Ms. Julie Tremblay reports

TVA GROUP REPORTS $4.4 MILLION NET LOSS ATTRIBUTABLE TO SHAREHOLDERS IN FOURTH QUARTER ENDED DECEMBER 31, 2014

TVA Group Inc. recorded a net loss attributable to shareholders in the amount of $4.4-million, or 19 cents per share, for the fourth quarter of 2014, compared with net income attributable to shareholders of $8.3-million, or 35 cents per share, in the same quarter of 2013.

Fourth quarter operating highlights:

• Consolidated adjusted operating income (see definition below): $6,814,000, a decrease of $13,520,000 (negative 66.5 per cent) compared with the same quarter of 2013;
• Broadcasting and production segment's adjusted operating income: $5,073,000, an unfavourable variance of $13,314,000 (negative 72.4 per cent), due primarily to the following factors:
  • 4.1-per-cent decrease in operating income at TVA Network, largely because of a 3.4-per-cent decrease in advertising revenues;
  • Increase in the operating loss of the TVA Sports service as a result of increase in programming investments and the launch of TVA Sports 2;
• Magazines segment's adjusted operating income: $1,741,000, an unfavourable variance of $206,000 (negative 10.6 per cent), mainly because of an 8.3-per-cent decrease in advertising revenues and a 1.9-per-cent decrease in newsstand revenues;
• On Dec. 30, 2014, the corporation closed the acquisition of substantially all of the assets of Vision Globale AR Ltee. for a total purchase price of $116,139,000 in cash. Vision Globale operates in the film and television industry, offering sound stage and equipment leasing, and postproduction and visual effects services;
• On Nov. 17, 2014, the corporation announced an agreement with Transcontinental Inc. to acquire 15 magazines for a cash consideration of $55.5-million. The transaction is, however, subject to Competition Bureau approval.

"While the broadcasting and production segment's advertising revenues fell short of our expectations in the fourth quarter of 2014, we are very pleased with the audience response to our new sports offering, which yielded a market share of nearly 2.0 per cent for TVA Sports and TVA Sports 2, compared with 0.4 per cent in the same quarter of 2013," commented Julie Tremblay, president and chief executive officer of the corporation. "Naturally, the addition of extensive NHL [National Hockey League] coverage entailed significant investments in sports content, particularly in connection with the launch of TVA Sports 2, in September, 2014, and we are reaping the dividends at every level. For example, our advertisers have responded very positively, and TVA Sports' advertising revenues were up by several million dollars in the last quarter of 2014 compared with the same quarter of 2013. New contracts for carriage of TVA Sports and TVA Sports 2 generated a 62-per-cent overall increase in subscription revenues for our specialty services compared with the same quarter of 2013," also commented Ms. Tremblay.

"The magazines segment put in a strong financial performance. Its operating margin was 11.4 per cent of total revenues. A 3.3-per-cent reduction in the segment's operating expenses enabled it to largely absorb a 4.2-per-cent quarter-over-quarter drop in its operating revenues. We are also very pleased with the agreement with Transcontinental. The transaction will add 15 prestigious titles to our stable, and will position the corporation to offer its advertisers a portfolio of complementary and diverse magazines, expand its on-line assets, and enable it to compete more effectively with major media groups and digital rivals. We are awaiting Competition Bureau approval of the deal," concluded Ms. Tremblay.

Cash flows provided by operating activities totalled $9.5-million for the quarter, compared with $5.1-million in the same quarter of 2013. The $4.4-million increase was essentially due to the favourable variance in non-cash items, particularly accounts payable, rights and accrued liabilities, which was partially offset by the decrease in adjusted operating income.

2014 results

For the fiscal year ended Dec. 31, 2014, the corporation's consolidated adjusted operating income was $29.4-million, compared with $60.6-million in the previous year, a 51.4-per-cent decrease. Adjusted operating income decreased by 62.8 per cent in the broadcasting and production segment, and increased by 28.5 per cent in the magazines segment. The increase in the magazines segment was due in part to the positive impact of the inclusion of the operating results of La Semaine magazine since July 18, 2013, the decrease in operating expenses at the other magazines and the impact of savings generated by the expense reduction plan instituted in the second quarter of 2013. The decrease in the broadcasting and production segment's adjusted operating income was due to the decline at TVA Network, caused by the combined effect of lower advertising revenues, the favourable impact on 2013 operating revenues of recognition of retroactive royalties for retransmission of distant signals, higher content costs and the increased adjusted operating loss of TVA Sports, resulting directly from programming expenditures.

Consolidated operating revenues totalled $439.3-million in fiscal 2014, compared with $444.8-million in the previous year, a 1.2-per-cent decrease. During the same period, the corporation recorded a net loss attributable to shareholders in the amount of $41.1-million, or $1.73 per share, compared with net income attributable to shareholders in the amount of $15.7-million, or 66 cents per share, in 2013.

In the third quarter of 2014, the corporation reviewed its business plan and operating forecasts, particularly in the broadcasting and production segment. The corporation concluded that the recoverable amounts were less than the carrying amounts of its broadcasting licence and goodwill. As a result, non-cash impairment charges of $32,462,000 and $8,538,000, respectively, were recorded with respect to those assets.

Definition

Adjusted operating income (loss)

In its analysis of operating results, the corporation defines adjusted operating income (loss) as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs, impairment of assets and other costs, income taxes, and share of loss (income) of associated corporations. Adjusted operating income (loss) as defined above is not a measure of results that is consistent with international financial reporting standards. It is not intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure 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 business 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 operating income (loss) is also relevant because it is a significant component of the corporation's annual incentive compensation programs. The corporation's definition of adjusted operating income (loss) may not be identical to similarly titled measures reported by other companies.

The audited consolidated financial statements with notes, and the annual management's discussion and analysis can be consulted on the corporation's website.

                    CONSOLIDATED STATEMENTS OF (LOSS) INCOME
              (in thousands of dollars, except per-share amounts)

                                    Three-month periods         Years ended
                                        ended Dec. 31,            Dec. 31,
                                       2014        2013       2014        2013

Revenues                          $ 129,794   $ 120,022  $ 439,340   $ 444,816
Purchases of goods and services      92,063      69,519    283,571     253,485
Employee costs                       30,917      30,169    126,343     130,761
Depreciation of property, plant
and equipment, and amortization
of intangible assets                  5,533       5,474     22,104      21,430
Financial expenses                    1,058       1,476      4,231       6,265
Operational restructuring costs,
impairment of assets and other
costs                                 3,485         991      3,594       4,865
Impairment of a licence and
goodwill                                  -           -     41,000           -
(Loss) income before tax
(recovery) expense and share of
loss of associated corporations      (3,262)     12,393    (41,503)     28,010
Tax (recovery) expense               (2,058)      2,564     (8,753)      6,110
Share of loss of associated
corporations                          3,214       1,501      8,338       6,154
Net (loss) income attributable
to shareholders                   $  (4,418)  $   8,328  $ (41,088)  $  15,746
Basic and diluted earnings per
share attributable to
shareholders                      $   (0.19)  $    0.35  $   (1.73)  $    0.66

In 2014, management changed the names of the corporation's business segments to better reflect operational realities. The television segment is now called broadcasting and production, and the publishing segment is now called magazines.

Management also made changes to the corporation's management structure at the beginning of 2014. As a result of those changes, the custom publishing, commercial print production and premedia services previously provided by the TVA Studio division in the magazines segment became part of the operations of TVA Acces Inc. in the broadcasting and production segment. Prior-period disclosures have been restated to reflect this new presentation.

We seek Safe Harbor.