TVA GROUP REPORTS $32.5 MILLION NET LOSS ATTRIBUTABLE TO SHAREHOLDERS IN THE THIRD QUARTER OF 2016
Montreal, Canada - TVA Group Inc. (the "Corporation") today announced that it recorded a net loss attributable to shareholders of $32.5 million, or a loss of $0.75 per share, in the third quarter of 2016, compared with a net loss attributable to shareholders of $36.5 million, or a loss of $0.84 per share, in the same quarter of 2015.
Third quarter operating highlights:
Ø Consolidated adjusted operating income of $20,693,000, an unfavorable variance of $10,171,000 (-33%) from the same quarter of 2015;
Ø $11,249,000 adjusted operating income1 in the Broadcasting & Production segment, a negative variance of $7,965,000 (-41%) due primarily to a decrease in the adjusted operating income1 of TVA Network and the “TVA Sports” channel, which was affected by the concentration of costs related to broadcasting the World Cup of Hockey in September 2016;
Ø $5,712,000 adjusted operating income1 in the Magazines segment, a $1,889,000 (49%) improvement mainly reflecting operational synergies realized since the integration of the magazines acquired from Transcontinental and other cost-cutting initiatives;
Ø $3,732,000 adjusted operating income1 in the Film Production & Audiovisual Services segment, a negative variance of $4,095,000 (-52%) due to lower volume of activities in soundstage and equipment rental, partially offset by increased of adjusted operating results from visual effects;
Ø Non-cash charge for impairment of goodwill of $40,100,000 compared with a $60,107,000 non-cash charge for impairment of a broadcasting licence in the same quarter of 2015.
“In a fast-changing industry, we recorded a decrease in adjusted operating income1 despite a strong performance by the “TVA Sports” channel, which saw an important growth in advertising revenues related mainly to the broadcast of the 2016 World Cup of Hockey. TVA Group’s total market share increased by 1.7 points to 34.0% in the third quarter of 2016, compared with 32.3%2 in the same period of 2015. We are also pleased to announce that our new TVA.CA site is now live and our TVA mobile app has been released. They give users free access to TVA programs in high definition, live or on demand. The site and the app also offer many other features. Users can catch up on shows from the previous seven days, watch exclusive original content, pause and resume play on a different screen and receive customized suggestions. Users can also access programming from the Corporation’s five entertainment channels,” commented Julie Tremblay, President and Chief Executive Officer of the Corporation.
“While we recorded an increase in adjusted operating income in the Magazines segment, the continuing downward trend in the magazines industry’s operating revenues, particularly advertising revenues and newsstand sales, led the Corporation to conclude that a $40.1 million non-cash charge for impairment of goodwill had to be taken,” said Julie Tremblay.
“Finally, the results of the Film Production & Audiovisual Services segment suffered from the absence of any major Hollywood production at our facilities for the second quarter in a row. However, the increase in volume of activities at our visual effects and postproduction operations, combined with more efficient resource management, partially offset the unfavourable impact from soundstage and equipment rental operations. We are currently setting up new facilities which will expand our visual effects capacity and meet the requirements of the international majors,” concluded Ms. 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 (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. 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, 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 in the Corporation’s 2015 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of October 28, 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.