NAV CANADA announces first quarter financial results
(Ottawa, January 14, 2016) – NAV CANADA (the “Company”) today released its financial results for the three months ended November 30, 2015. The results show continued success in controlling costs while maintaining safe and efficient air navigation services, as well as growth in air traffic volumes of 3.6 per cent compared to the same period in the prior fiscal year.
The Company’s fiscal year runs from September 1 to August 31. In the first quarter of fiscal 2016, the Company achieved positive free cash flow(1) and strong financial performance as evidenced by its rate stabilization account, finishing with a positive(2) balance of $102 million. When adjusted for rate setting purposes, there is a positive(2) “notional” balance of $124 million in the rate stabilization account, which is above its target balance of $100 million.
“Given the current strength of the rate stabilization account and our positive financial outlook for fiscal 2016, over the next fiscal quarter we will consider a rate reduction that, if enacted, would likely be implemented in September 2016,” said Neil Wilson, President and CEO. “We continuously monitor our financial requirements and air traffic, and regularly update our financial forecasts to account for changes in the economic environment. We will be closely monitoring this situation over the next several months.”
Effective September 1, 2015, NAV CANADA began reporting its financial results in accordance with IFRS, including comparative figures for fiscal 2015.
The Company’s revenue for the first quarter of fiscal 2016 was $342 million, compared to $325 million over the same period in fiscal 2015, mainly due to the growth in air traffic volumes.
Operating expenses for the first quarter of fiscal 2016 were $296 million as compared to $293 million over the same period in fiscal 2015, mainly due to higher compensation levels, higher pension expense and inflationary increases.
Lower interest income on investments and lower foreign exchange gains resulted in net other income and expenses of $30 million expense for the first quarter of fiscal 2016 as compared to an expense of $25 million over the same period in fiscal 2015.
The Company had net income (before net movement in regulatory deferral accounts including rate stabilization) of $16 million for the first quarter of fiscal 2016.
The Company is subject to legislation that regulates the level of its charges, and the timing of recognition of certain revenue and expenses is adjusted through movements in regulatory deferral accounts. The net movement in regulatory deferral accounts for the first quarter of fiscal 2016 was an expense of $18 million as compared to an expense of $8 million over the same period in fiscal 2015. The increase is mainly due to $14 million higher deferrals of favourable results through rate stabilization adjustments, partially offset by $4 million more of regulatory adjustments for certain transactions to adjust the accounting recognition to the period in which they will be considered for rate setting.
Based on the above, the Company had a net loss (after net movements in regulatory deferral accounts including rate stabilization) of $2 million for the first quarter of fiscal 2016.
The Company’s Financial Statements and Management's Discussion and Analysis for the three months ended November 30, 2015 can be found at:
NAV CANADA is the country’s private sector civil air navigation services provider. With operations from coast to coast to coast, NAV CANADA provides air traffic control, flight information, weather briefings, aeronautical information services, airport advisory services and electronic aids to navigation.
(1) Free cash flow is a non-GAAP financial measure used by the Company to enhance the overall understanding of its financial and operating performance. Non-GAAP financial measures do not have any standardized meaning prescribed by Canadian GAAP and therefore may not be comparable to similar measures presented by other issuers. The Company defines free cash flow as cash generated from operations, less capital expenditures and investments in Aireon LLC and other subsidiaries. Management places importance on this indicator as it assists in measuring the impact of its investment program on the Company’s financial resources.
(2) A positive balance in the rate stabilization account represents a regulatory credit balance on the Company’s statement of financial position, reflecting amounts returnable to customers through future customer service charges.
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This press release contains certain forward-looking statements that are subject to important risks and uncertainties. Actual results may differ materially from the results indicated in these statements for a number of reasons. NAV CANADA disclaims any intention to update any forward-looking statements.