Stingray Group Inc. — Annual Report 2022

Jun 8, 2022

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BASIS OF PREPARATION AND FORWARD-LOOKING STATEMENTS

The following is the Management’s Discussion and Analysis (“MD&A”) of the results of operations and financial position of Stingray Group Inc., (“Stingray” or “the Corporation”), and should be read in conjunction with the Corporation’s audited consolidated financial statements and accompanying notes for the years ended March 31, 2022 and 2021. This MD&A reflects information available to the Corporation as at June 7, 2022. Additional information relating to the Corporation is also available on SEDAR at www.sedar.com.

This MD&A contains forward-looking information within the meaning of applicable Canadian securities laws. This forward-looking information includes, but is not limited to, statements with respect to management’s expectations regarding the future growth, results of operations, performance and business prospects of the Corporation. This forward-looking information relates to, among other things, our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimations and intentions, and may also include other statements that are predictive in nature, or that depend upon or refer to future events or conditions. Statements with the words “could”, “expect”, “may”, “will”, “anticipate”, “assume”, “intend”, “plan”, “believes”, “estimates”, “guidance”, “foresee”, “continue” and similar expressions are intended to identify statements containing forward-looking information, although not all forward-looking statements include such words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events.

Although management believes the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are based on the opinions, assumptions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to the following risk factors : increases in royalties and tariffs or restricted access to music rights; our dependence on PayTV providers; the rapidly evolving audio and video entertainment industry; competition from other content providers and other media companies; the expansion of our operations into international markets; our rapid growth and our growth strategy; our acquisitions, business combinations and joint ventures; our reliance on third party hardware, software and related services; our dependence on key personnel; exchange rate fluctuations; economic and political instability in emerging countries; royalty calculation methods; rapid technological and industry changes; development of new or alternative media technologies ; unavailability of additional funding; failure to generate cash revenues; reliance on our credit facilities; costly and protracted litigation in defence of copyrighted content; our inability to protect our proprietary technology; our inability to maintain our corporate culture; unfavourable economic conditions; our exposure to foreign privacy and data security laws; unauthorized and pirated music and video content; natural catastrophic events and interruption by man-made problems; pandemics, epidemics and other health risks; additional income tax liabilities; maintaining our reputation; litigation and other claims; credit risk; liquidity risk; failure to comply with the Canadian Radio-television and Telecommunications Commission (“CRTC”) requirements; failure to maintain or renew our CRTC licences; the increase in broadcasting licence fees payable by us; unfavourable changes in government regulation affecting our industry.

In addition, if any of the assumptions or estimates made by management prove to be incorrect, actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A. Such assumptions include, but are not limited to, the following: our ability to generate sufficient revenue while controlling our costs and expenses; our ability to manage our growth effectively; the absence of material adverse changes in our industry or the global economy; trends in our industry and markets; the absence of any changes in law, administrative policy or regulatory requirements applicable to our business, including any change to our licences with the CRTC; minimal changes to the distribution of the pay audio services by Pay-TV providers in light of recent CRTC policy decisions; our ability to manage risks related to international expansion; our ability to maintain good business relationships with our clients, agents and partners; our ability to expand our sales and distribution infrastructure and our marketing; our ability to develop products and technologies that keep pace with the continuing changes in technology, evolving industry standards, new product introductions by competitors and changing client preferences and requirements; our ability to protect our technology and intellectual property rights; our ability to manage and integrate acquisitions; our ability to retain key personnel; and our ability to raise sufficient debt or equity financing to support our business growth. Accordingly, prospective purchasers are cautioned not to place undue reliance on such statements. All of the forward-looking information in this MD&A is qualified by these cautionary statements. Statements containing forward-looking information contained herein are made only as of the date of this MD&A. The Corporation expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumption underlying them, whether as a result of new information, future events or otherwise, except as required by law.

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KEY PERFORMANCE INDICATORS

For the three-month period ended March 31, 2022 (“Q4 2022”):

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$72.6 M $4.5 M $22.1 M
▲ 21.6% from Q4 2021 Or $0.06 per share ▼ 9.7% from Q4 2021
Revenues Net income Cash flow from
operating activities
Or $0.31 per share
$21.0 M $11.8 M $11.8 M
▼ 11.1% from Q4 2021 Or $0.17 per share ▼ 14.3% from Q4 2021
Adjusted EBITDA [(1)] Adjusted Net income [(1)] Adjusted free cash
flow [(1)]
Or $0.17 per share
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For the year ended March 31, 2022 (“Fiscal 2022”):

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$282.6 M $33.3 M $83.7 M
▲ 14.0% from Fiscal 2021 Or $0.47 per share ▼ 19.7% from Fiscal 2021
Revenues Net income Cash flow from
operating activities
Or $1.17 per share
$99.3 M $56.4 M $56.9 M
▼ 13.1% from Fiscal 2021 Or $0.79 per share ▼ 23.4% from Fiscal 2021
Adjusted EBITDA [(1)] Adjusted Net income [(1)] Adjusted free cash
flow [(1)]
Or $0.80 per share
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Note:

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

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FINANCIAL AND BUSINESS HIGHLIGHTS

Highlights of the fourth quarter ended March 31, 2022

Compared to the quarter ended March 31, 2021 (“Q4 2021”):

• Revenues increased 21.6% to $72.6 million from $59.7 million;

• Adjusted EBITDA[(1)] decreased 11.1% to $21.0 million from $23.6 million. Adjusted EBITDA[(1)] by segment was $14.5 million or 31.9% of revenues for Broadcasting and Commercial Music, $7.9 million or 29.0% of revenues for Radio and $(1.4) million for Corporate;

• Net income was $4.5 million ($0.06 per share) compared to $12.1 million ($0.17 per share);

• Adjusted Net income[(1)] was $11.8 million ($0.17 per share) compared to $12.0 million ($0.16 per share);

• Cash flow from operating activities decreased 9.7% to $22.1 million ($0.31 per share) compared to $24.5 million ($0.34 per share);

• Adjusted free cash flow[(1)] decreased 14.3% to $11.8 million ($0.17 per share) compared to $13.8 million ($0.19 per share);

• Net debt to Pro Forma Adjusted EBITDA[(1)] ratio of 3.16x, compared to 2.81x; and

• 80,200 shares were repurchased and cancelled for a total of $0.6 million compared to 967,415 shares for a total of $6.8 million.

Highlights of the year ended March 31, 2022

Compared to the year ended March 31, 2021 (“Fiscal 2021”):

• Revenues increased 14.0% to $282.6 million from $247.9 million;

• Adjusted EBITDA[(1)] decreased 13.1% to $99.3 million from $114.3 million. Adjusted EBITDA[(1)] by segment was $58.3 million or 36.7% of revenues for Broadcasting and Commercial Music, $46.2 million or 37.4% of revenues for Radio and $(5.2) million for Corporate;

• Net income was $33.3 million ($0.47 per share) compared with $45.1 million ($0.61 per share);

• Adjusted Net income[(1)] of $56.4 million ($0.79 per share) compared with $62.9 million ($0.86 per share);

• Cash flow from operating activities decreased 19.7% to $83.7 million ($1.17 per share) compared to $104.2 million ($1.42 per share);

• Adjusted free cash flow[(1)] decreased 23.4% to $56.9 million ($0.80 per share) compared to $74.4 million ($1.01 per share);

• Net debt to Pro Forma Adjusted EBITDA[(1)] ratio of 3.16x, compared to 2.81x; and

• 2,106,000 shares repurchased and cancelled for a total of $15.0 million compared to 1,530,180 shares for a total of $10.2 million.

Note:

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

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Additional business highlights for the fourth quarter and subsequent events:

• On May 12, 2022, the Corporation announced that METRO Inc. had joined the Stingray Retail Media Network. Under the agreement, the Corporation is responsible for exclusive sales representation of all in-store digital audio advertising within approximately 1,100 METRO network of food stores under several banners in Quebec and Ontario including Metro, Metro Plus, Super C and Food Basics, as well as drugstores primarily under Jean Coutu and Brunet, Metro Pharmacy and Food Basics Pharmacy banners.

• On April 20, 2022, the Corporation announced that it had reached an agreement for the distribution of a suite of free adsupported channels (FAST channels) to TCL smart TVs in Australia, Brazil, India, Mexico and the United States. The new services within the TCL app include Qello Concerts by Stingray, Stingray Karaoke, Stingray Classica, Stingray DJAZZ, Stingray CMusic, Stingray Naturescape and Stingray Music channels for users to access at no extra cost.

• On April 19, 2022, the Corporation announced that Walmart Canada had joined the Stingray Retail Media Network. Under the agreement, the Corporation is responsible for exclusive sales representation, in partnership with the Walmart Connect sales team, of all in-store digital audio advertising within the national Walmart Canada retail footprint.

• On April 6, 2022, the Corporation launched Stingray All Good Vibes channels with Amazon’s Prime Video Channels in Australia, a paid add-on subscription exclusive to Prime members. Prime members now have access to subscribe to Qello Concerts by Stingray, Stingray Karaoke, Stingray Classica, Stingray DJAZZ, and Stingray Naturescape. The launch showcased the quality and diversity of the Corporation's growing product portfolio and its strength in reaching new audiences.

• On March 23, 2022, the Corporation declared a dividend of $0.075 per subordinate voting share, variable subordinate voting share and multiple voting share. The dividend will be payable on or around June 15, 2022, to shareholders on record as of May 31, 2022.

• On March 14, 2022, the Corporation announced that it had launched 17 free ad-supported channels (FAST channels) on the streaming platform Galaxy TV in Canada and the United States.

• On March 1, 2022, the Corporation announced a partnership with Leger, the largest Canadian-owned market research and analytics firm, to measure the effectiveness of retail-based digital audio advertising in Canada. Leger will conduct surveys to demonstrate that advertising campaigns connected to the Stingray Retail Media Network drive tangible results.

• On February 23, 2022, the Corporation announced a partnership with TikTok, the leading destination for short-form mobile video, to launch TikTok Radio. The collaboration will bring TikTok’s top trending music and artists to the Corporation’s audience across multiple platforms.

• On February 8, 2022, the Corporation declared a dividend of $0.075 per subordinate voting share, variable subordinate voting share and multiple voting share. The dividend was paid on March 15, 2022 to shareholders on record as of February 28, 2022.

• On January 5, 2022, the Corporation announced that it had acquired InStore Audio Network, the largest in-store audio advertising network in the United States, reaching 100 million shoppers each week in over 16,000 grocery retailers and pharmacies across the US for total consideration of up to approximately $59.0 million subject to a specific earn out mechanism set forth in the purchase agreement

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

(in thousands of Canadian dollars, except per share amounts)	3 months March 31, 2022 Q4 2022 March 31, 2021 Q4 2021	12 months March 31, 2022 Fiscal 2022 March 31, 2021 Fiscal 2021 Recast(3) March 31, 2020 Fiscal 2020 $ % of revenues $ % of revenues $ % of revenues 282,626 100.0 %247,857 100.0 % 306,721 100.0 % 189,954 67.1 %140,876 56.8 % 190,381 62.0 % 35,544 12.6 % 38,692 15.6 % 40,302 13.1 % 6,119 2.2 % (1,199) (0.5) % 42,822 14.0 % 2 0.0 % 3,787 1.5 % (6,550) (2.1) % 8,707 3.1 % 4,637 1.9 % 24,104 7.9 %
	$ % of revenues $ % of revenues
Revenues Operating expenses Depreciation, amortization and write-off Net finance expense (income)(1) Change in fair value of investments Acquisition, legal, restructuring and other expenses	72,644 100.0 % 59,740 100.0 % 53,593 73.8 % 38,365 64.2 % 9,239 12.7 % 9,821 16.4 % (769) (1.1) % (7,284) (12.2) % 12 0.0 % – 0.0 % 5,912 8.1 % 2,714 4.5 %
Income before income taxes Income taxes	4,657 6.5 % 16,124 27.1 % 191 0.3 % 4,047 6.8 %	42,300 15.0 % 61,064 24.7 % 15,662 5.1 % 9,013 3.2 % 15,960 6.5 % 1,692 0.5 %
Net income	4,466 6.2 % 12,077 20.3 %	33,287 11.8 % 45,104 18.2 % 13,970 4.6 %
Adjusted EBITDA(2) 21,023 28.9 % 23,638 39.6 % Adjusted Net income(2) 11,780 16.2 % 11,981 20.1 % Cash flow from operating activities 22,127 30.5 % 24,514 41.0 % Adjusted free cash flow(2) 11,833 16.3 % 13,808 23.1 % Net debt(2) 369,082 – 326,405 – Net debt to Pro Forma Adjusted EBITDA(2) 3.16x – 2.81x – Net income per share basic 0.06 – 0.17 – Net income per share diluted 0.06 – 0.17 – Adjusted Net income per share basic(2) 0.17 – 0.17 – Adjusted Net income per share diluted(2) 0.17 – 0.16 – Cash flow from operating activities per share basic 0.32 – 0.34 – Cash flow from operating activities per share diluted 0.31 – 0.34 – Adjusted free cash flow per share Basic and diluted(2) 0.17 – 0.19 – Revenues by segment Broadcasting and Commercial Music 45,584 62.7 % 35,780 59.9 % Radio 27,060 37.3 % 23,960 40.1 %		99,269 35.1 %114,268 46.1 % 118,086 38.5 % 56,389 20.0 % 62,855 25.4 % 55,908 18.2 % 83,663 29.6 %104,246 42.1 % 88,145 28.7 % 56,933 20.1 % 74,359 30.0 % 78,350 25.5 % 369,082 – 326,405 – 361,251 – 3.16x – 2.81x – 3.01x – 0.47 – 0.62 – 0.18 – 0.47 – 0.61 – 0.18 – 0.79 – 0.86 – 0.74 – 0.79 – 0.86 – 0.74 – 1.18 – 1.42 – 1.16 – 1.17 – 1.42 – 1.16 – 0.80 – 1.01 – 1.03 – 159,082 56.3 %150,047 60.5 % 154,466 50.4 % 123,544 43.7 % 97,810 39.5 % 152,255 49.6 %
Revenues 72,644 100.0 % 59,740 100.0 %		282,626 100.0 %247,857 100.0 % 306,721100.0 %
Revenues by geography Canada 40,456 55.6 % 35,594 59.6 % United States 19,145 26.4 % 10,366 17.3 % Other Countries 13,043 18.0 % 13,780 23.1 %		177,739 62.9 %150,729 60.8 % 209,843 68.4 % 52,403 18.5 % 40,417 16.3 % 37,987 12.4 % 52,484 18.6 % 56,711 22.9 % 58,891 19.2 %
Revenues 72,644 100.0 % 59,740 100.0 %		282,626 100.0 %247,857 100.0 % 306,721 100.0 %

Notes:

(1) Interest paid during Q4 2022 was $3.4 million (Q4 2021; $5.1 million) and $14.4 million during Fiscal 2022 (Fiscal 2021; $18.1 million and Fiscal 2020; $17.4 million)

(2) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

(3) The 2021 comparative figures have been recast to adjust certain contracts that were recognized on a gross basis that should have been recognized on net basis. This had the effect of reducing revenues and operating expenses of the Broadcasting and commercial music segment from previously recorded $151.7 million and $74.2 million to recast $150.0 million $72.6 million, respectively. Consolidated revenues and operating expenses have been reduced from $249.5 million to $247.9 million and $142.5 million to $140.9 million, respectively.

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SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

Adjusted EBITDA, Pro Forma Adjusted EBITDA, LTM Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income, Adjusted Net income per share, Adjusted free cash flow, Adjusted free cash flow per share, Net debt and Net debt to Pro Forma Adjusted EBITDA ratio are non-IFRS measures that the Corporation uses to assess its operating performance. Refer to “Supplemental information on Non-IFRS Measures” on page 54.

The following tables show the reconciliation of Net income to Adjusted EBITDA, to Adjusted Net income, LTM Adjusted EBITDA and to Pro Forma Adjusted EBITDA:

EBITDA and to Pro Forma Adjusted EBITDA:
(in thousands of Canadian dollars)	3 months March 31, 2022 Q4 2022 March 31, 2021 Q4 2021
Net income Net finance expense (income) Change in fair value of investments Income taxes Depreciation and write-off of property and equipment Depreciation of right-of-use assets Amortization of intangible assets Share-based compensation Performance and deferred share unit expense Acquisition,legal,restructuringand other expenses	4,466 12,077 (769) (7,284) 12 – 191 4,047 3,862 3,082 1,201 1,436 4,176 5,303 222 235 1,750 2,028 5,912 2,714
Adjusted EBITDA	21,023 23,638
Net finance expense (income), excluding mark-to-market losses (gains) on derivative financial instruments Income taxes Depreciation of property and equipment and write-off Depreciation of right-of-use assets Income taxes related to change in fair value of investments, share-based compensation, performance and deferred share unit expense, amortization of intangible assets, mark- to-market losses (gains) on derivative financial instruments and acquisition,legal,restructuringand other expenses	(1,381) (3,214) (191) (4,047) (3,862) (3,082) (1,201) (1,436) (2,608) 122
Adjusted Net income	11,780 11,981
(in thousands of Canadian dollars)

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The following table shows the reconciliation of Cash flow from operating activities to Adjusted free cash flow:

(in thousands of Canadian dollars)	3 months March 31, 2022 Q4 2022 March 31, 2021 Q4 2021	12 months
		March 31, 2022 Fiscal 2022 March 31, 2021 Fiscal 2021
Cash flow from operating activities Add / Less : Acquisition of property and equipment Acquisition of intangible assets other than internally developed intangible assets Addition to internally developed intangible assets Interest paid Repayment of lease liabilities Net change in non-cash operating working capital items Unrealized loss (gain) on foreign exchange Acquisition,legal,restructuringand other expenses	22,127 24,514 (2,443) (1,929) (355) (194) (593) (1,367) (3,391) (5,142) (1,074) (1,099) (7,571) (344) (779) (3,345) 5,912 2,714	83,663 104,246 (9,061) (5,690) (1,134) (1,313) (6,854) (6,428) (14,384) (18,053) (4,815) (5,011) 24 10,632 787 (8,661) 8,707 4,637
Adjusted free cash flow	11,833 13,808	56,933 74,359

The following table shows the calculation of Net debt and Net debt to Pro Forma Adjusted EBITDA ratio:

	March 31,	March 31,
(in thousands of Canadian dollars)	2022	2021
Credit facilities	358,203	303,704
Subordinated debt	25,442	31,741
Cash and cash equivalents	(14,563)	(9,040)
Net debt	369,082	326,405
Net debt to Pro Forma Adjusted EBITDA	3.16	2.81

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FINANCIAL RESULTS FOR THE QUARTERS AND YEARS ENDED MARCH 31, 2022 AND 2021

CONSOLIDATED PERFORMANCE

Revenues

Revenues are detailed as follows:

(in thousands of Canadian dollars)	3 months 2022 2021 % Change	12 months
		2022 2021 % Change
Revenues by geography Canada United States Other Countries	40,456 35,594 13.7 19,145 10,366 84.7 13,043 13,780 (5.3)	177,739 150,729 17.9 52,403 40,417 29.7 52,484 56,711 (7.5)
Revenues	72,644 59,740 21.6	282,626 247,857 14.0

Global

Revenues in Q4 2022 increased $12.9 million or 21.6% to $72.6 million, from $59.7 million for Q4 2021. The increase was primarily due to the acquisition of InStore Audio Network, to the gradual easing of COVID-19 restrictions and the return to normal commercial operations, and to an increase in equipment and installation sales related to digital signage.

Revenues for Fiscal 2022 increased $34.7 million or 14.0% to $282.6 million, from $247.9 million for Fiscal 2021. The increase was primarily due to the gradual easing of COVID-19 restrictions and the return to normal commercial operations and to the acquisition of InStore Audio Network.

Canada

Revenues in Canada in Q4 2022 increased $5.0 million or 13.7% to $40.5 million, from $35.5 million for Q4 2021. Revenues in Canada for Fiscal 2022 increased $26.9 million or 17.9% to $177.7 million, from $150.8 million for Fiscal 2021. Both increases were primarily due to the gradual easing of COVID-19 restrictions and the return to normal commercial operations.

United States

Revenues in the United States in Q4 2022 increased $8.7 million or 84.7% to $19.1 million, from $10.4 million for Q4 2021. The increase was primarily due the acquisition of InStore Audio Network and to an increase in subscription revenues.

Revenues in the United States for Fiscal 2022 increased $12.0 million or 29.7% to $52.4 million, from $40.4 million for Fiscal 2021. The increase was primarily due to the acquisition of InStore Audio Network, to an increase in subscription revenues and to the acquisition of Calm Radio.

Other Countries

Revenues in Other countries in Q4 2022 decreased $0.8 million or 5.3% to $13.0 million, from $13.8 million for Q4 2021. The decrease was primarily due to a negative foreign exchange rate impact.

Revenues in Other countries for Fiscal 2022 decreased $4.2 million or 7.5% to $52.5 million, from $56.7 million for Fiscal 2021. The decrease was primarily due to a negative foreign exchange rate impact and to a decrease in audio channel revenues.

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Operating expenses

Operating expenses in Q4 2022 increased $15.2 million or 39.7% to $53.6 million, from $38.4 million for Q4 2021. The increase was mainly due to higher operating and variable expenses, and to lower Canadian Emergency Wage Subsidy (CEWS) ($4.3 million), all related to the gradual easing of COVID-19 restrictions and the return to normal commercial operations.

Operating expenses for Fiscal 2022 increased $49.1 million or 34.8% to $190.0 million, from $140.9 million for Fiscal 2021. The increase was primarily due to lower CEWS ($19.7 million) and to higher operating and variable expenses, all related to the gradual easing of COVID-19 restrictions and the return to normal commercial operations.

Adjusted EBITDA[(1)]

Adjusted EBITDA in Q4 2022 decreased $2.6 million or 11.1% to $21.0 million from $23.6 million for Q4 2021. Adjusted EBITDA margin was 28.9% compared to 39.6% for Q4 2021. The decrease was mainly due to lower CEWS and to higher operating costs due to the return to normal commercial operations, partially offset by higher revenues in the Radio segment, and by the acquisition of InStore Audio Network.

Adjusted EBITDA for Fiscal 2022 decreased $15.0 million or 13.1% to $99.3 million from $114.3 million for Fiscal 2021. Adjusted EBITDA margin was 35.1% compared to 46.1% for Fiscal 2021. The decrease in Adjusted EBITDA was primarily due to lower CEWS and to higher operating costs, partially offset by an increase in revenues in the Radio segment, all caused by the gradual easing of COVID-19 restrictions and the return to normal commercial operations.

Depreciation, amortization and write off

Depreciation, amortization and write off decreased $0.6 million or 5.9% to $9.2 million from $9.8 million for Q4 2021. Depreciation, amortization and write off for Fiscal 2022 decreased $3.2 million or 8.1% to $35.5 million, from $38.7 million for Fiscal 2021. Both decreases were primarily due to less intangible assets to amortize compared to the prior period as certain intangible assets are fully amortized.

Net finance expense (income)

Net finance income for Q4 2022 was $0.8 million compared to $7.3 million for Q4 2021. The decrease was mainly due to lower gains on derivative financial instruments and on foreign exchange, partially offset by a gain on the change in fair value of contingent consideration.

Net finance expense for Fiscal 2022 was $6.1 million compared to a Net finance income of $1.2 million for Fiscal 2021. The variance was mainly related to a lower gain on derivative financial instruments and to a foreign exchange loss, partially offset by a decrease in the fair value of contingent consideration and by lower interest expense.

Change in fair value of investments

In Q4 2022 and for cumulative Fiscal 2022, there was no gain or loss on fair value of investments as the securities held in AppDirect Inc. were sold in Q3 2021. Losses of $2.4 million for Q3 2021 and $3.8 million for cumulative Fiscal 2021 were recorded, both related to the sale of securities held in AppDirect Inc. which had a lower proceed than the estimated fair value before the transaction occurred.

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Note:

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Acquisition, legal, restructuring and other expenses

(in thousands of Canadian dollars)	3 months 2022 2021 Change$	12 months
		2022 2021 Change$
Acquisition Legal Restructuringand other	39 1,107 (1,068) 1,328 424 904 4,545 1,183 3,362	282 2,439 (2,157) 2,505 623 1,882 5,920 1,575 4,345
Acquisition, legal, restructuring and other expenses	5,912 2,714 3,198	8,707 4,637 4,070

In cumulative Fiscal 2021, a gain on legal expenses was recorded due to the reversal of a provision for professional fees due to a change in estimates in the quarter.

Income taxes

The income tax expense recognized in comprehensive income was $0.2 million for Q4 2022 compared to $4.0 million for Q4 2021. The effective tax rate for Q4 2022 was 4.1% compared to 25.1% for Q4 2021. The income taxes expense recognized in comprehensive income was $9.0 million for Fiscal 2022 compared to $16.0 million for Fiscal 2021. The effective tax rate for Fiscal 2022 was 21.3% compared to 26.1% for Fiscal 2021. Both decreases in the effective tax rate were due to the variance in permanent differences.

Net income and Net income per share

Net income in Q4 2022 was $4.5 million ($0.06 per share) compared to $12.1 million ($0.17 per share) for Q4 2021. The decrease was mainly related to a lower gain on derivative financial instruments and on foreign exchange, partially offset by lower income tax expense.

Net income for Fiscal 2022 was $33.3 million ($0.47 per share) compared to $45.1 million ($0.61 per share) for Fiscal 2021. The decrease was mainly related to lower operating results, to a lower gain on derivative financial instruments and to a foreign exchange loss, partially offset by a decrease in the fair value of contingent consideration, by lower income tax expense and by a loss on the fair value of investment in Fiscal 2021.

Adjusted Net income[(1)] and Adjusted Net income per share[(1)]

Adjusted Net income in Q4 2022 was $11.8 million ($0.17 per share), compared to $12.0 million ($0.16 per share) for Q4 2021. The decrease was mainly due to a lower gain on foreign exchange and to lower operating results, partially offset by a decrease in the fair value of contingent consideration.

Adjusted Net income for Fiscal 2022 was $56.4 million ($0.79 per share), compared to $62.9 million ($0.86 per share) for Fiscal 2021. The decrease was mainly due to lower operating results and to a foreign exchange loss, partially offset by a decrease in the fair value of contingent consideration and by lower income tax and interest expense.

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Note:

Annual Report 2022 | Stingray Group Inc. | 39

BUSINESS SEGMENT PERFORMANCE

BROADCASTING AND COMMERCIAL MUSIC

(in thousands of Canadian dollars)	3 months 2022 2021 % Change	12 months
		2022 2021 % Change
Revenues Operatingexpenses	45,584 35,780 27.4 31,060 19,483 59.4	159,082 150,047 6.0 100,767 72,594 38.8
Adjusted EBITDA(1)	14,524 16,297 (10.9)	58,315 77,453 (24.7)
Adjusted EBITDA margin(1)	31.9% 45.5% (30.0)	36.7% 51.6% (29.0)

Revenues

In Q4 2022, Broadcasting and Commercial Music revenues increased $9.8 million or 27.4% to $45.6 million, from $35.8 million for Q4 2021. The increase was primarily due to the acquisition of InStore Audio Network, to the gradual easing of COVID-19 restrictions and the return to normal commercial operations, and to an increase in equipment and installation sales related to digital signage.

Broadcasting and Commercial Music revenues for Fiscal 2022 increased $9.1 million or 6.0% to $159.1 million from $150.0 million for Fiscal 2021. The increase was primarily due to the acquisition of InStore Audio Network and of Calm Radio, and to the return to normal commercial operations, partially offset by a negative foreign exchange rate impact.

Adjusted EBITDA[(1)]

In Q4 2022, Broadcasting and Commercial Music Adjusted EBITDA decreased $1.8 million or 10.9% to $14.5 million from $16.3 million for Q4 2021. The decrease in Adjusted EBITDA was primarily due to higher operating costs and reduced CEWS, caused by the gradual easing of COVID-19 restrictions and the return to normal commercial operations, and to a decrease in gross margin related to product mix, partially offset by the acquisition of InStore Audio Network.

Broadcasting and Commercial Music Adjusted EBITDA for Fiscal 2022 decreased $19.1 million or 24.7% to $58.3 million from $77.4 million for Fiscal 2021. The decrease in Adjusted EBITDA was primarily due to reduced CEWS and higher operating costs, caused by the gradual easing of COVID-19 restrictions and the return to normal commercial operations, to a decrease in gross margin related to product mix and to a gain related to a settlement with SOCAN in Fiscal 2021 (refer to page 49), partially offset by the acquisition of InStore Audio Network and Calm Radio.

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Note:

Annual Report 2022 | Stingray Group Inc. | 40

RADIO

RADIO
(in thousands of Canadian dollars)	3 months 2022 2021 % Change	12 months
		2022 2021 % Change
Revenues Operatingexpenses	27,060 23,960 12.9 19,203 15,340 25.2	123,544 97,810 26.3 77,309 56,528 36.8
Adjusted EBITDA(1)	7,857 8,620 (8.9)	46,235 41,282 12.0
Adjusted EBITDA margin(1)	29.0% 36.0% (19.3)	37.4% 42.2% (11.3)

Revenues

Radio revenues are derived from the sale of advertising airtime, which is subject to the seasonal fluctuations of the Canadian radio industry. Accordingly, the first and third quarter results tend to be the strongest and the second and fourth quarter results tend to be the weakest in a fiscal year. However, for Fiscal 2021, Radio revenues did not follow historical patterns due to the ongoing impact of the COVID-19 pandemic.

In Q4 2022, Radio revenues increased $3.1 million or 12.9% to $27.1 million from $24.0 million for Q4 2021. Radio revenues for Fiscal 2022 increased $25.7 million or 26.3% to $123.5 million from $97.8 million for Fiscal 2021. Both increases were largely due to the gradual easing of COVID-19 restrictions and the return to normal commercial operations.

Adjusted EBITDA[(1)]

In Q4 2022, Radio Adjusted EBITDA decreased $0.8 million or 8.9% to $7.9 million from $8.7 million for Q4 2021. The decrease was primarily due to reduced CEWS, partially offset by higher revenues, all related to the gradual easing of COVID-19 restrictions and the return to normal commercial operations.

Radio Adjusted EBITDA for Fiscal 2022 increased $4.9 million or 12.0% to $46.2 million from $41.3 million for Fiscal 2021. The increase was primarily due to higher revenues, partially offset by reduced CEWS, all related to the gradual easing of COVID- 19 restrictions and the return to normal commercial operations.

CORPORATE

(in thousands of Canadian dollars)	3 months 2022 2021 % Change	12 months
		2022 2021 % Change
Operating expenses Adjust: Share-based compensation Performance and deferred share unit expense	3,330 3,542 (6.0) (222) (235) (5.5) (1,750) (2,028) (13.7)	11,878 11,754 1.1 (798) (851) (6.2) (5,799) (6,436) (9.9)
Adjusted EBITDA(1)	(1,358) (1,279) 6.2	(5,281) (4,467) 18.2

Adjusted EBITDA[(1)]

Corporate Adjusted EBITDA represents the head office operating expenses less the share-based compensation and performance and deferred share unit expense.

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Note:

Annual Report 2022 | Stingray Group Inc. | 41

Quarterly results

Revenues fluctuated over the last eight quarters from $52.1 million in the first quarter of Fiscal 2021 to $72.6 million in the fourth quarter of Fiscal 2022. The increases in Q2 2021 and Q3 2021 are due to progressive improvements in Radio advertising bookings as provinces begin lifting restrictions on social and economic activity and to normal business seasonality. The decrease in Q4 2021 is due to normal business seasonality. The increase in Q1 2022 was due to the gradual easing of COVID-19 restrictions. The increase in Q2 2022 was due to the gradual easing of COVID-19 restrictions, to increased equipment and installation sales related to digital signage and to the acquisition of Calm Radio. In Q3 2022, the increase was mainly due to normal business seasonality and to an increase in subscription revenues. The decrease in Q4 2022 is mostly due to normal business seasonality, partially offset by the acquisition of InStore Audio Network.

Adjusted EBITDA[(1)] fluctuated over the last eight quarters from $25.5 million in the first quarter of Fiscal 2021 to $21.0 million in the fourth quarter of Fiscal 2022. The increase in Q2 2021 was due to progressive improvements in Radio advertising bookings as provinces begin lifting restrictions on social and economic activity, partially offset by higher operating costs and lower CEWS. The increase in Q3 2021 was due to continuing improvements in Radio advertising bookings and normal business seasonality and to a settlement with SOCAN (refer to page 49), partially offset by a special bonus to employees, lower CEWS and higher operating costs. The decrease in Q4 2021 was due to normal business seasonality and to a settlement with SOCAN in Q3 2021, partially offset by a special bonus to employees in Q3 2021. The increase in Q1 2022 was due to normal business seasonality and change in product mix, partially offset by higher operating costs. The increase in Q2 2022 was due to higher operating results, partially offset by reduced CEWS. In Q3 2022, the increase was mainly due to normal business seasonality. The decrease in Q4 2022 was mainly due to normal business seasonality and to reduced CEWS, partially offset by the acquisition of InStore Audio Network.

Net income fluctuated over the last eight quarters from a net income of $7.0 million in the first quarter of Fiscal 2021 to $4.5 million in the fourth quarter of Fiscal 2022. In Q2 2021, the increase was due to higher operating results and positive change in mark-to-market on derivative financial instruments, partially offset by higher income tax and legal expenses. In Q3 2021, the increase was due to higher operating results, positive change in the fair value of contingent consideration, and higher gain in mark-to-market on derivative financial instruments, partially offset by a negative change in fair value of investments related to the sale of securities held in AppDirect Inc. In Q4 2021, the decrease was due to lower operating results, partially offset by higher gains in mark-to-market on derivative financial instruments. In Q1 2022, the decrease was due to a negative change in fair value of mark-to-market on derivative financial instruments and a lower foreign exchange gain, partially offset by lower income tax expense, and lower acquisition and restructuring costs. In Q2 2022, the increase was due a positive change in the fair value of contingent consideration, a positive change in fair value of derivative financial instruments and higher operating results, partially offset by a foreign exchange loss. In Q3 2022, the increase is mainly due to higher operating results, partially offset by a lower gain related to the change in the fair value of contingent consideration. The decrease in Q4 2022 was primarily due to lower operating results due to normal business seasonality and to higher restructuring and other expenses, partially offset by lower income tax expense.

Note:

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Annual Report 2022 | Stingray Group Inc. | 42

Summary of Consolidated Quarterly Results

(in thousands of Canadian dollars, except per share amounts)	3 months
	March 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020 Recast(2) Recast(2) Recast(2) Recast(2) Recast(2) Recast(2) Recast(2)
	FY2022 FY2022 FY2022 FY2022 FY2021 FY2021 FY2021 FY2021
Revenues by segment Broadcasting and Commercial Music Radio	45,584 40,085 38,392 35,021 35,780 39,623 38,887 35,757 27,060 34,943 32,311 29,230 23,960 32,379 25,125 16,346
Total revenues Revenues by geography Canada United States Other countries	72,644 75,028 70,703 64,251 59,740 72,002 64,012 52,103 40,456 49,286 46,659 41,338 35,594 47,368 39,710 28,057 19,145 12,588 10,853 9,817 10,366 10,130 9,809 10,112 13,043 13,154 13,191 13,096 13,780 14,504 14,493 13,934
Total revenues Adjusted EBITDA(1) LTM Adjusted EBITDA(1) Net income Net income per share basic and diluted Adjusted Net income(1) Adjusted Net income per share basic(1) Adjusted Net income per share diluted(1) Cash flow from operations Adjusted free Cash Flow(1)	72,644 75,028 70,703 64,251 59,740 72,002 64,012 52,103 21,023 28,504 25,587 24,155 23,638 33,993 31,156 25,481 99,269 101,884 107,373 112,942 114,268 118,847 115,887 112,402 4,466 12,546 12,075 4,200 12,077 14,118 11,888 7,021 0.06 0.18 0.17 0.06 0.17 0.19 0.16 0.10 11,780 17,048 16,323 11,238 11,981 21,054 16,311 13,509 0.17 0.24 0.23 0.16 0.17 0.29 0.22 0.18 0.17 0.24 0.23 0.16 0.16 0.29 0.22 0.18 22,127 24,762 20,437 16,337 24,514 16,333 25,406 37,993 11,833 14,731 15,362 15,007 13,808 19,645 22,861 18,045
Quarterly dividend	0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.075

Notes:

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

(2) The figures of the prior quarters of Fiscal 2022 and 2021 comparative figures have been recast to adjust certain contracts that were recognized on a gross basis that should have been recognized on net basis. This had the effect of reducing revenues and operating expenses of the Broadcasting and commercial music segment from previously recorded. Revenues have been recast from $41.0 million to $40.1 million for Q3 2022, from $39.1 million to 38.4 million for Q2 2022, from $35.6 million to $35.0 million for Q1 2022, from $36.4 million to $35.8 million for Q4 2021, from $40.2 million to $39.6 million for Q3 2021, from $39.2 million to $38.9 million for Q2 2021 and from $35.9 million to $35.8 million for Q1 2021, respectively.

Annual Report 2022 | Stingray Group Inc. | 43

Reconciliation of Quarterly Non-IFRS Measures

Adjusted EBITDA, Pro Forma Adjusted EBITDA, LTM Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income, Adjusted Net income per share, Adjusted free cash flow, Adjusted free cash flow per share, Net debt and Net debt to Pro Forma Adjusted EBITDA ratio are non-IFRS measures that the Corporation uses to assess its operating performance. Refer to “Supplemental information on Non-IFRS Measures” on page 54.

The following tables show the reconciliation of Net income to Adjusted EBITDA, to Adjusted Net income, to LTM Adjusted EBITDA and to Pro Forma Adjusted EBITDA:

	(in thousands of Canadian dollars)		3 months
			March 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020
			FY2022 FY2022 FY2022 FY2022 FY2021 FY2021 FY2021 FY2021
	Net income Net finance expense (income) Change in fair value of investments Income taxes Depreciation and write-off of property and equipment Depreciation of right-of-use assets Amortization of intangible assets Share-based compensation Performance and deferred share unit expense Acquisition, legal, restructuring and other expenses		4,466 12,546 12,075 4,200 12,077 14,118 11,888 7,021 (769) 1,999 (364) 5,253 (7,284) (1,290) 2,774 4,601 12 3 (13) – – 2,434 461 892 191 4,115 2,874 1,833 4,047 4,900 4,654 2,359 3,862 2,237 2,446 2,524 3,082 2,894 2,976 2,701 1,201 1,281 1,298 1,296 1,436 1,399 1,413 1,412 4,176 4,669 4,927 5,627 5,303 5,478 5,188 5,410 222 216 196 164 235 231 219 166 1,750 659 1,300 2,090 2,028 1,780 1,312 1,316 5,912 779 848 1,168 2,714 2,049 271 (397)
	Adjusted EBITDA		21,023 28,504 25,587 24,155 23,638 33,993 31,156 25,481
	Net finance expense (income), excluding mark-to-market losses (gains) on derivative financial instruments Income taxes Depreciation and write-off of property and equipment Depreciation of right-of-use assets Income taxes related to change in fair value of investments, share- based compensation, performance and deferred share unit expense, amortization of intangible assets, mark-to- market losses (gains) on derivative financial instruments and acquisition, legal, restructuring and other expenses		(1,381) (2,247) (1,153) (4,735) (3,214) (1,727) (4,340) (3,338) (191) (4,115) (2,874) (1,833) (4,047) (4,900) (4,654) (2,359) (3,862) (2,237) (2,446) (2,524) (3,082) (2,894) (2,976) (2,701) (1,201) (1,281) (1,298) (1,296) (1,436) (1,399) (1,413) (1,412) (2,608) (1,576) (1,493) (2,529) 122 (2,019) (1,462) (2,162)
	Adjusted Net income		11,780 17,048 16,323 11,238 11,981 21,054 16,311 13,509
	(in thousands of Canadian dollars)		3 months
			March 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020
			FY2022 FY2022 FY2022 FY2022 FY2021 FY2021 FY2021 FY2021
	LTM Adjusted EBITDA Synergies and Adjusted EBITDA for the months prior to the business acquisitions which are not already reflected in the results COVID-19 credits allocated due to mandated store closures		99,269 101,884 107,373 112,942 114,268 118,847 115,887 112,402 16,000 19,500 1,428 842 190 1,043 2,466 3,490 1,535 3,051 2,492 1,369 1,825 1,000 - -
	Pro Forma Adjusted EBITDA		116,804 124,435 111,293 115,153 116,283 120,890 118,353 115,892

Annual Report 2022 | Stingray Group Inc. | 44

The following table shows the reconciliation of Cash flow from operating activities to Adjusted free cash flow:

(in thousands of Canadian dollars)	3 months
	March 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020
	FY2022 FY2022 FY2022 FY2022 FY2021 FY2021 FY2021 FY2021
Cash flow from operating activities Acquisition of property and equipment Acquisition of intangible assets other than internally developed intangible assets Addition to internally developed intangible assets Interest paid Repayment of lease liabilities Net change in non-cash operating working capital items Unrealized loss (gain) on foreign exchange Acquisition, legal, restructuring and other expenses(income)	22,127 24,762 20,437 16,337 24,514 16,333 25,406 37,993 (2,443) (2,181) (2,360) (2,077) (1,929) (1,849) (1,209) (703) (355) (276) (305) (198) (194) (649) (212) (258) (593) (2,058) (2,050) (2,153) (1,367) (1,838) (1,671) (1,552) (3,391) (3,868) (3,234) (3,891) (5,142) (6,312) (2,912) (3,687) (1,074) (1,130) (1,526) (1,085) (1,099) (1,255) (1,443) (1,214) (7,571) (1,533) 2,323 6,805 (344) 15,858 6,530 (11,412) (779) 236 1,229 101 (3,345) (2,692) (1,899) (725) 5,912 779 848 1,168 2,714 2,049 271 (397)
Adjusted free cash flow	11,833 14,731 15,362 15,007 13,808 19,645 22,861 18,045

The following table shows the calculation of Net debt and of Net debt to Pro Forma Adjusted EBITDA ratio:

(in thousands of Canadian dollars)	3 months
	March 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020
	FY2022 FY2022 FY2022 FY2022 FY2021 FY2021 FY2021 FY2021
Credit facilities Subordinated debt Cash and cash equivalents Portion of the balance payable on acquisition of InStore Audio Network paid on January 5, 2022	358,203 317,957 313,172 305,779 303,704 290,353 299,361 303,504 25,442 25,416 31,791 31,766 31,741 39,715 39,690 39,665 (14,563) (11,266) (8,475) (6,416) (9,040) (9,827) (10,906) (6,393) – 42,471 – – – – – –
Net debt	369,082 374,578 336,488 331,129 326,405 320,241 328,145 336,776
Net debt to Pro Forma Adjusted EBITDA	3.16 3.01 3.02 2.88 2.81 2.65 2.77 2.91

Annual Report 2022 | Stingray Group Inc. | 45

LIQUIDITY AND CAPITAL RESOURCES FOR THE QUARTERS AND YEARS ENDED MARCH 31, 2022 AND 2021

(in thousands of Canadian dollars)	3 months 12 months
	2022 2021 2022 2021
Operating activities Financing activities Investingactivities	22,127 24,514 83,663 104,246 (15,430) (21,811) (59,510) (103,148) (3,400) (3,490) (18,630) 5,430
Net change in cash Cash – beginningofperiod	3,297 (787) 5,523 6,528 11,266 9,827 9,040 2,512
Cash – end ofperiod	14,563 9,040 14,563 9,040
Adjusted free cash flow(1)	11,833 13,808 56,933 74,359

Operating Activities

Cash flow generated from operating activities amounted to $22.1 million for Q4 2022 compared to $24.5 million for Q4 2021. The decrease was mainly due to higher restructuring and other expenses, to a lower foreign exchange gain and to lower operating results, partially offset by the positive change in non-cash operating items.

Cash flow generated from operating activities amounted to $83.7 million for Fiscal 2022 compared to $104.2 million for Fiscal 2021. The decrease was mainly due to lower operating results, to a foreign exchange loss and to higher restructuring and other expenses, partially offset by the positive change in non-cash operating items.

Financing Activities

Net cash flow used in financing activities amounted to $15.4 million for Q4 2022 compared to $21.8 million for Q4 2021. The decrease was mainly related to higher credit facilities borrowing, to a partial repayment of the subordinated debt in Q4 2021 and to less shares repurchased, partially offset by the repayment of the balance payable for the acquisition of InStore Audio Network.

Net cash flow used in financing activities amounted to $59.5 million for Fiscal 2022 compared to $103.1 million for Fiscal 2021. The decrease was mainly due to higher credit facilities borrowing, partially offset by the repayment of the balance payable for the acquisition of InStore Audio Network.

Investing Activities

Net cash flow used in investing activities amounted to $3.4 million for Q4 2022 compared to $3.5 million for Q4 2021. The decrease was primarily due to less internally developed intangibles assets, partially offset by higher acquisitions of property and equipment.

Net cash flow used in investing activities amounted to $18.6 million for Fiscal 2022 compared to net cash flow generated by investing activities of $5.4 million for Fiscal 2021. The net change was primarily due to the $18.9 million proceeds from the sale of securities held in AppDirect Inc. during Fiscal 2021 and to higher acquisitions of property and equipment.

Adjusted free cash flow[(1)]

Adjusted free cash flow generated in Q4 2022 amounted to $11.8 million compared to $13.8 million for Q4 2021. The decrease was mainly related to lower operating results, partially offset by lower interest paid.

Adjusted free cash flow generated in Fiscal 2022 amounted to $56.9 million compared to $74.4 million for Fiscal 2021. The decrease was mainly related to lower operating results and to higher capital expenditures, partially offset by lower interest paid.

(1) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Note

Annual Report 2022 | Stingray Group Inc. | 46

Contractual Obligations

The Corporation is committed under the terms of contractual obligations with various expiration dates, primarily the rental of properties and equipment, broadcast licences commitments and financial obligations under our credit agreement and subordinated debt. The following table summarizes the Corporation’s undiscounted significant contractual obligations as at March 31, 2022, including its estimated payments and commitments related to leasing contracts:

			More
	Less than	1 to 5	than 5
(in thousands of Canadian dollars)	1year	years	years	Total
Lease liabilities	1,439	19,171	16,308	36,918
Operating obligations	1,991	2,049	974	5,014
Broadcast licences commitments	15,285	12,731	–	28,016
Credit facilities	7,500	351,836	–	359,336
Subordinated debt	–	25,600	–	25,600
Accounts payables and accrued liabilities	67,016	–	–	67,016
Other liabilities	8,136	28,153	2,251	38,540
Total obligations	101,367	439,540	19,533	560,440

Broadcast licences and royalties

A condition of the broadcast licences owned by the Corporation is to commit to fund Canadian Content Development (“CCD”) over the initial term of the licences, which is usually seven years. The Corporation must also pay royalties for the use of music for the majority of its music services. Through copyright collective societies, the Corporation pays royalties to two sets of rights holders: rights holders in music works, which are the music and the lyrics; and, rights holders in artists’ performances and sounds recordings, which are the actual performances and recordings of the musical works.

Annual Report 2022 | Stingray Group Inc. | 47

Capital resources

Our principal sources of liquidity are our net cash provided by operating activities and borrowings available under our revolving facility. Our principal uses of cash are to repay our debt, finance our acquisitions and capital expenditures, pay dividends, repurchase shares and provide for working capital. We expect that cash generated from operations and borrowings available under our current credit facilities will be sufficient to meet our liquidity needs in the foreseeable future.

The credit facilities consist of a $375.0 million revolving credit facility and a $63.8 million term loan, both maturing in October 2026. On May 28, 2021, the Corporation fully repaid, on maturity, its $20.0 million term loan.

The Corporation is required to make consecutive quarterly capital repayments of 2.50% of the initial drawdown of the term loan. The remaining capital balance will be payable on maturity date, on October 25, 2026.

The credit facilities bear interest at (a) the bank’s prime rate (2.70% and 2.45% as at March 31, 2022 and 2021, respectively) or US base rate if denominated in US dollars (4.00% and 3.75% as at March 31, 2022 and 2021, respectively) plus an applicable margin based on a financial covenant, or (b) the banker’s acceptance rate (0.73% and 0.52% as at March 31, 2022 and 2021, respectively) plus an applicable margin based on a financial covenant, or (c) LIBOR (0.21% and 0.11% as at March 31, 2022 and 2021, respectively) plus an applicable margin based on a financial covenant, at the Corporation’s option.

As of March 31, 2022, the Corporation had cash and cash equivalents of $14.6 million, a subordinated debt of $25.4 million and credit facilities of $358.2 million, of which approximately $78.7 million was available.

The following table summarizes the impact on the Net debt[(2)] that occurred in the fiscal year ended March 31, 2022 including related ratios:

==> picture [516 x 253] intentionally omitted <==

----- Start of picture text -----

Movement in Net debt [(1)(2)]
$21.3 $(58.5)
$15.0
$14.4
$50.5
$369.1
$326.4
As at March 31, Business Interests Share Dividend Remaining net As at March 31,
2021 acquisitions payments repurchases payments change of 2022
outlays, revolving
balance facility and
payable and cash
contingent
consideration
payments
----- End of picture text -----

Notes:

• (1) In millions of Canadian dollars.

• (2) This is a non-IFRS measure. Refer to “Supplemental Information on Non-IFRS Measures” on page 54 for more information on each non-IFRS measure and for reconciliations to the most directly comparable IFRS financial measure, refer to “Supplemental Information on Non-IFRS Measures” on page 35 and “Reconciliation of Quarterly Non-IFRS Measures” on page 44.

Annual Report 2022 | Stingray Group Inc. | 48

CONSOLIDATED FINANCIAL POSITION

The following table shows the main variances that have occurred in the consolidated financial position of the Corporation for the year ended March 31, 2022:

(in thousands of Canadian	March 31,	March 31,
dollars)	2022	2021	Variance		Significant contributions
Trade and other receivables	66,666	61,114	5,552	▲	Timing ofpayments by clients
					Additions through business
					acquisition of Calm Radio and
Intangible assets	76,230	41,884	34,346	▲	InStore Audio Network, partially
					offset by amortization of intangible
					assets
Goodwill	354,304	337,897	16,407	▲	Acquisition of InStore Audio Network
Accounts payables and accrued liabilities	67,016	53,146	13,870	▲	Timing of payments to suppliers and increase in operating
					expenses
					Increase of contingent
					consideration for the acquisition
Other liabilities	60,997	60,027	970	▲	of InStore Audio Network, largely offset by a decrease in the fair
					value of derivative financial
					instrumentsliability
Credit facilities	358,203	303,704	54,499	▲	Refer to the graph on previous page
Subordinated debt	25,442	31,741	(6,299)	▼	Debt repayment

SOCAN and Re:Sound legal proceedings

In May 2017, the Corporation, together with its Canadian Broadcast Distribution Undertaking customers (together, the “Objectors”), presented an affirmative case before the Copyright Board of Canada to seek a reduction in the prescribed rates and terms for the Pay Audio Services Tariff for the 2007-2016 period. SOCAN and Re:Sound (together, the “Collectives”) opposed that case, but in the opinion of the Objectors failed to offer compelling alternatives other than a request to maintain the status quo.

As of December 2020, the Objectors and SOCAN entered into a binding MOU that will result in a partial refund to the Objectors of past royalties paid and a meaningfully reduced tariff burden for the present and future. On May 28, 2021, the Copyright Board of Canada released a final decision relating to the Pay Audio Services Tariff. The decision and certified tariff were in line with the Objectors expectations.

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Transactions Between Related Parties

The key management personnel of the Corporation are the Chief Executive Officer, Chief Financial Officer and certain other key employees of the Corporation.

Key management personnel compensation and director’s fees include the following:

(in thousands of Canadian dollars)	12 months
	2022 2021
Short-term employee benefits Share-based compensation Performance share units Deferred share units	5,074 5,727 525 465 2,533 1,755 954 2,908
	9,086 10,855

Off-Balance Sheet Arrangements

The Corporation therefore has no off-balance sheet arrangements, except for the operating leases with terms of twelve months or less, leases of low-value assets or leases that are not in scope of IFRS 16, that have, or are reasonably likely to have, a current or future material effect on its consolidated financial position, financial performance, liquidity, capital expenditures or capital resources.

Disclosure of Outstanding Share Data

Issued and outstanding shares and outstanding stock options consisted of:

	June 3,2022	March 31,2022
Issued and outstanding shares:
Subordinate voting shares	51,517,622	51,768,422
Subordinate voting shares held in trust through employee share
purchase plan	(20,008)	(11,776)
Variable subordinate voting shares	397,780	397,780
Multiple voting shares	17,941,498	17,941,498
	69,836,892	70,095,924
Outstanding stock options:
Stock options	3,469,807	3,469,807

The Corporation has a stock option plan to attract and retain employees, directors, officers and consultants. The plan provides for the granting of options to purchase subordinate voting shares. Under this plan,10% of all multiple voting shares, subordinate voting shares and variable subordinate voting shares issued and outstanding on a non-diluted basis is reserved for issuance. In Fiscal 2022, 95,000 options were exercised, 32,650 options were forfeited, and 434,204 options were granted to eligible employees, subject to service vesting periods of 4 years.

Financial Risk Factors

Currency risk:

The Corporation is exposed to currency risk on sales and expenses that are denominated in currencies other than the functional currency of the Corporation’s subsidiaries, primarily the US dollar and the euro. Also, additional earnings variability arises from the translation of monetary assets and liabilities denominated in currencies other than the functional currency of the Corporation’s subsidiaries at the rate of exchange at each balance sheet date, the impact of which is reported as a foreign exchange gain or loss in the consolidated statements of comprehensive income (loss).

The Corporation's objective in managing its foreign currency risk is to minimize its net exposure to foreign currency cash flows, by transacting with third parties in the above currencies to the maximum extent possible and practical, given that this will act as natural economic hedges for each of these currencies.

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Liquidity risk:

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. The Corporation manages liquidity risk by continuously monitoring actual and budgeted cash flows under both normal and stressed conditions. The Board of Directors also reviews and approves the Corporation’s operating and capital budgets, as well as any material transactions out of the ordinary course of business, including proposals on mergers, acquisitions or other major investments or divestitures.

Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Corporation holds the majority of its cash and cash equivalents balance in accounts bearing interest at rates less than 1.25%. The Corporation is, therefore, not materially exposed to future cash flow fluctuations coming from changes in market interest rates for its cash and cash equivalents.

The credit facility is a variable interest rate instrument that is due in more than one year. This instrument is exposed to changes in future interest rates that could result in future cash flow fluctuations. To manage its interest rate risk, the Corporation entered into the following interest rate swap agreements:

(in thousands of Canadian	dollars)
					Mark-to-market				Mark-to-market
		Fixed interest rate	Initial	nominal	Liabilities		as at		Liabilities as at
Maturity	Currency	(whenapplicable)		value	March31,		2022		March31,2021
Swaps
October 25, 2024	CAD	0.81%	$	50,000	$		—	$	945
October 25, 2024	CAD	1.33%		50,000			—		403
October 25, 2021	CAD	2.19%		50,000			—		494
October 25,2024	CAD	2.29%		50,000			—		1,938
				200,000			—		3,780
Swaptions
October 25, 2024	CAD	—		100,000			604		642
October 25,2024	CAD	—		100,000			860		948
			$	200,000	$	1,464		$	1,590
			$	400,000	$	1,464		$	5,370

Credit risk:

Credit risk is the risk of an unexpected financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet contractual obligations, and it arises primarily from the Corporation's trade and other receivables.

The Corporation’s credit risk is principally attributable to its trade receivables. The amounts presented in the consolidated statements of financial position are net of an allowance for expected credit risk, estimated by the Corporation’s management and based, in part, on the age of the specific receivable balance and the current and expected collection trends. The Corporation's exposure to credit risk is mainly influenced by the characteristics of each customer. Generally, the Corporation does not require collateral or other security from customers for trade receivables; however, credit is extended following an evaluation of creditworthiness. In addition, the Corporation performs ongoing credit reviews of its customers.

An allowance for expected credit losses is maintained to reflect an impairment risk for trade accounts receivable based on an expected credit loss model. Bad debts are also provided for based on collection history and specific risks identified on a customer-by-customer basis.

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Critical Accounting Estimates

The preparation of the Corporation’s consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Below is an overview of the areas that involved more judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Estimates are based on management’s best knowledge of current events and actions that the Corporation may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected by these revisions.

The areas involving significant estimates or judgments are:

Estimation of current tax payable and current tax expense

In the calculation of current tax, the Corporation is required to make significant estimates due to the fact that it is subject to tax laws of the many jurisdictions in which it operates. Recorded income taxes and tax credits are subject to review and approval by tax authorities and therefore, could be different from the amounts recorded.

Recognition of deferred tax assets for tax losses available for carry-forward

In the calculation of deferred tax, estimates must be used to determine the appropriate rates and amounts and to take into account the probability of their occurrence. Deferred income tax assets also reflect the benefit of unutilized tax losses that can be carried forward to reduce income taxes in future years. The deferred tax assets include an amount which relates to carried forward tax losses of some European and Australian subsidiaries. The subsidiaries have incurred the losses over the last financial years before the acquisition by the Corporation. The subsidiaries now generate taxable income. The Corporation has concluded that the deferred assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets for the subsidiaries.

Estimation of cost of defined benefit pension plans and present value of the net pension obligation

The cost of defined benefit pension plans and the present value of the net pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions which may differ from actual developments in the future. These include the determination of the discount rate, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, the net pension obligation is highly sensitive to changes in these assumptions.

Management engages the services of external actuaries to assist in the determination of the appropriate discount rate. Management, with the assistance of actuaries, considers the interest rates of high quality corporate bonds that have terms to maturity approximating the terms related to the defined benefit obligation. The mortality rate is based on publicly available mortality tables. Future pension increases are based on expected future inflation rates.

Estimated fair value of certain investments

The fair value of investments that are not traded in an active market is determined using valuation techniques. The Corporation uses judgement to select a valuation method and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

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Estimated value in use and/or fair value less costs to sell of CGUs used in goodwill and broadcasting licences impairment testing

Broadcast licences and goodwill are not amortized but are tested annually for impairment, or more frequently if events or circumstances indicate that it is more likely than not that the value of broadcast licences and/or goodwill may be impaired. Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value-in-use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s-length transaction of similar assets, observable market prices, or discounted cash flow projections less incremental costs for disposing of the asset. The value-in-use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Corporation is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. The impact of COVID-19 on the Corporation was also considered in calculating the future cash flows. Depending on the measures taken by the federal and provincial authorities to slow or stop the spread of COVID-19, such as the closure of non-essential businesses and social distancing, actual results could differ materially from estimates used.

Estimation of fair value of identified assets, liabilities and contingent consideration recorded in business acquisitions

The contingent consideration and balance payable on business acquisitions related to business combinations is payable based on the achievement of targets for growth in revenues for a period from the date of the acquisition and upon renewal of client contracts. The fair value of the contingent consideration and balance payable on business acquisitions were estimated by calculating the present value of the future expected cash flows.

Estimation of lease term of contracts with renewal options

The Corporation determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. After the commencement date, the Corporation reassesses the lease term for whether significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy) has occurred.

Business Combinations

Under the acquisition method, on the date that control is obtained, the identifiable assets, liabilities and contingent liabilities of the acquired business are measured at their fair values. Depending on the complexity of determining the valuation for certain assets, the Corporation uses appropriate valuation techniques in arriving at the estimated fair value at the acquisition date for these assets. These valuations are generally based on a forecast of the total expected future net discounted cash flows and relate closely to the assumptions made by management regarding the future performance of the related assets and the discount rate applied as it would be assumed by a market participant.

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SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

Each of the below non-IFRS financial measures is not an earnings or cash flow measure recognized by International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS. Our method of calculating such financial measures may differ from the methods used by other issuers and, accordingly, our definition of these non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that nonIFRS financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.

Adjusted EBITDA

Adjusted EBITDA is a non-IFRS financial measure used by management to facilitate comparisons of operating performance of the Corporation from period to period. Adjusted EBITDA is defined as earnings before Net finance expense (income), income taxes, depreciation, amortization, share based compensation, acquisition, restructuring and other various costs and change in fair value of investment. The Corporation believes that Adjusted EBITDA is an important measure when analyzing its operating profitability without being influenced by financing decisions, non-cash items and income taxes strategies. Comparison with peers is also easier as companies rarely have the same capital and financing structure. The Corporation also presents such non-IFRS measure because it believes such non-IFRS measure is frequently used by securities analysts, investors and other interested parties as measures of financial performance.

Adjusted EBITDA margin

Adjusted EBITDA margin ratio is a non-IFRS ratio used by management to analyze the profitability of the Corporation and facilitate period-to-period comparisons, as well as comparison with peers. This ratio is calculated by dividing the amount of Adjusted EBITDA for a given period by the amount of revenue for the same period. The Corporation believes that Adjusted EBITDA margin is an important measure when analyzing its operating profitability without being influenced by financing decisions, non-cash items and income taxes strategies. Comparison with peers is also easier as companies rarely have the same capital and financing structure. The Corporation also presents such non-IFRS ratio because it believes such non-IFRS ratio is frequently used by securities analysts, investors and other interested parties as measures of financial performance.

Adjusted free cash flow

Adjusted free cash flow is a non-IFRS measure used by management to assess the amount of cash generated after accounting for capital expenditures and non-core charges. It is a useful measure because it demonstrates cash available to make business acquisitions, pay dividends and reduce debt. Furthermore, this non-IFRS measure facilitates period-to-period comparisons. Refer to page 36 for a reconciliation of free cash flow to cash flow from operating activities.

Adjusted free cash flow per share

Adjusted free cash flow per share is a non-IFRS ratio used by management to assess the amount of cash generated after accounting for capital expenditures and non-core charges. It is a useful measure because it demonstrates cash available to make business acquisitions, pay dividends and reduce debt. Furthermore, this non-IFRS measure facilitates period-to-period comparisons. Adjusted free cash flow per share is calculated by dividing the amount of Adjusted free cash flow for a given period by the number of outstanding shares for the same period (on a basic or diluted basis).

Adjusted Net Income

Adjusted Net Income is a non-IFRS measure used by management to assess performance of the Corporation as it provides meaningful operating results and facilitates period-to-period operating comparisons. Additionally, the Corporation believes that Adjusted Net income is an important measure as it shows stable results from its operations which allows users of the financial statements to better assess the trend in the profitability of the business. Refer to page 35 for a reconciliation of Adjusted Net Income to Adjusted EBITDA and Net income.

Adjusted Net Income per share

Adjusted Net Income per share is a non-IFRS ratio used by management to assess performance of the Corporation as it provides meaningful operating results and facilitates period-to-period operating comparisons. Additionally, the Corporation believes that Adjusted Net income per share is an important measure as it shows stable results from its operations which allows users of the financial statements to better assess the trend in the profitability of the business. Adjusted Net Income per share is calculated by dividing the amount of Adjusted Net Income for a given period by the number of outstanding shares for the same period (on a basic or diluted basis).

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LTM Adjusted EBITDA

Last twelve months (LTM) Adjusted EBITDA is a non-IFRS measure representing the Adjusted EBITDA of a given quarterly period, plus the Adjusted EBITDA of the three quarters immediately preceding such referenced period. The Corporation believes that LTM Adjusted EBITDA is a useful measure to evaluate the Corporation’s operating performance during the immediately preceding twelve-month time period.

Pro Forma Adjusted EBITDA

Pro Forma Adjusted EBITDA is a non-IFRS measure representing LTM Adjusted EBITDA adjusted to include revenues and cost savings synergies from acquisitions for the months prior to such acquisitions and other extraordinary items. For Fiscal 2022, the synergies included derive from the acquisitions of InStore Audio Network and Calm Radio. For Fiscal 2021, the synergies included derive from the acquisitions of Marketing Sensorial México and Chatter Research Inc. For Fiscal 2022 and 2021, Pro Forma Adjusted EBITDA includes an adjustment for credits that were given to various customers following the mandated store closures required by governments. Management of the Corporation believes that Pro Forma Adjusted EBITDA provides investors with useful financial metrics to assess and evaluate the Corporation’s operating performance from periodto-period by adjusting for the impact of certain events that are non-recurring. The Corporation also presents such non-IFRS measure because it believes such non-IFRS measure is frequently used by securities analysts, investors and other interested parties as measures of financial performance.

Net debt

Net debt is a non-IFRS measure calculated as the Corporation’s credit facilities and subordinated debt for a given period less the Corporation’s cash and cash equivalents for the same period. Net debt is an important measure as it reflects the principal amount of debt owing by the Corporation at a particular date.

Net debt to Pro Forma Adjusted EBITDA ratio

Net debt to Pro Forma Adjusted EBITDA is a non-IFRS ratio calculated as Net debt divided by Pro Forma Adjusted EBITDA. The Corporation believes that Net debt to Pro Forma Adjusted EBITDA is an important measure when analyzing the Corporation’s debt repayment capacity on an annualized basis, taking into consideration the annualized Adjusted EBITDA of acquisitions made during the last twelve months.

New standard adopted by the Corporation

There are no new standards adopted by the Corporation as of March 31, 2022.

Future Accounting Changes

There are no material future accounting changes as of March 31, 2022.

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Evaluation of Disclosure Controls and Procedures and Internal Control Over Financial Reporting

Internal control over financial reporting ("ICFR") is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and of the preparation of financial statements for external purposes in accordance with IFRS. The President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), together with Management, are responsible for establishing and maintaining adequate disclosure controls and procedures ("DC&P") and ICFR, as defined in National Instrument 52-109. The Corporation’s internal control framework is based on the criteria published in the updated version released in May 2013 of the report Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“2013 COSO Framework”).

The DC&P have been designed to provide reasonable assurance that material information relating to the Corporation is made known to the CEO and CFO by others, and that information required to be disclosed by the Corporation in its annual filings, interim filings or other reports filed or submitted by the Corporation under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.

As at March 31, 2022, an evaluation was carried out, under the supervision of the CEO and the CFO, of the design and operating effectiveness of the Corporation’s DC&P. Based on this evaluation, the CEO and the CFO concluded that the Corporation’s DC&P were appropriately designed and were operating effectively as at March 31, 2022.

As at March 31, 2022, an evaluation was carried out, under the supervision of the CEO and the CFO, of the effectiveness of the ICFR based on the 2013 COSO Framework. Based on this evaluation, they have concluded that the Corporation’s ICFR were effective as at March 31, 2022.

There have been no changes in the Corporation’s internal control over financial reporting, except for the acquisition of Calm Radio and InStore Audio Network, that occurred during the period that have materially affected, or are likely to materially affect, the Corporation’s ICFR.

Management’s assessment of and conclusion on the design and the effectiveness of the Corporation’s ICFR as at June 7, 2022, did not include the controls or procedures of the operations of Calm Radio and InStore Audio Network. The Corporation has accordingly availed itself of provision 3.3(1)(b) of Regulation 52-109 which permits exclusion of these acquisitions in the design and operating effectiveness assessment of its ICFR for a maximum period of 365 days from the date of acquisition. The following table summarizes the financial information for Fiscal 2022 for these entities:

		InStore Audio
(in thousands of Canadian dollars)	Calm Radio	Network
Results of operations
Revenues	2,753	6,673
Net income (loss)	129	3,112
Financial Position
Current assets	364	6,717
Non-current assets	304	8,558
Current liabilities	818	2,990
Non-current liabilities	1,030	-

Subsequent Events

There are no subsequent events.

Additional Information

Additional information about the Corporation is available on our website at www.stingray.com and on the SEDAR website at www.sedar.com

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