Cogeco 2013 Annual Report Download - page 86

Consolidated financial statements COGECO CABLE INC. 2013 85
The Corporation is also exposed to credit risk in relation to its trade accounts receivable. To mitigate such risk, the Corporation continuously
monitors the financial condition of its customers and reviews the credit history or worthiness of each new large customer. At August 31, 2013
and August 31, 2012, no customer balance represented a significant portion of the Corporation’s consolidated trade accounts receivable.
The Corporation establishes an allowance for doubtful accounts based on specific credit risk of its customers by examining such factors as
the number of overdue days of the customer’s balance outstanding as well as the customer’s collection history. The Corporation believes
that its allowance for doubtful accounts is sufficient to cover the related credit risk. The Corporation has credit policies in place and has
established various credit controls, including credit checks, deposits on accounts and advance billing, and has also established procedures
to suspend the availability of services when customers have fully utilized approved credit limits or have violated existing payment terms. Since
the Corporation has a large and diversified clientele dispersed throughout its market areas in Canada, the United States and Europe, there
is no significant concentration of credit risk.
The following table provides further details on trade accounts receivable, net of allowance for doubtful accounts:
At August 31, 2013 2012
(In thousands of Canadian dollars) $$
Trade accounts receivable 82,292 65,570
Allowance for doubtful accounts (3,322) (2,866)
78,970 62,704
Other accounts receivable 8,015 5,716
86,985 68,420
Trade accounts receivable past due is defined as amount outstanding beyond normal credit terms and conditions for the respective customers.
A large portion of the Corporation’s customers are billed and pay before their services are rendered. The Corporation considers amount
outstanding at the due date as trade accounts receivable past due. The following table provides further details on trade accounts receivable
past due net of allowance for doubtful accounts at August 31, 2013 and 2012:
At August 31, 2013 2012
(In thousands of Canadian dollars) $$
Less than 60 days overdue 29,546 9,530
60 to 90 days overdue 1,626 431
More than 90 days overdue 1,732 1,092
32,904 11,053
The following table shows changes in the allowance for doubtful accounts for the year ended August 31, 2013 and 2012:
2013 2012
(In thousands of Canadian dollars) $$
Balance, beginning of the year 2,866 7,242
Provision for impaired receivables 26,658 25,110
Reversal of provision for amounts collected (5,838) (4,760)
Amounts written off as uncollectible (20,434) (20,825)
Foreign currency translation adjustment 70 —
Discontinued operations —(3,901)
Balance, end of the year 3,322 2,866
Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. The Corporation manages
liquidity risk through the management of its capital structure and access to different capital markets. It also manages liquidity risk by continuously
monitoring actual and projected cash flows to ensure sufficient liquidity to meet its obligations when due. At August 31, 2013, the available
amount under the Corporation’s revolving credit facilities was $233.7 million. Management believes that the committed revolving credit facilities
will, until their maturities in January 2017 and November 2017, provide sufficient liquidity to manage its long-term debt maturities and support
working capital requirements. Two subsidiaries of the Corporation also benefit from a Revolving Facility of US$100 million related to the
acquisition of Atlantic Broadband, of which US$34.1 million ($35.8 million) was used at August 31, 2013.