(CANWEST GLOBAL COMMUNICATIONS CORP. LOGO)
NEWS RELEASE
For immediate release
November 2, 2005
CANWEST'S EBITDA(1) AND NET EARNINGS INCREASE IN F2005
Solid Revenue and EBITDA gains at International Operations.
Proceeds from Successful Income Fund IPO significantly reduce CanWest Debt
WINNIPEG -- CanWest Global Communications Corp. today reported financial results
for its fourth quarter and for its fiscal year ended August 31, 2005. For the
twelve-month period, the Company reported net earnings of $10 million or $0.06
per share, compared to a net loss of $13 million or $0.08 per share reported for
fiscal 2004.
Earnings in fiscal 2005 were affected by aggregate non-cash charges of $95
million and losses of $189 million associated with interest rate and foreign
currency swaps, and foreign currency gains of $76 million. Excluding the effects
of these charges and comparable charges in the prior year, consolidated net
earnings from continuing operations net of income taxes, would have been $173
million for the year ended August 31, 2005 and $117 million for the year ended
August 31, 2004.
Consolidated revenues were $3,073 million for fiscal 2005, an increase of 6%
compared to consolidated revenues of $2,911 million the prior fiscal year.
Consolidated EBITDA(1) for fiscal 2005 was $720 million, a $3 million increase
from consolidated EBITDA(1) of $717 million for fiscal 2004.
Commenting on the results, Leonard Asper, CanWest's President and Chief
Executive Officer, said, "The benefits of the Company's diversification were
again evident in 2005 with outstanding results and contributions from our
international operations. Canadian conventional television remains a challenge,
but I am encouraged by improving audience ratings that should eventually be
reflected in improved revenues and EBITDA. However, underlying structural and
regulatory issues for conventional television will need to be addressed at an
industry level if we are to recapture the financial performance of earlier
years. Generally, the fundamentals of our newspaper business remain strong and
stable and we anticipate EBITDA growth in future quarters. Our most outstanding
accomplishment following the end of the fiscal year was the successful launch of
the CanWest MediaWorks Income Fund in October. With the proceeds from that
transaction used to reduce corporate debt, the Company's debt ratios are
stronger than at any time since 2000."
The Company recorded a net loss of $106 million for the fourth quarter ended
August 31, 2005. Net earnings were affected by a number of charges in the
quarter including a non-cash charge of $51 million to reflect a write down of
intangible assets (goodwill) of the National Post. The results were also
affected by losses of $109 million related to interest rate and foreign currency
swaps and a $12 million charge related to the termination of the Ravelston
Management Services Agreement. These charges were partially offset by $47
million in foreign currency exchange gains on the settlement of debt in the
fourth quarter. Excluding the effects of these charges, the net loss from
continuing operations for the fourth quarter ended August 31, 2005 would have
been $9 million compared to a loss of $20 million for fiscal 2004.
Consolidated revenues for the three month period ended August 31, 2005 increased
by 5% to $702 million for the quarter, compared to consolidated revenues of $665
million for the fourth quarter one year ago. Consolidated EBITDA (1) for the
quarter was $84 million, compared to consolidated EBITDA (1) of $121 million for
the same period in 2004. The decline in EBITDA (1) was attributable in part to a
total of $12 million in one-time corporate expenses related to the termination
of a management services contract with Ravelston Corporation Limited.
SEGMENTED RESULTS FOR FISCAL 2005
Revenues for the Company's newspaper and online operations for the year were
$1,229 million, 3% higher than revenues of $1,194 million for the same assets in
fiscal 2004. Newspaper and online EBITDA(1) of $255 million for the year was
down 5% from the $267 million result for fiscal 2004. The EBITDA (1) decline was
primarily attributable to start up losses associated with new businesses in
development, namely the free commuter daily magazine Dose and CanWest's share of
losses of the Metro joint venture, which produces and distributes free commuter
newspapers in Ottawa and Vancouver, and increased operating expenses. Cost
increases were mainly attributable to increased costs of distribution and higher
payroll costs, which in part reflect investment in new management.
TEN's contribution to CanWest's consolidated EBITDA(1), increased by 15% to $294
million for the year, up from $256 million for fiscal 2004, another best ever
result. TEN's television network retained its ratings leadership in the 16-39
young adult market in a highly competitive Australian television market with
only a few points separating all three commercial channels in the older 25-54
and all viewer demographics. TEN recorded another strong finish to the
Australian television season with the exceptional performance of hit series such
as Big Brother, Australian Idol and the AFL Grand Final. Eye Corp, TEN's
wholly-owned out-of-home advertising business, also achieved record results,
with revenues up by 40% for the year to $108 million and EBITDA(1) growth of 60%
over last year to $23 million.
CanWest MediaWorks (NZ) Limited achieved outstanding progress in fiscal 2005.
Its revenue grew by 11% and its EBITDA(1) was up 14% compared to results for the
prior year. Revenues at TVWorks increased by 14% to $123 million, with EBITDA(1)
for the year growing by 32% to $31 million. Excellent ratings continued for its
new current affairs program Campbell Live and its re-launched evening news
program 3News, providing a strong set-up for TV3's prime time schedule. In the
last week of the F2005 year, TV3 outstripped the state broadcaster TVNZ to
become the most watched television channel in the country, an important
milestone in TV3's history. RadioWorks' recorded an 8% revenue increase for the
year to $93 million. EBITDA(1) of $27 million at RadioWorks was down slightly
compared to the prior year, due entirely to expenditures related to the
re-branding of 16 radio stations under the More FM brand and the launch of Radio
Live, a new national talk radio network, in the fourth quarter. Based upon these
results, CanWest MediaWorks NZ declared a dividend of NZ2.3 cents per share
payable in November, which will result in aggregate dividends of NZ$3.6 million
to be received by CanWest.
TV3 Ireland also had a very good year. CanWest's 45% share of TV3's revenues
increased by 10% to $38 million for fiscal 2005, with CanWest's share of
EBITDA(1) increasing by 25% to $13 million from less than $11 million last year.
Reversing the decline of the previous year, Canadian broadcasting operations
generated a 1% increase in revenues for fiscal 2005 to $699 million from $690
million in fiscal 2004. EBITDA(1) of $125 million for the year was, however, 15%
lower than the prior year due to a continuing weak television advertising market
and to higher costs associated with increased investment in Canadian and
international programming as Global seeks to regain the ratings leadership of
past years. New programs that have attracted promising initial ratings include
the new drama Prison Break, and the quirky comedy My Name is Earl. Global's
Entertainment Tonight Canada, which launched in the first two weeks of the
season immediately shot to the number one spot for a Canadian entertainment
magazine program. Global has also achieved ratings gains in its key news
programming.
SEGMENTED RESULTS FOR THE FOURTH QUARTER ENDED AUGUST 31, 2005
Revenues for the quarter from Canadian newspaper and online operations increased
by 3% to $290 million compared to $281 million for the fourth quarter of 2004.
EBITDA(1) was down 27% for the quarter to $39 million compared to EBITDA(1) of
$53 million in the fourth quarter last year. As noted above, the decline in
EBITDA(1) is largely attributable to start up losses associated with new
businesses under development and increased payroll and distribution costs.
The Company's South Pacific television operations recorded outstanding results
in the fourth quarter. Australia's Network TEN reported a 7% gain in revenues to
$187 million compared to $175 million for the same quarter one year ago.
EBITDA(1) increased 6% to $62 million as TEN maintained its ratings lead in its
target 16-39 demographic and challenged the other two commercial networks in the
wider demographics. Eye Corp., TEN Group's out-of-home advertising business,
maintained its excellent positive momentum in the fourth quarter with a
year-over-year increase of 36% in revenues to $27 million and a 25% increase in
EBITDA to over $5 million compared to the fourth quarter of 2004.
CanWest MediaWorks (NZ) also had an excellent fourth quarter with television
operations, TVWorks, recording a 12% increase in revenues to $33 million, and
40% EBITDA growth to $8 million for the quarter. Revenues at RadioWorks
increased by 4% to $22 million for the fourth quarter of 2005. RadioWorks
EBITDA(1) of $6 million was essentially flat to the same quarter last year, due
entirely to the aforementioned costs associated with the re-branding of radio
stations and the launch of Radio Live.
CanWest's 45% share of the revenues of TV3 Ireland increased by 3% to over $7
million compared to the same period last year. EBITDA(1) of $2 million for the
quarter was the same as for the fourth quarter of 2004.
Canadian broadcasting operations generated revenues of $134 million for the
quarter, a 3% increase over the fourth quarter last year. The EBITDA(1) loss was
$13 million in the quarter compared to a break-even result for the same period
in 2004. This reflected increased investment in programming and certain
restructuring costs.
HIGHLIGHTS OF THE FOURTH QUARTER AND THE ENSUING PERIOD
o In June, the Company appointed Peter Viner, a long-time CanWest executive,
as President and Chief Executive Officer of CanWest MediaWorks, the
operating entity for CanWest's Canadian media operations.
o In July, the Company received A$47.6 million in dividend and interest
distributions from The TEN Group PTY Limited.
o OFCOM, the British broadcast and telecommunications regulator, awarded a
licence to CanWest to launch an FM radio station in the Solent region on
the south coast of England.
o Together with Turkish investors, CanWest was declared the highest bidder in
an auction by a Turkish state agency of rights to acquire two Turkish
national radio national stations Super FM and Metro FM.
o Net proceeds from the $550 million IPO of CanWest MediaWorks Income Fund
were used to significantly reduce CanWest's debt.
o The 2005 Raise A Reader campaign completed its most successful campaign
yet, raising $2 million to support literacy programs in cities across
Canada, thanks to the hard work and generosity of volunteers and national
and local sponsors.
o CanWest MediaWorks Interactive launched a new online classified site
driving.ca, which, like Working.com, is designed to strengthen the market
position of our newspaper and online classifieds.
This news release contains certain comments or forward-looking statements that
are based largely upon the Company's current expectations and are subject to
certain risks, trends and uncertainties. These factors could cause actual future
performance to vary materially from current expectations.
The Company's financial statements are available on the Company's website:
www.canwestglobal.com.
CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.SV and CGS.NV,
www.canwestglobal.com), an international media company, is Canada's largest
media company. In addition to owning the Global Television Network, CanWest also
owns, operates and/or holds substantial interests in Canada's largest publisher
of daily newspapers, and conventional television, out-of-home advertising,
specialty cable channels, web sites and radio stations and networks in Canada,
New Zealand, Australia, Ireland and the United Kingdom.
For further information contact:
Geoffrey Elliot John Maguire
Vice President, Corporate Affairs Chief Financial Officer
Tel: (204) 956-2025 Tel: (204) 956-2025
Fax: (204) 947-9841 Fax: (204) 947-9841
gelliot@canwest.com jmaguire@canwest.com
- ------------------- --------------------
CANWEST GLOBAL COMMUNICATIONS CORP.
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
<Table>
<Caption>
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
AUGUST 31, AUGUST 31,
-------------------------- ---------------------------
2005 2004 2005 2004
REVENUE
Publications and online -- Canada 290,242 280,807 1,228,851 1,193,629
------- ------- --------- ---------
Television
Canada 133,949 130,590 698,644 690,302
Australia -- Network TEN 187,439 175,415 783,315 721,247
New Zealand -- 3 and C4 33,192 29,682 122,995 108,236
Ireland -- TV3 7,351 7,110 37,519 34,152
------- ------- --------- ---------
361,931 342,797 1,642,473 1,553,937
Radio -- New Zealand 22,199 21,418 93,428 86,717
Outdoor -- Australia 27,165 19,968 107,790 77,117
------- ------- --------- ---------
CONSOLIDATED REVENUE 701,537 664,990 3,072,542 2,911,400
======= ======= ========= =========
SEGMENT OPERATING PROFIT
Publications and online -- Canada 38,869 53,348 254,875 267,343
------- ------- --------- ---------
Television
Canada (13,313) (20) 124,699 147,430
Australia -- Network TEN 61,634 58,405 293,528 256,033
New Zealand -- 3 and C4 7,894 5,630 30,713 23,291
Ireland -- TV3 1,712 1,712 13,254 10,591
------- ------- --------- ---------
57,927 65,727 462,194 437,345
Radio -- New Zealand 5,879 6,544 26,994 27,488
Outdoor -- Australia 5,149 4,116 23,173 14,477
------- ------- --------- ---------
107,824 129,735 767,236 746,653
Corporate and other (11,502) (6,453) (34,249) (27,110)
Restructuring expenses - (2,445) - (2,445)
Ravelston management contract termination (12,000) - (12,750) -
------- ------- --------- ---------
OPERATING PROFIT (EBITDA)(1) 84,322 120,837 720,237 717,098
======= ======= ========= =========
</Table>
(1) EBITDA is defined as earnings before interest, income taxes, amortization,
interest rate and foreign currency swap losses, foreign exchange gains,
investment gains, losses and write-downs, goodwill impairment expense, asset
impairment expense, loss on debt extinguishment, dividend income, minority
interests, interest in earnings of equity accounted affiliates, realized
currency translation adjustments and earnings (loss) from discontinued
operations. This supplementary earnings measure does not have a standardized
meaning prescribed by Canadian generally accepted accounting principles and may
not be comparable to similar measures presented by other companies nor should it
be viewed as an alternative to net earnings. The reconciliation of EBITDA to net
earnings is evident on the face of the following unaudited consolidated
statements of earnings (loss).
CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS EXCEPT AS OTHERWISE NOTED)
<Table>
<Caption>
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
--------------------------- ---------------------------
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2005 2004 2005 2004
Revenue 701,537 664,990 3,072,542 2,911,400
Operating expenses 411,492 380,976 1,617,210 1,538,466
Selling, general and administrative expenses 193,723 160,732 722,345 653,391
Ravelston management contract termination 12,000 - 12,750 -
Restructuring expenses - 2,445 - 2,445
-------- -------- --------- ---------
84,322 120,837 720,237 717,098
Amortization of intangibles 5,456 4,542 20,341 18,182
Amortization of property, plant and equipment
23,240 19,281 91,868 89,067
Other amortization 1,503 1,365 5,291 5,035
-------- -------- --------- ---------
Operating income 54,123 95,649 602,737 604,814
Interest expense (58,516) (79,685) (251,853) (338,528)
Interest income 421 2,899 2,631 9,141
Amortization of deferred financing costs (4,294) (6,581) (12,708) (12,641)
Interest rate and foreign currency swap losses (108,716) (101,759) (188,506) (110,858)
-------- -------- --------- ---------
Foreign exchange gains 47,319 41,207 76,025 44,973
Investment gains, losses and write-downs 1,296 118,246 1,527 115,786
Goodwill impairment expense (41,406) - (41,406) -
Asset impairment expense (9,629) - (9,629) -
Loss on debt extinguishment - - (43,992) -
Dividend income - - - 3,738
-------- -------- --------- ---------
(119,402) 69,976 134,826 316,425
Provision for (recovery of) income taxes (33,714) (9,701) 20,472 37,485
-------- -------- --------- ---------
Earnings before the following (85,688) 79,677 114,354 278,940
Minority interests (17,971) (18,059) (96,597) (80,349)
Interest in earnings of equity accounted affiliates
492 3,287 2,043 2,731
Realized currency translation adjustments 1,078 (5,138) 622 (7,023)
-------- -------- --------- ---------
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS
(102,089) 59,767 20,422 194,299
Earnings (loss) from discontinued operations (3,950) 2,199 (10,132) (207,777)
-------- -------- --------- ---------
NET EARNINGS (LOSS) FOR THE PERIOD (106,039) 61,966 10,290 (13,478)
======== ======== ========= =========
EARNINGS (LOSS) PER SHARE FROM CONTINUING
OPERATIONS:
BASIC ($0.57) $0.34 $0.12 $1.10
DILUTED ($0.57) $0.34 $0.12 $1.10
EARNINGS (LOSS) PER SHARE:
BASIC ($0.60) $0.35 $0.06 ($0.08)
DILUTED ($0.60) $0.35 $0.06 ($0.08)
</Table>