Review of Operations
GVIC Communications Corp. ("GVIC" or the "Company") continued to generate strong revenue, profit and cash flows from a number of its operations and through its diversified base of information communications businesses. However, weaker economic conditions in the quarter adversely affected operating results. Business and trade information revenue weakened in some operations during the three months ended March 31, 2013 due to softness in key economic sectors, particularly those in which volatile commodity pricing affect business information activity. Community media revenue continued to be softer compared to the same period last year. Revenues and EBITDA in the community media operations were affected by weaker conditions in the general economy and by related national advertising softness, as well as digital competition. Consolidated EBITDA was also affected by operating resource expense investments made to strengthen some community media assets acquired from Postmedia, and increased digital investment including a new real estate information portal, amongst other things.
Many of the Company's business information operations continue to grow and provide attractive opportunities for future growth in both existing and new verticals through multi-platform offerings, including rich information products and solutions. Community media operations continue to offer a strong value proposition through local information they provide to readers and key marketing channels they provide in the small community markets they serve across complementary multi-media platforms. As mentioned, weaker economic conditions in the first quarter adversely affected national advertising revenues - a trend which appears to be largely cyclical. Digital competition exacerbated the weaker economic conditions in the larger urban markets, but has been less of a factor in the smaller regional markets.
Notwithstanding the current market softness, a variety of significant growth opportunities are still available., The Company's strategy is to invest cash flow generated from the community media operations and the business and trade information operations in both operational opportunities and acquisitions. In particular, the Company intends to increase capital allocated to business and trade information acquisitions and growth opportunities, which includes internal product development related technology investments. The Company also intends to provide returns to shareholders through increasing dividends.
Many of GVIC's business and trade information operations continued to deliver growth, with revenue increases generated across a wide variety of verticals - driven by a diverse variety of product and information innovations. While in some verticals this growth was slower than the prior year, the various products and services still outperformed peer groups active in those sectors.
To the degree revenues have been adversely affected by general economic malaise, a number of growth initiatives are being pursued and are generating strong sales results, especially those associated with sectors of the economy which are experiencing relatively stable conditions in a pan-Canadian context. This is a result of a stronger inter-divisional collaboration framework created between the various operations.
In particular, GVIC's business and trade information operations enjoyed growth in the energy, environmental risk, environmental compliance networks, medical and financial information sectors as a result of targeted initiatives designed to align with growth areas within those sectors. GVIC's business and trade information portfolio contains many brands that have decades of service in their respective sectors. The intrinsic equity associated with these brands is a key competitive advantage as the products evolve and extend.
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