Cogeco 2015 Annual Report Download - page 78

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Consolidated financial statements COGECO CABLE INC. 2015 77
The acquisition was accounted for using the purchase method. The preliminary allocation of the purchase price of MetroCast Connecticut
is as follows, pending the finalization of the determination of the fair value of the net assets acquired:
(In thousands of Canadian dollars) $
Consideration
Paid
Purchase price 261,600
Working capital adjustments 1,640
263,240
Net assets acquired
Trade and other receivables 616
Prepaid expenses and other 1,696
Property, plant and equipment 51,368
Intangible assets 108,564
Goodwill 101,685
Trade and other payables assumed (689)
263,240
The amount of goodwill which is expected to be deductible for tax purposes, is mainly attributable to revenue and adjusted EBITDA growth
considering sizeable residential and business growth opportunities, to the tax benefit of amortizing goodwill and intangible assets in an asset
purchase, to the expected benefits from the corporate tax structure and to the strength of MetroCast Connecticut's assembled workforce.
In connection with this acquisition, the Corporation incurred acquisition-related costs of $1.6 million which have been recognized in the
current year as “Integration, restructuring and acquisition costs” in the Corporation’s consolidated statements of profit or loss.
Impact of the acquisition on the results of Cogeco Cable
Revenue and profit for the year include revenue of $1.7 million and profit for the year of $0.2 million attributable to the additional operations
generated by the acquisition of MetroCast Connecticut.
Had the business combination been effective at September 1, 2014, the consolidated revenue of the Corporation would have been $2.1
billion, and the profit for the year would have been $262.6 million for the year ended August 31, 2015. Management considers these “pro-
forma” numbers to represent an approximate measure of the performance of the combined group and to provide a reference point for
comparison in future periods. In determining these amounts, management has assumed that the fair value adjustments, determined on a
preliminary basis, that arose on the acquisition date would have been the same, in all material respects, if the acquisition had occurred on
September 1, 2014.
7. OPERATING EXPENSES
Years ended August 31, 2015 2014
(In thousands of Canadian dollars) $$
Salaries, employee benefits and outsourced services 343,850 324,272
Service delivery costs(1) 591,336 558,378
Customer related costs(2) 62,304 67,054
Other external purchases(3) 105,470 94,856
1,102,960 1,044,560
(1) Include cost of equipment sold, content and programming costs, payments to other carriers, data centre expenses, franchise fees and network costs.
(2) Include advertising and marketing expenses, selling costs, billing expenses, bad debts and collection expenses.
(3) Include office building expenses, professional service fees, Canadian Radio-television and Telecommunications Commission (“CRTC”) fees and other
administrative expenses.