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MD&A COGECO CABLE INC. 2014 53
ADJUSTED EBITDA AND OPERATING MARGIN
Adjusted EBITDA and operating margin are benchmarks commonly used in the telecommunications industry, as they allow comparisons with
companies that have different capital structures and are more current measures since they exclude the impact of historical investments in assets.
Adjusted EBITDA evolution assesses Cogeco Cable's ability to seize growth opportunities in a cost-effective manner, to finance its ongoing
operations and to service its debt. Adjusted EBITDA is a proxy for cash flow from operations. Consequently, adjusted EBITDA is one of the key
metrics used by the financial community to value the business and its financial strength. Operating margin is calculated by dividing adjusted
EBITDA by revenue.
The most comparable IFRS financial measure is profit for the period. Adjusted EBITDA and operating margin are calculated as follows:
Quarters ended Years ended
August 31,
2014 August 31,
2013
(1) August 31,
2014 August 31,
2013
(1)
(in thousands of dollars, except percentages) $$$$
Profit for the period 63,848 43,870 209,441 184,895
Income taxes 16,272 11,159 53,184 62,774
Financial expense 32,716 48,702 130,221 128,770
Impairment of property, plant and equipment 3,296 —35,493 —
Depreciation and amortization 113,742 114,103 460,282 382,714
Integration, restructuring and acquisitions costs 956 4,705 4,736 21,570
Adjusted EBITDA 230,830 222,539 893,357 780,723
Revenue 490,155 470,386 1,947,591 1,692,466
Operating margin 47.1% 47.3% 45.9% 46.1%
(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated
financial statements.
CAPITAL INTENSITY
Capital intensity is used by Cogeco Cable’s management and investors to assess the Corporation’s investment in capital expenditures in order
to support a certain level of revenue. Capital intensity ratio is defined as amount spent for acquisitions of property, plant and equipment, intangible
and other assets divided by revenue.
Capital intensity is calculated as follows:
Quarters ended Years ended
August 31,
2014 August 31,
2013 August 31,
2014 August 31,
2013
(in thousands of dollars, except percentages) $$$$
Acquisition of property, plant and equipment 164,171 102,241 400,846 388,698
Acquisition of intangible and other assets 954 4,917 14,626 18,567
Assets acquired under finance leases —937 —937
Total acquisitions of property, plant and equipment, intangible and other assets 165,125 108,095 415,472 408,202
Revenue 490,155 470,386 1,947,591 1,692,466
Capital intensity 33.7% 23.0% 21.3% 24.1%
ADDITIONAL INFORMATION
This MD&A was prepared on October 31, 2014. Additional information relating to the Corporation, including its Annual Information Form, is
available on the SEDAR website at www.sedar.com or on the Corporation's website at www.cogeco.ca.