Corporate Plan 2024-25 to 2028-29 Summary

APPENDIX E: Financial Statements and Budgets

Financial Statement Highlights

CATSA’s financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and approved by the Accounting Standards Board of Canada (AcSB).

Disposals

CATSA manages its assets, including asset disposal, as part of a lifecycle management regimen or as part of new technology requirements. The disposal of assets is governed by corporate policy and procedures that ensure compliance with applicable legislation and regulations concerning the disposal of Crown assets.

Statement of Financial Position

Statement of Financial Position
(Figures are in thousands)		 Actual
2022/23		 Forecast
2023/24		 Plan
2024/25		 Plan
2025/26		 Plan
2026/27		 Plan
2027/28		 Plan
2028/29
Assets
Current assets
Cash  $     13,785  $     10,000  $     10,000  $     10,000  $     10,000  $     10,000  $     10,000
Trade and other receivables       129,477       164,311       188,881       189,329         86,061         86,061         86,061
Inventories         11,419         12,786         11,238         10,603           9,800           9,513           8,389
Prepaids           7,834           8,062           4,184           5,645           5,799           5,958           6,136
Derivative financial assets                22                24                -                  -                  -                  -                  -  
 $  162,537  $  195,183  $   214,303  $  215,577  $   111,660  $   111,532  $   110,586
Non-current assets
Property and equipment and intangible assets
EDS  $   359,358  $   410,194  $   444,175  $   481,498  $   514,817  $   543,008  $   565,192
Non-EDS         20,729         24,664         36,582         38,783          35,971         31,764         27,802
 $   380,087  $   434,858  $   480,757  $   520,281  $    550,788  $   574,772  $   592,994
Right-of-use assets  $     13,581  $     16,588  $     11,869  $     10,173  $        8,475  $        9,482  $       7,769
Employee benefits asset         52,104          61,281         59,182         56,278          53,373          50,468         47,564
 $   608,309  $   707,910  $   766,111  $   802,309  $    724,296  $    746,254  $   758,913
Liabilities and Equity 
Current liabilities
Trade and other payables  $   141,890  $   174,652  $   199,222  $   199,670  $    96,402  $     96,402  $     96,402
Holdbacks           1,818                -                  -                  -                  -                  -                  -  
Lease liabilities           1,777           3,070           1,662           1,822           1,853           1,935           1,829
Deferred government funding related to operating expenses         19,253         20,848         15,422         16,248         15,599         15,471         14,525
 $   164,738  $   198,570  $   216,306  $   217,740  $   113,854  $   113,808  $   112,756
Non-current liabilities
Lease liabilities  $     12,708  $     15,729  $    12,173  $     10,390  $      8,574  $      9,417  $       7,671
Deferred government funding related to capital expenditures       379,180       434,053       480,038       519,648       550,241       574,311       592,614
Employee benefits liability         16,544         15,506         16,485         17,464         18,442         19,421         20,400
Derivative financial liabilities                10                -                  -                  -                  -                  -                  -  
 $  408,442  $   465,288  $   508,696  $   547,502  $   577,257  $   603,149  $   620,685
Equity
Accumulated surplus  $    35,129  $     44,052  $     41,109  $     37,067  $     33,185  $     29,297  $     25,472
 $  608,309  $   707,910  $   766,111  $   802,309  $   724,296  $   746,254  $   758,913

Statement of Comprehensive Income (Loss) and Equity

Statement of Comprehensive Income and Equity
(Figures are in thousands)		 Actual
2022/23		 Forecast
2023/24		 Plan
2024/25		 Plan
2025/26		 Plan
2026/27		 Plan
2027/28		 Plan
2028/29
Expenses
Pre-Board Screening  $   543,038  $   603,572  $    717,011  $    697,950  $    271,690  $    275,705  $    280,553
Hold Baggage Screening       151,511       166,913        179,705        182,670        107,514        109,154        110,525
Non-Passenger Screening       143,081       155,350        194,245        216,005          76,231          76,097          76,066
Restricted Area Identity Card Program           4,595           4,651            4,740            4,731            4,854            4,888            4,962
Corporate services         52,629         51,964          58,540          57,055          59,042          59,505          59,778
Total expenses  $   894,854  $   982,450  $ 1,154,241  $ 1,158,411  $    519,331  $    525,349  $    531,884
Other expenses (income)
Impairment of property and equipment  $         (390)  $            -    $            -    $            -    $            -    $            -    $            -  
Foreign exchange loss (gain)  $         (971)  $           (20)                -                  -                  -                  -                  -  
Finance costs              271              506              643              519              451              441              428
Write-off of property and equipment and intangible assets               38                -                  -                  -                  -                  -                  -  
Gain on disposal of property and equipment                 3                -                  -                  -                  -                  -                  -  
Net (gain) loss on fair value of derivative financial instruments               28  $           (12)                24                -                  -                  -                  -  
Gain on leases cancellation                -                  -    $         (250)                -                  -                  -                  -  
Total other expenses (income)  $     (1,021)  $          474  $          417  $          519  $          451  $          441  $          428
Revenue
Finance income  $       2,354  $       1,483  $            -    $            -    $            -    $            -    $            -  
Screening services - other  $            70  $            -    $            -    $            -    $            -    $            -    $            -  
Other income  $            32  $            14  $            -    $            -    $            -    $            -    $            -  
Total revenue  $       2,456  $       1,497  $            -    $            -    $            -    $            -    $            -  
Financial performance before government funding  $   891,377  $   981,427  $ 1,154,658  $ 1,158,930  $    519,782  $    525,790  $    532,312
Government funding
Parliamentary appropriations for operating expenses  $   848,001  $   936,878  $ 1,100,800  $ 1,097,998  $    452,493  $    451,972  $    452,790
Parliamentary appropriations for lease payments           3,435           2,122             3,713             2,177            2,272            2,295            2,364
Amortization of deferred government funding related to capital expenditures         40,415         42,007           47,202           54,713          61,135          67,635          73,333
Total government funding  $   891,851  $   981,007  $ 1,151,715  $ 1,154,888  $    515,900  $    521,902  $    528,487
Financial performance  $          474  $         (420)  $       (2,943)  $       (4,042)  $       (3,882)  $       (3,888)  $       (3,825)
Other comprehensive income
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans  $      (3,119)  $       9,343  $            -    $            -    $            -    $            -    $            -  
Total comprehensive income  $      (2,645)  $       8,923  $      (2,943)  $      (4,042)  $      (3,882)  $      (3,888)  $      (3,825)
Equity
Accumulated surplus, beginning of year  $     37,774  $     35,129  $     44,052  $     41,109  $     37,067  $     33,185  $     29,297
Total comprehensive income          (2,645)           8,923          (2,943)          (4,042)          (3,882)          (3,888)          (3,825)
Accumulated surplus, end of year  $     35,129  $     44,052  $     41,109  $     37,067  $     33,185  $     29,297  $     25,472

Statement of Cash Flows

Statement of Cash Flows
(Figures are in thousands)		 Actual
2022/23		 Forecast
2023/24		 Plan
2024/25		 Plan
2025/26		 Plan
2026/27		 Plan
2027/28		 Plan
2028/29
Cash flows provided by (used in)
Operating activities
Financial performance  $          474  $         (420)  $      (2,943)  $      (4,042)  $      (3,882)  $      (3,888)  $      (3,825)
Items not involving cash
Depreciation and amortization         44,294         45,021         50,363         56,530         62,955         69,493         75,211
Write-off of property and equipment and intangible assets               38                -                  -                  -                  -                  -                  -  
Change in fair value of financial instruments at fair value through profit and loss               28  $           (12)               24                -                  -                  -                  -  
Other non-cash transactions               23                -                  -                  -                  -                  -                  -  
Gain on disposal of property and equipment                 3                -                  -                  -                  -                  -                  -  
Amortization of deferred government funding related to capital expenditures        (40,415)        (42,007)        (47,202)        (54,713)        (61,135)        (67,635)        (73,333)
Change in net employee benefits asset/liability             (836)             (872)           3,078           3,883           3,883           3,884           3,883
Impairment of property and equipment             (390)                -                  -                  -                  -                  -                  -  
Gain on leases cancellation                -                  -               (250)                -                  -                  -                  -  
Net change in working capital balances           3,371          (2,071)                -                  -                  -                  -                  -  
 $       6,590  $         (361)  $       3,070  $       1,658  $       1,821  $       1,854  $       1,936
Investing activities
Parliamentary appropriations received for capital funding  $     12,500  $     96,880  $     93,187  $     94,323  $     91,728  $     91,705  $     91,636
Purchase of property and equipment and intangible assets:
EDS          (7,308)        (89,208)        (75,224)        (83,562)        (85,044)        (85,624)        (84,597)
Non-EDS          (2,408)          (9,474)        (17,963)        (10,761)          (6,684)          (6,081)          (7,039)
 $       2,784  $      (1,802)  $            -    $            -    $            -    $            -    $            -  
Financing activities
Lease principal payments  $      (3,170)  $      (1,622)  $      (3,070)  $      (1,658)  $      (1,821)  $      (1,854)  $      (1,936)
 $      (3,170)  $      (1,622)  $      (3,070)  $      (1,658)  $      (1,821)  $      (1,854)  $      (1,936)
Decrease in cash   $       6,204  $      (3,785)  $            -    $            -    $            -    $            -    $            -  
Cash, beginning of year  $       7,581  $     13,785  $     10,000  $     10,000  $     10,000  $     10,000  $     10,000
Cash, end of year  $     13,785  $     10,000  $     10,000  $     10,000  $     10,000  $     10,000  $     10,000

Reconciliation of Financial Performance (IFRS) to Operating Appropriations Used

Reconciliation of Financial Performance to Operating Appropriations Used
(Figures are in thousands)		 Actual
2022/23		 Forecast
2023/24		 Plan
2024/25		 Plan
2025/26		 Plan
2026/27		 Plan
2027/28		 Plan
2028/29
Financial performance before government funding  $    891,377  $    981,427  $ 1,154,658  $ 1,158,930  $    519,782  $    525,790  $    532,312
Non-cash expenses
Depreciation and amortization  $    (44,294)  $    (45,021)  $    (50,363)  $    (56,530)  $    (62,955)  $    (69,493)  $    (75,211)
Impairment of property and equipment              390                -                  -                  -                  -                  -                  -  
Non-cash loss on foreign exchange recognized in financial performance               26               88                -                  -                  -                  -                  -  
Write-off of property and equipment and intangible assets              (38)                -                  -                  -                  -                  -                  -  
Non-cash finance costs related to leases             (265)             (500)             (643)             (519)             (451)             (441)             (428)
Employee benefits expense              836              872          (3,078)          (3,883)          (3,883)          (3,884)          (3,883)
Gain on disposal of property and equipment                (3)                -                  -                  -                  -                  -                  -  
Change in fair value of financial instruments at fair value through profit and loss              (28)               12              (24)                -                  -                  -                  -  
Spare parts expense funded from capital                -                  -                  -                  -                  -                  -                  -  
Gain on leases cancellation                -                  -                250                -                  -                  -                  -  
Parliamentary appropriations for operating expenses   $    848,001  $    936,878  $ 1,100,800  $ 1,097,998  $    452,493  $    451,972  $    452,790
Other items affecting funding
Net change in prepaids and inventories  $       1,012  $       1,595  $      (5,426)  $          826  $         (649)  $         (128)  $         (946)
Total operating appropriations used  $    849,013  $    938,473  $ 1,095,374  $ 1,098,824  $    451,844  $    451,844  $    451,844

Operating and Capital Plans

The five-year operating and capital budgets reflect CATSA’s approved funding levels with the budget for 2026/27 and beyond reverting to CATSA’s A-Base funding. CATSA continues to support Transport Canada in the development of an operationally effective long-term funding strategy. Incremental funding will be required in order to allow the organization to maintain current operations. The narrative that follows reflects the strategic plans CATSA has developed, subject to available funding.

Operating

Operating Plan by Major Expenditure Category
(Figures are in thousands)		 Actual
2022/23		 Forecast
2023/24		 Budget
2023/24		 Plan
2024/25		 Plan
2025/26		 Plan
2026/27		 Plan
2027/28		 Plan
2028/29
Operating Expenditures
Screening Services and Other Related Costs         713,568         785,728         814,966         936,640         937,768         289,844         289,844         289,844
Equipment Operating and Maintenance           42,097           52,960           50,455           56,780           55,339           56,000           56,000           56,000
Program Support and Corporate Services           95,753         101,249         103,055         101,954         105,717         106,000         106,000         106,000
Subtotal  $     851,418  $     939,937  $     968,476  $   1,095,374  $   1,098,824  $     451,844  $     451,844  $     451,844
Revenue and Other Income  $       (2,405)  $       (1,464)                  -                    -                    -                    -                    -                    -  
Total  $    849,013   $    938,473   $     968,476  $   1,095,374  $   1,098,824  $     451,844  $     451,844  $     451,844

2023/24 Financial Results

Net operating expenditures are estimated to be $938.5 million, which is $30.0 million lower than the Corporate Plan budget of $968.5 million. The major factor contributing to the variance is lower spending due to a revised view of spending for the implementation of changes to non-passenger screening. These savings are partially offset by a ramp-up of screening officers to ensure successful summer operations, support improved wait time service levels and prepare for changes to non-passenger screening.

2024/25 – 2028/29 Financial Plan Highlights

Funding requirements for Screening Services and Other Related Costs will increase over the planning period mainly to reflect additional screening hours to support the 95/15 wait time service level in the face of increasing passenger volumes, the ongoing implementation of changes to non-passenger screening, and screening contractor billing rate increases.

Equipment Operating and Maintenance spending includes the costs to support CATSA’s EDS and Non-EDS equipment. Funding requirements in this area increase over the planning period due primarily to new deployments of more advanced technology, in addition to higher maintenance support costs owing to the terms of CATSA’s maintenance service provider contract. In addition, deployments of new and more advanced technology will require training for CATSA’s maintenance service provider.

Program Support and Corporate Services includes salaries and benefits to support CATSA’s workforce. Over the five-year planning period, funding requirements increase due to inflationary increases, as well as other support costs for various corporate initiatives including IT modernization and cybersecurity. CATSA’s indeterminate workforce increases over the planning period to support key priorities and initiatives.

Capital

Operating Plan by Major Expenditure Category
(Figures are in thousands)		 Actual
2022/23		 Forecast
2023/24		 Budget
2023/24		 Plan
2024/25		 Plan
2025/26		 Plan
2026/27		 Plan
2027/28		 Plan
2028/29
Capital Expenditures
Explosives Detection Systems (EDS)
PBS  $       4,596  $     37,478  $     45,269  $     40,513  $     64,590  $     61,679  $     56,990  $     68,488
HBS           6,012         44,625         39,681         34,711         18,972         23,365         28,634         16,109
NPS                -             5,303           5,303                -                  -                  -                  -                  -  
Total EDS  $     10,608  $     87,406  $     90,253  $     75,224  $     83,562  $     85,044  $     85,624  $     84,597
Non-EDS
PBS  $       2,276  $       4,462  $     10,548  $       9,442  $       2,281  $       2,749  $       2,769  $       2,637
HBS                96              467              100              743              589              136              143              157
NPS                28              106              223              309                90                82                82                85
RAIC              370           3,040           2,263              778              597              532              518              525
Corporate Services           3,073           3,521           2,649         10,404           9,381           5,457           4,864           5,999
Total Non-EDS  $       5,843  $     11,596  $     15,783  $     21,676  $     12,938  $       8,956  $       8,376  $       9,403
 Total   $     16,451  $     99,002  $    106,036  $     96,900  $     96,500  $     94,000  $     94,000  $     94,000

2023/24 Financial Results

Capital expenditures are estimated to be $99.0 million, which is $7.0 million lower than the Corporate Plan budget of $106.0M. The lower spending is primarily related to capital project delays prompted by revised airport schedules and supply chain issues experienced by CATSA’s vendors. As a result of these delays, CATSA may seek Finance Canada approval for a capital re-profile from 2023/24 to 2024/25. The potential re-profile has not been reflected in the capital budget for 2024/25.

Key priorities in 2023/24 capital spending include the continuation of two major EDS lifecycle management programs which will continue into future planning periods. These programs will upgrade all existing full body scanners to the latest technology at PBS checkpoints, and replace existing oversize HBS X-ray units with CT technology. In addition, CATSA began the deployment of Ultra Violet sanitization equipment to CATSA Plus lines at major airports, and replaced the mobile readers for the RAIC program, which had reached the end of their useful life.

2024/25 – 2028/29 Financial Plan Highlights

The lifecycle management of CATSA’s EDS equipment and systems is a key corporate priority and annually represents a significant portion of the capital spending. Over the 2024/25 - 2028/29 period, the Capital Plan for PBS includes the replacement of existing PBS X-ray equipment with CT technology starting in 2024/25, the deployment of additional PBS screening lines to accommodate a 95/15 wait time service level, as well as the replacement of existing full body scanners. In HBS, the replacement of the existing HBS oversize X-Ray units with CT continues, while the later years of the plan include funding to begin replacing high-speed CT units, which are nearing the end of their useful life.

As part of the lifecycle management plan, CATSA will explore options for new technologies with the aim of optimizing screening operations as well as ensuring alignment with its international partners. In each deployment scenario, work will be coordinated with airport authorities in order to minimize disruption to screening operations.

CATSA’s capital plan also provides for the lifecycle management of non-EDS equipment and systems including IT network infrastructure, CCTV cameras and the replacement of the Learning Management System. The budget also consists of annual lease payments.

As capital project delays may arise, CATSA will work with airport authorities and vendors in an effort to accommodate revised project plans. As a result, CATSA may require a re-profile of funds to account for delays in capital projects.

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