5. Financial and derivative instruments (continued)
As at December
As at March
31, 2017
31, 2017
Classifi-
Fair Value Carrying Hierarchy Amount
Fair
Carrying Amount
Fair
(millions)
cation
Value
Value
Financial and derivative assets Cash Trade and other receivables
FVTPL
n/a n/a
$
1
$
1
$
1
$
1
AC
115
115
111
111
Debt retirement funds
FVOCI - debt instruments
Level 2
103
103
101
101
Fair value of derivative instrument assets
FVTPL
Level 2
36
36
5
5
Financial and derivative liabilities Short-term debt
OL OL OL OL
n/a n/a n/a
294 114
294 114
293 109
293 109
Trade and other payables
Dividends payable
16
16
14
14
Long-term debt
Level 2
1,081
1,235
1,019
1,150
Fair value of derivative instrument liabilities
FVTPL
Level 2
55
55
40
40
Classification details: FVTPL - fair value through profit or loss FVOCI - fair value through other comprehensive income
OL - other liabilities AC - amortized cost
The fair value hierarchy is not applicable where the carrying amount approximates fair value due to the short-term nature of the financial instrument.
In measuring fair value, the Corporation classifies items according to the fair value hierarchy based on the amount of observable inputs.
a. Level 1
Level 1 valuations use quoted prices (unadjusted) that are available in active markets for identical assets or liabilities as at the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide ongoing pricing information. The Corporation did not classify any of its fair value measurements within Level 1.
b. Level 2
Level 2 valuations are based on inputs that are either directly or indirectly observable for the asset or liability as at the reporting date. Inputs include quoted market prices, time value, volatility factors and broker quotations which can be substantially observed or corroborated in the marketplace. The fair value of debt retirement funds is determined by Saskatchewan’s Ministry of Finance using a market approach with information provided by investment dealers. To the extent possible, valuations reflect indicative secondary pricing for these securities. In all other circumstances, valuations are determined with reference to similar actively traded instruments. The fair value of natural gas derivative instruments is determined using a market approach. The Corporation obtains quoted market prices from sources such as the New York Mercantile Exchange and the Natural Gas Exchange, independent price publications and over-the-counter broker quotes. The fair value of long-term debt is determined for disclosure purposes only using an income approach. Fair values are estimated using the present value of future cash flows discounted at the market rate of interest for the equivalent Province of Saskatchewan debt instruments.
21
2017-18 THIRD QUARTER REPORT
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