OTTAWA, ON--(Marketwired - October 28, 2016) - NAV CANADA today released its financial results for the year ended August 31, 2016. The results reflect growth in air traffic volumes of 4.1 per cent over the prior fiscal year and demonstrate the Company's continued success in controlling costs and making strategic investments in its core services while maintaining safe and efficient air navigation.
The Company's fiscal year runs from September 1 to August 31. In fiscal 2016, the Company had positive free cash flow(1) of $118 million and strong financial performance as evidenced by its rate stabilization account, finishing with a positive(2) balance of $169 million. When adjusted for rate setting purposes, there is a positive(2) "notional" balance of $183 million in the rate stabilization account, which is above its target balance of $100 million.
"Strong performance in the past year has positioned us to be able to both reduce our charges to our customers and increase our capital investments in fiscal 2017," said Neil Wilson, President & CEO. "Investments in technology and facilities will enable us enhance our services, improve safety, and ensure we are providing employees with the best tools and productive spaces in which to work."
On July 18, 2016, the Company announced revised customer service charges, effective September 1, 2016. Based on the strength of the rate stabilization account and our positive financial outlook for fiscal 2017, the Company has implemented a temporary one-year rate reduction in addition to revisions to base rates. These rate revisions will see customer service charges lowered by 7.6 per cent on average, for customer savings of approximately $105 million in fiscal year 2017.
Effective September 1, 2015, the Company began reporting its financial results in accordance with IFRS, including comparative figures for fiscal 2015.
The Company's revenue for fiscal 2016 was $1,393 million, compared to $1,334 million in the previous fiscal year, mainly due to the growth in air traffic volumes.
Operating expenses for fiscal 2016 were $1,238 million as compared to $1,202 million in the previous fiscal year, mainly due to higher compensation.
Net other income and expenses for fiscal 2016 were $116 million expense as compared to an expense of $103 million in the previous fiscal year, primarily due to foreign exchange losses compared to foreign exchange gains in the previous year, partially offset by lower interest expense, lower net interest costs relating to employee benefits and higher positive fair value adjustments on ABCP investments.
The Company had a net income (before net movement in regulatory deferral accounts including rate stabilization) of $37 million in fiscal 2016 as compared to a net income of $27 million in the previous fiscal year.
The Company is subject to legislation that regulates the level of its charges, and the timing of recognition of certain revenue and expenses is adjusted through movements in regulatory deferral accounts. The net movement in regulatory deferral accounts for fiscal 2016 was a loss of $37 million as compared to a loss of $27 million in fiscal 2015. This increase is mainly due to $83 million higher deferrals of favourable results through rate stabilization adjustments, partially offset by $73 million more of regulatory adjustments for certain transactions to adjust the accounting recognition to the periods in which they will be considered for rate setting.
The Company's Financial Statements, Management's Discussion and Analysis and Annual Information Form for the year ended August 31, 2016 can be found at:
NAV CANADA is the country's private sector civil air navigation services provider. With operations from coast to coast to coast, NAV CANADA provides air traffic control, flight information, weather briefings, aeronautical information services, airport advisory services and electronic aids to navigation.
- Free cash flow is a non-GAAP financial measure used by the Company to enhance the overall understanding of its financial and operating performance. Non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines free cash flow as cash generated from operations, less capital expenditures and investments in Aireon LLC and other subsidiaries. Management places importance on this indicator as it assists in measuring the impact of its investment program on the Company's financial resources.
- A positive balance in the rate stabilization account represents a regulatory credit balance on the Company's statement of financial position, reflecting amounts returnable to customers through future customer service charges.
This press release contains certain forward-looking statements that are subject to important risks and uncertainties. Actual results may differ materially from the results indicated in these statements for a number of reasons. NAV CANADA disclaims any intention to update any forward-looking statements.