CABLE SEGMENT
Giving effect to the recent acquisition of ABB on November 30, 2012, Cogeco Cable revised its financial guidelines for the 2013 fiscal year issued on November 1, 2012 to include a nine-month period of ABB's financial projections. Projections for the Enterprise services were maintained as initially projected. In the Cable services segment in Canada, guidelines remained essentially the same, except for revenue and acquisitions of property, plant and equipment which should be lower than originally expected due to lower PSU growth as a result of current uncertain economic environment, the service category maturity and competitive offers. Nonetheless, management expects revenue to reach $1.590 billion, representing a growth of $240 million, or 17.8%, when compared to those issued on November 1, 2012. PSU progression should reduce from 50,000 to 35,000, including ABB nine-month operations. Operating income before depreciation and amortization should increase by $121 million to reach $735 million reflecting the ABB acquisition and the cost reduction initiatives implemented in Canada during the current fiscal year and, consequently operating margin should increase from 45.5% to 46.2%. Depreciation and amortization of property, plant and equipment and intangible assets should increase from $290 million to $330 million and acquisition of property, plant and equipment, intangible and other assets should increase by $20 million to take into consideration the ABB nine-month operations, partly offset by the reduction in the Cable services segment in Canada. Financial expense should amount to $96 million, an increase of $32 million, as a result of the cost of financing of ABB acquisition. Fiscal 2013 free cash flow is expected to amount to $170 million, an increase of $65 million, or 61.9%, when compared to the free cash flow projection issued on November 1, 2012, stemming primarily from the nine-month operations of ABB combined with the reduction in acquisitions of property, plant and equipment, intangible and other assets explained above. Profit for the year is expected to amount to $225 million, $35 million higher than the November 1, 2012 projections, mainly as a result of the ABB's expected financial results for the nine-month operations.
Fiscal 2013 revised financial guidelines are as follows:
-------------------------------------------------------------------------------------------------------------------------------------------------------- Revised Original projections projections January 14, 2013 November 1, 2012 Fiscal 2013 Fiscal 2013(in millions of dollars, except net customer additions and operating margin) $ $----------------------------------------------------------------------------Financial guidelines Revenue 1,590 1,350 Operating income before depreciation and amortization 735 614 Operating margin 46.2% 45.5% Depreciation and amortization 330 290 Financial expense 96 64 Current income tax expense 92 95 Profit for the year 225 190 Acquisitions of property, plant and equipment, intangible and other assets 370 350 Free cash flow(1) 170 105Net customer addition guidelines PSU growth 35,000 50,000--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Free cash flow is calculated as operating income before depreciation and amortization less integration, restructuring and acquisition costs, financial expense, current income tax expense and acquisitions of property, plant and equipment, intangible and other assets.
