Management’s Discussion and Analysis
Liquidity and Capital Resources As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations and debt — which is borrowed through the Province’s General Revenue Fund. Cash from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies on it to fund a significant proportion of its investment in its natural gas facilities, and the debt servicing costs on those investments. 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. Under The SaskEnergy Act, the Corporation may borrow up to $2,500 million of debt upon approval of the Lieutenant Governor in Council.
(millions)
March 31, 2024 March 31, 2023
Change
$
345 $
Cash provided by operating activities Cash used in investing activities Cash used in financing activities Increase in cash and cash equivalents
304 $
41
(269)
(225)
(44)
(62)
(75)
13 10
$
14 $
4 $
Operating Activities Cash provided by operating activities increased $41 million through the 12 months ending March 31, 2024, due to favourable changes in working capital. High accounts receivable balances at March 31, 2023, primarily resulting from the colder than normal winter heating season in 2022-23, were collected through the 12 months ending March 31, 2024. Account receivable balances at March 31, 2024 were considerably lower than balances at March 31, 2023, as unusually warmer than normal weather through the current year resulted in lower customer account receivable balances outstanding at March 31, 2024, and a favourable impact to working capital. This was partially offset by the unfavourable results from decreasing asset optimization margins, lower delivery revenues, lower customer capital contributions, higher employee benefit costs, higher operating and maintenance expenses, and higher net finance costs.
Investing Activities Cash used in investing activities through 2023-24 increased $44 million compared to 2022-23, as the Corporation focused investment on system expansions to meet growing demand in the Melfort and Regina areas. This was partially offset by lower investment in customer growth initiatives as a large customer-focused capital project was operationalized in 2022-23. Financing Activities Cash used in financing activities decreased $13 million through the 12 months ending March 31, 2024 compared to 2022-23. The Corporation used $74 million for interest payments, $21 million for dividend payments, $66 million to reduce short-term debt and $16 million to pay debt retirement fund installments. The Corporation borrowed $125 million in long-term debt, at a discount of $5 million, in three increments during the first quarter of 2023-24 to support capital investment requirements. SaskEnergy’s debt-to-equity ratio at March 31, 2024, of 59 per cent debt and 41 per cent equity, remains the same year over year and is within the Corporation’s long-term target range of 58 to 63 per cent debt.
42
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