Financial Report - Veresen Inc.

Sustainability of Dividends and Productive Capacity
We intend to continue to pay dividends, although such dividends are not guaranteed and do not represent a legal obligation.
The sustainability of such dividends is a function of several factors including, among other things:
• earnings and cash flows we generate;
• ongoing maintenance of each business’s physical and economic productive capacity;
• our ability to comply with debt covenants and refinance debt as it comes due; and
• our ability to satisfy any applicable legal requirements.
For a complete discussion of the significant risks and uncertainties affecting us, see the “Risks” section contained elsewhere
in this MD&A.
Dividends Paid
For the year ended December 31, 2012 we declared dividends of $193.5 million (2011 – $163.0 million), of which $114.3 million
(2011 – $51.6 million) was paid to common shareholders in cash and $79.2 million (2011 – $111.4 million) was paid in Common
Shares issued under our DRIP.
Restrictions on Dividends
Our ability to pay dividends to common shareholders is dependent on the applicable terms of certain financing and security
agreements. On December 31, 2012 no Event of Default under any of these arrangements had occurred or was continuing
that would restrict dividends being paid.
Our Revolving Credit Facility restricts us from paying dividends to shareholders when an Event of Default has occurred or is continuing.
Our investments in our operating businesses have been made through debt and equity investments in subsidiary partnerships and
corporations. In general, other than covenant restrictions contained in applicable debt arrangements, there are no legal or practical
restrictions on such subsidiary partnerships or corporations from transferring funds received from the operating businesses to us
except that the subsidiary corporations must meet liquidity and solvency tests under applicable corporate law.
Dividends Paid/Payable Relative to Cash From Operating Activities and
Net Income Attributable to Common Shares
Three months ended December 31, Year ended December 31,
($ Millions) 2012 2011 2012 2011
Cash from operating activities 65.1 59.9 179.9 191.4
Net income attributable to Common Shares 12.0 14.4 38.9 53.1
Dividends paid/payable 49.4 41.5 193.5 163.0
Less dividends paid in Common Shares under DRIP (10.6) (19.3) (79.2) (111.4)
Net dividends paid/payable 38.8 22.2 114.3 51.6
Excess of cash from operating activities over net dividends paid/payable 26.3 37.7 65.6 139.8
Excess (deficiency) of net income attributable to Common Shares
over net dividends paid/payable (26.8) (7.8) (75.4) 1.5
The excess of cash from operating activities over net dividends paid/payable generally represents the cash we use for maintenance
capital expenditures, scheduled amortization of any long-term debt, payment of Preferred Share dividends, and cash we retain to
fund growth.
Net income attributable to Common Shares is generally less than dividends paid/payable as our net income includes certain non-cash
expenses such as depreciation and deferred income taxes, and can include unrealized foreign exchange and fair value losses which
are not reflected in calculating the amount of cash available for the payment of dividends. As a result of high participation rates under
our DRIP, net income attributable to Common Shares approximated net dividends paid/payable for the three and 12 months ended
December 31, 2011. In May 2012, we suspended the Premium Dividend TM component of our DRIP (trademark of Canaccord Genuity
Corp.), resulting in a lower participation rate for the three and 12 months ended December 31, 2012.
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