MONTREAL, Aug. 3, 2023
/CNW/ - TVA Group Inc. ("TVA Group" or the "Corporation")
announced today that it recorded revenues in the amount of
$138.8 million for the second quarter
of 2023, a year-over-year decrease of $8.7
million. Net loss attributable to shareholders was
$7.8 million or $0.18 per share, compared with net loss
attributable to shareholders of $3.2 million or $0.07 per share for the same quarter of 2022.
Second quarter operating highlights:
- $3,843,000 in consolidated
negative adjusted EBITDA,1 a $7,078,000 unfavourable variance from the same
quarter of 2022.
- $4,539,000 in negative adjusted
EBITDA1 in the Broadcasting segment, a $4,390,000 unfavourable variance due mainly to
lower traditional advertising revenues, partially offset by an
increase in digital advertising revenues, mainly for TVA+, and
savings generated by the restructuring plan.
- $413,000 in negative adjusted
EBITDA1 in the Film Production & Audiovisual
Services segment ("MELS"), a $2,585,000 unfavourable variance due mainly to
lower activity volume in soundstage, mobile and equipment rental,
postproduction and media accessibility, partially offset by the
positive impact of the discontinuation of visual effects
activities.
- $309,000 in adjusted
EBITDA1 in the Magazines segment, a $1,337,000 unfavourable variance due mainly to
lower revenues, especially at newsstands, reduced government
assistance and lower advertising revenues.
- $582,000 in adjusted
EBITDA1 in the Production & Distribution segment, a
favourable variance of $1,071,000,
attributable mainly to higher gross margin on international
distribution of films produced by companies in the Incendo Group
("Incendo"), especially in the United
States, in the second quarter of 2023 compared to the same
period in 2022.
|
____________________________
|
|
1 See definition of
adjusted EBITDA below.
|
"Second quarter results continued to be impacted by declining
profitability across all our segments and in the various industries
in which we operate. The implementation of our restructuring plan,
announced on February 16, 2023, has
not yet generated sufficient savings to offset the major challenges
of a declining advertising market and the lack of foreign
productions in our studios," said Pierre Karl Péladeau, acting
President and CEO of TVA Group.
"Results in the Broadcasting segment were seriously impacted by
the decline in our advertising revenues, which are the only source
of revenues for our over-the-air network. Despite the challenging
environment, we continued to invest in content to protect our
market shares, both for TVA Network and for our specialty services.
TVA Group's market share for the second quarter of 2023 was 42.7%,
up 0.4 points compared to the same period of 2022. TVA Network had
4 of the top 5 shows in Quebec in
the second quarter. The daily series Indéfendable, variety
show La Voix and the new reality TV show
Sortez-moi d'ici! all had an average audience of over
1.5 million viewers during the 2023 season.
"To continue to invest in programming and news content, it is
vital that a legislative and regulatory framework be implemented to
control the web giants and require them to contribute financially
to the Canadian broadcasting system.
"With the Act respecting online communications (Bill
C-18) expected to come into effect by the end of the year, Meta
decided to block news stories on its Facebook and Instagram
platforms to avoid paying their fair share to use this news
content. No one is above the law and, as such, we encourage
organizations to express their disagreement with Meta's complete
disregard for Canada's government
policy and news industry by advertising elsewhere. It need hardly
be repeated that the imbalance in the regulatory and legislative
frameworks is highly damaging: foreign companies reap profits from
the Canadian market and audience with no constraints, while
broadcasters such as TVA Group are tangled in outdated,
burdensome regulations.
"Another key measure that must be quickly applied is removing
advertising on all Radio-Canada platforms. The public broadcaster
is engaging in unfair competition with private broadcasters in its
race for ratings and advertising revenues, despite the fact that it
receives huge amounts of government funding to fulfil its
mandate. We will also continue our efforts to ensure that
distributor Bell TV ceases its highly prejudicial treatment of our
specialty channels and pays fair-market fees.
"In the Film Production & Audiovisual Services segment, the
Corporation was particularly affected by a decrease in soundstage
and equipment rental services, which continued to suffer from the
lack of foreign productions this quarter. Although MELS did
sign some major agreements with foreign producers for the coming
months, the writers and actors strikes in the United States are fuelling uncertainty.
Projects are being postponed and could be cancelled. In virtual
production activities, MELS benefited from increased demand for its
services and was able to generate additional profits in this
growing segment.
"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 this quarter continued to be
affected by lower revenues. The increase generated by our
magazines' digital revenues was not enough to offset notably the
substantial losses caused by the change to the Canada Periodical
Fund's grant allocation method, which continues to have a serious
negative impact on the sector amid numerous other challenges.
"Our Production & Distribution segment performed better in
the second quarter of 2023 compared with the same period in 2022,
with the delivery of two horror films to Tubi. We will be
keeping a close eye on the strike situation in the United States, which may impact our order
book for the coming months."
Definition
Adjusted EBITDA
In its analysis of operating results, the Corporation defines
adjusted EBITDA as net income (loss) before depreciation and
amortization, financial expenses (income), operational
restructuring costs and other, income tax expense (recovery) and
share of income 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 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, including COVID-19, 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.sedar.com or 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 August 3,
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, with notes, and
the interim Management's Discussion and Analysis for the
three-month period ended June 30,
2023, can be consulted on the Corporation's website at
www.groupetva.ca.
TVA GROUP INC.
Consolidated statements of
loss
(unaudited)
(in thousands of Canadian dollars, except per-share
amounts)
|
|
Three-month
periods
ended June 30
|
Six-month periods
ended June 30
|
|
Note
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
2
|
$
|
138,760
|
$
|
147,469
|
$
|
274,863
|
$
|
291,966
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of goods and
services
|
3
|
|
108,544
|
|
107,040
|
|
232,286
|
|
222,664
|
|
Employee
costs
|
|
|
34,059
|
|
37,194
|
|
70,397
|
|
75,788
|
|
Depreciation and
amortization
|
|
|
6,973
|
|
7,462
|
|
14,155
|
|
15,082
|
|
Financial (income)
expenses
|
4
|
|
(43)
|
|
94
|
|
(161)
|
|
594
|
|
Operational
restructuring costs and other
|
5
|
|
120
|
|
113
|
|
1,022
|
|
133
|
|
Loss before income tax recovery and
share of income of associates
|
|
|
(10,893)
|
|
(4,434)
|
|
(42,836)
|
|
(22,295)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
(3,006)
|
|
(1,062)
|
|
(11,325)
|
|
(5,659)
|
|
|
|
|
|
|
|
|
|
|
|
Share of income of
associates
|
|
|
(40)
|
|
(163)
|
|
(131)
|
|
(412)
|
|
Net loss
|
|
$
|
(7,847)
|
$
|
(3,209)
|
$
|
(31,380)
|
$
|
(16,224)
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable
to:
|
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
$
|
(7,847)
|
$
|
(3,212)
|
$
|
(31,380)
|
$
|
(16,228)
|
|
Non-controlling
interest
|
|
|
–
|
|
3
|
|
–
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
attributable to shareholders
|
|
$
|
(0.18)
|
$
|
(0.07)
|
$
|
(0.73)
|
$
|
(0.38)
|
|
Weighted average number of shares
outstanding and diluted shares
|
|
|
43,205,535
|
|
43,205,535
|
|
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 June 30
|
Six-month periods
ended June 30
|
|
Note
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,847)
|
$
|
(3,209)
|
$
|
(31,380)
|
$
|
(16,224)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
items that will not be
reclassified to loss:
|
|
|
|
|
|
|
|
|
|
|
Defined benefit
plans:
|
|
|
|
|
|
|
|
|
|
|
Re-measurement
gain
|
9
|
|
–
|
|
14,500
|
|
–
|
|
29,000
|
|
Deferred income
taxes
|
|
|
–
|
|
(3,900)
|
|
–
|
|
(7,700)
|
|
|
|
–
|
|
10,600
|
|
–
|
|
21,300
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(7,847)
|
$
|
7,391
|
$
|
(31,380)
|
$
|
5,076
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
attributable to:
|
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
$
|
(7,847)
|
$
|
7,388
|
$
|
(31,380)
|
$
|
5,072
|
|
Non-controlling
interest
|
|
|
–
|
|
3
|
|
–
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
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)
income
|
|
–
|
|
–
|
|
(16,228)
|
|
–
|
|
4
|
|
(16,224)
|
|
Other comprehensive
income
|
|
–
|
|
–
|
|
–
|
|
21,300
|
|
–
|
|
21,300
|
|
Balance as at June 30, 2022
|
|
207,280
|
|
581
|
|
122,451
|
|
54,014
|
|
1,214
|
|
385,540
|
|
Net income
(loss)
|
|
–
|
|
–
|
|
7,359
|
|
–
|
|
(24)
|
|
7,335
|
|
Dividends
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(1,190)
|
|
(1,190)
|
|
Other comprehensive
income
|
|
–
|
|
–
|
|
–
|
|
1,691
|
|
–
|
|
1,691
|
|
Balance as at December 31, 2022
|
|
207,280
|
|
581
|
|
129,810
|
|
55,705
|
|
–
|
|
393,376
|
|
Net loss
|
|
–
|
|
–
|
|
(31,380)
|
|
–
|
|
–
|
|
(31,380)
|
|
Balance as at June 30, 2023
|
$
|
207,280
|
$
|
581
|
$
|
98,430
|
$
|
55,705
|
$
|
–
|
$
|
361,996
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Consolidated balance
sheets
(unaudited)
(in thousands of Canadian dollars)
|
June 30,
2023
|
December 31,
2022
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Accounts
receivable
|
$
|
141,557
|
$
|
175,174
|
|
Income
taxes
|
|
20,040
|
|
8,522
|
|
Audiovisual
content
|
|
113,323
|
|
135,038
|
|
Prepaid
expenses
|
|
8,565
|
|
4,400
|
|
|
283,485
|
|
323,134
|
|
Non-current assets
|
|
|
|
|
|
Audiovisual
content
|
|
88,004
|
|
88,225
|
|
Investments
|
|
12,148
|
|
12,017
|
|
Property, plant and
equipment
|
|
147,647
|
|
157,784
|
|
Right-of-use
assets
|
|
6,830
|
|
7,599
|
|
Intangible
assets
|
|
13,930
|
|
14,671
|
|
Goodwill
|
|
21,696
|
|
21,696
|
|
Defined benefit plan
asset
|
|
44,310
|
|
45,111
|
|
Deferred income
taxes
|
|
5,118
|
|
5,833
|
|
|
339,683
|
|
352,936
|
|
Total assets
|
$
|
623,168
|
$
|
676,070
|
TVA GROUP INC.
Consolidated balance sheets
(continued)
(unaudited)
(in thousands of Canadian dollars)
|
Note
|
June 30,
2023
|
December 31,
2022
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Bank
indebtedness
|
6
|
$
|
10,117
|
$
|
1,107
|
|
Accounts payable,
accrued liabilities and provisions
|
|
|
90,232
|
|
114,174
|
|
Content rights
payable
|
|
|
42,591
|
|
124,394
|
|
Deferred
revenues
|
|
|
8,777
|
|
11,031
|
|
Income
taxes
|
|
|
358
|
|
562
|
|
Current portion of
lease liabilities
|
|
|
1,860
|
|
2,318
|
|
Short-term
debt
|
6
|
|
–
|
|
8,961
|
|
|
|
153,935
|
|
262,547
|
|
Non-current liabilities
|
|
|
|
|
|
|
Long-term
debt
|
6
|
|
90,889
|
|
–
|
|
Lease
liabilities
|
|
|
5,862
|
|
6,453
|
|
Other
liabilities
|
|
|
5,052
|
|
5,395
|
|
Deferred income
taxes
|
|
|
5,434
|
|
8,299
|
|
|
|
107,237
|
|
20,147
|
|
Equity
|
|
|
|
|
|
|
Capital
stock
|
7
|
|
207,280
|
|
207,280
|
|
Contributed
surplus
|
|
|
581
|
|
581
|
|
Retained
earnings
|
|
|
98,430
|
|
129,810
|
|
Accumulated other
comprehensive income
|
|
|
55,705
|
|
55,705
|
|
Equity
|
|
|
361,996
|
|
393,376
|
|
Total liabilities and equity
|
|
$
|
623,168
|
$
|
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 June 30
|
Six-month periods
ended June 30
|
|
Note
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Cash flows related to operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,847)
|
$
|
(3,209)
|
$
|
(31,380)
|
$
|
(16,224)
|
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
6,973
|
|
7,462
|
|
14,155
|
|
15,082
|
|
Share of income of
associates
|
|
|
(40)
|
|
(163)
|
|
(131)
|
|
(412)
|
|
Deferred income
taxes
|
|
|
(3,204)
|
|
(559)
|
|
(2,150)
|
|
(1,539)
|
|
Other
|
|
|
43
|
|
635
|
|
56
|
|
648
|
|
|
|
(4,075)
|
|
4,166
|
|
(19,450)
|
|
(2,445)
|
|
Net change in non-cash
balances related
to operating items
|
|
|
(93,040)
|
|
(843)
|
|
(68,103)
|
|
(4,834)
|
|
Cash flows (used in)
provided by operating
activities
|
|
|
(97,115)
|
|
3,323
|
|
(87,553)
|
|
(7,279)
|
|
Cash flows related to investing
activities
|
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
|
(210)
|
|
(7,112)
|
|
(1,877)
|
|
(12,308)
|
|
Additions to
intangible assets
|
|
|
(54)
|
|
(305)
|
|
(179)
|
|
(728)
|
|
Business
acquisitions
|
5
|
|
–
|
|
(3,750)
|
|
–
|
|
(3,750)
|
|
Cash flows used in
investing activities
|
|
|
(264)
|
|
(11,167)
|
|
(2,056)
|
|
(16,786)
|
|
Cash flows related to financing
activities
|
|
|
|
|
|
|
|
|
|
|
Net change in bank
indebtedness
|
|
|
6,918
|
|
1,422
|
|
9,024
|
|
2,996
|
|
Net change in
revolving credit facility
|
|
|
–
|
|
6,885
|
|
(8,970)
|
|
19,875
|
|
Net change of
long-term debt
|
6
|
|
91,000
|
|
–
|
|
91,000
|
|
–
|
|
Repayment of lease
liabilities
|
|
|
(525)
|
|
(715)
|
|
(1,378)
|
|
(1,511)
|
|
Other
|
|
|
(14)
|
|
–
|
|
(67)
|
|
(53)
|
|
Cash flows provided by
financing activities
|
|
|
97,379
|
|
7,592
|
|
89,609
|
|
21,307
|
|
Net change in cash
|
|
|
–
|
|
(252)
|
|
–
|
|
(2,758)
|
|
Cash at beginning of period
|
|
|
–
|
|
2,675
|
|
–
|
|
5,181
|
|
Cash at end of period
|
|
$
|
–
|
$
|
2,423
|
$
|
–
|
$
|
2,423
|
|
Interest and taxes reflected as operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net interest
paid
|
|
$
|
258
|
$
|
294
|
$
|
556
|
$
|
588
|
|
Income taxes paid (net
of refunds)
|
|
|
1,338
|
|
1,906
|
|
2,547
|
|
5,723
|
|
See accompanying notes
to condensed consolidated financial statements.
|
TVA GROUP INC.
Notes to condensed consolidated
financial statements
Three-month and six-month periods ended June 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 six-month periods ended June 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 condensed consolidated financial statements.
These condensed consolidated financial statements were approved
by the Corporation's Board of Directors on August 3, 2023.
Certain comparative figures for the three-month and six-month
periods ended June 30, 2022 have been
restated to conform to the presentation adopted for the three-month
and six-month periods ended June 30,
2023.
2. Revenues
|
Three-month
periods
ended June
30
|
Six-month
periods
ended June
30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Advertising
services
|
$
|
67,013
|
$
|
72,587
|
$
|
135,793
|
$
|
139,055
|
|
Royalties
|
|
33,305
|
|
34,134
|
|
66,614
|
|
68,387
|
|
Rental, postproduction
and distribution services
and other services rendered (1)
|
|
22,503
|
|
25,924
|
|
43,212
|
|
55,725
|
|
Product sales
(2)
|
|
15,939
|
|
14,824
|
|
29,244
|
|
28,799
|
|
$
|
138,760
|
$
|
147,469
|
$
|
274,863
|
$
|
291,966
|
|
(1)
|
Revenues from rental of
soundstages, mobiles, equipment and rental space amounted to
$5,427,000 and $9,653,000 for the three-month and six-month
periods ended June 30, 2023 respectively ($8,222,000 and
$17,795,000 for 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 six-month periods ended June 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 June
30
|
Six-month
periods
ended June
30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Rights and audiovisual
content costs
|
$
|
82,052
|
$
|
80,301
|
$
|
178,303
|
$
|
168,704
|
|
Printing and
distribution
|
|
3,663
|
|
3,027
|
|
6,966
|
|
6,705
|
|
Services rendered by
the parent corporation:
|
|
|
|
|
|
|
|
|
- Commissions on
advertising sales
|
|
5,976
|
|
6,506
|
|
12,105
|
|
13,138
|
|
|
|
2,269
|
|
2,080
|
|
4,726
|
|
4,464
|
|
Building
costs
|
|
4,240
|
|
3,999
|
|
8,630
|
|
8,461
|
|
Marketing, advertising
and promotion
|
|
3,719
|
|
4,168
|
|
8,028
|
|
8,296
|
|
Other
|
|
6,625
|
|
6,959
|
|
13,528
|
|
12,896
|
|
$
|
108,544
|
$
|
107,040
|
$
|
232,286
|
$
|
222,664
|
4. Financial (income) expenses
|
Three-month
periods
ended June
30
|
Six-month
periods
ended June
30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Interest on debt
(1)
|
$
|
260
|
$
|
189
|
$
|
509
|
$
|
380
|
|
Amortization of
financing costs
|
|
49
|
|
13
|
|
62
|
|
26
|
|
Interest on lease
liabilities
|
|
97
|
|
112
|
|
199
|
|
231
|
|
Interest income related
to defined benefit plans
|
|
(515)
|
|
(115)
|
|
(1,019)
|
|
(226)
|
|
Foreign exchange loss
(gain)
|
|
182
|
|
(101)
|
|
274
|
|
95
|
|
Other
|
|
(116)
|
|
(4)
|
|
(186)
|
|
88
|
|
$
|
(43)
|
$
|
94
|
$
|
(161)
|
$
|
594
|
|
(1)
|
For the three-month and
six-month periods ended June 30, 2023, interests totalling $60,000
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 six-month periods ended June 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 June 30
|
Six-month
periods
ended
June 30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Operational
restructuring costs
|
$
|
163
|
$
|
78
|
$
|
1,065
|
$
|
115
|
|
Other
|
|
(43)
|
|
35
|
|
(43)
|
|
18
|
|
$
|
120
|
$
|
113
|
$
|
1,022
|
$
|
133
|
Operational restructuring costs
For the three-month and six-month periods ended June 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 June 30
|
Six-month
periods
ended
June 30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Broadcasting
|
$
|
134
|
$
|
65
|
$
|
719
|
$
|
102
|
|
Film Production &
Audiovisual Services
|
|
29
|
|
–
|
|
203
|
|
–
|
|
Magazines
|
|
–
|
|
13
|
|
111
|
|
13
|
|
Production &
Distribution
|
|
–
|
|
–
|
|
32
|
|
–
|
|
$
|
163
|
$
|
78
|
$
|
1,065
|
$
|
115
|
Other
For 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 and had made a
$3,750,000 payment in connection with
that acquisition.
TVA GROUP INC.
Notes to condensed consolidated
financial statements (continued)
Three-month and six-month periods ended June 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:
|
June 30,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
Revolving credit
facility - Quebecor
|
$
|
91,000
|
|
$
|
–
|
|
Syndicated revolving
credit facility
|
|
–
|
|
|
8,970
|
|
Financing costs, net of
accumulated amortization
|
|
(111)
|
|
|
(9)
|
|
|
90,889
|
|
|
8,961
|
|
Less the current
portion
|
|
–
|
|
|
(8,961)
|
|
$
|
90,889
|
|
$
|
–
|
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 Bankers'
acceptance rate or Canadian prime rate, plus a premium based on the
Corporation's debt ratio.
On June 28, 2023, the Corporation
also entered into a new $20,000,000
secured on-demand credit facility with a banking institution. This
on-demand credit facility bears interest at Canadian prime rate or
U.S. prime rate, plus a premium 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 June 30, 2023, $294,000 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 $3,832,000. As
at June 30, 2023, $91,000,000 was drawn on the revolving credit
facility with Quebecor Media. Costs of $111,000 were incurred in setting up this new
financing.
As at June 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 six-month periods ended June 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
|
June 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 six-month periods ended June 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
|
|
Cancelled
|
(140,729)
|
|
|
1.83
|
|
Balance as at June 30, 2023
|
503,774
|
|
$
|
2.35
|
|
Vested options as at June 30,
2023
|
120,332
|
|
$
|
3.09
|
|
|
|
|
|
|
Quebecor
|
|
|
|
|
|
Balance as at December
31, 2022
|
244,216
|
|
$
|
30.36
|
|
Granted
|
135,000
|
|
|
33.28
|
|
Exercised
|
(8,250)
|
|
|
31.59
|
|
Cancelled
|
(80,985)
|
|
|
31.87
|
|
Balance as at June 30, 2023
|
289,981
|
|
$
|
31.26
|
|
Vested options as at June 30,
2023
|
50,493
|
|
$
|
28.81
|
During the three-month and six-month periods ended June 30, 2023, 8,250 Quebecor stock options were
exercised for a cash consideration of $27,000.
b) Deferred stock unit ("DSU") plan for
directors
|
Outstanding
units
|
|
|
Corporation
stock units
|
|
|
|
|
|
|
Balance as at December
31, 2022
|
|
|
|
446,934
|
|
Granted
|
|
|
|
35,205
|
|
Balance as at June 30, 2023
|
|
|
|
482,139
|
c) Stock-based compensation
expense
For the three-month and six-month periods ended
June 30, 2023, a compensation expense
reversal in the amount of $372,000
and a compensation expense of $194,000 respectively were recorded in respect of
all stock-based compensation plans (compensation expense reversal
of $113,000 and compensation expense
of $356,000 respectively for the same periods of 2022).
TVA GROUP INC.
Notes to condensed consolidated
financial statements (continued)
Three-month and six-month periods ended June 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 post-retirement benefits
The gain on remeasurement of defined benefit plans recognized on
the consolidated statement of comprehensive income for the
three-month and six-month periods ended June
30, 2022 reflected 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;
- 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 six-month periods ended June 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 June
30
|
Six-month
periods
ended June
30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Broadcasting
|
$
|
115,840
|
$
|
122,168
|
$
|
231,850
|
$
|
236,307
|
|
Film Production &
Audiovisual Services
|
|
12,239
|
|
18,334
|
|
26,511
|
|
37,685
|
|
Magazines
|
|
9,362
|
|
10,374
|
|
18,009
|
|
20,035
|
|
Production &
Distribution
|
|
5,882
|
|
2,456
|
|
8,223
|
|
8,436
|
|
Intersegment
items
|
|
(4,563)
|
|
(5,863)
|
|
(9,730)
|
|
(10,497)
|
|
|
138,760
|
|
147,469
|
|
274,863
|
|
291,966
|
|
(Negative adjusted EBITDA) adjusted
EBITDA(1)
|
|
|
|
|
|
|
|
|
|
Broadcasting
|
|
(4,539)
|
|
(149)
|
|
(27,345)
|
|
(15,617)
|
|
Film Production &
Audiovisual Services
|
|
(413)
|
|
2,172
|
|
(968)
|
|
6,016
|
|
Magazines
|
|
309
|
|
1,646
|
|
(58)
|
|
2,086
|
|
Production &
Distribution
|
|
582
|
|
(489)
|
|
227
|
|
1,064
|
|
Intersegment
items
|
|
218
|
|
55
|
|
324
|
|
(35)
|
|
|
(3,843)
|
|
3,235
|
|
(27,820)
|
|
(6,486)
|
|
Depreciation and
amortization
|
|
6,973
|
|
7,462
|
|
14,155
|
|
15,082
|
|
Financial (income)
expenses
|
|
(43)
|
|
94
|
|
(161)
|
|
594
|
|
Operational
restructuring costs and other
|
|
120
|
|
113
|
|
1,022
|
|
133
|
|
Loss before income tax recovery and share of
income of associates
|
$
|
(10,893)
|
$
|
(4,434)
|
$
|
(42,836)
|
$
|
(22,295)
|
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 (income) expenses,
operational restructuring costs and other, income tax recovery and
share of income of associates. Adjusted EBITDA as defined above is
not a measure of results that is consistent with IFRS
|
SOURCE TVA Group