Business News
Postmedia Network Reports Combined Fourth Quarter and Year End Results
Tuesday 16. November 2010 - Second consecutive quarter of overall revenue growth. Digital first focus results in 7% increase in digital revenue and record online audiences. Progress made in three key areas: growing digital, cutting costs, and repaying debt.
Postmedia Network Canada Corp. (“Postmedia” or “the Company”) today released financial information for the fourth quarter and fiscal year ended August 31, 2010. On July 13, 2010 Postmedia, through a wholly owned subsidiary, acquired substantially all of the assets and assumed certain liabilities of Canwest Limited Partnership (“Canwest LP”) including all of the outstanding shares of National Post Inc. (“National Post”) (the “Acquisition”).
Financial information presented in this release represents results of Canwest LP for periods prior to July 13, 2010 and Postmedia for the period from July 13, 2010 to August 31, 2010. All references to combined fourth quarter and year end 2010 financial results in this release represent the sum of the financial results of Canwest LP and Postmedia. The combined financial information does not represent and is not purported to represent the results that would have been achieved had Postmedia owned the assets of Canwest LP and shares of National Post for the entire fiscal year.
Operating Results
On a combined basis, revenue of Canwest LP and Postmedia for the quarter ended August 31, 2010 totaled $241.3 million, an increase of $3.6 million or 1.5% relative to the same period in the prior year. This was the second consecutive quarter of revenue growth for the publishing business acquired by Postmedia. For the year ended August 31, 2010, combined revenue declined to $1,052.5 million from $1,099.1 million in the prior year, a decline of $46.6 million. The revenue decline was primarily the result of large declines in the first quarter of the most recent fiscal year due to the impact of the economic downturn.
Year over year growth in the fourth quarter was led by growth in Digital revenue of 7%. The websites owned and represented by the Company also achieved a new digital audience milestone in August reaching a record high 7.9 million unique visitors (source: comScore Inc.).
Print advertising revenue grew 2% in the quarter versus the prior year. Print revenue growth was led by national revenue (up 9%) which more than offset declines in classified (down 3%) and retail (down 2%) and a 1% decline in insert distribution revenue. Circulation revenue, in the fourth quarter, declined $0.8 million or 1% relative to the prior year as a result of 5% decline in print circulation partially offset by higher circulation prices.
On a combined basis, operating profit before amortization and restructuring of operations and other items (see “Non-GAAP Financial Measures”) was $30.2 million in the quarter versus $24.5 million in the fourth quarter of the prior year, a 23% improvement. The improvement was the result of revenue growth combined with a decline in compensation and newsprint expenses. For the full year, combined operating profit before amortization and restructuring of operations and other items was $191.1 million for the year ended August 31, 2010 compared to $171.9 million in the prior year. This improvement was due to a decrease in compensation, newsprint and other operating expenses totaling $66 million or 7%, which more than offset a revenue decline of $47 million or 4%.
On the same combined basis, for the quarter ended August 31, 2010, operating profit declined to $1.3 million compared to operating profit of $12.1 million for the same quarter in 2009. The decrease in operating profit was due to higher amortization and restructuring expenses in the period from July 13, 2010 to August 31, 2010. For the year ended August 31, 2010, operating profit increased to $128.8 million compared to $102.5 million in the previous year.
Expenses related to restructuring of operations and other items totaling $10.7 million were recognized in the fourth quarter relating to initiatives being implemented in early fiscal 2011. These expenses relate primarily to employee severance costs, costs relating to the oversight of the employee restructuring programs and preliminary costs related to a proposed TSX listing.
The Company incurred costs of $18.3 million related to the Acquisition which were expensed in the quarter.
Also in the quarter, Postmedia made an optional principal repayment of US$32.5 million related to its US term loan credit facility. After giving effect to this payment, outstanding debt at August 31, 2010 consisted of a $110 million Canadian term loan, US$267.5 million US term loan and US$275 million of 12.5% senior secured notes. The companys revolving credit facility remained undrawn.
“This is a strong out-of-the-gate showing for our newly formed company and digital first philosophy,” said Paul Godfrey, Chief Executive Officer. “We have made progress on key business priorities and continue the work of transforming the company, attacking legacy cost structures and paying down debt.”
Note: All dollar amounts are expressed in Canadian dollars unless otherwise specified.