Quarterly Financial Reports 2024-2025 - 1st Quarter

© National Film Board of Canada, 2024
Quarterly Financial Report for the quarter ended June 30, 2024
Cat no. NF2-2E-PDF
ISSN 2818-0062

1. Introduction

The National Film Board (NFB) was created by an act of Parliament in 1939. A federal cultural agency within the Canadian Heritage portfolio, the NFB exists to produce and distribute original, innovative audiovisual works that raise awareness of Canadian values and viewpoints and the issues of interest to Canadians – across the country and around the world. The NFB serves Canadians by producing and making accessible, in all regions of the country and on all available platforms, rich and diverse cultural content that would not be produced otherwise and that reflects Canada’s rapidly shifting demographic profile. A brief description of the agency’s activities for the current year can be found in Part II of the Main Estimates.

This quarterly report has been prepared by management as required by Section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read together with the Main Estimates.

This quarterly report has not been subject to an external audit or review.

2. Basis of Presentation

This quarterly report has been prepared by management using expenditure accounting. The accompanying Statement of Authorities includes the agency’s spending authorities granted by Parliament and those used by the agency consistent with the Main Estimates and Supplementary Estimates for the 2024-2025 fiscal year. The report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before monies can be spent by the Government of Canada. Approvals are given in the form of annually approved limits through the Appropriation Act or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purpose of a general election, Section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The NFB uses the full accrual method of accounting to prepare and present its annual departmental financial statements, which are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

3. Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

This section highlights the principal factors that contributed to the variances between projected and actual expenditures and expected and earned revenues for the period ended June 30, 2024.

The graphic above shows the total budgetary authorities granted to the NFB for fiscal year 2024-2025 with projected gross expenditures totalling $ 80.4 million.

Table 2 (below), shows expenditures and revenues for the second quarter of 2024-2025. Here is an overview of the key items to be noted:

Variance in Revenues

The revenues recorded during this 1^st quarter of 2024-2025 total $0.6 million lower than the previous year mainly due to the invoicing of the Ocean School project last year.

Variation in Expenditures

Gross expenditures of the 1^st quarter of 2024-2025 decreased by $0.7 million compared to the same quarter of fiscal year 2023-2024 and stands at $16.8 million.

The variations come mainly from transportation and communications, information, rentals and acquisition of machinery and equipment. The variation in transportation and communications costs is explained by the decrease in travel expenses as well as a delay in billing for the wide area network service by Shared Services Canada. The increase in information expenditure is due to an increase in the number of film launches. The decrease in rental expenses is explained by a delay in the billing of software licenses. Expenditure on acquisitions of machinery and equipment decreased due to larger purchases of technology equipment last year.

4. Risks and Uncertainties

The need to innovate, create and collaborate remotely

The NFB must put in place innovative technologies to facilitate collaboration and open up new possibilities for remote creation and collaboration from coast to coast and internationally. At a time when opportunities and technological innovations are multiplying exponentially, the National Film Board of Canada must be vigilant and maintain coherent technological development, in terms of creation and engagement with its audiences, in order to meet the challenges of a constantly evolving environment to respond to the realities generated by external turbulence factors.

The 2021-2025 technological plan focuses on the integration of processes and innovative solutions that will meet the growing technological needs of the organization and support the actions and commitments of the 2020-2023 strategic plan published in December 2020. When it comes to creation, these technologies bring together the creative community and production teams across Canada into a single virtual work ecosystem, regardless of their geographic location. It is in this reality of remote collaboration requiring flexibility, fluidity, synchronicity and openness to new creative horizons that the NFB's technological vision is inscribed. The new remote work processes and tools are adaptable to the needs of production teams and facilitate the fluidity of collaboration between NFB teams and creators. As part of the repositioning of our flagship digital product, nfb.ca, our transition from Google Analytics Universal (UA) to Google Analytics 4 (GA4) is going very well and we have as well enhanced our privacy policy with the addition of a cookie policy to demonstrate our transparency and commitment to meeting growing legal requirements for the protection of personal information. We are progressively implementing a project tracking tool for audiovisual production, enabling us to monitor the progress and changes in projects on a daily basis.

The organization benefits from increased flexibility in its infrastructure that allows it to democratize and standardize secure access to its services. The centralized management of audiovisual works via our Media Asset Management (MAM) facilitates publication on digital platforms thus promoting discoverability for audience.  Funding for continuous investments in these technologies is crucial.

Financial and operational pressures

Over the past few years, the NFB has seen a continual erosion of its financial resources and purchasing power. Considerable investment to support the digital transformation strategy, additional expenditures related to office relocations, and the costs of adjustment to new business models have led to significant financial and operational pressures and continue to impact the organization’s financial capacity. For the fifth consecutive year (2024-2025), the NFB received additional funding allowing it to balance its budget.

Inadequate organizational capacity to handle the volume of work has remained a constant risk with certain sectors at the NFB for some time. It stems from the number of large-scale projects undertaken as well as reductions in human resources over the last number of years.

5. Significant Changes Related to Operations, Personnel and Programs

Over the past 9 months, the NFB has been implementing its 2023-2025 action plan that will build on NFB’s 3-year Strategic plan 2023-2025 entitled “New Ways for Storytelling for New Ways of Seeing”, a plan intended to renew its approach to programming, enrich the experience of creating at the NFB, and reinvent its marketing, presentation, and distribution methods, in addition to outlining the organization’s strategic commitments.  This 2023-2025 action plan will ensure a smooth transition during the process of modernizing the institutions and financing tools that support the screen sector, a process once defined that will allow the NFB to develop its 2025-2028 Strategic Plan to support these modernization efforts. This action plan is also aligned with the evolution of its structure with the aim of redefining its ways of working and collaborating centered on its primary mandate as a public producer and distributor.

In this context, over the past few months , the NFB has been reorganizing and downsizing its workforce while improving its management practices and tools. The NFB announced, among other things, the closure of its interactive studios in Vancouver and Montreal. Assuming sustained funding, these initiatives will allow for the reinvestment of approximately $5 million within the institution, particularly in the additional production of documentaries and animated films as well as in innovative initiatives aimed at enhancing our production and distribution methods and increasing audience engagement.

* Includes only Authorities available for use and granted by Parliament at quarter-end.

* Includes only Authorities available for use and granted by Parliament at quarter-end.