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 "Mystere" 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 Quebec (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 Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2008 2008
2009 Restated(1) 2009 Restated(1)
--------------------------------------------------------------------------
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 Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2008 2008
2009 Restated 2009 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
-----------------------------------------------------
2008
2009 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, 2008
Dec. 31, 2009 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
and 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 Years ended
ended December 31 December 31
---------------------------------------------------------------------------
2008 2008
2009 Restated 2009 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
---------------------------------------------------------------------------
2008 2008
2009 Restated 2009 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
---------------------------------------------------------
---------------------------------------------------------
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