Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) today announced that it recorded a net income attributable to shareholders of $5.7 million, or $0.13 per share, in the fourth quarter of 2016, compared with a net loss attributable to shareholders of $1.5 million, or a loss of $0.03 per share, in the same quarter of 2015.
Fourth quarter operating highlights:
Ø Consolidated adjusted operating income1 of $21,984,000, a favourable variance of $5,138,000 (30.5%) from the same quarter of 2015;
Ø $17,445,000 adjusted operating income1 in the Broadcasting & Production segment, a favourable variance of $4,752,000 mainly because of a 21.1% increase in the adjusted operating income1 of TVA Network and improved in the adjusted operating results1 at the specialty services, particularly “TVA Sports”;
Ø $2,139,000 adjusted operating income1 in the Magazines segment, a negative variance of $934,000 (-30.4%) mainly because of lower operating revenues;
Ø $2,400,000 adjusted operating income1 in the Film Production & Audiovisual Services segment (“MELS”), a favourable variance of $1,320,000 essentially because of increased in adjusted operating income1 from soundstage and equipment rental and dubbing, and a decrease in the adjusted operating loss1 of visual effects services due to higher volume of activities.
“We are satisfied with the results posted for the last quarter of our financial year, particularly the Broadcasting & Production segment, which registered significant advertising revenue growth, including year-over-year increases of 14.7% at “TVA Sports” and 10.5% at TVA Network. TVA Group’s total market share increased by 3.0 points to 35.5% in the fourth quarter of 2016, compared with 32.5% in the same period of 2015. TVA Group again demonstrated its news leadership on US election night, when its coverage was seen by 1,139,000 viewers, a 40.0% market share. In addition, more than 900,000 people followed the election results on the tvanouvelles.ca site and its mobile app (Android and iOS). We are pleased to see that subscriptions to the “TVA Sports” channel have recovered with the current hockey season,” commented Julie Tremblay, President and Chief Executive Officer of the Corporation.
“Our Magazines segment has been affected by the difficulties in that industry. But while the segment’s operating revenues fell by a significant 18.9%, the cost-cutting programs we introduced offset 86.3% of the drop in operating revenues and enabled us to generate a 7.3% operating margin. During the last quarter, we announced the discontinuation of two magazines, CHEZ SOI and Tellement bon, in order to be able to focus on our flagship brands and increase their reach. Despite the closures, TVA Group will maintain a strong presence in the decorating and cooking categories with our brands Les idées de ma maison, Style at Home, Coup de pouce, Canadian Living and Recettes du Québec,” added Ms. Tremblay.
“Finally, the Film Production & Audiovisual Services segment’s results improved considerably in the fourth quarter of 2016 compared with the same quarter of the previous year, largely because of higher volume of activities at our visual effects services. We are also very proud to have contributed to the award for the best sound for the film Arrival, directed by Denis Villeneuve, at the British Academy of Film and Television Arts, “BAFTA” 2017 edition, and also of the eight Oscar nominations,” concluded Ms. Tremblay.
2016 financial year results
For the fiscal year ended December 31, 2016, the Corporation’s consolidated adjusted operating income was $45,401,000, compared with $47,390,000 in the previous year, a 4.2% decrease. Adjusted operating income1 decreased by 7.2% in the Broadcasting & Production segment and increased by 52.3% in the Magazines segment, mainly explained by the inclusion of the results of the acquired magazines for the full year in 2016 and the realization of synergies and operational cost savings. In the Film Production & Audiovisual Services segment, adjusted operating income1 decreased by $5,003,000, mainly as a result of significantly lower volume of activities in soundstage and equipment rental, which was partially offset by the decrease in the adjusted operating loss1 of visual effects activities. The $1,736,000 decrease in the Broadcasting & Production segment’s adjusted operating income1 was due primarily to a 7.8% increase in the adjusted operating loss1 of “TVA Sports,” caused in particular by the failure of the Montreal Canadiens to qualify for the Stanley Cup playoffs, and to a slight decrease in TVA Network’s adjusted operating income1. Those factors were partially offset by an increase in the adjusted operating income1 of the specialty services other than “TVA Sports” and “LCN.”
Consolidated operating revenues amounted to $590,866,000 in fiscal 2016, compared with $589,890,000 in the previous year, a slight 0.2% increase. The Corporation’s net loss attributable to shareholders for the year totalled $39,855,000 or a loss of $0.92 per share, compared with a net loss attributable to shareholders of $55,226,000 or a loss of $1.42 per share in 2015.
In the third quarter of 2016, the Corporation recognized a $40,100,000 non-cash goodwill impairment charge, without any tax consequences, in the Magazines segment. In 2015, a $60,107,000 non-cash impairment charge was recorded with respect to the broadcasting licence, including $30,054,000 without any tax consequences.
1 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 (income) loss 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. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors and risk related to the 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, risks 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 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, 2016 and the “Risk Factors” section in the Corporation’s 2016 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of March 3, 2017, 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 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 the largest broadcaster of French‑language entertainment, information and public affairs programming in North America and one of the largest private production companies. TVA Group is also a leading publisher of French-language magazines and publishes some of Canada’s most popular English-language titles. 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