TVA Group Inc.
TSX : TVA.B

TVA Group Inc.

March 08, 2010 09:38 ET

TVA Group Reports Net Income of $21.1 Million for Fourth Quarter Ended December 31, 2009

MONTREAL, QUEBEC--(Marketwire - March 8, 2010) - TVA Group Inc. ("the Company")(TSX:TVA.B) announces that it recorded net income of $21.1 million, or $0.89 per share, for the last quarter of 2009, compared with $14.5 million, or $0.61 per share, in the corresponding quarter of 2008. Excluding the adjustment related to Canadian Radio-television and Telecommunications Commission (CRTC) Part II licence fees, the Company's operating income1 was relatively stable at $23.2 million in the fourth quarter of 2009, compared with $22.4 million in the same quarter of 2008.

Fourth quarter operating highlights:

  • The Television sector's normalized operating income1 increased by $4.8 million or 24.6% compared with the same quarter of 2008, mainly because of the following factors:

    • a 22.6% increase in the TVA Network's normalized operating income due to slight 1.0% growth in advertising revenues, creation of Local Programming Improvement Fund, and a 2.7% decrease in operating expenses, excluding the adjustment related to CRTC Part II licence fees;

    • increased normalized operating income at the specialty channels, particularly "Mystère" and "LCN"; and

    • increased operating income from our Internet activities.

  • 6.1% decrease in the Publishing sector's operating income, which declined from $1.9 million in the fourth quarter of 2008 to $1.8 million in the same quarter of 2009.

  • Operating loss of $2.8 million in the Distribution sector, compared with operating income of $1.1 million in the fourth quarter of 2008.

As a result, the Company's consolidated operating income increased 43.8% to $32.2 million, compared with $22.4 million in the same quarter of 2008.

"While we are posting positive results, the potential for future growth in advertising revenues, which still account for close to 75% of the Television sector's revenues, is severely limited in view of the economic environment and current market trends. Driven by its original programming and news coverage, the TVA Network achieved a 28.3% market share for the period of September 7 to December 13, 2009 and boasted the 10 top-rated programs in Québec (Source: BBM People Meter, all two years and over). Our specialty services continued their growth with a 19.4% increase in operating revenues and a 38.7% increase in operating income" said Pierre Dion, President and Chief Executive Officer of the Company.

(1) See definitions below.

"The Publishing sector's advertising revenues decreased by 8.2% in the fourth quarter compared with the same quarter of 2008. However, stringent control of operating costs helped us maintain a 9.8% profit margin, almost identical to the 9.7% profit margin reported in the same quarter of 2008, while continuing to protect our market share" said Mr. Dion.

Cash flows from operating activities were $10.7 million for the fourth quarter, against $15.9 million for the same quarter of 2008. The decrease was essentially due to the net change in non-cash working capital items, mainly in accounts receivable.

Growth in fiscal 2009

For the fiscal year ended December 31, 2009, the Company's consolidated operating income was $80.0 million, compared with $66.0 million for the previous fiscal year, a 21.3% increase. Adjustments made over the past two years in connection with disputed regulatory fees account for a large portion of this increase. For the same period, the Company generated net income of $49.1 million, or $2.05 per share, compared with $44.9 million, or $1.78 per share, in 2008.

Dividend

TVA Group Inc.'s Board of Directors today declared a dividend of $0.05 per share, payable on April 7, 2010 to Class A and B shareholders of record as at March 23, 2010. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canada Income Tax Act and its provincial counterpart.

The Company

TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company involved in television, the production and distribution of audiovisual products, and in magazine publishing. TVA Group Inc. is one of the largest private sector producers and the largest private sector broadcaster of French-language entertainment, information and public affairs programming, and magazine publishing in North America. TVA Group Inc. also operates SUN TV, a conventional station in Toronto. The Company'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 TVA Group Inc.'s Web site at: www.tva.canoe.ca.

Definitions

Operating income or operating loss

In its analysis of operating results, the Company defines operating income (loss) as earnings (loss) before amortization, financial expenses, operational restructuring costs, income taxes, non-controlling interest and equity in income of companies subject to significant influence. Operating income (loss) as defined above is not a measure of results that is consistent with Canadian Generally Accepted Accounting Principles ("GAAP"). 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 Canadian GAAP. Operating income (loss) is used by the Company because management believes it is a meaningful measure of performance.

This measure is commonly used by senior management and the Board of Directors to evaluate the consolidated results of the Company and the results of its sectors. Measurements such as operating income and operating loss are also commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Company is active. The Company's definition of operating income (loss) may not be identical to similarly titled measures reported by other companies.

Normalized operating income (loss)

Normalized operating income (loss) is defined as operating income adjusted for adjustments related to CRTC Part II licence fees. Normalized operating income (loss) presents operating results had the adjustments related to CRTC Part II licence fees for the periods in question been excluded. Normalized operating income (loss) as defined above is not a measure of results that is consistent with Canadian GAAP. 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 Canadian GAAP. Management believes that normalized operating income is a meaningful measure of performance. The Company's definition of normalized operating income (loss) may not be identical to similarly titled measures reported by other companies.

For a reconciliation of operating income and normalized operating income to the net income measure used in the Company's financial statements, please refer to our Management's Discussion and Analysis for the financial year ended December 31, 2009, available on the www.sedar.com and www.tva.canoe.ca websites.

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 Company'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), capital investment risks, credit risks, government regulation risks, governmental assistance risks, general changes in the economic environment and labour relations. 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 Company's actual results to differ from current expectations, please refer to the Company's public filings available at www.sedar.com and www.tva.canoe.ca including, in particular, the "Risks and Uncertainties" section of the Company's Management's Discussion and Analysis for the year ended December 31, 2009.

The forward-looking statements in this news release reflect the Company's expectations as of March 8, 2010, and are subject to change after this date. The Company 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 INC. 
Consolidated statements of income (unaudited) 
(in thousands of dollars, except per share amounts) 
  Three-month periods
ended December 31
  Years ended
December 31
 
    2009     2008 Restated1     2009     2008 Restated1  
                         
Operating revenues $ 128,454   $ 126,960   $ 438,969   $ 436,723  
Operating, selling and administrative expenses   96,233     104,549     358,942     370,773  
Amortization of property, plant and equipment and intangible assets   3,911     3,580     14,274     13,468  
Financial expenses (financial revenues)   1,017     (253 )   2,960     1,760  
Restructuring costs of operations   -     -     (794 )   184  
Income before income taxes, non-controlling interest and share of income from companies subject to significant influence $ 27,293   $ 19,084   $ 63,587   $ 50,538  
Income taxes   7,013     5,469     17,098     8,317  
Non-controlling interest   (254 )   (433 )   (1,906 )   (1,802 )
Share of income of companies subject to significant influence   (531 )   (496 )   (728 )   (889 )
NET INCOME $ 21,065   $ 14,544   $ 49,123   $ 44,912  
BASIC AND DILUTED EARNINGS PER SHARE $ 0.89   $ 0.61   $ 2.05   $ 1.78  
   
Consolidated statements of Comprehensive Income (unaudited)
(in thousands of dollars)
    Three-month periods ended December 31     Years ended
December 31
 
    2009     2008 Restated     2009     2008   Restated  
Net Income  $ 21,065    $ 14,544   $ 49,123   $ 44,912  
Gain (loss) on a derivative financial instrument   286     (434 )   434     (434 )
Income taxes related to a derivative financial instrument   (88 )   130     (130 )   130  
COMPREHENSIVE INCOME  $ 21,263    $ 14,240    $ 49,427    $ 44,608  

1: 2008 data have been restated following the adoption of Section 3064 from the CICA Handbook on January 1st 2009.

   
TVA GROUP INC. 
Consolidated statements of retained earnings (unaudited) 
(in thousands of dollars)
  Years ended
December 31
 
    2009     2008
Restated
 
Balance at the beginning, before restatement $ 99,101   $ 95,610  
Cumulative effects of changes in accounting policies   (590 )   (698 )
Balance at the beginning, as restated   98,511     94,912  
Net income   49,123     44,912  
Adjustment to transactions with related companies   (7,247 )   -  
Dividends paid   (4,786 )   (5,105 )
  Share redemption - excess of purchase price over net carrying amount   (1,298 )   (36,208 )
Balance at the end $ 134,303   $ 98,511  
 
 
TVA GROUP INC. 
Consolidated balance sheets 
(unaudited) 
 (in thousands of dollars)
  Dec. 31, 2009 Dec. 31, 2008 Restated  
ASSETS          
Current assets          
  Cash $ 1,924 $ 5,262  
  Accounts receivable   120,515   101,702  
  Current income tax assets   1,078   2,697  
  Programs, broadcast and distribution rights ands inventories   54,774   57,221  
  Prepaid expenses and other current assets   4,754   2,664  
  Future income tax assets   4,818   2,363  
    187,863   171,909  
Broadcast and distribution rights   38,950   31,727  
Investments   11,637   32,148  
Property, plant and equipment   79,123   77,355  
Future income tax assets   280   80  
Accrued benefit asset   8,900   8,489  
Licences and others intangible assets   86,789   80,950  
Goodwill   71,981   71,981  
  $ 485,523 $ 474,639  
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities          
  Bank overdraft $ 974 $ 147  
  Accounts payable and accrued liabilities   79,944   95,656  
  Current income tax liabilities   8,490   2,041  
  Broadcast and distribution rights payable   28,611   24,400  
  Deferred revenues   7,401   7,573  
  Deferred credit   272   366  
    125,692   130,183  
           
Broadcast rights payable   5,118         5,021  
Long-term debt   88,580   93,705  
Future income tax liabilities   28,951   31,342  
Other long-term liabilities   87   550  
Non-controlling interest and redeemable preferred shares   -   11,656  
    248,428   272,457  
Shareholders' equity          
  Capital stock   98,647   99,930  
  Contributed surplus   4,145   4,045  
  Retained earnings   134,303   98,511  
  Accumulated other comprehensive income   -   (304 )
    237,095   202,182  
  $ 485,523 $ 474,639  
   
TVA GROUP INC.
Consolidated statements of cash flows
(unaudited)
(in thousands of dollars)
  Three-month periods
ended December 31
  Years ended
December 31
 
  2009   2008 Restated   2009   2008   Restated  
                         
CASH FLOWS FROM OPERATING ACTIVITIES                        
  Net income $ 21,065   $ 14,544   $ 49,123   $ 44,912  
  Non-cash items                        
    Amortization   3,989     3,602     14,418     13,556  
    Share of income of companies subject to   significant influence   (531 )   (496 )   (728 )   (889 )
    Non-controlling interest   (254 )   (433 )   (1,906 )   (1,802 )
    Future income taxes   (936 )   1,715     (3,984 )   (3,180 )
    Other   (101 )   (54 )   (411 )   (624 )
  Cash flows from current operations   23,232     18,878     56,512     51,973  
  Net change in non-cash items   (12,525 )   (2,964 )   (27,402 )   (6,380 )
Cash flows from operating activities   10,707     15,914     29,110     45,593  
                         
CASH FLOWS FROM INVESTING ACTIVITIES                        
    Additions to property, plant and equipment   (3,413 )   (4,294 )   (16,261 )   (17,113 )
    Additions to intangible assets   (2,653 )   (2,236 )   (6,710 )   (4,768 )
    Business disposal (acquisition)   105     -     105     (105 )
    Net change in investments   -     226     11,977     (263 )
Cash flows from investing activities   (5,961 )   (6,304 )   (10,889 )   (22,249 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES                        
    Net change in bank overdraft   (912 )   (65 )   827     (2,288 )
    (Decrease) increase in revolving term loan   (75,044 )   (4,666 )   (78,907 )   37,501  
    Term loan   75,000     -     75,000     -  
    Deferred financing costs   (1,362 )   -     (1,362 )   -  
    Redemption of redeemable preferred shared   -     -     (9,750 )   -  
    Class B share redemption   -     -     (2,581 )   (51,415 )
    Dividends paid   (1,188 )   (1,201 )   (4,786 )   (5,105 )
Cash flows from financing activities   (3,506 )   (5,932 )   (21,559 )   (21,307 )
Net change in cash   1,240     3,678     (3,338 )   2,037  
Cash, at beginning of period   684     1,584     5,262     3,225  
Cash, at end of period $ 1,924   $ 5,262   $ 1,924   $ 5,262  
                         
SUPPLEMENTAL INFORMATION                        
    Net interest paid $ 509   $ 839   $ 2,213   $ 2,544  
    Net income taxes paid   3,357     3,493     13,006     22,244  
    Additions to property, plant and equipment  and intangible assets funded by accounts payable  and accrued liabilities at the end               3,166     4,233  
  Government assistance and accounts receivable credited to property, plant and equipment at the end             $ (688 ) $ -  
     
TVA GROUP INC.
Segmented information
(unaudited)
(in thousands of dollars) 
 
The following table includes information on operating results, as well as information on assets:
    Three-month periods ended December 31     Years ended December 31  
    2009     2008    Restated     2009     2008 Restated  
Operating revenues                        
Television $ 107,147   $   102,118   $ 357,044   $ 342,853  
Publishing   18,121     19,508     73,974     78,606  
Distribution   4,433     6,891     12,424     19,236  
Intersegment items   (1,247 )   (1,557 )   (4,473 )   (3,972 )
    128,454     126,960     438,969     436,723  
Operating, selling and administrative expenses                        
Television   73,950     82,705     282,492     287,681  
Publishing   16,349     17,621     62,901     69,300  
Distribution   7,242     5,814     18,007     18,054  
Intersegment items   (1,308 )   (1,591 )   (4,458 )   (4,262 )
    96,233     104,549     358,942     370,773  
Income (loss) before amortization, financial   expenses, restructuring costs of operations, income taxes, non-controlling interest and share of income of companies subject to significant influence                        
Television   33,197     19,413     74,552     55,172  
Publishing   1,772     1,887     11,073     9,306  
Distribution   (2,809 )   1,077     (5,583 )   1,182  
Intersegment items   61     34     (15 )   290  
  $ 32,221   $   22,411   $   80,027   $    65,950  

The intersegment items mentioned above represent the elimination of normal course business transactions made between the Company's business segments regarding revenues, expenses and unrealized profit.

    December 31, 2009   December 31, 2008
        Restated
         
Total assets        
Television $ 383,830 $ 362,213
Publishing   84,483   80,158
Distribution   17,210   21,006
Unallocated items   -   11,262
  $ 485,523 $ 474,639

Contact Information

  • TVA Group Inc.
    Denis Rozon, CA
    Vice-President and Chief Financial Officer
    514-598-2808