TVA Group Reports $6.3 Million Net Income Attributable to Shareholders in Quarter Ended September 30, 2013
(firmenpresse) - MONTREAL, CANADA -- (Marketwired) -- 11/05/13 -- TVA Group Inc. (the "Corporation") (TSX: TVA.B) announces that it recorded net income attributable to shareholders in the amount of $6.3 million, or $0.27 per share, in the third quarter of 2013, compared with $1.5 million, or $0.06 per share, in the same quarter of 2012.
Third quarter operating highlights:
"In addition to the retroactive royalties on distant signal retransmission, the results of the last quarter also showed an improvement in operating income," commented Pierre Dion, President and CEO of the Corporation. "This performance would not have been possible without the operational savings yielded by, among other things, the investments we have made in recent years in equipment and technological infrastructure. In the Television segment, TVA Network's advertising revenues decreased by 7.9% during the last quarter while the specialty services continued their strong performance with 6.6% growth in advertising revenues and 9.8% growth in subscription revenues.
"The Publishing segment registered remarkable operating income growth from the same quarter of 2012. The inclusion of the operating results of La Semaine magazine, acquired on July 18, 2013, contributed significantly to this growth as did the cost reductions TVA Publications has achieved since the second quarter of 2013. The integration of our new acquisition's operations into TVA Publications' existing business will continue during the fourth quarter. Excluding the acquisition, newsstand revenues decreased by 3.6% and advertising revenues by 5.6% in the third quarter. The decreases were less than those registered in the first two quarters of 2013. These results reflect our efforts since the beginning of the year to improve our products and marketing," said M. Pierre Dion.
Cash flows provided by operating activities totalled $13.0 million in the third quarter of 2013, compared with $18.3 million in the same quarter of 2012. The $5.3 million decrease was essentially due to an unfavourable net change in non-cash items, including accounts receivable, programs, broadcast and distribution rights, and inventories, partially offset by an improvement in operating income.
Definition
Operating income (loss)
In its analysis of operating results, the Corporation defines operating income (loss) as net income (loss) before amortization of property, plant and equipment and intangible assets, financial expenses, operational restructuring costs, impairment of assets and other costs, impairment of goodwill, gain on disposal of investments, tax expense, share of loss (income) of associated corporations and joint ventures, and net loss attributable to non-controlling interest. Operating income (loss) 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 is not intended to represent funds available for debt service, dividend payment, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. Operating income (loss) is used by the Corporation because management believes it is a meaningful measure of performance.
This measure is used by management and the Board of Directors to evaluate the Corporation's consolidated results and the results of its business sectors. Measurements such as operating income (loss) are also commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is active. The Corporation's definition of operating income (loss) may not be identical to similarly titled measures reported by other companies.
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), programming, content and production cost risks, credit risk, government regulation risks, government assistance risks, changes in economic conditions, fragmentation of the media landscape, 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 and including, in particular, the "Risks and Uncertainties" section of the Corporation's annual Management's Discussion and Analysis for the year ended December 31, 2012.
The forward-looking statements in this news release reflect the Corporation's expectations as of November 5, 2013, 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 by the applicable securities laws.
TVA Group
TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company involved in the creation, production, broadcast and distribution of audiovisual products, and in magazine publishing. TVA Group Inc. is the largest broadcaster of French-language entertainment, information and public affairs programming and publisher of French-language magazines in North America, and one of the largest private-sector producers of French-language content in North America. The Corporation's Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.
See accompanying notes to condensed consolidated financial statements.
See accompanying notes to condensed consolidated financial statements.
See accompanying notes to condensed consolidated financial statements.
See accompanying notes to condensed consolidated financial statements.
On November 5, 2013, the Board of Directors approved the condensed consolidated financial statements for the three-month and nine-month periods ended September 30, 2013 and 2012.
See accompanying notes to condensed consolidated financial statements.
TVA Group Inc. ("TVA Group" or the "Corporation") is governed by the Quebec Business Corporations Act. TVA Group is an integrated communications company with two operating segments: Television and Publishing (note 13). The Corporation is a subsidiary of Quebecor Media Inc. ("Quebecor Media" or the "parent corporation") and the ultimate parent corporation is Quebecor Inc. ("Quebecor"). The Corporation's head office is located at 1600 de Maisonneuve Boulevard East, Montreal, Quebec, Canada.
The Corporation's businesses experience significant seasonality due, among other factors, to seasonal advertising patterns and influences on people's viewing, reading and listening habits. Because the Corporation depends on the sale of advertising for a significant portion of its revenue, operating results are also sensitive to prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising expenditures. Accordingly, the results of operations for interim periods should not necessarily be considered indicative of full-year results.
1. Basis of presentation
These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), except that they do not include all disclosures required under IFRS for annual consolidated financial statements. In particular, these consolidated financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, and accordingly, they are condensed consolidated financial statements. They are presented in Canadian dollars, which is the currency of the primary economic environment in which the Corporation and its subsidiaries operate ("functional currency"). These condensed consolidated financial statements should be read in conjunction with the Corporation's 2012 annual consolidated financial statements, which describe the accounting policies used to prepare these financial statements.
Comparative figures for the three-month and nine-month periods ended September 30, 2012 have been restated to conform to the presentation adopted for the three-month and nine-month periods ended September 30, 2013.
2. Changes in accounting policies
On January 1, 2013, the Corporation adopted retrospectively the following standards. Unless otherwise indicated, the adoption of these new standards did not have a material impact on prior period comparative figures.
3. Revenues
The breakdown of revenues between services rendered and product sales is as follows:
4. Purchases of goods and services
The main components of purchases of goods and services are as follows:
5. Financial expenses
6. Operational restructuring costs, impairment of assets and other costs
During the three-month period ended September 30, 2013, the Corporation recorded an additional $611,000 inventory impairment charge in connection with the discontinuation of its TVA Boutiques division's home shopping and online shopping operations. For the nine-month period ended September 30, 2013, the impairment charge related to the discontinuation of operations totalled $1,223,000 in addition to a $303,000 provision for operational restructuring costs.
In the three-month period ended September 30, 2013, the Corporation recorded $138,000 in operational restructuring costs in connection with staff reductions, mainly in the Publishing segment ($1,784,000 for the nine- month period ended September 30, 2013, including $879,000 in the Television segment and $905,000 in the Publishing segment). In the nine-month period ended September 30, 2012, the Corporation recorded $117,000 in operational restructuring costs in connection with staff reductions in the Publishing segment.
During the nine-month period ended September 30, 2013, the Corporation also recorded a $387,000 impairment charge related to its long-term distribution rights inventory following its decision in the first quarter of 2013 to discontinue theatrical distribution of new Quebec films.
7. Impairment of goodwill
During the first quarter of 2012, following the adoption of new rates for business contributions towards the cost of waste recovery and recycling services provided by Quebec municipalities, the Corporation had to review its business plan for the related activities and perform an impairment test on the Publishing cash-generating unit ("CGU"). The Corporation concluded that the recoverable amount based on value in use was less than the carrying amount of the Publishing CGU and a goodwill impairment charge of $32,200,000 was recorded.
8. Gain on disposal of investments
On May 31, 2012, following Canadian Radio-television and Telecommunications Commission approval, the Corporation completed the sale of its 51% interest in "The Cave" and its 50% interest in "Mystery TV" to its partner in the joint ventures, Shaw Media Global Inc., for a total cash consideration of $20,963,000. A $12,881,000 gain on disposal of investments, before income taxes, was recorded. The transaction did not give rise to any income tax charge because the Corporation used unrecorded capital losses to eliminate the capital gains tax on disposal of investments.
9. Business acquisition
On July 18, 2013, the Corporation acquired all of the issued and outstanding shares of Les Publications Charron & Cie inc., publisher of La Semaine magazine, for a total consideration of $7,638,000, of which $438,000 remains unpaid in respect of acquired working capital items. As part of this transaction, the Corporation also acquired all of the issued and outstanding shares of Charron Editeur inc., a publishing house, and simultaneously transferred its operations to Sogides Group, a corporation under common control, for the equivalent of the price paid, namely an agreed price of $212,000, net of transferred working capital items. The results of the new subsidiary, Les Publications Charron & Cie inc., have been included in the Corporation's consolidated results since July 18, 2013. As the purchase price allocation process was not completed as of September 30, 2013, the amounts allocated to assets and liabilities may be changed subsequently.
The preliminary allocation of the acquisition price of Les Publications Charron & Cie inc. is as follows:
The Corporation's consolidated revenues and its consolidated pro forma net income would not have been materially different from the actual numbers if the business acquisition had occurred at the beginning of the nine- month period ended September 30, 2013.
No goodwill is deductible for income tax purposes.
10. Capital stock
a) Authorized capital stock
An unlimited number of Class A common shares, participating, voting, without par value.
An unlimited number of Class B shares, participating, non-voting, without par value.
An unlimited number of preferred shares, non-participating, non-voting, with a par value of $10 each, issuable in series.
b) Issued and outstanding capital stock
c) Earnings (loss) per share attributable to shareholders
The following table sets forth the computation of basic and diluted earnings (loss) per share attributable to shareholders:
The diluted earnings (loss) per share calculation does not take into consideration the potential dilutive effect of stock options of the Corporation since their impact is anti-dilutive.
11. Stock-based compensation and other stock-based payments
Of the options outstanding as at September 30, 2013, 691,076 Corporation Class B stock options at an average exercise price of $16.54 and 46,407 Quebecor Media stock options at an average price of $45.76 could be exercised.
During the three-month period ended September 30, 2013, no Quebecor Media stock options were exercised. During the nine-month period ended September 30, 2013, 41,884 Quebecor Media stock options were exercised for a cash consideration of $471,000 (113,728 stock options were exercised for a cash consideration of $629,000 during the three-month and nine-month periods ended September 30, 2012).
During the three-month and nine-month periods ended September 30, 2013, the Corporation recorded compensation expense reversals of $99,000 and $130,000 respectively (compensation expense reversals of $19,000 and $264,000 respectively in the same periods of 2012) in relation to the Corporation's Class B stock options, and it recorded compensation expenses of $387,000 and $317,000 respectively (compensation expense reversal of $64,000 and compensation expense of $482,000 respectively in the same periods of 2012) in relation to Quebecor Media stock options.
12. Related party transactions
Capital contributions to SUN News
During the three-month period ended September 30, 2013, the partners in SUN News made a capital contribution of $4,500,000 ($3,600,000 in 2012), including $2,205,000 from the Corporation ($1,764,000 in 2012) and $2,295,000 from Sun Media Corporation, a company under common control ($1,836,000 in 2012).
During the nine-month period ended September 30, 2013, the partners in SUN News made a capital contribution of $7,500,000 ($10,800,000 in 2012), including $3,675,000 from the Corporation ($5,436,000 in 2012) and $3,825,000 from Sun Media Corporation ($5,364,000 in 2012).
Disposal of interest in SUN News
On June 30, 2012, the Corporation sold a 2% interest in SUN News to Sun Media Corporation for a cash consideration of $765,000.The Corporation now holds a 49% interest in SUN News and Sun Media Corporation owns 51%. The difference between the amount paid and the book value of the interest yielded a $581,000 gain, which was accounted for in contributed surplus. Following the loss of control, SUN News' results are no longer consolidated as of July 1, 2012, and the investment in SUN News is now accounted for using the equity method.
The following table shows details of the net assets of SUN News, which were reclassified as an investment using the equity method at the date of deconsolidation.
13. Segmented information
The Corporation's business segments are:
The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments regarding revenues.
Contacts:
Denis Rozon, CPA, CA
Vice President and Chief Financial Officer
(514) 598-2808
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Datum: 05.11.2013 - 08:41 Uhr
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