MSF Canada Financial Report 2007

Financial Statements of

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

KPMG LLP Telephone (416) 228-7000 Chartered Accountants Fax (416) 228-7123 Yonge Corporate Centre Internet www.kpmg.ca 4100 Yonge Street Suite 200 Toronto ON M2P 2H3 Canada

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.

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

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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) $ 4,326,687 $ 9,332,463 Investments (note 4) 447,070 68,368 Accounts receivable (note 5) 1,751,226 1,789,158 Prepaid expenses 115,278 24,768 6,640,261 11,214,757

Capital assets (note 6) 239,289 52,778 $ 6,879,550 $ 11,267,535

Liabilities and Net Assets Current liabilities:

Accounts payable and accrued liabilities (note 7) $ 3,519,556 $ 5,689,194 Deferred contributions (note 8) – 7,896 3,519,556 5,697,090

Net assets:

Invested in capital assets 239,289 52,778 Unrestricted 3,120,705 5,517,667 3,359,994 5,570,445

Commitments (note 13) $ 6,879,550 $ 11,267,535

See accompanying notes to financial statements.

On behalf of the Board: Director Director

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

Donations $ 19,492,021 $ 17,027,884 Support from Canadian International

Development Agency (note 10) 3,850,000 4,000,000 Interest 293,142 349,845 Other 34,192 57,396 23,669,355 21,435,125

Expenses (note 11):

Program services: Emergency, medical, nutrition and health

projects (notes 10 and 12) 17,994,465 17,145,519 Public education 755,591 948,924 Program support and development 1,938,339 1,520,105 20,688,395 19,614,548

Supporting services:

Management and general 966,941 811,539 Fundraising 4,224,470 3,204,027 5,191,411 4,015,566

25,879,806 23,630,114 Excess of expenses over revenue $ (2,210,451) $ (2,194,989)


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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Changes in Net Assets Year ended December 31, 2007, with comparative figures for 2006 2007 2006 Invested in capital Unrestricted assets Total Total Net assets, beginning of year $ 5,517,667 $ 52,778 $ 5,570,445 $ 7,765,434 Excess of expenses over revenue (2,099,644) (110,807) (2,210,451) (2,194,989) Purchase of capital assets (297,318) 297,318 – – Net assets, end of year $ 3,120,705 $ 239,289 $ 3,359,994 $ 5,570,445


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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 $ (2,210,451) $ (2,194,989) Items not involving cash:

Amortization of capital assets 110,807 33,491 Program expenditures (7,896) (149,370)

(2,107,540) (2,310,868) Change in non-cash operating working capital:

Accounts receivable 37,932 (283,112) Prepaid expenses (90,510) 18,576 Accounts payable and accrued liabilities (2,169,638) 5,059,784

(4,329,756) 2,484,380 Investing activities:

Sale (purchase) of investments, net (378,702) 1,440,220 Purchase of capital assets (297,318) (37,787) (676,020) 1,402,433

Increase (decrease) in cash and cash equivalents (5,005,776) 3,886,813 Cash and cash equivalents, beginning of year 9,332,463 5,445,650 Cash and cash equivalents, end of year $ 4,326,687 $ 9,332,463


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

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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-for-trading 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.

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

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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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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:

2007 2006 Cash $ 3,426,683 $ 8,432,459 Money market 900,004 900,004 $ 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 2006 Market Market value Cost value Cost Equities $ 424,495 $ 417,292 $ 28,565 $ 28,478 Mutual funds 22,575 22,512 39,803 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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5. Accounts receivable:

2007 2006 Donations receivable $ 1,184,881 $ 1,260,730 MSF Holland 45,629 144,043 Other MSF organizations 358,890 236,743 Other 161,826 147,642 $ 1,751,226 $ 1,789,158

6. Capital assets:

2007 2006 Accumulated Net book Net book Cost amortization value value Office equipment $ 404,790 $ 302,925 $ 101,865 $ 47,479 Leasehold improvements 207,923 70,499 137,424 5,299 $ 612,713 $ 373,424 $ 239,289 $ 52,778

7. 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 $ 7,896 $ 157,266 Program expenditures (7,896) (149,370) Deferred contributions, end of year $ – $ 7,896


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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.

2007 2006 New grants recognized as revenue $ 3,850,000 $ 4,000,000 Grants disbursed by country:

Canada Volunteers Project $ – $ 380,000 Chad 380,000 – Democratic Republic of Congo – 950,000 Ivory Coast 665,000 665,000 Mozambique 237,500 – Somalia 665,000 665,000 Sudan 1,235,000 1,140,000 Uganda 475,000 –

$ 3,657,500 $ 3,800,000


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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 15% Program support and development 40% Management and general 20% Fundraising 25%

This allocation is supported by Médecins Sans Frontières International.


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12. Emergency, medical, nutrition and health projects by country:

2007 2006 Projects funded by CIDA (note 10) $ 3,657,500 $ 3,800,000 Angola – 210,375 Bolivia – 280,500 Burundi – 300,000 Cameroon – 170,000 Caucasus - Russia 1,000,000 300,000 Chad 1,000,000 200,000 Colombia 1,000,000 800,000 Democratic Republic of Congo 1,400,000 1,650,625 Ethiopia – 400,000 Haiti 1,400,000 1,575,550 India 1,000,000 700,000 Indonesia – 236,270 Ivory Coast 950,000 600,000 Lebanon – 15,003 Liberia – 780,000 Mozambique – 250,000 Nigeria – 400,000 Pakistan 1,000,000 300,000 Somalia 2,000,000 900,000 South Sudan – 900,000 Sierra Leone – 700,000 Sudan 1,500,000 500,000 Uganda 400,000 – Uzbekistan – 300,000 Zambia – 300,000 Zimbabwe 1,000,000 300,000 Other:

Access to essential medicines and DNDi 314,596 273,362 Other direct field costs 72,369 3,834 Emergencies 300,000 –

$ 17,994,465 $ 17,145,519


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13. Commitments:

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

2008 $ 193,000 2009 50,000 2010 46,000 $ 289,000

Documents

MSF Canada Financial Report 2007