NEWFOUNDLAND CAPITAL CORPORATION LIMITED - Revenue of $36.9 million was $1.4 million or 4% higher than last year. The increase was primarily due to growth in Toronto and Ottawa as a result of strong listener ratings in those markets.
- Earnings before interest, taxes, depreciation and amortization ("EBITDA"(1)) of $8.2 million in the quarter was $1.1 million or 15% higher than last year as a result of higher revenue and a continued focus on controlling expenses.
- Profit for the period was $4.6 million, an increase of $2.1 million or 83% compared to last year, as a result of higher EBITDA and lower interest expense. Significant events
During the quarter, the Company invested in strategic rebranding initiatives in Toronto and Halifax in an effort to improve market share and financial results of those operations.
"We are pleased with the growth in revenue and EBITDA this quarter, despite the challenging economic environment" commented Rob Steele, President and Chief Executive Officer. "The Company's success is attributable to strong listener ratings and a continued focus on operating efficiently."
Financial Highlights - First Quarter
Three months ended March 31
(thousands of Canadian dollars, except share information) 2016 2015
Revenue
$ 36,879
35,505
EBITDA (1) 8,162 7,087
Profit 4,571 2,502
Earnings per share - basic 0.17 0.09
Earnings per share - diluted 0.16 0.09
Weighted average number of shares outstanding (in thousands) 26,63028,184
March 31 December 31
2016 2015
Share price, NCC.A (closing)
$ 9.50
11.00
Total assets 358,543 364,246
Long-term debt, including current portion 140,170 145,908
Shareholders' equity 150,557 145,991
(1) Refer to page 11 "Non-IFRS Accounting Measure
MANAGEMENT'S DISCUSSION AND ANALYSIS
The purpose of the Management's Discussion and Analysis ("MD&A") is to provide readers with additional complementary information regarding the financial condition and results of operations for Newfoundland Capital Corporation Limited (the "Company") and should be read in conjunction with the unaudited condensed interim consolidated financial statements ("interim financial statements") and related notes for the periods ended March 31, 2016 and 2015, as well as the annual audited consolidated financial statements and related notes prepared in accordance with International Financial Reporting Standards ("IFRS") and the MD&A contained in the Company's 2015 Annual Report. The Company's first quarter 2016 interim financial statements and the accompanying notes have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting" as issued by the International Accounting Standards Board ("IASB") and using the accounting policies described therein. These interim financial statements include the accounts of the Company and other entities in which the Company controls in accordance with IFRS 10, "Consolidated Financial Statements" and are reported in Canadian dollars. These documents along with the Company's Annual Information Form, its Management Proxy Circular dated March 3, 2016 and other public information are filed electronically with various securities commissions in Canada through the System for Electronic Document Analysis and Retrieval ("SEDAR") and can be accessed at www.sedar.com. This information is also available on the Company's website at www.ncc.ca.
The Board of Directors, upon recommendation of the Audit and Governance Committee, approved the content of this MD&A on May 3, 2016. Disclosure contained in this document is current to this date, unless otherwise stated.
Management's Discussion and Analysis of financial condition and results of operations contains forward- looking statements and forward-looking information within the meaning of Canadian provincial securities laws. These forward-looking statements are based on current expectations. The use of terminology such as "expect", "intend", "anticipate", "believe", "may", "will", "should", "would", "plan" and other similar terminology relate to, but are not limited to, objectives, goals, plans, strategies, intentions, outlook and estimates. By their very nature, these statements involve inherent risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from those expressed in such forward-looking statements. As a result, there is no guarantee that any forward-looking statements will materialize and readers are cautioned not to place undue reliance on these statements. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause our actual results to differ materially from our current expectations are discussed in detail in the Risks, Uncertainties and Opportunities section of this MD&A. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CORPORATE PROFILE
Newfoundland Capital Corporation Limited owns and operates Newcap Radio, which is one of Canada's leading radio broadcasters with 95 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. It is Canada's largest pure-play radio company, employing approximately 1,000 of the best radio professionals across the country. The Company's portfolio of radio assets includes 80 FM and 15 AM licences which can be heard throughout Canada. Most of our stations are globally accessible via the internet and various mobile device applications, allowing listeners the flexibility to tune in to our stations at anytime from anywhere. The shares of the Company trade on the Toronto Stock Exchange under the symbols NCC.A and NCC.B.
STRATEGY AND OBJECTIVES
The Company's long-term strategy is to maximize returns on existing operations and add new licences through business and licence acquisitions and through the Canadian Radio-television and Telecommunications Commission ("CRTC") licence application process.
The Company's day-to-day operating objective is to grow its existing operations by increasing advertising revenue and remaining focused on controlling costs to maximize EBITDA margins. Management will continue to explore acquisition and expansion opportunities that fit the Company's objectives and it will make applications to the CRTC for new licences. The Company's commitment to its talented employees, its customers, its listeners and to the communities it serves remains critical to its success.
CORPORATE DEVELOPMENTS
The following is a review of the key corporate developments which should be considered when reviewing the "Consolidated Financial Performance Review" section. The results of the launched station have been included in the interim financial statements since its launch date.
Recent Developments:
March 2016 - rebranded CKDQ in Drumheller to 910 CFCW, an extension of the Company's legendary CFCW brand, the voice of rural Alberta which is now available in nearly all of Alberta.
February 2016 - rebranded CFXJ-FM in Toronto to 93.5 The Move, a rhythmic hot adult contemporary station targeting adults 25 to 44.
February 2016 - rebranded CKUL-FM in Halifax to Mix 96.5, a hot adult contemporary station playing a variety of pop/rock hits from the 90s to now.
December 2015 - launched a new FM licence in Fox Creek, Alberta (a repeater of CFXW-FM Whitecourt, Alberta).
August and December 2015 - the Company's Board of Directors approved dividends totalling $0.15 on each of its Class A Subordinate Voting and Class B Common shares.
May and July 2015 - The Company repurchased a total of 1,569,800 Class A Subordinate Voting shares for cash consideration of $13.9 million.
May 2015 - The Company amended its credit facilities to reduce interest rates by approximately 0.5% and to extend the maturity date to May 31, 2018.
CONSOLIDATED FINANCIAL PERFORMANCE REVIEW
Consolidated Financial Results of Operations
(thousands of Canadian dollars, except percentages
Three months ended March 31
and per share data) 2016 2015 % Change
Revenue | $ 36,879 | 35,505 | 4% |
Operating expenses | (28,717) | (28,418) | 1% |
EBITDA (1) | 8,162 | 7,087 | 15% |
Depreciation and amortization | (1,182) | (1,194) | (1%) |
Accretion of other liabilities | (86) | (116) | (26%) |
Interest expense | (1,216) | (2,148) | (43%) |
Other income (expense) | 234 | (181) | - |
Profit before provision for income taxes | 5,912 | 3,448 | 71% |
Provision for income taxes | (1,341) | (946) | 42% |
Profit | $ 4,571 | 2,502 | 83% |
Earnings per share | |||
- Basic | $ 0.17 | 0.09 | |
- Diluted | 0.16 | 0.09 |
(1) EBITDA - Earnings before interest, taxes, depreciation and amortization - refer to page 11 "Non-IFRS Accounting Measure"
ANALYSIS OF CONSOLIDATED FINANCIAL RESULTS
A detailed analysis of the variations in revenue, operating expenses and EBITDA are included in the section entitled Financial Review by Segment.
RevenueIn the quarter, consolidated revenue of $36.9 million was $1.4 million or 4% higher than last year due to higher revenue in the Broadcasting segment, particularly the Toronto and Ottawa operations.
Operating expensesConsolidated operating expenses of $28.7 million were $0.3 million or 1% higher than the first quarter last year primarily due to higher variable costs as a result of higher revenue.
EBITDAConsolidated EBITDA in the quarter of $8.2 million was $1.1 million or 15% higher than last year. The increase was primarily due to the higher revenue and the Company's continued focus on operating efficiently.
Accretion of other liabilitiesAccretion of other liabilities arises from discounting Canadian Content Development ("CCD") commitments to reflect the fair value of the obligations. Accretion expense was lower than last year because of the payments of CCD commitments during 2015 which reduced the balance on which accretion was recorded.
Interest expenseInterest expense in the first quarter was $1.2 million, $0.9 million or 43% lower than the prior year. Of this variance, $0.7 million was due to the fluctuations of the valuation of the Company's interest rate swap payable. Also contributing to the decrease in interest expense was the renegotiation of the Company's credit facilities in May 2015 which reduced interest rates.
Other income (expense)Other income (expense) consists of gains and losses, realized and unrealized, on the Company's marketable securities as well as items that are not indicative of the Company's core operating results, and should therefore not be used in the evaluation of the consolidated Company's performance. These include items such as acquisition-related costs and impairment charges. Other income was $0.2 million in the quarter compared to an expense of $0.2 million in the same quarter last year. The Company recognized mark-to-market unrealized gains of $0.2 million in 2016 compared to unrealized losses of $0.2 million in 2015. Refer to note 8(a) of the Company's interim financial statements for additional details on mark-to-market gains and losses.
Provision for income taxesThe effective income tax rate was 23% in the quarter, lower than the statutory income tax rate of 31% mainly because of the subsidiary rate differential that arises from consolidated entities that are taxed in different jurisdictions with lower tax rates. In addition, certain tax estimates were updated during the quarter, resulting in a decrease in tax expense.
ProfitFirst quarter profit of $4.6 million was higher than last year's $2.5 million primarily as a result of higher revenue from the Broadcasting segment and a decrease in interest expense.
FINANCIAL REVIEW BY SEGMENT
Consolidated financial figures include the results of operations of the Company's two separately reported segments - Broadcasting and Corporate and Other. The Company provides information about segment revenue and segment EBITDA because these financial measures are used by its key decision makers in making operating decisions and evaluating performance. For additional information about the Company's segmented information, see note 9 of the Company's interim financial statements.
Newfoundland Capital Corporation Limited published this content on 03 May 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 03 May 2016 12:53:04 UTC.
Original documenthttp://www.ncc.ca/docs/Q12016.pdf
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