Investor Presentaiton
10. CONTINGENCIES
(a) Guarantees:
Bank loans
Less: provision for
payment (Note 6)
Authorized
$
Utilized 2014 Utilized 2013
$
$
300
(300)
The guarantees were secured by various assets and proceeds from liquidation
were expected to offset any possible payments under guarantees.
(b) Litigation
The Corporation is co-defendant with the Province of Nova Scotia and Industrial
Estates Limited in a dispute regarding environmental contamination on land
previously owned by Industrial Estates Limited. NSBI assumes that any losses
incurred related to this claim will be fully funded by the Province of Nova Scotia.
The Corporation is unable to form an opinion in regard to the likelihood of loss
arising from the above litigation. Consequently, no provision for any possible
loss has been recorded in these financial statements.
In addition, there are other outstanding claims against the Corporation for
events that have arisen in the normal course of carrying on the operations of
the Corporation. It is not possible at this time to determine the amount that
may be assessed, or the impact to the Corporation's financial statements, with
respect to these claims.
11. FINANCIAL INSTRUMENTS
(a) Fair value
Equity investments in publicly-traded companies in the amount of $nil
(2013 - $4,168) are recorded at fair market value, which represents the last bid
price for the stock on the stock exchange. The Corporation sold all its publicly
traded equity investments in current year.
•
Fair value measurements in connection with the allowance for credit losses
recognized in Notes 2 and 3 are categorized using the fair value hierarchy that
reflects the significance of inputs used in determining the fair values:
Level 1 - unadjusted quoted prices in the active markets for identical assets
or liabilities;
Level 2-inputs other than quoted prices included in Level 1 that are
observable for the assets or liability, either directly or indirectly; and
Level 3 - inputs for assets and liabilities that are not based on observable
market data.
Cash and cash equivalents and the portfolio investments in equity
investments traded in active markets have been recorded as Level 1
using the fair value hierarchy.
(b) Associated risks
Risk management relates to the understanding and active management of
risks associated with all areas of the business and the associated operating
environment. The Corporation's Nova Scotia Business Fund assets are primarily
exposed to credit, interest rate market price and liquidity risk.
(i) Credit risk:
Credit risk is the risk that an issuer or counterparty will be unable to meet a
commitment that it has entered into with the Corporation. To mitigate this
risk, the Corporation has developed the following policies:
Before financing is approved, a risk assessment is performed on the client.
Each application is designated a risk rating based on the industry and
business, quality of management, financial history and projections, the
level of other creditor involvement and shareholder participation, and
environmental risks. The terms and conditions of the approved financing are
reflective of the assessed risk. Applications with unacceptable levels of risk
are not approved.
Clients are usually limited to a total of $15 million in financing from the
Corporation's Nova Scotia Business Fund. Three clients have exceeded
this total in the past; two were approved in the Nova Scotia Business
Development Corporation Fund and transferred to the Nova Scotia
NOVA SCOTIA BUSINESS INC. ANNUAL REPORT 2013-2014 | 31View entire presentation