DRAFT FOR DISCUSSION ONLY

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1 FINANCIAL STATEMENTS March 31, 2015

2 March 31, 2015 CONTENTS Page INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS Statement of Financial Position 2 Statement of Financial Activities and Changes in Net Assets 3 Statement of Cash Flows 4 Notes to the Financial Statements 5-7

3 INDEPENDENT AUDITORS' REPORT To The Board of Directors of Seaway Valley Community Health Centre Inc. We have audited the accompanying financial statements of Seaway Valley Community Health Centre Inc., which comprise the statement of financial position as at March 31, 2015 and the statements of financial activities and changes in net assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider 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, but not for the purpose of expressing an opinion on the effectiveness of the entity s control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Seaway Valley Community Health Centre Inc. as at March 31, 2015 and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Craig Keen Despatie Markell LLP Cornwall, Ontario June 24, 2015 Chartered Professional Accountants Licensed Public Accountants 1

4 STATEMENT OF FINANCIAL POSITION As at March 31, 2015 ASSETS CURRENT Cash $ 180,493 $ 193,606 Accounts receivable 82,840 84,285 Prepaid expenses 4, , ,891 CAPITAL (Note 2) 1,811,162 1,973,886 $ 2,078,495 $ 2,251,777 LIABILITIES CURRENT Accounts payable (Note 3) $ 259,605 $ 278,377 Due to Ministry of Health, operating recovery (Note 4) 51,295 44, , ,507 DEFERRED CAPITAL CONTRIBUTIONS (Note 5) 1,743,950 1,906,675 NET ASSETS 2,054,850 2,229,182 NET ASSETS 23,645 22,595 APPROVED ON BEHALF OF THE BOARD: Director Director Date $ 2,078,495 $ 2,251,777 See Accompanying Notes 2

5 STATEMENT OF FINANCIAL ACTIVITIES AND CHANGES IN NET ASSETS REVENUE Ministry of Health Base funding $ 2,506,103 $ 2,498,863 Base funding, one-time 98, ,855 Cardiac Rehab 28,333 - Cardiac Rehab, one-time funding 13,325-2,646,173 2,623,718 Falls Prevention 47,874 70,042 Primary Care Outreach 129,276 - Respiratory Therapy 82,131 - Telemedicine 150, ,343 Interest and other 45,460 39,063 3,101,458 2,872,166 EXPENDITURES Administration 3,343 2,948 Advertising 4,497 3,123 Bank charges and payroll fees 6,677 7,765 Contracted services 17,866 - Insurance 13,512 18,990 Maintenance - building 56,415 49,750 Maintenance - equipment 9,067 3,811 Medical supplies 10,029 24,593 Memberships 31,353 22,020 Minor equipment 43,710 73,496 Occupancy costs 253, ,873 Office supplies 128,252 81,929 Professional fees 35,290 43,248 Training 30,189 24,187 Transfer to deferred capital contributions 47,917 52,880 Travel 31,894 23,367 Wages and benefits 2,367,368 2,142,012 3,090,512 2,826,992 SURPLUS BEFORE OTHER ITEMS 10,946 45,174 OTHER ITEMS Settlement, current year 9,896 41,399 Amortization of deferred capital contributions (210,642) (219,779) Amortization of capital assets 210, ,779 9,896 41,399 NET SURPLUS FOR THE YEAR 1,050 3,775 NET ASSETS, beginning of year 22,595 18,820 NET ASSETS, end of year $ 23,645 $ 22,595 See Accompanying Notes 3

6 STATEMENT OF CASH FLOWS CASH (USED IN) FROM OPERATING ACTIVITIES Net surplus for the year $ 1,050 $ 3,775 Items not affecting working capital balances Amortization of deferred capital contributions (210,642) (219,779) Amortization of capital assets 210, ,779 Changes in non-cash working capital balances Accounts receivable 1,445 (33,496) Prepaid expenses (4,000) - Accounts payable (18,772) 149,056 Due to Ministry of Health, operating recovery 7,164 3,851 Deferred contributions - community partners donation - (16,240) (13,113) 106,946 CASH USED IN INVESTING ACTIVITIES Purchase of equipment and leaseholds (47,917) (52,880) CASH USED IN FINANCING ACTIVITIES Increase in deferred capital contributions 47,917 52,880 (DECREASE) INCREASE IN CASH (13,113) 106,946 CASH, beginning of year 193,606 86,660 CASH, end of year $ 180,493 $ 193,606 REPRESENTED BY: Cash $ 180,493 $ 193,606 See Accompanying Notes 4

7 NATURE OF THE ORGANIZATION NOTES TO THE FINANCIAL STATEMENTS The Centre's mandate is to provide, administer and maintain a health care facility for the residents of Cornwall and surrounding areas. The Centre is a registered charity and is exempt from income tax. 1. SIGNIFICANT ACCOUNTING POLICIES These financial statements were prepared in accordance with Canadian accounting standards for notfor-profit organizations, and include the following significant accounting policies: (a) (b) (c) (d) Use of estimates The preparation of these financial statements in conformity with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the current period. These estimates are reviewed periodically and adjustments are made to income as appropriate in the year they become known. Significant items subject to such estimates and assumptions include the estimated useful lives of capital assets and the valuation of allowances for doubtful accounts receivable. Actual results could differ from those estimates. Revenue and expenditure recognition The Centre follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenditures are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Expenditures are recorded when paid and operating payables are recorded using a modified accrual basis to match the revenues and expenditures. Cash and equivalents Cash is comprised of cash on hand and cash on deposit. Capital assets Capital assets are recorded at cost. Amortization is calculated to write off the cost less estimated residual value over the estimated life of the asset. Residual values, where applicable, are reviewed annually for equivalently aged assets and amortization rates adjusted accordingly on a prospective basis. The following rates and methods have been used: Leaseholds Equipment, information systems Equipment, non-information systems - 15 years straight-line - 3 and 5 years straight-line - 5, 10 and 20 years straight-line 5

8 2. CAPITAL SEAWAY VALLEY COMMUNITY HEALTH CENTRE INC. NOTES TO THE FINANCIAL STATEMENTS Accumulated Net Net Cost Amortization Leaseholds $ 1,943,005 $ 535,119 $ 1,407,886 $ 1,526,142 Equipment, information systems 163, ,724 53,229 48,026 Equipment, non-information systems 610, , , , ACCOUNTS PAYABLE $ 2,717,775 $ 906,613 $ 1,811,162 $ 1,973,886 Included in accounts payable are government remittances of $1,618 ( $1,550). 4. DUE TO MINISTRY OF HEALTH Operating recovery The Ministry of Health requires that a year-end calculation be performed to establish whether there has been an overpayment or underpayment of grants based on actual costs and revenues. Based on the calculations, the balance recoverable by the Ministry of Health is as follows: Due to Ministry of Health, 2015 settlement $ 9,896 $ - Due to Ministry of Health, 2014 settlement 41,399 41,399 Due to Ministry of Health, 2013 settlement - 2,731 Operating recovery, end of year $ 51,295 $ 44, DEFERRED CAPITAL CONTRIBUTIONS Deferred capital contributions related to leasehold and equipment acquisitions represent the unamortized amount of grants and donations received for the purchase of these assets. The amortization of capital contributions is recorded as revenue in the statement of financial activities based on the life of the asset purchased, less the estimated residual value. Balance, beginning of year $ 1,906,675 $ 2,073,574 Amortization (210,642) (219,779) Transferred from operations 47,917 52,880 Balance, end of year $ 1,743,950 $ 1,906,675 6

9 NOTES TO THE FINANCIAL STATEMENTS 6. COMMITMENTS The future minimum annual lease payments as of March 31, 2015 under operating leases are as follows: 7. ECONOMIC DEPENDENCE 2014 $154, $156, $156, $156, $156,270 The Centre is economically dependent on the continued funding from the Ministry of Health through the Champlain LHIN. 8. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with the financial statements presentation adopted for the current year. 9. FINANCIAL ASSETS AND FINANCIAL LIABILITIES Risks and concentrations The Centre is exposed to various risks through its financial instruments. The following analysis provides a measure of the centre's risk exposure and concentrations at the balance sheet date. Liquidity risk Liquidity risk is the risk that the Centre will not be able to meet its obligations associated with financial liabilities. The Centre meets its liquidity requirements by preparing and monitoring detail forecast of cash flows from operations and holding assets that can be readily converted into cash. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Centre is exposed to credit risk in the event of nonperformance by counterparties in connection with its accounts receivable. Accounts receivable arise primarily from amounts due from the LHIN and HST rebates. The maximum exposure to credit risk is the carrying value of accounts receivable on the balance sheet. Management believes concentrations of credit risk with respect to amounts receivable is limited due to the nature of the receivables. 7