HOSPICE WELLINGTON INC. (A Not-for-Profit Organization) FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2010

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1 FINANCIAL STATEMENTS

2 FINANCIAL STATEMENTS Page Auditor's Report 2 Financial Statements Statement of Financial Position 3 Statement of Changes in Net Assets 4 Statement of Operations 5 Statement of Cash Flows 6 Notes to the Financial Statements 7

3 Tel: Fax: Toll-free: BDO Canada LLP 512 Woolwich Street Guelph ON N1H 3X7 Canada AUDITOR'S REPORT To: The Members of Hospice Wellington Inc. We have audited the statement of financial position of Hospice Wellington Inc. as at March 31, 2010 and the statements of operations and changes in net assets and cash flows for the period then ended. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These financial statements are the responsibility of the entity's management. Our responsibility is to express an opinion on these financial statements based on our audit. Except as explained in the following paragraph, we conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In common with many not-for-profit organizations, the Organization derives revenue from donations the completeness of which is not susceptible to satisfactory audit verification. Accordingly, our verification of these revenues was limited to a comparison of recorded receipts with bank deposits and we were not able to determine whether any adjustments might be necessary to contributions, excess of revenues over expenses, current assets and net assets. In our opinion, except for the effect of adjustments, if any, which we might have determined to be necessary had we been able to satisfy ourselves concerning the completeness of the donation revenues referred to in the preceding paragraph, these financial statements present fairly, in all material respects, the financial position of the Organization as at March 31, 2010 and the results of its operations and its cash flows for the period then ended in accordance with Canadian generally accepted accounting principles. Licensed Public Accountants, Chartered Accountants Guelph, Ontario August 17, 2010 BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. 2

4 STATEMENT OF FINANCIAL POSITION AS AT MARCH 31, 2010 PROPERTY & CURRENT EQUIPMENT RESERVE FUND FUND FUND TOTAL TOTAL December A S S E T S CURRENT Cash (note 2) $ 98,218 $ 0 $ 1,916,756 $ 2,014,974 $ 1,713,985 Short-term investments (note 3) 11, ,100 11,087 Accounts receivable 1, ,894 20,039 53,546 Prepaid expenses 3, , ,901 3,429 Interfund loan (note 4) (62,878) 211,000 (148,122) , ,000 1,888,186 2,150,014 1,782,047 PROPERTY & EQUIPMENT (note 5) 0 4,396, ,396,730 3,628,094 $ 50,828 $ 4,607,730 $ 1,888,186 $ 6,546,744 $ 5,410,141 L I A B I L I T I E S CURRENT LIABILITIES Accounts payable and accrued liabilities $ 32,318 $ 195,004 $ 335,480 $ 562,802 $ 647,936 Deferred revenue (note 7) 0 200,452 2,920,841 3,121,293 2,818,312 Loan payable (note 6) 0 2,343, ,343,159 1,384,330 Total Liabilities 32,318 2,738,615 3,256,321 6,027,254 4,850,578 N E T A S S E T S NET ASSETS Invested in property & equipment 0 1,869, ,869,115 2,058,136 Restricted 0 0 (1,368,135) (1,368,135) (1,560,993) Unrestricted 18, ,510 62,420 18,510 1,869,115 (1,368,135) 519, ,563 $ 50,828 $ 4,607,730 $ 1,888,186 $ 6,546,744 $ 5,410,141 APPROVED BY THE BOARD: Director The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 3

5 STATEMENT OF CHANGES IN NET ASSETS NET ASSETS PROPERTY & CURRENT EQUIPMENT RESERVE FUND FUND FUND TOTAL TOTAL December Balance at beginning of the period $ 62,420 $ 2,058,136 $(1,560,993) $ 559,563 $ 607,997 (Deficiency) of revenue over expenditures for the period (41,291) (8,467) 9,685 (40,073) (48,434) 21,129 2,049,669 (1,551,308) 519, ,563 Interfund transfers Purchase of capital assets (2,619) (180,554) 183, Balance at end of the period $ 18,510 $ 1,869,115 $(1,368,135) $ 519,490 $ 559,563 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4

6 STATEMENT OF OPERATIONS PROPERTY & CURRENT EQUIPMENT RESERVE FUND FUND FUND TOTAL TOTAL (3 months) (Year) REVENUE Grants $ 48,412 $ 1,172 $ 0 $ 49,584 $ 198,890 Donations 9, ,616 32, ,357 Fundraising 12, , ,491 Programs 1, ,071 3,083 Interest ,131 Other income ,150 North Wellington ,590 1,172 23,466 96, ,011 EXPENDITURES Wages and benefits 56, ,000 65, ,080 Administration 30, , ,918 Program costs 23, , ,068 Depreciation 0 9, ,639 38,478 Interest on long-term debt 0 0 4,513 4,513 3,473 Advertising and promotion 1, ,638 43,573 Fundraising 1, ,569 22,776 Other ,913 Campaign expenses ,986 Education ,228 North Wellington (48) 112,881 9,639 13, , ,445 (DEFICIENCY) OF REVENUE OVER EXPENDITURES for period $ (41,291) $ (8,467) $ 9,685 $ (40,073) $ (48,434) The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 5

7 (Operating as A Not-for-Profit Organization) STATEMENT OF CASH FLOWS TOTAL TOTAL (3 months) (Year) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (Deficiency) of revenue over expenditures for the period $ (40,073) $ (48,434) Items not involving cash Depreciation 9,639 38,478 (30,434) (9,956) Changes in non-cash working capital items (note 8) 150, , , ,522 INVESTING ACTIVITIES Purchase of capital assets (778,275) (2,097,123) FINANCING ACTIVITIES Advance of infrastructure loan 958,829 1,384,330 NET INCREASE (DECREASE) IN CASH 300,989 (130,271) CASH, BEGINNING OF PERIOD 1,713,985 1,844,256 CASH, END OF PERIOD $ 2,014,974 $ 1,713,985 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 6

8 NOTES TO THE FINANCIAL STATEMENTS NATURE OF ORGANIZATION Hospice Wellington Inc. (the "Organization") is a registered charity incorporated without share capital under the provisions of the Ontario Business Corporations Act and is exempt from income tax. The Organization is committed to providing caring assistance to individuals and families from the time of diagnosis of life threatening or terminal illness regardless of disease stage. Hospice Wellington Inc. carries out its programs through a strong volunteer organization. 1. SIGNIFICANT ACCOUNTING POLICIES The following summary of significant accounting policies is presented in order to assist the reader in interpreting these financial statements: (a) FUND ACCOUNTING The activities of the Organization are carried out through the following funds: Current Fund The Current Fund accounts for the ongoing operations of the Organization and the revenue and expenditures of its programs. Property & Equipment Fund The Property & Equipment Fund reports the activities of the entity related to its capital assets. Reserve Fund The Reserve Fund accounts for restricted contributions designated for facilities. All income earned on investments of the fund accrues to the fund. The Board of Directors may transfer amounts from the Current Fund to the Reserve Fund by way of motion. The Board of Directors may transfer amounts from the Reserve Fund to the Current Fund only to the extent of cumulative funds remaining from amounts previously transferred by way of Board motion from the Current Fund. (b) REVENUE RECOGNITION Hospice Wellington Inc. follows the deferral method of accounting for contributions. Under this method: Contributions and donations restricted for the Building on Compassionate Care Campaign are deferred and recognized as revenue in the year in which the related expenses are incurred. Contributions restricted to the acquisition of capital assets are initially recorded as deferred contributions in the period in which they are received and are amortized to revenue over the useful life of the related assets. Unrestricted contributions and donations are recognized when received. 7

9 NOTES TO THE FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES (continued) (c) CONTRIBUTED SERVICES Volunteers contribute a significant amount of time per year to assist the Organization in carrying out its service delivery activities. Due to the difficulty of determining their fair value, contributed services are not recognized in the financial statements. (d) PROPERTY & EQUIPMENT Property & equipment are recorded at cost. Depreciation is calculated using the straight line method over the assets' estimated useful lives as follows: Building Equipment Office furniture and equipment Soft furnishings Computer equipment Signs 40 years 5 years 5 years 5 years 3 years 5 years (e) FINANCIAL INSTRUMENTS The Organization's financial assets and liabilities are generally classified and measured as outlined below. Cash and short-term investments are classified as held for trading. They are accounted for at fair value with the change in fair value recognized in net income for the period. Accounts receivable are classified as loans and receivables. They are accounted for at amortized cost. Accounts payable, accrued liabilities and loan payable, are classified as other liabilities and are accounted for at amortized cost. Unless otherwise noted, it is management's opinion that the Organization is not exposed to significant interest, currency or credit risks and that the financial instruments' carrying values approximate fair values. (f) USE OF ESTIMATES The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the period. Actual results could differ from those estimates. 8

10 NOTES TO THE FINANCIAL STATEMENTS 2. CASH The Organization's bank deposits are held at one chartered bank. 3. SHORT-TERM INVESTMENTS Short-term investments consist of a guaranteed investment certificate. The guaranteed investment certificate bears interest at 0.65% per annum and matures in March INTERFUND LOAN Interfund loans are non-interest bearing and due on demand. 5. PROPERTY & EQUIPMENT Property & equipment consists of the following: March December ACCUM. NET BOOK NET BOOK COST DEPR'N VALUE VALUE Land $ 203,185 $ 0 $ 203,185 $ 203,185 Building 4,129,302 (157,667) 3,971,635 3,218,245 Equipment 194, , ,125 Office furniture and equipment 32,411 (24,517) 7,894 8,601 Soft furnishings 14, ,313 0 Computer equipment 19,993 (15,205) 4,788 3,077 Signs 3,331 (2,541) $ 4,596,660 $ (199,930) $ 4,396,730 $ 3,628, LOAN PAYABLE The loan payable is to Ontario Infrastructure Projects Corporation. Interest accrues at a floating rate, at period end the rate was 1.64% per annum. There is a general security agreement on all present and future assets of the Organization. The maximum aggregate principal amount available is $4,000,000; at period end $2,343,159 has been advanced. The advances can be converted into debentures with specified terms at maturity or can be repaid before maturity. No principal repayments are required to be made until the completion of the building. Funds that have been advanced are restricted for use in capital expenditures. 9

11 NOTES TO THE FINANCIAL STATEMENTS 7. DEFERRED REVENUE Deferred revenue consists of the following: a) Deferred revenue in the Property & Equipment Fund consists of funding received from the Ministry of Health and Long Term Care for capital assets. The deferred revenue relating to these grants will be recognized over the estimated useful life of the assets that were funded by these grants in amounts equal to the annual depreciation (3 months) (Year) Opening balance $ 201,624 $ 206,312 Grants received 0 0 Expenses incurred and grants recognized as revenue (1,172) (4,688) $ 200,452 $ 201,624 b) Deferred revenue in the Reserve Fund represents donations received from the Building on Compassionate Care Campaign that are in excess of expenses incurred for the planned campaign and facilities (3 months) (Year) Opening balance $ 2,616,688 $ 2,373,306 Donations received 326, ,602 Expenses incurred and donations recognized as revenue (22,616) (94,220) $ 2,920,841 $ 2,616, CHANGES IN NON-CASH WORKING CAPITAL ITEMS (3 months) (Year) Increase in short-term investments $ (13) $ (114) Decrease (increase) in accounts receivable 33,507 (50,097) (Increase) decrease in prepaid expenses (100,472) 3,600 (Decrease) increase in accounts payable and accrued liabilities (85,134) 400,395 Increase in deferred revenue 302, ,694 $ 150,869 $ 592, CHANGE IN FISCAL PERIOD The Organization changed its fiscal year end during the period. Effective March 31, 2010, the Organization's new fiscal year end has been changed to March