Q2 2023-2024 Quarterly Financial Report

Condensed Interim Financial Statements (Unaudited)

September 30, 2023

Condensed Interim Statement of Financial Position
(Unaudited)

(In thousands of Canadian dollars) September 30, 2023 March 31, 2023
Assets
Current assets
Cash  $                12,825  $                13,785
Trade and other receivables (note 4)                  136,938                  129,477
Inventories (note 5)                    11,044                    11,419
Prepaids                     5,097                     7,834
Derivative financial assets (note 15)                          24                          22
                 165,928                  162,537
Non-current assets
Property and equipment (note 6)                  355,879                  367,255
Intangible assets (note 7)                    15,095                    12,832
Right-of-use assets (note 8)                    17,272                    13,581
Employee benefits asset (note 9)                    59,405                    52,104
                 447,651                  445,772
Total assets  $              613,579  $              608,309
Liabilities and Equity
Current liabilities
Trade and other payables   $              152,793  $              141,890
Holdbacks                           65                     1,818
Lease liabilities (note 11)                     1,775                     1,777
Deferred government funding related to operating expenses (note 12)                  16,141                  19,253
   170,774 164,738
Non-current liabilities
Lease liabilities (note 11)                    16,991                    12,708
Deferred government funding related to capital expenditures (note 12)                  370,127                  379,180
Employee benefits liability (note 9)                    15,066                    16,544
Derivative financial liabilities (note 15) -                          10
 402,184 408,442
Equity
Accumulated surplus                    40,621                    35,129
Total liabilities and equity  $              613,579  $              608,309

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
2023 2022 2023 2022
Expenses
Pre-Board Screening   $  148,961  $  143,510  $  296,437  $  263,653
Hold Baggage Screening       40,916       38,475       81,109       74,638
Non-Passenger Screening       38,301       35,779       75,577       71,370
Restricted Area Identity Card Program            995         1,155         2,091         2,170
Corporate services       12,532       12,578       25,713       25,631
Total expenses (note 13)      241,705      231,497      480,927      437,462
Other expenses (income)
Finance costs              97              69            164            139
Foreign exchange loss (gain)              82             (34)             (20)             (15)
Write-off of property and equipment and intangible assets               2 -              17              16
Net gain on fair value of derivative financial instruments           (419)        (1,016)             (12)        (1,473)
Loss on disposal of property and equipment - -               3 -
Total other (income) expenses            (238)           (981)            152        (1,333)
Financial performance before revenue and government funding      241,467      230,516      481,079      436,129
Revenue
Finance income            806            577         1,483            740
Miscellaneous income              14 -              14 -
Screening services - other -              63 -              70
Total revenue            820            640         1,497            810
Government funding
Parliamentary appropriations for operating expenses (note 12)      229,196      219,761      453,723      412,479
Amortization of deferred government funding related to capital expenditures (note 12)       10,492       10,105       20,947       20,191
Parliamentary appropriations for lease payments (note 14)            532         1,013         1,061         2,019
Total government funding      240,220      230,879      475,731      434,689
Financial performance  $       (427)  $       1,003  $    (3,851)  $      (630)
Other comprehensive income (loss)
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)       12,578        (3,150)         9,343         4,384
Total comprehensive income (loss)  $     12,151  $    (2,147)  $       5,492  $      3,754

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, 2023  $                  28,470
Financial performance                         (427)
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)                     12,578
Balance, September 30, 2023  $                  40,621
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

For the six months ended September 30:

(In thousands of Canadian dollars) Accumulated surplus
Balance, March 31, 2023  $                  35,129
Financial performance                      (3,851)
Item that will not be reclassified to financial performance
Remeasurement of defined benefit plans (note 9)                       9,343
Balance, September 30, 2023  $                  40,621
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

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
2023 2022 2023 2022
Cash flows provided by (used in)
Operating activities
Financial performance  $              (427)  $            1,003  $           (3,851)  $              (630)
Items not involving cash
Depreciation and amortization (note 13)              11,264              11,045              22,464              22,042
Write-off of property and equipment and intangible assets                      2 -                     17                     16
Amortization of deferred government funding related to capital expenditures (note 12)             (10,492)             (10,105)             (20,947)             (20,191)
Change in fair value of financial instruments at fair value through profit and loss                   (419)               (1,016)                    (12)               (1,473)
Change in net employee benefits asset/liability                     (70)                  (290)                   564                     44
Other non-cash transactions  -                   236 -                   163
Loss on disposal of property and equipment - -                      3 -
Net change in working capital balances (note 18)               (5,391)              11,298                4,400              46,684
              (5,533)              12,171                2,638              46,655
 Investing activities 
Parliamentary appropriations received for capital funding (note 14)                5,590                2,916                5,590                2,916
Purchase of property and equipment               (5,510)               (3,690)               (8,285)               (4,952)
Purchase of intangible assets  -                  (127) -                  (127)
                    80                  (901)               (2,695)               (2,163)
 Financing activities 
Lease principal payments                  (437)                  (945)                  (903)               (1,882)
                 (437)                  (945)                  (903)               (1,882)
 (Decrease) increase in cash                (5,890)              10,325                  (960)              42,610
 Cash, beginning of period               18,715              39,866              13,785                7,581
 Cash, end of period   $           12,825  $           50,191  $           12,825  $           50,191

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

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