TVA Group Reports $7.0 Million Net Income Attributable to Shareholders in Quarter Ended June 30, 2013
(firmenpresse) - MONTREAL, CANADA -- (Marketwired) -- 08/02/13 -- TVA Group Inc. ("the Corporation")(TSX: TVA.B) announces that it recorded net income attributable to shareholders in the amount of $7.0 million, or $0.29 per share, in the second quarter of 2013, compared with $10.2 million, or $0.43 per share, excluding a $12.9 million gain on disposal of investments,(1) in the same quarter of 2012.
Second quarter operating highlights:
"Results for the latest quarter, combined with those for the first quarter of 2013, point towards long-term trends in the global television market," said Pierre Dion, President and Chief Executive Officer of the Corporation. "This reality has prompted us to introduce a cost-reduction plan to enable us to achieve our financial targets for fiscal 2013 while continuing to invest in growth projects. At the same time, our revenue-diversification strategy aimed at increasing subscription revenues continued paying dividends, with 14.5% growth in the second quarter of 2013 compared with the same quarter of 2012".
"Our magazines' newsstand revenues and advertising revenues both declined in comparison with the same quarter of 2012. However, the cost-containment initiatives we have introduced since the beginning of the year have offset these decreases, aligning our cost structure with our current revenue levels. We are very pleased with our acquisition of Les Publications Charron and its weekly La Semaine, which allows us to grow that brand with the support of all of Quebecor Media's existing platforms and to offer it to our advertisers as a complement to our existing selection of magazines in Quebec."
Cash flows provided by operating activities totalled $10.7 million in the second quarter of 2013, compared with $2.0 million in the same quarter of 2012. The $8.7 million increase was essentially due to a favourable net change in non-cash items, resulting in part from positive variances in accounts receivable and in programs, broadcast and distribution rights, and inventories, partially offset by an unfavourable variance in rights payable.
Definition
Operating income (loss)
In its analysis of operating results, the Corporation defines operating income (loss) as net income (loss) before amortization of property, plant and equipment and intangible assets, financial expenses, operational restructuring costs, impairment of assets and other costs, impairment of goodwill, gain on disposal of investments, tax expense, share of loss (income) of associated corporations and joint ventures, and net loss attributable to non-controlling interest. 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 is not intended to represent funds available for debt service, dividend payment, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. Operating income (loss) is used by the Corporation because management believes it is a meaningful measure of performance.
This measure is used by management and the Board of Directors to evaluate the Corporation's consolidated results and the results of its segments. Measurements such as operating income (loss) are also commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is active. The Corporation's definition of 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), 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 and including, in particular, the "Risks and Uncertainties" section of the Corporation's annual Management's Discussion and Analysis for the year ended December 31, 2012.
The forward-looking statements in this news release reflect the Corporation's expectations as of August 2, 2013, 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
TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company involved in the creation, production, broadcast and distribution of audiovisual products, and in magazine publishing. TVA Group Inc. is the largest broadcaster of French-language entertainment, information and public affairs programming and publisher of French-language magazines in North America, and one of the largest private-sector producers of French-language content in North America. The Corporation's Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.
On August 2, 2013, the Board of Directors approved the condensed consolidated financial statements for the three-month and six-month periods ended June 30, 2013 and 2012.
TVA Group Inc. ("TVA Group" or "the Corporation") is governed by the Quebec Business Corporations Act. TVA Group is an integrated communications company with two operating segments: Television and Publishing (note 12). The Corporation is a subsidiary of Quebecor Media Inc. ("Quebecor Media" or "the parent corporation") and the ultimate parent corporation is Quebecor Inc. ("Quebecor"). The Corporation's head office is located at 1600 de Maisonneuve Boulevard East, Montreal, Quebec, Canada.
The Corporation's businesses experience significant seasonality due, among other factors, to seasonal advertising patterns and influences on people's viewing, reading and listening habits. Because the Corporation depends on the sale of advertising for a significant portion of its revenues, operating results are also sensitive to prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising expenditures. Furthermore, the Corporation is investing in the launch of new specialty services in the Television segment. During the period immediately following the launch of a new specialty service, subscription revenues are always relatively modest, while initial operating expenses may prove more substantial. Accordingly, the results of operations for interim periods should not necessarily be considered indicative of full-year results.
1. Basis of presentation
These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), except that they do not include all disclosures required under IFRS for annual consolidated financial statements. In particular, these consolidated financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, and accordingly, they are condensed consolidated financial statements. They are presented in Canadian dollars, which is the currency of the primary economic environment in which the Corporation and its subsidiaries operate ("functional currency"). These condensed consolidated financial statements should be read in conjunction with the Corporation's 2012 annual consolidated financial statements, which describe the accounting policies used to prepare these financial statements.
Comparative figures for the three-month and six-month periods ended June 30, 2012 have been restated to conform to the presentation adopted for the three-month and six-month periods ended June 30, 2013.
2. Changes in accounting policies
On January 1, 2013, the Corporation adopted retrospectively the following standards. Unless otherwise indicated, the adoption of these new standards did not have a material impact on prior period comparative figures.
The adoption of the standard had the following impacts on prior period comparative figures:
Consolidated statements of income and comprehensive income
The adoption of the amended standard had the following impacts on prior period comparative figures:
Consolidated statements of income and comprehensive income
Consolidated balance sheets
3. Revenues
The breakdown of revenues between services rendered and product sales is as follows:
4. Purchases of goods and services
The main components of purchases of goods and services are as follows:
5. Financial expenses
6. Operational restructuring costs, impairment of assets and other costs
In the three-month and six-month periods ended June 30, 2013, the Corporation recorded $1,646,000 in operational restructuring costs in connection with the elimination of a number of positions, including $897,000 in the Television segment and $749,000 in the Publishing segment. In the six-month period ended June 30, 2012, the Corporation recorded $117,000 in operational restructuring costs in connection with the elimination of a number of positions in the Publishing segment.
During the first quarter of 2013, the Corporation decided to discontinue theatrical distribution of new Quebec films, whereas in the second quarter of 2013, the Corporation announced that its TVA Boutiques division's home shopping and online shopping operations would be discontinued by August 31, 2013. As a result of these repositionings, the Corporation recorded a $612,000 inventory impairment charge and a $303,000 provision for operational restructuring costs for the three-month period ended June 30, 2013 and a $999,000 impairment charge and a $303,000 provision for operational restructuring costs for the six-month period ended June 30, 2013.
During the three-month period ended June 30, 2013, the Corporation also reversed a $514,000 provision for restructuring costs following a favourable judgment in a legal dispute related to a former subsidiary's production activities. During the six-month period ended June 30, 2013, the Corporation recorded a net charge of $51,000 in connection with this dispute.
7. Impairment of goodwill
During the first quarter of 2012, following the adoption of new rates for business contributions toward the costs of waste recovery and recycling services provided by Quebec municipalities, the Corporation had to review its business plan for the related activities and perform an impairment test on the Publishing cash-generating unit ("CGU"). The Corporation concluded that the recoverable amount based on value in use was less than the carrying amount of the Publishing CGU and a goodwill impairment charge of $32,200,000 was recorded.
8. Gain on disposal of investments
On May 31, 2012, following Canadian Radio-television and Telecommunications Commission approval, the Corporation completed the sale of its 51% interest in "The Cave" and its 50% interest in "Mystery TV" to its partner in the joint ventures, Shaw Media Global Inc., for a total cash consideration of $20,963,000. A $12,881,000 gain on disposal of investments, before taxes, was recorded. The transaction did not give rise to any tax expense because the Corporation used unrecorded capital losses to eliminate the capital gains tax on disposal of investments.
9. Capital stock
(a) Authorized capital stock
An unlimited number of Class A common shares, participating, voting, without par value.
An unlimited number of Class B shares, participating, non-voting, without par value.
An unlimited number of preferred shares, non-participating, non-voting, with a par value of $10 each, issuable in series.
(b) Issued and outstanding capital stock
(c) Earnings (loss) per share attributable to shareholders
The following table sets forth the computation of basic and diluted earnings (loss) per share attributable to shareholders:
The diluted earnings (loss) per share calculation does not take into consideration the potential dilutive effect of stock options of the Corporation since their impact is anti-dilutive.
10. Stock-based compensation and other stock-based payments
Of the number of options outstanding as at June 30, 2013, 691,076 Corporation's Class B stock options at an average exercise price of $16.54 and 46,407 Quebecor Media stock options at an average price of $45.76 could be exercised.
During the three-month period ended June 30, 2013, 21,927 Quebecor Media stock options were exercised for a cash consideration of $243,000 (no stock options were exercised in the same period of 2012). During the six-month period ended June 30, 2013, 41,884 Quebecor Media stock options were exercised for a cash consideration of $471,000 (no stock options were exercised in the same period of 2012).
During the three-month and six-month periods ended June 30, 2013, the Corporation recorded compensation expense reversals of $83,000 and $31,000 respectively (compensation expense reversals of $250,000 and $245,000 respectively in the same periods of 2012) in relation to the Corporation's Class B stock options and compensation expense reversals of $41,000 and $70,000 respectively (compensation expense reversal of $50,000 and compensation expense of $546,000 respectively in the same periods of 2012) in relation to Quebecor Media stock options.
11. Related party transactions
Capital contributions to SUN News
During the three-month and six-month periods ended June 30, 2013, the partners in SUN News made a capital contribution of $3,000,000 ($3,600,000 and $7,200,000 respectively during the same periods of 2012), including $1,470,000 from the Corporation ($1,836,000 and $3,672,000 respectively during the same periods of 2012) and $1,530,000 from Sun Media Corporation, a company under common control ($1,764,000 and $3,528,000 respectively during the same periods of 2012).
Disposal of interest in SUN News
On June 30, 2012, the Corporation sold a 2% interest in SUN News to Sun Media Corporation for a cash consideration of $765,000.The Corporation now holds a 49% interest in SUN News and Sun Media Corporation owns 51%. The difference between the amount paid and the book value of the interest yielded a $581,000 gain, which was accounted for in contributed surplus. Following the loss of control, SUN News' results are no longer consolidated as of July 1, 2012, and the investment in SUN News is now accounted for using the equity method.
The following table shows details of the net assets of SUN News, which were reclassified as an investment using the equity method at the date of deconsolidation:
12. Segmented information
The Corporation's operations consist of the following segments:
The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments regarding revenues.
13. Event after the reporting period
On July 18, 2013, the Corporation acquired all of the issued and outstanding shares of Les Publications Charron & Cie inc., publisher of La Semaine magazine, and of Charron Editeur inc., a book publisher, for a total cash consideration of $7,500,000. Les Publications Charron & Cie inc. was acquired as part of TVA Group's strategy to remain the Quebec market leader in magazine publishing. The operations of Charron Editeur inc. will be transferred to Sogides Group, a corporation under common control, for a $300,000 consideration.
Contacts:
Denis Rozon, CPA, CA
Vice President and Chief Financial Officer
(514) 598-2808
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Datum: 02.08.2013 - 13:49 Uhr
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