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MD&A COGECO CABLE INC. 2015 19
2.5 KEY PERFORMANCE INDICATORS AND PERFORMANCE HIGHLIGHTS
The following key performance indicators are closely monitored to ensure that business strategies and objectives are closely aligned with
shareholder value creation. The key performance indicators are not measurements in accordance with IFRS and should not be considered an
alternative to other measures of performance in accordance with IFRS. The Corporation's method of calculating key performance indicators
may differ from other companies and, accordingly, these key performance indicators may not be comparable to similar measures presented by
other companies. The Corporation measures its performance, with regard to these objectives by monitoring adjusted EBITDA(1), operating
margin(1), free cash flow(1) and capital intensity(1).
Original
projections
October 31, 2014 Actual
Achievement
of the original
projections(1)
Fiscal 2015 Fiscal 2015 Fiscal 2015
(in millions of dollars, except percentages) $$
Financial guidelines
Revenue 2,030 2,043
Adjusted EBITDA 925 930
Operating margin 45.6% 45.5%
Integration, restructuring and acquisition costs(2) —14
Depreciation and amortization 465 467
Financial expense 125 142
Current income taxes 100 91
Profit for the year 260 258
Acquisitions of property, plant and equipment, intangible and other assets 430 439
Free cash flow 280 286
Capital intensity 21.2% 21.5%
: Surpassed : Achieved : Under-achieved
(1) Achievement of the projections is defined as within 3% above or below the projected amount.
(2) The integration, restructuring and acquisition costs are comprised of acquisition costs of $1.6 million with regards to a business combination in the American
cable services segment and restructuring costs of $12.3 million related to the operational, financial and organizational restructuring in the Enterprise data
services segment.
For fiscal 2015, Cogeco Cable achieved or surpassed virtually all of its key performance indicators compared to its original projections issued on
October 31, 2014. For further details on the Corporation's operating results, please refer to the “Operating and financial results”, the "Segmented
operating results" and the "Cash flow analysis" sections.
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(1). 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. Fiscal 2015 adjusted EBITDA amounted to $930 million, achieving the Corporation's original projections. The operating
margin reached 45.5% in fiscal 2015, compared to the original projections of 45.6% issued on October 31, 2014.
FREE CASH FLOW
Free cash flow is defined as cash flow from operations less acquisitions of property, plant and equipment, intangible and other assets. The financial
community closely monitors this indicator since it measures the Corporation's ability to repay debt, distribute capital to its shareholders and finance
its growth. Fiscal 2015 free cash flow amounted to $286 million, achieving the Corporation's original projections. The Corporation expects to use
the increased free cash flow to reduce its indebtedness and further invest where appropriate.
CAPITAL INTENSITY AND ACQUISITIONS OF PROPERTY, PLANT AND
EQUIPMENT, INTANGIBLE AND OTHER ASSETS
The capital intensity ratio is defined as amount spent for acquisitions of property, plant and equipment and intangible assets divided by revenue
generated for the comparable period. The capital intensity ratio measures the Corporation's investment in capital expenditures in order to support
a certain level of revenue. For fiscal 2015, the Corporation reached acquisitions of property, plant and equipment, intangible and other assets of
$439 million and revenue of $2.0 billion for a capital intensity of 21.5% compared to 21.2% as projected, thus achieving its original projections.
(1) The indicated terms do not have standardized definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other
companies. For more details, please consult the “Non-IFRS financial measures” section of the MD&A.