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TVA Group Reports Q3 2021 Results

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MONTREAL, Oct. 28, 2021 /CNW/ - TVA Group Inc. ("TVA Group" or the "Corporation") announced today that it recorded operating revenues totalling $150.7 million in the third quarter of 2021, a year-over-year increase of $31.2 million. Net income attributable to shareholders was $19.0 million or $0.44 per share, compared with net income attributable to shareholders of $8.4 million or $0.19 per share for the same quarter of 2020.

Third quarter operating highlights:

  • Consolidated adjusted EBITDA1 of $35,504,000, a $12,141,000 favourable variance from the same quarter of 2020.

  • $21,538,000 in adjusted EBITDA1 in the Broadcasting segment, a $4,600,000 favourable variance due to the increase in adjusted EBITDA1 at "TVA Sports," which broadcast the 2019-2020 NHL playoffs in the third quarter of 2020 following the new broadcast schedule necessitated by the pandemic, partially offset by a decrease in adjusted EBITDA1 at TVA Network.

  • $10,565,000 in adjusted EBITDA1 in the Film Production & Audiovisual Services segment ("MELS"), a $7,618,000 favourable variance due to increased profitability of soundstage, mobile and equipment rental activities, partially offset by the weaker performance of dubbing, subtitling and described video, as well as visual effects.

  • $2,048,000 in adjusted EBITDA1 in the Magazines segment, a $951,000 unfavourable variance stemming from a resumption of activities amid reduced government support.

  • $1,243,000 in adjusted EBITDA1 in the Production & Distribution segment ("Incendo"), an $816,000 favourable variance generated primarily by the international distribution of films produced by Incendo.

"We are pleased with the results for the third quarter of our financial year, which reflect growing activity in most of our segments. For the third straight quarter, advertising revenues at TVA Network and our specialty channels were up over the same quarter of last year, but they also rose 22% compared with the same quarter of 2019, which was not affected by the public health crisis. Based on this positive situation, we can continue and increase our investments in content, a strategy that is reflected in our fall programming, with a wealth of new shows, original productions and exclusive content for our digital platforms. TVA+ continues to grow and build on its popularity. Our array of content is broader and more diverse than ever and is available on multiple platforms to reach more Quebecers on a daily basis and bring them together for major television events," said Pierre Karl Péladeau, acting President and CEO of TVA Group.

"With a consolidated market share of 38.2%2 for the third quarter of 2021, our shows are still among the most watched in Quebec and continued to perform strongly, particularly the hit family variety show Chanteurs masqués, which attracted over 1.6 million1 viewers. "TVA Sports" had the third most watched program in Quebec with an average audience of nearly 1.5 million1 viewers for certain games of the Stanley Cup finals, in addition to ranking third among all French–language channels3 for both daytime and prime time viewing.

In the Film Production & Audiovisual Services segment, our services were in high demand during the quarter, particularly our soundstage and equipment rental activities. The shooting of Paramount Pictures' mega–production Transformers: Rise of the Beast is now over, making way for a major online streaming player that will rent our studios in the coming months. MELS' services are increasingly being recognized and used by international clients, placing us in the enviable position of being able to take advantage of the current market growth and plan our offering with MELS 4. Our virtual stage services continue to draw the attention of producers, with greater numbers using the technology to facilitate shooting certain scenes or for creative advertising. Also, MELS was awarded the prestigious EPIC MegaGrant by EPIC Games to support ongoing development of the services and it was able to acquire its own equipment for virtual stage activities to be used in our studios this fall," continued Mr. Péladeau.

"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, which was exacerbated by the reduced government support. Grants from the Canada Periodicals Fund's regular program have decreased considerably due to program modifications. However, we welcome Heritage Canada's announcement this quarter confirming the extension of the enhanced grant until March 31, 2022 to help businesses in the segment recover from the effects of the pandemic. The significant decrease in profitability clearly demonstrates that government support is critical to the segment's survival. Nevertheless, the most recent Vividata survey indicates that we remain the leader in the magazines market, confirming our position as the number 1 publisher of French-language monthlies in Quebec4 with nearly 3.1 million3 cross-platform readers.

Our Production & Distribution activities continued with the completion of nine new romantic comedies that will be ready for distribution in the next few months, particularly international distribution, thus maintaining the growth of this segment. The growing popularity of streaming platforms also enabled the segment to increase its presence on this type of platform and to improve its profitability. Sales growth at Incendo continues to help diversify our revenue streams and expand our presence in English-language markets.

In closing, although the quarterly results are encouraging and indicate the Corporation is gradually recovering from the impacts of the public health crisis, the economic situation remains fragile and we continue to exercise caution in managing our activities. I want to thank our employees for their outstanding work and for helping us every day to fulfill our mission to inform and entertain Quebecers," concluded Mr. Péladeau.

Senior management

On April 14, 2021, France Lauzière decided to take time off from her professional duties for family reasons. Ms. Lauzière is now resigning from her position as President and Chief Executive Officer of TVA Group, for the same reasons. However, she remains available to work with the company on strategic projects content. Pierre Karl Péladeau will continue to serve as acting President of TVA Group.

"I had the privilege of working with France for 20 years. At every stage of her career, she always impressed me with her devotion to the company's success. Since joining TVA Group in 2001, France has helped strengthen TVA's dominant position as Québec's television leader. She paved the way for some major innovations in content creation, content acquisition and multiplatform distribution. Flagship programs such as Star Académie, La Voix, Révolution, La Tour, Les beaux malaises, Fugueuse and Pour Sarah, produced under her leadership, gave our artists and crews a chance to shine and showcased Québec culture. From the bottom of my heart, I thank France for her immense contribution," said Mr. Péladeau.

Update on the COVID-19 situation

Third quarter results must be viewed in the context of the COVID-19 pandemic, which had major consequences for the economic environment in Canada and around the globe. Despite the constraints created by the pandemic, the Corporation has maintained its operations, while safeguarding the health and safety of its employees and the public.

It is possible that the financial impacts of this crisis will continue to be felt in the coming quarters, including:

  • significant variability in our revenues and content costs related to live broadcasts of sporting events organized by professional leagues as they resume their activities while cancelling some events and making significant changes to formats and broadcast schedules;

  • reduction in advertising revenues in markets or sectors still affected by the public health crisis, which will inevitably affect the Broadcasting and Magazines segments;

  • variance in the level of activity at MELS and in the Production & Distribution segment resulting from the stoppage or a slow and complex resumption of our content production and distribution activities due to factors such as the need to comply with health precautions and physical distancing rules on the set, the closing of borders with some countries, and production insurance challenges.

  • possible reduction in the publication frequency of some periodicals, which would affect revenues in the Magazines segment.

Because of the decrease in their revenues, some of the entities in the Corporation's various business segments qualified for the Canada Emergency Wage Subsidy, enabling the Corporation to mitigate some of the impacts of the crisis.

Given the uncertainty about the future evolution of the pandemic, including a possible new wave, we cannot determine the full impact of the crisis with certainty. We believe that our current sound financial health, our strong balance sheet and the steps we have taken will enable us to continue to deliver positive cash flows.

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 and share of income of associated corporations. 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 emergency measures implemented 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 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, 2020 and the "Risk Factors" section in the Corporation's 2020 annual information form.

The forward-looking statements in this news release reflect the Corporation's expectations as of October 28, 2021 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 dated September 30, 2021, with notes, and the interim Management's Discussion and Analysis for the three-month and nine-month periods ended September 30, 2021, can be consulted on the Corporation's website at www.groupetva.ca.

____________________________

1 See definition of adjusted EBITDA below.

2 Source: Numeris – Quebec Franco, July 1 to September 30, 2021, Mon-Sun, 2 a.m.-2 a.m., All 2+

3 Source: Numeris – Quebec Franco, May 17 to July 11, 2021, Mon-Sun, 2 a.m.-2 a.m. and 6 p.m.-11 p.m., 25-54

4 Source: Vividata, Fall 2021, Total Canada, 14+, July 1, 2020 to June 30, 2021

Consolidated statements of income

(unaudited)
(in thousands of Canadian dollars, except per-share amounts)



Three-month periods
ended September 30

Nine-month periods
ended September 30


Note


2021


2020


2021


2020











Revenues

2

$

150,703

$

119,537

$

450,933

$

360,526











Purchases of goods and services

3


81,703


76,167


294,874


249,723

Employee costs

3


33,496


20,007


104,454


71,567

Depreciation and amortization



8,136


8,124


24,338


25,126

Financial expenses

4


649


634


2,055


1,969

Operational restructuring costs and other

5


20


2,734


182


4,838

Income before income taxes and share of loss (income) of associates



26,699


11,871


25,030


7,303











Income taxes



7,587


3,443


7,181


2,750











Share of loss (income) of associates



111


21


(552)


(405)

Net income


$

19,001

$

8,407

$

18,401

$

4,958











Net income (loss) attributable to:










Shareholders


$

19,010

$

8,404

$

18,409

$

4,937

Non-controlling interest



(9)


3


(8)


21





















Basic earnings per share attributable to shareholders


$

0.44

$

0.19

$

0.43

$

0.11

Diluted earnings per share attributable to shareholders



0.44


0.19


0.42


0.11

Weighted average number of outstanding shares



43,205,535


43,205,535


43,205,535


43,205,535

Weighted average number of diluted shares



43,466,447


43,205,535


43,414,665


43,205,535

See accompanying notes to condensed consolidated financial statements.

Consolidated statements of comprehensive income (loss)

(unaudited)
(in thousands of Canadian dollars)



Three-month periods
ended September 30

Nine-month periods
ended September 30


Note


2021


2020


2021


2020











Net income


$

19,001

$

8,407

$

18,401

$

4,958











Other comprehensive income (loss) items that will not be reclassified to income:










Defined benefit plans:










Re-measurement gain (loss)

8


8,500


(5,000)


44,500


(20,000)

Deferred income taxes



(2,200)


1,325


(11,800)


5,325




6,300


(3,675)


32,700


(14,675)











Comprehensive income (loss)


$

25,301

$

4,732

$

51,101

$

(9,717)











Comprehensive income (loss) attributable to:










Shareholders


$

25,310

$

4,729

$

51,109

$

(9,738)

Non-controlling interest



(9)


3


(8)


21

See accompanying notes to condensed consolidated financial statements.

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 6)

Contributed surplus

Retained earnings

Accumula-ted other comprehen-sive income (loss) Defined benefit plans














Balance as at December 31, 2019

$

207,280

$

581

$

75,858

$

5,274

$

1,196

$

290,189

Net income




4,937



21


4,958

Other comprehensive loss





(14,675)



(14,675)

Balance as at September 30, 2020


207,280


581


80,795


(9,401)


1,217


280,472

Net income




27,380



3


27,383

Other comprehensive income





4,764



4,764

Balance as at December 31, 2020


207,280


581


108,175


(4,637)


1,220


312,619

Net income (loss)




18,409



(8)


18,401

Other comprehensive income





32,700



32,700

Balance as at September 30, 2021

$

207,280

$

581

$

126,584

$

28,063

$

1,212

$

363,720

See accompanying notes to condensed consolidated financial statements.

Consolidated balance sheets

(unaudited)
(in thousands of Canadian dollars)


September 30,
2021

December 31,
2020






Assets










Current assets





Cash

$

2,513

$

2,838

Accounts receivable


155,432


137,177

Tax credits and government assistance receivable


10,934


16,883

Income taxes


4,023


1,391

Audiovisual content


107,401


112,982

Prepaid expenses


5,676


3,217



285,979


274,488

Non-current assets





Audiovisual content


91,613


57,245

Property, plant and equipment


157,761


165,247

Right-of-use assets


9,599


10,326

Intangible assets


20,901


25,028

Goodwill


21,696


21,696

Deferred income taxes


10,107


23,923

Other assets


28,256


11,238



339,933


314,703

Total assets

$

625,912

$

589,191

Consolidated balance sheets (continued)

(unaudited)
(in thousands of Canadian dollars)


Note

September 30,
2021

December 31,
2020







Liabilities and equity












Current liabilities






Bank overdraft


$

5,587

$

1,699

Accounts payable, accrued liabilities and provisions



112,002


106,066

Content rights payable



71,767


62,252

Deferred revenues



14,690


14,077

Income taxes



762


8,415

Current portion of lease liabilities



2,725


3,001

Short-term debt



33,808


27,117




241,341


222,627

Non-current liabilities






Lease liabilities



8,226


9,148

Other liabilities



9,043


38,223

Deferred income taxes



3,582


6,574




20,851


53,945

Equity






Capital stock

6


207,280


207,280

Contributed surplus



581


581

Retained earnings



126,584


108,175

Accumulated other comprehensive income (loss)



28,063


(4,637)

Equity attributable to shareholders



362,508


311,399

Non-controlling interest



1,212


1,220




363,720


312,619

Contingencies

10





Total liabilities and equity


$

625,912

$

589,191

See accompanying notes to condensed consolidated financial statements.

Consolidated statements of cash flows

(unaudited)
(in thousands of Canadian dollars)



Three-month periods
ended September 30

Nine-month periods
ended September 30


Note


2021


2020


2021


2020

Cash flows related to operating activities










Net income


$

19,001

$

8,407

$

18,401

$

4,958

Adjustments for:










Depreciation and amortization



8,136


8,124


24,338


25,126

Share of loss (income) of associates



111


21


(552)


(405)

Deferred income taxes



(295)


(303)


(976)


(2,120)

Gain on disposal of an asset

5





(253)

Other



13


13


(55)


(12)




26,966


16,262


41,156


27,294

Net change in non-cash balances related to operating activities



(5,376)


(37,587)


(35,976)


(4,498)

Cash flows provided by (used in) operating activities



21,590


(21,325)


5,180


22,796

Cash flows related to investing activities










Additions to property, plant and equipment



(4,488)


(2,458)


(11,224)


(9,246)

Additions to intangible assets



(346)


(549)


(1,847)


(2,070)

Business acquisitions

5




(606)


Other



271


271


271


672

Cash flows used in investing activities



(4,563)


(2,736)


(13,406)


(10,644)

Cash flows related to financing activities










Net change in bank overdraft



43


(258)


3,888


5,616

Net change in revolving credit facility



(16,130)


25,252


6,705


(15,614)

Repayment of lease liabilities



(786)


836


(2,514)


(2,559)

Other



(125)



(178)


(53)

Cash flows (used in) provided by financing activities



(16,998)


24,158


7,901


(12,610)

Net change in cash



29


97


(325)


(458)

Cash at beginning of period



2,484


2,828


2,838


3,383

Cash at end of period


$

2,513

$

2,925

$

2,513

$

2,925

Interest and taxes reflected as operating activities










Cash interest payments


$

381

$

268

$

1,133

$

1,279

Cash income tax payments (net of refunds)



5,150


2,310


18,257


5,383

See accompanying notes to condensed consolidated financial statements.

Notes to condensed consolidated financial statements

Three-month and nine-month periods ended September 30, 2021 and 2020 (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 9). 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.

The COVID-19 pandemic has had a significant impact on the economic environment in Canada and around the world. In order to limit the spread of the virus, the Quebec government has imposed a number of restrictions and special preventive measures since the beginning of this health crisis, including the suspension of some business activities. The Quebec government has gradually implemented a new reopening plan since May 2021 and has imposed the use of a vaccination passport starting September 1, 2021, required to be admitted to certain places or to participate in certain non-essential activities. Since March 2020, this health crisis has curtailed the operations of many of TVA Group's business partners and has led at times to a significant slowdown in some of the Corporation's segments. Among other things, the restrictions and preventive measures imposed by the Quebec government caused a decline in advertising revenues and their recovery is still hesitant in some markets and segments and, more specifically in 2020, a reduction in the sporting events broadcast on the "TVA Sports" specialty channel, a reduction in the publication frequency of some periodicals and the temporary suspension of most of our content production activities. Despite the constraints created by the pandemic, the Corporation has continued providing essential services in order to inform in addition to entertain the public, while safeguarding the health and safety of its employees and the public. Due to the decline in their revenues, a number of entities in the Corporation's various segments qualified for the Canada Emergency Wage Subsidy ("CEWS") at the beginning of the health crisis (note 3). Given the uncertainty about the future evolution of the pandemic, including a possible new wave, the full impact of the health crisis cannot be determined with certainty.

Accordingly, the results of operations for interim periods should not necessarily be considered indicative of full-year results.

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (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 2020 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 October 28, 2021.

Certain comparative figures for the three-month and nine-month periods ended September 30, 2020 have been restated to conform to the presentation adopted for the three-month and nine-month periods ended September 30, 2021.

2. Revenues



Three-month periods
ended September 30

Nine-month periods
ended September 30



2021


2020


2021


2020










Advertising services

$

58,998

$

50,563

$

203,594

$

155,408

Royalties


36,045


34,411


106,123


105,441

Rental, postproduction and distribution services and other services rendered(1)


39,560


17,256


93,453


52,415

Product sales(2)


16,100


17,307


47,763


47,262


$

150,703

$

119,537

$

450,933

$

360,526

(1)

Revenues from rental of soundstages, mobiles, equipment and rental space amounted to $17,510,000 and $34,559,000 during the three-month and nine-month periods ended September 30, 2021 respectively ($5,026,000 and $17,252,000 during the same periods of 2020). 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.

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

3. Purchases of goods and services and employee costs



Three-month periods
ended September 30

Nine-month periods
ended September 30



2021


2020


2021


2020










Purchases of goods and services:









Rights and audiovisual content costs(1)

$

57,512

$

51,379

$

218,125

$

176,757

Printing and distribution


3,990


4,112


11,178


10,774

Services rendered by the parent corporation:









- Commissions on advertising sales


4,867


5,172


18,430


16,080

- Other


1,962


1,876


6,357


6,374

Building costs


3,952


3,949


12,135


11,693

Marketing, advertising and promotion


3,543


4,298


11,742


9,736

Other


5,877


5,381


16,907


18,309



81,703


76,167


294,874


249,723

Employee costs(2)


33,496


20,007


104,454


71,567


$

115,199

$

96,174

$

399,328

$

321,290

(1)

In 2021, the Corporation reviewed the allocation of the value of the rights attached to the various components of its contract for National Hockey League ("NHL") games to better reflect the financial benefits arising from it. There were also a number of changes to the broadcast schedule for NHL games, since the 2019-2020 season was completed in the third quarter of 2020, the start of the 2020-2021 season was postponed to the beginning of 2021, and the 2020-2021 season was shortened. As a result, the timing of recognition in income of NHL content rights was changed.


Consequently, the cost of NHL rights decreased by $11,533,000 for the third quarter of 2021 compared with the same period of 2020, and increased by $13,294,000 for the nine-month period ended September 30, 2021 compared with the same period of 2020.

(2)

For the nine-month period ended September 30, 2021, employee costs are presented net of the $3,185,000 that the Corporation recognized under the CEWS for employees whose work assignments were maintained ($11,072,000 and $25,616,000 for the three‑month and nine-month periods ended September 30, 2020).

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

4. Financial expenses


Three-month periods
ended September 30

Nine-month periods
ended September 30



2021


2020


2021


2020










Interest on debt

$

228

$

145

$

614

$

760

Amortization of financing costs


13


13


39


48

Interest on lease liabilities


144


175


424


457

Interest expense related to defined-benefit plans


189


77


571


239

Foreign exchange (gain) loss


(12)


104


113


128

Other


87


120


294


337


$

649

$

634

$

2,055

$

1,969

5. Operational restructuring costs and other


Three-month periods
ended September 30

Nine-month periods
ended September 30


2021

2020

2021

2020










Operational restructuring costs

$

16

$

903

$

394

$

3,153

Other


4


1,831


(212)


1,685


$

20

$

2,734

$

182

$

4,838

Operational restructuring costs

For the three-month and nine-month periods ended September 30, 2021 and 2020 , the Corporation recorded a net charge (net reversal of the charge) for operational restructuring in connection with the elimination of positions and the implementation of cost reduction measures. The segment breakdown is as follows:



Three-month periods
ended September 30

Nine-month periods
ended September 30


2021

2020

2021

2020










Broadcasting

$

68

$

433

$

729

$

1,872

Film Production & Audiovisual Services



368


7


1,050

Magazines


(52)


102


(342)


231


$

16

$

903

$

394

$

3,153

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

5. Operational restructuring costs and other (continued)

Other

During the first nine months of 2021, the Corporation reversed a $49,000 charge following remeasurement of the contingent consideration payable in connection with the acquisition of the companies in the Incendo group and made a $606,000 payment with respect to this contingent consideration. In the third quarter of 2020, the Corporation recorded a $1,728,000 charge in respect of the same contingent consideration.

In the first nine months of 2021, the Corporation also recorded a $94,000 gain on write-off of lease liabilities. In the same period of 2020, the Corporation recognized a $253,000 gain on disposal of an asset, for proceeds of $310,000.

6. 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, 2021


December 31,2020







4,320,000 Class A common shares

$

72


$

72

38,885,535 Class B shares


207,208



207,208


$

207,280


$

207,280

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

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

(a) Stock option plans


Outstanding options


Number

Weighted average
exercise price





TVA Group




As at December 31, 2020

795,000

$

2.06

Cancelled

(105,497)


2.43

As at September 30, 2021

689,503

$

2.00

Vested options as at September 30, 2021

25,000

$

6.85





Quebecor Media




As at December 31, 2020

7,800

$

70.29

Exercised

(7,800)


70.29

As at September 30, 2021

$





Quebecor




As at December 31, 2020

590,795

$

30.30

Cancelled

(77,343)


29.22

As at September 30, 2021

513,452

$

30.47

Vested options as at September 30, 2021

$






During the three-month period ended September 30, 2021, 1,500 Quebecor Media stock options were exercised for a cash consideration of $71,000 (during the same period of 2020, 5,000 stock options were exercised for a cash consideration of $180,000).

During the nine-month period ended September 30, 2021, 7,800 Quebecor Media stock options were exercised for a cash consideration of $445,000 (during the same period of 2020, 23,800 stock options were exercised for a cash consideration of $1,182,000).

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

7. Stock-based compensation and other stock-based payments (continued)

(b) Deferred stock unit ("DSU") plans

TVA Group has a DSU plan for some management employees based on TVA Group Class B Non-Voting Shares ("TVA Group Class B Shares"). Quebecor also has a DSU plan for its employees and those of its subsidiaries, based on, among other things, Quebecor Class B Shares. Under these plans, the DSUs vest over six years and will be redeemed for cash only upon the participant's retirement or cessation of employment, as the case may be. Under the TVA Group plan, holders of DSUs are entitled to collect dividends on TVA Group Class B Shares in the form of additional units. Under the Quebecor plan, holders of DSUs are entitled to collect dividends on Quebecor Class B Shares in the form of additional units.

The following table shows changes in outstanding DSUs during the nine-month period ended September 30, 2021:


Outstanding units


Corporation stock units

Quebecor stock units






Balance as at December 31, 2020


156,564


25,472

Granted



451

Redeemed


(18,122)


(3,747)

Cancelled


(21,036)


(4,425)

Balance as at September 30, 2021


117,406


17,751

During the nine-month period ended September 30, 2021, 18,122 DSUs were redeemed under the Corporation's plan and 3,747 DSUs were redeemed under the Quebecor plan for cash considerations of $43,000 and $139,000 respectively (nil for the three-month and nine-month periods ended September 30, 2020).

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

7. Stock-based compensation and other stock-based payments (continued)

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


Outstanding units


Corporation stock units



Balance as at December 31, 2020

357,798

Granted

48,544

Redeemed

(36,413)

Balance as at September 30, 2021

369,929

During the three-month and nine-month periods ended September 30, 2021, 545 and 36,413 DSUs of the Corporation were redeemed for cash considerations of $2,000 and $106,000 respectively (nil for the same periods of 2020).

(d) Stock-based compensation expense

During the three-month and nine-month periods ended September 30, 2021, a compensation expense reversal in the amount of $7,000 and a compensation expense of $896,000 respectively were recorded in respect of all stock-based compensation plans (compensation expenses of $688,000 and $574,000 respectively for the same periods of 2020).

8. Pension plans and post-retirement benefits

The gain on remeasurement of defined benefit plans recognized on the consolidated statement of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2021 mainly reflects the increase in the discount rate (the loss recognized for the same periods of 2020 was due primarily to the decrease in the discount rate).

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

9. 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 notably through its Communications Qolab inc. subsidiary (formerly COLAB Studio Marketing Collaboratif inc.);

  • 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 visual effects;

  • The Magazines segment, which through its subsidiaries, notably TVA Publications inc. and Les Publications Charron & Cie inc., 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 produces and distributes television shows, movies and television series for the world market.

Notes to condensed consolidated financial statements (continued)

Three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

9. Segmented information (continued)


Three-month periods
ended September 30

Nine-month periods
ended September 30



2021


2020


2021


2020










Revenues









Broadcasting

$

111,934

$

97,400

$

356,846

$

292,228

Film Production & Audiovisual Services


28,070


11,856


64,036


37,298

Magazines


11,630


12,569


33,645


32,899

Production & Distribution


4,133


1,884


11,755


9,506

Intersegment items


(5,064)


(4,172)


(15,349)


(11,405)



150,703


119,537


450,933


360,526

Adjusted EBITDA(1)









Broadcasting


21,538


16,938


24,698


24,237

Film Production & Audiovisual Services


10,565


2,947


18,106


6,626

Magazines


2,048


2,999


5,569


6,553

Production & Distribution


1,243


427


2,974


1,522

Intersegment items


110


52


258


298



35,504


23,363


51,605


39,236

Depreciation and amortization


8,136


8,124


24,338


25,126

Financial expenses


649


634


2,055


1,969

Operational restructuring costs and other


20


2,734


182


4,838

Income before income taxes and share of loss (income) of associates

$

26,699

$

11,871

$

25,030

$

7,303

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 and share of income of associates. Adjusted EBITDA as defined above is not a measure of results that is consistent with IFRS.

10. Contingencies

Lawsuits were brought by and against the Corporation, and against Quebecor and some of its subsidiaries, in connection with business disputes with a cable operator. At this stage in the proceedings, the management of the Corporation does not expect their outcome to have a material adverse effect on the Corporation's results or on its financial position.

SOURCE TVA Group

Cision
Cision

View original content: http://www.newswire.ca/en/releases/archive/October2021/28/c9420.html

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