Page 57 - SIGA Annual Report 2013

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Saskatchewan Indian Gaming Authority Inc.
Notes to the Financial Statements
year ended March 31, 2013
57
19. CAPITAL DISCLOSURES (CONTINUED)
SIGA entered into a credit agreement with financial institutions in order to obtain financing for the casino projects. The agreement
identified five financial covenants which are reported on a quarterly basis to the financial institutions. SIGA monitors its capital structure
using these covenants. The financial covenants are as follows:
(a) The senior fund debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio shall be less than or equal
to 2.0:1.0 for each fiscal quarter;
(b) The interest coverage ratio shall not be less than 5.0:1.0;
(c) The total debt service coverage ratio shall not be less than 2.0:1.0;
(d) The fixed charge coverage ratio shall not be less than 1.0:1.0; and
(e) The earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) coverage ratio shall not be less than 2.0:1.0.
Ratios at year-end were 0.64, 9.77, 5.97, 1.0, and 4.87 respectively. In all instances during the year ended March 31, 2013
(and March 31, 2012), SIGA was in compliance with the above covenants.
20. FINANCIAL RISK MANAGEMENT
SIGA, through its financial assets and liabilities, has exposure to a number of risks from its use of financial instruments. The following
analysis provides a measurement of these risks as at March 31, 2013:
RISK MANAGEMENT
The Board has overall responsibility for the establishment and oversight of SIGA’s risk management framework and is responsible for
developing and monitoring SIGA’s risk management policies.
SIGA’s risk management policies are established to identify and analyze the risks faced by SIGA, to set appropriate risk limits and controls,
and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and SIGA’s activities.
SIGA’s Board oversees how management monitors compliance with SIGA’s risk management policies and procedures, and reviews the
adequacy of the risk management framework in relation to the risks faced by SIGA. The Board is assisted in its oversight role by Internal
Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are
reported to the Board.
CREDIT RISK
SIGA’s principal financial assets are cash and cash equivalents, short-term investments, and accounts receivable, which are subject to
credit risk. The carrying amounts of financial assets on the statement of financial position represent SIGA’s maximum credit exposure at
the statement of financial position date.
SIGA does not extend credit to its gaming customers. Credit risk is limited to its accounts receivable balance which consists primarily
of credit extended to business entities for business functions held at the various casino locations. The credit risk on cash and cash
equivalents and short-term investments is limited because the counterparties are chartered banks with high credit-ratings assigned
by national credit-rating agencies. Credit risk is not considered significant.