Climate Change Data

Environmental Metrics

Social Achievements

• Reached a 10% compensation expense reduction target.

Environmental Challenges

• Revenue declination in the legacy print business.
• Shift in advertising dollars from print to online and digital platforms.
• Declining print advertising revenue.
• Declining print circulation revenue.
• Increasing competition from digital media and other forms of media.
• Seasonal variations in revenue.
• Potential for deterioration in the collectability of accounts receivable.
• Failure to fulfill the strategy of building digital media and online businesses.
• Inability to retain and attract sufficient qualified personnel.
• Reliance on information systems and technology, disruptions to which could adversely affect operations.
• Risk of equipment failure.
• Potential for labor disruptions.
• Security breaches and other disruptions that could compromise information and expose the company to liability.
• Financial difficulties of contractors and vendors.
• Outsourcing certain aspects of the business.
• Occurrence of natural or man-made disasters.
• Liabilities related to registered pension plans.
• Potential for controversial editorial content resulting in litigation.
• Unresolved litigation matters.
• Competition Bureau review of the Torstar Transaction.
• Disruptions in credit markets.
• Availability and terms of insurance policies.
• Inability to protect intellectual property rights or liability for infringing the intellectual property rights of others.
• Potential for additional asset impairments.
• Compliance with environmental, health, and safety laws and regulations.
• Failure to comply with "Canadian newspaper" status.
• Compliance with Regulation 52-109.
• Increasing regulatory pressures and compliance requirements.
• Substantial indebtedness.
• Restrictive covenants in debt agreements.
• Inability to generate sufficient cash to service all indebtedness.
• Foreign exchange fluctuations.
• Lack of an active public market for shares.
• Volatile market price for shares.
• Dual-class share structure.
• Postmedia Network Canada Corp. is a holding company.

Mitigation Strategies

• Cost reduction initiatives (including closure of 9 community newspapers).
• Developing new products and initiatives in digital marketing services.
• Implementing cost reduction initiatives.
• Deferring or eliminating discretionary spending.
• Monitoring and maintaining compliance with terms of note indentures.
• Identifying and selling redundant assets.
• Utilizing the ABL Facility to provide additional liquidity.
• Investing in digital media and online businesses.
• Developing new digital media and online products.
• Developing new content channels.
• Transforming the organization and operating model.
• Developing and upgrading technologies and supporting processes.
• Selling advertising in significant markets.
• Attracting and retaining talent.
• Implementing security measures.
• Outsourcing to reduce costs and increase efficiencies.
• Maintaining insurance coverage.
• Conducting annual impairment testing.
• Monitoring impairment indicators.
• Maintaining compliance with environmental and health and safety requirements.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Continued industry challenges, including declining print advertising and circulation revenue.
• Competition from international digital giants.
• Structural changes in the newspaper industry and media in general.
• Shift in advertising dollars from print to online and other digital platforms.
• Economic uncertainty.

Mitigation Strategies

• Implemented cost savings initiatives (compensation expense reductions, real estate rationalization, production efficiencies, transformation programs).
• Refinanced debt to extend maturities and reduce redemption obligations.
• Continued focus on print advertising and circulation revenue stabilization.
• Strategic cost cutting.
• Focus on repayment of debt.
• Leveraging strengths across the network to grow digital revenues.
• Developing new products and initiatives in digital marketing services and customized solutions.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on the Canadian economy, leading to near shutdown and significant revenue declines in the second half of the fiscal year.
• Significant declines in print advertising revenue due to the shift of advertising dollars to online and digital platforms.
• Declines in print circulation revenue due to price increases being offset by declines in circulation volumes.
• Declines in digital revenue due to decreases in owned and operated digital advertising, digital marketing services, and off-network programmatic digital advertising.
• High fixed cost structure making the company vulnerable to fluctuations in advertising revenue.

Mitigation Strategies

• Preserving liquidity, constraining costs, maximizing revenue, and seeking government support.
• Implementing cost-saving measures, including temporary and permanent layoffs, closure of community publications, and temporary salary reductions.
• Selling redundant assets, including real estate assets.
• Undertaking cost reduction initiatives to address revenue decline in the legacy print business.
• Focusing on various new products and initiatives in the digital marketing services area to increase business revenue.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Advertising revenue declines accelerated as a result of the COVID-19 pandemic and related government measures.
• Continuing shift in advertising dollars from print advertising to advertising in other formats, particularly online and other digital platforms including search and social media websites.
• Declining newspaper readership and circulation levels.
• Competition from digital and other forms of media.
• High fixed cost structure of newspaper publishing.
• Potential for increased distribution costs due to rising fuel prices.
• Need to invest significant capital to address continued technological development and compete with alternative emerging technologies.
• Seasonal variations in revenue.
• Potential deterioration in the collectability of accounts receivable.
• Increases in sales and other taxes.
• Failure to fulfill the strategy of building digital media and online businesses.
• Inability to retain and attract sufficient qualified personnel.
• Vulnerability of information systems and technology to disruptions.
• Risk of equipment failure.
• Potential for labor disruptions.
• Risk of security breaches and other disruptions compromising information and exposing the company to liability.
• Financial difficulties of certain contractors and vendors.
• Risks associated with outsourcing certain aspects of the business.
• Potential disruptions from natural or man-made disasters.
• Potential for additional asset impairments.
• Compliance with environmental, health, and safety laws and regulations.
• Failure to comply with "Canadian newspaper" status.
• Requirements of Regulation 52-109 on Certification of Disclosure in Issuers’ Annual and Interim Filings.
• Increasing regulatory pressures and compliance requirements.
• Substantial indebtedness.
• Restrictive covenants in the First-Lien Notes and Second-Lien Notes indentures.
• Potential inability to generate sufficient cash to service all indebtedness.
• Adverse effects from foreign exchange fluctuations.
• Potential lack of an active trading market for shares and potential delisting from the TSX.
• Volatile market price for shares.
• Dual class share structure.
• Postmedia Network Canada Corp. being a holding company and the risks attributable to its subsidiary, Postmedia Network Inc.

Mitigation Strategies

• Undertaking cost reduction initiatives (approximately $18 million in net annualized cost savings during the year ended August 31, 2021).
• Developing new products and initiatives in the digital marketing services area.
• Advocating for a more level playing field where digital platforms share revenues they generate from news publishers’ content.
• Monitoring cash flow forecasts, implementing cost reduction initiatives, deferring or eliminating discretionary spending, monitoring and maintaining compliance with terms of the note indentures, utilizing the ABL Facility, and identifying and selling redundant assets.
• Incorporating the impact of the COVID-19 pandemic on future cash flow projections.
• Investing in the editorial content of newspapers.
• Implementing various transformation projects.
• Utilizing purchasing power and proximity to paper mills to minimize newsprint expense.
• Continuing to pursue additional cost reduction initiatives.
• Investing time and significant resources in digital media and online businesses.
• Transforming the organization and operating model to grow digital media and online business.
• Developing and upgrading technologies and supporting processes.
• Maintaining liability, property and casualty insurance and director and officer liability insurance coverage.
• Obtaining and applying for Canadian and foreign service mark and trademark registrations.
• Conducting annual impairment testing.
• Monitoring impairment indicators on a quarterly basis.
• Completing a Refinancing Transaction to extend the maturities of long-term debt.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: PricewaterhouseCoopers LLP

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Economic challenges including a slower than expected rebound, tight labour market and inflationary pressures.
• Revenue declination in the legacy print business.
• Continuing shift in advertising dollars from print advertising to advertising in other formats, particularly online and other digital platforms including search and social media websites.
• Declining circulation volumes of newspapers.
• Competition from digital and other forms of media.
• Increased competition could also lead to additional expenditures for editorial content and marketing.
• Increased energy costs, strikes and other labour-related supply chain disruptions.

Mitigation Strategies

• Building a strong foundation for our parcel business, successfully grown key digital revenue streams and extending our debt ahead of the economic slowdown.
• Prioritizing and putting greater emphasis on growing revenue streams that we believe have the most potential for growth.
• Carefully managing costs to preserve our future and continue to aggressively transform our business to be more efficient.
• Implementing new cost reduction initiatives with the objective of reducing operating expenses.
• Cost reduction initiatives which are expected to result in approximately $5 million and $31 million of net annualized cost savings, respectively.
• Investing in the editorial content of our newspapers.
• Developing new products across our business lines.
• Expanding into new distribution channels, particularly with respect to digital media and online products.
• Outsourcing certain aspects of our business to third-party vendors.
• Deferring or eliminating discretionary spending, monitoring and maintaining compliance with terms of long-term debt, utilizing the ABL Facility to provide additional liquidity during season fluctuations of the business and identifying and selling redundant assets including certain real estate assets.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: PricewaterhouseCoopers LLP

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Revenue declination in the legacy print business
• Significant declines in print advertising and a competitive digital advertising market
• Decreases in circulation volumes
• Competition from digital and other forms of media
• Increased consolidation in the Canadian newspaper publishing and other media industries
• Prevailing economic conditions and the prospects of our advertising customers
• Declining newsprint supply
• High fixed cost structures
• Increases in fuel prices
• Rapid and significant technological changes
• Seasonal variations in revenue
• Potential for deterioration in the collectability of accounts receivable
• Increases in sales and other taxes
• Competition for experienced personnel
• Vulnerability to unauthorized access, computer viruses, system failures, human error, natural disasters, fire, power loss, communications failure or acts of sabotage or terrorism
• Risk of equipment failure
• Potential for labour disruptions
• Potential for security breaches
• Financial difficulties of certain contractors and vendors
• Risks associated with outsourcing
• Potential for natural or man-made disasters
• Potential for additional funds to be required under the CAAT Pension Plan
• Potential for litigation related to controversial editorial content
• Disruptions in the credit markets
• Potential for adverse effects from foreign exchange fluctuations
• Potential for asset impairments

Mitigation Strategies

• Cost reduction and transformation initiatives
• Focus on digital revenue growth opportunities (digital marketing services, website development, SEO, SEM)
• Price increases (circulation)
• Continued investment in high-quality editorial content
• Development of new products and services
• Expansion into new distribution channels
• Implementation of cost reduction initiatives resulting in approximately $76 million of net annualized cost savings
• Leveraging purchasing power and proximity to paper mills to minimize newsprint expense
• Cost reduction initiatives to offset increases in parcel services distribution expenses and increased fuel prices
• Cost reduction initiatives to offset decrease in digital advertising revenue
• Cost reduction initiatives, including decreases in occupancy costs, travel and entertainment expenses and marketing expenses
• Monitoring cash flow forecasts, implementing cost reduction and transformation initiatives, deferring or eliminating discretionary spending, monitoring and maintaining compliance with terms of long-term debt, identifying and selling redundant assets, utilizing the ABL Facility to provide additional liquidity, and obtaining a commitment to provide further financial support from Chatham
• Maintaining a multi-media liability insurance policy in respect of defamation claims
• Continuous monitoring of the financial condition of customers, review of credit history, review of aging of accounts receivable, evaluation of significant individual credit risk accounts, and utilization of each customer’s historical experience

Supply Chain Management

Climate-Related Risks & Opportunities