These are the corporation's first financial statements prepared in accordance with International Financial Reporting Standards (IFRS). The corporation has restated its opening balance sheet at January 1, 2014, its IFRS transition date, by applying IFRS retrospectively.

Statement of Earnings

In 2015, local distribution revenue decreased to $11.4 million from $11.7 million in 2014. 

Operating expenditures of $7.0 million were eight per cent higher than in 2014, mainly due to expenses related to developing a five-year electricity distribution plan. 

Interest expense for 2015 approximated 2014.

During 2015, $600,000 of regulatory assets connected with stranded meters was written off by regulatory order.

As a result of the above-noted items, net earnings were $726,000 compared to $2.2 million in 2014.

Statement of Cash Flows

In 2015, Kingston Hydro recorded additions to capital assets of $3.4 million.

The company was pleased to provide dividend payments of $761,000 in 2015.

Balance Sheet

At December 31, 2015, Kingston Hydro’s gross capital assets amounted to $45.1 million compared to $41.7 million in 2014. These amounts have been restated at deemed cost at January 1, 2014, the corporation's transition date to IFRS.

The net book value of these assets amounted to $41.9 million compared to $40.1 million in 2014. This amount has increased every year since 1998, when the depreciated value of the capital assets in service was $19.7 million. Kingston Hydro has committed to re-investing in and upgrading ageing infrastructure to ensure sustainable electricity distribution for the future.

The net balance of the regulatory deferral accounts at the end of the year is $6.5 million, reduced from $9.3 million in 2014. This amount is primarily made up of an amount receivable from customers related to the global adjustment, which should ultimately be recovered from ratepayers through future rate adjustments, as approved by the Ontario Energy Board.

Kingston Hydro increased its long term borrowing in 2015 by an additional $4.5 million to fund infrastructure renewal projects. Approximately $700,000 in loans was repaid in 2015 related to capital loans that were obtained in prior years.

In addition, there was a decrease of $7.8 million in short term borrowings that are used to fund the regulatory assets.

As a result of the above, total debt decreased from $35.2 million in 2014 to $31.2 million in 2015.

Kingston Hydro’s deemed return on equity, as per its last cost of service rate application proceeding, was set at 9.58 per cent. With the lower net earnings in 2015 as indicated earlier, the company earned a return on equity of 3.72 per cent.

Management’s Responsibility for Financial Reporting

The accompanying financial statements and related financial information are the responsibility of the management of Kingston Hydro Corporation.

These financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board and set out in the CPA Canada Handbook, and involve management making best estimates and judgments.

In addition, management is responsible for establishing and maintaining an adequate system of internal control to ensure assets are safeguarded and the accounting systems provide accurate, timely, and reliable information.

The Board of Directors of Kingston Hydro Corporation is responsible for ensuring management has implemented the necessary systems, procedures and controls required to ensure the reliability and timeliness of the financial information. The Board is also responsible for reviewing the financial statements with management and approving the financial statements.

KPMG LLP, the independent auditors appointed by the Board of Directors, are responsible for providing an audit opinion on the financial statements based on the results of their audit tests and procedures.