Construction Specifications Canada Financial Statements For the year ended March 31, 2011

Construction Specifications Canada Financial Statements For the year ended March 31, 2011 Contents Independent Auditor's Report 2 Financial Statements Statement of Financial Position 3 Statement of Changes in Net Assets 4 Statement of Operations 5 Statement of Cash Flows 6 Summary of Significant Accounting Policies 7-9 Notes to Financial Statements 10 Schedule of Revenues and Expenses 11-12

Tel: 905 270 7700 Fax: 905 270 7915 Toll-free: 866 248 6660 www.bdo.ca BDO Canada LLP 1 City Centre Drive, Suite 1700 Mississauga ON L5B 1M2 Canada Independent Auditor's Report To the Members of Construction Specifications Canada We have audited the accompanying financial statements of Construction Specifications Canada, which comprise the statement of financial position as at March 31, 2011, and the statements of changes in net assets, operations and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's 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 presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of Construction Specifications Canada for the year ended March 31, 2011 are prepared, in all material respects, in accordance with Canadian Generally Accepted Accounting Principles. Chartered Accountants, Licensed Public Accountants Mississauga, Ontario May 6, 2011 BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. 2

Statement of Financial Position March 31 2011 2010 Assets Current Cash $ 812,565 $ 695,439 Short-term investments 124,704 122,822 Accounts receivable 145,280 121,766 Inventory of publications 22,379 10,394 Prepaid and deferred expenses 116,655 114,051 1,221,583 1,064,472 Long-term investments 100,000 101,385 Capital assets (Note 1) 91,934 101,849 $ 1,413,517 $ 1,267,706 Liabilities and Net Assets Current Accounts payable and accrued liabilities $ 75,739 $ 41,919 Deferred revenue 429,305 354,529 Chapter contributions received in advance 189,044 164,433 694,088 560,881 Net Assets Net assets invested in capital assets 91,934 101,849 Unrestricted net assets 627,495 604,976 719,429 706,825 $ 1,413,517 $ 1,267,706 On behalf of the Board: Officer Officer The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 3

Statement of Changes in Net Assets For the year ended March 31 2011 2010 Invested in Capital Assets Unrestricted Total Total Net assets, beginning of year $ 101,849 $ 604,976 $ 706,825 $ 696,518 Excess (deficiency) of revenue over expenses for the year (9,915) 22,519 12,604 10,307 Net assets, end of year $ 91,934 $ 627,495 $ 719,429 $ 706,825 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4

Statement of Operations For the year ended March 31 2011 2010 Operating revenue (Schedule) $ 1,201,917 $ 1,025,242 Operating expenses (Schedule) 794,627 635,991 Excess of operating revenue over operating expenses before administrative expenses 407,290 389,251 Administrative expenses (Schedule) 394,686 378,944 Excess of revenue over expenses for the year $ 12,604 $ 10,307 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 5

Statement of Cash Flows For the year ended March 31 2011 2010 Cash and cash equivalents provided by (used in) Operating activities Excess of revenue over expenses for the year $ 12,604 $ 10,307 Adjustments to reconcile excess of revenue over expenses for the year to net cash provided by operation Amortization of capital assets 9,915 10,833 Net change in non-cash working capital balances (Note 3) 96,489 51,071 119,008 72,211 Investing activities Purchase of capital assets - (5,401) Purchase of long-term investment - (101,385) - (106,786) Increase (decrease) in cash during the year 119,008 (34,575) Cash and cash equivalents, beginning of year 818,261 852,836 Cash and cash equivalents, end of year $ 937,269 $ 818,261 Cash and cash equivalents are comprised of the following: Cash $ 812,565 $ 695,439 Short-term investments 124,704 122,822 $ 937,269 $ 818,261 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 6

Summary of Significant Accounting Policies March 31, 2011 Purpose of the Organization Construction Specifications Canada is a multi-disciplinary, notfor-profit organization dedicated to the improvement of communication, contract documentation and technical information in the construction industry. Construction Specifications Canada is incorporated under the laws of Canada as a corporation without share capital. Some of the programs and projects of the organization are conducted through chapters which are chartered by the Board of Directors to further the objectives of the organization. These financial statements reflect the assets, liabilities, revenue and expenses of the organization only and do not include the assets, liabilities, revenue and expenses of the chapters. Cash and Cash Equivalents Financial Instruments Cash and cash equivalents consist of balances with banks and investments in short term, cashable GIC's. These investments are carried at amortized cost which approximates fair value as at March 31, 2011. Short-term investments bear interest of 1.20% and mature June 2011. The organization utilizes various financial instruments. The carrying values of its financial instruments approximate their fair values. The organization is subject to market, interest rate and currency risks with respect to its investments. The organization classifies its financial instruments into one of the following categories based on the purpose for which the asset was acquired. The organization accounting policy for each category is as follows: Held-for-trading This category is comprised of short-term and long-term investments in equity and debt instruments. They are carried in the balance sheet at fair value with changes in fair value recognized in the statement of operations. Transaction costs related to instruments classified as held-for-trading are expensed as incurred. Loans and receivables Accounts receivable are classified as loans and receivables and are initially recognized at fair value and subsequently carried at amortized cost, using the effective interest rate method, less any provision for impairment. Transaction costs related to loans and receivables are expensed as incurred. 7

Summary of Significant Accounting Policies March 31, 2011 Financial Instruments (continued) Other financial liabilities Other financial liabilities includes all financial liabilities other than those classified as held-for-trading and comprises trade payables and accrued liabilities and other short-term monetary liabilities. These liabilities are initially recognized at fair value and subsequently carried at amortized cost using the effective interest rate method. Risks arising from financial instruments Interest rate risk The organization manages its cash equivalents based on its cash flow needs and with a view to optimizing its investment income. The investments carry interest rates varying from 1.20% to 3.10% and have maturity dates from June 2011 to July 2013. Revenue Recognition The organization follows the deferral method of accounting for chapter contributions. Restricted contributions are recognized as revenue when the related expenses are incurred and unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Revenue from conferences is recognized at the time the conference is held. Revenue from education/seminars is recorded at the time the seminar is held. Revenue from membership dues is recorded when dues are received. Dues received in the current year for future periods are deferred and recorded as revenue in the applicable period. Revenue from the membership directory and technical documents are recorded when shipped, the amount can be reasonably estimated and collection is reasonably assured. Revenue from Master Specifications is recorded when sold, the amount can be reasonably estimated and collection is reasonably assured. Other revenue items are recognized when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. 8

Summary of Significant Accounting Policies March 31, 2011 Inventory of Publications Long-term Investment Inventory of publications is valued at the lower of cost or net realizable value, with cost being determined substantially on a first-in, first-out basis. Investment consists of a non-redeemable GIC which is classified as held-for-trading and is carried in the financial statements at fair value. Fair value is estimated based on quoted market values. The long-term investment bears interest at 3.10% and matures July 2013. Capital Assets and Amortization Capital assets are recorded at cost. Amortization is provided using the following rates: Condominium - 40 years straight line basis Condominium improvements - 15 years straight line basis Office furniture and equipment - 20 % diminishing balance basis Computer hardware and software - 30 % diminishing balance basis Donations of Materials and Services Use of Estimates Capital Management Donated materials and services are recorded at fair value where fair value can be reasonably estimated and when the materials and services are used in the normal course of operations and would otherwise have been purchased. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's best estimates as additional information becomes available in the future. The organization's capital consists of its net assets. The organization's primary objective of capital management is to ensure that it has sufficient resources to continue to provide ongoing development and delivery of quality education programs, publications and services for the betterment of the construction community and its members. The Board of Directors monitors the organization's capital to ensure it is maintained at an appropriate level. The organization is not subject to any externally imposed capital requirements. Annual budgets are developed and monitored to ensure the organization's capital is maintained at an appropriate level. 9

March 31, 2011 Construction Specifications Canada Notes to Financial Statements 1. Capital Assets 2011 2010 Accumulated Net Book Net Book Cost Amortization Value Value Condominium $ 82,508 $ 19,597 $ 62,911 $ 64,974 Condominium improvements 24,184 15,315 8,869 10,481 Office furniture and equipment 94,203 80,780 13,423 16,779 Computer hardware and software 86,417 79,686 6,731 9,615 $ 287,312 $ 195,378 $ 91,934 $ 101,849 2. Commitments In October 2008, the organization amended the existing agreement with Kenilworth Publishing Inc. for a further ten year period. Kenilworth Publishing Inc. will publish the Construction Canada magazines from the January / February 2009 issue to the January / February 2019 issue, with an option to re-new for an additional five years. 3. Net Change in Non-Cash Working Capital Balances The net change in non-cash working capital balances consists of: 2011 2010 Accounts receivable $ (22,129) $ 14,175 Inventory of publications (11,985) 11,786 Prepaid and deferred expenses (2,604) (16,233) Accounts payable and accrued liabilities 33,820 (5,273) Deferred revenue 74,776 8,056 Chapter contributions received in advance 24,611 38,560 $ 96,489 $ 51,071 10

Schedule of Revenue and Expenses For the year ended March 31 2011 2010 Operating Revenue Conference $ 237,190 $ 208,348 Construction Canada Magazine 105,763 90,017 Education/Seminars 74,804 77,392 Interest 4,556 3,450 Marketing 8,000 10,000 Master Specifications 334,271 240,804 Membership directory 61,335 49,417 Membership dues 287,262 286,044 Miscellaneous 3,485 2,719 Publication sales 27,632 31,313 Technical document sales 24,620 17,738 Technical Studies committee 33,000 8,000 $ 1,201,917 $ 1,025,242 Operating Expenses Annual meeting $ 14,997 $ 14,566 Board of directors 51,453 42,490 Chapter rebates expense 1,326 12,912 Conference 217,236 198,256 Construction Canada Magazine 93,491 69,757 Education/Seminars 60,293 61,663 Executive council 22,377 25,629 Liaisons 13,709 17,096 Marketing 33,182 40,369 Master Specifications 154,816 70,673 Membership directory 21,458 17,139 Membership expenses 20,565 10,647 Publication costs 9,755 16,027 Technical documents 23,508 15,471 Technical studies committee 56,461 23,296 $ 794,627 $ 635,991 11

Schedule of Revenue and Expenses (continued) For the year ended March 31 2011 2010 Administrative Expenses Accounting and audit $ 12,500 $ 12,000 Amortization 9,915 10,833 Insurance 5,433 5,392 Occupancy costs 21,251 22,021 Office equipment and rental maintenance 12,269 9,277 Postage 12,500 19,970 Printing, stationary and general 46,826 46,091 Salaries and benefits 266,487 246,532 Telephone/Communications 7,505 6,828 $ 394,686 $ 378,944 12