The 2016 Ottawa census tracts chart the percent change between the 2011 census and the 2016 census. Click on the individual tracts to see the percent change. The darkest colours indicate those areas that experience the fastest growth rates. Use the plus and minus signs to the bottom right to zoom in and out. You can also maneuver key census tracts away from the legend. The red areas represent tracts with no values.
Source Statistics Canada
This map shows the percent of population increases in federal ridings from the 2011 cencus and the 2016 census
Source: Statistics Canada
The darker areas show the sections of Ottawa that have grown at the fastest rate between 2011 and 2017
Nalcor’s comeback financial statement uses uncommon and potentially questionable reporting methods, according to Ottawa accountant John Wright
A provincial energy corporation in Newfoundland and Labrador appears to be making a comeback after losing $19 million and their entire board of directors in the spring of 2015.
The board of directors was replenished quickly and the company pursued their controversial undertakings at Muskrat Falls despite protests. Although Muskrat Falls is still a work in progress, Nalcor’s financial statement indicates much of their profit has come from investments in new projects, along with lower operating costs and higher oil production.
The third quarter financial statement indicates that during the first three months of 2016 the company made $38.7 million more than they did during the same period in 2015. This quick turn-around was accounted for in both financial charts and subsequent explanatory paragraphs in the report.
According to the report, one of the primary factors contributing to the company’s financial resurrection is a reduction in operating costs. The outline in the statement says the increase to $80.9 million in operating cost revenue over the first nine months of 2016 compared to $20.3 million for the same period in 2015 is due to “lower salary and benefits expenses, professional fees and system equipment maintenance.”
These figures are represented with a superscript number one next to them, indicating more information in a footnote. The note says the numbers are recorded using uncommon accounting techniques, known as non-generally accepted accounting principles.
These methods are cause for raised eyebrows according to John Wright, senior accountant at Vaive and Associates Firm in Ottawa. Wright says these methods of financial reporting are uncommon for a reason. “If someone came to me with a non-GAAP statement, we would have to look at it very closely to find out why they used them and what it means before we made any conclusions,” Wright says.
Although they can be used for tax evasion purposes, says Wright, it generally creates more work for the company in the long run since they have to produce two financial reports. This makes it an uncommon and undesirable practice.
Nalcor officials decline to comment on the matter.
Overall, Wright cautions “don’t trust them.”
The other factors contributing to the company’s increased revenue are all recorded using common practice. Oil production for Nalcor’s third quarter brought in almost $1.5 trillion compared to the previous year’s $299 billion. This increase is due primarily to the company’s ability to purchase oil at a lower price per barrel during 2016, coupled with increased production during the year. These two aspects allowed the company to produce more for less, and to soak in the financial benefits of such.
The statement also says the company recovered lost revenue through higher customer rates for services. They outline this practice as an ‘entitlement’ in the statement.
Finally, the increase in revenue for 2016 is also attributed to the company’s decision to increase investments in hydro projects. Nalcor has a number of sister companies across the east coast of Canada including Emera which recently announced the initiation of the Atlantic Link Transmission Project – a 350-mile submarine that will deliver energy to New England. New projects such as this provide the company initial income through deal-making and the promise of additional income with the completion of the project.
In a November 2016 press release, Nalcor’s CEO Stan Marshall said “Nalcor’s financial position is very sound… We are focused on getting back on track and completing as much work as possible before the onset of winter.”
Emera Stock Chart by chantalbacchus on TradingView.com
The Potash industry is not faring very well these days. The biggest Potash mining company in the world lost 934 billion of its revenue in the past 12 months. Considering that Potash Corp. made roughly 1,27 billion in December 2015 as opposed to 336 million in the same month of 2016.
Potash Corporation Stock Prices– Past 5 Years by flor.bonneville on TradingView.com
This substantial loss of revenue sounds alarming. More than 400 people lost their jobs at Potash Corp in 2016. Many are worried about the potash industry in Canada.
However, the trend seems to be constant throughout the whole potash mining industry.
When companies experience losses of capital, the first question to ask is whether the reason for the loss comes from inside the company. That is to say: “Was there a strike?” or “Did the company lose a major client?” If the answer to one or the two of these questions is yes, then there is an internal reason for the loss of money.
Professor Shantanu Dutta teaches finance at the University of Ottawa. He says that in the case of Potash Corp, an internal reason for the plummeting of net income does not apply. “This is probably not internal”, he says.
Effectively, the company did not experience a strike in the past year, and it has not lost that many sales. Potash Corp lost 33 per cent of its sales in China from 2015 to 2016, but not because it lost a client, but because the demand was lesser.
The sales have not fluctuated much in the past three years. In fact, Potash Corp’s sales increased from 2015 to 2016.
The internal changes are not significant enough to create a 75% crash in the company’s revenue over twelve months. The sales have not fluctuated much in the past three years. In fact, Potash Corp’s domestic sales increased from 2015 to 2016 of 21%.
We thus have to turn to the external factors affecting the company.
The external factors one needs to consider when analyzing a company’s money loss are competitors increasing their own shares of the market and the cyclical turn of the market.
Journalist Ian McGugan of the Globe and Mail has written many stories about the potash industry. He says that the huge loss experienced by Potash Corp is “all about the plunging price of potash”. Indeed, the price of potash has crashed of half its value on the stock market within the past five years.
McGugan says that the plunge of the price of potash “reflects growing supply”. Which means that the top five markets bought more potash for the same price as in previous years, therefore decreasing their demand for the subsequent years.
All in all, things are not looking good for the potash industry in the coming years. BMO analyst Joel Jackson writes that “few expect better” in the potash industry. Jackson writes that the question is whether the market will crash even more in the coming years.
However finance expert Shantunu Dutta says that there are always fluctuations in the natural resources market, because sales can only go so far when the market is driven by nature. It’s a cause and effect chain– if crops aren’t good for the top five market, then the demands will not be so high. Or alternatively, if crops are doing good and clients buy a lot of potash, then those clients will have surplus for a long time.
“It’s a typical situation for the natural commodity industry”, Dutta says. Hopefully, we can expect the return of a healthy potash market in the coming ten years.
(To see the annotations that accompany this financial statement, please click on the “Notes” tab.)
In what seems to be a quarter of ups and downs in terms of leadership and products, Rogers Communications Inc. remains optimistic about their future despite the company’s reported $9-million net loss.
In the latest financial report released by Rogers on the fourth quarter of 2016, the company recorded the loss and cited that this was triggered by its decision to record an impairment charge of $484-million after cancelling its five-year program to develop its own Internet Protocol Television (IPTV).
However, the company is confident that this bump was necessary for its long-term success.
Alan Douglas Horn, interim president and chief executive officer of Rogers said, “We were faced with some tough decisions in 2016, and we believe we made the right long-term choices to drive the most value for our customers and shareholders going forward.”
This loss is reported within the same quarter the telecommunications giant ousted Guy Laurence as chief executive officer after he clashed with the family of late founder Ted Rogers in October.
Regardless of this setback, Horn affirmed that the fourth quarter results reflected strong continued momentum and a testament of the company’s executive team and its 25,000 employees’ abilities to not miss a beat.
In line with this, the company stated in a press release that it closed 2016 with continued strong revenue growth.
This claim was reflected on the company’s consolidated financial results wherein total revenue increased by two per cent since 2015.
This increase was credited to the increasing number of wireless subscribers.
In fact, the similar report recorded a wireless service revenue growth of six per cent in 2016 compared to the same quarter of the previous year.
The increase in wireless service revenue primarily stemmed from a larger subscriber base and the consumers continued adoption of higher value Share Everything plans and their increase in data usage on these plans.
In the later part of 2016, Rogers announced a long-term agreement with American telecommunications conglomerate Comcast Corporation (Comcast).
According to its fourth quarter report, this partnership will bring the best-in-class TV product to Rogers’ customers.
As Horn stated, “We are, of course, excited about our recently announced partnership with Comcast, which will bring… a continued stream of industry-leading innovations. The agreement builds on Rogers’ Internet leadership and furthers our strategy to deliver all Internet provided services in the home.”
Billy Lee, a designated accounting professional, said that investors should not be worried because the reported net loss “was a result of an impairment loss due to discontinued operations.”
Lee added that if we look at the company’s consolidated revenues, we would recognize that all sections (except cable) have improved since 2015.
Further, he said that the company’s expectations for growth despite its loss were realistic.
“Impairment losses do not usually happen every year. It is not expected to have another impairment loss next year (although possible). In addition, per review of the past five year stock price history, Rogers stock price has increased from ~$37 to ~$55. We can rely on history to predict the future,” said Lee.
Rogers Communications Inc. Stock Prices by arvinjoaquin on TradingView.com
This assessment seemed to coincide with Horn’s claims that in 2017 the company will continue to drive revenue growth.
He added, “We are also committed to improving our cost structure and gaining productivity improvements you see throughout our businesses. This will position us well to translate strong revenue growth and to increase profitability
As such, our 2017 guidance reflects a stronger outlook than our growth achievements in 2016, reflecting a plan designed to deliver increasing shareholder value and of course, value that is sustainable over the long term.”
2017 will mark a new era for Rogers as its new CEO, former Telus president and chief executive officer, Joe Natale will join the company in July.
Until then, the company remains hopeful and optimistic.
As Horn stated, “In the interim, we are confident in our ability to build on the momentum you see reflected in our fourth quarter results.”
(See the full Q4 financial report below)
Second Cup is working its way out of a six-year financial deficit under the leadership of President and CEO Alix Box, but the Canadian coffee shop chain still has a long way to go—and a lot of structural changes to make—if it hopes to compete with coffee giants like Starbucks and Tim Hortons.
Box was named CEO of Second Cup in February of 2014 to help revitalize the Second Cup brand, and steer the company back in a profitable direction. Formerly Vice President of Operations, Company, and Licensed Stores with Starbucks Canada, she has a wealth of experience in “achiev[ing] strong growth in sales and profitability” in the coffee shop business according to a 2014 press release. Almost three years later, it appears she has lived up to her reputation: Box’s strategic business plan has reduced the operating loss of the company from over $30 million in September of 2014 to just $25,000 in September 2016.
This upward trend is due in part to Box’s aggressive-but-effective franchising strategy. In a May 2016 press release, Box said that the company is “moving toward an asset-light model,” which means that it intends to close most, if not all, of the company-owned stores in order to focus on supporting the much-more-profitable franchises. Since the beginning of 2014, Box has closed 41 under-performing stores, 18 of which were company-owned. As of September 2016, only 5 per cent of Second Cup’s 298 shops were company-owned. Second Cup says that the closures, along with a 2014 internal restructuring that cut almost a third of the staff at headquarters, should save the company up to $2.3 million annually. Box says this money will be rolled into franchise relations.
Financial analyst Alex Mirhady says Second Cup has “stemmed the bleeding” by closing the money-losing shops, and that a franchise-based model is the company’s best bet at this point. “They know that franchise owners are all independent business owners who are going to work really hard. Their own profit is on the line, versus corporate-owned stores where you have a manager who works for $10 an hour and then goes home. They have a vested interest.”
The reality of this is reflected in Second Cup’s operating margin. From the fall of 2015 to the fall of 2016, the corporate-owned stores cost the company over $700,000. By contrast, the franchise stores showed a net profit of almost $1.2 million. Mirhady says that the move toward franchising is the obvious choice, but that he believes significant financial gains from the decision will take some time to materialize.
“They’ve had to invest a whole lot into renovating their stores, and they have had to pay a lot to close those stores, with severance pay, getting out of leases, and likely selling some property at a deficit,” he says.
But while the company has yet to post any substantial profit, it is getting close to breaking free of its operating loss. Box states in an October 2016 press release that she is “pleased with the significant earnings progress,” and “optimistic that this will continue into the fourth quarter.” The financial statements for the fourth quarter—or winter season—of 2016 have yet to be posted.
But Mirhady believes there is still one major hurdle that second cup will need to face, whether its profit increases or not: that is, the lack of public faith in the company, and resulting plummeting stock prices. “The stock price reflects the expectations of the market for [the business’] future profits. In terms of what the stock market thinks of them… have they really turned the corner yet? I don’t see it.”
Only time will tell if Second Cup can recapture its mantle as one of Canada’s top coffee chains. But for now, it might have to settle for being Fifth or Sixth Cup.
Second Cup Stocks 2014-Present by amberdavison on TradingView.com
One of Canada’s top airlines, WestJet’s, net earnings have fallen by 20 per cent over the last three quarters, compared to the same period last year. According to an analysis of its third quarter report released in September.
The company based out of Calgary services flights from over 100 locations within Canada, the United States, and overseas. Meaning that it is in direct competition with a number of domestic, as well as international airlines.
WestJet’s slide in earnings follows what the report called its most “profitable third quarter in the airlines history.” The airline reported an increase of nearly 14 per-cent in net earnings in its last quarter compared to last year, in its most recent quarterly report. Yet, it recorded a decrease of close to 64 million dollars during the first three quarters of the 2016 fiscal year.
WestJet said in its most recent quarterly report that the decrease in earnings is largely due to the “devaluation of the Canadian dollar,” as the airline frequently often operates in American dollars due to the company’s international services.
WestJet also recently announced the expansion of their airplane fleet, which the company also attributes for the drop in earnings.
Its September report outlines an extensive plan to acquire an additional 166 planes in the next 10 years. Five of which the report said would be added in the final quarter of this year.
Lauren Stewart, WestJet’s Media Relations Advisor, said the company has reintroduced a year long Halifax to Gander, NL, flight beginning this summer and an international service between Calgary and Nashville. She added that depending on the success of these additional flights, the airline has a number of other services in the works.
Stewart declined to comment when asked about how the recent expansions have impacted the company’s decline in earnings over the past three quarters.
Cyril Mullaley, owner of the accounting firm Cyril P. Mullaley, C.A., C.P.A. from Newfoundland, says that the airline’s drop in earnings is largely due to the additional expenses created by WestJet’s most recent expansions.
Although the airline’s operation expenses increased by a marginal 7 per cent in the last quarter, and 5 per cent in the last three, its investing activities grew substantially.
WestJet Airline’s stock prices by jordansteinhauer on TradingView.com
The September report recorded a nearly 40 per cent increase in investment activities in the last three quarters of this year, compared to the same period in 2015. This includes the recent acquisition of new aircrafts, as well as other assets like property and equipment.
Mullaley added that not only does expanding flights into new markets, and increasing the company’s fleet mean higher expenses and more investments, but also more competition.
By expanding their market into new areas like Nashville, WestJet is in direct competition with a number of airlines that have been operating out of the city for years. Though the company is increasing its visibility and the surface area it covers on a map that does not mean its profits will immediately increase along with it.
Mullaley said that even with the significant drop in earnings “it is not a reason to stop the expansion,” or to go into “protectionist mode” as the company continues to be what he deems as profitable.
He added that he believes that WestJet is in definite need of an expansion if the airline intends to keep up with the ever-increasing competition that it faces in the Canadian and Global markets.
Mullaley said he could not comment on whether or not he would invest in the airline with the earnings as they currently stand, but he acknowledges that WestJet is positioning itself for growth in the upcoming years.
Despite a surge in stock prices and unexpectedly high revenue for lululemon athletica inc., the company had a disproportionate increase in expenses this past quarter.
Lululemon’s administrative expenses increased more than its revenue, according to the financial statement from the third quarter. The statement, released on Dec. 7, 2016, shows an increase in revenue by 13 per cent, but administrative expenses increased by 18 per cent.
Expenses growing faster than revenue can be a potential red flag for investors.
While a difference of five per cent does not sound like much, it means that it is costing lululemon more to do business than what the company is bringing in.
As seen in the financial statement, 34 per cent of its revenue went into administrative expenses, which include staff wages for the stores and head office, running the head office, and marketing the brand.
Lululemon opened 35 new stores this quarter, mostly in the United States. These new stores require new staff, and that staff requires wages, benefits and bonuses. Along with the staff for the stores themselves, lululemon needed to expand its head offices in order to ensure these new stores had proper management.
Both of these expenses comprise about half of the administrative expenses in the financial statement.
According to Carleton University business professor Michael McIntyre, these are an expected expenditure when a company opens new stores. The staff both in the stores and in the head offices must increase if the stores are increasing in numbers.
McIntyre said that it is not uncommon for newly opened stores to drain a company’s revenue in the inaugural stages. The expenses to operate these new stores are equal to mature, longer-established stores, McIntyre said, but the sales are not typically as strong as those established stores.
Lululemon is putting its unique flare into these new stores. The company prides itself on what it calls community feel, as seen in the company’s mission statement. CEO Laurent Potdevin said in a press release that the company strives for an “unparalleled guest experience.”
As these new stores have been rolling out around the world, they have included smoothie booths, art installations and lounge areas. Lululemon is turning away from the showroom style clothing store and pressing for a place where customers can hang out and relax.
This community feel that the company puts into its stores translates into a fairly unique expense in lululemon’s financial statement called community costs.
As can be seen in the financial statement, community costs are lumped together with other professional expenses. As McIntyre said, this innovation has a cost, in execution but particularly in planning. They would have needed to bring in marketing experts to build this community experience, he said.
The company denied to comment on how much of the $8 million was put into community costs, and denied to comment on how that $8 million was divided up overall.
McIntyre is not overly concerned about this increase in administrative costs. He says that the company is big enough to experiment with things like smoothie booths and art installations in the stores.
“It may work, it may not,” he said. Either way, he said, they will probably be fine.
Investors similarly do not seem concerned about this increase in expenses. Lululemon stocks were down during the fall when the retail market in the U.S. went through a slump.
On Dec. 7, 2016, however, the financial statement was released and it reported better results than even the company had predicted. Lululemon’s stocks jumped from 59.50 to 70.25 the next day and have remained around the same price since.
Fall slump by rachellevymclaughlin on TradingView.com
“Our entire team is excited about the momentum in the business,” said Potdevin in a press release. “We look forward to 2017 and advancing our long-term goals.”
In other words, the company is not planning on discontinuing its growth any time soon. It is so far working in its favour.
McIntyre warns, however, that it is important to keep an eye on expense increases, especially when they are disproportionate to the revenue increases. They can spell bad news for the company and investors.
Featured image from Mike Mozart, flickr Creative Commons.
Alberta oil giant Suncor is making a healthy recovery from the crash in oil prices in 2015 and the Fort McMurray wildfires in the spring of 2016. Suncor’s most recent quarterly financial statement revealed an over 200% increase in net profits compared to the previous year. The company suffered a $376 million loss in the third quarter of 2015 while in 2016 the company turned around with a $392 million profit.
Suncor’s Stock Prices by marinawang on TradingView.com
A dramatic drop in oil prices in 2015 hit Suncor hard with a net annual loss of nearly two billion dollars, as revealed by its 2015 annual financial statement. In years prior to the crash the company was earning profits in the multi-billions. To add fuel to flame, wildfires in the spring of 2016 caused the company to temporarily suspend oil sands operations, further exacerbating the company’s losses. However, Suncor returned to operations a few months after the fire, and profits were turned around for the third quarter.
“Despite what happened last year their balance sheet still looked very healthy,” said Emily Gray, chartered professional accountant and Sprott Business School instructor at Carleton University. Gray described the company’s finances as “impressive” and said that the balance sheet revealed strong operational cash flows or earnings from regular activities–a sign that the company is in good shape.
The company’s financial strength was demonstrated as Suncor invested a healthy sum in exploration and production–a potentially risky area of investment for an oil company, according to Gray. Gray said that investments in risky developments can indicate a company’s confidence. “Our performance demonstrates the strength of our core assets and our ability to deliver strong cash flow, even in a lower price environment,” stated Suncor CEO Steve Williams in the Q3 financial statement.
Suncor’s financial statement attributed its profits to operating earnings. The operating cost dropped by 18% from last year down to $22.50 per barrel. According to Williams, “Operational excellence is a top priority and has been consistently demonstrated in continuous improvements to reliability and ongoing reductions in both capital and operating costs.” According to the Q3 financial statement, operating costs are likely to continue decreasing.
A deferred tax recovery from the U.K. also contributed to this quarter’s earnings. However, these multi-million dollar earnings were largely cancelled out by losses in foreign currency exchanges.
The 2015 drop in oil prices may not have been as detrimental for Suncor as other companies in the same industry. Suncor was able to acquire Canadian Oil Sands for $4.2 billion in early 2016 and later increased its stake in Syncrude. Both of these investments are now beginning to pay off. Canadian Oil Sands is now Suncor’s largest contributor in production, earning the company a significant portion of the total profits this financial term.
Suncor spent $937 million on increasing its stake to a majority 54% in Syncrude, just months after acquiring Canadian Oil Sands. For this financial term, Syncrude’s oil production increased fivefold while operating costs were cut by a third.
“Discipline and prudence are the hallmarks of our financial strategy” said Williams during a speech regarding the Q3 financial statement, “it also allows us to continue to return cash to shareholders through a competitive dividend”.
Suncor representatives were contacted but did not give original comment.