Cogeco 2004 Annual Report Download - page 6

MESSAGE TO SHAREHOLDERS
4Cogeco Cable Inc. 2004
We plan to offer IP telephony to customers in 2005. In fact, a test
in approximately 1,000 homes has already proven very satisfactory.
IP telephony promises to deliver applications that will change the
way we use the telephone, such as video telephony, a service
which, in the medium-term, will be available to all households at
an affordable price. HSI, local and long-distance services, video
telephony – all from a single wire – are only a few of the major
changes that this technology will deliver. What remains to be seen
is whether or not the CRTC will regulate this area of communi-
cations and, if so, how it will regulate it. To date, the incumbent
telephone companies have enjoyed several privileges that have
limited, because of established rules, true competition from
growing in local telephony services. At this point in time, IP
telephony is free from these rules. It therefore offers consumers
achoice that, until now, was not available to them.
Other services are also under development: SVOD will be added
to our offering to all of our two-way cable plant customers. It will
work just like VOD which already offers a library of movies and
shows that is refreshed regularly and always accessible.
Other services are under review. For example, home networking
is another area that Cogeco Cable is exploring intently. This tech-
nology is developing rapidly in step with the needs and demands
of an ever-increasing number of homes.
Cogeco Cable is currently reviewing all of its disclosure and inter-
nal controls to ensure compliance with Multilateral Instrument
CSA 52-109
1
. Every major process that impacts financial results
will be reviewed – and improvements implemented. We believe
that such an exhaustive review will improve operational efficiency,
provide more effective management of operational risk, and
result in increased returns. It will also have a positive impact on
customer service processes and contribute to the improvement
of our customer approach.
A BRIGHT FUTURE
Throughout 2004, Cogeco Cable held the course it set in 2003.
Almost all of our performance indicators are up: Free Cash Flow,
revenue and Operating Margin. We have significantly reduced
capitalized costs associated with acquisitions of fixed assets and
deferred charges. And, we have stemmed the loss of basic-service
customers while increasing the number of Internet and digital
cable customers. Cogeco Cable is intent on satisfying its customers
and improving the value of the company for its shareholders, and
fiscal 2004 has yielded convincing results.
During fiscal 2004, excluding the accounting changes and the
amendments to the Ontario income tax rates, we were able to
raise the return on shareholder’s equity from 0% to 1.9%. We are
still aiming for 10% in the coming years, and every member of the
Cogeco Cable team is committed to this ambitious objective.
The strategic directions the Corporation has set are promising and
2005 will bring results that reflect the passion of the Cogeco Cable
staff. Our employees deserve special recognition for the remarkable
results they achieved in 2004. They have contributed with great
dedication, each in their own area of expertise, toward our cus-
tomer-focused approach, which is the cornerstone of our corporate
culture and success.
In the coming years, we envision continued growth of Free Cash
Flow, which should be between $45 million and $50 million at
year-end 2005, despite the launch of our IP telephony service
and the resumption of programs to modernize our networks.
Cogeco Cable remains alert to external growth opportunities in
line with its strategy and expertise.
One of the seasoned members on the Board of Directors will not
be seeking a new mandate at the December 2004 Shareholder’s
Meeting. Mr. Daniel Damov, a member of the Board since 1994,
has earned our most sincere gratitude for his contributions to
the Board of Directors which includes serving as Chairman of
the Human Resources Committee. His insight, experience, and
availability have been true assets to the Board’s deliberations
and have helped us to better understand, evaluate, and chart
the Corporation’s strategic directions over the years.
We would also like to take this opportunity to welcome
Mrs. Germaine Gibara and Mr. William Press Cooper to the Board.
In the last few months, their contributions have already been felt,
and their vast experience will enrich our reflections on the future
of Cogeco Cable.
Fiscal 2004 has ended on a positive note and all signs point to a
prosperous 2005. The communications industry is a fascinating
one. Because listening is the key to successful communication,
Cogeco Cable is intent on listening closely to its customers.
Louis Audet Maurice Myrand
President and Chairman of the Board
Chief Executive Officer
On behalf of the Board of Directors and the Cogeco Cable team,
Iwould like to thank Mr. Maurice Myrand, who will not be seeking
anew mandate, for his considerable contributions to the success
of Cogeco Cable since 1993, especially those he made as Chairman
of the Board of Directors since 1996. Maurice worked relentlessly
and with unparalleled tact to build a corporate governance system
worthy of the largest corporations in Canada. His dedication,
vision, and leadership have helped the Corporation to clearly
define its strategic objectives, to unite and motivate all of us,
to improve our work methods, and to increase our returns.
Louis Audet
President and Chief Executive Officer
1
Multilateral Instrument 52-109 “Certification of Disclosure in Issuers’ Annual and Interim Fillings”