Today, COGECO Inc. (TSX:CGO) ("COGECO" or the "Corporation") announced its
financial results for the second quarter of fiscal 2013, ended February 28,
2013, in accordance with International Financial Reporting Standards ("IFRS").
For the second quarter and first six months of fiscal 2013, which include three
month operating results of Atlantic Broadband ("ABB") and one month for Peer 1
Network Enterprises, Inc. ("PEER 1"):
-- Revenue increased by 32.7% to reach $458.5 million, and by 19.3% to
reach $825.1 million;
-- Operating income before depreciation and amortization increased by 35.6%
to $196.0 million when compared to the second quarter of fiscal 2012,
and by 23.8% to $352.5 million when compared to the first half of the
prior year;
-- Profit for the period from continuing operations amounted to $56.5
million in the second quarter when compared to $29.4 million for the
same period of the previous fiscal year. Profit progression for the
quarter is mostly attributable to the operating income before
depreciation and amortization increase coming primarily from the
acquisitions, in the Cable segment, of ABB and PEER 1, partly offset by
the acquisition costs and the financial expense increases both related
to ABB and PEER 1. For the first half of fiscal 2013, profit for the
period from continuing operations amounted to $103.6 million when
compared to $74.0 million for the first half of fiscal 2012. The
increase for the six-month period ended February 28, 2013 is mostly
attributable to the increase in operating income before depreciation and
amortization coming primarily from the acquisition of ABB, partly offset
by the acquisition costs and the financial expense increases both
related to ABB and PEER 1 and income tax expense increase;
-- Profit for the period amounted to $56.5 million in the second quarter
when compared to $81.5 million for the same period of the previous
fiscal year. For the first half of fiscal 2013, profit for the period
amounted to $103.6 million when compared to $129.4 million for the
comparable period of prior year. The decline for both periods is mostly
attributable to the last year's profit from the Portuguese subsidiary,
Cabovisao - Televisao por Cabo, S.A. ("Cabovisao"), reported as
discontinued operations and disposed of on February 29, 2012, partly
offset by the increases of operating income before depreciation and
amortization, financial expense and acquisition costs all related to ABB
and PEER 1 and the income tax expense increase;
-- Free cash flow(1) reached $34.4 million for the second quarter compared
to $18.0 million in the comparable quarter of the prior year. For the
six months, free cash flow amounted to $53.0 million, compared to $44.3
million in the first half of fiscal 2012. The increases in free cash
flow over the prior year are due to the improvement of operating income
before depreciation and amortization, partly offset by the increase in
financial expense, the acquisition costs related to ABB and PEER 1
acquisitions as well as the increase in acquisition of property, plant
and equipment;
(1) The indicated terms do not have standard definitions prescribed by IFRS
and therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the "Non-IFRS
financial measures" section of the Management's discussion and
analysis.
-- A quarterly dividend of $0.19 per share was paid to the holders of
subordinate and multiple voting shares, an increase of $0.01 per share,
or 5.6%, when compared to a dividend of $0.18 per share paid in the
second quarter of fiscal 2012. Dividend payments in the first six months
totaled $0.38 per share in fiscal 2013, compared to $0.36 per share in
fiscal 2012;
-- In the Cable segment, fiscal 2013 second-quarter primary service units
("PSU")(1) grew by 7,463 and by 22,543 in the first six months of
fiscal 2013. At February 28, 2013, consolidated PSU amounted to
2,486,350 of which 1,984,555 comes from the Canadian cable services
segment and 501,795 from the American cable services segment;
-- On January 31, 2013, Cogeco Cable completed the acquisition of 96.57% of
the issued and outstanding shares of PEER 1 by way of takeover bid (the
"offer") valued at approximately $649 million. On April 3, 2013, Cogeco
Cable completed the acquisition of the remaining 3.43% of the issued and
outstanding shares of PEER 1 for a cash consideration of $17 million
pursuant to the compulsory acquisition provisions in Section 300 of the
Business Corporations Act ("British Columbia"). In connection with the
completion of the offer, Cogeco Cable has entered into secured credit
facilities in the amount of approximately $650 million and maturing in
2017, with a syndicate of lenders. PEER 1 is one of the world's leading
internet infrastructure providers, specializing in managed hosting,
dedicated servers, cloud services and co-location. This acquisition
enhances Cogeco Cable footprint and builds on its strategic initiatives
by increasing scale in an attractive industry segment with significant
growth prospects in the state of the art data center platforms. The
Corporation will also serve additional businesses worldwide, in addition
to approximately 11,000 customers currently served, through 23 data
centres and 21 points-of-presence across North America and Europe. PEER
1's primary network centre and head office remain located in Vancouver.
"We are satisfied with the favourable results obtained for the second quarter of
fiscal 2013," declared Louis Audet, President and Chief Executive Officer of
Cogeco Inc. "The cable subsidiary continues along a path of steady growth, both
organic and through acquisition. Results for ABB's first quarter as a part of
Cogeco Cable had been in line with expectations. I am confident in this
subsidiary's ongoing ability to perform and contribute favourably to Cogeco's
objectives," continued Louis Audet.
"Regarding Cogeco Diffusion Inc., we are pleased with our radio business ratings
confirming its leadership in the Montreal market and good performance in most of
our other markets across the province of Quebec. Furthermore, our transit
advertising business, Cogeco Metromedia, is delivering results according to
plan," concluded Louis Audet.
(1) Represents the sum of Television, High Speed Internet ("HSI") and
Telephony service customers.
SHAREHOLDERS' REPORT
Three and six-month periods ended February 28, 2013
FINANCIAL HIGHLIGHTS
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Quarters ended Six months ended
(in thousands of
dollars, except February February February February
PSU growth, 28, 29, 28, 29,
percentages and 2013 2012 Change 2013 2012 Change
per share data) $ $ % $ $ %
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Operations
Revenue 458,501 345,613 32.7 825,109 691,636 19.3
Operating income
before
depreciation
and
amortization(1) 195,968 144,518 35.6 352,548 284,779 23.8
Operating income 102,464 58,931 73.9 185,741 133,573 39.1
Profit for the
period from
continuing
operations 56,517 29,449 91.9 103,612 73,973 40.1
Profit for the
period from
discontinued
operations - 52,047 - - 55,446 -
Profit for the
period 56,517 81,496 (30.7) 103,612 129,419 (19.9)
Profit for the
period
attributable to
owners of the
Corporation 16,899 25,089 (32.6) 35,386 43,859 (19.3)
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Cash Flow
Cash flow from
operating
activities 157,095 126,455 24.2 151,090 136,025 11.1
Cash flow from
operations(1) 140,413 105,153 33.5 242,203 209,892 15.4
Acquisitions of
property, plant
and equipment,
intangible and
other assets 106,019 87,186 21.6 189,174 165,590 14.2
Free cash
flow(1) 34,394 17,967 91.4 53,029 44,302 19.7
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Financial
Condition(2)
Property, plant
and equipment - - - 1,752,195 1,343,904 30.4
Total assets - - - 5,406,525 3,103,919 74.2
Indebtedness(3) - - - 3,137,780 1,180,971 -
Equity
attributable to
owners of the
Corporation - - - 430,130 397,799 8.1
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Primary service
units ("PSU")
growth(4) 7,463 12,280 (39.2) 22,543 58,459 (61.4)
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Per Share
Data(5)
Earnings per
share
attributable to
owners of the
Corporation
From
continuing
and
discontinued
operations
Basic 1.01 1.50 (32.7) 2.12 2.62 (19.1)
Diluted 1.00 1.49 (32.9) 2.10 2.61 (19.5)
From
continuing
operations
Basic 1.01 0.50 - 2.12 1.56 35.9
Diluted 1.00 0.50 - 2.10 1.55 35.5
From
discontinued
operations
Basic - 1.00 - - 1.07 -
Diluted - 0.99 - - 1.06 -
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(1) The indicated terms do not have standardized definitions prescribed by
International Financial Reporting Standards ("IFRS") and therefore, may
not be comparable to similar measures presented by other companies. For
more details, please consult the "Non-IFRS financial measures" section
of the Management's discussion and analysis ("MD&A").
(2) At February 28, 2013 and August 31, 2012.
(3) Indebtedness is defined as the total of bank indebtedness, principal on
long-term debt, balance due on business combinations and obligations
under derivative financial instruments.
(4) Represents the sum of Television, High Speed Internet ("HSI") and
Telephony service customers.
(5) Per multiple and subordinate voting share.
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
Three and six-month periods ended February 28, 2013
FORWARD-LOOKING STATEMENTS
Certain statements in this Management's Discussion and Analysis ("MD&A") may
constitute forward-looking information within the meaning of securities laws.
Forward-looking information may relate to COGECO's future outlook and
anticipated events, business, operations, financial performance, financial
condition or results and, in some cases, can be identified by terminology such
as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend";
"estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other
similar expressions concerning matters that are not historical facts. In
particular, statements regarding the Corporation's future operating results and
economic performance and its objectives and strategies are forward-looking
statements. These statements are based on certain factors and assumptions
including expected growth, results of operations, performance and business
prospects and opportunities, which COGECO believes are reasonable as of the
current date. While management considers these assumptions to be reasonable
based on information currently available to the Corporation, they may prove to
be incorrect. The Corporation cautions the reader that the economic downturn
experienced over the past few years makes forward- looking information and the
underlying assumptions subject to greater uncertainty and that, consequently,
they may not materialize, or the results may significantly differ from the
Corporation's expectations. It is impossible for COGECO to predict with
certainty the impact that the current economic uncertainties may have on future
results. Forward-looking information is also subject to certain factors,
including risks and uncertainties described in the "Uncertainties and main risk
factors" section of the Corporation's 2012 annual MD&A as well as in the present
MD&A) that could cause actual results to differ materially from what COGECO
currently expects. These factors include risks pertaining to markets and
competition, technology, regulatory developments, operating costs, information
systems, disasters or other contingencies, financial risks related to capital
requirements, human resources, controlling shareholder and holding structure,
many of which are beyond the Corporation's control. Therefore, future events and
results may vary significantly from what management currently foresees. The
reader should not place undue importance on forward-looking information and
should not rely upon this information as of any other date. While management may
elect to, the Corporation is under no obligation and does not undertake to
update or alter this information at any particular time, except as may required
by law.
All amounts are stated in Canadian dollars unless otherwise indicated. This
report should be read in conjunction with the Corporation's condensed interim
consolidated financial statements and the notes thereto, prepared in accordance
with the International Financial Reporting Standards ("IFRS") and the MD&A
included in the Corporation's 2012 Annual Report.
CORPORATE OBJECTIVES AND STRATEGIES
COGECO's objectives are to provide outstanding service to its customers and
maximize shareholder value by increasing profitability and ensuring continued
revenue growth. The strategies employed to reach these objectives, supported by
tight controls over costs and business processes, are specific to each segment.
The main strategies used to reach COGECO's objectives in the Cable segment focus
on sustained corporate growth and continuous improvement of networks and
equipment. The radio activities focus on continuous improvement of its
programming in order to increase its market share and thereby its profitability.
The Corporation measures its performance, with regard to these objectives by
monitoring operating income before depreciation and amortization(1), PSU(2)
growth and free cash flow(1).
KEY PERFORMANCE INDICATORS
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
For the six-month period ended February 28, 2013, operating income before
depreciation and amortization increased by 23.8% when compared to the same
period of fiscal 2012 to reach $352.5 million. As a result of the acquisition of
Peer 1 Network Enterprises, Inc. ("PEER 1") in the Cable segment, management
revised its January 14, 2013 projections for fiscal 2013. Operating income
before depreciation and amortization is now expected to reach $782 million from
$750 million. For further details, please consult the fiscal 2013 revised
projections in the "Fiscal 2013 financial guidelines" section.
FREE CASH FLOW
For the six-month period ended February 28, 2013, COGECO reports free cash flow
of $53 million, compared to $44.3 million for the first six months of the
previous fiscal year, representing an increase of $8.7 million. This variance is
mostly attributable to the improvement of operating income before depreciation
and amortization, partly offset by the increase in financial expense, the
acquisition costs related to Atlantic Broadband ("ABB") and PEER 1 acquisitions
as well as the increase in acquisition of property, plant and equipment. Giving
effect to the acquisition of PEER 1, management also revised its free cash flow
projections from $175 million to $150 million as a result of acquisitions of
property, plant and equipment, intangible and other assets exceeding cash flow
generated by PEER 1, additional integration, restructuring and acquisition costs
of $9 million as well as additional financial expense of $17 million both
related to this acquisition. For further details, please consult the fiscal 2013
revised projections in the "Fiscal 2013 financial guidelines" section.
CABLE SEGMENT
PSU growth and penetration of service offerings
During the six-month period ended February 28, 2013, PSU reach 2,486,350 of
which 1,984,555 comes from the Canadian cable services segment and 501,795 from
the American cable services segment. In the American cable services segment, PSU
increased by 7,121 in the quarter, stemming primarily from the Television and
HSI services. In the Canadian cable services segment, PSU increased at a lower
pace to 342 when compared to 12,280 PSU for the comparable period of the prior
year, mainly as a result of service category maturity and more competitive
environment in the Television services. Cogeco Cable maintains targeted
marketing initiatives to increase the penetration level of its services.
BUSINESS DEVELOPMENTS AND OTHER
BBM Canada's winter 2013 survey in the Montreal region, conducted with the
Portable People Meter ("PPM"), reported that 98.5 FM is the leading radio
station in the Montreal French market amongst all listeners and men two years
old and over ("2+"), while Rythme FM has maintained its leadership position in
the female 2+ segment among the musical stations. Regarding the Montreal English
market, The Beat is the leading radio station in the female 35-64 segment. In
the other Quebec regions, our radio stations registered good ratings.
On January 31, 2013, Cogeco Cable completed the acquisition of 96.57% of the
issued and outstanding shares of PEER 1 by way of takeover bid (the "offer")
valued at approximately $649 million. On April 3, 2013, Cogeco Cable completed
the acquisition of the remaining 3.43% of the issued and outstanding shares of
PEER 1 for a cash consideration of $17 million pursuant to the compulsory
acquisition provisions in Section 300 of the Business Corporations Act ("British
Columbia"). In connection with the completion of the offer, Cogeco Cable has
entered into secured credit facilities in the amount of approximately $650
million and maturing in 2017, with a syndicate of lenders. PEER 1 is one of the
world's leading internet infrastructure providers, specializing in managed
hosting, dedicated servers, cloud services and co-location. This acquisition
enhances Cogeco Cable footprint and builds on its strategic initiatives by
increasing scale in an attractive industry segment with significant growth
prospects in the state of the art data center platforms. The Corporation will
also serve additional businesses worldwide, in addition to approximately 11,000
customers currently served, through 23 data centres and 21 points-of-presence
across North America and Europe. PEER 1's primary network centre and head office
remain located in Vancouver.
On November 30, 2012, Cogeco Cable completed the acquisition of ABB, an
independent cable system operator formed in 2003, serving about 495,000 PSU's
and providing Analogue and Digital Television, as well as HSI and Telephony
services. The acquisition is an attractive entry point into the United States of
America ("US") market, providing a significant increase in PSU base with further
growth potential, a high quality network infrastructure and the ability for the
Corporation's management to leverage its core knowledge and operational
experience. The transaction, valued at US$1.36 billion, was financed through a
combination of cash on hand, a draw-down on the existing Term Revolving Facility
of approximately US$588 million and US$660 million of borrowings under a new
committed non-recourse debt financing at ABB. Ranked the 12th- largest cable
television system operator in the US, ABB operates cable systems in Western
Pennsylvania, Southern Florida, Maryland, Delaware and South Carolina.
(1) The indicated terms do not have standardized definitions prescribed by
IFRS and therefore, may not be comparable to similar measures presented
by other companies. For more details, please consult the "Non-IFRS
financial measures" section.
(2) Represents the sum of Television, High Speed Internet ("HSI") and
Telephony service customers.
OPERATING AND FINANCIAL RESULTS
OPERATING RESULTS
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Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 Change 2013 2012 Change
(in thousands of
dollars, except
percentages) $ $ % $ $ %
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Revenue 458,501 345,613 32.7 825,109 691,636 19.3
Operating
expenses 262,533 201,095 30.6 472,561 406,857 16.1
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Operating income
before
depreciation
and
amortization 195,968 144,518 35.6 352,548 284,779 23.8
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REVENUE
Fiscal 2013 second-quarter revenue increased by $112.9 million or 32.7%, to
reach $458.5 million, when compared to the same period last year. For the first
six months, revenue amounted to $825.1 million, an increase of $133.5 million,
or 19.3% when compared to the first six months of fiscal 2012. Revenue increased
for both periods mainly attributable to the operating results of the Cable
segment and the revenue generated by Metromedia CMR Plus Inc. ("Metromedia"),
acquired during the second quarter of fiscal 2012.
In the Cable segment, fiscal 2013 second-quarter revenue increased by $111.9
million, or 35.2%, to reach $429.7 million, when compared to the same period
last year. For the first six months, revenue amounted to $757.6 million, an
increase of $124.4 million, or 19.7% when compared to the same period of fiscal
2012. For further details on the Cable segment's revenue, please refer to the
"Cable segment" section.
OPERATING EXPENSES
For the second quarter of fiscal 2013, operating expenses increased by $61.4
million, to reach $262.5 million, an increase of 30.6% compared to the prior
year. For the first half of the fiscal year, operating expenses amounted to
$472.6 million, an increase of $65.7 million, or 16.1%, when compared to the
same period of fiscal 2012. The increase in operating expenses is mainly
attributable to the Cable segment operating results.
Operating expenses in the Cable segment for the second quarter, increased by
$59.3 million, to reach $230.9 million, an increase of 34.5% compared to the
prior year. For the first half of the fiscal year, operating expenses amounted
to $405.1 million, an increase of $57 million, or 16.4%, when compared to the
same period of fiscal 2012. For further details on the Cable segment's revenue,
please refer to the "Cable segment" section.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
Mainly as a result of higher growth from revenue than operating expenses
stemming primarily from the Cable segment, operating income before depreciation
and amortization grew by $51.5 million, or 35.6%, to reach $196.0 million in the
second quarter and by $67.8 million, or 23.8% to reach $352.5 million for the
first six months of fiscal 2013, when compared to the same periods of the
previous year. For further details on Cogeco Cable's operating results, please
refer to the "Cable segment" section.
FIXED CHARGES
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Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 Change 2013 2012 Change
(in thousands of
dollars, except
percentages) $ $ % $ $ %
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Depreciation and
amortization 86,014 85,479 0.6 152,055 151,098 0.6
Financial
expense 30,531 16,110 89.5 47,545 33,888 40.3
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For the three and six-month periods ended February 28, 2013, depreciation and
amortization expense was essentially the same at $86.0 million and $152.1
million, respectively, compared to $85.5 million and $151.1 million for the same
periods of the prior year, respectively, resulting mainly from Cogeco Cable's
recent acquisitions of ABB and PEER 1 ("recent acquisitions") and from
additional acquisition of property, plant and equipment offset by higher fiscal
2012 depreciation expense related to the reduction of useful lives for certain
home terminal devices.
Fiscal 2013 second-quarter financial expense increased by $14.4 million, or
89.5%, at $30.5 million when compared to $16.1 million in fiscal 2012
second-quarter. For the first six months of fiscal 2013, financial expense
increased by $13.7 million, or 40.3%, at $47.5 million, compared to $33.9
million in the prior year. Financial expense increased in both periods as a
result of the cost of financing related to the recent acquisitions.
INCOME TAXES
For the three and six-month periods ended February 28, 2013, income tax expense
amounted to $15.4 million and $34.6 million, respectively, compared to $13.4
million and $25.7 million, respectively, for the comparable periods in the prior
year. These increases are mostly attributable to the improvement in operating
income before depreciation and amortization and by income taxes reductions, in
fiscal 2012, from the implementation of certain tax measures of the 2011 federal
budget limiting the tax deferrals for corporations with a significant interest
in a partnership, partly offset by the increase in financial expense and by the
efficient tax structure resulting from the recent acquisitions in the Cable
segment.
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS
For the three-month period ended February 28, 2013, profit for the period from
continuing operations amounted to $56.5 million of which $16.9 million, or $1.01
per share is attributable to owners of the Corporation, compared to a profit for
the period from continuing operations of $29.4 million of which $8.4 million or
$0.50 per share is attributable to owners of the Corporation for the comparable
period. For the six-month period ended February 28, 2013, profit for the period
from continuing operations amounted to $103.6 million of which $35.4 million, or
$2.12 per share is attributable to owners of the Corporation, compared to a
profit for the period from continuing operations of $74.0 million of which $26.0
million, or $1.56 per share is attributable to owners of the corporation for the
comparable period. Profit for the period from continuing operations progression
for the quarter and the first half of fiscal 2013 is mostly attributable to the
increase in operating income before depreciation and amortization, partly offset
by the acquisition costs related to the recent acquisitions and the financial
expense and income tax expenses increases explained above.
PROFIT FOR THE PERIOD
For the three and six-month periods ended February 28, 2013, profit for the
period amounted to $56.5 million and $103.6 million, respectively, compared to
$81.5 million and $129.4 million for the comparable periods. Fiscal 2013
second-quarter profit for the period attributable to owners of the Corporation
amounted to $16.9 million, or $1.01 per share, compared to $25.1 million, or
$1.50 per share, in the second quarter of fiscal 2012. For the six-month period
ended February 28, 2013, profit for the period attributable to owners of the
Corporation amounted to $35.4 million, or $2.12 per share, compared to $43.9
million, or $2.62 per share for the comparable period of fiscal 2012.The decline
for both periods is mostly attributable to last year's profit from the
Portuguese subsidiary, Cabovisao - Televisao por Cabo, S.A. ("Cabovisao"),
reported as discontinued operations and disposed of on February 29, 2012, partly
offset by the increases of operating income before depreciation and
amortization, financial expense and acquisition costs all related to the recent
acquisitions.
The non-controlling interest represents a participation of approximately 67.9%
in Cogeco Cable's results. For the three and six-month periods ended February
28, 2013, profit for the period attributable to non-controlling interest
amounted to $39.6 million and $68.2 million, respectively, when compared to
$56.4 million and $85.6 million for the comparable periods of fiscal 2012.
CASH FLOW ANALYSIS
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Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 2013 2012
(in thousands of dollars) $ $ $ $
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Operating activities
Cash flow from operations 140,413 105,153 242,203 209,892
Changes in non-cash
operating activities 12,757 9,905 (74,751) (64,781)
Amortization of deferred
transaction costs and
discounts on long-term debt (2,861) (914) (3,717) (1,676)
Income taxes paid (18,211) (19,093) (62,459) (57,077)
Current income tax expense 22,552 25,971 48,664 47,290
Financial expense paid (28,086) (10,677) (46,395) (31,511)
Financial expense 30,531 16,110 47,545 33,888
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157,095 126,455 151,090 136,025
Investing activities (735,466) (118,470) (2,172,678) (196,669)
Financing activities 610,653 64,401 1,847,625 95,389
Effect of exchange rate
changes on cash and cash
equivalents denominated in
aforeign currencies 705 - 705 -
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Net change in cash and cash
equivalents from continuing
operations 32,987 72,386 (173,258) 34,745
Net change in cash and cash
equivalents from
discontinued operations (1) - 47,237 - 49,597
Cash and cash equivalents
from continuing and
discontinued operations,
beginning of year 9,278 19,935 215,523 55,216
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Cash and cash equivalents
from continuing and
discontinued operations,
end of year 42,265 139,558 42,265 139,558
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(1) For further details on the Corporation's cash flows attributable to
discontinued operations, please refer to the "Disposal of subsidiary
and discontinued operations" on note 14 of the condensed interim
consolidated financial statements.
OPERATING ACTIVITIES
Fiscal 2013 second-quarter cash flow from operations reached $140.4 million
compared to $105.2 million, an increase of $35.3 million or 33.5%, compared to
the same period of prior year. For the first six months, cash flow from
operations reached $242.2 million compared to $209.9 million for the same period
last year, an increase of $32.3 million, or 15.4%. Increases for both periods
are primarily due to the improvement of operating income before depreciation and
amortization, partly offset by financial expense increase and by the acquisition
costs related to ABB and PEER 1 acquisitions. For the second quarter, changes in
non-cash operating activities generated cash inflows of $12.8 million compared
to $9.9 million in the second quarter of fiscal 2012, mainly as a result of an
increase in trade and other payables compared to a decrease in the prior year,
partly offset by an increase in trade and other receivables in the prior year.
For the first six months, changes in non-cash operating activities generated
cash outflows of $74.8 million compared to $64.8 million for the same period in
fiscal 2012, mainly as a result of a higher decrease in trade and other payables
and by a decrease in provisions compared to an increase in the prior year,
partly offset by an increase in deferred and prepaid revenue and other
liabilities compared to a decrease in prior year.
INVESTING ACTIVITIES
BUSINESS COMBINATIONS IN FISCAL 2013
On January 31, 2013, the Corporation's subsidiary, Cogeco Cable, completed the
acquisition of PEER 1 and on November 30, 2012, the acquisition of ABB. These
acquisitions were accounted for using the purchase method. In addition,
Metromedia also completed the acquisition of a non- controlling interest
participation of 27.5% in one of its subsidiaries for a cash consideration of
approximately $0.5 million.
The preliminary purchase price allocation of these acquisitions, pending the
completion of the valuation of the net assets acquired as well as Metromedia's
non-controlling interest acquisition are as follows:
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Metromedia PEER 1 ABB TOTAL
$ $ $ $
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Consideration
Paid
Purchase of shares 462 477,834 337,779 816,075
Repayment of secured debts
and settlement of options
outstanding - 170,872 1,021,854 1,192,726
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462 648,706 1,359,633 2,008,801
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Net assets acquired
Cash and cash equivalents - 10,840 5,480 16,320
Restricted cash - 8,729 - 8,729
Trade and other receivables - 12,772 9,569 22,341
Prepaid expenses and other - 3,855 1,370 5,225
Income tax receivable - 672 - 672
Other assets - 3,328 - 3,328
Property, plant and
equipment - 150,206 205,353 355,559
Intangible assets - 139,703 763,084 902,787
Goodwill - 421,986 602,690 1,024,676
Deferred tax assets - 8,355 33,835 42,190
Trade and other payables
assumed - (26,330) (27,620) (53,950)
Provisions - - (721) (721)
Income tax liabilities
assumed - (4,716) - (4,716)
Deferred and prepaid revenue
and other liabilities
assumed - (3,315) (5,254) (8,569)
Long-term debt assumed - (1,735) - (1,735)
Deferred tax liabilities - (58,682) (228,153) (286,835)
Non-controlling interest 462 (16,962) - (16,500)
----------------------------------------------------------------------------
462 648,706 1,359,633 2,008,801
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FISCAL 2013 ADJUSTEMENT RELATED TO FISCAL 2012 BUSINESS COMBINATION
During the second quarter, the Corporation completed the purchase price
allocation of Metromedia which was acquired on December 26, 2011. The final
purchase price allocation of Metromedia is as follows:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Preliminary Final
$ $
----------------------------------------------------------------------------
Consideration
Paid
Purchase of shares 36,860 36,860
Repayment of secured debt 2,140 2,140
----------------------------------------------------------------------------
39,000 39,000
Balance due on a business combination, bank
prime rate plus 1% and payable in June 2013 2,000 2,000
----------------------------------------------------------------------------
41,000 41,000
----------------------------------------------------------------------------
Net assets acquired
Cash and cash equivalents 3,265 3,265
Trade and other receivables 7,242 7,364
Prepaid expenses and other 57 57
Income tax receivable 234 132
Property, plant and equipment 4,764 4,645
Intangible assets 14,747 14,747
Goodwill 20,171 20,540
Trade and other payables assumed (4,615) (4,786)
Income tax liabilities (142) -
Deferred and prepaid revenue and other
liabilities assumed (374) (615)
Deferred tax liabilities (3,887) (3,887)
Non-controlling interest (462) (462)
----------------------------------------------------------------------------
41,000 41,000
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ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS
For the three and six-month periods ended February 28, 2013, acquisition of
property, plant an equipment amounted to $101.5 million and $180.0 million,
respectively, compared to $84.5 million and $159.0 million for the comparable
periods of fiscal 2012 mainly as a results of the following factors in the Cable
segment:
-- A decrease in the quarter and an increase for the six-month period ended
February 28, 2013 in scalable infrastructure and network upgrade and
rebuild to extend and improve network capacity and to deploy advanced
technologies such as DOCSIS 3.0 and Switched Digital Video in existing
areas served;
-- A decrease in customer premise equipment, mainly due to the achievement
in fiscal 2012 of the first phase in the conversion of Television
service customers from analogue to digital and the lower PSU growth as a
result of services category maturity in the Canadian operations; and
-- An increase in data centre facilities capital expenditures in the
Montreal and Toronto areas in Canada and Portsmouth in England for
PEER 1 as well as expansion of the fibre in the Toronto area in order to
fulfill orders from new customers.
Acquisition of intangible and other assets are mainly attributable to reconnect
and additional service activation costs as well as other customer acquisition
costs. For the second quarter and the first six months of fiscal 2013, the
acquisition of intangible and other assets amounted to $4.5 million and $9.1
million, compared to $2.6 million and $6.6 million for the same periods last
year, respectively.
FREE CASH FLOW AND FINANCING ACTIVITIES
In the second quarter of fiscal 2013, free cash flow amounted to $34.4 million,
$16.4 million higher than in the comparable period of fiscal 2012. For the
six-month period, free cash flow amounted to $53.0 million, $8.7 million, or
19.7%, higher than the same period of last year. Free cash flow increase for
both periods over the prior year are due to the improvement of operating income
before depreciation and amortization, partly offset by the increase in financial
expense and acquisition costs both related to ABB and PEER 1 acquisitions, in
the Cable segment, as well as the increase in acquisition of property, plant and
equipment.
In the second quarter of fiscal 2013, higher Indebtedness level provided for a
cash increase of $636.1 million mainly due to drawings of $640.3 million (net of
transaction costs of $2.8 million) under new credit facilities amounting
approximately to $650 million incurred to finance the acquisition of PEER 1 in
the Cable segment. In the second quarter of fiscal 2012, higher Indebtedness
level provided a cash increase of $80.8 million mainly due mainly due to the
issuance, on February 14, 2012, of $200 million Senior Secured Debentures Series
3 ("Fiscal 2012 debentures") for net proceed of $198.1 million which was used to
repay the $84.9 million Term Revolving Facility and $31.7 million of bank
indebtedness.
For the six-month period of fiscal 2013, higher Indebtedness level provided for
a cash increase of $1.9 billion, mainly due to the draw-down on the existing
Term Revolving Facility of $584.2 million (US$588 million) and the new Term Loan
Facilities of $637.4 million (US$660 million for a net proceed of US$641.5
million, net of transaction costs of US$18.5 million) to finance the acquisition
of ABB as well as to drawings of $640.3 million (net of transaction costs of
$2.8 million) under new credit facilities amounting approximately to $650
million incurred to finance the acquisition of PEER 1. In the first six months
of fiscal 2012, Indebtedness affecting cash increased by $127.8 million mainly
due to the issuance of Fiscal 2012 debentures previously described, which was
used to repay the $103.7 million Term Revolving Facility.
During the second quarter of fiscal 2013, quarterly dividends of $0.19 per share
were paid to the holders of subordinate and multiple voting shares, totaling
$3.2 million, compared to quarterly dividends of $0.18 per share for a total of
$3.0 million the year before. Dividend payments in the first six months totaled
$0.38 per share, or $6.4 million, compared to $0.36 per share, or $6.0 million
the year before. In addition, dividends paid by a subsidiary to non-controlling
interests in the second quarter amounted to $8.6 million and $17.1 million for
the first six months, compared to $8.2 million and $16.5 million, respectively,
for the comparable periods of the prior year.
As at February 28, 2013, the Corporation had a working capital deficiency of
$151.3 million compared to $18.5 million at August 31, 2012. The increase of
$132.8 million in the deficiency is mainly due to the decrease of $173.3 million
million in cash and cash equivalents, primarily used for the acquisition of ABB
in the Cable segment. The deficiency was also impacted by an increase of $26.0
million in trade and other receivables and by a decrease of $23.9 million in
trade and other payables. As part of the usual conduct of its business, Cogeco
Cable maintains a working capital deficiency due to a low level of accounts
receivable as a large portion of the Corporation's customers pay before their
services are rendered, unlike trade and other payables, which are paid after
products are delivered or services are rendered, thus enabling the Corporation
to use cash and cash equivalents to reduce Indebtedness.
At February 28, 2013, the Corporation had used $78.8 million of its $100 million
Term Revolving Facility for a remaining availability of $21.2 million and Cogeco
Cable had used $626.5 million of its $750 million Term Revolving Facility for a
remaining availability of $123.5 million. Cogeco Cable also benefits, through
its subsidiary ABB, from a Revolving Credit Facility of $51.6 million (US$50
million), of which $3.6 million (US$3.5 million) was used at February 28, 2013
for a remaining availability of $48 million. At February 28, 2013, Cogeco Cable
also benefits from additional Revolving Credit Facilitiies of $250.9 million
incurred as a result of the acquisition of PEER 1, of which $243.6 million was
used at February 28, 2013 for a remaining availability of $7.3 million.
FINANCIAL POSITION
As a result of the acquisition of ABB and PEER 1 in the Cable segment, most
financial position balances have changed significantly since August 31, 2012.
For further details on the preliminary allocation of the purchase price of the
acquisitions, please refer to the investing activities under the "Cash flow
analysis" section.
OUTSTANDING SHARE DATA
A description of COGECO's share data at March 31, 2013 is presented in the table
below. Additional details are provided in note 10 of the condensed interim
consolidated financial statements.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Amount
Number of (in thousands
shares of dollars)
----------------------------------------------------------------------------
Common shares
Multiple voting shares 1,842,860 12
Subordinate voting shares 14,989,338 121,976
----------------------------------------------------------------------------
----------------------------------------------------------------------------
In the normal course of business, COGECO has incurred financial obligations,
primarily in the form of long-term debt, operating and finance leases and
guarantees. COGECO's obligations, as discussed in the 2012 Annual Report, have
not materially changed since August 31, 2012, except as mentioned below.
In connection with the acquisition of PEER 1 on January 31, 2013, the
Corporation's subsidiary, Cogeco Cable, concluded Secured Credit Facilities
totaling approximately $650 million with a syndicate of lenders in four tranches
for a net proceed of $640.3 million net of transaction costs of $2.8 million.
The first tranche, a Canadian Term Facility amounting to $175 million, the
second tranche, a US Term Facility amounting to US$225 million, the third
tranche, a Revolving Facility of $240 million and the fourth tranche, a UK
Revolving Facility of GBP 7 million. The Canadian and US Term Facilities are
available in Canadian and US dollars and interest rates are based on Bankers'
Acceptance, LIBOR Loans, Prime Rate Loans or US Base Rate Loans, plus the
applicable margin. The Revolving Facility is available in Canadian dollars, US
dollars, British Pounds and Euros and interest rates are based on Bankers'
Acceptance, LIBOR Loans in US dollars, British Pounds or Euros, Prime Rate Loans
or US and British Pounds Base Rate Loans, plus the applicable margin. The UK
Revolving Facility is available in British Pounds and interest rates are based
on British Pounds Base Rate Loans or British Pounds LIBOR Loans. Starting on
August 31, 2013, the Canadian and US Term Facilities are subject to quarterly
amortization of 1.25% in the first year, 1.875% in the second year, 3.125% in
the third year and 3.75% in the fourth year, payable on the last business day of
each fiscal quarter. The Secured Credit Facilities will mature on January 31,
2017. The Secured Credit Facilities are indirectly secured by a first priority
fixed and floating charge on substantially all present and future real and
personal property and undertaking of every nature and kind of the Corporation
and most of its subsidiaries except for ABB and its subsidiaries, and provides
for certain permitted encumbrances, including purchased money obligations,
existing funded obligations and charges granted by any subsidiary prior to the
date when it becomes a subsidiary, subject to a maximum amount. The provisions
under this facility provides for restrictions on the operations and activities
of the Corporation but does not cover ABB. Generally, the most significant
restrictions relate to permitted investments and dividends on multiple and
subordinate voting shares, as well as incurrence and maintenance of certain
financial ratios primarily linked to operating income before amortization,
financial expense and total indebtedness.
In connection with the acquisition of ABB on November 30, 2012, Cogeco Cable
concluded, through two of its US subsidiaries, First Lien Credit Facilities
totaling US$710 million with a syndicate of banks and other institutional
lenders in three tranche and draw down by an amount of US $660 million of which
US$641.5 million was used to repay ABB's prior secured debt and US$18.5 million
to pay for some of the transaction costs. The first tranche, a Term Loan A
Facility amounting to US$240 million, which will mature on November 30, 2017,
the second tranche, a Term Loan B Facility amounting to US$420 million, which
will mature on November 30, 2019 and the third tranche, a Revolving Credit
Facility of US $50 million, including a swingline of US$15 million, which will
mature on November 30, 2017. Interest rates on the First Lien Credit Facilities
are based on LIBOR plus the applicable margin, with a LIBOR floor of 1.00% for
the Term Loan B Facility. Starting on December 31, 2013, the Term Loan A
Facility is subject to quarterly amortization of 1.25% in the first year, 2.5%
in the second year and 3.0% in the third and fourth years. Starting on December
31, 2012, the Term Loan B Facility is subject to quarterly amortization of 0.25%
until its maturity date. In addition to the fixed amortization schedule and
commencing in the first quarter of fiscal 2015, loans under the Term Loan
Facilities shall be prepaid according to a Prepayment Percentage of excess cash
flow generated during the prior fiscal year. The First Lien Credit Facilities
are non-recourse to the Corporation, its Canadian subsidiaries and PEER 1's
subsidiaries and are indirectly secured by a first priority fixed and floating
charge on substantially all present and future real and personal property and
undertaking of every nature and kind of ABB and its subsidiaries. The provisions
under these facilities provide for restrictions on the operations and activities
of ABB and its subsidiaries. Generally, the most significant restrictions relate
to permitted indebtedness and investments, distributions and maintenance of
certain financial ratios.
FINANCIAL MANAGEMENT
Cogeco Cable has entered into cross-currency swap agreements to set the
liability for interest and principal payments on its US$190 million Senior
Secured Notes Series A maturing on October 1, 2015. These agreements have the
effect of converting the U.S. interest coupon rate of 7.00% per annum to an
average Canadian dollar interest rate of 7.24% per annum. The exchange rate
applicable to the principal portion of the debt has been fixed at $1.0625 per US
dollar. Cogeco Cable elected to apply cash flow hedge accounting on these
derivative financial instruments. During the first half of fiscal 2013, amounts
due under the US$190 million Senior Secured Notes Series A increased by $8.7
million due to the US dollar's appreciation relative to the Canadian dollar. The
fair value of cross-currency swaps liability decreased by a net amount of $7.9
million, of which a decrease of $8.7 million offsets the foreign exchange loss
on the debt denominated in US dollars. The difference of $0.7 million was
recorded as a decrease of other comprehensive income. During the first half of
fiscal 2012, amounts due under the US$190 million Senior Secured Notes Series A
increased by $1.9 million due to the US dollar's appreciation over the Canadian
dollar. The fair value of cross-currency swaps liability decreased by a net
amount of $1.9 million, of which $1.9 million offsets the foreign exchange loss
on the debt denominated in US dollars.
Furthermore, Cogeco Cable's net investment in foreign subsidiaries is exposed to
market risk attributable to fluctuations in foreign currency exchange rates,
primarily changes in the values of the Canadian dollar versus the US dollar and
British Pound. This risk was mitigated since the major part of the purchase
prices for ABB and PEER 1 were borrowed directly in US dollars and British
Pounds. These debts were designated as hedges of net investments in foreign
operations. At February 28, 2013, the net investment for ABB amounted to
US$472.6 million while long- term debt was of US$323 million. At February 28,
2013, the net investment for PEER 1 amounted to US$368 million and GBP 69.1
million while long-term debt was of $US245 million and GBP 69.1 million. The
exchange rate used to convert the US dollar currency and British Pound currency
into Canadian dollars for the statement of financial position accounts at
February 28, 2013 was $1.0314 per US dollar and $1.5645 per British Pound. The
impact of a 10% change in the exchange rate of the US dollar and British Pound
into Canadian dollars would change other comprehensive income by approximately
$28.1 million.
The Corporation is also impacted by foreign currency exchange rates, primarily
changes in the values of the US dollar relative to the Canadian dollar with
regards to purchases of certain equipment, as the majority of customer premise
equipment is purchased and subsequently paid in US dollars. Please consult the
"Foreign Exchange Risk" section in Note 13 of the condensed interim consolidated
financial statements for further details.
DIVIDEND DECLARATION
At its April 10, 2013 meeting, the Board of Directors of COGECO declared a
quarterly eligible dividend of $0.19 per share for multiple voting and
subordinate voting shares, payable on May 8, 2013, to shareholders of record on
April 24, 2013. The declaration, amount and date of any future dividend will
continue to be considered and approved by the Board of Directors of the
Corporation based upon the Corporation's financial condition, results of
operations, capital requirements and such other factors as the Board of
Directors, at its sole discretion, deems relevant. There is therefore no
assurance that dividends will be declared, and if declared, the amount and
frequency may vary.
CABLE SEGMENT
CUSTOMER STATISTICS
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Consolidated US CANADA
February 28,
2013
----------------------------------------------------------------------------
PSU 2,486,350 501,795(1) 1,984,555
Television service customers 1,100,547 247,840 852,707
HSI service customers 824,144 174,979 649,165
Telephony service customers 561,659 78,976 482,683
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Consolidated
-----------------------
Net additions (losses) Net additions (losses)
Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 2013 2012
----------------------------------------------------------------------------
PSU 7,463 12,280 22,543 58,459
Television service customers (4,896) (9,111) (6,972) (4,659)
HSI service customers 7,125 7,518 17,970 24,803
Telephony service customers 5,234 13,873 11,545 38,315
----------------------------------------------------------------------------
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(1) Include 494,674 PSU (244,404 Television service, 171,640 HSI service
and 78,630 Telephony service customers) from the acquisition of ABB on
November 30, 2012.
Fiscal 2013 second-quarter and first six months, PSU net additions were lower
than in the comparable period of the prior year mainly as a result of service
category maturity, competitive offers and tightening of our customer credit
controls and processes. PSU progression comes mainly from the US operations. For
the second quarter net customer losses for Television service customers stood at
4,896 compared to 9,111 for fiscal 2012 second-quarter. Television service
customer net losses are mainly due to the promotional offers of competitors for
the video service combined with the tightening of our customer credit controls.
Fiscal 2013 second-quarter HSI service customers grew by 7,125 compared to 7,518
in the second quarter of the prior year, and the number of net additions to the
Telephony service stood at 5,234 customers compared to 13,873 customers for the
same period of the prior year. For the first six months of fiscal 2013, PSU net
additions are the results of the recent acquisition of ABB at the end of the
first quarter of fiscal 2013.
Operating results
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended Six months ended
February February February February
28, 2013 29, 2012 Change 28, 2013 29, 2012 Change
(in thousands of
dollars, except
percentages) $ $ % $ $ %
----------------------------------------------------------------------------
Revenue 429,672 317,735 35.2 757,583 633,159 19.7
Operating expenses 230,908 171,649 34.5 405,112 348,108 16.4
Management fees -
COGECO Inc. 2,988 2,343 27.5 9,569 9,485 0.9
----------------------------------------------------------------------------
Operating income
before
depreciation and
amortization 195,776 143,743 36.2 342,902 275,566 24.4
----------------------------------------------------------------------------
Operating margin 45.6% 45.2% 45.3% 43.5%
----------------------------------------------------------------------------
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Revenue
Fiscal 2013 second-quarter revenue increased by $111.9 million, or 35.2%, to
reach $429.7 million, when compared to the same period last year. For the first
six months, revenue amounted to $757.6 million, an increase of $124.4 million,
or 19.7% when compared to the same period of fiscal 2012. Revenue increased for
both periods is mainly attributable to the operating results of Cogeco Cable's
recent acquisitions.
Operating expenses
For the second quarter of fiscal 2013, operating expenses increased by $59.3
million, to reach $230.9 million, an increase of 34.5% compared to the prior
year. For the first half of the fiscal year, operating expenses amounted to
$405.1 million, an increase of $57.0 million, or 16.4%, when compared to the
same period of fiscal 2012. Operating expenses increased is mostly attributable
to Cogeco Cable's recent acquisitions, partly offset by cost reduction
initiatives and by the reduction in operating expenses in the Canadian
operations related to the deployment and support costs incurred in fiscal 2012
for the migration of Television service customers from analogue to digital.
Operating income before depreciation and amortization and operating margin
Fiscal 2013 second-quarter operating income before depreciation and amortization
increased by $52.0 million, or 36.2%, to reach $195.8 million, and by $67.3
million, or 24.4% as a result of the recent acquisitions and the improvement in
the Canadian operations. Cogeco Cable's second- quarter operating margin
increased to 45.6% from 45.2% and to 45.3% from 43.5% for the first six months
of fiscal 2013 when compared to the comparable periods of the prior year.
FISCAL 2013 FINANCIAL GUIDELINES
As a result of revised projections in the Cable segment described below, the
Corporation revised its consolidated projections for the 2013 fiscal year.
Revenue is now expected to reach $1.8 billion, an increase of $105 million when
compared to the January 14, 2013 projections. Operating income before
depreciation and amortization should increase from $750 million to $782 million
and financial expense should increase from $101 million to $118 million.
Acquisitions of property, plant and equipment, intangible and other assets
should increase by approximately $31 million and free cash flow should reach
$150 million, a decrease of $25 million from January 14, 2013 projections.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revised Revised
projections projections
April 10, 2013 January 14, 2013
Fiscal 2013 Fiscal 2013
(in millions of dollars) $ $
----------------------------------------------------------------------------
Financial guidelines
Revenue 1,835 1,730
Operating income before depreciation and
amortization 782 750
Integration, restructuring and
acquisition costs 16 7
Financial expense 118 101
Current income tax expense 94 94
Profit for the year 207 227
Profit for the year attributable to
owners of the Corporation 69 75
Acquisitions of property, plant and
equipment, intangible and other assets 404 373
Free cash flow(1) 150 175
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(1) Free cash flow is calculated as operating income before depreciation
and amortization less integration, restructuring and acquisition costs,
financial expense, current income tax expense and acquisitions of
property, plant and equipment, intangible and other assets.
CABLE SEGMENT
Giving effect to the recent acquisition of PEER 1 on January 31, 2012, the
Corporation revised its financial guidelines for the 2013 fiscal year issued on
January 14, 2013 to include a seven-month period of PEER 1's financial
projections. Management expects revenue to reach $1.70 billion, representing a
growth of $105 million, or 6.6%, when compared to those issued on January 14,
2013. Operating income before depreciation and amortization should increase by
$32 million to reach $767 million reflecting the PEER 1 acquisition. However,
operating margin should decrease from 46.2% to 45.2% as a result of lower
margins business activities from PEER 1. Depreciation and amortization of
property, plant and equipment and intangible assets should increase from $330
million to $368 million and acquisition of property, plant and equipment,
intangible and other assets should increase by $31 million to take into
consideration the PEER 1 seven-month operations. Financial expense should amount
to $113 million, an increase of $17 million, as a result of the cost of
financing related to the PEER 1 acquisition. Fiscal 2013 free cash flow is
expected to amount to $145 million, a decrease of $25 million, or 14.7%, when
compared to the free cash flow projection issued on January 14, 2013 as a result
of acquisitions of property, plant and equipment, intangible and other assets
exceeding cash flow generated by PEER 1, additional integration, restructuring
and acquisition costs of $9 million as well as additional financial expense of
$17 million both related to PEER 1. Profit for the year is expected to amount to
$205 million, $20 million lower than the January 14, 2013 projections, mainly as
a result of the PEER 1's expected financial results for the seven-month
operations.
Fiscal 2013 revised financial guidelines are as follows:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revised Revised
projections projections
April 10, 2013 January 14, 2013
Fiscal 2013 Fiscal 2013
(in millions of dollars, except net
customer additions and operating
margin) $ $
----------------------------------------------------------------------------
Financial guidelines
Revenue 1,695 1,590
Operating income before depreciation
and amortization 767 735
Operating margin 45.2% 46.2%
Integration, restructuring and
acquisition costs 16 7
Depreciation and amortization 368 330
Financial expense 113 96
Current income tax expense 92 92
Profit for the year 205 225
Acquisitions of property, plant and
equipment, intangible and other
assets 401 370
Free cash flow(1) 145 170
Net customer addition guidelines
PSU growth 35,000 35,000
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----------------------------------------------------------------------------
(1) Free cash flow is calculated as operating income before depreciation
and amortization less integration, restructuring and acquisition costs,
financial expense, current income tax expense and acquisitions of
property, plant and equipment, intangible and other assets.
CONTROLS AND PROCEDURES
The President and Chief Executive Officer ("CEO") and the Senior Vice President
and Chief Financial Officer ("CFO"), together with Management, are responsible
for establishing and maintaining adequate disclosure controls and procedures and
internal controls over financial reporting, as defined in National Instrument
52-109. Cogeco Cable's internal control framework is based on the criteria
published in the report Internal Control- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and is designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with IFRS.
The CEO and CFO, supported by Management, evaluated the design of the
Corporation's disclosure controls and procedures and internal controls over
financial reporting as of February 28, 2013, and have concluded that they are
adequate. Furthermore, no significant changes to the internal controls over
financial reporting occurred during the quarter ended February 28, 2013, except
as described below with respect to ABB and PEER 1.
On November 30, 2012, the Corporation's subsidiary, Cogeco Cable, completed the
acquisition of ABB and, subsequently on January 31, 2013 and April 3, 2013, the
Corporation acquired 100% of the issued and outstanding shares of PEER 1. Due to
the short period of time between those acquisition dates and the certification
date on April 10, 2013, management was unable to complete its review of the
design of Internal Controls Over Financial Reporting ("ICFR") for the newly
acquired corporations. At February 28, 2013, risks were however mitigated as
management was fully apprised of any material events affecting these recent
acquisitions. In addition, all the assets and liabilities acquired were valued
and recorded in the condensed interim consolidated financial statements as part
of the preliminary purchase price allocation process and both ABB and PEER 1
results of operations were also included in the Corporation's consolidated
results. ABB constitutes 10% of revenue, 7% of profit for the period, 31% of the
total assets, 15% of the current assets, 32% of the non current assets, 11% of
the current liabilities and 24% of the non current liabilities of the
consolidated condensed interim financial statements for the six-month period
ended February 28, 2013. PEER 1 constitutes 2% of revenue, -6% of profit for the
period, 14% of the total assets, 16% of the current assets, 14% of the non
current assets, 9% of the current liabilities and 2% of the non current
liabilities of the consolidated condensed interim financial statements for the
six-month period ended February 28, 2013. In the upcoming quarters, management
will complete its review of the design of ICFR for ABB and PEER 1 and assess its
effectiveness. The business combinations of fiscal 2013 under the "Cash flow
analysis" section of this MD&A presents summary financial information about the
preliminary purchase price allocation, assets acquired and liabilities assumed
as well as other financial information about ABB and PEER 1 business impact on
the consolidated results of the Corporation. Other financial information can be
found in the Business Acquisition Report filed by the Corporation on
www.sedar.com, on February 13, 2013.
UNCERTAINTIES AND MAIN RISK FACTORS
The uncertainties and main risk factors faced by the Corporation have not
changed significantly for its Canadian Cable segment since August 31, 2012,
except for the proposed Astral/Bell amended Arrangement Agreement described
below. In addition, risks and uncertainties have been updated to reflect the
recent acquisitions of ABB and PEER 1. A detailed description of the
uncertainties and main risk factors faced by COGECO can be found in the 2012
Annual Report.
In Canada, following the denial by the CRTC on October 18, 2012 of an
application by BCE Inc. ("Bell") to acquire Astral Media Inc. ("Astral"), Astral
Bellamended their Arrangement Agreement with a view to submitting a revised
proposal to the CRTC for approval of Bell's acquisition of Astral. The closing
date of the proposed transaction was extended to June 1, 2013, with Astral and
Bell having a further right to postpone the closing date to July 31, 2013. On
March 4, 2013, the Commissioner of Competition and Bell announced the signing of
a consent agreement and the filing thereof with the Competition Tribunal. The
consent agreement provides conditional clearance for the proposed transaction
under the Competition Act subject to, inter alia, the divestiture by Bell of
Astral's joint venture ownership interests in certain television services and
its ownership interest certain additional French-language television services.
Also on March 4, 2013, Bell announced that it had concluded an agreement to sell
the Astral joint venture ownership interests as well as two Ottawa FM radio
stations to Corus Entertainment Inc. ("Corus"), and that it was putting up for
sale the remaining properties to be divested and 8 additional English-language
radio stations through an auction process. The sale of the joint venture
properties to Corus was approved by the Commissioner of Competition on March 15,
2013. In Management's view, if it is ultimately approved by the CRTC, the
proposed transaction, as revised, would still significantly increase the level
of vertical integration in the Canadian broadcasting and communications
industries and leave the opportunity as well as an incentive for Bell to abuse
its dominant position in the supply of programming for distribution in the
downstream broadcasting distribution market in Canada by non-vertically
integrated distributors such as Cogeco Cable. Bell would end up controlling over
forty percent (40 %) of Cogeco Cable's programming service affiliation payments
at current wholesale rates. The Corporation's businesses and results of
operations could thus be adversely affected in the future as affiliation
agreements need to be renewed with Bell. In the event of future disputes
concerning the terms of affiliation between Cogeco Cable and Bell for services
controlled by Bell, the CRTC may however set such terms at either party's
request following a dispute resolution process, and the services may not be
interrupted by either party while such dispute resolution process is pending.
Uncertainties and risks subsequent to the acquisitions of PEER 1 or ABB
Cogeco Cable acquired PEER 1 and ABB with the expectation that the combination
of its businesses and each of PEER 1 and ABB would result in greater long-term
potential and value creation than the individual corporations could achieve on
their own. These anticipated benefits will depend in part on whether the
operations, systems, management and cultures of each of the Corporation's other
businesses and those of PEER 1 and ABB can be combined in an effective manner
and in part on whether the presumed bases for the combination produce the
benefits anticipated. Most operational and strategic decisions, and certain
staffing decisions, with respect to the combined entity have not yet been made
and may not have been fully identified at this time.
There can be no assurance that the integration of Cogeco Cable's capital
investment optimization and equipment purchases with those of PEER 1 and ABB
will be timely or effectively accomplished, or ultimately will be successful in
achieving the anticipated benefits. The integration process may lead to greater
than expected operating costs, customer loss and business disruption for Cogeco
Cable's other businesses, PEER 1, ABB or the combined businesses. Similarly, the
integration process that may adversely affect the ability of the combined
businesses to realize the anticipated benefits of the combination or may
materially and adversely affect Cogeco Cable's, PEER 1's, ABB's or the combined
entity's businesses, results of operations and/or financial condition.
There may be liabilities and contingencies that Cogeco Cable did not discover in
its due diligence review prior to consummation of the PEER 1 and ABB
acquisitions and the Corporation may not be indemnified for these liabilities
and contingencies. The discovery of any material liabilities or contingencies
relating to the business of PEER 1 or ABB following the acquisitions could have
a material adverse effect on the Corporation businesses, financial condition and
results of operations.
Cogeco Cable currently intends to retain key personnel of PEER 1 and ABB to
continue to manage and operate each of PEER 1 and ABB. Cogeco Cable will compete
with other potential employers for employees, and may not be successful in
keeping the services of executives and other employees that PEER 1 or ABB need.
The failure of key personnel to remain as part of the management team of PEER 1
and ABB in the period following the PEER 1 and ABB acquisitions could have a
material adverse effect on the Corporation businesses, financial condition and
results of operations.
Risks pertaining to markets and competition
In the US, the competition is fragmented and varies by geographical area. ABB's
principal competitor for video services is Direct Broadcast Satellite ("DBS")
and its principal competitor for High Speed Data ("HSD") services is Direct
Subscriber Line ("DSL"). Intensive marketing efforts and aggressive pricing from
its competitors and an increase in the presence of local telephone companies and
electric utilities competing in its market may have an adverse impact on the
Corporation's ability to retain customers. Cogeco Cable's phone service faces
competition from the local incumbent local exchange carriers ("ILEC"), as well
as other providers such as cellular and Voice over Internet Protocol ("VoIP")
providers such as Vonage.
In the US, ABB also currently faces competition from over-the-top services such
as Netflix, Google TV, and Apple TV, Hulu and Samsung, which are gaining
increased interest by consumers. The availability of these services could cause
customers to view television content through their broadband connection rather
than through their traditional cable television subscription services, and view
less on-demand television content on the video-on-demand ("VOD") or
subscription-video-on-demand ("SVOD") platforms of cable television service
providers. We may not be able to make up for the loss of revenue associated with
this migration.
PEER 1's risks pertaining to markets and competition are similar to Cogeco Data
Services risks which can be found in the 2012 Annual Report.
Risk pertaining to Third-Party Service Suppliers
In the US, ABB also depends on third-party suppliers and providers, such as
Motorola and Cisco for certain specialized services, hardware and equipment that
are critical to their operations. These materials and services include set-top
boxes, telephony, cable and telephony modems, servers and routers, fiber-optic
cable, telephony switches, inter-city links, support structures, software, the
"backbone" telecommunications network for the Internet access and telephony
services; and construction services for expansion and upgrades of the cable and
telephony networks. These services and equipment are available from a limited
number of suppliers.
In addition, ABB depends on third-party plant construction contractors in areas
of new homes growth. If no supplier can provide ABB with the equipment or
services that it require or that comply with evolving internet and
telecommunications standards or that are compatible with ABB's other equipment
and software, ABB's cable services businesses, financial condition and results
of operations could be materially adversely affected. In addition, if ABB is
unable to obtain critical equipment, software, services or other items on a
timely basis and at an acceptable cost, its ability to offer its products and
services and roll out its advanced services may be delayed, and ABB's
businesses, financial condition and results of operations could be materially
adversely affected.
In addition, in recent years, the US cable industry has experienced a rapid
escalation in the cost of programming, particularly sports programming and
retransmission of broadcast programming. This escalation may continue, and ABB
may not be able to pass programming cost increases on to its customers. The
inability to pass these programming cost increases on to its customers would
have an adverse impact on ABB's cash flow and operating margins. In addition, as
ABB upgrades the channel capacity of its systems and adds programming to its
basic, expanded basic and digital service offerings, ABB may face additional
market constraints on its ability to pass programming costs on to its customers.
The inability to pass these costs increases on to its customers could materially
adversely affect ABB's profitability. ABB is also subject to increasing
financial and other demands by broadcasters to obtain the required consent for
the transmission of broadcast programming to its subscribers.
Financial risks - currency
Most of the Corporation's financial results are reported in Canadian dollars and
a significant portion of its sales and operating costs are realized in
currencies other than Canadian dollars, most often US dollars, Euros and pounds
sterling. For the purposes of financial reporting, any change in the value of
the Canadian dollar against the US dollar or pounds sterling during a given
financial reporting period would result in a foreign exchange gain or loss on
the translation of any unhedged foreign currency denominated debt into Canadian
dollars. Consequently, Cogeco Cable reported earnings and indebtedness could
fluctuate materially as a result of foreign-exchange gains or losses.
Significant fluctuations in relative currency values against the Canadian dollar
could therefore have a significant impact on the Corporation's future
profitability.
Risk pertaining to leased facilities
Certain of PEER 1's data centers are located in leased premises, and there can
be no assurance that PEER 1 will remain in compliance with its leases and that
they will not be terminated or can be renewed at commercially reasonable terms.
Termination of a lease could have a material impact on its businesses, results
of operations and financial condition.
Regulatory risks - US
US federal, state and local governments extensively regulate the video services
industry and may increase the regulation of the Internet services and VoIP phone
industries. Current regulation of the cable industry imposes administrative and
operational expenses and may limit the revenues of cable systems. Cable
operators are subject to, among other things:
-- subscriber privacy regulations;
-- limited rate regulation;
-- requirements that, under specified circumstances, a cable system carry a
local broadcast station or obtain consent to carry a local or distant
broadcast station;
-- rules for franchise renewals and transfers;
-- regulations concerning the content of programming offered to
subscribers;
-- the manner in which program packages are marketed to subscribers;
-- the use of cable system facilities by local franchising authorities, the
public and unrelated entities;
-- cable system ownership limitations and program access requirements;
-- payment of franchise fees to local franchising authorities;
-- payment of federal universal service assessments for any end user
revenues from interstate and international telecommunications services
and telecommunications provided to a third party for a fee, and other
state and federal telecommunications fees; and
-- regulations governing other requirements covering a variety of
operational areas such as equal employment opportunity, technical
standards and customer service requirements.
Further US regulation could give rise to increases in cable rates. The Federal
Communications Commission ("FCC") and the US Congress continue to be concerned
that cable rate increases are exceeding inflation and as a result it is possible
that either the FCC or the US Congress will restrict the ability of cable system
operators to implement rate increases. If ABB is unable to raise its rates in
response to increasing costs, its financial condition and results of operations
could be materially adversely affected.
In addition, ABB could be materially disadvantaged if it remains subject to
legal and regulatory constraints that do not apply equally to its competitors.
The FCC recently adopted rules to ensure that the local franchising process does
not unreasonably interfere with competitive entry, and several states have
enacted legislation to ease the franchising obligations of new entrants. These
changes in regulation by the FCC and several states will benefit ABB's
competitors. In addition, both the Congress and the FCC are considering various
forms of "network neutrality" regulation which may have the impact of
restricting the ABB's ability to manage its network efficiently.
Human Resources
As of February 28, 2013, approximately 26.8% of ABB's employees are represented
by several unions under collective bargaining agreements. ABB can neither
predict the outcome of current or future negotiations relating to labor
disputes, union representation or renewal of collective bargaining agreements,
nor be able to avoid future work stoppages, strikes or other forms of labor
protests pending the outcome of any current of future negotiations. A prolonged
work stoppage, strike or other form of labor protest could have a material
adverse effect on its businesses, operations and reputation. Even if ABB does
not experience strikes or other forms of labor protests, the outcome of labor
negotiations could adversely affect its businesses and results of operations. In
addition, its ability to make short-term adjustments to control compensation and
benefits costs is limited by the terms of its collective bargaining agreements.
ABB's and PEER 1's success are substantially dependent upon the retention and
the continued performance of their executive officers. Many of these executive
officers are uniquely qualified in their areas of expertise, making it difficult
to replace their services. The loss of the services of any of these officers
could adversely affect Cogeco Cable's growth, financial condition and results of
operations. In addition, to implement and manage its businesses and operating
strategies effectively, ABB and PEER 1 must maintain a high level of efficiency,
performance and content quality, continue to enhance its operational and
management systems, and continue to effectively attract, train, motivate and
manage its employees. If ABB and PEER 1 are not successful in their efforts, it
may have a material adverse effect on the Corporation's businesses, prospects,
results of operations and financial condition.
FUTURE ACCOUNTING DEVELOPMENTS IN CANADA
A number of new standards, interpretations and amendments to existing standards
were issued by the International Accounting Standard Board ("IASB") that are
mandatory but not yet effective for the period ended February 28, 2013 and have
not been applied in preparing the condensed interim consolidated financial
statements. These standards are described under "Future accounting developments
in Canada" in the Corporation's 2012 annual MD&A, available at www.sedar.com and
www.cogeco.ca.
CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There has been no significant change in COGECO's accounting policies, estimates
and future accounting pronouncements since August 31, 2012. A description of the
Corporation's policies and estimates can be found in the 2012 Annual Report,
available at www.sedar.com and www.cogeco.ca.
NON-IFRS FINANCIAL MEASURES
This section describes non-IFRS financial measures used by COGECO throughout
this MD&A. It also provides reconciliations between these non-IFRS measures and
the most comparable IFRS financial measures. These financial measures do not
have standard definitions prescribed by IFRS and therefore, may not be
comparable to similar measures presented by other companies. These measures
include "cash flow from operations", "free cash flow" and "operating income
before depreciation and amortization".
CASH FLOW FROM OPERATIONS AND FREE CASH FLOW
Cash flow from operations is used by COGECO's management and investors to
evaluate cash flows generated by operating activities, excluding the impact of
changes in non-cash operating activities, amortization of deferred transaction
costs and discounts on long-term debt, income taxes paid, current income tax
expense, financial expense paid and financial expense. This allows the
Corporation to isolate the cash flows from operating activities from the impact
of cash management decisions. Cash flow from operations is subsequently used in
calculating the non-IFRS measure, "free cash flow". Free cash flow is used, by
COGECO's management and investors, to measure its ability to repay debt,
distribute capital to its shareholders and finance its growth.
The most comparable IFRS measure is cash flow from operating activities. Cash
flow from operations is calculated as follows:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 2013 2012
(in thousands of dollars) $ $ $ $
----------------------------------------------------------------------------
Cash flow from operating
activities 157,095 126,455 151,090 136,025
Changes in non-cash
operating activities (12,757) (9,905) 74,751 64,781
Amortization of deferred
transaction costs and
discounts on long-term debt 2,861 914 3,717 1,676
Income taxes paid 18,211 19,093 62,459 57,077
Current income tax expense (22,552) (25,971) (48,664) (47,290)
Financial expense paid 28,086 10,677 46,395 31,511
Financial expense (30,531) (16,110) (47,545) (33,888)
----------------------------------------------------------------------------
Cash flow from operations 140,413 105,153 242,203 209,892
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Free cash flow is calculated as follows:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 2013 2012
(in thousands of dollars) $ $ $ $
----------------------------------------------------------------------------
Cash flow from operations 140,413 105,153 242,203 209,892
Acquisition of property,
plant and equipment (101,526) (84,540) (180,040) (159,000)
Acquisition of intangible
and other assets (4,493) (2,646) (9,134) (6,590)
----------------------------------------------------------------------------
Free cash flow 34,394 17,967 53,029 44,302
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
Operating income before depreciation and amortization is used by COGECO's
management and investors to assess the Corporation's ability to seize growth
opportunities in a cost effective manner, to finance its ongoing operations and
to service its debt. Operating income before depreciation and amortization is a
proxy for cash flows from operations excluding the impact of the capital
structure chosen, and is one of the key metrics used by the financial community
to value the business and its financial strength.
The most comparable IFRS financial measure is operating income. Operating income
before depreciation and amortization is calculated as follows:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended Six months ended
February February February February
28, 29, 28, 29,
2013 2012 2013 2012
(in thousands of dollars, except
percentages) $ $ $ $
----------------------------------------------------------------------------
Operating income 102,464 58,931 185,741 133,573
Depreciation and amortization 86,014 85,479 152,055 151,098
Integration, restructuring and
acquisitions costs 7,490 108 14,752 108
----------------------------------------------------------------------------
Operating income before depreciation
and amortization 195,968 144,518 352,548 284,779
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION
----------------------------------------------------------------------------
----------------------------------------------------------------------------
February February
Quarters ended 28, 29, November 30,
(in thousands of dollars,
except percentages and per
share data) 2013 2012 2012 2011
$ $ $ $
----------------------------------------------------------------------------
Revenue 458,501 345,613 366,608 346,023
Operating income before
depreciation and
amortization 195,968 144,518 156,580 140,261
Operating income 102,464 58,931 83,277 74,642
Income taxes 15,416 13,372 19,168 12,340
Profit for the period from
continuing operations 56,517 29,449 47,095 44,524
Profit (loss) for the period
from discontinued
operations - 52,047 - 3,399
Profit (loss) for the period 56,517 81,496 47,095 47,923
Profit (loss) for the period
attributable to owners of
the Corporation 16,899 25,089 18,487 18,770
Cash flow from operating
activities 157,095 126,455 (6,005) 9,570
Cash flow from operations 140,413 105,153 101,790 104,739
Acquisitions of property,
plant and equipment,
intangible and other assets 106,019 87,186 83,155 78,404
Free cash flow 34,394 17,967 18,635 26,335
Earnings (loss) per share(1)
From continuing and
discontinued operations
Basic 1.01 1.50 1.11 1.12
Diluted 1.00 1.49 1.10 1.11
From continuing operations
Basic 1.01 0.50 1.11 1.06
Diluted 1.00 0.50 1.10 1.05
From discontinued
operations
Basic - 1.00 - 0.07
Diluted - 0.99 - 0.06
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended August 31, May 31,
(in thousands of dollars,
except percentages and per
share data) 2012 2011 2012 2011
$ $ $ $
----------------------------------------------------------------------------
Revenue 356,685 331,045 358,032 330,258
Operating income before
depreciation and
amortization 163,617 152,434 158,446 142,025
Operating income 95,943 101,304 95,473 90,242
Income taxes 33,625 21,804 22,278 19,252
Profit for the period from
continuing operations 44,900 63,870 55,373 54,371
Profit (loss) for the period
from discontinued
operations - 6,219 - (233,573)
Profit (loss) for the period 44,900 70,089 55,373 (179,202)
Profit (loss) for the period
attributable to owners of
the Corporation 13,889 23,317 19,303 (56,303)
Cash flow from operating
activities 203,193 217,792 109,546 141,106
Cash flow from operations 119,612 148,228 117,606 129,327
Acquisitions of property,
plant and equipment,
intangible and other assets 124,638 122,441 88,141 63,807
Free cash flow (5,026) 25,787 29,465 65,520
Earnings (loss) per share(1)
From continuing and
discontinued operations
Basic 0.83 1.39 1.15 (3.36)
Diluted 0.83 1.39 1.15 (3.36)
From continuing operations
Basic 0.83 1.27 1.15 1.13
Diluted 0.83 1.27 1.15 1.13
From discontinued
operations
Basic - 0.12 - (4.49)
Diluted - 0.12 - (4.49)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Per multiple and subordinate voting share.
SEASONAL VARIATIONS
Cogeco Cable's operating results are not generally subject to material seasonal
fluctuations except as follows. The customer growth in the
Television service customers and HSI service are generally lower in the second
half of the fiscal year as a result of a decrease in economic activity due to
the beginning of the vacation period, the end of the television season, and
students leaving their campuses at the end of the school year. Cogeco Cable
offers its services in several university and college towns such as Kingston,
Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivieres and Rimouski in
Canada.
ADDITIONAL INFORMATION
This MD&A was prepared on April 10, 2013. Additional information relating to the
Corporation, including its Annual Information Form, is available on the SEDAR
website at www.sedar.com.
/s/ Jan Peeters /s/ Louis Audet
----------------------------------------------------------------------------
Jan Peeters Louis Audet
Chairman of the Board President and Chief Executive Officer
COGECO Inc.
Montreal, Quebec
April 10, 2013
ABOUT COGECO
COGECO is a diversified communications corporation. Through its Cogeco Cable
subsidiary, COGECO provides to its residential and business customers Analogue
and Digital Television, High Speed Internet ("HSI") and Telephony services.
Cogeco Cable operates in Canada under the Cogeco Cable brand name in Quebec and
Ontario, and in the United States through its subsidiary Atlantic Broadband in
Western Pennsylvania, Southern Florida, Maryland, Delaware and South Carolina.
Through its subsidiaries Cogeco Data Services and PEER 1 Hosting, Cogeco Cable
provides to its commercial customers, a suite of IT hosting, information and
communications technology services (Data Centre, Co-location, Managed Hosting,
Cloud Infrastructure and Connectivity), with 23 data centres, extensive fibre
networks in Montreal and Toronto as well as points-of-presence in North America
and Europe. Through its subsidiary Cogeco Diffusion, COGECO owns and operates 13
radio stations across most of Quebec with complementary radio formats serving a
wide range of audiences as well as Cogeco News, its news agency. Cogeco
Diffusion also operates Metromedia, an advertising representation house
specialized in the public transit sector that holds exclusive advertising rights
in the Province of Quebec where it also represents its business partners active
across other Canadian markets. COGECO's subordinate voting shares are listed on
the Toronto Stock Exchange (TSX:CGO). The subordinate voting shares of Cogeco
Cable are also listed on the Toronto Stock Exchange (TSX:CCA).
Analyst Conference Thursday, April 11, 2013 at 11:00 a.m. (Eastern
Call: Daylight Time) Media representatives may attend as
listeners only.
Please use the following dial-in number to have access
to the conference call by dialing five minutes before
the start of the conference:
Canada/USA Access Number: 1 866-322-8032
International Access Number: + 1 416-640-3406
Confirmation Code: 4371097 By Internet at
www.cogeco.ca/investors
A rebroadcast of the conference call will be available
until July 11, 2013, by dialing:
Canada and US access number: 1 888-203-1112
International access number: + 1 647-436-0148
Confirmation code: 4371097
FOR FURTHER INFORMATION PLEASE CONTACT:
Source:
COGECO Inc.
Pierre Gagne
Senior Vice President and Chief Financial Officer
514-764-4700
Information:
Media
Rene Guimond
Vice-President, Public Affairs and Communications
514-764-4700
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