01

rpc SCIENCE amp ENGINEERING

New Brunswicks Provincial Research Organization

Strategic Plan 2010middot2015

RPCs Vision Statement RP( will excel in technological innovation enabling our partners in business and industry to create wealth and high quality employment opportunities

RPCs Mission Statement Our mission is to assist small and medium size enterprises (SMEs) in New Brunswick to develop and apply innovative technology and to provide specialized laboratory-based technical services to clients in New Brunswick and the global marketplace

Strategic Corporate Objectives Strategic corporate objectives have been derived from the mission statement to reflect stakeholder input and the needs of the organization The objectives are targets intended to challenge the organization and provide a basis for planning The strategic plan has been endorsed by RPCs board of directors and defines the direction for the organization

The strategic plan includes a description of the process summary of inputs and results objectives rationale measures and preliminary actions The objectives have been developed to be specific measurable actionable realistic and timely (SMART)

Grow our revenue invest in our business The RP( business model for recovering overheads and

reinvesting consists of two components 1) a modest provincial grant and 2) margin from technical services Growth of our business requires growth in both ofthese components

Specific measures of success have been identified including a 4 annual sales revenue growth target ($11 million by 2015) introduction of new service offerings at the rate of at least one per year and maintenance of our 95 customer satisfaction through our survey process

Balance our innovation activities RPC services can be categorized as

1) Technical services (analyses tests and investigations) 2) Applied research

Technical services have predictable costs and minimal financial risk and if effectively managed can generate positive margins While New Brunswick industry depends on RP( delivering these services locally they also benefit from RPCs applied research capabilities This initiative aims to place more focus on the applied research aspects of our organization

Applied research is a key component of our mandate and consistent with the scope of other provincial research organizations In fact with the tremendous resources focused on basic research RP( has an important role in balancing innovation strategy by delivering applied research services for industry However increasing applied research introduces more risk and more cost to the organization Balancing our innovation activities will involve hiring new employees with new capabilities and is likely to have a moderating affect on our net income

Measures of success include the introduction of at least two new or substantially advanced technology offerings associated speCifically with new capabilities through recruitment and equipment purchases and growing our applied research and consulting services by 15 from the 20092010 billing levels

Open for Business RPC Moncton

RPC is pleased to offer improved service to its Moncton area clients with the opening of RP( Moncton The

facility is located at 150 Lutz Street in the downtown core The Moncton branch carries out accredited microbiological analyses on site and serves as a depot and local point of contact for RPCs wide variety of other services

Grow our human capital RPCs success requires continued investment in our human

capital Demographic trends are sure to increase the significance of human capital RPC will experience a number of retirements in the coming five-year period and will need successors Additionally the strategic objective to balance our innovation activities will require new hires

Our plan calls for growth in human capital Measures of success include 1) increasing the percentage of Masters and PhD level employees from 15 of our workforce to 20 by 2015 2) adding five strategic hires that expand our capabilities over the next five years and 3) reducing our exposure to specific risks identified in our Succession Plan

Revitalize our relationship with our owner There are opportunities for improving the relationship with

our owner as ongoing issues with duplication and reduction of our annual grant indicate there is a lack of awareness regarding RPCs role as New Brunswicks provincial research organization As globalization and productivity challenges place renewed Significance on applied research and technology RPCs role is critically important

Measures of success include 1) restoration of the annual provincial grant 2) recognition of RPCs leading role in provincial innovation and applied research policy 3) 50 increase in sales to provincial government and 4) increased activity and communications with government

Expand RPC awareness and understanding RPC enjoys an excellent relationship with established

customers and attracts new customers annually However to maximize our value and avoid initiatives that duplicate established RPC capabilities we need to create widespread awareness and understanding of the organization This initiative is to improve the awareness and understanding of RPCs role as the provincial research organization

Measures of success include 1) meet the sales revenue increases identified in strategic objective 1 2) retention of top 10 customers 3) zero examples of government duplication through new lab construction and 4) recognition of our 50th anniversary (in 2012)

Influential Opinions RPC Experts in Demand

RPC employees are involved in trade associations standard committees and conferences for both professionall development and promotion purposes Some examples of the past years activities demonstrating RPCs involvement in the science

community are

Presentation in Achievements and Challenges in Mass Spectrometry session at Pittcon in Orlando Florida

bull Presentation on the Belledune pipe failure findings at the ASME Pressure Vessel and Piping Conference in Seattle Washington

bull Presentation on our accredited wildlife forensics service the first in North America at the Society forWildlife Forensic Science conference in Oregon

bull Presentation on radon gas at the Worksafe NB conference in New Brunswick

bull Presentation and participation in a variety of conferences and workshops including Futures NB (Moncton) the UniverSudshyParis Eco Innovation program (Paris) the Research Money conference (Ottawa) and various aquaculture conferences

Participation on a number of boards including the Atlantic Canada Fish Farmers Association Genome Atlantic the Center for Nuclear Energy Research and the N8 Environmental Industries Association

bull Participation in avariety of committees including a NB Community College curriculum committee medical gas standards committee breathing r standards committee and the Council of Academies committee studying the state of science and technology in Canada

~

econoving SETTING THE STANDARD

3

From the Chairman and Executive Director

This past year was highlighted by growth We successfully

grew our organization with the opening of the RPC Moncton

location (see Open for Business p 2) We invested in growth

of our operations with new equipment and facility upgrades

(see Growing Capabilities p4) We grew our service offerings

highlighted by the launch of wwwrpcgeneticscom (see 2010shy

2011 RPC Merit Award p 9) and a fully accredited food chemistry

service There was growth in our people with investments in

training and new hires Finally and most importantly there

was growth in our client base with the number of clients served

climbing to an impressive 939 (see Chart 2 Clients by Location

p7)

New developments in science and the changing demands of

our clients require RPC to be in continuous growth mode as we

enhance expand and optimize our capabilities The achievements

highlighted above are a particularly satisfying collection of

successes some of which are the culmination of several years of

effort

We made excellent progress with our annual plan goals during

the past year (see Annual Plan Goals 2010-2011 p 7) These

goals complement our strategic plan objectives Of particular

strategic importance is our initiative to advance our applied

research efforts Business and industry is continually challenged

to be globally competitive RPC is assisting by providing product

and process development and testing services RPC is working

to promote this service while ensuring people equipment and

processes are in place to deliver the service

RPC continues to support New Brunswick industry and provides

technical services and expertise in support of numerous

sectors including consulting engineering aquaculture energy

manufacturing mining food and beverage pulp and paper

and others We offer an extensive array of accredited analytical

services as well as scientific and engineering expertise to facilitate

the development and optimization of new and improved products

and processes

There is wide spread agreement that research and development

has a significant influence on prosperity however research policy

and funding tends to be focused on technology-push research and

knowledge generation Effective innovation performance requires

a balance of market-led innovation RPCs legislated mandate As

New Brunswicks provincial research organization RPC provides

technical services and market-led research

Every year RPC makes investments in its people equipment and facilities with the objective of

anticipating and responding to client needs Some highlights over the past year Iliiiii~=~iiiiiiI bull Expanded breathing air lab This service area has experienced a consistent I

growth in demand In the past year we expanded the lab and added new

equipment

bull Pilot plant improvements Significant improvements were made in the pilot

plant area including the addition of a new crusher and an X-ray fluorescence

bull

(XRF) instrument that allows for rapid elemental analysis

The RPC genetics service line was launched providing accredited genetic

services This service is promoted through a consumer-friendly website

wwwrpcgeneticscom (see RPC Merit Award p 9)

Accreditations were obtained for nutritional analysis leading to a new service

line in food chemistry

In addition to facilities and equipment RPC invested in

training including safety programs asbestos identification

and participation in relevant conferences

-

4

Strategic Plan 2010middot2015

RPCs Vision Statement RP( will excel in technological innovation enabling our partners in business and industry to create wealth and high quality employment opportunities

RPCs Mission Statement Our mission is to assist small and medium size enterprises (SMEs) in New Brunswick to develop and apply innovative technology and to provide specialized laboratory-based technical services to clients in New Brunswick and the global marketplace

Strategic Corporate Objectives Strategic corporate objectives have been derived from the mission statement to reflect stakeholder input and the needs of the organization The objectives are targets intended to challenge the organization and provide a basis for planning The strategic plan has been endorsed by RPCs board of directors and defines the direction for the organization

The strategic plan includes a description of the process summary of inputs and results objectives rationale measures and preliminary actions The objectives have been developed to be specific measurable actionable realistic and timely (SMART)

Grow our revenue invest in our business The RP( business model for recovering overheads and

reinvesting consists of two components 1) a modest provincial grant and 2) margin from technical services Growth of our business requires growth in both ofthese components

Specific measures of success have been identified including a 4 annual sales revenue growth target ($11 million by 2015) introduction of new service offerings at the rate of at least one per year and maintenance of our 95 customer satisfaction through our survey process

Balance our innovation activities RPC services can be categorized as

1) Technical services (analyses tests and investigations) 2) Applied research

Technical services have predictable costs and minimal financial risk and if effectively managed can generate positive margins While New Brunswick industry depends on RP( delivering these services locally they also benefit from RPCs applied research capabilities This initiative aims to place more focus on the applied research aspects of our organization

Applied research is a key component of our mandate and consistent with the scope of other provincial research organizations In fact with the tremendous resources focused on basic research RP( has an important role in balancing innovation strategy by delivering applied research services for industry However increasing applied research introduces more risk and more cost to the organization Balancing our innovation activities will involve hiring new employees with new capabilities and is likely to have a moderating affect on our net income

Measures of success include the introduction of at least two new or substantially advanced technology offerings associated speCifically with new capabilities through recruitment and equipment purchases and growing our applied research and consulting services by 15 from the 20092010 billing levels

Open for Business RPC Moncton

RPC is pleased to offer improved service to its Moncton area clients with the opening of RP( Moncton The

facility is located at 150 Lutz Street in the downtown core The Moncton branch carries out accredited microbiological analyses on site and serves as a depot and local point of contact for RPCs wide variety of other services

Grow our human capital RPCs success requires continued investment in our human

capital Demographic trends are sure to increase the significance of human capital RPC will experience a number of retirements in the coming five-year period and will need successors Additionally the strategic objective to balance our innovation activities will require new hires

Our plan calls for growth in human capital Measures of success include 1) increasing the percentage of Masters and PhD level employees from 15 of our workforce to 20 by 2015 2) adding five strategic hires that expand our capabilities over the next five years and 3) reducing our exposure to specific risks identified in our Succession Plan

Revitalize our relationship with our owner There are opportunities for improving the relationship with

our owner as ongoing issues with duplication and reduction of our annual grant indicate there is a lack of awareness regarding RPCs role as New Brunswicks provincial research organization As globalization and productivity challenges place renewed Significance on applied research and technology RPCs role is critically important

Measures of success include 1) restoration of the annual provincial grant 2) recognition of RPCs leading role in provincial innovation and applied research policy 3) 50 increase in sales to provincial government and 4) increased activity and communications with government

Expand RPC awareness and understanding RPC enjoys an excellent relationship with established

customers and attracts new customers annually However to maximize our value and avoid initiatives that duplicate established RPC capabilities we need to create widespread awareness and understanding of the organization This initiative is to improve the awareness and understanding of RPCs role as the provincial research organization

Measures of success include 1) meet the sales revenue increases identified in strategic objective 1 2) retention of top 10 customers 3) zero examples of government duplication through new lab construction and 4) recognition of our 50th anniversary (in 2012)

Influential Opinions RPC Experts in Demand

RPC employees are involved in trade associations standard committees and conferences for both professionall development and promotion purposes Some examples of the past years activities demonstrating RPCs involvement in the science

community are

Presentation in Achievements and Challenges in Mass Spectrometry session at Pittcon in Orlando Florida

bull Presentation on the Belledune pipe failure findings at the ASME Pressure Vessel and Piping Conference in Seattle Washington

bull Presentation on our accredited wildlife forensics service the first in North America at the Society forWildlife Forensic Science conference in Oregon

bull Presentation on radon gas at the Worksafe NB conference in New Brunswick

bull Presentation and participation in a variety of conferences and workshops including Futures NB (Moncton) the UniverSudshyParis Eco Innovation program (Paris) the Research Money conference (Ottawa) and various aquaculture conferences

Participation on a number of boards including the Atlantic Canada Fish Farmers Association Genome Atlantic the Center for Nuclear Energy Research and the N8 Environmental Industries Association

bull Participation in avariety of committees including a NB Community College curriculum committee medical gas standards committee breathing r standards committee and the Council of Academies committee studying the state of science and technology in Canada

~

econoving SETTING THE STANDARD

3

From the Chairman and Executive Director

This past year was highlighted by growth We successfully

grew our organization with the opening of the RPC Moncton

location (see Open for Business p 2) We invested in growth

of our operations with new equipment and facility upgrades

(see Growing Capabilities p4) We grew our service offerings

highlighted by the launch of wwwrpcgeneticscom (see 2010shy

2011 RPC Merit Award p 9) and a fully accredited food chemistry

service There was growth in our people with investments in

training and new hires Finally and most importantly there

was growth in our client base with the number of clients served

climbing to an impressive 939 (see Chart 2 Clients by Location

p7)

New developments in science and the changing demands of

our clients require RPC to be in continuous growth mode as we

enhance expand and optimize our capabilities The achievements

highlighted above are a particularly satisfying collection of

successes some of which are the culmination of several years of

effort

We made excellent progress with our annual plan goals during

the past year (see Annual Plan Goals 2010-2011 p 7) These

goals complement our strategic plan objectives Of particular

strategic importance is our initiative to advance our applied

research efforts Business and industry is continually challenged

to be globally competitive RPC is assisting by providing product

and process development and testing services RPC is working

to promote this service while ensuring people equipment and

processes are in place to deliver the service

RPC continues to support New Brunswick industry and provides

technical services and expertise in support of numerous

sectors including consulting engineering aquaculture energy

manufacturing mining food and beverage pulp and paper

and others We offer an extensive array of accredited analytical

services as well as scientific and engineering expertise to facilitate

the development and optimization of new and improved products

and processes

There is wide spread agreement that research and development

has a significant influence on prosperity however research policy

and funding tends to be focused on technology-push research and

knowledge generation Effective innovation performance requires

a balance of market-led innovation RPCs legislated mandate As

New Brunswicks provincial research organization RPC provides

technical services and market-led research

Every year RPC makes investments in its people equipment and facilities with the objective of

anticipating and responding to client needs Some highlights over the past year Iliiiii~=~iiiiiiI bull Expanded breathing air lab This service area has experienced a consistent I

growth in demand In the past year we expanded the lab and added new

equipment

bull Pilot plant improvements Significant improvements were made in the pilot

plant area including the addition of a new crusher and an X-ray fluorescence

bull

(XRF) instrument that allows for rapid elemental analysis

The RPC genetics service line was launched providing accredited genetic

services This service is promoted through a consumer-friendly website

wwwrpcgeneticscom (see RPC Merit Award p 9)

Accreditations were obtained for nutritional analysis leading to a new service

line in food chemistry

In addition to facilities and equipment RPC invested in

training including safety programs asbestos identification

and participation in relevant conferences

-

4

Grow our human capital RPCs success requires continued investment in our human

capital Demographic trends are sure to increase the significance of human capital RPC will experience a number of retirements in the coming five-year period and will need successors Additionally the strategic objective to balance our innovation activities will require new hires

Our plan calls for growth in human capital Measures of success include 1) increasing the percentage of Masters and PhD level employees from 15 of our workforce to 20 by 2015 2) adding five strategic hires that expand our capabilities over the next five years and 3) reducing our exposure to specific risks identified in our Succession Plan

Revitalize our relationship with our owner There are opportunities for improving the relationship with

our owner as ongoing issues with duplication and reduction of our annual grant indicate there is a lack of awareness regarding RPCs role as New Brunswicks provincial research organization As globalization and productivity challenges place renewed Significance on applied research and technology RPCs role is critically important

Measures of success include 1) restoration of the annual provincial grant 2) recognition of RPCs leading role in provincial innovation and applied research policy 3) 50 increase in sales to provincial government and 4) increased activity and communications with government

Expand RPC awareness and understanding RPC enjoys an excellent relationship with established

customers and attracts new customers annually However to maximize our value and avoid initiatives that duplicate established RPC capabilities we need to create widespread awareness and understanding of the organization This initiative is to improve the awareness and understanding of RPCs role as the provincial research organization

Measures of success include 1) meet the sales revenue increases identified in strategic objective 1 2) retention of top 10 customers 3) zero examples of government duplication through new lab construction and 4) recognition of our 50th anniversary (in 2012)

Influential Opinions RPC Experts in Demand

RPC employees are involved in trade associations standard committees and conferences for both professionall development and promotion purposes Some examples of the past years activities demonstrating RPCs involvement in the science

community are

Presentation in Achievements and Challenges in Mass Spectrometry session at Pittcon in Orlando Florida

bull Presentation on the Belledune pipe failure findings at the ASME Pressure Vessel and Piping Conference in Seattle Washington

bull Presentation on our accredited wildlife forensics service the first in North America at the Society forWildlife Forensic Science conference in Oregon

bull Presentation on radon gas at the Worksafe NB conference in New Brunswick

bull Presentation and participation in a variety of conferences and workshops including Futures NB (Moncton) the UniverSudshyParis Eco Innovation program (Paris) the Research Money conference (Ottawa) and various aquaculture conferences

Participation on a number of boards including the Atlantic Canada Fish Farmers Association Genome Atlantic the Center for Nuclear Energy Research and the N8 Environmental Industries Association

bull Participation in avariety of committees including a NB Community College curriculum committee medical gas standards committee breathing r standards committee and the Council of Academies committee studying the state of science and technology in Canada

~

econoving SETTING THE STANDARD

3

From the Chairman and Executive Director

This past year was highlighted by growth We successfully

grew our organization with the opening of the RPC Moncton

location (see Open for Business p 2) We invested in growth

of our operations with new equipment and facility upgrades

(see Growing Capabilities p4) We grew our service offerings

highlighted by the launch of wwwrpcgeneticscom (see 2010shy

2011 RPC Merit Award p 9) and a fully accredited food chemistry

service There was growth in our people with investments in

training and new hires Finally and most importantly there

was growth in our client base with the number of clients served

climbing to an impressive 939 (see Chart 2 Clients by Location

p7)

New developments in science and the changing demands of

our clients require RPC to be in continuous growth mode as we

enhance expand and optimize our capabilities The achievements

highlighted above are a particularly satisfying collection of

successes some of which are the culmination of several years of

effort

We made excellent progress with our annual plan goals during

the past year (see Annual Plan Goals 2010-2011 p 7) These

goals complement our strategic plan objectives Of particular

strategic importance is our initiative to advance our applied

research efforts Business and industry is continually challenged

to be globally competitive RPC is assisting by providing product

and process development and testing services RPC is working

to promote this service while ensuring people equipment and

processes are in place to deliver the service

RPC continues to support New Brunswick industry and provides

technical services and expertise in support of numerous

sectors including consulting engineering aquaculture energy

manufacturing mining food and beverage pulp and paper

and others We offer an extensive array of accredited analytical

services as well as scientific and engineering expertise to facilitate

the development and optimization of new and improved products

and processes

There is wide spread agreement that research and development

has a significant influence on prosperity however research policy

and funding tends to be focused on technology-push research and

knowledge generation Effective innovation performance requires

a balance of market-led innovation RPCs legislated mandate As

New Brunswicks provincial research organization RPC provides

technical services and market-led research

Every year RPC makes investments in its people equipment and facilities with the objective of

anticipating and responding to client needs Some highlights over the past year Iliiiii~=~iiiiiiI bull Expanded breathing air lab This service area has experienced a consistent I

growth in demand In the past year we expanded the lab and added new

equipment

bull Pilot plant improvements Significant improvements were made in the pilot

plant area including the addition of a new crusher and an X-ray fluorescence

bull

(XRF) instrument that allows for rapid elemental analysis

The RPC genetics service line was launched providing accredited genetic

services This service is promoted through a consumer-friendly website

wwwrpcgeneticscom (see RPC Merit Award p 9)

Accreditations were obtained for nutritional analysis leading to a new service

line in food chemistry

In addition to facilities and equipment RPC invested in

training including safety programs asbestos identification

and participation in relevant conferences

-

4

From the Chairman and Executive Director

This past year was highlighted by growth We successfully

grew our organization with the opening of the RPC Moncton

location (see Open for Business p 2) We invested in growth

of our operations with new equipment and facility upgrades

(see Growing Capabilities p4) We grew our service offerings

highlighted by the launch of wwwrpcgeneticscom (see 2010shy

2011 RPC Merit Award p 9) and a fully accredited food chemistry

service There was growth in our people with investments in

training and new hires Finally and most importantly there

was growth in our client base with the number of clients served

climbing to an impressive 939 (see Chart 2 Clients by Location

p7)

New developments in science and the changing demands of

our clients require RPC to be in continuous growth mode as we

enhance expand and optimize our capabilities The achievements

highlighted above are a particularly satisfying collection of

successes some of which are the culmination of several years of

effort

We made excellent progress with our annual plan goals during

the past year (see Annual Plan Goals 2010-2011 p 7) These

goals complement our strategic plan objectives Of particular

strategic importance is our initiative to advance our applied

research efforts Business and industry is continually challenged

to be globally competitive RPC is assisting by providing product

and process development and testing services RPC is working

to promote this service while ensuring people equipment and

processes are in place to deliver the service

RPC continues to support New Brunswick industry and provides

technical services and expertise in support of numerous

sectors including consulting engineering aquaculture energy

manufacturing mining food and beverage pulp and paper

and others We offer an extensive array of accredited analytical

services as well as scientific and engineering expertise to facilitate

the development and optimization of new and improved products

and processes

There is wide spread agreement that research and development

has a significant influence on prosperity however research policy

and funding tends to be focused on technology-push research and

knowledge generation Effective innovation performance requires

a balance of market-led innovation RPCs legislated mandate As

New Brunswicks provincial research organization RPC provides

technical services and market-led research

Every year RPC makes investments in its people equipment and facilities with the objective of

anticipating and responding to client needs Some highlights over the past year Iliiiii~=~iiiiiiI bull Expanded breathing air lab This service area has experienced a consistent I

growth in demand In the past year we expanded the lab and added new

equipment

bull Pilot plant improvements Significant improvements were made in the pilot

plant area including the addition of a new crusher and an X-ray fluorescence

bull

(XRF) instrument that allows for rapid elemental analysis

The RPC genetics service line was launched providing accredited genetic

services This service is promoted through a consumer-friendly website

wwwrpcgeneticscom (see RPC Merit Award p 9)

Accreditations were obtained for nutritional analysis leading to a new service

line in food chemistry

In addition to facilities and equipment RPC invested in

training including safety programs asbestos identification

and participation in relevant conferences

-

4

Innovation The Role of Market-Led Research

Canadas lack luster innovation performance is well documented and analyzed Despite significant increases in research investments Canada continues to struggle with converting research into commercial success

Research and development has two key paths to commercial success technology push (see figure 1) and market-pull (see figure 2)

Figure 1 Technology-push process originates with a curiosity or idea

- Fundamental Discovery Opportunity

Commercial~ri~ or Basic or Application Value

Invention or Problem Research ~i

middot7

Figure 2 Market-pull (or market-led) research originates with a problem or opportunity

shyOpportunity Discovery Commercial

Research Applied

Application or Value or Problem Invention

RPCs mandate as with all provincial research organizations is to facilitate marketshyled research An indicator of market-led research activity is the measure of business expenditure on research and development (BERD) There are few programs designed to increase BERDj in fact the percentage of government financed business research and development dropped from 5 in 1997 to 23 in 2007 1

The Scientific Research and Experimental Development (SRED) tax credit program is the major program targeted at increasing business expenditure on research and development (BERD) As one of the very few programs available speCifically for industry business paSSionately defends SRED However SRED effectiveness is debatable Organization for Economic Co-operation and Development (OECD) data from 2006 indicates Canadas BERD is about 11 of gross domestic product (GDP) substantially lower than the OECD average of nearly 16 of GDp2 The same data highlights that New Brunswicks BERD is only 04 of GDP about a quarter of the Canadian average

Improvement in our innovation performance will require an increase in market-led research and an increase in BERD As RPC emphasizes our applied research services we are advocating effective incentives and increased business expenditure on research and development

RPC has been developing and applying its expertise in ultrasonic flow metering

for more than two decades Initially for application in the nuclear industry our flow metering expertise has been applied in New Brunswicks food processing industry pulp and paper industry and even a geo-thermal heating system

During the past year a significant success was achieved when RPC was awarded a threeshyyear service contract to design manufacture and install a high accuracy (gt99) flow and temperature meter at Bruce Power in Ontario The application required a comprehensive quality assurance regimen and reliability in a harsh environment that includes operating temperatures reaching 260 degrees Celsius Our innovative use of ultrasonic technology included temperature measurements co-located with flow measurements

The project required the design and construction of innovative fixtures and high temperature transducers as well as the development of control software and measurement procedures The calibration process demonstrated accuracy in excess of requirements and the systems were installed to take measurements beginning in March of 2011

RPCs success in providing an innovative solution to meet an industry need is expected to generate additional inquiries for precision temperature and flow measurement This is an excellent example of market-led innovation

_~__

~

5 I

From the Chairman and Executive Director continued

Looking Ahead

At the time of writing the world economy is in a precarious position - on the edge of recovery while on the verge of falling back into recession The outcome will be apparent with time however there are two influential realities we can be confident of 1) government debt concerns will reduce defiCit-spending on infrastructure and 2) global competition and emerging markets will require our businesses to be more competitive more productive and more innovative in order to succeed

RPC began to experience the effects of government spending reductions during the past year as demand softened for some of our analytical services driven by infrastructure spending We expect these conditions to continue for the near future and will be working to expand our customer base and introduce new service offerings to sustain revenues As governments search for cost saving opportunities RPC will continue to highlight our value proposition for the delivery of laboratory services Our high throughput from a diverse customer base results in a cost-effective lab service offering which is attractive to hundreds of clients and could be attractive to governments seeking to reduce costs

RPCs strategic plan was developed to complement the second challenge of global competition Our strategic plan includes the objective to expand capabilities and our client base for applied research services RPC is unique with its focus on market-led research - research which originates from a market need or opportunity As business addresses the challenges of global competition RPCs science and engineering services will be well positioned to assist with capabilities to develop new and improved products and processes

While RPCs financial performance is closely tied to the health of the economy our mandate to deliver applied research services is perhaps of greatest value in challenging economic environments RPC was created in 1962 with the mandate to help business and industry with their science and engineering needs Fifty years later in 2012 we will be recognizing our golden anniversary we look forward to continuing to help businesses overcome challenges by building on their successes as we have done for nearly five decades

Notes of Appreciation

RPCs success is made possible by a number of people and organizations We extend our appreciation to all who have contributed including those identified below

Our employee commitment to quality and customer service is outstanding and consistently reflected in our quality surveys We extend appreciation to our employees relentless contribution to our organizationS success A particularly impressive effort during the past year was the successful integration of the RPC Moncton location (see Open for Business RPC Moncton p 2)

RPCs board of directors volunteer their time to contribute to New Brunswicks provincial research organization We are grateful to these leaders and visionaries for their inSight and guidance (see RPC Board of Directors p 10)

We are thankful for the ongoing productive relationship with agencies committed to advanCing the New Brunswick economy including Business New Brunswick the New Brunswick Innovation Foundation the Industrial Research Assistance Program Natural Science and Engineering Research Council and the Atlantic Canada Opportunities Agency

bull Finally we thank our clients for their ongoing support and loyalty Our client base includes hundreds of New Brunswick businesses and all three levels of government We are aware that globalization provides choices and we are proud and appreciative that clients continue to choose RPC

Kenneth Reeder PEng Chairman

Eric Cook PEng MBA Executive DirectorCEO

J See G overnment-Financed Research and Development in Business Selected Organization for Economic Comiddotoperation and Development Coun tries 1997 and 2007 at httpwwwsciencegc codefa ult asp lang=enampn=DC429832middot1

2 See BERD Intensity at the Provincial Level 1996 2001 and 2006 at httpwwwsciencegccodefa ultasp lang=enampn=DC429832middot1

6

From the Chairman and Executive Director continued

Looking Ahead

At the time of writing the world economy is in a precarious position - on the edge of recovery while on the verge of falling back into recession The outcome will be apparent with time however there are two influential realities we can be confident of 1) government debt concerns will reduce defiCit-spending on infrastructure and 2) global competition and emerging markets will require our businesses to be more competitive more productive and more innovative in order to succeed

RPC began to experience the effects of government spending reductions during the past year as demand softened for some of our analytical services driven by infrastructure spending We expect these conditions to continue for the near future and will be working to expand our customer base and introduce new service offerings to sustain revenues As governments search for cost saving opportunities RPC will continue to highlight our value proposition for the delivery of laboratory services Our high throughput from a diverse customer base results in a cost-effective lab service offering which is attractive to hundreds of clients and could be attractive to governments seeking to reduce costs

RPCs strategic plan was developed to complement the second challenge of global competition Our strategic plan includes the objective to expand capabilities and our client base for applied research services RPC is unique with its focus on market-led research - research which originates from a market need or opportunity As business addresses the challenges of global competition RPCs science and engineering services will be well positioned to assist with capabilities to develop new and improved products and processes

While RPCs financial performance is closely tied to the health of the economy our mandate to deliver applied research services is perhaps of greatest value in challenging economic environments RPC was created in 1962 with the mandate to help business and industry with their science and engineering needs Fifty years later in 2012 we will be recognizing our golden anniversary we look forward to continuing to help businesses overcome challenges by building on their successes as we have done for nearly five decades

Notes of Appreciation

RPCs success is made possible by a number of people and organizations We extend our appreciation to all who have contributed including those identified below

Our employee commitment to quality and customer service is outstanding and consistently reflected in our quality surveys We extend appreciation to our employees relentless contribution to our organizationS success A particularly impressive effort during the past year was the successful integration of the RPC Moncton location (see Open for Business RPC Moncton p 2)

RPCs board of directors volunteer their time to contribute to New Brunswicks provincial research organization We are grateful to these leaders and visionaries for their inSight and guidance (see RPC Board of Directors p 10)

We are thankful for the ongoing productive relationship with agencies committed to advanCing the New Brunswick economy including Business New Brunswick the New Brunswick Innovation Foundation the Industrial Research Assistance Program Natural Science and Engineering Research Council and the Atlantic Canada Opportunities Agency

bull Finally we thank our clients for their ongoing support and loyalty Our client base includes hundreds of New Brunswick businesses and all three levels of government We are aware that globalization provides choices and we are proud and appreciative that clients continue to choose RPC

Kenneth Reeder PEng Chairman

Eric Cook PEng MBA Executive DirectorCEO

J See G overnment-Financed Research and Development in Business Selected Organization for Economic Comiddotoperation and Development Coun tries 1997 and 2007 at httpwwwsciencegc codefa ult asp lang=enampn=DC429832middot1

2 See BERD Intensity at the Provincial Level 1996 2001 and 2006 at httpwwwsciencegccodefa ultasp lang=enampn=DC429832middot1

6

Annual Plan Goals for 2010-2011

RP(sannual plan for 2010-2011 is asubsidiary document to the strategic plan 2010-2015 The annua l plan cross references the strategic corporate objectives and is endorsed by the board of directors The annual plan goa ls and the relevant progress made are reported below

I Produce a profitable result

RPC sales revenue grew to just over $94 million in 2010-2011

(see Consolidated Statement of Operations p 15) Although

this is a minor increase from 2010s $93 million sales revenue

we are pleased with the result when considering the reduction in

federal stimulus spending and the uncertain economy Careful

management of costs allowed for revenue to exceed expenses by

$328038 - the profitable result we were targeting

The Revenue Sources Profile (Chart I) illustrates that the bulk of

RPCs sales revenue (78_8) continues to come from industry The

second largest source is federa l government contracts (11 6)

Revenue from federal sources remains strong driven by RPCs

service contracts to Atomic Energy of Canada Limited for the

Point Lepreau NGS refurbishment project The provincial grant

remained at $50000 a much-appreciated contribution but a

substantial reduction from prior years

The Clients by Location (Chart 2) illustrates that 540 of RPCs

939 clients (58) were from New Brunswick Other clients were

regional (20) national (19) and international (3)

We are pleased that our expertise attracted 399 clients from

outside New Brunswick including 31 international clients As

illustrated in the Clients Served by Revenue chart (Chart 3) RPC

exported $36 million of services from the province helping to

create and maintain highly skilled labour opportunities here at home

As illustrated by the analysis above and the results presented in

the financial statements presented in this report the objective of

producing a profitable result was fulfilled

CHART 1 REVENUE SOURCES PROFILE

100

90

80 Q gt 70 c Q 60 gt Q

0 50

40 ~ 30

20

10

0 2006 2007 2008 2009 2010 2011

Fiscal Year Ending

bull Re nt Interest Sundry bull ProvinCIal Government Contracts o Municipalities Individuals Other o Federal Government Contracts bull Provincial Government Grant bull Indust ry

CHART 2 CLIENTS BY LOCATION

1000

900

800

700

600c sao 0 u

400 It

300

200

100

a 2006 2007 2008 2009 2010 2011

Year bull International Other Canadian Other AtlantIC bull NewBrunswick

NoteLocation data is by billing address

CHART 3 CLIENTS SERVED BY REVENUE

10-------------------------------------~

9

C 8 ~ E ~ 6 Q gt 5 c ~ 4 Q

~ 3 Q

~ 2 1

o 2006 2007 2008 2009 2010 2011

Year

bull International Other Canadian bull Other Atlantic bull New Brunswick

7

~

Annual Plan Goals for 2010-2011 continued

Market-led Research RPCs raison detre

Every year RPC works with dozens of entrepreneurs inventors and businesses to facilitate their research needs

Examples of the types of projects include

bull Environmental process development for recycling of waste

Process evaluation for high performance water filters

bull Development and test of sea lice treatment processes

bull Shelf life studies for the food and beverage industry

Probiotic applications

Electronics testing for a new remote control product

bull Mining process to extract minerals from smelter slag

bull Product process optimization

bull Development of precision flow and temperature measurement devices

bull Environmental process development for waste reduction

II Progress succession efforts

Several long-serving senior employees will retire from RPC

over the next few years RPC has developed a regularly updated

succession plan to address these succession challenges The plan

employs a strategy that includes a combination of promotion and

new hiring

We have begun acting on this plan and have made some progress

However with regards to new hiring for senior positions we have

found it challenging to identify candidates with both an advanced

science degree and a customerbusiness focus There is work

remaining to be done on this goal we have engaged a human

resource search professional to facilitate our efforts and have

carried the objective forward for the coming year

11 1 Advance applied research efforts

Emphasizing RPCs applied research efforts is one of our strategic

plan objectives a fundamental part of RPCs mandate and an

important initiative in helping business to be competitive

A number of initiatives were progressed to help advance our

applied research service offerings We continued our excellent

relationship with the National Research Councils Industrial

Research Assistance Program (IRAP) fully utilizing and receiving

an extension to the Network Members Agreement which assists

industry with small research projects We are involved as a

collaborator on two Atlantic Innovation Fund project proposals

We continued targeted industry visits to describe RPCs services

and gain an understanding of their needs Presentations and

submissions were made advocating the importance of market-led

resea rch We participated in relevant panels committees and

conferences (see Influential Opinions RPC Experts in Demand

p3) Finally we advocated RPCs applied research services

through news articles that were published on our website and local

newspapers

A sustained effort is required to advance RPCs applied research

efforts however we are pleased with the progress during the past

year

IV Promotion and awareness of RPC

Promotion and awareness is a continuous effort however during

the past year we focused additional effort on the initiative

including advertizing efforts through a variety of mediums such as

newspapers sponsorships radio Google and Facebook Another

highlight was the launch of the wwwrpcgeneticscom website

to promote our DNA services This site includes secure payment

options for clients

Other initiatives included

Launch of RPCs newsletter RPC Researcher

Participation in relevant trade shows such as the Prospectors

and Developers Association of Canada show in Toronto

bull Submission to The Review of Federal Support to RampD

highlighting the importance of market-led research

Presentations by RPC employees at conferences workshops

and roundtables

Presentation to Business New Brunswick senior staff

Partic ipation by RPC employees on boards industry

associations and standards committees

Focused efforts to meet directly with existi ng and potential

clients

bull Official opening of our Moncton lab to better serve clients in

the Greater Moncton area

In summary a variety of traditional and new activities helped to

promote RPC and meet this objective

- 8

~

Annual Plan Goals for 2010-2011 continued

Market-led Research RPCs raison detre

Every year RPC works with dozens of entrepreneurs inventors and businesses to facilitate their research needs

Examples of the types of projects include

bull Environmental process development for recycling of waste

Process evaluation for high performance water filters

bull Development and test of sea lice treatment processes

bull Shelf life studies for the food and beverage industry

Probiotic applications

Electronics testing for a new remote control product

bull Mining process to extract minerals from smelter slag

bull Product process optimization

bull Development of precision flow and temperature measurement devices

bull Environmental process development for waste reduction

II Progress succession efforts

Several long-serving senior employees will retire from RPC

over the next few years RPC has developed a regularly updated

succession plan to address these succession challenges The plan

employs a strategy that includes a combination of promotion and

new hiring

We have begun acting on this plan and have made some progress

However with regards to new hiring for senior positions we have

found it challenging to identify candidates with both an advanced

science degree and a customerbusiness focus There is work

remaining to be done on this goal we have engaged a human

resource search professional to facilitate our efforts and have

carried the objective forward for the coming year

11 1 Advance applied research efforts

Emphasizing RPCs applied research efforts is one of our strategic

plan objectives a fundamental part of RPCs mandate and an

important initiative in helping business to be competitive

A number of initiatives were progressed to help advance our

applied research service offerings We continued our excellent

relationship with the National Research Councils Industrial

Research Assistance Program (IRAP) fully utilizing and receiving

an extension to the Network Members Agreement which assists

industry with small research projects We are involved as a

collaborator on two Atlantic Innovation Fund project proposals

We continued targeted industry visits to describe RPCs services

and gain an understanding of their needs Presentations and

submissions were made advocating the importance of market-led

resea rch We participated in relevant panels committees and

conferences (see Influential Opinions RPC Experts in Demand

p3) Finally we advocated RPCs applied research services

through news articles that were published on our website and local

newspapers

A sustained effort is required to advance RPCs applied research

efforts however we are pleased with the progress during the past

year

IV Promotion and awareness of RPC

Promotion and awareness is a continuous effort however during

the past year we focused additional effort on the initiative

including advertizing efforts through a variety of mediums such as

newspapers sponsorships radio Google and Facebook Another

highlight was the launch of the wwwrpcgeneticscom website

to promote our DNA services This site includes secure payment

options for clients

Other initiatives included

Launch of RPCs newsletter RPC Researcher

Participation in relevant trade shows such as the Prospectors

and Developers Association of Canada show in Toronto

bull Submission to The Review of Federal Support to RampD

highlighting the importance of market-led research

Presentations by RPC employees at conferences workshops

and roundtables

Presentation to Business New Brunswick senior staff

Partic ipation by RPC employees on boards industry

associations and standards committees

Focused efforts to meet directly with existi ng and potential

clients

bull Official opening of our Moncton lab to better serve clients in

the Greater Moncton area

In summary a variety of traditional and new activities helped to

promote RPC and meet this objective

- 8

RPC Employees

2010middot2011 Merit Award

The RPC Merit Award is presented to an individual or team of individuals who made an outstanding contribution or was responsible for a

substantial achievement for RPC

The 2010 -2011 merit award was presented to the team who developed and launched RPCs accredited genetics testing service line including the wwwrpcgentics com website

This project evolved from our DNA capabilities in the aquaculture and wi ldlife forensics sector Research was completed to understand market demand and the requirements to obtain accreditation for human genetics testing specifically paternity and maternity analysis Technical requirements including state -of-the-art DNA extraction capability were established Standard operating procedures were developed then audited and approved by the Standards Counc il of Canada A consumer-friendly website was developed that allows for on-line ordering of test kits and secure payment with credit card or PayPal The service was officially launched in January 2011 and has resulted in a variety of projects including the identification of siblings and parents resolution of inheritance disputes and assisting provincia l medical examiners to identify unknown remains

The development and launch of new services is crucial to RPCs long term success This highly technical scientific service was combined with an easy-to-use customer interface and immediately resulted in international business The project is an important achievement and

Team members (from left to right) Dr Ben Forward Samantha Atkinson Sherry Binette Amy Brown Lenora Fanjoy Eric Johnsen

an excellent example of RPCs renewal

~01 ~~_~~_1

5Years

10 Years

15 Years

20Years

25Years

Retirement

1_ Employee Career Milestones

Sean McGrath Jodi Buckingham Matt Ness Dr Ben Forward

Cathy Hay

John Spee lman

Stacey Munn Bev Byers Kirk Kierstead Theresa Logan Krista Skinner TroyYoung Germain Landry

Brian Bell

Lynn Jewett

Senior Management Team --_ __

Executive Management Eric Cook Executive DirectorCEO Stephen Fox Chief Operating OfficerCFO

Department Heads John Aikens Mechanical Systems amp Diagnostics and Physical Metallurgy Eric Cook Process and Environmental Techno logy Dr Ben Forward Food Fisheries and Aquaculture Ross Kean Inorganic Analytical Chemistry Bruce Phillips Organic Analyt ical Chemistry

Section Heads Ross Gilders Mining and Industrial Services Thelma Green Air Ouality Services Dr John Macaulay High Reso lution Mass Spectrometry John Speelman Senior Metallurgist

(291f2 years of service to RPC)

9

RPC Board of Directors

Ken Reeder PEng Chairman (Past) President amp CEO Neill and Gunter Ltd Saint John NB

Eric Cook PEng Executive Director ICEO RPC Fredericton NB

Dr Bev Bacon President RDI Strategies Fredericton NB

David Beattie PEng Vice-President expcom Fredericton NB

Stephen Beatty CMA CFO AL-PACK Enterprises Ltd Moncton NB

Mr Lee Corey President Corey Nutrition Company Fredericton NB

Bob Crawford PEng (Past) Vice President NB Power Mactaquac NB

Doug Ettinger President and CEO Ganong Bros Limited St Stephen NB

Dr Greg Kealey Provost and VP Research University of New Brunswick Fredericton NB

Mr Daniel Laplante Director of Operations Enseignes Pattison Sign Group Edmundston NB

Bernard F LeBlanc PEng President and CEO Saint John Airport Inc Saint John NB

Bill Levesque Deputy Minister Business New Brunswick Fredericton NB

Dr Sharon McGladdery Director St Andrews Biological Station St Andrews NB

Michelyne Paulin Regional Director - Atlantic Foreign Affairs and International Trade Canada Moncton NB

RPCs June board meeting was conducted in the St AndrewsSt Stephen area In addition to the business meeting the board participated in an aquaculture tour that included a cage site visit and a factory tour of Canadas oldest candy company Ganongs Directors enjoyed New Brunswick products including Cooke Aquacultures Eco Certified salmon and a variety of Ganongs famous candy products

10

RPC Director Bob Crawford and Chief Operating Officer Steve Fox on our tour of Fundy aquaculture farms

Our tour guide Betty House Research and Development Coordinator at the Atlantic Canada Fish Farme rs Association and Dr Bev Bacon RPC Director

Revenue Highlights

- __e SOURCES OF REVENUE

----- shy

--e

2010-2011 2009-2010

Industry $ 7685672 $ 7610538

Federal Government Contracts 1132361 1136319

Provincial Government Contracts 368346 359801

Provincial Government Grant 50000 50000

Other 518868 539227

Total $ 9755247 $ 9695885

DISTRIBUTION OF INDUSTRIAL REVENUE

Under 200 Employees

Over 200 Employees

Foreign Industry

2010-2011 2009-2010

$ 4691949 $ 5363848

1695899 1132880

964810 733758

333014 380052

$ 7685672 $ 7610538

--e TOTAL INCOME 2000middot2011

10

8

~

r 2 middotE

6

~ QI J r QIgt QI

0

4

2

o 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

FiscalYear

bull Provincia l Grant bull Contract and Other

-- 1 1

Auditor 5 Report

To The Honourable David Alward

Premier of the Province of New Brunswick

- and shy

To the Chairman and Members of the

New Brunswick Research and Productivity Council

I have audited the accompanying consolidated financial statements of the New Brunswick Research and Productivity Council which comprise

the consolidated statement of financial position as at 31 March 2011 and the consolidated statements of operations net assets and cash

flows for the year then ended and a summary of significant accounting policies and other explanatory information

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Canashy

dian generally accepted accounting principles and for such internal control as management determines is necessary to enable the preparation

of consolidated financial statements that are free from material misstatement whether due to fraud or error

Auditors Responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit I conducted my audit in accordance

with the Canadian generally accepted auditing standards Those standards require that I comply with ethical requirements and plan and pershy

form the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements

The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of the consolishy

dated financial statements whether due to fraud or error In making those risk assessments the auditor considers internal control relevant to

the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are approprishy

ate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management

as well as evaluating the overall presentation of the consolidated financial statements

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

Opinion

In my opinion these consolidated financial statements present fairly in all material respects the financial position of the New Brunswick

Research and Productivity Council as at March 31 2011 and the results of its operations its net assets and its cash flows for the year then

ended in accordance with Canadian generally accepted accounting principles

~~Lu~M Kim MacPherson CA

Auditor General

Fredericton NB

June 29 2011

12

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

ASSETS Cu rre nt assets

Cash and term deposits $ 706638 $ $ 706638 $ 1188674

Accounts receivable 1712855 1712855 1767903 Work in progress 361224 361224 154769 Prepaid expenses 110370 110370 84157

2891087 2891087 3195503

Marketable securities 2664125 4446174 7110299 6891520 Capital assets net (Note 4) 2806514 2806514 2985215 Goodwill (Note 5) 395458 395458

$ 5950670 $ 7252688 $13203358 $13072238

LIABILITIES AND FUND BALANCES Current liabilities

Accounts payable and accrued liabilities $1230867 $ $ 1230867 $ 1492661 Deferred revenue 412962 412962 554223 Current portion of long term debt (Note 6) 27503 27503 26456

1643829 27503 1671332 2073340

Long term liabilities Accrued retirement benefits 835446 835446 738802 Note payable (Note 6) 46743 46743 74246

835446 46743 882189 813048

Deferred contributions (Note 7) 42684 42684 72245

Fund balances Unrestricted 3471395 3471395 2790945 Board restricted (Note 8) 4446174 4446174 4510392 Invested in capital assets 2689584 2689584 2812268

3471395 7135758 10607153 10113605 $ 5950670 $ 7252688 $13203358 $13072238

Approved by the Council

Chairman

Executive Director

13

CONSOLIDATED STATEMENT OF NET ASSETS 31 MARCH 2011

Capital Capital Operating Board Invested in Total Total

Unrestricted Restricted Capital Assets 2011 2010

Balance opening $ 2790945 $ 4510392 $ 2812268 $10113605 $ 9350668

Excess of revenue over expense 493548 493548 762937 Acquisition of capital assets (386715) 386715

Reduction in term loans payable 1047 (27503) 26456

Amortization of capital assets 535855 (535855)

Interfund transfer (350000) 350000

Balance closing $ 3471395 $ 4446174 $ 2689584 $10607153 $ 10113605

14

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

REVENUE Operations $ 9408638 $ $ 9408638 $ 9317799

Operating grant Province of New Brunswick 50000 50000 50000

Investment 183748 183748 191666

Sundry 112861 112861 136420

9755247 9755247 9695885

EXPENSE Operations 6827418 6827418 6647280 Administration 2066279 2066279 1924022 Amortization (Notes 4 and 7) 535855 535855 537083 Bad debts (Recovery) (2343) (2343) 11668

9427209 9427209 9120053

EXCESS OF REVENUE OVER EXPENSE FROM OPERATIONS 328038 328038 575832

Adjustment for unrealized gains on marketable securities 165510 165510 187105

EXCESS OF REVENUE OVER EXPENSE $ 493548 $ $ 493548 $ 762937

15

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

Revenue Highlights

- __e SOURCES OF REVENUE

----- shy

--e

2010-2011 2009-2010

Industry $ 7685672 $ 7610538

Federal Government Contracts 1132361 1136319

Provincial Government Contracts 368346 359801

Provincial Government Grant 50000 50000

Other 518868 539227

Total $ 9755247 $ 9695885

DISTRIBUTION OF INDUSTRIAL REVENUE

Under 200 Employees

Over 200 Employees

Foreign Industry

2010-2011 2009-2010

$ 4691949 $ 5363848

1695899 1132880

964810 733758

333014 380052

$ 7685672 $ 7610538

--e TOTAL INCOME 2000middot2011

10

8

~

r 2 middotE

6

~ QI J r QIgt QI

0

4

2

o 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

FiscalYear

bull Provincia l Grant bull Contract and Other

-- 1 1

Auditor 5 Report

To The Honourable David Alward

Premier of the Province of New Brunswick

- and shy

To the Chairman and Members of the

New Brunswick Research and Productivity Council

I have audited the accompanying consolidated financial statements of the New Brunswick Research and Productivity Council which comprise

the consolidated statement of financial position as at 31 March 2011 and the consolidated statements of operations net assets and cash

flows for the year then ended and a summary of significant accounting policies and other explanatory information

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Canashy

dian generally accepted accounting principles and for such internal control as management determines is necessary to enable the preparation

of consolidated financial statements that are free from material misstatement whether due to fraud or error

Auditors Responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit I conducted my audit in accordance

with the Canadian generally accepted auditing standards Those standards require that I comply with ethical requirements and plan and pershy

form the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements

The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of the consolishy

dated financial statements whether due to fraud or error In making those risk assessments the auditor considers internal control relevant to

the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are approprishy

ate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management

as well as evaluating the overall presentation of the consolidated financial statements

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

Opinion

In my opinion these consolidated financial statements present fairly in all material respects the financial position of the New Brunswick

Research and Productivity Council as at March 31 2011 and the results of its operations its net assets and its cash flows for the year then

ended in accordance with Canadian generally accepted accounting principles

~~Lu~M Kim MacPherson CA

Auditor General

Fredericton NB

June 29 2011

12

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

ASSETS Cu rre nt assets

Cash and term deposits $ 706638 $ $ 706638 $ 1188674

Accounts receivable 1712855 1712855 1767903 Work in progress 361224 361224 154769 Prepaid expenses 110370 110370 84157

2891087 2891087 3195503

Marketable securities 2664125 4446174 7110299 6891520 Capital assets net (Note 4) 2806514 2806514 2985215 Goodwill (Note 5) 395458 395458

$ 5950670 $ 7252688 $13203358 $13072238

LIABILITIES AND FUND BALANCES Current liabilities

Accounts payable and accrued liabilities $1230867 $ $ 1230867 $ 1492661 Deferred revenue 412962 412962 554223 Current portion of long term debt (Note 6) 27503 27503 26456

1643829 27503 1671332 2073340

Long term liabilities Accrued retirement benefits 835446 835446 738802 Note payable (Note 6) 46743 46743 74246

835446 46743 882189 813048

Deferred contributions (Note 7) 42684 42684 72245

Fund balances Unrestricted 3471395 3471395 2790945 Board restricted (Note 8) 4446174 4446174 4510392 Invested in capital assets 2689584 2689584 2812268

3471395 7135758 10607153 10113605 $ 5950670 $ 7252688 $13203358 $13072238

Approved by the Council

Chairman

Executive Director

13

CONSOLIDATED STATEMENT OF NET ASSETS 31 MARCH 2011

Capital Capital Operating Board Invested in Total Total

Unrestricted Restricted Capital Assets 2011 2010

Balance opening $ 2790945 $ 4510392 $ 2812268 $10113605 $ 9350668

Excess of revenue over expense 493548 493548 762937 Acquisition of capital assets (386715) 386715

Reduction in term loans payable 1047 (27503) 26456

Amortization of capital assets 535855 (535855)

Interfund transfer (350000) 350000

Balance closing $ 3471395 $ 4446174 $ 2689584 $10607153 $ 10113605

14

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

REVENUE Operations $ 9408638 $ $ 9408638 $ 9317799

Operating grant Province of New Brunswick 50000 50000 50000

Investment 183748 183748 191666

Sundry 112861 112861 136420

9755247 9755247 9695885

EXPENSE Operations 6827418 6827418 6647280 Administration 2066279 2066279 1924022 Amortization (Notes 4 and 7) 535855 535855 537083 Bad debts (Recovery) (2343) (2343) 11668

9427209 9427209 9120053

EXCESS OF REVENUE OVER EXPENSE FROM OPERATIONS 328038 328038 575832

Adjustment for unrealized gains on marketable securities 165510 165510 187105

EXCESS OF REVENUE OVER EXPENSE $ 493548 $ $ 493548 $ 762937

15

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

Auditor 5 Report

To The Honourable David Alward

Premier of the Province of New Brunswick

- and shy

To the Chairman and Members of the

New Brunswick Research and Productivity Council

I have audited the accompanying consolidated financial statements of the New Brunswick Research and Productivity Council which comprise

the consolidated statement of financial position as at 31 March 2011 and the consolidated statements of operations net assets and cash

flows for the year then ended and a summary of significant accounting policies and other explanatory information

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Canashy

dian generally accepted accounting principles and for such internal control as management determines is necessary to enable the preparation

of consolidated financial statements that are free from material misstatement whether due to fraud or error

Auditors Responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit I conducted my audit in accordance

with the Canadian generally accepted auditing standards Those standards require that I comply with ethical requirements and plan and pershy

form the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements

The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of the consolishy

dated financial statements whether due to fraud or error In making those risk assessments the auditor considers internal control relevant to

the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are approprishy

ate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management

as well as evaluating the overall presentation of the consolidated financial statements

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

Opinion

In my opinion these consolidated financial statements present fairly in all material respects the financial position of the New Brunswick

Research and Productivity Council as at March 31 2011 and the results of its operations its net assets and its cash flows for the year then

ended in accordance with Canadian generally accepted accounting principles

~~Lu~M Kim MacPherson CA

Auditor General

Fredericton NB

June 29 2011

12

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

ASSETS Cu rre nt assets

Cash and term deposits $ 706638 $ $ 706638 $ 1188674

Accounts receivable 1712855 1712855 1767903 Work in progress 361224 361224 154769 Prepaid expenses 110370 110370 84157

2891087 2891087 3195503

Marketable securities 2664125 4446174 7110299 6891520 Capital assets net (Note 4) 2806514 2806514 2985215 Goodwill (Note 5) 395458 395458

$ 5950670 $ 7252688 $13203358 $13072238

LIABILITIES AND FUND BALANCES Current liabilities

Accounts payable and accrued liabilities $1230867 $ $ 1230867 $ 1492661 Deferred revenue 412962 412962 554223 Current portion of long term debt (Note 6) 27503 27503 26456

1643829 27503 1671332 2073340

Long term liabilities Accrued retirement benefits 835446 835446 738802 Note payable (Note 6) 46743 46743 74246

835446 46743 882189 813048

Deferred contributions (Note 7) 42684 42684 72245

Fund balances Unrestricted 3471395 3471395 2790945 Board restricted (Note 8) 4446174 4446174 4510392 Invested in capital assets 2689584 2689584 2812268

3471395 7135758 10607153 10113605 $ 5950670 $ 7252688 $13203358 $13072238

Approved by the Council

Chairman

Executive Director

13

CONSOLIDATED STATEMENT OF NET ASSETS 31 MARCH 2011

Capital Capital Operating Board Invested in Total Total

Unrestricted Restricted Capital Assets 2011 2010

Balance opening $ 2790945 $ 4510392 $ 2812268 $10113605 $ 9350668

Excess of revenue over expense 493548 493548 762937 Acquisition of capital assets (386715) 386715

Reduction in term loans payable 1047 (27503) 26456

Amortization of capital assets 535855 (535855)

Interfund transfer (350000) 350000

Balance closing $ 3471395 $ 4446174 $ 2689584 $10607153 $ 10113605

14

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

REVENUE Operations $ 9408638 $ $ 9408638 $ 9317799

Operating grant Province of New Brunswick 50000 50000 50000

Investment 183748 183748 191666

Sundry 112861 112861 136420

9755247 9755247 9695885

EXPENSE Operations 6827418 6827418 6647280 Administration 2066279 2066279 1924022 Amortization (Notes 4 and 7) 535855 535855 537083 Bad debts (Recovery) (2343) (2343) 11668

9427209 9427209 9120053

EXCESS OF REVENUE OVER EXPENSE FROM OPERATIONS 328038 328038 575832

Adjustment for unrealized gains on marketable securities 165510 165510 187105

EXCESS OF REVENUE OVER EXPENSE $ 493548 $ $ 493548 $ 762937

15

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

ASSETS Cu rre nt assets

Cash and term deposits $ 706638 $ $ 706638 $ 1188674

Accounts receivable 1712855 1712855 1767903 Work in progress 361224 361224 154769 Prepaid expenses 110370 110370 84157

2891087 2891087 3195503

Marketable securities 2664125 4446174 7110299 6891520 Capital assets net (Note 4) 2806514 2806514 2985215 Goodwill (Note 5) 395458 395458

$ 5950670 $ 7252688 $13203358 $13072238

LIABILITIES AND FUND BALANCES Current liabilities

Accounts payable and accrued liabilities $1230867 $ $ 1230867 $ 1492661 Deferred revenue 412962 412962 554223 Current portion of long term debt (Note 6) 27503 27503 26456

1643829 27503 1671332 2073340

Long term liabilities Accrued retirement benefits 835446 835446 738802 Note payable (Note 6) 46743 46743 74246

835446 46743 882189 813048

Deferred contributions (Note 7) 42684 42684 72245

Fund balances Unrestricted 3471395 3471395 2790945 Board restricted (Note 8) 4446174 4446174 4510392 Invested in capital assets 2689584 2689584 2812268

3471395 7135758 10607153 10113605 $ 5950670 $ 7252688 $13203358 $13072238

Approved by the Council

Chairman

Executive Director

13

CONSOLIDATED STATEMENT OF NET ASSETS 31 MARCH 2011

Capital Capital Operating Board Invested in Total Total

Unrestricted Restricted Capital Assets 2011 2010

Balance opening $ 2790945 $ 4510392 $ 2812268 $10113605 $ 9350668

Excess of revenue over expense 493548 493548 762937 Acquisition of capital assets (386715) 386715

Reduction in term loans payable 1047 (27503) 26456

Amortization of capital assets 535855 (535855)

Interfund transfer (350000) 350000

Balance closing $ 3471395 $ 4446174 $ 2689584 $10607153 $ 10113605

14

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

REVENUE Operations $ 9408638 $ $ 9408638 $ 9317799

Operating grant Province of New Brunswick 50000 50000 50000

Investment 183748 183748 191666

Sundry 112861 112861 136420

9755247 9755247 9695885

EXPENSE Operations 6827418 6827418 6647280 Administration 2066279 2066279 1924022 Amortization (Notes 4 and 7) 535855 535855 537083 Bad debts (Recovery) (2343) (2343) 11668

9427209 9427209 9120053

EXCESS OF REVENUE OVER EXPENSE FROM OPERATIONS 328038 328038 575832

Adjustment for unrealized gains on marketable securities 165510 165510 187105

EXCESS OF REVENUE OVER EXPENSE $ 493548 $ $ 493548 $ 762937

15

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

CONSOLIDATED STATEMENT OF NET ASSETS 31 MARCH 2011

Capital Capital Operating Board Invested in Total Total

Unrestricted Restricted Capital Assets 2011 2010

Balance opening $ 2790945 $ 4510392 $ 2812268 $10113605 $ 9350668

Excess of revenue over expense 493548 493548 762937 Acquisition of capital assets (386715) 386715

Reduction in term loans payable 1047 (27503) 26456

Amortization of capital assets 535855 (535855)

Interfund transfer (350000) 350000

Balance closing $ 3471395 $ 4446174 $ 2689584 $10607153 $ 10113605

14

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

REVENUE Operations $ 9408638 $ $ 9408638 $ 9317799

Operating grant Province of New Brunswick 50000 50000 50000

Investment 183748 183748 191666

Sundry 112861 112861 136420

9755247 9755247 9695885

EXPENSE Operations 6827418 6827418 6647280 Administration 2066279 2066279 1924022 Amortization (Notes 4 and 7) 535855 535855 537083 Bad debts (Recovery) (2343) (2343) 11668

9427209 9427209 9120053

EXCESS OF REVENUE OVER EXPENSE FROM OPERATIONS 328038 328038 575832

Adjustment for unrealized gains on marketable securities 165510 165510 187105

EXCESS OF REVENUE OVER EXPENSE $ 493548 $ $ 493548 $ 762937

15

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

REVENUE Operations $ 9408638 $ $ 9408638 $ 9317799

Operating grant Province of New Brunswick 50000 50000 50000

Investment 183748 183748 191666

Sundry 112861 112861 136420

9755247 9755247 9695885

EXPENSE Operations 6827418 6827418 6647280 Administration 2066279 2066279 1924022 Amortization (Notes 4 and 7) 535855 535855 537083 Bad debts (Recovery) (2343) (2343) 11668

9427209 9427209 9120053

EXCESS OF REVENUE OVER EXPENSE FROM OPERATIONS 328038 328038 575832

Adjustment for unrealized gains on marketable securities 165510 165510 187105

EXCESS OF REVENUE OVER EXPENSE $ 493548 $ $ 493548 $ 762937

15

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Operating Capital 2011 2010 Fund Fund Total Total

CASH PROVIDED BY (USED FOR) Operating activities

Excess of revenue over expense Amortization Gain on sale of assets Net change in non-cash working capital Net cash provided by operating activities

$ 328038 535855

(579629) 284264

$ $ 328038 535855

(579629) 284264

$ 575832 537083

(6950) 246795

1352760

Financing and investing activities Purchase or transfer of long -term investment Accrual of retireme nt allowance entitlements Proceeds on disposal of capital assets Acquisition of Moncton operation (goodwill) Reduction in lo ng term debt Acquisit ion of capital assets Net cash provided (used) in financ in g and

investing activities

(117487) 96645

(395458)

(416300)

64218

(27503) (386715)

(350000)

(53269) 96645

(395458) (27503)

(386715)

(766300)

(566266) 46255 25700

(26456) (524025)

(1044792)

NET INCREASE (DECREASE) IN CASH (132036) (350000) (482036) 307968

Cash and term deposits beginning of year Interfund transfer (Note 8)

CASH AND TERM DEPOSITS end of yea r

1188674 (350000)

$ 706638

350000 $

1188674

$ 706638

880706

$1188674

~

- - -

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2011

1 Purpose of the organization

The New Brunswick Research and Productivity Council (the Council) is a non-profit organization incorporated under the Research and Productivity Council Act 1962 The objectives of the Council are to promote stimulate and expedite continuing improvement in productive efficiency and expansion in the various sectors of the New Brunswick economy The Council provides independent research testing and technical services to enterprises primarily within New Brunswick on a fee-for-service basis

2 Future accounting changes

The Canadian Institute of Chartered Accountants has issued new accounting standards which may change the Councils accounting framework The impact on future financial statements of implementing a new accounting framework will be assessed during the coming year

3 Significant accounting policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles The significant policies are detailed as follows

a) Fund accounting

Revenue and expense associated with delivery of services and administrative support are reported in the Operating Fund The Capital Fund reports assets liabilities gains and expenditures related to the acquisition disposal and financing of capital assets as well as the amount of net assets restricted for capital purposes

b) Revenue recognition

Revenue is determined to be earned and is recorded in the Operating Fund on a percentage of completion basis when services are performed The value of work completed but not billed is reported as Work in Progress while amounts which have been paid or billed in advance but for which work has not been done are reflected as Deferred Revenue

Investment income includes dividends interest and gains and losses on securities All investment income is reported in the Operating Fund in the year it is earned including unrealized gains and losses on held-for-trading financial assets

The Council follows the deferral method of accounting for grants received for operations and specific projects Grants to be used for restricted purposes are recognized as revenue in the period in which the related expenditures are incurred Where a portion of a grant relates to a future period it is deferred and recognized in the subsequent period

Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured Grants approved but not received at the end of an accounting period are accrued

c) Financial instruments

Financial instruments are comprised of cash term deposits accounts receivable marketable securities accounts payable and accrued liabilities accrued retirement benefits and note payable They are classified and accounted for in accordance with The Canadian Institute of Chartered Accountants (CICA) Handbook section 3855 Financial Instruments Recognition and Measurement as follows

Marketable securities including equities and bonds which are held-for-trading are carried at fair value which is determined by reference to published price quotations Accrued retirement benefits are recorded at fair value as estimated by management Estimated fair value has not been subjected to actuarial review

The non-interest bearing note payable is recorded at amortized cost using the effective interest rate method The fair value of this note has been determined using a discount rate of 39 this has resulted in a reduction in the initial carrying value of $14956

17

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

Due to the ir short-term nature al l other financial instruments are carried at amounts which are considered to approximate their fair value

The Council does not enter into hedging activities and does not engage in derivative transactions

The Council discloses its exposure to risk and its risk management practices in accordance with the accounting standards issued by the Canadian Institute of Chartered Accountants in Section 3861- Financial Instruments-Presentation and Disclosures in place of Financial Instruments-Disclosures- Section 3862 and Financial Instruments- Presentation Section 3863

d) Capital assets

Capital assets are recorded in the Capita l Fund at cost Amortization is provided on a straight-line basis over the assets estimated useful lives Amortization is recorded in the Operating Fund as part of the cost of service delivery at rates as disclosed in Note 4 (Capital assets)

e) Goodwill

Goodwill represents the excess of acquisit ion cost of a business over the fair value of the identifiable net assets acquired and is not amortized Goodwill is tested for impairment annually or when changes in circumstances indicate a potential impairment

f) Consolidation policy

These consolidated financial statements include the accounts of the Council and those of its wholly owned subsidiary Minuvar Ltd

g) Pension

Full -time employees of the Council are members of the New Brunswick Public Service Superannuation Plan The Plan is a defined benefit multi-employer plan under which contributions are made by both the Council and its employees The employers contributions to the plan are accounted for as a defined contribution plan as the Councils obligation is limited to the amount of these contributions

h) Retirement allowance entitlements

Retirement allowance entitlements are earned by employees at the rate of one weeks pay for each full year worked to a maximum of twenty-five weeks The amount of the retirement allowance is based upon years of service and the employees final salary

i) Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting princip les requires management to make estimates and assumptions that could differ from actual results Estimates have been made of the retirement allowance benefits earned to date that may become payable in the future Estimates have also been established for accounts receivable which are or may become uncollectible

4 Capital assets

2011 2010

Vehicle

Computer equipment

Operating equipment

Land and buildings

Amortization rates

25

25

1250

3

Cost

$ 11880

1634169

9364415

2918245

Accumulated amortization

$ 11880

1563908

7993710

1552697

Net book Net book value value

$ $

70261 47785

1370705 1560648

1365548 1376782

$13928709 $11122195 $ 2806514 $ 2985215

Amortization expense is comprised ofthe following amounts 2011 2010

Amortization of assets $ 565416 $ 572347

Amortizat ion of deferred contributions ( 29561) ( 35264)

$ 535855 $ 537083

18

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

5 Goodwill

2011 2010

Goodwill at 1 April $ $

Goodwill acquired with purchase of Moncton operation 395458

Goodwill at 31 March $ 395458 $

6 Note payable

2011 2010 Atlantic Canada Opportunities Agency interest free payable $7500

quarterly through November 12013 $ 74246 $ 100702

Less current portion ( 27503) ( 26456)

$ 46743 $ 74246

7 Deferred contributions

Deferred contributions reported in the Capital Fund represent the unamortized portion of external contributions received towards the cost of specific capital assets Amortization of deferred contributions is calculated at the same rate as amortization of the assets to which they relate and is netted with amortization expense for presentation purposes

The changes for the year in the deferred contributions balance reported in the Capital Fund are as follows

2011 2010 Deferred contributions at 1 April $ 72245 $ 107509 Amortization of deferred contributions ( 29561) ( 35264) Deferred contributions at 31 March $ 42684 $ 72245

8 Intermiddotfund transfers and internally restricted fund balances

The board of directors of the New Brunswick Research and Productivity Council internally restricted resources amounting to $4446174 as at 31 March 2011 (2010 - $4510392) This internally restricted amount is intended for the acquisition of capital assets and payment of capital obligations and is not available for other purposes without the approval of the board of directors This amount includes a 31 March 2011 transfer of $350000 from the Operating Fund to the Capital Fund (2010 - $600000)

9 Business Acquisition

On January 20th 2011 RPC acquired the Moncton New Brunswick operations of Caduceon Enterprises Inc The asset purchase agreement included acquisition of the assets and assumption of the obligation respecting the leased premises RPC provides laboratory services from this location to Caduceons former customers and employs those individuals formerly employed by Caduceon in this location The cost of purchase has been allocated as follows

Capital assets at fair market value $ 25140 Materials and supplies 22293

$ 47433 Remainder as Goodwill 395548

$ 442981

19

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20

10 Related party transactions

During the year the Council provided services to government departments and Crown agencies of the Province of New Brunswick The

Council provides these services under its normal terms and conditions

2011 2010 Revenue from services provided for the year

Government departments and agencies $1005694 $ 994207

Accounts receivable at 31 March

Government departments and agencies $222878 $ 180495

11 Management of Net Assets

The New Brunswick Research and Productivity Councils objective in managing its net assets is to remain a sustainable operation while

fulfilling its overall mandate of being an independent research testing and technical services organization It achieves this objective

through strong day-to-day management of cash poundlows and by regularly monitoring revenues and expenditures against its annual

operating and capital budgets

12 Financial risk management objectives and policies

The Councils risk management policies are part of the overall management of the entitys operations Managements direct

involvement in day-to-day operations identifies risks and variations from expectations leading to risk management activities

requirements and actions

Management has not entered into hedging transact ions to manage risks As part of the overa ll management of the entitys operations

management considers avoidance of undue concentrations of risk and employs appropriate investment and credit management

policies to manage the Councils exposure

20

• 10-11_1-2
• 10-11_3-20