ANNUAL REPORT 2016 TABLE OF CONTENTS Co‐Chief Executive Officers' Message Management's Discussion and Analysis 2 4 Management's Report 33 Independent Auditors' Report 34 Consolidated Financial Statements 35 Notes to Consolidated Financial Statements 39 Shareholder Information 75 Corporate Information Back Cover KNOWLEDGE BASED ‐ VALUE FOCUSED CLAIRVEST IS ONE OF CANADA'S LEADING PROVIDERS OF PRIVATE EQUITY FINANCING TO MID‐MARKET COMPANIES AND CURRENTLY HAS C$1.6 BILLION OF CAPITAL UNDER MANAGEMENT. CLAIRVEST MANAGES ITS OWN CAPITAL AND THAT OF THIRD PARTIES, THROUGH THE CLAIRVEST EQUITY PARTNERS LIMITED PARTNERSHIPS. CLAIRVEST PARTNERS WITH MANAGEMENT TO INVEST IN PROFITABLE, SMALL AND MID‐SIZED COMPANIES WITH THE GOAL OF HELPING TO BUILD VALUE IN THE BUSINESS AND GENERATE SUPERIOR LONG TERM FINANCIAL RETURNS FOR INVESTORS. CO‐CHIEF EXECUTIVE OFFICERS’ MESSAGE FIFTEEN CONSECUTIVE YEARS OF GROWTH TO BOOK VALUE AND 440% CUMULATIVE GROWTH IN VALUE FELLOW SHAREHOLDER, Fiscal 2016 was an active year for Clairvest. We exited two deals which returned in aggregate $100.3 million to our shareholders and our fund investors, added two new platform companies which we will grow over the next several years, and worked with our investment partners to complete acquisitions. Looking at the partnerships we manage, for fund 2 Clairvest purchased the residual interest of the Grey Eagle Casino bringing that fund’s life to a close, we continued to return capital to fund 3 and fund 4 investors, we closed fund 4 to new investments and began the investment period for fund 5, Clairvest Equity Partners V, which at March 31, 2016 had completed three deals and was drawn to 19%. Our new investments were in sectors familiar to us and proactively sought out by us. We expanded our presence in the marketing services sector with a digital marketing company and added another land‐based gaming opportunity in the U.S. to supplement our strong presence in the sector. Inclusive of four follow‐on investments made to support our existing investee companies, we put an aggregate $100.0 million to work for our shareholders and our fund investors during fiscal 2016. Despite some setbacks in parts of the portfolio due principally to the downturn in mining and oil and gas, in aggregate our 18 investee companies performed well during fiscal 2016. For the 12 months ended March 31, 2016, Clairvest’s book value per share grew 9% to $31.91 including dividends paid. This growth was driven by debt reduction and EBITDA growth and not changes in valuation multiples. Over the last 15 years, our book value has grown at a compounded annual growth rate of 11%, after tax, despite an average cash balance of 41%. In contrast, the S&P500 has delivered 5.6%, pre‐tax, reflecting solid out‐performance by Clairvest on an absolute and risk‐adjusted basis. As stated in the title of this letter, we generated our shareholders an aggregate return of 440% including dividends over the last fifteen years. 2 CO‐CHIEF EXECUTIVE OFFICERS’ MESSAGE We believe that the reputation we have developed over our 29‐year history as partners with ability and integrity has been and will continue to be the driver of our success. We pride ourselves on the relationships we have generated and continue to build with our partners and the returns we have delivered. Our track record speaks to this value creation best; the 28 realized deals originated by the current management team have turned $548 million of invested equity into over $1.6 billion and generated a pooled IRR of 24%. Our plan is to continue to execute and continually improve upon the same strategy that has worked in the past. As shareholders, we are comforted by the fact that our team today is stronger and deeper than ever before. Complimenting this team is a strong balance sheet, a great portfolio and lots of capital available to invest; for these reasons, we look forward with optimism. We are indebted to our sage board and loyal shareholders whose support has been critical to our success. Respectfully, B. Jeffrey Parr Co‐Chief Executive Officer Ken Rotman Co‐Chief Executive Officer June 22, 2016 3 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 The Management's Discussion and Analysis ["MD&A"] of financial condition and results of operations analyzes significant changes in Clairvest Group Inc.'s consolidated financial results, financial position, risks and opportunities. It should be read in conjunction with the audited annual consolidated financial statements and related notes for the year ended March 31, 2016 ["consolidated financial statements"]. The following MD&A is the responsibility of Management and is as of June 22, 2016. The Board of Directors carries out its responsibility for review of this disclosure through its Audit Committee. The Audit Committee reviews the disclosure and recommends its approval to the Board of Directors. The Board of Directors has approved this disclosure. INTRODUCTION Clairvest Group Inc. ["Clairvest" or the "Company"] is a private equity investor that specializes in partnering with management teams and other stakeholders of both emerging and established companies. The Company's shares are traded on the Toronto Stock Exchange under the stock symbol "CVG". Clairvest invests its own capital, and that of third parties, through Clairvest Equity Partners III Limited Partnership ["CEP III"], Clairvest Equity Partners IV Limited Partnership ["CEP IV"] and Clairvest Equity Partners IV‐A Limited Partnership ["CEP IV‐A"], and Clairvest Equity Partners V Limited Partnership ["CEP V"] and Clairvest Equity Partners V‐A Limited Partnership ["CEP V‐A"] [together, the "CEP Funds"] in a small number of carefully selected companies that have the potential to generate superior returns. Clairvest provides loans to and earns priority distributions or management fees and carried interest from the CEP Funds, which meet the definition of structured entities under IFRS. The Company concluded that its ownership interests in the CEP Funds do not meet the definition of control under IFRS. Accordingly, the financial positions and operating results of the CEP Funds are not included in Clairvest’s consolidated financial statements. Clairvest employs various acquisition entities in structuring its investments, all of which are controlled by Clairvest. These acquisition entities, which are accounted for at fair value in accordance with International Financial Reporting Standards ["IFRS"] as described in the Critical Accounting Estimates section of the MD&A, include the following: 2141788 Ontario Corporation ["2141788 Ontario"] CEP III Co‐Investment Limited Partnership ["CEP III Co‐Invest"] MIP III Limited Partnership ["MIP III"] CEP IV Co‐Investment Limited Partnership ["CEP IV Co‐Invest"] MIP IV Limited Partnership ["MIP IV"] CEP V Co‐Investment Limited Partnership ["CEP V Co‐Invest"] MIP V Limited Partnership ["MIP V"] 2486303 Ontario Inc. ["2486303 Ontario"] 2141788 Ontario, a limited partner of CEP III Co‐Invest and CEP V Co‐Invest, is a wholly‐owned acquisition entity of Clairvest. 2486303 Ontario is a wholly‐owned acquisition entity of Clairvest which purchased the limited partnership interest of Clairvest Equity Partners Limited Partnership ["CEP"] in December 2015. CEP was an investment fund held by third party investors prior to being purchased by 2486303 Ontario. Clairvest’s relationship with CEP III Co‐Invest and MIP III, CEP IV Co‐ Invest and MIP IV, and CEP V Co‐Invest and MIP V are described in the Transactions with Related Parties and Off‐Statement of Financial Position Arrangements sections of the MD&A. As at March 31, 2016, Clairvest, through these acquisition entities, had 18 core investments in 9 different industries and 3 countries. Three are joint investments with CEP III, ten are joint investments with CEP IV and CEP IV‐A [together, the "CEP IV Fund"], and three are joint investments with CEP V and CEP V‐A [together, the "CEP V Fund"]. Clairvest also holds investments in the Grey Eagle Casino and Wellington Financial. The table below summarizes Clairvest’s direct and indirect investee companies ["investee companies"] as at March 31, 2016: 4 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 SUMMARY OF CLAIRVEST'S INVESTEE COMPANIES AS AT MARCH 31, 2016 Investee Company Industry Segment Geographic Segment Ownership Percentage[19] Cost of Investment [millions] Net Cash Investment [millions][20] Fair Value of Investment [millions][21] Description of Business INVESTMENTS MADE BY CEP III CO‐INVEST ALONGSIDE CEP III Chilean Gaming Holdings[1] Gaming Chile 36.8% $ 28.8 $ 20.2 $ 43.7 Light Tower Rentals Inc. ["Light Tower Rentals"][2] Lyophilization Services of New England Inc. ["LSNE"][3] Equipment Rental United States 6.7% $ 2.4 $ [32.2] $ ─ Contract Manufacturing United States 12.3% $ 7.1 $ 6.9 $ 16.0 An investment vehicle which holds an equity in various gaming entertainment complexes in Chile. CEP III owns 37.7% of Chilean Gaming Holdings. interest An oilfield equipment rental company operating in major oil and gas drilling basins in the United States. CEP III owns 20.0% of Light Tower Rentals. A Manchester, New Hampshire based contract manufacturing organization focused on providing lyophilization services to biotech, pharmaceutical and medical device manufacturers. CEP III owns 36.8% of LSNE. INVESTMENTS MADE BY CEP IV CO‐INVEST ALONGSIDE CEP IV/CEP IV‐A Centaur Gaming [4] Gaming United States Debt interest with stapled warrants $ 14.6 $ 11.8 $ 68.7 Cieslok Media Ltd. ["Cieslok"][5] Marketing Services Canada 23.5% $ 4.0 $ 4.0 $ 10.6 County Waste of Virginia, LLC ["County Waste"][6] CRS Contractors Rental Supply Limited Partnership ["CRS"][7] Davenport Land Investments[8] Waste Management United States 12.5% $ 7.3 $ 7.3 $ 12.0 Equipment Rental Canada 13.6% $ 10.6 $ 9.3 $ 22.0 $ 2.2 $ 1.7 $ 2.9 Other United States 18.7% [Davenport North] & 13.4% [Davenport South] Discovery Air Inc. ["Discovery Air"][9] Specialty Aviation Canada 25.9% and debt interest $ 32.2 $ 30.3 $ 30.7 The owner and operator of the Hoosier Park Racing & Casino in Anderson, Indiana and the Indiana Grand Casino and Indiana Downs Racetrack ["Indiana Grand Casino"] in Shelbyville, Indiana. CEP IV and CEP IV‐A have debt interests with stapled warrants. A leading Canadian outdoor advertising firm, operating predominantly large format digital and static billboards throughout major cities in Canada. CEP IV and CEP IV‐A own 55.4% and 8.8% of Cieslok respectively. A private regional solid waste collection company headquartered in Albany, New York. CEP IV and CEP IV‐A own 29.5% and 4.7% of County Waste respectively. An Ontario based equipment rental provider commercial, industrial and infrastructure sectors. CEP IV and CEP IV‐A own 32.1% and 5.1% of CRS respectively. Comprised of two entities ["Davenport North" and "Davenport South"] holding real estate casino development in Davenport, Iowa. CEP IV and CEP IV‐A own 44.1% and 7.0% of Davenport North and 31.6% and 5.0% of Davenport South respectively. A specialty aviation services business operating across Canada and in selected locations internationally. CEP IV and CEP IV‐A have debt interest and own 32.6% and 5.2% of Discovery Air respectively. surrounding focused on a [1] [2] [3] [4] [5] [6] [7] [8] [9] Clairvest owns 30,446,299 units of Chilean Gaming Holdings which holds a 50% interest in Casino Marina del Sol and a 73.8% interest in each of Casino Osorno and Casino sol Calama. Clairvest owns 3,985,604 common shares in Light Tower Rentals. Clairvest also holds US$7.5 million in Light Tower Rentals corporate bonds in its treasury funds. Clairvest owns 6,406,000 Series A 10% cumulative convertible preferred shares and 1,250,000 Series B 10% cumulative preferred shares. Clairvest invested $14.6 million in Centaur Gaming by way of unsecured term loans with stapled warrants which, subject to regulatory approval, are convertible upon exercise into 9.9% of Class A and Class B units of Centaur Gaming. Clairvest owns 4,014,989 common shares in Cieslok. Clairvest owns 6,942.64 Class B units in County Waste. Clairvest owns 226,902 Class B and 10,572,805 Class C limited partnership units in CRS. Clairvest has the right to receive proceeds equal to an additional 2.2% economic interest in CRS until Clairvest has received three times its invested capital. Clairvest owns 1,408.81 units in Davenport North, 1,298.21 units in Davenport South and a US$0.6 million loan to a partner of Davenport Land Investments. Clairvest owns 21,265,415 common shares, $22.0 million in Discovery Air convertible debentures with a stated interest rate of 10% per annum and $2.2 million in secured loans with a stated interest rate of 12% per annum. Clairvest also hold $2.3 million of short‐term promissory notes with a stated rate of 8% per annum included in its loans receivable. 5 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 Investee Company Industry Segment Geographic Segment Ownership Percentage[19] Cost of Investment [millions] Net Cash Investment [millions][20] Fair Value of Investment [millions][21] Description of Business INVESTMENTS MADE BY CEP IV CO‐INVEST ALONGSIDE CEP IV/CEP IV‐A Specialty Momentum Aviation Aerospace Group ["MAG"][10] United States 10.3% $ 3.8 $ 3.8 $ 5.6 New Meadowlands Racetrack LLC [the "Meadowlands"][11] Gaming Rivers Casino [12] Gaming Winters Bros. Waste Systems of CT, LLC ["Winters Bros. of CT"][13] Waste Management United States United States United States $ 5.6 $ 4.4 $ 8.6 Debt interest and equity investment rights 5.0% $ 7.5 $ [16.9] $ 26.2 13.4% $ 8.1 $ 8.1 $ 9.9 INVESTMENTS MADE BY CEP V CO‐INVEST ALONGSIDE CEP V/CEP V‐A Accel Entertainment Inc. ["Accel Entertainment"][14] United States Gaming 9.3% $ 12.9 $ 12.9 $ 12.6 Digital Media Solutions, LLC ["Digital Media Solutions"][15] Marketing Services United States 13.9% $ 8.3 $ 8.3 $ 8.0 Waste Management United States 14.0% $ 8.2 $ 8.2 $ 10.9 Winters Bros. Waste Systems of Long Island Holdings, LLC ["Winters Bros. of LI"][16] STANDALONE INVESTMENTS Grey Eagle Casino[17] Gaming Canada Equity participation $ 11.0 $ 2.9 $ 14.1 Wellington Financial[18] Financial Services Canada 10.1% $ 14.6 $ 14.6 $ 20.8 surveillance A U.S.‐based speciality aviation and intelligence, and reconnaissance service provider. CEP IV and CEP IV‐A have Class A stock convertible to 24.3% and 3.9% equity interest respectively. Operates North America’s premier standardbred horse racing track located in East Rutherford, New Jersey. CEP IV and CEP IV‐A have debt interests and equity investment rights. A gaming entertainment complex located in Des Plains, Illinois. CEP IV and CEP IV‐ A own 11.8% and 1.9% of Rivers Casino respectively. A solid waste collection, regional recycling and disposal company based in Danbury, Connecticut. CEP IV and CEP IV‐ A own 31.6% and 5.0% of Winters Bros. of CT respectively. licensed video gaming lead generation engine A terminal operator in Illinois. CEP V and CEP V‐A own 18.2% and 3.5% of Accel Entertainment respectively. A digital media company which operates as a for companies in a variety of different industries. CEP V and CEP V‐A own 27.3% and 5.2% of Digital Media Solutions respectively. solid waste regional private A management company based in Long Island, New York. CEP V and CEP V‐A own 27.5% and 5.2% of Winters Bros. of LI respectively. A charitable casino on Tsuu T'ina First Nation reserve lands, located southwest of the city of Calgary, Alberta. Provides debt capital and operating lines to venture capital backed technology, communications and biotechnology, industrial product companies in Canada and the United States. OTHER TOTAL $ 1.5 $ 190.7 $ 1.5 $ 107.1 $ 1.4 $ 324.7 [10] [11] [12] [13] [14] [15] [16] [17] [18] Clairvest owns 32,736 Class A stock in MAG. Clairvest invested US$5.4 million in the Meadowlands by way of secured convertible debentures with a stated interest rate of 15% per annum. Clairvest also holds warrants which entitle it to invest in equity securities subject to certain conditions. Clairvest owns 9,021,917 units in Rivers Casino. Cost of investment and net cash investment [proceeds] exclude the $1.6 million which were funded by MIP IV as described in note 4[f] to the consolidated financial statements. Clairvest owns 76,284.8 Class C units of Winters Bros. of CT. Clairvest owns 283,478 Class D preferred shares of Accel Entertainment. Clairvest owns 6,150,000 Class B units of Digital Media Solutions. Clairvest owns 1,487,773 Class C units in Winters Bros. of LI. And 256,037 units in WBLI II, LLC, an affiliate to Winters Bros. of LI which is owned proportionately by the same unitholders as Winters Bros. of LI. Cost of investment and net cash investment [proceeds] exclude the $2.4 million which were funded by MIP V as described in note 4[i] to the consolidated financial statements. Clairvest had funded $5.6 million to Grey Eagle Casino by way of 16% debentures which were repaid in full during fiscal 2012. During fiscal 2016, Clairvest increased its equity participation interest in the Grey Eagle Casino, through the purchase of CEP by 2486303 Ontario, to between 11.25% to 38.25% of the earnings of Grey Eagle Casino until December 2022. Cost and fair value excludes $1.2 million which represent Clairvest’s direct entitlement through the general partner of CEP (“CEP GP”). Clairvest has a $30.3 million limited partner commitment to Wellington Financial Fund V, $14.6 million of which had been funded as at March 31, 2016. Clairvest also holds a residual interest in Wellington Financial Fund III and Wellington Financial Fund IV, and has an interest in the general partner of various Wellington Funds. [19] Ownership percentage calculated on a fully diluted basis as at March 31, 2016. [20] Net cash investment [proceeds] comprised cost net of dividends, interest and other distributions received but excludes advisory and other fees received, foreign income taxes incurred by acquisition entities and foreign exchange gains or losses on foreign exchange forward contracts entered into as economic hedges against Clairvest's foreign denominated investments. The determination of fair value incorporates the quoted market value of Clairvest's publicly‐traded investments and an estimate of fair value for privately‐held investments. The fair value of foreign exchange forward contracts entered into as economic hedges against Clairvest's foreign denominated investments is not included in this fair value. [21] 6 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 OVERVIEW OF FISCAL 2016 An overview of the significant events during fiscal 2016 follows: Overall and Corporate Clairvest's book value increased by $37.8 million, or $2.33 per share, to $485.5 million or $31.91 per share. The increase was primarily due to net income and comprehensive income ["net income"] of $2.63 per share, net of $0.2958 per share in dividends paid. Also during fiscal 2016, 80,000 common shares were issued as a result of options exercised for shares, bringing number of common shares outstanding to 15,214,095. For the year ended March 31, 2016, Clairvest recorded $75.0 million in total revenue, comprised $37.6 million in net investment gains, $18.5 million in distributions and interest income, $16.1 million in net carried interest income from the CEP Funds and $2.8 million in other income. Total revenue for the prior fiscal year was $104.3 million. Net income for the year ended March 31, 2016 was $40.0 million compared to $52.0 million in the prior fiscal year. Clairvest supported Wellington Financial through its raising of Wellington Fund V with a $30.3 million limited partner commitment and continuing support of the general partner. Further details are on page 16 of the MD&A. Clairvest filed a new normal course issuer bid enabling it to make market purchases of up to 760,704 of its common shares in the 12‐month period commencing March 7, 2016. No purchases have been made under this bid to June 22, 2016. As at June 22, 2016, Clairvest had repurchased a total of 6,595,049 common and non‐voting shares for $68.3 million over the last twelve years. Clairvest paid an annual ordinary dividend of $0.10 per share and a special dividend of $0.1958 per share. The dividends were paid on July 24, 2015 to common shareholders of record as of July 8, 2015. The dividends were eligible dividends for Canadian income tax purposes. Clairvest and CEP Clairvest invested $11.0 million to increase its profit participation interest in the Grey Eagle Casino through the purchase of CEP by 2486303 Ontario. As a result of the purchase, Clairvest increased its profit distribution entitlement, either directly or indirectly through 2486303 Ontario, to between 11.25% to 38.25% of the earnings of the Grey Eagle Casino until December 2022. Further details are on page 15 of the MD&A. Upon the sale as described above, the third party investors of CEP ceased to have any entitlements to CEP. In aggregate, CEP returned 1.7 times capital to its third party investors, or an internal rate of return of 12%. Clairvest/CEP III Co‐Invest and CEP III CEP III Co‐Invest and CEP III realized on Casino New Brunswick. CEP III Co‐Invest and CEP III realized proceeds of $58.0 million which equaled to 1.5 times invested capital. Clairvest and CEP III Co‐Invest’s portion of the proceeds was $14.8 million. Further details are on page 11 of the MD&A. Upon completion of the above transaction pertaining to Casino New Brunswick, CEP III Co‐Invest distributed $8.1 million to its limited partners, which include Clairvest, 2141788 Ontario and MIP III. The distributions from CEP III Co‐Invest to its limited partners resulted in total distribution income of $3.0 million and net investment gains of $5.1 million for Clairvest as reported in the consolidated financial statements. In addition, CEP III declared and paid $5.4 million in carried interest, 50% of which or $2.7 million was ultimately paid to Clairvest, and the other 50% or $2.7 million was ultimately paid to the limited partners of MIP III which is accounted for as management participation. Chilean Gaming Holdings increased its ownership in Casino Osorno and in Casino Sol Calama, both located in Chile, through a buyout of the operating partner by the entity which owns Casino Marina del Sol. Upon completion of this transaction, Chile Gaming Holdings increased its ownership in each Casino Osorno and Casino Sol Calama from 48.8% to 73.8%, and continues to hold a 50% ownership in Casino Marina del Sol. 7 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 Clairvest/CEP IV Co‐Invest and the CEP IV Fund CEP IV Co‐Invest, the CEP IV Fund and other co‐investors in Discovery Air [collectively the "Discovery Air Investor Group"] invested an additional net $9.0 million and made additional commitments to Discovery Air during fiscal 2016. The investments and commitments included a credit revolving facility, a guarantee as well as promissory notes and additional common shares. Clairvest and CEP IV Co‐Invest’s aggregate investment during fiscal 2016 was $3.2 million. Further details are on page 13 of the MD&A. CEP IV Co‐Invest and the CEP IV Fund realized on Linen King, LLC ["Linen King"], a textile rental company based in Oklahoma. CEP IV Co‐Invest’s portion of the proceeds was US$0.6 million, or 0.2 times invested capital. Clairvest/CEP V Co‐Invest and the CEP V Fund CEP V Co‐Invest and the CEP V Fund invested US$20.5 million in Digital Media Solutions, a digital media company which operates as a lead generation engine for companies in a variety of different industries. CEP V Co‐Invest’s portion of the investment in Digital Media Solutions was US$6.2 million. CEP V Co‐Invest and the CEP V Fund invested US$32.5 million in Accel Entertainment, a licensed video gaming terminal operator in Illinois. CEP V Co‐Invest’s portion of the investment in Accel Entertainment was US$9.7 million. Subject to post‐closing purchase price adjustments, CEP V Co‐Invest’s investment may be increased to up to US$12.1 million. OUTLOOK As at March 31, 2016, Clairvest's current management team has made 42 platform investments and has realized or partially realized on 28 investments which have in aggregate generated 2.9 times invested capital. From inception, the Company has invested its own capital in every investment. Clairvest's team of professionals have all invested significant amounts of capital in the Company which allows Clairvest to approach each investment as owners and shareholders. As a long‐term investor, Clairvest is focused on building value in its investee companies by contributing strategic expertise, guiding management through volatile times and helping its investee companies capitalize on new opportunities that arise. As at March 31, 2016, Clairvest and its controlled acquisition entities had $693.1 million of capital available for future acquisitions through its cash, cash equivalents and temporary investments ["treasury funds"], credit facilities and uncalled capital in the CEP Funds. The table below summarizes the status of the CEP Funds as at June 22, 2016: Status of Clairvest Equity Partnerships [$millions, except number of investments] Year of Fund Third Party Capital Clairvest Commitment Total Capital Percentage Drawn Currently Held Total Number of Investments Clairvest Equity Partners [“CEP”] – Terminated in December 2015 2001 164 Clairvest Equity Partners III [“CEP III”] 2006 225 Clairvest Equity Partners IV [“CEP IV”] 2010 342 Clairvest Equity Partners V [“CEP V”] 2015 420 55 75 125 180 219 N/A 300 79.8% 9 8 — 3 467 77.3% 11 10 600 18.5% 3 3 8 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 FINANCIAL POSITION AND BOOK VALUE The following table summarizes the Company’s financial position and book value: Financial Position As at, [$000's, except number of shares and per share amounts] March 31, 2016 March 31, 2015 Cash, cash equivalents and temporary investments [“treasury funds”] $ 87,043 $ 157,155 Carried interest receivable from the CEP Funds Corporate investments, at fair value Total assets Management Participation Total liabilities Book value Book value per share Dividend per share Number of common shares outstanding 64,009 353,801 570,191 43,977 84,670 53,738 291,421 531,207 37,756 83,513 485,521 447,694 31.91 0.2958 29.58 0.2492 15,214,095 15,134,095 As at March 31, 2016, Clairvest had total assets of $570.2 million, an increase of $39.0 million during fiscal 2016. The increase was primarily due to increase in the fair value of corporate investments as described below. As at March 31, 2016, the Company’s treasury funds of $87.0 million were held in cash, money market savings accounts rated not below R1‐High, investment savings accounts and guaranteed investment certificates rated not below BBB‐, and treasury investments in corporate bonds of Light Tower Rentals [see Notes 3 and 16 to the consolidated financial statements for a detailed discussion of the Company's treasury funds]. 2141788 Ontario Limited also held $41.6 million in cash, investment savings accounts and guarantee investment certificates with consistent ratings to the above. Clairvest also has access to $3.8 million in cash held in various other acquisition entities which are controlled by Clairvest. Clairvest has a $75.0 million, committed credit facility with a maturity date of April 30, 2020. The credit facility is unsecured and bears interest at the rate of 11.0% per annum on drawn amounts and 1.0% per annum on undrawn amounts. The amount available under the credit facility as at March 31, 2016 is $75.0 million. Clairvest also has a $20.0 million credit facility with a Canadian chartered bank. The credit facility, which is subject to annual renewal, is unsecured and bears interest at the bank prime rate plus 0.5% per annum. The amount available under the credit facility as at March 31, 2016 is $20.0 million, which is based on debt covenants and certain restrictions within the banking arrangement. As at March 31, 2016, Clairvest had corporate investments with a carrying value of $353.8 million, an increase of $62.4 million during fiscal 2016, $325.8 million of which represents the fair value of Clairvest’s investee companies and the remaining $28.0 million of which represents other net assets [liabilities] held by Clairvest’s acquisition entities. Excluding net assets [liabilities] held by Clairvest’s acquisition entities, the aggregate carrying value of Clairvest’s investee companies increased by $61.3 million during fiscal 2016, which primarily comprised the following: - - A $12.9 million investment in Accel Entertainment; The acquisition of limited partner and general partner interests in CEP for $11.0 million. CEP holds an equity participation interest in the Grey Eagle Casino; A $8.3 million investment in Digital Media Solutions; Follow‐on investments net of return of capital totaling $4.3 million in existing investee companies; - - - Net changes in unrealized gains on its investee companies of $32.4 million; - Interest accrued on debenture investments of $0.5 million and foreign exchange revaluations of $1.0 million; partially offset by 9 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 - - The sale of Casino New Brunswick which had a carrying value of $8.3 million as at March 31, 2015; The sale of Linen King which had a carrying value of $0.8 million as at March 31, 2015. Clairvest has implemented a foreign exchange hedging strategy to limit its exposure to changes in the value of foreign denominated currencies relative to the Canadian dollar by hedging 100% of the fair value of its foreign investments and loans unless a specific exemption is approved by the Board of Directors. As a result, the foreign exchange adjustments made in Clairvest’s investee companies is primarily offset by the foreign exchange adjustments made in the forward exchange forward contracts used to support its foreign exchange hedging strategy. The foreign exchange adjustments made in the forward exchange forward contracts are described in the Derivative Financial Instruments section of the MD&A. The table below details the cost and fair value of Clairvest’s investee companies as at March 31, 2016 and 2015: March 31, 2016 March 31, 2015 Fair value Cost Difference Fair value Cost Difference CEP III CO‐INVEST INVESTMENTS Casino New Brunswick $ — $ — $ — $ 8,324 $ 9,798 $ [1,474] Chilean Gaming Holdings[1] 43,674 28,754 14,920 [2,403] 8,940 34,703 11,629 9,380 28,754 5,949 2,403 7,451 9,226 1,929 Light Tower Rentals LSNE CEP IV CO‐INVEST INVESTMENTS Centaur Gaming Cieslok County Waste CRS Davenport Land Investments Discovery Air Linen King MAG The Meadowlands Rivers Casino Winters Bros. of CT CEP V CO‐INVEST INVESTMENTS Accel Entertainment Digital Media Solutions Winters Bros. of LI Grey Eagle Casino[2] Wellington Financial — 16,017 68,672 10,640 11,981 22,009 2,858 30,685 — 5,600 8,551 26,202 9,907 12,646 7,987 10,927 14,076 20,852 2,403 7,077 4,015 7,308 10,573 2,196 32,243 — 3,838 5,580 7,508 8,053 12,910 8,254 8,236 11,017 14,631 14,644 54,028 50,355 14,644 35,711 4,015 3,396 6,625 4,673 7,411 8,210 11,436 16,984 662 3,465 [1,558] 33,036 — 1,762 2,971 18,694 1,854 [264] [267] 2,691 3,059 6,221 809 3,980 7,942 25,362 9,662 — — 9,713 2,709 6,690 10,573 3,059 29,606 2,525 2,787 5,580 7,508 8,053 — — 7,215 1 1,520 6,411 406 3,430 [1,716] 1,193 2,362 17,854 1,609 — — 2,498 2,708 3,694 18,069 14,375 323,284 189,240 134,044 261,743 165,037 96,706 Other investments 1,415 1,486 [71] 1,616 1,686 [70] $ 324,699 $ 190,726 $ 133,973 $ 263,359 $ 166,723 $ 96,636 [1] [2] Comprised CEP III Co‐Invest’s investment in Casino Marina del Sol, Casino Osorno and Casino Sol Calama. Fair value includes the portion owned directly by Clairvest and the portion owned indirectly through 2486303 Ontario. Fair value excludes the amount of $1.2 million which represents Clairvest’s 50% entitlement of the carried interest of CEP as described in the Transactions with Related Parties section of the MD&A. 10 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 The cost and fair value of these investee companies do not reflect foreign exchange gains or losses on the foreign exchange forward contracts entered into as economic hedges against the Company's foreign‐denominated investments which are described in note 14 to the consolidated financial statements. A discussion on the activity in each investee company held as at March 31, 2016 follows: INVESTMENTS MADE BY CEP III CO‐INVEST ALONGSIDE CEP III Casino New Brunswick As at March 31, 2015, CEP III Co‐Invest had invested $9.8 million in Casino New Brunswick in the form of debentures with a stated interest at a rate of 6% per annum. The interest, which had been waived between March 1, 2011 and December 31, 2012, had resumed effective January 1, 2013, with 45% of the interest payable in cash and the remaining 55% payable in‐kind. CEP III Co‐Invest also holds units of a limited partnership which operated Casino New Brunswick, which entitled CEP III Co‐Invest to 22.5% of the earnings of the casino until December 31, 2030. At March 31, 2015, CEP III Co‐ Invest’s carrying value of Casino New Brunswick was $8.3 million. During fiscal 2016, CEP III Co‐Invest completed the sale of Casino New Brunswick and received proceeds of $14.3 million. The proceeds included $10.9 million in full repayment of debentures and interest, as well as $3.4 million in distributions from the limited partnership which operated Casino New Brunswick. In addition, Clairvest received $0.5 million in fees related to a guarantee it had provided to Casino New Brunswick as described in note 15[i] to the consolidated financial statements. As part of the transaction, rather than an escrow holdback, Clairvest agreed to a net guarantee of $13.5 million to fund any valid claims made by the purchaser under the indemnity provisions of the sale for a specified period. Any funding pursuant to the guarantee will be allocated 25% to CEP III Co‐Invest and 75% to CEP III. Over the life of the investment, Clairvest and CEP III Co‐Invest received aggregate proceeds of $15.6 million against the original investment of $9.8 million. Chilean Gaming Holdings As at March 31, 2016 and 2015, CEP III Co‐Invest held 30,446,299 limited partnership units in Chilean Gaming Holdings, representing a 36.8% ownership interest on a fully diluted basis. During fiscal 2016, Chilean Gaming Holdings increased its ownership in each of Casino Osorno and Casino Sol Calama through a buyout of the operating partner of Casino Osorno and Casino Sol Calama by the entity which owns Casino Marina del Sol. Upon completion of the transaction, Chilean Gaming Holdings increased its ownership in each of Casino Osorno and Casino Sol Calama from 48.8% to 73.8%, and continues to hold a 50% ownership in Casino Marina del Sol. During fiscal 2016, CEP III Co‐Invest earned dividends totaling $0.5 million through its interest in Chilean Gaming Holdings, bringing total dividends earned to March 31, 2016 to $9.5 million. Also during fiscal 2016, management determined that the fair value of Chilean Gaming Holdings should be adjusted upward by $10.4 million. The fair value of $43.7 million as at March 31, 2016 compares to a fair value of $34.7 million at March 31, 2015 and a cost of $28.8 million. The increase in fair value was due to improved operating performance and the fair value is adjusted for foreign exchange fluctuations. Light Tower Rentals As at March 31, 2016 and 2015, CEP III Co‐Invest held 3,985,604 common shares in Light Tower Rentals, representing a 6.7% ownership interest on a fully diluted basis. As at March 31, 2016 and 2015, Light Tower Rentals had returned proceeds totaling US$37.9 million, or 4.7 times of the gross invested capital of US$8.1 million, to CEP III Co‐Invest through a series of transactions which occurred during fiscal 2015. During fiscal 2016, the fair value of Light Tower Rentals was adjusted downwards to nil. The fair value as at March 31, 2016 compares to a fair value of $11.6 million at March 31, 2015 and an adjusted cost of $2.4 million. 11 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 LSNE As at March 31, 2015, CEP III Co‐Invest held 6,406,000 Series A 10% cumulative preferred shares, 1,250,000 Series B 10% cumulative preferred shares and US$0.4 million in 10% demand promissory notes in LSNE. The Series A 10% cumulative preferred shares are convertible into a 12.3% ownership interest on a fully diluted basis at CEP III Co‐Invest’s discretion and dividends are forfeited on conversion. The Series B preferred shares are not convertible. In addition, Clairvest had advanced short‐term loans totaling $0.8 million to LSNE which were outstanding as at March 31, 2015. During fiscal 2016, LSNE repaid in full the US$0.4 million in demand promissory notes and its accrued interest. LSNE also repaid in full the short‐term loans which were advanced by Clairvest. As at March 31, 2016, CEP III Co‐Invest held 6,406,000 Series A 10% cumulative preferred shares and 1,250,000 Series B 10% cumulative preferred shares. Also during fiscal 2016, management determined that the fair value of LSNE should be adjusted upward by $6.3 million. The fair value of $16.0 million as at March 31, 2016 compares to a fair value of $9.4 million at March 31, 2015 and a cost of $7.1 million. The increase in fair value was due to improved operating performance and the fair value is adjusted for foreign exchange fluctuations. INVESTMENTS MADE BY CEP IV CO‐INVEST ALONGSIDE CEP IV Centaur Gaming As at March 31, 2016 and 2015, CEP IV Co‐Invest held US$13.6 million in term loans with stapled warrants which are convertible upon exercise to 9.9% of Class A and B units in Centaur Gaming. During fiscal 2016, management determined that the fair value of Centaur Gaming should be adjusted upward by $17.3 million. The fair value of $68.7 million as at March 31, 2016 compares to a fair value of $50.4 million at March 31, 2015 and a cost of $14.6 million. The increase in fair value was due to continuing growth in operating performance and reduced debt levels. The fair value is adjusted for foreign exchange fluctuations. Cieslok As at March 31, 2016 and 2015, CEP IV Co‐Invest owned 4,014,989 common shares in Cieslok, representing a 23.5% ownership interest on a fully diluted basis. During fiscal 2016, management determined that the fair value of Cieslok should be adjusted upward by $3.2 million. The fair value of $10.6 million as at March 31, 2016 compares to a fair value of $7.4 million at March 31, 2015 and a cost of $4.0 million. The increase in fair value was due to growth in operating performance. County Waste As at March 31, 2015, CEP IV Co‐Invest owned 6,482.28 Class B units in County Waste. During fiscal 2016, CEP IV Co‐Invest invested an additional US$0.5 million for 460.36 Class B units in County Waste. As at March 31, 2016, CEP IV Co‐Invest held 6,942.64 Class B units in County Waste representing a 12.5% ownership interest on a fully diluted basis. During fiscal 2016, management determined that the fair value of County Waste should be adjusted upward by $3.1 million. The fair value of $12.0 million as at March 31, 2016 compares to a cost of $7.3 million. The increase in fair value was due to growth in operating performance and the fair value is adjusted for foreign exchange fluctuations. CRS As at March 31, 2015, CEP IV Co‐Invest held 199,900 Class B units and 10,572,805 Class C units in CRS. During fiscal 2016, CEP IV Co‐Invest exercised its right to purchase Class B limited partnership units in CRS from a departing unitholder of CRS at a pre‐determined price. CEP IV Co‐Invest purchased 27,002 Class B units in CRS for $34 thousand which was funded by a return of capital from CRS. As at March 31, 2016, CEP IV Co‐Invest held 226,902 Class B units and 10,572,805 Class C units in CRS, representing a 13.6% ownership interest on a fully diluted basis. CEP III Co‐Invest has the right to receive proceeds equal to an additional 2.2% economic interest until it has received three times its invested 12 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 capital. June 22, 2016 Also during fiscal 2016, management determined that the fair value of CRS should be adjusted upward by $5.0 million. The fair value of $22.0 million as at March 31, 2016 compares to a fair value of $17.0 million at March 31, 2015 and a cost of $10.6 million. The increase in fair value was due to continuing growth in operating performance. Also during fiscal 2016, CEP IV Co‐Invest earned $0.5 million in distributions from CRS. As a result of CRS’ flow‐ through status for tax purposes, Clairvest incurred income tax obligations totaling $0.5 million as a result of its investment in CRS. Davenport Land Investments As at March 31, 2015, CEP IV Co‐Invest had invested $1.6 million in Davenport North and $0.9 million in Davenport South. CEP IV Co‐Invest had also advanced a US$0.6 million non‐interest bearing promissory note to a partner to help fund its 50% ownership in Davenport North. During fiscal 2016, Davenport South sold certain real estate and distributed pre‐tax proceeds of US$1.0 million to CEP IV Co‐Invest, bringing total distributions from Davenport South, on an after tax basis, to 110% of invested capital. As a result of CEP IV Co‐Invest’s investment in Davenport South requiring certain acquisition entities in the United States, CEP IV Co‐Invest, through its acquisition entities, incurred U.S. income tax obligations totaling $0.2 million during fiscal 2016. Also during fiscal 2016, the promissory note advanced by CEP IV Co‐Invest was amended such that interest accrues at a stated rate of 10% per annum commencing October 1, 2015. The fair value of $2.9 million as at March 31, 2016 compares to a cost of $2.2 million. The fair value is adjusted for foreign exchange fluctuations. Discovery Air As at March 31, 2015, CEP IV Co‐Invest held 10% secured convertible debentures ["Debentures"] with a principal amount of $22.0 million and a grossed accrued value of $29.2 million, and 19,337,975 common shares in Discovery Air. Clairvest also held 471,940 common shares in Discovery Air and had advanced $1.7 million in promissory notes bearing interest at 8.0% per annum. During fiscal 2016, the Discovery Air Investor Group invested an additional $1.4 million to acquire 4,546,260 common shares in Discovery Air, with CEP IV Co‐Invest and Clairvest investing $0.4 million and $10 thousand to acquire 1,420,825 and 34,675 common shares in Discovery Air respectively. As at March 31, 2016, CEP IV Co‐Invest and Clairvest collectively held 21,265,415 common shares in Discovery Air representing a 25.9% ownership interest on a fully diluted basis. The Discovery Air Investor Group collectively held 66,422,606 common shares in Discovery Air representing an 81.0% ownership interest on a fully diluted basis. Clairvest controls the voting of these common shares. At as March 31, 2016, the closing quoted market price of a Discovery Air common share was $0.21 per share. Also during fiscal 2016, the maturity date of the Debentures was extended from March 22, 2017 to September 30, 2017. As at March 31, 2016, the Debentures have a grossed accrued value of $32.1 million and are convertible into 2,775,218 common shares in Discovery Air at a conversion price of $11.56 per share. As at March 31, 2016, the grossed accrued value of the Debentures held by the Discovery Air Investor Group was $101.9 million. Also during fiscal 2016, Clairvest advanced an additional $7.4 million to Discovery Air in the form of 8% promissory notes, bringing total advances under these promissory notes to $9.1 million. Subsequently Discovery Air repaid $6.8 million of these promissory notes such that $2.3 million remained outstanding as at March 31, 2016. The maturity date of this $2.3 million promissory note was May 15, 2016 and which had subsequently been extended to September 15, 2016. Also during fiscal 2016, the Discovery Air Investor Group committed to advance up to $12.0 million to Discovery Air in the form of secured revolving credit facility with interest at 12% per annum on drawn amounts, $10.0 million of which may be drawn upon request and the remaining $2.0 million is subject to Clairvest’s consent. Interest is payable monthly and any drawn amounts under the facility is repayable in full on December 31, 2016. As at March 31, 2016, $7.0 million of this facility has been drawn. CEP IV Co‐Invest’s commitment of this secured revolving credit facility is $3.8 million, $2.2 million of which 13 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 has been drawn as at March 31, 2016. June 22, 2016 Also during fiscal 2016, Clairvest entered into a guarantee agreement with a lender of Discovery Air to support up to $10.0 million of its credit facility with a bank. The guarantee is callable by the lender under certain circumstances and should it be called, Clairvest will assume the lender’s security position that supports the loans provided by the lender. Clairvest intends to allocate any amounts called under this guarantee to CEP IV Co‐Invest, CEP IV and CEP IV‐A on a pro‐rata basis in accordance with their respective capital commitments in Clairvest Equity Partners IV. As at March 31, 2016, the total contingent exposure under this guarantee is $7.4 million, $2.0 million of which would be assumed by CEP IV Co‐Invest if called. Any additional guarantee is subject to Clairvest’s consent at its sole discretion. As at March 31, 2016, management determined that the fair value of CEP IV Co‐Invest’s investment in Discovery Air was $30.7 million, comprised $28.5 million on the Debentures and $2.2 million on the secured revolving credit facility. The common shares in Discovery Air were carried at nil. The aggregate fair value of $30.7 million as at March 31, 2016 compares to a cost of $32.2 million. In addition, Clairvest is carrying the $2.3 million promissory notes at accrued value in loans receivable. Linen King As at March 31, 2015, CEP IV Co‐Invest held 2,529,209 Class A units in Linen King representing a 21.7% ownership interest on a fully diluted basis. During fiscal 2016, CEP IV Co‐Invest realized on its investment in Linen King and received proceeds of $US0.6 million against its original investment of US$2.5 million. MAG As at March 31, 2015, CEP IV Co‐Invest held 26,499 Class A stock in MAG. The Class A stock have a stated dividend rate of 10% per annum and each Class A stock is convertible into 1.0114 common stock of MAG at CEP IV Co‐Invest’s discretion and dividends are forfeited on conversion. During fiscal 2016, CEP IV Co‐Invest invested an additional US$0.8 million to acquire 6,237 Class A stock in MAG. As at March 31, 2016, CEP IV Co‐Invest held 32,736 Class A stock in MAG, representing a 10.3% ownership interest on a fully‐ diluted basis. The fair value of $5.6 million as at March 31, 2016 compares to a cost of $3.8 million, with the difference being attributable to accrued dividends on the Class A stock and is adjusted for foreign exchange fluctuations. Additionally, Clairvest had advanced working capital loans totaling $1.0 million to a Canadian subsidiary of MAG ["MAG Canada"] which is included in loans receivable. The Meadowlands As at March 31, 2016 and 2015, CEP IV Co‐Invest held US$5.4 million in secured convertible debentures in the Meadowlands which accrue interest at a rate of 15% per annum, 10% of which is payable quarterly in cash and 5% accrued quarterly. CEP IV Co‐Invest also held warrants which entitle it to invest in equity securities of the Meadowlands subject to certain conditions. During fiscal 2016, CEP IV Co‐Invest agreed to the entire 15% interest to be entirely payable in‐kind for a period commencing January 1, 2016. The fair value of $8.6 million as at March 31, 2016 compares to a fair value of $7.9 million at March 31, 2015 and a cost of $5.6 million. The fair value is adjusted for foreign exchange fluctuations. Rivers Casino As at March 31, 2016 and 2015, CEP IV Co‐Invest held 9,021,917 units in Rivers Casino representing a 5.0% ownership on a fully diluted basis. During fiscal 2016, CEP IV Co‐Invest earned $4.9 million in quarterly distributions and $0.6 million in quarterly fees from Rivers Casino. As a result of CEP IV Co‐Invest’s investment in Rivers Casino requiring certain acquisition entities in the 14 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 United States, CEP IV Co‐Invest, through its acquisition entities, incurred U.S. income tax obligations totaling $1.8 million during fiscal 2016. The fair value of $26.2 million as at March 31, 2016 compares to a fair value of $25.4 million at March 31, 2015 and a cost of $7.5 million. The fair value is adjusted for foreign exchange fluctuations. Winters Bros. of CT As at March 31, 2016 and 2015, CEP IV Co‐Invest owned 76,284.8 Class C units in Winters Bros. of CT, representing a 13.4% ownership interest on a fully diluted basis. The fair value of $9.9 million as at March 31, 2016 compares to a fair value of $9.7 million at March 31, 2015 and a cost of $8.1 million. The fair value is adjusted for foreign exchange fluctuations. INVESTMENTS MADE BY CEP V CO‐INVEST ALONGSIDE CEP V Accel Entertainment During fiscal 2016, CEP V Co‐Invest invested US$9.7 million to acquire 283,478 Class D preferred shares in Accel Entertainment, representing a 9.3% ownership interest on a fully diluted basis. Subject to post‐closing adjustments, CEP V Co‐Invest’s investment may be increased up to US$12.1 million. The fair value of $12.6 million as at March 31, 2016 compares to a cost of $12.9 million. The fair value is adjusted for foreign exchange fluctuations. Digital Media Solutions During fiscal 2016, CEP V Co‐Invest invested US$6.2 million to acquire 6,150,000 Class B units in Digital Media Solutions, representing a 13.9% ownership interest on a fully diluted basis. The Class B units are entitled to certain preference over all other equity units in Digital Media Solutions. The fair value of $8.0 million as at March 31, 2016 compares to a cost of $8.3 million. The fair value is adjusted for foreign exchange fluctuations. Winters Bros. of LI As at March 31, 2015, CEP V Co‐Invest held 1,398,507 Class C units in Winters Bros. of LI. During fiscal 2016, CEP V Co‐Invest invested an additional US$0.5 million to acquire 89,266 Class C units in Winters Bros. of LI. Also during fiscal 2016, CEP V Co‐Invest invested US$0.3 million for 256,037 units of WBLI II, LLC [“WBLI II”], an affiliated company of Winters Bros. of LI which is owned proportionately by the same unitholders of Winters Bros. of LI. As at March 31, 2016, Clairvest held 1,487,773 Class C units of Winters Bros. of LI and 256,037 units of WBLI II, representing a 14.0% ownership interest on a fully diluted basis in the respective entities. The fair value of $10.9 million as at March 31, 2016 compares to a cost of $8.2 million. The fair value is adjusted for foreign exchange fluctuations. OTHER INVESTMENTS Grey Eagle Casino As at March 31, 2015, Clairvest held units in a limited partnership which operates Grey Eagle Casino, entitling Clairvest between 2.8% and 9.6% of the earnings of the casino until December 18, 2022. During fiscal 2016, 2486303 Ontario, a wholly owned acquisition entity of Clairvest, invested $11.0 million to increase its equity participation interest in Grey Eagle Casino through the purchase of CEP. The purchase included 100% of the limited partnership units of CEP for $9.8 million and 50% of the limited partnership units of CEP GP, the entity that earns the carried interest from CEP, for $1.2 million. The purchase entitles 2486303 Ontario to 8.5% to 28.7% of the earnings of Grey Eagle Casino until December 18, 2022. During fiscal 2016, Clairvest earned $0.9 million and 2486303 Ontario earned $1.1 million in equity distributions 15 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 from Grey Eagle Casino. June 22, 2016 The aggregate fair value of $14.1 million as at March 31, 2016 compares to a cost of $11.0 million. Wellington Financial As at March 31, 2015, Clairvest had funded $14.4 million of its $25.2 million limited partner commitment in WF Fund IV Limited Partnership [“Wellington Fund IV”]. Clairvest also has an interest in the general partner of various Wellington Financial funds and retained residual limited partner interest in WF Fund III Limited Partnership [“Wellington Fund III”]. During fiscal 2016, Clairvest funded an additional $0.4 million to Wellington Fund IV bringing total amount funded to $14.8 million. Subsequently, Clairvest committed $30.3 million to WF Fund V Limited Partnership [“Wellington Fund V”], a $300 million successor fund to Wellington Fund IV. In conjunction with the raising of Wellington Fund V, Wellington Fund V purchased Wellington Fund IV’s loan portfolio at fair market value. As result of these transactions, Clairvest received a return of capital of $14.8 million from Wellington Fund IV and funded $14.6 million in Wellington Fund V. As at March 31, 2016, Clairvest had funded $14.6 million of its $30.3 million limited partner commitment to Wellington Fund V, representing a 10.1% ownership interest in Wellington Fund V. Clairvest is also entitled to participate in the profits received by the general partner of various Wellington Financial funds, and holds a residual limited partner interest in Wellington Fund III and Wellington Fund IV. As at March 31, 2016, Clairvest had received distributions from Wellington Financial totaling $26.6 million. The fair value of $20.9 million as at March 31, 2016 reflects management's estimated realizable value of Clairvest's entitlement as a limited partner of various Wellington Financial funds and general partner interest in Wellington Financial. LIABILITIES As at March 31, 2016, Clairvest had $84.7 million in total liabilities, which included $6.9 million in accrued management and director compensation, $17.1 million in share‐based compensation, $44.0 million in management participation and $14.1 million in deferred tax liability. $47.5 million of these liabilities were payable only upon the cash realization of certain investments of Clairvest or the CEP Funds. 16 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 FINANCIAL RESULTS June 22, 2016 Clairvest's operating results reflect revenue earned from its corporate investments and cash, cash equivalents and temporary investments and realized gains and net changes in unrealized gains and losses on its corporate investments. These results are net of all costs incurred to manage these assets. Net income for the year ended March 31, 2016 was $40.0 million compared with net income of $52.0 million for the year ended March 31, 2015. The following table summarizes the composition of net income for the years ended March 31: Financial Results Year ended March 31, [$000's, except number of shares and per share amounts] 2016 2015 Net investment gains [losses] - - Investee companies inclusive of foreign exchange hedging activities $ 32,577 $ 55,391 Acquisition entities including distributions, interest, dividends and fees received from investee companies and net of distributions or dividends made to Clairvest 5,005 [17,920] 37,582 37,471 Distributions, interest income, dividends and fees - - - - CEP Funds Investee companies Treasury funds[1] Acquisition entities and other Net carried interest income – realized and unrealized changes Total expenses, excluding income tax Net income before tax Income tax Net income and comprehensive income Net income and comprehensive income per share Net income and comprehensive income per share ‐ fully diluted [1] Includes market value changes to Clairvest’s treasury funds 9,955 6,548 517 4,259 21,279 16,101 31,735 43,227 3,261 39,966 2.63 2.63 8,580 3,628 1,227 22,060 35,495 31,361 49,035 55,292 3,287 52,005 3.43 3.43 The Company fair values its acquisition entities which hold Clairvest’s investee companies as well as other assets and liabilities. Distributions, interest, dividends and fees earned from and realized gains and net changes in unrealized gains on the investee companies held by acquisition entities, including foreign exchange fluctuations and the hedging activities related to managing the foreign currency exposure of these investments, are reflected in net investment gains until the proceeds are distributed out of acquisition entities, at which point the Company would record a distribution or a dividend from acquisition entities and reverse the net investment gains or losses which had previously been recorded. During fiscal 2016, CEP III Co‐Invest completed the sale of Casino New Brunswick and distributed substantially all of the proceeds to its unitholders. As a result, Clairvest recorded $3.7 million in distributions received from CEP III Co‐Invest. During fiscal 2015, CEP III Co‐Invest completed the sale of Kubra Data Transfer Limited and a recapitalization of Light Tower Rentals, Inc. Clairvest recorded $16.8 million in net distributions from CEP III Co‐Invest subsequent to these realizations and recorded a corresponding net investment loss on the revaluation of CEP III Co‐Invest subsequent to the distribution. The net changes in unrealized gains or losses on investee companies for the years ended March 31, excluding the impact of foreign exchange hedging activities, are summarized as follows: 17 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 Net changes in unrealized gains [losses] on investee companies Year ended March 31, [$000's] Casino New Brunswick[1] Centaur Gaming Cieslok Chilean Gaming Holdings County Waste CRS Davenport Land Investments Discovery Air Grey Eagle Casino Light Tower Rentals LSNE MAG Rivers Casino Wellington Financial Winters Bros. of LI[2] Other investments June 22, 2016 2016 2015 $ — $ 3,917 17,251 3,228 10,433 3,068 5,025 222 [4,993] 268 [11,531] 6,277 483 165 2,528 — 32,424 5,270 3,396 4,915 — 4,480 — [3,008] 579 50 — 306 538 1,954 2,400 24,797 1 [82] Net changes in unrealized gains on corporate investments $ 32,425 $ 24,715 [1] [2] Casino New Brunswick was realized during fiscal 2016. The net changes in unrealized gains for Winters Bros. of LI during fiscal 2015 was the result of Clairvest’s entitlement to MIP V’s investment as described in note 4[i] to the consolidated financial statements. During fiscal 2016, CEP III Co‐Invest recorded $1.5 million in realized gains as a result of the completed the sale of Casino New Brunswick and recorded $1.3 million in cost on the foreign exchange hedging activities. During fiscal 2015, CEP III Co‐Invest recorded $31.3 million in realized gains as a result of the completed the sale of Kubra Data Transfer Limited and a recapitalization of Light Tower Rentals, Inc. and recorded $0.6 million in cost on the foreign exchange hedging activities. The Company and its acquisition entities also receive distributions, interest, dividends or fees from various investee companies. The following table summarizes the income earned by the Company and its acquisition entities for the years ended March 31: 18 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 Distributions, Interest, Dividends, and Fees from Investee Companies Year ended March 31, [$000's] Distributions and interest income Casino New Brunswick Centaur Gaming County Waste CRS Davenport Land Investments Discovery Air Grey Eagle Casino LSNE MAG The Meadowlands Rivers Casino Wellington Financial Dividend income Chilean Gaming Holdings Other Advisory and other fees June 22, 2016 2016 2015 $ 1,136 $ 282 59 — 465 378 253 1,957 196 69 1,203 4,896 3,375 38 113 408 108 2,111 800 — 49 968 4,483 1,439 13,987 10,799 501 25 526 981 — 981 2,556 1,870 Distributions, interest, dividends and fees from investee companies $ 17,069 $ 13,650 The Company also receives distributions, fees and interest from the CEP Funds as described in the Transaction with Related Parties section of the MD&A. During fiscal 2016, the Company earned $7.8 million in general partner distributions, $0.8 million in management fees and $1.4 million in interest from the CEP Funds, compared with $6.9 million in general partner distributions, $0.6 million in management fees and $1.1 million in interest from the CEP Funds during fiscal 2015. Acquisition entities of Clairvest also earned $0.9 million in interest from the CEP Funds during fiscal 2016, and $0.1 million in interest from the CEP Funds during fiscal 2015. Also included in distributions and interest income was income on treasury funds of $0.5 million. Income from treasury funds for the year ended March 31, 2016 included unrealized losses of $1.8 million on the US$7.5 million Light Tower Rentals corporate bonds purchased under Clairvest’s treasury portfolio. During fiscal 2015, income on treasury funds of $1.2 million included unrealized losses of $1.5 million on the US$7.5 million Light Tower Rentals corporate bonds net of $0.9 million of unrealized gains on Centaur Gaming second lien loans purchased under Clairvest’s treasury portfolio. Acquisition entities of Clairvest earned interest from its treasury funds totaling $0.4 million during fiscal 2016 and 2015. The Company also earns carried interest income from the CEP Funds, as described in the Transaction with Related Parties section of the MD&A. The following table summarizes net carried interest income earned by the Company for the years ended March 31: 19 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 Net carried interest income Year ended March 31, [$000's] Realized carried interest from the CEP Funds Net change in unrealized carried interest from the CEP Funds Net carried interest income June 22, 2016 2016 2015 $ 5,708 $ 33,991 10,393 [2,630] $ 16,101 $ 31,361 Total expenses for the year were $31.7 million, compared with $49.0 million for the year ended March 31, 2015. The following table summarizes expenses incurred by the Company for the years ended March 31: Total Expenses, excluding Income Taxes Year ended March 31, [$000's] Employee compensation and benefits[1] Share‐based compensation expenses Administration and other expenses Domain and due diligence expenses[2] Professional fees [recovered] Office and other expenses Finance and foreign exchange expense Interest and bank charges Foreign exchange loss [gain] Management participation Total expenses, excluding income taxes 2016 2015 $ 10,025 $ 14,822 6,264 120 740 3,348 4,208 871 [736] 8,566 1,024 [303] 3,201 3,922 1,126 240 135 1,366 11,103 20,359 $ 31,735 $ 49,035 [1] [2] Year ended March 31, 2015 included $4.8 million in management compensation paid upon the closing of CEP V. Domain and due diligence expenses with respect to investments made alongside CEP V and CEP V‐A are allocated to CEP V Co‐Invest. These expenses are therefore included in the fair value determination of Clairvest’s acquisition entities. Included in share‐based compensation expenses for the year ended March 31, 2016 was $0.8 million for stock based compensation and $5.5 million for appreciation of book value appreciation rights ["BVARs"], compared to $2.3 million for stock based compensation, $4.9 million for appreciation of BVARs and $1.4 million for appreciation of DSUs and ADSUs for the year ended March 31, 2015. Refer to notes 2[h], 2[i], 2[j] and 12 to the consolidated financial statements for details of these compensation plans. Management participation is further described in the Transaction with Related Parties section of the MD&A. 20 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 SUMMARY OF QUARTERLY RESULTS [$000's except per share information] March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 Gross Revenue $ 27,878 18,279 8,072 20,733 32,524 4,330 45,432 22,041 Net Income [Loss] $ 17,265 11,930 2,882 7,889 19,009 [2,907] 26,362 9,541 June 22, 2016 Net Income [Loss] Per Common Share* $ 1.14 Net Income Per Common Share Fully Diluted* $ 1.14 0.78 0.19 0.52 1.25 [0.19] 1.74 0.63 0.78 0.19 0.52 1.25 [0.19] 1.74 0.60 * The sum of quarterly net income [loss] per common share may not equal to the full year net income per common share due to rounding and the dilutive effect on any quarters which may not be applicable for the full year. Significant variations arise in the quarterly results due to net investment gains, net carried interest income and management participation which are re‐valued on a quarterly basis when conditions warrant an adjustment to the fair value of the corporate investments and due to realizations, and share‐based compensation due to the movement in the trading price and book value of Clairvest's common shares. FOURTH QUARTER RESULTS Net income for the fourth quarter of fiscal 2016 was $17.3 million compared with a net income of $19.0 million for the fourth quarter of fiscal 2015. Gross revenue for the fourth quarter of fiscal 2016 was $27.9 million compared with $32.5 million for the fourth quarter of fiscal 2015. Expenses before income tax for the fourth quarter of fiscal 2016 were $9.3 million compared to $10.5 million for the fourth quarter of fiscal 2015. The Company incurred $1.3 million in tax expense during the fourth quarter of fiscal 2016, compared to $3.0 million in tax expense for the same quarter last year. Gross revenue for the fourth quarter of fiscal 2016 comprised $14.6 million of net investment gains, $5.1 million of distributions, interest, dividends and fees, and $8.2 million of net carried interest income. This compares with net investment gains of $2.6 million, $21.3 million of distributions, interest, dividends and fees and 8.5 million of net carried interest income for the fourth quarter of fiscal 2015. The net investment gains of $14.6 million for the fourth quarter of fiscal 2016 resulted from $13.7 million in net unrealized gains from Clairvest’s investee companies inclusive of foreign exchange hedging activities and $0.9 million from Clairvest’s acquisition entities. This compared with $18.4 million in net unrealized gains from Clairvest’s investee companies inclusive of foreign exchange hedging activities net of $15.8 million in net unrealized losses from Clairvest’s acquisition entities for the fourth quarter of fiscal 2015. The net unrealized losses from Clairvest’s acquisition entities were the result of distributions made by CEP III Co‐Invest during the fourth quarter of fiscal 2015. Distributions, interest, dividends and fees for the quarter included income on treasury funds of $0.7 million, general partner distributions and interest earned from the CEP Funds of $3.0 million, distributions and interest earned from investee companies of $0.9 million and $0.5 million from acquisition entities. This compared with $1.2 million in income on treasury funds, $2.2 million earned from the CEP Funds, $1.3 million earned from investee companies and $16.6 million in distributions from Clairvest’s acquisition entities for the same quarter last year. Net carried interest income of $8.2 million for the fourth quarter of fiscal 2016 comprised entirely of unrealized carried interest payable by the CEP Funds. Net carried interest income of $8.5 million for the fourth quarter of fiscal 2015 comprised of $8.3 million in unrealized carried interest payable by the CEP Funds and $0.2 million in realized carried interest 21 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 from CEP. Net carried interest income from the CEP Funds is further described in the Transaction with Related Parties section of the MD&A. Expenses for the fourth quarter of fiscal 2016 included $3.8 million of management and director compensation expenses, $5.4 million of management participation, $0.6 million in administrative expenses, and $0.4 million in finance and foreign exchange expense recoveries. This compares with $3.1 million of management and director compensation expenses, $6.0 million of management participation, $1.2 million in administrative expenses and $0.2 million in finance and foreign exchange expenses for the fourth quarter of fiscal 2015. Management participation is further described in the Transaction with Related Parties section of the MD&A. UPDATED SHARE INFORMATION As at March 31, 2016 and June 22, 2016, Clairvest had 15,214,095 common shares issued and outstanding. As at March 31, 2016 and June 22, 2016, there were no stock options outstanding. During fiscal 2016 and up to June 22, 2016, Clairvest did not purchase or cancel any common shares under its current and previous normal course issuer bids. As at June 22, 2016, Clairvest had repurchased a total of 6,595,049 common and non‐ voting shares for total consideration of $68.3 million over the last twelve years. During fiscal 2016, 555,000 options were exercised, 80,000 of which were exercised for shares, increasing share capital by $2.3 million. The remaining 475,000 were exercised under the cash settlement plan and had no impact on share capital. Clairvest paid an ordinary dividend of $0.10 per share on the common shares in each of fiscal 2016 and, fiscal 2015 and fiscal 2014. During fiscal 2016, and 2015 and 2014, Clairvest also paid a special dividend of $0.1958 and, $0.1492 and $0.1312 per share respectively. Subsequent to year end, Clairvest declared an annual ordinary dividend of $0.10 per share, and a special dividend of $0.2191 per share. The dividends will be payable to common shareholders of record as of July 6, 2016. The dividend will be paid on July 22, 2016. Both dividends are eligible dividends for Canadian income tax purposes. CRITICAL ACCOUNTING ESTIMATES For a discussion of all significant accounting policies, refer to Note 2 of the notes to the consolidated financial statements. Fair value of financial instruments When a financial asset or liability is initially recognized, its fair value is generally the value of consideration paid or received. Acquisition costs relating to corporate investments are not included as part of the cost of the investment. Subsequent to initial recognition, the fair value of an investment quoted on an active market, the fair value is generally the bid price on the principal exchange on which the investment is traded. Investments that are escrowed or otherwise restricted on sale or transfer are recorded at amounts at fair values which take into account the escrow terms or other restrictions. In determining the fair value for such investments, the Company considers the nature and length of the restriction, business risk of the investee company, its stage of development, market potential, relative trading volume and price volatility and any other factors that may be relevant to the ongoing and realizable value of the investments. The amounts at which Clairvest’s publicly‐ traded investments could be disposed of may differ from this fair value and the differences could be material. Differences could arise as the value at which significant ownership positions are sold is often different than the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Estimated costs of disposition are not included in the fair value determination. In the absence of an active market, the fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, the general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, private market transactions multiples and, where applicable, other pertinent 22 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which Clairvest's privately‐held investments could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination. In determining the fair value of public company warrants, for which the underlying security is traded on a recognized securities exchange, and if there are sufficient and reliable observable market inputs, including exercise price and term of the warrants, market interest rate, and current market price, expected dividends and volatility of the underlying security, a valuation technique is used. If market inputs are insufficient or unreliable, the warrants are valued at intrinsic value, which is equal to the higher of the closing bid price of the underlying security less the exercise price of the warrant, or nil. For private company warrants, the underlying security for which is not traded on a recognized securities exchange, the fair value is determined consistently with other investments which do not have an active market as described above. A change to an estimate with respect to Clairvest’s privately‐held corporate investments or publicly‐traded corporate investments would impact corporate investments and net investment gains. Recognition of carried interest and corresponding expenses The Company carries unrealized carried interest receivable on its consolidated statements of financial position which are based on the fair values of the financial instruments held by the CEP Funds. As discussed previously, fair values of certain financial instruments are determined using valuation techniques and by their nature, the use of estimates and assumptions. Changes in the underlying estimates and assumptions could materially impact the determination of the fair value of these financial instruments. Imprecision in determining fair value using valuation techniques may affect the calculation of unrealized carried interest receivable and the resulting accrued liabilities for future payouts relating to these unrealized carried interest at the statement of financial position date. Deferred income taxes The process of determining deferred income tax assets and liabilities requires management to exercise judgment while considering the anticipated timing of disposal of corporate investments, and proceeds thereon, tax planning strategies, changes in tax laws and rates, and loss carryforwards. Deferred income tax assets are only recognized to the extent that in the opinion of management, it is more likely than not that the deferred income tax asset will be realized. A change to an accounting estimate with respect to deferred income taxes would impact deferred tax liability and income tax expense. TRANSACTIONS WITH RELATED PARTIES The general partner of CEP ["CEP GP"], an entity which is controlled by Clairvest, is entitled to participate in distributions made by CEP equal to 20% of net gains [the "carried interest"] of CEP as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% was allocated to principals and employees of Clairvest via a limited partnership ["Participation Partnership"], the general partner of which is Clairvest. During fiscal 2016, CEP GP earned $0.3 million in carried interest from CEP, 50% of which or $0.2 million was ultimately paid to Clairvest, and the other 50% or $0.2 million was ultimately paid to the limited partners of Participation Partnership, which reduced the management participation liability. Subsequently, 2486303 Ontario purchased the 10% carried interest entitled by Participation Partnership for $1.2 million which reduced the management participation liability. As at March 31, 2016, CEP had declared and paid distributions to CEP GP totaling $23.6 million, 50% of which or $11.8 million was ultimately paid to Clairvest and the other 50% or $11.8 million was ultimately paid to the limited partners of Participation Partnership. As at March 31, 2016, if CEP were to sell all of its corporate investments at their current fair values, CEP GP would receive up to $2.4 million in carried interest from CEP. In accordance with IFRS, Clairvest has recorded the $2.4 million as carried interest receivable on the consolidated statements of financial position, with a $1.2 million payable owed to 2486303 Ontario. 23 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 As a general partner of CEP III, Clairvest is entitled to a priority distribution from CEP III. From January 13, 2011, the priority distribution is calculated monthly as 0.1667% of invested capital net of write‐downs of capital then invested. The priority distribution is reduced to the extent of 75% of any fees earned by Clairvest from corporate investments of CEP III. During fiscal 2016, CEP III declared to Clairvest priority distributions of $1.2 million. As per the limited partnership agreement, fees of $0.2 million from corporate investments of CEP III were netted against the priority distributions. The general partners of CEP III ["CEP III GPs"] are entitled to a 20% carried interest in respect of CEP III as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP III, the general partner of which is Clairvest and the limited partners of which are principals and employees of Clairvest. The limited partners of MIP III have purchased, at fair market value, units of the MIP III. From time to time, additional units in MIP III may be purchased by the limited partners of MIP III. During fiscal 2016, CEP III GPs earned $5.4 million in carried interest from CEP III, 50% of which, or $2.7 million, was ultimately paid to Clairvest, and the other 50% or $2.7 million was ultimately paid to the limited partners of MIP III which reduced the management participation liability. As at March 31, 2016, CEP III had declared and paid distributions to CEP III GPs totaling $38.7 million, 50% of which, or $19.4 million, was ultimately paid to Clairvest and the other 50% or $19.4 million was ultimately paid to the limited partners of MIP III. As at March 31, 2016, if CEP III were to sell all of its corporate investments at their current fair values, CEP III GPs would receive up to $17.9 million in carried interest from CEP III. In accordance with IFRS, Clairvest has recorded the $17.9 million as carried interest receivable on the consolidated statements of financial position, with the 50% entitlement that will be ultimately paid to the limited partners of MIP III, or $9.0 million recorded as a management participation liability on the consolidated statements of financial position. Clairvest is required to co‐invest alongside CEP III in all investments undertaken by CEP III. CEP III Co‐Invest was established in fiscal 2007 as the investment vehicle for this purpose. CEP III Co‐Invest has three limited partners, Clairvest, 2141788 Ontario and MIP III. MIP III has invested $1.1 million in CEP III Co‐Invest and in addition is entitled to an 8.25% carried interest in respect of CEP III Co‐Invest via the general partner of CEP III Co‐Invest, an entity controlled by Clairvest. Clairvest is entitled to the first $0.2 million in carried interest received by MIP III, and the remaining carried interest represents the entitlements of the limited partners of MIP III. During fiscal 2016, CEP III Co‐Invest paid $0.7 million to MIP III with respect to this carried interest entitlement. As at March 31, 2016, CEP III Co‐Invest had declared and paid distributions totaling $4.8 million to MIP III. As at March 31, 2016, if CEP III Co‐Invest were to sell its corporate investments at their current fair values, the limited partners of MIP III would receive up to $4.5 million in carried interest from CEP III Co‐Invest based on the terms described above, the amount of which has been recorded as a management participation liability on the consolidated statements of financial position. Clairvest, as the general partner of MIP III, is also entitled to participate in distributions equal to the realizable value on the $1.1 million invested by MIP III in CEP III Co‐Invest. As at March 31, 2016, $1.9 million has been received by Clairvest. As general partner of CEP IV, Clairvest is entitled to a priority distribution from CEP IV. From January 14, 2011 to January 13, 2016, the priority distribution is calculated monthly as 0.1667% of committed capital, and thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The priority distribution is reduced to the extent of 63.2% of any fees earned by Clairvest from corporate investments of CEP IV. During fiscal 2016, CEP IV declared to Clairvest priority distributions of $4.8 million. As per the limited partnership agreement, fees of $0.6 million from corporate investments of CEP IV were netted against the priority distributions. The general partners of CEP IV ["CEP IV GPs"] are entitled to a 20% carried interest in respect of CEP IV as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP IV, the general partner of which is Clairvest and the limited partners of which are principals and employees of Clairvest. The limited partners of MIP IV have purchased, at fair market value, units of the MIP IV. From time to time, additional units in MIP IV may be purchased by the limited partners of MIP IV. No carried interest has been declared and paid by CEP IV to CEP IV GPs as at March 31, 2016. As at March 31, 2016, if CEP IV were to sell all of its corporate investments at their current fair values, CEP IV GPs would receive up to $36.2 million in carried interest from CEP IV. In accordance with IFRS, Clairvest has recorded the 24 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 $36.2 million as carried interest receivable on the consolidated statements of financial position, with the 50% entitlement that will be ultimately paid to the limited partners of MIP IV, or $18.1 million, recorded as a management participation liability on the consolidated statements of financial position. As manager of CEP IV‐A, Clairvest is entitled to a management fee from CEP IV‐A. From January 14, 2011 to January 13, 2016, the management fee is calculated monthly as 0.1667% of committed capital, and thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The management fee is reduced to the extent of 10.1% of fees earned by Clairvest from corporate investments of CEP IV‐A and other amounts as provided in the limited partnership agreement. During fiscal 2016, Clairvest earned management fees of $0.6 million as compensation for its services in the administration of the portfolio of CEP IV‐A. As per the limited partnership agreement, fess of $0.3 million from corporate investments of CEP IV‐A were netted against the management fees. The general partner of CEP IV‐A ["CEP IV‐A GP"], an entity which is controlled by Clairvest, is entitled to a 20% carried interest in respect of CEP IV‐A as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP IV. No carried interest has been declared and paid by CEP IV‐A to CEP IV‐ A GP as at March 31, 2016. As at March 31, 2016, if CEP IV‐A were to sell all of its corporate investments at their current fair values, CEP IV‐A GP would receive up to $7.5 million in carried interest from CEP IV‐A. In accordance with IFRS, Clairvest has recorded the $7.5 million as carried interest receivable on the consolidated statements of financial position, with the 50% entitlement that will be ultimately paid to the limited partners of MIP IV, or $3.7 million recorded as a management participation liability on the consolidated statements of financial position. Clairvest is required to co‐invest alongside CEP IV and CEP IV‐A in all investments undertaken by CEP IV and CEP IV‐ A. CEP IV Co‐Invest was established in fiscal 2010 as the investment vehicle for this purpose. CEP IV Co‐Invest has two limited partners, Clairvest and MIP IV. MIP IV has invested $1.6 million in CEP IV Co‐Invest and in addition is entitled to an 8.25% carried interest in respect of CEP IV Co‐Invest via the general partner of CEP IV Co‐Invest, an entity controlled by Clairvest. Clairvest is entitled to the first $0.4 million in carried interest received by MIP IV, and the remaining carried interest represents the entitlements of the limited partners of MIP IV. As at March 31, 2016, if CEP IV Co‐Invest were to sell all of its corporate investments at their current fair values, MIP IV would receive up to $8.7 million in carried interest from CEP IV Co‐Invest based on the terms described above, the amount of which has been recorded as a management participation liability on the statements of financial position. To date, CEP IV Co‐Invest has not made any carried interest payments to MIP IV. Clairvest, as general partner of MIP IV, is also entitled to participate in distributions equal to the realizable value on the $1.6 million invested by MIP IV in CEP IV Co‐Invest. No amounts have been received by Clairvest as at March 31, 2016. As general partner of CEP V, Clairvest is entitled to a priority distribution from CEP V. The priority distribution is calculated monthly as follows: [i] from March 2, 2015 to January 13, 2016, 0.1667% of capital allocated to specifically identifiable investments net of any write‐downs of capital invested; [ii] from January 14, 2016 to January 13, 2021, 0.1667% of committed capital; and [iii] thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The priority distribution is reduced to the extent of 58.8% of any fees earned by Clairvest from corporate investments of CEP V. During fiscal 2016, CEP V declared to Clairvest priority distributions of $1.8 million. As per the limited partnership agreement, fees of $27 thousand from corporate investments of CEP V were netted against the priority distributions. The general partners of CEP V ["CEP V GPs"] are entitled to a 20% carried interest in respect of CEP V as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP V, the general partner of which is Clairvest and the limited partners of which are principals and employees of Clairvest. The limited partners of MIP V have purchased, at fair market value, units of the MIP V. From time to time, additional units in MIP V may be purchased by the limited partners of MIP V. No carried interest has been declared and paid by CEP V to CEP V GPs as at March 31, 2016. As manager of CEP V‐A, Clairvest is entitled to a management fee from CEP V‐A. The management fee is calculated monthly as follows: [i] from March 2, 2015 to January 13, 2016, 0.1667% of capital allocated to specifically identifiable 25 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 investments net of any write‐downs of capital invested; [ii] from January 14, 2016 to January 13, 2021, 0.1667% of committed capital; and [iii] thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The management fee is reduced to the extent of 11.2% of fees earned by Clairvest from corporate investments of CEP V‐A and other amounts as provided in the limited partnership agreement. During fiscal 2016, Clairvest earned management fees of $0.3 million as compensation for its services in the administration of the portfolio of CEP V‐A. As per the limited partnership agreement, fees of $5 thousand from corporate investments of CEP V‐A were netted against the management fees. The general partner of CEP V‐A ["CEP V‐A GP"], an entity which is controlled by Clairvest, is entitled to a 20% carried interest in respect of CEP V‐A as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP V. No carried interest has been declared and paid by CEP V‐A to CEP V‐A GP as at March 31, 2016. Clairvest is required to co‐invest alongside CEP V and CEP V‐A in all investments undertaken by CEP V and CEP V‐A. CEP V Co‐Invest was established in fiscal 2015 as an investment vehicle for this purpose. CEP V Co‐Invest has three limited partners, Clairvest, 2141788 Ontario and MIP V. MIP V has invested $2.4 million in CEP V Co‐Invest and in addition is entitled to an 8.25% carried interest in respect of CEP V Co‐Invest via the general partner of CEP V Co‐Invest, an entity controlled by Clairvest. Clairvest is entitled to the first $1.4 million in carried interest received by MIP V, and the remaining carried interest represents the entitlements of the limited partners of MIP V. Clairvest, as the general partner of MIP V, is also entitled to participate in distributions equal to the realizable value on the $2.4 million invested by MIP V in CEP V Co‐Invest. No amounts have been received by Clairvest as at March 31, 2016. Key management at Clairvest are the Co‐Chief Executive Officers ["Co‐CEOs"] and its directors. The Co‐CEOs are entitled to annual discretionary cash bonuses of up to 175% of their individual annual salary based on individual performance. There is also an annual objective cash bonus which is based on Clairvest’s Incentive Bonus Program, a stock option plan and a book value appreciation rights ["BVAR"] plan. Annual salaries and compensation under these plans paid to the co‐CEOs during fiscal 2016 was $12.2 million. As at March 31, 2016, the total amounts payable to the co‐CEOs under the aforementioned plans were $3.4 million. Compensation paid to the directors of Clairvest under its Deferred Share Units [“DSU”] plan and its Appreciation Deferred Share Units [“ADSU”] plan during fiscal 2016 was $0.4 million. As at March 31, 2016, the total amounts payable to the directors of Clairvest under the BVAR, DSU and ADSU plans were $9.8 million. As at March 31, 2016, Clairvest had loans receivable from certain officers of Clairvest [the "Officers"] totaling $2.3 million. The loans are interest bearing, have full recourse to the individual and are collateralized by the common shares of Clairvest owned by the Officers with a market value of $2.9 million. None of these loans were made to key management. As at March 31, 2016, Clairvest also had loans receivable from certain officers of a company affiliated with Clairvest totaling $0.9 million. The loans to officers of the affiliated company bear interest which is paid quarterly. Loans are repayable upon departure of the officer. Interest of $62 thousand was earned on these loans during fiscal 2016. During fiscal 2016, the Company had advanced to CEP III $9.4 million in loans bearing interest at the prime rate in accordance with CEP III’s limited partnership agreement. These loans were repaid in full during fiscal 2016. Interest of $1 thousand was earned from loans to CEP III during fiscal 2016. During fiscal 2016, the Company had advanced to CEP III Co‐Invest $3.8 million in non‐bearing interest loans. These loans were repaid in full during fiscal 2016. As at March 31, 2015, the Company had advanced to CEP IV $3.4 million in loans bearing interest at the Reference Rate in accordance with CEP IV’s limited partnership agreement. During fiscal 2016, additional loans totaling $45.7 million were made by the Company to CEP IV. Also during fiscal 2016, $44.1 million of these loans were repaid such that $5.0 million remained outstanding as at March 31, 2016. Interest of $0.6 million was earned from loans to CEP IV during fiscal 2016. Subsequent to year end, an additional $1.8 million of these loans were repaid. As at March 31, 2015, the Company had advanced to CEP IV‐A $0.6 million in loans bearing interest at the Reference Rate in accordance with CEP IV‐A’s limited partnership agreement. During fiscal 2016, additional loans totaling $6.0 million were made by the Company to CEP IV‐A. Also during fiscal 2016, these loans were repaid in full. Interest of $0.1 million was earned from loans to CEP IV‐A during fiscal 2016. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 As at March 31, 2015, the Company had advanced to CEP IV Co‐Invest $4.7 million in non‐bearing interest loans. During fiscal 2016, additional loans totaling $20.2 million were made by the Company to CEP IV Co‐Invest. Also during fiscal 2016, $14.1 million of these loans were repaid such that $10.8 million remained outstanding as at March 31, 2016. Subsequent to year end, an additional $1.3 million of these loans were repaid. During fiscal 2016, the Company had advanced to CEP V $67.7 million in loans bearing interest at the Reference Rate in accordance with CEP V’s limited partnership agreement. These loans were repaid in full during fiscal 2016. Interest of $0.5 million was earned from loans to CEP V during fiscal 2016. During fiscal 2016, the Company had advanced to CEP V‐A $17.5 million in loans bearing interest at the Reference Rate in accordance with CEP V‐A’s limited partnership agreement. These loans were repaid in full during fiscal 2016. Interest of $0.1 million was earned from loans to CEP V‐A during fiscal 2016. During fiscal 2016, the Company had advanced to CEP V Co‐Invest $39.1 million in non‐bearing interest loans. Also during fiscal 2016, $38.6 million of these loans were repaid such that $0.5 million remained outstanding as at March 31, 2016. Subsequent to year end, an additional $0.2 million of these loans were repaid. During fiscal 2016, the Company had advanced to 2486303 Ontario $11.0 million in loans bearing interest at 10% per annum. Also during fiscal 2016, $0.1 million of these loans were repaid such that $10.9 million remained outstanding as at March 31, 2016. During fiscal 2016, Clairvest earned $4.6 million in distributions and interest income and $1.9 million in advisory and other fees from its investee companies. Additionally, acquisition entities of Clairvest which were not consolidated in accordance with IFRS earned $12.8 million in distributions and interest income, $0.5 million in dividend income and $0.6 million in advisory and other fees from its investee companies. As at March 31, 2016, Clairvest had accounts receivable from its investee companies totaling $1.6 million, from CEP III totaling $0.4 million, from CEP IV totaling $12.9 million, from CEP IV‐A totaling $0.1 million, from CEP V totaling $5.0 million and from CEP V‐A totaling $1.0 million. Additionally, acquisition entities of Clairvest which were not consolidated in accordance with IFRS held receivables from CEP III totaling $1 thousand, from CEP IV totaling $0.5 million, from CEP V totaling $0.1 million and Clairvest’s investee companies totaling $1.7 million. Clairvest, through PGO Aviation LP, has a 50% ownership in an aircraft where the other 50% ownership is held by a related party of Clairvest. Clairvest received 100% of the incidental rental income of the aircraft and is responsible for 100% of the operating expenses. The related party has the right to sell its portion of the ownership of the aircraft to Clairvest at the fair market value determined at the time of sale. Accordingly, Clairvest has recognized 100% of the net book value of the aircraft and a liability for the 50% ownership the Company does not own. OFF‐STATEMENT OF FINACIAL POSITION ARRANGEMENTS CEP III Co‐Invest has committed to co‐invest alongside CEP III in all investments undertaken by CEP III. CEP III Co‐Invest's co‐ investment commitment is $75.0 million, $15.2 million of which remains unfunded as at March 31, 2016. In accordance with the co‐investment agreement, the proportion of the commitment amongst Clairvest, 2141788 Ontario and MIP III is at their own discretion. CEP III Co‐Invest may only sell all or a portion of a corporate investment that is a joint investment with CEP III if it concurrently sells a proportionate number of securities of that corporate investment held by CEP III. CEP IV Co‐Invest has committed to co‐invest alongside CEP IV and CEP IV‐A in all investments undertaken by CEP IV and CEP IV‐A. CEP IV's total co‐investment commitment is $125.0 million, $28.4 million of which remains unfunded as at March 31, 2016. In accordance with the co‐investment agreement, the proportion of the commitment between Clairvest and MIP IV is at their own discretion. CEP IV Co‐Invest may only sell all or a portion of a corporate investment that is a joint investment with CEP IV and CEP IV‐A if it concurrently sells a proportionate number of securities of that corporate investment held by CEP IV and CEP IV‐A. CEP V Co‐Invest has committed to co‐invest alongside CEP V and CEP V‐A in all investments undertaken by CEP V and CEP V‐A. CEP V Co‐Invest's co‐investment commitment is $180.0 million, $146.7 million of which remains unfunded as at 27 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 March 31, 2016. In accordance with the co‐investment agreement, the proportion of the commitment between Clairvest, 2141788 Ontario and MIP V is at their own discretion. CEP V Co‐Invest may only sell all or a portion of a corporate investment that is a joint investment with CEP V and CEP V‐A if it concurrently sells a proportionate number of securities of that corporate investment held by CEP V and CEP V‐A. Clairvest has committed $25.2 million to Wellington Fund IV, all of which became unfunded upon a 100% return of capital during fiscal 2016. As specified in the limited partnership agreement, upon the closing of Wellington Fund V, Wellington Fund IV may no longer invest in new investments. Clairvest has also committed $30.3 million to Wellington Fund V, $15.7 million of which remained unfunded as at March 31, 2016. As at March 31, 2016, Clairvest has earned profit distributions totaling $5.7 million through its ownership interest in the General Partners of Wellington Fund III and Wellington Fund IV. As a result of Wellington Fund V purchasing the loan portfolio from Wellington Fund IV at fair market value and the limited partners of Wellington Fund IV have earned their return threshold as specified in the limited partnership agreement, no amounts are required to be repaid by Clairvest. Clairvest has guaranteed up to amounts received by the General Partner, the clawback provision entered into by the General Partner in the event the limited partners of Wellington Fund V do not meet their return threshold as specified in the respective limited partnership agreements. As at March 31, 2016 and 2015, there were no accruals made with respect to the clawback as no amounts have been distributed by the General Partner of Wellington Fund V. Clairvest had guaranteed up to US$10.0 million of CEP III's obligations to a schedule 1 Canadian chartered bank under CEP III's foreign exchange forward contracts with the bank. Under Clairvest's Bonus Program, a bonus of 10% of after‐tax cash income and realizations on certain Clairvest's corporate investments would be paid to management annually as applicable [the "Realized Amount"]. As at March 31, 2016, the Realized Amount under the Bonus Program was $0.6 million and has been accrued under accrued compensation expense liability. In accordance with IFRS, Clairvest is also required to record a liability equal to a bonus of 10% of the after‐tax cash income and realizations which are applicable but which have yet to be realized. Accordingly, Clairvest also recorded a $3.5 million accrued compensation expense liability that would only be payable to management when the corresponding realization events have occurred. The Bonus Program does not apply to the income generated from investments made by Clairvest through CEP III Co‐Invest, CEP IV Co‐Invest and CEP V Co‐Invest. Clairvest had guaranteed to fund any cash flow or debt service shortfalls of Casino New Brunswick for a specified period of time. During fiscal 2016, the guarantee was extinguished upon the sale of Casino New Brunswick. In conjunction with the sale of Casino New Brunswick, Clairvest agreed to a net guarantee of $13.5 million to fund any valid claims made the purchaser under the indemnity provisions of the sale for a specified period of time. Any funding pursuant to the guarantee will be allocated 25% to CEP III Co‐Invest and 75% to CEP III. As at March 31, 2016, no amounts subject to this guarantee have been funded or are owing. An acquisition entity of Chilean Gaming Holdings and other investors of Casino Sol Calama had entered into a joint and several guarantee to fund any operating deficiencies upon the opening of Casino Sol Calama for a specified period of time. Latin Gaming Chili S.A., Casino Sol Calama's operator, had indemnified this acquisition entity with respect to this guarantee. As at March 31, 2016, the guarantee was extinguished and no amounts subject to this guarantee had been funded. As part of the holding structure of Chilean Gaming Holdings, acquisition entities of CEP III Co‐Invest had loans totaling $41.9 million as at March 31, 2016 from an unrelated financial institution, while another acquisition entity of CEP III Co‐Invest held term deposits totaling $41.9 million as at March 31, 2016 with the same financial institution as security for these loans. CEP III Co‐Invest’s ownership of both acquisition entities was 36.8% as at March 31, 2016. Clairvest has agreed to guarantee up to $10 million to support Discovery Air’s credit facility with its bank. The guarantee is callable by the lender under certain circumstances and should it be called, Clairvest will assume the lender’s security position that supports the loans provided by the lender. Clairvest intends to allocate any amounts called under this guarantee to CEP IV Co‐Invest, CEP IV and CEP IV‐A on a pro‐rata basis in accordance with their respective capital commitments in Clairvest Equity Partners IV. As at March 31, 2016, the total contingent exposure under this guarantee is 28 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 $7.4 million, $2.0 million of which would be assumed by CEP IV Co‐Invest if called. Any additional guarantee is subject to Clairvest’s consent at its sole discretion. As at March 31, 2016, the Company had future minimum annual lease payments under non‐cancellable operating leases for the use of office space of $0.4 million due within one year and $1.3 million due after one year but not more than five years. In connection with its normal business operations, Clairvest is from time to time named as a defendant in actions for damages and costs allegedly sustained by plaintiffs. While it is not possible to estimate the outcome of the various proceedings at this time, Clairvest does not believe that it will incur any material loss in connection with such actions. RISK MANAGEMENT The private equity investment business involves accepting risk for potential return, and is therefore affected by a number of economic factors, including changing economic environments, capital markets and interest rates. As a result, the Company faces various risk factors, inherent in its normal business activities. These risk factors and how the Company manages these risk factors are described below. Credit risk Credit risk is the risk of a financial loss occurring as a result of default of a counterparty on its obligations to the Company. For the year ended March 31, 2016, there were no material income effects on changes of credit risk on financial assets. The Company manages credit risk on corporate investments through thoughtful planning, strict investment criteria, significant due diligence of investment opportunities and oversight responsibilities with existing investee companies and by conducting activities in accordance with investment policies that are approved by the Board of Directors. Management's application of these policies is regularly monitored by the Board of Directors. Management and the Board of Directors review the financial condition of its investee companies regularly. The Company is also subject to credit risk on its accounts receivable and loans receivables, a significant portion of which is with its investee companies and its CEP Funds. The Company manages this risk through its oversight responsibilities with existing investee companies by reviewing financial conditions of its investee companies regularly, and through its fiduciary duty as manager or general partner of the CEP Funds and by maintaining sufficient uncalled capital for the CEP Funds to settle obligations as they come due. The Company manages counterparty credit risk on derivative instruments by only contracting with counterparties which are Schedule 1 Canadian chartered banks. As at March 31, 2016, the Company’s derivative instruments have a fair value of $0.6 million. Additionally, the Company’s acquisition entities held derivative instruments with a fair value of $6.2 million as at March 31, 2016. The Company believes the counterparty risk with respect to its and its acquisition entities’ derivative instruments is nominal. The Company manages credit risk on cash, cash equivalents and temporary investments by conducting activities in accordance with the fixed income securities policy that is approved by the Audit Committee. The Company also manages credit risk by contracting with counterparties which are Schedule 1 Canadian chartered banks or through investment firms where Clairvest's funds are segregated and held in trust for Clairvest's benefit. Management's application of these policies is regularly monitored by the Audit Committee. Management and the Audit Committee review credit quality of cash equivalents and temporary investments regularly. Market risk Market risk includes exposure to fluctuations in the market value of the Company's investments, currency rates and interest rates. Fluctuations in market interest rates affect the Company's income derived from its treasury funds. For financial instruments which yield a floating interest income, the interest received is directly impacted by the prevailing market interest rate. The fair value of financial instruments which yield a fixed interest income would change when there is a change in the 29 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 prevailing market interest rate. The Company manages interest rate risk on cash, cash equivalents and temporary investments by conducting activities in accordance with the fixed income securities policy that is approved by the Audit Committee. Management's application of these policies is regularly monitored by the Audit Committee. If interest rates were higher or lower by 1%, the potential effect would be an increase or decrease of $0.8 million to distributions and interest income on a pre‐tax basis for the year ended March 31, 2016. Included in corporate investments are investee companies for which the fair values have been estimated based on assumptions that may not be supported by observable market prices. The most significant unobservable input is the multiple of earnings before interest, taxes, depreciation and amortization ["EBITDA"] used for each individual investee company. In determining the appropriate multiple, Clairvest considers i] public company multiples for companies in the same or similar businesses; ii] where information is known and believed to be reliable, multiples at which recent transactions in the industry occurred; and iii] multiples at which Clairvest invested directly or indirectly in the company, or for follow‐on investments or financings. The resulting multiple is adjusted, if necessary, to take into account differences between the investee company and those the Company selected for comparisons and factors include public versus private company, company size, same versus similar business, as well as with respect to the sustainability of the company’s earnings and current economic environment. Nine investee companies are valued using the earnings multiple approach. If the Company had used an earnings multiple for each investee company that was higher or lower by 0.5 times, the potential effect would be an increase of $20.3 million or a decrease of $20.0 million to the aggregate carrying value of corporate investments and net changes in unrealized gains or losses on corporate investments, on a pre‐tax basis for the year ended March 31, 2016. Earnings multiples used are based on public company valuations as well as private market multiples for comparable companies. Clairvest may also use information about recent transactions carried out in the market for valuations of private equity investments when this value is the most representative indication of fair value. The fair value of corporate bonds, debentures or loans is primarily determined using discounted cash flow technique which uses observable and unobservable inputs such as discount rates that take into account the risk associated with the investment as well as future cash flows. For those investments valued based on recent transactions or discounted cash flows, Clairvest has determined there are no alternative assumptions that would change the fair value significantly as at March 31, 2016. The Company's corporate investment portfolio is diversified across 18 investee companies in 8 industries and 3 countries as at March 31, 2016. The Company has considered current economic events and indicators in the valuation of its corporate investments. The Company has implemented a hedging strategy because it has, directly and indirectly, several investments outside of Canada, currently in the United States and in Chile. The Company has also advanced loans to investee companies which are denominated in foreign currency. In order to limit its exposure to changes in the value of foreign denominated currencies relative to the Canadian dollar, as at March 31, 2016, Clairvest and its acquisition entities hedge 100% of the fair value of its foreign investments and loans unless a specific exemption is approved by the Board of Directors. A number of investee companies are subject to foreign exchange risk. A significant change in foreign exchange rates can have a significant impact to the profitability of these entities and in turn the Company's carrying value of these corporate investments. The Company manages this risk through oversight responsibilities with existing investee companies and by reviewing the financial condition of investee companies regularly. Certain of the Company's corporate investments are also held in the form of subordinated debentures. Significant fluctuations in market interest rates can have a significant impact on the fair value of these investments. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. Financial obligations arising from off‐statement of financial position arrangements have been previously discussed. Accounts payable, loans payable, and derivative instruments have maturities of less than one year. Management participation liability, share‐ based compensation liability, and amounts accrued under the Bonus Program are only due upon cash realization or completion of the respective vesting period. Total unfunded commitments to co‐invest alongside the CEP Funds are $190.3 30 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 million as at March 31, 2016. The timing of any amounts to be funded under these commitments is dependent upon the timing of investment acquisitions, which are made at the sole discretion of the Company. In addition to its commitments to co‐invest alongside the CEP Funds, the Company has unfunded commitments of $25.2 million and $15.6 million to Wellington Fund IV and Wellington Fund V respectively. The Company manages liquidity risk by maintaining a conservative liquidity position that exceeds all liabilities payable on demand. The Company invests its cash, cash equivalents and temporary investments [together, "treasury funds"] in liquid assets such that they are available to cover any potential funding commitments and guarantees. In addition, the Company maintains various credit facilities. As at March 31, 2016, Clairvest had treasury funds of $87.0 million and access to $95.0 million through its credit facilities to support its obligations and current and anticipated corporate investments. Clairvest also has access to $45.4 million in treasury funds held by acquisition entities of Clairvest. DERIVATIVE FINANCIAL INSTRUMENTS The Company and its acquisition entities entered into foreign exchange forward contracts as economic hedges against the fair value of its foreign‐denominated investments and loans unless specific exemption is approved by the Board of Directors. During fiscal 2016, the Company paid $4.8 million to various counterparties to settle realized foreign exchange forward contracts. As at March 31, 2016, Clairvest had entered into foreign exchange forward contracts to sell US$7.6 million at an average rate of Canadian $1.3751 per U.S. dollar through to August 2016. The fair value of the forward contracts as at March 31, 2016 is a gain of $0.6 million. Additionally, acquisition entities of Clairvest had entered into foreign exchange forward contracts to sell US$133.1 million at an average rate of Canadian $1.3451 per U.S. dollar through to September 2016 and foreign exchange forward contracts to sell 14.7 billion Chilean Pesos ["CLP"] at an average rate of Canadian $0.001881 per CLP through to January 2017. The fair value of the U.S. dollar contracts held by these acquisition entities as at March 31, 2016 is a gain of $6.2 million and the fair value of the CLP contracts as at March 31, 2016 is a loss of $17 thousand. These contracts have been included in the fair value of Clairvest’s investments in these acquisition entities. DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING In accordance with National Instrument 52‐109, "Certification of Disclosure in Issuers' Annual and Interim Filings", issued by the Canadian Securities Administrators ["CSA"], Management has evaluated the effectiveness of Clairvest's disclosure controls and procedures as of March 31, 2016 and concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in its corporate filings is recorded, processed, summarized and reported within the required time period for the year then ended. National Instrument 52‐109 also requires certification from the Chief Executive Officers and Chief Financial Officer to certify their responsibilities for establishing and maintaining internal controls with regards to the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. Management has evaluated Clairvest's design and operational effectiveness of internal controls over financial reporting for the year ended March 31, 2016. Management has concluded that the design of internal controls over financial reporting are effective and operating as designed as of March 31, 2016 based on this evaluation. There were no changes in internal controls during the most recent interim period that has materially affected, or is reasonably likely to materially affect, internal controls over financial reporting. The Company has not identified any weakness that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting. FORWARD‐LOOKING STATEMENTS A number of the matters discussed in this MD&A deal with potential future circumstances and developments and may constitute "forward‐looking" statements. These forward‐looking statements can generally be identified as such because of 31 MANAGEMENT’S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2016 June 22, 2016 the context of the statements and often include words such as the Company "believes", "anticipates", "expects", "plans", "estimates" or words of a similar nature. The forward‐looking statements are based on current expectations and are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. Such factors include general and economic business conditions and regulatory risks. The impact of any one risk factor on a particular forward‐looking statement is not determinable with certainty as such factors are interdependent upon other factors, and management's course of action would depend upon its assessment of the future, considering all information then available. All subsequent forward‐looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The Company assumes no obligation to update forward‐looking statements should circumstances, management’s estimates, or opinions change. REGULATORY FILINGS The Company's continuous disclosure materials, including interim filings, annual MD&A and audited consolidated financial statements, Annual Information Form, Notice of Annual Meeting of Shareholders and Proxy Circular are available on the Canadian System for Electronic Document Analysis and Retrieval ["SEDAR"] at www.sedar.com. USE OF NON‐IFRS MEASURES This MD&A contains references to "book value" and "book value per share" which are non‐IFRS financial measures. Book value is calculated as the value of total assets less the value of total liabilities. Book value per share is calculated as book value divided by the total number of common shares of the Company outstanding as at a specific date. The terms book value and book value per share do not have any standardized meaning according to IFRS. There is no comparable IFRS financial measure presented in the Company’s consolidated financial statements and thus no applicable quantitative reconciliation for such non‐IFRS financial measure. The Company believes that the measure provides information useful to its shareholders in understanding our performance, and may assist in the evaluation of the Company’s business relative to that of its peers. 32 MANAGEMENT’S REPORT The accompanying consolidated financial statements of Clairvest Group Inc. were prepared by management, which is responsible for the integrity and fairness of the financial information presented. These consolidated financial statements are prepared in accordance with International Financial Reporting Standards. The financial information contained elsewhere in the annual report has been reviewed to ensure consistency with the consolidated financial statements. Management maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded, that transactions are properly authorized and that financial records are properly maintained to facilitate the preparation of financial statements in a timely manner. Under the supervision of Management, an evaluation of the effectiveness of the Company’s internal control over financial reporting was carried out for the year ended March 31, 2016. Based on that evaluation, Management concluded that the Company’s internal control over financing reporting was effective for the year ended March 31, 2016. The Board of Directors carries out its responsibility for the consolidated financial statements in this annual report principally through its Audit Committee. The Audit Committee, which comprised three non‐management Directors during the year ended March 31, 2016, meets periodically with management and with external auditors to discuss the scope and results with respect to financial reporting of the Company. The Audit Committee has reviewed the consolidated financial statements with management and with the independent auditors. The consolidated financial statements have been approved by the Board of Directors on the recommendation of the Audit Committee. Ernst & Young LLP, appointed external auditors by the shareholders, have audited the consolidated financial statements and their report is included herewith. B. Jeffrey Parr Co‐Chief Executive Officer and Managing Director Daniel Cheng Chief Financial Officer 33 INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF CLAIRVEST GROUP INC. We have audited the accompanying consolidated financial statements of Clairvest Group Inc., which comprise the consolidated statements of financial position as at March 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. AUDITORS' RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Clairvest Group Inc. as at March 31, 2016 and 2015, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards. Toronto, Canada June 22, 2016 34 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at March 31 $000s ASSETS 2016 2015 Cash and cash equivalents [notes 3, 13, 16 and 17] $ 65,250 $ 98,644 Temporary investments [notes 3, 16 and 17] Accounts receivable and other assets [notes 4[n], 7[d] and 16] Loans receivable [notes 4, 7 and 16] Income taxes recoverable Derivative instruments [note 14] Carried interest receivable [note 4[j]] Corporate investments [notes 7 and 16] Fixed assets [notes 4[p] and 8] LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities 21,793 27,446 30,563 4,888 581 64,009 353,801 1,860 58,511 15,055 11,451 120 — 53,738 291,421 2,267 $ 570,191 $ 531,207 Accounts payable and accrued liabilities [note 4[p]] $ 2,501 $ 1,820 Income taxes payable Derivative instruments [note 14] Accrued compensation expense [notes 12 and 15[h]] Share‐based compensation [note 12] Management participation [note 4] Deferred income tax liability [note 10] Contingencies, commitments and guarantees [note 15] Shareholders' equity Share capital [note 11] Retained earnings See accompanying notes On behalf of the Board: MICHAEL BREGMAN Director JOSEPH J. HEFFERNAN Director 110 — 6,860 17,083 43,977 14,139 69 4,341 6,935 24,528 37,756 8,064 $ 84,670 $ 83,513 $ 81,662 $ 79,314 403,859 485,521 368,380 447,694 $ 570,191 $ 531,207 35 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended March 31 $000s [except per share information] REVENUE Net investment gains [notes 5 and 7] Distributions and interest income [notes 4 and 7] Net carried interest income [note 6] Management fees [notes 4[e] and 4[h]] Advisory and other fees [note 4[o]] 2016 2015 $ 37,582 $ 37,471 18,516 16,101 835 1,928 33,516 31,361 648 1,331 74,962 104,327 EXPENSES Employee compensation and benefits [notes 12 and 15[h]] 10,025 14,822 Share‐based compensation expenses [note 12] Administration and other expenses Finance and foreign exchange expenses [note 14] Management participation [note 4] Income before income taxes Income tax expense [note 10] 6,264 4,208 135 11,103 31,735 43,227 3,261 8,566 3,922 1,366 20,359 49,035 55,292 3,287 Net income and comprehensive income for the year Basic and fully diluted net income and comprehensive income per share [note 11] $ 39,966 $ 52,005 $ 2.63 $ 3.43 See accompanying notes 36 39,966 [4,487] 39,966 [4,487] 2,348 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY For the years ended March 31 $000s Share capital Retained earnings Total shareholders’ equity $ 79,314 $ 368,380 $ 447,694 As at April 1, 2015 Changes in shareholders' equity Net income and comprehensive income for the year Dividends declared [$0.2958 per share] Issue of shares on exercise of stock options [note 11] 2,348 As at March 31, 2016 $ 81,662 $ 403,859 $ 485,521 As at April 1, 2014 Changes in shareholders' equity $ 79,314 $ 320,146 $ 399,460 Net income and comprehensive income for the year Dividends declared [$0.2492 per share] 52,005 [3,771] 52,005 [3,771] As at March 31, 2015 See accompanying notes $ 79,314 $ 368,380 $ 447,694 37 CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended March 31 $000s OPERATING ACTIVITIES Net income and comprehensive income for the year Add [deduct] items not involving a current cash outlay Amortization and impairment of fixed assets Share‐based compensation expense Deferred income tax expense [recovered] Net investment gains Unrealized carried interest income and management participation Non‐cash items relating to foreign exchange forward contracts Non‐cash items relating to corporate investments Adjustments for: Net proceeds on sale of temporary investments Loans advanced [notes 4, 7[j] and 7[l]] Receipt of loans advanced [notes 4, 7[j] and 7[l]] Loans received [note 4] Repayment of loans received [note 4] Cost on settlement of realized foreign exchange forward contracts [note 14] Acquisition of corporate investments Proceeds on sale of corporate investments Return of capital from corporate investments Settlement of share‐based compensation liability Net change in non‐cash working capital balances related to operations [note 13] Cash provided by [used in] operating activities INVESTING ACTIVITIES Purchase of fixed assets Cash used in investing activities FINANCING ACTIVITIES Cash dividends paid Issuance of share capital [note 11] Cash used in financing activities 2016 2015 $ 39,966 $ 52,005 658 4,608 6,075 [37,582] [4,050] [104] 1,322 10,893 36,718 [236,038] 216,926 146 [146] [4,818] [40,887] 13 14,754 [12,053] [25,385] [16,512] [31,004] [251] [251] [4,487] 2,348 [2,139] 1,372 8,767 [1,763] [37,471] 2,063 3,742 [1,053] 27,662 4,484 [84,273] 111,078 19,945 [20,182] [976] [19,066] 144 10,054 [2,565] 18,643 4,394 50,699 [81] [81] [3,771] — [3,771] 46,847 51,797 $ 98,644 NET INCREASE [DECREASE] IN CASH AND CASH EQUIVALENTS DURING THE YEAR CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR [NOTE 13] [33,394] 98,644 $ 65,250 SUPPLEMENTAL CASH FLOW INFORMATION Interest received Distributions received Income taxes paid Interest paid, on gross basis See accompanying notes $ 2,284 $ 6,337 $ 1,941 $ 752 $ 3,792 $ 8,134 $ 5,360 $ 750 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 1. NATURE OF ACTIVITIES Clairvest Group Inc. ["Clairvest" or the "Company"] is a private equity investor publicly traded on the Toronto Stock Exchange ["TSX"] under symbol CVG. The Company, which operates in only one business segment, actively seeks to form mutually beneficial investments with entrepreneurial corporations. Clairvest invests its own capital, and that of third parties, through Clairvest Equity Partners III Limited Partnership ["CEP III"], Clairvest Equity Partners IV Limited Partnership ["CEP IV"], Clairvest Equity Partners IV‐A Limited Partnership ["CEP IV‐A"], Clairvest Equity Partners V Limited Partnership ["CEP V"] and Clairvest Equity Partners V‐A Limited Partnership ["CEP V‐A"] [together, the "CEP Funds"]. Clairvest contributes financing and strategic expertise to support the growth and development of its investee companies in order to create realizable value for all shareholders. Clairvest is incorporated under the laws of the Province of Ontario. The Company's head office is located at 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada, M4T 2S3. 2. SIGNIFICANT ACCOUNTING POLICIES [a] Basis of preparation The consolidated financial statements of Clairvest are prepared in accordance with International Financial Reporting Standards ["IFRS"] as issued by the International Accounting Standards Board ["IASB"]. The Company has consistently applied the following accounting policies throughout all periods presented in these consolidated financial statements, as if these policies had always been in effect. These audited annual consolidated financial statements and related notes of Clairvest for the years ended March 31, 2016 and 2015 ["consolidated financial statements"] were authorized for issuance by the Board of Directors on June 22, 2016. The consolidated financial statements have been presented on a historical cost basis, except for certain financial instruments that have been measured at fair value. The consolidated financial statements have been prepared on a going concern basis and are presented in Canadian dollars, which is the functional currency of the Company. All values are rounded to the nearest thousand dollars [$000s], except where otherwise indicated. [b] Basis of consolidation These consolidated financial statements have been prepared in accordance with IFRS 10, Consolidated Financial Statements ["IFRS 10"], and include the accounts of the Company and its consolidated subsidiaries. As discussed under critical accounting estimates and judgments, the Company has determined it meets the definition of an investment entity. Consolidated subsidiaries In accordance with IFRS 10, subsidiaries are those entities that provide investment‐related services and that the Company controls by having the power to govern the financial and operating policies of the entity. Such entities would include those which earn priority distributions or management fees and carried interest from the CEP Funds. All intercompany amounts and transactions amongst these consolidated entities have been eliminated upon consolidation. The existence and effect of potential voting rights that are currently exercisable and shareholder agreements are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and are subsequently deconsolidated from the consolidated financial statements on the date that control ceases. The following entities, which are significant in nature, provide investment‐related services on behalf of the Company. Clairvest GP Manageco Inc. Clairvest GP [GPLP] Inc. CEP MIP GP Corporation Clairvest USA Limited Clairvest General Partner Limited Partnership Clairvest General Partner III Limited Partnership Clairvest General Partner IV Limited Partnership Clairvest General Partner V Limited Partnership PGO Aviation Limited Partnership 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Interests in unconsolidated subsidiaries ["acquisition entities"] In accordance with the amendments for investment entities under IFRS 10, interests in subsidiaries other than those that provide investment‐related services are accounted for at fair value through profit or loss rather than consolidating them. As discussed under critical accounting estimates and judgments, management exercised judgement when determining whether subsidiaries are investment entities. The following entities, which are significant in nature, are controlled by Clairvest either directly or indirectly and are used as acquisition entities of the Company. These entities' principal place of business is in Canada. 2141788 Ontario Corporation ["2141788 Ontario"] CEP III Co‐Investment Limited Partnership ["CEP III Co‐Invest"] MIP III Limited Partnership ["MIP III"] CEP IV Co‐Investment Limited Partnership ["CEP IV Co‐Invest"] MIP IV Limited Partnership ["MIP IV"] CEP V Co‐Investment Limited Partnership ["CEP V Co‐Invest"] MIP V Limited Partnership ["MIP V"] 2486303 Ontario Inc. ["2486303 Ontario"] The Company may also use intermediate subsidiaries whose sole purpose is to hold investments for the Company and therefore not included in the listing above. Interests in the CEP Funds Clairvest manages and invests alongside the CEP Funds, which meet the definition of structured entities under IFRS. Clairvest provides loans to and earns priority distributions or management fees and carried interest from the CEP Funds, which are further described in note 4. The Company concluded that its ownership interests in the CEP Funds do not meet the definition of control under IFRS. Accordingly, the financial positions and operating results of the CEP Funds are not included in Clairvest's consolidated financial statements. [c] Classification and recognition of financial instruments In accordance with IAS 39, Financial Instruments: Recognition and Measurement, financial assets and financial liabilities are classified at initial recognition into the following categories: Financial assets and liabilities at fair value through profit or loss This category is further divided into the following: Financial instruments classified as held for trading: Financial assets and liabilities are classified as held for trading if they are acquired for the purpose of selling and/or repurchasing in the near term, and are acquired principally for the purpose of generating a profit from short‐term fluctuations in price. Derivative instruments are classified as held for trading. The Company does not apply hedge accounting to its derivative instruments. Financial instruments designated as FVTPL through inception: Cash equivalents, temporary investments, and corporate investments are designated as FVTPL upon initial recognition. These financial assets are designated upon initial recognition on the basis that they are part of a group of financial assets that are managed and have their performance evaluated on a fair value basis, in accordance with risk management and investment strategies of the Company. Loans and receivables Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Company includes in this category receivable balances relating to direct and indirect investee companies ["investee companies"] and the CEP Funds as well as other short‐term receivables. Other financial liabilities This category includes all financial liabilities, other than those classified as FVTPL. The Company includes in this category amounts relating to accounts payable, accrued liabilities and loans payable. 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [d] Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short‐term deposits with an original maturity of three months or less. [e] Temporary investments and corporate investments The Company carries its temporary investments and its corporate investments at fair value. When a financial instrument is initially recognized, its fair value is generally the value of consideration paid or received. Acquisition costs relating to corporate investments are not included as part of the cost of the investment. Subsequent to initial recognition, for the fair value of an investment quoted on an active market, the fair value is generally the closing bid price on the principal exchange on which the investment is traded. Investments that are escrowed or otherwise restricted as to sale or transfer are recorded at a value which takes into account the escrow terms or other restrictions. In determining the fair value for such investments, the Company considers the nature and length of the restriction, business risk of the investee company, its stage of development, market potential, relative trading volume and price volatility and any other factors that may be relevant to the ongoing and realizable value of the investments. The amounts at which Clairvest's publicly traded investments could be disposed of may differ from this fair value and the differences could be material. Differences could arise as the value at which significant ownership positions are sold is often different from the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Estimated costs of disposition are not included in the fair value determination. In the absence of an active market, the fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, the general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, private company transactions multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which Clairvest's privately held investments could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination. In determining the fair value of public company warrants, the underlying security of which is traded on a recognized securities exchange, if there are sufficient and reliable observable market inputs, including exercise price and term of the warrants, market interest rate, and current market price, expected dividends and volatility of the underlying security, a valuation technique is used. If market inputs are insufficient or unreliable, the warrants are valued at intrinsic value, which is equal to the higher of the closing bid price of the underlying security, less the exercise price of the warrant, or nil. For private company warrants, the underlying security of which is not traded on a recognized securities exchange, the fair value is determined consistently with other investments which do not have an active market as described above. [f] Foreign currency translation Income and expenses denominated in foreign currencies are translated into Canadian dollars at exchange rates prevailing at the transaction date. Monetary assets and liabilities are translated into Canadian dollars using exchange rates in effect at the consolidated statements of financial position dates. Non‐monetary assets and liabilities that are measured at historical cost are translated into Canadian dollars using the exchange rate at the date of transaction. Non‐monetary assets and liabilities that are carried at fair value are translated into Canadian dollars using exchange rates at the date the fair value was determined. Exchange gains and losses are included in income in the period in which they occur. Foreign currency transaction gains and losses on financial instruments classified as FVTPL are included in the consolidated statements of comprehensive income as part of net investments gains. [g] Derivative instruments The Company and its acquisition entities periodically enter into foreign exchange forward contracts to hedge their exposure to exchange rate fluctuations on their foreign currency denominated investments and loans. These foreign exchange 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] forward contracts and, where applicable, their underlying investments and loans, are valued at exchange rates in effect at the consolidated statements of financial position dates. Foreign exchange forward contracts entered into by the Company are included on the consolidated statements of financial position as derivative instruments and are valued at fair value representing the estimated amount that the Company would have been required to pay, or received, had the Company settled the outstanding contracts at the consolidated statement of financial position dates. Any unrealized gains or losses are included in finance and foreign exchange expense in the consolidated statements of comprehensive income. Foreign exchange forward contracts entered into by the Company's acquisition entities are included in the fair value determination of these acquisition entities. [h] Income recognition Realized gains or losses on disposition of corporate investments and change in unrealized gains or losses in the value of corporate investments are calculated based on weighted average cost and are included in net investment gains in the consolidated statements of comprehensive income. Management fees and advisory and other fees are recorded as income on an accrual basis when earned. Distributions and interest income are recognized on an accrual basis and dividend income is recognized on the ex‐dividend date. Carried interest from the CEP Funds are recognized on an accrual basis when estimated fair values of the underlying investments can be measured reliably. [i] Income taxes Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred income tax The Company records deferred income tax expense or recovery using the asset and liability method. Under this method, deferred income taxes reflect the expected deferred tax consequences of temporary differences between the carrying amounts of assets and liabilities and their respective income tax bases, as well as certain carryforward items. Deferred income tax assets and liabilities are determined for each temporary difference based on the income tax rates that are expected to be in effect when the asset or liability is settled. Deferred income tax assets and liabilities are only recognized to the extent that, in the opinion of management, the most probable outcome is that the deferred income tax asset or liability will be realized. [j] Stock‐based compensation plan The Company's stock option plan allows for a cash settlement of stock options. As the economics to choose cash or shares as settlement is the same for all holders, compensation expense is recognized and recorded as a liability based on the fair value of the outstanding stock options at the consolidated statements of financial position dates and the proportion of their vesting periods expected to elapse. Fair value is measured by use of an appropriate option‐pricing model. In valuing the Company's stock option plan, no consideration is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company. On the exercise of stock options for shares, the liability recorded with respect to the options and consideration paid by the employees is credited to share capital. On the exercise of stock options for cash, the liability recorded is reduced and any difference between the liability accrued and the amount paid is charged to share‐ based compensation expense. [k] Deferred share unit plan Directors of the Company may elect to receive all or a portion of their compensation in deferred share units ["DSUs"]. On the date directors' fees are payable, the number of DSUs granted to a participant is determined by dividing the amount of the fees to be received by way of DSUs by the market value of a Clairvest common share on the TSX. Upon redemption of DSUs, the Company pays to the participant a lump sum cash payment equal to the number of DSUs to be redeemed 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] multiplied by the market value of a Clairvest common share on the TSX on the redemption date. A participant may redeem his or her DSUs only following termination of board service. Under the Company's DSU plan, a change in the fair value of the DSUs is charged to share‐based compensation expense and recorded as a liability based on the number of DSUs outstanding at the consolidated statements of financial position dates multiplied by the market value of a Clairvest common share on the TSX at the consolidated statements of financial position dates. Certain directors were also granted Appreciation Deferred Share Units ["ADSUs"]. Upon redemption of the ADSUs, the Company pays to the participant a lump sum cash payment equal to the number of ADSUs to be redeemed multiplied by the difference between the market value of a Clairvest common share on the TSX on the redemption date and the market value of a Clairvest common share on the TSX on the grant date. A participant may redeem his or her ADSUs only following termination of board service. Under the Company's DSU plan, the fair value of the ADSUs is charged to share‐ based compensation expense and recorded as a liability based on the number of ADSUs outstanding at the consolidated statements of financial position dates multiplied by the difference between the market value of a Clairvest common share on the TSX at the consolidated statements of financial position dates and the market value of a Clairvest common share on the TSX on the grant date. [l] Book value appreciation rights plan The Company may elect to issue all or a portion of a participant's stock option grant by way of book value appreciation rights units ["BVARs"]. Upon redemption of BVARs, the Company pays to the participant a lump sum cash payment equal to the number of BVARs to be redeemed multiplied by the increase in book value per share between the grant date and the redemption date, and grossed up such that the participant's after‐tax proceeds equate to an amount as if the proceeds were taxed at the capital gains rate. The BVARs vest over a five‐year period and the participant may only redeem his or her BVARs at the earlier of [i] five years from the grant date or [ii] cessation of employment with the Company. As the Company's BVAR plan is a cash‐settled plan, the fair value of the BVARs is charged to share‐based compensation expense and recorded as a liability over the BVAR vesting period based on the book value per share at the consolidated statements of financial position dates of the prior quarter. [m] Fixed assets Fixed assets are accounted for at cost less accumulated amortization. Leasehold improvements are amortized on a straight‐ line basis over the lease term including reasonably assured renewal options. All other fixed assets are amortized on a straight‐line basis at the following rates per year: Aircraft Computer equipment Computer software Furniture, fixtures and equipment Leasehold improvements 10% 30% 50% 20% Term of lease The Company assesses, at each reporting date, whether there is an indication that a fixed asset may be impaired. If any indication exists, the Company estimates the fixed asset's recoverable amount. The recoverable amount is the higher of its fair value less costs of disposal and its value in use. When the carrying amount exceeds its recoverable amount, the fixed asset is considered impaired and is written down to its recoverable amount. [n] Net income and comprehensive income per share Basic net income and comprehensive income per share are determined by dividing net income and comprehensive income attributable to common shareholders by the weighted average number of common shares outstanding during the year. Fully diluted net income and comprehensive income per share are determined in accordance with the treasury stock method and is based on the weighted average number of common shares and dilutive common share equivalents outstanding during the year. 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [o] Critical accounting estimates, assumptions and judgments The preparation of consolidated financial statements in conformity with IFRS required management to make estimates, assumptions and judgments that affect the 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 under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates could materially differ from the related actual results. The following estimates, assumptions and judgments have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year: Determination of investment entity Judgment is required when making the determination that the Company or its various subsidiaries meet the definition of an investment entity under IFRS. In accordance with IFRS 10, an investment entity is an entity that: "obtains funds from one or more investors for the purpose of providing them with investment management services, commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both, and measures and evaluates the performance of substantially all of its investments on a fair value basis." In addition, IFRS 10 clarifies that an investment entity may earn fee income from the provision of investment‐related services to external parties. The Company has historically co‐invested alongside third‐party capital in the CEP Funds that it manages. In determining its status as an investment entity, the Company has determined that fair value is the primary measurement attribute used to monitor and evaluate its investments. Fair value of financial instruments Certain financial instruments are recorded in the Company’s consolidated statements of financial position at values that are representative of or approximate fair value. The fair value of a financial instrument that is traded in active markets at each reporting date is determined by reference to its quoted market price or dealer price quotations. The fair values of certain other financial instruments are determined using valuation techniques. By their nature, these valuation techniques require the use of estimates and assumptions. Changes in the underlying estimates and assumptions could materially impact the determination of the fair value of a financial instrument. Imprecision in determining fair value using valuation techniques may affect net investment gains reported in a particular period. The Company assesses, at each reporting date, whether there is any objective evidence to revise the fair values of its financial instruments. The assessment of the fair value of a financial instrument requires significant judgment, where management evaluates, among other factors, the financial health and business outlook of their investees. Fair value information is presented in note 17. Recognition of carried interest and corresponding expenses The determination of the Company's unrealized carried interest receivable recorded on the consolidated statements of financial position is based on the fair values of the financial instruments held by the CEP Funds. As discussed previously, fair values of certain financial instruments are determined using valuation techniques and by their nature, the use of estimates and assumptions. Changes in the underlying estimates and assumptions could materially impact the determination of the fair value of these financial instruments. Imprecision in determining fair value using valuation techniques may affect the calculation of unrealized carried interest receivable and the resulting accrued liabilities for future payouts relating to these unrealized carried interest at the consolidated statements of financial position dates. Income taxes The determination of the Company's income and other tax liabilities requires interpretation of complex laws and regulations often involving multiple jurisdictions. Judgment is required in determining whether deferred income tax assets should be recognized on the consolidated statements of financial position. Deferred income tax assets are recognized to the extent that the Company believes it is probable that the assets can be recovered. Furthermore, deferred income tax balances are recorded using enacted or substantively enacted future income tax rates. Changes in enacted income tax rates are not within the control of management. However, any such changes in income tax rates may result in actual income tax amounts that may differ significantly from estimates recorded in deferred tax balances. 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 3. CASH EQUIVALENTS AND TEMPORARY INVESTMENTS Cash equivalents consist of deposits in investment and money market savings accounts which have maturities of less than 90 days from the date of acquisition. The yield ranges between 0.8% and 0.9% per annum [2015 – between 0.2% and 1.1%] with a weighted average rate of pre‐tax return of 0.9% per annum [2015 – 1.0%]. Temporary investments consist of guaranteed investment certificates and corporate bonds and loans which have maturities greater than 90 days from the date of acquisition and through to August 2019. The yield on these investments ranges between 1.6% and 7.8% per annum [2015 – between 1.7% and 8.4%], with a weighted average rate of pre‐tax return of 3.6% per annum [2015 – 4.5%]. The composition of Clairvest's temporary investments as at March 31 was as follows: March 31, 2016 Due after 1 year March 31, 2015 Total Total Due in 1 year or less Guaranteed investment certificates $ 16,336 $ − $ 16,336 $ 38,288 Corporate bonds and loans − 5,457[1] 5,457 20,223 [1] [1] In addition to the investments Clairvest made in Light Tower Rentals Inc. and Centaur Gaming as described in notes 7[c] and 7[e] respectively, Clairvest held treasury investments in Light Tower Rentals Inc. in the form of US$7.5 million corporate bonds and in Centaur Gaming in the form of US$10.0 million second lien secured loans as at March 31, 2015. During fiscal 2016, the Centaur Gaming second lien loans were redeemed in full. As at March 31, 2016, the US$7.5 million Light Tower Rentals Inc. corporate bonds had a fair market value of US$4.2 million [C$5.4 million] [2015 – US$5.9 million [C$7.4 million]] based on the last bid price as at March 31, 2016. $ 16,336 $ 5,457 $ 21,793 $ 58,511 4. RELATED PARTY DISCLOSURES Investments in acquisition entities and investment‐related transactions with acquisition entities are further described in note 7. [a] The general partner of Clairvest Equity Partners Limited Partnership ["CEP"], ["CEP GP"], an entity which is controlled by Clairvest, is entitled to participate in distributions made by CEP equal to 20% of all net gains [the "carried interest"] of CEP as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% was allocated to principals and employees of Clairvest via a limited partnership ["Participation Partnership"], the general partner of which is Clairvest and the limited partners are principals and employees of Clairvest. During fiscal 2016, CEP GP earned $0.3 million [2015 − $0.5 million] in carried interest from CEP, 50% of which or $0.2 million [2015 − $0.2 million] was ul(cid:415)mately paid to Clairvest, and the other 50% or $0.2 million [2015 − $0.2 million] was ultimately paid to the limited partners of Participation Partnership, which reduced the management participation liability. Subsequently, 2486303 Ontario purchased the 10% carried interest entitled by Participation Partnership for $1.2 million which reduced the management participation liability. As at March 31, 2016, CEP had declared and paid distributions to CEP GP totaling $23.6 million [2015 – $23.3 million], 50% of which or $11.8 million [2015 – $11.6 million] was ultimately paid to Clairvest and the other 50% or $11.8 million [2015 – $11.6 million] was ultimately paid to the limited partners of Participation Partnership. During fiscal 2016, $0.8 million [2015 – $0.1 million] was paid by Participation Partnership to key management. [b] As general partner of CEP III, Clairvest is entitled to a priority distribution from CEP III. Effective January 13, 2011, the priority distribution is calculated monthly as 0.1667% of invested capital net of write‐downs of capital then invested. The priority distribution is reduced to the extent of 75% of fees earned by Clairvest from corporate investments of CEP III. During fiscal 2016, CEP III declared to Clairvest priority distributions of $1.2 million [2015 – $1.4 million]. As per the limited partnership agreement, fees of $0.2 million [2015 – $0.2 million] from corporate investments of CEP III were netted against the priority distributions. The general partners of CEP III ["CEP III GPs"] are entitled to a 20% carried interest in respect of CEP III as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP III, the general partner of which is Clairvest and the limited partners of which are principals and employees of 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Clairvest. The limited partners of MIP III have purchased, at fair market value, units of the MIP III. From time to time, additional units in MIP III may be purchased by the limited partners of MIP III. During fiscal 2016, CEP III GPs earned $5.4 million [2015 – $33.3 million] in carried interest from CEP III, 50% of which, or $2.7 million [2015 – $16.6 million], was ultimately paid to Clairvest, and the other 50% or $2.7 million [2015 – $16.6 million] was ultimately paid to the limited partners of MIP III, which reduced the management participation liability. As at March 31, 2016, CEP III had declared and paid distributions to CEP III GP totaling $38.7 million [2015 – $33.3 million], 50% of which, or $19.4 million [2015 – $16.6 million], was ultimately paid to Clairvest and the other 50% or $19.4 million [2015 – $16.6 million] was ultimately paid to the limited partners of MIP III. During fiscal 2016, $1.1 million [2015 − $8.9 million] was ultimately paid to key management. [c] As described in note 15[a], Clairvest is required to co‐invest alongside CEP III in all investments undertaken by CEP III. CEP III Co‐Invest was established in fiscal 2007 as the investment vehicle for this purpose. CEP III Co‐Invest has three limited partners, Clairvest, 2141788 Ontario and MIP III. MIP III has invested $1.1 million in CEP III Co‐Invest and in addition is entitled to an 8.25% carried interest in respect of CEP III Co‐Invest via the general partner of CEP III Co‐Invest, an entity controlled by Clairvest. Clairvest is entitled to the first $0.2 million in carried interest received by MIP III, and the remaining carried interest represents the entitlements of the limited partners of MIP III. During fiscal 2016, CEP III Co‐Invest paid $0.7 million [2015 – $4.1 million] to MIP III with respect to this carried interest entitlement. As at March 31, 2016, CEP III Co‐Invest had declared and paid distributions totaling $4.8 million [2015 – $4.1 million] to MIP III. During fiscal 2016, $0.3 million [2015 − $2.1 million] was ultimately paid to key management. Clairvest, as the general partner of MIP III, is entitled to participate in distributions equal to the realizable value on the $1.1 million invested by MIP III in CEP III Co‐Invest. As at March 31, 2016, $1.9 million [2015 – $1.8 million] has been received by Clairvest. [d] As general partner of CEP IV, Clairvest is entitled to a priority distribution from CEP IV. From January 14, 2011 to January 13, 2016, the priority distribution is calculated monthly as 0.1667% of committed capital, and thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The priority distribution is reduced to the extent of 63.2% of any fees earned by Clairvest from corporate investments of CEP IV. During fiscal 2016, CEP IV declared to Clairvest priority distributions of $4.8 million [2015 – $5.4 million]. As per the limited partnership agreement, fees of $0.6 million [2015 – $0.5 million] from corporate investments of CEP IV were netted against the priority distributions. The general partners of CEP IV ["CEP IV GPs"] are entitled to a 20% carried interest in respect of CEP IV as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP IV, the general partner of which is Clairvest and the limited partners of which are principals and employees of Clairvest. The limited partners of MIP IV have purchased, at fair market value, units of the MIP IV. From time to time, additional units in MIP IV may be purchased by the limited partners of MIP IV. No carried interest has been declared and paid by CEP IV to CEP IV GPs as at March 31, 2016 and 2015. [e] As manager of CEP IV‐A, Clairvest is entitled to a management fee from CEP IV‐A. From January 14, 2011 to January 13, 2016, the management fee is calculated monthly as 0.1667% of committed capital, and thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The management fee is reduced to the extent of 10.1% of fees earned by Clairvest from corporate investments of CEP IV‐A and other amounts as provided in the limited partnership agreement. During fiscal 2016, Clairvest earned management fees of $0.6 million [2015 – $0.6 million] as compensation for its services in the administration of the portfolio of CEP IV‐A. As per the limited partnership agreement, fees of $0.3 million [2015 – $0.3 million] from corporate investments of CEP IV‐A were netted against the management fees. The general partner of CEP IV‐A ["CEP IV‐A GP"], an entity which is controlled by Clairvest, is entitled to a 20% carried interest in respect of CEP IV‐A as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP IV. No carried interest has been declared and paid by CEP IV‐A to CEP IV‐A GP as at March 31, 2016 and 2015. [f] As described in note 15[b], Clairvest is required to co‐invest alongside CEP IV and CEP IV‐A in all investments undertaken by CEP IV and CEP IV‐A. CEP IV Co‐Invest was established in fiscal 2010 as the investment vehicle for this purpose. CEP IV 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Co‐Invest has two limited partners, Clairvest and MIP IV. MIP IV has invested $1.6 million in CEP IV Co‐Invest and in addition is entitled to an 8.25% carried interest in respect of CEP IV Co‐Invest via the general partner of CEP IV Co‐Invest, an entity controlled by Clairvest. Clairvest is entitled to participate in the first $0.4 million in carried interest received by MIP IV, and the remaining carried interest represents the entitlements of the limited partners of MIP IV. No carried interest has been declared and paid by CEP IV Co‐Invest as at March 31, 2016 and 2015. Clairvest, as general partner of MIP IV, is also entitled to participate in distributions equal to the realizable value on the $1.6 million invested by MIP IV in CEP IV Co‐Invest. No amounts have been received by Clairvest as at March 31, 2016 and 2015. [g] As general partner of CEP V, Clairvest is entitled to a priority distribution from CEP V. The priority distribution is calculated monthly as follows: [i] from March 2, 2015 to January 13, 2016, 0.1667% of capital allocated to specifically identifiable investments net of any write‐downs of capital invested; [ii] from January 14, 2016 to January 13, 2021, 0.1667% of committed capital; and [iii] thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The priority distribution is reduced to the extent of 58.8% of any fees earned by Clairvest from corporate investments of CEP V. During fiscal 2016, CEP V declared to Clairvest priority distributions of $1.8 million [2015 – $30 thousand]. As per the limited partnership agreement, fees of $27 thousand [2015 – nil] from corporate investments of CEP V were netted against the priority distributions. The general partners of CEP V ["CEP V GPs"] are entitled to a 20% carried interest in respect of CEP V as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP V, the general partner of which is Clairvest and the limited partners of which are principals and employees of Clairvest. The limited partners of MIP V have purchased, at fair market value, units of the MIP V. From time to time, additional units in MIP V may be purchased by the limited partners of MIP V. No carried interest has been declared and paid by CEP V to CEP V GPs as at March 31, 2016 and 2015. [h] As manager of CEP V‐A, Clairvest is entitled to a management fee from CEP V‐A. The management fee is calculated monthly as follows: [i] from March 2, 2015 to January 13, 2016, 0.1667% of capital allocated to specifically identifiable investments net of any write‐downs of capital invested; [ii] from January 14, 2016 to January 13, 2021, 0.1667% of committed capital; and [iii] thereafter, 0.1667% of invested capital net of write‐downs of capital then invested. The management fee is reduced to the extent of 11.2% of fees earned by Clairvest from corporate investments of CEP V‐A and other amounts as provided in the limited partnership agreement. During fiscal 2016, Clairvest earned management fees of $0.3 million [2015 – $6 thousand] as compensation for its services in the administration of the portfolio of CEP V‐A. As per the limited partnership agreement, fees of $5 thousand [2015 – nil] from corporate investments of CEP V‐A were netted against the management fees. The general partner of CEP V‐A ["CEP V‐A GP"], an entity which is controlled by Clairvest, is entitled to a 20% carried interest in respect of CEP V‐A as governed by its limited partnership agreement. 10% of the carried interest is allocated to Clairvest and the remaining 10% is allocated to MIP V. No carried interest has been declared and paid by CEP V‐A to CEP V‐A GP as at March 31, 2016 and 2015. [i] As described in note 15[c], Clairvest is required to co‐invest alongside CEP V and CEP V‐A in all investments undertaken by CEP V and CEP V‐A. CEP V Co‐Invest was established in fiscal 2015 as an investment vehicle for this purpose. CEP V Co‐Invest has three limited partners, Clairvest, 2141788 Ontario and MIP V. MIP V has invested $2.4 million in CEP V Co‐Invest and in addition is entitled to an 8.25% carried interest in respect of CEP V Co‐Invest via the general partner of CEP V Co‐Invest, an entity controlled by Clairvest. Clairvest is entitled to the first $1.4 million in carried interest received by MIP V, and the remaining carried interest represents the entitlements of the limited partners of MIP V. No carried interest has been declared and paid by CEP V Co‐Invest as at March 31, 2016 and 2015. Clairvest, as the general partner of MIP V, is also entitled to participate in distributions equal to the realizable value on the $2.4 million invested by MIP V in CEP V Co‐Invest. No amounts have been received by Clairvest as at March 31, 2016 and 2015. 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [j] As at March 31, 2016, if CEP and the CEP Funds were to sell all of their corporate investments at their current fair values, the respective general partners would receive the following in carried interest from CEP and the CEP Funds. As described in note 2[f], Clairvest has recorded these as carried interest receivable on the consolidated statements of financial position. CEP[1] CEP III CEP IV CEP IV‐A CEP V CEP V‐A March 31, 2016 March 31, 2015 $ 2,377 17,938 36,212 7,482 ― ― $ 64,009 $ 1,761 21,935 24,631 5,411 ― ― $ 53,738 [1] A corresponding $1.2 million in payable to 2486303 Ontario has been recorded to reflect the carried interest entitled by 2486303 Ontario. Also see note 7[s]. [k] If the CEP Funds were to sell all of their corporate investments, CEP III Co‐Invest, CEP IV Co‐Invest and CEP V Co‐Invest [the “CEP Co‐Invest Partnerships”] would be required to sell all of their corporate investments at their current fair values and as such, MIP III, MIP IV and MIP V would receive carried interest based on the terms previously described. The following details the carried interest entitlements from the CEP Funds and the CEP Co‐invest Partnerships that will be ultimately paid to non‐Clairvest participants, which are recorded as a management participation liability on the consolidated statements of financial position. CEP CEP III CEP IV CEP IV‐A CEP V CEP V‐A CEP III Co‐Invest[1] CEP IV Co‐Invest[1] CEP V Co‐Invest[1] March 31, 2016 March 31, 2015 $ ― 8,969 18,106 3,741 ― ― 30,816 4,467 8,694 ― $ 880 10,968 12,316 2,705 ― ― 26,869 4,716 6,171 ― $ 43,977 $ 37,756 [1] Represents the entitlements of the limited partners of MIP III, MIP IV and MIP V respectively as described in notes 7[c], 7[f] and 7[i]. 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [l] Changes in loans receivable were as follows: CEP III[1] CEP IV[2] CEP IV‐A[2] CEP V[2] CEP V‐A[2] CEP III Co‐Invest[3] CEP IV Co‐Invest[3] CEP V Co‐Invest[3] MIP III[3] 2486303 Ontario[4] Clairvest investee companies[5] Other CEP III[1] CEP IV[2] CEP IV‐A[2] CEP V[2] CEP V‐A[2] CEP IV Co‐Invest[3] MIP III[3] 2141788 Ontario[3] Clairvest investee companies[5] Other April 1, 2015 Loans advanced Loans repaid March 31, 2016 $ ― $ 9,388 $ [9,388] $ ― 3,428 567 ― ― ― 4,684 ― 35 ― 8,714 2,622 115 45,655 6,049 67,719 17,485 3,756 20,183 39,152 ― 11,016 220,403 14,309 1,326 [44,075] [6,616] [67,719] [17,485] [3,756] [14,087] [38,610] [35] [115] [201,886] [13,624] [1,416] 5,008 ― ― ― ― 10,780 542 ― 10,901 27,231 3,307 25 $ 11,451 $ 236,038 $ [216,926] $ 30,563 Loans transferred to acquisition entities April 1, 2014 Loans advanced Loans repaid March 31, 2015 $ 15,600 $ [2,500] $ 2,500 $ [15,600] $ ― 8,735 777 ― ― 3,733 ― 1,049 29,894 3,269 5,093 [3,860] ― ― ― ― ― ― [6,360] ― ― 24,473 3,760 18,855 3,580 19,751 100 ― 73,019 9,225 2,029 [25,920] [3,970] [18,855] [3,580] [18,800] [65] [1,049] [87,839] [9,872] [7,007] 3,428 567 ― ― 4,684 35 ― 8,714 2,622 115 $ 38,256 $ [6,360] $ 84,273 $ [104,718] $ 11,451 [1] [2] [3] [4] [5] Loans advanced to CEP III bear interest at the prime rate in accordance with CEP III’s limited partnership agreement. Interest of $1 thousand [2015 – $0.1 million] was earned from loans advanced to CEP III during fiscal 2016. Loans advanced to CEP IV, CEP IV‐A, CEP V and CEP V‐A bear interest at the Reference Rate in accordance with the respective limited partnership agreements. Interest of $1.3 million [2015 – $0.9 million] was earned from loans advanced to these partnerships during fiscal 2016. Subsequent to year end, an additional $1.8 million of these loans were repaid. Loans advanced to these acquisition entities are non‐interest bearing loans. Subsequent to year end, an additional $1.5 million of these loans were repaid. Loans advanced to 2486303 Ontario bear interest at 10.0% per annum. Interest of $0.3 million [2015 – nil] was earned from these loans during fiscal 2016. Comprised loans advanced to Discovery Air Inc. and a Canadian subsidiary of Momentum Aerospace Group. See notes 7[j] and 7[l]. 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [m] Changes in non‐interest bearing loans payable to acquisition entities were as follows: April 1, 2015 Loans received Repayment of loans received March 31, 2016 CEP III Co‐Invest $ ― $ 146 $ [146] $ ― CEP III Co‐Invest MIP III MIP V April 1, 2014 Loans received Repayment of loans received March 31, 2015 $ 237 $ 17,522 $ [17,759] $ ― ― ― 23 2,400 [23] [2,400] ― ― $ 237 $ 19,945 $ [20,182] $ ― [n] Included in accounts receivable and other assets as at March 31, 2016 are share purchase loans made to certain officers of the Company totaling $2.3 million [2015 − $2.2 million]. The share purchase loans bear interest which is paid annually, have full recourse and are collateralized by the common shares of the Company purchased by the officers with a market value of $2.9 million [2015 – $3.2 million]. None of these loans were made to key management. Also included in accounts receivable and other assets as at March 31, 2016 are other loans made to certain officers of a company affiliated with Clairvest totaling $0.9 million [2015 − $0.5 million]. The loans to officers of the affiliated company bear interest which is paid quarterly. Loans are repayable upon departure of the officer. Interest of $62 thousand [2015 – $54 thousand] was earned on these loans during the year. Accounts receivable and other assets comprised the following: Clairvest's investee companies CEP CEP III CEP IV CEP IV‐A CEP V CEP V‐A Other accounts receivable and prepaid expenses Share purchase loans and loans to officers of affiliated company March 31, 2016 March 31, 2015 $ 1,644 ― 432 12,942 109 4,984 988 21,099 3,159 3,188 $ 2,867 3 1,036 6,205 264 1,065 189 11,629 647 2,779 $ 27,446 $ 15,055 Additionally, acquisition entities of the Company which were not consolidated by the Company as described in note 7 held receivables from CEP III totaling $1 thousand [2015 – $0.1 million], from CEP IV totaling $0.5 million [2015 – $0.3 million], from CEP V totaling $0.1 million [2015– nil] and from Clairvest's investee companies totaling $1.7 million [2015 – $1.2 million]. [o] During fiscal 2016, Clairvest earned $4.6 million [2015 – $2.3 million] in distributions and interest income and $1.9 million [2015 – $1.3 million] in advisory and other fees from its investee companies. Additionally, acquisition entities of the Company which were not consolidated by the Company as described in note 7 earned $12.8 million [2015 – $8.5 million] in distributions and interest income, $0.5 million [2015 – $1.0 million] in dividend income and $0.6 million [2015 – $0.5 million] in advisory and other fees from its investee companies. [p] Clairvest, through PGO Aviation LP, has a 50% ownership in an aircraft where the other 50% ownership is held by a related party of Clairvest. Clairvest received 100% of the incidental rental income of the aircraft and is responsible for 100% of the operating expenses. The related party has the right to sell its portion of the ownership of the aircraft to Clairvest at 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] the fair market value determined at the time of sale. Accordingly, Clairvest has recognized 100% of the net book value of the aircraft and a liability for the 50% ownership the Company does not own. 5. NET INVESTMENT GAINS Net investment gains for the years ended March 31, 2016 and 2015 comprised the following: Net realized gains [losses] Previously recognized net unrealized losses Net changes in unrealized gains during the year 2016 2015 $ 13 $ [2,096] − 37,569 2,115 37,452 $ 37,582 $ 37,471 6. NET CARRIED INTEREST INCOME Net carried interest income for the years ended March 31, 2016 and 2015 comprised the following: Realized carried interest income [notes 4[a], 4[b] and 4[c]] 2016 2015 $ 5,708 $ 33,991 Net changes in unrealized carried interest [notes 4[a], 4[b], 4[d] and 4[e]] 10,393 [2,630] $ 16,101 $ 31,361 7. CORPORATE INVESTMENTS In accordance with IFRS 10, the fair value of the Company’s corporate investments includes the fair value of the net assets of its acquisition entities that are controlled by the Company. Accordingly, Clairvest's direct corporate investments comprise these acquisition entities, which invest directly or indirectly in various investee companies and other investee companies where Clairvest made an investment directly. 2141788 Ontario, a limited partner of CEP III Co‐Invest and CEP V Co‐Invest, is a wholly‐owned acquisition entity of Clairvest. Clairvest's relationship with CEP III Co‐Invest and MIP III, CEP IV Co‐Invest and MIP IV, and CEP V Co‐Invest and MIP V are described in notes 4[c], 4[f] and 4[i]. During the year ended March 31, 2016, Clairvest made additional investments totaling $3.7 million [2015 – $13.4 million] in CEP IV Co‐Invest and $22.2 million [2015 – $3.6 million] in CEP V Co‐Invest. During fiscal 2016, Clairvest advanced $11.0 million to 2486303 Ontario, a wholly‐owned acquisition entity of Clairvest. Subsequently, 2486303 Ontario purchased 100% of the limited partnership units of CEP for $9.8 million and 50% of the limited partnership units of CEP GP, the entity that earns a carried interest from CEP, for $1.2 million. Prior to the purchase, CEP was an investment fund held by third party investors whose portfolio had been liquidated except for an equity participation interest in the Grey Eagle Casino as described in note 7[s]. During fiscal 2016, CEP III Co‐Invest received total net cash proceeds of $14.3 million as a result of the realization events involving Casino New Brunswick as described in note 7[a]. CEP III Co‐Invest declared distributions totaling $3.0 million to Clairvest. CEP III Co‐Invest also declared distributions totaling $5.0 million and $0.1 million to 2141788 Ontario and MIP III, respectively. CEP III Co‐Invest also declared and paid $0.7 million to the general partner, all of which was then declared and paid to the limited partners of MIP III as described in note 4[c]. Also during fiscal 2016, MIP III declared and paid distributions totaling $0.1 million to Clairvest as described in note 4[c]. 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] The following table details the fair value of Clairvest’s direct investments and acquisition entities, which are controlled by Clairvest but which are not part of the consolidated group: Investee companies March 31, 2016 Acquisition entity net assets [liabilities] Total Investee companies March 31, 2015 Acquisition entity net assets [liabilities] Total Held directly by Clairvest Group Inc. $ 26,071 $ — $ 26,071 $ 22,394 $ — $ 22,394 Held through the following acquisition entities: 2486303 Ontario 2141788 Ontario CEP III Co‐Invest MIP III CEP IV Co‐Invest MIP IV CEP V Co‐Invest MIP V Total 10,272 40,223 22,152 886 [10,424] 27,060 16,486 660 [152] 67,283 38,638 1,546 — 42,954 23,763 952 — 20,572 12,476 500 — 63,526 36,239 1,452 193,458 [2,917] 190,541 163,978 [5,264] 158,714 3,649 25,607 2,381 [55] [1,563] [145] 3,594 24,044 2,236 3,238 3,658 2,422 [104] [71] [47] 3,134 3,587 2,375 $ 324,699 $ 29,102 $ 353,801 $ 263,359 $ 28,062 $ 291,421 The following table details the assets and liabilities included in the determination of the fair value of the net assets of acquisition entities excluding the investee companies held by these acquisition entities. Assets Cash Temporary investments Accounts receivable and other assets Loans receivable Income taxes recoverable Derivative instruments Deferred income tax asset Liabilities March 31, 2016 March 31, 2015 $ 34,901 $ 20,513 10,501 2,426 3,095 2,184 6,165 92 10,392 1,550 10,568 — — — $ 59,364 $ 43,023 Accounts payable and accrued liabilities $ 3,736 $ 503 Loans payable Income taxes payable Derivative instruments Deferred income tax liability Net assets 22,223 37 — 4,266 35 6,229 7,998 196 $ 30,262 $ 14,961 $ 29,102 $ 28,062 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Excluding the net assets from acquisition entities summarized in the table above, the difference between the cost and the fair value of the Company's investee companies, are summarized below. March 31, 2016 March 31, 2015 Fair value Cost Difference Fair value Cost Difference Investments made by CEP III Co‐Invest alongside CEP III Casino New Brunswick $ — $ — $ — $ 8,324 $ 9,798 $ [1,474] Chilean Gaming Holdings[1] 43,674 28,754 2,403 7,077 14,920 [2,403] 8,940 34,703 11,629 9,380 28,754 2,403 7,451 5,949 9,226 1,929 Light Tower Rentals Inc. Lyophilization Services of New England Inc. Investments made by CEP IV Co‐Invest alongside CEP IV Centaur Gaming Cieslok Media Inc. County Waste of Virginia, LLC CRS Contractors Rental Supply Limited Partnership Davenport Land Investments Discovery Air Inc. Linen King, LLC Momentum Aerospace Group New Meadowlands Racetrack, LLC Rivers Casino Winters Bros. Waste Systems of CT, LLC Investments made by CEP V Co‐Invest alongside CEP V Accel Entertainment Inc. Digital Media Solutions, LLC Winters Bros. Waste Systems of Long Island Holdings, LLC Grey Eagle Casino[2] Wellington Financial — 16,017 68,672 10,640 11,981 22,009 2,858 30,685 — 5,600 8,551 26,202 9,907 12,646 7,987 10,927 14,076 20,852 14,644 54,028 50,355 14,644 35,711 4,015 7,308 10,573 2,196 32,243 — 3,838 5,580 7,508 8,053 12,910 8,254 8,236 11,017 14,631 6,625 4,673 11,436 662 [1,558] — 1,762 2,971 18,694 1,854 [264] [267] 2,691 3,059 6,221 7,411 8,210 16,984 3,465 33,036 809 3,980 7,942 25,362 9,662 — — 9,713 2,709 4,015 6,690 10,573 3,059 29,606 2,525 2,787 5,580 7,508 8,053 — — 7,215 1 18,069 14,375 3,396 1,520 6,411 406 3,430 [1,716] 1,193 2,362 17,854 1,609 — — 2,498 2,708 3,694 96,706 [70] Other investments 1,415 1,486 [71] 1,616 1,686 323,284 189,240 134,044 261,743 165,037 [1] [2] Comprised CEP III Co‐Invest’s investment in Casino Marina del Sol, Casino Osorno and Casino Sol Calama. Fair value includes the portion owned directly by Clairvest and the portion owned indirectly through 2486303 Ontario. Fair value excludes the amount of $1.2 million which represents Clairvest’s 50% entitlement of the carried interest of CEP as described in note 4[a]. $ 324,699 $ 190,726 $ 133,973 $ 263,359 $ 166,723 $ 96,636 The cost and fair value of investee companies do not reflect foreign exchange gains or losses on the foreign exchange forward contracts entered into as economic hedges against these investments [note 14]. For those investments which are hedged by acquisition entities, the fair value of these foreign exchange forward contracts was included in the net assets [liabilities] of these acquisition entities. Details of each investee company are described below. 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [a] Casino New Brunswick Casino New Brunswick is a gaming entertainment complex located in Moncton, New Brunswick. As at March 31, 2015, CEP III Co‐Invest had invested $9.8 million in Casino New Brunswick in the form of debentures with a stated interest at a rate of 6% per annum and units of a limited partnership which operates Casino New Brunswick which entitled CEP III Co‐Invest to 22.5% of the earnings of the casino until December 31, 2030. Interest had been waived between March 1, 2011 and December 31, 2012 and resumed effective January 1, 2013, with 45% of the interest payable in cash and the remaining 55% payable in‐kind. During fiscal 2016, CEP III Co‐Invest completed the sale of Casino New Brunswick and received proceeds of $14.3 million against a carrying value as at March 31, 2015 of $8.3 million and its original investment of $9.8 million. The proceeds included $10.9 million in full repayment of debentures and interest, as well as $3.4 million in distributions from the entity which owned Casino New Brunswick and $13 thousand in fees. Subsequently, CEP III Co‐Invest distributed the net proceeds to its unitholders in accordance with its limited partnership agreement. In addition, Clairvest received $0.5 million in fees related to a guarantee it had provided to Casino New Brunswick as described in note 15[i]. As part of the transaction, rather than an escrow holdback, Clairvest agreed to a net guarantee of $13.5 million to fund any valid claims made by the purchaser under the indemnity provisions of the sale for a specified period. Any funding pursuant to the guarantee will be allocated 25% to CEP III Co‐Invest and 75% to CEP III. [b] Chilean Gaming Holdings Chilean Gaming Holdings is a limited partnership which had a 50% ownership interest in Casino Marina del Sol in Concepcion, Chile, and a 48.8% ownership interest in each of Casino Osorno in Osorno, Chile, and Casino Sol Calama in Calama, Chile. During fiscal 2016, Chilean Gaming Holdings increased its ownership in Casino Osorno and in Casino Sol Calama, through a buyout of the operating partner of Casino Osorno and Casino Sol Calama by the entity which owns Casino Marina del Sol. Upon completion of this transaction, Chilean Gaming Holdings increased its ownership in each of Casino Osorno and Casino Sol Calama from 48.8% to 73.8%, and continues to hold a 50% ownership in Casino Marina del Sol. As at March 31, 2016 and 2015, CEP III Co‐Invest held 30,446,299 limited partnership units of Chilean Gaming Holdings, representing a 36.8% equity interest. During fiscal 2016, CEP III Co‐Invest earned dividends totaling $0.5 million [2015 – $1.0 million] through its investment in Chilean Gaming Holdings, bringing dividends earned to March 31, 2016 to $9.5 million [2015 – $9.0 million]. [c] Light Tower Rentals Inc. Light Tower Rentals Inc. ["Light Tower Rentals"] is an oilfield equipment rental company operating in major oil and gas drilling basins in the United States. As at March 31, 2016 and 2015, CEP III Co‐Invest held 3,985,604 common shares of Light Tower Rentals representing a 6.7% ownership interest on a fully diluted basis. [d] Lyophilization Services of New England Inc. Lyophilization Services of New England Inc. ["LSNE"] is a Manchester, New Hampshire‐based contract manufacturing organization focused on providing lyophilization services to biotech, pharmaceutical and medical device manufacturers. As at March 31, 2015, CEP III Co‐Invest held 6,406,000 Series A 10% cumulative preferred shares which are convertible into a 12.3% ownership interest on a fully diluted basis, 1,250,000 Series B 10% cumulative preferred shares and US$0.4 million in demand promissory notes with a stated interest rate of 10% per annum. These Series A preferred shares are entitled to dividends only in the event that CEP III Co‐Invest does not convert the preferred shares into common shares. Each Series A preferred share is convertible into one common share at CEP III Co‐Invest's discretion and dividends are forfeited on conversion. During fiscal 2016, LSNE repaid in full the US$0.4 million in demand promissory notes and its accrued interest. As at March 31, 2016, CEP III Co‐Invest held 6,406,000 Series A 10% cumulative preferred shares and 1,250,000 Series B 10% cumulative preferred shares of LSNE. 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] As at March 31, 2015, Clairvest had advanced short‐term working capital loans totaling US$0.8 million [C$1.0 million] to LSNE. During fiscal 2016, additional loans totaling US$1.0 million [2015 – US$0.6 million] were made by Clairvest to LSNE. Subsequently, these loans and loans previously advanced were repaid in full [2015 – nil]. [e] Centaur Gaming Centaur Gaming is the owner and operator of Hoosier Park Racing & Casino in Anderson, Indiana, and Indiana Grand Casino and Indiana Downs Racetrack in Shelbyville, Indiana. As at March 31, 2016 and 2015, CEP IV Co‐Invest held US$13.6 million in term loans with stapled warrants which are convertible upon exercise to 9.9% of Class A and Class B units of Centaur Gaming. [f] Cieslok Media Inc. Cieslok Media Inc. ["Cieslok"] is a Canadian outdoor advertising firm which operates large format digital and static billboards throughout major cities in Canada. As at March 31, 2016 and 2015, CEP IV Co‐Invest held 4,014,989 common shares of Cieslok representing a 23.5% ownership on a fully diluted basis. [g] County Waste of Virginia, LLC County Waste of Virginia, LLC ["County Waste"] is a private regional solid waste collection company headquartered in Albany, New York. As at March 31, 2015, CEP IV Co‐Invest held 6,482.28 Class B units of County Waste at a cost of $6.7 million. During fiscal 2016, CEP IV Co‐Invest invested an additional US$0.5 million [C$0.6 million] for 460.36 Class B units of County Waste to support the growth of its operations. As at March 31, 2016, CEP IV Co‐Invest held 6,942.64 Class B units of County Waste representing a 12.5% [2015 – 12.5%] ownership interest on a fully diluted basis. [h] CRS Contractors Rental Supply Limited Partnership CRS Contractors Rental Supply Limited Partnership ["CRS"] is a provider of equipment rental services and related merchandise across Ontario, Canada. As at March 31, 2015, CEP IV Co‐Invest held 199,900 Class B units and 10,572,805 Class C units of CRS, representing a 13.7% ownership interest and the right to receive proceeds equal to an additional 2.2% economic interest until it has received three times its invested capital. During fiscal 2016, CEP IV Co‐Invest exercised its right to purchase units of CRS from a departing unitholder of CRS at a pre‐determined price. CEP IV Co‐Invest, via an acquisition entity, purchased 27,002 Class B units of CRS at $34 thousand, which was funded by a return of capital from CRS. As at March 31, 2016, CEP IV Co‐Invest held 226,902 Class B units and 10,572,805 Class C units of CRS, representing a 13.6% ownership interest and the right to receive proceeds equal to an additional 2.2% economic interest until it has received three times its invested capital. Also during fiscal 2016, CEP IV Co‐Invest earned distributions totaling $0.5 million [2015 – $0.4 million] from CRS, bringing distributions earned to March 31, 2016 to $1.4 million [2015 – $0.9 million]. [i] Davenport Land Investments Davenport Land Developments comprises two entities holding real estate surrounding a casino development in Davenport, Iowa ["Davenport North" and "Davenport South"]. As at March 31, 2015, CEP IV Co‐Invest had invested US$1.4 million [C$1.6 million] for an 18.7% ownership in Davenport North and US$1.3 million [C$1.5 million] for a 23.0% ownership interest in Davenport South. Additionally, CEP IV Co‐Invest had advanced a US$0.6 million non‐interest bearing promissory note to a partner to help fund its 50% ownership in Davenport North. During fiscal 2016, Davenport South sold certain of its real estate holdings for proceeds of US$1.0 million [C$1.2 million], which had been distributed to an acquisition entity of CEP IV Co‐Invest, bringing total distributions from Davenport South, on an after tax basis, to 110% of invested capital. As a result of CEP IV Co‐Invest’s investment in Davenport South requiring certain acquisition entities in the United States, CEP IV Co‐Invest, through its acquisition entities, incurred U.S. income tax obligations totaling $0.2 million during fiscal 2016. Also during fiscal 2016, the promissory note was amended such that interest accrues at a stated rate of 10% per annum commencing October 1, 2015. As at March 31, 2016, 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] CEP IV Co‐Invest had invested US$1.4 million [C$1.6 million] for an 18.7% ownership in Davenport North and US$0.8 million [C$0.9 million] for a 13.4% ownership interest in Davenport South in addition to a US$0.6 million promissory note with a stated interest rate of 10% per annum. [j] Discovery Air Inc. Discovery Air Inc. ["Discovery Air"] is a specialty aviation services company operating across Canada and in select locations internationally. As at March 31, 2015, CEP IV Co‐Invest had invested $22.0 million in secured convertible debentures ["Debentures"]. The Debentures, which have a 5.5‐year term from issuance on September 23, 2011 and are subject to certain early redemption rights in favour of Discovery Air, accrue interest at a rate of 10% per annum and interest is paid in‐kind and compounded on an annual basis. During fiscal 2016, CEP IV Co‐Invest earned $2.9 million [2015 – $2.8 million] in interest from the Debentures, all of which has been provided for [2015 – $0.7 million] and none of which [2015 – $1.6 million] was received during fiscal 2016. As at March 31, 2016, the Debentures have a gross accrued value of $32.1 million [2015 – $29.2 million], the maturity of which was extended from March 22, 2017 to September 30, 2017. The Debentures which are convertible into 2,775,218 common shares of Discovery Air at a conversion price of $11.56 [2015 – $10.51] per share. As at March 31, 2016, the closing quoted market price of a Discovery Air common share was $0.21 [2015 – $0.23] per share. As at March 31, 2015, CEP IV Co‐Invest held 19,337,975 common shares of Discovery Air and Clairvest held 471,940 common shares of Discovery Air, which collectively represent a 24.2% ownership interest on a fully diluted basis. During fiscal 2016, CEP IV Co‐Invest invested an additional $0.4 million to acquire 1,420,825 common shares of Discovery Air. Clairvest also invested $10 thousand to acquire 34,675 common shares of Discovery Air. As at March 31, 2016, Clairvest and CEP IV Co‐Invest collectively held 21,265,415 common shares representing a 25.9% ownership interest on a fully diluted basis. As at March 31, 2015, Clairvest had advanced to Discovery Air $1.7 million in the form of promissory notes. During fiscal 2016, Clairvest advanced an additional $7.4 million [2015 – $1.7 million] to Discovery Air in the form of promissory notes. Also during fiscal 2016, Discovery Air repaid $6.8 million of these loans and loans previously advanced such that $2.3 million remained outstanding as at March 31, 2016. Interest of $0.3 million [2015 – $1 thousand] was earned from these promissory notes to Discovery Air during fiscal 2016. The $2.3 million promissory note bears interest at 8.0% per annum and was repayable on May 15, 2016. Subsequent to year‐end, the maturity date of this promissory note was extended to September 15, 2016. During fiscal 2016, Clairvest entered into a guarantee agreement with a lender of Discovery Air to support up to $10.0 million of its credit facility with a bank. The guarantee is callable by the lender under certain circumstances and should it be called, Clairvest will assume the lender’s security position that supports the loans provided by the lender. Clairvest intends to allocate any amounts called under this guarantee to CEP IV Co‐Invest, CEP IV and CEP IV‐A on a pro‐ rata basis in accordance with their respective capital commitments in CEP IV. As at March 31, 2016, the total contingent exposure under this guarantee is $7.4 million, $2.0 million of which would be assumed by CEP IV Co‐Invest if called. Any additional guarantee is subject to Clairvest’s consent at its sole discretion. During fiscal 2016, CEP IV Co‐Invest committed to advance up to $3.8 million to Discovery Air in the form of a secured revolving credit facility with interest at 12% per annum on drawn amounts, $3.2 million of which may be drawn upon request and the remaining $0.6 million is subject to CEP IV Co‐Invest’s consent. As at March 31, 2016, $2.2 million of this facility has been drawn. [k] Linen King, LLC Linen King, LLC ["Linen King"] is an Oklahoma‐based textile rental company that provides commercial laundry services to the healthcare and hospitality industries. As at March 31, 2015, CEP IV Co‐Invest held 2,529,209 Class A units of Linen King, representing a 21.7% ownership interest. 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] During fiscal 2016, CEP IV Co‐Invest realized on its investment in Linen King and received proceeds of US$0.6 million [C$0.8 million] against its original investment of US$2.5 million [C$2.5 million]. Substantially all of the investment losses had been recorded in prior years. [l] Momentum Aerospace Group Momentum Aerospace Group ["MAG"] is a U.S.‐based specialty aviation and intelligence, surveillance and reconnaissance service provider. As at March 31, 2015, CEP IV Co‐Invest held 26,499 Class A stock of MAG, representing a 9.6% ownership interest on a fully diluted basis. The Class A stock has a stated dividend rate of 10% per annum and each Class A stock is convertible into 1.0114 common stock of MAG at CEP IV Co‐Invest’s discretion and dividends are forfeited on conversion. During fiscal 2016, CEP IV Co‐Invest invested an additional US$0.8 million [C$1.1 million] to acquire 6,237 Class A stock in MAG to support the growth of its operations. As at March 31, 2016, CEP IV Co‐Invest held 32,736 Class A stock of MAG, representing a 10.3% ownership interest on a fully diluted basis. As at March 31, 2015, Clairvest had provided $0.9 million of working capital loans to MAG Canada, a Canadian subsidiary of MAG, in support of its operations. During fiscal 2016, Clairvest advanced a further $6.9 million [2015 − $7.5 million] to MAG Canada. Also during fiscal 2016, $6.8 million [2015 − $9.9 million] of these loans and loans previously advanced were repaid such that $1.0 million [2015 − $0.9 million] was outstanding as at March 31, 2016 and have been included in loans receivable. Interest of $29 thousand [2015 – $50 thousand] was earned from loans to MAG Canada during fiscal 2016. [m] New Meadowlands Racetrack, LLC New Meadowlands Racetrack, LLC [the "Meadowlands"] operates a standardbred horseracing track located in East Rutherford, New Jersey. As at March 31, 2016 and 2015, Clairvest has fully funded its US$5.4 million [C$5.6 million] commitment to invest in the Meadowlands. The investment was made in the form of secured debentures, which accrue interest at a rate of 15% per annum, 10% of which is payable quarterly in cash and 5% is accrued quarterly. During fiscal 2016, Clairvest agreed to the entire 15% interest to be entirely payable in‐kind for a period commencing interest and $0.6 million January 1, 2016. Clairvest earned $0.6 million [2015 – $0.6 million] [2015 – $0.3 million] in accrued interest on its investment in the Meadowlands secured debentures. Cash interest of $0.8 million [2015 – $0.4 million] was received during the year. in cash Clairvest also holds warrants which entitle it to invest in equity securities of the Meadowlands subject to certain conditions. The accrued interest on the secured convertible debentures is forfeited in the event Clairvest exercises the warrants. [n] Rivers Casino Rivers Casino is a gaming entertainment complex located in Des Plaines, Illinois. As at March 31, 2016 and 2015, CEP IV Co‐Invest held 9,021,917 units of Rivers Casino, representing a 5.0% ownership on a fully diluted basis. CEP IV Co‐Invest earns quarterly distributions and fees as an investor in Rivers Casino. During fiscal 2016, CEP IV Co‐ Invest earned $4.9 million [2015 – $4.5 million] in quarterly distributions and $0.6 million [2015 – $0.5 million] in quarterly fees from Rivers Casino. As a result of CEP IV Co‐Invest's investment in Rivers Casino requiring certain acquisition entities in the United States, income tax obligations totaling $1.8 million incurred U.S. its acquisition entities, CEP IV Co‐Invest, through [2015 – $1.5 million] during fiscal 2016. The quarterly distributions, fees and U.S. taxes paid by the U.S. acquisition entity are reflected in the fair value of Clairvest's investments in CEP IV Co‐Invest. [o] Winters Bros. Waste Systems of CT, LLC Winters Bros. Waste Systems of CT, LLC ["Winters Bros. of CT"] is a regional solid waste collection, recycling and disposal company based in Danbury, Connecticut. 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] As at March 31, 2016 and 2015, CEP IV Co‐Invest held 76,284.8 Class C units of Winters Bros. of CT, representing 13.4% ownership interest on a fully diluted basis. [p] Accel Entertainment Inc. Accel Entertainment Inc. ["Accel Entertainment"] is a licensed video gaming terminal operator in Illinois. During fiscal 2016, CEP V Co‐Invest invested US$9.7 million [C$12.9 million] to acquire 283,478 Class D preferred shares of Accel Entertainment. As at March 31, 2016, CEP V Co‐Invest’s ownership interest in Accel Entertainment was 9.3%. Subject to post‐closing purchase price adjustments, CEP V Co‐Invest’s investment may be increased to up to US$12.1 million. [q] Digital Media Solutions, LLC Digital Media Solutions, LLC ["Digital Media Solutions"] operates as a lead generation engine for companies in a variety of different industries. During fiscal 2016, CEP V Co‐Invest invested US$6.2 million [C$8.3 million] to acquire 6,150,000 Class B units of Digital Media Solutions. The Class B units are entitled to certain preference over all other equity units in Digital Media Solutions. As at March 31, 2016, CEP V Co‐Invest’s ownership interest in Digital Media Solutions was 13.9%. [r] Winters Bros. Waste Systems of Long Island Holdings, LLC Winters Bros. Waste Systems of Long Island Holdings, LLC ["Winters Bros. of LI"] is a regional solid waste collection, recycling and disposal company based in Long Island, New York. As at March 31, 2015, CEP V Co‐Invest held 1,398,507 Class C units of Winters Bros. of LI, representing a 14.0% ownership on a fully diluted basis. During fiscal 2016, CEP V Co‐Invest invested an additional US$0.5 million [C$0.7 million] to acquire 89,266 Class C units of Winters Bros. of LI. Also during fiscal 2016, CEP V Co‐Invest invested US$0.3 million [C$0.3 million] for 256,037 units of WBLI II, LLC [“WBLI II”], an affiliated company of Winters Bros. of LI which is owned proportionately by the same unitholders of Winters Bros. of LI. As at March 31, 2016, CEP V Co‐Invest held 1,487,773 Class C units of Winters Bros. of LI and 256,037 units of WBLI II, representing a 14.0% ownership interest on a fully‐diluted basis in the respective entities. [s] Grey Eagle Casino Grey Eagle Casino is a charitable casino on Tsuu T'ina First Nation reserve lands, located southwest of the City of Calgary, Alberta. As at March 31, 2015, Clairvest held units of a limited partnership which operates Grey Eagle Casino, entitling Clairvest to between 2.8% and 9.6% of the earnings of the casino until December 18, 2022. During fiscal 2016, 2486303 Ontario, a wholly‐owned acquisition entity of Clairvest, invested $11.0 million to increase the equity participation interest in the Grey Eagle Casino through the purchase of CEP. As described above, the purchase included 100% of the limited partnership units of CEP for $9.8 million and 50% of the limited partnership units of CEP GP, the entity that earns the carried interest from CEP, for $1.2 million. The purchase entitles 2486303 Ontario to 8.5% to 28.7% of the earnings of the Grey Eagle Casino until December 18, 2022. During fiscal 2016, Clairvest earned $0.9 million [2015 – $0.8 million] and 2486303 Ontario earned $1.1 million [2015 – nil] in equity distributions from Grey Eagle Casino. [t] Wellington Financial Wellington Financial, through various Wellington Funds, provides debt capital and operating lines to technology, biotechnology, communications and industrial product companies across Canada and the United States. Clairvest, as a limited partner, committed to fund $25.2 million representing a 12.6% interest in WF Fund IV Limited Partnership [“Wellington Fund IV”] as at March 31, 2015. Clairvest continues to own an interest in the residual of WF Fund III Limited Partnership [“Wellington Fund III”] and is also entitled to participate in the profits received by the general partner of Wellington Fund III and Wellington Fund IV. During fiscal 2016, Clairvest funded an additional $0.4 million [2015 – $0.5 million] to Wellington Fund IV, bringing total amount funded to $14.8 million [2015 – $14.4 million] against the $25.2 million commitment. Subsequently, Clairvest committed $30.3 million to WF Fund V Limited Partnership ["Wellington Fund V"], a $300 million successor fund to Wellington Fund IV. In conjunction with the raising of Wellington Fund V, Wellington Fund V purchased Wellington Fund 58 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] IV’s loan portfolio. As a result of these transactions, Clairvest received a return of capital of $14.8 million from Wellington Fund IV and invested $14.6 million in Wellington Fund V. Clairvest is also entitled to participate in the profits of the general partner of various Wellington Financial Funds, and holds a residual limited partner interest in Wellington Fund III and Wellington Fund IV. As at March 31, 2016, $14.6 million of Clairvest's $30.3 million commitment had been funded representing a 10.1% ownership in Wellington Fund V. During fiscal 2016, Clairvest received distributions totaling $3.3 million from Wellington Financial, bringing total distributions received from current and prior Wellington Funds to $26.6 million [2015 – $23.3 million]. 8. FIXED ASSETS The composition of Clairvest's fixed assets was as follows: Aircraft IT equipment [1] Furniture, fixtures and equipment Leasehold improvements Total At cost Balance as at April 1, 2015 $ 3,603 $ 724 $ 391 $ 2,480 $ 7,198 Additions — 77 69 105 251 Balance as at March 31, 2016 $ 3,603 $ 801 $ 460 $ 2,585 $ 7,449 Accumulated amortization Balance as at April 1, 2015 $ 1,648 $ 638 $ 368 $ 2,277 $ 4,931 Amortization expense 356 111 9 182 658 Balance as at March 31, 2016 $ 2,004 $ 749 $ 377 $ 2,459 $ 5,589 Carrying amount as at March 31, 2016 $ 1,599 $ 52 $ 83 $ 126 $ 1,860 At cost Balance as at April 1, 2014 $ 3,603 $ 665 $ 371 $ 2,478 $ 7,117 Additions — 59 20 2 81 Balance as at March 31, 2015 $ 3,603 $ 724 $ 391 $ 2,480 $ 7,198 Accumulated amortization Balance as at April 1, 2014 $ 624 $ 604 $ 360 $ 1,971 $ 3,559 Amortization expense Impairment charges 224 800 34 — 8 — 306 — 572 800 Balance as at March 31, 2015 $ 1,648 $ 638 $ 368 $ 2,277 $ 4,931 Carrying amount as at March 31, 2015 $ 1,955 $ 86 $ 23 $ 203 $ 2,267 [1] Comprised computer equipment and computer software. 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 9. CREDIT FACILITIES Clairvest has a $75.0 million committed credit facility with a maturity date of April 30, 2020. The credit facility bears interest at 11% per annum on drawn amounts and at 1% per annum on undrawn amounts. The amount available under the credit facility as at March 31, 2016 and 2015 is $75.0 million. No amounts were drawn during fiscal 2016 and 2015. The Company also has a $20.0 million credit facility available, subject to annual renewals, bearing interest at prime plus 0.5% per annum. The prime rate as at March 31, 2016 was 2.70% [2015 – 2.85%]. The amount available under the credit facility as at March 31, 2016 and 2015 was $20.0 million, which is based on debt covenants within the banking arrangement. No amounts were drawn during fiscal 2016 and 2015. 10. INCOME TAXES Income tax expense for the years ended March 31, 2016 and 2015 comprised the following: Current income tax expense Deferred income tax expense [recovery] 2016 2015 $ [2,814] $ 5,050 6,075 [1,763] $ 3,261 $ 3,287 A reconciliation of the income tax expense for the years ended March 31, 2016 and 2015 based on the Federal and Ontario statutory rate and the effective rate were as follows: Income before income taxes Statutory Federal and Ontario income tax rate Statutory Federal and Ontario income taxes Non‐taxable portion of net investment gains and distributions Non‐taxable portion of carried interest net of management participation Non‐deductible [taxable] portion of foreign exchange cost [gains] Non‐deductible portion of other expenses Foreign income tax rate differences Tax recoveries regarding prior year Other 2016 $ 43,227 11,455 [5,128] 2015 % $ % 26.50 26.50 [11.86] 55,292 14,652 [8,954] [1,285] [2.97] [2,098] 128 22 [276] [778] [877] 3,261 0.29 0.05 [0.64] [1.80] [2.03] 7.54 [167] 964 [514] [193] [403] 3,287 26.50 26.50 [16.19] [3.80] [0.30] 1.74 [0.93] [0.35] [0.73] 5.94 In addition to the income tax expense recorded by Clairvest, acquisition entities of Clairvest recorded $3.2 million [2015 ‐ $5.8 million] in income tax expense during fiscal 2016, which is included in the fair value determination of these acquisition entities. 60 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Deferred income tax liabilities relate to temporary differences on corporate and temporary investments, derivative instruments, accounts payable and accrued liabilities, income, and unrealized carried interest income. The composition was as follows: Temporary differences on corporate and temporary investments Temporary differences on derivative instruments Temporary differences on accrued compensation and share‐based compensation Temporary differences on income Temporary differences on unrealized carried interest net of management participation Other March 31, 2016 March 31, 2015 $ 13,699 77 [4,565] 1,534 2,654 740 $ 14,139 $ 8,126 [575] [4,046] 677 2,118 1,764 $ 8,064 All deferred income tax expenses [recoveries] were recognized in net income during fiscal 2016 and 2015. 11. SHARE CAPITAL Authorized Unlimited number of preference shares issuable in series, with the designation, rights, privileges, restrictions, and conditions to be determined by the Board of Directors prior to the issue of the first shares of a series. Unlimited number of common shares 10,000,000 non‐voting shares Issued and outstanding March 31, 2016 March 31, 2015 Common shares, beginning of year Issued on exercise of stock options [note 12] Shares Amount Shares Amount 15,134,095 $ 79,314 15,134,095 $ 79,314 80,000 2,348 ─ ─ Common shares, end of year 15,214,095 $ 81,662 15,134,095 $ 79,314 During fiscal 2016, the Company filed a normal course issuer bid enabling it to make market purchases of up to 760,704 [2015 – 756,705] of its common shares in the 12‐month period commencing March 7, 2016 [2015 – March 5, 2015]. During fiscal 2016 and 2015, the Company made no purchases or cancellations under its normal course issuer bids. In total, 3,429,895 common shares at a cost of $35.3 million have been purchased under current and all previous normal course issuer bids as at March 31, 2016 and 2015. An additional 934,200 common and 2,230,954 non‐voting shares have been purchased for cancellation outside of the normal course issuer bid. Common shares of 15,214,095 [2015 − 15,134,095] were outstanding as at March 31, 2016. The weighted average number of common shares outstanding during fiscal 2016 was 15,179,547 [2015 − 15,134,095]. The basic and fully diluted net income per share computations for 2016 and 2015 were as follows: Net income and comprehensive income [000s] Weighted average number of shares 2016 Per share amount Net income and comprehensive income [000s] Weighted average number of shares[1] 2015 Per share amount Basic and fully diluted $ 39,966 15,179,547 $ 2.63 $ 52,005 15,134,095 $ 3.43 [1] The determination of the weighted average number of shares on a fully diluted basis excludes 322,092 shares related to stock options that were anti‐ dilutive for the year ended March 31, 2015. 61 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 12. SHARE‐BASED COMPENSATION Under the Company's stock option plan, 558,856 [2015 – 1,113,856] common shares of the Company have been made available for issuance to eligible participants. As at March 31, 2016, no options [2015 – 555,000] were outstanding under the plan, and an additional 558,856 [2015 – 558,856] are available for future grants. Under the plan, options are exercisable for one common share and the exercise price of the option must equal the market price of the underlying share on the day preceding the grant date. Options granted vest over a period of five years. Once vested, options are exercisable at any time until their expiry which is 10 years after the grant date. During fiscal 2016, 555,000 [2015 – 10,000] options were exercised, 80,000 [2015 – nil] of which were exercised for shares, increasing share capital by $2.3 million [2015 – nil]. The remaining 475,000 [2015 – 10,000] options were exercised under the cash settlement plan and had no impact on share capital. No options were granted during fiscal 2016 and 2015. A summary of the status of the Company's stock option plan as at March 31, 2016 and 2015 and changes during the years ended March 31, 2016 and 2015 are presented below: Options outstanding, April 1, 2014 Options exercised Options outstanding, March 31, 2015 Options exercised Options outstanding, March 31, 2016 [1] Adjusted for special dividends where applicable Number of options Weighted average exercise price per share[1] 565,000 [10,000] 555,000 [555,000] ─ $ 10.60 8.84 10.36 10.36 $ ─ Clairvest recognized share‐based compensation expense based upon the fair value of the outstanding stock options using the Black‐Scholes option‐pricing model. As at March 31, 2015, all options granted were fully vested and $9.7 million was accrued under the Company's stock option plan and included in share‐based compensation liability. For the year ended March 31, 2015, Clairvest recognized a share‐based compensation expense of $2.3 million. The composition was as follows: As at March 31, 2015 Grant # options granted # of options vested Price Black‐Scholes assumptions used Expected volatility Expected forfeiture rate[1] Expected dividend yield Risk‐free interest rate Expected life [years] June 23, 2005 June 21, 2006 June 27, 2007 June 30, 2009 200,000 120,000 200,000 35,000 200,000 120,000 200,000 35,000 8.84 9.40 12.49 12.14 10% 0% 0.00% 1.00% 0.2 10% 0% 0.29% 0.86% 1.2 10% 0% 0.32% 0.89% 2.2 10% 0% 0.34% 1.10% 4.2 Value using Black‐Scholes [000s][2] $ 3,837 $ 2,232 $ 3,113 $ 560 [1] [2] Assumed a 0% forfeiture rate as a result of a cash settlement feature in Clairvest’s stock option plan and historical forfeiture rates of individuals included in the stock option plan. Share price as at March 31, 2015 was $27.81 per share [TSX: CVG]. As at March 31, 2016, 243,402 [2015 – 229,103] DSUs were held by directors of the Company, the accrual in respect of which was $6.9 million [2015 – $6.5 million] and has been included in share‐based compensation liability. During fiscal 2016, no DSUs 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] [2015 – 13,577] were exercised and 14,299 March 31, 2016, Clairvest recognized an expense of $0.4 million [2015 – $1.4 million] with respect to DSUs. [2015 – 16,545] DSUs were granted. For the year ended As at March 31, 2016, 120,000 [2015 – 105,000] ADSUs were held by directors of the Company, the accrual in respect of which is $1.6 million [2015 – $1.6 million] and has been included in share‐based compensation liability. During fiscal 2016, no ADSUs [2015 – nil] were exercised and 15,000 [2015 – nil] ADSUs were granted. For the year ended March 31, 2016, Clairvest recognized an expense recovery of $2 thousand [2015 – expense of $0.4 million] with respect to ADSUs. As at March 31, 2016, a total of 1,119,348 [2015 – 1,105,692] BVARs were held by employees and a director of Clairvest, the accrual in respect of which was $8.5 million [2015 – $6.6 million] and has been included in share‐based compensation liability, and a further $5.7 million [2015 – $6.2 million] not accrued as those BVARs have not vested. During fiscal 2016, 204,994 [2015 – 189,994] BVARs were exercised and 23,014 [2015 – 42,401] BVARs were forfeited. Also during fiscal 2016, 241,664 [2015 – 188,551] BVARs were granted. For the year ended March 31, 2016, Clairvest recognized an expense of $5.5 million [2015 – $4.9 million] with respect to BVARs. Compensation paid and payable to key management Key management at Clairvest are the Co‐Chief Executive Officers ["Co‐CEOs"] and its directors. The Co‐CEOs are entitled to annual discretionary cash bonuses of up to 175% of their individual annual salary based on individual performance. There is also an annual objective cash bonus which is based on Clairvest's Incentive Bonus Program as described in note 15[h], a stock option plan and a BVAR plan. Compensation paid for the years ended March 31 to the Co‐CEOs was as follows: Paid Salaries Annual incentive plans[1] Stock options 2016 2015 $ 652 1,649 9,903 $ 652 3,293 ─ $ 12,204 $ 3,945 [1] Includes quarterly payments from annual incentive plan of up to 21.875% of their respective annual base salary and for the year ended March 31, 2015 included a one‐time bonus as a result of the closing of CEP V. Compensation payable to the Co‐CEOs at the consolidated statements of financial position dates was as follows: Payable Annual incentive plans Stock options Book value appreciation rights March 31, 2016 March 31, 2015 $ 2,261 ─ 1,100 $ 2,243 9,036 489 $ 3,361 $ 11,768 In addition to DSU and ADSU plans previously discussed, compensation payable to the directors of Clairvest included $1.3 million [2015 – $0.7 million] under the BVAR plan. 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 13. CONSOLIDATED STATEMENTS OF CASH FLOWS The net change in non‐cash working capital balances related to operations was as follows: Accounts receivable and other assets Income taxes recoverable Accounts payable and accrued liabilities Income taxes payable Accrued compensation expense Cash and cash equivalents comprised the following: Cash Cash equivalents 2016 2015 $ [12,391] $ [3,535] [4,768] 681 41 [75] 6,817 [458] 30 1,540 $ [16,512] $ 4,394 March 31, 2016 March 31, 2015 $ 2,704 $ 8,743 62,546 89,901 $ 65,250 $ 98,644 14. DERIVATIVE INSTRUMENTS The Company and its acquisition entities entered into foreign exchange forward contracts as economic hedges against the fair value of its foreign‐denominated investments and loans unless a specific exemption is approved by the Board of Directors. During fiscal 2016, the Company paid $4.8 million [2015 – $1.0 million] to various counterparties to settle realized foreign exchange forward contracts. As at March 31, 2016, the Company had entered into foreign exchange forward contracts as economic hedges against its foreign‐denominated investments and loans as follows: Foreign exchange forward contracts to sell US$7.6 million [2015 – US$28.9 million] at an average rate of Canadian $1.3751 per U.S. dollar [2015 – $1.1175] through to August 2016. The fair value of the forward contracts as at March 31, 2016 is a gain of $0.6 million [2015 – loss of $4.3 million]. Additionally, acquisition entities of Clairvest had entered into foreign exchange forward contracts as economic hedges against its foreign‐denominated investments as follows: Foreign exchange forward contracts to sell US$133.1 million [2015 – sell US$99.9 million and buy US$0.6 million] at an average rate of Canadian $1.3451 per U.S. dollar [2015 – $1.2010] through to September 2016. The fair value of the forward contracts as at March 31, 2016 is a gain of $6.2 million [2015 – loss of $6.8 million]. Foreign exchange forward contracts to sell 14.7 billion Chilean Pesos ["CLP"] [2015 – 14.7 billion] at an average rate of Canadian $0.001881 per CLP [2015 – $0.001909] through to January 2017. The fair value of these contracts as at March 31, 2016 is a loss of $17 thousand [2015 – $1.1 million]. The fair value of the foreign exchange forward contracts entered into by these acquisition entities has been included in the fair value of Clairvest’s investment in these acquisition entities on the consolidated statements of financial position. No collateral [2015 – $4.9 million] was funded to the counterparty for Clairvest’s foreign exchange forward contracts and those of its acquisition entities as at March 31, 2016. Any amounts funded are included in cash and cash equivalents on the consolidated statements of financial position. 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES [a] CEP III Co‐Invest has committed to co‐invest alongside CEP III in all investments undertaken by CEP III. CEP III Co‐Invest's co‐investment commitment is $75.0 million, $15.2 million [2015 – $15.2 million] of which remains unfunded as at 64 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] March 31, 2016. In accordance with the co‐investment agreement, the proportion of the commitment amongst Clairvest, 2141788 Ontario and MIP III is at their own discretion. CEP III Co‐Invest may only sell all or a portion of a corporate investment that is a joint investment with CEP III if it concurrently sells a proportionate number of securities of that corporate investment held by CEP III. [b] CEP IV Co‐Invest has committed to co‐invest alongside CEP IV and CEP IV‐A in all investments undertaken by CEP IV and CEP IV‐A. CEP IV Co‐Invest's co‐investment commitment is $125.0 million, $28.4 million [2015 – $40.3 million] of which remains unfunded as at March 31, 2016. In accordance with the co‐investment agreement, the proportion of the commitment between Clairvest and MIP IV is at their own discretion. CEP IV Co‐Invest may only sell all or a portion of a corporate investment that is a joint investment with CEP IV and CEP IV‐A if it concurrently sells a proportionate number of securities of that corporate investment held by CEP IV and CEP IV‐A. [c] CEP V Co‐Invest has committed to co‐invest alongside CEP V and CEP V‐A in all investments undertaken by CEP V and CEP V‐A. CEP V Co‐Invest's co‐investment commitment is $180.0 million, $146.7 million [2015 – $169.9 million] of which remains unfunded as at March 31, 2016. In accordance with the co‐investment agreement, the proportion of the commitment between Clairvest, 2141788 Ontario and MIP V is at their own discretion. CEP V Co‐Invest may only sell all or a portion of a corporate investment that is a joint investment with CEP V and CEP V‐A if it concurrently sells a proportionate number of securities of that corporate investment held by CEP V and CEP V‐A. [d] Clairvest has committed $25.2 million to Wellington Fund IV [2015 – $25.5 million], all of which became unfunded upon a 100% return of capital during fiscal 2016 [2015 – $10.8 million unfunded] as described in note 7[t]. As specified in the limited partnership agreement, upon the closing of Wellington Fund V, Wellington Fund IV may no longer invest in new investments. [e] Clairvest has also committed $30.3 million to Wellington Fund V, $15.7 million of which remained unfunded as at March 31, 2016. [f] As at March 31, 2016, Clairvest has received profit distributions totaling $5.7 million [2015 – $4.6 million] through its ownership interest in the General Partners of Wellington Fund III and Wellington Fund IV. As a result of Wellington Fund V purchasing the loan portfolio from Wellington Fund IV at fair market value and the limited partners of Wellington Fund IV have earned their return threshold as specified in the limited partnership agreement, no amounts are required to be repaid by Clairvest. Clairvest has guaranteed up to amounts received by the General Partner, the clawback provisions entered into by the General Partner in the event the limited partners of Wellington Fund V do not meet their return threshold as specified in the respective limited partnership agreements. As at March 31, 2016 and 2015, there were no accruals made with respect to the clawback as no amounts have been distributed by the General Partner of Wellington Fund V. [g] Clairvest had guaranteed up to US$10.0 million of CEP III's obligations to a schedule 1 Canadian chartered bank under CEP III's foreign exchange forward contracts with the bank. [h] Under Clairvest's Bonus Program, a bonus of 10% of after‐tax cash income and realizations on certain of Clairvest's corporate investments would be paid to management annually as applicable [the "Realized Amount"]. As at March 31, 2016, the Realized Amount under the Bonus Program was $0.6 million [2015 − $1.4 million] and has been accrued under accrued compensation expense liability. In accordance with IFRS, Clairvest is also required to record a liability equal to a bonus of 10% of the after‐tax cash income and realizations which are applicable but which have yet to be realized. Accordingly, Clairvest also recorded a $3.5 million [2015 − $2.8 million] accrued compensation expense liability that would only be payable to management when the corresponding realization events have occurred. The Bonus Program does not apply to the income generated from investments made by Clairvest through CEP III Co‐Invest, CEP IV Co‐Invest and CEP V Co‐Invest. [i] Clairvest had guaranteed to fund any cash flow or debt service shortfalls of Casino New Brunswick for a specified period of time. During fiscal 2016, the guarantee was extinguished upon the sale of Casino New Brunswick. In conjunction with the sale of Casino New Brunswick, Clairvest agreed to a net guarantee of $13.5 million to fund any valid claims made by the purchaser under the indemnity provisions of the sale for a specified period. Any funding pursuant to the guarantee will be 65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] allocated 25% to CEP III Co‐Invest and 75% to CEP III. As at March 31, 2016, no amounts with respect to this guarantee have been funded. [j] An acquisition entity of Chilean Gaming Holdings and other investors of Casino Sol Calama had entered into a joint and several guarantee to fund any operating deficiencies of Casino Sol Calama for a specified period. Latin Gaming Chile S.A., Casino Sol Calama's operator, had indemnified this acquisition entity with respect to this guarantee. As at March 31, 2016, the guarantee was extinguished and no amounts with respect to this guarantee had been funded. [k] As part of the holding structure of Chilean Gaming Holdings, acquisition entities of CEP III Co‐Invest had loans totaling $41.9 million as at March 31, 2016 [2015 − $40.7 million] from an unrelated financial institution, while another acquisition entity of CEP III Co‐Invest held term deposits totaling $41.9 million as at March 31, 2016 [2015 − $40.7 million] with the same financial institution as security for these loans. CEP III Co‐Invest's ownership of both acquisition entities was 36.8% as at March 31, 2016 and 2015. [l] Clairvest has agreed to guarantee up to $10.0 million to support Discovery Air’s credit facility with its bank. The guarantee is callable by the lender under certain circumstances and should it be called, Clairvest will assume the lender’s security position that supports the loans provided by the lender. Clairvest intends to allocate any amounts called under this guarantee to CEP IV Co‐Invest, CEP IV and CEP IV‐A on a pro‐rata basis in accordance with their respective capital commitments in CEP IV. As at March 31, 2016, the total contingent exposure under this guarantee is $7.4 million, $2.0 million of which would be assumed by CEP IV Co‐Invest if called. Any additional guarantee is subject to Clairvest’s consent at its sole discretion. [m] As at March 31, 2016, the Company had future minimum annual lease payments under non‐cancellable operating leases for the use of office space of $0.4 million due within one year [2015 − $0.3 million] and $1.3 million due after one year but not more than five years [2015 − $1.7 million]. [n] In connection with its normal business operations, the Company is from time to time named as a defendant in actions for damages and costs allegedly sustained by plaintiffs. While it is not possible to estimate the outcome of the various proceedings at this time, the Company does not believe that it will incur any material loss in connection with such actions. 16. RISK MANAGEMENT The private equity investment business involves accepting risk for potential return, and is therefore affected by a number of economic factors, including changing economic environments, capital markets and interest rates. As a result, the Company faces various risk factors, inherent in its normal business activities. These risk factors and how the Company manages these risk factors are described below. Credit risk Credit risk is the risk of a financial loss occurring as a result of default of a counterparty on its obligations to the Company. For the years ended March 31, 2016 and 2015, there were no material income effects on changes of credit risk on financial assets. The carrying values of financial assets subject to credit exposure as at March 31, 2016 and 2015, net of any allowances for losses, were as follows: 66 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Financial assets Cash and cash equivalents Temporary investments Accounts receivable[1] Loans receivable[2] Derivative instruments Corporate investments[3] Financial liabilities Accounts payable Derivative instruments March 31, 2016 March 31, 2015 $ 65,250 $ 98,644 21,793 24,287 8,340 581 324,699 58,511 14,408 6,732 − 263,359 $ 444,950 $ 441,654 $ 117 $ 315 − 4,341 $ 117 $ 4,656 [1] [2] [3] Excludes prepaid expenses and receivables from acquisition entities. Excludes loans receivable from acquisition entities. Excludes net assets [liabilities] from acquisition entities. The Company manages credit risk on corporate investments through thoughtful planning, strict investment criteria, significant due diligence of investment opportunities and oversight responsibilities with existing investee companies and by conducting activities in accordance with investment policies that are approved by the Board of Directors. Management's application of these policies is regularly monitored by the Board of Directors. Management and the Board of Directors review the financial condition of its investee companies regularly. The Company is also subject to credit risk on its accounts receivable and loans receivable, a significant portion of which is with its investee companies and the CEP Funds. The Company manages this risk through its oversight responsibilities with existing investee companies by reviewing financial conditions of its investee companies regularly, and through its fiduciary duty as manager or general partner of the CEP Funds and by maintaining sufficient uncalled capital for the CEP Funds to settle obligations as they come due. The Company manages counterparty credit risk on derivative instruments by only contracting with counterparties which are Schedule 1 Canadian chartered banks. As at March 31, 2016, the Company’s derivative instruments have a fair value of $0.6 million. Additionally, the Company’s acquisition entities held derivative instruments with fair value of $6.2 million as at March 31, 2016. The Company believes the counterparty risk with respect to its and its acquisition entities’ derivative instruments is nominal. The Company manages credit risk on cash, cash equivalents and temporary investments by conducting activities in accordance with the fixed income securities policy that is approved by the Audit Committee. The Company also manages credit risk by contracting with counterparties which are Schedule 1 Canadian chartered banks or through investment firms where Clairvest's funds are segregated and held in trust for Clairvest's benefit. Management's application of these policies is regularly monitored by the Audit Committee. Management and the Audit Committee review credit quality of cash equivalents and temporary investments regularly. The credit ratings, based on the Dominion Bond Rating Services rating scale, with the exception of corporate bonds and loans which are based on Standard & Poor's rating scale, for the Company's cash, cash equivalents and temporary investments were as follows: 67 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Cash Money market savings accounts R1‐High Guaranteed investment certificates and investment savings accounts AA A+ A BBB+[1] BBB[1] BBB‐[1] Not rated[1] Corporate bonds and loans B[2] B‐[2] March 31, 2016 March 31, 2015 $ 2,704 $ 8,743 39,023 41,262 36,683 2,570 202 101 101 101 101 − 5,457 76,603 2,534 7,588 101 − − 101 20,223 − Total cash, cash equivalents, temporary investments and restricted temporary investments $ 87,043 $ 157,155 [1] [2] Principal protected by the Canada Deposit Insurance Corporation. Pertains to Clairvest's treasury investments in Light Tower Rentals Inc. and Centaur Gaming as described in note 3. Market risk Market risk includes exposure to fluctuations in the market value of the Company's investments, currency rates and interest rates. Fluctuations in market interest rates affect the Company's income derived from cash, cash equivalents and temporary investments [together, "treasury funds"]. For financial instruments which yield a floating interest income, the interest received is directly impacted by the prevailing market interest rate. The fair value of financial instruments which yield a fixed interest income would change when there is a change in the prevailing market interest rate. The Company manages interest rate risk on cash, cash equivalents and temporary investments by conducting activities in accordance with the fixed income securities policy that is approved by the Audit Committee. Management's application of these policies is regularly monitored by the Audit Committee. If interest rates were higher or lower by 1% per annum, the potential effect would be an increase or decrease of $0.8 million [2015 – $1.4 million] to distributions and interest income on a pre‐tax basis for the year ended March 31, 2016. The Company's corporate investment portfolio is diversified across 18 investee companies in 8 industries and 3 countries as at March 31, 2016. Concentration risk by industry and by country was as follows: 68 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Contract manufacturing $ — $ 16,016 $ — $ 16,016 $ — $ 9,380 $ — $ 9,380 Canada United States Chile Total Canada United States Chile Total March 31, 2016 March 31, 2015 Defense services Equipment rental Financial services Gaming Marketing services Specialty aviation Textile rental service Waste management Other Total 15,343 22,009 20,852 5,601 — — — — — 20,944 22,009 20,852 14,076 116,070 43,674 173,820 10,641 15,342 — — 1,415 7,987 — — 32,815 2,858 — — — — — 18,628 15,342 — 32,815 4,273 16,518 16,984 18,069 11,033 7,411 16,518 — — 1,616 3,980 11,629 — — — — 20,498 28,613 18,069 83,659 34,703 129,395 — — 809 27,585 3,465 — — — — — 7,411 16,518 809 27,585 5,081 $ 99,678 $ 181,347 $ 43,674 $ 324,699 $ 88,149 $ 140,507 $ 34,703 $ 263,359 The Company has considered current economic events and indicators in the valuation of its corporate investments. The Company has implemented a hedging strategy because it has, directly and indirectly, several investments outside of Canada, currently in the United States and in Chile. The Company has also advanced loans to investee companies denominated in a foreign currency. In order to limit its exposure to changes in the value of foreign denominated currencies relative to the Canadian dollar, Clairvest and its acquisition entities hedge 100% of the fair value of their foreign investments unless a specific exemption is approved by the Board of Directors. A number of investee companies are subject to foreign exchange risk. A significant change in foreign exchange rates can have a significant impact on the profitability of these entities and in turn, the Company's fair value of these corporate investments. The Company manages this risk through oversight responsibilities with existing investee companies and by reviewing the financial condition of investee companies regularly. Certain of the Company's corporate investments are also held in the form of subordinated loans or debentures. Significant fluctuations in market interest rates can have a significant impact on the fair value of these investments. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. Accounts payable, loans payable, and derivative instruments have maturities of less than one year. Management participation liability, share‐ based compensation liability, and amounts accrued under the Bonus Program are only due upon cash realization or completion of the respective vesting period. Total unfunded commitments to co‐invest alongside the CEP Funds, as described are $190.3 million as at March 31, 2016 [2015 − $225.4 million]. The timing of any amounts to be funded under these commitments is dependent upon the timing of investment acquisitions, which are made at the sole discretion of the Company. In addition to its commitments to co‐invest alongside the CEP Funds, the Company has unfunded commitments of $25.2 million and $15.7 million to Wellington Fund IV and Wellington Fund V, respectively, as described in notes 15[d] and 15[e]. The Company manages liquidity risk by maintaining a conservative liquidity position that exceeds all liabilities payable on demand. The Company invests its treasury funds in liquid assets such that they are available to cover any potential funding commitments and guarantees. In addition, the Company maintains various credit facilities. As at March 31, 2016, Clairvest had treasury funds of $87.0 million [2015 – $157.2 million] and access to $95.0 million [2015 – $95.0 million] through its credit facilities to support its current and anticipated corporate investments. Clairvest also has access to $45.4 million [2015 – $30.9 million] in treasury funds held by acquisition entities of Clairvest. 69 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 17. FAIR VALUE OF FINANCIAL INSTRUMENTS Cash, cash equivalents, temporary investments, corporate investments, and derivative instruments are carried at fair value in accordance with the Company's accounting policy as described in note 2[c] to the consolidated financial statements. All other financial instruments, including receivables and payables, are short‐term in nature. [a] Fair value hierarchy The Company classifies financial instruments measured at FVTPL according to the following hierarchy, based on the lowest level of significant input used in measuring fair value. Level Level 1 Level 2 Fair value input description Financial instruments Quoted prices [unadjusted] from active markets Quoted equity instruments Inputs other than quoted prices included in Level 1 that are observable either directly [i.e., as prices] or indirectly [i.e., derived from prices] Quoted corporate bonds Money market and investment savings accounts Quoted equity instruments which are not actively traded [i.e. significant ownership positions] Guaranteed investment certificates Quoted corporate bonds or loans which are not actively traded Level 3 Inputs that are not based on observable market data Unquoted equity instruments or partnership units Corporate bonds, debentures or loans not traded The following table presents the financial instruments measured at fair value classified by the fair value hierarchy: March 31, 2016 Fair value measurements using Level 1 Level 2 Level 3 Assets/liabilities at fair value Financial assets Cash equivalents Money market savings accounts $ 39,023 $ — $ — $ 39,023 Investment savings accounts Temporary investments Guaranteed investment certificates Corporate bonds and loans Derivative instruments Corporate investments 23,523 62,546 — — — — — — — 16,336 5,457 21,793 581 — — — — — — — 23,523 62,546 16,336 5,457 21,793 581 353,801 353,801 $ 62,546 $ 22,374 $ 353,801 $ 438,721 70 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] March 31, 2015 Fair value measurements using Level 1 Level 2 Level 3 Assets/liabilities at fair value Financial assets Cash equivalents Money market savings accounts $ 41,262 $ — $ — $ 41,262 Investment savings accounts Temporary investments 48,639 89,901 Guaranteed investment certificates — — — 38,288 20,223 58,511 — — — — — 48,639 89,901 38,288 20,223 58,511 109 291,312 291,421 — — — $ 89,901 $ 58,620 $ 291,312 $ 439,833 $ — $ 4,341 $ — $ 4,341 $ — $ 4,341 $ — $ 4,341 Corporate bonds and loans Corporate investments Financial liabilities Derivative instruments For financial instruments that are recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re‐assessing categorization [based on the lowest level input that is significant to the fair value measurement as a whole] at the end of each reporting period. Transfers between levels of fair value hierarchy are deemed to have occurred at the date of event. During the year ended March 31, 2016, the Company transferred its investment in Discovery Air common shares from Level 2 to Level 3 as a result of the market for the shares becoming inactive following the additional purchases made by Clairvest together with its co‐investors as discussed in note 7[j]. There were no other transfers between the various levels of the fair value hierarchy for the years ended March 31, 2016 and 2015. [b] Level 3: Reconciliation between opening and closing balances The following table presents the changes in fair value measurements for instruments included in Level 3 of the fair value hierarchy set out in IFRS 13: 71 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] Total realized / unrealized gains and foreign exchange revaluations included in earnings Fair value April 1, 2015 Purchases of assets / issuances of liabilities Sales of assets / settlements of liabilities Fair value March 31, 2016 Unrealized gains and foreign exchange revaluations included in earnings for assets and liabilities for the year ended March 31, 2016 for positions still held $ 291,312 $ 36,366 $ 40,877 $ [14,754] $ 353,801 $ 36,353 $ 291,312 $ 36,366 $ 40,877 $ [14,754] $ 353,801 $ 36,353 Total realized / unrealized gains and foreign exchange revaluations included in earnings Fair value April 1, 2014 Purchases of assets / issuances of liabilities Sales of assets / settlements of liabilities Fair value March 31, 2015 Unrealized gains and foreign exchange revaluations included in earnings for assets and liabilities for the year ended March 31, 2015 for positions still held $ 243,974 $ 38,604 $ 18,932 $ [10,198] $ 291,312 $ 38,585 $ 243,974 $ 38,604 $ 18,932 $ [10,198] $ 291,312 $ 38,585 Financial assets Corporate investments Financial assets Corporate investments [c] Level 3: Fair value measurement based on reasonably possible alternative assumptions While Clairvest considers its fair value measurements to be appropriate, the use of reasonably possible alternative assumptions could result in different fair values. For a given measurement date, it is possible that other market participants could measure a same financial instrument at a different fair value, with the valuation techniques and inputs used by these market participants still meeting the definition of fair value. The fact that different fair value measurements exist reflects the judgment, estimates and assumptions applied as well as the uncertainty involved in determining the fair value of these financial instruments. Included in corporate investments are investee companies [refer to note 7] for which the fair values have been estimated based on assumptions that are not supported by observable inputs. The following tables present quantitative information on the primary valuation techniques and unobservable inputs based on the form of investment: March 31, 2016 Unquoted equity instruments [including warrants] or partnership units Corporate bonds, debentures or loans not traded or other finite set of cash flows Valuation techniques Public company comparables Recent transactions Significant unobservable input Range EBITDA multiples 5.1x to 7.7x n/a n/a Discounted cash flows Discount rates 8.0% to 19.0% 72 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] March 31, 2015 Unquoted equity instruments [including warrants] or partnership units Corporate bonds, debentures or loans not traded or other finite set of cash flows Valuation techniques Public company comparables Recent transactions Significant unobservable input Range EBITDA multiples 4.2x to 9.5x n/a n/a Discounted cash flows Discount rates 6.0% to 27.5% The most significant unobservable input for fair value measurement is the multiple of earnings before interest, taxes, depreciation and amortization ["EBITDA"] used for each individual investee company. In determining the appropriate multiple, Clairvest considers [i] public company multiples for companies in the same or similar businesses; [ii] where information is known and believed to be reliable, multiples at which recent transactions in the industry occurred; and [iii] multiples at which Clairvest invested directly or indirectly in the company, or for follow‐on investments or financings. The resulting multiple is adjusted, if necessary, to take into account differences between the investee company and those the Company selected for comparisons and factors include public versus private company, company size, same versus similar business, as well as with respect to the sustainability of the company’s earnings and current economic environment. Nine investee companies are valued using the earnings multiple approach. If the Company had used an earnings multiple for each investee company that was higher or lower by 0.5 times, the potential effect would be an increase of $20.3 million or decrease of $20.0 million to the carrying value of corporate investments and net changes in unrealized gains or losses on corporate investments, on a pre‐tax basis for the year ended March 31, 2016 [2015 – increase of $23.9 million or decrease of $27.4 million]. Earnings multiples used are based on public company valuations as well as private market multiples for comparable companies. Clairvest may also use information about recent transactions carried out in the market for valuations of private equity investments when this value is the most representative indication of fair value. The fair value of corporate bonds, debentures or loans is primarily determined using a discounted cash flow technique which uses observable and unobservable inputs such as discount rates that take into account the risk associated with the investment as well as future cash flows. For those investments valued based on recent transactions or discounted cash flows, Clairvest has determined that there are no alternative assumptions that would change the fair value significantly as at March 31, 2016 and 2015. 18. CAPITAL DISCLOSURES Clairvest considers the capital it manages to be shareholders' equity. Clairvest also manages the third‐party capital committed or invested in the CEP Funds and co‐investments made by other investors. Clairvest's objectives in managing capital are to: Preserve a financially strong company with substantial liquidity to pursue new acquisitions and growth opportunities as well as to support its operations and the growth of its existing corporate investments; Achieve an appropriate risk adjusted return on capital; Build the long‐term value of its corporate investments; and Have appropriate levels of committed third‐party capital available to invest along with Clairvest's capital. The management of third‐party capital also provides management fees and/or priority distributions to Clairvest and the ability to enhance Clairvest's returns by offsetting a portion of its operating costs and by earning a carried interest. As at March 31, 2016 and 2015, Clairvest had no external capital requirements, other than as disclosed in note 16. 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2016 and 2015 [tabular dollar amounts in thousands, except per share information] 19. FUTURE CHANGES IN ACCOUNTING POLICIES IFRS 9, Financial Instruments In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments, which reflects all phases of the financial instruments project and replaces IAS 39, Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous versions of IFRS 9 [2009, 2010 and 2013] is permitted if the date of initial application is before February 1, 2015. The Company is currently assessing the impact of IFRS 9 and plans to adopt the new standard on the required effective date. IFRS 15, Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five‐step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 2018 with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date. 20. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the fiscal 2016 consolidated financial statements. 74 SHAREHOLDER INFORMATION As at, and for the year ended, March 31, 2016 SHAREHOLDER COMMUNICATION Clairvest has both the obligation and desire to provide its shareholders with full and continuous disclosure, on a timely basis, throughout the fiscal year. Annual and quarterly reports are provided as part of this process and the company releases information on material events through the press, as required. Further disclosure can be found on the company’s website, www.clairvest.com, and on the SEDAR website, www.sedar.com. VALUATION MEASURES Clairvest’s focus is on building the long‐term value of its investments. Accordingly, the results are reflected in the value of our investments. The fair value method, however, is not without its limitations. Clairvest’s investments are often carried at values which may vary from the actual realizations. Common Shares[3] OUTSTANDING SECURITIES Share structure Common shares outstanding Less holders of 10% or more Public float[1,2] Market capitalization[1] Market value of public float[1,2] Stock market Stock symbol Toronto Stock Exchange CVG [1] [2] [3] As at June 7, 2016. Excludes holders of 10% or more of the outstanding common shares. During the year, Clairvest filed a new Normal Course Issuer Bid. BOOK VALUE PER SHARE[1] AT MARCH 31 15,214,095 9,906,122 5,307,973 $ 435,275,258 $ 151,861,108 [1] Book value per share presented under Part V “Pre‐changeover accounting standards” of the Handbook for Chartered Professional Accountants Canada [“Canadian GAAP”] for all periods up to March 31, 2014. 75 SHAREHOLDER INFORMATION As at, and for the year ended, March 31, 2016 SHARE PRICE VS BOOK VALUE PER SHARE[1] $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 $12.00 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 2012 2013 2014 2015 2016 Book Value Share Price [1] Book value per share presented under Part V “Pre‐changeover accounting standards” of the Handbook for Chartered Professional Accountants Canada [“Canadian GAAP”] for all periods up to March 31, 2014. SHARE TRADING VOLUME FISCAL 2016 Common shares Year to March 31, 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Year to March 31, 2015 First Quarter Second Quarter Third Quarter Fourth Quarter SHAREHOLDER INQUIRIES Maria Klyuev, Director, Investor Relations & Marketing 416.925.9270 tel: 416.925.5753 fax: email: mariak@clairvest.com High Low Close Volume 29.49 30.11 29.90 28.30 24.24 25.24 26.99 28.23 27.76 29.26 28.26 26.76 22.34 22.96 24.75 26.99 29.49 29.55 28.30 27.25 23.20 25.05 26.99 27.81 16,700 29,300 75,400 75,400 289,800 108,200 31,600 23,600 76 TRANSFER AGENT AND REGISTRAR Investors are encouraged to contact CST Trust Company for information regarding their security holdings. Information can be obtained at: P.O. Box 700, Station B Montreal, Québec H3B 3K3 Answerline: 1.800.387.0825 Web: www.canstockta.com Email: inquiries@canstockta.com CORPORATE INFORMATION CORPORATE OFFICE 22 St. Clair Avenue East, Suite 1700 Toronto, Ontario M4T 2S3 Tel: 416.925.9270 Fax: 416.925.5753 Web: www.clairvest.com AUDITORS Ernst & Young LLP THE ANNUAL MEETING OF SHAREHOLDERS August 10, 2016 St. Andrews Club & Conference Centre, 150 King Street West, 27th Floor Toronto, Ontario Canada All Shareholders are encouraged to attend.