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## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

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For the utilities – water segment, no economic dependence exists. Bristol Water has a large number of customers and there is no significant loss on trade receivables that has not been provided for. Revenue is derived from water supply and related activities in the United Kingdom. 

## (D) Liquidity Risk 

Liquidity risk is the risk that the Corporation may have insufficient cash or other resources to meet obligations as they come due. 

## Compliance with debt covenants 

The Corporation has financial liabilities in the power and utilities – water operating segments, as well as at corporate. Refer to notes 17 (Accounts payable and other liabilities), 18 (Finance lease obligations) and 19 (Long-term debt) for further detail on financial liabilities. These financial liabilities contain a number of standard financial and other covenants. 

Failure to comply with terms and covenants of the Corporation's credit agreements could result in a default, which, if not cured or waived, could result in accelerated repayment or the suspension of dividends. 

In the event of default, there can be no assurance that the Corporation could: 

(i) Generate sufficient cash flow from operations or that future dividends will be available in amounts sufficient to pay outstanding indebtedness, or to fund any other liquidity needs; or 

(ii) Refinance these credit agreements or obtain additional financing on commercially reasonable terms, if at all. The credit agreements, and future borrowings may be, at variable rates of interest, which exposes the Corporation to the risk of increased interest rates. 

## Contractual maturities 

The contractual maturities of the Corporation's financial liabilities as at December 31, 2013 were as follows: 

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## (E) Sensitivity Analysis 

The sensitivity analysis provided below discloses the effect on net income for the year ended December 31, 2013, assuming that a reasonably possible change in the relevant risk variable has occurred during the year and has been applied to the risk exposures in existence at that date to show the effects of reasonably possible changes. The reasonably possible changes in market variables used in the sensitivity analysis were determined based on implied volatilities, where available, or historical data. 

The sensitivity analysis has been prepared based on December 31, 2013 balances and on the basis that the balances, the ratio of fixed to floating rates of debt and derivatives, the proportion of energy contracts that are financial instruments and the proportion of financial instruments in foreign currencies in place at December 31, 2013 are all constant. Excluded from this analysis are all non-financial assets and liabilities that are not classified as financial instruments under IFRS 7. 

The sensitivity analysis provided is hypothetical and should be used with caution as the impacts provided are not necessarily indicative of the actual impacts that would be experienced because the Corporation's actual exposure to market rates is constantly changing as the Corporation's portfolio 

