2012 Financial Statements

FH CANADA

Financial Statements

September 30, 2012

Table of Contents Page

Independent Auditors' Report 1

Statement of Operations 3

Statement of Net Assets 4

Statement of Financial Position 5

Statement of Cash Flows 6

Notes to Financial Statements 7

INDEPENDENT AUDITORS' REPORT

To the members of:FH CANADA

We were engaged to audit the accompanying financial statements of FH Canada which are comprisedof the balance sheet as at September 30, 2012, and the statements of operations, net assets and cashflow for the year then ended, along with a summary of significant accounting policies and otherexplanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with Canadian generally accepted accounting principles, and for such internal control asmanagement determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with Canadian generally accepted auditing standards. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity'spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Basis for Qualified Opinion

In common with many charitable organizations, the society derives part of its revenue from the generalpublic in the form of donations; the completeness of which is not susceptible to satisfactory auditverification. Accordingly, our verification of these revenues was limited to the amounts recorded in therecords of the society and we were not able to determine whether any adjustment might be necessaryto contributions, excess of revenue over expenses, current assets, and net assets.

1

INDEPENDENT AUDITORS' REPORT (Continued)

Qualified Opinion

In our opinion, except for the effects of the preceding paragraph, these financial statements presentfairly, in all material respects, the financial position of FH Canada as at September 30, 2012 and itsfinancial performance and its cash flows for the year then ended, in accordance with Canadiangenerally accepted accounting principles.

CERTIFIED GENERAL ACCOUNTANTS

Abbotsford, B.C.January 16, 2013

2

FH CANADAStatement of OperationsFor the year ended September 30, 2012

Operating Capital 2012 2011

REVENUEContributions - program donations $ 2,548,244 $ - $ 2,548,244 $ 2,742,832Contributions - sponsorships 1,587,661 - 1,587,661 1,595,928Donated commodities (Note 1.e) 1,664,760 - 1,664,760 2,757,785Gifts in kind (Note 1.f) 84,593 7,000 91,593 208,680Grants - government 128,154 - 128,154 362,493Investment income 10,245 - 10,245 6,048Sales and service income 10,706 - 10,706 -

6,034,363 7,000 6,041,363 7,673,766

EXPENSESCommodities sent to the field (Note 1.e) 2,056,914 - 2,056,914 2,746,131Commodity shipping and other costs 250,671 - 250,671 206,500Salaries and related costs 1,343,102 - 1,343,102 1,356,907Direct international program payments 1,678,009 - 1,678,009 1,577,671CIDA grants remitted 56,720 - 56,720 311,051Grants to qualified donees 20,682 - 20,682 20,700Media and events 324,298 - 324,298 339,448Postage and delivery 104,817 - 104,817 100,711Travel 244,655 - 244,655 370,560Data processing and communications 93,458 - 93,458 96,646Occupancy 132,905 - 132,905 98,617Office supplies and expenses 32,972 - 32,972 28,495Professional and third party fees 92,517 - 92,517 60,000Insurance 12,113 - 12,113 11,497Meals, entertainment and related expenses 15,189 - 15,189 17,042Amortization - 71,692 71,692 71,514

6,459,022 71,692 6,530,714 7,413,490

EXCESS OF REVENUE/(EXPENSES)BEFORE OTHER ITEMS (424,659) (64,692) (489,351) 260,276

Foreign exchange loss (7,588) - (7,588) (14,779)Loss on disposal of capital assets - (4,168) (4,168) (950)Investment (loss)/gain 7,214 - 7,214 (13,807)

EXCESS OF REVENUE/(EXPENSES) $ (425,033)$ (68,860)$ (493,893)$ 230,740

See accompanying Notes to Financial Statements and Auditor's Report 3

FH CANADAStatement of Net AssetsFor the year ended September 30, 2012


NET ASSETS - Open $ 1,331,970 $ 423,422 $ 1,755,392 $ 1,524,652

Excess of Revenue/(Expenses) (425,033) (68,860) (493,893) 230,740

Interfund transfers (14,570) 14,570 - -

NET ASSETS - Close $ 892,367 $ 369,132 $ 1,261,499 $ 1,755,392


FH CANADAStatement of Financial PositionAs at September 30, 2012


ASSETS

CURRENT ASSETSCash and short-term deposits $ 238,487 $ - $ 238,487 $ 832,617Investments 849,907 - 849,907 187,039Accounts receivable 5,096 - 5,096 46,417Inventory (Note 4) 734,515 - 734,515 1,081,413Prepaid expenses 124,918 - 124,918 56,060Sales taxes refundable 20,420 - 20,420 22,765

1,973,343 - 1,973,343 2,226,311

CAPITAL ASSETS (Note 5) - 369,132 369,132 423,422

TOTAL ASSETS $ 1,973,343 $ 369,132 $ 2,342,475 $ 2,649,733

LIABILITIES & NET ASSETS

CURRENT LIABILITIESAccounts payable and accruals $ 117,491 $ - $ 117,491 $ 169,086Wages payable 14,698 - 14,698 11,559Deferred revenue (Note 1.c)(Note 6) 948,787 - 948,787 713,696

1,080,976 - 1,080,976 894,341

NET ASSETS 892,367 369,132 1,261,499 1,755,392

TOTAL LIABILITIES & NET ASSETS $ 1,973,343 $ 369,132 $ 2,342,475 $ 2,649,733

APPROVED ON BEHALF OF THE BOARD:

Director Director


FH CANADAStatement of Cash FlowsFor the year ended September 30, 2012


OPERATING ACTIVITIESExcess of Revenue/(Expenses) from operations $ (425,033)$ (68,860)$ (493,893)$ 230,740Add: non-cash items affecting operations

Amortization - 71,692 71,692 71,514Accounts receivable 41,322 - 41,322 (24,848)Inventory 346,898 - 346,898 (312,456)Prepaid expenses (68,858) - (68,858) 5,821Accounts payable and accruals (51,598) - (51,598) 85,258Sales taxes 2,346 - 2,346 (10,332)Wages payable 3,139 - 3,139 (11,052)Deferred revenue 235,092 - 235,092 364,431Loss on disposal of capital assets - 4,168 4,168 950

83,308 7,000 90,308 400,026

FINANCING ACTIVITIESAcquisition of capital assets - (21,570) (21,570) (44,456)

INVESTING ACTIVITIESInvestments (662,868) - (662,868) (35,069)

INCREASE IN CASH OR EQUIVALENTS (579,560) (14,570) (594,130) 320,501

INTERFUND TRANSFERS (14,570) 14,570 - -

CASH - OPEN 832,617 - 832,617 512,116

CASH - CLOSE $ 238,487 $ - $ 238,487 $ 832,617


FH CANADANotes to Financial StatementsFor the year ended September 30, 2012

1. ACCOUNTING POLICIES

(a) Accounting Framework

These statements have been prepared in accordance with Canadian Accounting Standardsfor Not-for Profit Organizations which is a framework available under Canadian GAAP (PartIII of the CICA Handbook). These financial statements were prepared by applying thenewly adopted accounting policies under Accounting Standards for Not-for-Profit Organ-izations at the opening balance sheet date, October 1, 2010 and throughout all periods pre-sented. Any assets or liabilities required to be recognized or unrecognized according tothese standards are adjusted to opening retained earnings.

The Society's new accounting policies are not materially different from those applied underthe previous accounting framework; as a result there are no changes to the openingbalance sheet of October 1, 2010.

(b) Revenue Recognition

The society uses the deferral method of accounting for contributions. Contributions arerecognized as revenue when received or receivable if the amount to be received can bereasonably estimated and collection is reasonably assured. Contributions related toexpenses of future periods are deferred and recognized as revenue in the period when therelated expenses are incurred.

(c) Deferred Revenue

Deferred revenue represents funds received during the year for projects that are tocommence or continue in future fiscal periods. These funds will be included in incomewhen expenses are incurred for the projects for which the funds have been received.

(d) Contributed Services

A substantial number of volunteers contribute a significant amount of their time each year.Because of the difficulty of determining the fair value, contributed services are notrecognized in the financial statements.

(e) Commodity Values

Commodity values represent the fair market value of donated and purchased suppliesshipped to various areas of need around the world. Commodities donated to the societyare stored at the society's warehouse until shipped. They are recognized as income whenthey are brought to full working order and shipped.

See accompanying Auditor's Report 7


SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f) Gift in Kind Donations

Donations of goods and supplies are recognized in the accounts of the society atestimated fair market value when the goods and supplies are used in the normal course ofthe society's operations and would otherwise have been acquired for distribution inaccordance with the society's purpose and objectives. The total donations in kind receivedduring the year was $1,761,419 (2011 - $2,966,465).

(g) Amortization

Capital assets are recorded at cost and are being amortized on the declining balance basisover the estimated useful life of the assets, with current year additions amortized at half ofthe usual rate, as follows:

Buildings 5 %Motor vehicles 20 %Computer equipment 40 %Furniture and fixtures 20 %

Leasehold improvements are being amortized on the straight-line basis over their estimat-ed useful life. Computer software is being amortized on the straight-line basis over threeyears. Current year additions to leasehold improvements and computer software areamortized at half of the usual rate.

(h) Fund Accounting

The society uses fund accounting procedures to account separately for resources thathave been designated for specific purposes and to maintain stewardship responsibility.Established funds are as follows:

Operating

A central fund that bears the costs of conducting the society's primary functions, intowhich all unrestricted funds flow.

Capital

A fund in which the resources are intended for use in capital improvements or toacquire and finance new capital assets.



SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i) Use of estimates

The preparation of the financial statements in conformity with Canadian generally accept-ed accounting principles requires management to make estimates that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities as atthe date of the financial statements, as well as reported amounts of revenues and ex-penses during the reporting period. These estimates are subject to measurement uncer-tainty and the effect on the financial statements of changes in such estimates in futureperiods could be significant.

(j) Foreign Currency

Foreign-currency-denominated monetary assets and liabilities are translated to Canadiandollars at the exchange rate in effect at the balance sheet date. Foreign-currency-denom-inated non-monetary assets and liabilities are translated to Canadian dollars at the ex-change rate in effect on the transaction date. Revenue and expense items are translatedat the exchange rate in effect at the time of the transaction. Amortization and propertywrite-downs are translated at the same exchange rate as the assets to which they relate.Foreign exchange gains or losses are included in the determination of net earnings for theyear.

2. DEFINITION OF ENTITY

FH Canada is incorporated under Part II of the Canada Corporations Act as a corporationwithout share capital and is registered as a charity for income tax purposes, and accord-ingly, is exempt from income taxes on its operations.

The objectives of FH Canada are to provide sustainable development and disaster relief tothe needy and destitute of the world, and to provide educational programs and informationin Canada to enhance public understanding of the issues surrounding poverty.

3. FINANCIAL INSTRUMENTS

Financial instruments are defined as a contractual right to either receive or deliver cash oranother financial instrument to another party. The company's financial instruments consistof the following items:



FINANCIAL INSTRUMENTS (Continued)

Cash and short-term depositsInvestmentsAccounts receivablePrepaid expensesAccounts payable and accruals

Fair Value

The carrying amount of cash and short-term deposits, investments, accounts receivable,prepaid expenses and accounts payable and accruals approximates their fair valuebecause of the short-term nature of these items.

Credit Risk

The society's financial assets that are exposed to credit risk are cash, investments andaccounts receivable. Credit risk associated with cash and investments is minimized sub-stantially by ensuring these assets are invested in accounts at a Schedule I bank withinvestment grade ratings. Credit risk associated with accounts receivable is minimized byrestricting the granting of credit and by application of internal collection policies andprocedures.

Interest Rate Risk

The society is not exposed to interest rate risk.

Foreign Currency Risk

The society is exposed to foreign exchange risk on cash, and accounts payable which aretransacted in US dollars.

4. INVENTORY

Inventory consists of donated equipment and supplies awaiting shipment and is recorded atestimated fair market value.



5. CAPITAL ASSETS

Original CostAccumulatedAmortization 2012 2011

Land $ 48,230 $ - $ 48,230 $ 48,230Buildings 372,666 (137,032) 235,634 248,035Motor vehicles 12,500 (5,683) 6,817 646Computer software 137,010 (103,114) 33,896 69,573Computer hardware 42,766 (28,948) 13,818 17,830Furniture and fixtures 81,508 (71,531) 9,977 14,786Leasehold improvements 42,615 (21,855) 20,760 24,322

$ 737,295 $(368,163) $ 369,132 $ 423,422The society has written off obsolete capital assets of $9,972 in furniture and fixtures, and$13,236 in computer hardware resulting in net losses of $2,473.

6. DEFERRED REVENUE

Deferred revenue represent unspent resources externally restricted for operating fundingreceived in the current period that is related to the subsequent fiscal year. Changes in thedeferred contributions balance are as follows:

2012 2011

Opening balance $ 713,696 $ 349,265Less: amounts recognized as revenue in the year (513,410) (169,265)Add: amounts received related to next year 748,501 533,696

$ 948,787 $ 713,696

7. LEASES

The society has entered into operating leases for the use of its Abbotsford premises andoffice equipment.

Under the terms of the leases, the minimum annual lease payments required are:

Year Operating2013 $ 99,2942014 $ 96,3432015 $ 96,0862016 $ 95,5732017 $ 65,857



8. INCOME TAXES

The society is registered as a charity under the Part II of the Canada Corporations Act andextra-provincially under the Society Act of British Columbia. The society is also registeredwith Canada Revenue Agency as a charitable organization and, as such, is not subject toincome taxes.

9. GLOBAL HUNGER FOUNDATION

In February 2008 the society gained control of Global Hunger Foundation. This occurredas a result of the majority of Global Hunger Foundation's board of directors also beingmembers of the board of FH Canada. The following financial information of the GlobalHunger Foundation has been taken from the society's unaudited financial statements forthe year ending June 30, 2012. There have been no significant events or transactions inthe intervening period from July 1, 2012 to September 30, 2012. There are no restrictionson the resources of the controlled entity and there are no significant differences in theaccounting policies followed.

2012 2011

Total assets $ 1,270 $ 1,085Net assets 1,270 1,085Total revenue 310 200Total expenses $ 125 $ 25

10. COMPARATIVE FIGURES

Comparative figures have been reclassified where necessary to conform to current pre-sentation and accounting framework.


Documents

2012 Financial Statements