Cogeco 2015 Annual Report Download - page 97

96 COGECO CABLE INC. 2015 Consolidated financial statements
The following table summarizes the contractual maturities of the financial liabilities and related capital amounts at August 31, 2015:
Contractual cash flows
(In thousands of Canadian dollars)
Carrying
amount
$2016
$2017 $2018 $2019 $2020 $Thereafter $Total $
Trade and other payables(1) 253,204 253,204 — — — — — 253,204
Long-term debt 3,280,024 297,659 46,878 381,134 76,135 1,295,087 1,213,123 3,310,016
Derivative financial instruments (49,834) (48,108) — — — — — (48,108)
3,483,394 502,755 46,878 381,134 76,135 1,295,087 1,213,123 3,515,112
(1) Excluding accrued interest on long-term debt.
The following table is a summary of interest payable on long-term debt that is due for each of the next five years and thereafter, based on
the principal amount and interest rate prevailing on the outstanding debt at August 31, 2015 and their respective maturities:
2016 2017 2018 2019 2020 Thereafter Total
(In thousands of Canadian dollars) $ $ $ $ $ $ $
Interest payments on long-term debt 128,094 118,270 113,342 103,491 85,673 179,479 728,349
Interest receipts on derivative financial
instruments (8,749) — — — — — (8,749)
Interest payments on derivative financial
instruments 7,307 — — — — — 7,307
126,652 118,270 113,342 103,491 85,673 179,479 726,907
Interest rate risk
The Corporation is exposed to interest rate risks for both fixed and floating interest rate instruments. Interest rates fluctuations will have an
effect on the valuation and collection or repayment of these instruments. At August 31, 2015, all of the Corporation’s long-term debt was at
fixed rate, except for the Corporation’s Term Revolving Facility and First Lien Credit Facilities. The sensitivity of the Corporation’s annual
financial expense to a variation of 1% in the interest rate applicable to these facilities is approximately $9.0 million based on the outstanding
debt at August 31, 2015.
Foreign exchange risk
The Corporation is exposed to foreign exchange risk related to its long-term debt denominated in US dollars that is not designated as a
hedge on its US dollar net investments. In order to mitigate this risk, the Corporation has established guidelines whereby cross-currency
swap agreements can be used to fix the exchange rates applicable to its US dollar denominated long-term debt. All such agreements are
exclusively used for hedging purposes. Accordingly, on October 2, 2008, the Corporation entered into cross-currency swap agreements to
set the liability for interest and principal payments on its Senior Secured Notes Series A.
The following table shows the cross-currency swaps outstanding at August 31, 2015:
Type of hedge Notional amount Receive interest rate Pay interest rate Maturity Exchange rate Hedged item
Cash flow US$190 million 7.00% USD 7.24% CAD October 1, 2015 1.0625 US$190 million Senior
Secured Notes Series A
The Corporation is also exposed to foreign exchange risk with respect to the interest associated with its long-term debt denominated in US
dollars and British Pounds. The impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian dollars would
change financial expense by approximately $7.7 million based on the outstanding debt at August 31, 2015.
The Corporation is facing exposure to foreign exchange risk on cash and cash equivalents, trade and other receivables and trade and other
payables and provisions denominated in US dollars, Euros or British Pounds. The Corporation’s exposure to foreign currency risk is as
follows:
At August 31, 2015 2014
US Euro British Pounds US Euro British Pounds
(In thousands of Canadian dollars) $ $ $ $ $ $
Financial assets (liabilities)
Cash and cash equivalents 28,172 887 295 4,939 681 185
Trade and other receivables 4,405 198 — 534 — —
Trade and other payables and provisions (25,984) (7,074) — (18,109) (7,144) —
6,593 (5,989) 295 (12,636) (6,463) 185