Spin Master Corp. — Interim / Quarterly Report 2024

May 7, 2024

Spin Master Corp.

Condensed consolidated interim financial statements (unaudited) For the three months ended March 31, 2024 and March 31, 2023

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

Table of contents

Condensed consolidated interim statements of financial position ...........................................................................		1
Condensed consolidated interim statements of loss and comprehensive (loss) income .....................................		2
Condensed consolidated interim statements of changes in shareholders' equity .................................................		3
Condensed consolidated interim statements of cash flows ......................................................................................		4
Notes to the Condensed consolidated interim financial statements ........................................................................	5	- 31

Spin Master Corp. Condensed consolidated interim statements of financial position

		Mar 31,	Dec 31,
(Unaudited in US$ millions)	Notes	2024	2023
Assets
Current assets
Cash		205.5	705.7
Restricted cash	9	3.1	—
Trade receivables, net	10	285.9	414.4
Other receivables	10	62.4	60.0
Inventories, net	11	252.1	98.0
Income tax receivable	8	33.2	—
Prepaid expenses and other assets	12	44.7	40.9
		886.9	1,319.0
Non-current assets
Intangible assets	14	820.1	281.3
Goodwill	15	381.4	165.9
Right-of-use assets	24	170.4	53.6
Property, plant and equipment	13	65.1	32.6
Deferred income tax assets		161.5	110.8
Other assets	12	37.0	26.5
		1,635.5	670.7
Total assets		2,522.4	1,989.7
Liabilities
Current liabilities
Trade payables and accrued liabilities	16	270.2	385.4
Loans and borrowings	18	473.2	—
Provisions	19	28.0	32.1
Lease liabilities	24	33.5	11.4
Deferred revenue	17	12.7	11.0
Income taxpayable		—	6.6
		817.6	446.5
Non-current liabilities
Deferred income tax liabilities		221.9	59.1
Lease liabilities	24	124.1	50.7
Provisions	19	14.7	14.3
		360.7	124.1
Total liabilities		1,178.3	570.6
Shareholders’ equity
Share capital	20	783.7	783.4
Retained earnings		534.5	604.5
Contributed surplus		29.1	27.4
Accumulated other comprehensive(loss)income		(3.2)	3.8
Total shareholders’ equity		1,344.1	1,419.0
Total liabilities and shareholders’ equity		2,522.4	1,989.7

Approved by the Board of Directors on May 7, 2024.

The accompanying notes on pages 5 to 31 are an integral part of these Condensed consolidated interim financial statements.

1

Spin Master Corp. Condensed consolidated interim statements of loss and comprehensive (loss) income

		Three Months Ended Mar 31,	Three Months Ended Mar 31,
(Unaudited, in US$ millions, except earnings per share)	Notes	2024	2023
Revenue	3	316.2	271.4
Cost of sales	11	159.7	112.9
Gross Profit		156.5	158.5
Expenses
Selling, general and administrative	6	197.7	149.3
Depreciation and amortization	6	19.8	6.6
Other expense, net	4	1.2	4.4
Foreign exchange(gain)loss,net	7	(0.4)	4.3
Operating Loss		(61.8)	(6.1)
Interest income		(1.3)	(6.7)
Interest expense	5	12.8	3.1
Loss before income tax recovery		(73.3)	(2.5)
Income tax recovery	8	(18.5)	(0.6)
Net Loss		(54.8)	(1.9)
Loss per share
Basic	21	(0.53)	(0.02)
Diluted	21	(0.53)	(0.02)
Weighted average number of shares (in millions)
Basic	21	104.2	103.0
Diluted	21	106.3	106.6
		Three Months Ended Mar 31,
(Unaudited, in US$ millions)		2024	2023
Net Loss		(54.8)	(1.9)
Items that may be subsequently reclassified to Net (Loss) Income
Foreign currencytranslation(loss) gain		(7.0)	2.6
Other comprehensive(loss) income		(7.0)	2.6
Total comprehensive (loss) income		(61.8)	0.7

The accompanying notes on pages 5 to 31 are an integral part of these Condensed consolidated interim financial statements.

2

Spin Master Corp. Condensed consolidated interim statements of changes in shareholders' equity

					Accumulated
					other
		Share	Retained	Contributed	comprehensive
(Unaudited, in US$ millions)	Note	capital	earnings	surplus	(loss) income	Total
Balance at January 1, 2023		754.7	477.4	40.7	(21.0)	1,251.8
Net Loss		—	(1.9)	—	—	(1.9)
Other comprehensive income		—	—	—	2.6	2.6
Share-based compensation	20	—	—	4.8	—	4.8
Dividends declared	20	—	(4.7)	—	—	(4.7)
Shares issued upon settlement of long-term
incentive plan	20	30.8	—	(30.8)	—	—
Subordinate voting shares purchased and cancelled	20	(2.8)	(3.5)	—	—	(6.3)
Obligation for automatic sharepurchaseplan	20		(7.2)			(7.2)
Balance at March 31, 2023		782.7	460.1	**14.7 **	(18.4)	1,239.1
Balance at January 1, 2024		783.4	604.5	27.4	3.8	1,419.1
Net Loss		—	(54.8)	—	—	(54.8)
Other comprehensive loss		—	—	—	(7.0)	(7.0)
Share-based compensation	20	—	—	6.1	—	6.1
Dividends declared	20	—	(4.6)	—	—	(4.6)
Shares issued upon settlement of long-term
incentive plan	20	4.4	—	(4.4)	—	—
Subordinate voting shares purchased and cancelled	20	(4.1)	(4.3)	—	—	(8.4)
Obligation for automatic sharepurchaseplan	20	—	(6.3)	—	—	(6.3)
Balance at March 31, 2024		783.7	534.5	29.1	(3.2)	1,344.1

The accompanying notes on pages 5 to 31 are an integral part of these Condensed consolidated interim financial statements.

3

Spin Master Corp. Condensed consolidated interim statements of cash flows

		Three Months	Ended Mar 31,
(Unaudited, in US$ millions)	Notes	2024	2023
Operating activities
Net Loss		(54.8)	(1.9)
Adjustments to reconcile net loss to cash provided by operating activities
Income tax recovery	8	(18.5)	(0.6)
Interest expense (income)	5	8.5	(6.7)
Depreciation and amortization	6	34.8	17.9
(Gain) Loss on disposal of non-current assets	13, 14, 24	(0.4)	0.4
Interest and accretion expense	5	2.6	1.3
Amortization of Facility fee costs	5	0.4	0.1
Impairment of non-current assets	13, 14, 15	0.3	2.4
Unrealized foreign exchange (gain) loss, net	7	(5.7)	0.6
Share-based compensation expense	20	6.1	4.8
Net changes in non-cash working capital	22	70.1	5.4
Net change in non-cash provisions and other assets		(12.8)	4.5
Recognition of fair value adjustment on inventory sold	11	20.6	—
Income taxes paid		(21.7)	(39.2)
Income taxes received		3.6	—
Interest(paid)received		(8.8)	6.7
Cashprovided by (used in) operating activities		24.3	(4.3)
Investing activities
Investment in property, plant and equipment	13	(7.4)	(6.7)
Investment in intangible assets	14	(17.5)	(23.4)
Business acquisitions, net of cash acquired	26	(955.5)	(26.5)
Cash used in investing activities		(980.4)	(56.6)
Financing activities
Proceeds from loans and borrowings	18	525.0	—
Repayment of loans and borrowings	18	(50.0)	—
Payment of lease liabilities	24	(8.1)	(3.9)
Dividends paid	20	(4.6)	(4.6)
Repurchase of subordinate votingshares	20	(5.1)	(6.3)
Cashprovided by (used in) financing activities		457.2	(14.8)
Effect of foreign currencyexchange rate changes on cash		(1.3)	0.7
Net decrease in cash during the period		(500.2)	(75.0)
Cash,beginningofperiod		705.7	644.3
Cash, end of period		205.5	569.3

The accompanying notes on pages 5 to 31 are an integral part of these Condensed consolidated interim financial statements.

4

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

1. Description of business

Spin Master Corp. was formed by the amalgamation of Spin Master Corp. (formerly SML Investments Inc. which was incorporated on June 9, 2004 under the Business Corporations Act (Ontario)), SML Investments 2008 Inc. and Varadi Bee Corp. pursuant to the filing of articles of amalgamation under the Business Corporations Act (Ontario) on July 29, 2015. The Company is a leading global children's entertainment company, creating exceptional play experiences through its three creative centres: Toys, Entertainment and Digital Games. Its head and registered office is located at 225 King Street West, Suite 200, Toronto, Canada, M5V 3M2. Spin Master Corp. and its subsidiaries are together referred to, in these Condensed consolidated interim financial statements, as the “Company” or “Spin Master”.

The Company has three reportable operating segments: Toys, Entertainment and Digital Games (see Note 28).

On January 2, 2024, the Company completed the acquisition of MND Holdings I Corp ("Melissa & Doug") by acquiring all issued and outstanding capital stock. Melissa & Doug is a leading brand in early childhood play with offerings of open-ended, creative, and developmental toys. The results from the operations of Melissa & Doug are included in the Company's results from operations and financial position commencing January 2, 2024. For further information regarding the Company's acquisition of Melissa & Doug, refer to Note 26.

2. Summary of material accounting policy information

(A) Statement of compliance

These Condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the IASB, have been omitted or condensed. The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The same accounting policies, presentation and methods of computation have been followed in these Condensed consolidated interim financial statements as were applied in the preparation of the audited Company's Consolidated financial statements for the year ended December 31, 2023.

Effective January 1, 2024, the Company adopted the IASB issued Classification of Liabilities as Current or Noncurrent. The amendments to IAS 1 specify the requirements for classifying liabilities as current or non-current. The amendments also clarify the definition of a right to defer settlement, that a right to defer must exist at the end of the reporting period, that classification is unaffected by the likelihood that a company will exercise its deferral right, and that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. In addition, a requirement has been introduced whereby a company must disclose when a liability arising from a loan agreement is classified as non-current and the company's right to defer settlement is contingent on future covenants within twelve months. The adoption of this standard did not have any impact on these Condensed consolidated interim financial statements.

All financial information is presented in millions of United States dollars ("US$") and has been rounded to the nearest hundred thousand, except as otherwise indicated.

These Condensed consolidated interim financial statements and accompanying notes were approved and authorized for issuance by the Board of Directors of the Company on May 7, 2024.

(B) Basis of preparation

These Condensed consolidated interim financial statements include the accounts of Spin Master Corp. and its subsidiaries and should be read in conjunction with the Company’s audited Consolidated financial statements, including the notes thereto, for the year ended December 31, 2023.

The Company has assessed significant accounting judgments and estimates in preparing the Company’s Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023. The accounting policies, judgments and estimates as disclosed in Note 3 of the Company’s audited Consolidated financial statements for the year ended December 31, 2023 have been applied consistently in the preparation of these Condensed consolidated interim financial statements.

5

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

2. Summary of material accounting policy information (continued)

(C) Functional currency change

Effective January 1, 2024, the functional currency of Spin Master Ltd. ("SML"), a wholly owned subsidiary of Spin Master Corp., changed from the Canadian dollar to the US$. The US$ was determined to be the functional currency of the primary economic environment in which SML operates, as the majority of the operational and financing activities are now denominated in or influenced by the US$. Considering that the underlying transactions, events and conditions that justify the change in functional currency have developed gradually, and those of greater relevance took place towards the end of 2023 and beginning of 2024, the change was made prospectively on January 1, 2024.

3. Revenue

The Company earns revenue from the following primary sources: Toys, Entertainment and Digital Games.

	Three Months Ended Mar 31,	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Toy revenue	226.4	186.3
Entertainment revenue	43.8	37.6
Digital Games revenue	46.0	47.5
Revenue	316.2	271.4

4. Other expense, net

		Three Months Ended Mar 31,	Three Months Ended Mar 31,
(US$ millions)	Notes	2024	2023
Impairment on non-current assets	13, 14, 15	0.3	2.4
Acquisition related deferred incentive compensation		1.5	2.1
Legal settlement (recovery) expense		(0.6)	0.2
Acquisition related deferred consideration	19	(1.6)	—
Other		1.6	(0.3)
Other expense, net		1.2	4.4

Acquisition related deferred incentive compensation includes amounts that are contingent on the continued employment of key principals as well as the achievement of certain performance metrics, over their respective requisite service periods.

5. Interest expense

Interest expense
	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Interest on loans and borrowings	8.3	—
Bank fees and financing charges	1.5	1.7
Interest on lease liabilities and accretion expense	2.6	1.3
Amortization of Facilityfee costs	0.4	0.1
Interest expense	12.8	3.1

6

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

6. Expenses

Expenses include selling, general and administrative expenses and depreciation and amortization.

Selling, general and administrative expenses

Selling, general and administrative expenses
	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Administrative	123.7	88.3
Marketing	31.0	24.3
Selling	16.4	16.4
Distribution	19.0	14.0
Product development	7.6	6.3
Selling, general and administrative	197.7	149.3

Depreciation and amortization

		Three Months Ended Mar 31,	Three Months Ended Mar 31,
(US$ millions)	Notes	2024	2023
Property, plant and equipment
Moulds, dies and tools, included in cost of sales	13	5.5	5.2
Building and leasehold improvements	13	1.7	1.3
Equipment	13	2.1	0.5
Computer hardware	13	1.8	0.2
Equipment,included in cost of sales	13	—	0.1
		11.1	7.3
Intangible assets
Entertainment content development, included in cost of sales	14	8.2	4.7
Digital games and app development, included in cost of sales	14	1.3	1.3
Trademarks, licenses, IP & customer lists - definite life	14	3.4	1.2
Computer software	14	0.6	0.4
		13.5	7.6
Right-of-use assets	24	10.2	3.0
Depreciation and amortization		34.8	17.9
		Three Months Ended Mar 31,
(US$ millions)		2024	2023
Included in cost of sales		15.0	11.3
Included in expenses		19.8	6.6
Depreciation and amortization		34.8	17.9

7

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

7. Foreign exchange

Foreign exchange
	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Unrealized foreign exchange (gain) loss, net	(5.7)	0.6
Realized foreign exchange loss,net	5.3	3.7
Foreign exchange (gain) loss, net	(0.4)	4.3

Unrealized foreign exchange gains and losses are generated by the translation of monetary assets and liabilities denominated in a currency other than the functional currency and includes gains and losses related to the Company's hedging programs. Realized foreign exchange gains and losses are recognized when monetary assets and liabilities denominated in a currency other than the functional currency of the applicable entity are settled and includes gains and losses related to the Company's hedging programs. The Company periodically enters into derivative financial instruments such as foreign exchange forward contracts to manage foreign currency risk on cash flows denominated in currencies other than the US$ (see Note 27).

8. Income tax

The income tax recovery recognized in the Condensed consolidated interim statements of loss and comprehensive (loss) income comprises of the following:

	Three Months Ended Mar 31,	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Current income tax recovery	(21.9)	(0.5)
Deferred income tax expense(recovery)	3.4	(0.1)
Income tax recovery	(18.5)	(0.6)

The income tax recovery is calculated as follows:

	Three Months	Three Months	Ended Mar 31,
(US$ millions)	2024		2023
Loss before income tax recovery	(73.3)		(2.5)
Income tax recovery at Canadian statutory tax rate of 26.5%	(19.4)	26.5 %	(0.7)	26.5 %
Effect of:
Different tax rates of subsidiaries operating in other jurisdictions	2.8	(3.8) %	0.1	(2.5) %
Expense not deductible in determining taxable income	(1.1)	1.5 %	—	— %
Other	(0.8)	1.0 %	—	— %
Income tax recovery	(18.5)	**25.2 % **	(0.6)	24.0 %

The tax rates used for the reconciliations above are the Canadian statutory tax rates of Spin Master Corp., payable by corporate entities in the Company, on taxable profits under tax laws in the respective jurisdictions in which the Company operates.

9. Restricted cash

As at March 31, 2024, $3.1 million was included in a demand deposit cash account (December 31, 2023 - $nil million), which was pledged as cash collateral to a letter of credit facility.

8

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

10. Trade and other receivables, net

Trade receivables

	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Trade receivables	513.6	660.1
Provisions for sales allowances	(217.8)	(241.7)
Allowance for doubtful accounts	(9.9)	(4.0)
Trade receivables, net	285.9	414.4

Trade receivables disclosed above include any amounts that are past due as at the end of the reporting period.

Other receivables

Other receivables
	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Investment tax credits receivables	53.8	48.9
Sales tax receivables	6.0	4.1
Other	2.6	7.0
Other receivables	62.4	60.0

11. Inventories, net

	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Raw materials	3.3	2.7
Finishedgoods	248.8	95.3
Inventories, net	252.1	98.0

Inventories as at March 31, 2024 are net of $13.3 million for the provision of inventories to net realizable value (December 31, 2023 - $9.0 million).

The cost of inventories recognized as an expense in cost of sales during the three months ended March 31, 2024 was $129.6 million (2023 - $88.6 million).

The Company acquired $179.6 million of inventories as part of the acquisition of Melissa & Doug, of which $66.3 million relates to the fair value adjustment, representing the difference between inventory cost and its fair value. The fair value adjustment is recognized as an expense in cost of sales as the related inventories are sold. For the three months ended March 31, 2024, the Company recognized $20.6 million of the fair value adjustment in cost of sales, which decreased gross profit realized in the quarter.

9

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

12. Prepaid expenses and other assets

		Mar 31,	Dec 31,
(US$ millions)	Notes	2024	2023
Prepaid expenses		42.8	35.2
Advances on royalties		1.6	1.6
Unrealized foreign exchangegain on financial instruments		0.3	4.1
Prepaid expenses and other assets		44.7	40.9
		Mar 31,	Dec 31,
(US$ millions)	Notes	2024	2023
Minority interest and other investments		11.3	11.3
Investment in a limited partnership	27	3.7	3.7
Advances on royalties		5.2	5.0
Investment tax credits - non-current portion		5.4	4.6
Other non-current receivables		11.4	0.2
Unamortized Facilityfee costs	18	—	1.7
Other assets, non-current		37.0	26.5

Minority interest and other investments

In 2023, the Company invested $2.5 million in existing minority interest and other investments classified as FVTPL.

Minority interest and other investments classified as FVTOCI is comprised of equity instruments that the Company has irrevocably elected to recognize in this category. These are strategic investments, and the Company considers this classification to be more relevant.

During the three months ended March 31, 2024 and 2023, there were no minority interest and other investments acquired.

The carrying value of the seven minority interest and other investments held as at March 31, 2024 (December 31, 2023 - seven investments) were as follows:

		Carrying	value at,
	Initial	Mar 31,	Dec 31,
(US$ millions)	investment	2024	2023
Minority interest and other investments classified as FVTOCI	3.6	3.0	3.0
Minorityinterest and other investments classified as FVTPL	8.8	8.3	8.3
Minority interest and other investments	12.4	11.3	11.3

For the three months ended March 31, 2024, the Company did not recognize any gains or losses (2023 - $nil) on the minority interest and other investments in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

Investment in a limited partnership

For the three months ended March 31, 2024, the Company did not recognize any net unrealized gain (2023 - $nil). The Company did not recognize any distribution income for the three months ended March 31, 2024 (2023 - $nil).

From inception, the Company has paid $2.9 million and is obligated to pay the remaining $0.1 million upon receiving capital calls over the remaining term of the limited partnership agreement. The investment in a limited partnership is held for medium to long-term strategic purposes (see Note 27).

10

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

13. Property, plant and equipment

				Land, building
		Moulds, dies		and leasehold	Computer
(US$ millions)	Note	and tools	Equipment	improvements	hardware	Total
Cost
Balance at Dec 31, 2022		176.1	30.2	39.7	12.6	258.6
Additions		20.6	1.9	3.7	1.8	28.0
Disposals		(38.3)	(5.5)	(3.0)	(0.6)	(47.4)
Impairment		(0.9)	—	—	—	(0.9)
Assets acquired through business
combinations		0.4	—	—	—	0.4
Foreign currency translation		(2.2)	0.3	0.8	0.4	(0.7)
Balance at Dec 31, 2023		155.7	26.9	41.2	14.2	238.0
Additions		5.6	1.0	0.1	0.7	7.4
Disposals		(0.4)	(0.1)	—	—	(0.5)
Impairment		(0.3)	—	—	—	(0.3)
Assets acquired through business
combination	26	5.0	12.2	13.4	6.5	37.1
Foreign currencytranslation		(2.9)	(0.2)	(0.1)	(0.1)	(3.3)
Balance at Mar 31, 2024		162.7	39.8	54.6	21.3	278.4
Accumulated depreciation and impairment
Balance at Dec 31, 2022		(156.9)	(23.1)	(30.9)	(11.7)	(222.6)
Depreciation		(19.9)	(4.3)	(4.7)	(1.0)	(29.9)
Disposals		37.1	4.6	2.7	0.7	45.1
Foreign currencytranslation		3.2	(0.4)	(0.6)	(0.2)	2.0
Balance at Dec 31, 2023		(136.5)	(23.2)	(33.5)	(12.2)	(205.4)
Depreciation		(5.5)	(2.1)	(1.7)	(1.8)	(11.1)
Disposals		0.3	0.1	—	—	0.4
Foreign currencytranslation		2.4	0.2	0.1	0.1	2.8
Balance at Mar 31, 2024		(139.3)	(25.0)	(35.1)	(13.9)	(213.3)
Net carrying amount
Balance at Dec 31, 2023		19.2	3.7	7.7	2.0	32.6
Balance at Mar 31, 2024		23.4	14.8	19.5	7.4	65.1

At March 31, 2024, the Company assessed tangible assets for any indication of impairment and noted no indicators with the exception of those related to certain tooling assets. For the three months ended March 31, 2024, the Company recorded impairment of $0.3 million (2023 - $0.2 million) related to tooling in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

11

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

14. Intangible assets

			Trademarks,
			licenses, IP
			& customer	Entertainment	Digital game
		Brands -	lists -	content	and app	Computer
(US$ millions)	Note	indefinite	definite	development	development	software	Total
Cost
Balance at Dec 31, 2022		159.7	56.1	290.8	34.8	36.9	578.3
Additions1		3.3	—	54.0	19.1	3.0	79.4
Disposals		—	—	—	—	(0.1)	(0.1)
Impairment		—	—	(6.4)	(0.7)	(1.1)	(8.2)
Assets acquired through
business combination	26	12.5	3.7	—	—	—	16.2
Foreign currencytranslation		0.6	0.2	7.4	1.6	0.9	10.7
Balance at Dec 31, 2023		176.1	60.0	345.8	54.8	39.6	676.3
Additions		—	—	9.6	7.4	0.5	17.5
Assets acquired through
business combination	26	431.0	105.2	—	—	—	536.2
Foreign currencytranslation		—	(0.1)	0.1	(1.8)	—	(1.8)
Balance at Mar 31, 2024		607.1	165.1	355.5	60.4	40.1	1,228.2
Accumulated amortization
Balance at Dec 31, 2022		—	(36.7)	(213.7)	(17.7)	(30.4)	(298.5)
Amortization		—	(3.1)	(77.7)	(5.1)	(2.6)	(88.5)
Disposal		—	—	—	—	0.1	0.1
Foreign currencytranslation		—	(0.8)	(6.1)	(0.5)	(0.7)	(8.1)
Balance at Dec 31, 2023		—	(40.6)	(297.5)	(23.3)	(33.6)	(395.0)
Amortization		—	(3.4)	(8.2)	(1.3)	(0.6)	(13.5)
Disposal		—	—	—	—	(0.1)	(0.1)
Foreign currencytranslation		—	—	(0.1)	0.6	—	0.5
Balance at Mar 31, 2024		—	(44.0)	(305.8)	(24.0)	(34.3)	(408.1)
Net carrying amount
Balance at Dec 31, 2023		176.1	19.4	48.3	31.5	6.0	281.2
Balance at Mar 31, 2024		607.1	121.1	49.7	36.4	5.8	820.1

1 On April 14, 2023, the Company recorded an addition of $3.3 million in indefinite life brands as a result of the assets acquired from a games & puzzles company.

The Company’s Entertainment content development and Digital Games development assets are comprised primarily of internally generated intangible assets. As at March 31, 2024, the range of remaining useful life of these definite life intangible assets based on their net carrying amount was one to five years.

At March 31, 2024, the Company assessed intangible assets for any indication of impairment. The Company recorded no impairment for the three months ended March 31, 2024. For the three months ended March 31, 2023, $1.2 million of impairment related to content development projects, app development projects and components of computer software was recorded in Other expense, net within the Condensed consolidated interim statements of loss and comprehensive (loss) income.

15. Goodwill

For the three months ended March 31, 2024, $213.0 million of goodwill was recognized upon acquisition of Melissa & Doug (Note 26).

At March 31, 2024, the Company assessed goodwill for any indication of impairment and recorded no impairment during the three months ended March 31, 2024 (2023 - $1.0 million) in the Condensed consolidated interim statements of loss and comprehensive (loss) income. Impairment is recorded when the carrying amount of the asset exceeds its recoverable amount.

12

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

16. Trade payables and accrued liabilities

Trade payables and accrued liabilities
	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Trade payables	102.8	189.2
Accrued liabilities	167.4	196.2
Trade payables and accrued liabilities	270.2	385.4

Accrued liabilities are comprised of payroll related liabilities, accrued royalties, commodity tax, dividends payable, and other liabilities. As at March 31, 2024, $4.6 million of dividends payable is included in accrued liabilities (December 31, 2023 - $4.6 million) (see Note 20).

As at March 31, 2024, a restructuring liability of $0.4 million, expected to be paid in 2024 (December 31, 2023 - $3.5 million), related to the reduction in the Company's global workforce, is included in accrued liabilities with a corresponding expense recorded in Selling, general and administrative expenses in the Condensed consolidated interim statements of loss and comprehensive (loss) income (see Note 6).

17. Deferred revenue

Deferred revenue is comprised of advances on contracts relating to Entertainment revenue and subscriptions relating to Digital Games revenue. These amounts represent consideration received in advance of the Company fulfilling its performance obligations. As at March 31, 2024, the Company had deferred revenue of $12.7 million (December 31, 2023 - $11.0 million).

For the three months ended March 31, 2024, the Company recognized revenue of $3.5 million (2023 - $1.6 million) relating to amounts previously deferred.

18. Loans and borrowings

Loans and borrowings
	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Unsecured debt (at amortized cost)
Facility (i)	250.0	—
Acquisition Facility (ii)	225.0	—
	475.0	—
Less:
Unamortized financingcosts	(1.8)	—
Total unamortized financing costs	(1.8)	—
Current	473.2	—
Non-current	—	—
Total loans and borrowings	473.2	—

13

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

18. Loans and borrowings (continued)

Unsecured Debt

Bank facilities

• i. The Company has an unsecured revolving credit facility (the "Facility") with a borrowing capacity of $510.0 million which matures on September 28, 2026, and contains certain financial covenants. The Facility also has an option which permits the Company to increase the total capital available by an additional $200.0 million. Total financing costs of $1.8 million, which include Facility amendment fees and related legal fees, are offset in Loans and borrowings and are being amortized over the term of the amended and restated agreement. This facility is subject to the maintenance of certain financial covenants.

As at March 31, 2024, there was $1.5 million (December 31, 2023 - $1.5 million) in letters of credit outstanding under the Facility. As at March 31, 2024, there was $250.0 million drawn (December 31, 2023 - $nil) under the Facility.

• ii. On November 20, 2023, the Company entered into a non-revolving credit facility (the "Acquisition Facility") with a borrowing capacity of $225.0 million which matures on November 19, 2024, and contains certain financial covenants. The Acquisition Facility was used to fund the acquisition of Melissa & Doug. Total financing costs of $0.8 million, which include facility arranger fees, agency fees and related legal fees, are offset in Loans and borrowings and are being amortized over the term of the Acquisition Facility. This facility is subject to the maintenance of certain financial covenants.

As at March 31, 2024, there was $225.0 million drawn (December 31, 2023 - $nil) under the Acquisition Facility.

For the three months ended March 31, 2024, the weighted average interest rates on the Facility and Acquisition Facility were both 6.6% (2023 - N/A).

As at December 31, 2023, unamortized financing costs of $1.7 million were recognized in Prepaid expenses and other assets in the Condensed consolidated interim statements of financial position .

The Company was in compliance with all financial covenants as at March 31, 2024 and December 31, 2023.

Bank overdraft facility

The Company has an uncommitted overdraft facility agreement (the "European Facility") for $15.9 million (equivalent to €15.0 million). The European Facility will be used, if needed, to fund working capital requirements in Europe. As at March 31, 2024, the outstanding balance was $nil (December 31, 2023 - $nil).

Secured Debt

Bank facilities

The Company has an uncommitted revolving credit facility to finance television and film production (the "Production Facility"). The limit of the credit facility is $7.4 million (equivalent to CA$10.0 million). As at March 31, 2024, the outstanding balance of the Production Facility was $nil (December 31, 2023 - $nil).

14

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

19. Provisions

	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Deferred Consideration(i)	24.9	26.7
Defectives(ii)	12.7	14.5
Supplier liabilities(iii)	5.1	5.2
Provisions	42.7	46.4
Current	28.0	32.1
Non-current	14.7	14.3
Provisions	42.7	46.4

(US$ millions)	Deferred consideration(i)	Defectives(ii)	Supplier liabilities(iii)	Total
Dec 31, 2022	26.7	13.6	5.4	45.7
Provisions recognized	14.2	9.7	1.5	25.4
Accretion recognized	1.2	—	—	1.2
Payments	(8.7)	(9.0)	(1.7)	(19.4)
Revaluation ofprovisions	(6.7)	0.2	—	(6.5)
Dec 31, 2023	26.7	14.5	5.2	46.4
Provisions recognized	0.9	1.0	0.2	2.1
Accretion recognized	0.4	—	—	0.4
Payments	(1.5)	(3.1)	(0.3)	(4.9)
Revaluation ofprovisions	(1.6)	0.3	—	(1.3)
Mar 31, 2024	24.9	12.7	5.1	42.7

• (i) Certain business combinations include agreement terms associated with royalty payables or deferred incentive compensation and are based on the achievement of certain financial performance criteria and/ or continued employment. The accretion of the royalties is recorded in Interest expense in the Condensed consolidated interim statements of loss and comprehensive (loss) income. Accrued deferred incentive compensation is recorded in Other expense, net in the Condensed consolidated interim statements of loss and comprehensive (loss) income. Subsequent reviews of financial performance may result in the recording of additional considerations or reductions of the existing provision and are recorded in Other expense, net in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

• (ii) Defectives occur when the end consumer returns faulty goods to the Company’s customers. Customers without a fixed allowance for defectives are eligible for a credit for the cost of the product if returned as defective by the end consumer. The estimate of defectives is made based on the class and nature of the product and reduces the revenue figure in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

• (iii) Supplier liabilities represent the estimated amounts to be paid to suppliers for lower than expected volumes purchased, resulting in the supplier having excess raw material and/or finished goods inventory. While such payments are not legally required, the Company may compensate suppliers to maintain supplier relationships. The supplier obligation is based on the Company’s estimate of the cost of the supplier’s excess raw material and/or finished goods inventory. The provision for supplier obligations is recorded in cost of sales in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

The Company is involved in various routine legal proceedings incidental to the ordinary course of its business. The Company believes that the outcome of all pending legal proceedings in the aggregate is not probable to have a material adverse effect on the Company’s business, financial condition and/or its results of operations. However, considering the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period.

15

Spin Master Corp.

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

20. Share capital

(a) Authorized as at March 31, 2024 and December 31, 2023

• Unlimited number of multiple voting shares with no par value;

• Unlimited number of subordinate voting shares with no par value; and

• Unlimited number of preferred shares issuable in series with no par value.

Multiple voting shares and subordinate voting shares entitle the holder to receive dividends, and to receive the proceeds of liquidation, dissolution or winding up the Company in proportion to the number of shares held. These rights are subject to the prior rights of the holders of any shares ranking prior to the multiple voting shares and the subordinate voting shares.

The holders of the multiple voting shares are entitled to 10 votes for each share held and the holders of the subordinate voting shares are entitled to 1 vote for each share held.

Multiple voting shares are convertible at any time into an equivalent number of subordinate voting shares. Subordinate voting shares do not have any redemption or conversion rights.

Preferred shares of each series will be entitled to preference over the multiple voting shares and subordinate voting shares with respect to the payment of dividends and to receive the proceeds of liquidation, dissolution or winding up of the Company.

	Three Months Ended Mar 31, Year Ended Dec 31, 2024 2023
	Shares (millions) Amount (US$ millions) Shares (millions) Amount (US$ millions)
Multiple voting shares: Outstanding, beginning and end of year Subordinate voting shares: Outstanding, beginning of period Issuance of subordinate voting shares Subordinate votingsharespurchased and cancelled	68.7 350.5 68.7 350.5 35.0 432.9 34.2 404.2 0.8 4.4 1.2 33.4 (0.3) (4.1) (0.4) (4.7)
Outstanding, end ofperiod	35.5 433.2 35.0 432.9
Shares issued and outstanding, end of year	104.2 783.7 103.7 783.4

On February 28, 2024, the Company launched, and the Toronto Stock Exchange ("TSX") accepted the notice to launch a Normal Course Issuer Bid (the "NCIB"). Under the NCIB, the Company repurchases its subordinate voting shares on the open market at its discretion and subject to compliance with applicable securities laws and the rules of the TSX. The NCIB period commenced on March 4, 2024, and will end on the earlier of March 3, 2025, and the completion of purchases under the NCIB, of up to 2,984,559 subordinate voting shares, which represented approximately 10% of the "public float" (within the meaning of the rules of the TSX) upon launch of the NCIB.

On February 28, 2024, the Company entered into an automatic share purchase plan ("ASPP") to purchase the subordinate voting shares under the NCIB for a period up to April 30, 2024. In the first quarter of 2024, the Company repurchased and cancelled 333,300 subordinate voting shares at a cost of $8.4 million, of which $5.1 million was paid and $3.3 million was paid subsequent to March 31, 2024. Subsequent to March 31, 2024, the Company repurchased a further 255,621 subordinate voting shares for cancellation at a cost of $6.3 million.

In 2023, the Company repurchased and cancelled 397,700 subordinate voting shares at a cost of $10.5 million.

16

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

20. Share capital (continued)

The following table summarizes the Company’s activities under the NCIB for the three months ended March 31, 2024:

	Three Months	Ended Mar 31
(US$ millions, unless otherwise noted)	2024	2023
Subordinate voting shares repurchased under the NCIB for cancellation (number of
shares)	333,300	241,500
Consideration	8.4	6.3
Reduction in share capital	4.1	2.8
Premium on repurchased and cancelled shares recorded in retained earnings	4.3	3.5

The Company paid its first quarterly dividend in the third quarter of 2022.The following table provides a summary of dividends declared and paid in 2024 and 2023.

dividends declared and	paid in 2024 and 2023.
			Dividend per Share	Dividends declared and
Declaration Date	Record Date	Payment Date	(CA$)	accrued(in US$ millions)
May 7, 2024	Jun 28, 2024	Jul 12, 2024	0.12	—
Feb 28, 2024	Mar 29, 2024	Apr 12, 2024	0.06	4.6
Nov 1, 2023	Dec 29, 2023	Jan 12, 2024	0.06	4.6
Aug 2, 2023	Sep 29, 2023	Oct 13, 2023	0.06	4.6
May 3, 2023	Jun 30, 2023	Jul 14, 2023	0.06	4.7
Mar 8, 2023	Mar 31, 2023	Apr 14, 2023	0.06	4.6
Nov 2, 2022	Dec 30, 2022	Jan 13, 2023	0.06	4.6

During the three months ended March 31, 2024, dividends of $4.6 million (2023 - $4.6 million) were paid.

In 2023, the Company implemented a Dividend Reinvestment Plan (the "DRIP"). The DRIP provides the Company’s eligible shareholders with the opportunity to have all or a portion of the cash dividends declared on their subordinate voting shares or multiple voting shares automatically reinvested into additional subordinate voting shares of the Company on an ongoing basis.

(b) Share-based plans

The total expense recognized for employee services received during the three months ended for March 31, 2024 equity-settled transactions is shown in the following table:

equity-settled transactions is shown in the following table:
	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Equity-settled RSUs and PSUs	6.1	4.2

Share based compensation expense is recorded in administrative expenses in the Condensed consolidated interim statements of loss and comprehensive (loss) income with a corresponding amount recorded in contributed surplus.

Long-Term Incentive Plan

The Company has an equity based compensation plan providing for the issuance of securities from treasury under which the grants will be made by the Company. Under the Long-Term Incentive Plan ("LTIP"), the Board may at its discretion from time to time, grant share options, share units, in the form of Restricted Stock Units ("RSUs") and Performance Share Units ("PSUs"), stock appreciation rights, restricted stock and any other equity based awards. As at March 31, 2024, the aggregate number of subordinate voting shares that may be issued pursuant to grants under the LTIP may not exceed 9,669,599 (December 31, 2023 - 9,669,599). As at March 31, 2024, 1,672,176 (December 31, 2023 - 2,952,265) subordinate voting shares remained reserved for issuance under the LTIP.

The Company settled vested LTIP grants through the issuance of shares. For the three months ended March 31, 2024, $4.4 million (2023 - $30.8 million) was transferred from contributed surplus to share capital, which is net of $12.0 million related to a reclassification between share capital and contributed surplus for historical LTIP settlements.

17

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

20. Share capital (continued)

Restricted Stock Units and Performance Share Units

RSUs and PSUs are granted to Eligible Persons by the Company’s Board. The Board determines the Grant Value and Valuation Date for each Grant. RSUs and PSUs vest from the date of grant in accordance with the vesting schedule determined by the Board and set out in the applicable Grant Agreement for each Eligible Person.

Below is a summary of the activity related to RSUs outstanding as at March 31, 2024 and December 31, 2023.

	Mar 31,	Dec 31,
(number of units)	2024	2023
Outstanding, beginning of period	1,146,027	1,082,423
Granted	778,721	676,978
Exercised	(361,356)	(562,775)
Forfeited	(2,759)	(50,599)
Outstanding, end of period	1,560,633	1,146,027

Below is a summary of the activity related to PSUs outstanding as at March 31, 2024 and December 31, 2023.

	Mar 31,	Dec 31,
(number of units)	2024	2023
Outstanding, beginning of period	722,624	1,006,332
Granted	474,303	404,009
Exercised	(418,802)	(665,519)
Forfeited	(405)	(22,198)
Outstanding, end of period	777,720	722,624

Deferred Share Units ("DSUs")

DSUs are an incentive program for Board members of the Company, whereby Board members may elect to receive remuneration in the form of DSUs, cash or combination thereof. The DSUs vest immediately upon grant but cannot be exercised until the Board member ceases to serve on the Company's Board.

Below is a summary of the activity related to the DSUs outstanding as at March 31, 2024 and December 31, 2023.

	Mar 31,	Dec 31,
(number of units)	2024	2023
Outstanding, beginning of period	256,680	187,864
Granted	19,176	72,506
Exercised	—	(3,690)
Outstanding, end of period	275,856	256,680

The fair value of the DSUs is determined to be the share price on the grant date. Share based compensation expense of $0.5 million (2023 - $0.5 million) was recorded for the three months ended March 31, 2024.

There was no mark to market gain or loss on DSUs outstanding (2023 - loss of $0.6 million) for the three months ended March 31, 2024.

The share-based compensation and mark to market loss or gain related to DSUs are reflected in administrative expenses in the Condensed consolidated interim statements of loss and comprehensive (loss) income. A corresponding amount was recorded in accrued liabilities.

For the three months ended March 31, 2024, the total share-based compensation expense of $6.1 million (2023 - $4.8 million) includes the equity-settled RSU and PSU share based compensation of $6.1 million (2023 - $4.2 million) and the mark to market loss on DSUs of $nil (2023 - loss of $0.6 million).

18

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

20. Share capital (continued)

Share Purchase Options (“Options”)

The Company has one share option plan for key employees, which forms part of their LTIP. Under this plan, the exercise price of each option equals the market price of the Company’s shares on the date of grant and the Options have a maximum term of ten years. The Options vest ratably over a four-year vesting period.

The Company did not issue any Options in 2024 and 2023. As at March 31, 2024, 476,224 (December 31, 2023 - 476,224) Options are outstanding with a weighted average exercise price of CA$34.78 (December 31, 2023 - CA$34.78).

21. Earnings per share

Earnings per share
	Three Months Ended Mar 31,
(US$ millions, except per share amounts)	2024	2023
Net Loss	(54.8)	(1.9)
Weighted average number of shares (in millions)	104.2	103.0
Dilutive effect of equity1	2.1	3.6
Diluted weighted average number of shares (in millions)	106.3	106.6
Basic earnings per share	(0.53)	(0.02)
Diluted earnings per share	(0.53)	(0.02)

1 The dilutive effect of equity includes equity instruments which comprise of employee stock options.

22. Net changes in non-cash working capital

	Three Months	Ended Mar 31,
(US$ millions)	2024	2023
(Increase) decrease in assets:
Trade receivables, net1	227.0	111.5
Other receivables	(3.6)	(7.4)
Inventories, net2	5.5	(2.3)
Prepaid expenses and other assets	(3.3)	(11.3)
	225.6	90.5
Increase (decrease) in liabilities:
Trade payables and accrued liabilities	(154.4)	(79.4)
Deferred revenue	1.7	2.7
Provisions	(2.8)	(8.4)
	(155.5)	(85.1)
Net changes in non-cash working capital	70.1	5.4

1 Includes a change in presentation from trade receivables to non-current other assets of $11.4 million in 2024.

2 Excludes fair value adjustment to Melissa & Doug's inventory of $66.3 million recorded as part of the acquisition on January 2, 2024 (Note 11).

23. Related party transactions

In the normal course of operations, the Company engaged the services of a law firm whose managing partner is also a member of the Company's Board of Directors, which have been made on terms equivalent to those that prevail in arm's length transactions.

For the three months ended March 31, 2024, related party transactions were included in administrative expenses in the Condensed consolidated interim statements of loss and comprehensive (loss) income of the Company in the amount of $0.3 million (2023 - $0.2 million). As at March 31, 2024, amounts payable to the director's law firm were $0.2 million (December 31, 2023 - $0.4 million).

Subsequent to March 31, 2024, the Company paid incentive compensation related liabilities of $1.5 million on behalf of three members of the Company's Board of Directors.

19

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

24. Leases

Amounts recognized in the Condensed consolidated interim statements of financial position

Leased office buildings represented approximately 90% of the right-of-use assets with the remainder comprised of leases of distribution centres, information technology ("IT") equipment, and vehicles.

The Company has categorized classes of assets for leases of office buildings and distribution centres as "Building" and IT equipment and vehicles are as "Equipment". The weighted average lease term for both classes is 11 years (2023 - 11 years). The carrying value of right-of-use assets and depreciation by class of underlying assets are as follows:

(US$ millions)	Building	**Equipment **	Right-of-use assets	Right-of-use assets
Jan 1, 2023	62.1	0.8		62.9
Additions	0.6	0.5		1.1
Disposals	(3.0)	(0.3)		(3.3)
Modifications	3.5	0.1		3.6
Depreciation	(11.1)	(0.5)		(11.6)
Foreign currencytranslation	0.9	—		0.9
Dec 31, 2023	53.0	0.6		53.6
Additions	40.6	0.1		40.7
Assets acquired through business combinations (Note 26)	85.0	0.4		85.4
Modifications	1.6	—		1.7
Depreciation	(9.8)	(0.1)		(10.3)
Foreign currencytranslation	(0.9)	(0.1)		(0.8)
Mar 31, 2024	169.5	0.9		170.4
(US$ millions)			Lease liabilities
Jan 1, 2023				71.2
Additions				1.0
Disposals				(3.6)
Modifications				3.5
Interest expense				3.9
Lease payments				(14.9)
Foreign currencytranslation				1.0
Dec 31, 2023				62.1
(US$ millions)			Lease liabilities
Additions				40.7
Liabilities assumed upon acquisition (Note 26)				60.7
Modifications				1.0
Interest expense				2.2
Lease payments				(8.1)
Foreign currencytranslation				(1.0)
Mar 31, 2024				157.6
		Mar 31,		Dec 31,
(US$ millions)			2024	2023
Lease liabilities, current			33.5	11.4
Lease liabilities,non-current			124.1	50.7
Total lease liabilities			157.6	62.1

Extension and termination options are included in a number of building and equipment leases across the Company. These terms are used to maximize operational flexibility in terms of managing contracts. Extension and termination options are exercisable only by the Company and not by the respective lessor.

20

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

25. Commitments for expenditures

As at March 31, 2024, the Company had minimum guarantees due to licensors of $51.9 million (December 31, 2023 - $54.2 million).

26. Business acquisitions

Acquisition of MND Holdings I Corp

On January 2, 2024, the Company, through its subsidiaries, completed the acquisition of all issued and outstanding capital stock of MND Holdings I Corp. Melissa & Doug is a leading brand in early childhood play with offerings of open-ended, creative, and developmental toys. Management performed an analysis under IFRS 3, Business Combinations (“IFRS 3”) and has determined that the assets and processes acquired comprised a business and accounted for the transaction as a business combination using the acquisition method of accounting. The addition of Melissa & Doug complements the Company's existing offering by adding complementary early childhood products and further diversifies its portfolio across new channels and formats. This acquisition has been reported in the Toys segment within the Preschool, Infant & Toddler and Plush product category beginning from the date of acquisition.

On January 2, 2024, cash consideration paid was $991.7 million, which includes $36.2 million in cash acquired, resulting in net purchase consideration of $955.5 million. As of March 31, 2024, purchase consideration was reduced by $2.5 million for working capital adjustments, resulting in purchase consideration of $989.2 million. The purchase consideration was allocated to the identifiable intangible assets based on their estimated fair values of $536.2 million (related to brands and customer relationships), tangible assets of $503.4 million and assumed liabilities of $263.4 million with the remaining $213.0 million allocated to goodwill. The Company funded the acquisition with $466.7 million cash and $525.0 million of debt. The debt was sourced through a drawdown of $300.0 million from the Company's Facility and $225.0 million from the Acquisition Facility (see Note 18).

The Company incurred $9.5 million in transaction related costs which were included in administrative expenses in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

The preliminary purchase price allocation is based on management's current best estimates of fair value. The actual allocation to certain identifiable net assets could vary as the purchase price allocation is finalized. The Company has one year to finalize the fair value of net tangible assets, goodwill, and intangible assets. The tables below summarize the preliminary purchase allocation of the purchase consideration of $989.2 million:

Assets acquired and liabilities assumed at the date of acquisition

Assets acquired and liabilities assumed at the date of acquisition
(US$ millions)	Fair value as at Jan 2, 2024
Assets acquired
Cash	36.2
Restricted Cash	3.1
Inventories, net	179.6
Prepaid expenses and other assets	3.0
Trade receivables, net	104.7
Deferred income tax assets	53.1
Intangible assets	536.2
Other assets	1.2
Property, plant and equipment	37.1
Right-of-use assets	85.4
	1,039.6
Liabilities assumed
Trade payables and accrued liabilities	39.6
Deferred income tax liabilities	161.6
Lease liabilities	60.7
Income tax payable	0.7
Provisions	0.8
	263.4
Fair value of identifiable net assets acquired	776.2

21

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

26. Business acquisitions (continued)

Business acquisitions(continued)
Goodwill arising on acquisition
Purchase consideration	989.2
Fair value of identifiable net assets acquired	776.2
Goodwill arising from transaction	213.0

Goodwill arose on the acquisition as the consideration paid effectively included amounts for the benefit of expected revenue growth and future market development. These benefits are not recognized separately from goodwill as they do not meet the recognition criteria for identifiable intangible assets. As at the date of acquisition, $213.0 million of goodwill is not expected to be deductible for income tax purposes.

Net cash outflow on acquisition

Net cash outflow on acquisition
Cash consideration	991.7
Less: cash balance acquired	36.2
Net cash outflow on acquisition	955.5

Impact of acquisition on the results of the Company

Included in the Company's financial results for the three months ended March 31, 2024 is $40.4 million in revenue and $19.1 million in operating loss attributable to the acquisition. Given the date of the acquisition on January 2, 2024, actual revenue and operating loss attributable to the acquisition are indicative of the results for the three months ended March 31, 2024, if the acquisition had occurred on January 1, 2024.

Summary of prior year acquisitions

Acquisition of certain assets from 4D Brands International Inc

On January 17, 2023, the Company acquired certain assets from 4D Brands International Inc. and 4D Cityscape Worldwide Limited, (collectively, the “Vendors”) creators of puzzle games. Management performed an analysis under IFRS 3 and has determined that the assets and processes acquired comprised a business and accounted for the transaction as a business combination using the acquisition method of accounting. This acquisition complements the Company’s existing games and puzzles offering and has been reported in the Toys segment within the Activities, Games & Puzzles and Plush product category and included in the Games and Puzzles cash generating unit (“CGU”) beginning from the date of acquisition.

The total purchase consideration of $18.9 million is comprised of $14.6 million cash consideration and $4.1 million contingent consideration related to the estimated fair value of future royalties as well as certain performance metrics. The contingent consideration is recorded in provisions and contingent liabilities in the Consolidated statements of financial position.

Goodwill arose on the acquisition as the consideration paid effectively included amounts for the benefit of expected revenue growth and future market development. These benefits are not recognized separately from goodwill as they do not meet the recognition criteria for identifiable intangible assets. As at the date of acquisition, $9.3 million of goodwill is expected to be deductible for income tax purposes and is being amortized for tax purposes over 15 years.

The total purchase consideration includes $4.1 million in deferred payments for future royalties recorded in provisions in the Condensed consolidated interim statements of financial position. The future royalties are payable to the vendor upon the achievement of key performance indicators over a five-year period. The potential undiscounted amount of all future payments that the Company could be required to make under this contingent consideration arrangement is between $nil and $7.4 million.

22

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

26. Business acquisitions (continued)

Acquisition of certain assets from Innovation First International, Inc.

On February 2, 2023, the Company acquired certain assets from Innovation First, Inc., Innovation First International Inc., Innovation First Labs, Inc., Innovation First Logistics., Inc. Management performed an analysis under IFRS 3, and has determined that the assets and processes acquired comprised a business and therefore, accounted for the transaction as a business combination using the acquisition method of accounting. This acquisition is an opportunity for Spin Master to enter the niche market of robotic toys and grow the HEXBUG brand. The acquired business has been reported in the Toys segment within the Wheels & Action product category and included in the Wheels & Action cash generating unit (“CGU”) beginning from the date of acquisition.

The total purchase consideration of $14.6 million is comprised of $12.9 million cash consideration and $1.4 million contingent consideration related to the estimated fair value of future royalties. The contingent consideration is recorded in provisions and contingent liabilities in the Condensed consolidated interim statements of financial position.

Goodwill arose on the acquisition as the consideration paid effectively included amounts for the benefit of expected revenue growth and future market development. These benefits are not recognized separately from goodwill as they do not meet the recognition criteria for identifiable intangible assets. As at the date of acquisition, $3.1 million of goodwill is expected to be deductible for income tax purposes and is being amortized for tax purposes over 15 years.

The total purchase consideration includes $1.4 million in deferred payments for future royalties. The contingent consideration is recorded in provisions in the Condensed consolidated interim statements of financial position. The future royalties are payable to the vendor upon the achievement of key performance indicators over a seven-year period. The potential undiscounted amount of all future payments that the Company could be required to make under this contingent consideration arrangement is between $nil and $3.7 million.

Assets acquired and liabilities recognized at the date of acquisition

	4D Brands	Innovation First
	International Inc	International, Inc.
	Fair value as at	Fair value as at
(US$ millions)	Jan 17, 2023	Feb 2, 2023
Assets acquired
Inventories	0.7	2.9
Prepaid expenses and other assets	0.4	0.5
Property, plant and equipment	—	0.4
Intangible assets	8.5	7.7
Fair value of identifiable net assets acquired	9.6	11.5

Goodwill arising on acquisition

	4D Brands	Innovation First
	International Inc	International, Inc.
Cash consideration	14.6	12.9
Purchase price adjustment	0.2	0.3
Present value of future royalties	4.1	1.4
Total purchase consideration	18.9	14.6
Fair value of identifiable net assets acquired	9.6	11.5
Goodwill arising from transaction	9.3	3.1

Net cash outflow on acquisition

	4D Brands	Innovation First
	International Inc	International, Inc.
Cash consideration	14.6	12.9
Less: advancepaid in 2022	0.5	0.5
Net cash outflow on acquisition	14.1	12.4

23

Spin Master Corp.

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

27. Financial instruments and risk management

Market risk

Foreign currency risk

Due to the structure of the Company’s international operations, it is exposed to foreign currency risk driven by fluctuations in exchange rates. Risk arises because the value of monetary assets, liabilities, revenues and expenditures arising from transactions denominated in foreign currencies may vary due to changes in exchange rates (“transaction exposures”) and because the non-US dollar denominated financial statements of the Company’s subsidiaries may vary on translation into the US dollar presentation currency (“translation exposures”). These exposures could impact the Company’s earnings and cash flows.

The Company periodically enters into derivative financial instruments such as foreign exchange forward contracts to manage its foreign currency risk on cash flows denominated in currencies other than the US dollar.

As at March 31, 2024, the Company is committed under outstanding foreign exchange contracts representing a total net sell commitment of $79.7 million (December 31, 2023 - net sell commitment of $74.7 million). These foreign exchange contracts have maturity dates varying from June 2024 to March 2025. For the three months ended March 31, 2024, net realized losses on the Company’s matured foreign exchange contracts were $1.8 million (2023 - realized losses of $4.2 million) and are included in the Condensed consolidated interim statements of loss and comprehensive (loss) income.

		Notional value:
As at Mar 31, 2024		foreign currency	Notional value:	Unrealized
(in millions)		(Sell)/Buy	US$	(loss) gain: US$
Foreign exchange contracts
Buy US$	GBP	(4.5)	(5.6)	(0.1)
Buy US$	EUR	(23.5)	(25.5)	—
Buy US$	MXN	(249.0)	(13.4)	(1.0)
Buy US$	AUD	(5.8)	(3.8)	—
Sell US$	CAD	172.0	126.9	0.3
Sell US$	JPY	151.9	1.1	(0.1)
Sell US$	HKD	—	—	—
Total			79.7	(0.9)

		Notional value:
As at Dec 31, 2023		foreign currency	Notional value:	Unrealized
(in millions)		(Sell)/Buy	US$	(loss) gain: US$
Foreign exchange contracts
Buy US$	GBP	(14.5)	(17.6)	(0.8)
Buy US$	EUR	(46.5)	(50.9)	(0.7)
Buy US$	MXN	(311.5)	(15.7)	(2.0)
Buy US$	AUD	(5.5)	(3.7)	(0.1)
Sell US$	CAD	212.9	157.1	4.0
Sell US$	JPY	320.7	2.2	0.1
Sell US$	HKD	25.7	3.3	—
Total			74.7	0.5

Interest rate risk

Interest rate risk is the risk that the Company’s financial assets and liabilities will increase or decrease in value due to a change in interest rates. The Company's Facility and Acquisition Facility bear interest at variable rates. As a result, the Company is exposed to interest rate cash flow risk due to fluctuations in lenders' base rates.

On March 27, 2024, the Company entered into interest rate swap agreements with an aggregate notional of $140.0 million, effective on April 1, 2024, maturing in four tranches until December 31, 2025. The interest rate swap is a derivative financial instrument. The Company’s swap agreement will be measured at fair value with gains and losses in fair value presented in interest expense in the Company’s Condensed consolidated interim statements of loss and comprehensive (loss) income.

24

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

27. Financial instruments and risk management (continued)

Fair value measurements

The following table presents the fair value of financial assets and financial liabilities. The carrying values of the Company’s financial instruments approximate their fair values with the exception of foreign exchange forward contracts, Investment in a limited partnership and minority interest and other investments which are recorded at fair value.

value.
	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Financial assets
Cash	205.5	705.7
Restricted cash	3.1	—
Trade receivables, net	285.9	414.4
Other receivables	62.4	60.0
Other assets:
Other non-current receivables	11.4	1.9
Minority interest and other investments	11.3	11.3
Investment in a limited partnership	3.7	3.7
Investment tax credits - non-current portion	5.4	4.6
Unrealized foreign exchangegain	0.3	4.1
Financial assets	589.0	1,205.7
Financial liabilities
Trade payables and accrued liabilities	270.2	385.4
Loans and borrowings	473.2	—
Financial liabilities	743.4	385.4

With the exception of foreign exchange forward contracts, Investment in a limited partnership and minority interest and other investments described below, all other financial instruments are categorized within Level 1 of the fair value hierarchy.

The fair value of foreign exchange forward contracts at March 31, 2024 resulted in an unrealized gain of $0.3 million, which is recorded in Other assets (December 31, 2023 - $4.1 million) and an unrealized loss of $1.2 million recorded in accrued liabilities (December 31, 2023 - $2.3 million). These fair values are categorized within Level 2 of the fair value hierarchy. The fair values of over-the-counter derivative financial instruments are based on broker or observable market rates. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest and exchange rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument for the Company and counterparty when appropriate. The fair value of foreign exchange contracts is estimated based on forward exchange rates observable at the end of the reporting period and contract forward rates. Realized and unrealized gains and losses on derivative financial instruments may be offset by realized and unrealized losses and gains on the underlying exposures being hedged and are recorded in earnings as they occur.

The fair value of the investment in a limited partnership as at March 31, 2024 is recorded in Other assets at $3.7 million (December 31, 2023 - $3.7 million). For the three months ended March 31, 2024, the Company recognized $nil (2023 - $nil) in net unrealized gain and $nil million (2023 - $nil) in net realized gain in Other expense, net. During the three months ended March 31, 2024, the Company received $nil (2023 - $nil) of distribution income in net realized gain related to the investment.

This fair value of the investment in a limited partnership is categorized within Level 3 of the fair value hierarchy. The fair value is estimated using various valuations techniques through the partnership based on the type of investment held by the fund. The quantitative unobservable inputs used in the fair value measurement are not developed by the Company and include assumptions regarding long-term revenue growth rates and discount rates, among others.

From inception, the Company has paid $2.9 million and is obligated to pay the remaining $0.1 million upon receiving capital calls over the remaining term of the limited partnership agreement. The investment in a limited partnership is held for medium to long-term strategic purposes.

25

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

27. Financial instruments and risk management (continued)

The fair value of the minority interest and other investments recorded in other assets are as follows:

	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Minority interest and other investments classified as FVTOCI	3.0	3.0
Minorityinterest and other investments classified as FVTPL	8.3	8.3
Minority interest and other investments	11.3	11.3

For the three months ended March 31, 2024 and 2023, there were no gains or losses recognized for the minority interest and other investments classified as FVTPL in the Condensed consolidated interim statements of loss and comprehensive (loss) income within Other expense, net.

For the three months ended March 31, 2024 and 2023, there were no gains or losses recognized for minority interest and other investments classified as FVTOCI in the Consolidated statements of earnings and comprehensive income within Other comprehensive loss.

These investments are categorized within Level 3 of the fair value hierarchy. The fair value of these investments is estimated using various valuation techniques. The quantitative unobservable inputs used in the fair value measurement are not developed by the Company and include assumptions regarding long-term revenue growth rates and discount rates, among others.

28. Segment information

Spin Master is a global children's entertainment company with a portfolio that includes children’s products, brands, and entertainment content spanning toys, games, licensed products, film and television programming and digital games.

The Company has three reportable operating segments, which are as follows:

(i) Toys

• (ii) Entertainment

• (iii) Digital Games

The Toys segment engages in the creation, design, manufacturing, licensing, and marketing of toys, games, and products around the world. The Entertainment segment engages in the creation and production of multi-platform content, stories and characters in original shows, short-form series, and films. The Digital Games segment engages in the creation of digital games, which include subscription services. The Company also presents Corporate & Other which includes certain corporate costs, foreign exchange and merger and acquisition-related costs, as well as fair value gains and losses and distribution income on minority interest and other investments.

The Chief Operating Decision Maker ("CODM") measures total segment performance based on Adjusted EBITDA, as reported internally to management.

26

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

28. Segment information (continued)

Segment revenue and operating results

The Company’s results from operations by reportable operating segment for the three months ended March 31, 2024 and March 31, 2023 are as follows:

(US$ millions)			Q1 2024
			Digital	Corporate &
	Toys	Entertainment	Games	Other	Total
Revenue	226.4	43.8	46.0	—	316.2
Operating (Loss) Income	(90.8)	28.6	13.2	(12.8)	(61.8)
Adjustments:
Fair value adjustment for inventories acquired1	20.6	—	—	—	20.6
Transaction and integration costs2	6.2	—	—	10.5	16.7
Share based compensation	4.2	0.4	0.8	0.7	6.1
Restructuring and other related costs	2.4	0.1	0.5	—	3.0
Amortization of intangible assets acquired	1.7	—	—	—	1.7
Acquisition related deferred incentive compensation	0.8	—	0.7	—	1.5
Impairment of property, plant and equipment	0.3	—	—	—	0.3
Foreign exchange gain	—	—	—	(0.4)	(0.4)
Legal settlement recovery	—	—	—	(0.6)	(0.6)
Acquisition related contingent consideration	(1.6)	—	—	—	(1.6)
Total Adjustments	34.6	0.5	2.0	10.2	47.3
Depreciation and amortization3	23.7	7.3	2.1	—	33.1
Adjusted EBITDA	(32.5)	36.4	17.3	(2.6)	18.6

1 Relates to the fair value adjustment to Melissa & Doug's inventory recorded as part of the acquisition on January 2, 2024.

2 Professional fees and integration costs incurred relating to acquisitions (including Melissa & Doug), including $9.5 million of transaction costs.

3 Depreciation and amortization excludes $1.7 million of amortization of intangible assets acquired with Melissa & Doug.

(US$ millions)				Q1 2024
				Digital	Corporate &
	Toys		Entertainment	Games	Other	Total
Capital expenditures		9.2	7.8	7.9	—	24.9

27

Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

Spin Master Corp.

28. Segment information (continued)

(US$ millions)			Q1 2023
			Digital	Corporate &
	Toys	Entertainment	Games	Other	Total
Revenue	186.3	37.6	47.5	—	271.4
Operating (Loss) Income	(41.8)	29.3	16.2	(9.8)	(6.1)
Adjustments:
Share based compensation	3.4	0.3	0.6	1.1	5.4
Foreign exchange loss	—	—	—	4.3	4.3
Restructuring and other related costs	3.1	0.1	0.6	—	3.8
Acquisition related deferred incentive compensation	0.7	—	1.4	—	2.1
Impairment of intangible assets	—	0.2	0.2	0.8	1.2
Impairment of goodwill	1.0	—	—	—	1.0
Transaction costs	—	—	—	0.6	0.6
Impairment of property, plant and equipment	0.2	—	—	—	0.2
Legal settlement	—	—	—	0.2	0.2
Total Adjustments	8.4	0.6	2.8	7.0	18.8
Depreciation and amortization	12.0	3.7	2.0	0.2	17.9
Adjusted EBITDA	(21.4)	33.6	21.0	(2.6)	30.6
(US$ millions)			Q1 2023
			Digital	Corporate &
	Toys	Entertainment	Games	Other	Total
Capital expenditures	7.8	18.4	3.9	—	30.1

28

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

28. Segment information (continued)

Revenue reported by segment above represents revenue generated from external customers. There was no intersegment revenue in any year.

The following table provides a reconciliation of the Company's consolidated Adjusted EBITDA to Income before income tax expense for the three months ended March 31, 2024 and March 31, 2023:

	Three Months Ended Mar 31	Three Months Ended Mar 31
(US$ millions)	2024	2023
Revenue from reportable segments	316.2	271.4
Adjusted EBITDA	18.6	30.6
Depreciation and amortization1	(34.8)	(17.9)
Fair value adjustment for inventories acquired2	(20.6)	—
Transaction and integration costs3	(16.7)	(0.6)
Share based compensation	(6.1)	(5.4)
Restructuring and other related costs	(3.0)	(3.8)
Acquisition related deferred incentive compensation	(1.5)	(2.1)
Impairment of property, plant and equipment	(0.3)	(0.2)
Impairment of goodwill	—	(1.0)
Impairment of intangible assets	—	(1.2)
Foreign exchange gain (loss)	0.4	(4.3)
Legal settlement recovery (expense)	0.6	(0.2)
Acquisition related contingent consideration	1.6	—
Operating Loss	(61.8)	(6.1)
Add (Deduct):
Interest income	1.3	6.7
Interest expense	(12.8)	(3.1)
Loss before income tax expense	(73.3)	(2.5)

1 Depreciation and amortization for the calculation of Adjusted EBITDA includes $1.7 million (Q1 2023 - $nil) of amortization of intangible assets acquired with Melissa & Doug.

2 Relates to the fair value adjustment to Melissa & Doug's inventory recorded as part of the acquisition on January 2, 2024.

3 Professional fees and integration costs incurred relating to acquisitions (including Melissa & Doug), including $9.5 million of transaction costs.

29

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

28. Segment information (continued)

Revenue from major product categories

Spin Master’s Toys segment is organized into four major product categories as follows:

• (i) Preschool, Infant & Toddler and Plush

• (ii) Activities, Games & Puzzles and Dolls & Interactive

• (iii) Wheels & Action

• (iv) Outdoor

The Company’s revenues based on its major product categories are as follows:

The Company’s revenues based on its major product categories are as follows:
	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Preschool, Infant & Toddler and Plush1	122.8	82.6
Activities, Games & Puzzles and Dolls & Interactive	80.5	62.6
Wheels & Action	40.7	43.7
Outdoor	20.1	27.4
Toy Gross Product Sales2	264.1	216.3
Sales Allowances	(38.2)	(30.0)
Toy Net Sales	225.9	186.3
Toy- Other Revenue	0.5	—
Toy Revenue	226.4	186.3
Entertainment revenue	43.8	37.6
Digital Games revenue	46.0	47.5
Revenue	316.2	271.4

1 Melissa & Doug is included within the Preschool, Infant & Toddler and Plush product categories beginning from the date of acquisition.

2 Toy Gross Product Sales represent sales of the Company’s products to customers, excluding sales allowances.

Geographical information

Revenue by geographical area is based on the location of the customers and non-current assets are based on geographic location of the entity which holds the assets. The North American geographic area is comprised of the United States and Canada. The European geographic area is comprised of the United Kingdom, France, Italy, the Netherlands, Germany, Austria, Switzerland, Belgium, Luxembourg, Slovakia, Hungary, Romania, Czech Republic, Poland, Turkey, Greece, Portugal and Spain. The Rest of World is comprised of Hong Kong, China, Vietnam, India, Australia, New Zealand, Japan and Mexico, and all other areas of the world serviced by the Company’s third party distribution network. Entertainment and Digital Games revenue are tracked on a global basis and are presented as such in the table below.

The Company's revenues are derived from the following geographical areas:

The Company's revenues are derived from the following geographical areas:
	Three Months Ended Mar 31,
(US$ millions)	2024	2023
North America	154.6	105.5
Europe	74.3	76.0
Rest of World	35.2	34.8
Toy Gross Product Sales	264.1	216.3
Sales Allowances	(38.2)	(30.0)
Toy Net Sales	225.9	186.3
Toy- Other Revenue	0.5	—
Toy Revenue	226.4	186.3
Entertainment revenue	43.8	37.6
Digital Games revenue	46.0	47.5
Revenue	316.2	271.4

Toy gross product sales for North America include amounts attributable to the United States of $147.1 million (2023 - $99.8 million) and Canada of $7.4 million (2023 - $5.7 million) for the three months ended March 31, 2024.

30

Spin Master Corp. Condensed consolidated interim financial statements for the three months ended March 31, 2024 and March 31, 2023

28. Segment information (continued)

Non-current assets by major geographic region are detailed as follows:

Non-current assets by major geographic region are detailed as follows:
	Mar 31,	Dec 31,
(US$ millions)	2024	2023
Non-current assets
North America	1,332.0	422.8
Europe	88.6	85.6
Rest of World	29.9	26.7
Non-current assets	1,450.5	535.1
Other	185.0	135.6
Total non-current assets	1,635.5	670.7

Other includes non-current assets not directly attributable to a specific geographic area.

Non-current assets for North America include assets attributable to Canada of $167.7 million as at March 31, 2024 (December 31, 2023 - $157.5 million).

Major customers

Sales to the Company's three largest customers accounted for 47.0% (2023 - 39.4%) of Toy gross product sales for the three months ended March 31, 2024. The Toys segment sells products to each of the Company’s three largest customers. Other than the top three customers, which have remained the same as compared to the comparative period, no other single customer contributed 10% or more to Toy gross product sales for the three months ended March 31, 2024 and 2023.

	Three Months Ended Mar 31,	Three Months Ended Mar 31,
(US$ millions)	2024	2023
Toy gross product sales
Customer 1	53.6	35.1
Customer 2	35.5	32.9
Customer 3	35.1	17.3
Total	124.2	85.3

31