2014/15 Audited Financial Statement CPCH

Financial Statements of

CANUCK PLACE CHILDREN’S HOSPICE Year ended March 31, 2015

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KPMG LLP Chartered Accountants Metrotower II Suite 2400 – 4720 Kingsway Burnaby BC V5H 4N2 Canada

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(604) 527-3600 (604) 527-3636 www.kpmg.ca

INDEPENDENT AUDITORS' REPORT To the Members We have audited the accompanying financial statements of Canuck Place Children's Hospice, which comprise the statement of financial position as at March 31, 2015, the 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 Financial Statements Management is responsible for the preparation and fair presentation of these 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 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 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 financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements.

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 financial statements present fairly, in all material respects, the financial position of Canuck Place Children's Hospice as at March 31, 2015, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Report on Other Legal and Regulatory Requirements As required by the Society Act (British Columbia), we report that, in our opinion, the accounting policies applied in preparing and presenting the financial statements in accordance with Canadian accounting standards for not-for-profit organizations have been applied on a basis consistent with that of the preceding year.

Chartered Accountants May 28, 2015 Burnaby, Canada

CANUCK PLACE CHILDREN’S HOSPICE Statement of Financial Position March 31, 2015, with comparative information for 2014 Operating Fund

Garden Fund

2015 Total

2014 Total

Assets Current assets: Cash and cash equivalents Short term investment (note 3) Accounts receivable Physician billings receivable GST receivable Due from (to) fund Prepaid expenses

$ 5,288,918 $ 206,060 80,000 26,734 164,061 78,033 21,600 (21,600) 49,163 5,708,509 184,460

Investments (note 3) Capital assets (note 4)

$ 5,494,978 $ 5,367,420 80,000 26,734 200,422 164,061 150,904 78,033 158,924 49,163 44,677 5,892,969 5,922,347

320,000

-

320,000

14,616,320

1,101,395

15,717,715

$ 20,644,829 $ 1,285,855

15,962,552

$ 21,930,684 $ 21,884,899

Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities $ 1,212,989 $ Loan payable (note 5) Current portion of obligations under capital lease (note 6 34,057 Deferred contributions (note 7) 249,827 1,496,873

-

Obligations under capital lease (note 6)

17,029

-

17,029

51,086

12,173,165

-

12,173,165

11,532,608

2,392,069 4,565,693 6,957,762

1,101,395 184,460 1,285,855

3,493,464 4,565,693 184,460 8,243,617

4,344,801 2,841,442 218,915 7,405,158

Deferred capital contributions (note 8) Net assets: Invested in capital assets (note 9) Unrestricted Externally restricted - Garden Fund

$ 1,212,989 $ 1,463,783 1,149,995 34,057 34,057 249,827 248,212 1,496,873 2,896,047

Commitments (notes 10 and 14) Subsequent event (note 13) $ 20,644,829 $ 1,285,855

See accompanying notes to financial statements.

Approved on behalf of the Board:

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$ 21,930,684 $ 21,884,899

CANUCK PLACE CHILDREN’S HOSPICE Statement of Operations Year ended March 31, 2015, with comparative information for 2014 Operating Fund Revenue: Donations Province of British Columbia: Operating funding Recovery of physicians billings Bequests Distribution from Canuck Place Children's Hospice Foundation (note 12) Interest and other Amortization of deferred capital contributions (note 8)

Garden Fund

$ 4,908,178 $ 5,200

Expenses: Amortization of capital assets Direct program expenses Facilities Marketing and promotion Regulatory and administration Staffing costs Travel and transportation

Excess (deficiency) of revenue over expenses before unde Contributions to Canuck Place Children's Hospice Foundation (note 12)

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$4,913,378 $ 4,543,459

-

4,685,000 405,431 505,496

3,685,000 396,682 2,666,036

130,000 127,266

2,116

130,000 129,382

130,000 112,050

618,481 11,379,852

7,316

618,481 11,387,168

172,007 11,705,234

747,347 1,670,836 430,831 124,890 495,940 6,957,102 70,990 10,497,936

9,002 3,175 12,484 26,112 50,773

756,349 1,674,011 443,315 124,890 495,940 6,983,214 70,990 10,548,709

446,742 1,496,574 349,511 132,297 489,585 6,652,755 67,016 9,634,480

838,459

2,070,754

-

1,800,000

881,916

(43,457)

-

$ 881,916 $ (43,457)

See accompanying notes to financial statements.

2014 Total

4,685,000 405,431 505,496

-

Excess (deficiency) of revenue over expenses

2015 Total

$ 838,459 $ 270,754

CANUCK PLACE CHILDREN’S HOSPICE Statement of Changes in Net Assets Year ended March 31, 2015, with comparative information for 2014

Balance, beginning of year

Operating Fund Invested in capital assets Unrestricted

Garden Fund Invested in Externally capital assets restricted

$ 3,234,404 $ 2,841,442

$ 1,110,397 $ 218,915

Excess (deficiency) of revenue over expenses (note 9)

(128,866)

1,010,782

Net change in invested in capital assets (note 9)

(713,469)

713,469

Balance, end of year

$ 2,392,069 $ 4,565,693

See accompanying notes to financial statements.

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(9,002)

-

(34,455)

-

$ 1,101,395 $ 184,460

Total 2015

2014

$ 7,405,158 $ 7,134,404

838,459

270,754

-

-

$ 8,243,617 $ 7,405,158

CANUCK PLACE CHILDREN’S HOSPICE Statement of Cash Flows Year ended March 31, 2015, with comparative information for 2014 2015

2014

Cash and cash equivalents provided by (used in): Operating: Excess of revenue over expenses for the year Items not involving cash: Amortization of capital assets Amortization of deferred capital contributions

$

Changes in non-cash working capital accounts: Accounts receivable Physician billings receivable GST receivable Prepaid expenses Accounts payable and accrued liabilities Deferred contributions

Investments: Purchase of capital assets Purchase of investments

Financing: Deferred contributions, Dave Lede House (Note 7) Loan payable Repayment of obligations under capital lease

Increase in cash and cash equivalents

Non-cash transaction: Amounts transferred from deferred contributions to deferred capital contributions Capital lease addition See accompanying notes to financial statements.

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$

270,754

756,349 (618,481) 976,327

446,742 (172,007) 545,489

173,688 (13,157) 80,891 (4,486) (250,794) 1,615 964,084

88,933 19,674 265,155 (29,800) (1,720,907) (71,507) (902,963)

(511,512) (400,000) (911,512)

(4,543,620) (4,543,620)

1,259,038 (1,149,995) (34,057) 74,986

4,532,996 1,149,995 (17,029) 5,665,962

127,558

219,379

5,367,420

5,148,041

$ 5,494,978

$ 5,367,420

$

$

Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year

838,459

26,396 -

156,050 102,172

CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements Year ended March 31, 2015

1. Operations: On March 1, 1990, Canuck Place Children’s Hospice (“Canuck Place” or the “Hospice”) was incorporated under the Society Act (British Columbia) as a non-profit organization for the purpose of operating a provincial children’s hospice program known as “Canuck Place”. Canuck Place Children’s Hospice is a registered charity and is not subject to income or capital taxes.

The Hospice controls Canuck Place Children’s Hospice Foundation (the “Foundation”). The purpose of the Foundation is to hold any endowment contributions received for the benefit of the Hospice or other amounts transferred by the Hospice. The net assets and results of operations of the Foundation have not been included in these financial statements. The Foundation is a public foundation formed on June 14, 2000 to manage funds for furthering the interests and supporting the operations of Canuck Place.

2. Significant accounting policies: The financial statements have been prepared by management in accordance with Canadian Accounting Standards for Not-For-Profit Organizations in Part III of the CPA Canada Handbook and include the following significant accounting policies: (a) Fund accounting: The Hospice accounts for its operations in various funds as follows: (i) The operating fund accounts for the general operations of the Hospice including receipt of restricted and unrestricted donations, revenue specifically attributable to funding for capital assets, other than those of the garden fund, and expenses related to maintaining the capital assets. (ii) The garden fund accounts for revenue and expenses related to maintaining the garden.

Unspent cash balances in the Garden Fund are externally restricted to be spent only on garden related items. (b) Revenue recognition: The Hospice follows the restricted fund method of accounting for restricted contributions of the Garden Fund. Contributions restricted for operations or acquisition of capital assets of the Garden Fund are recognized as revenue when received or receivable if collection is reasonably assured. The Hospice follows the deferral method of accounting for restricted contributions not relating to the Garden Fund.

Unrestricted donations are recorded when received or receivable if collection is reasonably assured. Unrestricted investment income is recorded as earned. Donations and investment income restricted for use in specific periods or for specific expenses of the operating fund are initially deferred and are recognized as revenue in the year in which the related expenses are incurred.

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CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

2. Significant accounting policies (continued): (b) Revenue recognition (continued): Contributions received specifically for the acquisition of capital assets of the operating fund are recorded as deferred contributions until the amount is invested in capital assets. Contributions for capital assets that will be amortized are transferred to unamortized deferred capital contributions in the period the asset is acquired. Contributions for capital assets that will not be amortized, such as land, are recorded as direct increases in net assets in the period the asset is acquired.

Deferred capital contributions of the operating fund are recognized as revenue on the same basis as the related capital assets are amortized to indicate how the amortization expense has been funded. Unamortized deferred capital contributions relating to capital assets disposed of are recognized as revenue in the period of disposal, provided that all restrictions have been complied with. (c) Donated goods and services: Supplemental efforts of volunteer workers are not recorded as revenue since it is not practical to calculate the value of benefits received. In addition, contributions of other personal service, facilities and supplies provided for the beneficiaries of Canuck Place that are not principally intended for the Hospice itself or its members, are not included in the accompanying statements. Donated goods and services provided for the benefit of the Hospice, and for which fair value can be determined and would have been purchased by the Hospice, are included in the financial statements and are recorded at their fair values. (d) Cash and cash equivalents: Cash and cash equivalents consist of cash in banks and short-term investments with maturities within ninety days of the date of acquisition. (e) Capital assets: Building, land improvements and equipment are initially recorded at cost. Building materials and labour contributed through donations are recorded as additions to capital assets only when the fair value of those items is readily determinable. Leasehold improvements on office premises are amortized on a straight line basis over the term of the lease. Building improvements on leased land agreements are amortized on a declining balance basis of 4%.

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CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

2. Significant accounting policies (continued): (e) Capital assets (continued): All other assets are amortized on a declining balance using the following rates: Assets

Rate

Automotive Building Computer software Hospice and garden equipment Land improvements Office equipment and furniture

30% 4% 100% 20% 4% 20%

(f) Financial instruments: Financial instruments are recorded at fair value on initial recognition. Freestanding derivative instruments that are not 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 Hospice has elected to carry investments at fair value.

Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs, which are amortized using the straight-line method.

Financial assets recorded at cost or amortized cost are assessed for impairment on an annual basis at the end of the fiscal year if there are indicators of impairment. If there is an indicator of impairment, the Hospice 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 carrying value of the financial asset is reduced to the highest of the present value of the expected cash flows, the amount that could be realized from selling the financial asset or the amount the Hospice expects to realize by exercising its right to any collateral. If events and circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improvement, not exceeding the initial carrying value.

The Hospice does not hold any financial derivatives as at March 31, 2015. (g) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. A significant area requiring management estimates is the rates used for amortization of capital assets and deferred capital contributions. Actual results could differ from these estimates.

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CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

3. Investments: The short-term investment is comprised of a guaranteed investment certificate in the amount of $80,000 bearing interest rate at 1.5% per annum and maturing March 2016. Non-current investments are comprised of four guaranteed investment certificates in the combined amount of $320,000 with interest rates ranging from 1.7% per annum to 2.1% per annum and maturity dates from March 2017 to March 2020.

4. Capital assets:

Cost Operating Fund: Vancouver Automotive $ Building Computer software Hospice equipment Office equipment and furniture

Abbotsford Automotive Dave Lede House (note 14) Hospice equipment Office equipment and furniture Garden Total Operating Fund Garden fund: Land Land improvements Garden equipment

Accumulated amortization

63,178 $ 5,063,802 367,535 498,492 776,809 6,769,816

58,254 $ 2,701,010 340,195 369,082 545,291 4,013,832

2015 Net book value

4,924 $ 2,362,792 27,340 129,410 231,518 2,755,984

2014 Net book value

7,035 2,444,335 133,858 219,864 2,805,092

96,483 12,006,302 221,800 214,200 16,436 12,555,221

17,773 592,448 51,673 32,991 694,885

78,710 11,413,854 170,127 181,209 16,436 11,860,336

11,760,892 199,676 86,495 12,047,063

19,325,037

4,708,717

14,616,320

14,852,155

925,001 346,893 43,351 1,315,245

178,430 35,420 213,850

925,001 168,463 7,931 1,101,395

925,001 175,482 9,914 1,110,397

$ 20,640,282 $

4,922,567 $ 15,717,715 $ 15,962,552

5. Loan payable: During the year, the Hospice negotiated a reduction of its available line of credit from $3,800,000 to $1,000,000 in accordance with its financing requirements. The line bears interest at prime less 0.25%. During the year the balance of the loan was repaid.

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CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

6. Obligations under capital lease: The Hospice has financed certain office furniture and other equipment by entering into a capital leasing arrangement. Capital lease repayments are due as follows: 2015 Year ending March 31: 2015 2016 2017 Total minimum lease payments

$

34,834 17,418 52,252

2014

$

34,834 34,834 17,418 87,086

Less amount representing interest at 2.8% Present value of net minimum capital lease payments

1,166 51,086

1,943 85,143

Current portion of obligations under capital leases

34,057

34,057

$

17,029

$

51,086

7. Deferred contributions: Changes in deferred contributions are as follows:

Amounts received: Donations

2015

2014

$ 1,841,841

$ 4,798,416

581,188 26,396

336,927 156,050

1,232,642 1,840,226

4,532,996 5,025,973

Less: Amounts recognized as revenue Transferred to deferred capital contributions Transferred to deferred capital contributions, Abbotsford Project

Decrease during the year

1,615

Deferred contributions, beginning of year

(227,557)

248,212

Deferred contributions, end of year

$

249,827

475,769 $

248,212

Included in deferred contributions is $120,688 (2014 - $100,878) of unspent contributions specifically designated for the purchase of capital assets for the Hospice.

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CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

8. Deferred capital contributions: Deferred capital contributions represent unamortized external funding restricted and used for the purchase of capital assets. Unamortized amounts, which will be recognized as revenue in future periods, are as follows: 2015

2014

Balance, beginning of year Capital contributions Amount amortized to revenue

$ 11,532,608 1,259,038 (618,481)

$ 7,015,569 4,689,046 (172,007)

Balance, end of year

$ 12,173,165

$ 11,532,608

9. Net assets invested in capital assets: Net assets invested in operating fund capital assets are calculated as follows: 2015 Capital assets, net of accumulated amortization Amounts funded by deferred capital contributions Amounts funded by obligations under capital lease

2014

$ 14,616,320 (12,173,165) (51,086)

$ 14,852,155 (11,532,608) (85,143)

$ 2,392,069

$ 3,234,404

Change in operating fund net assets invested in capital assets is calculated as follows: 2015 Deficiency of revenue over expenses: Amortization of deferred capital contributions Amortization of capital assets

Investment in capital assets: Purchase of capital assets Current and prior years amounts funded by deferred capital contributions Amounts funded by obligations under capital lease Repayment of obligations under capital lease

$

618,481 (747,347)

$

172,007 (436,952)

$

(128,866)

$

(264,945)

$

511,512

$ 4,645,792

(1,259,038) 34,057 $

10

2014

(713,469)

(4,689,046) (85,143) $

(128,397)

CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

10. Commitments: (a) Lease agreement on property: On April 6, 1993, Canuck Place entered into a long-term lease agreement with the City of Vancouver on a property known as “Glen Brae”. The property is being used for the purpose of housing and operating a children’s hospice known as “Canuck Place” and is separate from, but adjacent to, property owned by the Garden Fund. The initial term of the lease is twenty-five years and is renewable at the option of Canuck Place for a further two ten-year terms and one five-year term. The Hospice’s lease obligation is $1 for the entire term. In addition, the Hospice will be responsible for the maintenance of Canuck Place according to City of Vancouver’s bylaws governing heritage sites. Due to the difficulty in determining the fair value of this lease, no amount has been recorded for the difference between fair value and the amount paid. (b) Office equipment: The Hospice leases certain premises and office equipment under operating leases expiring in years up to fiscal 2018. Minimum lease payments required are as follows: Year ending March 31: 2016 2017 2018

$

179,854 175,354 175,354

$

530,562

11. Financial instruments: (a) Liquidity risk: Liquidity risk is the risk that the Hospice will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Hospice manages its liquidity risk by monitoring its operating requirements. The Hospice prepares budget and cash forecasts to ensure it has sufficient funds to fulfill its obligations. A portion of cash and cash equivalents is segregated in a separate bank account by board policy as an operating reserve. (b) Credit risk: Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. The Hospice is exposed to credit risk with respect to the accounts and physician billings receivable. The Hospice assesses, on a continuous basis, accounts and physician billings receivable and provides for any amounts that are not collectible in the allowance for doubtful accounts.

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CANUCK PLACE CHILDREN’S HOSPICE Notes to Financial Statements (continued) Year ended March 31, 2015

12. Related party: The Foundation is incorporated under the Society Act (British Columbia) and is registered as a public foundation under the Income Tax Act. The Foundation is an organization that shares common directors with Canuck Place Children’s Hospice. The Foundation manages, on behalf of Canuck Place, endowed gifts received and amounts transferred from Canuck Place. For the year ended March 31, 2015, the Foundation had total assets and net assets of $6,070,999 (2014 $6,021,990), total revenue of $230,728 (2014 - $2,001,848) and total expenses of $38,980 (2014 - $21,980), excluding transfers to the Hospice of $ 142,738 (2014 - $130,000). For the year ended March 31, 2015, the Hospice transferred nil (2014 – $1,800,000) to the Foundation. The Foundation makes annual disbursements to the Hospice in accordance with the CRA disbursement quota.

13. Subsequent event: Subsequent to year end, the Hospice received $3 million of operating funding from the Province of British Columbia Ministry of Health. This funding is intended for operations over the next year commencing April 1, 2015.

14. Dave Lede House Construction and MAC Campus of Care: In order to facilitate a lease agreement with the City of Abbotsford, three Societies formed a corporate entity registered in BC under the name MAC Campus of Care Abbotsford Ltd. (MAC).

Each of Canuck Place and the other two Societies, Abbotsford Hospice Society and Communitas Supportive Care Society, hold one-third of the shares of MAC. Through MAC, Canuck Place, operating as the Dave Lede House, along with its two equal partners, has entered into an agreement with the City of Abbotsford to hold the leased land on which the Dave Lede House has been constructed. The land is leased for an amount of $10 per year for 99 years. Each of the three Societies has or is in the process of constructing its own facility on the site at its own cost. The cost of common site improvements is being shared among the three Societies in accordance with a coowner’s agreement.

Canuck Place received occupancy for the Dave Lede House on December 24, 2013. The shared site works are still under construction and the estimated remaining costs for construction, excluding furniture and equipment, are $259,000.

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