Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded net income attributable to shareholders in the amount of $9.2 million or $0.21 per share in the fourth quarter of 2017, compared with net income attributable to shareholders of $5.7 million or $0.13 per share in the same quarter of 2016.
Fourth quarter operating highlights:
- Consolidated adjusted operating income of $22,968,000, a favourable variance of $984,000 (4.5%) from the same quarter of 2016.
- $16,232,000 adjusted operating income1 in the Broadcasting & Production segment, an unfavourable variance of $1,213,000 mainly because of a 9.5% decrease in the adjusted operating income1 of TVA Network.
- $2,482,000 adjusted operating income1 in the Magazines segment, a favourable variance of $343,000 (16.0%) mainly because of the implementation of rationalization plans in recent quarters and the discontinuation of some titles in 2016, partially offset by a decrease in operating revenues.
- $4,254,000 adjusted operating income1 in the Film Production & Audiovisual Services segment (“MELS”), a favourable variance of $1,854,000 essentially because of an increase in adjusted operating income1 from soundstage and equipment rental and a decrease in the adjusted operating loss1 of visual effects, partially offset by lower adjusted operating income1 from postproduction.
“We are satisfied with our results for the last quarter of our financial year. The Broadcasting & Production segment was impacted by a negative adjustment to the revenues of the Corporation’s specialty channels, notably an adjustment made following the CRTC decision on the rate payable by Bell for distribution of the “TVA Sports” channel. Nevertheless, our specialty channels’ advertising revenues continued to grow, increasing by 9.8% compared with the same quarter of 2016. TVA Group’s total market share rose 0.9 point to 36.4% in the fourth quarter of 2017, compared with 35.5% in the same period of 2016. TVA Network had a 24.3% market share and 7 shows that attracted more than a million viewers, including the grand finale of La Voix Junior which peaked at 2,476,000 viewers,” commented France Lauzière, President and CEO of the Corporation.
“The various rationalization plans implemented in recent quarters enabled the Magazines segment to grow its adjusted operating income1 and post a 10.3% profit margin. During the last quarter, TVA Publications’ titles were honoured with six Canadian Online Publishing Awards. The recognition for Coup de Pouce, Elle Québec, Elle Canada and Clin d’œil confirmed the soundness of our approach to digital content,” added Ms. Lauzière.
“Lastly, the Film Production & Audiovisual Services segment’s financial results improved for the third consecutive quarter, mainly because of the use of our soundstages and equipment by local and international producers. As well, postproduction, visual effects and distribution services globally grew their adjusted operating results1 compared with the same quarter of 2016. We are also very proud of the four Canadian Screen Awards nominations picked up by Nous sommes les autres, Hochelaga, Land of Souls and All You Can Eat Buddha for “Achievement in Visual Effects” and “Achievement in Overall Sound,” categories to which MELS contributed,” concluded Ms. Lauzière.
2017 financial year results
For the fiscal year ended December 31, 2017, the Corporation’s consolidated adjusted operating income1 was $66,381,000, compared with $45,401,000 in the previous year, a 46.2% favourable variance. There was an 87.1% favourable variance in adjusted operating income1 in the Broadcasting & Production segment and a 27.5% decrease in the Magazines segment, due mainly to the decrease in operating revenues. In the Film Production & Audiovisual Services segment, adjusted operating income1 increased by 57.7%, mainly as a result of significantly higher volume of activities in soundstage and equipment rental. The Broadcasting & Production segment posted a $19,488,000 favourable variance in adjusted operating income,1 due primarily to a 55.8% reduction in the adjusted operating loss1 of “TVA Sports,” a 4.3% increase in the adjusted operating income1 of TVA Network, and a 7.8% increase in the adjusted operating income1 of the other specialty services.
Consolidated operating revenues amounted to $589,707,000 in fiscal 2017, compared with $590,866,000 in the previous year, a slight 0.2% decrease. The Corporation’s net loss attributable to shareholders for the year totalled $15,951,000 or $0.37 per share, compared with $39,855,000 or $0.92 per share in 2016.
In the third quarter of 2017, the Corporation recognized a $29,993,000 non‑cash goodwill impairment charge in the Magazines segment, including $1,489,000 without any tax consequences ($40,100,000 without any tax consequences in 2016) and a $12,412,000 non‑cash charge for impairment of intangible assets, including $3,103,000 without any tax consequences (nil in 2016).
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, impairment of goodwill and of intangible assets, operational restructuring costs and others, income taxes and share of 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.
Conference call for investors
TVA Group will hold a conference call to discuss its fourth quarter and full‑year 2017 results on March 2, 2018, at 10:00 a.m. EST. There will be a question period reserved for financial analysts. To access the call, please dial 1‑877‑293‑8052, access code for participants 66581#. A tape recording of the call will be available from March 2 to June 2, 2018 by dialling 1-877-293‑8133, conference number 1228603#, access code for participants 66581#.
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 the risk of 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, risk 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, 2017 and the “Risk Factors” section in the Corporation’s 2017 annual information form.
The forward‑looking statements in this news release reflect the Corporation’s expectations as of March 1st, 2018 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 North America’s largest broadcaster of French‑language entertainment, information and public affairs programming and one of the largest private‑sector producers of French‑language content. It is also the largest publisher of French‑language magazines and publishes some of the most popular English‑language titles in Canada. 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