GREATER MONTRÉAL REAL ESTATE BOARD

Transcription

1 Consolidated Financial Statements of GREATER MONTRÉAL REAL ESTATE BOARD

2 Table of Contents Page Independent Auditors Report Consolidated Statement of Financial Position 1 Consolidated Statement of Operations 2 Consolidated Statement of Changes in Net Assets 3 Consolidated Statement of Cash Flows 4 Notes to Consolidated Financial Statements 5-13

3 KPMG LLP Telephone Chartered Professional Accountants Fax de Maisonneuve Blvd. West Internet Suite 1500 Tour KPMG Montréal (Québec) H3A 0A3 INDEPENDENT AUDITORS REPORT To the Directors of the Greater Montréal Real Estate Board We have audited the accompanying consolidated financial statements of the Greater Montréal Real Estate Board, which comprise the consolidated statement of financial position as at December 31, 2017, the consolidated statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management`s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the consolidated 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 internal 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP.

4 Page 2 Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Greater Montréal Real Estate Board as at December 31, 2017, and its consolidated results of operations and its consolidated cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. March 22, 2018 Montréal, Canada *FCPA auditor, FCA, public accountancy permit No. A110618

5 Consolidated Statement of Financial Position December 31, 2017, with comparative information for 2016 Assets Current assets: Cash and cash equivalents $ 4,168,580 $ 3,025,262 Temporary investments (Note 3) 6,000,000 6,000,000 Accounts receivable (Note 4) 602, ,379 Supplies 12,007 6,324 Prepaid expenses 306, ,086 11,089,756 10,083,051 Capital assets (Note 5) 4,921,966 4,573,139 Security deposits 29,806 29,806 Liabilities and Net Assets $ 16,041,528 $ 14,685,996 Current liabilities Accounts payable and accrued liabilities (Note 6) $ 4,515,409 $ 4,044,924 Deferred revenues (Note 8) 2,551,318 2,497,492 Current portion of deferred lease inducements 4,163 4,163 7,070,890 6,546,579 Deferred lease inducements 6,592 10,755 7,077,482 6,557,334 Net assets Invested in capital assets 4,921,966 4,573,139 Unrestricted 4,042,080 3,555,523 8,964,046 8,128,662 Commitments (Note 11) $ 16,041,528 $ 14,685,996 See accompanying notes to consolidated financial statements. On behalf of the Board:, Director, Director 1

6 Consolidated Statement of Operations, with comparative information for 2016 Revenues: Centris services and products to members $ 5,293,823 $ 4,801,616 Training 4,057,973 3,702,623 Annual dues and compliance 3,918,486 3,585,156 Service offers boards and brokers 1,659,800 1,534,595 Advertising fund contributions 1,624,728 1,387,355 Rent, interest and other revenues 535, ,698 Member association services 459, ,015 Member management services 294, ,110 Inter-organization services 291, ,224 Service offer non-brokers 109, ,949 18,246,282 16,830,341 Expenses Human resources 7,037,410 6,535,504 Service offer boards and brokers 2,560,190 2,208,982 Promotion of profession advertising fund 1,624,728 1,387,355 Training 1,308,310 1,114,360 Occupancy and maintenance of premises 920, ,511 Operation and maintenance of operating systems 860, ,470 Member association services 649, ,399 Professional fees 412, ,815 Advertising, marketing and promotion 399, ,342 Amortization 377, ,881 Financial expenses and credit card services 344, ,273 Information technology and general administration 285, ,639 Entertainment, communications, public relations and technology watch 272, ,855 Governance 237, ,142 GST/QST self-assessment on exemption election 37,899 Bad debts 31,536 41,024 Teaching content maintenance and updating costs 26,767 Research and development and technological projects 25,793 Other loss from sale of assets ,410,898 15,552,552 Excess of revenues over expenses $ 835,384 $ 1,277,789 See accompanying notes to consolidated financial statements. 2

7 Consolidated Statement of Changes in Net Assets, with comparative information for Invested in capital assets Unrestricted Total Net assets, beginning of year $ 4,573,139 $ 3,555,523 $ 8,128,662 Excess of revenues over expenses (377,160) 1,212, ,384 Investment in capital assets 725,987 (725,987) Net assets, end of year $ 4,921,966 $ 4,042,080 $ 8,964, Invested in capital assets Unrestricted Total Net assets, beginning of year $ 4,685,148 $ 2,165,725 $ 6,850,873 Excess of revenues over expenses (360,881) (i) 1,638,670 1,277,789 Investment in capital assets 248,872 (248,872) Net assets, end of year $ 4,573,139 $ 3,555,523 $ 8,128,662 (i) Represents amortization of capital assets and deferred lease inducements. See accompanying notes to consolidated financial statements. 3

8 Consolidated Statement of Cash Flows, with comparative information for 2016 Cash provided by (used in) Operating activities Excess of revenues over expenses $ 835,384 $ 1,277,789 Adjustments for non-cash items: Amortization of capital assets 377, ,881 Amortization of deferred lease inducements - rental expenses (4,163) (4,163) Interest income (94,011) (78,364) Changes in non-cash operating working capital items Accounts receivable 41,745 (22,346) Supplies (5,683) 4,633 Prepaid expenses 100,551 (149,530) Accounts payable and accrued liabilities 400, ,748 Deferred revenues 53, ,352 1,705,621 1,926,000 Investing activities Acquisitions of capital assets (656,314) (291,850) Disposal of capital assets 2,497 Purchase of investments (1,500,000) Interest income 94,011 78,364 (562,303) (1,710,989) Net increase in cash and cash equivalents 1,143, ,011 Cash and cash equivalents, beginning of year 3,025,262 2,810,251 Cash and cash equivalents, end of year $ 4,168,580 $ 3,025,262 Supplemental cash flow information Unpaid acquisitions of capital assets as at December 31 $ 69,673 $ See accompanying notes to consolidated financial statements. 4

9 Notes to Consolidated Financial Statements 1. Governing statutes and purpose The Greater Montréal Real Estate Board ( the Board ) and the Collège de l'immobilier du Québec (the Collège ), both incorporated under Part III of the Companies Act (Québec), are registered as not-for-profit organizations and are exempt from tax. The Board s mission is to promote and protect the professional and business interests of its members to allow them to successfully achieve their business objectives. The Collège s mission is to teach, educate and train students who are interested in real estate and related fields. The Greater Montréal Real Estate Board is empowered to appoint designated members of the Collège s Board of Directors, who have a casting vote and control the Collège. Société Centris Inc. ( Centris ) was incorporated on October 13, 2016 under the Canada Business Corporations Act. The Class A voting shares are wholly owned by the Board. On May 1, 2017, the Board rolled over the assets, operations and employees of the Centris Division to Centris in exchange for the issuance of 10,000,000 Class A common shares with a par value of $1 per share. The consolidated financial statements include the accounts of the Board, its subsidiary, Centris, and the accounts of the Collège since the Board controls the Collège. All intercompany transactions and accounts were eliminated upon consolidation. 2. Significant accounting policies These consolidated financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations ( NPO ). (a) Accounting estimates The preparation of consolidated financial statements requires the Board s management to make estimates and assumptions that affect the amounts recorded in the consolidated financial statements and notes. These estimates are based on management s best knowledge of current events and actions that the Board may undertake in the future. Actual results may differ from these estimates. 5

10 Notes to Consolidated Financial Statements (continued) 2. Significant accounting policies (continued) (b) Revenue recognition (i) Annual dues and compliance Annual dues are recognized on a straight-line basis using the accrual basis of accounting. Dues received for the following year are presented as deferred revenues under liabilities in the consolidated statement of financial position. (ii) Training revenues Revenues are recognized using the percentage of completion method. The stage of completion is determined based on hours of training provided. Training revenues received relating to training sessions for the following year are presented as deferred revenues under liabilities in the consolidated statement of financial position. (iii) Other revenues Other sources of revenues are recognized when the following criteria are met: - Delivery has occurred or services have been rendered; - The sales price is fixed or determinable; - Collection is reasonably assured; and - Persuasive evidence of an arrangement exists. The Board follows the deferral method of accounting for contributions. 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. Externally restricted contributions other than endowment contributions are recognized as revenue in the year in which the related expenses are recognized. (c) Financial assets and liabilities Upon initial recognition, all financial assets and liabilities are measured and recorded at fair value. 6

11 Notes to Consolidated Financial Statements (continued) 2. Significant accounting policies (continued) (c) Financial assets and liabilities (continued) Financial instruments are recorded at fair value upon initial recognition. Freestanding derivative instruments that are not designated as being in a qualifying hedging relationship and equity instruments that are quoted in an active market are subsequently measured at fair value. All other financial instruments are subsequently recorded at cost or amortized cost, unless management has elected to carry the instruments at fair value. The Board has not elected to carry any such financial instruments at fair value. Transaction costs incurred on the acquisition of financial instruments subsequently measured at fair value are expensed as incurred. All other financial instruments are adjusted for transaction costs incurred on acquisition and financing costs, which are amortized using the straight-line method. Financial assets are assessed for impairment on an annual basis at year end if there are indicators of impairment. If there is an indicator of impairment, the Board determines if there is a significant adverse change in the expected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in the expected cash flows, the Board reduces the carrying value of the financial asset to the greater of: the present value of the expected cash flows, the amount that could be realized by selling the financial asset or the amount the Board expects to realize by exercising its right to any collateral. If events or circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improvement, not exceeding the initial impairment expense. (d) Capital assets Capital assets are recorded at cost less accumulated amortization. Repairs and maintenance costs are expensed. Betterments which enhance the service potential of an asset are capitalized. When a capital asset no longer has any long-term service potential, the excess of its net carrying amount over any residual value is expensed in the consolidated statement of operations and the carrying amount of the capital asset is written down to its residual value. 7

12 Notes to Consolidated Financial Statements (continued) 2. Significant accounting policies (continued) (d) Capital assets (continued) Capital assets are amortized over their estimated useful lives according to the straight-line method over the following periods: Asset Building Computer equipment Furniture and fixtures Leasehold improvements Software Course development costs Period (i) 3 and 5 years 10 years Lease term 3 and 5 years 5 years (i) The head office building is amortized since November 1, 1995 over a 40-year period. Building additions are amortized over 25-year and 10-year periods. (e) Measurement of supplies Supplies are measured at the lower of cost and net realizable value. Cost is determined by the first in, first out method. Net realizable value is the estimated selling price in the normal course of operations, less estimated costs of completion and the estimated costs necessary to make the sale. (f) Cash and cash equivalents Cash and cash equivalents include cash on hand and short-term investments that are highly liquid and have original maturity dates of less than three months at the date of acquisition. (g) Controlled entities Under the terms of its complementary missions, the Fondation du Collège de l'immobilier du Québec ( Fondation ) is considered a controlled entity for accounting purposes. The purpose of the Fondation is to contribute to the advancement of education by offering bursaries for education and professional development to students of the Collège. Its fiscal year-end is December 31. The financial statements of the Fondation are not consolidated in the Board s consolidated financial statements but are summarized in Note 10. The Fondation is considered a registered charity for purposes of the Income Tax Act. 8

13 Notes to Consolidated Financial Statements (continued) 3. Temporary investments Guaranteed investment certificates, rates ranging from 1.55% to 1.95% (2016: 1.17% to 1.75%) maturing from January 2018 to July 2018 (January 2017 to July 2017) $ 6,000,000 $ 6,000, Accounts receivable Trade receivables $ 360,318 $ 473,045 Québec Federation of Real Estate Boards 169, ,744 Other 73,091 17,590 $ 602,634 $ 644, Capital assets 2017 Accumulated Net book Cost amortization value Tangible assets Land $ 1,397,261 $ $ 1,397,261 Building 5,535,792 3,122,491 2,413,301 Furniture and fixtures 508, , ,795 Computer equipment 480, , ,004 Leasehold improvements 148, ,565 10,950 Assets under development 47,093 47,093 8,117,483 3,838,079 4,279,404 Intangible assets Software 290, ,699 19,735 Projects 634,742 16, ,652 Course development costs 456, ,831 4,175 1,381, , ,562 $ 9,498,665 $ 4,576,699 $ 4,921,966 9

14 Notes to Consolidated Financial Statements (continued) 5. Capital assets (continued) During the year ended December 31, 2017, the Board, Centris and the Collège disposed of tangible and intangible assets with a cost of $611,929 (2016: $3,041) and accumulated amortization of $612,550 (2016: $41) for a loss on disposal of $621 (2016: $2,497 loss) Accumulated Net book Cost amortization value Tangible assets Land $ 1,397,261 $ $ 1,397,261 Building 5,535,792 2,940,429 2,595,363 Computer equipment 1,360,804 1,147, ,343 Furniture and fixtures 486, , ,813 Leasehold improvements 148, ,316 15,199 8,928,735 4,572,756 4,355,979 Intangible assets Projects 196, ,312 Software 675, ,784 8,920 Course development costs 456, ,078 11,928 1,328,022 1,110, ,160 $ 10,256,757 $ 5,683,618 $ 4,573, Accounts payable and accrued liabilities Accounts payable and accrued liabilities $ 3,541,816 $ 3,086,256 Québec Federation of Real Estate Boards 906, ,547 Sales taxes payable 67,470 58,121 $ 4,515,409 $ 4,044,924 10

15 Notes to Consolidated Financial Statements (continued) 7. Bank loans The Board has concluded two credit facilities totalling $3,000,000 with a financial institution, both bearing interest at prime rate plus 0.15% and secured by a first ranking general movable hypothec of $3,500,000 on the building and rents produced and insurance proceeds covering them. The Board must also comply with certain restrictions in the credit agreement, including a minimum working capital ratio. As at December 31, 2017 and 2016, the credit facilities had not been used. 8. Deferred revenues Deferred revenues represent revenues from annual dues, Centris services and compliance revenues, revenues related to advertising contributions, and training revenues that have been received and relate to the following year. They are allocated as follows: Annual dues $ 1,047,741 $ 948,844 Advertising fund contributions 1,056,667 1,039,135 Training 362, ,472 Service offers - boards and brokers 84, ,041 $ 2,551,318 $ 2,497, Québec Federation of Real Estate Boards The Board and the Québec Federation of Real Estate Boards ( Federation ) share certain directors and officers. The Board also provides administrative services to the Federation. 11

16 Notes to Consolidated Financial Statements (continued) 9. Québec Federation of Real Estate Boards (continued) During the year, the Board completed the following transactions in the normal course of operations and at the exchange amount, which is the amount established and accepted by the parties: Revenues: Administrative fees $ 179,901 $ 226,616 Computer equipment and support 46,939 41,055 Rental revenue 64,967 64,553 QSC program 29,641 Balances Trade receivables 169, ,744 Contributions payable 906, ,547 Other intrinsic expenses of the Federation were paid by the Board and charged back in full to the Federation. 10. Fondation du Collège de l immobilier du Québec As at December 31, the information derived from the financial statements of the Fondation was as follows: Total assets $ 6,192 $ 41,011 Total liabilities 6,183 16,254 Net assets 9 24,757 Revenues 16,225 18,792 Expenses 40,973 47,232 Deficiency of revenues over expenses (24,748) (28,441) Cash flows Operating activities (34,819) (29,385) The Fondation s Board of Directors will hold a meeting in 2018 to vote on the dissolution of the Fondation. 12

17 Notes to Consolidated Financial Statements (continued) 11. Commitments The Board, Centris and the Collège are committed, through various contracts expiring between January 2017 and November 2020, to pay an amount of $7,146,712 for computer service contracts, equipment rentals, rental of premises and consulting. The minimum payments are as follows: 2018 $ 3,303, ,130, ,490, and thereafter 222,255 Minimum payments for computer service contracts are estimated based on the appropriate number of members as at December 31, Comparative information Certain prior-year information has been reclassified to conform to the current year`s financial statement presentation. 13