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2013-2014 Quarterly Financial Report for the Quarter Ended June 30, 2013

Management Statement for the Quarter Ended June 30, 2013

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly financial report should be read in conjunction with the Main EstimatesFootnote 1 as well as with Canada's Economic Action Plan 2012 (Budget 2012).

1.2 Mandate and Program Activities

The mandate of the Canadian Space Agency (CSA) is to promote the peaceful use and development of space, to advance the knowledge of space through science and to ensure that space science and technology provide social and economic benefits for Canadians.

More information is available on the CSA's mandate and Program Activities in the 2013-2014 Report on Plans and Priorities Footnote 1.

1.3 Basis of Presentation

This quarterly financial report has been prepared by management using an expenditure basis of accounting. The Statement of Authorities annexed to this report includes the CSA's spending authorities granted by Parliament and those used by the CSA, consistent with the Main Estimates and Supplementary Estimates voted to date for the 2013-2014 fiscal year. This quarterly financial report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.

In 2012-2013, Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in the Budget 2012 are not reflected in the 2012-13 Main Estimates. For fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.

In 2013-2014, the changes to departmental authorities were implemented through the Annual Reference Level Update, as approved by Treasury Board, and were reflected in the 2013-2014 Main Estimates tabled in Parliament.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The CSA uses the full accrual method of accounting to prepare and present its annual financial statements, which are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis, that is, a partial accrual method of accounting. Expenditure basis accounting thus includes disbursements as well as some expenditures incurred for salaries and salary allowances.

This quarterly financial report has not been subject to an external audit. However, it has been reviewed by the members of the Audit Committee, who are satisfied with its presentation and content.

2. Highlights of the Quarterly Financial Results

This section highlights the significant factors that contributed to the changes to the authorities available for the fiscal year, as well as to the year to date and actual expenditures for the quarter ended June 30, 2013.

The following graph provides an overview of variations in available authorities and expenditures. Additional details on these variations are provided in sections 2.1 and 2.2 as well as in the appended annexes.

Variations in available authorities and expenditures ($ Million)
2013-2014 2012-2013 Variations
Authorities 488.7 363.4 125.3
34%
Year to date expenditures April to June 51.1 48.4 2.7
5%

Totals may not add up due to rounding.

2.1 Significant Changes in Authorities (Total Vote Available for Use) between fiscal 2012-2013 and 2013-2014

The total vote available for use by the CSA for the year ending March 31, 2014 is $488.7 million and represents an increase of 125.3 million over the same period for the previous year. The most significant changes are as follows:

Authorities (in thousands of dollars) 2013-14 2012-13 Variance %
Vote 25 - Operating expenditures 171,615 163,210 8,405 5%
Vote 30 - Capital expenditures 272,688 152,535 120,153 79%
Vote 35 - Grants and contributions 33,630 36,597 (2,967) -8%
Contributions to employee benefit plans Significant Changes in Authorities Table Note * 10,748 11,033 (285) -3%
Spending of proceeds from the disposal of surplus Crown assets Significant Changes in Authorities Table Note * 4 11 (7) -64%
Total budgetary authorities 488,685 363,386 125,299 34%

* Authorities for Contributions to employee benefit plans and authorities for Spending of proceeds from the disposal of surplus Crown assets must be reported separately starting 2013-2014. Therefore, statutory authorities have been reclassified for 2012-2013.

The following factors are key in explaining the increase of $8.4 million in Vote 25 - Operating Expenditures:

The following factors are key in explaining the increase of $120.2 million in Vote 30 - Capital Expenditures :

The following factors are key in explaining the decrease of $3.0 million in Vote 35 - Grants and Contributions :

2.2 Significant Changes in Year to Date and Quarterly Expenditures (Votes Used)

Year to date and quarterly expenditures for the quarter ended June 30, 2013 are $51.1 million and represent a $2.7 million increase compared to the same period over the previous year.

Expenditures by Vote

Expenditures and expenditure variations by vote for the quarter ended June 30:

Expenditures (in thousands of dollars) 2013-14 2012-13 Variance %
Vote 25 - Operating expenditures Expenditures by Vote Table Note ** 22,616 28,089 (5,473) -19%
Vote 30 - Capital expenditures 17,504 8,988 8,516 95%
Vote 35 - Grants and contributions 8,250 8,558 (308) -4%
Contributions to employee benefit plans Expenditures by Vote Table Note * 2,687 2,758 (71) -3%
Spending of proceeds from the disposal of surplus Crown assets Expenditures by Vote Table Note * 0 8 (8) -100%
Total budgetary expenditures 51,057 48,401 2,656 5%

* Authorities for Contributions to employee benefit plans and authorities for Spending of proceeds from the disposal of surplus Crown assets must be reported separately starting in 2013-2014. Therefore, expenditures related to statutory authorities have been reclassified for 2012-2013.

** Operating expenditures have been reclassified.

The $5.5 million decrease in the use of vote 25 - Operating expenditures, over the same period last year is partly explained by the reduction of our operating expenditures as a result of the implementation of decisions announced in the Budget 2012 Deficit Reduction Action Plan (DRAP) as well as the change in payment schedules compared to the same period last year.

The $8.5 million increase in the use of vote 30 - Capital expenditures, over the same period last year is mainly due to the increase in expenditures related to the development phase of the RCM project. The variation in the payment schedules and in the project development cycle, which are an inherent characteristic of the implementation of the Canadian Space Program, also explain the increase in expenses in the first quarter of 2013-2014.

Expenditures by Standard Object

Expenditures and expenditure variations by standard object
for the quarter ended June 30:

Expenditures (in thousands of dollars) 2013-14 2012-13 Variance %
Personnel 19,610 21,000 (1,390) -7%
Transportation and communications 693 868 (175) -20%
Information 347 219 128 58%
Professional and special services 5,079 11,875 (6,796) -57%
Rentals 239 345 (106) -31%
Repair and maintenance 510 154 356 231%
Utilities, materials and supplies 428 312 116 37%
Acquisition of land, buildings and works 0 0 0 N/A
Acquisition of machinery and equipment 15,758 4,757 11,001 231%
Transfer payments 8,250 8,558 (308) -4%
Other subsidies and payments 143 313 (170) -54%
Total budgetary expenditures 51,057 48,401 2,656 5%

The $1.4 million decrease in quarterly expenditures for the Personnel standard object is mainly due to workforce downsizing arising from recent government-wide reviews.

The $6.8 million decrease in quarterly expenditures for the Professional and special services standard object is partly attributable to the end of the definition phase activities for the RCM project as well as the variation in the payment schedule for other contracts related to the implementation of the Canadian Space Program.

The $11 million increase in quarterly expenditures for the Acquisition of machinery and equipment standard object is related to the implementation of the RCM project development phase.

3. Risks and Uncertainties

4. Significant Changes in Relation to Operations, Personnel and Programs

A significant change in personnel occurred during the first quarter: Mr. Steve MacLean left the CSA June 4, 2013. General (retired) Walter John Natynczyk, former Chief of Defence Staff, will become President of the CSA, effective August 6, 2013. Mr. Gilles Leclerc assumes the interim until Mr. Natynczyk's arrival.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being implemented in order to refocus government and programs, make it easier for Canadians and businesses to deal with their government and, modernize and reduce the back office.

The CSA will achieve annual savings of $29.5 million starting fiscal year 2014-15 through key measures that actively contribute to the Government's overarching plan to return to a balanced budget. Therefore, the CSA will increasingly focus its Programs and support in response to the growing demand for space-based solutions that serve the mandates and operations of Government departments and agencies.

In the first year of implementation in 2012-13, the CSA achieved savings of approximately $7.9 million. Savings will increase to $24.7 million in 2013-14 to reach ongoing saving of $29.5 million by 2014-15.

The decrease in authorities over the same period of the previous year are reflected in Vote 25 – Operating Expenditures for an amount of $20.3 million including an amount of $3.2 million for salaries, in Vote 35 – Grants and contributions for an amount of $3.8 million and in the statutory authority Contributions to employee benefit plans for an amount of $0.6 million.

During the first quarter, the decrease in expenditures over the same period of the previous year are mainly reflected in Vote 25 – Operating expenditures and in the standard object Personnel for an amount of $1.4 million.

There are no financial risks or uncertainties related to these savings.

Approval by Senior Officials

Approved by,

The original version was signed by
Walter Natynczyk, August 21, 2013

The original version was signed by
Marie-Claude Guérard, August 21, 2013

Annex 1

Canadian Space Agency
Quarterly Financial Report
For the quarter ended June 30, 2013
Statement of Authorities
(unaudited)
Fiscal year 2013-2014 (in thousands of dollars)
Fiscal Year 2013-2014 Fiscal Year 2012-2013
Total available for use for the year ending March 31, 2014 (Annexe 1 Note 1)
$
Used during the quarter ended June 30, 2013
$
Year to date used at quarter-end
$
Total available for use for the year ending March 31, 2013 (Annexe 1 Note 1, Annexe 1 Note 2, Annexe 1 Note 3)
$
Used during the quarter ended June 30, 2012 (Annexe 1 Note 4)
$
Year to date used at quarter-end (Annexe 1 Note 4)
$
Vote 25: Operating expenditures 171,615 22,616 22,616 163,210 28,089 28,089
Vote 30: Capital expenditures 272,688 17,504 17,504 152,535 8,988 8,988
Vote 35: Grants and contributions 33,630 8,250 8,250 36,597 8,558 8,558
Contributions to employee benefit plans 10,748 2,687 2,687 11,033 2,758 2,758
Spending of proceeds from the disposal of surplus Crown assets 4 0 0 11 8 8
Total budgetary authorities 488,685 51,057 51,057 363,386 48,401 48,401
  1. Includes only Authorities available for use and granted by Parliament at quarter-end.
  2. Total available for use does not reflect measures announced in Budget 2012.
  3. Statutory authorities have been reclassified. Authorities for Contributions to employee benefit plans and authorities for Spending of proceeds from the disposal of surplus Crown assets are presented separately starting 2013-2014.
  4. Operating expenditures and Spending from the proceeds from the disposal of surplus Crown assets have been reclassified. Expenditures for the Contributions to employee benefit plans and the Spending of proceeds from the disposal of surplus Crown assets are presented separately starting 2013-2014.

Annex 2

Canadian Space Agency
Quarterly Financial Report
For the quarter ended June 30, 2013
Departmental budgetary expenditures by Standard Object
(unaudited)
Fiscal year 2013-2014 (in thousands of dollars)
Fiscal Year 2013-2014 Fiscal Year 2012-2013
Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended June 30, 2013 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2013 (Annex 2 Note 1) Expended during the quarter ended June 30, 2012 Year to date used at quarter-end
Expenditures: $ $ $ $ $ $
Personnel 72,516 19,610 19,610 73,720 21,000 21,000
Transportation and communications 4 098 693 693 5,479 868 868
Information 908 347 347 1,140 219 219
Professional and special services 106,748 5,079 5,079 181,276 11,875 11,875
Rentals 2,347 239 239 1,416 345 345
Repair and maintenance 3,397 510 510 3,869 154 154
Utilities, materials and supplies 2,330 428 428 2,640 312 312
Acquisition of land, buildings and works 1,110 0 0 1,207 0 0
Acquisition of machinery and equipment 257,584 15,758 15,758 52,762 4,757 4,757
Transfer payments 33,630 8,250 8,250 36,597 8,558 8,558
Other subsidies and payments 4,017 143 143 3,280 313 313
Total budgetary expenditures 488,685 51,057 51,057 363,386 48,401 48,401
  1. Planned expenditures do not reflect measures announces in Budget 2012.
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