October 24, 2013 Last Updated 11:42 am

Postmedia losses rise to $35.8 million in latest earning report

Revenue for the quarter was $169.3 million, a decrease of $20.8 million (10.9%)

Press release:

TORONTO – October 24, 2013 –Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today released financial information for the three months and year ended August 31, 2013.

perating loss in the quarter was $13.9 million as compared to an operating loss of $2.3 million in the same period in the prior year primarily as a result of revenue declines of $20.8 million and a non-cash impairment charge of $6.1 million, partially offset by decreases in operating expenses.

Operating income before depreciation, amortization, impairment and restructuring of $23.2 million in the quarter represents a decrease of $4.9 million (17.5%), relative to the same period in the prior year.

Revenue for the quarter was $169.3 million, a decrease of $20.8 million (10.9%) relative to the same period in the prior year. This decrease was primarily due to a decline in print advertising revenue of $18.2 million (16.2%) with the declines occurring across all categories. Print circulation revenue decreased $1.9 million (3.6%) as a result of declines in circulation volumes partially offset by price increases. Digital revenue decreased $0.5 million (2.4%) relative to the same period in the prior year.

Total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $15.9 million (9.8%) relative to the same period in the prior year. Expense reductions occurred in all operating expense categories including compensation, newsprint, distribution and other operating expenses.

In August 2013, the Company entered into a print outsourcing agreement for the production of the Calgary Herald newspaper commencing in November, 2013. In addition, on September 9, 2013, the Company announced its intention to sell two of its real estate holdings: a printing facility in Surrey, BC and the Calgary Herald building in Alberta.

Full Year Operating Results
Net loss in the year ended August 31, 2013 was $153.8 million compared to a net loss of $23.2 million in the prior year. The decrease was primarily the result of non-cash impairment charges of $100.0 million. Also contributing to the decrease were lower revenues which were largely offset by operating cost reductions, and a gain on sale of the Times Colonist in Victoria and British Columbia-based community newspaper assets to Glacier Media Inc. in the prior year.

Net loss from continuing operations, which includes non-cash impairment charges of $100.0 million, was $153.8 million, compared to a net loss of $37.3 million in the prior year.

Operating loss was $77.0 million as compared to operating income of $39.3 million in the prior year primarily as a result of non-cash impairment charges.

Operating income before depreciation, amortization, impairment and restructuring was $130.4 million, a decrease of $13.9 million relative to the prior year. Excluding non-cash share-based and other long-term incentive plan compensation expense, operating income before depreciation, amortization, impairment and restructuring declined $10.2 million (7.2%).

Revenue for the twelve months ended August 31, 2013 was $751.6 million, a decrease of $80.3 million (9.7%) relative to the prior year. This decrease was primarily due to a decline in print advertising revenue of $69.4 million (13.5%) with the largest declines occurring in the classified and national advertising categories. Print circulation revenue decreased $13.3 million (6.3%) as a result of declines in circulation volumes partially offset by price increases. Digital revenue increased $2.5 million (2.8%) relative to the prior year as a result of increases in local digital advertising revenue partially offset by declines in digital classified revenue.

Total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $66.4 million (9.7%) relative to the prior year. Expense reductions occurred in all operating expense categories including compensation, newsprint, distribution and other operating expenses. Excluding non-cash share-based and other long-term incentive plan compensation expense, operating expenses excluding depreciation, amortization, impairment and restructuring declined $70.2 million (10.2%).

Business Transformation Initiatives
As announced in July 2012, the Company is implementing a three-year transformation program that is targeted to result in operating cost savings of 15%-20%. During the three months ended August 31, 2013, the Company implemented transformation initiatives which are expected to result in net annualized cost savings of approximately $20 million. This brings total net annualized cost savings, since the beginning of the program, to approximately $82 million representing approximately 12% of operating costs at the time the program was announced.

Management Commentary
“This past year was one of accelerated transformation for our industry and our Company,” said Paul Godfrey, President and Chief Executive Officer. “We have changed the overall design of our organization from local silos to a functional reporting structure, had important conversations with various stakeholders from unions and employees to advertisers and readers, and made progress rationalizing our real estate portfolio. With significant progress made on our structure, our teams are better equipped to focus on differentiated product offerings, deepening relationships with our audiences and effectively monetizing these offerings and insights.”

Also announced today that with Paul Godfrey acting as Interim Chairman, Peter Sharpe has been appointed to the role of Lead Director of the boards of both the Company and its subsidiary, Postmedia Network Inc. Mr. Sharpe has served as a Director of both boards since the Company’s formation. Mr. Sharpe served as President and CEO of Cadillac Fairview Corporation until his retirement in 2010, having served with the company for over 25 years. Mr. Sharpe is currently a Director of Morguard Corporation, First Industrial REIT (US), and Allied Property REIT. Mr. Sharpe is also a past chairman and current trustee of the International Council of Shopping Centers.

Note: All dollar amounts are expressed in Canadian dollars unless otherwise specified.

PostmediaER-lg

Comments are closed.