City of Langford — Consolidated Financial Statements for the year ended December 31, 2025

Officials

• Mayor: Scott Goodmanson
• Councillors:
  • Kimberley Guiry
  • Colby Harder
  • Mark Morley
  • Mary Wagner
  • Keith Yacucha
  • the Late Lillian Szpak
• Chief Administrative Officer: Darren Kiedyk, CPA, CGA
• Director of Finance: Michael Dillabaugh, CPA, CA
• City Engineer: Katelyn Balzer, P.Eng.
• City Planner: Leah Stohmann, RPP, MCIP
• Fire Chief: Christopher Aubrey
• Auditors: KPMG
• Solicitors: Young Anderson
• Bankers: Bank of Montreal
• Police: RCMP - West Shore

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Management's Responsibility for the Consolidated Financial Statements

Darren Kiedyk
Chief Administrative Officer

Michael Dillabaugh
Director of Finance

The accompanying consolidated financial statements of the City of Langford (the "City") are the responsibility of management and have been prepared in compliance with legislation, and in accordance with Canadian public sector accounting standards for local governments as recommended by the Public Sector Accounting Board of The Chartered Professional Accountants of Canada. A summary of the significant accounting policies are described in note 1 to the consolidated financial statements. The preparation of financial statements necessarily involves the use of estimates based on management’s judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods.

The City’s management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded in compliance with legislative and regulatory requirements, and reliable financial information is available on a timely basis for preparation of the consolidated financial statements. These systems are monitored and evaluated by management.

City of Langford Council meets with management and the external auditor to review the consolidated financial statements and discuss any significant financial reporting or internal control matters prior to their approval of the consolidated financial statements.

The consolidated financial statements have been audited by KPMG LLP, independent external auditor appointed by the City. The accompanying Independent Auditor's Report outlines their responsibilities, the scope of their examination and their opinion on the City’s consolidated financial statements.

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Independent Auditor’s Report

KPMG LLP
St. Andrew's Square II
800-730 View Street
Victoria, BC V8W 3Y7
Canada

INDEPENDENT AUDITOR’S REPORT

To the Mayor and Councillors of City of Langford

Opinion
We have audited the consolidated financial statements of City of Langford (the Entity), which comprise:

• the consolidated statement of financial position as at December 31, 2025
• the consolidated statement of operations for the year then ended
• the consolidated statement of changes in net financial assets (debt) for the year then ended
• the consolidated statement of cash flows for the year then ended
• and notes to the consolidated financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2025, and its consolidated results of operations, its consolidated remeasurement of gains and losses, its consolidated changes in net financial assets (debt) and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our auditor’s report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian public sector accounting standards, 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.

In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion.

DRAFT
Victoria, Canada
May 12, 2026

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Consolidated Statement of Financial Position

As at December 31, 2025, with comparative information for 2024

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Consolidated Statement of Operations

Year ended December 31, 2025, with comparative information for 2024

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Consolidated Statement of Changes in Net Financial Assets (Debt)

Year ended December 31, 2025, with comparative information for 2024

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Consolidated Statement of Cash Flows

Year ended December 31, 2025, with comparative information for 2024

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Notes to Consolidated Financial Statements

Year ended December 31, 2025

1. Significant accounting policies

(a) Reporting entity
The City of Langford (the "City") is incorporated and operates under the provisions of the British Columbia Local Government Act and the Community Charter of British Columbia.

(b) Basis of accounting
The consolidated financial statements of the City are prepared by management in accordance with Canadian public sector accounting standards for local governments as recommended by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants of Canada. Significant accounting policies adopted by the City are as follows:

The consolidated financial statements include the assets, liabilities, revenues and expenses of the City. The consolidated financial statements also include the City's proportionate interest in the West Shore Parks and Recreation Society ("West Shore"), an organization jointly controlled by the City. The City does not administer any trust activities on behalf of external parties.

The City follows the accrual method of accounting for revenues and expenses. Revenues are normally recognized in the year in which they are earned and measurable. Expenses are recognized as they are incurred and measurable as a result of receipt of goods or services and/or the creation of a legal obligation to pay.

Government transfers are recognized in the consolidated financial statements as revenues in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amounts can be made, except when and to the extent the transfer gives rise to an obligation that meets the definition of a liability.

Property tax revenue is recognized on an accrual basis using approved tax rates and the anticipated assessment for the current year. Parcel tax revenues are recognized in the year that they are levied.

Revenue from unilateral transactions is recognized when the City has the ability to claim or retain an inflow of economic resources and a past transaction or event giving rise to the asset has occurred. Revenue from exchange transactions is recognized when or as the City has satisfied performance obligations.

(c) Revenue recognition
(As described above.)

(d) Deferred revenue
Deferred revenue includes grants, contributions, and other amounts received from third parties pursuant to legislation, regulation and agreement which may only be used in certain programs, in the completion of specific work, or for the purchase of tangible capital assets. In addition, certain user charges and fees are collected for which the related services have yet to be performed. Revenue is recognized in the period when the related expenses are incurred, services performed, or the tangible capital assets are acquired thereby extinguishing any liability to the City.

Development cost charges are amounts which are restricted by government legislation or agreement with external parties. When qualifying expenditures are incurred, development cost charges are recognized as revenue in amounts which equal the associated expenses.

Receipts restricted by third parties are deferred and reported as refundable deposits under certain circumstances. Refundable deposits are returned when the third party meets their obligations or the deposits are recognized as revenue when qualifying expenditures are incurred.

(e) Refundable deposits
(As described above.)

(f) Investment income
Investment income is reported as revenue in the period earned. When required by the funding government or related Act, investment income earned on deferred revenue is added to the investment and forms part of the deferred revenue balance.

(g) Cash equivalents
Cash equivalents include short-term, highly liquid investments that are cashable on demand or have a term to maturity of 90 days or less at acquisition.

(h) Long-term debt
Long-term debt is recorded net of related repayments.

(i) Non-financial assets

(i) Tangible capital assets
Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations.

Tangible capital assets are recorded at cost which includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets, excluding land, are amortized on a straight line basis over their estimated useful lives as follows:

(ii) Contributions of tangible capital assets
Tangible capital assets received as contributions are recorded at their fair value and are recorded as revenue at the date of receipt.

(iii) Works of art and cultural and historic assets
Works of art and cultural and historic assets are not recorded as assets in these financial statements.

(iv) Leased tangible capital assets
Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as leased tangible capital assets. All other leases are accounted for as operating leases and the related payments are charged to expenses as incurred.

(v) Inventory of supplies
Inventory of supplies held for consumption is recorded at the lower of cost and replacement cost.

(vi) Contaminated sites
Contaminated sites are defined as the result of contamination being introduced in air, soil, water or sediment of a chemical, organic, or radioactive material or live organism that exceeds an environmental standard. A liability for remediation of contaminated sites is recognized, net of any expected recoveries, when all of the following criteria are met:

1. An environmental standard exists;
2. Contamination exceeds the environmental standard;
3. The City is directly responsible or accepts responsibility for the liability;
4. Future economic benefits will be given up; and
5. A reasonable estimate of the liability can be made.

(j) Employee benefits
The City and its employees make contributions to the Municipal Pension Plan. These contributions are expensed as incurred. The costs of a multi-employer defined contribution pension plan, such as the Municipal Pension Plan, are the employer's contributions due to the plan in the period.

(k) Asset retirement obligation
An asset and liability for the removal of asbestos has been recognized based on estimated future expenses on closure of the site and post-closure care. The capital assets affected by the asbestos liability are being amortized following the amortization accounting policies outlined in 1(i)(i) above.

An asset retirement obligation is recognized when, as at the financial reporting date, all the following criteria are met:

1. There is a legal obligation to incur retirement costs in relation to a tangible capital asset;
2. The past transaction or event giving rise to the liability has occurred;
3. It is expected that future economic benefits will be given up; and
4. A reasonable estimate of the amount can be made.

(l) Financial instruments
Financial instruments include cash and cash equivalents, investments, accounts receivables, property taxes receivable, and accounts payables and accrued liabilities and debt.

Financial instruments are recorded at fair value on initial recognition. Derivative instruments and equity instruments that are quoted in an active market are reported at fair value. All other financial instruments are subsequently recorded at cost or amortized cost unless management has elected to carry the instruments at fair value. Management has not elected to carry any other financial instruments at fair value.

Unrealized changes in fair value are recognized in the statement of remeasurement gains and losses until they are realized, when they are transferred to the statement of operations. There are no unrealized changes in fair value as at December 31, 2025 and December 31, 2024. As a result, the City does not have a statement of remeasurement gains and losses.

Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs, which are amortized using the straight-line method or effective interest rate method.

All financial assets are assessed for impairment on an annual basis. When a decline is determined to be other than temporary, the amount of the loss is reported in the statement of operations and any unrealized gain is adjusted through the statement of remeasurement gains and losses. When the asset is sold, the unrealized gains and losses previously recognized in the statement of remeasurement gains and losses are reversed and recognized in the statement of operations.

(m) Public private partnerships (P3)
A P3 arrangement occurs between a public sector entity and a private sector entity where the private sector entity designs, builds, finances and operates the infrastructure.

The City recognizes infrastructure assets acquired under P3 arrangements as tangible capital assets when the City controls the purpose and use of the infrastructure, access to the future economic benefits and exposure to risks of the infrastructure assets, and significant residual interest in the infrastructure, if any, at the end of the P3’s term. The assets are initially recognized at fair value, including costs incurred directly by the City and are subsequently amortized over the assets’ useful lives in accordance with the amortization accounting policy (note 1(i)(i)).

Under the financial liability model, the P3 related liability is initially recognized at the same amount as the assets, less any consideration paid to the private sector entity, and is subsequently measured at amortized cost using the interest rate implicit in the P3 arrangement.

Under the user-pay model, the private sector partner has the rights to earn revenue from third party users or access to another revenue-generating asset as compensation. The P3 related liability is initially recognized at the same amount as the assets. Revenue from the user-pay model is recognized and the liability reduced according to the terms of the agreement.

(n) Use of estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Estimates include assumptions used in estimating historical cost and useful lives of tangible capital assets, estimating fair value of contributed tangible capital assets and in estimating provisions for accrued liabilities and asset retirement obligations. Actual results could differ from these estimates.

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2. Cash and cash equivalents

The City has an approved and undrawn operating line of credit of $10,500,000.

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3. Deferred revenue

Development cost charges

Deferred revenue, reported on the consolidated statement of financial position, is comprised of the above.

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4. Debt

(a) Debt
Debt consists of MFA variable rate short term financing in the amount of $30,509,910 (2024 - $NIL) and TD Bank interim financing facilities in the amount of $37,978,976 (2024 - $38,673,494). TD Bank debt bears interest at the Canadian Overnight Repo Rate Average. The current rates of interest are 2.85% (MFA) and 3.17% (TD Bank).

(b) Principal payments on debt for the next five years and thereafter are as follows:

• 2026 $ 1,636,620
• 2027 $ 8,002,150
• 2028 $ 7,113,030
• 2029 $ 10,719,610
• 2030 and thereafter $ 41,017,476

Interest expense on debt during the year was $1,908,389 (2024 - $1,529,180).

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5. Tangible capital assets

(a) Assets under construction
Assets under construction have a value of $63,331,514 (2024 - $40,505,1476) and have not yet been amortized. Amortization of these assets will commence when the asset is put into service.

(b) Contributed tangible capital assets
Contributed tangible capital assets have been recognized at fair market value at the date of contribution. The value of contributed capital assets received during the year is $58,425,424 (2024 - $23,998,203) comprised of land $37,870,192 (2024 - $19,203,946), land improvements $810,510 (2024 - $365,479), Vehicles, machinery, equipment $nil (2024 - $nil), sewer and storm infrastructure $9,314,454 (2024 - $1,254,462) and roads infrastructure $10,430,268 (2024 - $3,174,316).

(c) Works of art and historical treasures
The City manages and controls various works of art and non-operational historical cultural assets including buildings, artifacts, paintings and sculptures located at City sites and public display areas.

(d) Write-down of tangible capital assets
No tangible capital assets were written down in 2025 or 2024.

(e) West Shore Parks and Recreation Society
The City's proportionate share of West Shore Parks and Recreation Society assets includes land, buildings, and equipment which are subject to amortization policies consistent with those of the City.

(f) Ministry of Transportation and Transit (MoTT)
In 2025, the City transferred $259,332 of assets to the Ministry of Transportation and Transit (MoTT), representing project costs incurred to design, engineer, and construct infrastructure, based on terms of the agreement between the City and the Ministry of Transportation and Transit (MoTT). The transfer is recorded as an expense in the consolidated statement of operations.

Detailed continuity of tangible capital assets:

Accumulated amortization:

Net book value, end of year:

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6. Sewer franchise agreement

Remaining cost to be recovered - (4,800,774) 4,800,774 -
$ 51,836,162 (1,023,641) 4,234,936 $ 55,047,457

During 2004, the City entered into a franchise and partnering agreement with West Shore Environmental Services Inc. ("WSES") and Terasen Utility Services Inc. The term of the agreement is 21 years, with a single 21 year renewal which has been exercised. Under the agreement, the City grants an exclusive franchise to WSES to design, construct, finance, own, and operate and maintain sanitary sewers in the City. The City also grants an exemption from municipal property tax for sewer infrastructure and WSES has been granted an Order in Council to extend that exemption to property taxes for all other jurisdictions. Upon termination of the agreement, the sewer infrastructure constructed by WSES will be acquired by the City for a nominal payment.

WSES will recover its capital costs by imposition of a sewer capital recovery fee ("SCRF") on owners of property who wish to connect to the sewer. WSES will also bill and collect all user fees. WSES will pay the City franchise fees that are estimated to total $11 million over the 21 year term of the agreement.

The City records the costs of sewer infrastructure constructed by WSES $4,234,936 (2024 - $4,900,855) and corresponding remaining cost to be recovered. The remaining cost to be recovered is reduced as SCRF's are collected by WSES.

The cost of WSES sewer infrastructure, less residual value, is amortized on a straight line basis over their estimated useful lives, 60 to 70 years.

During the 2025 year, the remaining costs to be recovered were in excess of the amount owing. In accordance with the agreement, the City has recorded an agency fee of the excess in the amount of $6,281,883 (2024 - $2,916,315).

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7. Accumulated surplus

Accumulated surplus consists of individual fund surplus and reserves and reserve funds as listed above.

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8. Taxation

Less taxes levied for other authorities:

Taxation revenue, reported on the consolidated statement of operations, is comprised of the amounts above: $ 64,458,520 (2025) and $ 56,358,739 (2024).

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9. Government transfers

The City recognizes the transfer of government funding as revenue when received and all related eligibility criteria and stipulations have been satisfied.

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10. Municipal pension plan

The City and its employees contribute to the Municipal Pension Plan (the "Plan"), a jointly trusteed pension plan. The board of trustees, representing plan members and employers, is responsible for administering the Plan, including investment of the assets and administration of benefits. The Plan is a multi-employer defined benefit pension plan. Basic pension benefits provided are based on a formula. As at December 31, 2024, the plan had about 273,000 active members and approximately 133,000 retired members. Active members include approximately 47,000 contributors from local governments.

Every three years, an actuarial valuation is performed to assess the financial position of the plan and adequacy of plan funding. The actuary determines an appropriate combined employer and member contribution rate to fund the plan. The actuary's calculated contribution rate is based on the entry-age normal cost method, which produces the long-term rate of member and employer contributions sufficient to provide benefits for average future entrants to the plan. This rate may be adjusted for the amortization of any actuarial funding surplus and will be adjusted for the amortization of any unfunded actuarial liability.

The most recent actuarial valuation as at December 31, 2024 indicated a $2,675 million funding surplus for basic pension benefits on a going concern basis. The next valuation will be as at December 31, 2027.

Employers participating in the Plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the Plan records accrued liabilities and accrued assets for the Plan in aggregate with the result that there is no consistent and reliable basis for allocating the obligation, assets and cost to the individual employers participating in the Plan.

The City paid $1,918,138 (2024 - $1,416,787) for employer contributions while employees contributed $1,640,397 (2024 - $1,289,619) to the Plan in fiscal 2025.

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11. Commitments and contingencies

(a) Contingent liabilities
The CRD debt, under provisions of the Local Government Act, is a direct, joint and several liability of the CRD and each member municipality within the CRD, including the City of Langford.

The City is a shareholder and member of the Capital Region Emergency Service Telecommunications (CREST) Incorporated who provides centralized emergency communications, and related public safety information services to municipalities, regional district, the provincial and federal governments and their agencies, and emergency services organizations throughout the Greater Victoria region and the Gulf Islands. Members' obligations to share in funding ongoing operations and any additional costs relating to capital assets are to be contributed pursuant to a Members' Agreement.

From time to time, the City is subject to claims and other lawsuits that arise in the ordinary course of business, some of which may seek damages in substantial amounts. Liability for these claims and lawsuits are recorded to the extent that the probability of a loss is likely and it is estimable. It is considered that the potential claims against the City resulting from such litigation will be covered by insurance and therefore will not materially affect the consolidated financial statements of the City.

(b) Litigation liability
(As described above.)

(c) Commitments

Total Amount Paid or of Contract Accrued

On February 7, 2013, the City entered into a purchase of service agreement with the YMCA/YWCA of Greater Victoria to provide access for Langford residents to an aquatic facility. The City agreed to pay $750,000 per year to be indexed by population every two years from the opening date to a maximum of $950,000 per year for a period of 25 years. In 2023, the City agreed to increase this amount by an additional $950,000.

The City entered into a long-term contract with the Royal Canadian Mounted Police (RCMP) for the provision of police services effective October 1, 1994. Under the terms of this contract, the City is responsible for 90% of policing costs. The 2026 estimated cost of this contract is $16,668,850.

On December 12, 2024, the City entered into an agreement to purchase parkland. As part of a the agreement, the City is committed to purchase all manufactured homes located on the property, if the tenant is unable or does not wish to relocate their manufactured home. These home purchases are to be completed by January 31, 2030. At December 31, 2025, the total purchase commitment is estimated to be $7,767,650.

Operating contracts include a cost of living factor for subsequent years. These have not been included in the total amount of the contract as the cost of living factor for subsequent years is currently not determinable. As at December 31, 2025, the major contracts in progress are as listed above.

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12. Contractual rights

The City has entered into various contracts for rental revenue within the normal course of operations. The estimated contractual rights under these contracts for the years ending December 31 are as follows:

• 2026 $ 2,947,421
• 2027 $ 2,920,611
• 2028 $ 2,845,019
• 2029 $ 2,624,011
• 2030 $ 2,519,265

Total $ 13,856,327

In addition to these contractual rights, the City has agreements with other parties that provide payments to the City based on a percentage earned throughout the year.

The City has entered into an agreement with School District 62 (Sooke) in relation to the installation of a turf field and associated lighting. Under this agreement, the City will receive $650,000 at such time as Provincial funding is approved. The City is unable to estimate when the funds will be received.

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13. Financial plan

Revenues:

• Operating $ 90,659,440
• Capital $ 139,584,940
• West Shore Parks & Rec Society $ 4,830,160
• Less: Transfers from own funds $ 43,163,420
• Proceeds on debt issue $ 60,896,250
• Total revenue $ 131,014,870

Expenses:

• Operating $ 90,659,440
• Capital $ 139,584,940
• West Shore Parks & Rec Society $ 4,702,253
• Less: Capital expenditures $ 139,584,940
• Transfer to own funds $ 10,748,240
• Debt principal payments $ 1,097,010
• Total expenses $ 83,516,443

Annual surplus $ 47,498,427

The financial plan data presented in these consolidated financial statements is based upon the 2025 operating and capital financial plans approved by Council on May 5, 2025. Amortization expense was not contemplated on development of the financial plan and, as such, has not been included. The chart below reconciles the approved financial plan to figures reported in these consolidated financial statements.

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14. West Shore Parks and Recreation Society

(a) Capital asset transfer
The Capital Regional District (the "CRD") transferred the lands and facilities comprising the Juan de Fuca Recreation Centre to the following municipal members (the "Municipalities") effective January 2, 2002; City of Langford, City of Colwood, District of Highlands, District of Metchosin and the CRD (on behalf of a portion of the Juan de Fuca Electoral Area). Effective January 1, 2007 the Town of View Royal became a member of the Society. Effective January 1, 2018, the CRD is no longer a member of the Society.

In 2002 the lands and facilities were transferred to the Municipalities in their proportionate share, as specified in the Co-Owners' Agreement. The lands and facilities were reallocated amongst the members on January 1, 2007 when the Town of View Royal became a member. Future improvements are allocated among the members as per the cost sharing formula in effect each year for each service or facility, as outlined in a Members' Agreement. For 2025, the City's share of improvements purchased by the Society on its behalf is $560,470.

Because the cost sharing formula in the Members' Agreement produces different cost shares for the members from year-to-year, there is a gain or loss on the opening fund balances. In 2025, the City of Langford's change in cost share is $146,782.

The Municipalities have each become members in the Society, which was incorporated to provide parks, recreation and community services to the Municipalities under contract. Under terms of an Operating, Maintenance and Management Agreement, the Society is responsible to equip, maintain, manage and operate the facilities located at the recreation centre. The current agreement has a term of March 1, 2020 to February 28, 2025. The agreement was extended for another five year term to February 28, 2030.

(b) Consolidation

Condensed financial information for the Society is as follows (City's proportion for consolidation purposes was 54.46% in 2025; 54.16% in 2024):

Financial results and budget for the Society are consolidated into the City's financial statements proportionately, based on the cost sharing formula outlined in the Members' Agreement.

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15. Segmented information

The City is a diversified municipal government institution that provides a wide range of services to its citizens, including General Government Services, Protective Services, Engineering and Public Works Services, Community Services and Utility and Enterprise Services. Service Areas were created for the purpose of recording specific activities to attain certain objectives in accordance with regulations, restrictions or limitations.

The accounting policies used in these segments are consistent with those followed in the preparation of the financial statements as disclosed in note 1. The following table provides additional financial information for the foregoing segments. Taxation and grants in lieu of taxes are apportioned to the functions based on their share of the net budgeted expenditures in the Financial Plan.

Note 15 — 2025 Segmented Information

Note 15 — 2024 Segmented information (summary provided in source document — omitted here for brevity in this extract)

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16. Financial risks and concentration of credit risk

(a) Credit risk
Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. The City is exposed to credit risk with respect to the accounts receivable, cash and investments.

The City assesses, on a continuous basis, accounts receivable and provides for any amounts that are not collectible in the allowance for doubtful accounts. The maximum exposure to credit risk of the City at December 31, 2025 is the carrying value of these assets.

The carrying amount of accounts receivable is valued with consideration for an allowance for doubtful accounts. The amount of any related impairment loss is recognized in the statement of operations. Subsequent recoveries of impairment losses related to accounts receivable are credited to the statement of operations. The balance of the allowance for doubtful accounts at December 31, 2025 is $230,738 (2024 - $136,689).

As at December 31, 2025, $4,827,647 (2024 - $7,955,275) of trade accounts receivable were past due, but not impaired.

There have been no significant changes to credit risk exposure from 2024.

(b) Liquidity risk
Liquidity risk is the risk that the City will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The City manages its liquidity risk by monitoring its operating requirements. The City prepares budget and cash forecasts to ensure it has sufficient funds to fulfill its obligations.

Accounts payable and accrued liabilities are generally due within 30 days of receipt of an invoice. There have been no significant changes to the liquidity risk exposure from 2024.

(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates or interest rates will affect the City’s income or the value of its holdings of financial instruments. The objective of market risk management is to control market risk exposures within acceptable parameters while optimizing return on investment.

(i) Foreign exchange risk
The City is exposed to financial risks as a result of exchange rate fluctuations and the volatility of these rates. In the normal course of business, the City makes purchases denominated in U.S. dollars. To help mitigate this risk, the City maintains a U.S. dollar bank account.

As at December 31, 2025 financial instruments denominated in foreign currencies totalled $51,799 USD ($70,995 CAD).

There have been no significant changes to the foreign exchange risk exposure from 2024.

(ii) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market interest rates.

Financial assets and financial liabilities with variable interest rates expose the City to interest rate risk. The City is exposed to this risk through to its interest bearing loans payable and its investments.

The City mitigates interest rate risk on its term debt through regular management and monitoring of interest rate fluctuations and ensuring revenues (primarily Parcel Tax) are adjusted accordingly. Additionally, interest rate risk for financial liabilities are mitigated through corresponding interest rate fluctuations for financial assets; therefore, fluctuations in market interest rates would not significantly impact future cash flows and operations relating to the term debt.

There has been no change to the interest rate risk exposure from 2024.

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17. Impact of tariffs

The imposition of U.S. tariffs on cross-border trade and resulting Canadian counter-measures may result in increased costs for goods and services procured from U.S. suppliers, impacting operations and infrastructure projects. While the long-term impact remains uncertain, the City is actively working to monitor and mitigate the risks and impacts of tariffs.

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18. Growing Communities Fund (GCF) (Unaudited)

The Province of British Columbia distributed conditional GCF grants to communities at the end of March 2023 to help local governments build community infrastructure and amenities to meet the demands of population growth. The GCF provided a one-time total of $1 billion in grants to all 161 municipalities and 27 regional districts in British Columbia.

The City of Langford received $16,464,000 under the Growing Communities Fund in 2023.

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19. Local Government Housing Initiatives Fund (Unaudited)

The City of Langford received $379,457 under the Local Government Housing Initiatives Fund in 2024.

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Staff Report to Special Council

DATE: Tuesday, May 12, 2026
DEPARTMENT: Finance
SUBJECT: 2025 Consolidated Financial Statements

EXECUTIVE SUMMARY:
Attached are the 2025 Draft Consolidated Financial Statements prepared by City staff pursuant to the provisions of the Community Charter, and in accordance with Canadian Public Sector Accounting Standards for local governments as recommended by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada. The financial statements have been audited by KPMG LLP.

Before the auditor’s report can be issued and the financial statements finalized, approval of the statements by Council is required.

OPTIONS:
Option 1
THAT Council approve the 2025 Audited Consolidated Financial Statements as presented.

OR Option 2
THAT Council not approve the 2025 Audited Consolidated Financial Statements as presented.

SUBMITTED BY: Paula O’Keefe, Manager of Financial Management and Reporting

Concurrence:

• Michael Dillabaugh, CPA, CA, Director of Finance
• Melisa Miles, Manager of Legislative Services
• Donna Petrie, Senior Manager of Communications & Economic Development
• Yari Nielsen, Director of Parks, Recreation and Facilities
• Leah Stohmann, RPP, MCIP, Director of Community Planning and Development
• Katelyn Balzer, P.Eng., Director of Engineering and Public Works
• Marie Watmough, Director of Legislative & Protective Services
• Braden Hutchins, Deputy Chief Administrative Officer
• Darren Kiedyk, Chief Administrative Officer

Attachments: DRAFT 2025 Consolidated Financial Statements

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