Transat A.T. Inc. announces its intention to restate its consolidated financial statements and its management's discussion and analysis for fiscal year 2018

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.

Caution regarding forward-looking statements

This news release contains certain forward-looking statements regarding the Corporation's expectation that travel reservations will follow the trends. In making these statements, the Corporation has assumed that the trends in reservations and selling prices will continue, and that fuel prices, other costs and the value of the Canadian dollar against foreign currencies will remain stable. If these assumptions prove incorrect, actual results and developments may differ materially from those contemplated by the forward-looking statements contained in this news release. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, economic conditions, changes in demand due to the seasonal nature of the business, extreme weather conditions, climatic or geological disasters, war, political instability, real or perceived terrorism, outbreaks of epidemics or disease, consumer preferences and consumer habits, consumers' perceptions of the safety of destination services and aviation safety, demographic trends, disruptions to the air traffic control system, the cost of protective, safety and environmental measures, competition, the Corporation's ability to maintain and grow its reputation and brand, the availability of funding in the future, fluctuations in fuel prices and exchange rates and interest rates, the Corporation's dependence on key suppliers, the availability and fluctuation of costs related to our aircraft, information technology and telecommunications, changes in legislation, unfavourable regulatory developments or procedures, pending litigation and third party lawsuits, the ability to reduce operating costs, the Corporation's ability to attract and retain skilled resources, labour relations, collective bargaining and labour disputes, pension issues, maintaining insurance coverage at favourable levels and conditions and at an acceptable cost, and other risks detailed from time to time in the Corporation's continuous disclosure documents.

These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. The Corporation considers the assumptions on which these forward-looking statements are based to be reasonable, but cautions the reader that these assumptions regarding future events, many of which are beyond its control, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect the Corporation. For additional information with respect to these and other factors, see the Annual Report for the year ended October 31, 2018, filed with Canadian securities commissions. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by securities laws.

www.transat.com

 

SOURCE Transat A.T. Inc.

Media: Christophe Hennebelle, Vice-President, Human Resources and Corporate Affairs, 514-987-1660, ext. 4584; Financial analysts: Denis Pétrin, Chief Financial Officer, 514 987-1660

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