Stingray Group Inc. — Audit Report / Information 2022

Jun 8, 2022

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KPMG LLP 600 de Maisonneuve Blvd. West Suite 1500, Tour KPMG Montréal (Québec) H3A 0A3 Canada

Telephone (514) 840-2100 Fax (514) 840-2187 Internet www.kpmg.ca

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Stingray Group Inc.

Opinion

We have audited the consolidated financial statements of GDI Integrated Facility Services Inc. (the "Entity"), which comprise:

• the consolidated statements of financial position as at March 31, 2022 and March 31, 2021

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

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

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

• and notes to the consolidated financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at March 31, 2022 and March 31, 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the " Auditors’ Responsibilities for the Audit of the Financial Statements " section of our auditors’ report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended March 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be the key audit matter to be communicated in our auditors’ report.

Goodwill and broadcast licenses impairment assessments for certain cash generating units

Description of the matter

We draw attention to Note 16 of the consolidated financial statements. The Entity’s goodwill and broadcast licenses amount to $354,304 and $272,996 respectively. For the purpose of impairment testing, broadcast licenses are allocated to groups of cash generating units ("CGUs"). Goodwill and broadcast licenses are tested for impairment annually and when circumstances indicate the carrying value may be impaired. The recoverable amounts of the CGUs have been determined based on their value-in-use ("VIU") using a discounted cash flow model. A significant estimate used in determining the recoverable amount is the measurement of the risk adjusted forecasted cash flows expected to be generated. Significant estimates and assumptions used to determine the discounted cash flows include the growth rate in revenue, operating expenses and discount rates.

Why the Matter is a Key Audit Matter

We identified goodwill and broadcast licenses impairment assessment for certain CGUs as a key audit matter. This matter represented an area of significant risk of material misstatement for certain groups of CGUs. This is due to the magnitude of the goodwill and the high degree of estimation uncertainty in determining the recoverable amount. In addition, significant auditor judgment and specialized skills and knowledge were needed in evaluating the results of our procedures due to the sensitivity to the Entity’s determination of the recoverable amounts of the certain CGUs to minor changes in significant assumptions.

How the Matter Was Addressed in the Audit

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

• We evaluated the Entity’s revenue growth rate assumptions for certain groups of CGUs, by comparing those assumptions to the expected growth rates included in analyst reports of the Entity and comparable entities.

• We compared certain groups of CGUs’ future cash flows to historical actual results. We evaluated the Entity’s ability to accurately forecast future cash flows by comparing actual results to historical cash flow forecasts.

• We involved valuation professionals with specialized skills and knowledge. They assisted us in evaluating the reasonableness of the discount rate assumptions used by management in the determination of the VIU by comparing them to discount rate ranges that were independently developed using publicly available market data for comparable entities.

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Other Information

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

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

• the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled "Annual Report".

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

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

We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors’ report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report.

We have nothing to report in this regard.

The information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled "Annual Report" is expected to be made available to us after the date of this auditors’ report. If, based on the work we will perform on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged with governance.

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

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

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

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

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Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

We also:

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

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

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

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

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

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

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

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

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

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

The engagement partner on the audit resulting in this auditors’ report is Alain Bessette.

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Montréal, Canada June 7, 2022

*CPA auditor, public accountancy permit No. A115894

Consolidated Statements of Comprehensive Income

Years ended March 31, 2022 and 2021

Years ended March 31, 2022 and 2021
(In thousands of Canadian dollars, except per share amounts)	Note		2022		2021
					Recast(note 4)
Revenues	5	$	282,626	$	247,857
Operating expenses	6		189,954		140,876
Depreciation, amortization and write-off			35,544		38,692
Net finance expense (income)	8		6,119		(1,199)
Change in fair value of investments	17, 29		2		3,787
Acquisition, legal, restructuring and other expenses	9		8,707		4,637
Income before income taxes			42,300		61,064
Income taxes	10		9,013		15,960
Net income		$	33,287	$	45,104
Net income per share — Basic	11	$	0.47	$	0.62
Netincome pershare— Diluted	11	$	0.47	$	0.61
Weighted average number of shares — Basic	11		70,968,954		73,266,886
Weighted average number of shares — Diluted	11		71,463,581		73,435,192
Comprehensive income
Net income		$	33,287	$	45,104
Other comprehensive income (loss), net of tax
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations			(1,954)		(7,577)
Items that will not be reclassified to profit and loss
Remeasurement gain (loss) on pension benefit obligations,
net of income tax payable of $1,004 (2021 — recovery of $3)			2,780		(7)
Total other comprehensive income (loss)			826		(7,584)
Total comprehensive income		$	34,113	$	37,520

Net income is entirely attributable to Shareholders.

The accompanying notes are an integral part of these consolidated financial statements.

Annual Report 2022 | Stingray Group Inc. | 62

Consolidated Statements of Financial Position

March 31, 2022 and 2021

March 31, 2022 and 2021
(In thousands of Canadian dollars)	Note		March 31,		March 31,
			2022		2021
Assets
Current assets
Cash and cash equivalents		$	14,563	$	9,040
Trade and other receivables	12		66,666		61,114
Income taxes receivable			96		3,801
Inventories			5,200		3,215
Other current assets			13,388		13,439
			99,913		90,609
Non-current assets
Property and equipment	13		39,931		42,228
Right-of-use assets on leases	14		25,944		28,184
Intangible assets, excluding broadcast licences	15		76,230		41,884
Broadcast licences	16		272,996		272,988
Goodwill	16		354,304		337,897
Investments	17		6,431		3,046
Other non-current assets			5,136		1,335
Deferred tax assets	10		2,816		4,666
Total assets		$	883,701	$	822,837
Liabilities and Equity
Current liabilities
Credit facilities	19	$	7,500	$	27,462
Accounts payable and accrued liabilities	18		67,016		53,146
Dividend payable	24		5,259		5,409
Deferred revenues			4,942		4,970
Current portion of lease liabilities	21		4,171		4,479
Current portion of other liabilities	22		17,786		15,812
Income taxes payable			8,283		9,211
			114,957		120,489
Non-current liabilities
Credit facilities	19		350,703		276,242
Subordinated debt	20		25,442		31,741
Deferred revenues			1,030		—
Lease liabilities	21		24,147		25,733
Other liabilities	22		43,211		44,215
Deferred tax liabilities	10		50,682		49,725
Total liabilities			610,172		548,145
Shareholders’ equity
Share capital	24		302,328		313,951
Contributed surplus			5,745		5,180
Deficit			(31,103)		(40,172)
Accumulated other comprehensive income (loss)			(3,441)		(4,267)
Total equity			273,529		274,692
Commitments(note 27)
Total liabilities and equity		$	883,701	$	822,837

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors,

(Signed) Eric Boyko, Director

(Signed) Pascal Tremblay, Director

Annual Report 2022 | Stingray Group Inc. | 63

Consolidated Statements of Changes in Equity

Years ended March 31, 2022 and 2021

Years ended March 31,	2022 and 2021
(In thousands of Canadian dollars, except number of share capital)	Share Capital Accumulated other comprehensiveincome (loss) Total shareholders’ equity Number Amount Contributed surplus Deficit Cumulative translation account Defined benefit pension plans
Balance at March 31, 2020 73,549,454 $ 322,366 $ 4,620 $ (56,407) $ 3,802 $ (485) $ 273,896 Issuance of shares upon exercise of stock options (note 24) 80,732 269 (125) — — — 144 Dividends — — — (27,376) — — (27,376) Repurchase and cancellation of shares (note 24) (1,530,180) (8,700) — (1,493) — — (10,193) Share-based compensation — — 700 — — — 700 Employee share purchase plan (notes 24 and 26) 11,582 16 (15) — — — 1 Net income — — — 45,104 — — 45,104 Other comprehensive income — — — — (7,577) (7) (7,584)
Balance at March 31, 2021 72,111,588 $ 313,951 $ 5,180 $ (40,172) $ (3,775) $ (492) $ 274,692 Issuance of shares upon exercise of stock options (note 24) 95,000 378 (84) — — — 294 Dividends — — — (21,104) — — (21,104) Repurchase and cancellation of shares (note 24) (2,106,000) (11,970) — (3,114) — — (15,084) Share-based compensation — — 618 — — — 618 Employee share purchase plan (notes 24 and 26) (4,664) (31) 31 — — — — Net income — — — 33,287 — — 33,287 Other comprehensive income (loss) — — — — (1,954) 2,780 826
Balance at March 31, 2022 70,095,924 $ 302,328 $ 5,745 $ (31,103) $ (5,729) $ 2,288 $ 273,529

The accompanying notes are an integral part of these consolidated financial statements.

Annual Report 2022 | Stingray Group Inc. | 64

Consolidated Statements of Cash Flows

Years ended March 31, 2022 and 2021

Years ended March 31, 2022 and 2021
(In thousands of Canadian dollars)	Note		2022		2021
Operating activities:
Net income		$	33,287	$	45,104
Adjustments for:
Depreciation, amortization and write-off			35,544		38,692
Share-based compensation, PSU and DSU expenses			6,597		7,287
Interest expense and standby fees	8		12,683		16,151
Mark-to-market gains on derivative financial instruments	8		(3,397)		(13,818)
Change in fair value of investments	17		2		3,787
Share of results of joint venture	17		65		38
Equity gains on associates	17		(241)		—
Change in fair value of contingent consideration	8		(7,555)		110
Depreciation, amortization and accretion of other
liabilities	8		1,644		3,248
Interest expense on lease liabilities	8, 21		1,615		1,628
Income tax expense			9,013		15,960
Income taxes paid			(5,570)		(3,309)
			83,687		114,878
Net changein non-cashoperatingitems	25		(24)		(10,632)
			83,663		104,246
Financing activities:
Increase (decrease) of credit facilities			53,658		(21,901)
Decrease of subordinated debt	20		(6,400)		(8,000)
Payment of dividends	24		(21,254)		(21,967)
Proceeds from the exercise of stock options	24		294		144
Shares repurchased and cancelled	24		(15,084)		(10,193)
Shares purchased under the employee share purchase plan			(430)		(339)
Interest paid			(14,384)		(18,053)
Repayment of lease liabilities	21		(4,815)		(5,011)
Repayment of other liabilities	22		(50,495)		(18,318)
Unwind of interestrate swaps	29		(600)		490
			(59,510)		(103,148)
Investing activities:
Business acquisitions, net of cash acquired	3		1,630		—
Acquisition of investments	17		(703)		—
Acquisition of investments in associates	17		(2,508)		—
Proceeds from the disposal of an investment	17		—		18,861
Acquisition of property and equipment			(9,061)		(5,690)
Acquisition of intangible assets other than internally
developed intangible assets			(1,134)		(1,313)
Additiontointernally developedintangible assets			(6,854)		(6,428)
			(18,630)		5,430
Net increase in cash and cash equivalents			5,523		6,528
Cashand cashequivalents, beginning ofyear			9,040		2,512
Cash and cash equivalents,end ofyear		$	14,563	$	9,040

The accompanying notes are an integral part of these consolidated financial statements.

Annual Report 2022 | Stingray Group Inc. | 65

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

1. BUSINESS DESCRIPTION

Stingray Group Inc. (the “Corporation”) is incorporated under the Canada Business Corporations Act. The Corporation is domiciled in Canada and its registered office is located at 730 Wellington, Montréal, Québec, H3C 1T4. The Corporation is a provider of multi-platform music services. It broadcasts high quality music and video content on a number of platforms including radio stations, premium television channels, digital TV, satellite TV, IPTV, the Internet, mobile devices and game consoles. A portion of the Corporation’s revenue is 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 the year ended March 31, 2021, Radio revenues did not follow historical patterns due to the ongoing impact of the coronavirus (“COVID-19”) pandemic.

2. SIGNIFICANT CHANGES AND HIGHLIGHTS

The consolidated financial position and performance of the Corporation was particularly affected by the following events and transactions during the year ended March 31, 2022:

• On December 31, 2021, the Corporation signed an agreement to acquire all of the membership interest of Pop Radio LLC, a company operating InStore Audio Network, an in-store audio advertising network in the United States, for total consideration of US$47,788 ($60,586). It resulted in the recognition of goodwill (Note 16), intangible assets (Note 15), a contingent consideration (Note 22) and a balance payable on acquisition (Note 22).

• On October 26, 2021, the Corporation made a voluntary capital repayment on its subordinated debt under its prepayment option of $6,400. The remaining capital balance of $25,600 will be payable on maturity date.

• On October 15, 2021, the Corporation amended its existing $392,500 credit facilities by increasing the authorized amount up to $442,500 and extending the maturity to October 15, 2026. The credit facilities consist of a revolving credit facility for an authorized amount up to $375,000 and a non-revolving term facility of $63,750.

• On September 21, 2021, the Corporation announced that the Toronto Stock Exchange had approved its normal course issuer bid, authorizing the Corporation to repurchase up to an aggregate 3,222,901 subordinate voting shares and variable subordinate voting shares (collectively, “Subordinate Shares”), representing approximately 10% of the public float of Subordinate Shares as at September 13, 2021. Refer to note 24 for more information.

• On August 11, 2021, the Corporation announced that it had acquired a minority interest of 20% in The Singing Machine Company Inc., for a cash consideration of US$2,000 ($2,508).

• On June 30, 2021, the Corporation signed an agreement to acquire all of the outstanding shares of Calm Radio Corp. (“Calm Radio”), a provider of online music focused on the wellness and relaxation markets, for total consideration of $8,171. It resulted in the recognition of goodwill (Note 16), intangible assets (Note 15) and contingent consideration (Note 22).

• On May 28, 2021, the Corporation fully repaid, on maturity, its $20,000 term loan.

Annual Report 2022 | Stingray Group Inc. | 66

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

3. BUSINESS ACQUISITIONS

FISCAL 2022

InStore Audio Network

On December 31, 2021, the Corporation purchased all of the membership interest of Pop Radio LLC, a company operating InStore Audio Network, an in-store audio advertising network in the United States, for a total consideration of US$47,788 ($60,586). As a result of the acquisition, goodwill of $18,567 was recognized related to the operating synergies expected to be achieved from integrating the acquired business into the Corporation’s existing business. The goodwill will be deductible for tax purposes.

The fair value of acquired trade receivables was US$5,629 ($7,136), which represented the gross contractual amount. The contingent consideration arrangement requires the Corporation to pay, in cash, to the former owners, an amount not exceeding US$11,843 ($15,015) over the next two years ending in April 2023, based on revenue target. The fair value of the contingent consideration was determined using an income approach based on the estimated amount and timing of projected cash flows. A portion of the balance payable on acquisition was subsequently paid on January 5, 2022 for an amount of US$33,500 ($42,471).

The results of the business acquisition of Pop Radio LLC for the period ended March 31, 2022 are included in results since the date of the acquisition. Revenues recorded from the acquisition date to March 31, 2022 were $6,673 and net income was $3,112. Had the acquisition occurred at the beginning of the fiscal year, revenues related to this acquired business would have been approximately $22,587 and net income would have been $7,742.

		Preliminary
Assets acquired:
Cash and cash equivalents	$	1,307
Trade and other receivables		7,136
Other current assets		984
Intangible assets		34,233
Goodwill		18,567
Other non-current assets		2,853
		65,080
Liabilities assumed:
Accounts payable and accrued liabilities		3,788
Deferredrevenues		706
		4,494
Net assets acquired at fair value	$	60,586
Consideration given:
Balance payable on business acquisition	$	45,025
Contingent consideration		11,895
Working capital payable		3,666
	$	60,586

As of the reporting date, the Corporation has not completed the purchase price allocation over the identifiable net assets and goodwill as information to confirm the fair value of certain assets and liabilities remains to be obtained.

Annual Report 2022 | Stingray Group Inc. | 67

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

Calm Radio Corp.

On June 30, 2021, the Corporation purchased all of the outstanding shares of Calm Radio, an online music streaming service focused on the wellness and relaxation markets, for a total consideration of $8,171. As a result of the acquisition, goodwill of $198 was recognized related to the operating synergies expected to be achieved from integrating the acquired business into the Corporation’s existing business. The goodwill will not be deductible for tax purposes.

The fair value of acquired trade receivables was $159, which represented the gross contractual amount. The contingent consideration arrangement requires the Corporation to pay, in cash, to the former owners, an amount not exceeding $8,000 over the next three years ending in August 2024, based on recurring monthly revenues targets. The fair value of the contingent consideration was determined using an income approach based on the estimated amount and timing of projected cash flows.

The Corporation finalized the assessment of the fair values of the assets acquired and liabilities assumed related to this acquisition and some adjustments to the preliminary assessment have been recorded in the consolidated statements of financial position as shown below.

The results of the business acquisition of Calm Radio for the period ended March 31, 2022 are included in results since the date of the acquisition. Revenues recorded from the acquisition date to March 31, 2022 were $2,753 and net income was $95. Had the acquisition occurred at the beginning of the fiscal year, revenues related to this acquired business would have been approximately $3,688 and net income would have been $146.

		Preliminary	Adjustments		Final
Assets acquired:
Cash and cash equivalents	$	314 $	9	$	323
Trade and other receivables		149	10		159
Other current assets		104	17		121
Property and equipment		83	(27)		56
Intangible assets		12,728	(647)		12,081
Goodwill		39	159		198
Deferred taxassets		142	(142)		—
		13,559	(621)		12,938
Liabilities assumed:
Accounts payable and accrued liabilities		208	13		221
Deferred revenues		1,872	(232)		1,640
Deferred tax liabilities		3,308	(402)		2,906
		5,388	(621)		4,767
Net assets acquired at fair value	$	8,171 $	—	$	8,171
Consideration given:
Balance payable on business acquisition	$	4,000 $	—	$	4,000
Contingent consideration		3,912	—		3,912
Working capital payable		259	—		259
	$	8,171 $	—	$	8,171

Annual Report 2022 | Stingray Group Inc. | 68

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

FISCAL 2021

Marketing Sensorial México

On May 6, 2020, the Corporation purchased all of the assets of Marketing Sensorial México (“MSM”) for a total consideration of MXN 127,759 ($7,433). MSM is a Mexican leader in point-of-sale marketing solutions. As a result of the acquisition, goodwill of $2,947 was recognized related to the operating synergies expected to be achieved from integrating the acquired business into the Corporation’s existing business. The intangible assets and goodwill will be deductible for tax purposes.

The Corporation finalized the assessment of the fair values of the assets acquired and liabilities assumed related to this acquisition and no adjustment to the preliminary assessment have been recorded in the consolidated statements of financial position.

		Final
Assets acquired:
Property and equipment	$	1,765
Intangible assets		2,721
Goodwill		2,947
Net assets acquired at fair value	$	7,433
Consideration given:
Balance payable on business acquisition	$	5,236
Contingent consideration		2,197
	$	7,433

Annual Report 2022 | Stingray Group Inc. | 69

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

4. SEGMENT INFORMATION

OPERATING SEGMENTS

The Corporation’s operating segments are aggregated in two segments: Broadcasting and commercial music and Radio. The operating segments reflect how the Corporation manages its operations, resources and assets and how it measures its performance. Both operating segments’ financial results are reviewed by the Chief operating decision maker (“CDOM”) to make decisions about resources to be allocated to the segment and asses its performance based on adjusted earnings before interest, taxes, depreciation and amortization (thereafter “Adjusted EBITDA”), and for which distinct financial information is available. Adjusted EBITDA excludes from income before income taxes the following expenses: share-based compensation, performance and deferred share unit expense, depreciation, amortization and write-off, net finance expense (income), change in fair value of investments and acquisition, legal, restructuring and other expenses. There are no intersegment revenues for the periods.

The Broadcasting and commercial music segment specializes in the broadcast of music and videos on multiple platforms and digital signage experiences and generates revenues from subscriptions or contracts.

The Radio segment operates several radio stations across Canada and generates revenues from advertising.

Corporate and eliminations is a non-operating segment comprising corporate and administrative functions that provide support and governance to the Corporation’s operating business units.

The following tables present financial information by segment for the years ended March 31, 2022 and 2021.

Year ended	Broadcasting and commercial music Radio Corporate and eliminations Consolidated
	2022 2021 2022 2021 2022 2021 2022 2021
Revenues Operating expenses (excluding Share-based compensation and PSU and DSU expenses)	$ 159,082 $ 150,047 $ 123,544 $ 97,810 $ — $ —$ 282,626 $ 247,857 100,767 72,594 77,309 56,528 5,281 4,467 183,357 133,589
Adjusted EBITDA Share-based compensation PSU and DSU expenses Depreciation, amortization and write-off Net finance expense (income) Change in fair value of investments Acquisition, legal, restructuring and other expenses	$ 58,315 $ 77,453 $ 46,235 $ 41,282 (5,281) (4,467) 99,269 114,268 798 851 798 851 5,799 6,436 5,799 6,436 35,544 38,692 35,544 38,692 6,119 (1,199) 6,119 (1,199) 2 3,787 2 3,787 $ 8,707$ 4,637 8,707 **4,637 **
Income before income taxes Income taxes	42,300 61,064 9,013 15,960
Net income	$ 33,287$ 45,104

Annual Report 2022 | Stingray Group Inc. | 70

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

		Broadcasting and	Broadcasting and				Corporate and	Corporate and
		commercial music		Radio			eliminations			Consolidated
	March 31,		March 31,	March 31,	March 31,		March 31,	March 31,		March 31, March 31,
		2022	2021	2022		2021	2022		2021	2022 2021
Total assets	$	268,160 $	217,256	$ 615,541	$	605,581 $	—	$	—	$ 883,701 $ 822,837
Total liabilities(1)	$	97,569 $	85,194	$ 122,235	$	116,727 $	390,368	$ 346,224		$ 610,172 $ 548,145

(1) Total liabilities include operating liabilities, the Credit facilities and the Subordinated debt

		Broadcasting and	Broadcasting and	Broadcasting and
		commercial music				Radio			Consolidated
Year ended		2022		2021		2022	2021		2022		2021
Acquisition of property
and equipment	$	4,617	$	6,731	$	4,066 $	1,527	$	8,683	$	8,258
Addition to
right-of-use assets on
leases	$	685	$	3,282	$	2,434 $	1,415	$	3,119	$	4,697
Acquisition of intangible
assets	$	54,467	$	11,654	$	— $	—	$	54,467	$	11,654
Acquisition of broadcast
licences	$	—	$	—	$	8 $	78	$	8	$	78
Goodwill recorded on
business acquisitions	$	18,765	$	2,947	$	— $	—	$	18,765	$	2,947

Acquisition of property and equipment, right-of-use assets on leases, intangible assets, broadcast licences and goodwill, includes those acquired through business acquisitions, whether they were paid or not, and none are related to the Corporate segment.

As at March 31, 2022, approximately 75% (80% as at March 31, 2021) of the Corporation’s non-current assets are located in Canada.

The 2021 comparative figures have been recast to adjust certain contracts that were recognized on a gross basis that should have been recognized on a net basis. This had the effect of reducing revenues and operating expenses of the Broadcasting and commercial music segment from previously recorded $151,658 and $74,205 to recast $150,047 and $72,594, respectively. Consolidated revenues and operating expenses have been reduced from $249,468 to $247,857 and $142,487 to $140,876, respectively.

Annual Report 2022 | Stingray Group Inc. | 71

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

5. REVENUES

DISAGGREGATION OF REVENUES

The following table presents the Corporation’s revenues disaggregated by reportable segment, primary geographical market and product.

market and product.
	Reportable segments(3)
Year ended	2022 2021 2022 2021 2022 2021
	Broadcasting and commercial music Radio Total revenues
Geography Canada $ United States Other countries	54,195 52,919 $ 123,544 97,810 $ 177,739 150,729 52,403 40,417 — — 52,403 40,417 52,484 56,711 — — 52,484 56,711
	159,082 150,047 123,544 97,810 282,626 247,857
Products Subscriptions(1) Equipment and labor(2) Advertising (2)	134,257 135,259 — — 134,257 135,259 12,863 11,138 — — 12,863 11,138 11,962 3,650 123,544 97,810 135,506 101,460
$	159,082 150,047 $ 123,544 97,810 $ 282,626 247,857

(1) Generally recognized over time

(2) Generally recognized at a point in time

(3) No revenues are generated from the Corporate Segment

UNSATISFIED PORTION OF PERFORMANCE OBLIGATIONS

The following table presents the revenues expected to be recognized over the next three years and thereafter related to unsatisfied or partially satisfied performance obligations as at March 31, 2022. The table below excludes i) contracts with a duration of one year or less and ii) variable consideration, such as revenues based on a number of subscribers or location as they will likely vary throughout the term of the contracts.

		2023	2024	2025	Thereafter		Total
Equipment and labor	$	3,695	—	—	—	$	3,695
Subscriptions		15,688	12,207	6,526	3,306		37,727
	$	19,383	12,207	6,526	3,306	$	41,422

Annual Report 2022 | Stingray Group Inc. | 72

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

6. OPERATING EXPENSES

During the year ended March 31, 2021, the Corporation applied and qualified for the Canada Emergency Wage Subsidy (“CEWS”), a Canadian federal government program created in response to the negative economic impact of the COVID-19 pandemic and designed to provide financial assistance to businesses who experienced a certain level of decrease in revenues to help them retain their employees. During the year ended March 31, 2022, the Corporation recognized, as a reduction of operating expenses, the subsidies claimed under the CEWS and other programs amounting to $5,437 (2021 – $25,161). As at March 31, 2022, the Corporation received most of the subsidies claimed from the Canadian federal government.

The Corporation also received tax credits related to its research and development and multimedia activities, which amounted $1,606 (2021 – $3,127) and was recorded as a reduction of operating expenses for an amount of $799 and as a reduction of intangible assets for an amount of $807 (2021 - nil).

7. OTHER INFORMATION

Expenses by nature are as follows:
		2022		2021
Salaries and other short-term employee benefits	$	96,566	$	79,013
Research and development	$	11,149	$	7,562
Equipment costs	$	6,869	$	4,932
Share-based compensation	$	798	$	851
PSU and DSU expenses	$	5,799	$	6,436

8. NET FINANCE EXPENSE (INCOME)

		2022		2021
Interest expense and standby fees	$	12,683	$	16,151
Mark-to-market gains on derivative financial instruments		(3,397)		(13,818)
Change in fair value of contingent consideration		(7,555)		110
Depreciation, amortization and accretion of other liabilities		1,644		3,248
Interest expense on lease liabilities (note 21)		1,615		1,628
Foreign exchange loss(gain)		1,129		(8,518)
	$	6,119	$	(1,199)

9. ACQUISITION, LEGAL, RESTRUCTURING AND OTHER EXPENSES

		2022		2021
Acquisition	$	282	$	2,439
Legal		2,505		623
Restructuringand other		5,920		1,575
	$	8,707	$	4,637

Annual Report 2022 | Stingray Group Inc. | 73

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

10. INCOME TAXES

The income tax expense consists of the following:

The income tax expense consists of the following:
		2022		2021
Current income tax:
Current year	$	10,308	$	9,851
Adjustment forprioryears		(129)		(177)
		10,179		9,674
Deferred income tax:
Origination and reversal of temporary differences		(733)		6,194
Change in substantively enacted tax rate		(164)		6
Adjustmentforprioryears		(269)		86
		(1,166)		6,286
Total income tax expense	$	9,013	$	15,960

The following table reconciles income tax computed at the Canadian statutory rate of 26.5% (2021 — 26.5%) and the total income tax expense for the years ended March 31.

ncome tax expense for the years ended March 31.
		2022		2021
Income beforeincome taxes	$	42,300	$	61,064
Income tax at the combined Canadian statutory rate		11,210		16,182
(Decrease) increase resulting from:
Impact of foreign tax rate differences		(860)		(1,726)
Income taxes on non-deductible expenses and
non-taxable revenues		(1,547)		1,548
Change in recognized tax losses and deductible temporary
differences		266		—
Change in substantively enacted tax rate		(164)		6
Other		108		(50)
Total income tax expense	$	9,013	$	15,960

SIGNIFICANT ESTIMATE

Recorded income taxes and tax credits are subject to review and approval by tax authorities and therefore, final amounts could be different from the amounts recorded.

Annual Report 2022 | Stingray Group Inc. | 74

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

RECOGNIZED DEFERRED TAX ASSETS AND LIABILITIES

The tax effects of significant components of temporary differences that give rise to deferred tax assets and liabilities are as follows:

as follows:
	2022 Assets Liabilities	2021
		Assets Liabilities
Property and equipment Intangible assets, goodwill and broadcast licences Financing fees Tax losses and Scientific Research and Experimental Development Expenditures (“SR&ED”) carried forward Investments CRTC tangible benefits Performance and deferred share unit plans Right-of-use assets on leases Lease liabilities Accrued pension benefit liability Other	$ 2,067 $ 3,261 839 66,879 514 — 6,105 — — 66 7,479 — 3,213 — — 6,844 7,485 — 1,457 — 25 —	$ 1,837 $ 2,940 934 65,134 980 — 7,670 — — — 7,390 — 2,596 — — 4,844 5,270 — 1,941 — 327 1,086
Deferred tax assets and liabilities Offsettingof assets and liabilities	29,184 77,050 (26,368) (26,368)	28,945 74,004 (24,279) (24,279)
Net deferred tax assets and liabilities	$ 2,816 $ 50,682	$ 4,666 $ 49,725

Changes in deferred tax assets and liabilities for the year ended March 31, 2022 are as follow:

				Recognized in
		Balance		other	Exchange		Balance
		as at March	Recognized	comprehensive	rate	Business	as at March
		31, 2021	in netincome	income (loss)	change	acquisitions	31, 2022
Property and equipment	$	(1,103)	(90)	—	—	—	(1,193)
Intangible assets, goodwill
and broadcast licences		(64,200)	1,371	—	(70)	(3,141)	(66,040)
Financing fees		980	(466)	—	—	—	514
Tax losses and SR&ED
carried forward		7,670	(1,809)	—	8	234	6,103
Investments		—	(65)	—	—	—	(65)
CRTC tangible benefits		7,390	89	—	—	—	7,479
Performance and deferred
share unit plans		2,596	617	—	—	—	3,213
Right-of-use assets on leases		(4,844)	(2,000)	—	—	—	(6,844)
Lease liabilities		5,270	2,215	—	—	—	7,485
Accrued pension benefit
liability		1,941	520	(1,004)	—	—	1,457
Other		(759)	784	—	—	—	25
	$	(45,059)	1,166	(1,004)	(62)	(2,907)	(47,866)

Annual Report 2022 | Stingray Group Inc. | 75

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

Changes in deferred tax assets and liabilities for the year ended March 31, 2021 are as follow:

				Recognized in
		Balance		other		Balance
		as at March	Recognized in	comprehensive	Exchange	as at March
		31, 2020	netincome	income (loss)	rate change	31, 2021
Property and equipment	$	(1,226)	123	—	—	(1,103)
Intangible assets, goodwill and
broadcast licences		(62,811)	(1,445)	—	56	(64,200)
Financing fees		1,304	(324)	—	—	980
Tax losses and SR&ED carried
forward		15,491	(7,807)	—	(14)	7,670
Investments		(2,829)	2,829	—	—	—
CRTC tangible benefits		7,113	277	—	—	7,390
Performance and deferred
share unit plans		1,313	1,283	—	—	2,596
Right-of-use assets on leases		(5,608)	764	—	—	(4,844)
Lease liabilities		5,932	(662)	—	—	5,270
Accrued pension benefit liability		2,238	(300)	3	—	1,941
Other		368	(1,024)	—	(103)	(759)
	$	(38,715)	(6,286)	3	(61)	(45,059)

UNRECOGNIZED DEFERRED TAX ASSETS

The Corporation has operating tax losses carried forward of $30,331 (2021 – $43,047) that are available to reduce future taxable income. A tax benefit was not recognized for $9,297 (2021 – $6,818) of these tax losses carried forward. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Corporation can utilize the benefits therefrom.

As at March 31, 2022 and 2021, the amounts and expiry dates of the tax losses carried forward were as follows:

	2022
	Canada (1) Netherlands Belgium Switzerland United Kingdom
2023 2028 2038 2039 2040 2041 Indefinite	$ — $ — $ — $ 2,064 $ — — — — 789 — 2,474 — — — — 232 — — — — 1,334 — — — — 837 — — — — — 2,106 2,990 — 17,505
	$ 4,877 $ 2,106 $ 2,990 $ 2,853 $ 17,505

(1) Represents tax losses carried forward as per federal jurisdiction and tax losses available as per provincial jurisdictions may differ.

Annual Report 2022 | Stingray Group Inc. | 76

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

	2021
	Canada (1) Singapore Switzerland UnitedKingdom
2022(2) 2023 2028 2036 2037 2038 2039 2040 2041 Indefinite	$ — $ — $ 3,335 $ — — — 2,032 — — — 360 — 51 — — — 323 — — — 2,992 — — — 808 — — — 4,465 — — — 1,535 — — — — 579 — 26,567
	$ 10,174 $ 579 $ 5,727 $ 26,567

(1) Represents tax losses carried forward as per federal jurisdiction and tax losses available as per provincial jurisdictions may differ.

(2) These losses expired during the year ended March 31, 2022.

UNRECOGNIZED DEFERRED TAX LIABILITIES

The Corporation has not recognized a deferred tax liability for the undistributed earnings of its subsidiaries in the current and prior years for those that the Corporation does not currently expect those undistributed earnings to reverse and become taxable in the foreseeable future. A deferred income tax liability will be recognized when the Corporation expects that it will recover those undistributed earnings in a taxable manner, such as the sale of the investment or through the receipt of dividends.

11. EARNINGS PER SHARE

		2022		2021
Netincome	$	33,287	$	45,104
Basic weighted average number of subordinate voting shares,
variable subordinate voting shares and multiple voting shares		70,968,954		73,266,886
Dilutive effect ofstockoptions		494,627		168,306
Diluted weighted average number of subordinated voting shares,
variable subordinated voting shares and multiple voting shares		71,463,581		73,435,192
Earnings per share — Basic	$	0.47	$	0.62
Earningsper share — Diluted	$	0.47	$	0.61

Annual Report 2022 | Stingray Group Inc. | 77

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

12. TRADE AND OTHER RECEIVABLES

		2022		2021
Trade	$	50,791	$	45,381
Other receivables		6,464		7,355
Settlement receivable		5,155		5,155
Sales taxes receivable		4,256		3,223
	$	66,666	$	61,114

As at March 31, 2022 and 2021, the Corporation had research and development tax credits receivable of $3,406 and $3,506, respectively, from the provincial and federal governments, which relate to qualified research and development expenditures under the applicable tax laws. As at March 31, 2022, the research and development tax credits receivable of $2,738 was booked as a deduction of income tax payable. The amounts are subject to a government tax audit and the final amounts received may differ from those recorded.

During the year ended March 31, 2021, the Corporation, together with its Canadian Broadcast Distribution Undertaking customers (together, the “Objectors”), and SOCAN have entered into a binding memorandum of understanding that will result in a partial refund to the Objectors of past royalties paid to Canadian collective societies. An amount of $5,155 was therefore recognized in reduction of operating expenses and was still receivable as at March 31, 2022. The Corporation started to receive a portion of the receivable after March 31, 2022 and expects to recover the full amount in the next twelve months.

Annual Report 2022 | Stingray Group Inc. | 78

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

13. PROPERTY AND EQUIPMENT

		Land,
		buildings and				Furniture,
		leasehold	Broadcasting			fixtures and		Computer
		improvements	infrastructure			equipment		hardware	**Other **		**Total **
Cost
Balance at March 31, 2020	$	15,869	$	17,660	$	25,071	$	15,391 $	2,562	$	76,553
Additions		131		1,119		3,769		1,419	55		6,493
Additions through business
acquisition		—		—		—		1,765	—		1,765
Disposals and write-off		(21)		(48)		(4,298)		(71)	(301)		(4,739)
Foreign exchange
differences		(40)		—		(126)		105	—		(61)
Balance at March 31, 2021		15,939		18,731		24,416		18,609	2,316		80,011
Additions		275		3,204		3,786		1,094	268		8,627
Additions through business
acquisition		17		—		29		10	—		56
Disposals and write-off		(219)		(564)		(1,139)		(73)	(29)		(2,024)
Foreign exchange
differences		6		—		(2)		(50)	—		(46)
Balance at March 31, 2022	$	16,018	$	21,371	$	27,090	$	19,590 $	2,555	$	86,624
Accumulated depreciation
Balance at March 31, 2020	$	4,066	$	3,085	$	12,728	$	10,336 $	606	$	30,821
Depreciation for the year		1,409		2,706		4,093		2,596	103		10,907
Disposals and write-off		(12)		(31)		(3,587)		(36)	(15)		(3,681)
Foreign exchange
differences		(34)		—		(219)		(11)	—		(264)
Balance at March 31, 2021		5,429		5,760		13,015		12,885	694		37,783
Depreciation for the year		1,044		2,706		4,521		2,130	121		10,522
Disposals and write-off		(218)		(694)		(465)		(71)	(29)		(1,477)
Foreign exchange
differences		2		—		(54)		(83)	—		(135)
Balance at March 31, 2022	$	6,257	$	7,772	$	17,017	$	14,861 $	786	$	46,693
Net carrying amounts
March 31, 2021	$	10,510	$	12,971	$	11,401	$	5,724 $	1,622	$	42,228
March 31, 2022	$	9,761	$	13,599	$	10,073	$	4,729 $	1,769	$	39,931

Annual Report 2022 | Stingray Group Inc. | 79

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

14. RIGHT-OF-USE ASSETS ON LEASES

		Land and
		buildings		Vehicles		**Total **
Cost
Balance at March 31, 2020	$	34,254	$	851	$	35,105
Additions		4,627		70		4,697
Reassessment of leases’ term		(407)		—		(407)
Foreignexchange differences		13		(13)		—
Balance at March 31, 2021		38,487		908		39,395
Additions		2,823		296		3,119
Reassessment of leases’ term		(2,211)		—		(2,211)
Foreign exchange differences		(84)		(15)		(99)
Balance at March 31, 2022	$	39,015	$	1,189	$	40,204
**Accumulated depreciation **
Balance at March 31, 2020	$	5,289	$	356	$	5,645
Depreciation for the year		5,285		329		5,614
Reassessment of leases’ term		(35)		—		(35)
Foreignexchange differences		(4)		(9)		(13)
Balance at March 31, 2021		10,535		676		11,211
Depreciation for the year		4,806		270		5,076
Reassessment of leases’ term		(1,970)		—		(1,970)
Foreign exchange differences		(43)		(14)		(57)
Balance at March 31, 2022	$	13,328	$	932	$	14,260
Net carrying amounts
March 31, 2021	$	27,952	$	232	$	28,184
March 31,2022	$	25,687	$	257	$	25,944

Annual Report 2022 | Stingray Group Inc. | 80

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

15. INTANGIBLE ASSETS, EXCLUDING BROADCAST LICENCES

									Licences,
									website
		Internally						application
	developed				Client list				and		Non-
		software	Music		and				computer		compete
		and apps	catalog	**relationships **		Trademarks			software	agreements			**Total **
Cost
Balance at March 31, 2020	$	14,304 $	12,154	$	113,323	$	10,621	$	25,925	$	17,901	$	194,228
Additions		6,428	1,527		—		—		978		—		8,933
Additions through
business acquisition		—	—		2,087		253		—		381		2,721
Disposals and write-off		—	(3,574)		(3,587)		—		(1,207)		—		(8,368)
Foreign exchange
differences		(336)	(41)		(982)		(392)		(788)		(183)		(2,722)
Balance at March 31, 2021		20,396	10,066		110,841		10,482		24,908		18,099		194,792
Additions, net of tax credit of		6,854	618		—		—
$807									681		—		8,153
Additions through
business acquisitions		1,639	—		31,156		3,767		9,488		264		46,314
Foreign exchange
differences		366	(21)		(1,710)		(177)		(247)		(110)		(1,899)
Balance at March 31, 2022	$	29,255 $	10,663	$	140,287	$	14,072	$	34,830	$	18,253	$	247,360
Accumulated depreciation
Balance at March 31, 2020	$	4,443 $	6,864	$	94,912	$	4,943	$	17,004	$	11,572	$	139,738
Amortization for the year		5,075	862		6,174		1,316		3,976		3,976		21,379
Disposals and write-off		—	(1,299)		(3,587)		—		(1,025)		—		(5,911)
Foreign exchange
differences		(259)	(33)		(919)		(198)		(758)		(131)		(2,298)
Balance at March 31, 2021		9,259	6,394		96,580		6,061		19,197		15,417		152,908
Amortization for the year		6,512	988		6,394		1,234		2,869		1,402		19,399
Foreign exchange
differences		259	(12)		(1,123)		(98)		(144)		(59)		(1,177)
Balance at March 31, 2022	$	16,030 $	7,370	$	101,851	$	7,197	$	21,922	$	16,760	$	171,130
Net carrying amounts
March 31, 2021	$	11,137 $	3,672	$	14,261	$	4,421	$	5,711	$	2,682	$	41,884
March 31, 2022	$	13,225 $	3,293	$	38,436	$	6,875	$	12,908	$	1,493	$	76,230

Annual Report 2022 | Stingray Group Inc. | 81

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

16. GOODWILL AND BROADCAST LICENCES

		Goodwill	**Broadcast **	licences
Balance at March 31, 2020	$	337,824	$	272,910
Additions through business acquisition (note3)		2,947		—
Additions		—		78
Foreignexchange differences		(2,874)		—
Balance at March 31, 2021		337,897		272,988
Additions through business acquisitions (note3)		18,765		—
Additions		—		8
Foreign exchange differences		(2,358)		—
Balance at March 31,2022	$	354,304	$	272,996

ANNUAL IMPAIRMENT ASSESSMENTS

Goodwill and broadcast licences are tested for impairment annually and when circumstances indicate the carrying value may be impaired. The Corporation’s impairment test for goodwill and broadcast licences having indefinite useful lives was based on the greater of value-in-use (“VIU”) and fair value less cost to sell (“FVLCS”) calculations determined by using a discounted cash flow model. VIU and FVLCS of cash generating units (“CGUs”) are determined with significant unobservable inputs and are considered level 3 within the fair value hierarchy.

CASH-GENERATING UNITS

For the purposes of assessing impairment, goodwill is allocated to those CGUs that are expected to benefit from synergies of the related business combination and represent the lowest level within the Corporation at which management monitors goodwill.

Broadcast licences are grouped at the CGU level, which is the lowest level for which there are largely independent cash inflows. For broadcast licences impairment testing purposes, the Corporation has identified 14 CGUs, based on geographical areas where interdependent cash inflows exist. Impairment charges and reversals, if any, are included as a separate line on the consolidated statements of comprehensive income.

The carrying amounts of goodwill and broadcast licences allocated to each CGU and/or group of CGUs are set out in the following tables.

ollowing tables.
		2022		2021
Goodwill
Radio	$	218,404	$	218,404
Broadcast and commercial music		135,900		119,493
	$	354,304	$	337,897
Broadcast licences
Toronto	$	90,270	$	90,270
Ottawa		48,568		48,568
Other(1)		134,158		134,150
	$	272,996	$	272,988

(1) The carrying value of broadcast licences in each of the other CGUs is less than 10% of the total carrying value of broadcast licences. Consequently, these other CGUs are grouped together for the purpose of note disclosure.

Annual Report 2022 | Stingray Group Inc. | 82

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

RADIO LICENCES IMPAIRMENT ASSESSMENTS

The recoverable amounts of the CGUs have been determined based on their VIU. The recoverable values have been determined to be higher than the carrying amounts. As a result, no impairment was recorded.

The VIUs were calculated using unobservable (Level 3) inputs such as cash flow projections from financial budgets approved by the Board of Directors. Growth rates used over the budget period are based on management’s estimates of performance, which is established by considering historical growth rates achieved as well as anticipated fluctuations including those resulting from the current economic environment. The growth rates depend also on whether the CGU includes mature market stations versus start-up or evolving stations. Management assesses how the CGU’s market position, relative to its competitors, might change over the budget period. The key assumptions used in the estimation of the recoverable amount for the CGUs are the risk adjusted forecasted cash flows. The most significant assumptions that form part of the risk adjusted forecasted cash flows relate to estimated growth in revenues and operating expenses. Forecasts are based on the Corporation’s estimate of future performance for this mature industry. Management expects the Corporation’s share of the market to be stable over the long-term budget period, despite that changes in rating results could affect local market shares and relating growth rates.

CGU	Five-year average	Five-year average
	growth rate in	growth rate in		Pre-tax discount
	revenues	operatingexpenses	Terminal value	rate
Toronto	5.5%	3.9%	1.5%	9.3%
Ottawa	6.6%	2.1%	1.5%	9.3%
Other(1)	3.4% to 6.0%	(3.1)% to 2.8%	1.5%	9.1% to 9.4%

(1) The carrying value of broadcast licences in each of the other CGUs is less than 10% of the total carrying value of broadcast licences. Consequently, these other CGUs are grouped together for the purpose of note disclosure.

The pre-tax discount rates applied to cash flow projections were derived from the Corporation’s weighted average cost of capital (“WACC”). The discount rate calculation is based on the specific circumstances of the Corporation and its CGUs and is derived from its WACC. The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Corporation’s investors. The cost of debt is based on the interest-bearing borrowings the Corporation is obliged to service. CGU-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.

The possibility of new market entrants can have an impact on growth rate assumptions, as can adverse ratings results, which would impact market share. However, management does not believe these would have a significant adverse effect on the forecasts included in the budget and management’s conclusions on impairment would not be materially different as a result. The determination of VIU is sensitive to the discount rates used and therefore management’s conclusions on impairment could be materially different if the assumptions used to determine the discount rates changed.

By their nature, these estimates and assumptions are subject to measurement uncertainty, and consequently, actual results could differ from estimates used. However, it has been determined that there is no reasonable change in assumptions that would cause the carrying amount to exceed the estimated recoverable amount.

Annual Report 2022 | Stingray Group Inc. | 83

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

GOODWILL IMPAIRMENT ASSESSMENTS

The recoverable amount of the CGU has been determined based on its VIU. The recoverable amount has been determined to be higher than the carrying amount. As a result, no impairment was recorded.

The VIU was calculated using unobservable (Level 3) inputs such as risk adjusted cash flows from financial budgets approved by the Board of Directors covering a five-year period. The Corporation considered past experience, economic trends as well as industry and market trends in assessing the level of cash flows that can be maintained in the future.

The most significant assumptions that form part of the risk adjusted forecasted cash flows relate to estimated growth in revenues and operating expenses. Forecasts are based on the Corporation’s estimate of future performance for this mature industry.

CGU	Five-year average	Five-year average
	growth rate in	growth rate in		Pre-tax discount
	revenues	operatingexpenses	Terminal value	rate
Broadcast and Commercial Music	9.8%	3.7%	2.5%	9.0%
Radio	5.3%	2.3%	1.5%	9.3%

The pre-tax discount rate represents the Corporation’s WACC as at the date of the assessment. Refer to the section above for more information on discount rates calculation.

By their nature, these estimates and assumptions are subject to measurement uncertainty, and consequently, actual results could differ from estimates used. However, it has been determined that there is no reasonable change in assumptions that would cause the carrying amount to exceed the estimated recoverable amount.

Annual Report 2022 | Stingray Group Inc. | 84

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

17. INVESTMENTS

The table below provides a continuity of investments, investment in a joint venture and investments in associates:

			Investment in a	Investment in a	Investments	Investments
		Investments		joint venture	in	associates	**Total **
Balance at March 31, 2020	$	23,548	$	628	$	1,556 $	25,732
Proceeds from disposal of an investment		(18,861)		—		—	(18,861)
Share of results of joint venture		—		(38)		—	(38)
Change in fair value, including foreign
exchange differences		(3,787)		—		—	(3,787)
Balance at March 31, 2021		900		590		1,556	3,046
Additions		703		—		2,508	3,211
Share of results of joint venture		—		(65)		—	(65)
Equity gains on associates		—		—		241	241
Change in fair value, including foreign
exchange differences		12		—		(14)	(2)
Balance at March 31, 2022	$	1,615	$	525	$	4,291 $	6,431

INVESTMENTS

The Corporation has equity instruments in private entities at fair value that are estimated using a market comparison technique. The valuation model is based on market multiples derived from quoted price of companies comparable to the investments and the expected EBITDA on the investments.

All equity instruments in private entities are classified as financial assets at fair value through profit and loss.

SIGNIFICANT ESTIMATE

The fair value of investments that are not traded in an active market is determined using valuation techniques. The Corporation uses judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting year. For details on the key assumptions used and the impact of changes to these assumptions see Note 29.

Annual Report 2022 | Stingray Group Inc. | 85

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

18. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		2022		2021
Trade	$	18,374	$	15,226
Accrued liabilities		44,394		34,172
Sales taxespayable		4,248		3,748
	$	67,016	$	53,146

19. CREDIT FACILITIES

The credit facilities consist of a $375,000 revolving credit facility (“Revolving facility”) and a remaining $63,750 term loan (“Term facility”), both maturing in October 2026. On May 28, 2021, the Corporation fully repaid, on maturity, its $20,000 term loan.

The credit facilities may be drawn in Canadian dollars in the form of prime rate loan or banker’s acceptances, in US dollars in the form of US base rate loans or LIBOR loans, in Euro in the form of LIBOR loans, in British Pound in the form of SONIA loans and in Australian dollars in the form of BBSY loans.

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.

In addition, the Corporation incurs standby fees based on a financial covenant, on the unused portion of the credit facilities (0.40% for the years ended March 31, 2022 and 2021). The credit facilities are secured by guarantees from subsidiaries and first ranking lien on universality of all assets, tangible and intangibles, present and future.

The tables below are a summary of the credit facilities:

March 31, 2022	Total	available		Drawn	Letterofcredit	Letterofcredit		Net available
Committed credit facilities
Revolving facility	$	375,000	$	295,586	$	750	$	78,664
Term facility		63,750		63,750		—		—
Total committed credit facilities	$	438,750	$	359,336	$	750	$	78,664
Less: unamortized deferred financing fees				(1,133)
Balance, end of year				358,203
Current portion			$	7,500
Non-currentportion			$	350,703

Annual Report 2022 | Stingray Group Inc. | 86

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

Years ended March 31, 2022 and 2021
(In thousands of Canadian dollars, unless otherwise stated)
March 31, 2021	Total	available		Drawn	Letterofcredit			Net available
Committed credit facilities
Revolving facility	$	325,000	$	213,434	$	750	$	110,816
Term facilities		91,250		91,250		—		—
Total committed credit facilities	$	416,250	$	304,684	$	750	$	110,816
Less:unamortized deferredfinancingfees				(980)
Balance, end of year				303,704
Current portion			$	27,462
Non-currentportion			$	276,242

As at March 31, 2022 and 2021, a letter of credit amounting to $750 reduced the availability on the Revolving facility.

The Corporation is required to make consecutive quarterly capital repayments of 2.50% of the initial drawdown amount of the Term facility. The remaining capital balance will be payable on maturity date, on October 15, 2026.

	Capital repayments of	Capital repayments of
	the	Term facility
2023	$	7,500
2024		7,500
2025		7,500
2026		7,500
2027		33,750
	$	63,750

As at March 31, 2022, the Corporation was in compliance with all the requirements of its credit agreement.

20. SUBORDINATED DEBT

The subordinated debt has a nominal value of $50,000 and matures on October 26, 2023. During the years ended on March 31, 2022 and 2021, the Corporation made a voluntary capital repayments under its prepayment option of $6,400 and $8,000, respectively. The loan is unsecured and bears interest based on a financial covenant (6.65% as at March 31, 2022 and 6.95% as at March 31, 2021). The remaining capital balance will be payable on maturity date.

Unamortized deferred financing fees amounted to $158 as at March 31, 2022 (2021 – $259).

Annual Report 2022 | Stingray Group Inc. | 87

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

21. LEASE LIABILITIES

The following table presents a summary of the activity related to the lease liabilities of the Corporation.

		2022		2021
Lease liabilities, beginning of year	$	30,212	$	30,853
Additions		3,119		4,703
Payment of lease liabilities, including related interest		(6,430)		(6,639)
Reassessment of leases’ term		(153)		(381)
Disposal		—		32
Interest expense on lease liabilities (note 8)		1,615		1,628
Foreignexchange		(45)		16
Lease liabilities,end ofyear	$	28,318	$	30,212
Lease liabilities included in the consolidated		March 31,		March 31,
**statements of financial position **		2022		2021
Current portion	$	4,171	$	4,479
Non-current portion	$	24,147	$	25,733
	$	28,318	$	30,212

The following table presents the maturity analysis of contractual undiscounted cashflows related to the lease liabilities of the Corporation as of March 31, 2022.

he Corporation as of March 31, 2022.
Less than one year	$	1,439
One to five years		19,171
More than five years		16,308
Total undiscounted lease liabilities as at March 31,2022	$	36,918

Annual Report 2022 | Stingray Group Inc. | 88

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

22. OTHER LIABILITIES

		2022		2021
CRTC tangible benefits	$	28,240	$	27,970
Contingent consideration		19,204		14,456
Balance payable on business acquisitions		2,559		100
Accrued pension benefit liability (note 23)		2,837		6,112
Derivative financial instruments (note 29)		1,464		5,370
Performance share units payable		5,046		4,478
Other		1,647		1,541
		60,997		60,027
Currentportion		(17,786)		(15,812)
	$	43,211	$	44,215

SIGNIFICANT ESTIMATE — CONTINGENT CONSIDERATION

In the event that certain predetermined sales volumes, specific contract renewals and other conditions are achieved by the acquired companies, additional consideration may be payable in the future.

The fair value of the contingent consideration of $19,204 was estimated by calculating the present value of the future expected outflows. For details of the key assumptions used and the impact of changes to these assumptions, see Note 29. The estimates are based on discount rates ranging from 12% to 36%. During the year ended March 31, 2022, the Corporation reassessed certain contingent consideration, as the actual sales revenues expected to be achieved by the acquired companies were either above or below the maximum threshold, contingent services to be received are not expected to be received in the future for one acquired company, and because of contractual rights to offset an amount against a claim made by the Corporation to sellers of an acquired company.

Annual Report 2022 | Stingray Group Inc. | 89

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

23. EMPLOYEE BENEFIT PLANS

The Corporation maintains a defined contribution pension plan and defined benefit pension plans.

DEFINED CONTRIBUTION PENSION PLAN

The defined contribution pension plan covers the majority of the Corporation’s employees. The Corporation’s contributions – to the defined contribution pension plan are based on percentages of gross salaries and totaled $1,550 (2021 $1,375).

DEFINED BENEFIT PENSION PLANS

The Corporation maintains a defined benefit pension plan (the “Basic Plan”) for a small group of the Corporation’s former employees, which is not accepting new entrants at this time. The Basic Plan provides pension benefits based on the length of service and the last five years of average earnings of each member.

The Basic Plan meets the definition of a designated plan under the Income Tax Act (Canada). The most recent funding actuarial valuation for the Basic Plan was as of March 31, 2022.

In addition, the Corporation has two individual Supplementary Retirement Pension Arrangements (“SRPAs”), which each provide pension benefits to a retired executive. These SRPAs provide benefits above the Income Tax Act (Canada) limit. These plans are funded by the Corporation.

The Corporation measures its accrued benefit obligations and fair value of plan assets for accounting purposes as of March 31 of each year. The obligations as at March 31, 2022 and the 2023 current service cost of the Plans are determined based on membership data as at March 31, 2022.

Items related to the Corporation’s defined benefit pension plans are presented as follows in the consolidated financial statements:

tatements:
		2022		2021
Consolidated statements of financial position
Accrued pension benefit liability, included in other liabilities (note 22)	$	(2,837)	$	(6,112)
Accrued pensionbenefit asset,includedinother non-current assets		1,633		532
Net accrued pension liability	$	(1,204)	$	(5,580)
Consolidated statements of comprehensive income
Pension benefit expense, included in net finance expense (income)	$	193	$	234
Other comprehensive gains and accumulated other comprehensive losses
Actuarial (gains) losses recognized in other comprehensive income (loss)	$	(3,784)	$	10
Cumulative actuarial (gains) losses recognized in other comprehensive income (loss)	$	(3,200)	$	584

Annual Report 2022 | Stingray Group Inc. | 90

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

The following summarizes the movements in the defined benefit pension plan balances:

	2022 2021
	BasicPlan SRPAs BasicPlan SRPAs
Accrued benefit obligations Balance, beginning of year Interest cost Benefits paid Actuarial gains (losses): Impact of changes in financial assumptions Impact ofchangesinexperience adjustments	$ 4,805 $ 6,112 $ 4,482 $ 6,139 130 167 151 194 (318) (785) (316) (793) (450) (271) 444 364 (155) (2,386) 44 208
Balance, end of year Plan assets Fair value, beginning of year Interest income Actuarial gains: Return on plan assets, excluding interest income Administrative expenses Benefits paid	$ 4,012 $ 2,837 $ 4,805 $ 6,112 $ 5,337 $ — $ 4,492 $ — 144 — 151 — 522 — 1,050 — (40) — (40) — (318) — (316) —
Fair value, end of year	$ 5,645 $ — $ 5,337 $ —
Net accruedpension asset(liability)	$ 1,633 $ (2,837) $ 532 $ (6,112)

The Corporation determined that there was no limit on the defined benefit asset (asset ceiling) because the Corporation has unimpaired rights to the surplus in the Basic Plan and it has the right to take contribution holidays when available.

Employer contributions to the SRPAs are estimated to be $232 in 2023.

Pension benefit expense recognized in the consolidated statements of comprehensive income (loss) as net finance expenses (income) is as follows:

expenses (income) is as follows:
	2022 2021
	BasicPlan SRPAs BasicPlan SRPAs
Interest cost Interest income on plan assets Administrative expenses	$ 130 $ 167 $ 151 $ 194 (144) — (151) — 40 — 40 —
Defined benefitplan expense	$ 26 $ 167 $ 40 $ 194

Actuarial gains and losses recognized in other comprehensive income (loss) are as follows:

	2022 2021
	Basic Plan SRPAs Total Basic Plan SRPAs Total
Cumulative actuarial losses (gains), beginning of year Recognized actuarial losses (gains) during the year	$ (209) $ 793$ 584$ 353 $ 221$ 574 (1,127) (2,657) (3,784) (562) 572 10
Cumulative actuarial losses, end ofyear	$ (1,336) $ (1,864) $ (3,200) $ (209) $ 793$ 584

Annual Report 2022 | Stingray Group Inc. | 91

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

The principal actuarial assumptions were as follows:

The principal actuarial assumptions were as follows:
	2022 2021
	BasicPlan SRPAs BasicPlan SRPAs
Discountrateforthe accruednet benefit obligation	3.5% 3.5% 2.8% 2.8%
Futurepension increases	1.7% 0.3% 1.7% 0.3%

As at March 31, 2022 and based on an actuarial review, the net remeasurement gain, before income tax recovery, recorded in other comprehensive income (loss) of $3,784 (2021 – net remeasurement loss of $10) was primarily reflective of an increase in the estimated discount rate for both plans and an actuarial loss on plan assets.

Plan assets for the Basic Plan consist of:

lan assets for the Basic Plan consist of:
	2022	2021
Equity funds	73%	68%
Fixed income funds	27%	32%
	100%	100%

The pension plan has no direct investments in the Corporation nor any of its affiliates. Investments are diversified such that the failure of any single investment would not have a material impact on the overall level of assets. The largest proportion of assets is invested in equities, although there is a good portion also invested in bonds and other highly liquid assets. All assets are invested in funds where the underlying securities have quoted market prices in an active market. The Corporation believes that equities offer the best returns over the long-term with an acceptable level of risk.

Since the benefit payments are adjusted to the Consumer Price Index, the pension plan is exposed to inflation. It is also exposed to interest rate risks and changes in life expectancy of pensioners. A large portion of the plan assets consist of equity securities, which are exposed to equity market risk.

SIGNIFICANT ESTIMATE

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 salary and 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, determines the applicable discount rates using the interest rates on 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 salary increases and pension increases are based on expected future inflation rates.

Changes in assumptions of all plans would have resulted in an increase (decrease) in the net defined benefit obligation as presented below:

presented below:
	Change inassumption
	Increase Decrease $ (304) $ 329 $ 414 $ (213) $ 264 $ (276)
Discount rate — change of 0.5% Future pension costs — change of 1.0% Life expectancy — change by 1 year

The sensitivity analysis above has been determined based on a method that extrapolates the impact on the net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The average duration of the defined benefit plan obligation at the end of the reporting period is 9.4 years.

Annual Report 2022 | Stingray Group Inc. | 92

Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

24. SHARE CAPITAL

Authorized:

Unlimited number of subordinate voting shares, participating, without par value

Unlimited number of variable subordinate voting shares, participating, without par value

Unlimited number of multiple voting shares (10 votes per share), participating, without par value

Unlimited number of special shares, participating, without par value

Unlimited number of preferred shares issuable in one or more series, non-participating, without par value

Issued and outstanding:

The movements in share capital were as follows:

	Number of		Carrying
	shares		amount
Year ended March 31, 2021
Subordinate voting shares and variable subordinate voting shares
As at March 31, 2020	55,607,956	$	304,140
Exercise of stock options	80,732		269
Repurchased and cancelled	(1,530,180)		(8,700)
Purchased andheldintrust throughemployee share purchase plan	11,582		16
As at March 31, 2021	54,170,090	$	295,725
Multiple voting shares
As atMarch31,2020 and2021	17,941,498	$	18,226
	72,111,588	$	313,951
Year ended March 31, 2022
Subordinate voting shares and variable subordinate voting shares
As at March 31, 2021	54,170,090	$	295,725
Exercise of stock options	95,000		378
Repurchased and cancelled	(2,106,000)		(11,970)
Purchased andheldintrust throughemployee share purchase plan	(4,664)		(31)
As at March 31, 2022	52,154,426	$	284,102
Multiple voting shares
As atMarch31,2021and2022	17,941,498	$	18,226
	70,095,924	$	302,328

To comply with the Broadcasting Act and the regulations and directions promulgated thereunder from time to time, which permit non-Canadians (as defined in the Direction to the CRTC (Ineligibility of Non-Canadians) (SOR/97-192)) to own and control, directly or indirectly, up to 20% of the voting shares and 20% of the votes of an operating licensee that is a corporation, such as the Corporation, the Corporation has imposed restrictions respecting the issuance, transfer and, if applicable, voting of the Corporation’s shares. Restrictions include limitations over foreign ownership of the issued and outstanding voting shares.

Annual Report 2022 | Stingray Group Inc. | 93

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

TRANSACTIONS FOR THE YEAR ENDED MARCH 31, 2022

During the period, 95,000 stock options were exercised and consequently, the Corporation issued 95,000 subordinate voting shares. The proceeds amounted to $294. An amount of $84 of contributed surplus related to those stock options was transferred to the subordinate voting shares’ account balance.

During the year ended March 31, 2022, the Corporation declared dividends of $0.075 per subordinate voting share, variable subordinate voting share and multiple voting share totalling $21,104, of which an amount of $21,254 was paid during the year. A dividend payable of $5,259 is accrued in the consolidated statement of financial position as at March 31, 2022 as it will be payable on or around June 15, 2022.

Share repurchase program

On September 21, 2021, the Toronto Stock Exchange (the "TSX") approved the implementation of a share repurchase program, which took effect on September 27, 2021. This program allows the Corporation to repurchase up to an aggregate 3,222,901 subordinate voting shares and variable subordinate voting shares (collectively, the "Subordinate Shares"), representing approximately 10% of the Subordinate Shares issued and outstanding as at September 13, 2021. In accordance with TSX requirements, the Corporation is entitled to purchase, on any trading day, up to a total of 12,130 Subordinate Shares, representing 25% of the net average daily trading volume of the Subordinate Shares. When making such repurchases, the number of Subordinate Shares in circulation is reduced and the proportionate interest of all remaining shareholders in the Corporation's share capital is increased on a pro rata basis. All shares repurchased under the share repurchase program will be cancelled upon repurchase. The share repurchase period will end no later than September 26, 2022.

The following table summarizes the Corporation's share repurchase activities during the years ended March 31, 2022 and 2021.

		2022		2021
Subordinate voting shares repurchased for cancellation (unit)		2,106,000		1,530,180
Average price per share	$	7.1622	$	6.6610
Total repurchase cost	$	15,084	$	10,193
Repurchase resulting in a reduction of:
Share capital	$	11,970	$	8,700
Deficit(1)	$	3,114	$	1,493

(1) The excess of net repurchase cost over the average book value of the Subordinate voting shares.

Annual Report 2022 | Stingray Group Inc. | 94

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

TRANSACTIONS FOR THE YEAR ENDED MARCH 31, 2021

During the year ended March 31, 2021, 80,732 stock options were exercised and consequently, the Corporation issued 80,732 subordinate voting shares. The proceeds amounted to $144. An amount of $125 of contributed surplus related to those stock options was transferred to the subordinate voting shares’ account balance.

Also during the year, the Corporation declared dividends of $0.075 per subordinate voting share, variable subordinate voting share and multiple voting share totalling $27,376, of which an amount of $21,967 was paid during the year. A dividend payable of $5,409 was accrued in the consolidated statement of financial position as at March 31, 2021 as it was payable on June 15, 2021.

25. SUPPLEMENTAL CASH FLOW INFORMATION

		2022		2021
Trade and other receivables	$	2,031	$	10,236
Inventories		(1,945)		(70)
Other current assets		1,255		(2,308)
Other non-current assets		(956)		(240)
Accounts payable and accrued liabilities		2,104		(18,220)
Deferred revenues		(1,289)		3,080
Income taxes payable		(1,430)		(6,171)
Otherpayables		206		3,061
	$	(24)	$	(10,632)

The following table summarizes the Corporation's additions not affecting cash and cash equivalents activities during the years ended March 31, 2022 and 2021.

ears ended March 31, 2022 and 2021.
		2022		2021
Additions to property and equipment	$	(434)	$	803
Additions to intangible assets, excluding broadcast licences and
intangible assets acquired through business acquisitions		165		1,192
	$	(269)	$	1,995

Annual Report 2022 | Stingray Group Inc. | 95

Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

26. SHARE-BASED COMPENSATION

STOCK OPTION PLAN

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 are reserved for issuance. The terms and conditions for acquiring and exercising options are set by the Board of Directors. Unless otherwise determined by the Board of Directors, each option shall expire at the latest on the seventh anniversary of the grant date. The total number of shares issued to a single person cannot exceed 10% of the Corporation’s total issued and outstanding common shares on a fully diluted basis.

Under the stock option plan, 3,469,807 stock options were outstanding as at March 31, 2022 (3,163,253 as at March 31, 2021). Outstanding options are subject to employee service vesting criteria which range from nil to four years of service.

The following summarizes the changes in the plan’s position for the years ended March 31, 2022 and 2021:

	2022 Number of options Weighted average exercise price	2021
		Number of options Weighted average exercise price
Options outstanding, beginning of year Granted Exercised (note 24) Forfeited	3,163,253 $ 6.30 434,204 6.97 (95,000) 3.09 (32,650) 5.18	2,431,819 $ 4.99 833,174 4.63 (80,732) 1.79 (21,008) 8.89
Options outstanding,end ofyear	3,469,807 6.48	3,163,253 6.30
Exercisable options,end ofyear	1,970,675 $ 6.97	1,449,918 $ 7.02

The following is a summary of the information on the outstanding stock options as at March 31, 2022 and 2021:

Outstanding options Exercise price Number of options outstanding Weighted average outstanding contractual life outstanding (years)	Exercisable options
	Number
March 31, 2022 $ 4.63 748,422 5.18 5.60 672,374 4.18 6.13 21,929 4.85 6.25 287,880 3.15 6.92 359,933 6.18 7.00 25,000 3.36 7.03 44,248 6.62 7.27 311,047 4.21 7.62 482,850 5.23 7.69 22,124 6.87 7.92 43,698 6.60 8.61 433,746 6.19 9.00 16,556 4.89	142,106 336,187 10,965 287,880 — 25,000 — 311,047 482,850 — 32,774 325,310 16,556
$ 6.48 3,469,807 5.00	1,970,675

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Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

Outstanding options Exercise price Number of options outstanding Weighted average outstanding contractual life outstanding (years)	Exercisable options
	Number
March 31, 2021 $ 0.46 35,000 1.17 4.63 833,173 6.18 5.60 672,374 5.18 6.13 21,929 5.85 6.25 287,880 4.15 7.00 25,000 4.36 7.27 311,047 5.21 7.62 482,850 6.23 7.92 43,698 7.60 8.61 433,746 7.19 9.00 16,556 5.89	35,000 — 168,093 5,482 287,880 25,000 311,047 362,138 21,849 216,873 16,556
$6.30 3,163,253 5.78	1,449,918

The weighted average fair value of the stock options granted during the year ended March 31, 2022 was $1.41 per stock — option (2021 $0.71). This fair value was estimated at the date on which the options were granted by using the Black-Scholes option pricing model with the following assumptions:

lack-Scholes option pricing model with the following assumptions:
	2022	2021
Weighted average volatility	35%	35%
Weighted average risk-free interest rate	0.86% - 1.82%	0.52%
Weighted average expected life of options	5 years	5 years
Weighted average value of the subordinate voting share at grant date	6.92$ - 7.69$	$4.63
Weighted average expected dividend rate	3.90% - 4.34%	6.26%

The weighted average volatility used is calculated based on the Corporation’s historical volatility.

Total share-based compensation costs recognized under this stock option plan amount to $635 for the year ended March 31, 2022 (2021 — $717).

The weighted average share price at the date of exercise for share options exercised during the year ended March 31, 2022 was $6.98 (2021 — $6.65).

EMPLOYEE SHARE PURCHASE PLAN

The Corporation has an employee share purchase plan (“ESPP”) to attract and retain employees. Under this plan, eligible employees, including certain key management personnel, are permitted to contribute up to a maximum of 6% of their eligible earnings to purchase the Corporation’s subordinate voting shares and variable subordinate voting shares. Subject to certain conditions, the Corporation will match a percentage of the employee’s contributions up to a maximum of 2% of the employee’s eligible earnings and the shares purchased with the Corporation’s contributions become vested on January 31 of the following year. All contributions are used by the plan’s trustee to purchase subordinate voting shares and variable subordinate voting shares in the open market, on behalf of employees.

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Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

The following summarizes the changes in the plan’s position for the years ended March 31, 2022 and 2021:

	2022 Number of units Amount	2021
		Number of units Amount
Unvested contributions, beginning of year Contributions Dividends credited Vested	7,112 $ 114 39,464 325 5,028 36 (39,828) (330)	18,694 $ 130 46,988 305 4,616 28 (63,186) (349)
Unvested contributions, end ofyear	11,776 $ 145	7,112 $ 114

The weighted average fair value of the shares contributed during the year ended March 31, 2022 was $7.23 (2021 — $6.11).

Total share-based compensation costs recognized under the ESPP amount to $163 for the year ended March 31, 2022 (2021 — $134).

PERFORMANCE SHARE UNIT PLAN

The Corporation has a performance unit plan (“PSU”) that can be granted to directors, officers, executives and employees as part of their long-term compensation package, which is expected to be settled in cash after a three year vesting period. The value of the payout is determined by multiplying the number of PSU vested at the payout date by the volume weighted average price of the Corporation’s shares on the last five trading days immediately preceding the vesting date. The fair value of the payout is determined at each reporting date based on the fair value of the Corporation’s shares at the reporting date. The fair value is amortized over the vesting period, being three years.

During the year ended March 31, 2022, 417,783 PSU (2021 — 563,837) were granted at a range of $6.71 to $7.26 (2021 — $4.38 to $7.05) per unit to executives and employees and no outstanding PSU were vested. As at March 31, 2022, the fair value per unit was $7.32 (2021 — $7.17) for a total amount of $7,208 (2021 — $5,705) and was presented in accrued liabilities on the consolidated statements of financial position.

The following summarizes the changes in the plan’s position for the years ended March 31, 2022 and 2021:

	2022 Number of units Amount	2021
		Number of units Amount
Balance, beginning of year Granted Expense and revision of estimates Liabilities settled Forfeited	1,510,513 $ 5,705 417,783 — — 4,860 (448,061) (3,342) (7,448) (15)	1,186,269 $ 2,894 563,837 — — 3,669 (163,850) (663) (75,743) (195)
Balance,end ofyear	1,472,787$ 7,208	1,510,513$ 5,705
Balance,vested	— —	— —

Total share-based compensation costs recognized under the PSU plan amount to $4,825 for the year ended March 31, 2022 (2021 — $3,528).

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

DEFERRED SHARE UNIT PLAN

The Corporation has a deferred share unit plan (“DSU”) that can be granted to directors, officers and employees as part of their compensation package, which is expected to be settled in cash. The value of the payout is determined by multiplying the number of DSU vested at the payout date by the fair value of the Corporation’s shares on the volume weighted average price of the Corporation’s shares on the last three trading days immediately preceding the payout date. The fair value of the payout is determined at each reporting date based on the fair value of the Corporation’s shares at the reporting date.

During the year ended March 31, 2022, 266,535 DSU (2021 — 214,369) were granted at a range of $6.58 to $7.61 per unit to directors (2021 — $4.40 to $7.73) and 924,260 DSU were vested. The total expense related to DSU plans amounted to $954 in 2022 (2021 — $2,908). As at March 31, 2022, the fair value per unit ranged from $7.26 to $7.43 (2021 — $7.12 to $7.20) for a total amount, including fringes, of $7,084 (2021 — $5,063) presented in accrued liabilities on the statements of financial position.

The following summarizes the changes in the plan’s position for the years ended March 31, 2022 and 2021:

	2022 Number of units Amount	2021
		Number of units Amount
Balance, beginning of year Granted and vested Settlement Revisionofestimates	672,827 $ 5,063 266,535 1,859 (15,102) (91) — 253	458,458 $ 1,948 214,369 1,193 — — — 1,922
Balance,end ofyear	924,260$ 7,084	672,827$ 5,063
Balance,vested	924,260$ 7,084	672,827$ 5,063

27. COMMITMENTS

The following table is a summary of the Corporation’s operating obligations as at March 31, 2022 that are due in each of the next six years and thereafter.

			Operating
			obligations
2023		$	1,991
2024			807
2025			592
2026			325
2027			325
2028	and thereafter		974
		$	5,014

OPERATING OBLIGATIONS

The Corporation’s significant operating obligations are for licensing and other long-term contracts that do not meet the definition of a lease under IFRS 16. 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.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

BROADCAST LICENCES

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.

28. USE OF ESTIMATES AND JUDGMENTS

The preparation of these consolidated financial statements in conformity with International Financial Reporting Standards (“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.

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions differing from actual outcomes. Detailed information about each of these estimates and judgments is included in notes 3 to 27 together with information about the basis of calculation for each affected line item in the consolidated financial statements.

SIGNIFICANT ESTIMATES

The areas involving significant estimates are:

• Estimation of current income tax payable and current income tax expense — Note 10

• Recognition of deferred tax assets for tax losses available for carryforward — Note 10

• Estimation of cost of defined benefit pension plans and present value of the net pension obligation — Note 23

• Estimated value in use and/or fair value less costs to sell of CGUs used in goodwill and broadcasting licences impairment testing — Note 16

• Estimation of fair value of identified assets, liabilities and contingent consideration recorded in business acquisitions — Notes 3 and 22

• Estimation of lease term of contracts with renewal options — Notes 14 and 21

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 year in which the estimates are revised and in any future years affected by these revisions.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

CRITICAL JUDGMENTS

Critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements include the following:

• Impairment of non-current assets

For the purpose of impairment testing of property and equipment, intangible assets, broadcast licences and goodwill, management must use its judgment to identify the smallest group of assets that generates cash inflows that are largely independent of those from other assets (“cash generating unit” or ”CGU”).

The amounts used for impairment calculations are based on estimates of future cash flows of the Corporation, including estimates of future revenues, operating costs, discount rates and market prices. By their nature, these estimates and assumptions are subject to measurement uncertainty and, consequently, actual results could differ from estimates used. 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.

• Useful lives of broadcast licences

The Corporation has concluded that broadcast licences are indefinite life intangible assets because they are renewed every seven years without significant cost and there is a low likelihood of the renewal being denied.

• Identifying a business acquisition

Management must use its judgment in determining whether a transaction is a business combination or a purchase of assets in accordance with the criteria established in IFRS 3 Business combinations. The acquisition of an asset or a group of assets that constitute a business is accounted for as a business combination and may give rise to goodwill, whereas an asset purchase does not, thereby impacting subsequent amortization expense and/or impairment testing results.

• Recognition of internally developed intangible assets

Management must use its judgment in determining whether an internally developed intangible asset qualifies for recognition, such as, but not limited to, assessing the technological feasibility of a project and determining the appropriate internal costs to be capitalized. This exercise requires management to distinguish between the costs necessary to generate an intangible asset from the costs necessary to maintain it. Recognition of an internally developed intangible asset would lead to an increase of amortization expense as the opposite would lead to an increase in research and development costs.

Judgment is also involved in determining the estimated useful life of an internally developed intangible asset. Increasing an asset’s estimated useful life would result in a decrease of the annual amortization expense.

• 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.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

29. FINANCIAL INSTRUMENTS

FAIR VALUES

The Corporation has determined that the carrying amount of cash and cash equivalents, trade and other receivables, accounts payable and accrued liabilities and current portion of other liabilities excluding the contingent consideration is a reasonable approximation of their fair value due to the short-term maturity of those instruments. As such, information on their fair values is not presented below. The fair value of the credit facilities approximates its carrying value as it bears interest at prime or banker’s acceptance rates plus a credit spread, which approximate current rates that could be obtained for debts with similar terms and credit risk. The fair value of derivative financial instruments is determined using an evaluation of the estimated market value, adjusted for the credit quality of the counterparty. The carrying amount of CRTC tangible benefits and balance payable on business acquisitions is a reasonable approximation of their fair value as they are discounted using the effective interest rate, which approximate current rates that could be obtained with similar terms and credit risk. The tables below summarize the carrying and fair value of financial assets and liabilities, including their level in the fair value hierarchy, as at March 31, 2022 and 2021. The Corporation uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:

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

• Level 2: other techniques for which all inputs that have a significant effect in the recorded value are observable, either directly or indirectly; and

• Level 3: techniques which uses inputs that have a significant effect on the recorded fair value that are not based on observable market data.

As at March 31, 2022	Carrying value	Carrying value		Fair value		Level 1		Level 2		Level 3
Financial assets measured at amortized cost
Cash and cash equivalents	$	14,563
Trade and other receivables		62,410
Financial assets measured at fair value
Investments	$	1,615	$	1,615	$	—	$	—	$	1,615
Financial liabilities measured at
amortized cost
Credit facilities	$	358,203
Subordinated debt		25,442
Accounts payable and accrued liabilities		62,768
CRTC tangible benefits		28,240
Accrued pension benefit liability		2,837
Performance share unit payable		5,046
Balance payable on business acquisitions		2,559
Financial liabilities measured at fair value
Contingent consideration	$	19,204	$	19,204	$	—	$	—	$	19,204
Derivative financial instruments		1,464		1,464		—		1,464		—

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Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

Years ended March 31, 2022 and 2021
(In thousands of Canadian dollars, unless otherwise stated)
As at March 31, 2021	Carrying value			Fair value		Level 1		Level 2		Level 3
Financial assets measured at amortized cost
Cash and cash equivalents	$	9,040
Trade and other receivables		57,891
Financial assets measured at fair value
Investments	$	900	$	900	$	—	$	—	$	900
Financial liabilities measured at
amortized cost
Credit facilities	$	303,704
Subordinated debt		31,741
Accounts payable and accrued liabilities		49,398
CRTC tangible benefits		27,970
Accrued pension benefit liability		6,112
Performance share unit payable		4,478
Balance payable on business acquisitions		100
Financial liabilities measured at fair value
Contingent consideration	$	14,456	$	14,456	$	—	$	—	$	14,456
Derivative financial instruments		5,370		5,370		—		5,370		—

Fair value measurement (Level 3):

				Contingent
		Investments		**consideration **
Balance as at March 31, 2020	$	23,548	$	17,831
Change in fair value, including foreign exchange differences		(3,787)		110
Addition through business acquisition		—		2,197
Settlements		(18,861)		(5,682)
Balance as at March 31, 2021	$	900	$	14,456
Change in fair value, including foreign exchange differences		12		(7,598)
Additions		703		—
Additions through business acquisitions		—		15,807
Settlements		—		(3,461)
Balance as at March 31, 2022	$	1,615	$	19,204

INVESTMENTS

For the years ended March 31, 2022 and 2021, the equity instruments in a private entity were classified as a financial assets at fair value through profit and loss. A change of 5% in the liquidity discount would have increased / decreased the fair value of the investments by approximately $81 and $45 during the years ended March 31, 2022 and 2021 respectively.

For the year ended March 31, 2021, the Corporation disposed of its investment in AppDirect for a cash consideration of USD14,612 ($18,861) and recognized a loss on disposal of $3,787 in change in fair value of investments in the consolidated statements of comprehensive income.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

CONTINGENT CONSIDERATION

The contingent consideration 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 measurement of the contingent consideration is determined using unobservable (Level 3) inputs. These inputs include (i) the estimated amount and timing of projected cash flows; and (ii) the risk-adjusted discount rate used to present value the cash flows which is based on the risk associated with the revenue targets being met. If projected cash flows were 10% higher, the fair value would have increased by $2,496 and if projected cash flows were 10% lower, the fair value would have decreased by $2,619. Discount rates ranging from 12% to 36% have been applied and consider the time value of money. A change in the discount rate by 100 basis points would have increased / decreased the fair value by $187.

The contingent consideration is classified as a financial liability and is included in other liabilities (note 22). The change in fair value is recognized in net finance expense (income) (Note 8).

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.

The aging of trade receivable balances and the allowance for doubtful accounts as at March 31, 2022 and March 31, 2021 were as follows:

		2022		2021
Current	$	25,867	$	20,125
Past due 0-30 days		12,252		9,652
Past due 31-60 days		7,363		6,767
Past due 61-90 days		4,171		5,134
Past due more than 90 days		7,067		6,901
Total trade receivables		56,720		48,579
Less : allowance for expected credit losses		(5,929)		(3,198)
	$	50,791	$	45,381

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Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

The movement in the allowance for expected credit losses in respect of trade receivables was as follows:

		2022		2021
Balance, beginning of year	$	3,198	$	2,401
Bad debt expense		88		1,488
Write-offagainstreserve		2,643		(691)
Balance,end ofyear	$	5,929	$	3,198

The Corporation also has credit risk relating to cash and cash equivalents and other receivables. The Corporation manages its risk by transacting only with sound financial institutions.

The carrying amounts of financial assets in the consolidated statements of financial position represent the Corporation's maximum credit exposure.

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.

The following are the contractual maturities of financial liabilities including estimated interest payments as at March 31, 2022:

	Total	carrying	Contractual	Contractual	Less	than 1			More	than 5
		amount	cash flows			year	1 to	5years		years
Credit facilities	$	358,203	$	359,336	$	7,500	$	351,836	$	—
Subordinated debt		25,442		25,600		—		25,600		—
Accounts payables and
accrued liabilities		67,016		67,016		67,016		—		—
Lease liabilities		28,318		36,918		1,439		19,171		16,308
Other liabilities		60,997		66,556		23,421		40,884		2,251

MARKET RISK

Market risk is the risk that the changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Corporation's earnings or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the return on risk.

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 (“USD”) and the euro (“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.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

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.

The Corporation's exposure to currency risk on its consolidated financial statements was as follows:

	March 31, 2022 USD EURO	March 31, 2021
		USD EURO
Cash and cash equivalents Trade receivables Investments Credit facilities Accounts payable and accrued liabilities Contingent consideration and balance payable onbusiness acquisitions	5,666 1,464 17,846 2,562 2,850 — (7,800) (3,800) (2,272) (2,484) (14,093) —	877 1,925 10,438 3,753 — — (10,421) (6,000) (280) (1,770) — —
Net balance exposure	2,197 (2,258)	614 (2,092)
Equivalent in Canadian dollars	2,745 (3,128)	772 (3,088)

The following exchange rates are those applicable to the following periods and dates:

	2022 Average Reporting	2021
		Average Reporting
USD per CAD EURO per CAD	1.2535 1.2496 1.4573 1.3853	1.3221 1.2575 1.5406 1.4759

Based on the Corporation’s foreign currency exposures noted above, varying the above foreign exchange rates to reflect a 5% strengthening of the US dollar and EURO would have the following impacts on net income, assuming that all other variables remained constant:

	March 31, 2022 USD EURO	March 31, 2021
		USD EURO
Increase (decrease) in net income	138 (156)	39 (154)

An assumed 5% weakening of the foreign currency would have had an equal but opposite effect on the basis that all other variables remained constant.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

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. Cash equivalents consist of term deposits with original maturities of less than three months and are, therefore, also exposed to interest rate risk on fair value. However, fair value risk is not significant, considering the relatively short term to maturity of these instruments.

The credit facilities are variable interest rate instruments 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 interest rate swap agreements.

The table below summarize the interest rate contracts effective as at March 31, 2022 and 2021:

		Fixed interest			Mark-to-market	Mark-to-market	Mark-to-market		Mark-to-market
		rate (when	Initial	nominal	liabilities		as at		liabilities as at
Maturity	Currency	applicable)		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

During the year ended March 31, 2022, the Corporation unwound three interest rate swaps with maturity date of October 25, 2024 and made payments totaling $600.

During the year ended March 31, 2021, the Corporation unwound two interest rate swaps with maturity dates of August 29, 2029 and August 31, 2029 and received cash payments totaling $490.

Given that the Corporation did not elect to apply hedge accounting during the years ended March 31, 2022 and 2021, mark-to-market gains of $3,397 and $13,818 were recorded in net finance expense (income), respectively.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

30. CAPITAL MANAGEMENT

The Corporation’s objectives when managing capital are as follows:

Pursue its growth strategy through acquisitions and organic growth by maintaining financial flexibility; and

Provide the Corporation’s shareholders with an appropriate return on their investment.

For capital management, the Corporation has defined its capital as the combination of net debt and total equity.

Total managed capital is as follows:

otal managed capital is as follows:
		2022		2021
Contingent consideration, including current portion	$	19,204	$	14,456
Balance payable on business acquisitions, including current portion		2,559		100
Credit facilities		358,203		303,704
Subordinated debt		25,442		31,741
Cash and cash equivalents		(14,563)		(9,040)
Net debt, including contingent consideration and
balance payable on business acquisition		390,845		340,961
Total equity		273,529		274,692
	$	664,374	$	615,653

The Corporation’s financing strategy is to maintain a flexible structure, to respond adequately to the changes in economic conditions and to allow growth through business acquisitions. The Corporation monitors its capital structure using the net debt to adjusted EBITDA ratio. Refer to note 4 for more information about the EBITDA.

In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to shareholders of the Corporation, issue or repay debt, issue shares or undertake any other activities as deemed appropriate under the specific circumstances, on a quarterly basis.

31. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL AND RELATED PARTIES

KEY MANAGEMENT PERSONNEL

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

Key management personnel compensation and director’s fees are as follows:

		2022		2021
Short-term employee benefits	$	5,074	$	5,727
Share-based compensation		525		465
Performance share units		2,533		1,755
Deferred share units		954		2,908
	$	9,086	$	10,855

RELATED PARTIES

Related parties of the Corporation include Directors and key management personnel, their family members and companies over which they have significant influence or control. The Corporation has transacted with related parties during the reporting period. These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties having normal trade terms.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

During the year ended March 31, 2022, the Corporation recognized revenues amounted to $794 (2021 — $742) for advertising sold to companies controlled by directors of the Corporation.

32. BASIS OF PREPARATION

A) STATEMENT OF COMPLIANCE

The consolidated financial statements of the Corporation have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (''IASB'').

The consolidated financial statements were authorized for issue by the Board of Directors on June 7, 2022.

B) BASIS OF MEASUREMENT

The consolidated financial statements have been prepared on the historical cost basis, except for the following:

• Contingent consideration payable which is measured at fair value at each reporting period in accordance with IFRS 3;

• Investments measured at fair value at year-end in accordance with IFRS 9;

• Cost of defined benefit pension plans and present value of the net pension obligation measured at fair value in accordance with IAS 19;

• Liabilities related to deferred share unit plan, performance share unit plan measured at fair value at year-end in accordance with IFRS 2;

• Equity stock options which are measured at fair value at date of grant pursuant to IFRS 2; and

• Assets and liabilities acquired in business combinations are measured at fair value at acquisition date.

• Derivative financial instruments are measured at fair value, determined by using an evaluation of the estimated market value, adjusted for the credit quality of the counterparty in accordance with IFRS 9.

C) FOREIGN CURRENCY TRANSLATION

FUNCTIONAL AND PRESENTATION CURRENCY

Items included in the financial statements of each of the subsidiaries are measured using the currency of the primary economic environment in which the subsidiary operates (the ‘functional currency’). The consolidated financial statements are presented in Canadian dollars, which is the Corporation’s functional and presentation currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand.

TRANSACTIONS AND BALANCES

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit or loss. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency gains and losses are reported on a net basis.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

SUBSIDIARIES

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each financial position presented are translated at the closing rate at the date of that financial position;

• income and expenses for each statement of income and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognized in other comprehensive income (loss).

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate.

33. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements and have been applied consistently by the Corporation’s subsidiaries.

(A) BASIS OF CONSOLIDATION

BUSINESS COMBINATIONS

The Corporation measures goodwill as the excess of the fair value of the consideration transferred which includes the fair value of contingent consideration, over the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Corporation incurs in connection with a business combination are expensed as incurred.

SUBSIDIARIES

Subsidiaries are entities controlled by the Corporation. The Corporation controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

These consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiaries, Stingray Music USA Inc. and its subsidiaries Pop Radio LLC, 2144286 Ontario Inc., 4445694 Canada Inc., Pay Audio Services Limited Partnership, Music Choice Europe Limited, Stingray Digital International Ltd., Stingray Europe B.V., Transmedia Communications SA, SBA Music PTY Ltd., Stingray Music, S.A. de C.V., DJ Matic NV, Stingray Radio Inc. and Calm Radio Corp. and all these entities’ wholly owned subsidiaries.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

INVESTMENT IN ASSOCIATES

An associate is an entity over which the Corporation has significant influence. The Corporation has significant influence when it has the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control. The Corporation accounts for its investment in an associate using the equity method. Under the equity method, the investment is initially recognized at cost. Subsequent to initial recognition, the consolidated financial statements include the Corporation’s share of the earnings and losses of the associate until the date significant influence ceases. Distributions received from an associate reduce the carrying amount of the investment. The consolidated statements of comprehensive income include the Corporations’ share of any amounts recognized by its associate in other comprehensive income, if any. Intercompany balances between the Corporation and its associate are not eliminated.

INTEREST IN JOINT VENTURE

A joint venture is an arrangement whereby the Corporation and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

TRANSACTIONS ELIMINATED ON CONSOLIDATION

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(B) FINANCIAL INSTRUMENTS

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The Corporation initially recognizes financial assets on the trade date at which the Corporation becomes a party to the contractual provisions of the instrument.

On initial recognition, the Corporation classifies its financial assets as subsequently measured at either amortized cost or fair value, depending on its business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset’s acquisition or origination.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and is not designated as at fair value through profit and loss:

• The asset is held within a business model whose objective is to hold the asset in order to collect contractual cash flows.

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Corporation currently classifies its cash and cash equivalents and trade and other receivables as financial assets measured at amortized cost.

Financial assets measured at fair value

All equity investments and other financial assets that do not meet the conditions to be classified as financial assets measured at amortized cost are measured at fair value through profit and loss.

Changes therein, including any interest or dividend income, are recognized in profit or loss.

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Notes to Consolidated Financial Statements

Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

The Corporation’s investments are classified as financial assets measured at fair value through profit and loss.

The Corporation derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers not retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognized financial assets that is created or retained by the Corporation is recognized as a separate asset or liability.

Financial liabilities

The Corporation initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognized initially on the trade date at which the Corporation becomes a party to the contractual provisions of the instruments.

Financial liabilities are initially measured at fair value. If the financial liabilities are not subsequently accounted for at fair value through profit or loss, then the initial measurement includes directly attributable transaction costs.

The Corporation classifies all financial liabilities at amortized cost using the effective interest method, except for contingent consideration recorded at fair value through profit and loss and financial liabilities designated at fair value through profit or loss when doing so results in more relevant information. Such liabilities shall be subsequently measured at fair value.

The Corporation derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the consolidated statements of financial position when, and only when, the Corporation has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Derivative financial instruments

The Corporation use derivative financial instruments to manage its interest rate risk on its credit facilities and does not use these instruments for speculative or trading purposes. The Corporation does not apply hedge accounting and therefore mark-to-market gains or losses are recognized in net finance expense (income).

IMPAIRMENT OF FINANCIAL ASSETS

The Corporation recognizes loss allowances for expected credit losses (ECLs) on financial assets measured at amortized cost. Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs. The maximum period considered when estimating ECLs is the maximum contractual period over which the Corporation is exposed to credit risk. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Corporation expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

ECLs on trade and other receivables is assessed by portfolio based on factors that may include the Corporation's past experience with debt recovery, an increased number of days exceeding payment terms in the portfolio, as well as a change - internationally or nationally - in economic conditions correlating with default payments.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets and is recognized in profit or loss.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor's credit rating), the previously recognized impairment loss is reversed. The reversal is recognized to the extent of the improvement without exceeding what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed. The amount of the reversal is recognized in profit or loss.

(C) REVENUE RECOGNITION

CONTRACTS WITH CUSTOMERS

The Corporation records revenues from contracts with customers in accordance with the five steps in IFRS 15 Contracts with customers as follows:

• 1) Identify the contract with a customer;

• 2) Identify the performance obligations in the contract;

• 3) Determine the transaction price, which is the total consideration provided by the customer;

• 4) Allocate the transaction price among the performance obligations in the contract based on their relative fair values; and

• 5) Recognize revenues when the relevant criteria are met for each performance obligation.

Revenues are measured based on the value of the expected consideration in a contract with a customer and are recognized when control of a product or service is transferred to a customer.

A contract asset is recognized in the consolidated statement of financial position when revenues are earned without having been invoiced. Contract assets are presented in “Other current assets”. A contract liability is recognized when the Corporation has received consideration in advance of the transfer of products or services to a customer.

Broadcasting and commercial music segment

The Broadcasting and commercial music segment specializes in the broadcast of music and videos on multiple platforms and digital signage experiences and generates revenues from subscriptions or contracts.

Subscriptions

The Corporation recognize revenues related to continuous music and video distribution over time, as the customer receives and consumes the benefits of the music supply at the same time it is broadcasted. On-demand products, primarily music and concerts services, are also recognized over time as the customer receives and consumes the benefits of the on-demand product at the same time it is broadcasted. The Corporation records contract liabilities when customers pay their subscription fees in advance.

Equipment and labor

For equipment and labor projects, mainly bundled arrangements, the Corporation accounts for individual products and services when they are separately identifiable, and the customer can benefit from the product or service on its own or with other readily available resources. The total arrangement consideration is allocated to each product or service on its own or with other readily available resources based on its stand-alone selling price.

The Corporation generally determines stand-alone selling prices based on the observable prices for products sold separately without a service contract, adjusted for market conditions and other factors, as appropriate. When similar products and services are not sold separately, the Corporation uses the expected cost plus margin approach to determine stand-alone selling prices. The Corporation recognizes revenues for each individual product or service, when the related performance obligations are satisfied, which is usually at a point in time for sale of equipment and over time for music related services.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

Advertising

The Corporation recognize revenues related to advertising generally at a point in time, when the advertising airs in the network. Advertising reaches the customers by Retail media, Streaming media and Broadcast media. Retail media includes in-store licensed music, music video, digital signage and consumer insights, Streaming media includes music and soundscapes across web and mobile and FAST channels and Broadcast media includes concerts, shows, music videos and TV audio channels.

Radio segment

The radio segment operates radio stations across Canada and generates revenues from advertising. Advertising revenues are recognized at a point in time when the advertising airs on the Corporation’s radio stations. Revenues are recorded net of any agency commissions as these charges are paid directly to the agency by the advertiser.

(D) RESEARCH AND DEVELOPMENT

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.

Development costs, net of tax credits, are recognized in profit or loss as incurred, unless the costs can be measured reliably, the product or process is technically feasible, future economic benefits are probable and the Corporation intends to and has sufficient resources to complete the development and to use or sell the asset. In such a case, costs are recognized as internally developed intangible assets (see (m) intangible assets).

(E) GOVERNMENT ASSISTANCE

Government assistance is recognized when there is reasonable assurance that the Corporation will comply with the requirements of the approved grant or subsidy program and the Corporation, based on management's judgment, is reasonably certain that the government assistance will be received. Government assistance related to operating expenses, including salary subsidy such as the Canada Emergency Wage Subsidy, is recorded as a reduction of such expenses. Investment tax credits are accounted for as a reduction of the research and development costs during the year in which the costs are incurred.

The investment tax credits must be reviewed and approved by the tax authorities and it is possible that the amounts granted will differ from the amounts recorded.

(F) LEASES AND PAYMENTS

Operating leases are not recognized in the Corporation’s consolidated statements of financial position. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease. Contingent lease payments are accounted for in the year in which they are incurred.

(G) FINANCE INCOME AND FINANCE COSTS

Finance income comprises interest income on funds invested, change in fair value of contingent consideration. Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on credit facilities, unwinding of the discount on provisions, change in fair value of derivatives and contingent consideration, amortization of deferred financing costs, foreign exchange (gain) loss and impairment losses recognized on financial assets.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

The Corporation recognizes finance income and finance costs as a component of operating activities in the consolidated statements of cash flows.

(H) INCOME TAXES

Income tax expense comprises current and deferred taxes. Current and deferred taxes are recognized in profit or loss except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognized for the following temporary differences:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

• temporary differences relating to investments in subsidiaries, associates and joint arrangements to the extent that the Corporation is able to control the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future; and

• taxable temporary differences arising on the initial recognition of goodwill.

A deferred tax asset is recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which they can be used. Deferred tax assets are measured at the end of each reporting year and their carrying amount is reduced to the extent that it is no longer probable that a taxable profit will be realized.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

(I) EARNINGS PER SHARE

Basic earnings per share are computed by dividing net earnings by the weighted average number of subordinate voting shares, variable subordinated voting shares and multiple voting shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of common shares, subordinate voting shares, variable subordinated voting shares and multiple voting shares outstanding during the year adjusted to include the dilutive impact of stock options, performance share units and deferred share units. The number of additional shares is calculated by assuming that all instruments with a dilutive effect are exercised and that the proceeds from such exercises, as well as the amount of unrecognized share-based compensation which is considered to be assumed proceeds, are used to repurchase subordinate voting shares, variable subordinated voting shares and multiple voting shares at the average share price for the year. For performance share units, only the unrecognized share-based compensation is considered assumed proceeds since there is no exercise price paid by the holder.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

(J) CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand and balances with banks.

(K) INVENTORIES

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in, first-out cost method.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.

(L) PROPERTY AND EQUIPMENT

RECOGNITION AND MEASUREMENT

Items of property and equipment are recognized at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset and the costs of dismantling and removing the item and restoring the site on which it is located, if any.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components).

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount, and are recognized in profit or loss.

SUBSEQUENT COSTS

The cost of replacing a part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Corporation, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property and equipment are recognized in profit or loss as incurred.

DEPRECIATION

Depreciation is calculated over the cost of the asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives, unless it is reasonably certain that the Corporation will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative years are as follows:

Property and equipment	Period
Building	20-60 years
Broadcasting infrastructure	8 to 25 years
Furniture, fixtures and equipment	3 to 10 years
Computer hardware	4 to 6 years
Leasehold improvements	Lease term

Estimates for depreciation methods, useful lives and residual values are reviewed at each reporting year-end and adjusted if appropriate prospectively.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

(M) INTANGIBLE ASSETS, EXCLUDING BROADCAST LICENCES

Intangible assets that are acquired by the Corporation and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

The fair value of non-compete agreements acquired in a business combination are based on the discounted estimated revenues losses that have been avoided as a result of the non-compete being signed. The fair value of clients list and relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows. The fair value of music catalogs acquired in a business combination is determined using the estimated costs for creating such music catalogs. The fair value of trademarks acquired in a business combination is based on the discounted estimated future royalty payments that have been avoided.

Amounts capitalized as internally developed intangible assets include the total cost of any external products or services and labor costs directly attributable to development.

AMORTIZATION

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of the definite life intangible assets.

Internally developed intangible assets, net of related tax credits, are amortized starting from the date the products and services are commercialized.

The estimated useful lives for the current and comparative years are as follows:

Intangible assets	Period
Internally developed software and apps	2 to 5 years
Music catalog	5 to15 years
Client list and relationships	3 to 15 years
Trademarks	2 to 20 years
Licences, website applications and computer software	2 to 25 years
Non-compete agreements	2 to 11years

Estimates for amortization methods, useful lives and residual values are reviewed at each reporting year-end and adjusted if appropriate prospectively.

(N) LEASES

At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Corporation allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for leases of properties for which it is a lessee, the Corporation has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component. The right-of-use asset and a lease liability are recognized at the lease commencement date.

RIGHT-OF-USE ASSETS ON LEASES

The right-of-use asset is measured at cost. The cost is based on the initial amount of the lease liability plus initial direct costs incurred, less lease incentives received, if any.

The cost of right-of-use assets is periodically reduced by amortization expenses and impairment losses, if any, and adjusted for certain remeasurements of the lease liability. Right-of-use assets are amortized to reflect the expected pattern of consumption of the future economic benefits which is based on the lesser of the useful life of the asset or

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

the lease term using the straight-line method. The lease term includes the renewal option only if it is reasonably certain to be exercised. The lease terms range from 1 to 50 years for buildings and towers, from 10 to 99 years for land and from 1 to 5 years for vehicles.

The Corporation elected not to recognize a right-of-use asset and liability for leases where the total lease term is less than or equal to twelve months and for leases of low value assets; such as but not limited to, office equipment. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

LEASE LIABILITIES

At the commencement date of the lease, the Corporation recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Corporation and payments of penalties for terminating a lease, if the lease term reflects the Corporation exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period in which the event or condition that triggered the payment has occurred.

In calculating the present value of lease payments, the Corporation uses the incremental borrowing rate as at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of the lease liability is increased to reflect the accretion of interest and reduced to reflect the lease payments made. In addition, the carrying amount of the lease liability is remeasured if there has been a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

(O) BUSINESS COMBINATION, GOODWILL AND BROADCAST LICENCES

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at the acquisition date fair value. Acquisition costs incurred are expensed and included in acquisition, legal, restructuring and other expenses. The cost of a business combination is allocated to the fair value of the related net identifiable tangible and intangible assets. The excess of the cost of the acquired businesses over the fair value of the related net identifiable tangible and intangible assets acquired is allocated to goodwill. If the consideration is lower than the fair value of the net assets acquired, the difference is recognized in the consolidated statements of comprehensive income (loss).

To receive approval to launch a new broadcast licence pursuant to applications made by the Corporation to the CRTC, the CRTC may require the Corporation to commit to fund Canadian Content Development (“CCD”) during the initial term of the licence over and above the prescribed annual requirements. These obligations are considered to be part of the costs related to the award of new broadcast licences and are recognized as a liability upon the launch of the new broadcast licence. Any other direct costs related to the award and launch of new broadcast licences are also capitalized as broadcast licences. CCD that arises from a business acquisition is considered a transaction cost and is expensed in the consolidated statements of comprehensive income (loss).

After initial recognition, goodwill and broadcast licences are recorded at cost less any accumulated impairment losses. Both goodwill and broadcast licences have indefinite useful lives and are not amortized, but they are subject to an impairment evaluation. Broadcast licences are deemed indefinite life assets since they are renewed every seven years without significant cost, with the unlikely chance that the renewal will be denied; therefore, there is no foreseeable limit to the period over which broadcast licences are expected to generate net cash flows for the Corporation.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

(P) IMPAIRMENT OF NON-FINANCIAL ASSETS

The Corporation reviews the carrying amount of its non-financial assets, which include intangible assets with a finite useful life and property and equipment on each reporting date in order to determine if specific events or changes in circumstances indicate that their carrying amounts may not be recoverable. The recoverable amount of goodwill and broadcast licences are tested for impairment each year at the same date, or more frequently if indications of impairment exist.

For impairment testing purposes, assets that cannot be tested individually are grouped in CGUs. Goodwill is allocated to the CGU or CGU group that is expected to benefit from the synergies resulting from the business combination. Each unit or group of units to which goodwill is allocated shall not be larger than an operating segment and represents the lowest level at which goodwill is monitored for internal management purposes.

An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Impairment losses are recognized in profit or loss. Impairment losses are first allocated to reduce the carrying amount of goodwill allocated to the CGU, and then to reduce the carrying amount of the other assets of the CGU on a pro rata basis.

(Q) PROVISIONS

A provision is recognized if, as a result of a past event, the Corporation has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

CONTINGENT LIABILITY

A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the control of the Corporation; or a present obligation that arises from past events (and therefore exists), but is not recognized because it is not probable that a transfer or use of assets, provision of services or any other transfer of economic benefits will be required to settle the obligation, or the amount of the obligation cannot be estimated reliably.

(R) EMPLOYEE BENEFITS

SHORT-TERM EMPLOYEE BENEFITS

Short-term employee benefits are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid if the Corporation has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Stock option plan

The fair value at the grant-date of equity settled share-based payment awards granted to management and key employees of the Corporation is recognized as an employee benefit expense, with a corresponding increase in equity, over the vesting period of the awards. The amount expensed is adjusted to reflect the number of awards for which it is expected that the service conditions will be met, so that the amount ultimately expensed will depend on the number of awards that meet the service conditions at the vesting date.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

Performance share units and deferred share units plans

Performance unit plan and deferred share units expected to be settled in cash are accounted for as cash settled awards, with the recognized compensation cost included in accounts payable and accrued liabilities. Compensation cost is initially measured at fair value at the grant date and is recognized in net income over the vesting year. The liability is remeasured based on the fair value price of the Corporation’s shares, at each reporting date. Remeasurements during the vesting year are recognized immediately to net income to the extent that they relate to past services and amortized over the remaining vesting year to the extent that they relate to future services. The cumulative compensation cost that will ultimately be recognized is the fair value of the Corporation’s shares at the settlement date.

Employee share purchase plan

The Corporation’s contributions, used to purchase shares on the open market on behalf of employees, are recognized when incurred as an employee benefit expense, with a corresponding increase in contributed surplus. The amount expensed is adjusted to reflect the number of awards for which it is expected that the vesting conditions will be met, so that the amount ultimately expensed will depend on the number of awards that meet the vesting conditions at the vesting date.

Unvested shares held in trust on behalf of employees are treasury shares and therefore deducted from equity until they become vested.

PENSION BENEFITS

The Corporation maintains a defined contribution pension plan and defined benefit pension plans. The Corporation does not provide any non-pension post-retirement benefits to employees.

Defined contribution pension plan

The Corporation matches employee contributions under the defined contribution pension plan. Under this plan, contributions are funded to a separate entity and the Corporation has no legal or constructive obligation to pay further amounts. The Corporation’s portion is recorded as compensation expense as contributions are made, which coincides with the periods during which services are rendered by employees.

Defined benefit pension plans

The cost of providing benefits under the defined benefit pension plans is determined on an annual basis by independent actuaries separately for each plan using the projected unit credit costing method. Actuarial gains and losses for both defined benefit plans are recognized immediately in full in the period in which they occur in OCI. Actuarial gains and losses are not reclassified to the consolidated statements of income in subsequent periods.

Past service costs are recognized in profit or loss on the earlier of: (i) the date of the plan amendment or curtailment, and (ii) the date that the Corporation recognizes restructuring-related costs.

The discount rate is applied to the net defined benefit asset or liability to determine net interest expense or income. The Corporation recognizes the following changes in the net defined benefit obligation under operating expenses in the consolidated statements of income: (i) service costs comprising current service costs, past service costs, gains and losses on curtailments and settlements, and (ii) net interest expense or income.

The value of any defined benefit asset recognized is restricted to the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

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Notes to Consolidated Financial Statements Years ended March 31, 2022 and 2021

(In thousands of Canadian dollars, unless otherwise stated)

(S) SHARE CAPITAL

Subordinate voting shares, variable voting shares and multiple voting shares are classified as equity. Incremental costs that are directly attributable to their issuance are recognized in reduction of equity, net of tax effects.

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