Less: benefits payments (598,771) (709,152) (1,307,923) (1,304,725) Change due to plan amendment ,821 Expected Accrued Benefit Obligation, end of year $10,927,170 $5,235,173 $16,162,343 $16,704,181 14

18 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, POST EMPLOYMENT BENEFIT LIABILITY (CONT'D) The accrued benefit obligations for employee future benefit plans as at December 31, 2017 are based on an actuarial valuation as of December 31, These actuarial valuations were based on assumptions about future events. The economic assumptions used in these valuations are the City's best estimates of expected rates of the following: 2017 % Inflation 2.0 Wage and salary escalation (includes inflation) 2.5 Discount on accrued benefit obligations (includes 2.6 inflation) Expected average remaining service life of employee group Post-retirement benefits Early retirement sick leave Sick leave Gratuity benefits Dental cost escalation 4.0 Health care cost escalation 6.50% for 2016, reducing by 0.25% in each subsequent year to an ultimate rate of 4% in 2026 Expected future mortality rates 2014 CPM (Public) Table and CPM Improvement - Expected future termination rates Early future retirement rates Scale B Ontario Light Table For Police Uniform/Senior Officers and Firefighters: , , , 60 and over For all other employees: , , 65 and over Reserve funds have been established to provide for the sick leave and post-employment benefits liabilities and are reported on Schedule B. The sick leave reserve fund balance at the end of the year amounted to $1,447,805 (2016- $1,487,149). The post-employment benefits reserve fund balance at the end of the year amounted to $154,806 (2016- $162,771). The current year amortization expenditure of the actuarial loss for retirement benefits is $318,748 and $14,481 for other employee future benefits. Retirement benefits are comprised of post-retirement benefits and early retirement sick leave incentive plan which are amortized over years and years respectively. Other employee future benefits are comprised of gratuity benefits and non-vesting accumulated sick leave which are amortized over years and years respectively. 15

19 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities include financial obligations to outside organizations and individuals as a result of transactions and events on or before the end of the accounting period. They are the result of contracts, agreements and legislation in force at the end of the accounting period that require the City to pay for goods and services acquired or provided on or before the accounting date. A breakdown is provided below: Trade accounts payable $ 16,041,132 $ 14,390,831 Other 5,830,875 5,451,968 $ 21,872,007 $ 19,842, DEFERRED REVENUE - OBLIGATORY RESERVE FUND A requirement of the public sector accounting standards of CPA Canada is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as federal, provincial and municipal legislation restricts how these funds may be used. The balances in the obligatory reserve funds are summarized as follows: Balance, beginning of year $ 1,582,736 $ 1,593,600 Recreational land 2, ,866 Investment income 33,622 29,253 Gasoline tax - Province 611,656 1,073,909 Gasoline tax - Federal 2,671,173 2,624,706 Transfer to current fund (3,490,860) (3,862,598) Balance, end of year $ 1,410,527 $ 1,582,736 Analyzed as follows: Recreational land $ 378,482 $ 397,623 Gasoline tax - Province 787, ,938 Gasoline tax - Federal 244, ,175 $ 1,410,527 $ 1,582,736 16

20 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, LONG-TERM LIABILITIES (a) The balance of the net long-term liabilities reported on the Consolidated Statement of Financial Position consists of the following: Total long-term liabilities incurred by the City, including those incurred on behalf of school boards, municipalities and municipal enterprises and outstanding at the end of the year are as follows: Debentures payable to Ontario Infrastructure Projects Corporation (1) $ 6,431,839 $ 6,912,962 Debentures payable to Ontario Infrastructure Projects Corporation (2) 7,382,489 7,651,334 Debentures payable to Ontario Infrastructure Projects Corporation (3) 18,335,040 18,842,993 Debentures payable to Ontario Infrastructure Projects Corporation (4) 20,784,642 21,600,000 Other 14,865 14,865 $ 52,948,875 $ 55,022,154 (b) Of the net long-term liabilities reported in (a) of this note, $11,641,943 in principal payments are payable from 2017 to 2021, and $41,306,932 thereafter. All of these amounts are payable from general revenues. (c) The first debenture payable to Ontario Infrastructure Projects Corporation was incurred to finance the construction of the Timmins Police Building and a new medical building. The loan is being repaid in semi-annual payments of $415,513 and bears interest at 5.15%. All of these amounts are payable from general operations. (d) The second debenture payable to Ontario Infrastructure Projects Corporation was incurred to finance the construction of an office building occupied by the Cochrane District Social Services Administration Board (CDSSAB). The loan is being repaid in semi-annual payments of $326,322 and bears interest at 5.06%. This debt is recoverable from CDSSAB. (e) The third debenture payable to Ontario Infrastructure Projects Corporation was incurred to finance the Waste Water Treatment facility upgrade capital project. The loan is being repaid in semi-annual payments of $1,174,282 and bears interest at 3.56%. All of these amounts are payable from waste water operations. (f) The fourth debenture payable to Ontario Infrastructure Projects Corporation was incurred to finance the Waste Water Treatment facility upgrade capital project. The loan is being repaid in semi-annual payments of $1,423,050 and bears interest at 2.84%. All of these amounts are payable from waste water operations. (g) The long-term liabilities in (a) issued in the name of the City have been approved by by-law. The annual principal and interest payments required to service these liabilities are within the annual debt repayments limit prescribed by the Ministry of Municipal Affairs and Housing. Debt retired over the next five years and thereafter: 2018 $ 2,153, ,237, ,324, ,415, ,510,342 Thereafter 41,306, $ 52,948,875

21 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, EQUITY IN TANGIBLE CAPITAL ASSETS Tangible capital assets (Schedule D) $ 524,075,590 $506,613,756 Accumulated amortization (Schedule D) (224,228,285) (208,462,044) Long-term debt (Note 12) (45,551,521) (47,355,955) $ 254,295,784 $250,795, EXPENDITURES BY OBJECT The following is a summary of the expenditures reported on the "Consolidated Statement of Operations and Accumulated Surplus" by object: Salaries, wages and fringe benefits $ 65,988,024 $ 64,934,074 Interest on net long-term debt charges 2,080,752 1,669,458 Materials and supplies 30,678,720 24,731,179 Contracted services 9,410,324 9,195,828 Rents and financial expenditures 4,694,543 4,934,066 External transfers 10,919,697 12,351,350 Amortization 16,513,207 16,134,359 Total current expenditures $ 140,285,267 $ 133,950, BUDGET FIGURES The City completes separate budget reviews for its operating and capital budgets each year. The approved operating budget for 2017 is reflected on the Consolidated Statement of Operations and has been reclassified to comply with PSAB reporting requirements. Budgets established for Reserves and Reserve Funds are based on a project-oriented basis, the costs of which may be carried out over one or more years and funding is determined annually and made by transfers from individual funds and by the application of applicable grants or other funds available to reserves or reserve funds. During 2017, Council approved net transfers of $7,538,831 ( $25,685,700) from reserves and reserve funds for capital projects. As such, they are not directly comparable with current year actual amounts and budgets have therefore not been reflected on the "Consolidated Statement of Operations". 16. PROVINCIAL OFFENCES ACT ADMINISTRATION The Provincial Offences Act (POA) is a procedural law for administering and prosecuting provincial offences, including those committed under the Highway Traffic Act, Compulsory Automobile Insurance Act, Trespass to Property Act, Liquor Licence Act, Municipal By-laws and minor federal offences. The revenues collected consist of fines levied under Parts I and III for POA charges and amounted to $1,129,109 for the year ended December 31, 2017 ( $1,133,824). The operating costs for the administration of the POA for the year ending December 31, 2017 amount to $522,331 ( $547,475), resulting in a net contribution of $606,778 ( $586,349), exclusive of capital costs. The City's share is 80.65%. Revenue and expenditures were audited in relation to the audit of the City as a whole. 18

22 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, FINANCIAL INSTRUMENTS (a) FAIR VALUE OF FINANCIAL INSTRUMENTS The municipality's carrying amounts of accounts receivable, loans receivable, taxes receivable, other receivables, post-employment benefits, accounts payable and accrued liabilities and long-term liabilities approximate their fair value due to short-term maturities of these instruments. (b) CREDIT RISK The City does not have significant exposure to any individual or party due to the fact that municipalities can obtain liens on properties for any unpaid realty taxes. An allowance for doubtful accounts is established based upon factors surrounding the risk related to specific ratepayers, historical trends and other information. (c) INTEREST RATE AND CURRENCY RISK Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. The City is exposed to interest rate risk primarily through its floating rate line of credit. 18. BANK INDEBTEDNESS The City has a credit facility agreement with a Canadian financial institution at a floating interest rate of prime less 0.75%. At year end the City had the entire amount of $20,000,000 ( $20,000,000) available under this facility agreement. 19. OTHER CONTINGENCIES In addition to those contingencies mentioned in Note 4, the City is involved in a number of claims and possible claims which are as a result of normal ongoing operations. Management of the City is of the opinion that these claims are without merit. No provision has been made in these statements to reflect any of these claims. Any settlements or awards which may arise will be reflected in the financial records in the year that the amount has been determined. In the eventuality that the City is unsuccessful in defending some of these claims, amounts are available in existing reserves and reserve funds. Management is of the opinion that the reserves and reserve funds are sufficient to cover these claims. 20. LANDFILL CLOSURE AND POST-CLOSURE LIABILITY Landfill closure and post-closure care requirements are outlined in the Certificate of Approval filed with the Ministry of the Environment and Energy. Closure will involve capping of the site with a compacted impermeable clay layer, a layer of topsoil, the re-introduction of a vegetative cover and the construction of surface drainage controls. Postclosure care will involve routine inspections, cap maintenance, groundwater and well sampling and analysis. The reported liability is based on estimates and assumptions with respect to events extending over a forty-five year period using the best information available to management. Future events may result in significant changes to the estimated total expenditures, capacity used or total capacity and the estimated liability, and would be recognized prospectively, as a change in estimate, when applicable. 19

23 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, LANDFILL CLOSURE AND POST-CLOSURE LIABILITY (CONT'D) Estimated total expenditures represent the sum of the discounted future cash flows for closure and post-closure care activities discounted at the City's average long-term borrowing rate of 5%. Total landfill closure and postclosure care expenditures are estimated at $21,667,219. It is estimated that the total net present value of the cost to close and maintain the landfill site is approximately $3,150,093. Currently, $782,150 has been accrued as a liability. To date, approximately 53.95% of the site's capacity has been used. The estimated remaining capacity of the landfill site is 46.05% (2,656,020 cubic meters) of its total estimated capacity and its estimated remaining life is 22 years, after which the period for post-closure care is estimated to be 25 years. 21. BUDGET INFORMATION The Budget was not prepared on a basis consistent with that used to report actual results (Public Sector Accounting Standards). The budget was prepared on a modified accrual basis while Public Sector Accounting Standards require full accrual basis. The budget figures anticipated transfers into reserve for revenues in excess of curren year expenditres. As a result, the budget figures presented in the statements of financial activities and changes in net debt represent the Budget adopted Council with adjustments as follows: Budgeted deficit for the year $ 561,982 Add: Transfer to reserves 33,554,126 Less: Transfer from reserve 8,725,553 Amortization 16,501,358 Budget surplus per statement of financial activities $ 8,889, SEGMENTED INFORMATION The City is a diversified municipal government that provides a wide range of services to its citizens, including fire, public transit, water, roads and public works operations, parks, recreation, culture, planning, development and building services. For management reporting purposes, the City's operations and activities are organized and reported by fund. Funds were created for the purpose of recording specific activities to attain certain objectives in accordance with special regulations, restrictions or limitations. The City's services are provided by departments and their activities are recorded in these funds. Certain departments that have been disclosed in the segmented information, along with the services they provide, are as follows: GENERAL GOVERNMENT This segment reflects the administrative operations of the City. Those costs that relate directly to the administration of the various segments have been allocated to the appropriate segment. PROTECTION SERVICES Protection is comprised of the Police Service and Fire Paramedic Service departments. The mandate of the Police Service department is to ensure the safety of the lives and property of citizens; preserve peace and good order; prevent crimes from occurring; detect offenders; and enforce the law. The Fire and Paramedic Service department is responsible for providing fire suppression service, fire prevention programs, training and education related to prevention, detection or extinguishments of fires, and paramedic services. 20

24 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, SEGMENTED INFORMATION (CONT'D) TRANSPORTATION SERVICES The Public Works department is responsible for the delivery of municipal public works services related to the planning, development and maintenance of roadway systems, the maintenance of parks and open space, and street lighting. The Transit department is responsible for providing local public transportation service. The City also operates the Timmins Airport which services Timmins and surrounding areas. ENVIRONMENTAL SERVICES The Water and Waste department consists of three distinct utilities - water, wastewater and solid waste disposal. The department provides drinking water to citizens of Timmins, collection and treatment of wastewater, and provides collection, disposal and waste minimization programs and facilities for solid waste. Their land drainage and garbage collection operations are reported in the General Revenue Fund and are included in the Public Works and Water segment. HEALTH SERVICES The City provides cemetery services to its citizens. It also contributes to the provision of public health and ambulance services to the community. These services are provided by the Porcupine Health Unit and the Cochrane District Social Services Administration Board. SOCIAL AND FAMILY SERVICES The City operates a nursing home which provides care to elderly individuals in the community. The City also contributes to the Cochrane District Social Services Administration Board for the provision of general assistance to individuals in the community. RECREATION AND CULTURAL SERVICES The Community Services department provides public services that contribute to neighbourhood development and sustainability through the provision of recreation and leisure services such as fitness and aquatic programs. The department also contributes towards the information needs of the City s citizens through the provision of library services. PLANNING AND DEVELOPMENT The Planning, Property and Development department provides a diverse bundle of services. It manages urban development for business interests, environmental concerns, heritage matters, local neighbourhoods and the downtown through city planning, community development, parks and riverbank planning. It ensures an acceptable quality of building construction and maintenance of properties through enforcement of construction codes, and building standards. It facilitates economic development by providing services for the approval of all land development plans, the processing of building permit applications and the provision of geometric services, as well as providing cemetery services to citizens. For each reported segment, revenues and expenditures represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. Therefore, certain allocation methodologies are employed in the preparation of segmented financial information. Taxation and payments-in-lieu of taxes, certain government transfers, transfer from other funds, and other revenues are apportioned to the segments have been apportioned based on a percentage of expenditures. 21

25 CORPORATION OF THE CITY OF TIMMINS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) YEAR ENDED DECEMBER 31, SEGMENTED INFORMATION (CONT'D) PLANNING AND DEVELOPMENT (CONT'D) The accounting policies used in these segments are consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note GOVERNMENT TRANSFERS FOR OPERATING Government transfers for operating for the year include a Library Pay Equity grant of $1,402 and a Library Per Household grant of $90,405 from the Province of Ontario. 24. LIBRARY EXPENDITURES Total operating costs for the library for the year ended December 31, 2017 amounted to $1,668,824. Of these costs, $1,221,047 related to salaries and benefits for employees. 25. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED Financial instruments, PS 3450, Foreign Currency Translation, PS 2601, and Financial Statement Presentation, PS 1201 are effective for fiscal years beginning on or after April 1, While early adoption is permitted, all three standards must be adopted in the same year. PS 3450 provides guidance on the recognition, measurement, presentation and disclosure of financial instruments including derivative instruments. PS 2601 Foreign Currency Translation includes guidance on deferral and amortization of unrealized gains and losses, hedge accounting and separation of realized and unrealized foreign exchange gains and losses. The City has not yet adopted these standards or determined the effect on the consolidated financial statements. 22

26 SCHEDULE A CORPORATION OF THE CITY OF TIMMINS SCHEDULE OF CONSOLIDATED ACCUMULATED SURPLUS YEAR ENDED DECEMBER RESERVE FUNDS (Schedule B) Sick leave $ 1,447,805 $ 1,487,149 Other designated projects 1,045, ,032 Post-employment benefits 154, ,771 TOTAL RESERVE FUNDS 2,647,892 2,461,952 RESERVES (Schedule B) Working Capital 2,468,933 1,663,238 Undesignated projects 2,366,889 1,674,697 Other designated projects 16,702,496 18,111,369 TOTAL RESERVES 21,538,318 21,449,304 TOTAL RESERVE FUNDS AND RESERVES 24,186,210 23,911,256 SURPLUS (DEFICIT) Invested in tangible capital assets (Note 13) 254,295, ,795,757 General Revenue Fund (3,827,953) (2,635,956) UNFUNDED Employee Benefits Payable (13,812,510) (13,019,144) TOTAL SURPLUS 236,655, ,140,657 ACCUMULATED SURPLUS $ 260,841,531 $ 259,051,913 23

27 SCHEDULE B CORPORATION OF THE CITY OF TIMMINS SCHEDULE OF CONSOLIDATED RESERVES AND RESERVE FUNDS YEAR ENDED DECEMBER REVENUES Interest earned $ 37,580 $ 24,151 Transfers from other funds 9,710,543 9,205,425 Sale of land 115,255 23,641 EXPENDITURES 9,863,378 9,253,217 Transfer to other funds 9,588,424 7,275,493 9,588,424 7,275,493 CHANGE IN RESERVE AND RESERVE FUND BALANCE 274,954 1,977,724 RESERVE AND RESERVE FUND BALANCE, beginning of year 23,911,256 21,933,532 RESERVE AND RESERVE FUND BALANCE, end of year $ 24,186,210 $ 23,911,256 ANALYZED AS FOLLOWS: RESERVES SET ASIDE FOR SPECIFIC PURPOSE For working capital 2,468,933 1,663,238 For undesignated projects 2,366,889 1,674,697 For other designated projects 16,702,496 18,111,369 Total reserves 21,538,318 21,449,304 RESERVE FUNDS SET ASIDE FOR SPECIFIC PURPOSE For sick leave 1,447,805 1,487,149 For other designated projects 1,045, ,032 For post-employment benefits 154, ,771 Total reserve funds 2,647,892 2,461,952 Total reserves and reserve funds $ 24,186,210 $ 23,911,256 24

28 CORPORATION OF THE CITY OF TIMMINS SCHEDULE OF CONSOLIDATED SEGMENTED DISCLOSURE SCHEDULE C YEAR ENDED DECEMBER 31, 2017 SOCIAL RECREATION AND FAMILY & GENERAL PROTECTION TRANSPORTATION ENVIRONMENTAL HEALTH CULTURAL HOUSING PLANNING AND 2017 GOVERNMENT SERVICES SERVICES SERVICES SERVICES SERVICES SERVICES DEVELOPMENT TOTAL REVENUES Taxation $ 4,303,936 $ 12,486,488 $ 14,337,154 $ 13,348,213 $ 3,674,362 $ 4,513,550 $ 10,173,378 $ 4,542,130 $ 67,379,211 Sale of services 2,472, ,913 6,670,544 21,747, ,263 1,831,675 3,573,443 5,347,422 42,375,580 Gov. transfers - operating 649,374 3,046,366 2,065,996 2,590,703 2,137, ,088 9,801,416 1,406,821 22,556,572 Gov. transfers - capital - - 3,840, , , ,508 (41,419) 4,937,789 Interest and other revenue 308, ,289 1,026, , , , , ,308 4,825,733 7,733,995 16,884,056 27,940,610 39,068,757 6,350,593 8,078,244 24,438,368 11,580, ,074,885 EXPENDITURES Salaries & benefits 4,685,846 20,898,998 11,559,293 6,863,077 1,810,911 4,802,358 12,802,754 2,564,787 65,988,024 Long-term debt interest - 288,754-1,347,051 61, ,799-2,080,752 Materials & services 3,001,977 3,034,124 5,749,046 6,860, ,096 3,310,556 2,165,909 6,326,222 30,678,720 Contracted services 852, ,323 4,566,250 2,926, ,661 47, ,372 9,410,344 Rent & financial expenditures 5,591 29,354 2,896,097 1,610,040 7,096 75,047 (8,081) 79,399 4,694,543 External transfers 127, , ,790,278-5,483,558-10,919,696 Amortization 286, ,639 5,079,640 8,184, , , , ,033 16,513,188 Inter-Functional Adjustments (656,350) (1,980) (289,617) 604, ,380 4, , Allocation of program support (5,276,893) 1,039,349 1,181,905 1,135, , , , ,106-3,027,664 27,034,561 30,742,614 29,531,591 8,066,640 9,777,943 22,269,335 9,834, ,285,267 Net revenues (expenditures) $ 4,706,331 $ (10,150,505) $ (2,802,004) $ 9,537,166 $ (1,716,047) $ (1,699,699) $ 2,169,033 $ 1,745,343 $ 1,789,618 25

29 CORPORATION OF THE CITY OF TIMMINS SCHEDULE OF CONSOLIDATED SEGMENTED DISCLOSURE (CONT'D) SCHEDULE C YEAR ENDED DECEMBER 31, 2016 SOCIAL RECREATION AND FAMILY & GENERAL PROTECTION TRANSPORTATION ENVIRONMENTAL HEALTH CULTURAL HOUSING PLANNING AND 2016 GOVERNMENT SERVICES SERVICES SERVICES SERVICES SERVICES SERVICES DEVELOPMENT TOTAL REVENUES Taxation $ 4,747,001 $ 13,474,397 $ 15,728,936 $ 13,913,857 $ 4,209,930 $ 4,833,555 $ 11,825,399 $ 2,080,078 $ 70,813,153 Sale of services 1,044, ,452 6,762,006 20,229, ,098 1,798,034 3,454, ,943 34,663,615 Gov. transfer - operating 708,699 3,062,238 2,156,641 2,540,511 2,125, ,037 9,858,632 1,129,841 22,415,887 Gov. transfer - capital - 13,469 7,090, , , ,103 3,783,999 11,294,320 Interest and other revenue 271, , , , , , , ,141 4,055,966 Contributed assets 25, ,444 6,797,815 17,739,329 32,639,039 37,609,160 6,839,448 7,858,487 25,978,105 7,807, ,268,385 EXPENDITURES Salaries & benefits 4,786,263 20,168,936 11,796,862 6,529,966 1,768,266 4,787,230 12,853,823 2,242,728 64,934,074 Long-term debt interest - 308, ,801 65, ,903-1,669,458 Materials & services 2,931,987 3,253,087 6,081,544 6,050, ,494 3,155,076 2,116, ,976 24,731,179 Contracted services 790, ,688 3,766,969 3,396, ,956 46, ,892 9,195,828 Rent & financial expenditures 28,171 49,907 3,235,002 1,496,571 9,392 52,662-62,361 4,934,066 External transfers 161, , ,101,002-6,641,093-12,351,350 Amortization 280, ,143 4,872,512 7,947, , , , ,723 16,134,359 Inter-Functional Adjustments (652,750) (2,480) (293,650) 605, ,380 4, , Allocation of program support (5,059,495) 1,016,618 1,204,892 1,094, , , , ,768-3,267,193 26,502,337 30,664,131 28,020,066 8,391,419 9,512,339 23,501,381 4,091, ,950,314 Net revenues (expenditures) $ 3,530,622 $ (8,763,008) $ 1,974,908 $ 9,589,094 $ (1,551,971) $ (1,653,852) $ 2,476,724 $ 3,715,554 $ 9,318,071 26

30 CORPORATION OF THE CITY OF TIMMINS SCHEDULE OF CONSOLIDATED TANGIBLE CAPITAL ASSETS SCHEDULE D YEARS ENDED DECEMBER 31 General Capital Assets Totals COST: Land and Land Improvements Buildings and Leasehold Improvements Vehicles, Equipment and Furniture Streets and Structures Water System Sewer System Assets Under Construction BALANCE, BEGINNING OF YEAR $ 19,437,266 $ 136,774,547 $ 106,621,231 $ 150,329,781 $ 40,834,510 $ 39,583,404 $ 13,033,017 $ 506,613,756 $ 484,870,774 Additions 580, ,505 3,340,921 6,090, , ,661,114 97,953,839 Construction-in-progress ,609,403 7,609,403 (71,952,192) Disposal of tangible capital assets - - (799,030) (9,653) (808,683) (4,258,665) BALANCE, END OF YEAR 20,018, ,294, ,163, ,410,643 40,963,715 39,583,404 20,642, ,075, ,613,756 ACCUMULATED AMORTIZATION: BALANCE, BEGINNING OF YEAR 9,562,719 43,843,063 47,624,821 77,879,504 18,444,158 11,107, ,462, ,762,345 Amortization 868,899 4,034,212 7,040,437 3,251, , ,124-16,513,208 16,134,359 Disposals and write downs - - (737,314) (9,653) (746,967) (3,434,660) BALANCE, END OF YEAR 10,431,618 47,877,275 53,927,944 81,121,074 19,212,471 11,657, ,228, ,462,044 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS $ 9,586,616 $ 89,416,777 $ 55,235,178 $ 75,289,569 $ 21,751,244 $ 27,925,501 $ 20,642,420 $ 299,847,305 $ 298,151, NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS $ 9,874,547 $ 92,931,484 $ 58,996,410 $ 58,320,214 $ 46,701,185 $ 18,294,855 $ 13,033,017 $ - $ 298,151,712 27

31 CORPORATION OF THE CITY OF TIMMINS TRUST FUNDS FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017

32 INDEPENDENT AUDITOR'S REPORT To the Councillors, Inhabitants and Ratepayers of Corporation of the City of Timmins. We have audited the accompanying financial statements of the Trust Funds of Corporation of the City of Timmins, which comprise the statement of financial position as at December 31, 2017, and the statement of continuity of the Trust Funds for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the Trust Funds of Corporation of the City of Timmins as at December 31, 2017 and the continuity of trust funds for the year then ended in accordance with Canadian public sector accounting standards. Timmins, Ontario MNP LLP June 19, 2018 Chartered Professional Accountants Licensed Public Accountants

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34 STATEMENT 2 CORPORATION OF THE CITY OF TIMMINS TRUST FUNDS STATEMENT OF OPERATIONS AND CONTINUITY YEAR ENDED DECEMBER 31, 2017 Cemetery Residents' Subdividers' F.E. Jokela French OHRP, Care and Trust Deposits for Bequest to Language/ OHRP Maint. Accts. Home Installation Home For Museum Timmins Public Rental Total Funds For the Aged of Services The Aged Donations Library Trust Trust BALANCE, beginning of year $ 2,864,047 $ 2,342,010 $ 64,758 $ 121,741 $ 125,971 $ 80,352 $ 21,868 $ 107,347 REVENUES Investment income - other funds 6,284 1, ,247 1, Care and maintenance funds rec. 51,645 51, Residents contributions - GM 311, , Adjustments 22, , ,922 52, ,402 1,247 24, EXPENDITURE Transfer to capital fund 39, , Transfers to revenue fund 188,684 1, , Payment on behalf of residents 135, , Contractors' repayments 4, , OHRP repayments to province 55, ,924 Expenses 22, ,883 12, ,129 1, ,895 4,834 9,883 51, ,924 BALANCE, end of year $ 2,808,840 $ 2,393,152 $ 54,265 $ 118,154 $ 140,132 $ 30,184 $ 21,384 $ 51,569 See accompanying notes.

35 CORPORATION OF THE CITY OF TIMMINS TRUST FUNDS NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING Receipts and expenditures on the "Statement of Continuity" are reported on the accrual basis of accounting, which recognizes revenues as they become available and measurable and expenditures as they are incurred and measurable as a result of the receipts of goods and services and the creation of a legal obligation to pay. 2. ONTARIO HOME RENEWAL PROGRAM The Ontario Home Renewal Program was established by the Ontario Ministry of Housing in 1973 to provide grants for municipalities to make loans to assist owner occupants to repair, rehabilitate and improve their homes to local property standards. Individual loans were limited to $7,500 of which the maximum forgivable portion was $4,000. The program is no longer in place. Ontario Home Renewal Program loans receivable at December 31, 2017 comprise repayable loans of $17,640 (2016-$17,640). In the event of the sale or lease of the home or in the event of the homeowner ceasing to occupy the home, the balances of the repayable loan and the unearned forgivable loan immediately become due and payable by the homeowner. 3. FINANCIAL INSTRUMENTS The carrying amounts of cash, accounts receivable and due (to) from revenue fund approximate their fair value due to short-term maturities of these instruments. The Trust Fund is not exposed to any significant credit, interest rate, liquidity, market, currency and other price risk. 4. DUE FROM THE CITY OF TIMMINS The balance due from/to the City of Timmins is non-interest bearing and due on demand. 5. INVESTMENTS The total for investments by trust funds of $2,230,000 (2016-$2,230,000) recorded on the "Statement of Financial Position" at cost, have a market value equal to their cost.

36 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2017 & 2016

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38 INDEPENDENT AUDITOR'S REPORT To the Members of Council and the Board of Management of the Downtown Timmins Business Improvement Area We have audited the accompanying financial statements of the Board of Management of the Downtown Timmins Business Improvement Area, which comprise the statement of financial position as at December 31, 2017, and the statements of operations and accumulated surplus, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and such internal control as management determines necessary to enable the preparation of 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the 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 presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion In common with many non-profit organizations, the organization derives revenue from ticket sales, donations and activities the completeness of which is not susceptible of satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the Board and we were not able to determine whether any adjustments might be necessary to the above revenue, excess of revenue over expenses, and cash flows from operations for the years ended December 31, 2017 and December 31, 2016 and assets and surplus as at December 31, 2017 and December 31, The audit opinion on the financial statements for the year ended December 31, 2016 was qualified accordingly because of the possible effects of the limitation in scope. Qualified Opinion In our opinion, except for the effect of the matter described in the Basis of Qualified Opinion paragraph, these financial statements present fairly, in all material respects, the financial position of the Board of Management of Downtown Timmins Business Improvement Area as at December 31, 2017 and its financial performance and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Timmins, Ontario MNP LLP May 15, 2018 Chartered Professional Accountants Licensed Public Accountants 1

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40 STATEMENT 2 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS YEARS ENDED DECEMBER Budget Actual Actual REVENUES Tax levy (Note 3) $ 200,000 $ 200,000 $ 189,007 Fundraising 9,700 37,230 34,526 Grants and subsidies - 17,664 29,862 Membership dues 1,500 1,900 2,164 Other 800 1,290 1,351 Voucher administrative fees TOTAL REVENUES 212, , ,968 EXPENSES Administration 50,450 50,164 49,239 Advertising and promotion 41,500 72,854 69,220 Amortization - 11,852 12,385 Beautification Loss on disposal of tangible capital assets - - 2,225 Strategic plan - - 4,512 Tax levy written off (recovered) (Note 3) 5,000 (451) 2,439 Wages and benefits 117, , ,895 TOTAL EXPENSES 214, , ,255 ANNUAL DEFICIT (2,430) (15,762) (21,287) ACCUMULATED SURPLUS, BEGINNING OF YEAR - 95, ,524 ACCUMULATED SURPLUS, END OF YEAR $ (2,430) $ 79,475 $ 95,237 See accompanying notes. 3

41 STATEMENT 3 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA STATEMENT OF CHANGE IN NET FINANCIAL ASSETS YEARS ENDED DECEMBER Budget 2017 Actual 2016 Actual ANNUAL DEFICIT $ (2,430) $ (15,762) $ (21,287) Acquisition of tangible capital assets - (2,318) (16,472) Amortization of tangible capital assets - 11,852 12,385 Loss on disposal of tangible capital assets - - 2,225 (Decrease) increase in prepaid expenses (415) - 10,494 (2,277) CHANGE IN NET FINANCIAL ASSETS (2,430) (5,268) (23,564) NET FINANCIAL ASSETS, BEGINNING OF YEAR 57,725 57,725 81,289 NET FINANCIAL ASSETS, END OF YEAR $ 55,295 $ 52,457 $ 57,725 See accompanying notes. 4

42 STATEMENT 4 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA STATEMENT OF CASH FLOWS YEARS ENDED DECEMBER OPERATIONS ANNUAL DEFICIT $ (15,762) $ (21,287) NON CASH CHARGES TO OPERATIONS Amortization 11,852 12,385 Loss on disposal of tangible capital assets - 2,225 USES: Decrease in downtown dollars (248) - Increase in prepaid expenses - (415) SOURCES: Decrease in accounts receivable 6,250 14,069 Increase in accounts payable and accrued liabilities 6, Decrease in prepaid expenses NET INCREASE IN CASH FROM OPERATIONS 9,475 7,017 INVESTING Purchase of tangible capital assets (2,318) (16,472) NET DECREASE IN CASH FROM INVESTING (2,318) (16,472) CHANGE IN CASH 7,157 (9,455) CASH, beginning of year 56,509 65,964 CASH, end of year $ 63,666 $ 56,509 CASH AND CASH EQUIVALENTS CONSISTS OF: Cash in bank $ 58,628 $ 56,509 Investment 5,038 - $ 63,666 $ 56,509 See accompanying notes. 5

43 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2017 & 2016 NATURE OF OPERATIONS The Board of Management of the Downtown Timmins Business Improvement Area (Downtown Timmins) was established by the City of Timmins By-Law No The organization, incorporated without share capital, operates as a non-profit organization and is dedicated to promoting an economically strong, safe, attractive and exciting downtown area. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Downtown Timmins Unit are the representation of management prepared in accordance with Canadian public sector accounting standards for local governments as recommended by the Public Sector Accounting Board (PSAB) of CPA Canada. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality. Significant aspects of the accounting policies adopted by the Health Unit are as follows: (a) REPORTING ENTITY The financial statements reflect the assets, liabilities, revenues, expenditures and net assets of the reporting entity. The reporting entity is comprised of all organizations and committees accountable for the administration of their financial affairs and resources to the Board and which are owned or controlled by Downtown Timmins. (b) REVENUE RECOGNITION The Board follows the deferral method of accounting for tax levy, memberships and grant and subsidies revenue which are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Fundraising and other revenues are recorded as earned. (c) ACCRUAL ACCOUNTING The financial statements of Downtown Timmins have been prepared using the accrual basis of accounting. (d) INVESTMENTS Investment consist of guaranteed investment certificate recorded at fair value. (e) TANGIBLE CAPITAL ASSETS Tangible capital assets are stated at cost less accumulated amortization. They are amortized over their estimated useful lives at the following rates and methods: Computer 5 years Straight line method Leasehold improvements 5 years Straight line method Office equipment 5 years Straight line method Signs and wreaths 5 years Straight line method Urban Park equipment 5 years Straight line method (f) CONTRIBUTED SERVICES Volunteers contribute to assist the Downtown Timmins in carrying out its service delivery activities. Contributed services are not recognized in the financial statements because of the difficulty of determining their fair value. 6

44 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (g) MEASUREMENT UNCERTAINTY (USE OF ESTIMATES) The preparation of financial statements in conformity with Canadian public sector accounting standards 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. These estimates include the useful life of the tangible capital assets. Actual results could differ from these estimates. Accounts receivable are stated after evaluation as to their collectability and an appropriate allowance for doubtful accounts is provided where considered necessary. Amortization is based on the estimated useful lives of tangible capital assets. These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in excess of revenues and expenses in the periods in which they become known. (h) FUND ACCOUNTING Revenues and expenses relating to Board administrative activities are reported in the general operating fund. The capital fund has been set up to recognize the cost and amortization of fixed assets purchased. Reserves for working capital, as approved by the Board, are amounts set aside for future operating purposes. (i) NON-FINANCIAL ASSETS Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the change in net financial assets for the year. (j) RESERVES AND RESERVE FUND Certain amounts, as approved by the Board, are set aside in reserves for future operating and capital purposes. Transfers to and/or from reserves are recorded as an adjustment to the respective fund when approved. 2. INVESTMENTS Investment represents investment in Guaranteed Investment Certificate with rate of return of 1.5% and maturing in October, TAX LEVY AND TAX LEVY WRITTEN OFF The Board requisitions the City of Timmins annually for the amount of the levy. The City calculates the percentage required to raise the levy using the assessed value of property in the Improvement Area. The levy appears on the members' or members' landlords' property tax bills. Tax levy written off results from reductions in assessments as a result of appeals by property owners. The difference between the original levy and the revised levy as a result of a successful appeal causes a write off. In years with excessive write offs, the Board has negotiated its share with the City of Timmins. 7

45 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & TANGIBLE CAPITAL ASSETS Leasehold Improvements Office Equipment Signs and wreaths Totals Urban Park Equipment Computer Cost Opening costs $ 14,004 $ 3,199 $ 25,448 $ 38,610 $ 32,665 $ 113,926 $ 101,162 Additions during the year ,992 2,318 16,472 Disposals and write downs (9,294) - (756) (5,994) - (16,044) (3,708) Closing costs 4,710 3,199 25,018 32,616 34, , ,926 Accumulated Amortization Opening accum'd amortization 11, ,365 32,920 25,379 83,098 72,196 Amortization ,201 1,847 4,427 11,852 12,385 Disposals and write downs (9,294) - (756) (5,994) - (16,044) (1,483) Closing accum'd amortization 3,237 1,280 15,810 28,773 29,806 78,906 83,098 Net Book Value of Tangible Capital Assets $ 1,473 $ 1,919 $ 9,208 $ 3,843 $ 4,851 $ 21,294 $ 30,828 8

46 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & FINANCIAL INSTRUMENTS The Board is exposed to various risks through its financial instruments and monitors, evaluates and manages these risks. The following analysis provides information about the Board's risk exposure and concentration as of December 31, 2017: Credit Risk Credit risk arises from the potential that a counter party will fail to perform its obligations. The Board is exposed to credit risk from customers. In order to reduce its credit risk, the Board reviews a new customer's credit before extending credit and conducts regular reviews of its existing customers' credit performance. An allowance for doubtful accounts is established based upon factors surrounding the credit risk of specific accounts, historical trends and other information. The Board has a significant number of customers which minimizes concentration of credit risk. Liquidity Risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Board is exposed to this risk mainly in respect of its receipt of funds from its customers and other related sources, and accounts payable. 9

47 BOARD OF MANAGEMENT OF THE DOWNTOWN TIMMINS BUSINESS IMPROVEMENT AREA NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & ACCUMULATED SURPLUS Accumulated surplus consists of individual fund surplus and reserves as follows: SURPLUS Invested in tangible capital assets $ 21,294 $ 30,828 General 45,919 52,147 Total surplus 67,213 82,975 RESERVES Working capital 10,000 10,000 Purchase of tangible capital assets 2,262 2,262 Total reserves 12,262 12,262 ACCUMULATED SURPLUS $ 79,475 $ 95, BUDGET FIGURES The budgeted figures presented are those approved by the Board of Directors. 8. RELATED PARTIES The organization and the Corporation of the City of Timmins are related parties due to the fact that the majority of revenue is derived from the Corporation of the City of Timmins. During the year, the organization received levies in the amount of $200,000 ( $189,007) from the Corporation of the City of Timmins. 9. ECONOMIC DEPENDENCE Over 77% of the organization's revenue is received from the Corporation of the City of Timmins. The continuation of this organization is dependent on this funding. 10. CONSOLIDATION The figures contained in these financial statements are consolidated into the operations and statements of the Corporation of the City of Timmins. 10

48 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31

49 INDEPENDENT AUDITOR'S REPORT To the Directors of Timmins Economic Development Corporation We have audited the accompanying financial statements of Timmins Economic Development Corporation, which comprise the statement of financial position as at December 31, 2017, and the statements of financial activities, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting principles, and for such internal control as management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of Timmins Economic Development Corporation as at December 31, 2017 and the results of its financial activities and the changes in its net financial assets and its cash flows for the year then ended in accordance with Canadian public sector accounting principles. Timmins, Ontario June 19, 2018 MNP LLP Chartered Professional Accountants Licensed Public Accountants

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51 STATEMENT 2 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) STATEMENT OF FINANCIAL ACTIVITIES YEARS ENDED DECEMBER 31 BUDGET REVENUES GRANTS City of Timmins $ 1,216,950 $ 1,216,950 $ 1,005,600 Province of Ontario 409, , ,459 Government of Canada 103, , ,672 1,729,450 1,882,439 1,794,731 OTHER Management services and workshops 12,000 10,405 11,686 Miscellaneous 418,600 56, , ,600 67, ,641 TOTAL REVENUES 2,160,050 1,949,731 1,949,372 EXPENDITURES Administration 926, , ,237 Amortization 12,939 12,939 17,098 Promotion and advertising 81,650 66,178 71,840 Receptions 11,500 8,696 15,754 Salaries and employee benefits 1,115,700 1,183,726 1,197,247 TOTAL EXPENDITURES 2,148,489 1,834,821 2,050,176 ANNUAL SURPLUS (DEFICIT) 11, ,910 (100,804) ACCUMULATED SURPLUS, BEGINNING OF YEAR - 320, ,179 ACCUMULATED SURPLUS, END OF YEAR $ 11,561 $ 435,285 $ 320,375 See accompanying notes.

52 STATEMENT 3 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) STATEMENT OF CHANGE IN NET FINANCIAL ASSETS YEARS ENDED DECEMBER ANNUAL SURPLUS (DEFICIT) $ 11,561 $ 114,910 $ (100,804) Acquisition of tangible capital assets - (277,507) (16,865) Amortization of tangible capital assets - 12,939 17,098 - (264,568) 233 CHANGE IN NET FINANCIAL ASSETS 11,561 (149,658) (100,571) NET FINANCIAL ASSETS, BEGINNING OF YEAR 295, , ,280 NET FINANCIAL ASSETS, END OF YEAR $ 307,270 $ 146,051 $ 295,709 See accompanying notes.

53 STATEMENT 4 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) STATEMENT OF CASH FLOWS YEARS ENDED DECEMBER OPERATING ACTIVITIES Annual surplus (deficit) $ 114,910 $ (100,804) Items not affecting cash: Amortization of tangible capital assets 12,939 17, ,849 (83,706) Change in non-cash working capital: Increase in accounts receivable 15,862 (24,152) Decrease in due from City of Timmins 189,182 84,347 Increase in accounts payable ,852 Increase (decrease) in deferred revenue (56,084) 22, , ,571 CASH PROVIDED BY OPERATING ACTIVITIES 277,507 16,865 CAPITAL TRANSACTIONS Acquisition of tangible capital assets (277,507) (16,865) CASH USED IN CAPITAL TRANSACTIONS (277,507) (16,865) CHANGE IN CASH - - CASH, beginning of year - - CASH, end of year $ - $ - CASH FLOW SUPPLEMENTARY INFORMATION The corporation paid no interest during the year. See accompanying notes.

54 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER NATURE OF OPERATIONS Timmins Economic Development Corporation (TEDC) was established by letters patent dated June 17, TEDC is a division of the Corporation of the City of Timmins. TEDC promotes economic development initiatives for the municipality and acts as an agent in the attraction, development and sustenance of businesses, which contribute to the economic, social and general well being of the community. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Timmins Economic Development Corporation are prepared by management in accordance with Canadian generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada. Significant aspects of the accounting policies adopted by the corporation are as follows: (a) BASIS OF ACCOUNTING (i) Sources of financing and expenditures are reported on the accrual basis of accounting. (ii) The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. (b) NON-FINANCIAL ASSETS Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. (c) TANGIBLE CAPITAL ASSETS Tangible capital assets are recorded at cost, which includes all amounts directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets are amortized on a straight-line basis over the estimated useful lives as follows: Leasehold improvements Communication, IT equipment and software Furniture, fixtures and appliances 34 years 5-10 years 5-10 years (i) CONTRIBUTIONS OF TANGIBLE CAPITAL ASSETS Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and also recorded as revenue. (ii) LEASES Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the related lease payments are charged to expenses as incurred.

55 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (d) GOVERNMENT TRANSFERS Government transfers are transfers from governments that are not the result of an exchange transaction and are not expected to be repaid in the future. Government transfers are recognized as revenue in the financial statements in the period in which the events giving rise to the transfer occur providing the transfers are authorized, eligibility criteria are met, and reasonable estimates of the amount can be made. (e) USE OF ESTIMATES The preparation of financial statements in conformity with Canadian public sector accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. These have been made using careful judgment and in light of information available. Such estimates include the useful life of tangible capital assets and the amortization thereof. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality. Actual results could differ from these estimates. (f) OTHER REVENUES Other revenues are recognized in the year that the events giving rise to the expenses occur and there is a legal or contractual obligation to pay. (g) DEFERRED REVENUES Revenue received for which the related services have yet to be performed are deferred and recorded as revenue in the year the related expenses are incurred or services performed, as this is the time the eligibility criteria have been met and the revenue is earned. 3. CONSOLIDATION The figures contained in these financial statements are consolidated into the operations and statements of the Corporation of the City of Timmins. 4. ECONOMIC DEPENDENCE The continued operations of TEDC are dependent upon its ability to secure financing from the Federal, Provincial and Municipal governments. 5. PENSION AGREEMENTS TEDC makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multiemployer plan on behalf of all permanent, full-time and qualifying part-time members. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for 2017 was $88,902 for current service ( $83,168) and is included as an expenditure on the Statement of Financial Activities.

56 TIMMINS ECONOMIC DEVELOPMENT CORPORATION (Operated by the Corporation of the City of Timmins) NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER BUDGET FIGURES The corporation completes separate budget reviews for its operating and capital budgets each year. The approved operating budget for 2017 is reflected on the Statement of Financial Activities. The budget established for the Capital Fund is based on a project-oriented basis, the costs of which may be carried out over one or more years. The budget adopted by the Board on November 1, 2016 was not prepared on a basis consistent with that used to report actual results (Public Sector Accounting Standards). The budget was prepared on a modified accrual basis while Public Sector Accounting Standards requires a full accrual basis. The budget figures anticipated use of surpluses accumulated in previous years to reduce current year expenditures in excess of current year revenues is $nil. In addition, the budget expensed all tangible capital expenditures rather than including amortization expense. As a resutl, the budget figures presented in the statements of operations and changes in net financial assets represent the budget adopted by the Board on xxxxxx with adjustments as follows: Financial plan (budget) surplus for the year $ - Add: Capital expenditures 379,500 Less: Budgeted transfers from accumulated surplus (355,000) Amortization (12,939) Budget surplus per statement of operations $ 11, ACCUMULATED SURPLUS Accumulated surplus consists of unrestricted amounts and equity in tangible capital assets as follows: Unrestricted surplus $ 102,351 $ 295,709 Amount restricted for future use by the Board motion 43,700 - Equity in tangible capital assets (Schedule A) 289,234 24,666 $ 435,285 $ 320, INTERNALLY RESTRICTED SURPLUS Restricted amoutns are made up of the following: Data Storage/Exploration Resolution project $ 43,700 $ - $ 43,700 $ - 9. FINANCIAL INSTRUMENTS The corporation's financial instruments consist of accounts receivable, due from the City of Timmins and accounts payable. Unless otherwise noted, it is management's opinion that the corporation is not exposed to significant interest, currency, liquidity, market, other price or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values.

57 PORCUPINE HEALTH UNIT FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2017 & 2016

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59 To the Board of Health for the Porcupine Health Unit INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the Porcupine Health Unit, which comprise the statement of financial position as at December 31, 2017, the statements of operations and accumulated surplus, changes in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the Porcupine Health Unit as at December 31, 2017 and the results of its operations, changes in its net financial assets and the changes in its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Timmins, Ontario MNP LLP April 20, 2018 Chartered Professional Accountants Licensed Public Accountants

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61 STATEMENT 2 PORCUPINE HEALTH UNIT STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS YEARS ENDED DECEMBER BUDGET ACTUAL ACTUAL REVENUE (Schedule A) Provincial grants $ 11,332,608 $ 11,274,458 $ 11,161,446 Municipal per capita revenue (Schedule B) 2,337,765 2,337,771 2,262,832 Sudbury Hospital genetics program 336, , ,659 Federal grants 171, , ,910 North East Local Health Integration Network 100, ,250 50,000 Other 253, , ,244 14,531,283 14,611,856 14,391,091 EXPENDITURE (Schedule A) General 9,017,764 8,869,420 8,949,141 Land Control 103,897 80,225 90,801 Preschool Speech and Language Initiative 768, , ,504 Genetics 336, , ,274 Stay on Your Feet 100,000 91, ,592 Chief Nursing Officer 121, , ,559 Healthy Smiles 406, , ,178 Unorganized Territories 855, , ,098 Infection Control 222, , ,300 Nurse Practitioner 122, ,603 Healthy Communities Healthy Babies/Healthy Children 1,018,056 1,009,520 1,009,425 Children's Oral Health Initiative 60,000 79, ,999 Canada Prenatal Nutrition 111, , ,111 Vector Borne Disease 122, , ,508 Smoke Free Ontario 399, , ,924 Small Drinking Water Systems 24,667 24,666 24,666 Diabetes Program 200, , ,557 Priority Population Nurse 180, , ,081 Fruit and Vegetable Pilot Program 194, , ,895 Infection Control Nurse 90,100 90,100 89,393 Harm Reduction 150, ,599-14,607,797 14,196,077 14,314,609 ANNUAL SURPLUS, before undernoted $ (76,514) 415,779 76,482 In year revenue deferred to subsequent period (Note 3) (336,279) (26,230) ANNUAL SURPLUS 79,500 50,252 ACCUMULATED SURPLUS, beginning of the year 3,494,820 3,425,409 Adjustment of prior period grants 3 19,159 ACCUMULATED SURPLUS, end of the year (Note 6) $ 3,574,323 $ 3,494,820 See accompanying notes.

62 STATEMENT 3 PORCUPINE HEALTH UNIT STATEMENT OF CHANGES IN NET FINANCIAL ASSETS YEARS ENDED DECEMBER BUDGET ACTUAL ACTUAL ANNUAL SURPLUS (DEFICIT) $ (76,514) $ 79,500 $ 50,252 Acquisition of tangible capital assets - (16,210) (23,120) Amortization of tangible capital assets - 116, ,050 Settlement of prior period grants , , ,089 CHANGE IN NET FINANCIAL ASSETS (76,514) 179, ,341 NET FINANCIAL ASSETS, beginning of the year 2,984,090 2,984,090 2,790,749 NET FINANCIAL ASSETS, end of year $ 2,907,576 $ 3,163,659 $ 2,984,090 See accompanying notes.

63 STATEMENT 4 PORCUPINE HEALTH UNIT STATEMENT OF CASH FLOWS YEARS ENDED DECEMBER OPERATIONS ANNUAL SURPLUS $ 79,500 $ 50,252 ITEMS NOT AFFECTING CASH: Amortization 116, ,050 Settlement of prior period grants 3 19,159 DECREASE (INCREASE) IN: Accounts receivables (46,623) 56,902 Prepaids 1,809 (9,961) INCREASE (DECREASE) IN: Due to Province of Ontario 3,870 (73,916) Accounts payable and accrued liabilities (129,674) (146,167) Separate Program balances 251,599 (205,479) Accrued employee benefit obligations 80,642 (4,261) INCREASE (DECREASE) IN CASH FROM OPERATIONS 357,402 (166,421) CAPITAL TRANSACTIONS Acquisition of tangible capital assets (16,210) (23,120) DECREASE IN CASH FROM CAPITAL TRANSACTIONS (16,210) (23,120) CHANGE IN CASH 341,192 (189,541) CASH, beginning of year 5,036,083 5,225,624 CASH, end of year $ 5,377,275 $ 5,036,083 CASH CONSISTS OF: Cash $ 1,739,985 $ 1,366,813 Short-term investments 3,637,290 3,669,270 $ 5,377,275 $ 5,036,083 See accompanying notes.

64 PORCUPINE HEALTH UNIT NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2017 & 2016 NATURE OF OPERATIONS The Porcupine Health Unit offers public health services through a variety of programs to the municipalities listed on Schedule B and the area's Unorganized Territories as specified in the Health Protection and Promotion Act. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Health Unit are the representation of management prepared in accordance with Canadian public sector accounting standards for local governments as recommended by the Public Sector Accounting Board (PSAB) of CPA Canada. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality. Significant aspects of the accounting policies adopted by the Health Unit are as follows: (a) REPORTING ENTITY The financial statements reflect the assets, liabilities, revenues, expenditures and net assets of the reporting entity. The reporting entity is comprised of all organizations and committees accountable for the administration of their financial affairs and resources to the Health Unit and which are owned or controlled by the Health Unit. The Board of Health for the Porcupine Health Unit Building Trust administered by the Health Unit is not included in the financial statements but are reported separately on The Board of Health for the Porcupine Health Unit Building Trust financial statements. (b) REVENUE RECOGNITION The Health Unit utilizes the accrual basis of accounting. Operating grants from all levels of government are recorded as revenue in the period to which they relate. Grants approved but not received at the end of an accounting period are accrued. Where a portion of a grant relates to a future period, it is deferred and recognized in that subsequent period. These financial statements reflect agreed arrangements with respect to the year ended December 31, Other revenues are recognized as they become available and are measurable. Expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. (c) SHORT-TERM INVESTMENTS Short-term investments are carried at market value. (d) TANGIBLE CAPITAL ASSETS Tangible capital assets are stated at cost less amortization. Tangible capital assets are amortized over their estimated useful lives at the following rates and methods: Automobiles 5 years Straight line method Clinical equipment 10 years Straight line method Leasehold improvements 10 years Straight line method Office equipment 10 years Straight line method (e) USE OF ESTIMATES The preparation of financial statements in conformity with Canadian public sector accounting standards 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 expenditures during the period. Such estimates include amortization of tangible capital assets, actuarial valuation of post-employment benefits, and accrued accounts payable. Actual results could differ from these estimates.

65 PORCUPINE HEALTH UNIT NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (f) RETIREMENT AND OTHER EMPLOYEE FUTURE BENEFITS The Health Unit provides future benefits to specified employee groups. These benefits include sick leave, vacation pay, and health care benefits. The costs of other employee future benefit plans are actuarially determined using the Health Unit's best estimate of accumulated sick days at retirement and health care costs trends, long-term inflation rates, and discount rates. (g) PROGRAM OPERATIONS The cost of General program operations of the Health Unit are primarily funded 25% from the member municipalities and 75% from the Province of Ontario. The municipalities' share is contributed by a per capita levy ($36.19 in 2017 and $35.03 in 2016). Excess of revenue over expenditures after adjustment of the Province's accounts is credited to the accumulated surplus of the Health Unit. The cost of all other programs, except for the Land Control Program which is funded on a fee for service basis, the Vector Borne Disease Program, and the Small Drinking Water Systems which are cost shared, are funded by various levels of government or other organizations without cost sharing by the participating municipalities. The balances of these programs are refundable to/receivable from the respective funding body upon settlement. (h) NON-FINANCIAL ASSETS Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives beyond the current year and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the annual surplus, provides the change in net financial assets for the year. (i) CASH AND CASH EQUIVALENTS Cash includes cash and cash equivalents. Cash equivalents are investments in guaranteed investment certificates and are valued at cost plus accrued interest. The carrying amounts approximate fair value because they have maturities at the date of purchase of less than ninety days. 2. SHORT TERM INVESTMENTS Short term investments represent investments in Guaranteed Investment Certificates with rates of return between 1.45% and 2.05% and maturing in 2019 and 2020.

66 PORCUPINE HEALTH UNIT NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & SEPARATE PROGRAM BALANCES Separate program balances represent the accumulated program surplus which includes unexpended funding or program deficits for certain programs that continue into the subsequent period. Program surpluses may be repayable at the program fiscal year end or if the funding bodies discontinue the program; upon settlement of the program's fiscal year end, deficits incurred may be the responsibility of the Health Unit Preschool Speech and Language Initiative $ 167,649 $ 198,876 Genetics 154, ,373 Stay on Your Feet (8,938) (23,976) Chief Nursing Officer Healthy Smiles Program 42,264 31,623 Unorganized Territories (1) (1) Infection Control Nurse Practitioner 154,165 19,887 Healthy Communities 14,902 14,902 Healthy Babies Healthy Children 8,525 11,621 Children's Oral Health Initiative 15,196 34,969 Canada Prenatal Nutrition 27,032 (11,460) Vector Bourne Disease (2,220) (2,277) Smoke Free Ontario 8,117 17,784 Small Drinking Water Systems - - Diabetes Program 78,218 76,609 Priority Population Nurse 1,429 1,426 Fruit and Vegetable Pilot Program 141,989 68,663 Infection Control Nurse Harm Reduction Program 42,401 - $ 847,266 $ 595,667

67 PORCUPINE HEALTH UNIT NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & ACCRUED EMPLOYEE BENEFIT OBLIGATIONS Sick Leave Other Employee Future Benefits Vacation Pay Total Accrued Obligation Total Accrued Obligation Accrued benefit obligation $ 755,485 $ 253,873 $ 172,124 $1,181,482 $ 886,623 Unamortized actuarial gains (losses) (338,911) 98,585 - (240,326) (26,110) $ 416,574 $ 352,458 $ 172,124 $ 941,156 $ 860,513 CHANGE IN ACCRUED EMPLOYEE BENEFIT OBLIGATIONS Current year benefit cost $ 81,447 $ 9,638 $ (2,719) $ 88,366 $ 41,164 (recovery) Interest on accrued benefit obligation 29,495 9,802-39,297 33,445 Amortization of actuarial gains (losses) 27,701 (7,600) - 20,101 3,078 Benefit payments (104,215) (11,615) - (115,830) (81,948) Increase due to plan amendment - 48,708-48,708 - $ 34,428 $ 48,933 $ (2,719) $ 80,642 $ (4,261) The accrued benefit obligations for employee future benefit plans as at December 31, 2017 are based on actuarial valuations as at December 12, These actuarial valuations were based on assumptions about future events. The next required valuation will be performed in The economic assumptions used in these valuations are the Health Unit's best estimates of expected rates of: Inflation 2.0% Expected average remaining life of employee group 13 years for sick leave and 16 years for retirement benefits Discount on accrued benefit obligations (includes inflation) 4.75% EMPLOYEE BENEFIT OBLIGATIONS (a) SICK LEAVE The Health Unit provides a sick leave payout to management employees and CUPE members hired before January 1, 2000 and ONA members hired before July 1, The number of credits available for payout and the related liability are capped (b) OTHER EMPLOYEE FUTURE BENEFITS The Health Unit agrees to offer to continue drug plan and vision coverage, up to age 65, to Management, CUPE and ONA members who are at least 55 years of age, at the date of retirement, and the total of their age and service with the Health Unit, in terms of years, is at least 80. There are currently eight members receiving this benefit. (c) LTD and AD&D Other employee benefits such as Long Term Disability (LTD) and Accidental Death and Dismemberment (AD&D) are insured and terminate upon retirement or early retirement. Since the LTD is insured, there is no accrued benefit obligation for the LTD to be reported.

68 PORCUPINE HEALTH UNIT NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & TANGIBLE CAPITAL ASSETS Automobiles Tangible Capital Assets Clinical Equipment Leasehold Improvements Totals Office Equipment Cost Opening costs $ 79,814 $ 649,002 $ 610,175 $ 3,282,103 $ 4,621,094 $ 4,597,974 Additions during the year 16, ,210 23,120 Disposal during the year (37,786) (37,786) - Closing costs 58, , ,175 3,282,103 4,599,518 4,621,094 Accumulated Amortization Opening accum'd amortization 5 79, , ,746 2,840,788 4,110,364 3,963,314 Amortization 0 3,242 9,363 12,570 91, , ,050 Disposal during the year (37,786) (37,786) - Closing accum'd amortization 45, , ,316 2,931,889 4,188,854 4,110,364 Net Book Value of Tangible Capital Assets $ 12,967 $ 29,624 $ 17,859 $ 350,214 $ 410,664 $ 510, ACCUMULATED SURPLUS ACCUMULATED SURPLUS IS REPRESENTED BY: Equipment replacement $ 3,127,819 $ 2,936,534 Investment in tangible capital assets 410, ,730 Sick leave reserve 35,841 47,556 $ 3,574,323 $ 3,494,820 (a) SICK LEAVE OBLIGATION The Board of Directors has approved the appropriation of operating funds to mitigate the future impact of this obligation. The amount in the reserve is adjusted each year to reflect the municipal share of the total potential liability (25% , 25% in 2016). (b) EQUIPMENT REPLACEMENT The Board of Directors has approved the appropriation of operating funds for future equipment replacements. 7. CONTINGENCIES The Health Unit has entered into accountable contributions with government funding agencies. All such revenue is subject to audit by the various governments with audit adjustments repayable to the government. In the normal course of operations, the Health Unit has become involved in labour relation disputes. As the probable outcome of these matters are not determinable at this time, any settlement or award will be reflected in the financial statements when the matters are resolved.

69 PORCUPINE HEALTH UNIT NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & FINANCIAL INSTRUMENTS The Health Unit is exposed to various risks through its financial instruments and has a comprehensive risk management framework to monitor, evaluate, and manage these risks. It is management's opinion that the Health Unit is not exposed to significant credit, liquidity, market, currency, interest rate, or other risks arising from these financial instruments. 9. ECONOMIC DEPENDENCE Over 77% of the organization's revenue is received from various Ministries of the Province of Ontario. The continuation of this organization is dependent on this funding. 10. BUDGETED AMOUNTS The budgeted figures presented are those approved by the Board of Health. 11. RELATED PARTY TRANSACTIONS During the year, the Health Unit paid $321,864 in rent and equipment rental to The Porcupine Health Unit Building Trust (related by common board membership). These transactions are in the normal course of operations and are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties. 12. PORCUPINE The Board of Health for the Porcupine Health Unit Building Trust was established to purchase tangible capital assets as investments to be leased on a long-term basis to the Health Unit. Total assets administered by the Trust are $2,336,628 with total liabilities of $5,225. Separate financial statements have been prepared for the Trust. 13. SEGMENTED INFORMATION The Health Unit provides a range of programs and services, that are reported in the statement of operations and accumulated surplus. Programs have been seperately disclosed in the segmented information in Schedule A. For each reported segment, expenditures represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. 14. COMMITTMENTS The Health Unit has entered into various lease agreements for periods ending from 2018 to 2021 with estimated minimum payments as follows: , , , , ,523

70 THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2017 & 2016

71 To the Board of Health for the Porcupine Health Unit INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the Porcupine Health Unit Building Trust, which comprise the statement of financial position as at December 31, 2017, the statements of operations and accumulated surplus, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting principles, and for such internal control as management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the Porcupine Health Unit Building Trust as at December 31, 2017 and the results of its operations, changes in its net financial net assets and cash flows for the year then ended in accordance with Canadian public sector accounting principles. Timmins, Ontario MNP LLP April 20, 2018 Chartered Professional Accountants Licensed Public Accountants

72

73 STATEMENT 2 THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS YEARS ENDED DECEMBER REVENUE Building and equipment rent $ 321,864 $ 321,863 Interest 10,844 7, , ,085 EXPENDITURES Amortization 25,074 26,394 Maintenance and repairs 41,283 33,471 Other Utilities 75,516 71, , ,758 ANNUAL SURPLUS 190, ,327 ACCUMULATED SURPLUS, beginning of year 2,141,077 1,943,750 ACCUMULATED SURPLUS, end of year $ 2,331,403 $ 2,141,077 See accompanying notes.

74 STATEMENT 3 THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST STATEMENT OF CHANGE IN NET FINANCIAL ASSETS YEARS ENDED DECEMBER ANNUAL SURPLUS $ 190,326 $ 197,327 Acquisition of tangible capital assets (3,299) (3,257) Amortization of tangible capital assets 25,074 26,394 Increase in prepaid expenditures (19) (17) 21,756 23,120 CHANGE IN NET FINANCIAL ASSETS 212, ,447 NET FINANCIAL ASSETS, beginning of year 1,087, ,167 NET FINANCIAL ASSETS, end of year $ 1,299,696 $ 1,087,614 See accompanying notes.

75 STATEMENT 4 THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST STATEMENT OF CASH FLOWS YEARS ENDED DECEMBER OPERATIONS ANNUAL SURPLUS $ 190,326 $ 197,327 ITEMS NOT AFFECTING CASH Amortization 25,074 26,394 DECREASE (INCREASE) IN: HST recoverable (1,877) 2,741 Prepaid expenditures (19) (17) Due from Porcupine Health Unit - 7,989 INCREASE (DECREASE) IN: Accounts payable and accrued liabilities (8,662) (1,332) INCREASE IN CASH FROM OPERATIONS 204, ,102 CAPITAL TRANSACTIONS Acquisition of tangible capital assets (3,299) (3,257) DECREASE IN CASH FROM CAPITAL TRANSACTIONS (3,299) (3,257) CHANGE IN CASH 201, ,845 CASH, beginning of year 1,095, ,673 CASH, end of year $ 1,297,061 $ 1,095,518 See accompanying notes.

76 THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2017 & 2016 NATURE OF ORGANIZATION The Building Trust has been established to purchase tangible capital assets as investments to be leased on a longterm basis to the Porcupine Health Unit when the Health Unit cannot secure funding for the purchase of these assets. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Building Trust are the representation of management prepared in accordance with Canadian generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board (PSAB) of CPA Canada. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality. Significant aspects of the accounting policies adopted by the Health Unit are as follows: (a) REVENUE RECOGNITION The Building Trust recognizes rental revenue in the period to which it relates. Interest income is recovered as earned. (b) ACCRUAL ACCOUNTING The financial statements of the Building Trust have been prepared using the accrual basis of accounting. (c) TANGIBLE CAPITAL ASSETS Tangible capital assets are stated at cost less accumulated amortization. amortized on the declining balance basis at 5% per annum. (d) USE OF ESTIMATES The building and equipment are The preparation of financial statements in conformity with Canadian public sector accounting principles 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 expenditures during the period. Such estimates include amortization of tangible capital assets. Actual results could differ from these estimates. (e) NON-FINANCIAL ASSETS Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the annual surplus provides the consolidated change in net financial assets for the year.

77 THE BOARD OF HEALTH FOR THE PORCUPINE HEALTH UNIT BUILDING TRUST NOTES TO FINANCIAL STATEMENTS (CONT'D) YEARS ENDED DECEMBER 31, 2017 & TANGIBLE CAPITAL ASSETS Tangible Capital Assets Totals Land Building & Equipment Cost Opening costs $ 550,931 $ 1,982,952 $ 2,533,883 $ 2,530,626 Additions during the year 3,299-3,299 3,257 Closing costs 554,230 1,982,952 2,537,182 2,533,883 Accumulated Amortization Opening accum'd amortization - 1,481,471 1,481,471 1,455,077 Amortization - 25,074 25,074 26,394 Closing accumulated amortization - 1,506,545 1,506,545 1,481,471 Net Book Value of Tangible Capital Assets $ 554,230 $ 476,407 $ 1,030,637 $ 1,052, FINANCIAL INSTRUMENTS The Building Trust's is exposed to various risks through its financial instruments and has a comprehensive risk management framework to monitor, evaluate, and manage these risks. It is management's opinion that the Health Unit is not exposed to significant credit, liquidity, market, currency, interest rate, or other risks arising from these financial instruments.

78 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD FINANCIAL STATEMENTS DECEMBER 31, 2017 & 2016

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80 INDEPENDENT AUDITOR'S REPORT To the Chairman and Board of the Cochrane District Social Services Administration Board Administration Board We have audited the accompanying financial statements of Cochrane District Social Services Administration Board Administration Board, which comprise the statement of financial position as at December 31, 2017, and the statements of financial activities and accumulated surplus, change in net debt, re-measurement gains and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the Cochrane District Social Services Administration Board as at December 31, 2017 and the results of its financial activities and the changes in net debt and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Other Matter The supplementary information contained in schedule 1 is presented for the purposes of additional analysis and is not part of the basic audited financial statements. The information in schedule 1 was derived from the accounting records tested in forming an opinion on the financial statements as a whole. Timmins, Ontario May 17, 2018 MNP LLP Chartered Professional Accountants Licensed Public Accountants 2

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82 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD STATEMENT OF FINANCIAL ACTIVITIES AND ACCUMULATED SURPLUS YEARS ENDED DECEMBER Budget Actual Actual REVENUE Province of Ontario $ 35,929,373 $ 40,095,619 $ 35,637,384 Municipal and unincorporated territories contributions (Schedule 2) 18,761,187 18,761,187 18,427,780 Government of Canada 4,059,533 4,059,534 4,236,176 Rent 7,277,033 7,179,766 7,047,860 Interest 235, , ,447 TOTAL REVENUE 66,262,151 70,379,591 65,629,647 EXPENSES - PROGRAMS Child care 9,361,741 10,233,519 9,176,055 Employment placement 1,074,875 1,176,000 1,074,875 Ontario Works 14,813,267 16,496,477 14,548,893 Social housing 17,669,801 15,834,047 16,595,743 Social housing - Moosonee 1,999,983 3,135,932 2,773,243 Land ambulance - operating 12,376,978 12,098,449 11,680,945 Other 4,564,186 5,127,406 4,379,769 61,860,831 64,101,830 60,229,523 EXPENSES - ADMINISTRATION OF PROGRAMS Amortization of capital assets 246, , ,414 Bank charges and interest 382, , ,299 Equipment and leasehold improvements (4,013) (15,396) 1,333 Miscellaneous 303, , ,989 Office supplies 108, , ,952 Professional fees and purchased services 75,000 87,063 63,664 Rent, building lease and utilities 150, , ,727 Salaries, wages and benefits 1,611,046 1,695,246 1,592,382 Travel 2, Interest earned (12,000) (7,528) (6,901) 2,862,578 3,034,554 2,861,705 TOTAL EXPENDITURES 64,723,409 67,136,384 63,091,228 ANNUAL SURPLUS 1,538,742 3,243,207 2,538,419 Repayment to MCSS, EDU, municipalities and unincorporated territories - (2,968,057) (964,593) ACCUMULATED OPERATING SURPLUS, BEGINNING OF YEAR 30,882,439 30,882,439 29,308,613 ACCUMULATED OPERATING SURPLUS, END OF YEAR $32,421,181 $31,157,589 $30,882,439 See accompanying notes. 4

83 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD STATEMENT OF CHANGE IN NET DEBT YEARS ENDED DECEMBER Budget Actual Actual ANNUAL SURPLUS $ 1,538,742 $ 3,243,207 $ 2,538,419 Acquisition of tangible capital assets (2,251,571) (2,812,177) (1,973,743) Amortization of tangible capital assets 2,289,806 2,289,806 2,192,298 Loss on sale of tangible capital assets - 6,838 46,894 Proceeds on sale of tangible capital assets - 32,994 7,488 Increase in prepaid expenses - (151,437) (157,513) Repayment to MCSS, EDU, municipalities and unincorporated territories - (2,968,057) (964,593) Remeasurement gain (loss) - (298,724) 294,566 38,235 (3,900,757) (554,603) CHANGE IN NET DEBT 1,576,977 (657,550) 1,983,816 NET DEBT, BEGINNING OF YEAR (16,810,088) (16,810,088) (18,793,904) NET DEBT, END OF YEAR $ (15,233,111) $ (17,467,638) $ (16,810,088) See accompanying notes. 5

84 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD STATEMENT OF RE-MEASUREMENT GAINS YEARS ENDED DECEMBER ACCUMULATED RE-MEASUREMENT GAINS, BEGINNING OF YEAR $ 294,566 $ - Unrealized gains (losses) attributable to derivatives (298,724) 294,566 ACCUMULATED RE-MEASUREMENT GAINS (LOSSES), END OF YEAR $ (4,158) $ 294,566 See accompanying notes. 6

85 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD STATEMENT OF CASH FLOWS YEARS ENDED DECEMBER OPERATING ACTIVITIES Annual surplus $ 3,243,207 $ 2,538,419 Items not affecting cash: Amortization of tangible capital assets 2,289,806 2,192,298 Loss on disposal of tangible capital assets 6,838 46,894 Repayment to MCSS, EDU, municipalities and unincorporated territories (2,968,057) (964,593) 2,571,794 3,813,018 Changes in non-cash working capital: Accounts receivable (403,952) (549,021) Prepaid expenses (151,437) (157,513) Accounts payable and accrued liabilities 689, ,103 Retirement and other employee future benefits 96,103 44,740 Due to Province of Ontario 456,033 (861,250) Deferred revenue 952, ,981 1,638,606 (1,080,960) CASH PROVIDED BY OPERATING ACTIVITIES 4,210,400 2,732,058 CAPITAL TRANSACTIONS Acquisition of tangible capital assets (2,812,177) (1,973,743) Proceeds on sale of tangible capital assets 32,994 7,488 CASH USED IN CAPITAL TRANSACTIONS (2,779,183) (1,966,255) INVESTING ACTIVITIES Loan receivable receipts 76,760 73,041 Purchase of investments (999,999) (2,000,000) Proceeds from sale of investments 2,132,787 - Interest earned (46,295) (43,950) CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,163,253 (1,970,909) FINANCING ACTIVITIES Repayment of long-term debt (1,526,977) (1,570,788) CASH USED IN FINANCING ACTIVITIES (1,526,977) (1,570,788) CHANGE IN CASH 1,067,493 (2,775,894) CASH, beginning of year 6,735,188 9,511,082 CASH, end of year $ 7,802,681 $ 6,735,188 CASH FLOW SUPPLEMENTARY INFORMATION: Interest paid $ 1,199,038 $ 1,304,031 See accompanying notes. 7

86 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, NATURE OF OPERATIONS Cochrane District Social Services Administration Board (CDSSAB) is an organization which administers various programs of the Ministry of Community and Social Services (MCSS), Ministry of Education (EDU), Ministry of Health and Long-Term Care (MOHLTC), Ministry of Municipal Affairs and Housing (MMAH), Ministry of Children and Youth Services (MCYS) and Ministry of Advanced Education and Skills Development (MAESD). The Board also provides social housing in the Cochrane District. The Board is funded primarily by the Province of Ontario, the Government of Canada and twelve incorporated municipalities from the District of Cochrane. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the CDSSAB are the representation of management prepared in accordance with Canadian public sector accounting standards. The more significant of these accounting policies are summarized below. (a) ACCRUAL ACCOUNTING The financial statements of the Cochrane District Social Services Administration Board have been prepared using the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. (b) REVENUE RECOGNITION AND GOVERNMENT TRANSFERS The programs are funded primarily by the Province of Ontario in accordance with budget arrangements established by the Ministry of Community and Social Services, Ministry of Education, Ministry of Health and Long-Term Care, Ministry of Municipal Affairs and Housing, Ministry of Children and Youth Services and Ministry of Training, Colleges and Universities. Government transfers are transfers from senior levels of government that are not the result of an exchange transaction and are not expected to be repaid in the future. Government transfers without eligibility criteria or stipulations are recognized as revenue when the transfer is authorized. A transfer with eligibility criteria is recognized as revenue when the transfer is authorized and all eligibility criteria have been met. A transfer without eligibility criteria but with stipulations is recognized as revenue in the period the transfer is authorized and all eligibility criteria have been met, except where and to the extent that the transfer gives rise to an obligation that meets the definition of a liability. Government transfers that meet the definition of a liability are recognized as revenues as the liability is extinguished. The programs are also funded by member municipalities from the District of Cochrane. Contributions for the year are based on the weighted assessments for each municipality. Any excess or deficiency of the municipalities' contributions in the year over their respective share of program's expenses is apportioned among the municipalities in the same proportion as the original contributions. 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. (c) INVESTMENTS Investments are recorded at the lower of cost and fair market value. The portfolio is comprised of fixed income investments. 8

87 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (d) TANGIBLE CAPITAL ASSETS Tangible capital assets are recorded at cost, which includes all amounts directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets are amortized on a straight-line basis over the estimated useful lives as follows: Buildings Building improvements Communication, IT equipment and software Furniture, fixtures and appliances Land improvements Leasehold improvements Machinery and equipment Office equipment Vehicles and mobile equipment 50 years years 3-5 years 5-10 years 10 years 10 years 5-10 years 5-10 years 5-10 years The CDSSAB has a capitalization threshold dependant on the asset type so that individual tangible capital assets of lessor value than the threshold are expensed unless they are pooled because, collectively, they have a significant value for operational reasons. (e) GENERAL REVENUE FUND Adjustments to prior year funding are recorded as increases or decreases in the general revenue fund in the period it is incurred. (f) RESERVES AND RESERVE FUNDS Reserves and reserve funds represent amounts appropriated for general and specific purposes and are charged or credited to the respective fund in the period appropriated or drawn down. The amounts in reserves are approved by the Board and are within the limits defined in the District Social Services Administration Boards Act. (g) RETIREMENT AND OTHER EMPLOYEE FUTURE BENEFITS The Board provides future benefits to specified employee groups. These benefits include sick leave, vacation pay and health care benefits. The costs of other employee future benefit plans are actuarially determined using the Board's best estimate of accumulated sick days at retirement and health care costs trends, long-term inflation rates and discount rates. The Board accrues its obligations under employment benefit plans as the employees render the services necessary to earn employee future benefits. The cost of retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on service and management's best estimate of salary escalation, retirement ages and expected health care costs. Actuarial valuations, where necessary for accounting purposes, are performed triennially. The discount rate used to determine the accrued benefit obligation was the expected cost of long-term debt. Unamortized actuarial gains or losses are amortized on a straight-line basis over the expected average remaining service life of the employee group. Where applicable, the Board has set aside reserves and reserve funds intended to fund these obligations, either in full or in part. These reserves and reserve funds do not meet the definition of a plan asset under CPA Canada PS 3250 Retirement Benefits. Therefore, for the purposes of these financial statements, the plans are considered unfunded. (h) FUND ACCOUNTING The organization follows the restricted method of accounting for contributions and maintains 3 funds: general revenue fund, tangible capital assets and reserve funds. The general revenue fund reports the organization's operational revenues and expenses. The tangible capital assets fund reports the organizations revenues and expenses related to the tangible capital assets. The reserve funds report revenue and expenses related to reserves. 9

88 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (i) MEASUREMENT UNCERTAINTY The preparation of financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting periods. Such estimates include the estimated useful lives of tangible capital assets and the retirement and other employee benefits obligation. These have been made using careful judgment and in light of information available. The financial statements have in management's opinion, been properly prepared within reasonable limits of materiality. Actual results could differ from these estimates. (j) NON-FINANCIAL ASSETS Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the Change in Net Financial Assets for the year. 3. LOAN RECEIVABLE Due from the Notre Dame Hospital, repayable in blended monthly instalments of $4,379, interest calculated at 5%, maturing February $ 352,428 $ 386,614 Due from Kaleidoscope, repayable in blended monthly instalments of $3,964, interest calculated at 5%, maturing May , ,021 Due from Drury Street Non-Profit Housing Corporation, repayable in blended monthly instalments of $1,591, interest calculated at 5%, maturing February , , , ,538 Amounts receivable within one year. (80,669) (76,760) $ 730,109 $ 810,778 Principal payments required for each of the next five years and thereafter are approximately as follows: 2018 $ 80, , , , ,399 Thereafter 364,208 $ 810,778 10

89 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, DUE TO (FROM) PROVINCE OF ONTARIO Due to Province - MMAH rent bank $ 102,344 $ 102,344 Due to Province - MCSS for ,456 Due to Province - MCSS for ,593 - Due from Province - EDU for 2013 (111,426) (111,426) Due to Province - EDU for , ,140 Due to Province - EDU for , ,200 Due to Province - EDU for , ,846 Due to Province - EDU for ,448 - Due from Province - MCSS Ontario Works (Form 5) 2015 (33,521) (33,521) Due from Province - MCSS Ontario Works (Form 5) 2016 (812,420) (812,420) Due to Province - MCSS Ontario Works (Form 5) ,690 - Due to Province - EDU wage enhancement for ,644 - Due from Province - Board mediation 2017 (34,049) - $ 426,652 $ (29,381) 5. LONG-TERM DEBT Due to the City of Timmins, repayable in blended semi-annual payments of $326,322, interest calculated at 5.06%, maturing May 16, $ 7,382,489 $ 7,651,334 Due to TD bank (see below). 8,663,384 8,618,923 Debentures debt (see below). 5,207,995 6,211,863 $ 21,253,868 $ 22,482,120 Principal payments required for each of the next five years and thereafter are approximately as follows: 2018 $ 1,201, ,591, ,459, ,485, ,570,525 Thereafter 13,945,864 $ 21,253,868 The Ministry of Municipal Affairs and Housing (MMAH) transferred title to all the housing units to Cochrane District Local Housing Corporation. The transfer was made such that the MMAH retained the debt that was outstanding on the properties. The MMAH continues to make the mortgage payments. In return, the subsidies received from the MMAH and the Federal government are reduced by the amount of these principal and interest payments. There are 50 debentures with interest rates ranging from 6.09% to 7.85%. The principal and interest payments for 2017 were $1,387,

90 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, LONG-TERM DEBT (CONT'D) The loan from TD Bank is a swap rate takeout loan agreement on the Cochrane Seniors Complex. The loan is a 25 year amortization. The swap is 20 years with a 5 year Optional Exit Strategy. The swap agreement exchanges CDSSAB's Banker's Acceptance variable loan payments for an established fixed rate payment. The exchange of interest payments result in an effective interest rate of 2.47% plus a 0.63% stamping fee for an all-in interest rate of 3.1%. TD Bank retains a general security agreement representing a first charge on all present and after acquired property, an assignment of rents and leases specific to th Street, Cochrane, Ontario and an assignment of fire insurance on said property. This loan matures in December TD loan payable $ 8,659,226 $ 8,913,489 Plus fair value adjustment of derivative 4,158 (294,566) $ 8,663,384 $ 8,618, DEFERRED REVENUE Tenants' prepaid rent $ 96,975 $ 84,252 LEAP - Energy bank 24,781 32,187 Community Homelessness Prevention Initiative 161, ,835 MOH Dedicated Nurse Offload Program 1,885 8,210 Opasatika - St Antoine School 68,946 80,938 Affordable Housing Program 510, ,164 Social Infrastructure Fund 132, ,714 Investment in Affordable Housing Administration - 14,685 Employment Ontario 52,938 41,866 Childcare ELCC 186,643 - Childcare expansion funding 734,630 - $ 1,970,942 $ 1,018,851 12

91 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, RETIREMENT AND OTHER EMPLOYEE FUTURE BENEFITS Total Employee Future Benefits Total Employee Future Benefits Accrued employee future benefit obligations, beginning of year $ 1,646,608 $ 1,601,868 Add: current year benefit cost 106,480 80,516 Add: interest on accrued benefit obligation 76,060 73,212 Recognized actuarial losses 11,813 11,813 Less: benefits paid (98,250) (120,801) Total expenses 96,103 44,740 Accrued employee future benefit obligations, ending of year $ 1,742,711 $ 1,646,608 The accrued benefit obligations for employee future benefit plans as at December 31, 2017 are based on actuarial valuations as at December 31, These actuarial valuations were based on assumptions about future events. The employee future benefits expenses have been included in salaries, wages and benefits expenses on the "Statement of Financial Activities and Accumulated Surplus". The next required actuarial valuation will be performed as at January 1,

92 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, RETIREMENT AND OTHER EMPLOYEE FUTURE BENEFITS (CONT'D) The economic assumptions used in these valuations are the Board's best estimates of expected rates of the following: 2017 % Inflation 2.0 Wage and salary escalation (includes inflation) 3.0 Dental cost escalation 4.0 Discount on accrued benefit obligations 4.25 Expected future sales tax 8.0 Future travel escalations Escalate at the same rate as health care. Expected average remaining service life Expected future retirement rates Expected future termination rates Expected future mortality rates Health Care Health care cost escalation Expected future change in benefits 14 years for retirement benefits and 13 years for sick leave. 14 years for retirement benefits and 13 years for sick leave. 133% of UP-94_2024. UP the uninsured Pensioner mortality tables. Fiscal 2015 Combined Active and Retiree Cost Rates including taxes, (Non Union: $45.72 family, $21.48 single, CUPE: $ family, $69.65 single) derived from CDSSAB experience, adjusted for age (25% during early retirement), plus future health care premium rate escalations. Escalates at % for 2012, 6.0% for 2013 vs. 2012, reducing by % per year over 6 years to 4% in 2019 vs and 4.0% per year thereafter. Future benefit caps will remain flat; fee schedules will track expected future premium escalation rates. Emergency Medical Travel Combined (Retiree plus Active) EMTI premiums of $1.79 per month single and $3.81 per month family were added to the Health Care rates for Non Union members, and are subject to Health Care escalation and a 25% age adjustment. Month of Retirement Coverage Life and Dependent Life All eligible CDSSAB early retirees will receive early retirement benefits until age % of UP-94_2024. A reserve fund of $586,239 ( $579,467) has been established to provide for housing employee entitlements. Also, reserves have been established to provide for sick leave and severance for land ambulance employees. The balance of these reserves is $307,388 ( $349,521) and $559,409 ( $559,409), respectively. These reserve funds and reserves are reported on Schedules 4 and 5. 14

93 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, RETIREMENT AND OTHER EMPLOYEE FUTURE BENEFITS (CONT'D) RETIREMENT BENEFITS (a) RETIREMENT GRATUITIES The Board provides retirement gratuities to certain groups of employees. The amount of the gratuities paid to eligible employees at retirement is based on their salary and accumulated sick days at retirement. (b) RETIREMENT LIFE INSURANCE AND HEALTH CARE BENEFITS The Board continues to provide life insurance and health care benefits to certain employee groups for one year after retirement. The benefit costs and liabilities related to this plan are included in the Board's financial statements. OTHER EMPLOYEE FUTURE BENEFITS (a) WORKPLACE SAFETY AND INSURANCE BOARD OBLIGATIONS The Board is a Schedule 1 employer under the Workplace Safety and Insurance Act and, as such, the Board insures all claims by its injured workers under the Act. The Board's insurance premiums for the year ended December 31, 2017 were $557,010 ( $564,899) and are included in the Board's current year benefit costs. No liabilities for claims by its injured workers under the Act are included in the Board's financial statements. (b) LONG-TERM DISABILITY The Board provides life insurance, dental and health care benefits to employees on long-term disability leave. The Board is responsible for the payment of life insurance premiums and the costs of health care benefits under this plan for a two-year period. The costs of salary compensation paid to employees on long-term disability leave are fully insured and not included in this plan. 8. RESERVES AND RESERVE FUNDS Reserves are comprised of the following: For organization sick leave $ 307,388 $ 349,521 For working capital 2,567,495 3,952,172 For computer development 595, ,000 For investment in affordable housing 800, ,611 For Housing Working Capital 245, ,000 For MOH - LA - severance 559, ,409 For MOH - LA - vehicle 48,490 48,490 For childcare mitigation funding 591, ,201 TOTAL RESERVES (Schedule 4) $ 5,714,594 $ 7,141,404 Reserve funds are comprised of the following: Algonquin $ 906,167 $ 846,060 Housing Employee Entitlement 586, ,467 Public Housing Capital 1,596,632 1,578,189 Federal Housing Capital 680, ,073 Moosonee Public Housing Capital 191, ,459 Non-Profit Housing Capital 368, ,578 TOTAL RESERVE FUNDS (Schedule 5) $ 4,330,488 $ 4,230,826 15

94 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, PENSION AGREEMENTS The Board makes contributions to the Ontario Municipal Employees Retirement System (OMERS), which is a multiemployer plan, on behalf of members of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for 2017 was $1,180,610 ( $1,130,530) for current service. As this is a multi-employer pension plan, these contributions are CDSSAB's pension benefit expense. No pension liability for this type of plan is included in CDSSAB's financial statements. 10. FINANCIAL INSTRUMENTS The Board is exposed to various risks through its financial instruments and monitors, evaluates and manages these risks. The following analysis provides information about the company'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 Board is exposed to credit risk from tenants. In order to reduce its credit risk, the Board reviews a clients' credit history before extending credit and conducts regular reviews of its existing customers' credit performance. An allowance for doubtful accounts is established based upon factors surrounding the credit risk of specific accounts, historical trends and other information. The Board has a significant number of clients which minimizes the concentration of credit risk. Fair value The Board's carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates its fair value due to the immediate or short term maturity of these instruments. The carrying amount of long-term debt approximates the fair value as the interest rates are consistent with current rates offered to the CDSSAB for debt with similar terms. Interest rate risk Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. In seeking to minimize the risks from interest rate fluctuations, the company manages exposure through its normal operating and financing activities. The Board is exposed to interest rate risk primarily through its floating interest rate. 11. COMMITMENTS The Board has leased office space under operating leases for various periods up to the year The Board is also paying rent on a month-to-month basis for leased office space. Future minimum lease payments are as follows: 2018 $ 81, ECONOMIC DEPENDENCE The majority of the Board's revenue is received from the provincial and federal governments and member municipalities. The continuation of this organization is dependent on this funding. 16

95 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, CONTINGENCIES The Board is involved in a number of claims and possible claims which are a result of normal on-going operations. In the eventuality that the Board is unsuccessful in defending some of these claims, amounts are available in existing reserves, reserve funds and the operating fund. Management is of the opinion that these amounts are sufficient to cover these claims. Any settlements or awards which may arise or any difference with the provision made will be reflected in the financial records in the year that the amount has been determined. 14. SEGMENTED INFORMATION The District of Cochrane Social Services Administration Board supports the development of healthy and selfsufficient communities through the innovative and responsive delivery of Children's Services, Community Housing, Emergency Medical Services and Social Assistance. For reporting purposes, the Board s financial activities are organized and reported by program. Certain programs that have been separately disclosed in the segmented information, along with the services they provide, are as follows: (a) SOCIAL HOUSING Housing Services administers rent-geared-to-income assistance to eligible households in the Cochrane District. The department also manages a housing portfolio of 1,284 units and 227 rent supplement units and administers the Social Housing Reform Act 2000 for the various Non-Profit and Co-Operative Housing Providers' portfolio of 800 units. Providers operate affordable housing projects that offer rental units at Market Rents and units that are eligible for rent-geared-to-income subsidy. Housing assistance is provided to families, seniors, couples, single people and people with special needs in a variety of buildings; townhouses, apartments, single and semi-detached. Private landlords have also agreed to supply accommodation under the rent supplement program. (b) ONTARIO WORKS The Ontario Works Department provides employment and financial assistance to individuals who comply with the participation requirements intended to assist them in finding and maintaining gainful employment. Individuals receiving assistance through Ontario Works participate in a wide range of employment assistance activities, which help them prepare for, find and keep a job. (c) CHILD CARE The Children s Services Division manages childcare funding within the District of Cochrane. This includes fee subsidy, resource centre funding, special needs resources, wage subsidy, National Child Reinvestment funding, and funding for special initiatives. (d) LAND AMBULANCE CDSSAB is responsible for the provision of Land Ambulance Services within the District of Cochrane based upon fundamental principles which include services that are seamless, accountable, responsive, integrated and accessible. For each reported segment, revenue and expenses represent both the amounts that are directly attributable to the segment as well as amounts that can reasonably be allocated to the segment. Therefore, certain allocation methodologies are employed in the preparation of segmented financial information. The accounting policies used in these segments are consistent with those followed in the preparation of the financial statements as disclosed in Note 2. For additional information, see the Schedule of Segment Disclosure (Schedule 6). 17

96 COCHRANE DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, CREDIT FACILITY AGREEMENTS CDSSAB has three credit facilities in place with CIBC. The first facility is in the amount of $5,000,000 to be used for day-to-day cash flow requirements for the admin account. Interest is payable at prime % per annum and is the balance is repayable on demand. The second facility is in the amount of $850,000 and is to be used for day-to-day cash flow requirements for the client account. Interest is payable at prime % per annum and balance is repayable on demand. The third facility is in the amount of $300,000 and is to be used for day-to-day cash flow requirements for the housing account. Interest is payable at prime % per annum and balance is repayable on demand. At December 31, 2017, the full amount of the admin facility was available, the client facility was fully utilized and $215,529 of the housing facility was available. 16. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with current year presentation. 17. BUDGET INFORMATION The Budget adopted by the Board of Directors on November 17, 2016 was not prepared on a basis consistent with that used to report actual results (Public Sector Accounting Standards). The budget was prepared on a modified accrual basis while Public Sector Accounting Standards require full accrual basis. The budget figures anticipated use of surpluses accumulated in previous years to reduce current year expenditures in excess of current year revenues is $nil. In addition, the budget expensed all tangible capital expenditures rather than including amortization expense. As a result, the budget figures presented in the statements of financial activities and changes in net debt represent the Budget adopted by the Board of Directors on November 17, 2016 with adjustments as follows: Budget surplus for the year $ - Add: Capital expenditures 2,251,571 Debt principal repayments 1,526,977 Transfer to accumulated surplus 50,000 Less: Amortization 2,289,806 Budget surplus per statement of financial activities $ 1,538, EXPENDITURES BY OBJECT The following is a summary of the expenditures reported on the "Statement of Financial Activities and Accumulated Surplus" by object: Salaries $ 17,336,775 $ 16,263,157 Materials and services 12,958,369 12,037,470 Rent and financial expenses 2,257,939 2,332,913 External transfers 32,541,315 29,848,895 Contracted services 2,041,986 2,608,793 Total expenditure $ 67,136,384 $ 63,091,228 18

97 The City of Timmins Non-Profit Housing Corporation Financial Statements December 31, 2017

98

99 Independent Auditors Report To the Board of The City of Timmins Non-Profit Housing Corporation: We have audited the accompanying financial statements of The City of Timmins Non-Profit Housing Corporation, which comprise the statement of financial position as at December 31, 2017, and the statements of operations and changes in net assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with funding arrangements with Cochrane District Social Services Administration Board (CDSSAB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The City of Timmins Non-Profit Housing Corporation as at December 31, 2017 and the results of its operations, changes in net assets its cash flows for the year then ended in accordance with funding arrangements with Cochrane District Social Services Administration Board (CDSSAB). Basis of Accounting and Restrictions on Distribution and Use Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis of accounting. The financial statement are prepared to assist the City of Timmins Non-Profit Housing Corporation to comply with the financial provisions of the funding arrangements referred to above. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the City of Timmins Non-Profit Housing Corporation and the CDSSAB and should not be distributed or used by parties other than the City of Timmins Non-Profit Housing Corporation or CDSSAB. Timmins, Ontario Chartered Professional Accountants June 13, 2018 Licensed Public Accountants 2185 Riverside Dr., Timmins, Ontario, P4R 0A1, Phone: (705)

100

101 The City of Timmins Non-Profit Housing Corporation Statement of Operations and Changes in Net Assets For the year ended December 31, 2017 General Fund Capital Replacement Reserve Budget Total Total Revenue Rent - market tenants 386, , , ,731 Rent - geared-to-income 544, , , ,731 Other rent related revenue 14,615-14,210 14,615 15,364 Government rent subsidies (Note 3), (Note 11) 745, , , ,126 Investment income 6,191 27,949-34,140 34,341 Unrealized gains on marketable securities - 62,857-62,857 39,709 Total revenue 1,697,032 90,806 1,702,955 1,787,838 1,762,002 Expenses Administrative overhead (Note 3) 170, , , ,820 Amortization - interest 197, , , ,659 Amortization - principal 465, , , ,081 Bad debts 4,490-3,555 4,490 13,110 Capital reserve expenditures - 150, , ,889 Insurance 18,915-32,344 18,915 20,118 Materials and services 167, , , ,478 Municipal taxes 166, , , ,582 Utilities 293, , , ,709 Transfers to replacement reserve 114,477 (114,477) 114,477 - (65) Total expenses 1,598,592 36,336 1,702,955 1,634,928 1,618,381 Excess of revenue over expenses 98,440 54, , ,621 Net assets beginning of year 441,105 1,240,841 1,681,946 1,538,325 Net assets, end of year 539,545 1,295,311 1,834,856 1,681,946 The accompanying notes are an integral part of these financial statements 2

102 The City of Timmins Non-Profit Housing Corporation Statement of Cash Flows For the year ended December 31, Cash provided by (used for) the following activities Operating Excess of revenue over expenses 152, ,621 Amortization 465, ,081 Unrealized gain on marketable securities (62,857) (39,709) 555, ,993 Changes in working capital accounts Accounts receivable 96,524 (70,001) Prepaid expenses (33) 1,139 Accounts payable and accruals 20, Prepaid rent (479) (7,336) 672, ,064 Financing Repayment of long-term debt (465,489) (441,082) Increase (decrease) in due to CDSSAB 38,789 (31,376) (426,700) (472,458) Investing Purchase of marketable securities (125,000) - Investment income re-invested (31,244) (32,241) (156,244) (32,241) Increase (decrease) in cash resources 89,150 (35,635) Cash resources, beginning of year 446, ,387 Cash resources, end of year 535, ,752 The accompanying notes are an integral part of these financial statements 3

103 The City of Timmins Non-Profit Housing Corporation Notes to the Financial Statements For the year ended December 31, Incorporation and nature of the organization The City of Timmins Non-Profit Housing Corporation (the Corporation ) was incorporated without share capital under the Ontario Corporations Act as a not-for-profit organization, and thus is exempt from income taxes under the Income Tax Act. The Corporation operates three non-profit housing projects. These projects are undertaken under funding programs with the Provincial and Federal governments. The Provincial programs were subsequently transferred to the Cochrane District Social Services Administration Board (CDSSAB). The project located at 77 Mountjoy Street North (MNP #1) operates 32 units under a tripartite agreement jointly signed by the Canada Mortgage and Housing Corporation (CMHC), the CDSSAB and the Corporation. Both CMHC and the CDSSAB provide funding on an agreed budget to cover the short-fall between rent collected and operating expenses. The project located at 67 Mountjoy Street North (MNP #2) operates 61 units under the Homes Now Non-Profit Housing Program of the Ministry of Municipal Affairs and Housing. The CDSSAB provides a subsidy based on an annual operating budget to cover the short-fall between budgeted rental revenue and budgeted operating expenses. The project located at 450 Shirley Street (MNP #3) operates 40 units under the Federal/Provincial Non-Profit Housing Program of the Ministry of Municipal Affairs and Housing. The federal government and the CDSSAB jointly provide a subsidy based on an annual operating budget to cover the short-fall between budgeted rental revenue and budgeted operating expenses. 2. Significant accounting policies Basis of accounting These financial statements have been prepared in accordance with the Cochrane District Social Services Administration Board. In accordance with the Cochrane District Social Services Administration Board directives, the financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations except that: Capital assets Capital assets are initially recorded at an amount equal to the total initial capital cost of the land, building, furniture and fixtures. Amortization of the capital cost of capital assets is recorded in annual amounts equal to the principal reduction in the mortgage debt, net of any interest credits received during the year. Principal reductions of the mortgage debt are expensed. Normal repair and maintenance expenditures are expensed as incurred. Cochrane District Social Services Administration Board approved modernization and improvement expenditures are also expensed as incurred. The net book value of the capital assets at year-end is equal to the principal balance of the related mortgage loan. As such there is no "Net Investment in Capital Assets" nor any "Deferred Capital Contributions" separately disclosed on the statement of financial position. Capital reserve fund Certain capital expenditures are required to be funded from the Capital Reserve Fund. When capital expenditures are made from the Capital Reserve Fund, they are not capitalized and amortized, but rather are expensed in the year of purchase. Transfers to the Capital Reserve Fund are reported as revenue on the statement of operations and changes in net assets. Government subsidies receivable (payable/recovered) The Corporation receives a subsidy from the Cochrane District Social Services Administration Board based on an annual budget submission. The Board of Directors administers the project as outlined in the legislated operating framework, as defined in the Housing Services Act, 2011, and signed service agreement. The Corporation is required to file an annual information return at year-end with the Cochrane District Social Services Administration Board. The annual return is used for settlement of the year's activities. Recoveries of funding based on settlements are recorded as adjustments to the net assets. 4

104 The City of Timmins Non-Profit Housing Corporation Notes to the Financial Statements For the year ended December 31, Significant accounting policies (continued) Fund accounting The Corporation maintains two funds: an Operating Fund and a Capital Reserve Fund. The Operating Fund reports the Corporation s revenue and expenses related to the operating activities as set out by budgets established by the Cochrane District Social Services Administration Board. The Capital Reserve Fund reports the Corporation s capital expenditures related to the operations. The Capital Reserve Fund is externally restricted for expenditures of a capital nature. The interest earned on investments of the Capital Reserve Fund is reported in the Capital Reserve Fund. Any balance due between the respective funds is unsecured, non-interest bearing and due on demand. Revenue recognition The Corporation uses the restricted fund 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. Investment income includes interest income and realized and unrealized investment gains and losses. Interest income and realized gains investment income are recognized when earned. Unrealized gains and losses on financial assets are recorded to reflect changes in the fair market value of these assets. Rental revenue is earned according to the occupancy of rental units over a period of time. Rent surcharges and miscellaneous revenue is recognized on a daily basis as earned. Revenue from Cochrane District Social Services Administration Board is earned according to occupancy levels, operating and capital expenses, and is calculated at different rates on a unit by unit basis according to tenant composition. Financial instruments The Corporation recognizes its financial instruments when the Corporation becomes party to the contractual provisions of the financial instrument. All financial instruments are initially recorded at their fair value, including financial assets and liabilities originated and issued in a related party transaction with management. Financial assets and liabilities originated and issued in all other related party transactions are initially measured at their carrying or exchange amount in accordance with Section 3840 Related Party Transactions (refer to Note 3). At initial recognition, the Corporation may irrevocably elect to subsequently measure any financial instrument at fair value. The Corporation has not made such an election during the year. The Corporation subsequently measures investments in equity instruments quoted in an active market at fair value. Fair value is determined by published price quotations. All other financial assets and liabilities are subsequently measured at amortized cost. Transaction costs and financing fees directly attributable to the origination, acquisition, issuance or assumption of financial instruments subsequently measured at fair value are immediately recognized in the excess of revenues over expenses for the current period. Conversely, transaction costs and financing fees are added to the carrying amount for those financial instruments subsequently measured at cost or amortized cost. Financial asset impairment The Corporation assesses impairment of all of its financial assets measured at cost or amortized cost. When there is an indication of impairment, the Corporation determines whether it has resulted in a significant adverse change in the expected timing or amount of future cash flows during the year. If so, the Corporation reduces the carrying amount of any impaired financial assets to the highest of: the present value of cash flows expected to be generated by holding the assets; the amount that could be realized by selling the assets; and the amount expected to be realized by exercising any rights to collateral held against those assets. Any impairment, which is not considered temporary, is included in current year excess of revenue over expenses. The Corporation reverses impairment losses on financial assets when there is a decrease in impairment and the decrease can be objectively related to an event occurring after the impairment loss was recognized. The amount of the reversal is recognized in the excess of revenue over expenses in the year the reversal occurs. 5

105 The City of Timmins Non-Profit Housing Corporation Notes to the Financial Statements For the year ended December 31, Significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents include balances with banks and short-term investments with maturities of three months or less. Long-lived assets Long-lived assets consist of capital assets. Long-lived assets held for use are measured and amortized as described in the applicable accounting policies. When the Corporation determines that a long-lived asset no longer has any long-term service potential to the Corporation, the excess of its net carrying amount over any residual value is recognized as an expense in the statement of operations. Write-downs are not reversed. Contributed materials Contributions of materials and services are recognized both as contributions and expenses in the statement of operations when a fair value can be reasonably estimated and when the materials and services are used in the normal course of the Corporation's operations and would otherwise have been purchased. Investments Long-term investments are portfolio investments recorded at fair value for those with prices quoted in an active market, and cost less impairment for those that are not quoted in an active market. They have been classified as long-term assets in concurrence with the nature of the investment. Measurement uncertainty (use of estimates) The preparation of financial statements in conformity with the funding arrangements with Cochrane District Social Services Administration Board requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates include the amortization of capital assets and allowance for doubtful accounts. These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in excess of revenues and expenses in the periods in which they become known. 3. Related party transactions The Corporation is related to CDSSAB by virtue of common management. Included in revenue for the current year are $745,040 ( $760,126) in government rent subsidies received from CDSSAB. Included in administrative overhead expenses are $163,879 ( $197,767) in management fees and maintenance paid to CDSSAB. The revenue and expenses were recorded at fair value at the date of transaction. 4. Accounts receivable Rent receivable 41,908 40,322 HST recoverable 72, ,015 Government subsidy receivable 1,126 1, , ,463 Allowance for doubtful rent receivable (37,696) (35,309) 77, , Marketable securities Phillips Hagar & North (cost - $1,381,513) 1,510,637 1,291,537 6

106 The City of Timmins Non-Profit Housing Corporation Notes to the Financial Statements For the year ended December 31, Capital assets Mountjoy Street North Land 151, ,071 Building 1,464,975 1,464,975 Equipment 40,112 40,112 Less: Accumulated amortization (1,279,607) (1,186,509) 376, , Mountjoy Street North Land 436, ,812 Building 4,741,723 4,741,723 Equipment 97,732 97,732 Less: Accumulated amortization (2,791,371) (2,578,690) 2,484,896 2,697, Shirley Street Land 358, ,107 Building 3,558,914 3,558,914 Equipment 67,144 67,144 Less: Accumulated amortization (2,160,579) (2,000,868) 1,823,586 1,983,297 4,685,033 5,150, Accounts payable and accruals Accounts payable and accrued liabilities 125, ,903 Mortgage loan principal and interest 58,731 58, , , Due to CDSSAB Amounts payable and recoverable consist of the following: Annual Information Return 52, Annual Information Return 55,618 55, Annual Information Return 62,211 77, Annual Information Return 4,902 4,902 Subsidy payment receivable (66,492) (67,975) 109,096 70,306 7

107 The City of Timmins Non-Profit Housing Corporation Notes to the Financial Statements For the year ended December 31, Long-term debt Scotiabank mortgage loan, repayable at $30,226 monthly including interest, at a rate of 5.83% per annum, maturing May 2024, secured by land and building at 67 Mountjoy Street North. Carrying value of land and building as of December $2,484,896 ( $2,697,577). 2,488,346 2,701,027 CMHC mortgage loan, repayable at $8,223 monthly including interest, at a rate of 1.31% per annum, maturing November 2021, secured by land and building at 77 Mountjoy Street North. Carrying value of land and building as of December $376,551 ( $469,649). 376, ,648 First National LP ( TD Canada Trust) mortgage loan, repayable at $16,810 monthly including interest, at a rate of 2.20% per annum, maturing February 2022, secured by land and building at 450 Shirley Street. Carrying value of land and building as of December $1,823,586 ( $1,983,297). 1,823,586 1,983,297 4,688,483 5,153,972 Less: Current portion 482, ,490 Principal repayments on long-term debt in each of the next five years are estimated as follows: Principal , , , ,011 Thereafter 2,652,059 4,688,483 4,205,485 4,688, Contingencies The Corporation is contingently liable to the Cochrane District Social Services Administration Board for any expenditures that it may have made in contravention of the contract agreements with this agency. The amount of the liability, if any, is not determinable at this time. 11. Government rent subsidies Provincial rent subsidies - 67 Mountjoy Street North & 450 Shirley 660, ,092 Provincial rent subsidies - 77 Mountjoy Street North 59,280 73,522 Federal rent subsidies - 77 Mountjoy Street North 25,512 25, , , Budget information During the year, the Board approved its operating budget based on planned expenses relating to the current year funding as identified in funding agreement between the Corporation and the Cochrane District Social Services Administration Board and other current year sources of revenue. The budget balances have been attached for information purposes only and are unaudited. 8

108 The City of Timmins Non-Profit Housing Corporation Notes to the Financial Statements For the year ended December 31, Financial instruments The Corporation, as part of its operations, carries a number of financial instruments. It is management's opinion that the Corporation is not exposed to significant interest, currency, credit, liquidity or other price risks arising from these financial instruments except as otherwise disclosed. Liquidity risk Liquidity risk is the risk that the Corporation cannot repay its obligations when they become due to its creditors. The Corporation enters into transactions to purchase goods and services on credit, for which repayment is required at various maturity dates. Interest rate risk Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. Changes in market interest rates may have an effect on the cash flows associated with some financial assets and liabilities, known as cash flow risk, and on the fair value of other financial assets or liabilities, known as price risk. The Corporation is exposed to interest rate price risk on its long-term debt as they are at fixed rates. The Corporation's loans, with fixed rates ranging from 1.31% %, mature between one and six years. 14. Economic dependence The Corporation's significant source of revenue is received from the Cochrane District Social Services Administration Board. The grant funding can be cancelled if the Corporation does not observe certain established guidelines. The Corporation's ability to continue viable operations is dependent upon its ability to meet the criteria within the Cochrane District Social Services Administration Board's guidelines. As at the date of these financial statements the Corporation believes that it is in compliance with these guidelines. 15. Comparative figures Certain comparative figures have been reclassified to conform with current year presentation. 9

109 MATTAGAMI REGION CONSERVATION AUTHORITY FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017

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111 To the Members of Mattagami Region Conservation Authority INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of Mattagami Region Conservation Authority, which comprise the statement of financial position as at December 31, 2017, and the statements of financial activities and accumulated surplus, changes in net financial assets and cash flows for the year ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting principles, and for such internal control as management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement whether due to fraud or error. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion Canadian public sector accounting principles require that post-employment benefits be recorded as a liability. The Authority has not recorded its post-employment benefits as a liability. We were not able to determine the required adjustment to the annual surplus or cash flow from operations for the years ended December 31, 2017 and December 31, 2016 and liabilities and net financial assets as at December 31, 207 and December 31, Qualified Opinion In our opinion, except for the matters described in the basis for Qualified Opinion paragraph, these financial statements present fairly, in all material respects, the financial position of Mattagami Region Conservation Authority as at December 31, 2017, and the results of its financial activities, changes in its net financial assets, and the changes in its cash flows for the year then ended in accordance with Canadian public sector accounting principles. Other Matter The supplementary information contained in the schedules is presented for the purposes of additional analysis and is not part of the basic audited financial statements. The information is in the schedules was derived from the accounting records tested in forming an opinion on the financial statements as a whole. Timmins, Ontario May 31, 2018 MNP LLP Chartered Professional Accountants Licensed Public Accountants 3

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