Glacier Media Inc. — Management Reports 2021

Mar 27, 2021

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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2020 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 report is dated March 26, 2021 and includes information up to this date.

Glacier Media Inc.’s Annual Report, including this MD&A 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 invest in key strategic areas, to realize cost efficiencies, to generate sufficient cash flow from operations to meet anticipated working capital, capital expenditures, and debt service requirements, that future cash flow from operations and the availability under existing banking arrangements are believed to be adequate to support financial liabilities, that the Company can renegotiate its credit facilities as needed, our expectations regarding continued federal government wage subsidies at reduced levels; the expectation that the effects of the COVID-19 pandemic will be temporary in nature and the Company’s expectation that revenues will recover as the pandemic abates; the Company’s belief that it has adequate liquidity to operate at lower revenue levels during the pandemic; and that the Company expects to be successful in its objection with CRA. 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 the impact of Coronavirus, 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 Annual 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 government programs, 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 Annual Report, including this MD&A, 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 Annual 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 March 26, 2021 and should be read in conjunction with the

GLACIER MEDIA INC. DECEMBER 31, 2020 1

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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Company’s consolidated financial statements and notes thereto as at and for the year ended December 31, 2020. 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”).

NON-IFRS MEASURES

Earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and EBITDA per share, are not generally accepted measures of financial performance under IFRS. In addition, certain results in this MD&A have been presented on a basis that includes the Company’s share of revenue and expenses from its joint venture and associate operations, which reflects the basis on which management makes its operating decisions and performance evaluation. These measures including joint ventures and associates 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 (loss) 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 Reconciliation with Per Share Amounts.

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 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

The data, analytics and intelligence products provide essential information, analysis and context that customers need for decision making, marketing needs, business opportunity identification and other purposes.

The Company has focused on a select group of industries that offer large addressable markets, growth opportunities and the ability to leverage its brands.

The content and marketing solutions products and offerings are being evolved and developed to address the changing needs of media - including both audience demand for content and client demand for marketing solutions.

Through its brands and operations, Glacier serves its clients and information users in three segments: Environmental and Property Information, Commodity Information and Community Media.

ENVIRONMENTAL AND PROPERTY INFORMATION

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ERIS (Environmental Risk Information Services) provides environmental risk data and related products for commercial real estate properties across North America. This information is used by environmental consultants, CRE brokers, financial institutions and insurance companies to identify and assess environmental risks around commercial real estate transactions. ERIS is the #1 provider of CRE environmental data in the Canadian market and is #2 in the United States.

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GLACIER MEDIA INC. DECEMBER 31, 2020

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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STP ComplianceEHS produces digital audit guides and compliance tools for use in environmental health and safety audits. Multi-national companies license STP’s content for use throughout the United States and across more than forty countries worldwide.

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REW is the leading residential real estate listings and property information marketplace in British Columbia and is expanding in Ontario and other parts of Canada. REW is now #1 in traffic and audience in B.C., after surpassing realtor.ca. The REW marketplace provides consumers with key real estate information and insights (e.g. school catchment areas, assessed values, past sales prices) in order to make better informed decisions about their home. Agents, new home developers and third-party providers (e.g. mortgage brokers, home insurance companies) use a variety of REW advertising, lead generation and subscription products to market their offerings to home buyers and sellers.

COMMODITY INFORMATION

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Glacier FarmMedia (“GFM”) is Canada’s leading provider of agricultural information. GFM serves the Canadian grower and agricultural industry with digital media, listings, publications, exhibitions and weather and commodities marketing subscriptions. Well-known brands operated by GFM include the Western Producer, Alberta Farmer Express, Manitoba Co-Operator, Country Guide, Farmtario, Canada’s Outdoor Farm Show, Ag In Motion, AgDealer, Global Auction Guide, MarketsFarm, METOS Canada and Weather Innovations.

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Following the sale of the JWN energy information assets in March 2021, the Glacier Resource Innovation Group (“RIG”) now exclusively serves the mining industry, associated suppliers and the financial industry with a wide variety of intelligence offerings. With significant operations in Vancouver and Toronto, RIG produces databases, conferences, digital media and e-learning programs for the mining sector. Key brands include the Northern Miner, the Canadian Mining Journal, CostMine, edumine, Mining.com and the Global Mining Symposium.

COMMUNITY MEDIA

DIGITAL MEDIA

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Glacier Media Digital (“GMD”) operations include local news, general community information and classifieds websites; digital marketing services; and specialty products and services. GMD brands include: Castanet Media, Vancouver Is Awesome, a partial interest in Village Media, Eastward Media (targeting the Asian market) and many others.

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The Company’s strategy is to build a standalone digital local media business with leading market positions in British Columbia and other Western Canadian markets. Glacier Media now has sufficient traffic, revenue and profit with Vancouver Is Awesome and its local websites and digital marketing services in the Lower Mainland to operate on a standalone basis.

Castanet is a digital only media business that has operated since 2000 and is the leading source of news and information in the Okanagan region of B.C. (Kelowna, Kamloops, Penticton and Vernon), with more than 54 million monthly page views.

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GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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Village Media is a digital only news and information business that operates eight of its own local websites in Ontario, and operates websites for other media companies. It generates 60 million monthly page views across its network, and also licenses its own proprietary community website platform software.

Combined, Glacier’s digital operations and network (the Local News Network), including network partners, now reaches over 27 million monthly unique visitors with over 180 million monthly page views.

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Local News Network is now one of the largest digital news network in Canada as measured by page views. Glacier’s websites generated 94 million monthly page views in B.C. alone, making it the leading provider of local news and information in the Province.

The Company is expanding its offerings of digital products and marketing services to 1) attract more local audience and provide the content its readers desire and 2) fulfill its clients’ marketing needs, which are becoming more comprehensive and complex. The Company is continuing to publish newspapers as they still provide value to readers and advertisers, content and sales resources that can be shared with its digital products, and cash flow. The sharing of these resources and the cash flow generated are assisting with the transformation to local digital media operations.

COMMUNITY MEDIA NEWSPAPER GROUP

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The Community Media newspaper group operations reach over 2 million readers in print in over 60 local markets in B.C., Alberta, Saskatchewan, and Manitoba. The group also owns partial interests in the U.S. Its brands include the Victoria Times-Colonist, North Shore News, Tri-Cities News, Burnaby Now, Richmond News, Prince George Citizen, St. Albert Gazette, Estevan Mercury, Yorkton This Week and many others.

Additional information on Glacier’s operations is included in the Company’s Annual Information Form as filed on SEDAR (www.sedar.com).

OPERATING PERFORMANCE HIGHLIGHTS

The following results are presented to include the Company’s proportionate share of its joint venture and associate operations; this is the basis on which management bases its operating decisions and performance[(1)] . These reported results have been reconciled to the IFRS results below.

	Revenue	EBITDA
(thousands of dollars)	2020 2019	2020 2019
Environmental, Property and Financial Information Commodity Information Community Media Centralized and Corporate Costs	$ $ 26,571 26,340 45,304 55,927 111,604 147,115 - -	$ $ 1,371 2,983 10,476 6,745 23,481 14,681 (5,568) (8,088)
Total Including Joint Ventures and Associates(1)(2)	183,479 229,382 (32,175) (44,592)	29,760 16,321
Joint Ventures and Associates		(6,819) (8,354)
Total IFRS	151,304 184,790	22,941 7,967

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(thousands of dollars, except share and per share amounts)		2020		2019
EBITDA including joint ventures and associates(1)(2)	$	29,760	$	16,321
EBITDA including joint ventures and associates per share(1)(2)	$	0.24	$	0.14
EBITDA	$	22,941	$	7,967
EBITDA per share	$	0.18	$	0.07
Capital expenditures(3)	$	4,530	$	9,765
Weighted average shares outstanding, net	125,213,346		116,783,420

• (1) Certain results are presented to include the Company’s proportionate share of its joint venture and associate operations, as this is the basis on which management bases its operating decisions and performance. The Company’s joint ventures and associates include Great West Media Limited Partnership, the Victoria Times-Colonist, Rhode Island Suburban Newspapers, Inc., Village Media Inc. and Borden Bridge Development Corporation.

• (2) The Company sold its interest in Fundata for $55.0 million in April 2019. Results were included up to March 31, 2019.

• (3) Includes $3.1 million purchase of land for Canada’s Outdoor Farm Show in Woodstock, Ontario in Q1 2019.

SIGNIFICANT DEVELOPMENTS IN 2020, OPERATING HIGHLIGHTS AND OUTLOOK

Impact of COVID and Actions Taken

The Company’s consolidated revenues (excluding joint ventures and associates) were down 18.1% for the year ending December 31, 2020 compared to the prior year primarily as a result of the impact of the COVID pandemic, the resulting restrictions and cut-back in consumer and business activity.

Consolidated EBITDA (excluding joint ventures and associates) for the Company was $4.2 million for the year before wage subsidies. Wage subsidies from the Canadian Emergency Wage Subsidy (“CEWS”) were $18.7 million for the year. EBITDA including the CEWS funding and other subsidies was $22.9 million for the year.

The federal government announced that the CEWS program will continue, at the current reduced levels, until at least June 2021. EBITDA also includes other grants and subsidies received which although expected to partly continue, may not continue at the same level in 2021.

In response to the pandemic, the Company implemented a comprehensive program in order to operate with the significant reduction in revenues and maintain adequate cash flow and liquidity, as well as the required changes in the workplace. Specifically, the Company:

1. Has taken extensive measures to ensure employees are kept safe while continuing to maintain community and customer connections. Measures have included working from home, self-distancing, creating a safe environment for those who want to work in the office, staggering in-office work days, rigorous cleaning, etc.;

2. Moved quickly to reduce operating costs. Measures included temporary wage roll-backs, reduced work weeks, temporary layoffs and a wide variety of other cost reduction measures;

3. Applied for and is receiving CEWS, work share funding, rent subsidies and ATP grant;

4. Raised capital and amended its bank facility.

Sale of Non-Controlling Interest

In July 2020, the Company sold a 45% non-controlling interest in its ERIS and STP businesses (ERI Environmental Risk LP) to Madison Venture Corporation (“Madison”), a related party. The Company, through its affiliate GVIC Communications Corp. (“GVIC”) received $11 million in cash and retained 100% of the cash flow of the businesses relating to the 45% interest for two years. A $1.6 million deferred consideration receivable was recorded at the time with respect to the additional cash flows being received over two years. The transaction allows Madison to acquire an additional 4% interest in the businesses at the acquisition date pricing and an

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additional 2% at future market value, and includes a mutual right of first refusal. There is a buy/sell provision that is exercisable after three years that allows either party to offer to acquire the other party’s interest at market value. Also refer to related party transactions discussed later in this MD&A.

Acquisition of GeoSearch

In November 2020, the Company, through its subsidiaries ERIS Information Inc. and ERIS Information LP (together “ERIS”), acquired the assets of GeoSearch LLC (“GeoSearch”) for estimated total consideration of $15.2 million. Cash of $3.6 million was paid up front with the remainder of the purchase price consisting of a fixed deferred purchase price of $7.7 million payable over the next three years, as well as a contingent consideration amount based on future GeoSearch net income that was recorded at a fair value of $3.9 million. GeoSearch is a U.S. based environmental risk information business with complimentary products to ERIS. The acquisition increases the revenue, cash flow and competitiveness of ERIS. The Company’s minority partner who owns 45% of ERIS is expected to provide $5.1 million in funding toward the deferred purchase obligations. The Company’s share of the total purchase price was $8.3 million and paid $2.0 million at closing and expects to pay the remaining $6.3 million over four years.

Subsequent Events

• On March 12, 2021, the Company sold its energy information business to geoLOGIC systems ltd for $4.5 million in cash at closing plus an earn-out of up to $3.5 million, for a total of up to $8.0 million. The earn-out is revenue based and payable over three years.

• The Company has entered into a definitive arrangement agreement under which Glacier will acquire all of the Class B common voting shares and Class C non-voting shares of GVIC Communications Corp. not currently held by Glacier and its subsidiary, or by a wholly-owned limited partnership of GVIC, through a share exchange. The GVIC shareholders have approved the arrangement and it is expected to close on March 31, 2021, subject to certain closing conditions.

Outlook and Operating Highlights

The Company has been working to strengthen its financial position and operating profitability during the pandemic. Revenues were impacted significantly, although they improved during the latter part of the year. It remains unclear how the pandemic will continue to unfold and affect conditions for the market in general and the Company’s businesses in particular.

The extensive measures taken to reduce operating expenses were implemented to ensure the Company’s businesses can operate profitably at the reduced revenue levels without CEWS and other government aid measures. It was unclear initially as to how long and how much subsidy would be received. The subsidies have helped, but are, as of December, at much lower levels than the initial months of the program. The wage rollbacks were viewed as temporary measures that were not sustainable for a prolonged period. Alternative cost savings initiatives have been pursued and management and staff have been working hard to generate higher levels of revenue, the combination of which has allowed the wage roll-backs to be reversed as much as possible.

The Company is now in a significantly stronger financial position with which to 1) operate at the lower levels of revenue and profitability currently being experienced, 2) have the financial capacity to handle restructuring costs required and other cash obligations and 3) withstand further economic uncertainty, additional waves of the pandemic and any related impact on revenues and cash flow.

OPERATING HIGHLIGHTS

While the pandemic is still affecting the Company’s businesses to varying degrees, the Company’s digital media, data, and information businesses have held up relatively well. The underlying fundamentals and value of these products have proven resilient despite the challenging market conditions.

Revenues have begun to recover in a number of areas and are gradually improving on an overall basis. The overall decline in consolidated revenue for the year was 18.1%. This reflects the mixed results of certain

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operations which are still being affected by revenue decreases from the impacts of COVID-19 and certain operations which surpassed prior year results in the later months of 2020.

HIGHLIGHTS:

• Environmental and Property Information revenues were up 11% as compared to the prior year. Revenues for this group were more resilient to the negative effects of COVID-19.

• ERIS acquired the assets of GeoSearch in November 2020. ERIS continues to grow organically, both in the U.S. and Canada.

• STP and ERIS were up 8% in revenue overall for the year, which includes one month of revenue relating to the GeoSearch acquisition.

• REW (the Company’s residential real estate portal) generated record traffic growth and revenues were up 29% for the year.

• Local Digital Media revenues, including a partial interest in Village Media, grew 7% as compared to the prior year.

• Efforts to adjust sales focus and product offerings and pivot to areas of demand have been effective in maintaining digital revenues and generating marketing results for advertisers during the pandemic.

• Digital audience growth was strong as the Company’s Local News Network monthly page views grew 30% as compared to last year. This growth continued a consistent pre-COVID trend and accelerated due to the focus on local news and COVID related issues.

• Glacier FarmMedia revenues decreased 20% as compared the prior year as a result of the conversion of the farm shows to a virtual format from an outdoor format due to the pandemic. Revenues were off 10% during the year excluding the farm shows. Demand for food and agricultural output has remained strong during the pandemic.

• The energy and mining group revenues were off 15% for the year, improving in the later months of 2020 as compared to the decline noted in early 2020. Significant cost reductions have offset the decline in revenues. The JWN Energy Group was sold subsequent to year end, in March 2021.

• Print community media advertising revenues were off significantly compared to prior year. The decline improved in the later months of the year as compared to the declines experienced during the early months of COVID-19. Operating costs have been reduced significantly in response to the revenue declines. The federal government Aid to Publishers (“ATP”) program was expanded to include non-paid publications. The majority of the Company’s publications are controlled distribution, so the expansion of the ATP program helped offset the revenue declines in these markets.

• Overall, the Company’s operating profitability is improving. Consolidated EBITDA was $4.2 million for the year excluding CEWS.

It is encouraging that the efforts and investment made in the core areas of focus for the Company prior to the pandemic have allowed demand for these products and services to be resilient during the pandemic. The respective brands, market positions and value to customers have remained strong.

Print advertising revenues have declined the most, but are improving, albeit at a lower amount than prepandemic levels. They are expected to recover further from current levels in the near term then continue their secular decline. The Company is planning for the financial costs relating to newspaper restructurings that may be required in the future. It owns real estate in some of its newspaper markets that can be sold to partially offset these costs. The new ATP program will help extend the life of the newspapers, if it continues.

The Company and its partners are seeing that local digital media businesses can operate on a standalone basis without newspapers, and can be operated with newspaper staff as well as new staff. The Company’s objective is to transform local media operations from mostly print newspaper revenue to digital operations over time.

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GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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Overall, the Company expects that as time progresses, and the pandemic abates, revenues will recover. Due to the uncertainty surrounding the continued magnitude and impact of the COVID pandemic on the economy, it remains unclear what the impact will be on the Company’s operations and financial position in the short-term.

The Company is working to reach the inflection point where the revenue, profit and cash flow from its data, analytics and intelligence products and digital media products exceeds the decline of its print advertising related profit and cash flow. The Company had made good progress in this regard in the first two months of the first quarter of 2020 before the impact of the pandemic set in. The Company can operate at lower levels of revenue from its digital media, data and information operations in the future and generate strong profit and cash flow without print newspapers.

2020 OPERATIONAL PERFORMANCE

Consolidated revenue for the year ending December 31, 2020 was $151.3 million, down $33.5 million or 18.1% from the same period in the prior year. Consolidated EBITDA was $22.9 million for the year, up $15.0 million from the prior year. Including the Company’s share of joint ventures and associates, revenue was $183.5 million, down $45.9 million or 20.0% and EBITDA was $29.8 million, up $13.4 million.

The Company recorded wage subsidies from the Canadian Emergency Wage Subsidy of $18.7 million for the year. Consolidated EBITDA was $4.2 million excluding CEWS. The Company’s EBITDA of $4.2 million also includes other grants and subsidies received during the year.

The federal government announced that the CEWS program will continue until June 2021, but at levels significantly reduced from 2020. Other subsidies are also expected to continue in 2021.

As stated, the Company implemented a wide variety of cost reductions in response to the decline in revenues. These included temporary wage roll-backs, reduced work weeks, layoffs and a wide variety of other cost reduction measures.

The Company is monitoring conditions on an ongoing basis and will respond accordingly. Revenues have been recovering gradually, and the Company is working to maintain sufficient levels of operating income within these levels, and making concerted efforts to bring revenues back further and increase profits and cash flow.

While staffing costs were reduced, the Company tried as much as possible to avoid the adverse impact of laying off capable staff that are required to maintain product quality, sales capacity, customer service, sufficient handling of workload and general operating effectiveness. The objective is to be in as strong a competitive and market position as possible as the pandemic abates. The implementation of wage roll-backs was intended to allow more staff to remain employed. The Company, for the most part, reversed the wage roll-backs as operating levels and cash flows stabilized.

Although capital expenditures have been reduced, continued operating expense investments are being made in some of the key strategic development initiatives, including the REW digital real estate marketplace, new weather and agricultural markets subscription-based products, and digital community media products.

Financial Position. As at December 31, 2020, senior debt was nil down from $8.0 million as at September 30, 2020. Total current and long-term debt was $2.6 million at December 31, 2020.

The Company has net $7.7 million of deferred purchase price obligations to be paid over the next four years. This amount is net of $5.0 million in contributions from minority partners. The Company has a $7.5 million vendor-take back receivable over the next three years resulting from the sale of the Company’s interest in Fundata.

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REVENUE

Glacier’s consolidated revenue for the year ended December 31, 2020 was $151.3 million compared to $184.8 million in the prior year.

ENVIRONMENTAL AND PROPERTY INFORMATION

The Environmental and Property Information group generated revenue of $26.6 million for the year ended December 31, 2020, as compared to $23.9 million in the prior year, or an increase of 11.4%.

REW (the Company’s residential real estate portal) generated record traffic and revenues increased 29% over the prior year. ERIS and STP’s revenues increased 8% over the prior year, including one month of revenue relating to the GeoSearch acquisition.

COMMODITY INFORMATION

The Commodity Information group generated revenue of $45.3 million for the year ended December 31, 2020, as compared to $55.9 million in the prior year, or a decline of 19.0%.

Glacier FarmMedia revenues were impacted by both COFS and AIM holding virtual shows in 2020 instead of inperson shows in 2019 as a result of the pandemic. 2020 revenues from the virtual shows were $5.1 million less than the in-person shows generated in 2019. Management is confident that revenues will recovery once the pandemic has receded.

COMMUNITY MEDIA

COMMUNITY MEDIA
	Revenue	EBITDA
(thousands of dollars)	2020 2019	2020 2019
Community Media Including Joint Ventures and Associates Joint Ventures and Associates	$ $ 111,604 147,115 (32,175) (42,110)	$ $ 23,481 14,681 (6,819) (7,020)
Community Media IFRS	79,429 105,005	16,662 7,661

The Community Media Group generated $79.4 million of revenue, down 24.4% for the year ended December 31, 2020, as compared to $105.0 million in the prior year.

Including the Company’s share of joint ventures and associates, the Community Media Group’s revenue was $111.6 million, as compared to $147.1 million in the prior year, or a decline of 24.1%.

While print advertising revenues caused the majority of the decline, they have recovered gradually during the pandemic. Print revenues were down significantly as compared to the prior year.

DIGITAL MEDIA

Local Digital Media revenues held up well, despite the pandemic.

Efforts to adjust sales focus and product offerings and pivot to areas of demand are proving effective in maintaining revenues despite the challenges of the pandemic.

Digital audience growth was strong, continuing a consistent pre-COVID trend and accelerating during the quarter due to the focus on local news and COVID related issues.

GROSS PROFIT

Glacier’s consolidated gross profit, being revenues less direct expenses, for the year ended December 31, 2020 was $57.8 million as compared to $48.2 in the prior year. Gross profit was affected by the drop in revenues

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related COVID-19, but was offset by the CEWS funds and other subsidies (which were recorded as an offset to wage expense and other direct printing expenses).

Gross profit as a percentage of revenues (“gross profit margin”) for the year ended December 31, 2020 was 38.2% as compared to 26.1% in the prior year.

GENERAL & ADMINISTRATIVE EXPENSES

Glacier’s consolidated general and administrative expenses were $34.9 million for the year ended December 31, 2020, down from $40.3 million for the same period in the prior year. The reduction in administrative costs was a result of cost savings and the CEWS funds, which were recorded as a reduction of wage expenses. Senior management and staff wage roll-back, permanent and temporary lay-offs and reduced working hours reduced overall wage expense.

EBITDA

EBITDA was $22.9 million for the year ended December 31, 2020 as compared to $8.0 million in the prior year. The results are due to the various reasons stated under “Revenue, Gross Profit and General & Administrative Expenses”. Most noticeable is the amounts recorded in 2020 from Canada’s Emergency Wage Subsidy program. The result of this is a positive EBITDA in 2020 despite the financial hardship at points throughout 2020.

NET INTEREST EXPENSE, DEBT

Glacier’s consolidated net interest expense for the year ended December 31, 2020 was $1.6 million as compared to $2.5 million for the same period in the prior year. The lower interest expense recorded during the period was mainly due to the reduction of debt.

INTEREST EXPENSE, LEASE LIABILITIES

Interest expense relating to lease liabilities for the year ended December 31, 2020 was $0.6 million as compared to $0.7 million in the prior year.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization decreased $1.6 million as the results of certain amortizing intangible assets becoming fully amortized in the prior year.

NET GAIN ON SALE

In the prior year ending December 31, 2019, the Company recognized a $47.7 million gain on sale, primarily relating to the sale of the Company’s interest in Fundata.

IMPAIRMENT EXPENSE

The Company recorded an impairment expense of $23.5 million as compared to $5.7 million in the prior year. In 2020, certain CGU's continue to be impacted by the negative impacts of COVID-19 pandemic, along with the continued decline of the industry.

OTHER INCOME

During the year ended December 31, 2020, the Company recorded other income of $3.0 million, relating to its share of the sale of certain real estate assets by a company in which Glacier is a minority shareholder.

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RESTRUCTURING AND OTHER EXPENSES (NET)

Restructuring and other expenses (net) for the year ended December 31, 2020 were $5.8 million compared to $5.3 million in the prior year. These expenses include restructuring costs (from the closure or divestiture of operations, or part of operations; including severance, redundant office costs and other direct closure costs during transition periods), transaction costs (including equity transactions with non-controlling interests), foreign exchange, 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 Great West Media Limited Partnership (“GWMLP”), the Victoria Times-Colonist (“VTC”), Rhode Island Suburban Newspapers, Inc. (“RISN”), Village Media Inc. (“Village”) and other joint ventures and associates, decreased $0.4 million as compared to the prior year. Included in 2020 is the CEWS received in the joint ventures and associates and impairments taken within the joint ventures and associates. The Company’s share of Fundata’s results have been included in the share of earnings from joint ventures and associates up to March 31, 2019. In April 2019, the Company sold its interest in Fundata.

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 December 31,
(thousands of dollars)	2020	2019
	$	$
Assets	61,914	64,041
Liabilities	18,827	16,765
Net assets	43,087	47,276
	For the year ended December	31,
(thousands of dollars)	2020	2019
	$	$
Revenues	32,175	44,592
EBITDA	6,819	8,354
Net income for the year	3,309	3,663

NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

Net income attributable to non-controlling interest decreased by $2.9 million as the result of the impairments taken in a subsidiary with a non-controlling interest, which was partially offset by the sale of 45% of ERI Environmental Risk LP in July 2020 and the impact CEWS had on net income of subsidiaries with non-controlling interests.

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

For the year ended December 31, 2020 there was a net loss attributable to common shareholders of $15.0 million compared to net income attributable to common shareholders of $34.2 million in the prior year. The change resulted from i) lower net gain on sale of $47.7 million, ii) increased impairment expense of $17.8 million, iii) increased restructuring and other expenses (net) of $0.5 million, iv) decreased share of earnings from joint ventures and associates of $0.4 million, and v) higher income tax expense of $6.3 million. This was partially offset by i) increased operating results of $15.0 million, ii) lower interest expense on debt of $0.9 million, iii) lower interest expense on lease liabilities of $0.1 million, iv) lower depreciation and amortization of $1.6 million, v) increased other income of $3.0 million and vi) lower income attributable to non-controlling interests of $2.9 million.

GLACIER MEDIA INC. DECEMBER 31, 2020 11

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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OTHER COMPREHENSIVE LOSS (NET OF TAX)

For the year ended December 31, 2020, Glacier recognized other comprehensive income (net of tax) of $2.3 million. The income related to the mix of actuarial gain on defined benefit pension plans resulting from the change in actuarial assumptions, mainly the discount rate and the change in the currency translation adjustment.

CASH FLOW FROM OPERATIONS

Glacier’s consolidated cash flow from operations was $21.4 million (before changes in non-cash operating accounts) for the year ended December 31, 2020 as compared to $3.9 million in the prior year. The change in cash flow from operations was primarily the result of the factors stated under “Revenue, Gross Profit, General & Administrative Expenses and EBITDA”.

Capital expenditures were $4.5 million in the year as compared to $9.8 million in the prior year. The majority of the current year expenditures relate to the development and implementation of software and websites, development of content and data and technology, and data and technology acquisition. Prior year capital expenditures related to the agricultural show site development, leasehold improvements and development and acquisition of software and data and technology.

See “Summary of Financial Position, Financial Requirements and Liquidity” for further details.

RELATED PARTY TRANSACTIONS

During the year ended December 31, 2020, the Company and its affiliates recorded administration, consulting, interest and other expenses of $1.1 million (2019: $0.6 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.

In July 2020, the Company’s affiliate GVIC Communications Corp. sold a 45% non-controlling interest in its ERIS and STP businesses (ERI Environmental Risk LP) to Madison Venture Corporation, a related party.

GVIC considered a variety of financial restructuring options with the objective of raising sufficient capital in the time required while preserving financial value for shareholders. Selling part of an asset at the valuation attained in the time required was deemed significantly more favourable for shareholders than raising equity at current market prices, or attempting to sell an entire asset to a third-party during the pandemic. The transaction allowed GVIC to retain ownership in the businesses, retain 100% of the cash flow for operating and debt service needs, maintain operating scale, and have the opportunity to repurchase the interest sold in the future.

Madison is a related party to both Glacier and GVIC. As such, a special committee of GVIC was formed, independent financial and legal advisors were retained, and a fairness opinion was provided advising that the transaction is fair from a financial point of view. Due to the serious financial difficulty caused by the pandemic, the Company relied on the “financial hardship” exemptions in sections 5.5(g) and 5.7(e) of Multilateral Instrument 61-101 with respect to valuation and minority approval requirements. A special committee of Glacier was also formed to review the transaction, and was supportive of the transaction.

Due to the financial impact of the pandemic and the level of the Company’s leverage prior to the transaction, the Company requested and received temporary covenant relief from its lenders and worked with its banking syndicate to implement a financial restructuring plan that would provide access to sufficient ongoing liquidity with which to operate through the pandemic. As a result of the transaction, the banking agreement was amended to provide ongoing additional borrowing capacity.

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During the year ended December 31, 2020, the Company paid its joint venture Great West Media LP for printing services as part of its normal operations. These services were provided at an agreed upon value. Total printing charged to the Company for the year was $0.3 million.

During the year ended December 31, 2020, the Company paid its joint venture Borden Bridge Development Corporation rental income as part of its normal operations. These services were provided at the agreed upon value. Total rent charged to the Company for the year was $0.2 million.

At December 31, 2020, the Company had amounts due from an associate of $6.9 million relating to nonoperating advances. These amounts are non-interest bearing and have no fixed terms of repayment. These amounts are included in trade and other receivables.

The Company provides digital advertising related services to the associate at rates consistent with those charged to third parties for similar services.

CONTINGENCY

During 2014-2018 an affiliate of the Company (“the affiliate”) has received, from the Canada Revenue Agency (“CRA”) and provincial tax authorities, tax notices of reassessments and assessments relating to the taxation years 2008-2017. 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 assessed at approximately $59.4 million. The affiliate has filed notices of objection with the CRA and provincial taxing authorities and has substantially 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 is vigorously defending such positions. The Company and its affiliate expect to ultimately be successful in its objection.

GLACIER MEDIA INC. DECEMBER 31, 2020 13

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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SELECTED ANNUAL 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 years ended December 31, 2020, 2019 and 2018:

(thousands of dollars)
except share and per share amounts		2020		2019		2018
Revenue	$	151,304	$	184,790	$	188,372
Gross profit(2)	$	57,841	$	48,236	$	50,823
Gross margin		38.2%		26.1%		27.0%
EBITDA(1)	$	22,941	$	7,967	$	10,423
EBITDA margin(1)		15.2%		4.3%		5.5%
EBITDA per share(1)	$	0.18	$	0.07	$	0.09
Net interest expense, debt	$	1,595	$	2,519	$	2,463
Net (loss) income attributable to common shareholders	$	(14,966)	$	34,249	$	654
Net (loss) income attributable to common shareholders per share	$	(0.12)	$	0.29	$	0.01
Cash flow from operations	$	21,365	$	3,870	$	6,006
Cash flow from operations per share	$	0.17	$	0.03	$	0.05
Capital expenditures(3)	$	4,530	$	9,765	$	7,595
Total assets	$	263,086	$	271,144	$	237,827
Total non-current financial liabilities	$	19,037	$	29,472	$	41,500
Equity attributable to common shareholders	$	170,761	$	176,953	$	132,033
Weighted average shares outstanding,net		125,213,346		116,783,420		109,828,731
Notes:

(1) Refer to "Non-IFRS Measures" and "EBITDA Reconciliation" section for calculation of non-IFRS measures used in this table.

(2) Gross profit for these purposes excludes depreciation and amortization.

(3) Includes $3.1 million purchase of land for Canada’s Outdoor Farm Show in Woodstock, Ontario in Q1 2019.

The main factors affecting the comparability of results the over last two years include:

• Operating performance of the Company’s various business units and general market conditions during the reported periods;

• The varying impact of COVID-19 on the Company’s operations’ revenues and expenses. As a result of COVID-19, the Company implemented temporary senior management and staff wage roll-backs, permanent and temporary lay-offs and reduced working hours reduced overall wage expense;

• In addition to revenue declines related to COVID-19, revenues continue to be impacted by declining print advertising revenue and the cyclical nature of certain of Glacier’s businesses, including the low price of oil and fluctuating conditions in the agriculture industry. This is partially being offset by the increase in community media digital revenue;

• The $18.7 million of CEWS as an offset to wage expense in the year ended December 31, 2020. Additionally certain joint venture and associate entities also received CEWS;

• An impairment charge of $23.5 million during for the year ended December 31, 2020 and $5.7 million for the year ended December 31, 2019. No impairment charge was recorded in 2018.

• In July 2020, the sale of a 45% non-controlling interest in ERI Environmental Risk LP for $11.0 million of cash and $1.6 million receivable over the next two years. This was accounted for as an equity transaction and was recorded as contributed surplus of $11.1 million, net of the tax impact of $1.1 million, and noncontrolling interest of $0.4 million;

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• In November 2020, acquired the assets of GeoSearch LLC, a U.S. based company, for estimated total consideration of $15.2 million. Cash of $3.6 million was paid up front with the remainder of the purchase price consisting of a fixed deferred purchase price of $7.7 million payable over the next three years, as well as a contingent consideration amount based on future GeoSearch net income that was recoded at a fair value of $3.9 million. The Company’s minority partner who owns 45% of ERIS is expected to provide $5.1 million in funding toward the deferred purchase obligations. The Company’s share of the total purchase price was $8.3 million and paid $2.0 million at closing and expects to pay the remaining $6.3 million over four years. The acquisition resulted in intangible assets of $8.3 million, goodwill of $6.3 million, property plant and equipment of $0.2 million and working capital of $0.4 million;

• In July 2019, the Company completed a private placement of 15,384,615 common shares at a price of $0.65 per share for gross proceeds of $10.0 million; and

• The acquisition of Castanet in April 2019, and the inclusion of the revenue, expenses and balance sheet in the current year;

• The sale of the Company’s interest in Fundata in April 2019;

• 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.

FOURTH QUARTER 2019 RESULTS AND OVERVIEW OF OPERATING PERFORMANCE

REVENUE

Glacier’s consolidated revenue for the three months ended December 31, 2020 was $41.7 million compared to $46.6 million for the same period in the prior year.

Revenues in the fourth quarter have begun to recover, from earlier in 2020, in a number of areas and are gradually improving on an overall basis. The 10.5% decline in consolidated revenues for the fourth quarter was an improvement from the revenue declines in the earlier quarters in 2020.

The Environmental and Property Information operations experienced another strong quarter with both ERIS and REW realizing double digit revenue growth. ERIS’s revenue increase was achieved through organic growth and through the acquisition of GeoSearch. REW had record traffic and revenues are steadily increasing.

The Commodity Information operation experienced a decrease in revenues. The Company continued to invest in its agricultural information operations in key growth areas such as outdoor exhibitions, digital products and online listings.

The Company’s Community Media’s operations continue to face ongoing print advertising challenges and economic challenges. While print advertising revenues caused the majority of the declines related to the pandemic, they are gradually recovering. Local Digital Media revenues continued to hold up well in the quarter, despite the pandemic. Efforts to adjust sales focus and product offerings and pivot to areas of demand are proving effective in maintaining revenues despite the challenges of the pandemic. Digital audience growth was strong, continuing a consistent pre-COVID trend and accelerating during the quarter due to the focus on local news and COVID related issues.

GROSS PROFIT

Glacier’s consolidated gross profit for the three months ended December 31, 2020 was $15.7 million compared to $12.4 million for the same period last year. Gross profit was affected by the drop in revenues related COVID19, but was offset by the CEWS funds (which were recorded as an offset to wage expense).

GLACIER MEDIA INC. DECEMBER 31, 2020 15

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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GENERAL & ADMINISTRATIVE EXPENSES

Glacier’s consolidated general and administrative expenses were $9.5 million for the three months ended December 31, 2020 compared to $10.7 million for the same period in the prior year. The Company continues to invest in its infrastructure to support its growth opportunities and digital products.

EBITDA

Consolidated EBITDA was $6.2 million for the three months ended December 31, 2020 as compared to $1.6 million for the same period in the prior year. The increase in EBITDA was due to the reasons stated under Revenue, Gross Profit and General & Administrative Expenses. Most noticeable is the amounts recorded in the fourth quarter of 2020 from Canada’s Emergency Wage Subsidy program.

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

Net income attributable to common shareholders for the three months ended December 31, 2020 increased by $5.1 million as compared to the net loss attributable to common shareholders in the same period in the prior year. The change resulted from i) increased operating results of $4.6 million, ii) lower net interest on debt of $0.1 million, iii) lower depreciation and amortization of $0.1 million, iv) lower impairment expense of $2.2 million, v) increased other income of $3.0 million, vi) increased share of earnings from joint ventures and associates of $1.7 million and vii) lower income attributable to non-controlling interest of $2.3 million. This was partially offset by i) increased restructuring and other expenses (net) of $0.2 million, and ii) a higher income tax expense of $8.8 million.

CASH FLOW FROM OPERATIONS

Glacier’s consolidated cash flow from operations was $8.5 million (before changes in non-cash working capital) for the three months ended December 31, 2020 compared to less than $0.1 million for the same period in the prior year. The change in cash flow from operations was primarily the result of the factors described under Revenue, Gross Profit and General & Administrative Expenses.

See Summary of Financial Position, Financial Requirements and Liquidity for further details.

GLACIER MEDIA INC. DECEMBER 31, 2020 16

GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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SUMMARY OF QUARTERLY RESULTS

The following outlines the significant financial performance measures for Glacier for the last eight quarters:

(thousands of dollars) Trailing 12 Q4 except share and per share amounts Months 2020	Q3 2020	Q2 2020	Q1 2020
Revenue 151,304 $ 41,710 $ EBITDA(1) 22,941 $ 6,240 $ EBITDA margin(1) 15.2% 15.0% EBITDA per share(1) 0.18 $ 0.05 $ Net interest expense, debt 1,595 $ 260 $ Net (loss) income attributable to common shareholders (14,966) $ 3,926 $	35,314 $ 8,577 $ 24.3% 0.07 $ 391 $ 1,133 $	30,999 $ 6,191 $ 20.0% 0.05 $ 502 $ (7,816) $	43,281 $ 1,933 $ 4.5% 0.02 $ 442 $ (12,209) $
Net (loss) income attributable to common shareholders per share (0.12) $ 0.03 $ Cash flow from operations 21,365 $ 8,450 $ Cash flow from operations per share 0.17 $ 0.07 $ Capital expenditures 4,530 $ 994 $ Equity attributable to common shareholders 170,761 $ 170,761 $ Weighted average shares outstanding, net 125,213,346 125,213,346	0.01 $ 6,601 $ 0.05 $ 999 $ 164,699 $ 125,213,346	(0.06) $ 5,832 $ 0.05 $ 1,214 $ 152,340 $ 125,213,346	(0.10) $ 482 $ 0.00 $ 1,323 $ 162,881 $ 125,213,346
Trailing 12 Q4 Months 2019	Q3	Q2 2019	Q1 2019
	2019
Revenue 184,790 $ 46,599 $ EBITDA(1) 7,967 $ 1,633 $ EBITDA margin(1) 4.3% 3.5% EBITDA per share(1) 0.07 $ 0.01 $ Net interest expense, debt 2,519 $ 334 $ Net income (loss) attributable to common shareholders 34,249 $ (1,166) $ Net income (loss) attributable to common shareholders per share 0.29 $ (0.01) $ Cash flow from operations 3,870 $ (2) $ Cash flow from operations per share 0.03 $ 0.00 $ Capital expenditures 9,765 $ 1,225 $ Equity attributable to common shareholders 176,953 $ 176,953 $ Weighted average shares outstanding, net 116,783,420 125,213,346		45,673 $ 2,284 $ 5.0% 0.02 $ 834 $ 40,057 $ 0.36 $ 1,370 $ 0.01 $ 1,701 $ 168,891 $ 109,828,731	44,262 $ 1,961 $ 4.4% 0.02 $ 891 $ (1,476) $ (0.01) $ 1,700 $ 0.02 $ 4,847 $ 130,061 $ 109,828,731
	48,256 $
	2,089 $
	4.3%
	0.02 $
	460 $ (3,166) $
	(0.03) $ 802 $ 0.01 $ 1,992 $ 175,641 $ 122,036,089
Notes:

		Trailing 12		Q4			Q3		Q2		Q1
		Months		2019			2019		2019		2019
Revenue	$	184,790	$	46,599		$	48,256	$	45,673	$	44,262
EBITDA(1)	$	7,967	$	1,633		$	2,089	$	2,284	$	1,961
EBITDA margin(1)		4.3%		3.5%			4.3%		5.0%		4.4%
EBITDA per share(1)	$	0.07	$	0.01		$	0.02	$	0.02	$	0.02
Net interest expense, debt	$	2,519	$	334		$	460	$	834	$	891
Net income (loss) attributable to common shareholders	$	34,249	$	(1,166)		$	(3,166)	$	40,057	$	(1,476)
Net income (loss) attributable to common shareholders per share	$	0.29	$	(0.01)		$	(0.03)	$	0.36	$	(0.01)
Cash flow from operations	$	3,870	$	(2)		$	802	$	1,370	$	1,700
Cash flow from operations per share	$	0.03	$	0.00		$	0.01	$	0.01	$	0.02
Capital expenditures	$	9,765	$	1,225		$	1,992	$	1,701	$	4,847
Equity attributable to common shareholders	$	176,953	$	176,953		$	175,641	$	168,891	$	130,061
Weighted average shares outstanding, net		116,783,420		125,213,346			122,036,089		109,828,731		109,828,731
Notes:

(1) Refer to "Non-IFRS Measures" and "EBITDA Reconciliation" 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;

• The impact of COVID-19 on certain of the Company’s operations’ revenues and expenses for the periods ended December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020. As a result of COVID19, the Company implemented senior management and staff wage roll-backs, permanent and temporary lay-offs and reduced working hours reduced overall wage expense in 2020;

• The $18.7 million of CEWS as an offset to wage expense for the year ended December 31, 2020. $2.1 million in the three months ended December 31, 2020, $7.1 million in the three months ended September 30, 2020, $8.8 million in the three months ended June 30, 2020 and $0.6 million in the three months ended March 31, 2020. Other subsidies were also received, at increased levels during 2020, as compared to 2019;

• In July 2020, the sale of a 45% non-controlling interest in ERI Environmental Risk LP for $11.0 million of cash and $1.6 million receivable over the next two years. This was accounted for as an equity transaction and was recorded as contributed surplus of $11.1 million, net of the tax impact of $1.1 million, and noncontrolling interest of $0.4 million;

• In November 2020, acquired the assets of GeoSearch LLC, a U.S. based company, for estimated total consideration of $15.2 million. Cash of $3.6 million was paid up front with the remainder of the purchase price consisting of a fixed deferred purchase price of $7.7 million payable over the next three years, as well as a contingent consideration amount based on future GeoSearch net income that was recoded at a fair value of $3.9 million. The Company’s minority partner who owns 45% of ERIS is expected to provide $5.1

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million in funding toward the deferred purchase obligations. The Company’s share of the total purchase price was $8.3 million and paid $2.0 million at closing and expects to pay the remaining $6.3 million over four years. The acquisition resulted in intangible assets of $8.3 million, goodwill of $6.3 million, property plant and equipment of $0.2 million and working capital of $0.4 million;

• An impairment charge of $23.5 million for the year ended December 31, 2020. $3.5 million during the three months ended December 31, 2020, $9.1 million during the three months ended June 30, 2020, $10.9 million during the three months ended March 31, 2020 and $5.7 million for the year and during the three months ended December 31, 2019;

• In July 2019, the Company completed a private placement of 15,384,615 common shares at a price of $0.65 per share for gross proceeds of $10.0 million;

• The sale of Fundata in April 2019, resulting in a gain on sale of $47.6 million; and

• The acquisition of Castanet Media in April 2019, for a purchase price of $22.0 million.

EBITDA RECONCILIATION

The following table reconciles the Company’s net (loss) income attributable to common shareholders as reported under IFRS to EBITDA.

(thousands of dollars)
except share and per share amounts	2020	2019 2018
Net (loss) income attributable to common shareholders Add (deduct): Non-controlling interests Net interest expense, debt	(14,966) $ 225 $ 1,595 $	34,249 $ 654 $ 3,071 $ 1,099 $ 2,519 $ 2,463 $ 675 $ - $ 13,760 $ 11,463 $ (47,713) $ (3,359) $ 5,700 $ - $ - $ - $ 5,288 $ 4,745 $ (3,663) $ (5,538) $ (5,919) $ (1,104) $ 7,967 $ 10,423 $ 116,783,420 109,828,731 0.29 $ 0.01 $ 0.07 $ 0.09 $
Interest expense, lease liability Depreciation and amortization	595 $
	12,152 $
Net gain on disposition	- $
Impairment expense Other income Restructuring and other expenses (net) Share of earnings from joint ventures and associates Income tax expense (recovery) EBITDA(1) Weighted average shares outstanding, net Net (loss) income attributable to common shareholders per share EBITDA per share(1)	23,505 $ (3,014) $ 5,796 $ (3,309) $ 362 $
	22,941 $
	125,213,346
	(0.12) $
	0.18 $
Notes:

(1) Refer to "Non-IFRS Measures" section for discussion of non-IFRS measures used in this table.

GLACIER MEDIA INC. DECEMBER 31, 2020 18

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SUMMARY OF FINANCIAL POSITION, FINANCIAL REQUIREMENTS AND LIQUIDITY

Glacier generates sufficient cash flow from operations to meet anticipated working capital, capital expenditures, and debt service requirements.

As at December 31, 2020, Glacier had consolidated cash and cash equivalents of $14.3 million, current and long-term debt of $2.7 million before adjustment for deferred financing fees attributable directly to the issuance of debt, and working capital of $17.2 million excluding deferred revenue. Glacier’s actual cash working capital is greater than reflected by the amounts indicated on the consolidated balance sheet due to deferred revenue relating to renewals and subscriptions that have been paid for by subscribers but not yet delivered; and the costs associated with the fulfillment of this liability are less than the amount indicated in current liabilities. Capital expenditures were $4.5 million in the year as compared to $9.8 million in the prior year. The majority of the current year expenditures relate to the development and implementation of software and websites, content development and data and technology acquisition. Prior year capital expenditures related to the agricultural show site development, leasehold improvements and software development.

CHANGES IN FINANCIAL POSITION

CHANGES IN FINANCIAL POSITION
(thousands of dollars)	2020	2019	2018
	$	$	$
Cash generated from (used in)
Operating activities	26,319	4,214	6,982
Investing activities	(6,391)	18,666	(1,964)
Financing activities	(10,766)	(20,884)	(5,788)
Increase in cash	9,162	1,996	(770)

The changes in the components of cash flows during 2020 and 2019 are detailed in the consolidated statements of cash flows of the financial statements. The more significant changes are discussed below.

OPERATING ACTIVITIES

Glacier generated cash flow from operations before changes in non-cash operating accounts of $21.4 million for the year ended December 31, 2020 as compared to $3.9 million for the same period in the prior year as a result of the factors stated under Revenue, Gross Profit, General & Administrative Expenses and EBITDA. Cash flow generated from operations after changes in non-cash working capital was $26.3 million for the year ended December 31, 2020 as compared to $4.2 million in the prior year.

INVESTING ACTIVITIES

Cash used in investing activities totalled $6.4 million for the year ended December 31, 2020 as compared to cash generated from investing activities of $18.7 million in the prior year. Investing activities included $3.7 million of acquisitions, $4.5 million of capital expenditures, distributions received of $1.9 million, proceeds from the disposal of assets of $0.2 million and other investing activities $0.3 million.

FINANCING ACTIVITIES

Cash used in financing activities was $10.8 million for the year ended December 31, 2020 as compared to $20.9 million for in the prior year. The Company had net repayments of $16.1 million, proceeds from the sale of noncontrolling interest in a subsidiary of $11.0 million, contributions from non-controlling interests of $1.8 million, distributions to non-controlling interests of $2.2 million, interest paid on debt of $1.4 million, interest paid on lease liabilities of $0.6 million and principal repayment of lease liabilities of $3.2 million. The comparative period included the issuance of common shares of $10.0 million.

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GLACIER MEDIA INC. MANAGEMENT’S DISCUSSION & ANALYSIS

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OUTSTANDING SHARE DATA

As at December 31, 2020 and March 26, 2020 there were 125,213,346 common shares and 1,115,000 share purchase warrants outstanding.

The warrants outstanding allow the holder to purchase one common share per warrant at $4.48 per share. The warrants expire on June 28, 2029, unless extended.

CONTRACTUAL AGREEMENTS

As at December 31, 2020, the Company has agreements with a syndicate of major Canadian banks whereby the lenders provide a revolving loan facility with no required principal repayments during its term.

In summary, the Company’s contractual obligations due over the next five calendar years are as follows:

(thousands of dollars)	Total	2021	2022	2023	2024	2025	Thereafter
	$	$	$	$	$	$	$
Long-term debt	2,593	219	297	298	1,779	-	-
Undiscounted lease liabilities	11,221	3,497	2,489	1,907	1,357	686	1,285
	13,814	3,716	2,786	2,205	3,136	686	1,285

Under various financing arrangements with its banks, the Company, its subsidiaries and its affiliates are required to meet certain covenants. The Company, its subsidiaries and its affiliates were fully in compliance with these covenants at December 31, 2020 and 2019.

FINANCIAL INSTRUMENTS

The Company’s activities result in exposure to a variety of financial risks, including risks relating to foreign exchange, credit, interest rate, and liquidity risk.

A small portion of the Company’s products are sold at prices denominated in U.S. dollars while the majority of its operational costs and expenses are incurred in Canadian dollars. An increase in the value of the Canadian dollar relative to the U.S. dollar reduces the revenue in Canadian dollar terms realized by the Company from sales made in U.S. dollars.

The Company also has foreign operations in the United States and the United Kingdom, whose earnings are exposed to foreign exchange risk.

The Company sells its products and services to a variety of customers under various payment terms and therefore is exposed to credit risks from its trade receivables from customers. The Company has adopted policies and procedures designed to limit these risks. The carrying amounts for trade receivables are net of applicable expected credit loss allowances, which are determined using the expected credit losses (“ECL”) model. Expected credit losses are measured as the present value of cash shortfalls from all possible default events, discounted at the effective interest rate of the financial asset. The Company is protected against any concentration of credit risk through its products, broad clientele and geographic diversity.

The Company’s interest rate risk mainly arises from the interest rate impact on cash and floating rate debt. The Company actively manages its interest rate risk through ongoing monitoring of market interest rates and the overall economic situation.

The Company is exposed to liquidity risk with respect to trade payables, debt, and contractual obligations. The Company manages liquidity by maintaining adequate cash balances and by having appropriate lines of credit available. In addition, the Company continuously monitors and reviews both actual and forecasted cash flows. Management believes that future cash flow from operations and the availability under existing banking arrangements will be adequate to support its financial liabilities. The Company’s revolving facility has been

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classified as current based on its maturity date. The Company’s working capital, excluding deferred revenue, is positive. Glacier’s actual cash working capital is greater than reflected by the amounts indicated on the consolidated balance sheet due to deferred revenue relating to renewals and subscriptions that have been paid for by subscribers but not yet delivered; and the costs associated with the fulfillment of this liability are less than the amount indicated in current liabilities. The Company expects to renegotiate its banking agreement well before maturity.

The carrying value of certain financial instruments maturing in the short-term approximates their fair value. These financial instruments include cash and cash equivalents, trade and other receivable, trade and other payables, debt and other current and non-current liabilities are classified as measured at amortized cost, and other investments are classified as measured at fair value through other comprehensive income. The fair values calculated approximate the amounts for which the financial instruments could be settled between consenting parties, based on current market data for similar instruments. Consequently, as estimates must be used to determine fair value, they must not be interpreted as being realizable in the event of an immediate settlement of the instruments.

BUSINESS ENVIRONMENT AND RISKS

IMPACT OF (COVID-19)

Since the end of March 2020 several measures have been implemented in Canada and the U.S. in response to the increased impact from novel coronavirus (COVID-19). While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on the Company’s business operations are expected to continue for some time. The duration and impact on overall customer demand cannot be reasonably estimated at this time, but it is anticipated this may have a further adverse impact on the Company’s business, results of operations, financial position and cash flows in future periods. See “Significant Developments in 2020, Operating Highlights and Outlook – Impact of COVID and Actions Taken”.

FOREIGN EXCHANGE

A small portion of the Company’s products are sold at prices denominated in U.S. dollars while the majority of its operational costs and expenses are incurred in Canadian dollars. An increase in the value of the Canadian dollar relative to the U.S. dollar reduces the revenue in Canadian dollar terms realized by the Company from sales made in U.S. dollars.

The Company also has foreign operations in the United States and the United Kingdom, whose earnings are exposed to foreign exchange risk.

GOVERNMENT PROGRAMS

The Department of Canadian Heritage’s Canada Periodical Fund’s Aid to Publishers program and Special Measures for Journalism program provides subsidies to eligible Canadian publications, including Western Producer Publications, Farm Business Communications and the Glacier community media group. While the Aid to Publishers program has been in place for decades, there is no guarantee that this subsidy will continue to be offered.

The federal government introduced a journalism tax credit whereby qualifying news organizations may apply for a refundable tax credit applied to the salaries of certain journalists.

The federal government introduced the Canadian Emergency Wage Subsidy program to help businesses keep workers employed through the challenges posed by the COVID-19 pandemic. An extension to the CEWS program was announced extending the program to June 2021.

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GENERAL MARKET CONDITIONS

Glacier’s Community Media Group generates revenue through the sale of advertising and newspaper subscriptions. As such, it is reliant upon general economic conditions and the spending plans of advertisers. A significant downturn in the national or regional economies may adversely affect revenues, as could significant changes in advertisers’ promotional strategies.

Glacier’s publications are affected by changes in the prices of purchased supplies, including newsprint.

Although Glacier is well diversified, competition is a continuing risk from existing businesses or new ones in a variety of media formats including print, online, radio and broadcast.

• The Community Media Group publishes newspapers in a variety of communities in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and the United States, and is diversified as a result;

• Glacier FarmMedia, Glacier Resource Innovation Group and Business in Vancouver publishes a wide variety of publications distributed across Canada;

• ERIS provides comprehensive information from a variety of databases regarding potential environmental liability; and

• Glacier disseminates its information in print, online and digital format.

The large North American business information and community media markets continue to offer many growth opportunities for the Company.

Certain of our products operate in the commodity and resource space and are subject to the fluctuations in their price, volume and other factors in their various markets.

The Company operates mainly in Canada and has operations in areas where cases of COVID-19 exist. The Company’s customers also operate in these same areas. The Company may experience impacts from quarantines, market downturns and changes in consumer behavior related to pandemic fears and impacts on workforce if the virus becomes widespread in any of the markets in which the Company operates. The Company cannot predict the full impact of COVID-19 or any other future global pandemic on business, but could suffer financial losses as a result of such a crisis.

Additional information on the Company’s business environment and risks is included in the Company’s Annual Information Form filed on SEDAR.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company has established disclosure controls and procedures to ensure that information disclosed in this MD&A and the related consolidated financial statements was properly recorded, processed, summarized and reported to the Audit Committee and the Board. The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have evaluated the effectiveness of these disclosure controls and procedures for the year ending December 31, 2020, and have concluded that they are effective.

The CEO and CFO, while acknowledging responsibility for the design of internal controls over financial reporting (“ICFR”), and confirming that there were no changes in these controls that occurred during the most recent year ended December 31, 2020 which materially affected, or are reasonably likely to materially affect, the Company’s ICFR and based upon their evaluation of these controls for the year ended December 31, 2020, the CEO and CFO have concluded that these controls are effective. The CEO and CFO have certified such findings and reported to the Audit Committee, which in turn, has included such certification and report in the Audit Committee’s recommendation to the Board of Directors. The Board of Directors in passing its resolutions acknowledges that it is basing and relying on such certification and report.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of the annual consolidated financial statements in conformity with International Financial Reporting Standards requires management to make estimates and assumptions that affect the amounts recorded in the consolidated financial statements. Management regularly reviews these estimates, including impairment of goodwill and assets with indefinite and finite lives, retirement benefit assets/obligations, income taxes, fair value assessment of business combinations, and useful lives for depreciation and amortization of property, plant and equipment and finite life intangible assets. While it is reasonably possible that circumstances may arise which cause actual results to differ from these estimates, management does not believe it is likely that any such differences will materially affect Glacier’s financial position.

THE IMPACT OF COVID-19

The impact of the COVID-19 pandemic, with its combined health toll and sharp decline in global economic output, is unprecedented and the full extent of the impact will depend on future developments. These developments are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning its severity, its duration and actions by government authorities to contain the outbreak or manage its impact. As a result, it is possible that circumstances may arise which cause actual results to differ from the estimates applied in these consolidated financial statements, and such differences affecting Glacier’s future financial position and results cannot be determined at this time.

INCOME TAXES

In accordance with IFRS recommendations, Glacier recognizes deferred income tax assets when it is more likely than not that the future income tax assets will be realized. This assumption is based on management's best estimate of future circumstances and events. If these estimates and assumptions are changed in the future, the value of the future income tax assets could be reduced or increased, resulting in an income tax expense or recovery. Glacier re-evaluates its future income tax assets on a regular basis.

RETIREMENT BENEFIT ASSETS/OBLIGATIONS

Glacier’s defined benefit plan provides both pension and other retirement benefits to certain salaried and hourly employees not covered by industry union plans.

Effective December 31, 2015, the Company made the decision to eliminate future benefit accruals under the defined benefit provision of the plan. Credited Service and final average earnings were permanently set. This change affects all members who were actively accruing benefits in the Plan as at December 31, 2015. Effective January 1, 2016, all eligible employees have joined a new defined contribution plan sponsored by Glacier. The Company also has health care plans covering certain hourly and retired salaried employees. Effective December 31, 2015, the post retirement benefit plan was closed for new retirees. Employees retiring after December 31, 2015, are not eligible for post-retirement benefits. The Company’s defined benefit pension plan related to its subsidiary remains unchanged.

Glacier uses independent actuarial firms to perform actuarial valuations of the fair value of pension and other retirement benefit plan obligations. The application of these recommendations requires judgments regarding certain assumptions that affect the accrued benefit provisions and related expenses, including the discount rate used to calculate the present value of the obligations and the assumed health care cost trend rates. Management and the Board of Director’s Pension Committee evaluate these assumptions annually based on experience and the recommendations of its actuarial firms. Changes in these assumptions result in actuarial gains or losses, which are recorded in comprehensive income or loss for the year.

SHARE-BASED PAYMENTS

The Company provides incentives via share-based payment entitlements. The fair value of entitlements is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the equity instrument, the vesting and performance criteria, the share price at the grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate

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for the term of the equity instrument. If certain assumptions used in the fair value calculation were to change, there would be an impact on the statement of operations in future financial periods.

IMPAIRMENT OF INTANGIBLE ASSETS AND GOODWILL

Goodwill, which is the excess of the purchase price paid for an acquisition over the fair value of the net assets acquired, is not amortized but is assessed annually for impairment or more frequently if events or circumstances indicate that it may be impaired.

Indefinite life intangible assets consisting mainly of mastheads which have an indefinite useful life and are not amortized, but tested annually for impairment or more frequently if impairment indicators arise.

Intangible assets with a finite life, which consist of subscription lists, customer relationships, other intangible assets and data and technology, and software, are reviewed for impairment when the occurrence of events or changes in circumstances indicates that the carrying value of the assets may not be recoverable.

For goodwill, finite life intangible assets and investments in joint ventures and associates, the recoverable amount was determined using five year cash flow budgets approved by management that made maximum use of observable market inputs and outputs. For periods beyond the budget period, cash flows were extrapolated using expected future growth rates taking into consideration historical rates and projected future structural changes to the industry, in the respective CGU or groups of CGUs and taking into account expected future operating results, cost savings achieved through cost savings initiatives, economic conditions and outlook for the industry within which the reporting unit operates. For certain CGU's, where cash flows have become difficult to forecast, we have also considered other valuation techniques such as an enterprise value approach utilizing revenue multiples, and considering other comparable market information.

For indefinite life intangible assets, the recoverable amount was determined using budgeted revenues to determine the relief from royalties that the mastheads and trademarks provide. For periods beyond the budget period, revenues were extrapolated using expected future growth rates taking into consideration historical rates and projected future structural changes to the industry.

The methods are based on many assumptions and estimates that may have a significant impact on the recoverable value of a CGU, and as a result on the amount of impairment recorded, if any. The impact of any significant changes in assumptions and the review of estimates are recognized through profit or loss in the period in which the change occurs.

In 2020, certain CGU's continue to be impacted by the negative impacts of COVID-19 pandemic, along with the continued decline of the industry, and based on the annual testing a further $3.5 million impairments were recorded in the fourth quarter for a total of $23.5 million for the year ending December 31, 2020. In 2019, certain CGU's continue to be impacted by the decline of the industry as well as other economic market conditions. As such, the Company recorded an impairment expense of $5.7 million to goodwill in 2019.

In its assessment of the recoverable amounts of the groups of CGUs, the Company performed a sensitivity analysis of key assumptions used in the testing: discount rates, EBITDA growth and revenue growth. The results of the sensitivity analysis show that the majority of the CGU's would not be sensitive to a reasonable change in key assumptions used to determine the recoverable amount and would not cause the carrying amount of those CGU's or group of CGUs to exceed their recoverable amounts. Certain CGU's included in the BC Community Media Group would be sensitive.

FAIR VALUE OF BUSINESS COMBINATIONS

On the acquisition of a business, the Company is required to identify and measure the various assets and liabilities acquired. This is based on the estimated fair value of each item acquired with the remainder of the purchase price being recognized as goodwill. Judgements are used when determining the split between intangible assets and goodwill. Estimates and judgments related to revenue and gross margin forecasts, customer attrition rate, and discount rate are used to determine the overall fair value of the purchase price when there is deferred and variable consideration.

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To estimate the fair value of the customer relationships, management used the excess earnings method by using a discounted cash flow model. Management developed key assumptions related to revenue and gross margin forecasts, customer attrition rate, and discount rate. To estimate the fair value of the data, management used the replacement cost method.

ESTIMATED USEFUL LIVES

Management estimates the useful lives of property, plant and equipment and finite life intangible assets based on the period during which the assets are available for use. The amounts and timing of depreciation and amortization for these assets are affected by useful lives. The estimates are reviewed annually and are updated for changes in the assets’ expected useful lives.

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GLACIER MEDIA INC. DECEMBER 31, 2020