"I am pleased to be back at the helm of Quebecor, a corporation in excellent financial health that has experienced steady growth in recent years," said Pierre�Karl P�ladeau, President and Chief Executive Officer of Quebecor. "I plan to continue the work of my predecessor, Pierre Dion, with the support of the solid management team, in order to pursue the development of the Corporation and its businesses. We will press ahead with our business strategy, relying on the same growth drivers that have propelled the Corporation's success thus far.
"In 2016, Quebecor grew its revenues by 3.2% and its adjusted operating income by 3.7%," Pierre�Karl P�ladeau noted. "Once again, the Telecommunications segment was responsible for the increases. The enthusiastic customer response to Videotron's offerings continues. The subscriber base for Videotron's mobile service passed the 900,000 mark at the beginning of�2017, solidifying Videotron's positioning as a mobile telephony leader in Qu�bec. The 27.3% increase in adjusted income from continuing operating activities of Quebecor in�2016, which fully reflects the growth in the Corporation's operating results and the positive impact of the financial transactions carried out over the past two years, was also noteworthy. Quebecor also posted excellent fourth quarter 2016�results, with a 7.9% increase in adjusted operating income generated by improved profitability in each of its segments, and a 46.0% increase in adjusted income from continuing operating activities."
"We are satisfied with the results Videotron recorded in 2016 and confident that the opportunities created by long-term trends in the wireless industry will support continuing sustained growth in our mobile telephony services," said Manon Brouillette, President and Chief Executive Officer of Videotron. "We will maintain a disciplined approach to balancing the pursuit of subscriber growth with control over customer acquisition costs in order to maximize the profitability of the mobile service. Mobile telephony contributed strongly to the 117,900�increase in Videotron's revenue-generating units in 2016 and the $9.18 (6.8%) increase in ARPU. The mobile service's ARPU rose�$3.31 (6.9%) from $47.92 in 2015 to $51.23 in 2016.
"At the same time, the development of our Internet access services and our business services also made a positive contribution to the robust numbers," added Manon Brouillette. "Our Fibre�Hybrid�120 and Fibre�Hybrid�200 Internet service marketing strategy has been a resounding success; Videotron is the only telecommunications provider to offer services of such speed and power on such a large portion of Qu�bec's territory. In July�2016, Videotron also launched Fibre Hybrid Giga Internet access service and in November�2016 it started rolling out Docsis�3.1 technology, which will eventually support download speeds of up to 10�Gbps. All these initiatives strengthen Videotron's lead in high-speed Internet access for residential and business customers. In the Business Solutions segment, following the acquisition of Fibrenoire�inc. in January�2016, we stepped up investment in our data centres and in September�2016 we opened a new Montr�al data centre which boasts one of the largest server rooms in Qu�bec. I should also mention that 4Degrees Colocation data centres have obtained ISO�27001 certification, one of the most respected international standards."
According to a survey conducted by the independent research firm Forrester released in late 2016, Videotron provides the best customer experience of all cable TV, Internet and wireless service providers in Canada. Videotron's mobile service earned the ultimate accolade: best customer experience overall among the 193 Canadian brands ranked on Forrester's Customer Experience Index in�2016. "We have always been guided by our desire to push the customer experience envelope and we are very proud of these distinctions, which we owe to the unflagging commitment of our 6,500 employees," said Manon Brouillette.
"The Media segment increased its adjusted operating income by $2.4�million (10.8%) in the fourth quarter of�2016; adjusted operating income from broadcasting operations was up $4.7�million (37.0%)," Julie Tremblay, President and Chief Executive Officer of Media Group, commented. "The performance was due to the impact of higher advertising revenues at TVA�Network and the TVA�Sports channel, higher subscription revenues at the specialty channels, and cost reductions related to restructuring initiatives.
"The disruption affecting the media industry in Qu�bec, as in the rest of the world, has led us to take transformative initiatives in order to adapt to the changes. To address the constantly shifting environment, the Media segment announced organizational changes on November�2,�2016 to balance its costs and enhance operational efficiencies. The workforce was reduced by 220 positions, mainly managers, professionals and administrative support staff, to enable the Media segment to maintain its lead in news and content production and promote its flagship brands.
"On the business development front, we are very proud of the agreement making TVA Sports the exclusive French-language broadcaster of the Montr�al Impact and an official broadcaster of the MLS for the next five years. This partnership will make it possible to enrich TVA�Sports' programming with new content and disseminate it on all of Quebecor's media platforms. Also in�2016, the Media segment launched its new TVA.ca website and TVA mobile app as part of TVA Group's strategy to enlarge its footprint in new media and in Internet broadcasting channels in order to reach its target audiences more effectively," Julie Tremblay concluded.
In the Sports and Entertainment segment, the Videotron Centre completed its first full year of operation in September�2016. The venue offered guests an extensive and varied schedule of concerts and sporting events, which it is constantly enriching and expanding. Meanwhile, in April�2016, Gestev became the official imprint for all shows and events produced and/or presented by Quebecor, enhancing the total package offered by the Corporation.
"Quebecor thus posted strong consolidated financial results in 2016 while implementing its business plan focused on high-growth activities," commented Pierre Karl P�ladeau. The Corporation remains well positioned to achieve its profitability and shareholder value-maximization objectives.
"In conclusion, I would like to express my gratitude and appreciation to Pierre Dion for his exemplary leadership and inspired work. He has occupied senior management positions with Quebecor and its subsidiaries since 2004. He has been one of the Corporation's most loyal officers and he will continue playing an active, strategic role in its affairs in his new role."
2016/2015 FINANCIAL YEAR COMPARISON�
Revenues: $4.02�billion, a $125.8�million (3.2%) increase.
Adjusted operating income: $1.49�billion, a $53.4�million (3.7%) increase.
Net income attributable to shareholders: $194.7�million ($1.59 per basic share) in 2016, compared with $151.8�million ($1.24�per basic share) in�2015, an increase of $42.9�million ($0.35 per basic share).
In 2016, Quebecor Media performed impairment tests on its Magazines cash-generating unit ("CGU") in view of the downtrend in the industry's advertising revenues. Quebecor Media concluded that the recoverable amount of its Magazines�CGU was less than its carrying amount. Accordingly, a $40.1�million non-cash goodwill impairment charge (without any tax consequences) was recorded in�2016. As well, a charge for impairment of intangible assets totalling $0.8�million was recorded in the Media segment in�2016.
Adjusted income from continuing operating activities: $305.5�million ($2.49 per basic share) in�2016, compared with $239.9�million ($1.95�per basic share) in 2015, an increase of $65.6�million ($0.54 per basic share).
2016/2015 FOURTH QUARTER COMPARISON�
Revenues: $1.05�billion, a $26.9�million (2.6%) increase.
Adjusted operating income: $389.3�million, a $28.5�million (7.9%) increase.
Net income attributable to shareholders: $123.3�million ($1.01 per basic share) in the fourth quarter of 2016, compared with a net loss attributable to shareholders of $34.8�million ($0.28 per basic share) in the same period of 2015, a favourable variance of�$158.1�million ($1.29�per basic share).
Adjusted income from continuing operating activities: $84.7�million ($0.69 per basic share) in the fourth quarter of�2016, compared with $58.0�million ($0.47�per basic share) in the same period of 2015, an increase of $26.7�million ($0.22�per basic share) or�46.0%.
On March 14, 2017, the Board of Directors of Quebecor declared a quarterly dividend of $0.045 per share on its Class�A Shares and Class�B Shares, payable on April 25, 2017 to shareholders of record at the close of business on March�31,�2017. This dividend is designated an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.
Normal course issuer bid
On August 3, 2016, the Board of Directors of Quebecor authorized the renewal of its normal course issuer bid for a maximum of 500,000�Class�A Shares, representing approximately 1.3% of issued and outstanding Class�A Shares, and for a maximum of 2,000,000�Class�B Shares, representing approximately 2.4% of issued and outstanding Class B Shares as of August�3,�2016. The purchases can be made from August 15, 2016 to August 14, 2017 at prevailing market prices on the open market through the facilities of the Toronto Stock Exchange or other alternative trading systems. All shares purchased under the bid will be cancelled.
In 2016, the Corporation purchased and cancelled 609,300 Class B Shares for a total cash consideration of $22.7�million (413,300�Class�B Shares for a total cash consideration of $12.4�million in 2015). The $20.4�million excess of the purchase price over the carrying value of the repurchased Class B Shares was recorded in reduction of retained earnings ($10.8�million�in�2015).
Detailed financial information
For a detailed analysis of Quebecor's fourth quarter and full year 2016 results, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor, available on the Corporation's website at http://www.quebecor.com/en/quarterly_doc_quebecor_inc or from the SEDAR filing service at www.sedar.com.
Conference call for investors and webcast
Quebecor will hold a conference call to discuss Quebecor's fourth quarter and full year 2016 results on March�15,�2017, at 11:00�a.m.�EDT. There will be a question period reserved for financial analysts. To access the conference call, please dial 1�877�293-8052, access code for participants 48006#. A tape recording of the call will be available from March�15 to June�15,�2017 by dialling 1�877�293-8133, conference number 1212694#, access code for participants 48006#. The conference call will also be broadcast live on Quebecor's website at www.quebecor.com/en/content/conference-call. It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above.
Cautionary statement regarding forward-looking statements
The statements in this press release that are not historical facts are forward-looking statements and are subject to significant known and unknown risks, uncertainties and assumptions that 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 may be identified by the use of the conditional or by forward-looking terminology such as the terms "plans," "expects," "may," "anticipates," "intends," "estimates," "projects," "seeks," "believes," or similar terms, variations of such terms or the negative of such terms. Certain factors that may cause actual results to differ from current expectations include seasonality (including seasonal fluctuations in customer orders), operating risk (including fluctuations in demand for Quebecor's products and pricing actions by competitors), new competition and Quebecor's ability to retain its current customers and attract new ones, risks related to fragmentation of the advertising market, insurance risk, risks associated with capital investments (including risks related to technological development and equipment availability and breakdown), environmental risks, risks associated with cybersecurity and the protection of personal information, risks associated with labour agreements, credit risk, financial risks, debt risks, risks related to interest rate fluctuations, foreign exchange risks, risks associated with government acts and regulations, risks related to changes in tax legislation, and changes in the general political and economic environment. 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 Quebecor's actual results to differ from current expectations, please refer to Quebecor's public filings, available at www.sedar.com and www.quebecor.com, including, in particular, the "Risks and Uncertainties" section of Quebecor's Management Discussion and Analysis for the year ended December�31,�2016.
The forward-looking statements in this press release reflect Quebecor's expectations as of March�15,�2017 and are subject to change after that date. Quebecor 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, except as required by applicable securities laws.
Quebecor, a Canadian leader in telecommunications, entertainment, news media and culture, is one of the best-performing integrated communications companies in the industry. Driven by their determination to deliver the best possible customer experience, all of Quebecor's subsidiaries and brands are differentiated by their high-quality, multiplatform, convergent products and services.
Quebecor (TSX: QBR.A, QBR.B) is headquartered in Qu�bec. It holds an 81.07% interest in Quebecor Media, which employs more than 10,000�people in Canada.�
A family business founded in 1950, Quebecor is strongly committed to the community. Every year, it actively supports people working with more than 400�organizations in the vital fields of culture, health, education, the environment, and entrepreneurship.�
Visit our website: www.quebecor.com
Follow us on Twitter: www.twitter.com/Quebecor
Adjusted operating income�
In its analysis of operating results, the Corporation defines adjusted operating income, as reconciled to net income (loss) under International Financial Reporting Standards ("IFRS"), as net income (loss) before depreciation and amortization, financial expenses, (loss) gain on valuation and translation of financial instruments, charge for restructuring of operations, litigation and other items, charge for impairment of goodwill and other assets, loss on debt refinancing, income taxes, and loss from discontinued operations. Adjusted operating income 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. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses adjusted operating income in order to assess the performance of its investment in Quebecor Media. The Corporation's management and Board of Directors use this measure in evaluating its consolidated results as well as the results of the Corporation's operating segments. This measure eliminates the significant level of impairment and depreciation/amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its business segments.
Adjusted operating income is also relevant because it is a significant component of the Corporation's annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of tangible and intangible assets used in generating revenues in the Corporation's segments. The Corporation also uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities of the Quebecor Media subsidiary. The Corporation's definition of adjusted operating income may not be the same as similarly titled measures reported by other companies.
Table 4 below provides a reconciliation of adjusted operating income to net income (loss) as disclosed in Quebecor's consolidated financial statements. The consolidated financial information for the three-month periods ended December�31,�2016 and�2015 presented in Table�4 below is drawn from the unaudited consolidated statements of income.
Adjusted income from continuing operating activities
The Corporation defines adjusted income from continuing operating activities, as reconciled to net income (loss) attributable to shareholders under IFRS, as net income (loss) attributable to shareholders before (loss) gain on valuation and translation of financial instruments, charge for restructuring of operations, litigation and other items, charge for impairment of goodwill and other assets, loss on debt refinancing, net of income tax related to adjustments and of net income attributable to non-controlling interest related to adjustments, and before the loss from discontinued operations attributable to shareholders. Adjusted income from continuing operating activities, as defined above, is not a measure of results that is consistent with IFRS. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses adjusted income from continuing operating activities to analyze trends in the performance of its businesses. The above-listed items are excluded from the calculation of this measure because they impair the comparability of the financial results. Adjusted income from continuing operating activities is more representative for forecasting income. The Corporation's definition of adjusted income from continuing operating activities may not be identical to similarly titled measures reported by other companies.�
Table 5 provides a reconciliation of adjusted income from continuing operating activities to the net income (loss) attributable to shareholders measure used in Quebecor's consolidated financial statements. The consolidated financial information for the three-month periods ended December�31,�2016 and 2015 presented in Table 5 below is drawn from the unaudited consolidated statements of income.
Includes impact of fluctuations in income tax applicable to adjusted items, either for statutory reasons or in connection with tax transactions.
KEY PERFORMANCE INDICATOR�
The Corporation uses ARPU, an industry metric, as a key performance indicator. This indicator is used to measure monthly revenues per average basic customer from its cable television, Internet access, cable and mobile telephony services and Club illico. ARPU is not a measurement that is consistent with IFRS and the Corporation's definition and calculation of ARPU may not be the same as identically titled measurements reported by other companies. The Corporation calculates ARPU by dividing the combined revenues from its cable television, Internet access, cable and mobile telephony services and Club illico by the average number of basic customers during the applicable period, and then dividing the resulting amount by the number of months in the applicable period.