Summary – Net Results

(in thousands of Canadian dollars)	For the year ended March 31
	2014	2013 (revised1)	% change
Revenue	767,830	646,065	18.8
Expenses	(1,873,717)	(1,870,963)	0.1
Government funding	1,090,898	1,154,850	(5.5)
Results before non-operating items	(14,989)	(70,048)	(78.6)
Non-operating items	(2,964)	19,076	(115.5)
Net results for the year	(17,953)	(50,972)	(64.8)
Results on a current operating basis2	46,429	216	N/M
N/M = not meaningful 1. The amounts for 2013 have been revised as a result of the adoption of the revised accounting standard on pensions. See Note 3A, New and Future Changes in Accounting Policies of the consolidated financial statements for more details. 2. Results on a Current Operating Basis is a non-IFRS measure. A reconciliation of net results to Results on a Current Operating Basis is provided below.

 

IFRS Results

This year’s revenue of $767.8 million was an increase of $121.8 million (18.8%) over last year. Higher revenue this year resulted largely from advertising associated with our coverage of the Sochi 2014 Olympic Winter Games. Current year revenue also included advertising associated with a full broadcast schedule of Hockey Night in Canada (HNIC), following the NHL lockout last season. This increase was partially offset by a weaker advertising market.

We have been successful in reducing operating expenses through cost management initiatives. These reductions largely offset costs incurred to broadcast both the full season of HNIC and the Sochi 2014 Winter Olympics. As a result, our expenses were relatively consistent with last year, increasing by $2.8 million or 0.1% overall.

Government funding recognized for accounting purposes was $64.0 million (5.5%) lower in the current year. This primarily reflects the lower levels of government appropriations received of $23.0 million and lower capital funding recognized for accounting purposes of $32.5 million this year, following last year’s shutdown of our analogue TV assets.

Net results reflected a loss of $18.0 million for the year, compared with a loss of $51.0 million in the prior year. In addition to revenue, expenses and government funding, this year’s results include non-operating losses of $3.0 million, mainly from equipment disposals as we replace old technology. Included in net results for both years are items that do not currently generate or require funds from operations, as explained below.

Reconciliation of Net Results under IFRS to Results on a Current Operating Basis

CBC/Radio-Canada defines Results on a Current Operating Basis as Net Results under IFRS, less the adjustments for non-cash expenses that will not require operating funds within one year and non-cash revenues that will not generate operating funds within one year. This measure is used by management to help monitor performance and balance the Corporation’s budget consistent with government funding methodology. We believe this measure provides useful complementary information to readers, while recognizing that it does not have a standard meaning under IFRS and will not likely be comparable to measures presented by other companies.

Adjustments include the elimination of non-cash pension and other employee future benefit costs, which represent the excess of the IFRS expense over the actual cash contribution for the year. Adjustments are also made for the depreciation and amortization of capital assets and the amortization of deferred capital funding because these are non-cash items.
Capital-related adjustments were lower in the current year than in 2012—2013 because last year included higher depreciation, decommissioning and capital funding due to the accelerated shutdown of analogue TV assets, the end of RCI shortwave broadcasting and other cost reduction initiatives. Other less significant items not funded or generating funds in the current year are adjusted for in the reconciliation to Results on a Current Operating Basis.

Under IFRS, CBC/Radio-Canada is required to present non-cash pension-related expenses under “Net results for the year” within expenses. These non-cash expenses are excluded from Results on a Current Operating Basis.

 

(in thousands of Canadian dollars)		For the year ended March 31
		2014	2013 (revised1)	% change
Net results for the year		(17,953)	(50,972)	(64.8)
Items not generating or requiring funds from operations
	Pension and other employee future benefits	58,799	50,991	15.3
	Depreciation and decommissioning expenses	127,732	173,843	(26.5)
	Amortization of deferred capital funding	(111,280)	(151,366)	(26.5)
	Other	(10,869)	(22,280)	(51.2)
Results on a current operating basis		46,429	216	N/M
N/M = not meaningful 1. The amounts for 2013 have been revised as a result of the adoption of the revised accounting standard on pensions. See Note 3A, New and Future Changes in Accounting Policies of the consolidated financial statements for more details.

 

Total Comprehensive Income (Loss)

 

(in thousands of Canadian dollars)	For the year ended March 31
	2014	2013 (revised1)	% change
Net results for the year	(17,953)	(50,972)	(64.8)
Other comprehensive income	203,812	40,342	405.2
Total comprehensive income (loss) for the year	185,859	(10,630)	N/M
N/M = not meaningful 1.The amounts for 2013 have been revised as a result of the adoption of the revised accounting standard on pensions. See Note 3A, New and Future Changes in Accounting Policies of the consolidated financial statements for more details.

 

In addition to pension costs included in net results, quarterly remeasurements of the Corporation’s pension and other future employee benefit plans resulted in other comprehensive income of $203.8 million this year. This income resulted from non-cash remeasurements due to changes in actuarial assumptions and returns on plan assets, as well as a non-cash adjustment arising from the adoption of new mortality assumptions.

Impact of Revised Pension Accounting Standard

As a result of the revised accounting standard applied on April 1, 2013 (IAS 19R – Employee Benefits), changes were required to the comparative period presented in this report which increased the calculation of pension expense presented as part of net results. However, the funding valuation and contribution requirements of the Corporation necessary to meet its pension obligations were unchanged.

Under the revised standard, net results for the year ended March 31, 2014 include pension expense of $134.5 million. This compares to the year ended March 31, 2013, which included pension expense of $126.1 million. The adoption of the revised standard resulted in net results previously presented for the year ended March 31, 2013 being reduced by $92.9 million, with a corresponding increase in other comprehensive income of $92.9 million. For further information, please refer to Note 3A – New and Future changes in accounting policies in the audited consolidated financial statements for the year ended
March 31, 2014.