NAV CANADA announces third quarter financial results
(Ottawa, July 15, 2016) – NAV CANADA today released its financial results for the three and nine months ended May 31, 2016. 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 3.0 per cent for the third quarter of fiscal 2016 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 three quarters of fiscal 2016, the Company had positive free cash flow(1) of $31 million and strong financial performance as evidenced by its rate stabilization account, finishing with a positive(2) balance of $137 million. When adjusted for rate setting purposes, there is a positive(2) “notional” balance of $155 million in the rate stabilization account, which is above its target balance of $100 million.
Based on the strength of the rate stabilization account and the Company’s positive financial outlook for fiscal 2016 and fiscal 2017, on April 8, 2016 the Company issued a notice of revised service charges for consultation, providing details of the proposed revisions. The consultation period concluded on July 6, 2016. The Company intends to issue an announcement later in July 2016 detailing the implementation of the revised charges.
Effective September 1, 2015, the Company began reporting its financial results in accordance with IFRS, including comparative figures for fiscal 2015.
The Company’s revenue for the third quarter of fiscal 2016 was $337 million, compared to $329 million over the same period in fiscal 2015, mainly due to the growth in air traffic volumes.
Operating expenses for the third quarter of fiscal 2016 were $319 million as compared to $304 million over the same period in fiscal 2015, mainly due to higher compensation levels, inflationary increases and other operating expenses. Lower interest expense, lower finance costs relating to employee benefits and higher positive fair value adjustments on ABCP investments, partially offset by higher foreign exchange losses resulted in net other income and expenses of $34 million expense for the third quarter of fiscal 2016 as compared to an expense of $37 million over the same period in fiscal 2015.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $16 million for the third quarter of fiscal 2016 as compared to a net loss of $12 million over the same period in fiscal 2015.
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 third quarter of fiscal 2016 was an income of $8 million as compared to an income of $4 million over the same period in fiscal 2015. The increase is mainly due to $16 million higher deferrals of favourable results through rate stabilization adjustments, offset by $20 million more of regulatory adjustments for certain transactions to adjust the accounting recognition to the periods 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 $8 million for the third quarter of fiscal 2016 as compared to a net loss of $8 million over the same period in fiscal 2015.
The Company’s Financial Statements and Management's Discussion and Analysis for the three and nine months ended May 31, 2016 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 IFRS 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.