DARTMOUTH, N.S. – In announcing his company’s second quarter results Wednesday, Newfoundland Capital Corporation president and CEO Rob Steele said the company will continue to set its sights on more acquisitions going forward.
"We are diligently investing resources in growing this company by focusing on acquiring assets in underserved markets across the country,” said Steele. “The first half of this year has met our objectives, not only in terms of operating results, but also in terms of the success we have had with acquisitions, their integration into our operations and the granting of new licences.”
NCC (better-known as Newcap in the industry) continues to seek out accretive and high quality radio station assets by selectively applying for new licences and developing a pipeline of acquisitions. Several new licence applications are currently before the CRTC and two purchase agreements for broadcasting assets in Red Deer, Alberta and Winnipeg, Manitoba are pending approval.
It launches its newest station, Fred FM, 92.3 FM in Fredericton, Thursday at 6 p.m. A classic rock format.
As for Q2 2005, growth in organic advertising revenue from existing radio stations and incremental revenue generated by the recent acquisitions in Thunder Bay, Ontario and Lloydminster, Alberta have positively contributed, said the company’s release. And, Newcap continues to expand its geographic reach in Canada, adding two new radio licences in Ontario this quarter. Highlights of the second quarter are as follows:
Newcap showed revenue growth of 16% to $20.9 million in the quarter, 17% to $36.6 million year-to-date. Earnings before interest, taxes, depreciation and amortization (EBITDA)improved by $1 million compared to the same quarter last year, and by $2.5 million over the six month period ended in June 2004.
Second quarter net income improved by $500,000 as compared to the second quarter last year. Excluding the one-time after-tax gain of $2 million in 2004, year-to-date net income increased by $1.5 million, or $0.14 per share.
The company has recorded increased demand for radio advertising over the last six months resulting in improved sales of advertising inventory, the release said. “The strength in national advertising sales and increases in local sales led to favourable second quarter revenue growth. Ottawa’s results, in particular, continue to increase as a result of the station maturing in the market.”
Going forward, the company expects more of the same. “Advertising revenue momentum continues to look positive for the remainder of the year. The company’s financial performance will benefit from overall market growth, new radio station assets and the improved ratings of its stations located in competitive markets,” it said.
Newcap is one of Canada’s leading small and medium market radio broadcasters with 67 licences across Canada. The company reaches millions of listeners each week through a variety of formats and is a recognized industry leader in radio programming, sales and networking.
Here’s a run-down of Newcap’s many recent moves and additions:
On May 30, 2005, the Company acquired broadcasting assets in Thunder Bay, Ontario from Big Pond Communications (2000) Inc. The primary assets acquired consisted of an FM radio licence and equipment. Total consideration was $1.9 million and was financed through the existing bank credit facility. Operating results from this acquisition are accounted for in the consolidated statements of income since May 30, 2005.
On January 31, 2005, the company completed its acquisition of radio, television and outdoor advertising assets located in Lloydminster, Alberta. The consolidated statements of income include the results of operations from the acquisition date. Consideration of $13.7 million was financed by the company’s existing credit facility and the primary assets acquired were broadcast licences and property and equipment.
The company has agreements in place to purchase broadcasting assets in Winnipeg, Manitoba and Red Deer, Alberta for an aggregate consideration of $11 million. These acquisitions are subject to CRT) approval.
The Company was awarded a new FM licence in Ottawa, Ontario by the CRTC in June 2005. The alternative rock station will broadcast at 88.5 FM and is expected to be on-air by the end of this year. This is an important step for the company as the new station complements the existing Ottawa station and is located in one of Canada’s major radio revenue markets. Newcap expects to invest approximately $1.5 million in capital expenditures for this station, primarily for broadcast equipment. As part of the approval for this new licence, the Company has also committed $1 million per year for seven years to fund Canadian talent development.
In November 2004, the company was awarded a new FM broadcast licence to serve Fredericton, the provincial capital of New Brunswick. The "Classic Rock" radio station format to be broadcast at 92.3 FM will be on-air in July 2005 (and be called Fred FM). The company will be obligated to fund Canadian talent development commitments of $100,000 per year for seven years.
To better serve smaller communities in Alberta which currently have AM services, Newcap requested approval from the CRTC for three new FM licences and permission to convert three AM signals to FM. The launch of six new FM services in Alberta began in 2004 with stations launched in Hinton, Cold Lake and Jasper. In January of this year the Wainwright station went on- air. Branded Wayne-FM, the station is showcasing adult contemporary music. The two remaining stations in Brooks and Camrose will be on-air in 2005 and are expected to contribute positively to the Company’s operating performance.
