2004 Crown Investments Corporation of Saskatchewan Annual Report

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MANAGEMENT’S DISCUSSION AND ANALYSISCIC Non-Consolidated: Analysis of Financial Results (continued)Operating, Investing and Financing ActivitiesCash from operations was $290.4 million (2003 - $157.0million). The $133.4 million increase was primarily dueto increased dividend revenue.Cash used in investing activities was $0.1 million (2003- $11.1 million). The primary reason for the $11.0million change was the reorganization of CIC IndustrialInterests Inc. into Investment Saskatchewan Inc.$ MillionsCash Flow Highlights 2004 2003Cash from operationsCash used in investing activitiesDebt repaid to the GRFDebt transferredDividend paid$ 290.4(0.1)--(205.0)Restated$ 157.0(11.1)(9.9)(15.4)(300.0)Cash used in financing activities was $205.0 million(2003 - $325.3 million), all of which was the dividendIncrease (Decrease) in Cash$ 85.3 $ (179.4)payment to the GRF. In 2003, CIC repaid $9.9 million in debt due to the GRF (net of sinking fund redemptions),transferred $15.4 million in debt (net of sinking funds) to Investment Saskatchewan Inc. and paid a $300.0million dividend to the GRF.During 2003, Cabinet approved the restructuring of CIC’s share capital subsidiary, CIC Industrial Interests Inc.,and renamed the corporation Investment Saskatchewan Inc. As part of the restructuring, CIC transferred itsremaining long-term debt and associated sinking funds to Investment Saskatchewan as partial repayment onnon-interest bearing advances from CIC. As a result of the transfer of these investments, CIC no longer holdsdebt.Key Factors Affecting Financial PerformanceEarnings of Crown CorporationsThe key factor affecting CIC’s earnings is the level of dividends from commercial subsidiary Crowncorporations.Factors affecting the level of dividends from subsidiary Crowns include the level of profits and theapplication of CIC’s subsidiary dividend policy. The CIC Board determines dividends from a subsidiary afterallocating cash for reinvestment within the Crown to and for debt reduction, if necessary. CIC expectsaggregate dividends declared by its commercial subsidiaries in 2005 to be lower than in 2004.Earnings of NewGradeDividends from NewGrade are determined by NewGrade’s Board of Directors. NewGrade’s Board of Directorswill consider the project’s profitability, agreements between the shareholders, lenders and loan guarantors,and capital requirements of the corporation before declaring the dividend.Public Policy CostsIn 2003, the government adopted a policy to ensure that Saskatchewan families will receive the packageof basic utilities including home electricity, home natural gas, basic telephone rates, and auto insurance ata total annual cost that is lower than the same package in any other province in Canada. CIC analyzes thecosts of this policy and is responsible for providing rebates, if necessary. The cost, if any, of the lowest bundlepackage for 2005 cannot be determined in advance as it is dependant on future events.Investment ValuesCIC regularly assesses the appropriateness of the carrying value for its investments, and writes down aninvestment if it judges there to be a permanent impairment in carrying value.C I C46
MANAGEMENT’S DISCUSSION AND ANALYSISLooking Ahead to 2005CIC’s key financial initiatives for 2005 include:Continuing to monitor new developments in financial reporting and governance, ensuring that CIC isa leader in its reporting and accountability practices.Continuing to provide a return to the shareholder.Contributing to important public policy initiatives by:providing Saskatchewan families with the lowest cost utility bundle; andfunding youth and Aboriginal initiatives such as Gradworks.The following table summarizes the earnings of CIC and its subsidiaries according to the businessplans of the respective organizations. Dividend payout rates are based on the budgeted earningsand the projected financial position of each subsidiary. Actual dividend payout rates and dividendpayments will depend on each Crown’s actual earnings for the year and financial position atDecember 31, 2005.CIC 2005 Consolidated Earnings BudgetSaskPower (1)SaskTelSaskEnergySGIInvestment Saskatchewan (2)ISCSaskWaterSTCSOCOCIC (non-consolidated) (3)OtherTotal$Earnings83.094.288.332.014.15.3(1.7)(0.6)5.7(53.4)(2.0)$ MillionsDividend54.084.857.420.8$ 264.9 $ 217.0$ProjectedDividend as a% of earnings65%90%65%65%1. SaskPower’s 2005 amount reflects a significant change in planning assumptions subsequent to preparation of SaskPower’s 2005business plan related to lower than planned electrical rates for 2005.2. Investment Saskatchewan’s 2005 dividend target has not yet been aproved by the CIC Board.3. CIC’s earnings reflect the elimination of all inter-entity transactions, including dividend revenue from subsidiary Crowns.47 C I C
Page 2 and 3: 2004 Financial HighlightsCrown Sect
Page 4 and 5: Table Of Contents2004 HighlightsLet
Page 6 and 7: Chair’s MessageSaskatchewan’s C
Page 8 and 9: Corporate ProfileCIC is the financi
Page 10 and 11: Corporate ProfileCIC ManagementThe
Page 12 and 13: Corporate ProfileFinancial and Publ
Page 14 and 15: Corporate ProfileCIC’s Holdings20
Page 16 and 17: Corporate ProfileSASKATCHEWAN GOVER
Page 18 and 19: Corporate ProfileSaskatchewan Telec
Page 21: Policy and ProgramsUtility Bundle C
Page 24 and 25: Policy and ProgramsCommitment to Gr
Page 26: Policy and ProgramsCommitment to Yo
Page 30: GovernanceFor the purposes of this
Page 33 and 34: Strategic Direction and Performance
Page 41 and 42: Management’s Discussion and Analy
Page 43 and 44: MANAGEMENT’S DISCUSSION AND ANALY
Page 49: MANAGEMENT’S DISCUSSION AND ANALY
Page 65: MANAGEMENT’S DISCUSSION AND ANALY
Page 68 and 69: Consolidated Statement of Financial
Page 70 and 71: Consolidated Statement of Cash Flow
Page 72 and 73: Notes to Consolidated Financial Sta
Page 96: Notes to Consolidated Financial Sta
Page 99 and 100: Non-Consolidated Statement of Finan
Page 101 and 102:
Non-Consolidated Statement of Cash
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Notes to Non-Consolidated Financial
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Pat AtkinsonMinisterPrinted in Sask
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2004 Crown Investments Corporation of Saskatchewan Annual Report

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