9. Financial risk management (continued)
c. Liquidity risk Liquidity risk is the risk that the Corporation is unable to meet its financial obligations as they become due. The Corporation has credit facilities available to refinance maturities in excess of anticipated operating cash flows. The contractual maturities of the Corporation’s financial obligations, including interest payments and the impact of netting agreements, as at March 31, 2017 were as follows: Contractual Maturities Carrying Less Than 1 - 2 3 - 5 More Than (millions) Amount 1 Year Years Years 5 Years Short-term debt $ 293 $ 293 $ – $ – $ – Trade and other payables 109 105 1 5 – Dividends payable 14 14 – – – Long-term debt 1,019 102 92 184 1,359 Derivative instruments 40 73 27 2 – $ 1,475 $ 587 $ 120 $ 191 $ 1,359 As at March 31, 2017, the Corporation’s borrowing capacity, together with relatively stable operating cash flows, provide sufficient liquidity to fund these contractual obligations. In addition to the above, the Corporation has posted a $10 million (2016 – $15 million) letter of credit with NGX Financial Inc. (NGX) as security for natural gas purchases and sales conducted by the Corporation on the NGX natural gas exchange in Alberta. NGX may draw upon the letter of credit if the Corporation fails to make timely payment for, or delivery of, natural gas as per the related contract. d. Credit risk Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial or derivative instrument fails to meet its contractual obligations. The Corporation is exposed to credit risk through cash, trade and other receivables, debt retirement funds and derivative instrument assets. Credit risk related to cash and debt retirement funds is minimized by dealing with institutions that have strong credit ratings and holding highly-rated financial securities. The Corporation extends credit to its customers in the normal course of business and is at risk of loss in the event of non-performance by counterparties on certain of the financial and derivative instruments. To reduce its credit risk, the Corporation has established policies and procedures to monitor and limit the amount of credit extended to its customers and counterparties and may require letters of credit and other forms of security. As at March 31, 2017, the maximum credit exposure to a single counterparty was $5 million (2016 – $1 million). The carrying amount of financial and derivative assets represents the maximum credit exposure as follows: (millions) 2017 2016 Cash $ 1 $ 11 Trade and other receivables 111 104 Debt retirement funds 101 102 Fair value of derivative instrument assets 5 11 $ 218 $ 228
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Consolidated Financial Statements
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