Financial Statements of the Ottawa Macdonald-Cartier International Airport Authority
December 31, 2017
Management’s Responsibility for Financial Statements
Management of Ottawa Macdonald-Cartier International Airport Authority is responsible for the integrity of the accompanying financial statements and all other information in this Annual Report. The financial statements have been prepared by management in accordance with generally accepted accounting principles of Canada, which for publicly accountable enterprises, and in the case of the Authority, require International Financial Reporting Standards. Their preparation necessarily involves the use of management’s best estimates and careful judgement, particularly in those circumstances where transactions affecting a current period are dependent upon future events. All financial information in the Annual Report is consistent with the information and data contained in the financial statements.
To discharge its responsibilities for financial reporting and safeguarding of assets, management believes that it has established appropriate systems of internal accounting control which provide reasonable assurance that the financial records are reliable and form a proper basis for the timely and reliable preparation of financial statements.
The Board of Directors discharges its responsibilities for the financial statements primarily through its Audit Committee, which is composed solely of directors who are neither officers nor employees of the Authority. This committee meets periodically with management and the independent auditors to review performance and to discuss audit, internal control, accounting policy, and financial reporting matters. The Audit Committee reports its findings to the Board of Directors which reviews and approves annual financial statements. These financial statements were reviewed by the Audit Committee and approved by the Board of Directors.
The financial statements have been audited by Ernst & Young LLP, who were appointed at the Annual General Meeting. Their report is presented below.
Mark Laroche
President and Chief Executive Officer
Ottawa Ontario Canada
February 21, 2018
Rob Turpin, CPA, CA, CPA (Illinois, USA)
Vice-President, Finance and Chief Financial Officer
Independent auditors’ report
To the Directors of the Ottawa Macdonald-Cartier International Airport Authority
We have audited the accompanying financial statements of the Ottawa Macdonald-Cartier International Airport Authority, which comprise the balance sheet as at December 31, 2017, and the statements of operations and comprehensive income (loss), changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Ottawa Macdonald-Cartier International Airport Authority as at December 31, 2017, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Other matter
The financial statements of Ottawa Macdonald-Cartier International Airport Authority for the year ended December 31, 2016 were audited by PricewaterhouseCoopers LLP, who expressed an unmodified opinion on those statements dated February 22, 2017.
Chartered Professional Accountants, Licensed Public Accountants
Ottawa, Canada
February 21, 2018
Balance Sheet
As at December 31
(in thousands of Canadian dollars)
| Assets | 2017 $ |
2016 $ |
|---|---|---|
| Current | ||
| Cash and cash equivalents | 29,454 | 29,955 |
| Trade and other receivables | 9,462 | 14,709 |
| Consumable supplies | 3,499 | 3,326 |
| Prepaid expenses and advances | 1,368 | 1,581 |
| Sinking Fund investments [note 3] | — | 200,000 |
| Total current assets | 43,783 | 249,571 |
| Non-current | ||
| Debt Service Reserve Fund [note 8a] | 6,495 | 11,321 |
| Property, plant and equipment, net [note 4] | 438,985 | 432,443 |
| Post-employment pension benefit asset [note10] | 367 | 204 |
| Other assets [note 5] | 5,328 | 5,399 |
| 494,958 | 698,938 | |
| Liabilities | 2017 $ |
2016 $ |
|---|---|---|
| Current | ||
| Accounts payable and accrued liabilities | 14,967 | 18,293 |
| Current portion of long-term debt [note 8] | 4,152 | 203,695 |
| Total current liabilities | 19,119 | 221,988 |
| Non-current | ||
| Other post-employment benefit liability [note 10] | 9,233 | 8,532 |
| Long-term debt [note 8] | 420,377 | 424,258 |
| Total liabilities | 448,729 | 654,778 |
| Commitments and contingencies [note 15] | ||
| Equity | ||
| Retained earnings | 55,448 | 51,612 |
| Accumulated other comprehensive loss | (9,219) | (7,452) |
| Total equity | 46,229 | 44,160 |
| 494,958 | 698,938 | |
See accompanying notes
On behalf of the Board:
Chris Carruthers,
Chair of the Board of Directors
Scott Eaton,
Chair, Audit Committee
Statement of operations and comprehensive income (loss)
Years ended December 31
(in thousands of Canadian dollars)
| Revenues | 2017 $ |
2016 $ |
|---|---|---|
| Airport improvement fees [note 9] | 49,110 | 46,920 |
| Terminal fees and loading bridge charges | 27,350 | 26,432 |
| Landing fees | 13,005 | 12,861 |
| Concessions | 14,255 | 12,521 |
| Car parking | 15,320 | 14,344 |
| Land and space rentals [note 12] | 6,453 | 6,349 |
| Other revenue | 2,765 | 2,485 |
| 128,258 | 121,912 |
| Expenses | 2017 $ |
2016 $ |
|---|---|---|
| Interest, net [note 8b] | 23,087 | 29,029 |
| Ground rent [note 12] | 9,626 | 8,994 |
| Materials, supplies and services | 33,839 | 33,404 |
| Salaries and benefits | 23,774 | 22,690 |
| Payments in lieu of municipal taxes | 5,110 | 5,017 |
| 95,436 | 99,134 | |
| Earnings before depreciation | 32,822 | 22,778 |
| Depreciation | 28,986 | 28,047 |
| Net earnings (loss) for the year | 3,836 | (5,269) |
| Other comprehensive loss | ||
| Item that will never be reclassified subsequently to net earnings | ||
| Remeasurement of defined benefit plans [note 10] | (1,767) | (2,132) |
| Total comprehensive income (loss) | 2,069 | (7,401) |
See accompanying notes
Statement of changes in equity
Years ended December 31
(in thousands of Canadian dollars)
| Equity | 2017 $ |
2016 $ |
|---|---|---|
| Retained earnings – beginning of year | 51,612 | 56,881 |
| Net earnings (loss) for the year | 3,836 | (5,269) |
| Retained earnings – end of year | 55,448 | 51,612 |
| Accumulated other comprehensive loss | ||
| Remeasurement of defined benefit plans [that will never be recycled into net earnings] | ||
| Balance – beginning of year | (7,452) | (5,320) |
| Other comprehensive loss for the year [note 10] | (1,767) | (2,132) |
| Balance – end of year | (9,219) | (7,452) |
| Total equity | 46,229 | 44,160 |
See accompanying notes
Statement of cash flows
Years ended December 31
(in thousands of Canadian dollars)
| 2017 $ |
2016 $ |
|
|---|---|---|
| Operating activities | ||
| Net earnings (loss) for the year | 3,836 | (5,269) |
| Add (deduct) items not involving cash | ||
| Depreciation | 28,986 | 28,047 |
| Amortization of deferred financing costs | 271 | 365 |
| Decrease in other assets | 71 | 64 |
| Decrease in other post-employment benefit liability | (1,229) | (1,215) |
| 31,935 | 21,992 | |
| Net change in non-cash working capital balances related to operations [note 13] | 6,676 | (2,572) |
| Interest expense, net | 23,087 | 29,029 |
| Interest paid | (25,619) | (30,587) |
| Cash provided by operating activities | 36,079 | 17,862 |
| Investing activities | ||
| Purchase of property, plant and equipment [note 4] | (35,528) | (24,679) |
| Maturity of Sinking Fund investments | 200,000 | — |
| Change in accounts payable and accrued liabilities related to investing activities | (2,204) | (2,596) |
| Cash provided by (used in) investing activities | 162,268 | (27,275) |
| Financing activities | ||
| Proceeds on disposal of property, plant and equipment | 21 | 10 |
| Decrease (increase) in Debt Service Reserve Fund [note 8a] | 4,826 | (89) |
| Repayment of long-term debt | (203,695) | (3,272) |
| Cash used in financing activities | (198,848) | (3,351) |
| Net decrease in cash during the year | (501) | (12,764) |
| Cash and cash equivalents, beginning of year | 29,955 | 42,719 |
| Cash and cash equivalents, end of year | 29,454 | 29,955 |
See accompanying notes