Cogeco 2012 Annual Report Download - page 36

Management’s Discussion and Analysis (MD&A) COGECO CABLE INC. 2012 35
ENTERPRISE SERVICES
Operating results
Fiscal 2012 fourth-quarter revenue increased by $3.8 million, or 19.5%, at $23.1 million mainly as a result of the acquisitions of QTI and MTO
during the fourth quarter of fiscal 2011 combined with an increase of 8.8% related to organic growth, partly offset by non-recurring revenue in
fiscal 2011 related to a one-time project development.
Fiscal 2012 fourth-quarter operating expenses increased by $0.4 million, or 3.2%, at $11.9 million mainly attributable to the acquisition of QTI
and MTO and to servicing new customers, partly offset by additional expenses in fiscal 2011 related to a one-time project development.
The operating income before depreciation and amortization increased by 43.5% of which 27.7% comes from organic growth. The operating
margin increased to 48.7% from 40.5%, mainly attributable to additional expenses in fiscal 2011 related to a one time project development as
well as the acquisitions of QTI and MTO.
CASH FLOW ANALYSIS
Quarters ended August 31, 2012 2011
(in thousands of dollars) $$
Operating activities
Cash flow from operations 126,946 144,699
Changes in non-cash operating activities 75,065 70,760
A
mortization of deferred transaction costs and discounts on long-term debt (747) (659)
Income taxes paid (15,090) (91)
Current income tax expense (recovery) 15,476 (7,509)
Financial expense paid (14,324) (9,836)
Financial expense 16,017 14,483
203,343 211,847
Investing activities (124,480) (251,695)
Financing activities (12,803) 755
Net change in cash and cash equivalents from continuing operations 66,060 (39,093)
Net change in cash and cash equivalents from discontinued operations (1) – (1,551)
Cash and cash equivalents from continuing and discontinued operations, beginning of period 149,331 96,091
Cash and cash equivalents from continuing and discontinued operations, end of period 215,391 55,447
(1) For further details on the Corporation’s cash flows attributable to discontinued operations, please refer to the “Disposal of subsidiary and discontinued
operations” section on page 31.
During the fourth quarter of 2012, cash flow from operations reached $126.9 million, 12.3% lower than the comparable period last year,
primarily due to the increase in current income tax expense, partly offset by the increase in operating income before depreciation and
amortization. Changes in non-cash operating items generated cash inflows of $75.1 million compared to $70.8 million for the same period in
fiscal 2011, mainly as a result of a higher increase in trade and other payables, partly offset by a decrease in provision compared to an
increase in prior year and an increase in trade and other receivables compared to a decrease in prior year.
Fiscal 2012 fourth-quarter investing activities amounted to $124.5 million, a decrease of 50.5% when compared to $251.7 million in the fourth
quarter of the prior year. The decrease is primarily due to the acquisitions of QTI and MTO for a total of $131.2 million, included in fiscal 2011
fourth-quarter. Except for the business combinations, investing activities are mainly composed of acquisitions of property, plant and equipment,
intangible and other assets. Acquisition of intangible and other assets are mainly attributable to reconnect and additional service activation
costs as well as other customer acquisition costs. For fiscal 2012 fourth-quarter, the acquisition of property, plant and equipment amounted to
$119.2 million and acquisitions of intangible and other assets amounted to $5.2 million compared to $118.3 million and $2.3 million,
respectively, for the same period of prior year.
In the fourth quarter of 2012, the Corporation generated free cash flows of $2.6 million compared to $24 million in the prior year. The decrease
in free cash flow over the prior year is due to the difference in the recognition of current income tax expense compared to income tax recovery
in prior year, partly offset by the increase of operating income before depreciation and amortization.
In the fourth quarter of 2012, Indebtedness affecting cash remained essentially the same. In the fourth quarter of 2011, Indebtedness affecting
cash decreased by $10.6 million mainly through net repayments on the Corporation’s Term Revolving Facility of $11.2 million.
During the fourth quarter of fiscal 2012, a dividend of $0.25 per share was paid to the holders of subordinate and multiple voting shares,
totalling $12.2 million, 25% higher than the dividend of $0.20 per share, or $9.7 million the year before.