Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its fourth quarter and full year 2014 consolidated financial results. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds a 75.4% interest.
2014 financial year
- Revenues up $68.6 million (1.9%) from 2013 to $3.72 billion.
- Adjusted operating income up $28.8 million (2.1%) to $1.40 billion.
- Net loss attributable to shareholders: $30.1 million ($0.24 per basic share) in 2014, compared with $288.6 million ($2.33 per basic share) in 2013, a favourable variance of $258.5 million ($2.09 per basic share), due in large part to the total $242.8 million favourable non‑cash impact of fluctuations in the value of goodwill, intangible assets and derivative financial instruments.
- Adjusted income from continuing operations: $202.3 million ($1.64 per basic share) in 2014 compared with $177.3 million ($1.43 per basic share) in 2013, an increase of $25.0 million or 14.1% ($0.21 per basic share).
- The Telecommunications segment grew its revenues by $104.5 million (3.7%) and its adjusted operating income by $60.7 million (4.7%) in 2014. Mobile telephony revenues were up $67.0 million (30.4%) and Internet access revenues $49.9 million (6.1%).
- The number of subscriber connections to the mobile network increased by 128,500, the strongest annual growth since 2011, and the mobile service’s average monthly revenue per user (“ARPU”) increased by $2.20.
- On March 11, 2015, Videotron Ltd. (“Videotron”) announced the acquisition of 4Degrees Colocation and its data centre, the largest in Québec City, for a cash consideration of $31.5 million, which may increase to $35.5 million if certain criteria are satisfied. The acquisition will enable Videotron to meet its business customers’ growing technological and hosting needs.
- On March 6, 2015, the Québec Court of Appeal ruled in favour of Videotron and TVA Group, and ordered Bell ExpressVu Limited Partnership, a subsidiary of Bell, to pay compensation totalling $137.0 million for having deliberately neglected to implement an appropriate security system to prevent piracy of the signals broadcast by its satellite television service between 1999 and 2005.
- On March 6, 2015, Quebecor Media announced that its Videotron subsidiary was the successful bidder for four 30 MHz licences in Industry Canada’s auction for AWS‑3 commercial mobile spectrum. Videotron obtained the licences for Eastern Québec, Southern Québec, Northern Québec and Eastern Ontario / Outaouais, covering 100% of Québec’s population and the Ottawa area, for a total price of $31.8 million.
- In December 2014, TVA Group Inc. (“TVA Group”) closed the acquisition of substantially all of the assets of A.R. Global Vision Ltd. (“Global Vision”), a provider of film‑ and television‑related services, and in November 2014 it reached an agreement with Transcontinental Inc. (“Transcontinental”) to acquire 15 magazines. The transaction was authorized by the Competition Bureau on March 2, 2015.
- On October 6, 2014, Quebecor Media announced the sale of its English-language newspaper businesses in Canada for a cash consideration of $316.0 million. The transaction is subject to Competition Bureau authorization.
- On September 10, 2014, Videotron launched its LTE mobile network (“LTE network”), which reaches nearly 90% of Québec’s population and supports speeds of up to 150 mbps.
- On September 2, 2014, Quebecor Media closed the sale of its Nurun Inc. (“Nurun”) subsidiary to the French company Publicis Groupe for a cash consideration of $125.0 million, less disposed‑of cash in the amount of $18.1 million.
- On July 1, 2014, TVA Sports became the official French-language broadcaster of the National Hockey League (“NHL”) for the next 12 years.
- Since the end of 2013, Quebecor has announced a number of major management changes at the Corporation and its subsidiaries.
- On April 28, 2014, Pierre Dion was appointed President and Chief Executive Officer of Quebecor and Quebecor Media. On May 7, 2014, Manon Brouillette was named President and Chief Executive Officer of Videotron.
- On June 19, 2014, at Quebecor’s Annual Meeting of Shareholders, the Right Honourable Brian Mulroney was named Chairman of the Board of Quebecor and Quebecor Media. On March 10, 2014, Sylvie Lalande was appointed Chairperson of the Board of TVA Group.
- On July 30, 2014, Benoît Robert was appointed President and Chief Executive Officer of Sports and Entertainment Group.
- On July 31, 2014, Julie Tremblay was appointed President and Chief Executive Officer of the newly created Media Group and President and Chief Executive Officer of TVA Group.
Fourth quarter 2014
- Revenues up $28.1 million (2.9%) to $989.4 million.
- Adjusted operating income down $3.3 million (-0.9%) to $353.1 million.
- Net loss attributable to shareholders: $59.5 million ($0.48 per basic share) in the fourth quarter of 2014, compared with net income attributable to shareholders in the amount of $0.3 million in the same period of 2013, an unfavourable variance of $59.8 million ($0.48 per basic share), due in part to the total $34.5 million unfavourable non‑cash impact of fluctuations in the value of goodwill, intangible assets and derivative financial instruments.
- Adjusted income from continuing operations: $50.3 million in the fourth quarter of 2014 ($0.41 per basic share), compared with $48.6 million ($0.39 per basic share) in the same period of 2013, an increase of $1.7 million ($0.02 per basic share).
- The Telecommunications segment’s adjusted operating income was up $19.9 million (6.1%) in the fourth quarter of 2014. The number of subscriber connections to the mobile network increased by 42,400, the strongest quarterly growth since 2011, and the mobile service’s ARPU was up $5.05 from $40.43 in the fourth quarter of 2013 to $45.48 in the same period of 2014.
Quebecor continued its growth in 2014 with a $28.8 million increase in adjusted operating income and a 14.1% increase in adjusted income from continuing operations,” noted Pierre Dion, President and CEO of Quebecor. “The results reflect the excellent performance of our Telecommunications segment, combined with the positive impact of the various refinancing transactions completed at advantageous interest rates in 2013 and 2014.
“In keeping with its mission, Quebecor refocused its activities on its main growth businesses in 2014. The business acquisitions and disposals announced and completed by the Corporation are also consistent with the trend toward consolidation in the media industry, which is necessary in order to maintain the sustainability and competitiveness of traditional media. Quebecor’s strategy also hinges on diversifying revenue streams by developing related activities.
“2014 was therefore a landmark year in Quebecor’s history. We announced the sale of our English‑language newspaper businesses, closed the sale of our Québec weeklies business and withdrew from door-to-door distribution in Québec. We disposed of our interactive technologies and communications activities by selling our Nurun subsidiary. We also created a new Media segment that includes our broadcasting activities and our newspaper, magazine and book publishing businesses. Finally, to improve the positioning of the businesses in this new segment, TVA Group acquired substantially all of the assets of Global Vision, a company engaged in the film and television industry, and announced the acquisition of 15 magazines to round out our product catalogue. I am confident that these transactions will enhance Quebecor’s competitive posture and yield positive results going forward,” Pierre Dion added.
“The Telecommunications segment continued to focus on growth in 2014, increasing its revenues and adjusted operating income by 3.7% and 4.7% respectively,” commented Manon Brouillette, President and CEO of Videotron. “Videotron’s strong results were driven by the performance of our mobile telephony and Internet access services. ARPU generated by all of Videotron’s services totalled $125.16 in 2014, a $7.13 (6.0%) increase powered by strong growth in the mobile telephony service, which increased its ARPU by $5.05 (12.5%) in the fourth quarter of 2014. The gains reflect the success of our optimal selection of mobile devices, combined with the immense capacity of our new LTE network, one of the most advanced in the industry. Consumer response to our offering has been very positive: we added 128,500 subscriber connections in 2014, the largest annual increase since 2011.
“In 2014, we launched our LTE network, which covers nearly 90% of Québec’s population at speeds of up to 150 mbps. We continued innovating by releasing the illico X8 set-top box, which can record eight HD programs simultaneously and has a 2 TB storage capacity. Videotron maintained its leading-edge capabilities in innovation and product development, launching new apps for the iPhone (4, 5C, 5S and 6) and iPad, as well as a new generation of Wi-Fi routers that support the latest wireless technology.
“The acquisition of the 30 MHz spectrum in March 2015 for $31.8 million will help ensure the sustainability of our mobile services in Québec and the Ottawa area. AWS‑3 spectrum, particularly the 30 MHz band which supports LTE technology, enables latest‑generation mobile devices, such as smartphones and tablets, to operate at optimal speed and reliability.
“Meanwhile, our Club illico subscription video-on-demand service registered a 120,000-customer increase in 2014 compared with the end of 2013, bringing its subscriber base to 178,000 as of December 31, 2014. The high-growth-potential service offers the largest selection of unlimited, on-demand French-language titles in Canada.
“Finally, with the acquisition of 4Degrees Colocation and its Québec City data centre on March 11, 2015, Videotron is joining forces with a booming business with the capacity to provide hosting services that meet the highest industry standards. This investment will also enable our teams to more effectively support business customers seeking integrated business solutions that meet the most stringent requirements,” said Manon Brouillette.
“On July 1, 2014, TVA Sports became the NHL’s official French-language broadcaster for the next 12 years,” noted Julie Tremblay, President and CEO of Media Group. “Since the addition of NHL games to its schedule, TVA Sports has significantly increased its subscriber base. It now stands at 2.0 million, of whom 390,000 were recruited in 2014, an annual increase of 24.8%. The specialty channel has become a new destination for businesses that want to reach sports fans and is attracting larger numbers of prestigious advertisers.
Quebecor Media was also busy in its new Sports and Entertainment segment in 2014. On November 27, 2014, Quebecor Media acquired the Remparts de Québec, a hockey team in the Quebec Major Junior Hockey League. Starting in the fall of 2015, the Remparts will play in the new Québec City Arena, to which Quebecor Media obtained management rights for 25 years in 2011. On February 3, 2015, Quebecor Media announced a strategic partnership with Live Nation Entertainment, the global market leader in concert production.
“On the financial front, Videotron and Quebecor Media carried out a number of opportunistic financing transactions in 2014 which will generate annual savings of approximately $20 million in interest on the debt,” reported Jean‑François Pruneau, Senior Vice President and CFO of Quebecor. “Together, the various debt refinancing operations completed over the past three years will yield annual interest savings totalling more than $50 million, while optimizing available liquidity and the debt maturity profile.”
“Quebecor’s pursuit of its business plan in its growth sectors delivered solid consolidated financial results in 2014,” said Pierre Dion. “The Corporation also completed a number of strategic business sales and acquisitions during the year. There is no question that it is now very well positioned to achieve its business development objectives and its earnings growth targets in 2015 and beyond.”
For more details and to consult definitions of "adjusted operating income" and "adjusted income from continuing operations", please refer to the attached PDF file for the complete version of the press release.
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Vice President, Public Affairs
Quebecor Media Inc.