GVIC Communications Corp.
TSX : GCT
TSX : GCT.C

August 29, 2007 18:03 ET

GVIC Releases Second Quarter Earnings

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 29, 2007) - GVIC Communications Corp. ("GVIC" or the "Company") (TSX:GCT)(TSX:GCT.C) reported revenue, cash flow and earnings for the period ending June 30, 2007.

Recent Developments

- On April 30, 2007, GVIC acquired the publishing assets of Glacier Ventures International Corp. in exchange for GVIC shares valued at $310.0 million and a promissory note of $15.0 million for total consideration of $325 million. The net assets acquired represent ownership interests and the operations of local newspapers, trade publications and business and professional information businesses.

- On May 18, 2007, GVIC consolidated its shares on the basis of one new class B voting common share for each 30 old class B voting common shares and one new class C non-voting share for each 30 old class C non-voting shares.

- On June 28 and 29, 2007 GVIC raised $11.8 million of equity capital, intended primarily for acquisition purposes.

Operating Results

The following financial information is presented on a continuity of interest basis and represents the results of operations and financial position for periods prior to the April 30, 2007 acquisition of Glacier's net assets as if GVIC owned the operations for the prior periods indicated.



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$000's except
share and per 3 Months 3 Months 6 Months 6 Months
share amounts June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
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Revenue $ 56,286 $ 48,570 $ 109,752 $ 89,413
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EBITA $ 13,371 $ 9,752 $ 25,204 $ 18,784
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Net income $ 9,112 $ 7,176 $ 13,196 $ 10,249
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Cash flow from
operations $ 10,686 $ 6,856 $ 19,736 $ 12,665
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Cash flow from
operations/share $ 0.04 $ 0.02 $ 0.07 $ 0.04
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EBITA/share $ 0.04 $ 0.03 $ 0.08 $ 0.06
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Net income/share $ 0.03 $ 0.02 $ 0.04 $ 0.03
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Debt outstanding
net of cash
reserves $ 137,739 $ 161,463 $ 137,739 $ 161,463
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Average shares
outstanding, net 300,425,031 300,425,031 300,425,031 300,425,031
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GVIC's recently acquired operations continued to generate strong revenue and EBITA growth on a "same-store" basis compared to last year, which contributed to an increase in cash flow from operations per share.

For the six months ended June 30, 2007, the Company earned $19.7 million of consolidated cash flow from operations on revenue of $110.0 million, as compared to $12.7 million on revenue of $89.4 million for the six months ended June 30, 2006. GVIC's EBITA was $25.2 million and net income was $13.2 million for the six month period ended June 30, 2007, as compared to EBITA of $18.8 million and net income of $10.2 million for the same period last year.

For the three months ending June 30, 2007, GVIC earned $10.7 million of consolidated cash flow from operations on revenue of $56.3 million, as compared to $6.9 million on revenue of $48.6 million for the three months ended June 30, 2006. GVIC's EBITA was $13.4 million and net income was $9.1 million for the three months ended June 30, 2007, as compared to EBITA of $9.8 million and net income of $7.2 million for the same period last year.

The year over year increase in EBITA for the six months ending June 30, 2007 was less than the increase in cash flow from operations as a result of approximately $0.7 million of non-cash operating expenses, primarily related to pension and benefits amounts and a decrease in cash taxes in 2007, offset by an increase in cash interest paid in 2007. The year over year increase in net income was less than would have been proportionate to the increase in cash flow from operations as a result of a one-time $2.8 million non-cash future income tax recovery in the second quarter of 2006 that was caused by a change in the federal enacted tax rate.

Operational Performance

The Company's operations continue to perform ahead of target and last year on a "same-store" basis in both revenue and cash flow. All operations are performing ahead of expectations.

The growth in revenue during the second quarter compared to last year was a result of a) improved sales effectiveness, strong Western Canadian local economies, strong industry niches such as mining and energy, new product offerings and national and regional advertising efforts that allow advertisers to benefit from GVIC's larger group of publications and expertise and b) the acquisition of a 50% interest in the Alta Newspaper Group Limited Partnership in September 2006 as well as several smaller acquisitions completed in 2007.

Continued progress in cost efficiency improvement as well as the increase in revenues resulted in significant growth in "same store" cash flow for GVIC's operations.

Management believes there are meaningful opportunities to continue to realize greater value from the Company's expanded operations through increased cost efficiencies, improved sales effectiveness and improved publication quality, amongst other things. A number of such opportunities were identified at the time of the Hollinger Canada acquisitions, as well for the Company's other operations, which were expected to take several years to achieve.

While progress continues to be made in realizing these improvements, many of the opportunities are still to be realized.

New Acquisitions and Private Placements

The Company acquired a community newspaper in British Columbia during the quarter and a number of community newspapers in Saskatchewan and Manitoba subsequent to the quarter end.

On June 28 and 29, 2007 GVIC raised $11.8 million through a series of separate private placements, issuing a total of 3,721,820 Class B shares and 8,068,080 Class C shares at a price of $1.00 per share. The proceeds are intended primarily for acquisition purposes.

GVIC is pursuing a number of acquisition opportunities to complement its existing operations.

Shares in GVIC can be traded on the Toronto Stock Exchange under the symbols GCT and GCT.C.

About the Company: GVIC Communications Corp. is an information communications company focused on expanding across North America through both internal growth and the strategic acquisition of information communications companies that provide essential information and related services through print, electronic and online media.

Forward Looking Statements

Certain statements in this press release are not historical and may constitute forward-looking statements reflecting financial performance. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Forward-looking statements are based on management's estimates, beliefs and opinions on the date the statements are made. GVIC assumes no obligation to update forward-looking statements if circumstances should change. Additional information on these and other potential factors that could affect GVIC's financial results are detailed in documents filed from time to time with the applicable Canadian securities regulatory authorities.

The Toronto Stock Exchange has neither approved nor disapproved the form or content of this release.

Contact Information

  • GVIC Communications Corp.
    Mr. Orest Smysnuik
    (604) 872-8565