2011-2012 Quarterly Financial Report for the Quarter Ended June 30, 2011

Management Statement for the Quarter Ended June 30, 2011

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 Estimates.

Raison d'Être and Responsibilities

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

The CSA is achieving this mandate in cooperation with other government departments/agencies, industries, and universities, as well as international partners. In addition to delivering its own programs, the CSA is responsible for coordinating all federal civil space-related policies and programs pertaining to science and technology research, industrial development, and international cooperation.

All CSA's program activities contribute to a single strategic outcome: Canada's exploration of space, provision of space services and development of its space capacity meet the nation's needs for scientific knowledge, innovation and information.

To learn more about the Canadian Space Agency' mandate, consult the following site:

www.asc-csa.gc.ca/eng/about/mission.asp

Basis of Presentation

This quarterly financial report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Canadian Space Agency's spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates for the 2011-2012 fiscal year. This quarterly financial report 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The CSA uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

This quarterly report has not been subject to an external audit or review.

Highlights of Fiscal Quarter and Fiscal Year to Date Results

Statement of Authorities

Total vote available for use for the year ending March 31, 2012

The total vote available for use to the Canadian Space Agency for the year ending March 31, 2012, increased from the previous year by $33.8 million (8.7%). This increase is due to a decrease of $9.5 million (-3.8%) in Vote 25 - Operating Expenditures, an increase of $32.8 million (40.3%) in Vote 30 - Capital Expenditures, and an increase of $9.9 million (21.4%) in Vote 35 - Grants and Contributions.

The following factors are key in explaining the decrease of $9.5 million in Vote 25 - Operating Expenditures:

  • Funding for the Mobile Maintenance System (MMS) exploration program was revised downward and the budget was reduced by $5.1 million. This program is Canada's contribution to the International Space Station (ISS).
  • Through the 2009 Budget Economic Action Plan the CSA was allocated $110 million over three years to support Canadian industry. The combination of the amount allocated in the 2009 Budget, the funds that the CSA invested from its reference levels to support the Economic Action Plan, and the cumulative effect of carrying forward operating budget funds as a result of sound management reduced reference levels by $3.3 million.

The following factors are key in explaining the increase of $32.8 million in Vote 30 - Capital Expenditures:

  • In the 2010 Budget, the CSA was allocated $397 million over five years to pursue the development of the RADARSAT Constellation Mission (RCM). The CSA will contribute $100 million from its capital reference levels to bring the total funding to $497 million. Of the $397 million allocated in the 2010 Budget, $30 million were added to the votes available for use for 2011-2012.
  • The RADARSAT Constellation Mission (RCM) consists of three satellites that will provide observational data for monitoring Canadian sovereignty, global environment and supporting disaster response. The RCM will increase Canada's ability to monitor and manage its natural resources and environment, while enhancing the surveillance of Canadian territory for security purposes. In 2011-2012, the CSA was allocated $2.5 million from the National Defence in conjunction with this project.

The following factors are key in explaining the increase of $9.9 million in Vote 35 - Grants and Contributions:

  • For Canada's contribution to the European Space Agency (ESA) program, the cumulative effect of carrying forward funds related to fluctuations in interest rates between the Canadian dollar and the euro, and variances in the inflation rate, contributed to a favourable variance of $11.6 million.
  • Moreover, cash flow management and internal reallocation of various elements of the Canadian Space Program in recent years resulted in a decrease of $2 million in the ESA contribution program.
Vote used during the quarter ended June 30, 2011

The vote used during the quarter ended June 30, 2011, is similar to the vote used for the corresponding quarter of the previous year, with a decrease of $1.3 million (-2.7 %). The most significant variance is for Vote 30 - Capital Expenditures where a $3.4 million (-81.8%) decrease in vote used is observed from the previous year. This decrease is explained mainly by cash flow and variances in the payment schedule, which the project schedule influences over time.

Departmental Budgetary Expenditures by Standard Object

Planned expenditures for the year ending March 31, 2012

The Canadian Space Agency's departmental budgetary planned expenditures by standard object for the year ending March 31, 2012, increased by $33.8 million (8.7%) from the previous year. This increase in planned expenditures is mainly due to the increase of $17 million (73.9%) in expenditures related to the Acquisition of machinery and equipment, to the $9.9 million (21.4%) increase in Transfer payments and to a $1.4 million (213.3%) increase in Rental charges.

The following activities are key in explaining the $17 million increase in planned expenditures for the Acquisition of machinery and equipment:

  • Of the $30 million allocated for RCM in 2011-2012 in the 2010 Budget, $22.5 million were planned for the Acquisition of machinery and equipment.
  • Moreover, the cumulative effect of carrying forward funds related to the risk management of the James Webb Space Telescope (JWST) project is responsible for the $5 million decrease in the Acquisition of machinery and equipment.

The increase in planned expenditures is $9.9 million for transfer payments. The explanations are those identified for the increase in Vote 35 - Grants and Contributions in section Total vote available for use for the year ending March 31, 2012.

The following factors are key in explaining the $1.4 million increase in planned expenditures for Rental charges:

  • The yearly equipment rental for the Cosmomania exhibit project, the acquisition and maintenance of numerous licences for the Oracle system, the acquisition of software and the amounts allocated to the Government Related Initiatives Program (GRIP).
Expended during the quarter ended June 30, 2011

Total expended during the first quarter of 2011-2012 decreased by $1.3 million (-2.7%) from the first quarter of the previous year.

The decrease in expenditures in the first quarter is mainly explained by variances in the payment schedule for Personnel expenditures (increase of $2.5 million), Acquisition of machinery and equipment (decrease of $4.3 million), and Other grants and subsidies (decrease of $1.9 million).

Expenditures for Professional and special services also varied due to the composition of the space project portfolio and the faster rate of expenditure associated with the Economic Action Plan (increase of $1.2 million). The variance in expenditures for Transfer payments (increase of $1.1 million) is mainly related to variances in exchange rates between the Canadian dollar and the euro.

Risks and Uncertainties

Risks and uncertainties stem from factors inherent to the development of the space sector.

1 - International co-operation is essential to the implementation of the Agency's programs, because partnerships with other space-faring nations make it possible to share technical expertise, knowledge and infrastructure.

The Canadian Space Agency also relies on partnerships with Canadian businesses and universities to turn scientific and technological advances into innovative products and services. The domestic market is relatively small and the viability of Canada's space sector depends on its positioning on international markets.

Consequently, the Agency must often review its project portfolio, activity plans, schedules and financial management strategies to adapt to changes in the space programs of its key partners (NASA, ESA and the International Space Station Program).

2 - Space projects use innovative technologies that are sometimes first tested under the rigorous conditions of space. The technical challenges are such that delays are commonly experienced in developing technology, to mitigate the risk of its use or implementation in a space mission.

Consequently, the Agency must often review its schedules and financial management strategies to adjust to delays incurred in implementing its projects or those of its partners. This results in recurring annual underutilization and cumulative carry-forward of funds.

3 - This Departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 27, 2011.

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13.

The budget freeze and the 1.5% salary cut announced in Budget 2010 requested that steps be taken to increase monitoring and budgetary controls with the CSA. A salary cap has been set up to improve the financial planning process and to ensure that the operating budget authority is not exceeded. This limit is closely managed with the business plan for human resources, short and long term planning.

Significant Changes in Relation to Operations, Personnel and Programs

There were no major changes in operations, personnel and programs in the first quarter of 2011-2012.

Approval by Senior Officials

Approved by,

The original version was signed by Steve MacLean, President, Canadian Space Agency, in Longueuil, Quebec, on August 10, 2011.

The original version was signed by Marie-Claude Guérard, CGA, Chief Financial Officer, Canadian Space Agency, in Longueuil, Quebec, on August 10, 2011.

Canadian Space Agency
Quarterly Financial Report
For the quarter ended June 30, 2011
Statement of Authorities
(unaudited)
Fiscal year 2011-2012 (in thousands of dollars)

Fiscal Year 2011-2012 Fiscal Year 2010-2011
Total vote available for use for the year ending March 31, 2012Table note * Vote used during the quarter ended June 30, 2011 Year to date used at quarter-end Total vote available for use for the year ending March 31, 2011Table note * Vote used during the quarter ended June 30, 2010 Year to date used at quarter-end
Vote 25: Operating Expenditures 242,734 34,643 34,643 252,278 34,764 34,764
Vote 30: Capital Expenditures 114,159 762 762 81,394 4,179 4,179
Vote 35: Grants and Contributions 56,223 10,382 10,382 46,327 9,251 9,251
Budgetary Statutory Authorities 11,500 2,875 2,875 10,793 1,799 1,799
Total Authorities 424,616 48,662 48,662 390,792 49,993 49,993

Note of Statement of Authorities Table

Note * Includes only Authorities available for use and granted by Parliament at quarter-end.

Canadian Space Agency
Quarterly Financial Report
For the quarter ended June 30, 2011
Departmental budgetary expenditures by Standard Object
(unaudited)
Fiscal year 2011-2012 (in thousands of dollars)

Expenditures: Fiscal Year 2011-2012 Fiscal Year 2010-2011
Planned expenditures for the year ending March 31, 2012 Expended during the quarter ended June 30, 2011 Year to date expended at quarter-
end
Planned expenditures for the year ending March 31, 2011 Expended during the quarter ended June 30, 2010 Year to date expended at quarter-
end
Personnel 75,393 22,572 22,572 74,279 20,118 20,118
Transportation and communications 9,693 1,351 1,351 9,021 1,652 1,652
Information 2,495 221 221 3,481 269 269
Professional and special services 227,210 11,369 11,369 223,381 10,156 10,156
Rentals 2,093 439 439 668 172 172
Repair and maintenance 3,461 459 459 1,724 267 267
Utilities, materials and supplies 3,009 472 472 2,912 602 602
Acquisition of land, buildings and works 1,004 0 0 2,086 0 0
Acquisition of machinery and equipment 39,972 777 777 22,988 5,032 5,032
Transfer payments 56,223 10,382 10,382 46,327 9,251 9,251
Other subsidies and payments 4,063 620 620 3,925 2,474 2,474
Total Budgetary Expenditures 424,616 48,662 48,662 390,792 49,993 49,993