Cogeco 2014 Annual Report Download - page 96

Consolidated financial statements COGECO CABLE INC. 2014 95
The following table summarizes certain of the key ratios used to monitor and manage the Corporation’s capital structure:
Years ended August 31, 2014 2013
Net senior indebtedness(1)(2) / adjusted EBITDA(3) 2.1 2.6
Net indebtedness(2)(4) / adjusted EBITDA(3) 2.9 3.4
Adjusted EBITDA(3) / financial expense(3) 6.8 6.2
(1) Net senior indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments,
less cash and cash equivalents and principal on Senior Unsecured Debenture and Senior Unsecured Notes.
(2) Excluding Atlantic Broadband and other non-significant unrestricted subsidiaries' cash and cash equivalents and non-recourse First Lien Credit Facilities.
(3) Calculation based on adjusted EBITDA and financial expense for the twelve-month period ended August 31, 2014 and August 31, 2013 excluding Atlantic
Broadband and other non-significant unrestricted subsidiaries and including Peer 1 Hosting results for the twelve-month period ended August 31, 2014
and the seven-month period ended August 31, 2013.
(4) Net indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments, less
cash and cash equivalents.
D) CATEGORIES OF FINANCIAL INSTRUMENTS
At August 31, 2014 2013
(In thousands of Canadian dollars) $$
Financial assets
Loans and receivables 159,345 126,560
Derivative financial instruments in designated hedge accounting relationships 6,132 833
165,477 127,393
Financial liabilities
Other liabilities 3,032,074 3,166,546
3,032,074 3,166,546
22. RELATED PARTY TRANSACTIONS
A) PARENT COMPANY
Cogeco Cable Inc. is a subsidiary of COGECO Inc., which holds 32% of the Corporation's equity shares, representing 82.5% of the
Corporation's voting shares. On September 1, 1992, Cogeco Cable Inc. executed a Management Agreement with COGECO Inc. under
which the parent company agreed to provide certain executive, administrative, legal, regulatory, strategic and financial planning services
and additional services to the Corporation and its subsidiaries (the “Management Agreement”). These services are provided by COGECO
Inc.'s senior executives, including the President and Chief Executive Officer, the Senior Vice President and Chief Financial Officer, the Vice
President Corporate Affairs, Chief Legal Officer and Secretary, the Vice President, Regulatory Affairs and Copyright, the Vice President,
Corporate Development, the Vice President and Treasurer, the Vice President Public Affairs and Communications and the Vice President,
Internal Audit and Risk Management. No direct remuneration is payable to such senior executives by the Corporation. However, the
Corporation granted 84,250 stock options (71,233 in 2013) and 12,550 ISUs (12,280 in 2013) to these senior executives as senior executives
of Cogeco Cable during fiscal 2014. During fiscal 2014, the Corporation charged COGECO Inc. amounts of $293,000 ($386,000 in 2013)
and $681,000 ($452,000 in 2013) with regards to the Corporation's stock options and ISUs granted to these senior executives.
Under the Management Agreement, the Corporation pays monthly fees equal to 2% of its total revenue to COGECO Inc. for the above-
mentioned services subject to a maximum amount which was set to $9.7 million in fiscal 2014 ($9.6 million in 2013) and paid within the first
half of the fiscal year. The management fees are subject to annual upward adjustment based on increases in the Consumer Price Index in
Canada. This limit can be increased under certain circumstances upon request to that effect by COGECO Inc. In addition, the Corporation
reimburses COGECO Inc.'s out-of-pocket expenses incurred with respect to services provided to the Corporation under the Management
Agreement.