Newfoundland Capital Corporation Limited - Second Quarter 2008 - Period Ended June 30 (unaudited)



    DARTMOUTH, NS, Aug. 7 /CNW/ - Newfoundland Capital Corporation Limited
(the "Company"), one of Canada's leading radio broadcasters, today announces
its financial results for the second quarter ended June 30, 2008.

    
    Highlights Organic growth led to solid increases in broadcasting revenue
this quarter.

    - Revenue growth of 5% to $27.4 million in the second quarter and growth
      of 8% to $49.2 million year-to-date was driven by same-station growth
      in the broadcasting segment.

    - Earnings before interest, taxes, depreciation and amortization
      ("EBITDA"(1)) were $10.4 million in the quarter, ahead of last year by
      46% and year-to-date EBITDA of $13.6 million was 87% higher than last
      year. These increases were primarily attributable to investment income.

    - Net income of $6.4 million was $0.6 million higher than the same
      quarter last year while year-to-date net income of $7.1 million was
      $6.1 million lower than 2007. During the first two quarters of 2007,
      gains on disposals of two long-term investments boosted the comparative
      year's net income.

    - A dividend of $0.15 per share was declared by the Board of Directors
      subsequent to quarter end.

    Significant events

    - The Company acquired the remaining 50% interest in Metro Radio Group
      Inc., which operates CKUL-FM in Halifax, Nova Scotia. It also acquired
      a 29.9% interest in a FM radio station in Nova Scotia. Both
      transactions were completed on July 2, 2008, for cash consideration of
      $9.5 million.

    - Subsequent to quarter end, the Company announced it has entered into a
      purchase agreement that would add 12 FM broadcasting licences in
      Ontario and an agreement to exchange an AM licence in Halifax, Nova
      Scotia for an AM licence in Sudbury, Ontario. These two transactions
      are subject to approval by the Canadian Radio-television and
      Telecommunications Commission ("CRTC") and would represent a net cash
      outflow of approximately $13.9 million.

    - The Company launched three new FM licences in June: Fort McMurray,
      Alberta and Sydney and Kentville, Nova Scotia.

    "We are making significant efforts to improve results in Edmonton and
Calgary, Alberta. We were extremely pleased to see in the July ratings that
our overall market share in these two cities has increased. This is a very
important achievement for us and demonstrates our ability to focus our efforts
on increasing listenership", commented Rob Steele, President and Chief
Executive Officer. "And while we continue to grow the company organically, we
remain focused on expansion plans as evidenced by our recent acquisition
announcements and new station launches."


    Financial Highlights - Second Quarter
    (thousands of dollars except share information)        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue                                           $  27,423      26,159
    EBITDA(1)                                            10,436       7,158
    Net income                                            6,371       5,807
    -------------------------------------------------------------------------
    Earnings per share - basic                             0.58        0.53
                       - diluted                           0.56        0.51
    Share price, NCC.A (closing)                          19.00       19.25
    Weighted average number of shares
     outstanding (in thousands)                          10,991      11,062
    -------------------------------------------------------------------------
    Total assets                                        243,350     215,312
    Long-term debt                                       66,500      49,013
    Shareholders' equity                                109,747     101,215
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to page 14 for the reconciliation of EBITDA to net income.


    Management's Discussion and Analysis

    The following interim discussion and analysis of financial condition and
results of operations of Newfoundland Capital Corporation Limited (the
"Company") has been prepared as of August 7, 2008. The purpose of the
Management's Discussion and Analysis ("MD&A") is to provide readers with
additional complementary information regarding the Company's financial
condition and results of operations and should be read in conjunction with the
unaudited interim consolidated financial statements and related notes for the
periods ended June 30, 2008 and 2007 as well as the annual audited
consolidated financial statements and related notes and the MD&A contained in
the Company's 2007 Annual Report. These documents along with the Company's
Annual Information Form 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.
    Management's Discussion and Analysis of financial condition and results of
operations contains forward-looking statements. These forward-looking
statements are based on current expectations. The use of terminology such as
"expect", "intend", "anticipate", "believe", "may", "will", and other similar
terminology relate to, but are not limited to, our 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. 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.

    Corporate Profile

    The Company is one of Canada's leading radio broadcasters with 77 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.

    Strategy and Objectives

    The overall goal is to increase value for shareholders. To accomplish
this, the Company seeks to achieve growth by adding new licences to its
portfolio of assets through business and licence acquisitions and through the
Canadian Radio-television and Telecommunications Commission ("CRTC") licence
application process, by converting AM stations to FM, and by maximizing
returns on existing operations. The section below describes some of the
Company's developments to date.

    Corporate Developments

    The following is a review of the key corporate developments which should
be considered when reviewing the "Consolidated Financial Review" section.

    2008 developments

    - March 3, 2008 - the Company re-launched CIQX-FM in Calgary as XL103-FM,
      "Calgary's Greatest Hits Radio", featuring classic music from the 60's,
      70's, and 80's. Before this, the station played smooth jazz. Ratings
      results released in July 2008 showed improved market share.

    - March 5, 2008 - the Company entered into an agreement with CTV Limited
      to acquire the remaining 50% interest in Metro Radio Group Inc. for
      $8.5 million. Metro Radio Group Inc. operates CKUL-FM in Halifax, Nova
      Scotia. The purchase was finalized July 2, 2008.

    - March 28, 2008 - the Company changed the format of one of its FM
      stations in Edmonton, Alberta. The station now known as Capital-FM
      plays Classic Hits. Recent ratings were very strong for this station
      and the Company is eager to continue to grow this station's market
      share.

    - April 7, 2008 - the Company entered into an agreement to purchase a
      29.9% interest in a company which operates an FM radio station in
      Nova Scotia. The transaction closed July 2, 2008 for $1.0 million.

    - June, 2008 - the Company launched three new FM stations; Fort McMurray,
      Alberta, Kentville and Sydney, Nova Scotia. The Fort McMurray and
      Kentville stations feature Classic Rock while the Sydney station plays
      Top 40 music.

    - July 23, 2008 - the Company announced it had an agreement to exchange
      radio stations with Rogers Broadcasting Limited (a Division of Rogers
      Communications Inc. RCI.A and RCI.B) subject to approval from the CRTC.
      The Company will exchange its AM broadcast licence in Halifax, Nova
      Scotia and receive in return Rogers' AM licence in Sudbury, Ontario and
      cash consideration of $5.0 million. Both parties have simultaneously
      submitted applications for this transfer of assets along with
      applications requesting conversion of the AM licences to FM.

    - July 28, 2008 - the Company announced it had entered into an agreement
      to acquire 12 English FM radio broadcasting licences in Ontario from
      Haliburton Broadcasting Group Inc. for $18.95 million, subject to CRTC
      approval. These assets include stations in Muskoka, North Bay and
      Timmins. This group of licences is the most significant geographical
      expansion for the Company since 2002 and considerably expands its reach
      in Ontario. Ten of these licences are in markets in which there is no
      other local radio station at present. This adds stability to the
      acquired revenue base, which at present approximates $8.5 million.

    - July 28, 2008 - the CRTC approved the Company's application for a new
      FM repeating signal in Pincher Creek, Alberta.

    2007 developments

    - February 1, 2007 - the CRTC approved the Company's application to
      convert its AM signal to FM in Edson, Alberta. The Classic Hits FM
      station was launched in July 2007.

    - March 19, 2007 - the Company successfully launched the new Calgary,
      Alberta FM station, FUEL 90.3, featuring a Classic Alternative format.

    - May 16, 2007 - the Company acquired the minority shareholder's 23.7%
      interest in 3937844 Canada Inc. for cash consideration of
      $10.7 million. 3937844 Canada Inc. owns and operates 22 of the
      Company's 34 licences throughout the province of Alberta.

    - July 4, 2007 - the Company received approval by the CRTC to convert its
      AM licence to FM in Carbonear, Newfoundland and Labrador. The FM
      station launched early in 2008.

    - July 6, 2007 - the CRTC approved the Company's application for two new
      FM licences in Nova Scotia, one in Sydney and one in Kentville. Both
      stations were launched in June 2008.

    - October 1, 2007 - the Company acquired the 37.8% non-controlling
      interest in Atlantic Stereo Limited which operates the two FM licences
      in Moncton, New Brunswick for cash consideration of $6.9 million.

    - December 6, 2007 - the CRTC approved a power increase from 1,300 watts
      to an average effective radiated power of 60,200 watts related to the
      Company's CHNK-FM licence in Winnipeg, Manitoba. This will allow the
      licence to be accessible to a larger listening audience, improving its
      marketability to prospective clients. The power has been increased to
      approximately 20,000 watts with the increase to full power coverage
      expected to be completed in the the third quarter of 2008.
    

    The results of the above acquired or launched stations have been included
in the consolidated financial statements since the respective acquisition and
launch dates.

    Consolidated Financial Review

    Revenue

    In the quarter consolidated revenue of $27.4 million was $1.3 million or
5% higher than last year. Year-to-date consolidated revenue of $49.2 million
was $3.5 million or 8% better. The improvement came exclusively from the
broadcasting segment.

    Other income (expense)

    Other income for the quarter of $5.5 million was higher than last year's
$1.2 million and year-to-date other income of $6.4 million was better than
last year's net expense of $0.3 million due to positive fluctuations in the
valuation of the Company's marketable securities.

    Operating expenses

    Consolidated operating expenses of $22.4 million were $2.2 million or 11%
higher than the second quarter last year. For the six months ended June 30,
2008, consolidated operating expenses of $41.9 million were 10% higher or
$3.8 million more than 2007. The increase was all a result of higher costs in
the broadcasting segment more fully described below.

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

    Consolidated EBITDA in the quarter of $10.4 million was $3.3 million
higher than last year's quarter and year-to-date consolidated EBITDA of
$13.6 million almost doubled last year's $7.3 million largely due to higher
investment income.
    More detailed disclosure on revenue, other income, operating expenses and
EBITDA are described in the section entitled "Financial Review by Segment".

    Depreciation and amortization

    For the quarter and year-to-date, depreciation and amortization expense
were on par with 2007.

    Interest expense

    Interest expense in the second quarter was $0.2 million higher than the
prior year and year-to-date interest was $0.4 million higher due to the
Company's higher debt levels as compared to last year.

    Accretion of other liabilities

    Accretion of other liabilities arises from discounting Canadian Content
Development ("CCD") commitments to reflect the fair value of the obligations.
The expense in the quarter, and for the six month period, was $0.2 million
lower than last year as a result of the expense being higher in the initial
years of payment.

    Gain on disposal of equity accounted investment

    The Company disposed of its interest in Larche Communications (Kitchener)
Inc. on April 12, 2007 for proceeds of $4.0 million which resulted in a
$3.8 million gain.

    Gain on Disposal of long-term investment

    On January 19, 2007, the Halterm Income Fund Trust Units were disposed of
for proceeds of $14.5 million which resulted in a gain of $10.8 million.

    Income taxes

    The effective income tax rate of 23% this quarter and 24% year-to-date
was lower than the statutory rate of 36% because the net capital gains are
taxed at one-half the normal tax rate.

    Non-controlling interest in subsidiaries' earnings

    In the prior period, non-controlling interest in subsidiaries' earnings
represented the 23.7% that Standard Radio Inc. held in 3937844 Canada Inc. and
the 37.8% that minority shareholders had in Atlantic Stereo Limited. The
Company acquired both of these minority interests in 2007. Non-controlling
interest accounting was no longer required as of the acquisition dates.

    Net income

    Net income in the quarter of $6.4 million was $0.6 million higher than
2007 while year-to-date net income of $7.1 million was $6.1 million lower than
last year. During the first two quarters of 2007, gains on disposals of two
long-term investments boosted net income while this year benefited from
positive fluctuations in the value of marketable securities.

    Other comprehensive income ("OCI")

    OCI consists of the net change in the fair value of the Company's cash
flow hedges and assets available-for-sale. Cash flow hedges include interest
rate swaps and an equity total return swap. The net change in the fair value
of the interest rate swaps recorded in OCI in the quarter was an after-tax
increase of $0.1 million (2007 - $0.2 million) and an after-tax decrease of
$0.3 million year-to-date (2007 - increase of $0.2 million). The net change in
the fair value of the equity total return swap recorded in OCI was an
after-tax decrease of $0.2 million in the quarter (2007 - increase of $0.1
million) and an after-tax decrease of $0.3 million year-to-date (2007 -
increase of $0.4 million). The asset available-for-sale was the investment in
Halterm Income Fund Trust Units which was disposed of in January 2007. The
disposition resulted in an after-tax gain of $8.9 million which was
transferred from OCI to net income in the first quarter of 2007.

    Financial Review by Segment

    Consolidated financial figures include the results of operation of the
Company's two separately reported segments - Broadcasting and Corporate and
other. The Company provides information about segment revenue, segment EBITDA
and operating income 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 10
of the Company's unaudited interim consolidated financial statements.

    
    Financial Results by Segment
    (thousands of dollars, except percentages)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                           Three months                  Six months
                           ended June 30                ended June 30
                      2008     2007    Growth      2008      2007    Growth
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue
      Broadcasting $26,544   25,275         5%   47,546    44,003         8%
      Corporate
       and other       879      884        (1%)   1,615     1,674        (4%)
    -------------------------------------------------------------------------
    Consolidated
     revenue        27,423   26,159         5%   49,161    45,677         8%
    -------------------------------------------------------------------------
    Other income
     (expense)
      Corporate
       and other     5,451    1,221         -     6,385      (293)        -
    -------------------------------------------------------------------------
    Consolidated
     revenue
     and other
     income         32,874   27,380        20%   55,546    45,384        22%
    -------------------------------------------------------------------------
    Operating
     expenses
      Broadcasting  19,600   17,338        13%   36,673    32,751        12%
      Corporate
       and other     2,838    2,884        (2%)   5,252     5,381        (2%)
    -------------------------------------------------------------------------
    Consolidated
     operating
     expenses       22,438   20,222        11%   41,925    38,132        10%
    -------------------------------------------------------------------------
    EBITDA
      Broadcasting   6,944    7,937       (13%)  10,873    11,252        (3%)
      Corporate
       and other     3,492     (779)        -     2,748    (4,000)        -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consolidated
     EBITDA        $10,436    7,158        46%   13,621     7,252        88%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA Margins    2008     2007     Growth     2008      2007     Growth
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Broadcasting       26%      31%       (5%)      23%       26%       (3%)
    Consolidated       32%      26%        6%       25%       16%        9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Broadcasting segment

    The broadcasting segment derives its revenue from the sale of broadcast
advertising from its 77 licences across the country. The performance of all
reporting units within this segment is evaluated based on the same financial
measure - EBITDA.
    Broadcasting revenue in the quarter of $26.5 million was $1.3 million or
5% better than last year while year-to-date broadcasting revenue of
$47.5 million was $3.5 million or 8% ahead of last year. Organic
(same-station) operations accounted for over 4% of the quarterly growth and 7%
of the year-over-year growth. The most significant contributors to organic
growth in the quarter and year-to-date were the Ottawa, Ontario radio stations
with a 26% and 31% increase, respectively, over the same periods last year.
Also contributing to organic revenue was the group of properties in Alberta.
Incremental revenue was generated by the Calgary, Alberta FM licence, launched
in March 2007, and the new FM in Lac La Biche, Alberta launched in December
2007.
    Radio revenue throughout major markets in Canada is measured by The
Trans-Canada Radio Advertising by Market ("TRAM"). When comparing growth rates
to those reported by TRAM for the three months ended June 30, 2008, the
Company is outpacing the industry's 3% growth rate. The same comparison on a
year-to-date basis shows the Company again outpacing the industry's rate of
6%.
    For the quarter, broadcasting operating expenses were $19.6 million, up
$2.3 million or 13% over last year. Year-to-date broadcasting operating
expenses of $36.7 million were $3.9 million or 12% higher than last year. In
the first quarter, and as previously disclosed, the Company re-formatted two
stations in Alberta. Calgary's "California 103" Smooth Jazz and Blues station
was re-launched as "XL103-FM" playing Classic Hits. Edmonton's Country
station, "Big Earl", was also re-launched as "Capital-FM" playing Classic
Hits. As a result of these changes in two very important markets, the Company
spent approximately $0.3 million more on advertising and marketing than it
normally would have. These expenditures, along with higher variable costs in
line with higher broadcasting revenue, explain a good portion of the total
increase in operating expenses. The remaining increase in operating expenses
was a result of the recognition of eighteen months worth of CRTC Part II
Licence fees, as described below.
    In the third quarter of 2007, the Company ceased to accrue CRTC Part II
Licence fees in accordance with a court ruling at that point in time. On April
28th, 2008, the Federal Court of Appeal reversed the original decision and
found that the fees are a valid regulatory charge. As a result of this
decision, this quarter the Company recognized the obligation as it pertains to
these fees retroactively to January 1, 2007. Had the Company continued
accounting for the fees, operating expenses in the quarter would have been
$0.7 million lower and $0.6 million lower year-to-date.
    Eliminating the one time effect of the Part II fees and the additional
marketing costs, broadcasting EBITDA would have been $7.9 million, comparable
to the second quarter last year. Year-to-date broadcasting EBITDA would have
been $11.8 million, $0.5 million or 5% better. In the quarter, organic EBITDA
growth would have been 2% and for the year it would have been 7%. Ottawa,
Ontario and small market stations in Alberta were the main contributors to
same-station growth.

    Corporate and other segment

    The corporate and other segment derives its revenue from hotel
operations. Corporate and other also includes other income and expenses
attributed to head office functions and investment income from the Company's
portfolio of marketable securities, the results of which are heavily dependent
on market conditions.
    Corporate and other revenue in the second quarter of $0.9 million was on
par with last year's revenue while year-to-date revenue of $1.6 million was
slightly lower than 2007, due to a slight decrease in hotel revenue
experienced in the first quarter.
    Other income is solely derived from this operating segment. It consists
of realized and unrealized gains and losses related to marketable securities,
interest, dividends and distributions from investments. Other income in the
quarter was $4.2 million higher than the same period last year while the
year-to-date amount was $6.7 million better. The value of marketable
securities increased compared to the same periods in 2007. For additional
information, refer to Note 8 of the unaudited interim consolidated financial
statements.
    Corporate and other operating expenses of $2.8 million in the quarter and
$5.3 million year-to-date were on par with the same periods last year.
    Second quarter corporate and other EBITDA was $4.3 million better than
the same period last year and $6.7 million higher on a year-to-date basis
because of the positive fluctuation in the valuation of marketable securities.
    Subsequent to quarter end, the Canadian trading market experienced
general declines and as a result the value of the Company's marketable
securities also declined. If the market does not rebound, corporate and other
EBITDA will be negatively impacted in the third quarter.

    Selected Quarterly Financial Information

    The Company's revenue is derived primarily from the sale of advertising
airtime which is subject to seasonal fluctuations. The first quarter of the
year is generally a period of lower retail spending while the fourth quarter
is a period of higher retail spending. Other factors affecting the variability
of net income in the quarters presented below are as follows. In 2006, the
third quarter was negatively impacted by a $1.6 million decline in the value
of marketable securities. The 2007 first quarter's net income was impacted by
the $10.8 million gain on disposal of the Halterm Income Fund Trust Units and
the second quarter was affected by the $3.8 million gain on disposal of the
equity accounted investment in Larche Communications (Kitchener) Inc. The
second quarter in 2008 was impacted by a positive fluctuation of $4.8 million
in the value of marketable securities.

    
    (thousands
     of dollars
     except per
     share data)    2008                    2007                    2006
               -------------   -----------------------------   --------------
                2nd     1st     4th     3rd     2nd     1st     4th     3rd
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue  $27,423  21,738  27,736  25,405  26,159  19,518  28,064  22,788
    Net
     income    6,371     722   5,766   1,332   5,807   7,408   3,285       9
    Earnings
     per
     share
      - Basic   0.58    0.07    0.52    0.12    0.53    0.67    0.29    0.00
      - Diluted 0.56    0.06    0.50    0.12    0.51    0.64    0.28    0.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liquidity and capital resources

    Selected cash flow information - three months ended June 30, 2008

    Cash from operating activities of $4.3 million combined with net long-term
debt borrowings of $2.0 million were used largely to finance property and
equipment additions of $2.5 million, to repurchase capital stock for
$1.8 million and to fund the launch of the three new FM radio stations.

    Selected cash flow information - three months ended June 30, 2007

    The cash from operating activities of $1.1 million combined with long-term
debt borrowings of $9.0 million and the $4.0 million proceeds from the
disposition of the equity accounted investment were used to buy the
non-controlling interest in 3937844 Canada Inc. for $10.7 million, and to
repurchase capital stock for $3.7 million.

    Selected cash flow information - six months ended June 30, 2008

    Cash from operating activities of $4.0 million combined with net long-term
debt proceeds of $5.5 million were used mainly to finance property and
equipment additions of $4.1 million, to repurchase capital stock for
$1.8 million, to pay CCD in the amount of $1.1 million and to fund the recent
launch of three new FM stations.

    Selected cash flow information - six months ended June 30, 2007

    The aggregate proceeds of $18.5 million from the disposals of Halterm
Income Fund Trust Units and the equity accounted investment were primarily
used to acquire the non-controlling interest in 3937844 Canada Inc. for
$10.7 million, to repurchase capital stock of $3.7 million and to purchase
property and equipment of $1.8 million.
    Expenditures in capital assets in the second quarter and year-to-date were
due to the recent new station launches in Sydney and Kentville, Nova Scotia
and Fort McMurray, Alberta. Last year's capital expenditures related mostly to
the launch of FUEL-FM in Calgary, Alberta.
    The Company expects its level of cash flow and the availability of its
credit facility to be sufficient to fund working capital, capital
expenditures, contractual obligations, the purchase commitments previously
disclosed and other cash requirements as described above. The Company intends
to increase the availability of its credit facility to fund the Haliburton
acquisition.

    Credit facility and capital structure

    The Company's syndicated credit facility has not changed since the
publication of the 2007 Annual Report. The $80.0 million revolving credit
facility is intended to be renewed prior to the maturity date in June 2010.
This type of credit facility provides flexibility because there are no
scheduled repayment terms. Covenants for the facility require that the Company
maintain certain financial ratios. The Company was in compliance with the
covenants throughout the quarter and at quarter end, and expects to be for the
foreseeable future. As at June 30, 2008 the Company had $2.4 million of
current bank indebtedness outstanding and $66.5 million of long-term debt, of
which less than $0.1 million was current. Working capital was $19.6 million
compared to $13.6 million as at December 31, 2007; the improved working
capital balance was due to the increase in current assets.

    Commitments and Contractual Obligations

    In addition to the Company's contractual obligations disclosed in the 2007
Annual Report, the Company has new commitments related to:

    - CCD commitments that arose on the launch of the three new FM stations;
      and
    - the previously disclosed business acquisitions and the purchase and
      asset exchange agreements, disclosed under the "Corporate
      Developments" section.
    

    Off-Balance Sheet Arrangements

    The Company's off-balance sheet arrangements consist of operating leases.
Other than these, which are considered in the ordinary course of business, the
Company does not have any other off-balance sheet arrangements and does not
expect to enter into any other such arrangement other than in the ordinary
course of business.

    Financial Condition

    Capital employed and capital structure

    Assets at quarter end totalled $243.4 million, up from $231.3 million at
December 31, 2007 primarily due to increased current assets and capital
assets. At quarter end the capital structure consisted of 45% equity ($109.7
million) and 55% debt ($133.6 million). Total bank debt is 63% of equity,
compared to the year end ratio of 59%. The total bank debt to EBITDA ratio
calculated in accordance with the Company's credit facility was 3.6 to 1.

    Share repurchases

    The Company has approval under a Normal Course Issuer Bid to repurchase
up to 491,630 Class A Subordinate Voting Shares ("Class A shares") and 62,906
Class B Common Shares. This bid expires February 7, 2009. In the second
quarter and year-to-date, the Company repurchased for cancellation 100,000 of
its outstanding Class A shares for a total cost of $1.8 million. In 2007,
198,800 Class A shares were repurchased in the first quarter for a total cost
of $3.7 million. Capital stock was reduced by $0.4 million (2007 -
$0.8 million) and retained earnings by $1.4 million (2007 - $2.9 million).

    Outstanding share data

    The weighted average number of shares outstanding was 10,991,000 as
compared to last year's 11,062,000; the reduction mainly due to the repurchase
of 100,000 Class A shares pursuant to the Normal Course Issuer Bid. As at
August 7, 2008, there are 9,733,189 Class A shares and 1,257,551 Class B
Common Shares outstanding.

    Executive Compensation

    Executive stock option plan

    Compensation expense related to stock options for the three months ended
June 30, 2008 was less than $0.1 million (2007 - $0.1 million) and
year-to-date was $0.1 million (2007 - $0.2 million). Refer to Note 4 of the
unaudited interim consolidated financial statements for further details
relating to the executive stock option plan.

    Stock appreciation rights plan

    For the three months ended June 30, 2008, the compensation expense
related to stock appreciation rights ("SARs") and the liability were reduced
by $0.1 million. For the same quarter last year, SARs compensation expense was
$0.1 million. Year-to-date compensation expense was less than $0.1 million
(2007 - $0.2 million) and the total obligation included in other liabilities
was $0.8 million (2007 - $0.3 million). Refer to Note 6 of the unaudited
interim consolidated financial statements for further details relating to
SARs.

    Adoption of new accounting policies

    Effective January 1, 2008, the Company adopted the recommendations of the
following Canadian Institute of Chartered Accountants ("CICA") Handbook
Sections: Section 1535 Capital Disclosures, Section 3862 Financial Instruments
- Disclosures and Section 3863 Financial Instruments - Presentation. The
changes in the accounting policies relate to disclosure and presentation only
and did not have an impact on the Company's financial results.

    Section 1535 Capital Disclosures

    This Section requires disclosure on information about the entity's
objectives, policies and processes for managing capital and whether the entity
has complied with externally imposed capital requirements.

    Section 3862 Financial Instruments - Disclosures &
    Section 3863 Financial Instruments - Presentation

    These Sections replace Section 3861 Financial Instruments - Disclosure
and Presentation by revising and enhancing disclosure requirements while
carrying forward the presentation requirements. The Sections increase the
emphasis on disclosing the nature and extent of risks arising from financial
instruments and how the entity manages those risks.
    Refer to Note 8 of the unaudited interim consolidated financial
statements for further details respecting the impact of adopting these new
disclosure requirements.

    Derivative Financial Instruments and Financial Risk Management

    For more detailed disclosures about derivative financial instruments and
financial risk management, refer to Note 8 of the unaudited interim
consolidated financial statements.

    Interest rate risk management

    To hedge its exposure to fluctuating interest rates on its long-term
debt, the Company has entered into interest rate swap agreements with Canadian
chartered banks. The swap agreements expire in 2013 and involve the exchange
of the three-month bankers' acceptance floating interest rate for a fixed
interest rate. The difference between the fixed and floating rates is settled
quarterly with the bank and recorded as an increase or decrease to interest
expense. The aggregate notional amount of the swap agreements was
$60.0 million (2007 - $25.0 million). The Company formally assesses
effectiveness of the swaps at inception and on a regular basis and has
concluded that the swaps are effective in offsetting changes in interest
rates. The aggregate fair value of the swap agreements, which represents the
amount that would be payable by the Company if the agreements were terminated
at June 30, 2008, was $0.5 million (2007 - receivable of $0.2 million).
After-tax unrealized income of $0.1 million (2007 - $0.2 million) was
recognized in OCI for the second quarter while the year-to-date unrealized
expenses recorded in OCI were $0.3 million (2007 - unrealized income of $0.2
million).

    Share price volatility management

    In July 2006, the Company entered into an agreement to hedge its
obligations under the stock appreciation rights plan using an equity total
return swap agreement to reduce the volatility in cash flow and earnings due
to possible future increases in the Company's share price.  Gains or losses
realized on the quarterly settlement dates are recognized in income in the
same period as the SARs compensation expense.  Unrealized gains and losses, to
the extent that the hedge is effective, are deferred and included in OCI until
such time as the hedged item affects net income.  If at any time, the hedge is
deemed to be ineffective or the hedge is terminated or de-designated, gains or
losses, including those previously recognized in OCI, will be recorded in net
income immediately.
    The Company has concluded that this cash flow hedge is effective. The
estimated fair value of the equity total return swap receivable at June 30,
2008 was $0.6 million (2007 - $0.7 million). After-tax unrealized losses of
$0.2 million (2007 - unrealized gains of less than $0.1 million) were
recognized in OCI for the second quarter and year-to-date unrealized losses
recorded in OCI were $0.3 million (2007 - unrealized income of $0.4 million).

    Market risk

    Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices. The
fair value of the Company's marketable securities is affected by changes in
the quoted share prices in active markets. Such prices can fluctuate and are
affected by numerous factors beyond the Company's control. In order to
minimize the risk associated with changes in the share price of any one
particular investment, the Company diversifies its portfolio by investing in
various stocks in varying industries. It also conducts regular financial
reviews of publicly available information related to its investments to
determine if any identified risks are within tolerable risk levels. The
Company has no exposure with regard to asset-backed instruments. As at
June 30, 2008, a 10% change in the share prices of the Company's marketable
securities would result in a $1.9 million after-tax change in net income.

    Credit risk management

    Credit exposure on financial instruments arises from the possibility that
a counterparty to an instrument in which the Company is entitled to receive
payment fails to perform. Credit exposure is managed through credit approval
and monitoring procedures.
    With regard to the interest rate swaps and the equity total return swap,
the Company does not anticipate any counterparties that it currently transacts
with will fail to meet their obligations as the counterparties are Canadian
Chartered Banks.
    The Company is subject to normal credit risk with respect to its
receivables. A large customer base and geographic dispersion minimize credit
risk. The Company reviews its receivables for possible indicators of
impairment on a regular basis and as such, it maintains a provision for
potential credit losses.
    At June 30, 2008 and 2007, there was minimal credit exposure to the
Company.

    Liquidity Risk

    Liquidity risk is the risk that the Company is not able to meet its
financial obligations as they become due or can do so only at excessive cost.
The Company's growth is financed through a combination of the cash flows from
operations and borrowings under the existing credit facility. One of
management's primary goals is to maintain an optimal level of liquidity
through the active management of the assets and liabilities as well as the
cash flows. Given the Company's available liquid resources as compared to the
timing of the payments of liabilities, management assesses the Company's
liquidity risk to be low.

    Capital Management

    The Company defines its capital as shareholders' equity. The Company's
objective when managing capital is to pursue its strategy of growth through
acquisitions and through organic operations so that that it can continue to
provide adequate returns for shareholders. The Company manages the capital
structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders, issue new shares or repurchase shares. The
Directors and Senior Management of the Company are of the opinion that from
time to time the purchase of its shares at the prevailing market price would
be a worthwhile investment and in the best interests of the Company and its
shareholders. Material transactions and those considered to be outside the
ordinary course of business, such as acquisitions and other major investments
or disposals, are reviewed and approved by the Board of Directors.

    Future Accounting Policy Changes

    In January 2006, the Accounting Standards Board ("AcSB") approved its
strategic plan for financial reporting in Canada. For publicly reportable
enterprises, Canadian generally accepted accounting principles ("GAAP") will
converge with International Financial Reporting Standards ("IFRS") over a five
year period between 2006 and 2011 after which Canadian GAAP will be replaced
altogether by IFRS. The Company will continue to monitor the effects of this
transition.
    The Accounting Standards Board approved new Section 3064 Goodwill and
Intangible Assets replacing Section 3062 Goodwill and Other Intangible Assets
and Section 3450 Research and Development. This Section establishes the
standard for recognition, measurement, presentation and disclosure of goodwill
and intangible assets. This Section will be adopted by the Company effective
January 1, 2009. The adoption of this Section will represent a change in how
the Company accounts for its pre-operating costs related to new station
launches. Currently, pre-operating costs are capitalized and amortized over
the term of the broadcast licence. Capitalization of these costs will no
longer be appropriate and therefore will be recorded in net income as
incurred. For pre-operating balances that exist on January 1, 2009, they will
be accounted for in accordance with Section 1506 Accounting Changes.

    Subsequent Events

    On July 2, 2008, the Company acquired the remaining 50% interest in Metro
Radio Group Inc. which owns and operates CKUL-FM in Halifax, Nova Scotia.
Total cash consideration was $8.5 million.
    On July 2, 2008, the Company bought a 29.9% interest in a company that
operates an FM radio station in Nova Scotia for $1.0 million.
    On July 23, 2008, the Company announced it had an agreement to exchange
radio stations with Rogers Broadcasting Limited (a Division of Rogers
Communications Inc. RCI.A and RCI.B) subject to approval from the CRTC. The
Company will exchange its AM broadcast licence in Halifax, Nova Scotia and
receive in return Rogers' AM licence in Sudbury, Ontario and cash
consideration of $5.0 million.
    On July 28, 2008, the Company announced it had entered into an agreement
to acquire 12 English FM radio broadcasting licences in Ontario from
Haliburton Broadcasting Group Inc. for $18.95 million, subject to CRTC
approval.
    On August 7, 2008, the Company declared dividends of $0.15 per share on
each of its Class A shares and Class B Common shares payable October 3, 2008
to shareholders of record as at September 5, 2008.

    Critical Accounting Estimates

    There has been no substantial change in the Company's critical accounting
estimates since the publication of the 2007 Annual Report.

    Risks and Opportunities

    There has been no substantial change in the Company's risks and
opportunities since the publication of the 2007 Annual Report except as it
relates to CRTC Licence fees, as described below.
    Since 2001, the CRTC has levied Part II licence fees on all Canadian
broadcasters. Broadcasters paid these fees in protest until December 15, 2006,
when the Federal Court rendered a decision stating that the Part II licence
fees were an illegal tax. In the third quarter of 2007, the Company deemed
that because there had been no appeal of the December 2006 ruling that it was
no longer appropriate to accrue for these fees in its results. The fees
recognized in 2007 were reversed and the Company discontinued accruing the
fees on a go forward basis.
    On May 6, 2008, the Canadian Association of Broadcasters ("CAB") issued a
news release stating that on April 28th, 2008, the Federal Court of Appeal
reversed the Trial Court decision on the CAB's Part II Licence Fee challenge,
and found that the fees are a valid regulatory charge. As a result of this
decision, the Company has determined that the Part II fees meet the definition
of a liability and has recognized the obligation as it pertains to these fees
retroactively from January 1, 2007 to June 30, 2008. The total amount recorded
as operating expenses in the second quarter was $0.9 million; $0.6 million
related to 2007 fees, $0.1 million related to the first quarter of 2008 and
$0.2 million related to the second quarter this year.
    The CAB has filed an appeal to the Supreme Court of Canada. It is unknown
at this time if the appeal will be heard, and if so, whether or not it will be
successful.

    Changes in Internal Controls over Financial Reporting

    There were no changes in the Company's internal controls over financial
reporting that occurred in the three months and six months ending June 30,
2008 that have materially affected, or are likely to materially affect, the
Company's internal controls over financial reporting.

    Outlook

    The July 2008 ratings results were positive for the Company, showing
market share increases in Ottawa, Ontario and in Edmonton and Calgary, Alberta
where two stations were recently re-launched with a Classic Hits format.
Management has focused on these markets in the last two years as competition
has increased and these are important markets for the Company. Management will
continue to monitor the performance of these stations and adjust the marketing
strategy as appropriate with the objective of continuing to grow revenue.
    The Company remains active in reviewing all possible acquisition
opportunities that meet the Company's investment criteria. The recently
announced purchase of 12 new stations in Ontario is an important expansion for
the Company and one that will significantly increase the Company's presence in
the province of Ontario. Management has demonstrated in the past that it
successfully integrates new stations into its radio operating platform and
makes strong stations even stronger.
    The Company is awaiting the CRTC decision on its applications for new FM
licences in Winnipeg, Manitoba and Drumheller, Alberta. The Company will
continue its successful track record of converting existing AM stations to FM.
    The Company remains committed to being actively involved with the local
communities where we have operations, while working in partnership with
community and charitable groups to ensure the radio stations remain locally
focused. A second key priority for the Company is its continued focus on
developing the talent of its radio professionals across Canada, which number
in excess of 850 people.

    
    Non-GAAP Measure

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

                                    Three months             Six months
                                    ended June 30           ended June 30
    (thousands of dollars)         2008        2007        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income                  $ 6,371       5,807       7,093      13,215
    Non-controlling interest
     in subsidiaries' earnings        -         190           -         292
    Provision for income taxes    1,916       2,847       2,255       4,413
    Gain on disposal of
     long-term investment             -           -           -     (10,843)
    Gain on disposal of equity
     accounted investment             -      (3,826)          -      (3,826)
    Accretion of other
     liabilities                    242         408         484         648
    Interest expense                922         730       1,850       1,468
    Depreciation and
     amortization expense           985       1,002       1,939       1,885
                               ----------------------  ----------------------
    EBITDA                     $ 10,436       7,158      13,621       7,252
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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.


    Newfoundland Capital Corporation Limited

    Notice of Disclosure of Non-Auditor Review of Interim Financial
    Statements for the three months and six months ended June 30, 2008 and
2007

    Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a)
issued by the Canadian Securities Administrators, the interim financial
statements must be accompanied by a notice indicating that the financial
statements have not been reviewed by an auditor if an auditor has not
performed a review of the interim financial statements.
    The accompanying unaudited interim consolidated financial statements of
the Company for the interim periods ended June 30, 2008 and 2007 have been
prepared in accordance with Canadian generally accepted accounting principles
and are the responsibility of the Company's management.
    The Company's independent auditors, Ernst & Young LLP, have not performed
a review of these interim consolidated financial statements in accordance with
the standards established by the Canadian Institute of Chartered Accountants
for a review of interim financial statements by an entity's auditor.

    Dated this 7th day of August, 2008


    Interim Consolidated Balance Sheets
    (unaudited)
                                                           June    December
                                                             30          31
    (thousands of dollars)                                 2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    ASSETS

    Current assets
      Marketable securities (note 8)                  $  23,531      16,167
      Receivables                                        20,807      21,351
      Prepaid expenses                                    1,494         966
      Other assets (note 8)                                 616         614
      Future income tax assets                            2,293       2,703
                                                      -----------------------
        Total current assets                             48,741      41,801

    Property and equipment                               37,649      35,234
    Other assets                                          5,736       4,642
    Broadcast licences (note 3)                         144,679     143,245
    Goodwill                                              4,859       4,859
    Future income tax assets                              1,686       1,515
                                                      -----------------------
                                                      $ 243,350     231,296
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Bank indebtedness                               $   2,388       1,117
      Accounts payable and accrued liabilities           18,235      18,053
      Dividends payable                                       -       1,664
      Income taxes payable                                7,580       7,313
      Future income tax liabilities                         884           -
      Current portion of long-term debt                      16          23
                                                      -----------------------
        Total current liabilities                        29,103      28,170

    Long-term debt                                       66,500      61,005
    Other liabilities                                    19,955      19,665
    Future income tax liabilities                        18,045      17,504
    Shareholders' equity                                109,747     104,952
                                                      -----------------------
                                                      $ 243,350     231,296
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments and contingencies (notes 8 and 11)
    Subsequent events (note 12)
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Income
    (unaudited)

                                 Three months ended       Six months ended
    (thousands of dollars              June 30                 June 30
     except per share data)        2008        2007        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue                   $  27,423      26,159      49,161      45,677
    Other income (expense)        5,451       1,221       6,385        (293)
                              -----------------------------------------------
                                 32,874      27,380      55,546      45,384
    Operating
     expenses (note 11)          22,438      20,222      41,925      38,132
    Depreciation                    839         815       1,647       1,590
    Amortization of
     deferred charges               146         187         292         295
                              -----------------------------------------------
    Operating income              9,451       6,156      11,682       5,367
    Interest expense (note 8)       922         730       1,850       1,468
    Accretion of other
     liabilities (note 8)           242         408         484         648
    Gain on disposal of
     equity accounted
     investment (note 3)              -      (3,826)          -      (3,826)
    Gain on disposal of
     long-term investment
     (note 8)                         -           -           -     (10,843)
                              -----------------------------------------------
                                  8,287       8,844       9,348      17,920
    Provision for income
     taxes                        1,916       2,847       2,255       4,413
                              -----------------------------------------------
                                  6,371       5,997       7,093      13,507
    Non-controlling interest
     in subsidiaries'
     earnings                         -         190           -         292
                              -----------------------------------------------
    Net income                $   6,371       5,807       7,093      13,215
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per
     share (note 9)
      - basic                 $    0.58        0.53        0.64        1.19
      - diluted                    0.56        0.51        0.62        1.15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Shareholders' Equity
    (unaudited)

                                                           Six months ended
                                                               June 30
    (thousands of dollars)                                 2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Retained earnings, beginning of period            $  59,621      45,525
    Net income                                            7,093      13,215
    Repurchase of capital stock (note 4)                 (1,373)     (2,890)
                                                      -----------------------
    Retained earnings, end of period                     65,341      55,850
    Capital stock (note 4)                               42,913      43,345
    Contributed surplus (note 5)                          1,857       1,567
    Accumulated other comprehensive income (loss)          (364)        453
                                                      -----------------------

    Total shareholders' equity                        $ 109,747     101,215
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Comprehensive Income
    (unaudited)

                                 Three months ended       Six months ended
                                       June 30                 June 30
    (thousands of dollars)         2008        2007        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income                $   6,371       5,807       7,093      13,215
                              -----------------------------------------------
    Other comprehensive
     income (loss):
    Change in fair values
     of cash flow hedges
     (note 8)
      Interest rate swaps:
        Increase (decrease)
         in fair value              120         305        (458)        355
        Reclassification to
         net income of
         realized interest
         expense                     63           1          63           2
        Related income tax
         recovery (expense)         (45)       (113)        118        (133)
                              -----------------------------------------------
                                    138         193        (277)        224
                              -----------------------------------------------
      Total equity return
       swap:
        Increase (decrease)
         in fair value             (425)        212        (425)        786
        Reclassification to
         net income of
         realized losses
         (gains)                    122        (131)        (23)       (232)
        Related income tax
         recovery (expense)         103         (32)        153        (202)
                              -----------------------------------------------
                                   (200)         49        (295)        352
                              -----------------------------------------------
    Change in fair value of
     asset available-for-
     sale (note 8)
      Realized gain on
       disposal of Halterm
       Income Fund Trust Units
       transferred to net
       income, net of
       income taxes of
       $1,952                         -           -           -      (8,891)
                              -----------------------------------------------
    Other comprehensive
     income (loss)                  (62)        242        (572)     (8,315)
                              -----------------------------------------------
    Comprehensive income      $   6,309       6,049       6,521       4,900
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statement of Accumulated Other
    Comprehensive Income
    (unaudited)
                                                           Six months ended
                                                               June 30
    (thousands of dollars)                                 2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive income,
     beginning of period                              $     208           -
    Transition adjustment for cash flow hedges,
     net of income tax recovery of $77 (note 8)               -        (123)
    Transition adjustment for unrealized gain
     associated with available for sale investment,
     net of income taxes of $1,952 (note 8)                   -       8,891
                                                      -----------------------
    Accumulated other comprehensive income,
     beginning of period                                    208       8,768
    Other comprehensive loss for the period                (572)     (8,315)
                                                      -----------------------

    Accumulated other comprehensive income
     (loss), end of period                            $    (364)        453
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Cash Flows
    (unaudited)

                                 Three months ended        Six months ended
                                       June 30                 June 30
    (thousands of dollars)         2008        2007        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating Activities
    Net income                $   6,371       5,807       7,093      13,215
    Items not involving cash
      Depreciation and
       amortization                 985       1,002       1,939       1,885
      Future income taxes         1,918       1,626       1,935       1,196
      Executive stock-based
       compensation plans
       (notes 4 and 6)              (16)        209         102         408
      Accretion of other
       liabilities (note 8)         242         408         484         648
      Gain on disposal of
       equity accounted
       investment (note 3)            -      (3,826)          -      (3,826)
      Gain on disposal of
       long-term
       investment (note 8)            -           -           -     (10,843)
      Non-controlling
       interest in
       subsidiaries' earnings         -         190           -         292
      Unrealized (gains)
       losses on marketable
       securities (note 8)       (4,830)     (1,000)     (5,530)        300
      Other                          90        (220)        (97)       (385)
                              -----------------------------------------------
                                  4,760       4,196       5,926       2,890
    Change in non-cash
     working capital
     relating to operating
     activities                    (468)     (3,135)     (1,913)     (5,372)
                              -----------------------------------------------
                                  4,292       1,061       4,013      (2,482)
    -------------------------------------------------------------------------
    Financing Activities
    Change in bank
     indebtedness                   104         787       1,271       3,546
    Long-term debt borrowings     2,000       9,000       5,500       9,000
    Long-term debt repayments        (6)       (267)        (12)    (13,758)
    Issuance of capital
     stock (note 4)                   -         153           -         185
    Repurchase of capital
     stock (note 4)              (1,805)     (3,737)     (1,805)     (3,737)
    Dividends paid                    -           -      (1,664)     (1,680)
    Other                             -           -           -        (605)
                              -----------------------------------------------
                                    293       5,936       3,290      (7,049)
    -------------------------------------------------------------------------
    Investing Activities
    Note receivable                   -       1,000           -       1,000
    Property and equipment
     additions                   (2,461)       (770)     (4,062)     (1,767)
    Canadian Content
     Development payments          (564)       (561)     (1,050)       (858)
    Acquisition of
     businesses, licences
     and non-controlling
     interest (note 3)                -     (10,745)          -     (10,745)
    Proceeds from disposal
     of Halterm Income Fund
     Trust Units and equity
     accounted investment
     (notes 3 and 8)                  -       4,000           -      18,547
    Deferred charges               (901)       (320)     (1,275)       (696)
    Employee share purchase
     loan repayment                   -           -           -       2,826
    Other                          (659)        399        (916)      1,224
                              -----------------------------------------------
                                 (4,585)     (6,997)     (7,303)      9,531
    -------------------------------------------------------------------------
    Cash, beginning and end
     of period                $       -           -           -           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental Cash Flow
     Information
      Interest paid           $     787         735       1,647       1,606
      Income taxes paid              43         197         115         762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Notes to the Interim Consolidated Financial Statements - June 30, 2008
    and 2007 (unaudited)
    -------------------------------------------------------------------------

    1. ACCOUNTING PRESENTATIONS AND DISCLOSURES

    The interim financial statements presented herein were prepared by the
    Company and follow the same accounting policies and their methods of
    application as the 2007 annual financial statements. These financial
    statements are prepared in accordance with Canadian generally accepted
    accounting principles ("GAAP") for interim financial statements. They
    do not include all of the information and disclosures required by GAAP
    for annual financial statements. Accordingly, these financial
    statements should be read in conjunction with the Company's audited
    consolidated financial statements and the accompanying notes contained
    in the Company's 2007 Annual Report.

    Certain of the comparative figures have been reclassified to conform
    to the financial statement presentation adopted in the current year.

    The Company's accounting policies have remained unchanged since the
    2007 Annual Report with the exception of the adoption of new
    accounting policies described in Note 2.

    2. ADOPTION OF NEW ACCOUNTING POLICIES

    Effective January 1, 2008, the Company adopted the recommendations of
    the following Canadian Institute of Chartered Accountants ("CICA")
    Handbook Sections: Section 1535 Capital Disclosures, Section 3862
    Financial Instruments - Disclosures and Section 3863 Financial
    Instruments - Presentation. The changes in the accounting policies
    relate to disclosure and presentation only and did not have an impact
    on the Company's financial results.

    Section 1535 Capital Disclosures

    This Section requires disclosure on information about the entity's
    objectives, policies and processes for managing capital and whether
    the entity has complied with externally imposed capital requirements.

    Section 3862 Financial Instruments - Disclosures &
    Section 3863 Financial Instruments - Presentation

    These Sections replace Section 3861 Financial Instruments - Disclosure
    and Presentation by revising and enhancing disclosure requirements while
    carrying forward the presentation requirements. The Sections increase
    the emphasis on disclosing the nature and extent of risks arising from
    financial instruments and how the entity manages those risks.

    3. ADDITIONS, ACQUISITIONS AND DISPOSALS

    Broadcast licence additions

    During 2008, the Company launched its new FM radio stations in Carbonear,
    Newfoundland and Labrador, Lac LaBiche and Fort McMurray, Alberta and
    Kentville and Sydney, Nova Scotia. Upon the launch dates, the Company
    became obligated to pay $225,000 in Canadian Content Development ("CCD")
    commitments per year for seven years. Using the amortized cost basis to
    record these commitments on the consolidated balance sheets, $1,236,000
    was capitalized as broadcast licences and recorded in other liabilities.
    Costs incurred related to the award of new broadcast licences such as
    application costs are also capitalized bringing the total amount
    capitalized to broadcast licences related to these stations to
    $1,434,000.

    In 2007, the Company launched its new FM radio station in Calgary,
    Alberta. Upon the launch date, the Company became obligated to pay CCD
    of $1,000,000 per year for seven years. Using the amortized cost basis
    to record these commitments on the consolidated balance sheets,
    $4,718,000 was capitalized as broadcast licences and recorded in other
    liabilities. Costs incurred related to the award of new broadcast
    licences such as application costs were also capitalized bringing the
    total amount capitalized to broadcast licences related to this station to
    $4,907,000.

    Business acquisitions

    On May 16, 2007, the Company acquired the minority shareholder's 23.66%
    interest in 3937844 Canada Inc. for cash consideration of $10,745,000.
    3937844 Canada Inc. owns and operates 22 of the Company's 34 licences
    throughout the province of Alberta. The excess of the purchase price over
    the net book value of the non- controlling interest acquired was
    allocated to the net identifiable assets acquired on the basis of their
    estimated fair market values using the purchase method of accounting.
    $521,000 was added to broadcast licences and $130,000 was recorded as a
    future tax liability. The Company accounted for this acquisition of
    non-controlling interest as a step purchase. The acquisition was financed
    by the Company's credit facility.

    Disposal of equity accounted investment

    On April 12, 2007, the Company disposed of its 29.9% interest in Larche
    Communications (Kitchener) Inc. which operates an FM radio station in
    Kitchener, Ontario. The proceeds were $4,000,000 which resulted in a gain
    on disposal of $3,826,000.

    4. CAPITAL STOCK

    Share repurchases

    The Company has approval under a Normal Course Issuer Bid to repurchase
    up to 491,630 Class A Subordinate Voting Shares ("Class A shares") and
    62,906 Class B Common Shares. This bid expires February 7, 2009. In the
    second quarter and year-to-date, the Company repurchased for cancellation
    100,000 of its outstanding Class A shares for a total cost of $1,805,000.
    In 2007, 198,800 Class A shares were repurchased in the first quarter for
    a total cost of $3,737,000. Capital stock was reduced by $432,000 (2007 -
    $847,000) and retained earnings by $1,373,000 (2007 - $2,890,000).

    Executive stock option plan

    Pursuant to the executive stock option plan, on a year-to-date basis
    35,000 (2007 - nil) options were granted at a weighted average exercise
    price of $19.99. No options were granted in the second quarter of 2008 or
    2007. The options vest at a rate of twenty-five percent on the date of
    grant and twenty-five percent on each of the three succeeding anniversary
    dates and the options expire March 10, 2013. During 2008, no options were
    exercised. In 2007, 20,000 Class A shares were exercised in the second
    quarter for proceeds of $153,000 and on a year-to-date basis 23,750 Class
    A shares were exercised for proceeds of $185,000. Additionally in last
    year's second quarter, 195,000 options were exercised on a cashless basis
    in exchange for 67,271 Class A shares which resulted in increasing
    capital stock and decreasing contributed surplus by $693,000.
    Compensation expense related to stock options for the three months ended
    June 30, 2008 was $44,000 (2007 - $75,000) and year-to-date was $79,000
    (2007 - $177,000).

    5. CONTRIBUTED SURPLUS

    (thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance, January 1, 2007                                    $     2,093
    Executive stock option plan compensation expense                    177
    Value of options exercised                                         (703)
                                                               --------------
    Balance, June 30, 2007                                            1,567
    Executive stock option plan compensation expense                    290
    Value of options exercised                                            -
                                                               --------------
    Balance, June 30 2008                                       $     1,857
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    6. STOCK APPRECIATION RIGHTS

    In January 2006, the Company granted 425,000 stock appreciation rights
    ("SARs") at a reference price of $16.53. On March 2, 2007, 5,000 SARs
    were granted at a reference price of $18.41 and on August 9, 2007,
    85,000 SARs were granted at a reference price of $19.91. As at June 30,
    2008, 70,000 SARs have expired. The rights vest at a rate of 50% at the
    end of year three, 25% at the end of year four and 25% at the end of year
    five. The rights are exercisable as they vest. At the date of exercise,
    cash payments are made to the holders based on the difference between the
    market value of the Company's Class A shares and the reference price. All
    SARs granted under this plan expire on the 60th day following the 5th
    anniversary of the grant date. For the three months ended June 30, 2008,
    the compensation expense and the liability were reduced by $60,000. For
    the same quarter last year, the compensation expense related to SARs was
    $134,000. Year-to-date compensation expense was $23,000 (2007 - $231,000)
    and the total obligation included in other liabilities was $780,000 (2007
    - $334,000).

    7. EMPLOYEE BENEFIT PLANS

                                 Three months ended        Six months ended
                                       June 30                 June 30
    (thousands of dollars)         2008        2007        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Defined contribution plan
     expense                     $  309         344         657         664
    Defined benefit plan
     expense                        126         125         252         251
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

    The Company's financial instruments are categorized and measured as
    follows:

    Asset / Liability               Classification               Measurement
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and bank
     indebtedness                 Held for trading                Fair value
    Marketable securities         Held for trading                Fair value
    Investment in Halterm
     Income Fund Trust
     Units                      Available-for-sale                Fair value
    Receivables              Loans and receivables  Amortized cost using EIM
    Note receivable          Loans and receivables  Amortized cost using EIM
    Accounts payable and
     accrued liabilities         Other liabilities  Amortized cost using EIM
    Long-term debt               Other liabilities  Amortized cost using EIM
    Canadian Content
     Development commitments,
     included in other
     liabilities                 Other liabilities  Amortized cost using EIM
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Marketable securities and cash are able to be settled in the near term;
    therefore, they meet the criteria required to classify them as held for
    trading. Instruments classified as held for trading are measured at fair
    value with unrealized gains and losses recorded immediately in net
    income. The fair value of marketable securities is based on the quoted
    share prices in active markets. For the quarter ended June 30, 2008, the
    change in fair value of marketable securities, recognized in other income
    in the consolidated statements of income, was a gain of $4,830,000 (2007
    -$1,000,000). That brings the year-to-date total to a gain of $5,530,000
    (2007 - loss of $300,000). There was no transitional adjustment required
    for marketable securities upon adoption of this accounting policy in
    January 2007 because the securities' carrying value was equal to the fair
    value on that date as a result of measuring these investments at the
    lower of cost or market on December 31, 2007.

    On January 1, 2007, the investment in Halterm Income Fund Trust Units
    was classified as an asset available for sale and the investment was
    measured at fair value based on the quoted unit price in active markets.
    This resulted in an unrealized gain of $10,843,000 ($8,891,000 after-tax)
    which was recognized in other comprehensive income ("OCI") and in
    accumulated other comprehensive income ("AOCI") as a transition
    adjustment. The investment was sold on January 19, 2007 for proceeds of
    $14,547,000 at which time the gain was realized and transferred from OCI
    to be included in net income.

    The financial instruments classified as loans and receivables and other
    liabilities are measured using amortized cost using the effective
    interest method ("EIM"). Under the EIM, interest income and expense are
    calculated and recorded using the effective interest rate which is the
    rate that exactly discounts estimated future cash receipts or payments
    throughout the expected life of the financial instrument. Interest
    expense on long-term debt for the second quarter was $717,000
    (2007 - $686,000) and year-to-date was $1,550,000 (2007 - $1,504,000).
    Accretion expense on CCD aggregated $242,000 for the second quarter
    (2007 - $408,000) and $484,000 year-to-date (2007 - $648,000) based on
    EIM rates ranging from 8% to 14.3%.

    Current assets and current liabilities' carrying values are
    representative of their fair values due to the relatively short period to
    maturity. The fair value of long-term debt approximates the carrying
    value because the floating interest rate is reflective of the market
    interest rate available to the Company.

    Transaction costs directly attributable to financial instruments
    classified as other than held for trading are included in the initial
    carrying value of such instruments and are amortized using EIM.

    The Company conducted a search for embedded derivatives in its
    contractual arrangements dated or modified subsequent to January 1, 2003.
    An embedded derivative is a component of a hybrid instrument that also
    includes a non-derivative host contract, with the effect that some of the
    cash flows of the combined instrument vary in a way similar to a stand-
    alone derivative. When certain conditions are met, an embedded derivative
    is separated from the host contract and accounted for separately as a
    derivative on the balance sheet at fair value. The Company's policy is to
    recognize embedded derivatives on the consolidated balance sheet, when
    applicable. Because there are no embedded derivatives at this time, this
    rule has no impact on the consolidated financial statements of the
    Company.

    The Company's risk management objectives and procedures are described
    below:

    Market risk

    Market risk is the risk that the fair value or future cash flows of a
    financial instrument will fluctuate because of changes in market prices,
    which includes quoted share prices in active markets, interest rates and
    the Company's quoted share price as it relates to one of its stock-based
    compensation plans.

    Managing risk associated with fluctuations in quoted share prices of
    marketable securities

    The fair value of the Company's marketable securities is affected by
    changes in the quoted share prices in active markets. Such prices can
    fluctuate and are affected by numerous factors beyond the Company's
    control. In order to minimize the risk associated with changes in the
    share price of any one particular investment, the Company diversifies its
    portfolio by investing in various stocks in varying industries. It also
    conducts regular financial reviews of publicly available information
    related to its investments to determine if any identified risks are
    within tolerable risk levels. The Company has no exposure with regard to
    asset-backed instruments. As at June 30, 2008 a 10% change in the share
    prices of the Company's marketable securities would result in a
    $1,900,000 after-tax change in net income.

    Interest rate risk management

    To hedge its exposure to fluctuating interest rates on its long-term
    debt, the Company has entered into interest rate swap agreements with
    Canadian chartered banks. The swap agreements involve the exchange of the
    three-month bankers' acceptance floating interest rate for a fixed
    interest rate. The difference between the fixed and floating rates is
    settled quarterly with the bank and recorded as an increase or decrease
    to interest expense. The Company formally assesses effectiveness of the
    swaps at inception and on a regular basis and has concluded that the
    swaps are effective in offsetting changes in interest rates.

    On June 23, 2008, the Company entered into two new interest rate swap
    agreements; one has a notional value of $15,000,000 and expires in
    June 2013, and the other has a notional amount of $45,000,000 and expires
    in May 2013. Three former interest rate swap agreements, having an
    aggregated notional value of $45,000,000, were terminated and as a result
    the fair value of these agreements ($349,000 payable) was blended into
    the interest rate of the new $45,000,000 swap agreement. This fair value
    payable will be transferred from OCI to net income (as interest expense)
    over the term of the original three swap agreements which expired between
    2009 and 2011. The amount related to this payable transferred to net
    income from OCI for the second quarter and year-to-date was $24,000
    (2007 - $nil).

    The aggregate notional amount of the Company's swap agreements was
    $60,000,000 (2007 - $25,000,000). The aggregate fair value of the swap
    agreements, which represents the amount that would be payable by the
    Company if the agreements were terminated on June 30, 2008, was $547,000
    (2007 - receivable of $205,000). In the second quarter, the before-tax
    increase in the fair value of the swaps recognized in OCI was $120,000
    (2007 - $305,000). Year-to-date, the before-tax decrease in fair value of
    the swaps recognized in OCI was $458,000 (2007 - increase in fair value
    of $355,000).

    Realized interest expense of $63,000 was transferred from OCI to net
    income in the second quarter and year-to-date (2007 - $1,000 in the
    quarter and $2,000 year-to-date). OCI income tax for the quarter on these
    swaps was $45,000 (2007 - $113,000) and year-to-date was a tax recovery
    of $118,000 (2007 - expense of $133,000). The accumulated loss at
    January 1, 2007 of $153,000 was recorded, net of income tax recoveries of
    $60,000, as a transition adjustment to opening AOCI.

    Share price volatility risk management related to stock-based
    compensation plan

    In July 2006, the Company entered into a cash-settled equity total return
    swap agreement to manage its exposure to fluctuations in its stock-based
    compensation costs related to the SAR plan. Compensation costs associated
    with SARs fluctuate as a result of changes in the market price of the
    Company's Class A shares. The Corporation entered into this swap for a
    total of 425,000 notional Class A shares with a hedged price of $17.55.

    The swap expires July 2011; however, the Company may elect to terminate
    the agreement prior to that date if the Class A share market price is
    equal to or less than the SARs' reference price of $16.53. The swap is
    settled on every quarterly settlement date. If the Company's share price
    is in excess of the hedged price on the settlement date, the Company is
    entitled to receive the difference per share, and if the Company's share
    price is less than the hedged price, the Company is obligated to pay the
    difference per share. A settlement date can automatically be triggered if
    the share price drops by 10% or more since the last scheduled settlement
    date. In this event, the Company must cash settle on that date based on
    that day's share price; however, on the quarterly settlement date if the
    share price has rebounded, the Company is reimbursed an amount equal to
    the difference between the hedged price and the share price which
    triggered the automatic settlement.

    The swap includes an interest and dividend component. Interest is accrued
    and payable by the Company on quarterly settlement dates. Any dividends
    paid on the Class A shares are reimbursed to the Company on the quarterly
    settlement dates.

    In order to qualify for hedge accounting, there must be reasonable
    assurance that the instrument is and will continue to be an effective
    hedge. At the inception of the hedge and on an ongoing basis, the Company
    formally assesses and documents whether the hedging relationship is
    effective in offsetting changes in cash flows of the hedged item. Gains
    or losses realized on the quarterly settlement dates are recognized in
    other income in the same period as the SARs compensation expense.
    Unrealized gains and losses, to the extent that the hedge is effective,
    are deferred and included in OCI until such time as the hedged item
    affects net income. If at any time, the hedge is deemed to be ineffective
    or the hedge is terminated or de-designated, gains or losses, including
    those previously recognized in OCI, will be recorded in net income
    immediately.

    The Company has concluded that this cash flow hedge is effective. The
    estimated fair value of the equity total return swap receivable at
    June 30, 2008 was $616,000 (2007 - $723,000). Before tax, the change in
    fair value of the swap for the second quarter and year-to-date recognized
    in OCI was a decrease of $425,000 (2007 - increase of $212,000 for the
    quarter and $786,000 year-to-date). On a before-tax basis, realized
    losses of $122,000 were transferred from OCI to net income in the quarter
    and realized gains of $23,000 were transferred from OCI to net income
    year-to-date (2007 - realized gains in the quarter of $131,000 and
    $232,000 year-to-date). OCI income tax recovery for the quarter on this
    swap was $103,000 and year-to-date was $153,000 (2007 - second quarter
    income tax expense of $32,000 and $202,000 year-to-date). The accumulated
    loss at January 1, 2007 related to this cash flow hedge was $47,000 and
    was recorded, net of income tax recoveries of $17,000, as a transition
    adjustment to opening AOCI.

    Credit risk

    Credit exposure on financial instruments arises from the possibility that
    a counterparty to an instrument in which the Company is entitled to
    receive payment fails to perform. The maximum credit exposure
    approximates $21,000,000, which includes accounts receivable, and the
    assets related to the interest rate swaps and the equity total return
    swap.

    Credit exposure is managed through credit approval and monitoring
    procedures. With regard to the interest rate swaps and the equity total
    return swap, the Company does not anticipate any counterparties that it
    currently transacts with will fail to meet their obligations as the
    counterparties are Canadian Chartered Banks. At June 30, 2008 and 2007,
    there was minimal credit exposure to the Company related to its
    derivative financial instruments.

    The Company is subject to normal credit risk with respect to its
    receivables. A large customer base and geographic dispersion minimize the
    concentration of credit risk. The Company does not require collateral or
    other security from clients for trade receivables; however the Company
    does perform credit checks on customers prior to extending credit. Based
    on the results of credit checks, the Company may require upfront deposits
    on account or upfront billing. The Company reviews its receivables for
    possible indicators of impairment on a regular basis and as such, it
    maintains a provision for potential credit losses which totaled
    $1,272,000 as at June 30, 2008. The Company is of the opinion that the
    provision for potential losses adequately reflects the credit risk
    associated with its receivables. Approximately 88% of trade receivables
    are outstanding for less than 90 days. Amounts would be written off
    directly against accounts receivable and against the allowance only if
    and when it was clear the amount would not be collected due to customer
    insolvency. Historically, the significance and incidence of amounts
    written off directly against receivables have been low.

    Liquidity risk

    Liquidity risk is the risk that the Company is not able to meet its
    financial obligations as they become due or can do so only at excessive
    cost. The Company's growth is financed through a combination of the cash
    flows from operations and borrowings under the existing credit facility.
    One of management's primary goals is to maintain an optimal level of
    liquidity through the active management of the assets and liabilities as
    well as the cash flows. Given the Company's available liquid resources as
    compared to the timing of the payments of liabilities, management
    assesses the Company's liquidity risk to be low.
    The Company's liabilities have contractual maturities which are
    summarized below:


    Obligation (thousands of dollars)     12 months   1-5 years  Thereafter
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Long-term debt                        $      16      66,500           -
    CCD commitments                           3,084      11,378         180
    Operating leases                          2,920       9,580       8,580
    Purchase considerations payable
     (note 12)                               23,450           -           -
    -------------------------------------------------------------------------
                                          $  29,470      87,458       8,760
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The revolving credit facility matures June 2010; however, the Company
    intends to renew the revolving credit facility prior to maturity and as a
    result, there will be no scheduled repayments. The Company chooses this
    type of credit facility because it provides flexibility with no scheduled
    repayment terms.

    The purchase considerations payable consist of transactions which are
    fully described in Notes 11 and 12.

    Capital risk management

    The Company defines its capital as shareholders' equity. The Company's
    objective when managing capital is to pursue its strategy of growth
    through acquisitions and through organic operations so that that it can
    continue to provide adequate returns for shareholders. The Company
    manages the capital structure and makes adjustments to it in light of
    changes in economic conditions and the risk characteristics of the
    underlying assets. In order to maintain or adjust the capital structure,
    the Company may adjust the amount of dividends paid to shareholders,
    issue new shares or repurchase shares. The Directors and Senior
    Management of the Company are of the opinion that from time to time the
    purchase of its shares at the prevailing market price would be a
    worthwhile investment and in the best interests of the Company and its
    shareholders. Material transactions and those considered to be outside
    the ordinary course of business, such as acquisitions and other major
    investments or disposals, are reviewed and approved by the Board of
    Directors.

    To comply with Federal Government directions, the Broadcasting Act and
    regulations governing radio stations (the "Regulations"), the Company has
    imposed restrictions respecting the issuance, transfer and, if
    applicable, voting of the Company's shares. Restrictions include
    limitations over foreign ownership of the issued and outstanding voting
    shares. Pursuant to such restrictions, the Company can prohibit the
    issuance of shares or refuse to register the transfer of shares or, if
    applicable, prohibit the voting of shares in circumstances that would or
    could adversely affect the ability of the Company, pursuant to the
    provisions of the Regulations, to obtain, maintain, renew or amend any
    licence required to carry on any business of the Company, including a
    licence to carry on a broadcasting undertaking, or to comply with such
    provisions or with those of any such licence.

    The Company is subject to certain covenants on its credit facility.
    Financial projections are updated and reviewed regularly to reasonably
    ensure that financial debt covenants will not be breached in future
    periods. The Company monitors the covenants and foreign ownership status
    of the issued and outstanding voting shares and presents this information
    to the Board of Directors quarterly. The Company was in compliance with
    the above as at June 30, 2008 and expects to be for the foreseeable
    future.

    9. EARNINGS PER SHARE

                                 Three months ended        Six months ended
                                       June 30                 June 30
    (thousands of dollars)         2008        2007        2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average common
     shares used in calculation
     of basic earnings per
     share                       10,991      11,062      11,041      11,098
    Incremental common shares
     calculated in accordance
     with the treasury stock
     method                         317         417         330         412
                                ---------------------------------------------
    Weighted average common
     shares used in
     calculation of diluted
     earnings per share          11,308      11,479      11,371      11,510
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    10. SEGMENTED INFORMATION

    The Company has two reportable segments - broadcasting and corporate and
    other. The broadcasting segment consists of the operations of the
    Company's radio and television licences. This segment derives its revenue
    from the sale of broadcast advertising. This reportable segment is a
    strategic business unit that offers different services and is managed
    separately. The Company evaluates performance based on earnings before
    interest, taxes, depreciation and amortization. Corporate and other
    consists of a hotel and the head office functions. Its revenue relates to
    hotel operations and its other income relates to investment income.
    Details of segment operations are set out below.


                              Corpo-                        Corpo-
    (thousands      Broad-     rate               Broad-     rate
     of dollars)  casting   & other     Total   casting   & other     Total
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                   Three months ended June 30     Six months ended June 30
                -----------------------------  -----------------------------
    2008
    Revenue      $ 26,544       879    27,423    47,546     1,615    49,161
    Other income        -     5,451     5,451         -     6,385     6,385
                -----------------------------  -----------------------------
                   26,544     6,330    32,874    47,546     8,000    55,546
    Operating
     expenses      19,600     2,838    22,438    36,673     5,252    41,925
    Depreciation
     and
     Amorti-
     zation           908        77       985     1,790       149     1,939
                -------------------------------------------------------------
    Operating
     income      $  6,036     3,415     9,451     9,083     2,599    11,682
                -------------------------------------------------------------
    Assets
     employed                                  $209,307    34,043   243,350
    Goodwill     $      -         -         -     4,859         -     4,859
    Capital
     expendi-
     tures       $  2,403        58     2,461     3,933       129     4,062
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    2007
    Revenue      $ 25,275       884    26,159    44,003     1,674    45,677
    Other income
     (expense)          -     1,221     1,221         -      (293)     (293)
                 -----------------------------  -----------------------------
                   25,275     2,105    27,380    44,003     1,381    45,384
    Operating
     expenses      17,338     2,884    20,222    32,751     5,381    38,132
    Depreciation
     and
     Amorti-
     zation           936        66     1,002     1,754       131     1,885
                 -----------------------------  -----------------------------
    Operating
     income
     (loss)      $  7,001      (845)    6,156     9,498    (4,131)    5,367
                 -----------------------------  -----------------------------
    Assets
     employed                                  $193,269    22,043   215,312
    Goodwill     $      -         -         -     4,337         -     4,337
    Capital
     expendi-
     tures       $    629       141       770     1,534       233     1,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    11. COMMITMENTS AND CONTINGENCIES

    In the third quarter of 2007, the Company ceased to accrue CRTC Part II
    Licence fees in accordance with a court ruling at that point in time. On
    April 28th, 2008, the Federal Court of Appeal reversed the original
    decision and found that the fees are a valid regulatory charge. As a
    result of this decision, this quarter the Company recognized the
    obligation as it pertains to these fees retroactively to January 1, 2007.
    The amount recorded in operating expenses was $915,000: $613,000 relates
    to fiscal 2007, $133,000 relates to the first quarter of 2008 and
    $169,000 to the second quarter this year. An appeal of this recent court
    decision has been filed; however, the outcome is unknown.

    12. SUBSEQUENT EVENTS

    On July 2, 2008, the Company acquired the remaining 50% interest in Metro
    Radio Group Inc. which owns and operates CKUL-FM in Halifax, Nova Scotia.
    Total cash consideration was $8,500,000. The Company will account for
    this acquisition as a step purchase. The Company has not yet finalized
    the allocation of the purchase price.

    On July 2, 2008, the Company bought a 29.9% interest in a company that
    operates an FM radio station in Nova Scotia for $1,000,000. This
    investment is one in which the Company exercises significant influence;
    the Company's share of future net profits or losses will be accounted for
    in net income.

    These transactions were financed by the Company's credit facility.

    On July 23, 2008, the Company announced it had an agreement to exchange
    radio stations with Rogers Broadcasting Limited (a Division of Rogers
    Communications Inc. RCI.A and RCI.B) subject to approval from the CRTC.
    The Company will exchange its AM broadcast licence in Halifax, Nova
    Scotia and receive in return Rogers' AM licence in Sudbury, Ontario and
    cash consideration of $5,000,000. Both parties have simultaneously
    submitted applications for this transfer of assets along with
    applications requesting conversion of the AM licences to FM.

    On July 28, 2008, the Company announced it had entered into an agreement
    to acquire 12 English FM radio broadcasting licences in Ontario from
    Haliburton Broadcasting Group Inc. for $18,950,000, subject to CRTC
    approval. These assets include stations in Muskoka, North Bay and
    Timmins. The Company intends to increase the availability of its credit
    facility to fund this purchase.

    On August 7, 2008, the Company declared dividends of $0.15 per share on
    each of its Class A shares and Class B Common shares payable October 3,
    2008 to shareholders of record as at September 5, 2008.
    




For further information:

For further information: Robert G. Steele, President and Chief Executive
Officer; Scott G.M. Weatherby, Chief Financial Officer and Corporate
Secretary, Newfoundland Capital Corporation Limited, (902) 468-7557, Fax:
(902) 468-7558, investorrelations@ncc.ca, www.ncc.ca


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