the same period in 2016, as capital additions increase the asset base and depreciation and amortization. Net finance expense of $12 million equaled the same three month period in 2016.
SaskEnergy Incorporated First Quarter Report LIQUIDITY AND CAPITAL RESOURCES
March 31, 2011
Three months ended
Nine months ended December 31
December 31
(millions)
2017
2016 Change
2017
2016 Change
Cash provided by operating activities Cash used in investing activities Cash provided by financing activities
$
61
$
39
$
22
$
173
$
120
$
53
(79)
(69)
(10)
(183)
(156)
(27) (14)
21
29
(8)
10
24
Increase (decrease) in cash and cash equivalents
$
3
$
(1)
$
4
$
-
$
(12)
$
12
As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations, debt – which is borrowed through the province’s General Revenue Fund – and equity advances from CIC, the Province’s crown corporation holding company. Equity advances are rarely used to finance Crown corporations as CIC prefers to use its Subsidiary Crown Dividend Policy to manage its equity interests in its commercial enterprises. Cash provided from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies upon it to fund dividends, debt servicing costs, and a significant proportion of its investment in pipeline facilities. Long- and short-term debt can be borrowed through the Province of Saskatchewan to meet any long- or short-term incremental capital requirements, and to repay debt as it matures. Sources of liquidity include Order-in-Council authority to borrow up to $500 million in short-term loans, and a $35 million uncommitted line of credit with the Toronto-Dominion Bank. By borrowing through the province, SaskEnergy has access to the province’s borrowing capacity and North American capital markets. The SaskEnergy Act allows the Corporation to borrow up to $1,700 million.
Operating Activities
Cash from operating activities of $173 million for the nine months ended December 31, 2017 was $53 million higher than the same period in 2016. Higher delivery revenue and transportation revenue contributed to higher operating cash flows compared to 2016. The Corporation also took advantage of low natural gas market prices by purchasing and injecting lower priced natural gas into storage while managing employee benefit and operating and maintenance costs.
Investing Activities
Cash used in investing activities totaled $183 million for the nine months ended December 31, 2017; $27 million higher than 2016. Capital investment levels are increasing in 2017 compared to 2016, primarily due to higher investment in safety and integrity programming to maintain aging infrastructure and manage increasing regulatory requirements.
Financing Activities
Cash used in financing activities was $10 million during the nine months of 2017 compared to $24 million in 2016. From a cash management perspective, SaskEnergy uses cash from operations to pay for its investing activities, dividend payments and debt servicing costs (including interest payments and sinking fund installments). Any remaining cash from operations is applied to reducing the short-term debt balance. If there is insufficient cash from operations, SaskEnergy will borrow more debt, usually short-term debt, to meet its cash requirements. SaskEnergy issued $119 million of long-term debt at a premium of $2 million during the first two quarters which was used to repay $59 million of maturing debt and $60 million of new long- term debt. SaskEnergy’s debt ratio at December 31, 2017 of 58 per cent is below the 59 per cent at both March 31, 2017 and December 31, 2016.
CAPITAL EXPENDITURES
Three months ended
Nine months ended December 31
December 31
(millions)
2017
2016 Change
2017
2016 Change
Customer growth and system expansion
$
41 28
$
35 30
$
6
$
90 72
$
77 65 10
$
13
Safety and system integrity
(2)
7
Information systems
4 4
4
-
9 8
(1)
Vehicles & equipment, buildings, furniture
-
4 8
2
6
$
77
$
69
$
$
179
$
154
$
25
9
2017-18 THIRD QUARTER REPORT
Made with FlippingBook Ebook Creator