Public - Private Partnerships by zyc19183

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									Public - Private Partnerships Infrastructure
                        Building
                                   2008 - 09 Annual Report
                                                                                                                                                                                                                                                                PPP Canada - 2008-09 Annual Report page 1




                 Mandate: Developing the Canadian market for public-private partnerships              Table of Contents
                                     for the supply of public infrastructure in the public interest
                                                                                                          Chair’s Message ........................................................................................................................................ 2

                                                                                                          CEO Message............................................................................................................................................. 4

                                                                                                          Context for Creating PPP Canada ............................................................................................................ 6
                                                                                                           The Canadian P3 Market........................................................................................................................... 7

                                                                                                          The Basics of P3s ...................................................................................................................................... 9
                                                                                                           The Importance of Developing the P3 Marketplace .................................................................................11

                                                                                                          Corporate Objectives .............................................................................................................................. 12
                                                                                                           Developing Capacity................................................................................................................................ 12
                                                                                                           Engaging Stakeholders ........................................................................................................................... 14
                                                                                                           Addressing Immediate Priorities .............................................................................................................. 15

                                                                                                          Challenges, Opportunities and Setting Priorities................................................................................. 16

                                                                                                          Corporate Governance............................................................................................................................ 18
                                                                                                           Corporate Profile ..................................................................................................................................... 18
                                                                                                           Board of Directors.................................................................................................................................... 18
                                                                                                           Board Mandate and Governance Role .................................................................................................... 19

                                                                                                          Management’s Discussion & Analysis .................................................................................................. 20
                                                                                                           Financial Overview .................................................................................................................................. 20
                                                                                                           Management’s Responsibility for Financial Statements .......................................................................... 21
                                                                                                           Auditors Report ........................................................................................................................................ 22
                                                                                                           Financial Statements ............................................................................................................................... 23
                                                                                                           Notes to Financial Statements................................................................................................................. 26
                                                                                                           Risk Management.................................................................................................................................... 34
                                                                                                             Corporate Risks: .................................................................................................................................... 34
                                                                                                             P3 Canada Fund Risks:......................................................................................................................... 35




                                            100 Queen Street, Suite 630, Ottawa, Ontario K1P 1J9
                                                 Tel: (613) 947-9480 Fax: (613) 947-2289
                                                          email: info@p3canada.ca




PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                               PPP Canada - 2008-09 Annual Report page 3




                                Chair’s Message
                                In January 2009, I was honoured to            As we look forward, the new Board           section of Canadian private sector         The development of high-performing
                                accept the position of Chair of PPP           of Directors at PPP Canada will focus       expertise in fields such as engineering,   public infrastructure is an important
                                Canada’s Board of Directors. The new          on the immediate priority of building       banking, finance and the law. Their        endeavor for current and future
                                Crown corporation offers a tremendous         the Corporation. From the Board’s           senior executive experience is             Canadians. On behalf of the Board
                                opportunity to bring together important       perspective, this phase will involve us     matched by an entrepreneurial passion      of Directors at PPP Canada, we look
                                public sector infrastructure initiatives      overseeing the operational direction        well-suited to a new Corporation such as   forward to working towards achieving the
                                and private sector expertise. Our             proposed by management and providing        PPP Canada. Their respective successes     Corporation’s mandate while maintaining
                                corporate mission is to further develop       them with strategic insight and guidance.   in leadership will provide the necessary   a high degree of accountability, an
                                the Canadian P3 market, with the aim of       Moreover, it will be the Board’s duty       skills and reputation that PPP Canada      outstanding corporate reputation, and
                                increasing the value Canadians receive        to challenge itself and management          requires during this formative phase of    the highest level of public confidence.
                                from their public infrastructure through      to develop a best-in-class corporate        the organization.
                                better performance.                           governance system. That system
                                                                              includes the policies, procedures,
                                With 2008-09 being the year that PPP
                                                                              internal controls, and risk management
                                Canada was created, I want to take this                                                                                              Greg Melchin
                                                                              measures necessary to instill confidence
                                opportunity to thank the interim Board of                                                                                            Chair of the Board
                                                                              in our stakeholders and will enable the
                                Directors, Mr. William Ross, Mr. Michael
                                                                              Corporation to deliver the greatest value
                                Carter and Ms. Benita Warmbold. This
                                                                              to the public and to taxpayers.
                                team of Directors did exemplary work in
                                seeing the organization through its initial   The new members of the Board of
                                days. I commend them for their effort and     Directors bring a tremendous amount of
                                proficiency in launching the organization.    business acumen to our organization.
                                                                              They possess an impressive cross-




                     “A tremendous opportunity to bring together important public sector
                            infrastructure initiatives and private sector expertise.”




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                                                                                                                                                                                                              PPP Canada - 2008-09 Annual Report page 5




                                CEO Message
                                Public infrastructure touches the lives    partnerships (P3s) are an approach to       I have been impressed by the skills and      propositions to the public sector. This
                                of Canadians in real ways every day        the procurement of public infrastructure    knowledge in both the public and private     includes further analyzing the impact of
                                – the water we drink, the roads            that delivers value for taxpayers in the    sectors in regards to the opportunities      the significant changes we have seen in
                                and public transit we take to work and     public interest when executed in the        and challenges presented by P3s.             Canadian and global capital markets.
                                the many other elements of public          right circumstances and in the right way.   I am grateful for the generosity shown
                                                                                                                                                                    I would like to thank Mr. Michael Carter
                                infrastructure that exist all around us.   PPP Canada’s mandate is to develop          to PPP Canada and to me as they
                                                                                                                                                                    for his work over the past year in the role
                                Public infrastructure is a conduit for     the use of public-private partnerships      shared their experience and expertise.
                                                                                                                                                                    of interim Executive Vice-President. Mike
                                the public goods and services              to deliver public infrastructure to         I am committed to working in the public
                                                                                                                                                                    diligently oversaw the incorporation of
                                essential to the prosperity, health and    Canadians. It is an honour for me to        interest to develop P3s that deliver value
                                                                                                                                                                    PPP Canada and its initial establishment.
                                security of Canadians.                     be the Corporation’s first CEO.             to Canadian taxpayers.
                                                                                                                                                                    I would also like to thank the PPP
                                Each year billions of dollars are          PPP Canada is a new organization –          In the coming year, PPP Canada will be       Canada staff for joining forces with me on
                                invested by all orders of government       one that is learning and growing. Since     mapping out its approach to fulfilling its   this exciting endeavour.
                                to design, build, operate and maintain     assuming my responsibilities on February    mandate and building on its capacity
                                                                                                                                                                    The members of the Board bring
                                public infrastructure. Public-private      16, 2009, I have had the opportunity to     to be effective. PPP Canada is already
                                                                                                                                                                    impressive credentials and backgrounds
                                                                           speak with people from across Canada        working with partners to identify
                                                                                                                                                                    to the Corporation. I look forward to
                                                                           about the role that public-private          investment opportunities for the P3
                                                                                                                                                                    working with them to advance public-
                                                                           partnerships can play in the provision of   Canada Fund. This fund, totaling $1.2
                                                                                                                                                                    private partnerships.
                                                                           public infrastructure.                      billion over five years, is earmarked for
                                                                                                                       non-federal public infrastructure P3s. We
                                                                                                                       will also be working to promote a more
                                                                                                                       systematic federal government approach
                                                                                                                       to its investment in P3s. In addition, we    John McBride
                                                                                                                       will be working with the private sector to   CEO
                                                                                                                       better understand the opportunities and
                                                                                                                       challenges they face in delivering value




                                                                                                                                  “The P3 Canada fund totals $1.2 billion over five years, and
                                                                                                                                    is earmarked for non-federal public infrastructure P3s.”




page 4 PPP Canada - 2008-09 Annual Report
P3
                                                                                                                                                                                                  PPP Canada - 2008-09 Annual Report page 7




                                                                                                                                         “PPP Canada – fostering the development of the P3 market
                                                                                                                                        in Canada, and encouraging consideration of the use of P3s
                                                                                                                                           as an alternative to traditional procurement processes.”

           Context for Creating PPP Canada
                               The P3 marketplace in Canada has             While past P3 successes demonstrated the         Through the development of close
                               experienced a coming of age in               P3 model’s ability to complement traditional     working relationships with partners in
                               the last decade, as more provinces           government infrastructure procurement, no        both the private and public sectors,
                               and municipalities began to identify         consistent federal policy or framework has       PPP Canada will look for opportunities
                               opportunities to implement P3 contracts      yet been developed in Canada to further          where a P3 model can best serve the
                               and recognize the benefits of strategic      enhance the marketplace and identify new         public interest, and work to support the
                               private-public partnerships. At the          P3 opportunities. When new infrastructure        development of a dynamic and efficient
                               federal level, P3s have been used in a       funding was announced in 2007, the               national P3 market.
                               few notable instances to secure public       Canadian government decided to create a
                                                                                                                             The Canadian P3 Market
                               infrastructure. For example, the longest     new P3 office – PPP Canada – to foster the
                               bridge over ice-covered water, the           development of the P3 market in Canada,          To date, Canada’s P3 market has largely
                               Confederation Bridge was completed           and to encourage consideration of the            been driven by the provinces, territories
                               in 1996. The bridge connecting New           use of P3s as an alternative to traditional      and municipalities, who have recognized
                               Brunswick and Prince Edward Island was       procurement processes.                           viable opportunities to implement public-
                               built by Strait Crossing Development,                                                         private partnership solutions. Ontario,
                                                                            Ensuring the availability and longevity of
                               who continues to manage and maintain                                                          Quebec and British Columbia have
                                                                            Canada’s critical infrastructure is a key
                               the structure today. The complexity and                                                       created provincial P3 Crown corporations
                                                                            government priority, and the government
                               cost of designing, building and operating                                                     to manage and promote P3s provincially,       Confederation Bridge
                                                                            allocated $33 billion in 2007. Primarily for
                               the world’s longest bridge of its kind,                                                       while Alberta has embedded a P3
                                                                            projects being undertaken at the provincial,
                               and a desire to shift project risk away                                                       function within its Treasury Board. Others
                                                                            territorial and municipal levels, and by First
                               from taxpayers while providing them                                                           such as Saskatchewan, Nova Scotia
                                                                            Nations, this funding will ensure Canada
                               with a best–value solution led the federal                                                    and Prince Edward Island have created
                                                                            has the roads, water, air and vibrant, healthy
                               government to turn to a P3 solution.                                                          special offices to advise on P3 projects,
                                                                            cities, towns and rural areas it needs to
                                                                                                                             and even provinces with less formal
                                                                            continue to grow and prosper. Of this
                                                                                                                             institutional P3 structures have undertaken
                                                                            $33 billion, $1.2 billion was earmarked for
                                                                                                                             select public-private partnership projects.
                                                                            the P3 Canada Fund.




page 6 PPP Canada - 2008-09 Annual Report
                                            P3
                                                                                                                                   PPP Canada - 2008-09 Annual Report page 9




                                            The Basics of Public - Private Partnerships
                                            P3s are a long-term, performance-           For the public sector, the P3 model
                                            based approach for procuring public         reduces or eliminates certain financial
                                            infrastructure which involves a             risks such as additional costs associated
                                            significant element of private sector       with construction delays or securing
                                            risk and financing.                         long-term maintenance agreements for
                                                                                        the structure. Rather, the private sector
                                            The P3 procurement model is unique
                                                                                        assumes these risks and develops a long-
                                            in that the private sector assumes a
                                                                                        term plan to develop and maintain the
                                            major share of the responsibility for
                                                                                        structure by receiving secured revenue
                                            the delivery and the performance of
                                                                                        throughout the project’s lifetime. Done
                                            the infrastructure – from designing the
                                                                                        right, P3 solutions reduce taxpayers’
                                            concept, architectural and structural
                                                                                        financial burden and exposure to risk while
                                            planning to its long-term maintenance.
                                                                                        creating the infrastructure Canada needs
                                            When applied effectively, the P3 model
                                                                                        in an efficient, cost effective manner.
                                            can provide additional value to taxpayers
                                            by leveraging the right capabilities        In the end, for the taxpayer, the P3
                                            to complete the job on time and on          framework ensures the depth of
                                            budget, allowing for greater integration    expertise to develop new, modern and
                                            of project planning and design and          innovative infrastructure and effective
                                            eliminating major shortfalls around         cost control in order to limit overages.
                                            building, construction and maintenance.     The full advantages of the P3 model
                                            By approaching the project from an          are delivered when the benefits (e.g.
                                            integrated standpoint, a P3 builds in       better design, more timely construction,
                                            greater controls throughout the building    improved operations and maintenance
                                            phase and creates greater accountability    of the infrastructure asset) outweigh the
                                            to ensure the project is designed           higher borrowing costs of private sector
                                            and completed to last throughout the        financing and the transaction costs of
                                            contractual lifetime of the project.        these arrangements.




                                                             “P3s are a long-term, performance-based approach
                                                                     for procuring public infrastructure.”




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                                                                                                                                                                                     PPP Canada - 2008-09 Annual Report page 11
                                                                                                                                                                                    PPP Canada - 2008-09 Annual Report




                                             Anthony Henday Drive, (Edmonton Ring Road) Edmonton, Alberta                           The Importance of Developing
                                                                                                                                    the P3 Marketplace
                                             Alberta Transportation has used a P3 approach to construct the southeast
                                             and northwest sections of Anthony Henday Drive (Edmonton Ring Road) that               In the right circumstances, a P3 provides
                                             will circle the city by 2015. In 2007, the southeast section of the roadway was
                                                                                                                                    greater due diligence and responsibility
                                             completed, on time and on budget by Access Roads Edmonton Ltd. The
                                                                                                                                    to meet project milestones, and allows
                                             agreement to complete the northwest portion by NORTHWESTCONNECT
                                             General Partnership was signed in 2008 at a cost of $1.42 billion, saving              for greater innovation in project planning
                                             taxpayers $240 million compared with the estimated cost of delivery using              and development. As Canada begins to
                                             traditional methods, as demonstrated by a public sector comparator. The P3             undertake the renewal of critical portions
                                             approach will finish the project two years earlier, provide a fixed price, and a 30-
                                                                                                                                    of its infrastructure, the ability to develop
                                             year warranty. The 21-kilometre Northwest Anthony Henday Drive will open in fall
                                                                                                                                    and implement creative, modern solutions
                                             2011, significantly improving transportation in and around Edmonton.
                                                                                                                                    will provide added value to the taxpayer
                                                                                                                                    along with long-term financial stability.
                                             Britannia Water Treatment Facility, Britannia Beach, British Columbia
                                                                                                                                    In many cases, P3s have proven a
                                             For decades, pollution from the Britannia Mine contributed heavily to the con-
                                                                                                                                    beneficial alternative to traditional
                                             taminated marine environment in Howe Sound. In 2006, the provincial govern-
                                             ment announced a P3 project in collaboration with EPCOR to build and operate           procurement processes. P3 projects in
                                             a water treatment facility at the mine to remove heavy metals and acidity from         Canada have not only been completed on
                                             rainwater and runoff prior to reaching the Sound. By using the P3 model, the BC        budget, but also on schedule, mitigating
                                             government was able to save over $10 million in building and operating costs.          taxpayer frustration at construction delays
                                             The partnership negotiations and arrangements were done by Partnerships BC-
                                                                                                                                    and cost overruns. By seeking best-fit
                                             the provincial P3 office.
                                                                                                                                    opportunities to implement P3s, PPP
                                                                                                                                    Canada strives to bring additional value to
                                             Confederation Bridge, Prince Edward Island                                             taxpayers and facilitate the creation of a
                                                                                                                                    more robust P3 marketplace.
                                             The issue of how to connect Prince Edward Island and mainland Canada was
                                             a contentious issue. Many Islanders supported the maintenance of the ferry             The transactional relationship and division
                                             system, while others agreed that a new connection needed to be put into place
                                                                                                                                    of risk associated with the P3 procurement
                                             to allow for more efficient access to the island. After years of debate, in the
                                                                                                                                    process is not suitable for every
                                             late 1980s, the Islanders, by a slim majority, voted to build a bridge that would
                                             span the Northumberland Strait from New Brunswick to PEI. In the mid-1990s,            infrastructure project. Given the financial
                                             Strait Crossing Bridge Limited began construction on the inter-provincial bridge       risk assumed by the private sector and the
                                             connecting Cape Jourimain, New Brunswick and Borden-Carleton, Prince                   long-term nature of contracting, P3s are
                                             Edward Island. The Confederation Bridge is one of the earliest examples of a P3        often best used for large, complex projects
                                             procurement in Canada – by designating risks to private contractors, the federal
                                                                                                                                    where construction and maintenance
                                             government was able to complete the bridge on budget and on schedule. Strait
                                             Crossing will maintain the Confederation Bridge until 2032, when ownership will        schedules are managed – and public risk
                                             revert back to the federal government. As the longest bridge over ice-covered          is mitigated - through the involvement of
                                             water, the Confederation Bridge is an example of the innovation and design             an integrated private sector partner.
                                             leadership stemming from the P3 process.




page 10 PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                          PPP Canada - 2008-09 Annual Report page 13




                                                                                                                                  PPP Canada’s
            Corporate Objectives                                                                                                  Development Chronology

                                Recognizing the growth in the P3 market,         changing environmental priorities and PPP        February 2008

                                PPP Canada was created to fulfill six            Canada’s corporate development.                  •	   PPP	Canada	is	incorporated	as	a	subsidiary	of	
                                                                                                                                       Canada Development Investment Corporation
                                corporate objectives:
                                                                                 As the Corporation’s first year, activities in        under the Canada Business Act
                                1.    Assess P3s at the federal level in         fiscal 2008-2009 focused around creating         •	   Directors	of	CDIC	are	appointed	as	interim	
                                      accordance with criteria established by
                                                                                 the corporation. For PPP Canada, this                 directors of PPP Canada
                                      the Treasury Board
                                                                                 meant adopting a three-pronged strategy,
                                                                                                                                  May 2008
                                2.    Assess the suitability of P3 projects      with both an internal and external focus.
                                      seeking funding from federal                                                                •	   The	Governor-in-Council	declares	PPP	Canada	
                                      infrastructure programs in accordance      1.   Developing capacity                              a Parent Crown Corporation for the purposes of
                                      with criteria established by or pursuant                                                         the Financial Administration Act
                                                                                 2.   Engaging stakeholders
                                      to Treasury Board authorities                                                               •	   The	Governor-in-Council	appoints	three	
                                                                                 3.   Addressing immediate priorities                  Directors of CDIC as Directors of PPP Canada
                                3.    Advise on the execution of P3s at
                                      a federal level                            Developing Capacity                              June 2008
                                4.    Manage the P3 Canada Fund in                                                                •	   The	Governor-in-Council	approves	the	first	
                                                                                 PPP Canada’s first fiscal year focused
                                      accordance with the policies and                                                                 Corporate Plan
                                                                                 on establishing and developing the
                                      authorities established by the Treasury
                                      Board                                      Corporation itself. As a new entity, PPP         December 2008
                                                                                 Canada had to first build its internal           •	   The	Governor-in-Council	approves	the	
                                5.    Negotiate, sign and administer                                                                   Amended Corporate Plan, including terms and
                                                                                 capacity in order to best meet the
                                      agreements to be funded through the                                                              conditions for the P3 Canada Fund
                                                                                 objectives set out for the Corporation.
                                      P3 Canada Fund in accordance with
                                      the policies and authorities established   PPP Canada is now looking ahead to               January 2009
                                      by Treasury Board                          increasing its ability to meet its Corporate     •	   The	Minister	of	Finance,	the	Hon.	Jim	Flaherty,	
                                                                                 Objectives as set out by the Order-in-                announces the appointment of Chair (Mr. Greg
                                6.    Act as a source of expertise and
                                                                                 Council, and delivering on its mandate to             Melchin) and CEO ( Mr. John McBride)
                                      advice on P3 matters
                                                                                 the benefit of Canadian taxpayers.
                                                                                                                                  February 2009
                                As laid out in the 2008 Corporate Plan,
                                                                                                                                  •	   CEO	assumes	duties	and	begins	initiating	
                                PPP Canada has developed a staged
                                                                                                                                       discussions with key industry and provincial
                                implementation plan in accordance with
                                                                                                                                       stakeholders

                                                                                                                                  March 2009
                                                                                                                                  •	   Amended Corporate Plan tabled in Parliament




page 12 PPP Canada - 2008-09 Annual Report
                                                                                                                                                                           PPP Canada - 2008-09 Annual Report   page 15




                                 Having been declared a Parent Crown          level of P3 expertise that exists outside      Addressing Immediate Priorities
                                 Corporation in May 2008, PPP Canada          the federal government, PPP Canada is
                                                                                                                             Following extensive discussions
                                 worked with its interim Board of Directors   establishing close working relationships
                                                                                                                             with the provinces/territories, private
                                 to develop its inaugural Corporate Plan      with market experts, especially the
                                                                                                                             sector stakeholders and other federal
                                 and Amended Corporate Plan, which            provincial P3 offices, to inform the
                                                                                                                             organizations, it was apparent the
                                 received approval from the Governor-         development of the Corporation and
                                                                                                                             financial crisis was creating a significant
                                 in-Council in December 2008. The             refine its position within the industry.
                                                                                                                             roadblock for P3 projects coming to
                                 Amended Corporate Plan included the
                                                                              Engaging Stakeholders                          market to secure adequate private
                                 terms and conditions for the P3 Canada
                                                                                                                             sector financing. In the context of the
                                 Fund – a vehicle that provides initial       As an organization that works with all
                                                                                                                             Extraordinary Financing Framework
                                 funding for P3 projects at a provincial/     orders of government and a variety of
                                                                                                                             announced in Budget 2009, PPP Canada
                                 territorial or municipal level.              private sector partners, PPP Canada
                                                                                                                             worked with Export Development
                                                                              recognized the importance of building
                                 The following month, Minister of                                                            Canada (EDC) to scope capital market
                                                                              strong working relationships with key
                                 Finance Jim Flaherty announced the                                                          challenges facing the P3 market. Recent
                                                                              stakeholders. P3s have existed in
                                 appointments of PPP Canada’s Chair                                                          announcements by EDC regarding surety
                                                                              Canada for many years, with and without
                                 Mr. Greg Melchin, and Chief Executive                                                       and bonding support and co-lending for
                                                                              formal institutional structures in place. As
                                 Officer, Mr. John McBride, both of                                                          trade-enabling projects, to be delivered
                                                                              such, the Corporation felt that in order
                                 whom have extensive public sector                                                           in partnership with private financial
                                                                              to fulfill the corporate mandate outlined
                                 experience. These appointments                                                              institutions, should assist in enabling the
                                                                              above, it was critical to understand fully
                                 formed the foundation of an executive                                                       P3 infrastructure projects to proceed.
                                                                              the dynamics of the market, and build on
                                 team with the breadth and depth of
                                                                              the best practices demonstrated by its
                                 experience to understand the dynamics
                                                                              provincial counterparts.
                                 of public sector procurement and
                                 private sector financing. A first priority   PPP Canada began to engage key
                                 was to engage in meetings with key           stakeholders – the provinces, other
                                 stakeholders (the provinces/territories,     government departments and industry
                                 investment community and government          leaders. Through discussions with
                                 departments) to gather additional insight    these stakeholders, the Corporation
                                 into immediate market-wide priorities.       was able to identify the state of the P3
                                 Given PPP Canada’s mandate to work           market, major challenges and significant
                                 with both the public and private sectors,    opportunities for the Corporation.
                                 the information gathered from industry
                                 stakeholders and others is guiding
                                 the development of the Corporation’s
                                 corporate strategy. Recognizing the




page 14   PPP Canada - 2008-09 Annual Report
                                                                                                                            PPP Canada - 2008-09 Annual Report page 17
                                                                                                                           PPP Canada - 2008-09 Annual Report




            Challenges, Opportunities and Setting Priorities
                                 As set out in its Corporate Objects,        and private sectors. By developing
                                 PPP Canada has a number of ways             and advising on a federal policy
                                 to help both the public and private         framework, PPP Canada can facilitate
                                 sectors navigate the changing market        bringing federal P3 projects to market
                                 landscape. One of its most important        which would further support the overall
                                 instruments is the P3 Canada Fund           growth of Canada’s P3 market. As the
                                 – a $1.2 billion fund designated to         government adopts this policy framework
                                 support the innovative application          to facilitate the implementation of
                                 of P3 procurement across Canada.            P3 projects at a federal level, the P3
                                 As announced in 2007 as part of the         marketplace can further grow and
                                 Building Canada Plan, the fund provides     diversify. The Corporate Objects set out
                                 financial assistance to provinces,          a variety of tasks for the Corporation, and
                                 municipalities and First Nations (on        PPP Canada has developed a staged
                                 reserve or Crown lands) seeking support     implementation approach to address first
                                 for a P3 project. Moving forward with       the immediate priorities and challenges
                                 investments from the P3 Canada Fund         determined by the market and public
                                 over the next fiscal year will be a high    sector and develop the corporate
                                 priority for PPP Canada and its new         knowledge to fulfill its role as a national
                                 Board of Directors.                         P3 centre of excellence.

                                 Changing market conditions also shifted
                                 the dynamic of public and private
                                 sector interaction with respect to the P3
                                 process. In addition to managing the
                                 fund, PPP Canada will work to foster
                                 the growth of a P3 policy framework to
                                 improve interactions between the public




page 16 PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                                   PPP Canada - 2008-09 Annual Report   page 19




                                                                                                                             On May 15, 2009, the following were
                                                                             Board of Directors
                                                                                                                             appointed to the Board of Directors of
                                                                             On February 12, 2008, the following             PPP Canada:
                                                                             CDIC officers and directors were
                                                                                                                             •		   Mr. Jacques Lamarre - former
                                                                             appointed as the interim Board of
            Corporate Governance                                             Directors for PPP Canada:
                                                                                                                                   President and Chief Executive Officer
                                                                                                                                   of SNC-Lavalin Group Inc.

                                                                             •	   Mr. William C. Ross – Mr. Ross holds       •	    Mr. Tony Comper - former President
                                 Corporate Profile
                                                                                  the position of Chair of the Board                                                       federal Minister of Finance and approved
                                                                                                                                   and CEO of BMO Financial Group
                                                                                  for CDIC.                                                                                by the Governor-in-Council. The Board
                                 PPP Canada is a Parent Crown                                                                •	    Ms. Carol Pennycook - law partner at    approves the five-year Corporate Plan
                                 Corporation for the purposes of             •	   Mr. Michael F.K. Carter – Mr. Carter             Davies Ward Phillips & Vineberg
                                                                                                                                                                           and the Annual Report, both of which
                                 Part X, (except section 90) of the               resigned from the Board on June 25,
                                                                                  2008 to assume the role of temporary       On May 29, 2009, there was an                 are tabled in Parliament, and meets
                                 Financial Administration Act and reports
                                                                                  Executive Vice-President of PPP            additional appointment to the Board of        regularly to review PPP Canada’s
                                 to Parliament through the Minister
                                                                                  Canada. He resigned as Executive           Directors of PPP Canada:                      overall operations, receive committee
                                 of Finance.                                      Vice-President on March 31st, 2009.                                                      reports, and discuss the Corporation’s
                                                                                                                             •	    Mr. Peter Armstrong - founder,
                                 PPP Canada submits a five-year              •	   Ms. Benita M. Warmbold −                                                                 performance against objectives.
                                                                                                                                   Executive Chair and Chief Executive
                                 Corporate Plan each year to Treasury             Ms. Warmbold is also a director of the           Officer of the Armstrong Group          Moreover, the Board of Directors’
                                 Board which is due 60 days before                CDIC. She resigned from the Board
                                                                                  effective January 29th, 2009.              The Directors come with a remarkable          responsibilities include:
                                 the beginning of the fiscal year. Given
                                 PPP Canada’s preliminary stages of                                                          depth and breadth of knowledge and            •	   Overseeing	PPP	Canada,	including	the	
                                                                             The interim Board of Directors oversaw
                                 development, the Corporation was                                                            experience, whether from the public                management of its resources (such as
                                                                             the development of PPP Canada’s
                                                                                                                             sector or as leaders in their respective           the P3 Canada Fund) and its personnel
                                 granted an extension for 2009/2010, and     inaugural Corporate Plan. On June 8,
                                 will submit its 2009/2010 Corporate Plan                                                    industries. Their direction will ensure       •	   Developing	certain	by-laws	for	the	
                                                                             2008, the Governor-in-Council approved
                                 in the fall of 2009. As it gains capacity                                                   the Corporation can fulfill its mandate            conduct of its affairs
                                                                             PPP Canada’s Corporate Plan, thus
                                 and implements its permanent Board                                                          to make strategic recommendations on
                                                                             allowing the Corporation to move forward                                                      •	   Ensuring	accountability	for	the	prudent	
                                 of Directors, the Corporation expects                                                       policy development and provide best-               use of financial resources
                                                                             with its initial staffing and administration.
                                 to submit its 2010/2011 Corporate Plan                                                      practice advice based on their corporate
                                                                             On January 19, 2009, the federal Minister                                                     •	   Making	recommendations	regarding	
                                 to meet the usual schedule outlined for                                                     and public-sector experience.
                                                                                                                                                                                infrastructure projects under the P3
                                 Crown corporations.                         of Finance appointed Mr. Gregory
                                                                                                                             Board Mandate and Governance Role                  Canada Fund
                                                                             Melchin as Chair of the Board of
                                  All financial statements included in the   Directors for PPP Canada. The Minister                                                        •	   Overseeing	issues	of	risk	management	
                                                                                                                             PPP Canada’s Board of Directors
                                  Annual Reports are audited by KPMG                                                                                                            for the Corporation
                                                                             also appointed Mr. John McBride as              provides leadership and guidance to the
                                  and the Auditor General of Canada.         Chief Executive Officer of PPP Canada,          Corporation’s management team, and            In keeping with modern governance
                                                                             and ex-officio member of the Board of           determines the Corporation’s strategic        arrangements for Crown corporations,
                                                                             Directors, effective February 16, 2009.         direction. The Board is comprised of a        the Board of Directors will establish
                                                                                                                             Chair, the Chief Executive Officer, and up    committees in 2009-10 to support the
                                                                                                                             to seven other Directors appointed by the     Board and its work.




page 18   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                            PPP Canada - 2008-09 Annual Report   page 21




            Management’s Discussion & Analysis                                                                               Management’s Responsibility for Financial Statements

                                 Financial Overview                                                                                     PPP Canada Inc. management is responsible for the integrity and objectivity of the
                                                                                                                                        financial statements and related note disclosures. The financial statements have been
                                 The operational figures reported in this document represent figures for the period from
                                                                                                                                        prepared in accordance with Canadian generally accepted accounting principles and,
                                 incorporation on February 12, 2008, to March 31, 2009.
                                                                                                                                        consequently, include amounts which are based on the best estimates and judgment
                                 In this period, $3.43 million of the $5 million available (Section 178 of the Budget and               of management.
                                 Economic Statement Implementation Act, 2007) for operating and capital purposes
                                                                                                                                        In carrying out its responsibilities, management maintains appropriate financial systems
                                 of the Corporation was advanced in 2008-09. PPP Canada earned $18,098 of interest
                                                                                                                                        and related internal controls to provide reasonable assurance that financial information
                                 investing the advanced appropriation and utilized $1,887,891 for corporate expenses
                                                                                                                                        is reliable, assets are safeguarded, transactions are properly authorized, resources
                                 and start up costs, and $43,988 for the acquisition of equipment. The $1,516,221
                                                                                                                                        are managed efficiently and economically, and operations are carried out effectively
                                 in cash and cash equivalents at year end will satisfy the accounts payable and
                                                                                                                                        in the attainment of corporate objectives, and that transactions are in accordance
                                 accrued liabilities and fund additional start up costs in 2009-10 including leasehold
                                                                                                                                        with the Canada Business Corporations Act and regulations, Part X of the Financial
                                 improvements, computers and office furniture for permanent office space.
                                                                                                                                        Administration Act and regulations, any directives issued by the Governor in Council to
                                 PPP Canada will operate within the financial framework as set out by the organization’s                the corporation, and the articles and by-laws of the corporation.
                                 corporate governance policies. These corporate governance policies will be set forth
                                 by the Corporation’s new Board of Directors in 2009-10.                                                The Board of Directors oversees management’s responsibilities for financial reporting,
                                                                                                                                        internal control systems, and the controls. The Board of Directors has approved the
                                 The proposed federal funding for PPP Canada is outlined in the table below.                            financial statements.

                                                                                                                                        KPMG LLP and the Auditor General of Canada have audited the financial statements.
                                                                                                                                        The auditors have full access to, and meet periodically with, the Board of Directors
                                 Funding Profile
                                                                                                                                        to discuss their audit and related matters and report on their audit to the Minister of
                                 ($000)                                                                                                 Finance.
                                                       Actual    Planned      Planned     Planned     Planned     Planned
                                 Vote                 2008-09     2009-10     2010-11     2011-12     2012-13     2013-14
                                 Statutory             $3,430
                                 Operating                        $10,100     $15,400      $12,500    $12,500       $7,000
                                                                                                                                        _____________________________ ______________________________
                                 P3 Canada Fund                  $165,400    $242,500 $275,000 $275,000 $252,900
                                                                                                                                        John McBride                       Gregory Smith, CA
                                                                                                                                        Chief Executive Officer            Chief Financial Officer
                                                                                                                                        PPP Canada Inc.                    PPP Canada Inc.



                                                                                                                                        May 29, 2009




page 20   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                           PPP Canada - 2008-09 Annual Report   page 23




             Auditors’ Report                                                                                                   Financial Statements
                                                                                                                                         Balance Sheet
                                 To the Minister of Finance

                                 We have audited the balance sheet of PPP Canada Inc. as at March 31, 2009 and the                       As at March 31, 2009
                                 statements of operations, comprehensive income and retained earnings and cash flows                     ASSETS
                                 from the date of incorporation of February 12, 2008 to March 31, 2009. These financial
                                 statements are the responsibility of the corporation’s management. Our responsibility is                Current assets
                                 to express an opinion on these financial statements based on our audit.                                 Cash and cash equivalents [note 4]                                     $      1,516,221

                                 We conducted our audit in accordance with Canadian generally accepted                                   Non-current assets
                                 auditing standards. Those standards require that we plan and perform an audit to                        Equipment [note 6]                                                               36,657
                                 obtain reasonable assurance whether the financial statements are free of material                       Total assets                                                           $      1,552,878

                                 misstatement. An audit includes examining, on a test basis, evidence supporting the
                                                                                                                                         LIABILITIES AND SHAREHOLDER’S EQUITY
                                 amounts and disclosures in the financial statements. An audit also includes assessing
                                 the accounting principles used and significant estimates made by management, as
                                                                                                                                         Current liabilities
                                 well as evaluating the overall financial statement presentation.
                                                                                                                                         Accounts payable and accrued liabilities                               $        298,176
                                 In our opinion, these financial statements present fairly, in all material respects, the                Total current liabilities                                                       298,176
                                 financial position of the corporation as at March 31, 2009 and the results of its operations
                                 and its cash flows from the date of incorporation of February 12, 2008 to March 31, 2009                Employee future benefits [note 7]                                                 48,158
                                 in accordance with Canadian generally accepted accounting principles.                                   Deferred capital funding [note 8]                                                 36,657

                                 Further, in our opinion, the transactions of the corporation that have come to our notice               Shareholder’s equity
                                 during our audit of the financial statements have, in all significant respects, been in                 Share capital [note 11]                                                               1
                                 accordance with the Canada Business Corporations Act and regulations, Part X of the                     Retained earnings                                                             1,169,886
                                 Financial Administration Act and regulations, any directives issued by the Governor in                  Total shareholder’s equity                                                    1,169,887
                                 Council to the corporation, and the articles and by-laws of the corporation.
                                                                                                                                         Total liabilities and shareholder’s equity                             $      1,552,878

                                                                                                                                         Contingent liabilities [note 14]

                                 _____________________________ ______________________________                                            The accompanying notes are an integral part of these financial statements.

                                 Sylvain Ricard, CA                   KPMG LLP                                                           Approved by the Board:

                                 Assistant Auditor General            Chartered Accountants
                                 for the Auditor General of Canada    Licensed Public Accountants
                                 Ottawa, Canada                       Ottawa, Canada
                                                                                                                                         Chair, Board of Directors                    Director
                                 May 29, 2009                         May 29, 2009




page 22   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                               PPP Canada - 2008-09 Annual Report   page 25




                                Statement of Operations, Comprehensive                                                     Statement of Cash Flows
                                Income and Retained Earnings

                                From date of incorporation of February 12, 2008 to March 31, 2009                          From date of incorporation of February 12, 2008 to March 31, 2009

                                                                                                                           Cash flows provided by (used in) operating activities
                                EXPENSES                                                                                       Interest income received                                             $          18,098
                                Professional and consulting fees                                      $      1,526,487         Cash used for corporate expenses and start up costs                        (1,887,891)
                                Salaries and benefits                                                          222,005         Cash received from appropriations [note 13]                                 3,386,013
                                Management fees [note 10]                                                      208,800                                                                                     1,516,220
                                Administrative and other                                                       173,742     Cash flows provided by (used in) investing activities
                                Corporate communication                                                         60,584         Acquisition of equipment                                                       (43,988)
                                Directors fees                                                                  39,354
                                Amortization                                                                     7,331     Cash flows provided by financing activities
                                Interest and bank charges                                                        3,253         Issuance of common share                                                               1
                                                                                                             2,241,556         Parliamentary appropriations for capital funding [note 8]                       43,988
                                REVENUE
                                Interest income                                                                 18,098     Increase in cash and cash equivalents                                           1,516,221


                                Net results of operations before Parliamentary appropriations                (2,223,458)   Cash and cash equivalents, beginning of year                                               –
                                Parliamentary appropriations [note 13]                                       3,386,013
                                Amortization of deferred capital funding [note 8]                                7,331     Cash and cash equivalents, end of year [note 4]                          $      1,516,221
                                Net results of operations, comprehensive income
                                and retained earnings, end of year                                    $      1,169,886     The accompanying notes are an integral part of these financial statements.


                                The accompanying notes are an integral part of these financial statements.




page 24   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                                                   PPP Canada - 2008-09 Annual Report   page 27




             Notes to Financial Statements                                                                                           The following are the significant accounting policies:

                                 From date of incorporation of February 12, 2008 to March 31, 2009                                   a) Use of estimates and assumptions

                                                                                                                                     The preparation of financial statements in accordance with GAAP requires
                                 1.    CORPORATE MANDATE AND AUTHORITY
                                                                                                                                     management to make estimates and assumptions. These estimates and assumptions
                                 On February 12, 2008, PPP Canada Inc. (“P3C”) was incorporated pursuant to the                      affect the reported amounts of assets, liabilities, comprehensive income and related
                                 Canada Business Corporations Act. One share was issued to Canada Development                        disclosures. Key areas where management has made estimates and assumptions
                                 Investment Corporation. On May 8, 2008, the Governor-in-Council declared P3C a                      include those related to the fair value of financial instruments, useful life of equipment,
                                 parent Crown corporation for the purposes of Part X, except section 90, of the                      and the present value of employee future benefits. Where actual results differ from
                                 Financial Administration Act.                                                                       these estimates and assumptions, the impact will be recorded in future periods.

                                 P3C was designed to spearhead the Government of Canada’s efforts with respect                       b) Financial instruments
                                 to Public-private partnerships (P3s). Within P3C the government established the
                                 P3 Canada Fund to fund the delivery of infrastructure investments through public-                   P3C currently classifies its financial assets as held for trading. Financial liabilities are
                                 private partnerships.                                                                               classified as other financial liabilities. The classification is determined by P3C at initial
                                                                                                                                     recognition and depends on the purpose for which the financial assets were acquired or
                                 P3C’s objectives as outlined in its articles of incorporation include:                              liabilities were incurred. All financial instruments are recognized initially at fair value. The
                                 •		   Assess	P3s	at	the	federal	level	in	accordance	with	criteria	established	by	                   fair value of financial instruments on initial recognition is based on the transaction price.
                                       the Treasury Board;                                                                           The transaction price represents the fair value of the consideration given or received.
                                                                                                                                     Subsequent measurement is dependent on the classification selected by management.
                                 •	    Assess	the	suitability	of	P3	projects	seeking	funding	from	federal	infrastructure	programs	
                                       in accordance with criteria established by or pursuant to Treasury
                                       Board authorities;
                                                                                                                                       Classification      Accounting treatment
                                 •	    Advice	on	the	execution	of	P3s	at	the	federal	level;
                                                                                                                                       Held for            Cash and cash equivalents are classified as Held for Trading.
                                 •	    Manage	the	P3	Canada	Fund	in	accordance	with	the	policies	and	authorities	established	
                                                                                                                                       Trading (HFT)
                                       by the Treasury Board;                                                                                              Cash and cash equivalents are measured at fair value. Gains and
                                                                                                                                                           losses arising from changes in the fair value are recorded in net
                                 •	    Negotiate,	sign	and	administer	agreements	to	be	funded	through	the	P3	Canada	Fund	in	                               results of operations before Parliamentary appropriations in the
                                       accordance with the policies and authorities established by the Treasury Board; and                                 period in which they arise.

                                 •	    Act	as	a	source	of	expertise	and	advice	on	P3	matters.                                          Other               Accounts payable and accrued liabilities are classified as Other
                                                                                                                                       Financial           Financial Liabilities.
                                 2.    SIGNIFICANT ACCOUNTING POLICIES
                                                                                                                                       Liabilities         Other Financial Liabilities are non-derivative financial liabilities which
                                 Basis of presentation                                                                                                     have not been designated at fair value.

                                 The financial statements have been prepared in accordance with Canadian generally                                         Subsequent to initial recognition, they are measured at amortized
                                 accepted accounting principles (“GAAP”). The significant accounting policies used in                                      cost using the effective interest method. Any gains, losses or interest
                                                                                                                                                           expense are recorded in net results of operations before Parliamentary
                                 the preparation of these financial statements are summarized on the following pages
                                                                                                                                                           appropriations depending on the nature of the financial liability that
                                 and conform in all material respects to GAAP.
                                                                                                                                                           gave rise to the gain, loss or expense.




page 26   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                                  PPP Canada - 2008-09 Annual Report   page 29




                                c) Equipment                                                                                 f) Start-up costs

                                Equipment is recorded at cost less accumulated amortization. Amortization is                 Start-up costs include fees paid to professional services firms as part of the
                                provided for over the estimated useful lives of the assets using the following annual        establishment of P3C’s incorporation, business plan and other one-time start-up
                                bases and periods:                                                                           activities. Start-up costs have been expensed.

                                Asset                                                       Basis                  Period    g) Parliamentary appropriations
                                Computer hardware                                     Straight-line                3 years
                                                                                                                             Parliamentary appropriations for operating purposes are recognized in the Statement
                                Computer software                                     Straight-line                3 years
                                                                                                                             of Operations, Comprehensive Income and Retained Earnings when received and any
                                Useful lives are assessed annually and revisions to the useful life are made as required.    excess is unrestricted to be spent on future operations.

                                Amortization commences when the asset is put into use and ceases when it no longer           Parliamentary appropriations used for equipment are recorded as deferred capital
                                provides any further economic benefit to P3C or when it is no longer in service.             funding and amortized on the same basis and over the same periods as the related
                                                                                                                             equipment. The amortization of the deferred capital funding is recorded in the
                                Equipment is reviewed for impairment whenever events or changes in circumstances
                                                                                                                             Statement of Operations, Comprehensive Income and Retained Earnings.
                                indicate that the carrying amount of an asset may not be recoverable. Recoverability
                                is measured by a comparison of the carrying amount to the estimated undiscounted
                                                                                                                             3.   FUTURE ACCOUNTING CHANGES
                                cash flows expected to be generated by the asset. If the carrying amount of the asset
                                exceeds its estimated future cash flows, an impairment charge is recognized by the           International Financial Reporting Standards (“IFRS”)

                                amount by which the carrying amount of the asset exceeds the fair value of the asset.        On February 13, 2008, the Canadian Institute of Chartered Accountants (“CICA”)
                                                                                                                             confirmed that use of International Financial Reporting Standards (“IFRS”) will be
                                d) Interest income
                                                                                                                             required in 2011 for publicly accountable enterprises. IFRS will replace Canada’s
                                Interest income earned on cash and cash equivalents is recognized in net results of          current generally accepted accounting principles for publicly accountable entities
                                operations before Parliamentary appropriation when it is measurable and has been earned.     that are responsible to large or diverse groups of stakeholders. P3C will adopt IFRS
                                                                                                                             commencing on April 1, 2011, with comparatives for the year commencing April
                                e) Employee future benefits
                                                                                                                             1, 2010. P3C has commenced its initial assessment of the impact to its financial
                                Employees are entitled to severance benefits, as provided for under labour contracts         statements of adopting IFRS.
                                and conditions of employment. The cost of these benefits is accrued as the employees
                                render the services necessary to earn them. Management determined the accrued                4.   CASH AND CASH EQUIVALENTS
                                benefit obligation using a method based upon assumptions and its best estimates.             Cash and cash equivalents consist of cash of $316,403 and cash equivalents of
                                These benefits represent an obligation of P3C that entails settlement by future payments.    $1,199,818. Cash equivalents are comprised of only highly liquid investments, such as
                                                                                                                             money market funds and term deposits, with original maturities at the date of purchase
                                                                                                                             of three months or less.




page 28   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                                       PPP Canada - 2008-09 Annual Report   page 31




                                5.      FAIR VALUE OF FINANCIAL INSTRUMENTS                                                   a) Credit risk
                                Due to their short-term nature, the carrying value of P3C’s financial instruments             Credit risk is the risk of financial loss to P3C if a customer or counterparty to a financial
                                approximates their fair value.                                                                instrument fails to meet its contractual obligations. Such risks arise principally from
                                                                                                                              certain financial assets held by P3C consisting of cash and cash equivalents. The
                                6.      EQUIPMENT
                                                                                                                              maximum exposure to credit risk of P3C at March 31, 2009 is the carrying value of
                                                                                 Cost    Accumulated            Net book      these assets.
                                                                                         amortization               value
                                Computer hardware                             $32,078            $5,346             $26,732   P3C manages its credit risk surrounding cash and cash equivalents by dealing solely
                                Computer software                              11,910             1,985               9,925   with reputable banks and financial institutions, and utilizing an investment policy to
                                Total                                         $43,988            $7,331             $36,657   guide their investment decisions. P3C invests surplus funds to earn investment income
                                                                                                                              with the objective of maintaining safety of principal and providing adequate liquidity to
                                                                                                                              meet operating cash flow requirements.
                                7.      EMPLOYEE FUTURE BENEFITS
                                                                                                                              b) Market risk
                                P3C has determined that the fair value of the severance accrual at March 31, 2009 is
                                                                                                                              Market risk is the risk that changes in market prices, such as interest rates, will affect
                                $48,158 which approximates the carrying amount. The fair value has been determined
                                                                                                                              P3C’s income or the value of its holdings of financial instruments. The objective
                                using a discounted cash flow analysis with an appropriate discount factor, which at
                                                                                                                              of market risk management is to control market risk exposures within acceptable
                                March 31, 2009 was determined to be 7.25%. The severance accrual is expected to be
                                                                                                                              parameters while optimizing the return on risk.
                                settled in 2020.
                                                                                                                              Interest rate risk is the risk that the fair value of future cash flows of a financial
                                8.      DEFERRED CAPITAL FUNDING                                                              instrument will fluctuate because of changes in the market interest rates.
                                Parliamentary appropriations for equipment are recorded as deferred capital funding
                                                                                                                              Financial assets and financial liabilities with variable interest rates expose P3C to cash
                                and amortized on the same basis and over the same periods as the related equipment.
                                                                                                                              flow interest rate risk. P3C’s cash and cash equivalents include short-term, highly liquid
                                From date of incorporation of February 12, 2008 to March 31, 2009, P3C received
                                                                                                                              investments that earn interest at market rates. P3C does not have any debt instruments
                                $43,988 in deferred capital funding from the Government of Canada pursuant to Section
                                                                                                                              outstanding with fixed or variable interest rates at March 31, 2009. It is management’s
                                178 of the Budget and Economic Statement Implementation Act, 2007 and amortized
                                                                                                                              opinion that P3C is not exposed to any significant interest rate risk.
                                $7,331 in the Statement of Operations, Comprehensive Income and Retained Earnings.


                                9.      FINANCIAL RISK MANAGEMENT

                                P3C has exposure to the following risks from its use of financial instruments: credit risk,
                                market risk and liquidity risk.

                                The Board of Directors ensures that P3C has identified its major risks and ensures that
                                management monitors and controls them.




page 30   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                                      PPP Canada - 2008-09 Annual Report   page 33




                                c) Liquidity risk                                                                                 11. SHARE CAPITAL

                                Liquidity risk is the risk that P3C will not be able to meet its financial obligations as they    The authorized share capital of P3C is unlimited common shares at no par value.
                                become due. P3C is economically dependant on appropriations that are received from                As of March 31, 2009, one common share has been issued and fully paid at $1.
                                the Government of Canada.
                                                                                                                                  12. CAPITAL MANAGEMENT
                                P3C manages liquidity risk by continually monitoring actual and forecasted cash flows
                                from operations and anticipated investing and financing activities to ensure, as far as           P3C defines its capital as its share capital and retained earnings, collectively
                                possible, that it will always have sufficient liquidity to meet its liabilities when due, under   “shareholder’s equity”.
                                both normal and stressed conditions, without incurring unacceptable losses or risking             P3C’s objective when managing capital is to ensure it is able to continue as a
                                damage to P3C’s reputation. P3C’s objective is to accurately estimate the operating               going concern by maintaining sufficient long-term equity and ensuring adequate
                                costs for the year in order to manage within the approved Parliamentary appropriations.           working capital.
                                All of P3C’s financial liabilities have contractual maturities of less than 365 days.             P3C’s objectives for managing capital from date of incorporation of February 12, 2008
                                                                                                                                  to March 31, 2009 were met and P3C did not change any of its objectives, policies or
                                10. RELATED PARTY TRANSACTIONS                                                                    processes during the period.
                                P3C is related, in terms of common ownership, to all Government of Canada
                                                                                                                                  P3C is not exposed to any externally imposed capital requirements.
                                departments, agencies and Crown corporations. P3C enters into transactions with
                                government entities in the normal course of business and on normal trade terms
                                                                                                                                  13. PARLIAMENTARY APPROPRIATIONS
                                applicable to all individuals and enterprises. The following table summarizes
                                the impact of the significant related party transactions for the period from date of              From date of incorporation of February 12, 2008 to March 31, 2009, P3C received
                                incorporation of February 12, 2008 to March 31, 2009 on total expenses and the                    $3,386,013 in appropriations from the Government of Canada for operating
                                amounts due to (from) those related parties at the end of the year. The transactions are          purposes pursuant to Section 178 of the Budget and Economic Statement
                                measured at the exchange amount, which is the amount of consideration established                 Implementation Act, 2007.
                                and agreed to by the related parties.
                                                                                                                                  14. CONTINGENT LIABILITIES
                                                                                                                   Payable
                                                                                                                                  P3C may, from time to time, be involved in legal proceedings, claims, and litigation that
                                Related party and nature of service provided              Expense               (Receivable)
                                                                                                                                  arise in the normal course of business. In the event that any such claims or litigation
                                Canada Development Investment Corporation
                                                                                                                                  are resolved against P3C, such outcomes or resolutions could have a material effect
                                Management Fees                                           $208,800                   $16,800
                                                                                                                                  on the business, financial condition, or results of operations of P3C. At March 31, 2009
                                Total                                                     $208,800                   $16,800
                                                                                                                                  there are no outstanding claims.




page 32   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                                     PPP Canada - 2008-09 Annual Report   page 35




                                 Risk Management
                                 Corporate risk is an inherent part of PPP Canada’s business from an operational                P3 Canada Fund Risks:
                                 and financial standpoint. As the Corporation continues to build a strong foundation
                                                                                                                                Infrastructure Project Timely and Cost-effective Completion – each project is subject
                                 of management, policies, and governance practices in 2009-10, the organization’s
                                                                                                                                to construction related risks that may affect the timely and cost-effective completion
                                 management team will develop, in consultation with the new Board of Directors, a
                                                                                                                                of a project.
                                 comprehensive enterprise risk management program.
                                                                                                                                Fairness and Transparency of the Project Approval Process – the transparency of the
                                 Risk management within PPP Canada is a shared process between the Corporation’s
                                                                                                                                project assessment and approval process may always be subject to scrutiny by various
                                 management team and the Board of Directors. The Board will ensure that a formal
                                                                                                                                parties for various reasons. For this reason, the fairness and transparency of the Fund’s
                                 risk management program is developed, maintained, effective, and reviewed on a
                                                                                                                                project approval process will remain a constant risk factor. Applicant challenges to PPP
                                 regular basis. The management team will ensure that effective structures, policies, and
                                                                                                                                Canada’s project assessments may also cause undue delays in projects.
                                 procedures are incorporated into the risk management program and implemented.
                                                                                                                                Recruitment of Qualified Personnel – attracting qualified and skilled personnel in the
                                 Below are the relevant PPP Canada Corporate and Fund risks that have been
                                                                                                                                areas of engineering, procurement, and project assessment in the P3 marketplace,
                                 identified to date. As PPP Canada evolves and becomes more active in pursuing its
                                                                                                                                and in the infrastructure sector generally, will be challenging and thus presents a risk
                                 Corporate and Fund objectives it is reasonable to expect that the Corporation’s risk
                                                                                                                                to the organization.
                                 profile will change.
                                                                                                                                Recipients’ and/or Proponents’ Capacities – those who receive support from the P3
                                 Corporate Risks:
                                                                                                                                Canada Fund may lack P3 procurement expertise. This presents risks in relation to
                                 Staffing – this risk is related to providing additional management capacity to lead and        successful project completion.
                                 operate PPP Canada as the organization continues to build. PPP Canada is addressing
                                                                                                                                Recipients’ Compliance with Funding Agreements – this risk is related to recipients of
                                 this risk by preparing a staffing strategy for inclusion in the 2009/10 Corporate Plan and
                                                                                                                                P3 Canada Fund support not remaining compliant with all aspects
                                 through the placement of recruitment ads in major Canadian city newspapers.
                                                                                                                                of the funding agreement entered into with PPP Canada.
                                 Credit Markets – this risk is related general credit availability and credit spreads in
                                 the market, and the extent to which credit risks will constrain the market for P3 private
                                 financing. PPP Canada will assess credit risk for projects in which it invests. It will also
                                 maintain a continued understanding of the evolution of credit markets for P3s.

                                 Effective and Expeditious Decision Making – this risk is related to how quickly decisions
                                 are made with respect to assessing various infrastructure project opportunities.

                                 PPP Canada will address this risk by incorporating a clear decision-making architecture
                                 and process. This will allow for more effective and expeditious decision making for the
                                 parties involved.




page 34   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                                            PPP Canada - 2008-09 Annual Report   page 37




                   Appendix A: Board of Directors




                   Greg Melchin                                        Jacques Lamarre                                   Carol Pennycook                                     Tony Comper

                   Mr. Melchin was the member of the Legislative       From 1996 to 2009, Jacques Lamarre was            Carol Pennycook is a partner in the Toronto         Tony Comper, former President and CEO of BMO
                   Assembly of Alberta for Calgary-North West from     the President and Chief Executive Officer of      office of the law firm Davies Ward Phillips &       Financial group, currently serves as a Director
                   1997 to March 2008. While in the Legislature, he    SNC-Lavalin Group Inc., a Canadian-based          Vineberg LLP, where she practises law with          of a number of corporations, including Spectra
                   held a number of Ministerial positions, including   global engineering and construction company.      an emphasis on debt financing, corporate            Energy Corporation, the Canadian Institute for
                   Minister of Seniors and Community Supports,         Mr. Lamarre is a founding member and past         reorganizations and private and public negotiated   Advanced Research, and the Canadian Friends of
                   Minister of Energy and Minister of Revenue.         Chairman of the Commonwealth Business             merger transactions—transactions involving the      Simon Wiesenthal Center for Holocaust Studies.
                                                                       Council. He is past Chairman of the Board of      acquisition of both public and private companies    He is also a Trustee of the Canadian Center of
                   Mr. Melchin’s previous experience includes
                                                                       Directors of the Conference Board of Canada,      and public-private partnership transactions.        Architecture and a member of the International
                   serving as Chief Financial Officer for Karl Oil
                                                                       a Director of the Royal Bank of Canada, and a     In addition, she currently serves as a Director     Advisory Committee of the Li Ka Shing Knowledge
                   & Gas/Cumorah Construction, Vice President
                                                                       founding member of the World Economic Forum’s     of Advantage Energy, is on the editorial board      Institute of St. Michael’s Hospital. His past
                   of Finance for Torode Realty Ltd., and Senior
                                                                       Governors for Engineering & Construction.         of the Canadian Corporation Precedents and          experience includes serving as the Chair of the
                   Accountant for Peat, Marwick, Mitchell & Co.,
                                                                       Mr. Lamarre holds a Bachelor of Arts degree       Canadian Securities Law Precedents, and is an       University of Toronto’s Governing Council and
                   Chartered Accountants.
                                                                       and a Bachelor of Arts and Science degree in      adjunct professor at York University’s Osgoode      Chair of the C.D. Howe Institute. Mr. Comper has
                   Mr. Melchin is a graduate of Brigham Young          Civil Engineering from Laval University. He has   Hall Law School. Ms. Pennycook was educated at      degrees from Mount Saint Vincent University, the
                   University, located in Provo, Utah, where he        also completed Harvard University’s Executive     the University of Calgary (B.Sc. and LL.B.), and    University of New Brunswick and Haifa University,
                   obtained a Bachelor of Science Degree, with a       Development Program.                              was admitted to the bar of Alberta in 1981 and      with an honorary law degree from the University of
                   major in Accounting. He received his Chartered                                                        Ontario in 1985. She is a member of a number        Toronto.
                   Accountant designation in 1980 and his Fellow                                                         of professional organizations, including the
                   Chartered Accountant designation in 2004.                                                             Canadian Bar Association, the Law Society of
                                                                                                                         Upper Canada and the Law Society of Alberta.




page 36   PPP Canada - 2008-09 Annual Report
                                                                                                                                                                                PPP Canada - 2008-09 Annual Report   page 39




                   Peter Armstrong                                     N. William C. Ross                                    John McBride

                   Peter Armstrong is the founder, Executive           Bill Ross has a diverse practice in corporate,        Mr. McBride has been the Executive
                   Chairman and Chief Executive Officer of             commercial and not-for-profit law and has             Vice-President of the Canadian International
                   Armstrong Group, owner and operator of Rocky        had experience in virtually all areas of those        Development Agency (CIDA) since 2007.
                   Mountaineer Vacations, Gray Line West and other     practices. His areas of practice include
                                                                                                                             Mr. McBride’s past experience includes serving
                   associated tourism and hospitality businesses.      corporate governance, franchising, acquisitions
                                                                                                                             as President and CEO of the Canadian
                   Since its inception in 1990, the organization has   and mergers, corporate financing, corporate
                                                                                                                             Commercial Corporation and as Assistant Deputy
                   evolved from a small entrepreneurial startup        restructuring, securities, competition, charities
                                                                                                                             Minister and Associate Assistant Deputy Minister
                   company into one of Canada’s leading tourism        (with particular emphasis on health care entities),
                                                                                                                             at Industry Canada.
                   providers, Rocky Mountaineer Vacations. Mr.         employment (including contracts, benefits,
                   Armstrong, a very active resident of Vancouver,     pensions and compensation plans), libel, and          A Commerce graduate of Carleton University in
                   B.C. was born in St. John, New Brunswick and        intellectual property. Bill has been a director       Ottawa, Mr. McBride was awarded the University
                   attended St. George’s School, BCIT’s Hotel          of several Canadian corporations. Among his           Medal in Commerce.
                   Management Program and the University of British    current directorships are Canada Hibernia Holding
                   Columbia. He participates on many industry and      Corporation (Chairman), and Acuity Funds Ltd.,
                   community boards. Mr. Armstrong received his        of which he is also Secretary.
                   ICD.D designation from the Institute of Corporate
                   Directors in October, 2008.




page 38   PPP Canada - 2008-09 Annual Report
page 40   PPP Canada - 2008-09 Annual Report

								
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