SUCCESSFUL YEAR FOR CROWN SECTOR IN 2011

Earnings exceeded budget projections in Saskatchewan's Crown sector in 2011, enabling CIC to provide a dividend to the provincial treasury in spite of challenges and increasing demands for services.

On a consolidated basis, Crown Investments Corporation (CIC) and its subsidiaries earned a profit of $450.9 million on revenue of $4.6 billion in 2011. Both the consolidated debt ratio, at 49.8 per cent, and the return on equity at 10.9 per cent were ahead of target.

"Extreme weather was certainly a factor in 2011, along with continued growth in demand for Crown sector services," Minister responsible for Crown Investments Corporation Tim McMillan said. "Despite these challenges, the Crowns met our dividend commitment, invested in infrastructure, and achieved appropriate debt to equity ratios, while delivering high quality service to Saskatchewan customers."

The Crown sector adopted International Financial Reporting Standards (IFRS) in 2011. Last year's financial statements (2010) have been restated according to IFRS, rather than Generally Accepted Accounting Principles (GAAP) standards, which is how they appeared in the 2010 annual reports. In 2011 CIC's earnings as a holding company, which are recorded on the separate financial statements, were $167.1 million, down $68.9 million from 2010's restated results, largely due to decreased dividend revenue from the Crowns. CIC paid a dividend of $128.5 million to the General Revenue Fund.

To achieve the necessary capital investment of $1.1 billion throughout the sector, there was an increase in borrowing which resulted in Crown debt increasing by $260.9 million in 2011.

"The Crowns continue to invest heavily in the province, which benefits their customers," McMillan said. "Our goal is to have the infrastructure in place to meet the strong economic growth in Saskatchewan, while continuing the high standard of services our customers have come to expect."

Significant accomplishments and events for CIC and the Crown sector in 2011 include:

• SaskTel completed a system expansion providing internet and cellular coverage to an even broader base of the province, and congestion issues on its 4G network, which were addressed through $26.5 million in network investment.
• SaskWater achieved its strongest earnings to date, posting a surplus of $3.5 million due to an increased focus on growing the business and significant project management work with the potash industry. 
• 2011 was a difficult year for the entire insurance industry, including SGI, as increased claim costs in all jurisdictions and lower-than-expected investment returns affected SGI's bottom line. Flooding in the Weyburn and Estevan areas, hail storms, and losses from the Slave Lake Alberta wildfire were key factors.
• SaskEnergy's residential and industrial demand continued to drive customer growth, requiring system expansion and increased Alberta natural gas imports. Wet weather created system integrity challenges, so SaskEnergy added an additional $6.5 million to its safety program in 2011.
• SaskPower began construction on the Boundary Dam 3 carbon capture project. Wet weather hampered coal generation as flooding disrupted coal access; however, it led to improved hydro generation. Opportunities to sell electricity to Alberta, efficiency and cost control, low natural gas prices, and increased low cost hydro generation contributed to record earnings.

CIC's 2011 Annual Report is available online at www.cicorp.sk.ca.

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For more information, contact:

Debbie Clark
Crown Investments Corporation
Regina
Phone: 306-787-5451
Email: dclark@cicorp.sk.ca
Cell: 306-530-2523