Cogeco 2014 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2014 Cogeco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 105

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105

MD&A COGECO CABLE INC. 2014 37
Operating expenses
For the period ended August 31, 2014, operating expenses increased by $4.5 million, or 8.8%, to $56.2 million. Operating expenses increased
during the fourth quarter as a result of additional programming costs, the deployment of TiVo's digital advanced television services as well as
marketing initiatives to improve PSU growth and by the appreciation of the US dollar over the Canadian dollar.
Operating expenses in local currency for the fourth quarter of fiscal 2014 amounted to US$51.9 million compared to US$49.8 million for the fourth
quarter of fiscal 2013.
Adjusted EBITDA and operating margin
Fiscal 2014 fourth-quarter adjusted EBITDA increased by 9.2% to reach $43.5 million, compared to $39.8 million for the same period of last year
as a result of the factors previously discussed. As a result of revenue growth exceeding operating expenses growth, operating margin for the
2014 fourth quarter slightly increase to 43.6% from 43.5% compared to the same period of last year.
Fiscal 2014 fourth-quarter adjusted EBITDA in local currency amounted to US$40.1 million compared to US$38.4 million for the same period last
year.
ENTERPRISE DATA SERVICES
OPERATING RESULTS
Quarters ended August 31, 2014 2013 Change
(in thousands of dollars, except percentages) $$ %
Revenue 75,791 70,548 7.4
Operating expenses 50,491 43,649 15.7
Adjusted EBITDA 25,300 26,899 (5.9)
Operating margin 33.4% 38.1%
Revenue
Fiscal 2014 fourth-quarter revenue reached $75.8 million compared to $70.5 million for the same period last year. Revenue increased due to the
organic growth from colocation, managed and dedicated hosting and connectivity services as well as the appreciation of the US dollar and the
British Pound against the Canadian dollar for our foreign operations. However, revenue has been negatively impacted by non recurring billing
adjustments and credit notes mainly resulting from the findings of certification process that is underway as well as the continuous improvement
of controls and procedures as a result of a year of integration, consolidation and further enhancement in the segment.
Operating expenses
For the fourth quarter of fiscal 2014, operating expenses increased by $6.8 million to $50.5 million due to the organic growth and the appreciation
of the US dollar and the British Pound currency against the Canadian dollar. Moreover, operating expenses were also negatively impacted by
non recurring additional costs such as the transformation of the sales force in order to enhance our market position combined with the continuous
improvement of controls and procedures and other initiatives as a result of a year of integration, consolidation and further enhancement in the
segment.
Adjusted EBITDA and operating margin
As a result of operating expenses growth exceeding revenue growth, fiscal 2014 fourth-quarter adjusted EBITDA decreased by $1.6 million to
reach $25.3 million compared to the same period of the prior year. Fiscal 2014 fourth-quarter operating expenses have been negatively impacted
by approximately $3.0 million with regards to the non recurring adjustments recorded in the fourth quarter. Consequently, operating margin
decreased to 33.4% from 38.1% in the fourth quarter compared to the same period of the prior year.