40-F

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 40-F

(Check One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2018 Commission File Number 001-37408

DHX Media Ltd.
(Exact name of Registrant as specified in its charter)

Canada
(Province or other jurisdiction of incorporation or organization)

7829
(Primary Standard Industrial Classification Code Number (if applicable))

Not Applicable
(I.R.S. Employer Identification Number (if applicable))

1478 Queen Street

Halifax, Nova Scotia, B3J 2H7, Canada

(902) 423-0260
(Address and telephone number of Registrant’s principal executive offices)

C T Corporation System111 Eighth Avenue

13^th Floor

New York, NY 10011

(212) 590-9070
(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class
Variable Voting Shares (no par value) Common Voting Shares (no par value) Name of each exchange
on which registered
The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

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None
(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

☒ Annual information form ☒ Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

At June 30, 2018, the Registrant had outstanding 34,783,382 Variable Voting Shares, without par value, and 99,510,508 Common Voting Shares, without par value.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

YES ☐ NO ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

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EXPLANATORY NOTE

DHX Media Ltd. (the “Registrant”) is a Canadian corporation eligible to file its Annual Report pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F. The Registrant is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Equity securities of the Registrant are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder.

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 40-F are forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Additionally, the safe harbor provided in Section 21E of the Exchange Act and Section 27A of the Securities Act applies to any forward-looking information provided pursuant to “Off-Balance Sheet Arrangements” and “Tabular Disclosure of Contractual Obligations” in this Annual Report on Form 40-F. Please see “Management Discussion and Analysis” on pages 2-3 of the Management Discussion and Analysis for the fiscal year ended June 30, 2018 of the Registrant, attached as Exhibit 99.3 to this Annual Report on Form 40-F, and “Forward Looking Statements” on pages 3-4 of the Annual Information Form for the fiscal year ended June 30, 2018 of the Registrant, attached as Exhibit 99.1 to this Annual Report on Form 40-F.

NOTE TO UNITED STATES READERS -
DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Annual Report on Form 40-F in accordance with Canadian disclosure requirements, which are different from those of the United States.

The Registrant prepares its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board. As a result, the Registrant’s consolidated financial statements may not be comparable to financial statements of U.S. companies prepared in accordance with U.S. generally accepted accounting principles.

Unless otherwise indicated, all dollar amounts in this Annual Report on Form 40-F are in Canadian dollars. The exchange rate of Canadian dollars into United States dollars, on June 29, 2018, based upon the Bank of Canada published daily average exchange rate, was U.S.$1.00 = CDN$1.3168.

Purchasing, holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Annual Report on Form 40-F.

PRINCIPAL DOCUMENTS

Annual Information Form

The Registrant’s Annual Information Form for the fiscal year ended June 30, 2018 is filed as Exhibit 99.1 and incorporated by reference in this Annual Report on Form 40-F.

Audited Annual Financial Statements

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The audited consolidated financial statements of the Registrant for the fiscal year ended June 30, 2018, including the Independent Auditor’s Report with respect thereto, are filed as Exhibit 99.2 and incorporated by reference in this Annual Report on Form 40-F.

Management’s Discussion and Analysis

The Registrant’s Management’s Discussion and Analysis for the fiscal year ended June 30, 2018 is filed as Exhibit 99.3 and incorporated by reference in this Annual Report on Form 40-F.

CONTROLS AND PROCEDURES

Certifications

The required certifications are included in Exhibits 99.4, 99.5, 99.6 and 99.7 of this Annual Report on Form 40-F.

Disclosure Controls and Procedures

At the end of the period covered by this report, an evaluation of the effectiveness of the design and operation of the Registrant’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) under the Exchange Act) was carried out by the Registrant’s principal executive officer and principal financial officer. Based upon that evaluation, the Registrant’s principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, the design and operation of the Registrant’s disclosure controls and procedures are effective to ensure that (i) information required to be disclosed in reports that the Registrant files or submits to regulatory authorities is recorded, processed, summarized and reported within the time periods specified by regulation, and (ii) is accumulated and communicated to management, including the Registrant’s principal executive officer (the “CEO”) and principal financial officer (the “CFO”), to allow timely decisions regarding required disclosure.

It should be noted that while the Registrant’s CEO and CFO believe that the Registrant’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Management Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) and has designed such internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

In designing and evaluating the Registrant’s internal control over financial reporting, the Registrant’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its reasonable judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the Registrant’s internal control over financial reporting as of June 30, 2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on this evaluation, management concluded that the Registrant’s internal control over financial reporting was effective as of June 30, 2018, based on those criteria.  Also see “Disclosure Controls and Procedures and Internal Control over Financial Reporting” in the Management’s Discussion and Analysis for the fiscal year ended June 30, 2018, included as Exhibit 99.3 to this Annual Report on Form 40-F.

Attestation Report of Independent Auditor

In accordance with the United States Jumpstart Our Business Startup Act (the “JOBS Act”) enacted on April 5, 2012, the Registrant qualifies as an “emerging growth company” (an “EGC”), which entitles the Registrant to take advantage

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of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. Specifically, the JOBS Act defers the requirement to have the Registrant’s independent auditor assess the Registrant’s internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act. As such, the Registrant is exempted from the requirement to include an auditor attestation report in this Form 40-F for so long as the Registrant remains an EGC, which may be for as long as five years following its initial registration in the United States.

Changes in Internal Control over Financial Reporting

During the year ended June 30, 2018, there were no changes in the Registrant’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

NOTICES PURSUANT TO REGULATION BTR

There were no notices required by Rule 104 of Regulation BTR that the Registrant sent during the year ended June 30, 2018 concerning any equity security subject to a blackout period under Rule 101 of Regulation BTR.

AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT

Audit Committee

The Board of Directors has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act for the purpose of overseeing the accounting and financial reporting processes of the Registrant and audits of the Registrant’s annual financial statements. As of the date of this Annual Report on Form 40-F, the members of the Audit Committee are Elizabeth Beale, David Colville, Alan Hibben and Donald Wright.

The Board of Directors of the Registrant has determined that all members of the Audit Committee are “independent,” as such term is defined under the rules of The NASDAQ Stock Market LLC (“NASDAQ”). Further, the Registrant has determined that all members of the Audit Committee are financially literate, meaning that they must be able to read and understand fundamental financial statements.

Audit Committee Financial Expert

The Board of Directors of the Registrant has determined that the Chair of the Audit Committee, Donald Wright, is an “audit committee financial expert,” as defined in General Instruction B(8)(b) of Form 40-F. The U.S. Securities and Exchange Commission (the “Commission”) has indicated that the designation of Donald Wright as an audit committee financial expert does not make him an “expert” for any purpose, impose any duties, obligations or liability on him that are greater than those imposed on members of the audit committee and board of directors who do not carry this designation or affect the duties, obligations or liability of any other member of the audit committee.

CODE OF ETHICS

The Registrant has adopted a written code of ethics for its directors, officers and employees entitled “Code of Business Conduct and Ethics” (the “Code”) that complies with Section 406 of the Sarbanes-Oxley Act of 2002 and with NASDAQ Listing Rule 5610. The Code includes, among other things, written standards for the Registrant’s principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions, which are required by the Commission for a code of ethics applicable to such officers. A copy of the Code is posted on the Registrant’s website at www.dhxmedia.com under the Investors tab and under the Governance Documents tab.

No substantive amendments to the Code were adopted during the year ended June 30, 2018. No “waiver” or “implicit waiver,” as such terms are defined in Note 6 to General Instruction B(9) of Form 40-F, was granted relating to any provision of the Code during the year ended June 30, 2018.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP has served as the Registrant’s auditing firm since its formation on February 12, 2004. Aggregate fees billed to the Registrant for professional services rendered by PricewaterhouseCoopers LLP and its affiliates during the fiscal years ended June 30, 2018 and June 30, 2017 are detailed below (stated in Canadian dollars):

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		Fiscal 2018		Fiscal 2017
Audit Fees	$	1,635,991	$	1,729,000
Audit-Related Fees	$	185,346	$	76,450
Tax Fees	$	170,785	$	164,471
All Other Fees	$	-	$	-
Total Fees	$	1,992,122	$	1,969,921

The nature of each category of fees is as follows:

Audit Fees

Audit fees were paid for professional services rendered by the auditor for the audit of the Registrant’s annual financial statements (2017 – $1,545,000 and 2018 – $1,250,000), reviews of the Registrant’s consolidated interim financial statements (2017 – $150,000 and 2018 – $150,000), and business acquisition, translation and stat audits (2017 – $34,000 and 2018 – $235,991).

Audit-Related Fees

Audit-related fees are defined as the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Registrant’s financial statements and are not reported under the Audit Fees item above. This category is comprised of fees billed for advisory services associated with the Registrant’s financial reporting and includes production cost audits and tax credit letters (2017 – $66,450 and 2018 – $142,296) and due diligence and bank reporting (2017 – $10,000 and 2018 – $43,050).

Tax Fees

Tax fees are defined as the aggregate fees billed for professional services rendered by the Registrant’s external auditor for tax compliance (2017 – $131,905 and 2018 – $134,245), tax advice and tax planning (2017 – $6,050 and 2018 – $26,250) and due diligence (2017 – $26,516 and 2018 – $10,290).

All Other Fees

There were no other fees paid with respect to fiscal 2018 and 2017.

Pre-Approval Policies and Procedures

All audit and non-audit services performed by the Registrant’s auditor must be pre-approved by the Audit Committee of the Registrant.

For the fiscal year ended June 30, 2018, all audit and non-audit services performed by the Registrant’s auditor were pre-approved by the Audit Committee of the Registrant, pursuant to Rule 2-01(c)(7)(i) of Regulation S-X.

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2018, the Registrant does not have any “off-balance sheet arrangements” (as that term is defined in paragraph 11(ii) of General Instruction B to Form 40-F) that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table lists, as of June 30, 2018, information with respect to the Registrant’s known contractual obligations:

	Payments Due by Period (All amounts in thousands of Canadian dollars)
Contractual Obligations(1)	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Bank indebtedness	$	16,350	$	16,350		-		-		-
Accounts payable and accrued liabilities	$	130,545	$	130,545		-		-		-
Interim production financing	$	93,683	$	93,683		-		-		-
Other liabilities	$	8,150		-	$	8,150		-		-
Senior unsecured convertible debentures	$	193,474	$	8,225	$	16,450	$	16,450	$	152,349
Term facility	$	747,021	$	24,197	$	47,856	$	47,273	$	627,695
Operating leases	$	60,552	$	10,369	$	16,496	$	12,960	$	20,727
Finance lease obligations	$	9,435	$	4,364	$	4,132	$	939		-
Total Contractual Obligations	$	1,259,210	$	287,733	$	93,084	$	77,622	$	800,771

(1) In addition to the totals above, the Company has entered into various contracts to buy broadcast rights with future commitments totaling $22.3 million. Contractual payments in the table above include fixed rate interest payments but excludes variable rate interest payments and are not discounted. Other liabilities exclude deferred lease inducements as these do not require any future contractual payments. Mandatory repayment obligations under the credit agreement of the Company, which are described in Note 12 to the Registrant’s Audited Consolidated Financial Statements for the year ended June 30, 2018 (a copy of which is filed herewith as Exhibit 99.2), are also not included in the table above.

INTERACTIVE DATA FILE

The Registrant is submitting as Exhibit 101 to this Annual Report on Form 40-F its Interactive Data File.

MINE SAFETY DISCLOSURE

Not applicable.

CORPORATE GOVERNANCE

The Registrant is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and its variable voting shares and common voting shares are listed on NASDAQ. NASDAQ Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practices in lieu of certain requirements in the NASDAQ Listing Rules. A foreign private issuer that follows home country practices in lieu of certain corporate governance provisions of the NASDAQ Listing Rules must disclose each NASDAQ corporate governance requirement that it does not follow and include a brief statement of the home country practice the issuer follows in lieu of the NASDAQ corporate governance requirement(s), either on its website or in its annual filings with the Commission. A description of the significant ways in which the Registrant’s corporate governance practices differ from those followed by domestic companies pursuant to the applicable NASDAQ Listing Rules is disclosed on the Registrant’s website at www.dhxmedia.com under “Investors/Governance/Governance Documents/NASDAQ Corporate Governance”.

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.

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CONSENT TO SERVICE OF PROCESS

The Registrant filed an Appointment of Agent for Service of Process and Undertaking on Form F-X on May 28, 2015, with respect to the class of securities in relation to which the obligation to file this Annual Report on Form 40-F arises.

Any further change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the Commission by an amendment to the Form F-X referencing the file number of the Registrant.

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EXHIBIT INDEX

Exhibit No.	Title of Exhibit
Principal Documents
99.1	Annual Information Form of the Registrant for the year ended June 30, 2018
99.2	Audited Consolidated Financial Statements of the Registrant for the year ended June 30, 2018 together with the Auditors’ Report thereon
99.3	Management’s Discussion and Analysis of the operating and financial results of the Registrant for the year ended June 30, 2018
Certifications
99.4	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the United States Securities Exchange Act of 1934
99.5	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the United States Securities Exchange Act of 1934
99.6	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the United States Sarbanes Oxley Act of 2002
99.7	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the United States Sarbanes Oxley Act of 2002
Consents
99.8	Consent of PricewaterhouseCoopers LLP
XBRL
101	XBRL Documents

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

DHX MEDIA LTD.

By:	/s/ Michael Donovan
Name: Michael Donovan
Title: Chief Executive Officer
By:	/s/ Douglas Lamb
Name: Douglas Lamb
Title: Chief Financial Officer

Date: September 24, 2018

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EX-99.1

Annual Information Form

for the year ended June 30, 2018

September 24, 2018

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DHX MEDIA LTD.

2018 ANNUAL INFORMATION FORM

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS	3
CORPORATE STRUCTURE	4
GENERAL DEVELOPMENT OF THE BUSINESS	5
BUSINESS OF THE COMPANY	10
REORGANIZATIONS	24
SOCIAL POLICIES	24
RISK FACTORS	24
DIVIDENDS AND DISTRIBUTIONS	39
DESCRIPTION OF CAPITAL STRUCTURE	40
RATINGS	48
MARKET FOR SECURITIES	49
SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	50
DIRECTORS AND OFFICERS	51
LEGAL PROCEEDINGS	57
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	57
INTEREST OF EXPERTS	57
AUDITOR, TRANSFER AGENT AND REGISTRAR	57
MATERIAL CONTRACTS	57
ADDITIONAL INFORMATION	60
AUDIT COMMITTEE CHARTER	61

All amounts following are expressed in Canadian dollars unless otherwise indicated.

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FORWARD LOOKING STATEMENTS

This Annual Information Form and the documents incorporated by reference herein, if any, contain certain “forward-looking information” and “forward looking statements” within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as “forward-looking statements”), including the “safe harbour” provisions of provincial securities legislation in Canada, the U.S. Private Securities Litigation Reform Act of 1995, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the, “U.S. Exchange Act”), and Section 27A of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). These statements relate to future events or future performance and reflect the Company’s expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of the Company and its subsidiaries. Forward looking statements are often, but not always, identified by the use of words such as “may”, “would”, “could”, “will”, “should”, “expect”, “expects”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “continue”, “seek” or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Company or any of its subsidiaries’ objectives, plans and goals, including those related to future operating results, economic performance, and the markets and industries in which the Company operates are or involve forward-looking statements. Specific forward-looking statements in this document include, but are not limited to:

• the business strategies of DHX;

• the future financial and operating performance of DHX and its subsidiaries;

• the timing for implementation of certain business strategies and other operational activities of DHX;

• the markets and industries, including competitive conditions, in which DHX operates;

• regulatory changes and potential impacts on DHX and the markets and industries in which it operates;

• DHX’s production pipeline and delivery dates;

• the growth of DHX’s WildBrain business; and

• the outlook for English kids television in Canada.

Forward-looking statements are based on factors and assumptions that management believes are reasonable at the time they are made, but a number of assumptions may prove to be incorrect, including, but not limited to, assumptions about: (i) the Company’s future operating results, (ii) the expected pace of expansion of the Company’s operations, (iii) future general economic and market conditions, including debt and equity capital markets, (iv) the impact of increasing competition on the Company, (v) changes in the industries and changes in laws and regulations related to the industries in which the Company operates, (vi) consumer preferences, and (vii) the ability of the Company to execute on acquisition and other growth opportunities and realize the expected benefits therefrom. Although the forward-looking statements contained in this Annual Information Form and any documents incorporated by reference herein are based on what the Company considers to be reasonable assumptions based on information currently available to the Company, there can be no assurances that actual events, performance or results will be consistent with these forward-looking statements and these assumptions may prove to be incorrect.

A number of known and unknown risks, uncertainties and other factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. In evaluating these statements, investors and prospective investors should specifically consider various risks, uncertainties and other factors which may cause actual events, performance or results to differ materially from any forward-looking statement.

This is not an exhaustive list of the factors that may affect any of the Company’s forward-looking statements. Please refer to a discussion of the above and other risk factors related to the business of the Company and the industry in which it operates that will continue to apply to the Company, which are discussed in the Company’s Management Discussion and Analysis for the year ended June 30, 2018 which is on file at www.sedar.com and attached as an exhibit to the Company’s annual report on Form 40-F filed with the SEC at www.sec.gov and under the heading “Risk Factors” contained in this Annual Information Form.

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These forward-looking statements are made as of the date of this Annual Information Form or, in the case of documents incorporated by reference herein, if any, as of the date of such documents, and the Company does not intend, and does not assume any obligation, to update or revise them to reflect new events or circumstances, except in accordance with applicable securities laws. Investors and prospective investors of the Company’s securities are cautioned not to place undue reliance on forward-looking statements.

CORPORATE STRUCTURE

DHX Media Ltd. (the “Company” or “DHX”) was incorporated in Nova Scotia, Canada, under the Companies Act (Nova Scotia) on February 12, 2004 under the name Slate Entertainment Limited. The Company’s name was changed to The Halifax Film Company Limited on April 20, 2004, and again on March 17, 2006 to DHX Media Ltd.

On April 25, 2006, the Company was continued federally as a corporation under the Canada Business Corporations Act (the “CBCA”). Neither the Company’s Articles of Continuance, as amended from time to time (the “Articles of Continuance”), nor the Company’s By-Laws, as amended or otherwise supplemented from time to time (the “By-Laws”) contain any restriction on the objects of the Company.

Effective as of October 6, 2014, DHX’s Articles of Continuance were amended in accordance with the Articles of Amendment which were approved at a special meeting of shareholders on September 30, 2014 (the “Articles of Amendment”). Pursuant to the Articles of Amendment, DHX’s share capital structure was reorganized (the “Share Capital Reorganization”) in order to address concerns relating to Canadian ownership and control arising as a result of its indirect ownership of DHX Television (as defined below). The Share Capital Reorganization resulted in the creation of three new classes of shares, common voting shares (the “Common Voting Shares”), variable voting shares (the “Variable Voting Shares”, and together with the Common Voting Shares, the “Shares”), and non-voting shares (the “Non-Voting Shares”). Each outstanding common share in the capital of DHX (the “Common Shares”) which was not owned and controlled by a Canadian for the purposes of the Broadcasting Act (Canada) (the “Broadcasting Act”) was converted into one Variable Voting Share and each outstanding Common Share which was owned and controlled by a Canadian for the purposes of the Broadcasting Act was converted into one Common Voting Share. For additional information concerning DHX’s share capital refer to “Description of Capital Structure” below.

The Company is domiciled in Canada and its head and registered office is located at 1478 Queen Street, Halifax, Nova Scotia, Canada, B3J 2H7.

The following table lists the principal subsidiaries of the Company, the jurisdiction of formation of each subsidiary, and the percentage of voting securities beneficially owned or over which control or direction is exercised by the Company:¹ 

Corporate Structure
Subsidiary	Jurisdiction	Percentage of Voting Securities
DHX Media (Halifax) Ltd.	Nova Scotia	100%
DHX Media (Toronto) Ltd.	Ontario	100%
DHX Media (Vancouver) Ltd.	British Columbia	100%
DHX SSP Holdings LLC	Delaware	100%
DHX PH Holdings LLC	Delaware	51%
Peanuts Holdings LLC	Delaware	41%
Peanuts Worldwide LLC	Delaware	41%
Shortcake IP Holdings LLC	Delaware	100%
Wild Brain Entertainment Inc.	Delaware	100%
Wild Brain International Limited	United Kingdom	100%
Wild Brain Family International Limited	United Kingdom	100%
The Copyright Promotions Licensing Group Limited	United Kingdom	100%
DHX Media (UK) Limited	United Kingdom	100%
DHX Worldwide Limited	United Kingdom	100%
DHX Television Ltd.	Canada	100%
Nerd Corps Entertainment Inc.	British Columbia	100%

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¹ As depicted in the chart below, following the Peanuts Divestiture (as defined below) the Company indirectly owns 51% of DHX PH Holdings LLC which owns 80% of Peanuts Holdings LLC. Peanuts Holdings LLC owns 100% of Peanuts Worldwide LLC. Accordingly, on an aggregate basis, DHX owns an indirect interest in Peanuts Holdings LLC and Peanuts Worldwide LLC of approximately 41%.

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The following chart depicts the corporate organizational structure of the Company and its principal subsidiaries (ownership of certain subsidiaries depicted below may be indirectly held through other wholly owned subsidiaries):

GENERAL DEVELOPMENT OF THE BUSINESS

DHX is a children’s content and brands company, headquartered in Canada and operating worldwide. The Company’s business is developing, producing, distributing, broadcasting, licensing, and further exploiting the rights for television and film programming and brands, primarily focusing on children’s, youth and family productions and brands. DHX has the following four integrated business lines:

• Production (including proprietary production and production service)

• Distribution (including proprietary and third party content)

• Television Broadcasting

• Consumer Products (including licensing its own intellectual property and representing third parties)

On May 19, 2006, the Company’s Common Shares were listed on the Toronto Stock Exchange (the “TSX”) under the trading symbol “DHX”. Presently, and following the Share Capital Reorganization, the Company’s Variable Voting Shares and Common Voting Shares trade on the TSX under the symbols “DHX.A” and “DHX.B”, respectively. On June 23, 2015, the Company effected the listing of its Variable Voting Shares for trading on the NASDAQ Global Select Market (“NASDAQ”) under the trading symbol “DHXM”. On May 31, 2018, DHX’s Common Voting Shares and Variable Voting Shares began trading on the TSX under a single trading symbol “DHX”. Also on May 31, 2018, the Company effected the listing of its Common Voting Shares on NASDAQ, and the Variable Voting Shares and Common Voting Shares began trading on NASDAQ under a single ticker symbol “DHXM”.

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On the same date as its initial listing on the TSX, the Company acquired all of the issued and outstanding shares in the capital of Decode Entertainment Inc. (now DHX Media (Toronto) Ltd.). The Company has also completed acquisitions of Studio B Entertainment Inc. (now DHX Media (Vancouver) Ltd.), imX Communications Inc., Wild Brain Entertainment Inc., the business of Cookie Jar Entertainment Inc., including its Copyright Promotions Licensing Group, Ragdoll Worldwide Limited (now DHX Worldwide Limited), the Epitome group of companies, DHX Television Ltd. (which holds the Family suite of television channels), a library of television and film programs consisting of approximately 1,200 half hours of predominantly children’s and family film and television programs, Nerd Corps Entertainment Inc., 80% of Whizzsis Limited, Peanuts and Strawberry Shortcake (which, at the time of acquisition, included an 80% controlling interest in Peanuts) and a 51% interest in Egg Head Studios LLC.

Significant Acquisitions and Other Recent Developments

Base Shelf Prospectus Filing

In connection with the Company’s listing of its Variable Voting Shares for trading on NASDAQ, on July 2, 2015, the Company filed a final short form base shelf prospectus with the securities commissions in each of the provinces of Canada, and a corresponding registration statement on Form F-10 with the SEC under the U.S. Securities Act and the U.S./Canada Multijurisdictional Disclosure System. The prospectus and associated filings qualified the Company to make offerings of Common Voting Shares, Variable Voting Shares, Non-Voting Shares, debt securities, warrants, and subscription receipts, or any combination thereof, having an aggregate offering amount of up to US$200 million in Canada and the United States over a 25-month period from the date of filing, which has since expired. On July 6, 2015, the Company announced the commencement of a marketed, underwritten public offering of 8,700,000 Variable Voting Shares and Common Voting Shares. On July 9, 2015, the Company announced that it would not proceed with the offering due to an assessment by management that the market conditions were not conducive for an offering on terms that would be in the best interests of shareholders.

Normal Course Issuer Bid

On October 5, 2015, the Company commenced a normal course issuer bid (the “NCIB”) to purchase up to an aggregate of 8,207,887 Shares on the open market through the facilities of the TSX and NASDAQ at the market price as of the time of the transaction, with daily purchases limited to 84,544 Shares per day (other than pursuant to applicable block purchase exceptions). To facilitate purchases under the NCIB, on January 13, 2016, the Company entered into an automatic share purchase plan with Canaccord Genuity Corp. The Company purchased and cancelled an aggregate of 659,000 Common Voting Shares for a gross amount of approximately $5.04 million under the NCIB, which expired on October 4, 2016.

DreamWorks Agreement

On December 8, 2015, the Company announced it had entered into a 5 year agreement with DreamWorks Animation ("DreamWorks") to co-produce 130 episodes of original animated children's content at DHX, which will air in Canada on DHX Television's suite of channels. In addition to the co-production activities, DHX Television licensed more than 1,000 half-hours of programming from DreamWorks, including Hail King Julien, The Mr. Peabody & Sherman Show, Dragons: Race to the Edge, and The Croods, among others. DHX Television also licensed 300 half-hours of teen content for exclusive broadcast in Canada on Family Channel and includes SVOD and mobile rights.

Mattel Agreements

On December 15, 2015, the Company entered into an agreement with Mattel, Inc. and certain of its affiliates (collectively, "Mattel"), pursuant to which DHX and Mattel agreed to fund, develop and produce various forms of new content for certain Mattel properties, including Bob the Builder^TM, Fireman Sam^TM, Little People®, and Polly Pocket^TM. DHX’s production arm works with Mattel to develop and produce the new content, while DHX’s distribution arm manages the global distribution of both the existing and new content, with Mattel responsible for global brand management and consumer products.

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The Company subsequently announced, on April 19, 2016, an additional exclusive agreement with Mattel for the property Rainbow Magic^TM covering multiple revenue streams and establishing the framework for DHX to produce and distribute a range of new multi-platform content inspired by such property. Under such agreement Mattel global brand management and global toy rights and the parties work together on consumer product licensing activities for the Rainbow Magic^TM brand for territories in which DHX has a consumer products presence.

DHX Studios

On January 29, 2016, the Company announced the rebranding of its content-creation arm to DHX Studios. DHX Studios unites the Company’s development, production, and interactive operations under a single business unit and management team. The Company also announced that it will commence the construction of a 75,000 square foot leased studio in Vancouver. The studio will combine the Company's existing 2D and CGI animation studios in Vancouver.

WildBrain

On April 25, 2016, DHX announced the launch of WildBrain, the Company’s wholly owned and operated Multi-Platform Kids Network for kids from 2-10 years old, which connects content owners with advertisers on YouTube and other platforms and leverages DHX’s digital expertise to monetize children’s content.

Bought Deal Offering

On May 2, 2016, the Company closed a bought deal public offering (the “Bought Deal Offering”) comprised of both Variable Voting Shares and Common Voting Shares through a syndicate of underwriters (the “Underwriters”), pursuant to which the Company issued 8,667,000 Shares at a price of $7.50 per Share for aggregate gross proceeds of $65.0 million.

Additional Issuance of Senior Unsecured Notes

On May 13, 2016, the Company closed a private offering (the “Additional Notes Offering”) of an additional $50 million aggregate principal amount of its 5.875% Senior Unsecured Notes (the “Notes”) due December 2, 2021 through a syndicate of underwriters at a price of $975.00 per $1,000.00 principal amount, plus accrued interest from and including December 2, 2015 through May 13, 2016. Following the Additional Notes Offering, the Company had a total outstanding principal amount of $225 million of Notes.

In connection with the Company’s acquisition of Peanuts and Strawberry Shortcake, the Notes were redeemed effective July 11, 2017. Refer to “Redemption of Notes” below.

Iconix / Strawberry Shortcake Agreement

On May 17, 2016, the Company announced that it had entered into an agreement with Iconix Brand Group, Inc. (“Iconix”) to co-develop and co-produce a new animated series based on Strawberry Shortcake. Pursuant to such agreement, the new content would be produced and distributed globally by DHX with Iconix responsible for worldwide consumer products licensing for the brand. Concurrently, under a separate agreement, DHX was appointed the exclusive global distributor for Strawberry Shortcake content, including 108 half-hours.

With the Company’s acquisition of Strawberry Shortcake, the foregoing agreement has been terminated and the exploitation of Strawberry Shortcake has been rolled into the Company’s existing business structure. Refer to “Acquisition of Peanuts and Strawberry Shortcake” below.

Acquisition of Kiddyzuzaa

On March 3, 2017, the Company acquired 80% of the outstanding shares of Whizzsis Limited ("Kiddyzuzaa"), which owns and produces proprietary children's and family content and operates a children's and family focused YouTube channel.

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Additional information concerning the Company’s acquisition of Kiddyzuzaa can be found in the Management Discussion and Analysis of the Company for the fiscal year ended June 30, 2018 on file at www.sedar.com and also filed on a Form 6-K with the SEC at www.sec.gov.

Acquisition of Peanuts and Strawberry Shortcake

On May 10, 2017, the Company announced that it had entered into agreements (the “Peanuts/SSC Acquisition Agreements”) to acquire (the “Peanuts/SSC Acquisition”) the entertainment division of Iconix, including an 80% equity interest in the company which holds all of the assets associated with Peanuts, Peanuts Holdings LLC (“Peanuts Holdings”), and a 100% equity interest in the company which holds all of the assets associated with Strawberry Shortcake, Shortcake IP Holdings LLC (“Shortcake Holdings”). Pursuant to the terms of the Peanuts/SSC Acquisition Agreements, the purchase price for the Peanuts/SSC Acquisition was approximately US$346.5 million including a preliminary working capital adjustment of approximately US$1.5 million which was paid in cash on closing and was subject to a final working capital adjustment. The Peanuts/SSC Acquisition was completed on June 30, 2017, and was financed through a combination of cash on hand, proceeds from a new senior secured credit facility, and proceeds from the Company’s offering of subscription receipts, and included the refinancing and repayment of the Company’s existing debt under its Notes and the Company’s senior secured credit facility existing prior to closing. For additional information concerning the Peanuts/SSC Acquisition and financing thereof refer to and “Acquisition of Peanuts and Strawberry Shortcake Financing” below.

A Business Acquisition Report (Form 51-102F4) was filed by the Company in respect of the Peanuts/SSC Acquisition on September 13, 2017 and is on file at www.sedar.com and was also filed on a Form 6-K with the SEC at www.sec.gov.

Acquisition of Peanuts and Strawberry Shortcake Financing

In connection with the Peanuts/SSC Acquisition, the Company entered into a senior secured credit facility with Royal Bank of Canada, as administrative agent, certain lenders party thereto, and RBC Capital Markets and Jefferies Finance LLC, as joint lead arrangers and joint bookrunners (the “Senior Credit Facilities”). The Senior Credit Facilities are primarily comprised of a US$30 million revolving credit facility and US$495 million term loan facility the proceeds of which, in addition to the proceeds from the Company’s offering of Subscription Receipts (as defined below), were used to finance the purchase price for the Peanuts/SSC Acquisition, refinance the Company’s previous indebtedness, and other general corporate purposes.

Also in connection with the Peanuts/SSC Acquisition, the Company completed a sale of 140,000 subscription receipts (the “Subscription Receipts”) on May 31, 2017 (the “Subscription Receipt Offering”). The Subscription Receipts were sold on a bought deal private placement basis at a price of $1,000 per Subscription Receipt for aggregate gross proceeds of $140 million, which included an upsize of the offering in the amount of $25 million as well as the exercise by the underwriters of an option to purchase an additional $15 million in Subscription Receipts. The net proceeds from the offering of Subscription Receipts were held in escrow until closing of the Peanuts/SSC Acquisition at which point they were released from escrow and used to finance the Peanuts/SSC Acquisition, refinance substantially all the Company’s indebtedness, and for general corporate purposes. At such time, each holder of Subscription Receipts received, for no additional consideration and subject to adjustment, one special warrant (the “Special Warrants”) that were subsequently automatically exercised, for no additional consideration, to acquire $1,000 principal amount of 5.875% senior unsecured convertible debentures of the Company (the “Convertible Debentures”). Each Convertible Debenture shall be convertible into Common Voting Shares or Variable Voting Shares of the Company, as applicable, at a price of $8.00 per share, subject to adjustment in certain events. The Special Warrants were automatically converted into Convertible Debentures on October 2, 2017, at which point the Convertible Debentures were listed and posted for trading on the TSX under the trading symbol “DHX.DB”. Refer to “Description of Capital Structure –Convertible Debentures” below.

The Senior Credit Facilities, Convertible Debentures and other indebtedness of the Company are further described in note 12 to the Company’s audited financial statements for the fiscal year ending June 30, 2018 and accompanying Management Discussion and Analysis which are on file with SEDAR at www.sedar.com and attached as an exhibit to the Company’s annual report on Form 40-F filed with the SEC at www.sec.gov. The credit agreement in respect of the Senior Credit Facilities is summarized under “Material Contracts” below.

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Redemption of Notes

As part of the Company’s refinancing activities in connection with the Peanuts/SSC Acquisition, on July 11, 2017, the Company redeemed all of its outstanding Notes at a price equal to 100% of the $225 million principal amount, plus applicable premium and accrued and unpaid interest to, but excluding, the redemption date. The redemption price per $1,000 principal amount of the Notes was $1,066.12, including an applicable premium of $59.84 and interest of $6.28. Proceeds from the Senior Credit Facilities and the Subscription Receipt Offering were used to funds the redemption of the Notes.

New York Office

During its fiscal 2018, the Company entered into a lease agreement for office space in New York in connection with the Peanuts/SSC Acquisition transition and a relocation of its U.S. operations from Los Angeles to New York. The Company’s New York location and associated personnel operate the Peanuts and Strawberry Shortcake businesses, as well as provide a North American location for some of the Company’s other owned-brands licensing activities.

Acquisition of Ellie Sparkles

On September 15, 2017, the Company acquired 51% of the outstanding equity interests of Egg Head Studios LLC ("Ellie Sparkles"), which owns and produces proprietary children's and family content and operates a children's and family focused YouTube channel.

Additional information concerning the Company’s acquisition of Ellie Sparkles can be found in the Management Discussion and Analysis of the Company for the year ended June 30, 2018 on file at www.sedar.com and attached as an exhibit to the Company’s annual report on Form 40-F filed with the SEC at www.sec.gov.

Transition of Interactive Business

On September 30, 2017, DHX entered into a memorandum of understanding pursuant to which, among other things, it transitioned its interactive business to Epic Story Interactive (a new company formed by Ken Faier, former SVP with DHX). Under the memorandum of understanding, DHX licensed interactive rights (including rights to gaming apps) in certain of its properties of DHX to Epic Story Interactive for the purpose of developing, publishing and exploiting such interactive rights, with DHX to receive future royalties (including a minimum guarantee) from such exploitation. Epic Story Interactive agreed to assume the obligations and liabilities of DHX’s interactive business in connection with such transition.

Strategic Review

On October 2, 2017, the Company announced that its board of directors, supported by its management team, had commenced a process (the “Strategic Review”) to explore and evaluate potential strategic alternatives focused on maximizing shareholder value, including, among other things, the sale of part or all of the Company, a sale of some of the assets of the Company, a merger or other business combination with another party, or other strategic transactions. In connection with the Strategic Review, the Company formed a special committee of independent directors to consider and evaluate various strategic alternatives available to the Company. As part of the Strategic Review, the Company completed the Peanuts Divestiture (as defined and discussed in more detail below). The Company announced the completion of the Strategic Review concurrently with the filing of this Annual Information Form.

Management Changes

On February 26, 2018, the Company announced that Dana Landry was stepping down as Chief Executive Officer and from the board of directors and that Michael Donovan, Executive Chair, was appointed as Chief Executive Officer. On the same day, it was announced that Doug Lamb was appointed as Chief Financial Officer of the Company, replacing the former Chief Financial Officer, Keith Abriel.

On April 18, 2018, the Company announced that Aaron Ames was appointed as Chief Operating Officer, replacing Steven DeNure and Josh Scherba and Anne Loi were promoted to President and Chief Commercial Officer, respectively.

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Partial Divestiture of Peanuts

On May 13, 2018, the Company announced that it had entered into a definitive agreement to sell (the “Peanuts Divestiture”) 49% of the Company’s 80% interest in Peanuts to Sony Music Entertainment (Japan) Inc. (“SMEJ”). The Peanuts Divestiture subsequently closed on July 23, 2018 following the satisfaction of the conditions to closing. The purchase price for the transaction was $235.6 million in cash, subject to customary working capital adjustments. The net proceeds from the Peanuts Divestiture were used to repay indebtedness outstanding under the Senior Credit Facilities of the Company.

As a result of the Peanuts Divestiture, the Company now indirectly owns 41% of the Peanuts business and SMEJ and members of the family of Charles M. Schulz own 39% and 20%, respectively. Also, in connection with the Peanuts Divestiture, Peanuts has expanded its relationship with Sony Creative Products Inc. (SMEJ’s consumer products division) by, among other things, extending the duration of the licensing and syndication agency agreement in respect of Peanuts in Japan.

BUSINESS OF THE COMPANY

Business Overview

DHX is a children’s content and brands company, headquartered in Canada and operating worldwide. DHX owns one of the largest independent libraries of children’s and family content (i.e. excluding libraries associated with a U.S. studio) and is home to some of the most viewed children’s TV stations in Canada. The Company’s extensive library and brands include many of the world’s most popular and recognizable characters and shows such as Peanuts, Teletubbies, Strawberry Shortcake, Caillou, Inspector Gadget, and the Degrassi franchise.

The Company is integrated across production, distribution, television broadcasting and consumer products with its production studios and operational locations in Halifax, Toronto, Vancouver, London and, New York. DHX licenses its own produced content globally for a set term, and then re-licenses it in various territories to create a continuing incremental revenue stream. DHX Television provides increased revenue stability, further diversification of operations and facilitates DHX’s ability to supply more original and other library content to audiences through some of the most watched children’s television channels in Canada. DHX’s consumer products operations are comprised of licensing intellectual property derived from programs produced in-house and owned brands, as well as additionally representing third party independently owned intellectual property.

In fiscal 2018, the Company produced 103 half hours of proprietary content and 125 half hours of content based on third party titles for which the Company has distribution rights, through its own and third party studios, including animated and live-action content, which was added to the Company’s library. In addition to its animation production studios and operations in Halifax and Vancouver, the Company also maintains its own live action focused studio in Toronto and in fiscal 2018 produced 45 half hours of live action proprietary content. New content is created at low risk to DHX with 85% – 100% of third party direct production costs typically covered at “green lighting” from contracted Canadian broadcast licensing revenue, pre-sales and tax credits and other production incentives.

DHX’s library contains approximately 13,000 half hours of content (with approximately 500 titles) consisting of primarily children’s and family programming, which DHX estimates is the largest independent library (i.e. libraries not associated with a U.S. studio) of children’s content in the world. The titles owned or otherwise distributed by the Company appeal to a broad cross-section of audiences, from classic preschool programs targeted towards both genders, to up-to-date comedy titles and nostalgic titles for older audiences. Management believes that DHX’s library, combined with its production capabilities, make it a valuable “go to” supplier to a broad range of established and new TV channels and Over-The-Top Content (“OTT”)² providers which are looking to deliver a wide range of programming to their viewers. DHX also generates distribution revenue through its ownership and operation of WildBrain, which the Company estimates is one of the largest networks of children’s channels on YouTube.

___________________

² Refers to delivery of audio, visual, and other media over the Internet without an operator of multiple cable or direct-broadcast satellite television systems being involved in the control or distribution of the content.

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DHX’s television business (“DHX Television”) is comprised of four children’s television channels, including Family Channel, Family Jr., Télémagino, and Family CHRGD. Combined, these channels represent some of the most viewed TV stations among children ages 2 to 17 in Canada.

DHX also generates revenue through its consumer products business line, which involves generating licensing royalties by exploiting its own intellectual property and brands, as well as generating commissions from the representation of third party brands through Copyright Promotions Licensing Group (“CPLG”), across toys, games, apparel, publishing and other categories. With the addition of the Peanuts and Strawberry Shortcake brands to its portfolio, DHX has expanded the size and scope of its consumer products activities.

The Company has three reportable segments which include (i) its production and distribution of content business, including proprietary production, production service, distribution of proprietary and third party content (including digital distribution on YouTube through WildBrain) and consumer products and other licensing of the Company’s owned intellectual property and certain other third party licensing arrangements, (ii) television broadcasting, and (iii) consumer products represented through CPLG. The breakdown of revenues by reportable segment for the two most recently completed fiscal years is as follows (amounts are expressed in thousands):

Year ended June 30	2017	2018
Content Business	$222,514	$366,368
DHX Television	$57,384	$55,014
Consumer Products Represented	$18,814	$13,034
Total	$298,712	$434,416

The Company’s Business Lines

The Company’s business is developing, producing, distributing, broadcasting, licensing, and further exploiting the rights for television and film programming and brands focusing primarily on children’s, youth and family productions and brands. DHX has the following four integrated business lines:

• Production (including proprietary production and production service)

• Distribution (including proprietary and third party content)

• Television Broadcasting

• Consumer Products (including licensing its own intellectual property and representing third parties)

Production

Production Strategy

DHX has expertise in developing, producing, distributing and otherwise monetizing children’s, youth and family content worldwide and is integrated with its production studios and operations in Halifax, Toronto, and Vancouver. DHX’s production business focuses on programs, primarily animation, targeted at the children and youth age range that appeal to worldwide audiences and have the potential to generate multiple revenue streams. Management of the Company believes that children’s programming, especially animation, travels across cultures more easily than non-children’s programming as it can be more easily dubbed into other languages and can therefore be sold in numerous markets. Management also believes that animated children’s programming is particularly attractive due to the potential for longer-term revenue streams, including consumer products revenue, as it tends not to become dated as quickly as other forms of programming and consequently may be resold for viewing by successive generations of children. The Company’s youth-oriented productions include the multi-award winning Degrassi franchise as well as more recent popular programs such as Creeped Out and Massive Monster Mayhem. The Company believes that such youth-oriented programs are complementary to DHX’s primarily children’s and family library and are consistent with the Company’s strategy of focusing on properties which have international appeal and the potential for multiple revenue streams, including digital distribution and consumer products opportunities. Finally, the Company’s production strategy also includes the development of properties outside of its core area of children’s and youth programming, including live action comedy, such

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as This Hour Has 22 Minutes. This additional diversification of its production slate provides the Company with alternative revenue streams, and access to different markets.

DHX believes that focusing on the production and development of high quality television programs will result in a consequential extension of the revenue generating life of the titles developed and produced, more viable consumer products opportunities, and increased profit on production. The Company also actively pursues co-production relationships in order to expand its output and access to international talent to create worldwide brands of value.

The Company maintains a disciplined approach to acquiring and perfecting key exploitation rights to its content and endeavors to own the majority of home entertainment and consumer products rights to its intellectual property. The following chart illustrates the production process employed by the Company:

Production Pipeline

In fiscal 2018, the Company produced 103 half hours of proprietary content and 125 half hours of content based on third party titles for which the Company has distribution rights, through its own and third party studios, including animated and live-action content, which was added to the Company’s library. DHX has a robust production pipeline with 8 titles and 168 half-hour episodes of proprietary and third party owned content for which the Company holds distribution rights currently in production. The current production slate of the Company includes shows such as MegaMan, Rev and Roll, The Deep and Creeped Out. Additionally, the Company’s prime-time production slate includes the award-winning comedy series This Hour Has 22 Minutes, which has a 25-year history as a cultural icon in the Canadian market and is presently in its 26^th season.

The following table illustrates proprietary programs and programs for which the Company holds distribution rights which are currently in production, including equivalent total number of half-hours for the season:³ 

^{___________________________} 

³ Episodes may not necessarily equal a half hour in length

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Production Funding

The Company and its production subsidiaries employ a production funding model that is designed to ensure there is low capital risk associated with developing content while retaining long-term exploitation rights. DHX benefits from a Canadian regulatory environment that provides funding to cover the majority of the costs of developing and producing content prior to obtaining “green light” approval for production. The Company believes that this provides a distinct advantage over international peers that self-fund their productions. DHX maintains a “green light” policy which requires projects to have at least 85%–100% of the direct costs of production covered before entering the production phase. This is achieved through contracted Canadian broadcast licensing revenue, tax credits, other subsidies, and pre-sales.

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Interim production financing is an additional component of the funding model for a typical production produced by the Company. The Company’s interim production financing is made up of credit facilities with various institutions which are secured by a combination of, among other things, production license fees, restricted cash balances and federal and provincial film tax credits receivable. Typically, upon collection of film tax credit receivables, the production financing is repaid.

Production Services

DHX also generates revenue from production services relationships. DHX provides production services, such as producing television shows and specials and animation and other similar services to third parties under contract and frequently on a repeat basis for established brands.

Distribution

DHX owns a library of globally recognized children’s and family content and associated brands with substantial scale and diversity. The Company’s library contains approximately 13,000 half hours of primarily animated programming across over 500 titles, making it, based on management’s estimates, one of the world’s largest independent librariesof children’s content (i.e. excluding libraries associated with a U.S. studio). The Company’s extensive library includes some of the world’s most popular and recognizable characters. The titles appeal to a broad cross-section of audiences, from classic preschool properties targeted towards both genders, to up-to-date comedy titles and nostalgic titles for older audiences. The Company believes that libraries of this breadth and depth are extremely difficult to replicate and estimates that replacement could take several decades with no assurances of created brands of a similar strength. With stable viewing hours for children and teens, the Company believes it is well positioned to continue to monetize its library through its existing relationships and new entrants.

The following table illustrates select assets in the Company’s library:^-4 

^{__________________________________} 

⁴ Episodes may not necessarily equal half hour in length.

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The Company’s distribution business line sells initial broadcast rights to individual broadcasters and other content exhibitors representing different “windows” of licensed rights in their respective territories, as well as packages of programs (“library” sales) to individual broadcasters and other content exhibitors, reuse rights to existing series with individual broadcasters and other content exhibitors, and pre-sells series that are in development. The Company maintains relationships with many broadcasters and other content exhibitors in the children and youth genres in major territories worldwide. The Company’s broad base of customers to date has been critical to the Company’s growth, enabling it to minimize the effects of downturns in any one market. DHX has long-standing relationships with many of the world’s distributors across broadcast television, cable, OTT and other digital channels. The Company manages its global distribution relationships through an in-house platform in order to effectively monetize its extensive library worldwide.

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The Company’s content is primarily distributed through its international sales group, which is based in Toronto, with additional locations in Paris and Beijing. DHX is one of the largest independent producer of children’s content in Canada, one of the largest international suppliers into the U.S. market, and has a significant presence in key markets around the world, including Europe, Asia and South America, servicing 500 broadcasters and other content exhibition platforms globally. As noted above, the Company believes that children’s content, in particular animated content, travels across cultures more easily than other genres and that as a result the Company benefits from its focus on animated children’s shows for which it enjoys global recognition for many of its titles.

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DHX’s distribution team is fully integrated with the Company’s development and production studios, which provide valuable market feedback at all stages of project development. Through this feedback, DHX is able to develop new content, including new titles and new seasons of existing titles, with broad appeal and significant market opportunity. The Company employs an advanced content rights management system which is used to manage all business aspects of distribution and maximize monetization of content.

DHX maintains a strong global presence at preeminent industry events, including MIP, MIPCOM, Licensing International Expo, American International Toy Fair, Licensing Show and others to continually identify opportunities to monetize its library globally.

Digital Distribution and WildBrain

The Company believes that the emergence and rapid growth of OTT platforms are creating substantial revenue generation opportunities for owners of high-quality, in-demand content and that DHX is well-positioned to benefit from this industry transformation.

The digital distribution of DHX’s library has been a source of significant growth for the Company as subscription video on demand (“SVOD”), transactional video on demand (“TVOD”), advertising video on demand (“AVOD”)⁵ and other OTT channels have increasingly looked, and are increasingly looking, to add high quality children’s content to their offerings. The Company has entered into agreements with leading digital providers including Netflix, Amazon, DLA (Latin America), Hulu and CraveTV and has entered into several international digital content deals with global channel operators in Europe, South America and Africa. The Company expects the rollout and growth of digital content to continue around the world.

DHX has also partnered with YouTube with respect to the monitoring and delivery of its content via YouTube (outside of DHX’s dedicated channels) creating an additional distribution revenue stream for the Company. The Company believes that the successful implementation of this strategy is indicative of DHX’s ability to monetize its content through AVOD delivery platforms such as YouTube. Additionally, DHX maintains its own branded advertising-based dedicated YouTube channels in order to enhance the Company’s digital footprint. DHX’s dedicated YouTube channels deliver a variety of DHX content to consumers, which generates advertising-based revenues for the Company.

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⁵ Refers to internet-based services that give consumers free access to video content in exchange for being exposed to advertising (e.g. YouTube).

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WildBrain is the Company’s wholly owned and operated multi-platform kids network for preschool and children, which connects content and brand owners with advertisers on YouTube and other platforms and leverages DHX’s library and digital expertise to produce and monetize children’s content. WildBrain has become one of the largest proprietary networks of kid’s content on YouTube and is expected to realize continued growth organically and through acquisitions such as Kiddyzuzaa and Ellie Sparkles.

Television Broadcasting

DHX’s television broadcasting business line, which operates as DHX Television, is comprised of four children’s television channels, including Family Channel, Family Jr., Télémagino, and Family CHRGD, which represent some of Canada’s most viewed children’s TV stations.

• Family Channel – Family Channel launched in 1988 and offers family television entertainment targeting kids 8-14 with a mix of top-rated Canadian and acquired series, movies and specials.

• Family Jr. – Family Jr. launched in 2007 and offers English-language subscribers across Canada preschool television entertainment through a mix of Canadian series and popular preschool brands.

• Télémagino – Télémagino launched in 2010 and offers French-language subscribers preschool entertainment through a mix of Canadian series and popular preschool brands.

• Family CHRGD – Family CHRGD launched in 2011 and features animated and live-action programming for kids 6-12.

In addition to linear television, each of the four channels also have multiplatform applications which allow for its content to be distributed across a number of platforms (including broadcast distribution undertakings (“BDUs”), online, and mobile), both on demand and streamed. All of the services are available in high definition. The primary target audience for these services consists of authenticated BDU subscribers, which avoids cannibalizing BDU-generated revenues. The four channels are also supported by popular websites designed to engage viewers and support their loyalty to the brands. The sites feature games, short and long form video content, contests, music videos, and micro-sites of the most popular shows. Traffic to the sites is monetized through advertising and sales sponsorships. The services are additionally present on social media platforms, including YouTube, Facebook and Twitter. DHX Television is headquartered in DHX’s Toronto offices.

On June 1, 2017, the Canadian Radio-television and Telecommunications Commission (the “CRTC”) called for renewal applications for all broadcasting licences and television services with licences expiring August 31, 2018. As such, the Company submitted licence renewal applications to the CRTC for Family Channel (and its multiplex, Family Jr.), Family CHRGD and Télémagino in August 2017. On July 5, 2018, the CRTCrenewed DHX Television’sbroadcasting licences for the English-language discretionary services Family Channel (and its multiplex, Family Jr.) and Family CHRGD, as well as the French‑language discretionary service Télémagino, from September 1, 2018 to August 31, 2023.

Integration of Operations (DHX Television)

The ownership of DHX Television has enabled the Company to increase integration between operating segments in the following ways:

• Liberating production of new DHX series from dependency on obtaining “green light” approval from third-party broadcasters;

• Strengthening earnings as a result of reduced volatility through contractual customer relationships and streamlined production processes;

• Increasing the amount of Canadian content production funding directed to DHX productions arising from the approval of the acquisition of DHX Television by the CRTC; and

• Strengthening the platform to build awareness of DHX brands among children and youth across demographics, increasing loyalty and driving consumer products revenue.

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DHX Television maintains a content-driven strategy which is built upon the following: (i) commissioning new and original content, including utilizing the Company’s own proprietary animation and production teams; (ii) leveraging the Company’s 13,000 half-hour library; and (iii) augmenting its content strategy with new and compelling content supply agreements.

Consumer Products

The Company’s consumer products business involves licensing its owned intellectual property for royalties and representing third party owned intellectual property for commissions.

The Company’s consumer products owned business focuses its activities around the Company’s core slate of high-profile licensed properties and includes licensing, brand management and creative services teams. The Company licenses rights to merchandisers for fabrication of consumer products, such as toys, games and apparel, based on intellectual property owned by the Company. Some of DHX’s proprietary brands that are or have been leveraged in this owned consumer products business line include, among others, Peanuts, Strawberry Shortcake, Teletubbies,Yo Gabba Gabba!, Caillou, Johnny Test, In the Night Garden, and Twirlywoos. Licensing fees for these rights are generally paid as royalties and in many instances include non-refundable minimum guarantees. Additional revenue streams under this business line include revenues from music publishing rights, music retransmission rights and live tours.

CPLG is a subsidiary of the Company and the agent appointed for selected brands of DHX. CPLG is a leading entertainment, sport and brand licensing agency with offices in the UK, Europe, U.S., and Middle East. CPLG has approximately 40 years of experience in the licensing industry and has a representation portfolio which includes Sesame Street, Paramount and Pink Panther. CPLG provides each of its clients with dedicated licensing and marketing industry professionals and a fully-integrated product development, legal and accounting service. CPLG earns commissions on consumer products licensing from representing independently owned brands of film studios and other third parties as well as selected DHX brands.

The addition of Peanuts and Strawberry Shortcake to the Company’s global portfolio has increased the size and scale of the Company’s business, in particular, its consumer products business line.

Industry Overview

Production

Canada is a favorable jurisdiction for film and television production due to its supportive regulatory environment, including tax credit and other incentive regimes, Canadian content regulations and international co-production treaties. Major television broadcasting ownership groups (including Rogers Media, Bell Media and Corus Entertainment) are typically required by the CRTC to spend a percentage of their revenues on Canadian content. The Broadcasting Act also encourages independent production by directing BDU contributions and establishing requirements for Canadian programming expenditures.

Although the total film and television production in Canada realized an increase of 24% in 2016/2017 to production volume of $8.38 billion, children’s and youth production decreased by 16.9% to $521 million and Canadian animation production decreased by 19.9% to $266 million in 2016/2017. Both children’s and youth and animation saw a ten-year high in 2015/2016 and despite the single year declines in production in 2016/2017, the volume for the genres during such period was still above the ten-year average. Such declines are also mitigated by the global demand for screen-based content driven by the proliferation of new channels and platforms for delivery.⁶ 

Finally, the production industry in Canada also offers access to a highly skilled creative workforce and Canada has consistently enjoyed success in the animation production industry worldwide, with several independently produced Canadian programs achieving international recognition.

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⁶Source: CMPA Profile 2017.

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Distribution

DHX believes that the demand for content, in particular children’s and family programming, has increased significantly as a result of the proliferation of digital/non-linear distribution methods, including OTT and AVOD platforms, including YouTube. OTT deployments include aggregators such as Netflix and Hulu, standalone set-top boxes such as Apple TV and TiVo, internet-enabled “smart” TVs and other TV Everywhere⁷ initiatives. Since most digital/non-linear sales are currently non-exclusive, distributors, such as DHX, are able to take advantage of selling the same content to multiple channels in certain territories.

Television Broadcasting

The strong viewership dynamics of the children’s TV segment in Canada is supported by the fact that English kids TV represents approximately a 12% viewership share of total English Canadian pay specialty TV market.⁸

In March 2015, the CRTC released a series of decisions as the result of its Let’s Talk TV consultation which resulted in and will continue to result in changes to the regulatory framework for Canadian television services, including the services offered by the DHX Television Business. Among other things, the decisions will require BDUs to offer a small basic service package and to provide subscribers with the opportunity to purchase all discretionary television services on an à la carte basis.

Currently, Category A channels are required to be distributed in Canada by all larger cable and satellite BDUs, although terms of carriage are subject to negotiation. Category B channels are not required to be distributed by BDUs meaning that access to BDU platforms and terms of carriage are subject to negotiation. However, the CRTC is phasing out the distinction between Category A and Category B channels at the time of licence renewal. The distinction between Category A and Category B television services is being phased out, which started with the renewal of the licences held by larger vertically integrated broadcasting groups (such as Bell, Rogers and Corus) in 2017. These licensing categories are replaced by a single discretionary category of service. Discretionary services are not required to be distributed by BDUs and all terms of carriage are subject to negotiation. Category A licences for independent broadcasting companies (i.e. those that are not owned by or related to a BDU), such as DHX Television’s Family Channel Licence was phased out with its recent licence renewal.

The Let’s Talk TV decisions include a number of regulatory measures that are intended to provide support for non-vertically integrated broadcasting companies such as DHX Television. These include a requirement that BDUs distribute at least one independent discretionary television service for each related television service that they distribute, and the Wholesale Code that establishes principles to guide commercial negotiations between BDUs and television services regarding terms of carriage and related matters. The CRTC issued the Wholesale Code effective January 22, 2016 and licensed undertakings’ adherence with the Wholesale Code is now a formal regulatory requirement.

Other regulatory measures that flow from the Let’s Talk TV decision that are relevant to DHX include the removal of “genre” protection and regulated genre requirements as between Canadian programming services (which means that Canadian programming services may now compete directly with each other in all genres), the announcement that the CRTC will no longer require television services to enter into formal terms of trade with the independent production industry, and the ability for pay television services, such as Family Channel (was at that time), to broadcast advertising as of November 2, 2016.

In the view of management of the Company, the outlook for English kids TV in Canada remains stable and will continue to be a primary platform for content consumption.

Consumer Products

The global consumer products licensing industry operates in a mature market and can be highly lucrative given the low risk, high cash margins and passive nature of collecting royalty streams. Typically, companies will enter into licensing arrangements once their brands have achieved a reasonable level of market recognition through a content distribution platform or otherwise.

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⁷ DHX employs the term “TV Everywhere” to describe authenticated OTT platforms on mobile devices.

⁸ Source: Numeris (Previously BBM Canada) (Broadcast Year 2017-2018).

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The sale of licensed entertainment merchandise is a multi-billion dollar industry. In 2017, global revenue from trademark licensing was US$271.6 billion, with the United States and Canada remaining the largest market and accounting for 58% of the global total. Furthermore, entertainment and characters licensing continues to be the number one category, accounting for US$121.5 billion or 44.7% of the total global licensing market.⁹ 

Competitive Conditions

Production and Distribution

Although there is a multi-billion dollar children’s entertainment market worldwide, the production and distribution of children’s, youth and other genres of television, film and other media content is highly competitive. The Company competes with numerous Canadian domestic as well as international suppliers of media content, including vertically integrated major motion picture studios, television networks, and independent television production companies. Many of these competitors are significantly larger than DHX and have substantially greater resources, including easier access to capital. Canadian production companies typically also have access to the same favourable production financing environment in Canada employed by the Company and compete with the Company for program commissions from Canadian broadcasters. Additionally, the Company competes with other television and motion picture production companies for ideas and storylines created by third parties, as well as for actors, directors, writers and other key personnel required for a production.

The Company believes that the proliferation of digital/non-linear distribution of media content, including OTT, has reduced certain competitive pressures in the production and distribution of media content through the increased number of customers and distribution channels, an increase in the demand for programming and the existence of opportunity for non-exclusive deals in certain territories which permits the Company to sell the same content to multiple channels in the same territory.

Additionally, as noted above, the Company believes that the breadth and depth of the Company’s library would be extremely difficult to replicate. The Company estimates that replacement could take several decades with no assurances of created brands of a similar strength, advantageously positioning the Company relative to certain competitors.

Television Broadcasting

The competitive environment in the television industry has changed significantly over the past few years following the deployment of digital set-top boxes, the launch of numerous new television networks and the resulting fragmentation of the market. As a result, the channels comprising DHX Television compete for subscribers against other discretionary service operators such as Corus, Bell Media, Rogers Broadcasting and Quebecor. Furthermore, DHX Television competes for advertising revenues with the aforementioned operators and conventional television networks such as CBC, CTV, and Global as well as with other advertising media, including the internet. The multiplication of television networks has also resulted in increased competition for program content.

DHX Television also competes with several foreign and domestic digital/non-linear providers, including OTT, many of which are outside of the Canadian regulatory system and therefore have no Canadian content spending or on-air obligations, and charge no Canadian sales tax. The Company believes that the proliferation of digital/non-linear providers has increased the demand for, and cost of, high-quality content and increased audience fragmentation and competition for subscribers.

The Company also expects that the decisions coming from the Let’s Talk TV consultation have resulted and will continue to result in changes to the competitive conditions impacting the DHX Television Business. Refer to “Industry Overview – Television Broadcasting” above for additional information concerning the CRTC Let’s Talk TV hearings and associated decisions and their potential impact on the Company.

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⁹Source: Licensing Industry Merchandisers’ Association, LIMA Annual Global Licensing Survey 2017.

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Consumer Products

The Company’s consumer products activities are also subject to a highly competitive environment. The Company competes with several large entertainment and toy companies as well as smaller domestic and international entertainment and toy developers and producers. The industry’s low barriers to entry result in opportunities for existing competitors and new entrants to develop and acquire entertainment and trademark properties that compete with the Company’s properties. Competition is based primarily on consumer preferences and extends to the Company’s ability to generate or otherwise acquire popular entertainment and trademark properties and secure licenses to exploit, and effectively distribute and market, such properties.

Customers

    DHX’s target customers for its production and distribution business lines are, in large part, made up of conventional and specialty terrestrial and cable/satellite television broadcasters in the U.S., United Kingdom, Canada and other international markets. Additionally, the Company targets OTT and digital providers for its production and distribution business lines worldwide. Some of the OTT and digital providers that comprise DHX’s customer base include Netflix, Amazon, Hulu and CraveTV. The Company has sold programs to over 500 broadcasters and other rights buyers in over 150 countries.

The following chart lists certain of the Company’s current and recent production and distribution customers:

In addition to the above, the Company also provides production services to large brand owners looking to create content, such as Hasbro. Each of the four children’s television channels comprising DHX Television are carried by major BDUs in Canada, including as Bell, Cogeco, Telus, Rogers, Shaw Direct, Eastlink, Shaw and Videotron. The Company’s customer base also includes licensing agents in various international territories and other licensees for its consumer products activities.

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Specialized Skill and Knowledge

DHX’s management team and employees bring together strong complementary skills, expertise and experience in various aspects of the television and film production, distribution, television broadcasting, programming, consumer products, and digital media industries, including production, financing, sales and marketing and have received numerous awards of excellence. For additional information concerning certain members of the management team, refer to “Directors and Officers” below.

Intangible Properties

DHX uses a number of trademarks, service marks and official marks for its products and services. Many of these brands and marks are owned and registered by the Company, and the Company believes those trademarks that are not registered are protected by common law. The Company may also license certain marks from third parties. The Company has taken affirmative legal steps to protect its owned and licensed trademarks and believes its trademark position is adequately protected. The exclusive rights to trademarks depend upon the Company’s efforts to use and protect such marks and the Company does so vigorously.

Distribution rights to television programming and films as well as ancillary rights are granted legal protection under the copyright laws and other laws of Canada, the United States and most foreign countries. These laws impose substantial civil and criminal sanctions for the unauthorized duplication and exhibition of film and television programming. The Company believes that it takes, and plans to continue taking, all appropriate and reasonable measures to secure, protect and maintain or obtain agreements from licensees to secure, protect and maintain copyright and other legal protections for all of the film and television programming produced and distributed by DHX under the laws of all applicable jurisdictions.

The Company can give no assurance that its actions to establish and protect its trademarks and other proprietary rights will be adequate to prevent imitation or copying of its filmed and animated entertainment by others or to prevent third parties from seeking to block sales of its filmed and animated entertainment as a violation of their trademarks and proprietary rights. Moreover, the Company can give no assurance that others will not assert rights in, or ownership of, its trademarks and other proprietary rights, or that the Company will be able to successfully resolve these conflicts. In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of Canada and the United States.

The Company operates a comprehensive clearance and rights management system to both protect its rights and to ensure that works that DHX uses have the requisite clearances or licenses from the owners. A key element of contracts for copyright works is the term or time period of the license granted, which in the television sector can vary, but usually is for a time period such as one to three years. Rights management in a digital business environment is becoming increasingly complex due to challenges with definitions, semantics and taxonomic issues related to contractual rights.

Cycles and Seasonality

DHX’s operating results for any period are subject to cyclical or season fluctuations and dependent on factors such as the number and timing of film and television programs delivered, the budgets and financing cycles of broadcasters, overall demand for content, general advertising revenues and retail cycles associated with consumer spending activity, and the timing and level of success achieved by consumer products licensed and royalties paid in respect thereof, none of which can be predicted with certainty. Consequently, the Company’s results from operations may fluctuate materially from period-to-period and the results of any one period are not necessarily indicative of results for future periods. Refer to “Risk Factors” below.

Employees

At June 30, 2018, the Company had 505 full-time employees, 27 of which are based in Halifax, 182 at the Company’s facilities in Toronto, 2 in Los Angeles, 27 in New York, 81 in Vancouver and 186 are based in Europe. In addition, the Company retains individuals on a temporary contract basis, including directors, cast and crew, with the appropriate skills and background as required for particular projects under development or in production. During the year ended June 30, 2018, the Company retained approximately 862 temporary workers. Given the extent of the Company’s production portfolio, it is able to maintain its access to skilled animators, artists, lighting crews, directors and line producers, by being able to provide relatively constant work. There are a number of independent animation studios across the country that can be engaged on a “work for hire” basis that can be used to manage production capacity while minimizing fixed overhead costs.

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Operations

DHX operates out of offices in Halifax, Toronto, Vancouver, London, and, most recently, New York with additional locations worldwide as depicted under “The Company’s Business Lines – Distribution” above. The additional offices worldwide primarily support the Company’s distribution and consumer products activities. The Company maintains animation studios in Halifax and Vancouver where it provides services and facilities for both its owned productions as well as for third parties. The Company also owns and operates a 98,400 square foot studio on a 4.3 acre site in Toronto used primarily for live-action productions produced by the Company.

A significant percentage of the Company’s consolidated revenue for the fiscal year ended June 30, 2018 was attributable to foreign operations (i.e. attributable to the Company’s entities outside of Canada). These consist primarily of revenues from the Company’s international content distribution, consumer products licensing of owned intellectual property and consumer products representation of third party brands. Revenue attributable to the consumer products represented segment for the year ended June 30, 2018 was comprised substantially of revenue from foreign operations.

REORGANIZATIONS

During fiscal year ended June 30, 2016, the Company completed a reorganization for tax planning purposes involving certain of its material subsidiaries which primarily involved, among other transactions, the dissolution of DHX Cookie Jar Inc., the transfer of substantially all of DHX Cookie Jar Inc.’s assets and liabilities to DHX Media (Toronto) Ltd., and the transfer of Cookie Jar Entertainment Holdings UK Ltd. (which holds CPLG) to DHX Worldwide Limited.

SOCIAL POLICIES

DHX is committed to fair dealing, honesty and integrity in all aspects of its business conduct and has implemented a Code of Business Conduct and Ethics applicable to all directors, officers, and employees of the Company which aims to demonstrate the Company’s commitment to conduct itself ethically and is available on DHX’s website at www.dhxmedia.com.

RISK FACTORS

The following are the specific and general risks that could affect the Company that each reader should carefully consider. Additional risks and uncertainties not presently known to the Company or that the Company does not currently anticipate will be material, may impair the Company’s business operations and its operating results and as a result could materially impact its business, results of operations, prospects and financial condition. Readers should additionally refer to the risk factors set out in the Company’s most recent annual Management Discussion and Analysis, which, together with the risk factors below, do not necessarily constitute an exhaustive list.

Risks Applicable to the Company’s Shares

The market prices for the Shares may be volatile as a result of factors beyond the Company’s control.

Securities markets have a high level of price and volume volatility, and the market price of shares of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. The market price of the Company’s Shares may be subject to significant fluctuation in response to numerous factors, including variations in its annual or quarterly financial results or those of its competitors, changes by financial research analysts in their recommendations or estimates of the Company’s earnings, conditions in the economy in general or in the broadcasting, film or television sectors in particular, unfavorable publicity changes in applicable laws and regulations, exercise of the Company’s outstanding options, or other factors. Moreover, from time to time, the stock markets on which the Company’s Shares will be listed may experience significant price and volume volatility that may affect the market price of the Company’s Shares for reasons unrelated to its economic performance. No prediction can be made as to the effect, if any, that future sales of Shares or the availability of Shares for future sale (including Shares issuable upon the exercise of stock options) will have on the market price of the Shares prevailing from time to time. Sales of substantial numbers of Shares, or the perception that such sales could occur, could adversely affect the prevailing price of the Company’s Shares.

As a result of any of these factors, the market price of the Shares may be volatile and, at any given point in time, may not accurately reflect the long term value of DHX. This volatility may affect the ability of holders of Shares to sell their Shares at an advantageous price.

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DHX’s Common Voting Shares and Variable Voting Shares structure is unusual in the United States. As a result, brokers, dealers and other market participants may not understand the conversion features of the Common Voting Shares and Variable Voting Shares, which may negatively impact liquidity in the trading market for each class of Shares and may result in differences between the trading prices of each class of Shares that do not reflect differences in the underlying economic or voting interests represented by each class of Shares.

The Company may require additional capital in the future which may decrease market prices and dilute each shareholder’s ownership of the Company’s Shares.

The Company may require capital in the future in order to meet additional working capital requirements, to make capital expenditures, to take advantage of investment and/or acquisition opportunities or for other reasons (the specific risks of which are described in more detail below). Accordingly, the Company may need to raise additional capital in the future. The Company’s ability to obtain additional financing will be subject to a number of factors including market conditions and its operating performance. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable for the Company.

In order to raise such capital, the Company may sell additional equity securities in subsequent offerings and may issue additional equity securities. Sales or issuances of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market price for the securities. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and the Company may experience dilution in its earnings per share. Capital raised through debt financing would require the Company to make periodic interest payments and may impose restrictive covenants on the conduct of the Company’s business. Furthermore, additional financings may not be available on terms favorable to the Company, or at all. The Company’s failure to obtain additional funding could prevent the Company from making expenditures that may be required to grow its business or maintain its operations.

The Company may issue additional Common Voting Shares and/or Variable Voting Shares, including upon the exercise of its currently outstanding convertible debentures, stock options and in accordance with the terms of the Company’s dividend reinvestment plan, employee share purchase plan and performance share unit plan. Accordingly, holders of Common Voting Shares and Variable Voting Shares may suffer dilution.

Voting rights of holders of Variable Voting Shares may be automatically decreased if votes attached to the Variable Voting Shares exceed certain limits under the Articles.

The terms of the Variable Voting Shares pursuant to the Articles of Amendment of the Company provide for the voting rights attached to the Variable Voting Shares to decrease automatically and without further act or formality on the part of the Company or the holder if the total number of votes that may be exercised in respect of all issued and outstanding Variable Voting Shares exceed certain limits. As a result, holders of Variable Voting Shares may have less influence on a per share basis than holders of Common Voting Shares on matters requiring a vote of shareholders. An automatic decrease of voting rights attaching to the Variable Voting Shares, or the risk that such a decrease of voting rights attaching to the Variable Voting Shares may occur, could affect the ability of holders of Variable Voting Shares to sell their Shares at an advantageous price. See “Description of Capital Structure”.

The Company expects to continue to incur significant additional legal, accounting and other expenses as a result of becoming a public company in the United States.

In connection with the listing of Shares of the Company on NASDAQ, the Company became subject to public company reporting obligations in the United States. As a public company in the United States, the Company has incurred and continues to incur significant additional legal, accounting and other expenses compared to levels prior to becoming a public company in the United States. In addition, changing laws, regulations and standards in the United States relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations thereunder, as well as under the Sarbanes-Oxley Act of 2002, the United States Jumpstart Our Business Startups Act (the “JOBS Act”) and the rules and regulations of the SEC and NASDAQ, may result in an increase in the Company’s costs and the time that the Board and management of the Company must devote to complying with these rules and regulations. The Company expects these rules and regulations to continue to elevate increase its legal and financial compliance costs and to divert management time and attention from the Company’s product development and other business activities.

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The Company is a “foreign private issuer” under U.S. securities laws, and is not required to provide the same information in the same time periods as U.S. “domestic issuers”.

The Company is a foreign private issuer under applicable U.S. federal securities laws, and therefore, it is not required to comply with all the periodic disclosure and current reporting requirements of the U.S. Exchange Act. As a result, the Company does not file the same reports that a U.S. domestic issuer would file with the SEC, although the Company will be required to file with or furnish to the SEC the continuous disclosure documents that it is required to file in Canada under Canadian securities laws. In addition, the Company’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the U.S. Exchange Act. Therefore, the Company’s shareholders may not know on as timely a basis when the Company’s officers, directors and principal shareholders purchase or sell Common Voting Shares or Variable Voting Shares as the reporting periods under the corresponding Canadian insider reporting requirements are longer. In addition, as a foreign private issuer, the Company is exempt from the proxy rules under the U.S. Exchange Act.

The Company is an “emerging growth company”. The reduced reporting requirements applicable to emerging growth companies may make the Company’s Shares less attractive to investors. In addition, loss of emerging growth company status may increase management time and cost for compliance with additional reporting requirements.

The Company is an “emerging growth company” as defined in section 3(a) of the U.S. Exchange Act (as amended by the JOBS Act, enacted on April 5, 2012), and the Company will continue to qualify as an “emerging growth company” until the earliest to occur of: (a) the last day of the fiscal year during which the Company has total annual gross revenues of US$1,070,000,000 (as such amount is indexed for inflation every 5 years by the SEC) or more; (b) the last day of the fiscal year of the Company following the fifth anniversary of the date of the first sale of common equity securities of the Company pursuant to an effective registration statement under the U.S. Securities Act; (c) the date on which the Company has, during the previous 3-year period, issued more than US$1,000,000,000 in non-convertible debt; and (d) the date on which the Company is deemed to be a ‘large accelerated filer’, as defined in Rule 12b–2 under the U.S. Exchange Act. The Company would qualify as a large accelerated filer (and would cease to be an emerging growth company) as at June 30, 2018 if the aggregate worldwide market value of common equity held by its non-affiliates would be US$700 million or more as of December 31, 2018, being the last business day of its second fiscal quarter of this year.

Generally, a registrant that registers any class of its securities under section 12 of the U.S. Exchange Act is required to include in the second and all subsequent annual reports filed by it under the U.S. Exchange Act, a management report on internal control over financial reporting and, subject to an exemption available to registrants that meet the definition of a “smaller reporting company” in Rule 12b-2 under the U.S. Exchange Act, an auditor attestation report on management’s assessment of internal control over financial reporting. However, for so long as the Company continues to qualify as an emerging growth company, it will be exempt from the requirement to include an auditor attestation report in its annual reports filed under the U.S. Exchange Act, even if it does not qualify as a “smaller reporting company”. In addition, section 103(a)(3) of the Sarbanes-Oxley Act of 2002 has been amended by the JOBS Act to provide that, among other things, the auditor of an emerging growth company are exempt from any rules of the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the registrant (auditor discussion and analysis).

Investors may find the Shares less attractive because the Company relies upon certain of these exemptions. If some investors find the Shares less attractive as a result, there may be a less active trading market for the Shares and the Share price may be more volatile. However, if the Company no longer qualifies as an emerging growth company, the Company would be required to divert additional management time and attention from the Company’s product development and other business activities and incur increased legal and financial costs to comply with the additional associated additional reporting requirements.

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It may be difficult for U.S. investors to bring actions and enforce judgments under U.S. securities laws.

Investors in the United States or in other jurisdictions outside of Canada may have difficulty bringing actions and enforcing judgments against the Company, its directors, its executive officers and some of the experts named in this Annual Information Form based on civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof or the equivalent laws of other jurisdictions of investor residence.

There is some doubt as to whether a judgment of a U.S. court based solely upon the civil liability provisions of U.S. federal or state securities laws would be enforceable in Canada against the Company, its directors and officers or the experts named in this Annual Information Form. There is also doubt as to whether an original action could be brought in Canada against the Company or its directors and officers or the experts named in this Annual Information Form to enforce liabilities based solely upon U.S. federal or state securities laws.

An active market in the United States for the Company’s Shares may not develop or be sustained.

The Company’s Variable Voting Shares began trading on NASDAQ on June 23, 2015, and the Company’s Common Voting Shares began trading on NASDAQ on May 31, 2018 together with the Variable Voting Shares under a single ticker symbol. However, trading volume on NASDAQ has been limited. There can be no assurance that an active market for the Shares in the United States will be developed or sustained. Holders of Shares may be unable to sell their investments on satisfactory terms in the United States. As a result of any risk factor discussed herein, the market price of the Shares of the Company at any given point in time may not accurately reflect the long-term value of the Company. Furthermore, responding to these risk factors could result in substantial costs and divert management’s attention and resources. Substantial and potentially permanent declines in the value of the Shares may result.

Other factors unrelated to the performance of the Company that may have an effect on the price and liquidity of the Shares include: the extent of analytical coverage; lessening in trading volume and general market interest in the Shares; the size of the Company’s public float; and any event resulting in a delisting of Shares.

The public announcement of potential future corporate developments may significantly affect the market price of the Shares.

Management of the Company, in the ordinary course of the Company’s business, regularly explores potential strategic opportunities and transactions. These opportunities and transactions may include strategic joint venture relationships, significant debt or equity investments in the Company by third parties, the acquisition or disposition of material assets, the licensing, acquisition or disposition of material intellectual property, the development of new product lines or new applications for its existing intellectual property, significant distribution arrangements and other similar opportunities and transactions. The public announcement of any of these or similar strategic opportunities or transactions might have a significant effect on the price of the Shares. The Company’s policy is to not publicly disclose the pursuit of a potential strategic opportunity or transaction unless it is required to do so by applicable law, including applicable securities laws relating to continuous disclosure obligations. There can be no assurance that investors who buy or sell Shares of the Company are doing so at a time when the Company is not pursuing a particular strategic opportunity or transaction that, when announced, would have a significant effect on the price of the Shares.

In addition, any such future corporate development may be accompanied by certain risks, including exposure to unknown liabilities of the strategic opportunities and transactions, higher than anticipated transaction costs and expenses, the difficulty and expense of integrating operations and personnel of any acquired companies, disruption of the Company’s ongoing business, diversion of management’s time and attention, possible dilution to shareholders and other factors as discussed below in more detail. The Company may not be able to successfully overcome these risks and other problems associated with any future acquisitions and this may adversely affect the Company’s business and financial condition.

Risks Applicable to DHX Generally

The Company faces risks inherent in doing business internationally, many of which are beyond the Company’s control.

The Company distributes films and television productions and conducts other business activities outside Canada and derives revenues from these sources. As a result, the Company’s business is subject to certain risks inherent in international

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business, many of which are beyond its control. These risks include: changes in local regulatory requirements, including restrictions on content; changes in the laws and policies affecting trade, investment and taxes (including laws and policies relating to the repatriation of funds and to withholding taxes); differing degrees of protection for intellectual property; instability of foreign economies and governments; cultural barriers; wars and acts of terrorism; and the spread of viruses, diseases or other widespread health hazards.

Any of these factors could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company’s results of operations may fluctuate significantly depending on the number and timing of television programs and films delivered or made available to various media.

Results of operations with respect to DHX’s production and distribution of film and television operations for any periods are significantly dependent on the number and timing of television programs and films delivered or made available to various media. Consequently, the Company’s results of operations may fluctuate materially from period to period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. Although traditions are changing, due in part to increased competition from new channels of distribution, industry practice is that broadcasters make most of their annual programming commitments between February and June such that new programs can be ready for telecast at the start of the broadcast season in September, or as mid-season replacements in January. Because of this annual production cycle, DHX’s revenues may not be earned on an even basis throughout the year. Results from operations fluctuate materially from quarter to quarter and the results for any one quarter are not necessarily indicative of results for future quarters.

The Company relies on key personnel, the loss of any one of whom could have a negative effect on the Company.

The Company’s future success is substantially dependent upon the services of certain key personnel of the Company, including certain senior management, and creative, technical and sales and marketing personnel. The loss of the services of any one or more of such individuals could have a material adverse effect on the business, results of operations or financial condition of the Company. Recruiting and retaining skilled personnel is costly and highly competitive. If the Company fails to retain, hire, train and integrate qualified employees and contractors, it may not be able to maintain and expand its business.

The Company is subject to income taxes in a number of jurisdictions, and to audits from tax authorities in those jurisdictions. Any audits could materially affect the income taxes payable or receivable in any jurisdiction, which changes would affect the Company’s financial statements.

In the preparation of its financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates, taking into consideration tax laws, regulations and interpretations that pertain to the Company’s activities. In addition, DHX is subject to audits from different tax authorities on an ongoing basis and the outcome of such audits could materially affect the amount of income tax payable or receivable recorded on its consolidated balance sheets and the income tax expense recorded on its consolidated statements of earnings. Any cash payment or receipt resulting from such audits would have an impact on the Company’s cash resources available for its operations.

The Company may be subject to or pursue claims and legal proceedings that could be time-consuming, expensive and result in significant liabilities.

Governmental, legal or arbitration proceedings may be brought or threatened against the Company and the Company may bring legal or arbitration proceedings against third parties. Regardless of their merit, any such claims could be time consuming and expensive to evaluate and defend, divert management’s attention and focus away from the business and subject the Company to potentially significant liabilities.

Integration of Peanuts and Strawberry Shortcake

The Company’s ability to maintain and successfully execute its business depends upon the judgment and project execution skills of its senior professionals. Any management disruption or difficulties in integrating the Peanuts and Strawberry Shortcake business with the business of the Company could significantly affect the Company’s business and results of operations. The success of the Peanuts/SSC Acquisition will depend, in large part, on the ability of management of the Company to realize the anticipated benefits and cost savings from integration of the Peanuts and Strawberry Shortcake business with the business of the Company. The integration of the Peanuts and Strawberry Shortcake business with the business of the Company may result

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in significant challenges, and management of the Company may be unable to accomplish the integration smoothly, or successfully, in a timely manner or without spending significant amounts of money. It is possible that the integration process could result in the loss of key employees, the disruption of the respective ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of management of the Company to maintain relationships with clients, suppliers, employees, or other key stakeholders or to achieve the anticipated benefits of the acquisition.

The integration of the Peanuts and Strawberry Shortcake business requires the dedication of substantial management effort, time and resources which may divert management's focus and resources from other strategic opportunities and from operational matters during this process. There can be no assurance that management of the Company will be able to integrate the operations of the businesses successfully or achieve any of the synergies or other benefits that are anticipated as a result of the acquisition of the Peanuts and Strawberry Shortcake business. Any inability of management to successfully integrate the operations of the Company and the Peanuts and Strawberry Shortcake business, including, but not limited to, information technology and financial reporting systems, could have a material adverse effect on the business, financial condition and results of operations of the Company. The challenges involved in the integration may include, among other things, the following:

• addressing possible differences in corporate cultures and management philosophies;

• retaining key personnel going forward;

• integrating information technology systems and resources;

• managing the expansion the Company’s systems, including but not limited to accounting systems, and adjusting its internal control environment to cover the Peanuts and Strawberry Shortcake operations;

• unforeseen expenses or delays associated with the Peanuts/SSC Acquisition;

• unforeseen facilities-related issues;

• performance shortfalls relative to expectations at one or both of the businesses as a result of the diversion of management's attention to the acquisition; and

• meeting the expectations of business partners with respect to the overall integration of the businesses.

It is possible that the integration process could result in the loss of key employees, diversion of management's attention, the disruption or interruption of, or the loss of momentum in, ongoing business or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect the Company’s ability to maintain relationships with business partners and employees or its ability to achieve the anticipated benefits of the transaction, or could reduce its earnings or otherwise adversely affect the business and financial results of the combined company. In addition, the integration process may strain the combined company's financial and managerial controls and reporting systems and procedures. This may result in the diversion of management and financial resources from the combined company's core business objectives.

The Company’s growth strategy partially depends upon the acquisition of other businesses. There can be no assurance that the Company will be able to successfully identify, consummate or integrate any potential acquisitions into its operations.

The Company has made or entered into, and will likely continue to pursue, various acquisitions, business combinations and joint ventures intended to complement or expand its business. DHX believes the acquisition of other businesses may enhance its strategy of expanding its product offerings and customer base, among other things. The successful implementation of such acquisition strategy depends on the Company’s ability to identify suitable acquisition candidates, acquire such companies on acceptable terms, integrate the acquired company’s operations and technology successfully with its own and maintain the goodwill of the acquired business. DHX is unable to predict whether or when it will be able to identify any suitable additional acquisition candidates that are available for a suitable price, or the likelihood that any potential acquisition will be completed. When evaluating a prospective acquisition opportunity, the Company cannot assure that it will correctly identify the costs and risks inherent in the business to be acquired. The scale of such acquisition risks will be related to the size of the company or companies acquired relative to that of DHX at the time of acquisition, and certain target companies may be larger than DHX.

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Growth and expansion resulting from future acquisitions may place significant demands on the Company’s management resources. In addition, while DHX’s management believes it has the experience and know-how to integrate acquisitions, such efforts entail significant risks including, but not limited to: (a) the failure to integrate successfully the personnel, information systems, technology, and operations of the acquired business; (b) the potential loss of key employees or customers from either the Company’s current business or the business of the acquired company; (c) failure to maximize the potential financial and strategic benefits of the transaction; (d) the failure to realize the expected synergies from acquired businesses; (e) impairment of goodwill; (f) reductions in future operating results from amortization of intangible assets; (g) the assumption of significant and/or unknown liabilities of the acquired company; and (h) the diversion of management’s time and resources.

Future acquisitions are accompanied by the risk that the obligations and liabilities of an acquired company may not be adequately reflected in the historical financial statements of such company and the risk that such historical financial statements may be based on assumptions, which are incorrect or inconsistent with the Company’s assumptions or approach to accounting policies. In addition, such future acquisitions could involve tangential businesses which could alter the strategy and direction of the Company.

There can be no assurance that DHX will be able to successfully identify, consummate or integrate any potential acquisitions into its operations. In addition, future acquisitions may result in potentially dilutive issuances of equity securities, have a negative effect on the Company’s share price, or may result in the incurrence of debt or the amortization of expenses related to intangible assets, all of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’s leverage could affect its ability to obtain financing, restrict operational flexibility, restrict payment of dividends, divert cash flow to interest payments and make it more vulnerable to competitors and economic downturns.

DHX incurred a significant amount of indebtedness in connection with its recent acquisitions. As of June 30, 2018, DHX had outstanding indebtedness of approximately $879 million. The Company’s degree of current and future leverage, particularly if increased to complete potential acquisitions, could materially and adversely affect DHX in a number of ways, including:

• limiting the Company’s ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes;

• restricting the Company’s flexibility and discretion to operate its business;

• limiting the Company’s ability to declare dividends on its Shares;

• having to dedicate a portion of the Company’s cash flows from operations to the payment of interest on its existing indebtedness and not having such cash flows available for other purposes, including operations, capital expenditures and future business opportunities;

• exposing the Company to increased interest expense on borrowings at variable rates;

• limiting the Company’s flexibility to plan for, or react to, changes in its business or market conditions;

• placing the Company at a competitive disadvantage compared to its competitors that have less debt;

• making the Company vulnerable to the impact of adverse economic, industry and Company-specific conditions; and

• making the Company unable to make capital expenditures that are important to its growth and strategies.

In addition, the Company may not be able to generate sufficient cash flows from operations to service its indebtedness, in which case it may be required to sell assets, reduce capital expenditures, reduce spending on new production, refinance all or a portion of its existing indebtedness or obtain additional financing, any of which would materially adversely affect the Company’s operations and ability to implement its business strategy.

The Company’s current outstanding indebtedness may limit its ability to incur additional debt, sell assets, grant liens and pay dividends. In addition, in the event of a default, or a cross-default or cross-acceleration under future credit facilities, the Company may not have sufficient funds available to make the required payments under its debt agreements, resulting in lenders taking possession of collateral.

The terms of the Company’s Senior Credit Facilities, Convertible Debentures and other indebtedness may limit the Company’s ability to, among other things:

• incur additional indebtedness or contingent obligations;

• sell significant assets;

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• grant liens; and

• pay dividends in excess of certain thresholds.

The Senior Credit Facilities require the Company to maintain certain financial ratios and satisfy other non-financial maintenance covenants. Compliance with these covenants and financial ratios, as well as those that may be contained in future debt agreements may impair the Company’s ability to finance its future operations or capital needs or to take advantage of favorable business opportunities. The Company’s ability to comply with these covenants and financial ratios will depend on future performance, which may be affected by events beyond the Company’s control. The Company’s failure to comply with any of these covenants or financial ratios may result in a default under the Senior Credit Facilities and, in some cases, the acceleration of indebtedness under other instruments that contain cross-default or cross-acceleration provisions. In the event of a default, or a cross-default or cross- acceleration, the Company may not have sufficient funds available to make the required payments under its debt agreements. If the Company is unable to repay amounts owed under the terms of the Senior Credit Facilities or the credit agreement governing any credit facility that it may enter into in the future, those lenders may be entitled to take possession of the collateral securing that facility to the extent required to repay those borrowings. In such event, the Company may not be able to fully repay the Senior Credit Facilities or any credit facility that it may enter into in the future, if at all. For additional information concerning the Company’s Senior Credit Facilities refer to “General Development of the Business – Significant Acquisitions and Other Recent Developments” and “Material Contracts”.

Credit ratings and credit risk of the Company may change.

The credit ratings assigned to the Company are not a recommendation to buy, hold or sell securities of the Company. A rating is not a comment on the market price of a security nor is it an assessment of ownership given various investment objectives. There can be no assurance that the credit ratings assigned to the Company will remain in effect for any given period of time and ratings may be upgraded, downgraded, placed under review, confirmed and discontinued by an applicable credit ratings agency at any time. Real or anticipated changes in credit ratings may affect the market value of securities of the Company. In addition, real or anticipated changes in credit ratings may affect the Company’s ability to obtain short-term and long-term financing and the cost at which the Company can access the capital markets. See “Ratings” for additional information.

The Company’s expanding operations have placed significant demands on the managerial, operational and financial personnel and systems of the Company.

As a result of acquisitions and other recent transactions completed by DHX, including but not limited to the Peanuts/SSC Acquisition and the Peanuts Divestiture, significant demands have been placed on the managerial, operational and financial personnel and systems of DHX. No assurance can be given that the Company’s systems, procedures and controls will be adequate to support the expansion of operations of DHX or the management of its relationships with third parties and the operations of such ventures. The future operating results of the Company and its subsidiaries will be affected by the ability of its officers and key employees to manage changing business conditions and to implement and improve its operational and financial controls and reporting systems. If the Company is unsuccessful in managing such demands and changing business conditions, its financial condition and results of operations could be materially adversely affected.

The Company manages liquidity carefully to address fluctuating quarterly revenues. Any failure of the Company to adequately manage such liquidity could adversely affect the Company’s business and results of operations.

The Company’s production revenues for any period are dependent on the number and timing of film and television programs delivered, which cannot be predicted with certainty. The Company’s film and television distribution revenues vary significantly from quarter to quarter driven by contracted deliveries with television services. Distribution revenues are contract and demand driven and can fluctuate significantly from period to period. The Company manages liquidity by forecasting and monitoring operating cash flows and through the use of capital leases and maintaining credit facilities. Any failure to adequately manage liquidity could adversely affect the Company’s business and results of operations, including by limiting the Company’s ability to meet its working capital needs, make necessary or desirable capital expenditures, satisfy its debt service requirements, make acquisitions and declare dividends on its Shares. There can be no assurance that the Company will continue to have access to sufficient short and long term capital resources, on acceptable terms or at all, to meet its liquidity requirements.

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There can be no assurance that the Company will reinstate its dividend payments at the prior levels or at all.

The Company previously paid quarterly dividends on its Shares in amounts approved by the Board. Concurrently with the filing of this Annual Information Form, the Company has suspended its dividend. There can be no assurance that the Company will reinstate its dividend payments at the prior levels or at all.

During an economic downturn, the Company’s operating results, prospects and financial condition may be adversely affected.

The Company’s revenues and operating results are and will continue to be influenced by prevailing general economic conditions in particular with respect to its television broadcasting activities. In certain cases, purchasers of DHX Television’s advertising inventories may reduce their advertising budgets. In addition, the deterioration of economic conditions could adversely affect payment patterns which could increase the Company’s bad debt expense. During an economic downturn, there can be no assurance that the Company’s operating results, prospects and financial condition would not be adversely affected.

Risks Related to the Production and Distribution of Content

The Company’s entertainment programming may not be accepted by the public which would result in a portion of the Company’s costs not being recouped or anticipated profits not being realized.

The entertainment industry involves a substantial degree of risk. Acceptance of entertainment programming represents a response not only to the production’s artistic components, but also the quality and acceptance of other competing programs released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, public tastes generally and other intangible factors, all of which could change rapidly or without notice and cannot be predicted with certainty. There is a risk that some or all of the Company’s programming will not be purchased or accepted by the public generally, resulting in a portion of costs not being recouped or anticipated profits not being realized. There can be no assurance that revenue from existing or future programming will replace loss of revenue associated with the cancellation or unsuccessful commercialization of any particular production.

The Company’s films and television programs may not receive favorable reviews or ratings or perform well in ancillary markets, broadcasters may not license the rights to the Company’s film and television programs, and distributors may not distribute or promote the Company’s films and television programs, any of which could have a material adverse effect on the Company’s business, results of operations or financial condition.

Because the performance of television and film programs in ancillary markets, such as home video and pay and free television, is often directly related to reviews from critics and/or television ratings, poor reviews from critics or television ratings may negatively affect future revenue. The Company’s results of operation will depend, in part, on the experience and judgment of its management to select and develop new investment and production opportunities. The Company cannot make assurances that the Company’s films and television programs will obtain favorable reviews or ratings, that its films and television programs will perform well in ancillary markets, or that broadcasters will license the rights to broadcast any of the Company’s film and television programs in development or renew licenses to broadcast film and television programs in the Company’s library. The failure to achieve any of the foregoing could have a material adverse effect on the Company’s business, results of operations or financial condition.

Licensed distributors’ decisions regarding the timing of release of, and promotional support for, the Company’s films, television programs and related products are important in determining the success of these films, programs and related products. The Company does not control the timing and manner in which the Company’s licensed distributors distribute the Company’s films, television programs or related products. Any decision by those distributors not to distribute or promote one of the Company’s films, television programs or related products or to promote competitors’ films, programs or related products to a greater extent than they promote the Company could have a material adverse effect on the Company’s business, results of operations or financial condition.

Loss of the Company’s Canadian status may result in loss of government tax credits and incentives or default by the Company under broadcast licences.

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In addition to license fees from domestic and foreign broadcasters and financial contributions from co-producers, the Company finances a significant portion of its production budgets from federal and provincial governmental agencies and incentive programs, including the Canada Media Fund, provincial film equity investment and incentive programs, federal tax credits and provincial tax credits, and other investment and incentive programs. Tax credits are considered part of the Company’s equity in any production for which they are used as financing. There can be no assurance that individual incentive programs available to the Company will not be reduced, amended or eliminated or that the Company or any production will qualify for them, any of which may have an adverse effect on the Company’s business, results of operations or financial condition.

Furthermore, the Company could lose its ability to exploit Canadian government tax credits and incentives described above if it ceases to be “Canadian” as defined under the Investment Canada Act (Canada). In particular, the Company would not qualify as a Canadian if Canadian nationals cease to beneficially own shares of the Company having more than 50% of the combined voting power of its outstanding shares. In Canada and under international treaties, under applicable regulations, a program will generally qualify as a Canadian-content production if, among other things: (i) it is produced by Canadians with the involvement of Canadians in principal functions; and (ii) a substantial portion of the budget is spent on Canadian elements. In addition, the Canadian producer must have full creative and financial control of the project. A substantial number of the Company’s programs are contractually required by broadcasters to be certified as “Canadian”. In the event a production does not qualify for certification as Canadian, the Company would be in default under any government incentive and broadcast licenses for that production. In the event of such default, the broadcaster could refuse acceptance of the Company’s productions.

In 2016, Canada’s Minister of Canadian Heritage announced a review of Canada’s broadcasting, media and cultural industries, commencing with consultations with consumers and creators of cultural content. Following such consultation process the federal government announced Creative Canada Framework which details the approach of the federal government to creative industries and growing the creative economy in Canada. Presently, it remains uncertain as to the full impact and implications of the Creative Canada Framework and potential changes to laws, regulations, rules, institutions, policies or programs governing Canada’s broadcasting, media and cultural industries and whether such changes, if any, would impact the Company and its business.

Production and distribution of television programs and films is highly competitive. Failure of the Company to increase its penetration of the prime-time network market or obtain favorable programming slots may have a negative impact on the Company’s business.

For fiscal 2018, a material portion of the Company’s revenues have been derived from the production and distribution of film and television programs. The business of producing and distributing film and television programs is highly competitive. The Company faces intense competition with other producers and distributors, many of whom are substantially larger and have greater financial, technical and marketing resources than the Company. The Company competes with other television and film production companies for ideas and storylines created by third parties as well as for actors, directors, writers and other personnel required for a production. The Company may not be successful in any of these efforts which may adversely affect business, results of operations or financial condition.

The Company competes for time slots with a variety of companies which produce televised programming. The number of favorable time slots remains limited (a “slot” being a broadcast time period for a program), even though the total number of outlets for television programming has increased over the last decade. Competition created by the emergence of new broadcasters and other content providers and platforms has generally caused the market shares of the major networks to decrease. Even so, the licence fees paid by the major networks remain lucrative. As a result, there continues to be intense competition for the time slots offered by those networks. There can be no assurance that the Company will be able to obtain favorable programming slots and the failure to do so may have a negative impact on the Company’s business.

The Company may not be able to acquire or develop new products and rights to popular titles, which could have a material adverse effect on its business, results of operations or financial condition.

The Company depends on a limited number of titles for a significant portion of the revenues generated by its film and television content library. In addition, some of the titles in its library are not presently distributed and generate substantially no revenue. If the Company cannot acquire or develop new products and rights to popular titles through production, distribution agreements, acquisitions, mergers, joint ventures or other strategic alliances, it could have a material adverse effect on its business, results of operations or financial condition.

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The Company may not successfully protect and defend against intellectual property infringement and claims. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company’s ability to compete depends, in part, upon successful protection of its intellectual property. Furthermore, the Company’s revenues are dependent on the unrestricted ownership of its rights to television and film productions. Any successful claims to the ownership of these intangible assets could hinder the Company’s ability to exploit these rights. The Company does not have the financial resources to protect its rights to the same extent as some of its competitors. The Company attempts to protect proprietary and intellectual property rights to its productions through available copyright and trademark laws in a number of jurisdictions and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries in which the Company may distribute its products and in other jurisdictions no assurance can be given that challenges will not be made to the Company’s copyright and trade-marks. In addition, technological advances and conversion of film and television programs into digital format have made it easier to create, transmit and share unauthorized copies of film and television programs. Users may be able to download and/or stream and distribute unauthorized or “pirated” copies of copyrighted material over the Internet. As long as pirated content is available to download and/or stream digitally, some consumers may choose to digitally download or stream material illegally. As a result, it may be possible for unauthorized third parties to copy and distribute the Company’s productions or certain portions or applications of its intended productions, which could have a material adverse effect on its business, results of operations or financial condition.

Litigation may also be necessary in the future to enforce the Company’s intellectual property rights, to protect its trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on the Company’s business, results of operations or financial condition. The Company cannot provide assurances that infringement or invalidity claims will not materially adversely affect its business, results of operations or financial condition. Regardless of the validity or the success of the assertion of these claims, the Company could incur significant costs and diversion of resources in enforcing its intellectual property rights or in defending against such claims, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company may be materially adversely affected by the loss of revenue generated by a few productions or broadcasters.

Revenue from production and distribution of film and television may originate from disproportionately few productions and broadcasters. The value of the Common Voting Shares and Variable Voting Shares may be materially adversely affected should the Company lose the revenue generated by any such production or broadcaster.

The Company may not have sufficient insurance coverage, completion bonds, or alternative financing to pay for budget overruns and other production risks.

A production’s costs may exceed its budget. Unforeseen events such as labor disputes, death or disability of a star performer or other key personnel, changes related to technology, special effects or other aspects of production, shortage of necessary equipment, damage to film negatives, master tapes and recordings, or adverse weather conditions, or other unforeseen events may cause cost overruns and delay or frustrate completion of a production. Although the Company has historically completed its productions within budget, there can be no assurance that it will continue to do so. The Company currently maintains insurance policies and when necessary, completion bonds, covering certain of these risks. There can be no assurance that any overrun resulting from any occurrence will be adequately covered or that such insurance and completion bonds will continue to be available or, if available on terms acceptable to the Company. In the event of budget overruns, the Company may have to seek additional financing from outside sources in order to complete production of a television program. No assurance can be given as to the availability of such financing or, if available on terms acceptable to the Company. In addition, in the event of substantial budget overruns, there can be no assurance that such costs will be recouped, which could have a significant impact on the Company’s results of operations or financial condition.

Management estimates for revenues and expenses for a production may not be accurate.

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The Company makes numerous estimates as to its revenues and matching production and direct distribution expenses on a project by project basis. As a result of this accounting policy, earnings can widely fluctuate if the Company’s management has not accurately forecast the revenue potential of a production.

Local cultural incentive programs currently accessed by the Company may be reduced, amended or eliminated.

There can be no assurance that the local cultural incentive programs which DHX may access in Canada and internationally from time to time, including those sponsored by various Canadian, European and Australian governmental agencies, will not be reduced, amended or eliminated. There can be no assurance that such programs and policies will not be terminated or modified in a manner that has an adverse impact on DHX’s business, including, but not limited to, its ability to finance its production activities. Any change in the policies of those countries in connection with their incentive programs may require DHX to relocate production activities or otherwise have an adverse impact on DHX’s business, results of operation or financial condition.

The Company may be required to increase overhead and payments to talent in connection with increases in its production slate or its production budgets, which would result in greater financial risk.

The production, acquisition and distribution of films and television programs require a significant amount of capital. The Company cannot provide assurance that it will be able to continue to successfully implement financing arrangements or that it will not be subject to substantial financial risks relating to the production, acquisition, completion and release of future films and television programs. If the Company increases (through internal growth or acquisition) its production slate or its production budgets, it may be required to increase overhead, make larger up-front payments to talent, and consequently bear greater financial risks. The occurrence of any of the foregoing could have a material adverse effect on the Company’s business, results of operations or financial condition.

Changes in the regulatory environment of the film and television industry could have a material adverse effect on the Company’s revenues and earnings.

At the present time, the film and television industry is subject to a variety of rules and regulations. In addition to the regulatory risks applicable to DHX Television more particularly described elsewhere herein, the Company’s film and television production and distribution operations may be affected in varying degrees by future changes in the regulatory environment of the film and television industry. Any change in the regulatory environment applicable to the Company’s operations could have a material adverse effect on the Company’s revenues and earnings. Management constantly monitors the regulatory environment to identify risks and opportunities resulting from any changes.

Technological changes to production and distribution may diminish the value of the Company’s existing equipment and programs if the Company is unable to adapt to these changes on a timely basis.

Technological change may have a material adverse effect on the Company’s business, results of operations and financial condition if the Company is unable to adapt to these changes on a timely basis. The emergence of new production or computer-generated imagery (“CGI”) technologies, or a new digital television broadcasting standard, may diminish the value of the Company’s existing equipment and programs. Although the Company is committed to production technologies such as CGI and digital post-production, there can be no assurance that it will be able to incorporate other new production and post-production technologies which may become de facto industry standards. In particular, the advent of new broadcast standards, which may result in television programming being presented with greater resolution and on a wider screen than is currently the case, may diminish the evergreen value of the Company’s programming library because such productions may not be able to take full advantage of such features. There can be no assurance that the Company will be successful in adapting to these changes on a timely basis.

A strike or other form of labor protest affecting guilds or unions in the television and film industries could disrupt the Company’s production schedules which could result in delays and additional expenses.

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Many individuals associated with the Company’s projects are members of guilds or unions which bargain collectively with producers on an industry-wide basis from time to time. While the Company has positive relationships with the guilds and unions in the industry, a strike or other form of labor protest affecting those guilds or unions could, to some extent, disrupt production schedules which could result in delays and additional expenses.

Funds from the foreign exploitation of its properties may be paid in foreign currencies which may vary substantially relative to the Canadian dollar in a production period due to factors beyond the Company’s control. In addition, foreign currency and exchange control regulations may adversely affect the repatriation of funds to Canada.

The returns to the Company from foreign exploitations of its properties are customarily paid in USD, GBP, JPY and Euros and, as such, may be affected by fluctuations in the exchange rates. Currency exchange rates are determined by market factors beyond the control of the Company and may vary substantially during the course of a production period. In addition, the ability of the Company to repatriate to Canada funds arising in connection with foreign exploitation of its properties may also be adversely affected by currency and exchange control regulations imposed by the country in which the production is exploited. At present, the Company is not aware of any existing currency or exchange control regulations in any country in which the Company currently contemplates exploiting its properties which would have an adverse effect on the Company’s ability to repatriate such funds. Where appropriate, the Company may hedge its foreign exchange risk through the use of derivatives.

Any of the foregoing could have a material adverse effect on the Company’s business, results of operations or financial condition.

A change in laws or regulations or contractual terms applicable to YouTube or other AVOD platforms or other governmental or third-party claim in respect of the Company’s use of such platforms could have a material adverse impact on the growth and revenues of DHX.

Substantially all of DHX’s revenue from digital distribution through WildBrain are derived from advertising revenue from YouTube. In the event that laws or regulations are changed or instituted which impact the ability of YouTube to generate advertising revenue through its service and pass a portion of such revenue on to the copyright owners of content distributed via YouTube, DHX’s revenue from digital distribution may be materially adversely impacted. Additionally, there is risk that YouTube may be subject to claims relating to advertising to children, whether instituted by a governmental entity or otherwise, in which case they may change their approach to providing content with advertising to children. Independent of such risk, YouTube may also change its service or amend applicable contractual terms. In either of such instances, DHX’s revenue from digital distribution may be materially adversely impacted.

Risks Related to Television Broadcasting

The CRTC’s decisions following the Let’s Talk TV consultation are expected to have an impact on the manner in which broadcasting distribution undertakings package and promote television services and also to increase competition between television services. The manner in which these changes are made could have a material adverse impact on the revenues of DHX.

Starting in March 2016, broadcasting distribution undertakings are required to offer all discretionary television programming services (which includes all services other than those that are required to be distributed as a part of the basic service and some other exceptions) either on an à la carte basis or in small, reasonably priced packages. As of December 2016, BDUs are required to offer all services both on an à la carte basis and in small, reasonably priced packages.

The impact of these changes on existing packages offered by BDUs, and in particular on the relatively high penetration packages through which DHX Television’s services have typically been offered is not yet fully known. If DHX Television’s services were moved into low penetration packages or only offered on an à la carte basis, and if DHX Television were not able to negotiate penetration based pricing to offset the decline in penetration, then this could have an adverse impact on DHX’s revenue.

Loss of applicable licences for DHX Television, or changes to the terms of these licences, could have a material adverse effect on the revenues of the Company attributable to its television broadcasting activities.

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DHX Television operates under three broadcast licences issued by the CRTC, which are required to operate the broadcasting undertakings held by DHX Television. The Category A licences for Family Channel and Family Jr. and the Category B licence for Télémagino were recently renewed as discretionary services for a period of five years, expiring in 2023.

At this time, all larger, licensed Canadian BDUs must carry channels that hold Category A licences in the appropriate language market. The CRTC has stated that it intends to remove this requirement for independent Category A licences starting as of September 1, 2018. As such, at Family Channel’s licence renewal it lost its Category A licence effective September 1, 2018. The change in status of the Family Channel Category A licence or other loss thereof could have a material adverse effect on the subscriber count and ultimately the revenues of DHX attributable to its television broadcasting activities.

In addition, the CRTC licences carry a number of mandated requirements, including minimum Canadian content expenditures, minimum Canadian content airtime, among other requirements. Changes to these terms, particularly with respect to Canadian programming exhibition and expenditures, may result in material changes to the content cost structure of DHX Television. Moreover, in past years, previous owners of DHX Television were able to allocate Canadian content expenditures across a number of different services by sharing these expenditures with its other broadcast assets in its CRTC-recognized broadcast group. DHX may share these expenditures across its four services. However, it does not the same scale as the previous owner of such services and, therefore, does not receive the same benefit from this licence condition.

The inability of the Company to renew distribution affiliation agreements with BDUs on similar terms or at all, or the loss of certain significant customers, could have a material adverse effect on revenues of DHX Television.

DHX Television is dependent on BDUs, including cable, Direct to Home, Internet Protocol TV and multichannel multipoint distribution systems, for distribution of its television services. There could be a negative impact on revenues if distribution affiliation agreements with BDUs were not renewed on terms and conditions similar to those currently in effect or at all. Affiliation agreements with BDUs have multi-year terms that expire at various points in time.

The majority of DHX Television’s subscriber base is reached through a small number of very significant customers. DHX Television generally enters into long-term contracts (typically three years) with its customers, however, there is always a risk that the loss of an important relationship would have a significant impact on any particular business unit.

The rebranding of DHX’s television channels and resulting change in content may negatively affect the Company’s relationship with its BDU partners and impact its ability to negotiate terms and conditions when distribution affiliation agreements are up for renewal.

Legislative changes, a direction by the Governor in Council to the CRTC, or the adoption of new regulations or policies or any decision by the CRTC, could have a material adverse effect on DHX’s business, financial condition or operating results.

DHX’s television broadcasting operations are subject to federal government regulation, including the Broadcasting Act. The CRTC administers the Broadcasting Act and, among other things, grants, amends and renews broadcasting licences, and approves certain changes in corporate ownership and control of broadcast licencees. The CRTC may also adopt and implement regulations and policies, and renders decisions thereunder, which can be found on the CRTC’s website at www.crtc.gc.ca. Certain decisions of the CRTC can also be varied, rescinded or referred back to the CRTC by Canada’s Governor-in-Council either of its own volition or upon petition in writing by third parties filed within 90 days of a CRTC decision. The Government of Canada also has the power under the Broadcasting Act to issue directions of general application on broad policy matters with respect to the objectives of the broadcasting and regulatory policy in the Broadcasting Act, and to issue directions to the CRTC requiring it to report on matters within the CRTC’s jurisdiction under the Broadcasting Act. Legislative changes, a direction by the Governor in Council to the CRTC, or the adoption of new regulations or policies or any decision by the CRTC, could have a material adverse effect on the DHX’s business, financial condition or operating results.

The CRTC requires Canadian television programming services to draw certain proportions of their programming from Canadian content and, in many cases, to spend a portion of their revenues on Canadian programming. Often, a portion of the production budgets of Canadian programs is financed by Canadian government agencies and incentive programs, such as the Canadian

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Media Fund, Telefilm Canada and federal and provincial tax credits. There can be no assurance that such financing will continue to be available at current levels, or at all. Reductions or other changes in the policies of Canada or its provinces in connection with their incentive programs could increase the cost of acquiring Canadian programs required to be broadcasted and have a material adverse effect on DHX’s business, financial condition or operating results.

Government directions limit the ownership by non-Canadians of voting shares in Canadian broadcasting undertakings and require Canadian control of such undertakings. For additional information concerning restrictions on ownership of shares and voting shares arising in connection with the application of the Broadcasting Act to DHX refer to “Description of Capital Structure” above. Any failure to comply with such limits could result in the loss of the broadcast licences held by DHX Television. In October 2014 DHX effected the Share Capital Reorganization in order to address this risk concerning Canadian ownership and control of broadcast undertakings. Additional details concerning DHX’s capital structure can be found above under the heading “Description of the Share Capital”. The Company additionally monitors the level of non-Canadian ownership of its Shares pursuant to its special operating procedures for monitoring share ownership discussed below under “Description of Capital Structure – Restrictions on Non-Canadian Ownership”. The CRTC has not reviewed or approved DHX’s share capital structure and there can be no assurance that the level of non-Canadian ownership of DHX’s shares will be deemed to be within acceptable limits for the purposes of the Broadcasting Act.

DHX’s television operations rely upon licenses granted under the Copyright Act (Canada) (the “Copyright Act”) in order to make use of the music components of the programming distributed by these undertakings. Under these licenses, DHX is required to pay royalties, established by the Copyright Board of Canada pursuant to the requirements of the Copyright Act, to collecting societies that represent the copyright owners of such music components. The levels of the royalty payable by DHX are subject to change upon application by the collecting societies and approval by the Copyright Board. The Government of Canada may, from time to time, make amendments to the Copyright Act. Amendments to the Copyright Act could result in DHX being required to pay different levels of royalties for these licenses.

Changes in laws or regulations or in how they are interpreted, and the adoption of new laws or regulations, could negatively affect DHX. Management constantly monitors the regulatory environment to identify risks and opportunities resulting from any changes.

Technological changes in broadcasting may increase audience fragmentation, decrease the number of subscribers to the Company’s services, reduce the Company’s television ratings and have an adverse effect on revenues.

With respect to the DHX Television Business, products issued from new or alternative technologies, may include, among other things: TVOD, SVOD, Personal Video Recorders, Mobile Television, Internet Protocol TV and Internet television. Additionally, devices like smartphones and tablets are creating consumer demand for mobile/portable content. Also, there has been growth of OTT content delivery through the implementation of game systems and other consumer electronic devices (including TV sets themselves) that enable broadband delivery of content providing increased flexibility for consumers to view high quality audio/video in the “living room”. These technologies may increase audience fragmentation, decrease the number of subscribers to the Company’s services, reduce the Company’s television ratings and have an adverse effect on revenues.

The maintenance and growth of the Company’s subscriber bases is dependent upon the ability of BDUs to deploy and expand their digital technologies, their marketing efforts and the packaging of their services’ offerings, as well as upon the willingness of subscribers to adopt and pay for the services.

Subscription revenues are dependent on the number of subscribers and the wholesale rate billed by DHX Television to BDUs for carriage of the individual services. The extent to which the Company’s subscriber bases will be maintained or grow is uncertain and is dependent upon the ability of BDUs to deploy and expand their digital technologies, their marketing efforts and the packaging of their services’ offerings, as well as upon the willingness of subscribers to adopt and pay for the services.

DHX Television’s broadcast signals are subject to illegal interception and as a result, potential revenue loss. An increase in the number of illegal receivers in Canadian homes could adversely impact the Company’s existing revenues and inhibit its capacity to grow its subscriber base.

Licences granted by the CRTC to other licencees, the emergence of new indirect and unregulated competitors, and competition for popular quality programming all increase the Company’s competition for viewers, listeners, programming and advertising dollars.

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The CRTC issues new licences for a variety of services on a constant basis. Competitive licences granted to other licencees increase the competition for viewers, listeners, programming and advertising dollars. The Commission has revised its policies regarding genre protection for Category A services based on its Let’s Talk TV review conducted in the 2014-15 broadcast year, which could result in increased competition, particularly in relation to Family Channel.

In recent years, the previous owner of the DHX Television Business launched a number of digital television specialty services and new programming channels, and was able to limit the impact of competition by delivering strong programming and strengthening its brands. DHX Television additionally faces the emergence of new indirect and unregulated competitors such as personal video recorders, mobile television, Internet Protocol TV, Internet television, satellite radio, cell phone radio, OTT content, tablets, smartphones, and mobile media players.

Quality programming is a key factor driving the success of DHX’s television services. Increasing competition for popular quality programming can cause prohibitive cost increases that may prevent DHX from renewing supply agreements for specific popular programs or contracts for on-air personalities.

During an economic downturn, there can be no assurance that the Company’s broadcast licences and goodwill value would not be adversely affected following changes in assumptions used to support the discounted future cash flows calculated by DHX to assess the fair value.

As disclosed in the notes to the audited consolidated financial statements for the year ended June 30, 2018, the broadcast licences and goodwill are not amortized but are tested for impairment annually, or more frequently if events or circumstances indicate that it is more likely than not that the broadcast licences and/or goodwill value might be impaired. The fair value of broadcast licences and goodwill is and will continue to be influenced by assumptions, based on prevailing general economic conditions, used to support the discounted future cash flows calculated by DHX to assess the fair value of its broadcast licences and goodwill. During an economic downturn, there can be no assurance that DHX’s broadcast licences and goodwill value would not be adversely affected following changes in such assumptions. DHX monitors the value of its broadcasts licences and goodwill on an ongoing basis and any changes to their fair value would be recognized as a non-cash impairment charge on the consolidated statements of earnings.

As television broadcasting is a relatively new business for the Company, it may be less successful in implementing its business strategy than a more seasoned broadcasting entity.

Television broadcasting is a relatively new business for the Company. Although the Company expects to benefit from the experience that its management team has gained while working in the television industry, and the strong management team at DHX (including those managers that have transitioned to DHX in connection with the completion of the acquisition of DHX Television), the Company may be less successful in implementing its business strategy than a more seasoned broadcasting entity. As a result, DHX may experience significant fluctuations in its operating results and rate of growth, which may vary from those projected by management. In addition, the forward-looking statements contained in this Annual Information Form and Management Discussion and Analysis of the Company for the year ended June 30, 2018 about expected future operating results are subject to uncertainties that are due, in part, to DHX’s lack of an operating history in the broadcasting industry. No assurance can be given that DHX will be successful in implementing its business strategy or that it will achieve expected future operating results which could have a material adverse effect on the Company’s cash flows, financial condition or results of operations.

DIVIDENDS AND DISTRIBUTIONS

Holders of Common Voting Shares and Variable Voting Shares of the Company (“Shareholders”) are entitled, subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares of the Company, to receive dividends if, as and when declared by the Board of the Company. The Common Voting Shares and the Variable Voting Shares rank equally as to dividends on a share-for-share basis. The Company may pay a dividend in money or property or by issuing fully paid shares. However, the Company may not declare or pay a dividend if there are reasonable grounds to believe that (a) the Company is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of the Company’s assets would thereby be less than the aggregate of its liabilities and stated capital of all classes. See “Risk Factors”.

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The dividend policy of the Company undergoes a periodic review by the Board of the Company and is subject to change at any time depending upon the earnings of the Company, its financial requirements and other factors existing at the time. On February 13, 2013, the Board approved a dividend policy for the payment of a regular quarterly dividend. Concurrently with the filing of this Annual Information Form, the Company announced that it has suspended its dividend.

Pursuant to subsection 89(14) of the Income Tax Act (Canada) (“ITA”) each dividend paid by DHX on or after June 14, 2013 qualified as an eligible dividend for Canadian income tax purposes, as defined in subsection 89(1) of the ITA.

DHX’s history on dividend payments is as follows. All amounts represent pre-tax dividend amounts in Canadian dollars. The gap in dividend payment between June and October is due to the timing of release of the Company’s annual financial statements which are due 90 days from year end, while quarterly financials are due 45 days from each quarter end. Dividends paid prior to October 15, 2014 were paid in respect of the Company’s Common Shares and dividends paid following such date were paid in respect of the Company’s Common Voting Shares and Variable Voting Shares:

Dividend Payment History
Record Date	Payment Date		Amount
May 25, 2018		June 22, 2018	$	0.020
February 23, 2018		March 12, 2018	$	0.020
September 27, 2017		October 25, 2017	$	0.020
November 28, 2017		December 18, 2017	$	0.020
May 26, 2017		June 20, 2017	$	0.019
February 24, 2017		March 17, 2017	$	0.019
November 29, 2016		December 16, 2016	$	0.018
October 11, 2016		October 21, 2016	$	0.018
May 30, 2016		June 20, 2016	$	0.016
February 26, 2016		March 21, 2016	$	0.016
December 4, 2015		December 29, 2015	$	0.015
October 8, 2015		October 16, 2015	$	0.015

DESCRIPTION OF CAPITAL STRUCTURE

The authorized share capital of the Company is comprised of an unlimited number of preferred variable voting shares (the “PVV Shares”), an unlimited number of Common Voting Shares, an unlimited number of Variable Voting Shares and an unlimited number of Non-Voting Shares. As of June 30, 2018, there were a total of 100,000,000 PVV Shares, 134,293,890 Common and Variable Voting Shares and no Non-Voting Shares outstanding. As of June 30, 2018, there was a total of $140,000,000 aggregate principal amount of Convertible Debentures outstanding.

Overview

The following description refers only to the Company’s share capital and not to any of its subsidiaries. The Company’s share capital is authorized under and subject to applicable provisions of the CBCA. Any amendment to the Company’s authorized share capital, or any other provision of its Articles of Continuance, as amended by the Articles of Amendment and as may be further amended from time to time, is subject to shareholder approval as required by the CBCA. For a more detailed description of the Company’s share capital, refer to the provisions of the Articles of Continuance, as amended by the Articles of Amendment and as may be further amended from time to time.

At February 12, 2004, the date of its incorporation, the Company’s authorized share capital was 1,000,000 Common Shares. On April 19, 2004, the Company’s authorized share capital was increased to 100,000,000 Common Shares. On June 6, 2005, the Company’s authorized share capital was amended to convert 10,000,000 authorized Common Shares into 10,000,000 authorized class A preferred shares. On May 12, 2006, the Company amended its authorized share capital to create an unlimited number of Common Shares. At the same time the Company was authorized by its shareholders to automatically convert the

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class A preferred shares into Common Shares at the completion of the Company’s initial Public Offering on May 19, 2006. On May 12, 2006, the Company amended its Articles of Continuance to create a new class of shares designated as preferred variable voting shares, with an authorized capital of an unlimited number of shares. The PVV Shares do not have nominal or par value and all of the PVV Shares are fully paid-up.

Effective as of October 6, 2014, DHX’s Articles of Continuance were amended in accordance with the Articles of Amendment approved at a special meeting of shareholders on September 30, 2014. Pursuant to the Articles of Amendment, DHX’s share capital structure was reorganized in order to address concerns relating to Canadian ownership and control arising as a result of its indirect ownership of the DHX Television Business. The Share Capital Reorganization resulted in the creation of three new classes of shares, the Common Voting Shares, the Variable Voting Shares, and the Non-Voting Shares. Each outstanding Common Share of DHX which was not owned and controlled by a Canadian for the purposes of the Broadcasting Act was converted into one Variable Voting Share and each outstanding Common Shares which was owned and controlled by a Canadian for the purposes of the Broadcasting Act was converted into one Common Voting Share. For additional information refer to the management information circular and proxy statement dated September 3, 2014, prepared in connection with the Company’s special meeting of shareholders held on September 30, 2014, which is on file at www.sedar.com and attached as an exhibit to the Company’s registration statement on Form 40-F filed with the SEC at www.sec.gov, and “Common Voting Shares, Variable Voting Shares, and Non-Voting Shares” in this section below.

The Company may, by special resolution of its shareholders, amend its articles to: change any maximum number of shares that the Company is authorized to issue; create new classes of shares; reduce or increase its stated capital, if its stated capital is set out in the articles; change the designation of all or any of its shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued; change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series; divide or authorize the directors (or revoke, diminish or enlarge such authority) to divide a class of shares, whether issued or unissued, into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof; authorize the directors (or revoke, diminish or enlarge such authority) to change the rights, privileges, restrictions and conditions attached to unissued shares of any series; add, change or remove restrictions on the issue, transfer or ownership of shares; or add, change or remove any other provision that is permitted by the CBCA to be set out in the articles.

The holders of shares of a class are entitled to vote separately as a class on a proposal to amend the Company’s articles to: effect an exchange, reclassification or cancellation of all or part of the shares of such class; add, change or remove the rights, privileges, restrictions or conditions attached to the shares of such class; increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of such class; make any class of shares having rights or privileges inferior to the shares of such class equal or superior to the shares of such class; effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of such class; or constrain the issue, transfer or ownership of the shares of such class or change or remove such constraint. Additionally, the holders of shares of a class, except the holders of Common Voting Shares or Variable Voting Shares of the Company pursuant to the Company’s articles, are entitled to vote separately as a class on a proposal to amend the Company’s articles to: increase or decrease any maximum number of authorized shares of such class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of such class; or create a new class of shares equal or superior to the shares of such class. The holders of shares of a series are entitled to vote separately as a series on any of the foregoing proposals if such series is affected by an amendment in a manner different from other shares of the same class.

Under the By-Laws, annual meetings must be held not later than 15 months after holding the last preceding annual meeting but no later than six months after the end of the Company’s preceding financial year. The annual meeting of shareholders is held for the purpose of considering the financial statements and reports required by the CBCA to be placed before the annual meeting, electing directors, appointing an auditor and for the transaction of such other business as may properly be brought before the meeting. The Board of the Company may call a special meeting of shareholders at any time. Annual or special meetings may be held at the registered office of the Company or elsewhere in Canada if the Company’s Board so determines. Under the By-Laws, meetings of shareholders require 21 days’ notice of such meetings. Under the CBCA, the holders of not less than 5% of the issued shares of the Company that carry the right to vote at a meeting sought to be held may requisition the Board to call a meeting of shareholders for the purposes stated in the requisition. If the directors of the Company do not proceed to call a meeting within 21 days from the date they receive the requisition, any shareholder who signed the requisition may call the meeting. The accidental omission to give notice to a shareholder, the non-receipt of a notice by a shareholder, or any error in any notice not affecting the substance thereof, does not invalidate any action taken at any meeting held pursuant to such notice. Not less than two persons holding or representing by proxy not less than 33 1/3% of the issued and outstanding shares of the Company entitled to vote at a meeting constitute a quorum for such meeting. Subject to the CBCA, a question at a meeting of shareholders shall

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be decided by show of hands unless a ballot thereon is required by the chair of the meeting or demanded by any person who is present and entitled to vote on such question at the meeting. Unless a ballot is so demanded, a declaration by the chair of the meeting that the vote upon the question has been carried or carried by a particular majority or defeated and an entry to that effect in the minutes of the meeting shall be prima facie proof of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other proceeding in respect of the question, and the result of the vote so taken shall be the decision of the shareholders upon the question. In the case of an equality of votes either upon a show of hands or upon a poll, the chair of the meeting is not entitled to a second or casting vote.

A person or company (and any director or officer of such company) who beneficially owns, directly or indirectly, or exercises control or direction over, securities of the Company (such as Common Voting Shares or Variable Voting Shares) carrying 10% or more of votes attached to all securities of the Company is, like directors and officers of the Company, considered an “insider” of the Company. Insiders of the Company are subject to requirements under securities legislation in Canadian jurisdictions to report trades of shares and each acquisition of 2% or more of additional voting securities of the Company, each disposition of 2% or more of voting securities of the Company, and any decrease in ownership of voting securities of the Company that results in the insider’s ownership falling below the 10% threshold.

Restrictions on Non-Canadian Ownership

The legal requirements relating to Canadian ownership and control of broadcasting undertakings are embodied in the Direction from the Governor in Council (i.e. Cabinet of the Canadian federal government) to the CRTC pursuant to authority contained in the Broadcasting Act. Under the Direction, non-Canadians are permitted to own and control, directly or indirectly, up to 33 1/3% of the voting shares and 33 1/3% of the votes of a holding company which has a wholly owned subsidiary operating company licenced under the Broadcasting Act. This restriction applies to the Company because it has a wholly owned subsidiary operating the DHX Television Business. The Direction also provides that the Chief Executive Officer and 80% of the members of the board of directors of a licencee that is a corporation, such as DHX’s licenced subsidiary operating company, must be resident Canadian citizens. There are no explicit restrictions on the number of non-voting shares that may be held by non-Canadians at either the holding company or licencee level, but the Direction does not allow the licencee to be controlled by non-Canadians as a question of fact, and the level of ownership of Non-Voting Shares and of total equity is relevant to the analysis of control.

For the purposes of these regulations, “Canadian” means, among other things: (i) a Canadian citizen who is ordinarily resident in Canada; (ii) a permanent resident of Canada who is ordinarily resident in Canada and has been so for more than one year after the date he or she was eligible to apply for Canadian citizenship; (iii) a corporation with not less than 66 2/3% of the issued and outstanding voting shares of which are beneficially owned and controlled by Canadians and which is not otherwise controlled in fact by non-Canadians; or (iv) a pension fund society the majority of whose members of its board of directors are individual Canadians, and that is established under applicable federal legislation or any provincial legislation relating to the establishment of pension fund societies.

As described below, Variable Voting Shares may only be owned or controlled by non-Canadians, and the Common Voting Shares may only be owned and controlled by Canadians. DHX has adopted special operating procedures for monitoring share ownership and ensuring that the share register of each class of Shares is up to date at all times which procedures are administered by DHX’s transfer agent and registrar in Canada and the U.S., Computershare Investor Services Inc. and Computershare Trust Company, N.A., respectively. The special operating procedures set out provisions for monitoring Share ownership, such as requiring declarations regarding Share ownership and compliance, including from participants, brokers, and other financial intermediaries on a quarterly basis and in each form of proxy/voting information form used by DHX, as well as provisions for ensuring and enforcing compliance including requiring conversion where there is contravention of ownership requirements. DHX’s special operating procedures for monitoring share ownership are available on its website at www.dhxmedia.com under the Investors-Governance tabs.

Constraints Imposed on Ownership of Shares of DHX to Ensure Canadian Control

Each issued and outstanding Common Voting Share which is not owned or controlled by a Canadian for the purposes of the Broadcasting Act and related regulations converts, automatically and without any further act by the Company, into one Variable Voting Share. Variable Voting Shares carry one vote per share held, except where (i) the number of votes that may be exercised in respect of all issued and outstanding Variable Voting Shares exceeds 33 1/3% of the total number of votes that may be exercised in respect of all issued and outstanding Variable Voting Shares, Common Voting Shares or PVV Shares (or any greater percentage that would qualify the Company as a “Canadian” pursuant to the Broadcasting Act or any regulation made thereunder) or (ii) the total number of votes cast by or on behalf of the holders of Variable Voting Shares at any meeting on any

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matter on which a vote is to be taken exceeds 33 1/3% (or any greater percentage that would qualify the Company as a “Canadian” pursuant to the Broadcasting Act or any regulation made thereunder) of the total number of votes that may be cast at such meeting.

If either of the above-noted thresholds is surpassed at any time, the vote attached to each Variable Voting Share will decrease automatically and without further act or formality. Under the circumstances described in clause (i) above, the Variable Voting Shares as a class cannot carry more than 33 1/3% (or any greater percentage that would qualify the Company as a “Canadian” pursuant to the Broadcasting Act or any regulation made thereunder) of the total voting rights attached to the aggregate number of issued and outstanding Variable Voting Shares, Common Voting Shares and PVV Shares of the Company. Under the circumstances described in clause (ii) above, the Variable Voting Shares as a class cannot, for a given meeting of the shareholders of DHX, carry more than 33 1/3% (or any greater percentage that would qualify the Company as a “Canadian” pursuant to the Broadcasting Act or any regulation made thereunder) of the total number of votes that may be cast at such meeting of shareholders. See “Common Voting Shares, Variable Voting Shares, and Non-Voting Shares” in this section below.

The terms ascribed to the Variable Voting Shares by the Articles of Amendment of the Company are intended to ensure that the number of votes owned and controlled by non-Canadians is at all times within the limit permitted under the Direction, the Broadcasting Act and the regulations made thereunder. However, there can be no assurance that such terms will be accepted by the CRTC or other regulatory authorities as being effective for this purpose.

Common Voting Shares, Variable Voting Shares, and Non-Voting Shares

Voting

The holders of Common Voting Shares will be entitled to receive notice of, and to attend and vote at all meetings of the Shareholders, except those at which holders of a specific class are entitled to vote separately as a class under the CBCA. Each Common Voting Share shall confer the right to one vote at all meetings of the Company's Shareholders.

The holders of Variable Voting Shares will be entitled to receive notice of, to attend and vote at all meetings of the Shareholders, except those at which the holders of a specific class are entitled to vote separately as a class under the CBCA.

Variable Voting Shares will carry one vote per share held, except where (i) the number of votes that may be exercised in respect of all issued and outstanding Variable Voting Shares exceeds 33 1/3% of the total number of votes that may be exercised in respect of all issued and outstanding Variable Voting Shares, Common Voting Shares and PVV Shares (or any greater percentage that would qualify the Company as a "Canadian" pursuant to the Broadcasting Act or in any regulation or direction made thereunder), or (ii) the total number of votes cast by or on behalf of the holders of Variable Voting Shares at any meeting on any matter on which a vote is to be taken exceeds 33 1/3% (or any greater percentage that would qualify the Company as a "Canadian" pursuant to the Broadcasting Act or in any regulation or direction made thereunder) of the total number of votes that may be cast at such meeting.

If either of the above-noted thresholds is surpassed at any time, the vote attached to each Variable Voting Share will decrease automatically without further act or formality. Under the circumstances described in clause (i) of the paragraph above, the Variable Voting Shares as a class cannot carry more than 33 1/3% (or any greater percentage that would qualify the Company as a "Canadian" pursuant to the Broadcasting Act or in any regulation or direction made thereunder) of the total voting rights attached to the aggregate number of issued and outstanding Variable Voting Shares, Common Voting Shares and PVV Shares of the Company. Under the circumstances described in clause (ii) of the paragraph above, the Variable Voting Shares as a class cannot, for a given Shareholders' meeting, carry more than 33 1/3% (or any greater percentage that would qualify the Company as a "Canadian" pursuant to the Broadcasting Act or in any regulation or direction made thereunder) of the total number of votes that may be cast at the meeting.

The holders of Non-Voting Shares will not be entitled to receive notice of, or to attend and vote at meetings of the Shareholders, except those at which holders of Non-Voting Shares are entitled to vote separately as a class under the CBCA. Each Non-Voting Share shall confer the right to one vote at any such meetings of the holders of Non-Voting Shares only.

Dividends

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Subject to the rights, privileges, restrictions and conditions attached to any other class of the Company shares ranking prior to the Variable Voting Shares, the holders of Common Voting Shares and the holders of Variable Voting Shares are entitled to receive any dividends that are declared by the Company's Board at the times and for the amounts that the Board may, from time to time, determine. The Common Voting Shares, the Variable Voting Shares and the Non-Voting Shares shall rank equally as to dividends on a share-for-share basis. All dividends shall be declared in equal or equivalent amounts per share on all Common Voting Shares, Variable Voting Shares and Non-Voting Shares then outstanding, without preference or distinction.

Subdivision or Consolidation

No subdivision or consolidation of the Common Voting Shares, the Variable Voting Shares or the Non-Voting Shares shall occur unless simultaneously, the shares of the other two classes are subdivided or consolidated in the same manner so as to maintain and preserve the relative rights of the holders of each of these classes of shares.

Rights in the Case of Liquidation, Winding-Up or Dissolution

Subject to the rights, privileges, restrictions and conditions attached to the other classes of shares of the Company ranking prior to the Common Voting Shares, the Variable Voting Shares or the Non-Voting Shares, in the case of liquidation, dissolution or winding-up of the Company, the holders of Common Voting Shares, Variable Voting Shares and Non-Voting Shares shall be entitled to receive the Company's remaining property and shall be entitled to share equally, share for share, in all distributions of such assets.

Conversion

Each issued and outstanding Common Voting Share shall be converted into one Variable Voting Share, automatically and without any further act of the Company or the holder, if such Common Voting Share is or becomes owned or controlled by a person who is not a Canadian.

Each issued and outstanding Variable Voting Share shall be automatically converted into one Common Voting Share, without any further intervention on the part of the Company or the holder, if (i) the Variable Voting Share is or becomes owned and controlled by a Canadian; or if (ii) the provisions contained in or promulgated under the Broadcasting Act relating to foreign ownership restrictions are repealed and not replaced with other similar provisions in applicable legislation.

In the event that an offer is made to purchase Variable Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Variable Voting Shares are then listed, to be made to all or substantially all the holders of Variable Voting Shares, each Common Voting Share shall become convertible at the option of the holder into one Variable Voting Share at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Common Voting Shares for the purpose of depositing the resulting Variable Voting Shares pursuant to the offer, and for no other reason, including notably with respect to voting rights attached thereto, which are deemed to remain subject to the provisions concerning the voting rights for Common Voting Shares notwithstanding their conversion. In such event, the Company's transfer agent shall deposit the resulting Variable Voting Shares on behalf of the holder.

Should the Variable Voting Shares issued upon conversion and tendered in response to the offer be withdrawn by the Shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Variable Voting Shares resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Company or on the part of the holder, to Common Voting Shares.

In the event that an offer is made to purchase Common Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Common Voting Shares are then listed, to be made to all or substantially all the holders of Common Voting Shares in a given province of Canada to which these requirements apply, each Variable Voting Share shall become convertible at the option of the holder into one Common Voting Share at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Variable Voting Shares for the purpose of depositing the resulting Common Voting Shares pursuant to the offer, and for no other reason, including notably with respect to voting rights attached thereto, which are deemed to remain subject to the provisions concerning voting rights for Variable Voting Shares notwithstanding their conversion. In such event, the Company's transfer agent shall deposit the resulting Common Voting Shares on behalf of the holder.

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Should the Common Voting Shares issued upon conversion and tendered in response to the offer be withdrawn by Shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Common Voting Shares resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Company or on the part of the holder, into Variable Voting Shares.

In the event that an offer is made to purchase Common Voting Shares or Variable Voting Shares, as the case may be, and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Common Voting Shares or Variable Voting Shares, as the case may be, are then listed, to be made to all or substantially all the holders of Common Voting Shares or Variable Voting Shares, as the case may be, in a province of Canada to which the requirement applies, each Non-Voting Share shall become convertible at the option of the holder into one Common Voting Share or Variable Voting Shares, as the case may be, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Non-Voting Shares for the purpose of depositing the resulting Common Voting Shares or Variable Voting Shares, as the case may be, pursuant to the offer, and for no other reason, including notably with respect to voting rights attached thereto, which are deemed to remain subject to the provisions restricting voting, notwithstanding their conversion. In such event, the Transfer Agent shall deposit the resulting Common Voting Shares or Variable Voting Shares, as the case may be, on behalf of the holder.

Should the Common Voting Shares or Variable Voting Shares, as the case may be, issued upon conversion and tendered in response to the offer be withdrawn by the Shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Common Voting Shares or Variable Voting Shares, as the case may be, resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Company or on the part of the holder, to Non-Voting Shares.

Common Voting Shares, Variable Voting Shares and Non-Voting Shares may not be converted, other than in accordance with the conversion procedure set out in the Company's Articles of Amendment.

Constraints on Share Ownership

Variable Voting Shares may only be owned or controlled by non-Canadians. The Common Voting Shares may only be owned and controlled by Canadians.

Preferred Variable Voting Shares

The votes attached to the PVV Shares as a class are automatically adjusted so that they, together with the votes attached to the shares of the Company that are owned by Canadians (as determined based on inquiries the Company has made of the holders of Shares and depositary interests), equal 55% of the votes attached to all shares in the capital of the Company. The votes attached to the PVV Shares as a class are, in aggregate, not less than 1% of the votes attached to all shares in the capital of the Company. The PVV Shares are not listed on any stock exchange.

The votes attached to the PVV Shares as a class are determined based on the level of Canadian ownership of Shares ascertained through the Company’s monitoring process undertaken pursuant to its special operating procedures for monitoring share ownership described in this section above under “Restrictions on Non-Canadian Ownership”. The votes attached to the PVV Shares as a class are determined once the level of Canadian ownership of Shares has been established through this monitoring process.

The Board of the Company will not approve or compel a transfer to a person that is not a current officer of the Company and a Resident Canadian (as defined in the CBCA), and it is the current intention of the Company’s Board that all of the PVV Shares be held by the individual that holds the position of Chief Executive Officer of the Company from time to time. The Company issued 100,000,000 PVV Shares to the Company’s former Chief Executive Officer, now Executive Chairman, Michael Donovan, who entered into a Preferred Variable Voting Shareholders Agreement (the “PVVS Agreement”) with the Company on May 12, 2006 (the same date as the issuance). On November 12, 2014, in accordance with the Board’s intentions with respect to PVV Share ownership, the issued and outstanding PVV Shares were transferred by DHX’s Executive Chairman and CEO, Michael Donovan, to DHX’s former Chief Executive Officer, Dana Landry in accordance with the terms of the PVVS Agreement. In connection with the Company’s management changes in fiscal 2018, on May 14, 2018, the issued and outstanding PVV Shares were transferred back to Mr. Donovan.

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Pursuant to the PVVS Agreement any individual that becomes a holder of PVV Shares of the Company (i) agrees not to transfer PVV Shares, in whole or in part, except with the prior written approval of the Board of the Company, (ii) grants to the Company the unilateral right to compel the transfer of the PVV Shares, at any time and from time to time, in whole or in part, to a person designated by the Board and (iii) grants to the Company a power of attorney to effect any transfers contemplated by the PVVS Agreement. The board of directors of the Company will not approve or compel a transfer without first obtaining the approval of the TSX and the PVVS Agreement cannot be amended, waived or terminated unless approved by the TSX. In determining whether to approve or compel a transfer, the Board will act in the best interests of the Company in order to enable the Company to be eligible for tax credits or government incentives. Pursuant to the PVVS Agreement, the consideration received as a result of the transfer of PVV Shares cannot exceed one/one millionth of a cent per share. Under the terms of the PVV Shares, transfers of the shares will be restricted to Resident Canadians (as defined in the CBCA).

The PVV Shares are redeemable at the option of the Company for one/one millionth of a cent per share and, in the event of the liquidation, dissolution or other distribution of the Company’s assets for the purpose of winding up of the Company’s affairs, holders of PVV Shares are entitled to one/one millionth of a cent per share in priority to holders of Shares, but have no further rights. PVV Shares will not be entitled to receive dividends. The terms of the PVV Shares and the PVVS Agreement contain a coattail provision which prevents a holder of PVV Shares from accepting an offer to purchase all or part of the holder’s shares unless the party making the offer also offers to purchaser, by way of a take-over bid, all of the outstanding Shares at a price per Share and on other terms and conditions as are approved by the Company’s Board.

Convertible Debentures

The following is a summary of the material attributes and characteristics of the Convertible Debentures. This summary does not purport to be complete and is subject to, and qualified in its entirety by, reference to the terms of the convertible debenture indenture entered into between the Company and Computershare Trust Company of Canada, as debenture trustee (the “Debenture Trustee”), on May 31, 2017 (the “DebentureIndenture”) which has been filed on SEDAR at www.sedar.com and with the SEC at www.sec.gov.

The Convertible Debentures were issued under the Debenture Indenture upon the deemed exercise of the Special Warrants on the Deemed Exercise Date. The maximum aggregate principal amount of Convertible Debentures authorized to be issued under the Debenture Indenture is $140,000,000, being the maximum aggregate principal amount issuable upon the exercise of the 140,000 Special Warrants outstanding. The Convertible Debentures are designated as “5.875% Convertible Unsecured Subordinated Debentures”. The Convertible Debentures are dated as of their date of issue in denominations of $1,000 and integral multiples thereof.

The Convertible Debentures bear interest at an annual rate of 5.875%, payable in semi-annual payments in arrears on the last day of September and March each year (or the immediately following business day if any interest payment date would not be a business day) commencing on September 30, 2017, provided that the interest paid on September 30, 2017, was calculated as if the Convertible Debentures had been issued on the closing date of the Subscription Receipt Offering on May 31, 2017. The maturity date for the Convertible Debentures is September 30, 2024 (the “Maturity Date”).

Each Debenture is convertible at the holder’s option into Shares, at any time prior to the close of business on the earliest of (i) the business day immediately preceding the Maturity Date; (ii) if called for redemption, the business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures; and (iii) if an offer to purchase is made pursuant to a change of control, the business day immediately preceding the specified repurchase date, at a conversion price of $8.00 per Share (the “Conversion Price”), representing a conversion rate calculated by dividing $1,000 principal amount of the Convertible Debentures, by the Conversion Price or, in the event of a cash change of control, the applicable conversion price as determined in accordance with the Debenture Indenture. The Conversion Price is subject to adjustment in certain events in accordance with the terms and conditions of the Debenture Indenture. Holders converting their Convertible Debentures will receive accrued and unpaid interest thereon for the period from the last interest payment date to, but excluding, the date of conversion. Upon conversion, the Company will have the right to settle the conversion in cash (or a combination of cash and Shares) in lieu of Shares unless such holder has expressly indicated in the applicable conversion notice that it does not wish to receive cash in lieu of Shares.

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The Convertible Debentures may not be redeemed by the Company prior to September 30, 2020, except in the event of the satisfaction of certain conditions after a change of control. On or after September 30, 2020 and prior to September 30, 2024, the Convertible Debentures may be redeemed by the Company, in whole or in part from time to time, at a price equal to the principal amount of the Convertible Debentures plus accrued and unpaid interest thereon, if any, up to, but excluding, the date of redemption on not more than 60 days’ and not less than 30 days’ prior written notice, provided that the current market price as determined in accordance with the Debenture Indenture on the date on which notice of redemption is given exceeds 135% of the Conversion Price.

Subject to any required regulatory approvals and provided that no event of default has occurred and is continuing, the Company may, at its option, elect to satisfy its obligation to pay, in whole or in part, the principal amount of the Convertible Debentures that are to be redeemed or that have matured on the Maturity Date, on not more than 60 days’ and not less than 30 days’ prior notice, by issuing that number of freely-tradeable Shares obtained by dividing the principal amount of the Convertible Debentures that are to be redeemed or that have matured, as the case may be, by 95% of the current market price as determined in accordance with the Debenture Indenture on the date fixed for redemption or the Maturity Date, as applicable.

The Convertible Debentures are direct, subordinated, unsecured obligations of the Company and will rank equally with one another and subordinate to all senior indebtedness of the Company. The Debenture Indenture does not restrict the Company or its subsidiaries from incurring additional indebtedness or from mortgaging, pledging or charging its properties to secure any indebtedness or liabilities. The Debenture Indenture provides that in the event of any dissolution, winding-up, liquidation, bankruptcy, insolvency, receivership, creditor enforcement or realization or other similar proceedings relating to the Company or any of its property, or any marshalling of the assets and liabilities of the Company, then holders of senior indebtedness will receive payment in full before the holders of Convertible Debentures will be entitled to receive any payment or distribution of any kind or character, whether in cash, property or securities, which may be payable or deliverable in any such event in respect of any of the Convertible Debentures or any unpaid interest accrued thereon. The Debenture Indenture also provides that the Company will not make any payment, and the holders of the Convertible Debentures will not be entitled to demand, accelerate, institute proceedings for the collection of, or receive any payment or benefit (including without limitation by set-off, combination of accounts or otherwise in any manner whatsoever) on account of the Convertible Debentures if a default or event of default with respect to or under any senior indebtedness permitting acceleration of the same has occurred and is continuing.

The rights of the holders of the Convertible Debentures may be modified in accordance with the terms of the Debenture Indenture. For that purpose, among others, the Debenture Indenture contains certain provisions which will make extraordinary resolutions binding on all holders of Convertible Debentures. Under the Debenture Indenture, the Debenture Trustee will have the right to make certain amendments to the Debenture Indenture in its discretion, without the consent of the holders of Convertible Debentures.

The Debenture Indenture also includes customary provisions dealing with events of default of the Company and other terms and conditions typical of an agreement of such nature.

Exemption from Take-Over Bid and Early Warning Reporting Requirements

On September 14, 2015, DHX received an exemption to treat DHX’s Common Voting Shares and Variable Voting Shares as a single class for the purposes of applicable take-over bid and related early warning reporting requirements under Canadian securities laws. As noted elsewhere herein, DHX’s dual class share capital structure was implemented solely to ensure compliance with the Canadian ownership rules under the Broadcasting Act which DHX became subject to upon acquiring DHX Television.

Pursuant to an application by DHX, the securities regulatory authorities in each of the provinces of Canada granted exemptive relief (the “Decision”) from (i) applicable take-over bid requirements, such that those requirements would only apply to an offer to acquire 20 per cent or more of the outstanding Variable Voting Shares and Common Voting Shares of DHX on a combined basis and (ii) applicable early warning reporting requirements, such that those requirements would only apply to an acquirer who acquires or holds beneficial ownership of, or control or direction over, 10 per cent or more of the outstanding Variable Voting Shares and Common Voting Shares of DHX on a combined basis (or 5 per cent in the case of acquisitions during a take-over bid). Without the exemptive relief, shareholders were subject to these requirements based on the number of Shares outstanding solely of the class held by the shareholder a number that can vary without notice due to automatic conversions, and which is in some respects not indicative of the Shareholder’s real ownership level. A copy of the Decision is available on SEDAR at www.sedar.com.

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The Decision takes into account the fact that the Common Voting Shares and Variable Voting Shares have identical terms except for the foreign ownership voting limitations applicable to the Variable Voting Shares. The Decision also takes into account the automatic conversion feature of DHX’s dual class share structure, whereby, although an investor may acquire either class of Shares, the class of shares ultimately held by an investor is a function of the investor’s Canadian or non-Canadian status. As a result, the number of Shares outstanding in each class varies while the aggregate number of Shares of both classes remains unchanged, giving Shareholders little certainty as to the number of Shares outstanding in each class at any given time. The Decision also acknowledges that there may be from time to time a significantly smaller public float and a significantly smaller trading volume of Variable Voting Shares (compared to the public float and trading volume of Common Voting Shares). Together, these considerations make it more difficult for investors, particularly non-Canadian investors to acquire Shares of DHX in the ordinary course without the apprehension of inadvertently triggering the takeover bid rules and early warning requirements (considering the application of such rules to the acquisition of shares of a class) and could potentially restrict the interest of non-Canadian investors in DHX’s Shares for reasons unrelated to their investment objectives.

RATINGS

The following table sets forth the ratings assigned to DHX’s Senior Credit Facilities obtained during its fiscal year ended June 30, 2018:

Rating Agency	Rating
Standard & Poor’s Financial Services LLC (“S&P”)1	B
Moody’s Investors Service, Inc. (“Moody’s”)2	B2
Fitch Ratings, Inc. (“Fitch”)3	BB+/RR1

_________________________________

¹ S&P rates by categories ranging from “AAA” to “SD” and “D”, which represents the range from highest to lowest quality of such securities rated. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions. An obligation rated “B” is characterized by S&P as more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation. In addition, S&P may add a rating outlook of “positive”, “negative”, “stable” or “developing”, which assess the likely direction of an issuer’s rating over the medium term. The “B” category is the sixth highest of the ten available categories.

² Moody’s uses nine rating categories, which range from Aaa to C. Moody’s appends numerical modifiers from one to three on its long-term debt ratings from Aa to Caa to indicate where the obligation ranks within a particular ranking category, with the 2 modifier indicating a mid-range ranking. Obligations rated B are considered speculative and are subject to high credit risk. The B rating assigned by Moody’s is the sixth highest rating of the nine available categories.

³ Fitch ratings of individual securities or financial obligations of a corporate issuer address relative vulnerability to default on an ordinal scale. The modifiers + or - may be appended to a rating to denote relative status within major rating categories. Such suffixes are added to obligation rating categories, or to corporate finance obligation ratings between AA and CCC. A rating of BB is denoted as “Speculative” and indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met. The BB rating assigned by Fitch is the fifth highest rating of nine available categories. Recovery ratings (RR) are assigned by Fitch most frequently for individual obligations of corporate finance issuers with ratings in speculative grade categories and are an ordinal scale based on the expected relative recovery characteristics of an obligation upon the curing of a default, emergence from insolvency or following the liquidation or termination of the obligor or its associated collateral. A rating of RR1 is the highest rating of six categories and indicates characteristics consistent with securities historically recovering 91%–100% of current principal and related interest.

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Credit ratings are intended to provide investors with an independent measure of the credit quality of an issuer of securities. The credit ratings accorded to the Company are not recommendations to purchase, hold or sell any of the Company’s securities inasmuch as such ratings are not a comment upon the market price of any such securities or their suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant. Over the past year, DHX has paid the rating agencies S&P, Moody’s and Fitch to assign ratings to DHX’s Senior Credit Facilities.

Over the past year, DHX has paid the rating agencies S&P, Moody’s and Fitch to assign ratings for DHX in connection with its Senior Credit Facilities. For a description of certain risks related to the Company’s indebtedness refer to “Risk Factors”.

MARKET FOR SECURITIES

Trading Price and Volume

The Common Voting Shares and Variable Voting Shares were listed and posted for trading on the TSX under the symbols “DHX.B” and “DHX.A”, respectively, during the Company’s fiscal 2018 until May 31, 2018. Effective, May 31, 2018, the Common Voting Shares and Variable Voting Shares began trading on the TSX under a single trading symbol, “DHX”. The following table sets forth information relating to the trading of the Common Voting Shares and Variable Voting Shares on the TSX for the year ended June 30, 2018:

Common Voting Shares (DHX.B)

Date	High ($)	Low ($)	Trading Volume
July, 2017	6.53	5.62	4,235,952
August, 2017	7.00	6.22	4,894,435
September, 2017	7.33	4.75	6,690,283
October, 2017	5.73	3.81	16,498,623
November, 2017	4.37	3.75	7,405,113
December, 2017	4.57	3.75	11,565,120
January, 2018	4.83	4.41	5,790,309
February, 2018	4.89	3.91	4,172,028
March, 2018	4.24	3.74	5,511,919
April, 2018	3.96	3.45	3,075,740
May, 2018	4.27	3.18	5,970,243

_____________________________

Variable Voting Shares (DHX.A)

Date		High ($)		Low ($)		Trading Volume
July, 2017	6.50		5.70		92,693
August, 2017	7.18		6.20		255,020
September, 2017	7.31		4.75		482,815
October, 2017	5.80		3.84		566,040
November, 2017	4.39		3.76		224,786
December, 2017	4.54		3.78		310,004
January, 2018	4.83		4.39		276,343
February, 2018	4.87		3.89		254,152
March, 2018	4.22		3.72		185,872
April, 2018	3.97		3.46		371,872
May, 2018	4.25		3.17		514,282

_____________________________

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Common and Variable Voting Shares (DHX)    

Date		High ($)		Low ($)		Trading Volume
June, 2018	3.52		2.66		5,839,450

The Convertible Debentures were listed and posted for trading on the TSX under the symbol “DHX.DB” effective October 2, 2017. The following table sets forth information relating to the trading of the Convertible Debentures on the TSX for the year ended June 30, 2018:

Date		High ($)		Low ($)		Trading Volume
October, 2017	104.00		92.00		11,751,999
November, 2017	95.00		93.00		5,513,999
December, 2017	96.50		94.25		3,243,000
January, 2018	97.50		95.85		13,114,000
February, 2018	97.00		92.00		5,071,000
March, 2018	93.50		90.00		598,999
April, 2018	92.00		88.00		424,000
May, 2018	91.00		87.22		2,131,999
June, 2018	90.10		88.00		241,000

_____________________________

The Variable Voting Shares were listed and posted for trading on NASDAQ under the symbol “DHXM” during the Company’s fiscal 2018 until May 31, 2018. Effective, May 31, 2018, the Common Voting Shares and Variable Voting Shares began trading on NASDAQ under a single trading symbol, “DHXM”. The following table sets forth information relating to the trading of the Common Voting Shares and Variable Voting Shares on NASDAQ for the year ended June 30, 2018:

Variable Voting Shares (DHXM)

Date	High ($)				Low ($)		Trading Volume
October, 2017		$4.75	$	3.00		2,596,284
November, 2017		$3.55	$	2.95		1,135,623
December, 2017		$3.65	$	2.92		1,026,987
January, 2018		$3.90	$	3.50		676,495
February, 2018		$4.00	$	3.00		651,592
March, 2018		$3.30	$	2.85		1,103,329
April, 2018		$3.15	$	2.70		814,698
May, 2018		$3.30	$	2.49		1,743,640

Common and Variable Voting Shares (DHXM)    

Date	High ($)				Low ($)		Trading Volume
June, 2018		$2.80	$	2.00		1,016,985

Prior Sales

During the most recently completed financial year, other than issuances under its stock option plan and performance share unit plan, the Company did not issue any securities which are not listed or quoted on a marketplace.

SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

The 100,000,000 PVV Shares of the Company issued and outstanding are subject to certain restrictions on transfer as described in more detail above under “Description of Capital Structure – Preferred Variable Voting Shares”.

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Based on the Company’s knowledge, the following chart summarizes the class, number and percentage of the class of the Company’s shares escrowed or subject to a restriction on transfer during the fiscal year ended and as of June 30, 2018:

Class	Number	Percentage of Class
PVV Shares(1)	100,000,000	100%
Special Warrants(2)	140,000	100%

⁽¹⁾ Refer to the description above concerning the PVV Shares.

⁽²⁾ The Special Warrants were not qualified for distribution to the public under applicable Canadian securities laws and were offered on a private placement basis. Accordingly, the transfer or resale of such securities in Canada to, from, or for the benefit or account of any person resident in Canada was subject to restrictions under applicable securities legislation and any resale of the Special Warrants (during the period they were outstanding) would need to have been made in accordance with applicable securities legislation and the Special Warrant Indenture, as applicable. Unless otherwise permitted under securities legislation, a holder of such securities was restricted from trading the applicable securities under such offering until the earlier of (i) the third business day following the filing of the prospectus supplement or the issuance of a receipt for the prospectus in respect of the Convertible Debentures (following automatic conversion of the Special Warrants), and (ii) the date that is four months and one day from the date of the closing of private placement. Refer to “General Development of the Business – Acquisition of Peanuts and Strawberry Shortcake Financing”.

DIRECTORS AND OFFICERS

The Company’s board of directors (the “Board”) is elected at each annual general meeting of shareholders. Additional directors may, within the maximum number permitted by the Articles of Continuance, be appointed by the Board of the Company, provided that the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders. The Company may have as few as three directors, at least two of whom cannot be officers or employees of the Company or its affiliates, and as many as ten directors. A director or officer of the Company must disclose to the Company, in the manner and to the extent provided by the CBCA, any interest that such director or officer has in a material contract or transaction, whether made or proposed, with the Company, if such director or officer (a) is a party to the contract or transaction; (b) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or (c) has a material interest in a party to the contract or transaction. Such a director shall not vote on any resolution to approve the material contact or transaction except as allowed under the CBCA. Directors are paid such remuneration for their services as the Board may from time to time determine. Directors are entitled to be reimbursed for travelling and other expenses properly incurred by them in attending meetings of the Board of the Company or any committee thereof. Subject to the CBCA, the Company will indemnify a director or an officer, a former director or officer, or another individual who acts or acted at the Company’s request as a director or officer, or an individual acting in a similar capacity, of another entity, and their heirs and legal representatives, against all costs and expenses reasonably incurred by the individual in respect of any civil, criminal or other proceeding in which the individual is involved because of that association with the Company, or other entity, if such individual (a) acted honestly and in good faith with a view to the best interests of the Company, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the Company’s request; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful. The Board may from time to time appoint a chair of the Board, a chief executive officer, a president, one or more vice-presidents, a secretary, a treasurer and such other officers as the Board may determine. The Board may from time to time specify the duties of each officer, delegate to him or her powers to manage any business or affairs of the Company (including the power to sub-delegate) and change such duties and powers, all insofar as not prohibited by the CBCA. The Board may, in its discretion, remove any officer of the Company. To the extent not otherwise so specified or delegated, and subject to the CBCA, the duties and powers of the officers of the Company shall be those usually pertaining to their respective offices. The Board has the power to approve offerings of authorized capital. The Board may appoint one or more committees of the Board and, subject to the CBCA, delegate to any such committee any of the powers of the Board.

The Company’s directors and executive officers presently own or exercise direction or control over a total of 5,928,368 Shares which represents approximately 4.41% of the outstanding number of Shares.

The following table sets out, for each of the Company’s directors and executive officers, the person’s name, age, municipality of residence, positions with the Company, principal occupation and, if a director, the day, month and year in which the person became a director. The term of office for each of the directors will expire at the time of the Company’s next annual shareholders meeting. During fiscal 2018, Catherine Tait resigned as a director of the Company effective May 15, 2018.

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Directors and Officers
Name and Municipality of Residence	Age	Offices with the Company	Principal Occupation	Director Since
ELIZABETH JANE BEALE (3),(4),(5) Halifax, Nova Scotia, Canada	67	Director	Corporate Director	November 12, 2014
DAVID CAMERON COLVILLE(2),(3) Halifax, Nova Scotia, Canada	73	Director	President of DC Communications Consulting Ltd.	May 16, 2014
MICHAEL PATRICK DONOVAN(1) Halifax, Nova Scotia, Canada	65	Executive Chairman/Chief Executive Officer and Director	Officer of the Company/ Corporate Director	February 12, 2004
DEBORAH ANN DRISDELL(1),(2) Montreal, Quebec, Canada	55	Director	President of Drisdell Consulting	December 16, 2015
ALAN ROY HIBBEN(3)(5) Toronto, Ontario, Canada	65	Director	Principal of Shakerhill Partners Ltd.	March 23, 2018
D. GEOFFREY MACHUM(2)(4) Halifax, Nova Scotia, Canada	58	Director	Lawyer, Stewart McKelvey	May 16, 2014
ROBERT G. C. SOBEY(2) New Glasgow, Nova Scotia, Canada	51	Director	Corporate Director	December 16, 2010
JONATHAN PATRICK WHITCHER(2)(5) New York, NY, U.S.	39	Director	Chief Investment Officer, Fine Capital	June 25, 2018
DONALD ARTHUR WRIGHT(2),(3),(4),(5) Toronto, Ontario, Canada	70	Lead Director and Vice Chair	President and Chief Executive Officer of The Winnington Capital Group Inc.	January 9, 2006
DOUGLAS EDWARD JOHN LAMB Toronto, Ontario, Canada	56	Chief Financial Officer	Officer of the Company	N/A
AARON SHOLOM AMES Toronto, Ontario, Canada	49	Chief Operating Officer	Officer of the Company	N/A
MARK GREGORY GOSINE Halifax, Nova Scotia, Canada	51	Executive Vice President, Legal Affairs, General Counsel and Corporate Secretary	Officer of the Company	N/A
DAVID ANDREW REGAN Halifax, Nova Scotia, Canada	49	Executive Vice President, Strategy & Corporate Development	Officer of the Company	N/A

__________________________________

⁽¹⁾ Member of the Production Financing Committee.

⁽²⁾ Member of the Human Resources and Compensation Committee.

⁽³⁾ Member of the Audit Committee.

⁽⁴⁾ Member of the Corporate Governance and Nominations Committee.

⁽⁵⁾  Member of the Corporate Finance Committee.

Except as noted below, each of the Company’s directors and executive officers has been engaged for more than five years in his or her present principal occupation or in other capacities with the Company or organization (or predecessor) in which he or she currently holds his or her principal occupation.

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Directors

Elizabeth Beale, a non-executive and independent director of DHX, is an economist who has served as an advisor to senior levels of government and industry throughout her career. She was President and CEO of the Atlantic Provinces Economic Council from 1996 to 2015. Prior to this, she worked for 10 years as a Consulting Economist and was APEC’s Chief Economist from 1981 to 1986. She continues to contribute to public policy as an advisor to the Premier of Prince Edward Island, as a Commissioner for Canada’s Ecofiscal Commission and as a member of the Expert Panel on Prioritizing Climate Change Risks (CCA). Ms. Beale was an associate fellow and lecturer in the School of Journalism at the University of King’s College from 1981 to 1991 and a governor of Dalhousie University from 2000 to 2009. She has a long-standing association from 1985 to 1999 as a director and chair of the Human Resource Development Association. She is currently a director of Wawanesa Insurance and Invest Nova Scotia. Ms. Beale was born in Edinburgh, Scotland and has lived in Halifax, Nova Scotia since 1975. She is a graduate of the universities of Toronto (B.A., 1973) and Dalhousie (M.A. Economics, 1978).

David Colville, P.Eng., a non-executive and independent director of DHX, is president of DC Communications Consulting Ltd, and a former Commissioner and Vice Chairman of the Canadian Radio-Television and Telecommunications Commission (“CRTC”). Mr. Colville worked in the telecommunications industry from 1970 to 1980 with Bell Canada and Maritime Tel. & Tel. From 1980 to 1990 Mr. Colville was Senior Director Communications Policy with the Nova Scotia Dept. of Transportation and Communications. From 1990 to 2004, he was Commissioner and Vice Chairman (from 1995) of the CRTC, during which time he was responsible for opening the telecommunications market to competition and exempting internet programming from Broadcasting regulation. Mr. Colville was a founding member of both the Board of Directors of the Nova Scotia Film Development Corp. and the Nova Scotia Educational Television Service.

Michael Patrick Donovan, an executive Director of DHX, also serves as the Company’s Executive Chairman and Chief Executive Officer. Mr. Donovan has been recognized with numerous awards for his work in the television and film industry, including an Academy Award for the feature documentary, Bowling for Columbine. Mr. Donovan was Chief Executive Officer of DHX from the time of the Company’s founding in 2006 until August 2014, returning to such role in February 2018. He co-founded and was Chairman and Chief Executive Officer of Salter Street Films, which was purchased by Alliance Atlantis in 2001. Mr. Donovan is a member of the National Advisory Council of the Academy of Canadian Cinema and Television, and is the former Chair of the Board of Trustees of the Nova Scotia College of Art and Design (NSCAD). Mr. Donovan is one of the creators of This Hour Has 22 Minutes, one of Canada’s longest-running television comedy series; and he was producer and one of the creators of the multiple award-winning feature film, Shake Hands With the Devil. Mr. Donovan holds B.A. (1974), LL.B. (1977) and LL.D. (Hon) (2004) degrees from Dalhousie University.

Deborah Drisdell, a non-executive Director of DHX, is currently President of Drisdell Consulting and is a veteran of over 25 years in the Canadian film and television industry. Previously, Ms. Drisdell held the positions of Director General, Accessibility & Digital Enterprises (from 2006 to 2015) and Director, Strategic Planning & Government Relations with the National Film Board of Canada (NFB) during which time she was responsible for advancing the NFB into the digital era of content distribution with its award winning NFB.ca platform and mobile expansion. Prior to her engagement with the NFB Ms. Drisdell was President of Drisdell Consulting, providing strategic advice to public and private sector clients in Canada and internationally. She has also held various other senior positions with media organizations, including Sextant Entertainment Group and Telefilm Canada.

Alan Hibben, CPA, CA, CFA, ICD.D, a non-executive and independent director of DHX, is a corporate director and advisor. Since December 2014, he has been the principal of Shakerhill Partners Ltd., a consulting firm providing strategic and financial advice, specializing in mergers and acquisitions, private equity, financing, corporate strategy, valuation, governance, as well as expert witness services. Previously, Mr. Hibben was the Managing Director in the Mergers and Acquisitions Group at RBC Capital Markets from March 2011 to December 2014. Mr. Hibben has been a director of a number of Canadian public and private companies, both in financial services and as part of his responsibility for overseeing private equity and venture capital investments for Royal Bank of Canada. Mr. Hibben is currently Chair of Hudbay Minerals Inc. (a TSX and NYSE listed company), and a director of Extendicare Inc. (a TSX listed company) and Home Capital Group Inc. (a TSX listed company) and is also director of the Mount Sinai Hospital Foundation.

Geoffrey Machum, Q.C., ICD.D, a non-executive director of DHX, is a senior partner based in the Halifax office of Stewart McKelvey, a leading Atlantic Canadian Law Firm. He serves as Chair of the firm's governing Partnership Board, and ‎serves on its Audit, Human Resources and Governance Committee. He has also served as the firm's Strategic Marketing Partner.

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He is recognized by national peer based legal publications as a leading practitioner in his chosen fields which include directors and officers liability and governance counsel. Mr. Machum has also served as Chair of the Halifax Port Authority, is a graduate of the Rotman School of Management’s Intensive Directors Education Program, University of Toronto, and is a member of the Institute of Corporate Directors and has also been granted the Institute of Corporate Director’s ICD.D Designation in recognition of his commitment to excellence in corporate governance. Mr. Machum has been involved with several community organizations including as a member of the Board of Governors of the Halifax Grammar School and as a member of the board of directors of Symphony Nova Scotia where he was also chair of the Governance Committee.

Robert (Rob) Sobey, is a non-executive and independent director of DHX. Mr. Sobey was the President & Chief Executive Officer of Lawton’s Drug Stores Limited until his retirement in 2014 after 25 years with Sobeys. He serves as a director for Empire Company Ltd., SeaFort Capital and Norvista Capital. Mr. Sobey is Chair of the NSCC Capital Campaign, the D&R Sobey Queens Scholarship Program, the Kings University D&R Sobey Scholarship, and the Sobey Art Foundation. Mr. Sobey is President of the DR Sobey Foundation, Honourary Chair of Venture for Canada, a member of the Queen’s University School of Business Advisory Board, a member of the WWF Atlantic Council, Co-Chair of the Tate Canada Foundation, and is a Founding Partner and Fellow of CDL Atlantic. As Honourary Colonel of the 1st Field Artillery Regiment of Halifax (RCA), Mr. Sobey received a Queen Elizabeth II Diamond Jubilee Medal for service to the Canadian Forces. He has an honours undergraduate degree from Queen’s University, a Masters of Business Administration degree from Babson College, and the ICD.D designation.

Jonathan Whitcher, a non-executive director of DHX, has been with Fine Capital since inception in 2004 and currently serves as Chief Investment Officer. Fine Capital is a New York-based fund, predominantly managing U.S. equity assets for endowments and foundations. Fine Capital adheres to a strict value investing style with a focus on out-of-favor companies that exhibit a large disparity between their market value and their intrinsic value. Fine Capital looks for companies that have a path to significantly improved earnings and cash flow. Before joining Fine Capital, Mr. Whitcher was an Equity Research Analyst at Citigroup Asset Management. He received a B.A. in Economics from Northwestern University.

Donald Wright, a non-executive and independent director of DHX, and is the Lead Director and Vice Chair of the Board. He is currently the President and Chief Executive Officer of The Winnington Capital Group Inc. He is an active investor in both the private and public equity markets. Mr. Wright has enjoyed a long and distinguished career as a leader in Canada’s investment industry and business community. He has held a number of leadership positions, including President of Merrill Lynch Canada; Executive Vice President, Director and member of the Executive Committee of Burns Fry Ltd.; Chair and Chief Executive Officer of TD Securities Inc. and Deputy Chair of TD Bank Financial Group. Mr. Wright serves as Chair of the Board of Directors of GMP Capital Inc. He is also Chair of the Board of Trustees of Richards Packaging Income Fund. Mr. Wright was appointed Chairman of the Board of Metrolinx in August 2018. He actively supports numerous charitable organizations. He is a past member of the Royal Ontario Museum Governors’ Finance Committee, and a past member of the Campaign Cabinet of Eva’s Phoenix. He is also a former member of the Board of Trustees of The Hospital for Sick Children, and past Chair of the Board of Directors of VIA Rail Canada Inc.

Officers

Aaron Ames, Chief Operating Officer of DHX, has had a long career in management roles for public and private companies. He was Chief Integration Officer for DHX following the Company’s acquisition of Cookie Jar Entertainment, where he was Chief Financial Officer. A Certified Professional Accountant (Ontario & Ohio) and specialist in business improvement, M&A integration and synergies, Aaron subsequently assisted DHX as a consultant on numerous projects, including the integration of various corporate acquisitions. Prior to his appointment as Chief Operating Officer for DHX, he held senior roles with Atlas Cold Storage (TSX: FZR), Centenario Copper (TSX: CCT), Coretec (TSX: CYY) and TSC Stores LP. Aaron graduated from Case Western Reserve University in 1993 with a Master's of Accountancy and worked for Ernst & Young in Cleveland and Toronto until 2001.

Mark Gosine, Executive Vice President, Legal Affairs, General Counsel and Corporate Secretary of DHX, is responsible for all of the legal and regulatory affairs for DHX and its subsidiaries. His principal areas of focus are financings, mergers, acquisitions, securities, intellectual property, governance and compliance. Mr. Gosine has more than 20 years legal experience both in private practice and in-house, and has more than 20 years’ experience in the entertainment industry. Mr. Gosine plays a key role in the company’s growth strategy in the acquisition and subsequent integration of such acquisitions. In his entertainment work, he oversees all legal and business aspects of the company’s development, production and distribution. He commenced his career as a performer after completing the jazz program at St. Francis Xavier University. Mr. Gosine went on to complete a B.A. Honors degree at Saint Mary’s University and earned an LL.B. at Dalhousie University. He is member of the Nova Scotia Barristers’ Society, the Canadian Bar Association and the Canadian Corporate Counsel Association. Mr. Gosine currently serves

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on the boards of the Legal Information Society of Nova Scotia, Symphony Nova Scotia, and is part time faculty at the Schulich School of Law, Dalhousie University.

Douglas Lamb, Chief Financial Officer of DHX, is a veteran Canadian media executive, who joined the Company in February 2018. Prior to working for DHX, he was Executive Vice President and Chief Financial Officer of Postmedia, from July 2010 until February 2017. Prior to that, he was Executive Vice President and Chief Financial Officer of Canwest LP since 2005. Mr. Lamb also served as Vice President of Corporate Development of Metroland, the community publishing business of Torstar Corporation. Prior to his employment with Torstar Corporation, he held a variety of financial roles at Hollinger International Inc. and Southam Inc. Mr. Lamb holds an MBA from the Ivey Business School, University of Western Ontario, and a Bachelor of Mechanical Engineering from Carleton University.

David Regan, Executive Vice President, Strategy & Corporate Development of DHX, is responsible for the Company’s strategic initiatives and mergers & acquisitions. Prior to working with DHX, Mr. Regan held positions with VI Associates, A.T. Kearney’s New York Financial Institutions Group and Export Development Corporation. In these positions he worked with clients in the entertainment and financial services industries throughout North America, Europe and Asia to provide financing, corporate development and business strategy advisory services. Mr. Regan holds an MBA from INSEAD in Fontainebleau, France, and a BBA Honours degree from St. Francis Xavier University in Nova Scotia. Mr. Regan serves on the board of directors of Watts Wind Energy Inc. and Katalyst Wind Inc. and is the Atlantic Canada chapter chair of the Ernest C. Manning Innovation Awards.

The following chart sets forth the companies and partnerships (other than the Company and its subsidiaries) of which a director or of the Company is, or has in the past five years been, a director or partner:

Directorships/Partnerships
Director	Past Directorships and Partnerships	Current Directorships and Partnerships
Elizabeth Beale	—	Wawanesa Insurance
David C. Colville	—	—
Deborah Drisdell	—	—
Michael Donovan	Media Fund (Atlantic) Ltd.	3124518 Nova Scotia Limited Simply Cast
Alan Hibben	OP Trust	Hudbay Minerals Inc. Extendicare Inc. Home Capital Group Inc. Mount Sinai Hospital Foundation
Geoffrey Machum	—	Halifax Port Authority
Robert (Rob) Sobey	—	Sobeys Inc. Empire Co. Limited Seafort Capital Norvista Capital
Jonathan Whitcher	—	—
Donald Wright	Black Bull Resources Ltd. Equity Financial Holdings Inc. Tuscany International Drilling Inc. New Era Minerals Inc. Jaguar Resources Inc. Condor Petroleum Inc. Cinaport Acquisitions Corp Mettrum Health Corp	GMP Capital Inc. Richards Packaging Income Fund Cinaport Acquisitions Corp II

Committees of the Board of Directors

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The Board of the Company has established an audit committee, a human resources and compensation committee, a corporate governance and nominations committee, a production financing committee and a corporate finance committee. Each of the committees has adopted a written charter establishing its role and responsibilities.

Audit Committee

The audit committee assists the Board in fulfilling its responsibilities for oversight and supervision of financial and accounting matters and the integrity of the Company’s financial reporting process. These responsibilities include, among others, reviewing annual and quarterly financial statements and related Management Discussion and Analysis and public disclosure of information extracted therefrom, monitoring and overseeing the accounting and financial reporting processes of the Company, monitoring and overseeing the Company’s internal controls, including internal controls over financial reporting, reviewing the risk management policies of the Company and insurance coverage, reviewing and overseeing the audits of the Company’s financial statements, engaging the independent external auditor of the Company and approving independent audit fees and considering the recommendations of the independent external auditor, monitoring the Company’s compliance with legal and regulatory requirements related to financial reporting, and examining improprieties or suspected improprieties with respect to accounting and other matters that impact financial reporting, reviewing and assessing related party transactions and establishing and monitoring whistleblower procedures and policies. The audit committee has the authority to retain outside counsel or experts to assist the committee in performing its functions. A copy of the audit committee charter is attached to this Annual Information Form as Schedule “A”.

The Company’s audit committee is chaired by Donald Wright, vice-chaired by Elizabeth Beale, and currently additionally composed of David Colville. Each of the members of the audit committee is “independent” and “financially literate” within the meaning of Multilateral Instrument 52-110 – Audit Committees of the Canadian Securities Administrators. Each of the members of the audit committee is “independent” within the meaning of Rule 10A-3 under the U.S. Exchange Act and the applicable NASDAQ rules. For a description of the relevant education and experience of the Audit Committee members refer to “Directors and Officers” above.

The following table outlines the audit, audit-related, tax and other fees billed to the Company by its external auditor, PricewaterhouseCoopers LLP, in each of the fiscal years ended June 30, 2017 and June 30, 2018.

Audit Fees
Fees	Fiscal Year ended June 30, 2017		Fiscal Year ended June 30, 2018
Audit Fees(1)		$1,729,000		$1,635,991
Audit Related Fees(2)		$76,450		$185,346
Tax Fees(3)		$164,471		$170,785
All Other Fees	-		-
Total		$1,969,921		$1,992,122

________

⁽¹⁾ Audit fees were paid for professional services rendered by the auditor for the audit of the Registrant’s annual financial statements (2017 – $1,545,000 and 2018 – $1,250,000), reviews of the Registrant’s consolidated interim financial statements (2017 – $150,000 and 2018 – $150,000), and business acquisition, translation and stat audits (2017 – $34,000 and 2018 – $235,991).

⁽²⁾ Audit-related fees are defined as the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Registrant’s financial statements and are not reported under the Audit Fees item above. This category is comprised of fees billed for advisory services associated with the Registrant’s financial reporting and includes production cost audits and tax credit letters (2017 – $66,450 and 2018 – $142,296) and due diligence and bank reporting (2017 – $10,000 and 2018 – $43,050).

⁽³⁾ Tax fees are defined as the aggregate fees billed for professional services rendered by the Registrant’s external auditor for tax compliance (2017 – $131,905 and 2018 – $134,245), tax advice and tax planning (2017 – $6,050 and 2018 – $26,250) and due diligence (2017 – $26,516 and 2018 – $10,290).

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Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Mr. Donald Wright was a director of Tuscany International Drilling Inc. (“Tuscany”) from December 2008 to February 14, 2015. On February 2, 2014, Tuscany announced that it and one of its subsidiaries, Tuscany International Holdings (U.S.A.) Ltd. (“Tuscany USA”) commenced proceedings under Chapter 11 of the United States Bankruptcy Code (“U.S. Code”) in the United States Bankruptcy Court for the District of Delaware (the “Chapter 11 Proceedings”) to implement a restructuring of Tuscany’s debt obligations and capital structure through a plan of reorganization under the U.S. Code. Tuscany also announced that it and Tuscany USA intend to commence ancillary proceedings in the Court of Queen’s Bench of Alberta under the Companies’ Creditors Arrangement Act to seek recognition of the Chapter 11 Proceedings and certain related relief. Tuscany’s plan of reorganization under Chapter 11 of the U.S. Code was approved on May 19, 2014.

Mr. Donald Wright was previously Chairman of the board of directors of Jaguar Resources Inc. (“Jaguar”). On May 6, 2015 the Alberta Securities Commission and on May 8, 2015 the British Columbia Securities Commission, issued cease trade orders (the “Cease Trade Orders”) against Jaguar for failure to file its annual audited financial statements, annual management’s discussion and analysis, and certification of the annual filings for the year ended December 31, 2014, pursuant to which trading in Jaguar’s securities was prohibited. Further, during the term of the Cease Trade Orders, Jaguar issued securities in contravention of the Cease Trade Orders. The Cease Trade Orders were subsequently revoked on March 15, 2016. Mr. Wright subsequently resigned as a director of Jaguar effective April 4, 2016.

LEGAL PROCEEDINGS

The Company is not, and was not during fiscal 2018, a party or subject to any legal proceedings or group of similar proceedings, nor are any such proceedings known to the Company to be contemplated, where the amount involved, exclusive of interest and costs, exceeds or exceeded ten percent of the current assets of the Company.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Except as disclosed in this Annual Information Form, none of the persons who are or have been directors or executive officers of DHX since July 1, 2015 or the associates or affiliates of those persons have any material interest, direct or indirect, in any transaction that has materially affected or is reasonably expected to materially affect the Company.

INTEREST OF EXPERTS

The Company’s consolidated financial statements for the year ended June 30, 2017 were audited by PricewaterhouseCoopers LLP, independent auditor appointed by the shareholders of the Company upon the recommendation of the Board of Directors of the Company at its Annual General Meeting held on December 15, 2016. PricewaterhouseCoopers LLP has confirmed that it is independent with respect to DHX within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Nova Scotia and in accordance with the independence rules of the SEC and the Public Company Accounting Oversight Board. A copy of the audited consolidated annual financial statements of the Company, including the auditor’s report thereon, may be found on SEDAR at www.sedar.com and are attached as an exhibit to the Company’s annual report on Form 40-F filed with the SEC at www.sec.gov.

BDO USA, LLP served as the auditor for certain carve-out financial statements of the business acquired pursuant to the Peanuts/SSC Acquisition which are attached to the Business Acquisition Report in respect of the Peanuts/SSC Acquisition.

AUDITOR, TRANSFER AGENT AND REGISTRAR

The Company’s auditor is PricewaterhouseCoopers LLP 1601 Lower Water Street, Suite 400, Halifax, Nova Scotia, B3J 3PS, Canada. PricewaterhouseCoopers LLP is registered with the Chartered Professional Accountants of Nova Scotia.

The transfer agent and registrar for the Common Voting Shares and the Variable Voting Shares in Canada is Computershare Investor Services Inc. at its principal offices at 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada. The transfer agent and registrar for the Common Voting Shares and the Variable Voting Shares in the United States is Computershare Trust Company, N.A. at its offices at 7342 Lucent Blvd., Suite 300, Highlands Ranch, Colorado 80129.

MATERIAL CONTRACTS

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This Annual Information Form includes a summary description of certain material agreements of the Company. The summary description discloses all attributes material to an investor in securities of the Company but is not complete and is qualified by reference to the terms of the material agreements, which have been filed under the Company’s profile on SEDAR at www.sedar.com and with the SEC at www.sec.gov. Investors are encouraged to read the full text of such material agreements.

The following are the only material contracts, other than contracts entered into in the ordinary course of business, which the Company has entered into within the past year or which are still in effect:

• Preferred Variable Voting Shareholders Agreement described above under “Description of Capital Structure – Preferred Variable Voting Shares” and on file at www.sedar.com and is attached as an exhibit to the Company’s registration statement on Form 40-F filed with the SEC at www.sec.gov. Refer to “Description of Capital Structure – Preferred Variable Voting Shares”.

• Membership interest purchase agreement dated as of May 9, 2017 between Icon NY Holdings LLC, IBG Borrower LLC, Iconix Brand Group, Inc., the Company and DHX SSP Holdings relating to the Peanuts acquisition (the “Peanuts MIPA”). The Peanuts MIPA contains customary representations and warranties in favour of DHX SSP Holdings, including with respect to corporate matters, financial statements and liabilities, consents and approvals, title, litigation and proceedings, conduct of business, material contracts, tax, intellectual property, compliance with laws, brokers, employees and benefit plans, kickbacks and similar payments, accounts receivable, transactions with affiliates, insurance and absence of material adverse effects. An indemnity claim in respect of a majority of the representations and warranties may be made until the first anniversary of the Peanuts/SSC Acquisition closing date, while an indemnity claim with respect to certain other designated representations and warranties, including those relating to title to non-intellectual property assets, intellectual property and transactions with affiliates, may be made and will survive for 18 months following the closing date. Indemnity claims with respect to certain fundamental representations and warranties survive for an indefinite period. Indemnities are subject to customary thresholds and limitations. The foregoing is a summary of the material provisions of the Peanuts MIPA. This summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the provisions of the Peanuts MIPA, a copy of which has been filed on SEDAR and with the SEC and are available under the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Refer to “General Development of the Business – Acquisition of Peanuts and Strawberry Shortcake” for additional information.

• Membership interest purchase agreement dated as of May 9, 2017 between IBG Borrower LLC, Iconix Brand Group, Inc., the Company and DHX SSP Holdings relating to the Strawberry Shortcake acquisition (the “SSC MIPA”). The SSC MIPA contains customary representations and warranties in favour of DHX SSP Holdings, including with respect to corporate matters, financial statements and liabilities, consents and approvals, title, litigation and proceedings, conduct of business, material contracts, tax, intellectual property, compliance with laws, brokers, employees and benefit plans, kickbacks and similar payments, accounts receivable, transactions with affiliates, insurance and absence of material adverse effects. An indemnity claim in respect of a majority of the representations and warranties may be made until the first anniversary of the Peanuts/SSC Acquisition closing date, while an indemnity claim with respect to certain other designated representations and warranties, including those relating to title to non-intellectual property assets, intellectual property and transactions with affiliates, may be made and will survive for 18 months following the closing date. Indemnity claims with respect to certain fundamental representations and warranties survive for an indefinite period. Indemnities are subject to customary thresholds and limitations. The foregoing is a summary of the material provisions of the SSC MIPA. This summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the provisions of the Peanuts MIPA, a copy of which has been filed on SEDAR and with the SEC and are available under the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Refer to “General Development of the Business – Acquisition of Peanuts and Strawberry Shortcake” for additional information.

• Credit agreement among DHX, as borrower, Royal Bank of Canada, as agent, (“Agent”) and a syndicate of lenders party thereto (the “Lenders”) dated June 30, 2017, as amended by an omnibus amendment and consent dated July 23, 2018 (the “Credit Agreement”). Under the Credit Agreement, DHX was provided a term facility (the “Term Facility”) and a revolving facility (the “Revolving Facility”). The Term Facility consists of an initial principal amount of US$495 million and matures on December 29, 2023. The Term Facility is repayable in annual amortization payments of 1% of the initial principal, payable in equal quarterly installments, commencing on September 30, 2017. The Term Facility also requires repayments equal to 50% of excess cash flow (as defined in the Credit Agreement), commencing for the fiscal year-ended June 30, 2018 while the first lien net leverage ratio (as defined in the Credit Agreement) is greater than 3.50 times, reducing to 25% of excess cash flow while the first lien net leverage ratio is at or below 3.50 times and greater than 3.00 times, with the remaining balance due on December 29, 2023. As a term facility, the amounts borrowed may be repaid (subject to the applicable repayment provisions in the Credit Agreement), but once repaid are no longer available to re-borrow. The Term Facility bears interest at floating rates of US$ base rate plus 2.75% or US

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$ LIBOR plus 3.75%. The Revolving Facility has a maximum available balance of US$30 million and matures on June 30, 2022. The Revolving Facility may be drawn by way of either US$ base rate, CDN$ prime rate, CDN$ bankers’ acceptance, or US$ and GBP£ LIBOR advances and bears interest at floating rates ranging from the drawdown rate plus 2.50% to the drawdown rate plus 3.75%. The Credit Agreement requires that the Company comply with financial covenants including a total net leverage ratio covenant. The Credit Agreement also includes negative covenants that, subject to certain exceptions, may restrict or limit the ability of the Company and certain of its significant operating subsidiaries (collectively, the “Restricted Group”) to, among other things, incur, assume or permit to exist liens or additional indebtedness, engage in mergers, amalgamations, consolidations, dissolutions or other reorganizations or change its organization documents in a manner adverse to the lenders, make investments, dispose of assets, make certain payments outside of the Restricted Group including dividends and share repurchases, change the nature of its business or fiscal year, transact with affiliates enter into burdensome agreements, prepay junior indebtedness or commence productions without a sufficient level of financing. The Credit Agreement contains certain customary representations and warranties, positive covenants and events of default, including, among others, payment defaults, covenant defaults, material breach of representations and warranties, cross-defaults, insolvency proceedings and inability to pay debts, judgments, change of control and failure to maintain security over the collateral. If any event of default occurs and is continuing the Agent may take all actions available to a secured creditor including terminating the loan commitments and declare all amounts owing immediately due and payable. The lenders under the Credit Agreement have a first ranking charge over the present and future property of the Restricted Group. Certain subsidiaries of the Company in the Restricted Group have provided guarantees to the lenders and securities and intercompany debt pledge agreements have been entered into by the such entities. This summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the provisions of the Credit Agreement, a copy of which has been filed on SEDAR and with the SEC and are available under the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

• Underwriting agreement dated May 31, 2017 (the “Underwriting Agreement”) entered into by the Company with a syndicate of underwriters co-led by Canaccord Genuity Corp. and RBC Dominion Securities Inc. and including National Bank Financial Inc., Scotia Capital Inc., CIBC World Markets Inc. and Echelon Wealth Partners Inc. (collectively, the “Underwriters”) in connection with the Subscription Receipt Offering. Pursuant to the Underwriting Agreement the Company agreed to pay the Underwriters a commission of 4.0% or $40 per Subscription Receipt, payable 50% on the closing date of the Subscription Receipt Offering (May 31, 2017) and 50% on satisfaction of the applicable release condition set forth therein which was satisfied commensurate with the closing of the Peanuts/SSC Acquisition on June 30, 2017. The Underwriting Agreement also included customary representations and warranties and indemnities typical of an agreement of such nature. This summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the provisions of the Underwriting Agreement, a copy of which has been filed on SEDAR and with the SEC and are available under the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Refer to “General Development of the Business – Acquisition of Peanuts and Strawberry Shortcake Financing” for additional information.

• Membership interest purchase agreement dated as of May 13, 2018 between DHX SSP Holdings LLC (“SSP”), the Company and GoNoGo Inc. (by way of assignment from SMEJ) (“SMEJ Buyer”), as amended by Amendment No.1 to membership interest purchase agreement among the foregoing parties dated as of July 20, 2018 (the “Peanuts Divestiture MIPA”). The Peanuts Divestiture MIPA contains customary representations and warranties of SSP (among other applicable entities) in favour of SMEJ Buyer, including with respect to corporate matters, financial statements and liabilities, consents and approvals, title, litigation and proceedings, conduct of business, material contracts, tax, intellectual property, compliance with law, brokers, employees and benefit plans, kickbacks and similar payments, accounts receivable, transactions with affiliates, insurance and absence of material adverse effects. An indemnity claim in respect of a majority of the representations and warranties may be made until the first anniversary of the Peanuts Divestiture closing date, while an indemnity claim with respect to certain other designated representations and warranties, including those relating to title to intellectual property and transactions with affiliates, may be made and will survive for 18 months following the closing date. Indemnity claims with respect to certain fundamental representations and warranties survive for the applicable statute of limitations plus 30 days. Indemnities are subject to customary thresholds and limitations. This summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the provisions of the Peanuts Divestiture MIPA, a copy of which has been filed on SEDAR and with the SEC and are available under the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Refer to “General Development of the Business – Partial Divestiture of Peanuts” for additional information.

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ADDITIONAL INFORMATION

Additional financial information is provided in the Company’s comparative consolidated financial statements and Management Discussion and Analysis for the most recently completed financial fiscal year. Other additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, is contained in the Company’s most current management information circular. These documents, and additional information on the Company may be found on SEDAR at www.sedar.com and are filed with the SEC at www.sec.gov.

* * * * *

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SCHEDULE “A”

Audit Committee Charter

(See attached.)

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DHX Media Ltd.

(the “Corporation”)

Audit Committee Charter

Originally adopted by the Board of Directors on February 27, 2006. Revised effective September 20, 2018.

This charter (the “Charter”) sets forth the purpose, composition, responsibilities and authority of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of DHX Media Ltd.

A.    PURPOSE AND SCOPE

The primary function of the Audit Committee is to assist the Board and work with management in fulfilling its responsibilities with respect to the integrity of the Corporation’s financial reporting process by: (i) reviewing the financial statements and reports provided by the Corporation to applicable securities regulators, the Corporation’s shareholders or to the general public, (ii) monitoring and overseeing the accounting and financial reporting processes of the Corporation, (iii) monitoring and overseeing the Corporation’s internal controls, including internal controls over financial reporting, and (iv) reviewing and overseeing the audits of the Corporation’s financial statements.

B.    COMPOSITION

The Committee shall be comprised of persons who have the suitable experience and skills given the nature and function of the Audit Committee. The Board will appoint the members (“Members”) of the Committee. The Committee shall be comprised of a minimum of three directors as appointed by the Board annually, who shall meet the independence, financial literacy and audit committee composition requirements under any applicable rules or regulations of applicable securities regulators and stock exchanges, including, but not limited to, the rules of the NASDAQ Stock Market LLC (“NASDAQ”) and Rule 10A-3(b)(1) promulgated under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules of the Toronto Stock Exchange (“TSX”) and National Instrument 52-110 — Audit Committees, as in effect from time to time, and each such director shall be free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. Further, no member of the Committee shall have participated in the preparation of the financial statements of the Corporation or any current subsidiary of the Corporation at any time during the past three (3) years.

All Members shall either (i) be able to read and understand fundamental financial statements, including a balance sheet, cash flow statement and income statement, or (ii) be able to do so within a reasonable period of time after appointment to the Committee. At least one member of the Committee shall be an “audit committee financial expert” as defined by the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and shall have employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

The Members shall be elected by the Board at the meeting of the Board following each annual meeting of shareholders and shall serve until their successors shall be duly elected and qualified or until their earlier resignation or removal. Unless the chair of the Committee (“Chair”) is elected by the full Board, the Members may designate a Chair by majority vote of the full Committee membership.

C.    MEETINGS

1. Meetings of the Committee will be held at such times and places as the Chair may determine, but in any event not less than two times per year.

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2. Twenty-four (24) hours advance notice of each meeting will be given to each Member orally, by telephone, by facsimile or email, unless all Members are present and waive notice, or if those absent waive notice before or after a meeting.

3. Members may attend all meetings either in person, videoconferencing or by telephone.

4. The Chair, if present, will act as the chair of meetings of the Committee. If the Chair is not present at a meeting of the Committee, the Members in attendance may select one of their number to act as chair of the meeting.

5. A majority of Members will constitute a quorum for a meeting of the Committee.

6. Each Member will have one vote and decisions of the Committee will be made by an affirmative vote of the majority. The Chair will not have a deciding or casting vote in the case of an equality of votes. Powers of the Committee may also be exercised by written resolutions signed by all Members.

7. The Committee may invite from time to time such persons as it sees fit to attend its meetings and to take part in the discussion and consideration of the affairs of the Committee.

8. The Committee should meet in camera without members of management in attendance for a portion of each meeting of the Committee.

9. In advance of every regular meeting of the Committee, the Chair, with the assistance of the secretary, shall prepare and distribute to the Members and others as deemed appropriate by the Chair, an agenda of matters to be addressed at the meeting together with appropriate briefing materials. The Committee may require officers and employees of the Company to produce such information and reports as the Committee may deem appropriate in order for it to fulfill its duties.

10. The Board may remove a Member at any time and may fill any vacancy occurring on the Committee. A Member may resign at any time and a Member will automatically cease to be a Member upon ceasing to be a director. In the event of a vacancy on the Committee, the remaining Members may exercise all of the powers of the Committee, so long as a quorum remains.

D.    RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Committee shall:

Financial Reporting Processes

1. In consultation with the auditor and management, review annually the adequacy of the Corporation’s internal financial and accounting controls, including any significant deficiencies and significant changes.

2. Oversee the resolution of issues, if any, between management and the auditor regarding financial reporting.

3. Review and approve all material related party transactions to be disclosed, pursuant to Item 404 of Regulation S-K, promulgated under the Exchange Act, or Item 7.B. of Form 20-F, promulgated under the Exchange Act and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, as applicable, and be responsible for the review and oversight contemplated by NASDAQ and TSX, as applicable, with respect to any such reported transactions.

4. Assist the Board in ensuring the Corporation’s compliance with legal and regulatory requirements related to the Corporation’s financial reporting process.

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5. Seek to ensure that adequate procedures are in place for the review of Corporation’s public disclosure of financial information extracted or derived from Corporation’s financial statements, periodically assess the adequacy of those procedures and recommend any proposed changes to the Board for consideration.

6. Review periodic reports from the disclosure committee, established pursuant to Corporation’s Disclosure Policy, or a delegate thereof.

Document Review

7. Review and assess the adequacy of this Charter at least annually (and update this Charter if and when appropriate).

8. Review and recommend to the Board for approval, the annual financial statements including the auditor’s report thereon, the quarterly financial statements, accounting policies that affect the statements, annual disclosure to be included in management’s discussion and analysis, financial reports, and any associated press release, prior to the public disclosure of such information. Review the Corporation’s annual reports for consistency with the financial disclosure referenced in the annual financial statements.

Internal Controls and Risk Management

9. Review the effectiveness and integrity of internal controls, including internal audit procedures, as evaluated by the Corporation’s internal and the external auditor, and the mandate of, and reports issued by, the Corporation’s internal auditor, and make recommendations with respect thereto.

10. Review significant financial risks or exposures and assess the steps management has taken to monitor, control and mitigate such risks or exposures.

11. Satisfy itself, through discussions with management, that the adequacy of internal controls, systems and procedures has been periodically assessed in order to ensure compliance with regulatory requirements and recommendations.

12. Review, and in the Committee’s discretion make recommendations to the Board regarding, the adequacy of Corporation’s risk management policies and procedures with regard to identification of the Corporation’s principal risks and implementation of appropriate systems to manage such risks including an assessment of the adequacy of insurance coverage maintained by the Corporation;

13. Monitor and oversee the internal auditor of the Corporation.

Independent External Auditor

14. Recommend to the Board for approval, the selection of the external auditor, and approve the fees and other compensation to be paid to the external auditor. The Committee and the Board shall have the ultimate authority and responsibility to select, evaluate and, when warranted, replace such external auditor (or to recommend such replacement for shareholder approval in any management information circular).

15. Request from the independent external auditor on a periodic basis a written statement delineating all relationships between the external auditor and the Corporation which may adversely impact the external auditor’s independence, if any.

16. On an annual basis, receive from the external auditor a formal written statement identifying all relationships between the external auditor and the Corporation consistent with any applicable rules or regulations of applicable securities regulators and stock exchanges. The Committee shall actively engage in a dialogue with the external auditor as to any disclosed relationships or services that may impact its independence or objectivity.

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The Committee shall take, or recommend that the Board take, appropriate action to oversee the independence of the external auditor.

17. On an annual basis, discuss with representatives of the external auditor the matters required to be discussed by any applicable rules or regulations of applicable securities regulators and stock exchanges.

18. Meet with the external auditor prior to the audit to review the planning and staffing of the audit.

19. Evaluate the performance of the external auditor and recommend to the Board any proposed discharge of the external auditor when circumstances warrant. The external auditor shall be ultimately accountable to the Board and the Committee.

Compliance

20. To the extent deemed necessary by the Committee, it shall have the authority to engage outside counsel, independent accounting consultants or other advisors to review any matter under its responsibility and to pay the compensation for any advisors employed by the Committee at the cost of the Corporation without obtaining Board approval, based on its sole judgment and discretion. The Committee has the authority, without obtaining Board approval, to pay for ordinary administrative expenses deemed necessary and appropriate in carrying out its duties.

21. Cause to be provided to NASDAQ and the TSX, as applicable, appropriate written confirmation of any of the foregoing matters as NASDAQ and the TSX may from time to time require.

Related Party Transactions

22. Review any material or non-ordinary course related party transactions other than those delegated to a special committee or independent committee of the Board against applicable legal and regulatory requirements, discuss with management the business rationale for the transactions, review applicable disclosures and report to the Board on all such transactions, if any, each quarter.

23. Review and discuss with the Corporation’s independent auditor the auditor’s evaluation of the Corporation’s identification of, accounting for, and disclosure of its relationships and transactions with related parties, including any significant matters arising from the audit in connection therewith.

Associated Responsibilities

24. Establish, monitor and periodically review the whistleblower procedures, as set forth in the Corporation’s Whistle Blower Policy available on the Corporation’s website and associated procedures for:

(i) the receipt, retention and treatment of complaints received by Corporation regarding accounting, internal accounting controls or auditing matters;

(ii) the confidential, anonymous submission by directors, officers and employees of Corporation of concerns regarding questionable accounting or auditing matters;

(iii) any violations of any applicable law, rule or regulation that relates to corporate reporting and disclosure, or violations of Corporation’s Code of Business Conduct & Ethics.

25. Review and approve the Corporation’s hiring policies regarding employees and partners, and former employees and partners, of the present and former external auditor of the Corporation.

Other Duties

26. The Committee may: (i) engage and compensate outside professionals where the Members believe it is necessary to carry out their duties and responsibilities; (ii) direct and supervise the investigation into any

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matter brought to its attention within the scope of its duties; and (iii) perform such other duties as may be assigned to it by the Board and perform any other activities consistent with this Charter, from time to time or as may be required by applicable regulatory authorities or legislation.

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Corporation’s financial statements are complete and accurate and are in accordance with applicable generally accepted accounting principles.

* * * * *

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EX-99.2

DHX Media Ltd.

Consolidated Financial Statements

June 30, 2018 and 2017

(expressed in thousands of Canadian dollars)

September 24, 2018

Management’s Responsibility for Financial Reporting

The accompanying 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 consolidated financial statements. The Board carries out this responsibility through its Audit Committee. The Audit Committee reviews the Company’s 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 consolidated financial statements to the Board for approval.

The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards 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 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 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.

PricewaterhouseCoopers LLP, appointed as the Company's auditors by the shareholders, has audited these consolidated financial statements and their report follows.

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

DHX Media Ltd.

Consolidated Balance Sheet

As at June 30, 2018 and 2017

(expressed in thousands of Canadian dollars)

	June 30, 2018	June 30, 2017
	$	$
Assets
Current assets
Cash	46,550	62,143
Cash held in trust (note 12(c)(iv))	—	239,877
Amounts receivable (note 6)	251,538	245,033
Prepaid expenses and other	8,580	10,092
Investment in film and television programs (note 7)	186,008	195,180
	492,676	752,325
Long-term amounts receivable (note 6)	18,789	26,502
Acquired and library content (note 8)	147,088	155,940
Property and equipment (note 9)	30,436	30,996
Intangible assets (note 10)	546,997	555,408
Goodwill (note 11)	240,806	240,534
	1,476,792	1,761,705
Liabilities
Current liabilities
Bank indebtedness (note 12)	16,350	—
Accounts payable and accrued liabilities	130,545	178,365
Deferred revenue	47,552	50,949
Interim production financing (note 12)	93,683	101,224
Current portion of long-term debt and obligations under finance leases (note 12)	10,524	234,876
	298,654	565,414
Long-term debt and obligations under finance leases (note 12)	746,046	748,459
Other long-term liabilities	13,621	17,420
Deferred income taxes (note 15)	17,679	14,559
	1,076,000	1,345,852
Shareholders’ Equity
Equity attributable to Shareholders of the Company	315,078	329,297
Non-controlling interest	85,714	86,556
	400,792	415,853
	1,476,792	1,761,705
Commitments and contingencies(note 19)

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

DHX Media Ltd.

Consolidated Statement of Changes in Equity

For the years ended June 30, 2018 and 2017

(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, 2016	302,828	20,488		(20,286	)	33,805		—		336,835
Net loss for the year	—	—		—		(3,634	)	—		(3,634	)
Other comprehensive loss for the year	—	—		(1,310	)	—		—		(1,310	)
Comprehensive loss for the year	—	—		(1,310	)	(3,634	)	—		(4,944	)
Common shares issued (note 13)	354	(45	)	—		—		—		309
Dividends reinvested and paid	1,138	—		—		(9,908	)	—		(8,770	)
Share-based compensation (note 13)	—	5,867		—		—		—		5,867
Non-controlling interest on acquisition of subsidiaries (note 5)	—	—		—		—		86,556		86,556
Balance - June 30, 2017	304,320	26,310		(21,596	)	20,263		86,556		415,853
Net income (loss) for the year	—	—		—		(14,060	)	7,312		(6,748	)
Other comprehensive income for the year	—	—		6,978		—		—		6,978
Comprehensive income (loss) for the year	—	—		6,978		(14,060	)	7,312		230
Common shares issued (note 13)	428	(200	)	—		—		—		228
Dividends reinvested and paid	419	—		—		(10,734	)	—		(10,315	)
Share-based compensation (note 13)	—	2,950		—		—		—		2,950
Non-controlling interest on acquisition of subsidiaries (note 5)	—	—		—		—		4,036		4,036
Distributions to non-controlling interests	—	—		—		—		(12,190	)	(12,190	)
Balance - June 30, 2018	305,167	29,060		(14,618	)	(4,531	)	85,714		400,792

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

DHX Media Ltd.

Consolidated Statement of Income (Loss)

For the years ended June 30, 2018 and 2017

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

	June 30, 2018		June 30, 2017
	$		$
Revenues(note 23)	434,416		298,712
Expenses (note 17)
Direct production costs and expense of film and television produced	244,244		143,112
Amortization of acquired and library content (note 8)	15,916		10,541
Amortization of property and equipment and intangible assets	24,174		17,565
Development, integration and other	10,554		3,435
Acquisition costs (note 5)	—		9,695
Write-down of investment in film and television programs and acquired and library content and impairment of intangible assets (notes 7,8,10)	12,027		1,540
Selling, general and administrative	86,200		74,133
Finance expense (note 16)	58,956		42,978
Finance income (note 16)	(12,398	)	(2,524	)
	439,673		300,475
Loss before income taxes	(5,257	)	(1,763	)
Provision for (recovery of) income taxes
Current income taxes (note 15)	2,166		5,991
Deferred income taxes (note 15)	(675	)	(4,120	)
	1,491		1,871
Net loss for the year	(6,748	)	(3,634	)
Net income attributable to non-controlling interests	7,312		—
Net loss attributable to Shareholders of the Company	(14,060	)	(3,634	)
Basic loss per common share (note 21)	(0.10	)	(0.03	)
Diluted loss per common share (note 21)	(0.10	)	(0.03	)

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

DHX Media Ltd.

Consolidated Statement of Comprehensive Income (Loss)

For the years ended June 30, 2018 and 2017    

(expressed in thousands of Canadian dollars)

	June 30, 2018		June 30, 2017
	$		$
Net loss for the year	(6,748	)	(3,634	)
Other comprehensive income (loss)
Items that may be subsequently reclassified to the statement of income (loss)
Foreign currency translation adjustment	6,978		(1,310	)
Comprehensive income (loss) for the year	230		(4,944	)

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

DHX Media Ltd.

Consolidated Statement of Cash Flows

For the years ended June 30, 2018 and 2017    

(expressed in thousands of Canadian dollars)

	June 30,		June 30,
	2018		2017
	$		$
Cash provided by (used in)
Operating activities
Net loss for the year	(6,748	)	(3,634	)
Charges (credits) not involving cash
Amortization of property and equipment	8,828		6,186
Amortization of intangible assets	15,346		11,379
Write-down of intangible assets	1,059		—
Unrealized foreign exchange loss	(3,295	)	2,637
Amortization of deferred financing fees	4,992		1,682
Accretion on tangible benefit obligation	539		651
Debt extinguishment charge	—		6,990
Share-based compensation	2,950		5,867
Accretion on Senior Unsecured Convertible Debentures	1,586		—
Amortization of debt premium	—		118
Movement in the fair value of embedded derivatives	(11,251	)	(1,968	)
Deferred tax recovery	(675	)	(4,120	)
Write-down of acquired and library content	3,402		363
Write-down of investment in film and television programs	7,566		1,177
Amortization of acquired and library content	15,916		10,541
Net investment in film and television programs (note 22)	4,471		(57,235	)
Net change in non-cash balances related to operations (note 22)	(31,322	)	12,830
Cash provided by (used in) operating activities	13,364		(6,536	)
Financing activities
Dividends	(10,315	)	(8,770	)
Common shares issued	228		309
Proceeds from bank indebtedness	16,350		—
Proceeds from (repayment of) interim production financing	(7,541	)	9,221
Distributions to non-controlling interests	(12,190	)	—
Payment of debt issue costs	(539	)	(32,340	)
Decrease (increase) in cash held in trust	239,877		(239,877	)
Proceeds from long-term debt	—		782,362
Repayment of long-term debt and obligations under finance leases	(236,763	)	(73,623	)
Cash (used in) provided by financing activities	(10,893	)	437,282
Investing activities
Business acquisitions, net of cash acquired (note 5)	(7,641	)	(439,014	)
Acquisition of property and equipment	(2,426	)	(5,618	)
Acquisition/cost of intangible assets	(8,539	)	(4,332	)
Cash used in investing activities	(18,606	)	(448,964	)
Effect of foreign exchange rate changes on cash	542		(85	)
Net change in cash during the year	(15,593	)	(18,303	)
Cash - Beginning of year	62,143		80,446
Cash - End of year	46,550		62,143

Supplemental information (note 22)

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

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

(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

The Company prepares its consolidated financial statements (the “financial statements”) in accordance with Canadian generally accepted accounting principles (“GAAP”) as set out in the Chartered Professional Accountants of Canada Handbook - Accounting - Part 1 (“CPA Canada Handbook”), which incorporates International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

These consolidated financial statements have been authorized for issuance by the Board of Directors on September 24, 2018.

3 Significant accounting policies, judgments and estimation uncertainty

The significant accounting policies used in the preparation of these financial statements are described below:

Basis of measurement

The consolidated financial statements have been prepared under a historical cost basis, except for certain financial assets and financial liabilities, including derivative instruments that are measured at fair value.

Consolidation

The consolidated financial statements include the accounts of DHX Media Ltd. and all of its subsidiaries. The consolidated financial statements of all subsidiaries are prepared for the same reporting period, using consistent accounting policies. Intercompany accounts, transactions, income and expenses and unrealized gains and losses resulting from transactions among the consolidated companies have been eliminated upon consolidation.

Subsidiaries are those entities, including structured entities, which the Company controls. Consistent with other entities in the film and television industry, the Company utilizes structured entities as a vehicle to create and fund some of its film and television projects. When the Company makes substantive decisions on creation of the content and financing within the structured entities it consolidates them. For accounting purposes, control is established by the Company 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. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and are de-consolidated from the date that control ceases.

( 1)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Non-controlling interest represents the portion of a subsidiary's earning and losses and net assets that is not held by the Company. If losses in a subsidiary applicable to a non-controlling interest exceed the non-controlling interest in the subsidiary's equity, the excess is allocated to the non-controlling interest except to the extent that the majority has a binding obligation and is able to cover the losses.

Foreign currency translation

(i) Functional and presentation currency

Items included in the consolidated financial statements of each consolidated entity of the Company are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). Primary and secondary indicators are used to determine the functional currency (primary indicators have priority over secondary indicators). The primary indicator which applies to the Company is the currency that mainly influences revenues and expenses. Secondary indicators include the currency in which funds from financing activities are generated. The Company operates material subsidiaries in three currency jurisdictions including the Canadian dollar, the US dollar, and the UK pound sterling. An assessment of the primary and secondary indicators for each subsidiary is performed to determine the functional currency of the subsidiary, which are then translated to Canadian dollars, the Company's presentation currency. The financial statements of consolidated entities that have a functional currency other than Canadian dollars (“foreign operations”) are translated into Canadian dollars as follows:

(a) assets and liabilities - at the closing rate at the date of the balance sheet; and

(b) income and expenses - at the average rate for the period.

All resulting exchange differences are recognized in other comprehensive income as foreign currency translation adjustments.

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If the Company disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation, at year-end exchange rates, of monetary assets and liabilities denominated in currencies other than the functional currency are recognized in the consolidated statement of income (loss).

( 2)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Revenue recognition

Revenue from the licensing of film and television programs is recognized when:

(a) the production has been completed;

(b) the contractual delivery arrangements have been satisfied and the Company retains neither continuing managerial involvement to the degree usually associated with the ownership nor effective control over the goods sold;

(c) the customer has access to the production and can benefit from the content;

(d) the amount of revenue can be measured reliably;

(e) collectability of proceeds is probable; and

(f) the costs incurred or to be incurred in respect of the contractual arrangement can be measured reliably.

Cash payments received or advances currently due pursuant to a broadcast license or distribution arrangement are recorded as deferred revenue until all of the foregoing conditions of revenue recognition have been met.

Revenue from production services for third parties and other revenue, as appropriate, is recognized on a percentage-of-completion basis. Percentage-of-completion is based upon the proportion of costs incurred in the current period to total expected costs. A provision is made for the entire amount of future estimated losses, if any, on productions-in-progress.

Royalty revenue is accrued for royalty streams for which the receipt of revenue is probable and is recognized in accordance with the substance of the relevant agreements and statements received from third party agents.

Revenue from live tours is recorded in the period in which the show is performed, the amount of revenue can be reliably measured, the costs incurred or to be incurred can be measured and collectability is reasonably assured. Merchandising revenue is recognized at the point of sale to customers.

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, the services have been provided and collectability is reasonably assured. 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.

Revenue from the Company's broadcasting business is recognized as follows:

(a) subscriber fee revenues are recognized monthly based on estimated subscriber levels for the period-end, which are based on the preceding month's actual subscribed as submitted by the broadcast distribution undertakings;

(b) advertising and promotion revenue, net of agency commission where applicable, is recorded when the advertising or promotion airs on the Company's television stations; and

(c) other revenues, including sponsorship revenue, as earned.

( 3)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Gross versus net revenue

The Company evaluates arrangements with third parties to determine whether revenue should be reported on a gross or net basis under each individual arrangement by determining whether the Company acts as the principal or agent under the terms of each arrangement. To the extent that the Company acts as the principal in an arrangement, revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line items. Conversely, to the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues being presented net of any related expenses. Determining whether the Company acts as principal or agent is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement. The most significant factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and inventory risk (or equivalent) and latitude in establishing prices.

Investment in film and television programs

Investment in film and television programs represents the balance of costs of film and television programs which have been produced by the Company or for which the Company has invested in distribution rights and the Company’s right to participate in certain future cash flows of film and television programs produced and distributed by other unrelated parties.

Costs of investing in and producing film and television programs are capitalized. The costs are measured net of federal and provincial program contributions earned and are charged to income using a declining balance method of amortization. For film and television programs produced by the Company, capitalized costs include all direct production and financing costs incurred during production that are expected to benefit future periods. Financing costs are capitalized to the costs of a film or television program until substantially all of the activities necessary to prepare the film or television program for delivery are complete. Production financing provided by third parties that acquire participation rights is recorded as a reduction of the cost of the production.

The rates used for the declining balance method of amortization range from 40 to 100% at the time of initial episodic delivery and at rates ranging from 10 to 25% annually thereafter. The determination of the rates is based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue.

Investments in film and television programs are accounted for as inventory and classified within current assets. The normal operating cycle of the Company can be greater than 12 months.

The investment in film and television programs is measured at the lower of cost and net realizable value. The net realizable value is determined using estimates of future revenues net of future costs. A write-down is recorded equivalent to the amount by which the costs exceed the estimated net realizable value of the film or television program.

Acquired and library content

Acquired and library content represents the balance of acquired film and television programs. Acquired and library content typically has minimal ongoing costs to maintain the content, and is charged to income using a declining balance method of amortization.

The rates used for the declining balance method of amortization range from 10 to 20% annually. The determination of rates is based on the expected economic useful life of the film or television program, and includes factors such as the availability of rights to renew licenses for episodic television programs in various territories, as well as the availability of secondary market revenue.

( 4)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Acquired and library content is accounted for as an intangible asset and classified within long-term assets.

Acquired and library content is tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use, being the present value of the expected future cash flows of the asset. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Broadcast rights

Program and film rights for broadcasting are purchased on a fixed or variable cost basis. The asset and liability for fixed cost purchases are recognized at the time the rights are known and determinable, and if they are available for airing. The cost of fixed program and film rights is expensed over the lesser of the availability period and the maximum period that varies depending upon the type of program, generally ranging from 24 to 60 months based on the expected pattern of consumption of the economic benefit. Program and film rights for broadcasting acquired on a variable cost basis are not capitalized and their cost is determined and expensed over their contracted exhibition period, on the basis of the average number of subscribers to the network exhibiting the program and of other contracting terms.

In the event that the recognition criteria for fixed cost purchases described above are not met and the Company has already paid amounts to obtain future rights, such amounts are considered as prepaid program and film rights and are included as prepaids on the consolidated balance sheet.

Any impairment charges are reported as an expense on the consolidated statement of income (loss).

Accrued participation payables

Included in accounts payable and accrued liabilities are accrued participation payables.  Accrued participation payables reflect the legal liability due as at the balance sheet date, calculated as the participation owing on cash collected and accounts receivable.

Deferred financing fees and debt issue costs

Debt issue costs related to bank indebtedness are recorded as a deferred charge and amortized, using the straight-line method, over the term of the related bank indebtedness and the expense is included in interest expense. Debt issue costs related to long-term debt are recorded as a reduction to the carrying amount of long-term debt and amortized using the effective interest method and the expense is included in finance expense.

Business combinations

The Company applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.

Any contingent consideration to be transferred by the group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

( 5)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Goodwill is initially measured as the excess of the aggregate of the fair value of consideration transferred over the fair value of identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

Development costs

Development costs include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and included in investment in film and television programs upon commencement of production. Advances or contributions received from third parties to assist in development are deducted from these costs. Projects in development are written off as development expenses at the earlier of the date determined not to be recoverable or when projects under development are abandoned, or three years from the date of the initial recognition of the investment, if there have been no active development milestones or significant development expenditures within the last year.

Property and equipment

Property and equipment are carried at historical cost, less accumulated amortization and accumulated impairment losses. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the consolidated statement of income during the period in which they are incurred. Amortization is provided, commencing when the asset is available for use, over the estimated useful life of the asset, using the following annual rates and methods:

Buildings	4% declining balance
Furniture, fixtures and other equipment	5% to 20% declining balance
Computer equipment	30% declining balance
Post-production equipment	30% declining balance
Computer software	2 years straight-line
Website design	2 years straight-line
Leasehold improvements	Straight-line over the term of lease

The Company allocates the amount initially recognized in respect of an item of property and equipment to its significant parts and depreciates each such part separately. Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.

Gains and losses on disposals of property and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains and losses in the consolidated statement of income (loss).

Goodwill

Goodwill represents the cost of acquired businesses in excess of the fair value of net identifiable assets acquired at the date of acquisition. Goodwill is carried at cost less any accumulated impairment losses and is not subject to amortization. Goodwill is tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired. Goodwill is allocated to a cash generating unit (“CGU”), or group of CGUs, which is the lowest level within an entity at which the goodwill is monitored for internal management purposes, which is not higher than an operating segment. Impairment is tested by comparing the recoverable amount of goodwill assigned to a CGU or group of CGUs to its carrying value.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Intangible assets

Intangible assets are carried at cost. Amortization is provided on a straight-line basis over the estimated useful life of the assets, using the following annual rates and methods:

Broadcaster relationships	7 to 10 years straight-line
Customer relationships	10 years straight-line
Brands	10 to 20 years straight-line or indefinite life
Production and distribution rights	10 to 25 years straight-line
Production backlog	2 to 3 years straight-line
Non-compete contracts	3 years straight-line
Production software	5 years straight-line

Intangible assets with indefinite life are not amortized. The assessment of whether the underlying asset continues to have an indefinite life is reviewed annually to determine whether an indefinite life continues to be supportable, and if not, the change in useful life from indefinite to finite is made on a prospective basis.

Broadcast licenses

Broadcast licenses are considered to have an indefinite life based on management’s intent and ability to renew the licenses without significant cost and without material modification of the existing terms and conditions of the license. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Broadcast licenses are tested for impairment annually or more frequently if events or circumstances indicate that they may be impaired.

Broadcast licenses by themselves do not generate cash inflows and therefore, when assessing these assets for impairment, the Company looks to the CGUs to which the asset belongs.

Impairment of non-financial assets

Property and equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets that are not amortized are subject to an annual impairment test. For the purposes of measuring recoverable amounts, assets are grouped into CGUs. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use, being the present value of the expected future cash flows of the relevant CGU. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, including investment in films and property and equipment, are added to the cost of those assets, until such time as the assets are substantially complete and ready for use. All other borrowing costs are recognized as a finance expense in the consolidated statement of income in the period in which they are incurred.

( 7)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Government financing and assistance

The Company has access to several government programs, including tax credits that are designed to assist film and television production and distribution in Canada. The Company records government assistance when the related costs have been incurred and there is reasonable assurance that they will be realized. Amounts received or receivable in respect of production assistance are recorded as a reduction of the production costs of the applicable production. Government assistance with respect to distribution rights is recorded as a reduction of investment in film and television programs. Government assistance towards current expenses is recorded as a reduction of the applicable expense item.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material. The Company performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.

Leases

Upon initial recognition, the Company classifies all leases as either a finance lease or an operating lease, depending on the substance of the lease terms. Finance leases are classified as such because they are found to transfer substantially all the rewards incidental to ownership of the asset to the lessee, whereas operating leases are classified as such because they are not found to meet the criteria required for classification as a finance lease. Upon commencement of the lease, finance leases are recorded as assets with corresponding liabilities in the consolidated balance sheet at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The rate used to discount the payments is either the interest rate implicit in the lease or the Company's incremental borrowing rate. The asset is amortized over the shorter of the term of the lease and the useful life of the asset while the liability is decreased by the actual lease payments and increased by any accretion expense. Payments made under operating leases are charged to the consolidated statement of income (loss) on a straight-line basis over the period of the lease.

Income taxes

The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of income (loss), except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

Deferred tax is recognized in respect of temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the financial statements, as well as the benefit of losses that are probable to be realized and are available for carry forward to future years to reduce income taxes. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

( 8)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

The effect of a change in tax rates on deferred tax assets and liabilities is included in earnings in the period that the change is substantively enacted, except to the extent it relates to items previously recognized outside earnings in which case the rate change impact is recognized in a manner consistent with how the items were originally recognized.

Deferred income tax assets and liabilities are presented as non-current.

Share-based compensation

The Company grants stock options to certain directors, officers, employees and consultants of the Company. Stock options vest over periods of up to 4 years and expire after 5 to 7 years. Each vesting tranche of stock options is considered a separate award with its own vesting period and estimated grant date fair value. The estimated grant date fair value of each vesting tranche is estimated using the Black-Scholes option pricing model. The non-cash compensation expense is recognized over each tranche’s vesting period by increasing contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually with any impact being recognized immediately.

The Company also grants performance share units ("PSUs") to certaineligible employees. PSUs are granted at the discretion of the Board based on a notional equity value of the common shares of the Company tied to a specified formula. The number of PSUs that ultimately vest under each grant is dependent on continued employment for a period of time and the achievement of specific performance measures. On the vesting date, each employee will receive common shares as settlement; accordingly, grants of PSUs are accounted for as equity settled instruments. The Company recognizes compensation expense offset by contributed surplus equal to the estimated grant date fair value of the PSUs granted on a straight-line basis over the applicable vesting period, taking into consideration forfeiture estimates. Compensation expense is adjusted prospectively for subsequent changes in management’s estimate of the number of PSUs that are expected to vest.

Earnings per share

Basic earnings per share (“EPS”) is calculated by dividing the net income for the period attributable to equity owners of the Company by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for potentially dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. The Company’s potentially dilutive common shares comprise stock options, PSUs and the Senior Unsecured Convertible Debentures.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Financial instruments

Financial instruments are classified as follows:

• Financial assets classified as "Available-for-Sale" are recognized initially at fair value plus transaction costs and are subsequently carried at fair value with the changes in fair value recorded in other comprehensive income. Available-for-Sale assets are classified as non-current, unless the investment matures or management expects to dispose of them within twelve months.

• Derivative financial instruments are classified as “Held-for-Trading” and recognized initially on the balance sheet at fair value. Financial assets classified as Held-for-Trading are recognized at fair value with the changes in fair value recorded in net income.

• Cash, cash held in trust, trade receivables and long-term amounts receivables are classified as “Loans and Receivables”. After their initial fair value measurement, they are measured at amortized cost using the effective interest method, less a provision for impairment, established on an account-by-account basis, based on, among other factors, prior experience and knowledge of the specific debtor and management’s assessment of the current economic environment.

• Accounts payable and accrued liabilities, interim production financing, long-term debt, special warrants and other liabilities are classified as “Other Financial Liabilities”, and are initially recognized at fair value less transaction costs. Subsequent to initial recognition, Other Financial Liabilities are measured at amortized cost using the effective interest method.

Impairment of financial assets

At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. A significant or prolonged decline in the fair value of the security below its cost is evidence that the asset is impaired. If such evidence exists, the Company recognizes an impairment loss, as follows:

• Financial assets carried at amortized cost: The loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

• Available-for-Sale financial assets: The impairment loss is the difference between the original cost of the asset and its fair value at the measurement date, less any impairment losses previously recognized in the statement of income. This amount represents the cumulative loss in accumulated other comprehensive income that is reclassified to net income.

Impairment losses on financial assets carried at amortized cost and Available-for-Sale financial assets are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on available-for-sale equity instruments are not reversed.

Dividend distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Board of Directors.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Tangible benefit obligation

As part of the Canadian Radio-Television and Telecommunications Commission (“CRTC”) decision approving the Company’s acquisition of 8504601 Canada Inc. (“DHX Television”) on July 31, 2014, the Company is required to contribute $17,313 to provide tangible benefits to the Canadian broadcasting system over seven years from the date of acquisition. The tangible benefit obligation was initially recorded in the consolidated statement of income at the estimated fair value on the date of acquisition, being the sum of the discounted future net cash flows and the same amount was recorded as a liability at the date of acquisition of DHX Television. The tangible benefit obligation is being adjusted for the incurrence of related expenditures, the passage of time and for revisions to the timing of the cash flows. Changes in the obligation (other than incurred expenditures) are recorded as finance expense in the consolidated statement of income (loss).

Cash and cash equivalents

Cash and cash equivalents consist of current operating bank accounts, term deposits and fixed income securities with an original term to maturity of 90 days or less. Cash equivalents are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

New and amended standards adopted

i) The IASB issued amendments to IAS 7, "Statement of Cash Flows" ("IAS 7") to improve financial information provided to users of financial statements about an entity's financing activities. These amendments are effective for annual periods beginning on or after January 1, 2017. The adoption of this standard had no financial impact on the Company's consolidated financial statements, however did required additional disclosure in note 22.

Accounting standards issued but not yet applied

i) IFRS 9 “Financial instruments” (“IFRS 9”) is required to be applied for years beginning on or after January 1, 2018, and sets out the requirements for recognizing and measuring financial assets and financial liabilities. IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”). The new standard establishes a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. It 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. Additional disclosures would be required under the new standard.

Upon adoption, the Company expects the impact to be $500 to $1,500, and will change the category of classification for its financial assets and financial liabilities. Previously, the Company classified its financial assets as ‘loans and receivables’ and its financial liabilities as ‘other financial liabilities’, both of which were previously measure at amortized cost, with the exception of embedded derivatives which were measured at fair value. Under IFRS 9, the measurement basis would remain the same, however the category for classification would be referred to as 'Amortized Cost'.

( 11)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

ii) IFRS 15 “Revenue from Contracts and Customers” (“IFRS 15”) is required to be applied for years beginning on or after January 1, 2018, and establishes principles to record revenues from contracts for the sale of goods or services, unless the contracts are in the scope of other IFRSs. IFRS 15 replaces IAS 18, “Revenue” and 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

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

The new standard also provides additional guidance relating to principal versus agent relationships, licenses of intellectual property, and contract costs.

The Company has completed its assessment of the impact of IFRS 15 and expects its proprietary production revenue and consumer products owned revenue streams to be impacted.

Under IFRS 15, the Company has determined that in certain proprietary production contracts, the customer who owns the initial broadcast license rights may in substance control the asset. In such cases, the Company would record revenue using the percentage of completion basis.

In addition,  the Company has determined that, under IFRS 15, contracts for the management of copyrights, licensing and brands provide the customer with a right to access to the underlying property, and therefore royalties, including minimum guarantees, will be recognized as the greater of earned royalties or the pro-rata minimum guarantee over the term of the license.

IFRS 15 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective or cumulative effect method).  The Company intends to adopt the standard using the modified retrospective method on the date of transition, which is July 1, 2018.  The expected impact of this adoption is a increase in deficit as at July 1, 2018 in the range of $4.0 million to $9.0 million, with a corresponding adjustment to deferred revenue.

iii) In January 2016, the IASB issued IFRS 16, "Leases" ("IFRS 16") effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have also adopted IFRS 15. IFRS 16 provides a comprehensive model for the measurement, presentation and disclosure of leases and supersedes

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 financial statements.

( 12)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

iv) The IASB issued amendments to IFRS 2, "Share-based payment" ("IFRS 2"), to clarify the classification and measurement of share-based payment transactions. The amendments are effective for annual periods beginning on or after January 1, 2018. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

v) In June 2017, the IASB issued IFRIC 23 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. The Company is currently evaluating the impact of IFRIC 23 on its consolidated financial statements.

vi) The IASB issued IFRIC 22 "Foreign currency transactions and advance consideration" ("IFRIC 22"), which clarifies 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). IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. The Company will apply the IFRIC on a prospective basis. The effect of applying this IFRIC is not expected to be have a significant impact on the Company's consolidated financial statements.

Significant accounting judgments and estimation uncertainty

The preparation of financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable. Actual results may differ materially from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

(i) Income taxes and deferred income taxes

Deferred tax assets and liabilities require management’s judgment in determining the amounts to be recognized. In particular, judgment is used when assessing the extent to which deferred tax assets should be recognized with respect to the timing of deferred taxable income.

The current income tax provision for the year requires judgment in interpreting tax laws and regulations. Estimates are used in determining the provision for current income taxes which are recognized in the financial statements. The Company considers the estimates, assumptions and judgments to be reasonable but this can involve complex issues which may take an extended period to resolve. The final determination of the amounts to be paid related to the current year’s tax provisions could be different from the estimates reflected in the financial statements. The Company’s tax filings also are subject to audits, the outcome of which could change the amount of current and deferred tax assets and liabilities.

( 13)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

(ii) Business combinations

The purchase price allocation process requires management to use significant estimates and assumptions, including fair value estimates including, but not limited to:

•estimated fair values of tangible assets;

•estimated fair values of intangible assets;

•estimated fair values of deferred revenue;

•probability of required payment under contingent consideration provisions;

•estimated income tax assets and liabilities; and

•estimated fair value of pre-acquisition contingencies.

While management uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired and liabilities assumed at the business combination date, estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which is the earlier of the date management receives the information it is looking for or one year from the business combination date, adjustments are recorded to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Although management believes the assumptions and estimates made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the assets and liabilities acquired include but are not limited to:

•future expected cash flows from distribution, consumer products and licensing and other customer

contracts;

•expected costs to complete film and television productions in-progress and the estimated cash flows

from the productions when completed;

•the acquired company’s brand, broadcaster relationships and customer and distribution

relationships as well as assumptions about the period of time these acquired intangibles will

continue to benefit the combined company;

•the fair value of deferred revenue, including future obligations to customers;

•uncertain tax positions assumed in connection with a business combination are initially estimated

as of the acquisition date and are re-evaluated quarterly, management continues to collect

information in order to determine their estimated value, with any adjustments to preliminary

estimates recorded to goodwill during the measurement period; and

•discount rates applied to future expected cash flows.

Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities and goodwill in the purchase price allocation, which could also impact net income as expenses and impairments could change. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

(iii) Investment in film and television programs/Acquired and library content

The costs of investing in and producing film and television programs are capitalized, net of federal and provincial program contributions earned.

( 14)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Investment in film assets are amortized using the declining balance method with rates of amortization ranging from 40% to 100% at the time of initial episodic delivery and at rates ranging from 10% to 25% annually thereafter. Management estimates these rates based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue. Estimation uncertainty relates to management's ability to estimate the expected economic useful life of the film or television program.

(iv) Impairment of goodwill and indefinite life intangibles

Management estimates the recoverable amount of each CGU that has goodwill or indefinite life intangibles by estimating its value-in-use or fair value less costs to sell, whichever is greater, and compares it to the carrying amount to determine if the goodwill or indefinite life intangible asset are impaired.

Value-in-use is based on the expected future cash flows of an asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The impairment test calculations are based on detailed budgets and forecasts which are prepared for each CGU to which the assets are allocated. These budgets and forecasts generally cover a period of five years with a long-term growth rate applied to the terminal year. Key areas of estimation uncertainty relate to management's assumptions about future operating results, long-term growth rates and the discount rate. Actual results could vary from these estimates which may cause significant adjustments to the Company's goodwill or indefinite life intangible assets in subsequent reporting periods.

(v) Impairment of non-financial assets

The indicators of impairment for non-financial assets are determined based on management’s judgment. If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset’s or CGU’s recoverable amount. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management estimates the asset or CGU’s value-in-use. Value-in-use is based on the estimated future cash flows of the asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The impairment test calculations are based on detailed budgets or forecasts which are prepared for each CGU to which the assets are allocated. Key areas of estimation uncertainty relate to management's assumptions about the cash flow forecast, the long-term growth rate applied to cash flows and the discount rate.

( 15)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

4    Compensation of key management

Key management includes all directors, including both executive and non-executive directors, as well as the Executive Chairman and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Commercial Officer and President. The compensation earned by key management is as follows:

	2018	2017
	$	$
Salaries and employee benefits	4,205	2,694
Share-based compensation	2,146	2,738
Termination benefits	2,899	—
	9,250	5,432

5    Acquisitions

i) On September 15, 2017, the Company acquired 51% of the outstanding shares of Egg Head Studios LLC ("Ellie Sparkles"), which owns and produces proprietary kids and family content and operates a kids and family focused YouTube channel, for consideration as follows:

• Cash consideration US$3,570 ($4,350) paid at closing, subject to a customary working capital adjustment; and

• Two performance based earn-outs, each in the amount of up to US$1,000 ($1,218) which, subject to achieving performance based targets, may become payable on the first and second anniversaries of closing. Subsequent to year end, it was determined that $nil would be payable in relation to the first anniversary performance based target.

The acquisition of Ellie Sparkles was accounted for using the purchase method and as such, the results of operations reflect revenue and expenses of Ellie Sparkles since September 15, 2017.

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

	$
Assets
Cash	122
Acquired and library content	8,406
Total identifiable net assets at fair value	8,528
Non-controlling interest	4,178
Purchase consideration transferred	4,350

The Company finalized the purchase price allocation during the year. There was no impact to net income previously reported as a result of finalizing the purchase price allocation.

( 16)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

ii) On June 30, 2017 (“IED Effective Date”), the Company acquired all of the entertainment division of Iconix Brand Group, Inc. (“IED”), which includes an 80% controlling interest in Peanuts and a 100% interest in Strawberry Shortcake for consideration of US$349,132 ($453,070), consisting of US$345,000 ($447,707) paid at closing for the purchase price and a working capital adjustment of US$4,132 ($5,363), of which US$1,503 ($1,950) was paid at closing, and US$2,629 ($3,413) of which was paid during the period. Specifically, the acquisition of IED consisted of two Membership Interest Purchase Agreements which provided for the acquisition of an 80% interest in Peanuts Holdings LLC (including all subsidiaries) ("Peanuts"), a 100% interest in IBGNYC LLC (including all subsidiaries), a 100% interest in IBGSCREEN LLC, and a 100% interest in Shortcake IP Holdings LLC. The acquisition of IED was funded in conjunction with a refinancing (the “Refinancing”) of all the Company’s existing senior secured credit facilities (the "Former Senior Secured Credit Facilities") and existing senior unsecured notes (the "Senior Unsecured Notes").

The Company also entered into a new senior secured credit agreement (the "Senior Secured Credit Agreement") and completed an offering (the "Offering") of subscription receipts (the "Subscription Receipts"), which commensurate with the closing of the acquisition of IED on June 30, 2017 were automatically converted into special warrants (the "Special Warrants"), and effective October 1, 2017 were automatically exercised, for no additional consideration, into Senior Unsecured Convertible Debentures. The details of the Refinancing are further described in note 12. The remaining 20% interest in Peanuts Holdings LLC (including all subsidiaries) continues to be held by members of the family of Charles M. Schulz. In addition to its 20% interest in Peanuts Holdings LLC (including all subsidiaries), the family of Charles M. Schulz is also entitled to receive an additional fee based on the revenues less shareable costs of Peanuts Worldwide LLC, a subsidiary of Peanuts Holdings LLC, which for the year ended June 30, 2018 was $54,082.

The goodwill value of $25,149 arising from the acquisition of IED is attributable to the Company’s ability to further develop the Peanuts and Strawberry Shortcake properties in new ways; the increased size and scale of the combined consumer products and licensing businesses; synergies related to the Company’s CPLG business, which manages copyrights, licensing and brands; and the value of the assembled workforce.

Goodwill is measured as the excess of the consideration transferred and the amount of non-controlling interests over the estimated fair value of the identifiable assets acquired and the liabilities assumed.

The acquisition of IED was accounted for using the purchase method; and as such, the results of operations reflect the revenues and expenses of IED since June 30, 2017.

( 17)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

	$
Assets
Cash	12,754
Amounts receivable	24,367
Prepaid expenses and deposits	1,787
Long-term receivables	8,661
Acquired and library content	74,618
Property and equipment	104
Intangible assets - brands	422,012
Goodwill	25,149
	569,452
Liabilities
Accounts payable and accrued liabilities	10,938
Deferred revenue	14,575
Other liabilities	5,148
	30,661
Total identifiable net assets at fair value	538,791
Non-controlling interest	85,721
Purchase consideration transferred	453,070

The Company finalized the purchase price allocation during the year. There was no impact to net income previously reported as a result of finalizing the purchase price allocation.

Subsequent to June 30, 2018, the Company sold 49% of its 80% ownership interest in Peanuts (see note 24 for further details).

iii) On March 3, 2017, the Company acquired 80% of the outstanding shares of Whizzsis Limited ("Kiddyzuzaa"), which owns and produces proprietary kids and family content and operates a kids and family focused YouTube channel, for consideration as follows:

• Cash consideration £GBP1,290 ($2,121) paid at closing, with an additional payment of £GBP202 ($333) due on the first anniversary of closing and a final payment of £GBP202 ($333) due on the second anniversary of closing; and

• A performance based earn-out of up to £GBP322 ($530) based on total commercial exploitation over a two-year period following closing.

The acquisition of Kiddyzuzaa was accounted for using the purchase method and as such, the results of operations reflect revenue and expenses of Kiddyzuzaa since March 3, 2017.

( 18)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

The purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as follows:

	$
Assets
Cash	10
Acquired and library content	3,484
Goodwill	695
	4,189
Liabilities
Accounts payable and accrued liabilities	75
Deferred income tax liabilities	631
	706
Total identifiable net assets at fair value	3,483
Non-controlling interest	696
Purchase consideration transferred	2,787

The Company finalized the purchase price allocation during the year. There was no impact to net income previously reported as a result of finalizing the purchase price allocation.

6    Amounts receivable

	June 30, 2018		June 30, 2017
	$		$
Trade receivables	163,203		136,755
Less: Provision for impairment of trade receivables	(9,742	)	(4,772	)
	153,461		131,983
Goods and services tax recoverable, net	1,203		1,411
Federal and provincial film tax credits and other government assistance	96,874		111,639
Short-term amounts receivable	251,538		245,033
Long-term amounts receivable	18,789		26,502
Total amounts receivable	270,327		271,535

The aging of trade receivables not impaired is as follows:

	June 30, 2018	June 30, 2017
	$	$
Less than 60 days	131,683	125,081
Between 60 and 90 days	5,863	1,833
Over 90 days	15,915	5,069
	153,461	131,983

The Company does not have security over these balances. All impaired trade receivables are older than 90 days.

( 19)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

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 historical default experience, any changes to credit quality and management estimates. Goods and services taxes recoverable and other government assistance do not contain any significant uncertainty.

Provision for impairment of trade receivables:

	June 30, 2018		June 30, 2017
	$		$
Opening balance	4,772		6,459
Provision for receivables	5,089		3,857
Receivables written off during the period	(197	)	(5,300	)
Recoveries of receivables previously provided for	(12	)	(94	)
Foreign exchange	90		(150	)
Closing balance	9,742		4,772

7 Investment in film and television programs

	June 30, 2018		June 30, 2017
	$		$
Development costs	2,112		1,678
Productions in progress
Cost, net of government and third-party assistance	17,577		37,346
Productions completed and released
Cost, net of government and third-party assistance	529,494		473,775
Accumulated expense	(377,041	)	(343,487	)
Accumulated write-down of investment in film and television programs	(15,910	)	(11,131	)
	136,543		119,157
Program and film rights - broadcasting
Cost	134,765		120,655
Accumulated expense	(102,202	)	(83,656	)
Accumulated write-down of program and film rights	(2,787	)	—
	29,776		36,999
	186,008		195,180

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

( 20)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

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

	June 30, 2018		June 30, 2017
	$		$
Net opening investment in film and television programs	195,180		140,444
Increase in development costs	434		238
Cost of productions (completed and released and productions in progress), net of government assistance and third-party assistance	33,088		88,021
Expense of investment in film and television programs	(33,554	)	(24,348	)
Write-down of investment in film and television programs	(4,779	)	(1,177	)
Increase of program and film rights - broadcasting	14,110		15,839
Expense of program and film rights - broadcasting	(18,546	)	(22,515	)
Write-down of program and film rights - broadcasting	(2,787	)	—
Foreign exchange	2,862		(1,322	)
	186,008		195,180

During the year ended June 30, 2018, interest of $1,384 (2017 - $2,149) has been capitalized to investment in film and television programs.

8 Acquired and library content

	June 30, 2018		June 30, 2017
	$		$
Net opening acquired and library content	155,940		88,462
Additions IED (note 5)	—		74,618
Additions Kiddyzuzaa (note 5)	—		3,484
Additions Ellie Sparkles (note 5)	8,406		—
Write-down of acquired and library content	(3,402	)	(363	)
Amortization	(15,916	)	(10,541	)
Foreign exchange	2,060		280
	147,088		155,940

( 21)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

9 Property and equipment

	Land	Building		Furniture, fixtures and equipment		Computer equipment		Post-production equipment		Computer software		Leasehold improvements		Total
	$	$		$		$		$		$		$		$
For the year ended June 30, 2017
Opening net book value	4,276	1,792		1,354		2,811		2,917		1,040		3,493		17,683
IED Acquisition	—	—		—		104		—		—		—		104
Additions	—	—		1,071		1,087		8,223		344		8,872		19,597
Disposals, net	—	—		—		(170	)	—		—		—		(170	)
Transfers, net	—	158		—		—		—		—		(158	)	—
Amortization	—	(12	)	(314	)	(1,475	)	(2,852	)	(488	)	(1,045	)	(6,186	)
Foreign exchange differences	—	—		—		(32	)	—		—		—		(32	)
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
At June 30, 2017
Cost	4,276	2,070		6,281		12,536		13,966		4,896		14,372		58,397
Accumulated amortization	—	(132	)	(4,178	)	(10,419	)	(5,678	)	(4,056	)	(3,226	)	(27,689	)
Foreign exchange differences	—	—		8		208		—		56		16		288
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
For the year ended June 30, 2018
Opening net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
Additions	—	73		349		852		6,055		331		616		8,276
Disposals, net	—	—		—		—		—		—		(104	)	(104	)
Amortization	—	(78	)	(738	)	(1,147	)	(4,907	)	(429	)	(1,529	)	(8,828	)
Foreign exchange differences	—	—		1		84		—		9		2		96
	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436
At June 30, 2018
Cost	4,276	2,143		6,630		13,388		20,021		5,227		14,884		66,569
Accumulated amortization	—	(210	)	(4,916	)	(11,566	)	(10,585	)	(4,485	)	(4,755	)	(36,517	)
Foreign exchange differences	—	—		9		292		—		65		18		384
Net book value	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436

As at June 30, 2018, included in the property and equipment net book value were leased computers equipment, post production equipment and computer software in the amount of $1,690, $6,327, and $740 respectively, (2017 - $1,733, $5,787, and $725).

( 22)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

10    Intangible assets

All broadcast licenses relate to the operations of DHX Television.

	Broadcast licenses	Broadcaster relationships		Customer relationships		Brands (1)		Production and distribution rights (2)		Other (3)		Total
	$	$		$		$		$		$		$
For the year ended June 30, 2017
Opening book value	67,800	1,262		21,653		24,853		25,843		3,199		144,610
IED acquisition (note 5)	—	—		—		422,012		—		—		422,012
Additions	—	—		—		969		—		—		969
Amortization	—	(732	)	(2,747	)	(3,177	)	(2,387	)	(2,336	)	(11,379	)
Foreign exchange differences	—	1		(226	)	(76	)	(503	)	—		(804	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
At June 30, 2017
Cost	67,800	7,362		27,920		458,260		30,946		7,327		599,615
Accumulated amortization	—	(6,875	)	(9,680	)	(13,918	)	(3,551	)	(6,464	)	(40,488	)
Foreign exchange differences	—	44		440		239		(4,442	)	—		(3,719	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
For the year ended June 30, 2018
Opening book value	67,800	531		18,680		444,581		22,953		863		555,408
Additions	—	—		—		—		—		1,074		1,074
Amortization	—	(299	)	(2,792	)	(8,899	)	(2,458	)	(898	)	(15,346	)
Impairment	—	—		—		(1,059	)	—		—		(1,059	)
Foreign exchange differences	—	—		89		6,091		674		66		6,920
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997
At June 30, 2018
Cost	67,800	7,362		27,920		457,201		30,946		8,401		599,630
Accumulated amortization	—	(7,174	)	(12,472	)	(22,817	)	(6,009	)	(7,362	)	(55,834	)
Foreign exchange differences	—	44		529		6,330		(3,768	)	66		3,201
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997

(1) Included in Brands are $350,419 of indefinite life intangibles (2017 - $345,319).

(2) Productions and distribution rights represent rights acquired by the Company to produce and/or distribute television content where the Company does not own the underlying intellectual properties.

(3) Comprised of production backlog, non-compete contracts and production software.

( 23)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

11 Goodwill

The continuity of goodwill is as follows:

	June 30, 2018		June 30, 2017
	$		$
Opening net book value	240,534		214,325
Acquired on acquisition of IED (note 5)	(537	)	25,818
Acquired on acquisition of Kiddyzuzaa (note 5)	—		695
Exchange differences	809		(304	)
	240,806		240,534

Impairment testing

Goodwill and indefinite life intangible assets, being the broadcast licenses and certain brands, are tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired. The Company tested goodwill for impairment at June 30, 2018 and 2017, in accordance with its policy described in note 3. For the purposes of allocating goodwill, the Company has determined that it has four CGU's: i) the Company's production, distribution and licensing of film and television programs business, being the Content Business excluding Peanuts (the "Content Business"); ii) Peanuts; iii) CPLG, which manages copyrights, licensing and brands for third parties; and iv) DHX Television. The CPLG CGU does not have any goodwill or indefinite life intangible assets, and therefore has not been tested for impairment.

In assessing the goodwill and indefinite life intangible assets for impairment, the Company compares the carrying value of the CGU to the recoverable amount, where the recoverable amount is the higher of fair value less costs to sell ("FVLCS") and the value-in-use ("VIU"). An impairment charge is recognized to the extent that the carrying value exceeds the recoverable amount.

To determine the recoverable amount for each of it's CGU's, the Company applied the following valuation methods:

CGU's	Valuation methodology
Content Business	Value-in-use
Peanuts	FVLCS
DHX Television	Value-in-use

Value-in-Use

The value-in-use of the Company's Content Business CGU and DHX Television CGU were determined by discounting five-year cash flow projections prepared from business plans reviewed by senior management and approved by the Board of Directors. The projections reflect management’s expectations of revenue, profit, capital expenditures, working capital and operating cash flows, based on past experience and future expectations of operating performance. Cash flows beyond the five-year period are extrapolated using perpetual growth rates.

The discount rates are applied to the cash flow projections and were derived from the weighted average cost of capital and other external sources for each CGU.

( 24)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

The following table shows the key assumptions used to estimate the recoverable amounts of the groups of CGUs:

	Assumptions used
	Perpetual		Pre-tax
CGU's	growth rate		discount rate
Content Business	3.0	%	12.2	%
DHX Television	0.0	%	15.5	%

For the Content Business and DHX Television CGU's, the recoverable amount of the CGU's to which goodwill and indefinite life intangible assets have been allocated was greater than its carrying value, as such the Company determined there were no impairments of goodwill or indefinite life intangible assets as at June 30, 2018. Management believes that any reasonably possible change in the key assumptions on which the estimate of recoverable amounts of the Content Business and DHX Television CGU's was based would not cause their carrying amounts to exceed their recoverable amounts.

The cash flows used in determining the recoverable amounts for the CGU’s were based on the following key assumptions:

Cash flows from operations for each CGU were projected for a period of five years based on a combination of past experience, actual operating results and forecasted future results.

For the Content Business CGU, key revenue assumptions include i) future production slates (both proprietary and production service), ii) future sources of distribution revenues (linear and digital) and expected sales prices/revenue levels, and iii) consumer products revenue forecasts by brand. These key assumptions represent Management’s assessment of future industry trends and are based on both historical results, future projections and external sources. Gross margins for the Content Business were estimated using a combination of both forecast and historical margins.

For the DHX Television CGU, the key revenue assumptions include subscriber levels, rates per subscriber, and future advertising revenues. Subscriber levels were estimated based on Management’s assessment of future industry trends, while subscriber rates were based on existing agreements and Management’s estimates of future renewal rates. Advertising and promotion revenues were based upon Management’s assessment of future industry trends, based on internal and external sources. Gross margins for DHX Television were estimated using historical margins, while giving consideration to expected future content costs.

Expenditure levels for all CGU’s were forecasted based on Management’s assessment of future industry trends.

Cash flow adjustments for capital expenditures for each CGU were based upon Management’s sustaining capital expenditure estimates, adjusted for presently planned capital expenditures required to achieve forecast operating levels.

The perpetual growth rates were estimated based upon Management’s assessment of future industry trends for each specific CGU.

Fair value less costs to sell

The fair value less costs to sell of the Company's Peanuts CGU was estimated with reference to the sale of 49% of its ownership interest to a third party, Sony Music Entertainment (Japan) Inc. subsequent to year end (see note 24). Based on the sales price of this transaction, the Company concluded there were no impairments of goodwill or indefinite life intangible assets in the Peanuts CGU as at June 30, 2018.

( 25)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

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

	June 30, 2018		June 30, 2017
	$		$
Bank indebtedness	16,350		—
Interim production financing	93,683		101,224
Long-term debt and obligations under finance leases	756,570		983,335
Interest bearing debt and obligations under finance leases	866,603		1,084,559
Amount due within 12 months	(120,557	)	(336,100	)
Amount due beyond 12 months	746,046		748,459

Effective June 30, 2017 and commensurate with the closing of the Company’s acquisition of IED (note 5), the Company entered into the Senior Secured Credit Agreement with a syndicate of lenders, which provides for a revolving facility (the “Revolving Facility”) and a term facility (the “Term Facility”). All amounts borrowed pursuant to the Senior Secured Credit Agreement are guaranteed by the Company and certain of its subsidiaries (the “Guarantors”). A first priority security interest in respect of all of the capital stock of certain of the subsidiaries of DHX Media Ltd. has been provided in favour of the syndicate of lenders, as well as all present and subsequently acquired real and personal property of the Guarantors.

On May 31, 2017, and pursuant to the Company’s acquisition of IED (note 5), the Company completed the Offering of Subscription Receipts, which upon closing of the acquisition of IED on June 30, 2017 were automatically converted into Special Warrants and were automatically exercised, for no additional consideration, into Senior Unsecured Convertible Debentures effective October 1, 2017.

The proceeds from the Refinancing were used to fund the acquisition of IED (note 5) and to repay all amounts owing pursuant to Former Senior Secured Credit Facilities and Senior Unsecured Notes.

a) Bank indebtedness

The Revolving Facility has a maximum available balance of US$30,000 (CAD $39,504) 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 June 30, 2018, $16,350 (2017 - $nil) was drawn on the Revolving Facility, comprised of the following amounts payable: US$4,000, GBP£1,200, and CAD$9,000.

b) Interim production financing

	June 30, 2018	June 30, 2017
	$	$
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 $115,639 at June 30, 2018 (June 30, 2017 - $131,186) have been pledged as security.	93,683	101,224

During the year ended June 30, 2018, the $CDN bank prime rate averaged 3.19% (2017 - 2.70%).

( 26)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

c) Long-term debt and obligations under finance leases

	June 30, 2018		June 30, 2017
	$		$
Term Facility, net of unamortized issue costs of $22,232 (June 30, 2017 - $26,107)	623,066		616,339
Special Warrants, net of unamortized issue costs of $nil (June 30, 2017 - $6,249)	—		133,751
Senior Unsecured Convertible Debentures, net of unamortized issue costs of $5,588 (June 30, 2017 - $nil) and embedded derivatives at fair value of $11,940 (June 30, 2017 - $nil)	124,747		—
Senior Unsecured Notes	—		225,000
Obligations under various finance leases, bearing interest at rates ranging from 4.0% to 9.8%, maturing on dates ranging from July 2018 to March 2021	8,757		8,245
	756,570		983,335
Less: Current portion	(10,524	)	(234,876	)
	746,046		748,459

(i) Term Facility

As at June 30, 2018, the Term Facility has a principal balance of US$490,050 (2017 - US$495,000) and matures on December 29, 2023.

The Term Facility is repayable in annual amortization payments of 1% of the initial principal, payable in equal quarterly installments which commenced September 30, 2017. 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 June 30, 2018, no payments were owing under the Excess Cash Flow Payments terms of the Term Facility.

The Term Facility bears interest at floating rates of either $USD base rate + 2.75% or $USD LIBOR + 3.75%.

Subsequent to June 30, 2018, 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 (see note 24 for further details).

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

• The ratio of Consolidated Funded Indebtedness (defined in summary as all third-party indebtedness for borrowed money, unreimbursed obligations in respect of drawn letters of credit, finance leases and other purchase money indebtedness and guarantees of the Company and certain of its subsidiaries (the “Restricted Subsidiaries”) and generally excludes all interim production financing),less the unrestricted cash and cash equivalents of the Company and Restricted Subsidiaries to Consolidated EBITDA (rolling consolidated adjusted EBITDA, pro-forma last 12 months) of the Company and its Restricted Subsidiaries, calculated quarterly in $USD, which

( 27)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

commencing the 12 month period ended September 30, 2017 is not to exceed 7.25 times, stepping down to 6.75 times commencing for the 12 month period ended September 30, 2018, then stepping down to 6.50 times for the 12 month period ended September 30, 2019, then stepping down to 5.75 times commencing for the 12 month period ended September 30, 2020, then stepping down to 5.50 times commencing for the 12 month period ended September 30, 2021 through until maturity.

As at June 30, 2018, the Company was in compliance with its debt covenants.

(ii) Former Term Facility

On June 30, 2017, a portion of the proceeds from the Refinancing were used to repay all amounts outstanding pursuant to the Former Term Facility which bore interest at floating rates, resulting in a debt extinguishment charge of $1,471 during the year ended June 30, 2017, representing the previously unamortized debt issue costs.

(iii) Senior Unsecured Convertible Debentures

On May 31, 2017, and in contemplation of the closing of the acquisition of IED (note 5), the Company completed the Offering of Subscription Receipts in the amount of $140,000, which upon closing of the acquisition of IED (note 5) on June 30, 2017 automatically converted into Special Warrants and were exercised, for no additional consideration, into Senior Unsecured Convertible Debentures of the Company effective October 1, 2017. The Subscription Receipts, Special Warrants and Senior Unsecured Convertible Debentures all bear interest at an annual rate of 5.875%, paid semi-annually on March 31 and September 30. 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 Company accounts for the Senior Unsecured Convertible Debentures by allocating the proceeds, net of issue costs, between the debt component and the embedded derivatives based on the estimated fair values of the debt component and the embedded derivatives, as determined by the residual value of the debt component. 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; accordingly, the Senior Unsecured Convertible Debentures are deemed to have no equity component and the estimated fair value of the embedded derivatives is recorded as a financial liability and is 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 October 1, 2017, the initial estimated fair value of the embedded derivatives was $23,191.

(iv) Senior Unsecured Notes

As at June 30, 2018, the outstanding principal amount due on the Senior Unsecured Notes was

$nil (2017 - $225,000). The Senior Unsecured Notes bore interest at 5.875% and with an originally scheduled maturity of December 2, 2021.

On June 7, 2017, and pursuant to both the acquisition of IED (note 5) and the Refinancing, the Company issued notice to the holders of the Senior Unsecured Notes of its intention to redeem the Senior Unsecured Notes on July 11, 2017, resulting in the recognition of an early redemption penalty of $13,464 and a debt extinguishment charge of $5,519, representing the previously unamortized debt issue costs, during the year ended June 30, 2017. On July 11, 2017, the Senior Unsecured Notes, including all accrued interest and the early redemption penalty were settled for $239,877.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

(v) Principal repayments

The aggregate amount of scheduled principal repayments, excluding any potential Excess Cash Flow Payments, required in each of the next five years is as follows:

	$
Year ending June 30, 2019	10,524
2020	8,611
2021	8,254
2022	7,440
2023 and beyond	759,225

13    Share capital and contributed surplus

a) Authorized

100,000,000 Preferred Variable Voting Shares (“PVVS”), redeemable at the option of the Company at any time at a millionth of a cent per share, no entitlement to dividends, voting

Unlimited Common Voting Shares without nominal or par value

Unlimited Variable Voting Shares without nominal or par value

Unlimited Non-Voting Shares without nominal or par value

Preferred Variable Voting Shares

On May 14, 2018, the PVVS were transferred to the Company’s Executive Chairmen and Chief Executive Officer ("CEO"), in accordance with the terms of a shareholders agreement among the Company and holder of the PVVS (the “PVVS Shareholder Agreement”). On the date of such transfer, the CEO entered into the PVVS Shareholder Agreement with the Company, pursuant to which the CEO: (i) agreed not to transfer the PVVS, in whole or in part, except with the prior written approval of the Board; (ii) granted to the Company the unilateral right to compel the transfer of the PVVS, at any time and from time to time, in whole or in part, to a person designated by the Board; and (iii) granted to the Company a power of attorney to effect any transfers contemplated by the PVVS Shareholder Agreement.  The Board will not approve or compel a transfer without first obtaining the approval of the TSX and the PVVS Shareholder Agreement cannot be amended, waived or terminated unless approved by the TSX.

Common shares

On September 30, 2014, the Company’s shareholders approved a reorganization of the Company’s share capital structure (the “Share Capital Reorganization”) to address the Canadian ownership requirements of DHX Television. The Share Capital Reorganization was affected on October 9, 2014 and resulted in, among other things, the creation of three new classes of shares: Common Voting Shares, Variable Voting Shares and Non-Voting Shares.

On October 9, 2014, each outstanding Common Share of the Company that was not owned and controlled by a Canadian for the purposes of the Broadcasting Act (Canada) (the “Broadcasting Act”) was converted into one Variable Voting Share and each outstanding Common Share that was owned and controlled by a Canadian for the purposes of the Broadcasting Act was converted into one Common Voting Share. Each Common Voting Share carries one vote per share on all matters. Each Variable Voting Share carries one vote per share unless the number of Variable Voting Shares outstanding exceeds 33 1/3% of the total number of Variable Voting Shares and Common Voting Shares outstanding, in which case the voting rights per share of the Variable Voting Shares are reduced so that the total number of votes associated with the outstanding Variable Voting Shares equals 33 1/3% of the total votes associated with the outstanding Variable Voting Shares and Common Voting Shares combined. The economic rights of each Variable Voting

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Share, each Common Voting Share and each Non-Voting Share are the same. All of the unissued Common Shares of the Company were cancelled on the completion of the Share Capital Reorganization. The Variable Voting Shares and Common Voting Shares are listed on the TSX under the ticker symbol DHX. On June 23, 2015, the Variable Voting Shares were listed on the NASDAQ under the ticker symbol DHXM.

b) Issued and outstanding

	June 30, 2018		June 30, 2017
	Number	Amount	Number	Amount
		$		$
Preferred variable voting shares (note 13 (a))	100,000,000	—	100,000,000	—
Common shares (note 13 (c))
Opening balance	134,061,548	304,320	133,774,729	302,828
Dividend reinvestment	108,180	419	195,319	1,138
Shares issued pursuant to the ESPP	43,496	199	31,500	205
PSU's settled	20,666	69	—	—
Options exercised	60,000	160	60,000	149
Ending balance	134,293,890	305,167	134,061.548	304,320

c) Common shares

The common shares of the Company are inclusive of Common Voting Shares, Variable Voting Shares and Non-Voting Shares. As at June 30, 2018, the Company had 99,510,508 Common Voting Shares, 34,783,382 Variable Voting Shares and nil Non-Voting Shares issued and outstanding (2017 - 103,821,287, 30,240,261, and nil respectively).

During the year ended June 30, 2018, the Company issued 43,496 common shares, at an average price of $4.58 as part of the Company’s employee share purchase plan (2017 - 31,500 at $6.51).

During the year ended June 30, 2018, 60,000 common shares were issued out of treasury at an average price of $1.81 upon exercise of stock options (2017 - 60,000 at $1.73).

During the year ended June 30, 2018, the Company issued 108,180 common shares at an average price of $3.87, as part of the shareholder enrollment in the Company's dividend reinvestment program (2017 - 195,319 at 5.82).

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

d) Stock options

As at June 30, 2018 and 2017, the Company had the following stock options outstanding:

			Weighted average
	Number of		exercise price
	options		per stock option
Outstanding at June 30, 2016	7,137,125		6.93
Granted	1,742,400		6.79
Exercised	(60,000	)	1.73
Outstanding at June 30, 2017	8,819,525		6.93
Granted	1,920,000		5.69
Forfeited	(2,431,050	)	7.85
Cancelled	(125,000	)	7.13
Exercised	(60,000	)	1.81
Outstanding at June 30, 2018	8,123,475		6.41
Exercisable at June 30, 2018	4,297,150		6.12

The total maximum number of common shares to be reserved for issuance through the Company's option plan at June 30, 2018 is 8.5% (2017 - 8.5%) of the total number of outstanding common shares at any time. As at June 30, 2018, this amounted to 11,414,980 (2017 - 11,395,231).

On October 3, 2016, 1,342,400 stock options were issued at $7.02 per share, vesting over four years, expiring on October 2, 2023.

On February 16, 2017, 400,000 stock options were issued at $6.08 per share, vesting over four years, expiring on February 15, 2024.

On July 11, 2017, 1,620,000 stock options were granted to directors, officers and employees with an exercise price of $5.73 per common share, vesting over four years and expiring on July 10, 2024.

On October 2 2017, 300,000 stock options were granted to employees with and exercise price of $5.47 per common share, vesting over four years , expiring on October 1, 2024.

The weighted average grant date value of stock options and assumptions using the Black-Scholes option pricing model for the year ended June 30, 2018 and 2017 are as follows:

	2018			2017
Weighted average grant date value	$	1.67		$	2.01
Risk-free rate	1.45		%	0.69		%
Expected option life	5 years			5 years
Expected volatility	36		%	37		%
Expected dividend yield	1.35		%	1.08		%

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

During the year ended June 30, 2018, the compensation expense recognized as a result of stock options was $2,159 (2017 - $4,972), with a corresponding adjustment to contributed surplus.

Information related to options outstanding at June 30, 2018 is presented below.

	Number	Weighted	Weighted	Number	Weighted
Range of	outstanding at	average	average	exercisable at	average
exercise prices	June 30,	remaining	exercise	June 30,	exercise
	2018	contractual life	price	2017	price
		years	$		$
$1.50 - $3.49	655,625	0.03	2.03	655,625	2.03
$3.50 - $5.49	1,170,000	1.90	4.43	870,000	4.07
$5.50 - $7.49	4,027,100	4.35	6.57	1,324,900	7.00
$7.50 - $9.49	2,270,750	2.71	8.40	1,446,625	8.40
Total	8,123,475	3.19	6.41	4,297,150	6.12

e) Performance share unit plan

As described in note 3, on December 16, 2015, the Company's Shareholders approved the Plan for eligible employees of the Company. During the year ended June 30, 2017, and in two separate awards, the Company granted certain eligible employees a target number of PSUs that vest over up to a three-year period. On the vesting date, each eligible employee will receive common shares as settlement.

As at June 30, 2018, there were 207,270 (2017 - 338,665) PSUs both granted and outstanding. During the year, the compensation expense recognized as a result of the PSUs was $791 (2017 - $895), with a corresponding adjustment to contributed surplus.

During the year ended June 30, 2018, 20,666 PSU's were paid out to employees, 87,076 were forfeited and 23,653 were cancelled relating to taxes payable on the units issued.

14 Government financing and assistance

During the year ended June 30, 2018, investment in film and television programs was reduced by $nil (2017 - $2,125) related to production financing from government agencies. This financing is related to participation amounts by government agencies and is repayable from distribution revenue of the specific productions for which the financing was made. In addition, during the year ended June 30, 2018, investment in film has also been reduced by $1,667 (2017 - $3,737) related to non-repayable contributions from the Canadian Media Fund license fee program. During the year ended June 30, 2018, investment in film and television programs has been reduced by $15,618 (2017 - $25,547) for tax credits relating to production activities. Lastly, during the year ended June 30, 2018, the Company received $63,464, in government financing and assistance (2017 - $39,919).

Amounts receivable from the Canadian federal government and other government agencies in connection with production financing represents 36% of total amounts receivable at June 30, 2018 (2017 - 41%). Certain of these amounts are subject to audit by the government agency. Management believes that the net amounts recorded are fully collectible. The Company adjusts amounts receivable from Canadian federal government and other government agencies including federal and provincial tax credits receivable, in connection with production financing, quarterly and yearly, for any known differences arising from internal or external audit of these balances.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

15 Income taxes

Significant components of the Company’s net deferred income tax liability as at June 30, 2018 and 2017 are as follows:

	June 30, 2018		June 30, 2017
	$		$
Broadcast licenses	(17,967	)	(17,967	)
Tangible benefit obligation	2,171		2,352
Leasehold inducement	—		123
Foreign tax credits	2,324		85
Participation payables and finance lease obligations and other liabilities	—		64
Property and equipment	697		(1,724	)
Share issuance costs and deferred financing fees	(1,603	)	(1,051	)
Investment in film and television programs and acquired and library content	(27,568	)	(7,782	)
Intangible assets	(9,633	)	(6,278	)
Non-capital losses and other	33,900		17,619
Net deferred income tax liability	(17,679	)	(14,559	)

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 totalled $72,648 at June 30, 2018 (2017 - $60,510).

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

	June 30, 2018		June 30, 2017
	$		$
Income tax expense (recovery) based on combined federal and provincial tax rates of 31% (June 30, 2017 - 31%)	(1,664	)	(113	)
Income taxes increased (reduced) by:
Share-based compensation	915		1,792
Non-taxable portion of capital gain	(1,024	)	—
Tax rate differential	3,675		(1,252	)
Non-controlling interest	(2,223	)	—
Non-deductible acquisition costs	—		1,244
Tax rate change on opening balance	2,120		—
Other	(308	)	200
Provision for income taxes	1,491		1,871

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.

For the year ended June 30, 2018, the Company’s blended U.S. federal statutory tax rate is 27.5%, a result of using a tax rate of 34% for the six months ended December 31, 2017 and a reduced tax rate of 21% for the six months ended June 30, 2018.  As a result of the change in the U.S. federal statutory tax rate, the Company has recorded an estimated $2,120 expense, primarily as a result of the re-measurement of its deferred tax assets and deferred tax liabilities.  The Company’s deferred tax assets and deferred tax liabilities have been re-measured to reflect the

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

reduced U.S. federal statutory tax rate expected to apply when the deferred tax assets and deferred tax liabilities are settled or realized in future periods; re-measuring the deferred tax assets and deferred tax liabilities involves estimating when the amounts will be settled or realized, and may be further revised if these estimates are ultimately different from actual future operating results.

16 Finance income and finance expense

Finance income and finance expense are comprised of the following:

	June 30, 2018	June 30, 2017
	$	$
Finance income
Interest income	1,147	556
Gain on movement in fair value of the embedded derivatives on Senior Unsecured Convertible Debentures and Senior Unsecured Notes	11,251	1,968
	12,398	2,524
Finance expense
Interest expense on bank indebtedness	788	348
Accretion of tangible benefit obligation	539	651
Interest on long-term debt, obligations under finance leases and other	48,343	18,181
Early redemption penalties	—	13,464
Accretion on Senior Unsecured Convertible Debentures	1,586	—
Debt extinguishment charge	—	6,990
Amortization of debt premium on Senior Unsecured Notes	—	118
Net foreign exchange loss	7,700	3,226
	58,956	42,978

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

17 Expenses by nature and employee benefit expense

The following sets out the expenses by nature:

	June 30, 2018	June 30, 2017
	$	$
Investment in film and television programs
Direct production and new media costs	192,143	96,249
Expense of film and television programs	33,554	24,348
Expense of film and broadcast rights for broadcasting	18,546	22,515
Write-down of investment in film and television programs and acquired and library content	10,968	1,540
Development, integration and other	10,554	3,435
Impairment of intangible assets	1,059	—
Amortization of acquired and library content	15,916	10,541
Office and administrative	21,704	20,395
Acquisition costs	—	9,695
Finance expense, net	46,558	40,454
Investor relations and marketing	3,322	2,902
Professional and regulatory	7,804	5,363
Amortization of property and equipment and intangible assets	24,174	17,565
	386,302	255,002
The following sets out the components of employee benefits expense:
Salaries and employee benefits	50,421	39,606
Share-based compensation	2,950	5,867
	53,371	45,473
	439,673	300,475

18    Financial instruments

a) Credit risk

Credit risk arises from cash, cash held in trust as well as credit exposure to customers, including outstanding trade receivables. The Company manages credit risk on cash and cash equivalents by ensuring that the counterparties are banks, governments and government agencies with high credit ratings.

The maximum exposure to credit risk for cash, cash held in trust and trade receivables approximate the amount recorded on the consolidated balance sheet of $228,542 at June 30, 2018 (2017 - $465,277).

The balance of trade amounts receivable are mainly with Canadian broadcasters and large international distribution companies. Management manages credit risk by regularly reviewing aged accounts receivables and appropriate credit analysis. The Company has booked an allowance for doubtful accounts of approximately 6% against the gross amounts for certain trade amounts receivable and management believes that the net amount of trade amounts receivable is fully collectible. In assessing credit risk, management includes in its assessment the long-term receivables and considers what impact the long-term nature of the receivable has on credit risk. For certain arrangements with licensees, the Company is considered the agent,

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

and only reports the revenue net of the licensor’s share. When the Company bills a third party in full where it is an agent for the licensor, the Company records an offsetting amount in accounts payable that is only payable to a licensee when the amount is collected from the third party. This reduces the risk, as the Company is only exposed to the amounts receivable related to the revenue it records.

b) Interest rate risk

The Company is exposed to interest rate risk arising from fluctuations in interest rates as its interim production financing, certain long-term debt and a portion of cash and cash equivalents and cash held in trust bear interest at floating rates. A 1% (100 bps) fluctuation in the interest rate on the Company's variable rate debt instruments would have an approximate $6,000 to $7,000 effect on net income before income taxes.

c) Liquidity risk

The Company manages liquidity by forecasting and monitoring operating cash flows and through the use of finance leases, interim production financing and maintaining revolving credit facilities (note 12). As at June 30, 2018, the Company had cash on hand of $46,550 (June 30, 2017 - $62,143).

Results of operations for any period are dependent on the number and timing of film and television programs delivered, which cannot be predicted with certainty. Consequently, the Company’s results from operations may fluctuate materially from period-to-period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. During the initial broadcast of the rights, the Company is somewhat reliant on the broadcaster’s budget and financing cycles and at times the license period gets delayed and commences at a later date than originally projected.

The Company’s film and television revenues vary significantly from quarter to quarter driven by contracted deliveries with the primary broadcasters. Although with the Company’s recent diversification of its revenue mix, particularly in the strengthening of the distribution revenue stream and addition of the broadcasting revenue stream, some of the quarterly unevenness is improving slightly and becoming more predictable. Distribution revenues are contract and demand driven and can fluctuate significantly from year-to-year. The Company maintains appropriate cash balances and has access to financing facilities to manage fluctuating cash flows.

The Company obtains interim production financing (note 12) to provide funds until such time as the federal and provincial film tax credits (note 6) are collected. Upon collection of the film tax credits, the related interim production financing is repaid.

d) Currency risk

The Company’s activities involve holding foreign currencies and incurring production costs and earning revenues denominated in foreign currencies. These activities result in exposure to fluctuations in foreign currency exchange rates. The Company periodically enters into foreign exchange purchases contracts to manage its foreign exchange risk on USD, GBP and Euro denominate contracts. At June 30, 2018, the Company revalued its financial instruments denominated in a foreign currency at the prevailing exchange rates. A 1% change in the USD, GBP, JPY or Euro foreign exchange rates would have an approximate $8,000 effect on net income and comprehensive income.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

e) Contractual maturity analysis for financial liabilities

		Less than	1 to 3	4 to 5	After 5
	Total	1 year	years	years	years
	$	$	$	$	$
Bank indebtedness	16,350	16,350	—	—	—
Accounts payable and accrued liabilities	130,545	130,545	—	—	—
Interim production financing	93,683	93,683	—	—	—
Other liabilities	8,150	—	8,150	—	—
Senior Unsecured Convertible Debentures	193,474	8,225	16,450	16,450	152,349
Term Facility	747,021	24,197	47,856	47,273	627,695
Finance lease obligations	9,435	4,364	4,132	939	—
	1,198,658	277,364	76,588	64,662	780,044

Contractual payments in the table above includes fixed rate interest payments but excludes variable rate interest payments and are not discounted. Other liabilities exclude deferred lease inducements as these do not require any future contractual payments.

f) Fair values

The Company categorizes its fair value measurements 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. Change in assumptions and estimates could significantly affect fair values.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

Financial assets and liabilities measured at fair value

	As at
	June 30, 2018			June 30, 2017
	Fair value hierarchy	Fair value(1)		Fair value hierarchy	Fair value(1)
Derivatives
Embedded derivatives (2)	Level 2	(11,940	)	Level 2	—
Foreign currency forwards (3)	Level 2	(61	)	Level 2	(174	)
(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 values of embedded derivatives are determined using valuation models.
(3) The fair value of forward currency contracts is determined using prevailing exchange rates.

Financial assets and liabilities not measured at fair value

The carrying amounts reported on the consolidated financial statements for cash on hand, cash held in trust, amounts receivables and accounts payable and accrued liabilities all approximate their fair values due to their immediate or short-term nature. Bank indebtedness was renegotiated during the previous year to reflect current interest rates; therefore, management believes the carrying amounts also approximate their fair values. Cash has a hierarchy of Level 1, all other values listed above are listed as Level 3.

The following table summarizes the fair value and carrying value of other financial liabilities that are not recognized at fair value on a recurring basis on the consolidated balance sheets:

	As at
	June 30, 2018			June 30, 2017
	Fair value hierarchy	Fair value liability	Carrying value	Fair value hierarchy	Fair value liability	Carrying value
Term Facility(1)	Level 2	645,298	645,298	Level 2	642,363	642,363
Senior Unsecured Notes(2)	Level 2	—	—	Level 2	225,000	225,000
Obligations under finance leases	Level 2	8,757	8,757	Level 2	8,245	8,245
Special Warrants	Level 3	—	—	Level 3	140,000	140,000
Senior Unsecured Convertible Debentures(3)	Level 1	123,200	130,355	N/A	—	—
Interim production financing(4)	Level 2	93,683	93,683	Level 2	101,224	101,224
Other liabilities(5)	Level 3	8,150	8,150	Level 3	11,422	11,422
(1) The interest rates on the Term Facility resets regularly; therefore, the fair value, using a market approach approximates the carrying value.
(2) Management estimates the fair value using a market approach, based on publicly disclosed trades between arm's length parties.
(3) The fair value of the convertible debentures is based on market quotes as these are actively traded on the open exchange.
(4) Interim production financing bears interest at variable rates, therefore management believes the fair value approximates the carrying value.
(5) The fair value of other liabilities, which includes the tangible benefit obligations, the long-term portion of certain other contractual liabilities and excludes deferred lease inducements, was estimated based on discounting the expected future cash flows. The key unobservable assumptions in calculating the fair value are the timing of the payments over the next four years related to the tangible benefit obligation included in other liabilities, and the discount rate used for discounting the other liabilities.

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

g) Foreign currency contracts

At June 30, 2018, the Company had notional principal of US$2,231 (2017 - US$7,756) in contracts to sell US dollars.

19 Commitments and contingencies

Commitments

The Company has entered into various operating leases for operating premises and equipment. The future aggregate minimum payments are as follows:

	$
Year ended June 30, 2019	9,884
2020	8,933
2021	7,563
2022	6,925
Beyond 2022	26,762

The Company has entered into various contracts to buy broadcast rights with future commitments totalling $22,321.

Contingencies

The Company is, from time-to-time, involved in various claims, legal proceedings and complaints arising in the normal course of business and as such, provisions have been recorded where appropriate. Management does not believe that the final determination of these claims will have a material adverse effect on the financial position or results of operations of the Company.

20 Capital disclosures

The Company’s objectives when managing capital are to provide an adequate return to shareholders, safeguard its assets, maintain a competitive cost structure and continue as a going concern in order to pursue the development, production, distribution and licensing of its film and television properties and broadcast operations. During the year ended June 30, 2018, the Company declared dividends totalling $10,734 (2017 - $9,908). The balance of the Company’s cash is being used to maximize ongoing development and reduce leverage.

The Company’s capital at June 30, 2018 and 2017 is summarized in the table below:

	June 30, 2018		June 30, 2017
	$		$
Total bank indebtedness, long-term debt and obligations under capital leases, excluding interim production financing	772,920		983,335
Less: Cash and cash held in trust	(46,550	)	(302,020	)
Net debt	726,370		681,315
Total Shareholders’ Equity	400,792		415,853
	1,127,162		1,097,168

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DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

To facilitate the management of its capital structure, the Company prepares annual expenditure operating budgets that are updated as necessary depending on various factors including industry conditions and operating cash flow. The annual and updated budgets are reviewed by the Board of Directors.

21 Earnings per common share

a) Basic

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

	June 30, 2018		June 30, 2017
	$		$
Net loss attributable to shareholders of the Company	(14,060	)	(3,634	)
Weighted average number of common shares	134,505,625		134,059,478
Basic loss per share	(0.10	)	(0.03	)

b) Diluted

Diluted earnings per common share is calculated by adjusting the weighted average number of common shares outstanding to assume conversion of all potentially dilutive instruments which are convertible into common shares. The Company has three categories of potentially dilutive instruments which are convertible into common shares: stock options, performance share units and the Senior Unsecured Convertible Debentures. For the stock options, performance share units and the Senior Unsecured Convertible Debentures, a calculation is completed to determine the number of common shares that could have been acquired at fair value (determined as the average market price of the Company’s outstanding common shares for the period), based on the monetary value of the subscription rights attached to the stock options, performance share units and Senior Unsecured Convertible Debentures. The number of shares calculated above is compared with the number of shares that would have been issued assuming exercises of stock options, issuance of performance share units and exercise of Senior Unsecured Convertible Debentures.

For the years ended June 30, 2018 and 2017, 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.

	June 30, 2018		June 30, 2017
	$		$
Net loss attributable to shareholders of the Company	(14,060	)	(3,634	)
Weighted average number of common shares	134,505,625		134,059,478
Diluted loss per share	(0.10	)	(0.03	)

( 40)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

22 Statement of cash flows - supplementary information

Net change in non-cash balances related to operations

	June 30,		June 30,
	2018		2017
	$		$
Decrease (increase) in amounts receivable	7,345		(44,457	)
Decrease (increase) in prepaid expenses and deposits and other	1,512		(526	)
Decrease (increase) in long-term amounts receivable	7,713		2,912
Increase (decrease) in accounts payable and accrued liabilities	(41,475	)	47,601
Increase (decrease) in deferred revenue	(5,558	)	10,899
Tangible benefit obligation payments	(859	)	(3,599	)
	(31,322	)	12,830
During the year, the Company paid and received the following:
	$		$
Interest paid	45,156		19,250
Interest received	342		556
Taxes paid	3,694		15,996

Net change in film and television programs

	June 30,		June 30,
	2018		2017
	$		$
Decrease (increase) in development	(434	)	(238	)
Decrease (increase) in productions in progress	19,769		(12,285	)
Decrease (increase) in productions completed and released	(52,854	)	(75,736	)
Expense of film and television programs	33,554		24,348
Decrease (increase) in program and film rights - broadcasting	(14,110	)	(15,839	)
Expense of film and broadcast rights for broadcasting	18,546		22,515
	4,471		(57,235	)

( 41)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

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

					Senior
					Unsecured		Senior
	Term		Special		Convertible		Unsecured		Finance
	Facility		Warrants		Debentures		Notes		leases		Total
	$		$		$		$		$		$
Balance - June 30, 2017	616,339		133,751		—		225,000		8,245		983,335
Repayments	(6,425	)	—		—		(225,000	)	(5,338	)	(236,763	)
Issue costs	(226	)	—		(313	)	—		—		(539	)
Total financing cash flow activities	(6,651	)	—		(313	)	(225,000	)	(5,338	)	(237,302	)
Conversion to Senior Unsecured Convertible Debentures	—		(133,751	)	133,751		—		—		—
Amortization of deferred financing costs	4,018		—		974		—		—		4,992
New finance leases	—		—		—		—		5,850		5,850
Movement in fair value of embedded derivatives	—		—		(11,251	)	—		—		(11,251	)
Accretion on Senior Unsecured Convertible Debentures	—		—		1,586		—		—		1,586
Unrealized foreign exchange loss	9,360		—		—		—		—		9,360
Total financing non-cash activities	13,378		(133,751	)	125,060		—		5,850		10,537
Balance - June 30, 2018	623,066		—		124,747		—		8,757		756,570

					Former		Senior
	Term		Special		Term		Unsecured		Finance
	Facility		Warrants		Facility		Notes		leases		Total
	$		$		$		$		$		$
Balance - June 30, 2016	—		—		67,578		219,928		4,567		292,073
New debt	642,362		140,000		—		—		—		782,362
Debt extinguishment cost	—		—		1,116		5,874		—		6,990
Realized foreign exchange	—		—		—		372		—		372
Repayments	—		—		(69,106	)	—		(4,517	)	(73,623	)
Issue costs	(26,023	)	(6,322	)	(18	)	(332	)	—		(32,695	)
Total financing cash flow activities	616,339		133,678		(68,008	)	5,914		(4,517	)	683,406
Amortization of deferred financing costs	—		73		430		1,008		—		1,511
Amortization of premium	—		—		—		118		—		118
New finance leases	—		—		—		—		8,195		8,195
Movement in fair value of embedded derivatives	—		—		—		(1,968	)	—		(1,968	)
Total financing non-cash activities	—		73		430		(842	)	8,195		7,856
Balance - June 30, 2017	616,339		133,751		—		225,000		8,245		983,335

( 42)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

23 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.

	Year ended June 30, 2018
	CPLG		DHX Television	Content	Consolidated
	$		$	$	$
Revenues	13,034		55,014	366,368	434,416
Direct production costs and expense of film and television produced, and selling, general and administrative	15,285		33,459	257,891	306,635
Segment profit	(2,251	)	21,555	108,477	127,781
Corporate selling, general and administrative					23,809
Amortization of property and equipment and intangible assets					24,174
Finance expense, net					46,558
Amortization of acquired and library content					15,916
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets					12,027
Development, integration and other					10,554
Loss before income taxes					(5,257	)

	Year ended June 30, 2017
	CPLG	DHX Television	Content	Consolidated
	$	$	$	$
Revenues	18,814	57,384	222,514	298,712
Direct production costs and expense of film and television produced, and selling, general and administrative	16,589	35,276	140,132	191,997
Segment profit	2,225	22,108	82,382	106,715
Corporate selling, general and administrative				25,248
Amortization of property and equipment and intangible assets				17,565
Finance expense, net				40,454
Amortization of acquired and library content				10,541
Write-down of acquired and library content				1,540
Acquisition costs				9,695
Development, integration and other				3,435
Loss before income taxes				(1,763	)

( 43)

DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2018 and 2017

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

For the year ended June 30, 2018, write-down of investment in film and television programs and acquired and library content included $2,787 and $9,240 related to DHX Television and Content segments, respectively (2017 - $nil and $1,540, respectively).

As at June 30, 2018, $nil, $33,224, and $207,582 of goodwill was allocated to CPLG, DHX Television and Content Business, respectively (2017 - $nil, $33,224, and $207,310, respectively).

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

	June 30, 2018	June 30, 2017
	$	$
Content
Production revenue	19,793	36,877
Distribution revenue	124,094	100,408
Merchandising and licensing and other revenue	144,712	26,253
Producer and service fee revenue	77,769	58,976
	366,368	222,514
DHX Television
Subscriber revenue	51,102	53,240
Promotion and advertising revenue	3,912	4,144
	55,014	57,384
CPLG
Third party brand representation revenue	13,034	18,814
	434,416	298,712

Of the Company’s $434,416 in revenues for the year endedJune 30, 2018, (2017 - $298,712), $168,038 was attributable to the Company’s entities based in Canada (2017 - $173,427), $144,940 (2017 - $1,089) was attributable to the Company’s entities based in the USA $109,024 (2017 - $108,849) was attributable to the Companies entities based in the UK and $12,414 (2017 - $15,347) was attributable to entities based outside of Canada, the USA and the UK.

As at June 30, 2018, the following non-current assets were attributable to the Company’s entities based in the USA: $67 of property and equipment, $423,485 of intangible assets, and $26,399 of goodwill (2017 - $125, $422,170, and $26,742, respectively). As at June 30, 2018, the following non-current assets were attributable to the Company’s entities based outside of Canada and the USA: $1,872 of property and equipment, $30,332 of intangible assets and $5,334 of goodwill (2017 - $2,091, $55,956, and $3,771 respectively). All other non-current assets were attributable to the Company’s entities based in Canada.

24    Subsequent events

On July 23, 2018, the Company completed the sale of a non-controlling interest in Peanuts to Sony Music Entertainment (Japan) Inc. (“SMEJ”).  SMEJ has indirectly purchased 49% of the Company’s 80% interest in Peanuts for $235.6 million in cash, subject to certain adjustments contemplated in the original agreement.  Subsequent to the sale, the Company now owns a 41% interest in Peanuts, SMEJ owns a 39% interest, and the members of the family of Charles M. Schulz continue to hold their 20% interest.

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EX-99.3

Fiscal 2018

Management Discussion and Analysis

MANAGEMENT DISCUSSION AND ANALYSIS

The following Management Discussion & Analysis (“MD&A”) dated as of September 24, 2018, should be read in conjunction with the audited consolidated financial statements of DHX Media Ltd.’s (“DHX Media”, the “Company”, "we”, “our” or “us”) for the years ended June 30, 2018 and 2017 and accompanying notes. The audited consolidated financial statements and accompanying notes for the years ended June 30, 2018 and 2017 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

All currency amounts are in thousands of Canadian dollars unless otherwise noted. Some figures and percentages may not total exactly due to rounding.

This MD&A refers to certain financial measures that are not determined in accordance with IFRS. Although these measures do not have standardized meanings and may not be comparable to similar measures presented by other companies, these measures are defined herein or can be determined by reference to our financial statements. The Company discusses these measures because it believes that they facilitate the understanding of the results of its operations and financial position.

DHX Media is a public company whose common voting shares (“Common Voting Shares”) and variable voting shares (“Variable Voting Shares”) are traded on the Toronto Stock Exchange (“TSX”) under DHX and on the NASDAQ Global Trading Market (“NASDAQ”) under DHXM. Headquartered in Canada, DHX Media has offices worldwide.

Further information about the Company can be found on our website at www.dhxmedia.com, on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.shtml.

Caution Regarding Forward Looking Statements

This MD&A and the documents incorporated by reference herein, if any, contain certain “forward-looking information” and “forward looking statements” within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as “forward-looking statements”), including the “safe harbour” provisions of provincial securities legislation in Canada, the U.S. Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended (the, “U.S. Exchange Act”), and Section 27A of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). These statements relate to future events or future performance and reflect the Company’s expectations and assumptions regarding the results of operations, performance and business prospects and opportunities of the Company and its subsidiaries. Forward looking statements are often, but not always, identified by the use of words such as “may”, “would”, “could”, “will”, “should”, “expect”, “expects”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “continue”, “seek” or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Company or any of its subsidiaries’ growth, objectives, future plans and goals, including those related to future operating results, economic performance, and the markets and industries in which the Company operates are or involve forward-looking statements. Specific forward-looking statements in this document include, but are not limited to, statements with respect to:

•the business strategies and strategic priorities of the Company;

• Management’s financial targets and priorities, and the future financial and operating performance and goals of the Company and its subsidiaries;

• the timing for implementation of certain business strategies and other operational activities of the Company;

• the markets and industries, including competitive conditions, in which the Company operates;

• the Company’s production pipeline;

• the financial impact of its long-term agreements with Mattel, Inc. and other strategic brand partnerships; and

• the Company’s cost reduction and deleveraging initiatives.

Forward-looking statements are based on factors and assumptions that Management believes are reasonable at the time they are made, but a number of assumptions may prove to be incorrect, including, but not limited to, assumptions about: (i) the Company’s future operating results; (ii) the expected pace of expansion of the Company’s operations, (iii) the Company’s ability to restructure its operations and adapt to a changing environment for content; (iv) future general economic and market conditions, including debt and equity capital markets; (v) the impact of increasing competition on the Company; and (vi) changes to the industry and changes in laws and regulations related to the industry. Although the forward-looking statements contained in this MD&A and any documents incorporated by reference herein are based on what the Company considers to be reasonable assumptions based on information currently available to the Company, there can be no assurances that actual events, performance or results will be consistent with these forward-looking statements and these assumptions may prove to be incorrect.

A number of known and unknown risks, uncertainties and other factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements, including, but not limited to, general economic and

2

market segment conditions, competitor activities, product capability and acceptance, international risk and currency exchange rates and technology changes. In evaluating these forward-looking statements, investors and prospective investors should specifically consider various risks, uncertainties and other factors which may cause actual events, performance or results to differ materially from any forward-looking statement.

This is not an exhaustive list of the factors that may affect any of the Company’s forward-looking statements. Please refer to a discussion of the above and other risk factors related to the business of the Company and the industry in which it operates that will continue to apply to the Company, which are discussed in the Company’s Annual Information Form for the year ended June 30, 2018 which is on file at www.sedar.com and attached as an exhibit to the Company’s annual report on Form 40-F filed with the SEC at www.sec.gov/edgar.shtml and under the heading “Risk Factors” contained in this MD&A.

These forward-looking statements are made as of the date of this MD&A or, in the case of documents incorporated by reference herein, if any, as of the date of such documents, and the Company does not intend, and does not assume any obligation, to update or revise them to reflect new events or circumstances, except in accordance with applicable securities laws. Investors and prospective investors are cautioned not to place undue reliance on forward-looking statements.

3

Business Overview

DHX Media is a leading independent children’s content and brands company, recognized globally for such high-profile properties as Peanuts, Teletubbies, Strawberry Shortcake, Caillou, Inspector Gadget, and the Degrassi franchise. We focus on children and family content given the international reach and longer lifespan of this genre of programming and the potential to monetize this content across multiple revenue streams. Kids’ and family content travels across cultures and animated series, in particular, can be easily dubbed into multiple languages. Such content does not lose relevance as easily as other genres; and therefore, can be licensed into numerous markets over and over again for many years.

As one of the world’s foremost producers of children’s series, DHX Media owns the world’s largest independent library of children’s content, currently at 13,000 half-hours. We monetize our content and related intellectual property (“IP”) mainly by:

1. producing and distributing shows to over 500 broadcasters and streaming services worldwide;

2. generating ad-supported video-on-demand (“AVOD”) revenue through our wholly owned subsidiary, WildBrain (“WildBrain”), which operates one of the largest networks of children’s channels on YouTube; and

3. realizing royalties from consumer products based on our IP and brands.

DHX Media also operates the Family suite of linear specialty channels in Canada, which has been a trusted broadcaster for over 25 years and provides stable cash flow that serves to fund and facilitate new content for our library. In addition, we represent third-party lifestyle and entertainment brands around the world through our wholly owned agency business, Copyright Promotions Licensing Group (“CPLG”), through which we are realizing operational synergies by using CPLG as the agent for a number of our own brands.

Revenue Model

DHX Media operates through three primary business areas: 1)Production and Distribution of Content, 2) Television, and 3) Consumer Products Representation.

1. Production and Distribution of Content relates to business segments that derive revenue from DHX Media’s owned IP or use of the Company’s production studios (the “Content Business”), and includes the production of our own proprietary content (“Proprietary Production”); third-party service work (“Producer and Service Fee”); distribution of proprietary and third-party titles across linear and streaming platforms including digital distribution on YouTube through our WildBrain network (“Distribution”); and royalties derived from licensing our own IP including partnership brands such as Mattel (“Consumer Products-Owned”);

2. The Television segment derives revenue from the operation of our Family broadcast channels in Canada (“Television”); and

3. The Consumer Products Representation segment generates commissions from the representation of third-party brands (“Consumer Products-Represented”).

Proprietary Production Revenue

Revenue from Proprietary Production is generated by licensing the initial broadcast rights for our proprietary titles. These fees are typically collected in stages, including partially upon commissioning of a production, partially during production, and partially once a completed production is delivered for broadcast, and also at some point in time after delivery as a holdback (see note 3 of the Fiscal 2018 financial statements for additional details on revenue recognition).

Producer and Service Fee Revenue

Producer and Service Fee is earned for producing television shows (both animated and live-action), feature films, direct-to-digital movies, and movies of the week for third parties, and also includes production revenues related to the Company’s strategic partnerships including Mattel.

Distribution Revenue

DHX Media is able to retain the ownership rights to its Proprietary Production titles. Once a new proprietary production is completed and delivered, the program is included in the Company’s library. Further licensing of the broadcast rights of the program is included in Distribution revenue. In addition to revenue from the licensing of initial broadcast rights, the Company is able to concurrently generate revenue from distributing the series in other jurisdictions and on other platforms (such as digital platforms, including, amongst others, Netflix, YouTube, Amazon, and home entertainment) for specified periods of time. The Company is also able to obtain the distribution rights of third-party produced titles to generate additional distribution revenue.

WildBrain revenue is included as a sub-category of Distribution. WildBrain is our platform of kids’ AVOD channels on which we distribute both our own IP and third-party brands on YouTube. We earn revenue derived from advertising on WildBrain channels.

4

Consumer Products-Owned Revenue

Consumer Products-Owned revenue is earned from licensing royalties based on our proprietary brands (among others, Peanuts, Strawberry Shortcake, Teletubbies, Yo Gabba Gabba!, Caillou, Johnny Test, In the Night Garden, and Twirlywoos), including merchandising, publishing, music rights, live tours and themed-events, and interactive games and apps as well as from consumer products royalties earned through our strategic brand partnerships such as with Mattel.

Television Revenue

The Company generates Television revenue through the ownership of Family Channel, Family Jr, Télémagino, and Family CHRGD. Revenues are primarily derived through subscription fees earned by charging a monthly subscriber fee to various Canadian cable and satellite television distributors. The channels also generate revenues from advertising and promotion activities; however, the majority of revenues are expected to continue to be derived from subscriber fees. In addition to linear television, all four channels have multi-platform applications, which allow for their content to be distributed both on-demand and streamed and are supported by websites and apps designed to engage viewers and support their loyalty to the brands.

Consumer Products-Represented Revenue

Consumer Products-Represented includes revenues earned from CPLG. CPLG is a wholly owned agency business based in Europe that earns commissions on consumer products licensing agreements from DHX Media’s own brands and third-party brands from film studios and other independent IP owners.

Strategy and Outlook

Fiscal 2018 has been a year of transition as we reshape the Company and reset our priorities to return to sustainable growth and capitalize on the changing market environment for kids’ content. There has been a refinement of DHX Media’s content-driven strategy to focus on our key assets in order to benefit from the largest market opportunities.

As a content producer, distributor and IP owner, DHX Media continues to be focused on the multiple ways in which we can monetize this content, including producing and distributing the shows that kids love across all media platforms, and deriving royalties from consumer products based on our shows and brands. 

Evolving Market for Content

As the market for content expands and evolves, major streaming platforms, such as Netflix, Amazon, Hulu and Apple, are investing in larger-budget, premium original shows, often based on established brands. At the same time, YouTube has emerged as one of the most popular destinations for short-form kids’ entertainment.

To capitalize on these two significant segments of the market, we are leveraging our position as the owner of both the world’s largest independent library of children’s content, currently comprising over 13,000 half-hours, and of WildBrain, our market-leading network of kids’ videos on YouTube, in order to address the growing markets for premium content and short-form content, respectively.

Content Strategy - Focused on Producing Premium Content and Growing WildBrain

Building content-driven brands is at the heart of DHX Media’s business. Management is committed to returning to growth by executing on a disciplined strategy aimed at generating attractive returns on invested capital, improving cash flow and driving organic growth. To that end, our strategy has evolved to build brands guided by the following key priorities:

• Developing New, and Revitalizing Classic Brands with Content on WildBrain - Invest in more, lower-cost short-form YouTube content to deliver rapid returns on investment by leveraging data from WildBrain's 2.4 billion monthly views and more than 50 million subscribers to create and develop global brands.

• Developing Premium Kids’ Content to Build Franchise Brands - Prioritize new content development on premium, original long-form series to meet rising demand from major streaming platforms for exclusive programming; develop and expand global franchise brands supported by new premium content to drive consumer products royalties; and

During Fiscal 2018, we began to shift the business and integrate operations around these priorities. We are focusing on a targeted production slate and select brands that will improve profitability and generate revenue across multiple lines of business. We expect Fiscal 2019 to begin to show the benefit of the changes we have made throughout the prior fiscal year, and begin to demonstrate the value of our strong and unique portfolio of assets.

5

Fiscal 2019 Priorities
Key Priorities	Fiscal 2019 Objectives
Developing New, and Revitalizing Classic Brands with Content on WildBrain	– Continue to drive significant revenue growth in WildBrain – Increase investment in original short-form content – Launch new series for franchise brands on Youtube – Pursue additional YouTube channel acquisition opportunities
Developing Premium Kids' Content to Drive Franchise Brands	– Target select high-end originals to meet demand for exclusive programming – Greenlight production on new series with greater consumer products potential – Drive major agreements for Peanuts to grow brand awareness and its licensee base – Launch consumer products programs on new brands
Improve Cash Flow and Balance Sheet	– Further rationalize overhead expenses and operating efficiencies – Apply excess cash flow to debt repayment and invest in our rapidly growing WildBrain business

6

Financial Highlights for the Year Ended June 30, 2018

• Fiscal 2018 continued to be a year of transition. We focused on improving efficiencies, rationalizing costs and began to reshape the business and integrate operations around our key imperatives of building brands by: (1) developing premium kids’ content; and (2) developing new, and revitalizing classic brands on WildBrain, in order to return to sustainable, profitable growth, improve cash generation and strengthen the balance sheet. 

• Consolidated revenue grew 45% to $434.4 million in Fiscal 2018, compared to Fiscal 2017. Loss before income taxes increased 199% to $5.3 million in Fiscal 2018, from a loss of $1.8 millionFiscal 2017. Adjusted EBITDA increased 12% to $97.5 million in Fiscal 2018, compared to Fiscal 2017. Please see the “Use of Non-GAAP Financial Measures” and “Reconciliation of Historical Results to Adjusted EBITDA” sections of this MD&A for the definition and detailed calculation of Adjusted EBITDA. The increases in both revenue and adjusted EBITDA were driven by the acquisition of Peanuts on June 30, 2017, and by continued strong growth in WildBrain. The loss before income taxes was driven primarily by an increase in write-down of certain investments in film and television programs, acquired and library content, and impairment of intangible assets.

• WildBrain revenue rose 68% to $57.3 million, compared to the prior year. WildBrain is increasingly monetizing our library content online, and is also managing a growing number of channels for third-party brand and IP owners, reflecting more and more kids’ content being consumed on this fast-growing distribution channel.

• Excluding acquisition growth of $145.5 million, revenue for Fiscal 2018 of $288.9 million was down 3% to the previous 12 months, at $298.7 million. In particular, traditional distribution revenue was impacted by a reduction in proprietary half-hours produced in Fiscal 2018, to 103 episodes versus 194 a year ago. This resulted as we started to move to a production slate comprised of fewer, but higher-value premium shows for key brands and to serve the demand from major streaming services for more exclusive programming, compared with library volume deals of previous years.

• The Company’s focus on building brands supported by new content is realizing incremental returns through our brand partnership with Mattel, which generated approximately $25.8 million in distribution revenue and consumer products royalties in Fiscal 2018.

• The result of moderating investment in content to focus on a targeted production pipeline and premium brands is translating into improved cash flow. For Fiscal 2018, cash provided by operating activities was $13.4 million, or approximately $37.8 million if we exclude the $24.4 million in items related to the Peanuts and Strawberry Shortcake acquisition and associated refinancing costs.

• In the current year, a net loss of $14.1 million was reported versus a net loss of $3.6 million in the prior year. The higher net loss reflected lower margins in Fiscal 2018 partly due to the new mix of our business with Peanuts, as well as a write-down of $12.0 million related to third-party shows licensed for our Family TV channels, acquired content, older titles in the library, and certain intangible assets as part of our annual impairment review.

• Subsequent to year end, the Company announced the suspension of the quarterly dividend. The approximate annual savings of $10.0 million from the suspension of the dividend will be used to pay down debt and invest in WildBrain growth opportunities.

• On July 23, 2018, we completed the sale of a minority stake in Peanuts Holdings LLC (“Peanuts”) to Sony Music Entertainment (Japan) Inc. (“Sony”). Sony acquired 49% of the Company’s 80% interest in Peanuts. Net proceeds of US$161.3 million were used to pay down a portion of the Company’s term loan.

7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary consolidated financial information set out below for years ended June 30, 2018, 2017, and 2016 has been derived from the Company’s audited consolidated financial statements and accompanying notes for those fiscal years and can be found on DHX Media’s website at www.dhxmedia.com, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov/edgar.shtml.

Each reader should read the following information in conjunction with those statements and the related notes.

	Fiscal		Fiscal		Fiscal
	2018		2017		2016
($000, except per share data)
Consolidated Statements of Income and Comprehensive Income Data:1
Revenues	434,416		298,712		304,817
Direct production costs and expense of film and television produced	(244,244	)	(143,112	)	(126,985	)
Gross margin2	190,172		155,600		173,322
Selling, general, and administrative	(86,200	)	(74,133	)	(75,614	)
Write-down of investment in film and television programs, acquired library and content, and impairment of intangible assets	(12,027	)	(1,540	)	(1,750	)
Amortization, finance and other expenses, net	(97,202	)	(81,690	)	(63,169	)
Provision for income taxes	(1,491	)	(1,871	)	(5,121	)
Net income (loss)	(6,748	)	(3,634	)	27,668
Net income attributable to non-controlling interests	(7,312	)	—		—
Net income (loss) attributable to the Shareholders of the Company	(14,060	)	(3,634	)	27,668
Basic earnings (loss) per common share	(0.10	)	(0.03	)	0.22
Diluted earnings (loss) per common share	(0.10	)	(0.03	)	0.22
Weighted average common shares outstanding (expressed in thousands)
Basic	134,506		134,059		126,146
Diluted	134,506		134,884		127,682
Consolidated Balance Sheet Data:
Total assets	1,476,792		1,761,705		910,166
Total liabilities	1,076,000		1,345,852		573,331
Shareholders’ equity	400,792		415,853		336,835
Other Key Performance Measures:
Adjusted EBITDA2	97,485		87,334		103,689
Cash flow from operating activities	13,364		(6,536	)	(21,291	)
Proprietary half-hours of content delivered	103		194		215

¹The financial information for the year ended June 30, 2018 includes the full results for all of the Company’s operations and all its subsidiaries, including Peanuts and Strawberry Shortcake, though not for Ellie Sparkles, which was acquired on September 17, 2017. The financial information for Fiscal 2017 includes the full results for all of the Company’s operations and all its subsidiaries, except Kiddyzuzaa, as it was acquired on March 3, 2017, and fully excludes Peanuts, Strawberry Shortcake, and Ellie Sparkles. The financial information for Fiscal 2016 includes the full results for all of the Company’s operations and all its subsidiaries, except Peanuts, Strawberry Shortcake, Kiddyzuzaa, and Ellie Sparkles.

²See “Use of Non-GAAP Financial Measures” section of this MD&A for further details.

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Results for the year ended June 30, 2018 (“Fiscal 2018”) compared to the year ended June 30, 2017 (“Fiscal 2017”)

Revenues

Consolidated revenue for Fiscal 2018 was $434.4 million, compared to $298.7 million for Fiscal 2017, an increase of $135.7 million, or 45%. The increase was due to growth in total distribution revenue, which itself was due to growth in WildBrain; growth in Consumer Products-Owned revenue, which resulted from the Peanuts acquisition; and higher Producer and Service Fees, of $18.8 million, due to an increase in service work at DHX Media’s studios. The increases were partially offset by lower revenues in the Company’s Proprietary Production, Consumer Products-Represented, and Television businesses, which experienced respective declines of $17.1 million, $5.8 million, and $2.4 million in Fiscal 2018, compared to Fiscal 2017. Excluding revenue of $145.5 million from acquisitions, revenue declined 3%, or $9.8 million.

Business segmented revenues for Fiscal 2018 are summarized in the following table:

Revenue Component	Fiscal 2018			Fiscal 2017	Variance
(shown in thousands)	Organic ($)	Acquired ($)	Total ($)	$	$	%
Distribution excluding WildBrain	53,370	13,441	66,811	66,379	432	1	%
WildBrain	53,855	3,427	57,282	34,029	23,253	68	%
Total Distribution Revenue	107,225	16,868	124,093	100,408	23,685	24	%
Proprietary Production Revenue	19,793	-	19,793	36,878	(17,085)	(46	)%
Producer and Service Fees	77,770	-	77,770	58,976	18,794	32	%
Consumer Products-Owned	16,054	128,658	144,712	26,254	118,458	451	%
Content Business	220,842	145,526	366,368	222,516	143,852	65	%
Television	55,014	-	55,014	57,382	(2,368)	(4	)%
Consumer Products-Represented	13,034	-	13,034	18,814	(5,780)	(31	)%
Total Revenue	288,890	145,526	434,416	298,712	135,704	45	%

Content Business: The Company's Content Business is comprised of its Total Distribution (including WildBrain), Proprietary Production, Producer and Service Fees, and Consumer Products-Owned business segments, which relate to revenues derived from the Company’s owned IP or studio production facilities, comprised of proprietary production, as well as service production, and also including strategic partnerships, whereby we participate in higher back-end economics on partnership brands.

Content Business revenue increased to $366.4 million in Fiscal 2018, compared to $222.5 million in Fiscal 2017, an increase of$143.8 million, or 65%. The increase was driven by the acquisition of Peanuts and Strawberry Shortcake, which significantly grew Consumer Products-Owned revenue, to $144.7 million, and by the strong growth experienced in WildBrain revenues. Proprietary Production revenue decreased to $19.8 million in Fiscal 2018, compared to $36.9 million in Fiscal 2017, a decrease of $17.1 million, which was more than offset by the growth in Producer and Service Fees revenue, of $18.8 million. The decrease in Proprietary Production revenue was part of the Company’s strategy to moderate the elevated pace of content investment over the past few years to focus on a more targeted slate and key brands. Fewer new productions contributed to Distribution (excluding WildBrain) revenue being largely level, at $66.8 million in Fiscal 2018, compared to $66.4 million in Fiscal 2017, as the Company began transitioning the business to serve the demand from major streaming services for more exclusive programming compared with library volume deals of previous years.

Excluding acquisitive growth, the Content Business revenue of $220.8 million in Fiscal 2018 was flat, relative to the $222.5 million earned in Fiscal 2017. Organic growth in WildBrain, of $19.8 million, and Producer and Service Fees of $18.8 million, were offset by declines in Proprietary Production, of $17.1 million, Distribution (excluding WildBrain), of $13.0 million, and Consumer Products-Owned, of $10.2 million.

Content Business included the following business segments:

• Total Distribution including WildBrain: Total Distribution revenue increased to $124.1 million in Fiscal 2018, compared to $100.4 million in Fiscal 2017, an increase of$23.7 million, or 24%. The increase in Fiscal 2018 was driven by significant growth experienced in the Company’s WildBrain platform, which increased to $57.3 million in Fiscal 2018, from $34.0 million in Fiscal 2017, an increase of $23.3 million, or 68%. Distribution (excluding WildBrain) revenues were $66.8 million in Fiscal 2018, compared to $66.4 million in Fiscal 2017, an increase of$0.4 million, or 1%.

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Acquisitive revenue of $16.9 million was generated from the Peanuts, Kiddyzuzaa and Ellie Sparkles acquisitions. Excluding acquired revenue, WildBrain revenue rose 58%, as our library is increasingly monetized on this digital channel, while Distribution (excluding WildBrain) experienced revenue decline of 20%, reflecting fewer new titles being added as we shift to select productions to meet the rising demand for exclusive original programming.

• Proprietary Production: Total Proprietary Production revenue decreased $17.1 million to $19.8 million in Fiscal 2018, compared to $36.9 million in Fiscal 2017. The decrease was more than offset by an increase in the Company’s Producer and Service Fees, which utilize the same production studios to earn revenues. During Fiscal 2018, the Company added 103.0 proprietary half-hours and 125.0 half-hours of third-party produced titles with distribution rights to the library (Fiscal 2017-194.0 proprietary half-hours and 101.0 third-party titles with distribution rights). Third-party titles with distribution rights largely arise as a result of the operational synergies associated with owning our linear television channels.

• Producer and Service Fees: Producer and Service Fees revenue were $77.8 million in Fiscal 2018, compared to $59.0 million in Fiscal 2017, an increase of$18.8 million or 32%. The increase was due to maximizing our studio capacity with a number of key service projects, including My Little Pony for Hasbro, Carmen Sandiego for Netflix, and Rocky and Bullwinkle. $13.3 million in Producer and Service Fees (Fiscal 2017-$9.1 million) related to new content produced as part of the Company’s strategic pact with Mattel on Bob the Builder, Fireman Sam, Little People, and Polly Pocket, from which we benefit through incremental distribution revenues and consumer products royalties.

• Consumer Products-Owned: For Fiscal 2018, Consumer Products-Owned revenues were $144.7 million, up$118.5 million, or 451% as compared to $26.3 million for Fiscal 2017. The increase was a direct result of the acquisition of the Peanuts and Strawberry Shortcake brands at the end of Fiscal 2017. The decline in organic revenue compared to prior year of $10.2 million was primarily due to the decline in live tour revenues to $0.2 million in Fiscal 2018 compared to $6.9 million in Fiscal 2017.

Television: For Fiscal 2018, Television revenues were $55.0 million, compared to $57.4 million for Fiscal 2017, a decrease of$2.4 million, or 4%. Subscriber revenue continued to account for approximately 93%, or $51.1 million (Fiscal 2017 - 93%, or $53.2 million) of the Television revenues, while advertising, promotion, and digital revenues contributed 7%, or $3.9 million (Fiscal 2017 - 7%, or $4.1 million) on a combined basis. The 4% decline in the subscriber revenues was in line with Management's expectations.

Consumer Products-Represented: For Fiscal 2018, Consumer Products-Represented revenues were $13.0 million, compared to $18.8 million in Fiscal 2017, a decrease of$5.8 million, or 31%. The decline reflected the continuing transition of the business unit in shifting its customer base as revenues dropped off from Despicable Me and Minions, which benefited Fiscal 2017.

Gross Margin

Gross margin is calculated by taking revenue less direct production costs and amortization related to investment in film & television programs.

	Fiscal 2018			Fiscal 2017
(shown in thousands, except percentages)	Gross Margin $	Gross Margin %		Gross Margin $	Gross Margin %
Content Business	144,162	39	%	102,099	46	%
Television	32,976	60	%	34,687	60	%
Consumer Products-Represented	13,034	100	%	18,814	100	%
Total Gross Margin	190,172	44	%	155,600	52	%

Consolidated gross margin for Fiscal 2018 was $190.2 million, an increase of $34.6 million, or 22%, compared to $155.6 million for Fiscal 2017. Gross margin percentage for Fiscal 2018 was 44% of revenue, compared to 52% of revenue for Fiscal 2017, as the acquisition of Peanuts and Strawberry Shortcake has altered the composition of the Company’s gross margin, which is described further below. The Peanuts and Strawberry Shortcake acquisition contributed $59.7 million in gross margin to the Content Business in Fiscal 2018.

The Content Business gross margins were $144.2 million in Fiscal 2018, an increase of$42.1 million, or 41%, compared to $102.1 million in Fiscal 2017. Excluding the acquisition of Peanuts and Strawberry Shortcake, gross margin of the Content Business declined $17.6 million, or 17%, primarily as a result of revenue declines in Distribution (excluding WildBrain). Gross margin percentage for Fiscal 2018 was 39% of revenue, compared to 46% of revenue for Fiscal 2017. The decline in gross margin percentage was largely due to four factors:

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i) the impact of the acquisition of Peanuts, which yields a lower gross margin due to the revenue-based talent fee payable to the estate of Charles M. Schulz;

ii) the mix of higher service productions, especially for the Mattel strategic brand partnership, which have a lower gross margin but carry with them significant distribution and consumer products rights for DHX Media;

iii) higher than normal third-party traditional distribution revenues, which carry lower gross margins; and

iv) the continued strong growth of third-party revenues in WildBrain, which are at lower gross margins, but are expected to continue to drive increasing revenue growth.

Television gross margins were $33.0 million for Fiscal 2018, a slight decline compared to the $34.7 million in the prior year. Gross margin percentage for Fiscal 2018 was 60%, flat versus Fiscal 2017, as the Company continued to maintain consistent margins by utilizing its large library to control content costs.

Consumer Products-Represented gross margins were $13.0 million in Fiscal 2018, compared to $18.8 million in Fiscal 2017, a decrease of $5.8 million. Gross margin percentage was 100% for both Fiscal 2018 and Fiscal 2017.

Operating Expenses (Income)

Selling, General, & Administrative (“SG&A”)

SG&A costs include compensation, overhead and administrative costs and travel expenses for corporate personnel and sales support as well as professional fees relating to our business development, public company listings and other general corporate expenses.

SG&A costs for Fiscal 2018 were $86.2 million, compared to $74.1 million for Fiscal 2017, an increase of$12.1 million, or 16%. These costs declined to 20% of revenue in the current fiscal year, compared with 25% in the prior year, and point to continued focus on company-wide cost-rationalization initiatives. Included in SG&A was $3.0 million in non-cash share-based compensation in Fiscal 2018, compared to $5.9 million in Fiscal 2017. The increase was primarily the result of additional costs related to the acquisition of Peanuts and Strawberry Shortcake.

Amortization and Expense of Acquired Libraries

Total amortization and expense of acquired libraries was $40.1 million for Fiscal 2018, compared to $28.1 million in Fiscal 2017, an increase of$12.0 million, or 43%, and included amortization of acquired and library content, amortization of property and equipment, and amortization of intangible assets.

Amortization of acquired and library content was $15.9 million in Fiscal 2018, compared to $10.5 million in Fiscal 2017, an increase of $5.4 million, or 51%. The increase was a direct result of the acquisition of Peanuts and Strawberry Shortcake.

Amortization of property and equipment (“P&E”) was $8.8 million in Fiscal 2018, compared to $6.2 million in Fiscal 2017, an increase of $2.6 million, or 43%. The increase was due to the full-year amortization of the Company’s new Vancouver animation studio and related post-production equipment, which was completed at the end of Fiscal 2017.

Amortization of intangible assets was $15.3 million in Fiscal 2018, compared to $11.4 million in Fiscal 2017, an increase of $3.9 million, or 34%. The increase was a direct result of the acquisition of Peanuts and Strawberry Shortcake and related amortization of certain assets associated with these brands.

Development, Integration and Other

Development integration and other were $10.6 million in Fiscal 2018, compared to $3.4 million in Fiscal 2017, an increase of $7.2 million. Included in the Fiscal 2018 charge was $5.5 million in severance and other integration costs, $4.7 million to support the Company’s strategic review and related activities, $0.3 million for development write-downs, and $nil related to the previously disclosed rebranding of DHX Television channels, compared to $1.7 million, $nil, $1.1 million, and $0.7 million, respectively in Fiscal 2017.

Write-down of Investments in Film and Television Programs, Acquired and Library Content, and Impairment of Intangible Assets

The Company recorded $12.0 million in the write-down of certain investments in film and television programs, acquired and library content, and impairment of intangible assets in Fiscal 2018, compared to $1.5 million in Fiscal 2017. The increase was comprised of write-downs of $4.8 million in investment in film, $2.8 million in Television content, $3.4 million in acquired and library content, and $1.1 million in intangible assets (Fiscal 2017 - $nil, $1.5 million, $nil, and $nil respectively). These write-downs are related to weaker than expected revenue performance for select library and acquired titles. The television programming write-down relates to licensed foreign programming that is no longer being aired on the Company’s television channels.

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Finance Income (Expense)

Net finance expense was $46.6 million in Fiscal 2018, compared to $40.5 million in Fiscal 2017, an increase of $6.1 million, or 15%. The increase was primarily attributable to higher average debt levels related to the acquisition of Peanuts & Strawberry Shortcake, a net foreign exchange loss, and gain on movement in fair value of the embedded derivatives on the senior unsecured notes. A breakdown of the net interest expense was as follows:

	Fiscal 2018		Fiscal 2017
	$		$
Interest expense on bank indebtedness	788		348
Interest on long-term debt, obligations under finance leases and other	48,343		18,181
Early redemption penalties	—		13,464
Accretion on Senior Unsecured Convertible Debentures	1,586		—
Debt extinguishment charge	—		6,990
Net foreign exchange loss	7,700		3,226
Gain on movement in fair value of the embedded derivatives on senior unsecured notes	(11,251	)	(1,968	)
Other	(608	)	213
	46,558		40,454

Interest on long-term debt is expected to decline as a portion of the Company’s Term Facility was repaid from the net proceeds arising from the sale of a minority stake to SMEJ in Peanuts, which closed on July 23, 2018. See Subsequent Event section in this MD&A.

Adjusted EBITDA Attributable to DHX Media

Adjusted EBITDA attributable to DHX Media was $97.5 million in Fiscal 2018, compared to $87.3 million in Fiscal 2017, an increase of $10.2 million, or 12%. The increase was due to the Peanuts acquisition, growth at WildBrain and higher Producer and Service Fees, partially offset by declines in Proprietary Production, Distribution (excluding WildBrain), Consumer Products-Represented and Television.

Please see the “Use of Non-GAAP Financial Measures” and “Reconciliation of Historical Results to Adjusted EBITDA” sections of this MD&A for the definition and detailed calculation of Adjusted EBITDA.

Income Taxes

Income tax for Fiscal 2018 was an expense of $1.5 million, compared to $1.9 million in Fiscal 2017, a decrease of $0.4 million. While the Company incurred a loss before income taxes in both years, the Company incurred an income tax expense as a result of the jurisdiction in which the income was earned, where more income was earned in countries with higher tax rates. The lower tax expense in Fiscal 2018 was primarily a result of the lower tax rates resulting from the U.S. tax reform.

Net Income (Loss), Comprehensive Income (Loss), and Earnings Per Share

For Fiscal 2018, net loss attributable to DHX Media was $14.1 million, compared to a net loss of $3.6 million for Fiscal 2017, an increase of $10.4 million, or 287%. The higher net loss in the current fiscal year was due to an increase in gross margins resulting from the Peanuts acquisition, which were more than offset by higher SG&A, finance expenses, and amortization and impairment of assets. The impairment of assets related to third party shows licensed for our TV channels, acquired content and older library titles as part of the annual review of the carrying value across a range of assets.

Comprehensive income for Fiscal 2018 was $0.2 million, compared to comprehensive loss of $4.9 million for Fiscal 2017.

Earnings per share (both basic and diluted) was a loss of $0.10 per share in Fiscal 2018, compared to a loss of $0.03 per share in Fiscal 2017.

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SUMMARY OF SELECTED CONSOLIDATED QUARTERLY INFORMATION

DHX Media’s results may vary on a quarterly basis due to the timing of production deliveries and distribution deals as well as seasonality in our WildBrain and Consumer Products businesses. Historically, our first quarter is the lightest (during summer months). Our second and third quarters tend to be stronger as our main markets are geared towards the fall and winter months especially during the Christmas season.

	Fiscal 20181						Fiscal 20171
	Q4		Q3		Q2	Q1	Q4		Q3	Q2	Q1
(All numbers are in thousands	30-Jun		31-Mar		31-Dec	30-Sep	30-Jun		31-Mar	31-Dec	30-Sep
except per share data)	$		$		$	$	$		$	$	$
Revenue	97,368		116,486		121,941	98,621	87,647		78,348	78,883	53,834
Gross Margin2	42,283		50,972		53,946	42,971	40,204		42,194	42,017	31,184
Adjusted EBITDA2, 3, 4	15,972		26,713		32,012	22,788	23,671		24,853	23,979	14,831
Net Income (Loss) attributable to the shareholders of the company4	(21,614	)	(8,005	)	7,411	8,148	(18,312	)	7,551	5,755	1,372
Weighted average common shares outstanding (expressed in thousands)
Basic	134,506		134,562		134,481	134,407	134,231		134,162	134,068	133,788
Diluted	134,506		134,562		134,893	135,197	134,231		135,207	135,170	134,730
Basic Earnings (Loss) Per Common Share
	(0.16	)	(0.06	)	0.06	0.06	(0.14	)	0.06	0.04	0.01
Diluted Earnings (Loss) Per Common Share	(0.16	)	(0.06	)	0.05	0.06	(0.14	)	0.06	0.04	0.01

¹All four quarters of Fiscal 2018 included the full results for all the Company’s operations including Peanuts and Strawberry Shortcake. Q1 2018 included Ellie Sparkles for only 16 days as it was acquired on September 15, 2017.

All four quarters of Fiscal 2017 included the full results for all of the Company’s operations but excluded Peanuts and Strawberry Shortcake, which were acquired on June 30, 2017, and Ellie Sparkles, which was acquired on September 15, 2017. Kiddyzuzaa, which was acquired on March 3, 2017, was included for all of Q4 2017, 29 days of Q3 2017, and excluded from Q2 2017 and Q1 2017.

²See “Use of Non-GAAP Financial Measures” section of this MD&A for further details.

³Adjusted EBITDA is calculated as outlined in the “Use of Non-GAAP Financial Measures”, and a detailed calculation of each is included in the “Reconciliation of Historical Results to Adjusted EBITDA” section of this MD&A as Management believes this figure to be a more meaningful indicator of operating performance. 

⁴Adjusted EBITDA and Net Income (Loss) in the table above reflect only the portions attributable to the Shareholders of the Company (excluding non-controlling interest).

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Results for the three months ended June 30, 2018 (“Q4 2018”) compared to the three months ended June 30, 2017 (“Q4 2017”)

Revenues

Consolidated revenue for Q4 2018 were $97.4 million, compared to $87.7 million in Q4 2017, an increase of $9.7 million, or 11%. The increase was attributed to continued strong growth in WildBrain, and a significant increase in Consumer Products-Owned revenue due to the acquisition of Peanuts of Strawberry Shortcake, which experienced year-over-year increases of $4.1 million and $24.7 million, respectively.

Producer and Service Fees rose by $0.7 million to $22.2 million, as we maximized our studio capacity for service work as well as produced new content under the Mattel brand partnership where we benefit from incremental distribution and consumer products rights. This partially offset a year-over-year decline of $3.8 million in Proprietary Production revenue in Q4 2018 as we shifted production to focus on select proprietary titles to respond to the growing demand for premium originals and support key brands.

Television revenues grew by $0.9 million in Q4 2018, compared with the same quarter a year ago, which reflected consistent year-over-year subscriber revenues while we experienced traction in growing our advertising revenue stream. A decline of $1.6 million in Consumer Products-Represented business over the prior year quarter continued to reflect the shifting of the business’ customer base following the especially strong success of Despicable Me and Minions, whose revenue contribution has now fallen off.

Business segmented revenues for Q4 2018 are summarized in the following table:

Revenue Component	Q4 2018			Q4 2017	Variance
(shown in thousands)	Organic ($)	Acquired ($)	Total ($)	$	$	%
Distribution excluding WildBrain	6,133	5,240	11,373	26,582	(15,209)	(57	)%
WildBrain	13,607	748	14,355	10,283	4,072	40	%
Total Distribution Revenue	19,740	5,988	25,728	36,865	(11,137)	(30	)%
Proprietary Production Revenue	2,187	-	2,187	6,027	(3,840)	(64	)%
Producer and Service Fees	22,185	-	22,185	21,502	683	3	%
Consumer Products-Owned	4,055	27,604	31,659	6,957	24,702	355	%
Content Business	48,167	33,592	81,759	71,351	10,408	15	%
Television	13,805	-	13,805	12,909	896	7	%
Consumer Products-Represented	1,804	-	1,804	3,387	(1,583)	(47	)%
Total Revenue	63,776	33,592	97,368	87,647	9,721	11	%

Content Business: Content Business revenue increased to $81.8 million in Q4 2018, compared to $71.4 million in Q4 2017, an increase of$10.4 million, or 15%. The increase was driven by the acquisition of Peanuts and Strawberry Shortcake, which significantly added to Consumer Products-Owned revenue rising to $31.7 million, and strong growth in WildBrain with revenue up 40% to $14.4 million in Q4 2018.

Proprietary Production revenue decreased to $2.2 million in Q4 2018, compared to $6.0 million in Q4 2017, a decrease of $3.8 million, which was partially offset by an increase in Producer and Service Fees revenue. The decrease in Proprietary Production revenue underscored the Company’s strategy to moderate the elevated pace of content investment over the past few years to focus on a more targeted slate and key brands including our Mattel partnership brands. Distribution revenue (excluding WildBrain) declined to $11.4 million in Q4 2018, compared to $26.6 million in the prior year period, reflecting the move to focus on targeted, exclusive programming for major streaming customers instead of the heightened demand for library deals of prior years, as well as the migration of our library titles being increasingly monetized on WildBrain and a number of large deals in Q4 2017 not replicated in the current fourth quarter.

Excluding acquisitive growth, the Content Business decreased from $71.4 million in Q4 2017 to $48.2 million in Q4 2018, a decrease of $23.2 million. The year-over-year decrease was primarily due to lower revenues in Distribution (excluding Wildbrain), Proprietary Production and Consumer Products-Owned, which declined $20.4 million, $3.8 million, and $2.9 million, respectively. These were partially offset by higher year-over-year revenue growth in WildBrain of $3.3 million and Producer and Service Fees of $0.7 million.

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The Content Business includes the following business segments:

• Total Distribution (including WildBrain): Total Distribution revenue were $25.7 million in Q4 2018, compared to $36.9 million in Q4 2017, a decrease of$11.1 million, or 30%. Distribution (excluding WildBrain) revenue declined $15.2 million year over year, which was partly offset by the $4.1 millionincrease in WildBrain revenue.

Acquisitive revenue of $6.0 million was generated from the Peanuts, Kiddyzuzaa and Ellie Sparkles acquisitions. Excluding acquired revenue, total Distribution (including WildBrain) declined $17.1 million in Q4 2018, compared to Q4 2017. The decline was due to a quarter over quarter decrease of $20.4 million in the Distribution (excluding WildBrain) segment, partly offset by higher quarter over quarter revenues in WildBrain of $3.3 million.

Lower Total Distribution revenue was impacted by a reduction in proprietary titles produced as the Company focuses on a targeted slate and premium brands in response to major streaming customers seeking exclusive originals and being more selective on library titles, and the increasing shift to more short-form content on YouTube that is driving growth in WildBrain.

• Proprietary Production: Total Proprietary Production revenue decreased $3.8 million to $2.2 million in Q4 2018, compared to $6.0 million in Q4 2017. The decrease was partly offset by an increase in Producer and Service Fees, which utilize the same production studios to earn revenues. During Q4 2018, the Company added 9.0 proprietary half-hours and 73.0 half-hours of third-party titles with distribution rights to the library (Q4 2017 - 54.0 proprietary half-hours and 33.0 half-hours of third-party titles with distribution rights). Third-party produced titles with distribution rights largely arise as a result of operational synergies associated with owning linear television channels.

• Producer and Service Fees: Producer and Service Fees revenue was $22.2 million in Q4 2018, compared to $21.5 million in Q4 2017, an increase of $0.7 million, or 3%. The increase was due to maximizing our studio capacity with production service projects including $0.9 million (Q4 2017 - $2.5 million) in revenues related to the Company’s strategic brand partnerships with Mattel which also contribute distribution and consumer products revenues.

• Consumer Products-Owned: For Q4 2018, Consumer Products-Owned revenues were $31.7 million, up$24.7 million, or 355%, compared to the $7.0 million earned in Q4 2017 as a direct result of the acquisition of the Peanuts and Strawberry Shortcake at the end of Fiscal 2017.

Television: For Q4 2018, Television revenues grew 7% to $13.8 million, compared to $12.9 million in Q4 2017, an increase of$0.9 million. Subscriber revenue remained steady accounting for approximately 93%, or $12.8 million (Q4 2017-99%, or $12.8 million) of the television revenues, while advertising, promotion and digital revenues contributed to a combined 7%, or $1.0 million (Q4 2017-1%, or $0.2 million). The rise in advertising revenue showed encouraging results as we build out this revenue stream.

Consumer Products-Represented: For Q4 2018, Consumer Products-Represented revenues were $1.8 million, compared to $3.4 million in Q4 2017, a decrease of $1.6 million, or 47%. The decline was due in part to the drop-off of revenues from Despicable Me and Minions, which benefited Q4 2017.

Gross Margin

Gross margin is calculated by taking revenue less direct production costs and amortization related to investment in film & television programs.

	Q4 2018			Q4 2017
(shown in thousands, except percentages)	Gross Margin $	Gross Margin %		Gross Margin $	Gross Margin %
Content Business	32,238	39	%	29,428	41	%
Television	8,240	60	%	7,389	57	%
Consumer Products-Represented	1,805	100	%	3,387	100	%
Total Gross Margin	42,283	43	%	40,204	46	%

Consolidated gross margin for Q4 2018 was $42.3 million, an increase of $2.1 million, or 5%, compared to $40.2 million for Q4 2017. Gross margin percentage for Q4 2018 was 43% of revenue compared to 46% of revenue for Q4 2017 as the acquisition of Peanuts and Strawberry Shortcake has altered the composition of the Company's gross margin described further below. The Peanuts and Strawberry Shortcake acquisition contributed $15.4 million in gross margin to the Content Business in Q4 2018.

15

The Content Business gross margins were $32.2 million in Q4 2018, an increase of $2.8 million, or 10%, compared to $29.4 million in Q4 2017. Gross margin percentage for Q4 2018 was 39% of revenue, compared to 41% of revenue for Q4 2017. The decline in gross margin percentage was largely due to four factors:

i) the impact of the acquisition of Peanuts, which yields lower gross margins due to the revenue-based talent fee payable to the estate of Charles M. Schulz;

ii) the higher mix of service production including the Mattel strategic pact projects, which are lower gross margin, but carry significant distribution and consumer products rights for DHX Media;

iii) higher than normal third-party traditional distribution revenues, which generate lower gross margins; and

iv) the continued growth of third-party revenues in WildBrain, which are lower gross margin, but are expected to continue to drive increasing revenue growth in WildBrain.

Television gross margins were $8.2 million for Q4 2018, an increase of $0.9 million, compared to the $7.4 million in gross margin earned in the prior year. Gross margin percentage for Q4 2018 was 60%, up compared to the 57% in Q4 2017, which remained steady as the Company continued to benefit from its large library to control content costs.

Consumer Products-Represented gross margins were $1.8 million in Q4 2018, compared to $3.4 million in Q4 2017, a decrease of $1.6 million. Gross margin percentage was 100% for both Q4 2018 and Q4 2017.

Operating Expenses (Income)

SG&A

SG&A costs for Q4 2018 were $23.2 million, compared to $18.0 million for Q4 2017, an increase of $5.1 million, or 28%. Included in SG&A was a recovery of $0.2 million in non-cash share-based compensation in Q4 2018, compared to $1.5 million expense in Q4 2017. Adjusted for share-based compensation, SG&A was $23.3 million in Q4 2018, compared to $16.5 million in Q4 2017, an increase of $6.8 million, or 41%. The increase was primarily due to the additional costs from the acquisition of Peanuts and Strawberry Shortcake, and additional costs incurred in WildBrain to support continued growth.

Amortization

Total amortization and expense of acquired libraries was $10.0 million for Q4 2018, compared to $7.4 million in Q4 2017, an increase of $2.6 million, or 35%, and includes amortization of acquired and library content, amortization of property and equipment, and amortization of intangible assets.

Amortization of acquired and library content was $3.8 million in Q4 2018, compared to $2.4 million in Q4 2017, an increase of $1.4 million. The increase was a direct result of the acquisition of Peanuts and Strawberry Shortcake.

Amortization of property and equipment was $3.0 million in Q4 2018, compared to $2.1 million in Q4 2017, an increase of $1.0 million. The increase was due to the completion of the new Vancouver animation studio and the related post-production equipment at the end of Fiscal 2017.

Amortization of intangible assets was $3.2 million in Q4 2018 comparable to the $3.0 million recorded in Q4 2017.

Development, Integration and Other

Development, integration and other were $2.0 million in Q4 2018, compared to $0.7 million in Q4 2017, an increase of $1.4 million. Included in the current quarter charge was $0.5 million in severance and other integration costs and $1.7 million to support the Company’s strategic review and related activities, compared to $0.7 million and $nil in Q4 2017, respectively.

Write-down of Investments in Film and Television Programs, Acquired and Library Content, and Impairment of Intangible Assets

The Company recorded $10.1 million in the write-down of certain investments in film and television programs, acquired and library content, and impairment of intangible assets in Q4 2018, compared to $nil in Q4 2017. The write-down was comprised of $4.8 million in investment in film, $2.8 million in Television content, $1.5 million in acquired and library content, and $1.1 million in intangible assets (2017-$nil for all asset groups). These write-downs were related to weaker than expected revenue performance for a number of library and acquired titles. The television programming write-down related to licensed foreign programming that is no longer being aired on the Company’s television channels.

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Finance Income (Expense)

Net finance expense was $21.5 million in Q4 2018, compared to $26.4 million in Q4 2017, a decrease of $4.9 million. The decrease was primarily attributable the lack of early redemption penalties and debt extinguishment charge in Q4 2018, offset by higher average debt levels related to the acquisition of Peanuts & Strawberry Shortcake, a net foreign exchange loss, and gain on movement in fair value of the embedded derivatives on the senior unsecured notes. A breakdown of the net interest expense was as follows:

	Q4 2018		Q4 2017
	$		$
Interest expense on bank indebtedness	236		189
Interest on long-term debt, obligations under finance leases and other	13,891		4,331
Early redemption penalties	—		13,464
Accretion on Senior Unsecured Convertible Debentures	(65	)	—
Debt extinguishment charge	—		6,990
Net foreign exchange loss	11,202		2,788
Gain on movement in fair value of the embedded derivatives on senior unsecured notes	(2,926	)	(1,368	)
Other	(796	)	12
	21,542		26,406

Adjusted EBITDA Attributable to DHX Media

Adjusted EBITDA attributable to DHX Media was $16.0 million in Q4 2018, compared to $23.7 million in Q4 2017, a decrease of $7.7 million, or 33%. The higher gross margins earned in the period were more than offset by higher SG&A and the allocation of Adjusted EBITDA to the Company’s non-controlling interest.

Please see the “Use of Non-GAAP Financial Measures” and “Reconciliation of Historical Results to Adjusted EBITDA” sections of this MD&A for the definition and detailed calculation of Adjusted EBITDA.

Income Taxes

Income tax for Q4 2018 was a recovery of $5.4 million, compared to a recovery of $3.7 million in Q4 2017, an increase in net taxes recovery of $1.7 million. The higher tax recovery was due to was due to the higher pre-tax net loss in Q4 2018, compared to Q4 2017.

Net Income (Loss), Comprehensive Income (Loss), and Earnings Per Share

For Q4 2018, net loss attributable to DHX Media was $21.6 million, compared to net loss of $18.3 million for Q4 2017, a decrease of $3.3 million.

Comprehensive loss for Q4 2018 was $17.6 million, compared to comprehensive loss of $14.2 million for Q4 2017.

Earnings per share (both basic and diluted) was loss of $0.16 per share in Q4 2018, compared to a loss of $0.03 per share in Q4 2017.

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Financial Condition

The following table summarizes certain information with respect to the Company’s capitalization and financial position as at June 30, 2018 and June 30, 2017:

(shown in thousands, except ratio data)	June 30, 2018	June 30, 2017
	$	$
Cash	46,550	62,143
Cash held in trust	—	239,877
Amounts receivable	270,327	271,535
Investment in film and television programs	186,008	195,180
Acquired and library content	147,088	155,940
Intangible assets	546,997	555,408
Other assets	279,822	281,622
Total assets	1,476,792	1,761,705
Bank indebtedness	16,350	—
Accounts payable and accrued liabilities	130,545	178,365
Interim production financing	93,683	101,224
Long-term debt and obligations under finance leases	756,570	983,335
Deferred revenue	47,552	50,949
Other liabilities	31,300	31,979
Total liabilities	1,076,000	1,345,852
Shareholders’ equity	400,792	415,853
Working capital(1)	194,022	186,911
Working capital ratio(2)	1.65	1.33
Net debt(3)	726,370	681,315

(1) Working capital is calculated as current assets less current liabilities.

(2) Working capital ratio is current assets divided by current liabilities.

(3) Net debt includes Long-Term Debt and obligations under finance leases plus Bank Indebtedness less cash, and excludes interim production financing. See note 12 in the Fiscal 2018 consolidated financial statements.

Total assets were $1,476.8 million as at June 30, 2018, a decrease of $284.9 million, or 16%, compared to $1,761.7 million as at June 30, 2017. The decrease in total assets was primarily due to i) the reduction in cash held in trust for $239.9 million used to repay the Company’s term loan, ii) a reduction in the Company’s investment in film and television programs and acquired and library content of $18.5 million, and iii) lower cash on hand of $15.6 million.

Total liabilities were $1,076.0 million as at June 30, 2018, a decrease of $269.9 million, or 20%, compared to $1,345.9 million as at June 30, 2017. The decrease in total liabilities was primarily due to i) a reduction in long-term debt and obligations under finance leases by $226.8 million, funded by cash held in trust as at June 30, 2017, and ii) lower accounts payable and accrued liabilities of $47.8 million, as the Company had an elevated level of payables in the prior year end related to the Peanuts and Strawberry Shortcake acquisition.

The Company’s total external debt and obligations under finance leases (excluding interim production financing) were $756.6 million at June 30, 2018, compared to $983.3 million in June 30, 2017, a decrease of $226.8 million, which was funded by the cash held in trust as at June 30, 2017. Subsequent to year-end, the Company completed the sale of a minority stake in Peanuts to Sony. Sony has indirectly purchased 49% of DHX Media’s 80% interest in Peanuts. The net proceeds of US$161.3 million, after transaction costs and taxes, were used to repay a portion of the Company’s outstanding long-term debt (see Subsequent Event section in this MD&A).

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Liquidity and Capital Resources

Summary of cash flow components:

	Three Months Ended		Three Months Ended		Year Ended		Year Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
	$		$		$		$
Cash Inflows (Outflows) by Activity:
Operating activities	8,272		6,875		13,364		(6,536	)
Financing activities	(8,811	)	440,088		(10,893	)	437,282
Investing activities	(1,523	)	(434,655	)	(18,606	)	(448,964	)
Effect of foreign exchange rate changes on cash	293		(68	)	542		(85	)
Net cash inflows (outflows)	(1,769	)	12,240		(15,593	)	(18,303	)

Changes in Cash

Cash at June 30, 2018 was $46.6 million as compared to $62.1 million at June 30, 2017.

Operating Activities

In Fiscal 2018, cash provided by operating activities was $13.4 million, compared to a cash outflow in Fiscal 2017 of $6.5 million, an improvement of $19.9 million. During the year ended June 30, 2018, cash from operating activities included a working capital outflow of $18.6 million, and payments of approximately $24.4 million in fees and expenses related to the acquisition of Peanuts and Strawberry Shortcake (described below). If the payments of $24.4 million were excluded, cash from operating activities for the year ended June 30, 2018 would have been $37.8 million.

For Fiscal 2018, the Company’s operating cash flow was materially impacted by the following payments:

Acquisition of Peanuts and Strawberry Shortcake

• $13.5 million in penalties for the early redemption of the Company’s Senior Unsecured Notes on July 11, 2017;

• $10.9 million in acquisition and debt issue costs associated with the acquisition; and

Strategic Pact with Mattel

• $19.2 million for the co-funding of productions related to the Company’s strategic pact with Mattel wherein we participate in distribution revenue and consumer products royalties associated with the brands pursuant to the partnership.

The cash flow from operations for Fiscal 2018 also reflected the Company continuing to invest in new productions. Specifically, the Company had $17.6 million in productions in progress at June 30, 2018 (refer to note 7 of the Company’s financial statements for Fiscal 2018), which includes projects such as The Deep, Mega Man, Chip and Potato, and the projects completed related to the Company’s strategic pact with Mattel, including Polly Pocket, and Little People. Productions in progress, are investments in productions in progress, but not yet delivered. The majority of these productions are expected to be delivered in Fiscal 2019.

Financing Activities

For Fiscal 2018, cash flows used by financing activities were $10.9 million, which was comprised of $236.8 million in repayments of long-term debt and obligations under finance leases, $12.2 million paid to non-controlling interests, $10.3 million paid in dividends, $0.5 million in payment of debt issue costs, and $7.5 million in net repayments of interim production financing, partially offset by a decrease in cash held in trust of $239.9 million and increase in bank indebtedness of $16.4 million.

Investing Activities

For Fiscal 2018, cash flows used in investing activities comprised of $7.6 million for business acquisitions, which represents the acquisition of Ellie Sparkles and the final payment for Peanuts and Strawberry Shortcake, $2.4 million for acquisitions of P&E, and $8.5 million for acquisition of and cost of generating intangible assets, which includes certain required payments pursuant to the Company's strategic pacts with Mattel.

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Re-Financing Activities

Effective June 30, 2017 and commensurate with the closing of the Peanuts and Strawberry Shortcake acquisition, the Company entered into a new senior secured credit agreement (“Senior Secured Credit Agreement”) with a syndicate of lenders, which provided for a US$30.0 million ($37.6 million) revolving facility (“Revolving Facility”) and a US$495.0 million term facility (“Term Facility”). Concurrently, a $140.0 million offering of senior unsecured convertible debentures (“Convertible Debentures”) was completed. The net proceeds from both the Senior Secured Credit Agreement and Convertible Debentures were used to fund the acquisition, refinance all of DHX Media’s existing indebtedness, and for general corporate purposes.

On June 30, 2017, the Company’s previous senior secured credit facilities comprising a revolving facility and a term loan (“Former Senior Secured Credit Facilities”) were repaid in full. On June 7, 2017, the Company issued a notice of redemption for all of its existing senior unsecured notes (“Senior Unsecured Notes”), which was settled for $239.9 million, including all accrued interest and the early redemption penalty on July 11, 2017.

For further details on the Company’s Former Senior Secured Credit Facilities, its Senior Secured Credit Agreement and Convertible Debentures, see the Bank Indebtedness, Long-Term Debt and Convertible Debenture sections below, and note 12 in the Company’s consolidated financial statements for Fiscal 2018.

Bank Indebtedness

The Revolving Facility has a maximum available balance of US$30.0 million ($39.5 million) and matures on June 30, 2022. The Revolving Facility may be drawn down by way of either US$ base rate, CDN$ prime rate, CDN$ bankers’ acceptance, or US$ and GBP£ LIBOR advances (“Drawdown Rate”) and bears interest at floating rates ranging from the Drawdown Rate + 2.50% to the Drawdown Rate + 3.75%. As of June 30, 2018, $16.4 million was drawn on the Revolving Facility.

Long-Term Debt

Term Facility

The Term Facility had a principal balance of US$490.1 million at June 30, 2018 and matures on December 29, 2023. The Term Facility is repayable in annual amortization payments of 1% of the initial principal, payable in equal quarterly installments, which commenced September 30, 2017.

The Term Facility also requires repayments equal to 50% of Excess Cash Flow (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 is at or below 3.50 times and greater than 3.00 times, with the remaining balance due at maturity. The Term Facility bears interest at floating rates of US$ base rate + 2.75% or US$ LIBOR + 3.75%. The Excess Cash Flow for Fiscal 2018 was $nil and as a result, no payment is required.

Total Net Leverage Ratio - The Senior Secured Credit Agreement requires that the Company comply with a Total Net Leverage Ratio covenant, generally defined as follows:

The leverage ratio is calculated in US$ based on consolidated net debt (defined in summary as all third-party indebtedness for borrowed money, unreimbursed obligations in respect of drawn letters of credit, finance leases and other purchase money indebtedness and guarantees of the Company and certain of its subsidiaries), less cash and cash equivalents divided by the Company’s rolling 12-month consolidated EBITDA as defined in the Senior Secured Credit Agreement. The ratio calculation excludes interim production financing and any production-related cash and EBITDA.

The Total Net Leverage Ratio cannot exceed the following targets:

Ratio Target	Period
7.25x	12 Months to September 30, 2018
6.75x	12 Months to September 30, 2019
6.50x	12 Months to September 30, 2020
5.75x	12 Months to September 30, 2021
5.50x	September 30, 2021 to Maturity at December 29, 2023

At June 30, 2018, the Total Net Leverage Ratio was 6.07x.

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Subsequent to year-end on July 23, 2018, net proceeds from the sale of a minority stake in Peanuts to Sony amounting to US$161.3 million, after transaction costs and taxes, were used to repay a portion of the Company’s Term Facility (see Subsequent Event section in this MD&A). As a result of this debt repayment, the Company’s Total Net Leverage Ratio at June 30, 2018 would have been approximately 4.7 on a pro forma basis.

For additional information on the Term Facility, refer to the Fiscal 2018 financial statements and the Senior Secured Credit Agreement on SEDAR at www.sedar.com.

Senior Unsecured Convertible Debentures

On May 31, 2017, and in contemplation of the closing of the acquisition of Peanuts and Strawberry Shortcake, the Company completed an offering of subscription receipts (“Special Receipts”) for gross proceeds $140.0 million, which were automatically converted in special warrants (“Special Warrants”). Effective October 1, 2017, the Special Warrants were automatically exercised, for no additional consideration, in Convertible Debentures. The Convertible Debentures bear interest at a rate of 5.875% and 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 Convertible Debentures mature on September 30, 2024.

Working Capital and Liquidity

Working capital represents the Company’s current assets less current liabilities, which was $194.0 million as at June 30, 2018, compared to $186.9 million at June 30, 2017. Working capital at June 30, 2017 also reflected $239.9 million of cash held in trust, which was used to settle all of the Company’s Senior Unsecured Notes, including all accrued interest and the early redemption penalty on July 11, 2017.

Based on the Company’s current revenue expectations for Fiscal 2019, we believe that our working capital is sufficient to meet our present requirements and future business plans. We expect foreseeable cash needs to be funded through existing cash resources, the Revolving Facility and operating cash flow.

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Contractual Obligations¹ 

The following table summarizes our outstanding cash commitments as of June 30, 2018:

Payments Due by Period	Total	Less than 1 year	1 to 3 years	4 to 5 years	After 5 years
(shown in thousands)
	$	$	$	$	$
Bank indebtedness	16,350	16,350	—	—	—
Accounts payable and accrued liabilities	130,545	130,545	—	—	—
Interim production financing	93,683	93,683	—	—	—
Other liabilities	8,150	—	8,150	—	—
Senior unsecured convertible debentures	193,474	8,225	16,450	16,450	152,349
Term facility	747,021	24,197	47,856	47,273	627,695
Operating leases	60,552	10,369	16,496	12,960	20,727
Finance lease obligations	9,435	4,364	4,132	939	—
Total Contractual Obligations	1,259,210	287,733	93,084	77,622	800,771

(1) In addition to the totals above, the Company has entered into various contracts to buy broadcast rights with future commitments totaling $22.3 million.

Recent Transactions

Acquisition of Peanuts and Strawberry Shortcake

On June 30, 2017, DHX Media acquired the entertainment division of Iconix Brand Group, Inc., which included both an 80% controlling interest in Peanuts and a 100% interest in Strawberry Shortcake, for US$349.0 million ($453.0 million) in cash, which comprised of the following:

• A purchase price of US$345.0 million ($447.7 million) paid at closing; and

• A working capital adjustment of US$4.1 million ($5.4 million), of which US$1.5 million ($2.0 million) was paid at closing and US$2.6 million ($3.4 million) was paid during the nine months ended March 31, 2018.

The remaining 20% interest in Peanuts continues to be held by members of the family of Charles M. Schulz (“Schulz Family”). Additionally, the Schulz Family is also entitled to a fee based on revenues less shareable costs of Peanuts Worldwide LLC, a subsidiary of Peanuts.

For additional information on the acquisition and the purchase price allocation please refer to the notes to the Company’s audited consolidated financial statements for the years ended June 30, 2018 and June 30, 2017.

Concurrent with closing of the acquisition, the Company entered into a new Senior Secured Credit Agreement, which consisted of a US$30.0 million ($37.6 million) Revolving Facility and US$495.0 million Term Facility as well as completed a $140.0 million offering of Convertible Debentures. The net proceeds from both the Senior Secured Credit Agreement and Convertible Debentures were used to fund the acquisition, refinance all of DHX Media’s existing indebtedness, and for general corporate purposes.

On June 30, 2017, the Company’s Former Revolving Facility and Former Term Facility were repaid in full. On June 7, 2017, the Company issued a notice of redemption for all of its Senior Unsecured Notes, which was settled for $239.9 million, including all accrued interest and the early redemption penalty on July 11, 2017.

For further details on the refinancing of the Company’s previous indebtedness and its new debt facilities and Convertible Debentures, see the Bank Indebtedness, Long-Term Debt and Convertible Debenture sections above, and notes and in the Company’s financial statements for Fiscal 2018.

Acquisition of YouTube Channels

As part of our strategy to acquire third-party independent kids’ channels to add to WildBrain’s growing size and scale, the Company acquired majority equity interest in two children and family-focused YouTube channels, Kiddyzuzaa and Ellie Sparkles, during Fiscal 2017 and 2018.

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Kiddyzuzaa

On March 3, 2017, the Company acquired an 80% interest in Kiddyzuzaa, which produced proprietary content for its channel, garnering an average of 68 million views per month in 2016. The following consideration was paid:

•£1.3 million ($2.1 million) in cash at closing, with subsequent payments of £0.2 million ($0.3 million) each due on the first and second anniversaries from closing; and

•A performance-based earn-out of up to £0.3 million ($0.5 million) based on total commercial exploitation over a 2-year period following closing.

The Company’s unaudited condensed interim financial statements for the period ended March 31, 2018 contain the Company’s purchase price allocation, which was finalized during Q3 2018.

Ellie Sparkles

On September 15, 2017, the Company acquired a 51% stake in Ellie Sparkles for the following consideration:

• US$3.6 million ($4.4 million) in cash paid at closing, subject to a customary working capital adjustment; and

• Two performance-based earn-outs of up to US$1.0 million ($1.2 million) each, payable on the first and second anniversaries of closing.

The Company's unaudited condensed interim financial statements for the period ended March 31, 2018 contain the Company's preliminary purchase price allocation, which has not been finalized, and remains open. The Company finalized the purchase price allocation during Q4 2018.

Licensing of Interactive/Digital Business

Effective September 30, 2017, the Company entered into a revenue-based royalty agreement with Epic Story Interactive, Inc., a company controlled by Ken Faier, a former Senior Vice-President of DHX Media. The agreement licenses certain intellectual properties from DHX Media for the purpose of supporting the development, publishing, and exploitation of certain gaming apps, while also assuming the employment agreements of approximately 15 of the Company’s interactive employees. Ken Faier continues to serve as an Executive Producer on a number of DHX Media’s proprietary productions.

Subsequent Event

On July 23, 2018, the Company completed the sale of a minority stake in Peanuts to Sony. Sony has indirectly purchased 49% of DHX Media’s 80% interest in Peanuts for gross proceeds of US$178.0 million ($235.6 million) in cash, subject to certain adjustments contemplated in the original agreement. DHX Media now owns 41% of Peanuts, Sony owns 39%, and the members of the Schulz family retain their 20% interest. The expected gain on sale has not yet been determined. DHX Media will continue to control Peanuts and consolidate its results in the Company’s consolidated financial statements.

Net proceeds from the sale of US$161.3 million, after transaction costs and taxes, were used to repay a portion of the Company’s outstanding loans under the Term Facility. As a result of this debt repayment, the Company’s Total Net Leverage Ratio at June 30, 2018 would have been reduced from 6.07 to 4.7 on a pro forma basis.

Share Capital

As at June 30, 2018, DHX Media’s issued and outstanding share capital is summarized as follows:

Common Voting Shares	99,510,508
Variable Voting Shares	34,783,382
Total Common Shares	134,293,890
Preferred Variable Voting Shares	100,000,000
Options	8,123,475
Performance Share Units	207,270

Pursuant to DHX Media’s articles of incorporation and the Broadcasting Act (Canada), the Common Voting Shares may only be held and controlled by Canadians, and the Variable Voting Shares may only be held and controlled by non-Canadians. The dual-class share structure is required to enable the Company to comply with Canadian ownership rules as an operator of broadcast assets. The preferred variable voting shares were instituted prior to the Company’s initial public offering and are maintained to ensure compliance with Canadian ownership requirements related to its business and continuing qualification for tax credits. For additional information on DHX Media’s share capital, see the Company’s Fiscal 2018 financial statements.

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Off-Balance Sheet Arrangements

As of the date of this MD&A, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.

Related Party Transactions

There are no related party transactions included in the Fiscal 2018 financial statements of the Company as at June 30, 2018.

Critical Accounting Estimates

The preparation of the financial statements in conformity with IFRS requires Management to make estimates, judgments, and assumptions that Management believes are reasonable based upon the information available. These estimates, judgments, and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year or period. Actual results can differ from those estimates (refer to page 1 of this MD&A for more information regarding forward-looking information). For a discussion of all of the Company’s accounting policies, refer to note 3 of the audited consolidated financial statements for the year ended June 30, 2018 on www.sedar.com or DHX’s website at www.dhxmedia.com or on EDGAR at www.sec.gov/edgar.shtml.

Changes in Accounting Policies

New and amended standards adopted

i) The IASB issued amendments to IAS 7, "Statement of Cash Flows" ("IAS 7") to improve financial information provided to users of financial statements about an entity's financing activities. These amendments are effective for annual periods beginning on or after January 1, 2017. The adoption of this standard had no financial impact on the Company's consolidated financial statements, however did required additional disclosure in note 22.

Accounting standards issued but not yet applied

i) IFRS 9 “Financial instruments” (“IFRS 9”) is required to be applied for years beginning on or after January 1, 2018, and sets out the requirements for recognizing and measuring financial assets and financial liabilities. IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”). The new standard establishes a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. It 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. Additional disclosures would be required under the new standard.

Upon adoption, the Company expects the impact to be $0.5 million to $1.5 million, and will change the category of classification for its financial assets and financial liabilities. Previously, the Company classified its financial assets as ‘loans and receivables’ and its financial liabilities as ‘other financial liabilities’, both of which were previously measure at amortized cost, with the exception of embedded derivatives which were measured at fair value. Under IFRS 9, the measurement basis would remain the same, however the category for classification would be referred to as 'Amortized Cost'.

ii) IFRS 15 “Revenue from Contracts and Customers” (“IFRS 15”) is required to be applied for years beginning on or after January 1, 2018, and establishes principles to record revenues from contracts for the sale of goods or services, unless the contracts are in the scope of other IFRSs. IFRS 15 replaces IAS 18, “Revenue” and 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:

Identify the contract with a customer

1.Identify the performance obligations in the contract

2.Determine the transaction price

3.Allocate the transaction price to the performance obligations in the contract

4.Recognize revenue when (or as) the entity satisfies a performance obligation

The new standard also provides additional guidance relating to principal versus agent relationships, licenses of intellectual property, and contract costs.

24

The Company has completed its assessment of the impact of IFRS 15 and expects its proprietary production revenue and consumer products owned revenue streams to be impacted.

Under IFRS 15, the Company has determined that in certain proprietary production contracts, the customer who owns the initial broadcast license rights may in substance control the asset. In such cases, the Company would record revenue using the percentage of completion basis.

In addition, the Company has determined that, under IFRS 15, contracts for the management of copyrights, licensing and brands provide the customer with a right to access to the underlying property, and therefore royalties, including minimum guarantees, will be recognized as the greater of earned royalties or the pro-rata minimum guarantee over the term of the license.

IFRS 15 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective or cumulative effect method). The Company intends to adopt the standard using the modified retrospective method on the date of transition, which is July 1, 2018. The expected impact of this adoption is an increase in deficit as at July 1, 2018 in the range of $4.0 million to $9.0 million, with a corresponding adjustment to deferred revenue.

iii) In January 2016, the IASB issued IFRS 16, "Leases" ("IFRS 16") effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have also adopted IFRS 15. IFRS 16 provides a comprehensive model for the measurement, presentation and disclosure of leases and supersedes 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 financial statements.

iv) The IASB issued amendments to IFRS 2, "Share-based payment" ("IFRS 2"), to clarify the classification and measurement of share-based payment transactions. The amendments are effective for annual periods beginning on or after January 1, 2018. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

v) In June 2017, the IASB issued IFRIC 23 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. The Company is currently evaluating the impact of IFRIC 23 on its consolidated financial statements.

vi) The IASB issued IFRIC 22 "Foreign currency transactions and advance consideration" ("IFRIC 22"), which clarifies 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). IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. The Company will apply the IFRIC on a prospective basis. The effect of applying this IFRIC is not expected to be have a significant impact on the Company's consolidated financial statements.

Significant accounting judgments and estimation uncertainty

The preparation of financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable. Actual results may differ materially from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

(i) Income taxes and deferred income taxes

Deferred tax assets and liabilities require management’s judgment in determining the amounts to be recognized. In particular, judgment is used when assessing the extent to which deferred tax assets should be recognized with respect to the timing of deferred taxable income.

The current income tax provision for the year requires judgment in interpreting tax laws and regulations. Estimates are used in determining the provision for current income taxes which are recognized in the financial statements. The Company considers the estimates, assumptions and judgments to be reasonable but this can involve complex issues which may take an extended period to resolve. The final determination of the amounts to be paid related to the current year’s tax provisions could be different from the estimates reflected in the financial statements. The

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Company’s tax filings also are subject to audits, the outcome of which could change the amount of current and deferred tax assets and liabilities.

(ii) Business combinations

The purchase price allocation process requires management to use significant estimates and assumptions, including fair value estimates including, but not limited to:

•estimated fair values of tangible assets;

•estimated fair values of intangible assets;

•estimated fair values of deferred revenue;

•probability of required payment under contingent consideration provisions;

•estimated income tax assets and liabilities; and

•estimated fair value of pre-acquisition contingencies.

While management uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired and liabilities assumed at the business combination date, estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which is the earlier of the date management receives the information it is looking for or one year from the business combination date, adjustments are recorded to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Although management believes the assumptions and estimates made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the assets and liabilities acquired include but are not limited to:

• future expected cash flows from distribution, consumer products and licensing and other customer contracts;

• expected costs to complete film and television productions in-progress and the estimated cash flows from the productions when completed;

• the acquired company’s brand, broadcaster relationships and customer and distribution relationships as well as assumptions about the period of time these acquired intangibles will continue to benefit the combined company;

•the fair value of deferred revenue, including future obligations to customers;

• uncertain tax positions assumed in connection with a business combination are initially estimated as of the acquisition date and are re-evaluated quarterly, management continues to collect information in order to determine their estimated value, with any adjustments to preliminary estimates recorded to goodwill during the measurement period; and

•discount rates applied to future expected cash flows.

Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities and goodwill in the purchase price allocation, which could also impact net income as expenses and impairments could change. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

(iii) Investment in film and television programs/Acquired and library content

The costs of investing in and producing film and television programs are capitalized, net of federal and provincial program contributions earned.

Investment in film assets are amortized using the declining balance method with rates of amortization ranging from 40% to 100% at the time of initial episodic delivery and at rates ranging from 10% to 25% annually thereafter. Management estimates these rates based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue. Estimation uncertainty relates to management's ability to estimate the expected economic useful life of the film or television program.

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(iv) Impairment of goodwill and indefinite life intangibles

Management estimates the recoverable amount of each CGU that has goodwill or indefinite life intangibles by estimating its value-in-use or fair value less costs to sell, whichever is greater, and compares it to the carrying amount to determine if the goodwill or indefinite life intangible asset are impaired.

Value-in-use is based on the expected future cash flows of an asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The impairment test calculations are based on detailed budgets and forecasts which are prepared for each CGU to which the assets are allocated. These budgets and forecasts generally cover a period of five years with a long-term growth rate applied to the terminal year. Key areas of estimation uncertainty relate to management's assumptions about future operating results, long-term growth rates and the discount rate. Actual results could vary from these estimates which may cause significant adjustments to the Company's goodwill or indefinite life intangible assets in subsequent reporting periods.

(v) Impairment of non-financial assets

The indicators of impairment for non-financial assets are determined based on management’s judgment. If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset’s or CGU’s recoverable amount. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management estimates the asset or CGU’s value-in-use. Value-in-use is based on the estimated future cash flows of the asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The impairment test calculations are based on detailed budgets or forecasts which are prepared for each CGU to which the assets are allocated. Key areas of estimation uncertainty relate to management's assumptions about the cash flow forecast, the long-term growth rate applied to cash flows and the discount rate.

Financial Instruments andRisk Management

The Company’s financial instruments consist of cash and cash equivalents, as well as cash held in trust, amounts receivable, long-term amounts receivable, bank indebtedness (when drawn), interim production financing, accounts payable and accrued liabilities, long-term debt and obligations under finance leases, and certain items included within other liabilities. The Company, through its financial assets and liabilities, has exposure to the following risks from its use of financial instruments: credit risk, interest rate risk, liquidity risk, and currency risk. Management monitors risk levels and reviews risk management activities as they determine to be necessary.

Credit Risk

Credit risk arises from cash and cash equivalents, cash held in trust, as well as credit exposure to customers, including outstanding receivables. The Company manages credit risk for cash and cash equivalents and cash held in trust by ensuring that the counterparties are banks, governments and government agencies with high credit ratings. The maximum exposure to credit risk for cash and equivalents and cash held in trust, amounts receivable, and long-term amounts receivable, approximates the amount recorded on the consolidated balance sheet.

The balance of trade amounts receivable and long-term amounts receivable are mainly with Canadian broadcasters, large international broadcasters and distribution companies, and large international digital platform providers. Management manages credit risk by regularly reviewing aged accounts receivables and performing rigorous credit analysis. The Company has booked an allowance for doubtful accounts of approximately 4% against the gross amounts for certain trade amounts receivable and Management believes that the net amount of trade amounts receivable is fully collectible.

In assessing credit risk, Management includes in its assessment the long-term receivables and considers what impact the long-term nature of the receivable has on credit risk. For certain arrangements with licensees, the Company is considered the agent, and only reports the revenue net of the licensor’s share. When the Company bills a third party in full where it is an agent for the licensor, the Company records an offsetting amount in accounts payable that is only payable to a licensee when the amount is collected from the third party. This reduces the risk, as the Company is only exposed to the amounts receivable related to the revenue it records.

Interest Rate Risk

The Company is exposed to interest rate risk arising from fluctuations in interest rates as its interim production financing, certain long-term debt, and a portion of cash and cash equivalents and cash held in trust bear interest at floating rates. A 1% fluctuation would have an approximate $6.0-7.0 million effect on annual net income before income taxes.

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Liquidity Risk

The Company manages liquidity by forecasting and monitoring operating cash flows and through the use of finance leases and revolving credit facilities. As at June 30, 2018 the Company had cash and cash equivalents on hand of $46.6 million (June 30, 2017 - $62.1 million) (excluding cash held in trust).

Results of operations for any period are dependent on the number and timing of film and television programs delivered, which cannot be predicted with certainty. Consequently, the Company’s results from operations may fluctuate materially from period-to-period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. During the initial broadcast of the rights, the Company is somewhat reliant on the broadcaster’s budget and financing cycles and at times the license period gets delayed and commences at a later date than originally projected.

The Company’s film and television revenues vary significantly from quarter to quarter driven by contracted deliveries with the primary broadcasters. Although with the Company’s recent diversification of its revenue mix, particularly in the strengthening of the distribution revenue stream and addition of the broadcasting revenue stream, some of the quarterly unevenness is improving slightly and becoming more predictable. Distribution revenues are contract and demand driven and can fluctuate significantly from year to year. The Company maintains appropriate cash balances and has access to financing facilities to manage fluctuating cash flows.

The Company obtains interim production financing to provide funds until such time as the federal and provincial film tax credits are collected. Upon collection of the film tax credits, the related interim production financing is repaid.

Currency Risk

The Company’s activities involve holding foreign currencies and incurring production costs and earning revenues denominated in foreign currencies. These activities result in exposure to fluctuations in foreign currency exchange rates. The Company periodically enters into foreign exchange purchase contracts to manage its foreign exchange risk on US$, GBP£, JPY, and Euro denominated contracts. At June 30, 2018, the Company revalued its financial instruments denominated in foreign currencies at the prevailing exchange rates. While inherently difficult to estimate, Management estimates a 1% change in the US$, GBP£, JPY, or Euro exchange rate would have an approximate $8.0 million annual effect on net income before income taxes.

Risk Assessment

The Company is exposed to a number of specific and general risks that could affect the Company that each reader should carefully consider. Additional risks and uncertainties not presently known to the Company or that the Company does not currently anticipate will be material, may impair the Company’s business operations and its operating results and as a result could materially impact its business, results of operations, prospects, and financial condition. The specific and general risks include, but are not limited to the following: risks related to the nature of the entertainment industry, risks related to television and film industries, risks related to doing business internationally, loss of Canadian status, competition, limited ability to exploit film and television content library, protecting and defending against intellectual property claims, fluctuating results of operations, raising additional capital, concentration risk, reliance on key personnel, market share price fluctuations, risks associated with acquisitions and joint ventures, potential for budget overruns and other production risks, management estimates in revenues and earnings, stoppage of incentive programs, financial risks resulting from the Company’s capital requirements, government incentive program, change in regulatory environment, litigation, technological change, labour relations, and exchanges rates.

The following are the specific and general risks that could affect the Company that each reader should carefully consider. Additional risks and uncertainties not presently known to the Company or that the Company does not currently anticipate will be material, may impair the Company’s business operations and its operating results and as a result could materially impact its business, results of operations, prospects and financial condition. Readers should additionally refer to the risk factors set out in the Company’s most recent annual Management Discussion and Analysis, which, together with the risk factors below, do not necessarily constitute an exhaustive list.

Risks Applicable to the Company’s Shares

The market prices for the Shares may be volatile as a result of factors beyond the Company’s control.

Securities markets have a high level of price and volume volatility, and the market price of shares of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. The market price of the Company’s Shares may be subject to significant fluctuation in response to numerous factors, including variations in its annual or quarterly financial results or those of its competitors, changes by financial research analysts in their recommendations or estimates of the Company’s earnings, conditions in the

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economy in general or in the broadcasting, film or television sectors in particular, unfavorable publicity changes in applicable laws and regulations, exercise of the Company’s outstanding options, or other factors. Moreover, from time to time, the stock markets on which the Company’s Shares will be listed may experience significant price and volume volatility that may affect the market price of the Company’s Shares for reasons unrelated to its economic performance. No prediction can be made as to the effect, if any, that future sales of Shares or the availability of Shares for future sale (including Shares issuable upon the exercise of stock options) will have on the market price of the Shares prevailing from time to time. Sales of substantial numbers of Shares, or the perception that such sales could occur, could adversely affect the prevailing price of the Company’s Shares.

As a result of any of these factors, the market price of the Shares may be volatile and, at any given point in time, may not accurately reflect the long term value of DHX. This volatility may affect the ability of holders of Shares to sell their Shares at an advantageous price.

DHX’s Common Voting Shares and Variable Voting Shares structure is unusual in the United States. As a result, brokers, dealers and other market participants may not understand the conversion features of the Common Voting Shares and Variable Voting Shares, which may negatively impact liquidity in the trading market for each class of Shares and may result in differences between the trading prices of each class of Shares that do not reflect differences in the underlying economic or voting interests represented by each class of Shares.

The Company may require additional capital in the future which may decrease market prices and dilute each shareholder’s ownership of the Company’s Shares.

The Company may require capital in the future in order to meet additional working capital requirements, to make capital expenditures, to take advantage of investment and/or acquisition opportunities or for other reasons (the specific risks of which are described in more detail below). Accordingly, the Company may need to raise additional capital in the future. The Company’s ability to obtain additional financing will be subject to a number of factors including market conditions and its operating performance. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable for the Company.

In order to raise such capital, the Company may sell additional equity securities in subsequent offerings and may issue additional equity securities. Sales or issuances of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market price for the securities. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and the Company may experience dilution in its earnings per share. Capital raised through debt financing would require the Company to make periodic interest payments and may impose restrictive covenants on the conduct of the Company’s business. Furthermore, additional financings may not be available on terms favorable to the Company, or at all. The Company’s failure to obtain additional funding could prevent the Company from making expenditures that may be required to grow its business or maintain its operations.

The Company may issue additional Common Voting Shares and/or Variable Voting Shares, including upon the exercise of its currently outstanding convertible debentures, stock options and in accordance with the terms of the Company’s dividend reinvestment plan, employee share purchase plan and performance share unit plan. Accordingly, holders of Common Voting Shares and Variable Voting Shares may suffer dilution.

Voting rights of holders of Variable Voting Shares may be automatically decreased if votes attached to the Variable Voting Shares exceed certain limits under the Articles.

The terms of the Variable Voting Shares pursuant to the Articles of Amendment of the Company provide for the voting rights attached to the Variable Voting Shares to decrease automatically and without further act or formality on the part of the Company or the holder if the total number of votes that may be exercised in respect of all issued and outstanding Variable Voting Shares exceed certain limits. As a result, holders of Variable Voting Shares may have less influence on a per share basis than holders of Common Voting Shares on matters requiring a vote of shareholders. An automatic decrease of voting rights attaching to the Variable Voting Shares, or the risk that such a decrease of voting rights attaching to the Variable Voting Shares may occur, could affect the ability of holders of Variable Voting Shares to sell their Shares at an advantageous price. See “Description of Capital Structure”.

The Company expects to continue to incur significant additional legal, accounting and other expenses as a result of becoming a public company in the United States.

In connection with the listing of Shares of the Company on NASDAQ, the Company became subject to public company reporting obligations in the United States. As a public company in the United States, the Company has incurred and continues to incur significant additional legal, accounting and other expenses compared to levels prior to becoming a public company in the United States. In addition, changing laws, regulations and standards in the United States relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations thereunder, as well as under the Sarbanes-Oxley Act of 2002, the United States Jumpstart Our Business Startups Act (the “JOBS Act”) and the rules and regulations of the SEC and NASDAQ, may result in an increase in the Company’s costs and

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the time that the Board and management of the Company must devote to complying with these rules and regulations. The Company expects these rules and regulations to continue to elevate increase its legal and financial compliance costs and to divert management time and attention from the Company’s product development and other business activities.

The Company is a “foreign private issuer” under U.S. securities laws, and is not required to provide the same information in the same time periods as U.S. “domestic issuers”.

The Company is a foreign private issuer under applicable U.S. federal securities laws, and therefore, it is not required to comply with all the periodic disclosure and current reporting requirements of the U.S. Exchange Act. As a result, the Company does not file the same reports that a U.S. domestic issuer would file with the SEC, although the Company will be required to file with or furnish to the SEC the continuous disclosure documents that it is required to file in Canada under Canadian securities laws. In addition, the Company’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the U.S. Exchange Act. Therefore, the Company’s shareholders may not know on as timely a basis when the Company’s officers, directors and principal shareholders purchase or sell Common Voting Shares or Variable Voting Shares as the reporting periods under the corresponding Canadian insider reporting requirements are longer. In addition, as a foreign private issuer, the Company is exempt from the proxy rules under the U.S. Exchange Act.

The Company is an “emerging growth company”. The reduced reporting requirements applicable to emerging growth companies may make the Company’s Shares less attractive to investors. In addition, loss of emerging growth company status may increase management time and cost for compliance with additional reporting requirements.

The Company is an “emerging growth company” as defined in section 3(a) of the U.S. Exchange Act (as amended by the JOBS Act, enacted on April 5, 2012), and the Company will continue to qualify as an “emerging growth company” until the earliest to occur of: (a) the last day of the fiscal year during which the Company has total annual gross revenues of US$1,070,000,000 (as such amount is indexed for inflation every 5 years by the SEC) or more; (b) the last day of the fiscal year of the Company following the fifth anniversary of the date of the first sale of common equity securities of the Company pursuant to an effective registration statement under the U.S. Securities Act; (c) the date on which the Company has, during the previous 3-year period, issued more than US$1,000,000,000 in non-convertible debt; and (d) the date on which the Company is deemed to be a ‘large accelerated filer’, as defined in Rule 12b-2 under the U.S. Exchange Act. The Company would qualify as a large accelerated filer (and would cease to be an emerging growth company) as at June 30, 2018 if the aggregate worldwide market value of common equity held by its non-affiliates would be US$700 million or more as of December 31, 2018, being the last business day of its second fiscal quarter of this year.

Generally, a registrant that registers any class of its securities under section 12 of the U.S. Exchange Act is required to include in the second and all subsequent annual reports filed by it under the U.S. Exchange Act, a management report on internal control over financial reporting and, subject to an exemption available to registrants that meet the definition of a “smaller reporting company” in Rule 12b-2 under the U.S. Exchange Act, an auditor attestation report on management’s assessment of internal control over financial reporting. However, for so long as the Company continues to qualify as an emerging growth company, it will be exempt from the requirement to include an auditor attestation report in its annual reports filed under the U.S. Exchange Act, even if it does not qualify as a “smaller reporting company”. In addition, section 103(a)(3) of the Sarbanes-Oxley Act of 2002 has been amended by the JOBS Act to provide that, among other things, the auditor of an emerging growth company are exempt from any rules of the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the registrant (auditor discussion and analysis).

Investors may find the Shares less attractive because the Company relies upon certain of these exemptions. If some investors find the Shares less attractive as a result, there may be a less active trading market for the Shares and the Share price may be more volatile. However, if the Company no longer qualifies as an emerging growth company, the Company would be required to divert additional management time and attention from the Company’s product development and other business activities and incur increased legal and financial costs to comply with the additional associated additional reporting requirements.

It may be difficult for U.S. investors to bring actions and enforce judgments under U.S. securities laws.

Investors in the United States or in other jurisdictions outside of Canada may have difficulty bringing actions and enforcing judgments against the Company, its directors, its executive officers and some of the experts named in the Annual Information Form based on civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof or the equivalent laws of other jurisdictions of investor residence.

There is some doubt as to whether a judgment of a U.S. court based solely upon the civil liability provisions of U.S. federal or state securities laws would be enforceable in Canada against the Company, its directors and officers or the experts named in the Annual Information Form. There is also doubt as to whether an original action could be brought in Canada

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against the Company or its directors and officers or the experts named in the Annual Information Form to enforce liabilities based solely upon U.S. federal or state securities laws.

An active market in the United States for the Company’s Shares may not develop or be sustained.

The Company’s Variable Voting Shares began trading on NASDAQ on June 23, 2015, and the Company’s Common Voting Shares began trading on NASDAQ on May 31, 2018 together with the Variable Voting Shares under a single ticker symbol. However, trading volume on NASDAQ has been limited. There can be no assurance that an active market for the Shares in the United States will be developed or sustained. Holders of Shares may be unable to sell their investments on satisfactory terms in the United States. As a result of any risk factor discussed herein, the market price of the Shares of the Company at any given point in time may not accurately reflect the long-term value of the Company. Furthermore, responding to these risk factors could result in substantial costs and divert management’s attention and resources. Substantial and potentially permanent declines in the value of the Shares may result.

Other factors unrelated to the performance of the Company that may have an effect on the price and liquidity of the Shares include: the extent of analytical coverage; lessening in trading volume and general market interest in the Shares; the size of the Company’s public float; and any event resulting in a delisting of Shares.

The public announcement of potential future corporate developments may significantly affect the market price of the Shares.

Management of the Company, in the ordinary course of the Company’s business, regularly explores potential strategic opportunities and transactions. These opportunities and transactions may include strategic joint venture relationships, significant debt or equity investments in the Company by third parties, the acquisition or disposition of material assets, the licensing, acquisition or disposition of material intellectual property, the development of new product lines or new applications for its existing intellectual property, significant distribution arrangements and other similar opportunities and transactions. The public announcement of any of these or similar strategic opportunities or transactions might have a significant effect on the price of the Shares. The Company’s policy is to not publicly disclose the pursuit of a potential strategic opportunity or transaction unless it is required to do so by applicable law, including applicable securities laws relating to continuous disclosure obligations. There can be no assurance that investors who buy or sell Shares of the Company are doing so at a time when the Company is not pursuing a particular strategic opportunity or transaction that, when announced, would have a significant effect on the price of the Shares.

In addition, any such future corporate development may be accompanied by certain risks, including exposure to unknown liabilities of the strategic opportunities and transactions, higher than anticipated transaction costs and expenses, the difficulty and expense of integrating operations and personnel of any acquired companies, disruption of the Company’s ongoing business, diversion of management’s time and attention, possible dilution to shareholders and other factors as discussed below in more detail. The Company may not be able to successfully overcome these risks and other problems associated with any future acquisitions and this may adversely affect the Company’s business and financial condition.

Risks Applicable to DHX Generally

The Company faces risks inherent in doing business internationally, many of which are beyond the Company’s control.

The Company distributes films and television productions and conducts other business activities outside Canada and derives revenues from these sources. As a result, the Company’s business is subject to certain risks inherent in international business, many of which are beyond its control. These risks include: changes in local regulatory requirements, including restrictions on content; changes in the laws and policies affecting trade, investment and taxes (including laws and policies relating to the repatriation of funds and to withholding taxes); differing degrees of protection for intellectual property; instability of foreign economies and governments; cultural barriers; wars and acts of terrorism; and the spread of viruses, diseases or other widespread health hazards.

Any of these factors could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company’s results of operations may fluctuate significantly depending on the number and timing of television programs and films delivered or made available to various media.

Results of operations with respect to DHX’s production and distribution of film and television operations for any periods are significantly dependent on the number and timing of television programs and films delivered or made available to various media. Consequently, the Company’s results of operations may fluctuate materially from period to period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. Although traditions are changing, due in part to increased competition from new channels of distribution, industry practice is that broadcasters make most of their annual programming commitments between February and June such that new programs can be ready for telecast at the start of the broadcast season in September, or as

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mid-season replacements in January. Because of this annual production cycle, DHX’s revenues may not be earned on an even basis throughout the year. Results from operations fluctuate materially from quarter to quarter and the results for any one quarter are not necessarily indicative of results for future quarters.

The Company relies on key personnel, the loss of any one of whom could have a negative effect on the Company.

The Company’s future success is substantially dependent upon the services of certain key personnel of the Company, including certain senior management, and creative, technical and sales and marketing personnel. The loss of the services of any one or more of such individuals could have a material adverse effect on the business, results of operations or financial condition of the Company. Recruiting and retaining skilled personnel is costly and highly competitive. If the Company fails to retain, hire, train and integrate qualified employees and contractors, it may not be able to maintain and expand its business.

The Company is subject to income taxes in a number of jurisdictions, and to audits from tax authorities in those jurisdictions. Any audits could materially affect the income taxes payable or receivable in any jurisdiction, which changes would affect the Company’s financial statements.

In the preparation of its financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates, taking into consideration tax laws, regulations and interpretations that pertain to the Company’s activities. In addition, DHX is subject to audits from different tax authorities on an ongoing basis and the outcome of such audits could materially affect the amount of income tax payable or receivable recorded on its consolidated balance sheets and the income tax expense recorded on its consolidated statements of earnings. Any cash payment or receipt resulting from such audits would have an impact on the Company’s cash resources available for its operations.

The Company may be subject to or pursue claims and legal proceedings that could be time-consuming, expensive and result in significant liabilities.

Governmental, legal or arbitration proceedings may be brought or threatened against the Company and the Company may bring legal or arbitration proceedings against third parties. Regardless of their merit, any such claims could be time consuming and expensive to evaluate and defend, divert management’s attention and focus away from the business and subject the Company to potentially significant liabilities.

Integration of Peanuts and Strawberry Shortcake

The Company’s ability to maintain and successfully execute its business depends upon the judgment and project execution skills of its senior professionals. Any management disruption or difficulties in integrating the Peanuts and Strawberry Shortcake business with the business of the Company could significantly affect the Company’s business and results of operations. The success of the Peanuts/SSC Acquisition will depend, in large part, on the ability of management of the Company to realize the anticipated benefits and cost savings from integration of the Peanuts and Strawberry Shortcake business with the business of the Company. The integration of the Peanuts and Strawberry Shortcake business with the business of the Company may result in significant challenges, and management of the Company may be unable to accomplish the integration smoothly, or successfully, in a timely manner or without spending significant amounts of money. It is possible that the integration process could result in the loss of key employees, the disruption of the respective ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of management of the Company to maintain relationships with clients, suppliers, employees, or other key stakeholders or to achieve the anticipated benefits of the acquisition.

The integration of the Peanuts and Strawberry Shortcake business requires the dedication of substantial management effort, time and resources which may divert management's focus and resources from other strategic opportunities and from operational matters during this process. There can be no assurance that management of the Company will be able to integrate the operations of the businesses successfully or achieve any of the synergies or other benefits that are anticipated as a result of the acquisition of the Peanuts and Strawberry Shortcake business. Any inability of management to successfully integrate the operations of the Company and the Peanuts and Strawberry Shortcake business, including, but not limited to, information technology and financial reporting systems, could have a material adverse effect on the business, financial condition and results of operations of the Company. The challenges involved in the integration may include, among other things, the following:

•addressing possible differences in corporate cultures and management philosophies;

•retaining key personnel going forward;

•integrating information technology systems and resources;

• managing the expansion the Company’s systems, including but not limited to accounting systems, and adjusting its internal control environment to cover the Peanuts and Strawberry Shortcake operations;

•unforeseen expenses or delays associated with the Peanuts/SSC Acquisition;

•unforeseen facilities-related issues;

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• performance shortfalls relative to expectations at one or both of the businesses as a result of the diversion of management's attention to the acquisition; and

•meeting the expectations of business partners with respect to the overall integration of the businesses.

It is possible that the integration process could result in the loss of key employees, diversion of management's attention, the disruption or interruption of, or the loss of momentum in, ongoing business or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect the Company’s ability to maintain relationships with business partners and employees or its ability to achieve the anticipated benefits of the transaction, or could reduce its earnings or otherwise adversely affect the business and financial results of the combined company. In addition, the integration process may strain the combined company's financial and managerial controls and reporting systems and procedures. This may result in the diversion of management and financial resources from the combined company's core business objectives.

The Company’s growth strategy partially depends upon the acquisition of other businesses. There can be no assurance that the Company will be able to successfully identify, consummate or integrate any potential acquisitions into its operations.

The Company has made or entered into, and will likely continue to pursue, various acquisitions, business combinations and joint ventures intended to complement or expand its business. DHX believes the acquisition of other businesses may enhance its strategy of expanding its product offerings and customer base, among other things. The successful implementation of such acquisition strategy depends on the Company’s ability to identify suitable acquisition candidates, acquire such companies on acceptable terms, integrate the acquired company’s operations and technology successfully with its own and maintain the goodwill of the acquired business. DHX is unable to predict whether or when it will be able to identify any suitable additional acquisition candidates that are available for a suitable price, or the likelihood that any potential acquisition will be completed. When evaluating a prospective acquisition opportunity, the Company cannot assure that it will correctly identify the costs and risks inherent in the business to be acquired. The scale of such acquisition risks will be related to the size of the company or companies acquired relative to that of DHX at the time of acquisition, and certain target companies may be larger than DHX.

Growth and expansion resulting from future acquisitions may place significant demands on the Company’s management resources. In addition, while DHX’s management believes it has the experience and know-how to integrate acquisitions, such efforts entail significant risks including, but not limited to: (a) the failure to integrate successfully the personnel, information systems, technology, and operations of the acquired business; (b) the potential loss of key employees or customers from either the Company’s current business or the business of the acquired company; (c) failure to maximize the potential financial and strategic benefits of the transaction; (d) the failure to realize the expected synergies from acquired businesses; (e) impairment of goodwill; (f) reductions in future operating results from amortization of intangible assets; (g) the assumption of significant and/or unknown liabilities of the acquired company; and (h) the diversion of management’s time and resources.

Future acquisitions are accompanied by the risk that the obligations and liabilities of an acquired company may not be adequately reflected in the historical financial statements of such company and the risk that such historical financial statements may be based on assumptions, which are incorrect or inconsistent with the Company’s assumptions or approach to accounting policies. In addition, such future acquisitions could involve tangential businesses which could alter the strategy and direction of the Company.

There can be no assurance that DHX will be able to successfully identify, consummate or integrate any potential acquisitions into its operations. In addition, future acquisitions may result in potentially dilutive issuances of equity securities, have a negative effect on the Company’s share price, or may result in the incurrence of debt or the amortization of expenses related to intangible assets, all of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’s leverage could affect its ability to obtain financing, restrict operational flexibility, restrict payment of dividends, divert cash flow to interest payments and make it more vulnerable to competitors and economic downturns.

DHX incurred a significant amount of indebtedness in connection with its recent acquisitions. As of June 30, 2018, DHX had outstanding indebtedness of approximately $879 million. The Company’s degree of current and future leverage, particularly if increased to complete potential acquisitions, could materially and adversely affect DHX in a number of ways, including:

• limiting the Company’s ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes;

• restricting the Company’s flexibility and discretion to operate its business;

• limiting the Company’s ability to declare dividends on its Shares;

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• having to dedicate a portion of the Company’s cash flows from operations to the payment of interest on its existing indebtedness and not having such cash flows available for other purposes, including operations, capital expenditures and future business opportunities;

• exposing the Company to increased interest expense on borrowings at variable rates;

• limiting the Company’s flexibility to plan for, or react to, changes in its business or market conditions;

• placing the Company at a competitive disadvantage compared to its competitors that have less debt;

• making the Company vulnerable to the impact of adverse economic, industry and Company-specific conditions; and

• making the Company unable to make capital expenditures that are important to its growth and strategies.

In addition, the Company may not be able to generate sufficient cash flows from operations to service its indebtedness, in which case it may be required to sell assets, reduce capital expenditures, reduce spending on new production, refinance all or a portion of its existing indebtedness or obtain additional financing, any of which would materially adversely affect the Company’s operations and ability to implement its business strategy.

The Company’s current outstanding indebtedness may limit its ability to incur additional debt, sell assets, grant liens and pay dividends. In addition, in the event of a default, or a cross-default or cross-acceleration under future credit facilities, the Company may not have sufficient funds available to make the required payments under its debt agreements, resulting in lenders taking possession of collateral.

The terms of the Company’s Senior Credit Facilities, Convertible Debentures and other indebtedness may limit the Company’s ability to, among other things:

• incur additional indebtedness or contingent obligations;

• sell significant assets;

• grant liens; and

• pay dividends in excess of certain thresholds.

The Senior Credit Facilities require the Company to maintain certain financial ratios and satisfy other non-financial maintenance covenants. Compliance with these covenants and financial ratios, as well as those that may be contained in future debt agreements may impair the Company’s ability to finance its future operations or capital needs or to take advantage of favorable business opportunities. The Company’s ability to comply with these covenants and financial ratios will depend on future performance, which may be affected by events beyond the Company’s control. The Company’s failure to comply with any of these covenants or financial ratios may result in a default under the Senior Credit Facilities and, in some cases, the acceleration of indebtedness under other instruments that contain cross-default or cross-acceleration provisions. In the event of a default, or a cross-default or cross- acceleration, the Company may not have sufficient funds available to make the required payments under its debt agreements. If the Company is unable to repay amounts owed under the terms of the Senior Credit Facilities or the credit agreement governing any credit facility that it may enter into in the future, those lenders may be entitled to take possession of the collateral securing that facility to the extent required to repay those borrowings. In such event, the Company may not be able to fully repay the Senior Credit Facilities or any credit facility that it may enter into in the future, if at all. For additional information concerning the Company’s Senior Credit Facilities refer to “General Development of the Business - Significant Acquisitions and Other Recent Developments” and “Material Contracts”.

Credit ratings and credit risk of the Company may change.

The credit ratings assigned to the Company are not a recommendation to buy, hold or sell securities of the Company. A rating is not a comment on the market price of a security nor is it an assessment of ownership given various investment objectives. There can be no assurance that the credit ratings assigned to the Company will remain in effect for any given period of time and ratings may be upgraded, downgraded, placed under review, confirmed and discontinued by an applicable credit ratings agency at any time. Real or anticipated changes in credit ratings may affect the market value of securities of the Company. In addition, real or anticipated changes in credit ratings may affect the Company’s ability to obtain short-term and long-term financing and the cost at which the Company can access the capital markets. See “Ratings” for additional information.

The Company’s expanding operations have placed significant demands on the managerial, operational and financial personnel and systems of the Company.

As a result of acquisitions and other recent transactions completed by DHX, including but not limited to the Peanuts/SSC Acquisition and the Peanuts Divestiture, significant demands have been placed on the managerial, operational and financial personnel and systems of DHX. No assurance can be given that the Company’s systems, procedures and controls will be adequate to support the expansion of operations of DHX or the management of its relationships with third parties and the

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operations of such ventures. The future operating results of the Company and its subsidiaries will be affected by the ability of its officers and key employees to manage changing business conditions and to implement and improve its operational and financial controls and reporting systems. If the Company is unsuccessful in managing such demands and changing business conditions, its financial condition and results of operations could be materially adversely affected.

The Company manages liquidity carefully to address fluctuating quarterly revenues. Any failure of the Company to adequately manage such liquidity could adversely affect the Company’s business and results of operations.

The Company’s production revenues for any period are dependent on the number and timing of film and television programs delivered, which cannot be predicted with certainty. The Company’s film and television distribution revenues vary significantly from quarter to quarter driven by contracted deliveries with television services. Distribution revenues are contract and demand driven and can fluctuate significantly from period to period. The Company manages liquidity by forecasting and monitoring operating cash flows and through the use of capital leases and maintaining credit facilities. Any failure to adequately manage liquidity could adversely affect the Company’s business and results of operations, including by limiting the Company’s ability to meet its working capital needs, make necessary or desirable capital expenditures, satisfy its debt service requirements, make acquisitions and declare dividends on its Shares. There can be no assurance that the Company will continue to have access to sufficient short and long term capital resources, on acceptable terms or at all, to meet its liquidity requirements.

There can be no assurance that the Company will reinstate its dividend payments at the prior levels or at all.

The Company previously paid quarterly dividends on its Shares in amounts approved by the Board. Concurrently with the filing of this Annual Information Form, the Company has suspended its dividend. There can be no assurance that the Company will reinstate its dividend payments at the prior levels or at all.

During an economic downturn, the Company’s operating results, prospects and financial condition may be adversely affected.

The Company’s revenues and operating results are and will continue to be influenced by prevailing general economic conditions in particular with respect to its television broadcasting activities. In certain cases, purchasers of DHX Television’s advertising inventories may reduce their advertising budgets. In addition, the deterioration of economic conditions could adversely affect payment patterns which could increase the Company’s bad debt expense. During an economic downturn, there can be no assurance that the Company’s operating results, prospects and financial condition would not be adversely affected.

Risks Related to the Production and Distribution of Content

The Company’s entertainment programming may not be accepted by the public which would result in a portion of the Company’s costs not being recouped or anticipated profits not being realized.

The entertainment industry involves a substantial degree of risk. Acceptance of entertainment programming represents a response not only to the production’s artistic components, but also the quality and acceptance of other competing programs released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, public tastes generally and other intangible factors, all of which could change rapidly or without notice and cannot be predicted with certainty. There is a risk that some or all of the Company’s programming will not be purchased or accepted by the public generally, resulting in a portion of costs not being recouped or anticipated profits not being realized. There can be no assurance that revenue from existing or future programming will replace loss of revenue associated with the cancellation or unsuccessful commercialization of any particular production.

The Company’s films and television programs may not receive favorable reviews or ratings or perform well in ancillary markets, broadcasters may not license the rights to the Company’s film and television programs, and distributors may not distribute or promote the Company’s films and television programs, any of which could have a material adverse effect on the Company’s business, results of operations or financial condition.

Because the performance of television and film programs in ancillary markets, such as home video and pay and free television, is often directly related to reviews from critics and/or television ratings, poor reviews from critics or television ratings may negatively affect future revenue. The Company’s results of operation will depend, in part, on the experience and judgment of its management to select and develop new investment and production opportunities. The Company cannot make assurances that the Company’s films and television programs will obtain favorable reviews or ratings, that its films and television programs will perform well in ancillary markets, or that broadcasters will license the rights to broadcast any of the Company’s film and television programs in development or renew licenses to broadcast film and television programs in the Company’s library. The failure to achieve any of the foregoing could have a material adverse effect on the Company’s business, results of operations or financial condition.

Licensed distributors’ decisions regarding the timing of release of, and promotional support for, the Company’s films, television programs and related products are important in determining the success of these films, programs and related products.

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The Company does not control the timing and manner in which the Company’s licensed distributors distribute the Company’s films, television programs or related products. Any decision by those distributors not to distribute or promote one of the Company’s films, television programs or related products or to promote competitors’ films, programs or related products to a greater extent than they promote the Company could have a material adverse effect on the Company’s business, results of operations or financial condition.

Loss of the Company’s Canadian status may result in loss of government tax credits and incentives or default by the Company under broadcast licences.

In addition to license fees from domestic and foreign broadcasters and financial contributions from co-producers, the Company finances a significant portion of its production budgets from federal and provincial governmental agencies and incentive programs, including the Canada Media Fund, provincial film equity investment and incentive programs, federal tax credits and provincial tax credits, and other investment and incentive programs. Tax credits are considered part of the Company’s equity in any production for which they are used as financing. There can be no assurance that individual incentive programs available to the Company will not be reduced, amended or eliminated or that the Company or any production will qualify for them, any of which may have an adverse effect on the Company’s business, results of operations or financial condition.

Furthermore, the Company could lose its ability to exploit Canadian government tax credits and incentives described above if it ceases to be “Canadian” as defined under the Investment Canada Act (Canada). In particular, the Company would not qualify as a Canadian if Canadian nationals cease to beneficially own shares of the Company having more than 50% of the combined voting power of its outstanding shares. In Canada and under international treaties, under applicable regulations, a program will generally qualify as a Canadian-content production if, among other things: (i) it is produced by Canadians with the involvement of Canadians in principal functions; and (ii) a substantial portion of the budget is spent on Canadian elements. In addition, the Canadian producer must have full creative and financial control of the project. A substantial number of the Company’s programs are contractually required by broadcasters to be certified as “Canadian”. In the event a production does not qualify for certification as Canadian, the Company would be in default under any government incentive and broadcast licenses for that production. In the event of such default, the broadcaster could refuse acceptance of the Company’s productions.

In 2016, Canada’s Minister of Canadian Heritage announced a review of Canada’s broadcasting, media and cultural industries, commencing with consultations with consumers and creators of cultural content. Following such consultation process the federal government announced Creative Canada Framework which details the approach of the federal government to creative industries and growing the creative economy in Canada. Presently, it remains uncertain as to the full impact and implications of the Creative Canada Framework and potential changes to laws, regulations, rules, institutions, policies or programs governing Canada’s broadcasting, media and cultural industries and whether such changes, if any, would impact the Company and its business.

Production and distribution of television programs and films is highly competitive. Failure of the Company to increase its penetration of the prime-time network market or obtain favorable programming slots may have a negative impact on the Company’s business.

For fiscal 2018, a material portion of the Company’s revenues have been derived from the production and distribution of film and television programs. The business of producing and distributing film and television programs is highly competitive. The Company faces intense competition with other producers and distributors, many of whom are substantially larger and have greater financial, technical and marketing resources than the Company. The Company competes with other television and film production companies for ideas and storylines created by third parties as well as for actors, directors, writers and other personnel required for a production. The Company may not be successful in any of these efforts which may adversely affect business, results of operations or financial condition.

The Company competes for time slots with a variety of companies which produce televised programming. The number of favorable time slots remains limited (a “slot” being a broadcast time period for a program), even though the total number of outlets for television programming has increased over the last decade. Competition created by the emergence of new broadcasters and other content providers and platforms has generally caused the market shares of the major networks to decrease. Even so, the licence fees paid by the major networks remain lucrative. As a result, there continues to be intense competition for the time slots offered by those networks. There can be no assurance that the Company will be able to obtain favorable programming slots and the failure to do so may have a negative impact on the Company’s business.

The Company may not be able to acquire or develop new products and rights to popular titles, which could have a material adverse effect on its business, results of operations or financial condition.

The Company depends on a limited number of titles for a significant portion of the revenues generated by its film and television content library. In addition, some of the titles in its library are not presently distributed and generate substantially no revenue. If the Company cannot acquire or develop new products and rights to popular titles through production, distribution

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agreements, acquisitions, mergers, joint ventures or other strategic alliances, it could have a material adverse effect on its business, results of operations or financial condition.

The Company may not successfully protect and defend against intellectual property infringement and claims. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company’s ability to compete depends, in part, upon successful protection of its intellectual property. Furthermore, the Company’s revenues are dependent on the unrestricted ownership of its rights to television and film productions. Any successful claims to the ownership of these intangible assets could hinder the Company’s ability to exploit these rights. The Company does not have the financial resources to protect its rights to the same extent as some of its competitors. The Company attempts to protect proprietary and intellectual property rights to its productions through available copyright and trademark laws in a number of jurisdictions and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries in which the Company may distribute its products and in other jurisdictions no assurance can be given that challenges will not be made to the Company’s copyright and trade-marks. In addition, technological advances and conversion of film and television programs into digital format have made it easier to create, transmit and share unauthorized copies of film and television programs. Users may be able to download and/or stream and distribute unauthorized or “pirated” copies of copyrighted material over the Internet. As long as pirated content is available to download and/or stream digitally, some consumers may choose to digitally download or stream material illegally. As a result, it may be possible for unauthorized third parties to copy and distribute the Company’s productions or certain portions or applications of its intended productions, which could have a material adverse effect on its business, results of operations or financial condition.

Litigation may also be necessary in the future to enforce the Company’s intellectual property rights, to protect its trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on the Company’s business, results of operations or financial condition. The Company cannot provide assurances that infringement or invalidity claims will not materially adversely affect its business, results of operations or financial condition. Regardless of the validity or the success of the assertion of these claims, the Company could incur significant costs and diversion of resources in enforcing its intellectual property rights or in defending against such claims, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company may be materially adversely affected by the loss of revenue generated by a few productions or broadcasters.

Revenue from production and distribution of film and television may originate from disproportionately few productions and broadcasters. The value of the Common Voting Shares and Variable Voting Shares may be materially adversely affected should the Company lose the revenue generated by any such production or broadcaster.

The Company may not have sufficient insurance coverage, completion bonds, or alternative financing to pay for budget overruns and other production risks.

A production’s costs may exceed its budget. Unforeseen events such as labor disputes, death or disability of a star performer or other key personnel, changes related to technology, special effects or other aspects of production, shortage of necessary equipment, damage to film negatives, master tapes and recordings, or adverse weather conditions, or other unforeseen events may cause cost overruns and delay or frustrate completion of a production. Although the Company has historically completed its productions within budget, there can be no assurance that it will continue to do so. The Company currently maintains insurance policies and when necessary, completion bonds, covering certain of these risks. There can be no assurance that any overrun resulting from any occurrence will be adequately covered or that such insurance and completion bonds will continue to be available or, if available on terms acceptable to the Company. In the event of budget overruns, the Company may have to seek additional financing from outside sources in order to complete production of a television program. No assurance can be given as to the availability of such financing or, if available on terms acceptable to the Company. In addition, in the event of substantial budget overruns, there can be no assurance that such costs will be recouped, which could have a significant impact on the Company’s results of operations or financial condition.

Management estimates for revenues and expenses for a production may not be accurate.

The Company makes numerous estimates as to its revenues and matching production and direct distribution expenses on a project by project basis. As a result of this accounting policy, earnings can widely fluctuate if the Company’s management has not accurately forecast the revenue potential of a production.

Local cultural incentive programs currently accessed by the Company may be reduced, amended or eliminated.

There can be no assurance that the local cultural incentive programs which DHX may access in Canada and internationally from time to time, including those sponsored by various Canadian, European and Australian governmental agencies, will not

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be reduced, amended or eliminated. There can be no assurance that such programs and policies will not be terminated or modified in a manner that has an adverse impact on DHX’s business, including, but not limited to, its ability to finance its production activities. Any change in the policies of those countries in connection with their incentive programs may require DHX to relocate production activities or otherwise have an adverse impact on DHX’s business, results of operation or financial condition.

The Company may be required to increase overhead and payments to talent in connection with increases in its production slate or its production budgets, which would result in greater financial risk.

The production, acquisition and distribution of films and television programs require a significant amount of capital. The Company cannot provide assurance that it will be able to continue to successfully implement financing arrangements or that it will not be subject to substantial financial risks relating to the production, acquisition, completion and release of future films and television programs. If the Company increases (through internal growth or acquisition) its production slate or its production budgets, it may be required to increase overhead, make larger up-front payments to talent, and consequently bear greater financial risks. The occurrence of any of the foregoing could have a material adverse effect on the Company’s business, results of operations or financial condition.

Changes in the regulatory environment of the film and television industry could have a material adverse effect on the Company’s revenues and earnings.

At the present time, the film and television industry is subject to a variety of rules and regulations. In addition to the regulatory risks applicable to DHX Television more particularly described elsewhere herein, the Company’s film and television production and distribution operations may be affected in varying degrees by future changes in the regulatory environment of the film and television industry. Any change in the regulatory environment applicable to the Company’s operations could have a material adverse effect on the Company’s revenues and earnings. Management constantly monitors the regulatory environment to identify risks and opportunities resulting from any changes.

Technological changes to production and distribution may diminish the value of the Company’s existing equipment and programs if the Company is unable to adapt to these changes on a timely basis.

Technological change may have a material adverse effect on the Company’s business, results of operations and financial condition if the Company is unable to adapt to these changes on a timely basis. The emergence of new production or computer-generated imagery (“CGI”) technologies, or a new digital television broadcasting standard, may diminish the value of the Company’s existing equipment and programs. Although the Company is committed to production technologies such as CGI and digital post-production, there can be no assurance that it will be able to incorporate other new production and post-production technologies which may become de facto industry standards. In particular, the advent of new broadcast standards, which may result in television programming being presented with greater resolution and on a wider screen than is currently the case, may diminish the evergreen value of the Company’s programming library because such productions may not be able to take full advantage of such features. There can be no assurance that the Company will be successful in adapting to these changes on a timely basis.

A strike or other form of labor protest affecting guilds or unions in the television and film industries could disrupt the Company’s production schedules which could result in delays and additional expenses.

Many individuals associated with the Company’s projects are members of guilds or unions which bargain collectively with producers on an industry-wide basis from time to time. While the Company has positive relationships with the guilds and unions in the industry, a strike or other form of labor protest affecting those guilds or unions could, to some extent, disrupt production schedules which could result in delays and additional expenses.

Funds from the foreign exploitation of its properties may be paid in foreign currencies which may vary substantially relative to the Canadian dollar in a production period due to factors beyond the Company’s control. In addition, foreign currency and exchange control regulations may adversely affect the repatriation of funds to Canada.

The returns to the Company from foreign exploitations of its properties are customarily paid in USD, GBP, JPY and Euros and, as such, may be affected by fluctuations in the exchange rates. Currency exchange rates are determined by market factors beyond the control of the Company and may vary substantially during the course of a production period. In addition, the ability of the Company to repatriate to Canada funds arising in connection with foreign exploitation of its properties may also be adversely affected by currency and exchange control regulations imposed by the country in which the production is exploited. At present, the Company is not aware of any existing currency or exchange control regulations in any country in which the Company currently contemplates exploiting its properties which would have an adverse effect on the Company’s ability to repatriate such funds. Where appropriate, the Company may hedge its foreign exchange risk through the use of derivatives.

Any of the foregoing could have a material adverse effect on the Company’s business, results of operations or financial condition.

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A change in laws or regulations or contractual terms applicable to YouTube or other AVOD platforms or other governmental or third-party claim in respect of the Company’s use of such platforms could have a material adverse impact on the growth and revenues of DHX.

Substantially all of DHX’s revenue from digital distribution through WildBrain are derived from advertising revenue from YouTube. In the event that laws or regulations are changed or instituted which impact the ability of YouTube to generate advertising revenue through its service and pass a portion of such revenue on to the copyright owners of content distributed via YouTube, DHX’s revenue from digital distribution may be materially adversely impacted. Additionally, there is risk that YouTube may be subject to claims relating to advertising to children, whether instituted by a governmental entity or otherwise, in which case they may change their approach to providing content with advertising to children. Independent of such risk, YouTube may also change its service or amend applicable contractual terms. In either of such instances, DHX’s revenue from digital distribution may be materially adversely impacted.

Risks Related to Television Broadcasting

The CRTC’s decisions following the Let’s Talk TV consultation are expected to have an impact on the manner in which broadcasting distribution undertakings package and promote television services and also to increase competition between television services. The manner in which these changes are made could have a material adverse impact on the revenues of DHX.

Starting in March 2016, broadcasting distribution undertakings are required to offer all discretionary television programming services (which includes all services other than those that are required to be distributed as a part of the basic service and some other exceptions) either on an à la carte basis or in small, reasonably priced packages. As of December 2016, BDUs are required to offer all services both on an à la carte basis and in small, reasonably priced packages.

The impact of these changes on existing packages offered by BDUs, and in particular on the relatively high penetration packages through which DHX Television’s services have typically been offered is not yet fully known. If DHX Television’s services were moved into low penetration packages or only offered on an à la carte basis, and if DHX Television were not able to negotiate penetration based pricing to offset the decline in penetration, then this could have an adverse impact on DHX’s revenue.

Loss of applicable licences for DHX Television, or changes to the terms of these licences, could have a material adverse effect on the revenues of the Company attributable to its television broadcasting activities.

DHX Television operates under three broadcast licences issued by the CRTC, which are required to operate the broadcasting undertakings held by DHX Television. The Category A licences for Family Channel and Family Jr. and the Category B licence for Télémagino were recently renewed as discretionary services for a period of five years, expiring in 2023.

At this time, all larger, licensed Canadian BDUs must carry channels that hold Category A licences in the appropriate language market. The CRTC has stated that it intends to remove this requirement for independent Category A licences starting as of September 1, 2018. As such, at Family Channel’s licence renewal it lost its Category A licence effective September 1, 2018. The change in status of the Family Channel Category A licence or other loss thereof could have a material adverse effect on the subscriber count and ultimately the revenues of DHX attributable to its television broadcasting activities.

In addition, the CRTC licences carry a number of mandated requirements, including minimum Canadian content expenditures, minimum Canadian content airtime, among other requirements. Changes to these terms, particularly with respect to Canadian programming exhibition and expenditures, may result in material changes to the content cost structure of DHX Television. Moreover, in past years, previous owners of DHX Television were able to allocate Canadian content expenditures across a number of different services by sharing these expenditures with its other broadcast assets in its CRTC-recognized broadcast group. DHX may share these expenditures across its four services. However, it does not the same scale as the previous owner of such services and, therefore, does not receive the same benefit from this licence condition.

The inability of the Company to renew distribution affiliation agreements with BDUs on similar terms or at all, or the loss of certain significant customers, could have a material adverse effect on revenues of DHX Television.

DHX Television is dependent on BDUs, including cable, Direct to Home, Internet Protocol TV and multichannel multipoint distribution systems, for distribution of its television services. There could be a negative impact on revenues if distribution affiliation agreements with BDUs were not renewed on terms and conditions similar to those currently in effect or at all. Affiliation agreements with BDUs have multi-year terms that expire at various points in time.

The majority of DHX Television’s subscriber base is reached through a small number of very significant customers. DHX Television generally enters into long-term contracts (typically three years) with its customers, however, there is always a risk that the loss of an important relationship would have a significant impact on any particular business unit.

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The rebranding of DHX’s television channels and resulting change in content may negatively affect the Company’s relationship with its BDU partners and impact its ability to negotiate terms and conditions when distribution affiliation agreements are up for renewal.

Legislative changes, a direction by the Governor in Council to the CRTC, or the adoption of new regulations or policies or any decision by the CRTC, could have a material adverse effect on DHX’s business, financial condition or operating results.

DHX’s television broadcasting operations are subject to federal government regulation, including the Broadcasting Act. The CRTC administers the Broadcasting Act and, among other things, grants, amends and renews broadcasting licences, and approves certain changes in corporate ownership and control of broadcast licencees. The CRTC may also adopt and implement regulations and policies, and renders decisions thereunder, which can be found on the CRTC’s website at www.crtc.gc.ca. Certain decisions of the CRTC can also be varied, rescinded or referred back to the CRTC by Canada’s Governor-in-Council either of its own volition or upon petition in writing by third parties filed within 90 days of a CRTC decision. The Government of Canada also has the power under the Broadcasting Act to issue directions of general application on broad policy matters with respect to the objectives of the broadcasting and regulatory policy in the Broadcasting Act, and to issue directions to the CRTC requiring it to report on matters within the CRTC’s jurisdiction under the Broadcasting Act. Legislative changes, a direction by the Governor in Council to the CRTC, or the adoption of new regulations or policies or any decision by the CRTC, could have a material adverse effect on the DHX’s business, financial condition or operating results.

The CRTC requires Canadian television programming services to draw certain proportions of their programming from Canadian content and, in many cases, to spend a portion of their revenues on Canadian programming. Often, a portion of the production budgets of Canadian programs is financed by Canadian government agencies and incentive programs, such as the Canadian Media Fund, Telefilm Canada and federal and provincial tax credits. There can be no assurance that such financing will continue to be available at current levels, or at all. Reductions or other changes in the policies of Canada or its provinces in connection with their incentive programs could increase the cost of acquiring Canadian programs required to be broadcasted and have a material adverse effect on DHX’s business, financial condition or operating results.

Government directions limit the ownership by non-Canadians of voting shares in Canadian broadcasting undertakings and require Canadian control of such undertakings. For additional information concerning restrictions on ownership of shares and voting shares arising in connection with the application of the Broadcasting Act to DHX refer to “Description of Capital Structure” above. Any failure to comply with such limits could result in the loss of the broadcast licences held by DHX Television. In October 2014 DHX effected the Share Capital Reorganization in order to address this risk concerning Canadian ownership and control of broadcast undertakings. Additional details concerning DHX’s capital structure can be found above under the heading “Description of the Share Capital”. The Company additionally monitors the level of non-Canadian ownership of its Shares pursuant to its special operating procedures for monitoring share ownership discussed below under “Description of Capital Structure - Restrictions on Non-Canadian Ownership”. The CRTC has not reviewed or approved DHX’s share capital structure and there can be no assurance that the level of non-Canadian ownership of DHX’s shares will be deemed to be within acceptable limits for the purposes of the Broadcasting Act.

DHX’s television operations rely upon licenses granted under the Copyright Act (Canada) (the “Copyright Act”) in order to make use of the music components of the programming distributed by these undertakings. Under these licenses, DHX is required to pay royalties, established by the Copyright Board of Canada pursuant to the requirements of the Copyright Act, to collecting societies that represent the copyright owners of such music components. The levels of the royalty payable by DHX are subject to change upon application by the collecting societies and approval by the Copyright Board. The Government of Canada may, from time to time, make amendments to the Copyright Act. Amendments to the Copyright Act could result in DHX being required to pay different levels of royalties for these licenses.

Changes in laws or regulations or in how they are interpreted, and the adoption of new laws or regulations, could negatively affect DHX. Management constantly monitors the regulatory environment to identify risks and opportunities resulting from any changes.

Technological changes in broadcasting may increase audience fragmentation, decrease the number of subscribers to the Company’s services, reduce the Company’s television ratings and have an adverse effect on revenues.

With respect to the DHX Television Business, products issued from new or alternative technologies, may include, among other things: TVOD, SVOD, Personal Video Recorders, Mobile Television, Internet Protocol TV and Internet television. Additionally, devices like smartphones and tablets are creating consumer demand for mobile/portable content. Also, there has been growth of OTT content delivery through the implementation of game systems and other consumer electronic devices (including TV sets themselves) that enable broadband delivery of content providing increased flexibility for consumers to view high quality audio/video in the “living room”. These technologies may increase audience fragmentation, decrease the number of subscribers to the Company’s services, reduce the Company’s television ratings and have an adverse effect on revenues.

40

The maintenance and growth of the Company’s subscriber bases is dependent upon the ability of BDUs to deploy and expand their digital technologies, their marketing efforts and the packaging of their services’ offerings, as well as upon the willingness of subscribers to adopt and pay for the services.

Subscription revenues are dependent on the number of subscribers and the wholesale rate billed by DHX Television to BDUs for carriage of the individual services. The extent to which the Company’s subscriber bases will be maintained or grow is uncertain and is dependent upon the ability of BDUs to deploy and expand their digital technologies, their marketing efforts and the packaging of their services’ offerings, as well as upon the willingness of subscribers to adopt and pay for the services.

DHX Television’s broadcast signals are subject to illegal interception and as a result, potential revenue loss. An increase in the number of illegal receivers in Canadian homes could adversely impact the Company’s existing revenues and inhibit its capacity to grow its subscriber base.

Licences granted by the CRTC to other licencees, the emergence of new indirect and unregulated competitors, and competition for popular quality programming all increase the Company’s competition for viewers, listeners, programming and advertising dollars.

The CRTC issues new licences for a variety of services on a constant basis. Competitive licences granted to other licencees increase the competition for viewers, listeners, programming and advertising dollars. The Commission has revised its policies regarding genre protection for Category A services based on its Let’s Talk TV review conducted in the 2014-15 broadcast year, which could result in increased competition, particularly in relation to Family Channel.

In recent years, the previous owner of the DHX Television Business launched a number of digital television specialty services and new programming channels, and was able to limit the impact of competition by delivering strong programming and strengthening its brands. DHX Television additionally faces the emergence of new indirect and unregulated competitors such as personal video recorders, mobile television, Internet Protocol TV, Internet television, satellite radio, cell phone radio, OTT content, tablets, smartphones, and mobile media players.

Quality programming is a key factor driving the success of DHX’s television services. Increasing competition for popular quality programming can cause prohibitive cost increases that may prevent DHX from renewing supply agreements for specific popular programs or contracts for on-air personalities.

During an economic downturn, there can be no assurance that the Company’s broadcast licences and goodwill value would not be adversely affected following changes in assumptions used to support the discounted future cash flows calculated by DHX to assess the fair value.

As disclosed in the notes to the audited consolidated financial statements for the year ended June 30, 2018, the broadcast licences and goodwill are not amortized but are tested for impairment annually, or more frequently if events or circumstances indicate that it is more likely than not that the broadcast licences and/or goodwill value might be impaired. The fair value of broadcast licences and goodwill is and will continue to be influenced by assumptions, based on prevailing general economic conditions, used to support the discounted future cash flows calculated by DHX to assess the fair value of its broadcast licences and goodwill. During an economic downturn, there can be no assurance that DHX’s broadcast licences and goodwill value would not be adversely affected following changes in such assumptions. DHX monitors the value of its broadcasts licences and goodwill on an ongoing basis and any changes to their fair value would be recognized as a non-cash impairment charge on the consolidated statements of earnings.

As television broadcasting is a relatively new business for the Company, it may be less successful in implementing its business strategy than a more seasoned broadcasting entity.

Television broadcasting is a relatively new business for the Company. Although the Company expects to benefit from the experience that its management team has gained while working in the television industry, and the strong management team at DHX (including those managers that have transitioned to DHX in connection with the completion of the acquisition of DHX Television), the Company may be less successful in implementing its business strategy than a more seasoned broadcasting entity. As a result, DHX may experience significant fluctuations in its operating results and rate of growth, which may vary from those projected by management. In addition, the forward-looking statements contained in the Annual Information Form and Management Discussion and Analysis of the Company for the year ended June 30, 2018 about expected future operating results are subject to uncertainties that are due, in part, to DHX’s lack of an operating history in the broadcasting industry. No assurance can be given that DHX will be successful in implementing its business strategy or that it will achieve expected future operating results which could have a material adverse effect on the Company’s cash flows, financial condition or results of operations.

Seasonality

Results of operations for any period are dependent on the number and timing of film and television programs delivered, which cannot be predicted with certainty. Consequently, the Company’s results from operations may fluctuate materially from

41

period-to-period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. During the initial broadcast of the rights the Company is somewhat reliant on the broadcaster’s budget and financing cycles and at times the license period gets delayed and commences at a later date than originally projected.

The Company’s film and television revenues vary significantly from quarter to quarter driven by contracted deliveries with the primary broadcasters. Although with the Company’s continued diversification of its revenue mix, particularly in the strengthening of the distribution revenue stream, some of the quarterly unevenness is improving slightly and becoming more predictable. Distribution revenues are contract and demand driven and can fluctuate significantly from period-to-period.

42

Disclosure Controls and Procedures and Internal Control over Financial Reporting

The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have designed or caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that material information is gathered and reported to senior Management to permit timely decisions regarding public disclosure and to provide reasonable assurance that the information required to be disclosed in reports that are filed or submitted under Canadian securities legislation is recorded, processed, summarized, and reported within the time period specified in those rules.

The CEO and the CFO have also designed, or caused to be designed under their supervision, internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.

In its annual filings dated September 24, 2018, the CEO and the CFO, after evaluating the effectiveness of the Company’s disclosure controls and procedures, and internal control over financial reporting, concluded that as at June 30, 2018, both the Company’s disclosure controls and procedures, and internal control over financial reporting were operating effectively. It should be noted that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected.

There were no changes in internal controls over financial reporting during the year ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Non-GAAP Financial Measures

In addition to the results reported in accordance with IFRS as issued by the International Accounting Standards Board, the Company uses various non-GAAP financial measures, which are not recognized under IFRS, as supplemental indicators of our operating performance and financial position. These non-GAAP financial measures are provided to enhance the user’s understanding of our historical and current financial performance and our prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of our core operating results and ongoing operations and provide a more consistent basis for comparison between periods. The following discussion explains the Company’s use of certain non-GAAP financial measures, which are Adjusted EBITDA and Gross Margin.

“AdjustedEBITDA” means earnings (loss) before interest, income taxes, amortization of property & equipment and intangible assets, amortization of acquired and library content, share-based compensation expense, finance expense (income), development expense, impairment of certain investments in film and television programs/acquired and library content, and also includes adjustments for other identified charges, as specified in the accompanying tables. Adjusted EBITDA is not an earnings measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes Adjusted EBITDA to be a meaningful indicator of operating performance that provides useful information to investors regarding our financial condition and results of operation. The most comparable GAAP measure is earnings before income taxes.

“Gross Margin”means revenue less direct production costs and digital costs, expense of film and television programs, and expense of film and broadcasting rights for broadcasting (per the financial statements). Gross Margin is not an earnings measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Gross Margin may not be comparable to similar measures presented by other issuers. The most comparable GAAP measure is earnings before income taxes.

43

Reconciliation of Historical Results to Adjusted EBITDA

Adjusted EBITDA is not a recognized earnings measure under GAAP and does not have standardized meanings prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other companies or issuers. Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to net income or loss determined in accordance with GAAP as an indicator of the Company’s performance or to cash flows from operating, investing, and financing activities as a measure of liquidity and cash flows.

The operating results for any period should not be relied upon as an indication of results for any future period.

																Fiscal		Fiscal
	Q4 20181		Q3 20181		Q2 20181		Q1 20181		Q4 20171		Q3 20171		Q2 20171	Q1 20171		20181		20171
	($000)		($000)		($000)		($000)		($000)		($000)		($000)	($000)		($000)		($000)
Income (loss) before income taxes	(24,568	)	(5,763	)	13,560		11,514		(22,020	)	10,464		7,794	1,999		(5,257	)	(1,763	)
Interest expense, net2	13,193		11,266		12,138		11,387		4,360		4,682		4,639	4,292		47,984		17,973
Amortization3	6,252		6,122		5,892		5,908		5,062		4,619		4,059	3,825		24,174		17,565
Amortization of acquired and library content	3,770		4,456		3,791		3,899		2,359		2,355		2,526	3,301		15,916		10,541
Share-based compensation expense	(176	)	913		1,019		1,194		1,497		1,479		1,601	1,290		2,950		5,867
Finance expense (gain) excluding interest, net2	8,349		6,948		(5,575	)	(11,148	)	22,046		(1,130	)	2,067	(502	)	(1,426	)	22,481
Acquisition costs	—		—		—		—		9,695		—		—	—		—		9,695
Write-down of certain investment in film and television	10,102		875		1,050		—		12		1,081		447	—		12,027		1,540
Development, integration and other	2,029		4,567		2,373		1,585		660		1,303		846	626		10,554		3,435
Adjusted EBITDA1	18,951		29,384		34,248		24,339		23,671		24,853		23,979	14,831		106,922		87,334
Portion of EBITDA attributable to non-controlling interests4	(2,979	)	(2,671	)	(2,236	)	(1,551	)	—		—		—	—		(9,437	)	—
Adjusted EBITDA attributable to DHX Media1 & 4	15,972		26,713		32,012		22,788		23,671		24,853		23,979	14,831		97,485		87,334

¹See “Use of Non-GAAP Financial Measures” section of this MD&A for further details.

²Finance expense per the financial statements has been split between its interest and non-interest components.

³Amortization is made up of amortization of P&E and intangibles.

⁴For Q4 2018, net income attributable to non-controlling interests was $2.4 million, comprised of $3.0 million which was included in Adjusted EBITDA and ($0.6) million of which is not included in Adjusted EBITDA. For Q3 2018, net income attributable to non-controlling interests was $1.63 million, comprised of $2.67 million which was included in Adjusted EBITDA and ($1.04) million of which is not included in Adjusted EBITDA. For Q2 2018, net income attributable to non-controlling interests was $1.83 million, comprised of $2.24 million which was included in Adjusted EBITDA and ($0.41) million of which is not included in Adjusted EBITDA. For Q1 2018, net income attributable to non-controlling interests was $1.42 million, comprised of $1.55 million which was included in Adjusted EBITDA and ($0.13) million of which is not included in Adjusted EBITDA.

44

Reconciliation of Historical Results to Gross Margin

Gross Margin is not a recognized earnings measure under GAAP and does not have standardized meanings prescribed by GAAP; accordingly, Gross Margin may not be comparable to similar measures presented by other companies or issuers. Investors are cautioned that Gross Margin should not be construed as an alternative to net income or loss determined in accordance with GAAP as an indicator of the Company’s performance or to cash flows from operating, investing, and financing activities as a measure of liquidity and cash flows.

The operating results for any period should not be relied upon as an indication of results for any future period.

																Fiscal		Fiscal
	Q4 20181		Q3 20181		Q2 20181		Q1 20181		Q4 20171		Q3 20171		Q2 20171	Q1 20171		20181		20171
	($000)		($000)		($000)		($000)		($000)		($000)		($000)	($000)		($000)		($000)
Income (loss) before income taxes	(24,568	)	(5,763	)	13,560		11,514		(22,020	)	10,464		7,794	1,999		(5,257	)	(1,763	)
Interest expense, net2	13,193		11,266		12,138		11,387		4,360		4,682		4,639	4,292		47,984		17,973
Amortization3	6,252		6,122		5,892		5,908		5,062		4,619		4,059	3,825		24,174		17,565
Amortization of acquired and library content	3,770		4,456		3,791		3,899		2,359		2,355		2,526	3,301		15,916		10,541
Selling, general, and administrative	23,156		22,501		20,717		19,826		18,030		18,820		19,640	17,643		86,200		74,133
Finance expense (gain) excluding interest, net2	8,349		6,948		(5,575	)	(11,148	)	22,046		(1,130	)	2,067	(502	)	(1,426	)	22,481
Acquisition costs	—		—		—		—		9,695		—		—	—		—		9,695
Write-down of certain investment in film and television	10,102		875		1,050		—		12		1,081		447	—		12,027		1,540
Development, integration and other	2,029		4,567		2,373		1,585		660		1,303		846	626		10,554		3,435
Gross Margin1	42,283		50,972		53,946		42,971		40,204		42,194		42,018	31,184		190,172		155,600

¹See “Use of Non-GAAP Financial Measures” section of this MD&A for further details.

²Finance expense per the financial statements has been split between its interest and non-interest components.

³Amortization is made up of amortization of P&E and intangibles.

Additional Information

Additional information related to DHX Media, its business and subsidiaries, including its Annual Information Form is available on SEDAR at www.sedar.com.

45

EX-99.4

Exhibit 99.4

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Donovan, certify that:

1. I have reviewed this annual report on Form 40-F of DHX Media Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: September 24, 2018

/s/ Michael Donovan

Michael Donovan

Chief Executive Officer

(principal executive officer)

EX-99.5

Exhibit 99.5

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas Lamb, certify that:

1. I have reviewed this annual report on Form 40-F of DHX Media Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: September 24, 2018

/s/ Douglas Lamb

Douglas Lamb

Chief Financial Officer

(principal financial officer)

EX-99.6

Exhibit 99.6

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, as the Chief Executive Officer of DHX Media Ltd., certifies that, to the best of his knowledge and belief, the annual report on Form 40-F for the fiscal year ended June 30, 2018, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the information contained in the annual report on Form 40-F for the fiscal year ended June 30, 2018 fairly presents, in all material respects, the financial condition and results of operations of DHX Media Ltd. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Date: September 24, 2018

/s/ Michael Donovan

Michael Donovan

Chief Executive Officer

(principal executive officer)

EX-99.7

Exhibit 99.7

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, as the Chief Financial Officer of DHX Media Ltd., certifies that, to the best of his knowledge and belief, the annual report on Form 40-F for the fiscal year ended June 30, 2018, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the information contained in the annual report on Form 40-F for the fiscal year ended June 30, 2018 fairly presents, in all material respects, the financial condition and results of operations of DHX Media Ltd. at the dates and for the periods indicated. The foregoing certification is made pursuant to §906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Date: September 24, 2018

/s/ Douglas Lamb

Douglas Lamb

Chief Financial Officer

(principal financial officer)

EX-99.8

Exhibit 99.8

Consent of Independent Auditor

We hereby consent to the incorporation by reference in this Annual Report on Form 40-F for the year ended June 30, 2018 of DHX Media Ltd. of our report dated September 24, 2018, relating to the consolidated financial statements which appear in the Exhibit 99.2 incorporated by reference in this Annual Report.

We also consent to the incorporation by reference in the Registration Statements on Forms S-8 (No. 333-208591 and No. 333-207194) of DHX Media Ltd. of our report dated September 24, 2018 referred to above. We also consent to reference to us under the heading “Interests of Experts,” which appears in the Annual Information Form included in the Exhibit 99.1, which is incorporated by reference in this Annual Report on Form 40-F, which is incorporated by reference in such Registration Statements.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Halifax, Nova Scotia, Canada

September 24, 2018

XML

Document and Entity Information	12 Months Ended
	Jun. 30, 2018 shares
Document And Entity Information [Abstract]
Entity Registrant Name	DHX Media Ltd.
Entity Central Index Key	0001490186
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Document Type	40-F
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding	34,783,382,000

XML

Consolidated Balance Sheet - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Current assets
Cash	$ 46,550	$ 62,143
Cash held in trust (note 12(c)(iv))	0	239,877
Amounts receivable (note 6)	251,538	245,033
Prepaid expenses and other	8,580	10,092
Investment in film and television programs (note 7)	186,008	195,180
Current assets	492,676	752,325
Long-term amounts receivable (note 6)	18,789	26,502
Property and equipment (note 9)	30,436	30,996
Goodwill (note 11)	240,806	240,534
Assets	1,476,792	1,761,705
Current liabilities
Bank indebtedness (note 12)	16,350	0
Accounts payable and accrued liabilities	130,545	178,365
Deferred revenue	47,552	50,949
Interim production financing (note 12)	93,683	101,224
Current portion of long-term debt and obligations under finance leases (note 12)	10,524	234,876
Current liabilities	298,654	565,414
Long-term debt and obligations under finance leases (note 12)	746,046	748,459
Other long-term liabilities	13,621	17,420
Deferred income taxes (note 15)	17,679	14,559
Liabilities	1,076,000	1,345,852
Equity attributable to Shareholders of the Company	315,078	329,297
Non-controlling interest	85,714	86,556
Total Shareholders’ Equity	400,792	415,853
Equity and liabilities	1,476,792	1,761,705
Commitments And Contingencies1
Acquired and library content (note 8)
Current assets
Acquired and library content and Intangible assets	147,088	155,940
Intangible assets (note 10)
Current assets
Acquired and library content and Intangible assets	$ 546,997	$ 555,408

XML

Consolidated Statement of Changes in Equity - CAD ($) $ in Thousands	Total	Contributed surplus	Accumulated other comprehensive income (loss)	Retained earnings (deficit)	Non-controlling interest	Common shares Common Shares
Beginning balance at Jun. 30, 2016	$ 336,835	$ 20,488	$ (20,286)	$ 33,805	$ 0	$ 302,828
Net income (loss) for the year	(3,634)			(3,634)
Other comprehensive income (loss) for the year	(1,310)		(1,310)
Comprehensive income (loss) for the year	(4,944)		(1,310)	(3,634)
Common shares issued (note 13)	309	(45)				354
Dividends reinvested and paid	(8,770)			(9,908)		1,138
Share-based compensation (note 13)	5,867	5,867
Non-controlling interest on acquisition of subsidiaries (note 5)	86,556				86,556
Ending balance at Jun. 30, 2017	415,853	26,310	(21,596)	20,263	86,556	304,320
Net income (loss) for the year	(6,748)			(14,060)	7,312
Other comprehensive income (loss) for the year	6,978		6,978
Comprehensive income (loss) for the year	230		6,978	(14,060)	7,312
Common shares issued (note 13)	228	(200)				428
Dividends reinvested and paid	(10,315)			(10,734)		419
Share-based compensation (note 13)	2,950	2,950
Non-controlling interest on acquisition of subsidiaries (note 5)	4,036				4,036
Distributions to non-controlling interests	(12,190)				(12,190)
Ending balance at Jun. 30, 2018	$ 400,792	$ 29,060	$ (14,618)	$ (4,531)	$ 85,714	$ 305,167

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Consolidated Statement of Income (Loss) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Statements Of Income [Line Items]
Revenues (note 23)	$ 434,416	$ 298,712
Expenses (note 17)
Direct production costs and expense of film and television produced	244,244	143,112
Amortization of property and equipment and intangible assets	24,174	17,565
Development, integration and other	10,554	3,435
Acquisition costs (note 5)	0	9,695
Write-down of investment in film and television programs and acquired and library content and impairment of intangible assets (notes 7,8,10)	10,968	1,540
Selling, general and administrative	86,200	74,133
Finance expense (note 16)	58,956	42,978
Finance income (note 16)	(12,398)	(2,524)
Expenses	439,673	300,475
Loss before income taxes	(5,257)	(1,763)
Current income taxes (note 15)	2,166	5,991
Deferred income taxes (note 15)	(675)	(4,120)
Provision for (recovery of) income taxes	1,491	1,871
Net loss for the year	(6,748)	(3,634)
Net income attributable to non-controlling interests	7,312	0
Net loss attributable to Shareholders of the Company	$ (14,060)	$ (3,634)
Basic loss per common share (note 21) (in CAD per share)	$ (0.10)	$ (0.03)
Diluted loss per common share (note 21) (in CAD per share)	$ (0.10)	$ (0.03)
Acquired and library content
Expenses (note 17)
Amortization of acquired and library content (note 8)	$ 15,916	$ 10,541

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Consolidated Statement of Comprehensive Income (Loss) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Statement of comprehensive income [abstract]
Net loss for the year	$ (6,748)	$ (3,634)
Items that may be subsequently reclassified to the statement of income (loss)
Foreign currency translation adjustment	6,978	(1,310)
Comprehensive income (loss) for the year	$ 230	$ (4,944)

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Consolidated Statement Of Cash Flows Statement - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash provided by (used in) Operating activities
Net loss for the year	$ (6,748)	$ (3,634)
Charges (credits) not involving cash
Amortization of property and equipment	8,828	6,186
Write-down of intangible assets	1,059	0
Unrealized foreign exchange loss	(3,295)	2,637
Amortization of deferred financing fees	4,992	1,682
Accretion on tangible benefit obligation	539	651
Debt extinguishment charge	0	6,990
Share-based compensation	2,950	5,867
Accretion on Senior Unsecured Convertible Debentures	(1,586)	0
Amortization of debt premium	0	118
Movement in the fair value of embedded derivatives	(11,251)	(1,968)
Deferred tax recovery	(675)	(4,120)
Write-down of acquired and library content	3,402	363
Write-down of investment in film and television programs	7,566	1,177
Net investment in film and television programs (note 22)	4,471	(57,235)
Net change in non-cash balances related to operations (note 22)	(31,322)	12,830
Cash provided by (used in) operating activities	13,364	(6,536)
Financing activities
Dividends	(10,315)	(8,770)
Common shares issued	228	309
Proceeds from bank indebtedness	16,350	0
Proceeds from (repayment of) interim production financing	(7,541)	9,221
Distributions to non-controlling interests	(12,190)	0
Payment of debt issue costs	(539)	(32,340)
Decrease (increase) in cash held in trust	239,877	(239,877)
Proceeds from long-term debt	0	782,362
Repayment of long-term debt and obligations under finance leases	(236,763)	(73,623)
Cash (used in) provided by financing activities	(10,893)	437,282
Investing activities
Business acquisitions, net of cash acquired (note 5)	(7,641)	(439,014)
Acquisition of property and equipment	(2,426)	(5,618)
Acquisition/cost of intangible assets	(8,539)	(4,332)
Cash used in investing activities	(18,606)	(448,964)
Effect of foreign exchange rate changes on cash	542	(85)
Net change in cash during the year	(15,593)	(18,303)
Cash - Beginning of year	62,143	80,446
Cash - End of year	46,550	62,143
Intangible Assets
Charges (credits) not involving cash
Amortization of intangible assets	15,346	11,379
Write-down of intangible assets	1,059
Acquired and library content
Charges (credits) not involving cash
Amortization of intangible assets	15,916	10,541
Write-down of acquired and library content	$ 3,402	$ 363

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Nature of business

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Nature of business

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.

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Basis of preparation

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Basis of preparation

Basis of preparation

The Company prepares its consolidated financial statements (the “financial statements”) in accordance with Canadian generally accepted accounting principles (“GAAP”) as set out in the Chartered Professional Accountants of Canada Handbook - Accounting - Part 1 (“CPA Canada Handbook”), which incorporates International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

These consolidated financial statements have been authorized for issuance by the Board of Directors on September 24, 2018.

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Significant accounting policies, judgments and estimation uncertainty

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Significant accounting policies, judgments and estimation uncertainty

Significant accounting policies, judgments and estimation uncertainty

The significant accounting policies used in the preparation of these financial statements are described below:

Basis of measurement

The consolidated financial statements have been prepared under a historical cost basis, except for certain financial assets and financial liabilities, including derivative instruments that are measured at fair value.

Consolidation

The consolidated financial statements include the accounts of DHX Media Ltd. and all of its subsidiaries. The consolidated financial statements of all subsidiaries are prepared for the same reporting period, using consistent accounting policies. Intercompany accounts, transactions, income and expenses and unrealized gains and losses resulting from transactions among the consolidated companies have been eliminated upon consolidation.

Subsidiaries are those entities, including structured entities, which the Company controls. Consistent with other entities in the film and television industry, the Company utilizes structured entities as a vehicle to create and fund some of its film and television projects. When the Company makes substantive decisions on creation of the content and financing within the structured entities it consolidates them. For accounting purposes, control is established by the Company 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. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and are de-consolidated from the date that control ceases.

Non-controlling interest represents the portion of a subsidiary's earning and losses and net assets that is not held by the Company. If losses in a subsidiary applicable to a non-controlling interest exceed the non-controlling interest in the subsidiary's equity, the excess is allocated to the non-controlling interest except to the extent that the majority has a binding obligation and is able to cover the losses.

Foreign currency translation

(i) Functional and presentation currency

Items included in the consolidated financial statements of each consolidated entity of the Company are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). Primary and secondary indicators are used to determine the functional currency (primary indicators have priority over secondary indicators). The primary indicator which applies to the Company is the currency that mainly influences revenues and expenses. Secondary indicators include the currency in which funds from financing activities are generated. The Company operates material subsidiaries in three currency jurisdictions including the Canadian dollar, the US dollar, and the UK pound sterling. An assessment of the primary and secondary indicators for each subsidiary is performed to determine the functional currency of the subsidiary, which are then translated to Canadian dollars, the Company's presentation currency. The financial statements of consolidated entities that have a functional currency other than Canadian dollars (“foreign operations”) are translated into Canadian dollars as follows:

(a) assets and liabilities - at the closing rate at the date of the balance sheet; and

(b) income and expenses - at the average rate for the period.

All resulting exchange differences are recognized in other comprehensive income as foreign currency translation adjustments.

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If the Company disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation, at year-end exchange rates, of monetary assets and liabilities denominated in currencies other than the functional currency are recognized in the consolidated statement of income (loss).

Revenue recognition

Revenue from the licensing of film and television programs is recognized when:

(a) the production has been completed;

(b) the contractual delivery arrangements have been satisfied and the Company retains neither continuing managerial involvement to the degree usually associated with the ownership nor effective control over the goods sold;

(c) the customer has access to the production and can benefit from the content;

(d) the amount of revenue can be measured reliably;

(e) collectability of proceeds is probable; and

(f) the costs incurred or to be incurred in respect of the contractual arrangement can be measured reliably.

Cash payments received or advances currently due pursuant to a broadcast license or distribution arrangement are recorded as deferred revenue until all of the foregoing conditions of revenue recognition have been met.

Revenue from production services for third parties and other revenue, as appropriate, is recognized on a percentage-of-completion basis. Percentage-of-completion is based upon the proportion of costs incurred in the current period to total expected costs. A provision is made for the entire amount of future estimated losses, if any, on productions-in-progress.

Royalty revenue is accrued for royalty streams for which the receipt of revenue is probable and is recognized in accordance with the substance of the relevant agreements and statements received from third party agents.

Revenue from live tours is recorded in the period in which the show is performed, the amount of revenue can be reliably measured, the costs incurred or to be incurred can be measured and collectability is reasonably assured. Merchandising revenue is recognized at the point of sale to customers.

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, the services have been provided and collectability is reasonably assured. 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.

Revenue from the Company's broadcasting business is recognized as follows:

(a) subscriber fee revenues are recognized monthly based on estimated subscriber levels for the period-end, which are based on the preceding month's actual subscribed as submitted by the broadcast distribution undertakings;

(b) advertising and promotion revenue, net of agency commission where applicable, is recorded when the advertising or promotion airs on the Company's television stations; and

(c) other revenues, including sponsorship revenue, as earned.

Gross versus net revenue

The Company evaluates arrangements with third parties to determine whether revenue should be reported on a gross or net basis under each individual arrangement by determining whether the Company acts as the principal or agent under the terms of each arrangement. To the extent that the Company acts as the principal in an arrangement, revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line items. Conversely, to the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues being presented net of any related expenses. Determining whether the Company acts as principal or agent is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement. The most significant factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and inventory risk (or equivalent) and latitude in establishing prices.

Investment in film and television programs

Investment in film and television programs represents the balance of costs of film and television programs which have been produced by the Company or for which the Company has invested in distribution rights and the Company’s right to participate in certain future cash flows of film and television programs produced and distributed by other unrelated parties.

Costs of investing in and producing film and television programs are capitalized. The costs are measured net of federal and provincial program contributions earned and are charged to income using a declining balance method of amortization. For film and television programs produced by the Company, capitalized costs include all direct production and financing costs incurred during production that are expected to benefit future periods. Financing costs are capitalized to the costs of a film or television program until substantially all of the activities necessary to prepare the film or television program for delivery are complete. Production financing provided by third parties that acquire participation rights is recorded as a reduction of the cost of the production.

The rates used for the declining balance method of amortization range from 40 to 100% at the time of initial episodic delivery and at rates ranging from 10 to 25% annually thereafter. The determination of the rates is based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue.

Investments in film and television programs are accounted for as inventory and classified within current assets. The normal operating cycle of the Company can be greater than 12 months.

The investment in film and television programs is measured at the lower of cost and net realizable value. The net realizable value is determined using estimates of future revenues net of future costs. A write-down is recorded equivalent to the amount by which the costs exceed the estimated net realizable value of the film or television program.

Acquired and library content

Acquired and library content represents the balance of acquired film and television programs. Acquired and library content typically has minimal ongoing costs to maintain the content, and is charged to income using a declining balance method of amortization.

The rates used for the declining balance method of amortization range from 10 to 20% annually. The determination of rates is based on the expected economic useful life of the film or television program, and includes factors such as the availability of rights to renew licenses for episodic television programs in various territories, as well as the availability of secondary market revenue.

Acquired and library content is accounted for as an intangible asset and classified within long-term assets.

Acquired and library content is tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use, being the present value of the expected future cash flows of the asset. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Broadcast rights

Program and film rights for broadcasting are purchased on a fixed or variable cost basis. The asset and liability for fixed cost purchases are recognized at the time the rights are known and determinable, and if they are available for airing. The cost of fixed program and film rights is expensed over the lesser of the availability period and the maximum period that varies depending upon the type of program, generally ranging from 24 to 60 months based on the expected pattern of consumption of the economic benefit. Program and film rights for broadcasting acquired on a variable cost basis are not capitalized and their cost is determined and expensed over their contracted exhibition period, on the basis of the average number of subscribers to the network exhibiting the program and of other contracting terms.

In the event that the recognition criteria for fixed cost purchases described above are not met and the Company has already paid amounts to obtain future rights, such amounts are considered as prepaid program and film rights and are included as prepaids on the consolidated balance sheet.

Any impairment charges are reported as an expense on the consolidated statement of income (loss).

Accrued participation payables

Included in accounts payable and accrued liabilities are accrued participation payables.  Accrued participation payables reflect the legal liability due as at the balance sheet date, calculated as the participation owing on cash collected and accounts receivable.

Deferred financing fees and debt issue costs

Debt issue costs related to bank indebtedness are recorded as a deferred charge and amortized, using the straight-line method, over the term of the related bank indebtedness and the expense is included in interest expense. Debt issue costs related to long-term debt are recorded as a reduction to the carrying amount of long-term debt and amortized using the effective interest method and the expense is included in finance expense.

Business combinations

The Company applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.

Any contingent consideration to be transferred by the group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the fair value of consideration transferred over the fair value of identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

Development costs

Development costs include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and included in investment in film and television programs upon commencement of production. Advances or contributions received from third parties to assist in development are deducted from these costs. Projects in development are written off as development expenses at the earlier of the date determined not to be recoverable or when projects under development are abandoned, or three years from the date of the initial recognition of the investment, if there have been no active development milestones or significant development expenditures within the last year.

Property and equipment

Property and equipment are carried at historical cost, less accumulated amortization and accumulated impairment losses. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the consolidated statement of income during the period in which they are incurred. Amortization is provided, commencing when the asset is available for use, over the estimated useful life of the asset, using the following annual rates and methods:

Buildings	4% declining balance
Furniture, fixtures and other equipment	5% to 20% declining balance
Computer equipment	30% declining balance
Post-production equipment	30% declining balance
Computer software	2 years straight-line
Website design	2 years straight-line
Leasehold improvements	Straight-line over the term of lease

The Company allocates the amount initially recognized in respect of an item of property and equipment to its significant parts and depreciates each such part separately. Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.

Gains and losses on disposals of property and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains and losses in the consolidated statement of income (loss).

Goodwill

Goodwill represents the cost of acquired businesses in excess of the fair value of net identifiable assets acquired at the date of acquisition. Goodwill is carried at cost less any accumulated impairment losses and is not subject to amortization. Goodwill is tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired. Goodwill is allocated to a cash generating unit (“CGU”), or group of CGUs, which is the lowest level within an entity at which the goodwill is monitored for internal management purposes, which is not higher than an operating segment. Impairment is tested by comparing the recoverable amount of goodwill assigned to a CGU or group of CGUs to its carrying value.

Intangible assets

Intangible assets are carried at cost. Amortization is provided on a straight-line basis over the estimated useful life of the assets, using the following annual rates and methods:

Broadcaster relationships	7 to 10 years straight-line
Customer relationships	10 years straight-line
Brands	10 to 20 years straight-line or indefinite life
Production and distribution rights	10 to 25 years straight-line
Production backlog	2 to 3 years straight-line
Non-compete contracts	3 years straight-line
Production software	5 years straight-line

Intangible assets with indefinite life are not amortized. The assessment of whether the underlying asset continues to have an indefinite life is reviewed annually to determine whether an indefinite life continues to be supportable, and if not, the change in useful life from indefinite to finite is made on a prospective basis.

Broadcast licenses

Broadcast licenses are considered to have an indefinite life based on management’s intent and ability to renew the licenses without significant cost and without material modification of the existing terms and conditions of the license. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Broadcast licenses are tested for impairment annually or more frequently if events or circumstances indicate that they may be impaired.

Broadcast licenses by themselves do not generate cash inflows and therefore, when assessing these assets for impairment, the Company looks to the CGUs to which the asset belongs.

Impairment of non-financial assets

Property and equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets that are not amortized are subject to an annual impairment test. For the purposes of measuring recoverable amounts, assets are grouped into CGUs. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use, being the present value of the expected future cash flows of the relevant CGU. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, including investment in films and property and equipment, are added to the cost of those assets, until such time as the assets are substantially complete and ready for use. All other borrowing costs are recognized as a finance expense in the consolidated statement of income in the period in which they are incurred.

Government financing and assistance

The Company has access to several government programs, including tax credits that are designed to assist film and television production and distribution in Canada. The Company records government assistance when the related costs have been incurred and there is reasonable assurance that they will be realized. Amounts received or receivable in respect of production assistance are recorded as a reduction of the production costs of the applicable production. Government assistance with respect to distribution rights is recorded as a reduction of investment in film and television programs. Government assistance towards current expenses is recorded as a reduction of the applicable expense item.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material. The Company performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.

Leases

Upon initial recognition, the Company classifies all leases as either a finance lease or an operating lease, depending on the substance of the lease terms. Finance leases are classified as such because they are found to transfer substantially all the rewards incidental to ownership of the asset to the lessee, whereas operating leases are classified as such because they are not found to meet the criteria required for classification as a finance lease. Upon commencement of the lease, finance leases are recorded as assets with corresponding liabilities in the consolidated balance sheet at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The rate used to discount the payments is either the interest rate implicit in the lease or the Company's incremental borrowing rate. The asset is amortized over the shorter of the term of the lease and the useful life of the asset while the liability is decreased by the actual lease payments and increased by any accretion expense. Payments made under operating leases are charged to the consolidated statement of income (loss) on a straight-line basis over the period of the lease.

Income taxes

The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of income (loss), except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

Deferred tax is recognized in respect of temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the financial statements, as well as the benefit of losses that are probable to be realized and are available for carry forward to future years to reduce income taxes. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

The effect of a change in tax rates on deferred tax assets and liabilities is included in earnings in the period that the change is substantively enacted, except to the extent it relates to items previously recognized outside earnings in which case the rate change impact is recognized in a manner consistent with how the items were originally recognized.

Deferred income tax assets and liabilities are presented as non-current.

Share-based compensation

The Company grants stock options to certain directors, officers, employees and consultants of the Company. Stock options vest over periods of up to 4 years and expire after 5 to 7 years. Each vesting tranche of stock options is considered a separate award with its own vesting period and estimated grant date fair value. The estimated grant date fair value of each vesting tranche is estimated using the Black-Scholes option pricing model. The non-cash compensation expense is recognized over each tranche’s vesting period by increasing contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually with any impact being recognized immediately.

The Company also grants performance share units ("PSUs") to certaineligible employees. PSUs are granted at the discretion of the Board based on a notional equity value of the common shares of the Company tied to a specified formula. The number of PSUs that ultimately vest under each grant is dependent on continued employment for a period of time and the achievement of specific performance measures. On the vesting date, each employee will receive common shares as settlement; accordingly, grants of PSUs are accounted for as equity settled instruments. The Company recognizes compensation expense offset by contributed surplus equal to the estimated grant date fair value of the PSUs granted on a straight-line basis over the applicable vesting period, taking into consideration forfeiture estimates. Compensation expense is adjusted prospectively for subsequent changes in management’s estimate of the number of PSUs that are expected to vest.

Earnings per share

Basic earnings per share (“EPS”) is calculated by dividing the net income for the period attributable to equity owners of the Company by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for potentially dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. The Company’s potentially dilutive common shares comprise stock options, PSUs and the Senior Unsecured Convertible Debentures.

Financial instruments

Financial instruments are classified as follows:

• Financial assets classified as "Available-for-Sale" are recognized initially at fair value plus transaction costs and are subsequently carried at fair value with the changes in fair value recorded in other comprehensive income. Available-for-Sale assets are classified as non-current, unless the investment matures or management expects to dispose of them within twelve months.

• Derivative financial instruments are classified as “Held-for-Trading” and recognized initially on the balance sheet at fair value. Financial assets classified as Held-for-Trading are recognized at fair value with the changes in fair value recorded in net income.

• Cash, cash held in trust, trade receivables and long-term amounts receivables are classified as “Loans and Receivables”. After their initial fair value measurement, they are measured at amortized cost using the effective interest method, less a provision for impairment, established on an account-by-account basis, based on, among other factors, prior experience and knowledge of the specific debtor and management’s assessment of the current economic environment.

• Accounts payable and accrued liabilities, interim production financing, long-term debt, special warrants and other liabilities are classified as “Other Financial Liabilities”, and are initially recognized at fair value less transaction costs. Subsequent to initial recognition, Other Financial Liabilities are measured at amortized cost using the effective interest method.

Impairment of financial assets

At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. A significant or prolonged decline in the fair value of the security below its cost is evidence that the asset is impaired. If such evidence exists, the Company recognizes an impairment loss, as follows:

• Financial assets carried at amortized cost: The loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

• Available-for-Sale financial assets: The impairment loss is the difference between the original cost of the asset and its fair value at the measurement date, less any impairment losses previously recognized in the statement of income. This amount represents the cumulative loss in accumulated other comprehensive income that is reclassified to net income.

Impairment losses on financial assets carried at amortized cost and Available-for-Sale financial assets are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on available-for-sale equity instruments are not reversed.

Dividend distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Board of Directors.

Tangible benefit obligation

As part of the Canadian Radio-Television and Telecommunications Commission (“CRTC”) decision approving the Company’s acquisition of 8504601 Canada Inc. (“DHX Television”) on July 31, 2014, the Company is required to contribute $17,313 to provide tangible benefits to the Canadian broadcasting system over seven years from the date of acquisition. The tangible benefit obligation was initially recorded in the consolidated statement of income at the estimated fair value on the date of acquisition, being the sum of the discounted future net cash flows and the same amount was recorded as a liability at the date of acquisition of DHX Television. The tangible benefit obligation is being adjusted for the incurrence of related expenditures, the passage of time and for revisions to the timing of the cash flows. Changes in the obligation (other than incurred expenditures) are recorded as finance expense in the consolidated statement of income (loss).

Cash and cash equivalents

Cash and cash equivalents consist of current operating bank accounts, term deposits and fixed income securities with an original term to maturity of 90 days or less. Cash equivalents are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

New and amended standards adopted

i) The IASB issued amendments to IAS 7, "Statement of Cash Flows" ("IAS 7") to improve financial information provided to users of financial statements about an entity's financing activities. These amendments are effective for annual periods beginning on or after January 1, 2017. The adoption of this standard had no financial impact on the Company's consolidated financial statements, however did required additional disclosure in note 22.

Accounting standards issued but not yet applied

i) IFRS 9 “Financial instruments” (“IFRS 9”) is required to be applied for years beginning on or after January 1, 2018, and sets out the requirements for recognizing and measuring financial assets and financial liabilities. IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”). The new standard establishes a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. It 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. Additional disclosures would be required under the new standard.

Upon adoption, the Company expects the impact to be $500 to $1,500, and will change the category of classification for its financial assets and financial liabilities. Previously, the Company classified its financial assets as ‘loans and receivables’ and its financial liabilities as ‘other financial liabilities’, both of which were previously measure at amortized cost, with the exception of embedded derivatives which were measured at fair value. Under IFRS 9, the measurement basis would remain the same, however the category for classification would be referred to as 'Amortized Cost'.

ii) IFRS 15 “Revenue from Contracts and Customers” (“IFRS 15”) is required to be applied for years beginning on or after January 1, 2018, and establishes principles to record revenues from contracts for the sale of goods or services, unless the contracts are in the scope of other IFRSs. IFRS 15 replaces IAS 18, “Revenue” and 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

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

The new standard also provides additional guidance relating to principal versus agent relationships, licenses of intellectual property, and contract costs.

The Company has completed its assessment of the impact of IFRS 15 and expects its proprietary production revenue and consumer products owned revenue streams to be impacted.

Under IFRS 15, the Company has determined that in certain proprietary production contracts, the customer who owns the initial broadcast license rights may in substance control the asset. In such cases, the Company would record revenue using the percentage of completion basis.

In addition,  the Company has determined that, under IFRS 15, contracts for the management of copyrights, licensing and brands provide the customer with a right to access to the underlying property, and therefore royalties, including minimum guarantees, will be recognized as the greater of earned royalties or the pro-rata minimum guarantee over the term of the license.

IFRS 15 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective or cumulative effect method).  The Company intends to adopt the standard using the modified retrospective method on the date of transition, which is July 1, 2018.  The expected impact of this adoption is a increase in deficit as at July 1, 2018 in the range of $4.0 million to $9.0 million, with a corresponding adjustment to deferred revenue.

iii) In January 2016, the IASB issued IFRS 16, "Leases" ("IFRS 16") effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have also adopted IFRS 15. IFRS 16 provides a comprehensive model for the measurement, presentation and disclosure of leases and supersedes

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 financial statements.

iv) The IASB issued amendments to IFRS 2, "Share-based payment" ("IFRS 2"), to clarify the classification and measurement of share-based payment transactions. The amendments are effective for annual periods beginning on or after January 1, 2018. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

v) In June 2017, the IASB issued IFRIC 23 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. The Company is currently evaluating the impact of IFRIC 23 on its consolidated financial statements.

vi) The IASB issued IFRIC 22 "Foreign currency transactions and advance consideration" ("IFRIC 22"), which clarifies 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). IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. The Company will apply the IFRIC on a prospective basis. The effect of applying this IFRIC is not expected to be have a significant impact on the Company's consolidated financial statements.

Significant accounting judgments and estimation uncertainty

The preparation of financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable. Actual results may differ materially from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

(i) Income taxes and deferred income taxes

Deferred tax assets and liabilities require management’s judgment in determining the amounts to be recognized. In particular, judgment is used when assessing the extent to which deferred tax assets should be recognized with respect to the timing of deferred taxable income.

The current income tax provision for the year requires judgment in interpreting tax laws and regulations. Estimates are used in determining the provision for current income taxes which are recognized in the financial statements. The Company considers the estimates, assumptions and judgments to be reasonable but this can involve complex issues which may take an extended period to resolve. The final determination of the amounts to be paid related to the current year’s tax provisions could be different from the estimates reflected in the financial statements. The Company’s tax filings also are subject to audits, the outcome of which could change the amount of current and deferred tax assets and liabilities.

(ii) Business combinations

The purchase price allocation process requires management to use significant estimates and assumptions, including fair value estimates including, but not limited to:

•estimated fair values of tangible assets;

•estimated fair values of intangible assets;

•estimated fair values of deferred revenue;

•probability of required payment under contingent consideration provisions;

•estimated income tax assets and liabilities; and

•estimated fair value of pre-acquisition contingencies.

While management uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired and liabilities assumed at the business combination date, estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which is the earlier of the date management receives the information it is looking for or one year from the business combination date, adjustments are recorded to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Although management believes the assumptions and estimates made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the assets and liabilities acquired include but are not limited to:

•future expected cash flows from distribution, consumer products and licensing and other customer

contracts;

•expected costs to complete film and television productions in-progress and the estimated cash flows

from the productions when completed;

•the acquired company’s brand, broadcaster relationships and customer and distribution

relationships as well as assumptions about the period of time these acquired intangibles will

continue to benefit the combined company;

•the fair value of deferred revenue, including future obligations to customers;

•uncertain tax positions assumed in connection with a business combination are initially estimated

as of the acquisition date and are re-evaluated quarterly, management continues to collect

information in order to determine their estimated value, with any adjustments to preliminary

estimates recorded to goodwill during the measurement period; and

•discount rates applied to future expected cash flows.

Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities and goodwill in the purchase price allocation, which could also impact net income as expenses and impairments could change. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

(iii) Investment in film and television programs/Acquired and library content

The costs of investing in and producing film and television programs are capitalized, net of federal and provincial program contributions earned.

Investment in film assets are amortized using the declining balance method with rates of amortization ranging from 40% to 100% at the time of initial episodic delivery and at rates ranging from 10% to 25% annually thereafter. Management estimates these rates based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue. Estimation uncertainty relates to management's ability to estimate the expected economic useful life of the film or television program.

(iv) Impairment of goodwill and indefinite life intangibles

Management estimates the recoverable amount of each CGU that has goodwill or indefinite life intangibles by estimating its value-in-use or fair value less costs to sell, whichever is greater, and compares it to the carrying amount to determine if the goodwill or indefinite life intangible asset are impaired.

Value-in-use is based on the expected future cash flows of an asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The impairment test calculations are based on detailed budgets and forecasts which are prepared for each CGU to which the assets are allocated. These budgets and forecasts generally cover a period of five years with a long-term growth rate applied to the terminal year. Key areas of estimation uncertainty relate to management's assumptions about future operating results, long-term growth rates and the discount rate. Actual results could vary from these estimates which may cause significant adjustments to the Company's goodwill or indefinite life intangible assets in subsequent reporting periods.

(v) Impairment of non-financial assets

The indicators of impairment for non-financial assets are determined based on management’s judgment. If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset’s or CGU’s recoverable amount. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management estimates the asset or CGU’s value-in-use. Value-in-use is based on the estimated future cash flows of the asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The impairment test calculations are based on detailed budgets or forecasts which are prepared for each CGU to which the assets are allocated. Key areas of estimation uncertainty relate to management's assumptions about the cash flow forecast, the long-term growth rate applied to cash flows and the discount rate.

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Compensation of key management

12 Months Ended

Jun. 30, 2018

Related Party [Abstract]

Compensation of key management

Compensation of key management

Key management includes all directors, including both executive and non-executive directors, as well as the Executive Chairman and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Commercial Officer and President. The compensation earned by key management is as follows:

	2018	2017
	$	$
Salaries and employee benefits	4,205	2,694
Share-based compensation	2,146	2,738
Termination benefits	2,899	—
	9,250	5,432

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Acquisitions

12 Months Ended

Jun. 30, 2018

Business Combinations1 [Abstract]

Acquisitions

Acquisitions

i) On September 15, 2017, the Company acquired 51% of the outstanding shares of Egg Head Studios LLC ("Ellie Sparkles"), which owns and produces proprietary kids and family content and operates a kids and family focused YouTube channel, for consideration as follows:

• Cash consideration US$3,570 ($4,350) paid at closing, subject to a customary working capital adjustment; and

• Two performance based earn-outs, each in the amount of up to US$1,000 ($1,218) which, subject to achieving performance based targets, may become payable on the first and second anniversaries of closing. Subsequent to year end, it was determined that $nil would be payable in relation to the first anniversary performance based target.

The acquisition of Ellie Sparkles was accounted for using the purchase method and as such, the results of operations reflect revenue and expenses of Ellie Sparkles since September 15, 2017.

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

	$
Assets
Cash	122
Acquired and library content	8,406
Total identifiable net assets at fair value	8,528
Non-controlling interest	4,178
Purchase consideration transferred	4,350

The Company finalized the purchase price allocation during the year. There was no impact to net income previously reported as a result of finalizing the purchase price allocation.

ii) On June 30, 2017 (“IED Effective Date”), the Company acquired all of the entertainment division of Iconix Brand Group, Inc. (“IED”), which includes an 80% controlling interest in Peanuts and a 100% interest in Strawberry Shortcake for consideration of US$349,132 ($453,070), consisting of US$345,000 ($447,707) paid at closing for the purchase price and a working capital adjustment of US$4,132 ($5,363), of which US$1,503 ($1,950) was paid at closing, and US$2,629 ($3,413) of which was paid during the period. Specifically, the acquisition of IED consisted of two Membership Interest Purchase Agreements which provided for the acquisition of an 80% interest in Peanuts Holdings LLC (including all subsidiaries) ("Peanuts"), a 100% interest in IBGNYC LLC (including all subsidiaries), a 100% interest in IBGSCREEN LLC, and a 100% interest in Shortcake IP Holdings LLC. The acquisition of IED was funded in conjunction with a refinancing (the “Refinancing”) of all the Company’s existing senior secured credit facilities (the "Former Senior Secured Credit Facilities") and existing senior unsecured notes (the "Senior Unsecured Notes").

The Company also entered into a new senior secured credit agreement (the "Senior Secured Credit Agreement") and completed an offering (the "Offering") of subscription receipts (the "Subscription Receipts"), which commensurate with the closing of the acquisition of IED on June 30, 2017 were automatically converted into special warrants (the "Special Warrants"), and effective October 1, 2017 were automatically exercised, for no additional consideration, into Senior Unsecured Convertible Debentures. The details of the Refinancing are further described in note 12. The remaining 20% interest in Peanuts Holdings LLC (including all subsidiaries) continues to be held by members of the family of Charles M. Schulz. In addition to its 20% interest in Peanuts Holdings LLC (including all subsidiaries), the family of Charles M. Schulz is also entitled to receive an additional fee based on the revenues less shareable costs of Peanuts Worldwide LLC, a subsidiary of Peanuts Holdings LLC, which for the year ended June 30, 2018 was $54,082.

The goodwill value of $25,149 arising from the acquisition of IED is attributable to the Company’s ability to further develop the Peanuts and Strawberry Shortcake properties in new ways; the increased size and scale of the combined consumer products and licensing businesses; synergies related to the Company’s CPLG business, which manages copyrights, licensing and brands; and the value of the assembled workforce.

Goodwill is measured as the excess of the consideration transferred and the amount of non-controlling interests over the estimated fair value of the identifiable assets acquired and the liabilities assumed.

The acquisition of IED was accounted for using the purchase method; and as such, the results of operations reflect the revenues and expenses of IED since June 30, 2017.

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

	$
Assets
Cash	12,754
Amounts receivable	24,367
Prepaid expenses and deposits	1,787
Long-term receivables	8,661
Acquired and library content	74,618
Property and equipment	104
Intangible assets - brands	422,012
Goodwill	25,149
	569,452
Liabilities
Accounts payable and accrued liabilities	10,938
Deferred revenue	14,575
Other liabilities	5,148
	30,661
Total identifiable net assets at fair value	538,791
Non-controlling interest	85,721
Purchase consideration transferred	453,070

The Company finalized the purchase price allocation during the year. There was no impact to net income previously reported as a result of finalizing the purchase price allocation.

Subsequent to June 30, 2018, the Company sold 49% of its 80% ownership interest in Peanuts (see note 24 for further details).

iii) On March 3, 2017, the Company acquired 80% of the outstanding shares of Whizzsis Limited ("Kiddyzuzaa"), which owns and produces proprietary kids and family content and operates a kids and family focused YouTube channel, for consideration as follows:

• Cash consideration £GBP1,290 ($2,121) paid at closing, with an additional payment of £GBP202 ($333) due on the first anniversary of closing and a final payment of £GBP202 ($333) due on the second anniversary of closing; and

• A performance based earn-out of up to £GBP322 ($530) based on total commercial exploitation over a two-year period following closing.

The acquisition of Kiddyzuzaa was accounted for using the purchase method and as such, the results of operations reflect revenue and expenses of Kiddyzuzaa since March 3, 2017.

The purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as follows:

	$
Assets
Cash	10
Acquired and library content	3,484
Goodwill	695
	4,189
Liabilities
Accounts payable and accrued liabilities	75
Deferred income tax liabilities	631
	706
Total identifiable net assets at fair value	3,483
Non-controlling interest	696
Purchase consideration transferred	2,787

The Company finalized the purchase price allocation during the year. There was no impact to net income previously reported as a result of finalizing the purchase price allocation.

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Amounts receivable

12 Months Ended

Jun. 30, 2018

Subclassifications of assets, liabilities and equities [abstract]

Amounts receivable

Amounts receivable

	June 30, 2018		June 30, 2017
	$		$
Trade receivables	163,203		136,755
Less: Provision for impairment of trade receivables	(9,742	)	(4,772	)
	153,461		131,983
Goods and services tax recoverable, net	1,203		1,411
Federal and provincial film tax credits and other government assistance	96,874		111,639
Short-term amounts receivable	251,538		245,033
Long-term amounts receivable	18,789		26,502
Total amounts receivable	270,327		271,535

The aging of trade receivables not impaired is as follows:

	June 30, 2018	June 30, 2017
	$	$
Less than 60 days	131,683	125,081
Between 60 and 90 days	5,863	1,833
Over 90 days	15,915	5,069
	153,461	131,983

The Company does not have security over these balances. All impaired trade receivables are older than 90 days.

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 historical default experience, any changes to credit quality and management estimates. Goods and services taxes recoverable and other government assistance do not contain any significant uncertainty.

Provision for impairment of trade receivables:

	June 30, 2018		June 30, 2017
	$		$
Opening balance	4,772		6,459
Provision for receivables	5,089		3,857
Receivables written off during the period	(197	)	(5,300	)
Recoveries of receivables previously provided for	(12	)	(94	)
Foreign exchange	90		(150	)
Closing balance	9,742		4,772

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Investment in film and television programs

12 Months Ended

Jun. 30, 2018

Inventories [Abstract]

Investment in film and television programs

Investment in film and television programs

	June 30, 2018		June 30, 2017
	$		$
Development costs	2,112		1,678
Productions in progress
Cost, net of government and third-party assistance	17,577		37,346
Productions completed and released
Cost, net of government and third-party assistance	529,494		473,775
Accumulated expense	(377,041	)	(343,487	)
Accumulated write-down of investment in film and television programs	(15,910	)	(11,131	)
	136,543		119,157
Program and film rights - broadcasting
Cost	134,765		120,655
Accumulated expense	(102,202	)	(83,656	)
Accumulated write-down of program and film rights	(2,787	)	—
	29,776		36,999
	186,008		195,180

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

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

	June 30, 2018		June 30, 2017
	$		$
Net opening investment in film and television programs	195,180		140,444
Increase in development costs	434		238
Cost of productions (completed and released and productions in progress), net of government assistance and third-party assistance	33,088		88,021
Expense of investment in film and television programs	(33,554	)	(24,348	)
Write-down of investment in film and television programs	(4,779	)	(1,177	)
Increase of program and film rights - broadcasting	14,110		15,839
Expense of program and film rights - broadcasting	(18,546	)	(22,515	)
Write-down of program and film rights - broadcasting	(2,787	)	—
Foreign exchange	2,862		(1,322	)
	186,008		195,180

During the year ended June 30, 2018, interest of $1,384 (2017 - $2,149) has been capitalized to investment in film and television programs.

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Acquired and library content

12 Months Ended

Jun. 30, 2018

Intangible Assets [Abstract]

Acquired and library content

Acquired and library content

	June 30, 2018		June 30, 2017
	$		$
Net opening acquired and library content	155,940		88,462
Additions IED (note 5)	—		74,618
Additions Kiddyzuzaa (note 5)	—		3,484
Additions Ellie Sparkles (note 5)	8,406		—
Write-down of acquired and library content	(3,402	)	(363	)
Amortization	(15,916	)	(10,541	)
Foreign exchange	2,060		280
	147,088		155,940

Intangible assets

All broadcast licenses relate to the operations of DHX Television.

	Broadcast licenses	Broadcaster relationships		Customer relationships		Brands (1)		Production and distribution rights (2)		Other (3)		Total
	$	$		$		$		$		$		$
For the year ended June 30, 2017
Opening book value	67,800	1,262		21,653		24,853		25,843		3,199		144,610
IED acquisition (note 5)	—	—		—		422,012		—		—		422,012
Additions	—	—		—		969		—		—		969
Amortization	—	(732	)	(2,747	)	(3,177	)	(2,387	)	(2,336	)	(11,379	)
Foreign exchange differences	—	1		(226	)	(76	)	(503	)	—		(804	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
At June 30, 2017
Cost	67,800	7,362		27,920		458,260		30,946		7,327		599,615
Accumulated amortization	—	(6,875	)	(9,680	)	(13,918	)	(3,551	)	(6,464	)	(40,488	)
Foreign exchange differences	—	44		440		239		(4,442	)	—		(3,719	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
For the year ended June 30, 2018
Opening book value	67,800	531		18,680		444,581		22,953		863		555,408
Additions	—	—		—		—		—		1,074		1,074
Amortization	—	(299	)	(2,792	)	(8,899	)	(2,458	)	(898	)	(15,346	)
Impairment	—	—		—		(1,059	)	—		—		(1,059	)
Foreign exchange differences	—	—		89		6,091		674		66		6,920
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997
At June 30, 2018
Cost	67,800	7,362		27,920		457,201		30,946		8,401		599,630
Accumulated amortization	—	(7,174	)	(12,472	)	(22,817	)	(6,009	)	(7,362	)	(55,834	)
Foreign exchange differences	—	44		529		6,330		(3,768	)	66		3,201
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997

(1) Included in Brands are $350,419 of indefinite life intangibles (2017 - $345,319).

(2) Productions and distribution rights represent rights acquired by the Company to produce and/or distribute television content where the Company does not own the underlying intellectual properties.

(3) Comprised of production backlog, non-compete contracts and production software.

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Property and equipment

12 Months Ended

Jun. 30, 2018

Property, plant and equipment [abstract]

Property and equipment

Property and equipment

	Land	Building		Furniture, fixtures and equipment		Computer equipment		Post-production equipment		Computer software		Leasehold improvements		Total
	$	$		$		$		$		$		$		$
For the year ended June 30, 2017
Opening net book value	4,276	1,792		1,354		2,811		2,917		1,040		3,493		17,683
IED Acquisition	—	—		—		104		—		—		—		104
Additions	—	—		1,071		1,087		8,223		344		8,872		19,597
Disposals, net	—	—		—		(170	)	—		—		—		(170	)
Transfers, net	—	158		—		—		—		—		(158	)	—
Amortization	—	(12	)	(314	)	(1,475	)	(2,852	)	(488	)	(1,045	)	(6,186	)
Foreign exchange differences	—	—		—		(32	)	—		—		—		(32	)
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
At June 30, 2017
Cost	4,276	2,070		6,281		12,536		13,966		4,896		14,372		58,397
Accumulated amortization	—	(132	)	(4,178	)	(10,419	)	(5,678	)	(4,056	)	(3,226	)	(27,689	)
Foreign exchange differences	—	—		8		208		—		56		16		288
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
For the year ended June 30, 2018
Opening net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
Additions	—	73		349		852		6,055		331		616		8,276
Disposals, net	—	—		—		—		—		—		(104	)	(104	)
Amortization	—	(78	)	(738	)	(1,147	)	(4,907	)	(429	)	(1,529	)	(8,828	)
Foreign exchange differences	—	—		1		84		—		9		2		96
	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436
At June 30, 2018
Cost	4,276	2,143		6,630		13,388		20,021		5,227		14,884		66,569
Accumulated amortization	—	(210	)	(4,916	)	(11,566	)	(10,585	)	(4,485	)	(4,755	)	(36,517	)
Foreign exchange differences	—	—		9		292		—		65		18		384
Net book value	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436

As at June 30, 2018, included in the property and equipment net book value were leased computers equipment, post production equipment and computer software in the amount of $1,690, $6,327, and $740 respectively, (2017 - $1,733, $5,787, and $725).

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Intangible assets

12 Months Ended

Jun. 30, 2018

Intangible Assets [Abstract]

Intangible assets

Acquired and library content

	June 30, 2018		June 30, 2017
	$		$
Net opening acquired and library content	155,940		88,462
Additions IED (note 5)	—		74,618
Additions Kiddyzuzaa (note 5)	—		3,484
Additions Ellie Sparkles (note 5)	8,406		—
Write-down of acquired and library content	(3,402	)	(363	)
Amortization	(15,916	)	(10,541	)
Foreign exchange	2,060		280
	147,088		155,940

Intangible assets

All broadcast licenses relate to the operations of DHX Television.

	Broadcast licenses	Broadcaster relationships		Customer relationships		Brands (1)		Production and distribution rights (2)		Other (3)		Total
	$	$		$		$		$		$		$
For the year ended June 30, 2017
Opening book value	67,800	1,262		21,653		24,853		25,843		3,199		144,610
IED acquisition (note 5)	—	—		—		422,012		—		—		422,012
Additions	—	—		—		969		—		—		969
Amortization	—	(732	)	(2,747	)	(3,177	)	(2,387	)	(2,336	)	(11,379	)
Foreign exchange differences	—	1		(226	)	(76	)	(503	)	—		(804	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
At June 30, 2017
Cost	67,800	7,362		27,920		458,260		30,946		7,327		599,615
Accumulated amortization	—	(6,875	)	(9,680	)	(13,918	)	(3,551	)	(6,464	)	(40,488	)
Foreign exchange differences	—	44		440		239		(4,442	)	—		(3,719	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
For the year ended June 30, 2018
Opening book value	67,800	531		18,680		444,581		22,953		863		555,408
Additions	—	—		—		—		—		1,074		1,074
Amortization	—	(299	)	(2,792	)	(8,899	)	(2,458	)	(898	)	(15,346	)
Impairment	—	—		—		(1,059	)	—		—		(1,059	)
Foreign exchange differences	—	—		89		6,091		674		66		6,920
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997
At June 30, 2018
Cost	67,800	7,362		27,920		457,201		30,946		8,401		599,630
Accumulated amortization	—	(7,174	)	(12,472	)	(22,817	)	(6,009	)	(7,362	)	(55,834	)
Foreign exchange differences	—	44		529		6,330		(3,768	)	66		3,201
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997

(1) Included in Brands are $350,419 of indefinite life intangibles (2017 - $345,319).

(2) Productions and distribution rights represent rights acquired by the Company to produce and/or distribute television content where the Company does not own the underlying intellectual properties.

(3) Comprised of production backlog, non-compete contracts and production software.

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Goodwill

12 Months Ended

Jun. 30, 2018

Intangible Assets [Abstract]

Goodwill

Goodwill

The continuity of goodwill is as follows:

	June 30, 2018		June 30, 2017
	$		$
Opening net book value	240,534		214,325
Acquired on acquisition of IED (note 5)	(537	)	25,818
Acquired on acquisition of Kiddyzuzaa (note 5)	—		695
Exchange differences	809		(304	)
	240,806		240,534

Impairment testing

Goodwill and indefinite life intangible assets, being the broadcast licenses and certain brands, are tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired. The Company tested goodwill for impairment at June 30, 2018 and 2017, in accordance with its policy described in note 3. For the purposes of allocating goodwill, the Company has determined that it has four CGU's: i) the Company's production, distribution and licensing of film and television programs business, being the Content Business excluding Peanuts (the "Content Business"); ii) Peanuts; iii) CPLG, which manages copyrights, licensing and brands for third parties; and iv) DHX Television. The CPLG CGU does not have any goodwill or indefinite life intangible assets, and therefore has not been tested for impairment.

In assessing the goodwill and indefinite life intangible assets for impairment, the Company compares the carrying value of the CGU to the recoverable amount, where the recoverable amount is the higher of fair value less costs to sell ("FVLCS") and the value-in-use ("VIU"). An impairment charge is recognized to the extent that the carrying value exceeds the recoverable amount.

To determine the recoverable amount for each of it's CGU's, the Company applied the following valuation methods:

CGU's	Valuation methodology
Content Business	Value-in-use
Peanuts	FVLCS
DHX Television	Value-in-use

Value-in-Use

The value-in-use of the Company's Content Business CGU and DHX Television CGU were determined by discounting five-year cash flow projections prepared from business plans reviewed by senior management and approved by the Board of Directors. The projections reflect management’s expectations of revenue, profit, capital expenditures, working capital and operating cash flows, based on past experience and future expectations of operating performance. Cash flows beyond the five-year period are extrapolated using perpetual growth rates.

The discount rates are applied to the cash flow projections and were derived from the weighted average cost of capital and other external sources for each CGU.

The following table shows the key assumptions used to estimate the recoverable amounts of the groups of CGUs:

	Assumptions used
	Perpetual		Pre-tax
CGU's	growth rate		discount rate
Content Business	3.0	%	12.2	%
DHX Television	0.0	%	15.5	%

For the Content Business and DHX Television CGU's, the recoverable amount of the CGU's to which goodwill and indefinite life intangible assets have been allocated was greater than its carrying value, as such the Company determined there were no impairments of goodwill or indefinite life intangible assets as at June 30, 2018. Management believes that any reasonably possible change in the key assumptions on which the estimate of recoverable amounts of the Content Business and DHX Television CGU's was based would not cause their carrying amounts to exceed their recoverable amounts.

The cash flows used in determining the recoverable amounts for the CGU’s were based on the following key assumptions:

Cash flows from operations for each CGU were projected for a period of five years based on a combination of past experience, actual operating results and forecasted future results.

For the Content Business CGU, key revenue assumptions include i) future production slates (both proprietary and production service), ii) future sources of distribution revenues (linear and digital) and expected sales prices/revenue levels, and iii) consumer products revenue forecasts by brand. These key assumptions represent Management’s assessment of future industry trends and are based on both historical results, future projections and external sources. Gross margins for the Content Business were estimated using a combination of both forecast and historical margins.

For the DHX Television CGU, the key revenue assumptions include subscriber levels, rates per subscriber, and future advertising revenues. Subscriber levels were estimated based on Management’s assessment of future industry trends, while subscriber rates were based on existing agreements and Management’s estimates of future renewal rates. Advertising and promotion revenues were based upon Management’s assessment of future industry trends, based on internal and external sources. Gross margins for DHX Television were estimated using historical margins, while giving consideration to expected future content costs.

Expenditure levels for all CGU’s were forecasted based on Management’s assessment of future industry trends.

Cash flow adjustments for capital expenditures for each CGU were based upon Management’s sustaining capital expenditure estimates, adjusted for presently planned capital expenditures required to achieve forecast operating levels.

The perpetual growth rates were estimated based upon Management’s assessment of future industry trends for each specific CGU.

Fair value less costs to sell

The fair value less costs to sell of the Company's Peanuts CGU was estimated with reference to the sale of 49% of its ownership interest to a third party, Sony Music Entertainment (Japan) Inc. subsequent to year end (see note 24). Based on the sales price of this transaction, the Company concluded there were no impairments of goodwill or indefinite life intangible assets in the Peanuts CGU as at June 30, 2018.

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

12 Months Ended

Jun. 30, 2018

Financial Instruments [Abstract]

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

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

	June 30, 2018		June 30, 2017
	$		$
Bank indebtedness	16,350		—
Interim production financing	93,683		101,224
Long-term debt and obligations under finance leases	756,570		983,335
Interest bearing debt and obligations under finance leases	866,603		1,084,559
Amount due within 12 months	(120,557	)	(336,100	)
Amount due beyond 12 months	746,046		748,459

Effective June 30, 2017 and commensurate with the closing of the Company’s acquisition of IED (note 5), the Company entered into the Senior Secured Credit Agreement with a syndicate of lenders, which provides for a revolving facility (the “Revolving Facility”) and a term facility (the “Term Facility”). All amounts borrowed pursuant to the Senior Secured Credit Agreement are guaranteed by the Company and certain of its subsidiaries (the “Guarantors”). A first priority security interest in respect of all of the capital stock of certain of the subsidiaries of DHX Media Ltd. has been provided in favour of the syndicate of lenders, as well as all present and subsequently acquired real and personal property of the Guarantors.

On May 31, 2017, and pursuant to the Company’s acquisition of IED (note 5), the Company completed the Offering of Subscription Receipts, which upon closing of the acquisition of IED on June 30, 2017 were automatically converted into Special Warrants and were automatically exercised, for no additional consideration, into Senior Unsecured Convertible Debentures effective October 1, 2017.

The proceeds from the Refinancing were used to fund the acquisition of IED (note 5) and to repay all amounts owing pursuant to Former Senior Secured Credit Facilities and Senior Unsecured Notes.

a) Bank indebtedness

The Revolving Facility has a maximum available balance of US$30,000 (CAD $39,504) 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 June 30, 2018, $16,350 (2017 - $nil) was drawn on the Revolving Facility, comprised of the following amounts payable: US$4,000, GBP£1,200, and CAD$9,000.

b) Interim production financing

	June 30, 2018	June 30, 2017
	$	$
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 $115,639 at June 30, 2018 (June 30, 2017 - $131,186) have been pledged as security.	93,683	101,224

During the year ended June 30, 2018, the $CDN bank prime rate averaged 3.19% (2017 - 2.70%).

c) Long-term debt and obligations under finance leases

	June 30, 2018		June 30, 2017
	$		$
Term Facility, net of unamortized issue costs of $22,232 (June 30, 2017 - $26,107)	623,066		616,339
Special Warrants, net of unamortized issue costs of $nil (June 30, 2017 - $6,249)	—		133,751
Senior Unsecured Convertible Debentures, net of unamortized issue costs of $5,588 (June 30, 2017 - $nil) and embedded derivatives at fair value of $11,940 (June 30, 2017 - $nil)	124,747		—
Senior Unsecured Notes	—		225,000
Obligations under various finance leases, bearing interest at rates ranging from 4.0% to 9.8%, maturing on dates ranging from July 2018 to March 2021	8,757		8,245
	756,570		983,335
Less: Current portion	(10,524	)	(234,876	)
	746,046		748,459

(i) Term Facility

As at June 30, 2018, the Term Facility has a principal balance of US$490,050 (2017 - US$495,000) and matures on December 29, 2023.

The Term Facility is repayable in annual amortization payments of 1% of the initial principal, payable in equal quarterly installments which commenced September 30, 2017. 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 June 30, 2018, no payments were owing under the Excess Cash Flow Payments terms of the Term Facility.

The Term Facility bears interest at floating rates of either $USD base rate + 2.75% or $USD LIBOR + 3.75%.

Subsequent to June 30, 2018, 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 (see note 24 for further details).

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

• The ratio of Consolidated Funded Indebtedness (defined in summary as all third-party indebtedness for borrowed money, unreimbursed obligations in respect of drawn letters of credit, finance leases and other purchase money indebtedness and guarantees of the Company and certain of its subsidiaries (the “Restricted Subsidiaries”) and generally excludes all interim production financing),less the unrestricted cash and cash equivalents of the Company and Restricted Subsidiaries to Consolidated EBITDA (rolling consolidated adjusted EBITDA, pro-forma last 12 months) of the Company and its Restricted Subsidiaries, calculated quarterly in $USD, which commencing the 12 month period ended September 30, 2017 is not to exceed 7.25 times, stepping down to 6.75 times commencing for the 12 month period ended September 30, 2018, then stepping down to 6.50 times for the 12 month period ended September 30, 2019, then stepping down to 5.75 times commencing for the 12 month period ended September 30, 2020, then stepping down to 5.50 times commencing for the 12 month period ended September 30, 2021 through until maturity.

As at June 30, 2018, the Company was in compliance with its debt covenants.

(ii) Former Term Facility

On June 30, 2017, a portion of the proceeds from the Refinancing were used to repay all amounts outstanding pursuant to the Former Term Facility which bore interest at floating rates, resulting in a debt extinguishment charge of $1,471 during the year ended June 30, 2017, representing the previously unamortized debt issue costs.

(iii) Senior Unsecured Convertible Debentures

On May 31, 2017, and in contemplation of the closing of the acquisition of IED (note 5), the Company completed the Offering of Subscription Receipts in the amount of $140,000, which upon closing of the acquisition of IED (note 5) on June 30, 2017 automatically converted into Special Warrants and were exercised, for no additional consideration, into Senior Unsecured Convertible Debentures of the Company effective October 1, 2017. The Subscription Receipts, Special Warrants and Senior Unsecured Convertible Debentures all bear interest at an annual rate of 5.875%, paid semi-annually on March 31 and September 30. 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 Company accounts for the Senior Unsecured Convertible Debentures by allocating the proceeds, net of issue costs, between the debt component and the embedded derivatives based on the estimated fair values of the debt component and the embedded derivatives, as determined by the residual value of the debt component. 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; accordingly, the Senior Unsecured Convertible Debentures are deemed to have no equity component and the estimated fair value of the embedded derivatives is recorded as a financial liability and is 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 October 1, 2017, the initial estimated fair value of the embedded derivatives was $23,191.

(iv) Senior Unsecured Notes

As at June 30, 2018, the outstanding principal amount due on the Senior Unsecured Notes was

$nil (2017 - $225,000). The Senior Unsecured Notes bore interest at 5.875% and with an originally scheduled maturity of December 2, 2021.

On June 7, 2017, and pursuant to both the acquisition of IED (note 5) and the Refinancing, the Company issued notice to the holders of the Senior Unsecured Notes of its intention to redeem the Senior Unsecured Notes on July 11, 2017, resulting in the recognition of an early redemption penalty of $13,464 and a debt extinguishment charge of $5,519, representing the previously unamortized debt issue costs, during the year ended June 30, 2017. On July 11, 2017, the Senior Unsecured Notes, including all accrued interest and the early redemption penalty were settled for $239,877.

(v) Principal repayments

The aggregate amount of scheduled principal repayments, excluding any potential Excess Cash Flow Payments, required in each of the next five years is as follows:

	$
Year ending June 30, 2019	10,524
2020	8,611
2021	8,254
2022	7,440
2023 and beyond	759,225

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Share capital and contributed surplus

12 Months Ended

Jun. 30, 2018

Share Capital, Reserves And Other Equity Interest [Abstract]

Share capital and contributed surplus

Share capital and contributed surplus

a) Authorized

100,000,000 Preferred Variable Voting Shares (“PVVS”), redeemable at the option of the Company at any time at a millionth of a cent per share, no entitlement to dividends, voting

Unlimited Common Voting Shares without nominal or par value

Unlimited Variable Voting Shares without nominal or par value

Unlimited Non-Voting Shares without nominal or par value

Preferred Variable Voting Shares

On May 14, 2018, the PVVS were transferred to the Company’s Executive Chairmen and Chief Executive Officer ("CEO"), in accordance with the terms of a shareholders agreement among the Company and holder of the PVVS (the “PVVS Shareholder Agreement”). On the date of such transfer, the CEO entered into the PVVS Shareholder Agreement with the Company, pursuant to which the CEO: (i) agreed not to transfer the PVVS, in whole or in part, except with the prior written approval of the Board; (ii) granted to the Company the unilateral right to compel the transfer of the PVVS, at any time and from time to time, in whole or in part, to a person designated by the Board; and (iii) granted to the Company a power of attorney to effect any transfers contemplated by the PVVS Shareholder Agreement.  The Board will not approve or compel a transfer without first obtaining the approval of the TSX and the PVVS Shareholder Agreement cannot be amended, waived or terminated unless approved by the TSX.

Common shares

On September 30, 2014, the Company’s shareholders approved a reorganization of the Company’s share capital structure (the “Share Capital Reorganization”) to address the Canadian ownership requirements of DHX Television. The Share Capital Reorganization was affected on October 9, 2014 and resulted in, among other things, the creation of three new classes of shares: Common Voting Shares, Variable Voting Shares and Non-Voting Shares.

On October 9, 2014, each outstanding Common Share of the Company that was not owned and controlled by a Canadian for the purposes of the Broadcasting Act (Canada) (the “Broadcasting Act”) was converted into one Variable Voting Share and each outstanding Common Share that was owned and controlled by a Canadian for the purposes of the Broadcasting Act was converted into one Common Voting Share. Each Common Voting Share carries one vote per share on all matters. Each Variable Voting Share carries one vote per share unless the number of Variable Voting Shares outstanding exceeds 33 1/3% of the total number of Variable Voting Shares and Common Voting Shares outstanding, in which case the voting rights per share of the Variable Voting Shares are reduced so that the total number of votes associated with the outstanding Variable Voting Shares equals 33 1/3% of the total votes associated with the outstanding Variable Voting Shares and Common Voting Shares combined. The economic rights of each Variable Voting Share, each Common Voting Share and each Non-Voting Share are the same. All of the unissued Common Shares of the Company were cancelled on the completion of the Share Capital Reorganization. The Variable Voting Shares and Common Voting Shares are listed on the TSX under the ticker symbol DHX. On June 23, 2015, the Variable Voting Shares were listed on the NASDAQ under the ticker symbol DHXM.

b) Issued and outstanding

	June 30, 2018		June 30, 2017
	Number	Amount	Number	Amount
		$		$
Preferred variable voting shares (note 13 (a))	100,000,000	—	100,000,000	—
Common shares (note 13 (c))
Opening balance	134,061,548	304,320	133,774,729	302,828
Dividend reinvestment	108,180	419	195,319	1,138
Shares issued pursuant to the ESPP	43,496	199	31,500	205
PSU's settled	20,666	69	—	—
Options exercised	60,000	160	60,000	149
Ending balance	134,293,890	305,167	134,061.548	304,320

c) Common shares

The common shares of the Company are inclusive of Common Voting Shares, Variable Voting Shares and Non-Voting Shares. As at June 30, 2018, the Company had 99,510,508 Common Voting Shares, 34,783,382 Variable Voting Shares and nil Non-Voting Shares issued and outstanding (2017 - 103,821,287, 30,240,261, and nil respectively).

During the year ended June 30, 2018, the Company issued 43,496 common shares, at an average price of $4.58 as part of the Company’s employee share purchase plan (2017 - 31,500 at $6.51).

During the year ended June 30, 2018, 60,000 common shares were issued out of treasury at an average price of $1.81 upon exercise of stock options (2017 - 60,000 at $1.73).

During the year ended June 30, 2018, the Company issued 108,180 common shares at an average price of $3.87, as part of the shareholder enrollment in the Company's dividend reinvestment program (2017 - 195,319 at 5.82).

d) Stock options

As at June 30, 2018 and 2017, the Company had the following stock options outstanding:

			Weighted average
	Number of		exercise price
	options		per stock option
Outstanding at June 30, 2016	7,137,125		6.93
Granted	1,742,400		6.79
Exercised	(60,000	)	1.73
Outstanding at June 30, 2017	8,819,525		6.93
Granted	1,920,000		5.69
Forfeited	(2,431,050	)	7.85
Cancelled	(125,000	)	7.13
Exercised	(60,000	)	1.81
Outstanding at June 30, 2018	8,123,475		6.41
Exercisable at June 30, 2018	4,297,150		6.12

The total maximum number of common shares to be reserved for issuance through the Company's option plan at June 30, 2018 is 8.5% (2017 - 8.5%) of the total number of outstanding common shares at any time. As at June 30, 2018, this amounted to 11,414,980 (2017 - 11,395,231).

On October 3, 2016, 1,342,400 stock options were issued at $7.02 per share, vesting over four years, expiring on October 2, 2023.

On February 16, 2017, 400,000 stock options were issued at $6.08 per share, vesting over four years, expiring on February 15, 2024.

On July 11, 2017, 1,620,000 stock options were granted to directors, officers and employees with an exercise price of $5.73 per common share, vesting over four years and expiring on July 10, 2024.

On October 2 2017, 300,000 stock options were granted to employees with and exercise price of $5.47 per common share, vesting over four years , expiring on October 1, 2024.

The weighted average grant date value of stock options and assumptions using the Black-Scholes option pricing model for the year ended June 30, 2018 and 2017 are as follows:

	2018			2017
Weighted average grant date value	$	1.67		$	2.01
Risk-free rate	1.45		%	0.69		%
Expected option life	5 years			5 years
Expected volatility	36		%	37		%
Expected dividend yield	1.35		%	1.08		%

During the year ended June 30, 2018, the compensation expense recognized as a result of stock options was $2,159 (2017 - $4,972), with a corresponding adjustment to contributed surplus.

Information related to options outstanding at June 30, 2018 is presented below.

	Number	Weighted	Weighted	Number	Weighted
Range of	outstanding at	average	average	exercisable at	average
exercise prices	June 30,	remaining	exercise	June 30,	exercise
	2018	contractual life	price	2017	price
		years	$		$
$1.50 - $3.49	655,625	0.03	2.03	655,625	2.03
$3.50 - $5.49	1,170,000	1.90	4.43	870,000	4.07
$5.50 - $7.49	4,027,100	4.35	6.57	1,324,900	7.00
$7.50 - $9.49	2,270,750	2.71	8.40	1,446,625	8.40
Total	8,123,475	3.19	6.41	4,297,150	6.12

e) Performance share unit plan

As described in note 3, on December 16, 2015, the Company's Shareholders approved the Plan for eligible employees of the Company. During the year ended June 30, 2017, and in two separate awards, the Company granted certain eligible employees a target number of PSUs that vest over up to a three-year period. On the vesting date, each eligible employee will receive common shares as settlement.

As at June 30, 2018, there were 207,270 (2017 - 338,665) PSUs both granted and outstanding. During the year, the compensation expense recognized as a result of the PSUs was $791 (2017 - $895), with a corresponding adjustment to contributed surplus.

During the year ended June 30, 2018, 20,666 PSU's were paid out to employees, 87,076 were forfeited and 23,653 were cancelled relating to taxes payable on the units issued.

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Government financing and assistance

12 Months Ended

Jun. 30, 2018

Government Grants [Abstract]

Government financing and assistance

Government financing and assistance

During the year ended June 30, 2018, investment in film and television programs was reduced by $nil (2017 - $2,125) related to production financing from government agencies. This financing is related to participation amounts by government agencies and is repayable from distribution revenue of the specific productions for which the financing was made. In addition, during the year ended June 30, 2018, investment in film has also been reduced by $1,667 (2017 - $3,737) related to non-repayable contributions from the Canadian Media Fund license fee program. During the year ended June 30, 2018, investment in film and television programs has been reduced by $15,618 (2017 - $25,547) for tax credits relating to production activities. Lastly, during the year ended June 30, 2018, the Company received $63,464, in government financing and assistance (2017 - $39,919).

Amounts receivable from the Canadian federal government and other government agencies in connection with production financing represents 36% of total amounts receivable at June 30, 2018 (2017 - 41%). Certain of these amounts are subject to audit by the government agency. Management believes that the net amounts recorded are fully collectible. The Company adjusts amounts receivable from Canadian federal government and other government agencies including federal and provincial tax credits receivable, in connection with production financing, quarterly and yearly, for any known differences arising from internal or external audit of these balances.

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Income taxes

12 Months Ended

Jun. 30, 2018

Income Taxes [Abstract]

Income taxes

Income taxes

Significant components of the Company’s net deferred income tax liability as at June 30, 2018 and 2017 are as follows:

	June 30, 2018		June 30, 2017
	$		$
Broadcast licenses	(17,967	)	(17,967	)
Tangible benefit obligation	2,171		2,352
Leasehold inducement	—		123
Foreign tax credits	2,324		85
Participation payables and finance lease obligations and other liabilities	—		64
Property and equipment	697		(1,724	)
Share issuance costs and deferred financing fees	(1,603	)	(1,051	)
Investment in film and television programs and acquired and library content	(27,568	)	(7,782	)
Intangible assets	(9,633	)	(6,278	)
Non-capital losses and other	33,900		17,619
Net deferred income tax liability	(17,679	)	(14,559	)

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 totalled $72,648 at June 30, 2018 (2017 - $60,510).

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

	June 30, 2018		June 30, 2017
	$		$
Income tax expense (recovery) based on combined federal and provincial tax rates of 31% (June 30, 2017 - 31%)	(1,664	)	(113	)
Income taxes increased (reduced) by:
Share-based compensation	915		1,792
Non-taxable portion of capital gain	(1,024	)	—
Tax rate differential	3,675		(1,252	)
Non-controlling interest	(2,223	)	—
Non-deductible acquisition costs	—		1,244
Tax rate change on opening balance	2,120		—
Other	(308	)	200
Provision for income taxes	1,491		1,871

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.

For the year ended June 30, 2018, the Company’s blended U.S. federal statutory tax rate is 27.5%, a result of using a tax rate of 34% for the six months ended December 31, 2017 and a reduced tax rate of 21% for the six months ended June 30, 2018.  As a result of the change in the U.S. federal statutory tax rate, the Company has recorded an estimated $2,120 expense, primarily as a result of the re-measurement of its deferred tax assets and deferred tax liabilities.  The Company’s deferred tax assets and deferred tax liabilities have been re-measured to reflect the reduced U.S. federal statutory tax rate expected to apply when the deferred tax assets and deferred tax liabilities are settled or realized in future periods; re-measuring the deferred tax assets and deferred tax liabilities involves estimating when the amounts will be settled or realized, and may be further revised if these estimates are ultimately different from actual future operating results.

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Finance income and finance expense

12 Months Ended

Jun. 30, 2018

Analysis of income and expense [abstract]

Finance income and finance expense

Finance income and finance expense

Finance income and finance expense are comprised of the following:

	June 30, 2018	June 30, 2017
	$	$
Finance income
Interest income	1,147	556
Gain on movement in fair value of the embedded derivatives on Senior Unsecured Convertible Debentures and Senior Unsecured Notes	11,251	1,968
	12,398	2,524
Finance expense
Interest expense on bank indebtedness	788	348
Accretion of tangible benefit obligation	539	651
Interest on long-term debt, obligations under finance leases and other	48,343	18,181
Early redemption penalties	—	13,464
Accretion on Senior Unsecured Convertible Debentures	1,586	—
Debt extinguishment charge	—	6,990
Amortization of debt premium on Senior Unsecured Notes	—	118
Net foreign exchange loss	7,700	3,226
	58,956	42,978

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Expenses by nature and employee benefit expense

12 Months Ended

Jun. 30, 2018

Analysis of income and expense [abstract]

Expenses by nature and employee benefit expense

Expenses by nature and employee benefit expense

The following sets out the expenses by nature:

	June 30, 2018	June 30, 2017
	$	$
Investment in film and television programs
Direct production and new media costs	192,143	96,249
Expense of film and television programs	33,554	24,348
Expense of film and broadcast rights for broadcasting	18,546	22,515
Write-down of investment in film and television programs and acquired and library content	10,968	1,540
Development, integration and other	10,554	3,435
Impairment of intangible assets	1,059	—
Amortization of acquired and library content	15,916	10,541
Office and administrative	21,704	20,395
Acquisition costs	—	9,695
Finance expense, net	46,558	40,454
Investor relations and marketing	3,322	2,902
Professional and regulatory	7,804	5,363
Amortization of property and equipment and intangible assets	24,174	17,565
	386,302	255,002
The following sets out the components of employee benefits expense:
Salaries and employee benefits	50,421	39,606
Share-based compensation	2,950	5,867
	53,371	45,473
	439,673	300,475

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Financial instruments

12 Months Ended

Jun. 30, 2018

Financial Instruments [Abstract]

Financial instruments

Financial instruments

a) Credit risk

Credit risk arises from cash, cash held in trust as well as credit exposure to customers, including outstanding trade receivables. The Company manages credit risk on cash and cash equivalents by ensuring that the counterparties are banks, governments and government agencies with high credit ratings.

The maximum exposure to credit risk for cash, cash held in trust and trade receivables approximate the amount recorded on the consolidated balance sheet of $228,542 at June 30, 2018 (2017 - $465,277).

The balance of trade amounts receivable are mainly with Canadian broadcasters and large international distribution companies. Management manages credit risk by regularly reviewing aged accounts receivables and appropriate credit analysis. The Company has booked an allowance for doubtful accounts of approximately 6% against the gross amounts for certain trade amounts receivable and management believes that the net amount of trade amounts receivable is fully collectible. In assessing credit risk, management includes in its assessment the long-term receivables and considers what impact the long-term nature of the receivable has on credit risk. For certain arrangements with licensees, the Company is considered the agent, and only reports the revenue net of the licensor’s share. When the Company bills a third party in full where it is an agent for the licensor, the Company records an offsetting amount in accounts payable that is only payable to a licensee when the amount is collected from the third party. This reduces the risk, as the Company is only exposed to the amounts receivable related to the revenue it records.

b) Interest rate risk

The Company is exposed to interest rate risk arising from fluctuations in interest rates as its interim production financing, certain long-term debt and a portion of cash and cash equivalents and cash held in trust bear interest at floating rates. A 1% (100 bps) fluctuation in the interest rate on the Company's variable rate debt instruments would have an approximate $6,000 to $7,000 effect on net income before income taxes.

c) Liquidity risk

The Company manages liquidity by forecasting and monitoring operating cash flows and through the use of finance leases, interim production financing and maintaining revolving credit facilities (note 12). As at June 30, 2018, the Company had cash on hand of $46,550 (June 30, 2017 - $62,143).

Results of operations for any period are dependent on the number and timing of film and television programs delivered, which cannot be predicted with certainty. Consequently, the Company’s results from operations may fluctuate materially from period-to-period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. During the initial broadcast of the rights, the Company is somewhat reliant on the broadcaster’s budget and financing cycles and at times the license period gets delayed and commences at a later date than originally projected.

The Company’s film and television revenues vary significantly from quarter to quarter driven by contracted deliveries with the primary broadcasters. Although with the Company’s recent diversification of its revenue mix, particularly in the strengthening of the distribution revenue stream and addition of the broadcasting revenue stream, some of the quarterly unevenness is improving slightly and becoming more predictable. Distribution revenues are contract and demand driven and can fluctuate significantly from year-to-year. The Company maintains appropriate cash balances and has access to financing facilities to manage fluctuating cash flows.

The Company obtains interim production financing (note 12) to provide funds until such time as the federal and provincial film tax credits (note 6) are collected. Upon collection of the film tax credits, the related interim production financing is repaid.

d) Currency risk

The Company’s activities involve holding foreign currencies and incurring production costs and earning revenues denominated in foreign currencies. These activities result in exposure to fluctuations in foreign currency exchange rates. The Company periodically enters into foreign exchange purchases contracts to manage its foreign exchange risk on USD, GBP and Euro denominate contracts. At June 30, 2018, the Company revalued its financial instruments denominated in a foreign currency at the prevailing exchange rates. A 1% change in the USD, GBP, JPY or Euro foreign exchange rates would have an approximate $8,000 effect on net income and comprehensive income.

e) Contractual maturity analysis for financial liabilities

		Less than	1 to 3	4 to 5	After 5
	Total	1 year	years	years	years
	$	$	$	$	$
Bank indebtedness	16,350	16,350	—	—	—
Accounts payable and accrued liabilities	130,545	130,545	—	—	—
Interim production financing	93,683	93,683	—	—	—
Other liabilities	8,150	—	8,150	—	—
Senior Unsecured Convertible Debentures	193,474	8,225	16,450	16,450	152,349
Term Facility	747,021	24,197	47,856	47,273	627,695
Finance lease obligations	9,435	4,364	4,132	939	—
	1,198,658	277,364	76,588	64,662	780,044

Contractual payments in the table above includes fixed rate interest payments but excludes variable rate interest payments and are not discounted. Other liabilities exclude deferred lease inducements as these do not require any future contractual payments.

f) Fair values

The Company categorizes its fair value measurements 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. Change in assumptions and estimates could significantly affect fair values.

Financial assets and liabilities measured at fair value

	As at
	June 30, 2018			June 30, 2017
	Fair value hierarchy	Fair value(1)		Fair value hierarchy	Fair value(1)
Derivatives
Embedded derivatives (2)	Level 2	(11,940	)	Level 2	—
Foreign currency forwards (3)	Level 2	(61	)	Level 2	(174	)
(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 values of embedded derivatives are determined using valuation models.
(3) The fair value of forward currency contracts is determined using prevailing exchange rates.

Financial assets and liabilities not measured at fair value

The carrying amounts reported on the consolidated financial statements for cash on hand, cash held in trust, amounts receivables and accounts payable and accrued liabilities all approximate their fair values due to their immediate or short-term nature. Bank indebtedness was renegotiated during the previous year to reflect current interest rates; therefore, management believes the carrying amounts also approximate their fair values. Cash has a hierarchy of Level 1, all other values listed above are listed as Level 3.

The following table summarizes the fair value and carrying value of other financial liabilities that are not recognized at fair value on a recurring basis on the consolidated balance sheets:

	As at
	June 30, 2018			June 30, 2017
	Fair value hierarchy	Fair value liability	Carrying value	Fair value hierarchy	Fair value liability	Carrying value
Term Facility(1)	Level 2	645,298	645,298	Level 2	642,363	642,363
Senior Unsecured Notes(2)	Level 2	—	—	Level 2	225,000	225,000
Obligations under finance leases	Level 2	8,757	8,757	Level 2	8,245	8,245
Special Warrants	Level 3	—	—	Level 3	140,000	140,000
Senior Unsecured Convertible Debentures(3)	Level 1	123,200	130,355	N/A	—	—
Interim production financing(4)	Level 2	93,683	93,683	Level 2	101,224	101,224
Other liabilities(5)	Level 3	8,150	8,150	Level 3	11,422	11,422
(1) The interest rates on the Term Facility resets regularly; therefore, the fair value, using a market approach approximates the carrying value.
(2) Management estimates the fair value using a market approach, based on publicly disclosed trades between arm's length parties.
(3) The fair value of the convertible debentures is based on market quotes as these are actively traded on the open exchange.
(4) Interim production financing bears interest at variable rates, therefore management believes the fair value approximates the carrying value.
(5) The fair value of other liabilities, which includes the tangible benefit obligations, the long-term portion of certain other contractual liabilities and excludes deferred lease inducements, was estimated based on discounting the expected future cash flows. The key unobservable assumptions in calculating the fair value are the timing of the payments over the next four years related to the tangible benefit obligation included in other liabilities, and the discount rate used for discounting the other liabilities.

g) Foreign currency contracts

At June 30, 2018, the Company had notional principal of US$2,231 (2017 - US$7,756) in contracts to sell US dollars.

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Commitments and contingencies

12 Months Ended

Jun. 30, 2018

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Commitments and contingencies

Commitments and contingencies

Commitments

The Company has entered into various operating leases for operating premises and equipment. The future aggregate minimum payments are as follows:

	$
Year ended June 30, 2019	9,884
2020	8,933
2021	7,563
2022	6,925
Beyond 2022	26,762

The Company has entered into various contracts to buy broadcast rights with future commitments totalling $22,321.

Contingencies

The Company is, from time-to-time, involved in various claims, legal proceedings and complaints arising in the normal course of business and as such, provisions have been recorded where appropriate. Management does not believe that the final determination of these claims will have a material adverse effect on the financial position or results of operations of the Company.

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Capital disclosures

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Capital disclosures

Capital disclosures

The Company’s objectives when managing capital are to provide an adequate return to shareholders, safeguard its assets, maintain a competitive cost structure and continue as a going concern in order to pursue the development, production, distribution and licensing of its film and television properties and broadcast operations. During the year ended June 30, 2018, the Company declared dividends totalling $10,734 (2017 - $9,908). The balance of the Company’s cash is being used to maximize ongoing development and reduce leverage.

The Company’s capital at June 30, 2018 and 2017 is summarized in the table below:

	June 30, 2018		June 30, 2017
	$		$
Total bank indebtedness, long-term debt and obligations under capital leases, excluding interim production financing	772,920		983,335
Less: Cash and cash held in trust	(46,550	)	(302,020	)
Net debt	726,370		681,315
Total Shareholders’ Equity	400,792		415,853
	1,127,162		1,097,168

To facilitate the management of its capital structure, the Company prepares annual expenditure operating budgets that are updated as necessary depending on various factors including industry conditions and operating cash flow. The annual and updated budgets are reviewed by the Board of Directors.

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Earnings per common share

12 Months Ended

Jun. 30, 2018

Earnings per share [abstract]

Earnings per common share

Earnings per common share

a) Basic

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

	June 30, 2018		June 30, 2017
	$		$
Net loss attributable to shareholders of the Company	(14,060	)	(3,634	)
Weighted average number of common shares	134,505,625		134,059,478
Basic loss per share	(0.10	)	(0.03	)

b) Diluted

Diluted earnings per common share is calculated by adjusting the weighted average number of common shares outstanding to assume conversion of all potentially dilutive instruments which are convertible into common shares. The Company has three categories of potentially dilutive instruments which are convertible into common shares: stock options, performance share units and the Senior Unsecured Convertible Debentures. For the stock options, performance share units and the Senior Unsecured Convertible Debentures, a calculation is completed to determine the number of common shares that could have been acquired at fair value (determined as the average market price of the Company’s outstanding common shares for the period), based on the monetary value of the subscription rights attached to the stock options, performance share units and Senior Unsecured Convertible Debentures. The number of shares calculated above is compared with the number of shares that would have been issued assuming exercises of stock options, issuance of performance share units and exercise of Senior Unsecured Convertible Debentures.

For the years ended June 30, 2018 and 2017, 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.

	June 30, 2018		June 30, 2017
	$		$
Net loss attributable to shareholders of the Company	(14,060	)	(3,634	)
Weighted average number of common shares	134,505,625		134,059,478
Diluted loss per share	(0.10	)	(0.03	)

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Statement of cash flows - supplementary information

12 Months Ended

Jun. 30, 2018

Cash Flow Statement [Abstract]

Statement of cash flows - supplementary information

Statement of cash flows - supplementary information

Net change in non-cash balances related to operations

	June 30,		June 30,
	2018		2017
	$		$
Decrease (increase) in amounts receivable	7,345		(44,457	)
Decrease (increase) in prepaid expenses and deposits and other	1,512		(526	)
Decrease (increase) in long-term amounts receivable	7,713		2,912
Increase (decrease) in accounts payable and accrued liabilities	(41,475	)	47,601
Increase (decrease) in deferred revenue	(5,558	)	10,899
Tangible benefit obligation payments	(859	)	(3,599	)
	(31,322	)	12,830
During the year, the Company paid and received the following:
	$		$
Interest paid	45,156		19,250
Interest received	342		556
Taxes paid	3,694		15,996

Net change in film and television programs

	June 30,		June 30,
	2018		2017
	$		$
Decrease (increase) in development	(434	)	(238	)
Decrease (increase) in productions in progress	19,769		(12,285	)
Decrease (increase) in productions completed and released	(52,854	)	(75,736	)
Expense of film and television programs	33,554		24,348
Decrease (increase) in program and film rights - broadcasting	(14,110	)	(15,839	)
Expense of film and broadcast rights for broadcasting	18,546		22,515
	4,471		(57,235	)

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

					Senior
					Unsecured		Senior
	Term		Special		Convertible		Unsecured		Finance
	Facility		Warrants		Debentures		Notes		leases		Total
	$		$		$		$		$		$
Balance - June 30, 2017	616,339		133,751		—		225,000		8,245		983,335
Repayments	(6,425	)	—		—		(225,000	)	(5,338	)	(236,763	)
Issue costs	(226	)	—		(313	)	—		—		(539	)
Total financing cash flow activities	(6,651	)	—		(313	)	(225,000	)	(5,338	)	(237,302	)
Conversion to Senior Unsecured Convertible Debentures	—		(133,751	)	133,751		—		—		—
Amortization of deferred financing costs	4,018		—		974		—		—		4,992
New finance leases	—		—		—		—		5,850		5,850
Movement in fair value of embedded derivatives	—		—		(11,251	)	—		—		(11,251	)
Accretion on Senior Unsecured Convertible Debentures	—		—		1,586		—		—		1,586
Unrealized foreign exchange loss	9,360		—		—		—		—		9,360
Total financing non-cash activities	13,378		(133,751	)	125,060		—		5,850		10,537
Balance - June 30, 2018	623,066		—		124,747		—		8,757		756,570

					Former		Senior
	Term		Special		Term		Unsecured		Finance
	Facility		Warrants		Facility		Notes		leases		Total
	$		$		$		$		$		$
Balance - June 30, 2016	—		—		67,578		219,928		4,567		292,073
New debt	642,362		140,000		—		—		—		782,362
Debt extinguishment cost	—		—		1,116		5,874		—		6,990
Realized foreign exchange	—		—		—		372		—		372
Repayments	—		—		(69,106	)	—		(4,517	)	(73,623	)
Issue costs	(26,023	)	(6,322	)	(18	)	(332	)	—		(32,695	)
Total financing cash flow activities	616,339		133,678		(68,008	)	5,914		(4,517	)	683,406
Amortization of deferred financing costs	—		73		430		1,008		—		1,511
Amortization of premium	—		—		—		118		—		118
New finance leases	—		—		—		—		8,195		8,195
Movement in fair value of embedded derivatives	—		—		—		(1,968	)	—		(1,968	)
Total financing non-cash activities	—		73		430		(842	)	8,195		7,856
Balance - June 30, 2017	616,339		133,751		—		225,000		8,245		983,335

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Revenues and segmented information

12 Months Ended

Jun. 30, 2018

Operating Segments [Abstract]

Revenues and segmented information

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.

	Year ended June 30, 2018
	CPLG		DHX Television	Content	Consolidated
	$		$	$	$
Revenues	13,034		55,014	366,368	434,416
Direct production costs and expense of film and television produced, and selling, general and administrative	15,285		33,459	257,891	306,635
Segment profit	(2,251	)	21,555	108,477	127,781
Corporate selling, general and administrative					23,809
Amortization of property and equipment and intangible assets					24,174
Finance expense, net					46,558
Amortization of acquired and library content					15,916
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets					12,027
Development, integration and other					10,554
Loss before income taxes					(5,257	)

	Year ended June 30, 2017
	CPLG	DHX Television	Content	Consolidated
	$	$	$	$
Revenues	18,814	57,384	222,514	298,712
Direct production costs and expense of film and television produced, and selling, general and administrative	16,589	35,276	140,132	191,997
Segment profit	2,225	22,108	82,382	106,715
Corporate selling, general and administrative				25,248
Amortization of property and equipment and intangible assets				17,565
Finance expense, net				40,454
Amortization of acquired and library content				10,541
Write-down of acquired and library content				1,540
Acquisition costs				9,695
Development, integration and other				3,435
Loss before income taxes				(1,763	)

For the year ended June 30, 2018, write-down of investment in film and television programs and acquired and library content included $2,787 and $9,240 related to DHX Television and Content segments, respectively (2017 - $nil and $1,540, respectively).

As at June 30, 2018, $nil, $33,224, and $207,582 of goodwill was allocated to CPLG, DHX Television and Content Business, respectively (2017 - $nil, $33,224, and $207,310, respectively).

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

	June 30, 2018	June 30, 2017
	$	$
Content
Production revenue	19,793	36,877
Distribution revenue	124,094	100,408
Merchandising and licensing and other revenue	144,712	26,253
Producer and service fee revenue	77,769	58,976
	366,368	222,514
DHX Television
Subscriber revenue	51,102	53,240
Promotion and advertising revenue	3,912	4,144
	55,014	57,384
CPLG
Third party brand representation revenue	13,034	18,814
	434,416	298,712

Of the Company’s $434,416 in revenues for the year endedJune 30, 2018, (2017 - $298,712), $168,038 was attributable to the Company’s entities based in Canada (2017 - $173,427), $144,940 (2017 - $1,089) was attributable to the Company’s entities based in the USA $109,024 (2017 - $108,849) was attributable to the Companies entities based in the UK and $12,414 (2017 - $15,347) was attributable to entities based outside of Canada, the USA and the UK.

As at June 30, 2018, the following non-current assets were attributable to the Company’s entities based in the USA: $67 of property and equipment, $423,485 of intangible assets, and $26,399 of goodwill (2017 - $125, $422,170, and $26,742, respectively). As at June 30, 2018, the following non-current assets were attributable to the Company’s entities based outside of Canada and the USA: $1,872 of property and equipment, $30,332 of intangible assets and $5,334 of goodwill (2017 - $2,091, $55,956, and $3,771 respectively). All other non-current assets were attributable to the Company’s entities based in Canada.

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Subsequent events

12 Months Ended

Jun. 30, 2018

Events After Reporting Period [Abstract]

Subsequent events

Subsequent events

On July 23, 2018, the Company completed the sale of a non-controlling interest in Peanuts to Sony Music Entertainment (Japan) Inc. (“SMEJ”).  SMEJ has indirectly purchased 49% of the Company’s 80% interest in Peanuts for $235.6 million in cash, subject to certain adjustments contemplated in the original agreement.  Subsequent to the sale, the Company now owns a 41% interest in Peanuts, SMEJ owns a 39% interest, and the members of the family of Charles M. Schulz continue to hold their 20% interest.

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Significant accounting policies, judgments and estimation uncertainty (Policies)

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Basis of measurement

Basis of measurement

The consolidated financial statements have been prepared under a historical cost basis, except for certain financial assets and financial liabilities, including derivative instruments that are measured at fair value.

Consolidation

Consolidation

The consolidated financial statements include the accounts of DHX Media Ltd. and all of its subsidiaries. The consolidated financial statements of all subsidiaries are prepared for the same reporting period, using consistent accounting policies. Intercompany accounts, transactions, income and expenses and unrealized gains and losses resulting from transactions among the consolidated companies have been eliminated upon consolidation.

Subsidiaries are those entities, including structured entities, which the Company controls. Consistent with other entities in the film and television industry, the Company utilizes structured entities as a vehicle to create and fund some of its film and television projects. When the Company makes substantive decisions on creation of the content and financing within the structured entities it consolidates them. For accounting purposes, control is established by the Company 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. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and are de-consolidated from the date that control ceases.

Non-controlling interest represents the portion of a subsidiary's earning and losses and net assets that is not held by the Company. If losses in a subsidiary applicable to a non-controlling interest exceed the non-controlling interest in the subsidiary's equity, the excess is allocated to the non-controlling interest except to the extent that the majority has a binding obligation and is able to cover the losses.

Foreign currency translation

Foreign currency translation

(i) Functional and presentation currency

Items included in the consolidated financial statements of each consolidated entity of the Company are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). Primary and secondary indicators are used to determine the functional currency (primary indicators have priority over secondary indicators). The primary indicator which applies to the Company is the currency that mainly influences revenues and expenses. Secondary indicators include the currency in which funds from financing activities are generated. The Company operates material subsidiaries in three currency jurisdictions including the Canadian dollar, the US dollar, and the UK pound sterling. An assessment of the primary and secondary indicators for each subsidiary is performed to determine the functional currency of the subsidiary, which are then translated to Canadian dollars, the Company's presentation currency. The financial statements of consolidated entities that have a functional currency other than Canadian dollars (“foreign operations”) are translated into Canadian dollars as follows:

(a) assets and liabilities - at the closing rate at the date of the balance sheet; and

(b) income and expenses - at the average rate for the period.

All resulting exchange differences are recognized in other comprehensive income as foreign currency translation adjustments.

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If the Company disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation, at year-end exchange rates, of monetary assets and liabilities denominated in currencies other than the functional currency are recognized in the consolidated statement of income (loss).

Revenue recognition

Revenue recognition

Revenue from the licensing of film and television programs is recognized when:

(a) the production has been completed;

(b) the contractual delivery arrangements have been satisfied and the Company retains neither continuing managerial involvement to the degree usually associated with the ownership nor effective control over the goods sold;

(c) the customer has access to the production and can benefit from the content;

(d) the amount of revenue can be measured reliably;

(e) collectability of proceeds is probable; and

(f) the costs incurred or to be incurred in respect of the contractual arrangement can be measured reliably.

Cash payments received or advances currently due pursuant to a broadcast license or distribution arrangement are recorded as deferred revenue until all of the foregoing conditions of revenue recognition have been met.

Revenue from production services for third parties and other revenue, as appropriate, is recognized on a percentage-of-completion basis. Percentage-of-completion is based upon the proportion of costs incurred in the current period to total expected costs. A provision is made for the entire amount of future estimated losses, if any, on productions-in-progress.

Royalty revenue is accrued for royalty streams for which the receipt of revenue is probable and is recognized in accordance with the substance of the relevant agreements and statements received from third party agents.

Revenue from live tours is recorded in the period in which the show is performed, the amount of revenue can be reliably measured, the costs incurred or to be incurred can be measured and collectability is reasonably assured. Merchandising revenue is recognized at the point of sale to customers.

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, the services have been provided and collectability is reasonably assured. 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.

Revenue from the Company's broadcasting business is recognized as follows:

(a) subscriber fee revenues are recognized monthly based on estimated subscriber levels for the period-end, which are based on the preceding month's actual subscribed as submitted by the broadcast distribution undertakings;

(b) advertising and promotion revenue, net of agency commission where applicable, is recorded when the advertising or promotion airs on the Company's television stations; and

(c) other revenues, including sponsorship revenue, as earned.

Gross versus net revenue

The Company evaluates arrangements with third parties to determine whether revenue should be reported on a gross or net basis under each individual arrangement by determining whether the Company acts as the principal or agent under the terms of each arrangement. To the extent that the Company acts as the principal in an arrangement, revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line items. Conversely, to the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues being presented net of any related expenses. Determining whether the Company acts as principal or agent is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement. The most significant factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and inventory risk (or equivalent) and latitude in establishing prices.

Investment in film and television programs

Investment in film and television programs

Investment in film and television programs represents the balance of costs of film and television programs which have been produced by the Company or for which the Company has invested in distribution rights and the Company’s right to participate in certain future cash flows of film and television programs produced and distributed by other unrelated parties.

Costs of investing in and producing film and television programs are capitalized. The costs are measured net of federal and provincial program contributions earned and are charged to income using a declining balance method of amortization. For film and television programs produced by the Company, capitalized costs include all direct production and financing costs incurred during production that are expected to benefit future periods. Financing costs are capitalized to the costs of a film or television program until substantially all of the activities necessary to prepare the film or television program for delivery are complete. Production financing provided by third parties that acquire participation rights is recorded as a reduction of the cost of the production.

The rates used for the declining balance method of amortization range from 40 to 100% at the time of initial episodic delivery and at rates ranging from 10 to 25% annually thereafter. The determination of the rates is based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue.

Investments in film and television programs are accounted for as inventory and classified within current assets. The normal operating cycle of the Company can be greater than 12 months.

The investment in film and television programs is measured at the lower of cost and net realizable value. The net realizable value is determined using estimates of future revenues net of future costs. A write-down is recorded equivalent to the amount by which the costs exceed the estimated net realizable value of the film or television program.

Intangible assets

Acquired and library content

Acquired and library content represents the balance of acquired film and television programs. Acquired and library content typically has minimal ongoing costs to maintain the content, and is charged to income using a declining balance method of amortization.

The rates used for the declining balance method of amortization range from 10 to 20% annually. The determination of rates is based on the expected economic useful life of the film or television program, and includes factors such as the availability of rights to renew licenses for episodic television programs in various territories, as well as the availability of secondary market revenue.

Acquired and library content is accounted for as an intangible asset and classified within long-term assets.

Acquired and library content is tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use, being the present value of the expected future cash flows of the asset. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Broadcast rights

Program and film rights for broadcasting are purchased on a fixed or variable cost basis. The asset and liability for fixed cost purchases are recognized at the time the rights are known and determinable, and if they are available for airing. The cost of fixed program and film rights is expensed over the lesser of the availability period and the maximum period that varies depending upon the type of program, generally ranging from 24 to 60 months based on the expected pattern of consumption of the economic benefit. Program and film rights for broadcasting acquired on a variable cost basis are not capitalized and their cost is determined and expensed over their contracted exhibition period, on the basis of the average number of subscribers to the network exhibiting the program and of other contracting terms.

In the event that the recognition criteria for fixed cost purchases described above are not met and the Company has already paid amounts to obtain future rights, such amounts are considered as prepaid program and film rights and are included as prepaids on the consolidated balance sheet.

Any impairment charges are reported as an expense on the consolidated statement of income (loss).

Intangible assets

Intangible assets are carried at cost. Amortization is provided on a straight-line basis over the estimated useful life of the assets, using the following annual rates and methods:

Broadcaster relationships	7 to 10 years straight-line
Customer relationships	10 years straight-line
Brands	10 to 20 years straight-line or indefinite life
Production and distribution rights	10 to 25 years straight-line
Production backlog	2 to 3 years straight-line
Non-compete contracts	3 years straight-line
Production software	5 years straight-line

Intangible assets with indefinite life are not amortized. The assessment of whether the underlying asset continues to have an indefinite life is reviewed annually to determine whether an indefinite life continues to be supportable, and if not, the change in useful life from indefinite to finite is made on a prospective basis.

Broadcast licenses

Broadcast licenses are considered to have an indefinite life based on management’s intent and ability to renew the licenses without significant cost and without material modification of the existing terms and conditions of the license. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Broadcast licenses are tested for impairment annually or more frequently if events or circumstances indicate that they may be impaired.

Broadcast licenses by themselves do not generate cash inflows and therefore, when assessing these assets for impairment, the Company looks to the CGUs to which the asset belongs.

Accrued participation payables

Accrued participation payables

Included in accounts payable and accrued liabilities are accrued participation payables.  Accrued participation payables reflect the legal liability due as at the balance sheet date, calculated as the participation owing on cash collected and accounts receivable.

Deferred financing fees and debt issue costs

Deferred financing fees and debt issue costs

Debt issue costs related to bank indebtedness are recorded as a deferred charge and amortized, using the straight-line method, over the term of the related bank indebtedness and the expense is included in interest expense. Debt issue costs related to long-term debt are recorded as a reduction to the carrying amount of long-term debt and amortized using the effective interest method and the expense is included in finance expense.

Business combinations

Business combinations

The Company applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.

Any contingent consideration to be transferred by the group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the fair value of consideration transferred over the fair value of identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

Development costs

Development costs

Development costs include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and included in investment in film and television programs upon commencement of production. Advances or contributions received from third parties to assist in development are deducted from these costs. Projects in development are written off as development expenses at the earlier of the date determined not to be recoverable or when projects under development are abandoned, or three years from the date of the initial recognition of the investment, if there have been no active development milestones or significant development expenditures within the last year.

Property and equipment

Property and equipment

Property and equipment are carried at historical cost, less accumulated amortization and accumulated impairment losses. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the consolidated statement of income during the period in which they are incurred. Amortization is provided, commencing when the asset is available for use, over the estimated useful life of the asset, using the following annual rates and methods:

Buildings	4% declining balance
Furniture, fixtures and other equipment	5% to 20% declining balance
Computer equipment	30% declining balance
Post-production equipment	30% declining balance
Computer software	2 years straight-line
Website design	2 years straight-line
Leasehold improvements	Straight-line over the term of lease

The Company allocates the amount initially recognized in respect of an item of property and equipment to its significant parts and depreciates each such part separately. Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.

Gains and losses on disposals of property and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains and losses in the consolidated statement of income (loss).

Goodwill

Goodwill

Goodwill represents the cost of acquired businesses in excess of the fair value of net identifiable assets acquired at the date of acquisition. Goodwill is carried at cost less any accumulated impairment losses and is not subject to amortization. Goodwill is tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired. Goodwill is allocated to a cash generating unit (“CGU”), or group of CGUs, which is the lowest level within an entity at which the goodwill is monitored for internal management purposes, which is not higher than an operating segment. Impairment is tested by comparing the recoverable amount of goodwill assigned to a CGU or group of CGUs to its carrying value.

Impairment of non-financial assets

Impairment of non-financial assets

Property and equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets that are not amortized are subject to an annual impairment test. For the purposes of measuring recoverable amounts, assets are grouped into CGUs. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use, being the present value of the expected future cash flows of the relevant CGU. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Borrowing costs

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, including investment in films and property and equipment, are added to the cost of those assets, until such time as the assets are substantially complete and ready for use. All other borrowing costs are recognized as a finance expense in the consolidated statement of income in the period in which they are incurred.

Government financing and assistance

Government financing and assistance

The Company has access to several government programs, including tax credits that are designed to assist film and television production and distribution in Canada. The Company records government assistance when the related costs have been incurred and there is reasonable assurance that they will be realized. Amounts received or receivable in respect of production assistance are recorded as a reduction of the production costs of the applicable production. Government assistance with respect to distribution rights is recorded as a reduction of investment in film and television programs. Government assistance towards current expenses is recorded as a reduction of the applicable expense item.

Provisions

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material. The Company performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.

Leases

Leases

Upon initial recognition, the Company classifies all leases as either a finance lease or an operating lease, depending on the substance of the lease terms. Finance leases are classified as such because they are found to transfer substantially all the rewards incidental to ownership of the asset to the lessee, whereas operating leases are classified as such because they are not found to meet the criteria required for classification as a finance lease. Upon commencement of the lease, finance leases are recorded as assets with corresponding liabilities in the consolidated balance sheet at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The rate used to discount the payments is either the interest rate implicit in the lease or the Company's incremental borrowing rate. The asset is amortized over the shorter of the term of the lease and the useful life of the asset while the liability is decreased by the actual lease payments and increased by any accretion expense. Payments made under operating leases are charged to the consolidated statement of income (loss) on a straight-line basis over the period of the lease.

Income taxes

Income taxes

The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of income (loss), except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

Deferred tax is recognized in respect of temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the financial statements, as well as the benefit of losses that are probable to be realized and are available for carry forward to future years to reduce income taxes. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

The effect of a change in tax rates on deferred tax assets and liabilities is included in earnings in the period that the change is substantively enacted, except to the extent it relates to items previously recognized outside earnings in which case the rate change impact is recognized in a manner consistent with how the items were originally recognized.

Deferred income tax assets and liabilities are presented as non-current.

Share-based compensation

Share-based compensation

The Company grants stock options to certain directors, officers, employees and consultants of the Company. Stock options vest over periods of up to 4 years and expire after 5 to 7 years. Each vesting tranche of stock options is considered a separate award with its own vesting period and estimated grant date fair value. The estimated grant date fair value of each vesting tranche is estimated using the Black-Scholes option pricing model. The non-cash compensation expense is recognized over each tranche’s vesting period by increasing contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually with any impact being recognized immediately.

The Company also grants performance share units ("PSUs") to certaineligible employees. PSUs are granted at the discretion of the Board based on a notional equity value of the common shares of the Company tied to a specified formula. The number of PSUs that ultimately vest under each grant is dependent on continued employment for a period of time and the achievement of specific performance measures. On the vesting date, each employee will receive common shares as settlement; accordingly, grants of PSUs are accounted for as equity settled instruments. The Company recognizes compensation expense offset by contributed surplus equal to the estimated grant date fair value of the PSUs granted on a straight-line basis over the applicable vesting period, taking into consideration forfeiture estimates. Compensation expense is adjusted prospectively for subsequent changes in management’s estimate of the number of PSUs that are expected to vest.

Earnings per share

Earnings per share

Basic earnings per share (“EPS”) is calculated by dividing the net income for the period attributable to equity owners of the Company by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for potentially dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. The Company’s potentially dilutive common shares comprise stock options, PSUs and the Senior Unsecured Convertible Debentures.

Financial instruments

Financial instruments

Financial instruments are classified as follows:

• Financial assets classified as "Available-for-Sale" are recognized initially at fair value plus transaction costs and are subsequently carried at fair value with the changes in fair value recorded in other comprehensive income. Available-for-Sale assets are classified as non-current, unless the investment matures or management expects to dispose of them within twelve months.

• Derivative financial instruments are classified as “Held-for-Trading” and recognized initially on the balance sheet at fair value. Financial assets classified as Held-for-Trading are recognized at fair value with the changes in fair value recorded in net income.

• Cash, cash held in trust, trade receivables and long-term amounts receivables are classified as “Loans and Receivables”. After their initial fair value measurement, they are measured at amortized cost using the effective interest method, less a provision for impairment, established on an account-by-account basis, based on, among other factors, prior experience and knowledge of the specific debtor and management’s assessment of the current economic environment.

• Accounts payable and accrued liabilities, interim production financing, long-term debt, special warrants and other liabilities are classified as “Other Financial Liabilities”, and are initially recognized at fair value less transaction costs. Subsequent to initial recognition, Other Financial Liabilities are measured at amortized cost using the effective interest method.

Impairment of financial assets

Impairment of financial assets

At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. A significant or prolonged decline in the fair value of the security below its cost is evidence that the asset is impaired. If such evidence exists, the Company recognizes an impairment loss, as follows:

• Financial assets carried at amortized cost: The loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

• Available-for-Sale financial assets: The impairment loss is the difference between the original cost of the asset and its fair value at the measurement date, less any impairment losses previously recognized in the statement of income. This amount represents the cumulative loss in accumulated other comprehensive income that is reclassified to net income.

Impairment losses on financial assets carried at amortized cost and Available-for-Sale financial assets are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on available-for-sale equity instruments are not reversed.

Dividend distribution

Dividend distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Board of Directors.

Tangible benefit obligation

Tangible benefit obligation

As part of the Canadian Radio-Television and Telecommunications Commission (“CRTC”) decision approving the Company’s acquisition of 8504601 Canada Inc. (“DHX Television”) on July 31, 2014, the Company is required to contribute $17,313 to provide tangible benefits to the Canadian broadcasting system over seven years from the date of acquisition. The tangible benefit obligation was initially recorded in the consolidated statement of income at the estimated fair value on the date of acquisition, being the sum of the discounted future net cash flows and the same amount was recorded as a liability at the date of acquisition of DHX Television. The tangible benefit obligation is being adjusted for the incurrence of related expenditures, the passage of time and for revisions to the timing of the cash flows. Changes in the obligation (other than incurred expenditures) are recorded as finance expense in the consolidated statement of income (loss).

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents consist of current operating bank accounts, term deposits and fixed income securities with an original term to maturity of 90 days or less. Cash equivalents are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

New and amended standards adopted, Accounting standards issued but not yet applied, and Significant accounting judgments and estimation uncertainty

New and amended standards adopted

i) The IASB issued amendments to IAS 7, "Statement of Cash Flows" ("IAS 7") to improve financial information provided to users of financial statements about an entity's financing activities. These amendments are effective for annual periods beginning on or after January 1, 2017. The adoption of this standard had no financial impact on the Company's consolidated financial statements, however did required additional disclosure in note 22.

Accounting standards issued but not yet applied

i) IFRS 9 “Financial instruments” (“IFRS 9”) is required to be applied for years beginning on or after January 1, 2018, and sets out the requirements for recognizing and measuring financial assets and financial liabilities. IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”). The new standard establishes a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. It 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. Additional disclosures would be required under the new standard.

Upon adoption, the Company expects the impact to be $500 to $1,500, and will change the category of classification for its financial assets and financial liabilities. Previously, the Company classified its financial assets as ‘loans and receivables’ and its financial liabilities as ‘other financial liabilities’, both of which were previously measure at amortized cost, with the exception of embedded derivatives which were measured at fair value. Under IFRS 9, the measurement basis would remain the same, however the category for classification would be referred to as 'Amortized Cost'.

ii) IFRS 15 “Revenue from Contracts and Customers” (“IFRS 15”) is required to be applied for years beginning on or after January 1, 2018, and establishes principles to record revenues from contracts for the sale of goods or services, unless the contracts are in the scope of other IFRSs. IFRS 15 replaces IAS 18, “Revenue” and 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

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

The new standard also provides additional guidance relating to principal versus agent relationships, licenses of intellectual property, and contract costs.

The Company has completed its assessment of the impact of IFRS 15 and expects its proprietary production revenue and consumer products owned revenue streams to be impacted.

Under IFRS 15, the Company has determined that in certain proprietary production contracts, the customer who owns the initial broadcast license rights may in substance control the asset. In such cases, the Company would record revenue using the percentage of completion basis.

In addition,  the Company has determined that, under IFRS 15, contracts for the management of copyrights, licensing and brands provide the customer with a right to access to the underlying property, and therefore royalties, including minimum guarantees, will be recognized as the greater of earned royalties or the pro-rata minimum guarantee over the term of the license.

IFRS 15 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective or cumulative effect method).  The Company intends to adopt the standard using the modified retrospective method on the date of transition, which is July 1, 2018.  The expected impact of this adoption is a increase in deficit as at July 1, 2018 in the range of $4.0 million to $9.0 million, with a corresponding adjustment to deferred revenue.

iii) In January 2016, the IASB issued IFRS 16, "Leases" ("IFRS 16") effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have also adopted IFRS 15. IFRS 16 provides a comprehensive model for the measurement, presentation and disclosure of leases and supersedes

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 financial statements.

iv) The IASB issued amendments to IFRS 2, "Share-based payment" ("IFRS 2"), to clarify the classification and measurement of share-based payment transactions. The amendments are effective for annual periods beginning on or after January 1, 2018. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

v) In June 2017, the IASB issued IFRIC 23 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. The Company is currently evaluating the impact of IFRIC 23 on its consolidated financial statements.

vi) The IASB issued IFRIC 22 "Foreign currency transactions and advance consideration" ("IFRIC 22"), which clarifies 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). IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. The Company will apply the IFRIC on a prospective basis. The effect of applying this IFRIC is not expected to be have a significant impact on the Company's consolidated financial statements.

Significant accounting judgments and estimation uncertainty

The preparation of financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable. Actual results may differ materially from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

(i) Income taxes and deferred income taxes

Deferred tax assets and liabilities require management’s judgment in determining the amounts to be recognized. In particular, judgment is used when assessing the extent to which deferred tax assets should be recognized with respect to the timing of deferred taxable income.

The current income tax provision for the year requires judgment in interpreting tax laws and regulations. Estimates are used in determining the provision for current income taxes which are recognized in the financial statements. The Company considers the estimates, assumptions and judgments to be reasonable but this can involve complex issues which may take an extended period to resolve. The final determination of the amounts to be paid related to the current year’s tax provisions could be different from the estimates reflected in the financial statements. The Company’s tax filings also are subject to audits, the outcome of which could change the amount of current and deferred tax assets and liabilities.

(ii) Business combinations

The purchase price allocation process requires management to use significant estimates and assumptions, including fair value estimates including, but not limited to:

•estimated fair values of tangible assets;

•estimated fair values of intangible assets;

•estimated fair values of deferred revenue;

•probability of required payment under contingent consideration provisions;

•estimated income tax assets and liabilities; and

•estimated fair value of pre-acquisition contingencies.

While management uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired and liabilities assumed at the business combination date, estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which is the earlier of the date management receives the information it is looking for or one year from the business combination date, adjustments are recorded to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Although management believes the assumptions and estimates made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the assets and liabilities acquired include but are not limited to:

•future expected cash flows from distribution, consumer products and licensing and other customer

contracts;

•expected costs to complete film and television productions in-progress and the estimated cash flows

from the productions when completed;

•the acquired company’s brand, broadcaster relationships and customer and distribution

relationships as well as assumptions about the period of time these acquired intangibles will

continue to benefit the combined company;

•the fair value of deferred revenue, including future obligations to customers;

•uncertain tax positions assumed in connection with a business combination are initially estimated

as of the acquisition date and are re-evaluated quarterly, management continues to collect

information in order to determine their estimated value, with any adjustments to preliminary

estimates recorded to goodwill during the measurement period; and

•discount rates applied to future expected cash flows.

Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities and goodwill in the purchase price allocation, which could also impact net income as expenses and impairments could change. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

(iii) Investment in film and television programs/Acquired and library content

The costs of investing in and producing film and television programs are capitalized, net of federal and provincial program contributions earned.

Investment in film assets are amortized using the declining balance method with rates of amortization ranging from 40% to 100% at the time of initial episodic delivery and at rates ranging from 10% to 25% annually thereafter. Management estimates these rates based on the expected economic useful life of the film or television program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market revenue. Estimation uncertainty relates to management's ability to estimate the expected economic useful life of the film or television program.

(iv) Impairment of goodwill and indefinite life intangibles

Management estimates the recoverable amount of each CGU that has goodwill or indefinite life intangibles by estimating its value-in-use or fair value less costs to sell, whichever is greater, and compares it to the carrying amount to determine if the goodwill or indefinite life intangible asset are impaired.

Value-in-use is based on the expected future cash flows of an asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The impairment test calculations are based on detailed budgets and forecasts which are prepared for each CGU to which the assets are allocated. These budgets and forecasts generally cover a period of five years with a long-term growth rate applied to the terminal year. Key areas of estimation uncertainty relate to management's assumptions about future operating results, long-term growth rates and the discount rate. Actual results could vary from these estimates which may cause significant adjustments to the Company's goodwill or indefinite life intangible assets in subsequent reporting periods.

(v) Impairment of non-financial assets

The indicators of impairment for non-financial assets are determined based on management’s judgment. If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset’s or CGU’s recoverable amount. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management estimates the asset or CGU’s value-in-use. Value-in-use is based on the estimated future cash flows of the asset or CGU discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The impairment test calculations are based on detailed budgets or forecasts which are prepared for each CGU to which the assets are allocated. Key areas of estimation uncertainty relate to management's assumptions about the cash flow forecast, the long-term growth rate applied to cash flows and the discount rate.

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Significant accounting policies, judgments and estimation uncertainty (Tables)

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Disclosure of detailed information about property, plant and equipment

Amortization is provided, commencing when the asset is available for use, over the estimated useful life of the asset, using the following annual rates and methods:

Buildings	4% declining balance
Furniture, fixtures and other equipment	5% to 20% declining balance
Computer equipment	30% declining balance
Post-production equipment	30% declining balance
Computer software	2 years straight-line
Website design	2 years straight-line
Leasehold improvements	Straight-line over the term of lease

	Land	Building		Furniture, fixtures and equipment		Computer equipment		Post-production equipment		Computer software		Leasehold improvements		Total
	$	$		$		$		$		$		$		$
For the year ended June 30, 2017
Opening net book value	4,276	1,792		1,354		2,811		2,917		1,040		3,493		17,683
IED Acquisition	—	—		—		104		—		—		—		104
Additions	—	—		1,071		1,087		8,223		344		8,872		19,597
Disposals, net	—	—		—		(170	)	—		—		—		(170	)
Transfers, net	—	158		—		—		—		—		(158	)	—
Amortization	—	(12	)	(314	)	(1,475	)	(2,852	)	(488	)	(1,045	)	(6,186	)
Foreign exchange differences	—	—		—		(32	)	—		—		—		(32	)
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
At June 30, 2017
Cost	4,276	2,070		6,281		12,536		13,966		4,896		14,372		58,397
Accumulated amortization	—	(132	)	(4,178	)	(10,419	)	(5,678	)	(4,056	)	(3,226	)	(27,689	)
Foreign exchange differences	—	—		8		208		—		56		16		288
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
For the year ended June 30, 2018
Opening net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
Additions	—	73		349		852		6,055		331		616		8,276
Disposals, net	—	—		—		—		—		—		(104	)	(104	)
Amortization	—	(78	)	(738	)	(1,147	)	(4,907	)	(429	)	(1,529	)	(8,828	)
Foreign exchange differences	—	—		1		84		—		9		2		96
	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436
At June 30, 2018
Cost	4,276	2,143		6,630		13,388		20,021		5,227		14,884		66,569
Accumulated amortization	—	(210	)	(4,916	)	(11,566	)	(10,585	)	(4,485	)	(4,755	)	(36,517	)
Foreign exchange differences	—	—		9		292		—		65		18		384
Net book value	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436

Disclosure of detailed information about intangible assets

Amortization is provided on a straight-line basis over the estimated useful life of the assets, using the following annual rates and methods:

Broadcaster relationships	7 to 10 years straight-line
Customer relationships	10 years straight-line
Brands	10 to 20 years straight-line or indefinite life
Production and distribution rights	10 to 25 years straight-line
Production backlog	2 to 3 years straight-line
Non-compete contracts	3 years straight-line
Production software	5 years straight-line

	June 30, 2018		June 30, 2017
	$		$
Net opening acquired and library content	155,940		88,462
Additions IED (note 5)	—		74,618
Additions Kiddyzuzaa (note 5)	—		3,484
Additions Ellie Sparkles (note 5)	8,406		—
Write-down of acquired and library content	(3,402	)	(363	)
Amortization	(15,916	)	(10,541	)
Foreign exchange	2,060		280
	147,088		155,940

	Broadcast licenses	Broadcaster relationships		Customer relationships		Brands (1)		Production and distribution rights (2)		Other (3)		Total
	$	$		$		$		$		$		$
For the year ended June 30, 2017
Opening book value	67,800	1,262		21,653		24,853		25,843		3,199		144,610
IED acquisition (note 5)	—	—		—		422,012		—		—		422,012
Additions	—	—		—		969		—		—		969
Amortization	—	(732	)	(2,747	)	(3,177	)	(2,387	)	(2,336	)	(11,379	)
Foreign exchange differences	—	1		(226	)	(76	)	(503	)	—		(804	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
At June 30, 2017
Cost	67,800	7,362		27,920		458,260		30,946		7,327		599,615
Accumulated amortization	—	(6,875	)	(9,680	)	(13,918	)	(3,551	)	(6,464	)	(40,488	)
Foreign exchange differences	—	44		440		239		(4,442	)	—		(3,719	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
For the year ended June 30, 2018
Opening book value	67,800	531		18,680		444,581		22,953		863		555,408
Additions	—	—		—		—		—		1,074		1,074
Amortization	—	(299	)	(2,792	)	(8,899	)	(2,458	)	(898	)	(15,346	)
Impairment	—	—		—		(1,059	)	—		—		(1,059	)
Foreign exchange differences	—	—		89		6,091		674		66		6,920
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997
At June 30, 2018
Cost	67,800	7,362		27,920		457,201		30,946		8,401		599,630
Accumulated amortization	—	(7,174	)	(12,472	)	(22,817	)	(6,009	)	(7,362	)	(55,834	)
Foreign exchange differences	—	44		529		6,330		(3,768	)	66		3,201
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997

(1) Included in Brands are $350,419 of indefinite life intangibles (2017 - $345,319).

(2) Productions and distribution rights represent rights acquired by the Company to produce and/or distribute television content where the Company does not own the underlying intellectual properties.

(3) Comprised of production backlog, non-compete contracts and production software.

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Compensation of key management (Tables)

12 Months Ended

Jun. 30, 2018

Related Party [Abstract]

Compensation earned by key management

The compensation earned by key management is as follows:

	2018	2017
	$	$
Salaries and employee benefits	4,205	2,694
Share-based compensation	2,146	2,738
Termination benefits	2,899	—
	9,250	5,432

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Acquisitions (Tables)

12 Months Ended

Jun. 30, 2018

Business Combinations1 [Abstract]

Disclosure of detailed information about business combinations

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

	$
Assets
Cash	122
Acquired and library content	8,406
Total identifiable net assets at fair value	8,528
Non-controlling interest	4,178
Purchase consideration transferred	4,350

The purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as follows:

	$
Assets
Cash	10
Acquired and library content	3,484
Goodwill	695
	4,189
Liabilities
Accounts payable and accrued liabilities	75
Deferred income tax liabilities	631
	706
Total identifiable net assets at fair value	3,483
Non-controlling interest	696
Purchase consideration transferred	2,787

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

	$
Assets
Cash	12,754
Amounts receivable	24,367
Prepaid expenses and deposits	1,787
Long-term receivables	8,661
Acquired and library content	74,618
Property and equipment	104
Intangible assets - brands	422,012
Goodwill	25,149
	569,452
Liabilities
Accounts payable and accrued liabilities	10,938
Deferred revenue	14,575
Other liabilities	5,148
	30,661
Total identifiable net assets at fair value	538,791
Non-controlling interest	85,721
Purchase consideration transferred	453,070

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Amounts receivable (Tables)

12 Months Ended

Jun. 30, 2018

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of amounts receivable

	June 30, 2018		June 30, 2017
	$		$
Trade receivables	163,203		136,755
Less: Provision for impairment of trade receivables	(9,742	)	(4,772	)
	153,461		131,983
Goods and services tax recoverable, net	1,203		1,411
Federal and provincial film tax credits and other government assistance	96,874		111,639
Short-term amounts receivable	251,538		245,033
Long-term amounts receivable	18,789		26,502
Total amounts receivable	270,327		271,535

Aging of trade receivables

The aging of trade receivables not impaired is as follows:

	June 30, 2018	June 30, 2017
	$	$
Less than 60 days	131,683	125,081
Between 60 and 90 days	5,863	1,833
Over 90 days	15,915	5,069
	153,461	131,983

Provision for impairment of trade receivables

Provision for impairment of trade receivables:

	June 30, 2018		June 30, 2017
	$		$
Opening balance	4,772		6,459
Provision for receivables	5,089		3,857
Receivables written off during the period	(197	)	(5,300	)
Recoveries of receivables previously provided for	(12	)	(94	)
Foreign exchange	90		(150	)
Closing balance	9,742		4,772

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Investment in film and television programs (Tables)

12 Months Ended

Jun. 30, 2018

Inventories [Abstract]

Disclosure of detailed information about inventory

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

	June 30, 2018		June 30, 2017
	$		$
Net opening investment in film and television programs	195,180		140,444
Increase in development costs	434		238
Cost of productions (completed and released and productions in progress), net of government assistance and third-party assistance	33,088		88,021
Expense of investment in film and television programs	(33,554	)	(24,348	)
Write-down of investment in film and television programs	(4,779	)	(1,177	)
Increase of program and film rights - broadcasting	14,110		15,839
Expense of program and film rights - broadcasting	(18,546	)	(22,515	)
Write-down of program and film rights - broadcasting	(2,787	)	—
Foreign exchange	2,862		(1,322	)
	186,008		195,180

	June 30, 2018		June 30, 2017
	$		$
Development costs	2,112		1,678
Productions in progress
Cost, net of government and third-party assistance	17,577		37,346
Productions completed and released
Cost, net of government and third-party assistance	529,494		473,775
Accumulated expense	(377,041	)	(343,487	)
Accumulated write-down of investment in film and television programs	(15,910	)	(11,131	)
	136,543		119,157
Program and film rights - broadcasting
Cost	134,765		120,655
Accumulated expense	(102,202	)	(83,656	)
Accumulated write-down of program and film rights	(2,787	)	—
	29,776		36,999
	186,008		195,180

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Acquired and library content (Tables)

12 Months Ended

Jun. 30, 2018

Intangible Assets [Abstract]

Disclosure of detailed information about intangible assets

Amortization is provided on a straight-line basis over the estimated useful life of the assets, using the following annual rates and methods:

Broadcaster relationships	7 to 10 years straight-line
Customer relationships	10 years straight-line
Brands	10 to 20 years straight-line or indefinite life
Production and distribution rights	10 to 25 years straight-line
Production backlog	2 to 3 years straight-line
Non-compete contracts	3 years straight-line
Production software	5 years straight-line

	June 30, 2018		June 30, 2017
	$		$
Net opening acquired and library content	155,940		88,462
Additions IED (note 5)	—		74,618
Additions Kiddyzuzaa (note 5)	—		3,484
Additions Ellie Sparkles (note 5)	8,406		—
Write-down of acquired and library content	(3,402	)	(363	)
Amortization	(15,916	)	(10,541	)
Foreign exchange	2,060		280
	147,088		155,940

	Broadcast licenses	Broadcaster relationships		Customer relationships		Brands (1)		Production and distribution rights (2)		Other (3)		Total
	$	$		$		$		$		$		$
For the year ended June 30, 2017
Opening book value	67,800	1,262		21,653		24,853		25,843		3,199		144,610
IED acquisition (note 5)	—	—		—		422,012		—		—		422,012
Additions	—	—		—		969		—		—		969
Amortization	—	(732	)	(2,747	)	(3,177	)	(2,387	)	(2,336	)	(11,379	)
Foreign exchange differences	—	1		(226	)	(76	)	(503	)	—		(804	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
At June 30, 2017
Cost	67,800	7,362		27,920		458,260		30,946		7,327		599,615
Accumulated amortization	—	(6,875	)	(9,680	)	(13,918	)	(3,551	)	(6,464	)	(40,488	)
Foreign exchange differences	—	44		440		239		(4,442	)	—		(3,719	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
For the year ended June 30, 2018
Opening book value	67,800	531		18,680		444,581		22,953		863		555,408
Additions	—	—		—		—		—		1,074		1,074
Amortization	—	(299	)	(2,792	)	(8,899	)	(2,458	)	(898	)	(15,346	)
Impairment	—	—		—		(1,059	)	—		—		(1,059	)
Foreign exchange differences	—	—		89		6,091		674		66		6,920
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997
At June 30, 2018
Cost	67,800	7,362		27,920		457,201		30,946		8,401		599,630
Accumulated amortization	—	(7,174	)	(12,472	)	(22,817	)	(6,009	)	(7,362	)	(55,834	)
Foreign exchange differences	—	44		529		6,330		(3,768	)	66		3,201
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997

(1) Included in Brands are $350,419 of indefinite life intangibles (2017 - $345,319).

(2) Productions and distribution rights represent rights acquired by the Company to produce and/or distribute television content where the Company does not own the underlying intellectual properties.

(3) Comprised of production backlog, non-compete contracts and production software.

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Property and equipment (Tables)

12 Months Ended

Jun. 30, 2018

Property, plant and equipment [abstract]

Disclosure of detailed information about property, plant and equipment

Amortization is provided, commencing when the asset is available for use, over the estimated useful life of the asset, using the following annual rates and methods:

Buildings	4% declining balance
Furniture, fixtures and other equipment	5% to 20% declining balance
Computer equipment	30% declining balance
Post-production equipment	30% declining balance
Computer software	2 years straight-line
Website design	2 years straight-line
Leasehold improvements	Straight-line over the term of lease

	Land	Building		Furniture, fixtures and equipment		Computer equipment		Post-production equipment		Computer software		Leasehold improvements		Total
	$	$		$		$		$		$		$		$
For the year ended June 30, 2017
Opening net book value	4,276	1,792		1,354		2,811		2,917		1,040		3,493		17,683
IED Acquisition	—	—		—		104		—		—		—		104
Additions	—	—		1,071		1,087		8,223		344		8,872		19,597
Disposals, net	—	—		—		(170	)	—		—		—		(170	)
Transfers, net	—	158		—		—		—		—		(158	)	—
Amortization	—	(12	)	(314	)	(1,475	)	(2,852	)	(488	)	(1,045	)	(6,186	)
Foreign exchange differences	—	—		—		(32	)	—		—		—		(32	)
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
At June 30, 2017
Cost	4,276	2,070		6,281		12,536		13,966		4,896		14,372		58,397
Accumulated amortization	—	(132	)	(4,178	)	(10,419	)	(5,678	)	(4,056	)	(3,226	)	(27,689	)
Foreign exchange differences	—	—		8		208		—		56		16		288
Net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
For the year ended June 30, 2018
Opening net book value	4,276	1,938		2,111		2,325		8,288		896		11,162		30,996
Additions	—	73		349		852		6,055		331		616		8,276
Disposals, net	—	—		—		—		—		—		(104	)	(104	)
Amortization	—	(78	)	(738	)	(1,147	)	(4,907	)	(429	)	(1,529	)	(8,828	)
Foreign exchange differences	—	—		1		84		—		9		2		96
	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436
At June 30, 2018
Cost	4,276	2,143		6,630		13,388		20,021		5,227		14,884		66,569
Accumulated amortization	—	(210	)	(4,916	)	(11,566	)	(10,585	)	(4,485	)	(4,755	)	(36,517	)
Foreign exchange differences	—	—		9		292		—		65		18		384
Net book value	4,276	1,933		1,723		2,114		9,436		807		10,147		30,436

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Intangible assets (Tables)

12 Months Ended

Jun. 30, 2018

Intangible Assets [Abstract]

Disclosure of detailed information about intangible assets

Amortization is provided on a straight-line basis over the estimated useful life of the assets, using the following annual rates and methods:

Broadcaster relationships	7 to 10 years straight-line
Customer relationships	10 years straight-line
Brands	10 to 20 years straight-line or indefinite life
Production and distribution rights	10 to 25 years straight-line
Production backlog	2 to 3 years straight-line
Non-compete contracts	3 years straight-line
Production software	5 years straight-line

	June 30, 2018		June 30, 2017
	$		$
Net opening acquired and library content	155,940		88,462
Additions IED (note 5)	—		74,618
Additions Kiddyzuzaa (note 5)	—		3,484
Additions Ellie Sparkles (note 5)	8,406		—
Write-down of acquired and library content	(3,402	)	(363	)
Amortization	(15,916	)	(10,541	)
Foreign exchange	2,060		280
	147,088		155,940

	Broadcast licenses	Broadcaster relationships		Customer relationships		Brands (1)		Production and distribution rights (2)		Other (3)		Total
	$	$		$		$		$		$		$
For the year ended June 30, 2017
Opening book value	67,800	1,262		21,653		24,853		25,843		3,199		144,610
IED acquisition (note 5)	—	—		—		422,012		—		—		422,012
Additions	—	—		—		969		—		—		969
Amortization	—	(732	)	(2,747	)	(3,177	)	(2,387	)	(2,336	)	(11,379	)
Foreign exchange differences	—	1		(226	)	(76	)	(503	)	—		(804	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
At June 30, 2017
Cost	67,800	7,362		27,920		458,260		30,946		7,327		599,615
Accumulated amortization	—	(6,875	)	(9,680	)	(13,918	)	(3,551	)	(6,464	)	(40,488	)
Foreign exchange differences	—	44		440		239		(4,442	)	—		(3,719	)
Net book value	67,800	531		18,680		444,581		22,953		863		555,408
For the year ended June 30, 2018
Opening book value	67,800	531		18,680		444,581		22,953		863		555,408
Additions	—	—		—		—		—		1,074		1,074
Amortization	—	(299	)	(2,792	)	(8,899	)	(2,458	)	(898	)	(15,346	)
Impairment	—	—		—		(1,059	)	—		—		(1,059	)
Foreign exchange differences	—	—		89		6,091		674		66		6,920
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997
At June 30, 2018
Cost	67,800	7,362		27,920		457,201		30,946		8,401		599,630
Accumulated amortization	—	(7,174	)	(12,472	)	(22,817	)	(6,009	)	(7,362	)	(55,834	)
Foreign exchange differences	—	44		529		6,330		(3,768	)	66		3,201
Net book value	67,800	232		15,977		440,714		21,169		1,105		546,997

(1) Included in Brands are $350,419 of indefinite life intangibles (2017 - $345,319).

(2) Productions and distribution rights represent rights acquired by the Company to produce and/or distribute television content where the Company does not own the underlying intellectual properties.

(3) Comprised of production backlog, non-compete contracts and production software.

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Goodwill (Tables)

12 Months Ended

Jun. 30, 2018

Intangible Assets [Abstract]

Disclosure of reconciliation of changes in goodwill

The continuity of goodwill is as follows:

	June 30, 2018		June 30, 2017
	$		$
Opening net book value	240,534		214,325
Acquired on acquisition of IED (note 5)	(537	)	25,818
Acquired on acquisition of Kiddyzuzaa (note 5)	—		695
Exchange differences	809		(304	)
	240,806		240,534

Disclosure of information for cash-generating units

To determine the recoverable amount for each of it's CGU's, the Company applied the following valuation methods:

CGU's	Valuation methodology
Content Business	Value-in-use
Peanuts	FVLCS
DHX Television	Value-in-use

The following table shows the key assumptions used to estimate the recoverable amounts of the groups of CGUs:

	Assumptions used
	Perpetual		Pre-tax
CGU's	growth rate		discount rate
Content Business	3.0	%	12.2	%
DHX Television	0.0	%	15.5	%

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Bank indebtedness, interim production financing, long-term debt and obligations under financing leases (Tables)

12 Months Ended

Jun. 30, 2018

Financial Instruments [Abstract]

Disclosure of detailed information about borrowings

Long-term debt and obligations under finance leases

	June 30, 2018		June 30, 2017
	$		$
Term Facility, net of unamortized issue costs of $22,232 (June 30, 2017 - $26,107)	623,066		616,339
Special Warrants, net of unamortized issue costs of $nil (June 30, 2017 - $6,249)	—		133,751
Senior Unsecured Convertible Debentures, net of unamortized issue costs of $5,588 (June 30, 2017 - $nil) and embedded derivatives at fair value of $11,940 (June 30, 2017 - $nil)	124,747		—
Senior Unsecured Notes	—		225,000
Obligations under various finance leases, bearing interest at rates ranging from 4.0% to 9.8%, maturing on dates ranging from July 2018 to March 2021	8,757		8,245
	756,570		983,335
Less: Current portion	(10,524	)	(234,876	)
	746,046		748,459

Interim production financing

	June 30, 2018	June 30, 2017
	$	$
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 $115,639 at June 30, 2018 (June 30, 2017 - $131,186) have been pledged as security.	93,683	101,224

	June 30, 2018		June 30, 2017
	$		$
Bank indebtedness	16,350		—
Interim production financing	93,683		101,224
Long-term debt and obligations under finance leases	756,570		983,335
Interest bearing debt and obligations under finance leases	866,603		1,084,559
Amount due within 12 months	(120,557	)	(336,100	)
Amount due beyond 12 months	746,046		748,459

Disclosure of repayments of borrowings

The aggregate amount of scheduled principal repayments, excluding any potential Excess Cash Flow Payments, required in each of the next five years is as follows:

	$
Year ending June 30, 2019	10,524
2020	8,611
2021	8,254
2022	7,440
2023 and beyond	759,225

Contractual maturity analysis for financial liabilities

		Less than	1 to 3	4 to 5	After 5
	Total	1 year	years	years	years
	$	$	$	$	$
Bank indebtedness	16,350	16,350	—	—	—
Accounts payable and accrued liabilities	130,545	130,545	—	—	—
Interim production financing	93,683	93,683	—	—	—
Other liabilities	8,150	—	8,150	—	—
Senior Unsecured Convertible Debentures	193,474	8,225	16,450	16,450	152,349
Term Facility	747,021	24,197	47,856	47,273	627,695
Finance lease obligations	9,435	4,364	4,132	939	—
	1,198,658	277,364	76,588	64,662	780,044

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Share capital and contributed surplus (Tables)

12 Months Ended

Jun. 30, 2018

Share Capital, Reserves And Other Equity Interest [Abstract]

Disclosure of classes of share capital

	June 30, 2018		June 30, 2017
	Number	Amount	Number	Amount
		$		$
Preferred variable voting shares (note 13 (a))	100,000,000	—	100,000,000	—
Common shares (note 13 (c))
Opening balance	134,061,548	304,320	133,774,729	302,828
Dividend reinvestment	108,180	419	195,319	1,138
Shares issued pursuant to the ESPP	43,496	199	31,500	205
PSU's settled	20,666	69	—	—
Options exercised	60,000	160	60,000	149
Ending balance	134,293,890	305,167	134,061.548	304,320

Disclosure of number and weighted average exercise prices of share options

As at June 30, 2018 and 2017, the Company had the following stock options outstanding:

			Weighted average
	Number of		exercise price
	options		per stock option
Outstanding at June 30, 2016	7,137,125		6.93
Granted	1,742,400		6.79
Exercised	(60,000	)	1.73
Outstanding at June 30, 2017	8,819,525		6.93
Granted	1,920,000		5.69
Forfeited	(2,431,050	)	7.85
Cancelled	(125,000	)	7.13
Exercised	(60,000	)	1.81
Outstanding at June 30, 2018	8,123,475		6.41
Exercisable at June 30, 2018	4,297,150		6.12

Weighted average grant date value of stock options and assumptions

The weighted average grant date value of stock options and assumptions using the Black-Scholes option pricing model for the year ended June 30, 2018 and 2017 are as follows:

	2018			2017
Weighted average grant date value	$	1.67		$	2.01
Risk-free rate	1.45		%	0.69		%
Expected option life	5 years			5 years
Expected volatility	36		%	37		%
Expected dividend yield	1.35		%	1.08		%

Disclosure of range of exercise prices of outstanding share options

Information related to options outstanding at June 30, 2018 is presented below.

	Number	Weighted	Weighted	Number	Weighted
Range of	outstanding at	average	average	exercisable at	average
exercise prices	June 30,	remaining	exercise	June 30,	exercise
	2018	contractual life	price	2017	price
		years	$		$
$1.50 - $3.49	655,625	0.03	2.03	655,625	2.03
$3.50 - $5.49	1,170,000	1.90	4.43	870,000	4.07
$5.50 - $7.49	4,027,100	4.35	6.57	1,324,900	7.00
$7.50 - $9.49	2,270,750	2.71	8.40	1,446,625	8.40
Total	8,123,475	3.19	6.41	4,297,150	6.12

Disclosure of number and weighted average remaining contractual life of outstanding share options

Information related to options outstanding at June 30, 2018 is presented below.

	Number	Weighted	Weighted	Number	Weighted
Range of	outstanding at	average	average	exercisable at	average
exercise prices	June 30,	remaining	exercise	June 30,	exercise
	2018	contractual life	price	2017	price
		years	$		$
$1.50 - $3.49	655,625	0.03	2.03	655,625	2.03
$3.50 - $5.49	1,170,000	1.90	4.43	870,000	4.07
$5.50 - $7.49	4,027,100	4.35	6.57	1,324,900	7.00
$7.50 - $9.49	2,270,750	2.71	8.40	1,446,625	8.40
Total	8,123,475	3.19	6.41	4,297,150	6.12

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Income taxes (Tables)

12 Months Ended

Jun. 30, 2018

Income Taxes [Abstract]

Disclosure of temporary difference, unused tax losses and unused tax credits

Significant components of the Company’s net deferred income tax liability as at June 30, 2018 and 2017 are as follows:

	June 30, 2018		June 30, 2017
	$		$
Broadcast licenses	(17,967	)	(17,967	)
Tangible benefit obligation	2,171		2,352
Leasehold inducement	—		123
Foreign tax credits	2,324		85
Participation payables and finance lease obligations and other liabilities	—		64
Property and equipment	697		(1,724	)
Share issuance costs and deferred financing fees	(1,603	)	(1,051	)
Investment in film and television programs and acquired and library content	(27,568	)	(7,782	)
Intangible assets	(9,633	)	(6,278	)
Non-capital losses and other	33,900		17,619
Net deferred income tax liability	(17,679	)	(14,559	)

Disclosure of reconciliation of accounting profit multiplied by applicable tax rates and average effective tax rate

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

	June 30, 2018		June 30, 2017
	$		$
Income tax expense (recovery) based on combined federal and provincial tax rates of 31% (June 30, 2017 - 31%)	(1,664	)	(113	)
Income taxes increased (reduced) by:
Share-based compensation	915		1,792
Non-taxable portion of capital gain	(1,024	)	—
Tax rate differential	3,675		(1,252	)
Non-controlling interest	(2,223	)	—
Non-deductible acquisition costs	—		1,244
Tax rate change on opening balance	2,120		—
Other	(308	)	200
Provision for income taxes	1,491		1,871

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Finance income and finance expense (Tables)

12 Months Ended

Jun. 30, 2018

Analysis of income and expense [abstract]

Summary of finance income and finance expense

Finance income and finance expense are comprised of the following:

	June 30, 2018	June 30, 2017
	$	$
Finance income
Interest income	1,147	556
Gain on movement in fair value of the embedded derivatives on Senior Unsecured Convertible Debentures and Senior Unsecured Notes	11,251	1,968
	12,398	2,524
Finance expense
Interest expense on bank indebtedness	788	348
Accretion of tangible benefit obligation	539	651
Interest on long-term debt, obligations under finance leases and other	48,343	18,181
Early redemption penalties	—	13,464
Accretion on Senior Unsecured Convertible Debentures	1,586	—
Debt extinguishment charge	—	6,990
Amortization of debt premium on Senior Unsecured Notes	—	118
Net foreign exchange loss	7,700	3,226
	58,956	42,978

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Expenses by nature and employee benefit expense (Tables)

12 Months Ended

Jun. 30, 2018

Analysis of income and expense [abstract]

Disclosure of components of expenses by nature

The following sets out the expenses by nature:

	June 30, 2018	June 30, 2017
	$	$
Investment in film and television programs
Direct production and new media costs	192,143	96,249
Expense of film and television programs	33,554	24,348
Expense of film and broadcast rights for broadcasting	18,546	22,515
Write-down of investment in film and television programs and acquired and library content	10,968	1,540
Development, integration and other	10,554	3,435
Impairment of intangible assets	1,059	—
Amortization of acquired and library content	15,916	10,541
Office and administrative	21,704	20,395
Acquisition costs	—	9,695
Finance expense, net	46,558	40,454
Investor relations and marketing	3,322	2,902
Professional and regulatory	7,804	5,363
Amortization of property and equipment and intangible assets	24,174	17,565
	386,302	255,002
The following sets out the components of employee benefits expense:
Salaries and employee benefits	50,421	39,606
Share-based compensation	2,950	5,867
	53,371	45,473
	439,673	300,475

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Financial instruments (Tables)

12 Months Ended

Jun. 30, 2018

Financial Instruments [Abstract]

Disclosure of contractual maturity analysis for financial liabilities

The aggregate amount of scheduled principal repayments, excluding any potential Excess Cash Flow Payments, required in each of the next five years is as follows:

	$
Year ending June 30, 2019	10,524
2020	8,611
2021	8,254
2022	7,440
2023 and beyond	759,225

Contractual maturity analysis for financial liabilities

		Less than	1 to 3	4 to 5	After 5
	Total	1 year	years	years	years
	$	$	$	$	$
Bank indebtedness	16,350	16,350	—	—	—
Accounts payable and accrued liabilities	130,545	130,545	—	—	—
Interim production financing	93,683	93,683	—	—	—
Other liabilities	8,150	—	8,150	—	—
Senior Unsecured Convertible Debentures	193,474	8,225	16,450	16,450	152,349
Term Facility	747,021	24,197	47,856	47,273	627,695
Finance lease obligations	9,435	4,364	4,132	939	—
	1,198,658	277,364	76,588	64,662	780,044

Disclosure of fair value measurement of liabilities

The following table summarizes the fair value and carrying value of other financial liabilities that are not recognized at fair value on a recurring basis on the consolidated balance sheets:

	As at
	June 30, 2018			June 30, 2017
	Fair value hierarchy	Fair value liability	Carrying value	Fair value hierarchy	Fair value liability	Carrying value
Term Facility(1)	Level 2	645,298	645,298	Level 2	642,363	642,363
Senior Unsecured Notes(2)	Level 2	—	—	Level 2	225,000	225,000
Obligations under finance leases	Level 2	8,757	8,757	Level 2	8,245	8,245
Special Warrants	Level 3	—	—	Level 3	140,000	140,000
Senior Unsecured Convertible Debentures(3)	Level 1	123,200	130,355	N/A	—	—
Interim production financing(4)	Level 2	93,683	93,683	Level 2	101,224	101,224
Other liabilities(5)	Level 3	8,150	8,150	Level 3	11,422	11,422
(1) The interest rates on the Term Facility resets regularly; therefore, the fair value, using a market approach approximates the carrying value.
(2) Management estimates the fair value using a market approach, based on publicly disclosed trades between arm's length parties.
(3) The fair value of the convertible debentures is based on market quotes as these are actively traded on the open exchange.
(4) Interim production financing bears interest at variable rates, therefore management believes the fair value approximates the carrying value.
(5) The fair value of other liabilities, which includes the tangible benefit obligations, the long-term portion of certain other contractual liabilities and excludes deferred lease inducements, was estimated based on discounting the expected future cash flows. The key unobservable assumptions in calculating the fair value are the timing of the payments over the next four years related to the tangible benefit obligation included in other liabilities, and the discount rate used for discounting the other liabilities.

	As at
	June 30, 2018			June 30, 2017
	Fair value hierarchy	Fair value(1)		Fair value hierarchy	Fair value(1)
Derivatives
Embedded derivatives (2)	Level 2	(11,940	)	Level 2	—
Foreign currency forwards (3)	Level 2	(61	)	Level 2	(174	)
(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 values of embedded derivatives are determined using valuation models.
(3) The fair value of forward currency contracts is determined using prevailing exchange rates.

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Commitments and contingencies (Tables)

12 Months Ended

Jun. 30, 2018

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Disclosure of operating lease by lessee

The future aggregate minimum payments are as follows:

	$
Year ended June 30, 2019	9,884
2020	8,933
2021	7,563
2022	6,925
Beyond 2022	26,762

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Capital disclosures (Tables)

12 Months Ended

Jun. 30, 2018

Corporate Information And Statement Of IFRS Compliance [Abstract]

Disclosure of capital items

The Company’s capital at June 30, 2018 and 2017 is summarized in the table below:

	June 30, 2018		June 30, 2017
	$		$
Total bank indebtedness, long-term debt and obligations under capital leases, excluding interim production financing	772,920		983,335
Less: Cash and cash held in trust	(46,550	)	(302,020	)
Net debt	726,370		681,315
Total Shareholders’ Equity	400,792		415,853
	1,127,162		1,097,168

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Earnings per common share (Tables)

12 Months Ended

Jun. 30, 2018

Earnings per share [abstract]

Earnings per share

	June 30, 2018		June 30, 2017
	$		$
Net loss attributable to shareholders of the Company	(14,060	)	(3,634	)
Weighted average number of common shares	134,505,625		134,059,478
Diluted loss per share	(0.10	)	(0.03	)

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

	June 30, 2018		June 30, 2017
	$		$
Net loss attributable to shareholders of the Company	(14,060	)	(3,634	)
Weighted average number of common shares	134,505,625		134,059,478
Basic loss per share	(0.10	)	(0.03	)

XML

Statement of cash flows - supplementary information (Tables)

12 Months Ended

Jun. 30, 2018

Cash Flow Statement [Abstract]

Disclosure of other non cash items operating activities

Net change in non-cash balances related to operations

	June 30,		June 30,
	2018		2017
	$		$
Decrease (increase) in amounts receivable	7,345		(44,457	)
Decrease (increase) in prepaid expenses and deposits and other	1,512		(526	)
Decrease (increase) in long-term amounts receivable	7,713		2,912
Increase (decrease) in accounts payable and accrued liabilities	(41,475	)	47,601
Increase (decrease) in deferred revenue	(5,558	)	10,899
Tangible benefit obligation payments	(859	)	(3,599	)
	(31,322	)	12,830
During the year, the Company paid and received the following:
	$		$
Interest paid	45,156		19,250
Interest received	342		556
Taxes paid	3,694		15,996

Schedule of net change film and television programs

Net change in film and television programs

	June 30,		June 30,
	2018		2017
	$		$
Decrease (increase) in development	(434	)	(238	)
Decrease (increase) in productions in progress	19,769		(12,285	)
Decrease (increase) in productions completed and released	(52,854	)	(75,736	)
Expense of film and television programs	33,554		24,348
Decrease (increase) in program and film rights - broadcasting	(14,110	)	(15,839	)
Expense of film and broadcast rights for broadcasting	18,546		22,515
	4,471		(57,235	)

Disclosure of reconciliation of liabilities arising from financing activities

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

					Senior
					Unsecured		Senior
	Term		Special		Convertible		Unsecured		Finance
	Facility		Warrants		Debentures		Notes		leases		Total
	$		$		$		$		$		$
Balance - June 30, 2017	616,339		133,751		—		225,000		8,245		983,335
Repayments	(6,425	)	—		—		(225,000	)	(5,338	)	(236,763	)
Issue costs	(226	)	—		(313	)	—		—		(539	)
Total financing cash flow activities	(6,651	)	—		(313	)	(225,000	)	(5,338	)	(237,302	)
Conversion to Senior Unsecured Convertible Debentures	—		(133,751	)	133,751		—		—		—
Amortization of deferred financing costs	4,018		—		974		—		—		4,992
New finance leases	—		—		—		—		5,850		5,850
Movement in fair value of embedded derivatives	—		—		(11,251	)	—		—		(11,251	)
Accretion on Senior Unsecured Convertible Debentures	—		—		1,586		—		—		1,586
Unrealized foreign exchange loss	9,360		—		—		—		—		9,360
Total financing non-cash activities	13,378		(133,751	)	125,060		—		5,850		10,537
Balance - June 30, 2018	623,066		—		124,747		—		8,757		756,570

					Former		Senior
	Term		Special		Term		Unsecured		Finance
	Facility		Warrants		Facility		Notes		leases		Total
	$		$		$		$		$		$
Balance - June 30, 2016	—		—		67,578		219,928		4,567		292,073
New debt	642,362		140,000		—		—		—		782,362
Debt extinguishment cost	—		—		1,116		5,874		—		6,990
Realized foreign exchange	—		—		—		372		—		372
Repayments	—		—		(69,106	)	—		(4,517	)	(73,623	)
Issue costs	(26,023	)	(6,322	)	(18	)	(332	)	—		(32,695	)
Total financing cash flow activities	616,339		133,678		(68,008	)	5,914		(4,517	)	683,406
Amortization of deferred financing costs	—		73		430		1,008		—		1,511
Amortization of premium	—		—		—		118		—		118
New finance leases	—		—		—		—		8,195		8,195
Movement in fair value of embedded derivatives	—		—		—		(1,968	)	—		(1,968	)
Total financing non-cash activities	—		73		430		(842	)	8,195		7,856
Balance - June 30, 2017	616,339		133,751		—		225,000		8,245		983,335

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Revenues and segmented information (Tables)

12 Months Ended

Jun. 30, 2018

Operating Segments [Abstract]

Disclosure of operating segments

	Year ended June 30, 2018
	CPLG		DHX Television	Content	Consolidated
	$		$	$	$
Revenues	13,034		55,014	366,368	434,416
Direct production costs and expense of film and television produced, and selling, general and administrative	15,285		33,459	257,891	306,635
Segment profit	(2,251	)	21,555	108,477	127,781
Corporate selling, general and administrative					23,809
Amortization of property and equipment and intangible assets					24,174
Finance expense, net					46,558
Amortization of acquired and library content					15,916
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets					12,027
Development, integration and other					10,554
Loss before income taxes					(5,257	)

	Year ended June 30, 2017
	CPLG	DHX Television	Content	Consolidated
	$	$	$	$
Revenues	18,814	57,384	222,514	298,712
Direct production costs and expense of film and television produced, and selling, general and administrative	16,589	35,276	140,132	191,997
Segment profit	2,225	22,108	82,382	106,715
Corporate selling, general and administrative				25,248
Amortization of property and equipment and intangible assets				17,565
Finance expense, net				40,454
Amortization of acquired and library content				10,541
Write-down of acquired and library content				1,540
Acquisition costs				9,695
Development, integration and other				3,435
Loss before income taxes				(1,763	)

Disclosure of disaggregation of revenue from contracts with customers

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

	June 30, 2018	June 30, 2017
	$	$
Content
Production revenue	19,793	36,877
Distribution revenue	124,094	100,408
Merchandising and licensing and other revenue	144,712	26,253
Producer and service fee revenue	77,769	58,976
	366,368	222,514
DHX Television
Subscriber revenue	51,102	53,240
Promotion and advertising revenue	3,912	4,144
	55,014	57,384
CPLG
Third party brand representation revenue	13,034	18,814
	434,416	298,712

XML

Significant accounting policies, judgments and estimation uncertainty - Investment in film and television programs (Details)	Jun. 30, 2018
Bottom of range
Disclosure Of Detailed Information About Investment In Firm and Television Programs [Line Items]
Declining balance method, amortization range rate, initial delivery	40.00%
Declining balance method, amortization range rate, after initial delivery	10.00%
Top of range
Disclosure Of Detailed Information About Investment In Firm and Television Programs [Line Items]
Declining balance method, amortization range rate, initial delivery	100.00%
Declining balance method, amortization range rate, after initial delivery	25.00%

XML

Significant accounting policies, judgments and estimation uncertainty - Acquired and library content (Details) - Acquired and library content	12 Months Ended
	Jun. 30, 2018
Bottom of range
Disclosure Of Detailed Information About Acquired And Library Content [Line Items]
Useful lives or amortisation rates, intangible assets other than goodwill period	1000.00%
Top of range
Disclosure Of Detailed Information About Acquired And Library Content [Line Items]
Useful lives or amortisation rates, intangible assets other than goodwill period	2000.00%

XML

Significant accounting policies, judgments and estimation uncertainty - Development costs (Details)	12 Months Ended
	Jun. 30, 2018
Disclosure of notes and other explanatory information [Abstract]
Years from date of initial recognition	3 years

XML

Significant accounting policies, judgments and estimation uncertainty - Property and equipment (Details)	12 Months Ended
	Jun. 30, 2018
Building
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment rate	4.00%
Furniture, fixtures and equipment | Bottom of range
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment rate	5.00%
Furniture, fixtures and equipment | Top of range
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment rate	20.00%
Computer equipment
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment rate	30.00%
Post-production equipment
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment rate	30.00%
Computer software
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment period	2 years
Website design
Disclosure of detailed information about property, plant and equipment [line items]
Useful lives or depreciation rates, property, plant and equipment period	2 years

XML

Significant accounting policies, judgments and estimation uncertainty - Intangible assets (Details)	12 Months Ended
	Jun. 30, 2018
Customer relationships
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	10 years
Non-compete contracts
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	3 years
Production software
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	5 years
Bottom of range | Broadcaster relationships
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	7 years
Bottom of range | Brands
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	10 years
Bottom of range | Production and distribution rights
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	10 years
Bottom of range | Production backlog
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	2 years
Top of range | Broadcaster relationships
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	10 years
Top of range | Brands
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	20 years
Top of range | Production and distribution rights
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	25 years
Top of range | Production backlog
Disclosure of detailed information about intangible assets [line items]
Useful lives or amortisation rates, intangible assets other than goodwill period	3 years

XML

Significant accounting policies, judgments and estimation uncertainty - Share-based compensation (Details) - Stock Options	12 Months Ended
	Jun. 30, 2018
Top of range
Disclosure of terms and conditions of share-based payment arrangement [line items]
Stock options vesting period	4 years
Stock options expiration period	7 years
Bottom of range
Disclosure of terms and conditions of share-based payment arrangement [line items]
Stock options expiration period	5 years

XML

Significant accounting policies, judgments and estimation uncertainty - Tangible benefit obligation (Details) $ in Thousands	Jul. 31, 2014 CAD ($)
Disclosure of detailed information about tangible assets [Line Items]
Tangible benefit contribution period	7 years
Financial liabilities at fair value
Disclosure of detailed information about tangible assets [Line Items]
Tangible benefit requirement	$ 17,313

XML

Significant accounting policies, judgments and estimation uncertainty - Accounting standards issued but not yet applied (Details) $ in Thousands	12 Months Ended
	Jun. 30, 2018 CAD ($)
Bottom of range | IFRS 9
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Cumulative effect of new accounting principle in period of adoption	$ 500
Bottom of range | IFRS 15
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Cumulative effect of new accounting principle, increase in defecit	4,000
Top of range | IFRS 9
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Cumulative effect of new accounting principle in period of adoption	1,500
Top of range | IFRS 15
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Cumulative effect of new accounting principle, increase in defecit	$ 9,000

XML

Compensation of key management (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Related Party [Abstract]
Salaries and employee benefits	$ 4,205	$ 2,694
Share-based compensation	2,146	2,738
Termination benefits	2,899	0
Total compensation earned by key management	$ 9,250	$ 5,432

XML

Acquisitions - Narrative (Details) £ in Thousands, $ in Thousands					12 Months Ended
	Jul. 23, 2018 CAD ($)	Jun. 30, 2017 CAD ($) agreement	Jun. 30, 2017 USD ($)	Mar. 03, 2017 GBP (£)	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 CAD ($) agreement	Jun. 30, 2017 USD ($)	Sep. 15, 2017 CAD ($) earn_out	Sep. 15, 2017 USD ($) earn_out	Jun. 30, 2017 USD ($) agreement	Mar. 03, 2017 CAD ($)
Disclosure of detailed information about business combination [line items]
Payable in relation to performance based target										$ 0
Net change in non-cash balances related to operations (note 22)					$ 31,322		$ (12,830)
Goodwill		$ 240,534			$ 240,806		240,534
Peanuts
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired					80.00%
Proportion of voting rights held by non-controlling interests		20.00%	20.00%
Major business combination | Peanuts
Disclosure of detailed information about business combination [line items]
Consideration paid	$ 235,600
Proportion of ownership interest in subsidiary	41.00%
Major business combination | Sony Music Entertainment Japan Inc. (SMEJ) | Peanuts
Disclosure of detailed information about business combination [line items]
Proportion of ownership interest in subsidiary	39.00%
Percentage equity interests sold	49.00%
Ellie Sparkles
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired									51.00%	51.00%
Consideration paid									$ 4,350	$ 3,570,000
Number of performance based earn-outs | earn_out									2	2
Consideration transferred, acquisition-date fair value									$ 4,350
IED
Disclosure of detailed information about business combination [line items]
Consideration paid		$ 447,707					447,707				$ 345,000,000
Consideration transferred, acquisition-date fair value		453,070					453,070				$ 349,132,000
Net change in non-cash balances related to operations (note 22)		$ 1,950	$ 1,503,000		$ 3,413	$ 2,629,000	$ 5,363	$ 4,132,000
Number of member interest purchase agreements | agreement		2					2				2
Goodwill		$ 25,149					$ 25,149
IED | Peanuts
Disclosure of detailed information about business combination [line items]
Proportion of ownership interest in subsidiary		80.00%	80.00%
IED | Shortcake IP Holdings LLC
Disclosure of detailed information about business combination [line items]
Proportion of ownership interest in subsidiary		100.00%	100.00%
IED | IBGNYC LLC
Disclosure of detailed information about business combination [line items]
Proportion of ownership interest in subsidiary		100.00%	100.00%
IED | IBGSCREEN LLC
Disclosure of detailed information about business combination [line items]
Proportion of ownership interest in subsidiary		100.00%	100.00%
Kiddyzuzaa
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired				80.00%								80.00%
Consideration paid				£ 1,290								$ 2,121
Consideration transferred, acquisition-date fair value												2,787
Goodwill												695
Contingent consideration, commercial exploration period for target earn-out				2 years
Kiddyzuzaa | First Anniversary of Acquisition Closing Date
Disclosure of detailed information about business combination [line items]
Consideration paid				£ 202								333
Kiddyzuzaa | Second Anniversary of Acquisition Closing Date
Disclosure of detailed information about business combination [line items]
Consideration paid				202								333
Subsidiaries | Family of Charles M. Schulz | Peanuts
Disclosure of detailed information about business combination [line items]
Fee received based on revenues less shareable costs of subsidiary					$ 54,082
Performance Target Earnout | Ellie Sparkles
Disclosure of detailed information about business combination [line items]
Estimated financial effect, contingent liabilities in business combination									$ 1,218	$ 1,000,000
Performance Target Earnout | Kiddyzuzaa
Disclosure of detailed information about business combination [line items]
Estimated financial effect, contingent liabilities in business combination				£ 322								$ 530

XML

Acquisitions - Purchase price allocation (Details) $ in Thousands, $ in Thousands	Jun. 30, 2018 CAD ($)	Sep. 15, 2017 CAD ($)	Jun. 30, 2017 CAD ($)	Jun. 30, 2017 USD ($)	Mar. 03, 2017 CAD ($)
Assets
Goodwill	$ 240,806		$ 240,534
Ellie Sparkles
Assets
Cash		$ 122
Intangible assets		8,406
Total identifiable net assets at fair value		8,528
Liabilities
Non-controlling interest		4,178
Purchase consideration transferred		$ 4,350
IED
Assets
Cash			12,754
Amounts receivable			24,367
Prepaid expenses and deposits			1,787
Long-term receivables			8,661
Property and equipment			104
Goodwill			25,149
Total identifiable net assets at fair value			569,452
Liabilities
Accounts payable and accrued liabilities			10,938
Deferred revenue			14,575
Other liabilities			5,148
Liabilities			30,661
Total identifiable net assets at fair value			538,791
Non-controlling interest			85,721
Purchase consideration transferred			453,070	$ 349,132
Kiddyzuzaa
Assets
Cash					$ 10
Intangible assets					3,484
Goodwill					695
Total identifiable net assets at fair value					4,189
Liabilities
Accounts payable and accrued liabilities					75
Liabilities					706
Total identifiable net assets at fair value					3,483
Deferred income tax liabilities					631
Non-controlling interest					696
Purchase consideration transferred					$ 2,787
Acquired and library content | IED
Assets
Intangible assets			74,618
Brands | IED
Assets
Intangible assets			$ 422,012

XML

Amounts receivable - Amounts receivable summary (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Disclosure of reconciliation of changes in loss allowance and explanation of changes in gross carrying amount for financial instruments [line items]
Trade receivables	$ 153,461	$ 131,983
Goods and services tax recoverable, net	1,203	1,411
Federal and provincial film tax credits and other government assistance	96,874	111,639
Short-term amounts receivable	251,538	245,033
Long-term amounts receivable	18,789	26,502
Total amounts receivable	270,327	271,535
Trade receivables
Disclosure of reconciliation of changes in loss allowance and explanation of changes in gross carrying amount for financial instruments [line items]
Trade receivables	163,203	136,755
Less: Provision for impairment of trade receivables
Disclosure of reconciliation of changes in loss allowance and explanation of changes in gross carrying amount for financial instruments [line items]
Trade receivables	$ (9,742)	$ (4,772)

XML

Amounts receivable - Aging of trade receivables not impaired (Details) - Trade receivables - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Disclosure of provision matrix [line items]
Financial assets	$ 153,461	$ 131,983
Less than 60 days
Disclosure of provision matrix [line items]
Financial assets	131,683	125,081
Between 60 and 90 days
Disclosure of provision matrix [line items]
Financial assets	5,863	1,833
Over 90 days
Disclosure of provision matrix [line items]
Financial assets	$ 15,915	$ 5,069

XML

Amounts receivable - Provision for impairment of trade receivables (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of changes in allowance account for credit losses of financial assets [abstract]
Provision, opening balance	$ 4,772	$ 6,459
Provision for receivables	5,089	3,857
Receivables written off during the period	(197)	(5,300)
Recoveries of receivables previously provided for	(12)	(94)
Foreign exchange	90	(150)
Provision, closing balance	$ 9,742	$ 4,772

XML

Investment in film and television programs - Schedule of investment in film and television programs (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure Of Detailed Information About Inventory [Line Items]
Development costs	$ 2,112	$ 1,678
Productions in progress	17,577	37,346
Productions completed and released	136,543	119,157
Program and film rights - broadcasting	29,776	36,999
Investment in film and television programs	186,008	195,180	$ 140,444
Cost
Disclosure Of Detailed Information About Inventory [Line Items]
Productions completed and released	529,494	473,775
Program and film rights - broadcasting	134,765	120,655
Accumulated amortization
Disclosure Of Detailed Information About Inventory [Line Items]
Productions completed and released	(377,041)	(343,487)
Program and film rights - broadcasting	(102,202)	(83,656)
Accumulated impairment
Disclosure Of Detailed Information About Inventory [Line Items]
Productions completed and released	(15,910)	(11,131)
Accumulated Write Down Of Program And Film Rights [Member]
Disclosure Of Detailed Information About Inventory [Line Items]
Program and film rights - broadcasting	$ (2,787)	$ 0

XML

Investment in film and television programs - Continuity of investment in film and television programs (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Inventories [Abstract]
Net opening investment in film and television programs	$ 195,180	$ 140,444
Increase in development costs	434	238
Cost of productions (completed and released and productions in progress), net of government assistance and third-party assistance	33,088	88,021
Expense of investment in film and television programs	(33,554)	(24,348)
Write-down of investment in film and television programs	(4,779)	(1,177)
Increase of program and film rights - broadcasting	14,110	15,839
Expense of program and film rights - broadcasting	(18,546)	(22,515)
Write-down of program and film rights - broadcasting	(2,787)	0
Foreign exchange	2,862	(1,322)
Net ending investment in film and television programs	$ 186,008	$ 195,180

XML

Investment in film and television programs - Narrative (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Inventories [Abstract]
Interest costs capitalised	$ 1,384	$ 2,149

XML

Acquired and library content (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of changes in intangible assets other than goodwill [abstract]
Write-down of acquired and library content	$ (3,402)	$ (363)
Acquired and library content
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	155,940	88,462
Write-down of acquired and library content	(3,402)	(363)
Amortization	(15,916)	(10,541)
Foreign exchange	2,060	280
Net book value	147,088	155,940
IED | Acquired and library content
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions through business combination	0	74,618
Kiddyzuzaa | Acquired and library content
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions through business combination	0	3,484
Ellie Sparkles | Acquired and library content
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions through business combination	$ 8,406	$ 0

XML

Property and equipment (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	$ 30,996	$ 17,683
IED Acquisition		104
Additions	8,276	19,597
Disposals, net	(104)	(170)
Transfers, net		0
Amortization	(8,828)	(6,186)
Foreign exchange differences	96	(32)
Net book value	30,436	30,996
Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	58,397
Net book value	66,569	58,397
Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(27,689)
Net book value	(36,517)	(27,689)
Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	288
Net book value	384	288
Land
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	4,276	4,276
IED Acquisition		0
Additions	0	0
Disposals, net	0	0
Transfers, net		0
Amortization	0	0
Foreign exchange differences	0	0
Net book value	4,276	4,276
Land | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	4,276
Net book value	4,276	4,276
Land | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	0
Net book value	0	0
Land | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	0
Net book value	0	0
Building
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	1,938	1,792
IED Acquisition		0
Additions	73	0
Disposals, net	0	0
Transfers, net		158
Amortization	(78)	(12)
Foreign exchange differences	0	0
Net book value	1,933	1,938
Building | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	2,070
Net book value	2,143	2,070
Building | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(132)
Net book value	(210)	(132)
Building | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	0
Net book value	0	0
Furniture, fixtures and equipment
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	2,111	1,354
IED Acquisition		0
Additions	349	1,071
Disposals, net	0	0
Transfers, net		0
Amortization	(738)	(314)
Foreign exchange differences	1	0
Net book value	1,723	2,111
Furniture, fixtures and equipment | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	6,281
Net book value	6,630	6,281
Furniture, fixtures and equipment | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(4,178)
Net book value	(4,916)	(4,178)
Furniture, fixtures and equipment | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	8
Net book value	9	8
Computer equipment
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	2,325	2,811
IED Acquisition		104
Additions	852	1,087
Disposals, net	0	(170)
Transfers, net		0
Amortization	(1,147)	(1,475)
Foreign exchange differences	84	(32)
Net book value	2,114	2,325
Computer equipment | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	12,536
Net book value	13,388	12,536
Computer equipment | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(10,419)
Net book value	(11,566)	(10,419)
Computer equipment | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	208
Net book value	292	208
Post-production equipment
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	8,288	2,917
IED Acquisition		0
Additions	6,055	8,223
Disposals, net	0	0
Transfers, net		0
Amortization	(4,907)	(2,852)
Foreign exchange differences	0	0
Net book value	9,436	8,288
Post-production equipment | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	13,966
Net book value	20,021	13,966
Post-production equipment | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(5,678)
Net book value	(10,585)	(5,678)
Post-production equipment | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	0
Net book value	0	0
Computer software
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	896	1,040
IED Acquisition		0
Additions	331	344
Disposals, net	0	0
Transfers, net		0
Amortization	(429)	(488)
Foreign exchange differences	9	0
Net book value	807	896
Computer software | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	4,896
Net book value	5,227	4,896
Computer software | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(4,056)
Net book value	(4,485)	(4,056)
Computer software | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	56
Net book value	65	56
Leasehold improvements
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	11,162	3,493
IED Acquisition		0
Additions	616	8,872
Disposals, net	(104)	0
Transfers, net		(158)
Amortization	(1,529)	(1,045)
Foreign exchange differences	2	0
Net book value	10,147	11,162
Leasehold improvements | Cost
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	14,372
Net book value	14,884	14,372
Leasehold improvements | Accumulated amortization
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	(3,226)
Net book value	(4,755)	(3,226)
Leasehold improvements | Foreign exchange differences
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	16
Net book value	18	16
Property, plant and equipment subject to operating leases | Computer equipment
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	1,733
Net book value	1,690	1,733
Property, plant and equipment subject to operating leases | Post-production equipment
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	5,787
Net book value	6,327	5,787
Property, plant and equipment subject to operating leases | Computer software
Reconciliation of changes in property, plant and equipment [abstract]
Opening net book value	725
Net book value	$ 740	$ 725

XML

Intangible assets (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of changes in intangible assets other than goodwill [abstract]
Impairment	$ (1,059)	$ 0
Intangible Assets
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	555,408	144,610
IED acquisition (note 5)		422,012
Amortization	(15,346)	(11,379)
Impairment	(1,059)
Additions	1,074	969
Foreign exchange differences	6,920	(804)
Net book value	546,997	555,408
Intangible Assets | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	599,615
Net book value	599,630	599,615
Intangible Assets | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(40,488)
Net book value	(55,834)	(40,488)
Intangible Assets | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(3,719)
Net book value	3,201	(3,719)
Broadcast licenses
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	67,800	67,800
IED acquisition (note 5)		0
Amortization	0	0
Impairment	0
Additions	0	0
Foreign exchange differences	0	0
Net book value	67,800	67,800
Broadcast licenses | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	67,800
Net book value	67,800	67,800
Broadcast licenses | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	0
Net book value	0	0
Broadcast licenses | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	0
Net book value	0	0
Broadcaster relationships
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	531	1,262
IED acquisition (note 5)		0
Amortization	(299)	(732)
Impairment	0
Additions	0	0
Foreign exchange differences	0	1
Net book value	232	531
Broadcaster relationships | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	7,362
Net book value	7,362	7,362
Broadcaster relationships | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(6,875)
Net book value	(7,174)	(6,875)
Broadcaster relationships | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	44
Net book value	44	44
Customer relationships
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	18,680	21,653
IED acquisition (note 5)		0
Amortization	(2,792)	(2,747)
Impairment	0
Additions	0	0
Foreign exchange differences	89	(226)
Net book value	15,977	18,680
Customer relationships | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	27,920
Net book value	27,920	27,920
Customer relationships | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(9,680)
Net book value	(12,472)	(9,680)
Customer relationships | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	440
Net book value	529	440
Brands
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	444,581	24,853
IED acquisition (note 5)		422,012
Amortization	(8,899)	(3,177)
Impairment	(1,059)
Additions	0	969
Foreign exchange differences	6,091	(76)
Net book value	440,714	444,581
Indefinite life intangible assets	350,419	345,319
Brands | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	458,260
Net book value	457,201	458,260
Brands | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(13,918)
Net book value	(22,817)	(13,918)
Brands | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	239
Net book value	6,330	239
Production and distribution rights
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	22,953	25,843
IED acquisition (note 5)		0
Amortization	(2,458)	(2,387)
Impairment	0
Additions	0	0
Foreign exchange differences	674	(503)
Net book value	21,169	22,953
Production and distribution rights | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	30,946
Net book value	30,946	30,946
Production and distribution rights | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(3,551)
Net book value	(6,009)	(3,551)
Production and distribution rights | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(4,442)
Net book value	(3,768)	(4,442)
Other
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	863	3,199
IED acquisition (note 5)		0
Amortization	(898)	(2,336)
Impairment	0
Additions	1,074	0
Foreign exchange differences	66	0
Net book value	1,105	863
Other | Cost
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	7,327
Net book value	8,401	7,327
Other | Accumulated amortization
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	(6,464)
Net book value	(7,362)	(6,464)
Other | Foreign exchange differences
Reconciliation of changes in intangible assets other than goodwill [abstract]
Opening book value	0
Net book value	$ 66	$ 0

XML

Goodwill - Continuity of goodwill and narrative (Details) $ in Thousands		12 Months Ended
	Jul. 23, 2018	Jun. 30, 2018 CAD ($) cash_generating_unit	Jun. 30, 2017 CAD ($)
Reconciliation of changes in intangible assets and goodwill [abstract]
Number of cash generating units | cash_generating_unit		4
Goodwill
Reconciliation of changes in intangible assets and goodwill [abstract]
Opening net book value		$ 240,534	$ 214,325
Exchange differences		809	(304)
Ending net book value		240,806	240,534
IED | Goodwill
Reconciliation of changes in intangible assets and goodwill [abstract]
Acquired on acquisition		(537)	25,818
Kiddyzuzaa | Goodwill
Reconciliation of changes in intangible assets and goodwill [abstract]
Acquired on acquisition		$ 0	$ 695
Sony Music Entertainment Japan Inc. (SMEJ) | Major business combination | Peanuts Holdings LLC
Reconciliation of changes in intangible assets and goodwill [abstract]
Percentage equity interests sold	49.00%

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Goodwill - Value-In-Use assumptions (Details)	Jun. 30, 2018
Content Business
Disclosure of information for cash-generating units [line items]
Perpetual growth rate	3.00%
Pre-tax discount rate	12.20%
DHX Television
Disclosure of information for cash-generating units [line items]
Perpetual growth rate	0.00%
Pre-tax discount rate	15.50%

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Bank indebtedness, interim production financing, long-term debt and obligations under finance leases - Bank indebtedness, interim production financing, long-term debt and obligations under finance leases (Details) £ in Thousands, $ in Thousands	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 CAD ($)
Disclosure of detailed information about borrowings [line items]
Current borrowings		$ 16,350,000		$ 0
Borrowings		866,603,000		1,084,559,000
Amount due within 12 months		(120,557,000)		(336,100,000)
Amount due beyond 12 months		746,046,000		748,459,000
Bank indebtedness
Disclosure of detailed information about borrowings [line items]
Borrowings	£ 1,200	9,000,000	$ 4,000	0
Interim production financing
Disclosure of detailed information about borrowings [line items]
Borrowings		93,683,000		101,224,000
Long-term debt and obligations under finance leases
Disclosure of detailed information about borrowings [line items]
Borrowings		756,570,000		983,335,000
Amount due within 12 months		(10,524,000)		(234,876,000)
Amount due beyond 12 months		$ 746,046,000		$ 748,459,000

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Bank indebtedness, interim production financing, long-term debt and obligations under finance leases - Narrative (Details) $ / shares in Units, £ in Thousands				3 Months Ended	12 Months Ended
	Jul. 23, 2018	Oct. 01, 2017 CAD ($) $ / shares	Jul. 11, 2017 CAD ($)	Sep. 25, 2018 USD ($)	Jun. 30, 2018 CAD ($)	Jun. 30, 2017 CAD ($)	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Disclosure of detailed information about borrowings [line items]
Current borrowings						$ 0		$ 16,350,000
Borrowings						1,084,559,000		$ 866,603,000
Repayments of borrowings					$ 236,763,000	73,623,000
Debt extinguishment cost					0	6,990,000
Credit derivative, fair value		$ 23,191,000
Borrowings, early redemption penalty					$ 0	13,464,000
Base Rate
Disclosure of detailed information about borrowings [line items]
Borrowings, adjustment to interest rate basis							2.75%	2.75%	2.75%
Revolving Credit Facility
Disclosure of detailed information about borrowings [line items]
Line of credit maximum borrowing capacity								$ 39,504,000	$ 30,000,000
Borrowings						0	£ 1,200	$ 9,000,000	$ 4,000,000
Revolving Credit Facility | LIBOR | Bottom of range
Disclosure of detailed information about borrowings [line items]
Borrowings, adjustment to interest rate basis							2.50%	2.50%	2.50%
Revolving Credit Facility | LIBOR | Top of range
Disclosure of detailed information about borrowings [line items]
Borrowings, adjustment to interest rate basis							3.75%	3.75%	3.75%
Interim Production Financing
Disclosure of detailed information about borrowings [line items]
Borrowings						$ 101,224,000		$ 93,683,000
Interim Production Financing | Floating interest rate
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate						2.70%	3.19%	3.19%	3.19%	2.70%
Term Facility
Disclosure of detailed information about borrowings [line items]
Borrowings								$ 747,021,000	$ 490,050,000	$ 495,000,000
Annual amortization payment percentage							1.00%	1.00%	1.00%
Term Facility | LIBOR
Disclosure of detailed information about borrowings [line items]
Borrowings, adjustment to interest rate basis							3.75%	3.75%	3.75%
Former Term Facility
Disclosure of detailed information about borrowings [line items]
Debt extinguishment cost						$ 1,471,000
Senior Unsecured Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Borrowings								$ 193,474,000
Notional amount		$ 140,000,000
Debt instrument, convertible, conversion price (in CAD per share) | $ / shares		$ 8.00
Subscription Receipts, Special Warrants and Senior Unsecured Convertible Debentures | Fixed interest rate
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate		5.875%
Senior Unsecured Notes
Disclosure of detailed information about borrowings [line items]
Borrowings						225,000,000		$ 0
Repayments of borrowings			$ 239,877,000
Debt extinguishment cost						(5,519,000)
Borrowings, early redemption penalty						$ 13,464,000
Senior Unsecured Notes | Fixed interest rate
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate							5.875%	5.875%	5.875%
First Lien Net Leverage Ratio, Greater than 3.50 | Term Facility
Disclosure of detailed information about borrowings [line items]
Excess cash flow repayment percentage							50.00%	50.00%	50.00%
First Lien Net Leverage Ratio, Greater than 3.50 | Term Facility | Top of range
Disclosure of detailed information about borrowings [line items]
First lien net leverage ratio							3.50	3.50	3.50
First Lien Net Leverage Ratio, Between 3.00 and 3.50 | Term Facility
Disclosure of detailed information about borrowings [line items]
Excess cash flow repayment percentage							25.00%	25.00%	25.00%
First Lien Net Leverage Ratio, Between 3.00 and 3.50 | Term Facility | Bottom of range
Disclosure of detailed information about borrowings [line items]
First lien net leverage ratio							3.50	3.50	3.50
First Lien Net Leverage Ratio, Between 3.00 and 3.50 | Term Facility | Top of range
Disclosure of detailed information about borrowings [line items]
First lien net leverage ratio							3.00	3.00	3.00
Initial 12 month period | Senior Secured Credit Facilities
Disclosure of detailed information about borrowings [line items]
Debt instrument, covenant, maximum leverage ratio							7.25	7.25	7.25
12 month period ending September 30, 2018 | Senior Secured Credit Facilities
Disclosure of detailed information about borrowings [line items]
Debt instrument, covenant, maximum leverage ratio							6.75	6.75	6.75
12 month period ending September 30, 2019 | Senior Secured Credit Facilities
Disclosure of detailed information about borrowings [line items]
Debt instrument, covenant, maximum leverage ratio							6.50	6.50	6.50
12 month period ending September 30, 2020 | Senior Secured Credit Facilities
Disclosure of detailed information about borrowings [line items]
Debt instrument, covenant, maximum leverage ratio							5.75	5.75	5.75
12 month period ending September 30, 2021 | Senior Secured Credit Facilities
Disclosure of detailed information about borrowings [line items]
Debt instrument, covenant, maximum leverage ratio							5.50	5.50	5.50
Peanuts
Disclosure of detailed information about borrowings [line items]
Percentage of voting equity interests acquired							80.00%	80.00%	80.00%
Disposal of Major Subsidiary | Term Facility
Disclosure of detailed information about borrowings [line items]
Repayments of borrowings				$ 161,328,000
Sony Music Entertainment Japan Inc. (SMEJ) | Disposal of Major Subsidiary | Peanuts
Disclosure of detailed information about borrowings [line items]
Percentage equity interests sold	49.00%

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Bank indebtedness, interim production financing, long-term debt and obligations under finance leases - Interim production financing (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Disclosure of detailed information about borrowings [line items]
Net book value of production financing, licensing contracts receivable and film tax credits receivable	$ 115,639	$ 131,186
Borrowings	866,603	1,084,559
Interim production financing
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 93,683	$ 101,224
Interim production financing | Prime Rate | Bottom of range
Disclosure of detailed information about borrowings [line items]
Borrowings, adjustment to interest rate basis	0.50%
Interim production financing | Prime Rate | Top of range
Disclosure of detailed information about borrowings [line items]
Borrowings, adjustment to interest rate basis	1.00%

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Bank indebtedness, interim production financing, long-term debt and obligations under finance leases - Long-term debt and obligations under finance leases (Details) $ in Thousands	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 CAD ($)	Jun. 30, 2017 USD ($)
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 866,603,000		$ 1,084,559,000
Liabilities	1,076,000,000		1,345,852,000
Less: Current portion	(120,557,000)		(336,100,000)
Non-current portion of non-current borrowings	746,046,000		748,459,000
Long-Term Debt and Obligations under Finance Leases
Disclosure of detailed information about borrowings [line items]
Borrowings	756,570,000		983,335,000
Less: Current portion	(10,524,000)		(234,876,000)
Non-current portion of non-current borrowings	746,046,000		748,459,000
Term Facility
Disclosure of detailed information about borrowings [line items]
Borrowings, net	623,066,000		616,339,000
Borrowings	747,021,000	$ 490,050		$ 495,000
Special Warrants
Disclosure of detailed information about borrowings [line items]
Borrowings, net	0		133,751,000
Senior Unsecured Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Borrowings, net	124,747,000		0
Borrowings	193,474,000
Senior Unsecured Notes
Disclosure of detailed information about borrowings [line items]
Borrowings	0		225,000,000
Finance Lease Liabilities
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 8,757,000		8,245,000
Finance Lease Liabilities | Bottom of range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate	4.00%	4.00%
Finance Lease Liabilities | Top of range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate	9.80%	9.80%
Unamortized issue costs | Term Facility
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 22,232,000		26,107,000
Unamortized issue costs | Special Warrants
Disclosure of detailed information about borrowings [line items]
Borrowings	0		6,249,000
Unamortized issue costs | Senior Unsecured Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 5,588,000		0
Recurring fair value measurement | Embedded derivatives
Disclosure of detailed information about borrowings [line items]
Liabilities			$ 0

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Bank indebtedness, interim production financing, long-term debt and obligations under finance leases - Principal repayments and undrawn borrowing facilities (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 866,603	$ 1,084,559
Year ending June 30, 2019
Disclosure of detailed information about borrowings [line items]
Borrowings	10,524
2020
Disclosure of detailed information about borrowings [line items]
Borrowings	8,611
2021
Disclosure of detailed information about borrowings [line items]
Borrowings	8,254
2022
Disclosure of detailed information about borrowings [line items]
Borrowings	7,440
2023 and beyond
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 759,225

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Share capital and contributed surplus - Preferred variable voting shares and common shares narrative (Details)		12 Months Ended
	Oct. 09, 2014 class_of_share vote	Jun. 30, 2018 CAD ($) shares $ / shares	Jun. 30, 2017 CAD ($) shares $ / shares	Jun. 30, 2016 shares
Disclosure of classes of share capital [line items]
Number of classes of shares | class_of_share	3
Options exercised (in shares)		60,000	60,000
Weighted average exercise price of share options exercised (in CAD per share) | $		$ 1.81	$ 1.73
Preference Variable Voting Shares
Disclosure of classes of share capital [line items]
Number of shares authorised (in shares)		100,000,000
Par value per share (in CAD per share) | $ / shares		$ 0.00000001
Issued capital | Preference Variable Voting Shares
Disclosure of classes of share capital [line items]
Number of shares outstanding (in shares)		100,000,000	100,000,000
Issued capital | Common shares
Disclosure of classes of share capital [line items]
Number of shares outstanding (in shares)		134,293,890	134,061,548.000	133,774,729
Shares issued pursuant to the ESPP (in shares)		43,496	31,500
ESPP shares issued price per share (in CAD per share) | $ / shares		$ 4.58	$ 6.51
Options exercised (in shares)		60,000	60,000
Dividend reinvestment (in shares)		108,180	195,319
Dividend reinvestment (in CAD per share) | $ / shares		$ 3.87	$ 5.82
Issued capital | Common Voting Shares
Disclosure of classes of share capital [line items]
Stock conversion ratio if held for purposes other than broadcasting act	1
Number of votes per share | vote	1
Number of shares outstanding (in shares)		99,510,508	103,821,287
Issued capital | Variable Voting Shares
Disclosure of classes of share capital [line items]
Stock conversion ratio if held for purpose of broadcasting act	1
Number of votes per share if under threshold percentage | vote	1
Threshold percentage of outstanding shares to dilute votes per share	33.33%
Number of shares outstanding (in shares)		34,783,382	30,240,261
Issued capital | Non-Voting Shares
Disclosure of classes of share capital [line items]
Number of shares outstanding (in shares)		0	0

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Share capital and contributed surplus - Issued and outstanding (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Reconciliation of number of shares outstanding [abstract]
Options exercised (in shares)	60,000	60,000
Beginning balance	$ 415,853	$ 336,835
Ending balance	400,792	415,853
Common shares
Reconciliation of number of shares outstanding [abstract]
Dividend reinvestment	$ 419	$ 1,138
Issued capital | Preference Variable Voting Shares
Disclosure of classes of share capital [line items]
Number of shares issued	100,000,000	100,000,000
Reconciliation of number of shares outstanding [abstract]
Number of shares outstanding at beginning of period (in shares)	100,000,000
Number of shares outstanding at end of period (in shares)	100,000,000	100,000,000
Beginning balance	$ 0
Ending balance	$ 0	$ 0
Issued capital | Common shares
Disclosure of classes of share capital [line items]
Number of shares issued	134,061,548	133,774,729	123,982,312
Reconciliation of number of shares outstanding [abstract]
Number of shares outstanding at beginning of period (in shares)	134,061,548.000	133,774,729
Dividend reinvestment (in shares)	108,180	195,319
Shares issued pursuant to the ESPP (in shares)	43,496	31,500
Options exercised (in shares)	60,000	60,000
Number of shares outstanding at end of period (in shares)	134,293,890	134,061,548.000
Beginning balance	$ 304,320	$ 302,828
Shares issued pursuant to the ESPP	199	205
Stock options exercised	160	149
Ending balance	$ 305,167	$ 304,320
Contributed surplus
Disclosure of classes of share capital [line items]
Number of shares issued	9,158,190	7,137,125	6,353,750
Reconciliation of number of shares outstanding [abstract]
Beginning balance	$ 26,310	$ 20,488
Ending balance	$ 29,060	$ 26,310
Performance Share Units (PSU)
Reconciliation of number of shares outstanding [abstract]
PSUs settled (in shares)	20,666
Performance Share Units (PSU) | Common shares
Reconciliation of number of shares outstanding [abstract]
PSUs settled (in shares)	20,666	0
PSU's settled	$ 69	$ 0

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Share capital and contributed surplus - Stock options rollforward (Details)					3 Months Ended	12 Months Ended
	Oct. 02, 2017 CAD ($) shares	Jul. 11, 2017 CAD ($) shares	Feb. 16, 2017 CAD ($) shares	Oct. 03, 2016 CAD ($) shares	Jun. 30, 2018 CAD ($) shares	Jun. 30, 2018 CAD ($) shares	Jun. 30, 2017 CAD ($) shares
Share Capital, Reserves And Other Equity Interest [Abstract]
Outstanding at beginning of period (in shares) | shares						8,819,525	7,137,125
Granted (in shares) | shares	300,000	1,620,000	400,000	1,342,400	1,742,400	1,920,000
Forfeited (in shares) | shares						(2,431,050)
Cancelled (in shares) | shares						(125,000)
Exercised (in shares) | shares						(60,000)	(60,000)
Outstanding at end of period (in shares) | shares					8,123,475	8,123,475	8,819,525
Exercisable (in shares) | shares					4,297,150	4,297,150
Weighted average exercise price of stock option at beginning of period (in CAD per share) | $						$ 6.93	$ 6.93
Weighted average exercise price of share options granted (in CAD per share) | $	$ 5.47	$ 5.73	$ 6.08	$ 7.02		5.69	6.79
Weighted average exercise price of share options forfeited (in CAD per share) | $						7.85
Weighted average exercise price of share options cancelled (in CAD per share) | $						7.13
Weighted average exercise price of share options exercised (in CAD per share) | $						1.81	1.73
Weighted average exercise price of stock option at end of period (in CAD per share) | $					$ 6.41	6.41	$ 6.93
Weighted average exercise price of share options exercisable (in CAD per share) | $					$ 6.12	$ 6.12

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Share capital and contributed surplus - Stock options narrative (Details)					3 Months Ended	12 Months Ended
	Oct. 02, 2017 CAD ($) shares	Jul. 11, 2017 CAD ($) shares	Feb. 16, 2017 CAD ($) shares	Oct. 03, 2016 CAD ($) shares	Jun. 30, 2018 shares	Jun. 30, 2018 CAD ($) shares	Jun. 30, 2017 CAD ($) shares
Share Capital, Reserves And Other Equity Interest [Abstract]
Percentage of total number of outstanding common shares authorized					8.50%	8.50%	8.50%
Shares authorized (in shares)					11,414,980	11,414,980	11,395,231
Granted (in shares)	300,000	1,620,000	400,000	1,342,400	1,742,400	1,920,000
Weighted average exercise price of share options granted (in CAD per share) | $	$ 5.47	$ 5.73	$ 6.08	$ 7.02		$ 5.69	$ 6.79
Disclosure of terms and conditions of share-based payment arrangement [line items]
Award vesting period	4 years	4 years	4 years	4 years
Options exercised (in shares)						60,000	60,000
Weighted average exercise price of share options exercised (in CAD per share) | $						$ 1.81	$ 1.73

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Share capital and contributed surplus - Weighted average grant date value of stock options and assumptions (Details)	12 Months Ended
	Jun. 30, 2018 CAD ($) year	Jun. 30, 2017 CAD ($) year
Share Capital, Reserves And Other Equity Interest [Abstract]
Weighted average fair value at measurement date, share options granted | $	$ 1.67	$ 2.01
Risk free interest rate, share options granted	1.45%	0.69%
Expected option life, in years | year	5	5
Expected volatility, share options granted	36.00%	37.00%
Expected dividend as percentage, share options granted	1.35%	1.08%

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Share capital and contributed surplus - Information related to stock option (Details)	Jun. 30, 2018 CAD ($) shares year	Jun. 30, 2017 CAD ($) shares	Jun. 30, 2016 CAD ($) shares
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding (in shares) | shares	8,123,475	8,819,525	7,137,125
Weighted average remaining contractual life (in years) | year	3.19
Weighted average exercise price (in CAD per share)	$ 6.41	$ 6.93	$ 6.93
Number of share options exercisable (in shares) | shares	4,297,150
Weighted average exercise price of share options exercisable (in CAD per share)	$ 6.12
$1.50 - $3.49
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding (in shares) | shares	655,625
Weighted average remaining contractual life (in years) | year	0.03
Weighted average exercise price (in CAD per share)	$ 2.03
Number of share options exercisable (in shares) | shares	655,625
Weighted average exercise price of share options exercisable (in CAD per share)	$ 2.03
$3.50 - $5.49
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding (in shares) | shares	1,170,000
Weighted average remaining contractual life (in years) | year	1.90
Weighted average exercise price (in CAD per share)	$ 4.43
Number of share options exercisable (in shares) | shares	870,000
Weighted average exercise price of share options exercisable (in CAD per share)	$ 4.07
$5.50 - $7.49
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding (in shares) | shares	4,027,100
Weighted average remaining contractual life (in years) | year	4.35
Weighted average exercise price (in CAD per share)	$ 6.57
Number of share options exercisable (in shares) | shares	1,324,900
Weighted average exercise price of share options exercisable (in CAD per share)	$ 7.00
$7.50 - $9.49
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding (in shares) | shares	2,270,750
Weighted average remaining contractual life (in years) | year	2.71
Weighted average exercise price (in CAD per share)	$ 8.40
Number of share options exercisable (in shares) | shares	1,446,625
Weighted average exercise price of share options exercisable (in CAD per share)	$ 8.40
Bottom of range | $1.50 - $3.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	1.50
Bottom of range | $3.50 - $5.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	3.50
Bottom of range | $5.50 - $7.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	5.50
Bottom of range | $7.50 - $9.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	7.50
Top of range | $1.50 - $3.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	3.49
Top of range | $3.50 - $5.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	5.49
Top of range | $5.50 - $7.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	7.49
Top of range | $7.50 - $9.49
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price of outstanding share options (in CAD per share)	$ 9.49

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Share capital and contributed surplus - Share capital and contributed surplus narrative (Details) $ in Thousands					12 Months Ended
	Oct. 02, 2017	Jul. 11, 2017	Feb. 16, 2017	Oct. 03, 2016	Jun. 30, 2018 CAD ($) shares	Jun. 30, 2017 CAD ($) shares award
Disclosure of terms and conditions of share-based payment arrangement [line items]
Compensation expense | $					$ 2,950	$ 5,867
Award vesting period	4 years	4 years	4 years	4 years
PSUs outstanding (in shares)					338,665	0
Stock Options
Disclosure of terms and conditions of share-based payment arrangement [line items]
Compensation expense | $					$ 2,159	$ 4,972
Performance Share Units (PSU)
Disclosure of terms and conditions of share-based payment arrangement [line items]
Compensation expense | $					$ 791	$ 895
Number of awards | award						2
Award vesting period					3 years
PSUs granted (in shares)					207,270	338,665
PSUs settled (in shares)					20,666
PSUs forfeited (in shares)					87,076
PSUs cancelled (in shares)					23,653

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Government financing and assistance (Details) - CAD ($)	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of disaggregation of revenue from contracts with customers [line items]
Adjustments for decrease (increase) in inventories	$ 4,471,000	$ (57,235,000)
Income from government grants	63,464,000	39,919,000
Government customers
Disclosure of disaggregation of revenue from contracts with customers [line items]
Adjustments for decrease (increase) in inventories	0	2,125,000
Canadian Media Fund
Disclosure of disaggregation of revenue from contracts with customers [line items]
Adjustments for decrease (increase) in inventories	1,667,000	3,737,000
Government customers, production activities
Disclosure of disaggregation of revenue from contracts with customers [line items]
Adjustments for decrease (increase) in inventories	$ 15,618,000	$ 25,547,000
Customer Concentration Risk | Government customers
Disclosure of disaggregation of revenue from contracts with customers [line items]
Concentration risk, percentage	36.00%	41.00%

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Income taxes - Components of deferred tax liability (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	$ (17,679)	$ (14,559)
Broadcast licenses
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	(17,967)	(17,967)
Tangible benefit obligation
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	2,171	2,352
Leasehold inducement
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	0	123
Foreign tax credits
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	2,324	85
Participation payables and finance lease obligations and other liabilities
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	0	64
Property and equipment
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	697	(1,724)
Share issuance costs and deferred financing fees
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	(1,603)	(1,051)
Investment in film and television programs and acquired and library content
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	(27,568)	(7,782)
Intangible assets
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	(9,633)	(6,278)
Non-capital losses and other
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Net deferred income tax liability	$ 33,900	$ 17,619

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Income taxes - Narrative (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure Of Income Taxes [Line Items]
Temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements for which deferred tax liabilities have not been recognised	$ 72,648	$ 60,510
Applicable tax rate	31.00%	31.00%
Tax effect from change in tax rate	$ 2,120	$ 0
Foreign Tax Authority
Disclosure Of Income Taxes [Line Items]
Applicable tax rate	27.50%
Tax effect from change in tax rate	$ 2,120

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Income taxes - Reconciliation of income taxes (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Taxes [Abstract]
Applicable tax rate	31.00%	31.00%
Income tax expense (recovery) based on combined federal and provincial tax rates of 31% (June 30, 2017 - 31%)	$ (1,664)	$ (113)
Share-based compensation	915	1,792
Non-taxable portion of capital gain	(1,024)	0
Tax rate differential	3,675	(1,252)
Non-controlling interest	(2,223)	0
Non-deductible acquisition costs	0	1,244
Tax rate change on opening balance	2,120	0
Other	(308)	200
Provision for (recovery of) income taxes	$ 1,491	$ 1,871

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Finance income and finance expense (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of detailed information about borrowings [line items]
Interest income	$ 1,147	$ 556
Gain on movement in fair value of the embedded derivatives on Senior Unsecured Convertible Debentures and Senior Unsecured Notes	11,251	1,968
Finance income	12,398	2,524
Accretion on tangible benefit obligation	539	651
Early redemption penalties	0	13,464
Debt extinguishment cost	0	6,990
Amortization of premium	0	118
Net foreign exchange loss	7,700	3,226
Finance expense	58,956	42,978
Interest expense on bank indebtedness
Disclosure of detailed information about borrowings [line items]
Interest expense on borrowings	788	348
Interest on long-term debt, obligations under finance leases and other
Disclosure of detailed information about borrowings [line items]
Interest expense on borrowings	48,343	18,181
Accretion on Senior Unsecured Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Interest expense on borrowings	$ 1,586	$ 0

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Expenses by nature and employee benefit expense (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Investment in film and television programs
Direct production and new media costs	$ 192,143	$ 96,249
Expense of film and television programs	33,554	24,348
Expense of film and broadcast rights for broadcasting	18,546	22,515
Write-down of investment in film and television programs and acquired and library content and impairment of intangible assets (notes 7,8,10)	10,968	1,540
Development, integration and other	10,554	3,435
Impairment of intangible assets	1,059	0
Office and administrative	21,704	20,395
Acquisition costs	0	9,695
Finance expense, net	46,558	40,454
Investor relations and marketing	3,322	2,902
Professional and regulatory	7,804	5,363
Amortization of property and equipment and intangible assets	24,174	17,565
Expenses by nature, excluding benefit expense	386,302	255,002
The following sets out the components of employee benefits expense:
Salaries and employee benefits	50,421	39,606
Share-based compensation	2,950	5,867
Employee benefits expense	53,371	45,473
Expenses	439,673	300,475
Acquired and library content
Investment in film and television programs
Amortization of acquired and library content	$ 15,916	$ 10,541

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Financial instruments - Narrative (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 CAD ($)	Jun. 30, 2017 USD ($)
Credit risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	$ 228,542		$ 465,277
Allowance account for credit losses of financial assets, percent	6.00%	6.00%
Liquidity risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	$ 46,550		$ 62,143
Currency risk
Disclosure of credit risk exposure [line items]
Sensitivity analysis for types of market risk, reasonably possible change in risk variable, percent	1.00%
Sensitivity analysis for types of market risk, reasonably possible change in risk variable, impact to net income (loss)	$ 8,000
Risk exposure associated with instruments sharing characteristic		$ 2,231		$ 7,756
Floating interest rate | Interest rate risk
Disclosure of credit risk exposure [line items]
Sensitivity analysis for types of market risk, reasonably possible change in risk variable, percent	1.00%
Bottom of range | Interest rate risk
Disclosure of credit risk exposure [line items]
Sensitivity analysis for types of market risk, reasonably possible change in risk variable, impact to net income (loss)	$ 6,000
Top of range | Interest rate risk
Disclosure of credit risk exposure [line items]
Sensitivity analysis for types of market risk, reasonably possible change in risk variable, impact to net income (loss)	$ 7,000

XML

Financial instruments - Contractual maturity analysis for financial liabilities (Details) $ in Thousands, $ in Thousands	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 CAD ($)	Jun. 30, 2017 USD ($)
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Bank indebtedness	$ 16,350		$ 0
Accounts payable and accrued liabilities	130,545		178,365
Interim production financing	93,683
Other liabilities	8,150
Borrowings	866,603		$ 1,084,559
Finance lease obligations	9,435
Financial liabilities	1,198,658
Less than 1 year
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Bank indebtedness	16,350
Accounts payable and accrued liabilities	130,545
Interim production financing	93,683
Other liabilities	0
Borrowings	10,524
Finance lease obligations	4,364
Financial liabilities	277,364
1 to 3 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Bank indebtedness	0
Accounts payable and accrued liabilities	0
Interim production financing	0
Other liabilities	8,150
Finance lease obligations	4,132
Financial liabilities	76,588
4 to 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Bank indebtedness	0
Accounts payable and accrued liabilities	0
Interim production financing	0
Other liabilities	0
Finance lease obligations	939
Financial liabilities	64,662
After 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Bank indebtedness	0
Accounts payable and accrued liabilities	0
Interim production financing	0
Other liabilities	0
Borrowings	759,225
Finance lease obligations	0
Financial liabilities	780,044
Senior Unsecured Convertible Debentures
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	193,474
Senior Unsecured Convertible Debentures | Less than 1 year
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	8,225
Senior Unsecured Convertible Debentures | 1 to 3 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	16,450
Senior Unsecured Convertible Debentures | 4 to 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	16,450
Senior Unsecured Convertible Debentures | After 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	152,349
Term Facility
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	747,021	$ 490,050		$ 495,000
Term Facility | Less than 1 year
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	24,197
Term Facility | 1 to 3 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	47,856
Term Facility | 4 to 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	47,273
Term Facility | After 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Borrowings	$ 627,695

XML

Financial instruments - Fair values (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	$ 1,076,000	$ 1,345,852
Embedded derivatives | Recurring fair value measurement
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability		0
Embedded derivatives | Level 2 | Recurring fair value measurement
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	11,940	0
Foreign currency forwards | Level 2 | Recurring fair value measurement
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	61	174
Term Facility | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	645,298	642,363
Term Facility | Level 2 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	645,298	642,363
Senior Unsecured Notes | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	0	225,000
Senior Unsecured Notes | Level 2 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	0	225,000
Obligations under finance leases | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	8,757	8,245
Obligations under finance leases | Level 2 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	8,757	8,245
Special Warrants | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	0	140,000
Special Warrants | Level 3 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	0	140,000
Senior Unsecured Convertible Debentures | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	130,355	0
Senior Unsecured Convertible Debentures | Level 1 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	123,200	0
Interim production financing | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	93,683	101,224
Interim production financing | Level 2 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	93,683	101,224
Other liabilities | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	8,150	11,422
Other liabilities | Level 3 | Not measured at fair value in statement of financial position but for which fair value is disclosed
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Fair value liability	$ 8,150	$ 11,422

XML

Commitments and contingencies - Future aggregate minimum payments (Details) $ in Thousands	Jun. 30, 2018 CAD ($)
Year ending June 30, 2019
Disclosure of finance lease and operating lease by lessee [line items]
Future aggregate minimum payments	$ 9,884
2020
Disclosure of finance lease and operating lease by lessee [line items]
Future aggregate minimum payments	8,933
2021
Disclosure of finance lease and operating lease by lessee [line items]
Future aggregate minimum payments	7,563
2022
Disclosure of finance lease and operating lease by lessee [line items]
Future aggregate minimum payments	6,925
Beyond 2022
Disclosure of finance lease and operating lease by lessee [line items]
Future aggregate minimum payments	$ 26,762

XML

Commitments and contingencies - Narrative (Details) $ in Thousands	Jun. 30, 2018 CAD ($)
Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]
Future purchase commitments	$ 22,321

XML

Capital disclosures - Narrative (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Corporate Information And Statement Of IFRS Compliance [Abstract]
Dividends declared	$ 10,734	$ 9,908

XML

Capital disclosures - Company's capital (Details) - CAD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 866,603	$ 1,084,559
Less: Cash and cash held in trust	(46,550)	(302,020)
Net debt	726,370	681,315
Total Shareholders’ Equity	400,792	415,853	$ 336,835
Total company's capital	1,127,162	1,097,168
Total bank indebtedness, long-term debt and obligations under capital leases, excluding interim production financing
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 772,920	$ 983,335

XML

Earnings per common share (Details) - CAD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Earnings per share [abstract]
Net loss attributable to shareholders of the Company	$ (14,060)	$ (3,634)
Weighted average number of common shares (in shares)	134,505,625	134,059,478
Basic loss per share (in CAD per share)	$ (0.10)	$ (0.03)
Weighted average number of common shares (diluted) (in shares)	134,505,625	134,059,478
Diluted loss per share (in CAD per share)	$ (0.10)	$ (0.03)

XML

Statement of cash flows - supplementary information - Net change in non-cash balances related to operations (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash Flow Statement [Abstract]
Decrease (increase) in amounts receivable	$ 7,345	$ (44,457)
Decrease (increase) in prepaid expenses and deposits and other	1,512	(526)
Decrease (increase) in long-term amounts receivable	7,713	2,912
Increase (decrease) in accounts payable and accrued liabilities	(41,475)	47,601
Increase (decrease) in deferred revenue	(5,558)	10,899
Tangible benefit obligation payments	(859)	(3,599)
Increase (decrease) in working capital	(31,322)	12,830
Interest paid	45,156	19,250
Interest received	342	556
Taxes paid	$ 3,694	$ 15,996

XML

Statement of cash flows - supplementary information - Net change in film and television programs (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash Flow Statement [Abstract]
Decrease (increase) in development	$ (434)	$ (238)
Decrease (increase) in productions in progress	19,769	(12,285)
Decrease (increase) in productions completed and released	(52,854)	(75,736)
Expense of film and television programs	33,554	24,348
Decrease (increase) in program and film rights - broadcasting	(14,110)	(15,839)
Expense of film and broadcast rights for broadcasting	18,546	22,515
Net change in film and television programs	$ 4,471	$ (57,235)

XML

Statement of cash flows - supplementary information - Reconciliation between the opening and closing balances in the consolidated balance sheet arising from financing activities (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	$ 983,335	$ 292,073
New debt	0	782,362
Debt extinguishment cost	0	6,990
Realized foreign exchange		372
Repayments	(236,763)	(73,623)
Issue costs	(539)	(32,695)
Total financing cash flow activities	(237,302)	683,406
Conversion to Senior Unsecured Convertible Debentures	0
Amortization of deferred financing costs	4,992	1,511
Amortization of premium	0	118
New finance leases	5,850	8,195
Movement in fair value of embedded derivatives	(11,251)	(1,968)
Accretion on Senior Unsecured Convertible Debentures	1,586	0
Unrealized foreign exchange loss	9,360
Total financing non-cash activities	10,537	7,856
Liabilities from financing activities, ending balance	756,570	983,335
Term Facility
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	616,339	0
New debt		642,362
Debt extinguishment cost		0
Realized foreign exchange		0
Repayments	(6,425)	0
Issue costs	(226)	(26,023)
Total financing cash flow activities	(6,651)	616,339
Conversion to Senior Unsecured Convertible Debentures	0
Amortization of deferred financing costs	4,018	0
Amortization of premium		0
New finance leases	0	0
Movement in fair value of embedded derivatives	0	0
Accretion on Senior Unsecured Convertible Debentures	0
Unrealized foreign exchange loss	9,360
Total financing non-cash activities	13,378	0
Liabilities from financing activities, ending balance	623,066	616,339
Special Warrants
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	133,751	0
New debt		140,000
Debt extinguishment cost		0
Realized foreign exchange		0
Repayments	0	0
Issue costs	0	(6,322)
Total financing cash flow activities	0	133,678
Conversion to Senior Unsecured Convertible Debentures	(133,751)
Amortization of deferred financing costs	0	73
Amortization of premium		0
New finance leases	0	0
Movement in fair value of embedded derivatives	0	0
Accretion on Senior Unsecured Convertible Debentures	0
Unrealized foreign exchange loss	0
Total financing non-cash activities	(133,751)	73
Liabilities from financing activities, ending balance	0	133,751
Senior Unsecured Convertible Debentures
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	0
Repayments	0
Issue costs	(313)
Total financing cash flow activities	(313)
Conversion to Senior Unsecured Convertible Debentures	133,751
Amortization of deferred financing costs	974
New finance leases	0
Movement in fair value of embedded derivatives	(11,251)
Accretion on Senior Unsecured Convertible Debentures	1,586
Unrealized foreign exchange loss	0
Total financing non-cash activities	125,060
Liabilities from financing activities, ending balance	124,747	0
Former Term Facility
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	0	67,578
New debt		0
Debt extinguishment cost		1,116
Realized foreign exchange		0
Repayments		(69,106)
Issue costs		(18)
Total financing cash flow activities		(68,008)
Amortization of deferred financing costs		430
Amortization of premium		0
New finance leases		0
Movement in fair value of embedded derivatives		0
Total financing non-cash activities		430
Liabilities from financing activities, ending balance		0
Senior Unsecured Notes
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	225,000	219,928
New debt		0
Debt extinguishment cost		5,874
Realized foreign exchange		372
Repayments	(225,000)	0
Issue costs	0	(332)
Total financing cash flow activities	(225,000)	5,914
Conversion to Senior Unsecured Convertible Debentures	0
Amortization of deferred financing costs	0	1,008
Amortization of premium		118
New finance leases	0	0
Movement in fair value of embedded derivatives	0	(1,968)
Accretion on Senior Unsecured Convertible Debentures	0
Unrealized foreign exchange loss	0
Total financing non-cash activities	0	(842)
Liabilities from financing activities, ending balance	0	225,000
Finance leases
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities from financing activities, beginning balance	8,245	4,567
New debt		0
Debt extinguishment cost		0
Realized foreign exchange		0
Repayments	(5,338)	(4,517)
Issue costs	0	0
Total financing cash flow activities	(5,338)	(4,517)
Conversion to Senior Unsecured Convertible Debentures	0
Amortization of deferred financing costs	0	0
Amortization of premium		0
New finance leases	5,850	8,195
Movement in fair value of embedded derivatives	0	0
Accretion on Senior Unsecured Convertible Debentures	0
Unrealized foreign exchange loss	0
Total financing non-cash activities	5,850	8,195
Liabilities from financing activities, ending balance	$ 8,757	$ 8,245

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Revenues and segmented information - Narrative (Details)	12 Months Ended
	Jun. 30, 2018 CAD ($) segment	Jun. 30, 2017 CAD ($)	Jun. 30, 2016 CAD ($)
Disclosure of disaggregation of revenue from contracts with customers [line items]
Number of reportable segments | segment	3
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	$ 10,968,000	$ 1,540,000
Goodwill	240,806,000	240,534,000
Revenues	434,416,000	298,712,000
Property and equipment	30,436,000	30,996,000	$ 17,683,000
Canada
Disclosure of disaggregation of revenue from contracts with customers [line items]
Revenues	168,038,000	173,427,000
USA
Disclosure of disaggregation of revenue from contracts with customers [line items]
Goodwill	26,399,000	26,742,000
Revenues	144,940,000	1,089,000
Property and equipment	67,000	125,000
UNITED KINGDOM
Disclosure of disaggregation of revenue from contracts with customers [line items]
Revenues	109,024,000	108,849,000
Countries outside of Canada and the USA
Disclosure of disaggregation of revenue from contracts with customers [line items]
Goodwill	5,334,000	3,771,000
Revenues	12,414,000	15,347,000
Property and equipment	1,872,000	2,091,000
Intangible Assets
Disclosure of disaggregation of revenue from contracts with customers [line items]
Intangible assets	546,997,000	555,408,000	$ 144,610,000
Intangible Assets | USA
Disclosure of disaggregation of revenue from contracts with customers [line items]
Intangible assets	423,485,000	422,170,000
Intangible Assets | Countries outside of Canada and the USA
Disclosure of disaggregation of revenue from contracts with customers [line items]
Intangible assets	30,332,000	55,956,000
DHX Television
Disclosure of disaggregation of revenue from contracts with customers [line items]
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	2,787,000	0
Goodwill	33,224,000	33,224,000
Revenues	55,014,000	57,384,000
Content Business
Disclosure of disaggregation of revenue from contracts with customers [line items]
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	9,240,000	1,540,000
Goodwill	207,582,000	207,310,000
Revenues	366,368,000	222,514,000
CPLG
Disclosure of disaggregation of revenue from contracts with customers [line items]
Goodwill	$ 0	$ 0

XML

Revenues and segmented information - Income statement information (Details) - CAD ($)	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of operating segments [line items]
Revenues	$ 434,416,000	$ 298,712,000
Direct production costs and expense of film and television produced, and selling, general and administrative	306,635,000	191,997,000
Segment profit	127,781,000	106,715,000
Corporate selling, general and administrative	86,200,000	74,133,000
Amortization of property and equipment and intangible assets	24,174,000	17,565,000
Finance expense, net	46,558,000	40,454,000
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	10,968,000	1,540,000
Development, integration and other	10,554,000	3,435,000
Loss before income taxes	(5,257,000)	(1,763,000)
Acquisition costs	0	9,695,000
Acquired and library content
Disclosure of operating segments [line items]
Amortization of acquired and library content	15,916,000	10,541,000
DHX Television
Disclosure of operating segments [line items]
Revenues	55,014,000	57,384,000
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	2,787,000	0
Content
Disclosure of operating segments [line items]
Revenues	366,368,000	222,514,000
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	9,240,000	1,540,000
Operating segments | CPLG
Disclosure of operating segments [line items]
Revenues	13,034,000	18,814,000
Direct production costs and expense of film and television produced, and selling, general and administrative	15,285,000	16,589,000
Segment profit	(2,251,000)	2,225,000
Operating segments | DHX Television
Disclosure of operating segments [line items]
Revenues	55,014,000	57,384,000
Direct production costs and expense of film and television produced, and selling, general and administrative	33,459,000	35,276,000
Segment profit	21,555,000	22,108,000
Operating segments | Content
Disclosure of operating segments [line items]
Revenues	366,368,000	222,514,000
Direct production costs and expense of film and television produced, and selling, general and administrative	257,891,000	140,132,000
Segment profit	108,477,000	82,382,000
Unallocated amounts
Disclosure of operating segments [line items]
Corporate selling, general and administrative	23,809,000	25,248,000
Amortization of property and equipment and intangible assets	24,174,000	17,565,000
Finance expense, net	46,558,000	40,454,000
Write-down of investment in film and television programs and acquired and library content, and impairment intangible assets	12,027,000	1,540,000
Development, integration and other	10,554,000	3,435,000
Acquisition costs		9,695,000
Unallocated amounts | Acquired and library content
Disclosure of operating segments [line items]
Amortization of acquired and library content	$ 15,916,000	$ 10,541,000

XML

Revenues and segmented information - Disaggregation of revenue (Details) - CAD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of operating segments [line items]
Revenues	$ 434,416	$ 298,712
Content
Disclosure of operating segments [line items]
Revenues	366,368	222,514
Content | Production revenue
Disclosure of operating segments [line items]
Revenues	19,793	36,877
Content | Distribution revenue
Disclosure of operating segments [line items]
Revenues	124,094	100,408
Content | Merchandising and licensing and other revenue
Disclosure of operating segments [line items]
Revenues	144,712	26,253
Content | Producer and service fee revenue
Disclosure of operating segments [line items]
Revenues	77,769	58,976
DHX Television
Disclosure of operating segments [line items]
Revenues	55,014	57,384
DHX Television | Subscriber revenue
Disclosure of operating segments [line items]
Revenues	51,102	53,240
DHX Television | Promotion and advertising revenue
Disclosure of operating segments [line items]
Revenues	3,912	4,144
CPLG | Third party brand representation revenue
Disclosure of operating segments [line items]
Revenues	13,034	18,814
Countries outside of Canada and the USA
Disclosure of operating segments [line items]
Revenues	$ 12,414	$ 15,347

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Subsequent events (Details) - Peanuts Holdings LLC - CAD ($) $ in Millions	Jul. 23, 2018	Jun. 30, 2018
Disclosure of non-adjusting events after reporting period [line items]
Percentage of voting equity interests acquired		80.00%
Major business combination
Disclosure of non-adjusting events after reporting period [line items]
Consideration paid	$ 235.6
Proportion of ownership interest in subsidiary	41.00%
Proportion of voting rights held by non-controlling interests	20.00%
Major business combination | Sony Music Entertainment Japan Inc. (SMEJ)
Disclosure of non-adjusting events after reporting period [line items]
Percentage equity interests sold	49.00%
Proportion of ownership interest in subsidiary	39.00%