PR Newswire
MONTRÉAL, May 8, 2018
MONTRÉAL, May 8, 2018 /PRNewswire/ - Quebecor Inc. ("Quebecor" or "the Corporation") today reported its consolidated financial results for the first quarter of 2018 and announced a 100% increase in its quarterly dividend, in accordance with the policy established by the Board of Directors. Quebecor consolidates the financial results of its Quebecor Media Inc. ("Quebecor Media") subsidiary, in which it holds an 81.53% interest.
As described under "Changes in Accounting Policies" below, on January 1, 2018 the Corporation adopted on a fully retroactive basis the new rules in IFRS 15, Revenue from Contracts with Customers.1 Accordingly, comparative data have been restated to reflect the impact of the new rules. The Corporation has also reviewed the nature and definition of its key performance indicators. As a result, average monthly revenue per user ("ARPU") has been abandoned and replaced by average billing per unit ("ABPU"), which is defined under "Key Performance Indicators" below. The definition of revenue-generating unit ("RGU") has also been added in the same section.
Highlights
First quarter 2018
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1 | In accordance with International Financial Reporting Standards ("IFRS"). |
2 | See "Adjusted operating income" under "Definitions." |
3 | See "Adjusted income from continuing operating activities" under "Definitions." |
4 | See "Key performance indicators" under "Definitions." |
"The Telecommunications segment was the main profitability driver for Quebecor in the first quarter of 2018," commented Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. "It made a strong contribution to the healthy increases in the Corporation's adjusted operating income and adjusted income from continuing operating activities. Once again, Videotron's numbers were boosted by its high-growth products and services, including mobile telephony and Internet access. To maintain its lead over the competition, the Corporation continued making investments, including spending on its Internet Protocol television project, based on the XFINITY X1 platform developed by our partner, Comcast Corporation. This forward-looking project will eventually provide our customers with the best television anywhere and equip Quebecor Media with a powerful convergence tool to support enhancement of its content."
"During the 12-month period ended March 31, 2018, the number of subscriber connections to Videotron's mobile telephony service increased by 126,400 or 13.7%," noted Manon Brouillette, President and Chief Executive Officer of Videotron. "During the same period, Videotron added 46,500 subscribers (2.9%) to its cable Internet access service. We remain the only telecommunications provider to offer services of such speed and power across so large a portion of Québec's territory, thanks to our hybrid fibre network."
The Club illico service also posted significant gains. The 58,900 (18.2%) subscriber increase in the last 12 months attests to the positive consumer response to Club illico's diverse, high-quality offerings. "Club illico and Quebecor Content renewed their commitment to original Québec film production with the development and production of at least three feature films. Our ultimate objective is to quickly bring this new content to all of the group's platforms, including premieres on Club illico," added Manon Brouillette.
"Videotron was recently ranked the most respected telecommunications provider in Québec for the 13th consecutive year by the 2018 Léger – NATIONAL Reputation survey and scored as Québec's most influential telecommunications brand on the 2018 Ipsos-Infopresse index," Manon Brouillette concluded.
"In the Media segment, the specialty channels, including TVA Sports, film production and audiovisual services and magazines were responsible for the $2.9 million favourable variance in TVA Group's adjusted operating income in the first quarter of 2018," said France Lauzière, President and Chief Executive Officer of TVA Group. "In another move to address the interests of Québec viewers with diverse, high-quality programming, TVA Sports will be the official Québec French-language broadcaster of the Euro 2020 soccer tournament."
At the beginning of May 2018, TVA Group announced an agreement to acquire the companies in the Serdy Média and Serdy Video group in order to add the Évasion and Zeste specialty channels to its stable. The acquisition is consistent with TVA Group's content diversification strategy. "We are confident that incorporating these two respected brands into our group should enable them to reach more consumers across all platforms and give them additional resources to drive their growth," said France Lauzière.
"The Film Production and Audiovisual Services segment's quarterly financial results showed year-over-year improvement for the fourth consecutive quarter. With the acquisition of the assets of Mobilimage inc. in January 2018, we have added mobile units and production equipment to our rental services, as well as related technical expertise. It is also noteworthy that Mels Studios and Postproduction G.P. ("MELS") won two prestigious Canadian Screen Awards in March 2018, Achievement in Visual Effects and Achievement in Overall Sound, testimony to the creative spirit of MELS' employees and associates, and the respect they have earned in the film industry."
In the Sports and Entertainment segment, the Québec Remparts hockey team of the Québec Major Junior Hockey League announced on April 26, 2018 the appointment of Patrick Roy as general manager and coach. "Patrick Roy is a major figure in the history of the National Hockey League and the Québec Remparts and we are very enthusiastic about his return," said Martin Tremblay, Chief Operating Officer of Quebecor Sports and Entertainment Group. "Having him at the helm will help the team maintain its winning tradition."
"On the financial front, Quebecor purchased 4,125,800 Class B Shares for a total cash consideration of $98.7 million in the first quarter of 2018," said Jean François Pruneau, Senior Vice President and Chief Financial Officer of Quebecor. "The Corporation also redeemed convertible debentures in the principal amount of $37.5 million for a cash consideration of $71.9 million on April 4, 2018. Repurchases of equity in the form of shares and debentures convertible into shares have therefore totalled more than $170.0 million at fair value since the beginning of 2018, in addition to repurchases totalling more than $260.0 million at fair value in 2017. All these repurchases were made while maintaining the Corporation's financial flexibility. As well, in view of the Corporation's current and prospective financial profile, the Board of Directors of Quebecor has examined the dividend policy and has set a dividend target of 30% to 50% of the Corporation's annual free cash flows, to be achieved gradually by the end of a four-year period. Accordingly, the Board has approved a 100% increase in the quarterly dividend for 2018."
"In the first quarter of 2018, Quebecor again posted solid consolidated financial results thanks to the impact of its investing strategies," Pierre Karl Péladeau concluded. "The Corporation remains strongly positioned to create shareholder value."
Table 1 | |||||||||||
Quebecor first quarter financial highlights, 2014 to 2018 | |||||||||||
(in millions of Canadian dollars, except per share data) | |||||||||||
| | 2018 | | 2017 | | 2016 | | 2015 | | 2014 | |
| | | | | | | | | | | |
Revenues | $ | 1,006.7 | $ | 1,001.5 | $ | 980.3 | $ | 926.3 | $ | 876.3 | |
Adjusted operating income | | 407.4 | | 371.9 | | 359.2 | | 339.4 | | 336.7 | |
Income from continuing operating activities attributable to shareholders | | 56.7 | | 3.9 | | 72.6 | | 31.6 | | 39.5 | |
Net income attributable to shareholders | | 56.7 | | 3.9 | | 72.6 | | 29.5 | | 40.0 | |
Adjusted income from continuing operating activities | | 89.6 | | 74.9 | | 70.4 | | 41.5 | | 46.0 | |
Per basic share: | | | | | | | | | | | |
| Income from continuing operating activities attributable to shareholders | | 0.24 | | 0.02 | | 0.30 | | 0.13 | | 0.16 |
| Net income attributable to shareholders | | 0.24 | | 0.02 | | 0.30 | | 0.12 | | 0.16 |
| Adjusted income from continuing operating activities | | 0.38 | | 0.31 | | 0.29 | | 0.17 | | 0.19 |
Changes in Accounting Policies
On January 1, 2018, the Corporation adopted on a fully retroactive basis the new rules under IFRS 15, Revenue from Contracts with Customers, which specify how and when an entity should recognize revenue. The adoption of IFRS 15 had significant impacts on the consolidated financial statements, mainly in the Telecommunications segment, with regards to the timing of the recognition of its revenues, the classification of its revenues, as well as the capitalization of costs. Among other impacts, the adoption of IFRS 15 resulted in an increase in the revenue from device sales and in a decrease in the mobile service revenue recognized over the contract term. As well, costs to obtain a contract and connection costs are now fully amortized as operating expenses over the contract term or over the period of time the customer is expected to maintain its services. A description of the new rules and details of the retroactive adjustments to comparative data are provided in note 2 to Quebecor's condensed consolidated financial statements for the first quarter of 2018 and under "Changes in Accounting Policies" in Quebecor's Management Discussion and Analysis for the same period. As well, to clarify the impact of IFRS 15 on non-IFRS measures, columns presenting the data without application of IFRS 15 have been added to the tables showing the calculation and reconciliation of non-IFRS measures, as presented under "Definitions" below.
Tables 2 and 3 below present segmented revenues and adjusted operating income for the last eight quarters, restated to reflect retroactive application of the new IFRS 15 standard.
Table 2 | ||||||||||||||||
Quebecor's segmented revenues for the past eight quarters | ||||||||||||||||
(in millions of Canadian dollars) | ||||||||||||||||
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