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- Quarterly Financial Report for the Quarter Ended

Canadian Space Agency
-

Quarterly Financial Report
For the Quarter Ended

Management Statement
for the Quarter Ended

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 EstimateFootnote 1.

1.2 Mandate and Program Activities

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

More information is available on the CSA's mandate and Program Activities in the - Departmental PlanFootnote 1.

1.3 Basis of Presentation

This quarterly financial report (QFR) 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 as at December 31 for fiscal years - compared to -. This QFR has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

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. Partial accrual method of accounting includes disbursements as well as some accruals for salaries and salary allowances.

This QFR report has not been subject to an external audit. However, it has been reviewed by the members of the CSA 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 quarterly and year-to-date expenditures for the quarter ended .

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.

Authorities available for use and expenditures as at December 31 (in millions of dollars)
Authorities Quarterly
Expenditures
Year to Date
Expenditures
Fiscal Year - 419.7 73.9 189.3
Fiscal Year - 460.7 71.8 213.1

Totals may not add up due to rounding.

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

The total vote available for use as at is $419.7 million, and represents a decrease of $41.1 million compared to the same period of the previous year.

Authorities (in thousands of dollars) - - Variance %
Vote 1 - Operating expenditures 180,678 184,498 (3,820) (2%)
Vote 5 - Capital expenditures 168,666 210,228 (41,562) (20%)
Vote 10 - Grants and contributions 60,966 55,942 5,024 9%
Contributions to employee benefit plans 9,328 10,037 (709) (7%)
Spending of proceeds from the disposal of surplus Crown assets 30 42 (12) (29%)
Total budgetary authorities 419,668 460,747 (41,079) (9%)

The decrease of $3.8 million in Vote 1 - Operating Expenditures is mainly explained by the following items:

  • A decrease of $9.5 million between - and - due to funding received in for the provision of value-added satellite reports/images for humanitarian needs.
  • A decrease of $9 million due to different cash flow requirements from two projects; replacement of cameras for the Mobile Servicing System (MSS RCAM) as well as the Dextre Deployable Vision System (DDVS).
  • A decrease of $3 million due to a budgetary transfer from the Operating credit to the Grants and Contributions credit for the Space technologies development program.
  • A decrease of $1.4 million between the two years due to the reduction announced in the Federal Budget for professional services, travel and advertising.
  • An increase of $9.2 million compared to the same period last year due to obtaining the additional authority to carry forward Operating expenditures Vote from - to -.
  • An increase of $8.6 million due to additional funding received to extend Canada's participation in the International Space Station (ISS) mission from to .
  • An increase of $1.6 million mainly due to compensation related to collective agreements renewal.

The decrease of $41.6 million in Vote 5 - Capital Expenditures is mainly explained by the following items:

  • A decrease of $86.5 million related to the RADARSAT Constellation Mission (RCM). The variation between the two years is due to different needs for cash flows according to new milestones schedules, without affecting the launch that is still planned for .
  • A decrease of $4.8 million between - and - due to a one-time funding issued in for the Maritime Monitoring and Messaging Micro-Satellite (M3MSat) project.
  • An increase of $10.3 million between the two years, due to different cash flow requirements for ISS related activities.
  • An increase of $7.5 million for items in Budget related to the security enhancement at John H. Chapman Space Centre as well as the purchase and installation of absorber material for the David Florida Laboratory (DFL) Anechoic Chamber.
  • An increase of $23.7 million between - and - because the Capital Vote carry forward from - to - was more significant than the carry forward from - to -.
  • The residual difference consists of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the next, requiring vote transfers or fund carry forwards to another fiscal year.

The increase of $5.0 million in Vote 10 - Grants and Contributions Expenditures is mainly explained by the following items:

  • An increase of $3 million due to a budgetary transfer from the Operating Vote to the Grants and Contributions Vote for the Space technologies development program.
  • An increase of $2.6 million between - and - based on the cash requirements of the Class Grant and Contribution Program to Support research, awareness and learning in Space Science and Technology, for the Canadian CubeSats initiative.

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

Quarterly and year-to-date expenditures for the quarter ended are of $73.9 and $189.3 million and represent a quarterly increase of $2.2 million, but a cumulative decrease of $23.7 million compared to the same period of the previous year.

Expenditures by Vote at December 31
Expenditures by Vote
(in thousands of dollars)
- - Variance
Quarterly Year to date Quarterly Year to date Quarterly Year to date
Vote 1 - Operating expenditures 42,993 103,742 36,729 94,182 6,264 9,560
Vote 5 - Capital expenditures 22,322 61,778 23,521 92,892 (1,199) (31,114)
Vote 10 - Grants and contributions 6,336 16,931 9,019 18,444 (2,683) (1,513)
Contributions to employee benefit plans 2,289 6,867 2,510 7,528 (221) (661)
Spending of proceeds from the disposal of surplus Crown assets 3 24 12 12 (9) 12
Total budgetary expenditures by Vote 73,943 189,342 71,791 213,058 2,152 (23,716)

The increase of $6.3 and $9.6 million in the quarterly and year to date expenditures in Vote 1 – Operating expenditures, is mainly explained by the following:

  • An increase in salary expenses due to the ratification of multiple collective agreements as well as a variation in the payment schedules of the implementation cycle of Government initiatives on Earth observation.

The decrease of $1.2 and $31.1 million in the quarterly and year to date expenditures in Vote 5 - Capital expenditures, is mainly explained by the following:

  • The variations in the payment schedules for the RCM project.

The decrease of $2.7 and $1.5 million in the quarterly and year to date expenditures in Vote 10 – Grants and contributions, is mainly explained by the following:

  • The variations in the payment schedules to the European Space Agency (ESA) as well as the Class Grant Program to support research, awareness and learning in Space Science and Technology.
Expenditures by Standard Object at December 31
Expenditures by Standard Object (in thousands of dollars) - - Variance
Quarterly Year to date Quarterly Year to date Quarterly Year to date
Personnel 20,987 57,421 16,312 50,219 4,675 7,202
Transportation and communications 1,279 2,920 1,049 2,493 230 427
Information 643 2,032 566 1,797 77 235
Professional and special services 23,678 51,105 21,576 48,864 2,102 2,241
Rentals 1,029 2,192 589 1,206 440 986
Repair and maintenance 5,578 7,853 1,218 2,309 4,360 5,544
Utilities, materials and supplies 527 1,299 294 1,118 233 181
Acquisition of land, buildings and works - - - - - -
Acquisition of machinery and equipment 13,832 45,523 21,097 84,443 (7,265) (38,920)
Transfer payments 6,336 16,931 9,019 18,444 (2,683) (1,513)
Other subsidies and payments 54 2,066 71 2,165 (17) (99)
Total budgetary expenditures by Standard Object 73,943 189,342 71,791 213,058 2,152 (23,716)

The $4.6 and $7.2 million increases in quarterly and year to date expenditures for the Personnel standard object is primarily due to:

  • An increase in salary expenses due to retroactive payments after the ratification of multiple collective agreements.

The $2.1 and $2.2 million increases in quarterly and year to date expenditures for the Professional and special services standard object is primarily due to:

  • A variation in the payment schedules for the implementation cycle of certain Life Science projects related to ISS.

The $4.4 and 5.5 million increases in quarterly and year to date expenditures for the Repair and maintenance standard object is primarily due to:

  • A variation in the payment schedules for the implementation phases of the David Florida Laboratory infrastructure accelerated refit project as well as for the security enhancement project at the John H. Chapman Space Centre.

The $7.3 and $38.9 million decreases in quarterly and year to date expenditures for the Acquisition of machinery and equipment standard object is primarily due to:

  • The variations in the payment schedules for the RCM project.

The $2.7 and $1.5 million decreases in quarterly and year to date expenditures for the Transfer payments standard object is primarily due to:

  • The variations in the payment schedules to the European Space Agency (ESA) as well as the Class Grant Program to support research, awareness and learning in Space Science and Technology.

3. Risks and Uncertainties

The specific nature of the Canadian Space Program confronts us with issues related to the advanced technologies used in space missions and issues related to the international aspect of some of our projects. These specific characteristics of the space sector create a risk of delays in the realization of projects and therefore, risk of deferral of the use of funds.

The year-to-date expenditures for the 3rd quarter of - represent 45% of authorities whereas 75% of fiscal year has passed. This situation is similar to that of the previous fiscal years (46% for - and 49% for -) and represents no concerns. The situation concerning the cumulative expenditures will be restored at fiscal year-end when the accruals will be recorded, according to the full accrual method of accounting, combined with the deferral of budgets to the following year.

Government organizations are increasingly using space assets to deliver their mandate. Where there is a large diversity of missions and partnership opportunities to choose from, there is a risk that gaps may emerge between users' needs and services provided. In this context, the CSA has implemented an interdepartmental governance model that facilitates the identification and mitigation of potential gaps between supply and demand, while ensuring that adequate financial resources will be allocated to space activities.

Risks also arise from the Canada / European Space Agency (ESA) Cooperation Agreement such as, variations in amounts payable caused by changes in the Gross National Product (GNP) statistics, the fluctuation of the Canadian dollar against the euro (exchange rate), inflation and the enforcement of the ESA's industrial policy. These risks have an impact on both costs and cash flow profiles.

To mitigate all of these risks, the CSA regularly reviews its project portfolio, activity plans, schedules and financial management strategies to adjust to changes brought on by space programs of its key partners (National Aeronautics and Space Administration (NASA), ESA and other space agencies). In addition, the CSA continued the implementation of its governance framework and investment monitoring, which effectively improves the management and control process already in place.

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

There were no major changes in operations, personnel and programs, in the third quarter of -.

Approval by Senior Officials

Approved by,

The original version was signed by Sylvain Laporte, President, in Longueuil, Quebec, on .

The original version was signed by Marie-Claude Guérard, CPA CGA, Chief Financial Officer, in Longueuil, Quebec, on .

Annex 1

Canadian Space Agency
Quarterly Financial Report
For the quarter ended
Statement of Authorities
(unaudited)
(in thousands of dollars)
Fiscal Year - Fiscal Year -
Total available for use for the year ending

Table note 2
$
Used during the quarter ended

$
Year to date
used at
quarter-end
$
Total available for use for the year ending

Table note 2
$
Used during the quarter ended
December 30, 2016
$
Year to date
used at
quarter-end
$
Vote 1: Operating expenditures 180,678 42,993 103,742 184,498 36,729 94,182
Vote 5: Capital expenditures 168,666 22,322 61,778 210,228 23,521 92,892
Vote 10: Grants and contributions 60,966 6,336 16,931 55,942 9,019 18,444
Contributions to employee benefit plans 9,328 2,289 6,867 10,037 2,510 7,528
Spending of proceeds from the disposal of surplus Crown assets 30 3 24 42 12 12
Total budgetary authorities 419,668 73,943 189,342 460,747 71,791 213,058

Annex 2

Canadian Space Agency
Quarterly Financial Report
For the quarter ended
Departmental budgetary expenditures by Standard Object
(unaudited)
(in thousands of dollars)
Fiscal Year - Fiscal Year -
Planned expenditures for the year ending

$
Used
during the
quarter ended

$
Year to date
used at
quarter-end
$
Planned expenditures for the year ending

$
Used
during the
quarter ended
$
Year to date
used at
quarter-end
$
Expenditures:
Personnel 70,109 20,987 57,421 68,389 16,312 50,219
Transportation and communications 5,015 1,279 2,920 4,249 1,049 2,493
Information 3,165 643 2,032 2,775 566 1,797
Professional and special services 139,311 23,678 51,105 138,898 21,576 48,864
Rentals 3,480 1,029 2,192 3,361 589 1,206
Repair and maintenance 7,573 5,578 7,853 7,900 1,218 2,309
Utilities, materials and supplies 1,924 527 1,299 1,817 294 1,118
Acquisition of land, buildings and works - - - 595 - -
Acquisition of machinery and equipment 121,082 13,832 45,523 172,419 21,097 84,443
Transfer payments 60,966 6,336 16,931 55,942 9,019 18,444
Other subsidies and payments 7,043 54 2,066 4,402 71 2,165
Total budgetary expenditures 419,668 73,943 189,342 460,747 71,791 213,058
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