Condensed Interim Consolidated Financial Statements of GLACIER MEDIA INC. For the three and six months ended June 30, 2018 and 2017 (Unaudited)

Transcription

1 Condensed Interim Consolidated Financial Statements of GLACIER MEDIA INC. For the three and six months ended June 30, 2018 and 2017 (Unaudited)

2 Report to Shareholders Management s Discussion & Analysis Interim Consolidated Statements of Operations Interim Consolidated Statements of Comprehensive (Loss) Income Interim Consolidated Balance Sheets Interim Consolidated Statements of Changes in Equity Interim Consolidated Statements of Cash Flows Condensed Notes to the Interim Consolidated Financial Statements Corporate Information... 40

3 INTERIM REPORT JUNE 30, 2018 Report to Shareholders Financial Performance Glacier Media Inc. s ( Glacier or the Company ) overall financial results for the second quarter were impacted by a change in accounting treatment at one of its operations. Excluding the change in accounting, revenues were $55.7 million, which was $2.5 million or 4.3% lower than Q and EBITDA was $5.7 million, which was $0.6 million or 9.5% lower than Q Overall the underlying operating results were consistent with results in recent quarters. The Company s growth initiatives continued to progress well, while print advertising revenues declined as expected. Including the impact of accounting change, overall, adjusted (1) consolidated EBITDA, including the Company s share of its joint venture interests, decreased to $4.6 million for the quarter ended June 30, 2018 compared to $6.3 million for the same period in the prior year. Adjusted consolidated revenue was $54.8 million for the quarter compared to $58.2 million for the same quarter in the prior year. Revenue and EBITDA at Specialty Technical Publishers ( STP ) were reduced $0.9 million and $1.1 million respectively primarily due to an accounting treatment change reflecting the on-going transition in operations to a digital, subscription based business. The adjustment is to defer revenue and subscription contracts in process to change the recognition methodology to the term of the contract. The change coincides with operational changes being made at STP including the phasing out of the paper versions of the product. The change in methodology will also impact the monthly revenues recognized going forward until year s end. In addition, adjusted consolidated results were impacted by two transactions when compared to the same period last year: 1) the sale of the Comprehensive Oilfield Service and Supply Database ( COSSD ) which was published by the Company last June; 2) the purchase of the remaining interest in Infomine, resulting in Infomine s results being consolidated into the Company s results in Q Together, these two transactions resulted in a net revenue decrease of $0.6 million and a net EBITDA increase of $0.2 million as compared to last year. The environmental, property and financial information operations continued to generate growth. Included in the segment results was the impact of the accounting change at STP. Adjusted revenues for the segment were $6.9 million or $0.7 million lower than Q2 2017, while adjusted EBITDA was $0.7 million or $1.8 million lower than Q Excluding the STP changes, revenues for the segment were $0.2 million higher and EBITDA $0.7 million lower than Q Operating investments in ERIS and REW dampened EBITDA but resulted in revenue and traffic growth. The commodities sector continued its recovery, resulting in a solid quarter for the Company s commodity information segment. Although the segment s adjusted revenue declined 7.0% to $12.1 million (due to the sale of the COSSD directory) the adjusted EBITDA increased by $0.8 million to $1.0 million. The community media group continued to make progress in its efforts to evolve and build its digital media business while leveraging its traditional print and flyer content and offerings. Print advertising revenue continued to decline as expected, but was partially offset by growth in digital revenues and profits. In total, adjusted community media revenue declined by 4.9% to $35.8 million while adjusted EBITDA declined by 9.5% to $5.0 million. Digital revenues grew 50%, with good progress being made in the Company s portfolio of digital products and marketing solutions offerings. Outlook Markets important to the Company s operations continue to improve. The mining industry has been in a growth phase and the energy and agriculture markets appear to have stabilized. Improvements in these markets should aid the Company s related information businesses as well as the Western Canadian communities that our community media operations serve. That said, given anticipated print advertising declines and continued nearterm uncertainty and market risk, the Company will operate cautiously and evaluate cost reduction initiatives where appropriate in the affected businesses. As outlined following, the Company plans to continue to invest in strategic areas. The investments are critical to the Company s growth plan and are resulting in demonstrable value creation

4 INTERIM REPORT JUNE 30, 2018 Management intends to build-on the progress of the last few years in strengthening the Company s financial position by further reducing debt. A strengthened balance sheet will mitigate risk while allowing the ongoing and planned operational and capital investments. (1) For a reconciliation of adjusted results to results in accordance with International Financial Reporting Standards ( IFRS ), refer to the Reconciliation of IFRS to Adjusted Results as presented in the Company s Management Discussion & Analysis. Operational Strategy and Focus Glacier operates as an information and marketing solutions company pursuing growth in sectors where the provision of essential information and related services provides high customer value. The Company s go to market strategy is being pursued through two operational areas: 1. Data, analytics and intelligence; and 2. Content and marketing solutions Through its brands and operations, Glacier serves clients in three segments: Environmental, Property and Financial Information Environmental and Property Information Environmental Risk Information Services ( ERIS ), Specialty Technical Publishers ( STP ), and REW.ca Financial Information Fundata (50% interest) Commodity Information Agricultural Information Glacier FarmMedia ( GFM ): Western Producer, Farm Business Communications, Canada s Outdoor Farm Show, Ag In Motion, AgDealer and Weather INnovations ( WIN ) Energy and Mining Information Community Media JuneWarren-Nickle s Energy Group (including CanOils) ( JWN ), Evaluate Energy, Northern Miner Group and Infomine Community Media Local daily and weekly newspapers and related publications, websites and digital products in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and the United States (includes direct, joint venture and other interests) Operational Overview Environmental, Property and Financial Information Environmental and Property Information ERIS continued to grow in both Canada and the U.S., with new customer additions and renewals. During the quarter, ERIS launched a completely redesigned and overhauled order form and process, making the ordering of ERIS products much more seamless and easy. REW.ca, the Company s online real estate portal, continued to grow rapidly in terms of site features, traffic and revenues. Visits to the site increased by 30% as compared to Q During the second quarter, REW.ca ramped up its sales and business development team in the Toronto market

5 INTERIM REPORT JUNE 30, 2018 Financial Information Fundata experienced a strong quarter and continues to expand its product offerings and client base. During the quarter, Fundata launched its partnership with Barchart to provide premium Canadian data on mutual funds and exchange-traded funds (ETFs) to The Globe and Mail s Globe Investor website. Commodity Information Agricultural Information Conditions in the agricultural markets have stabilized. The Company continued to invest in its agricultural information operations in key growth areas such as outdoor exhibitions and online listings. During the quarter, Glacier FarmMedia launched Farmtario, a print and digital media offering for the growers of Ontario. The launch leveraged the variety of existing assets that Glacier FarmMedia currently operates in Ontario including the Canadian Outdoor Farm Show, Weather Innovations and AgDealer. Energy and Mining Information The energy group continued to reap the benefits of the substantial restructurings enacted over the last two years. The energy information group is now focussed on 1) data, analytics and intelligence products and 2) digital media. In aggregate, these products continued to experience slight revenue growth versus the prior year. Stabilized revenues and the restructurings resulted in a substantial EBITDA increase as compared to Q The Northern Miner Group continued to capitalize on the recovering mining market and experienced strong growth in both revenue and EBITDA. In April 2018, the Northern Miner Group hosted the second annual Canadian Mining Symposium in London, England. The event built on the momentum of the inaugural event and was very successful both operationally and financially. Efforts are underway to merge the operations of the Company s energy and mining groups into a consolidated natural resources information business in order to reap the efficiency and growth benefits available. The combination of Infomine, Northern Miner Group and the JWN Energy Group represents an at-scale, digital resource information business. Community Media Given the mature nature of consumer print media, revenues in the community media segment continued to decline as anticipated. The 4.9% overall revenue decline was lower than the 6.8% Q1 decline but largely consistent with the rate of decline in recent quarters. The Company continues to respond to print revenue declines with operational restructurings and efficiency initiatives. Digital media operations continued to experience strong performance across a variety of products, such as local websites, retargeting services, website builds and Chinese digital marketing solutions. Community media digital revenues grew by over 50% in the quarter and profits grew at an even higher growth rate. Investment and Value Creation The Company is investing in a number of strategic areas in order to grow and create shareholder value. As is the case for many companies, some of the Company s products and offerings are maturing, specifically its print media publications. In order to deal with this issue, the Company sold a number of its trade publications several years ago to reduce the number of verticals to evolve, then selected a smaller number of verticals to focus on and better deploy capital and resources

6 INTERIM REPORT JUNE 30, 2018 Industry verticals were chosen that offer attractive growth opportunities, and where the Company can leverage its brands, market position, customer relationships and marketing reach. In community media, where print declines have been the most significant, the Company felt it was better off to take a long-term view and use the cash flow to invest in the growth areas identified and create greater value versus selling the community media business at a low price. So far, this strategy has been working. In each of the areas chosen for investment, progress is being achieved, as measured by revenue growth, digital traffic metrics, attendance at events and other measures relevant to the offerings being developed. A significant amount of investment is being made that is classified as operating expenses and consequently reduced the Company s short-term EBITDA. It is also making capital investments related to the products and offerings being developed. These investments and the value being created are not readily transparent in the Company s consolidated revenue and EBITDA in its financial statements. Overall consolidated revenue has declined primarily because of a) the print advertising declines in community media and related restructurings (i.e. reduced frequency that results in some revenue loss but greater profitability), b) closures and sale of energy print advertising related products to focus on data, analytics and intelligence products and digital media and c) the impact of cyclical declines in the commodities sector related offerings, which are now reversing. Most of the products and services being developed have higher margins and higher valuation multiples than the print publications that are declining. Consequently, the new revenue being created is not expected to, nor necessary, to fully replace the print revenue lost on a dollar-for-dollar basis. And as stated, operating costs have been increased to fund the development and growth-oriented investments. Areas of Investment All of the businesses in the environmental, property and financial information segment continue to grow and are targeting large addressable markets. Investment will continue in these businesses particularly in new data and product development. Within agricultural information, a number of operations including WIN, the agricultural exhibitions and AgDealer are growing, and investment will continue to be made in these areas. The Company also continues to invest in and improve the value of its energy and mining database and subscription offerings, positioning itself as the cyclical downturn continues to reverse. The following provides some examples of the progress being made and value being created: Glacier FarmMedia (GFM). GFM acquired Canada s Outdoor Farm Show (COFS), then invested further in the show and its facilities, and used its marketing reach and customer relationships to grow the show. Revenue has more than doubled and profit tripled as a result. Glacier FarmMedia then launched Ag In Motion in Saskatchewan three years ago to build on the COFS success. This required both operating and capital investment. By the third annual show last year, attendance was 27,000. Investment is also being made to develop GFM s digital media, listings, market advisory and weather products. ERIS. Significant capital has been invested to expand ERIS in the U.S. and more than 30 staff have been added. This had the effect of reducing EBITDA initially. The investment paid off though, and in 2017 revenue grew substantially. Glacier also acquired TRS in 2016 in order to bring in-house the aerial maps it was purchasing for its Phase 1 environmental risk product and develop its own city directories information that it was also purchasing. The acquisition has resulted in a reduction of operating costs and secured ownership of important product data. REW. Significant capital has also been invested in the REW digital residential real estate listings offering through both capital investment and planned operating losses normal to the development and expansion of such a business. REW now offers listings in the Lower Mainland of B.C., Vancouver Island and Toronto. Traffic has grown exponentially and grown to more than 20 million monthly page views. Revenue continues to grow but planned operating losses continue to be incurred in order to - 6 -

7 INTERIM REPORT JUNE 30, 2018 expand the business. REW already has significant enterprise value, well in excess of the cumulative investment made. Energy Group. Despite the severe downturn in the energy market over the last four years, the energy group continued to develop its Daily Oil Bulletin digital subscription offering and enrich its content, and improve its user experience and utility. The CanOils and Evaluate Energy products were acquired to provide richer energy production data and financial and operating insights. Revenue is now recovering in the group s data, analytics, intelligence and digital media offerings. Mining Group. Significant investments were made in 2017 and the first half of 2018 to continue the development of the Mining Intelligence database and other digital products. The Company acquired the remaining 50% interest in Infomine and is working to integrate Infomine, the Northern Miner Group and JWN Energy into at-scale, digital resource information group. It is also becoming apparent that a viable long-term digital community media business model exists where the Company can leverage its broad presence in local markets across Western Canada and offer local websites, web services and specialty digital products. The Company can augment its local content with its agriculture, energy and mining content, which is of interest to the people who live in the communities the Company serves in Western Canada. The Company is investing prudently in these digital community media opportunities. It is also apparent that good print products still offer value to readers and advertisers and provide good cash flow to fund growth as described. If the Company s strategy is executed successfully, it is expected that its community media business will evolve with less revenue but greater value as the digital products grow. Financial Position At June 30, 2018, senior debt was flat to Q1, 2018 at $37.1 million. As outlined in the last quarterly report, the Company s non-recourse, non-mortgage debt in its investment entities has been substantially reduced as a result of significant debt repayment. This will allow for increased distributions from these entities to the Company. During the quarter the Company invested $1.7 million in acquisitions and joint ventures & associates. On an adjusted basis, Glacier s consolidated debt net of cash outstanding before deferred financing charges was 1.5x trailing 12-months adjusted EBITDA as at June 30,

8 INTERIM REPORT JUNE 30, Management s Discussion & Analysis ( MD&A ) Forward-Looking Statements In this MD&A, Glacier Media Inc. and its subsidiaries are referred to collectively as Glacier, us, our, we or the Company unless the context requires otherwise. The information in this report is as at August 10, Glacier Media Inc. s Interim Report, including this MD&A and the accompanying Report to Shareholders, contains forward-looking statements that relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates and can generally be identified by the use of statements that include phrases such as believe, expected, anticipate, intend, plan, likely, will, may, could, should, would, suspect, outlook, estimate, forecast, objective, continue (or the negative thereof) or similar words or phrases. These forward-looking statements include, among other things, statements relating to our expectations regarding revenues, expenses, cash flows, future profitability and the effect of our strategic initiatives and restructuring, including our expectations to grow certain operations, to generate new revenues, to generate sufficient cash flow from operations to meet anticipated working capital, capital expenditures, and debt service requirements, to reduce debt levels and that reduced debt levels in investment entities will result in further distributions to the Company. These forward-looking statements are based on certain assumptions, including continued economic growth and recovery and the realization of cost savings in a timely manner and in the expected amounts, which are subject to risks, uncertainties and other factors which may cause results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, and undue reliance should not be placed on such statements. Important factors that could cause actual results to differ materially from these expectations include failure to implement or achieve the intended results from our strategic initiatives, the failure to reduce debt and the other risk factors listed in our Annual Information Form under the heading Risk Factors and in our Interim MD&A under the heading Business Environment and Risks, many of which are out of our control. These other risk factors include, but are not limited to, the ability of the Company to sell advertising and subscriptions related to its publications, foreign exchange rate fluctuations, the seasonal and cyclical nature of the agricultural and energy sectors, discontinuation of the Department of Canadian Heritage s Canada Periodical Fund s Aid to Publishers, general market conditions in both Canada and the United States, changes in the prices of purchased supplies including newsprint, the effects of competition in the Company s markets, dependence on key personnel, integration of newly acquired businesses, technological changes, tax risk, financing risk, debt service risk and cybersecurity risk. The forward-looking statements made in the Company s Interim Report, including this MD&A and the accompanying Report to Shareholders, relate only to events or information as of the date on which the statements are made. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. The Interim Report, this MD&A and the documents to which we refer herein should be read completely and with the understanding that our actual future results may be materially different from what we expect. Basis of Discussion and Analysis The following management discussion and analysis of the financial condition and results of operations of the Company and other information is dated as at June 30, 2018 and should be read in conjunction with the Company s annual consolidated financial statements and notes thereto as at and for the year ended December 31, The annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). These condensed interim consolidated financial statements include only significant events and transactions affecting the Company during the current fiscal period and do not include all disclosures normally provided in the Company s annual consolidated financial statements. As a result, these condensed interim consolidated - 8 -

9 INTERIM REPORT JUNE 30, 2018 financial statements should be read in conjunction with the Company s audited consolidated financial statements for the period ended December 31, 2017 and related MD&A which can be obtained on the Company s website: and on the System for Electronic Document Analysis and Retrieval ( SEDAR ). Interim results are not necessarily indicative of the results expected for the fiscal year. Non-IFRS Measures Earnings before interest, taxes, depreciation and amortization ( EBITDA ), EBITDA margin, EBITDA per share, cash flow from operations, cash flow from operations per share, net income attributable to common shareholders before non-recurring items and net income attributable to common shareholders before nonrecurring items per share are not generally accepted measures of financial performance under IFRS. In addition, certain results in this MD&A stated to be adjusted have been presented on an adjusted basis that includes the Company s shares of revenue, expenses, assets and liabilities from its joint venture operations, which reflects the basis on which management makes its operating decisions and performance evaluation. These adjusted measures are also not generally accepted measures of financial performance under IFRS. Management utilizes these financial performance measures to assess profitability and return on equity in its decision making. In addition, the Company, its lenders and its investors use EBITDA to measure performance and value for various purposes. Investors are cautioned, however, that EBITDA should not be construed as an alternative to net income attributable to common shareholders determined in accordance with IFRS as an indicator of the Company s performance. The Company s method of calculating these financial performance measures may differ from other companies and, accordingly, they may not be comparable to measures used by other companies. A quantitative reconciliation of these non-ifrs measures is included in the section entitled EBITDA, Cash Flow from Operations, Net Income Attributable to Common Shareholders before Non-Recurring Items and Net Income Attributable to Common Shareholders before Non-Recurring Items Reconciliation with Per Share Amounts and a reconciliation of the adjusted non-ifrs measures is included in the section entitled Reconciliation of IFRS to Adjusted Results in this MD&A. All financial references are in millions of Canadian dollars unless otherwise noted. Overview of the Business Glacier operates as an information and marketing solutions company pursuing growth in sectors where the provision of essential information and related services provides high customer value. The Company s go to market strategy is being pursued through two operational areas: 1. Data, analytics and intelligence; and 2. Content and marketing solutions Through its brands and operations, Glacier serves clients in three segments: Environmental, Property and Financial Information Environmental and Property Information Environmental Risk Information Services ( ERIS ), Specialty Technical Publishers ( STP ) and REW.ca Financial Information Fundata (50% interest) Commodity Information Agricultural Information Glacier FarmMedia ( GFM ): Western Producer, Farm Business Communications, Canada s Outdoor Farm Show, Ag In Motion, AgDealer and Weather INnovations Network ( WIN ) Energy and Mining Information JuneWarren-Nickle s Energy Group (including CanOils) ( JWN ), Evaluate Energy, Northern Miner Group and Infomine - 9 -

10 INTERIM REPORT JUNE 30, 2018 Community Media Community Media Local daily and weekly newspapers and related publications, websites and digital products in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and the United States (includes direct, joint venture and other interests) Additional information on Glacier s operations is included in the Company s Annual Information Form as filed on SEDAR ( Significant Developments in 2018 and Outlook Glacier Media Inc. s ( Glacier or the Company ) overall financial results for the second quarter were impacted by two one-time transactions and a change in accounting treatment at one of its operations. Excluding these items, the underlying operating results were consistent with results in recent quarters. The Company s growth initiatives continued to progress well, while print advertising revenues declined as expected. In the quarter, the following items affected the results comparability to the prior year: Two transactions impacted the quarter s results when compared to the same period last year: 1) the sale of the COSSD which was published by the Company last June; 2) the purchase of the remaining interest in Infomine, resulting in Infomine s results being consolidated into the Company s results in Q Adjustments to revenue and EBITDA at Specialty Technical Publishers ( STP ) based primarily on an accounting treatment change reflecting the on-going transition in operations to a digital, subscription based business. The adjustment is to defer revenue and subscription contracts in process to change the recognition methodology to the term of the contract. The change coincides with operational changes being made at STP including the phasing out of the paper versions of the product. The change in methodology will also impact the monthly revenues recognized going forward until year s end. The environmental, property and financial information operations continued to generate growth. Included in the segment results was the impact of the accounting change at STP. In addition, operating investments in ERIS and REW dampened EBITDA but resulted in revenue and traffic growth. The commodities sector continued its recovery, resulting in a solid quarter for the Company s commodity information segment. Overall, the segment s adjusted revenue declined due to the sale of the COSSD directory while adjusted EBITDA increased. The community media group continued to make progress in its efforts to evolve and build its digital media business while leveraging its traditional print and flyer content and offerings. Print advertising revenue continued to decline as expected, but was partially offset by growth in digital revenues and profits. Digital revenues grew 50%, with good progress being made in the Company s portfolio of digital products and marketing solutions offerings. Markets important to the Company s operations continue to improve. The mining industry has been in a growth phase and the energy and agriculture markets appear to have stabilized. Improvements in these markets should aid the Company s related information businesses as well as the Western Canadian communities that our community media operations serve. That said, given anticipated print advertising declines and continued nearterm uncertainty and market risk, the Company will operate cautiously and evaluate cost reduction initiatives where appropriate in the affected businesses. As outlined, the Company plans to continue to invest in strategic areas. The investments are critical to the Company s growth plan and are resulting in demonstrable value creation. Management intends to build-on the progress of the last few years in strengthening the Company s financial position by further reducing debt. A strengthened balance sheet will mitigate risk while allowing the ongoing and planned operational and capital investments

11 INTERIM REPORT JUNE 30, 2018 Reconciliation of IFRS to Adjusted Results and Non-IFRS Measures The following table reconciles the Company s results as reported under IFRS to the results presented on an adjusted basis that includes the Company s shares of revenue, expenses, assets and liabilities from its joint venture operations, which reflects the basis on which management makes its operating decisions and performance evaluation. (thousands of dollars) Three months ended June 30, 2018 Three months ended June 30, 2017 except share and per share amounts Per IFRS Differential Adjusted (1) Per IFRS Differential Adjusted (1) Revenue $ 46,228 $ 8,547 $ 54,775 $ 49,019 $ 9,169 $ 58,188 Gross profit (3) $ 12,172 $ 4,360 $ 16,532 $ 13,859 $ 4,701 $ 18,560 Gross margin 26.3% 30.2% 28.3% 31.9% EBITDA (1)(2) $ 1,499 $ 3,069 $ 4,568 $ 2,982 $ 3,284 $ 6,266 EBITDA margin (1) 3.2% 8.3% 6.1% 10.8% EBITDA per share (1)(2) $ 0.01 $ 0.03 $ 0.04 $ 0.03 $ 0.03 $ 0.06 Net income attributable to common shareholders before non-recurring items (1)(2) $ 108 $ (28) $ 80 $ 2,703 $ (40) $ 2,663 Net income attributable to common shareholders before non-recurring items per share (1)(2) $ 0.00 $ - $ 0.00 $ 0.02 $ - $ 0.02 Net income attributable to common shareholders $ 4,939 $ (20) $ 4,919 $ 2,163 $ (33) $ 2,130 Net income attributable to common shareholders per share $ 0.04 $ - $ 0.04 $ 0.02 $ - $ 0.02 Cash flow from operations before non-recurring items (1)(2) $ 1,099 $ 2,871 $ 3,970 $ 2,548 $ 3,144 $ 5,692 Cash flow from operations per share (1)(2) $ 0.01 $ 0.03 $ 0.04 $ 0.02 $ 0.03 $ 0.05 Weighted average shares outstanding, net 109,828, ,828, ,828, ,828,731 (thousands of dollars) Six months ended June 30, 2018 Six months ended June 30, 2017 except share and per share amounts Per IFRS Differential Adjusted (1) Per IFRS Differential Adjusted (1) Revenue $ 91,086 $ 16,775 $ 107,861 $ 96,079 $ 17,544 $ 113,623 Gross profit (3) $ 25,783 $ 8,432 $ 34,215 $ 28,249 $ 8,856 $ 37,105 Gross margin 28.3% 31.7% 29.4% 32.7% EBITDA (1)(2) $ 5,246 $ 5,778 $ 11,024 $ 7,474 $ 6,043 $ 13,517 EBITDA margin (1) 5.8% 10.2% 7.8% 11.9% EBITDA per share (1)(2) $ 0.05 $ 0.05 $ 0.10 $ 0.07 $ 0.05 $ 0.12 Net income attributable to common shareholders before non-recurring items (1)(2) $ 1,628 $ (157) $ 1,471 $ 4,514 $ (160) $ 4,354 Net income attributable to common shareholders before non-recurring items per share (1)(2) $ 0.01 $ - $ 0.01 $ 0.04 $ - $ 0.04 Net income attributable to common shareholders $ 4,891 $ (155) $ 4,736 $ 3,738 $ (159) $ 3,579 Net income attributable to common shareholders per share $ 0.04 $ - $ 0.04 $ 0.03 $ - $ 0.03 Cash flow from operations before non-recurring items (1)(2) $ 4,291 $ 4,972 $ 9,263 $ 6,471 $ 5,403 $ 11,874 Cash flow from operations per share (1)(2) $ 0.04 $ 0.04 $ 0.08 $ 0.06 $ 0.05 $ 0.11 Weighted average shares outstanding, net 109,828, ,828, ,828, ,828,731 Notes: (1) Refer to "Non-IFRS Measures" section for discussion of non-ifrs measures used in this table. (2) IFRS net income attributable to common shareholders and cash flow from operations have been adjusted for non-recurring items. Refer to "EBITDA, Cash Flow from Operations and Net Income Attributable to Common Shareholders Before Non-Recurring Items Reconciliation". (3) Gross profit for these purposes excludes depreciation and amortization. Adjusted Operational Performance (1) Management believes that including its share of revenues, expenses and cash flows of its joint venture operations in the Company s results provides a more comprehensive basis for reflecting and assessing the overall operations of the Company. Management bases its operating decisions and performance evaluation using the adjusted results (1). The following discussion adjusts the Company s reported results under IFRS to include the revenues, expenses and cash flows of its joint ventures. Adjusted consolidated EBITDA decreased to $4.6 million for the quarter ended June 30, 2018 compared to $6.3 million in the prior year. Decreases in adjusted EBITDA were due a one-time accounting adjustment to reflect the on-going transition in operation to a digital, subscription based business. The adjustment is to primarily defer revenue and subscription contracts in process to change the recognition methodology to the term of the contract. The accounting adjustments reduced revenue and EBITDA by $0.9 million and $1.1 million respectively. In addition, the weaker agriculture market in Canada, along with print advertising declines in community media operations also had an overall effect on Glacier s results

12 INTERIM REPORT JUNE 30, 2018 Adjusted consolidated revenue was $54.8 million for the quarter ended June 30, 2018 compared to $58.2 million in the prior year. In addition to the STP adjustment as mentioned above, revenue continues to be impacted by the maturing community media industry, along with the weaker agriculture market. For the quarter ended June 30, 2018, adjusted net income attributable to common shareholders before nonrecurring items decreased to $0.1 million from $2.7 million in the prior year. Adjusted cash flow from operations before non-recurring items decreased to $4.0 million from $5.7 million in the prior year. On an adjusted basis, Glacier s consolidated debt net of cash outstanding before deferred financing charges was 1.5x trailing 12-months adjusted EBITDA as at June 30, The main factors affecting the comparability of the results for the year are detailed below under the IFRS Selected Financial Information. Note: (1) The adjusted consolidated financial results have been adjusted to include the Company s share of revenue, expenses, assets and liabilities from its joint venture operations on a proportionate accounting basis as this is the basis on which management bases its operating decisions and performance evaluation. IFRS does not allow for the inclusion of the joint ventures on a proportionate basis. These results include additional non-ifrs measures such as EBITDA, cash flow from operations and net income attributable to common shareholders before non-recurring items. The adjusted results are not generally accepted measures of financial performance under IFRS. The Company s method of calculating these financial performance measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies. Please refer to the Reconciliation of IFRS to Adjusted Results for a reconciliation of these non-ifrs measures and adjusted results. Management reports its results adjusted to include its share of its joint ventures in the MD&A under the heading Adjusted Operational Performance. Management reports its results adjusted to include its share of its joint ventures in the Report to Shareholders

13 INTERIM REPORT JUNE 30, 2018 Second Quarter IFRS Results and Overview of Operating Performance Selected Financial Information The following outlines selected financial statistics and performance measures for Glacier, on an IFRS basis (other than the non-ifrs measures noted) for the periods ended June 30, 2018 and 2017: Three months ended Six months ended (thousands of dollars) except share and per share amounts June 30, June 30, Revenue $ 46,228 $ 49,019 $ 91,086 $ 96,079 Gross profit (2) $ 12,172 $ 13,859 $ 25,783 $ 28,249 Gross margin 26.3% 28.3% 28.3% 29.4% EBITDA (1) $ 1,499 $ 2,982 $ 5,246 $ 7,474 EBITDA margin (1) 3.2% 6.1% 5.8% 7.8% EBITDA per share (1) $ 0.01 $ 0.03 $ 0.05 $ 0.07 Interest expense, net $ 575 $ 588 $ 1,147 $ 1,189 Net income attributable to common shareholders before non-recurring items (1) $ 108 $ 2,703 $ 1,628 $ 4,514 Net income attributable to common shareholder before non-recurring items per share (1) $ 0.00 $ 0.02 $ 0.01 $ 0.04 Net income attributable to common shareholders $ 4,939 $ 2,163 $ 4,891 $ 3,738 Net income attributable to common shareholders per share $ 0.04 $ 0.02 $ 0.04 $ 0.03 Cash flow from operations (1) $ 1,099 $ 2,548 $ 4,291 $ 6,471 Cash flow from operations per share (1) $ 0.01 $ 0.02 $ 0.04 $ 0.06 Capital expenditures $ 1,929 $ 1,034 $ 3,350 $ 1,913 Total assets $ 245,747 $ 245,589 $ 245,747 $ 245,589 Total non-current financial liabilities $ 39,690 $ 44,659 $ 39,690 $ 44,659 Debt net of cash outstanding before deferred financing charges and other expenses $ 39,159 $ 44,096 $ 39,159 $ 44,096 Equity attributable to common shareholders $ 138,212 $ 133,881 $ 138,212 $ 133,881 Weighted average shares outstanding, net 109,828, ,828, ,828, ,828,731 Notes: (1) Refer to "Non-IFRS Measures" and "EBITDA, Cash Flow from Operations and Net Income Attributable to Common Shareholders before Non-Recurring Items" section for calculation of non-ifrs measures used in this table. (2) Gross profit for these purposes excludes depreciation and amortization. The main factors affecting the comparability of the results for the quarter include: Operating performance of the Company s various business units and general market conditions during the reported years; Decreased revenues due to the weaker community media industry, the cyclical nature of certain of Glacier s businesses, including the low price of oil and general softness in the agriculture industry, as well as the sale of COSSD which was published by the Company last June; Fluctuations in restructuring expenses including severance payments, transaction and transition expenses, and other amounts related to the closure and sale of certain community media assets; In the April 2018, the Company acquired the remaining 50% of Infomine for $3.6 million and a gain on acquisition of $2.7 million was recognized; In June 2018, the Company made a one-time accounting adjustment. The adjustment is to primarily defer revenue and subscription contracts in process to change the recognition methodology to the term of the contracts. This adjustment reduced revenue and EBITDA by $0.9 million and $1.1 million respectively; Revenue Glacier s consolidated revenue for the period ended June 30, 2018 was $46.2 million compared to $49.0 million in the prior year

14 INTERIM REPORT JUNE 30, 2018 Environmental, Property and Financial Information The Environmental, Property and Financial Information group generated revenues of $4.5 million for the period ended June 30, 2018, as compared to $5.3 million in the prior year. ERIS continued to expand, experiencing revenue growth in both U.S. and the Canada. REW.ca, the Company s online real estate portal, continued to grow rapidly in terms of site features, traffic and revenues. Growth in ERIS and REW.ca was offset by a one-time accounting adjustment to reflect the on-going transition in operation to a digital, subscription based business. The adjustment is to primarily defer revenue and subscription contracts in process to change the recognition methodology to the term of the contract. The accounting adjustments reduced revenue and EBITDA by $0.9 million and $1.1 million respectively. Commodity Information The Commodity Information group generated revenues of $12.1 million for the period ended June 30, 2018, as compared to $13.0 million in the prior year. Decline in revenue was largely due to the sale of the COSSD directory in Conditions in the agricultural markets have stabilized. The Company continued to invest in its agricultural information operations in key growth areas such as outdoor exhibitions and online listings. Market conditions in the energy sector appear to have stabilized in the oil sector, although natural gas prices remain weak. The mining market continues to show signs of recovery. In April 2018, the Company acquired the remaining 50% of Infomine. Infomine, combined with the Northern Miner Group and JWN Energy Group, represents an at-scale, digital resource information business. Efforts are already underway to operationally merge the groups to reap the efficiency and growth benefits. Community Media The Community Media group generated $29.6 million of revenue for the period ended June 30, 2018, as compared to $30.7 million in the prior year. The revenue decline within the Community Media group was driven by the maturing nature of the print advertising industry. Digital revenues experienced strong growth overall and across a number of product offerings including retargeting services, website builds and Chinese digital marketing solutions. Some of the general revenue declines were partially offset by ongoing operational efficiencies and the continued realization of savings from the restructurings. Gross Profit Glacier s consolidated gross profit, being revenues less direct expenses, for the period ended June 30, 2018 was $12.2 million compared to $13.9 million in the prior year. The decrease in gross profit is largely attributable to the decrease in revenues, which is partially offset by the related decrease in direct expenses and operational efficiencies from restructurings and continued cost management. Gross profit as a percentage of revenues ( gross profit margin ) for the period ended June 30, 2018 was 26.3% as compared to 28.3% for the same period in the prior year. General & Administrative Expenses Glacier s consolidated general and administrative expenses were $10.7 million for the period ended June 30, 2018 compared to $10.9 million in the prior year. While the Company continues to focus on reducing administration costs, the Company also continues to invest in resources within operations experiencing growth and with growth potential. EBITDA EBITDA was $1.5 million for the period ended June 30, 2018 as compared to $3.0 million in the prior year. The results are due to the various reasons stated under Revenue, Gross Profit and General & Administrative Expenses. Net Interest Expense Glacier s consolidated net interest expense for the period ended June 30, 2018 was $0.6 million as compared to $0.6 million in the prior year

15 INTERIM REPORT JUNE 30, 2018 Depreciation and Amortization Depreciation of property, plant and equipment for the period ended June 30, 2018 decreased $0.1 million as compared to the prior year. Amortization of intangible and other assets remained consistent as compared the prior year. Restructuring and Other Expenses (Net) Restructuring and other expenses (net) for the period ended June 30, 2018 were $1.1 million compared to $0.7 million in the prior year. These expenses include restructuring costs, foreign exchange, severance expense, other income, and other expenses. Share of Earnings from Joint Ventures and Associates Share of earnings from joint ventures and associates, which include the Company s share of Fundata Canada Inc. ( Fundata ), Continental Newspapers Ltd. ( Continental ), Great West Newspapers Limited Partnership ( GWNLP ), the Victoria Times-Colonist, Rhode Island Suburban Newspapers, Inc. ( RISN ), Village Media Inc. ( Village ) and other joint ventures and associates, decreased $0.6 million as compared to the prior year. Aggregate operating results for the Company s joint ventures and associates, at the Company s proportionate share of the results, are as follows: As at (thousands of dollars) June 30, 2018 December 31, 2017 $ $ Assets 77,863 82,392 Liabilities 18,285 21,976 Net assets 59,578 60,415 For the three months ended June 30, 2018 June 30, 2017 $ $ Revenues 14,573 15,328 Net income for the year 2,415 3,102 Other comprehensive (loss) income 346 (1,175) Net Income Attributable to Common Shareholders Net income attributable to common shareholders increased by $2.8 million compared to the same period in the prior year. The increased from i) lower depreciation and amortization expenses of $0.1 million, ii) higher net gain on acquisition of $2.7 million, and iii) higher income tax recovery of $2.6 million. This was partially offset by i) lower operating results of $1.5 million, ii) higher restructuring expense of $0.4 million, iii) higher non-controlling interests of $0.1 million, and iii) lower share of earnings from joint ventures and associate of $0.6 million. Other Comprehensive Income (net of tax) For the period ended June 30, 2018, Glacier recognized other comprehensive loss (net of tax) of $1.3 million. The majority of the income related to the actuarial gain on defined benefit pension plans resulting from the change in actuarial assumptions, mainly the discount rate. Cash Flow from Operations Glacier s consolidated cash flow from operations was $1.1 million (before changes in non-cash operating accounts and non-recurring items) for the period ended June 30, 2018 as compared to $2.5 million in the prior year. The change in cash flow from operations resulted from the factors stated under Revenue, Gross Profit, General & Administrative Expenses and EBITDA

16 INTERIM REPORT JUNE 30, 2018 Capital expenditures were $1.9 million for the period ended June 30, 2018 compared to $1.0 million in the prior year. The majority of the current year expenditures relate to software development, hardware costs, leasehold improvements, infrastructures for the agricultural shows, customer list and mastheads. Prior year capital expenditures related to software development, IT infrastructure, and other sustaining capital expenditures. See Summary of Financial Position, Financial Requirements and Liquidity for further details. Related Party Transactions During the period ended June 30, 2018, the Company and its affiliates recorded administration, consulting, interest and other expenses of $0.2 million from Madison Venture Corporation ( Madison ) and its subsidiaries. Madison is a shareholder of the Company and certain of its officers and directors are officers and directors of the Company. Madison provides strategic, financial, transactional advisory services and administrative services to the Company on an ongoing basis. These services have been provided with the intention of maintaining an efficient and cost effective corporate overhead structure, instead of i) hiring more full-time corporate and administrative staff and thereby increasing fixed overhead costs and ii) retaining outside professional advisory firms on a more extensive basis. These services were provided in the normal course of operations and were measured at the amount of consideration established and agreed to by the related parties. In addition, Madison was required to be the guarantor of a loan relating to the acquisition of interests in certain community newspapers in Contingency During an affiliate of the Company ( the affiliate ) received, from the Canada Revenue Agency ( CRA ) and provincial tax authorities, tax notices of reassessments and assessments relating to the taxation years The notices deny the application of non-capital losses, capital losses, scientific research and experimental development ( SR&ED ) pool deductions and SR&ED tax credits claimed. As a result additional taxes payable including interest and penalties are approximately $55.8 million. The affiliate has filed notices of objection with the CRA and provincial taxing authorities and has paid the required deposits, which has been recorded in other assets. The Company, the affiliate and its counsel believe that the filing positions adopted by the affiliate in all years are appropriate and in accordance with the law. The affiliate intends to vigorously defend such positions. Summary of Selected Quarterly IFRS Results

17 INTERIM REPORT JUNE 30, 2018 The following outlines the significant financial performance measures for Glacier for the last eight quarters: Trailing (thousands of dollars) 12 Q2 Q1 Q4 Q3 except share and per share amounts Months Revenue $ 186,178 $ 46,228 $ 44,858 $ 48,690 $ 46,402 EBITDA (1) $ 14,267 $ 1,499 $ 3,747 $ 6,101 $ 2,920 EBITDA margin (1) 7.7% 3.2% 8.4% 12.5% 6.3% EBITDA per share (1) $ 0.13 $ 0.01 $ 0.03 $ 0.06 $ 0.03 Interest expense, net $ 2,566 $ 575 $ 572 $ 775 $ 644 Net income attributable to common shareholders before non-recurring items (1) $ 7,249 $ 108 $ 1,520 $ 3,761 $ 1,860 Net income attributable to common shareholders before non-recurring items per share (1) $ 0.07 $ 0.00 $ 0.01 $ 0.03 $ 0.02 Net (loss) income attributable to common shareholders $ (10) $ 4,939 $ (48) $ (5,944) $ 1,043 Net (loss) income attributable to common shareholders per share $ 0.00 $ 0.04 $ 0.00 $ (0.05) $ 0.01 Cash flow from operations (1) $ 12,158 $ 1,099 $ 3,192 $ 5,265 $ 2,602 Cash flow from operations per share (1) $ 0.11 $ 0.01 $ 0.03 $ 0.05 $ 0.02 Capital expenditures $ 6,564 $ 1,929 $ 1,421 $ 1,607 $ 1,607 Debt net of cash outstanding before deferred financing charges and other expenses $ 39,159 $ 39,159 $ 38,984 $ 40,256 $ 41,601 Equity attributable to common shareholders $ 138,212 $ 138,212 $ 132,037 $ 132,653 $ 138,014 Weighted average shares outstanding, net 109,828, ,828, ,828, ,828, ,828,731 Trailing 12 Q2 Q1 Q4 Q3 Months Revenue $ 194,522 $ 49,019 $ 47,060 $ 48,840 $ 49,603 EBITDA (1) $ 17,297 $ 2,982 $ 4,492 $ 5,289 $ 4,534 EBITDA margin (1) 8.9% 6.1% 9.5% 10.8% 9.1% EBITDA per share (1) $ 0.17 $ 0.03 $ 0.04 $ 0.05 $ 0.04 Interest expense, net $ 2,990 $ 588 $ 601 $ 1,056 $ 745 Net income attributable to common shareholders before non-recurring items (1) $ 8,918 $ 2,703 $ 1,811 $ 2,841 $ 1,563 Net income attributable to common shareholders before non-recurring items per share (1) $ 0.09 $ 0.02 $ 0.02 $ 0.03 $ 0.01 Net income (loss) attributable to common shareholders $ 2,935 $ 2,163 $ 1,575 $ (2,587) $ 1,784 Net income (loss) attributable to common shareholders per share $ 0.03 $ 0.02 $ 0.01 $ (0.02) $ 0.02 Cash flow from operations (1) $ 15,340 $ 2,548 $ 3,923 $ 4,156 $ 4,713 Cash flow from operations per share (1) $ 0.15 $ 0.02 $ 0.04 $ 0.04 $ 0.04 Capital expenditures $ 4,980 $ 1,034 $ 879 $ 1,835 $ 1,232 Debt net of cash outstanding before deferred financing charges and other expenses $ 44,096 $ 44,096 $ 45,030 $ 50,320 $ 51,591 Equity attributable to common shareholders $ 133,881 $ 133,881 $ 135,718 $ 133,351 $ 131,986 Weighted average shares outstanding, net 99,342, ,828, ,828, ,152,243 89,083,105 Notes: (1) Refer to "Non-IFRS Measures" and "EBITDA, Cash Flow from Operations Reconciliation and Net Income Attributable to Common Shareholders Before Non-Recurring Items" section for calculation of non-ifrs measures used in this table. The main factors affecting comparability of results over the last eight quarters are: Operating performance of the Company s various business units, including cost-reduction initiatives and general market conditions during the reported periods; Decreased revenues during the reported periods due to the structural changes in the community media industry, the cyclical nature of certain of Glacier s businesses, including softness in the energy and mining sectors, as well as the sale of COSSD which was published by the Company last June; In the April 2018, the Company acquired the remaining 50% of infomine for $3.6 million and a gain on acquisition of $2.7 million was recognized; In June 2018, the Company made a one-time accounting adjustment. The adjustment is to primarily defer revenue and subscription contracts in process to change the recognition methodology to the term of the contracts. This adjustment reduced revenue and EBITDA by $0.9 million and $1.1 million respectively;