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Corus Entertainment Inc Cl.B NV TSX: CJR-B-T

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Corus Entertainment Announces Fiscal 2019 Second Quarter Results

PR Newswire - Fri Apr 5, 5:00AM CDT

-- Consolidated revenues increased 4% for the quarter and 3% year-to-date, driven by an 11% increase in Television advertising revenues for the quarter and 7% year-to-date

-- Consolidated segment profit(1) was flat for the quarter and up 5% for the year-to-date

-- Consolidated segment profit margin(1) of 29% for the quarter and 36% for the year-to-date

-- Net income attributable to shareholders of $6.3(2) million ($0.03 per share basic) for the quarter and $66.8(2) million ($0.31 per share basic) for the year-to-date

-- Free cash flow(1) of $83.9 million for the quarter and $126.3 million for the year-to-date

Corus Entertainment Inc. (TSX:CJR-B.TO) announced its second quarter financial results today.

"Corus delivered another strong quarter, with double-digit Television advertising revenue growth exceeding our expectations," said Doug Murphy, President and Chief Executive Officer. "The benefits of our ongoing progress in advanced advertising and data initiatives, our client centric approach and robust advertising demand are reflected in these positive results, partially offset by softness in our Radio segment and timing-related variability in our content business. Notably, the strength of our free cash flow in the quarter is accelerating our progress towards our leverage targets and supporting the advancement of our strategic priorities as we continue to build for the future."

Financial Highlights

Three months ended  Six months ended
                                                             February 28,        February 28,
(in thousands of Canadian dollars except per share amounts)  2019      2018      2019     2018
Revenues
Television                                                   353,466   336,222   779,656  751,686
Radio                                                        30,649    33,243    71,930   75,167
                                                             384,115   369,465   851,586  826,853
Segment profit (1)
Television                                                   113,709   103,646   298,262  272,248
Radio                                                        4,955     6,883     17,967   20,404
Corporate                                                    (5,516)   2,230     (11,443) (2,006)
                                                             113,148   112,759   304,786  290,646
Net income attributable to shareholders (2)                  6,344     40,042    66,759   117,715
Adjusted net income attributable to shareholders (1) (2) (3) 15,733    41,880    85,844   120,765
Basic earnings per share (2)                                 $0.03     $0.19     $0.31    $0.57
Adjusted basic earnings per share (1) (2) (3)                $0.07     $0.20     $0.40    $0.58
Diluted earnings per share (2)                               $0.03     $0.19     $0.31    $0.57
Free cash flow (1)                                           83,909    82,073    126,315  165,288
(1) Segment profit, segment profit margin, adjusted net income attributable to shareholders, adjusted basic earnings per share, and free cash flow do not have standardized meanings prescribed by IFRS. The Company believes these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations and reconciliations see discussion under the Key Performance Indicators section of the Second Quarter 2019 Report to Shareholders.
(2) Net income attributable to shareholders as well as basic and diluted earnings per share for the three and six months ended February 28, 2019 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the three and six months ended February 28, 2019, this has resulted in an additional $34.9 million and $69.8 million, respectively, in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders, net of income taxes, by $25.7 million ($0.12 per share basic) and $51.3 million ($0.24 per share basic), respectively. Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the Second Quarter 2019 Report to Shareholders.
(3) Refer to page 10 of this press release for details of adjustments to arrive at adjusted net income attributable to shareholders and adjusted basic earnings per share.

Consolidated Results from Operations

Consolidated revenues for the three months ended February 28, 2019 were $384.1 million, up 4% from $369.5 million last year and consolidated segment profit was $113.1 million, relatively consistent with $112.8 million last year. Net income attributable to shareholders for the quarter ended February 28, 2019 was $6.3 million ($0.03 per share basic), compared to $40.0 million ($0.19 per share basic) last year. Net income attributable to shareholders for the second quarter of fiscal 2019 includes business acquisition, integration and restructuring costs of $4.0 million ($0.01 per share, net of income taxes) and an impairment of an investment in associates of $8.7 million ($0.03 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $15.7 million ($0.07 per share basic) for the quarter. Net income attributable to shareholders for the prior year quarter includes business acquisition, integration and restructuring costs of $2.5 million ($0.01 per share, net of income taxes). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $41.9 million ($0.20 per share basic) for the prior year quarter.

Consolidated revenues for the six months ended February 28, 2019 were $851.6 million, up 3% from $826.9 million last year. Consolidated segment profit was $304.8 million, up 5% from $290.6 million last year. Net income attributable to shareholders for the six months ended February 28, 2019 was $66.8 million ($0.31 per share basic), compared to net income attributable to shareholders of $117.7 million ($0.57 per share basic) last year. Net income attributable to shareholders for the six months ended February 28, 2019 includes business acquisition, integration and restructuring costs of $17.2 million ($0.06 per share, net of income taxes) and an impairment of an investment in associates of $8.7 million ($0.03 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $85.8 million ($0.40 per share basic) for the current fiscal year. Net income attributable to shareholders for the six months ended February 28, 2018 includes business acquisition, integration and restructuring costs of $4.1 million ($0.01 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $120.8 million ($0.58 per share basic) for the prior fiscal year.

Consolidated net income attributable to shareholders as well as basic and diluted earnings per share for the three and six months ended February 28, 2019 was impacted by a change in accounting estimate related to the useful life of the Company's television brands. Commencing September 1, 2018, the useful life of television brands was changed from indefinite life to lives ranging from three to 20 years. For the three and six months ended February 28, 2019, this has resulted in an additional $34.9 million and $69.8 million, respectively, in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders, net of income taxes, by $25.7 million ($0.12 per share basic) and $51.3 million ($0.24 per share basic), respectively. Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the Second Quarter 2019 Report to Shareholders.

Operational Results - Highlights for Q1 2019

Television

-- Segment revenues increased 5% in Q2 2019 and 4% for the year-to-date

-- Advertising revenues increased 11% in Q2 2019 and 7% for the year-to-date

-- Subscriber revenues were down 1% in Q2 2019 and flat for the year-to-date

-- Merchandising, distribution and other revenues were down $2.5 million (13%) in Q2 2019 and $2.0 million (6%) for the year-to-date

-- Segment profit(1) increased 10% in both Q2 2019 and the year-to-date

-- Segment profit margin(1) of 32% in Q2 2019 and 38% for the year-to-date, compared to 31% and 36%, respectively, in the prior year

Radio

-- Segment revenues decreased 8% in Q2 2019 and 4% for the year-to-date

-- Segment profit(1) decreased $1.9 million (28%) in Q2 2019 and $2.4 million (12%) for the year-to-date

-- Segment profit margin(1) of 16% in Q2 2019 and 25% for the year-to-date, compared to 21% and 27%, respectively, in the prior year

(1) Segment profit and segment profit margin do not have standardized meanings prescribed by IFRS. The Company reports on these because they are key measures used to evaluate performance. For definitions and explanations, see the discussion under the Key Performance Indicators section of the Second Quarter 2019 Report to Shareholders.

Corporate

-- Free cash flow(1) of $83.9 million in Q2 2019 and $126.3 million for the year-to-date, compared to $82.1 million and $165.3 million, respectively, in the prior year

-- Net debt to segment profit(1) leverage of 3.05 times at February 28, 2019, down from 3.28 times at August 31, 2018, in part due to debt repayments of $117.6 million for the year-to-date

-- Consolidated segment profit margin(1) of 29% in Q2 2019 and 36% for the year-to-date, compared to 31% and 35%, respectively, in the prior year

(1) Segment profit, segment profit margin, and free cash flow do not have standardized meanings prescribed by IFRS. The Company reports on these because they are key measures used to evaluate performance. For definitions and explanations, see the discussion under the Key Performance Indicators section of the Second Quarter 2019 Report to Shareholders.

Corus Entertainment Inc. reports its financial results in Canadian dollars.

The unaudited interim condensed consolidated financial statements and accompanying notes for the three and six months ended February 28, 2019 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.

A conference call with Corus senior management is scheduled for April 5, 2019 at 8:00 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for local and international callers is 1.647.427.7450 and for North America is 1.888.231.8191. More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Use of Non-IFRS Financial Measures

This press release includes the non-IFRS financial measures of adjusted net income attributable to shareholders, adjusted basic earnings per share and free cash flow that are not in accordance with, nor an alternate to, generally accepted accounting principles ("IFRS") and may be different from non-IFRS measures used by other companies. In addition, these non-IFRS measures are not based on any comprehensive set of accounting rules or principles.

Non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-IFRS financial measures are meant to supplement, and to be viewed in conjunction with, IFRS financial results. A reconciliation of the Company's non-IFRS measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR at www.sedar.com.

Caution Concerning Forward-Looking Information

This press release contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward- looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking information"). These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances may be considered forward-looking information. Although Corus believes that the expectations reflected in such forward-looking information are reasonable, such information involves assumptions and risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied with respect to the forward-looking information, including without limitation, factors and assumptions regarding the general market conditions and general outlook for the industry, interest rates, stability of the advertising, distribution, merchandise and subscription markets, operating and capital costs and tariffs, taxes and fees, our ability to source desirable content and our capital and operating results being consistent with our expectations. Actual results may differ materially from those expressed or implied in such information. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying any forward-looking information may be found under the heading "Risks and Uncertainties" in the Management's Discussion and Analysis for the year ended August 31, 2018 and the second quarter ended February 28, 2019 and under the heading "Risk Factors" in our Annual Information Form. Corus cautions that the foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying on our forward-looking information to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise specified, all forward-looking information in this document speaks as of the date of this document. Unless otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking information whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

About Corus Entertainment Inc.

Corus Entertainment Inc. (TSX:CJR-B.TO) is a leading media and content company that develops and delivers high quality brands and content across platforms for audiences around the world. The company's portfolio of multimedia offerings encompass 37 specialty television services, 39 radio stations, 15 conventional television stations, a suite of digital assets, animation software, technology and media services. Corus is also an established creator of globally distributed content through Nelvana animation studio, Corus Studios, and children's book publishing house Kids Can Press. The company also owns innovative full-service social digital agency so.da, and lifestyle entertainment company Kin Canada. Corus' roster of premium brands includes Global Television, W Network, HGTV Canada, Food Network Canada, HISTORY®, Showcase, National Geographic, Disney Channel Canada, YTV and Nickelodeon Canada, Global News, Globalnews.ca, Q107, Country 105, and CFOX. Visit Corus at www.corusent.com.

CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited - in thousands of Canadian dollars)  As at February 28, As at August 31,
                                                2019               2018
ASSETS
Current
Cash and cash equivalents                       67,650             94,801
Accounts receivable                             436,966            388,751
Income taxes recoverable                        --                 3,305
Prepaid expenses and other assets               24,591             20,723
Total current assets                            529,207            507,580
Tax credits receivable                          25,744             18,047
Investments and other assets                    69,593             82,213
Property, plant and equipment                   219,216            231,192
Program rights                                  579,897            538,357
Film investments                                54,172             43,424
Intangibles (1)                                 1,935,236          2,012,086
Goodwill                                        1,387,652          1,387,652
Deferred income tax assets                      69,243             62,403
                                                4,869,960          4,882,954
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities        444,275            405,762
Current portion of long-term debt               79,466             106,375
Provisions                                      11,462             11,175
Income taxes payable                            9,274              --
Total current liabilities                       544,477            523,312
Long-term debt                                  1,789,166          1,877,558
Other long-term liabilities                     329,907            295,206
Provisions                                      10,831             7,801
Deferred income tax liabilities                 484,952            502,274
Total liabilities                               3,159,333          3,206,151
EQUITY
Share capital                                   830,477            2,330,477
Contributed surplus                             1,512,366          12,119
Accumulated deficit                             (814,531)          (856,668)
Accumulated other comprehensive income          31,326             36,460
Total equity attributable to shareholders       1,559,638          1,522,388
Equity attributable to non-controlling interest 150,989            154,415
Total equity                                    1,710,627          1,676,803
                                                4,869,960          4,882,954
(1) Net income attributable to shareholders as well as basic and diluted earnings per share for the three and six months ended February 28, 2019 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the three and six months ended February 28, 2019, this has resulted in an additional $34.9 million and $69.8 million, respectively, in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders, net of income taxes, by $25.7 million ($0.12 per share basic) and $51.3 million ($0.24 per share basic), respectively. Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the Second Quarter 2019 Report to Shareholders.

CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

Three months ended  Six months ended
                                                                        February 28,        February 28,
(unaudited - in thousands of Canadian dollars except per share amounts) 2019      2018      2019     2018
Revenues                                                                384,115   369,465   851,586  826,853
Direct cost of sales, general and administrative expenses               270,967   256,706   546,800  536,207
Depreciation and amortization (1)                                       54,801    20,832    109,129  41,590
Interest expense                                                        31,846    31,766    63,185   63,841
Business acquisition, integration and restructuring costs               4,047     2,475     17,228   4,083
Other expense (income), net                                             6,521     (3,473)   7,758    4,081
Income before income taxes                                              15,933    61,159    107,486  177,051
Income tax expense                                                      4,213     15,446    28,990   46,331
Net income for the period                                               11,720    45,713    78,496   130,720
Other comprehensive income (loss), net of income taxes:
Items that may be reclassified subsequently to income:
Unrealized foreign currency translation adjustment                      (170)     (8)       120      430
Unrealized change in fair value of cash flow hedges                     (14,368)  14,128    (14,746) 13,719
                                                                        (14,538)  14,120    (14,626) 14,149
Items that will not be reclassified to income:
Unrealized change in fair value of financial assets                     96        --        96       --
Actuarial gain (loss) on post-retirement benefit plans                  (3,502)   1,871     (1,176)  (868)
                                                                        (3,406)   1,871     (1,080)  (868)
Other comprehensive income (loss), net of income taxes                  (17,944)  15,991    (15,706) 13,281
Comprehensive income (loss) for the period                              (6,224)   61,704    62,790   144,001
Net income attributable to:
Shareholders                                                            6,344     40,042    66,759   117,715
Non-controlling interest                                                5,376     5,671     11,737   13,005
                                                                        11,720    45,713    78,496   130,720
Comprehensive income (loss) attributable to:
Shareholders                                                            (11,600)  56,033    51,053   130,996
Non-controlling interest                                                5,376     5,671     11,737   13,005
                                                                        (6,224)   61,704    62,790   144,001
Earnings per share attributable to shareholders:
Basic                                                                   $0.03     $0.19     $0.31    $0.57
Diluted                                                                 $0.03     $0.19     $0.31    $0.57
(1) Net income attributable to shareholders as well as basic and diluted earnings per share for the three and six months ended February 28, 2019 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the three and six months ended February 28, 2019, this has resulted in an additional $34.9 million and $69.8 million, respectively, in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders, net of income taxes, by $25.7 million ($0.12 per share basic) and $51.3 million ($0.24 per share basic), respectively. Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the Second Quarter 2019 Report to Shareholders.

CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited - in thousands of Canadian dollars)      Share       Contributed Accumulated Accumulated   Total equity Non-controlling Total equity
                                                    capital     surplus     deficit     other         attributable interest
                                                                                        comprehensive to
                                                                                        income        shareholders
As at August 31, 2018, as previously presented      2,330,477   12,119      (856,668)   36,460        1,522,388    154,415         1,676,803
IFRS 9 transitional adjustment(1)                   --          --          --          9,396         9,396        --              9,396
IFRS 15 transitional adjustment(1)                  --          --          1,985       --            1,985        --              1,985
Adjusted balance as at September 1, 2018            2,330,477   12,119      (854,683)   45,856        1,533,769    154,415         1,688,184
Comprehensive income (loss)                         --          --          66,759      (15,706)      51,053       11,737          62,790
Dividends declared                                  --          --          (25,431)    --            (25,431)     (15,163)        (40,594)
Reduction of stated capital                         (1,500,000) 1,500,000   --          --            --           --              --
Actuarial loss on post-retirement benefit plans     --          --          (1,176)     1,176         --           --              --
Share-based compensation expense                    --          247         --          --            247          --              247
As at February 28, 2019                             830,477     1,512,366   (814,531)   31,326        1,559,638    150,989         1,710,627
(unaudited - in thousands of Canadian dollars)      Share       Contributed Retained    Accumulated   Total equity Non-            Total equity
                                                    capital     surplus     earnings    other         attributable controlling
                                                                                        comprehensive to           interest
                                                                                        income        shareholders
As at August 31, 2017                               2,291,814   11,449      114,492     22,938        2,440,693    158,828         2,599,521
Comprehensive income                                --          --          117,715     13,281        130,996      13,005          144,001
Dividends declared                                  --          --          (118,294)   --            (118,294)    (16,188)        (134,482)
Issuance of shares under dividend reinvestment plan 18,584      --          --          --            18,584       --              18,584
Issuance of shares under stock option plan          85          --          --          --            85           --              85
Actuarial loss on post-retirement benefit plans     --          --          (868)       868           --           --              --
Share-based compensation expense                    --          356         --          --            356          --              356
As at February 28, 2018                             2,310,483   11,805      113,045     37,087        2,472,420    155,645         2,628,065
(1) Refer to the Company's Second Quarter 2019 Report to Shareholders for details on New Accounting Pronouncements Adopted in Fiscal 2019 in the Impact of New Accounting Policies and Changes in Estimates section.

CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended  Six months ended
                                                                      February 28,        February 28,
(unaudited - in thousands of Canadian dollars)                        2019      2018      2019      2018
OPERATING ACTIVITIES
Net income for the period                                             11,720    45,713    78,496    130,720
Adjustments to reconcile net income to cash flow from operations:
Amortization of program rights                                        127,558   125,692   257,128   259,075
Amortization of film investments                                      2,856     3,329     6,385     5,855
Depreciation and amortization                                         54,801    20,832    109,129   41,590
Deferred income taxes (recovery)                                      (10,600)  267       (19,947)  98
Impairment of investment in associate                                 8,720     --        8,720     --
Share-based compensation expense                                      202       168       247       356
Imputed interest                                                      11,071    11,011    21,665    22,878
Proceeds from termination of interest rate swap                       --        --        --        24,644
Payment of program rights                                             (126,590) (122,692) (236,804) (238,369)
Net spend on film investments                                         (17,722)  (11,533)  (28,385)  (20,281)
CRTC benefit payments                                                 (50)      (186)     (911)     (897)
Other                                                                 (338)     (3,154)   (3,808)   (2,728)
Cash flow from operations                                             61,628    69,447    191,915   222,941
Net change in non-cash working capital balances related to operations 24,692    17,055    (60,224)  (50,762)
Cash provided by operating activities                                 86,320    86,502    131,691   172,179
INVESTING ACTIVITIES
Additions to property, plant and equipment                            (3,591)   (3,378)   (6,160)   (4,959)
Proceeds from sale of property                                        6         --        9         545
Net cash flows for intangibles, investments and other assets          (2,124)   (2,773)   (2,523)   (3,679)
Cash used in investing activities                                     (5,709)   (6,151)   (8,674)   (8,093)
FINANCING ACTIVITIES
Decrease in bank loans                                                (60,539)  (28,165)  (117,548) (54,727)
Deferred financing costs                                              --        --        --        (4,088)
Issuance of shares under stock option plan                            --        --        --        85
Dividends paid                                                        (12,717)  (50,319)  (12,717)  (99,367)
Dividends paid to non-controlling interest                            (9,941)   (4,179)   (17,163)  (16,188)
Other                                                                 (431)     (742)     (2,740)   (3,086)
Cash used in financing activities                                     (83,628)  (83,405)  (150,168) (177,371)
Net change in cash and cash equivalents during the period             (3,017)   (3,054)   (27,151)  (13,285)
Cash and cash equivalents, beginning of the period                    70,667    83,470    94,801    93,701
Cash and cash equivalents, end of the period                          67,650    80,416    67,650    80,416

CORUS ENTERTAINMENT INC. BUSINESS SEGMENT INFORMATION

(unaudited - in thousands of Canadian dollars)
Three months ended February 28, 2019
                                                                     Television Radio  Corporate Consolidated
Revenues                                                             353,466    30,649 --        384,115
Direct cost of sales, general and administrative expenses            239,757    25,694 5,516     270,967
Segment profit (loss)(1)                                             113,709    4,955  (5,516)   113,148
Depreciation and amortization                                                                    54,801
Interest expense                                                                                 31,846
Business acquisition, integration and restructuring costs                                        4,047
Other expense, net                                                                               6,521
Income before income taxes                                                                       15,933
Three months ended February 28, 2018
                                                                     Television Radio  Corporate Consolidated
Revenues                                                             336,222    33,243 --        369,465
Direct cost of sales, general and administrative expenses (recovery) 232,576    26,360 (2,230)   256,706
Segment profit(1)                                                    103,646    6,883  2,230     112,759
Depreciation and amortization                                                                    20,832
Interest expense                                                                                 31,766
Business acquisition, integration and restructuring costs                                        2,475
Other income, net                                                                                (3,473)
Income before income taxes                                                                       61,159
Six months ended February 28, 2019
                                                                     Television Radio  Corporate Consolidated
Revenues                                                             779,656    71,930 --        851,586
Direct cost of sales, general and administrative expenses            481,394    53,963 11,443    546,800
Segment profit (loss)(1)                                             298,262    17,967 (11,443)  304,786
Depreciation and amortization                                                                    109,129
Interest expense                                                                                 63,185
Business acquisition, integration and restructuring costs                                        17,228
Other expense, net                                                                               7,758
Income before income taxes                                                                       107,486
(1) Segment profit (loss) does not have a standardized meaning prescribed by IFRS.  For definitions and explanations, see discussion under the Key Performance Indicators section of the Second Quarter 2019 Report to Shareholders.
(unaudited - in thousands of Canadian dollars)
Six months ended February 28, 2018
                                                          Television Radio  Corporate Consolidated
Revenues                                                  751,686    75,167 --        826,853
Direct cost of sales, general and administrative expenses 479,438    54,763 2,006     536,207
Segment profit (loss)(1)                                  272,248    20,404 (2,006)   290,646
Depreciation and amortization                                                         41,590
Interest expense                                                                      63,841
Business acquisition, integration and restructuring costs                             4,083
Other expense, net                                                                    4,081
Income before income taxes                                                            177,051
(1) Segment profit (loss) does not have a standardized meaning prescribed by IFRS. For definitions and explanations, see discussion under the Key Performance Indicators section of the Second Quarter 2019 Report to Shareholders.

REVENUES BY TYPE

Three months ended  Six months ended
                                               February 28,        February 28,
(unaudited - in thousands of Canadian dollars) 2019      2018      2019     2018
Advertising                                    240,284   221,663   561,619  533,874
Subscriber fees                                125,639   127,008   252,323  253,263
Merchandising, distribution and other          18,192    20,794    37,644   39,716
                                               384,115   369,465   851,586  826,853

NON-IFRS FINANCIAL MEASURES

Three months ended  Six months ended
(unaudited - in thousands of Canadian dollars, except per share amounts) February 28,        February 28,
Adjusted Net Income Attributable to Shareholders                         2019      2018      2019     2018
Net income attributable to shareholders                                  6,344     40,042    66,759   117,715
Adjustments, net of income tax:
Impairment of investment in associate                                    6,409     --        6,409    --
Business acquisition, integration and restructuring costs                2,980     1,838     12,676   3,050
Adjusted net income attributable to shareholders                         15,733    41,880    85,844   120,765
Basic earnings per share                                                 $0.03     $0.19     $0.31    $0.57
Adjustments, net of income tax:
Impairment of investment in associate                                    $0.03     --        $0.03    --
Business acquisition, integration and restructuring costs                $0.01     $0.01     $0.06    $0.01
Adjusted basic earnings per share                                        $0.07     $0.20     $0.40    $0.58
Free Cash Flow
Cash provided by (used in):
Operating activities                                                     86,320    86,502    131,691  172,179
Investing activities                                                     (5,709)   (6,151)   (8,674)  (8,093)
Add: cash used in business combinations and strategic investments (1)    80,611    80,351    123,017  164,086
                                                                         3,298     1,722     3,298    1,202
Free cash flow                                                           83,909    82,073    126,315  165,288
(1) Strategic investments are comprised of investments in venture funds and associated companies.

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SOURCE Corus Entertainment Inc.

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