The Corporation of the Town of Whitby

Transcription

1 Consolidated financial statements of The Corporation of the Town of Whitby

2 Table of contents Independent Auditor s Report Consolidated statement of financial position... 3 Consolidated statement of operations... 4 Consolidated statement of change in net financial assets... 5 Consolidated statement of cash flows Consolidated schedule of segmented disclosure - Schedule

3 Deloitte LLP 400 Applewood Crescent Suite 500 Vaughan ON L4K 0C3 Canada Tel: Fax: Independent Auditor s Report To the Members of Council, Inhabitants and Ratepayers of the Corporation of the Town of Whitby We have audited the accompanying financial statements of the Corporation of the Town of Whitby, which comprise the consolidated statement of financial position as at, and the consolidated statements of operations, 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 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 in our audit is sufficient and appropriate to provide a basis for our audit opinion.

4 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation of the Town of Whitby as at and the results of its operations, change in its net financial assets and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants Licensed Public Accountants July 20, 2017 Page 2

5 Consolidated statement of financial position as at Financial assets Cash 134,009, ,314,013 Investments 46,620,519 21,323,178 Taxes receivable (Note 4) 10,053,492 10,826,340 Accounts receivable 6,666,147 6,188,304 Other accounts receivable (Note 5) 6,521,300 6,521,300 Investment in Whitby Hydro (Note 15) 48,432,000 47,278,000 Long-term note receivable (Note 15) 21,816,642 21,816, ,119, ,267,777 Liabilities Accounts payable and accrued liabilities 16,644,790 10,550,265 Other current liabilities 3,693,260 3,811,578 Deferred revenue (Note 6) 99,210,656 95,159,292 Liability for contaminated sites (Note 7) 3,556,000 3,556,000 Employee future benefits liabilities (Note 8) 10,245,723 10,028, ,350, ,106,055 Net financial assets 140,768, ,161,722 Non-financial assets Tangible capital assets (Note 9) 630,950, ,833,467 Prepaid expenses 1,167, ,985 Inventory of supplies 427, , ,545, ,306,592 Accumulated surplus (Note 10) 773,314, ,468,314 The accompanying notes to the financial statements are an integral part of this financial statement. Page 3

6 Consolidated statement of operations year ended Budget (Note 13) Actual Actual $ Revenue Taxation 78,559,793 79,237,630 75,036,420 User fees and charges 18,908,818 20,305,949 19,518,858 Grants 504, ,059 1,164,099 Developer and other contributions earned 15,210,124 6,430,166 2,711,940 Gas tax revenue 4,110,297 4,041,191 3,637,077 Investment income 1,319,290 1,451,572 1,291,381 Fines, penalties and interest 2,705,000 2,649,383 2,695,078 Licenses and permits 427, , ,472 Rents and other 5,435,054 5,182,229 3,204,200 Revenue recognized on contributed tangible capital assets 12,299,136 12,299,136 8,856,926 Net earnings, Whitby Hydro (Note 15) 3,268,924 3,977,000 4,245, ,748, ,801, ,736,451 Expenses (Schedule 1) General government 15,774,798 15,946,197 14,904,609 Protection to persons and property 22,545,287 22,773,421 22,075,385 Transportation services 39,020,832 35,810,253 37,173,209 Environmental services 6,381,975 5,705,293 5,987,947 Recreation and cultural services 33,760,773 32,161,858 30,229,159 Planning and development 5,405,770 4,084,692 4,057,978 Social and family services 1,334,210 1,473,398 1,338, ,223, ,955, ,767,117 Annual surplus 18,524,748 18,845,955 6,969,334 Accumulated surplus, beginning of year 754,468, ,468, ,498,980 Accumulated surplus, end of year 772,993, ,314, ,468,314 The accompanying notes to the financial statements are an integral part of this financial statement. Page 4

7 Consolidated statement of change in net financial assets year ended Budget (Note 13) Actual Actual $ Annual surplus 18,524,748 18,845,955 6,969,334 Acquisition of tangible capital assets (30,782,700) (36,574,565) (26,121,896) Amortization of tangible capital assets 23,318,179 23,959,595 22,967,365 Write down of tangible capital assets - 497,763 2,542,687 11,060,227 6,728,748 6,357,490 (Increase) decrease in prepaid expenses - (167,716) 209,464 Acquisition of inventories of supplies - (427,038) (473,140) Consumption of inventories of supplies - 473, ,200 Change in net financial assets 11,060,227 6,607,134 6,599,014 Net financial assets, beginning of year (note 2) 134,161, ,161, ,562,708 Net financial assets, end of year 145,221, ,768, ,161,722 The accompanying notes to the financial statements are an integral part of this financial statement. Page 5

8 Consolidated statement of cash flows year ended Operating activities Annual surplus 18,845,955 6,969,334 Items not involving cash Amortization 23,959,595 22,967,365 Write down of tangible capital assets 497,763 2,542,687 Net earnings of Whitby Hydro Energy Corporation (3,977,000) (4,245,000) Value of contributed tangible assets recognized as revenue (12,299,136) (8,856,926) Changes in non-cash assets and liabilities Taxes receivable 772, ,911 Accounts receivable (477,843) (1,038,938) Inventory of supplies 46,102 32,060 Prepaid expenses (167,716) 209,464 Accounts payable and accrued liabilities 6,094,525 (1,041,648) Other current liabilities (118,318) 672,625 Deferred revenue 4,051,364 4,826,139 Employee future benefits liability 216, ,420 37,444,942 23,384,493 Capital activity Acquisition of tangible capital assets (24,275,429) (17,264,970) Investing activities Net changes in investments (25,297,341) 34,921,862 Dividend from Whitby Hydro Energy Corporation 2,823,000 2,808,000 (22,474,341) 37,729,862 Change in cash during the year (9,304,828) 43,849,385 Cash, beginning of year 143,314,013 99,464,628 Cash, end of year 134,009, ,314,013 The accompanying notes to the financial statements are an integral part of this financial statement. Page 6

9 1. Significant accounting policies The consolidated financial statements of The Corporation of the Town of Whitby (the Town ) are the representations of management prepared in accordance with accounting standards, as recommended by the Public Sector Accounting Board ( PSAB ) of the Chartered Professional Accountants of Canada. a) i) Reporting entity These consolidated financial statements reflect the assets, liabilities, accumulated surplus, revenues, expenses and annual surplus of the reporting entity. The reporting entity is comprised of all organizations, local boards and committees which are controlled by the Town, including the following: Town of Whitby Public Library Board; and Groveside Cemetery Board All material inter-entity transactions and balances are eliminated on consolidation with the exception of transactions/balances with Whitby Hydro Energy Corporation (Note 1(a) (ii)). ii) Investment in Whitby Hydro Energy Corporation Whitby Hydro Energy Corporation and its subsidiaries are accounted for on a modified equity basis, consistent with generally accepted accounting principles as recommended by PSAB for government business enterprises. Under the modified equity basis of accounting, the business enterprise s accounting principles are not adjusted to conform to those of the Town, and inter-organizational transactions and balances are not eliminated. The Town recognizes its equity interest in the annual income or loss of Whitby Hydro Energy Corporation in its statement of operations with a corresponding increase or decrease in its investment asset account. Any dividends that the Town receives from Whitby Hydro Energy Corporation are reflected as reductions in the investment asset account. iii) Accounting for region and school board transactions The taxation, other revenues, expenses, assets and liabilities with respect to the operations of the school boards and the Region of Durham are not reflected in the municipal fund balances of these financial statements. iv) Trust funds Trust funds and their related operations administered by the Town are not consolidated, but are reported separately on the Trust Funds Statement of Financial Activities and Change in Fund Balance and the Trust Funds Statement of Financial Position. b) Basis of accounting i) Revenues and expenses Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues, as they are earned and measurable; expenses are recognized, as they are incurred and measurable as a result of the receipt of goods or services and the creation of a legal obligation to pay. Tax revenue ii) Tax revenue is recognized on all taxable properties within the Town included in the tax roll provided by the Municipal Property Assessment Corporation, using property values included in the tax roll or property values that can be reasonably estimated by the Town as it relates to supplementary or omitted assessments using tax rates authorized by Council for the Town s own purposes in the period for which the tax is levied. Investments Investments are recorded at lower of cost or market value. Page 7

10 1. Significant accounting policies (continued) b) Basis of accounting (continued) iii) 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. Tangible capital assets Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets excluding land are amortized on a straight line basis over their estimated useful lives as follows: Useful life-years Land improvements Building and building improvements Vehicles, machinery and equipment 5-20 Stormwater management Road infrastructure One half of the amortization is charged in the year of acquisition and in the year of disposal. Assets under construction are not amortized until the asset is available for productive use. Contribution of tangible capital assets Tangible capital assets received as contributions are recorded at their fair value as the date of receipt and also are recorded as revenue. Interest capitalization The Town s tangible capital asset policy does not allow for the capitalization of interest costs associated with the acquisition or construction of tangible capital assets. iv) Deferred revenue - obligatory reserve funds Deferred revenue - obligatory reserve funds represents development charge contributions, payments in lieu of parkland, building code net revenues, Invest in Ontario grants, and gas tax, levied or received under the authority of federal and provincial legislation and Town 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 related services are performed. v) Deferred revenue - general Deferred revenue - general 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 related services are performed. vi) Employee future benefits liabilities The present value of the cost of providing employees with future benefits programs is recognized as employees earn these entitlements through service. Page 8

11 1. Significant accounting policies (continued) b) Basis of accounting (continued) vii) Government transfers Government transfers are recognized as revenues by the Town in the period during which the transfer is authorized and any eligibility criteria are met. Government transfers are deferred if they are restricted through stipulations that require specific actions to be carried out in order to keep the transfer. For such transfers, revenue is recognized when the stipulation has been met. viii) Reserves and reserve funds Certain amounts, as approved by Town 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 an adjustment to the respective fund when approved. ix) Liability for contaminated sites A liability for the remediation of a contaminated site is recognized as the best estimate of the amount required to remediate the contaminated site when contamination exceeding an environmental standard exists, the Town is either directly responsible or accepts responsibility, it is expected that the future economic benefit will be given up, and a reasonable estimate of the amount is determinable. If the likelihood of the Town s obligation to incur these costs is either not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements. x) 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 amounts in the financial statements and accompanying notes. Significant estimates relate to taxes receivable, accounts receivable, employee future benefits liabilities and accounts payable and accrued liabilities. Due to the inherent uncertainty in making estimates, actual results could differ from those estimates. 2. Operations of school boards and the Region of Durham Further to Note 1 a) iii), requisitions were made by the Region of Durham and School Boards requiring the Town to collect property taxes and payments in lieu of property taxes on their behalf. The amounts collected and remitted are summarized as follows: School Region of boards Durham Total Total Taxation 50,785, ,939, ,725, ,920,598 Payment in lieu of taxes 626,077 1,895,137 2,521,214 2,529,908 Amounts collected and remitted 51,411, ,834, ,246, ,450, Trust funds Trust funds administered by the Town amounting to $1,136,509 ( $1,077,297) have not been included in the Consolidated Statement of Financial Position nor have their operations been included in the Consolidated Statement of Operations. The trust funds have been reported separately on the Trust Funds Statement of Financial Activities and Change in Fund Balance and Trust Funds Statement of Financial Position. Page 9

12 4. Taxes receivable The balance in taxes receivable, including penalties and interest, is comprised of the following: Current year 5,293,811 6,723,783 Arrears previous years 4,759,681 4,102,557 10,053,492 10,826, Other accounts receivable 7-1/4% promissory note issued to the Town of Whitby by Whitby Hydro Energy Corporation. The Town has the option of calling the principal amount in whole or in part, with notice of sixty days. The Town has agreed not to call this loan before January 1, ,460,300 1,460, /4% promissory note issued to the Town of Whitby by Whitby Hydro Energy Corporation. The Town has the option of calling the principal amount in whole or in part, with notice of sixty days. The Town has agreed not to call this note before January 1, ,061,000 5,061,000 6,521,300 6,521,300 Interest revenue earned on these notes totaled $472,794 ( $472,794). 6. Deferred revenue Deferred revenue represents user charges and fees which have been collected but for which the related services have yet to be performed. These amounts will be recognized as revenues in the fiscal year the related services are performed. The following is the current status of the deferred revenues: Obligatory reserve funds Development charges 85,674,690 82,713,129 Parkland 4,616,799 3,948,382 Federal gas tax 4,448,545 4,665,647 Deferred revenue - general 4,470,622 3,832,134 99,210,656 95,159,292 Page 10

13 6. Deferred revenue (continued) Continuity of deferred revenue is as follows: Balance, beginning of year 95,159,292 90,333,153 Developer contributions collected 8,329,681 6,861,820 Federal gas tax 3,742,112 3,533,198 Other collections 4,470,622 3,832,134 Interest earned 1,844,695 1,414,031 18,387,110 15,641,183 Less Developer contribution revenue recognized in current operations 2,721,283 1,815,802 Developer contribution revenue recognized in capital operations 6,741,138 1,371,954 Gas tax revenue recognized in capital operations 4,041,191 3,637,077 General deferred revenue recognized 3,832,134 3,990,211 17,335,746 10,815,044 Balance, end of year 96,210,656 95,159, Liability for contaminated site The Town has recorded an unfunded liability of $3,566,000 ( $ 3,566,000) i for the estimated remediation costs associated with a Town owned site with identified contaminates in the soil. The liability estimate for the site identified was based on an environmental assessment conducted by a third party engineering firm. At this time, the Town does not anticipate obtaining any recoveries in respect of the estimated liability. 8. Employee future benefits liabilities The Town makes available to qualifying employees who retire before the age of 65, the opportunity to continue their coverage for such benefits as extended health and drugs, dental care and life insurance. Coverage ceases at the age of 65. The accrued benefit liability and the expense for the year ended are based on the results and assumptions of an actuarial valuation as at. The significant actuarial assumptions used in estimating the Town s related accrued benefit obligation are as follows: Discount rate 4.00% Inflation rate 1.75% per year Dental benefit cost escalation 3.75% per year Medical benefit cash escalation 4.75% per year reducing to 3.75% per year over 3 years Information about the Town s post retirement benefit plan is as follows: Accrued benefit liability Accrued benefit obligation 11,357,098 10,779,937 Unamortized actuarial loss (1,111,375) (751,017) Employee future benefit liability 10,245,723 10,028,920 Page 11

14 8. Employee future benefits liabilities (continued) Expense Current year benefit expense 500, ,037 Amortization of actuarial losses 86,513 86,513 Interest on accrued benefit obligation 503, ,920 1,089,777 1,052, Tangible capital assets i) Contributed tangible capital assets The Town records all tangible capital assets contributed by an external party at fair value on the earlier of the date received or of the transfer of risk and responsibility. Typical examples are land, roadways, and storm sewer lines installed by a developer as part of a subdivision agreement. Transfer of tangible capital assets in 2016 amounted to $12,299,136 ( $8,856,926). ii) Tangible capital assets recognized at nominal value Certain assets have been assigned a nominal value of one Canadian dollar, because of the difficulty of determining a tenable valuation and/or the assets were older than their estimated expected useful lives, and therefore were fully amortized. iii) Works of art and historical treasures The Town applies efforts to protect and preserve a number of owned historical buildings, collections of equipment, artifacts, documents and exhibits and works of art. These assets are not held for financial gain or to provide service but rather for public exhibition, education or research in furtherance of public service. These historical treasures and works of art are not recognized as tangible capital assets in the financial statements. The acquisition or betterment of such assets is recognized in the financial statements as an operating expense. Page 12

15 9. Tangible capital assets (continued) iv) Other No interest was capitalized during the year ( $Nil) Vehicles, Building and machinery Land building and Stormwater Road Work in Land improvements improvements equipment management infrastructure progress Total Cost Balance, beginning of year 79,407,108 80,458, ,540,539 38,432,613 66,856, ,168,856 4,328, ,192,728 Additions - 1,922,940 1,336,009 3,844,511 3,164,387 19,392,279 6,914,439 36,574,565 Work in process - completed - 169, ,932 66, ,956 2,832,075 (4,328,440) - Write downs - (159,594) - (1,867,834) (6,013) (807,987) - (2,841,428) Balance, end of year 79,407,108 82,390, ,146,480 40,475,607 71,006, ,585,223 6,914,439 1,009,925,865 Accumulated amortization Balance, beginning of year - 28,011,411 62,487,685 28,781,885 15,306, ,772, ,359,261 Write downs - (57,710) (1,829,048) (2,405) (454,502) - (2,343,665) Amortization expense - 2,591,122 4,310,711 2,700, ,364 13,484,814-23,959,595 Balance, end of year - 30,544,823 66,798,396 29,653,421 16,176, ,802, ,975,191 Net book value, end of year 79,407,108 51,846,000 82,348,084 10,822,186 54,830, ,782,692 6,914, ,950,674 Page 13

16 9. Tangible capital assets (continued) iv) Other (continued) 2015 Vehicles, Building and machinery Land building and Stormwater Road Work in Land improvements improvements equipment management infrastructure progress Total Cost Balance, beginning of year 79,391,023 79,092, ,585,027 37,150,136 65,793, ,077,885 2,901, ,991,604 Additions 16,085 1,667,612 2,719,529 2,757,470 1,150,630 13,482,130 4,328,440 26,121,896 Work in process completed - 42, , ,622,869 (2,901,274) - Write downs - (344,018) - (1,474,993) (87,733) (4,014,028) - (5,920,772) Balance, end of year 79,407,108 80,458, ,540,539 38,432,613 66,856, ,168,856 4,328, ,192,728 Accumulated amortization Balance, beginning of year - 28,930,778 58,160,723 26,512,303 14,500, ,665, ,769,981 Write downs - (2,979,977) (18,651) (202,961) (25,058) (151,438) - (3,378,085) Amortization expense - 2,060,610 4,345,613 2,472, ,577 13,258,022-22,967,365 Balance, end of year - 28,011,411 62,487,685 28,781,885 15,306, ,772, ,359,261 Net book value, end of year 79,407,108 52,446,906 85,052,854 9,650,728 51,550, ,396,637 4,328, ,833,467 Page 14

17 10. Accumulated surplus Accumulated surplus consists of individual fund surplus, reserves and reserve funds and invested in tangible capital assets as follows: General 5,438,329 5,278,428 Unfunded employee future benefits (10,245,723) (10,028,920) Unfunded liability for contaminated sites (3,556,000) (3,556,000) Internal borrowings from deferred revenue (6,710,943) (7,603,652) Unfunded capital (919,594) (142,131) Equity in Whitby Hydro 70,248,642 69,094,642 Reserve and Reserve Funds 88,108,884 82,592,480 Invested in tangible capital assets 630,950, ,833, ,314, ,468, Internal loans As a means of funding various capital acquisitions, funds are borrowed by the Operating Fund from Development Charges. These funds are secured by promissory notes and are repaid over a determined period of time. The financing arrangements and ultimate repayment are approved by Council through the current budget process. The following is a summary of the individual loans. Whitby Public Library 4,140,359 4,673,353 Recreation and Cultural 441, ,192 Soccer Club 2,129,137 2,335,107 6,710,943 7,603, Pension agreements The Town makes contributions to the Ontario Municipal Employees Retirement System ( OMERS ) which is a multi-employer plan, on behalf of all permanent, full-time members of its staff. The Plan is a defined benefit plan that specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. Contributions to OMERS for the year were $8,499,624 ( $8,410,048). Page 15

18 13. Budget figures The 2016 operating budget adopted by Council was not prepared on a basis consistent with that used to report actual results. The budget was prepared on a modified accrual basis while Public Sector Accounting Standards require a full accrual basis. The budget figures did not include amortization expense on tangible capital assets, capital expenses or post-employment benefits. As a result, the budget figures presented in the Consolidated Statements of Operations and Change in Net Financial Assets represent the budget adopted by Council with adjustments as follows: operating budget Adjust for budget adopted by consolidated PSAS presented in council entities adjustments statements Taxation 78,559, ,559,793 User fees and charges 17,618,678 1,290,140-18,908,818 Developer and other contributions ,210,124 15,210,124 Gas tax revenue - - 4,110,297 4,110,297 Revenue recognized on contributed tangible capital assets ,299,136 12,299,136 Other 9,424, ,482 3,560,000 13,660, ,603,214 1,965,622 35,179, ,748,393 Expenses General government 18,460,448 (4,854,335) 2,168,685 15,774,798 Protection 21,294,978-1,250,309 22,545,287 Transportation 18,213,727-20,807,105 39,020,832 Environmental 3,542,499-2,839,476 6,381,975 Social and family 1,083, ,658 5,084 1,334,210 Recreation and culture 19,313,296 5,977,979 8,469,498 33,760,773 Planning and development 4,086,898-1,318,872 5,405,770 Interfund transfers 19,607,900 1,535,229 (21,143,129) - 105,603,214 2,904,531 15,715, ,223,645 Annual surplus - (938,909) 19,463,657 18,524, Contingent liabilities Unsettled legal claims and potential other claims The Town has been named as the defendant in certain legal actions in which damages have been sought. The outcome of these actions is not determinable at this time and, accordingly, no provision has been made in these financial statements for any liability that may result. Page 16

19 15. Investment in Whitby Hydro Energy Corporation In accordance with the requirements in Bill 35 (The Energy Competition Act, 1998) the Town of Whitby (the Town ), passed a transfer by-law, effective November 1, 2000, that transferred substantially all of the assets and liabilities of the Whitby Hydro-Electric Commission to Whitby Hydro Energy Corporation. Whitby Hydro Energy Corporation carries on the former business of the Commission with all its rights, duties, obligations and responsibilities. a) Equity in Whitby Hydro Energy Corporation Balance, beginning of year 69,094,642 67,657,642 Changes during the year Net income for the year 3,977,000 4,245,000 73,071,642 71,902,642 Dividend received from Whitby Hydro Energy Corporation (2,823,000) (2,808,000) Balance, end of year 70,248,642 69,094,642 Investment in Whitby Hydro Energy Corporation 48,432,000 47,278,000 Long-term note receivable 21,816,642 21,816,642 70,248,642 69,094,642 Reported on the consolidated statement of financial position as follows: The long-term note receivable by the Town is a demand note with a fixed interest rate of 7.0%. The Town has the option of calling the principal, in whole or in part, with twelve months notice. The Town does not anticipate calling this note before January 1, Interest revenue earned on this note totaled $1,527,206 ( $1,527,206). Page 17

20 15. Investment in Whitby Hydro Energy Corporation (continued) a) Equity in Whitby Hydro Energy Corporation (continued) The following table provides condensed financial information of Whitby Hydro Energy Corporation at and for the year ended. (000 s) (000 s) Assets Current 30,930 32,257 Capital and intangibles 88,079 81,634 Other 2,191 2,402 Total assets 121, ,293 Regulatory balances 4,348 6,201 Total assets and regulatory balances 125, ,494 Liabilities Current 19,857 18,430 Long-term debt 31,938 32,338 Other 20,253 17,572 Total liabilities 72,048 68,340 Shareholders' equity Share capital 30,432 30,432 Accumulated other comprehensive income (302) 12 Retained earnings 18,302 16,834 Total equity 48,432 47,278 Regulatory balances 5,068 6,876 Total liabilities, equity and regulatory balances 125, ,494 Comprehensive Income Commodity revenue 119, ,607 Commodity expenses (116,492) (105,367) Distribution revenue 19,845 21,951 Operating expenses (18,261) (16,956) Other income (expense) 152 (183) Accumulated other comprehensive loss (314) 97 Net movements in regulatory balances, net of tax (44) (904) Total comprehensive income for the year 3,977 4,245 Included in revenues above is $ 4,196,000 ( $4,242,000) earned from the Town for services provided. Expenses above include $3,283,000 ( $2,583,000) paid to the Town. Page 18

21 15. Investment in Whitby Hydro Energy Corporation (continued) b) Commitments and Contingencies of Whitby Hydro Energy Corporation as disclosed in their financial statements are as follows: General Liability Insurance The Corporation maintains appropriate types and levels of insurance with major insurers. With respect to liability insurance, the Corporation is a member of the Municipal Electricity Association Reciprocal Insurance Exchange ( MEARIE ). A reciprocal insurance exchange may be defined as a group of persons formed for the purpose of exchanging reciprocal contracts of indemnity or inter-insurance with each other. MEARIE is licensed to provide general liability insurance to its members. All members of the pool could potentially be subjected to an assessment for losses experiences by the pool for the years in which they were members on a pro-rata basis on the total of their respective service revenues. It is anticipated that should such an assessment occur it would be funded over a period of up to 5 years. As at, no such assessments have been made. Contractual Obligations The Corporation is party to a connection and cost recovery agreement with Hydro One Networks Inc. (Hydro One) related to the construction by Hydro One of a transformer station designated to meet the Corporation s anticipated load growth. Construction of the project was completed during 2007 and the Corporation connected to the transformer station in November To the extent that the cost of the project is not recoverable from future transformer connection revenues, the Corporation is obliged to pay a capital contribution equal to the difference between these revenues and the construction costs allocated to the Corporation. Hydro One performs a true-up based on actual load on a periodic basis. There is currently no revenue shortfall owing by the Corporation based on the most recent true-up. Any estimated short fall in the future would be recorded as a liability and a corresponding intangible asset when determined. General From time to time, the Corporation is involved in various litigation matters arising in the ordinary course of its business. The Corporation has no reason to believe that the disposition of any such current matter could reasonably be expected to have a materially adverse impact on the Corporation s financial position, results of operations or its ability to carry on any of its business activities. The Corporation is committed to lease agreements for various vehicles and equipment. The future minimum non-cancellable annual lease payments are as follows: Less than one year Between one and five years 1, More than five years ,100 1,176 Page 19

22 16. Segmented information The Town provides a wide range of services to its residents. Segmented information has been provided in Schedule 1 for the following Town Services: Protection to persons and property Public works services (transportation and environmental) Recreation and Culture Planning and Development General Government Revenues and expenses directly attributable to each segment are reported by segment. Typically general government expenses are incurred in support of all services. Similarly general government revenues including taxes are used to finance all activities of the Town. For purposes of segmented reporting general government revenues and expenses have not been allocated to the other services but rather are shown separately. 17. Comparative figures Certain of prior year s figures have been reclassified to conform with current year s presentation. Page 20

23 Consolidated schedule of segmented disclosure - Schedule 1 year ended Protection to persons Public works Recreation Planning and General and property services and culture development government Consolidated Revenue Tax revenues ,237,630 79,237,630 Grants 6, ,486 12,500 85, ,059 Developer contributions used for capital 458,895 5,081, ,538 8, ,677 6,430,166 Revenue recognized on contributed assets - 12,299, ,299,136 Other revenues 2,442,915 8,707,183 9,173,710 1,111,989 17,044,279 38,480,076 2,908,077 26,087,400 10,134,734 1,133,464 96,537, ,801,067 Expenditures Salaries and wages 19,415,547 13,706,832 17,909,249 3,418,344 10,096,328 64,546,300 Materials and supplies 880,980 5,283,908 3,948, ,641 2,080,266 12,719,149 Contracted services 1,227,709 3,678,589 3,586, ,277 2,050,589 10,655,887 Other 13, , ,609 17,058 2,510,914 3,232,756 Loss on disposal of tangible capital assets 105,450 1,736, , ,231 2,841,428 Amortization 1,130,609 16,872,460 5,550,882 11, ,269 23,959,592 22,773,421 41,515,545 32,161,857 4,084,692 17,419, ,955,112 Annual surplus (19,865,344) (15,428,145) (22,027,123) (2,951,228) 79,117,795 18,845,955 The accompanying notes to the financial statements are an integral part of this financial statement. Page 21

24 Consolidated schedule of segmented disclosure - Schedule 1 (continued) year ended December 31, 2015 Protection to persons Public works Recreation Planning and General and property services and culture development government Consolidated Revenue Tax revenues ,036,420 75,036,420 Grants 6,099 1, ,396 20, ,131 1,164,099 Developer contributions used for capital 90,271 1,326,705 1,099, ,815 85,998 2,711,940 Revenue recognized on contributed assets - 8,840, ,085 8,856,926 Other revenues 1,735,612 7,794,528 9,158,012 1,495,449 14,783,465 34,967,066 1,831,982 17,963,751 10,570,559 1,626,060 90,744, ,736,451 Expenditures Salaries and wages 18,899,289 13,507,974 17,627,051 3,383,873 9,305,387 62,723,574 Materials and supplies 838,382 6,345,398 3,694, ,791 2,161,410 13,602,702 Contracted services 1,318,868 4,067,718 3,385,283 98,404 1,930,604 10,800,877 Other 11, , ,428 1,537 2,406,088 3,136,638 Loss on disposal of tangible capital assets - 1,288, ,288,989 Amortization 1,007,659 17,728,679 5,026,676 11, ,950 24,214,337 22,075,385 43,161,156 30,229,159 4,057,978 16,243, ,767,117 Annual surplus (20,243,403) (25,197,405) (19,658,600) (2,431,918) 74,500,660 6,969,334 The accompanying notes to the financial statements are an integral part of this financial statement. Page 22