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ECBC Annual Report 2007


Chair & CEO Message
Acting VP Message 
Senior Management Team
Board of Directors
Who We Are
Economic Context 
Performance Against Objectives
Property Operations 
Human Resources
Corporate Social Responsibility
Official Languages, Communications and Government On-Line
Corporate Governance
Risk Management
Management Discussion and Analysis
Financial Statements 

Message from Chair and CEO Monique Collette

The economy of Cape Breton Island continues to adjust to the changes brought about as a result of the closure of the coal and steel industry, as well as the decline of the fishery. As demonstrated by this annual report, progress is being made in the diversification of the economic base and the economic indicators show signs of improvement. Unemployment  remains high, however, and out migration continues to erode the Island's population base.

Faced with these ongoing challenges, the Board of Directors of ECBC has worked diligently to use the Corporation's flexible mandate and financial resources to leverage new opportunities. Working closely with community stakeholders and private sector entrepreneurs, the Corporation has invested in the future of the Island.

The success that has been achieved is in no small measure due to the dedication and vision of the Board of Directors. In 2006-2007, the terms of five of the Corporation's seven directors had expired. As a result, five new directors joined the Board in January 2007. I would like to take this opportunity to thank the out- going directors for their contributions and to welcome the new Board members. I am privileged to work with so many community-minded individuals who share a common goal-building a better future for Cape Breton Island and Mulgrave. 

Message from Acting Vice-President Marlene Usher

At ECBC, our staff is passionate about Cape Breton Island and the Mulgrave area. We are deeply committed to building a brighter economic future for our families, friends and neighbours. We are an integral part of the community we serve.

This year, with guidance from the Board of Directors, ECBC has been active in numerous initiatives that have provided support to businesses and communities. Through our Memorandum of Understanding (MOU) with the Atlantic Canada Opportunities Agency (ACOA), we continue to successfully deliver the Agency's economic development programs in our mandate area. This enables us to bring additional resources to bear on the strategic direction established by the Board. In the areas of policy, advocacy and business recruitment, we have been involved in initiatives related to tourism and environmental remediation. These investments will set the stage for further growth.

The Corporation's work continues. I know I speak for all staff when I say that we look forward to the future and the opportunity to work with clients, community groups and other economic development stakeholders to strengthen and grow the economy. I would also like to thank management and staff for their dedication to the Corporation's mandate.


Acting Vice President

Director, Internal Audit

Acting Director General, Commercial Accounts

Director, Communications and Access to Information/Privacy

Acting Director General, Corporate Services


Ms. Collette assumed the responsibilities of Chair of the Enterprise Cape Breton Corporation in 2003. She is also President of ACOA.

Ms. Usher  joined the Corporation in 2001, after 12 years with a national chartered accounting firm. As a chartered accountant, she brings a wealth of experience in private sector business and consulting services.

Mr. Miller is a resident of Cape Breton Island and a graduate of St. Mary’s University. He recently retired from a career in banking and is currently employed with the Cape Breton District Health Authority.

Mr. MacInnis, a resident of Creignish, Inverness County, is a graduate of St. Francis Xavier University. He is now retired from a career in education. Mr. MacInnis serves on several boards and numerous organizing committees.

A native of Sydney, Mr. Munroe is a chartered accountant and an associate partner of KPMG LLP in Sydney. He has extensive experience in auditing, accounting, tax and other financial advisory services. Mr. Munroe is involved in various professional and community activities.

A native of North Sydney, Ms. Figliomeni is a graduate of Mount St. Vincent University and has knowledge and experience in the hospitality industry as a young entrepreneur. Ms. Figliomeni is currently the owner/operator of Joe’s Warehouse Restaurant in Sydney and serves on several boards and community organizations.

Ms. Landry, a resident of St. Peters, brings a wealth of professional experience to the board. Ms. Landry was the first woman to hold the positions of inspector and superintendent of schools in Nova Scotia and has also worked as a consultant in education. Now retired, Ms. Landry is an active volunteer in her community.


As a Crown corporation, ECBC is a distinct entity  which reports to Parliament through the Minister of ACOA, who is also responsible for ECBC and the Cape Breton Growth Fund Corporation (CBGF).

In addition to its own programs, ECBC is responsible for the delivery of ACOA’s programs on Cape Breton Island. In 1995, ECBC and ACOA signed a Memorandum of Understanding (MOU) allowing ECBC to design its programming and economic development strategies to complement ACOA programming. The MOU was renegotiated with ACOA for two additional five-year terms effective April 1, 2000 and April 1, 2005.

In August 2000, CBGF was incorporated as a wholly-owned subsidiary of ECBC with its own Board of Directors. The Governor in Council declared that Part X of the Financial Administration Act (FAA) applies to the CBGF as if it were a parent Crown corporation. This means that CBGF reports separately to Parliament through its own corporate plan and annual report. ECBC, through an MOU with CBGF, provides program and operational support, thereby minimizing administrative expenses.

In addition to its relationship with CBGF and ACOA,  ECBC has a history of working in partnership with the federal Department of Human Resources and Social Development, Nova Scotia Economic Development, Regional Development Authorities, Nova Scotia Business Inc., Nova Scotia Department of Tourism, Nova Scotia Department of Energy, Cape Breton Development Corporation (DEVCO), Destination Cape Breton, community business development corporations (CBDCs), various not-for-profit organizations, municipalities and the private sector on a number of economic development initiatives.

ECBC has and will continue to encourage working relationships with all levels of government.

The Enterprise Cape Breton Corporation Act provides the Corporation with a broad legislative mandate which reads:

The objects of the Corporation are to promote and assist, either alone or in conjunction with any person or the Government of Canada or of Nova Scotia or any agency of either of those governments, the financing and development of industry on Cape Breton Island* to provide employment outside the coal producing industry and to broaden the base of the economy of Cape Breton Island.
*This definition of Cape Breton includes the Mulgrave area.

The mission statement focuses the Corporation on the major issues affecting the economy of Cape Breton Island and the Mulgrave area. ECBC’s mission statement reads:

Enterprise Cape Breton Corporation (ECBC) is the principal federal government organization for economic development in Cape Breton. ECBC, in partnership with all levels of government, the private sector and other community stakeholders, will use its broad and flexible powers to assist, promote and co-ordinate efforts that foster an environment supportive of the generation of wealth to effect sustainable job creation throughout Cape Breton Island and Mulgrave.


Economic restructuring continues to evolve in Cape  Breton after the closure of the Island’s two major industries between 1999 and 2001. For over a century, the coal and steel industries dominated the Cape Breton economy. It has been seven years since their closure and, while there are still a number of challenges, the Cape Breton economy has remained stable.

Statistics Canada Labour Force indicators continue to be very positive for Cape Breton. At the time of the closure of the coal and steel industries, Cape Breton's unemployment rate was estimated at approximately 18%. Since then, the unemployment rate has shown a steady decline. In 2006, the unemployment rate was estimated at approximately 13%, the lowest it has been in decades.

Employment figures for the Island have shown improvement. Employment figures since 1993 have shown a steady increase from approximately 47,000 people to approximately 55,000 people in 2006.

A continuing challenge for Cape Breton Island is out-migration. Although numbers have shown an improvement over the past few years, calculations by Statistics Canada have shown an increase in out-migration for 2004-2005. 

The most recent income data available for the Island show steady growth in employment income per earner. Total earned income grew by 2.2% in 2004.


ECBC has established a number of performance objectives and indicators that measure the Corporation's overall progress in implementing the strategic direction outlined in its corporate plan. The performance indicators serve to:

• verify that the Corporation is achieving what it sets out to achieve;
• provide feedback on corporate goals and outcomes for management planning; and
• provide a basis for public reporting and accountability.

In 2006-2007, six activities continued to guide the Corporation's strategic direction. They are:

• Support to Business;
• Support to Communities;
• Business Recruitment and Investment;
• Advocacy;
• Policy and Research; and
• Delivery/Service Agent for Government Services.

ECBC also researches economic data to determine whether the Corporation is making a positive contribution to the Cape Breton economy. Over the past decade, economic indicators show improvement. By working with the economic development tools available, other levels of government, the private sector, and communities, ECBC continues to be a catalyst for positive change.

Through research, ECBC also monitors, on an ongoing basis, the impacts that the Corporation’s programs are having on the region. During the year, the Corporation carried out a cost-benefit analysis of its e-Commerce initiative to determine its impact on Cape Breton’s tourism participants and the overall economy.


To grow the economy by encouraging private sector investment in projects that enhance the competitiveness of commercial enterprises and increase trade opportunities to produce long-term, sustainable jobs.

For a number of years, the Cape Breton economy was dominated by two main industries, coal and steel, which operated on the Island for more than a century. Due to the inordinate dependence on these industries, the economy’s entrepreneurial base had not matured to the same extent as other regions of the country. With the closure of these industries over seven years ago, the Island’s economy began to rebuild. ECBC works with businesses on the Island in various stages of growth, making investments in business start-ups, expansions, innovation, export development, e-business, business skills development, strategic infrastructure and telecommunication links.
The Corporation can provide access to capital in the form of secured, unsecured or interest-free loans, equity or non-repayable assistance. During 2006-2007, ECBC committed over $3.9 million in assistance as part of its support to business activities.

In 2006, ECBC commissioned a cost-benefit analysis of the eCommerce initiative. Launched in 2004, the eCommerce initiative assists local businesses in adopting an Internet presence in the form of an informational website and/or fully functional eCommerce website. The websites build a strong technology infrastructure giving businesses on Cape Breton Island a competitive edge by making locally produced products more accessible to international markets. The cost-benefit analysis determined that for every 1 spent on eCommerce, $50.7 in sales is generated.

Ground Zero Communications Inc.
During 2006-2007, ECBC contributed  funds toward the construction of a manufacturing facility for the first fully-integrated, web-based communications system for Ground Zero Communications Inc. The system will offer all the advantages of voice-over Internet protocol technology on a mobile platform, as well as serving as a standard mobile phone and cordless landline phone. The company plans to test the product under live conditions in Cape Breton. They will target both the emergency relief market and infrastructure opportunities in developing countries.

CBI Cape Breton Island Developers Inc.
In December 2006, an announcement was made by European developers to build a resort community near Louisbourg, Cape Breton. Cape Breton Developers plans to build a $300-million, world-class luxury development with facilities that include a golf course, spa, family recreation centre, restaurant, and conference facilities. The company will initially construct 24 luxurious homes, but the plan is to expand to a 200-300 home resort with completion by 2011.

A project of this magnitude is great news for the Cape Breton economy. Cape Breton Developers estimates that it will cost $95 million to cover the infrastructure costs of the resort and another $205 million to cover the cost of construction of the homes.


To help communities plan and implement community development projects that have a direct link to long-term, self-sustaining economic activity. 

During 2006-2007, the Corporation worked with a number of community economic development organizations to achieve the specific goals identified and initiated by communities. Investment in communities helps to create a competitive business climate on the Island, ultimately encouraging business start-up and as attracting new investment to the region. 

Community development took many forms throughout the year. Projects included strategic planning in Sydney Mines, infrastructure improvements at Cape Breton University, investment in a new building for the Cape Breton Centre for Craft and Design and for the Francophone community television, as well as many other community development projects.

The Corporation exceeded both its annual and five-year targets for leveraged investment. During 2006-2007, the Corporation leveraged $4.96 million under its Support to Community activities.

ECBC continues to support convention and sporting events. In 2006-2007, it was a major sponsor of the Vince Ryan Memorial Old-timers Hockey Tournament that took place at venues across the Island in March.  The impact of this event during the tourism off-season provided a tremendous boost to the Cape Breton economy. During the year, ECBC also provided support to the 2006 Grand Slam of Curling Event, as well as the 30th Annual Festival of Community Economics.  

As part of the Festival and Events initiative, ECBC supported 70 festival and events across the Island, leveraging over $1.3 million.

Cape Breton Centre for Craft and Design
The Cape Breton Centre for Craft  and Design constructed a new building with financial assistance from ECBC. The new building includes a gallery, studio space, classrooms, display area, library and office space.

ECBC provided financial assistance to the Vince Ryan Memorial Old-timers Hockey Tournament to help maintain and increase off-island registration.

The tournament is one of the largest adult hockey tournaments in the world. More than 200 volunteers are needed to run a successful tournament on an annual basis. Since 1989, the tournament has raised approximately $100,000 in scholarships for local high school students.


To attract new business investment to Cape Breton Island.

ECBC's business recruitment and investment
strategy has evolved from research carried out by the Corporation, marketing plan development, community consultation, and partnerships with community stakeholders and other levels of government. 

During the year, ECBC supported a number of business recruitment activities including a business and consumer showcase in Port Hawkesbury. The Corporation also co-sponsored a multi-sector trade show in Alberta (Partner East) to display products and services of companies from Atlantic Canada in an effort to demonstrate the advantages of partnering with Nova Scotian firms.

The Corporation also organized a fact-finding tour of Humber Valley, a resort destination in Newfoundland. ECBC representatives viewed the properties and amenities and met with the developers of the resort to gather additional knowledge and insight to advance a similar Cape Breton initiative, now known as Louisbourg Golf and Spa.

ECBC captures new investment by identifying foreign direct investment from outside Canada, as well as off-Island investment from within Canada. ECBC attracted an estimated $962,918 in new investment to Cape Breton during 2006-2007, achieving close to 50% of its target.

As with ECBC's target for leveraged investment under its Support to Business activities, its target for new investment will be revisited as CBGF winds down. Over the past six years, ECBC has participated in a number of the projects supported by CBGF which, given their size and scope, had resulted in larger than average amounts of investment in Cape Breton.  


To advocate for Cape Breton Island interests, priorities and concerns in government decisions. 

ECBC's advocacy role is aimed at advancing the interests, priorities and concerns of Cape Breton Island in government project selection, decisions and actions. 

The primary advocacy functions include:

• providing advice on issues that can affect the opportunities for economic development on Cape Breton Island through participation in meetings, working groups and committees;
• ensuring awareness of the interests, priorities and concerns of Cape Breton Island on the part of other government departments and agencies through partnerships and networking;
• ensuring an effective two-way process of  information sharing and bringing insight and knowledge of policies, perspectives and priorities on and off the Island; and
• working co-operatively with other government departments on mainland Nova Scotia and in Ottawa.

During the year, ECBC played an advocacy role on a number of issues. The Corporation led a working group comprosed of a number of customer contact centres on the Island, to undertake an examination of employee turnover rates. High levels of turnover are often endemic to this industry, and staffing is challenging when it comes to finding, selecting, training and keeping good staff. The Corporation hired the services of Dan White and Associates to undertake an examination to better understand the underlying causes of employee turnover and to look at the best practices in other centres.

The customer contact industry in Cape Breton continues to play a pivotal role in the local economy. The economic impact of the sector is significant. A study conducted in 2004 determined that the contact centres on the Island spent an estimated $119 million on general operations that year, providing over 3,800 person-years of employment (including spin-off effects) and $113 million in GDP.

Pursuant to the Corporation's Memorandum of Understanding with the CBGF, ECBC hired the services of Ernst & Young Orenda Corporate Finance Inc. to formulate an exit strategy for the CBGF to divest of Cape Breton Casting Inc. (CBCI). During 2005-2006, CBGF exercised its rights under its contract with CBCI, assuming control of the company in March 2006. Over the course of establishing this plant, the shareholders of CBCI ran into financial difficulties and were unable to secure the required financing to complete the project.

During 2006-2007, ECBC continued to work in partnership with First Nations communities throughout Cape Breton toward the achievement of economic development goals. ECBC continued to be involved in a number of committees and working groups where Cape Breton perspectives were highlighted. They included:

• Tripartite Economic Development Committee (TEDC): a partnership between the federal and provincial governments and First Nations communities of Nova Scotia.
• Economic Development Officers Network  (EDON): a voluntary group that meets on a regular basis to address issues related to Aboriginal peoples.
• Marshall Response Initiative:  an initiative led by Indian and Northern Affairs Canada.  It is part of the federal government’s response to the Marshall decision that includes a component for economic development in First Nations communities.

Sydney Tar Ponds Remediation
During the year, representatives from ECBC worked with five Aboriginal communities on procurement activities related to the remediation of the Sydney Tar Ponds. The Sydney Tar Ponds Agency has set aside a portion of the cleanup funds for Aboriginal businesses. Only companies with at least 51% Aboriginal ownership and control will be eligible to bid. In addition, if a bidder has more than five full-time employees, at least one-third of them must be at the least Aboriginal. There are also Aboriginal content requirements for subcontractors.


To help provide a sound basis for the Corporation's policy priorities and programs. 

ECBC research and analysis reflects and supports:
• emerging local economic issues;
• structural challenges and opportunities;
• sector specific considerations;
• federal policies;
• ECBC's program and development initiatives; and
• the need for ongoing performance management and evaluation.

During 2006-2007, ECBC’s Policy Unit carried out three research studies. Each of the studies is described below.

Turnover Analysis of the Tele-service Industry on Cape Breton Island
The Corporation contracted the services of Dan White and Associates to carry out an in-depth analysis of employee turnover in the tele-service industry on Cape Breton.
The analysis determined that human resource practices at Cape Breton contact centres may benefit from refinement and customization appropriate to the local context. Cape Breton centres are large compared with the average size of Canadian and U.S. operations; therefore, their circumstance with respect to turnover is unique and seems to require special interventions. Teamwork, training and specific retention strategies take on more importance under such circumstances, and employee career paths are fundamentally key to motivation and empowerment.

Economic Impact Analysis of Cape Breton Casting Inc. (CBCI)
ECBC carried out an economic impact assessment of CBCI. CBGF currently oversees the operation of the facility and is seeking a buyer for the operation. The main results of the analysis are as follows:
• During the construction phase, CBCI created total employment of 40.1 person years, household income of $1.2 million and gross domestic product of $1.5 million.
• For a typical year of operation, CBCI provides total employment of 108 direct and indirect jobs, a total wage bill of $4.2 million and a total gross domestic product of $5.0 million.
• The operation also provides estimated fiscal benefits of $0.57 million per year - in federal tax revenue and $0.59 million in provincial tax revenue.

Cost Benefit Analysis of the ECBC e-Commerce Initiative
The Corporation commissioned the services of Canmac Economics to carry out an economic benefit analysis of ECBC's e-Commerce initiative to determine its impact on Cape Breton's tourism participants. This study began in the 2005-2006 fiscal year. It was determined, at that time, that there was not enough information to proceed as a number of the
e-Commerce  sites were not yet operational. The study was deferred and completed in December 2006.

The main findings of this report are:
• ECBC e-Commerce  clients were asked to rate their satisfaction with respect to the success of the e-Commerce project on a scale of 1 to 5, 1 being very dissatisfied and 5 being very satisfied. The average score for this question was 4.2.
• Clients were further asked to rate their satisfaction with ECBC's role in assisting with their e-Commerce  projects on the same scale (1-5) as was used in rating the project. The average score regarding ECBC's assistance was 5, as all respondents were very satisfied with ECBC's assistance.
• Over the 2007 to 2011 period, average total sales per client are expected to grow slowly and to reach $1,028,278 by 2011, growth of 20.1% or 4% per year. However, revenue from
e-Commerce  as a percentage of total sales is expected to grow from 27.11% in 2006 to 44.0% in 2011. This represents growth of 62.3% or 12.5% per year. 
• Every $1 spent on e-Commerce  generates $50.7 on sales.
• Over the period 2004 to 2011, it was estimated, on a present value basis, that the program will generate the following benefits:
 • $26.7 million in sales;
 • $7.9 million in wages; and
 • $2.2 million in business profit.
Clients estimate that 44.4% of these benefits would not have occurred without ECBC assistance.

Working with Communities
During the year, the Policy Unit worked with a number of community groups to develop terms of reference for various studies and community projects, including:

• Silver Dart Centennial Association ~ 100th anniversary of flight in Canada; 
• Premium Seafood and Louisbourg Seafood ~Cape Breton Ground Fishery Study; and      
• Louisbourg Merchants’ Association ~ Strategic Planning for the 250th Anniversary of the Second Siege of Louisbourg.


To deliver programs and services, on behalf of government organizations, in an effort to increase the opportunity for a co-ordinated approach to economic development on Cape Breton Island and, specifically, to enhance the growth of both earned incomes and employment opportunities in the region.

ECBC delivers the following programs on behalf of ACOA:

Business Development Program (BDP)
This program is designed to help small- and medium-sized enterprises (SMEs) establish, expand and modernize by offering access to capital in the form of interest-free, unsecured loans. The BDP also provides non-repayable support to non-profit organizations.

Consultant Advisory Services (CAS)
The CAS program provides clients with access to consulting expertise in pursuing business opportunities or solving problems.

Municipal Rural Infrastructure Fund (MRIF)
This program supports small-scale municipal infrastructure projects. The MRIF also includes a component addressing the infrastructure needs of First Nations communities.

Community Futures Program
This program supports autonomous, not-for-profit CBDCs to help entrepreneurs in rural areas obtain access to the information, advice and capital required to succeed. 

Atlantic Investment Partnership Second Wave
In 2000, the Atlantic Investment Partnership was launched as a $700-million investment to support economic development in Atlantic Canada. The Atlantic Investment Partnership has entered its second phase and addresses areas that are fundamental to continued economic growth -- investing in innovation, investing in communities, investing in people, and investing in the business climate.

Incorporated in August 2000, the CBGF has its own Board of Directors and reports separately to Parliament through its corporate plan and annual report. ECBC entered into an MOU with the CBGF to provide administrative and operational support. Staff was assigned by ECBC to support the Board of Directors and operations. Results and annual reports for the CBGF can be found on the website at


ECBC reactivated DARR (Cape Breton) Limited in 2003, a real estate holding company, in order to consolidate real property management and promote economic development in Cape Breton.

DARR deals with the acquisition and disposition of properties that financially benefit Cape Breton by encouraging private sector investment. DARR follows the policies of ECBC and reports its operational and financial activities at all ECBC Board meetings.

During the 2006-2007 fiscal year, DARR operated four properties in the Sydney and Port Hawkesbury area. Three of these properties are predominately office space and are occupied by public and private sector firms. The Point Edward Resource Centre was vacant during 2006-2007 and is available for sale.

ECBC and the Cape Breton Development Corporation (DEVCO) have collaborated during DEVCO’s  wind-up process in an effort to maximize the further potential for economic development as it relates to the transfer of DEVCO’s real property assets to ECBC. To that end, a formal MOU was executed in 2005 and renewed in 2006. The first custodial transfer occurred in January 2007, which involved the transfer of approximately 3,700 acres of land to ECBC. Both Crown corporations are currently working toward a second phase, which is expected to occur in mid-fall 2007.


ECBC is divided into a number of operational units that report to the Vice-President. The units consist of:

• Commercial Accounts;
• Community Economic Development;
• Internal Audit;
• Corporate Services; and
• Communications and Access to Information.

Training is offered in a number of areas including French language training, annual professional development for the Corporation's certified accountants, university-level courses, leadership training, corporate governance training, life planning and retirement seminars, and workplace health and safety conferences.

Many ECBC employees have significant private-sector experience, contributing to the overall success of the Corporation as a socially connected entity. Over 13% of the staff hold professional designations and 6% have masters degrees. Approximately 19% of staff members are bilingual.

ECBC has two locations to serve clients in its mandate area. The main office, located in Sydney, Nova Scotia, is the day-time home to 44 employees. The Corporation also has a satellite office in Port Hawkesbury, Nova Scotia, which is staffed by two employees.

ECBC's employees live in local communities and are committed to fulfilling the Corporation's mandate to improve the local economy. They are active volunteers in their communities and continue to make a difference. They have been proud to support many different charities such as Big Brothers & Big Sisters, Canadian Cancer Society, and the Every Woman's Centre.



The Corporation is committed to accountability and transparency in its operations. A policy of proactive disclosure, whereby all travel and hospitality expenses of the management team are regularly posted on its website, has been implemented. The site also contains a detailed listing of all approved projects that is equipped with a search feature.

ECBC became subject to the Access to Information Act (ATIA) and Privacy Act (PA) in September 2005. Since that time, the Corporation has invested in training for staff and additional software to facilitate its compliance with this new legislative requirement. In terms of requests, the Corporation experienced a high volume of requests during 2005-2006; however the demand diminished during 2006-2007. A total of 20 ATIA requests and two PA requests were carried over from 2005-2006 into the new fiscal year. Only three ATIA requests and one PA request were received in 2006-2007. As of March 31, 2007, there were no outstanding ATIA requests and only one outstanding PA request. The Corporation also administers the ATIA and PA on behalf of CBGF.

ECBC employees and clients are entitled to have their dignity as human beings respected and to work in an environment free from intimidation, hostility or offensiveness. ECBC, is therefore, committed to creating and maintaining a work and business environment that is free from harassment and discrimination on prohibited grounds.

Since its inception, ECBC has been committed to partnering with educational institutions and key stakeholders to build an economy that offers opportunities for youth.

With out-migration numbers increasing, creating opportunities for our youth has become more important than ever. ECBC recognizes that youth are the future of the Island and collectively we must increase opportunities in education and entrepreneurship.

ECBC delivers the "Students in Business" program to encourage young entrepreneurs throughout its mandate area to create their own summer employment and gain valuable experience in the field of entrepreneurship. ECBC also continues to hire six students each year for summer employment in all areas of economic development.

The Corporation will continue to work with the Junior Chamber International (JCI). The Corporation assists the JCI in a number of areas, particularly entrepreneurship and skills development, export development and internships.


The Corporation is committed to the principles of the Official Languages Act (OLA) and works closely with the minority language (Francophone) communities on the Island that have identified economic development as a priority and a determining factor to their survival and growth.

With a bilingual staff complement of approximately 19%, ECBC maintains a core bilingual staff to provide the Corporation's various programs and services in both official languages. In 2005-2006, the Corporation established a small language school to assist staff with career advancement and to facilitate language retention. Two members of the management team were involved in full-time language training during 2006-2007.

With regard to its outreach activities, the Corporation has developed a close working relationship with minority language communities on Cape Breton Island and a designated development officer works directly with Francophone community groups and businesses. The Corporation also has an official languages champion, who liaises with the Treasury Board Secretariat and other Crown corporations for the promotion of official languages within the Corporation.

Good communications is key to building strong relationships with the Corporation's shareholder and the community it serves. The overall goal of the communications team is to relate how the Government of Canada, through ECBC, is investing to improve the economic outlook of Cape Breton Island.

ECBC projects have affected almost every community in the Corporation's mandate area. To encourage a sense of pride and facilitate further investment, it is important to recognize, celebrate and communicate these achievements.

Over the past year, ECBC has issued 13 releases on various initiatives and participated in seven trade shows or trade missions -- as either a corporate sponsor or an exhibitor.

Working directly with ACOA, the ECBC Communications Unit continues to assist and promote a number of initiatives related to entrepreneurship, innovation, trade and women in business.

The Corporation has its own in-house graphic design capability that not only reduces costs, but enables the Corporation to maintain greater control over the design and management of public affairs materials. A total of 54 operational and promotional ads were created and placed in various publications throughout the year. The Corporation also produces its own annual report in-house, with staff taking responsibility for all aspects of the process from editorial content and layout and design to printing and binding.

Government On-line (GOL) is a government-wide initiative to use information and communications technology to provide Canadians with enhanced access to citizen-centred government services on-line and in the official language of their choice.

To this end, ECBC has worked with ACOA to implement the secure channel on-line services for ACOA clients. In 2006, ECBC launched its own client portal called "ECBC Direct." This secure channel infrastructure enables clients to have access to their project information and to submit claims on-line. It also enables clients to correspond with ECBC officials in confidence. Further enhancements to this service may include secure on-line application submission.


Government considers an effective board of directors to be a vital element of the corporate governance and accountability regime for Crown corporations.
Guidelines for Corporate Governance in Crown Corporations and Other Public Enterprises, Treasury Board Secretariat, Ottawa, June 1996.

Corporate governance refers to the process and structure for overseeing the direction and management of a corporation so that it carries out its mandate and objectives effectively. 

ECBC is a distinct legal entity, established by an act of Parliament as an instrument of public policy in the area of economic development. The ECBC Act sets out the Corporation's mandate, powers and objectives. Authority is vested in its Board of Directors comprising the Chairperson/CEO, the Vice-President and five other directors appointed by the Minister with the approval of the Governor in Council.

The legislative framework for ECBC's governance and accountability regime is set out in Part X of the FAA. It places the Board of Directors at the centre of the governance process. A major change in ECBC's governance and accountability regime occurred with the passing of the Federal Accountability Act in December 2006. As part of the government's efforts to strengthen overall accountability, the  Act contained amendments to the ECBC Act whereby the current combined position of Chair and CEO will be eliminated. In its place, a new CEO position will be created, replacing the current Vice-President's position. Separating the function of Chair from the CEO position is in keeping with current good governance practices. The amendments come into effect on April 1, 2007.

The ECBC Board of Directors oversees the management of the Crown corporation and holds management responsible for its performance. In turn, the Board is accountable to Parliament through its responsible Minister. In accordance with the FAA, ECBC must submit annually, for government approval, a corporate plan and capital budget and operating budget.

It also must prepare an annual report, which is the principal means by which the Corporation is accountable to Parliament and all Canadians. The annual reports as well as summaries of all budgets and plans are tabled in Parliament.

All Crown corporations are required to maintain proper financial statements that are subject to annual audit. The Office of the Auditor General of Canada has been appointed auditor for ECBC. Audit provisions for all Crown corporations are the same and include an annual audit opinion on the fair presentation of the financial statements and on compliance with significant authorities, and a provision to raise other matters as the auditors deem appropriate. ECBC is also subject to a value-for-money audit known as a special examination, which is conducted once every five years.

Corporate governance is an ongoing priority for the ECBC Board of Directors. In 2001, working in conjunction with the Conference Board of Canada, the Corporation conducted an assessment of its compliance with Guidelines for Corporate Governance in Crown Corporations, produced by the Department of Finance and the Treasury Board of Canada. Certain benchmarks were established. A follow-up survey was conducted in 2002 by the Conference Board of Canada. As a result of this exercise, ECBC established a corporate governance self-assessment tool to track key components of good corporate governance practices as they relate ECBC's specific legislation, mandate and organizational structure.

The self-assessment is completed on a yearly basis for inclusion in the Corporation's annual report. Management's comments, analysis and rationale behind the assessment of each of the guidelines are also included.


Risk refers to the uncertainty that surrounds future events and outcomes. It is the expression of the likelihood and impact of an event with the potential to influence the achievement of an organization's objectives. A certain element of risk is inherent in all of ECBC's operations. Risk management is a systematic approach to establish the best course of action within the context of uncertainty, by identifying, assessing, understanding, acting on and communicating risk issues.

In 2005, ECBC commissioned the services of Deloitte & Touche LLP to undertake the development of a risk management framework that would form the basis of a structured, systematic, and disciplined approach to comprehensive risk management. The framework confirmed the significant risks impacting ECBC; provided a common means of classifying and communicating risk across the Corporation; provided a structure for the assessment, reporting and monitoring of risks by various groups; and ensured that due consideration is given to all risks in a day-to-day environment.

The Corporation is working toward completing a more comprehensive risk management strategy addressing all aspects of the Corporation's operations by the end of 2007-2008. One area of development during 2006-2007 has been the development of an internal process to carry out environmental risk assessments on ECBC projects and operations in accordance with the Canadian Environmental Assessment Act (CEAA).

Environmental assessment is a process to predict the environmental effects of proposed initiatives before they are carried out. An environmental assessment:
• identifies possible environmental effects;
• proposes measures to mitigate adverse effects; and
• predicts whether there will be significant adverse environmental effects, even after the mitigation is implemented.

The CEAA is the legal basis for the environmental assessment process required of federal entities. The Act sets out the responsibilities and procedures for carrying out the environmental assessments of projects that involve federal government decision making.

ECBC has been subject to the CEAA since 2006. The Corporation has made investments in staff training to carry out its own environmental assessments and to ensure that all projects and internal initiatives are assessed for environmental impact. Any identified mitigation measures are incorporated into the terms and conditions of the assistance agreement between ECBC and the applicant. Ongoing monitoring of 100% of projects is done to ensure that conditions have been respected and proper mitigation procedures have been implemented. This is a key component of ECBC's approach.


Operating and Development Activities
ECBC’s total parliamentary appropriation was $8.655 million in 2006-2007 (2006 - $8.650 million).

Development expenses in the form of non-repayable assistance totaled $4.9 million. Of this amount, the Corporation provided $1.3 million in direct support to business and $3.5 million in support to communities. In addition, other areas of focus included in the Corporate Plan, such as policy and investment, totalled $0.1 million.

In addition to the above-noted non-repayable assistance, the Corporation also provided repayable loans to businesses totalling $2.9 million (2006 - $2.8 million), which is not reflected in the above expenditures. The combined repayable and non-repayable assistance in 2006-2007 totalled $7.8 million, which is $0.7 million greater than budget. Additional funds were made available to applicants by way of development assistance as a result of recoveries being $0.7 million in excess of budget. The excess revenues relate to additional loans and repayable contribution collections, rentals, bad debt recoveries and other income. Therefore, it is felt the Corporation did indeed exceed its planned mandate.

Program Support
The Corporation employs 46 individuals delivering programs, administering payments, collections, trade and development work and various other functions. These individuals are located in offices in both Sydney and Port Hawkesbury to ensure that access to our programs and services is available locally to all clients within our mandate area.

Staff deliver ECBC, ACOA and CBGF programming. In order to better capture time spent in each area, the Corporation uses an electronic time-keeping system. All employees enter their time electronically and allocate their time between ECBC, ACOA and CBGF on a daily basis. The time system assists in providing a reasonably accurate reflection of time spent and costs recoverable for the program areas.

Overall, administrative costs incurred in 2006-2007 are reasonable in relation to budget and the prior year as detailed below.

Program support costs are $0.1 million more than the prior year and $0.2 million less than budget due to a number of factors including staff departures and secondment arrangements.

The percentage of overhead (administrative and program support) to development expenses and loan disbursements has decreased significantly from 1999. The percentage for 2007 is reported at 24% (2006 - 20.6%) compared with 38.7% in 1999.

The combined ECBC/ACOA program support costs are 17.0% (2006 - 16.6%) of the total programs delivered for ECBC and ACOA, which is reasonable in relation to the rates for the previous eight years (as displayed in the graphs below).

The Corporation maintains cash in a Canadian chartered bank and receives interest on a monthly basis. Interest is calculated on the average monthly balance at prime rate minus 1.75%. At March 31, 2007, the cash balance was $5.9 million and the interest rate paid by the bank was 4.25%.

Several types of loan instruments are used by the Corporation including forgivable loans, interest-bearing loans, non-interest bearing loans and conditionally repayable contributions.

The amount of forgiveness and all conditionally repayable contributions are charged to operations when the loan is issued. If terms and conditions of the loan contract are not fulfilled, the forgiveness or conditionally repayable amounts are reversed and the balance becomes receivable.

The Corporation has focused on providing a mix of investment vehicles to clients including loans, grants and conditionally repayable contributions in order to achieve the appropriate balance required by clients to grow and expand their business yet maximize the return on capital to the Corporation. By increasing the loan portfolio, all payments collected can be loaned to clients in subsequent years.

During the year, the Corporation disbursed $2.9 million in loans to clients, in addition to grants and contributions under the various programs administered by ECBC. The total loans and repayable contributions outstanding at March 31, 2007 are $11.8 million and consist of 45 accounts. The average loan and repayable contribution balance is $261,860 in 2007, compared to $38,555 in 1999.

Collections on loans totalled $1.0 million (2006 - $1.2 million) during the year, which represents 12.0% (2006 - 16%) of the previous year’s closing net balance and is $0.5 million in excess of the Corporate Plan budget.

As part of the due diligence process conducted by program officers, the Corporation mitigates the risk of loss by obtaining security, where appropriate, from the majority of clients. The Corporation holds security on 53% (2006 - 61%) of the loans outstanding at March 31, 2007. Security is obtained to protect the Corporation in the event of loan default. Security includes any one or a combination of the following: 1st and 2nd position mortgages on land and buildings; chattel mortgages; personal and corporate guarantees; general security agreements; first and floating debentures or promissory notes.

ALLOWANCE for loan impairment
The allowance for loan impairment as a percentage of the loan balance outstanding has decreased significantly from 1999 to the current year percentage of 19.5% (2006 - 19.4%).

The allowance for loan impairment has been determined on an individual loan basis based on current information at year end and management’s knowledge of the entity’s circumstances. If it is determined that the collection may not be received on a timely basis, a provision for loan impairment is recorded in the financial statements.

Collections on the ACOA portfolio managed by ECBC for the 2006-2007 fiscal year totalled $4,312,000 (2006 - $3,263,000), which is 111% (2006 - 104%) of the established target amount.

The Corporation has not only met  ACOA’s collection targets for the past seven years, it has exceeded the target as displayed in the accompanying chart.

The collection efforts of the Corporation have also resulted in the arrears rate of ACOA receivables being 4% (2006 - 4%). The results have been achieved due to the concerted efforts of both collection staff and program officers.

Equity Investments
There were no new equity investments made during the 2006-2007 fiscal year. The total number of equity investments stands at three (2006 - 4). Redemption of preferred shares totalled nil (2006 - $120,000).

Investment in Subsidiaries
Cape Breton Growth Fund Corporation
The Corporation has recorded the investment of $1 in the CBGF on the cost basis as the Governor  in Council has instructed the CBGF to act as a parent Crown corporation. Therefore, control or significant influence does not exist and the investment is accounted for on a cost basis.

The wind-up of the CBGF will commence when the last dollar of the $91 million fund is committed. It is anticipated that the fund will be fully committed and the remaining assets and liabilities of the CBGF will be transferred to the Corporation in 2007-2008.

The Corporation operates its subsidiary DARR (Cape Breton) Limited as a real estate holding and development company. DARR will acquire, manage and retain real property to support the delivery of economic development programs administered by ECBC. DARR’s financial statements are presented on a consolidated basis with ECBC.

Property and Equipment
Property and equipment acquisitions were $731,803 which is slightly less than the Corporate Plan budget amount of $775,000. Planned acquisitions of equipment and renovations to existing property occurred, including renovations to  MacDonald House. During 2006-2007, renovations were completed at Silicon Island, and Cape Breton Development Corporation has relocated to the Silicon Island facility.

Provision of Services - ACOA
The Corporation administered $19.6 million (2006 - $19.9 million) of various ACOA programs during 2007 and recovered $2.3 million (2006 - $2.5 million) for salaries, professional fees and other operating costs related to delivering services pursuant to the ECBC/ACOA MOU.

Sydport Industrial Park
A settlement agreement was signed in September 2005, with an amended cash purchase price of $1.255 million. Payments totalling $72,929 were received in 2006-2007 with payments of $252,071 and $325,000 due in 2008 and 2009 respectively. Repayments are non-interest bearing except in the event of a default.


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