Q2 2022-2023 Quarterly Financial Report

Condensed Interim Financial Statements (Unaudited)

September 30, 2022

Condensed Interim Statement of Financial Position
(Unaudited)

(In thousands of Canadian dollars) September 30, 2022 March 31, 2022
Assets
Current assets
Cash  $                50,191  $                  7,581
Trade and other receivables (note 4)                  145,081                  100,670
Inventories (note 5)                    10,202                    11,406
Prepaids                     4,081                     6,835
Derivative financial assets (note 15)                     1,473                          34
                 211,028                  126,526
Non-current assets
Property and equipment (note 6)                  377,745                  392,726
Intangible assets (note 7)                    13,810                    14,745
Right-of-use assets (note 8)                    14,916                    16,569
Employee benefits asset (note 9)                    58,538                    56,950
Derivative financial assets (note 15)                          40                            6
                 465,049                  480,996
Total assets  $              676,077  $              607,522
Liabilities and Equity
Current liabilities
Trade and other payables   $              196,040  $              106,748
Holdbacks                      1,640                     1,637
Provisions (note 10) -                        200
Lease liabilities (note 11)                     2,188                     3,129
Deferred government funding related to operating expenses (note 12)                     14,283 18,241
                 214,151                  129,955
Non-current liabilities
Lease liabilities (note 11)                    13,305                    14,107
Deferred government funding related to capital expenditures (note 12)                  390,738                  406,579
Employee benefits liability (note 9)                    16,355                    19,107
                 420,398                  439,793
Equity
Accumulated surplus                    41,528                    37,774
Total liabilities and equity  $              676,077  $              607,522

Contingencies (note 10) and contractual arrangements (note 16)

The accompanying notes are an integral part of these condensed interim financial statements.

Condensed Interim Statement of Comprehensive Income (Loss)
(Unaudited)

(In thousands of Canadian dollars) Three months ended September 30 Six months ended
September 30
2022 2021 2022 2021
Expenses
Pre-Board Screening   $  143,510  $  103,047  $  263,653  $  183,253
Hold Baggage Screening       38,475       41,392       74,638       79,367
Non-Passenger Screening       35,779       39,040       71,370       81,960
Restricted Area Identity Card Program         1,155            669         2,170         1,442
Corporate services       12,578       11,383       25,631       23,838
Total expenses (note 13)      231,497      195,531      437,462      369,860
Other (income) expenses
Finance costs              69              36            139              76
Net gain on fair value of derivative financial instruments        (1,016)           (457)        (1,473)           (696)
Foreign exchange (gain) loss             (34)            283             (15)            736
Impairment of property and equipment (note 6) -         1,940 -         1,940
Write-off of property and equipment and intangible assets -              40              16              40
Total other (income) expenses            (981)         1,842        (1,333)         2,096
Financial performance before revenue and government funding      230,516      197,373      436,129      371,956
Revenue
Finance income            577              78            740            127
Screening services - other              63 -              70 -
Total revenue            640              78            810            127
Government funding
Parliamentary appropriations for operating expenses (note 12)      219,761      175,703      412,479      328,568
Amortization of deferred government funding related to capital expenditures (note 12)       10,105       21,253       20,191       40,803
Parliamentary appropriations for lease payments (note 14)         1,013            980         2,019         2,011
Total government funding      230,879      197,936      434,689      371,382
Financial performance  $     1,003  $        641  $       (630)  $       (447)
Other comprehensive (loss) income
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)        (3,150)         8,171         4,384         6,764
Total comprehensive income  $    (2,147)  $     8,812  $     3,754  $     6,317

The accompanying notes are an integral part of these condensed interim financial statements.

Condensed Interim Statement of Changes in Equity
(Unaudited)

For the three months ended September 30:

(In thousands of Canadian dollars) Accumulated surplus
Balance, June 30, 2022  $                              43,675
Financial performance                                   1,003
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)                                  (3,150)
Balance, September 30, 2022  $                              41,528
Balance, June 30, 2021  $                              11,011
Financial performance                                      641
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)                                   8,171
Balance, September 30, 2021  $                              19,823

For the six months ended September 30:

(In thousands of Canadian dollars) Accumulated surplus
Balance, March 31, 2022  $                             37,774
Financial performance                                    (630)
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)                                   4,384
Balance, September 30, 2022  $                             41,528
Balance, March 31, 2021  $                             13,506
Financial performance                                    (447)
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)                                   6,764
Balance, September 30, 2021  $                             19,823

The accompanying notes are an integral part of these condensed interim financial statements.

Condensed Interim Statement of Cash Flows
(Unaudited)

(In thousands of Canadian dollars)  Three months ended
September 30		  Six months ended
September 30
2022 2021 2022 2021
Cash flows provided by (used in)
Operating activities
Financial performance  $            1,003  $               641  $              (630)  $              (447)
Items not involving cash
Depreciation and amortization (note 13)              11,045              20,236              22,042              40,729
Other non-cash transactions                    236                1,210                   163                1,400
Amortization of deferred government funding related to capital expenditures (note 12)             (10,105)             (21,253)             (20,191)             (40,803)
Change in fair value of financial instruments at fair value through profit and loss                (1,016)                  (457)               (1,473)                  (696)
Change in net employee benefits asset/liability                   (290)                  (342)                     44               (1,096)
Impairment of property and equipment (note 6) -                1,940 -                1,940
Write-off of property and equipment and intangible assets -                     40                     16                     40
Net change in working capital balances (note 18)              11,298               (8,022)              46,684                8,457
             12,171               (6,007)              46,655                9,524
 Investing activities 
Parliamentary appropriations received for capital funding (note 14)                2,916              13,082                2,916              13,082
Purchase of property and equipment               (3,690)               (7,867)               (4,952)             (19,990)
Purchase of intangible assets                   (127) -                  (127)                    (76)
                 (901)                5,215               (2,163)               (6,984)
 Financing activities 
Lease principal payments                  (945)                  (944)               (1,882)               (1,937)
                 (945)                  (944)               (1,882)               (1,937)
 Increase (decrease) in cash               10,325               (1,736)              42,610                   603
 Cash, beginning of period               39,866              16,425                7,581              14,086
 Cash, end of period   $           50,191  $           14,689  $           50,191  $           14,689

Interest expense paid and interest income received approximate finance costs and finance income, respectively, in the Condensed Interim Statement of Comprehensive Income.
Supplementary cash flow information (note 18)
The accompanying notes are an integral part of these condensed interim financial statements.

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