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28 COGECO CABLE INC. 2015 MD&A
6.2 OTHER SIGNIFICANT CHANGES
At August 31, 2015 2014 Change Explanations
(in thousands of dollars) $$ $
Non-current assets
Property, plant and equipment 1,985,421 1,830,971 154,450 Increase due to the acquisition of MetroCast Connecticut in the fourth quarter of fiscal
2015 combined with the appreciation of the US dollar and British Pound currency
against the Canadian dollar and higher capital expenditures, partly offset by the
depreciation expense.
Intangible assets 2,124,904 1,894,846 230,058 Increase due to the acquisition of MetroCast Connecticut in the fourth quarter of fiscal
2015 combined with the appreciation of the US dollar and British Pound currency
against the Canadian dollar, partly offset by the amortization expense exceeding
acquisitions of intangible assets.
Goodwill 1,504,379 1,220,529 283,850 Increase due to the acquisition of MetroCast Connecticut in the fourth quarter of fiscal
2015 combined with the US dollar and the British Pound currency appreciation against
the Canadian dollar.
Non-current liabilities
Long-term debt 2,982,395 2,686,191 296,204 Increase mainly due to the new Term A-2 Loan and the draw-down under the
Revolving Facility related to the acquisition of MetroCast Connecticut in the fourth
quarter of fiscal 2015 combined with the appreciation of the US dollar and British
Pound currency against the Canadian dollar, partly offset by the increase in the current
portion of long-term debt and repayments.
Deferred taxes liabilities 514,194 484,595 29,599 Refer to Note 10 in the consolidated financial statements.
7. CAPITAL RESOURCES AND LIQUIDITY
7.1 CAPITAL STRUCTURE
The table below summarizes debt-related financial ratios over the last two fiscal years and the fiscal 2016 guidelines:
Years ended August 31, 2016
Guidelines
(1) 2015 2014
Average cost of indebtedness(2) 4.0% 4.1% 4.3%
Fixed rate indebtedness(3) 63% 64% 78%
Average term: long-term debt (in years) 4.6 5.2 6.2
Net secured indebtedness(4)(5) / adjusted EBITDA(6) N/A (8) 2.1 2.1
Net indebtedness(5)(7) / adjusted EBITDA(6) N/A (8) 3.0 2.9
Adjusted EBITDA(6) / financial expense(6) N/A (8) 6.3 6.8
(1) Based on mid-range guidelines
(2) Excludes amortization of financing fees and commitments fees but includes impact of interest rate swaps.
(3) Taking into consideration the interest rate swaps in effect at the end of each fiscal year.
(4) Net secured indebtedness is defined as the aggregate 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.
(5) Excluding Atlantic Broadband and other non-significant unrestricted subsidiaries' cash and cash equivalents and non-recourse First Lien Credit Facilities.
(6) Calculation excludes Atlantic Broadband.
(7) Net indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments, less
cash and cash equivalents.
(8) Specific guidance on these ratios cannot be provided given that Atlantic Broadband's segmented financial guidance are not provided.
In fiscal 2016, assuming no further acquisitions are made, the financial leverage ratios relating to net indebtedness and net secured indebtedness
over adjusted EBITDA should decline due to the projected increase in adjusted EBITDA, combined with a reduction in Indebtedness from generated
free cash flow. The financial expense coverage ratio should increase as a result of the projected increase in adjusted EBITDA and the projected
decline in financial expense. The percentage of fixed rated indebtedness is expected to decline by August 31, 2016, as the US$190 million Senior
Secured Notes due on October 1, 2015 will have been repaid with expected excess cash and on October 14, 2015, Cogeco Cable entered into
interest rate swap agreements on a notional amount of US$150 million.