26 An update on Grain Farmers of Ontario news and events Notes to the Financial Statements For the year ended May 31, 2022 3. FINANCIAL INSTRUMENTS Unless otherwise noted, it is management's opinion that the association is not exposed to significant interest, credit, currency, liquidity, or other price risks arising from its financial instruments. The extent of the association's exposure to these risks did not change in 2022 compared to the previous period. The association does not have a significant exposure to any individual customer or counterpart. Credit risk The major concentration of credit risk arises from the association's accounts receivable. The majority of the accounts receivable are from organizations in the agricultural and food processing industry. The association manages the risk through evaluation and monitoring processes. Market risk Market risk is the risk that the fair value or future cash flows of the company’s financial instruments will fluctuate because of changes in market prices. Some of the company’s financial instruments expose it to this risk, which comprises currency risk, interest rate risk and other price risk. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The association is exposed to interest rate risk as a result of the fixed coupon rates on its bonds. Should market interest rates fluctuate significantly from these fixed coupon rates, the fair value of the bonds will be correspondingly affected. 4. CAPITAL ASSETS Accumulated Net Net Cost Amortization 2022 2021 Land $ 208,000 $ 0 $ 208,000 $ 208,000 Building 5,075,241 1,171,770 3,903,471 4,106,481 Office furniture and fixtures 290,120 273,218 16,902 20,565 Computer equipment 611,006 554,778 56,228 69,957 Equipment 0 0 0 19,194 Lab equipment 599,999 449,999 150,000 225,000 Passenger vehicle and trailers 599,566 439,173 160,393 104,080 $7,383,932 $2,888,938 $4,494,994 $4,753,277 5. DEFERRED REVENUE Deferred revenue consists of: 2022 2021 Deferred research revenue $ 82,531 $ 107,821 6. EMPLOYEE BENEFITS The association offers a defined contribution post retirement benefit plan to its employees. The total expense for the association's defined contribution plan is $159,545 (2021 — $159,370). 7. BUDGET FIGURES The budgeted figures are presented for comparison purposes as prepared and approved by the Board. They have not been audited or reviewed by the auditor. 8. ADDITIONAL INFORMATION TO THE STATEMENT OF CASH FLOWS Net Change in non cash working capital 2022 2021 Change in accounts receivable $ 221,830 $ 132,656 Change in government remittances receivable 16,083 (21,524) Change in prepaid expenses 89,625 (94,111) Change in inventory 0 46,069 Change in open hedge position, future crop year 0 1,268 Change in accounts payable and accrued liabilities 3,097 301,783 Change in government remittances payable 0 (21,185) Change in deferred revenue (25,290) 5,640 Change in deferred hedge revenue 0 (100,245) Change in liability to producers (106,907) (4,606) $ 198,438 $ 245,745 9. CONTRACTUAL OBLIGATIONS The minimum amounts payable under long term operating leases and contracts, exclusive of certain operating costs, including the net research project and market development commitments for which the association is responsible to fund, are as follows: 2023 2,605,590 2024 1,005,008 2025 394,938 2026 130,563 2027 $ 21,563 4,157,662 Thereafter 0 $ 4,157,662 10. TRANSFER With the discontinuation of wheat trading activity, with approval from the Farm Products Marketing Commission, the Board transferred the $14,055,874 remaining balance in the externally restricted wheat marketing fund to the newly formed internally restricted legacy fund. 11. GENERAL FUND BALANCES The general fund is comprised of the following net asset balances at year end: 2022 2021 Unrestricted net assets $ 12,648,841 $ 11,233,186 Net assets invested in capital assets 4,494,994 4,753,277 Total General Fund net assets $ 17,143,835 $ 15,986,463 12. INVESTMENTS Investments are comprised of a number of individual portfolios all holding low risk investments in accordance with the Farm Products Marketing Act. Investments held in these portfolios include investment savings accounts and guaranteed investment certificates, maturities ranging from November 2022 to May 2027, with interest rates ranging from 0.75% to 4.10%. 13. MATERIAL UNCERTAINTY DUE TO COVID-19 During the year and subsequent to year end, the Novel Coronavirus (COVID 19) significantly impacted the economy in Canada and globally. This global pandemic has disrupted economic activities and has resulted in the organization cancelling events and gatherings. Although the disruption from the virus is expected to be temporary, given the dynamic nature of these circumstances, the duration of business disruption and the related financial impact cannot be reasonably estimated at this time. Further, the timing and amounts realized on the organization’s assets as well as its future ability to deliver all programming may be impacted by the evolving circumstances of the virus.
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