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TVA GROUP REPORTS $9.0 MILLION NET INCOME ATTRIBUTABLE TO SHAREHOLDERS IN Q4 2018

Le jeudi 28 février 2019

 

February 28, 2019

 

For immediate release

 

TVA GROUP REPORTS $9.0 MILLION NET INCOME ATTRIBUTABLE TO SHAREHOLDERS IN Q4 2018

 

Montreal, Canada – TVA Group Inc. (“TVA Group”, “TVA” or “the Corporation”) announced today that it recorded net income attributable to shareholders in the amount of $9.0 million or $0.21 per share in the fourth quarter of 2018, compared with net income attributable to shareholders of $9.2 million or $0.21 per share in the same quarter of 2017.

 

Fourth quarter operating highlights:

 

  • Consolidated adjusted EBITDA[1] of $25,024,000 representing a favourable variance of $2,056,000 (9.0%) from the same quarter of 2017.
  • $16,464,000 adjusted EBITDA1 in the Broadcasting & Production segment representing a favourable variance of $232,000, mainly because of an increase in adjusted EBITDA1 from the specialty services reflecting unfavourable retroactive adjustments to operating revenues recorded in the fourth quarter of 2017, largely offset by a 37.0% decrease in TVA Network’s adjusted EBITDA.1
  • $3,149,000 adjusted EBITDA 1 in the Magazines segment representing a favourable variance of $667,000 (26.9%) mainly because of the implementation of rationalization plans in recent quarters, partially offset by a decrease in operating revenues.
  • $5,411,000 adjusted EBITDA1 in the Film Production & Audiovisual Services (“MELS”) segment, a $1,157,000 (27.2%) favourable variance essentially due to an increase in adjusted EBITDA1 from soundstage and equipment rental and the increased profitability of postproduction activities. The positive factors were partially offset by lower volume of activities in visual effects, dubbing and subtitling.

“We are satisfied with our results for the last quarter of our financial year. Our operating expense reduction initiatives of recent quarters made up for the decline in operating revenues in the Broadcasting & Production and Magazines segments, which have both been hit by the decrease in advertising revenues. Meanwhile, MELS grew its operating revenues and adjusted EBITDA1.

TVA Group’s total market share increased by 0.2 points[2] to 36.6%2 in the fourth quarter of 2018. The specialty channels grew their market share by 1.4 points2 to 13.5%2, including a 0.5 point2 increase at “LCN”.

We are very pleased to be able to close the acquisition of the “Évasion” and “Zeste” specialty services on February 13, 2019, following Canadian Radio‑television and Telecommunications Commission approval. The addition of these channels will enhance our television content offering for the benefit of our viewers and advertisers. On February 22, 2019, we also signed an agreement to acquire the companies in the Incendo group. The transaction is in keeping with our push to increase our revenues from other markets, step up our international development and expand our footprint, especially in English‑language markets,” commented France Lauzière, President and CEO of the Corporation.

“The various rationalization plans implemented in recent quarters enabled the Magazines segment to grow its adjusted EBITDA[3] and post a 15.1% profit margin. We are pressing ahead with our efforts to offset the drop in revenues by cutting costs and increasing operating efficiencies, while continuing to offer the rich and varied content that sustains the popularity of our brands. Once again, we are pleased to report that TVA held its position as the top publisher of French‑language magazines in Quebec with more than 3.7 million[4] readers, while our English‑language titles are read by more than 5.9 million2 people,” added Ms Lauzière.

 

“Lastly, the Film Production & Audiovisual Services segment’s financial results improved in the fourth quarter of 2018, mainly because of the use of our soundstages and equipment by local and international producers, as well as additional volume from our acquisitions. MELS remains a growth driver for the Corporation and our rental and postproduction services are increasingly recognized and in demand,” Ms. Lauzière concluded.

 

2018 financial year results

 

For the fiscal year ended December 31, 2018, the Corporation’s consolidated adjusted EBITDA1 was $50,383,000, compared with $66,381,000 in the previous year, a 24.1% decrease. There was a 34.9% unfavourable variance in adjusted EBITDA1 in the Broadcasting & Production segment and an 18.1% decrease in the Magazines segment, due mainly to lower advertising revenues in both segments. The Film Production & Audiovisual Services segment grew its adjusted EBITDA1 by 3.1%, mainly as a result of higher volume of activities and the increased profitability of soundstage and equipment rental and postproduction, which was partially offset by lower volume of activities in visual effects. The $14,632,000 unfavourable variance in the Broadcasting & Production segment’s adjusted EBITDA1 was caused mainly by a 33.4% decrease in TVA Network’s adjusted EBITDA,1 as well as a 24.9% increase in the “TVA Sports” channel’s negative adjusted EBITDA,1 partially offset by an 8.0% increase in the adjusted EBITDA1 of the other specialty channels.

 

Consolidated operating revenues amounted to $551,910,000 in fiscal 2018 compared with $589,707,000 in the previous year, a 6.4% decrease. The Corporation recorded net income attributable to shareholders in the amount of $8,312,000, for earnings per share of $0.19, compared with a net loss attributable to shareholders of $15,951,000 for a loss of $0.37 per share in 2017.

 

In the third quarter of 2017, the Corporation had recognized a $29,993,000 non‑cash goodwill impairment charge in the Magazines segment, including $1,489,000 without any tax consequences, and a $12,412,000 non‑cash charge for impairment of intangible assets, including $3,103,000 without any tax consequences.

 

Definition

1 Adjusted EBITDA (previously adjusted operating income (loss))

In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs and others, impairment of goodwill and intangible assets, income taxes and share of income of associated corporations. Adjusted EBITDA as defined above is not a measure of results that is consistent with International Financial Reporting Standards (“IFRS”). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. This measure is used by management and the Board of Directors to evaluate the Corporation’s consolidated results and the results of its segments. This measure eliminates the significant level of impairment, depreciation and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments. Adjusted EBITDA is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. The Corporation’s definition of adjusted EBITDA may not be identical to similarly titled measures reported by other companies.

 

 

 

Conference call for investors

 

TVA Group will hold a conference call to discuss its fourth quarter and full‑year 2018 results on March 1, 2019, at 10:00 a.m. EAST. There will be a question period reserved for financial analysts. To access the call, please dial 1‑877‑293‑8052, access code for participants 66581#. A tape recording of the call will be available from March 1 to April 1, 2019 by dialling 1‑877‑293‑8133, conference number 1242598#, access code for participants 66581#.

 

Forward‑looking information disclaimer

 

The statements in this news release that are not historical facts may be forward‑looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Corporation’s actual results for future periods to differ materially from those set forth in the forward‑looking statements. Forward‑looking statements generally can be identified by the use of the conditional, the use of forward‑looking terminology such as “propose,” “will,” “expect,” “may,” “anticipate,” “intend,” “estimate,” “plan,” “foresee,” “believe” or the negative of these terms or variations of them or similar terminology. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors and the risk of loss of key customers in the Film Production & Audiovisual Services segment), programming, content and production cost risks, credit risk, government regulation risks, government assistance risks, changes in economic conditions, fragmentation of the media landscape, risk related to the Corporation’s ability to adapt to fast‑paced technological change and to new delivery and storage methods, and labour relation risks.

 

Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward‑looking statements. For more information on the risks, uncertainties and assumptions that could cause the Corporation’s actual results to differ from current expectations, please refer to the Corporation’s public filings, available at www.sedar.com and www.groupetva.ca, including in particular the “Risks and Uncertainties” section of the Corporation’s annual Management’s Discussion and Analysis for the year ended December 31, 2018 and the “Risk Factors” section in the Corporation’s 2018 annual information form.

 

The forward‑looking statements in this news release reflect the Corporation’s expectations as of February 28, 2019 and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward‑looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the applicable securities laws.

 

TVA Group

 

TVA Group Inc., a subsidiary of Quebecor Media Inc., is a communications company engaged in the broadcasting, film and audiovisual production, and magazine publishing industries. TVA Group Inc. is North America’s largest broadcaster of French‑language entertainment, information and public affairs programming and one of the largest private‑sector producers of French‑language content. It is also the largest publisher of French‑language magazines and publishes some of the most popular English‑language titles in Canada. The Corporation’s Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B. 

 

The audited consolidated financial statements, with notes, and the annual Management’s Discussion and Analysis, can be consulted on the Corporation’s website at www.groupetva.ca

 

Source:

Anick Dubois, CPA, CA

Vice‑President Finance

(514) 598‑3987

 

 

TVA GROUP INC.

Consolidated statements of income (loss)

 

(unaudited)

(in thousands of Canadian dollars, except per‑share amounts)

 

 

Three-month periods

ended December 31

Years ended

December 31

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

150,466

$

155,256

$

551,910

$

589,707

 

 

 

 

 

 

 

 

 

 

Purchases of goods and services

 

 

89,429

 

96,968

 

357,171

 

373,404

Employee costs

 

 

36,013

 

35,320

 

144,356

 

149,922

Depreciation of property, plant and equipment and amortization of intangible assets

 

 

9,833

 

8,365

 

35,542

 

34,874

Financial expenses

 

 

610

 

480

 

2,477

 

2,449

Operational restructuring costs and others

 

 

2,276

 

1,408

 

2,433

 

6,390

Impairment of goodwill and intangible assets

 

 

 

 

 

42,405

Income (loss) before tax expense (recovery) and share of income of associated corporations

 

 

12,305

 

12,715

 

9,931

 

(19,737)

 

 

 

 

 

 

 

 

 

 

Tax expense (recovery)

 

 

3,307

 

3,493

 

2,467

 

(3,631)

Share of income of associated corporations

 

 

(74)

 

(117)

 

(684)

 

(445)

Net income (loss)

 

$

9,072

$

9,339

$

8,148

$

(15,661)

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

Shareholders

 

$

9,012

$

9,210

$

8,312

$

(15,951)

Non-controlling interest

 

 

60

 

129

 

(164)

 

290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share attributable to shareholders

 

 

 

$

 

0.21

 

$

 

0.21

 

$

 

0.19

 

$

 

(0.37)

                       

 

 

TVA GROUP INC.

Consolidated statements of comprehensive income (loss)

 

(unaudited)

(in thousands of Canadian dollars)

 

 

            Three-month periods

            ended December 31

Years ended

December 31

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

9,072

$

9,339

$

8,148

$

(15,661)

 

 

 

 

 

 

 

 

 

 

Other comprehensive items that may be reclassified to income:

 

 

 

 

 

 

 

 

 

Cash flow hedge:

 

 

 

 

 

 

 

 

 

Gain on valuation of derivative financial instruments

 

 

 

8

 

 

168

Deferred income taxes

 

 

 

(2)

 

 

(45)

Other comprehensive items that will not be reclassified to income:

 

 

 

 

 

 

 

 

 

Defined benefit plans:

 

 

 

 

 

 

 

 

 

Re-measurement gain

 

 

710

 

1,150

 

710

 

1,150

Deferred income taxes

 

 

(188)

 

(308)

 

(188)

 

(308)

 

 

 

 

 

 

 

 

 

 

 

 

 

522

 

848

 

522

 

965

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

9,594

$

10,187

$

8,670

$

(14,696)

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

 

 

Shareholders

 

$

9,534

$

10,058

$

8,834

$

(14,986)

Non-controlling interest

 

 

60

 

129

 

(164)

 

290

 

 

 

 

 

 

 

 

 

 

                       

 

 

 

TVA GROUP INC.

Consolidated statements of equity

 

(unaudited)

(in thousands of Canadian dollars)

 

 

Equity attributable to shareholders

Equity attributable to non-controlling interest

Total
equity

 

Capital
stock

Contributed surplus

Retained earnings

Accumula-ted other comprehen-sive income

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at December 31, 2016

$

207,280

$

581

$

67,514

$

2,010

$

840

$

278,225

Net (loss) income

 

 

 

(15,951)

 

 

290

 

(15,661)

Other comprehensive income

 

 

 

 

965

 

 

965

Balance as at December 31, 2017

 

207,280

 

581

 

51,563

 

2,975

 

1,130

 

263,529

Net income (loss)

 

 

 

8,312

 

 

(164)

 

8,148

Other comprehensive income

 

 

 

 

522

 

 

522

Balance as at December 31, 2018

$

207,280

$

581

$

59,875

$

3,497

$

966

$

272,199

 

 

 

TVA GROUP INC.

Consolidated balance sheets

 

(unaudited)

(in thousands of Canadian dollars)

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash

 

$

18,112

$

21,258

Accounts receivable

 

 

151,715

 

144,913

Income taxes

 

 

3,325

 

596

Programs, broadcast rights and inventories

 

 

78,483

 

79,437

Prepaid expenses

 

 

4,081

 

3,736

 

 

 

255,716

 

249,940

Non-current assets

 

 

 

 

 

Broadcast rights

 

 

42,987

 

43,031

Investments

 

 

11,242

 

12,851

Property, plant and equipment

 

 

187,116

 

200,510

Intangible assets

 

 

13,662

 

15,120

Goodwill

 

 

9,102

 

7,892

Defined benefit plan asset

 

 

 

2,873

Deferred income taxes

 

 

14,750

 

14,015

 

 

 

278,859

 

296,292

Total assets

 

$

534,575

$

546,232

 

 

 

TVA GROUP INC.

Consolidated balance sheets (continued)

 

(unaudited)

(in thousands of Canadian dollars)

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

100,249

$

104,505

Income taxes

 

 

782

 

6,314

Broadcast rights payable

 

 

70,145

 

69,244

Provisions

 

 

7,522

 

8,937

Deferred revenues

 

 

16,803

 

18,728

Short-term debt

 

 

52,849

 

9,844

 

 

 

248,350

 

217,572

Non-current liabilities

 

 

 

 

 

Long-term debt

 

 

 

52,708

Defined benefit plan liability

 

 

4,258

 

1,686

Other liabilities

 

 

9,321

 

9,946

Deferred income taxes

 

 

447

 

791

 

 

 

14,026

 

65,131

Equity

 

 

 

 

 

Capital stock

 

 

207,280

 

207,280

Contributed surplus

 

 

581

 

581

Retained earnings

 

 

59,875

 

51,563

Accumulated other comprehensive income

 

 

3,497

 

2,975

Equity attributable to shareholders

 

 

271,233

 

262,399

Non-controlling interest

 

 

966

 

1,130

 

 

 

272,199

 

263,529

Total liabilities and equity

 

$

534,575

$

546,232

 

 

TVA GROUP INC.

Consolidated statements of cash flows

 

(unaudited)

(in thousands of Canadian dollars)

 

 

Three-month periods

ended December 31

Years ended

December 31

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

Cash flows related to operating activities

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

9,072

$

9,339

$

8,148

$

(15,661)

Adjustments for:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

9,882

 

8,414

 

35,739

 

35,071

Impairment of goodwill and intangible assets

 

 

 

 

 

42,405

Share of income of associated corporations

 

 

(74)

 

(117)

 

(684)

 

(445)

Deferred income taxes

 

 

(202)

 

(206)

 

(1,618)

 

(12,024)

Gain on disposal of assets

 

 

 

(740)

 

(3,936)

 

(740)

Impairment of other assets

 

 

 

 

2,000

 

Others

 

 

 

 

(80)

 

2

Cash flows provided by current operations

 

 

18,678

 

16,690

 

39,569

 

48,608

Net change in non-cash operating assets and liabilities

 

 

(14,199)

 

(14,317)

 

(14,436)

 

(15,319)

Cash flows provided by operating activities

 

 

4,479

 

2,373

 

25,133

 

33,289

 

 

 

 

 

 

 

 

 

 

Cash flows related to investing activities

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(2,552)

 

(4,081)

 

(12,936)

 

(21,621)

Additions to intangible assets

 

 

(1,006)

 

(358)

 

(3,916)

 

(1,795)

Disposal of property, plant and equipment and intangible assets

 

 

 

740

 

3,723

 

740

Business acquisitions

 

 

(24)

 

 

(4,755)

 

Change in investments

 

 

 

 

195

 

350

Others

 

 

 

 

(600)

 

Cash flows used in investing activities

 

 

(3,582)

 

(3,699)

 

(18,289)

 

(22,326)

 

 

 

 

 

 

 

 

 

 

Cash flows related to financing activities

 

 

 

 

 

 

 

 

 

Repayment of long-term debt

 

 

(2,822)

 

(2,530)

 

(9,900)

 

(6,768)

Others

 

 

 

(37)

 

(90)

 

(156)

Cash flows used in financing activities

 

 

(2,822)

 

(2,567)

 

(9,990)

 

(6,924)

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(1,925)

 

(3,893)

 

(3,146)

 

4,039

Cash at beginning of period

 

 

20,037

 

25,151

 

21,258

 

17,219

Cash at end of period

 

$

18,112

$

21,258

$

18,112

$

21,258

 

 

 

 

 

 

 

 

 

 

Interests and taxes reflected as operating activities

 

 

 

 

 

 

 

 

 

Net interests paid

 

$

517

$

493

$

2,113

$

2,315

Income taxes paid (received) (net of refunds or of payments)

 

 

856

 

413

 

12,325

 

(42)

                       

 

TVA GROUP INC.

Segmented information

 

(unaudited)

(in thousands of Canadian dollars)

 

The Corporation’s operations consist of the following segments:

–    The Broadcasting & Production segment includes the operations of TVA Network (including the TVA Productions Inc. subsidiary and the TVA Nouvelles division), specialty services, the marketing of digital products associated with the various televisual brands, commercial production services and distribution of audiovisual products.

  • The Magazines segment through its subsidiaries, notably TVA Publications Inc. and Les Publications Charron & Cie inc., publishes magazines in various fields including the arts, entertainment, television, fashion and decorating, markets digital products associated with the various magazine brands and provides custom publishing services.
  • The Film Production & Audiovisual Services segment through its subsidiaries Mels Studios and Postproduction G.P. and Mels Dubbing Inc. provides soundstage, mobile unit and production equipment rental services, as well as dubbing, postproduction, visual effects and distribution services.

 

 

 

TVA GROUP INC.

Segmented information (continued)

 

(unaudited)

(in thousands of Canadian dollars)

 

Three-month periods

ended December 31

Years ended

December 31

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

Broadcasting & Production

$

113,259

$

117,016

$

417,597

$

439,149

Magazines

 

20,827

 

24,207

 

77,708

 

94,583

Film Production & Audiovisual Services

 

19,049

 

16,701

 

68,447

 

67,073

Intersegment items

 

(2,669)

 

(2,668)

 

(11,842)

 

(11,098)

 

 

150,466

 

155,256

 

551,910

 

589,707

Adjusted EBITDA(1)

 

 

 

 

 

 

 

 

Broadcasting & Production

 

16,464

 

16,232

 

27,235

 

41,867

Magazines

 

3,149

 

2,482

 

8,210

 

10,020

Film Production & Audiovisual Services

 

5,411

 

4,254

 

14,938

 

14,494

 

 

25,024

 

22,968

 

50,383

 

66,381

Depreciation of property, plant and equipment and amortization of intangible assets

 

9,833

 

8,365

 

35,542

 

34,874

Financial expenses

 

610

 

480

 

2,477

 

2,449

Operational restructuring costs and others

 

2,276

 

1,408

 

2,433

 

6,390

Impairment of goodwill and intangible assets

 

 

 

 

42,405

Income (loss) before tax expense (recovery) and share of income of associated corporations

$

12,305

$

12,715

$

9,931

$

(19,737)

  1. The Chief Executive Officer uses adjusted EBITDA as a measure of financial performance for assessing the performance of each of the Corporation’s segments. Adjusted EBITDA is defined as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs and others, impairment of goodwill and intangible assets, income taxes and share of income of associated corporations. Adjusted EBITDA as defined above is not a measure of results that is consistent with IFRS.

 

 

 

 

 

 

 

[1] See definition of adjusted EBITDA below.

2 Numeris – Quebec Franco, October 1 to December 31, 2018, Mo‑Su, 2am‑2am, t2+

[3] See definition of adjusted EBITDA above.

[4] Source: Vividata, Winter 2019, Total Canada, 14+, October 1, 2017 to September 30, 2018.

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