Statement of financial position for the year ended March 31, 2019

  2019
($ 000)		 2018
($ 000)
Financial assets
Cash 1,311 714
Investments (Note 3) 125,807 385,731
Accounts receivable 6 23
Sub-total 127,124 386,468
Liabilities and accumulated surplus
Accounts payable 55 196
Repayable provincial allocations (Note 4) 89,244 353,104
Sub-total 89,299 353,300
Net financial assets 37,825 33,168
Non-financial assets
Deferred commission charges (Note 5) 146 1,219
Accumulated surplus 37,971 34,387
See accompanying notes to financial statements.

Statement of operations for the year ended March 31, 2019

  2019
Budget
($ 000)		 2019
Actuals
($ 000)		 2018
Actuals
($ 000)
Revenue
Interest income 7,723 5,054 8,863
Sub-total 7,723 5,054 8,863
Expenses (Note 6)
Amortization of deferred commission charges (Note 5) 1,130 1,063 4,087
Investment management fee (Note 3) 810 407 802
Sub-total 1,940 1,470 4,889
Excess of revenue over expenses 5,783 3,584 3,974
Accumulated surplus, beginning of year 34,387 34,387 30,413
Accumulated surplus, end of year 40,170 37,971 34,387
See accompanying notes to financial statements.

Statement of changes in net financial assets for the year ended March 31, 2019

  2019 Budget
($ 000)		 2019 Actuals
($ 000)		 2018 Actuals
($ 000)
Excess of revenue over expenses 5,783 3,584 3,974
Refund of commission - 10 -
Amortization of deferred commission charges 1,130 1,063 4,087
Increase in net financial assets 6,913 4,657 8,061
Net financial assets, beginning of year 33,168 33,168 25,107
Net financial assets, end of year 40.081 37,825 33,168
See accompanying notes to financial statements.

Statement of cash flows for the year ended March 31, 2019

  2019
($ 000)		 2018
($ 000)
Cash provided by (used in) operating activities
Interest received 416 198
Investment management fees paid (531) (876)
Sub-total (115) (678)
Cash (used in) provided by investing and financing activities
Refund of commission 10 160
Provincial allocations repaid (263,860) (138,719)
Sub-total (263,850) (138,559)
Investments matured 369,583 205,787
Investments purchased (105,021) (68,205)
Sub-total 264,562 137,582
Net increase/(decrease) in cash 597 (1,655)
Cash, beginning of year 714 2,369
Cash, end of year 1,311 714
See accompanying notes to financial statements.

Notes to financial statements March 31, 2019

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.

The 2014 federal budget announced the termination of the IIP with a commitment to process applications that were received prior to February 11, 2014. In July 2017, Ontario received approval to suspend the receipt of monies from the federal government. Accordingly, the Corporation will remain operational until fiscal 2022/23 to meet its repayment obligations under the IIP.

Significant accounting policies

Basis of accounting

These financial statements have been prepared by management in accordance with Canadian public sector accounting standards.

Revenue recognition

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

Financial instruments

A financial instrument is an asset or liability that will ultimately be settled in cash. The Corporation’s financial assets and financial liabilities are accounted for as follows:

Cash, accounts receivable and accounts payable are recorded at cost, which approximates fair value due to the short-term nature of these instruments.

Investments are initially recorded at cost and subsequently recorded at cost plus accrued interest earned to date.

Repayable provincial allocations are originally recorded at the actual amounts received and remain at those amounts until repaid due to the interest-free nature of the debt. They have not been discounted to reflect fair value.

The Corporation does not use derivative financial instruments.

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.

Measurement uncertainty

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Items requiring the use of significant estimates include the amortization period for deferred commission charges.

Investments

Prior to February 2011, the Corporation invested all its allocations in fixed income securities issued by the Province of Ontario, maturing within five years. In general, fixed rate bonds were purchased to align maturity dates to the Provincial Allocations repayment schedule provided in Note 4. For fiscal year 2019, these fixed income securities had a weighted-average yield of 2.05% (2018-2.10%).

In September 2010, in order to satisfy the requirements of the Federal Immigrant Investor Program, the Corporation approved an investment strategy to direct a significant portion of allocations received to the Loan Program managed by Ontario Infrastructure and Lands Corporation (OILC) a related in exchange for promissory notes. These promissory notes are 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. For fiscal year 2019, these promissory notes had a weighted average interest rate of 2.21% (2018-2.13%). As a result of the announced termination of the Immigrant Investor Program, OILC stopped borrowing funds from the Corporation in August 2014.

Allocations not taken by OILC were placed in five year fixed income securities issued by the Province of Ontario. Upon maturation, investment funds and any surplus income are put into short-term 90 day rotational Treasury Bills to earn nominal interest until the date of repayment to the investors. For the fiscal year 2019, these Treasury Bills had a weighted average yield of 1.64% per annum (2018-0.98%).

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, 2019
Cost
($ 000)		 March 31, 2019
Market
($ 000)		 March 31, 2018
Cost
($ 000)		 March 31, 2018
Market
($ 000)
OILC promissory notes 46,649 46,667 257,779 235,468
Fixed income bonds 46,463 46,421 108,626 100,014
Treasury bills 32,695 32,694 19,326 19,324
Sub-total 125,807 125,780 385,731 354,806

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.

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 2020 79,962
Due fiscal year 2021 7,154
Due fiscal year 2022 1,967
Due fiscal year 2023 161
Sub-total 89,244

An investor’s application for permanent residence may be withdrawn by the Investor or denied by the federal government. As at March 31, 2019 there are no applications in process.

Deferred commission charges

Deferred commission charges are comprised as follows:

  2019
($ 000)		 2018
($ 000)
Balance, beginning of year 1,219 5,306
Refund of commission (10) -
Amortization (1,063) (4,087)
Balance, end of year 146 1,219

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 and Growth and the Ministry of Citizenship and Immigration without charge.