TVA Group reports increased adjusted operating income[1] for the second straight quarter

TVA Group reports increased adjusted operating income[1] for the second straight quarter

MONTREAL, Feb. 26, 2016 /CNW Telbec/ - TVA Group Inc. ("TVA Group" or the "Corporation") today announced that it recorded adjusted operating income(1) in the amount of $16.8 million in the fourth quarter of fiscal 2015, compared with $6.8 million in the same quarter of 2014.

However, the Corporation declared a net loss attributable to shareholders of $1.5 million or a loss of $0.03 per share for the quarter, compared with a net loss attributable to shareholders of $4.4 million or a loss of $0.19 per share in the same quarter of 2014.

Fourth quarter operating highlights:


-- Consolidated adjusted operating income(1): $16,846,000, up $10,032,000
(147%) from the same quarter of 2014.
-- Adjusted operating income(1) in the Broadcasting & Production segment:
$14,013,000, up $8,940,000 (176%) due mainly to the following factors:
-- improved adjusted operating results(1) at "TVA Sports," essentially
due to a 19% increase in advertising revenues and a 13% increase in
subscription revenues;
-- 80% increase in adjusted operating income(1) at the other specialty
services, mainly reflecting higher subscription revenues;
-- increase in adjusted operating income(1) at TVA Network, mainly as a
result of the operating cost reduction plan.
-- Adjusted operating income(1) in the Magazines segment: $1,853,000, up
$112,000 (6%) mainly because of the addition of the adjusted operating
results of the magazines acquired from Transcontinental, which was
partially offset by the impact of the decrease in the segment's
operating revenues, excluding the acquired magazines.
-- Adjusted operating income(1) in the Film Production & Audiovisual
Services segment ("MELS"): $980,000.
"We are pleased to be posting growth in adjusted operating income(1) for a second quarter in a row," commented Julie Tremblay, President and Chief Executive Officer of the Corporation. "The increase is due to our revenue diversification strategy and our marketing efforts in support of our brands and content. The Broadcasting & Production segment improved its financial performance significantly, particularly at its news and entertainment specialty services, which increased their combined adjusted operating income(1) by 80%, and its "TVA Sports" specialty service, which improved its adjusted operating results by 49%. TVA Network held its 22.5% market share, while our two main rivals saw market share declines. The combined market share of our specialty services increased by 0.3 points to 10%."

"The Magazines segment slightly increased its profitability, as measured by adjusted operating income,(1) despite considerable pressure on advertising revenues. To maintain our market position and focus our resources on our strong brands, we announced on November 18, 2015 the discontinuation of six French-language titles. This move will enable the Corporation's flagship brands to increase their reach. Despite the closures we maintain a strong presence in every niche," added Ms Julie Tremblay.

"We are also very pleased with the response from local and foreign producers of films and television series, who are making extensive use of MELS' soundstage facilities and equipment, as well as its postproduction and special effects services. In line with our commitment to offering them outstanding service, we announced the appointment of Michel Trudel to the position of President of MELS. His appointment will help carry the company into a new phase of expansion at home and internationally," concluded the President.

2015 financial year results

The Corporation's consolidated adjusted operating income1 for the financial year ended December 31, 2015 amounted to $47,390,000 compared with $29,426,000 for the previous year, a 61% increase. The Broadcasting & Production segment grew its adjusted operating income(1) by 30% while the Magazines segment posted a 20% decrease. The addition of the operations of the Film Production & Audiovisual Services segment, created following the acquisition of assets now operated by MELS on December 30, 2014, made a significant contribution to the growth, generating $14,062,000 in adjusted operating income(1) in 2015. The improvement in the Broadcasting & Production segment's adjusted operating income(1) was due to the increase in TVA Network's adjusted operating income(1), which was driven by reductions in content costs and the operating cost reduction plan introduced in the second quarter of 2015, as well as the 48% increase in the combined adjusted operating income(1 )of specialty services (other than "TVA Sports") resulting from higher subscription revenues.

Consolidated operating revenues amounted to $589,890,000 in fiscal 2015, compared with $439,340,000 in the previous year, a 34% increase. The Corporation's net loss attributable to shareholders was $55,226,000 or a loss of $1.42 per share in 2015, compared with a net loss attributable to shareholders of $41,088,000 or a loss of $1.73 per share in 2014.

Also, in the third quarter of 2015, the Corporation completed the annual update of its three-year strategic plan, including the plan for its Broadcasting & Production segment. The Corporation recognized a $60,107,000 non-cash impairment charge with respect to a 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.

___________________________

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

Definition

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 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, 2015.

The forward-looking statements in this news release reflect the Corporation's expectations as of February 26, 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.

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.

The audited consolidated financial statements, with notes, and the annual Management's Discussion and Analysis, can be consulted on the Corporation's website at http://groupetva.ca.





TVA GROUP INC.
Consolidated statements of (loss) income


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

Three-month periods Years ended

ended December 31 December 31
----------------- -----------

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


Revenues $165,429 $129,794 $589,890 $439,340


Purchases of goods and
services 109,634 92,063 383,156 283,571

Employee costs 38,949 30,917 159,344 126,343

Depreciation of property,
plant and equipment and
amortization of
intangible assets 12,757 5,533 33,515 22,104

Financial expenses 290 1,058 4,104 4,231

Operational restructuring
costs, impairment of
assets and others 3,436 3,485 6,315 3,594

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

Income (loss) before tax
expense (recovery) and
share of loss of
associated corporations 363 (3,262) (56,651) (41,503)
------------------------ --- ------ ------- -------


Tax expense (recovery) 265 (2,058) (7,818) (8,753)

Share of loss of
associated corporations 1,575 3,214 6,134 8,338
------------------------ ----- ----- ----- -----

Net loss $(1,477) $(4,418) $(54,967) $(41,088)
======== ======= ======= ======== ========


Net (loss) income
attributable to:

Shareholders $(1,472) $(4,418) $(55,226) $(41,088)

Non-controlling interest (5) - 259 -



Basic and diluted loss
per share
attributable to
shareholders $(0.03) $(0.19) $(1.42) $(1.73)
====================== ====== ====== ====== ======







TVA GROUP INC.
Consolidated statements of comprehensive (loss) income


(unaudited)
(in thousands of Canadian dollars)
=================================

Three-month periods Years ended

ended December 31 December 31
----------------- -----------

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


Net loss $(1,477) $(4,418) $(54,967) $(41,088)


Other comprehensive items that may be
reclassified to income:

Cash flow hedge:

Gain (loss) on valuation of
derivative financial instruments 57 - (462) -

Deferred income taxes (16) - 124 -

Other comprehensive items that will not be
reclassified to income:

Defined benefit
plans:

Re-measurement loss (3,446) (11,993) (3,446) (11,993)

Deferred income taxes 928 3,227 928 3,227


(2,477) (8,766) (2,856) (8,766)


Comprehensive loss $(3,954) $(13,184) $(57,823) $(49,854)
================== ======= ======== ======== ========


Comprehensive (loss) income attributable to:

Shareholders $(3,949) $(13,184) $(58,082) $(49,854)

Non-controlling interest (5) - 259 -
======================== === === === ===




TVA GROUP INC.
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 Accumula-
stock surplus earnings ted other
comprehen-
sive income
(loss)
--- ------


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

Net loss - - (41,088) - - (41,088)

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


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

Business acquisitions - - - - 417 417

Net (loss) income - - (55,226) - 259 (54,967)

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

Other comprehensive loss - - - (2,856) - (2,856)
------------------------ --- --- --- ------ --- ------

Balance as at December
31, 2015 $207,280 $581 $107,369 $(6,474) $676 $309,432
====================== ======== ==== ======== ======= ==== ========




TVA GROUP INC.
Consolidated balance sheets


(unaudited)
(in thousands of Canadian dollars)
=================================

December 31,
2014
December 31,
2015
----


Assets


Current assets

Cash $11,996 $ -

Accounts receivable 150,930 136,811

Income taxes 6,787 5,256

Programs, broadcast rights and inventories 79,495 74,765

Prepaid expenses 4,064 3,734
---------------- ----- -----

253,272 220,566

Non-current assets

Broadcast rights 36,321 31,989

Investments 12,594 12,111

Property, plant and equipment 208,103 201,429

Licences and other intangible assets 39,770 83,647

Goodwill 77,985 48,266

Defined benefit plan asset - 2,964

Deferred income taxes 7,069 1,060
--------------------- ----- -----

381,842 381,466
------- -------

Total assets $635,114 $602,032
============ ======== ========



Liabilities and equity


Current liabilities

Bank overdraft $ - $4,486

Accounts payable and accrued liabilities 112,914 88,746

Income taxes 1,769 777

Broadcast rights payable 88,867 45,660

Provisions 7,107 4,331

Deferred revenues 28,148 8,690

Credit facility from parent corporation - 100,000

Short-term debt 4,219 938
--------------- ----- ---

243,024 253,628

Non-current liabilities

Long-term debt 68,812 72,757

Other liabilities 10,974 9,967

Deferred income taxes 2,872 7,475
--------------------- ----- -----

82,658 90,199

Equity

Capital stock 207,280 98,647

Contributed surplus 581 581

Retained earnings 107,369 162,595

Accumulated other comprehensive loss (6,474) (3,618)
------------------------------------ ------ ------

Equity attributable to shareholders 308,756 258,205

Non-controlling interest 676 -
------------------------ --- ---

309,432 258,205
------- -------

Total liabilities and equity $635,114 $602,032
============================ ======== ========




TVA GROUP INC.
Consolidated statements of cash flows


(unaudited)
(in thousands of Canadian dollars)
=================================

Three-month periods Years ended

ended December 31 December 31
----------------- -----------

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


Cash flows related to operating activities

Net loss $(1,477) $(4,418) $(54,967) $(41,088)

Adjustments for:

Depreciation and amortization 12,826 5,604 33,829 22,326

Impairment of assets - 832 - 832

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

Share of loss of associated
corporations 1,575 3,214 6,134 8,338

Deferred income taxes (18) (5,670) (8,663) (9,838)

Loss on valuation of derivative
financial instruments 2 - 24 -
------------------------------- --- --- --- ---

Cash flows provided (used) by current
operations 12,908 (438) 36,464 21,570

Net change in non-cash balances related to
operating activities (4,449) 9,916 58,830 15,116
------------------------------------------ ------ ----- ------ ------

Cash flows provided by operating activities 8,459 9,478 95,294 36,686
------------------------------------------- ----- ----- ------ ------


Cash flows related to investing activities

Net business
acquisitions (786) (116,115) (57,147) (116,616)

Additions to
property, plant
and equipment (6,308) (4,244) (23,900) (22,158)

Additions to
intangible
assets (1,061) (806) (2,642) (2,489)

Net change in
investments - (1,911) (2,620) (6,459)
-------------- --- ------ ------ ------

Cash flows used in investing activities (8,155) (123,076) (86,309) (147,722)
--------------------------------------- ------ -------- ------- --------


Cash flows related to financing activities

Change in bank
overdraft - 4,486 (4,486) 4,486

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

Repayment of a
term loan - (75,000) - (75,000)

(Repayment)
increase of
long-term debt (1,152) 74,737 (940) 74,737

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

Financing costs - (904) - (904)

Repayment of
derivative
financial
instruments (51) - (196) -
------------- --- --- ---- ---

Cash flows (used) provided by financing
activities (1,203) 103,319 3,011 103,319
--------------------------------------- ------ ------- ----- -------


Net change in cash (899) (10,279) 11,996 (7,717)

Cash at beginning of period 12,895 10,279 - 7,717
--------------------------- ------ ------ --- -----

Cash at end of period $11,996 $ - $11,966 $ -
===================== ======= === === ======= === ===


Interests and taxes reflected as operating
activities

Interests paid $800 $2,117 $3,975 $4,169

Income taxes
(cashed) paid
(net of
payments or of
refunds) (731) 1,486 1,374 7,266
=============== ==== ===== ===== =====


TVA GROUP INC.

Segmented information

(unaudited)

(in thousands of Canadian dollars)

At the beginning of 2015, the Corporation revised its business segments to better reflect changes in its operations and management structure following the acquisition on December 30, 2014 of substantially all of the assets of A.R. Global Vision Ltd., now operated by MELS. 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.

Then, the Corporation's operations 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, and
markets 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,
postproduction and visual effects services provided by MELS.





Three-month periods Years ended

ended December 31 December 31
----------------- -----------

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


Revenues

Broadcasting & Production $122,962 $116,173 $428,526 $380,178

Magazines 32,477 15,275 106,457 62,614

Film Production & Audiovisual
Services 11,754 - 60,120 -

Intersegment items (1,764) (1,654) (5,213) (3,452)
------------------ ------ ------ ------ ------

165,429 129,794 589,890 439,340

Adjusted operating
income(1)

Broadcasting & Production 14,013 5,073 25,592 19,728

Magazines 1,853 1,741 7,736 9,698

Film Production & Audiovisual
Services 980 - 14,062 -
------------------------------ --- --- ------ ---

16,846 6,814 47,390 29,426

Depreciation of property,
plant and equipment and
amortization of
intangible assets 12,757 5,533 33,515 22,104

Financial expenses 290 1,058 4,104 4,231

Operational restructuring
costs, impairment of
assets and others 3,436 3,485 6,315 3,594

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

Income (loss) before tax
expense (recovery) and
share of loss of
associated corporations $363 $(3,262) $(56,651) $(41,503)
======================== ==== ======= ======== ========


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 and
amortization of intangible
assets, financial expenses,
operational restructuring costs,
impairment of assets and others,
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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