Saint John Port Authority Consolidated Financial Statements December 31, 2018 (all amounts in thousands of Canadian dollars) Independent auditor’s report To the Board of Directors of Saint John Port Authority Our opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Saint John Port Authority and its subsidiaries (together, the Authority) as at December 31, 2018 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) . What we have audited The Authority's consolidated financial statements comprise: the consolidated statement of financial position as at December 31, 2018; the consolidated statement of comprehensive income for the year then ended; the consolidated statement of changes in equity for the year then ended; the consolidated statement of cash flows for the year then ended; and the notes to the consolidated financial statements, which include a summary of significant accounting policies. Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Authority in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. PricewaterhouseCoopers LLP 14 King Street, Suite 320, Saint John, New Brunswick, Canada E2L 1G2 T: +1 506 632 1810, F: +1 506 632 8997 “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, 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. In preparing the consolidated financial statements, management is responsible for assessing the Authority's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Authority or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Authority’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Authority’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Authority’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Authority to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Authority to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants Saint John, New Brunswick April 1, 2019 Saint John Port Authority Consolidated Statement of Comprehensive Income For the year ended December 31, 2018 (all amounts in thousands of Canadian dollars) 2018 2017 $ $ Revenue from port operations Rental income 6,168 6,090 Throughput fees 2,541 2,981 Dredging dues (note 14) 5,831 4,711 Harbour dues 2,023 2,200 Passenger fees 1,510 1,399 Wharfage fees 3,712 3,082 Berthage fees 1,119 1,216 Other 962 899 23,866 22,578 Expenses from port operations Dredging costs (note 14) 6,464 5,628 Depreciation of property and equipment (note 7) 3,256 3,418 Salaries, fees, allowances and benefits (note 10) 3,884 3,677 Professional and consulting fees 570 548 Other operating and administrative 2,852 2,807 Maintenance and repair costs 928 843 Grants in lieu of municipal taxes 781 805 Gross revenue charge 831 775 19,566 18,501 Income from port operations 4,300 4,077 Investment income, net of expenses 162 404 Gain on disposal of fixed assets 5 – Net income for the year 4,467 4,481 Other comprehensive (loss) gain Remeasurements of defined benefit plans (note 9) (90) (42) Remeasurements of IFRS 9 investments (note 5) 197 (431) 107 (473) Comprehensive income for the year 4,574 4,008 The accompanying notes are an integral part of these financial statements. Saint John Port Authority Consolidated Statement of Changes in Equity For the year ended December 31, 2018 (all amounts in thousands of Canadian dollars) Contributed Infrastructure Retained capital reserve earnings Total equity $ $ $ $ Balance at January 1, 2017 61,659 7,596 24,220 93,475 Net income for the year – – 4,481 4,481 Other comprehensive loss – – (473) (473) Comprehensive income for the year – – 4,008 4,008 Transfers (note 12) – (7,596) 7,596 – Balance at December 31, 2017 61,659 – 35,824 97,483 Balance at January 1, 2018 61,659 – 35,824 97,483 Net income for the year – – 4,467 4,467 Other comprehensive income – – 107 107 Comprehensive income for the year – – 4,574 4,574 Balance at December 31, 2018 61,659 – 40,398 102,057 The accompanying notes are an integral part of these financial statements. Saint John Port Authority Consolidated Statement of Cash Flows For the year ended December 31, 2018 (all amounts in thousands of Canadian dollars) 2018 2017 $ $ Cash (used in) provided by Operating activities Net income for the year 4,467 4,481 Charges to income not involving cash Depreciation of property and equipment 3,256 3,418 Gain on disposal of property and equipment (5) – 7,718 7,899 Net change in post-employment benefit assets and liabilities (53) (54) Net change in non-cash working capital balances related to operations Decrease (increase) in unbilled dredging revenues (589) 1,098 Decrease in accounts receivable 518 721 Decrease (increase) in prepaid expenses (163) 31 Increase in accounts payable and accrued charges 718 1,145 Increase (decrease) in deferred rental revenues (46) 230 Increase in bulk dredging – 283 Cash provided by operating activities 8,103 11,353 Investing activities Purchase of property and equipment (6,415) (6,651) Proceeds on sale of property and equipment 5 – Government grant