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"We continue to press government authorities for regulatory relief, the application of which continues to be delayed. This flexibility is all the more necessary to support Canadian broadcasters, especially since the contributions from foreign online companies, required by the CRTC as part of the implementation of the new Broadcasting Act, will not inject any real new money into our system.

"Despite the difficult environment, TVA Group continues to hold the highest market share in Quebec at 42.5% for the second quarter. The "TVA Sports" channel enjoyed exceptional growth of 1.0% for the period, due in part to the presentation of the National Hockey League playoffs and Euro 2024, the final of which was also broadcast on TVA Network and reached as many as 600,000 viewers. The "Témoin" channel, which launched its programming in April 2024, saw significant growth of 0.4 points, while the "LCN" news and public affairs channel grew by 0.1 points, remaining Quebec's most-watched specialty channel. TVA Network concluded its winter programming schedule with 3 of the top 5 shows in Quebec, including the reality TV show Sortez-moi d'ici!, with an average audience of over 1.5 million viewers, La Voix and the daily series Indéfendable. TVA Group was also chosen to broadcast Céline Dion's first French-language interview, which drew almost 1.4 million viewers, as part of the international launch of the I Am: Céline Dion documentary.

"In the Film Production & Audiovisual Services segment, our services continued to be in high demand in the second quarter, particularly our soundstage and equipment rental activities. The Skydance production was completed during the quarter, and MELS is well positioned to attract even more productions with the increase in the film production services tax credit from 20% to 25%.

"The Magazines segment reported a decrease in profitability due to the difficult situation in an industry that has been in decline for a number of years, exacerbated by the reduced government support. Grants from the Canada Periodical Fund's regular program have decreased considerably due to program modifications. We will of course continue our efforts to convince Canadian Heritage to take action in this precarious situation.

"The Production & Distribution segment had a more difficult second quarter than last year and continues to be affected by a slowdown in orders in the U.S. market. The English-language market was particularly hard hit by the pandemic, the labour disputes in the U.S. industry and the financial difficulties of over-the-air channels and some platforms, resulting in a significant decline in the number of film and series projects launched.

"In closing, in this year of transition, as we continue to implement our major reorganization plan, TVA Group is staying the course with its responsible management and is focusing all its efforts on maintaining the sustainability of its business."

Definition

Adjusted EBITDA

In its analysis of operating results, the Corporation defines adjusted EBITDA, as reconciled to net income (loss) under IFRS, as net income (loss) before depreciation and amortization, financial expenses (income), 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 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 depreciation and amortization of tangible and intangible assets, including any asset impairment charges, as well as the cost associated with one-time restructuring measures, 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 EBITDA may not be the same as 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 announced on November 2, 2023 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 on schedule or at all, the possibility that unknown potential liabilities or costs will be associated with 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.

The forward-looking statements in this document are made to give investors and the public a better understanding of the Corporation's circumstances and are based on assumptions it believes to be reasonable as of the day on which they were made. 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, 2023.

The forward-looking statements in this news release reflect the Corporation's expectations as of August 1, 2024 and are subject to change after that 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 June 30 2024, 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.
Notes to condensed consolidated financial statements (continued)

Three-month and six-month periods ended June 30, 2024 and 2023 (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 612 Saint-Jacques St., 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, particularly as they may affect corporate 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.

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 2023 annual consolidated financial statements, which describe the significant accounting policies used to prepare these financial statements.

These condensed consolidated financial statements were approved by the Corporation's Board of Directors on August 1, 2024.

Certain comparative figures for the three-month and six-month periods ended June 30, 2023 have been restated to conform to the presentation adopted for the three-month and six-month periods ended June 30, 2024.

2. Revenues

3. Purchases of goods and services 

4. Financial expenses (income)

([1])   For the three-month and six-month periods ended June 30, 2024, interest totalling $1,540,000 and $3,256,000, respectively, were recorded on the renewable credit facility with Quebecor Media ($60,000 for the same periods of 2023).

5. Restructuring costs and other

Restructuring costs

For the three-month and six-month periods ended June 30, 2024 and 2023, the Corporation recorded an operational restructuring charge in connection with the elimination of positions and the implementation of rationalization plans, mainly in the Broadcasting segment.

Impairment of assets

During the second quarter of 2024, the Corporation performed an impairment test on the Production and Distribution cash-generating unit ("CGU") due to the competitive industry environment and the slowdown in its volume of activities. The Corporation concluded that this CGU's recoverable amount was less than its carrying amount and a goodwill impairment charge of $7,781,000, without any tax consequences, was recorded.

Gain on disposal of property, plant and equipment

During the first quarter of 2024, the Corporation closed the sale of a building in Saguenay to the parent corporation for proceeds on disposal of $2,600,000. The transaction gave rise to the recognition of a $2,309,000 gain on disposal.

During the second quarter of 2024, the Corporation also recognized a gain on disposal of assets of $163,000.

6. Long-term debt

The components of long-term debt are as follows:

On June 28, 2023, the Corporation entered into a new $120,000,000 secured renewable credit facility maturing on June 15, 2025, with Quebecor Media as lender. This renewable credit facility bears interest at the Canadian Overnight Repo Rate Average ("CORRA") or the Canadian prime rate, plus a premium based on the Corporation's debt ratio.

Also on June 28, 2023, the Corporation entered into a new $20,000,000 secured renewable credit facility, repayable on demand. This demand credit facility bears interest at the Canadian or U.S. prime rate, plus a premium based on the Corporation's debt ratio.

Concurrently, on June 28, 2023, the Corporation terminated its $75,000,000 syndicated renewable credit facility.

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

8. Stock-based compensation and other stock-based payments

     a) Stock option plans

     b) Deferred stock unit ("DSU") plan for directors

For the three-month and six-month periods ended June 30, 2024, the Corporation redeemed DSUs in the total amount of $107,000.

     c) Stock-based compensation expense 

For the three-month and six-month periods ended June 30, 2024, compensation expense reversals in the amounts of $135,000 and $49,000, respectively, were recorded in respect of all stock-based compensation plans (compensation expense reversal of $372,000 and compensation expense of $194,000, respectively, for the same periods of 2023).

9. Pension plans and postretirement benefits

The gain on remeasurement of defined benefit plans recognized on the consolidated statement of comprehensive loss for the three-month and six-month periods ended June 30, 2024 mainly reflects the increase in the discount rate.

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;

• The Film Production & Audiovisual Services segment, which 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 publishes magazines and markets digital products associated with the various magazine brands;

• The Production & Distribution segment, which produces and distributes television shows, movies and television series for the world market.

The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments.

SOURCE TVA Group

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