Cogeco 2014 Annual Report Download - page 21

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20 COGECO CABLE INC. 2014 MD&A
Fiscal 2014 depreciation and amortization expense reached $460.3 million compared to $382.7 million in the prior year. The increase resulted
mainly from the full year impact from the recent acquisitions as well as the appreciation of the US dollar and British Pound currency compared
to the Canadian dollar and from additional acquisitions of property, plant and equipment.
For fiscal 2014 financial expense increased by $1.5 million to reach $130.2 million, compared to $128.8 million in the prior year as a result of the
financing costs related to the recent acquisitions as well as the appreciation of the US dollar and British Pound currency compared to the Canadian
dollar, partly offset by a make-whole premium of $10.2 million related to the early repayment of the Senior Secured Debentures Series 1 that
occurred in the fourth quarter of fiscal 2013. For further details, please refer to the “Capital resources and liquidity” section.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
During the fourth quarter of fiscal 2014, the Corporation recognized in its Enterprise data services segment an impairment of $3.3 million of
property, plant and equipment related to the rationalization of its automation platforms with regard to data centre operating activities.
During the third quarter of fiscal 2014, the Corporation's subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2 million of property,
plant and equipment, capitalized wages and borrowing costs related to an Internet Protocol Television ("IPTV") solution and related projects on
which its Canadian cable services segment had worked. As a result of the unexpected performance issues encountered with the platform, it had
to be abandoned by Cogeco Cable Canada.
INCOME TAXES
Fiscal 2014 income taxes amounted to $53.2 million, compared to $62.8 million in the prior year. The decrease in fiscal 2014 is mostly attributable
to the impairment of property, plant and equipment explained above, the increase in fixed charges as well as the favorable impact of the tax
structure implemented when the recent acquisitions were concluded, partly offset by the improvement of adjusted EBITDA.
PROFIT FOR THE YEAR
Fiscal 2014 profit for the year amounted to $209.4 million, or $4.30 per share compared to a profit for the year of $184.9 million, or $3.80 per
share for the prior year. Profit progression for the year is mostly attributable to the improvement of adjusted EBITDA explained above as well as
the decreases in integration, restructuring and acquisition costs and income taxes, partly offset by the impairment of property, plant and equipment
and the increase in fixed charges explained above.
The Corporation maintained its return on equity(1) of 14.7% for the year ended August 31, 2014, which is comparable to 14.6% for the prior year.
CUSTOMER STATISTICS
Net additions (losses) % of penetration(1)
August 31, 2014 Years ended August 31, August 31,
Consolidated UNITED STATES CANADA 2014 2013 2014 2013
PSU 2,442,184 496,162 1,946,022 (25,473) 7,423
Television service customers 1,023,094 225,929 797,165 (43,858) (33,476) 46.4 48.7
HSI service customers 869,453 189,869 679,584 31,008 28,437 39.5 38.3
Telephony service customers 549,637 80,364 469,273 (12,623) 12,462 24.9 25.7
(1) As a percentage of homes passed.
(1) Return on equity is defined as profit for the year divided by average shareholders' equity (computed on the basis of the beginning and ending balance for a
given fiscal year).