FP Newspapers Inc. — Management Reports 2024

Apr 18, 2024

FP NEWSPAPERS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 30, 2023 AND 2022

Approved for issuance: APRIL 17, 2024

MANAGEMENT'S DISCUSSION AND ANALYSIS

This management's discussion and analysis is dated April 17, 2024 and does not reflect changes or information subsequent to this date. Additional regulatory filings for FP NEWSPAPERS INC. ("FPI") can be found on the SEDAR website at www.sedarplus.ca.

The following discussion and analysis is supplementary to, and should be read in conjunction with our financial statements for the year ended December 30, 2023.

Forward-Looking Statements

Certain statements in this discussion and analysis may constitute forward-looking statements that reflect management's expectations regarding future growth, financial performance and business opportunities that are not historical facts. Such forward-looking statements are subject to risks and uncertainties set out below under the heading "Caution Regarding Forward-Looking Statements". All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. These statements reflect current expectations of management regarding future events and operating performance and speak only as of the date of this discussion and analysis. They are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

Financial Statements

The audited financial statements of FPI for the years ended December 30, 2023 and 2022 have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). These financial statements are available on the SEDAR+ website.

All monetary amounts, unless otherwise indicated, are expressed in Canadian dollars.

OVERVIEW AND BACKGROUND

FP NEWSPAPERS INC. has no active business. It owns securities entitling it to 49% of the distributable cash flow of FP CANADIAN NEWSPAPERS LP ("FPLP"). FPLP owns and operates the Winnipeg Free Press, along with several other Manitoba based news and media publications that are available in both print and digital formats. The informative and engaging content we produce has an extensive reach throughout the province of Manitoba. The breadth of our reach provides compelling platforms for those looking to effectively reach a Manitoba audience.

OPERATING RESULTS

A discussion of our operating results

	For the three months ended December 30,		For the year ended December 30,
(\$ in 000's)	2023	2022	2023		2022
Equity interest in FP Canadian Newspapers LP Income (Loss) Administration expenses Other income	\$ 210 (58) 2	\$ 46 (50) 1	\$	(3,066) \$ (217) 9		884 (196) 3
(Loss) income before income taxes	154	(3)		(3,274)		691
Current income tax recovery (expense)	11	(85)		42		(387)
Deferred income tax recovery	-	-		12		-
(Loss) income and comprehensive (loss) income for the period	165	(88)		(3,220)		304
Weighted average number of Common Shares outstanding	6,902,592	6,902,592	6,902,592		6,902,592
Comprehensive (loss) income per share – basic and diluted	\$ 0.024	\$ (0.013) \$		(0.466) \$		0.044

Equity interest in FP Canadian Newspapers LP Income

FPI's proportionate share of FPLP income (loss) and comprehensive income (loss) for the three months and year ended December 30, 2023, was \$0.2 and \$(3.1) million, respectively, compared to income of \$0.05 and \$0.9 million in the same periods of the prior year. See the supplemental management and analysis of FPLP included herein.

Administrative Expenses

Changes in administrative expenses are due to timing.

Income Taxes

Current income taxes include FPI's proportionate share of FPLP's non-conterminous taxable income resulting in fluctuations of FPI's effective tax rate.

Deferred income tax recovery reflects an adjustment to the net deferred tax liability relating to intangible assets of FPLP.

Income (Loss) and Comprehensive Income (Loss)

Income (loss) and comprehensive income (loss) for the period reflects FPI's investment in FPLP and its underlying performance for the period. Comprehensive income (loss) for the three months and year ended December 30, 2023, was \$0.2 and \$(3.2) million, respectively, compared to an income (loss) of \$(0.1) and \$0.3 million for the same periods in the prior year.

					Quarter Ended
(\$ in '000's.		2023 Dec - 30	2023	2023	2023	2022 Dec - 30	2022	2022 Jun - 30	2022 Mar - 31	2021
except share \$)			Sep - 30	$Jun - 30$	$Mar - 31$		Sep - 30			Dec - 30
FP CANADIAN NEWSPAPERS LP
Revenue	\$	13,070	12,896	13,604	13,323	15,073	13,542	14,619	13,519	15,104
Income and comprehensive income $(\text{loss})$	\$	428	360	934	(7,980)	93	(766)	1,245	1.233	695
Proportionate % of Income and comprehensive Income (Loss) attributable to FP NEWSPAPERS INC		49.0%	49.0%	49.0%	49.0%	49.0%	49.0%	49.0%	49.0%	49.0%
Income and comprehensive income (loss) attributable to FP NEWSPAPERS INC	\$	210	177	458	(3,910)	46	(375)	610	604	341
FP NEWSPAPERS INC.
Income and comprehensive income $(\text{loss})$	\$	165	140	426	(3,950)	(88)	(600)	696	297	18
Income and comprehensive income (loss) per Share	\$	0.024	0.020	0.062	(0.572)	(0.013)	(0.087)	0.101	0.043	0.003
Outstanding Shares	#	6,902.6	6,902.6	6,902.6	6,902.6	6,902.6	6,902.6	6,902.6	6,902.6	6,902.6

SUPPLEMENTAL DISCLOSURE BY FP NEWSPAPERS INC. OF

FP CANADIAN NEWSPAPERS LIMITED PARTNERSHIP

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

OPERATING RESULTS

A discussion of our operating results

	For the three months ended December 31,				For the year ended December 31,
(\$ in 000's)	2023			2022		2023		2022
Revenue
Print advertising	\$ 5,009	\$		6,658	\$	20,630	\$	24,147
Circulation	5,855			6,019		23,439		24,066
Digital advertising	1,059			1,121		3,775		3,592
Other	1,147			1,275		5,049		4,948
TOTAL REVENUE	13,070			15,073		52,893		56,753
Operating expenses
Employee compensation	5,576			6,082		22,652		23,976
Newsprint and other paper	1,002			1,157		4,123		4,103
Distribution	2,292			2,450		9,103		9,832
Production	1,501			1,618		5,771		6,169
Other	1,456			1,522		5,258		5,685
Depreciation and amortization	1,209			1,882		3,704		5,305
OPERATING INCOME BEFORE UNDERNOTED
ITEMS	34			362		2,282		1,683
Restructuring charge	(121)			(141)		(350)		(159)
Impairment of intangible assets	-			-		-		(89)
Impairment of property, plant, and equipment	360			-		(7,863)		-
OPERATING INCOME	273			221		(5,931)		1,435
Other income	51			42		214		70
Finance costs	(163)			(173)		(808)		(434)
Gain on disposal of property, plant, and equipment	267			3		267		734
INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD	\$ 428	\$		93	\$	(6,258) \$		1,805

Revenue

Revenue decreased \$2.0 million or 13.3% to \$13.1 million and decreased \$3.9 million or 6.8% to \$52.9 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. The decreases are reflective of decreases in print advertising and circulation, partially offset by increases in digital advertising during the year.

Print advertising

Print Advertising revenues decreased \$1.6 million or 24.8% to \$5 million and \$3.5 million or 14.6% to \$20.6 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. Classified advertising revenues decreased \$0.2 million or 15.2% to \$1.3 million and \$0.5 million or 8.3% to \$5.3 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. Display advertising revenues decreased \$1.2 million or 33.3% to \$2.4 million and \$1.9 million or 15.7% to \$10.2 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. Flyer distribution revenues decreased \$0.2 million or 14.3% to \$1.3 million and \$1.1 million or 18.1% to \$5.1 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year.

Circulation

Circulation revenue decreased \$0.2 million or 2.7% to \$5.9 million and \$0.6 million or 2.6% to \$23.4 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. There was an increase in the overall digital subscription revenue albeit not enough to offset the decrease in print subscription revenue.

Digital advertising

Digital Advertising revenues decreased \$0.1 million or 5.5% to \$1.1 million for the three months year ended December 31, 2023, and increased \$0.2 million or 5.1% to \$3.8 million for the year ended December 31, 2023, as compared to the same periods in the prior year. This was due to increased client demand for alternatives to traditional print advertising.

Other

Other revenues decreased \$0.1 million or 10% to \$1.1 million and increased \$0.1 million or 2% to \$5 million for three months and year ended December 31, 2023, respectively, reflective of slight variances in commercial print levels compared to the same periods in the prior year.

Gain on disposal of property, plant, and equipment

FPLP disposed of land and buildings in the fourth quarter of 2023, the net proceeds on disposition were \$1.1 million, and a gain of \$0.3 million was recognized with respect to the disposition.

Expenses

Operating expenses decreased \$1.7 million or 11.4% to \$13.0 million and \$4.5 million or 8.1% to \$50.6 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year.

Employee Compensation

Employee compensation costs decreased by \$0.5 million or 8.3% to \$5.6 million and \$1.3 million or 5.5% to \$22.7 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. A recovery of \$0.3 and \$1.0 million were recognized for the three months and year ended December 31, 2023, relating to the federal government's Canadian Journalism Tax credit program ("JTC").

Newsprint and other paper

Newsprint expenses decreased \$0.2 million or 13.4% to \$1 million for the three months ended December 31, 2023, as compared to the same period in the prior year and was relatively flat overall for the year ended December 31, 2023, due to stable newsprint prices and slight decreases in the volume of total paper purchased.

Distribution

Distribution expenses decreased \$0.2 million or 6.4% to \$2.3 million and \$0.7 million or 7.4% to \$9.1 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year as a result of declining newspaper circulation volumes.

Production

Production expenses decreased \$0.1 million or 7.2% to \$1.5 million and \$0.4 million or 6.5% to \$5.8 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. The decrease in production expenses is a result of decreases in third party services, primarily relating to commercial printing.

Other

Other operating expenses decreased \$0.1 million or 4.3% to \$1.5 million and \$0.4 million or 7.5% to \$5.3 million for the three months and year ended December 31, 2023, respectively as compared to the same period in the prior year, as a result of cost reduction measures in general for the overall category.

Depreciation and amortization

Depreciation and amortization decreased by \$0.7 million or 35.8% to \$1.2 million and \$1.6 million or 30.2% to \$3.7 million for the three months and year ended December 31, 2023, respectively as compared to the same periods in the prior year. The decrease in depreciation and amortization expense is a result of capital asset retirements in the current and prior years as well as accelerated depreciation of press equipment in 2022.

Impairment of Property, Plant, and Equipment

On March 9, 2023, management made the decision that it would not be proceeding with the installation of the KBA Commander CT Press System and the Ferag mailroom equipment and recognized an impairment expense of \$8.5 million. During the remainder of the year, recoveries amounting to \$0.6 million were recognized from partial disposal of parts, reducing the impairment charge to \$7.9 million.

EBITDA (1)

EBITDA was \$1.1 and \$5.6 million for the three months and year ended December 31, 2023, respectively, compared to \$2.1 and \$6.8 million for the same periods in the prior year, a decrease of 46.6% and 17.4%, respectively. EBITDA margin for the three months and year ended December 31, 2023, were 8.6% and 10.7%, respectively, compared to 13.9% and 12.0% for the same periods in the prior year. The changes in EBITDA were due to the factors described above.

Finance Costs

Finance costs remained flat during the quarter and increased \$0.4 million or 86.2% to \$0.8 million for the year ended December 31, 2023, as compared to the same periods in the prior year as a result of refinancing the existing HSBC credit facility.

Income (loss) and Comprehensive Income (loss)

An income (loss) and comprehensive income (loss) of \$0.4 and \$(6.3) million were reflected for the three months and year ended December 31, 2023, respectively, compared to income of \$0.1 and \$1.8 million for the same periods in the prior year. The increase for the three-month period is reflective of decreased expenses as described above, and the decline for the year ended December 31, 2023 is a result of the impairment described above.

Quarter Ended
(\$ in '000's)		2023 Dec - 31	2023 Sep - 30	2023 Jun - 30	2023 Mar - 31	2022 Dec - 31	2022 Sep - 30	2022 Jun - 30	2022 Mar - 31	2021 Dec - 31
Revenue	\$	13,070	12,896	13,604	13,323	15,073	13,542	14,619	13,519	15,104
EBITDA	\$	1,124	1,138	1,828	1,548	2,103	1,175	1,914	1,637	1,414
Income (loss) and comprehensive Income (Loss)	\$	428	360	934	(7,980)	93	(766)	1 2 4 5	1,233	695
Distributions	\$	٠	٠	500	٠	839	۰	٠	1,289	592
Restructuring	\$	(121)	(221)	٠	8	141		5	12	760
Capital Expenditures		260	50	308	1,328	1,806	6,141	709	715	568

Cash Flow from Investing Activities

Capital and intangible assets additions were \$0.3 and \$1.9 million for the three months and year ended December 31, 2023, respectively compared to \$1.8 and \$9.4 million for the same periods in the prior year. Capital asset additions for the quarter relate to new computer equipment, while additions for the year are reflective of new press controls. Proceeds from the sale of property, plant and equipment were \$1.8 million for the year ended December 31, 2023 as compared to \$1.5 million in the prior year. Capital assets disposed of were land and buildings as well as recoveries from disposal of the KBA press.

Cash Flow from Financing Activities

Cash outflows from financing activities were \$2.1 and \$9.8 million for three months and year ended December 31, 2023, respectively compared to providing \$5.5 and \$6.2 million for the same periods in the prior year. FPLP amended and extended its existing credit facility in the prior year, proceeds of \$10.3 million were received from the term loan for the year ended December 31, 2022. Principal repayments of \$2.1 and \$9.0 million were made during the three months and year ended December 31, 2023, respectively. No distributions were made to partners during the quarter; a distribution of \$0.5 million was made during the year ended December 31, 2023, (2022 - \$2.1 million).

COMMITMENTS AND CONTINGENCIES

A description of changes to our material contractual obligations

Commitments and contingencies are disclosed in note 11 of the 2023 annual financial statements.

RELATED PARTY TRANSACTIONS

A description of our material transactions with related parties

Virtually all newsprint is purchased from the Alberta Newsprint Company, a related party. Total newsprint purchases for the three months and year ended December 31, 2023, were \$0.7 and \$2.5 million, respectively (2022 - \$1.1 and \$3.4 million).

INTERNAL CONTROL OVER FINANCIAL REPORTING

A discussion of our disclosure controls and internal controls over financial reporting

In connection with National Instrument 52-109 (Certificate of Disclosure in Issuer's Annual and Interim Filings), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issue Basic Certificate with respect to the financial information contained in the financial statements for the year ended and this accompanying MD&A. This can be found on SEDAR.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A description of accounting estimates that are critical to determining our financial results

The critical accounting policies and estimates adopted in preparation of the year end financial statements are disclosed in note 2 of the 2023 annual consolidated financial statements.

OUTLOOK

The outlook for our business

The uncertainty of the economy and political landscape (Bill C-18) continue to impact the newspaper industry. We anticipate the print advertising market to remain challenging, with a continuing shift in advertising dollars from print into other advertising formats, particularly online and digital search and social media platforms. We continue to be focused on various initiatives to participate and compete in this area.

We anticipate circulation to remain challenging, with a continuing decline in subscriber volume and shifting dollars from print into digital subscriptions. Historically price increases have mitigated declines in overall circulation volumes that we have experienced over the last few years, and we expect this trend to continue. As our audience transitions, we continue to be focused on various initiatives to remain relevant and accommodate our audience.

Management of FPLP believe that despite the ever-growing immediate challenges in the newspaper industry, as well as ever changing market conditions, the business will continue to operate, without issue, with existing press equipment and production infrastructure.

RISKS AND UNCERTAINTIES

A Summary of Select Risks and Uncertainties Facing Our Business

We are subject to a number of risks and uncertainties, including those set out below. A risk is the possibility that an event might happen in the future that could have a negative effect on our financial position, financial performance, or our business. The actual effect of any event on our business could be materially different from what is anticipated. The risks described below impact some or all of our businesses. The risks described below do not include all possible risks.

Revenue

Our revenue is primarily dependent upon the sale of advertising, the distribution of inserts and flyers and the generation of subscription revenue. Advertising revenue includes in-paper advertising, digital advertising and specialty publications. There has been a continuing shift within the media industry from print to other formats and, as a result, digital media generates significant competition for advertising and subscription revenue and readership. Our existing and potential future digital competitors range from start-up operations with low-cost structures to well capitalized global players. We expect this shift to continue and consequently could have an adverse effect on our business, financial results and financial position.

Reliance on Printing Operations

Our newspaper operations place considerable reliance on the functioning of printing operations for the printing of our various publications. In the event that any of our print facilities experience a shutdown or disruption, we will attempt to mitigate potential damage but we do not have a readily available option to shift or outsource such work to a third-party commercial printer. Such a shutdown or disruption could result in our being unable to print or distribute some or all of our publications, and consequently could have an adverse effect on our business, financial results and financial position.

Newsprint Costs

We primarily source newsprint from a single supplier. Newsprint is the single largest raw material expense for our newspaper operations. Newsprint is priced as a commodity with the price varying widely from time to time. We could face a risk in supply of newsprint and/or increased prices as a result of a reduction in the number of suppliers. We could also face volatility in the price of newsprint caused by other factors influencing supplier profitability, including increased raw material, energy costs, limitations on the supply of raw materials, and changes in trade agreements. There can be no assurance that we will not be exposed in the future to volatile or increased newsprint costs which could have an adverse effect on our business, financial results and financial position.

Distribution Costs

We rely on third party service providers to deliver many of our products to customers. These service providers range in size and scale from large distribution businesses to individual independent contractors. Significant increases in costs associated with engaging these third party service providers (including increases due to wage, fuel, changes in employment laws, or other matters) could materially increase our distribution expenses and have an adverse effect on our business, financial results and financial position.

Labour Disruptions

We have two collective agreements in our newspaper operations. We face the risk associated with future labour negotiations and the potential for business interruption should a strike, lockout or other labour disruption occur. Such a disruption may lead to lost revenues and could have an adverse effect on our business, financial results and financial position.

Dependency on Key Personnel

We are dependent to a large extent upon the continued services of our senior management team and other key employees such as editorial, digital, sales and technical personnel. There is increasingly intense competition for qualified managers and skilled employees (including technology and sales development focused roles which are key to our transformation) and our failure to recruit, train and retain such employees could have an adverse effect on our business, financial results and financial position.

Reputation

Our reputation for quality journalism and content is an important factor in maintaining readership levels and subscriptions. We strive to provide content across a number of platforms that is perceived as reliable, relevant and entertaining by readers and advertisers. However, public preferences regarding the credibility of media organizations and journalism, general economic conditions, the availability of alternatives for news and other content could contribute to the fluctuation in readership levels, and accordingly, limit our ability to generate advertising and subscription revenue which could have an adverse effect on our business, financial results and financial position.

Reliance on Technology

We place considerable reliance upon technology and information systems. These systems are sourced from third party service providers and permeate throughout our entire operations. There are critical risks associated with these systems including, but not limited to, cyber-security threats, unauthorized access, computer viruses, sabotage, power loss, system failures, human error and wear and tear on equipment. A disruption to these critical systems and equipment could have an adverse effect on our business, financial results and financial position.

Litigation

We are involved in various legal actions, which arise in the ordinary course of business. In particular, given the nature of our businesses, we have had and may have, litigation claims filed which are related to the publication of our editorial and other content, copyright or trademarks, privacy, personal injury, product liability, breach of contract, misleading advertising, unfair competition, employment related matters or other legal claims. Although we maintain insurance for many types of claims, there can be no assurance that insurance will be available or adequate for all such claims. Similarly, there can be no assurance as to the outcome of any future litigation or investigations will not have a negative impact on our business, financial results and financial position, even if ultimately found not to be liable.

Insurance

We have insurance, including media liability, property and casualty and directors' and officers' liability insurance, in place to address certain material insurable risks. Such insurance is subject to certain coverage limits, exclusions and deductibles that we believe are reasonable in the circumstances. There is no assurance that such insurance will continue to be available on an economically feasible basis, that all events that could give rise to a loss or liability are insurable or insured, that amounts owing from insurers will be collected or that the insurance coverage will be sufficient to cover every material loss or claim that may occur involving our business.

Income Tax, and Other Government Programs

We have taken and hope to continue to take advantage of a number of federal and provincial tax credit and grant programs, including programs designed to support Canadian media organizations. We have recorded the benefit of qualifying journalism tax credits based on estimates. There can be no assurance that the amounts accrued will be realized, or that these tax credit programs will continue to be available to us in the future or will not be reduced, changed or eliminated. Any future eliminations or reductions of these tax credits, or amendments to or unfavourable determinations regarding their application could increase our costs having an adverse effect on our business, financial results and financial position.

Economic Conditions

Revenue from our publications, whether digital or printed, is dependent on the prospects of our advertising clients, which can be affected by a variety of factors, including prevailing economic conditions. Adverse economic conditions generally have had and may continue to have a negative impact on the advertising industry and on our operations. Certain of our local and national advertisers operate in industries that are sensitive to adverse economic conditions and are subject to increasing competition and shifts in their industries. A downturn that impacts any of these industries could also have an adverse impact on our business and financial results and financial position.

Credit Risk

Credit risk is the risk of our financial loss if a customer fails to meet its contractual obligations. In the normal course of business, we are exposed to credit risk for accounts receivable from our customers. While we apply a prudent approach to the granting of credit to customers, the collectability of accounts receivable could deteriorate to a greater extent than provided for in our Financial Statements. Accounts receivables are carried at net realizable value and the allowance for doubtful accounts has been determined based on several factors, including the aging of accounts receivable, evaluation of significant individual credit risk accounts and historical experience. If such collectability estimates prove inaccurate, adverse adjustments to future operating results could occur and could have an adverse effect on our business, financial results and financial position.

Risks Related to our Indebtedness

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the future amounts due on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance indebtedness.

Our inability to generate sufficient cash flows to satisfy our debt or to refinance indebtedness on commercially reasonable terms, or at all, would materially and adversely affect our business, financial position and results of operations, and our ability to satisfy such obligations.

Availability of Capital

If funds are not available from our operations, we may be required to raise additional financing through public or private equity or debt financings, or other arrangements with corporate sources or other sources of financing to fund operations and meet our financial commitments. However, there is no assurance that additional funding, if required, will be available to us in amounts or on terms acceptable to us, if at all. Where available, theses agreements may require compliance with certain financial covenants and compliance with other affirmative and negative covenants. Such restrictions could limit our flexibility in planning and operating the business in the normal course, which could make us more vulnerable to adverse economic and industry conditions. The same can be said for replacing and/or refinancing our existing indebtedness.

Financial Reporting

We are responsible for establishing and maintaining adequate internal controls over financial reporting, a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.

Impairment

Changes in economic, legal, regulatory, competitive, customer, contractual and other factors may affect the value of our long-lived assets, intangible assets and investments. If any of these factors impair the value of these assets, IFRS requires that we reduce their carrying value and recognize an impairment charge. This would reduce our reported assets and earnings in the year the impairment charge is recognized.

Distributions

Decisions on the declaration and payment of distributions are made by our Board of Directors based on our overall financial performance and cash flow outlook. There is no guarantee that distributions will be declared in the future or that we will make distributions at former levels.

NON-IFRS MEASURES

A description of how we determine EBITDA and distributable cash flow used by management

(1) Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")

EBITDA is often referred to as a useful proxy for operating cash flows of a business. EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under IFRS. Readers are therefore cautioned against using this as an alternative to net earnings determined in accordance with IFRS as an indicator of our operating performance. Readers are similarly cautioned that our method for calculating EBITDA, may differ from those of other issuers and may not allow for direct comparisons to be made. Our calculation of EBITDA is the operating income (loss) as presented on the statement of income excluding depreciation, amortization, finance costs, other income, impairment of intangible assets and property, plant, and equipment and gain on disposal of property, plant, and equipment.

	For the Three Months Ended December 31,		For the Year Ended December 31,
(\$ in 000's)	2023	2022	2023	2022
Income for the period Add (subtract):	\$ 428 \$	93 \$	(6,258) \$	1,805
Depreciation and amortization Impairment of intangible assets Impairment (recovery) of property, plant, and	1,210 -	1,882 -	3,705 -	5,305 89
equipment Finance costs Other income	(360) 163	- 173	7,863 808	- 434
Gain on disposal of property, plant, and equipment	(50) (267)	(42) (3)	(213) (267)	(70) (734)
EBITDA	\$ 1,124 \$	2,103 \$	5,638 \$	6,829

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

An elaboration on the above noted title

Certain statements in this management's discussion and analysis may constitute "forward-looking information" under applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include but are not limited to statements using words such as "anticipate," "believe," "budgeted," "could," "expect," "estimate," "intend," "may," "will," "would," "should" and similar expressions and derivations thereof in connection with any discussion of future events, trends or prospects or future operating or financial performance. By their nature, forward-looking information and statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These risks and uncertainties include, among others: competition from digital and other forms of media; the effect of economic conditions on advertising revenue; the ability to build out digital media and online businesses; the failure to maintain current print and online newspaper readership and audience levels; the realization of anticipated cost savings; possible damage to the reputation of the Company's brands or trademarks; possible labour disruptions; possible environmental liabilities, litigation and pension plan obligations; fluctuations in foreign exchange rates and the prices of newsprint and other commodities. While both FPI and FPLP base such information and statements on assumptions believed to be reasonable when made, they are not guarantees of future performance and actual results of operations, financial condition and liquidity, and developments in the industry in which they operate, may differ materially from any such information and statements in this press release. Given these risks and uncertainties, undue reliance should not be placed on any forward-looking information or forwardlooking statements, which speak only as of the date of such information or statements. Other than as required by law, FPI and FPLP does not undertake, and specifically declines, any obligation to update such information or statements or to publicly announce the results of any revisions to any such information or statements.