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Category Investors Date 7/5/2006 |
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CanWest MediaWorks Income Fund Reports Q3 Results
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Toronto, Ontario - CanWest MediaWorks Income Fund (the "Fund") today reported financial results for CanWest MediaWorks Limited Partnership (the “Partnership”) for the third quarter and the nine months ended May 31, 2006.
Revenue for the third quarter was $299.7 million, slightly ahead of the $297.8 million reported for the same quarter last year. Revenues were affected by an unexpected slowdown in national advertising in the last half of the quarter and by continued weakness in print classifieds. Retail, online classified and insert revenue all experienced growth in the quarter. Circulation revenue was flat relative to prior year, with higher revenue per copy offsetting a slight decline in number of copies sold. Interactive revenues increased 17% to $7.5 million for the quarter from $6.5 million for in the third quarter of fiscal 2005, with gains in FPInfomart and advertising on the canada.com network of sites.
EBITDA¹ for the third quarter was $70.5 million, compared with $61.8 million reported for the third quarter of 2005. Results for the third quarter of 2005 were affected by a $13.2 million expense related to the termination of the Ravelston management services contract. Several factors affected this year’s third quarter results, including increased severance costs and the decision to cease publication of the print version of Dose magazine. Cost savings at Dose will benefit EBITDA results in future quarters. Continuing start-up losses associated with the Partnership’s one-third ownership of Metro free distribution newspapers in Vancouver and Ottawa were also a factor. Losses at Dose and Metro in the quarter, including Dose restructuring costs, were $4.3 million versus $3.0 million in the prior year. Severance costs, excluding those related to Dose, were $1.5 million in the quarter compared to $0.1 million in the same period in 2005. Adjusting for severance, and losses at Dose and Metro, EBITDA for the third quarter was $76.3 million, a decline of 2% compared to $78.1 million, after adjusting for Ravelston expenses, in the third quarter of fiscal 2005.
Distributable cash for the quarter was $62.2 million or $0.2914 per unit. Cash distributions for the quarter were $0.2313 per unit. Due to the seasonal nature of newspaper advertising revenue, we expect distributable cash in the first and third quarters to exceed actual distributions and to be more than sufficient to offset anticipated shortfalls in the second and fourth quarters. For the period from October 13, 2005 to May 31, 2006 the Fund declared cash distributions equivalent to 87% of distributable cash. As a result of the unexpected slowdown in national advertising experienced in the last half of the quarter, the company now believes that cash distributions for the period from October 13, 2005 to August 31, 2006 may now exceed 95% of distributable cash.
Net earnings for the quarter were $46.8 million compared to $4.8 million in the third quarter of fiscal 2005. The increase in net earnings primarily reflects reduced interest expense and income tax expense following the change in corporate structure to a Limited Partnership in October 2005.
Commenting on the results, Peter Viner, President and Chief Executive Officer of the Limited Partnership said, “The unexpected weakness in certain national advertising accounts was a disappointment in the third quarter as was a slight moderation in the growth in advertising revenues at our newspapers in Western Canada. We believe these developments are temporary and remain optimistic that newspaper advertising growth will return in the fourth quarter. We continue to press ahead with our cost containment initiatives, including our decision to cease publication of the print version of Dose, all of which should contribute to EBITDA growth in future quarters. We are pleased to report that distributable cash generation in the quarter remained at a level more than sufficient to meet unit holder distribution requirements.”
Nine- Months Ended May 31, 2006
Revenue for the nine-month period was $892.8 million, a gain of 3% or $28.3 million compared to the same period last year. Growth in retail and national ROP advertising, inserts, and Interactive revenues in the first two quarters accounted for most of the revenue gains. Revenue growth for the first nine months of fiscal 2006 is more heavily weighted to the newspapers in western Canada despite the above noted moderation in growth experienced by those newspapers during the third quarter.
EBITDA for the first nine months of fiscal 2006 was $205.1 million compared to $224.2 million for the same period last year. The EBITDA decline is attributable primarily to increased severance charges and start-up losses at the Dose and Metro publications. Suspension of publication of the print edition of Dose will significantly reduce those start-up losses in future quarters. For the nine-month period, Dose and Metro losses (including Dose restructuring costs) totaled $11.1 million compared to $3.3 million in the prior year. Severance totaled $8.3 million versus $0.8 million in the prior year.
Distributable cash for the period October 13, 2005 to May 31, 2006 was $148.2 million or $0.6948 per unit. Distributions declared for the period October 13, 2005 to May 31, 2006 were $0.6060 per unit. For the nine months ended May 31, 2006, net earnings were $114.2 million compared to $30.6 million for the same period last year. As for the third quarter, the increase in net earnings primarily reflects lower interest expense and reduced tax liabilities following the change in corporate structure to a Limited Partnership in October 2005.
Basis of Presentation
The Publications Group, formerly owned by CanWest MediaWorks Inc., was acquired by CanWest MediaWorks Limited Partnership (the “Limited Partnership”), in which, effective October 13, 2005, the Fund acquired an approximate 26% interest.
The financial statements released today include the presentation of combined consolidated financial performance of the Publications Group for the period from September 1, 2005 to October 12, 2005, the time pre-dating the formation of the Limited Partnership, and the consolidated financial results of the Limited Partnership for the period from October 13, 2005 to May 31, 2006. The comparative period for the nine months ended May 31, 2005 covers the combined consolidated financial results of the Publications Group.
Caution Concerning Forward-Looking Statements
This news release contains certain comments or forward-looking statements about the objectives, strategies, financial conditions, results of operations and businesses of the Fund. Statements that are not historical facts are forward-looking and are subject to important risks, uncertainties and assumptions. These statements are based on our current expectations about our business and the markets in which we operate, and upon various estimates and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events if known or unknown risks, trends or uncertainties affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, there is no assurance that the circumstances described in any forward-looking statement will materialize. Significant and reasonably foreseeable factors that could cause our results to differ materially from our current expectations are discussed in the section entitled "Risk Factors" contained in our Annual Information Form dated January 31, 2006 filed by CanWest MediaWorks Income Fund with the Canadian securities commissions (available on the Fund's website at www.cwmincomefund.com and on SEDAR at www.sedar.com), as updated in our Management's Discussion and Analysis for the three months and nine months ended May 31, 2006 dated July 5, 2006. We disclaim any intention or obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.
About CanWest MediaWorks Income Fund and CanWest MediaWorks Limited Partnership
CanWest MediaWorks Income Fund (TSX: CWM.UN; www.cwmincomefund.com) is an unincorporated, open-ended trust that holds an approximate 26% equity interest in CanWest MediaWorks Limited Partnership, which is the largest publisher of newspapers in Canada, as measured by paid circulation, readership and revenue.
The assets within the Limited Partnership comprise ten major metropolitan daily newspapers serving nine Canadian cities; Vancouver Sun, The Province (Vancouver), Ottawa Citizen, The Gazette (Montreal), The Edmonton Journal, Calgary Herald, The Windsor Star, Times-Colonist (Victoria), Leader Post (Regina), Star Phoenix (Saskatoon), and a one-third interest in Metro Ottawa and Metro Vancouver, free commuter dailies, together with 23 smaller community daily, weekly and bi-weekly publications. The assets also include online properties canada.com, working.com and driving.ca and related websites.
CanWest MediaWorks Limited Partnership is approximately 74% owned by CanWest Global Communications Corp. (www.canwestglobal.com), an international media company listed on the TSX (trading symbols: CGS and CGS.A) and NYSE (trading symbol: CWG). CanWest is Canada’s largest media company, it is Canada’s largest publisher of daily newspapers, and owns, operates and/or holds substantial interests in free-to-air and subscription-based television networks, out-of-home advertising, web sites, and radio stations and networks in Canada, New Zealand, Australia, Ireland, Singapore, Malaysia, Turkey and the United Kingdom.
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For full details click here
For additional information, please contact:
Doug Lamb,
Executive Vice President and CFO
CanWest MediaWorks Limited Partnership
Tel:
Email:
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