Fp Newspapers Inc. · TSXV:FP
Fp Newspapers — FP Newspapers Income Fund — Investor Presentation (January 2004)
41 slides from Fp Newspapers's investor presentation, Jan 28, 2004
Slide 1: FP Newspapers Income Fund
FP Newspapers Income Fund Rudy Redekop, President Dan Koshowski, Chief Financial Officer January 28, 2004 TSX: FP.UN
Slide 2: Agenda
Agenda • Fund Facts • Industry Overview • Operations Review • Financial Highlights • Outlook
Slide 3: Forward-Looking Statements
FP Newspapers Income Fund FORWARD-LOOKING STATEMENTS: Certain statements in this presentation are ‘‘forward looking statements’’ which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, FP Trust or FPLP to be
Slide 4: Fund Facts
Fund Facts • IPO completed: May 28, 2002 • 49% interest in FP Canadian Newspapers LP • 6.9 million units outstanding • Unit price: $12.41 (Close Jan 27, 2004) • Distributions: $1.26 annually per unit • TSX: FP.UN
Slide 5: Fund Opportunity
Fund Opportunity • Stable, slow-growing industry – consistent advertising trends • Industry leading properties – Winnipeg Free Press – Brandon Sun • Strong Leadership – Skilled and experienced management team • Strong Sponsorship – Sponsors own 65% of the business
Slide 6: Industry Overview
Industry Overview • Well-established • Trusted information source • Integral part of the community • Traditional and new media
Slide 7: Industry Characteristics
Industry Characteristics • Advertising • Readership • Concentrated Ownership • High Barriers to Entry • Electronic Media
Slide 8: Advertising Volume
Advertising Volume $3 Canadian Net Total Advertising Volume: Daily Newspapers billions $2 $1 $0 1966 1972 1978 1984 1990 1996 2002
Slide 9: Revenue Sources
Revenue Sources Canadian Daily Newspapers Advertising 79% Circulation 21% Data: 2001
Slide 10: Advertising Revenue
Advertising Revenue Canadian Daily Newspapers Classifieds Local 25% Display Ads 54% National Ads 21% Data: 2001
Slide 11: Advertising Market Segments
Advertising Market Segments Newspapers Internet 32% 1% Outdoor 3% Televison 24% Magazines 8% Yellow Catalogue/ Direct Mail Pages Radio 12% 10% 10% Data: 2001
Slide 12: Readership in Canada
Readership in Canada • 56% read daily newspapers • 5 million daily circulation for past 5 years
Slide 13: Concentrated Ownership
Concentrated Ownership • Winnipeg Free Press largest daily not owned by: – Bell Globemedia – Torstar – CanWest Global – Quebecor
Slide 14: High Barriers to Entry
High Barriers to Entry • Established franchises • Culture – part of the community • Set-up costs – Plant and equipment is capital intensive – Attracting journalists to a start-up is costly
Slide 15: Electronic Media
Electronic Media • Content transportable to web • Web use trends – News – Classifieds
Slide 16: Winnipeg Free Press Website
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Slide 17: Brandon Sun Website
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Slide 18: FP Newspapers
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Slide 19: Winnipeg Free Press
Winnipeg Free Press • Founded 1872 • Winnipeg a diverse and stable economy • 44% readership is the highest of daily newspapers in major Canadian cities • Compares with 25% for Winnipeg Sun
Slide 20: Weekday Readership in Canada
Weekday Readership in Canada Winnipeg Free Press 44% Edmonton Journal 42% Calgary Herald 36% Ottawa Citizen 34% Vancouver Province 30% Vancouver Sun 29% Toronto Star 27% Edmonton Sun 26% Winnipeg Sun 25% Calgary Sun 24% Toronto Sun 15% Ottawa Sun 14% Montreal Gazette 14% Globe and Mail 12% National
Slide 21: Winnipeg newspaper readership among university graduates
Winnipeg newspaper readership among university graduates Source: 2002 NADbank survey Base: Winnipeg CMA adults 18+ Winnipeg Free Press 77% Winnipeg Sun 59% 58% 22% 18% 20% Weekdays Saturdays Sundays
Slide 22: Winnipeg newspaper readership among adults with household incomes of $75,000+
Winnipeg newspaper readership among adults with household incomes of $75,000+ Source: 2002 NADbank survey Base: Winnipeg CMA adults 18+ Winnipeg Free Press Winnipeg Sun 71% 54% 57% 30% 26% 25% Weekdays Saturdays Sundays
Slide 23: Brandon Sun
Brandon Sun • Founded 1882 • The only daily paper in the region • Contract to print The Globe & Mail to 2010
Slide 24: Market Leaders
Market Leaders Circulation 127,000 15,000 Products & Daily papers Daily papers Services - News & information - Local news, sports and - Advertising entertainment Commercial Printing - Advertising - Excess capacity creates Commercial printing growth opportunity - Contract to print the Globe & Online
Slide 25: Additional Strengths
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Slide 26: FP Newspapers: Employees
FP Newspapers: Employees • Winnipeg Free Press – 475 full-time equivalent – 650 unionized carriers who are independent contractors • Brandon Sun – 105 full-time equivalent
Slide 27: Labour Relations
Labour Relations • October 2002 Strike – Loss of 9 publishing days – Estimated revenue impact $ 2.7 million – Estimated EBITDA impact $2.0 million • New Contract expires September 30, 2005 – Rate increases: year 1 2% year 2 2% year 3 2.25%
Slide 28: Labour Relations - Brandon
Labour Relations - Brandon • Negotiations completed in April 2003 for 80 CEP members. – Rate increases: year 1 2% year 2 2% year 3 2.25% • All contracts expire December 31, 2005.
Slide 29: Financial Highlights
Financial Highlights • Six quarters reported since IPO May 28, 2002 • Q3 results announced October 30th
Slide 30: Manitoba Newspaper Operations
Manitoba Newspaper Operations LTM * 2002* 2001 2000 1999 (in millions of dollars) Revenues $96.7 $94.6 $97.3 $98.1 $96.2 * Figures for LTM and 2002 include the negative impact of the loss of nine publishing days due to a strike at the Winnipeg Free Press (management estimates lost revenue at approxi
Slide 31: Q3 2003 Highlights
Q3 2003 Highlights FP Canadian Newspapers Limited Partnership 2003 2002 Revenue $23.9 $22.7 EBITDA $ 5.3 $ 5.0 Net Income $ 1.0 $ 0.7 • Advertising flyer distribution revenue growth and colour display advertising revenue growth. • Newsprint expense increased 15.7%, or $0.5 million, due to increased
Slide 32: Components of Revenue
Components of Revenue --------------------------- promotions and services 2% More than 70% of revenue is ------------------------ commercial printing 5% generated from ---------------------- circulation 21% advertising sources, with -------------------- advertising –flyer distribution 9% display adv
Slide 33: Components of Operating Expenses
Components of Operating Expenses (excluding amortization) Compensation and city-carrier delivery ------------------------------- newsprint 19% costs are under contract at the ----------------------- employee compensation 49% Winnipeg Free -------------------------------------- other expenses 21% Pre
Slide 34: Manitoba Newspaper Operations
Manitoba Newspaper Operations LTM * 2002* 2001 2000 1999 (in millions of dollars) Revenues $96.7 $94.6 $97.3 $98.1 $96.2 EBITDA $22.4 $22.0 $23.0 $25.3 $23.9 EBITDA margin 23.2% 23.2% 23.6% 25.8% 24.8% * Figures for LTM and 2002 include the negative impact of the loss of nine publishing days due to
Slide 35: Distribution History
Distribution History Monthly Distributions: • 11.25 cents inception to Sept 2002 • 10 cents through Oct 2003 • 10.5 cents starting Nov 2003 ($1.26)
Slide 36: Distributable Cash
Distributable Cash 28-May-02 YTD to Since 31-Dec-02 30-Sep-03 Inception EBITDA $13,086 $16,986 $30,072 Interest (Net) (1,808) (2,280) (4,088) Capex (586) (196) (782) $10,692 $14,510 $25,202 49% of distributable cash of FPLP $ 5,239 $ 7,110 $12,349 Administration expenses (126) (200) (326) Loan from
Slide 37: Advertising Outlook
Advertising Outlook • Trend is positive • Highly dependent on consumer spending. • Forecasts – BMO 3-5% rev growth 2004 Cdn Newspapers – PwC 1.2% rev growth 2004 Cdn Newspapers • Uncertain global economy still a concern.
Slide 38: Expense Outlook
Expense Outlook • Contracted wage rates will increase by an effective rate of 2.1% in 2004 vs 2003. • Newsprint is the most significant variable. • Newsprint prices in Canada unlikely to increase again until second half of 2004, due to recent FX movement.
Slide 39: Fund Website – www.fpnewspapers.com
Fund Website – www.fpnewspapers.com
Slide 40: Summary
Summary • Leading media products in diversified stable markets • Seasoned management and strong operating performance • Opportunities to increase distributions • High-barriers to entry and state-of-the- art production assets
Slide 41: Annual Report 2002
ANNUAL REPORT 2002 NEWSPAPERS P... FUND
FP Newspapers Income Fund — Investor Presentation (January 2004) on 6ix