Exhibit 99.3

DHX Media Ltd.

Unaudited Interim Condensed Consolidated
Financial Statements

March 31, 2019

(expressed in thousands of Canadian dollars)

May 13, 2019

Management’s Responsibility for Financial Reporting

The accompanying unaudited interim condensed consolidated financial statements of DHX Media Ltd. (the “Company”) are the responsibility of management and have been approved by the Board of Directors (the “Board”). The Board is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the unaudited interim condensed consolidated financial statements. The Board carries out this responsibility through its Audit Committee. The Audit Committee reviews the Company’s unaudited interim condensed consolidated financial statements and recommends their approval by the Board.

The Audit Committee is appointed by the Board and all of its members are independent directors. It meets with the Company’s management and reviews internal control and financial reporting matters to ensure that management is properly discharging its responsibilities before submitting the unaudited interim condensed consolidated financial statements to the Board for approval.

The unaudited interim condensed consolidated financial statements have been prepared by management in accordance with International Accounting Standard 34, Interim Financial Reporting as issued by the International Accounting Standards Board. When alternative methods of accounting exist, management has chosen those it deems most appropriate in the circumstances. The unaudited interim condensed consolidated financial statements include amounts based on informed judgments and estimates of the expected effects of current events and transactions with appropriate consideration to materiality. In addition, in preparing the unaudited interim condensed consolidated financial statements, management must make determinations as to the relevancy of information to be included, and make estimates and assumptions that affect reported information. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.

(signed) “Michael Donovan”	(signed) “Doug Lamb”
Chief Executive Officer	Chief Financial Officer
Halifax, Nova Scotia	Toronto, Ontario

DHX Media Ltd.

Unaudited Interim Condensed Consolidated Balance Sheet

As at March 31, 2019 and June 30, 2018

(expressed in thousands of Canadian dollars)

	March 31, 2019		June 30,  2018
	$		$
Assets
Current assets
Cash		42,161		46,550
Amounts receivable (note 4)		285,872		251,538
Prepaid expenses and other		5,902		8,580
Investment in film and television programs (note 5)		154,055		186,008
		487,990		492,676
Long-term amounts receivable (note 4)		10,030		18,789
Acquired and library content (note 6)		126,246		147,088
Property and equipment		27,094		30,436
Intangible assets		539,785		546,997
Goodwill		241,211		240,806
		1,432,356		1,476,792
Liabilities
Current liabilities
Bank indebtedness (note 7)		—		16,350
Accounts payable and accrued liabilities		121,180		130,545
Deferred revenue		50,578		47,552
Interim production financing (note 7)		109,544		93,683
Current portion of long-term debt and obligations under finance leases (note 7)		4,260		10,524
		285,562		298,654
Long-term debt and obligations under finance leases (note 7)		553,233		746,046
Other long-term liabilities		10,007		13,621
Deferred income taxes (note 8)		6,891		17,679
		855,693		1,076,000
Shareholders’ Equity
Equity attributable to shareholders of the Company		318,545		315,078
Non-controlling interest (note 9)		258,118		85,714
		576,663		400,792
		1,432,356		1,476,792

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

DHX Media Ltd.

Unaudited Interim Condensed Consolidated Statement of Changes in Equity

For the nine month periods ended March 31, 2019 and 2018

(expressed in thousands of Canadian dollars)

	Common shares $		Contributed surplus $			Accumulated other comprehensive income (loss) $			Retained earnings (deficit) $			Non- controlling interest $			Total $
Balance - June 30, 2017		304,320		26,310			(21,596	)		20,263			86,556			415,853
Net income for the period		—		—			—			7,554			4,872			12,426
Other comprehensive income for the period		—		—			5,418			—			—			5,418
Comprehensive income for the period		—		—			5,418			7,554			4,872			17,844
Common shares issued		672		(51	)		—			—			—			621
Dividends		—		—			—			(8,049	)		—			(8,049	)
Share-based compensation		—		3,126			—			—			—			3,126
Non-controlling interest on acquisition of subsidiaries		—		—			—			—			4,178			4,178
Distributions to non-controlling interests		—		—			—			—			(9,696	)		(9,696	)
Balance - March 31, 2018		304,992		29,385			(16,178	)		19,768			85,910			423,877
Balance - June 30, 2018		305,167		29,060			(14,618	)		(4,531	)		85,714			400,792
Adoption of IFRS 9 (note 3)		—		—			—			(1,049	)		—			(1,049	)
Adoption of IFRS 15 (note 3)		—		—			481			(5,823	)		—			(5,342	)
Balance - July 1, 2018		305,167		29,060			(14,137	)		(11,403	)		85,714			394,401
Net (loss) income for the period		—		—			—			(38,722	)		18,463			(20,259	)
Other comprehensive income for the period		—		—			7,540			—			—			7,540
Comprehensive loss (income) for the period		—		—			7,540			(38,722	)		18,463			(12,719	)
Common shares issued		1,925		(1,142	)		—			—			—			783
Share-based compensation		—		741			—			—			—			741
Disposal of interest in subsidiary, net of transaction costs and taxes (note 9)		—		—			—			39,516			174,596			214,112
Distributions to non-controlling interests		—		—			—			—			(20,655	)		(20,655	)
Balance - March 31, 2019		307,092		28,659			(6,597	)		(10,609	)		258,118			576,663

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

DHX Media Ltd.

Unaudited Interim Condensed Consolidated Statement of Income (Loss)

For the three and nine month periods ended March 31, 2019 and 2018

(expressed in thousands of Canadian dollars, except for amounts per share)

	Three months ended						Nine months ended
	March 31,  2019			March 31,  2018			March 31,  2019			March 31,  2018
	$			$			$			$
Revenues (note 16)		109,986			116,486			331,040			337,048
Expenses (note 12)
Direct production costs and expense of film and television produced		62,713			65,514			192,198			189,159
Amortization of acquired and library content (note 6)		3,888			4,456			11,042			12,146
Amortization of property and equipment and intangible assets		5,574			6,122			17,073			17,922
Development, integration and other		1,365			4,567			4,085			8,525
Write-down of investment in film and television programs and acquired and library content and impairment of intangible assets (Note 5, 6)		34,199			875			36,154			1,925
Selling, general and administrative		20,240			22,501			58,711			63,044
Finance costs (note 11)		10,220			12,216			40,486			36,843
Change in fair value of embedded derivative		(1,600	)		(925	)		(3,500	)		(8,325	)
Foreign exchange (gain) loss		(7,542	)		6,923			5,534			(3,502	)
		129,057			122,249			361,783			317,737
Income (loss) before income taxes		(19,071	)		(5,763	)		(30,743	)		19,311
Provision for (recovery of) income taxes
Current income taxes (note 8)		(4,245	)		(409	)		842			2,946
Deferred income taxes (note 8)		(3,008	)		1,025			(11,326	)		3,939
		(7,253	)		616			(10,484	)		6,885
Net income (loss) for the period		(11,818	)		(6,379	)		(20,259	)		12,426
Net income attributable to non-controlling interests		6,610			1,626			18,463			4,872
Net (loss) income attributable to shareholders of the Company		(18,428	)		(8,005	)		(38,722	)		7,554
Basic earnings (loss) per common share (note 14)		(0.14	)		(0.06	)		(0.29	)		0.06
Diluted earnings (loss) per common share (note 14)		(0.14	)		(0.06	)		(0.29	)		0.06

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

DHX Media Ltd.

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income (Loss)

For the three and nine month periods ended March 31, 2019 and 2018

(expressed in thousands of Canadian dollars)

	Three months ended						Nine months ended
	March 31,  2019			March 31,  2018			March 31,  2019			March 31,  2018
	$			$			$			$
Net income (loss) for the period		(11,818	)		(6,379	)		(20,259	)		12,426
Other comprehensive income (loss)
Items that may be subsequently reclassified to the statement of income (loss)
Foreign currency translation adjustment		(10,422	)		13,003			7,540			5,418
Comprehensive income (loss) for the period		(22,240	)		6,624			(12,719	)		17,844

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

DHX Media Ltd.

Unaudited Interim Condensed Consolidated Statement of Cash Flows

For the nine month periods ended March 31, 2019 and 2018

(expressed in thousands of Canadian dollars)

	March 31,  2019			March 31,  2018
	$			$
Cash provided by (used in)
Operating activities
Net income (loss) for the period		(20,259	)		12,426
Charges (credits) not involving cash
Amortization of property and equipment		6,076			5,797
Amortization of intangible assets		10,997			12,125
Unrealized foreign exchange loss		6,168			7,238
Amortization of deferred financing fees		2,707			3,773
Accretion on tangible benefit obligation		313			401
Share-based compensation		741			3,126
Deferred share units expensed		175			—
Write-down of term facility unamortized issue costs		7,320			—
Accretion on Senior Unsecured Convertible Debentures		1,685			1,651
Change in fair value of embedded derivative		(3,500	)		(8,325	)
Deferred tax (recovery) expense		(11,326	)		3,939
Write-down of acquired and library content		11,059			1,925
Write-down of investment in film and television programs		22,615			—
Impairment of intangible assets		2,480			—
Amortization of acquired and library content		11,042			12,146
Gain on disposal of assets		(1,415	)		—
Net investment in film and television programs (note 15)		9,753			4,729
Net change in non-cash balances related to operations (note 15)		(40,789	)		(55,859	)
Cash provided by operating activities		15,842			5,092
Financing activities
Common shares issued, net of withholding taxes		783			270
Dividends		—			(7,698	)
Proceeds from (repayment of) bank indebtedness		(16,350	)		15,699
Proceeds from (repayment of) interim production financing		15,861			(6,223	)
Distributions to non-controlling interests		(20,655	)		(9,696	)
Payment of debt issue costs		—			(434	)
Decrease in cash held in trust		—			239,877
Proceeds on sale of interest in a subsidiary, net of cash fees paid (note 9)		221,084			—
Repayment of long-term debt and obligations under finance leases		(217,111	)		(233,877	)
Cash used in financing activities		(16,388	)		(2,082	)
Investing activities
Business acquisitions, net of cash acquired		—			(7,641	)
Proceeds on sale of assets		405			—
Acquisition of property and equipment		(303	)		(1,528	)
Acquisition of intangible assets		(4,171	)		(7,914	)
Cash used in investing activities		(4,069	)		(17,083	)
Effect of foreign exchange rate changes on cash		226			249
Net change in cash during the period		(4,389	)		(13,824	)
Cash - Beginning of period		46,550			62,143
Cash - End of period		42,161			48,319

Supplemental information (note 15)

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

1 Nature of business

DHX Media Ltd. (the “Company”) is a public company, and the ultimate parent, whose common shares are traded on the Toronto Stock Exchange (“TSX”), admitted on May 19, 2006, under the symbol DHX. On June 23, 2015, the Company commenced trading its Variable Voting Shares on the NASDAQ Global Trading Market (“NASDAQ”) under the symbol DHXM. The Company, incorporated on February 12, 2004 under the laws of the Province of Nova Scotia, Canada, and continued on April 25, 2006 under the Canada Business Corporation Act, develops, produces and distributes films and television programs for the domestic and international markets; licenses its brands in the domestic and international markets; broadcasts films and television programs in the domestic market; and manages copyrights, licensing and brands for third parties. The address of the Company’s head office is 1478 Queen Street, Halifax, Nova Scotia, Canada, B3J 2H7.

2 Basis of preparation

These unaudited interim condensed consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), applicable to the preparation of International Accounting Standard ("IAS") 34, Interim Financial Reporting, and follow the same accounting policies as those used in the Company's most recent audited annual consolidated financial statements, except for the new accounting policies adopted and described in note 3. These unaudited interim condensed consolidated financial statements do not include all the disclosures included in the Company's audited annual consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements.

These unaudited interim condensed consolidated financial statements have been authorized for issuance by the Board of Directors on May 13, 2019.

3 Significant accounting policies, judgments and estimation uncertainty

These unaudited interim condensed consolidated financial statements have been prepared using the same policies and methods as the annual consolidated financial statements of the Company for the year ended June 30, 2018, except for the new and amended accounting standards adopted and described below.

New and amended standards adopted

i) IFRS 9, Financial Instruments ("IFRS 9")

Effective July 1, 2018, the Company adopted IFRS 9, which establishes a single classification and measurement approach for financial assets and financial liabilities that reflect the business model in which they are managed and their cash flow characteristics. IFRS 9 also provides guidance on an entity's own credit risk relating to financial liabilities and amends the impairment model by introducing a new 'expected credit loss' model for calculating impairment. IFRS 9 replaces IAS 39, Financial Instruments: Recognition and Measurement ("IAS 39").

Under the previous accounting standard, the Company calculated its provision for impaired receivables by applying an 'incurred loss' model. Under IFRS 9, the Company applied the 'expected credit loss' model. Trade receivables, goods and services taxes recoverable and federal and provincial film tax credits and other government assistance are provided for based on estimated recoverable amounts as determined by using a combination of the customer's historical default experience and expected future credit losses. Goods and services taxes recoverable and other government assistance do not contain any significant uncertainty. In accordance with the transitional provisions of IFRS 9 (7.2.15), the resulting increase to the provision for impaired receivables as at July 1, 2018 was $1,049 with a corresponding increase to opening deficit.

 (1)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

In addition, the Company previously classified its financial assets as 'loans and receivables' and its financial liabilities as 'other financial liabilities', both of which were measured at amortized cost, with the exception of embedded derivatives which was classified as 'fair value through profit and loss' and measured, on a recurring basis, at fair value. Under IFRS 9, the measurement basis would remain the same across all financial instruments, however the category for classification has been amended to 'Amortized Cost' for its financial assets classified as loans and receivables and its financial liabilities classified as other financial liabilities, and to 'fair value through profit and loss' for its embedded derivative.

The standard also clarifies the accounting treatment for modifications of financial liabilities and requires a financial liability measured at amortized cost to be remeasured when a modification occurs. Any resulting gain or loss is required to be recognized in profit or loss at the date of modification. There was no adjustment to the Company's unaudited interim condensed consolidated financial statements as a result of this change.

ii) IFRS 15, Revenue from Contracts with Customers (“IFRS 15”)

Effective July 1, 2018, the Company adopted IFRS 15, which establishes a new comprehensive framework to record revenues from contracts for the sale of goods or services, unless the contracts are in the scope of other standards. IFRS 15 replaces IAS 18, Revenue, IAS 11, Construction Contracts, and some revenue related interpretations. Under IFRS 15, revenue is recognized at an amount that reflects the expected consideration receivable in exchange for transferring goods or services to a customer, applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company adopted IFRS 15 using the modified retrospective method, which requires the cumulative effect of initially applying the Standard to be recognized at the date of initial application, which is July 1, 2018, and that the financial information previously presented for the year ended June 30, 2018 would remain unchanged. The Company also elected to apply the practical expedient which permits the Company to apply IFRS 15 retrospectively only to contracts that are not completed contracts at the date of initial application.

The significant changes to the Company's revenue recognition policies are as follows:

•             Under its proprietary production channel, the Company previously recorded revenue for the initial broadcast rights when the production was completed and available to the customer. Under IFRS 15, an assessment is made at the inception of each contract to determine whether: i) the performance obligations are satisfied at a point in time, which generally occurs when the production is completed, available to the customer, and the customer has the contractual right to broadcast or stream the content; or ii) the Company transfers control of the production over time and therefore satisfies the performance obligations and recognizes revenue over time. Over time recognition generally occurs when the Company's production creates an asset that the customer controls as that production is created. When performance obligations are satisfied at a point in time, revenue is recognized when all the aforementioned criteria are met. When performance obligations are satisfied over time during the production of the show, revenue is recognized using the percentage of completion method, based on actual costs incurred compared to the total estimated costs. This change did not have an effect on the Company's opening balance sheet.

•             Under its distribution channel, the Company previously recorded revenue on certain distribution license agreements for its television and film content when the contract was executed and the licensed content was available to the customer. Under IFRS 15, revenue is deferred and recorded as revenue when the licensed content is available to the customer and the customer has the contractual right to broadcast or stream the content. This change did not have an effect on the Company's opening balance sheet.

 (2)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

•             Under its consumer products-owned channel, the Company previously recognized license revenue relating to certain minimum guarantees for royalties on its copyrights and brands at the start of the license period. Under IFRS 15, the Company determined that these were right-of-access licenses and as a result, minimum guarantees are deferred and amortized over the term of the license. Royalty revenue is calculated as the greater of royalties based on underlying sales or the pro-rata allocation of the minimum guarantee. This change resulted in a July 1, 2018 adjustment to increase opening deficit by $5,823, an increase to opening deferred revenue by $6,459, a decrease to opening deferred income taxes by $1,117 and a decrease to accumulated other comprehensive loss by $481.

•             For renewals or extensions of license agreements for television and film content, the Company previously recorded revenue when the agreement was renewed or extended. Under IFRS 15, revenue related to the extension or renewal term is recognized when the customer has the contractual right to broadcast or stream the content. This change did not have an effect on the Company's opening balance sheet.

The following is a reconciliation of the impact of IFRS 15 for the three month and nine month periods ended March 31, 2019:

	Three months ended March 31,  2019			Nine months ended March 31, 2019
	$			$
Revenue under IFRS 15, as reported		109,986			331,040
Impact of IFRS 15 on revenue:
Revenue on minimum guarantees (1)		(372	)		(2,025	)
Revenue on proprietary production shows (2)		242			1,544
Revenue on distribution licenses (3)		148			148
Revenue under IAS 18		110,004			330,707
Direct production costs and expense of film and television produced under IFRS 15, as reported		62,713			192,198
Impact of IFRS 15 on Direct production costs and expense of film and television produced: (4)		145			926
Direct production costs and expense of film and television produced under IAS 18		62,858			193,124

⁽¹⁾ Revenue on minimum guarantees - these are minimum guarantees on royalties in the consumer products-owned channel that were previously recognized at the inception of the license period but under IFRS 15 are recognized over the license term as a "right-to-access license", resulting in a corresponding adjustment to deferred revenue.

⁽²⁾ Revenue on proprietary production shows - these are proprietary production revenues that would have met the previous revenue recognition criteria under IAS 18 and recognized at a point in time with a corresponding adjustment to amounts receivable, but have been deferred under IFRS 15 as the risks and rewards of ownership under IAS 18 transferred to the customer at an earlier date than control was transferred under IFRS 15.

⁽³⁾ Revenue on distribution licenses - these are distribution revenues that would have met the previous revenue recognition criteria under IAS 18 and recognized at a point in time with a corresponding adjustment to amounts receivable, but have been deferred under IFRS 15 as the risks and rewards of ownership under IAS 18 transferred to the customer at an earlier date than control transferred under IFRS 15.

 (3)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

⁽⁴⁾ Direct production and new media costs - these costs are the expense of film and television produced related to proprietary production shows that have been deferred, with a corresponding adjustment to investment in film and television programs.

Revenue recognition policy adopted

Revenue is recognized at an amount that reflects the expected consideration receivable in exchange for transferring goods or services to a customer by applying the following five steps:

1) identify the contract with a customer;

2) identify the performance obligations in the contract;

3) determine the transaction price;

4) allocate the transaction price to the performance obligations in the contract; and

5) recognize revenue when (or as) the entity satisfies a performance obligation.

Revenue excludes sales taxes and other amounts that are collected on behalf of third parties and is recorded when control of a product or service is transferred to a customer.

For initial broadcast license rights related to proprietary production titles, an assessment is made at the execution of each contract to determine whether: i) the performance obligations are satisfied over time, or ii) the performance obligations are satisfied at a point in time. Performance obligations are satisfied over time during the production of the title when the customer can exert control over the production process and the Company’s ability to generate other revenues from the title are limited based on the remaining rights held and the nature of the show. Revenue is recognized using the percentage-of-completion method when performance obligations are satisfied over time. Performance obligations that are not satisfied over time are satisfied at a point in time, which generally occurs when the production is completed, available to the customer and the customer has the contractual right to broadcast or stream the content. When performance obligations are satisfied at a point in time, revenue is recognized when the conditions for recognition are satisfied.

Revenue from the sale of broadcast license rights to third parties is recognized when the licensed content is available to the customer and the customer has the contractual right to broadcast or stream the content.

Revenue from production services for third parties is recognized using the percentage-of-completion method. Percentage-of-completion recognizes revenues based upon the proportion of costs incurred in the current period to total expected costs.

Royalty revenue is accrued for royalty streams when the amount of revenue can be reliably measured based on relevant agreements and statements received from third party agents, and the underlying sales activity generating the royalty revenue has occurred.

 (4)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

Revenue from the management of copyrights, licensing and brands for third parties through representation agreements is recognized when the amount of revenue can be reliably measured and the services have been performed.

Minimum guarantees received on its merchandising and consumer brand licenses are deferred and recognized as revenue over the term of the license period.

License renewals or extensions are recognized when the licensed content becomes available under the renewal or extension.

Amounts received or advances currently due pursuant to a contractual arrangement, which have not yet met the criteria established to be recognized as revenue, are recorded as deferred revenue.

iii) IFRIC 22, Foreign Currency Transactions and Advance Consideration ("IFRIC 22")

Effective July 1, 2018, the Company adopted IFRIC 22, which clarified how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts. For a single payment or receipt, the date of the transaction is the date on which the entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability).

The Company has elected to apply IFRIC 22 prospectively beginning July 1, 2018. The adoption of this standard did not have a material impact to the Company's consolidated financial statements.

iv) Amendments to IFRS 2, Share-Based Payment ("IFRS 2")

Effective July 1, 2018, the Company adopted the amendments to IFRS 2, which clarified the classification and measurement of certain share-based payment transactions. The adoption of this amendment did not have an impact to the Company's consolidated financial statements.

Accounting standards issued but not yet applied

i) In January 2016, the IASB issued IFRS 16, Leases ("IFRS 16") effective for annual periods beginning on or after January 1, 2019. IFRS 16 provides a comprehensive model for the measurement, presentation and disclosure of leases and replaces IAS 17, Leases. The adoption of IFRS 16 will result in substantially all lessee leases being recorded on the balance sheet as an asset with a corresponding liability with both current and long-term portions. The Company is currently evaluating the impact of IFRS 16 on its consolidated financial statements.

ii) In June 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatment to clarify how the requirements of IAS 12, Income Taxes should be applied when there is uncertainty over income tax treatments. The interpretation is effective for annual periods beginning on or after January 1, 2019, with modified retrospective or retrospective application permitted. The Company is currently evaluating the impact of IFRIC 23 on its consolidated financial statements.

 (5)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

4 Amounts receivable

	March 31,  2019			June 30,  2018
	$			$
Trade receivables		191,461			163,203
Less: Loss allowance on trade receivables		(12,797	)		(9,742	)
		178,664			153,461
Goods and services tax recoverable, net		1,060			1,203
Federal and provincial film tax credits and other government assistance		106,148			96,874
Short-term amounts receivable		285,872			251,538
Long-term amounts receivable		10,030			18,789
Total amounts receivable		295,902			270,327

Loss allowance on trade receivables:

	March 31,  2019			June 30,  2018
	$			$
Opening balance		9,742			4,772
Impact of adoption of IFRS 9		1,049			—
Opening balance, restated for IFRS 9		10,791			4,772
Loss allowance on trade receivable		2,773			5,089
Receivables written off during the period		(581	)		(197	)
Recoveries of receivables previously provided for		(204	)		(12	)
Foreign exchange		18			90
Ending balance		12,797			9,742

 (6)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

5 Investment in film and television programs

	March 31,  2019			June 30,  2018
	$			$
Development costs		1,902			2,112
Productions in progress
Cost, net of government and third party assistance		14,302			17,577
Productions completed and released
Cost, net of government and third party assistance		560,331			529,494
Accumulated expense		(406,106	)		(377,041	)
Accumulated write-down of investment in film and television programs		(35,693	)		(15,910	)
		118,532			136,543
Program and film rights - broadcasting
Cost		138,890			134,765
Accumulated expense		(113,952	)		(102,202	)
Accumulated write-down of program and film rights		(5,619	)		(2,787	)
		19,319			29,776
		154,055			186,008

All program and film rights - broadcasting, noted above, relate to DHX Television.

The continuity of investment in film and television programs is as follows:

	March 31,  2019			June 30,  2018
	$			$
Net opening investment in film and television programs		186,008			195,180
Increase/(decrease) in development costs		(210	)		434
Cost of productions (completed and released and productions in progress), net of assistance		27,147			33,088
Expense of investment in film and television programs		(29,065	)		(33,554	)
Write-down of investment in film and television programs		(19,783	)		(4,779	)
Increase of program and film rights - broadcasting		4,125			14,110
Expense of program and film rights - broadcasting		(11,750	)		(18,546	)
Write-down of program and film rights - broadcasting		(2,832	)		(2,787	)
Foreign exchange		415			2,862
		154,055			186,008

During the nine months ended March 31, 2019, interest of $322 (2018 - $919) has been capitalized to investment in film and television programs.

During the nine months ended March 31, 2019, the Company recorded $22,615 in the write-down of certain investments in film, television programs and broadcasting film rights (2018 -$7,566). These write-downs are related to weaker than expected revenue performance and management's outlook for certain titles in the Company's library. The television programming write-down relates to licensed programming that is no longer being aired on the Company's television channels.

 (7)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

6 Acquired and library content

	March 31,  2019			June 30,  2018
	$			$
Net opening acquired and library content		147,088			155,940
Additions		—			8,406
Write-down of acquired and library content		(11,059	)		(3,402	)
Amortization		(11,042	)		(15,916	)
Foreign exchange		1,259			2,060
		126,246			147,088

During the nine months ended March 31, 2019, the Company recorded $11,059 in the write-down of certain acquired and library content (2018 -$3,402). These write-downs are related to weaker than expected revenue performance and current market condition for select acquired content.

7 Bank indebtedness, interim production financing, long-term debt and obligations under finance leases

	March 31,  2019			June 30,  2018
	$			$
Bank indebtedness		—			16,350
Interim production financing		109,544			93,683
Long-term debt and obligations under finance leases		557,493			756,570
Interest bearing debt and obligations under finance leases		667,037			866,603
Amount due within 12 months		(113,804	)		(120,557	)
Amount due beyond 12 months		553,233			746,046

a) Bank indebtedness

The Revolving Facility has a maximum available balance of US$30,000 (CAD $40,089) and matures on June 30, 2022. The Revolving Facility may be drawn down by way of either $USD base rate, $CAD prime rate, $CAD bankers’ acceptance, or $USD and £GBP LIBOR advances (the “Drawdown Rate”) and bears interest at floating rates ranging from the Drawdown Rate + 2.50% to the Drawdown Rate + 3.75%.

As at March 31, 2019, $nil (June 30, 2018 - $16,350) was drawn on the Revolving Facility.

 (8)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

b) Interim production financing

	March 31,  2019		June 30,  2018
	$		$
Interim production credit facilities with various institutions, bearing interest at bank prime plus 0.5% - 1.0%.  Assignment and direction of specific production financing, licensing contracts receivable and film tax credits receivable with a net book value of approximately $119,143 at March 31, 2019 (June 30, 2018 - $115,639) have been pledged as security.		109,544		93,683

During the nine months ended March 31, 2019, the $CDN bank prime rate averaged 3.84% (Q3 2018 - 3.19%).

c) Long-term debt and obligations under finance leases

	March 31,  2019			June 30,  2018
	$			$
Term Facility, net of unamortized issue costs of $12,852 (June 30, 2018 - $22,232)		426,677			623,066
Senior Unsecured Convertible Debentures, net of unamortized issue costs of $4,918 (June 30, 2018 - $5,588) and embedded derivatives at fair value of $8,440 (June 30, 2018 - $11,940)		123,602			124,747
Obligations under various finance leases, bearing interest at rates ranging from 4.0% to 9.8%, maturing on dates ranging from January 2019 to December 2026		7,214			8,757
		557,493			756,570
Less: Current portion		(4,260	)		(10,524	)
		553,233			746,046

(i) Term Facility

As at March 31, 2019, the Company's Term Facility had a principal balance of US$328,722 (June 30, 2018 - US$490,050), bearing interest at floating rates of either $USD base rate + 2.75% or $USD LIBOR + 3.75% and will mature on December 29, 2023.

During the first quarter, the Company repaid US$161,328 against its Term Facility using proceeds from the sale of a 49% interest of the Company's 80% ownership in Peanuts (note 9). As a result of this repayment, the Company recorded a write-down of its unamortized issue costs of $7,320.

The Term Facility is repayable in equal quarterly installment payments of US$1,238 or 0.25% of the initial principal commencing September 30, 2017. As a result of the repayment in the first quarter, the Company is not required to make any further installment payments through to maturity.

 (9)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

(i) Term Facility (continued)

The Term Facility also requires repayments equal to 50% of Excess Cash Flow (the "Excess Cash Flow Payments") (as defined in the Senior Secured Credit Agreement), commencing for the fiscal year-ended June 30, 2018, while the First Lien Net Leverage Ratio (as defined in the Senior Secured Credit Agreement) is greater than 3.50 times, reducing to 25% of Excess Cash Flow while First Lien Net Leverage Ratio (as defined in the Senior Secured Credit Agreement) is at or below 3.50 times and greater than 3.00 times, with the remaining balance due on December 29, 2023. As at March 31, 2019, no payments were owed under the Excess Cash Flow Payments terms of the Term Facility.

The Senior Secured Credit Facilities require that the Company comply with a Total Net Leverage Ratio covenant, as defined in the Senior Secured Credit Agreement:

Period	Ratio target
Each fiscal quarter commencing September 30, 2018	< 6.75x
Each fiscal quarter commencing September 30, 2019	< 6.50x
Each fiscal quarter commencing September 30, 2020	< 5.75x
Each fiscal quarter commencing September 30, 2021 to Maturity at December 29, 2023	< 5.50x

As at March 31, 2019, the Company was in compliance with all its debt covenants with a Total Net Leverage Ratio of 6.09x.

(ii) Senior Unsecured Convertible Debentures

As at March 31, 2019, the Senior Unsecured Convertible Debentures had a principal balance of $140,000 (June 30, 2018 - $140,000), bearing interest at an annual rate of 5.875% and paid semi-annually on March 31 and September 30 of each year. The Senior Unsecured Convertible Debentures are convertible into Common Voting Shares or Variable Voting Shares of the Company at a price of $8.00 per share, subject to certain customary adjustments. The Senior Unsecured Convertible Debentures mature September 30, 2024.

The Senior Unsecured Convertible Debentures have a cash conversion option whereby the Company can elect to make a cash payment in lieu of issuing Common Voting Shares or Variable Voting Shares upon exercise of the conversion option feature by the holder of the Senior Unsecured Convertible Debentures. As a result, the Senior Unsecured Convertible Debentures were deemed to have no equity component at initial recognition and the estimated fair value of the embedded derivatives is recorded as a financial liability and included with the debt component on the Company's consolidated balance sheet. Changes in the estimated fair value of the embedded derivatives are recorded through the Company's consolidated statement of income. As at March 31, 2019, the estimated fair value of the embedded derivatives was $8,440.

 (10)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

8 Income taxes

Significant components of the Company’s net deferred income tax liability as at March 31, 2019 and June 30, 2018 are as follows:

	March 31,  2019			June 30,  2018
	$			$
Broadcast licenses		(17,967	)		(17,967	)
Tangible benefit obligation		1,965			2,171
Deferred revenue		690			—
Foreign tax credits		1,881			2,324
Property and equipment		2,323			697
Share issuance costs and deferred financing fees		(476	)		(1,603	)
Investment in film and television programs and acquired and library content		(20,644	)		(27,568	)
Intangible assets		(10,990	)		(9,633	)
Non-capital losses and other		36,327			33,900
Net deferred income tax liability		(6,891	)		(17,679	)

Deferred income tax liabilities have not been recognized for the withholding tax and other taxes that would be payable on unremitted earnings of certain subsidiaries, as such amounts are permanently reinvested. Unremitted earnings totaled $86,365 at March 31, 2019 (June 30, 2018 - $72,648).

The reconciliation of income taxes computed at the statutory tax rates to income tax expense (recovery) is as follows:

	Three months ended						Nine months ended
	March 31,  2019			March 31,  2018			March 31, 2019			March 31,  2018
	$			$			$			$
Income tax expense (recovery) based on combined federal and provincial tax rates of 31% (June 30, 2018 - 31%)		(5,773	)		(1,786	)		(9,391	)		5,996
Income taxes increased (reduced) by:
Share-based compensation		210			283			222			969
Non-taxable or non deductible portion of capital gain / (loss)		(1,410	)		1,447			527			(1,490	)
Tax rate differential		(1,105	)		57			1,341			(192	)
Non-controlling interest		(2,049	)		(504	)		(5,724	)		(1,510	)
Tax rate change on opening balance		—			780			—			2,790
True up to return		3,243			—			3,243			—
Other		(369	)		339			(702	)		322
Provision for income taxes		(7,253	)		616			(10,484	)		6,885

The Company operates in multiple jurisdictions with differing tax rates. The Company’s effective tax rates are dependent on the jurisdiction to which income relates.

 (11)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

9 Disposal of interest in subsidiary and non-controlling interest

On July 23, 2018, the Company completed the sale of a non-controlling interest in its Peanuts subsidiary ("Peanuts") to Sony Music Entertainment (Japan) Inc. ("SMEJ"). SMEJ acquired 49% of the Company's 80% interest in Peanuts for gross proceeds of $234,610 and net proceeds of $214,112 (net of transaction costs of $8,720 and taxes of $11,778). The Company recorded a non-controlling interest of $174,596 on the sale to SMEJ.

As at March 31, 2019, the Company holds a 41% interest in Peanuts, SMEJ holds a 39% interest, and the members of the family of Charles M. Schulz hold a 20% interest. Subsequent to the sale, the Company continues to control Peanuts and therefore consolidates 100% of Peanuts.

10 Share capital and contributed surplus

Common shares

The common shares of the Company are inclusive of Common Voting Shares, Variable Voting Shares and Non-Voting Shares. As at March 31, 2019, the Company had 54,274,501 Common Voting Shares, 80,630,051 Variable Voting Shares and nil Non-Voting Shares issued and outstanding.

During the nine months ended March 31, 2019, Company issued 66,577 common shares, at an average price of $2.39 as part of the Company’s employee share purchase plan.

Options

On September 27, 2018, 4,046,500 options were granted to directors, officers and employees with an exercise price of $1.51 per common share. Included in this option grant were 3,046,500 that vest over four years and expire in seven years, and 1,000,000 that vest at a share price of $10 and expire in seven years.

On November 16, 2018, 272,516 options were granted to directors, officers and employees with an exercise price of $2.81 per common share, all of which vest over four years and expire in seven years.

On February 15, 2019, 300,000 options were granted to directors, officers and employees with an exercise price of $2.26 per common share, all of which vest over four years and expire in seven years.

Performance share unit plan

During the nine month period ended March 31, 2019, 78,460 Performance Share Units ("PSUs") were paid out to employees, including accrued dividends, 3,383 were forfeited and 70,229 were cancelled relating to taxes payable on the units issued.

Deferred share unit plan

Under the Deferred Share Unit Plan ("DSU Plan") adopted in the current year, the Board may grant Deferred Share Units ("DSUs") to directors and eligible employees at its discretion, or directors and employees may elect to receive directors fees or certain cash bonus amounts in the form of DSUs. The DSUs are fully vested upon allocation and cannot be redeemed for cash until the holder is no longer a director or employee of DHX. Upon redemption, the value of the DSUs will be paid in cash, or shares delivered from the share purchase funds. In no event shall shares be issued from treasury to settle DSUs. On the vesting date, the Company recognizes compensation expense and liabilities equal to the fair value of the DSUs, and both are adjusted prospectively equal to the market price of the share of the Company.

The Company granted directors 84,000 DSUs. During the period, the compensation expense recognized as a result of the DSUs was $175 (2018 - $nil). The obligation from DSUs of $175 (2018 - $nil) was classified as other long-term liabilities.

 (12)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

11 Finance costs

Finance costs comprised of the following:

	Three months ended						Nine months ended
	March 31,  2019			March 31,  2018			March 31,  2019			March 31,  2018
	$			$			$			$
Finance costs
Interest income		(493	)		(69	)		(1,716	)		(213	)
Interest expense on bank indebtedness		63			217			388			552
Accretion of tangible benefit obligation		104			133			313			401
Interest on long-term debt		8,649			9,950			28,222			30,733
Interest on completed and released productions		271			—			1,021			—
Amortization of deferred financing fees		915			984			2,707			3,235
Write-down of term facility unamortized issue costs		—			—			7,320			—
Accretion on Senior Unsecured Convertible Debentures		533			817			1,685			1,651
Interest on finance leases		178			184			546			484
		10,220			12,216			40,486			36,843

 (13)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

12 Expenses by nature and employee benefit expense

The following sets out the expenses by nature:

	Three months ended				Nine months ended
	March 31,  2019		March 31,  2018		March 31,  2019		March 31,  2018
	$		$		$		$
Direct production and new media costs		44,923		46,363		151,383		148,241
Expense of film and television programs		13,791		14,422		29,065		26,795
Expense of film and broadcast rights for broadcasting		3,999		4,729		11,750		14,123
Write-down of investment in film and television programs and acquired and library content		31,719		875		33,674		1,925
Development, integration and other		1,365		4,567		4,085		8,525
Impairment of intangible assets		2,480		—		2,480		—
Amortization of acquired and library content		3,888		4,456		11,042		12,146
Office and administrative		2,671		7,057		14,688		16,882
Finance costs, changes in fair value of embedded derivative, and foreign exchange		1,078		18,214		42,520		25,016
Investor relations and marketing		833		617		2,120		2,350
Professional and regulatory		1,180		1,756		5,061		4,939
Amortization of property and equipment and intangible assets		5,574		6,122		17,073		17,922
		113,501		109,178		324,941		278,864
The following sets out the components of employee benefits expense:
Salaries and employee benefits		14,870		12,158		36,101		35,747
Share-based compensation		686		913		741		3,126
		15,556		13,071		36,842		38,873
		129,057		122,249		361,783		317,737

 (14)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

13 Financial instruments

Financial instruments recorded at fair value on the consolidated balance sheet are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The value hierarchy has the following levels:

Level 1 -	Valuation based on quoted prices observed in active markets for identical assets and liabilities.
Level 2 -	Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 -	Valuation techniques with significant unobservable market inputs.

A financial instrument is classified to the lowest of the hierarchy for which a significant input has been considered in measuring fair value.

Fair value estimates are made at a specific point in time based on relevant market information. These are estimates and involve uncertainties and matters of significant judgment and cannot be determined with precision. Changes in assumptions and estimates could significantly affect fair values.

Financial assets and liabilities measured at fair value

	As at
	March 31, 2019					June 30, 2018
	Fair value hierarchy		Fair value(1)			Fair value hierarchy		Fair value(1)
				$					$
Embedded Derivatives(2)		Level 2		(8,440	)		Level 2		(11,940	)

⁽¹⁾ The Company values its derivatives using valuations that are calibrated to the initial trade prices.  Subsequent valuations are based on observable inputs to the valuation model.

⁽²⁾ The fair value of embedded derivatives are estimated using valuation models.

Financial assets and liabilities not measured at fair value

The carrying amount of all financial instruments presented in the unaudited interim condensed consolidated financial statements approximate their fair values, except for the Senior Unsecured Convertible Debentures as follows:

	As at
	March 31, 2019						June 30, 2018
	Fair value hierarchy		Fair value liability		Carrying value		Fair value hierarchy		Fair value liability		Carrying value
				$		$				$		$
Senior Unsecured Convertible Debentures(1)		Level 1		109,214		128,520		Level 1		123,200		130,355

⁽¹⁾ The fair value of the convertible debentures is based on market quotes as these are actively traded on the open exchange.

 (15)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

14 Earnings per common share

a) Basic

Basic earnings per share is calculated by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of common shares outstanding during the period.

	Three months ended						Nine months ended
	March 31,  2019			March 31,  2018			March 31,  2019			March 31,  2018
	$			$			$			$
Net income (loss) attributable to shareholders of the Company		(18,428	)		(8,005	)		(38,722	)		7,554
Weighted average number of common shares outstanding (in 000's)		134,954			134,562			134,752			134,483
Basic earnings (loss) per share		(0.14	)		(0.06	)		(0.29	)		0.06

b) Diluted

Diluted earnings per share reflect the potential dilutive effect that could occur if additional common shares were assumed to be issued under securities or instruments that may entitle their holders to obtain common shares in the future. Dilution could occur through the exercise of stock options, the exercise of PSUs, or the exercise of the conversion option of the convertible debentures. The number of additional shares for inclusion in the diluted earnings per share calculation was determined using the treasury stock method.

For the nine month period ended March 31, 2019, the diluted weighted average number of common shares outstanding is the same as the basic weighted average number of common shares outstanding, as the Company had a net loss for the period and the exercise of any potentially dilutive instruments would be anti-dilutive.

	Three months ended						Nine months ended
	March 31,  2019			March 31,  2018			March 31,  2019			March 31,  2018
	$			$			$			$
Net income (loss) attributable to shareholders of the Company		(18,428	)		(8,005	)		(38,722	)		7,554
Weighted average number of common shares (in 000's)		134,954			134,562			134,752			134,483
Dilutive effect of share-based compensation (in 000's)		—			—			—			524
Weighted average number of diluted shares outstanding		134,954			134,562			134,752			135,007
Diluted earnings (loss) per share		(0.14	)		(0.06	)		(0.29	)		0.06

 (16)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

15 Statement of cash flows - supplementary information

Net change in non-cash balances related to operations

	March 31,			March 31,
	2019			2018
	$			$
Decrease (increase) in amounts receivable		(33,504	)		(34,372	)
Decrease (increase) in prepaid expenses and other		2,678			3,045
Decrease (increase) in long-term amounts receivable		8,759			3,001
Increase (decrease) in accounts payable and accrued liabilities		(14,199	)		(42,294	)
Increase (decrease) in deferred revenue		(3,433	)		15,524
Tangible benefit obligation payments		(1,090	)		(763	)
		(40,789	)		(55,859	)

During the period, the Company paid and received the following:

	March 31,		March 31,
	2019		2018
	$		$
Interest paid		25,773		27,688
Interest received		294		213
Taxes paid		8,033		2,510

Net change in film and television programs

	Nine months ended
	March 31,			March 31,
	2019			2018
		$			$
Decrease (increase) in development		210			(11	)
Decrease (increase) in productions in progress		3,275			11,707
Decrease (increase) in productions completed and released		(30,422	)		(29,439	)
Expense of film and television programs		29,065			26,795
Decrease (increase) in program and film rights - broadcasting		(4,125	)		(18,446	)
Expense of film and broadcast rights for broadcasting		11,750			14,123
		9,753			4,729

 (17)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

Reconciliation between the opening and closing balances on the consolidated balance sheet arising from financing activities

				Senior
				unsecured
	Term			convertible			Finance
	facility			debentures			leases			Total
		$			$			$			$
Balance - June 30, 2018		623,066			124,747			8,757			756,570
Repayments		(212,437	)		—			(4,674	)		(217,111	)
Total financing cash flow activities		(212,437	)		—			(4,674	)		(217,111	)
Amortization of deferred financing costs		2,037			670			—			2,707
Write-down of term facility unamortized issue costs		7,320			—			—			7,320
New finance leases		—			—			3,131			3,131
Change in fair value of embedded derivatives		—			(3,500	)		—			(3,500	)
Accretion on Senior Unsecured Convertible Debentures		—			1,685			—			1,685
Unrealized foreign exchange gain		6,691			—			—			6,691
Total financing non-cash activities		16,048			(1,145	)		3,131			18,034
Balance - March 31, 2019		426,677			123,602			7,214			557,493

							Senior
	Term			Special			unsecured			Finance
	facility			warrants			notes			leases			Total
		$			$			$			$			$
Balance - June 30, 2017		616,339			133,751			225,000			8,245			983,335
Repayments		(4,941	)		(313	)		(225,000	)		(4,057	)		(234,311	)
Total financing cash flow activities		(4,941	)		(313	)		(225,000	)		(4,057	)		(234,311	)
Amortization of deferred financing costs		3,022			751			—			—			3,773
New finance leases		—			(8,325	)		—			—			(8,325	)
Movement in fair value of embedded derivatives		—			1,651			—			—			1,651
Accretion on Senior Unsecured Convertible Debentures		—			—			—			3,880			3,880
Unrealized foreign exchange gain		(4,193	)		—			—			—			(4,193	)
Total financing non-cash activities		(1,171	)		(5,923	)		—			3,880			(3,214	)
Balance - March 31, 2018		610,227			127,515			—			8,068			745,810

 (18)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

16 Revenues and segmented information

The Company operates production entities and offices throughout Canada, the United States and Europe. In evaluating performance, the Chief Operating Decision Maker ("CODM") does not distinguish or group its production, distribution and merchandising operations ("Content Business") on a geographic basis. The Company has determined that it has three reportable segments being the Content Business, CPLG, which manages copyrights, licensing and brands for third parties and DHX Television.

	Three months ended March 31, 2019
	CPLG			DHX  Television		Content		Consolidated
		$			$		$		$
Revenues		2,864			12,349		94,773		109,986
Direct production costs and expense of film and television produced, and selling, general and administrative		3,503			7,308		65,563		76,374
Segment profit/(loss)		(639	)		5,041		29,210		33,612
Corporate selling, general and administrative									6,579
Amortization of property and equipment and intangible assets									5,574
Finance costs									10,220
Foreign exchange gain									(7,542	)
Change in fair value of embedded derivative									(1,600	)
Amortization of acquired and library content									3,888
Write-down of investment in film and television programs and acquired and library content									34,199
Development, integration and other									1,365
Loss before income taxes									(19,071	)

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DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

	Three months ended March 31, 2018
	CPLG			DHX Television		Content		Consolidated
		$			$		$		$
Revenues		2,115			12,885		101,486		116,486
Direct production costs and expense of film and television produced, and selling, general and administrative		4,375			8,341		70,137		82,853
Segment profit/(loss)		(2,260	)		4,544		31,349		33,633
Corporate selling, general and administrative									5,162
Amortization of property and equipment and intangible assets									6,122
Finance costs									12,216
Foreign exchange loss									6,923
Change in fair value of embedded derivative									(925	)
Amortization of acquired and library content									4,456
Write-down of investment in film and television programs and acquired and library content									875
Development, integration and other									4,567
Loss before income taxes									(5,763	)

	Nine months ended March 31, 2019
	CPLG			DHX Television		Content		Consolidated
		$			$		$		$
Revenues		9,797			39,402		281,841		331,040
Direct production costs and expense of film and television produced, and selling, general and administrative		10,166			21,670		202,918		234,754
Segment profit/(loss)		(369	)		17,732		78,923		96,286
Corporate selling, general and administrative									16,155
Amortization of property and equipment and intangible assets									17,073
Finance costs									40,486
Foreign exchange loss									5,534
Change in fair value of embedded derivative									(3,500	)
Amortization of acquired and library content									11,042
Write-down of investment in film and television programs and acquired and library content									36,154
Development, integration and other									4,085
Loss before income taxes									(30,743	)

 (20)

DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

	Nine months ended March 31, 2018
	CPLG		DHX Television		Content		Consolidated
		$		$		$		$
Revenues		11,229		41,209		284,610		337,048
Direct production costs and expense of film and television produced, and selling, general and administrative		10,529		25,009		200,538		236,076
Segment profit		700		16,200		84,072		100,972
Corporate selling, general and administrative								16,127
Amortization of property and equipment and intangible assets								17,922
Finance costs								36,843
Foreign exchange gain								(3,502	)
Change in fair value of embedded derivative								(8,325	)
Amortization of acquired and library content								12,146
Write-down of investment in film and television programs and acquired and library content								1,925
Development, integration and other								8,525
Income before income taxes								19,311

As at March 31, 2019, $33,224, and $207,984 of goodwill was allocated to DHX Television and Content Business, respectively (June 30, 2018 - $33,224, and $207,582, respectively).

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DHX Media Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

For the period ended March 31, 2019

(expressed in thousands of Canadian dollars unless otherwise noted, except for amounts per share)

The following table presents further components of revenue derived from the following areas:

	Three months ended				Nine months ended
	March 31,  2019		March 31,  2018		March 31,  2019		March 31,  2018
	$		$		$		$
Content
Production revenue		9,956		6,443		18,460		17,605
Distribution revenue		35,632		40,965		94,239		98,367
Merchandising and licensing and other revenue		37,511		34,126		121,647		113,053
Producer and service fee revenue		11,674		19,952		47,495		55,585
		94,773		101,486		281,841		284,610
DHX Television
Subscriber revenue		11,016		12,349		35,448		38,274
Promotion and advertising revenue		1,333		536		3,954		2,935
		12,349		12,885		39,402		41,209
CPLG
Third party brand representation revenue		2,864		2,115		9,797		11,229
		109,986		116,486		331,040		337,048

17 Subsequent event

On April 2, 2019, the Company entered into an Agreement of Purchase and Sale to sell a building it owns on Bartley Drive, Toronto, with a carrying value of $6,337, for total consideration of $12,000. The agreement is subject to customary closing conditions, and commissions and transaction costs will be determined at the time of closing, which is expected during the fourth quarter.

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