Quebecor Inc. Reports Fourth Quarter and Full Year 2014 Consolidated Results
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 03/11/15 -- Quebecor Inc. ("Quebecor" or the "Corporation") (TSX: QBR.A)(TSX: QBR.B) today reported its fourth quarter and full year 2014 consolidated financial results. Quebecor consolidates the financial results of its Quebecor Media Inc. ("Quebecor Media") subsidiary, in which it holds a 75.4% interest.
HIGHLIGHTS
2014 financial year
Fourth quarter 2014
"Quebecor continued its growth in 2014 with a $28.8 million increase in adjusted operating income and a 14.1% increase in adjusted income from continuing operations," noted Pierre Dion, President and CEO of Quebecor. "The results reflect the excellent performance of our Telecommunications segment, combined with the positive impact of the various refinancing transactions completed at advantageous interest rates in 2013 and 2014.
"In keeping with its mission, Quebecor refocused its activities on its main growth businesses in 2014. The business acquisitions and disposals announced and completed by the Corporation are also consistent with the trend toward consolidation in the media industry, which is necessary in order to maintain the sustainability and competitiveness of traditional media. Quebecor''s strategy also hinges on diversifying revenue streams by developing related activities.
"2014 was therefore a landmark year in Quebecor''s history. We announced the sale of our English-language newspaper businesses, closed the sale of our Quebec weeklies business and withdrew from door-to-door distribution in Quebec. We disposed of our interactive technologies and communications activities by selling our Nurun subsidiary. We also created a new Media segment that includes our broadcasting activities and our newspaper, magazine and book publishing businesses. Finally, to improve the positioning of the businesses in this new segment, TVA Group acquired substantially all of the assets of Global Vision, a company engaged in the film and television industry, and announced the acquisition of 15 magazines to round out our product catalogue. I am confident that these transactions will enhance Quebecor''s competitive posture and yield positive results going forward," Pierre Dion added.
"The Telecommunications segment continued to focus on growth in 2014, increasing its revenues and adjusted operating income by 3.7% and 4.7% respectively," commented Manon Brouillette, President and CEO of Videotron. "Videotron''s strong results were driven by the performance of our mobile telephony and Internet access services. ARPU generated by all of Videotron''s services totalled $125.16 in 2014, a $7.13 (6.0%) increase powered by strong growth in the mobile telephony service, which increased its ARPU by $5.05 (12.5%) in the fourth quarter of 2014. The gains reflect the success of our optimal selection of mobile devices, combined with the immense capacity of our new LTE network, one of the most advanced in the industry. Consumer response to our offering has been very positive: we added 128,500 subscriber connections in 2014, the largest annual increase since 2011.
"In 2014, we launched our LTE network, which covers nearly 90% of Quebec''s population at speeds of up to 150 mbps. We continued innovating by releasing the illico X8 set-top box, which can record eight HD programs simultaneously and has a 2 TB storage capacity. Videotron maintained its leading-edge capabilities in innovation and product development, launching new apps for the iPhone (4, 5C, 5S and 6) and iPad, as well as a new generation of Wi-Fi routers that support the latest wireless technology.
"The acquisition of the 30 MHz spectrum in March 2015 for $31.8 million will help ensure the sustainability of our mobile services in Quebec and the Ottawa area. AWS-3 spectrum, particularly the 30 MHz band which supports LTE technology, enables latest-generation mobile devices, such as smartphones and tablets, to operate at optimal speed and reliability.
"Meanwhile, our Club illico subscription video-on-demand service registered a 120,000-customer increase in 2014 compared with the end of 2013, bringing its subscriber base to 178,000 as of December 31, 2014. The high-growth-potential service offers the largest selection of unlimited, on-demand French-language titles in Canada.
"Finally, with the acquisition of 4Degrees Colocation and its Quebec City data centre on March 11, 2015, Videotron is joining forces with a booming business with the capacity to provide hosting services that meet the highest industry standards. This investment will also enable our teams to more effectively support business customers seeking integrated business solutions that meet the most stringent requirements," said Manon Brouillette.
"On July 1, 2014, TVA Sports became the NHL''s official French-language broadcaster for the next 12 years," noted Julie Tremblay, President and CEO of Media Group. "Since the addition of NHL games to its schedule, TVA Sports has significantly increased its subscriber base. It now stands at 2.0 million, of whom 390,000 were recruited in 2014, an annual increase of 24.8%. The specialty channel has become a new destination for businesses that want to reach sports fans and is attracting larger numbers of prestigious advertisers.
Quebecor Media was also busy in its new Sports and Entertainment segment in 2014. On November 27, 2014, Quebecor Media acquired the Remparts de Quebec, a hockey team in the Quebec Major Junior Hockey League. Starting in the fall of 2015, the Remparts will play in the new Quebec City Arena, to which Quebecor Media obtained management rights for 25 years in 2011. On February 3, 2015, Quebecor Media announced a strategic partnership with Live Nation Entertainment, the global market leader in concert production.
"On the financial front, Videotron and Quebecor Media carried out a number of opportunistic financing transactions in 2014 which will generate annual savings of approximately $20 million in interest on the debt," reported Jean-Francois Pruneau, Senior Vice President and CFO of Quebecor. "Together, the various debt refinancing operations completed over the past three years will yield annual interest savings totalling more than $50 million, while optimizing available liquidity and the debt maturity profile."
"Quebecor''s pursuit of its business plan in its growth sectors delivered solid consolidated financial results in 2014," said Pierre Dion. "The Corporation also completed a number of strategic business sales and acquisitions during the year. There is no question that it is now very well positioned to achieve its business development objectives and its earnings growth targets in 2015 and beyond."
New segment structure
During the third quarter of 2014, the Corporation changed its organizational structure and its operations are now managed through the following three segments: Telecommunications, Media, and Sports and Entertainment. The reorganization consisted in: (a) the creation of the new Media segment, which includes all activities of the previous News Media and Broadcasting segments, as well as the book publishing and distribution activities previously included in the Leisure and Entertainment segment; (b) the creation of the new Sports and Entertainment segment, which includes all operating, production, distribution and management activities of the previous Leisure and Entertainment segment relating to music, entertainment, sports, and the future Quebec City Arena; and (c) the transfer of the retail businesses from the old Leisure and Entertainment segment to the Telecommunications segment. Accordingly, prior period figures in the Corporation''s segmented information have been reclassified to reflect these changes.
Tables 2 and 3 show the new segments'' revenues and adjusted operating income for the past eight quarters.
Discontinued operations
On October 6, 2014, Quebecor Media announced the sale of its English-language newspaper businesses in Canada - 175 newspapers and publications, the Canoe portal in English Canada, and 8 printing plants, including the Islington, Ontario plant - for a cash consideration of $316.0 million. The transaction will be paid in cash, subject to certain adjustments, including a $10.0 million adjustment with respect to real estate holdings disposed of by Quebecor Media after the transaction date. The transaction is subject to Competition Bureau authorization. On September 2, 2014, Quebecor Media closed the sale of its Nurun subsidiary to Publicis Groupe for a cash consideration of $125.0 million, less disposed-of cash, in the amount of $18.1 million. An amount of $8.2 million was also received in connection with certain adjustments as part of the transaction. On June 1, 2014, Quebecor Media finalized the sale of 74 Quebec weeklies to Transcontinental Interactive Inc., a subsidiary of Transcontinental, for a cash consideration of $75.0 million. Quebecor Media announced that it was abandoning door-to-door distribution of community newspapers and flyers in Quebec and discontinuing distribution of the Le Sac Plus doorknob bag as of January 2014. Quebecor Media sold its specialized websites Jobboom and Reseau Contact in 2013 for a total cash consideration of $59.2 million, net of disposed-of cash. The operating results and cash flows related to those businesses, as well as the $41.5 million gain on the sale of Nurun in 2014, the $7.9 million gain on the sale of the 74 Quebec weeklies in 2014, and the $37.6 million gain on the sale of the 2 websites in 2013, were reclassified as discontinued operations in the consolidated statements of income and cash flows.
Changes in Accounting Policies
Although market participants submitted various interpretations to the International Financial Reporting Standards ("IFRS") Interpretations Committee (the "Committee"), as per the report released by the Committee in May 2014, a financial instrument that is mandatorily convertible into a variable number of shares subject to a cap and a floor should be classified as a liability in its entirety. The Corporation therefore changed retrospectively its accounting policy for the accounting of its convertible debentures to be in line with the Committee''s discussions.
2014/2013 FINANCIAL YEAR COMPARISON
Revenues: $3.72 billion, a $68.6 million (1.9%) increase.
Adjusted operating income: $1.40 billion, a $28.8 million (2.1%) increase.
Net loss attributable to shareholders: $30.1 million ($0.24 per basic share) in 2014, compared with $288.6 million ($2.33 per basic share) in 2013, a favourable variance of $258.5 million ($2.09 per basic share).
In 2014, Quebecor Media recognized non-cash charges of $39.3 million (without any tax consequences) for impairment of goodwill and $41.7 million (including $20.9 million without tax consequences) for impairment of broadcasting licences in the Media segment''s continuing operations, in accordance with IFRS accounting valuation principles. The charges reflect the impact of the transition to digital and the difficult market conditions in the newspaper industry, as well as increased competition in the television industry.
Adjusted income from continuing operations: $202.3 million ($1.64 per basic share) in 2014, compared with $177.3 million ($1.43 per basic share) in 2013, an increase of $25.0 million ($0.21 per basic share).
2014/2013 fourth quarter comparison
Revenues: $989.4 million, a $28.1 million (2.9%) increase.
Adjusted operating income: $353.1 million, a $3.3 million (-0.9%) decrease.
Net loss attributable to shareholders: $59.5 million ($0.48 per basic share) in the fourth quarter of 2014, compared with net income attributable to shareholders in the amount of $0.3 million in the same period of 2013, an unfavourable variance of $59.8 million ($0.48 per basic share).
Adjusted income from continuing operations: $50.3 million in the fourth quarter of 2014 ($0.41 per basic share), compared with $48.6 million ($0.39 per basic share) in the same period of 2013, an increase of $1.7 million ($0.02 per basic share).
Financing
The following financial operations were carried out in 2014 and the beginning of 2015.
Dividend
On March 10, 2015, the Board of Directors of Quebecor declared a quarterly dividend of $0.025 per share on its Class A Multiple Voting Shares ("Class A Shares") and Class B Subordinate Voting Shares ("Class B Shares"), payable on April 21, 2015 to shareholders of record at the close of business on March 27, 2015. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.
Normal course issuer bid
On July 31, 2014, Quebecor filed a normal course issuer bid for a maximum of 500,000 Class A Shares representing approximately 1.3% of issued and outstanding Class A Shares, and for a maximum of 2,000,000 Class B Shares representing approximately 2.4% of issued and outstanding Class B Shares as of July 29, 2014. The purchases can be made from August 13, 2014 to August 12, 2015 at prevailing market prices on the open market through the facilities of the Toronto Stock Exchange. All shares purchased under the bid will be cancelled.
In 2014, the Corporation purchased and cancelled 455,000 Class B Shares for a total cash consideration of $11.7 million (1,603,700 Class B Shares for a total cash consideration of $36.4 million in 2013). The excess of $10.0 million of the purchase price over the carrying value of Class B Shares repurchased was recorded in reduction of retained earnings in 2014 ($30.2 million in 2013).
Detailed financial information
For a detailed analysis of Quebecor''s fourth quarter and full year 2014 results, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor, available on the Corporation''s website at or from the SEDAR filing service at .
Conference call for investors and webcast
Quebecor will hold a conference call to discuss its fourth quarter 2014 results on March 11, 2015, at 11:00 a.m. EDT. There will be a question period reserved for financial analysts. To access the conference call, please dial 1 877 293-8052, access code for participants 62079#. A tape recording of the call will be available from March 11 to June 11, 2015 by dialling 1 877 293-8133, conference number 1173916, access code for participants 62079#. The conference call will also be broadcast live on Quebecor''s website at . It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above.
Cautionary statement regarding forward-looking statements
The statements in this press release that are not historical facts are forward-looking statements and are subject to significant known and unknown risks, uncertainties and assumptions that 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 may be identified by the use of the conditional or by forward-looking terminology such as the terms "plans," "expects," "may," "anticipates," "intends," "estimates," "projects," "seeks," "believes," or similar terms, variations of such terms or the negative of such terms. Certain factors that may cause actual results to differ from current expectations include seasonality (including seasonal fluctuations in customer orders), operating risk (including fluctuations in demand for Quebecor''s products and pricing actions by competitors), insurance risk, risks associated with capital investment (including risks related to technological development and equipment availability and breakdown), environmental risks, risks associated with labour agreements, risks associated with commodities and energy prices (including fluctuations in the cost and availability of raw materials), credit risk, financial risks, debt risks, risks related to interest rate fluctuations, foreign exchange risks, risks associated with government acts and regulations, risks related to changes in tax legislation, and changes in the general political and economic environment. 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 Quebecor''s actual results to differ from current expectations, please refer to Quebecor''s public filings available at and , including, in particular, the "Risks and Uncertainties" section of Quebecor''s Management Discussion and Analysis for the year ended December 31, 2014.
The forward-looking statements in this press release reflect Quebecor''s expectations as of March 11, 2015 and are subject to change after that date. Quebecor 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, except as required by applicable securities laws.
The Corporation
Quebecor, a Canadian leader in telecommunications, news media, entertainment and culture, is one of the best-performing integrated communications companies in the industry. Driven by their determination to deliver the best possible customer experience, all of Quebecor''s subsidiaries and brands are differentiated by their high-quality, multiplatform, convergent products and services.
Quebecor (TSX: QBR.A)(TSX: QBR.B) is headquartered in Quebec. It holds a 75.36% interest in Quebecor Media, which employs nearly 14,000 people in Canada.
A family business founded in 1950, Quebecor is strongly committed to the community. Every year, it actively supports people working with more than 400 organizations in the vital fields of culture, health, education, the environment, and entrepreneurship.
Visit our Web site:
Follow us on Twitter: twitter.com/QuebecorMedia
DEFINITIONS
Adjusted Operating Income
In its analysis of operating results, the Corporation defines adjusted operating income, as reconciled to net (loss) income under IFRS, as net (loss) income before depreciation and amortization, financial expenses, loss on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, charge for impairment of goodwill and intangible assets, loss on debt refinancing, income taxes, and (loss) income from discontinued operations. Adjusted operating income as defined above is not a measure of results that is consistent with IFRS. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses adjusted operating income in order to assess the performance of its investment in Quebecor Media. The Corporation''s management and Board of Directors use this measure in evaluating its consolidated results as well as the results of the Corporation''s operating segments. This measure eliminates the significant level of impairment and depreciation/amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments.
Adjusted operating income is also relevant because it is a significant component of the Corporation''s annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of tangible and intangible assets used in generating revenues in the Corporation''s segments. The Corporation also uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities of the Quebecor Media subsidiary. The Corporation''s definition of adjusted operating income may not be the same as similarly titled measures reported by other companies.
Table 4 below provides a reconciliation of adjusted operating income to net (loss) income as disclosed in Quebecor''s consolidated financial statements. The consolidated financial information for the three-month periods ended December 31, 2014 and 2013 presented in Table 4 below is drawn from the unaudited consolidated statements of income.
Adjusted Income from Continuing Operations
The Corporation defines adjusted income from continuing operations, as reconciled to net (loss) income attributable to shareholders under IFRS, as net (loss) income attributable to shareholders before loss on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing, net of income tax related to adjustments and net loss attributable to non-controlling interests related to adjustments, before (loss) income from discontinued operations attributable to shareholders. Adjusted income from continuing operations, as defined above, is not a measure of results that is consistent with IFRS. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses adjusted income from continuing operations to analyze trends in the performance of its businesses. The above-listed items are excluded from the calculation of this measure because they impair the comparability of the financial results. Adjusted income from continuing operations is more representative for the purpose of forecasting income. The Corporation''s definition of adjusted income from continuing operations may not be identical to similarly titled measures reported by other companies.
Table 5 provides a reconciliation of adjusted income from continuing operations to net (loss) income attributable to shareholders used in Quebecor''s consolidated financial statements.
Average Monthly Revenue per User
ARPU is an industry metric that the Corporation uses to measure its monthly cable television, Internet access, cable and mobile telephony revenues per average basic cable customer. ARPU is not a measurement that is consistent with IFRS and the Corporation''s definition and calculation of ARPU may not be the same as identically titled measurements reported by other companies. The Corporation calculates ARPU by dividing its combined cable television, Internet access, and cable and mobile telephony revenues by the average number of basic customers during the applicable period, and then dividing the resulting amount by the number of months in the applicable period.
Contacts:
Jean-Francois Pruneau
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
514 380-4144
Martin Tremblay
Vice President, Public Affairs
Quebecor Media Inc.
514 380-1985
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