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CROWN SECTOR CONTINUES TO PERFORM WELL IN 1998

April 21, 1999

Deputy Premier and Crown Investments Corporation (CIC) Minister Dwain Lingenfelter said today that Saskatchewan's Crown sector continued to perform well in 1998 by focusing on sound financial management and debt reduction, both within the Crown corporations and the holding company, CIC. "Good financial management allowed us to reduce our consolidated debt by $187 million in 1998," Lingenfelter said. "For the second year in a row CIC cut its debt in half.

CIC achieved its self-supporting debt target by cutting non-consolidated debt from $432 million in 1997 to $218 million at the end of 1998. CIC's non-consolidated debt was $861 million at the end of 1996.

CIC and its subsidiary Crown corporations, SaskPower, SaskTel, SaskEnergy, Saskatchewan Government Insurance (SGI), Saskatchewan Transportation Company (STC), Sask Water, Saskatchewan Opportunities Corporation (SOCO) and Saskatchewan Government Growth Fund Management Corporation (SGGF), tabled their 1998 Annual Reports with the Legislative Assembly today. Annual financial statements were also tabled for Crown corporations' pension plans and wholly-owned subsidiaries.

"Lower debt and associated interest costs on debt have allowed CIC to declare an increased dividend to the province's General Revenue Fund (GRF)," Lingenfelter said. "The dividend of $100 million for 1998 is double the amount we were able to declare for each of the three previous years. This contribution from the Crown sector will go toward programs and services that benefit all Saskatchewan people."

Other highlights of the 1998 Annual Reports include:

  • CIC recorded a gain of $94 million on the sale of its 50 per cent interest in the Bi-Provincial Upgrader at Lloydminster. As a result of the sale, CIC was able to declare a special dividend of $100 million to the GRF and the repayment of $85 million of equity advances;
  • CIC recorded a $6 million gain on the sale of NorSask Forest Products Inc.;
  • Consolidated earnings were $344 million on revenues of $2,684 million in 1998. That compares with 1997 earnings of $294 million on revenues of $2,916 million;
  • Consolidated debt at the end of 1998 was $3,388 million, a reduction of $187 million from $3,575 million in 1997;
  • STC continued to meet the challenge of providing passenger and freight service to Saskatchewan people while implementing efficiency measures and meeting or exceeding all of its targets for cost reductions. The provincial bus company recorded a decrease of 62 per cent in its cash operating loss, which dropped from $6.3 million in 1997 to $2.4 million in 1998, its lowest deficit since 1994. Total expenses were the lowest recorded by STC since 1986, falling by 23 per cent, from $21.7 million in 1997 to $16.6 million in 1998;
  • SaskPower reduced its debt by $51 million, to $1.6 billion, while maintaining its freeze on farm and residential electrical rates. Revenues were $953 million, an increase of $38 million over 1997, while net earnings increased by $8 million to $140 million;
  • SaskTel had revenues of $752.6 million compared with $728 million in 1997, primarily due to growth in nontraditional services and diversification initiatives. After a one-time non-cash provision of $55.7 million lowered 1997 earnings to $40.6 million, net earnings rose to $93.2 million in 1998. SaskTel also recorded a $7.6 million gain on the sale of its interest in Alouette Communications Inc. SaskTel continued to focus on competitive pricing and customer service, enabling it to retain about 92 per cent of the long distance market in the province;
  • SaskEnergy customers continued to pay the second lowest natural gas rates in Canada in 1998, as the company intoduced supply competition for the residential, farm and small business markets. SaskEnergy's revenues were $367 million, compared with $353.8 million in 1997. Net earnings dropped to $36.3 million from $39.4 million in 1997, primarily due to lower gas consumption because of warmer weather;
  • SGI CANADA's net earnings were $31.1 million, up from $24.3 million in 1997, mainly because of fewer claims as a result of no major summer storms and good winter driving conditions. The Saskatchewan Auto Fund, a stand-alone, compulsory auto insurance program administered by SGI CANADA, is not included in SGI CANADA's or CIC's consolidated financial statements. The Auto Fund reduced its accumulated deficit to $91.6 million from $127.9 million in 1997, as a result of net earnings of $36.2 million compared with a loss of $15.2 million in 1997;
  • Sask Water lost $1.1 million in 1998, compared with $1.9 million the previous year, primarily due to the early years of operation of the Wakaw-Humboldt water supply system and losses in the SPUDCO division due to low potato prices;
  • SOCO's revenues increased to $14.7 million, up from $13.3 million in 1997, due mainly to higher tenant occupancy at Innovation Place in Saskatoon and higher returns on a larger investment portfolio; and
  • SGGF Management Corporation had earnings of $16.4 million in 1998 compared with a loss of $229,000 in 1997. The increase solely reflects residual profits from SGGF's first fund company, which repaid its final investors during 1998.

"Our Crowns are continuing to give Saskatchewan people a good return on their investment while providing quality services at rates that are among the lowest in Canada," Lingenfelter said. "Our financial results for 1998, along with the many other accomplishments of our Crown sector, have set the stage for another promising year in 1999."

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Karen Schmidt
Crown Investments Corporation
Regina
Phone: (306) 787-5889