Annual Report 2011 - Canlan Ice Sports

Management Discussion & Analysis
Administration expenses are generally consistent throughout the year.
2011 2010
in thousands Expense % of total Expense % of total
Q1 $1,177 28 $1,027 23
Q2 1,076 25 1,066 23
Q3 1,004 24 1,152 25
Q4 1,014 24 1,319 29
$4,271 100 $4,564 100
EBITDA
After accounting for ice rink operating costs of $57.8 million (2010 - $55.6 million) and G&A expenses of $4.3 million
(2010: $4.6 million), EBITDA increased by $0.1 million to $9.8 million, an increase of 1.3%.
The Company recorded the following EBITDA by quarter in 2011 and 2010:
2011 2010
in thousands EBITDA % of total EBITDA % of total
Q1 $4,681 48 $4,775 49
Q2 724 7 465 5
Q3 2 - (128) (1)
Q4 4,441 45 4,606 47
$9,848 100 $9,718 100
The Company generates the vast majority of its operating profit during
the fall and winter seasons (first and fourth quarters) that produce 56%
(2010 - 57%) of our total revenue. This seasonality contributes to quarterly
variability of our earnings because a significant portion of our operating
costs are relatively fixed.
Gross Margin
Gross margin is calculated as revenue less operating and G&A expenses,
expressed as a percentage of revenue. Gross margin for 2011 was 13.7%
compared to 13.9% in 2010.
This trend is illustrated as follows:
$25.0
Non-operating Expenses
$20.0
Depreciation
$15.0
$10.0
Revenue
Costs
EBITA
Depreciation expense of $5.2 million in 2011 increased by $0.2 million due
to the addition of the Romeoville property and other capital asset additions
in existing facilities.
$5.0
$0.0
Q1 Q2 Q3 Q4
The Company’s amortization policy was unchanged during the year other
than the additional two components of property, plant and equipment as a
result of transition to IFRS. The policy calls for straight-line amortization
of ice rink assets over periods ranging from five years to forty years.
20 Canlan Ice Sports Corp. 2011 Annual Report