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Ontario Immigrant Investor Corporation (OIIC)
Financial Statements for the Year Ended March 31, 2015

Statement of Financial Position as at March 31, 2015

  2015
($ 000)
2014
($ 000)
FINANCIAL ASSETS  
Cash 4,656 10,241
Investments (Note 3) 1,052,509 1,207,736
Accounts receivable 61 71
  1,057,226 1,218,048
LIABILITIES AND ACCUMULATED SURPLUS  
Accounts payable 536 622
Repayable Provincial Allocations (Note 4) 959,408 1,139,228
  959,944 1,139,850
Net Financial Assets 97,282 78,198
Non-Financial  Assets  
Deferred Commission Charges (Note 5) 19,082 26,404
Accumulated Surplus 116,364 104,602

See accompanying notes to financial statements.

Approved on behalf of the Board:

Director

Statement of Operations
For the Year Ended March 31, 2015

  2015
($ 000)
2014
($ 000)
Revenue  
Interest income 25,901 29,809
  25,901 29,809
Expenses (Note 6)  
Amortization of deferred commission charges (Note 5) 12,034 14,596
Investment management fee (Note 3) 2,105 2,270
  14,139 16,866
Excess of Revenue over Expenses 11,762 12,943
Accumulated Surplus, beginning of year 104,602 91,659
Accumulated Surplus, end of year 116,364 104,602

See accompanying notes to financial statements.

Statement of Changes in Net Financial Assets
For the Year Ended March 31, 2015

  2015
($ 000)
2014
($ 000)
Excess of Revenue Over Expenses 11,762 12,943
Deferred Commission Charges- Current Year (4,801) (15,150)
Amortization of Deferred Commission Charges 12,034 14,596
Deferred Commission Recovered 89 20
 
Increase in Net Financial Assets 19,084 12,409
Net Financial Assets, beginning  of  year 78,198 65,789
Net Financial Assets, end  of  year 97,282 78,198

See accompanying notes to financial statements.

Statement of Cash Flows
For the Year Ended March 31, 2015

  2015
($ 000)
2014
($ 000)
Cash provided by (used in) operating activities  
Interest received 804 604
Investment Management Fees paid (2,182) (2,214)
  (1,378) (1,610)
Cash (used in) provided by investing and financing activities  
Provincial allocations received net of commissions 75,735 249,712
Provincial allocations repaid (258,625) (233,397)
Provincial allocations refunded (1,640) (266)
  (184,530) 16,049
Investments matured 578,830 477,769
Investments purchased (398,507) (493,757)
  180,323 (15,988)
Net (decrease) in cash (5,585) (1,549)
Cash, beginning of year  10,241  11,790
Cash, end of year 4,656 10,241

See accompanying notes to financial statements.

Notes to Financial Statements
March 31, 2015

1.  Nature and Future of the Corporation

The Ontario Immigrant Investor Corporation (Corporation) was established as a corporation without share capital on April 30, 1999 pursuant to Ontario Regulation 279/99 made under the Development Corporations Act.

The Corporation was established in order to participate in a federal Immigrant Investor Program (IIP).  Under the IIP, each participating province established a vehicle to receive and invest immigrant investor dollars for the purposes of creating or continuing employment in Canada in order to foster the development of a strong and viable economy.  Each participating province, in turn, guarantees immigrant investors that their investment will be repaid after five years with no interest.

In February 2014, the Federal government announced the termination of the Immigrant Investor Program. Citizenship and Immigration Canada (CIC) is processing the remaining 160 applications designated for Ontario’s allocation amount of approximately $29.8 million. However, CIC has indicated that above numbers are estimates based on how many applications are actually approved. Ontario is expected to receive its share of the remaining funds by the end of March 2016. The repayment of this allocation to the immigrant investors after five years will occur by March 2021. Accordingly, the Corporation will remain operational until then to meet its obligations under the Immigrant Investor Program.

2.  Significant Accounting Policies

(a)  Basis of Accounting

As the Corporation is a government organization, these financial statements are prepared in accordance with Canadian public sector accounting standards.

(b)  Revenue recognition

Accrued interest is recognized as earned and amounts not yet received are included in the carrying value of investments.

(c)  Financial instruments

A financial instrument is an asset or liability that will ultimately be settled in cash.

(d)  Deferred commission charges

Commissions paid to intermediaries, for introducing new immigrant investors, are deferred and amortized to expense on a straight-line basis over the same period as the related Repayable Provincial Allocation beginning in the fiscal year when the allocation is received. If the application for permanent residence is withdrawn by the immigrant investor or denied by the federal government, the Corporation recovers the commission in the year when this occurs.  The deferred charges represent the unamortized balance of the commissions.

3.  Investments

Prior to February 2011, the Corporation invested all of its allocations in fixed income securities issued by the Province of Ontario, maturing within five years.  In general, zero-coupon bonds were purchased to align maturity dates to the Provincial Allocations repayment schedule provided in Note 4.  As at March 31, 2015, these fixed income securities had a weighted-average yield of 2.56% (2014 - 2.84%). 

In September 2010, in order to satisfy the requirements of the Federal Immigrant Investor Program the Corporation approved a new investment strategy to direct a significant portion of allocations received to the Loan Program managed by Ontario Infrastructure and Lands Corporation (OILC) a related party.  Through its Loan Program, OILC helps finance hundreds of infrastructure projects such as the construction of roads, bridges and facilities thereby fostering economic development and job creation.

The Corporation entered into an agreement with OILC to direct a significant portion of the allocations to OILC monthly, in exchange for promissory notes due five years from the date of the transfer at either a fixed or floating interest rate effectively equal to the OILC’s cost of borrowing for similar terms as determined by the Ontario Financing Authority.  As a result of the announced termination of the Immigrant Investor Program, there was a significant reduction in the provincial allocations. In fiscal 2015, OILC received $42 million of the provincial allocations (2014 – $200 million). As at March 31, 2015, these promissory notes had a weighted average interest rate of 2.10% (2014 – 2.09%).

The entire portfolio of investments is managed by the Ontario Financing Authority (OFA), a related party, in accordance with the terms and conditions set out in an agreement signed between the OFA, the Corporation and the Province.  The OFA receives an investment management fee of 0.2% of the average par value or face value of the investments outstanding during the year for performing these services.

The investments balance which includes accrued interest is broken down as follows:

  March 31, 2015
Cost
($ 000)
March 31, 2015
Market
($ 000)
March 31, 2014
Cost
($ 000)
March 31, 2014
Market
($ 000)
OILC Promissory Notes 608,171 594,312 553,635 543,440
Zero Coupon Bonds 227,890 229,466 491,609 498,898
Fixed Income Bonds 129,524 129,682 93,330 92,255
Treasury Bills 86,924 86,924 69,162 69,162
  1,052,509 1,040,384 1,207,736 1,203,755

The Corporation is exposed to interest rate risk whenever any funds received from immigrants are invested in fixed income securities because the future return and market value of the investments is dependent on the prevailing interest rates.  However, there is very little exposure to fluctuating interest rates during the 5-year period of the repayable provincial allocations because the maturity of the fixed income investments matches the maturity of the repayable provincial allocations. 

It is management’s opinion that the Corporation is not exposed to significant credit or currency risk because all investments are with related parties supported by the Province and none of them are denominated in a foreign currency.

4.  Repayable Provincial Allocations

The Corporation incurs long-term obligations from funds received under the federal Immigrant Investor Program in accordance with the terms and conditions set out in agreements signed in June 1999 and June 2011 between the federal Minister of Citizenship and Immigration and the Corporation.  The agreement states that the federal Minister, as agent of the Corporation, receives funds from immigrant investors and transfers Ontario’s share of the funds (Provincial Allocation) to the Corporation.  The Corporation will repay any Provincial Allocations received without interest at expiry of the Allocation Period, being five years from the date the Provincial Allocation was originally received.

The Province guarantees the repayment of the Provincial Allocations when due.  The repayment schedule on Provincial Allocations is as follows:

  ($ 000)
Due fiscal year 2016 257,993
Due fiscal year 2017 218,732
Due fiscal year 2018 138,575
Due fiscal year 2019 264,146
Due fiscal year 2020 79,962
  959,408

An investor’s application for permanent residence may be withdrawn by the Investor or denied by the federal government. As at March 31, 2015 there are $967,000 of applications that are in process. If any of these applications are withdrawn by the Investor or denied by the federal government the Provincial Allocation pertaining to the Investor is to be returned to the federal government within 30 days of receipt of request from the federal government.

5.  Deferred Commission Charges

Deferred commission charges are comprised as follows:

  2015
($ 000)
2014
($ 000)
Balance, beginning of year 26,404 25,870
Commissions – current year 4,801 15,150
Commissions recovered (89) (20)
Amortization (12,034) (14,596)
Balance, end of year 19,082 26,404

6.  Administration Support Services

Business support, strategic management services and other administrative support, including accommodation, financial, legal and human resource services is provided by the Ministry of Economic Development, Employment & Infrastructure and the Ministry of Citizenship, Immigration & International Trade without charge.