MSF Canada Financial Report 2007

Financial Statements of

DOCTORS WITHOUT BORDERS CANADA/MÉDECINS SANS FRONTIÈRES CANADA Year ended December 31, 2007

KPMG LLP

Chartered Accountants Yonge Corporate Centre 4100 Yonge Street Suite 200 Toronto ON M2P 2H3 Canada

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(416) 228-7000 (416) 228-7123 www.kpmg.ca

AUDITORS' REPORT To the Members of Doctors Without Borders Canada/ Médecins Sans Frontières Canada

We have audited the statement of financial position of Doctors Without Borders Canada/Médecins Sans Frontières Canada as at December 31, 2007 and the statements of operations, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those 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 Organization as at December 31, 2007 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. As required by the Canada Corporations Act, we report that, in our opinion, except for the change in the method of valuing investments as explained in note 1 to the financial statements, these principles have been applied on a basis consistent with that of the preceding year.

Chartered Accountants, Licensed Public Accountants

Toronto, Canada March 20, 2008

KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

KPMG Canada provides services to KPMG LLP.

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA (Incorporated under the laws of Canada) Statement of Financial Position December 31, 2007, with comparative figures for 2006 2007

2006

Assets Current assets: Cash and cash equivalents (note 3) Investments (note 4) Accounts receivable (note 5) Prepaid expenses

$ 4,326,687 447,070 1,751,226 115,278 6,640,261

Capital assets (note 6)

$

9,332,463 68,368 1,789,158 24,768 11,214,757

239,289

52,778

$ 6,879,550

$ 11,267,535

$ 3,519,556 – 3,519,556

$

Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities (note 7) Deferred contributions (note 8) Net assets: Invested in capital assets Unrestricted

5,689,194 7,896 5,697,090

239,289 3,120,705 3,359,994

52,778 5,517,667 5,570,445

$ 6,879,550

$ 11,267,535

Commitments (note 13)

See accompanying notes to financial statements.

On behalf of the Board: Director Director

1

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Statement of Operations Year ended December 31, 2007, with comparative figures for 2006

Revenue: Donations Support from Canadian International Development Agency (note 10) Interest Other Expenses (note 11): Program services: Emergency, medical, nutrition and health projects (notes 10 and 12) Public education Program support and development Supporting services: Management and general Fundraising

Excess of expenses over revenue

2007

2006

$ 19,492,021

$ 17,027,884

3,850,000 293,142 34,192 23,669,355

4,000,000 349,845 57,396 21,435,125

17,994,465 755,591 1,938,339 20,688,395

17,145,519 948,924 1,520,105 19,614,548

966,941 4,224,470 5,191,411 25,879,806

811,539 3,204,027 4,015,566 23,630,114

$ (2,210,451)

See accompanying notes to financial statements.

2

$ (2,194,989)

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Changes in Net Assets Year ended December 31, 2007, with comparative figures for 2006

Unrestricted Net assets, beginning of year Excess of expenses over revenue Purchase of capital assets Net assets, end of year

$ 5,517,667 (2,099,644) (297,318) $ 3,120,705

See accompanying notes to financial statements.

3

$

2007

2006

Invested in capital assets

Total

Total

52,778

$ 5,570,445

$ 7,765,434

(110,807)

(2,210,451)

(2,194,989)

297,318

–

–

$ 239,289

$ 3,359,994

$ 5,570,445

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Cash Flows Year ended December 31, 2007, with comparative figures for 2006 2007

2006

Cash provided by (used in): Operating activities: Excess of expenses over revenue Items not involving cash: Amortization of capital assets Program expenditures

$ (2,210,451)

$ (2,194,989)

110,807 (7,896) (2,107,540)

33,491 (149,370) (2,310,868)

37,932 (90,510) (2,169,638) (4,329,756)

(283,112) 18,576 5,059,784 2,484,380

(378,702) (297,318) (676,020)

1,440,220 (37,787) 1,402,433

Change in non-cash operating working capital: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Investing activities: Sale (purchase) of investments, net Purchase of capital assets Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year

$

See accompanying notes to financial statements.

4

(5,005,776)

3,886,813

9,332,463

5,445,650

4,326,687

$

9,332,463

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements Year ended December 31, 2007

Doctors Without Borders Canada/Médecins Sans Frontières Canada ("MSF Canada") actively commenced operations on January 1, 1992. MSF Canada offers assistance to populations in distress, victims of natural or man-made disasters and victims of armed conflict, without discrimination and irrespective of race, religion, creed or political affiliation.

MSF Canada is a registered charity under the Income Tax Act (Canada) and, while registered, is exempt from income taxes.

1.

Significant accounting policies: These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The significant accounting policies are summarized as follows: (a) Financial instruments: Effective January 1, 2007, MSF Canada adopted The Canadian Institute of Chartered Accountants' ("CICA") Handbook Section 3855, Financial Instruments - Recognition and Measurement, and Handbook Section 3861, Financial Instruments - Disclosure and Presentation. These new handbook sections provide comprehensive requirements for the recognition and measurement of financial instruments. These accounting policy changes were adopted on a prospective basis with no restatement of prior period financial statements.

Under the new recognition and measurement standard, all financial instruments are classified as either held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale or other financial liabilities. Financial instruments classified as held-fortrading are measured at fair value with unrealized gains and losses recognized in the statement of operations. Financial instruments classified as held-to-maturity investments, loans and receivables, and other liabilities are measured at amortized cost. Financial instruments classified as available-for-sale are measured at fair value with the unrealized gains and losses recognized in the statement of changes in net assets.

Upon adoption of this new standard, MSF Canada designated its cash and cash equivalents as held-for-trading, which are measured at fair value, accounts receivable as loans and receivables, which are measured at amortized cost, and accounts payable and accrued liabilities as other financial liabilities, which are measured at amortized cost.

The adoption of this accounting standard had no material effect on the presentation of MSF Canada's financial statements.

5

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

1.

Significant accounting policies (continued): (b) Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and short-term investments with original maturities of less than 90 days. (c) Capital assets: Capital assets consist of office equipment and leasehold improvements. These costs are capitalized and amortized on a straight-line basis using an estimated useful life of three years. (d) Revenue recognition: MSF Canada follows the deferral method of accounting for contributions. Unrestricted contributions are recognized when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Donations are recognized on a cash basis since pledges are not legally enforceable claims. Externally restricted contributions are recognized as revenue in the year in which the related expenses are incurred.

Interest income is recognized as revenue on an accrual basis. (e) Contributed materials and services: Doctors and other volunteers contribute a significant amount of time in support of MSF Canada. As this time cannot be easily valued, contributed services are not recognized in the financial statements. Contributed materials are also not recognized. (f) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates.

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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

2.

Future accounting standards: The CICA has issued several new standards which are effective for MSF Canada for the reporting period beginning on January 1, 2008. The following accounting standards relate to financial instruments: Section 3862, Financial Instruments - Disclosures, and Section 3863, Financial Instruments - Presentation. These new standards revise and enhance the current disclosure requirements but do not change the existing presentation requirements for financial instruments. The new disclosures will provide additional information on the nature and extent of risks arising from financial instruments to which MSF Canada is exposed and how it manages these risks.

3.

Cash and cash equivalents: Cash and cash equivalents consist of the following:

Cash Money market

2007

2006

$ 3,426,683 900,004

$ 8,432,459 900,004

$ 4,326,687

$ 9,332,463

At December 31, 2007, the money market fund yielded an effective interest rate of 4.33% (2006 - 3.77%).

4.

Investments: 2007

Equities Mutual funds

Market value

2006 Cost

Market value

Cost

$ 424,495 22,575

$ 417,292 22,512

$ 28,565 39,803

$ 28,478 39,470

$ 447,070

$ 439,804

$ 68,368

$ 67,948

Equities represent gifts-in-kind donated at year end and sold subsequent to year end.

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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

5.

Accounts receivable:

Donations receivable MSF Holland Other MSF organizations Other

6.

2006

$ 1,184,881 45,629 358,890 161,826

$ 1,260,730 144,043 236,743 147,642

$ 1,751,226

$ 1,789,158

Capital assets:

Office equipment Leasehold improvements

7.

2007

Cost

Accumulated amortization

2007 Net book value

2006 Net book value

$ 404,790 207,923

$ 302,925 70,499

$ 101,865 137,424

$ 47,479 5,299

$ 612,713

$ 373,424

$ 239,289

$ 52,778

Accounts payable and accrued liabilities: Included in accounts payable and accrued liabilities is $3,112,597 (2006 - $5,464,312) in amounts owing to other MSF organizations.

8.

Deferred contributions: Deferred contributions represent funds received for special projects. The continuity of this balance is as follows: 2007

2006

Deferred contributions, beginning of year Program expenditures

$ 7,896 (7,896)

$ 157,266 (149,370)

Deferred contributions, end of year

$

$

8

–

7,896

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

9.

Fair values of financial instruments: The fair values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these financial instruments.

The fair values of investments are based on quoted market values, as disclosed in note 4.

10.

Canadian International Development Agency: MSF Canada solicits funds for projects being undertaken by MSF worldwide from Canadian International Development Agency ("CIDA"). CIDA funds a number of these projects and grants the funding to MSF Canada. MSF Canada retains 5% (2006 - 5%) of the CIDA funds to cover its project coordination, administration and overhead costs. MSF Canada enters into an agency agreement with the operational MSF section that will carry out the project and passes on the CIDA funds to that section. At the conclusion of the project, the operational section accounts for the funds to MSF Canada. MSF Canada reviews these accounts and presents them to CIDA. To the extent that the funds are not fully spent, they are returned by the operational section to MSF Canada and by MSF Canada to CIDA.

New grants recognized as revenue Grants disbursed by country: Canada Volunteers Project Chad Democratic Republic of Congo Ivory Coast Mozambique Somalia Sudan Uganda

2007

2006

$ 3,850,000

$ 4,000,000

$

$

– 380,000 – 665,000 237,500 665,000 1,235,000 475,000

$ 3,657,500

9

380,000 – 950,000 665,000 – 665,000 1,140,000 –

$ 3,800,000

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

10.

Canadian International Development Agency (continued): The grants disbursed are included in program services expenses - emergency and medical projects.

For the year ended December 31, 2007, the difference between net grants recognized as revenue and grants disbursed represents project coordination, administration and overhead expenses totalling $192,500 (2006 - $200,000).

11.

Expenses: MSF Canada has allocated its common expenses to the following accounts:

Public education Program support and development Management and general Fundraising

15% 40% 20% 25%

This allocation is supported by Médecins Sans Frontières International.

10

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

12.

Emergency, medical, nutrition and health projects by country: 2007

Projects funded by CIDA (note 10) Angola Bolivia Burundi Cameroon Caucasus - Russia Chad Colombia Democratic Republic of Congo Ethiopia Haiti India Indonesia Ivory Coast Lebanon Liberia Mozambique Nigeria Pakistan Somalia South Sudan Sierra Leone Sudan Uganda Uzbekistan Zambia Zimbabwe Other: Access to essential medicines and DNDi Other direct field costs Emergencies

11

$

3,657,500 – – – – 1,000,000 1,000,000 1,000,000 1,400,000 – 1,400,000 1,000,000 – 950,000 – – – – 1,000,000 2,000,000 – – 1,500,000 400,000 – – 1,000,000

2006

$

3,800,000 210,375 280,500 300,000 170,000 300,000 200,000 800,000 1,650,625 400,000 1,575,550 700,000 236,270 600,000 15,003 780,000 250,000 400,000 300,000 900,000 900,000 700,000 500,000 – 300,000 300,000 300,000

314,596 72,369 300,000

273,362 3,834 –

$ 17,994,465

$ 17,145,519

DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2007

13.

Commitments: MSF Canada has commitments for its leased premises and equipment. The future minimum annual lease payments are as follows:

2008 2009 2010

$ 193,000 50,000 46,000 $ 289,000

12