Agricultural Research Institute of Ontario Financial Statements 2019-20

Financial Information

Independent auditor's report

To the Members of: Agricultural Research Institute of Ontario

Opinion

We have audited the accompanying financial statements of Agricultural Research Institute of Ontario, which comprise the statement of financial position as at March 31, 2020 and the statements of revenues and expenditures and changes in fund balances, remeasurement losses and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of Agricultural Research Institute of Ontario as at March 31, 2020 and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Basis of Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Agricultural Research Institute of Ontario in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian public sector accounting standards 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.

In preparing the financial statements, management is responsible for assessing the organization's ability to continue as a going concern, disclosing, as applicable, matters related to a going concern and using the going concern basis of accounting unless management either intends to liquidate the organization or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the organization's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of the auditor's responsibilities for the audit of the financial statements is located at RLB LLP's website. This description forms part of our auditor's report.

Chartered Professional Accountants
Licensed Public Accountants
Guelph, Ontario
July 16, 2020

Statement of financial position as at March 31, 2020

Assets

Asset 2020 $ (schedule 1) 2019 $
Cash 7,516,142 10,054,638
Investments 28,722,000 27,549,149
Accounts receivable (note 14) 1,104,441 186,995
Total current assets 37,342,583 37,790,782
Tangible capital assets under construction 11,188,076 16,420,639
Tangible capital assets (note 5) 88,497,233 78,875,275
Total assets 137,027,892 133,086,696

Liabilities

Liability 2020 $ (schedule 1) 2019 $
Accounts payable and accruals 5,924,523 2,925,869
Holdbacks payable 54,600 395,142
Unclaimed expenditures 2,511,562 3,088,036
Deferred revenue 100,000 266,500
Total current liabilities 8,590,685 6,675,547
Deferred capital funded contributions (notes 6 and 9) 88,186,800 82,286,657
Deferred capital contributions (note 7) 14,257,050 15,616,617
Total liabilities 111,034,535 104,578,821

Net assets

Net assets 2020 $ (schedule 1) 2019 $
Fund balances 14,684,772 16,853,989
Accumulated remeasurement losses (373,106) (27,805)
Contributed assets (notes 4, 5 and 11) 11,681,691 11,681,691
Total net assets 25,993,357 28,507,875

Total liabilities and net assets

Liabilities and net assets 2020 $ (schedule 1) 2019 $
Total liabilities and net assets 137,027,892 133,086,696

Statement of revenues and expenditures and changes in fund balances for year ended March 31, 2020

Research revenues

Revenue 2020 $ (schedule 2) 2019 $
Grants - provincial (note 9) 0 1,850,000
Grants - OEGF (Kawartha and IGPC) (note 12) 378,000 378,000
Intellectual property (note 8) 604,707 775,079
Total research revenues 982,707 3,003,079

Property revenues

Revenue 2020 $ (schedule 2) 2019 $
Grants - provincial - minor capital (note 9) 111,823 0
Rental income - provincial 633,233 580,793
Rental income - private industry 527,437 1,314,501
Grants - provincial - payments in lieu of taxes (note 9) 750,000 750,000
Payments in lieu of taxes 194,645 195,212
Amortization of deferred capital contributions 2,459,424 2,248,447
Total property revenues 4,676,562 5,088,953

Other revenues

Revenue 2020 $ (schedule 2) 2019 $
Gain on disposal of tangible capital asset (note 11) 0 1,035,000
Investment income (note 13) 718,932 583,499
Total other revenues 718,932 1,618,499

Total revenues

Revenue 2020 $ (schedule 2) 2019 $
Total research revenues 982,707 3,003,079
Total property revenues 4,676,562 5,088,953
Total other revenues 718,932 1,618,499
Total revenues 6,378,201 9,710,531

Research expenditures

Expenditure 2020 $ (schedule 2) 2019 $
Research projects 1,132,899 2,224,541
Intellectual property (note 8) 23,276 359,870
Total research expenditures 1,156,175 2,584,411

Property expenditures

Expenditure 2020 $ (schedule 2) 2019 $
Payments in lieu of taxes 1,318,202 1,223,035
Minor capital 3,263,202 3,976,546
Operations and maintenance 644,314 1,055,817
Amortization of tangible capital assets 2,459,424 2,248,447
Total property expenditures 7,685,142 8,503,845

Total expenditures

Expenditure 2020 $ (schedule 2) 2019 $
Total research expenditures 1,156,175 2,584,411
Total property expenditures 7,685,142 8,503,845
Total expenditures 8,841,317 11,088,256

Excess of (expenditures over revenues) revenue over expenditures for the year

Item 2020 $ (schedule 2) 2019 $
Excess of expenditures over revenues for the year (2,463,116) (1,377,725)
Net amount transferred from (to) unclaimed expenditures 293,899 (135,997)
Net excess of expenditures over revenues for the year (2,169,217) (1,513,722)

Net assets

Net assets 2020 $ (schedule 2) 2019 $
Net assets, beginning of year 28,507,875 30,998,537
Net remeasurement gains (losses) for the year (345,301) 23,543
Change in contributed land (note 4) 0 (1,000,483)
Net assets, end of year 25,993,357 28,507,875

Statement of remeasurement losses for year ended March 31, 2020

Remeasurement losses 2020 $ 2019 $
Accumulated remeasurement losses, beginning of year (27,805) (51,348)
Unrealized gains (losses) attributable to investments (337,590) 42,850
Amounts reclassified to the statement of operations: realized losses on investments (7,711) (19,307)
Net remeasurement gains (losses) for the year (345,301) 23,543
Accumulated remeasurement losses, end of year (373,106) (27,805)

Statement of cash flows for year ended March 31, 2020

Cash provided by (used in) operating activities

Operating activity 2020 $ 2019 $
Excess of expenditures over revenues for the year (2,463,116) (1,377,725)

Items not requiring an outlay of cash

Operating activity 2020 $ 2019 $
Amortization of tangible capital assets 2,459,424 2,248,447
Completed project surplus transferred to unclaimed expenditures (282,575) (315,291)
Deferred capital contributions (1,359,567) (1,210,164)
Gain on disposal of tangible capital assets 0 (1,035,000)
Net remeasurement gains (losses) (345,301) 23,543
Total items not requiring an outlay of cash (1,991,135) (1,666,190)

Changes in non-cash working capital

Operating activity 2020 $ 2019 $
Accounts receivable (917,446) 4,501,431
Investments (1,172,851) (335,437)
Accounts payable and accruals 2,998,654 1,355,843
Deferred capital funded contributions 5,900,143 10,444,298
Holdbacks payable (340,542) (132,934)
Deferred revenue (166,500) (296,052)
Total cash provided by (used in) operating activities 4,310,323 13,870,959

Cash provided by (used in) capital activities

Capital activity 2020 $ 2019 $
Additions to tangible capital assets 0 (3,526,045)
Proceeds on sale of tangible capital assets 0 1,035,000
Tangible capital assets under construction (6,848,819) (7,988,275)
Total cash provided by (used in) capital activities (6,848,819) (10,479,320)

Net change in cash for the year

Cash 2020 $ 2019 $
Net increase in cash for the year (2,538,496) 3,391,639
Cash, beginning of the year 10,054,638 6,662,999
Cash end of the year 7,516,142 10,054,638

Notes to the financial statements

Note 1 - Nature of organization

Under the province of Ontario Agencies and Appointments Directive, the Agricultural Research Institute of Ontario (ARIO) is classified as a Board Governed Operational Service Agency reporting to the Minister of Agriculture, Food and Rural Affairs. In addition, ARIO is a non profit organization within the meaning of the Income Tax Act (Canada) and is exempt from income taxes. It was created by the ARIO Act with specific responsibilities for the co ordination and direction of agri food research programs and research infrastructure in Ontario. These activities relate to a broad range of commodities and disciplines, covering all aspects of the agri food system.

Funding for programs supported by ARIO is available from various sources. The Ontario Government, through the Ministry of Agriculture, Food and Rural Affairs (OMAFRA), is the primary source of funding. The Ontario Government also provides funding for open research programs. Under the ARIO Act, ARIO may accept grants and donations for research. Other funds usually come from commercial sources (such as agri business, marketing boards and producer associations) and can be either designated for specific projects or non designated. In addition, ARIO reinvests royalties earned from Ministry funded research.

All receipts are held in trust by the Director of Research and are allocated in accordance with the terms of the funds. Transactions between OMAFRA and the below programs are recorded at the exchange value.

The current research trust funds managed by the secretariat to ARIO are as follows:

  • Agricultural Research Institute of Ontario (ARIO)
  • Open Competitive Research (incl. New Directions, Food Safety, other)
  • Infrastructure

COVID 19 Acknowledgment:

Due to restrictions under the Emergency Management and Civil Protection Act, R.S.O. 1990, and its regulations, put in place in response to an ongoing pandemic known as the COVID 19 pandemic; there were and continue to be limitations on the activities permitted under law (the "Limitations") which impacts or has impacted the ability of ARIO to carry out operational and major capital construction activities.

Should these Limitations result in a delay in completing the business of ARIO, i.e. operating, reporting and capital activities, ARIO, in its capacity as a Board Governed Operational Service Agency reporting to the Minister of Agriculture, Food and Rural Affairs, will act in a timely manner to mitigate any delays so as to continue operations for which the agency is prescribed under the ARIO Act.

Note 2 - Summary of significant accounting policies

The financial statements have been prepared in accordance with Canadian public sector accounting standards for government not for profit organizations, including the 4200 series of standards, as issued by the Public Sector Accounting Board ("PSAB for Government NPOs") and include the following significant accounting policies:

Basis of accounting

ARIO follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue of the appropriate research trust fund in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue of the appropriate research trust fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured.

Financial instruments

Measurement of financial instruments

The organization initially measures its financial assets and liabilities at fair value, except for certain non-arm's length transactions.

The organization subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments, which are measured at fair value. Changes in fair value are recognized in the statement of remeasurement (losses) gains.

Impairment

Financial assets measured at amortized cost are tested for impairment when there are indicators of impairment. If an impairment has occurred, the carrying amount of financial assets measured at amortized cost is reduced to the greater of the discounted future cash flows expected or the proceeds that could be realized from the sale of the financial asset. The amount of the write down is recognized in the statement of revenues and expenditures. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in the statement of revenues and expenditures.

Transaction costs

The organization recognizes its transaction costs in expenditures in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

Unclaimed expenditures

Unclaimed expenditures are defined as the total approved budget for open research projects less expenses incurred to date.

Tangible capital assets

Tangible capital assets are recorded at cost and are amortized using the following annual rates and method:

  • buildings and components 25 to 40 years straight line

Tangible capital assets under construction (new buildings) are not amortized.

Impairment of long lived assets

Long lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized when the carrying value exceeds the total undiscounted cash flows expected from their use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value.

Deferred capital contributions

Deferred capital contributions are recognized in the same period as the related expenditure and amortized at the same rate as the buildings to which they relate.

Restrictions on the expenditure of funds

The purpose, funding, terms and conditions and duration of each research trust fund are stipulated in the relevant Order-in-Council, memorandum of understanding or Ministry correspondence.

Use of estimates

The preparation of financial statements in accordance with PSAB for Government NPOs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Significant areas requiring the use of management estimates and assumptions relate to the valuation of accounts payable and accruals and the useful life of capital assets. Actual results could differ from those estimates.

Note 3 - Financial instruments

Fair value

For certain of ARIO's financial instruments, the carrying amounts of cash, accounts receivable and accounts payable and accruals, approximate fair value due to the short term maturity of these financial instruments.

PS3450, Financial Instruments Disclosures requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:

  • Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
  • Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
  • Level 3 - Inputs that are not based on observable market data.

ARIO's financial instruments are classified as Level 2 except for cash which is classified as Level 1 as at March 31, 2020 and 2019.

There were no transfers in or out of Level 1 or Level 2 for the years ended March 31, 2020 and 2019.

Associated risks

Market price risk:

Market price risk is the risk that the value of an instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As all of ARIO's financial instruments are carried at fair value with fair value changes recognized in the statement of remeasurement losses, all changes in market conditions will directly affect the increase (decrease) in accumulated remeasurement losses. Market price risk is managed by the Investment Manager through construction of a diversified portfolio of instruments traded on various markets and across various industries.

A 1% increase (decrease) in the value of the investments would increase (decrease) the asset value and the change in unrealized gains in investments by $287,220 (2019 - $275,491). The price of the investments is affected by changes in market values, foreign exchange rates and interest rates impacting the underlying financial instruments held within the individual investments managed by the Investment Manager.

Interest rate risk:

Interest rate risk refers to the adverse consequences of interest rate changes on the Institute's cash flows, financial position and income. Interest rate changes have an indirect impact on the investment assets in ARIO. ARIO uses investment diversification to manage this risk.

Liquidity risk:

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

All of ARIO's fixed income securities are considered to be readily realizable as they can be quickly liquidated at amounts close to their fair value in order to meet liquidity requirements.

Foreign currency risk:

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. ARIO is not exposed to significant foreign currency risk.

Credit risk

Credit risk is the risk that a customer or counterpart may be unable or unwilling to meet a commitment that it has entered into with ARIO. ARIO is not exposed to significant credit risk.

Note 4 - Contributed assets

Contributed assets of $11,681,691 (2019 - $11,681,691) are recorded in the Infrastructure Fund and represent the cost of the land transferred to ARIO from the Government of Ontario. During the year, the fair value of the land in Alfred was adjusted by an impairment of $0 (2019 -$0 due to a sale (see note 11)). Additionally, the land in Alfred was sold in 2019 for $1,010,000, which was the residual value of the Alfred land in contributed surplus, and part of the land in New Liskeard was sold for $25,000, with cost base of $473, reducing contributed surplus by the cost base in contributed surplus of $473.

Note 5 - Tangible capital assets

Land assets

Land Cost $ Accumulated amortization $ Net 2020 $ Net 2019 $
Regional campuses 736,984 0 736,984 1,736,984
Research stations 24,651,505 0 24,651,505 24,651,505
Total land assets 25,388,489 0 25,388,489 25,388,489

Building assets

Building Cost $ Accumulated amortization $ Net 2020 $ Net 2019 $
Regional campuses 25,118,835 9,887,252 15,231,583 16,121,790
Research stations 60,980,965 13,103,804 47,877,161 37,364,996
Total building assets 86,099,800 22,991,056 63,108,744 53,486,786

Total land and building assets

Land and building Cost $ Accumulated amortization $ Net 2020 $ Net 2019 $
Total land assets 25,388,489 0 25,388,489 25,388,489
Total building assets 86,099,800 22,991,056 63,108,744 53,486,786
Total assets 111,488,289 22,991,056 88,497,233 78,875,275

As at March 6, 2007, the titles for capital assets (land and buildings) with a carrying value of approximately $60.9 million were transferred to ARIO from the Government of Ontario. Carrying value is being used as the transfer value since the transfer took place between non arm's length parties, is non-monetary in nature and does not have commercial substance. As an agency of the Government of Ontario, ARIO reports these capital assets (and other assets and liabilities) in consolidation with the Ministry of Agriculture, Food and Rural Affairs on an annual basis.

During the year, there was $0 (2018 - $460,194) impairment taken on land and $0 (2018 - $305,716) impairment taken on buildings for a total impairment of $0 (2018 - $765,910).

Note 6 - Deferred capital funded contributions

Deferred capital contributions relating to construction of capital funded projects represents the amount of grants and other restricted funding received by ARIO for construction projects.

Balance 2020 $ 2019 $
Balance, beginning of the year 82,286,657 71,842,359
Less amortization for the year (1,099,857) (1,038,283)
Add contributions received for capital purposes 7,000,000 11,482,581
Balance, end of the year 88,186,800 82,286,657

Funding Sources

Funding source 2020 $ 2019 $
Federal 1,102,500 1,137,500
Provincial 78,110,233 71,981,121
Industry 8,974,067 9,168,036
Total funding sources 88,186,800 82,286,657

Note 7 - Deferred capital contributions

Deferred capital contributions represent the unamortized amount of the net book value of the buildings transferred to ARIO from the Government of Ontario in 2007. The amortization of capital contributions is recorded as revenue in the statement of revenues and expenditures. The changes in the deferred capital contributions are as follows:

Balance 2020 $ 2019 $
Balance, beginning of the year 15,616,617 16,826,781
Less amortization for the year (1,359,567) (1,210,164)
Balance, end of the year 14,257,050 15,616,617

Note 8 - ARIO research fund

Revenue

Revenue Seed royalty $ Technology royalty $ Other $ Total 2020 $ Total 2019 $
Intellectual property 515,642 89,065 0 604,707 775,079
Investment income (12,285) (11,539) 79 (23,745) 181,827
Total revenue 503,357 77,526 79 580,962 956,906

Expenses

Expense Seed royalty $ Technology royalty $ Other $ Total 2020 $ Total 2019 $
Expenses 15,308 8,779 (811) 23,276 359,870

Fund balances

Fund balances Seed royalty $ Technology royalty $ Other $ Total 2020 $ Total 2019 $
Net surplus for the year 488,049 68,747 890 557,686 597,036
Fund balance, beginning of year 3,056,474 3,290,863 500,000 6,847,337 6,234,953
Remeasurement gains 56,721 47,865 7,060 111,646 15,348
Fund balance, end of year 3,601,244 3,407,475 507,950 7,516,669 6,847,337

During the prior year, the University of Guelph began program administration for the above intellectual property fund.

Note 9 - Grants received from the provincial government

The following grants, recorded at the exchange value, have been received from the Ontario Ministry of Agriculture, Food and Rural Affairs and successor ministries:

Research programs and other grants

Research Programs 2020 $ 2019 $
New Directions (Competitive Research) Program 0 1,350,000
Food Safety Research Program 0 500,000
Total Research Programs 0 1,850,000
Other Grants 2020 $ 2019 $
Minor capital 4,500,000 0
Major capital build projects 2,500,000 7,500,000
Payments in lieu of taxes 750,000 750,000
Total Other Grants 7,750,000 8,250,000
Total research programs and other grants 7,750,000 10,100,000

The following Provincial Government capital transfer payment grants have been partially capitalized as Deferred Capital Funded Contributions and partially recognized as Revenues as follows:

Minor capital

Minor capital 2020 $ 2019 $
Funding received 4,500,000 0
Capitalized - Unclaimed expenditures (4,500,000) 0
Net revenue 0 0

The following Provincial Government capital transfer payment grants have been partially capitalized as Deferred Capital Funded Contributions and partially recognized as Revenues as follows:

Major capital build projects

Major capital build projects 2020 $ 2019 $
Funding received 2,500,000 7,500,000
Capitalized - Deferred Capital Funding Contribution (2,500,000) (7,500,000)
Net revenue 0 0

Note 10 - Transfer payments to the University of Guelph

During 2016, ARIO entered into a funding agreement with the University of Guelph to construct new turf grass facilities at the University of Guelph Arboretum. Under the agreement, ARIO would provide maximum funds of $12,000,000 to be combined with up to $3,000,000 in industry contributions to fund the construction of the new facility on Arboretum land. The project has experienced unforeseen delays and, as such, ARIO has approved the contribution of an additional $1,000,000 in funding towards the project in order to assist in bringing the project to completion. The University of Guelph is also contributing an additional $1,000,000 towards completion of the project. ARIO funds for this agreement come from major capital funding transfers which were previously received by ARIO from the Ontario Ministry of Agriculture, Food and Rural Affairs and successor ministries. By March 31, 2019, funding milestones were met and ARIO had provided the University with $12,000,000 in funding.

During 2017, ARIO entered into a funding agreement with the University. Under the agreement, ARIO would provide maximum funds of $800,000 to fund equipment for the Guelph Food Innovation Centre. At March 31, 2019, funding milestones have been met and ARIO has provided the University with $800,000 in funding.

During 2018, ARIO entered into funding agreements with the University of Guelph for the construction of a new swine research facility at Elora and a new Agronomy Research Services Building at New Liskeard. ARIO will provide maximum funds of $12,000,000 to be combined with up to $3,000,000 in industry contributions to fund the construction of the new Swine Research facility. ARIO will provide up to $4,000,000 for the New Liskeard Agronomy building project. No industry contribution is anticipated for this project. ARIO provided the University with $0 for the new swine facility (2019 - $3,000,000) and $0 (2019 - $1,000,000) for the New Liskeard agronomy building. During the current year, ARIO has received $0 (2019 - $100,000) in industry contributions for the new swine facility from Ontario Pork. ARIO funds for these agreements come from deferred capital funded contributions which were previously received by ARIO from the Ontario Ministry of Agriculture, Food and Rural Affairs and successor ministries.

Note 11 - Gain on Disposal of Tangible Capital Asset

March 31, 2019 - Sale of Alfred and New Liskeard Land

During the prior year, the organization sold parcels of land in two locations, one in Alfred and one in New Liskeard. All parcels of land were originally transferred to the organization and capitalized to assets and contributed surplus.

Gain on Disposal of Tangible Capital Asset Alfred New Liskeard Total 2020 $ Total 2019 $
Proceeds from sale 0 0 0 1,035,000
Cost of tangible capital assets 0 0 0 1,010,473
Accumulated amortization 0 0 0 0
Net book value 0 0 0 1,010,473
Contributed asset 0 0 0 (1,010,473)
Gain on sale 0 0 0 1,035,000

During the 2019 fiscal year, the Municipality of North Grenville paid $4,000,000, satisfying the terms of their promissory note and closing the final payment on the sale of the property.

Note 12 - Funding agreements with third parties

The Agricultural Research Institute of Ontario (ARIO), Her Majesty the Queen in right of Ontario as represented by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) and the Integrated Grain Processors Co-operative Inc. (IGPC) have jointly signed an agreement whereby, pursuant to a Capital Grant Agreement effective June 2006 between OMAFRA and IGPC, IGPC agreed to contribute to a research and development fund in exchange for the capital grant support provided by OMAFRA through the Ontario Ethanol Growth Fund. IGPC has agreed to contribute $280,000 annually for 10 years (for a total of $2,800,000) starting in April 2012 and ending with the final payment in April 2021. These funds are being paid directly to ARIO to be used to support research priorities in the agri-food sector in Ontario. Funds recognized to date are $2,240,000; however, funds received to date are $1,960,000 as the 2020 payment was deferred until fiscal 2021. See schedule 2.

Her Majesty the Queen in right of Ontario as represented by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) and Kawartha Ethanol Inc. have signed a Capital Grant Agreement effective August 1, 2008 between OMAFRA and Kawartha Ethanol Inc. whereby Kawartha Ethanol Inc. agreed to contribute to a research and development fund in exchange for the capital grant support provided by OMAFRA through the Ontario Ethanol Growth Fund. Kawartha Ethanol Inc. has agreed to contribute $98,000 annually for 10 years (for a total of $980,000) starting April 2013 and ending with the final payment in April 2022. These funds are to be paid directly to ARIO to be used to support research priorities in the agri-food sector in Ontario. Funds recognized to date, being actual receipts to date are $686,000. See schedule 2.

Note 13 - Canadian Agricultural Partnership (CAP) Funding

During the year, ARIO received funding for two research infrastructure projects from the CAP program:

  • Elora Research Station Precision Feed Preparation Facility to support the expanded dairy and beef research herds at Elora.
  • Vineland Research Innovation Centre (VRIC) - Research Facility Upgrades to significantly modernize key aspects of several research platforms at VRIC by increasing the ability of the station to undertake a wider variety of research projects through modernization and enhanced program support.

These programs were both completed by March 31, 2020.

Schedule 1 - Research Trust Funds: Financial Position as at March 31, 2020

Assets

Assets ARIO $ Infrastructure $ New Directions $ Food Safety $ Eliminations $ 2020 $
Cash 7,516,142 0 0 0 0 7,516,142
Investments 28,722,000 0 0 0 0 28,722,000
Due from ARIO 0 22,845,480 3,787,360 1,203,234 (27,836,074) 0
Accounts receivable 608,476 215,324 280,484 157 0 1,104,441
Total current assets 36,846,618 23,060,804 4,067,844 1,203,391 (27,836,074) 37,342,583
Tangible capital assets under construction 0 11,188,076 0 0 0 11,188,076
Tangible capital assets (note 5) 0 88,497,233 0 0 0 88,497,233
Total tangible assets 0 99,685,309 0 0 0 99,685,309
Total Assets 36,846,618 122,746,113 4,067,844 1,203,391 (27,836,074) 137,027,892

Liabilities

Liabilities ARIO $ Infrastructure $ New Directions $ Food Safety $ Eliminations $ 2020 $
Due to other research trust funds 27,836,074 0 0 0 (27,836,074) 0
Accounts payable and accruals 526,375 4,820,783 367,184 210,181 0 5,924,523
Holdbacks payable 0 0 24,600 30,000 0 54,600
Unclaimed expenditures 967,500 0 1,230,259 313,803 0 2,511,562
Deferred revenue 0 100,000 0 0 0 100,000
Total current liabilities 29,329,949 4,920,783 1,622,043 553,984 (27,836,074) 8,590,685
Deferred capital funded contributions (note 6 and 9) 0 88,186,800 0 0 0 88,186,800
Deferred capital contributions (note 7) 0 14,257,050 0 0 0 14,257,050
Total deferred capital 0 102,443,850 0 0 0 102,443,850
Total Liabilities 29,329,949 107,364,633 1,622,043 553,984 (27,836,074) 111,034,535

Fund Balances

Fund balance ARIO $ Infrastructure $ New Directions $ Food Safety $ Eliminations $ 2020 $
Fund balances 7,394,786 4,137,321 2,489,819 662,846 0 14,684,772
Accumulated Remeasurement gains (losses) 121,883 (437,532) (44,018) (13,439) 0 (373,106)
Contributed Assets (notes 4, 5 and 11) 0 11,681,691 0 0 0 11,681,691
Total fund balances 7,516,669 15,381,480 2,445,801 649,407 0 25,993,357
Total liabilities and net assets 36,846,618 122,746,113 4,067,844 1,203,391 (27,836,074) 137,027,892

Schedule 2 - Research Trust Funds: Revenues and Expenditures and Changes in Fund Balances for the year ended March 31, 2020

Research revenues

Revenue ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Grants - OEGF (Kawartha and IGPC) (note 12) 0 0 378,000 0 378,000
Intellectual property (note 8) 604,707 0 0 0 604,707
Total research revenues 604,707 0 378,000 0 982,707

Property revenues

Revenue ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Grants - provincial- minor capital (note 9) 0 111,823 0 0 111,823
Rental income - provincial 0 633,233 0 0 633,233
Rental income - private industry 0 527,437 0 0 527,437
Grants - provincial - payments in lieu of taxes (note 9) 0 750,000 0 0 750,000
Payments in lieu of taxes 0 194,645 0 0 194,645
Amortization of deferred capital contributions 0 2,459,424 0 0 2,459,424
Total property revenues 0 4,676,562 0 0 4,676,562

Other revenues

Revenue ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Investment income (note 13) (23,745) 628,653 87,876 26,148 718,932
Total other revenues (23,745) 628,653 87,876 26,148 718,932

Total revenues

Revenue ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Total research revenue 604,707 0 378,000 0 982,707
Total property revenues 0 4,676,562 0 0 4,676,562
Other income (23,745) 628,653 87,876 26,148 718,932
Total revenues 580,962 5,305,215 465,876 26,148 6,378,201

Research expenditures

Expenditure ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Research project/ program 0 0 889,300 243,599 1,132,899
Intellectual property (note 8) 23,276 0 0 0 23,276
Total research expenditures 23,276 0 889,300 243,599 1,156,175

Property expenditures

Item ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Payments in lieu of taxes 0 1,318,202 0 0 1,318,202
Minor capital 0 3,263,202 0 0 3,263,202
Operations and maintenance 0 644,314 0 0 644,314
Amortization of tangible capital assets 0 2,459,424 0 0 2,459,424
Total property expenditures 0 7,685,142 0 0 7,685,142

Total Expenditures

Item ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Total research expenditures 23,276 0 889,300 243,599 1,156,175
Total property expenditures 0 7,685,142 0 0 7,685,142
Total expenditures 23,276 7,685,142 889,300 243,599 8,841,317

Excess of revenue over expenditures for the year

Item ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 20209 $
Excess of (expenditures over revenues) revenues over expenditures for the year 557,686 (2,379,927) (423,424) (217,451) (2,463,116)
Net amount transferred from unclaimed expenditures 0 0 58,654 235,245 293,899

Net Assets

Item ARIO (note 8) $ Infrastructure $ New Directions $ Food Safety $ 2020 $
Net assets, beginning of year 6,847,337 18,168,378 2,848,149 644,011 28,507,875
Net remeasurement gains for the year 111,646 (406,971) (37,578) (12,398) (345,301)
Net assets, end of year 7,516,669 15,381,480 2,445,801 649,407 25,993,357

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