IFRS 12 Disclosures of Interests in Other Entities IFRS 13 Fair Value Measurement Financial Instruments Risk management and hedging activities In May 2011, the IASB issued IFRS 12, a new standard of comprehensive disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a result, the Company anticipates providing additional financial statement disclosures relating to interests in subsidiaries and joint arrangements. IFRS 12 is effective for annual periods beginning on or after January 1, 2013 and is to be applied retrospectively. Earlier application is permitted but must be applied simultaneously with IFRS 11 and IFRS 10. In May 2011, the IASB issued IFRS 13 which defines fair value, sets out in a single IFRS a framework for measuring fair value and enhances disclosures about fair value measurements. IFRS 13 applies to fair value measurements required or permitted by other IFRSs, but does not (a) introduce any new requirements to measure an asset or a liability at fair value, (b) change what is measured at fair value in IFRSs, or (c) address how to present changes in fair value. The adoption of this new standard is expected to affect the Company’s fair value disclosures for financial instruments and asset impairment calculations. IFRS 13 is effective for annual periods beginning on or after January 1, 2013 and is to be applied prospectively. Earlier application is permitted. The Company has various financial assets that are classified for financial reporting purposes as available for sale, held at fair value through income or loss, or loans and receivable. Financial liabilities are classified as either held at fair value through income or loss or other liabilities. Initially, all financial assets and financial liabilities are recorded on the statement of financial position at fair value with subsequent measurement determined by the classification of each financial asset and liability. Trade and other receivables and trade and other payables are measured at amortized cost and their fair values are not materially different from their carrying amounts due to their short-term nature. The classification, carrying amounts and fair values of financial instruments held at December 31, 2012 and 2011 were as follows: The Company is exposed to changes in energy commodity prices, foreign currency exchange rates and interest rates. The Company uses various risk management techniques, including derivative instruments such as forward contracts, fixed-for-floating swaps, and option contracts, to reduce this exposure. These derivative instruments are recorded at fair value on the statement of financial position except for non-financial derivatives that are entered into and continue to be held for the purpose of receipt or delivery of a non-financial item in accordance with the Company’s expected purchase, sale or usage requirements. ($millions) As at December 31 2012 2011 Classification Carrying amount Fair value Carrying amount Fair value Financial assets: Cash and cash equivalents Loans and receivables 53 53 73 73 Trade and other receivables Loans and receivables 354 354 198 198 Derivative financial instruments assets – current and non-current Financial assets designated at fair value through income or loss 77 77 38 38 Other financial assets - current Financial assets designated at fair value through income or loss - - 53 53 Finance lease receivable Loans and receivables 461 374 58 50 Other financial assets – non-current Loans and receivables 55 55 38 37 Other financial assets – non-current Available for sale 5 5 4 4 Financial liabilities: Trade and other payables Other financial liabilities 210 210 220 220 Derivative financial instruments liabilities – current and non-current Financial liabilities designated at fair value through income or loss 64 64 74 74 Loans and borrowings (including current portion) Other financial liabilities 1,659 1,676 1,480 1,571 Capital Power Corporation Management’s Discussion and Analysis 2012 58