Celebrating Sixty Years
VISION & MISSION STATEMENTS
VISION Co-operatives and credit unions within Nova Scotia will be part of a strong, proactive provincial co-operative movement which coordinates its efforts to ensure that they continue to provide for a dynamic and creative presence in local communities in the province, capable of addressing their community’s needs, challenges, and development into the future.
MISSION As an organization established to ensure that co-operatives and credit unions continue to provide for a dynamic and creative presence in local communities in Nova Scotia, the Nova Scotia Co-operative Council is committed to: Bringing all types of co-operatives together to form a strong co-operative movement in Nova Scotia Encouraging the development of a ‘co-operative identity’ among the public in Nova Scotia Playing an active role in promoting, supporting, and developing new co-operative enterprises across all sectors and industries in Nova Scotia Having an organizational structure that will provide for participation, communication, and active leadership within the co-operative sector Representing the co-operative sector’s interests in providing a strong advocacy role with municipal, provincial, and federal governments, with respect to government policy and legislation, or any other matters affecting co-operatives and credit unions Creating alternative finance programs and instruments that support co-operative community development opportunities Ensuring innovation opportunities are identified and pursued within the co-operative sector
Celebrating Sixty Years
Celebrating Sixty Years
Celebrating Sixty Years
PRESIDENT’S REPORT
Dear Fellow Co-operators: Happy 60th Anniversary! On behalf of your board of directors, I am pleased to present to you this accountability report for the 60th year of operation of the Nova Scotia Co-operative Council. It has been an incredible 60 year journey, and as we reflect back there is much to be proud of. The co-operative sector has made very significant contributions to the economy of Nova Scotia, and in many communities, the local co-operative and credit union is the only economic game in town. From a pure business perspective, the numbers are impressive. Nova Scotia co-operatives are worth more than $5 billon; we cross every industry and sector, and employ more than 7,000 Nova Scotians. More than a tool or an organizational technique, a co-operative business model is really a process that allows ordinary people to shape humane, democratic, economically strong and prosperous communities. Our 60 years of success belongs to the thousands of volunteers, management and staff of Nova Scotia’s 400 co-operatives, who have made many sacrifices to create a strong and vibrant “business system”, with impressive material and capital assets. Today, we applaud you all! As a volunteer organization with scarce resources, the Nova Scotia Co-operative Council itself has weathered the tides of 60 years. Today, we have a very solid organization, thanks to the prudent management of our resources, our mandate and our image. The Council is fortunate to have a board of directors who are committed and take their fiduciary responsibilities seriously. Your board held five regularly scheduled board meetings this year, in addition to several executive and committee meetings and a joint board/management planning session. In addition, the board engaged in two governance training sessions (the role of audit committees and succession planning), as well as continued with our comprehensive governance planning work. I am delighted to report that in 2008 the Council received the Canadian Co-operative Association’s national award for “Excellence in Co-operative Governance”. In presenting the award, CCA’s President, Dave Sitaram, indicated that co-operatives across Canada can learn a lot from the governance work of the NSCC. This award is a testament to this board, who work diligently on governance issues at each and every board meeting. Several other highlights for the year include: The approval of changes to the Nova Scotia Co-operative Association’s Act that will allow for the:
Celebrating Sixty Years
provision for preferred shares for all co-operatives issuance of tax deferred co-operative shares This is an important change as it provides yet another opportunity for co-operatives to raise and/or keep capital, and it removes a competitive disadvantage that co-operatives have faced for many years. The selection of our 2008 Distinguished Co-operator Award recipients is always a highlight for the board. This award, presented annually, recognizes the significant contributions that individuals in both the co-operative and credit union sector have made to the co-operative movement. I am delighted to announce that the 2008 recipients are Raymond Doucet, nominated by Cheticamp Co-operative, and Joe MacNeil nominated by East Coast Credit Union. Raymond and Joe have collectively given over seven decades of support and service to the co-operative movement. Today we say a big “thank you” to each of them! The ongoing support of our co-operative and credit union friends, and the productive relationships that we enjoy with our various government partners, continues to be paramount to our success. Thanks to all of you for your support and involvement and sharing in our vision. As for the nuts and bolts of our activities, I encourage you to read ahead to the report of our CEO, Dianne Kelderman. No doubt, you will be impressed with results and achievements of the past year. Finally, let me close with a heartfelt thank you to all of you who supported me in many ways, during my unexpected illness this past year. It was a trying time for me and my family, but the prayers, visits, thoughts, calls and cards from our co-operative family pulled us through. I am forever grateful. To our board of directors: thank you for the extra work you did in my absence, and for the energy, commitment and enthusiasm you bring to this organization. It is a pleasure to be part of your volunteer efforts. To our management and staff: the expectations that you set for your own performance, your enthusiasm, and commitment to success are very evident in the results you continue to achieve for the Council. You represent “the best of the best” and we are fortunate to have each of you on our team. To all of you ~ our members: our success is your success! Thank you for continued support and commitment. Here’s to another 60 great years! Respectfully,
Marinus Van de Sande President
The Acadians of Cheticamp were early users of the co-op model and had organized a fisheries co-operative by 1915
A co-operative store was opened in Sydney in 1903, at the suggestion of W. L. MacKenzie King.
1928 - St. FX sets up adult education Extension Department and asks Father Moses Coady to be the director.
The Nova Scotia Co-operative Union was founded in 1944. It would later become the Nova Scotia Co-operative Council.
Scotian Gold Co-operative Limited, Eastern Canada’s largest apple packing and storage operation.
Halifax had its first co-op store in 1870.
The Atlantic Filmmakers Co-operative bills itself as Canada’s oldest English speaking film co-op. It opened its doors in 1974.
Ten co-operative businesses or credit unions were among the top 100 biggest businesses in Atlantic Canada in 2008.
Celebrating Sixty Years
REPORT FROM THE CEO
Wow! What a year it has been! The Nova Scotia Co-operative Council is celebrating a significant milestone this year ~ our 60th anniversary. We share this milestone with a number of other remarkable events that will surely make 2008 - 2009 go down in history. The Canadian Co-operative Association turns 100 this year, and Credit Union Central of Nova Scotia turns 75. We saw the inauguration of the first black President of the United States, a world-wide recession, pirogue of the Canadian Parliament, approval to create an Atlantic Credit Union Central, and a provincial election in Nova Scotia. This was not a year that we will soon forget. “Hard times bring out the best in people”, Winston Churchill wrote, “and the worst”. The co-operative sector has been known to shine in hard times. At a time when the economy is slowing down, the co-operative sector continues to be stable and in many areas, is experiencing growth. We saw 5.6 percent (or $80 million) in growth overall this year, and employment increased by two (2) percent. Membership grew by almost three (3) percent. More and more, Nova Scotians are seeing the value of owning their own enterprises and their own financial institutions. At a time when Nova Scotia is exporting our young people at record numbers, Nova Scotia’s co-operatives and credit unions launched an aggressive youth strategy that is seeing young people actively engaged in leadership development, internships, employment opportunities, and participating on boards of directors with a youth voice and perspective. At a time when banks are retreating from rural communities, our credit unions are stable, growing, and quickly becoming the number one choice for commercial and personal financing across Atlantic Canada. At a time when we are exporting nearly $1.6 billion a year in RRSP dollars out of Atlantic Canada, over $600 million from Nova Scotia alone, with less than four (4) percent of it coming back in the form of re-investment; co-operatives and credit unions are providing attractive options and mechanisms for Nova Scotians to keep their hard earned dollars at home, at work and in our communities where it belongs!! At a time when there is a global concern for the environment, co-operatives and credit unions are leading the way with green energy initiatives and specialized financing for hybrid vehicles. At a time when our health care system is in a state of crisis, co-operatives and credit unions have stepped up to the plate and launched Canada’s first and only online health care support clinic, Connecting People for Health Co-operative Limited.
Celebrating Sixty Years
The Nova Scotia Co-operative Council, as the umbrella economic development agency for co-operatives and credit unions, has been at the forefront; encouraging, stimulating, agitating, and pushing these new developments. Our eye is squarely on the future and on our innovation agenda. Some highlights for the year include: 14 new co-operatives were incorporated during the year, bringing the total number of co-operatives doing business in Nova Scotia to well over 400. This includes credit unions and our regional and national co-operative enterprises as well. A partnership agreement was signed with PRAXES Emergency Specialists (one of Nova Scotia’s top 50 fastest growing companies) to bring our Connecting People for Health venture to fruition. We can expect to see enhanced health care services available to our members early in 2010. In partnership with our co-operatives, we led the development of several new Community Economic Development Investment Funds (CEDIFs) during the year, with local investment exceeding one million dollars. Our Small Business Loan Guarantee Program, in partnership with the Province and our local credit unions, now exceeds $27 million in financing disbursed to over 400 business clients. These clients have created and/or maintained 2,808 jobs, which have had a significant impact on our economy. We are pleased to report that loan losses in this program are less than three (3) percent. Our youth initiative, which is resulting in a meaningful connection between young people and their local co-operatives and/or credit unions, has been now rolled out across all regions of Nova Scotia and has been a huge success. More than 50 young people have participated in our leadership development weekends, and are actively engaged in their local community. We launched in January 2009, for the very first time, a co-op curriculum in the business school at the Nova Scotia Community College, Truro Campus, with 14 young people completing the first course. We hope to replicate this program to other community college locations across the province. Likewise, we worked with the Nova Scotia Community College, Waterfront Campus, to place young management and accounting students in co-ops and credit unions for their work terms this year. These young people are bringing fresh ideas and skills into our businesses, and we hope they will become our employees in the future. The Council worked with fifty-nine of our existing co-op members this year, to ensure they continue to grow and prosper. Support included governance training, legal and by-law support, marketing, finance, business planning and advocacy. We signed a partnership agreement with the Office of Immigration, which has resulted in over $2 million of financing for immigrant entrepreneurs being made available through our credit union network. As part of our anniversary activities this year, we contracted Corporate Research Associates to conduct an independent public opinion poll for us, to gauge Nova Scotia’s knowledge and perceptions of
Celebrating Sixty Years
co-operatives and the co-operative economy. We were thrilled with the results, which showed that the co-operative sector has a very positive and trusting brand, and is seen as part of the Nova Scotia fabric, particularly in rural communities. It also showed that the sector is poised for growth, as we are well positioned to meet community needs and opportunities. A series of forums and roundtables were held during the year with co-op leaders, community and government partners, to explore opportunities, plan for the future and deal with emerging pressing community needs. We are particularly pleased that we were successful this year in securing a change to the Nova Scotia Co-operative Associations Act, which now allows for the issuance of preferred shares for all co-operatives registered in Nova Scotia. This is an important change for the sector, as it allows co-operatives to raise needed capital in new ways, keep existing capital in the business, and it removes a competitive disadvantage that co-operatives have faced for many years. We launched this year, a new communication and public relations strategy, including a new website, member communiqués, and quarterly reporting. The Nova Scotia Co-operative Council is ending its 60th year of operations on a very solid foundation. We are financially strong, committed to delivering measurable results, have earned a positive and credible image and profile, and are focused on partnerships and accountability. We have achieved a significant amount when one considers the limited resources, both human and financial. To that end, I owe a deep and heartfelt thanks to our staff who regularly go beyond the call of duty. Andrea, Frank, Linda, Paul, Jonathan, Mark and Meghan; you are a super team and the Council is lucky to have each of you in its employ. To the board of directors; you are the stewards of the co-op history, brand, and its future. You do a remarkable job as volunteers, and I greatly appreciate your sage advice, counsel, and guidance. Thank you for your trust in the NSCC team. To you, our partners and members; you are the reason we go about our work with such vigor everyday. Our success is your success. Thank you for your continued support! Happy Anniversary! Respectfully,
Dianne Kelderman, M.CED, M.Ed Chief Executive Officer
Scotsburn is one of the oldest co-ops in the province. The farmers in Pictou County formed the Scotburn Creamery in 1900.
Scotsburn operates five processing facilities and 11 distribution centres in Nova Scotia.
The Nova Scotia Co-operative Council has represented co-ops and credit unions since its inception.
Celebrating Sixty Years
DISTINGUISHED CO-OPERATOR AWARD WINNERS
G. Joseph MacNeil Nominated by East Coast Credit Union Limited Joseph MacNeil has made significant contributions to the co-operative and credit union sector as he has faithfully served many co-operatives and credit unions for over 60 years, dedicating his time, talent, and energies to the movement. He contributed to the betterment of his community by serving as a board member and president of River Bourgeois Credit Union, a board member of Credit Union Central of Nova Scotia, chair of First Richmond Credit Union, first vice-president and board member of East Coast Credit Union, president of St. Peters Co-operative, a director of League Savings and Mortgage, and as a board member of the Nova Scotia Co-operative Council; all the while spending countless hours volunteering with numerous community organizations.
Raymond Doucet Nominated by Cheticamp Co-operative Limited Raymond Doucet has made significant contributions to the co-operative and credit union sector as he has faithfully served many co-operatives and credit unions for over 40 years, dedicating his time, talent, and energies to the movement. He contributed to the betterment of his community by serving as a manager for Cheticamp Co-operative, a founding member, board member, vice-president, and president of Le Conseil Coopératif Acadien de la N-É, president of Cheticamp Fish Co-operative, Credit Committee member of La Caisse Populaire Acadienne, Manager Advisory Committee member for Co-op Atlantic, and as a board member of the Nova Scotia Co-operative Council; all the while spending countless hours volunteering with numerous community organizations.
The government of Nova Scotia has been involved with co-operative development since the early 1900’s.
Nova Sotian R. J. MacSween was Canada’s first Inspector of Co-operatives
Early co-ops marketed products such as fruits, wool, livestock and poultry.
R. J. MacSween had a hand in launching 250 co-op businesses in Nova Scotia.
Celebrating Sixty Years
PROFILE OF A MEMBER CO-OPERATIVE
EduNova Co-operative Limited
In the middle of the desert, not far from EduNova’s branch office in Abu Dhabi, there is a road sign that warns travelers to “beware of road surprises”. EduNova staff like this sign and often refer to “road surprises” in everyday conversations. The road sign has come to symbolize EduNova’s journey in its fourth year, as the team works to manage the co-operative’s dramatic growth. EduNova Co-operative Limited was registered under the Co-operative Associations Act in 2004 and officially opened its doors in October 2005. With 17 founding members, the co-op was established to help Nova Scotia based education and training providers export their services to international markets. The concept of a co-operative exporting alliance in the education and training sector was piloted from 1997 - 2002 and the success of this pilot is what helped to create the foundation for EduNova.
In just over three years, EduNova has grown to include 35 members and associates, four office sites (two in Nova Scotia and two in the United Arab Emirates), 51 employees, and a multi-million dollar budget. In a time of economic crisis, the education and training export sector is growing. Demand for skilled workers to rebuild economies is high and EduNova, using its extensive international network, is sourcing more international partnership opportunities than ever before for members. And those road surprises? Well, EduNova has learned to expect that everything will not go smoothly during a time of rapid organizational growth. Anticipating road surprises has enabled EduNova to continue its journey, better equipped to manage risks and allow for detours, while keeping its sights set upon its destination.
Celebrating Sixty Years
In addition, EduNova has also learned to imagine exactly what road surprises might be ahead. Working with members, associates, and partners, EduNova’s team has developed many successful templates for international collaboration that have resulted in an increase in international activity for members and associates in regions ranging from Central and South America, the Caribbean, GCC (Gulf Cooperation Council) countries and into Asia. The number of in-country partners essential to EduNova’s international work has increased significantly this past year and these strong relationships are critical to supporting and guiding the co-operative in its overseas journeys. While EduNova continues to look to experienced Canadian partners such as the Nova Scotia Co-operative Council, Atlantic Canada Opportunities Agency (ACOA), the Province of Nova Scotia, Nova Scotia Business Inc, and the Canadian government for advice and support, the co-operative has brought in local expertise to help navigate the road surprises that will be encountered as the organization continues to grow. Notably, EduNova has been working closely with Grant Thornton LLP, one of the world’s leading organizations of independently owned and managed accounting and consulting firms, to strengthen its complex accounting system and to assist EduNova in maintaining audit ready books that ensure accuracy in accounting and complete transparency. Wickwire Holm, the Halifax based law firm with over 300 years of legal expertise, has taken an active and supportive role in helping manage EduNova’s UAE based School Improvement Project. Scotiabank, with over 2,000 branches in 50 countries, and the Emirates Islamic Bank in Abu Dhabi both have assisted EduNova in addressing the financial road surprises this past year. And finally, the talented drivers employed by EduNova and the dedicated navigators on EduNova’s board of directors have collectively helped to ensure that EduNova has maintained its course. Watching for road surprises can be exciting. Not knowing what to expect makes the journey interesting. Ultimately, EduNova Co-operative is better equipped for whatever trips 2009 might bring. Thanks to all involved for making the 2008 - 2009 journey possible.
Michael Whalen Chair, Board of Directors
Ava Czapalay President & CEO
Celebrating Sixty Years
BOARD OF DIRECTORS
Marinus Van de Sande President
Eric Meek Vice President
Irene Caswell Secretary
Donald Gunn Treasurer
Neal Conrad NS Economic & Rural Development
Norma Tomiczek Director Co-op Atlantic
Earl Goski Director Credit Union Central of NS
Don Black Director
Marion Garlick Director
Donna LeBlanc Director
Alvin Martell Director
Mike Oulton Director
Carol Pettigrew Director
Celebrating Sixty Years
DEVELOPMENT TEAM
Dianne Kelderman CEO
Frank Henderson Director of Finanace
Paul Crane Director of Co-operative Development
Mark Sparrow Business Development Officer
Jonathan McClelland Business Development Officer
Andrea Jackson Office Manager
Linda Johnson Finanace Assistant
Meghan Farrell Youth Coordinator
The Co-operators is the largest, wholly Canadian owned multi-product insurance company, with assets exceeding $6.5 billion.
Nova Scotia’s first co-op began in 1861. Miners started a co-op in Stellarton. It had 30 members and a capital pool of $1,000.
There are 34 credit unions in Nova Scotia with 81 locations and 66 ATMs.
The province’s first housing co-op was known as Tompkinsville. The cost for the project was just $32,000.
Celebrating Sixty Years
MANAGEMENT’S RESPONSIBILITY FOR REPORT
Preparation of the financial statements accompanying this annual report and the presentation of all other information in the report is the responsibility of management. The financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles and reflects management’s best estimates and judgments. All other financial information in the report is consistent with that contained in the financial statements. The board of directors oversees management in carrying out its responsibilities for financial reporting and systems of internal control. The board of directors meets regularly with financial management personnel and annually with external auditors to satisfy itself as to the reliability and integrity of financial information and the safe-guarding of assets. The board of directors reviews and approves the annual financial statements to be issued to members. The external auditors have full and free access to the board of directors.
Dianne Kelderman, CEO May 13, 2009
Donald Gunn, Treasurer May 13, 2009
Among the earliest and most enthusiastic supporters of the movement were farmers who formed fruit and egg co-ops as a way to bolster their markets. Valley apple growers, tired of hidden ‘freight charges’ created by unscrupulous shipping dealers, gathered together in 1907 to form the Berwick Fruit Company. The company’s business grew ten-fold in the first year and within five years 40 co-operative fruit businesses were up and running.
Auditors’ report
Grant Thornton LLP Suite 400 35 Commercial Street, PO Box 725 Truro, NS B2N 5E8 T (902) 893-1150 F (902) 893-9757 www.GrantThornton.ca
To the Board of Directors of the Nova Scotia Co-operative Council Limited We have audited the non-consolidated balance sheet of the Nova Scotia Co-operative Council Limited at March 31, 2009 and the non-consolidated statements of revenue, expenses and surplus and cash flows for the year then ended. ese non -consolidated financial statements are the responsibility of the Co-operative's management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. ose standards require that we plan and perform an audit to obtain reasonable assurance whether the non-consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the non-consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. As explained in Note 2, the Co-operative did not consolidate the financial statements of its subsidiary co-operative in these financial statements. In our opinion, except for the non-compliance to consolidate, these non-consolidated financial statements present fairly, in all material respects, the financial position of the Nova Scotia Cooperative Council Limited as at March 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
Truro, No va Scotia May 6, 2009
Chartered Accountants
Audit • Tax • Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
Nova Scotia Co-operative Council Limited
Year ended March 31
Non-consolidated statement of revenue, expenses and surplus
2009 Revenue Fees for service Membership dues Development contributions Government Other Interest income Miscellaneous Expenses Administrative Bad debts Communications Donations Fees, salaries and benefits Furniture, equipment and supplies Insurance Office and sundry Professional fees Rent Total administrative costs Governance costs Annual General Meeting Directors Total governance costs Development costs Conferences and training Consulting and fees Marketing and promotion Travel Total development costs Total expenses Excess of revenue over expenses Surplus, beginning of year As previously reported Adjustment of prior year (Note 5) As restated Excess of revenue over expenses Surplus, end of year $ $ 213,883 $ 22,925 200,000 48,151 126 15,075 500,160
2008 124,554 23,528 456,025 48,009 599 12,702 665,417
5,614 1,634 116,233 9,007 2,770 2,705 13,057 12,332 163,352 41,094 38,471 79,565 2,871 197,717 24,347 12,099 237,034 479,951 20,209 $
2,714 9,818 7,834 108,249 9,812 2,021 4,159 7,005 11,005 162,617 27,504 27,005 54,509 1,119 397,001 6,724 9,531 414,375 631,501 33,916
$
$
211,936 $ (12,031) 199,905 20,209 220,114 $
165,989 165,989 33,916 199,905
See accompanying notes to the non-consolidated financial statements
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Nova Scotia Co-operative Council Limited
Non-consolidated balance sheet
March 31 2009 2008
Assets Current Cash and cash equivalents $ Receivables Due from: Connecting People for Health Co-operative Limited Healthwise Holdings Co-operative Limited Investing in Nova Scotia Enterprises Co-operative Limited Subsidiary Prepaids Investment in subsidiary, at cost Other investments, at cost
132,071 $ 122,493 46,531 4,204 10,057 35,000 30,417 380,773 4,000 3,848 388,621 $
45,707 111,109 13,827 60,000 11,065 241,708 4,000 5,848 251,556
$
Liabilities Payables and accruals Deferred revenue Equity General reserve Surplus
$
61,957 $ 96,550 158,507 10,000 220,114 230,114 388,621 $
32,925 8,726 41,651 10,000 199,905 209,905 251,556
$
Commitment (Note 3)
On Behalf of the Board Director Director
See accompanying notes to the non-consolidated financial statements
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Nova Scotia Co-operative Council Limited
Non-consolidated statement of cash flows
Year ended March 31 Increase (decrease) in cash and cash equivalents Operating Excess of revenue over expenses Change in non-cash operating working capital Receivables Prepaids Payables and accruals Deferred revenue Financing Advances from (to): Connecting People for Health Co-operative Limited Healthwise Holdings Co-operative Limited Investing in Nova Scotia Enterprises Co-operative Limited Subsidiary Investing Increase (decrease) in investments Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year $ $ 20,209 $ (11,384) (19,352) 29,032 87,824 106,329 33,916 (84,738) (5,338) 18,243 (52,683) (90,600) 2009 2008
(46,531) (4,204) 3,770 25,000 (21,965) 2,000 86,364 45,707 132,071 $
(12,141) (15,215) (27,356) (52) (118,008) 163,715 45,707
See accompanying notes to the non-consolidated financial statements
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Nova Scotia Co-operative Council Limited
March 31, 2009 1.
Notes to the non-consolidated financial statements
Nature of operations
The Nova Scotia Co-operative Council Limited is incorporated and operates under the Nova Scotia Co-operative Associations Act as a not for profit organization. The Co-operative provides economic development expertise and services to the Nova Scotia co-operative and credit union sector.
2.
Summary of significant accounting policies
Financial statement presentation These financial statements are prepared on the basis of accounting for the investment in the subsidiary co-operative using the cost method instead of on a consolidated basis, and in this respect only are not, and are not intended to be, in accordance with generally accepted accounting principles. The basis of accounting is considered appropriate as the beneficial users have access to all pertinent information concerning the resources and results of the group and have consented to the preparation of non-consolidated financial statements for management and statutory purposes. As these financial statements have not been prepared for general purposes, some users may require further information. Consolidated financial statements have also been prepared. Use of estimates The preparation of 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 and disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenue and expenses during the year. Actual results could differ from those reported. Cash and cash equivalents Cash and cash equivalents include cash on hand and balances with credit unions. Revenue recognition Fees for services are recorded as revenue in the year in which the revenues are earned. Membership dues are recorded as revenue when received. The Co-operative follows the deferral method of accounting for contributions. Grants received from various funding agencies are matched to related expenses. Any resulting excess is recorded as deferred revenue until the related expense is incurred.
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Nova Scotia Co-operative Council Limited
March 31, 2009 2.
Notes to the non-consolidated financial statements
Summary of significant accounting policies (continued)
Furniture and equipment Significant equipment additions greater than $2,500 and have extended useful lives are recorded at cost as capital assets. Any small equipment additions under the $2,500 threshold and with limited useful lives are expensed. Rates and bases of depreciation of furniture and equipment are recorded over their estimated lives at the following rates: Computer equipment Other equipment and furniture 3 years, straight-line 5 years, straight-line
Financial instruments The Co-operative’s financial instruments include cash and cash equivalents, receivables, due from related parties, investments and payables and accruals. Unless otherwise noted, it is management’s opinion that the Co-operative is not exposed to significant interest, currency or credit risks arising from financial instruments. The fair market value of these financial instruments approximate their carrying values due to their short term nature. The Co-operative classifies its financial instruments as held for trading, other than long term investments, which are classified as available for sale and loans receivable which are classified as loans and receivables. Financial instruments classified as held for trading are measured at fair value on each reporting date which approximates carrying value. Long term investments are subsequently measured at cost. Unless otherwise noted, the fair values of the Co-operative’s assets and liabilities approximate their carrying values. Income tax status Nova Scotia Co-operative Council Limited is a non-profit organization, which is exempt from income taxes under Section 149(1) of the Canadian Income Tax Act. Recent accounting pronouncement CICA Section 4470, “Disclosure of Allocated expenses by not for profit organizations” establishes disclosure standards for not for profit organizations that classifies its expenses by function and allocates its expenses to a number of functions to which the expenses relate. This standard is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2009 and is applicable to the Co-operative’s 2010 fiscal year. The Co-operative does not expect that the adoption of this standard will have a significant impact on its financial statements.
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Nova Scotia Co-operative Council Limited
March 31, 2009 3.
Notes to the non-consolidated financial statements
Commitment
The approximate minimum lease payment for the rental of premises for a year to year lease ending October 31, 2009 totals $7,700.
4.
Related party transactions
During the year, the Co-operative conducted certain transactions with related parties: (a) (b) received management fees at an agreed amount of $60,000 (2008 - $60,000) from its subsidiary Co-operative, Equity for Nova Scotia Businesses Co-operative Limited; received $116,864 (2008 - $85,000) for reimbursement of expenses, on behalf of Investing in Nova Scotia Enterprises Co-operative Limited, a co-operative in which it holds a minority interest. The $116,864 (2008 - $85,000) has been applied against the Cooperative’s administrative expenses; paid professional fees of $4,204 on behalf of Healthwise Holdings Co-operative Limited, a co-operative in which it holds a minority interest; and paid business expenses of $46,531 on behalf of Connecting People for Health Cooperative Limited, a co-operative in which it holds minority interest.
(c) (d)
5.
Adjustment of prior year
As a result of unrecorded liabilities at the end of March 31, 2008, for the Youth Alliance Camp and for a donation for Making Waves – Special Edition, an adjustment of prior year has been recorded to reflect these liabilities and expenses in the appropriate period. This has resulted in an increase of expenses and payables and accruals of $12,031 for fiscal 2008 with a corresponding decrease in opening surplus for the same amount for fiscal 2009.
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Auditors’ report
Grant Thornton LLP Suite 400 35 Commercial Street, PO Box 725 Truro, NS B2N 5E8 T (902) 893-1150 F (902) 893-9757 www.GrantThornton.ca
To the Board of Directors of the Nova Scotia Co-operative Council Limited We have audited the consolidated balance sheet of the Nova Scotia Co-operative Council Limited at March 31, 2009 and the statements of revenue, expenses and deficit and cash flows for the year then ended. ese consolidated financial statements are the responsibility of the Co-operative’s management. 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. ose standards require that we plan and perform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Nova Scotia Co-operative Council Limited as at March 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
Truro, Nova Scotia May 6, 2009 Chartered Accountants
Audit • Tax • Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
Nova Scotia Co-operative Council Limited
Year ended March 31
Consolidated statement of revenue, expenses and deficit
2009 Revenue Fees for service Membership dues Development contributions Government Other In-kind contributions Investment income Miscellaneous Expenses Administrative Advertising Bad debts Communications Donations Fees, salaries and benefits Furniture, equipment and supplies Insurance Office and sundry Professional fees Rent Total administrative costs Governance costs Annual General Meeting Directors Total governance costs Development costs Conferences and training Consulting and fees Loan guarantee (recovery) Marketing and promotion Provision for write-down of long term investments and loan receivables, net of recoveries Travel Total development costs Total expenses (Deficiency) excess of revenues over expenses Surplus, beginning of year As previously reported Adjustment of prior year (Note 8) As restated (Deficiency) excess of revenues over expenses (Deficit) surplus, end of year
2008
$
153,883 $ 22,925 200,000 48,151 14,238 24,649 15,075 478,921 14,238 5,614 1,634 116,233 9,007 2,770 2,795 13,057 12,332 177,680 41,094 38,471 79,565 2,871 197,717 24,347 42,559 12,099 279,593 536,838 (57,917) $
64,554 23,528 456,025 48,009 22,518 44,536 12,702 671,872 22,518 2,714 9,818 7,834 108,249 9,812 2,021 4,235 7,005 11,005 185,211 27,504 27,005 54,509 1,119 397,001 (12,500) 6,724 839 9,531 402,714 642,434 29,438
$
$
$
42,676 $ (12,031) 30,645 (57,917) (27,272) $
1,207 1,207 29,438 30,645
See accompanying notes to the consolidated financial statements
2
Nova Scotia Co-operative Council Limited
Consolidated balance sheet
March 31 2009 2008
Assets Current Cash $ Short term investments Interest receivable Receivables Due from: Connecting People for Health Co-operative Limited Healthwise Holdings Co-operative Limited Investing in Nova Scotia Enterprises Co-operative Limited Current portion of loans receivable Prepaids Loans receivable (Note 3) Investments, at cost (Note 4) Investment in Healthwise Holdings Co-operative Limited, at cost Other investments, at cost
135,824 $ 354,932 7,962 122,493 46,531 4,204 10,057 15,004 30,417 727,424 1,558 158,405 250,000 3,848 1,141,235 $
93,154 262,208 6,922 111,109 100,000 13,827 13,404 11,065 611,689 16,353 198,405 250,000 5,848 1,082,295
$
Liabilities Payables and accruals Deferred revenue Equity Equity contributions (Note 5) General reserve (Deficit) surplus
$
61,957 $ 96,550 158,507 1,000,000 10,000 (27,272) 982,728 1,141,235 $
32,924 8,726 41,650 1,000,000 10,000 30,645 1,040,645 1,082,295
$
Commitment (Note 6) On Behalf of the Board Director See accompanying notes to the consolidated financial statements Director
3
Nova Scotia Co-operative Council Limited
Consolidated statement of cash flows
Year ended March 31 Increase (decrease) in cash and cash equivalents Operating (Deficiency) excess of revenues over expenses Change in non-cash operating working capital Receivables Interest receivable Deferred revenue Prepaids Payables and accruals Financing Advances (to) from: Connecting People for Health Co-operative Limited Investing in Nova Scotia Enterprises Co-operative Limited Healthwise Holdings Co-operative Limited Investing Decrease (increase) in: Short term investments Long term investments, net of repayments and allowance Loans receivable, net of repayments and allowance Reduction of allowance for loan guarantees Net increase (decrease) in cash and cash equivalents Cash, beginning of year Cash, end of year $ $ (57,917) $ (11,384) (1,040) 87,824 (19,352) 29,033 27,164 29,438 (84,738) 7,118 (52,683) (5,338) 18,243 (87,960) 2009 2008
(46,531) 3,770 95,796 53,035
(12,141) (100,000) (112,141)
(92,724) 42,000 13,195 (37,529) 42,670 93,154 135,824 $
318,231 (197,052) (29,757) (12,500) 78,922 (121,179) 214,333 93,154
See accompanying notes to the consolidated financial statements
4
Nova Scotia Co-operative Council Limited
March 31, 2009 1.
Notes to the consolidated financial statements
Nature of operations
The Nova Scotia Co-operative Council Limited is incorporated and operates under the Nova Scotia Co-operative Associations Act as a not for profit organization. The Co-operative provides economic development expertise, services and alternative financing to Nova Scotia businesses.
2.
Summary of significant accounting policies
Principles of consolidation The financial statements reflect the consolidated financial position at March 31, 2009 and the consolidated results of operations for the year then ended of Nova Scotia Co-operative Council Limited and its wholly-owned subsidiary, Equity for Nova Scotia Businesses Co-operative Limited. Use of estimates Canadian generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management does not anticipate that actual results will differ materially from those estimates. Cash and cash equivalents Cash and cash equivalents include cash on hand and balances with credit unions. Revenue recognition Fees for services are recorded as revenue in the year in which they are earned. Membership dues are recorded as revenue when received. The Co-operative follows the deferral method of accounting for contributions. Grants received from various funding agencies are matched to related expenses. Any resulting excess is recorded as deferred revenue until the related expense is incurred. Investment income is recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. In-kind contributions are measured at fair value and are recorded as in-kind contributions with an offsetting advertising in-kind expense on the statement of revenue and expenses.
5
Nova Scotia Co-operative Council Limited
March 31, 2009 2.
Notes to the consolidated financial statements
Summary of significant accounting policies (continued)
Furniture and equipment Significant equipment additions greater than $2,500 and have extended useful lives are recorded at cost as capital assets. Any small equipment additions under the $2,500 threshold and with limited useful lives are expensed. Rates and bases of depreciation of furniture and equipment are recorded over their estimated lives at the following rates: Computer equipment Other equipment and furniture Investments – short term Investments are carried at the lower of cost or market. Long term investments Investments in common shares of business enterprises in which the Co-operative holds less than 20% interest and investments in preferred shares are recorded at cost. The Co-operative’s 24.3% investment in Healthwise Holdings Co-operative Limited is recorded at cost. The Co-operative does not exercise significant influence over Healthwise Holdings Cooperative Limited due to each shareholder having one vote per member authority regardless of the number or percentage of shares owned. Financial instruments The Co-operative’s financial instruments include cash, short term investments, receivables, due from related parties, loans receivable, investments and payables and accruals. Unless otherwise noted, it is management’s opinion that the Co - operative is not exposed to significant interest and currency risk arising from financial instruments. The Co-operative is exposed to financial risk that arises from the credit quality of the entities in which the Equity for Nova Scotia Businesses Co-operative Limited invests or provides loan services. Credit risk arises from the possibility that the entities will not fulfil their obligations to the Co-operative. Before engaging in providing investments or loans to entities, the Equity for Nova Scotia Businesses Co-operative Limited performs a credit risk evaluation. However, many of the Cooperative’s investments and loans are higher risk in nature which increases the concentration of credit risk. During the year, the Co-operative recorded a provision for potential investment and loan losses after an extensive review. Management feels that the carrying value of the investments and loans receivable approximate fair values due to the recorded provisions. 3 years, straight-line 5 years, straight-line
6
Nova Scotia Co-operative Council Limited
March 31, 2009 2.
Notes to the consolidated financial statements
Summary of significant accounting policies (continued)
Financial instruments (continued) The Co-operative classified its financial instruments as held for trading, other than long term investments, which are classified as available for sale and loans receivable which are classified as loans and receivables. Financial instruments classified as held for trading are measured at fair value on each reporting date which approximates carrying value. Long term investments are measured at cost and loans receivable are measured at amortized cost. Unless otherwise noted, the fair values of the Co-operative’s assets and liabilities approximate their carrying values. Income tax status Nova Scotia Co-operative Council Limited is a non-profit organization, which is exempt from income taxes under Section 149(1) of the Canadian Income Tax Act. Recent accounting pronouncement CICA Section 4470, “Disclosure of Allocated expenses by not for profit organizations” establishes disclosure standards for not for profit organizations that classifies its expenses by function and allocates its expenses to a number of functions to which the expenses relate. This standard is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2009 and is applicable to the Co-operative’s 2010 fiscal year. The Cooperative does not expect that the adoption of this standard will have a significant impact on its financial statements.
3.
Loans receivable
2009
2008
Due from various private companies, repayable in equal monthly instalments of principal of $50 to $400. Amount is net of an accumulated provision for losses of $12,098. Due from a private co-operative bearing interest at 12% with interest only payments of $100 per month with the principal balance due January 1, 2010. Less: current portion
$
6,562 $
19,757
$
10,000 16,562 15,004 1,558 $
10,000 29,757 13,404 16,353
7
Nova Scotia Co-operative Council Limited
March 31, 2009 3.
Notes to the consolidated financial statements
Loans receivable (continued)
Principal repayments in each of the next four years in accordance with the expected repayment terms are as follows: 2010 2011 2012 2013 2014 $ $ $ $ $ 15,004 3,159 3,000 3,000 1,997
4.
Long term investments
2009 238,000 $ 10,005 248,005 (89,600) 158,405 $
2008 238,000 10,005 248,005 (49,600) 198,405
Non-voting preferred shares held in private companies $ Common shares held in private co-operative, at cost Less: accumulated provision for investment losses $
The non-voting preferred shares held in private companies are redeemable with an entitlement to dividends.
5.
Equity contributions
2009
2008
Equity contributions represent specific development contributions received and an allocation of surplus by the Council which is to be used to provide equity investments for new start-ups and/or growth and expansion opportunities. These contributions are as follows: ACOA development contribution Credit Union Central of Nova Scotia development contribution Nova Scotia Co-operative Council surplus allocation $ 500,000 $ 100,000 400,000 1,000,000 $ 500,000 100,000 400,000 1,000,000
$
6.
Commitment
The approximate minimum lease payment for the rental of premises for a year to year lease ending October 31, 2009 totals $7,700.
8
Nova Scotia Co-operative Council Limited
March 31, 2009 7.
Notes to the consolidated financial statements
Related party transactions
During the year, the Co-operative conducted certain transactions with related parties: (a) received $116,864 (2008 - $85,000) for reimbursement of expenses, on behalf of Investing in Nova Scotia Enterprises Co-operative Limited, a co-operative in which it holds a minority interest. The $116,864 (2008 - $85,000) has been applied against the Co-operative’s administrative expenses; paid professional fees of $4,204 on behalf of Healthwise Holdings Co-operative Limited, a co-operative in which it holds a minority interest; and paid business expenses of $46,531 on behalf of Connecting People for Health Cooperative Limited, a co-operative in which it holds minority interest.
(b) (c)
8.
Adjustment of prior year
As a result of unrecorded liabilities at the end of March 31, 2008, for the Youth Alliance Camp and for a donation for Making Waves – Special Edition, an adjustment of prior year has been recorded to reflect these liabilities and expenses in the appropriate period. This has resulted in an increase of expenses and payables and accruals of $12,031 for fiscal 2008 with a corresponding decrease in opening surplus for the same amount for fiscal 2009.
9
In 1931 in Havre Boucher under the watchful eye of Dr. Moses Coady members built a lobster factory in the community within a year.
The first credit union in Nova Scotia opened in 1936 in Broad Cove.
Just Us! Coffee Roasters Co-op started Canada’s first fair trade coffee roaster.
Co-ops market over 60 percent of the value of agriculture production in the province.
Equity for Nova Scotia Businesses Co-operative Limited
ANNUAL REPORT 2008
Growing businesses, one idea at a time…
Celebrating Sixty Years
PRESIDENT & CEO JOINT REPORT
Dear Fellow Co-operators & Partners, We are pleased to present to you, our governance, accountability and management report for Equity for Nova Scotia Businesses Co-operative Limited for the fiscal year 2008. In March 2004, the Nova Scotia Co-operative Council signed a partnership agreement with the Atlantic Canada Opportunities Agency (ACOA) to launch a short term equity fund. We each contributed $500,000 to start with a $1 million pool of capital. This fund operated as a project of the Nova Scotia Co-operative Council for the first year of operations, but in 2005 was established as its own legal entity called Equity for Nova Scotia Businesses Co-operative Limited, which is wholly owned by the Nova Scotia Co-operative Council. The fund is considered an incremental development fund. It invests in business ventures (co-operatives and private) that have a social/community goal as well as an economic or financial goal. By its very nature and intent, the fund is considered high risk. To date the fund has invested in eleven Nova Scotia enterprises totaling $409,963. Many of these ventures have been started by persons with disabilities and/or low income people wanting to create their own self-employment opportunities. Our credit unions have been a key partner in this program and have provided financial services, including debt financing, to many of our clients. This year we saw one company close its doors, resulting in a $50,000 loss to our fund. Given the high risk nature of this fund, a significant amount of mentoring and follow up is done with every client. On a monthly basis they are required to submit financial statements to the Council, and at least once a year a site visit is done with each client, and a company profile report compiled. We are pleased to present again this year, a clean audit report for the fund. The deficit shown for the year was expected and is largely due to the write down of the $50,000 investment, and the difference between the management fee expense of $60,000 paid to the Nova Scotia Co-operative Council for marketing, management, and administration of the fund; and credit union charges, against the modest revenue and interest earned on the investments of $38,762. Given all of the variables, we are pleased with the activity and performance of the fund to date. We are particularly pleased to have helped so many worthy clients achieve their entrepreneurial dream. Respectfully,
Marinus Van de Sande President
Dianne Kelderman Chief Executive Officer
The province’s first housing co-op consisted of eleven homes built just west of Reserve Mines, Cape Breton.
The Small Business Loan Program has connected over 400 businesses with $27 million in capital and created 2,808 jobs. Nova Scotia is home to the first and only online health care clinic in Canada - Connecting People for Health Co-operative.
Auditors’ report
Grant Thornton LLP Suite 400 35 Commercial Street, PO Box 725 Truro, NS B2N 5E8 T (902) 893-1150 F (902) 893-9757 www.GrantThornton.ca
To the shareholder of Equity for Nova Scotia Businesses Co-operative Limited We have audited the balance sheet of Equity for Nova Scotia Businesses Co-operative Limited at March 31, 2009 and the statements of revenue, expenses and deficit and cash flows for the year then ended. ese financial statements are the responsibility of the Co-operative's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with Canadian generally accepted auditing standards. ose standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Co-operative as at March 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
Truro, Nova Scotia May 4, 2009 Chartered Accountants
Audit • Tax • Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
Equity for Nova Scotia Businesses Co-operative Limited
Year ended March 31
Statement of revenue, expenses and deficit
Investment income Dividends In-kind contributions Interest Expenses Advertising Interest and bank charges Loan guarantee (recovery) Management fee Provision for write-down on long term investments and loans receivable Deficiency of revenue over expenses $
2009
2008
$
11,984 $ 14,238 12,540 38,762 14,238 90 60,000 42,559 116,887 (78,125) $
29,099 22,518 14,838 66,455 22,518 76 (12,500) 60,000 839 70,933 (4,478)
Deficit, beginning of year Deficiency of revenue over expenses Deficit, end of year
$
(169,261) $ (78,125)
(164,783) (4,478) (169,261)
$
(247,386) $
See accompanying notes to the financial statements
2
Equity for Nova Scotia Businesses Co-operative Limited
Balance sheet
March 31 2009 2008
Assets Current Cash and cash equivalents $ Interest receivable Due from Healthwise Holdings Co-operative Limited Current portion of loans receivable Loans receivable (Note 3) Investments, at cost (Note 4) Investment in Healthwise Holdings Co-operative Limited, at cost $
358,685 $ 7,962 15,004 381,651 1,558 158,405 250,000 791,614 $
309,655 6,922 100,000 13,404 429,981 16,353 198,405 250,000 894,739
Liabilities Current Due to Nova Scotia Co-operative Council Limited Shareholders’ Equity Equity contributions (Note 5) Capital stock (Note 6) Deficit
$
35,000 $
60,000
1,000,000 4,000 (247,386) 756,614 $ 791,614 $
1,000,000 4,000 (169,261) 834,739 894,739
On Behalf of the Board Director Director
See accompanying notes to the financial statements
3
Equity for Nova Scotia Businesses Co-operative Limited
Statement of cash flows
Year ended March 31 2009 2008
Increase (decrease) in cash and cash equivalents Operating Deficiency of revenue over expenses Change in non-cash operating working capital Interest receivable Financing Advances (to) from Nova Scotia Co-operative Council Limited Advances from (to) Healthwise Holdings Co-operative Limited Investing Decrease (increase) in: Long term investments, net of repayments and allowance Loans receivable, net of repayments and allowance Reduction of allowance for loan guarantees Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year $ $ (78,125) $ (1,040) (79,165) (4,478) 7,118 2,640
(25,000) 100,000 75,000
15,215 (100,000) (84,785)
40,000 13,195 53,195 49,030 309,655 358,685 $
(197,000) (29,757) (12,500) (239,257) (321,402) 631,057 309,655
Cash and cash equivalents consist of: Credit Union Short term investments
$ $
3,753 $ 354,932 358,685 $
47,447 262,208 309,655
See accompanying notes to the financial statements
4
Equity for Nova Scotia Businesses Co-operative Limited
Notes to the financial statements
March 31, 2009 1. Nature of operations
The Equity for Nova Scotia Businesses Co-operative Limited was incorporated on September 23, 2004 and operates under the Nova Scotia Co-operative Associations Act as a not for profit organization. The Co-operative provides equity investments in various Nova Scotia businesses.
2.
Summary of significant accounting policies
Use of estimates The preparation of the financial statements in conformity with the Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those reported. Cash and cash equivalents Cash and cash equivalents include cash on hand, short term investments and balances with credit unions. Revenue recognition Investment income is recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. In-kind contributions are measured at fair value and are recorded as in-kind contributions with an offsetting advertising in-kind expense on the statement of revenue and expenses. Long term investments Investments in common shares of business enterprises in which the Co-operative holds less than 20% interest and investments in preferred shares are recorded at cost. The Co-operative’s 24.3% investment in Healthwise Holdings Co-operative Limited is recorded at cost. The Co-operative does not exercise significant influence over Healthwise Holdings Cooperative Limited due to each shareholder having one vote per member authority regardless of the number or percentage of shares owned. The investments are reviewed by management for impairment and if a decline in value is considered other than temporary, the investment is written down to reflect the impairment with a charge to income.
5
Equity for Nova Scotia Businesses Co-operative Limited
Notes to the financial statements
March 31, 2009 2.
Summary of significant accounting policies (continued)
Financial instruments The Co-operative’s financial instruments include cash and cash equivalents, interest receivable, loans receivable, investments and due to Nova Scotia Co-operative Council Limited. Unless otherwise noted, it is management’s opinion that the Co-operative is not exposed to significant interest and currency risks arising from these financial instruments. The Co-operative is exposed to financial risk that arises from the credit quality of the entities in which the Co-operative invests or provides loan services. Credit risk arises from the possibility that the entities will not fulfil their obligations to the Co-operative. Before engaging in providing investments or loans to entities, the Co-operative performs a credit risk evaluation. However, many of the Co-operative’s investments and loans are higher risk in nature which increases the concentration of credit risk. During the year, the Co-operative recorded a provision for potential investment and loan losses after an extensive review. Management feels that the carrying value of the investments and loans receivable approximate fair values due to the recorded provisions. Unless otherwise noted, the fair values of Equity for Nova Scotia Businesses Co-operative Limited’s assets and liabilities approximate their carrying values. The Co-operative classified its financial instruments as held for trading, other than long term investments, which are classified as available for sale and loans receivable which are classified as loans and receivables. Financial instruments classified as held for trading are measured at fair value on each reporting date which approximates carrying value. Long term investments are measured at cost and loans receivable are measured at amortized cost. Income tax status Equity for Nova Scotia Businesses Co-operative Limited is a non-profit organization, which is exempt from income taxes under Section 149(l) of the Canadian Income Tax Act. Recent accounting pronouncement CICA Section 4470, “Disclosure of Allocated expenses by not for profit organizations” establishes disclosure standards for not for profit organizations that classifies its expenses by function and allocates its expenses to a number of functions to which the expenses relate. This standard is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2009 and is applicable to the Co-operative’s 2010 fiscal year. The Co-operative does not expect that the adoption of this standard will have a significant impact on its financial statements.
6
Equity for Nova Scotia Businesses Co-operative Limited
Notes to the financial statements
March 31, 2009 3. Loans receivable
2009
2008
Due from various private companies, repayable in equal monthly instalments of principal of $50 to $400. Amount is net of an accumulated provision for losses of $12,098. Due from a private co-operative bearing interest at 12% with interest only payments of $100 per month with the principal balance due January 1, 2010. Less: current portion
$
6,562 $
19,757
$
10,000 16,562 15,004 1,558 $
10,000 29,757 13,404 16,353
Principal repayments in each of the next five years in accordance with the expected repayment terms are as follows: 2010 2011 2012 2013 2014 $ $ $ $ $ 15,004 3,159 3,000 3,000 1,997
4.
Investments, at cost
2009 238,000 $ 10,005 248,005 (89,600) 158,405 $
2008 238,000 10,005 248,005 (49,600) 198,405
Non-voting preferred shares held in private companies $ Common shares held in private Co-operative, at cost Less: accumulated provision for investment losses $
The non-voting preferred shares held in private companies are redeemable with an entitlement to dividends.
7
Equity for Nova Scotia Businesses Co-operative Limited
Notes to the financial statements
March 31, 2009 5. Equity contributions
2009
2008
Equity contributions represent specific development contributions received and an allocation of surplus from the parent co-operative, which is to be used to provide equity investments for new start-ups and/or growth and expansion opportunities. These contributions are as follows: ACOA development contribution Credit Union Central of Nova Scotia development contribution Nova Scotia Co-operative Council, parent $ 500,000 $ 100,000 400,000 1,000,000 $ 500,000 100,000 400,000 1,000,000
$
6.
Capital stock
2009
2008
Authorized: The Co-operative is authorized to issue an unlimited number of common shares with a par value of $1,000 each. Issued and outstanding: 4 common shares $ 4,000 $ 4,000
7.
Related party transaction
During the year, the Co-operative paid management fees of $60,000 to its parent, Nova Scotia Co-operative Council Limited. This represents the amount agreed to by the related parties.
8