TVA GROUP REPORTS INCREASED ADJUSTED OPERATING INCOME FOR THE THIRD STRAIGHT QUARTER
Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) today announced that it recorded adjusted operating income1 in the amount of $0.3 million in the first quarter of fiscal 2016, compared with a $7.7 million adjusted operating loss in the same quarter of 2015.
The Corporation also declared a net loss attributable to shareholders of $7.4 million or a loss of $0.17 per share for the quarter, compared with a net loss attributable to shareholders of $14.7 million or a loss of $0.57 per share in the same quarter of 2015.
First quarter operating highlights:
Ø Adjusted operating loss1 in the Broadcasting & Production segment: $3,884,000, up $4,775,000 (55%) due mainly to the following factors:
Þ 21% decrease in the adjusted operating loss1 of “TVA Sports”;
Þ Increase in adjusted operating income1 at the specialty services other than “TVA Sports”; and
Þ Increase in the adjusted operating income1 at TVA Network, mainly due to lower operating expenses, other than the expenses generated by increased commercial production volume of activity.
Ø Adjusted operating income1 in the Film Production & Audiovisual Services segment (“MELS”): $2,122,000, up $2,119,000 due to increased volume of activity in soundstage and production equipment leasing compared with the same quarter of 2015.
Ø Adjusted operating income1 in the Magazines segment: $2,059,000, up $1,094,000 (113%) mainly because of the addition of the adjusted operating results of the magazines acquired from Transcontinental and a decrease in the magazines’ expenses due to a decline in the volume of activity for comparable magazines.
“We are very satisfied that we have increased our adjusted operating income1 for the third consecutive quarter,” commented Julie Tremblay, President and Chief Executive Officer of the Corporation. “The improvement was driven by the addition of the magazines we acquired in the second quarter of 2015 combined with significant volume of activity growth at MELS and stringent control of operating expenses. The turmoil in the media industry is forcing us to constantly question our products and brands with a view to maintaining their profitability. We therefore had to resign ourselves to relinquishing the licence for our “Argent” specialty service when we filed our licence renewal applications to Canadian Radio-television and Telecommunications Commission in April. We will continue operating the prestigious “Argent” brand through the TVA Nouvelles newscasts, the “LCN” news and public affairs channel, and digital platforms, which hold the greatest potential for business news consumption. TVA Group’s total market share held strong at 35.7% in the last quarter compared with 34.6% in the same quarter of 2015. TVA Network carried 22 of the 30 most-watched programs in Quebec, including the smash hit variety show La Voix, which attracted an average audience of nearly 2.6 million for an average market share of 57.5% and peaked at more than 3.5 million viewers”, also commented Ms. Tremblay.
“We are pleased with the response from local and foreign producers of films and television series, who are making extensive use of MELS’s soundstage facilities and equipment, as well as its postproduction and visual effects services. The financial results for the last quarter and the utilization rate of our film production facilities indicate increasing interest in our services and strong growth potential for this line of business”, added Julie Tremblay.
“Finally, in the Magazines segment, we are very proud to have Canada’s leading brands in our portfolio, with 9 million readers across all platforms. On April 12, we launched “Molto”, our digital newsstand, to address our readers’ adoption of multiple content delivery methods. “Molto” gives all users unlimited access to the full content of all our publications on their tablets and smartphones, making our magazines that much more accessible. This new product fits into our digital strategy and will increase the reach of our brands,” concluded Julie Tremblay.
Adjusted operating income (loss) (“Adjusted operating results”)
In its analysis of operating results, the Corporation defines adjusted operating income (loss) as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs, impairment of assets and others, income taxes and share of loss (income) of associated corporations. Adjusted 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 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 operating income (loss) is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. The Corporation’s definition of adjusted 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. Factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors and risks related to loss of key customers in the Film Production and 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, 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 http://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, 2015 and the “Risk Factors” section of the Corporation’s 2015 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of May 10, 2016, 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 Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company engaged in the broadcasting and production, film production and audiovisual services and magazine publishing industries. TVA Group Inc. is North America’s largest broadcaster of French-language entertainment, information and public affairs programming, largest publisher of French-language magazines, and one of the largest private-sector producers of French-language content. The Corporation’s Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.
Denis Rozon, CPA, CA
Vice President and Chief Financial Officer