Financial Report - Veresen Inc.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Maturity Analysis of Financial Liabilities The tables below summarize the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the undiscounted cash flows. The following table summarizes the maturity analysis of financial liabilities as of December 31, 2012:
Credit Risk Veresen and its jointly-controlled businesses are exposed to credit risk as revenues are dependent upon the ability of customers to fulfill their contractual obligations, the failure of which could adversely affect the ability of Veresen and its jointly-controlled businesses to recover operating and financing costs or make dividends or distributions, as applicable. Alliance’s business is concentrated in the natural gas transportation industry and its revenue is dependent upon the ability of its shippers to pay their monthly demand charges. Alliance limits, to some degree, its exposure to this credit risk by requiring its shippers to provide letters of credit or other suitable security unless they maintain specified credit ratings or can demonstrate equivalent financial strength. As at December 31, 2012, Alliance held $21.4 million in letters of credit and cash deposits as security from its shippers. AEGS is primarily dependent upon two customers, both large petrochemical companies with world-scale petrochemical facilities located in Alberta. AEGS represents a critical component in securing ethane feedstock for these petrochemical facilities. In the case of the Hythe/Steeprock complex, the Company is primarily dependent on one customer, a major natural gas producer, with investment-grade credit ratings. Aux Sable’s earnings and cash flows are primarily dependent upon the long-term NGL Sales Agreement with a large, integrated energy company. The counterparty exposures associated with the Company’s power business are diverse and are spread across numerous entities (including a number of government entities in the case of the Company’s district energy facilities) and individual counterparties. None of the Company’s financial assets are past due or impaired, nor have any terms been renegotiated. The Company is satisfied with the credit quality of its financial assets. The maximum exposure to credit risk related to non-derivative financial assets is their carrying value, as disclosed previously in the table “Financial Instruments”. Liquidity Risk Veresen and its businesses manage their liquidity requirements utilizing cash from operations, excess cash and undrawn committed credit facilities. The Company believes these sources of funding are sufficient to meet its expected liquidity requirements. All financial liabilities classified as current on the balance sheet are expected to be settled within one year. Note 19. Segmented Information Pipelines Midstream Power Corporate (1) Total Year ended December 31 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Equity income (loss) 82.2 87.0 53.4 90.2 2.1 (20.8) (1.9) (1.3) 135.8 155.1 Operating revenues 49.9 47.7 95.7 – 118.6 126.5 – – 264.2 174.2 Operations and maintenance (22.4) (21.6) (36.7) – (53.3) (63.5) – – (112.4) (85.1) General, administrative and project development (2.5) (2.2) (1.6) – (20.8) (17.8) (44.6) (31.9) (69.5) (51.9) Depreciation and amortization (13.3) (12.9) (34.1) – (33.5) (33.4) (2.2) (2.1) (83.1) (48.4) Interest and other finance (5.2) (5.4) – – (14.1) (14.9) (39.3) (25.6) (58.6) (45.9) Foreign exchange and other – – – – – (0.1) (0.9) (1.5) (0.9) (1.6) Net income (loss) before taxes and non-controlling interest 88.7 92.6 76.7 90.2 (1.0) (24.0) (88.9) (62.4) 75.5 96.4 Taxes (2) – – – – – – (28.8) (43.2) (28.8) (43.2) Non-controlling interest – – – – (0.1) (0.1) – – (0.1) (0.1) Net income (loss) 88.7 92.6 76.7 90.2 (1.1) (24.1) (117.7) (105.6) 46.6 53.1 Preferred Share dividends – – – – – – (7.7) – (7.7) – Net income (loss) attributable to Common Shares 88.7 92.6 76.7 90.2 (1.1) (24.1) (125.4) (105.6) 38.9 53.1 Total assets (3) 946.9 998.5 1,215.9 229.1 881.9 883.9 99.3 446.6 3,144.0 2,558.1 Capital expenditures (4) 11.1 0.3 11.3 – 48.5 10.7 20.6 7.5 91.5 18.5 (1) (2) (3) (4) Reflects unallocated amounts applicable to Veresen’s head office activities. Corporate office general and administrative costs for the year ended December 31, 2012 include project development costs of $17.0 million (2011 – $8.3 million). The Company holds its ownership interests in multiple business lines through partnerships, which are consolidated into various corporate entities. Consequently, the tax provision is determined on a consolidated basis and, as such, the Company is not able to present income tax by segment. After giving effect to intersegment eliminations and allocations to businesses. Reflects capital expenditures related only to wholly-owned and majority-controlled businesses. 63
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03 04 05 06 07 08 09 10 11 2012 VER
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Management‘s Discussion and Analy
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Business Overview We are a Canadian
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• Aux Sable Canada (50% ownership
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Earnings also reflect increased cor
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Alliance Pipeline Alliance has firm
Page 13 and 14: On May 26, 2009, the NEB adopted a
Page 15 and 16: Financial Highlights Hythe/Steeproc
Page 17 and 18: Opportunities and Developments Aux
Page 19 and 20: Operational performance from our ga
Page 21 and 22: For the three and 12 months ended D
Page 23 and 24: Sustainability of Dividends and Pro
Page 25 and 26: Distributable cash for the three an
Page 27 and 28: Capital Funding and Liquidity To fu
Page 29 and 30: Fair Values Fair value is the amoun
Page 31 and 32: We and our businesses employ variou
Page 33 and 34: The level of commitments for transp
Page 35 and 36: Critical Accounting Estimates The p
Page 37 and 38: Reconciliation of Distributable Cas
Page 39 and 40: Significant items that affected qua
Page 41 and 42: Independent Auditor’s Report To t
Page 43 and 44: Consolidated Statement of Income Ye
Page 45 and 46: Consolidated Statement of Sharehold
Page 47 and 48: JOINTLY-CONTROLLED Entity (1) Pipel
Page 49 and 50: In December 2011, the FASB issued A
Page 51 and 52: Financial Instruments Financial ass
Page 53 and 54: Note 6. Investments in Jointly-Cont
Page 55 and 56: Note 9. Pipeline, Plant and Other C
Page 57 and 58: Medium Term Notes On March 14, 2012
Page 59 and 60: Geographical Components Net income
Page 61 and 62: Common Shares 2012 2011 Common Shar
Page 63: The following table summarizes our
Page 67 and 68: Corporate Information Officers Step
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Financial Report - Veresen Inc.

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