5. Financial and derivative instruments
For recurring and non-recurring fair value measurements, the Corporation estimates the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the reporting date under current market conditions. This requires the Corporation to make certain assumptions, including the principal (or most advantageous) market, the most appropriate valuation technique and the most appropriate valuation premise. The Corporation’s own credit risk and the credit risk of the counterparty have been taken into account in determining the fair value of financial assets and liabilities, including derivative instruments.
As at September
As at March
30, 2018
31, 2018
Classifi-
Fair Value Carrying Hierarchy Amount
Fair
Carrying Amount
Fair
(millions)
cation
Value
Value
Financial and derivative assets Cash Trade and other receivables
FVTPL
Level 2 Level 2 Level 2
$
1
$
1
$
-
$
-
AC
72
72
141 106
141 106
Debt retirement funds
FVOCI
112
112
Fair value of derivative instrument assets
FVTPL
Level 2
38
38
61
61
Financial and derivative liabilities Bank indebtedness
FVTPL
Level 2 Level 2 Level 2 Level 2 Level 2 Level 2
-
-
3
3
Short-term debt
OL OL OL OL OL
194
194
254 127
254 127
Trade and other payables Finance lease obligation
82 10
82 10
11 23
11 23
Dividends payable
-
-
Long-term debt
1,230
1,338
1,081
1,207
Fair value of derivative instrument liabilities
FVTPL
Level 2
28
28
50
50
Classification details: FVTPL - fair value through profit or loss AC - amortized cost FVOCI - fair value through other comprehensive income OL - other liabilities
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.
23
2018-19 SECOND QUARTER REPORT
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