FRV Média Inc.
TSX VENTURE : FRV

FRV Média Inc.

August 27, 2007 15:58 ET

FRV Media Unveils First Quarter Results

MONTREAL, QUEBEC--(Marketwire - Aug. 27, 2007) - The Board of Directors of FRV Media ("FRV" or the "Company") (TSX VENTURE:FRV) has approved the Company's audited financial statements for the first quarter ended June 30, 2007.

For the quarter ended June 30, 2007, FRV Media recorded a net loss of $635,479, compared to a loss of $864,092 in the same year-ago quarter, an improvement of $228,613 owed largely to lower operating expenses achieved following the Company's restructuring on March 31.

The quarter's results do not reflect the production value since the beginning of the year given that few productions were recognized in the first quarter due to the fact that license periods tend to begin at the same time as the television programming season. A number of major projects are underway and scheduled for delivery later in the year, namely: Il faut prendre le taureau par les contes (Alliance), Bob Gratton (TQS), La riviere aux castors (Alliance), Telesur (TV5), Les Eveques (SRC/RDI), 60 tonnes d'epinettes (Canal D) and a TV magazine titled Martin sur la route (SRC /Food Network).

"Our first quarter performance is in line with expectation both in terms of revenues and operating costs, which decreased 27% from last year. We are also actively working on the Imavision transaction, which we are confident will close as announced in our June 20 press release," explained FRV Media chief executive Richard Laferriere.



ANALYSIS OF RESULTS

KEY FIGURES, FIRST QUARTER 2008 (in thousands of dollars, except amounts
per share)

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June 30, 2007 June 30, 2006
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Gross production value 2,761.3 1,465.8
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Revenues 1,747.9 1,100.8
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Gross profit 231.1 238.0
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Operating expense 746.9 1,023.8
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Net gain (loss) (635.5) (864.1)
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Gain (loss) per share ($) (0.02) (0.02)
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Revenues

For the first quarter of fiscal 2008, ended June 30, 2007, FRV Media recorded revenues of $1,747,845, delivering productions with a gross value of $2,761,259, compared with revenues of $1,100,786 in the same year-ago period and gross production value of $1,465,014, including government assistance of $365,000.

Few projects were delivered in the first quarter since the license periods tend to begin at the same time as the programming season. Deliveries in the first quarter consisted of: episodes of the animated series Dragon III, a documentary titled Bachelet, Documentaire geologique, and capsules of the Mercuriades (FCCQ). The product mix was different in the first quarter of 2006 when it was consisted of several small productions.

Gross profit

Gross profit in the first quarter was $231,076, or 13.2% of sales, a result below expectations attributable to the delivery of a production with a very low margin. Gross profit for the comparable year-ago period was $238,014 or 21.6% of sales.

Operating expenses

Consolidated operating expenses comprise those of FRV Media and its subsidiaries. First quarter expenses fell 27.4% or $276,954, from $1,023,827 in the same period last year to $746,873. This decrease stems from the Company's restructuring and the fact that some activities were discontinued in the last quarter of fiscal 2007.

Interest, depreciation and amortization

Financial expenses net of investment income were $98,417, against $54,043 in the first quarter of last year, reflecting the financing secured to meet operating liquidity needs.

Amortization and depreciation fell slightly, from $28,963 year-over-year to $21,264 as at June 30, 2007, as a result of the disposal of production assets on March 31, 2007.

Net loss

As a result of lower operating expenses, the net loss improved substantially from the same quarter last year, decreasing by $228,613, from $864,092 as at June 30, 2006, to $635,479.

RECENT DEVELOPMENTS AND OUTLOOK

FRV Media's strategy is to create content that can be exploited across multiple distribution platforms with a view to generating longer term returns. We will continue to expand by growing organically and acquiring companies that create similar or complementary content.

As such, acquisitions remain a part of our development strategy, as evidenced by the letter of intent signed on June 15 to acquire Imavision Distribution, a large North-American DVD distributor. This transaction is proceeding as scheduled and announced in a press release on June 20.

Cite Amerique has a number of projects scheduled for delivery later this year: the second season of Bob Gratton, ma vie my life (TQS), Ludovic (CDC/SRC), Il faut prendre le taureau par les contes, documentaries such as La riviere aux castors, Documentaire geologique (CBC /NFB), Bachelet (SRC/RDI), 60 tonnes d'epinettes (RDI), TeleSur (TV5) and Les Eveques (RDI/TFO), and a TV magazine called Martin sur la route (SRC/ Food Network).

FORWARD-LOOKING INFORMATION

This press release contains forward looking statements reflecting the objectives, estimates and expectations of FRV Media management. These statements are identified by the use of verbs such as "believe," "anticipate," "estimate" and "expect" as well as the use of the future or conditional tense. By their very nature, these types of statements involve risk and uncertainty. Consequently, results could differ materially from the Company's projections or expectations. For more information on the risk factors not specifically mentioned in this press release, the reader is invited to consult FRV's annual report for the fiscal year ended March 31, 2007, under the heading "Risks and Uncertainties," page 15.

ADDITIONAL INFORMATION

The complete management's analysis and discussion of operating results and financial position for the quarter ended June 30, 2007 can be found on our Web site at www.frvmedia.com as well as on SEDAR at www.sedar.com. The Company regularly discloses additional information by press release, quarterly financial statements and its annual notice. This information is also available on SEDAR.

ABOUT FRV MEDIA

FRV Media is a producer, exporter and integrator of quality content deployed across multiple platforms: television, cinema, multimedia and publishing. Through its two wholly owned subsidiaries Cite-Amerique and Delphis Films, the Company creates and distributes dramatic content (TV series, made-for-TV movies and feature films), youth and children's programs, documentaries, sitcoms and magazine shows.



FRV Media Inc.

Consolidated Financial Statements
as at June 30, 2007

These consolidated financial statements
have not been reviewed
by the company's auditors



FRV Media Inc.
Consolidated Earnings (unaudited)
Three-month period ended June 30, 2007 and 2006
-------------------------------------------------------------------------
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2007 2006
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$ $
Revenue 1,747,845 1,100,786
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Production costs 1,195,010 580,108
Direct distribution costs 321,759 282,664
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1,516,769 862,772
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Gross profit 231,076 238,014
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Operating expenses 746,873 1,023,827
Financial expenses 100,352 54,043
Amortization of property and equipment 21,264 28,963
Interest income (1,934) (4,727)
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866,555 1,102,106
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Net loss (635,479) (864,092)
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Basic and diluted net loss per Class "A" share (0.02) (0.02)

Weighted average number of basic and diluted
Class "A" shares outstanding 37,259,923 34,993,313
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FRV Media Inc.
Consolidated Deficit (unaudited)
Three-month period ended June 30, 2007 and 2006
-------------------------------------------------------------------------
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2007 2006
-------------------------------------------------------------------------
$ $
Balance, beginning of period 9,282,799 6,196,000
Net loss 635,479 864,092
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Balance, end of period 9,918,278 7,060,092
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FRV Media Inc.
Consolidated Cash Flows (unaudited)
Three-month period ended June 30, 2007 and 2006
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2007 2006
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$ $
OPERATING ACTIVITIES
Net loss (635,479) (864,092)
Non-cash items
Amortization of television and film productions 1,187,132
Amortization of distribution rights and costs (6,050) (73,377)
Write-off of projects under development 7,878
Stock-based compensation 3,302 2,509
Interest premium capitalized to convertible
debentures 35,425 10,914
Implicite interest charged to convertible
debentures 7,637
Amortization of property and equipment 21,264 28,963
Changes in assets and liabilities (2,850,025) (2,846,691)
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Cash flows from operating activities (2,228,916) (3,741,774)
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INVESTING ACTIVITIES
Short-term investments (470,273)
Restricted cash and investments 50,000 390,392
Property and equipment (3,475) (46,533)
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Cash flows from investing activities (423,748) 343,859
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FINANCING ACTIVITIES
Deferred expenses (18,973) (26,389)
Short-term debt 1,644,380 2,708,756
Short-term debentures 873,600
Long-term debt 1,083,819
Repayment of long-term debt (42,769) (26,152)
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Cash flows from financing activities 2,456,238 3,740,034
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Net increase (decrease) in cash (196,426) 342,119
Cash, beginning of period 773,970 132,262
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Cash, end of period 577,544 474,381
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FRV Media Inc.
Consolidated Balance Sheets
as of June 30, 2007 and March 31, 2007
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June 30, March 31,
07 07
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(unaudited) (audited)
$ $
ASSETS
Cash 577,544 773,970
Short-term investments 592,790 122,517
Restricted cash and investments 400,000 450,000
Accounts receivable 3,927,074 4,353,098
Prepaid expenses 178,345 158,106
Television and film productions 4,397,257 2,364,911
Distribution rights and costs 1,767,228 1,609,086
Balance of sale 137,500 137,500
Deferred expenses 190,228 44,855
Property and equipment 287,026 304,816
Goodwill 2,074,071 2,074,071
Future income taxes 499,325 499,325
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15,028,388 12,892,255
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LIABILITIES
Short-term debt 800,000 725,100
Bank loans for productions 4,737,534 3,168,055
Accounts payable and accrued liabilities 2,654,024 2,758,499
Deferred revenue 2,585,306 2,357,823
Short-term debentures 1,097,000 97,000
Convertible debentures 1,501,475 1,458,413
Other long-term debt 334,422 376,561
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13,709,761 10,941,451
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SHAREHOLDERS' EQUITY
Capital stock 10,169,891 10,169,891
Equity component of convertible debentures 93,000 93,000
Contributed surplus 974,014 970,712
Deficit (9,918,278) (9,282,799)
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1,318,627 1,950,804
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15,028,388 12,892,255
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Contact Information

  • FRV Media Inc.
    Alain Dufour
    Vice-President and Chief Financial Officer
    514-843-3355
    adufour@frvmedia.com