Condensed Consolidated Interim Financial Statements Land Title and Survey Authority of British Columbia

Transcription

1 Condensed Consolidated Interim Financial Statements Land Title and Survey Authority of British Columbia Three and Nine Months Ended and 2013 The accompanying unaudited condensed consolidated interim financial statements have been prepared by and are the responsibility of the Land Title and Survey Authority of British Columbia's management. The Land Title and Survey Authority of British Columbia's independent auditor has not performed a review of these condensed consolidated interim financial statements. 1

2 Three Months Ended December 31 Nine Months Ended December 31 Note Land Title and Survey Authority Revenue 4 $8,782,502 $6,152,033 $25,115,290 $19,871,074 of British Columbia Expenses Consolidated Interim Statement Salaries and benefits 3,098,192 2,796,193 9,188,115 8,348,835 of Comprehensive Income Information services 359, ,673 1,377,560 1,376,016 (Expressed in Canadian dollars) Office and business expenses 435, ,986 1,282,295 1,299,860 Building occupancy 871, ,347 2,663,277 2,602,613 Professional fees 164, , , ,287 Amortization 1,139, ,621 3,227,721 2,449,732 Total expenses 6,068,157 5,694,649 18,357,818 16,706,343 Operating income 2,714, ,384 6,757,472 3,164,731 Other income and expenses Bank charges, interest and investment fees (24,979) (15,413) (74,898) (57,051) Interest income 108, , , ,816 (Loss) gain on disposal of property and equipment (11,972) 346 Total other income and expenses 83,591 90, , ,111 Income and comprehensive income before income taxes 2,797, ,572 6,982,462 3,400,842 Income taxes (recoverable) 5 169,538 13, ,241 (22,270) Net income and comprehensive income $2,628,398 $534,155 $6,667,221 $3,423,112 See accompanying notes to the consolidated interim financial statements. 2

3 Notes March 31, 2014 Assets Current Cash and cash equivalents 6 $15,137,858 $13,033,100 Investments 7 20,073,867 18,251,705 Funds held for customers 8 2,819, ,091 Trade and other receivables 54,598 43,968 Prepaids 246, ,176 Land Title and Survey Authority of British Columbia Total current assets 38,332,823 32,652,040 Consolidated Interim Statement Non-current of Financial Position Property and equipment 9 5,493,264 4,321,731 (Expressed in Canadian dollars) Intangible assets 10 21,143,926 16,404,655 Deferred tax asset 5 41,482 40,996 Total non-current assets 26,678,672 20,767,382 Total assets $65,011,495 $53,419,422 Liabilities Current Customer deposits held 8 $2,819,510 $929,091 Trade and other payables 5,288,862 2,201,805 Provisions , ,687 Current portion of employee benefits 12 1,370,138 1,492,478 Deferred revenue 361, ,428 Other current liabilities 306, ,315 Total current liabilities 10,739,113 6,235,804 Non-current Employee benefits 12 65, ,683 Deferred tax liabilities 5 101,631 14,971 Other long-term liabilities ,300 9,750 Total non-current liabilities 878, ,404 Equity 53,393,435 46,726,214 Total liabilities and equity $65,011,495 $53,419,422 See accompanying notes to the consolidated interim financial statements. 3

4 Nine Months Ended December 31 Unappropriated Assurance Total Retained Fund Retained Earnings Reserve Earnings Land Title and Survey Authority of British Columbia Balance at April 1, 2013 $37,715,929 $6,000,000 $43,715,929 Consolidated Interim Statement Net income and comprehensive income 3,423,112-3,423,112 of Changes in Equity (Expressed in Canadian dollars) Balance at December 31, 2013 $41,139,041 $6,000,000 $47,139,041 Balance at April 1, 2014 $40,726,214 $6,000,000 $46,726,214 Net income and comprehensive income 6,667,221-6,667,221 Balance at $47,393,435 $6,000,000 $53,393,435 See accompanying notes to the consolidated interim financial statements. 4

5 Nine Months Ended December Cash flow from operating activities Cash received for: Fees $25,078,946 $19,796,383 Fees collected on behalf of the Province of BC 23,142, ,915 Property transfer tax collected on behalf of the Province of BC - 835,028 Fees collected on behalf of other parties 865,860 - Interest 383, ,116 Commodity sales and income taxes 27, ,791 Land Title and Survey Authority Total cash received 49,499,098 21,928,233 of British Columbia Cash paid for: Consolidated Interim Statement Salaries and benefits (9,678,124) (8,573,629) of Cash Flows Goods and services (5,201,950) (6,442,731) (Expressed in Canadian dollars) Commodity sales and income taxes (15,769) (20,113) Interest (1,105) (795) Fees submitted to the Province of BC (23,136,864) (844,647) Property transfer tax submitted to the Province of BC (153) (833,715) Fees submitted to other parties (873,899) - Total cash paid (38,907,864) (16,715,630) Total cash flow from operating activities 10,591,234 5,212,603 Cash flow from financing activities Repayment of finance lease obligation (17,062) (10,743) Total cash flow from financing activities (17,062) (10,743) Cash flow from investing activities Purchase of investments (5,830,532) (10,643,123) Proceeds from sale or maturity of investments 4,008,371 7,593,568 Purchase of property and equipment (1,764,565) (890,825) Proceeds from disposal of property and equipment 1, Purchase of intangible assets (4,884,574) (4,427,565) Total cash flow from investing activities (8,469,414) (8,367,599) Net increase (decrease) in cash and cash equivalents 2,104,758 (3,165,739) Cash and cash equivalents, beginning of period 13,033,100 15,640,098 Cash and cash equivalents, end of period $15,137,858 $12,474,359 See accompanying notes to the consolidated interim financial statements. 5

6 1. Nature of operations The Land Title and Survey Authority of British Columbia (the LTSA ) is an independent, not-forprofit corporation without share capital. It is established under the Land Title and Survey Authority Act and has responsibility for managing, operating and maintaining British Columbia s land title and land survey systems. Our corporate head office is located at Suite 200, 1321 Blanshard Street, Victoria, British Columbia. The LTSA s primary customers are lawyers, notaries public and land surveyors who act on behalf of those who have an interest in conducting land-related transactions. Other stakeholders include all levels of government and First Nations, real estate professionals, financial institutions, historians, registry agents and other organizations, and the general public. The LTSA operates independently from the provincial government, but must meet obligations and targets that the provincial government has established for it both in legislation and in a written Operating Agreement. The Operating Agreement has a term of 60 years, with the provision to renegotiate the revenue arrangement between the Province and the LTSA every 10 years. 2. Summary of significant accounting policies Basis of presentation The unaudited condensed consolidated interim financial statements have been prepared using the same accounting policies and methods as those used in the LTSA s consolidated financial statements for the year ended March 31, 2014, with the exception of the accounting policies adopted April 1, 2014 and May 1, These condensed consolidated interim financial statements have been prepared in compliance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, certain disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards have been omitted or condensed. These condensed consolidated interim financial statements should be read in conjunction with the LTSA s consolidated financial statements for the year ended March 31, 2014, which are included in the LTSA s 2014 annual report. On April 1, 2014 IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) was adopted. The implementation of this standard did not have a significant impact on the financial statements. On May 1, 2014, with the start of operations of myltsa, service fees revenue began to be derived from processing land title and survey transactions through this electronic portal. Revenue is recognized at the time the customer either submits an application or plan, or receives an information product. 6

7 New standards and interpretations not yet adopted IFRS 15 Revenue from Contracts with Customers In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which superseded IAS 18 Revenue, IAS 11 Construction Contracts and other interpretive guidance associated with revenue recognition. IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers to determine how and when an entity should recognize revenue. The LTSA intends to adopt IFRS 15 in its financial statements for the annual period beginning April 1, 2017 and is currently evaluating the impact of IFRS 15 on its financial statements. IFRS 9 Financial Instruments In July 2014, the IASB issued IFRS 9 Financial Instruments, which replaces the earlier versions of IFRS 9 (2009, 2010 and 2013) and completes the IASB s project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes a model for classification and measurement of financial assets; a single, forward-looking expected loss impairment model and a revised approach to hedge accounting. The LTSA intends to adopt IFRS 9 in its financial statements for the annual period beginning April 1, 2018 and is currently evaluating the impact of IFRS 9 on its financial statements. 3. Segment information The LTSA has three reportable segments which management identifies based on the difference in services provided: Core Business, comprising the operations of the land title and surveyor general divisions. Revenue is derived from the provision of information products and examination services; myltsa, the Integrated Customer Portal, which finished development and began operations on May 1, 2014, creating a simple electronic and communications portal to LTSA information and services. Service fee revenue is derived from processing electronic transactions; and ParcelMap BC ( PMBC ), is a single, complete, trusted and sustainable electronic map of all titled parcels and surveyed provincial Crown land parcels. To support the build and ongoing operations of PMBC, most LTSA fees were increased by 12.5% as of October 1, This incremental revenue is included in the table below. The following tables summarize the operating results of the reportable segments: 7

8 3. Segment information (continued) Three Months Ended Core Business myltsa PMBC Total Revenue $ 6,688,502 $ 1,318,390 $ 775,610 $ 8,782,502 Expenses Salaries and benefits 2,798, ,486-3,098,192 Information services 293,229 66, ,986 Office and business expenses 423,531 11, ,316 Building occupancy 815,081 56, ,098 Professional fees 175,843 - (11,456) 164,387 Amortization 913, ,384 1,139,178 Total expenses 5,420, ,429 (11,456) 6,068,157 Operating income 1,268, , ,066 2,714,345 Other income and expenses Bank charges, interest and investment fees (20,131) (4,848) - (24,979) Interest income 99,319 8, ,163 Gain on disposal of property and equipment Total other income and expenses 79,595 3,996-83,591 Income and comprehensive income before income taxes 1,347, , ,066 2,797,936 Income taxes (recoverable) (54,596) 224, ,538 Net income and comprehensive income $ 1,402,509 $ 438,823 $ 787,066 $ 2,628,398 8

9 3. Segment information (continued) Nine Months Ended Core Business myltsa PMBC Total Revenue $ 20,639,481 $ 3,700,199 $ 775,610 $ 25,115,290 Expenses Salaries and benefits 8,412, ,593 39,243 9,188,115 Information services 1,175, ,986 2,625 1,377,560 Office and business expenses 1,252,860 28, ,282,295 Building occupancy 2,504, ,679-2,663,277 Professional fees 615,323 3, ,850 Amortization 2,613, ,131-3,227,721 Total expenses 16,574,599 1,740,657 42,562 18,357,818 Operating income 4,064,882 1,959, ,048 6,757,472 Other income and expenses Bank charges, interest and investment fees (62,534) (12,364) - (74,898) Interest income 291,755 20, ,860 Loss on disposal of property and equipment (11,972) - - (11,972) Total other income and expenses 217,249 7, ,990 Income and comprehensive income before income taxes 4,282,131 1,967, ,048 6,982,462 Income taxes 5, , ,241 Net income and comprehensive income $ 4,276,865 $ 1,657,308 $ 733,048 $ 6,667,221 9

10 3. Segment information (continued) Three Months Ended December 31, 2013 Core Business myltsa PMBC Total Revenue $ 6,152,033 $ - $ - $ 6,152,033 Expenses Salaries and benefits 2,776,325-19,868 2,796,193 Information services 434,048-2, ,673 Office and business expenses 550,185-2, ,986 Building occupancy 867, ,347 Professional fees 196,620-20, ,829 Amortization 824, ,621 Total expenses 5,649,146-45,503 5,694,649 Operating income (loss) 502,887 - (45,503) 457,384 Other income and expenses Bank charges, interest and investment fees (15,413) - - (15,413) Interest income 105, ,401 Gain on disposal of property and equipment Total other income and expenses 90, ,188 Income (loss) and comprehensive income (loss) before income taxes 593,075 - (45,503) 547,572 Income taxes recoverable 13, ,417 Net income (loss) and comprehensive income (loss) $ 579,658 $ - ($ 45,503) $ 534,155 10

11 3. Segment information (continued) Nine Months Ended December 31, 2013 Core Business myltsa PMBC Total Revenue $ 19,871,074 $ - $ - $ 19,871,074 Expenses Salaries and benefits 8,271,225-77,610 8,348,835 Information services 1,370,766-5,250 1,376,016 Office and business expenses 1,293,729-6,131 1,299,860 Building occupancy 2,602, ,602,613 Professional fees 571,680-57, ,287 Amortization 2,449, ,449,732 Total expenses 16,559, ,598 16,706,343 Operating income (loss) 3,311,329 - (146,598) 3,164,731 Other income and expenses Bank charges, interest and investment fees (57,051) - - (57,051) Interest income 292, ,816 Gain on disposal of property and equipment Total other income and expenses 236, ,111 Income (loss) and comprehensive income (loss) before income taxes 3,547,440 - (146,598) 3,400,842 Income taxes (recoverable) (22,270) - - (22,270) Net income (loss) and comprehensive income (loss) $ 3,569,710 $ - ($ 146,598) $ 3,423,112 Core Business myltsa PMBC Total Assets $ 54,609,771 $ 4,960,739 $ 5,440,985 $ 65,011,495 Liabilities $ 3,879,692 $ 3,030,431 $ 4,707,937 $ 11,618,060 March 31, 2014 Core Business myltsa PMBC Total Assets $ 48,164,976 $ 5,239,475 $ - $ 53,404,451 Liabilities $ 1,438,762 $ 5,239,475 $ - $ 6,678,237 11

12 4. Revenue The LTSA s sources of revenue from operations are as follows: Three months ended December 31 Nine months ended December Information products $ 2,393,503 $ 1,968,452 $ 7,055,814 $ 6,482,871 Examination services 5,070,609 4,183,581 14,359,277 13,388,203 Service fees 1,318,390-3,700,199 - $ 8,782,502 $ 6,152,033 $ 25,115,290 $ 19,871, Income taxes The income tax expense (recovery) is as follows: Three months ended December 31 Nine months ended December Current $ 143,929 $ 2,671 $ 229,067 $ 5,455 Deferred 25,609 10,746 86,174 (27,725) $ 169,538 $ 13,417 $ 315,241 $ (22,270) December 31 March Deferred tax asset: Tax benefits on losses carried forward $ 41,482 $ 40,996 Deferred tax liabilities: Technical equipment 9,610 6,090 Office furniture and equipment 6,151 4,208 Leasehold improvements 3,108 2,501 Software systems 82,762 2,172 $ 101,631 $ 14,971 At March 31, 2014 LandSure had $307,273 in non-capital losses carried forward which expire on March 31,

13 6. Cash and cash equivalents December 31 March Cash in bank and on hand $ 12,464,058 $ 8,725,044 Cash equivalents 2,673,800 4,308,056 $ 15,137,858 $ 13,033,100 Included in cash in bank and on hand is property transfer tax of $0 (March 31, 2014: $153), fees payable to the Province of British Columbia of $50,174 (March 31, 2014: $44,625), fees payable to BC OnLine of $0 (March 31, 2014: $8,262), and fees payable to the Law Society of British Columbia of $1,454 (March 31, 2014: $1,230). Under the terms of the Operating Agreement with the Province of British Columbia, property transfer tax and the province s share of fees collected on behalf of the province must be remitted within one business day of collection. These amounts payable to the province are included in trade and other payables. 7. Investments Fair value determination is classified within a three-level hierarchy, based on observability of significant inputs to the measurement, as follows: Level 1: Level 2: Level 3: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Unobservable inputs for the asset or liability. The following tables present investments recorded at fair value in the consolidated statements of financial position classified using the fair value hierarchy described above: Level 1 Level 2 Level 3 Investments Short-term notes $ - $ 18,142,505 $ - $ 18,142,505 Bonds - 1,931,362-1,931,362 $ - $ 20,073,867 $ - $ 20,073,867 Level 1 Level 2 Level 3 March 31, 2014 Investments Short-term notes $ - $ 8,748,659 $ - $ 8,748,659 Bonds - 9,503,046-9,503,046 $ - $ 18,251,705 $ - $ 18,251,705 13

14 7. Investments (continued) During the quarter, no transfers occurred between levels. Short-term notes and bonds are traded on an over-the-counter market and are valued at their closing bid price on the valuation date. Where a bid price is not available, they are valued at the closing sale price on the valuation date. 8. Funds held for customers At, LTSA held funds due to customers in the amount of $2,819,510 (March 31, 2014: $929,091). The funds held for customers are comprised of cash transferred by customers into their myltsa deposit accounts and held in trust. 9. Property and equipment Vault storage systems Technical equipment Office furniture and equipment Leasehold improvements Cost Balance, as at April 1, 2013 $ 351,689 $ 1,976,517 $ 1,384,440 $ 3,805,510 $ 7,518,156 Additions - 473,569 15,870 5, ,547 Disposals - (12,036) (57) - (12,093) Balance, as at December 31, 2013 $ 351,689 $ 2,438,050 $ 1,400,253 $ 3,810,618 $ 8,000,610 Total Balance, as at April 1, 2014 $ 353,147 $ 2,277,996 $ 1,401,758 $ 3,853,262 $ 7,886,162 Additions 73, , , ,031 1,883,264 Disposals (10,665) (110,985) (81,117) (121,618) (324,385) Balance, as at $ 416,182 $ 2,394,379 $ 1,912,806 $ 4,721,674 $ 9,445,041 Amortization Balance, as at April 1, 2013 $ (155,889) $ (1,663,369) $ (498,050) $ (711,007) $ (3,028,315) Disposals - 12, ,093 Amortization (23,374) (148,312)) (116,938) (253,795) (542,419) Balance, as at December 31, 2013 $ (179,263) $ (1,799,645) $ (614,931) $ (964,802) $ (3,558,641) Balance, as at April 1, 2014 $ (187,052) $ (1,688,571) $ (639,343) $ (1,049,465) $ (3,564,431) Disposals 10,665 97,139 70, , ,993 Amortization (26,128) (198,300) (139,501) (320,410) (684,339) Balance, as at $ (202,515) $ (1,789,732) $ (708,035) $ (1,251,495) $ (3,951,777) Net book value, as at March 31,2014 $ 166,095 $ 589,425 $ 762,415 $ 2,803,796 $ 4,321,731 Net book value, as at December 31, 2014 $ 213,667 $ 604,647 $ 1,204,771 $ 3,470,179 $ 5,493,264 Included in technical equipment at is $88,568 (March 31, 2014: $78,382) of equipment held under a finance lease and related accumulated amortization of $9,188 (March 31, 2014: $63,369). 14

15 10. Intangible assets Software systems Software systems under development Trademarks Total Cost Balance, as at April 1, 2013 $ 25,974,796 $ 583,862 $ - $ 26,563,658 Additions 52,863 3,630,652 5,777 3,689,292 Disposals (1,533,915) - - (1,533,915) Balance, as at December 31, 2013 $ 24,493,744 $ 4,214,514 $ 5,777 $ 28,714,035 Balance, as at April 1, 2014 $ 24,500,747 $ 5,332,066 $ 6,777 $ 29,839,590 Transfers 5,661,584 (5,661,584) - - Additions 5,660 7,276,992-7,282,652 Balance, as at $ 30,167,991 $ 6,947,474 $ 6,777 $ 37,122,242 Amortization Balance, as at April 1, 2013 $ (12,418,242) $ - $ - $ (12,418,242) Disposals 1,533, ,533,915 Amortization (1,919,979) - - (1,919,979) Balance, as at December 31, 2013 $ (12,804,306) $ - $ - $ (12,804,306) Balance, as at April 1, 2014 $ (13,434,935) $ - $ - $ (13,434,935) Amortization (2,543,381) - - (2,543,381) Balance, as at $ (15,978,316) $ - $ - $ (15,978,316) Net book value, as at March 31, 2014 $ 11,065,812 $ 5,332,066 $ 6,777 $ 16,404,655 Net book value, as at December 31, 2014 $ 14,189,675 $ 6,947,474 $ 6,777 $ 21,143,926 Software systems under development are comprised of costs to build PMBC and costs to enhance the land title registry functionality. Costs to build PMBC are comprised of software development and cadastral fabric compilation. Once the systems are placed in use, their costs will be amortized over their estimated useful life. Trademarks include costs related to registering LTSA s trademarks. 15

16 11. Provisions All provisions are considered current. The carrying amounts and the movements in the provision account are as follows: Assurance Fund claims Salaries and benefits reserve Balance, April 1, 2013 $ 50,000 $ 87,000 $ 5,000 $ 142,000 Additions - 16,500-16,500 Balance, December 31, 2013 $ 50,000 $ 103,500 $ 5,000 $ 158,500 Other Total Balance, April 1, 2014 $ 510,000 $ 138,687 $ - $ 648,687 Utilized - (40,885) - (40,885) Reversals - (15,000) - (15,000) Balance, $ 510,000 $ 82,802 $ - $ 592, Employee benefits The liabilities recognized for employee benefits consist of the following amounts: December 31 March Current Salaries payable $ 582,404 $ 751,345 Employee leave liability $ 600, ,195 Defined supplementary retirement benefit plan 63, ,856 Superannuation and group RRSP benefits 123,607 81,082 $ 1,370,138 $ 1,492,478 Non-current Defined supplementary retirement benefit plan $ 65,016 $ 432,683 The current portion of these liabilities represents the LTSA s obligations to its current and former employees that are expected to be settled during the next twelve months. Public service pension plan The LTSA has a defined benefit plan providing pension, other retirement, and post-employment benefits to most of its employees. The Public Service Pension Plan is administered by the Pension Corporation of British Columbia. The latest actuarial valuation as at March 31, 2014 indicated a surplus of $194 million, an improvement from March 31, 2011 s unfunded liability of $275 million. The amount recognized as an expense for the three month and nine month periods ended was $192,361 and $558,565 (2013: $203,359 and $ 587,214). 16

17 12. Employee benefits (continued) LandSure retirement benefit LandSure contributed 5.0% of employees base salaries to their individual registered retirement savings plan accounts or 6.0% of employees base salaries to a group registered retirement savings plan. The amount recognized as an expense for the three month and nine month periods ended was $28,388 and $74,076 (2013: $8,561 and $26,619). 13. Other long-term liabilities Holdbacks payable On July 3, 2014, the LTSA signed a contract valued at $14 million with MacDonald Dettweiler and Associates Ltd. to build ParcelMap BC. The LTSA is entitled to hold back 15% from each milestone payment which will be released and paid upon successful completion of the contract. As at, long-term holdbacks payable to MDA for ParcelMap BC were $657,935 (March 31, 2014: $0). Obligations under capital leases As at, long-term obligations under capital leases were $54,365 (March 31, 2014: $9,750). 14. Related party transactions Province of British Columbia The Province of British Columbia provincial ministries, central agencies and certain other organizations are exempt from the payment of LTSA fees. During the three and nine month periods ended, the LTSA provided services to these organizations which, if assessed fees at the usual rates applicable to other entities, would have resulted in additional revenues of $631,671 and $1,806,323 (2013: $357,761 and $1,276,128). Products and services acquired from the Province for the three and nine month periods ended totalled $184,403 and $805,387 (2013: $279,631 and $1,013,200). Real property taxation agencies Various real property taxation agencies are entitled to use the land title system free of charge for the administration of the taxation of real property. During the three and nine month periods ended, the LTSA provided services to these agencies which, if assessed fees at the usual rates applicable to other entities, would have resulted in additional revenues of $173,986 and $727,675 (2013: $295,693 and $875,193). 17

18 15. Comparative figures Certain comparative figures have been reclassified to conform to the presentation adopted in the current period. 16. Approval of financial statements These consolidated interim financial statements were approved for issuance by the Board of Directors on February 20,