Management’s Discussion and Analysis
Introduction The Management’s Discussion and Analysis (MD&A) highlights the primary factors that affected SaskEnergy’s consolidated financial performance for the nine months ended December 31, 2024. Using financial and operating results as its basis, the MD&A describes the Corporation’s past performance and future prospects, enabling readers to view SaskEnergy from the perspective of management. The MD&A is presented as at February 13, 2025 and should be read in conjunction with the Corporation’s condensed consolidated financial statements, which have been prepared in accordance with IAS 34, Interim Financial Reporting using accounting policies consistent with IFRS® Accounting Standards. For additional information related to the Corporation, refer to SaskEnergy’s 2023-24 Annual Report. The MD&A contains certain forward-looking statements that are subject to inherent uncertainties and risks. Many of these risks are described in the Risk Management and Disclosure section of SaskEnergy’s 2023-24 Annual Report. All forward-looking statements reflect the Corporation’s best estimates and assumptions based on information available at the time the statements were made. However, actual results and events may vary significantly from those included in, contemplated by, or implied by such statements. The volume of natural gas delivered to customers is sensitive to variations in weather, particularly through the prime heating season of November to March. Additionally, changes in market value adjustments may cause significant fluctuations in net income due to the volatility of natural gas prices. Therefore, the condensed consolidated financial results for the first nine months of 2024-25 should not be taken as indicative of the performance to be expected for the full year. The Corporation’s financial results are subject to variation, especially given the volatility of natural gas prices. To compare financial performance from period to period, the Corporation uses the following measures: income before unrealized market value adjustments; net commodity sales realized; and realized margin on asset optimization sales. Each measure removes the impact of fair value adjustments on financial and derivative instruments and the revaluation of natural gas in storage to the lower of cost and net realizable value. Unrealized market value adjustments vary considerably with market prices of natural gas, drive significant changes in the Corporation’s consolidated net income and may obscure other business factors that are also important to understanding the Corporation’s financial results. The measures referred to above are non-IFRS Accounting Standards measures, in that there is no standardized definition and may not be comparable to similar measures presented by other entities. The discussion of the Corporation’s results in the MD&A, set out on the following pages, is a comparison of the results for the nine months ended December 31, 2024, to the results for the nine months ended December 31, 2023, unless otherwise noted. Operating Environment SaskEnergy monitors a number of important external factors that could influence financial performance. Canadian real gross domestic product (GDP) growth has averaged nearly 2 per cent annualized in the first three quarters of 2024. Despite this positive growth, cost-related obstacles continue to cloud the outlook for many Canadian businesses, with inflation continuing to be an obstacle for some businesses in the near term, as elevated costs of goods and services linger after inflation peaked and is starting to decline. Other businesses anticipate challenges relating to high interest rates and debt costs to have a larger impact. Overall, Saskatchewan's economic performance in 2024 has been robust, driven by strong agricultural output, construction activity, and a healthy labor market. The province's real GDP growth forecast for 2024 stands at 1.9 per cent, which is higher than the national average of 1.3 per cent forecasted and tied at fourth highest among Canadian provinces. Saskatchewan economic growth is largely attributed to a nearly 10 per cent increase in crop production. In addition to agriculture, Saskatchewan's non-residential construction sector has also contributed to its economic performance. The ongoing work at the Jansen Mine project has been a significant driver of growth in this sector. Residential construction investment is advancing at a healthy pace, fueled by recent interest rate cuts that have ignited housing demand.
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