Port of Sydney Booklet -Community Update 2018

2017/2018 Community Update

“Cruise has “29% of our visitation is fromprovided the cruise ship passengers, plus theyrevenue needed make purchases in our gift shop.to allow us to The combination of traffic fromexpand into a cruise and Celtic Colours haswinter tourism allowed us to expand our seasonmarket. We will until the end of October.”now be offering - Rodney Chaisson, Highlandsnowshoeing and Village Museumother experiences.Our goal is to “Without cruise, we would closebecome a year- on Labour Day. Now, we are openround product in until the middle of October. As atwo years.” result, approximately 10 staff get– Sandra two extra months of work.”MacDonald, – Mary Pat Mombourquette,Goat Island, Cape Breton Miners MuseumEskasoni“75-80% of my business comes from cruise shippassengers. This year, my business grew by 250%with the increase in cruise ships. The second berthand more cruise lines coming to our Port meansopportunity for small businesses to flourish andexpand.”– Barbara Moseychuck, Madi G’s Custom Tours1

2017/2018 Community UpdateTABLE OF CONTENTS 3 4 Message from the Chair of the Board 5 Message from the CEO 6 Our Mission/Values 7 Audited Financial Report 8 Statement of Financial Position 9 Statement of Operation 10 Unaudited State of Operation 13 Budget: April 1, 2018 - March 31, 2019 14 Cruise at a Glance Second Berth 2

Message from the Chair of the Board The current board of directors were appointed as of April 1,2017. Our compliment of directors consists of a highly skilled group ofprofessionals from our community. We are; together with input frommanagement, developing the strategic direction for the Port of SydneyDevelopment Corporation. We have also participated in governancetraining and finalized a contract with the Atlantic Canada OpportunitiesAgency for continuation of services of the Chief Executive Officer. There is a great anticipation for the coming year with boththe construction of the second berth and the anticipation of anothersuccessful cruise season. The Port of Sydney holds great potential. Ourboard is pleased to play a role in growing Cape Breton through portdevelopment.Regards,Jerry GillisChair of the Board Board of DirectorsLeft to Right - John Anderson - Treasurer, CPA • Jerry Gillis - Chair of the board, Business and Commerce •John Strasser, Marketing • Lucia MacIsaac - Secretary, Professional Engineering • Marlene Usher, CPA - Portof Sydney CEO • Owen Fitzgerald, Business and Commerce • Alyssia Jeddore, Eskasoni First Nation • RichardPaul, Membertou First Nation • John Khattar - Vice Chair of the Board, Lawyer • *Missing - Elizabeth Brunet,Business and Commerce3

Message from the CEO The past year has been a busy time at the Port of Sydney with overall positive results; however not without challenge. In July we lost the services of our Cruise Manager following a motor vehicle accident. Our dearest and most competent professional and friend, Bernadette MacNeil; continues to recover. In fiscal March 31, 2017 operations before amortization were highly successful, exceeding budgeted surplus by almost $160,000. This is due to a very successful cruise season which is a result of a sustainable strategy. Our dedicated staff make it their business to ensure that our cruise port offering is pleasing to the passengers and competitive for cruise line operators. Fiscal March 31, 2018 will also be highly successful, exceeding budgeted surplus by a healthy margin. Operations for cruise are presented in more detail in this report. Also included is financialinformation, future budgets and operational information. This report was developed and designedto give the reader up to date information about the Port of Sydney Development Corporation. Wewelcome your feedback.Thank you, StaffMarlene Usher, CPAChief Executive Officer Staff Left to Right - Jackie Long, Robbie McLeod, Dan Young and Diane McKay Left to Right (back row) - Paul Carrigan, Jonathan Keigan, Peter Hill Left to Right (front row) - Nicole MacAulay, Kathleen MacLeod,Samantha Ash, Bernadette MacNeil, Marlene Usher 4

Our Mission To support, promote and develop the harbour and related infrastructure with a view of growing the economy of the Cape Breton Regional Municipality. In its advocacy role, the Port of Sydney Development Corporation will strive to create the conditions for success with the aim of optimizing the Port’s economic development prospects. The PSDC fulfills its mission through the following responsibilities: To manage and operate the Port of To foster a healthy relationship with all Sydney in the Cape Breton Regional levels of government as well as other key Municipality, Nova Scotia including the stakeholders; Sydney marine Terminal; To maintain a close working relationship To develop, build or acquire with Indigenous partners; infrastructure needed for the operation, promotion or economic development of To actively market the advantages of the Port of Sydney and/or its facilities; using Sydney as A Port of Call: To advocate for and assist private To promote business development and enterprise to grow the Port; investments in the Port of Sydney and related businesses; and To efficiently and effectively manage and administer personnel and To provide an effective and robust infrastructure assets under its care; communications and outreach plan for the Port of Sydney.Our Values Values clarify what we believe in, what we stand for, and how these beliefs are translated into action when we are conducting business and dealing with emplyees, clients, and stakeholders. Board members and employees at the PSDC will be guided by these values including, but not limited to: Honesty and Integrity Quality Inclusiveness Respect5

Audited Financial ReportINDEPENDENT AUDITORS’ REPORTON THE SUMMARY FINANCIAL STATEMENTSTo The Board of DirectorsPort of Sydney Development CorporationThe accompanying summary financial statements, which comprise the statement of financialposition as of March 31, 2017, and the statement of operations for the year then ended, are derivedfrom the audited financial statements of Port of Sydney Development Corporation for the yearended March 31, 2017. We expressed an unmodified audit opinion on those financial statementsin our report dated October 13, 2017. Those financial statements, and the summary financialstatements, do not reflect the effects of events that occurred subsequent to the date of our reporton those financial statements.The summary financial statements do not contain all the disclosures required by Canadian PublicSector Accounting Standards. Reading the summary financial statements, therefore, is not asubstitute for reading the audited financial statements of Port of Sydney Development Corporation.Management’s Responsibility for the Summary Financial StatementsManagement is responsible for the preparation of a summary of the audited financial statements inaccordance with Canadian Public Sector Accounting Standards.Auditors’ ResponsibilityOur responsibility is to express an opinion on the summary financial statements based on ourprocedures, which were conducted in accordance with Canadian Auditing Standard (CAS) 810,“Engagements to Report on Summary Financial Statements”.OpinionIn our opinion, the summary financial statements derived from the audited financial statementsof Port of Sydney Development Corporation for the year ended March 31, 2017 are a fair summary,in all material respects, of those financial statements, in accordance with Canadian Public SectorAccounting Standards.Chartered Professional AccountantsLicensed Public AccountantsSydney, CanadaJanuary 31, 2018 6

PORT OF SYDNEY DEVELOPMENT CORPORATIONStatement of Financial PositionMarch 31, 2017, with comparative figures for 2016FINANCIAL ASSETS 2017 2016 Cash Accounts receivable $ 310,244 $ 431,836 Harmonized sales tax receivable 284,863 163,901 14,673 10,087FINANCIAL LIABILITIES $ 609,780 $ 605,824 Accounts payable and accrued liabilities Payable to Cape Breton Regional Municipality $ 140,039 $ 114,655 Deferred revenue 1,487,950 1,510,271 Obligations under capital leases 3,964 9,464 - 155,815NET FINANCIAL LIABILITIES 1,631,953 1,790,205NON-FINANCIAL ASSETS (1,022,173) (1,184,381) Tangible capital assets Deposits and prepaid expenses 5,902,174 6,267,408 31,638 28,037ACCUMULATED SURPLUS 5,933,812 6,295,445For financial statements please visit: www.portofsydney.ca $ 4,911,639 $ 5,111,064On behalf of the Board: Director7

PORT OF SYDNEY DEVELOPMENT CORPORATION Statement of Operation Year ended March 31, 2017, with comparative figures for 2016REVENUES Budget 2017 2016 Passenger tax Actual Actual Wharfage and berthage $ 598,133 Government funding 491,797 $ 660,304 $ 629,488 Storage and rental 420,000 532,961 528,562 Security 147,576 503,349 698,980 Events 93,592 163,016 149,398 Craft market 61,950 140,864 129,027 Sundry 52,155 78,228 61,515 22,161 72,503 79,772EXPENSES 12,137 11,244 Salaries and benefits 1,887,364 Business development 2,163,362 2,287,986 Utilities 686,481 Repairs and maintenance 420,000 738,136 686,548 Security 187,082 364,338 567,231 Advertising 169,494 179,018 198,020 Dues and fees 165,022 164,929 Professional fees 87,858 133,332 153,423 Insurance 51,368 102,619 Travel 43,885 97,959 Cruise activites 41,750 67,926 22,845 Miscellaneous 57,360 54,339 59,636 Office and general 35,800 52,252 52,647 Interest and bank charges 35,498 36,793 60,687 Interest on long-term debt 31,100 35,173 36,599 Events 14,160 25,458 Bad debts 15,607 7,366 3,600 20,058Net operating income before the undernoted - 9,660 5,974 4,123Other income (expenses) 7,263 3,037 16,476 Amortization - 1,935 11,681 Loss on disposal of tangible capital assets 1,990,619 Restructuring transaction 1,872,699 - 172,743 2,160,228ANNUAL SURPLUS (DEFICIT) 14,665ACCUMULATED SURPLUS, BEGINNING OF YEAR (365,643) 127,758 - (6,525)ACCUMULATED SURPLUS, END OF YEAR - (408,035) - (372,168) - (199,425) 14,665 5,111,064 5,391,341 4,983,306 $ 4,911,639 5,111,064 - $ 5,111,064 8

PORT OF SYDNEY DEVELOPMENT CORPORATIONInternal Unaudited State of OperationYear to date Apr. 1, 2017-Jan. 31, 2018 REVENUES $399,861 Wharfage & Berthage $89,010 Event Revenue Storage & Rental $238,027 Passenger Tax $944,540 Craft Market Revenue Security Revenue $90,389 Trust fund revenue $138,366 Government Funding $203,537 Total $66,366 EXPENSES $2,170,096 Wages & Salaries Professional Development & Fees $575,682 Advertising & Promotions $113,884 Business Development Trust fund expenditures $63,458 Office Rent $29,715 On site operating $203,537 Office & Admin Total $5,288 Surplus Before Amortization $625,291 Amortization (NON CASH) $44,752 Net Profit $1,661,607 TRUST FUND EXPENDITURES $508,489 Legal Consulting $297,843 Rail study $210,646 CDF Monitoring Total 01/31/18 $5,569 $25,974 $87,300 $84,694 $203,5379

PORT OF SYDNEY DEVELOPMENT CORPORATION Budget: April 1, 2018 - March 31, 2019REVENUES $475,529Wharfage & Berthage $112,950Event Revenue $258,818Storage & Rental $936,880Passenger TaxCraft Market Revenue $83,780Security Revenue $160,212Business Development Harbour $120,000Government FundingTotal $35,000 $2,183,169EXPENSESWages & Salaries $846,816Professional Development & Fees $106,591Advertising & PromotionsBusiness Development $54,680Event Expense $216,455Office RentOn site operating $54,085Capital Repairs $36,000Office & Admin $643,351Total $100,000 $91,385Surplus Before Amortization $2,149,363Amortization (NON CASH)Net Loss $33,806 $350,000 $316,194 10

“We have specific “I wouldn’t have a businessstaff assigned to downtown without the cruise shipwork when we have industry. I absolutely love meetingtours booked for the passengers from all over thecruise passengers. world. ”Some of these staff - Louise Chisling,include elders fromour community. owner of Chislingo’sTherefore, themore tours we have “We see a large spike during cruisebooked, the more ship days in Sydney, it has beenopportunity there is tremendous for our business. Wefor employment.” offer a seafood special and double– Jeff Ward, our staff for quick service”Membertou - Allison, Manager of Governor’sHeritage Park Pub & Eatery, Sydney11

“Most visitors that come to Sydney on the cruise ships seem quite impressed with our local market and vendors. They often comment on how they haven’t seen a market quite like ours on their travels and they love the fact that they get to meet the local artisans and makers at the market. I think that this is something that we should celebrate and be proud of as Cape Bretoners.” - Jill Franklin, Owner of Jill’s Chocolates“The growth we have seen incruise has been amazing. We havecome a long way as an industry.We’ll always need to adapt andwork together to move forward.Cruise is a significant part of mybusinesses and I look forward toseeing what the future will bring.”- Bruce Meloney, Owner of theCape Breton T Shirt Companyand Reiker by the Shoe Tree “The Fortress of Louisbourg National Historic Site is a popular attraction for cruise ship visitors docking in Sydney. In the last seven years, the Fortress had an average of 4681 visitors from cruise ships (Sydney and Louisbourg docks combined). In 2017, we received 6031 cruise ship guests, our highest number ever.” - Monique Cantin, Parks Canada 12

Cruise at a Glance - 2017 Cruise Season40% Increase More than $39.2 Million 52% increase 168,269in passengers in economic benefits in ships Passengers to Cape Breton Island and crew docked and crew in Sydney 82 shipsbetween Mayand November In the last 10 years Cruise passengers has increased 172% The numbers of ships that comes to Sydney has grown by 182% An estimated 81 million in direct spending has been generated for our economy since 2012.13

Highlights of Second BerthCruise 2018: # of Ships: 85 Passengers: 137,622 Crew: 59,325 Double Ship Days: 8 Triple Ship Days: 3 Inaugural Calls: AIDAvita, Albatros, Silver Wind, Royal PrincessThe second berth at the Port of Sydney is a The 2018 cruise ship schedule20 million dollar project cost shared by all expects 85 vessels however the 2nd3 levels of government. berth will not be available during that time. It is anticipated that theTenders for the project have gone out, and 2019 cruise schedule will include thethe closing date is March 29 2018. second berth.Two new mooring dolphins will be installed.This will allow for larger ships to be dockedat the original berth. 14

2017/2018 Community Update