You are on page 1of 52

ANNUAL REPORT

Walton Edgemont Development Corporation

2011
Walton Edgemont Development Corporation • Edmonton, Alberta

ANNUAL REPORT
For the period ended December 31, 2011

ANNUAL REPORT

Walton Edgemont Development Corporation • Edmonton, Alberta

2011

CONTENTS

Walton Edgemont Development Corporation • Edmonton, Alberta

CEO Message to Shareholders
Management’s Discussion and Analysis
Financial Statements
Directors and Officers

2011 Annual Report • Walton Edgemont Development Corporation

3

CEO Message to Shareholders
We are pleased to present the Annual Report for Walton Edgemont Development Corporation (the “Corporation”). Launched in
2011, the Corporation owns a four-phase residential development located in southwest Edmonton.
As you read through this report, which details the Corporation’s first year of operations, you will see the factors that contribute
to our confidence in this project – it is strategically situated in the anticipated path of growth, it is professionally-managed and it
follows a well-developed strategy that is consistent with local priorities.

Project Milestones
Having raised the required capital as planned, the Corporation acquired the intended land. We will now focus our efforts on meeting
specific development criteria throughout the life of this project. Management expects that the project will be completed within the
approximate time frame disclosed in the prospectus.
The following summarizes several milestones relating to the Corporation:

Q3 2011 
Completed an initial public offering and private placement (collectively, the “Offerings”). The gross proceeds raised from the
Offerings were $30,000,000.

Q4 2011 
Completed the acquisition of the Edgemont Properties.

Q4 2011
Obtained a $29.2 million construction loan to finance Phase 1 of the project.

Q4 2011 
Commenced preliminary grading for Phase 1 of the project.

Northeast view of Walton Edgemont Development Corporation • Fall 2011

4

2011 Annual Report • Walton Edgemont Development Corporation

Edgemont Estates • March 2012

Edmonton

Market Environment
Edmonton’s GDP is forecasted to grow 3.4% in 2012 and unemployment is
projected to drop from 5.5% at the end of 2011 to 5.2% in 20121. Edmonton’s
economy is fuelled by a strong energy sector comprised of primary and secondary
industries that support the exploration, mining and processing of oil from the
Athabasca oilsands of the industrial north. There is renewed interest and significant
investment into several long term mega projects that should provide stimulus and benefit
not only to Edmonton’s energy related industries but also to increasingly diversified non-related
industries within the larger economy.
Edmonton’s strong economic prospects are anticipated to create a significant number of new jobs in 2012,
increasing total employment in Edmonton. Edmonton is forecasted to add approximately 10,000 jobs in 2012,
bringing total employment in Edmonton to approximately 681,000 jobs1.
Increased employment will contribute to accelerated in-migration, and will result in population growth, further supporting
housing demand. Lot servicing activity has continued its positive trend in 2011 since hitting low levels during the recession in 2009.
Given the expected increase in housing demand, combined with the slowdown in the growth of housing supply seen in 2009,
we anticipate that new housing units will need to be brought to market to keep up with expected demand which will benefit
the project. Total housing starts for 2012 are forecasted to be approximately 9,820 units2.

Goals
Overall, the Corporation’s development project is proceeding as planned.
Our goals for 2012 are to:
• obtain contractual commitments from homebuilders for Phase 1 lots;
• complete Phase 1 construction, deliver lots to homebuilders and open show homes to the public; and
• make first distribution on the units comprised of interest payment, plus either principal repayments and or dividends
As Canada and the U.S. move into the next phase of economic growth in 2012, Walton maintains an optimistic outlook for our
managed real estate investments. Our investment team is working collaboratively with local authorities to create successful,
smart-growth communities that realize the highest and best use of our lands, ultimately attaining your and our investment
goals. Our experience is that, with expert management and Walton’s carefully crafted approach, quality investments prevail.
Thank you for your investment in the Corporation, and thank you for your support and confidence in the Walton Group of
Companies.
Best regards,

Bill Doherty
Chief Executive Officer
Walton Edgemont Development Corporation
1) Conference Board of Canada, Metropolitan Outlook Winter 2012, retrieved February 27, 2012.
2) Conference Board of Canada, Metropolitan Outlook 1 Winter 2012, Economic Insights Into 13 Canadian Metropolitan Economies

2011 Annual Report • Walton Edgemont Development Corporation

5

Management’s Discussion & Analysis For the three months ended December 31.  recognition  criteria  and  measurement  concepts  for  assets.  2011  to  December  31.  the  Corporation  has  followed  guidance   issued  by  the  Real  Property  Association  of  Canada  to  the  extent  that  such  guidance  does  not  conflict  with  the  requirements   under  IFRS  or  the  definitions. 2011 March  26.  the  completion  date  for  the  serviced  lots  and  the   Corporation’s  cost  of  capital.  IFRS  has  not  issued  rules  and  guidance   applicable  to  the  real  estate  investment  and  development  industry.  The  MD&A  should  be  read  in  conjunction  with  the  Corporation’s  audited   financial  statements  for  the  period  ended  December  31.  As  this  is  the  first  year  of   operations  of  the  Corporation.  2011  and  the   period  from  May  5.  Changes  in  these  estimates  and  assumptions   could  cause  actual  results  to  differ  materially  from  those  reported.  and  the  recognition  of  future  tax  assets.sedar.  2012   The  following  management’s  discussion  and  analysis  (“MD&A”)  is  a  review  of  the  financial  condition  and  results  of  operations   of  Walton  Edgemont  Development  Corporation  (the  “Corporation”)  for  the  three  months  ended  December  31.  and  the  reported   amount  of  revenues  and  expenses  during  the  period.  these  financial  statements  have  also  been  prepared  in  accordance  with  IFRS  1:  First-­‐time   Adoption  of  International  Financial  Reporting  Standards.     Additional  information  about  the  Corporation  is  available  on  SEDAR  at  www.  The  estimates  and  assumptions  that  have  the  most  significant  effect  on   the  amounts  recognized  in  the  Corporation’s  financial  statements  are  related  to  the  recoverability  of  land  held  for   development  and  land  development  costs.  In  assessing  the  recoverability  of  land  held   for  development  and  land  development  costs.  2011.  which  requires  management  to  make  estimates  and   assumption  regarding  the  likelihood.com.  In  limited  situations.  l iabilities.   All  financial  information  is  reported  in  Canadian  dollars  and  has  been  prepared  in  accordance  with  International  Financial   Reporting  Standards  ("IFRS”)  as  issued  by  the  International  Accounting  Standards  Board  (“IASB”).  timing  and  level  of  future  taxable  profits.  the  timing  of  lot  sales.  In  such  instances.  2011.  liabilities  and  equity  at  the  date  of  the  financial  statements.  the  costs  to  service  the  lots.   6 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .  significant   judgment  is  required  in   determining  the  amount  of  deferred  tax  assets  that  can  be  recognized. 2011 and the period from May 5. 2011 to December 31.    management  is  required  to  make  estimates  and  assumptions  regarding  the  sale   price  for  serviced  lots.   Critical Accounting Estimates The  preparation  of  financial  information  in  conformity  with  IFRS  requires  management  to  make  estimates  and  assumptions   that  affect  the  reported  amount  of  assets.  income  and  expenses  in   the  IFRS  framework.  In  assessing  the  amount  of  deferred  tax  assets  to  recognize.  2011.  and  the  prospectus  (“Prospectus”)  of  the  Corporation  dated   June  27.

 These  risks  and  uncertainties  include.     In  order  to  raise  sufficient  capital  for  the  acquisition  and  development  of  the  Properties.  These  uncertainties  may  cause  the  Corporation’s  actual  performance.  Investors  are  cautioned  against  attributing  undue  certainty  to  forward-­‐looking  statements  as   actual  results  could  differ  materially  from  management’s  targets.  including  the  disclosure  of  the  anticipated  completion  dates  of  key  project   milestones.  the  timing  of  approval  by  municipalities.5  acre  “Edgemont”  properties  located  in  the   Southwest  corner  of  Edmonton.  which  are  based  on  experience   and  the  Corporation’s  assessment  of  historical  and  future  trends.  and  associated  parks  and  natural  areas.     Each  unit  issued  by  the  Corporation  (“Unit”)  was  comprised  of  a  $7.  the  Corporation   completed  an  initial   public  offering  (“IPO”)  and  follow-­‐up  private  placement  (“Private  Placement”)  of  units  during  the  third  quarter  of  2011.  the  project  is  anticipated  to  consist  of  approximately  672  single-­‐family  lots.  extendable  debenture  bearing  simple  interest  at  a  rate  of  8%  (“Debenture”)  and  one  class  B  non-­‐voting  common   share  (“Class  B  share”)  having  a  price  of  $2.  plans  and  beliefs.Forward-looking Statements Certain  information  set  forth  in  this  material.   but  are  not  limited  to.  which  will  manage  the  project.  the  estimated  time  required  for  construction  and  the  business   and  general  economic  environment.  2011.   natural  areas.  Such  forward-­‐looking  statements  necessarily  involve  known   and  unknown  risks  and  uncertainties.  The  development  plan  prepared  for  the  project  by  Walton  Development   and  Management  L.  as  well  as  financial   results  in  future  periods.  the  bylaw  for  which  passed  third  and  final   reading  by  Edmonton  City  Council  on  June  22.  includes  primarily  "single-­‐family"  lots  suitable  for  starter  and   move-­‐up  homes.  which  provides  an  attractive  setting  for  a  residential   development  and  adds  significant  amenity  value  to  the  future  community.  In  total.  are  based  on  the  Corporation’s  current  expectations.1   acres  of  multi-­‐family  development.  green  space  and  parks.     The  Properties  are  included  in  the  Edgemont  Neighbourhood  Area  Structure  Plan.  the  management  of  the  Corporation.  2011  for  the  purpose  and  objective  of  providing  investors  with  the  opportunity     to  participate  in  the  acquisition  and  development  of  the  approximately  201.  expectations  or  estimates.50.   Business Overview The  Corporation  was  established  on  May  5.  Alberta  (the  “Properties”).  and  is  the  responsibility  of.  many  of  which  are  beyond  management’s  control.  the  Corporation  completed  the  acquisition  of  the  Properties  during  the  fourth  quarter  of  2011.     the  “Offerings”).         2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 7 .  2012.   convertible.P.  which   intersects  Anthony  Henday  Drive  (Edmonton’s  ring  road)  approximately  one  kilometre  to  the  north  of  the  Properties.  "low-­‐density  residential"  which  can  accommodate  multi-­‐family  development.  subordinated.  Access  is  provided  by  199th  Street  via  Lessard  Road.  (“WDM”).  Following  the  completion  of  the  IPO  and  Private  Placement  (collectively.   Responsibility of Management This  MD&A  has  been  prepared  by.  to  differ  materially  from  any  projections  of  future  performance  or  results  expressed  or  implied  by  such   forward-­‐looking  statements.     Approval by the Board of Directors The  MD&A  was  authorized  for  issue  by  the  board  of  directors  on  March  26.  intentions.     The  Properties  are  bounded  to  the  south  by  the  Wedgewood  Ravine.  and  an  environmental  reserve.50  principal  amount  of  unsecured.  5.

  iii.) achieve  a  net  internal  rate  of  return  of  13.  distributions  by  the  Corporation  are  neither  guaranteed  nor  will  they  be  paid  in  a  steady  or  stable  stream.   The  performance  fee  is  only  payable  provided  that  the  investors  of  Units  in  the  Corporation  have  received  cash  payments     or  distributions  equal  to  $10.  and   iii.  and   iv.     and  (ii)  any  amounts  outstanding.  605  –  5  Avenue  SW.  Calgary.) make  annual  cash  distributions  on  the  Units  beginning  in  September  2012  until  the  final  distribution  of  funds  from     the  project.  Alberta.00  per  Unit.  liabilities  and  commitments  (other  than  with  respect  to  the  Debentures).  on  a  phase  by  phase  basis.   ii.     including  (i)  the  fees  payable  to  Walton  Asset  Management  L.) obtain  contractual  commitments  from  home  builders  to  purchase  lots  to  be  serviced  in  each  of  the  four  planned   phases  of  the  development  of  the  Properties  before  construction  commences  on  that  phase.  which  is  anticipated  to  be  in  December  of  2016.) preserve  the  capital  investment  of  the  purchasers  in  the  Units.  plus  a  simple  cumulative  priority  return  thereon.     The  amounts  and  timing  of  any  distributions  will  be  at  the  sole  discretion  of  the  Corporation  and  only  after  the  Corporation     has  paid  or  reserved  funds  for  its  expenses.  equal  to  8%  per  annum.5%  on  the  $10.   The  Corporation  intends  to  preserve  the  capital  investment  of  the  purchasers  of  Units  in  the  Corporation  and  provide  cash   distributions  on  the  Units  by  executing  the  following  four-­‐step  investment  strategy:       i.  T2P  3H5.) use  the  revenue  from  the  sale  of  the  serviced  lots  to  repay  construction  loans  and  other  obligations  of  the   Corporation  and  then  pay  the  remainder  to  the  holders  of  the  Debentures  and  Class  B  shares  by  paying  the  interest   and  principal  on  the  Debentures  by  declaring  a  dividend  or  dividends  on  the  Class  B  shares  and/or  winding  up  the   Corporation  and  distributing  its  assets  to  the  holders  of  the  Class  B  shares.   8 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .   rd th The  registered  office  and  principal  place  of  business  is  23  floor.  (“WAM”)  and  WDM  (including  the  performance  fee).  under  the  construction  loans  required  to  develop  the  Properties.) construct  municipal  services  infrastructure  on  the  Properties  in  phases  to  provide  a  controlled  supply  of  serviced     lots  to  the  marketplace.00  purchase  price  of  the  Units.The  Corporation’s  investment  objectives  are  to:     i.P.) acquire  the  Properties.   ii.   Although  management  expects  that  the  execution  of  the  investment  strategy  will  allow  the  Corporation  to  pay  distributions     on  the  Units.

    During  the  fourth  quarter  of  2011.28   1   –   Weighted   average   shares   outstanding   exclude   the  100   Class   A   voting   common   shares   issued.2  million  construction  loan  to  finance  Phase  1   of  the  project.  expressions  of  interest  were  obtained  from   four  homebuilders  to  participate  in  the   first  release  of  Phase  1  lots.  Each  Unit  was  priced  at  $10/Unit  and  was   comprised  of  one  Debenture  and  one  Class  B  share.651  to  unrelated  parties  for  193  acres  and  the  issuance  of  120.     During  the  fourth  quarter  of  2011.139  Units  to  Walton   International  Group  Inc.575.     Preliminary  grading  for  Phase  1.  (“WIGI”)  for  an  equivalent  value  of  $1.  was  initiated  during  the  fourth  quarter  of  2011.  the  Offerings  resulted  in  the  issuance  of  3.  the  Corporation  completed  the  acquisition  of  the  Properties.  In  total.139   -­‐   Review of Operations Summary The  period  from  May  5. 2011 Total  assets  ($)   30.   Class   A   shareholders   are   not   entitled   to   participate  in  any  dividends  declared  by  the  Corporation.479   Total  expenses  ($)   831.  work  fee  and  organizational  costs  associated  with  the   Offerings  were  $1.  the  Corporation  completed  the  Offerings.  2011  marked  the  first  period  of  operations  for  the  Corporation.120.006.  The  selling  commissions.587.317  for  the  remaining  8. 2011 to December 31.000.  This  was  completed   through  the  payment  of  $25.     During  the  fourth  quarter  of  2011.595   Deferred  income  tax  recovery  ($)   205.  The  key  activities   undertaken  by  the  Corporation  during  the  period  were  as  follows:   • • • • • • During  the  second  quarter  of  2011.373.554.009   100   Total  non-­‐current  liabilities  ($)   22.  the  Corporation  entered  into  a  $29.127   Net  loss  and  comprehensive  loss  ($)   561.269   Basic  net  loss  per  share  ($)   0.  or  the  distributions  of  any  part  of  the  assets  of  the  Corporation.989   1 Weighted  average  shares  outstanding   2.572   -­‐   Total  liabilities  ($)   23.639   -­‐   Total  Equity  ($)   6.6  acres.     As at December 31.  respectively.   During  the  third  quarter  of  2011. 2011 Total  revenues  ($)   64.000.   Based   on   the  Corporation’s   articles   of   incorporation.     2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 9 .000  Units   for  gross  proceeds  of  $30.370   100   Class  B  shares  outstanding  –  end  of  period   3.Summary Financial Data For the period from May 5.000.  $42.000.184.280  and  $450.  2011  to  December  31. 2011 As at May 5.000.818.  an  application  for  the  subdivision  of  the  Properties  was  submitted  by  the  vendors   of  the  Properties  to  the  City  of  Edmonton.  including  the  show  home  area.138.

800  Units.800  Units.  cash  of  $2.479.  As  the   development  of  the  Properties  proceeds.617.  The  IPO  of  the  Corporation  was  completed  on  July  15.  Each  Unit  issued  through  the  Offerings  was  comprised  of  one  Debenture  and  one  Class  B   share.067.  These  revenues  were   comprised  of  interest  earned  on  the  Corporation’s  cash  on  hand.       10 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .  the  project  has  experienced   some  delays  in  achieving  these  milestones  during  the  period.  $22.  2011.  the  Corporation  will  use  the  proceeds  from  the  sale  of  serviced  lots  to  make  interest   and  principal  repayments  on  both  the  construction  loan  and  the  debentures  payable.184.  The  nature  and  amount  of   the  expenses  incurred  by  the  Corporation  during  the  period  was  consistent  with  management’s  expectations.554.  management  fee.000  gross  proceeds  raised  from  the  Offerings.  the  Corporation  generated  total  revenues  of  $64.     As  at  December  31.320   was  allocated  to  the  share  component  based  on  their  proportionate  share  of  the  gross  proceeds  raised.  the  Corporation  does  not  foresee  any  significant  challenges  in   financing  or  completing     the  remaining  phases  of  the  project.   development  fee.989  was  also  consistent  with  management’s  expectations  because   the  Corporation  is  not  expected  to  generate  significant  revenue.212.  The  liabilities  were  comprised  of  debentures   payable  of  $22.  2011.000  Units  of  the  Corporation  at  a  price  of     $10  per  Unit.  construction  costs  and  other  expenses  of  the  Corporation.370.000  was  paid  as  consideration  for  the  debenture   payable  and  $7.  the  “Offering  Documents”).  except  during  periods  when  the  sale  of  lots  is  completed.   Analysis  of  Financial  Condition   As  at  December  31.  The  costs  incurred     for  the  preparation  of  the  Offerings  have  been  recognized  as  an  expense.  Of  the  $30.  2011  and  resulted  in  the  issuance  of  2.  $1.  $247.007  in  costs  incurred  for  the  management  of  the   Corporation  and  $60.200  Units     of  the  Corporation.  total  liabilities  of  $23.  The  Private  Placement  was  successfully  completed  on  September  30.  pre-­‐development  costs.000.720  were  consistent  with  the  net  proceeds  anticipated  by  management  and  as  disclosed  in  the  Offering  Documents.818.977.  The  total  expenses  during  the  period  were  $831.  the  Corporation  had  total  assets  of  $ 30.  The  overall  net   loss  incurred  by  the  Corporation  during  the  period  of  $561.365.960  was  allocated  to  the  debenture  component  and  $404.370.     will  be  sufficient  to  finance  Phase  1  of  the  project  and  the  ongoing  expenses  of  the  Corporation  during  that  time.  2011  and  resulted     in  the  issuance  of  422.     The  Corporation  expects  that  the  cash  on  hand  at  December  31.  The  most  significant  assets  of  the  Corporation  were  land  held  for  development  of   $26.  Of  the  commissions  and  work  fee.  2011.   During  the  period  ended  December  31.074.639  and  total   shareholders’  equity  of  $6.500.  The  total  costs  associated  with  the  Offerings  were   comprised  of  commissions  and  a  work  fee  payable  to  the  agents  of  $1.  2011.000  was  paid  as  consideration  for  the  Class  B  shares.  The  closing  of  the  IPO  was  followed  by  the  commencement  of  the  Private  Placement  on  July  18.500.371  and  land  development  costs  of  $1.572  and  current  liabilities  of  $1.  in  combination  with  the  phase  1  construction  loan.280  and  costs  incurred  for  the  preparation  of  the   Offerings  of  $450.009.932.595  and   primarily  consisted  of  $450.  2011.  management  expects  that  the   project  will  be  completed  within  the  approximate  six-­‐year  time  frame  disclosed  in  the  Prospectus  and  Offering  Memorandum   (collectively.In  comparison  with  the  anticipated  completion  date  for  the  key  project  milestones  for  Phase  1.598.725.  Notwithstanding  these  delays.  the  Corporation  filed  the  Prospectus  for  the  IPO  of  3.  the  Corporation  was  highly  leveraged  and  this  is  expected  to  increase   over  the  next  year  as  the   Corporation  draws  on  the  construction  loan  to  fund  the  ongoing  administrative  and  operating  expenses.000  in  costs  relating  to  the  Offerings.  2011     for  the  remaining  of  422.000.577.     Initial Public Offering and Private Placement On  June  27.373.000.  The  net  proceeds  raised  from  the  Offerings  of   $27.  consistent  with  the  planned  capital  structure  of  the  Corporation.552  in  servicing  fees  paid  to  the  agents  who  sold  Units  through  the  Offerings.  The  high  amount  of   leveraging  employed  by  the  Corporation  is  however.  As  long  as     the  project  continues  as  anticipated.

052   for  the  remaining  4.987.083.Acquisition of the Properties On  October  12.  The  acquisition  was  completed  through  the  payment  of  $10.     part  of  which.  the  details  of  which   have  been  outlined  in  the  Offering  Documents. 2011 $ Planning   Land  development     Financing   Legal   Project  management   Total  –  land  development  costs   212.598   Land  development  costs  can  be  divided  into  two  primary  categories:  hard  construction  costs.525  in  selling  commissions  since  neither  WIGI  nor  the  Corporation  was  obliged  to  pay  selling  commissions  as  part     of  the  land  for  Unit  exchange.  and  soft  costs.079  Units  to  WIGI  for  an  equivalent  value  of  $645.6  acres  of  the  Properties  (“Parcels  A   and  B”)  .  During  the   period  ended  December  31.  2011.060  Units  to  WIGI  for  an  equivalent  value  of  $493.750   1.   As at December 31.     less  the  $0.05  acres.96  acres.  municipal  taxes  and  construction  management.  which  will  be  developed  as  part  of  Phase  1  of  the  project.  the  Corporation  completed  the  acquisition  of  the  remaining  83.  financing.  2011.600.  and  the  issuance  of  68.  2011.  the  Corporation  incurred  total  hard  development  costs  of  $53.88  acres.  the  Units  issued  to  WIGI  were  issued  at  a  price  of  $9.  financing  fees  for  establishing  construction  loans  and  security.  Planning.  legal  fees.   Land Development Costs The  following  table  provides  a  breakdown  of  the  amounts  capitalized  to  land  development  costs  by  nature  as  at     December  31.475  per  Unit.     During  the  period  ended  December  31.  2011.  while  land  development  costs  include  both  hard   development  costs  and  soft  costs.075   1.581   53.  which  include  but  are  not  limited  to.428  to  unrelated  parties  for  79.764   14.  The  acquisition  was  completed  through  the  payment  of   $14.  2011.  This  price   was  determined  by  taking  the  $10/Unit  issue  price  paid  by  the  Corporation’s  existing   investors  of  Units  in  the  Corporation. 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 11 .  which  are  the  costs  related  to     the  physical  improvement  of  the  land.  interest  on  the  construction  loan  and   debentures  payable.  legal   and  project  management  fees  are  all  soft  costs  associated  with  the  project.750.73  acres.   On  November  30.274  for  the  remaining  3.  the  Corporation  incurred  total  soft  construction  costs  of  $1.428   1.   In  accordance  with  the  terms  of  the  Walton  Contribution  Agreements  between  WIGI  and  the  Corporation.848.  and  the   issuance  of  52.  the  Corporation  completed  the  acquisition  of  the  approximately  117.93  acres  of  land  (“Parcel  C”).223  to  unrelated  parties  for  113.365.  costs  associated  with  architectural   control  consultants.  and  appraisal  fees.311.  The  land  development   costs  incurred  during  the  period  were  consistent  with  the  amounts  anticipated  by  management  for  the  work  completed  during   the  period.

 During  the   period  ended  December  31.030  and  organizational  costs  of  $386.  a  work  fee.330.  transfer  agent  and  other  costs  incurred  by     the  Corporation  associated  with  the  preparation  for  the  Offerings  and  the  preparation  of  the  Offering  Documents.5%  of  the  net  proceeds  raised  from  the  Offerings.) thereafter.772.  and  servicing  fees  incurred  during  the  period  were  consistent   with  the  costs  anticipated  by  management.   2016.280.  net  of  selling  commissions  $221.  filing.  2011.  WAM  will  provide  management  and  administrative  services  to  the  Corporation  in  return   for  an  annual  management  fee  equal  to:   i.   Management Fees On  June  27.  calculated  as  the  gross  proceeds  raised  of  $25.  while  the  servicing  fee  has  been  recognized  as  an  expense   during  the  period.  and   ii.  2011.  In  accordance  with  the  terms  of   the  Management  Services  Agreement.552.) the  product  of  the  number  of  Units  issued  by  the  Corporation  to  WIGI  in  exchange  for  its  interest  in  the   Properties  multiplied  by  $9.  accounting.   During  the  period  ended  December  31.007.  an  amount  equal     to  2%  of  the  book  value  of  the  Properties.Organizational costs Organizational  costs  are  comprised  of  the  legal.) The  net  proceeds  raised  from  the  IPO  of  $24.  The  Corporation  will  also  pay  the   agents  an  annual  servicing  fee  equal  to  0.  audit.353.  2011  until  the  earlier  of  the  date  of  termination  of  the  Management  Services  Agreement  and  June  30.25%  of  the  gross  proceeds  raised  from  the   Offerings  and  a  work  fee  equal  to  1%  of  the  gross  proceeds  raised  from  the  Private  Placement.) from  July  15.000.325  which  was  equal  to  $1.  from  July  1.  These  costs  were  consistent   with  the  costs  anticipated  by  management  as  outlined  in  the  Offering  Documents.  The  amount  of  the  commissions.  respectively.  and   c.  2011.970.  work  fees  of  $42.390.     The  management  fees  incurred  during  the  period  were  consistent  with  the  costs  anticipated  by  management.) The  net  proceeds  raised  from  the  Private  Placement  of  $3.  as  outlined  in     the  Offering  Documents.228.   net  of  selling  commissions  of  $1.  2011.  calculated  as  the  gross  proceeds  raised     of  $4.000.  Given  that  the  Corporation  does  not  plan  on   raising  any  additional  equity  over  the  life  of  the  Corporation.  and  servicing  fees  of   $1.   b.   12 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .  $42.575.120.  the  Corporation  and  WAM  entered  into  a  Management  Services  Agreement.  the  Corporation  incurred  commissions.  The  commissions  and  work  fee  have  been  accounted  for  as  a  reduction  to  the   initial  carrying  amount  of  the  debentures  payable  and  share  capital.  as  outlined  in  the  Offering  Documents.580.  the  Corporation  will  pay  the  agents  a  commission  equal  to  5.  the  Corporation  incurred  total  management  fees  of  $247.  2%  of  the  aggregate  of:   a.000.  management  does  not  expect  to  incur  any   organizational  costs  in   future  periods.  printing.000.  the  Corporation  incurred  total  organizational  costs  of  $450.  and   organizational  costs  of     $63.  work  fee.900.  until  the  earlier  of  the  dissolution  of   the  Corporation  and  June  30.  which  it  will  then  pay  such  amounts   to  the  registered  dealers  on  behalf  of  the  Corporation.     Servicing Fees and Commissions Under  the  terms  of  the  Agency  Agreements  between  the  Corporation  and  the  agents  contracted  to  sell  Units  of  the  Corporation   through  the  Offerings.420.   During  the  period  ended  December  31.032.  2016  until  the  termination  date  of  the  Management  Services  Agreement.280  and  $60.  2016.  The  commission  and  servicing  fee  is  payable  to  WAM.296.

 With  the  exception  of  the  development   fee  payable  to  WDM  and  the  amounts  payable  to  WAM  for  the  servicing  fee.007.475  per  Unit.   Walton International Group Inc.P.  The  servicing  fees  are  payable  to  WAM. 2011 $ Walton  International  Group  Inc. On  September  30.     WIGI  further  acquired  68.  being  the  $10/Unit  issue  price  paid  by  the   Corporation’s  unitholders.079  Units  in  exchange  for  its  4.   As at December 31.  less  the  $0.525  in  selling  commissions  which  neither  WIGI  nor  the  Corporation  was  obliged   to  pay  as  part  of  the  land  for  Unit  exchange.  This  was  comprised   of  land  development  costs  and   other  costs  of  the  Corporation  which  were  initially  funded  by  WIGI  on  behalf  of  the  Corporation  but  are  reimbursable   by  the  Corporation.  the  Corporation  incurred  total   servicing  fees  of  $60.  these  amounts  are  unsecured.183   -­‐   339.  2011.  2011  was  a  result  of  the  transactions  disclosed  above.  The  development  fee  payable  to  WDM  is  payable  within  60  days  of   quarter-­‐end.     In  accordance  with  the  Agency  Agreements  between  the  Corporation  and  its  agents.  In  accordance  with  the  terms  of  the  Walton  Contribution  Agreement  between  WIGI  and  the   Corporation.  the  Corporation   incurred  total  management  fees  during  the  period  of  $247.  the  Corporation  owed  WIGI  $267.  are  all  related  to  the  Corporation  by  virtue  of  common  management.Transactions with Related Parties WAM.   Walton Asset Management L.060  Units  in  exchange  for  its  3.   Total     The  following  transactions  entered  into  between  the  related  parties  during  the  period  were  under  terms  and  conditions  agreed   upon  between  the  parties.   267.477   -­‐   Walton  Asset  Management  L.  WDM  and  1389211  Alberta  Ltd.   bear  no  interest  and  have  no  fixed  terms  of  repayment. In  accordance  with  the  Management  Services  Agreement  between  the  Corporation  and  WAM.P.88  acres  of  Parcel  C.  The  servicing  fee  which  is  paid  to  WAM  is  payable  semi-­‐annually.   69.  due  on  demand.440  Units  of  the  Corporation  for  total  consideration  of  $374.  and  52.P.355   -­‐   Walton  Development  and  Management  L.  WIGI  owns  157.  which  is  responsible  for  the   distribution  of  the  servicing  fees  to  the  agents.     2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 13 .  the  Units  were  issued  to  WIGI  at  a  price  of  $9.  WIGI  acquired  37.  which  represents   approximately  5%  of  the  outstanding  Units.  WIGI.695   -­‐   2.73   acres  of  Parcels  A  and  B.     As  a  result  of  the  transactions  noted  above.400  through   the  Private  Placement.     The  balance  payable  to  WAM  as  at  December  31.  2011.579  Units  of  the  Corporation.477.   As  at  December  31.   The  balances   due  to  these  related  parties  as  at  December  31.  2011  are  outlined  in  the  table  below.552  during  the  period. 2011 $ As at May 5.

 The  total   compensation  expense  incurred  by  the  Corporation  relating  to  its  directors  was  as  follows:   For the period from May 5.Walton Development and Management L.     As  a  result.   No  performance  fee  was  incurred  by  the  Corporation  during  the  period  ended  December  31.  reduced  by  any   cash  payments  or  distributions  by  the  Corporation.  balance  owing  to  WDM  was  comprised  of  the  development  fee  and  land  improvement   costs.  The  Corporation  makes  use  of  the  following  non-­‐financial  indicators  in  evaluating  its  performance.   1389211 Alberta Ltd.   14 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .  2011  because  the     $10  per  Unit  amount  and  the  cumulative  priority  return  have  not  been  received  by  the  investors  of  Units  in     the  Corporation. On  June  27.  This  amount  has  been  capitalized  as  part  of  land  development  costs.  the  Corporation  and  WDM  entered  into  a  Project  Management  Agreement.  the  Corporation  issued  to  1389211  Alberta  Ltd.   As  at  December  31. 2011 to December 31.  2011  to  December  31.075.  until  the  sale  of  lots  commences.  the  total  development  fee  charged  to  the  Corporation     was  $1.  the  financial  statements  alone  are  not  a  good  indicator  of  the  progress  of  the  Corporation  toward  its  investment   objectives.  2011. 2011 $    Director  fees   34.  2011.   Key Management Compensation Key  management  personnel  are  comprised  of  the  Corporation’s  directors  and  executive  officers.  payable  within  60  days  of  the  end  of  such  quarter.) WDM  will  receive  a  performance  fee.  equal  to  25%  of  cash  distributions  after  all   investors  of  Units  in  the  Corporation  have  received  cash  payments  or  distributions  equal  to  $10  per  Unit.339   All  services  performed  for  the  Corporation  by  its  executive  officers  is  governed  by  the  Management  Services   Agreement.  In  accordance  with  the   terms  of  the  Project  Management  Agreement.  The  annual  management  fee  that  WAM  receives  under  the  Management  Services  Agreement  has  been   disclosed  above.  plus  applicable  taxes.P.  which  were  paid  for  by  WDM  on  behalf  of  the  Corporation  but  are  reimbursable  by  the  Corporation.   On  May  5.     For  the  period  from  May  5.  2011.  2011.  the  fees  and  costs  for  services  provided  by  WDM  are  divided  into  the   following  two  categories:   i.   plus  an  8%  priority  return.  plus  applicable  taxes  equal  to  2%  of  certain  development  costs   incurred  in  the  calendar  quarter.  100  Class  A  voting  common  shares  (“Class  A  shares”)   for  total  consideration  of  $100.  The  priority  return  is  calculated  on  that  $10  amount  per  Unit.) WDM  will  receive  a  development  fee.     ii.   Non-Financial Indicators The  amount  of  revenues  generated  by  the  Corporation  is  not  expected  to  be  significant.

 or  their  ability  to  commence  the  sale  of  single  family  or  multi-­‐family  homes.     2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 15 .  2011       Obtain  subdivision  plan  registration   December.  the  key  milestones  used  by  management  include  those  presented  in  the  Offering   Documents.  2011       September.Key Milestones For  Phase  1  of  the  project.   Walton Edgemont Development Corporation – Key Project Milestones for Phase 1 Anticipated steps to completion Form  homebuilder  syndicate  and  meet   lender  pre-­‐sale  test  requirement   Initiate  preliminary  grading  of  Phase  1   lands  for  show  homes  only   Submit  application  to  subdivide  the   property  and  obtain  subdivision   approval.  2011   Completed  in  March  2012   August  –  September.  the  milestones  for  Phase  1   are  behind  the  timelines  initially  anticipated  by  management  and  are  now  anticipated  to  be  completed  in  the  year   2013.  if  any.   Negotiate  final  terms  of  bank  financing   for  construction  loan   Execute  homebuilder  purchase  and  sale   agreements  for  Phase  1  single-­‐family   lots  and  obtain  deposits   Complete  underground  utility   construction  (onsite  and  offsite)   Anticipated completion date per Prospectus Status May  –  July.  2012       Completed  in  November  2011   Purchase  and  sale  agreements  for   91  of  the  176  single  family  lots   were  executed  in  March  2012   Completion  of  onsite  underground   utilities  anticipated  by  the  end  of   July  2012   Completion  of  offsite  underground   utilities  anticipated  in  2013   Anticipated  completion  by  the  end   of  June  2012   Completion  of  onsite  roadway   construction  anticipated  by  the  end   of  September  2012   Completion  of  offsite  roadway   construction  anticipated  in  2013   In  comparison  to  the  anticipated  completion  dates  included  in  the  Offering  Documents.  The  Corporation’s  progress  toward  these  milestones  has  been  summarized  in  the  following  table.  The  most  significant  delays  are  in  respect  of  the  construction  of  offsite  utilities  and  offsite  roadways.  impact  on  the  ability  of  homebuilders  to  commence  the  construction  of  show   homes.  2011       Initiated  in  December  2011   May  –  September.   which  are  expected  to  have  little.  2011       September  –  December.  As  a  result.  2011     Complete  roadway  construction  (onsite   and  offsite)   May  –  June.  These  delays  are  attributable  to  the  longer  than  anticipated  time  to  obtain  subdivision  approvals  from  the  City   of  Edmonton.  management  expects   that  the  timing  of  the  completion  of  the  overall  project  will  be  unchanged  and  the  ability  of  the  Corporation  to   achieve  its  investment  objectives  will  be  unaffected.  2011       Application  submitted  in     February  2012   Approval  anticipated  in  April  2012   June  –  August.

 the  acquisition  of  the  Properties  was  completed  through  the  payment  of  $25.778   in  costs  incurred  for  the  management  of  the  Corporation.   these  delays  are  not  expected  to  affect  the  ability  of  the  Corporation  to  complete  the  project   within  the  approximate  six-­‐year   time  frame  disclosed  in  the  Offering  Documents.  and  $13.Lot Activity Report In  November  2011.  The  nature  and  amount  of  the  expenses  incurred  by  the  Corporation  during  the   fourth  quarter  were  consistent  with  management’s  expectations.  development.  for  the   remaining  8.  and  the  expected  completion  dates     of  their  key  milestones  will  be  determined  closer  to  the  commencement  of  those  phases.  the  Corporation  received  expressions  of  interest  from   four  homebuilders  to  acquire  91  of  the  176   Phase  1  lots.  3  and  4  of  the  project  are  substantially  the  same  as  the  milestones  for  Phase  1.032  in  director  fees.  the  Corporation  negotiated  the  final  terms  for  the  Phase  1  construction  loan.     On  an  after  tax  basis.138.  In  total.391.   2011.  3  and  4  have  not  yet  been  determined.6  acres.  and  the  issuance  of  120.     Although  some  of  the  above  activities  were  completed  later  than  the  completion  date  initially  anticipated  by  management. Phases 2.651  to  unrelated   parties  for  193  acres.     The  commencement  dates  for  Phase  2.  including  the  Phase  1  show  homes  area.  which  primarily  consisted  of  $122.  Executed  purchase  and  sale  agreements  for  those  and  initial  deposits  for  the  91  lots  were  received  in   February  and  March  2012.   In  November  2011.     The  Phase  1  construction  loan  will  help  to  finance  pre-­‐development.139  Units  to  WIGI  for  an  equivalent  value  of  $1.  $34.  except  during  periods  when  the  sale  of  lots  is  completed.       16 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .  2011  and  Parcels  A  and  B  on  November  30.  the  Corporation  incurred  total  expenses  of  $197.  grading  and  construction     of  Phase  1  of  the  project.  the  Corporation  generated  net  income  of  $7.     in  November  2011.     In  November  2011.  the  Corporation  received  expressions  of  interest  from  four  builders  who  will  acquire  91     of  the  176  Phase  1  lots.820  in  servicing  fees  paid  to  the  agents  who  sold  Units  through   the  Offerings.587.  the  Corporation  undertook  the  following  activities   during  the  fourth  quarter  of  2011:   • • • • The  Corporation  completed  the  acquisition  of  Parcel  C  on  October  12.     The  Corporation  commenced  preliminary  grading  of  the  Phase  1  lands.317. Review of Fourth Quarter Operations Having  successfully  completed  the  Offerings  during  the  third  quarter  of  2011.736  during  the  fourth  quarter  of  2011.   During  the  fourth  quarter  of  2011.  The  deferred  tax   recovery  recognized  during  the  fourth  quarter  of  $205. 3 and 4 The  steps  to  complete  Phases  2.  The  net  loss  before  taxes  incurred  by  the  Corporation  during   the  fourth  quarter  was  also  consistent  with  management’s  expectations  because  the  Corporation  is  not  expected  to  generate   significant  revenue.127  was  in  respect  of  prior  period  tax  losses  which  met  the  recognition   criteria  under  IFRS  during  the  fourth  quarter  of  2011.

 The  expenses  of  the  Corporation  relating  the  Offerings  were  incurred  during  the  third  quarter  of  2011  and     totalled  $450.479   -­‐   Total  expenses  ($)   197.241)   3. 2011 June 30.  2011  and  September  30.600   -­‐   -­‐   (0.127   -­‐   -­‐   7.  2011.000   -­‐   3.  This  was  in  respect  of  prior   period  tax  losses  which  met  the  recognition  criteria  under  IFRS  during  the  fourth  quarter  of   2011.  the   Corporation’s  expenses  decreased  substantially  during  the  fourth  quarter.Summary of Quarterly Results A  summary  of  operating  results  for  the  past  three  quarters  is  as  follows:     Three months ended December 31.818.307   6.317.110   21.  the  Offerings  resulted  in  the  issuance  of  3.161.391   625.  Having  successfully  completed  the  Offerings  during  the  third  quarter  of  2011.241   Deferred  tax  recovery  ($)   205.  and  the  issuance  of  120.  for  the  remaining  8.  the  Corporation  completed  the  acquisition  of  the  Properties   through  the  payment  of   $25. 2 2011 Total  assets  ($)   30.141)   -­‐   64.  the  period  ended  June  30.  In  total.   2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 17 .     During  the  periods  ended  June  30.  Until  this  time.  As  a  result.  The  amount  of  the  expenses  of  the  Corporation  in  future  quarters  is  expected  to  be  consistent  with  the  level     of  expenses  incurred  during  the  fourth  quarter  of  2011.000   -­‐   Total  equity/(deficit)  ($)   Total  revenue  ($)   Net  income  (loss)  and  comprehensive  income  (loss)  ($)   1 Weighted  average  shares  outstanding   1 Basic  and  diluted  net  income  (loss)  per  share  ($)   Class  B  shares  issued  during  the  period     2 Class  B  shares  outstanding  –  end  of  period     1  -­‐  Class  A  shares  outstanding  have  not  been  included  in  the  weighted  average  shares  outstanding  because  the  Class  A  shares  do  not  participate  in  the  profits  or  losses  of  the  Corporation. 2011 September 30.741   2.554.165   13.26)   N/A   120.484)   (8.000.000  Units  of  the   Corporation  for  gross  proceeds  of  $30.373.139   3.  total  liabilities  and  total  equity  of  the  Corporation   significantly.  2011  was  from  May  5.  The  completion  of  the  Offerings  increased  the  total  assets.120.755.000.281.000.009   28.  2011.  The  Corporation  is  not  expected  to  generate  a  profit  until  the  sale  of   lots  commences.000.  the  Corporation  recognized  a  deferred  tax  recovery  of  $ 205.370   6.000.166   Total  liabilities  ($)   23.076.  This  was  partially  offset  by  an  increase  to  the  total   servicing  fees  and  management  fees  incurred  during  the  fourth  quarter.     During  the  fourth  quarter  of  2011.963   8.055   (8.6  acres.  the  main  focus  of  the  Corporation  was  to  raise  sufficient   capital  to  enable  the  Corporation  to  execute  its  investment  strategy.138.  which  were  only  in  effect  for  a  portion  of  the  third   quarter  of  2011.  2011  –  June  30.  This  was  accomplished  through  the  successful  completion   of  the  Offerings  during  the  third  quarter  of  2011.526.000.639   21.  2011.139  Units  to  WIGI  for  an  equivalent  value  of   $1.   2  –  The  Corporation  was  formed  on  May  5.   During  the  fourth  quarter  of  2011.127.587.  the  total  equity  of  the  Corporation  is  expected  to  decline  as  cash  is  expended  to  pay  for  the   ongoing  expenses  of  the  Corporation.  Each  Unit  offered  through  the  Offerings  was  comprised  of  one  Debenture  and   one  Class  B  share.651  to  unrelated  parties  for  193  acres.139   3.736   (561.

 As  at  December  31.  and  due  to  related  parties  have  been  classified  as  other  financial  liabilities.3  million  letter(s)  of  credit. Supplemental Information Liquidity and Capital Resources The  Corporation  has  two  sources  of  capital  to  finance  its  operations:   i.  With  the  exception  of  debentures  payable.  WIGI  monitors.  the  Corporation  had  total  cash  on  hand  of  $2.1%  ($2.  and  are   carried  at  amortized  cost  using  the  effective  interest  rate  method.  interest  or  currency  risk.  debentures  payable.  Other  receivable  and  cash  are  classified  as  loans  and  receivables.  This  loan  is  partially  guaranteed  by  WIGI   and  is  also  secured  by  a  first  priority  security  interest  in  all  present  and  after  acquired  personal  property  of  the   Corporation.   In  March  2012.  As  at  December  31.  trade  payables  and   accrued  liabilities.  the  multi-­‐family   site  in  Phase  1  has  been  conditionally  sold.  2012.  2011.   pre-­‐development  costs.  credit.  the  fair  value  of  these  financial  instruments   approximate  their  carrying  value  due  to  the  short-­‐term  nature  of  these  items.  a  floating  charge  over  all  of  the  Corporation's  present  and  after  acquired  real  and  other  property.  cash.7  million)  was  set  aside     by  the  Corporation  to  pay  for  its  ongoing  administrative  and  operating  expenses.   Off-Balance Sheet Arrangements There  were  no  off-­‐balance  sheet  arrangements  as  at  December  31.  trade  payables   and  accrued  liabilities  and  due  to  related  parties.     Management  regularly  reviews  the  levels  of  its  capital  resources  to  determine  if  sufficient  cash  is  available  to  fund  the  ongoing   costs  of  the  Corporation  over  the  next  twelve  months.  interest  payable.  grading  costs.Subsequent Events On  February  27.  management  believes  that  sufficient  capital   exists  to  fund  the  Corporation’s  activities  for  at  least  the  next  12  months.  As  at  December  31.074.  its  net  worth  to   ensure  compliance  with  its  obligations  as  a  guarantor.  2011.  WIGI  was  in  compliance  with  this  requirement.  development  fee.371.) The  Corporation  has  a  construction  loan  to  help  finance  Phase  1  of  the  project.     and  a  first  fixed  and  specific  demand  collateral  land  mortgage  over  the  Properties.  The  total  amount  drawn  on  the   construction  loan  at  December  31.  The  construction  loan  consists  of  a   $26.  3  and  4  of  the  project.  2011.  The  fair  value  of  debentures  payable   approximates  the  carrying  amount  because  the  interest  rate  on  the  debentures   approximates  the  interest  rate  on  debentures   issued  by  comparable  entities.  management  fee.  In  addition.     It  is  management's  opinion  that  the  Corporation  is  not  exposed  to  significant  liquidity.   ii.  and  are  carried  at  amortized  cost   using  the  effective  interest  rate  method.  2011  was  $nil.) Of  the  gross  proceeds  raised  under  the  IPO  and  Private  Placement.  Debentures  payable.   2011.9  million  non-­‐revolving  loan  facility  and  $2.  interest  payable. the  Corporation  entered  into  purchase  and  sale  agreements  for  91  of  the  176  lots.  approximately  9.  WEDC  received  rezoning  approval  for  Phase  1  from  Edmonton  City  Council.   18 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .   and  foresees  no  circumstances  or  conditions  which  may  be  reasonably  likely  to  cause  WIGI  to  be  offside  with  its  obligations  a s   guarantor  over  the  next  12  months.  on  a  monthly  basis.  It  is  anticipated  that  further  construction  loans  will  be  required  to   fund  the  costs  of  development  for  Phase  2.  construction  costs  and  other  expenses  of  the  Corporation.   Financial Instruments The  Corporation’s  financial  instruments  consist  of  other  receivable.

 The  Corporation  will  adopt   IFRS  9  for  the  annual  year  beginning  on  January  1.  after  June  30.664   69.243.   Commitments The  following  table  presents  future  commitments  of  the  Corporation  under  the  Management  Services  Agreement  and  the   Agency  Agreements  over  the  next  five  years.139  Class  B  shares  outstanding.664   139.724   720.2  million  and  principal  amount  of  $23.  2016.488   581.  IFRS  9  is  not  expected  to  result  in  any  changes  to  the   classification  or  carrying  amount  the  Corporation’s  financial  liabilities.  except  that  fair  value  changes  due  to   credit  risk  for  liabilities  designated  at  fair  value  through  profit  and  loss  are  generally  recorded  in  other  comprehensive  income.530   2.   Outstanding Debentures As  of  the  date  of  this  MD&A.664   139.120.  however.   Servicing fee $ Management fee $ Total $ 139.4  million.724   720.  this  change  is  not  expected  to  result  in  a   material  change  to  the  carrying  amount  of  these  financial  assets.  The  Corporation  may  in  its  sole  discretion.  2015.832   628.060   290.664   139.  It  does  not  include  the  WDM’s  performance  fee  under  the  Project  Management   Agreement.258   2012   2013   2014   2015   2016   Total   The  commitment  for  the  management  fee  will  extend  for  the  length  of  the  project.     IFRS  9  is  effective  for  annual  periods  beginning  after  January  1.   Future Changes in Accounting Policy Financial  instruments   IFRS  9:  Financial  Instruments  (“IFRS  9”)  was  issued  in  November  2009  and  addresses  classification  and  measurement  of     financial  assets.  which  cannot  be  reasonably  estimated   at  this  time.  Requirements  for  financial  liabilities  were  added  to   IFRS  9  in  October  2010  and  they  largely  carried  forward  existing  requirements  in  IAS  39.060   581.139  debentures  payable  outstanding  with  a  carrying  value  of   approximately  $22.724   720.724   360.Outstanding Shares As  of  the  date  of  this  MD&A.  It  replaces  the  multiple  category  and  measurement  models  in  I nternational  Accounting  Standard  39:  Financial   Instruments  –  Recognition  and  Measurement  (“IAS  39”)  for  debt  instruments  with  a  new  mixed  measurement  model  having   only  two  categories:  amortized  cost  and  fair  value  through  profit  or  loss.  based  on  the  fair  market  value  per  Class  B   share  on  the  date  of  the  conversion.120.060   581.  it  is  calculated   based  on  the  book  value  of  the  Properties  at  the  end  of  the  previous   calendar  quarter.  which  is  calculated  based  on  the  amount  of  distributions  paid  by  the   Corporation.  These  commitments  will  be   funded  through  future  revenues  generated  by  the  Corporation  and  the  capital  resources  available  to  the  Corporation.  the  Corporation  had  100  Class  A  shares  outstanding  and  3.  with  early  adoption  permitted.060   581.770   720.  the  Corporation  had  3.614.       2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 19 .362   3.  convert  all  or  any   principal  amount  of  the  debentures  payable  into  a  variable  number  of  Class  B  shares.  2015.  The  adoption  of  IFRS  9  will  result  in  a  change  in  the  classification  of  the   Corporation’s  financial  assets  from  amortized  cost  to  fair  value  through  profit  or  loss.

    Personal Profiles   20 Clifford  H.   guidance  on  measuring  and  disclosing  fair  value  is  dispersed  among  the  specific  standards  requiring  fair  value  measurements   and  does  not  always  reflect  a  clear  measurement  basis  or  consistent  disclosures.Fair  value  measurement   IFRS  13:  Fair  Value  Measurement  (“IFRS  13”)  is  a  comprehensive  standard  for  fair  value  measurement  and  disclosure  for  use   across  all  IFRS  standards.  and  ensuring  corporate  conduct  in  an  ethical  and  legal  manner     via  an  appropriate  system  of  corporate  governance  and  internal  control  processes  and  procedures.         2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .P.  Singleton  and  Jon  N.  Singleton     are  independent  of  management  of  the  Corporation.     The  board  of  directors  facilitates  its  exercise  of  independent  supervision  over  management  through.  that  the  audit   committee  be  comprised  solely  of  directors  that  are  independent  of  management.  Jon  N.  Hagan.     The  only  standing  committee  of  the  board  of  directors  is  the  audit  committee  (the  “Audit  Committee”).  and   • The  requirement.  Hagan  and  Richard  R.  The  Corporation  will   adopt  IFRS  13  for  the  annual  year  beginning  on  January  1.  at  the  measurement  date.  retiring  as  Vice  Chairman  in  November  of  2011.  for  eight  years.  Jon  N.  Under  existing  IFRS.  Fryers.     The  board  of  directors  is  comprised  of  Clifford  H.     Corporate Governance Board of Directors The  mandate  of  the  board  of  directors  is  to  oversee  the  management  of  the  business  of  the  Corporation..  Fryers  –  Mr.  including  the  following   reporting  issuers:  Walton  Ontario  Land  1  Corporation.   Walton  Big  Lake  Development  Corporation.  or  paid     to  transfer  a  liability  in  an  orderly  transaction  between  market  participants.  2013.  Walton   Yellowhead  Development  Corporation.  with  early  adoption  permitted.  1.  Hagan  and  Richard  R.  with  a  view   to  maximizing  the  Corporation’s  shareholder  value.  2013.  Singleton.     among  other  things:     • The  adoption  by  the  board  of  directors  of  a  written  mandate  requiring  that  a  majority  of  the  members     of  the  board  of  directors  be  independent  of  management.  Currently.  The  new  standard  clarifies  that  fair  value  is  the  price  that  would  be  received  to  sell  an  asset.  Within  the     meaning  of  National  Instrument  52-­‐110  –  Audit  Committees  (“NI  52-­‐110”).  all  financial  instruments  are  initially  recognized  at   fair  value  and  subsequently  carried  at  amortized  cost.  in  the  board  of  director’s  written  mandate  for  its  audit  committee.  which   consists  of  Richard  R.  being  the  general  partner  of  Walton  Big  Lake  Development  L.  while  Clifford  H.   IFRS  13  is  effective  for  annual  periods  beginning  after  January  1.  Fryers  has  been  Chairman  and  Chief  Executive  Officer  of  the  White  Iron  Group  of  Companies   (a  media  production  house)  since  1997.  He  also  is  the  chair  of  the  board  of  the  Manning  Centre  for  Building   Democracy  and  is  on  the  board  of  directors  of  several  companies  in  the  Walton  Group.  and  Walton  Westphalia  Development  Corporation.  The  adoption  of  IFRS  13  is  not  expected  to  result  in  any  changes  to  the  measurement     and  disclosure  of  the  fair  value  its  financial  instruments.  Fryers  is  not  independent  as  his  spouse  is  the   Corporate  Secretary  of  the  Corporation.P.  The  Corporation  also  discloses  the  fair  value  of  financial  instruments  in   the  notes  to  the  financial  statements.  being  the  general  partner  of  Walton  Ontario  Land  L.  He  was  on  the  Board  of   Advisors  of  Walton  Global  Investments  Ltd.

P.  being  the  general  partner  of  Walton  Ontario  Land  L.       2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 21 .  His  experience  spanned  land  use  project   financial  proforma  analyses.  human   resources.  Finance  and  Corporate  Development.  Walton   Big  Lake  Development  Corporation.  he  was  a  Senior  Tax  Partner  and  Managing  Partner  with  the  law  firm  of  Milner  Fenerty   (now  Fraser  Milner  Casgrain  LLP)  which  he  joined  in  1980.  the  United  States  of  America.  corporate  governance  and  investment  committees  of  Bentall  Kennedy  Group  from  2001  to  2011.  Ottawa  from  1971  to  1977  and  then  as  General  Tax  Counsel  for  Mobil  Oil  Canada.  Hagan  is  also  a  director  and  member  of  the  audit  and  executive  committees  of  the  board  of  directors  of  First   Capital  Realty  Inc.D  certification  granted  by  the  Institute  of  Corporate  Directors.     Walton  Big  Lake  Development  Corporation.  and  acquisition  and  disposition  transactions  covering   situations  in  Canada.  Singleton  is  also  on  the  board  of  directors  of   the  following  reporting  issuers  within  the   Walton  Group:  Walton  Ontario  Land  1  Corporation.  His  career  took  him  to  Cambridge  Shopping  Centres  in  1980.  which  is  a  reporting  issuer  in  Canada.  Singleton  is  presently  a  director  of  the  National  Music  Centre  (Cantos  Foundation).  He  worked  in  the  Tax  Litigation  Section  of  the  Department   of  Justice.  where  he  eventually  became  S enior  Vice-­‐ President.     Richard  R.  Mexico  and  China.  1.  concept  design  and  approval  agency   policy  planning  initiatives.  being  the  general  partner  of  Walton  Big  Lake  Development  L.  He  was     a  trustee  of  Sunrise  Senior  Living  Real  Estate  Investment  Trust  from  2004  to  2007  and  was  the  chair  of  the  audit   committee  thereof..  Singleton’s  work  included  major  land  planning  and  land  parcel  development  projects  primarily  in   Alberta  and  other  major  commercial  projects  in  other  parts  of  Canada.  being  the  general  partner  of  Walton  Ontario  Land  L.  Fryers  was  Chief  of  Staff  to  the  Leader  of  Her  Majesty’s  Official  Opposition  in  the  House     of  Commons.   Architects.  a  member  of  the  Advisory   Board  of  Thermal  Systems  KWC  Ltd.  Mr.  Planners  (now  called  Dialogue  Design)  for  36  years.     Mr.       Mr..  He  was  previously  a  member  of  the  Board  of  Advisors  of  Walton  Global   Investments  Ltd.  He  was  formerly  a  director  and  member  of  the  audit.  Mr.  Mr.  Hagan  is  also  on  the  board  of  directors  of  the  following  reporting  issuers  within  the   Walton  Group:  Walton  Ontario  Land  1  Corporation.  From  1996  through  2000.  compensation  programs.  and.  Hagan  -­‐  Mr.  Fryers  holds  the  ICD.  he  has  consulted  and  provided  assistance  to  developers  in  various  planning  and  building  projects.       Mr.From  1997  until  2000.  real  estate  acquisition  and  disposition.  he  was  Executive  Vice   President  and  Chief  Financial  Officer  of  Cadillac  Fairview  Corporation.  during   that  time.  Mr.     computer  systems.P.  He  holds  a  BSc  in  Mechanical  Engineering  from  the  University  of  Saskatchewan   and  attended  the  Executive  MBA  program  at  the  University  of  Alberta.  Hagan  is  a  chartered  accountant.  corporate  and  real  estate  finance.  Corporate  Group  and  Chief  Financial  Officer.P.  Engineers.  Singleton  –  Mr.  Singleton  was  one  of  the  lead  architectural  partners  with  Cohos  Evamy  Partners.  Walton   Yellowhead  Development  Corporation.  He  then  joined  the  Empire  Company  Limited  where  he  was   Executive  Vice-­‐President.  Ltd.     Mr.     Walton  Yellowhead  Development  Corporation.     Jon  N.  He  was  the  Chairman  of  Teranet  Income  Fund  from  2006  to  2008.  beginning  with  Oxford  in     the  1970s.  He  provides  assistance   to  major  corporations  regarding  real  estate  capital  markets.  1.  He  primarily  focused  on  larger  commercial   projects  and  planning  work  in  Alberta  and  throughout  Canada.  financial  reporting.  and  Walton  Westphalia  Development  Corporation.  being  the  general  partner  of  Walton  Big  Lake  Development  L.  budgeting  for  land  use  and  development  projects.  Singleton  has  been  retired  since  2 008.  Hagan  has  been  the  principal  of  JN  Hagan  Consulting  since  December  2000.     Mr.  Hagan  has  held  a  number  of  executive  finance  positions  in  the  real  estate  industry.  Mr.  Prior  to  that.  until  1980.  and  Walton  Westphalia  Development  Corporation.P.  He  was  a  director  and  on  the   audit  committee  of  the  board  of  directors  of  The  Mills  Corporation  for  the  first  three  months  of  2007  to  assist  in  the   sale  of  The  Mills  Corporation..  Mr  Hagan's  experience  spans  corporate   strategy.  forecasting  and  budgeting.  a  past  member  of  the  Calgary  Arts  Development  Authority  and  a  board  member   of  a  private  real  estate  investment  group.  During   his  career.

 The  new  director  may  be  appointed  by  the  remaining  directors  or  by  the  Class  A  shareholder   of  Corporation.  to  provide  directors  with  ongoing  education  on  specific  subject  matters.  LEED  is  a  set  of  rating  systems  for  the  design.   22 2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis .   an  annual  retainer  of  $25.  Outside  experts  may  be  retained.  the  remaining  directors  will  identify  a  new  director  with  a  view  to  ensuring  overall  diversity     of  experience  and  skill.  including  the  fees  for  such  services.     Nomination of Directors The  original  members  of  the  board  of  directors  were  appointed  by  the  Class  A  shareholder  of  the  Corporation.     the  Audit  Committee  will  be  responsible  for  directing  the  auditors’  examination  of  specific  areas.  as   appropriate.Mr.  and  the  quality  and  integrity  of  its  financial  statements.  paid  quarterly  in  advance.  for  the  selection     of  the  Corporation’s  independent  auditors  and  for  the  approval  of  all  non-­‐audit  services  for  which  its  auditors     may  be  engaged.  homes  and  neighbourhoods.  In  addition.000  per  year.  meaning  that  each  has     the  ability  to  read  and  understand  a  set  of  financial  statements  that  present  a  breadth  and  level  of  complexity  of   accounting  issues  that  are  generally  comparable  to  the  breadth  and  complexity  of  issues  that  can  reasonably  be   expected  to  be  raised  by  the  financial  statements  of  the  Corporation.  Singleton.       The  Audit  Committee  currently  consists  of  Jon  N.  Singleton  holds  a  Bachelor  of  Architecture  from  the  University  of  Manitoba  and  is  LEED  (Leadership  in  Energy  and   Environmental  Design)  accredited.  construction  and  operation  of  high   performance  green  buildings.     The  executive  officers  of  the  Corporation  do  not  receive  any  compensation  from  the  Corporation.  This  amount  was  determined  by  the  Corporation   and  the  directors  prior  to  the  retention  of  the  directors.  Each  member  of  the  Audit   Committee  is  “independent”  as  contemplated  by  NI  52-­‐110  and  each  is  financially  literate.   Audit Committee The  primary  function  of  the  Audit  Committee  is  to  assist  the  board  of  directors  in  fulfilling  their  responsibility  of   oversight  and  supervision  of  the  Corporation’s  accounting  and  financial  reporting  practices  and  procedures.  If  and   when  a  director  resigns.  Hagan  and  Richard  R.  the   adequacy  of  internal  controls  and  procedures.   Assessments The  directors  will  regularly  assess  themselves  with  respect  to  their  effectiveness  and  contribution.  including  discussions   with  senior  management  of  the  Corporation  and  at  meetings  of  the  directors.   Orientation and Continuing Education New  directors  will  attend  a  briefing  with  existing  directors  on  all  aspects  of  the  nature  and  operation  of  the   Corporation’s  business  from  the  existing  directors  and  the  senior  management  of  the  Corporation.   Compensation The  Corporation  has  agreed  to  pay  to  each  of  the  directors  who  are  “independent”  within  the  meaning  of  NI  52-­‐110.       Directors  will  be  afforded  the  opportunity  to  attend  and  participate  in  seminars  and  continuing  education  programs   and  are  encouraged  to  identify  their  continuing  education  needs  through  a  variety  of  means.

 to  act  in  a  manner  that  exemplifies  ethical  business  conduct.  and  that  they  must  not  condone  or  encourage  unethical  conduct.  Appropriate  procedures  are  then  undertaken   to  ensure  that  the  report  is  promptly  and  thoroughly  investigated.  leave  the  meeting  during  the  discussion  and  abstain  from  voting  on  such  matter.     the  President  or  the  Chief  Operating  Officer.  Under  the  whistleblower  policy.  as  well  as  the   officers  of  the  Corporation.  where  appropriate.Ethical Business Conduct Directors  who  have.  any  employee   who  becomes  aware  of  any  questionable  accounting.  internal  accounting  controls.  This  code  requires  that  all  such  individuals  conduct  themselves  in  a   professional  and  ethical  manner.   This  code  also   requires  that  any  individuals  who  are  aware  of  dishonest  activities  or  conduct  to  report  the  conduct  to  the  President   and  CEO.  or  may  be  reasonably  perceived  to  have.   The  directors  encourage  and  promote  a  culture  of  ethical  business  conduct  by  expecting  each  director.  Employees  also  have  the  option  of  reporting  such  matters  directly  to     the  chair  of  the  Audit  Committee  or  the  chair  of  the  board  of  directors.  a  personal  interest  in  a  transaction  or  agreement  being   contemplated  by  the  Corporation  are  required  to  declare  such  interest  at  any  meeting  at  which  the  matter  is  being   considered  and.  auditing  matters  or  potential   violations  of  law  are  encouraged  to  contact  their  immediate  supervisor.     The  Corporation  has  established  a  Code  of  Business  Conduct  and  Ethics  to  which  all  directors.       2011 Annual Report • Walton Edgemont Development Corporation • Management’s Discussion & Analysis 23 .  their  immediate  supervisor’s  manager.  officers  and  employees   of  the  Corporation  are  required  to  adhere.     Whistleblower Policy   The  Corporation  has  established  a  Whistleblower  Policy  to  ensure  the  integrity  of  the  accounting  records  and  financial   statements  of  the  Corporation  and  its  compliance  with  applicable  laws.

2011 (expressed in Canadian Dollars) 24 2011 Annual Report • Walton Edgemont Development Corporation • Financial Statements .Financial Statements Walton Edgemont Development Corporation For the period from May 5. 2011 to December 31.

whether due to fraud or error. changes in shareholders’ equity and cash flows for the period May 5. Chartered Accountants 111 5th Avenue SW Suite 3100. In making those risk assessments. 2012 PricewaterhouseCoopers LLP. 2011 and its financial performance and its cash flows for the period May 5. and the related notes. We conducted our audits in accordance with Canadian generally accepted auditing standards. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. 2011 Annual Report • Walton Edgemont Development Corporation • Financial Statements 25 . www. 2011 and May 5. Alberta March 26. 2011 in accordance with International Financial Reporting Standards. whether due to fraud or error. Chartered Accountants Calgary. Calgary. 2011 and May 5. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Alberta. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. The procedures selected depend on the auditor’s judgment. which comprise the statements of financial position as at December 31. Canada T2P 5L3 T: 403 509 7500 F:403 781 1825. but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 2011 and the statements of comprehensive loss. the financial statements present fairly.com/ca “PwC” refers to PricewaterhouseCoopers LLP. including the assessment of the risks of material misstatement of the financial statements. which comprise a summary of significant accounting policies. in all material respects. the financial position of Walton Edgemont Development Corporation as at December 31. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. 2011 to December 31.pwc. Opinion In our opinion. an Ontario limited liability partnership. 2011 to December 31.Independent Auditor’s Report To the Shareholders’ of Walton Edgemont Development Corporation. 2011. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. We have audited the accompanying financial statements of Walton Edgemont Development Corporation. and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement. as well as evaluating the overall presentation of the financial statements. the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances.

380.639     -­‐   Share  capital  (note  10)         7.598 - 26.402     -­‐   GST  payable         31. 2011 (expressed  in  Canadian  dollars)     December 31.977   -­‐   205.009             The  accompanying  notes  to  the  financial  statements  are  an  integral  part  of  these  statements           Approved  on  behalf  of  the  Board  of  Directors         100   LIABILITIES SHAREHOLDERS’ EQUITY TOTAL LIABILITIES & EQUITY __________________________  Director   Clifford  H. 2011 AND MAY 5.365.667     -­‐   Due  to  related  parties  (note  9)         339.371     100   TOTAL ASSETS       30.359     100   Accumulated  deficit         (561.373.355     -­‐   TOTAL LIABILITIES         23. 2011 $ 1.  Hagan 2011 Annual Report • Walton Edgemont Development Corporation • Financial Statements .989)     -­‐   TOTAL EQUITY       6.009     100   Debentures  payable  (note  6)         22.572     -­‐   Interest  payable  (note  6)         796.074.184.725.373.Walton Edgemont Development Corporation Statement of Financial Position AS AT DECEMBER 31.127   -­‐   ASSETS Land  development  costs  (note  4) Land  held  for  development  (note  5) Deferred  tax  asset  (note  11)   Other  receivable         1.370     100                 30.  Fryers         26         ___________________________  Director   Jon  N.936     -­‐   Cash         2.818.554. 2011 $ May 5.643     -­‐   Trade  payables  and  accrued  liabilities         202.

946   Office  expenses   9.127           NET  LOSS  AND  COMPREHENSIVE  LOSS     (561.187     21.570     247.Walton Edgemont Development Corporation Statement of Comprehensive Loss FOR THE PERIOD FROM MAY 5.595           (184.324     17.933     831.         REVENUE Interest  Income Organizational  costs   Management  fees  (note  9)   NET LOSS BEFORE TAXES   Basic  and  diluted  loss  per  share  (note  10)             2011 Annual Report • Walton Edgemont Development Corporation • Financial Statements 27 .751     214.28)             The  accompanying  notes  to  the  financial  statements  are  an  integral  part  of  these  statements. 2011 (expressed  in  Canadian  dollars)     2011 $ Three $           30.007   Servicing  fees  (note  9)   34.989)         (0.000   146.032     34.116)         Current  tax  expense  (note  11)     -­‐   Deferred  tax  recovery  (note  11)       205.168   64.765)     (767. 2011 TO DECEMBER 31.479         EXPENSES       -­‐     450.06)     (0.820     60.339   Professional  fees 11.552   Director  fees  (note  9)   13.

500.000   Share  issuance  costs     -­‐     -­‐   -­‐     (404.380.818.989)     6.000     7.370                     The  accompanying  notes  to  the  financial  statements  are  an  integral  part  of  these  statements.579     -­‐     284. 2011 Class B Non-voting Common Shares # of $ Shares $ Total $ $ 100     100   -­‐     -­‐   -­‐     100   Shares  issued  for  cash     -­‐     -­‐   3.500.139     284.579   Net  loss  and  comprehensive  loss     -­‐     -­‐     -­‐     -­‐     (561. 2011   100     100   3.320)   -­‐     (404.000   -­‐     7.320)   Shares  issued  in  exchange  for  land     -­‐     -­‐     120.259   (561.120. 2011 (expressed  in  Canadian  dollars)     Class A Voting Common Shares # of Shares Balance – May 5. 2011 TO DECEMBER 31.989)   Balance – December 31.Walton Edgemont Development Corporation Statement of Changes in Shareholders’ Equity FOR THE PERIOD FROM MAY 5.989)     (561.000.139     7.   28 Accumulated Deficit 2011 Annual Report • Walton Edgemont Development Corporation • Financial Statements .

660)   (205.287.579     239.271   27.182.804)   (25.005)     2.449)       202.895.116)     (26.789     463.643   339.074.680     -­‐     1.936)   796.989)       (1.681   Issuance  of  debentures  payable   Issuance  of  Class  B  shares   Increase  in  cash   Cash  –  Beginning  of  period     Cash  –  End  of  period   The  accompanying  notes  to  the  interim  financial  statements  are  an  integral  part  of  these  statements.321.074.765)     (561.074.Walton Edgemont Development Corporation Statement of Cash Flows FOR THE PERIOD FROM MAY 5.355   31.127)   (1.667     (1.382.402         897.667   129.111     28.374     100   2.371           SUPPLEMENTAL CASH FLOW INFORMATION         Cash  interest  received       92.     2011 Annual Report • Walton Edgemont Development Corporation • Financial Statements 29 .587.883     31. 2011 TO DECEMBER 31.308.095.040   7.003.586     (27. 2011 (expressed  in  Canadian  dollars)     Three 2011 $ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net  loss   Changes  in  non-­‐cash  working  capital  items   Increase  in  land  development  costs  (note  4)   Increase  in  land  held  for  development  (note  5)   Increase  in  deferred  tax  asset  (note  11)   Increase  in  other  receivable   Increase  in  interest  payable   Increase  in  due  to  related  parties   Increase  in  GST  payable   Increase  in  trade  payables  and  accrued  liabilities       FINANCING ACTIVITIES       (184.007.532     21.371     2.821.720           (25.877)               25.

 Alberta.  liabilities  and  commitments  (other  than  with  respect  to  the  offering  debentures).  The  board  of  directors   have  the  power  to  amend  and  reissue  the  financial  statements.) use  the  revenue  from  the  sale  of  the  serviced  lots  to  repay  construction  loans  and  other  obligations  of  the   Corporation  and  then  pay  the  remainder  to  the  holders  of  the  offering  debentures  and   Class  B  shares  by  paying     the  interest  and  principal  on  the  offering  debentures  and  by  declaring  a  dividend  or  dividends  on  the  Class  B  shares   and/or  winding  up  the  Corporation  and  distributing  its  assets  to  the  holders  of  the   Class  B  shares.  on  a  phase  by  phase  basis.50  per  share.) acquire  the  Properties.     The  Corporation  was  formed  to  provide  subscribers  with  the  opportunity  to  participate  in  the  development  of  the   approximately  201.  The  amounts     and  timing  of  any  distributions  will  be  at  the  sole  discretion  of  the  Corporation  and  only  after  the  Corporation  has  paid  or   reserved  funds  for  its  expenses. These  financial  statements  were  authorized  for  issue  by  the  board  of  directors  on  March  26.  2011.     The  Corporation  intends  to  preserve  the  capital  investment  of  the  purchasers  of  Units  in  the  Corporation  and  provide  cash   distributions  on  the  Units  by  executing  the  following  four  step  strategy:     i.  and  (ii)  any  amounts  outstanding.50  principal  amount  of  offering  debenture  and  one  class  B   non-­‐voting  common  share  (“Class  B  share”)  at  a  price  of  $2.  Each  unit  issued  by  the  Corporation  (“Unit”)  through  its  initial  public  offering  (“IPO”)  and  private   placement  offering  (“Private  Placement”)  was  comprised  of  a  $7. Nature of Business Walton  Edgemont  Development  Corporation  (the  “Corporation”)  was  incorporated  under  the  laws  of  the  province  of     Alberta  on  May  5.  (“WDM”)   (including  the  performance  fee  –  see  note  9).   iii.  Calgary.  605  –  5  Avenue  SW.   Distributions  by  the  Corporation  are  neither  guaranteed  nor  will  they  be  paid  in  a  steady  or  stable  stream.  equal  to  8%  per  annum.P.  (“WAM”)  and  Walton  Development  and  Management  L.5  acre  “Edgemont”  properties  located  in  Edmonton.  2012.  and   iv.   30 2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements .  including     (i)  the  fees  payable  to  Walton  Asset  Management  L.00  per  Unit.  plus  a  simple  cumulative   priority  return  thereon.) construct  municipal  services  infrastructure  on  the  Properties  in  phases  to  provide  a  controlled  supply  of  serviced   lots  to  the  marketplace.  The  performance  fee  is  only  payable  provided  that  the  investors  of   Units  in  the  Corporation  have  received  cash  payments  or  distributions  equal  to  $10.P.  T2P  3H5. 2011 (expressed  in  Canadian  dollars)     1.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  under  the   construction  loans  required  to  develop  the  Properties. 2011 TO DECEMBER 31.   rd th The  registered  office  and  principal  place  of  business  is  23  floor.   ii.  Alberta  (the  “ Properties”)  through  the  purchase  of   units  in  the  Corporation.) obtain  contractual  commitments  from  homebuilders  to  purchase  lots  to  be  serviced  in  each  of   the  four  planned   phases  of  the  development  of  the  Properties  before  construction  commences  on  that  phase.

 presentation  based  on  liquidity   is  considered  by  management  to  provide  information  that  is  more  reliable  and  relevant  to  the  users  of  the  financial   statements.  the  timing  of  which  is  uncertain. Basis of Preparation Statement of Compliance These  financial  statements  have  been  prepared  in  full  compliance  with  International  Financial  Reporting  Standards  (“IFRS”)   and  using  accounting  policies  that  are  consistent  with  IFRS  as  issued  by  the  International  Accounting  Standards  Board   (“IASB”).  as  explained  in  the  accounting  policies  set  out  in  note  3.  As  a  result.  the  disclosure  of  contingencies  at  the  date  of  the  financial   statements.  With  the  exception  of  land  development  costs  (see  note  4). Accounting Policies Use of Estimates The  preparation  of  financial  statements  in  conformity  with  IFRS  requires  management  to  make  estimates  and  assumptions   that  affect  the  reported  amounts  of  assets.  and  the  reported  amounts  of  revenue  and  expenses  during  the  period.       2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 31 .  the  timing  of  lot  sales.  As  this  is  the  first  year  of  operations  of  the  Corporation.     Basis of Presentation The  Corporation’s  financial  statements  have  been  prepared  on  the  historical  cost  basis.  The  estimates  and  assumptions  that     have  the  most  significant  effect  on  the  amounts  recognized  in  the  Corporation’s  financial  statements  are  as  follows:   Recoverability  of  land  held  for  development  and  land  development  costs   In  assessing  the  recoverability  of  the  land  held  for  development  and  land  development  costs.  these  financial  statements  have  also  been  prepared  in   accordance  with  IFRS  1:  First-­‐time  Adoption  of  International  Financial  Reporting  Standards.  the  costs  to  service  the  lots.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5. 2011 (expressed  in  Canadian  dollars)     2.   the  completion  date  for  the  serviced  lots  and  the  Corporation’s  cost  of  capital.  liabilities  and  equity.  Changes  in  these  estimates  and  assumptions   could  cause  the  amount  of  the  recovery  of  land  held  for  development  and  land  development  costs  to  differ  materially  from   the  carrying  amount  of  those  assets. 2011 TO DECEMBER 31.  land  held  for  development  (see  note  5)  and   debentures  payable  (see  note  6).   3.  all  assets  and  liabilities  are  current  in  nature  and  are  expected  to  be  settled  in  less  than   twelve  months.   The  statement  of  financial  position  have  been  prepared  using  a  liquidity  based  presentation  because  the  operating  cycle  of   the  Corporation  revolves  around  the  sale  of  land.  except  for  certain  financial   instruments  which  are  initially  measured  at  fair  value.    management  is  required  to   make  estimates  and  assumptions  regarding  the  sale  price  for  serviced  lots.

 the   aggregate  of  the  carrying  value  of  land  development  costs  and  land  held  for  development   is  compared  against  the  net   realizable  value. 2011 (expressed  in  Canadian  dollars)     Deferred  tax  asset   In  assessing  the  amount  of  deferred  tax  assets  to  recognize.  significant  judgment  is  required  in  determining  the  amount  of   deferred  tax  assets  that  can  be  recognized.  At  the  time  sales  are   recognized.   Land Held for Development Land  held  for  development  has  been  designated  by  management  as  inventory  property  because  it  is  the  intention  of  the   Corporation  to  service  the  Properties.   Land  development  costs  are  then  relieved  through  cost  of  land  sold  on  a  per  acre  basis.  but  exclude  general  and  administrative  overhead  expenses. 2011 TO DECEMBER 31.  and  to  construct  municipal  services  infrastructure  on  the  Properties.   Land  held  for  development  is  assessed  for  indicators  of  impairment  quarterly.  Where  the  carrying  amount  exceeds  the  net  realizable  value.   32 2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements .  When  indicators  of  impairment  exist.  Changes  in   the  timing  and  level  of  future  taxable  profits  could  cause  the  amount  of  the  deferred  tax  assets   to  be  recovered  to  differ   materially  from  the  carrying  amount.  Land  held  for   development  is  relieved  through  cost  of  land  sold  on  a  per  acre  basis  as  sales  are  recognized.  the  Corporation  will  also  capitalize  the  estimated  unexpended  portion  of  costs  relating  to  the  lots  that  are  sold.  l and  held  for  development  is  carried  at  acquisition  cost.  the  difference  is  recognized  as  an  impairment   loss.  These  costs  include  borrowing  (financing)  costs  such  as  interest  on  debt  specifically  related  to  the   development  and  property  taxes.  based  upon  the  likelihood.  the  recovery  is  capitalized  to  land  held  for   development  to  the  extent  of  the  improvement.  for  eventual     sale  in  the  ordinary  course  of  business.  Where  the  carrying  amount  exceeds  the  net  realizable  value.  timing  and  level  of  future  taxable  profits.  If  the  impairment  to  the  land  development  costs  subsequently  decreases.  As  inventory  property.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  The  Corporation  capitalizes  all  direct  costs  related     to  land  development.     which  is  based  on  the  price  paid  by  the  Corporation  for  the  Properties  plus  other  direct  purchase  expenses.     Land Development Costs Land  development  costs  are  allocated  to  the  land  to  which  they  relate.   the   aggregate  of  the  carrying  value  of  land  development  costs  and  land  held  for  development   is  compared  against  the  net   realizable  value.  If  the  impairment  to  the  land  development  costs  subsequently  decreases.  the  difference  is  recognized  as  an  impairment   loss.     Land  development  costs  are  assessed  for  indicators  of  impairment  quarterly.  When  indicators  of  impairment  exist.  the  recovery  is  capitalized  to  land  held  for   development  to  the  extent  of  the  improvement.

    The  debentures  payable  issued  by  the  Corporation  are  extendable  at  the  option  of  the  Corporation  for  a  period  of  two  years.  Debentures  payable.     with  the  balance  being  allocated  to  debentures  payable.  construction  or  production  of  qualifying  assets.  until  such  time  as  the  assets  are  substantially  ready  for  their  intended  use  or  sale.  Subsequent  measurement  depends  on  how  the  financial  instrument   has  been  classified.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  and  are  carried  at  amortized  cost  using   the  effective  interest  rate  method.  which  is  the  amount  of  consideration  that  would  be  agreed  upon     in  an  arm’s  length  transaction  between  willing  parties.   This  extension  feature  is  a  loan  commitment  under  International  Accounting  Standard  39:  Recognition  and  Measurement   (“IAS  39”).  Interest  is  calculated  on  the  carrying  amount  of     the  debentures  using  the  effective  interest  rate  and  is  allocated  to  interest  payable  based  on  the  stated  interest  rate.  and  due  to   related  parties  have  been  classified  as  other  financial  liabilities  and  are  carried  at  amortized  cost  using  the  effective  interest   rate  method.   Financial  instruments  are  recognized  initially  at  fair  value. 2011 (expressed  in  Canadian  dollars)     Borrowing Costs General  and  specific  borrowing  costs  directly  attributable  to  the  acquisition.  interest  payable.  Since  the  debentures  payable  were  initially  recognized  at  a  discount. 2011 TO DECEMBER 31.  The  Corporation   considers  land  development  costs  and  land  held  for  development  to  be  qualifying  assets.  Financial  assets  and  liabilities  are  recognized  when  the  company  becomes  a  party  to  the   contractual  provisions  of  the  instrument.   which  are  assets  that  necessarily  take  a  substantial  period  of  time  to  get  ready  for  their  intended  use  or  sale.  are  added  to     the  cost  of  those  assets.       Financial Instruments Financial  instruments  are  any  contract  that  gives  rise  to  a  financial  asset  of  one  party  and  a  financial  liability  or  equity   instrument  of  another  party.  and  as  a  result.   Cash Cash  includes  cash  in  the  Corporation’s  bank  account.  Financial  assets  are  derecognized  when  the  rights  to  receive  cash  flows  from  the   assets  have  been  transferred  and  the  company  has  transferred  substantially  all  risks  and  rewards  of  ownership.  the  effective  interest  rate  on  the   debentures  payable  exceeds  the  stated  interest  rate  on  the  debentures.  no  asset  or  liability  has  been  recognized  is  respect  of  this  option.  Cash  and  other  receivable  are  classified  as  loans  and  receivables.   2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 33 .  Financial   liabilities  are  derecognized  when  the  obligation  specified  in  the  contract  is  discharged.       Investment  income  earned  on  the  temporary  investment  of  specific  borrowings  pending  their  expenditure  on  qualifying   assets  is  deducted  from  the  borrowing  costs  eligible  for  capitalization.  trade  payables  and  accrued  liabilities. Debentures Payable Debentures  payable  are  financial  liabilities  of  the  Corporation  and  are  carried  at  amortized  cost  using  the  effective  interest   rate  method.

 using  tax  rates  enacted  or  substantively  enacted.   Current  tax  is  the  expected  tax  payable  on  the  taxable  income  for  the  year.  recognized  in  respect  of  temporary  differences  between  the     tax  basis  of  assets  and  liabilities  and  their  carrying  amounts.   at  the  end  of  the  reporting  period.     Deferred  income  tax  is  recognized  using  the  liability  method.  Costs  directly  attributable  to  the  issuance  of  such  shares  are  recognized  as   a  deduction  from  equity.  the  purchaser  can  commence  construction.  and  do  not  provide  the  holder  of  the  shares  with  the  right  to  put  t he   shares  back  to  the  Corporation.  in  which   case  the  income  tax  is  also  recognized  directly  in  other  comprehensive  income  or  equity.  Deferred  income  tax  is  determined  using  tax  rates  that  have   been  enacted.  or  substantially  enacted.  by  the  balance  sheet  date  and  are  expected  to  apply  when  the  related  deferred   income  tax  asset  is  realized  or  the  deferred  income  tax  liability  is  settled.     Revenue Recognition Land  is  sold  by  way  of  an  agreement  of  purchase  and  sale.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  Deferred  income  tax  assets  are  recognized  only  to   the  extent  that  it  is  probable  that  future  taxable  profit  will  be  available  against  which  the  temporary  differences  and  unused   tax  losses  can  be  utilized.     34 2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements . 2011 TO DECEMBER 31.  the  collection  of  sales  proceeds  is  reasonably  assured.  and  any  adjustment  to  tax  payable  in  respect  of  previous  years.   Organizational Costs Organizational  costs  represent  the  legal.     Class  B  shares  issued  by  the  Corporation  have  been  classified  as  equity  because  the  shares  represent  a  residual  interest  in   the  Corporation  after  the  payment  of  all  liabilities  of  the  Corporation.   Customer  deposits  received  for  purchases  of  lots  on  which  revenue  recognition  criteria  have  not  been  met  are  recorded     as  deferred  revenue.  respectively.  accounting.   The  Corporation  recognizes  interest  income  on  an  accrual  basis  in  the  period  when  it  is  earned.  including  a  deposit  of  not  less  than  20%.  These  costs  are  expensed  as  incurred.  Income  tax  is  recognized  in  the  statement  of  income   except  to  the  extent  that  it  relates  to  items  recognized  directly  in  other  comprehensive  income  or  directly  in  equity.  and  do  not  provide  the  holder  of  the  shares  with  the   right  to  put  the  shares  back  to  the  Corporation.  Revenue  is  recognized  on  these  sales  once   the  agreement  is  duly   executed  and  delivered.     Current and Deferred Income Tax Income  tax  expense  for  the  period  comprises  current  and  deferred  tax.  audit.  transfer  agent  and  other  costs  incurred  by  the   Corporation  associated  with  the  IPO  and  Private  Placement.  printing.   and  all  other  material  conditions  are  met.  filing. 2011 (expressed  in  Canadian  dollars)     Share Capital Class  A  voting  common  shares  (“Class  A  shares”)  have  been  classified  as  equity  because  they  represent  residual  assets     of  the  entity  after  the  deduction  of  all  its  liabilities.

  guidance  on  measuring  and  disclosing  fair  value  is  dispersed  among  the  specific  standards  requiring  fair  value  measurements   and  does  not  always  reflect  a  clear  measurement  basis  or  consistent  disclosures.  The  Corporation     will  adopt  IFRS  9  for  the  annual  year  beginning  on  January  1.  this  change  is     not  expected  to  result  in  a  material  change  to  the  carrying  amount  of  these  financial  assets.  or  paid   to  transfer  a  liability  in  an  orderly  transaction  between  market  participants.  Under  existing  IFRS.       2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 35 .  The  adoption  of  IFRS  13  is  not  expected  to  result  in  any  changes  to  the   measurement  and  disclosure  of  the  fair  value  its  financial  instruments.  It  replaces  the  multiple  category  and  measurement  models  in  I AS  39  for  debt  instruments  with  a  new  mixed   measurement  model  having  only  two  categories:  amortized  cost  and  fair  value  through  profit  or  loss.  Requirements  for   financial  liabilities  were  added  to  IFRS  9  in  October  2010  and  they  largely  carried  forward  existing  requirements  in  IAS  39.   The  Corporation  did  not  have  any  OCL  during  the  period  ended  December  31.  2013.   IFRS  13  is  effective  for  annual  periods  beginning  after  January  1.  The  adoption  of  IFRS  9  will  result  in  a  change  in  the   classification  of  the  Corporation’s  financial  assets  from  amortized  cost  to  fair  value  through  profit  or  loss.  at  the  measurement  date.   except  that  fair  value  changes  due  to  credit  risk  for  liabilities  designated  at  fair  value  through  profit  and  loss  are  generally   recorded  in  other  comprehensive  income.     IFRS  9  is  effective  for  annual  periods  beginning  after  January  1.  The  Corporation  also  discloses  the  fair  value  of  financial   instruments  in  the  notes  to  the  financial  statements.  As  outlined  in  note  3.  and  includes  exchange  differences   on  the  translation  of  financial  statements  into  the  presentation  currency.  with  early  adoption  permitted.  2013. 2011 TO DECEMBER 31.  2011.  2015.  The  Corporation  will   adopt  IFRS  13  for  the  annual  year  beginning  on  January  1.  all  financial  instruments  are  initially   recognized  at  fair  value  and  subsequently  carried  at  amortized  cost.  The  new  standard  clarifies  that  fair  value  is  the  price  that  would  be  received  to  sell  an  asset.  with  early  adoption  permitted.  and   changes  in  the  fair  value  of  the  effective   portion  of  cash  flow  hedging  instruments.  2015.  OCL  represents  changes  in  shareholders’   equity  during  a  period  arising  from  transactions  and  other  events  with  non-­‐owner  sources.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5. Future Changes in Accounting Policy Financial  instruments   IFRS  9:  Financial  Instruments  (“IFRS  9”)  was  issued  in  November  2009  and  addresses  classification  and  measurement  of   financial  assets.   Fair  value  measurement   IFRS  13:  Fair  Value  Measurement  (“IFRS  13”)  is  a  comprehensive  standard  for  fair  value  measurement  and  disclosure  for  use   across  all  IFRS  standards.  IFRS  9  is  not  expected  to  result     in  any  changes  to  the  classification  or  carrying  amount  the  Corporation’s  financial  liabilities. 2011 (expressed  in  Canadian  dollars)     Comprehensive Loss Comprehensive  loss  consists  of  net  loss  and  other  comprehensive  loss  (“OCL”).

73  acres.  2011.  The  remaining   83.               Planning  (note  9)   Land  development   Financing     Legal   Project  management  (note  8)       May 5.  the  Corporation  paid  $14.764     -­‐     14.079  Units     to  Walton  International  Group  Inc.       36 2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements .060  Units  to  WIGI  for  an  equivalent  value  of  $493.428     -­‐     1.  while  a  portion  of  land  development  costs  could  be  current  in  nature.  it  is  not  possible  for  management  to   reasonably  estimate  the  portion  that  will  be  realized  within  the  next  twelve  months.6  acres  of  the  Property  (“Parcels  A  and  B”)  were  acquired  on  November  30.  On  October  12.  2011  through  the  payment  of  $10.075         1.   while  a  portion  of  land  held  for  development  could  be  current  in  nature.  and  issued  68.598     -­‐   The  timing  of  sales  are  uncertain  because  it  is  dictated  by  the  timing  of  cash  receipts  by  the  Corporation. Land Development Costs The  following  table  provides  a  breakdown  of  costs  capitalized  to  land  development  costs  by  nature  as  at  December  31.750     -­‐     1.  As  a  result.     As  a  result.93  acres  of  the  Properties  (“Parcel  C”).  such  as  market  demand  and  the  cash  flows  of  our  customers.  (“WIGI”)  for  an  equivalent  value  of  $645. Land Held for Development Land  held  for  development  consists  of  the  Corporation’s  100%  interest  in  the  Properties  which  were  acquired  during  the   fourth  quarter  of  2011.083.434     to  unrelated  parties  for  79.  such  as  market  demand  and  the  cash  flows  of  our  customers.96  acres.226  to  unrelated  parties  for  113.88  acres.987.05  acres.  which  is  influenced  by   factors  that  are  beyond  the  control  of  management.     The  timing  of  sales  is  uncertain  because  it  is  dictated  by  the  timing  of  cash  receipts  by  the  Corporation.  the  Corporation  acquired  117.  2011. 2011 $                       212.600.  and  the  issuance  of  52. 2011 (expressed  in  Canadian  dollars)     4.581     -­‐     53.  it  is  not  possible  for  management  to  reasonably   estimate  the  portion  that  will  be  realized  within  the  next  twelve  months.     5.  In   consideration  for  Parcel  C.049  for  the  remaining  4.365. 2011 $ December 31.  which  is  influenced   by  factors  that  are  beyond  the  control  of  management.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5. 2011 TO DECEMBER 31.268  for  the   remaining  3.

 422.643       2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 37 .227   Debentures  issued  through  Private  Placement         2.50.  or  interest  under.  The  debentures  are  unsecured  and  bear  interest  at  a  rate  of  8%.  and  52.800  debentures  as  part  of  its  Private   Placement. 2011 $ BALANCE – BEGINNING OF PERIOD Accrued  interest  on  the  debentures  payable         BALANCE – END OF PERIOD         -­‐       796.  The  Corporation  may  also.  2011.  the  debentures  payable  through  the  issuance  of  Class  B  shares.  The  following  table   reconciles  the  change  in  interest  payable  during  the  year:   December 31. Debentures Payable and Interest Payable During  the  year.  (i)  repay  all  or     any  portion  of  the  principal  amount  of.     The  debentures  mature  on  December  31.079  debentures  in  exchange  for  WIGI’s  ownership  interest  in  Parcel  C.  2016  at  a  face  value  of  $7.972.  although  the  maturity  date  can  be  extended  by  the   Corporation  at  its  sole  discretion  until  December  31.  and  is  payable  on  September  30.577.794         22.  68. 2011 (expressed  in  Canadian  dollars)     6. 2011 TO DECEMBER 31.786   Debentures  issued  in  exchange  for  parcels  A  and  B         369.060  debentures  in  exchange  for   WIGI’s  ownership  interest  in  parcels  A  and  B.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.952     Non-­‐cash  interest  on  the  debentures         BALANCE – END OF PERIOD       43.     (ii)  evidence  its  obligation  to  pay  all  or  any  portion  of  the  interest  under  the  debentures  through  the  issuance  of  Interest   debentures.643     796.  Interest  on  the   debentures  is  calculated  based  on  the  face  value  of  the  debentures  on  June  30.  the  Corporation  issued  2.813   Debentures  issued  in  exchange  for  parcel  C         483.  and  is  payable  annually  on  September  30.572   The  debentures  payable  issued  by  the  Corporation  bear  interest  at  a  rate  of  8%  per  annum.314.  2011  to  December  31.     The  following  table  reconciles  the  change  in  debentures  payable  during  the  period  from  May  5.200  debentures  as  part  of  its  IPO.  Interest  is  calculated  based  on   the  face  value  of  the  debentures  payable  as  at  June  30  of  each  year.  and/or  (iii)  convert  all  or  any  principal  amount  of  the  offering  debentures  into  Class  B  shares.184. 2011 $ BALANCE – BEGINNING OF PERIOD       -­‐   Debentures  issued  through  the  IPO           18.  2018.     December 31.  in  its  sole  discretion.

 Exposure  to  credit  risk  relating  to  these  receivables   is  not   considered  significant.  2011  was  outstanding  less  than     90  days  and  considered  collectible  by  the  Corporation.     Cash  -­‐  Cash  is  on  deposit  with  a  major  financial  institution.  management   believes  the  Corporation’s  exposure  to  credit  risk  is  minimal  for  the  following  reasons:   Other  receivable  -­‐  The  balance  of  receivables  outstanding  is  typically  not  material  and  is  settled  in  accordance   with  the  terms  of  contract.     38   2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements .  debentures  payable.  The  balance  of  other  receivable  as  at  December  31.       a.   While  the  maximum  exposure  to  credit  risk  is  equal  to  the  carrying  value  of  these  financial  instruments.  Credit  risk  arises  from  cash  held  with  banks  and  financial  institutions.  the  fair  value  of     these  financial  instruments  approximate  their  carrying  value  due  to  the  short-­‐term  nature  of  these  items.)  Risk  –  overview     The  Corporation’s  financial  instruments  and  the  nature  of  the  risks  to  which  they  may  be  subject  are  as  set  out  in     the  following  table.  and   other  receivable.  which  substantially  minimizes  its  exposure  to     credit  risk. Financial Instruments The  Corporation’s  financial  instruments  consist  of  other  receivable.  The  fair  value     of  debentures  payable  approximates  the  carrying  amount  because  the  interest  rate  on  the  debentures   approximates  the   interest  rate  on  debentures  issued  by  comparable  entities.  With  the  exception  of  debentures  payable. 2011 (expressed  in  Canadian  dollars)     7.) Credit  risk   Liquidity X X Interest rate Currency X X X X Credit  risk  is  the  risk  that  one  party  to  a  financial  instrument  will  cause  a  financial  loss  for  the  other  party  by  failing  t o   discharge  an  obligation.   Risk Credit X X Other  receivable   Cash     Debentures  payable   Interest  payable   Trade  payables  and  accrued     liabilities   Due  to  related  parties     b.  trade   payables  and  accrued  liabilities  and  due  to  related  parties.  interest  payable.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  cash. 2011 TO DECEMBER 31.

355   -­‐   22.  2018  at  the  sole  discretion  of  the  Corporation.   2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 39 .) Liquidity  risk   Liquidity  risk  arises  from  the  possibility  that  the  Corporation  will  encounter  difficulties  in  meeting  its  financial   obligations  as  they  become  due.  The  Corporation  manages  its  liquidity  risk  by  continuously  monitoring  the  adequacy   of  its  capital  resources  (see  note  13)  and  by  managing  cash  receipts  and  payments.  and  the  capital  resources  available  to  the  Corporation.  as  disclosed  in  note  13.  2016.  and  due  to  related  parties  –  These  liabilities  are  a  result  of  the  normal   operations  of  the  Corporation  and  are  current  in  nature.402   339.  The  financial  instruments  of  the  Corporation  which  give  rise  to  interest  rate  risk     are  as  follows:   Cash   -­‐   Changes   in   market   interest   rates   will   cause   fluctuations   in   the   future   interest   earned   on   cash   balances.643   d.  Management  considers  exposure  to  liquidity  risk  from  these   financial  instruments  to  be  minimal  because  the  balances  owing  at  December  31.  the  maturity  date  can  be   extended  to  December  31.  however. 2011 TO DECEMBER 31.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.184.184.     Any  resulting  impact  on  the  Corporation’s  financial  results  would  not  be  considered  material. Debentures  payable  and  interest  payable  –  The  Corporation  manages  the  liquidity  risk  associated  with  the   debentures  payable  by  continuously  monitoring  its  working  capital  to  ensure  it  has  sufficient  capital  to  fund  the   annual  interest  payments  due  on  the  debentures  payable.  The  obligations  relating  to  such  future  commitments  will  be  funded  through  a  combination  of  future   revenues  generated  by  the  Corporation.  as  disclosed  in   note  13.  The  debentures  have  a  maturity  date  of  December  31. 2011 (expressed  in  Canadian  dollars)     c. 2011 Between 91 > 1 year Total days and 1 < 90 days year   Debentures  payable  ($)   Interest  payable  ($)   Trade  payables  and     accrued  liabilities  ($)   Due  to  related  parties  ($)   -­‐   -­‐     -­‐     796.064     85.572       796.  do  not  expose  the   Corporation  to  any  interest  rate  risk.  The  liabilities  which  expose  the   Corporation  to  liquidity  risk  are  as  follows:     Trade  payables  and  accrued  liabilities.  as  a  result.  The  Corporation  intends  to  repay     the  debentures  payable  through  future  revenues  generated  by  the  Corporation.355       -­‐     339.) Interest  rate  risk   Interest  rate  risk  is  the  risk  that  the  fair  value  or  future  cash  flows  of  financial  instruments  will  fluctuate  because  of   changes  in  market  interest  rates.  and  the  capital  resources  available  to  the  Corporation.  2011  will  be  funded  by  cash  held  by   the  Corporation.  Such  capital  is  derived  from  a  combination  of  future   revenues  generated  by  the  Corporation.   Maturity Analysis of liabilities – December 31.643   117.572       -­‐   22.338     -­‐     202.   Debentures  payable  –  The  debentures  payable  have  a  fixed  8%  interest  rate  and.

P.     The  balances  due  to  these  related  parties  as  at  December  31.   Walton  Development  and  Management  L. 2011 TO DECEMBER 31.P.3  million  letter(s)  of  credit.     The  construction  loan  is  due  on  demand  and  bears  interest  at  a  rate  of  prime  +  1.   due  on  demand.) Currency  risk   The  Corporation  does  not  engage  in  foreign  currency  denominated  transactions.   Walton  Asset  Management  L.  and  $2.477   59.  The  development  fee  payable  to  WDM  is  payable   within  60  days  of  quarter-­‐end.     a  floating  charge  over  all  of  the  Corporation's  present  and  after  acquired  real  and  other  property. 40 2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements .  however. 2011 $     -­‐     -­‐     -­‐     -­‐     The  following  transactions  entered  into  between  the  related  parties  during  the  period  were  under  terms  and  conditions   agreed  upon  between  the  parties.  The  construction  loan     consists  of  a  $26.9  million  revolving  demand  loan.  these  amounts  are  unsecured.     9.  while  the  letters  of  credit  act  as  security  for  the  completion  of  certain   obligations  pursuant  to  the  development  agreements  which  will  be  signed  with  the  City  of  Edmonton. 2011 2011 $ $   267.  and  a  first  fixed  and  specific   demand  collateral  land  mortgage  over  the  Properties.  The  servicing  fee  which  is  paid  to  WAM  for  distribution  to  the  Corporation’s  agents  is  payable   semi-­‐annually. Related Party Transactions WAM.  bear  no  interest  and  have  no  fixed  terms  of  repayment.  With  the  exception  of     the  development  fee  payable  to  WDM  and  the  amounts  payable  to  WAM  for  the  servicing  fee.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  The  lender  reserves  the  right  to  stop  advancing   from  the  interest  reserve  account  if  the  loan  is  not  in  good  standing.  2011  are  outlined  in  the  table  below.  no  interest  is  payable  on  this   loan  until  the  interest  reserve  set  out  in  the  loan  agreement  is  fully  utilized.  WDM  and  1389211  Alberta  Ltd.303     May 5.  As  a  result.183   -­‐   339.253       2.   8.050       69.695   1.     through  a  series  of  staged  reductions  over  a  period  of  time  and  are  ultimately  extinguished  when  the  municipality  has     issued  final  acceptance  certificates.25%.        Walton  International  Group  Inc. December 31.  The  loan  facility  is  available  to  finance   the  construction  costs  for  Phase  1  of  the  project. 2011 (expressed  in  Canadian  dollars)     e.  This  letter     of  credit  typically  declines  as  the  Corporation’s  development  obligations  with  the  City  of  Edmonton  are  completed.  The  construction  loan  is  partially  guaranteed  by  WIGI   and  is  also  secured  by  a  first  priority  security  interest  in  all  present  and  after  acquired  personal  property  of  the   Corporation.  WIGI.   Total   December   31.2  million  construction  loan  to  help  finance  Phase  1  of  the  project.  it  has  no  exposure     to  currency  risk.  are  all  related  to  the  Corporation  by  virtue  of  common  management.355   60. Project Debt The  Corporation  has  a  $29.

390.  calculated  as  the  gross  proceeds     raised  of  $4.  2011  until  the  earlier  of  the  date  of  termination  of  the  Management  Services  Agreement  and  June  30.  the  Corporation  incurred  total  management  fees  of  $247.228.   As  at  December  31.)  the  product  of  the  number  of  Units  issued  by  the  Corporation  to  WIGI  in  exchange  for  its  interest  in  the   Property  multiplied  by  $9.330.  2011.  2011  to  December  31.   2016.552.  calculated  as  the  gross  proceeds  raise  of   $25.  WIGI  owns  approximately  5.  2011.  WIGI  acquired  37. 2011 (expressed  in  Canadian  dollars)     Walton Asset Management L.   During  the  period  from  May  5.  On  November  30.)   thereafter.  2016.970.   On  September  30.)  The  net  proceeds  raised  from  the  Private  Placement  of  $3.   Also  in  accordance  with  the  Management  Services  Agreement. On  June  27.   b.  In  accordance  with  the   terms  of  the  Walton  Contribution  Agreement  between  WIGI  and  the  Corporation.000.120.  being  the  $10/Unit  issue  price  paid  by  the  Corporation’s  unitholders.  2011  was  a  result  of  the  transactions  disclosed  above.  and.007.  net  of  selling  commissions  $1.  In  accordance  with  the  terms   of  the  Management  Services  Agreement.  2011.000.440  Units  of  the  Corporation  for  total  consideration  of  $374.  The  servicing  fee  is  calculated  from  the  date  of  the  applicable  closing.079  Units  in  exchange  for  its  ownership  interest  in  Parcel  C.   Walton International Group Inc.   WIGI  acquired  an  additional  52.  and  organizational  costs     of  $63.1%  of  the  outstanding  Units  of  the  Corporation.) from  July  15.  calculated   semi-­‐annually  and  paid  as  soon  as  practicable  after  that  date.     On  October  12.  WAM  is  then  responsible  for  paying  the   servicing  fee  to  the  Corporation’s  agents.325  which  was  equal  to  $1.  an  amount  equal   to  2%  of  the  book  value  of  the  Properties.353.     As  a  result  of  the  transactions  noted  above.  WAM  will  provide  management  and  administrative  services  to  the  Corporation  in   return  for  an  annual  management  fee  equal  to:   i.475  per  Unit.50%   annually  of  the  net  proceeds  for  each  Unit  sold  under  the  IPO  and  Private  Placement.   During  the  period  from  May  5.772.  2011  WIGI  acquired  68.525  in  selling   commissions  which  neither  WIGI  nor  the  Corporation  was  obliged  to  pay  as  part  of  the  land  for  Unit  exchange.  from  July  1.477.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.  the  Corporation  owed  WIGI  $267.400  through  the   Private  Placement.030  and  organizational  costs  of  $386.  2011  and  continuing  until  the  earlier   of  the  dissolution  of  the  Corporation  and  June  30.)  The  net  proceeds  raised  from  the  IPO  of  $24.  c ommencing  on  July  15.280.  w ork  fees  of  $42. 2011 TO DECEMBER 31.  2%  of  the  aggregate  of:   a.P.     c.  the  Corporation  will  pay  to  WAM  a  servicing  fee  equal  to  0.032.  2011.060  Units  in  exchange  for  its  ownership  interest  in  Parcel  A  and  B.  the  Units  issued  to  WIGI  were  issued  at     a  price  of  $9.     2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 41 .  This  was  comprised   of  land  development  costs  and     other  costs  of  the  Corporation  which  were  initially  funded  by  WIGI  on  behalf  of  the  Corporation  but  are  reimbursable     by  the  Corporation.  2011  to  December  31.296.900.     The  balance  payable  to  WAM  as  at  December  31.  2011.  the  Corporation  and  WAM  entered  into  a  Management  Services  Agreement.  less  the  $0.  and   ii.  the  Corporation  incurred  total  servicing  fees  of  $60.  2011.580.420.  net  of  selling  commissions  $221.  2016  until  the  termination  date  of  the  Management  Services  Agreement.

00  per  Unit.  the  fees  and  costs  for  services  provided  by  WDM  are  divided  into  the  following     two  categories:   i.   42 2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements . 2011 December 31.  reduced  by  any  cash  payments   or  distributions  by  the  Corporation.00  amount.  the  total  development  fee  charged  to  the  Corporation  was  $1.   1389211 Alberta Ltd.  2011.     For  the  period  from  May  5.  plus  applicable  taxes. On  June  27.   As  at  December  31.  2011.  plus  applicable  taxes.032   34.  payable  within  60-­‐days  of  the  end  of  such  quarter.  The  priority  return  is  calculated  on  that  $10.075.339   All  services  performed  for  the  Corporation  by  its  executive  officers  are  governed  by  the  Management  Services  Agreement.  In  accordance  with  the  terms     of  the  Project  Management  Agreement.   which  were  paid  for  by  WDM  on  behalf  of  the  Corporation  but  are  reimbursable  by  the  Corporation.  2011  to  December  31.  equal  to  2%  of  certain  development  costs  incurred     in  the  calendar  quarter.) WDM  will  receive  a  development  fee. 2011 to December 31.  The  total  compensation   expense  incurred  by  the  Corporation  relating  to  its  directors  was  a s  follows:     Three months   For the period from ended May 5.P.  2011.   This  amount  has  been  capitalized  as  part  of  land  development  costs   No  performance  fee  was  incurred  by  the  Corporation  during  the  period  ended  December  31.  100  Class  A  shares  for  total  consideration  of  $100.  equal  to  25%  of  cash  distributions  after  all  investors     of  Units  in  the  Corporation  have  received  an  cash  payments  or  other  distributions  equal  to  $10.   ii. 2011 $ $       Director  fees         13.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.   On  May  5.  the  Corporation  and  WDM  entered  into  a  Project  Management  Agreement.) WDM  will  receive  a  performance  fee.   The  annual  management  fee  that  WAM  receives  under  the  Management  Services  Agreement  has  been  disclosed  above.  the  Corporation  issued  to  1389211  Alberta  Ltd. 2011 (expressed  in  Canadian  dollars)     Walton Development and Management L.  the  balance  owing  to  WDM  was  comprised  of  the  development  fee  and  land  improvement  costs.  2011.   Key Management Compensation Key  management  personnel  are  comprised  of  the  Corporation’s  directors  and  executive  officers. 2011 TO DECEMBER 31.  2011  because  the  $10  per  Unit   amount  and  the  cumulative  priority  return  have  not  been  received  by  the  investors  of  Units  in  the  Corporation.     plus  an  8%  priority  return.

  Per Share Amount Basic  net  loss  per  share  is  calculated  by  dividing  the  Corporation’s  net  loss  by  the  weighted  average  number  of  shares   outstanding.000  debentures  for  gross  proceeds  of  $22.000.000.000  Class  B  shares  for  gross  proceeds     of  $7.269.320)     -­‐   -­‐   3.000.320  and  $1.  2011.000  and  the  work  fees  pertaining  to  the  Private  Placement  of  $42.000  and  the  issuance  of  3.  The  weighted  average  number  of  shares   outstanding  for  the  period  ended  December  31.500.  Class  A  shares  outstanding  have  not  been  included  in  the  weighted  average  shares  outstanding  because  the   Class  A  shares  do  not  participate  in  the  profits  or  losses  of  the  Corporation.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5. Share Capital Authorized   Unlimited  Class  A  shares   Unlimited  Class  B  shares       Outstanding   December 31.006.500.  The  IPO  and  the  Private  Placement  were  successfully  completed  on     July  15.  respectively.  The  issuance  costs  associated     with  the  share  component  and  debenture  component  were  $404.500.  which  is  a  related  party  of  the  Corporation  by  virtue  of   common  management.  2011.  and  were  comprised  of   commissions  paid  to  agents  of  $1.  the  Corporation  filed  the  Prospectus  for  the  IPO  of  its  Units.         2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 43 . 2011 Number of Amount shares $ May 5.  based  on  their  proportionate  share  of  the  gross     proceeds  raised.280.120.  resulting  in  the  issuance  of  3.     Initial Public Offering and Private Placement On  June  27. 2011 Number of Amount shares $           Class  A  shares   100   100     100   100   Class  B  shares   3.  respectively.  2011  was  2.960.000     -­‐   -­‐   120.  2011  and  December  31.575.380.  2011. 2011 TO DECEMBER 31.  These  costs   were  allocated  to  the  share  component  and  debenture  component.212.579     -­‐   -­‐   -­‐   (404.139   284.  This  was  followed  by  a  non-­‐brokered  Private   Placement  of  Units  which  was  filed  on  July  18.239   7. 2011 (expressed  in  Canadian  dollars)     10.000..000   7.359     100   100   Class  B  shares  issued  in  exchange  for   land Share  issuance  costs  –  commissions  and   work  fees All  Class  A  shares  of  the  Corporation  are  held  by  1389211  Alberta  Ltd.

2011 TO DECEMBER 31. Income Taxes The  income  tax  recovery  recognized  by  the  Corporation  during  the  period  ended  December  31.  the  potentially  dilutive  shares  were  nil  because  the  Corporation  generated  a  net  loss   during  the  period.  2011. 2011 to December 31.50/share.127   .  this  conversion  feature   could  result  in  potentially  dilutive  shares  in  the  determination  of  the  weighted  average  diluted  shares  outstanding.  For  the   period  ended  December  31.   11.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5. 2011 (expressed  in  Canadian  dollars)     As  the  Corporation  has  the  right  to  convert  any  portion  of  the  debentures  payable  into  Class  B  shares. 2011     Current  tax     Deferred  tax  recovery   Income  tax  recovery       44   2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements $     -­‐       205.127       205.     Share Issuance Price The  Class  A  shares  issued  and  outstanding  of  the  Corporation  were  issued  at  a  price  of  $1/share.   The  Class  B  shares  issued  and  outstanding  of  the  Corporation  were  issued  at  a  price  of  $2.  2011  was  comprised  of     the  following:     the period For from May 5.

 as  well  as  the  recognition  of  tax  losses  for  the  period   from   May   5.127   DEFERRED TAX ASSET – MAY 5.   The  full  amount  of  the  deferred  tax  asset  is  non-­‐current  because  it  is  not  expected  to  be  recovered  within  twelve  months. 2011 (expressed  in  Canadian  dollars)     The   tax   recovery   on   the   Corporation’s   net   loss   before   tax   differs   from   the   amount   that   would   arise   using   the   weighted   average  tax  rate  applicable  to  losses  as  follows:     Net  loss  before  tax         Applicable  tax  rate   Expected  deferred  tax  recovery     Tax  effects  of:     Non-­‐deductible  expenses   Unit  issuance  costs  and  organizational  costs     period from For the May 5.127         205.  deferred  income  tax   assets  are  recognized  only  to  the  extent   that  it  is  probable  that  future  taxable  profit  will  be  available  against  which  temporary  differences  and  prior  year  tax  losses   can  be  utilized.   2011   to   December   31.     2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements 45 .127)   Deferred   income   tax   assets   are   a   result   of   temporary   differences   between   the   carrying   amount   of   assets   and   liabilities   in   the   financial  statements  and  their  carrying  amount  for  income  tax  purposes.  Management  feels  that  based  on  the  level  of  commitments  received  for  the  purchase  of   serviced  lots  and  the  anticipated  costs  required  to  complete  the  development  of  those  serviced  lots.  The  nature  of  the  Corporation’s  business  is  such  that  until  the  sale  of  lots  commences. 2011 to December 31.   2011.116)   25%               (191.483       205.644   Recognition  of  tax  losses  from  current  year       107.  the  Corporation  will  be   able  to  recover  the  tax  losses  from  the  period  May  5. 2011 $   (767.644)   (205. 2011       DEFERRED TAX ASSET – DECEMBER 31.500       (28. 2011   As  outlined  in  the  Corporation’s  accounting  policies  (note  3).  any  revenue  generated   by  the  Corporation  is  not  significant.  2011  to  December  31.  2011  before  the  expiry  date  of  the  tax  losses.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5.   The   deferred   income   tax   recovery   recognized   by   the   Corporation   during   the   period   and  its  impact  on  the  deferred  income  tax  asset  is  as  follows:           $       -­‐           Change  due  to  origination  and  reversal  of  temporary  differences       97.779)           112.204)           Origination  and  reversal  of  timing  differences   Income  tax  recovery   (97. 2011 TO DECEMBER 31.

 it  is   calculated  based  on  the  book  value  of  the  Properties  at  the  end  of  the  previous  calendar  quarter.488     2.  the  Corporation  had  total  cash  on  hand  of  $2.  The  total  amount   drawn  on  the  construction  loan  at  December  31.  which  is  determined  at  the  time  land  sales  are  completed.  As  at  December  31.060   581. 2011 (expressed  in  Canadian  dollars)     12.   The  Corporation  is  not  subject  to  any  externally  imposed  financial  covenants.243.  As  at  December  31.1%  ($2.  2011.  It  does  not  include  the  performance  fee  payable  to  WAM  under  the  Management  Services   Agreement.  2011.  WIGI  monitors.   Servicing fee $ 2012   2013   2014   2015   2016   Management fee $ Total $ 139.724   720.   which  is  required  to  maintain  a  minimum  level  of  net  worth  stated  in  the  borrowing  agreement.832             581. 13.664   139.664   139.  which  cannot  be  reasonably   estimated  at  this  time.724   720.) The  Corporation  has  a  construction  loan  to  help  finance  Phase  1  of  the  project.060   581.664   69.     Management  regularly  reviews  the  levels  of  its  capital  resources  to  determine  if  sufficient  cash  is  available  to  fund  the   ongoing  costs  of  the  Corporation  over  the  next  twelve  months.  sufficient  capital  exists  to  fund     the  Corporation’s  activities  for  at  least  the  next  12  months.) Of  the  gross  proceeds  raised  under  the  IPO  and  Private  Placement.060   290.9  million  non-­‐revolving  loan  facility  and  $2.  2011  was  $nil  (May  5.3  million  letter(s)  of  credit. Commitments The  following  table  presents  future  commitments  of  the  Corporation  under  the  Management  Services  and  Agreement     (note  9)  over  the  next  five  years.7  million)  was  set  aside   by  the  Corporation  to  pay  for  its  ongoing  administrative  and  operating  expenses.   ii.  management  fee.770     3.  grading  costs.074.  The  construction  loan  consists  of  a   $26. Capital Management The  Corporation  has  two  sources  of  capital  to  finance  its  operations:   i.  approximately  9.  on  a  monthly  basis.  2011  -­‐  $nil).060   581.  its  net  worth  to  ensure   compliance  with  its  obligations  as  a  guarantor.362   628.614.  pre-­‐development  costs.  3  and  4  of  the  project.371.  construction  costs  and  other  expenses  of  the   Corporation.  development   fee.  however.     and  foresees  no  circumstances  or  conditions  which  may  be  reasonably  likely  to  cause  WIGI  to  be  offside  with  its  obligations     as  guarantor  over  the  next  12  months.  after  June  30.  It  is  anticipated  that  further   construction  loans  will  be  required  to  fund  the  costs  of  development  for  Phase  2.724   720.  As  at   December  31.724   360.664   139.258   The  commitment  for  the  management  fee  will  extend  for  the  length  of  the  project.530             720.  2011.  WIGI  was  in  compliance  with  this  requirement.Walton Edgemont Development Corporation Notes to the Financial Statements FOR THE PERIOD FROM MAY 5. 2011 TO DECEMBER 31.  2016.       46   2011 Annual Report • Walton Edgemont Development Corporation • Notes to Financial Statements .  This  loan  is  partially  guaranteed  by  WIGI.

Notes 2011 Annual Report • Walton Edgemont Development Corporation 47 .

Notes 48 2011 Annual Report • Walton Edgemont Development Corporation .

the Walton Group has over 700 employees in Canada. the Walton Group currently manages approximately CAD $3. acquire. Our professional teams research. Walton Capital Management Inc. 2011 Annual Report • Walton Edgemont Development Corporation 49 .P. maximizing returns for clients and investors.1 billion of pre-development and development real estate assets. Members of the Walton Group of Companies include: Walton Asset Management L. Europe and Asia. North Carolina for the Walton Group and on behalf of investors around the world. syndicate. including primarily North America. is a shareholder in the Walton Edgemont Development Corporation with a minory interest. Texas. In business for more than 30 years.Walton Group of Companies The Walton Group of Companies constitutes one of North America’s leading land-based real estate investment and development groups. Ontario.C. area and Charlotte.000 acres of land in Alberta. Walton International Group Inc. is the manager of Walton Edgemont Development Corporation.P. is the project manager for Walton Edgemont Development Corporation. Singapore. Headquartered in Calgary. the United States. the Washington D. Hong Kong. develop and manage land assets with the goal of achieving the highest and best potential of the land – and in doing so. Malaysia and Germany. Arizona. including nearly 65. Georgia. is a registered exempt market securities dealer which distributed units for Walton Edgemont Development Corporation. is the parent company of the Walton Group of Companies. plan. Walton Development and Management L. Walton Global Investments Ltd.

a member of the Advisory Board of Thermal Systems KWC. He is a former member of the Board of Advisors of Walton Global Investments Ltd. Previously. brokerdealers. the Institute of Chartered Accountants of Alberta and the Canadian Institute of Chartered Accountants. He is also a director and member of the audit and executive committees of the board of directors of First Capital Realty Inc. Mr. ICD.D D. financial advisors and institutional investors. a past member of the Calgary Arts Development Authority and a board member of a private real estate investment group. and past Chair of the Canadian Bar Association’s National Commodity Tax. She has lectured extensively at legal seminars. where he practiced tax law for 20 years. Leslie enjoyed three decades of successful private practice. Architects. Blair Nixon. Cliff was Chief of Staff to the Leader of Her Majesty’s Official Opposition in the House of Commons. Atlanta. Richard holds a Bachelor of Architecture from the University of Manitoba and is LEED accredited. He has been a guest lecturer for the Canadian Tax Foundation. Mr. He is presently a director of the National Music Centre (Cantos Foundation). In addition.D Richard R. Fryers Director Walton Edgemont Development Corporation Cliff Fryers has been Chairman and Chief Executive Officer of the White Iron Group of Companies (a media production house) since 1997. retiring as Vice Chairman in November. and holds a Law degree from McGill University. She is a Member of the Law Society of Alberta. Jon N. oversees the worldwide legal services for the Walton Group of Companies. Toronto. area and Charlotte. He is ranked as a leading business lawyer by Chambers Global.D certification granted by the Institute of Corporate Directors. Chief Executive Officer Walton Edgemont Development Corporation Bill Doherty leads the Walton Group of Companies as Chief Executive Officer of Walton Global Investments Ltd. 2011. he has consulted and provided assistance to developers in various planning and building projects. and is on the board of directors of several companies in the Walton Group. He is also the chair of the board of the Manning Centre for Building Democracy. USA and European operations.. Director Walton Edgemont Development Corporation 50 William (Bill) Doherty 2011 Annual Report • Walton Edgemont Development Corporation Corporate Secretary Walton Edgemont Development Corporation Chief Financial Officer Walton Edgemont Development Corporation . he was a trustee of Sunrise Senior Living Real Estate Investment Trust and was the chair of the audit committee thereof. He is central to Walton’s strategic direction and expansion and has directed the launch of Walton’s Asian.C. the Washington D. ICD.. and holds the ICD. Cambridge Shopping Centres. is a past Chair of the Board of Directors of the Legal Education Society of Alberta and is currently a Member of The Association of General Counsel of Alberta. Ltd. Singleton was a lead architectural partner with Cohos Evamy Partners. Executive Vice President. Hagan is principal of JN Hagan Consulting. He was appointed Queen’s Counsel by the Province of Alberta. and has been granted the ICD. In addition to board service. For eight years. Leslie was appointed Queen’s Counsel by the Province of Alberta. responsible for finance operations across the Walton Group of Companies. Austin-San Antonio. Fryers. Richard is on the board of directors of several companies in the Walton Group. He was Co-Managing Partner of law firm Felesky Flynn LLP. recruited experienced industry leaders to form Walton Development and Management L. and is a former director and member of various committees of Bentall Kennedy Group. and acquisition and disposition transactions covering situations across North America and China.. awarded the FCA designation by the Institute of Chartered Accountants of Alberta. Bill is deeply involved in Walton’s growing array of business relationships with leading international investment banks. He was a Senior Tax Partner and Managing Partner with law firm Milner Fenerty (now Fraser Milner Casgrain LLP). Leslie Fryers. He was on the Board of Advisors of Walton Global Investments Ltd. Jon has held a number of executive finance positions with real estate industry leaders including Oxford.D distinction from the Institute of Corporate Directors. and as an actively-involved Director and Executive with several Walton Group affiliates. Lexpert and Martindale-Hubbell. FCA. Phoenix-Tucson.. DallasFort Worth. Nixon is both an experienced tax lawyer and a chartered accountant. Nixon is an elected Member and President of the Council for the Institute of Chartered Accountants of Alberta. QC.Jon N. Empire Company Limited and Cadillac Fairview Corporation. Law for Walton Global Investments Ltd. North Carolina. Overseeing an innovative and dynamic enterprise that has grown into a leading North American real estate investment and development group.D certification granted by the Institute of Corporate Directors. Richard Singleton Leslie L. Blair Nixon is Chief Financial Officer of Walton Global Investments Ltd. and has overseen the diversification of Walton’s real estate portfolio from an original base in Calgary to significant positions in and around Edmonton. Previously. Ottawa. Hagan Director Walton Edgemont Development Corporation Clifford H. holds a BSc in Mechanical Engineering from the University of Saskatchewan and attended the Executive MBA program at the University of Alberta. Jon is a chartered accountant. providing assistance to major corporations regarding real estate capital markets. QC. Previously. concentrating on mergers and acquisitions. Since retiring in 2008. and he holds the ICD.P. Engineers and Planners (now Dialogue Design) for 36 years. He has also been Chairman of Teranet Income Fund and a director and on the audit committee of the board of directors of The Mills Corporation. Customs and Trade Section.

If you are not yet registered. If you have any questions during the registration process.925.com to access information on your investments with Walton International Group Inc. or Walton Capital Management Inc. You’ll find: • Updates on your investment projects • Information about pending exit offers on your investments • Account holdings • Financial results • Videos and presentations • Walton’s Privacy Policy Go to Walton. 2011 Annual Report • Walton Edgemont Development Corporation 51 . please contact Investor Services at 1. select New User in the top right hand corner and follow the registration instructions.Register for Our Website Visit Walton.8668.com and select either Walton International Group Inc. to log in if you are a registered user. and/or Walton Capital Management Inc.866.

416.4255 Fax: +1.5th Avenue SW Calgary.8668 Fax: +1. 605 .Walton International Group Inc.8663 InvestorServices@WaltonInternational.1825 Walton Investor Services 23rd Floor.265.509. 605 .866. Canada T2P 5L3 Main: +1.925.866. Alberta.6634 Toronto Suite #100.403. Canada T2P 3H5 Main: +1. Alberta.9962 Auditor PricewaterhouseCoopers LLP Suite 3100.365.403.5th Avenue SW Calgary.237.com . Alberta.403. Canada T2P 3H5 Main: +1.7500 Fax: +1.416. Canada M9W 7K6 Main: +1. Ontario.5th Avenue SW Calgary.925. Corporate Headquarters • Calgary 23rd Floor.781.860.com Walton.403.2790 Fax: +1. 20 Carlson Court Toronto. 111 .