Province Of Nova Scotia 18-K Annual report (foreign governments)

Exhibit 2

57

Consolidated Financial Statements

Statement 1

Consolidated Statement of Financial Position
As at March 31, 2010
($ thousands)

				2009
	2010			(as restated)
Financial Assets
Cash and Short-Term Investments (Note 3)		781,442			968,806
Accounts Receivable and Advances		938,404			866,679
Inventories for Resale		3,824			3,851
Loans Receivable (Schedule 3)		1,639,249			1,304,299
Investments (Schedule 3)		63,314			51,408
Investment in Government Business Enterprises (Schedule 6)		52,728			40,520
		3,478,961			3,235,563
Liabilities
Bank Advances and Short-Term Borrowings		442,573			613,866
Accounts Payable and Accrued Liabilities		1,603,756			1,498,846
Deferred Revenue (Note 4)		669,077			922,355
Accrued Interest		198,189			205,923
Unmatured Debt of Governmental Units (Schedule 4)		11,372,026			10,224,246
Unamortized Foreign Exchange Translation Gains, Premiums and Discounts		172,227			221,614
Federal Equalization Repayable Loan (Note 6)		72,193			84,225
Pension, Retirement and Other Obligations (Note 7)		1,967,476			1,782,727
		16,497,517			15,553,802
Net Direct Debt		(13,018,556	)		(12,318,239	)
Non-Financial Assets
Tangible Capital Assets (Schedule 7)		4,522,719			4,070,380
Inventories of Supplies		62,430			56,504
Prepaid Expenses		30,623			30,495
		4,615,772			4,157,379
Accumulated Deficits		(8,402,784	)		(8,160,860	)
Trust Funds under Administration (Note 8)		3,639,510			3,061,481
Accounting Changes (Note 2)
Contingencies and Contractual Obligations (Note 12)
Subsequent Events (Note 13)
Comparative Figures (Note 14)

The accompanying notes and schedules are an integral part of these Financial Statements

58

Public Accounts Volume 1 — Financial Statements

Statement 2

Consolidated Statement of Operations and Accumulated Deficits
For the fiscal year ended March 31, 2010
($ thousands)

							Actual
	Estimate			Actual			2009
	2010			2010			(as restated)
Revenue (Schedule 1)
Provincial Sources		4,295,208			4,849,920			4,951,010
Federal Sources		3,115,169			3,184,368			2,956,451
Prior Years’ Adjustments — Federal/Provincial Fiscal Arrangements		—			48,234			61,534
Other Revenue		1,212,472			736,224			750,782
Sinking Fund and Public Debt Retirement Fund Earnings		91,623			92,188			116,384
Total Revenue		8,714,472			8,910,934			8,836,161
Expenses (Schedule 2)
Agriculture		64,094			71,321			67,239
Community Services		1,020,009			941,186			906,088
Economic and Rural Development		116,674			128,824			139,392
Education		1,614,084			1,654,183			1,630,696
Assistance to Universities		455,802			450,359			485,468
Energy		44,920			31,282			38,789
Environment		94,134			82,588			72,852
Finance		47,802			62,943			57,913
Fisheries and Aquaculture		11,350			8,930			7,571
Health		3,530,898			3,557,162			3,418,279
Health Promotion and Protection		52,345			43,695			41,573
Justice		281,523			276,187			261,779
Labour and Workforce Development		142,755			127,268			57,513
Natural Resources		94,315			93,949			92,659
Public Service		190,675			173,102			157,106
Seniors		1,957			1,903			1,693
Service Nova Scotia and Municipal Relations		301,869			278,499			244,591
Tourism, Culture and Heritage		65,950			63,793			63,404
Transportation and Infrastructure Renewal		375,323			378,834			381,475
Restructuring Costs		178,817			133,967			72,208
Pension Valuation Adjustment		88,990			86,410			85,066
Gain on Disposal of Crown Assets		—			(14,943	)		(1,076	)
Debt Servicing Costs (Note 10)		889,076			880,147			887,490
Total Expenses (Note 9)		9,663,362			9,511,589			9,169,768
Deficit from Governmental Units		(948,890	)		(600,655	)		(333,607	)
Net Income from Government Business Enterprises (Schedule 6)		356,797			358,731			359,580
Provincial Surplus (Deficit)		(592,093	)		(241,924	)		25,973
Accumulated Deficits, Beginning of Year
As Previously Reported					(8,167,132	)		(8,186,833	)
Accounting Changes (Note 2)					6,272			—
As Restated					(8,160,860	)		(8,186,833	)
Accumulated Deficits, End of Year					(8,402,784	)		(8,160,860	)

The accompanying notes and schedules are an integral part of these Financial Statements

59

Consolidated Financial Statements

Statement 3

Consolidated Statement of Change in Net Direct Debt
For the fiscal year ended March 31, 2010
($ thousands)

							Actual
	Estimate			Actual			2009
	2010			2010			(as restated)
Net Direct Debt, Beginning of Year
As Previously Reported		(12,318,239	)		(12,323,508	)		(12,114,763	)
Accounting Changes (Note 2)		—			5,269			(1,283	)
As Restated		(12,318,239	)		(12,318,239	)		(12,116,046	)
Changes in the Year*
Provincial Surplus (Deficit)		(592,093	)		(241,924	)		25,973
Acquisition of Tangible Capital Assets		(674,194	)		(774,988	)		(503,627	)
Amortization of Tangible Capital Assets		218,874			312,578			280,864
Disposals and Adjustments to Tangible Capital Assets		—			10,071			3,727
Increase in Inventories of Supplies		—			(5,926	)		(4,473	)
Increase in Prepaid Expenses		—			(128	)		(4,657	)
Total Changes in the Year		(1,047,413	)		(700,317	)		(202,193	)
Net Direct Debt, End of Year		(13,365,652	)		(13,018,556	)		(12,318,239	)

* Except for the Provincial Surplus figure, the estimates for items shown as Changes in the Year reflect the activity of the Consolidated Fund only.

The accompanying notes and schedules are an integral part of these Financial Statements

60

Public Accounts Volume 1 — Financial Statements

Statement 4

Consolidated Statement of Cash Flow
For the fiscal year ended March 31, 2010
($ thousands)

				2009
	2010			(as restated)
Cash Inflow (Outflow) from the following activities:
Operating:
Provincial Surplus (Deficit)		(241,924	)		25,973
Sinking Fund and Public Debt Retirement Fund Earnings		(92,188	)		(116,384	)
Foreign Exchange Amortization		(4,685	)		1,295
Amortization of Tangible Capital Assets		312,578		��	280,864
Net Income from Government Business Enterprises		(358,731	)		(359,580	)
Profit Distributions from Government Business Enterprises		346,523			345,886
Loss on Disposal of Tangible Capital Assets		(13,137	)		2,450
Net Change in Other Items (Note 11)		(220,398	)		(201,249	)
		(271,962	)		(20,745	)
Investing:
Repayment of Loans		235,825			211,577
Advances and Investing		(582,681	)		(384,142	)
		(346,856	)		(172,565	)
Capital:
Acquisition of Tangible Capital Assets		(774,988	)		(503,627	)
Proceeds from Disposal of Tangible Capital Assets		23,208			1,277
		(751,780	)		(502,350	)
Financing:
Debentures Issued		1,881,165			1,541,909
Repayment of Federal Equalization Repayable Loan		(12,032	)		(12,033	)
Foreign Currency Swaps and Adjustments		(32,855	)		(20,556	)
Sinking Fund (Installments) Withdrawals		99,681			(63,688	)
Repayment of Debentures and Other Long-term Obligations		(752,725	)		(391,164	)
		1,183,234			1,054,468
Cash (Outflows) Inflows		(187,364	)		358,808
Cash Position, Beginning of Year		968,806			609,998
Cash Position, End of Year		781,442			968,806
Cash Position Represented by:
Cash and Short-Term Investments		781,442			968,806

The accompanying notes and schedules are an integral part of these Financial Statements

61

Schedules to the Consolidated Financial Statements

Schedule 1

Revenue
For the fiscal year ended March 31, 2010
($ thousands)

				2009
	2010			(as restated)
Provincial Sources
Income Taxes		2,210,468			2,170,891
Sales Taxes		1,650,411			1,580,929
Petroleum Royalties		125,634			451,795
Other Provincial Revenue		863,407			747,395
		4,849,920			4,951,010
Federal Sources
Equalization Payments		1,464,935			1,464,935
Canada Health and Social Transfers		1,002,115			965,797
Crown Share		79,386			95,114
Other Federal Payments		637,932			430,605
		3,184,368			2,956,451
Prior Years Adjustments — Federal/Provincial Fiscal
Arrangements
Provincial Sources		54,065			53,904
Federal Sources		(5,831	)		7,630
		48,234			61,534
Other Revenue		736,224			750,782
Sinking Fund and Public Debt Retirement Fund Earnings		92,188			116,384
Total Revenue		8,910,934			8,836,161

62

Public Accounts Volume 1 — Financial Statements

Schedule 2

Expenses
For the fiscal year ended March 31, 2010
($thousands)

			2009
	2010		(as restated)
Agriculture
Department of Agriculture		67,722		63,224
AgraPoint International Inc.		2,910		3,245
AgriTECH Park Incorporated		689		770
		71,321		67,239
Community Services
Department of Community Services		803,747		805,374
Nova Scotia Housing Development Corporation		137,439		100,714
		941,186		906,088
Economic and Rural Development
Department of Economic and Rural Development		62,010		76,644
Bioscience Enterprise Centre Incorporated		483		624
Film Nova Scotia		3,587		4,089
Nova Scotia Business Inc.		29,816		29,293
Nova Scotia Innovation Corporation		7,571		7,331
Nova Scotia Strategic Opportunities Fund Incorporated		1,174		446
Trade Centre Limited		16,905		17,787
Waterfront Development Corporation Limited		7,278		3,178
		128,824		139,392
Education
Department of Education		276,019		286,086
Annapolis Valley Regional School Board		128,751		124,762
Cape Breton Victoria Regional School Board		160,727		151,344
Chignecto-Central Regional School Board		191,918		189,318
Conseil scolaire acadien provincial		52,895		50,198
Halifax Regional School Board		417,788		414,848
Nova Scotia Community College		197,189		182,835
Nova Scotia School Boards Association		1,328		622
Nova Scotia School Insurance Exchange		2,407		2,797
Nova Scotia School Insurance Program Association		796		743
P3 Schools Capital and Technology Refresh Fund		133		95
Scotia Learning Technology Refresh Fund		—		104
South Shore Regional School Board		73,365		73,143
Strait Regional School Board		84,931		87,541
Tri-County Regional School Board		65,936		66,260
		1,654,183		1,630,696
Assistance to Universities		450,359		485,468
Energy
Department of Energy		9,367		15,854
Conserve Nova Scotia		20,084		20,245
Nova Scotia Market Development Initiative Fund		1,721		2,559
Pengrowth Nova Scotia Energy Scholarship Fund		110		131
		31,282		38,789

63

Schedules to the Consolidated Financial Statements

Schedule 2

Expenses (continued)
For the fiscal year ended March 31, 2010
($ thousands)

			2009
	2010		(as restated)
Environment
Department of Environment		37,751		27,887
Resource Recovery Fund Board Incorporated		44,837		44,965
		82,588		72,852
Finance
Department of Finance		28,290		26,955
Nova Scotia Pension Agency		26,000		23,341
Nova Scotia Utility and Review Board		8,594		7,824
Sydney Steel Corporation		—		116
3052155 Nova Scotia Limited		59		(323	)
		62,943		57,913
Fisheries and Aquaculture
Department of Fisheries and Aquaculture		8,654		7,311
Nova Scotia Sportfish Habitat Fund		276		260
		8,930		7,571
Health
Department of Health		1,604,761		1,575,204
Annapolis Valley District Health Authority		124,158		118,000
Cape Breton District Health Authority		257,804		260,678
Capital District Health Authority		772,770		723,078
Colchester East Hants Health Authority		74,730		67,024
Cumberland Health Authority		62,590		57,242
Guysborough Antigonish Strait Health Authority		80,029		72,056
Izaak Walton Killam Health Centre		237,855		221,455
Nova Scotia Health Research Foundation		5,343		6,443
Pictou County Health Authority		74,497		69,835
Provincial Drug Distribution Program		79,415		78,435
South Shore District Health Authority		83,753		73,338
South West Nova District Health Authority		99,457		95,491
		3,557,162		3,418,279
Health Promotion and Protection
Department of Health Promotion and Protection		43,120		40,969
Nova Scotia Gaming Foundation		575		604
		43,695		41,573
Justice
Department of Justice		254,507		238,337
Law Reform Commission		339		340
Nova Scotia Legal Aid Commission		21,341		23,102
		276,187		261,779

64

Public Accounts Volume 1 — Financial Statements

Schedule 2

Expenses (continued)
For the fiscal year ended March 31, 2010
($ thousands)

				2009
	2010			(as restated)
Labour and Workforce Development
Department of Labour and Workforce Development		127,268			57,513
			��
Natural Resources
Department of Natural Resources		90,436			85,529
Acadia Coal Company Limited Fund		—			1
Coal Research Agreement Fund		299			117
Crown Land Mine Remediation Fund		50			—
Crown Land Silviculture Fund		1,723			2,273
Habitat Conservation Fund		91			96
Nova Scotia Primary Forest Products Marketing Board		289			442
Off-Highway Vehicle Infrastructure Fund		988			1,874
Species-at-risk Conservation Fund		73			12
Sustainable Forestry Fund		—			2,315
		93,949			92,659
Public Service
Public Service		153,434			130,032
Democracy 250		—			272
Nova Scotia E911 Cost Recovery Fund		4,671			4,676
Nova Scotia Nominee Program Fund		14,997			22,111
Interest only for the Nova Scotia Nominee Program Fund		—			15
		173,102			157,106
Seniors
Department of Seniors		1,903			1,693
Service Nova Scotia and Municipal Relations
Department of Service Nova Scotia and Municipal Relations		278,220			244,266
Nova Scotia Municipal Finance Corporation		279			325
		278,499			244,591
Tourism, Culture and Heritage
Department of Tourism, Culture and Heritage		57,899			56,681
Art Gallery of Nova Scotia		3,576			4,375
Public Archives of Nova Scotia		137			181
Sherbrooke Restoration Commission		2,181			2,167
		63,793			63,404
Transportation and Infrastructure Renewal
Department of Transportation and Infrastructure Renewal		377,825			380,667
Harbourside Commercial Park Inc.		700			154
Nova Scotia Lands Inc.		309			654
		378,834			381,475

65

Schedules to the Consolidated Financial Statements

Schedule 2

Expenses (continued)
For the fiscal year ended March 31, 2010
($thousands)

				2009
	2010			(as restated)
Restructuring Costs		133,967			72,208
Pension Valuation Adjustment		86,410			85,066
Gain on Disposal of Crown Assets		(14,943	)		(1,076	)
Debt Servicing Costs
Consolidated Fund		826,430			843,543
Annapolis Valley District Health Authority		487			405
Annapolis Valley Regional School Board		381			421
Cape Breton District Health Authority		1,513			1,170
Cape Breton Victoria Regional School Board		265			315
Capital District Health Authority		7,058			7,489
Chignecto-Central Regional School Board		647			731
Colchester East Hants Health Authority		276			276
Conseil scolaire acadien provincial		83			93
Conserve Nova Scotia		56			—
Cumberland Health Authority		271			241
Guysborough Antigonish Strait Health Authority		336			316
Halifax Regional School Board		1,529			1,367
Izaak Walton Killam Health Centre		1,311			994
Nova Scotia Community College		1,149			1,175
Nova Scotia Housing Development Corporation		35,682			26,543
Nova Scotia Innovation Corporation		65			63
Nova Scotia Legal Aid Commission		219			193
Nova Scotia Municipal Finance Corporation		471			515
Nova Scotia Utility and Review Board		30			31
Pictou County Health Authority		307			314
Sherbrooke Restoration Commission		—			(3	)
South Shore District Health Authority		376			325
South Shore Regional School Board		266			32
South West Nova District Health Authority		536			443
Strait Regional School Board		228			249
Tri-County Regional School Board		172			139
Waterfront Development Corporation Limited		3			107
Waycobah School Assistance Fund		—			3
		880,147			887,490
Total Expenses		9,511,589			9,169,768

66

Schedule 3

Public Accounts Volume 1 — Financial Statements

Loans and Investments
As at March 31, 2010
($thousands)

							Net
	Loans and				Net		2009
	Investments		Provisions		2010		(as restated)
Loans of the Consolidated Fund:
Agriculture and Rural Credit Act		179,230		27,361		151,869		170,745
Fisheries Development Act		94,752		298		94,454		84,412
Housing Development Act		316,124		22,990		293,134		109,433
Industrial Development Act		224,757		70,442		154,315		47,600
Venture Corporations Act		809		809		—		—
Loans to Municipalities
Municipal Loan and Building Fund Act		150		—		150		225
Educational & Services Products (NS) Ltd		15		—		15		15
Education — Student Loans Direct Lending		161,477		59,238		102,239		97,256
Miscellaneous		709		—		709		709
Nova Scotia Market Development Initiative Fund		5,600		—		5,600		5,600
		983,623		181,138		802,485		515,995
Loans of Governmental Units:
Conserve Nova Scotia		1,046		—		1,046		—
Nova Scotia Business Inc.		123,591		39,622		83,969		86,381
Nova Scotia Innovation Corporation		232		—		232		255
Nova Scotia Municipal Finance Corporation		719,298		—		719,298		700,121
Nova Scotia Strategic Opportunities Fund Incorporated		31,091		—		31,091		—
Resource Recovery Fund Board Inc.		254		—		254		464
Waterfront Development Corporation		874		—		874		1,083
		876,386		39,622		836,764		788,304
Total Loans		1,860,009		220,760		1,639,249		1,304,299

67

Schedules to the Consolidated Financial Statements

Schedule 3

Loans and Investments (continued)
As at March 31, 2010
($thousands)

							Net
	Loans and				Net		2009
	Investments		Provisions		2010		(as restated)
Investments of the Consolidated Fund:
Housing Development Act		2,246		105		2,141		1,938
Industrial Development Act		8,071		4,271		3,800		3,800
		10,317		4,376		5,941		5,738
Investments of Governmental Units:
AgraPoint International Inc.		810		—		810		660
Art Gallery of Nova Scotia		1,493		—		1,493		1,873
Nova Scotia Business Inc.		44,626		15,556		29,070		19,439
Nova Scotia Gaming Foundation		3,301		—		3,301		—
Nova Scotia Innovation Corporation		13,758		—		13,758		15,244
Nova Scotia School Insurance Exchange		8,049		—		8,049		8,454
Public Archives of Nova Scotia		892		—		892		—
		72,929		15,556		57,373		45,670
Total Investments		83,246		19,932		63,314		51,408
Total Loans and Investments		1,943,255		240,692		1,702,563		1,355,707

The Provisions listed above include amounts for possible guarantee payouts related to the Industrial Development Act $500 (2009 — $4,000), the Housing Development Corporation Act $13,802 (2009 — $14,247), and Nova Scotia Business Incorporated $2,900 (2009 — $2,934). Also included in Provisions for the Housing Development Corporation Act is $3,200 (2009 — $3,200) for interest fluctuations.

68

Public Accounts Volume 1 — Financial Statements

Schedule 4

Unmatured Debt
As at March 31, 2010
($ thousands)

			Sinking				Net
			Funds and		Net		Debt
	Gross		Defeasance		Debt		2009
	Debt		Assets		2010		(as restated)
Governmental Units
Consolidated Fund		13,331,989		2,204,219		11,127,770		9,967,833
Nova Scotia Housing Development Corporation		240,288		—		240,288		252,156
Nova Scotia Municipal Finance Corporation		2,416		—		2,416		2,573
Nova Scotia Power Finance Corporation		1,004,680		1,004,680		—		—
Waterfront Development Corporation Limited		625		—		625		125
Other		927		—		927		1,559
Unmatured Debt of Governmental Units		14,580,925		3,208,899		11,372,026		10,224,246
Government Business Enterprises
Halifax-Dartmouth Bridge Commission		54,000		—		54,000		57,000
Highway 104 Western Alignment Corporation		70,659		—		70,659		72,348
Nova Scotia Gaming Corporation		20,786		—		20,786		24,354
Nova Scotia Liquor Corporation		2,373		—		2,373		3,491
Unmatured Debt of Government Business Enterprises		147,818		—		147,818		157,193
Total Unmatured Debt		14,728,743		3,208,899		11,519,844		10,381,439

All debt is presented in Canadian dollar equivalents and after giving effect to currency swap contracts itemized in Note 5.

The current and long-term portions of unmatured debt of Governmental Units are shown on the Consolidated Statement of Financial Position with reference to this schedule. Debt of Government Business Enterprises is reflected in the Investment in Government Business Enterprises and in further detail in Schedule 6.

As of March 31, 2010, the Consolidated Fund held Sinking Funds and Public Debt Retirement Funds of $2,204.2 million. These funds were comprised of $2,058.3 million in Sinking Funds and $145.9 million in Public Debt Management Funds. The total market value of both funds is $2,287.5 million at year-end. During the year, contributions were $95.3 million, total earnings were $92.2 million and total redemptions were $195.0 million.

69

Schedules to the Consolidated Financial Statements

Schedule 4

Unmatured Debt (continued)
As at March 31, 2010
($ thousands)

Sinking fund assets are recorded at cost, which includes premiums and discounts associated with the purchase of these investments. These premiums and discounts are amortized on a straight-line basis over the term of the related investment. The unamortized portion of the premiums and discounts is included as part of the value of the sinking funds. As at March 31, 2010, the unamortized net premium was $66.5 million.

Assets consist primarily of debentures of the provinces and Government of Canada with fixed interest rates ranging from 4.05 per cent to 10.00 per cent. Sinking fund payments normally commence on the first anniversary date of the issue of the debenture and are designed to retire the debt over a 20-year period unless the term of the issue is longer. At year-end, the province held $1,037.7 million carrying value worth of its own debentures in Sinking Funds and Public Debt Retirement Funds as active investments.

As per the Nova Scotia Power Corporation Privatization Agreement, Nova Scotia Power Finance Corporation provides for defeasance of its debt. The portfolio of defeasance assets consists of Nova Scotia Power Corporation, other provincial governments and utilities, federal US bonds, coupons or residuals. This debt is shown net of defeasance assets on the Statement of Financial Position.

Projected Payments
($ thousands)

	Governmental Units
	Net						Government
	Principal		Sinking Fund		Total		Business
	Repayments		Requirements		Payments		Enterprises		Total
2011		684,726		88,128		772,854		15,835		788,689
2012		1,617,851		88,128		1,705,979		17,260		1,723,239
2013		970,159		88,128		1,058,287		5,287		1,063,574
2014		1,014,068		71,017		1,085,085		5,529		1,090,614
2015		591,758		71,017		662,775		5,797		668,572
2016 & thereafter		5,734,748		352,298		6,087,046		98,110		6,185,156
		10,613,310		758,716		11,372,026		147,818		11,519,844

Net principal repayments are comprised of the principal amount due less available designated sinking funds to retire the debenture.

In addition, the province has approximately $765.4 million in unrestricted sinking funds that can be used towards the retirement of any unmatured debt. The use of these funds is evaluated each year based on a detailed analysis of cash requirements and market conditions.

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Public Accounts Volume 1 — Financial Statements

Schedule 5

Gross Long-Term Debt
As at March 31, 2010
($ thousands)

	Foreign
	Exchange		CDN $		Maturity
	Rate		Amount		Dates		Interest Rates
Governmental Units:
			Debentures
Consolidated Fund
Consolidated Fund (CDN$)				13,009,608		2010 to 2041	2.50% to 15.998%
Consolidated Fund (US$)		1.0156		—		2012 to 2022	5.125% to 9.50%
Consolidated Fund (UK£)		1.5422		—		2011 to 2019	11.75% to 16.75%
Nova Scotia Municipal Finance Corporation				2,416		2010 to 2018	1.00% to 2.62%
Nova Scotia Power Finance Corporation
Nova Scotia Power Finance Corporation (CDN$)				700,000		2012 to 2031	10.25% to 11.25%
Nova Scotia Power Finance Corporation (US$)		1.0156		304,680		2021		9.40	%
Total — Debentures				14,016,704
			Loans
Consolidated Fund — Other Debt				150		2011 to 2014	1.20% to 8.375%
Nova Scotia Housing Development Corporation				240,288		2010 to 2034	4.00% to 21.50%
Waterfront Development Corporation				625	Demand Loan		Bank prime less 1.125%
Total — Loans				241,063
			Capital Leases
Consolidated Fund				322,231		2010 to 2027	6.04% to 11.00%
Other				927		2010 to 2016	5.00% to 6.19%
Total — Capital Leases				323,158
Total — Long-term Debt of Governmental Units				14,580,925

71

Schedules to the Consolidated Financial Statements

Schedule 5

Gross Long-Term Debt (continued)
As at March 31, 2010
($ thousands)

	CDN $		Maturity
	Amount		Dates		Interest Rates
Government Business Enterprises:
	Debentures
Highway 104 Western Alignment Corporation		70,659		2026		10.13	%
	Loans
Halifax-Dartmouth Bridge Commission		54,000		2019		5.13	%
Nova Scotia Gaming Corporation		20,786	2010 to 2011		variable
	Capital Leases
Nova Scotia Liquor Corporation		2,373		2012		13.80	%
Total Long-term Debt of Government Business Enterprises		147,818
Total Gross Long-term Debt		14,728,743

Call, Redemption and Other Features:

Consolidated Fund

Canadian debentures include $1,079.4 million in CPP debentures, which are redeemable in whole or in part before maturity, on six months notice, at the option of the Minister of Finance of Canada.

The interest rates shown for the Canadian and US debentures reflect the fixed interest rates only. There are debentures that have floating interest rates. Floating interest rates are adjusted on a quarterly basis.

Housing Development Corporation

Mortgages and notes payable are secured by investments in social housing.

Highway 104 Western Alignment Corporation

The Corporation has provided an assignment of all the present and future property and assets, including rights to operate the facility, and a security interest in the Debt Service Reserve Account and the Major Maintenance Reserve Account.

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Public Accounts Volume 1 — Financial Statements

Schedule 6

Government Business Enterprises
As at March 31, 2010
($ thousands)

		2010										2009
	��	Halifax —		Highway 104
		Dartmouth		Western		Nova Scotia		Nova Scotia
		Bridge		Alignment		Gaming		Liquor
		Commission		Corporation		Corporation		Corporation		Total		Total
Cash			7,092		488		13,389		10,683		31,652		27,676
Accounts Receivable			570		970		—		1,736		3,276		3,410
Inventory			—		9		1,497		36,465		37,971		37,366
Tangible Capital Assets			77,790		94,471		90,901		46,901		310,063		313,179
Other Assets			4,119		41,883		3,324		762		50,088		43,828
Total Assets			89,571		137,821		109,111		96,547		433,050		425,459
Accounts Payable			3,873		1,717		2,639		75,072		83,301		75,571
Long-term Debt			54,000		70,659		20,786		2,373		147,818		157,193
Other Liabilities			3,423		40,992		85,686		19,102		149,203		152,175
Total Liabilities			61,296		113,368		109,111		96,547		380,322		384,939
Equity			28,275		24,453		—		—		52,728		40,520
Total Liabilities and Equity			89,571		137,821		109,111		96,547		433,050		425,459
Revenue			25,216		21,149		431,626		583,713		1,061,704		1,059,758
Expenses			15,925		8,046		303,782		362,916		690,669		686,562
Debt Servicing			2,865		7,321		684		1,434		12,304		13,616
Total Expenses			18,790		15,367		304,466		364,350		702,973		700,178
Net Income			6,426		5,782		127,160		219,363		358,731		359,580

73

Schedules to the Consolidated Financial Statements

Schedule 6

Government Business Enterprises (continued)
As at March 31, 2010

Halifax-Dartmouth Bridge Commission

The Halifax-Dartmouth Bridge Commission (the Commission) was created in 1950 by a special statute of the Province of Nova Scotia (now the Halifax-Dartmouth Bridge Commission Act). The purpose of the Commission is to construct, maintain, and operate bridges and their necessary approaches across the Halifax Harbour, between the communities of Halifax and Dartmouth, and across the North West Arm. The Commission currently operates and maintains two toll bridges across the Halifax Harbour, the Angus L. Macdonald Bridge and the A. Murray MacKay Bridge. Bridge tolls are regulated by the Nova Scotia Utility and Review Board, a provincially controlled public sector entity.

Effective January 1, 2008, the Commission moved to a full straight line method for calculating depreciation on all assets. The estimated remaining useful life of the bridges is periodically updated based on consultation with the Commission’s external engineers.

On July 25, 2007 the Commission entered into a long-term loan agreement with the Province for $60.0 million with a final maturity date of December 4, 2019. This agreement requires eleven consecutive annual installments of $3.0 million commencing with an installment payment on December 4, 2008 and for each year thereafter with the final principal repayment amount of $27.0 million along with all accrued and unpaid interest thereon due on the final maturity date of December 4, 2019. Interest is payable semi-annually on June 4 and December 4 of each year. The average interest rate over the 12-year period was set at 5.13%. The Commission accrued interest on the long term debt for the period ending March 31, 2010 in the amount of $885.0 thousand. In addition, the agreement requires that two reserve funds, the OM Fund and Debt Service Fund, be maintained. Effective June 4, 2008, a Capital Fund was also established.

On June 30, 2008, the Commission entered into a Line of Credit agreement for $60.0 million with the Province. There have been no borrowings against this line of credit as of March 31, 2010.

Highway 104 Western Alignment Corporation

The Corporation has been established for the purpose of financing, designing, constructing, operating, and maintaining a 45 km stretch of highway between Masstown and Thomson Station in the counties of Colchester and Cumberland, Nova Scotia. The Corporation’s fiscal year end is March 31. The Province of Nova Scotia retains ownership of the highway. The Corporation is granted the right to operate the highway and collect tolls for a 30-year period, pursuant to an agreement dated April 1, 1996, after which time the right will revert to the Province.

The Province contributed $55.0 million toward the construction of the highway, one-half of which was recovered from the Federal Government under the Canada-Nova Scotia Strategic Highway Improvement Program. There were no contributions in the current or previous year.

On May 22, 1996, the Corporation entered into an operating agreement with Atlantic Highways Management Corporation whereby compensation is based on the annual operating budget plus a variable fee.

A thirty year agreement between the Corporation and the Department of Transportation and Infrastructure Renewal to provide annual roadway maintenance services is renewable in five year increments and was renewed in the prior year. For the current fiscal year, the annual fee was adjusted for inflation and totaled $1.1 million. During the year, the Corporation incurred management fees of $76,605 (2009 — $56,718) from the Province of Nova Scotia.

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Public Accounts Volume 1 — Financial Statements

Schedule 6

Government Business Enterprises (continued)
As at March 31, 2010

At March 31, 2010, the Corporation has a receivable recorded from the Province in the amount of $0.4 million (2009 — $0.6 million).

Restricted assets, consisting primarily of investments in the amount of $41.5 million (2009 — $38.3 million), are included in other assets and cash. These reserve accounts were established in accordance with trust indenture agreements between the Corporation, bondholders, and an Omnibus Agreement between the Corporation and the Province.

Nova Scotia Gaming Corporation

The Corporation was incorporated on February 15, 1995 by Chapter 4 of the Acts of 1994-95, the Gaming Control Act. The purpose of the Corporation is to develop, undertake, organize, conduct and manage casinos and other lottery business on behalf of the Province of Nova Scotia. The Corporation’s fiscal year end is March 31. Revenues of the Corporation are derived from two casinos, located in Halifax and Sydney, and ticket and video lottery sales. The net balance owing to the Province at March 31, 2010 is $65.2 million (2009 — $68.4 million).

Unclaimed prizes are retained by the Corporation in a prize fund for one year from the announced beginning date of the draw. As at March 31, 2010, this amounted to $4.5 million (2009 — $2.5 million). This $4.5 million of restricted cash is included in cash.

Video Lottery (VL) retailers in Nova Scotia have agreed, under the terms of their agreements with Atlantic Lottery Corporation Inc., to contribute 1% of their VL commission to the Nova Scotia Gaming Foundation. The Corporation has agreed to contribute an amount equal to all contributions made by the VL retailers.

The Corporation is obligated to make direct payments annually to three provincial government bodies as follows: the Department of Tourism, Culture and Heritage (in support of the Cultural Federation of NS), the Department of Agriculture (in support of the Exhibition Association of Nova Scotia), and the Department of Health Promotion and Protection (in support of Sport Nova Scotia). These payments totaled $0.2 million in 2010 (2009-$0.2 million). Additionally, as part of its Gaming Strategy, the Government of Nova Scotia approved a contribution of $3.0 million to Nova Scotia Health Promotion and Protection in 2010 (2009-$3.0 million) to fund problem gambling treatment. The Corporation annually contributes to the Nova Scotia Harness Racing Fund amounts approved by the Minister of Finance. The Government of Nova Scotia approved a contribution of $1.0 million in 2010 to support the harness racing industry in Nova Scotia.

Nova Scotia Liquor Corporation

The Corporation derives its mandate from the Liquor Control Act, Chapter 260 of the Revised Statutes of Nova Scotia, 1989. The Corporation was created June 1, 2001, by Chapter 4 of the Government Restructuring (2001) Act, via continuance of the Nova Scotia Liquor Commission as a body corporate.

The Corporation operates retail sales locations across the province and has a fiscal year end of March 31. The net balance owing to the Province at March 31, 2010 is $43.1 million (2009 — $39.0 million).

75

Schedules to the Consolidated Financial Statements

Schedule 7

Tangible Capital Assets
As at March 31, 2010
($ thousands)

	2010																		2009
				Buildings			Machinery						Roads,
				and Land			Computers			Vehicles			Bridges
				Improve-			and			and			and						Total
	Land			ments			Equipment			Ferries			Highways			Total			(as restated)
Costs
Opening Costs		616,025			3,770,521			1,126,120			116,426			1,344,570			6,973,662			6,491,808
Additions		115,281			244,747			106,893			15,629			292,438			774,988			503,627
Disposals		(7,079	)		(5,690	)		(11,598	)		(5,009	)		(79	)		(29,455	)		(21,773	)
Closing Costs		724,227			4,009,578			1,221,415			127,046			1,636,929			7,719,195			6,973,662
Accumulated Amortization
Opening Accumulated Amortization		—			(1,474,076	)		(803,687	)		(77,303	)		(548,216	)		(2,903,282	)		(2,640,464	)
Disposals		—			5,123			9,289			4,957			15			19,384			18,046
Amortization Expense		—			(119,350	)		(76,120	)		(10,991	)		(106,117	)		(312,578	)		(280,864	)
Closing Accumulated Amortization		—			(1,588,303	)		(870,518	)		(83,337	)		(654,318	)		(3,196,476	)		(2,903,282	)
Net Book Value		724,227			2,421,275			350,897			43,709			982,611			4,522,719			4,070,380
Opening Balance		616,025			2,296,445			322,433			39,123			796,354			4,070,380			3,851,344
Closing Balance		724,227			2,421,275			350,897			43,709			982,611			4,522,719			4,070,380
Increase in Net Book Value		108,202			124,830			28,464			4,586			186,257			452,339			219,036

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Public Accounts Volume 1 — Financial Statements

Schedule 7

Tangible Capital Assets (continued)
As at March 31, 2010

Amortization is calculated on a declining balance basis for most assets of the Consolidated Fund. The amortization percentages of the more common tangible capital assets are: buildings and land improvements (5-30 per cent); machinery, computers and equipment (15-50 per cent); vehicles and ferries (15-35 per cent); and roads, bridges and highways (5-15 per cent). Capital leases are amortized on a straight-line basis over the length of each lease (3-25 years).

Amortization is generally calculated on a straight-line basis for assets of other governmental units. The estimated useful lives of the more common tangible capital assets are: buildings (including leasehold improvements) and land improvements (2-50 years); machinery, computers and equipment (3-50 years); and vehicles and ferries (3-7 years). Capital leases are amortized on a straight-line basis (generally 3-45 years).

Social Housing assets are included in Buildings and Land Improvements and relate to the Housing Development Corporation. These assets are amortized using the straight-line method. The net book value of these assets is $328,618 (2009 - $320,905).

Included in the closing costs totals of the various classes as of March 31, 2010, are costs for assets under construction, which have not yet begun to amortize. These costs are buildings and land improvements — $175,697; machinery, computers and equipment — $48,413; vehicles and ferries — $3,763; and roads, bridges and highways — $100,821.

Capital leases are included in the various categories as follows: buildings and land improvements — cost $472,226, accumulated amortization ($236,958); machinery, computers and equipment — cost $39,198, accumulated amortization ($36,608); and vehicles and ferries — cost $16,830, accumulated amortization ($7,439).

77

Schedules to the Consolidated Financial Statements

Schedule 8

Direct Guarantees
As at March 31, 2010
($ thousands)

	Authorized		Utilized			Utilized
	2010		2010			2009
Bank Loans:
Nova Scotia Business Inc.		8,900		2,900			3,534
Industrial Development Act		54,712		37,379			22,833
Nova Scotia Fisheries and Aquaculture Loan Board		—		—			100
Department of Education — Student Loan Program		30,940		30,940			42,995
Total — Bank Loan Guarantees		94,552		71,219			69,462
Promissory Notes:
3052155 NS Limited to Canada-Nova Scotia Offshore Petroleum Board		—		—			2,500
Total — Promissory Note Guarantees		—		—			2,500
Mortgages:
Housing Development Corporation Act		11,045		11,045			11,275
Housing Development Corporation Act — CMHC Indemnities		108,524		108,524			117,487
Provincial Finance Act		90		90			101
Total — Mortgage Guarantees		119,659		119,659			128,863
Other Guarantees:
Aliant Telecom MASH Sector		—		—			3
Equity Tax Credit Act — Community Economic Development Investment Funds		251		251			713
Total — Other Guarantees		251		251			716
Total — Direct Guarantees		214,462		191,129			201,541
Less Provision for Guarantee Payout:
Industrial Development Act				(500	)		(4,000	)
Nova Scotia Business Inc.				(2,900	)		(2,934	)
Department of Education — Student Loan Program				(6,801	)		(8,982	)
Housing Development Corporation Act				(13,802	)		(14,247	)
3052155 Nova Scotia Limited				—			(100	)
				(24,003	)		(30,263	)
Less Provision for Student Debt Reduction Program:
Department of Education — Student Loan Program				(4,845	)		(3,599	)
Net Direct Guarantees not provided for in these statements				162,281			167,679

78

Public Accounts Volume 1 — Financial Statements

Schedule 9

Segment Reporting
As at March 31, 2010

Segment reporting is designed to assist users to identify the resources allocated to support the major activities of government and to better understand the performance of segments.

The following schedules provide segment information for the 2010 and 2009 fiscal years. The province has determined that the following segments represent the major activities for the government.

Health — The provision of such services and institutions to the public that will lead to a higher state of personal health.

Education — The provision of all aspects and phases of training to equip people with necessary skills to pursue productive lives.

Infrastructure & Public Works — The provision of the means to facilitate the effective and efficient movement of persons and property. This includes the net results of the Halifax-Dartmouth Bridge Commission and the Highway 104 Western Alignment Corporation.

Social Services — The provision of services and assistance to economically and/or socially disadvantaged persons requiring aid.

Natural Resources & Economic Development — The provision for the maintenance and upkeep, efficient extraction and processing of the natural attributes of the province with the aim of creating employment and contributing to the material well-being of residents.

Other — The provision of all other essential services which are necessary for the efficient and effective operation of government. This also includes items which assure a benefit to the whole of government and cannot be identified with any other function.

Unallocated — Revenues and expenses that cannot be directly allocated on a reasonable basis to individual segments because they support a wide range of service delivery activities or relate to general administration activities that are not identified as a separate segment. This includes items like tax revenues, sinking fund earnings, debt servicing costs, and the pension valuation adjustment.

79

Schedules to the Consolidated Financial Statements

Schedule 9

Segment Reporting
For the fiscal year ended March 31, 2010
($ thousands)

													Natural
													Resources
							Infrastructure			Social			& Economic
	Health			Education			& Public Works			Services			Development			Other		Unallocated			Eliminations			Total
Revenue
Provincial Sources		179,313			68,670			120,547			43,369			73,926			745,730		4,147,768			(116,607	)		5,262,716
Federal Sources		42,422			32,876			3,468			72,502			118,491			89,532		2,819,246			—			3,178,537
Other Revenue		128,714			344,006			—			57,148			112,943			71,025		46,810			(24,422	)		736,224
Sinking Fund Earnings		—			—			—			—			—			—		92,188			—			92,188
Total Revenues		350,449			445,552			124,015			173,019			305,360			906,287		7,106,012			(141,029	)		9,269,665
Expenses
Grants and Subsidies		1,362,850			596,671			604			714,939			248,742			281,097		—			(55,477	)		3,149,426
Salaries and Employee Benefits		1,553,605			1,101,804			122,804			126,802			166,800			308,970		86,410			(48,787	)		3,418,408
Operating Goods and Services		649,290			297,874			101,612			111,635			127,121			123,004		—			(3,720	)		1,406,816
Professional Services		93,734			14,533			23,915			3,142			21,144			140,394		—			(735	)		296,127
Amortization		88,617			64,368			129,009			15,923			5,442			9,219		—			—			312,578
Debt Servicing Costs		—			—			—			—			—			—		909,764			(29,617	)		880,147
Other		—			43,534			—			—			20,818			1,371		(14,943	)		(2,693	)		48,087
Total Expenses		3,748,096			2,118,784			377,944			972,441			590,067			864,055		981,231			(141,029	)		9,511,589
Segment Result		(3,397,647	)		(1,673,232	)		(253,929	)		(799,422	)		(284,707	)		42,232		6,124,781			—			(241,924	)

80

Public Accounts Volume 1 — Financial Statements

Schedule 9

Segment Reporting
For the fiscal year ended March 31, 2009 (as restated)
($ thousands)

													Natural
													Resources
							Infrastructure			Social			& Economic
	Health			Education			& Public Works			Services			Development			Other		Unallocated			Eliminations			Total
Revenue
Provincial Sources		177,354			44,802			56,568			44,524			67,203			734,634		4,348,940			(109,531	)		5,364,494
Federal Sources		35,415			43,392			4,050			70,997			33,593			50,959		2,725,675			—			2,964,081
Other Revenue		152,656			336,668			—			52,184			111,173			66,306		49,885			(18,090	)		750,782
Sinking Fund Earnings		—			—			—			—			—			—		116,384			—			116,384
Total Revenues		365,425			424,862			60,618			167,705			211,969			851,899		7,240,884			(127,621	)		9,195,741
Expenses
Grants and Subsidies		1,271,584			633,147			1,591			705,982			177,456			250,483		—			19,205			3,059,448
Salaries and Employee Benefits		1,472,305			1,052,629			124,388			121,607			153,714			301,016		85,066			(107,239	)		3,203,486
Operating Goods and Services		626,746			316,357			125,656			90,803			127,829			114,479		—			(6,509	)		1,395,361
Professional Services		76,452			13,349			19,691			5,244			19,585			136,174		—			(688	)		269,807
Amortization		78,106			62,381			109,657			15,162			5,279			10,280		—			—			280,865
Debt Servicing Costs		—			—			—			—			—			—		917,839			(30,349	)		887,490
Other		—			42,239			—			—			33,792			397		(1,076	)		(2,041	)		73,311
Total Expenses		3,525,193			2,120,102			380,983			938,798			517,655			812,829		1,001,829			(127,621	)		9,169,768
Segment Result		(3,159,768	)		(1,695,240	)		(320,365	)		(771,093	)		(305,686	)		39,070		6,239,055			—			25,973

81

Schedules to the Consolidated Financial Statements

Schedule 10

Government Reporting Entity
As at March 31, 2010

The government reporting entity is comprised of the province’s departments and public service units (Consolidated Fund) as well as the following governmental units, government business enterprises and a proportionate share of government partnership arrangements:

Governmental Units
(Consolidation Method)
Acadia Coal Company Limited Fund
AgraPoint International Inc.
AgriTECH Park Incorporated
Annapolis Valley District Health Authority
Annapolis Valley Regional School Board
Art Gallery of Nova Scotia
Bioscience Enterprise Centre Incorporated
Cape Breton District Health Authority
Cape Breton Victoria Regional School Board
Capital District Health Authority
Check Inns Limited (inactive)
Chignecto-Central Regional School Board
Coal Research Agreement Fund
Colchester East Hants Health Authority
Conseil scolaire acadien provincial
Conserve Nova Scotia
CorFor Capital Repairs and Replacements Fund
Crown Land Mine Remediation Fund
Crown Land Silviculture Fund
Cumberland Health Authority
Democracy 250 (inactive)
Film Nova Scotia
Gaming Addiction Treatment Trust Fund
Guysborough Antigonish Strait Health Authority
Habitat Conservation Fund
Halifax Regional School Board
Harbourside Commercial Park Inc.

Sydney Utilities Limited

Industrial Expansion Fund
Izaak Walton Killam Health Centre
Law Reform Commission
Mainstream 1992 Fund
Muggah Creek Remediation Fund
Nova Scotia Arts Council (inactive)
Nova Scotia Blueberry Institute Fund
Nova Scotia Business Inc.
Nova Scotia Community College
     Nova Scotia Community College Foundation
Nova Scotia Coordinate Referencing System Trust Fund
Nova Scotia Crop and Livestock Insurance Commission
Nova Scotia E911 Cost Recovery Fund
Nova Scotia Environmental Trust
Nova Scotia Farm Loan Board
Nova Scotia Fisheries and Aquaculture Loan Board
Nova Scotia Gaming Foundation
Nova Scotia Government Acadian Bursary Program Fund
Nova Scotia Harness Racing Incorporated (inactive)
Nova Scotia Health Research Foundation
Nova Scotia Housing Development Corporation

Annapolis Valley Housing Authority
Cape Breton Island Housing Authority
Cobequid Housing Authority
Eastern Mainland Housing Authority
Metropolitan Regional Housing Authority
South Shore Housing Authority
Tri-County Housing Authority

Nova Scotia Hurricane Juan Recovery Fund (inactive)
Nova Scotia Innovation Corporation

1402998 Nova Scotia Limited
3087532 Nova Scotia Limited

Nova Scotia Lands Inc.
Nova Scotia Legal Aid Commission
Nova Scotia Market Development Initiative Fund
Nova Scotia Municipal Finance Corporation
Nova Scotia Nominee Program Fund
Nova Scotia Pension Agency
Nova Scotia Power Finance Corporation
Nova Scotia Primary Forest Products Marketing Board
Nova Scotia School Boards Association (1)
Nova Scotia School Insurance Exchange (2)
Nova Scotia School Insurance Program Association (2)
Nova Scotia Sportfish Habitat Fund
Nova Scotia Strategic Opportunities Fund Incorporated
Nova Scotia Utility and Review Board
Off-Highway Vehicle Infrastructure Fund
P3 Schools Capital and Technology Refresh Fund (3)
Partnership Trust Fund (inactive)
Pengrowth Nova Scotia Energy Scholarship Fund
Pictou County Health Authority
Provincial Drug Distribution Program
Public Archives of Nova Scotia
Public Debt Management Fund
Resource Recovery Fund Board Inc.
Rockingham Terminal Incorporated (inactive)
Scotia Benefit Fund (inactive)
Scotia Learning Technology Refresh Fund
Sherbrooke Restoration Commission
South Shore District Health Authority
South Shore Regional School Board
South West Nova District Health Authority

82

Public Accounts Volume 1 — Financial Statements

Schedule 10

Government Reporting Entity (continued)
As at March 31, 2010

Governmental Units (continued)
(Consolidation Method)

Species-at-risk Conservation Fund
Strait Regional School Board
Sustainable Forestry Fund
Sydney Environmental Resources Limited (inactive)
Sydney Steel Corporation
Sydney Tar Ponds Agency
Sysco Decommissioning Fund
Trade Centre Limited
Tri-County Regional School Board
Upper Clements Family Theme Park Limited (inactive)
Waterfront Development Corporation Limited

3104102 Nova Scotia Limited

Waycobah School Assistance Fund
3052155 Nova Scotia Limited

Government Business Enterprises
(Modified Equity Method)

Halifax-Dartmouth Bridge Commission
Highway 104 Western Alignment Corporation
Nova Scotia Gaming Corporation

Atlantic Lottery Corporation (25% ownership)
Interprovincial Lottery Corporation (10% ownership)
Nova Scotia Gaming Equipment Limited

Nova Scotia Liquor Corporation

Government Partnership Arrangements
(Proportionate Consolidation Method)

Atlantic Provinces Special Education Authority

(approximately 55% share)

Canada-Nova Scotia Offshore Petroleum Board

(50% share)

Canadian Sports Centre Atlantic

(approximately 8% share)

Council of Atlantic Premiers

(approximately 45% share)

(1)	— Entity is a partnership controlled by the eight school boards.
(2)	— Entity is a partnership controlled by the eight school boards and the Community College
(3)	— This includes all refresh funds related to P3 schools.

83

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

1. Financial Reporting and Accounting Policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles for the public sector, that for purposes of the province’s financial statements are represented by accounting recommendations of the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants (CICA), supplemented where appropriate by other CICA and International Federation of Accountants accounting standards or pronouncements.

These consolidated financial statements have been prepared using the following significant accounting policies:

a)	The Government Reporting Entity
	The government reporting entity (GRE) is comprised of the Consolidated Fund, other governmental units (GUs), government business enterprises (GBEs) and a proportionate share of government partnership arrangements (GPAs). GUs and GBEs represent the entities that are controlled by the government. Control is defined as the power to govern the financial and operating policies of another organization with expected benefits or the risk of loss to the government from the other organization’s activities. Control exists regardless of whether the government chooses not to exercise its power to govern so long as it has the ability to govern. Control must exist at the financial statement date, without the need to amend legislation or agreements. GPAs represent entities for which decision making and significant risks and benefits are shared with other parties outside of the GRE.
	Trusts administered by the province are excluded from the reporting entity and are disclosed separately on the Statement of Financial Position for information purposes only.
b)	Principles of Consolidation
	A GU is a government organization that is not a GBE. GUs include government departments, public service units, funds, agencies, service organizations, boards and government not-for-profit organizations. The accounts of GUs are consolidated on a line- by-line basis after adjusting the accounting policies to be consistent with those described in Note 1 (c), with the exception of tangible capital assets. Significant inter-organization accounts and transactions are eliminated.
	A GBE is a self-sustaining organization that has the financial and operating authority to sell goods and services to individuals and non-government organizations as its principal activity and source of revenue. GBEs have been accounted for on the modified equity basis which does not require any accounting policy adjustments. The total net equity of all GBEs is included in the Statement of Financial Position. The total net income is shown as a separate item in the Statement of Operations and Accumulated Deficits.

84

Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

	A GPA is a contractual arrangement between the government and a party or parties outside the reporting entity. The partners have significant clearly defined common goals, make a financial investment in the partnership, share control of decision making, and share, on an equitable basis, the significant risks and benefits associated with the operations of the government partnership. Where significant, the government’s interest in partnerships is accounted for on the proportionate consolidation method.
	A complete listing of the organizations within the GRE is provided in Schedule 10.
c)	Significant Accounting Policies
	Revenues
	Revenues are recorded on the accrual basis. The main components of revenue are various taxes, legislated levies, and interest. Revenues from Personal and Corporate Income Taxes, as well as Harmonized Sales Taxes are accrued in the year earned based upon estimates using statistical models. Tax revenues are recorded at the net amount estimated, after considering adjustments for tax credits and other adjustments from the federal government.
	Government transfers are recognized as revenue in the period during which the transfer is authorized and any eligibility criteria are met. Transfers are recorded as deferred revenue if they are restricted for a stated purpose, such as a specific program or the purchase of tangible capital assets.
	Expenses
	Expenses are recorded on the accrual basis and are reported in more detail in Note 9 — Expenses by Object. Grants are recognized in the period during which the grant is authorized and any eligibility criteria are met. Provisions are made for probable losses on certain loans, investments, loan guarantees, accounts receivable, advances, forgivable loans and for contingent liabilities when it is likely that a liability exists and the amount can be reasonably determined. These provisions are updated as estimates are revised, at least annually.
	Financial Assets
	Cash and Short-term Investments are recorded at cost, which approximates market value. Investments are R-1 (low, mid, high) rated federal and provincial government bills or promissory notes, bankers’ acceptances, term deposits and commercial paper. Terms of investments are generally 1 to 90 days. The average interest rate was 0.24 per cent at year-end.
	Accounts Receivable and Advances are recorded at the principal amount less valuation allowances.
	Inventories for Resale are held for sale in the ordinary course of operations and are recorded at the lower of cost and net realizable value.
	Loans are recorded at cost less adjustments for concessionary assistance and any prolonged impairment in value. Concessionary assistance consists of subsidies provided by the province and is recognized as an expense at the date of issuance of the loan. Any loan write offs must be approved by the Governor-in-Council. Loans usually bear interest at approximate market rates and normally have fixed repayment schedules.

85

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

Investments are recorded at cost less adjustments for concessionary assistance and any prolonged impairment in value. Concessionary assistance consists of subsidies provided by the province and is recognized as an expense at the date of issuance of the investment. Any write- down of an investment to reflect a loss in value is not reversed if there is a subsequent increase in value.

Liabilities

Bank Advances and Short-term Borrowings have initial maturities of one year or less and are recorded at cost that approximates market value. Short-term Borrowings had a weighted average interest rate of 0.23 per cent at year-end on Canadian dollar borrowings.

Unmatured Debt consists of debentures and various loans in Canadian and foreign currencies and capital leases. Debt is recorded at par, net of sinking funds (including public debt management funds).

Hedge accounting is used when financial instruments form a hedging relationship, the relationship is highly effective and it is considered to be consistent with the province’s financial risk management goals.

Sinking Fund and Public Debt Retirement Fund investments are recorded at cost and consist primarily of debentures of the Province of Nova Scotia, other provincial governments and the Government of Canada. Premiums and discounts on sinking funds are deferred and amortized over the life of the investment. Amortization and realized gains and losses for premiums and discounts relating to sinking fund balances and installments are netted against sinking fund earnings.

Unamortized Foreign Exchange Translation Gains and Losses result when debentures payable in foreign currencies, and sinking funds invested in foreign currencies are translated into Canadian dollars at the rate of exchange in effect at March 31 and upon entering into derivative contracts. Foreign exchange gains and losses on the translation of foreign currency are amortized on a straight-line basis over the remaining term of the related monetary item.

Premiums and discounts, as well as underwriting commissions relating to the issuance of debentures, are deferred and amortized over the term of the related debt. Amortization and realized foreign exchange gains and losses, premiums and discounts relating to debt balances, serial retirements, sinking fund balances and installments are charged to debt servicing costs except as noted above.

Pension, Retirement and Other Obligations include various employee future benefit plans. Pension liabilities for defined benefit plans are calculated using the projected benefit actuarial method using accounting assumptions that reflect the province’s best estimates of performance over the long-term. The projected benefit actuarial method attributes the estimated cost of retirement benefits to the periods of employee service. The net pension liability represents accrued pension benefits less the market related value of pension assets (if applicable) and the balance of unamortized experience gains and losses. The market related values are determined in a rational and systematic manner so as to recognize asset market value gains and losses over a five-year period. The pension benefit plan for the majority of health sector employees is offered by a multi-employer plan administrator and is not sponsored by the province. Employer contributions to this plan are expensed in the period paid. The accrued benefit asset (liability) of this plan is not recognized in these financial statements.

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Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

	Net Direct Debt
	Net Direct Debt represents the direct liabilities of the province less financial assets and unamortized foreign exchange translation gains and losses and premiums and discounts on outstanding debenture issues.
	Non-Financial Assets
	Tangible Capital Assets have useful lives extending beyond the accounting period, are held for use in the production and supply of goods and services and are not intended for sale in the ordinary course of operations. Tangible capital assets are recorded at gross historical cost (or estimated cost when the actual cost is unknown) and include all costs directly attributable to the acquisition, construction, development and installation of the tangible capital asset, except interest. Tangible Capital Assets include land, buildings, major equipment and software, vehicles, ferries, roads, highways, and bridges. Tangible capital assets do not include intangibles or assets acquired by right, such as forests, water and mineral resources or works of art and historical treasures. Tangible capital assets are amortized to expense over the useful lives of the assets. The amortization methods and rates selected by entities other than the Consolidated Fund are not adjusted to the methods and rates used by the Consolidated Fund.
	Inventories of Supplies are held for consumption or use by the province in the course of its operations. All entities record inventory at the lower of cost and net realizable value.
	Prepaid Expenses are cash disbursements for goods or services, other than Tangible Capital Assets and Inventories of Supplies, of which some or all will provide economic benefits in one or more future periods. The prepaid amount is recognized as an expense in the year the good or service is used or consumed.
	Accumulated Deficits
	Accumulated Deficits represent the direct liabilities of the province less financial assets, non- financial assets and unamortized foreign exchange translation gains and losses and premiums and discounts on outstanding debenture issues. This represents the accumulated balance of net surpluses/deficits arising from the operations of the province.
d)	Measurement Uncertainty
	Uncertainty in the determination of the amount at which an item is recorded in the financial statements is known as measurement uncertainty. Uncertainty exists whenever estimates are used because it is reasonably possible that there could be a material difference between the recognized amount and another reasonably possible amount.
	Measurement uncertainty exists in these financial statements in the accruals for such items as pension, retirement and other obligations, environmental remediation obligations, federal, and provincial source revenues. The nature of the uncertainty in the accruals for pension, retirement and other obligations arises because actual results may differ significantly from the province’s various assumptions about plan members and economic conditions in the marketplace. Uncertainty exists for environmental remediation obligations because the actual extent of remediation activities required may differ significantly based on the actual extent of site contamination and the chosen remediation process. Uncertainty related to Sales and Income Taxes, petroleum royalties, CHT and CST arises because of the possible differences between the estimated and actual economic growth and other assumptions used in statistical models to accrue these revenues.

87

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

2. Accounting Changes

Accounting changes were made during the year that have increased or decreased the Provincial Surplus (Deficit), Net Direct Debt, and Accumulated Deficits as follows:

	2010									2009
				Net Direct			Accumulated					Net Direct		Accumulated
				Debt			Deficits					Debt		Deficits
	Provincial			April 1,			April 1,			Provincial		April 1,		April 1,
($ millions)	Deficit			2009			2009			Surplus		2008		2008
Pensions		(3.6	)		(6.3	)		(6.3	)		6.3		—		—
GUs previously not
consolidated		—			1.0			—			—		1.3		—
		(3.6	)		(5.3	)		(6.3	)		6.3		1.3		—

Nova Scotia School Board Association Pension Plan

A review of the financial statements of the Nova Scotia School Boards Association (NSSBA) indicated the NSSBA has a pension plan which provides pension benefits for the non-teaching employees of participating Nova Scotia School Boards and the Association’s employees.

As these entities are governmental units and are part of the government reporting entity and the impact of this plan was not included in the financial statements of those entities, the impact of the plan has been included in the Province’s financial statements using pension accounting.

Governmental Units Previously Not Consolidated

Due to materiality, certain smaller governmental units (GUs) were previously accounted for on an equity basis. These units are now being fully consolidated on a line-by-line basis. This change was recorded retroactively and the impacts are shown in the table above.

3. Restricted Cash and Short-Term Investments

As at March 31, 2010 restricted cash and short-term investments of $97.1 million (2009 — $90.2 million) have been designated for restricted purposes by parties external to the province. Restricted cash includes $54.4 million for future housing expenditures from the Nova Scotia Housing Development Corporation; $27.6 million from Capital District Health Authority for the Centre for Clinical Research and other purposes; $7.4 million for gas market development from the Nova Scotia Market Development Initiative; and $7.7 million for various other purposes.

88

Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

4. Deferred Revenue

Receipts are recorded as deferred revenue if they are restricted by external parties for a stated purpose, such as a specific program or the purchase of tangible capital assets. Deferred revenue is recognized into revenue over time as the recognition criteria are achieved or is drawn down to reimburse third parties as conditions are met. The balance includes the following components:

			2009
($ thousands)	2010			(as restated)
Offshore Accord		361,285		541,357
C-52 Federal Trust Agreements		16,764		62,685
Office of Immigration’s — Nova Scotia Nominee Program (funds held in segregated account)		28,143		42,720
C-48 Federal Trust Agreements		538		9,954
Nova Scotia Housing Development Corporation’s Social Housing Agreement		54,385		48,809
Early Learning Child Care Funds		33,534		38,594
Capital District Health Authority’s Capital and Research Funds		30,487		27,229
Nova Scotia Gas Tax Agreement on Municipal Funding		41,643		36,098
Labour Market Agreement		10,488		2,352
C-41 Community Development Trust		16,533		25,874
Nova Scotia Market Development Initiative Fund		9,424		11,719
Resource Recovery Fund Board Inc.’s Unearned Revenue from Container Deposits, Paint Levies and Tire Deposits		14,002		13,320
Other		51,851		61,644
Total Deferred Revenue		669,077		922,355

89

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

5. Derivative Financial Instruments

The province is a party to financial instruments with off-balance sheet risk, either to hedge against the risks associated with fluctuations in foreign currency exchange rates or to manage risks associated with interest rate fluctuations. Interest rate contracts include swap agreements and options on swaps. These contracts are used to vary the amounts and periods for which interest rates on borrowing are fixed or floating. Foreign exchange contracts include swap agreements that are used to convert the liability for foreign currency borrowing and associated costs into Canadian dollars.

The province’s credit policy is that it only executes derivative transactions with well rated counterparties. All current counterparties are rated equal to or better than the Province.

As at March 31,2010, the province has executed 92 interest rate swap contracts to convert certain interest payments from a fixed to floating, from floating to fixed, floating to floating or fixed to fixed basis. These swaps have terms remaining of 1 day to 21 years, a notional principal value of $1.6 billion and a mark to market1 value of $16.7 million.

The province has executed foreign currency swap contracts to convert its foreign denominated debt into Canadian denominated debt as follows:

Termination	Original	Original		Current	Current		Mark to
Date	Currency	Principal		Currency	Principal		Market 1
		( thousands)			( thousands)		( thousands)
October 28, 2011	UK£		23,250	CDN$		56,283		(25,600	)
April 16, 2019	UK£		60,000	CDN$		114,387		(34,500	)
Total	UK£		83,250	CDN$		170,670		(60,100	)
February 27, 2012	US$		500,000	CDN$		795,000		(246,700	)
July 27, 2013	US$		300,000	CDN$		299,850		7,600
March 15, 2016	US$		150,000	CDN$		205,725		(45,800	)
January 26, 2017	US$		500,000	CDN$		586,500		(11,700	)
February 1, 2019	US$		200,000	CDN$		198,000		7,900
July 1, 2019	US$		200,000	CDN$		199,900		4,700
November 15, 2019	US$		244,000	CDN$		246,318		3,000
March 1, 2020	US$		300,000	CDN$		409,200		(118,800	)
May 1, 2021	US$		300,000	CDN$		312,002		(7,000	)
April 1, 2022	US$		300,000	CDN$		379,517		(78,500	)
July 30, 2022	US$		300,000	CDN$		329,310		(24,100	)
Total	US$		3,294,000	CDN$		3,961,322		(509,400	)

1 Mark to Market is an indication of the swap’s market value as at March 31, 2010. This represents the estimated realizable gain (loss) and is equivalent to the present value of future interest and/or currency savings (losses) based on market conditions as at March 31, 2010.

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Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

6. Federal Equalization Repayable Loan

The province received an equalization repayable loan from the federal government in March 2005 in the amount of $120.3 million. The loan bears no interest and is being repaid over 10 years, with bi-monthly deductions of $0.5 million to commence in April 2006. As of March 31, 2010 the balance of the loan is $72.2 million (2009 — $84.2 million).

7.	Pension, Retirement and Other Obligations
a)	Description of Obligations
	The province offers a variety of pension, other retirement, post-employment and special termination benefits. The province is responsible for adequately funding most of the plans. Except as otherwise noted, the cost of benefits are recognized in the periods the employee provides service. For benefits that do not vest or accumulate, a liability is recognized when an event that obligates the province to pay benefits occurs. The significant plans are detailed as follows:
	Pension Benefit Plans
	The province sponsors two funded pension plans, the Public Service Superannuation Plan (PSSP) and the Nova Scotia Teachers’ Pension Plan (TPP). Both plans are defined benefit plans with plan assets primarily composed of Canadian and foreign equities, government and corporate bonds, debentures, secured mortgages and real estate. The plans are jointly funded with contributions from employees being matched by the province. Benefits paid upon retirement are based on an employee’s length of service, rate of pay and inflation adjustments.
	On April 1, 2006, the Minister of Finance transferred responsibility for the governance of the Nova Scotia Teachers’ Pension Fund to the Teachers’ Pension Plan Trustee Inc., (TPPTI). The TPPTI is a body corporate comprised of nine board members — four nominated by the Nova Scotia Teachers’ Union, four nominated by the province and one Chair agreed to by both parties. As a result of this transfer, the province and Union agreed to share all surpluses and deficits of the plan equally. The province accounts for one-half of all components of the accrued benefit liability associated with the plan in its financial statements. In addition, the province recognizes one-half of components associated with the net benefit expense (recovery) associated with this plan. As of March 31, 2010, the total accrued benefit liability associated with the plan was $121.7 million.
	The province has several unfunded defined pension plans. The majority of these plans do not require contributions from employees. Benefits paid upon retirement are based on an employee’s length of service, rate of pay and inflation adjustments.
	Employees in the health sector are members of a multi-employer defined benefit pension plan. As the province does not sponsor this plan, the annual net benefit plan expense is the amount of required contributions provided for employees’ services rendered during the year. The accrued benefit asset (liability) of this plan is not recognized in these financial statements. The most recent actuarial valuation was performed on July 1, 2008 and extrapolated to December 31, 2008 which indicated a funding deficit of $123.3 million.
	Other Retirement Benefit Plans
	The province sponsors two other retirement benefit plans: retirement allowances and retirement health plan benefits. These plans are not funded. Benefits paid upon retirement for retirement allowances are based on an employee’s length of service and rate of pay. Retirement health plan benefits vary depending on the collective agreements negotiated with each group. The province pays 65 per cent and 100 per cent of the cost of retirement health plan benefits for the PSSP and TPP retirees respectively.

91

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

	Post-Employment Benefits
	The province offers two significant post-employment benefit plans: Self Insured Workers’ Compensation and Long-Term Disability. The amount recorded in these financial statements represents the actual amount of benefits paid during the year plus the actuarial estimate of future payments, based on claims ongoing at year-end. For the Long-Term Disability plan, the obligation is offset by the market related value of plan assets.
	Special Termination Benefits
	The province has offered early retirement incentive programs to members of the PSSP and TPP at various times commencing in 1986 and 1994 respectively. Qualified members were offered additional years of pensionable service if they elected to retire. The cost of these benefits was accrued in the year the employee accepted the early retirement option.
b)	Summary of Activity in Defined Benefit Plans

Accrued Benefit Liability
($ thousands)

	2010		2009
Pension Benefit Plans		558,666		423,384
Other Benefit Plans		1,408,810		1,359,343
Total Accrued Benefit Liability		1,967,476		1,782,727

Activity During the Year
($ thousands)

	Pension Benefit Plans						Other Benefit Plans
	2010			2009			2010			2009
Projected benefit obligation, beginning of year		7,623,059			7,315,823			1,390,338			1,394,049
Current benefit cost		211,708			194,797			69,744			64,147
Interest cost		526,055			504,269			67,613			68,861
Actuarial (gains) losses		93,477			14,670			27,144			(69,628	)
Benefit payments		(436,467	)		(414,329	)		(84,358	)		(81,287	)
Other		7,698			7,829			2,044			(1,520	)
Plan amendments		—			—			3,908			15,716
Projected benefit obligation, end of year		8,025,530			7,623,059			1,476,433			1,390,338
Market related value of plan assets, beginning of year		6,096,055			6,151,049			92,993			80,583
Expected return on plan assets		427,416			430,994			5,978			5,362
Actuarial gains (losses)		(193,960	)		(321,569	)		(2,617	)		(3,755	)
Benefit payments		(436,467	)		(414,329	)		(84,358	)		(81,287	)
Other		7,697			7,829			(364	)		(397	)
Employer contributions		149,723			135,279			82,153			81,482
Employee contributions		125,194			106,802			9,134			11,005
Market related value of plan assets, end of year		6,175,658			6,096,055			102,919			92,993
Funded status, end of year		(1,849,872	)		(1,527,004	)		(1,373,514	)		(1,297,345	)
Unamortized net actuarial (gains) losses		1,291,206			1,103,620			(11,813	)		(46,037	)
Valuation Allowance		—			—			(23,483	)		(15,961	)
Accrued benefit liability, end of year		(558,666	)		(423,384	)		(1,408,810	)		(1,359,343	)

92

Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

c)	Actuarial Assumptions
	The table below shows significant weighted-average assumptions used to measure pension and other benefit plan obligations.

	Pension Benefits						Other Benefits
	2010			2009			2010			2009
Long-term inflation rates		2.5	%		2.5	%		2.5	%		2.5	%
Expected real rate of return on plan assets		4.5	%		4.5	%		—			—
Rate of compensation increase		2.75% to 5.5% + merit			2.75% to 5.5% + merit			2.75% to 4.95% + merit			2.75% to 4.95% + merit
Discount Rate — Main Plans		7.11	%		7.11	%		4.75	%		4.95	%
Other		—			—			6.35	%		4.95% to 6.7%

Other assumptions used were:

6.5 per cent annual rate increase in the cost per person of covered healthcare benefits for 2009, decreasing at 0.25 per cent per annum to an ultimate rate of 4.5 per cent per annum.

11 per cent annual rate increase in the cost per person of covered prescription drugs for 2009, decreasing at 1 per cent per annum to an ultimate rate of 4.5 per cent per annum.

Actuarial assumptions are reviewed and assessed on a regular basis to ensure that the accounting assumptions take into account various changing conditions and reflect the province’s best estimate of performance over the long-term.

93

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

d)	Other Disclosure
	The net unamortized actuarial gains (losses) are amortized on a straight-line basis over the expected average remaining service life (EARSL) of the related employee groups ranging from 4 years to 17 years (weighted-average EARSL is 14 years).
	During the year, the weighted average actual rate of return on plan assets was 22.0 per cent (2009 — (17.6) per cent). The total market value of plan assets is $7.6 billion (2009 — $6.5 billion) at March 31, 2010.
	The most recent actuarial valuations performed for most of the benefit plans was at December 31, 2008 with the exception of certain other retirement benefit plans that were performed on March 31, 2007 and the post-employment benefit plans that are performed annually at March 31.
e)	Net Benefit Plans Expense (Recovery)

The table below shows the components of the net benefit plans expense (recovery).

($ thousands)

	Pension Benefits						Other Benefits
	2010			2009			2010			2009
Current benefit cost		211,708			194,797			69,744			64,147
Employee contributions		(125,703	)		(107,323	)		(9,151	)		(11,025	)
Employer contributions*		35,440			31,028			—			—
Plan amendments		—			—			3,908			15,716
Amortization of net actuarial (gains) losses		99,851			72,407			(3,438	)		410
Recognition of actuarial losses on plan amendment		—			—			(1,024	)		—
Other		(4	)		18			2,636			2,152
Increase in valuation allowance		—			(3,032	)		7,522			15,523
Interest cost		526,055			504,269			67,613			68,861
Expected return on plan assets		(427,416	)		(430,994	)		(5,978	)		(5,362	)
Employer contributions to multi-employer plan		84,027			73,438			—			—
Net benefit plans expense (recovery)		403,958			334,608			131,832			150,422

* This represents one-half of the employer contributions made by PNS to the TPP. Included in the figures above for 2010 and 2009, are one-half of all transactions associated with TPP to reflect the province’s share of this plan under joint trusteeship.

94

Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

8. Trust Funds Under Administration

Trust fund assets solely administered by the province (before giving consideration to actuarial adjustments) are:

($ thousands)

			2009
	2010			(as restated)
Public Service Superannuation Fund (1)		3,444,323		2,897,604
Sydney Steel Corporation Superannuation Plan (1), (2)		20		50
Nova Scotia Public Service Long Term Disability Plan (1), (4)		92,273		74,910
Nova Scotia Credit Union Deposit Insurance Corporation(4)		17,698		16,438
Public Trustee (1)		49,864		40,416
Miscellaneous Trusts (3)		35,332		32,063
Total Trust Funds Under Administration		3,639,510		3,061,481

(1)	See Public Accounts Volume 2 for full financial statements of these funds.
(2)	Administration of the assets of Sydney Steel Corporation Superannuation Fund was assumed during fiscal 2001.
(3)	Miscellaneous trusts include a large number of relatively small funds.
(4)	These represent trusts with December 31 year ends. Trust asset balances at March 31 did not differ significantly.

Other

The Province is no longer the sole trustee administering the Nova Scotia Teachers’ Pension Fund (the Fund). The Nova Scotia Teachers’ Union and the Province of Nova Scotia agreed to a joint trusteeship of the Fund effective April 1, 2006. Under joint trusteeship the Trustee of the Fund is the Teachers’ Pension Plan Trustee Inc., of which the province has 4 of 9 members. The Trustee is responsible for administration of the Plan and investment management of plan assets. Total net assets available for benefits as at December 31, 2009 were $4.0 billion (2010 — $3.7 billion).

9. Expenses by Object

($ thousands)

			2009
	2010			(as restated)
Grant and Subsidies		3,149,426		3,059,448
Salaries and Employee Benefits		3,418,408		3,203,486
Operating Goods and Services		1,406,816		1,395,361
Professional Services		296,127		269,807
Amortization		312,578		280,864
Debt Servicing Costs		880,147		887,490
Other		48,087		73,312
Total Expenses by Object		9,511,589		9,169,768

95

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

10. Debt Servicing Costs

($ thousands)

				2009
	2010				(as restated)
CDN$ Denominated Debt		685,676			701,801
Pension, Retirement and Other Obligations		160,274			136,774
Capital Leases		20,989			22,957
Other Debt		42,610			45,947
Premium / Discount Amortization		(4,685	)		1,295
Foreign Exchange		(25,931	)		(22,393	)
Miscellaneous		1,214			1,109
Total Debt Servicing Costs		880,147			887,490

Debt servicing costs for Government Business Enterprises were $12.3 million for the year ended March 31, 2010 ($13.6 million for the year ended March 31, 2009).

11. Cash-Flow — Net Change in Other Items

($ thousands)

				2009
	2010				(as restated)
Change in Receivables from Government Business Enterprises		(824	)		(9,323	)
Change in Receivables and Advances		(70,901	)		279,143
Change in Accounts Payable and Other Short-term Borrowings		(66,383	)		(509,957	)
Change in Inventory for Resale		27			610
Change in Inventory of Supplies		(5,926	)		(4,473	)
Change in Prepaid Expenses		(128	)		(4,657	)
Change in Deferred Revenue		(253,278	)		(131,927	)
Change in Accrued Interest		(7,734	)		17,313
Change in Pension, Retirement and Other Obligations		184,749			162,022
Total Net Change in Other Items		(220,398	)		(201,249	)

96

Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

12.	Contingencies and Contractual Obligations
a)	Contingent Liabilities
	Environmental Sites
	Various provincially owned sites throughout the province are considered environmental or contaminated sites. Studies are ongoing to assess the nature and extent of damage to develop remediation plans. Provisions for these costs are recorded in these financial statements when it is determined a liability exists and a reasonable estimate of the remediation costs can be made. With the exception of remediation costs noted in the following paragraphs, no further provisions have been recognized in these financial statements.
	Engineering and environmental studies have generated estimates for the cost of remediation of the Sydney Steel Corporation (Sysco) and adjacent sites as well as the Sydney Tar Ponds site. As a result, the province recorded liabilities totaling $318.5 million in 2000 for environmental site clean up. At March 31, 2010, $134.3 million (2009 — $179.0 million) remains unspent. The provision will continue to be utilized for future decommissioning, demolition and remediation of Sysco’s and adjacent sites, including the Sydney Tar Ponds site. Based on currently available information, the provision, in aggregate, appears to be sufficient to cover the estimated costs to remediate these sites.
	Other remediation liabilities amounting to $12.8 million (2009 — $12.5 million) have been recognized in these financial statements.
	Lawsuits
	The province’s losses for any lawsuits pending cannot be determined due to uncertainty of the trial outcomes.
	Other Contingent Liabilities
	The province also has contingent liabilities in the form of indemnities. The province’s potential liability, if any, cannot be determined at this time.
b)	Contingent Gains
	The Province of Nova Scotia may receive funds in the future from recoveries of various types of claims paid out and other agreements pending the occurrence of certain events. Recoveries are recorded in the year the contingent events occur.

97

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2010

c)	Contractual Obligations
	Contractual Obligations
	As at March 31, 2010, the province had contractual obligations as follows:

($ thousands)

			Government		Total
	Governmental		Business		Contractual
Fiscal Year	Units		Enterprises		Obligations
2011		503,772		2,717		506,489
2012		404,257		2,617		406,874
2013		355,800		2,292		358,092
2014		332,639		2,157		334,796
2015		330,516		2,285		332,801
2016-2020		1,443,855		—		1,443,855
2021-2025		900,775		—		900,775
2026-2030		941,372		—		941,372
2031 & thereafter		1,173,278		—		1,173,278
		6,386,264		12,068		6,398,332

These contractual obligations are comprised of $6,147.9 million for the Consolidated Fund, $238.3 million for other Governmental Units and $12.1 million for Government Business Enterprises. Included are contractual obligations of $113.7 million by Nova Scotia Business Incorporated for projects approved under its various programs, $282.3 million by the Department of Education for P3 school maintenance agreements, $950.6 million by the Department of Health for the management of the ground ambulance fleet, and $4,449.6 million by the Department of Health for service agreements with long-term care facilities.

In addition to the contractual obligations noted above, in 1992 the Department of Justice entered into a 20-year contract with the RCMP for policing services, including services paid by the municipalities under the Service Exchange Agreement. Costs are negotiated each year based on required policing services. The net estimated expense for the province for 2011 is $32.7 million.

98

Public Accounts Volume 1 — Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statement
As at March 31, 2010

Leases

As at March 31, 2010, the province was contractually obligated under various operating leases. Future minimum annual lease payments are as follows:

($ thousands)

			Government		Total
	Governmental		Business		Lease
Fiscal Year	Units		Enterprises		Payments
2011		59,874		9,228		69,102
2012		52,115		8,390		60,505
2013		44,132		7,837		51,969
2014		35,613		7,748		43,361
2015		27,030		7,001		34,031
2016-2020		36,569		—		36,569
2021-2025		9,874		—		9,874
2026-2030		8,194		—		8,194
2031 & thereafter		118		—		118
		273,519		40,204		313,723

13. Subsequent Events

On May 11, 2010, the Financial Measures (2010) Act received Royal Assent. Contained in this Act were changes to the Public Service Superannuation Act, whereby future indexing of pensions payable will be contingent on the funding level of the Nova Scotia Public Service Superannuation Fund, as well as subject to the approval of the Trustee. Based on an actuarial funding valuation to be calculated as at December 31, 2010, the province has agreed to make a one-time lump-sum payment into the Fund for any deficiency.

On May 11, 2010 the Finance Act received Royal Assent. The Finance Act comes into effect on August 1, 2010 and will replace the Provincial Finance Act. The new Act reflects updated language with respect to current accounting policies, and better describes the present provincial organization and how its business is conducted.

14. Comparative Figures

Certain of the prior year’s numbers have been restated to conform to the presentation format adopted in the current year.

15. Related Party Transactions

Included in these consolidated financial statements are immaterial transactions with various provincial crown corporations, agencies, boards and commissions. Significant related party transactions have been offset and eliminated for purposes of consolidated reporting. Parties are deemed to be related to the Consolidated Fund due to common control or ownership by the Province of Nova Scotia.

The most significant unadjusted related party transactions are described in Schedule 6 — Government Business Enterprises.

99