sstc 2010-2011 annual report

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About Saskatchewan

Scrap Tire Corporation

The Saskatchewan Scrap Tire Corporation (SSTC) is a non-profit, non-government organization that delivers the province-wide tire recycling program.

Since 1996, SSTC has diverted millions of used tires from the Saskatchewan waste stream and cleaned up decades worth of old tires from municipal landfills. These tires have been recycled into useful marketable items. Accountable to both its stakeholders and the public, the SSTC manages the collection of scrap tires for recycling and reuse in order to eliminate disposal in local landfills.

Consumers make all of this possible by paying a recycling fee when they buy new tires. The fee paid by consumers on the purchase of a new tire is remitted to SSTC. These funds are then used to cover the cost of collecting and recycling the scrap tires.

There are more than 1,200 participating retailers, four tire collection companies and two scrap tire processors.

• Diverted more than 16 million tires from landfill disposal

• Removed historical scrap tire material from more than 300 landfills

• Provided funding to more than 50 communities through the Community Demonstration Grant Program

• Put more than 550,000 tires into Saskatchewan roadways as rubberized asphalt paving

• Removed tire stockpiles from private and farm land in 48 municipalities through the Black Gold Rush pilot project.

Since inception SSTC has

The three phases to the program

Phase 1 – Current Generation TiresSaskatchewan generates 1,000,000 scrap tires annually of passenger car tire equivalents (PTE). The scrap tire program ensures these tires are collected and processed. Prior to the SSTC program, almost all of these tires ended up in our local landfills as domestic waste.

Phase 2 – Municipal Landfill CleanupThis phase of the program involved removing tires from every landfill in Saskatchewan. When the work wrapped up in 2010, SSTC had removed scrap tires from more than 300 landfill sites around the province - the equivalent of two million passenger tires. In exchange for the free clean up, municipalities were required to pass bylaws banning scrap tires from their landfill.

Phase 3 – Private StockpilesThis phase of the program involves removing stockpiles of tires from private property. In the spring of 2010, the Saskatchewan Scrap Tire Corporation launched a regional pilot project to test the effectiveness of various methods to complete this phase of the program. The full launch of the program is expected to begin in 2012.

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Founded in 1996, The Saskatchewan Scrap Tire Corporation has recycled over 16 million tires in the province.

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Black Gold Rush

pilot projectWith more than 2.8 million pounds of scrap tires collected over 12 weeks, The Saskatchewan Scrap Tire Corporation’s Phase 3 – Black Gold Rush pilot project proved successful in 2010. Forty-eight municipalities in the southwest region of the province took part in the Black Gold Rush pilot project and helped to make it such a success.

Black Gold Rushby the numbers

121448

57,713Weeks the pilot project ran

Number of scrap tires collected

Pounds of scrap tires removed from private

and farm land

Service groups that participated

Participating municipalities

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Municipalities oversaw the main objectives of the project, including: establishing a drop off location, choosing drop off dates and acting the main point of contact between the community and the SSTC. Service Groups also played a significant role in the Black Gold Rush pilot assisting the municipalities with their sites and the ratepayers with their tire drop-offs, SSTC paid out in excess of $61,000 to the 14 service groups. The total cost of the project was $489,344.

Now that the Black Gold Rush pilot project is complete, the SSTC will evaluate the outcome and plan for the full launch of Phase 3 in 2012.

The North Battleford landfill was the last landfill to be cleaned, thus completing Phase 2 of the Scrap Tire Corporation’s program. The North Battleford site had four piles with an estimated 200,000 scrap tires to be removed. Once cleaned, more than 6.7 million pounds of scrap tires had been removed. In total more than 300 landfills have been cleaned by the SSTC in the past ten years. Completion of Phase 2 allowed for the SSTC to shift focus to Phase 3- the cleanup of scrap tire stockpiles on private and farm land.

Above: Volunteers at the R.M. of Lone Tree participate in the Black Gold Rush pilot project.

Left: Landfill clean-up in North Battleford completed phase two of the Scrap Tire Corporation’s program.

Phase 2 Completion

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2010Highlights

SSTC saw the completion of Phase 2 - Municipal Landfill Cleanup. The North Battleford landfill was the final site to be cleared. More than 6.7 million pounds of scrap tires were removed.

SSTC funded the pilot project of Phase 3—The Black Gold Rush. Forty-eight municipalities participated and more than 2.8 million pounds of scrap tires were removed from private yards and farm land.

SSTC continued providing funding through its Community Demonstration Grant Program. Five communities in Saskatchewan were given funding for projects that involved an innovative use for recycled rubber products.

SSTC funded a pilot project to collect bicycle tires in 2010. More than 3,500 tires were collected and recycled.

During the 2010 construction season, the Saskatchewan Ministry of Highways and Infrastructure used crumb rubber asphalt pavement on about 313 km of various provincial highway lanes. That translates into an estimated 257,300 tires recycled.

The SSTC is working with the Communities of Tomorrow to further the research and use of recycled scrap tire material in infrastructure rehabilitation in Saskatchewan. In 2010 SSTC participated in the Green Street Project in Saskatoon which saw over 700 cubic meters of scrap tire material used in the construction of a road. Turf system that uses recycled tires at

Leibel Field in Regina, Saskatchewan.

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2010 Statistics

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Recycled (by Pound)Total: 25,869,834

Tires Sold (by Tire):Total: 1,428,553

Tires Collected (by Tire): Total: 786,260

Passenger Car/Light Truck1,233,919Medium Truck154,351

Ag Tire34,896

Passenger Car/Light Truck676,946 Medium Truck97,496

Ag Tire10,513

OTR4,355

OTRII1,032

OTR1,204

OTRII101

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FinancialStatements

To the Members of Saskatchewan Scrap Tire Corporation:

Management is responsible for the preparation and presentation of the accompanying financial statements, including responsibility for significant accounting judgments and estimates in accordance with Canadian generally accepted accounting principles and ensuring that all information in the annual report is consistent with the statements. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of financial statements.

The Board of Directors and Finance Committee are composed entirely of Directors who are neither management nor employees of the Corporation.

The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report. The Board fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management, and external auditors. The Board is also responsible for recommending the appointment of the Corporation’s external auditors.

Meyers Norris Penny LLP, an independent firm of Chartered Accountants, is appointed by the board to audit the financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, both the Board and management to discuss their audit findings.

February 18, 2011

Theresa McQuoid Marni Moldovan Management Accountant

Management’sResponsibility

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When retailers put new tires on a consumer’s vehicle, they also hold and store the old tires until they are collected.

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Independent Auditors’ Report

To the Board Members of Saskatchewan Scrap Tire Corporation:

We have audited the accompanying financial statements of Saskatchewan Scrap Tire Corporation as at December 31, 2010, which comprise of the balance sheet as at December 31, 2010, the statement of revenue, expenses and reserve and the statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur 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 comply with ethical requirements and plan and perform the audit to obtain reasonable 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 in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well 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 for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of Saskatchewan Scrap Tire Corporation as at December 31, 2010 and its financial performance and cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Regina, Saskatchewan

February 18, 2011 Chartered Accountants

Auditors’Report

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The accompanying notes are an integral part of these financial statements

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Saskatchewan Scrap Tire CorporationBalance Sheet

As at December 31, 2010

2010 2009

AssetsCurrent

Cash and cash equivalents 1,566,363 1,791,058Accounts receivable 41,992 76,026Funds held in trust (Note 3) 151,736 151,736Prepaid expenses and deposits 36,816 11,742

1,796,907 2,030,562Capital Assets (Note 4) 32,377 41,811

Investments (Note 7) 384,338 349,857

2,213,622 2,422,230

LiabilitiesCurrent

Accounts payable and accruals 539,794 401,888Goods and services tax payable 29,610 20,131Funds held in trust (Note 3) 151,736 151,736

721,140 573,755Commitments (Note 6)

ReservesUnrestricted reserve (355,993) -

Stabilization reserve (Note 5) 1,848,475 1,848,475

2,213,622 2,422,230

Approved on Behalf of the Board

Director Director

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Saskatchewan Scrap Tire Corporation Statement of Revenue, Expenses and Reserve

For the year ended December 31, 2010

2010 2009

REVENUE Tire recycling fee 7,075,674 6,561,096 Other 56,564 43,345 Unrealized gain on investments (Note 2) 23,155 45,898

7,155,393 6,650,339

RECYCLING COSTS Recycling fee commission 129,732 120,505 Processors and Collector costs 5,153,704 4,932,774 Professional fees 155,805 168,449 Special projects 1,559,802 657,270

6,999,043 5,878,998

PROGRAM ADMINISTRATION EXPENSES Advertising and promotion 45,354 73,904 Amortization 11,860 15,917 Bad debts 18,916 12,096 Computer support 29,553 19,626 Conferences 6,633 5,683 Directors' remuneration 14,686 15,000 Equipment rental 5,271 4,036 Insurance and licenses 6,474 5,046 Meeting expense 2,146 3,025 Office operations 6,013 5,325 Postage 4,083 5,243 Printing and publications 28,950 53,776 Professional fees 56,031 35,693 Recycle Sask 11,676 14,247 Rental 30,581 27,407 Salaries, wages and benefits 212,260 134,952 Stationary and supplies 6,724 8,707 Telephone, fax and internet 8,731 6,154 Travel 6,401 9,384

512,343 455,221

Net (loss) income (355,993) 316,120

Unrestricted Reserve, beginning of year - -

Transitional Adjustment to Reserve - -

Transfer to Stabilization Reserve (Note 5) - (316,120)

Unrestricted Reserve, end of year (355,993) -

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Saskatchewan Scrap Tire CorporationStatement of Cash Flows


2010 2009

Cash provided by (used for) the following activitiesOperating activities

Cash received from customers 7,090,793 6,476,547Cash paid to suppliers (7,146,038) (6,305,069)Cash paid to employees (212,260) (134,952)Interest received 56,564 43,345

(210,941) 79,871

Investing activitiesPurchases of capital assets (2,427) (2,065)Proceeds on disposition of capital assets - -Purchase of investments (11,327) (12,281)

(13,754) (14,346)

(Decrease) increase in cash resources (224,695) 65,525

Cash resources, beginning of year 1,791,058 1,725,533

Cash resources, end of year 1,566,363 1,791,058

Cash and cash equivalents consist of:Cash 637,832 879,012Short-term investments 928,531 912,046

Total 1,566,363 1,791,058


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Saskatchewan Scrap Tire CorporationStatement of Cash Flows


2010 2009

Cash provided by (used for) the following activitiesOperating activities

Cash received from customers 7,090,793 6,476,547Cash paid to suppliers (7,146,038) (6,305,069)Cash paid to employees (212,260) (134,952)Interest received 56,564 43,345

(210,941) 79,871

Investing activitiesPurchases of capital assets (2,427) (2,065)Proceeds on disposition of capital assets - -Purchase of investments (11,327) (12,281)

(13,754) (14,346)

(Decrease) increase in cash resources (224,695) 65,525

Cash resources, beginning of year 1,791,058 1,725,533

Cash resources, end of year 1,566,363 1,791,058

Cash and cash equivalents consist of:Cash 637,832 879,012Short-term investments 928,531 912,046

Total 1,566,363 1,791,058

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1. Incorporation and commencement of operations

Saskatchewan Scrap Tire Corporation is incorporated under the Not for profit Corporation’s Act and is exempt from income taxes. The purpose of the Corporation is to establish and manage a mandatory scrap tire waste reduction program on behalf of its members as set out in The Scrap Tire Management Regulations.

2. Accounting policies

The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include the following significant accounting policies:

Revenue recognitionRevenue from tire recycling fees is recognized when retailers submit reports for tires sold. All other revenue is recognized in the period it is earned.

Cash and cash equivalentsCash and cash equivalents include balances with banks and short term investments with maturities of three months or less. Cash subject to restrictions that prevent its use for current purposes is included in restricted cash. Short-term investments consist of GICs with interest rates ranging from 1.65% to 1.96%, all maturing on December 5, 2011.

Capital assetsCapital assets are initially recorded at cost. Amortization is provided using methods and rates intended to amortize the cost of assets over their estimated useful lives.

In the year of acquisition, amortization is taken at one half of the above rates.

Measurement uncertainty The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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 revenues and expenses during the reporting period. Accounts receivable are stated after the evaluation as to their collectability and an appropriate allowance for doubtful accounts is provided when necessary. Amortization is based on the estimated useful lives of the assets.

Method RateComputer equipment declining balance 30 %Computer software declining balance 100 %Office equipment declining balance 20 %

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Saskatchewan Scrap Tire CorporationNotes to the Financial Statements


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Saskatchewan Scrap Tire Corporation is incorporated under the Not-for-profit Corporation's Act and is exemptfrom income taxes. The purpose of the Corporation is to establish and manage a mandatory scrap tire wastereduction program on behalf of its members as set out in The Scrap Tire Management Regulations.


The financial statements have been prepared in accordance with Canadian generally accepted accountingprinciples and include the following significant accounting policies:

Revenue recognition

Revenue from tire recycling fees is recognized when retailers submit reports for tires sold. All other revenue isrecognized in the period it is earned.

Cash and cash equivalents

Cash and cash equivalents include balances with banks and short-term investments with maturities of threemonths or less. Cash subject to restrictions that prevent its use for current purposes is included in restrictedcash. Short-term investments consist of GICs with interest rates ranging from 1.65% to 1.96%, all maturing onDecember 5, 2011.

Capital assets

Capital assets are initially recorded at cost. Amortization is provided using methods and rates intended toamortize the cost of assets over their estimated useful lives.

Method Rate

Computer equipment declining balance 30 %Computer software declining balance 100 %Office equipment declining balance 20 %

In the year of acquisition, amortization is taken at one-half of the above rates.

Measurement uncertainty

The preparation of financial statements in conformity with Canadian generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and thereported amounts of revenues and expenses during the reporting period. Accounts receivable are stated afterthe evaluation as to their collectability and an appropriate allowance for doubtful accounts is provided whennecessary. Amortization is based on the estimated useful lives of the assets.

Financial instruments

Saskatchewan Scrap Tire Corporation has classified cash, investments and funds held in trust as financial instruments held for trading. Accounts receivables and accounts payables are classified as loans and receivables and other liabilities respectively. Held for trading financial assets and liabilities are financial instruments that are acquired or incurred principally for the purpose of selling or repurchasing the instrument in the near term. These instruments are initially recognized at their fair value. Fair value is approximated by the instrument’s initial cost in a transaction between unrelated parties. Held for trading financial instruments are carried at fair value with both realized and unrealized gains and losses included in net income. Financial assets and liabilities that the Corporation has recorded as loans and receivables and other liabilities are measured at amortized cost. During the year there was an unrealized gain of $23,155 recognized on investments.

Recent accounting pronouncements

Financial instruments deferral of section 3862 and 3863

On December 2006, the Canadian Institute of Chartered Accountants (CICA) issued Section 3862 Financial Instruments – Disclosures and Section 3863 Financial Instruments – Presentation to replace Section 3861 Financial Instruments – Disclosure and Presentation. The effective date for these new Sections was for interim and annual financial statements with fiscal years beginning on or after October 1, 2007, with earlier adoption permitted. However, in light of the uncertainty regarding the future direction in setting standards for not-for-profit organizations, the CICA released a decision to allow deferral of Sections 3862 and 3863 for this sector. Not-for-profit organizations should continue to apply Section 3861.

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Scrap tires are processed into a safe, reusable format and put to many good uses. Among the products currently being made from recycled tires are low-impact playground surfaces, athletic field turf, street and road paving material, interlocking patio bricks, shingles, parking curbs, livestock feeders, mats and a whole lot more.



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Revenue recognition




Capital assets


Method Rate





Canadian accounting standards for not-for-profit organizations

In October 2010, the Accounting Standards Board (AcSB) approved the accounting standards for private sector not-for-profit organizations (NFPOs) to be included in Part III of the CICA Handbook- Accounting (“Handbook”). Part III will comprise:

- The existing “4400 series” of standards dealing with the unique circumstances of NFPOs, currently in Part V of the Handbook; and

- The new accounting standards for private enterprises in Part II of the Handbook, to the extent that they would apply to NFPOs.

Effective for fiscal years beginning on or after January 1, 2012, private sector NFPOs will have the option to adopt either Part III of the Handbook or International Financial Reporting Standards (IFRS). Earlier adoption is permitted. The Corporation expects to adopt Part III of the Handbook as its new financial reporting standards. The Corporation has not yet determined the impact of the adoption of Part III of the Handbook on its financial statements.

3. Funds held in trust

Funds held in trust represent a security bond being held for certain processors. 4. Capital assets

2010 2009 Accumulated Net Book Net Book

Cost amortization value value Computer equipment 121,051 102,838 18,213 23,974 Computer software 17,491 17,102 389 618 Office equipment 52,183 38,408 13,775 17,219

190,725 158,348 32,377 41,811

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Revenue recognition




Capital assets


Method Rate





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All retailers in the province that sell new tires and/or vehicles/equipment with new tires must participate in the SSTC’s tire recycling program.

5. Stabilization reserve

In 2006, the Board internally restricted funds through the establishment of a stabilization reserve to ensure that funds are available to meet financial obligations of the Corporation. Specifically, the Board wants to ensure that in the event of a windup that the Corporation would have adequate funds available to proceed in an orderly manner.

The amount of $0 (2009 - $316,120) was transferred to the reserve as at December 31, 2010 and is subject to change at the discretion of the Board of Directors. The balance includes $32,377 (2009 - $41,811) invested in Capital Assets.

6. Commitments

The Corporation has entered into various lease agreements with estimated minimum annual payments as follows:

2011 2,595 2012 2,547 2013 2,028 2014 1,098 The Corporation is currently in negotiations for the office lease. In 2010, the Corporation paid a

monthly rate of $975 for office space.

2010 2009

Stabilization reserve, opening balance 1,848,475 1,532,355Transfer from unrestricted reserve - 316,120 Stabilization reserve, ending balance 1,848,475 1,848,475

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Revenue recognition




Capital assets


Method Rate





7. Financial instruments The Corporation as part of its operations carries

a number of financial instruments which include cash and cash equivalents, accounts receivable, investments, accounts payable and accruals. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable and accruals approximates their fair value, due to their relatively short term maturities. Investments are recorded at fair market value. The cost of investments at year end was $335,434 (Mutual Fund) and in 2009 the cost was $297,043. It is management’s opinion that the Corporation is not exposed to significant interest, currency or credit risks arising from these financial instruments except as otherwise disclosed. The Corporation is exposed to market fluctuations in investments. The Corporation manages the risk by limiting its amounts invested in investments that significantly fluctuate based on market changes.

8. Capital disclosure The Corporation’s objective when managing

capital is to maintain a sufficient reserve fund base to ensure they can continue to cover the significant expenditures relating to the Corporation. The Corporation transfers surpluses to the stabilization reserve as disclosed in Note 5.

9. Comparative figures Certain comparative figures have been

reclassified to conform to current year presentation.

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Thanks to the support of Saskatchewan people,

we’ve built one of the most successful tire recycling

programs in Canada.



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Revenue recognition




Capital assets


Method Rate





CONTACT USSaskatchewan Scrap Tire Corporation

Mailing Address:Box 1936Regina, Saskatchewan S4P 3E1

Street Address:420 - 2220 12th AvenueRegina, SaskatchewanS4P 0M8

Phone: (306) 721-8473 (721-TIRE) Fax: (306) 721-1585 E-mail: [email protected]

www.scraptire.sk.ca