Cogeco 2013 Annual Report Download - page 58

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended August 31, 2013 and 2012
Consolidated financial statements COGECO CABLE INC. 2013 57
NATURE OF OPERATIONS
Cogeco Cable Inc. (the “Corporation” or the “Parent Corporation”) is a Canadian public corporation whose shares are listed on the Toronto Stock
Exchange (“TSX”). The Corporation’s core business through its subsidiaries is providing Cable Television, High Speed Internet (“HSI”), Telephony,
managed information technology and infrastructure, and other telecommunications services to its residential and commercial customers in Canada,
in the United States of America (“United States”), in the United Kingdom ("UK") and in France (see note 4 for a detailed description of operations).
The Corporation is a subsidiary of COGECO Inc., which holds 32.1% of the Corporation’s equity shares, representing 82.5% of the votes attached
to the Corporation’s voting shares.
The Corporation's registered office is located at 5 Place Ville Marie, Suite 1700, Montréal, Québec, H3B 0B3.
1. BASIS OF PRESENTATION
These audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
issued by the International Accounting Standards Board ("IASB").
The consolidated financial statements have been prepared on a going concern basis using historical cost except for derivative financial
instruments and cash-settled share-based payment arrangements, which are measured at fair value, and for the pension plan liabilities and
accrued employee benefits, which are measured at present value.
Financial information is presented in Canadian dollars, which is the functional currency of Cogeco Cable Inc.
The consolidated financial statements were approved by the Board of Directors of Cogeco Cable Inc. at its meeting held on October 30, 2013.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial statements, unless
otherwise indicated.
A) BASIS OF CONSOLIDATION
These consolidated financial statements include the accounts of the Corporation and its subsidiaries.
Subsidiaries are entities controlled by the Corporation. Control is achieved where the Corporation has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries' financial statements are included in the
consolidated financial statements from the date that control commences until the date that control ceases. Subsidiaries' accounting
policies are aligned with those adopted by the Corporation. Operating segments and percentage of interest in the principal subsidiaries
at August 31, 2013 are as follows:
Operating segment Principal subsidiaries
Percentage of equity interest
%
Voting rights
%
Canadian cable services Cogeco Cable Canada 100 100
American cable services Atlantic Broadband 100 100
Enterprise services Cogeco Enterprise Services 100 100
The Corporation has established a special purpose entity (“SPE”) with the objective of mitigating the impact of stock price fluctuations
in connection with its Incentive Share Unit Plan. A SPE is consolidated if, based on an evaluation of the substance of its relationship
with the Corporation and the SPE's risks and rewards, the Corporation concludes that it controls the SPE. A SPE controlled by the
Corporation was established under terms that impose strict limitations on the decision-making powers of the SPE's management, resulting
in the Corporation receiving the majority of the benefits related to the SPE's operations and net assets, being exposed to the majority
of risks incident to the SPE's activities, and retaining the majority of the residual or ownership risks related to the SPE or its assets.
All inter-company transactions and balances and any unrealized revenue and expense are eliminated in preparing the consolidated
financial statements.