Cogeco 2012 Annual Report Download - page 16

Management’s Discussion and Analysis (MD&A) COGECO CABLE INC. 2012 15
IFRS 9 replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement on the classification and measurement of
financial assets and financial liabilities. The replacement of IAS 39 is a three-phase project with the objective of improving and simplifying the
reporting for financial instruments. This is the first phase of that project.
IFRS 10 replaces the consolidation requirements in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation –
Special Purpose Entities. It provides a single model to be applied in the control analysis for all investees.
IFRS 12 establishes disclosure requirements for entities that have interests in subsidiaries, joint arrangements, associates and/or
unconsolidated structures entities.
IFRS 13 replaces the fair value measurement guidance contained in individual IFRS with a single source of fair value measurement guidance.
The standard clarifies the definition of fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair
value measurements.
The amendments to IAS 1 require that an entity present separately the items of other comprehensive income (“OCI”) that may be reclassified
to profit or loss in the future from those that would never be reclassified to profit or loss.
The amendments to IAS 19 requires the recognition of actuarial gains and losses immediately in OCI, full recognition of past service costs
immediately in profit or loss, recognition of expected return on plan assets in profit or loss to be calculated based on the rate used to discount
the defined benefit obligation and additional disclosures explaining the characteristics of the Corporation’s defined benefit pension plans.
The Corporation is in the process of determining the extent of the impact of these standards on its consolidated financial statements.
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 and operation of the Corporation’s disclosure controls and procedures
and internal controls over financial reporting as of August 31, 2012, and have concluded that they are effective. Furthermore, no significant
changes to the internal controls over financial reporting occurred during the year ended August 31, 2012.
UNCERTAINTIES AND MAIN RISK FACTORS
This section outlines general as well as more specific risks faced by Cogeco Cable and its subsidiaries that could significantly affect the
financial condition, operating results or business of the Corporation. It does not purport to cover all contingencies, or to describe all possible
factors that might have an influence on the Corporation or its activities at any point in time. Furthermore, the risks and uncertainties outlined in
this section may or may not materialize in the end, may evolve differently than expected or may have different consequences than those that
are being presently anticipated.
Cogeco Cable applies an on-going risk management process that includes a quarterly assessment of risks for the Corporation and its
subsidiaries, under the oversight of the Audit Committee. As part of this process, the Corporation endeavours to identify risks that are liable to
have a major impact on the Corporation’s financial situation, revenue or activities, and to mitigate such risks proactively as may be reasonable
and appropriate in the circumstances. This section reflects management’s current views on uncertainties and the main risk factors.
RISKS PERTAINING TO MARKETS AND COMPETITION
Electronic communications markets continue to be very competitive and to evolve rapidly in North America. Competitors offer video distribution,
broadband HSI access, fixed telephone, mobile telephone and fixed and mobile data services through various means of telecommunications
facilities, including terrestrial wireline and wireless networks as well as satellite. Rivalry extends over several elements comprising the value
proposition, including the features of individual services, the composition of service bundles, the range of content or service options, quality of
service, speed of delivery, regular introductory and promotional pricing or special offers, duration of the commitment by the customer, terminal
devices, multiplatform delivery and customer service. Service bundles offered by competitors include up to “quadruple-play” offers combining
television, HSI, fixed and mobile telecommunications to residential and commercial customers.
Cogeco Cable provides “double-play” and “triple-play” service bundles in Canada, with various combinations of Telephony, HSI and Television
distribution services being offered at attractive bundle prices, but does not offer “quadruple-play” service bundles that include mobile
communications, as Cogeco Cable does not offer mobile telephone or Internet services. The Corporation continues to focus on its existing lines
of service with a view to capturing the remaining growth opportunities for HSI, Digital Television and Telephony services in its footprint, making
the most efficient use of its own hybrid fibre-coaxial (“HFC”) plant. As markets evolve and mobility becomes a more cost-effective substitute to
wireline communications, Cogeco Cable may need to add mobility components to its service offerings, through suitable mobile virtual network
(“MVNO”) arrangements with existing or future mobile operators, or otherwise through new wireless alternatives. There is no assurance that
appropriate MVNO arrangements will be concluded by the Corporation when needed, and their impact on the financial results cannot be