Page 57 - SIGA Annual Report 2014

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NOTES TO
THE FINANCIAL
STATEMENTS
YEAR ENDED
MARCH 31, 2014
57
18. EMPLOYEE BENEFITS
Effective April 1, 1997, SIGA established a pension plan for employees. The plan is a defined contribution plan administered by Great
West Life. Substantially all of SIGA’s full-time employees participate in the plan. SIGA’s financial obligation is limited to matching the
required amounts contributed by employees, 6% of salary, which totalled $3,636,960 in fiscal 2014 (2013 – $3,622,657).
19. CAPITAL DISCLOSURES
SIGA’s objectives when managing capital are to ensure adequate capital to support the operations and growth strategies of
the Corporation.
SIGA funds its capital requirements through the $5,000,000 capital reserve from SLGA, internal operating activities and debt. SIGA
also has an available line of credit of $2,000,000 at a financial institution (Note 11).
SIGA limits the amount of risk in proportion to its capital. The initial financing option of the Dakota Dunes, Living Sky, and Painted
Hand casino projects (“casino projects”) was limited to variable rate loans. SIGA entered into four interest rate swap agreements
to exchange the variable rate debt instruments to fixed rate loans to mitigate fluctuations in interest rates. SIGA also performs
environmental scanning to determine if any factors have the potential to change the capital structure of the organization. Risk
management reports are presented to the Audit and Finance Committee and Board on a quarterly basis.
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, 9.72, 5.65, 1.2, and 4.45 respectively. In all instances during the year ended March 31, 2014
(and March 31, 2013), 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, 2014:
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.