Société de coopération pour le développement international (SOCODEVI) Consolidated Financial Statements March 31, 2011

Transcription

1 Société de coopération pour le développement international Consolidated Financial Statements March 31,

2 Société de coopération pour le développement international Table of contents Independent Auditor's report 1 Consolidated Financial Statements Consolidated Balance Sheet 3 Consolidated Statement of Income 4 Consolidated Statement of Changes in Net Assets 5 Consolidated Statement of Cash Flows 6 7 Consolidated Unaudited Expenses 19

3 Mallette SENCRL Comptables agréés Bureau , chemin des Quatre-Bourgeois Québec (Québec) G1W 5C4 Téléphone Télécopieur Courriel INDEPENDENT AUDITOR S REPORT To the members of Société de coopération pour le développement international We have audited the accompanying consolidated financial statements of Société de coopération pour le développement international, which comprise the consolidated balance sheet as at March 31,, and the consolidated statements of income, 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 consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, 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. Auditor s 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 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 the auditor s 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, the auditor considers internal control relevant to the Company 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 Company 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. (1)

4 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 consolidated financial statements present fairly, in all material respects, the financial position of Société de coopération pour le développement international as at March 31,, and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Other items The consolidated financial statements of the Company for the year ended March 31, were audited by another auditor who expressed an unqualified opinion on those statements as of June 4,. The appendix accompanying the consolidated financial statements is presented as additional information only and is not necessary component of the consolidated financial statements of the Company. The information in this appendix has been subject to audit procedures only to the extent necessary to enable us to express an opinion on the consolidated financial statements of the Company and, in our opinion, is fairly presented in all respect material to those consolidated financial statements. Mallette L.L.P. Chartered Accountants Québec, Canada June 10, 1 CA auditor permit No (2)

5 Consolidated Balance Sheet As at March 31, Assets Current assets Cash 675,291 1,532,973 Net assets of projects in progress 720, ,806 Accounts receivable (note 5) 1,954,740 1,537,846 Prepaid expenses 21,738 26,985 Investments (note 6) 949,089 - Lease inducement 5,120 15,360 4,326,490 3,720,970 Investments, at cost (note 6) 91, ,272 Lease inducement - 5,120 Capital assets (note 8) 52,449 58,941 Liabilities 4,470,888 4,780,303 Current liabilities Bank loan (note 9) 80,000 - Accounts payable and accrued liabilities 790, ,442 Deferred revenues (note 10) 887,951 1,547,535 1,758,255 2,348,977 Net assets Invested in capital assets (note 8) 52,449 58,941 Reserved for Contingency Fund (note 6) 1,122, ,756 Unappropriated 1,537,892 1,389,629 Contingencies and commitment (note 12) 2,712,633 2,431,326 4,470,888 4,780,303 (3)

6 Consolidated Statement of Income For the year ended March 31, Revenues CIDA Program Fund 2,736,928 3,524,827 CIDA Other 6,333,712 4,047,379 Contributions from other lenders (note 13) 2,027,480 1,882,073 Contributions from member institutions in the form of services rendered 647, ,726 Contributions from member institutions (note 14) 113, ,126 Interest and other revenues (note 15) 95, ,516 11,954,613 10,447,647 Expenses International program 9,436,947 8,097,293 Contributions from member institutions in the form of services rendered 647, ,726 Awareness and communication program 254, ,145 Institutional expenses 1,333,715 1,275,446 11,673,306 10,221,610 Excess of revenues over expenses for the year 281, ,037 (4)

7 Consolidated Statement of Changes in Net Assets For the year ended March 31, Invested in capital assets Reserved for Contingency Fund Unappropriated Total Total Balance Beginning of year 58, ,756 1,389,629 2,431,326 2,294,519 Contributions for project self-financing (89,230) Excess of revenues over expenses (expenses over revenues) for the year (20,305) 45, , , ,037 Appropriation 42,118 93,770 (135,888) - - Loss on writeoff of capital assets (28,305) - 28, Balance End of year 52,449 1,122,292 1,537,892 2,712,633 2,431,326 (5)

8 Consolidated Statement of Cash Flows For the year ended March 31, Cash flows from operating activities Excess of revenues over expenses for the year 281, ,037 Contributions for project self-financing - (89,230) Items not affecting cash Amortization of capital assets 20,305 20,375 Loss on writeoff of capital assets 28,305 5,378 Interest income from the Contingency Fund (45,766) (42,340) Interest capitalized into a loan to a partner - (378) Discount on a loan to a partner - 1,024 Amortization of lease inducement 15,360 15, , ,226 Change in non-cash working capital items Net assets of projects in progress (112,706) (87,913) Accounts receivable (416,894) 60,851 Prepaid expenses 5,247 7,446 Accounts payable and accrued liabilities (11,138) 16,533 Deferred revenues (659,584) 373,847 (1,195,075) 370,764 (895,564) 506,990 Cash flows from investing activities Decrease in loans to partners - 20,688 Increase in investments - (75,000) Increase in capital assets (42,118) (23,488) (42,118) (77,800) Cash flows from financing activities Increase of the bank loan 80,000 - Increase (decrease) in cash (857,682) 429,190 Cash Beginning of year 1,532,973 1,103,783 Cash End of year 675,291 1,532,973 (6)

9 As at March 31, 1 General The Company is a non-profit organization incorporated under Part II of the Canada Business Corporations Act. Along with its various lenders, through the involvement of its member institutions and through promotion of the cooperative and mutualism movements and other forms of association, the Company contributes to sustainable development in partner countries with a view to empowering their inhabitants. The Company is exempt from taxes. 2 Summary of significant accounting policies Scope of consolidation and basis of presentation These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. They include the accounts of the Company and those of its subsidiary, SOCODEVI Panama, S.A. SOCODEVI Panama, S.A. was incorporated on January 14, 2008 under Law 32 of the Corporation Law of Panama in order to allow the execution of a project in this country. Upon a resolution adopted by the Board of Directors of SOCODEVI, it has been agreed to issue, in favour of two managers of SOCODEVI, one voting share each, without par value, thus accelerating and facilitating the creation process of the subsidiary. SOCODEVI does not hold any interests in SOCODEVI Panama S.A. but has a 100% controlling interest in that company. Use of estimates The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported in the consolidated financial statements. Those estimates and assumptions also affect the disclosure of contingencies at the date of the consolidated financial statements and the reported amounts of consolidated revenues and expenses during the year. Actual consolidated results could differ from those estimates. Net assets The Company's operations are recorded using the deferral method. Under this method, restricted revenues for expenses of future periods are deferred and recognized as revenues in the same period as the related expenses are incurred. Unappropriated net assets consist of the excess of current and prior year surplus, net of self-financing of cooperation projects and assignments to other funds. The Contingency Fund's purpose is to provide the Company with a sufficient reserve so that the Company will be able to meet its financial obligations towards its partners, lenders, suppliers and employees. Any increase in this fund must be ratified by the Board of Directors. Members will decide of the disposal and the use of the (7)

10 As at March 31, Fund at the special meeting of members. Investment income from the Contingency Fund's resources is also presented in the Contingency Fund. Foreign currency translation Items in foreign currencies are translated into Canadian dollars using the temporal method. Under this method, balance sheet monetary items are translated at the exchange rates in effect at the balance sheet date, whereas revenues and expenses are translated at monthly average exchange rates. The non-monetary items are translated at exchange rates at the transaction dates. Exchange gains and losses resulting from such translation are reflected in the statement of income. Financial instruments The Company classifies its financial assets in the following categories, with each category requiring a particular accounting treatment: financial assets held for trading, held-to-maturity investments, loans and receivables, and available-for-sale financial assets. As to financial liabilities, they are classified as held for trading or as other financial liabilities. The Company measures all its financial assets at fair value, except for loans and receivables and held-tomaturity investments, which are measured at amortized cost using the effective interest rate method. The Company measures all its financial liabilities at fair value when they are classified as held for trading. The other financial liabilities are measured at amortized cost. The Company has classified cash, net assets of projects in progress, accounts receivable as well as accounts payable and accrued liabilities as held for trading. The Company has classified its contingency fund as a held-to-maturity investment and its equity investment as an available-for-sale financial asset. Considering that these shares have no quoted price in an active market, they are measured at cost. The Company has chosen to apply the Section 3861 Financial Instruments - disclosure and presentation as permitted by CICA Handbook, instead of Section 3862 Financial Instruments - disclosures and Section 3863 Financial Instruments - presentation. Net assets of projects in progress Net assets of projects in progress mainly consist of cash on hand, but also include advances, guarantees as well as the accounts payable and accrued liabilities for projects in progress. Lease inducement The lease inducement is amortized using the straight-line method over the remaining term of the lease. Capital assets Capital assets are recorded at cost and depreciated using the declining balance method at annual rates of 20% for furniture and office equipment and 30% for computer equipment and software. (8)

11 As at March 31, Capital assets acquired as part of the international program are charged to consolidated income statement since the Company does not remain the owner of these assets. When an asset has no longer the potential of long-term service to the Company, the excess of its net book value of any residual value is recorded as an expense in the income statement. Deferred revenues Lenders' contributions whose expenses related to the corresponding projects are not incurred are accounted for as deferred revenues and transferred to consolidated earnings during the year in which the expenses are incurred. Revenues In accordance with contribution agreements entered into with different lenders, any non-spent or unjustified amount provided by these lenders to the Company must be returned to them, under the terms of the programs accepted by the lenders. Under some agreements entered into with lenders, the interest generated by its contributions must be used for the projects and the interest which will not have been spent or justified must be returned to the lenders. In certain cases, the generated interest must be considered as a contribution from the lender, to be deducted from the total amount of the agreement. This interest is accounted for as deferred revenues and transferred to project revenues when it is reinvested in the projects. Any other interest income is included in Interest and other revenues. Contributions in the form of services rendered Contributions in the form of services rendered represent the value of the contribution provided by the Company's member institutions under its international program. This value was estimated from the daily rate recognized by CIDA under the Company's Program Fund. Services received without consideration Consolidated income do not include the cost of services rendered through awareness and institutional activities by the directors, the personnel and other reference people that are part of the Company's member institutions. Operations with joint ventures During the year, the Company realized projects with joint ventures over which it exercised joint control with different partners. These joint ventures are not incorporated in business corporations. The Company's interest in these joint ventures is accounted for using the equity method. (9)

12 As at March 31, 3 Future changes in accounting policies Accounting standards for not-for-profit organizations In September, the Canadian Accounting Standards Board confirmed that the not-for-profit organizations must choose to apply the International Financial Reporting Standards (IFRS) or the new accounting standards for not-for-profit organizations for private sector for fiscal years beginning on or after January 1, Earlier adoption is permitted. The Company is currently evaluating the impact of adopting these new standards in its financial statements. Business combination and consolidation The Canadian Institute of Chartered Accountants issued the Section 1582 Business combination which replaces the former Section 1581 of the same title, as the Sections 1601 Consolidated financial statements and 1602 Non-controlling interest which replace the former Section 1600 Consolidated financial statements. Section 1582 establishes standards for the recognition of a business combination. These standards must be applied to business combinations for which the acquisition date is in a fiscal year beginning on January 1, or a later date. Therefore, the Company will adopt them for business combinations taking place in the year ending March 31, Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1602 establishes standards for the accounting of non-controlling interest in a subsidiary, in the consolidated financial statements subsequent to a business combination. These standards must be applied for annual periods beginning on or after January 1,. Therefore, the Company will adopt them for the year ending March 31, The Company is currently evaluating the impact of these new standards on its financial statements. (10)

13 As at March 31, 4 Related party transactions In addition to the operations with the joint ventures, the Company concluded the following transactions with the SOCODEVI Foundation for international development during the year. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. The SOCODEVI Foundation's mission is to collect donations in order to financially support local communities and organizations of the associative type (cooperatives and mutual organizations) which are in developing countries. SOCODEVI has committed to providing the SOCODEVI Foundation with the administrative services required in the realization of its activities without receiving any consideration in return. The cost of services rendered by the Company's staff to the SOCODEVI Foundation is estimated at 26,730 (42,094 in ) for the current year. On March 31,, balances to receive from (due to) SOCODEVI Foundation are: Accounts receivable (accounts payable and accrued liabilities) 177 (8,967) 5 Accounts receivable Contributions receivable 1,542,112 1,135,617 Contributions receivable other partners 198, ,884 Current portion of loans to partners, non-interest bearing - 4,879 Other 214, ,466 1,954,740 1,537,846 (11)

14 As at March 31, 6 Investments, at cost Contingency Fund Desjardins Term deposit certificate, maturing on July 13, at an annual rate of 4.7%, non redeemable before maturity 474, ,641 Term deposit certificate, maturing on September 10, 2014 at an annual rate of 3.75%, non redeemable before maturity 79,433 76,557 La Capitale Guaranteed investment certificate, maturing on July 12, at an annual rate of 4.725%, redeemable with penalty of market value 474, ,558 1,028, ,756 Foreign shares The UNEC S.A., 162 common shares, representing a 33.33% interest 12,516 12,516 1,041, ,272 Current portion applicable to the next fiscal year 949,089-91, ,272 The equity investment is recorded at cost since the appreciation of the shares is not held by the Company. The UNEC S.A. is a Bolivian company whose mission is the production, marketing and export of agricultural products. 7 Reserved for Contingency Fund Investment, at cost Long-term 79, ,756 Short-term 949,089-1,028, ,756 Cash 93,770-1,122, ,756 (12)

15 As at March 31, 8 Capital assets Cost Accumulated amortization Net Net Furniture and office equipment 15,432 2,649 12,783 10,790 Computer equipment 54,618 20,972 33,646 37,150 Intangible assets 7,198 1,178 6,020 11,001 77,248 24,799 52,449 58,941 9 Bank loan The Company has an available line of credit of an authorized amount of 500,000, bearing interest at prime rate and renewable on July 31,. A first universal mortgage of 600,000 on the universality of present and future investment, in any form it may be, has been given as a security for the line of credit. As at March 31,, the line of credit is used for 80,000. (13)

16 As at March 31, 10 Deferred revenues (contributions receivable) ACDI Program Fund Others Other contributions Total Total Balance Beginning of year 53, ,116 (171,075) 411,918 (143,960) Receipts 3,077,920 4,888,033 2,127,086 10,093,039 9,935,948 Interest allocated 1, ,117 4,211 3,132,919 5,418,144 1,956,011 10,507,074 9,796,199 Amounts Transferred to International Program's earnings 2,736,884 6,386,025 2,030,853 11,153,762 9,399,854 Transferred to other income - (5,538) - (5,538) - Reimbursements to lenders ,494 Reimbursements to partners ,772 Other items (130) - 13,141 13,011 (28,839) 2,736,754 6,380,487 2,043,994 11,161,235 9,384,281 Balance End of year 396,165 (962,343) (87,983) (654,161) 411,918 Deferred revenues 396, , , ,951 1,547,535 Contributions receivable (note 5) - (1,192,559) (349,553) (1,542,112) (1,135,617) 11 Capital management 396,165 (962,343) (87,983) (654,161) 411,918 In managing its capital, the Company aims to: Safeguard its assets and its ability to continue operations while maximizing their growth; Meet its financial obligations. The Company defines its capital as follows: Bank loan; Net assets. The Company achieves its goals through prudent management of capital generated by internal growth and optimizing the use of capital at low cost. (14)

17 As at March 31, 12 Contingencies and commitment Lease The Company has committed to paying a net minimum amount of 24,560 until July 31, under a longterm operating lease. Caution A guarantee in favour of the Receiver General for Canada has been issued as security for advances granted by CIDA for a specific project in Guatemala. This guarantee amounting to CAN250,000 expires on December 2,. 13 Contributions from other lenders Government of Mali with financing from the World Bank 168, ,814 Qujing Municipality (China) 323,185 52,541 Government of Panama with financing from the Inter-American Development Bank (IDB) and United Nations Development Program (UNDP) 3, ,227 Sustainable Tree Crop Program (STCP) with financing from The United States Agency for International Development (USAID) 215, ,370 Québec Ministry of International Relations (MRI) 148, ,307 Government of Haiti with financing from Inter-American Development Bank (IDB) 131,155 97,969 Mutuelle assurance des commerçants et industriels de France (MACIF) 171, ,736 World Wide Fund for Nature-Central Africa Regional Program Office (WWF-CARPO) - 32,960 World Food Program (WFP) 106, ,938 World Cocoa Foundation (WCF) with financing from Bill and Melinda Gates Foundation 718, ,397 Other lenders 42,201 41, Contributions from member institutions 2,027,480 1,882,073 Contributions to the activities carried out by SOCODEVI 113,698 67,896 Project self-financing Program Fund - 89, , ,126 (15)

18 As at March 31, 15 Interest and other revenues Interest income - Contingency Fund 45,766 42,340 Interest income - Unappropriated 588 2,428 Other revenues 48, ,748 95, , Operations with joint ventures During the year, the Company realized the following joint venture projects: Project Rural economic development project in the department of Sololá in Guatemala - CIDA Local Development Program in Haiti - CIDA Contribution to improving food safety in Haiti - CIDA Partners Interest in net income Contributions CECI 52 % 1,378, ,762 CECI, CRC- SOGEMA and ENAP 32 % 299, ,350 CECI and UPA DI 20 % 27,052 13,210 Women and food security in Niger - CIDA CECI and UPA DI 20 % - 16,346 Implementing actions: «Innovation and diffusion of irrigation technology and processing, and interprofessional cooperation» for the region of Mopti in Mali-Government of Mali with financing from the World Bank Support to Rice Production Project for Food Security in Senegal/Bey Dunde - CIDA Agricultural Intensification Project in the Artibonite Valley - Government of Haiti with financing from the IDB Water Management user s organization CECI and UPA DI 36 % 168, ,814 CECI and UPA DI 30 % 14,084 - CECI and AECON 33 1/3 % 131,155 97,969 2,018,903 1,690,451 (16)

19 As at March 31, These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the joint ventures. As at March 31,, an amount of 540,345 (753,077 in ) has been included in contributions receivable with respect to joint venture projects while an amount of 158,306 (293,121 in ) has been included in accounts payable and accrued liabilities for these projects. Deferred revenues include an advance of 16,581 related to a joint venture project (137,551 in ). 17 Financial instruments Risk Management Policy Risk management is done within a management framework that takes into account the nature of activities and the level of risk that the Company considers reasonable to assume taking into account the risk-return expectations and desired members. Credit risk and credit concentration Credit risk is the risk of financial loss for the Company if a counterparty defaults on its obligations. This risk is primarily due to cash flow, net assets of projects in progress, accounts receivable and investments. The risk that the Company is exposed due to the concentration of credit is limited. The risk of non-recovery is reduced because the balances receivable come primarily from government agencies and corporations. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company made some of its transactions in foreign currencies, especially in CFA francs and U.S. dollars. As a result, certain assets are exposed to fluctuations of exchange rates. As at March 31,, net assets denominated in foreign currencies and converted to Canadian dollars is 805,000. The Company does not use financial instruments to manage risks of fluctuating exchange rates. However, the risk is limited given the number of foreign currencies used by the Company. Fair value Fair value of cash, net assets of current projects, investments, accounts receivable and payable and accrued liabilities approximate their carrying values due to their short-term maturity or current rates market. As for foreign stocks, the fair value could not be determined since it is virtually impossible to find on the market a financial instrument that has essentially the same economic characteristics. (17)

20 As at March 31, Interest rate risk Investments bear interest at the rates mentioned in note 6. Cash, accounts receivable and payable and accrued liabilities are interest free. 18 Comparative figures Certain comparative figures have been restated to conform to the current year presentation. (18)

21 Consolidated Unaudited Expenses For the year ended March 31, International program Financial assistance 2,770,698 1,231,876 Technical assistance Canadian staff Salaries and fringe benefits 1,660,984 1,672,361 Living allowances 312, ,554 Other expenses 255, ,766 Local staff 1,483,473 1,304,943 Capital expenditures 231, ,793 Extra support and mission expenses 512, ,267 Operating expenses Rent, supplies, communications and other 352, ,975 Travelling and car expenses 648, ,262 Professional fees, studies and research 655, ,385 Training 554, ,111 9,436,947 8,097,293 Awareness and communication program Salaries and fringe benefits 96,177 85,127 Training and awareness tools 53,690 24,963 Special events 58,215 28,645 Publications and promotion 15,938 20,497 Mission expenses 22, Material and equipment Office expenses 6,600 5,979 Professional fees 1,339 1,070 Travelling and entertainment 464 1, , ,145 Institutional expenses Salaries and fringe benefits 720, ,142 Recruitment and training of staff 30,707 9,230 Rent 91,142 91,223 Stationery and office expenses 81,841 46,473 Professional fees 30,032 63,314 Travelling and entertainment 26,380 29,749 Consignment and telecommunications 17,016 16,941 Mission expenses 5,174 15,638 Business development Salaries and fringe benefits 160, ,611 Other expenses 90,156 80,755 Depreciation of capital assets 20,305 20,375 Loss on writeoff of capital assets 28,305 5,378 Exchange loss 32, ,617 1,333,715 1,275,446 (19)