MANITOBA CARDIAC INSTITUTE(REH-FIT) INC.

Non-consolidatedFinancial StatementsFor the year ended March 31, 2017

MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.

Non-consolidated Financial StatementsFor the year ended March 31, 2017

Contents

Independent Auditor's Report 2

Non-consolidated Financial Statements

Non-consolidated Statement of Financial Position 3

Non-consolidated Statement of Changes in Net Assets 4

Non-consolidated Statement of Operations 5

Non-consolidated Statement of Cash Flows 6

Notes to Non-consolidated Financial Statements 7

MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Statement of Changes in Net Assets

For the year ended March 31 2017 2016

Invested in Property and

Unrestricted Equipment Total Total

Net assets, beginning of year $ 289,948 $ 2,094,512 $ 2,384,460 $ 2,261,379

AmortizationDeferred contributions (448,989) 448,989 - -Property and equipment 762,580 (762,580) - -

Excess of revenue over expenses 183,415 - 183,415 123,081

Transfer for asset purchases (netof deferred contributions) (680,840) 680,840 - -

Net assets, end of year $ 106,114 $ 2,461,761 $ 2,567,875 $ 2,384,460

The accompanying notes are an integral part of these non-consolidated financial statements. 4

MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Non-consolidated Statement of Operations

For the year ended March 31 2017 2016

RevenueMembership and user fees $ 3,191,443 $ 3,240,041Ancillary services 720,565 556,746WRHA Service Agreement funding 752,280 752,280Programs 444,342 392,154Gift from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. 200,208 134,730Amortization of deferred contributions 448,989 442,128Other 165,000 200,670

5,922,827 5,718,749

ExpensesCompensation 2,513,065 2,481,429Amortization of property and equipment 762,580 747,437Facility and operations 656,239 651,892Administrative 582,616 525,541Ancillary services 479,553 404,161Gift to Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. 350,000 380,000Programs 214,938 207,354Membership and marketing 180,421 197,854

5,739,412 5,595,668

Excess of revenue over expenses $ 183,415 $ 123,081

The accompanying notes are an integral part of these non-consolidated financial statements. 5

MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Statement of Cash Flows

For the year ended March 31 2017 2016

Cash Provided by (Used in)

Cash Flows from Operating ActivitiesExcess of revenue over expenses $ 183,415 $ 123,081Adjustments for non-cash items

Amortization of property and equipment 762,580 747,437Amortization of deferred contributions (448,989) (442,128)Gain on disposal of property and equipment (7,550) (10,614)

489,456 417,776Changes in non-cash working capital balances

Accounts receivable 12,570 (21,307)Inventory 9,421 (4,333)Prepaid expenses (14,961) 7,437Accounts payable and accrued liabilities 134,408 119,579Memberships and fees paid in advance 48,447 (20,274)

Net cash provided by operating activities 679,341 498,878

Cash Flows from Investing ActivitiesPurchase of property and equipment (717,763) (406,806)Proceeds on disposal of property and equipment 7,550 10,664

Net cash used in investing activities (710,213) (396,142)

Cash Flows from Financing ActivitiesIncrease in deferred contributions 36,923 15,000Repayments from (to) Manitoba Cardiac Institute (Reh-Fit)

Foundation Inc. 1,368 (3,079)

Net cash provided by financing activities 38,291 11,921

Increase in cash and cash equivalents 7,419 114,657

Cash and cash equivalents, beginning of year 1,695,185 1,580,528

Cash and cash equivalents, end of year $ 1,702,604 $ 1,695,185

The accompanying notes are an integral part of these non-consolidated financial statements. 6

MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

1. Nature of the Organization and Summary of Significant Accounting Policies

Nature of the Organization

The Manitoba Cardiac Institute (Reh-Fit) Inc. (the "Organization") is a non-profit organizationincorporated under The Corporations Act of Manitoba and is a registered Canadian charityexempt from income tax under section 149 of the Income Tax Act. The Organization's missionis to enhance the health and well-being of its members and the community by providinginnovative health and fitness services through assessment, education and exercise in asupportive environment.

Basis of Accounting

These non-consolidated financial statements have been prepared in accordance withCanadian accounting standards for not-for-profit organizations (Part III of the CPA CanadaHandbook).

Revenue Recognition

Membership fees and income from programs and other activities are recognized when earnedand collection is reasonably assured.

The Organization follows the deferral method of accounting for contributions. Restrictedcontributions are recognized as revenue in the year the related expenses are incurred.Contributions restricted for the purchase of capital assets are amortized into revenue on astraight-line basis, at a rate corresponding with the amortization rate for the related capitalassets. Unrestricted contributions are recognized in revenue when received. Contributions arerecorded as receivable if the amount to be received can be reasonably estimated andcollection is reasonably assured.

Contributed Services

Volunteers contribute numerous hours per year to assist the Organization in carrying out itsmandate. Due to the difficulty of determining their fair value, contributed services are notrecognized in the non-consolidated financial statements.

Financial Instruments

Financial instruments are recorded at fair value when acquired or issued. In subsequentperiods, equities traded in an active market and derivatives are reported at fair value, with anyunrealized gains and losses reported in income. All other financial instruments are reported atcost or amortized cost less impairment, if applicable. Financial assets are tested forimpairment when changes in circumstances indicate the asset could be impaired. Transactioncosts on acquisition, sale or issue of financial instruments are expensed for those itemsremeasured at fair value at each balance sheet date and charged to the financial instrumentfor those measured at amortized cost.

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MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

1. Nature of the Organization and Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents consists of cash and investments having a maturity of less thanthree months.

Inventory

Inventory is stated at the lower of average cost and net realizable value. Cost is determinedon a first-in, first-out basis.

Property and Equipment

Tangible capital assets are stated at cost less accumulated amortization. Amortization basedon the estimated useful life of the asset is calculated as follows:

Building 25 years straight-line basisParking lots 20 years straight-line basisEquipment 3 to 10 years straight-line basis

Use of Estimates

The preparation of non-consolidated financial statements in accordance with Canadianaccounting standards for not-for-profit organizations requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities at the date of thenon-consolidated financial statements, and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from management's best estimates asadditional information becomes available in the future.

2. Cash and Cash Equivalents 2017 2016

Cash in bank $ 285,916 $ 287,261High interest e-savings accounts 1,416,688 1,407,924

$ 1,702,604 $ 1,695,185

As at March 31, 2017, the cash and cash equivalents balance is reflective of memberships,program and user fees paid in advance.

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MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

2. Cash and Cash Equivalents (continued)

Credit Facility

The Organization has a demand credit facility with Royal Bank, for $500,000, available foroperating needs. The line of credit bears interest at the bank's prime rate (effective rate2.70%; 2.70% in 2016), calculated and payable monthly. The line of credit is collateralized bya general security agreement, a collateral mortgage covering 1390 Taylor Avenue and anassignment of insurance.

3. Due from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc.

The Manitoba Cardiac Institute (Reh-Fit) Inc. is supported by the Manitoba Cardiac Institute(Reh-Fit) Foundation Inc. (the "Foundation"). The Foundation was established July 21, 1999to support and promote the welfare and good of the Organization by appealing for funds andacquiring, accepting or receiving grants, gifts, donations, bequests or other money. TheFoundation is incorporated under The Corporations Act of Manitoba and is a registered charityunder the Income Tax Act. The Organization has a significant economic interest in theFoundation in that all resources of the Foundation must be provided to the Organization orused for its benefit. In addition, the Organization could control the Foundation under certaincircumstances by becoming its sole member and, as sole member, electing the Directors ofthe Foundation.

The balance due to the Foundation has arisen from transactions in the normal course ofoperations between the organizations and has no security, repayment terms or interestcharged.

The following summarizes the Organization's related party transactions for the year:

2017 2016

Gift from the Foundation General $ 200,208 $ 134,730

For donor-specified program support 13,200 13,200

Total $ 213,408 $ 147,930

Gift to Building & Equipment Fund in the Foundation $ 350,000 $ 380,000

The Foundation's Building & Equipment Fund of $3,554,310 was established to accumulatefunds to make gifts to the organization for use in maintaining, repairing, replacing andexpanding the facilities and equipment used in its activities.

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MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

3. Due from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. (continued)

The Foundation's Endowment Fund of $63,645 reports the receipt of funds established fromgifts by donors which are designated to remain under the Foundation's management inperpetuity.

The Foundation's financial statements have not been consolidated in the Organization's non-consolidated financial statements. Financial statements of the Foundation are available onrequest. Financial summaries of the Foundation as at March 31, 2017 and 2016 and for theyears then ended are as follows:

2017 2016

Cash and cash equivalents $ 3,643,738 $ 2,978,606Short-term investments - 315,263Accounts receivable 37,345 27,535Prepaid expenses 12,592 12,829Due from Manitoba Cardiac Institute (Reh-Fit) Inc. 54 -

$ 3,693,729 $ 3,334,233

Accounts payable and accrued liabilities $ 4,905 $ 4,750Deferred revenue 88,555 89,582Due to Manitoba Cardiac Institute (Reh-Fit) Inc. - 1,314

93,460 95,646

Fund balances 3,600,269 3,238,587

$ 3,693,729 $ 3,334,233

2017 2016

Revenues Fundraising events, donations and investment income $ 307,989 $ 247,388 Gift from Manitoba Cardiac Institute (Reh-Fit) Inc. 350,000 380,000

657,989 627,388

Fundraising and administrative expenses 82,899 93,964

575,090 533,424Gifts to Manitoba Cardiac Institute (Reh-Fit) Inc.

General and donor-specified 213,408 147,930

Excess of revenues over expenses $ 361,682 $ 385,494

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MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

4. Property and Equipment

2017 2016

Accumulated Net Book Accumulated Net Book Cost Amortization Value Cost Amortization Value

Property $ 297,591 $ - $ 297,591 $ 297,591 $ - $ 297,591Parking lots 680,542 189,058 491,484 680,542 155,648 524,894Building 12,743,972 5,954,261 6,789,711 12,722,257 5,457,857 7,264,400Equipment 3,468,766 2,541,489 927,277 2,940,094 2,476,099 463,995

$ 17,190,871 $ 8,684,808 $ 8,506,063 $ 16,640,484 $ 8,089,604 $ 8,550,880

5. Accounts Payable and Accrued Liabilities

Included in accounts payable and accrued liabilities are $42,809 ($61,896 in 2016) ingovernment remittances payable. All accounts are current with the respective filing agencies.

6. Deferred Contributions

Deferred contributions related to capital assets represent the funded portion of capital assetsthat will be recognized as revenue in future periods and matched against the applicableamortization charged in that period. The changes in the deferred contributions balance for theyear are as follows:

2017 2016

Beginning balance $ 6,456,368 $ 6,883,496Other contributions 36,923 15,000

6,493,291 6,898,496

Amounts amortized to revenue (448,989) (442,128)

Ending balance $ 6,044,302 $ 6,456,368

7. Commitment

The land on which the Organization is situated is leased from the City of Winnipeg for a leasepayment of $1 per year, until December 31, 2102.

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MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

8. Contingency

When the Organization opened, the Kinsmen Club of Winnipeg made a grant to theOrganization of $300,000, followed by a grant of $75,000 in 1985. The grant was madesubject to the following condition: In the event of the sale of the assets by the Organization,the sale may only take place after consultation with and the approval of the Kinsmen Club ofWinnipeg; and further, should such sale occur, then after the retirement of all debts andfinancial obligations of the Organization, the remaining amount up to $375,000 is to bereturned to the Kinsmen Club of Winnipeg for re-allocation to service funding in thecommunity. The sum of $375,000 represents the total of the contributions made by theKinsmen Club of Winnipeg to date.

9. Capital Replacement Plan

The Organization follows prudent budgeting policies whereby future capital replacements areplanned to be funded from operations and the Foundation. The capital replacement plan hasbeen created with accepted industry standards for asset replacement and has been adoptedas management's annual goal of $1,500,000 ($1,400,000 in 2016).

10. Financial Instrument Risk Disclosures

The Organization is exposed to different types of risk in the normal course of operations,including credit risk, market risk and liquidity risk. The Organization's objective in riskmanagement is to optimize the risk return trade-off, within set limits, by applying integratedrisk management and control strategies, policies and procedures throughout theOrganization's activities. The risks have not changed from the previous year.

Credit Risk

Credit risk is the risk that one party to a financial instrument fails to discharge an obligationand causes financial loss to another party. The Organization, in the normal course ofoperations provides credit to its members and is exposed to credit risk from its receivables.The Organization mitigates credit risk on its receivables by limiting exposure to any onemember. The Organization is exposed to credit risk from its investments. Credit risk from itsinvestments is managed through investment leadership from the Finance Committee and byinvesting in high quality and insured financial products.

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MANITOBA CARDIAC INSTITUTE (REH-FIT) INC.Notes to Non-consolidated Financial Statements

For the year ended March 31, 2017

10. Financial Instrument Risk Disclosures (continued)

Market Risk

Market risk is the risk the fair value of future cash flows of a financial instrument will fluctuatebecause of changes in market prices. Market risk comprises three types of risk: interest raterisk, foreign exchange risk and other price risk.

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changesin market interest rates. The Organization is not exposed to significant interest rate risk as itscash and cash equivalents are held in short-term investments or variable rate products.

The Organization is not exposed to significant foreign currency risk as it does not have anyfinancial instruments denominated in foreign currency and the number of transactions inforeign currency are minimal.

Other price risk is the risk that the value of an investment will fluctuate as a result of changesin market prices (other than those arising from interest rate risk or currency risk), whetherthose changes are caused by factors specific to the individual investment or factors affectingsimilar financial instruments traded in the market. The Organization limits its exposure to otherprice risks by investing in low risk investment vehicles.

Liquidity Risk

Liquidity risk is the risk that the Organization encounters difficulty in meeting its obligationsassociated with financial liabilities. Liquidity risk includes the risk that, as a result ofoperational liquidity requirements, the Organization will not have sufficient funds to settle atransaction on the due date; will be forced to sell financial assets at a value, which is less thanwhat they are worth; or may be unable to settle or recover a financial asset. The Organizationis not exposed to significant liquidity rate risk as its liquidity risk arises from accounts payableand sufficient assets are on hand as memberships and fees are paid in advance.

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