COREM FINANCIAT STATEMENTS DECEMBER 31,2015

Transcription

1 oclété DE CoMPTABTES PRoTEIoNNEt AGRÉÉS 1305, boul. Lebourgneuf. bureau 401 Ouébec (Ouébec) G2K2E4 Té1. : îéléc.; COREM FINANCIAT STATEMENTS DECEMBER 31,2015 Votre réeau québécoi d'expertie comptable! Victoriaville, Thetford Mine Québec t Drummondville Pleiville I RDL Légará Mc Nicoll inc. t une antité luridique ditincte et ndépendante qui n'et pa aociée ni mandataire de autre ent té membre du Groupe RDL. GROUPE RDL* grouperdl.ca info.quebec@grouperdl,ca

2 RDL LEGARE, VC NICOLL,". octété DE comprable profetonnel AcRÉÉ 1305, boul. Lebourgneuf, bureau 401 Ouébec (Ouébec) G2K2E4 Té1. : Téléc. : INDEPENDANT AUDITORS' REPORT To the membre of COREM We have audited the accompanying financial tatement of COREM, which comprie the balance heet a at December 31,20t5, and the tatement of income, of change in net aet and cah flow for the year then ended and a ummary of ignificant accounting policie and other explanatory information. Management' Reponability for the Financial Statement Management i reponible for the preparation and fair preentation of thee financial tatement in accordance with Canadian accounting tandard for non profit organization, and for uch internal control a management determine i neceary to enable the preparation of financial tatement that are free from material mitatement, whether due to fraud or error. Auditor' Reponability Our reponibility i to expre an opinion on thee financial tatement baed on our audit. We conducted our audit in accordance with Canadian generally accepted auditing tandard. Thoe tandard requiere that we comply with ethical requirement and plan and perform the audit to obtain reaonnable aurance about whether the financial tatement are free from material mitatement. An audit involve performing procedure to obtain audit evidence about the amount and dicloure in the financial tatement. The procedure elected depend on the auditor' judgment, including the aement of the rik of material mitatement of the financial tatement, whether due to fraud or error. ln making thoe rik aement, the auditor conider internal control relevant to COREM' preparation and fair preentation of the financial tatement in order to deign audit procedure that are appropriate in the circumtance, but not for the purpoe of expreing an opinion on the effectivene of COREM' internal control. An audit alo include evaluating the appropriatene of accounting policie ued and the reaonablene of accounting etimate made by management, a well a evaluating the overall preentation of the financial tatement. We believe that the audit evidence we have obtainded i ufficient and appropriate to provide a bai for our audit opinion. Victoriaville'fhetford Mine Ouébec Drummondville Pleiville RDL Légaré lvc Nicoll inc. et une entité juridique ditincte et indépendante qui rì'et pa aociée ni mandataire de autre entité mernbre du Groupe RDL. L GROUPE RDL* info.q uebec@grou perd l.ca

3 I NDEPEN DANT AUDITORS' REPORT Opinion ln our opinion, the financial tatement preent fairly, in all material repect, the financial poition of COREM a of December 31, 2015 and it' financial performance and cah flow for the year then ended in accordance with Canadian accounting tandard for non profit organization. I Chartered Profeional Accou ntant Corporation Québec, March 21, 2016 r Julie Bilodeau, CPA auditrice, CA 2 GROUPE RDL*

4 Statement of lncome For the vear ended December L4 REVENUES lndutrial member' contribution Contract Financial upport relating to: operating cot capital aet (note 12) financial cot Other 2,355,900 6,251,21O 2,754, ,415 t2, ,362,LLz 6,991,401 2,37O, ,946 22,O5O 108,341 tt,994,84t t2,487,274 EXPENSES Salarie and fringe benefit lnurance Bad debt Office upplie Supplie, maintenance and utilitie Office fee Repreentation and travelling expene External ervice Sub-conultant and partnerhip Micellaneou lnteret and bank fee lnteret on long term debt Gain on foreign currency exchange Depreciation of capital aet 9,74t,o48 to6,7,2 124,O32 197,575 t,5o7, ,118 t7o,964 t67, ,113 97,216 6,625 t2,128 (18,028) t,245,579 9,060, ,638 13, ,335 1,445, ,48O 154,7L6 169,381 4LO, ,815 6,893 22,L84 (24,272l. L,423,97L 13,319,799 13,607,348 DEFICIENCY OF REVENUES OVER EXPENSES f t CROUPE RDL*

5 Statement of change in net aet For the year ended December lnveted ln capltal aet Reearch Fund Unretr cted Totel Total BAI.ANCE, BEGINNING OF YEAR $ 1,564,973 I 700,000 $ 2,543,287 S 4,808,260 S 5,928,334 Deficiency of revenue over expene (1,324,958) (1,324,958) (!,t20,074t, Depreciation of capital aet Acqu t on of capital aet lncreae in deferred financial upport 1t,245,5791 1,394,529 (1,080,000) 1,245,579 (1,394,529) 1,080,000 Deferred flnancial upport tranfered to revenue BAI.ANCE, END OF YEAR f 562,41) S 1,196,338 S Too,ooo $ r ,483,302 4,808,260 4 GROUPE RDL*

6 Balance Sheet A at December ASSETS CURRENT ASSETS Cah and cah equivalent Temporary invetment reerved (note 4) Account receivable (note 5) Current portion of financial upport receivable related to capital aet (note 6) Work in progre Prepaid expene 1,316, ,389 3,969, ,Ot 297,O59 201,313 2,07L, ,735 4,878, ,7L3 2L6,682 23,942 FINANCIAL SUPPORT RECEIVABTE REI.ATED TO CAPITAT ASSETS (NOIC 6) CAPITAL ASSETS (note z) 6,168, ,O29,O7O 216,051 3.L49.O TIABILITIES CURRENT TIABITITIES Account payable (note 9) Deferred revenue (note 10) Current portion of long-term debt (note 11) IoNG-TERM DEBT (nore 11) DEFERRED FINANCIAL SUPPORT (note tz) $ 1,949,803 t,716,ot6 216,051 3,881,870_ 2,tot, ,370,873 L,99O,r97 424,7L3 4,785, ,Ot 1,584, NET ASSETS INVESTED IN CAPITAT ASSETS RESEARCH FUND (note 3) UNRESTRICTED 1,196, , ,564, ,000 2,43, ,260 9,466,806 tt,394,143 On behalf of the Board:, Director, Director 5 GROUPE RDL-

7 Statement of Cah Flow For the year ended December L4 OPERATING ACTIVITIES Deficiency of revenue over expene Adjutment for: Depreciation of capital aet Deferred financial upport tranferred to revenue Change in fair value of temporary invetment reerved (1,324,958) (L,t2O,O74l 1,245,579 L,423,97t (562,4151 ß42,946l, 110,641 f ( Net change in non-cah working capital item Account receivable Work in progre Prepaid expene Account payable Deferred revenue 9lo,o22 (80,377) 52,629 (351,312) l274,t&tl 256,78t (1,352,181) LL,879 4, , ,460 (669,407) ( ) ( ) INVESTING ACTIVITIES Cahing of temporary invetment reerved Acquiition of capital aet lncreae in deferred financial upport 25,000 11,464,2871 1,080,000 (243,980) (359,2871 (243,980) DECREASE IN CASH AND CASH EQUIVATENTS CASH AND CASH EqUVALENTS, BEGINNING OF YEAR (754,954) 2.O7t.368 (L,269,529) 3, CASH AND CASH EqUNAIENTS, END OF YEAR 1,316,414 2,O7t,368 6 GROUPE RDL-

8 Note to Financial Statement For the vear ended December STATUES AND NATURE OF ACTIVITIES COREM, incorporated under Part lll of the Companie Act (Québec), i a non profit organization under the lncome Tax Act. COREM' miion and objective are to impove the Canadian mineral indutry' competitivene through reearch and development work. 2. SIGNIFICANTACCOUNTINGPOTICIES Bai of accounting COREM' apply the canadian accounting tandard for non-profit organization from part lll of the CPA Book in accordance with Canadian generally accepted accounting principle. Ue of et mate The preparation of financial tatement in conformity with canadian accounting tandard for non profit organization require management to make etimate that affect the reported amount of aet and liabilitie, the dicloure of contingent aet and liabilitie at the date of the financial tatement and the reported amount of revenue and expene during the reporting period preented. Actual reult could differ from etimate made by management. Revenue recognition Contribution lndutrial member' contribution revenue are recorded baed on COREM' general regulation when they are receivable and collection i reaonably aured. Contract Revenue from contract ervice are accounted for uing the percentage of completion method. The percentage of work completion i calculated on the bai of cot incurred at the balance heet date compared with the total etimated cot of the contract. Reviion of cot etimate, profit or loe are taken into account in the financial period in which the fact that give rie to the reviion become known. Financial upport The government financial upport i accounted uing the deferral method baed on confirmed engagement. Financial upport related to capital aet i recorded to revenue on the ame bai a the related capital aet are amortized. Financial upport for operating cot i recorded in the ame period a the related expene. 7 GROUPE RDL-

9 Note to Financial Statement For the vear ended December SIGNIFICANTACCOUNTINGPOIICIES(continued) Foreign currency tranlatlon COREM' ue the temporal method to tranlate foreign currency account into Canadian dollar. Monetary aet and liabilitie are tranlated at period-end exchange rate. Other aet and liabilitie are tranlated uing the hitorical exchange rate. Revenue and expene are tranlated uing the period exchange rate. Any reulting gain or loe are included in the income tatement. Cah and cah equivalent Cah and cah equivalent conit of cah on hand, bank balance including bank overdraft which balance that fluctuate frequently from being poitive to overdrawn and highly liquid invetment that are readily covertible to known amount of cah which value will not change ignificantly. Financial ntrument Meourement of financiol intrument COREM' initially meaure it financial aet and liabilitie at fair value, except for certain operation that are not concluded a an arm' length tranaction. COREM' ubequently meaure all of it aet and financial liabilitie at amortized cot, except for temporary invetment reerved, that are meaured at fair value. Change in fair value are recognized in net income. Financial aet meaured at amortized cot are repreented by cah and cah equivalent, account receivable, work in progre and financial upport receivable. Financial liabilitie meaured at amortized cot are repreented by account payable and long-term debt. Financial aet meaured at fair value conit of temporary invetment reerved. lmpairment Financial aet meaured at cot are teted for impairment if there are indication of poible impairment. The amount of impairment lo i recognized in net income. The impairment lo previouly recognized hall be revered to the extent of the improvement, either directly or by adjuting the allowance account, and mut be no greater than the amount that would have been reported at the date of the reveral had the impairment not been recognized previouly. Thi reveral i recognized in net income. Work in proce Amount recognized a revenue in exce of billing are claified a work in progre. Amount received in advance of the performance of ervice are claified a deferred revenue. lmpalrment of long-lived aet The long-lived aet are teted for impairment whenever event or change in circumtance indicate that their carrying amount may not be recoverable. An impairment lo i recognized when the carrying amount of a long-lived aet exceed the um of the undicounted cah flow reulting from it ue and eventual dipoition. The impairment lo i meaured a the amount by which the carrying amount of the long-lived aet exceed it fair value. 8 GROUPE RDL*

10 Note to Financial Statement For the year ended December SIGNIFICANTACCOUNTING POIICIES(continued) Capltal aet Capital aet are recorded at cot and depreciated uing the traight-line method over their etimated ueful live a follow: Period Leaehold improvement Équipment Computer equipment Automotive equipment 5 year 3, 5 and 10 year 3 year 5 year 3. RESEARCH FUND A at December 7,2O!!, the Board of Director adopted a reolution to allocate an amount of S 700,000 for precompetitive reearch purpoe. COREM cannot ue thi retricted amount for other purpoe without the Board of Di rector prior conent. 4. TEMPORARY INVESTMENTS RESERVED Under an agreement between COREM, it employee and the employee' union, an amount of S 169,389 (S 183,735 in 2014) of invetment in mutual fund i affected to cover the repayment of ick leave accumulated by ome employee of COREM a at September 27, ACCOUNTS RECEIVABIE L4 Contract Allowance for doubtful account lndutrial member' contribution Financial upport relating to operating cot 2,130,671 (87,804) 1,051,345 a ,660,4O9 (13,4521 8t2,549 t,419,l24 $ 3,968,608 +,SZA,0SO 9 GROUPE RDL-

11 Note to Financial Statement For the year ended December FINANCIAT SUPPORT RECEIVABLE RELATED TO CAPITAT ASSETS L4 Financial upport related to aumed debt Current port on 216,051 f , ,OL 7. CAPITAT ASSETS Cot Accumulated depreciation !4 Net book value Net book value Leaehold improvement Équipment Computer equipment Automotive equipment 4,107, ,7t7,12O 282, ,872 4,090,698 4, tgo,l76 ttt,o79 16,994 3,t67,793 92, L4,619 2,848,158 50,885 35,360 S t2,239, O22 8. CREDIT FACITITY COREM ha an authorized bank line of credit of S 750,000, bearing interet at bank prime rate plu 1%. A movable hypothec affecting the univerality of receivable and equipment ha been pledged a ecurity againt thi line of credit. A at december 31,2OL5, thi credit facility wa unued. 9. ACCOUNTS PAYABTE t4 Account payable and accrued liabilitie Sale taxe and good and ervice taxe $ 1,891,937 57,866 $ ,O55,27t 315,602 2, GROUPE RDL*

12 Note to Financlal Statement For the year ended December DEFERRED REVENUES L4 lndutrial member' contribution Contract 1,502, ,586 t,3o1, ,024 1,7t6,016 7,990,!97 TI, IONG-TERM DEBT L4 Term loan of S 1,260,000 ecured by an hypothec on financial upport receivable from the Gouvernement du Québec,2.27Yo, repayable in emi-annual intalment of S 218,42L including interet, maturing in May 2OL6 * 216, ,764 Current portion of long-term debt f ,051 * The principal and interet payment of the loan are made directly by the Gouvernement du Québec. 12. DEFERRED FINANCIAT SUPPORT Balance, beginning of year Financial upport of the year for acquiition of capital aet Tranfer to revenue of an amount equal to the depreciation charge of capital aet $ 1,584,049 1,080,000 2,226,995 Í562.41) ß $ 2,101,634 1,584,049 tt GROUPE RDL-

13 Note to Flnancial Statement For the year ended December INFORMATION ON CASH FTOWS Operation without affecting cah related to inveting and financing act v t e L4 Principal payment on loan made directly by the Gouvernement du Québec Acquiition of capital aet included in account payable 424,713 15, ,561 85, FINANCIAL RISKS tiquidity rik Liquidity rik i the rik that an entity encounter difficulty in meeting obligation aociated with financial liabilitie. COREM' i expoed to thi rik mainly regarding account payable. Management believe that COREM ha ufficient liquidity fund to meet it commitment. Credit rik Credit rik i the rik that one party to a financial intrument will caue a financial lo for the other party by failing to dicharge an obligation. The main credit rik for COREM are related to account receivable and work in progre. COREM provide credit to it cutomer in the normal coure of buine. Thu, COREM i expoed to a concentration of credit on it account receivable. A at December 3L, 2Ot5, an amount of S wa receivable from three cutomer. Currency rik Currency rik i the rik that the fair value or future cah flow of a financial intrument will fluctuate becaue of change in foreign exchange rate. COREM conduct ome tranaction in US dollar. Therefore, certain aet and liabilitie are expoed to US dollar tranlation. COREM doe not ue any financial intrument to manage rik from fluctuation of the exchange rate. The table below repreent the aet and liabilitie in US dollar and their converion into Canadian dollar a at December 31, SUS S can Cah and cah equivalent Account receivable Account payable 70,703 49,94O 4,lLL 97,226 69,262 5,7OL L2 CROUPE RDL*

14 Note to Financlal Statement For the year ended December RELATEDPARTYTRANSACTIONS During the year, COREM had the following tranaction with hi member: L4 Revenue: lndutrial member' contribution Contract $ 2,355,900 2,298,409 2,362,t!2 2,528,067 Thee tranaction occured in the normal coure of buine and are meaured at the exchange amount, which i the amount of conideration etablihed and accepted to by the related partie. At the end of year, the account receivable from member are a follow: t4 Account receivable: lndutrial member' contribution Contract 1,05 1, ,881 8L2,549 1,437,54O 16. ECONOMICDEPENDANCE Approximately 26Yo of the organization revenue conit of government aitance. A thi i an important ource of revenue, management believe that the ability to utain operation depend on maintaining thi aitance, but doe not quetion the aumption of going concern. 17. COMPARATIVE FIGURES Certain figure of 2OL4 have been reclaified to make their preentation identical to that adopted in GROUPE RDL*