2012-2013 Quarterly Financial Report for the Quarter Ended December 31, 2012

Management Statement for the Quarter Ended December 31, 2012

1. 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 EstimatesFootnote1, Supplementary Estimates A and B, the previous quarterly reports for the current year, as well as with Canada's Economic Action Plan 2012 (Budget 2012).

1.2 Mandate and Program Activities

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.

More information is available on the CSA's mandate and Program Activities in the Report on Plans and PrioritiesFootnote1

1.3 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 CSA's spending authorities granted by Parliament and those used by the CSA, consistent with the Main Estimates and Supplementary Estimates voted to date for the 2012-2013 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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in Budget 2012 are not reflected in the 2012-2013 Main Estimates.

For fiscal year 2012-2013, frozen allotments have been established by CT authority in departmental votes to prohibit the spending of funds already identified as saving measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by CT, and reflected in the subsequent Main Estimates tabled in Parliament.

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.

The CSA uses the full accrual method of accounting to prepare and present its annual financial statements, which are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis, that is, a partial accrual method of accounting. Expenditure basis accounting thus includes disbursements, but also some expenditures incurred for salaries and salary allowances.

This quarterly financial report has not been subject to an external audit. However, it has been reviewed by the members of the Audit Committee, who are satisfied with its presentation and content.

2. Highlights of the Quarterly Financial Results

This section highlights the significant factors that contributed to the changes to the authorities available for the fiscal year, as well as to the year to date and actual expenditures for the quarter ended December 31, 2012.

The following graph provides an overview of variations in available authorities and expenditures. Additional details on these variations are provided in sections 2.1 and 2.2 as well as in the appended annexes.

Variations in available authorities and expenditures ($ Million)
2012-2013 2011-2012 Variations
Authorities 386.0 439.0 -53.0
-12%
Year to date expenditures April to December 179.5 221.5 -42.0
-19%
Expended during the quarter ended December 31 65.3 88.9 -23.6
-27%

Totals may not add due to rounding.

2.1 Significant Changes in Authorities (Total Vote Available for Use) between fiscal 2011-2012 and 2012-2013

The total vote available for use by the CSA for the year ending March 31, 2013 is $386.0 million and represents a decrease of $53.0 million over the same period for the previous year. The most significant changes are as follows:
Authorities (in thousands of dollars) 2012-13 2011-12 Variance %
Vote 25 - Operating expenditures 175 000 250 654 (75 572) -30%
Vote 30 - Capital expenditures 162 228 118 663 43 565 37%
Vote 35 - Grants and contributions 37 599 58 159 (20 560) -35%
Budgetary statutory authorities 11 050 11 520 (470) -4%
Total budgetary authorities 385 959 438 996 (53 037) -12%

The following factors are key in explaining the decrease of $75.6 million in Vote 25 - Operating Expenditures:

The following factors are key in explaining the increase of $43.6 million in Vote 30 - Capital Expenditures:

The following factors are key in explaining the decrease of $20.6 million in Vote 35 - Grants and Contributions:

2.2 Significant Changes in Year to Date and Quarterly Expenditures (Votes Used)

Year to date and quarterly expenditures for the quarter ended December 31, 2012 are respectively $179.5 and $65.3 million and represent a decrease of $42.0 and $23.6 million compared to the same period for the previous year.

Expenditures by Vote

Expenditures and expenditure variations by vote for the quarter ended December 31 :
Expenditures (in thousands of dollars) Year to date Quaterly
2012-13 2011-12 Variance 2012-13 2011-12 Variance
Vote 25 - Operating expenditures 105 222 142 100 (36 878) 39 213 53 423 (14 210)
Vote 30 - Capital expenditures 46 579 39 857 6 722 22 793 18 423 4 370
Vote 35 - Grants and contributions 19 372 30 891 (11 519) 487 14 166 (13 679)
Budgetary statutory authorities 8 291 8 636 (345) 2 759 2 885 (126)
Total budgetary expenditures 179 464 221 484 (42 020) 65 252 88 897 (23 645)

The decrease in the use of Vote 25 – Operating Expenditures, of $36.9 million for year to date expenditures and $14.2 million for quarterly expenditures over the same period in the previous fiscal year is mainly explained by the end of funding from the Economic Action Plan announced in Budget 2009. The reduction of operating activities stemming from the implementation of the decisions announced in Budget 2012 relating to the Deficit Reduction Action Plan (DRAP) also explains the year to date and quarterly decrease for 2012-2013.

The increase in the use of Vote 30 – Capital Expenditures of $6.7 million year to date expenditures and $4.4 million quarterly expenditures over the same period in the previous year is mainly due to invoice payments relating to the development phase of the (RCM) project as well as the acquisition of material with extended procurement lead time. The variation in payment schedules and in the project development lifecycle, which is an inherent characteristic of the Canadian Space Plan also explains the year to date and quarterly increase for 2012-0213.

The decrease in the use of Vote 35 – Grants and Contributions of $11.5 million in year to date expenditures and $13.7 quarterly expenditures over the same period in the previous is mainly attributable to the variations in ESA payment schedules. The variations in the Class Grant and Contribution Program to Support Research, Awareness and Learning in Space Science and Technology payment schedules also explains the year to date and quarterly decrease for 2012- 2013.

Expenditures by Standard Object

Expenditures and expenditure variations by standard object for the quarter ended December 31:
Expenditures (in thousands of dollars) Year to date Quaterly
2012-13 2011-12 Variance 2012-13 2011-12 Variance
Personnel 58 402 62 447 (4 045) 18 145 19 748 (1 603)
Transports and communications 3 054 4 375 (1 321) 1 207 1 306 (99)
Information 1 055 1 030 25 540 225 315
Professional and special service 62 522 110 359 (47 837) 28 273 49 731 21 458
Rental 2 546 1 358 1 1188 1 610 444 1 166
Repair and maintenance 1 185 1 442 (257) 885 476 409
Utilities, materials and supplies 2 109 2 802 (693) 936 919 17
Acquisition of land, buildings and works 0 0 0 0 0 0
Acquisition of machinery and equipment 26 736 3 638 23 098 13 150 1 421 11 729
Transfer payments 19 372 30 891 (11 519) 487 14 166 (13 679)
Other subsidies and payments 2 483 3 142 (659) 19 461 (442)
Total budgetary expenditures 179 464 221 484 (42 020) 65 252 88 897 (23 645)

The decrease of $4.0 and $1.6 million year to date and quarterly expenditure decrease for the Personnel standard object is mainly owing to workforce reductions arising from recent government-wide reviews and the pay disbursement schedule.

The decrease of $47.8 and $21.5 million in year to date and quarterly expenditures for the Professional and special services standard object is partly attributable to the payment schedule related to the (RCM) project as well as the end of the funding from the Economic Action Plan announced in Budget 2009.

The increase of $23.1 and $11.7 million of year to date and quarterly expenditures for the Acquisition of machinery and equipment standard object is attributable to the acquisition of material with extended procurement lead time for the (RCM) project.

The explanation for the $11.5 and $13.7 million decrease in year to date and quarterly expenditures for the Transfer payment standard object is provided in the previous section of expenditures by vote under Vote 35 – Grants and Contributions.

The explanation for the variations in year to date and quarterly expenditures for several standard objects, such as Transportation and communications, Repair and maintenance and Utilities, materials and supplies, is partly due to the implementation of the decisions announced in Budget 2012 relating to the Deficit Reduction Action Plan (DRAP).

3. Risks and Uncertainties

4. Significant Changes in Relation to Operations, Personnel and Programs

During the 2nd quarter of 2011-2012, the Government of Canada established a new organization, SSC (SSC), in order to combine the information technology and telecommunications resources of 44 departments and agencies with the purpose of optimizing the use of resources by achieving significant economies of scale. The financial repercussions of this change are described in the table under section 2.1 – Significant Changes in Authorities and in appendixes 1 and 2.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs, make it easier for Canadians and business to deal with their government and, modernize and reduce the back office.

The CSA will achieve annual savings of $29.5 million starting fiscal year 2014-2015 through key measures that actively contribute to the Government's overarching plan to return to a balanced budget. Therefore, the CSA will increasingly focus its Programs and support in response to the growing demand for space-based solutions that serve the mandates and operations of Government departments and agencies.

In the first year of implementation, the CSA will achieve savings of approximately $7.9 million. Savings will increase to $24.7 million in 2013-2014 to reach ongoing saving of $29.5 million by 2014-2015. The related savings in progress will be reflected in Vote 25 – Operating Expenditures and Vote 35 – Grants and contributions.

For the quarter ended December 31st, 2012, the impact of Budget 2012 on the CSA's authorities is nil as the results of Budget 2012 were not reflected in the 2012-2013 Main Estimates and in the Supplementary Estimates. Therefore, for the third quarter, the variances in the Agency's authorities are not related to Budget 2012.

At the end of the third quarter, the reduction to expenditures related to Budget 2012 are reflected in Vote 25 – Operating Expenditures and in several standard objects, such as Transportation and Communications, Repair and maintenance and Utilities, materials and supplies. Other savings related to Budget 2012 will be reflected later in the fiscal year in Vote 25 – Operating Expenditures and Vote 35 – Grants and contributions.

There are no financial risks or uncertainties related to these savings.

Approval by Senior Officials

Approved by,

The original version was signed by
Gilles Leclerc, Acting President, Longueuil, Quebec, February 21, 2013

The original version was signed by
Marie-Claude Guérard, CGA Chief Financial Officer, Longueuil, Quebec, February 21, 2013

CSA
Quarterly Financial Report
For the quarter ended December 31, 2012
Statement of Authorities (unaudited)
Fiscal year 2012-2013 (in thousands of dollars)
Fiscal Year 2012-2013 Fiscal Year 2011-2012
Total available for use for the year ending March 31, 2013 (1, 2) Used during the quarter ended December 31, 2012 Year to date used at quarter-end Total available for use for the year ending March 31, 2012 (1, 3) Used during the quarter ended December 31, 2011 (4) Year to date used at quarter-end (4)
Expenditures: $ $ $ $ $ $
Vote 25: Operating expenditures 175 082 39 213 105 222 250 654 53 423 142 100
Vote 30: Capital expenditures 162 228 22 793 46 579 118 663 18 423 39 857
Vote 35: Grants and contributions 37 599 487 19 372 58 159 14 166 30 891
Budgetary statutory authorities 11 050 2 759 8 291 11 520 2 885 8 636
Total budgetary authorities 385 959 65 252 179 464 438 996 88 897 221 484

(1) Includes only Authorities available for use and granted by Parliament at quarter-end.

(2) Total available for use does not reflect measures announced in Budget 2012. The effective budgetary reductions for fiscal 2012-2013 will only be reflected in the 2013-2014 reference levels.

(3) Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, an amount of $3,296 thousand is deemed to have been appropriated to SSC votes for Operating expenditures ($2,550 thousand) and Capital expenditures ($746 thousand), which results in a reduction for the same amounts in the Canadian Space Agency's votes 25 and 30, Appropriation Act No.1, 2011-2012.

(4) Excludes an amount of $3,296 thousand incurred on behalf of SSC from the date of transfer of November 15 to December 31, 2011. The expenditure reductions by Vote are the same as those identified under the note (3).

One thousand dollar variances may occur due to rounding.

CSA
Quarterly Financial Report
For the quarter ended December 31, 2012
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2012-2013(in thousands of dollars)
Fiscal Year 2012-2013 Fiscal Year 2011-2012
Planned expenditures for the year ending March 31, 2013 (1) Expended during the quarter ended December 31, 2012 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2012 (2) Expended during the quarter ended December 31, 2011 (3) Year to date used at quarter-end (3)
Expenditures: $ $ $ $ $ $
Personnel 79 846 18 145 58 402 77 414 19 748 62 447
Transportation and communications 5 541 1 207 3 054 9 119 1 306 4 375
Information 1 140 540 1 055 2 496 225 1 030
Professional and special services 186 054 28 273 62 522 233 877 49 731 110 359
Rentals 1 522 1 610 2 546 1 982 444 1 358
Repair and maintenance 3 869 885 1 185 3 522 476 1 442
Utilities, materials and supplies 2 814 936 2 109 3 169 919 2 802
Acquisition of land, buildings and works 1 207 0 0 1 004 0 0
Acquisition of machinery and equipment 62 893 13 150 26 736 44 192 1 421 3 638
Transfer payments 37 599 487 19 372 58 159 14 166 30 891
Other subsidies and payments 3 474 19 2 483 4 063 461 3 142
Total budgetary expenditures 385 959 65 252 179 464 438 996 88 897 221 484

(1) Planned expenditures do not reflect measures announces in Budget 2012.

(2) Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, an amount of $3,296 thousand is deemed to have been appropriated to SSC votes for Operating expenditures ($2,550 thousand) and Capital expenditures ($746 thousand) which results in a reduction for the same amounts in the Canadian Space Agency's votes 25 and 30, Appropriation Act No.1, 2011-2012. The specific reductions are to Standard Objects Personnel ($829 thousand), Transportation and communications ($574 thousand), Professional and special services ($403 thousand), Rentals ($226 thousand), Utilities, materials and supplies ($124 thousand) and Acquisition of machinery and equipment ($1,140 thousand).

(3) Excludes an amount of $3 296 thousand incurred on behalf of SSC from the date of transfer of November 15 to December 31, 2011. The expenditure reductions by Standard Object are the same as those specified under note (2).

One thousand dollar variances may occur due to rounding.

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