LIQUIDITY AND CAPITAL RESOURCES
Three months ended December 31
Twelve months ended December 31
2015
2014 Change
2015
2014 Change
(millions)
$
57
$
260
Cash provided by operating activities Cash used in investing activities
$
52
$
5
$
248
$
12 68
(83)
(215)
(98)
15
(283)
28
(47)
Cash provided by (used in) financing activities
47
(19)
40
(87)
Increase (decrease) in cash and cash equivalents
$
2
$
(2)
$
1
$
1
$
5
$
(7)
Cash from operations and debt borrowed from the Province of Saskatchewan’s General Revenue Fund are the primary sources of liquidity and capital for SaskEnergy. Generally, SaskEnergy finances its investment activity with cash from operations. To the extent that cash from operations is insufficient to support its investment activity, debt servicing costs and dividends, additional short and long term debt is used. Sources of liquidity include Order in Council authority to borrow up to $500 million in short-term loans, which was increased by $100 million in the third quarter of 2015. The Corporation holds a $35 million uncommitted line of credit with the Toronto-Dominion Bank. Over the longer term, The SaskEnergy Act allows the Corporation to borrow up to $1,700 million.
Operating Activities
Cash from operating activities was $260 million in 2015, an increase of $12 million from the twelve months of 2014, which is a result of higher transportation revenue and the commodity rate increase both improving cash flow in 2015 compared to 2014. Gas Marketing activities increased margins and cash flows in 2015 as the lower natural gas price environment generated a lower average cost of gas sold per GJ in 2015 versus 2014.This is partially offset by lower commodity volumes sold and lower delivery service revenue, both due to the warmer than normal weather in 2015 compared to the significantly colder weather in 2014.
Investing Activities
Cash used in investing activities totaled $215 million for the twelve months of 2015, $68 million below 2014. Capital investment levels have declined in 2015 due to lower system growth and customer connection levels compared to 2014. The majority of 2015 capital investment focused on $61 million of customer connection projects, which are a result of Saskatchewan residential and industrial growth, as well as safety and integrity programming of $52 million, a sign of the Corporation’s ongoing commitment to a safe, reliable system. The Bayhurst-to-Rosetown pipeline project was completed in 2014, which was the Corporation’s largest capital investment project in recent years, contributing $70 million to the record high level of capital investment in 2014. The Corporation funds its substantial capital requirements with cash from operations and debt from the Province of Saskatchewan.
Financing Activities
Cash used for financing activities was $47 million during the twelve months of 2015 compared to a source of funds in 2014. In the first quarter of 2015, given the Corporation’s relatively high short-term debt balances and attractive interest rates on long- term debt, the Corporation issued $50 million of long term debt at an effective interest rate of 2.7%, the proceeds of which were used to repay $62 million of its short-term debt. With decreased capital spending in 2015, long term debt requirements declined from 2014 and $50 million of long term debt was repaid in the fourth quarter while cash from operations has been utilized to meet the 2015 capital spending and operating requirements. SaskEnergy’s debt ratio at December 31, 2015 was 62%. OUTLOOK In late November, the Government of Saskatchewan announced that, as a next step in the transition to summary budgeting, the fiscal year end of Crown Investments Corporation entities, including SaskEnergy, will change from December 31 to March 31. For the current year, SaskEnergy will report on a 15-month period beginning January 1, 2015 and ending March 31, 2016. Thereafter, SaskEnergy will report on the 12-month periods ending March 31st of each year. In close alignment with Saskatchewan Crown Sector Priorities and the Saskatchewan Plan for Growth, SaskEnergy’s 2015/2016 efforts will continue to focus on the four strategic mandates: Service Excellence, Achieving Growth, Our Team and Creating Value. The Corporation is financially well-positioned to achieve its business objectives in 2015/2016 and over the five-year planning horizon.
11
2015/2016 FOURTH QUARTER REPORT
Made with FlippingBook Ebook Creator