PRESS RELEASE
For immediate release
COGECO Inc. reports s tr ong fiscal 2013 financial results
• Solid revenue and operating income before depreciation and amortization
(1)
increases in the fourth
quarter and in fiscal year 2013, meeting revised financial guidelines
• On target
financial
results from
Cogeco
Cable
Inc.'s
recent
acquisitions
Atlantic Broadband
and Peer
1 Network Enterprises Inc. ("PEER 1"); and
• Quarterly dividend increase of 15.8%.
Montréal, October 30, 2013 – Today, COGECO Inc. (TSX: CGO) (“COGECO” or the “Corporation”) announced its financial
results for the fourth quarter and fiscal year 2013, ended August 31, 2013, in accordance with International Financial Reporting
Standards (“IFRS”).
For the fourth quarter and fiscal 2013, which include nine months operating results of Atlantic Broadband and seven months
operating results of PEER 1:
• Fourth quarter revenue increased by 41.5% to reach $504.7 million and by 30.4% for fiscal 2013 to close at $1.8 billion
when compared to the same periods of the prior year;
• Operating income before depreciation and amortization
(1)
increased by 37.1% to $224.3 million compared to the fourth
quarter of fiscal 2012, and by 31.4% to $797.4 million compared to the prior year. Operating income before depreciation
and amortization increases for both periods are mainly from the Cable segment and attributable to the acquisitions of
Atlantic Broadband and PEER 1 (the "recent acquisitions") as well as to the financial results improvement from organic
growth;
• Profit for the period from continuing operations amounted to $43.8 million in the fourth quarter compared to $44.9
million for the same period of the previous fiscal year. The decrease is mostly attributable to additional depreciation
and amortization and financial expense both related to the recent acquisitions. It is partly offset by the operating income
before depreciation and amortization improvement stemming from the Cable segment organic growth, the recent
acquisitions combined with lower income tax expenses resulting from the recent acquisitions tax structure. For fiscal
2013, profit for the year from continuing operations amounted to $189.8 million compared to $174.2 million for fiscal
2012. Profit progression is mostly attributable to the improvement in the operating income before depreciation and
amortization generated by the Cable segment, partly offset by additional depreciation and amortization, financial
expense and acquisition costs all related to the recent acquisitions;
• Profit for the period amounted to $43.8 million in the fourth quarter when compared to $44.9 million for the same period
of the previous fiscal year due to the factors previously described. For the year ended August 31, 2013, profit for the
year amounted to $189.8 million when compared to $229.7 million for the same period of fiscal 2012. The decline for
the year is attributable to the factors previously described and also due to last year's profit of $55.4 million from the
sale of the Portuguese subsidiary, Cabovisão - Televisão por Cabo, S.A. (“Cabovisão”), reported as discontinued
operations in fiscal 2012;
(1) The indicated terms do not have standardized definitions prescribed by International Financial Reporting Standards (“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 Management’s
discuss ion and analysis (“ MD &A ”)
• Free cash flow
(1)
reached $53.7 million for the fourth quarter compared to negative free cash flow of $5.0 million in the
comparable quarter of the prior year. The increase for the period is mostly attributable to the improvement of operating
income before depreciation and amortization as well as to the decrease in acquisition of property, plant and equipment
and current income taxes, partly offset by the increase in financial expense. Fiscal 2013 free cash flow amounted to
$151.7 million compared to $68.7 million in fiscal 2012. The increase for the year is mostly attributable to the
improvement of operating income before depreciation and amortization and the decrease in current income taxes,
partly
offset
by the increase in financial expense, the recent acquisition
costs
and the increase in acquisition of property,
plant and equipment;
• A quarterly dividend of $0.19 per share was paid to the holders of subordinate and multiple voting shares, an increase
of $0.01 per share, or 5.6%, compared to a dividend of $0.18 per share paid in the fourth quarter of fiscal 2012.
Dividends paid in fiscal 2013 totaled $0.76 per share compared to $0.72 per share in f is cal 2012;
• Cable segment fourth-quarter 2013 primary service units (“PSU”)
(2)
decreased by 15,237 and increased by 5,546 for
fiscal 2013
.
At August 31, 2013, consolidated PSU amounted
to
2,465,780
of
which 1,980,122 come from the Canadian
operations and 485,658 from the American opera tion s;
•
On
October 30, 2013,
COGECO
declared an eligible dividend of $0.22 per share, an increase of 15.8% when compared
to the $0.19 dividend per share paid in the fourth quarter of fiscal 2013;
• On June 27, 2013, the Corporation's subsidiary, Cogeco Cable, completed, pursuant to a private placement, the
issuance of US$215 million Senior Secured Notes bearing interest at 4.30% payable semi-annually and maturing on
June 16, 2025. The net proceeds from this offering along with drawings under Cogeco Cable's credit facilities were
used to repay, on July 29, 2013, all the outstanding amount of $300 million Senior Secured Debentures Series 1, due
on June 9, 2014;
• On July 22, 2013, Cogeco Cable entered into interest rate swap agreements to fix the interest rate on US$200 million
of its LIBOR based loans. These agreements have the effect of converting the floating US LIBOR base rate at an
average fixed rate of 0.39625% under its Term Revolving Facility until July 25, 2015; and
• On July 5, 2013, Cogeco Cable reduced its Term Revolving Facility from $750 million to $600 million and its Revolving
Facility of its Secured Credit Facilities from $240 million to $190 million .
"Fiscal 2013 proved to be a strong financial year for COGECO and its subsidiaries, during which good headway was made in
positioning the business toward sustained profitable growth," stated Louis Audet, President & Chief Executive Officer of COGECO
Inc.
"Our Cogeco Cable subsidiary completed two acquisitions that allowed the Corporation, on the one hand, to diversify its cable
assets geographically and, on the other hand, build a stronger footprint in the promising data hosting and managed IT services
market. As a logical aftermath to its evolving portfolio, Cogeco Cable regrouped its Canadian cable operations under a self-
standing operational unit, a move that will better facilitate continued excellence in product innovation and customer service to the
benefit of its Canadian Digital Television, Telephony and HSI customers. All of this, along with the successful refinancing that
was completed during a period of low interest rates, should enhance Cogeco Cable’s financial performance in fiscal 2014,"
continued Mr. Audet.
"Our Cogeco Diffusion subsidiary also fared well in fiscal 2013, having completed the full integration of Cogeco Métromédia.
Today, we have the largest commercial talk radio network in the province of Quebec, attracting listeners who represent families
among those with the highest per capita income profile very much sought after by advertisers. I am very pleased with our overall
results and am optimistic about our ability to deliver on our 2014 projections with a steady performance our investors can count
on," concluded Louis Audet.
Fiscal 2014 Financial Guidelines
COGECO revised its fiscal 2014 financial guidelines, as issued on July 10, 2013, as a result of certain adjustments related to the
preliminary allocation of the purchase price of Atlantic Broadband and PEER 1 in the Cable segment. Please consult the “Fiscal
2014 financial guidelines” section of the Corporation’s 2013 Annual Report for further details.
(1) The indicated terms do not have standard 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.
(2) Re pr es e nts th e sum of Television, High S pee d Internet (" HSI") and Telephony service customers.
FINANCIAL HIGHLIGHTS
Quarte rs end ed Years ended
(in thousands of dollars, except PSU growth, percentages and
per share data)
August 31,
2013
August 31,
2012 Change
August 31,
2013
August 31,
2012 Change
Operations
$ $ % $ $ %
Revenue 504,714 356,685 41.5 1,834,257 1,406,353 30.4
Operating income before depreciation and amortization
(1)
224,304 163,617 37.1 797,426 606,842 31.4
Operating income 104,110 95,943 8.5 387,489 324,989 19.2
Profit for the period from continuing operations 43,759 44,900 (2.5) 189,777 174,246 8.9
Profit for the period from discontinued operations — —
— — 55,446
—
Profit for the period 43,759 44,900 (2.5) 189,777 229,692 (17.4)
Profit for the period attributable to owners of the Corporation 13,826 13,889 (0.5) 64,088 77,051 (16.8)
Cash Flow
Cash flow from op era ti ng acti viti es 233,464 203,193 14.9 552,195 448,764 23.0
Cash flow from op era ti on s
(1)
162,427 119,612 35.8 563,091 447,110 25.9
Acquisitions of property, plant and equipment, intangible and
other asse ts
(2)
108,756 124,638 (12.7) 411,422 378,369 8.7
Free cash flow
(1)
53,671 (5,026) — 151,669 68,741 —
Financial Condition
Property, plant and equi pm en t — — — 1,874,866 1,343,904 39.5
Total assets — — — 5,452,513 3,103,919 75.7
Indebtedness
(3)
— — — 3,054,275 1,180,971 –
Equity attributable to owners of the Corporation — — — 457,285 397,799 15.0
Primary service units (“PSU”) gr o wt h (decline)
(4)
(15,237) 7,564 — 5,546 73,645 (92.5)
Per Share Data
(5)
Earnings per share attributable to owners of the Corporation
From continuing and discontinued operations
Basic 0.83 0.83
— 3.83 4.61 (16.9)
Diluted 0.82 0.83 (1.2) 3.81 4.58 (16.8)
From continuing operations
Basic 0.83 0.83 — 3.83 3.54 8.2
Diluted 0.82 0.83 (1.2) 3.81 3.52 8.2
From discontinued operations
Basic — — — — 1.07 —
Diluted — — — — 1.06 —
(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.
(2) Fiscal 2013 fourth-quarter and fiscal 2013 acquisitions of property, plant and equipment, intangible and other assets include assets acquired under finance
lease of $0.9 million that are excluded from the statements of cas h flo ws .
(3) Indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt, bala nce due on busi nes s com bin ati o ns and obl iga ti on s und er
derivative financial instruments.
(4)
Represents the sum of Television, High Spee d Inte rn et (“H S I ”) an d Telephony service customers.
(5) Per multiple and subordinate voting share.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking
information may relate to COGECO’s future outlook and anticipated events, business, operations, financial performance, financial condition
or results and, in some cases, can be identified by terminology s uch as "may"; "will"; "should"; " expect"; "plan"; " anticipate"; "beli eve"; "intend";
"estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters t hat are not historical facts. In
particular, statements regarding the Corporation’s future operating results and economic performance and its objectives and strategies are
forward-
looking
statements.
These statements are based on certain
factors
and assumptions including expected growth, results
of
operations, performance
and business prospects and opportunities, which COGECO believes are reasonable as of the current date. While management considers these
assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. The Corporation
cautions the reader that the economic downturn experienced over the past few years makes forward-looking information and the underlying
assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the
Corporation’s expectations. It is impossible for COGECO to predict with certainty the impact that the current economic uncertainties may have
on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in
the “Uncertainties
and main risk factors” section of the Corporation's 2013 annual Management's Discussion and Analysis ("MD&A")) that could cause actual results
to differ materially from what
COGECO
currently expects. These
factors
include risks pertaining to markets and competition, technology, regulatory
developments, operating costs, information systems, disasters or other contingencies, financial risks related to capital requirements, human
resources, controlling shareholder and holding
structure,
many of which are beyond the Corporation’s control. Therefore, future events and results
may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information
and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation and does
not undertake to update or alter this information at any particular time, except as may be required by law.
All amounts are stated in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the MD&A included
in the Corporation’s 2013 Annual Report, the Corporation's consolidated financial statements and the notes thereto, prepared in accordance with
the Internati onal Financ i al Reporting Standards (“IFRS”) for the year ended August 31, 2013.
ADDITIONAL INFORMATION
Additional information relating to the Corporation, including its Annual Information Form, is available on the SEDAR website at
www.sedar.com.
The Corporation’s 2013 Annual Report c an also be found on:
http://www.cogeco.ca/cable/corporate/cgo/investors/annual_report_en_2013.html
A copy of this press release with a more detailed summary of results can be found at
http://www.cogeco.ca/cable/corporate/files/press_releases_en/2013/CGO_Q4-2013_detailed_103013.pdf
ABOUT COGECO
COGECO is a diversified holding corporation. Through its Cogeco Cable subsidiary, COGECO provides to its residential and business customers
Analogue and Digital Television, High Speed Internet and Telephony services. Cogeco Cable operates in Canada through its subsidiary Cogeco
Cable Canada in Quebec and Ontario, and in the United States through its subsidiary Atlantic Broadband in Western Pennsylvania, South Florida,
Maryland/Delaware and South Carolina. Through its subsidiary Cogeco Enterprise Services, the holding company of Cogeco Data Services and
Peer 1 Network Enterprises, Cogeco Cable provides
to
its commercial customers, a suite
of
IT
hosting, information and communications technology
services (data centre, colocation, managed hosting, cloud infrastructure and connectivity), with 20 data centres, extensive fibre networks in
Montreal and Toronto as well as points-of-presence in North America and Europe. Through its subsidiary Cogeco Diffusion, COGECO owns and
operates 13 radio stations across most of Québec with complementary radio formats serving a wide range of audiences as well as Cogeco News,
its news agency. Through its subsidiary Métromédia, COGECO operat es an advertising representation house specialized in the public transit
sector that holds exclusive advertising rights in the Province of Québec where it also represents its business partners active across other Canadian
markets. COGECO's subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CGO). The subordinate
voting shares of Cogeco
Cable are also listed on the Toronto Stock Exchange (TSX: CCA). For more information about
COGECO
and its subsidiaries visit www.cogeco.ca,
cogecodiffusion.com and cogecometromedia.com.
- 30 -
Source: COGECO Inc.
Pierre Gagné
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4700
Informati o n: Media
René Guimond
Vice-President, Public Affairs and Communications
Tel.: 514-764-4700
Analyst Conference Call: Thursday, October 31, 2013 at 11:00 a.m. (Eastern Daylight Time)
Media representat i ves may attend as listeners only.
Please use the following dial-in num ber to have access to the conference call by dialing five minutes
before the start of the conference:
Canada/United Stat es A cc ess Number: 1 866-321-6651
International Acces s Number: + 1 416-642-5212
Confirmati on Code: 7376711
By Internet at www.cogeco.ca/investors
A rebroadcast of the conference call will be available until November 7, 2013, by dialing:
Canada and United States access number: 1 888-203-1112
Internati onal access number: + 1 647-436-0148
Confirmati on code: 7376711