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2012ANNUALREPORTGrowingandBuildingReformsforaSustainableFuture. KEYPERFORMANCEINDICATORSOperationalIndicators.CollectionAccessibilityIndicators.AccessOESCollectionSitesOntarioPopulationCovered125km10kmMeasuresrelatedtotheweightofregulatedelectronicscollectedbytheprogramforrecycling.Measuresrelatedtotheconvenienceofaccessingtheprogramtohaveregulatedelectronicsrecycled.OntarioElectronicStewardship1TONNETOTALTONNES173031.31KgCapitaTOTALTONNES345852.62KgCapitaTOTALTONNES522813.96KgCapitaTOTALTONNES757025.61KgCapitaAp12009-Mar312010Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012314527520444AffiliatesGenerators223715672507OESCollectionEventsRoundups250435270228968525km10kmJan-Dec2011868125km10kmApr12010-Mar312011918525km10kmJan-Dec20128577TheOESandRECYCLEYOURELECTRONICSmarksarethepropertyofOntarioElectronicStewardshipUnauthorizeduseprohibited.1.SourceStatisticsCanada2012OntarioPopulationwww.statcan.gc.caApril2009-December2012ThistablereflectsKPIsasof2012 PublicAwarenessandDirectIndustryParticipationIndicators.AwarenessFinancialIndicators.CostMeasuresrelatedtotheoverallcostsofdeliveringtheprogramincludingcollectionconsolidationtransportationauditsprocessingadministrationcommunicationsmanagementandprofessionalfees.Measuresrelatedtothepublicsawarenessoftheprogramandthedirectparticipationofobligatedindustryintheprogramforenvironmentalcompliance.ofServiceProviders209446360512ofStewardsRemitters735797770787AwarenessofOESandrye.ca2TotalCostPerTonneMaterialCostRDPEOverhead2265671231.121249.72986.0411.580.29283.6147.7543.9145.65111.1374.642010KEYPERFORMANCEINDICATORS1104.591508.891671.940.0020112012TheOESandRECYCLEYOURELECTRONICSmarksarethepropertyofOntarioElectronicStewardshipUnauthorizeduseprohibited.2.SourceIpsos-ReidDecember2012201020112012Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012Apr12009-Mar312010Apr12010-Mar312011Jan-Dec2011Jan-Dec2012April2009-December2012ThistablereflectsKPIsasof20123 4AsChairoftheOESBoardIamhonouredtopresentthe2012AnnualReport.In2012theOESBoardfocusedcontinuingeffortsonensuringthedeliveryofanenvironmentallyresponsibleandcosteffectiveelectronicsprogram.WithacommitmenttocontinuousimprovementOESadoptedanumberofreformsaimedatensuringfinancialstability.Chiefamongthemismovingtoacostrecoveryfundingmodelwhichtakeseffectin2013andaddressestheuniquecharacteristicsoftheelectronicssupplychain.Ensuringthatend-of-lifeelectronicsaredivertedfromourlandfillsandwaterwayssafelyandresponsiblyisacorepartofourmandate.WorkingwithourpartnertheRecyclerQualificationOfficeRQOwemaintainhighstandardsandastrongcomplianceandenforcementregimetoprotectstewardsprocessorsandmostimportanttheenvironment.BycentralizingtherecyclercertificationprocessthroughRQOandharmonizingtheseeffortsnationallyoureffortstosafeguardtheenvironmentwillbefurtherstrengthened.Againstthisbackdroptheprogramcontinuedtogainmomentumandrealizegreatresults.WearedelightedtoreportthatinjustoverthreeyearsOntarioresidentsandbusinessestogetherwithournetworkofapprovedserviceprovidershavedivertedalmost170000tonnesofelectronicsfromlandfill.Inotherwordssome5.61kilogramsofwasteelectronicspercapitawerecollectedthisyearcomparedto1.31kilogramspercapitacollectedintheprogramsfirstyear.Overthesameperiodawarenessoftheprogramhasincreasedthreefoldfrom22percentto67percentwhiletotalcostpertonnehasbeendrivendownfrom1672in2010to1105pertonnein2012.ThebottomlinetheOESprogramnotonlyworksitisasignificantassetforOntarians.2012alsobroughtachangeinthecompositionoftheOESBoard.OnbehalfoftheBoardIwanttothankoutgoingmembersDavidBoisSergeLegerChristaCopelandElenaPapakostaPeterSkubnaDr.JamesGray-DonaldandGaryRygusfortheircommitmentandtheirservice.ThisyearsachievementsweredrivenbytheeffortsoffellowBoardmembersadedicatedOESstaffandacomprehensivenetworkofprogrampartners.AswelookforwardtotheyearaheadweremaincommittedtocontinuousimprovementandanadherencetoindustryleadingenvironmentalrecyclingstandardsthattogetherhavebecomethehallmarkoftheOESprogram.MESSAGEFROMTHECHAIRMESSAGEFROMTHECHAIR 52012wasaverygoodyearforOntarioswasteelectricalandelectronicequipmentWEEEdiversionprogram.Itwasalsoayearthatcamewithsomechallenges.Challengecameintheformofprogramreform.Asresponsiblefinancialmanagersoftheprogramourgoalistobalancerevenuesandcoststoensurethattheprogramremainsstableconvenientefficientandeffective.In2012weintroducedreformsbuiltonbestpracticesfromotherjurisdictionsandwithextensiveconsultationwithgovernmentWasteDiversionOntarioandprogramparticipants.AnewfundingmodelwhichtakeseffectMay12013reflectsthegovernmentsrequestthatindustry-fundedprogramslikeOESrecoverthefullcostoftheiroperationsannually.Thenewfundingmodelisbasedonactualcostsandincludesprovisionforsufficientoperatingreservesanddeficitrecoverytoprovidesustainablefundinggoingforward.Reformofourprocessorincentiveprogramalignedincentiveswithmarket-basedcostsenhancedenvironmentalstandardsandstrengthenedprogramcompliance.AfocusoncontinuousimprovementhasbroughtoperatingcoststotheirlowestlevelinthreeyearsandamongthelowestinCanada.Atthesametimewefulfilledourmandatebydivertingmorethan75000tonnesofWEEEanincreaseof45percentoverlastyearandexceedingourtargetforthesecondyearinarow.Inthefewshortyearssincetheprogramsinceptionwehaveachievedamilestonein2012of100000tonnesofwasteelectronicscollectedandarewellonourwaytoreachingthe200000tonnescollectedmilestonein2013.Thecontinuedcommitmenttotheprogramisindeedhearteningandunderscorestheprogramswidespreadneedandsupportforitacrosstheprovince.Ontarianscanberightlyproud.IamalsoproudtoreportthatOESreceivedanAwardforExcellenceinCorporateResponsibilityfromGreenLivingEnterprisesinrecognitionoftheteamseffortstopromoteandeducateallOntariansonthesaferesponsiblehandlingofend-of-lifeelectronics.Ourmissiontoleadend-of-lifeelectronicscollectioninanenvironmentallyresponsibleandcosteffectivemannerforthebenefitofallOntariansisatthecoreofthedecisionswemakeonbehalfofthoseweserveincludingournetworkofserviceprovidersthatworkwithintheprogramandtheelectronicproductstewardsthatfundit.Forallthatwehaveachievedtogetherin2012thankyou.WelookforwardtoyourcontinuedparticipationinCanadasmostsuccessfulWEEEdiversionprogram.MESSAGEFROMTHEEXECUTIVEDIRECTORMESSAGEFROMTHEEXECUTIVEDIRECTOR OESisanot-for-profitorganizationthatbeganoperationsinApril2009withleadingretailinformationtechnologyandconsumerelectronicscompanieswhomakeandmarketelectronicproductsinOntario.WecollectfeesfrommembercompaniestofulfillobligationssetoutbyOntariosWasteDiversionAct2002andtheWasteElectricalandElectronicEquipmentWEEEProgramPlan.TheprogramrequireselectricalandelectronicequipmentEEEbrandownersfirstimportersfranchisorsandassemblersorStewardstofundthediversionoftheirproductsandpackagingfromthewastestream.OESisgovernedbyavolunteerBoardofDirectorsdrawnfromacrossthesupplychainthatrepresentsawiderangeofobligatedelectricalandelectronicequipment.6OurMissionToleadend-of-lifeelectronicscollectioninanenvironmentallyresponsibleandcosteffectivemannerforthebenefitofallOntarians.PROGRAMOVERVIEWattheendof2012stoodat67growingthreefoldfrom20092010.ProgramAwarenessRecycleYourElectronics.caandOntarioElectronicStewardship2267ContinuedMomentumTheamountofe-wastecollectedincreasedto5.61kilogramspercapitafrom3.96kilogramsin2011.3.96kg5.61kg20122011CostReductionTotalprogramcostspertonnein2012werereducedto1105from1509theprioryear.-404OESisanot-for-profitorganizationthatbeganoperationsinApril2009withleadingretailinformationtechnologyandconsumerelectronicscompaniesthatmakeandmarketelectronicproductsinOntario.WecollectfeesfromcompaniestofulfillobligationssetoutbyOntariosWasteDiversionAct2002andtheWasteElectricalandElectronicEquipmentWEEEProgramPlan.TheprogramrequireselectricalandelectronicequipmentEEEbrandownersfirstimportersfranchisorsandassemblersorStewardstofundthediversionoftheirproductsandpackagingfromthewastestream.OESisgovernedbyavolunteerBoardofDirectorsdrawnfromacrossthesupplychainthatrepresentsawiderangeofobligatedelectricalandelectronicequipment. 7SERVICEPROVIDERTYPE2012TOTALOES-APPROVEDSERVICEPROVIDERSOESCollectors444TransportationCompanies31ConsolidationCompanies5SuppliesSpecialServicesandRe-packers16PrimaryProcessors14ReuseRefurbishment18PROGRAMHIGHLIGHTSOESSERVICEPROVIDERSJANUARYDECEMBER2012Ournetworkofserviceproviderswhichmakestheprogramarealityincludesmunicipalretailercommercialandnot-for-profitcollectorsaswellastransportersconsolidatorsandprimaryprocessorsandtheirgenerators.Togetherthenetworkpartnersworkhardandplayacrucialroleindrivingsuccessanddeliveringresults.75702tonnesofout-of-useelectronicswerecollectedin2012a45increaseintonnesdivertedover2011.At5.61kgpercapitaOEShasthehighestdiversionrateofanyWEEEprograminCanada.Totalcostpertonnedecreasedto1105down27from2011reflectingthelowestprogramcostsinthreeyears.ThevastmajorityofOntarians81areconcernedabouttheimproperdisposalofout-of-useelectronics.Aprogrammilestonewasachievedtheprogramcollectedrecycledandsuccessfullydivertedfromlandfillmorethan100000tonnesofelectronicwastesincetheprogramsinception. 8ACCESSIBILITYOESiscommittedtoexpandingaccessibilityoftheprogramtoensurethatallOntarianswhowishtodisposeoftheirout-of-useelectronicandelectricaldevicescandosoaseasilyandconvenientlyaspossible.Ourcommitmenttocontinuousimprovementdrivesinnovativearrangementsthatareappropriatetothecommunitiesthatweserve.Wethankallourmunicipalpartnersfortheeffortstheyhavemadetomeettheneedsoftheirconstituentstodivertwasteelectronicsfromlandfill.ThetablebelowillustrateshowOEShasbroughttheprogramwithinreachofOntarians.ACCESSIBILITYkM2012OESCOLLECTIONSITESANDEVENTSGENERATORCOLLECTIONSITESANDEVENTSTOTALACCESSIBILITYTotalKilometresOntarioPopulationCoveredTotalKilometresOntarioPopulationCoveredTotalKilometresOntarioPopulationCovered10km7710km7110km8025km8525km8125km8550km8650km8450km86MARkETDEVELOPMENTInresponsetoneedsexpressedbythemicroandsmallbusinesscommunityOESlaunchedatwo-weekpilotpromotionalradiocampaigntargetingsmallbusinessinhighdensitycommercialareasoftheGreaterTorontoAreatoarrangeforthecollectionofWEEEatnocosttobusiness.SuccessofthepilotprojectspurreddevelopmentofICIroundupsinOrangevilleandBolton.Additionalpilotstargetingmulti-residentialcollectioninAjaxPickeringandUxbridgebroughtsimilarsuccess. 9AsresponsiblemanagersofelectronicsrecyclingandreuseinOntarioOESiscommittedtodeliveringaprogramthatiseffectiveandefficient.OverthecourseoftheyearOESworkedwithWasteDiversionOntarioandtheMinistryoftheEnvironmenttodevelopanewcostrecoveryfundingmodelthatwillsetenvironmentalhandlingfeesonthebasisofactualcostsratherthanestimatesandforecasts.ThisnewmodelisexpectedtostabilizefundingmovingforwardallowingtheprogramtokeeppacewiththegrowingdemandforsaferesponsibleandregulatedelectronicsrecyclinginOntario.Environmentalhandlingfeeswereadjustedupordownacrossallelectronicandelectricalequipmentcategoriesamoveaimedatbalancingrevenuesandcostsuntilthenewfundingmodelcomesonlinenextyear.Movingtocostrecoveryisjustonestepinaseriesofeffortsmadethisyeartomeetgrowingdemandwhilebalancingrevenueandcosts.Anumberofreformsbuiltonbestpracticeswereintroducedin2012toenhanceprogrameffectiveness.Amongthemaredesignedprocessorincentiveprogramalignsincentiveswithmarket-basedcostsenhancesenvironmentalstandardsthroughcontractualobligationsandstrengthensprogramcompliancebyintroducingsuchenhancementsasauditchecklistsforgenerators.OESalsocarriedoutaninternalreorganizationtoloweroperatingcostsandenhanceprogrameffectivenessthroughaninsourcedstaffarrangement.Anewweb-basedmaterialtrackingsystemMTSiscontributingtoloweredmaterialmanagementcostsandimprovingvisibilityandcontrolsacrosstheprogramscollectionnetwork.PROGRAMREFORMSCOMPLIANCEATwORkOESmonitorsprogramcompliancethroughaseriesofinitiativesincludingariskmanagementandcompliancecommitteethatmeetsregularlyaprogramenforcementofficerinthefieldanincidentreportinglinetoencourageintelligencegatheringauditsofallserviceproviderswhoparticipateintheprogramandthird-partyinvestigations. 10EFFECTIVENESSAT-A-GLANCEMATERIALPROCESSMetalsFerrousAluminumCopperMetalsaremanuallyandormechanicallyseparatedandsmeltedforreclaimOtherpreciousmetalsPreciousmetalcontainingchipsandcircuitboardsaremanuallyandormechanicallyseparatedandsmeltedforreclaimofthepreciousmetalsCablesandwiresManuallyandormechanicallyseparatedandsmeltedformetalrecoveryHighandlowgradecircuitboardsManuallyandormechanicallyseparatedandsmeltedforreclaimofpreciousmetalsGlassnon-hazardousNon-leadedglassismanuallyseparatedforrecoveryormixedwithleadedglassstreamforsmeltingLeadedGlassCathodeRayTubesCRTleadedplasmadisplayGlassismanuallyandormechanicallyseparatedandeithersentintoleadedglassproductionorsmeltedtoreclaimleadfromtheglasswhAThAPPENSTOELECTRONICwASTEProcessingrecycledelectronicsresultsintherecoveryofrawmaterialssuchasmetalandglassasnotedbelow.Wasteelectronicsarecollectedandthenshippedtoaconsolidationfacilitywheretheyareinspectedandweighed.Fromthereprimaryprocessorssafelydismantletheitemsandseparatethemintoindividualcomponents.Valuablecommoditiessuchassteelaluminumcopperglassandplasticarethenshreddedsmeltedorprocessedasrawmaterialsforfutureuse.RECYCLINgwEEESOMEOfThEPROCESSESINVOLVED 11PROgRAMgROwThIn2012theOESprogramexperiencedsignificantgrowthinthetotalWEEEcollectedforend-of-lifeelectronicsmanagement.ThefollowingchartsdepictthetotaltonnesofWEEEcollectedsincetheprogramsinceptionbymonthandchannelaswellasyearoveryearbymonth.TOTALTONNESYEAROVERYEAR20122011201020090Jan100020003000400050006000700080009000TotalTonnesFebMarAprMayJunJulAugSepOctNovDecTOTALTONNESBYCHANNELPIAllocationRRTotalApr09010002000300040005000600070008000Jun09Aug09Oct09Dec09Feb10Apr10Jun10Aug10Oct10Dec10Feb11Apr11Jun11Aug11Oct11Dec11Feb12Apr12Jun12Aug12Oct12Dec12TotalTonnes 12Abigconcern11Somewhatofaconcern5451Notmuchofaconcern1011NotconcernedatallNeverthoughtaboutit2323DontknowCONCERNSWITHIMPROPERDISPOSALOFELECTRONICWASTE303020112012MARkETRESEARCHFINDINGSAWARENESSACROSSONTARIO676566646565616364636265847064707165726273587165676269646367616762686359Dec12Jul12Apr12Jan12October11Jul11TotalGTACentralEastSouthwestNorthAwarenessIsGrowingAcrossOntarioCombinedawarenessofRecycleYourElectronics.caandOntarioElectronicStewardshipat67.SourceIpsos-ReidJanuary201367AnIssueThatConcernsOntarioInresponsetoasurveyquestion81ofOntariansareconcernedaboutimproperdisposalofelectronicwaste.SourcePollaraAugust20128112 13COMMUNICATIONSOUTREACHIn2012OEScontinuedthefocusonadual-brandstrategythathighlightsOESastheoperatingentityforOntariose-wastediversionprogramRecycleYourElectronics.ca.In2012RecycleYourElectronicsbecameanofficialmarkofOntarioElectronicStewardship.OvertheyearOESexecutedmulti-facetedcommunicationsoutreachstrategieswithfourgoalsinmindenhancingbrandcommunicationsandpositioningraisingprogramawarenessdeepeningstakeholderrelationsandinfluencingshiftsthatdrivepositiveaudienceaction.100000TONNESANDCOUNTINgInthespringOESmarkedanimportantmilestoneinannouncingthatmorethan100000tonnesofelectronicwastehadbeencollectedrecycledandsuccessfullydivertedfromlandfillsincetheprogramsinception.TorecognizetheeffortsofOntariansinreachingthissignificantmilestoneandspurevenmoree-wastediversionfromlandfillamulti-facetedsocialmediacampaignleveragingahighprofilesocialmediaexpertinthetechfieldwaslaunchedtargetingconsumersandkeystakeholderstopromotethecauseofdivertinge-wastefromlandfill.ThisintegratedcampaignwhichfocusedonGTAandEasternOntarioprovedtobeverysuccessfulreachingclosetosixmillionOntariansthroughtelevisionradioonlineprinteventsandsocialmediaplatforms.OESleveragedmediaattentionandamobiletourtoencourageOntarianstosignanext100000tonnespledgesecuringover5000pledgesbytheendoftheyear.AwARD-wINNINgCOMMUNICATIONSTwoofourRecycleYourElectronics.caradiospotsOldTVandOldBoomBoxwonCrystalawardsinthreecategoriesthisyear.TheCrystalscelebratethebestinradiocreativeinCanada.Thespotsweredevelopedwiththegoalofpromotingacalltoactiontovisitthewebsitetofindasaferesponsibleandfreedrop-offlocationandhelpeddrivea100increaseintraffictothewebsitewith50ofthattrafficfromtheradiospottoourmobilesite.WewereawardedasateamforExcellenceinCorporateResponsibilityfromGreenLivingEnterprisesinrecognitionofthestrategicuseoffundstopromoteandeducateallOntariansonthesaferesponsiblehandlingofend-of-lifeelectronics.STAkEhOLDERCOMMUNICATIONSIn2012OESundertookaseriesofcomprehensiveconsultationsthatincludedworkgroupssurveysorientationsandinformationsessionswithstakeholders.Topicscoveredfordialogueprocessorincentiveandreformsrevisedstewardfeesstateoffloor-standingprintercategoryandanewfundingmodelcostrecoveryfortheprogram.ManysummariesreportingoutcomescommentsandfindingsarepostedontheOESwebsite.RECOgNIzINgTOPMUNICIPALPARTNERSMunicipalitiesarekeypartnerswithOEStoeducatecommunitiesonwhereandhowtheymaysafelyandresponsiblydisposeofout-of-useelectronics.OEScelebratedits100000tonnescollectedmilestonein2012byrecognizingthetopmunicipalitiestotaltonnesandtotalkghouseholdintheireffortsinthismilestoneperiod.TOP5MUNICIPALITIESVOLUMEAPRIL2009DECEMBER2011RegionTotalTonnes1.Toronto.................................................4232.662.Simcoe.................................................1639.243.Halton..................................................1584.854.Niagara................................................1342.985.Durham................................................1268.20TOP5MUNICIPALITIESkgPERhOUSEhOLDAPRIL2009DECEMBER2011RegionKgPerHousehold1.CityofPeterborough.................................32.822.TownshipofAlgonquinHighlands.............32.553.NorthRenfrewLandfillOperationsBoard..32.264.MunicipalityofDysart...............................29.825.TownshipofSeguin...................................28.44 14RecyclerQualificationOffice92CaplanAveSte.102BarrieONL4N0Z7May152013REELECTRONICSRECYCLERAUDITSANDAPPROVALSSincetheinceptionoftheOntarioElectronicStewardshipOESprogramrecyclershavebeenauditedagainsttherequirementsoftheElectronicsRecyclingStandardERS.NowincorporatedintothebroaderRecyclerQualificationProgramRQPtheERSdefinestheminimumrequirementsforelectronicsrecyclerstoensurethatend-of-lifeelectronicsandtheresultantmaterialstreamsarehandledinasafeenvironmentallysoundandresponsiblemanner.NowpartoftheElectronicProductsRecyclingAssociationtheRecyclerQualificationOfficeRQOconductsrecyclerauditsonbehalfoftheindustry-ledprovincialelectronicsprogramsinaccordancewiththerequirementsoftheRQP.AsofDecember312012alloftheOESapprovedrecyclershavebeenauditedbytheRQOhavedemonstratedconformancewiththerequirementsoftheERSandapprovedundertheRQP.SeanDeVriesDirectorRecyclerQualificationOfficeElectronicProductsRecyclingAssociation 15AUDITEDfINANCIALSTATEMENTSANDCOMMENTARYTheauditedfinancialstatementsreflectrevenueandexpensesatcalendaryear-end.Totalrevenuestewardfeesinterestandotherrevenueof58.6millionisdown13.12millionover2011.ThedecreasereflectsafullyearsimpactofthestewardfeesintroducedAugust12011.Directoperatingcostsof74.64millionareup9.30millionfrom2011a14increasebecausetheWEEEprogrammanagedahighertotalvolumeofWEEEin2012thantheprioryear75702tonnesin2012vs52281tonnesin2011a44increase.Otherexpensesof8.98millionaredown4.57millionfromlastyear.MostnotablysharedpromotionandeducationPEexpenseswere4.4millionlowerthisyearreflectingasignificantfocusplacedonconsultingwithandcommunicatingtostakeholdersaswellasefficientuseofpaidandorganicsearchearnedmediacommunity-basedpromotionaleventsandsocialmedia.Lowerprogramdeliverycostsreflectsavingsduetotheinsourcingofthird-partyservicefunctionsin2012.DuringtheyeartheOESBoardofDirectorsremovedinternalrestrictionsontheorganizationsreservefundtransferring22millioninfundstounrestrictednetassetsinordertorespondtoincreaseddemandfortheorganizationsWEEEdiversionprograms.OESsawadeficiencyofrevenueoverexpensesin2012ofjustover25millionreflectingtheapplicationofsurplusmoniesto2012operationsresultingfromtheincreasedvolumeofWEEEcollectedandprocessedin2012.2013NoteEffectiveMay12013stewardfeeswillbebasedontheprincipleoffullcostrecoverywithprovisionforappropriateoperatingreservesmaterialcategorypastdeficitrecoveryandannualreconciliationtoactualoperatingcosts.FinancialsYearendedDecember312012 16Tel4168650200Fax4168650887www.bdo.caBDOCanadaLLPRoyalBankPlazaSouthTower200BayStreet33rdFloorPOBox32TorontoONM5J2J8CanadaIndependentAuditorsReportTotheMembersofOntarioElectronicStewardshipWehaveauditedtheaccompanyingfinancialstatementsofOntarioElectronicStewardshipwhichcomprisethebalancesheetsasatDecember312012December312011andJanuary12011andthestatementsofchangesinnetassetsoperationsandcashflowsfortheyearsendedDecember312012andDecember312011andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.ManagementsResponsibilityfortheFinancialStatementsManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithCanadianaccountingstandardsfornot-for-profitorganizationsandforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatementwhetherduetofraudorerror.AuditorsResponsibilityOurresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.WeconductedourauditsinaccordancewithCanadiangenerallyacceptedauditingstandards.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditorsjudgmentincludingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatementswhetherduetofraudorerror.Inmakingthoseriskassessmentstheauditorconsidersinternalcontrolrelevanttotheentityspreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstancesbutnotforthepurposeofexpressinganopinionontheeffectivenessoftheentitysinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagementaswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethattheauditevidencewehaveobtainedinourauditsissufficientandappropriatetoprovideabasisforourauditopinion.OpinionInouropinionthesefinancialstatementspresentfairlyinallmaterialrespectsthefinancialpositionofOntarioElectronicStewardshipasatDecember312012December312011andJanuary12011andtheresultsofitsoperationsanditscashflowsfortheyearendedDecember312012andDecember312011inaccordancewithCanadianaccountingstandardsfornot-for-profitorganizations.CharteredAccountantsLicensedPublicAccountantsMarch72013TorontoOntario 17OntarioElectronicStewardshipBalanceSheetDecember31December31January1201220112011AssetsCurrentCash4252150297953626067211InvestmentsNote3-21180589-Accountsreceivable128527031753735515803918Prepaidexpenses6253866689532330171673914236437541903459CapitalassetsNote4724686147823-178920774251219841903459LiabilitiesandNetAssetsCurrentAccountspayableandaccruedliabilitiesNote5184202981803082710253990NetAssetsInvestedincapitalassets724686147823-Unrestricted1252907233354820649469InternallyrestrictedNote6-22000000110000005282212448137131649469178920774251219841903459 18OntarioElectronicStewardshipStatementofChangesinNetAssetsFortheyearendedDecember312012InvestedinCapitalInternally2012AssetsUnrestrictedRestrictedTotalBalancebeginningofyear14782323335482200000024481371Deficiencyofrevenueoverexpensesfortheyear20256524807027-25009592Investmentincapitalassets779428779428--TransferofinternallyrestrictednetassetsNote6-2200000022000000-Balanceendofyear7246861252907-528221FortheyearendedDecember312011InvestedinCapitalInternally2011AssetsUnrestrictedRestrictedTotalBalancebeginningofyear-206494691100000031649469Deficiencyofrevenueoverexpensesfortheyear109737157125-7168098Investmentincapitalassets158796158796--TransfertointernallyrestrictednetassetsNote6-1100000011000000-Balanceendofyear14782323335482200000024481371 19OntarioElectronicStewardshipStatementofOperationsFortheyearendedDecember3120122011RevenueStewardfees5828253371328898Investmentincome177176389101Other150000-5860970971717999DirectoperatingcostsMaterialmanagementcosts7464537265336476OtherexpensesSharedpromotionandeducation33235577724467Sharedresearchanddevelopment-15314WasteDiversionOntarioadministrationandprogramdelivery1044677541565Programdelivery15633303910654Administration304236513576218973929135496218361930178886097Deficiencyofrevenueoverexpensesfortheyear250095927168098 20OntarioElectronicStewardshipStatementofCashFlowsFortheyearendedDecember3120122011CashprovidedbyusedinOperatingactivitiesDeficiencyofrevenueoverexpensesfortheyear250095927168098AdjustmentstoreconciledeficiencyofrevenueoverexpensesfortheyeartocashprovidedbyoperatingactivitiesAmortizationofcapitalassets20256510973Non-cashcomponentofinvestmentincome102588180589Lossondisposalofcapitalassets5545-Changesinnon-cashworkingcapitalbalancesAccountsreceivable46846521733437Prepaidexpenses604357634565Accountspayableandaccruedliabilities3894717776837192255901928879InvestingactivitiesPurchaseofinvestments1000000021000000Proceedsfrominvestments31283177-Purchaseofcapitalassets791223158796Proceedsfromdisposalofcapitalassets6250-2049820421158796Increasedecreaseincashduringtheyear127261423087675Cashbeginningofyear297953626067211Cashendofyear42521502979536 21OntarioElectronicStewardshipNotestoFinancialStatementsDecember3120121.SignificantAccountingPoliciesThefollowingisasummaryofsignificantaccountingpoliciesoftheOrganizationaBusinessOrganizationandOperationsTheOntarioElectronicStewardshipOrganizationissetuptoactasanindustryfundingorganizationfortheadministrationofprovincialprogramsforthereductionreuseandrecyclingofwasteelectricalandelectronicequipmentWEEEpursuanttotheWasteDiversionAct2002.TheOrganizationisanot-for-profitorganizationandassuchisnotsubjecttoincometaxes.OnSeptember202007theOrganizationwasformallyincorporatedintheprovinceofOntarioasacorporationwithoutsharecapital.OnJuly92008theOrganizationwasdesignatedastheIndustryFundingOrganizationforWEEEbyregulationundertheWasteDiversionAct2002.ThePhase1WEEEProgramofficiallycommencedApril12009.ThePhase1WEEEProgramwasexpandedtoincludethePhase2materialsandtoreflecttheRevisedPhase1and2ProgramPlancomponentswhichcommencedApril12010.TheRevisedPlanencompasses44materialsgroupedinto8categories.TheOrganizationoperatestheWEEEProgramunderthetermsofaProgramAgreementdatedJuly102009withWasteDiversionOntario.bBasisofAccountingThefinancialstatementshavebeenpreparedusingCanadianaccountingstandardsfornot-for-profitorganizations.cRevenueRecognitionStewardfeesarerecognizedasrevenueasstewardsregisterwiththeOrganizationandsubmitunitdetails.Revenuesresultingfromcomplianceandenforcementactivitiesarerecognizedwhentheamountcanbereasonablyestimatedandcollectionisreasonablyassured.Interestincomeisrecognizedonanaccrualbasis.TheOrganizationfollowsthedeferralmethodofaccounting. 22OntarioElectronicStewardshipNotestoFinancialStatementsDecember3120121.SignificantAccountingPoliciesContinueddFinancialInstrumentsInvestmentsaremeasuredattheirfairvalue.Realizedandunrealizedgainslossesarerecordedinthestatementofoperations.TheOrganizationaccountsforitsinvestmentsonasettlementdatebasisandtransactioncostsassociatedwithinvestmentactivitiesareincludedinthestatementofoperations.UnlessotherwisenotedtheOrganizationinitiallymeasuresitsfinancialassetsandliabilitiesatfairvalueandsubsequentlymeasuresitsfinancialassetsandliabilitiesatamortizedcost.eCapitalAssetsPropertyplantandequipmentisrecordedatcostlessaccumulatedamortizationandareamortizedonthefollowingbasisComputerequipment-3yearsstraightlineFurnitureandfixtures-10yearsstraightlineMotorvehicles-5yearsstraightlineOfficeequipment-5yearsstraightlineContainers-10yearsstraightlineIntangibleassetswithfinitelivesarerecordedatcostandareamortizedovertheirusefullifebeginningoncetheassetisreadyforuse.Thecomputersoftwareisbeingamortizedonastraightlinebasisover3years.fUseofEstimatesThepreparationoffinancialstatementsinaccordancewithCanadianaccountingstandardsfornot-for-profitorganizationsrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesatthedateofthefinancialstatementsandreportedamountsofrevenuesandexpensesduringthereportingperiod.Significantestimatesincludeaccruedmaterialmanagementcosts.Actualresultscoulddifferfrommanagementsbestestimatesasadditionalinformationbecomesavailableinthefuture. 23OntarioElectronicStewardshipNotestoFinancialStatementsDecember3120122.First-timeAdoptionEffectiveJanuary12012theOrganizationadoptedtherequirementsofthenewaccountingframeworkCanadianaccountingstandardsfornot-for-profitorganizationsASNPOorPartIIIoftherequirementsoftheCanadianInstituteofCharteredAccountantsCICAHandbook-Accounting.ThesearetheOrganizationsfirstfinancialstatementspreparedinaccordancewiththisframeworkandthetransitionalprovisionsofSection1501First-timeAdoptionhavebeenapplied.Section1501requiresretrospectiveapplicationoftheaccountingstandardswithcertainelectiveexemptionsandretrospectiveexceptions.TheaccountingpoliciessetoutinNote1-SignificantAccountingPolicieshavebeenappliedinpreparingthefinancialstatementsfortheyearendedDecember312012thecomparativeinformationpresentedinthesefinancialstatementsfortheyearendedDecember312011andinthepreparationofanopeningASNPObalancesheetatthedateoftransitionofJanuary12011.TheOrganizationissuedfinancialstatementsfortheyearendedDecember312011usinggenerallyacceptedaccountingprinciplesprescribedbytheCICAHandbook-AccountingPartV-Pre-changeoverAccountingStandards.TheadoptionofASNPOresultedinnoadjustmentstothepreviouslyreportedassetsliabilitiesnetassetsexcessofrevenueoverexpensesandcashflowsoftheOrganization.ThefollowingexemptionwasusedatthedateoftransitiontoCanadianaccountingstandardsfornot-for-profitorganizationsFinancialInstrumentsTheOrganizationhaselectedtodesignateitsinvestmentstobemeasuredatfairvalueatthedateoftransitiontoASNPO. 24OntarioElectronicStewardshipNotestoFinancialStatementsDecember3120123.InvestmentsIn2011investmentsconsistedofguaranteedinvestmentcertificatesthatboreinterestat1.15to1.25perannumandmaturedbetweenMarch2012andMay2012.4.CapitalAssets20122011AccumulatedAccumulatedCostAmortizationCostAmortizationPropertyplantandequipmentComputerequipment4046914930214442433Furnitureandfixtures581787757581781939Motorvehicles192286089342854000Officeequipment4435911239366552495Containers11976127382341061742104128815879610973IntangibleassetComputersoftware760753168989--93496321027715879610973Netcarryingamount7246861478235.AccountsPayableandAccruedLiabilitiesIncludedinaccountspayableandaccruedliabilitiesaregovernmentremittancespayableof8229072011-824658.6.InternallyRestrictedNetAssetsTheBoardofDirectorsrecognizedtheneedtoestablishareservefundtoenabletheOrganizationtocarryoutitsnon-profitactivitiessatisfyallofitsobligationsandensurefinancialstability.During2011theBoardofDirectorsinternallyrestricted11000000forthispurpose.During2012theBoardofDirectorsremovedtheinternalrestrictionandtransferredthe22000000tounrestrictednetassets. 25OntarioElectronicStewardshipNotestoFinancialStatementsDecember3120127.SignificantContractTheOrganizationhadanOperatingAgreementwithStewardEdgeInc.SEwherebySEactedasitsprogramserviceprovidertoimplementandoperatetheWEEEdiversionplanundertheWasteDiversionAct2002.ThecontractcommencedMay12009andexpiredMarch312012.TheOrganizationpaidapproximately5420002011-3818000toSEduringtheyear.Includedinaccountspayableandaccruedliabilitiesis405812011-530377whichisduetoSE.8.CommitmentsDuring2011theOrganizationenteredintoaleaseagreementthatexpiresinSeptember2016.UnderthetermsoftheagreementtheOrganizationiscommittedtopaybasicrentplusadditionalrentandoperatingcosts.BasicandadditionalrentplusHSToverthenextfouryearsisapproximatelyasfollows2013128100201412940020151332002016999004906009.FinancialInstrumentRiskExposureandManagementManagementhasestablishedpoliciesandprocedurestomanagerisksrelatedtofinancialinstrumentswiththeobjectiveofminimizinganyadverseeffectsonfinancialperformance.UnlessotherwisenoteditismanagementsopinionthattheOrganizationisnotexposedtosignificantinterestratecurrencyorcreditrisksarisingfromitsfinancialinstruments.AbriefdescriptionofmanagementsassessmentsoftheserisksisasfollowsaGeneralObjectivesPoliciesandProcessesTheBoardandmanagementareresponsibleforthedeterminationoftheOrganizationsriskmanagementobjectivesandpoliciesanddesigningoperatingprocessesthatensuretheeffectiveimplementationoftheobjectivesandpolicies.IngeneraltheOrganizationmeasuresandmonitorsriskthroughpreparationandreviewofmonthlyreportsbymanagement. 26OntarioElectronicStewardshipNotestoFinancialStatementsDecember3120129.FinancialInstrumentRiskExposureandManagementContinuedbCreditRiskFinancialinstrumentspotentiallyexposedtocreditriskincludecashandaccountsreceivable.ManagementconsidersitsexposuretocreditriskovercashtoberemoteastheOrganizationholdscashdepositsatamajorCanadianbank.Accountsreceivablearenotsignificantlyconcentratedmonitoredregularlyforcollectionsandthecarryingamountofaccountsreceivablerepresentsthemaximumcreditriskexposure.AtDecember312012theallowancefordoubtfulaccountwas350622011-Nil.cLiquidityRiskLiquidityriskistheriskthattheOrganizationwillnotbeabletomeetitsobligationsastheycomedue.TheOrganizationsapproachtomanagingliquidityriskistoensurethatitwillalwayshavesufficientworkingcapitalavailableorinternallyrestrictedfundstomeetitsobligationsastheycomedue.AtDecember312012theOrganizationhadnegativeworkingcapitalof1252907.TheworkingcapitaldeficiencywillbeaddressedthroughchangestotheWEEEprogramplanin2013asdescribedinNote11.10.ComparativeFiguresCertaincomparativeamountshavebeenreclassifiedtoconformwiththecurrentyearpresentation.11.SubsequentEventOnFebruary192013theMinisteroftheEnvironmentapprovedanamendmenttotheWEEEprogramplangivingeffecttothenewcostrecoveryprinciplesforstewardfee-setting.EffectiveMay12013stewardfeeswillbebasedontheprincipleoffullcostrecoverywithprovisionforappropriateoperatingreservesmaterialcategorypastdeficitrecoveryoverafiveyearperiodandannualreconciliationtoactualoperatingcosts. 27GOVERNANCEOESBoardandCommitteeCompositionBoardincludingObserversasatDecember312012NickAubryChairSonyofCanadaLtd.LloydBryantHewlett-PackardCanadaCo.ReneZaninToshibaofCanadaLtd.HarryZarekCompugenGrantMcTaggartBestBuyCanadaPeterGibelStaplesClintMahlmanLondonDrugsOBSERVERSCliffHackingElectronicProductsRecyclingAssociationShelaghKerrElectronicsProductStewardshipCanadaAllenLangdonRetailCouncilofCanadaOESMANAgEMENTTEAMJonathanSpencerCAExecutiveDirectorHowardMorrisonCMADirectorFinanceSandraPakoshABCDirectorCommunicationsPierrePrimDirectorBusinessOperations 885DonMillsRoadSuite400TorontoOntarioM3C1V918886461820customerserviceontarioelectronicstewardship.caLearnmoreaboutOESOntarioElectronicStewardship.caSafelyreuseandrecycleyourelectronicsRecycleYourElectronics.caTheOESandRECYCLEYOURELECTRONICSmarksarethepropertyofOntarioElectronicStewardshipunauthoriseduseisprohibited.FPO