Cogeco 2013 Annual Report Download - page 39

38 COGECO CABLE INC. 2013 Management's discussion and analysis (“MD&A”)
OPERATING RESULTS
Years ended
August 31,
2013 August 31, 2012 Change
(in thousands of dollars, except percentages) $$ %
Revenue 1,226,275 1,188,717 3.2
Operating expenses 615,157 614,644 0.1
Operating income before depreciation and amortization 611,118 574,073 6.5
Operating margin 49.8% 48.3%
Revenue
For fiscal 2013, revenue amounted to $1,226.3 million, an increase of 3.2% compared to $1,188.7 million in fiscal 2012, primarily as a result of
rate increases implemented in June and July 2012 in Quebec and Ontario and the full year impact of PSU earned in fiscal 2012.
Operating expenses
For the year ended August 31, 2013, operating expenses amounted to $615.2 million, an increase of $0.5 million when compared to fiscal 2012.
Operating expenses increased as a result of additional personnel to manage the PSU base, programming costs increases and incentive programs
such as bonus, partly offset by cost reduction initiatives and the operating expenses reduction related to the deployment and support costs for
the migration of Television service customers from analogue to digital during fiscal 2012, which has not reoccurred in fiscal 2013.
Operating income before depreciation and amortization and operating margin
As a result of revenue growth exceeding operating expenses, fiscal 2013 operating income before depreciation and amortization amounted to
$611.1 million, or 6.5% higher than in the same period of the prior year. Operating margin increased from 48.3% to 49.8% for fiscal 2013 when
compared to prior year.
AMERICAN CABLE SERVICES
On November 30, 2012, the Corporation completed the acquisition of Atlantic Broadband, an independent cable system operator formed in 2003
and providing Analogue and Digital Television, as well as HSI and Telephony services. Atlantic Broadband operates cable systems in Western
Pennsylvania, Southern Florida, Maryland/Delaware and South Carolina. Fiscal 2013 included nine months of operations of Atlantic Broadband.
CUSTOMER STATISTICS
Net additions (losses) % of penetration(1)
Years ended
August 31,
2013 (2) August 31, 2013 August 31, 2012 August 31, 2013 August 31, 2012
PSU 485,658 478 —
Television service customers 230,304 (7,009) —44.5 —
HSI service customers 177,108 7,555 —34.3 —
Telephony service customers 78,246 (68) —15.1 —
(1) As a percentage of homes passed.
(2) Includes 485,180 PSU (237,313 Television service, 169,553 HSI service and 78,314 Telephony service customers) at the acquisition date.
Fiscal 2013 PSU net additions stood at 478. Television service customers net losses amounted to 7,009 which are mainly attributable to seasonal
variations resulting from the end of the school year for college and university students and also, in Miami region, from winter season residents
returning home from late Spring through the Fall. HSI service customers net additions stood at 7,555 mainly as a result of an increase in residential
HSI customers through additional marketing which focused on bundle package offerings, thus increasing overall demand given the higher speed
offerings with the rollout of DOCSIS 3.0 capabilities in 2012 to a majority of Atlantic Broadband's markets, as well as increased commercial HSI.
As at August 31, 2013, 59% of the American cable services customers subscribed to two or more services. The distribution of customers by
number of services for the American cable services were: 41% who subscribe to the single play, 37% to the double play and 22% to the triple
play.