SASKENERGY 2018-19 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
INTRODUCTION The Management’s Discussion and Analysis (MD&A) highlights the primary factors that affected SaskEnergy’s consolidated financial performance for the 12 months ending March 31, 2019. Using financial and operating results as its basis, the MD&A describes the Corporation’s past performance and future prospects, enabling readers to view SaskEnergy from the perspective of management. The MD&A is presented as at May 23, 2019, and should be read in conjunction with the Corporation’s audited consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The MD&A contains certain forward-looking statements that are subject to inherent uncertainties and risks. Many of these risks are described in the Risk Management and Disclosure section of the MD&A. All forward-looking statements reflect the Corporation’s best estimates and assumptions based on information available at the time the statements were made. However, actual results and events may vary significantly from those included in, contemplated by, or implied by such statements. The Corporation’s financial results are subject to variation, especially given the volatility of natural gas prices. In order to compare financial performance from period to period, the Corporation uses the following measures: income before unrealized market value adjustments, realized margin on commodity sales, and realized margin on asset optimization sales. Each measure removes the impact of fair value adjustments on financial and derivative instruments and the revaluation of natural gas in storage to the lower of cost and net realizable value. Unrealized market value adjustments vary considerably with the market prices of natural gas, drive significant changes in the Corporation’s consolidated net income and may obscure other business factors that are also important to understanding the Corporation’s financial results. The measures referred to above are non-IFRS measures, in that there is no standardized definition, and may not be comparable to similar measures presented by other entities. STRATEGIC SCORECARD MEASURES SaskEnergy refreshed its mission, vision and values while continuing to align with the Crown Sector Strategic Priorities identified by CIC. The four new strategic mandates — One Company, One Team; Industry Leader; Fuel of Choice; Business and Technology
Optimization — as set out in the Business Plan, support the vision, mission and values of the Corporation. These mandates and strategic priorities provide guidance to SaskEnergy in its business planning process as well as its performance management and reporting. They also assist employees in making a link between their everyday efforts and their contribution to the Strategic Plan and the overall direction of the Corporation. The Crown Sector Strategic Priorities convey shareholder strategic direction for the Province’s Crown corporations.
The government’s strategic plan identified five core strategic and three near-term priorities. Core Strategic Priorities: • Customer Focus
• Financial Sustainability • Infrastructure Investment • Private Sector Engagement • Labour Force
Crown corporations consider all potential structure, administration and operational changes to achieve financial sustainability and the sustainability of high- quality service delivery to the people of Saskatchewan. Near-term Priorities: • Strong Earnings • Prioritize Investments • Transformational Change During 2018-19, SaskEnergy demonstrated support of these priorities. SaskEnergy exceeded its net income target reporting net income of $134 million before market value adjustments. Provincial growth and a colder than normal winter resulted in higher revenues; however, the higher demand for natural gas resulted in higher than planned costs in order to meet that demand. SaskEnergy managed these increased costs through efficiencies and effective resource management. SaskEnergy continues to evolve its capital prioritization process for capital investments. Ongoing monitoring of the portfolio of projects allows for a fluid and adaptive capital plan, ensuring capital is being effectively deployed to maximize value for the Corporation.
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