Newfoundland Capital Corporation Limited - Fourth Quarter 2006 - Period Ended December 31 (unaudited)



    DARTMOUTH, N.S., March 2 /CNW/ - Newfoundland Capital Corporation Limited
(the "Company"), one of Canada's leading radio broadcasters, today announces
its financial results for the fourth quarter and fiscal year ended
December 31, 2006.

    Highlights
    Same station growth propelled revenue and EBITDA in the fourth quarter
    and led to a strong finish for the year.

    
    - Fourth quarter revenue of $28.0 million is 14% higher than 2005, and
      for the year revenue grew 17% to $93.9 million.
    - Earnings before interest, taxes, depreciation and amortization
      (EBITDA(1)) increased 12% over 2005 in the quarter and improved 26% for
      the year reaching $23.0 million; the increase was driven primarily by
      $8.7 million in net investment gains on the short-term portfolio
      recognized in other income.
    - Net income is $0.6 million ($0.05 per share) higher in the quarter, and
      $5.9 million higher for the year. Net income for fiscal 2006 was
      $12.0 million ($1.07 per share).
    - A dividend of $0.15 per share was declared by the Board of Directors in
      December 2006, bringing the total dividends for 2006 to $0.30 per
      share.

    The Company has continued its expansion by way of new licence approvals. A
new FM broadcast licence in Fort McMurray, Alberta, was awarded by the
Canadian Radio-television and Telecommunications Commission ("CRTC") on
November 15, 2006, and the conversion of the Edson station from AM to FM was
approved subsequent to year end. This continues a strong trend for 2006 in
which the Company was awarded FM licences in Calgary, Lac LaBiche, and
Bonnyville, Alberta and Charlottetown, Prince Edward Island. The Company also
completed the acquisition of CKJS-AM in Winnipeg, Manitoba in April.
    Rob Steele, President and Chief Executive Officer commented: "2006 has
been a year of investment for the Company. The work completed in 2006
launching new stations and integrating new acquisitions was an important step
on the road to achieving our stated goal of doubling EBITDA to $30.0 million
by the end of 2009. We are committed to our growth strategy and will continue
to seek high quality, new licence opportunities that will increase shareholder
value."

    Financial Highlights - Fourth Quarter
    (thousands of dollars except share information)         2006        2005
    -------------------------------------------------------------------------
    Revenue                                             $ 28,064      24,600
    EBITDA(1)                                              5,559       4,978
    Net income                                             3,285       2,691
    -------------------------------------------------------------------------
    Earnings per share - basic                              0.29        0.24
                       - diluted                            0.28        0.23
    Share price, NCC.A (closing)                           17.40       16.50
    Weighted average number of shares
     outstanding (in thousands)                           11,199      11,365
    -------------------------------------------------------------------------
    Total assets                                         216,287     213,507
    Long-term debt                                        53,771      53,285
    Shareholders' equity                                  90,922      82,925
    -------------------------------------------------------------------------

    Corporate Developments

    The corporate developments below should be considered when reviewing the
"Consolidated Operating Results" section.

    2006 acquisitions and approvals of new licences by the CRTC

    - March 10, 2006 - awarded full-station status, from repeater status, in
      Bonnyville, Alberta which allows the Company to originate and broadcast
      from that community. KOOL-FM, featuring contemporary hits, was launched
      in May.

    - March 23, 2006 - the CRTC approved the purchase of CKJS Limited which
      holds the CKJS-AM broadcast licence in Winnipeg, Manitoba. The
      transaction was completed April 30, 2006 for aggregate consideration of
      $2.3 million.

    - March 24, 2006 - awarded an FM radio licence in Charlottetown, Prince
      Edward Island and a conversion of the Company's existing station,
      CHTN-AM, from an AM to FM signal. The new FM stations, Ocean-FM and
      K-ROCK, were successfully launched in June and July, respectively.

    - August 2, 2006 - The CRTC awarded the Company a new FM licence in
      Calgary, Alberta. The new station, 90.3 on the FM band, will be a
      perfect complement to the existing station, California 103 and is
      expected to be launched in March 2007.

    As a result of these new broadcast licences, the Company has committed to
fund Canadian Talent Development ("CTD") in the amount of $8.7 million over a
seven year period.

    2005 acquisitions and approvals of new licences by the CRTC

    - January 31, 2005 - the Company acquired the assets of Shortell's
      Limited and its related companies in Lloydminster, Alberta, including
      three radio and two television broadcasting licences and an outdoor
      advertising business.

    - May 30, 2005 - the Company acquired the broadcasting assets of Big Pond
      Communications (2000) Inc. in Thunder Bay, Ontario, the primary asset
      being an FM radio licence.

    - September 26, 2005 - the Company acquired 100% of the common shares of
      4323041 Canada Inc. entitling it to the property, assets, licences and
      rights in connection with the operation of two FM radio licences in
      Red Deer, Alberta.

    - December 5, 2005 - the Company acquired the remaining 80.1% of the
      common shares of CKVN Radiolink System Inc., having initially acquired
      19.9% in February 2005. This acquisition entitles the Company to the
      broadcast licence, net assets and rights used in connection with an FM
      radio licence in Winnipeg, Manitoba.

    - The Company launched four FM radio broadcast licences in Alberta
      throughout 2005, a new FM licence in Fredericton, New Brunswick in
      July, and one in Ottawa, Ontario at the end of December.

    The results of the above incremental operations have been included in the
consolidated financial statements since the respective acquisition and launch
dates.
    The fourth quarter of the year is generally a period of higher retail
spending and results in increased advertising revenue.

     Consolidated Operating Results

    The Company has one separately reportable segment - broadcasting, which
derives its revenue from the sale of advertising airtime. Corporate and other
derives its revenue from hotel operations.

                Three months ended December 31       Year ended December 31
                ------------------------------       ------------------------
                                       Growth                        Growth
    (thousands of                    ---------                     ----------
     dollars, except                  To-  Org-                     To- Org-
     percentages)    2006     2005   tal  anic       2006    2005  tal anic
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue
      Broad-
       casting   $ 27,269   23,877    14%    9%    90,643  77,503   17%   3%
      Corporate
       and other      795      723    10%   10%     3,294   3,060    8%   8%
                  ----------------                ---------------
                 $ 28,064   24,600    14%    9%    93,937  80,563   17%   4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated revenue of $28.1 million represented a 14% improvement over
2005 with year-to-date revenue of $93.9 million being 17% better than 2005.
For the quarter, organic growth (same-station growth) of 9% contributed to the
increase in broadcasting revenue while new stations and acquisitions accounted
for 5%. For the year, organic growth of 3% contributed to the broadcasting
revenue increase while 14% came from new launches and acquisitions.
    The Company worked diligently in 2006 on integrating the 2005 and 2006
business acquisitions and the newly launched stations that are described above
under "Corporate Developments". By the fourth quarter of 2006 the majority of
revenue growth was organic since most acquisitions and new station launches
have been fully integrated for 12 months or longer. The results this year
demonstrate management's ability in seeking out accretive investment
opportunities, successfully integrating them into the Company's operating
platform and earning positive results in a timely manner.
    Improvements occurred in the fourth quarter in those markets where the
Company faced increased competition in the earlier part of the year.
    Corporate and other revenue was higher than the same periods last year
because of increased revenue from hotel operations.

    Other income

    Other income in the fourth quarter is $1.0 million higher than the same
period last year due to higher income earned on the short-term investments.
Year-to-date results are significantly higher than 2005 because of the
realization of $8.7 million in net gains from the Company's short-term
investment portfolio.

    Operating expenses

    Incremental expenses from business and licence acquisitions and new
station launches accounted for $1.4 million of the increase in operating
expenses in the quarter and $9.1 million year-to-date. During the quarter, a
$1.3 million incentive was awarded to the Chairman of the Board of Directors
in recognition of his performance managing the short-term investment portfolio
which realized significant gains in the year. The year-to-date operating
expenses were impacted by a $0.8 million non-cash stock-based compensation
expense charge related to the extension of the expiry date of certain stock
options. Overall, the Company spent more this year on marketing expenses due
to the competition it faced in certain markets. The remaining increase in
operating expenses relate to the variable costs associated with higher revenue
and inflationary increases.

    Earnings before interest, taxes, depreciation
    and amortization (EBITDA(1))

                Three months ended December 31       Year ended December 31
                ------------------------------       ------------------------
                                       Growth                        Growth
    (thousands of                    ---------                     ----------
     dollars, except                  To-  Org-                     To- Org-
     percentages)    2006     2005   tal  anic       2006    2005  tal anic
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA
      Broad-
       casting    $ 7,896    6,182    28%   28%  $ 23,372  22,366    5%  (3%)
      Corporate
       and other   (2,337)  (1,204)  (94%) (94%)     (327) (4,123)  92%  92%
                 ------------------              -----------------
                  $ 5,559    4,978    12%   12%  $ 23,045  18,243   26%  17%
    -------------------------------------------------------------------------
    % of Revenue
      Broadcasting     29%      26%    3%    3%        26%     29%  (3%) (3%)
      Total            19%      20%   (1%)  (1%)       22%     22%   0%   0%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Broadcasting EBITDA increased by 28% in the fourth quarter. A concerted
effort to manage operating expenses positively impacted EBITDA in the fourth
quarter. Year-to-date consolidated EBITDA has improved by 26% over the prior
year primarily due to the net investment gains of $8.7 million realized in
2006 in Corporate and other.

    Depreciation and amortization

    Depreciation and amortization expense is on par with the quarter last year
and $0.6 million higher than a year ago which is a result of an increased
depreciable asset base from acquisitions and station launches.

    Interest expense

    Interest expense of $0.7 million is comparable to the fourth quarter last
year. Year-to-date interest expense is $1.6 million higher than the year ended
December 31, 2005 as a result of higher interest rates and higher average debt
levels due to the business and licence acquisitions and new station launches.

    Accretion of other liabilities

    Accretion of other liabilities was $0.3 million in the quarter and
$1.0 million year-to-date and arose from the discounting of Canadian Talent
Development commitments included in other liabilities. The expense in 2005 was
under $0.1 million for the quarter and the year.

    Income taxes

    The effective income tax rate in the quarter is lower than the statutory
rate due to the recovery of future income taxes relating to the reversal of
temporary differences. Year-to-date, the effective tax is lower than the
statutory rate of 38.1% because of two factors: the net capital gains realized
from short-term investments were taxed at one-half the normal tax rate and in
June 2006, the Company re-measured its future income tax assets and
liabilities due to the enactment of lower general corporate tax rates in
Canada, resulting in a future income tax recovery of $1.3 million.

    Non-Controlling Interest in Subsidiaries' Earnings

    Non-controlling interest in subsidiaries' earnings represents the 23.7%
that Standard Radio Inc. holds in certain Alberta licences and the 37.8% that
minority shareholders have in the Moncton, New Brunswick licences.
Non-controlling interest in subsidiaries' earnings were higher in the quarter
and year-to-date by $0.1 million and $0.3 million respectively, due to better
performance of the licences.

    Net income

                                         Basic                        Basic
    (thousands       Three months     Earnings      Year ended     Earnings
     of dollars,    ended Dec. 31    Per Share         Dec. 31    Per Share
     except share    -------------  ----------    -------------  ----------
     data)           2006    2005   2006  2005     2006   2005    2006 2005
    -------------------------------------------------------------------------
    Net income    $ 3,285   2,691   0.29  0.24   11,967  6,032    1.07 0.53
    -------------------------------------------------------------------------

    Net income for the fourth quarter is $0.6 million higher than the same
period in 2005 mainly due to a lower provision for income taxes. Net income of
$12.0 million doubled last year's $6.0 million. The 2006 net after-tax
investment gains of $7.1 million accounted for this increase.

    Liquidity and Capital Resources

    The Company's net cash flow from operating activities in the quarter was
$4.6 million. This was used to pay $1.9 million of Canadian Talent Development
commitments, to repay net debt in the amount of $1.4 million and to invest
$0.8 million in property and equipment. For the fourth quarter last year, net
borrowings of $7.4 million were used to repurchase capital stock in the amount
of $1.7 million, to pay $1.5 million in Canadian Talent Development
commitments, to finance $2.4 million of property and equipment additions and
the Winnipeg, Manitoba business acquisition of $1.4 million.
    Year-to-date cash flows from operating activities of $15.3 million are
higher than last year's amount by $11.4 million primarily due to the proceeds
from disposal of short-term investments. This cash was used to pay dividends
aggregating $3.4 million, to pay Canadian Talent Development commitments of
$3.1 million, to repurchase capital stock for $2.0 million, to finance
property and equipment additions of $4.4 million and the $2.3 million
Winnipeg, Manitoba business acquisition. In 2005, inflows from the long-term
debt borrowing of $38.2 million and the $2.3 million proceeds from the sale of
Halterm Income Fund Trust Units, combined with the cash from operations, were
used to finance $26.3 million of business and licence acquisitions,
$8.7 million of property and equipment additions, to repurchase capital stock
of $6.5 million and to pay dividends of $2.9 million.

    Other Matters

    - The Company held 762,000 units in Halterm Income Fund (the "Fund")
      having a cost base of $3.7 million as at December 31, 2006. In November
      2006 the Fund announced it had entered into a purchase and sale
      agreement, subject to meeting certain conditions. On January 16, 2007,
      the Fund declared that the transaction was complete and that
      unitholders would receive a cash distribution in respect of their total
      units held. On January 19, 2007, the Company received its distribution
      of $19.08 per unit amounting to $14.5 million which resulted in the
      recognition of a gain on disposal of $10.8 million (approximately
      $8.9 million after tax or $0.79 per share).

    - The Company is obligated to pay $1.0 million in Canadian Talent
      Development commitments per year for 7 years with regard to its new FM
      radio station in Calgary, Alberta which will be launched in March 2007.
      Upon the launch of the station, the Company will recognize this
      obligation as broadcast licences and other liabilities on a discounted
      basis using the present value of the future minimum payments which will
      approximate $4.7 million.

    - In 2006, the Company applied to the CRTC to convert an AM station to FM
      in Edson, Alberta. On February 1, 2007, the CRTC granted the Company
      the right to do so. This conversion is expected to be completed by the
      end of summer 2007.

    Non-GAAP Measure

    (1)EBITDA is defined as net income excluding depreciation and amortization
expense, interest expense, accretion of other liabilities, loss on equity
accounted investment, gain on disposal of long-term investment, settlement,
provision for income taxes (recovery) and non-controlling interest in
subsidiaries' earnings. A calculation of this measure is as follows:

                                Three months ended             Year ended
                                     December 31               December 31
    (thousands of dollars)         2006      2005          2006        2005
    -------------------------------------------------------------------------
    Net income                  $ 3,285     2,691        11,967       6,032
    Non-controlling interest
     in subsidiaries' earnings      357       267           833         583
    Provision for income taxes
     (recovery)                    (164)      995         2,326       3,888
    Settlement                        -         -             -       3,500
    Gain on disposal of long-term
     investment                       -      (840)         (168)       (840)
    Loss on equity accounted
     investment                      44       117            11         181
    Accretion of other liabilities  288        68         1,022          68
    Interest expense                693       605         3,309       1,667
    Depreciation and
     amortization expense         1,056     1,075         3,745       3,164
                                ---------------------------------------------
    EBITDA                      $ 5,559     4,978        23,045      18,243
    -------------------------------------------------------------------------

    This measure is not defined by Generally Accepted Accounting Principles
and is not standardized for public issuers. This measure may not be comparable
to similar measures presented by other public enterprises. The Company has
included this measure because the Company's key decision makers believe
certain investors use it as a measure of the Company's financial performance
and for valuation purposes. The Company also uses this measure internally to
evaluate the performance of management.

    Consolidated Balance Sheets
    (unaudited)

    (thousands of dollars)                                 2006        2005
    -------------------------------------------------------------------------
    Assets
    Current assets
      Short-term investments
        (market value $12,404; 2005 - $12,628)     $     12,404      11,570
      Receivables                                        20,783      20,733
      Note receivable                                       927         948
      Prepaid expenses                                      610       1,656
      Other asset                                         3,704           -
                                                  ---------------------------
        Total current assets                             38,428      34,907
    Property and equipment                               32,392      30,753
    Other assets                                          8,069      12,668
    Broadcast licences                                  131,267     128,799
    Goodwill                                              4,337       3,610
    Future income tax assets                              1,794       2,770
                                                  ---------------------------
                                                   $    216,287     213,507
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity
    Current liabilities
      Bank indebtedness                            $        802       1,943
      Accounts payable and accrued liabilities           19,459      22,134
      Dividends payable                                   1,680       1,695
      Income taxes payable                                7,236       7,451
      Current portion of long-term debt                      23          23
                                                  ---------------------------
        Total current liabilities                        29,200      33,246
    Long-term debt                                       53,771      53,285
    Other liabilities                                    17,083      18,759
    Future income tax liabilities                        13,631      14,143
    Non-controlling interest in subsidiaries             11,680      11,149
    Shareholders' equity                                 90,922      82,925
                                                  ---------------------------
                                                   $    216,287     213,507
    -------------------------------------------------------------------------

    Consolidated Statements of Income
    (unaudited)

                                  Three months ended          Year ended
                                      December 31             December 31
    (thousands of dollars except
     per share data)               2006        2005        2006        2005
    -------------------------------------------------------------------------
    Revenue                    $ 28,064      24,600      93,937      80,563
    Other income                  1,729         684       9,667       2,701
                             ------------------------------------------------
                                 29,793      25,284     103,604      83,264
    Operating expenses           24,234      20,306      80,559      65,021
    Depreciation                    948         985       3,300       2,783
    Amortization of deferred
     charges                        108          90         445         381
                             ------------------------------------------------
    Operating income              4,503       3,903      19,300      15,079
    Interest expense                693         605       3,309       1,667
    Accretion of other
     liabilities                    288          68       1,022          68
    Loss on equity accounted
     investment                      44         117          11         181
    Gain on disposal of
     long-term investment             -        (840)       (168)       (840)
    Settlement                        -           -           -       3,500
                             ------------------------------------------------
                                  3,478       3,953      15,126      10,503
    Provision for income
     taxes (recovery)              (164)        995       2,326       3,888
                             ------------------------------------------------
                                  3,642       2,958      12,800       6,615
    Non-controlling interest
     in subsidiaries' earnings      357         267         833         583
                             ------------------------------------------------
    Net income                  $ 3,285       2,691      11,967       6,032
    -------------------------------------------------------------------------
    Earnings per share
     - basic                    $  0.29        0.24        1.07        0.53
     - diluted                     0.28        0.23        1.04        0.51
    -------------------------------------------------------------------------

    Consolidated Statements of Shareholders' Equity
    (unaudited)

                                                              Year ended
                                                             December 31
    (thousands of dollars)                                 2006        2005
    -------------------------------------------------------------------------
    Retained earnings, beginning of year           $     38,441      40,446
    Net income                                           11,967       6,032
    Dividends declared                                   (3,358)     (3,404)
    Repurchase of capital stock                          (1,525)     (4,633)
                                                   --------------------------
    Retained earnings, end of year                       45,525      38,441
    Capital stock                                        43,304      43,635
    Contributed surplus                                   2,093         849
                                                   --------------------------
    Total shareholders' equity                     $     90,922      82,925
    -------------------------------------------------------------------------


    Consolidated Statements of Cash Flows
    (unaudited)

                                  Three months ended          Year ended
                                      December 31             December 31
    (thousands of dollars)         2006        2005        2006        2005
    -------------------------------------------------------------------------
    Operating Activities
    Net income                  $ 3,285       2,691      11,967       6,032
    Items not involving cash
      Depreciation and
       amortization               1,056       1,075       3,745       3,164
      Future income taxes
      (recovery)                   (175)        (91)       (165)        648
      Gain on disposal of
       long-term investment           -        (840)       (168)       (840)
      Executive stock-based
       compensation plans           142         108       1,362         405
      Accretion of other
       liabilities                  288          68       1,022          68
      Non-controlling interest
       in subsidiaries' earnings    357         267         833         583
      Other                         (30)        120        (287)        (28)
                                ---------------------------------------------
                                  4,923       3,398      18,309      10,032
    Change in non-cash working
     capital relating to
     operating activities          (357)     (6,744)     (3,057)     (6,181)
                                ---------------------------------------------
                                  4,566      (3,346)     15,252       3,851
    -------------------------------------------------------------------------
    Financing Activities
    Change in bank indebtedness  (1,953)      1,200      (1,141)      1,424
    Long-term debt borrowings       515       6,235       5,030      38,235
    Long-term debt repayments        (5)         (1)     (4,544)        (23)
    Issuance of capital stock         -           -         163         180
    Repurchase of capital stock       -      (1,655)     (2,034)     (6,536)
    Dividends paid                    -           -      (3,373)     (2,883)
    Canadian Talent Development
     commitment payments         (1,948)     (1,515)     (3,117)     (2,034)
    Other                             -         102        (302)       (244)
                                ---------------------------------------------
                                 (3,391)      4,366      (9,318)     28,119
    -------------------------------------------------------------------------
    Investing Activities
    Note receivable                   -           -       1,000       1,000
    Property and equipment
     additions                     (771)     (2,412)     (4,434)     (8,713)
    Initial investment in
     business and licence
     acquisition                      -           -           -        (356)
    Deposit for business and
     licence acquisitions             -           -           -        (200)
    Business and licence
     acquisitions                     -      (1,437)     (2,296)    (25,725)
    Investment in Halterm
     Income Fund Trust Units          -           -           -        (268)
    Proceeds from disposal of
     Halterm Income
     Fund Trust Units                 -       2,327         399       2,327
    Deferred charges               (429)       (343)       (976)       (903)
    Other                            25         845         373         868
                                ---------------------------------------------
                                 (1,175)     (1,020)     (5,934)    (31,970)
    -------------------------------------------------------------------------
    Cash, beginning and
     end of period              $     -           -           -           -
    -------------------------------------------------------------------------
    

    The Company's Annual Report, which includes the annual consolidated
financial statements along with related notes and the annual Management's
Discussion and Analysis, will be available on www.sedar.com and the Company's
website by March 31, 2007.

    About Newfoundland Capital Corporation Limited

    Newfoundland Capital Corporation Limited (TSX: NCC.A, NCC.B) is one of
Canada's leading radio broadcasters with 75 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.

    This press release contains forward-looking statements. 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.
Readers are cautioned not to place undue reliance on these statements. 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.
    %SEDAR: 00002995E




For further information:

For further information: REF: Robert G. Steele, President and Chief
Executive Officer, Scott G.M. Weatherby, Chief Financial Officer and Corporate
Secretary, Newfoundland Capital Corporation Limited, 745 Windmill Road,
Dartmouth, Nova Scotia B3B 1C2, Tel: (902) 468-7557, Fax: (902) 468-7558,
e-mail: investorrelations@ncc.ca, Web: www.ncc.ca


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