TVA Group reports higher adjusted operating income(1) in third quarter ended September 30, 2015

TVA Group reports higher adjusted operating income(1) in third quarter ended September 30, 2015

MONTREAL, Nov. 2, 2015 /CNW Telbec/ - TVA Group Inc. ("TVA Group" or the "Corporation") today announced that it recorded adjusted operating income(1) in the amount of $30.9 million in the third quarter of 2015, compared with $7.6 million in the same quarter of 2014.

The Corporation also recognized a $60.1 million non-cash charge for impairment of a broadcasting licence and declared a net loss attributable to shareholders of $36.5 million or $0.84 per share in the quarter, compared with a net loss attributable to shareholders of $35.7 million or $1.50 per share in the same quarter of 2014.

Third quarter operating highlights:


-- Consolidated adjusted operating income(1) of $30,864,000, a favourable
variance of $23,226,000 (304%) compared with the same quarter of 2014;
-- Adjusted operating income(1) of $19,527,000 in the Broadcasting &
Production segment, a favourable variance of $14,731,000 (307%), caused
mainly by an increase in the adjusted operating results of the "TVA
Sports" service and an increase in TVA Network's adjusted operating
income;
-- Adjusted operating income(1) of $3,732,000 in the Magazines segment, a
favourable variance of $890,000 (31%) due primarily to the addition of
the adjusted operating results of the magazines acquired from
Transcontinental on April 12, 2015;
-- Adjusted operating income(1) of $7,605,000 in the Corporation's new Film
Production & Audiovisual Services segment, which includes the operations
of the properties acquired from A.R. Global Vision Ltd. on December 30,
2014;
-- Non-cash charge for impairment of a licence and goodwill of $60,107,000,
compared with $41,000,000 in the same period of 2014.
"We are satisfied with the improvement in our financial results based on adjusted operating income in all three of our business segments. The excellent financial performance of our new Film Production & Audiovisual Services segment made a significant contribution. Adding this line of business, which has strong growth potential, to the Corporation's operations is consistent with our goal of reducing our dependence on fluctuating advertising revenues," said Julie Tremblay, President and CEO of the Corporation.

"This being said, market conditions in the television industry, particularly the pressure on advertising revenues, led the Corporation to conclude that the book value of a broadcasting licence is no longer recoverable and that a $60.1 million non-cash impairment charge was necessary," commented Ms. Julie Tremblay. "On the other hand, the progression of advertising and subscription revenues from our specialty services, particularly "TVA Sports," bode well for the Broadcasting & Production segment. TVA Group's ratings continued to climb, reaching a combined market share of 32.3%, compared with 31.6% in the same quarter of 2014. TVA Network remains the leading over-the-air network with a 22.3% market share and 3 of the top 5 most watched programs in Quebec, namely Le Banquier and two new series, Boomerang and Pour Sarah, each of which attracted more than 1.5 million viewers," said Ms. Tremblay.

"Financial results also improved in our Magazines segment during the quarter because of the inclusion of the operating results of the mastheads acquired from Transcontinental in the second quarter. The addition of those titles to our existing portfolio of magazines has made us the largest magazine publisher in Canada and strengthened our advertising offer to national advertisers," concluded Ms. Tremblay.

Definition

Adjusted operating income (loss)

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 other costs, 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), 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, 2014 and the "Risk Factors" section in the Corporation's 2014 annual information form.

The forward-looking statements in this news release reflect the Corporation's expectations as of November 2, 2015, 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 engaged in the broadcasting, film and television production, 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.

____________________

(1) See definition of adjusted operating income (loss) below.





TVA GROUP INC.
Interim consolidated statements of loss


(unaudited)
(in thousands of Canadian dollars, except per-share amounts)


Three-month periods Nine-month periods
ended September 30 ended September 30
------------------ ------------------

Note 2015 2014 2015 2014
---- ---- ---- ---- ----


Revenues 2 $138,523 $94,525 $424,461 $309,546


Purchases of goods and
services 3 70,242 57,105 273,522 191,508

Employee costs 37,417 29,782 120,395 95,426

Depreciation of property, plant and
equipment and amortization of
intangible assets 6,871 5,870 20,758 16,571

Financial expenses 4 1,009 1,078 3,814 3,173

Impairment of a
licence and goodwill 5 60,107 41,000 60,107 41,000

Operational
restructuring costs,
impairment of assets
and other costs 6 168 109 2,879 109
--------------------- --- --- --- ----- ---

Loss before tax recovery and share of
loss of associated corporations (37,291) (40,419) (57,014) (38,241)
------------------------------------- ------- ------- ------- -------


Tax recovery (1,689) (6,176) (8,083) (6,695)


Share of loss of
associated
corporations 11 a) 449 1,427 4,559 5,124
---------------- ---- --- ----- ----- -----

Net loss $(36,051) $(35,670) $(53,490) $(36,670)
======== ======== ======== ======== ========


Net (loss) income attributable to:

Shareholders $(36,455) $(35,670) $(53,754) $(36,670)

Non-controlling interest 404 - 264 -



Basic and diluted loss
per share
attributable to
shareholders 8 c) $(0.84) $(1.50) $(1.44) $(1.54)
====================== === ====== ====== ====== ======
See accompanying notes to interim condensed consolidated financial statements.





TVA GROUP INC.
Interim consolidated statements of comprehensive loss


(unaudited)
(in thousands of Canadian dollars)


Three-month periods Nine-month periods
ended September 30 ended September 30
------------------ ------------------

Note 2015 2014 2015 2014
---- ---- ---- ---- ----


Net loss $(36,051) $(35,670) $(53,490) $(36,670)


Other comprehensive items that may be
reclassified to income:

Derivative financial instrument 9 (154) - (519) -

Deferred income taxes 9 42 - 140 -
--------------------- --- --- --- --- ---

Comprehensive loss $(36,163) $(35,670) $(53,869) $(36,670)
================== ======== ======== ======== ========


Comprehensive (loss) income attributable
to:

Shareholders $(36,567) $(35,670) $(54,133) $(36,670)

Non-controlling interest 404 - 264 -
======================== === === === ===
See accompanying notes to interim condensed consolidated financial statements.





TVA GROUP INC.
Interim consolidated statements of equity


(unaudited)
(in thousands of Canadian dollars)


Equity attributable to shareholders Equity Total
attributable equity
to non-
controlling
interest
-------------------- ---

Capital Contributed Retained
surplus earnings Accumula-
stock ted other
comprehen-
(note 8) sive income
(loss)

(note 9)
--- --------


Balance as at December
31, 2013 $98,647 $581 $203,683 $5,148 $ - $308,059

Net loss - - (36,670) - - (36,670)
-------- --- --- ------- --- --- -------

Balance as at September 30, 2014 98,647 581 167,013 5,148 - 271,389

Net loss - - (4,418) - - (4,418)

Other comprehensive loss - - - (8,766) - (8,766)
------------------------ --- --- --- ------ --- ------

Balance as at December 31, 2014 98,647 581 162,595 (3,618) - 258,205

Business acquisition (note 7) - - - - 565 565

Net (loss) income - - (53,754) - 264 (53,490)

Issuance of share capital, net
of transaction costs 108,633 - - - - 108,633

Other comprehensive loss - - - (379) - (379)
------------------------ --- --- --- ---- --- ----

Balance as at
September 30, 2015 $207,280 $581 $108,841 $(3,997) $829 $313,534
=================== ======== ==== ======== ======= ==== ========
See accompanying notes to interim condensed consolidated financial statements.





TVA
GROUP
INC.
Interim
consolidated
balance
sheets


(unaudited)
(in
thousands
of
Canadian
dollars)


Note September 30, December 31,
2015 2014
---- ----


Assets


Current
assets

Cash $12,895 $ -

Accounts receivable 141,735 136,811

Income taxes 6,654 5,256

Programs, broadcast and
distribution rights and
inventories 73,972 74,765

Prepaid expenses 6,268 3,734
---------------- ----- -----

241,524 220,566

Non-
current
assets

Broadcast and distribution
rights 38,793 31,989

Investments 14,169 12,111

Property, plant and equipment 202,977 201,429

Licences and other intangible
assets 5 38,234 83,647

Goodwill 7 83,082 48,266

Defined benefit plan asset 4,364 2,964

Deferred income taxes 7,669 1,060
--------------------- ----- -----

389,288 381,466
------- -------

Total
assets $630,812 $602,032
====== ======== ========




TVA GROUP INC.
Interim consolidated balance sheets (continued)


(unaudited)
(in thousands of Canadian dollars)


Note September 30, December 31,
2015 2014
---- ----


Liabilities and equity


Current liabilities

Bank overdraft $ - $4,486

Accounts payable and accrued
liabilities 111,447 88,746

Income taxes 622 777

Broadcast and distribution rights
payable 88,947 45,660

Provisions 5,044 4,331

Deferred revenues 21,156 8,690

Credit facility from parent
corporation 11 b) - 100,000

Short-term debt 3,750 938
--------------- ----- ---

230,966 253,628

Non-current liabilities

Long-term debt 70,364 72,757

Other liabilities 11,920 9,967

Deferred income taxes 4,028 7,475
--------------------- ----- -----

86,312 90,199

Equity

Capital stock 8 207,280 98,647

Contributed surplus 581 581

Retained earnings 108,841 162,595

Accumulated other comprehensive loss 9 (3,997) (3,618)
------------------------------------ --- ------ ------

Equity attributable to shareholders 312,705 258,205

Non-controlling interest 829 -
------------------------ --- ---

313,534 258,205


Guarantees 12
---------- ---

Total liabilities and equity $630,812 $602,032
============================ ======== ========
See accompanying notes to interim condensed consolidated financial statements.

On November 2, 2015, the Board of Directors approved the interim condensed consolidated financial statements for the three-month and nine-month periods ended September 30, 2015 and 2014.





TVA GROUP INC.
Interim consolidated statements of cash flows


(unaudited)
(in thousands of Canadian dollars)


Three-month periods Nine-month periods
ended September 30 ended September 30
------------------ ------------------

Note 2015 2014 2015 2014
---- ---- ---- ---- ----


Cash flows related to operating activities

Net loss $(36,051) $(35,670) $(53,490) $(36,670)

Adjustments
for:

Depreciation and amortization 6,940 5,920 21,003 16,722

Impairment of a licence and
goodwill 5 60,107 41,000 60,107 41,000

Share of loss of associated
corporations 449 1,427 4,559 5,124

Deferred income taxes (2,618) (5,129) (8,645) (4,168)

Loss on valuation of derivative
financial instruments 5 - 22 -
------------------------------- --- --- --- ---

28,832 7,548 23,556 22,008

Net change in
non-cash
balances
related to
operating
activities (13,592) (1,292) 63,279 5,200
-------------- ------- ------ ------ -----

Cash flows provided by operating activities 15,240 6,256 86,835 27,208
------------------------------------------- ------ ----- ------ ------

Cash flows related to investing activities

Additions to
property,
plant and
equipment (5,498) (6,094) (17,592) (17,914)

Additions to
intangible
assets (682) (188) (1,581) (1,683)

Net change in
investments 11 a) - (1,781) (2,620) (4,548)

Net business
acquisitions 7 (1,161) - (56,361) (501)
------------- --- ------ --- ------- ----

Cash flows used in investing activities (7,341) (8,063) (78,154) (24,646)
--------------------------------------- ------ ------ ------- -------

Cash flows related to financing activities

Decrease of
bank overdraft - - (4,486) -

Net change of
revolving
credit
facilities (2,886) - 212 -

Repayment of
credit
facility from
parent
corporation 11 b) - - (100,000) -

Issuance of
share capital,
net of
transaction
costs 8 (92) - 108,633 -

Repayment of
derivative
financial
instruments (35) - (145) -
------------- --- --- ---- ---

Cash flows (used) provided by financing
activities (3,013) - 4,214 -
--------------------------------------- ------ --- ----- ---

Net change in cash 4,886 (1,807) 12,895 2,562

Cash at beginning of period 8,009 12,086 - 7,717
--------------------------- ----- ------ --- -----

Cash at end of period $12,895 $10,279 $12,895 $10,279
===================== ======= ======= ======= =======

Interest and taxes reflected as operating
activities

Net interest
paid $624 $21 $3,175 $2,052

Income taxes
paid (net of
refunds) 645 1,079 2,105 5,780
============= === ===== ===== =====
See accompanying notes to interim condensed consolidated financial statements.

TVA GROUP INC.

Notes to interim condensed consolidated financial statements

Three-month and nine-month periods ended September 30, 2015 and 2014 (unaudited)

(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

TVA Group Inc. ("TVA Group" or the "Corporation") is governed by the Québec Business Corporations Act. TVA Group is an integrated communications company engaged in the broadcasting, film and audiovisual production, and magazine publishing industries (note 13). The Corporation is a subsidiary of Quebecor Media Inc. ("Quebecor Media" or the "parent corporation") and its 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 to, among other factors, seasonal advertising patterns, consumers' viewing and reading habits, and demand for production services from international and local producers. 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. 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 are condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Corporation's 2014 annual consolidated financial statements, which describe the accounting policies used to prepare these financial statements.

Certain comparative figures for the three-month and nine-month periods ended September 30, 2014 have been restated to conform to the presentation adopted for the three-month and nine-month periods ended September 30, 2015.

2. Revenues

The breakdown of revenues between advertising services, royalties, leasing and post-production services and other services rendered, and product sales is as follows:







Three-month periods Nine-month periods

ended September 30 ended September 30
------------------ ------------------

2015 2014 2015 2014
---- ---- ---- ----


Advertising
services $49,470 $42,319 $181,444 $158,695

Royalties,
leasing and
post-
production
services
and other
services
rendered 58,211 27,704 163,055 80,040

Product
sales 30,842 24,502 79,962 70,811
------- ------ ------ ------ ------

$138,523 $94,525 $424,461 $309,546
======== ======= ======== ========


3. Purchases of goods and services

The main components of purchases of goods and services are as follows:




Three-month periods Nine-month periods

ended September 30 ended September 30
------------------ ------------------

2015 2014 2015 2014
---- ---- ---- ----


Royalties, rights and
production costs $38,831 $35,431 $183,184 $128,119

Printing and
distribution 9,450 4,194 22,228 12,694

Services rendered by
parent corporation

-Commissions on advertising
sales 3,791 2,760 12,537 9,028

- Other 2,194 2,705 6,883 7,880

Building costs 4,729 2,118 14,558 6,798

Marketing, advertising
and promotion 2,924 4,158 12,034 10,753

Other 8,323 5,739 22,098 16,236
----- ----- ----- ------ ------

$70,242 $57,105 $273,522 $191,508
======= ======= ======== ========


4. Financial expenses







Three-month periods Nine-month periods

ended September 30 ended September 30
------------------ ------------------

2015 2014 2015 2014
---- ---- ---- ----


Interest on
long-term debt $741 $1,125 $2,352 $3,370

Interest on
credit facility
from parent
corporation
(note 11 b)) - - 805 -

Amortization of
financing costs 69 50 245 151

Foreign exchange
loss 19 42 185 28

Interest expense
(revenues) on
net defined
benefit asset
or liability 13 (72) 39 (215)

Other 167 (67) 188 (161)
----- --- --- --- ----

$1,009 $1,078 $3,814 $3,173
====== ====== ====== ======


5. Impairment of a licence and goodwill

During the third quarter of 2015, the Corporation completed the annual update of its strategic plan for the next three years. Market conditions in the television industry, particularly the continuing pressure on advertising revenues, led the Corporation to perform an impairment test on its Broadcasting & Production cash-generating unit ("CGU"). The Corporation concluded that the recoverable amount, based on value in use, of the Broadcasting & Production CGU was less than its carrying amount. A $60,107,000 non-cash impairment charge was recorded with respect to the broadcasting licence, including $30,054,000 without any tax consequences ($32,462,000 in 2014, including $16,231,000 without any tax consequences). In 2014, an $8,538,000 non-cash goodwill impairment charge, without any tax consequences, was also recognized. The Corporation used an 11.10% pre-tax discount rate and a 0.0% perpetual growth rate to calculate the recoverable amount (11.08% pre-tax discount rate and 1.0% perpetual growth rate in 2014).

6. Operational restructuring costs, impairment of assets and other costs

In the three-month and nine-month periods ended September 30, 2015 and 2014, the Corporation recorded the following operational restructuring costs in connection with the elimination of positions:




Three-month periods Nine-month periods

ended September 30 ended September 30
------------------ ------------------

2015 2014 2015 2014
---- ---- ---- ----


Broadcasting &
Production $274 $109 $739 $109

Magazines 602 - 1,882 -

Film Production &
Audiovisual Services 4 - 339 -
--------------------- --- --- --- ---

$880 $109 $2,960 $109
==== ==== ====== ====


During the three-month period ended September 30, 2015, the Corporation recorded a $32,000 net reversal of professional fees and integration costs ($599,000 expense for the nine-month period ended September 30, 2015) in connection with the acquisition of substantially all of the assets of Mels Studios and Postproduction G.P. ("MELS", formerly A.R. Global Vision Ltd.) and the acquisition of magazines from Transcontinental Inc.

On October 15, 2015, the Supreme Court of Canada refused to hear an appeal from Bell ExpressVu Limited Partnership ("Bell ExpressVu"), a subsidiary of Bell Canada, against a Quebec Court of Appeal judgement in favour of Videotron Ltd. and TVA Group rendered on March 6, 2015. The ruling ordered Bell ExpressVu to pay TVA Group $665,000, including interest, for having failed to implement an appropriate security system in a timely manner to prevent piracy of its satellite television signals between 1999 and 2005, harming its competitors and broadcasters. Accordingly, on October 19, 2015, Bell ExpressVu paid the amount of $933,000, including interest and professional fees, in connection with the outcome of this case. In the third quarter of 2015, a $680,000 gain, including interest, was recognized in operational restructuring costs, impairment of assets and other costs.

7. Business acquisitions and disposal

On April 12, 2015, the Corporation acquired 14 magazines from Transcontinental, four of which are owned and operated in partnership, as well as three websites, custom publishing contracts and book publishing operations, for a cash purchase price of $55,500,000. A $2,012,000 amount payable was also recorded in accounts payable and accrued liabilities as a preliminary adjustment based on a predetermined working capital target agreed to by the parties.

The acquisition was in keeping with the Corporation's strategy of investing in the production and dissemination of diverse, rich, high-quality entertainment content. The acquired intangible assets basically consist of customer lists and mastheads. The goodwill related to the acquisition arises mainly from the quality of the content and the expected synergies.

The preliminary allocation of the fair value of assets and liabilities associated with this acquisition is as follows:






Assets acquired

Current assets $22,062

Investment 2,237

Property, plant and equipment 867

Intangible assets 19,250

Goodwill 34,051

Deferred income taxes 400
--------------------- ---

78,867

Liabilities assumed

Current liabilities (20,790)
------------------- -------

(20,790)
-------

Net assets acquired at fair value 58,077
--------------------------------- ------

Non-controlling interest (565)
------------------------ ----

$57,512
=======


Consideration

Cash 55,500

Amount payable 2,012
-------------- -----

$57,512
=======


As part of this transaction, the Corporation simultaneously transferred the acquired book publishing operations to Sogides Group Inc., a corporation under common control, for an agreed price of $811,000, including $300,000 in cash and a balance receivable of $511,000. The transferred net assets include $898,000 in current assets, a $127,000 publishing fund and $214,000 in current liabilities.

The Corporation's consolidated revenues and consolidated pro forma net loss would have been $446,550,000 and $54,528,000 respectively if this net business acquisition had occurred at the beginning of the nine-month period ended September 30, 2015.

Goodwill in the amount of $7,635,000 is deductible for income tax purposes.

MELS

In the second quarter of 2015, the Corporation recorded a $1,217,000 amount payable as a preliminary adjustment related to the acquisition of MELS in 2014. In the third quarter ended September 30, 2015, the amount payable was lowered and $1,161,000 was paid as a preliminary adjustment to the purchase price. The preliminary adjustment to the purchase price gave rise to recognition of a deferred tax asset of $373,000, additional goodwill of $765,000, and a downward adjustment to non-current liabilities in the amount of $23,000. As the purchase price allocation process had not been completed as of September 30, 2015, the amounts allocated to assets and liabilities may be changed subsequently.

8. 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




September 30, December 31,

2015 2014
---- ----


4,320,000 Class A common
shares $72 $72

38,885,535 Class B shares
(19,450,906 in 2014) 207,208 98,575
------------------------- ------- ------

$207,280 $98,647
======== =======


On March 20, 2015, the Corporation completed a subscription rights offering to its shareholders, whereby it received gross proceeds totalling $110,000,000 from the issuance of 19,434,629 Class B non-voting shares. Transaction costs of $1,870,000, less $503,000 in income tax, were charged to capital stock as a reduction of gross proceeds from the issuance. The transaction costs include $1,100,000 in commitment fees paid to Quebecor Media.

c) Loss per share attributable to shareholders

The following table shows the computation of loss per basic and diluted share attributable to shareholders:




Three-month periods Nine-month periods

ended September 30 ended September 30
------------------ ------------------

2015 2014 2015 2014
---- ---- ---- ----


Net loss
attributable to
shareholders $(36,455) $(35,670) $(53,754) $(36,670)
================ ======== ======== ======== ========


Weighted average
number of basic
and diluted
shares
outstanding 43,205,535 23,770,906 37,368,027 23,770,906
================ ========== ========== ========== ==========


Basic and diluted
loss per share
attributable to
shareholders $(0.84) $(1.50) $(1.44) $(1.54)
================= ====== ====== ====== ======
The loss per diluted share calculation does not take into consideration the potential dilutive effect of stock options of the Corporation, because their impact is non-dilutive.

9. Accumulated other comprehensive income (loss)




Cash flow Defined Total

hedge benefits plan
----- -------------


Balance as at December 31, 2013 and
September 30, 2014 $ - $5,148 $5,148

Other comprehensive loss - (8,766) (8,766)
------------------------ --- ------ ------

Balance as at December 31, 2014 - (3,618) (3,618)

Other comprehensive loss (379) - (379)
------------------------ ---- --- ----

Balance as at September 30, 2015 $(379) $(3,618) $(3,997)
================================ ===== ======= =======
The Corporation is using an interest rate swap to secure future interest expenses on a $39,875,000 portion of its $75,000,000 secured term loan, which bears interest at a floating rate. This interest rate swap is designated as a cash flow hedge and therefore the effective portion of the hedge is reported in other comprehensive income while the ineffective portion is immediately recognized in loss. In the three-month and nine-month periods ended September 30, 2015, losses of $5,000 and $22,000 respectively were recognized in loss under financial expenses in connection with the ineffective portion of the hedge.

10. Stock-based compensation and other stock-based payments




Nine-month period ended September 30, 2015
------------------------------------------

Corporation's Class B Quebecor Media

stock options stock options
------------- -------------

Number Weighted Number Weighted
average average
exercise exercise
price price
--------- ---------


Balance as at
December 31,
2014 525,368 $15.25 355,432 $55.43

Granted 80,000 6.85 50,000 70.56

Exercised - - (79,972) 51.24

Expired (59,631) 21.28 - -

Cancelled (82,366) 13.68 (8,200) 67.80

Stock options
related to
Executive
transferred to
TVA Group - - 148,500 55.72

Stock options
related to
Executive
transferred to
Quebecor Media - - (233,360) 53.71
--------------- --- --- -------- -----

Balance as at
September 30,
2015 463,371 $13.30 232,400 $61.61
============== ======= ====== ======= ======
Of the options outstanding as at September 30, 2015, 369,371 Corporation Class B stock options at an average exercise price of $14.81 and 11,200 Quebecor Media stock options at an average exercise price of $59.23 could be exercised.

During the three-month period ended September 30, 2015, 33,200 Quebecor Media stock options were exercised for a cash consideration of $1,732,000 (8,000 stock options were exercised for a cash consideration of $61,000 for the same period of 2014). During the nine-month period ended September 30, 2015, 79,972 Quebecor Media stock options were exercised for a cash consideration of $2,471,000 (29,375 stock options were exercised for a cash consideration of $413,000 for the same period of 2014).

During the three-month and nine-month periods ended September 30, 2015, the Corporation recorded compensation expenses of $11,000 and $6,000 respectively (nil and a compensation expense reversal of $46,000 respectively in the same periods of 2014) in relation to the Corporation's Class B stock options, and compensation expenses of $126,000 and $957,000 respectively ($262,000 and $859,000 respectively in the same periods of 2014) in relation to Quebecor Media stock options.

11. Related party transactions

a) Share of loss and capital contributions to the "SUN News" specialty service

On February 13, 2015, Sun Media Corporation, a corporation under common control, announced the discontinuation of the operations of the "SUN News" specialty service. As at September 30, 2015, the Corporation's share of the "SUN News" specialty service's loss included costs related to the discontinuation of operations.

In a corporate reorganization carried out in April 2015, Sun Media Corporation was folded into Quebecor Media, which now holds 51% of SUN News General Partnership, the name of which was changed on September 30, 2015 to ROC Television G.P. ("ROC Television").

In 2015, the Corporation has continued making capital contributions to ROC Television and a $1,760,000 allowance was recorded under accounts payable and accrued liabilities as at September 30, 2015 to cover costs related to the discontinuation of operations.

During the three-month period ended September 30, 2015, the partners in ROC Television made no capital contribution to ROC Television. In the same quarter of 2014, the partners in ROC Television made a capital contribution of $4,100,000, including $2,009,000 from the Corporation.

During the nine-month period ended September 30, 2015, the partners in ROC Television made a capital contribution of $5,900,000 ($10,300,000 during the same period of 2014), including $2,891,000 from the Corporation ($5,047,000 during the same period of 2014).

b) Repayment of credit facility

On December 30, 2014, in connection with the funding of the acquisition of the assets of MELS, the Corporation obtained a $100,000,000 credit facility from Quebecor Media. On March 20, 2015, the Corporation paid down the credit facility using the proceeds from the subscription rights offering (note 8). The Corporation recognized and paid an $805,000 interest expense in connection with this transaction in the first quarter of 2015, which is included in financial expenses.

12. Guarantees

In the normal course of business, the Corporation enters into indemnification agreements with third parties as part of certain transactions, including acquisition contracts for goods, service agreements and leases. These indemnification agreements require the Corporation to compensate the third parties for costs incurred as a result of specific circumstances. The terms of these indemnification agreements vary from transaction to transaction, based on the contract terms. The nature of these indemnification agreements prevents the Corporation from making a reasonable estimate of the maximum potential amount it could be required to pay to third parties for all of its commitments. In the first quarter of 2014, the liability risk under specific commitments, which totalled $4,700,000 at December 31, 2013, was recognized in purchases of goods and services.

13. Segmented information

At the beginning of 2015, the Corporation revised its business segments to better reflect changes in its operations and management structure following the acquisition of substantially all of the assets of MELS on December 30, 2014. Accordingly, the new Film Production & Audiovisual Services segment was created.

In addition, since April 12, 2015, following the transaction with Transcontinental Inc., the operations of the acquired magazines have been included in the Magazines segment's results, while custom publishing operations have been included in the Broadcasting & Production segment's results.

The Corporation's operations now consist of the following segments:


-- The Broadcasting & Production segment, which includes the operations of
TVA Network (including the subsidiary and divisions TVA Productions
Inc., TVA Nouvelles and TVA Interactif), specialty services, the
marketing of digital products associated with the various televisual
brands, the commercial production, dubbing, custom publishing and
premedia services of TVA Accès Inc., and distribution of audiovisual
products by the TVA Films division;
-- The Magazines segment, which through its subsidiaries, notably TVA
Publications Inc. and Les Publications Charron & Cie inc., publishes
French- and English-language magazines in various fields such as the
arts, entertainment, television, fashion, sports and decoration as well
as the marketing of digital products associated with the various
magazine brands;
-- The Film Production & Audiovisual Services segment, which since December
30, 2014 has included the soundstage and equipment leasing,
post-production and visual effects services provided by MELS.





Three-month periods Nine-month periods

ended September 30 ended September 30
------------------ ------------------

2015 2014 2015 2014
---- ---- ---- ----


Revenues

Broadcasting & Production $87,145 $78,829 $305,564 $264,005

Magazines 32,265 16,243 73,980 47,339

Film Production & Audiovisual
Services 20,460 - 48,366 -

Intersegment items (1,347) (547) (3,449) (1,798)
------------------ ------ ---- ------ ------

138,523 94,525 424,461 309,546

Adjusted operating income
1

Broadcasting & Production 19,527 4,796 11,579 14,655

Magazines 3,732 2,842 5,883 7,957

Film Production & Audiovisual
Services 7,605 - 13,082 -
------------------------------ ----- --- ------ ---

30,864 7,638 30,544 22,612

Depreciation of property,
plant and equipment and
amortization of
intangible assets 6,871 5,870 20,758 16,571

Financial expenses 1,009 1,078 3,814 3,173

Impairment of a licence
and goodwill 60,107 41,000 60,107 41,000

Operational restructuring
costs, impairment of
assets and other costs 168 109 2,879 109
------------------------- --- --- ----- ---

Loss before tax recovery
and share of loss of
associated corporations $(37,291) $(40,419) $(57,014) $(38,241)
======================== ======== ======== ======== ========


The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments regarding revenues.

((1) )The Chief Executive Officer uses adjusted operating income (loss) as a measure of financial performance for assessing the performance of each of the Corporation's segments. Adjusted operating income (loss) is defined as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs, impairment of assets and other costs, 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 IFRS.



SOURCE TVA Group

TVA Group

CONTACT: Denis Rozon, CPA, CA, Vice President and Chief Financial Officer, (514) 598-2808

Web Site: tva.canoe.ca/groupetva


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