SaskEnergy First Quarter Report - June 30, 2017

5. Financial and derivative instruments (continued)

As at June

As at March

30, 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

$

2

$

2

$

1

$

1

Amortized cost FVOCI - debt instruments

72

72

111

111

Debt retirement funds

Level 2

104

104

101

101

Fair value of derivative instrument assets

FVTPL

Level 2

9

9

5

5

Financial and derivative liabilities Short-term debt

OL OL OL OL

n/a n/a n/a

187 118

187 118

293 109

293 109

Trade and other payables

Dividends payable

-

-

14

14

Long-term debt

Level 2

1,121

1,280

1,019

1,150

Fair value of derivative instrument liabilities

FVTPL

Level 2

38

38

40

40

Classification details: FVTPL - fair value through profit or loss FVOCI - fair value through other comprehensive income OL - other liabilities

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.

c. Level 3

Level 3 inputs are unobservable for the particular assets and liabilities as at the reporting date. The Corporation did not classify any of its fair value measurements within Level 3.

20

2017-18 FIRST QUARTER REPORT

Made with FlippingBook Ebook Creator