24 Ontario Clean W ater Agency 2012 Annual Report Financial Discussion The Ontario economy showed modest gr owth in 2012 despite the challenging global economy The str ong Canadian dollar pr ovided an advantage to some businesses by r educing the cost of imported capital equipment and business travel Job cr eation in Ontario continued to str engthen r esulting in lower unemployment rates and impr oved tax bases for municipal clients This positively impacted municipal spending in 2012 and r esulted in impr oved r evenue for out of scope services of fer ed to clients Balance Sheet A favourable net income of 11 million including investment income helped to boost the net assets of the Agency to 1868 million T otal assets as of December 31 2012 wer e 2176 million The cash and investments position totalled 569 million with zer o debt Revenue Given the continued impr ovement in Ontario s economy and moderate spending incr eases by municipalities outofscope work incr eased by 78 compar ed to 2011 In addition the Agency was successful in r etaining almost all 947 of the agr eements that came up for r enewal in 2012 Operational r evenue r eported includes r evenue fr om the Lake Hur on and Elgin contract signed into ef fect July 1 2012 Expenses During 2012 the Agency r etender ed 60 of pr ocess chemical contracts and laboratory testing contracts for periods of thr ee and four years r espectively The supply of pr ocess chemicals r emained stable over the past year ther eby minimizing pr essur e on prices The establishment of multiyear contracts with suppliers minimizes exposur e to market volatility r educes costs and ensur es a r eliable supply of these goods and services In addition some client contracts ar e negotiated to allow for fow thr ough of costs such as chemicals and insurance wher eby the client assumes the price risks for these costs Fuel prices usually impact the cost of biosolids management and haulage In 2012 several of these contracts expir ed and wer e r etender ed Given the volatility of fuel prices contract prices incr eased on average by 5 Our clients continue to take advantage of the insurance prices of fer ed by OCW A Due to our favourable claims history and the soft market for insurance insur ers quoted fat pr emiums for all policies with the exception of pr operty insurance which incr eased due to higher pr operty values In 2012 the Agency s Boar d of Dir ectors appr oved the OTEP strategy to transform and moder nize OCW A s information technology systems which will r esult in an investment of 214 million over thr ee years The additional amortization and r e engineering costs for OTEP in 2012 wer e 300000 Salary and beneft incr eases wer e driven by new positions and ef forts to fund pension and nonpensionable futur e employee benefts This year the combined compensation for all of the Agency s Dir ectors was 28150 In 2012 the Agency r elocated Engineering Services Compliance T raining and some Information T echnology staf f to Mississauga in or der to better addr ess the business needs of our largest client This move has r esulted in a savings in accommodation costs which helped of fset the afor ementioned cost incr eases Investment Income OCW A s fnancing income is comprised of income fr om short term investments inter est on cash balances and inter est on the inherited loan portfolio Inter est income fr om the inherited loan portfolio continues to decline as loans ar e paid down The continued global economic uncertainty has caused the Bank of Canada to continue to hold inter est rates at historically low levels Nevertheless negotiations with major banks on short and long term investments r esulted in r etur ns that deliver ed a marginal incr ease in net investment income of 15 compar ed to 2011