Notes to Consolidated Financial Statements 

Year ended December 31, 2011 

## Reporting entity: 

Alaris is a company domiciled in Calgary, Alberta, Canada. The consolidated financial statements of the Company as at and for the year ended December 31, 2011 comprises the Company and its subsidiaries (together referred to as the “Corporation”). The Corporation’s Canadian operations are conducted through a partnership. The Corporation’s American operations are conducted through a Delaware Corporation formed on October 21, 2011. The Corporation’s operations consist primarily of investments in private operating entities, typically in the form of preferred limited partnership interests, preferred interest in limited liability corporations in the United States, or long-term license and royalty arrangements. The Corporation also has a wholly-owned subsidiary in The Netherlands. 

## 2. Statement of compliance: 

## (a) Statement of compliance 

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). 

An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Corporation is provided in note 13. This note includes reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of the transition reported under Canadian GAAP to those reported for those periods and at the date of transition under IFRS. 

These consolidated financial statements were approved by the Board of Directors on March 14, 2012. 

## (b) Basis of measurement 

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: 

GLYPH<g120> Available-for-sale financial assets (Preferred LP units and Preferred LLC units) are measured at fair value with changes in fair value recorded in other comprehensive income 

GLYPH<g120> Derivative financial instruments are measured at fair value 

## (c) Functional and presentation currency 

These consolidated financial statements are presented in Canadian dollars which is the Corporation’s functional currency. 

## (d) Use of estimates 

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. Management reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an 

