Page 55 - 2009_2010_Annual_Report

Basic HTML Version

Saskatchewan Indian Gaming Authority
|
NOTES TO THE FINANCIAL STATEMENTS
Year Ended March 31, 2010
53
19. FINANCIAL RISK MANAGEMENT (CONTINUED)
INTEREST RATE RISK
Interest rate risk is the risk of financial loss resulting from changes in market interest rates. SIGA has entered into interest rate
swaps which fix the interest rate on their casino project loans. At March 31, 2010, if interest rates at that date had been 100
basis points lower with all other variables held constant, net income before distribution to SLGA for the year would have been
$3,325,000 lower, arising mainly as a result of higher unrealized losses on interest rate swaps, partially offset by lower interest
expense on variable borrowings. If interest rates had been 100 basis points higher, with all other variables held constant, net
income before distribution to SLGA for the year would have been $3,325,000 higher, arising mainly as a result of lower unrealized
losses on interest rate swaps, partially offset by higher interest expense on variable borrowings.
LIQUIDITY RISK
Liquidity risk is the risk that SIGA is unable to meet its financial commitments as they become due or can only do so at excessive
cost. SIGA manages its cash resources based on financial forecasts and anticipated cash flows.
The following summarizes the contractual maturities of SIGA’s financial liabilities as at March 31, 2010:
Contractual cash flows
Carrying
0 - 12
1 - 2
3 - 5
More than
Financial Liabilities
Amount
months
years
years
5 years
Total
Payable to SLGA
$ 51,274,319 $ 51,274,319 $
– $
– $
– $ 51,274,319
Accounts payable and
accrued liabilities
17,019,861
17,019,861
17,019,861
Debt
73,098,572
9,322,472
9,092,286
68,493,682
86,908,440
Capital lease
43,456,632
6,090,077
6,090,077
18,270,231
75,916,079
106,366,464
Derivative liability
5,492,969
5,492,969
5,492,969
$ 190,342,353 $ 83,706,729 $ 15,182,363 $ 86,763,913 $ 81,409,048 $ 267,062,053
Management believes its ability to generate funds will be adequate to support these financial liabilities.
20. FAIR VALUE OF FINANCIAL INSTRUMENTS
ESTABLISHING FAIR VALUE
The fair value of cash, accounts receivable, due to SLGA, and accounts payable and accrued liabilities approximates their carrying
values due to their short-term maturity.
The fair value of short-term investments is based on quoted bid prices.
The fair value of derivative instruments is calculated using pricing models that incorporate current market prices and the contractual
prices of the underlying instruments, the time value of money and yield curves.
The fair value of long-term debt is addressed in Note 12.