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

Exhibit 2

INDEPENDENT AUDITOR’S REPORT

To the Members of the Legislative Assembly of Nova Scotia:

Report on the Consolidated Financial Statements

I have audited the accompanying consolidated financial statements of the Province of Nova Scotia, which comprise the consolidated statement of financial position as at March 31, 2011, and the consolidated statements of operations and accumulated deficits, change in net debt and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibilities for the Consolidated Financial Statements

Management is responsible for the preparation and fair representation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles for the public sector and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement. whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards required that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Province of Nova Scotia as at March 31, 2011, and its consolidated financial performance and cash flows for the year then ended in accordance with Canadian generally accepted accounting principles for the public sector.

Jacques R. Lapointe, CA

Auditor General

July 21, 2011

Halifax, Nova Scotia

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64

Consolidated Financial Statements

Statement 1

Province of Nova Scotia

Consolidated Statement of Financial Position

As at March 31, 2011

($ thousands)

	2011			2010  (as restated)
Financial Assets
Cash and Short-Term Investments (Note 3)		1,183,863			781,554
Accounts Receivable and Advances		922,518			913,988
Inventories for Resale		8,969			3,824
Loans Receivable (Schedule 3)		1,915,664			1,639,249
Investments (Schedule 3)		86,765			63,202
Investment in Government Business Enterprises (Schedule 6)		62,948			52,728
		4,180,727			3,454,545
Liabilities
Bank Advances and Short-Term Borrowings		536,862			442,573
Accounts Payable and Accrued Liabilities		1,720,751			1,603,756
Deferred Revenue (Note 4)		395,560			671,251
Accrued Interest		208,522			198,189
Unmatured Debt of Governmental Units (Schedule 4)		12,447,250			11,372,026
Unamortized Foreign Exchange Translation Gains and Losses, Premiums and Discounts		150,069			172,227
Federal Equalization Repayable Loan (Note 6)		60,161			72,193
Pension, Retirement and Other Obligations (Note 7)		1,488,883			1,967,476
		17,008,058			16,499,691
Net Debt		(12,827,331	)		(13,045,146)
Non-Financial Assets
Tangible Capital Assets (Schedule 7)		4,876,924			4,522,719
Inventories of Supplies		56,732			62,430
Prepaid Expenses		33,402			30,623
		4,967,058			4,615,772
Accumulated Deficits		(7,860,273	)		(8,429,374)
Accounting Changes (Note 2)
Trust Funds under Administration (Note 8)
Contingencies and Contractual Obligations (Note 12 & Schedule 8)
Direct Guarantees (Schedule 8)

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

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Public Accounts Volume 1 — Consolidated Financial Statements

Statement 2

Province of Nova Scotia

Consolidated Statement of Operations and Accumulated Deficits

For the fiscal year ended March 31, 2011

($ thousands)

	Adjusted Estimate 2011			Actual 2011				Actual  2010  (as restated)
Revenue (Schedule 1)
Provincial Sources
Tax Revenue		4,239,802			4,677,158				4,060,509
Other Provincial Revenue		1,260,387			1,471,890				1,374,314
Net Income from Government Business
Enterprises (Schedule 6)		348,573			357,219				358,731
Investment Income		182,553			181,741				149,899
		6,031,315			6,688,008				5,943,453
Federal Sources		3,355,820			3,208,876				3,287,309
Total Revenue		9,387,135			9,896,884				9,230,762
Expenses (Schedule 2)
Agriculture		62,950			65,403				71,321
Community Services		1,046,440			923,433				941,186
Economic and Rural Development		130,704			120,540				128,824
Education		1,651,442			1,682,212				1,654,478
Assistance to Universities		60,643			93,545				450,359
Energy		41,063			34,828				31,282
Environment		102,080			95,662				82,588
Finance		52,959			74,048				62,943
Fisheries and Aquaculture		13,231			13,087				8,930
Health		3,734,245			3,763,124				3,560,083
Health Promotion and Protection		50,311			63,396				43,695
Justice		289,420			277,587				276,187
Labour and Workforce Development		167,033			148,019				127,268
Natural Resources		98,425			95,398				93,949
Public Service		194,492			161,103				173,102
Seniors		1,902			1,734				1,903
Service Nova Scotia and Municipal Relations		313,541			292,471		��		278,499
Tourism, Culture and Heritage		62,851			61,915				63,793
Transportation and Infrastructure Renewal		401,618			405,710				378,834
Restructuring Costs		111,423			69,391				133,967
Pension Valuation Adjustment		8,448			(25,696	)			86,410
Tax Credits and Rebates		54,800			48,860				—
Net Loss on Disposal of Crown Assets		—			609				—
Debt Servicing Costs (Note 10)		959,197			861,404				849,675
Total Expenses (Note 9)		9,609,218			9,327,783				9,499,276
Provincial Surplus (Deficit)		(222,083	)		569,101				(268,514)
Accumulated Deficits, Beginning of Year
As Previously Reported					(8,402,784	)			(8,160,860)
Accounting Changes (Note 2)					(26,590	)			—
As Restated					(8,429,374	)			(8,160,860)
Accumulated Deficits, End of Year					(7,860,273	)			(8,429,374)

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

66

Consolidated Financial Statements

Statement 3

Province of Nova Scotia

Consolidated Statement of Changes in Net Debt

For the fiscal year March 31, 2011

($ thousands)

	Adjusted Estimate 2011			Actual 2011			Actual  2010  (as restated)
Net Debt, Beginning of Year
As Previously Reported		(13,045,146	)		(13,018,556	)		(12,318,239)
Accounting Changes (Note 2)		—			(26,590	)		—
As Restated		(13,045,146	)		(13,045,146	)		(12,318,239)
Changes in the Year *
Provincial Surplus (Deficit)		(222,083	)		569,101			(268,514)
Acquisition and Transfers of Tangible Capital Assets		(579,894	)		(702,639	)		(774,988)
Amortization of Tangible Capital Assets		249,871			345,291			312,578
Disposal of Tangible Capital Assets		—			3,143			10,071
Increase in Inventories of Supplies		—			5,698			(5,926)
Increase in Prepaid Expenses		—			(2,779	)		(128)
Total Changes in the Year		(552,106	)		217,815			(726,907)
Net Debt, End of Year		(13,597,252	)		(12,827,331	)		(13,045,146)

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

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

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Public Accounts Volume 1 — Consolidated Financial Statements

Statement 4

Province of Nova Scotia Consolidated

Statement of Cash Flow

For the fiscal year March 31, 2011

($ thousands)

	2011			2010  (as restated)
Cash Inflow (Outflow) from the following activities:
Operating
Provincial Surplus (Deficit)		569,101			(268,514)
Sinking Fund and Public Debt Retirement Fund Earnings		(102,234	)		(92,188)
Amortization of Premiums and Discounts on Unmatured Debt		(6,245	)		(4,685)
Amortization of Tangible Capital Assets		345,291			312,578
Net Income from Government Business Enterprises		(357,219	)		(358,731)
Profit Distributions from Government Business Enterprises		346,999			346,523
Loss on Disposal of Tangible Capital Assets		1,116			(13,137)
Net Change in Other Items (Note 11)		(543,423	)		(193,808)
		253,386			(271,962)
Investing
Repayment of Loans		200,201			185,663
Advances and Investing		(521,782	)		(582,681)
Write-offs		21,603			50,162
		(299,978	)		(346,856)
Capital:
Acquisition of Tangible Capital Assets		(702,639	)		(774,988)
Proceeds from Disposal of Tangible Capital Assets		2,027			23,208
		(700,612	)		(751,780)
Financing:
Debentures Issued		2,265,042			1,881,165
Repayment of Federal Equalization Repayable Loan		(12,032	)		(12,032)
Foreign Currency Swaps and Adjustments		(28,082	)		(32,855)
Sinking Fund (Installments) Withdrawals		(88,128	)		99,681
Repayment of Debentures and Other Long-term Obligations		(987,287	)		(752,725)
		1,149,513			1,183,234
Cash (Outflows) Inflows		402,309			(187,364)
Cash Position, Beginning of Year		781,554			968,918
Cash Position, End of Year		1,183,863			781,554
Cash Position Represented by:
Cash and Short-Term Investments		1,183,863			781,554

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

68

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

1. Financial Reporting and Accounting Policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles (GAAP) for the public sector that for purposes of the province’s financial statements are represented by the Public Sector Accounting (PSA) standards 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) Government Reporting Entity

The government reporting entity (GRE) is comprised of the General Revenue Fund, other governmental units (GUs), government business enterprises (GBEs), and the province’s 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 in Note 8 for information purposes only.

(b) Principles of Consolidation

A GU is a governmental 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(d). 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 are 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 from GBEs is reported as a separate item in the Consolidated Statement of Operations and Accumulated Deficits.

A GPA is a contractual arrangement between the government and a party or parties outside the GRE. 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.

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Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

(c) Presentation of Estimates

Each year, the province prepares an annual budget, referred to as the Estimates, which represents the financial plan of the province presented by the Government to the House of Assembly for the fiscal year commencing April 1. The Estimates, forming the basis of the Appropriations Act, are prepared primarily for the management and oversight of the General Revenue Fund based upon the policies, programs, and priorities of the Government. Impacts of consolidation are summarized in the Estimates and included on a net basis as Consolidation and Accounting Adjustments.

For comparison with these consolidated financial statements, the Estimates were adjusted on a line-by-line basis to gross up the associated revenues and expenses of the consolidated entities.

(d) Significant Accounting Policies

Revenues

Revenues are recorded on the accrual basis. The main components of revenue are various taxes, legislated levies, program recoveries, user fees, and investment income. Revenues from Personal and Corporate Income Taxes, as well as Harmonized Sales Tax, are accrued in the year earned based upon estimates using statistical models. Tax revenues are recorded at the 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 approximate 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 1.01 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.

70

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

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.

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 1.05 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. Hedging relationships include synthetic instruments, which involve relationships between two or more distinct assets or liabilities for the purpose of emulating the net cash flows or other characteristics of a single asset or liability. Synthetic instrument accounting is used to account for the assets and liabilities in a synthetic instrument relationship as though they were the item being emulated.

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.

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Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

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.

Contingent liabilities, including provisions for losses on loan guarantees, are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

Net Debt

Net Debt represents the total liabilities of the province, including unamortized foreign exchange translation gains and losses, premiums and discounts on outstanding debenture issues, less its financial assets.

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 applied by the other governmental units are not adjusted to the methods and rates used by the General Revenue Fund.

Inventories of Supplies are held for consumption or use by the province in the course of its operations. Inventory is recorded 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, that 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.

72

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

Accumulated Deficits

Accumulated Deficits represent the total liabilities of the province less financial assets and non-financial assets. This represents the cumulative balance of net surpluses and deficits arising from the operations of the province.

(e) Measurement Uncertainty

Uncertainty in the determination of the amount at which an item is recorded in the financial statements is known as measurement uncertainty. Many items are measured using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. 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, and 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, Canada Health Transfer, and Canada Social Transfer arises because of the possible differences between the estimated and actual economic growth and other assumptions used in statistical models to accrue these revenues.

2. Accounting Changes

Errors in recording both Personal Income Tax (PIT) and Corporate Income Tax (CIT) revenues as at March 31, 2010 were determined during the process of updating forecasted PIT and CIT revenues for the current year. As a result of these errors, the Provincial Deficit, Net Debt, and Accumulated Deficits were understated by $26.6 million in the prior year.

Prior year results have been restated to reflect the impact of these errors, as shown in the following table:

	2011								2010
($ thousands)	Provincial Surplus		Net Debt April 1, 2010			Accumulated Deficits April 1, 2010			Provincial Deficit			Net Debt April 1, 2009		Accumulated Deficits April 1, 2009
Personal
Income Tax		—		(87,721	)		(87,721	)		(87,721	)		—		—
Corporate
Income Tax		—		61,131			61,131			61,131			—		—
		—		(26,590	)		(26,590	)		(26,590	)		—		—

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Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

3. Restricted Cash and Short-Term Investments

As at March 31, 2011, restricted cash and short-term investments of $106.4 million (2010 — $97.1 million) have been designated for restricted purposes by parties external to the province. Restricted cash includes $59.5 million for future housing expenditures from the Nova Scotia Housing Development Corporation; $31.9 million from Capital District Health Authority for the Centre for Clinical Research and other purposes; $5.8 million for gas market development from the Nova Scotia Market Development Initiative; and $9.2 million for various other purposes.

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:

( $ THOUSANDS)	2011		2010   (as restated)
Offshore Accord		134,060		361,285
C-52 Federal Trust Agreements		11,835		16,764
Office of Immigration’s Nova Scotia Nominee Program		—		28,143
Nova Scotia Housing Development Corporation’s
Social Housing Agreement		58,951		54,385
Early Learning Child Care Funds		26,985		33,534
Capital District Health Authority’s Capital and Research Funds		36,109		30,487
Nova Scotia Gas Tax Agreement on Municipal Funding		49,676		41,643
Labour Market Agreement		4,396		10,488
C-41 Community Development Trust		286		16,533
Nova Scotia Market Development Initiative Fund		6,472		9,424
Resource Recovery Fund Board Inc.’s Unearned Revenue from
Container Deposits, Paint Levies and Tire Deposits		14,486		14,002
Seniors Pharmacare		8,505		7,638
C-50 Police Officers Recruitment Fund		7,500		7,500
Other		36,299		39,425
Total Deferred Revenue		395,560		671,251

74

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

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 policy requires that a minimum credit rating for counterparties to derivative transactions be ‘A’, where the minimum rating in the “A” category is “A-”or equivalent.

As at March 31,2011, the province has executed 40 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 60 days to 14.5 years, a notional principal value of $1.6 billion and a mark to market¹ value of ($6.2) million.

The province has currency swap contracts that convert foreign denominated debt into Canadian dollar denominated debt as follows:

Termination Date	Original Currency	Original Principal		Current Currency	Current Principal		Mark to Market1
		($ thousands)			($ thousands)		($ thousands)
October 28, 2011	UK£		23,250	CDN$		56,283		(22,880	)
April 16, 2019	UK£		60,000	CDN$		114,387		(33,912	)
Total	UK£		83,250	CDN$		170,670		(56,792	)
February 27, 2012	US$		500,000	CDN$		795,000		(288,753	)
July 27, 2013	US$		300,000	CDN$		299,850		(1,707	)
July 21, 2015	US$		750,000	CDN$		771,750		(49,343	)
March 15, 2016	US$		150,000	CDN$		205,725		(49,020	)
January 26, 2017	US$		500,000	CDN$		586,500		(29,745	)
February 1, 2019	US$		200,000	CDN$		198,000		1,469
July 1, 2019	US$		200,000	CDN$		199,900		(739	)
November 15, 2019	US$		244,000	CDN$		246,318		(3,627	)
March 1, 2020	US$		300,000	CDN$		409,200		(124,684	)
May 1, 2021	US$		300,000	CDN$		312,002		(15,696	)
April 1, 2022	US$		300,000	CDN$		379,517		(85,048	)
July 30, 2022	US$		300,000	CDN$		329,310		(29,996	)
Total	US$		4,044,000	CDN$		4,733,072		(676,889	)

1 Mark to Market is an indication of the swap’s market value as at March 31, 2011, which represents the equivalent to the present value of future cash flows based on market conditions as at March 31, 2011.

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 that commenced in April 2006. As at March 31, 2011, the balance of the loan 75 is $60.2 million (2010 — $72.2 million).

75

Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

7. Pension, Retirement and Other 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.

(a) Description of Obligations

Pension Benefit Plans

The province sponsors two funded pension plans, the Nova Scotia 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 Plan 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 half of all components of the accrued benefit liability associated with the plan in its financial statements. In addition, the province recognizes half of components associated with the net benefit expense (recovery) associated with this plan. As of March 31, 2011, the total accrued benefit liability associated with the plan was $180.8 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 October 31, 2010 and extrapolated to December 31, 2010 which indicated a funding surplus of $109.6 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.

76

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

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)

	2011		2010
Pension Benefit Plans		41,491		558,666
Other Benefit Plans		1,447,392		1,408,810
Total Accrued Benefit Liability		1,488,883		1,967,476

Activity During the Year

($ thousands)

	Pension Benefit Plans						Other Benefit Plans
	2011			2010			2011			2010
Projected benefit obligation, beginning of year		8,025,530			7,623,059			1,476,433			1,390,338
Current benefit cost		196,055			211,708			74,239			69,744
Interest cost		517,553			526,055			69,263			67,613
Actuarial (gains) losses		(106,696	)		93,477			887			27,144
Benefit payments		(446,071	)		(436,467	)		(85,216	)		(84,358	)
Other		13,191			7,698			1,259			2,044
Plan amendments		(550,430	)		—			(18,335	)		3,908
Projected benefit obligation, end of year		7,649,132			8,025,530			1,518,530			1,476,433
Market related value of plan assets, beginning of year		6,175,658			6,096,055			102,919			92,993
Expected return on plan assets		442,210			427,416			6,631			5,978
Actuarial gains (losses)		(226,959	)		(193,960	)		(2,518	)		(2,617	)
Benefit payments		(446,071	)		(436,467	)		(85,216	)		(84,358	)
Other		13,191			7,697			(476	)		(364	)
Employer contributions		688,254			149,723			83,250			82,153
Employee contributions		125,285			125,194			9,913			9,134
Market related value of plan assets, end of year		6,771,568			6,175,658			114,503			102,919
Funded status, end of year		(877,564	)		(1,849,872	)		(1,404,027	)		(1,373,514	)
Unamortized net actuarial (gains) losses		839,370			1,291,206			(6,993	)		(11,813	)
Valuation Allowance		(3,297	)		—			(36,372	)		(23,483	)
Accrued benefit liability, end of year		(41,491	)		(558,666	)		(1,447,392	)		(1,408,810	)

77

Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

(c) Actuarial Assumptions

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

	Pension Benefit Plans						Other Benefit Plans
	2011			2010			2011			2010
Long-term inflation rates		2.50	%		2.50	%		2.50	%		2.50	%
Expected real rate of return on plan assets		4.50	%		4.50	%		—			—
Rate of compensation increase		2.75% to 5.50% + 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	%		4.75	%
Other		—			—			6.35	%		6.35	%

Other assumptions

7.0 per cent annual rate increase in the cost per person of covered healthcare benefits for 2011, decreasing to an ultimate rate of 4.5 per cent per annum over 15 years.

7.0 per cent annual rate increase in the cost per person of covered prescription drugs for 2011, decreasing to an ultimate rate of 4.5 per cent per annum over 15 years.

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.

(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 10.6 per cent (2010 — 22.0 per cent). The total market value of plan assets at March 31, 2011 was $8.6 billion (2010 — $7.6 billion).

The most recent actuarial valuations performed for most of the benefit plans was at December 31, 2009 with the exception of certain other retirement benefit plans that were performed on various dates and the post-employment benefit plans that are performed annually at March 31.

78

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

(e) Net Benefit Plans Expense (Recovery)

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

($thousands)

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Current benefit cost		196,055			211,708			74,239			69,744
Employee contributions		(125,796	)		(125,703	)		(9,922	)		(9,151	)
Employer contributions*		33,791			35,440			—			—
Plan amendments		(550,430	)		—			(18,335	)		3,908
Amortization of net actuarial (gains) losses		36,375			99,851			(1,416	)		(3,438	)
Recognition of actuarial losses on plan amendment		535,723			—			—			(1,024	)
Other		(1	)		(4	)		1,959			2,636
Increase in valuation allowance		3,297			0			12,889			7,522
Interest cost		517,553			526,055			69,263			67,613
Expected return on plan assets		(442,210	)		(427,416	)		(6,631	)		(5,978	)
Employer contributions to multi-employer plan		93,648			84,027			—			—
Net benefit plans expense (recovery)		298,005			403,958			122,046			131,832

* This represents one-half of the employer contributions made by PNS to the TPP. Included in the figures above for 2011 and 2010, are one-half of all transactions associated with TPP to reflect the province’s share of this plan under joint trusteeship.

79

Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

8. Trust Funds Under Administration

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

($ thousands)

	2011		2010 (as restated)
Nova Scotia Public Service Superannuation Fund(1)		4,301,040		3,444,323
Sydney Steel Corporation Superannuation Plan(1), (2)		7		20
Nova Scotia Public Service Long Term Disability Plan(1), (4)		108,109		92,273
Nova Scotia Credit Union Deposit Insurance Corporation(4)		19,091		17,698
Public Trustee(1)		53,636		49,864
Miscellaneous Trusts(3)		35,830		35,200
Total Trust Funds Under Administration		4,517,713		3,639,378

(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.

Other

The Province of Nova Scotia 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 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 four of nine members. The Trustee is responsible for the administration of the Fund and investment management of fund assets. Total net assets available for benefits as at December 31, 2010 were $4.2 billion (2010 — $4.0 billion).

9. Expenses by Object

($ thousands)

	2011		2010 (as restated)
Grants and Subsidies		2,988,291		3,150,023
Salaries and Employee Benefits		3,359,076		3,418,408
Operating Goods and Services		1,418,415		1,409,435
Professional Services		290,333		296,127
Amortization		345,291		312,578
Debt Servicing Costs		861,404		849,675
Other		64,973		63,030
Total Expenses by Object		9,327,783		9,499,276

80

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

10. Debt Servicing Costs

($ thousands)

	2011			2010   (as restated)
CDN$ Denominated Debt		721,344			685,676
Pension, Retirement and Other Obligations		137,975			160,274
Capital Leases		19,461			20,989
Other Debt		13,238			12,138
Premium / Discount Amortization		(6,245	)		(4,685	)
Foreign Exchange		(25,955	)		(25,931	)
Miscellaneous		1,586			1,214
Total Debt Servicing Costs		861,404			849,675

Debt servicing costs for Government Business Enterprises were $14.5 million (2010—$12.3 million) for the year ended March 31, 2011.

11. Cash-Flow — Net Change in Other Items

($ thousands)

	2011			2010   (as restated)
Change in Receivables from Government Business Enterprises		7,920			(824	)
Change in Accounts Receivable and Advances		(16,450	)		(46,485	)
Change in Accounts Payable and Other Short-term Borrowings		211,284			(66,383	)
Change in Inventories for Resale		(5,145	)		27
Change in Inventories of Supplies		5,698			(5,926	)
Change in Prepaid Expenses		(2,779	)		(128	)
Change in Deferred Revenue		(275,691	)		(251,104	)
Change in Accrued Interest		10,333			(7,734	)
Change in Pension, Retirement and Other Obligations		(478,593	)		184,749
Total Net Change in Other Items		(543,423	)		(193,808	)

81

Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

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, 2011, $103.8 million (2010 — $134.3 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 $13.0 million (2010 — $12.8 million) have been recognized in these financial statements.

Lawsuits

The Province of Nova Scotia is involved in various legal proceedings arising from government activities. These different disputes result from breaches of contract, damages suffered by individuals or property, and related elements. These claims include items with pleading amounts and items where an amount is not specified. While the total amount claimed in these actions may be significant, their outcomes are not certain.

When it is determined that a liability likely exists and the amount can be reasonably estimated, the amount is recorded as an accrued liability and an expense. The accrued liability for pending litigation in process at March 31, 2011 was $40.3 million (2010 — $16.5 million).

Guarantees

Guarantees by the province are authorized by various acts of legislature and provided through specific agreements and programs to repay promissory notes, bank loans, lines of credit, mortgages and other securities. Provision for losses on guarantees are recorded when it is likely that a loss will occur. The amount of the loss provision represents the province’s best estimate of future payments. Estimates take into consideration the nature of the loan guarantee, loss experience, and current conditions. The provision is reviewed on an ongoing basis and changes in the provision are recorded in the year they become known. Details on amounts authorized, utilized, and accrued are presented in Schedule 8.

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.

82

Notes to the Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

(b) Contingent Gains

The province 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.

(c) Contractual Obligations

As at March 31, 2011, the province had contractual obligations as follows:

($ thousands)

Fiscal Year	Governmental Units		Government Business Enterprises		Total Contractual Obligations
2012		679,009		8,372		687,381
2013		414,381		8,047		422,428
2014		348,058		7,912		355,970
2015		328,877		6,908		335,785
2016		314,690		7,470		322,160
2017-2021		1,286,400		—		1,286,400
2022-2026		879,035		—		879,035
2027-2031		938,520		—		938,520
2032 & thereafter		969,984		—		969,984
		6,158,954		38,709		6,197,663

These contractual obligations are comprised of $5,907.2 million for the General Revenue Fund, $251.7 million for other Governmental Units, and $38.7 million for the Government Business Enterprises. Included are contractual obligations of $79.4 million from Nova Scotia Business Inc. for projects approved under its various programs, $260.2 million from the Department of Education for P3 School maintenance agreements, $823.8 million from the Department of Health for the management of the ground ambulance fleet, $98.0 million from the Department of Justice for RCMP policing services, and $4,296.9 million from the Department of Health for service agreements with long-term care facilities.

LEASES

As at March 31, 2011, the province was contractually obligated under various operating leases. Future minimum annual lease payments are as follows:

($ thousands)

Fiscal Year	Governmental Units		Government Business Enterprises		Total Lease Payments
2012		67,932		6,902		74,834
2013		55,984		6,092		62,076
2014		44,972		5,948		50,920
2015		34,586		5,193		39,779
2016		27,503		3,909		31,412
2017-2021		31,125		—		31,125
2022-2026		827		—		827
2027-2031		719		—		719
2032 & thereafter		574		—		574
		264,222		28,044		292,266

83

Public Accounts Volume 1 — Consolidated Financial Statements

Province of Nova Scotia

Notes to the Consolidated Financial Statements

As at March 31, 2011

13. Comparative Figures

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

14. Related Party Transactions

Included in these consolidated financial statements are insignificant 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 General Revenue 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.

84

Schedules to the Consolidated Financial Statements

Schedule 1

Revenue

For the fiscal year ended March 31, 2011

($ thousands)

	2011		2010 (as restated)
Provincial Sources
Tax Revenue
Personal Income Tax		2,046,059		1,868,263
Corporate Income Tax		473,053		325,276
Harmonized Sales Tax		1,504,694		1,242,434
Tobacco Tax		211,856		199,149
Motive Fuel Tax		255,395		248,128
Other Tax Revenue		186,101		177,259
		4,677,158		4,060,509
Other Provincial Revenue
Recoveries		344,543		338,995
Other Revenue from Governmental Units		393,343		373,693
Municipal Contributions to School Boards		206,297		206,917
Petroleum Royalties		197,008		110,060
Registry of Motor Vehicles		112,281		111,763
Other Government Charges		70,103		68,666
Miscellaneous		148,315		149,277
Net Gain on Disposal of Crown Assets		—		14,943
		1,471,890		1,374,314
Net Income from Government Business Enterprises		357,219		358,731
Investment Income
Interest Revenue		79,507		57,711
Sinking Fund and Public Debt Retirement Fund Earnings		102,234		92,188
		181,741		149,899
Total Provincial Sources		6,688,008		5,943,453
Federal Sources
Equalization Payments		1,360,723		1,464,935
Canada Health Transfer		726,429		694,941
Canada Social Transfer		309,696		301,343
Recoveries		302,700		312,224
Offshore Accord		227,225		180,072
TCA Cost Shared Revenue		92,072		108,772
Crown Share		29,717		79,386
Other Federal Transfers		160,314		145,636
Total Federal Sources		3,208,876		3,287,309
Total Revenue		9,896,884		9,230,762

85

Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 2

Expenses

For the fiscal year ended March 31, 2011

($ thousands)

	2011		2010
Agriculture
Department of Agriculture		61,362		67,722
AgraPoint International Inc.		3,259		2,910
AgriTECH Park Incorporated		782		689
		65,403		71,321
Community Services
Department of Community Services		797,926		803,747
Nova Scotia Housing Development Corporation		125,507		137,439
		923,433		941,186
Economic and Rural Development
Department of Economic and Rural Development		64,259		62,010
Bioscience Enterprise Centre Incorporated		309		483
Film Nova Scotia		3,632		3,587
Nova Scotia Business Inc.		23,180		29,816
Nova Scotia Innovation Corporation		5,938		7,571
Nova Scotia Strategic Opportunities Fund Incorporated		2,050		1,174
Trade Centre Limited		16,896		16,905
Waterfront Development Corporation Limited		4,276		7,278
		120,540		128,824
Education
Department of Education		271,606		276,019
Annapolis Valley Regional School Board		129,729		128,751
Cape Breton Victoria Regional School Board		163,197		160,727
Chignecto-Central Regional School Board		200,917		191,918
Conseil scolaire acadien provincial		54,359		52,895
Halifax Regional School Board		424,070		417,788
Nova Scotia Community College		203,169		197,189
Nova Scotia School Boards Association		1,116		1,328
Nova Scotia School Insurance Exchange		2,678		2,407
Nova Scotia School Insurance Program Association		781		796
P3 Schools Capital and Technology Refresh Fund		—		133
South Shore Regional School Board		78,199		73,660
Strait Regional School Board		84,410		84,931
Tri-County Regional School Board		67,981		65,936
		1,682,212		1,654,478
Assistance to Universities		93,545		450,359
Energy
Department of Energy		20,604		9,367
Conserve Nova Scotia		12,672		20,084
Nova Scotia Market Development Initiative Fund		1,495		1,721
Pengrowth Nova Scotia Energy Scholarship Fund		57		110
		34,828		31,282

86

Schedules to the Consolidated Financial Statements

Schedule 2

Expenses (continued)

For the fiscal year ended March 31, 2011

($ thousands)

	2011		2010
Environment
Department of Environment		47,398		37,751
Resource Recovery Fund Board Incorporated		48,264		44,837
		95,662		82,588
Finance
Department of Finance		31,508		28,290
Nova Scotia Harness Racing Fund		1,000		—
Nova Scotia Pension Agency		32,093		26,000
Nova Scotia Utility and Review Board		9,433		8,594
Sydney Steel Corporation		—		—
3052155 Nova Scotia Limited		14		59
		74,048		62,943
Fisheries and Aquaculture
Department of Fisheries and Aquaculture		12,818		8,654
Nova Scotia Sportfish Habitat Fund		269		276
		13,087		8,930
Health
Department of Health		1,760,778		1,607,085
Annapolis Valley District Health Authority		126,363		124,158
Cape Breton District Health Authority		286,375		257,804
Capital District Health Authority		777,247		772,770
Colchester East Hants Health Authority		75,303		74,730
Cumberland Health Authority		60,245		62,590
Guysborough Antigonish Strait Health Authority		82,997		80,029
Izaak Walton Killam Health Centre		241,428		237,855
Nova Scotia Health Research Foundation		6,395		5,940
Pictou County Health Authority		77,919		74,497
Provincial Drug Distribution Program		82,210		79,415
South Shore District Health Authority		85,478		83,753
South West Nova District Health Authority		100,386		99,457
		3,763,124		3,560,083
Health Promotion and Protection
Department of Health Promotion and Protection		62,736		43,120
Nova Scotia Gaming Foundation		660		575
		63,396		43,695
Justice
Department of Justice		255,837		254,507
Law Reform Commission		349		339
Nova Scotia Legal Aid Commission		21,401		21,341
		277,587		276,187
Labour and Workforce Development
Department of Labour and Workforce Development		148,019		127,268

87

Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 2

Expenses (continued)

For the fiscal year ended March 31, 2011

($ thousands)

	2011			2010
Natural Resources
Department of Natural Resources		92,787			90,436
Acadia Coal Company Limited Fund		2			—
Coal Research Agreement Fund		—			299
Crown Land Mine Remediation Fund		—			50
Crown Land Silviculture Fund		—			1,723
Habitat Conservation Fund		174			91
Nova Scotia Primary Forest Products Marketing Board		226			289
Off-Highway Vehicle Infrastructure Fund		1,744			988
Species-at-risk Conservation Fund		3			73
Sustainable Forestry Fund		462			—
		95,398			93,949
Public Service
Public Service		139,062			153,434
Nova Scotia E911 Cost Recovery Fund		4,924			4,671
Nova Scotia Nominee Program Fund		17,117			14,997
		161,103			173,102
Seniors
Department of Seniors		1,734			1,903
Service Nova Scotia and Municipal Relations
Department of Service Nova Scotia and Municipal Relations		292,055			278,220
Nova Scotia Municipal Finance Corporation		416			279
		292,471			278,499
Tourism, Culture and Heritage
Department of Tourism, Culture and Heritage		55,513			57,899
Art Gallery of Nova Scotia		3,789			3,576
Public Archives of Nova Scotia		119			137
Sherbrooke Restoration Commission		2,494			2,181
		61,915			63,793
Transportation and Infrastructure Renewal
Department of Transportation and Infrastructure Renewal		404,439			377,825
Harbourside Commercial Park Inc.		773			700
Nova Scotia Lands Inc.		498			309
		405,710			378,834
Restructuring Costs		69,391			133,967
Pension Valuation Adjustment		(25,696	)		86,410
Tax Credits and Rebates		48,860			—
Net Loss on Disposal of Crown Assets		609			—

88

Schedules to the Consolidated Financial Statements

Schedule 2

Expenses (continued)

For the fiscal year ended March 31, 2011

($ thousands)

	2011		2010
Debt Servicing Costs
General Revenue Fund		805,975		795,958
Annapolis Valley District Health Authority		501		487
Annapolis Valley Regional School Board		382		381
Cape Breton District Health Authority		1,533		1,513
Cape Breton Victoria Regional School Board		271		265
Capital District Health Authority		7,441		7,058
Chignecto-Central Regional School Board		658		647
Colchester East Hants Health Authority		295		276
Conseil scolaire acadien provincial		94		83
Conserve Nova Scotia		73		56
Cumberland Health Authority		276		271
Guysborough Antigonish Strait Health Authority		353		336
Halifax Regional School Board		1,457		1,529
Izaak Walton Killam Health Centre		1,435		1,311
Nova Scotia Community College		1,347		1,149
Nova Scotia Housing Development Corporation		36,522		35,682
Nova Scotia Innovation Corporation		63		65
Nova Scotia Legal Aid Commission		307		219
Nova Scotia Municipal Finance Corporation		454		471
Nova Scotia Utility and Review Board		31		30
Pictou County Health Authority		323		307
Sherbrooke Restoration Commission		24		—
South Shore District Health Authority		393		376
South Shore Regional School Board		209		266
South West Nova District Health Authority		535		536
Strait Regional School Board		236		228
Tri-County Regional School Board		189		172
Waterfront Development Corporation Limited		8		3
Waycobah School Assistance Fund		19		—
		861,404		849,675
Total Expenses		9,327,783		9,499,276

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Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 3

Loans and Investments

As at March 31, 2011

($ thousands)

	Loans and Investments		Provisions		Net 2011		Net 2010
Loans
Agriculture and Rural Credit Act		174,612		18,291		156,321		151,869
Conserve Nova Scotia		1,849		122		1,727		1,046
Educational & Services Products (NS) Ltd		15		—		15		15
Education—Student Loans Direct Lending		172,628		61,185		111,443		102,239
Fisheries Development Act		104,357		373		103,984		94,454
Industrial Development Act		218,481		66,514		151,967		154,315
Miscellaneous		709		—		709		709
Municipal Loan and Building Fund Act		75		—		75		150
Nova Scotia Bridge Commission		2,000		—		2,000		—
Nova Scotia Business Inc.		125,760		35,990		89,770		83,969
Nova Scotia Housing Development Corporation		497,280		20,954		476,326		293,134
Nova Scotia Innovation Corporation		192		—		192		232
Nova Scotia Market Development Initiative Fund		5,600		—		5,600		5,600
Nova Scotia Municipal Finance Corporation		748,013		—		748,013		719,298
Nova Scotia Strategic Opportunities Fund Incorporated		66,296		—		66,296		31,091
Resource Recovery Fund Board Inc.		125		—		125		254
Venture Corporations Act		809		809		—		—
Waterfront Development Corporation		1,101		—		1,101		874
Total Loans		2,119,902		204,238		1,915,664		1,639,249
Investments
AgraPoint International Inc.		704		—		704		698
Art Gallery of Nova Scotia		2,145		—		2,145		1,493
Gambling Awareness Foundation of Nova Scotia		3,385		—		3,385		3,301
Industrial Development Act		31,670		4,271		27,399		3,800
Nova Scotia Business Inc.		39,365		10,787		28,578		29,070
Nova Scotia Housing Development Corporation		2,349		181		2,168		2,141
Nova Scotia Innovation Corporation		12,954		—		12,954		13,758
Nova Scotia School Insurance Exchange		8,505		—		8,505		8,049
Public Archives of Nova Scotia		927		—		927		892
Total Investments		102,004		15,239		86,765		63,202
Total Loans and Investments		2,221,906		219,477		2,002,429		1,702,451

The provisions listed above include amounts for possible guarantee payouts for the Industrial Development Act $2,350 (2010 — $500), the Housing Development Corporation Act $9,889 (2010 — $13,802), and Nova Scotia Business Incorporated $30 (2010 — $2,900).

The provision includes amounts for the Debt Reduction Assistance Program of the Education Student Loans $11,257 (2010 — $12,334) of which $4,422 (2010 — $4,845) relates to the student loans guaranteed by the Province.

Also included in provisions for the Housing Development Corporation Act is $3,200 (2010 — $3,200) for interest fluctuations.

90

Schedules to the Consolidated Financial Statements

Schedule 4

Unmatured Debt

As at March 31, 2011

($ thousands)

	Gross Unmatured Debt		Sinking Funds and Defeasance Assets		Net Unmatured Debt 2011		Net Unmatured Debt 2010
General Revenue Fund		14,611,478		2,394,581		12,216,897		11,127,770
Nova Scotia Housing Development Corporation		226,106		—		226,106		240,288
Nova Scotia Municipal Finance Corporation		2,065		—		2,065		2,416
Nova Scotia Power Finance Corporation		991,540		991,540		—		—
Waterfront Development Corporation Limited		875		—		875		625
Other		1,307		—		1,307		927
Total Unmatured Debt		15,833,371		3,386,121		12,447,250		11,372,026

Gross Unmatured Debt

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 the Governmental Units, as well as unmatured debt of the General Revenue Fund are included in the province’s Unmatured Debt of Governmental Units shown on the Consolidated Statement of Financial Position and referenced to this schedule. Current and long-term debt of the Government Business Enterprises is reflected in the province’s Investment in Government Business Enterprises and further detailed in Schedule 6.

Sinking Fund Assets

As of March 31, 2011, the General Revenue Fund held Sinking Funds and Public Debt Retirement Funds of $2,394.6 million (2010 — $2,204.2 million). These funds were comprised of $2,244.0 million in Sinking Funds and $150.6 million in Public Debt Management Funds. The total market value of both funds was $2,454.1 million at year-end. During the year, contributions were $88.2 million, total earnings were $102.2 million, and there were no redemptions.

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, 2011, the unamortized net premium was $48.8 million (2010 — $66.5 million).

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Schedule 4

Unmatured Debt (continued)

As at March 31, 2011

Sinking fund assets consist primarily of debentures of the provinces and Government of Canada with fixed interest rates ranging from 2.75 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 the relevant period to maturity. At year-end, the province held $994.9 million (2010 — $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 principal repayments and sinking fund requirements for the next five years and thereafter are as follows:

Projected Payments

($ thousands)

	Net Principal Repayments		Sinking Fund Requirements		Total Payments
2012		1,623,088		37,618		1,660,706
2013		998,425		37,155		1,035,580
2014		1,014,282		30,580		1,044,862
2015		590,210		30,580		620,790
2016		1,021,661		30,580		1,052,241
2017 & thereafter		6,910,062		123,009		7,033,071
		12,157,728		289,522		12,447,250

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 $788.4 million (2010 — $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.

92

Schedules to the Consolidated Financial Statements

Schedule 5

Gross Unmatured Debt

As at March 31, 2011

($ thousands)

	Foreign Exchange Rate		CDN $ Amount		Maturity Dates		Interest Rates
Debentures
General Revenue Fund
General Revenue Fund (CDN$)				14,310,888		2011 to 2041		2.50% to 15.998%
General Revenue Fund (US$)		0.9718		—		2012 to 2022		2.375% to 9.50%
General Revenue Fund (UK£)		1.5595		—		2011 to 2019		11.75% to 16.75%
Nova Scotia Municipal Finance Corporation				2,065		2011 to 2018		1.00% to 2.62%
Nova Scotia Power Finance Corporation
Nova Scotia Power Finance Corporation (CDN$)				700,000		2012 to 2031		10.25% to 11.25%
Nova Scotia Power Finance Corporation (US$)		0.9718		291,540		2021		9.40%
Total Debentures				15,304,493
Loans
General Revenue Fund — Other Debt				2,453		2011 to 2014		1.90% to 8.375%
Nova Scotia Housing Development Corporation				226,106		2011 to 2034		4.00% to 21.50%
Waterfront Development Corporation Limited				875		Demand loan		Bank prime less 1.125%
Total Loans				229,434
Capital Leases
General Revenue Fund				298,137		2011 to 2027		6.04% to 11.00%
Other				1,307		2011 to 2017		6.19% to 6.29%
Total Capital Leases				299,444
Gross Unmatured Debt of Governmental Units				15,833,371

Call, Redemption and Other Features:

General Revenue 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.

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Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 6

Government Business Enterprises

As at March 31, 2011

($ thousands)

	2011										2010
	Halifax — Dartmouth Bridge Commission		Highway 104 Western Alignment Corporation		Nova Scotia Gaming Corporation		Nova Scotia Liquor Corporation		Total		Total
Cash		4,144		755		21,693		4,657		31,249		27,675
Accounts Receivable		773		929		—		1,891		3,593		3,276
Inventory		—		10		1,974		38,130		40,114		37,971
Investments		9,734		38,177		2		—		47,913		49,188
Tangible Capital Assets		80,086		91,196		80,746		41,448		293,476		310,063
Other Assets		352		419		826		8,373		9,970		4,877
Total Assets		95,089		131,486		105,241		94,499		426,315		433,050
Accounts Payable		3,109		783		67,206		73,427		144,525		158,814
Unmatured Debt		51,000		63,892		15,240		1,166		131,298		147,818
Other Liabilities		5,445		39,398		22,795		19,906		87,544		73,690
Total Liabilities		59,554		104,073		105,241		94,499		363,367		380,322
Equity		35,535		27,413		—		—		62,948		52,728
Total Liabilities and Equity		95,089		131,486		105,241		94,499		426,315		433,050
Total Revenue		26,390		21,920		440,324		585,892		1,074,526		1,061,704
Debt Servicing		2,752		9,660		743		1,309		14,464		12,304
Other Expenses		16,378		9,300		315,741		361,424		702,843		690,669
Total Expenses		19,130		18,960		316,484		362,733		717,307		702,973
Net Income		7,260		2,960		123,840		223,159		357,219		358,731

94

Schedules to the Consolidated Financial Statements

Schedule 6

Government Business Enterprises (continued)

As at March 31, 2011

Halifax-Dartmouth Bridge Commission

The Halifax-Dartmouth Bridge Commission, operating as Halifax Harbour Bridges, was created in 1950 by a special statue 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.

Long-Term Loan Agreement

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 that commenced 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. At March 31, 2011 the Corporation had $48.0 million of long-term debt and $3.0 million of debt maturing within one year.

Interest is payable semi-annually on June 4 and December 4 of each year. The average interest rate over the 12-year period is 5.13%. For the period ending March 31, 2011, interest expense on the long term debt was $2.7 million, of which $0.8 million was payable at year end.

This agreement also requires that two reserve funds, the Operating, Maintenance, and Administrative Fund (OM Fund) and Debt Service Fund, be maintained. Effective June 4, 2008, a Capital Fund was also established.

Line of Credit Agreement

On June 30, 2008, the Commission entered into an agreement with the province for a $60.0 million revolving, unsecured line of credit. At March 31, 2011, the Commission had one advance totaling $2.0 million against the line of credit and accrued interest for the year in the amount of $39.0 thousand.

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Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 6

Government Business Enterprises (continued)

As at March 31, 2011

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.

Omnibus Agreement

The omnibus agreement dated April 1, 1996 is an agreement between the Corporation, the contractor, the operator, and the province to design, finance, construct, operate, and maintain the Highway 104 Western Alignment.

Under this agreement, the Province of Nova Scotia retains ownership of the highway. However, the Corporation is granted the right to operate the highway and collect tolls for a 30-year period, after which time the right will revert to the province.

The province contributed $55.0 million towards 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.

Annual Roadway Maintenance Agreement

The annual roadway maintenance agreement is a 30-year agreement between the Corporation and the Department of Transportation and Infrastructure Renewal for the provision of annual roadway maintenance services. It is renewable in five-year increments and was renewed in the prior year. For the current fiscal year, the annual fee totaled $1.1 million (2010 — $1.1 million). During the year, the Corporation incurred management fees of $70.1 thousand (2010 — $76.6 thousand) from the province.

Payable and Receivable to/from the Province

At March 31, 2011, the Corporation had a payable (deferred grant) to the province in the amount of $0.3 million (2010 — $0.3 million). The Corporation also had a receivable from the province in the amount of $0.8 million (2010 — $0.4 million).

Long-Term Debt

Long-term debt is comprised of senior toll revenue bonds bearing interest of 10.13% and maturing March 31, 2026. The bonds are payable in equal installments of interest and principal. At March 31, 2011, the Corporation had $62.0 million of long-term debt and $1.9 million of debt maturing within one year. Interest expense on the long-term debt was $9.7 million for the year.

Minimum principal repayments for the next five years, net of deferred financing fees, are as follows: 2012 — $1.9 million, 2013 — $2.1 million, 2014 — $2.3 million, 2015 — $2.6 million, 2016 — $2.9 million.

As security, 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.

96

Schedules to the Consolidated Financial Statements

Schedule 6

Government Business Enterprises (continued)

As at March 31, 2011

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. Revenues of the Corporation are derived from two casinos, located in Halifax and Sydney, as well as ticket and video lottery sales.

In March 2011, it was announced that the conduct-and-manage function for gambling would migrate from the Nova Scotia Gaming Corporation to a division within the Department of Communities, Culture and Heritage of the province. As a result, it is anticipated that at some future date, the Corporation will cease operations. At that time, all assets and liabilities will be transferred to the province, at their net book value or fair value, in accordance with the Corporation’s accounting policy for each balance.

Payable to the Province

At March 31, 2011, the Corporation had a payable to the province in the amount of $57.1 million (2010 — $65.2 million).

Special Payments to Government Departments

The Corporation is obligated to make direct payments annually to three government departments: Department of Tourism, Culture, and Heritage (for the Cultural Federation of NS), Department of Agriculture (for the Exhibition Association of Nova Scotia), and Department of Health Promotion and Protection (for Sport Nova Scotia). These payments totaled $0.2 million in 2011 (2010 — $0.2 million). Additionally, as part of its Gaming Strategy, the Province of Nova Scotia approved a contribution of $3.1 million to the Department of Health Promotion and Protection in 2011 (2010 — $3.0 million) to fund problem gambling treatment.

Gambling Awareness Foundation Contribution

Video Lottery (VL) retailers in Nova Scotia have agreed, under the terms of their agreements with Atlantic Lottery Corporation Inc. (ALC), to contribute 1.0% of their VL commissions to the Gambling Awareness Foundation of Nova Scotia (formerly the Nova Scotia Gaming Foundation). The Corporation has agreed to contribute an amount equal to all contributions made by the VL retailers. At March 31, 2011 the Corporation had a payable to the Gambling Awareness Foundation in the amount of $46.0 thousand (2010 — $49.0 thousand).

Harness Racing Fund Contribution

The Corporation annually contributes to the Nova Scotia Harness Racing Fund, pursuant to the Nova Scotia Harness Racing Fund Regulations. In 2011, the contribution was $1.0 million. The 2012 approved budget for this item is $1.0 million.

Due to Atlantic Gaming Equipment

This liability represents a portion of ALC debt used in the acquisition of assets operated on behalf of the Corporation. All amounts are payable by ALC and are due on or before April 2013. The debt is based on variable interest rates ranging from 2.58% to 5.13%. The aggregate maturity of long-term debt for the next two years are approximately as follows: 2012 — $7.6 million, and 2013 — $7.6 million. Included in interest expense is $57.0 thousand relating to the debt.

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Schedule 6

Government Business Enterprises (continued)

As at March 31, 2011

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.

Obligations under Capital Lease

The Corporation has two obligations under capital lease, one of which matures in 2012 and the other which continues through to 2015. The discount rate used is the rate implicit in the lease which is 13.8% for the lease maturing in 2012 and 5.0% for the continuing lease.

At March 31, 2011, the Corporation had long-term obligations under capital lease of $60.0 thousand and current obligations under capital lease of $1.1 million.

The future minimum lease payments are as follows: 2012 — $1.2 million; 2013 — $21.0 thousand, 2014 — $22.0 thousand; 2015 — $22.0 thousand.

Payable to the Province

At March 31, 2011, the Corporation had a payable to the province in the amount of $43.2 million (2010 — $43.1 million).

98

Schedules to the Consolidated Financial Statements

Schedule 7

Tangible Capital Assets

As at March 31, 2011

($ thousands)

	2011																		2010
	Land			Buildings and Land Improve- ments			Machinery Computers and Equipment			Vehicles and Ferries			Roads, Bridges and Highways			Total			Total
Costs
Opening Costs		724,227			4,009,578			1,221,415			127,046			1,636,929			7,719,195			6,973,662
Transfers		620			(2,341	)		(72	)		493			4,298			2,998			2,247
Additions		29,025			275,793			104,098			18,825			274,507			702,248			772,741
Disposals		(128	)		(3,576	)		(29,738	)		(7,672	)		(827	)		(41,941	)		(29,455	)
Closing Costs		753,744			4,279,454			1,295,703			138,692			1,914,907			8,382,500			7,719,195
Accumulated Amortization
Opening Accumulated Amortization		—			(1,588,303	)		(870,518	)		(83,337	)		(654,318	)		(3,196,476	)		(2,903,282	)
Transfers		—			(1,635	)		(354	)		(107	)		(511	)		(2,607	)		(22	)
Disposals		—			2,642			28,017			7,537			602			38,798			19,406
Amortization Expense		—			(129,332	)		(80,334	)		(11,994	)		(123,631	)		(345,291	)		(312,578	)
Closing Accumulated Amortization		—			(1,716,628	)		(923,189	)		(87,901	)		(777,858	)		(3,505,576	)		(3,196,476	)
Net Book Value		753,744			2,562,826			372,514			50,791			1,137,049			4,876,924			4,522,719
Opening Balance		724,227			2,421,275			350,897			43,709			982,611			4,522,719			4,070,380
Closing Balance		753,744			2,562,826			372,514			50,791			1,137,049			4,876,924			4,522,719
Increase in Net Book Value		29,517			141,551			21,617			7,082			154,438			354,205			452,339

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Schedule 7

Tangible Capital Assets (continued)

As at March 31, 2011

($ thousands)

Amortization is calculated on a declining balance basis for most assets of the General Revenue Fund. The amortization percentages of the more common tangible capital assets are as follows:

Buildings and Land Improvements	5-30 per cent
Machinery, Computers and Equipment	15-50 per cent
Vehicles and Ferries	15-35 per cent
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 the other governmental units. The estimated useful lives of the more common tangible capital assets are as follows:

Buildings (including Leasehold Improvements)
and Land Improvements	2-50 years
Machinery, Computers and Equipment	2-50 years
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 Nova Scotia Housing Development Corporation. These assets are amortized using the straight-line method. The net book value of these assets is $355,400 (2010 — $328,618).

Included in the closing costs of the various classes as at March 31, 2011, are costs for assets under construction, which have not yet been amortized. These costs relate to buildings and land improvements of $232,946, machinery, computers and equipment of $47,125, vehicles and ferries of $7,681, and roads, bridges and highways of $109, 209.

Capital leases are included in the various classes as at March 31, 2011 as follows: buildings and land improvements (cost of $472,226, accumulated amortization of $259,522), machinery, computers and equipment (cost of $40,088, accumulated amortization of $37,272, and vehicles and ferries (cost of $16,875, accumulated amortization of $8,462).

100

Schedules to the Consolidated Financial Statements

Schedule 8

Direct Guarantees

As at March 31, 2011

($ thousands)

	Authorized 2011		Utilized 2011			Utilized 2010
	(as restated)
Bank Loans
Nova Scotia Business Inc.		1,050		300			2,900
Industrial Development Act		64,300		36,534			37,379
Department of Education — Student Loan Program		22,364		22,364			30,940
Total Bank Loan Guarantees		87,714		59,198			71,219
Mortgages
Housing Development Corporation Act		9,573		9,573			10,602
Housing Development Corporation Act — CMHC Indemnities		103,000		103,000			111,911
Provincial Finance Act		83		83			90
Total Mortgage Guarantees		112,656		112,656			122,603
Other Guarantees
Equity Tax Credit Act — Community Economic Development Investment Funds		—		—			251
Total Other Guarantees		—		—			251
Total Direct Guarantees		200,370		171,854			194,073
Less: Provision for Guarantee Payout
Industrial Development Act				(2,350	)		(500	)
Nova Scotia Business Inc.				(30	)		(2,900	)
Department of Education — Student Loan Program				(4,776	)		(6,801	)
Housing Development Corporation Act				(9,888	)		(13,802	)
				(17,044	)		(24,003	)
Less: Provision for Student Debt Reduction Program
Department of Education — Student Loan Program				(4,422	)		(4,845	)
Net Direct Guarantees (not provided for in these statements)				150,388			165,225

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Schedule 9

Segment Reporting

As at March 31, 2011

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 2011 and 2010 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 Government

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

102

Schedules to the Consolidated Financial Statements

Schedule 9

Segment Reporting

For the fiscal year ended March 31, 2011

($ thousands)

	Health						Education						Infrastructure & Public Works						Social Services
	2011			2010			2011			2010			2011			2010			2011			2010
Revenue
Provincial Sources
Tax Revenue		—			—			—			—			—			—			—			—
Other Provincial Revenue		304,221			295,641			405,568			403,112			22,299			24,686			115,342			90,418
Net Income from GBEs		—			—			—			—			10,220			12,208			—			—
Investment Income		2,295			1,338			1,651			735			—			—			20,957			10,099
Federal Sources		59,082			56,392			26,675			42,000			79,253			87,122			68,766			72,502
Total Revenues		365,598			353,371			433,894			445,847			111,772			124,016			205,065			173,019
Expenses
Grants and Subsidies		1,523,736			1,363,447			226,096			596,671			343			604			683,865			714,939
Salaries and Employee Benefits		1,532,751			1,553,605			1,115,081			1,101,804			125,197			122,804			145,407			126,802
Operating Goods and Services		651,070			651,615			326,254			298,169			108,910			101,612			105,208			111,635
Professional Services		79,223			93,734			14,979			14,533			24,483			23,915			5,510			3,142
Amortization		96,221			88,617			70,166			64,368			145,808			129,009			18,394			15,923
Debt Servicing Costs		14,231			13,628			4,843			4,721			—			—			34,578			31,907
Other		491			—			41,796			43,534			—			—			—			—
Total Expenses		3,897,723			3,764,646			1,799,215			2,123,800			404,741			377,944			992,962			1,004,348
Segment Result		(3,532,125	)		(3,411,275	)		(1,365,321	)		(1,677,953	)		(292,969	)		(253,928	)		(787,897	)		(831,329	)

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Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 9

Segment Reporting

For the fiscal year ended March 31, 2011

($ thousands)

	Natural Resources & Economic Development						Other Government				Eliminations						Total
	2011			2010			2011		2010		2011			2010			2011		2010
	(as restated)
Revenue
Provincial Sources
Tax Revenue		490			568			4,676,668		4,059,941		—			—			4,677,158		4,060,509
Other Provincial Revenue		166,796			173,051			580,969		510,605		(123,305	)		(123,199	)		1,471,890		1,374,314
Net Income from GBEs		—			—			346,999		346,523		—			—			357,219		358,731
Investment Income		11,716			11,394			176,019		144,164		(30,897	)		(17,831	)		181,741		149,899
Federal Sources		144,949			120,347			2,830,151		2,908,946		—			—			3,208,876		3,287,309
Total Revenues		323,951			305,360			8,610,806		7,970,179		(154,202	)		(141,030	)		9,896,884		9,230,762
Expenses
Grants and Subsidies		279,070			248,742			342,047		281,097		(66,866	)		(55,477	)		2,988,291		3,150,023
Salaries and Employee Benefits		171,813			166,800			305,405		395,381		(36,578	)		(48,788	)		3,359,076		3,418,408
Operating Goods and Services		118,251			127,121			112,960		123,003		(4,238	)		(3,720	)		1,418,415		1,409,435
Professional Services		24,936			21,144			141,871		140,394		(669	)		(735	)		290,333		296,127
Amortization		6,115			5,442			8,587		9,219		—			—			345,291		312,578
Debt Servicing Costs		8,098			6,387			843,004		822,649		(43,350	)		(29,617	)		861,404		849,675
Other		24,303			20,818			884		1,371		(2,501	)		(2,693	)		64,973		63,030
Total Expenses		632,586			596,454			1,754,758		1,773,114		(154,202	)		(141,030	)		9,327,783		9,499,276
Segment Result		(308,635	)		(291,094	)		6,856,048		6,197,065		—			—			569,101		(268,514	)

104

Schedules to the Consolidated Financial Statements

Schedule 10

Government Reporting Entity

As at March 31, 2011

The government reporting entity is comprised of the province’s departments and public service units (General Revenue 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

Gambling Awareness Foundation of 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 Government Acadian Bursary Program Fund

Nova Scotia Harness Racing Fund

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

105

Public Accounts Volume 1 — Consolidated Financial Statements

Schedule 10

Government Reporting Entity (continued)

As at March 31, 2011

Governmental Units (continued)

(Consolidation Method)

Sherbrooke Restoration Commission

South Shore District Health Authority

South Shore Regional School Board

South West Nova District Health Authority

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 Nova Scotia Community College

(3) — This includes all refresh funds related to P3 schools.

106