Provided by Transat A.T. Inc./CNW
MONTRÉAL, June 27, 2019 /CNW Telbec/ – Transat A.T. Inc. (“Transat” or the “Corporation”) announces that it will need to restate its consolidated financial statements (the “Restated Financial Statements”) and the management’s discussion and analysis for the year ended October 31, 2018, as well as the first quarter ended January 31, 2019 and the second quarter ended April 30, 2019.
Management has concluded that a restatement of its consolidated financial statements filed for the above-mentioned periods is necessary regarding the carrying amount of the non-controlling interest in the Trafictours Canada Inc. subsidiary.
The carrying value of the non-controlling interest is related to the Trafictours Canada Inc. subsidiary and the right of the minority shareholder to require that the Corporation purchase the Trafictours Canada Inc. shares it holds at a price calculated in accordance with a pre-determined formula, subject to adjustment based on the circumstances, payable in cash. The fair value of this option is taken into account in the carrying amount of the non-controlling interest. The difference in this instance results from the use of a formula that differs from the one in the contract for the calculation of the purchase price of the minority interest. As a result, the liability for the non-controlling interest reported under “Trade and Other Payables” in the Consolidated Statements of Financial Position is undervalued by $25.9 million, $23.3 million and $20.3 million as at October 31, 2018, January 31, 2019 and April 30, 2019 respectively. These underevaluations have no impact on the Consolidated Statements of Income (Loss) for the aforementioned periods as such adjustments are recorded as equity transactions in the retained earnings.
The Corporation intends to restate its previously filed consolidated financial statements for the year ended October 31, 2018, including all related notes. The preliminary impact of the aforementioned corrections on the consolidated financial statements of Transat for the relevant periods is as follows:
| Consolidated Statements of Financial Position for the Year Ended October 31, 2018 In thousands of Canadian dollars | |||
| Line item | As Reported | Adjustment | Restated(unaudited) |
| LIABILITIES | |||
| Trade and Other Payables | 294,021 | 25,900 | 319,921 |
| Current Liabilities | 835,848 | 25,900 | 861,748 |
| EQUITY | 599,374 | (25,900) | 573,474 |
Consolidated Statements of Financial Position for the Quarter Ended January 31, 2019 In thousands of Canadian dollars | |||
| Line item | As Reported | Adjustment | Restated(unaudited) |
| LIABILITIES | |||
| Trade and Other Payables | 329,275 | 23,290 | 352,565 |
| Current Liabilities | 1,122,070 | 23,290 | 1,145,360 |
| EQUITY | 552,475 | (23,290) | 529,185 |
| Consolidated Statements of Financial Position for the Quarter Ended April 30, 2019 In thousands of Canadian dollars | |||
| Line item | As Reported | Adjustment | Restated(unaudited) |
| LIABILITIES | |||
| Trade and Other Payables | 343,418 | 20,251 | 363,669 |
| Current Liabilities | 1,000,084 | 20,251 | 1,020,335 |
| EQUITY | 557,578 | (20,251) | 537,327 |
Management has concluded that this difference requires a restatement of the related consolidated financial statements. Accordingly, the Corporation plans on filing Restated Financial Statements for the aforementioned periods over the next few weeks to reflect the corrections indicated above, once its external auditors have completed the required audit procedures in connection with the preparation of such Restated Financial Statements. The adjustments set forth above remain preliminary and could change as a result of additional work performed in connection with the preparation of the Restated Financial Statements.
This Corporation’s consolidated financial statements prior to October 31, 2017 also contain the same undervaluation affecting the non-controlling interest for its Trafictours Canada Inc. subsidiary. However, the Corporation believes that it is not necessary to present corrected amounts for these prior periods given the corrections made with respect to the last two fiscal years and the quarters ended in the current 2019 fiscal year.
Non-IFRS financial measures
Transat prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). We will occasionally refer to non-IFRS financial measures in the news release. These non-IFRS financial measures do not have any meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. They are intended to provide additional information and should not be considered as a substitute for measures of performance prepared in accordance with IFRS. All dollar figures are in Canadian dollars unless otherwise indicated.