Computer Modelling Group Ltd. — Audit Report / Information 2024

May 23, 2024

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Management’s Statement of Responsibility

Management is responsible for the accompanying consolidated financial statements and all other information contained in this Annual Report. The consolidated financial statements have been prepared in accordance with the IFRS Accounting Standards (“IFRS”) consistently applied, using management’s best estimates and judgments, where appropriate. Financial information included elsewhere in this report is consistent with the consolidated financial statements.

Management has also prepared the Management’s Discussion and Analysis (MD&A). The MD&A is based on the Company’s financial results prepared in accordance with IFRS. The MD&A compares the audited financial results for the years ended March 31, 2024 and March 31, 2023.

Management maintains appropriate systems of internal control. Policies and procedures are designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of consolidated financial statements.

KPMG LLP, Chartered Professional Accountants, appointed by the shareholders, have audited the consolidated financial statements in accordance with Canadian generally accepted auditing standards.

The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfills its financial reporting responsibilities. The Audit Committee reviews the financial content of the Financial Report and meets regularly with management and KPMG LLP to discuss internal controls, accounting and auditing and financial matters. The Committee reports its findings to the Board of Directors for its consideration in approving the consolidated financial statements.

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Sandra Balic, CPA, CA, Vice President, Finance and Chief Financial Officer

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Pramod Jain Chief Executive Officer

Calgary, Canada May 22, 2024

Computer Modelling Group Ltd.

Management’s Statement of Responsibility

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Independent Auditor's Report

To the Shareholders of Computer Modelling Group Ltd.

Opinion

We have audited the consolidated financial statements of Computer Modelling Group Ltd. (the Entity), which comprise:

• the consolidated statements of financial position as at March 31, 2024 and March 31, 2023

• the consolidated statements of operations and comprehensive income for the years then ended

• the consolidated statements of changes in equity for the years then ended

• the consolidated statements of cash flows for the years then ended

• and notes to the consolidated financial statements, including a summary of material accounting policy information

(Hereinafter referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at March 31, 2024 and March 31, 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “ Auditor’s Responsibilities for the Audit of the Financial Statements” section of our auditor’s report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended March 31, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.

Evaluation of the acquisition-date fair value of technology and customer relationship intangible assets acquired through a business combination

Description of the matter

We draw attention to Note 2(d), Note 3(b) and Note 4(a) of the financial statements. The Entity acquired 100% of the outstanding shares of Bluware-Headwave Ventures Inc. (“BHV”) for total purchase price consideration of $27.8 million. As a result of the transaction, the Entity acquired technology and customer relationship intangible assets

Computer Modelling Group Ltd.

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Independent Auditor's Report

with an acquisition-date fair value of $22.7 million. The Entity uses the income approach to value acquired technology and customer relationships. The income approach is a valuation technique that calculates the estimated fair value of an intangible asset based on the estimated future cash flows that the asset can be expected to generate over its remaining useful life. The Entity’s significant assumptions in calculating the estimated future cash flows used to determine the acquisition-date fair value of the technology and customer relationships include projected revenues and costs, contributory asset charges, and discount rates.

Why the matter is a key audit matter

We identified the evaluation of the acquisition-date fair value of technology and customer relationship intangible assets acquired through a business combination as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of the business combination to the Entity and the high degree of estimation uncertainty in determining the fair value of technology and customer relationship intangible assets acquired.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We compared the Entity’s estimated future cash flows to BHV’s and the Entity’s historical actual results. We took into account the changes in conditions and events affecting the cash flows to assess the adjustment or lack of adjustments, made by the Entity in arriving at the estimated future cash flows.

We involved our valuation professionals with specialized skills and knowledge, who assisted in:

• Evaluating the appropriateness of the valuation approach and valuation method used by the Entity to calculate the fair value of the technology and customer relationship intangible assets based on the knowledge of the valuation professional

• Evaluating the appropriateness of the discount rates used, by comparing them against an independent discount rate range developed by our valuation professionals

• Evaluating the appropriateness of the contributory asset charges by comparing them against independent contributory asset charges developed by our valuation professionals.

Determination of the standalone selling price of revenue performance obligations for annuity agreements containing a software license

Description of the matter

We draw attention to Note 2(d), Note 3(a) and Note 13 to the financial statements. The Entity has recognized revenue of $108.7 million, a portion of which is allocated to software licenses in the contract.

The Entity enters into contracts with customers that often include promises to deliver multiple products, such as licenses and maintenance. Determining whether such bundled products and services are considered i) distinct performance obligations that should be separately recognized or ii) non-distinct and therefore should be combined with another good or service and recognized as a combined unit of accounting may require significant judgment. The determination of the standalone selling prices (SSP) for distinct performance obligations can also require judgment and estimates. SSP for a performance obligation in a contract with customers is an estimate of the price that would be charged for the specific product or service if it was sold separately in similar circumstances and to similar customers.

Computer Modelling Group Ltd.

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Independent Auditor's Report

Annuity agreements include a term-based software license bundled with maintenance. Since the Entity does not sell term-based annuity licenses individually without maintenance and there is no comparable product in the market, there is no observable SSP for term-based software annuity licenses. The Entity allocates the value of bundled annuity agreements between software licenses and maintenance using either the residual approach or the adjusted market assessment approach. When the Entity has an observable SSP for its maintenance performance obligation, the Entity allocates the value of bundled annuity agreements between software licenses and maintenance using the residual approach, by subtracting the SSP of maintenance from the total annuity agreement fee. When the Entity does not have an observable SSP for its maintenance performance obligation, the Entity determines the SSP using the adjusted market assessment approach based on market information and other inputs including the value relationship between maintenance and the term-based software license, the economic life of products, the frequency of product upgrades, and software renewal rates. Based on these allocations, the SSP of both the maintenance and the standalone annuity license each represents 50% of the total annuity agreement fee.

Why the matter is a key audit matter

We identified the determination of the SSP of revenue performance obligations for annuity agreements containing a software license as a key audit matter. Significant auditor judgment was required to evaluate the determination of SSP, specifically, the allocation between maintenance and the standalone annuity license.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We evaluated the determined allocation of SSP by comparing current pricing in a selection of customer contracts containing a software license to historical analyses of contract pricing completed by the Entity and pricing observed in the industry.

Other Information

Management is responsible for the other information. Other information comprises:

• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

• the information, other than the financial statements and the auditor’s report thereon, included in a document entitled “2024 Financial Report”.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the other information identified above as at the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor’s report.

We have nothing to report in this regard.

Computer Modelling Group Ltd.

Independent Auditor's Report

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Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Accounting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern.

Computer Modelling Group Ltd.

Independent Auditor's Report

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• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

• Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this auditor’s report is Kimberly J. Payne.

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Chartered Professional Accountants Calgary, Canada May 22, 2024

Computer Modelling Group Ltd.

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Independent Auditor's Report

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Consolidated Statements of Financial Position

(thousands of Canadian $)	March 31, 2024 March 31, 2023
Assets Current assets: Cash Restricted cash Trade and other receivables (note 20a) Prepaid expenses Prepaid income taxes(note 17)	63,083 66,850 142 - 36,550 23,910 2,321 1,060 3,841 444
Intangible assets (note 6) Right-of-use assets (note 7) Property and equipment (note 8) Goodwill (note 4 & 9) Deferred tax asset(note 17)	105,937 92,264 23,683 1,321 29,072 30,733 9,877 10,366 3,745 - 59 2,444
Total assets	172,373 137,128
Liabilities and shareholders’ equity Current liabilities: Trade payables and accrued liabilities (note 10) Income taxes payable (note 17) Acquisition holdback payable (note 4) Deferred revenue (note 11) Lease liabilities(note 12)	16,582 9,883 1,604 33 2,292 - 41,120 34,797 2,566 1,829
Lease liabilities (note 12) Stock-based compensation liabilities (note 18(c)) Acquisition earnout (note 4) Other long-term liabilities Deferred tax liabilities(note 17)	64,164 46,542 34,395 36,151 2,593 1,985 1,503 - 305 - 1,598 -
Total liabilities	104,558 84,678
Shareholders’ equity: Share capital (note 18) Contributed surplus Cumulative translation adjustment Deficit	87,304 81,820 15,667 15,471 (367) - (34,789) (44,841)
Total shareholders’ equity	67,815 52,450
Total liabilities and shareholders' equity	172,373 137,128

Subsequent event (note 25)

See accompanying notes to consolidated financial statements.

Approved by the Board

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Mark R. Miller Director

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Peter H. Kinash Director

Computer Modelling Group Ltd.

Consolidated Financial Statements

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Consolidated Statements of Operations and Comprehensive Income

Income
Years ended March 31, (thousands of Canadian $ except per share amounts)	2024 2023 (note 2(e))
Revenue (note 13) Cost of revenue	108,679 17,224 73,846 7,481
Gross profit Operating expenses Sales and marketing Research and development (note 14) General and administrative	91,455 66,365 14,957 9,968 23,679 17,857 18,835 12,680
	57,471 40,505
Operating profit Finance income (note 16) Finance costs(note 16)	33,984 25,860 3,146 2,720 (1,908) (1,932)
Profit before income and other taxes Income and other taxes(note 17)	35,222 26,648 8,963 6,851
Net income	26,259 19,797
Other comprehensive income: Foreign currencytranslation adjustment	(367) -
Other comprehensive income	(367) -
Total comprehensive income	25,892 19,797
Net income per share – basic (note 18(d)) Net income per share – diluted (note 18(d)) Dividend per share	0.32 0.25 0.32 0.24 0.20 0.20

See accompanying notes to consolidated financial statements.

Computer Modelling Group Ltd.

Consolidated Financial Statements

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Consolidated Statements of Changes in Equity

			Accumulated
			other
	Share	Contributed	comprehensive		Total
(thousands of Canadian $)	capital	surplus	income (loss)	Deficit	equity
Balance, April 1, 2022	80,248	15,009	-	(48,539)	46,718
Comprehensive income	-	-	-	19,797	19,797
Dividends paid	-	-	-	(16,099)	(16,099)
Shares issued on exercise of stock options	1,263	(197)	-	-	1,066
(note 18(b))
Shares issued on redemption of restricted
share units (note 18(b))	309	-	-	-	309
Stock-based compensation:
Currentperiod expense(note 18(c))	-	659	-	-	659
Balance, March 31, 2023	81,820	15,471	-	(44,841)	52,450
Balance, April 1, 2023	81,820	15,471	-	(44,841)	52,450
Net income	-	-	-	26,259	26,259
Foreign currency translation adjustment	-	-	(367)	-	(367)
Dividends paid	-	-	-	(16,207)	(16,207)
Shares issued on exercise of stock options
(note 18(b))	4,856	(663)	-	-	4,193
Shares issued on redemption of restricted
share units (note 18(b))	480	-	-	-	480
Shares issued on redemption of
performance share units (note 18(b))	148	-	-	-	148
Stock-based compensation:
Currentperiod expense(note 18(c))	-	859	-	-	859
Balance, March 31, 2024	87,304	15,667	(367)	(34,789)	67,815

See accompanying notes to consolidated financial statements.

Computer Modelling Group Ltd.

Consolidated Financial Statements

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Consolidated Statements of Cash Flows

Years ended March 31, (thousands of Canadian $)	2024 2023
Operating activities Net income Adjustments for: Depreciation and amortization of property, equipment, right- of use assets (notes 7 & 8) Amortization of intangible assets (note 6) Deferred income tax expense (recovery) (note 17) Stock-based compensation Foreign exchange and other non-cash items	26,259 19,797 4,187 3,649 1,501 - 3,518 (235) 2,795 2,146 (5) -
Funds flow from operations Movement in non-cash working capital: Trade and other receivables Trade payables and accrued liabilities Prepaid expenses and other assets Income taxes receivable (payable) Deferred revenue	38,255 25,357 (6,697) (6,403) 2,618 2,315 (1,183) (268) (1,826) 535 4,910 4,343
Change in non-cash workingcapital	(2,178) 522
Net cashprovided by operating activities	36,077 25,879
Financing activities Repayment of acquired line of credit Proceeds from issuance of common shares Repayment of lease liabilities (note 12) Dividendspaid	(2,012) - 4,193 1,066 (2,355) (1,608) (16,207) (16,099)
Net cash used in financing activities	(16,381) (16,641)
Investing activities Corporate acquisition, net of cash acquired (note 4) Intangible asset additions Propertyand equipment additions, net of disposals(note 8)	(22,814) - - (1,340) (650) (708)
Net cash used in investing activities	(23,464) (2,048)
Increase (decrease) in cash Effect of foreign exchange on cash Cash, beginningofyear	(3,768) 7,190 1 - 66,850 59,660
Cash, end ofyear	63,083 66,850
Supplementary cash flow information Interest received (note 16) Interest paid (notes 12 and 16) Income taxes paid	3,096 1,810 1,908 1,932 7,201 6,635

See accompanying notes to consolidated financial statements.

Computer Modelling Group Ltd.

Consolidated Financial Statements

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Notes to Consolidated Financial Statements

For the years ended March 31, 2024 and 2023.

1. Reporting Entity:

Computer Modelling Group Ltd. (“CMG Group” or “the Company”) is a company domiciled in Alberta, Canada and is incorporated pursuant to the Alberta Business Corporations Act, with its common shares listed on the Toronto Stock Exchange under the symbol “CMG”. The address of CMG Group’s registered office is 3710 33 Street N.W., Calgary, Alberta, Canada, T2L 2M1. The consolidated financial statements as at and for the year ended March 31, 2024, comprise CMG Group and its subsidiaries: Computer Modelling Group Inc., CMG Middle East FZ LLC, CMGL Services Corporation Inc., CMG Europe Ltd., and CMG Collaboration Centre India Private Ltd., (together referred to as “CMG”), and CMG Holdings (USA), Inc., Bluware-Headwave Ventures Inc., Bluware Inc., Bluware AS, (together referred to as “BHV”). The Company is a global software and consulting technology company engaged in both the development and licensing of reservoir simulation and seismic interpretation software. The Company also provides professional services consisting of highly specialized support, consulting, training, and contract research activities.

2. Basis of Preparation:

(a) Statement of Compliance:

These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

These consolidated financial statements as at and for the year ended March 31, 2024 were authorized for issuance by the Board of Directors on May 22, 2024.

(b) Basis of Measurement:

The consolidated financial statements have been prepared on the historical cost basis except for certain assets and liabilities initially recognized in connection with business combinations, which are measured at their estimated fair value at the time of the transaction, and contingent consideration related to business combinations which is recorded at fair value at each reporting date.

(c) Functional and Presentation Currency:

The consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency. The functional currency of CMG Holdings (USA) Inc., Bluware-Headwave Ventures Inc. and Bluware Inc. has been determined to be United States dollar. The functional currency of Bluware AS has been determined to be Norwegian Krone. All financial information presented in Canadian dollars has been rounded to the nearest thousand.

(d) Use of Estimates, Judgments and Assumptions:

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenues and expenses at the date of the financial statements and the reported amounts of revenue, costs and expenses. Estimates and underlying assumptions are based on historical experience and other assumptions that are considered reasonable in the circumstances and are reviewed on an ongoing basis. Actual results may differ from such estimates and it is possible that the differences could be material. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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Significant estimates and judgments made by management in the preparation of these consolidated financial statements are as follows:

(i) Contracts with multiple products or services

Contracts with customers often include promises to deliver multiple products, such as licenses and maintenance. Determining whether such bundled products and services are considered i) distinct performance obligations that should be separately recognized or ii) non-distinct and therefore should be combined with another good or service and recognized as a combined unit of accounting may require significant judgment. The determination of the standalone selling prices (“SSP”) for distinct performance obligations can also require judgment and estimates. SSP for a performance obligation in a contract with customers is an estimate of the price that would be charged for the specific product or service if it was sold separately in similar circumstances and to similar customers.

(ii) Professional services revenue

The Company applies estimates when calculating professional services revenue from certain consulting contracts as it relates to remaining labour hours required to complete the contract. Estimates are continually and routinely revised as new information becomes available. In assessing revenue recognition, judgment is also used in assessing the ability to collect the corresponding account receivable.

(iii) Intangible Assets

Acquired intangible assets – The Company uses the income approach to value acquired technology, customer relationships and trade name/trademarks. The income approach is a valuation technique that calculates the estimated fair value of an intangible asset based on the estimated future cash flows that the asset can be expected to generate over its remaining useful life.

The Company utilizes the discounted cash flow methodology which is a form of the income approach that begins with a forecast of the annual cash flows that a market participant would expect the subject intangible asset to generate over a discrete projection period. The forecasted cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the intangible assets' projected cash flows, again, from a market participant perspective. The present value of the forecasted cash flows is then added to the present value of the residual value of the intangible asset (if any) at the end of the discrete projection period to arrive at a conclusion with respect to the estimated fair value of the subject intangible assets. The significant assumptions in calculating the estimated future cash flows used to determine the acquisition date fair value of the intangible assets included projected revenues and costs, contributory asset charges, and discount rates.

The Company specifically uses the relief-from-royalty method to value trade name/trademarks and the multiple period excess earnings to value customer relationships and intellectual property.

(iv) Determination of Purchase Price Allocation and Contingent Consideration

Estimates are made in determining the fair value of assets and liabilities, including the valuation of separately identifiable intangibles acquired as part of an acquisition. Judgments are also made in determining whether any consideration transferred for an acquisition relates to future compensation arrangements and is excluded from the purchase price allocation. Furthermore, estimates are made in determining the value of contingent consideration payments that should be recorded as part of the consideration on the date of acquisition and changes in contingent consideration payable in subsequent reporting periods. Contingent consideration payments are generally based on acquired businesses achieving certain performance targets or metrics. The estimates are based on management’s best assessment of the related inputs used in the valuation models, such as future cash flows and discount rates. Future performance results that differ from management’s estimates could result in changes to liabilities recorded, which are recorded as they arise through profit or loss. Refer to Note 4 for acquisitions and associated purchase price allocations and contingent consideration.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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(v) Goodwill

The Company accounts for business combinations using the acquisition method. The excess of the purchase price over the fair value of the identifiable net assets represents goodwill and is allocated to the cash generating units (“CGUs”) expected to benefit from the business combination. Goodwill has an indefinite useful life and is not subject to amortization however, the carrying value is subject to impairment testing at least once a year, or more frequently if events or changes in circumstances indicate the carrying amount maybe impaired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. An impairment loss is recognized if the carrying amount of a CGU exceeds its estimated recoverable amount. As a result, any impairment losses are a result of management’s best estimates of expected cash flows at a specific point in time. These estimates are subject to measurement uncertainty as they are dependent on factors outside of management’s control. In addition, by their nature, impairment tests involve a significant degree of judgment as expectations concerning future cash flows and the selection of appropriate market inputs are subject to considerable risks and uncertainties.

(vi) Determination of Cash Generating Units (“CGUs”)

A CGU is the lowest group of assets that generate identifiable cash inflows that are largely independent of the cash inflows of other assets or groups of assets. The allocation of assets into CGUs require judgment and interpretations with respect to the existence of active markets, integration between assets, and the way in which management monitors the operations.

(vii) Functional Currency

The determination of the functional currency is a matter of determining the primary economic environment in which an entity operates and the nature of the relationship between the parent company and the subsidiary. The Company uses judgment in the ultimate determination of certain subsidiary’s functional currency by assessing the operational factors of the subsidiary.

(viii) Research and development

Assumptions are made in respect to the eligibility of certain research and development projects in the calculation of scientific research and experimental development (“SR&ED”) investment tax credits which are netted against the research and development costs in the statement of operations and comprehensive income. SR&ED claims are subject to audits by relevant taxation authorities and the actual amount may change depending on the outcome of such audits (note 14).

(ix) Stock-based compensation

Assumptions and estimates are used in determining the inputs used in the Black-Scholes option pricing model, including assumptions regarding volatility, dividend yield, risk-free interest rates, forfeiture estimates and expected option lives (note 18 (c)).

(x) Deferred taxes

Assumptions and estimates about the amount, utilization and timing of realization and/or settlement of temporary differences as well as the future tax rates that will apply to those differences. Changes in those assumptions and estimates may have a significant impact on the amounts recorded for deferred tax assets and liabilities and could result in amounts different from those initially recorded. Management closely monitors current and potential changes to tax law and bases its information on the best available information at each reporting date.

(e) Change in Presentation of Operating Expenses:

Prior to April 1, 2023, CMG classified costs related to software licenses and professional services (including costs associated with customer support and training, and consulting services) under sales and marketing expenses, and costs related to public cloud hosting services under research and development expenses in the statement of operations. In order to better align with industry peers for comparability purposes, the Company has changed the presentation of the direct costs to deliver professional services and software licenses as a cost of revenue. Cost of revenue includes direct employee, external consultant and overhead

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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costs associated with customer support, training, consulting, and public cloud hosting applications. The change in presentation had no effect on the reported results of operations. The comparative period has been updated to reflect this presentation change.

Year ended March 31,

Year ended March 31,
(thousands of $)
	As presented March 31, 2023 Reclassification in Presentation	Restated
		March 31, 2023
Cost of revenue Sales and marketing Research and development	- 7,481 17,161 (7,193) 18,145 (288)	7,481
		9,968
		17,857

3. Material Accounting Policies

(a) Revenue Recognition:

Revenue is recognized upon transfer of control of products or services to customers at an amount that reflects the consideration the Company expects to receive in exchange for the products or services. The nature of the products and services from which the Company derives its revenue is described below.

Type of products Nature, timing of satisfaction of performance obligations, /service significant contract terms Annuity license CMG’s annuity agreements include a term-based software license bundled with maintenance. IFRS revenue - CMG 15 Revenue from Contracts with Customers (“IFRS 15”) requires that the portion of the annuity agreement fee that relates to the software license should be recognized as revenue at the start of the license period, while the remainder should be recognized as maintenance revenue on a straightline basis over the license period. However, since it is management’s practice to honour customers’ mid-contract requests to reduce product quantities or license term duration without a penalty and refund or credit a pro-rata share of the agreement fee, software annuity license revenue cannot be recognized upfront and will instead be recognized rateably over the term of the contract.

The exception to this practice is certain multi-year agreements with very specific termination clauses that significantly limit the customer’s ability to reduce the license term. For these agreements, the software license portion that relates to a non-cancellable period will be recognized upfront, at the start of that particular period of the license contract.

The maintenance component of an annuity contract includes customer support and unspecified software upgrades. Maintenance license revenue is recognized on a straight-line basis over the term of the contract, as the Company satisfies its maintenance performance obligation over time.

Since the Company does not sell term-based annuity licenses individually without maintenance and there is no comparable product in the market, there is no observable standalone selling price (“SSP”) for term-based software annuity licenses. The Company allocates the value of bundled annuity agreements between software licenses and maintenance using the residual approach, by subtracting the SSP of maintenance from the total annuity agreement fee.

Based on this calculation, the SSP of maintenance represents 50% of the total annuity agreement fee, leaving 50% to be allocated to the standalone software annuity license.

Annuity license fee BHV’s revenue contracts include combinations of software licenses, upgrades, maintenance and revenue - BHV support which are separate performance obligations with differing revenue recognition patterns. Annuity agreements may include a term-based software license, as a single performance obligation and upgrades, maintenance and support services (“maintenance”) as a single performance Annuity maintenance obligation. We allocate the transaction price based on the SSP of the distinct performance revenue obligations. Revenue from the annuity agreement fee that relates to the software license is recognized up front upon delivery at the start of the license term. Revenue from the maintenance

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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Type of products	Nature, timing of satisfaction of performance obligations,
/service	significant contract terms
	component of the contract is recognized on a straight-line basis over the term of the contract, as the
	maintenance performance obligation is satisfied over time.
	Since BHV does not sell term-based annuity licenses individually without maintenance and there is
	no comparable product in the market therefore not an independently observable SSP. BHV also does
	not sell maintenance individually and therefore does not have an observable SSP for its maintenance
	performance obligation. Judgment is required to determine the SSP for each distinct performance
	obligation. BHV determines the SSP using the adjusted market assessment approach based on
	market information and other inputs including the value relationship between maintenance and the
	term-based software license, the economic life of products, the frequency of product upgrades, and
	software renewal rates. Based on this analysis, the SSP of maintenance represents 50% of the total
	annual contract fee, leaving 50% to be allocated to the software license to be recognized upfront at
	the start of the license term.
Maintenance license	CMG has maintenance agreements which include customer support and unspecified software
revenue	upgrades, typically of one year or less. Maintenance licenses are purchased by customers who
	already own a perpetual license and want the additional benefit of customer support and software
	upgrades. Maintenance license revenue is recognized on a straight-line basis over the term of the
	contract, as the Company satisfies its maintenance performance obligation over time.
Perpetual license	A perpetual license grants the customer the right to use the then-current version of the software in
revenue	perpetuity. Perpetual license revenue is recognized at a point in time, upon delivery of the licensed
	product.
Professional services	Revenue from professional services consists of consulting, training and contract research activities.
revenue	Professional services revenue is recognized over time, based on hours incurred.

Costs to obtain a contract

The Company applies the practical expedient available under IFRS 15 and does not capitalize incremental costs of obtaining contracts if the amortization period is one year or less.

(b) Business Combinations:

Business combinations are accounted for using the acquisition method of accounting when the assets acquired and liabilities assumed meet the definition of a business in accordance with IFRS. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. The determination of the fair value assigned to the assets acquired and liabilities assumed requires management to make assumptions and estimates. These assumptions or estimates are inherently uncertain and subject to refinement and could impact the amounts assigned to assets, liabilities and goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded to our consolidated statements of income. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in our consolidated statements of operations and comprehensive income.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration meets the definition of a financial instrument and is classified as equity, then it is not remeasured, and settlement amount is accounted for within equity. Otherwise, other contingent considerations are remeasured at fair value at each reporting date and subsequent changes in the fair value are recognized in our consolidated statements of operations and comprehensive income.

Acquisition-related costs are included within general and administrative expenses and are accounted for and disclosed if they meet the definition of acquisition-related costs in accordance with IFRS.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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(c) Property and Equipment:

Property and equipment is recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives as follows:

	Useful life
Computer equipment	3 years
Furniture and equipment	5 years
Leasehold improvements	Over the lease term

(d) Intangible Assets:

Intangibles acquired as part of a business combination are recognized at fair value at the acquisition date and carried at cost less accumulated amortization subsequent to acquisition. Intangible assets with a finite life are amortized on a straight-line basis over their expected period of benefit as follows:

eriod of benefit as follows:
	Useful life
Customer relationships	10 years
Intellectual property	5 to 10 years
Tradename/trademarks	10 years

(e) Income Taxes:

Income tax is comprised of current and deferred tax.

Current tax is the expected tax payable or receivable based on taxable profit for the period calculated using tax rates that have been enacted or substantively enacted at the reporting date, and includes any adjustments to tax payable in respect of previous years. Prepaid income taxes and current income taxes payable are offset only when a legally enforceable right of offset exists and the prepaid income tax and tax payable arise in the same tax jurisdiction and relate to the same taxable entity.

Deferred tax is recognized on the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are offset only when a legally enforceable right of offset exists and the deferred tax assets and liabilities arise in the same tax jurisdiction and relate to the same taxable entity. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(f) Earnings Per Share:

Basic earnings per share is computed by dividing the net income by the weighted average number of common shares outstanding for the period. Diluted per share amounts reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted to common shares. In calculating the dilutive effect of stock options, it is assumed that proceeds received from the exercise of in-the-money stock options are used to purchase common shares at the average market price during the period.

(g) Stock-Based Compensation:

The Company has a stock option plan, a share appreciation rights plan, a performance share unit, a restricted share unit plan, and a deferred share unit plan, as described in note 18(c).

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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Stock option plan

Stock options give the holder the right to purchase common shares and are accounted for as an equity-settled plan. The fair value of stock options is determined using the Black-Scholes valuation model as of the grant date and is expensed over the vesting period, with a corresponding increase in contributed surplus. At the end of each reporting period, the Company revises its estimate of the number of options that are expected to vest and recognizes the impact of any revision in the statement of operations and comprehensive income.

Included within the stock option plan, the Company has also issued performance-based stock options that vest and become exercisable when certain share price targets are achieved. As the performance condition is a market condition, the expense is recognized over the expected period needed to achieve the market condition and the estimate related to this expected period is not subsequently revised. Fair value measurement inputs include the target share price, the exercise price of the instrument, expected volatility (based on an evaluation of the Company’s historic volatility, particularly over the historic period commensurate with the expected term), expected term of the instruments (based on historical experience and general option holder behavior), expected dividends, and the risk-free interest rate (based on government bonds).

Share appreciation rights plan

Share appreciation right (“SAR”) entitles the holder to receive a cash payment equal to the difference between the stated exercise price and the market price of the Company’s common shares on the date the SAR is exercised. These awards are remeasured at fair value at each reporting period. Fifty percent of SARs vest on the first-year anniversary from the grant date and then 25% vest on each of the second and third year anniversary dates and expire after five-years. The expense is recognized over the vesting period, with a corresponding adjustment to liabilities, based on the Company’s estimate of the number of awards that will eventually vest. When awards are exercised for cash, the cash settlement paid reduces the outstanding liability.

Fair value measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility (based on an evaluation of the Company’s historic volatility, particularly over the historic period commensurate with the expected term), expected term of the instruments (based on historical experience and general option holder behaviour), forfeiture rate (based on the Company’s historical forfeiture rate), expected dividends, and the risk-free interest rate (based on government bonds).

Performance share unit plan

Performance share unit (“PSUs”) settle in cash or have the option to settle in cash or shares are accounted for as cash- settled plans. These awards are remeasured at fair value each reporting period. PSUs cliff-vest at the end of three years, with the vesting multiplier ranging from 0.0 to 2.0 contingent upon achieving certain Company performance criteria. The expense is recognized over the vesting period, with a corresponding adjustment to liabilities, based on the Company’s estimate of the number of awards that will eventually vest. When awards are exercised for cash, the cash settlement paid reduces the outstanding liability. When awards are exercised for common shares, the previously recognized liability is recorded to share capital.

Fair value measurement inputs include, estimated performance multiplier (based on forecasted and historical information), share price on measurement date, and expected term of the instruments/forfeiture rate (based on historical experience and general option holder behaviour).

Restricted share unit plan and deferred share unit plan

Restricted share unit (“RSUs”) and deferred share unit (“DSU”) awards that settle in cash or have the option to settle in cash or shares are accounted for as cash- settled plans. These awards are remeasured at fair value each reporting period. The expense is recognized over the vesting period, with a corresponding adjustment to liabilities, based on the Company’s estimate of the number of awards that will eventually vest. When awards are surrendered for cash, the cash settlement paid reduces the outstanding liability. When awards are exercised for common shares, the previously recognized liability is recorded to share capital.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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Fair value measurement inputs include the share price on the measurement date and expected term of the instruments/forfeiture rate (based on historical experience and general option holder behaviour). Service and non-market performance conditions attached to the units are not taken into account in determining fair value.

(h) Financial Instruments:

Financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial instruments are initially classified into two categories: measured at amortized cost or fair value through profit or loss (“FVTPL”). Below is a list of the Company’s financial instruments, their classification and subsequent measurement:

	Classification	Measurement
Cash and restricted cash	Amortized cost	Amortized cost
Trade and other receivables	Amortized cost	Amortized cost
Trade payables and accrued liabilities	Other financial liabilities	Amortized cost
Acquisition holdback payable	Other financial liabilities	Amortized cost
Acquisition earnout	FVTPL	FVTPL

The Company’s financial assets and liabilities are initially recognized at fair value plus any directly attributable transaction costs and are subsequently measured at amortized cost using the effective interest rate method less any provision for impairment.

Financial liabilities are classified as current liabilities when payment is due within a year; otherwise, they are classified as noncurrent liabilities. The acquisition earnout liability is classified as long-term and recorded at an estimated fair value of $1.5 million as at March 31, 2024 ($nil – March 31, 2023). Adjustments to the estimated fair value will be recorded in the statement of operations and comprehensive income (note 20).

(i) Impairment of tangible and intangible assets:

At the end of each reporting period, management assesses the carrying amounts of its tangible and intangible assets for both external and internal indications of impairment. Indications of impairment include, but are not limited to, a recurring lack of profitability and significant changes in technology. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognized immediately within the statement of operations and comprehensive income. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized in prior years.

(j) Leases:

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Since the Company does not have any debt, its incremental borrowing rate must be estimated using such factors as the amount of the funds that would be borrowed if the Company bought the underlying right-of-use asset, the length of the borrowing term, the nature and quality of the underlying right-of-use asset and the economic environment of the jurisdiction in which the asset is located.

The Company applies the practical expedient not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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(k) Cash:

Cash consists of balances held in interest-earning bank accounts.

(l) Adoption of Recent Accounting Pronouncements

Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies

In February 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements, and IFRS Practice Statement 2, Making Materiality Judgments, to provide guidance in the application of materiality judgments to accounting policy disclosures. These amendments also replaced the requirement for disclosures around ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies. The amendments are effective for annual periods beginning on or after January 1, 2023, with earlier application permitted as long as this fact is disclosed. The amendments did not have a material impact on the consolidated financial statements.

4. Acquisitions:

(a) Bluware-Headwave Ventures Inc. Acquisition:

On September 25, 2023, CMG Group completed the acquisition of 100% of the outstanding shares of BHV, a software and services company specializing in cloud and interactive deep learning solutions for subsurface decision-making including seismic interpretation. The purchase price consideration of $27.8 million consisted of cash purchase consideration of $24.0 million paid on closing, $2.3 million withheld as an indemnification holdback for a period of 12 months which is recorded as acquisition holdback payable and $1.5 million of earnout contingent consideration.

There is an earnout provision of up to US$8.0 million payable if certain revenue thresholds and cash collections related to key contracts of BHV are met during the 18-month period after closing. Payments pursuant to the earnout will be settled in cash no later than 90 days following March 25, 2025. The earnout is treated as contingent consideration, measured at a fair value of $1.5 million using a discount rate of 15.6% and is considered a long-term liability in the consolidated statement of financial position. The fair value of the contingent consideration will be assessed for remeasurement at each reporting period end until the earnout period expires. At March 31, 2024, there were no changes to the fair value measurement of contingent consideration.

The acquisition was accounted for as a business combination, under the acquisition method, whereby the net assets acquired, and liabilities assumed were recorded at fair value at the acquisition date and the results of operations included in these consolidated financial statements from the date of the acquisition.

Goodwill of $3.7 million recognized in connection with this acquisition is primarily attributable to CMG Group’s best practices to improve the operations of the BHV, opportunities for BHV to increase sales to new customers and margins on revenue as the business expands, and other intangible assets that do not qualify for separate recognition including the assembled workforce. Goodwill is not expected to be deductible for income tax purposes.

Due to the timing of statutory tax filings during fiscal 2024 and fiscal 2025, combined with the complexity of the corporate tax structure implemented during the acquisition, CMG Group is in the process of determining and finalizing the estimated fair value of the deferred tax assets and liabilities acquired and has recorded the deferred tax assets and liabilities on a provisional basis which may impact the net asset assessments and measurements of assumed liabilities. The provisional purchase price allocations may differ from the final purchase price allocations due to these potential differences and may be material. Revisions to allocations will occur as additional information about the fair value of deferred tax assets and liabilities becomes available.

The acquisition accounting method applied on a provisional basis in connection with the acquisition of BHV is as follows:

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

19

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(thousands of $)
Cash Net working capital, excluding deferred revenue Right-of-use assets Lease liabilities Deferred revenue Line of credit(1) Other assets and liabilities Intangible assets: technology Intangible assets: customer relationships Intangible assets: trade name and trademarks Deferred tax liability	1,203
	2,637
	1,332
	(1,327)
	(1,413)
	(2,012)
	249
	20,338
	2,349
	1,176
	(463)
Net assets acquired	24,069
Goodwill	3,745
Total purchase consideration	27,814

(1) Subsequent to the acquisition, the line of credit was repaid.

These consolidated financial statements include the results of BHV, Bluware Inc., Hue AS, and Kalkulo AS for the period following closing of the transaction on September 25, 2023. If the acquisition would have occurred on April 1, 2023, management estimates that the proforma revenues and net income before taxes would have increased by $36.9 million and $5.1 million for the twelve months ended March 31, 2024. This proforma information is not necessarily indicative of the results of operations that would have resulted had the acquisition been reflected on the dates indicated, or that may be obtained in the future.

As part of the acquisition, $1.2 million is payable to employees of BHV of which $0.4 million was paid after three months, $0.5 million is payable at the end of the holdback period and $0.3 million is payable at the end of the earnout period, all of which are accounted for as post-combination remuneration and accrued as the service is provided. For the year ended March 31, 2024, $0.7 million of post-combination remuneration was recognized as acquisition-related costs within general and administrative expenses. During the year ended March 31, 2024 the Company incurred $0.7 million of transaction costs, comprised of consulting, legal, travel and professional services related to the acquisition of BHV was recognized as acquisition-related costs within general and administrative expenses.

(b) Unconventional Subsurface Integration LLC Acquisition:

On February 15, 2023, the Company acquired all of the assets of Unconventional Subsurface Integration LLC (“USI”), an earlystage AI-based data analytics technology used for the development and optimization of shale reservoirs. Total consideration for USI’s assets was $1.3 million (US$1.0 million) settled in cash. In accordance with IFRS 3, this acquisition was accounted for as a business combination with the results of operations included in these consolidated financial statements from the date of the acquisition. This acquisition will help the Company to establish its presence in data analytics and deliver physics-based solutions to a broader range of users.

The purchase consideration has been allocated exclusively to the intellectual property acquired in the transaction based on the fair value calculated using the discounted cash flow methodology.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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5. Segmented Information:

The Company provides professional services, consisting of support, training, consulting and contract research activities, to promote the use and development of its software; however, these activities are considered a single line of business and all products function around this purpose and are not evaluated as a separate business segment. As a result of CMG Group’s acquisition of BHV on September 25, 2023, the Company’s operations are now organized into two reportable operating segments represented by CMG, the development and licensing of reservoir simulation software, and BHV, the development and licensing of seismic interpretation software.

Years ended March 31,
($ thousands)	CMG 2024 2023	BHV 2024 2023	CMG Group 2024 2023
Revenue Cost of revenue	87,894 73,846	20,785 -	108,679 73,846 17,224 7,481
	8,858 7,481	8,366 -
Grossprofit	79,036 66,365	12,419 -	91,455 66,365
Operating expenses Sales and marketing Research and development General and administrative	13,787 9,968 19,870 17,857	1,170 - 3,809 -	14,957 9,968 23,679 17,857 18,835 12,680
	14,234 12,680	4,601 -
	47,891 40,505	9,580	57,471 40,505
Operating profit	31,145 25,860	2,839 -	33,984 25,860
Net finance income(cost)	1,340 788	(102) -	1,238 788
Profit before income and other taxes Income and other taxes	32,485 26,648	2,737 -	35,222 26,648 8,963 6,851
	7,875 6,851	1,088 -
Net income for theperiod	24,610 19,797	1,649 -	26,259 19,797

Non-current assets include property, equipment, intangible and right-of-use assets of the Company are located in the following geographic regions (for revenue by geographic region, refer to note 13), based on location of the respective operations:

(thousands of $)	March 31, 2024 March 31, 2023
Canada United States South America Eastern Hemisphere(1)	58,188 41,835 4,255 345 80 148 109 92
	62,632 42,420

(1) Includes Europe, Africa, Asia and Australia.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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6. Intangible Assets:

. Intangible Assets:
Cost	Intellectual	Customer	Trademark
(thousands of $)	Property	Relationships	/Trade name	Total
Balance at April 1, 2022	-	-	-	-
Additions	1,340	-	-	1,340
Balance at March 31, 2023	1,340	-	-	1,340
Balance at April 1, 2023	1,340	-	-	1,340
Acquired through business combination
(Note 4)	20,338	2,349	1,176	23,863
Balance at March 31, 2024	21,678	2,349	1,176	25,203
Accumulated Amortization
(thousands of $)
Balance at April 1, 2022	-	-	-	-
Amortization for theyear	(19)	-	-	(19)
Balance at March 31, 2023	(19)	-	-	(19)
Balance at April 1, 2023	(19)	-	-	(19)
Amortization for theyear	(1,321)	(120)	(60)	(1,501)
Balance at March 31, 2024	(1,340)	(120)	(60)	(1,520)
Carrying Amounts
At March 31,2023	1,321	-	-	1,321
At March 31, 2024	20,338	2,229	1,116	23,683

7. Right-of-Use-Assets:

Cost
(thousands of $)	Offices
Balance at April 1, 2022 and March 31, 2023	40,229
Balance at April 1, 2023	40,229
Acquired through business combination(note 4)	1,332
Balance at March 31, 2024	41,561
Accumulated Depreciation
(thousands of $)
Balance at April 1, 2022	(7,116)
Depreciation charge for theyear	(2,380)
Balance at March 31, 2023	(9,496)
Balance at April 1, 2023	(9,496)
Depreciation charge for theyear	(2,993)
Balance at March 31, 2024	(12,489)
Carrying Amounts
At March 31,2023	30,733
At March 31, 2024	29,072

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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8. Property and Equipment:

. Property and Equipment:
Cost	Computer	Furniture and	Leasehold
(thousands of $)	Equipment	Equipment	Improvements	Total
Balance at April 1, 2022	7,490	3,052	13,439	23,981
Additions	708	-	-	708
Disposals	(65)	-	-	(65)
Balance at March 31, 2023	8,133	3,052	13,439	24,624
Balance at April 1, 2023	8,133	3,052	13,439	24,624
Additions	633	8	20	661
Acquired through business combination
(note 4)	42	-	13	55
Disposals	(82)	-	-	(82)
Balance at March 31, 2024	8,726	3,060	13,472	25,258
Accumulated Depreciation
(thousands of $)
Balance at April 1, 2022	(6,541)	(3,036)	(3,496)	(13,073)
Depreciation charge for the year	(584)	(4)	(662)	(1,250)
Disposals	65	-	-	65
Balance at March 31, 2023	(7,060)	(3,040)	(4,158)	(14,258)
Balance at April 1, 2023	(7,060)	(3,040)	(4,158)	(14,258)
Depreciation charge for the year	(507)	(6)	(681)	(1,194)
Disposals	71	-	-	71
Balance at March 31, 2024	(7,496)	(3,046)	(4,839)	(15,381)
Carrying Amounts
At March 31,2023	1,073	12	9,281	10,366
At March 31, 2024	1,230	14	8,633	9,877

9. Goodwill:

Carrying Amounts
At March 31,2023	-
At March 31, 2024(note 4)	3,745

10. Trade Payables and Accrued Liabilities:

0. Trade Payables and Accrued Liabilities:
(thousands of $)	March 31, 2024 March 31, 2023
Trade payables Employee salaries, commissions, and benefits payable Accrued liabilities, stock-based compensation, and other payables (note 18(c))	2,027 8,765 5,790 634 5,138 4,111
	16,582 9,883

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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11. Deferred Revenue:

The following table presents changes in the deferred revenue balance:

The following table presents changes in the deferred revenue balance:
(thousands of $)	March 31, 2024 March 31, 2023
Balance, beginning of year Acquired deferred revenue (note 4) Invoiced during the year, excluding amounts recognized as revenue during the year Recognition of deferred revenue included in the balance of acquired deferred revenue Recognition of deferred revenue included in the balance at the beginning of the year	34,797 30,454 1,413 - 39,815 33,533 (1,328) - (33,577) (29,190)
Balance, end of year	41,120 34,797

12. Lease Liabilities:

The Company’s leases are for office space in Canada, United States, and Colombia, the most significant of which is the twentyyear head office lease in Calgary, Canada that commenced in 2017. These leases contain renewal options for additional terms, but since the Company is not reasonably certain it will exercise the renewal options, they have not been included in the measurement of the lease obligations.

(thousands of $)	March 31, 2024 March 31, 2023
Balance, beginning of year Acquired lease liabilities (note 4) Interest on lease liabilities (note 16) Leasepayments	37,980 39,588 1,327 - 1,908 1,931 (4,254) (3,539)
Balance, end ofperiod	36,961 37,980
Current Long-term	2,566 1,829 34,395 36,151

The following table presents contractual undiscounted payments for lease liabilities as at March 31, 2024:

(thousands of $)
Less than one year	4,236
Between one and five years	14,004
More than fiveyears	32,479
Total undiscounted payments	50,719

Other lease-related items recognized in the consolidated statement of operations and comprehensive income:

Years ended March 31, (thousands of $)	2024 2023
Variable lease expense Short-term lease expense	1,036 884 318 141

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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13. Revenue:

In the following table, revenue is disaggregated by reportable segment and geographical region based on where the customer is located and timing of revenue recognition. In the case of revenues recognized through a reseller arrangement the geographic segmentation is based on the resellers’ location:

Years ended March 31,	2024	2023
($ thousands) Canada United States South America Eastern Hemisp here(1)	Total Canada United States South America Eastern Hemisp here(1)
		Total
CMG Annuity/maintenance 13,208 17,782 8,671 28,876 Perpetual license 270 1,207 324 3,938	68,537 12,602 14,928 8,079 24,081 5,739 - 302 - 2,938
		59,690
		3,240
Total software revenue 13,478 18,989 8,995 32,814	74,276 12,602 15,230 8,079 27,019	62,930
Professional services 9,379 1,013 1,961 1,265	13,618 9,108 374 420 1,014	10,916
Total CMG revenue 22,857 20,002 10,956 34,079	87,894 21,710 15,604 8,499 28,033	73,846
BHV Annuity maintenance - 672 514 1,807 Annuitylicense fee - 667 893 3,586	2,993 - - - -
		-
	5,146 - - - -	-
Total software revenue - 1,339 1,407 5,393	8,139 - - - -	-
Professional services - 10,836 - 1,810	12,646 - - - -	-
Total BHV revenue - 12,175 1,407 7,203	20,785 - - - -	-
Total revenue 22,857 32,177 12,363 41,282	108,679 21,710 15,604 8,499 28,033	73,846

(1) Includes Europe, Africa, Asia and Australia.

The amount of revenue recognized during the year ended March 31, 2024 from performance obligations satisfied (or partially satisfied) in previous periods is $2.3 million (year ended March 31, 2023 – $2.6 million).

The Company applies the practical expedient available under IFRS 15 and does not disclose the amount of the transaction price allocated to unsatisfied performance obligations if the underlying contract has an expected duration of one year or less.

Receivables and contract assets from contracts with customers included in “Trade and other receivables” were as follows:

(thousands of $)	March 31, 2024 March 31, 2023
Receivables	35,137 22,901
Contract assets	1,045 462

During the year ended March 31, 2024, one customer comprised 20.2% of the Company’s total revenue (year ended March 31, 2023 – one customer, 11.7%).

14. Research and Development Costs:

4. Research and Development Costs:
Years ended March 31,	2024	2023
(thousands of $)		(note 2(e))
Research and development	24,025	18,625
Scientific research and experimental development (“SR&ED”) investment tax credits	(346)	(768)
	23,679	17,857

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

25

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15. Personnel Expenses:

5. Personnel Expenses:
Years ended March 31, (thousands of $)	2024 2023
Salaries, commissions and short-term employee benefits Stock-based compensation(note 18(c))	46,980 6,292 33,344 3,317
	53,272 36,661
6. Finance Income and Finance Costs: Years ended March 31, (thousands of $)	2024 2023
Interest income Net foreign exchangegain	3,096 50 1,810 910
Finance income	3,146 2,720
Interest expense on lease liabilities(note 12)	(1,908) (1,931)
Finance costs	(1,908) (1,931)

16. Finance Income and Finance Costs:

17. Income and Other Taxes:

The major components of income tax expense are as follows:

Years ended March 31, (thousands of $)	2024 2023
Current year income tax expense Adjustment forprioryear	3,915 6,442 149 50
Current year income taxes Deferred tax expense (recovery) Foreign withholdingand other taxes	4,064 6,492 3,517 (235) 1,382 594
	8,963 6,851

During the year ended March 31, 2024, the blended statutory rate was 23% (2023 – 23%).

The provision for income and other taxes reported differs from the amount computed by applying the combined Canadian Federal and Provincial statutory rate to the profit before income and other taxes. The reasons for this difference and the related tax effects are as follows:

Years ended March 31, (thousands of $, unless otherwise stated)	2024 2023
Combined statutorytax rate	23.00% 23.00%
Expected income tax Non-deductible costs Withholding taxes Effect of tax rates in foreign jurisdictions Adjustment for prior year Other	8,102 6,129 361 364 348 445 (183) (16) 149 50 186 (121)
	8,963 6,851

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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A continuity of the net deferred income tax assets and liability is detailed in the following tables:

		Recognized in	Business
(thousands of $)	April 1, 2022	Net Income	Combination	March 31, 2023
Taxable temporary differences:
SR&ED Investment tax credit	(189)	19	-	(170)
Deductible temporary differences:
Property and equipment	149	(229)	-	(80)
Right-of-use asset	1,479	174	-	1,653
Stock based compensation liability	770	271	-	1,041
Deferred income tax asset	2,209	235	-	2,444
		Recognized in	Business
(thousands of $)	April 1, 2023	Net Income	Combination	March 31, 2024
Taxable temporary differences:
SR&ED Investment tax credit	(170)	91	-	(79)
Property and equipment	(80)	164	-	84
Intangible assets	-	(4,608)	(813)	(5,421)
Deductible temporary differences:
Other current liability	-	(37)	350	313
Right-of-use asset	1,653	80	-	1,733
Stock based compensation liability	1,041	301	-	1,342
Federal loss carryforward	-	104	-	104
Foreign income tax credit carryforward	-	385	-	385
Deferred income tax asset (liability)	2,444	(3,520)	(463)	(1,539)

Prepaid income taxes and current income taxes payable have not been offset as the amounts relate to income taxes levied by different tax authorities on different taxable entities.

18. Share Capital:

(a) Authorized:

An unlimited number of common shares, an unlimited number of non-voting shares, and an unlimited number of preferred shares, issuable in series.

(b) Issued:

(b) Issued:
(thousands of shares)	Common shares
Balance, April 1, 2022	80,335
Issued on redemption of restricted share units	67
Issued on exercise of stock options	235
Balance, March 31, 2023	80,637
Balance, April 1, 2023	80,637
Issued on redemption of performance share units	15
Issued on redemption of restricted share units	53
Issued for cash on exercise of stock options	687
Balance, March 31, 2024	81,392

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

27

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(c) Stock-Based Compensation:

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense:

The following table summarizes stock-based compensation expense:
Years ended March 31, (thousands of $)	2024 2023
Equity-settled plans Cash-settledplans	859 5,433 659 2,658
Total stock-based compensation expense	6,292 3,317

Liability Recognized for Stock-Based Compensation[(1)]

The following table summarizes liabilities for the Company’s cash-settled plans:

The following table summarizes liabilities for the Company’s cash-settled	plans:
(thousands of $)	March 31, 2024 March 31, 2023
SARs RSUs PSUs DSUs	1,278 931 2,128 1,975 519 437 1,910 1,184
Total stock-based compensation liability	5,835 4,527
Current, recorded within trade payables and accrued liabilities (note 11) Long-term	3,242 2,542 2,593 1,985

(1) The intrinsic value of the vested awards at March 31, 2024 is $2.6 million.

The Company has several stock-based compensation plans, including a stock option plan, a share appreciation rights plan, a performance share unit and restricted share unit plan, and a deferred share unit plan.

The maximum number of common shares reserved for issuance under the Company’s security-based compensation plans is limited to 10% of the issued and outstanding common shares. Based on this calculation, at March 31, 2024, the Company may reserve up to 8,139,169 common shares for issuance under its security-based compensation plans.

(i) Stock Option Plan

The Company adopted a rolling stock option plan as of July 13, 2005, which was most recently reaffirmed by the Company’s shareholders on July 6, 2023. Stock options granted by the Company provide the holder with the right to purchase common shares at the market price on the grant date, subject to fulfilling vesting terms. The majority of the Company’s options vest over a three-year period, with fifty percent vesting on the first-year anniversary from the grant date and 25% vesting on each of the second- and third-year anniversary dates. In fiscal 2023, the Company granted stock options that vest when certain share price thresholds are achieved. All stock options have a five-year life.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

28

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The following table outlines changes in stock options:

Years ended March 31,	2024 2023
	Number of Options (thousands) Weighted Average Exercise Price ($/share) Number of Options (thousands) Weighted Average Exercise Price ($/share)
Outstanding at beginning of year Granted Exercised Forfeited/expired	5,017 5.21 3,680 6.38 376 8.52 3,196(1) 4.86 (687) 6.04 (236) 4.52 (313) 7.83 (1,623) 7.30
Outstandingat end ofyear	4,393 5.17 5,017 5.21
Options exercisable at end of year	1,131 5.01 1,573 6.14

(1) 2,525,000 stock options granted during the year ended March 31, 2023 are exercisable when specified share price targets are achieved.

The range of exercise prices of stock options outstanding and exercisable at March 31, 2024 is as follows:

			Outstanding		Exercisable
		Weighted
		Average	Weighted		Weighted
		Remaining	Average	Number of	Average
Exercise Price	Number of Options	Contractual Life	Exercise Price	Options	Exercise Price
($/option)	(thousands)	(years)	($/option)	(thousands)	($/option)
3.98 to 4.62	697	2.7	4.14	345	3.98
4.63 to 4.87	1,800	3.2	4.74	-	-
4.88 to 5.04	667	3.5	5.00	234	5.00
5.05 to 5.88	633	2.4	5.26	333	5.08
5.89 to 8.70	596	3.0	7.78	219	6.52
	4,393	3.0	5.17	1,131	5.01

The fair value of stock options granted during the year was estimated using the Black Scholes pricing model under the following assumptions:

assumptions:
Years ended March 31,	2024 2023
Fair value at grant date ($/option) Share price at grant date ($/share) Risk-free interest rate (%) Estimated hold period prior to exercise (years) Volatility in the price of common shares (%) Dividend yield per common share (%)	2.35 to 2.81 0.10 to 1.37 8.52 4.49 to 5.45 4.47 to 4.66 2.55 to 3.76 3 to 4 3 to 5 40 to 43 39 to 45 2.32 3.91 to 4.45

(ii) Share Appreciation Rights Plan

The Company adopted a share appreciation rights plan (“SAR Plan”) in November 2015. A share appreciation right (“SAR”) entitles the holder to receive a cash payment equal to the difference between the stated exercise price and the market price of the Company’s common shares on the date the SAR is exercised. SARs are granted to executive officers and employees residing and working outside of Canada.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

29

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The following table outlines changes in SARs:

The following table outlines changes in SARs:
Years ended March 31,	2024 2023
	Number of SARs (thousands) Weighted Average Exercise Price ($/SAR) Number of SARs (thousands) Weighted Average Exercise Price ($/SAR)
Outstanding at beginning of year Granted Exercised Forfeited/expired	957 6.47 1,395 7.11 131 8.52 304(1) 6.25 (345) 5.99 (23) 5.42 (180) 8.88 (719) 7.64
Outstandingat end ofyear	563 6.50 957 6.47
SARs exercisable at end of year	138 5.25 544 7.04

(1) 200,000 SARS granted during the year ended March 31, 2023 are exercisable when specified share price targets are achieved.

(iii) Share Unit Plans

Performance Share Units (PSUs) and Restricted Share Units (RSUs)

The Performance Share Unit and Restricted Share Unit Plan (“PSU & RSU Plan”) is open to all employees and contractors of the Company. Upon vesting, PSUs and RSUs can be exchanged for common shares of the Company or surrendered for cash at the option of the holder.

The International Employees PSU & RSU Plan includes substantially the same terms, conditions, and PSU performance criteria as the PSU & RSU Plan, with the main two exceptions being that (i) it is available only to employees and contractors residing and working outside of Canada and (ii) PSUs and RSUs under this plan can be redeemed for cash only.

Deferred Share Units (DSUs)

The DSU Plan was adopted in May 2017 and is limited to non-employee members of the Board of Directors. DSUs vest immediately but are redeemable for cash only after a director ceases Board of Director membership.

The following table summarizes the activity related to the Company’s share unit plans:

Years ended March 31, (thousands)	2024 2023
	RSUs PSUs DSUs RSUs PSUs DSUs
Outstanding at beginning of year Granted Exercised Forfeited/expired	542 68 163 722 165 123 158 87 57 305 3 82 (240) (38) (33) (273) - (42) (66) - - (212) (100) -
Outstanding at end of year	394 117 187 542 68 163

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

30

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(d) Earnings Per Share:

The following table summarizes the earnings and weighted average number of common shares used in calculating basic and diluted earnings per share:

diluted earnings per share:
Years ended March 31, (thousands except per share amounts)	2024 2023
	Earnings ($) Weighted average shares outstanding Earnings per share ($/share) Earnings ($) Weighted average shares outstanding Earnings per share ($/share)
Basic Dilutive effect of share-based awards	26,259 80,975 0.32 19,797 80,464 0.25 2,136 635
Diluted	26,259 83,111 0.32 19,797 81,099 0.24

During the year ended March 31, 2024, 164,000 awards (2023 – 233,000) awards) were excluded from the computation of the weighted average number of diluted shares outstanding because their effect was not dilutive.

19. Capital Management:

The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth, and acquisitions, and to maximize the return to its shareholders. The capital structure of the Company consists of cash, credit facilities and shareholders’ equity. The Company does not have any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital.

The Company’s policy is to pay quarterly dividends based on the Company’s overall financial performance and cash flow generation. Decisions on dividend payments are made on a quarterly basis by the Board of Directors. There can be no assurance as to the amount or payment of such dividends in the future.

The Company adjusts its capital structure in light of general economic conditions and the Company’s working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may pay dividends, buy back shares or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions not in the ordinary course of business.

20. Financial Instruments and Risk Management:

The Company’s financial instruments consist of financial assets which include cash, restricted cash, trade and other receivables, which are classified as and measured at amortized cost, which approximates their fair values, as well as financial liabilities and include trade payables and accrued liabilities (excluding stock-based compensation payable), acquisition holdback payable, and other long-term liabilities which are classified as other financial liabilities and, using level 2 inputs, are measured at amortized cost, which approximates their fair values. The acquisition earnout liability is contingent consideration and is classified as longterm and using level 3 inputs is recorded at an estimated fair value of $1.5 million as at March 31, 2024 ($nil – March 31, 2023). Adjustments to the estimated fair value will be recorded in the statement of operations and comprehensive income.

The different levels in the fair value hierarchy have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3: Inputs for the asset or liability that are not based on observable market data.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

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The fair value of contingent consideration is measured using a discounted cash flow analysis of expected cash flows in future periods. A 1% change in the discount rate could increase the Company’s determination of fair value by approximately $0.2 million as at March 31, 2024 (March 31, 2023 - $nil).

There were no transfers between the levels in the fair value hierarchy during the year ended March 31, 2024 and 2023.

Overview:

The Company is exposed to risks of varying degrees of significance and likelihood, which could affect its ability to achieve its strategic objectives for growth. The main objectives of the Company’s risk management process are to ensure that risks are properly identified and that the capital base is adequate in relation to those risks. The principal financial risks to which the Company is exposed are described below:

(a) Credit Risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligation and arises principally from the Company’s trade and other receivables. The amounts reported in the statements of financial position for trade receivables are net of expected credit losses, estimated by the Company’s management based on prior experience and their assessment of the current economic environment.

The Company’s trade receivables consist primarily of balances from customers operating in the oil and gas industry, both domestically and internationally, as the Company sells its products and services in approximately 60 countries worldwide. Some of these countries have greater economic and political risk than experienced in North America, and as a result there may be greater risk associated with sales in those jurisdictions. The Company manages this risk by invoicing for the full license term in advance for the majority of software license sales and by invoicing as frequently as the contract allows for consulting and contract research services. In cases where collectability is not deemed probable, revenue is recognized upon receipt of cash, providing all other criteria have been met. Historically, the Company has not experienced any significant losses related to individual customers or groups of customers in any particular geographic area. At March 31, 2024, the Company assessed credit risk related to its accounts receivable and established an allowance for doubtful accounts of $0.5 million (2023 – $6 thousand). In fiscal 2024, most of the allowance for doubtful accounts related to receivables from customers located in geopolitically unstable countries.

As at March 31, 2024, the Company has a concentration of credit risk with four domestic and international customers which have an outstanding balance of 5% or more of total trade and accrued receivables. These four customers represent 51% of total trade and accrued receivables. (2023 – 3 customers; 63%).

The carrying amount of trade and other receivables represents the maximum credit exposure. The maximum exposure to credit risk at March 31, 2024 was $36.5 million (2023 – $23.9 million). The aging of trade and other receivables at the reporting date was:

was:
(thousands of $)	March 31, 2024 March 31, 2023
Current 31-60 days 61-90 days Over 90 days	14,942 11,431 13,730 8,048 5,615 2,027 2,263 2,404
Balance, end of year	36,550 23,910

The Company assesses the creditworthiness of its customers on an ongoing basis and regularly monitors the amount and age of balances outstanding. Payment terms with the majority of customers are 30-90 days from invoice date; however, industry practice can extend these terms. Accordingly, the Company views the credit risk on these amounts as normal for the industry.

The Company minimizes the credit risk of cash by depositing only with a reputable financial institution in highly liquid interestbearing cash accounts.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

32

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(b) Market Risk

i. Foreign Exchange Risk

The Company operates internationally and primarily prices its products in either the Canadian or US dollar. This gives rise to exposure to market risks from changes in the foreign exchange rates between the Canadian and US dollar. Approximately 79% (2023 – 74%) of the Company’s revenues for the year ended March 31, 2024 were denominated in US dollars, and at March 31, 2024, approximately US $53.3 million (2023 – US $28.6 million) of the Company’s working capital was denominated in US dollars. The Company currently does not use derivative instruments to hedge its exposure to those risks, but since approximately 46% (2023 – 27%) of the Company’s total costs are also denominated in US dollars, they provide a partial economic hedge against the fluctuation in this currency exchange rate.

The Company’s operations are exposed to currency risk on US-dollar denominated financial assets and liabilities with fluctuations in the rate recognized as foreign exchange gains or losses in the consolidated statement of operations and comprehensive income. It is estimated that a one cent change in the US dollar would result in a net change of approximately $0.4 million to equity and net income for the year ended March 31, 2024. A weaker US dollar with respect to the Canadian dollar will result in a negative impact, while the reverse would result from a stronger US dollar.

ii. Interest Rate Risk

The Company has significant cash balances and no interest-bearing debt. The Company’s policy is to invest excess cash in interest-bearing deposits and/or guaranteed investment certificates issued by a reputable financial institution. The Company is exposed to interest cash flow risk from changes in interest rates on its cash balances. Based on the March 31, 2024 cash balance, each 1% change in the interest rate on the Company’s cash balance would change equity and net income for the year ended March 31, 2024 by approximately $0.5 million.

(c) Liquidity Risk

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due or can do so only at excessive cost. The Company manages liquidity risk through the management of its capital structure as outlined in note 19. The Company’s growth is financed through a combination of the cash flows from operations and its cash balances on hand. Given the Company’s available liquid resources as compared to the timing of the payments of its liabilities, management assesses the Company’s liquidity risk to be low. The Company monitors its expenditures by preparing annual budgets that are periodically updated. The Company’s trade payables are due within one year. At March 31, 2024, the Company has significant cash balances in excess of its obligations and approximately $0.7 million of the line of credit available for its use (note 22).

21. Commitments:

(a) Research Commitment:

CMG, in partnership with Shell Global Solutions International B.V. (“Shell”) at present, and also in partnership with Petroleo Brasileiro S.A. historically, is the developer of CoFlow, the newest generation of reservoir and production system simulation software.

On January 1, 2017, Shell and CMG entered into an agreement (the “CoFlow Agreement”) with an initial five-year term whereby CMG would be responsible for the research and development costs of CoFlow and Shell would be responsible for providing a contribution for the continuing development of the software.

On December 21, 2020, the CoFlow Agreement was amended when Shell exercised its right to request a five-year term extension, commencing January 1, 2022. All other terms and conditions in the CoFlow Agreement, including any related amendments, remain unchanged and in full force and effect during the extended term. In September 2021, CMG and Shell agreed that CMG would add and/or allocate up to six additional full-time employees in order to accelerate CoFlow development and support targeted CoFlow deployments, and Shell’s contribution would increase accordingly.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

33

Consolidated Financial Statements

During the year ended March 31, 2024, CMG recorded professional services revenue of $7.7 million (year ended March 31, 2023 - $7.7 million), and CoFlow costs of $7.6 million, to research and development expenses (year ended March 31, 2023 - $7.7 million).

(b) Commitments:

The Company’s commitments include operating cost commitments, short-term office leases, and an office lease in Norway that that has been committed but does not commence until subsequent to year-end:

The Company’s commitments include operating cost commitments, short-term office leases, and an that has been committed but does not commence until subsequent to year-end:	office lease in Norway that
(thousands of $)	March 31, 2024
Less than one year Between one and five years More than fiveyears	1,303
	5,259
	9,103
	15,665

22. Line of Credit:

The Company has arranged for a $2.0 million line of credit with its principal banker, which can be drawn down by way of a demand operating credit facility or may be used to support letters of credit. As at March 31, 2024, $1.3 million (March 31, 2023– $1.1 million) had been reserved on this line of credit for letters of credit supporting performance bonds.

23. Subsidiaries:

CMG Group is the beneficial owner of the entire issued share capital and controls all the votes of its subsidiaries. The principal activities of all the subsidiaries are the sale and support for the use of CMG Group’s software licenses. Transactions between subsidiaries are eliminated on consolidation.

The following is the list of CMG Group’s subsidiaries:

The following is the list of CMG Group’s subsidiaries:
	Country of
Subsidiary	Incorporation
Computer Modelling Group Inc.	Unites States
CMG Middle East FZ LLC	United Arab Emirates
CMG (Europe) Limited	United Kingdom
CMGL Services Corporation Inc.	Canada
CMG Collaboration Centre India Private Limited	India
CMG Holdings (USA) Inc.	United States
Bluware Headwave Ventures Inc.	United States
Bluware Inc.	United States
Bluware AS(1)	Norway

(1) Amalgamation of Hue AS and Kalkulo AS on February 14, 2024.

24. Related Parties:

(a) Intercompany Transactions:

The Company has nine wholly owned subsidiaries (note 23) that have intercompany transactions under the normal course of operations and are eliminated upon consolidation.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

34

Consolidated Financial Statements

(b) Key Management Personnel Compensation

For year ended March 31, 2024, and 2023, the key management personnel of the Company are the Company’s executive officers, heads of departments and Board of Directors. The key management personnel control approximately 2% of the outstanding shares of CMG at March 31, 2024. In addition to their salaries and director fees, as applicable, directors, executive officers and heads of departments also participate in the Company’s stock-based compensation plans (note 18(c)), which are available to almost all employees of the Company, with the exception of the DSU plan, which is only available to non-employee directors of the Company.

Key management personnel compensation comprised the following:

Key management personnel compensation comprised the following:
Years ended March 31, (thousands of $)	2024 2023
Salaries, bonus and employee benefits Termination benefits Stock-based compensation	5,573 585 2,646 5,273 1,973 1,685
	8,804 8,931

25. Subsequent Event:

On May 22, 2024, the Board of Directors declared a quarterly cash dividend of $0.05 per share on its common shares, payable on June 14, 2024 to all shareholders of record at the close of business on June 6, 2024.

Computer Modelling Group Ltd.

Notes to the Consolidated Financial Statements

35