MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Financial Statements For the year ended March 31, 2015
MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Financial Statements For the year ended March 31, 2015 Contents Independent Auditor's Report 2 Non-consolidated 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 Financial Statements 7
MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Statement of Changes in Net Assets For the year ended March 31 2015 2014 Invested in Property and Unrestricted Equipment Total Total Net assets, beginning of year $ (40,578) $ 2,142,917 $ 2,102,339 $ 1,920,800 Amortization Deferred contributions (441,712) 441,712 - - Property and equipment 737,227 (737,227) - - Excess of revenue over expenses 159,040-159,040 181,539 Transfer for asset purchases net of deferred contributions (160,663) 160,663 - - Net assets, end of year $ 253,314 $ 2,008,065 $ 2,261,379 $ 2,102,339 The accompanying notes are an integral part of these non-consolidated financial statements. 4
MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Statement of Operations For the year ended March 31 2015 2014 Revenue Membership and user fees $ 3,315,854 $ 3,118,804 Ancillary services 540,856 532,576 WRHA Service Agreement Funding 752,280 752,280 Programs 368,600 360,871 Gift from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. 213,153 137,489 Amortization of deferred contributions 441,712 436,193 Other 208,766 150,187 5,841,221 5,488,400 Expenses Compensation 2,416,443 2,413,781 Administrative 509,782 429,866 Program 176,517 169,394 Ancillary services 373,846 392,349 Membership and marketing 201,792 244,152 Amortization of property and equipment 737,227 742,818 Facility and operations 603,469 564,501 Gift to Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. 663,105 350,000 5,682,181 5,306,861 Excess of revenue over expenses $ 159,040 $ 181,539 The accompanying notes are an integral part of these non-consolidated financial statements. 5
MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Non-consolidated Statement of Cash Flows For the year ended March 31 2015 2014 Cash Provided by (Used in): Cash Flows from Operating Activities Excess of revenue over expenses $ 159,040 $ 181,539 Adjustments for non-cash items Amortization of property and equipment 737,227 742,818 Amortization of deferred contributions (441,712) (436,193) Gain on disposal of property and equipment (46,314) (3,718) 408,241 484,446 Changes in non-cash working capital balances Accounts and grants receivable 36,891 135,680 Inventory (6,602) 8,539 Prepaid expenses (4,331) (11,487) Accounts payable and accrued liabilities (42,800) (45,562) Memberships and fees paid in advance (4,095) 142,351 Net cash provided by operating activities 387,304 713,967 Cash Flows from Investing Activities Purchase of capital assets property and equipment (179,105) (328,922) Proceeds on disposal of capital assets property and equipment 49,106 7,410 Net cash used in investing activities (129,999) (321,512) Cash Flows from Financing Activities Increase in deferred contributions 15,650 10,000 (Payments to)/proceeds from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. (145,628) 161,526 Net cash provided by (used in) financing activities (129,978) 171,526 Increase in cash and cash equivalents 127,327 563,981 Cash and cash equivalents, beginning of year 1,453,201 889,220 Cash and cash equivalents, end of year $ 1,580,528 $ 1,453,201 The accompanying notes are an integral part of these non-consolidated financial statements. 6
For the year ended March 31, 2015 MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements 1. Nature of the Organization and Summary of Significant Accounting Policies Nature of the Organization The Manitoba Cardiac Institute (Reh-Fit) Inc. (the "organization") is a non-profit organization incorporated under The Corporations Act of Manitoba and is a registered Canadian charity exempt from income tax under section 149 of the Income Tax Act. The organization's mission is to enhance the health and well-being of its members and the community by providing innovative health and fitness services through assessment, education and exercise in a supportive environment. Basis of Accounting These financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations (Part III of the CPA Canada Handbook). Revenue Recognition Membership fees and income from programs and other activities are recognized when earned and collection is reasonably assured. The organization follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year the related expenses are incurred. Contributions restricted for the purchase of capital assets are amortized into revenue on a straight-line basis, at a rate corresponding with the amortization rate for the related capital assets. Unrestricted contributions are recognized in revenue when received. Contributions are recorded as receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Contributed Services Volunteers contribute numerous hours per year to assist the organization in carrying out its mandate. Due to the difficulty of determining their fair value, contributed services are not recognized in the financial statements. Financial Instruments Financial instruments are recorded at fair value when acquired or issued. In subsequent periods, equities traded in an active market and derivatives are reported at fair value, with any unrealized gains and losses reported in income. All other financial instruments are reported at cost or amortized cost less impairment, if applicable. Financial assets are tested for impairment when changes in circumstances indicate the asset could be impaired. Transaction costs on acquisition, sale or issue of financial instruments are expensed for those items remeasured at fair value at each balance sheet date and charged to the financial instrument for those measured at amortized cost. 7
For the year ended March 31, 2015 MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements 1. Nature of the Organization and Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents Cash and cash equivalents consists of cash and investments having a maturity of less than three months. Inventory Inventory is stated at the lower of average cost and net realizable value. Cost is determined on a first-in, first-out basis. Property and Equipment Tangible capital assets are stated at cost less accumulated amortization. Amortization based on the estimated useful life of the asset is calculated as follows: Building Parking lots Equipment - motorized Equipment - other Equipment - computer hardware 25 years straight-line basis 20 years straight-line basis 3 to 6 years straight-line basis 10 years straight-line basis 3 to 5 years straight-line basis Use of Estimates The preparation of financial statements in accordance with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's best estimates as additional information becomes available in the future. 2. Cash and Cash Equivalents 2015 2014 Cash in bank $ 879,201 $ 760,440 High interest e-savings accounts 701,327 692,761 $ 1,580,528 $ 1,453,201 As at March 31, 2015, the cash and cash equivalents balance is reflective of memberships and fees paid in advance. 8
For the year ended March 31, 2015 2. Cash and Cash Equivalents (continued) MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements Credit Facility The organization has a demand credit facility with Royal Bank, for $500,000, available for operating needs. The line of credit bears interest at the bank's prime rate (effective rate 2.85%; 3.0% in 2014), calculated and payable monthly. The line of credit is collateralized by a general security agreement, a collateral mortgage covering 1390 Taylor Avenue and an assignment of insurance. 3. Due to Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. The Manitoba Cardiac Institute (Reh-Fit) Inc. is supported by the Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. (the "Foundation"). The Foundation was established July 21, 1999 to support and promote the welfare and good of the organization by appealing for funds and acquiring, accepting or receiving grants, gifts, donations, bequests or other money. The Foundation is incorporated under The Corporations Act of Manitoba and is a registered charity under the Income Tax Act. The organization has a significant economic interest in the Foundation in that all resources of the Foundation must be provided to the organization or used for its benefit. In addition, the organization could control the Foundation under certain circumstances by becoming its sole member and, as sole member, electing the Directors of the Foundation. The balance due to the Foundation has arisen from transactions in the normal course of operations between the organizations and has no security, repayment terms or interest charged. The following summarizes the organization's related party transactions for the year: 2015 2014 Gift from the Foundation General $ 213,153 $ 137,489 For donor-specified capital acquisitions 14,000 - For donor-specified program support 13,200 - $ 240,353 $ 137,489 Capital Campaign - 10,000 Total $ 240,353 $ 147,489 Gift to Building & Equipment Fund in the Foundation $ 663,105 $ 350,000 The Foundation's Building & Equipment Fund of $2,692,406 was established to accumulate funds to make gifts to the organization for use in maintaining, repairing, replacing and expanding the facilities and equipment used in its activities. The Foundation's Endowment Fund of $53,454 reports the receipt of funds established from gifts by donors which are designated to remain under the Foundation's management in perpetuity. 9
For the year ended March 31, 2015 MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements 3. Due from/to Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. (continued) The Foundation's financial statements have not been consolidated in the organization's financial statements. Financial statements of the Foundation are available on request. Financial summaries of the Foundation as at March 31, 2015 and 2014 and for the years then ended are as follows: 2015 2014 Cash and cash equivalents $ 2,886,423 $ 2,052,558 Accounts receivable 41,825 49,004 Prepaid expenses 6,435 8,286 Due from Manitoba Cardiac Institute (Reh-Fit) Inc. 1,765 147,393 $ 2,936,448 $ 2,257,241 Accounts payable and accrued liabilities $ 4,400 $ 4,752 Deferred revenue 78,955 80,309 83,355 85,061 Fund balances 2,853,093 2,172,180 $ 2,936,448 $ 2,257,241 2015 2014 Revenues Fundraising events, donations and investment income $ 359,529 $ 274,192 Gift from Manitoba Cardiac Institute (Reh-Fit) Inc. 663,105 350,000 1,022,634 624,192 Fundraising and administrative expenses 101,368 116,522 921,266 507,670 Gifts to Manitoba Cardiac Institute (Reh-Fit) Inc. General and donor-specified 240,353 137,489 Capital - 10,000 240,353 147,489 Excess of revenues over expenses $ 680,913 $ 360,181 10
For the year ended March 31, 2015 4. Property and Equipment MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements 2015 2014 Accumulated Net Book Accumulated Net Book Cost Amortization Value Cost Amortization Value Property $ 297,591 $ - $ 297,591 $ 297,591 $ - $ 297,591 Parking lots 680,542 122,237 558,305 680,542 88,828 591,714 Building 12,498,063 4,963,626 7,534,437 12,491,461 4,483,404 8,008,057 Equipment 2,824,528 2,323,300 501,228 2,745,288 2,190,175 555,113 $ 16,300,724 $ 7,409,163 $ 8,891,561 $ 16,214,882 $ 6,762,407 $ 9,452,475 5. Accounts Payable and Accrued Liabilities Included in accounts payable and accrued liabilities are $52,056 ($58,543 in 2014) in government remittances payable. All accounts are current with the respective filing agencies. 6. Deferred Contributions Deferred contributions related to capital assets represent the funded portion of capital assets that will be recognized as revenue in future periods and matched against the applicable amortization charged in that period. The changes in the deferred contributions balance for the year are as follows: 2015 2014 Beginning balance $ 7,309,558 $ 7,735,751 Contributions from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. 14,000 10,000 Other contributions 1,650-7,325,208 7,745,751 Amounts amortized to revenue (441,712) (436,193) Ending balance $ 6,883,496 $ 7,309,558 7. Commitment The land on which the organization is situated is leased from the City of Winnipeg for a lease payment of $1 per year, until December 31, 2102. 11
For the year ended March 31, 2015 8. Contingency MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements When the organization opened, the Kinsmen Club of Winnipeg made a grant to the organization of $300,000, followed by a grant of $75,000 in 1985. The grant was made subject to the following condition: In the event of the sale of the assets by the organization, the sale may only take place after consultation with and the approval of the Kinsmen Club of Winnipeg; and further, should such sale occur, then after the retirement of all debts and financial obligations of the organization, the remaining amount up to $375,000 is to be returned to the Kinsmen Club of Winnipeg for re-allocation to service funding in the community. The sum of $375,000 represents the total of the contributions made by the Kinsmen Club of Winnipeg to date. 9. Capital Replacement Plan The organization follows prudent budgeting policies whereby future capital replacements are planned to be funded from operations and the Foundation. The capital replacement plan has been created with accepted industry standards for asset replacement and has been adopted as management's annual goal of $1,100,000 ($1,100,000 in 2014). 10. Financial Instrument Risk The organization is exposed to different types of risk in the normal course of operations, including credit risk, market risk and liquidity risk. The organization's objective in risk management is to optimize the risk return trade-off, within set limits, by applying integrated risk management and control strategies, policies and procedures throughout the organization's activities. Credit Risk Credit risk is the risk that one party to a financial instrument fails to discharge an obligation and causes financial loss to another party. The organization's maximum exposure to credit risk without taking account of any collateral or other credit enhancements consists of its accounts receivable and the amount due from Manitoba Cardiac Institute (Reh-Fit) Foundation Inc. The risk has not changed from the previous year. 12
For the year ended March 31, 2015 MANITOBA CARDIAC INSTITUTE (REH-FIT) INC. Notes to Non-consolidated Financial Statements 10. Financial Instrument Risk Management (continued) Market Risk Market risk is the risk the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign exchange risk and other price risk. Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The organization is not exposed to significant interest rate risk as its cash and cash equivalents are held in short-term investments or variable rate products. The risk has not changed from the previous year. The organization is not exposed to significant foreign currency risk as it does not have any financial instruments denominated in foreign currency and the number of transactions in foreign currency are minimal. The risk has not changed from the previous year. Other price risk is the risk that the value of an investment will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual investment or factors affecting similar financial instruments traded in the market. The organization limits its exposure to other price risks by investing in low risk investment vehicles. The risk has not changed from the previous year. Liquidity Risk Liquidity risk is the risk that the organization encounters difficulty in meeting its obligations associated with financial liabilities. Liquidity risk includes the risk that, as a result of operational liquidity requirements, the organization will not have sufficient funds to settle a transaction on the due date; will be forced to sell financial assets at a value, which is less than what they are worth; or may be unable to settle or recover a financial asset. The organization is not exposed to significant liquidity rate risk as its liquidity risk arises from accounts payable and sufficient assets are on hand as memberships and fees are paid in advance. The risk has not changed from the previous year. 13