MONTREAL, Nov. 2, 2023
/CNW/ - TVA Group Inc. (TSX: TVA.B) ("TVA Group" or the
"Corporation") announced today that it recorded revenues in the
amount of $118.6 million for the
third quarter of 2023, a year-over-year decrease of $11.9 million. Net loss attributable to
shareholders was $0.6 million or
$0.01 per share, compared with net
income attributable to shareholders of $7.6
million or $0.18 per share for
the same period of 2022. For the nine-month period ended
September 30, 2023, the net loss
attributable to shareholders was $32.0
million, or $0.74 per share,
compared with $8.6 million, or
$0.20 per share, for the same period
of 2022.
Operating highlights for the third quarter and first nine
months of the year:
- $16,485,000 in consolidated
adjusted EBITDA1 for the third quarter, a $1,710,000 unfavourable variance compared with
the same quarter of 2022, and $11,335,000 in negative adjusted
EBITDA1 for the first nine months of the year, a
$23,044,000 unfavourable variance
from the same period of 2022.
- $14,456,000 in adjusted
EBITDA1 for the third quarter in the Broadcasting
segment, a $389,000 favourable
variance mainly due to higher adjusted EBITDA1 at
Communications Qolab inc. TVA Network's negative adjusted
EBITDA1 continued to deteriorate and the specialty
channels continued to suffer from the effects of a shrinking
advertising market and a reduction in the number of cable
subscribers ("cord-cutting").
- $12,889,000 in negative Adjusted
EBITDA1 in the Broadcasting segment for the first nine
months of 2023, compared with $1,550,000 in negative adjusted
EBITDA1 for the same period of 2022. Last February's
restructuring plan enabled the Corporation to achieve some savings,
but insufficient to offset the significant drop in revenues, both
from traditional advertising and specialty channel subscriptions,
or to sustain the required investments in content to maintain our
market share and our audience in the face of foreign digital
on-demand platforms, among other things.
- $669,000 in adjusted
EBITDA1 in the Film Production & Audiovisual
Services segment ("MELS") for the third quarter of 2023, a
$1,916,000 unfavourable variance
compared with the same quarter of 2022, due mainly to lower
activity volume in soundstage, mobile and equipment rental,
postproduction and media accessibility services, partially offset
by the positive impact of the discontinuation of visual effects
activities. For the first nine months of 2023, MELS posted
$299,000 in negative adjusted
EBITDA,1 compared with $8,601,000 in adjusted EBITDA1 for the
same period of 2022, an unfavourable variance explained by the same
factors as for the quarter.
- $1,288,000 in adjusted
EBITDA1 in the Magazines segment for the third quarter,
a $66,000 favourable variance
compared with the same quarter of 2022, mainly because cost savings
were slightly higher than the decrease in revenues, particularly in
newsstand and subscription revenues. For the first nine months of
the year, adjusted EBITDA1 for the Magazines segment was
$1,230,000, compared with
$3,308,000 in adjusted
EBITDA1 for the same period of 2022.
- $146,000 in negative adjusted
EBITDA1 in the Production and Distribution segment for
the third quarter, a $195,000
unfavourable variance compared with the same quarter of 2022, due
mainly to a lower gross margin on the international distribution of
films produced by Incendo, as well as lower profitability at TVA
Films, partially offset by savings on administrative expenses and a
higher gross margin on Canadian distribution for Incendo. For the
first nine months of 2023, adjusted EBITDA1 in the
Production and Distribution segment was $81,000, compared with $1,113,000 in adjusted EBITDA1 for the
same period of 2022.
- During the third quarter of 2023, challenging market conditions
and changes in the television industry ecosystem led the
Corporation to record a goodwill impairment charge of $4,813,000 and an impairment charge of
$2,850,000 on certain trademarks in
the Broadcasting segment.
Pierre Karl Péladeau, acting President and CEO of TVA Group, had
this to say:
"Looking at our results over the last few quarters, which show a
negative adjusted EBITDA1 of nearly $13 million in the Broadcasting segment, it's
clear that the broadcasting ecosystem no longer provides the
conditions necessary for our conventional television activities to
be viable. Even though TVA Group increased its market share by
0.5 points to 40.6% during the quarter, traditional
advertising revenues continued their sharp decline of recent
years. These factors led the Corporation to conclude that a
$7,663,000 non-cash charge for
impairment of goodwill and certain trademarks was necessary.
The crisis in the media industry has affected results more than
ever, with competition from web giants and Radio-Canada
monopolizing advertising revenues. For too long, TVA Group has been
calling for regulatory relief to give private broadcasters greater
flexibility. Moreover, despite TVA Group's extensive efforts to
stabilize its financial situation, including the elimination of 140
positions in February 2023, the
decline in advertising revenues is now an unfortunate fact of life
with which we have to contend. Consequently, we are announcing
today major changes to our organizational structure in order to
secure the future of our business. Our goal is clear, to continue
offering our viewers and our advertisers the best original content
produced in Quebec, providing
reliable, high-quality news coverage throughout Quebec, and presenting major sporting events
live. The Corporation will therefore implement a reorganization
plan that will refocus its mission on broadcasting, restructure its
news division and optimize its real estate holdings. The goal is to
reduce the Corporation's operating costs. The plan will reduce the
Corporation's workforce by 547 employees. Most of the costs
associated with the elimination of positions will be recognized in
the next quarter.
TVA Group's third quarter results were affected by lower
revenues across all business segments, particularly at MELS, which
continues to suffer from the lack of foreign productions. Although
the writers' strike has been resolved, the actors' strike in the
U.S. continues, prolonging the absence of foreign producers at our
studios. The appointment of Patrick
Jutras as President of MELS will strengthen the company's
local and international business ties, attract more large-scale
productions and accelerate growth.
To keep our productions and film studios competitive and viable,
when many other jurisdictions in the U.S. and Canada are offering producers more
advantageous tax treatment, governments must quickly review tax
credits for Quebec film and
television productions, and for production services.
In the Magazines segment, results for all our titles were
affected by a decline in revenues, offset by cost savings. The
significant reduction in government assistance from the Canada
Periodical Fund remains a cause for concern for this segment, which
has been operating in a sharply declining market for several
years.
Our Production and Distribution segment suffered a decrease in
adjusted EBITDA1 primarily due to the negative impact of
strikes on the order book in the U.S. industry. Incendo is
currently starting its first film shoot of 2023 for Tubi."
|
______________________________
|
|
1 See
definition of adjusted EBITDA below.
|
Definition
Adjusted EBITDA
In its analysis of operating results, the Corporation defines
adjusted EBITDA as net income (loss) before depreciation and
amortization, financial expenses, operational restructuring costs
and other, income taxes (income tax recovery) and share of (income)
loss of associates. Adjusted EBITDA as defined above is not a
measure of results that is consistent with International Financial
Reporting Standards ("IFRS"). It is not intended to be regarded as
an alternative to other financial operating 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
EBITDA is also relevant because it is a significant component of
the Corporation's annual incentive compensation programs. The
Corporation's definition of adjusted EBITDA 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. Certain factors that may cause actual results
to differ from current expectations include the possibility that
the reorganization plan will not be carried out on schedule or at
all, the possibility that the Corporation will be unable to realize
the anticipated benefits of the reorganization plan in a timely
manner or at all, the possibility of unknown potential liabilities
or costs related to the reorganization plan, the possibility that
the Corporation will be unable to successfully implement its
business strategies, seasonality, operational risks (including
pricing actions by competitors and the risk of loss of key
customers in the Film Production & Audiovisual Services and
Production & Distribution segments), programming, content and
production cost risks, credit risk, government regulation risks,
government assistance risks, changes in economic conditions,
fragmentation of the media landscape, risk related to the
Corporation's ability to adapt to fast-paced technological change
and to new delivery and storage methods, labour relation risks, and
the risks related to public health emergencies, as well as any
urgent steps taken by government.
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.sedarplus.ca and
www.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, 2022.
The forward-looking statements in this news release reflect the
Corporation's expectations as of November 2,
2023, 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 to do so by the applicable securities laws.
TVA Group
TVA Group Inc., a subsidiary of Quebecor Media Inc., is a
communications company engaged in the broadcasting, film production
and audiovisual services, international production and distribution
of television content, and magazine publishing industries. TVA
Group Inc. is North America's
largest broadcaster of French-language entertainment, information
and public affairs programming and one of the largest
private-sector producers of French-language content. It is also the
largest publisher of French-language magazines and publishes some
of the most popular English-language titles in Canada. The Corporation's Class B shares are
listed on the Toronto Stock Exchange under the ticker symbol
TVA.B.
The Condensed Consolidated Financial Statements as at
September 30, 2023, with notes, and
the interim Management's Discussion and Analysis can be consulted
on the Corporation's website at www.groupetva.ca.
TVA GROUP INC.
Consolidated statements of income (loss)
(unaudited)
(in thousands of Canadian dollars, except per-share
amounts)
|
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
Note
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
2
|
$
|
118,620
|
$
|
130,519
|
$
|
393,483
|
$
|
422,485
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of goods and
services
|
3
|
|
72,958
|
|
78,155
|
|
305,244
|
|
300,819
|
|
Employee
costs
|
|
|
29,177
|
|
34,169
|
|
99,574
|
|
109,957
|
|
Depreciation and
amortization
|
|
|
6,805
|
|
7,446
|
|
20,960
|
|
22,528
|
|
Financial
expenses
|
4
|
|
947
|
|
64
|
|
786
|
|
658
|
|
Operational
restructuring costs and other
|
5
|
|
7,684
|
|
49
|
|
8,706
|
|
182
|
|
Income (loss) before income taxes
(income tax recovery) and share of
(income) loss of associates
|
|
|
1,049
|
|
10,636
|
|
(41,787)
|
|
(11,659)
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes (income
tax recovery)
|
|
|
1,691
|
|
2,842
|
|
(9,634)
|
|
(2,817)
|
|
|
|
|
|
|
|
|
|
|
|
Share of (income) loss
of associates
|
|
|
(3)
|
|
195
|
|
(134)
|
|
(217)
|
|
Net (loss) income
|
|
$
|
(639)
|
$
|
7,599
|
$
|
(32,019)
|
$
|
(8,625)
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable
to:
|
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
$
|
(639)
|
$
|
7,623
|
$
|
(32,019)
|
$
|
(8,605)
|
|
Non-controlling
interest
|
|
|
–
|
|
(24)
|
|
–
|
|
(20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per
share attributable to
shareholders
|
|
$
|
(0.01)
|
$
|
0.18
|
$
|
(0.74)
|
$
|
(0.20)
|
|
Weighted average number of outstanding
shares
|
|
|
43,205,535
|
|
43,205,535
|
|
43,205,535
|
|
43,205,535
|
|
Weighted average number of diluted
shares
|
|
|
43,205,535
|
|
43,307,990
|
|
43,205,535
|
|
43,205,535
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Consolidated statements of comprehensive (loss)
income
(unaudited)
(in thousands of Canadian dollars)
|
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
Note
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(639)
|
$
|
7,599
|
$
|
(32,019)
|
$
|
(8,625)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income items that will
not be reclassified to income:
|
|
|
|
|
|
|
|
|
|
|
Defined benefit
plans:
|
|
|
|
|
|
|
|
|
|
|
Re-measurement
gain
|
9
|
|
–
|
|
1,000
|
|
–
|
|
30,000
|
|
Deferred income
taxes
|
|
|
–
|
|
(300)
|
|
–
|
|
(8,000)
|
|
|
|
–
|
|
700
|
|
–
|
|
22,000
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(639)
|
$
|
8,299
|
$
|
(32,019)
|
$
|
13,375
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
attributable to:
|
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
$
|
(639)
|
$
|
8,323
|
$
|
(32,019)
|
$
|
13,395
|
|
Non-controlling
interest
|
|
|
–
|
|
(24)
|
|
–
|
|
(20)
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Consolidated statements of equity
(unaudited)
(in thousands of Canadian dollars)
|
Equity attributable to
shareholders
|
Equity
attributable
to non-
controlling
interest
|
Total
equity
|
|
Capital
stock
(note 7)
|
Contributed
surplus
|
Retained
earnings
|
Accumula-
ted other
comprehen-
sive
income –
Defined
benefit
plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31, 2021
|
$
|
207,280
|
$
|
581
|
$
|
138,679
|
$
|
32,714
|
$
|
1,210
|
$
|
380,464
|
|
Net loss
|
|
–
|
|
–
|
|
(8,605)
|
|
–
|
|
(20)
|
|
(8,625)
|
|
Dividends
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(1,190)
|
|
(1,190)
|
|
Other comprehensive
income
|
|
–
|
|
–
|
|
–
|
|
22,000
|
|
–
|
|
22,000
|
|
Balance as at September 30,
2022
|
|
207,280
|
|
581
|
|
130,074
|
|
54,714
|
|
–
|
|
392,649
|
|
Net loss
|
|
–
|
|
–
|
|
(264)
|
|
–
|
|
–
|
|
(264)
|
|
Other comprehensive
income
|
|
–
|
|
–
|
|
–
|
|
991
|
|
–
|
|
991
|
|
Balance as at December 31, 2022
|
|
207,280
|
|
581
|
|
129,810
|
|
55,705
|
|
–
|
|
393,376
|
|
Net loss
|
|
–
|
|
–
|
|
(32,019)
|
|
–
|
|
–
|
|
(32,019)
|
|
Balance as at September 30,
2023
|
$
|
207,280
|
$
|
581
|
$
|
97,791
|
$
|
55,705
|
$
|
–
|
$
|
361,357
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Consolidated balance sheets
(unaudited)
(in thousands of Canadian dollars)
|
Note
|
September 30,
2023
|
December 31,
2022
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
$
|
137,797
|
$
|
175,174
|
|
Income
taxes
|
|
|
|
18,535
|
|
8,522
|
|
Audiovisual
content
|
|
|
|
121,455
|
|
135,038
|
|
Prepaid
expenses
|
|
|
|
6,187
|
|
4,400
|
|
|
|
|
283,974
|
|
323,134
|
|
Non-current assets
|
|
|
|
|
|
|
|
Audiovisual
content
|
|
|
|
90,838
|
|
88,225
|
|
Investments
|
|
|
|
11,880
|
|
12,017
|
|
Property, plant and
equipment
|
|
|
|
144,093
|
|
157,784
|
|
Right-of-use
assets
|
|
|
|
7,037
|
|
7,599
|
|
Intangible
assets
|
|
5
|
|
10,006
|
|
14,671
|
|
Goodwill
|
|
5
|
|
16,883
|
|
21,696
|
|
Defined benefit plan
asset
|
|
|
|
43,562
|
|
45,111
|
|
Deferred income
taxes
|
|
|
|
6,136
|
|
5,833
|
|
|
|
|
330,435
|
|
352,936
|
|
Total assets
|
|
|
$
|
614,409
|
$
|
676,070
|
TVA GROUP INC.
Consolidated balance sheets (continued)
(unaudited)
(in thousands of Canadian dollars)
|
Note
|
September 30,
2023
|
December 31,
2022
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
6
|
$
|
14,004
|
$
|
1,107
|
|
Accounts payable,
accrued liabilities and provisions
|
|
|
|
95,858
|
|
114,174
|
|
Content rights
payable
|
|
|
|
44,355
|
|
124,394
|
|
Deferred
revenues
|
|
|
|
10,958
|
|
11,031
|
|
Income
taxes
|
|
|
|
778
|
|
562
|
|
Current portion of
lease liabilities
|
|
|
|
1,868
|
|
2,318
|
|
Short-term
debt
|
|
6
|
|
–
|
|
8,961
|
|
|
|
|
167,821
|
|
262,547
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Long-term
debt
|
|
6
|
|
68,868
|
|
–
|
|
Lease
liabilities
|
|
|
|
6,046
|
|
6,453
|
|
Other
liabilities
|
|
|
|
4,684
|
|
5,395
|
|
Deferred income
taxes
|
|
|
|
5,633
|
|
8,299
|
|
|
|
|
85,231
|
|
20,147
|
|
Equity
|
|
|
|
|
|
|
|
Capital
stock
|
|
7
|
|
207,280
|
|
207,280
|
|
Contributed
surplus
|
|
|
|
581
|
|
581
|
|
Retained
earnings
|
|
|
|
97,791
|
|
129,810
|
|
Accumulated other
comprehensive income
|
|
|
|
55,705
|
|
55,705
|
|
Equity
|
|
|
|
361,357
|
|
393,376
|
|
Total liabilities and equity
|
|
|
$
|
614,409
|
$
|
676,070
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Consolidated statements of cash flows
(unaudited)
(in thousands of Canadian dollars)
|
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
Note
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Cash flows related to operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(639)
|
$
|
7,599
|
$
|
(32,019)
|
$
|
(8,625)
|
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
6,805
|
|
7,446
|
|
20,960
|
|
22,528
|
|
Share of (income) loss
of associates
|
|
|
(3)
|
|
195
|
|
(134)
|
|
(217)
|
|
Deferred income
taxes
|
|
|
(819)
|
|
(2,004)
|
|
(2,969)
|
|
(3,543)
|
|
Impairment of assets
and other
|
5
|
|
7,696
|
|
13
|
|
7,752
|
|
661
|
|
|
|
13,040
|
|
13,249
|
|
(6,410)
|
|
10,804
|
|
Net change in non-cash
balances related
to operating activities
|
|
|
6,372
|
|
(15,073)
|
|
(61,731)
|
|
(19,907)
|
|
Cash flows provided by
(used in) operating
activities
|
|
|
19,412
|
|
(1,824)
|
|
(68,141)
|
|
(9,103)
|
|
Cash flows related to investing
activities
|
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
|
(996)
|
|
(3,939)
|
|
(2,873)
|
|
(16,247)
|
|
Additions to
intangible assets
|
|
|
(46)
|
|
(87)
|
|
(225)
|
|
(815)
|
|
Business
acquisitions
|
5
|
|
–
|
|
(2,573)
|
|
–
|
|
(6,323)
|
|
Dividends to
non-controlling shareholders
|
|
|
–
|
|
(1,150)
|
|
–
|
|
(1,150)
|
|
Other
|
|
|
271
|
|
271
|
|
271
|
|
271
|
|
Cash flows used in
investing activities
|
|
|
(771)
|
|
(7,478)
|
|
(2,827)
|
|
(24,264)
|
|
Cash flows related to financing
activities
|
|
|
|
|
|
|
|
|
|
|
Net change in bank
indebtedness
|
|
|
3,873
|
|
5,624
|
|
12,897
|
|
8,620
|
|
Net change in
revolving credit facility
|
6
|
|
–
|
|
1,835
|
|
(8,970)
|
|
21,710
|
|
Net change in
long-term debt
|
6
|
|
(22,000)
|
|
–
|
|
69,000
|
|
–
|
|
Repayment of lease
liabilities
|
|
|
(514)
|
|
(580)
|
|
(1,892)
|
|
(2,091)
|
|
Other
|
|
|
–
|
|
–
|
|
(67)
|
|
(53)
|
|
Cash flows (used in)
provided by financing
activities
|
|
|
(18,641)
|
|
6,879
|
|
70,968
|
|
28,186
|
|
Net change in cash
|
|
|
–
|
|
(2,423)
|
|
–
|
|
(5,181)
|
|
Cash at beginning of period
|
|
|
–
|
|
2,423
|
|
–
|
|
5,181
|
|
Cash at end of period
|
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
|
Interest and taxes reflected as operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net interest
paid
|
|
$
|
1,442
|
$
|
450
|
$
|
1,998
|
$
|
1,038
|
|
Income taxes paid
(received)
|
|
|
585
|
|
(1,975)
|
|
3,132
|
|
3,748
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Notes to condensed consolidated financial statements
Three-month and nine-month periods ended September 30, 2023 and 2022 (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 Quebec Business
Corporations Act. TVA Group is a communications company engaged
in broadcasting, film production & audiovisual services,
international production & distribution of television content,
and magazine publishing (note 10). 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, reading and listening habits, demand for
production services from international and local producers, and
demand for content from global broadcasters. 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 spending. In view of the seasonal nature of some
of the Corporation's activities, the results of operations for
interim periods should not necessarily be considered indicative of
full-year results.
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
1. Basis of presentation
These consolidated financial statements were prepared in
accordance with the International Financial Reporting Standards
("IFRS") 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
accordingly are condensed consolidated financial statements. These
condensed consolidated financial statements should be read in
conjunction with the Corporation's 2022 annual consolidated
financial statements, which describe the accounting policies used
to prepare these financial statements.
These condensed consolidated financial statements were approved
by the Corporation's Board of Directors on November 2, 2023.
Certain comparative figures for the three-month and nine-month
periods ended September 30, 2022 have
been restated to conform to the presentation adopted for the
three-month and nine-month periods ended
September 30, 2023.
2. Revenues
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Advertising
services
|
$
|
50,098
|
$
|
50,472
|
$
|
185,891
|
$
|
189,527
|
|
Royalties
|
|
32,705
|
|
33,391
|
|
99,319
|
|
101,778
|
|
Rental, postproduction
and distribution services
and other services rendered(1)
|
|
20,003
|
|
32,709
|
|
63,215
|
|
88,434
|
|
Product
sales(2)
|
|
15,814
|
|
13,947
|
|
45,058
|
|
42,746
|
|
$
|
118,620
|
$
|
130,519
|
$
|
393,483
|
$
|
422,485
|
|
(1)
|
Revenue from rental of
soundstages, mobiles, equipment and rental space amounted to
$5,004,000 and $14,657,000 during the three-month and nine-month
periods ended September 30, 2023, respectively ($8,229,000 and
$26,024,000 during the same periods of 2022). Service revenues also
include the activities of the Production & Distribution
segment.
|
|
(2)
|
Revenues from product
sales include newsstand and subscription sales of magazines and
sales of audiovisual content.
|
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
3. Purchases of goods and services
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Rights and audiovisual
content costs
|
$
|
50,436
|
$
|
53,787
|
$
|
228,739
|
$
|
222,491
|
|
Printing and
distribution
|
|
3,315
|
|
3,385
|
|
10,281
|
|
10,090
|
|
Services rendered by
the parent corporation:
|
|
|
|
|
|
|
|
|
|
• Commissions on advertising sales
|
|
4,054
|
|
4,536
|
|
16,159
|
|
17,674
|
|
• Other
|
|
2,273
|
|
2,381
|
|
6,999
|
|
6,845
|
|
Building
costs
|
|
4,002
|
|
3,786
|
|
12,632
|
|
12,247
|
|
Marketing, advertising
and promotion
|
|
3,484
|
|
3,692
|
|
11,512
|
|
11,988
|
|
Other
|
|
5,394
|
|
6,588
|
|
18,922
|
|
19,484
|
|
$
|
72,958
|
$
|
78,155
|
$
|
305,244
|
$
|
300,819
|
4. Financial expenses
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Interest on
debt(1)
|
$
|
1,612
|
$
|
384
|
$
|
2,121
|
$
|
764
|
|
Amortization of
financing costs
|
|
33
|
|
13
|
|
95
|
|
39
|
|
Interest on lease
liabilities
|
|
96
|
|
109
|
|
295
|
|
340
|
|
Interest income related
to defined benefit plans
|
|
(516)
|
|
(115)
|
|
(1,535)
|
|
(341)
|
|
Foreign exchange (gain)
loss
|
|
(142)
|
|
(285)
|
|
132
|
|
(190)
|
|
Other
|
|
(136)
|
|
(42)
|
|
(322)
|
|
46
|
|
$
|
947
|
$
|
64
|
$
|
786
|
$
|
658
|
|
(1)
|
For the three-month and
nine-month periods ended September 30, 2023, interest totalling
$1,445,000 and $1,505,000, respectively, were recorded on the
secured revolving credit facility with Quebecor Media (note
6).
|
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
5. Operational restructuring costs and other
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Operational
restructuring costs
|
$
|
21
|
$
|
49
|
$
|
1,086
|
$
|
164
|
|
Impairment of
assets
|
|
7,663
|
|
–
|
|
7,663
|
|
–
|
|
Other
|
|
–
|
|
–
|
|
(43)
|
|
18
|
|
$
|
7,684
|
$
|
49
|
$
|
8,706
|
$
|
182
|
Operational restructuring costs
For the three-month and nine-month periods ended September 30, 2023 and 2022, the segment
breakdown of the Corporation's operational restructuring costs in
connection with the elimination of positions and the implementation
of cost reduction initiatives is as follows:
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Broadcasting
|
$
|
10
|
$
|
–
|
$
|
729
|
$
|
102
|
|
Film Production &
Audiovisual Services
|
|
11
|
|
49
|
|
214
|
|
49
|
|
Magazines
|
|
–
|
|
–
|
|
111
|
|
13
|
|
Production &
Distribution
|
|
–
|
|
–
|
|
32
|
|
–
|
|
$
|
21
|
$
|
49
|
$
|
1,086
|
$
|
164
|
Impairment of assets
During the third quarter of 2023, unfavourable market conditions
and the changing ecosystem of the television industry led the
Corporation to perform an impairment test on its Broadcasting
cash-generating unit. The Corporation concluded that the
recoverable amount, based on fair value less costs of disposal, was
less than its carrying amount. Accordingly, a $4,813,000 goodwill impairment charge was
recognized, as well as a $2,850,000
impairment charge with respect to certain trademarks.
Other
In the second quarter of 2022, the Corporation had recorded a
$622,000 charge for impairment of its
investment in an associate in the Magazines segment following
revised financial guidance from that corporation's management and
the continuing downward trend in revenues in the industry.
During the same period, the Corporation had reversed a
$587,000 charge following
remeasurement of the contingent consideration payable on the
acquisition of the companies in the Incendo group. Payments of
$2,573,000 and $6,323,000 were made in connection with this
acquisition for the three-month and nine-month periods ended
September 30, 2022 respectively.
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
6. Long-term debt
The components of long-term debt are as follows:
|
September 30,
2023
|
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
Revolving credit
facility - Quebecor
|
$
|
69,000
|
|
|
$
|
–
|
|
Syndicated revolving
credit facility
|
|
–
|
|
|
|
8,970
|
|
Financing costs, net of
accumulated amortization
|
|
(132)
|
|
|
|
(9)
|
|
|
68,868
|
|
|
|
8,961
|
|
Less the current
portion
|
|
–
|
|
|
|
(8,961)
|
|
$
|
68,868
|
|
|
$
|
–
|
On June 28, 2023, the Corporation
entered into a new $120,000,000
secured revolving credit facility maturing on June 15, 2025, with Quebecor Media as
lender. This revolving credit facility bears interest at the
Canadian banker's acceptance rate or prime rate, plus a spread
based on the Corporation's debt ratio.
Also on June 28, 2023, the
Corporation entered into a new $20,000,000 secured on-demand credit facility
with a banking institution. This on-demand credit facility bears
interest at the Canadian or U.S. prime rate, plus a spread based on
the Corporation's debt ratio.
Concurrently, on June 28, 2023,
the Corporation terminated its bank facility consisting of a
$75,000,000 secured syndicated
revolving credit facility.
The two new credit facilities contain standard representations
and warranties for this type of agreement.
As at September 30, 2023,
$9,310,000 was drawn on the on-demand
credit facility, which is presented under "Bank indebtedness"
(including bank overdraft), in addition to outstanding letters of
credit for a total amount of $2,805,000. As at September 30, 2023, $69,000,000 was drawn on the revolving credit
facility with Quebecor Media. Costs of $151,000 were incurred in setting up this new
financing.
As at September 30, 2023, the
Corporation was in compliance with all the terms of its credit
agreements.
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
7. 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,
2023
|
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
4,320,000 Class A
common shares
|
$
|
72
|
|
|
$
|
72
|
|
38,885,535 Class B
shares
|
|
207,208
|
|
|
|
207,208
|
|
$
|
207,280
|
|
|
$
|
207,280
|
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
8. Stock-based compensation and other stock-based
payments
(a) Stock option plans
|
Outstanding options
|
|
Number
|
Weighted average
exercise price
|
|
|
|
|
|
TVA Group
|
|
|
|
|
Balance as at December
31, 2022
|
519,503
|
$
|
2.29
|
|
Granted
|
125,000
|
|
2.03
|
|
Exercised
|
(6,666)
|
|
1.40
|
|
Cancelled
|
(217,397)
|
|
1.95
|
|
Balance as at September 30,
2023
|
420,440
|
$
|
2.40
|
|
Vested options as at September 30,
2023
|
144,025
|
$
|
2.81
|
|
|
|
|
|
Quebecor
|
|
|
|
|
Balance as at December
31, 2022
|
244,216
|
$
|
30.36
|
|
Granted
|
135,000
|
|
33.28
|
|
Exercised
|
(21,583)
|
|
28.46
|
|
Cancelled
|
(234,035)
|
|
31.86
|
|
Balance as at September 30,
2023
|
123,598
|
$
|
31.04
|
|
Vested options as at September 30,
2023
|
48,573
|
$
|
30.47
|
|
|
|
|
|
(b) Deferred stock unit ("DSU") plan for directors
|
Outstanding
units
|
|
|
Corporation stock
units
|
|
|
|
|
|
|
Balance as at December
31, 2022
|
|
|
|
446,934
|
|
Granted
|
|
|
|
53,115
|
|
Balance as at September 30,
2023
|
|
|
|
500,049
|
(c) Stock-based compensation expense
During the three-month and nine-month periods ended September 30, 2023, compensation expense
reversals in the amounts of $387,000
and $193,000 respectively were
recorded in respect of all stock-based compensation plans
(compensation expense reversals of $624,000 and $268,000, respectively, for the same periods of
2022).
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
9. Pension plans and postretirement benefits
The gain on remeasurement for defined benefit plans recognized
on the consolidated statement of comprehensive income resulted from
the increase in the fair value of pension plan assets for the
three-month period ended September 30,
2022. For the nine-month period ended September 30, 2022, the gain resulted from the
increase in the discount rate, net of the decrease in the fair
value of pension plan assets.
10. Segmented information
The Corporation's operations consist of the following
segments:
- The Broadcasting segment, which includes the operations
of TVA Network, specialty services, the marketing of digital
products associated with the various televisual brands, and
commercial production and custom publishing services, including
those of its Communications Qolab inc. subsidiary;
- The Film Production & Audiovisual Services segment,
which through its subsidiaries Mels Studios and Postproduction G.P.
and MELS Dubbing Inc. provides soundstage, mobile and production
equipment rental services, as well as dubbing and described video
("media accessibility services"), postproduction and virtual
production services;
- The Magazines segment, which through its TVA
Publications inc. subsidiary publishes magazines in various fields
including the arts, entertainment, television, fashion and
decorating, and markets digital products associated with the
various magazine brands;
- The Production & Distribution segment, which through
the companies in the Incendo group and the TVA Films division
produces and distributes television shows, movies and television
series for the world market.
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars,
except per share and per option amounts)
10. Segmented information (continued)
|
Three-month
periods
ended September 30
|
Nine-month
periods
ended September 30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Broadcasting
|
$
|
98,317
|
$
|
104,601
|
$
|
330,167
|
$
|
340,908
|
|
Film Production &
Audiovisual Services
|
|
12,519
|
|
17,304
|
|
39,030
|
|
54,989
|
|
Magazines
|
|
9,342
|
|
9,945
|
|
27,351
|
|
29,980
|
|
Production &
Distribution
|
|
2,550
|
|
3,279
|
|
10,773
|
|
11,715
|
|
Intersegment
items
|
|
(4,108)
|
|
(4,610)
|
|
(13,838)
|
|
(15,107)
|
|
|
118,620
|
|
130,519
|
|
393,483
|
|
422,485
|
|
Adjusted EBITDA (negative adjusted
EBITDA)(1)
|
|
|
|
|
|
|
|
|
|
Broadcasting
|
|
14,456
|
|
14,067
|
|
(12,889)
|
|
(1,550)
|
|
Film Production &
Audiovisual Services
|
|
669
|
|
2,585
|
|
(299)
|
|
8,601
|
|
Magazines
|
|
1,288
|
|
1,222
|
|
1,230
|
|
3,308
|
|
Production &
Distribution
|
|
(146)
|
|
49
|
|
81
|
|
1,113
|
|
Intersegment
items
|
|
218
|
|
272
|
|
542
|
|
237
|
|
|
16,485
|
|
18,195
|
|
(11,335)
|
|
11,709
|
|
Depreciation and
amortization
|
|
6,805
|
|
7,446
|
|
20,960
|
|
22,528
|
|
Financial
expenses
|
|
947
|
|
64
|
|
786
|
|
658
|
|
Operational
restructuring costs and other
|
|
7,684
|
|
49
|
|
8,706
|
|
182
|
|
Income (loss) before income taxes (income tax
recovery) and share of (income) loss of
associates
|
$
|
1,049
|
$
|
10,636
|
$
|
(41,787)
|
$
|
(11,659)
|
The above-noted intersegment items represent the elimination of
normal course business transactions between the Corporation's
business segments.
|
(1)
|
The Chief Executive
Officer uses adjusted EBITDA as a measure of financial performance
for assessing the performance of each of the Corporation's
segments. Adjusted EBITDA is defined as net income (loss) before
depreciation and amortization, financial expenses, operational
restructuring costs and other, income taxes (income tax recovery)
and share of (income) loss of associates. Adjusted EBITDA as
defined above is not a measure of results that is consistent with
IFRS.
|
TVA GROUP INC.
Notes to condensed consolidated financial statements
(continued)
Three-month and nine-month periods ended September 30, 2023 and 2022 (unaudited)(Tabular
amounts are expressed in thousands of Canadian dollars, except per
share and per option amounts)
11. Subsequent event
On November 2, 2023, in the
context of the worldwide crisis in the media industry, the
Corporation announced major changes to its organizational
structure. It will implement a reorganization plan that will
refocus its mission on broadcasting, restructure its news division
and optimize its real estate holdings. The goal is to reduce the
Corporation's operating costs. The plan will reduce the
Corporation's workforce by 547 employees. Most of the costs
associated with the elimination of positions will be recognized in
the fourth quarter of 2023.
SOURCE TVA Group
