Clairvest Group Inc.
Annual Report 2018

Plain-text annual report

ANNUAL REPORT 2018 TABLE OF CONTENTS Chief Executive Officer’s Message Management's Discussion and Analysis Management's Report Independent Auditors' Report Consolidated Financial Statements Notes to Consolidated Financial Statements Shareholder Information Corporate Information 2 4 34 35 36 40 76 Back Cover KNOWLEDGE BASED - PARTNER FOCUSED CLAIRVEST IS ONE OF CANADA'S LEADING PROVIDERS OF PRIVATE TO MID-MARKET FINANCING COMPANIES AND CURRENTLY HAS OVER C$1.7 BILLION OF CAPITAL UNDER MANAGEMENT. EQUITY CLAIRVEST MANAGES ITS OWN CAPITAL AND THAT OF THIRD PARTIES, THROUGH CLAIRVEST EQUITY PARTNERS LIMITED PARTNERSHIPS. CLAIRVEST PARTNERS WITH MANAGEMENT TO INVEST IN PROFITABLE, SMALL AND MID-SIZED COMPANIES TO BUILD VALUE IN THE BUISINESS AND GENERATE SUPERIOR LONG TERM FINANCIAL RETURNS FOR INVESTORS. CHIEF EXECUTIVE OFFICER'S MESSAGE CLAIRVEST DELIVERS AN EXCEPTIONAL FISCAL 2018 FELLOW SHAREHOLDERS, In so many ways, fiscal 2018 was an exceptional year for Clairvest. With the continued rise of valuation multiples, Clairvest remained in the seller’s seat and completed three successful portfolio exits plus an agreement of sale for a fourth exit. We closed on two new platform investments, supported our investment partners with 19 add-on acquisitions and worked through several complex situations with our investment partners to position their companies for better performance. On the exit front, the last 12 months were marked by some of Clairvest’s best deals on a multiple of capital basis. In the recent sale of MAG Aerospace, Clairvest generated a multiple of approximately 9.5x in Canadian dollar terms (8.2x in USD), in the agreed sale of Centaur Gaming, Clairvest is expected to realize a multiple of approximately 14.2x in Canadian dollars on its core fund investment (11.2x in USD), the sale of CRS generated a multiple of 3.2x and the sale of Winters Bros. of CT had a 1.4x return, where we took our money and retained our economic interest in the company. These exits bolstered our track record to a 3.6x multiple on capital invested over 25 years with a pooled IRR of 24%. In addition to impressive returns, we are also proud of the fact that these returns were achieved primarily from fundamental value creation and significant EBITDA growth during our holding period, as opposed multiple expansion from the frothy market conditions that have predominated our industry for the last few years. In addition to portfolio sales, Clairvest also completed the sale of its General Partner position in Wellington Financial, a venture loan provider to technology and life science companies across Canada and the United States. We helped launch Wellington Financial in 2000 and since then Wellington Financial has become a leader in its sector and has grown to finance well over one hundred North American-based growth companies. Portfolio company exits and the Wellington Financial transaction drove a material lift to our book value. For the 12 months ended March 31, 2018, Clairvest’s book value per share grew to $44.01, or by 22% including dividends paid. Over the past 10 years, our book value has grown at a compounded annual growth rate of 11.2%, after tax, despite an average cash balance of 42%. In contrast, the S&P500 has delivered 7.2%, pre-tax, reflecting solid out- performance by Clairvest on an absolute and, particularly, on a risk-adjusted basis. Our team's continued emphasis on domain research for deal generation have led to the closing of two new investment opportunities. The first is Clairvest’s participation in the Ontario Lottery and Gaming Corporation privatization process of some of its assets and the award of the West GTA bundle to operate four properties in the West Greater Toronto Area. We are excited to bring our gaming experience to Ontario and apply our knowledge of industry best practices to grow the performance of these assets. We did this transaction in partnership with Great Canadian Gaming, a group that we have known for many years. 2 CHIEF EXECUTIVE OFFICER'S MESSAGE The second investment opportunity is Clairvest’s entry into the renewable energy space with an investment in Also Energy, a leading provider of solar monitoring software and hardware, where we are contributing growth capital to support the co-founders of the company through its next phase of growth. As Clairvest continues to evolve, so does our investment team. Our team is deeper and stronger than it has ever been. This year, we promoted Michael Wagman to President and Robbie Isenberg to Managing Director. We also welcomed Michael Wagman to Clairvest’s Board of Directors and Joe Fluet, CEO of MAG Aerospace, will join in August. Jeff Parr is moving from the Co-CEO role into the Vice Chairman role as he continues to support the growth of the firm, while I continue to lead Clairvest as CEO. For all the success that we have experienced to date, there is always more that can be done. In addition to Clairvest’s ongoing work with our investment partners, we are expanding our industry research toward new opportunities created by the rapid change in technology, changes in outsourcing trends and innovation. In fiscal 2018 we saw a continuation of the themes of the past several years with fierce competition, high valuation multiples and increasing allocations to the Private Equity asset class. We have been here before, leading up to the financial crisis in 2009 when pricing was unreasonably high, and we responded with investment sales, and very careful, judicious underwriting of new investments. We were not drawn in then and we are not drawn in now; we remain focused on protecting and growing our own and our investors’ capital. We are taking our time to learn about new industries and uncover unique situations where we can deploy capital wisely. Our track record to date and the impressive results in fiscal 2018 speak to the fact that our discipline, patience and perseverance have served us very well and will continue to do so. As always, I would like to express my gratitude to Clairvest’s shareholders and fund partners for their support, to our investee company management for their entrepreneurship, to the Clairvest team for their hard work and to our board members for their advice and counsel. Together, they provide the means to continue building shareholder value in Clairvest Group. Respectfully, Ken Rotman Chief Executive Officer June 27, 2018 3 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 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, 2018 ("consolidated financial statements"). The following MD&A is the responsibility of Management and is as at June 27, 2018. 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 management firm 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"), Clairvest Equity Partners IV-A Limited Partnership ("CEP IV-A"), Clairvest Equity Partners V Limited Partnership ("CEP V"), CEP V HI India Investment Limited Partnership ("CEP V India") and Clairvest Equity Partners V-A Limited Partnership ("CEP V-A") (together, the "CEP Funds") in carefully selected companies that have the potential to generate superior returns. Clairvest also manages third-party capital through the CEP Funds and 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 International Financial Reporting Standards ("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. The Company's consolidated financial statements include those subsidiaries which provide investment-related services and that the Company controls by having the power to govern the financial and operating policies of these entities. Such entities would include those which earn priority distributions or management fees and carried interest from the CEP Funds. 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 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 IFRS as described in the Critical Accounting Estimates section of the MD&A, include the following: 2141788 Ontario Corporation ("2141788 Ontario") 2486303 Ontario Inc. ("2486303 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") 4 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 CEP V Co-Investment Limited Partnership ("CEP V Co-Invest") MIP V Limited Partnership ("MIP V") 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 together with Clairvest, directly and indirectly holds a 100% interest in Clairvest Equity Partners Limited Partnership ("CEP"). CEP was an investment fund held by third-party investors until December 2015. 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, 2018, Clairvest, through these acquisition entities, had 17 core investments in 6 different industries and 4 countries. One was a joint investment with CEP III, eight were joint investments with CEP IV and CEP IV-A (together, the "CEP IV Fund"), and six were joint investments with CEP V, CEP V India and CEP V-A (together, the "CEP V Fund"). Clairvest also held 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, 2018: 5 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 SUMMARY OF CLAIRVEST'S INVESTEE COMPANIES AS AT MARCH 31, 2018 June 27, 2018 Investee Company Industry Segment Geographic Segment Ownership Percentage(18) Cost of Investment (millions) Net Cash Investment (millions)(19) Description of Business Fair Value of Investment (millions)(20) INVESTMENTS MADE BY CEP III CO-INVEST ALONGSIDE CEP III Chilean Gaming Holdings(1) Gaming Chile 36.8% $ 28.8 $ 16.0 $ INVESTMENTS MADE BY CEP IV CO-INVEST ALONGSIDE CEP IV/CEP IV-A Centaur Gaming(2) Gaming United States Debt interest with stapled warrants (convertible upon exercise into 12.7%, subject to regulatory approval) $ 34.7 $ 31.8 $ County Waste of Virginia, LLC ("County Waste")(3) Waste Management United States 13.0% $ 11.3 $ 11.3 $ Davenport Land Investments(4) Other United States Discovery Air Inc. ("Discovery Air") / Top Aces(5) Defence Services Canada 18.7% (Davenport North) & 13.4% (Davenport South) 29.9% and debt interest / 26.3% $ 2.2 $ 1.9 $ $ 55.5 $ 37.9 $ Impero Waste Systems, LLC ("Impero Waste")(6) Waste Management United States 6.1% $ 3.0 $ (1.8) $ MAG Aerospace ("MAG")(7) Defence Services United States 10.3% and debt interest $ 5.1 $ 5.1 $ New Meadowlands Racetrack LLC (the "Meadowlands")(8) Gaming United States Debt interest and equity investment rights $ 6.4 $ 5.3 $ 60.1 An investment vehicle which holds an equity interest in various gaming entertainment complexes in Chile. CEP III ownership: 37.7% 192.4 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 ownerships: debt interests with stapled warrants (convertible upon exercise into 16.5% and 2.6% respectively, subject to regulatory approval). 19.8 A private regional solid waste collection company servicing customers in the states of Virginia and Pennsylvania. CEP IV and CEP IV-A ownerships: 30.7% and 4.9% respectively 3.0 Comprised two entities ("Davenport North" and "Davenport South") holding real estate surrounding a casino development in Davenport, Iowa. CEP IV and CEP IV-A ownerships: 44.1% and 7.0% of Davenport North and 31.6% and 5.0% of Davenport South respectively 44.9 Discovery Air is a specialty aviation services company operating across Canada and in select locations internationally. Top Aces is a supplier of advanced adversary services across three continents. CEP IV and CEP IV-A ownerships: 40.2% and 6.4% of Discovery Air and debt interest respectively 32.5% and 5.2% of Top Aces respectively 4.1 A regional solid waste collection, recycling and disposal company servicing customers in the states of Connecticut and New York. CEP IV and CEP IV-A ownerships: 14.4% and 2.3% respectively 21.2 A U.S.-based speciality aviation and intelligence, surveillance and reconnaissance service provider. CEP IV and CEP IV-A ownerships: 24.3% and 3.9% respectively 10.2 Operates North America’s premier standardbred horse racing track located in East Rutherford, New Jersey. CEP IV and CEP IV-A ownerships: debt interests and equity investment rights Rivers Casino(9) Gaming United States 5.0% $ 9.1 $ (34.4) $ 23.8 A gaming entertainment complex located in Des Plains, Illinois. CEP IV and CEP IV-A ownerships: 11.8% and 1.9% respectively (1) (2) (3) (4) (5) (6) (7) (8) (9) Clairvest held 30,446,299 units of Chilean Gaming Holdings, a partnership which held a 50% interest in Casino Marina del Sol and a 73.8% interest in each of Casino Osorno and Casino sol Calama. Clairvest held US$17.4 million in unsecured term loans with stapled warrants which, subject to regulatory approval, were convertible upon exercise into 12.7% of Class A and Class B units of Centaur Gaming. Clairvest held 7,374.67 Class B units and a US$1.7 million promissory note with a stated interest rate of 12% per annum from County Waste, and 174.3 units of Spare Lots, LLC ("Spare Lots"), a company affiliated with County Waste. Clairvest held 1,408.81 units of Davenport North, 1,298.21 units of Davenport South and a US$0.6 million promissory note from a partner of Davenport Land Investments. Clairvest held 24,332,907 common shares of Discovery Air, $22.0 million in convertible debentures with a stated interest rate of 10% per annum and $4.9 million in debtor- in-possession financing loans. Clairvest also held 611.4 common shares of Top Aces. Clairvest held 4,817.86 Class A units of Impero Waste. Clairvest held 33,736 Class A stock of MAG Aerospace and advanced $1.1 million in the form of promissory notes from MAG Aerospace Canada Corp., with a stated interest rate of 10% per annum. Clairvest invested US$5.4 million in the Meadowlands in the form of secured convertible debentures with a stated interest rate of 15% per annum and an additional US$0.7 million in the form of preferred debt with a stated interest rate of 3% per annum. Clairvest also held warrants which entitle it to invest in equity securities subject to certain conditions. Clairvest held 9,021,917 limited liability company units of Rivers Casino. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 Investee Company Industry Segment Geographic Segment Ownership Percentage(18) Cost of Investment (millions) Net Cash Investment (millions)(19) Description of Business Fair Value of Investment (millions)(20) INVESTMENTS MADE BY CEP V CO-INVEST ALONGSIDE CEP V/CEP V-A 7.5% $ 16.0 $ 16.0 $ 27.3 A licensed video gaming terminal operator in Illinois. Accel Entertainment Inc. ("Accel Entertainment")(10) Gaming United States Ace2Three(11) Gaming India 33.6% and debt interest $ 56.0 $ 56.0 $ Also Energy, Inc. ("Also Energy")(12) Renewable Energy United States 14.3% $ 6.0 $ 6.0 $ Digital Media Solutions, LLC ("Digital Media Solutions")(13) Marketing Services United States 13.9% $ 8.3 $ 7.3 $ GTA Gaming(14) Gaming Canada $ 0.6 $ 0.6 $ 0.6% (Ontario Gaming GTA) & 13.5% (Ontario Gaming West GTA) Waste Management United States 14.0% $ 10.6 $ 10.6 $ Winters Bros. Waste Systems of Long Island Holdings, LLC ("Winters Bros. of LI")(15) STANDALONE INVESTMENTS Grey Eagle Casino(16) Gaming Canada Equity participation $ 11.0 $ (1.7) $ Wellington Financial(17) Financial Services Canada N/A $ — $ (24.7) $ CEP V and CEP V-A ownerships: 14.6% and 2.8% respectively 40.2 An operater of an online, skilled based gaming India providing an online rummy in platform experience. CEP V India and CEP V-A ownerships: 35.2% and 8.6% respectively 6.2 A provider of software and hardware solutions that enable the monitoring and control of power production and plant operations for commercial, industrial, and utility-scale plants in the United States and around the world. CEP V and CEP V-A ownerships: 28.1% and 5.3% respectively 9.1 A digital media company which operates as a lead generation engine for companies in a variety of different industries. CEP V and CEP V-A ownerships: 27.3% and 5.2% respectively 0.6 Comprised two partnerships which operate gaming facilities in the Greater Toronto Area ("GTA") and the West GTA. CEP V and CEP V-A ownerships: 1.2% and 0.2% of Ontario Gaming GTA and 26.5% and 5.0% of Ontario Gaming West GTA respectively 9.8 A regional solid waste collection, recylcing and disposal company servicing customers in Long Island, New York. CEP V and CEP V-A ownerships: 27.5% and 5.2% respectively 11.3 A charitable casino on Tsuu T'ina First Nation reserve lands, located southwest of the city of Calgary, Alberta. 3.6 Provided debt capital and operating lines to venture capital biotechnology, communications and industrial product companies in Canada and the United States. technology, backed OTHER TOTAL $ $ 0.7 265.3 $ $ 0.7 144.0 $ $ 20.9 508.5 (9) (10) (11) (12) (13) (14) (15) (16) Clairvest held 283,478 Class D preferred shares of Accel Entertainment. Claircest held 202,230 common shares of Ace2Three and advanced $22.9 million in the form of compulsory convertible debentures with a stated interest rate of 16% per annum. Clairvest held 1,013,062 Series A preferred stock of Also Energy. Clairvest held 6,150,000 Class B units of Digital Media Solutions. Clairvest held 1,254,000 limited partnership units of Ontario Gaming GTA Limited Partnership and 405,151.2 limited partnership units of Ontario Gaming West GTA Limited Partnership. Clairvest held 1,487,773 Class C units of Winters Bros. of LI. and 256,037 units of WBLI II, LLC, an affiliate to Winters Bros. of LI which is owned proportionately by the same unitholders as Winters Bros. of LI. Clairvest held an equity participation interest in the Grey Eagle Casino entitling to earnings between 11.25% to 38.25% of the earnings of Grey Eagle Casino until December 2022. Clairvest held a limited partner interest in Wellington Financial Fund III, Wellington Financial Fund IV and Wellington Financial Fund V and an interest in the general partner of the various Wellington Funds. (17) Ownership percentage calculated on a fully diluted basis as at March 31, 2018. (18) 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. (19) 7 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 OVERVIEW OF FISCAL 2018 An overview of the significant events during fiscal 2018 and those which occurred subsequent to year-end follows: Overall and Corporate • Clairvest's book value increased by $117.1 million, or $7.80 per share, to $667.3 million or $44.01 per share. The increase was primarily due to net income and comprehensive income ("net income") of $8.15 per share, net of $0.3621 per share in dividends paid. During fiscal 2018, 31,100 common shares were purchased and cancelled under the Normal Course Issuer Bid at an average price of $37.27 per share, reducing the number of common shares outstanding to 15,162,995. For the year ended March 31, 2018, Clairvest recorded $208.2 million in total revenue, comprised $107.7 million in net investment gains, $51.2 million in distributions and interest income, $0.3 million in dividend income, $46.5 million in net carried interest income from the CEP Funds and $2.5 million in fees earned from the CEP Funds and Clairvest's investee companies. Total revenue for the prior fiscal year was $131.5 million. • • • Net income for the year ended March 31, 2018 was $123.8 million compared to $70.1 million in the prior fiscal year. • Clairvest filed a new normal course issuer bid enabling it to make market purchases of up to 760,677 of its common shares in the 12-month period commencing March 7, 2018. No purchases had been made under this bid to March 31, 2018 and 5,100 shares had been purchased and cancelled under this bid between April 1, 2018 to June 27, 2018. In January 2018, CIBC acquired the loan assets of Wellington Financial Fund V L.P. ("WF Fund V") and certain assets of the general partner of WF Fund V. As a result of the sale, Clairvest received a full repayment of $17.3 million on its investment in WF Fund V plus 194,876 CIBC common shares which are restricted for sale for 36 months subject to certain conditions. Clairvest continues to participate in its pro-rata share of any profits realized from warrants previously granted to various Wellington Financial funds and is eligible for additional payments on the sale of the general partner assets subject to certain conditions. Further details are described on page 17 of the MD&A. • During fiscal 2018, Clairvest paid an annual ordinary dividend of $0.10 per share and a special dividend of $0.2621 per share. The dividends were paid on July 24, 2017 to common shareholders of record as of July 6, 2017. The dividends were eligible dividends for Canadian income tax purposes. Clairvest/CEP III Co-Invest and CEP III • Clairvest and CEP III completed the sale of Lyophilization Services of New England, Inc. ("LSNE") in April 2018, where CEP III Co-Invest realized total sale proceeds of US$20.5 million (C$27.3 million). Over the 9-year investment horizon, LSNE generated 2.9 times invested capital, or a 13% IRR for Clairvest and CEP III on a currency neutral basis. In Canadian dollar terms, net of foreign exchange hedges, CEP III Co-Invest received total proceeds of $26.6 million against an investment of $7.5 million, or 3.5 times invested capital. Further details are on page 13 of the MD&A. • As at March 31, 2018 and June 27, 2018, CEP III had returned 2.3 times invested capital to its third-party investors, after consideration of general partner priority distributions, carried interest and expenses. CEP III continues to hold one investment as at June 27, 2018. Based on the fair value at March 31, 2018, CEP III is expected to generate approximately 2.5 times invested capital or an IRR of over 18% for its third-party investors after general partner priority distributions. expenses and carried interest over the life of the fund. Clairvest/CEP IV Co-Invest and the CEP IV Fund • In August 2017, Clairvest and the CEP IV Fund completed the sale of CRS Contractors Rental Supply Limited Partnership ("CRS"), which generated 3.2 times invested capital, or a 31% IRR over the 4.5-year holding period. CEP IV Co-Invest received cash proceeds of $31.7 million on the sale and is entitled to additional proceeds subject to certain conditions. Further details are described on page 13 of the MD&A. In October 2017, Clairvest and the CEP IV Fund completed a partial realization of Winters Bros. Waste Systems of CT, LLC ("Winters Bros. of CT."). CEP IV Co-Invest received cash proceeds of US$7.9 million (C$10.1 million) and a 6.1% interest in Impero Waste Services, LLC ("Impero Waste"), the acquirer of Winters Bros. of CT. Further details are described on page 14 of the MD&A. • 8 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 • In November 2017, Clairvest and the CEP IV Fund announced the proposed sale of Centaur Gaming. The transaction is anticipated to close during the second quarter of fiscal 2019. As at March 31, 2018, the investments in Centaur held by CEP IV Co-Invest were convertible upon exercise into 12.7% of Class A and B units of Centaur Gaming, and with a carrying value of $192.4 million at March 31, 2018, represented 28.8% of the book value of Clairvest. Should the transaction close on anticipated terms, the sale of Centaur Gaming is expected to increase Clairvest's book value per share by approximately $1.35 from the March 31, 2018 book value per share of $44.01. Further details are described on page 13 of the MD&A. • Also during fiscal 2018, 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 $19.5 million into Discovery Air, CEP IV Co-Invest's portion of which was $8.2 million. Subsequent to these investments, Discovery Air completed a series of corporate transactions which included divesting substantially all of its interest in Top Aces to its secured debenture holders and other third-party institutional investors, which resulted in $7.6 million of cash interest payments to CEP IV Co-Invest. As at March 31, 2018, CEP IV Co-Invest's investment in Discovery Air and Top Aces had a carrying value of $44.9 million, compared to $30.7 million in the prior year. In March 2018, Discovery Air filed for creditor protection under the CCAA and CEP IV Co- Invest advanced $4.9 million in support of these proceedings. Further details are described on page 14 of the MD&A. • As at March 31, 2018, the CEP IV Fund had realized or partially realized 5 of its 11 investments, and had returned 100% of capital invested by third-party investors. Based on the fair value at March 31, 2018, the CEP IV Fund is expected to generate approximately 2.5 times invested capital or an IRR of approximately 22% for its third-party investors after general partner priority distributions, expenses and carried interest over the life of the fund. In June 2018, Clairvest and the CEP IV Fund completed the sale of MAG Aerospace. At closing, CEP IV Co-Invest and the CEP IV Fund received aggregate proceeds of approximately US$110 million on the sale of their equity interest in MAG Aerospace, which is approximately 8.2 times their invested capital, or a IRR of 57% on a currency neutral basis. In Canadian dollar terms, net of foreign exchange hedges, and including the full repayment of notes from MAG Aerospace Canada, CEP IV Co-Invest received proceeds of approximately $39 million against an equity investment of $4.0 million. The sale of MAG Aerospace will add approximately $1.10 from the book value per share at March 31, 2018. Further details are described on page 15 of the MD&A. • Clairvest/CEP V Co-Invest and the CEP V Fund • • • In April 2017, CEP V Co-Invest and the CEP V Fund invested US$73.7 million (C$99.2 million) in Ace2Three. CEP V Co- Invest invested US$41.6 million (C$56.0 million) in Ace2Three, which comprised US$17.0 million (C$22.9 million) in the form of compulsory convertible debentures denominated in Indian Rupee ("INR”) which bear interest at a rate of 16.0% per annum, and US$24.6 million (C$33.1 million) for a 33.6% equity interest in Ace2Three. Further details are described on page 16 of the MD&A. In August 2017, CEP V Co-Invest and the CEP V Fund invested in US$16 million in Also Energy, Inc. ("Also Energy"). CEP V Co-Invest invested US$4.8 million (C$6.0 million) in Also Energy in the form of 8% cumulative preferred shares. Further details are described on page 16 of the MD&A. In December 2017, the Ontario Lottery and Gaming Corporation announced that Ontario Gaming West GTA Limited Partnership ("OWGTALP") was selected as the successful proponent to operate four gaming facilities in the West Greater Toronto Area (the "West GTA Bundle"). In May 2018, OWGTALP completed the acquisition of the gaming assets in the West GTA Bundle for a purchase price of $134 million. OWGTALP was capitalized with Clairvest and the CEP V Fund owning 45% and Great Canadian Gaming Corporation owning 55%. CEP V Co-Invest invested $8.8 million in OWGTALP for a 13.5% ownership. Further details are described on page 17 of the MD&A. • As at June 27, 2018, the CEP V Fund had made 6 investments, representing approximately 43% of its committed capital. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 OUTLOOK As at March 31, 2018, Clairvest and its controlled acquisition entities had $640.7 million of capital available for future acquisitions through its cash, cash equivalents and temporary investments ("treasury funds"), credit facilities and uncalled capital in the CEP Funds. The exit of MAG Aerospace subsequent to year end and the anticipated exit of Centaur Gaming will significantly add to the treasury funds and meaningfully decrease the portion of capital which is deployed in our core investment program. Notwithstanding this, valuations are high and competition is fierce for investments in our targeted fields. The management team will continue to employ a disciplined approach to re-invest the treasury funds in new investment opportunities and to further support our existing investee companies in carrying out their investment theses. As at June 27, 2018, Clairvest's current management team has made 50 platform investments and has realized or partially realized on 32 investments which have in aggregate generated 3.1 times invested capital. From inception, the Company has invested its own capital in every investment. Clairvest's team of professionals have all invested significant amounts of capital in the Company which allows Clairvest to approach each investment as owners and shareholders. As a long-term investor, Clairvest is focused on building value in its investee companies by contributing strategic expertise, advising on operational improvement and helping its investee companies capitalize on new opportunities that arise. The table below summarizes the status of the CEP Funds as at June 27, 2018: Status of Clairvest Equity Partnerships ($millions, except year of fund and number of investments) Clairvest Equity Partners III ("CEP III") 2006 225 75 300 79.8% Year of Fund Third-Party Capital Clairvest Commitment Total Capital Percentage Drawn Clairvest Equity Partners IV ("CEP IV") 2010 342 Clairvest Equity Partners V ("CEP V") 2015 420 125 180 467 86.3% 600 43.3% Number of Investments Total 8 11 6 Currently Held 1 7 6 FINANCIAL CONDITION AND BOOK VALUE The following table summarizes the Company's financial position and book value as at March 31, 2018 and 2017: Financial Position As at, ($000's, except number of shares and per share amounts) Cash, cash equivalents, temporary investments and restricted cash ("treasury funds") Carried interest receivable Corporate investments, at fair value Total assets Management participation Total liabilities Book value Book value per share Number of common shares outstanding March 31, 2018 March 31, 2017 $ 147,924 $ 127,900 515,172 834,889 91,267 167,568 667,321 44.01 15,162,995 122,169 98,322 410,102 671,951 67,050 121,747 550,204 36.21 15,194,095 10 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 As at March 31, 2018, Clairvest had total assets of $834.9 million, an increase of $162.9 million during fiscal 2018. The increase was primarily due to net gains on investment realizations and a net increase in the fair value of Clairvest's investee companies. As at March 31, 2018, the Company's treasury funds of $147.9 million were held in cash and money market savings accounts rated not below R1-High, investment savings accounts and guaranteed investment certificates rated not below A-, and other fixed income securities as permitted by the Company's treasury policy. 2141788 Ontario also held $34.3 million in cash, investment savings accounts and guarantee investment certificates with consistent ratings to the above. Clairvest also had access to $2.6 million in cash held in various other acquisition entities which were controlled by Clairvest. Clairvest maintains a $100.0 million revolving credit facility which is participated in by several Schedule 1 Canadian chartered banks. The credit facility, which has an expiry of December 2022 and is eligible for a one-year extension on each anniversary date, bears interest at the bank prime rate plus 1.25% per annum on drawn amounts and a standby fee of 0.70% per annum on undrawn amounts. The amount available under the credit facility as at March 31, 2018 was $100.0 million, which is based on debt covenants and certain restrictions within the banking arrangement. No amounts had been drawn on the facility during the year and as at March 31, 2018. As at March 31, 2018, Clairvest had corporate investments with a carrying value of $515.2 million, an increase of $105.1 million during fiscal 2018, $508.5 million of which represented the fair value of Clairvest's investee companies and the remaining $6.7 million of which represented 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 $128.1 million during fiscal 2018, which primarily comprised the following: A $56.0 million investment in Ace2Three; CIBC common shares received by way of distribution from Wellington Financial valued at $21.6 million; - Net changes in unrealized gains on its investee companies of $98.3 million; - - - Net follow-on investments in Discovery Air and Top Aces totalling $13.1 million; - Accrued interest on debt investments and dividends totalling $10.7 million; - A $6.0 million investment in Also Energy; - Follow-on investments net of return of capital totalling $3.8 million in other existing investee companies; - A $0.6 million investment in GTA Gaming; partially offset by - The sale of CRS which had a carrying value of $28.8 million as at March 31, 2017; - The sale of LSNE which had a carrying value of $27.2 million as at March 31, 2017; - A $15.6 million net return of capital from Wellington Financial; - The partial realization of Winters Bros. of CT, the realized portion of which had a carrying value of $7.0 million as at March 31, 2017; and Foreign exchange revaluations of investee companies totalling $3.4 million. - Clairvest has implemented a hedging strategy because it has, directly and indirectly, several investments outside of Canada. In order to limit its exposure to changes in the value of these investments denominated in foreign currencies relative to the Canadian dollar, Clairvest and its acquisition entities consider and if determined appropriate, enters into hedging positions against these foreign denominated currencies. For the year ended March 31, 2018, the foreign exchange adjustments made in Clairvest's valuation of its 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, except for its foreign exchange exposure in approximately 35% of its Chilean Pesos ("CLP") balances and 100% of its Indian Rupees ("INR") balances which are unhedged. Forward exchange forward contracts are described in the Derivative Financial Instruments section of the MD&A. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 The table below details the cost and fair value of Clairvest’s investee companies as at March 31, 2018 and 2017: CEP III CO-INVEST INVESTMENTS Chilean Gaming Holdings(1) LSNE CEP IV CO-INVEST INVESTMENTS Centaur Gaming County Waste CRS Davenport Land Investments Discovery Air / Top Aces Impero Waste MAG Aerospace The Meadowlands Rivers Casino CEP V CO-INVEST INVESTMENTS Accel Entertainment Ace2Three Also Energy Digital Media Solutions GTA Gaming Winters Bros. of LI Grey Eagle Casino(2) Wellington Financial Other investments(3) March 31, 2018 March 31, 2017 Fair value Cost Difference Fair value Cost Difference $ 60,113 — $ 28,754 — $ 31,359 — $ 48,835 27,248 $ 28,754 6,619 $ 20,081 20,629 192,394 19,776 — 3,018 44,926 4,100 21,164 10,237 23,787 27,258 40,228 6,189 9,126 602 9,764 11,331 3,626 487,639 20,866 $ 508,505 34,657 11,314 — 2,196 55,522 3,019 5,068 6,444 9,058 157,737 8,462 — 822 (10,596) 1,081 16,096 3,793 14,729 111,170 17,999 28,758 3,009 21,037 11,160 11,557 9,563 14,307 34,657 7,533 10,573 2,196 36,860 8,053 5,068 6,444 9,058 76,513 10,466 18,185 813 (15,823) 3,107 6,489 3,119 5,249 15,978 55,968 6,038 8,254 602 10,636 11,017 — 264,525 788 $ 265,313 11,280 (15,740) 151 872 — (872) 314 3,626 223,114 20,078 $ 243,192 20,639 — — 8,179 — 11,190 12,613 22,101 379,365 1,039 $ 380,404 15,978 — — 8,254 — 10,636 11,017 15,640 217,340 1,127 $ 218,467 4,661 — — (75) — 554 1,596 6,461 162,025 (88) $ 161,937 (1) (2) (3) Comprised CEP III Co-Invest's investment in Casino Marina del Sol, Casino Osorno and Casino Sol Calama. Fair value included the portion owned directly by Clairvest and the portion owned indirectly through 2486303 Ontario. Fair value excluded the amount of $1.8 million which represented carried interest of CEP to be received by 2486303 Ontario as described in the Transactions with Related Parties section of the MD&A. Comprised primarily 194,876 CIBC common shares which were received on the Wellington Financial sale transaction. 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. Details of each investee company held as at March 31, 2018 and 2017 follows: INVESTMENTS MADE BY CEP III CO-INVEST ALONGSIDE CEP III Chilean Gaming Holdings As at March 31, 2018 and 2017, CEP III Co-Invest held 30,446,299 limited partnership units of Chilean Gaming Holdings, representing a 36.8% ownership interest on a fully diluted basis. During fiscal 2018, CEP III Co-Invest earned dividends totalling $0.8 million through its interest in Chilean Gaming Holdings, bringing total dividends earned to March 31, 2018 to $14.0 million. Also during fiscal 2018, management determined that the fair value of Chilean Gaming Holdings should be adjusted upward by $7.9 million. The fair value of $60.1 million as at March 31, 2018 compares to a fair value of $48.8 million at March 31, 2017 and a cost of $28.8 million. The fair value is adjusted for foreign exchange fluctuations. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 LSNE As at March 31, 2017, CEP III Co-Invest held 6,406,000 Series A 10% cumulative preferred shares and 331,506 Series B 10% cumulative preferred shares of LSNE. The Series A preferred shares were convertible into a 11.2% ownership interest on a fully diluted basis and dividends would be forfeited on conversion. The Series B preferred shares were not convertible. During fiscal 2018, CEP III Co-Invest realized its investment in LSNE for total proceeds of US$20.5 million (C$27.3 million) against a carrying value of $27.2 million as at March 31, 2017 for a net realized gain of $0.1 million. INVESTMENTS MADE BY CEP IV CO-INVEST ALONGSIDE CEP IV Centaur Gaming As at March 31, 2018 and 2017, held US$17.4 million in term loans with stapled warrants which, subject to regulatory approval, were convertible upon exercise to 12.7% of Class A and Class B units of Centaur Gaming. During fiscal 2018, Clairvest announced the proposed sale of Centaur Gaming. The transaction is subject to regulatory approvals and is anticipated to close during fiscal 2019. Accordingly, management determined that the fair value of Centaur Gaming should reflect the economics of the proposed sale, but adjusted for the risk of closing. The fair value of $192.4 million as at March 31, 2018 compares to a fair value of $111.2 million as at March 31, 2017 and a cost of $34.7 million. The fair value is adjusted for foreign exchange fluctuations. County Waste As at March 31, 2017, CEP IV Co-Invest held 6,942.64 Class B units of County Waste and 174.3 units of Spare Lots, LLC ("Spare Lots"), a company affiliated with County Waste, collectively representing a 12.5% ownership interest on a fully diluted basis. During fiscal 2018, CEP IV Co-Invest invested an additional US$1.3 million (C$1.6 million) for 432.03 Class B units of County Waste and advanced US$1.7 million (C$2.1 million) in promissory notes accruing interest at 12% per annum with a maturity date of January 3, 2022. Interest of $43 thousand was earned from these promissory notes from County Waste during fiscal 2018. As at March 31, 2018, CEP IV Co-Invest held US$1.7 million in 12% promissory notes in addition to 7,374.67 Class B units of County Waste and 174.3 units of Spare Lots, which represented a 13.0% ownership interest on a fully diluted basis. The fair value of $19.8 million as at March 31, 2018 compares to a fair value of $18.0 million as at March 31, 2017 and a cost of $11.3 million. The fair value is adjusted for foreign exchange fluctuations. CRS As at March 31, 2017, CEP IV Co-Invest held 241,896 Class B units and 10,572,805 Class C units of CRS, representing a 13.5% ownership interest. During fiscal 2018, CEP IV Co-Invest earned distributions totalling $0.2 million from CRS. Subsequently, CEP IV Co-Invest realized on its investment in CRS and received $31.7 million in cash proceeds against a carrying value of $28.8 million as at March 31, 2017 for a net realized gain of $2.9 million. Davenport Land Investments As at March 31, 2018 and 2017, 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 promissory note to a partner to help fund its 50% ownership in Davenport North. Effective October 1, 2017, the promissory note bears interest at a rate of 12% per annum. The fair value of $3.0 million as at March 31, 2018 compares to a fair value of $3.0 million as at March 31, 2017 and a cost of $2.2 million. The fair value is adjusted for foreign exchange fluctuations. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 Discovery Air / Top Aces As at March 31, 2017, CEP IV Co-Invest had invested $22.0 million in secured convertible debentures ("Debentures") of Discovery Air, which had a maturity date of May 5, 2018. The Debentures accrued interest at a rate of 10% per annum and interest is paid in-kind and compounded on an annual basis. As at March 31, 2017, the gross accrued value of the Debentures was $33.6 million, which included $11.6 million in accrued interest. During fiscal 2018, $3.1 million in interest was accrued on the Debentures. During fiscal 2018, CEP IV Co-Invest exercised the swap option pusuant to a letter agreement dated June 5, 2017 between Discovery Air, Discovery Air Defence Services Inc. ("Top Aces") and Clairvest and its affiliates and exchanged $5.8 million of the Debentures into common shares of Top Aces. Subsequent to these transactions, a third-party institutional investor purchased $50 million of equity in Top Aces, half from Top Aces treasury and the other half from Discovery Air. Subsequently, Discovery Air repaid $7.6 million of interest owing to CEP IV Co-Invest under the terms of the Debentures. As at March 31, 2018, the gross accrued value of the Debentures was $23.3 million. As at March 31, 2018, the carrying value of the Debentures was $1.3 million. As at March 31, 2017, Clairvest and CEP IV Co-Invest collectively held 22,384,024 Class A common shares of Discovery Air representing a 27.3% ownership interest on a fully diluted basis. During fiscal 2018, CEP IV Co-Invest purchased an additional 1,948,883 Class A common shares of Discovery Air for $0.4 million as part of a take-private transaction. As at March 31, 2018, Clairvest and CEP IV Co-Invest collectively held 24,332,907 common shares representing a 29.9% ownership interest on a fully diluted basis. As at March 31, 2018 and, 2017, the carrying value of the Discovery Air common shares was nil. As at March 31, 2017, Clairvest had advanced to Discovery Air $2.3 million in the form of a promissory note bearing interest at 8.0% per annum which had been included in loans receivable at the accrued value. During fiscal 2018, Discovery Air repaid the promissory note in full. Interest of $0.1 million was earned on the promissory note during fiscal 2018. In March 2018, Discovery Air commenced a restructuring under the Companies Creditors Arrangement Act ("CCAA") to conduct a Court-supervised sale process of its equity interest in its wholly owned subsidiaries and its residual interest in Top Aces (together, the "Assets"). CEP IV Co-Invest and other investors of the Debentures of Discovery Air (the "Discovery Air Investor Group"), have submitted bids to purchase the Assets as stalking horse purchasers (the "Transactions"). In support of CCAA proceedings, CEP IV Co-Invest has agreed to provide up to $12.6 million in debtor-in-possession ("DIP") financing, $4.9 million of which had been drawn as at March 31, 2018. Subsequent to year end, the DIP financing was increased to $15.0 million and was fully drawn. As at March 31, 2017, the Discovery Air Investor Group had in place a $25.0 million secured revolving credit facility ("Revolver") to Top Aces, $20.0 million of which was drawn as at March 31, 2017. The Revolver provides the Discovery Air Investor Group the option to convert the outstanding balance of the Revolver into common shares of Top Aces based on an agreed market value of Top Aces. During fiscal 2018, a second secured revolving credit facility ("2nd Revolver") for $13.0 million was provided under the same terms and conditions and both Revolvers were fully drawn. In total, CEP IV Co- Invest funded $14.5 million under the Revolvers, $7.8 million of which was funded during fiscal 2018. Subsequently, the Discovery Air Investor Group exercised the pre-existing optional conversion feature pursuant to the terms of the Revolvers to convert all the outstanding amounts under both Revolvers into common shares of Top Aces. This occurred concurrent with the above-mentioned exercise of the swap option for common shares of Top Aces. Interest of $0.9 million was earned from the Revolvers during fiscal 2018. As at March 31, 2018, CEP IV Co-Invest held 611.4 common shares of Top Aces, representing a 26.3% ownership interest on a fully diluted basis. Impero Waste / Winters Bros. of CT As at March 31, 2017, CEP IV Co-Invest held 76,284.8 Class C units of Winters Bros. of CT, representing a 13.4% ownership interest on a fully diluted basis. During fiscal 2018, CEP IV Co-Invest completed a partial realization of its investment in Winters Bros. of CT and received cash proceeds of US$7.9 million (C$10.1 million) for a net realized gain of $3.3 million and 4,817.86 Class A units of Impero Waste, the acquirer of Winters Bros. of CT, representing a 6.1% ownership interest in Impero Waste on a fully diluted 14 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 basis. The fair value of $4.1 million as at March 31, 2018 compares to a cost of $3.0 million. The fair value is adjusted for foreign exchange fluctuations. MAG As at March 31, 2018 and 2017, CEP IV Co-Invest held 33,736 Class A stock of MAG, representing a 10.3% ownership interest on a fully-diluted basis. 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. Also during fiscal 2018, management determined that the fair value of MAG should be adjusted upward by $9.8 million. The fair value of $21.2 million as at March 31, 2018 compares to a fair value of $11.6 million at March 31, 2017 and a cost of $5.1 million. The increase in fair value was attributable to growth in operating performance. The fair value is adjusted for foreign exchange fluctuations. CEP IV Co-Invest also held $1.1 million in promissory notes from MAG Aerospace Canada (formerly Discovery Air Fire Services) which bear interest at 10.0% per annum with a maturity date of January 31, 2021. Interest of $0.1 million was earned from these promissory notes from MAG Aerospace Canada during fiscal 2018. Subsequent to year-end and in conjunction with the sale of MAG as described below, the promissory notes and accrued interest were repaid in full. Additionally, Clairvest had advanced working capital loans to a Canadian subsidiary of MAG ("Momentum Solutions") which had been repaid in full during the year. During fiscal 2018, $0.2 million in interest was earned from these loans. Subsequent to year-end, CEP IV Co-Invest realized its investment in MAG and sold the Class A stock for US$29.5 million in proceeds at closing while retaining a 5% ownership interest in Momentum Solutions. Total proceeds for CEP IV Co-Invest including the notes repayment was $39.2 million. The Meadowlands As at March 31, 2018 and 2017, CEP IV Co-Invest had invested US$5.4 million (C$5.6 million) to the Meadowlands in the form of secured convertible debentures which accrue interest at a rate of 15% per annum, 10% of which was payable quarterly in cash and 5% payable in-kind. Commencing January 1, 2016, CEP IV Co-Invest agreed that the entire 15% interest be payable in-kind. CEP IV Co-Invest also held warrants which entitle it to invest in equity securities of the Meadowlands subject to certain conditions. 5% of the 15% interest on the secured convertible debentures is forfeited in the event CEP IV Co-Invest exercises the warrants. As at March 31, 2017, the gross accrued value of the secured debentures was US$7.6 million (C$10.1 million), which included US$2.2 million in accrued interest. During fiscal 2018, US$1.1 million (C$1.4 million) in interest was accrued on the Debentures. As at March 31, 2018, the gross accrued value of the secured debentures was US$8.7 million (C$11.2 million) and the carrying value of the secured debentures was US$7.3 million (C$9.4 million), which reflected US$1.4 million (C$1.8 million) in accrued interest being provided for on the secured debentures. CEP IV Co-Invest also invested US$0.7 million ($0.9 million) in the Meadowlands in the form of preferred debt, which is junior to the secured debentures. The preferred debt has a stated interest rate of 3% per annum and interest is payable- in-kind. During fiscal 2018, CEP IV Co-Invest earned $26 thousand in interest on the preferred debt, which was fully provided for and presented on a net basis. The fair value of $10.2 million as at March 31, 2018 compares to a fair value of $9.6 million as at March 31, 2017 and a cost of $6.4 million. The fair value is adjusted for foreign exchange fluctuations. Rivers Casino As at March 31, 2018 and 2017, CEP IV Co-Invest held 9,021,917 units of Rivers Casino representing a 5.0% ownership interest on a fully diluted basis. 15 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 During fiscal 2018, CEP IV Co-Invest earned quarterly distributions totalling $1.3 million and quarterly fees totalling $0.6 million from Rivers Casino. As a result of CEP IV Co-Invest's investment in Rivers Casino requiring certain acquisition entities in the United States, $0.8 million in U.S. income tax obligations were incurred during fiscal 2018. Also during fiscal 2018, management determined that the fair value of Rivers Casino should be adjusted upward by $9.7 million. The fair value of $23.8 million as at March 31, 2018 compares to a fair value of $14.3 million at March 31, 2017 and a cost of $9.1 million. The increase in fair value was attributable primarily to an increase to the valuation multiple and debt reduction. The fair value is adjusted for foreign exchange fluctuations. INVESTMENTS MADE BY CEP V CO-INVEST ALONGSIDE CEP V Accel Entertainment As at March 31, 2018 and 2017, CEP V Co-Invest held 283,478 Class D preferred shares of Accel Entertainment, representing a 7.5% ownership interest on a fully diluted basis. The Class D preferred shares are entitled to certain preference over all other equity of Accel Entertainment. Also during fiscal 2018, management determined that the fair value of Accel Entertainment should be adjusted upward by $7.1 million. The fair value of $27.3 million as at March 31, 2018 compares to a fair value of $20.6 million as at March 31, 2017 and a cost of $16.0 million. The increase in fair value was due to growth in operating performance. The fair value is adjusted for foreign exchange fluctuations. Ace2Three During fiscal 2018, CEP V Co-Invest invested $56.0 million in Ace2Three. The investment comprised $22.9 million in the form of compulsory convertible debentures which are denominated in INR and bear interest at a rate of 16% per annum, and $33.1 million in 202,230 common shares representing a 33.6% ownership interest on a fully diluted basis. In June 2017, Ace2Three experienced a material adverse development which resulted in a temporary shut-down of operation and a material loss in revenue. Ace2Three has since resumed its operations in certain jurisdictions and the validity of the regulatory developments is being challenged and the matter is before the courts. While Ace2Three remains profitable, Clairvest has determined that there has been a negative impact on the fair value of this investment. Accordingly, the carrying value of the equity investment made in Ace2Three was reduced by 50% or $15.8 million. The fair value of $40.2 million as at March 31, 2018 compares to a cost of $56.0 million. The fair value is adjusted for foreign exchange fluctuations. Also Energy During fiscal 2018, CEP V Co-Invest invested US$4.8 million (C$6.0 million) to acquire 1,013,062 Series A preferred stock of Also Energy. The Series A preferred stock which accrue dividends at a rate of 8% compounded annually, are convertible into common stock of Also Energy at CEP V Co-Invest's discretion. As at March 31, 2018, CEP V Co-Invest's ownership interest in Also Energy was 14.3% on a fully diluted basis. The fair value of $6.2 million as at March 31, 2018 compares to a cost of $6.0 million. The fair value is adjusted for foreign exchange fluctuations. Digital Media Solutions As at March 31, 2018 and 2017, CEP V Co-Invest held 6,150,000 Class B units of 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. During fiscal 2018, CEP V Co-Invest received distributions totalling $0.6 million from Digital Media Solutions. Also during fiscal 2018, management determined that the fair value of Digital Media Solutions should be adjusted upward by $1.2 million. The fair value of $9.1 million as at March 31, 2018 compares to a fair value of $8.2 million as at March 31, 2017 and a cost of $8.3 million. The fair value is adjusted for foreign exchange fluctuations. 16 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 GTA Gaming In December 2017, the Ontario Lottery and Gaming Corporation announced that Ontario Gaming West GTA Limited Partnership ("OWGTALP") was selected as the successful proponent to operate four gaming facilities in the West Greater Toronto Area (the "West GTA Bundle"). As support for this bid, Clairvest had pledged $15.8 million to a Schedule 1 Canadian chartered bank which remained restricted as at March 31, 2018. During fiscal 2018, CEP V Co-Invest invested $0.4 million for 405,151.2 units of OWGTALP representing a 13.5% ownership interest. Subsequent to year-end and in conjunction with the final closing of the purchase of West GTA Bundle gaming assets, an additional $8.4 million was funded by CEP V Co-Invest for an additional 8,370,000 units of OWGTALP and the restriction on the $15.8 million was released subsequently as the pledge was no longer required upon completion of final closing. Also during fiscal 2018, CEP V Co-Invest invested $0.2 million for 1,254,000 units of Ontario Gaming GTA Limited Partnership (“OGTALP”) representing a 0.6% ownership interest. OGTALP operates 3 gaming assets in the Great Toronto Area. Winters Bros. of LI As at March 31, 2018 and 2017, CEP V Co-Invest held 1,487,773 Class C units of Winters Bros. of LI and 256,037 units of WBLI II, an affiliated company of Winters Bros. of LI which is owned proportionately by the same unitholders of Winters Bros. of LI, representing a 14.0% ownership interest on a fully diluted basis in the respective entities. During fiscal 2018, management determined that the fair value of Winters Bros. of LI should be adjusted downward by $1.1 million. The fair value of $9.8 million as at March 31, 2018 compares to a fair value of $11.2 million at March 31, 2017 and a cost of $10.6 million. The fair value is adjusted for foreign exchange fluctuations. OTHER INVESTMENTS Grey Eagle Casino As at March 31, 2018 and 2017, Clairvest held units of 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. Additionally, CEP is entitled to between 8.5% and 28.7% of the earnings of the Grey Eagle Casino until December 18, 2022. As described in the Transaction with Related Parties section of the MD&A, 2486303 Ontario and Clairvest collectively holds a 100% interest in CEP. During fiscal 2018, Clairvest earned $0.5 million and CEP earned $1.6 million in equity distributions from Grey Eagle Casino. The aggregate fair value of $11.3 million as at March 31, 2018 compares to a fair value of $12.6 million as at March 31, 2017 and a cost of $11.0 million. Wellington Financial As at March 31, 2017, Clairvest had funded $15.6 million of its $30.3 million limited partner commitment in WF Fund V, representing a 10.1% ownership interest in WF Fund V. During fiscal 2018, Clairvest funded an additional $1.7 million to WF Fund V bringing total amount funded to $17.3 million. Subsequently, CIBC acquired the loan portfolio of WF Fund V and certain assets of the general partner of WF Fund V. Clairvest received a full return of capital on its investment of $17.3 million and 194,876 CIBC common shares which subject to certain conditions are restricted for sale until January 7, 2021. As at March 31, 2018, the CIBC common shares were valued at a discount to the closing price of $113.72 per share to reflect the sale restriction and had been included as other investments. Clairvest continues to participate in its pro-rata share of any profits realized from warrants previously granted to the various Wellington Funds (the "warrants") and is eligible for additional payments on the sale of the general partner assets subject to certain conditions. During fiscal 2018, Clairvest received distributions totalling $24.5 million from Wellington Financial, which includes the CIBC common shares. As at March 31, 2018, Clairvest had received distributions totalling $55.7 million from current and prior Wellington Funds. 17 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 The fair value of $3.6 million as at March 31, 2018 reflects management's estimated realizable value of Clairvest's entitlement of the warrants. LIABILITIES As at March 31, 2018, Clairvest had $167.6 million in total liabilities, which included $11.6 million in accrued management and director compensation, $31.3 million in share-based compensation, $91.3 million in management participation and $29.7 million in current and deferred tax liability. $137.1 million of these liabilities were payable only upon the cash realization of certain investments of Clairvest or the CEP Funds. FINANCIAL RESULTS Clairvest's operating results reflect revenue earned from its corporate investments and treasury funds 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, 2018 was $123.8 million compared with net income of $70.1 million for the year ended March 31, 2017. The following table summarizes the composition of net income for the years ended March 31: Financial Results Year ended March 31, ($000's, except per share amounts) Net investment gains 2018 2017 - Investee companies inclusive of foreign exchange hedging activities $ 103,497 $ 60,455 - Acquisition entities including distributions, interest, dividends and fees received from investee companies and net of taxes paid or payable by these acquisition entities Distributions, interest income, dividends and fees - CEP Funds - Investee companies - Treasury funds - Acquisition entities and other Net carried interest income – realized and unrealized changes Total expenses Income before income taxes Income taxes Net income and comprehensive income Net income and comprehensive income per share - basic and fully diluted (1) Includes realized gains/losses and market value changes to Clairvest's treasury funds. 4,243 12,491 107,740 72,946 11,071 26,810 1,928 14,171 53,980 46,469 71,495 136,694 12,916 123,778 8.15 12,281 7,260 764 2,602 22,907 35,617 51,870 79,600 9,474 70,126 4.61 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, and income taxes incurred by these acquisition entities, are reflected in net investment gains until the proceeds are distributed out of these 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. 18 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 During fiscal 2018, CEP III Co-Invest realized its investment in LSNE and received cash proceeds totalling $27.3 million. Subsequently, CEP III Co-Invest made distributions totalling $28.2 million, $9.6 million of which were to Clairvest, $16.3 million were to acquisition entities of Clairvest and $2.3 million were paid as carried interest entitlements. During fiscal 2018, CEP IV Co-Invest received $31.7 million in cash proceeds as a result of the sale of CRS and received $10.1 million in cash proceeds from the partial realization of Winters Bros. of CT. During fiscal 2018, CEP IV Co-Invest made a return of capital totalling $46.3 million to its unitholders, $45.6 million of which were to Clairvest and the remaining $0.7 million were to acquisition entities of Clairvest. The following tables summarize the net investment gains or losses of investee companies for the years ended March 31, 2018 and 2017. These net investment gains are inclusive of the impact on the foreign exchange hedging activities related to these investments: Net investment gains (losses) on investee companies Year ended March 31, 2018 ($000's) Accel Entertainment Ace2Three Also Energy Centaur Gaming Cieslok Media(1) Chilean Gaming Holdings County Waste CRS Digital Media Solutions Discovery Air / Top Aces Grey Eagle Casino Impero Waste (formerly "Winters Bros. of CT") LSNE MAG The Meadowlands Rivers Casino Wellington Financial Winters Bros. of LI Other investments Net investment gains on investee companies (1) Cieslok Media was realized during fiscal 2017. Foreign Exchange gains (losses) inclusive of foreign exchange hedging activities (68) $ (2,807) (4) 207 — 1,560 (98) — (40) — — (115) 88 143 (34) 135 — (100) — (1,133) $ Net realized gains (losses) — — — — 69 — — 2,950 — (1,165) — 3,311 146 — — — — — — 5,311 $ $ Net unrealized gains (losses) 7,137 (15,826) — 82,691 — 7,928 (1,730) — 1,196 5,214 (2,305) 21 — 9,831 — 9,711 (2,847) (1,064) (1,646) 98,311 $ $ $ $ Total 7,069 (18,633) (4) 82,898 69 9,488 (1,828) 2,950 1,156 4,049 (2,305) 3,217 234 9,974 (34) 9,846 (2,847) (1,164) (1,646) 102,489 19 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 Foreign exchange gains (losses) inclusive of foreign exchange hedging activities $ (30) $ 1,251 — 1,540 42 — (21) (16) — — (9) (73) 7 (89) (147) — (8) 2,447 $ $ Total 4,530 20,526 22,707 5,259 5,427 6,749 (21) (16) (8,097) (1,424) 1,006 11,628 4,577 (89) (12,522) 223 (8) 60,455 Net realized gains (losses) Net unrealized gains (losses) — — 22,707 — — — — — — — — 31 — — — — — 22,738 $ $ 4,560 19,275 — 3,719 5,385 6,749 — — (8,097) (1,424) 1,015 11,670 4,570 — (12,375) 223 — 35,270 $ $ Year ended March 31, 2017 ($000's) Accel Entertainment Centaur Gaming Cieslok Media(1) Chilean Gaming Holdings County Waste CRS Davenport Land Investments Digital Media Solutions Discovery Air Grey Eagle Casino Winters Bros. of CT LSNE MAG The Meadowlands Rivers Casino(2) Wellington Financial Winters Bros. of LI Net investment gains on investee companies (1) (2) Cieslok Media was realized during fiscal 2017. During fiscal 2017, Rivers Casino completed a financing and distributed $14.8 million to CEP IV Co-Invest which resulted in a decrease to the fair value of the investment. The Company and its acquisition entities also receive distributions, interest, dividends or fees from various investee companies. The following table summarizes these income earned by the Company and its acquisition entities for the years ended March 31: 20 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 Distributions, Interest, Dividends, and Fees from Investee Companies Year ended March 31, ($000's) Distributions and interest income Ace2Three Centaur Gaming County Waste CRS Davenport Land Investments Digital Media Solutions Discovery Air Grey Eagle Casino MAG The Meadowlands Rivers Casino Wellington Financial Dividend income Chilean Gaming Holdings Other investments 2018 Earned through acquisition entities Earned directly by Clairvest Earned directly by Clairvest Total 2017 Earned through acquisition entities Total — $ $ — $ — — — — — 130 522 152 — — 24,575 25,379 3,225 $ 192 43 245 99 589 14,316 1,568 115 959 1,322 — 22,673 3,225 $ 192 43 245 99 589 14,446 2,090 267 959 1,322 24,575 48,052 — $ — — — — — 183 729 245 — — 4,773 5,930 121 — 622 82 819 395 2,187 21 866 18,691 — 23,804 — 121 — 622 82 819 578 2,916 266 866 18,691 4,773 29,734 — 259 259 849 — 849 849 259 1,108 — — — 3,701 — 3,701 3,701 — 3,701 Advisory and other fees 1,172 611 1,783 1,330 619 1,949 Distributions, interest, dividends and fees from investee companies $ 26,810 $ 24,133 $ 50,943 $ 7,260 $ 28,124 $ 35,384 The Company and its acquisition entities also receive distributions, fees and interest from the CEP Funds as described in the Transaction with Related Parties section of the MD&A. The following table summarizes the distributions, fees and interest earned from the CEP Funds for the years ended March 31: Distributions, Fees and Interest from the CEP Funds Year ended March 31, ($000's) Priority distributions Management fees Interest on loans advanced Distributions, fees and interest from the CEP Funds 2018 Earned through acquisition entities Earned directly by Clairvest Earned directly by Clairvest Total 2017 Earned through acquisition entities Total $ 9,267 $ — $ 9,267 $ 10,860 $ — $ 10,860 1,304 500 — 81 1,304 581 1,311 110 — 74 1,311 184 $ 11,071 $ 81 $ 11,152 $ 12,281 $ 74 $ 12,355 Also included in distributions and interest income for the year ended March 31, 2018 and 2017 was income on treasury funds of $1.9 million and $0.8 million respectively. During fiscal 2017, income on treasury funds included a net realized loss of 21 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 $0.7 million on the US$7.5 million Light Tower Rentals corporate bonds purchased under Clairvest's treasury portfolio. Acquisition entities of Clairvest earned interest from its treasury funds totalling $0.5 million during fiscal 2018 and 2017. 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: Net carried interest income Year ended March 31, ($000's) Realized carried interest from CEP Realized carried interest from the CEP Funds Net change in unrealized carried interest from CEP and the CEP Funds Net carried interest income(1) (1) 2017 474 830 34,313 35,617 Includes carried interest which is ultimately received by non-Clairvest participants if and when they are receivable, which are recorded as management participation as described below. 2018 301 16,590 29,578 46,469 $ $ $ $ Total expenses for the year were $71.5 million, compared with $51.9 million for the year ended March 31, 2017. 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 Share-based compensation expenses Administration and other expenses Domain and due diligence expenses(1) Professional fees Office and other expenses Finance and foreign exchange expense Interest and bank charges Foreign exchange costs (gain) Management participation 2018 $ 13,108 $ 17,105 797 618 4,118 5,533 878 23 901 34,848 2017 11,342 10,992 730 770 3,388 4,888 828 (14) 814 23,834 Total expenses, excluding income taxes (1) 51,870 Domain and due diligence expenses with respect to investments made alongside CEP V, CEP V India 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. 71,495 $ $ Included in share-based compensation expenses for the year ended March 31, 2018 was $4.5 million for the Non-Voting Option Plan, $7.8 million for book value appreciation rights ("BVARs"), and $5.3 million for Deferred Share Units ("DSUs"), Appreciation Deferred Share Units ("ADSUs"), and Employee Deferred Share Units (“EDSUs”), compared to $0.9 million for the Non-Voting Option Plan, $7.8 million for BVARs and $2.7 million for DSUs, ADSUs and EDSUs for the year ended March 31, 2017. 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. 22 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 SUMMARY OF QUARTERLY RESULTS June 27, 2018 ($000's except per share information) Gross revenue $ Net income (loss) $ Net income (loss) per common share* Net income (loss) per common share fully diluted* $ $ 1.23 26,845 March 31, 2018 4.88 121,671 December 31, 2017 2.80 63,504 September 30, 2017 (0.76) (3,831) June 30, 2017 1.14 33,361 March 31, 2017 2.02 52,368 December 31, 2016 0.69 20,436 September 30, 2016 0.76 25,305 June 30, 2016 * 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 18,626 74,103 42,609 (11,560) 17,268 30,764 10,520 11,574 1.23 4.88 2.80 (0.76) 1.14 2.02 0.69 0.76 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 2018 was $18.6 million compared with a net income of $17.3 million for the fourth quarter of fiscal 2017. Gross revenue for the fourth quarter of fiscal 2018 comprised $7.1 million in net investment losses, $26.8 million in distributions, interest, dividends and fees, and $7.2 million in net carried interest income. This compares with $17.1 million in net investment gains, $5.8 million in distributions, interest, dividends and fees and $10.4 million in net carried interest income for the fourth quarter of fiscal 2017. The net investment losses of $7.1 million for the fourth quarter of fiscal 2018 resulted from $5.8 million in net unrealized losses from Clairvest's investee companies inclusive of foreign exchange hedging activities and $1.3 million in net unrealized losses from Clairvest's acquisition entities. This compared with $18.5 million in net unrealized gains from Clairvest's investee companies and $1.4 million in net unrealized losses from Clairvest's acquisition entities for the fourth quarter of fiscal 2017. Distributions from acquisition entities are typically declared annually during the fourth quarter of each fiscal year resulting in net unrealized losses from these acquisition entities. The net unrealized loss of $5.8 million from Clairvest’s investee companies resulted primarily from $21.6 million in distributions received from Wellington Financial as described on page 17 of the MD&A. Distributions, interest, dividends and fees for the quarter included income on treasury funds of $0.9 million, general partner distributions and interest earned from the CEP Funds of $2.2 million, distributions and interest earned from investee companies of $23.4 million and $0.3 million from acquisition entities. This compared with $0.3 million in income on treasury funds, $3.1 million earned from the CEP Funds, $2.1 million earned from investee companies and $0.3 million in distributions from Clairvest's acquisition entities for the same quarter last year. Net carried interest income of $7.2 million for the fourth quarter of fiscal 2018 comprised $0.1 million in realized carried interest from CEP and $7.1 million in unrealized carried interest receivable from the CEP Funds. Net carried interest income of $10.4 million for the fourth quarter of fiscal 2017 comprised $0.1 million in realized carried interest from CEP and $10.3 million in unrealized carried interest receivable from the CEP Funds. Net carried interest income from the CEP Funds is further described in the Transaction with Related Parties section of the MD&A. 23 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 Expenses for the fourth quarter of fiscal 2018 included $4.8 million in management and director compensation expenses, $4.8 million in management participation, $1.6 million in administrative and other expenses, $0.1 million in finance and foreign exchange expenses and $3.0 million in income tax recoveries. This compares with $6.8 million in management and director compensation expenses, $6.4 million in management participation, $1.1 million in administrative and other expenses, $0.1 million in finance and foreign exchange expenses recoveries, and $1.6 in income tax expense for the fourth quarter of fiscal 2017. Management participation is further described in the Transaction with Related Parties section of the MD&A. EQUITY AND SHARE INFORMATION As at March 31, 2018, Clairvest had 15,162,995 common shares issued and outstanding. During fiscal 2018, Clairvest purchased and cancelled 31,100 common shares under the Company's normal course issuer bids. An additional 5,100 common shares were purchased and cancelled between April 1, 2018 and June 27, 2018. As at June 27, 2018, Clairvest had 15,157,895 common shares issued and outstanding. During fiscal 2017, the Board of Directors of the Company authorized the creation of Non-Voting Series 2 Shares ("Non-Voting Shares") which have a two times preference over the common shares. The Non-Voting Shares were authorized as part of the new stock option program as described below. No Non-Voting Shares had been issued as at March 31, 2018 and June 27, 2018. Also during fiscal 2017, Company adopted a stock option plan (the "Non-Voting Option Plan"). Options granted under the Non-Voting Option Plan are exercisable for Non-Voting Shares. The Non-Voting Option Plan has a cash settlement feature. Options granted under this plan vest at a rate of one-fifth of the grant at the end of each year over a five-year period. As at March 31, 2018 and June 27, 2018, 362,604 options were outstanding and 38,752 had vested. In addition, during fiscal 2017 the Board of Directors of the Company approved an EDSU Plan. The EDSU Plan provides, among other things, that participants may elect annually to receive all or a portion of their annual bonus amounts that would otherwise be payable in cash in the form of EDSUs. EDSUs may be redeemed for cash or for common shares of the Company in accordance with the terms of the plan. Clairvest is required to reserve one common share for each EDSU issued under the EDSU Plan. The maximum number of Clairvest common shares reserved for the EDSU Plan is 200,000 which represented approximately 1.3% of the outstanding number of common shares as at March 31, 2018 and June 27, 2018. As at March 31, 2018 and June 27, 2018, 50,556 EDSUs had been issued based on the terms and conditions of the EDSU Plan, and none of which had been redeemed. Clairvest paid an ordinary dividend of $0.10 per share on the common shares in each of fiscal 2018, fiscal 2017 and fiscal 2016. During fiscal 2018, and 2017 and 2016, Clairvest also paid a special dividend of $0.2621 and, $0.2191 and $0.1958 per share respectively. Subsequent to year-end, Clairvest declared an annual ordinary dividend of $0.10 per share, and a special dividend of $0.3401 per share. The dividends will be payable to common shareholders of record as of July 6, 2018. The dividend will be paid on July 25, 2018. 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 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 24 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 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 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 records 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 Clairvest, though its consolidated subsidiaries, is entitled to priority distributions, management fees and carried interest from the CEP Funds. Clairvest is also entitled to other entitlements from CEP III Co-Invest, CEP IV Co-Invest, and CEP V Co-Invest (the “CEP Co-Invest Partnerships”) as specified in the respective limited partnership agreements. MIP III, MIP IV and MIP V are entitled to certain carried interest from the CEP Funds and the CEP Co-Invest Partnerships. Further details are described in note 9 to the consolidated financial statements. 25 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 As at March 31, 2018, Clairvest had accounts receivable from its investee companies totalling $2.4 million, from CEP IV totalling $0.7 million, from CEP IV-A totalling $0.1 million, from CEP V totalling $17.1 million, from CEP V India totalling $0.1 million and from CEP V-A totalling $3.3 million. Additionally, acquisition entities of Clairvest which were not consolidated in accordance with IFRS held receivables from CEP IV totalling $0.1 million, from CEP V totalling $17 thousand, from CEP V-A totalling $3 thousand and Clairvest's investee companies totalling $1.5 million. In addition, the Company advances loans to its acquisition entities and the CEP Funds. During fiscal 2018, the Company received net repayments of $2.1 million from these loans, such that $13.6 million in loans remained outstanding as at March 31, 2018. Further details are described in note 9(l) to the consolidated financial statements. As at March 31, 2018, Clairvest had share purchase loans receivable from certain officers of Clairvest (the "Officers") totalling $3.0 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 $6.5 million. None of these loans were made to key management. During fiscal 2018, other loans made to officers of the affiliated company were repaid in full. Interest of $68 thousand was earned on these loans during the year. Key management at Clairvest includes the Chief Executive Officer ("CEO"), the Vice Chairman, the President and its directors. The CEO and President are entitled to annual discretionary cash bonuses of up to 175% of their individual annual salary based on individual performance. The Vice Chairman is entitled to annual discretionary cash bonuses of up to 100% of annual salary based on individual performance. There is also an annual objective cash bonus which is based on Clairvest's Incentive Bonus Program, the stock option plans, the BVAR Plan and the EDSU Plan. Annual salaries and compensation under these plans paid to the CEO, Vice Chairman, and President during fiscal 2018 was $5.5 million. As at March 31, 2018, the total amounts payable to the CEO, Vice Chairman, and President under the aforementioned plans were $11.8 million. During fiscal 2018, no compensation was paid to directors under the BVAR, DSU or ADSU plans. As at March 31, 2018, the total amounts payable to the directors of Clairvest under the DSU, ADSU and Non-Voting Option plans was $15.5 million. During fiscal 2018, Clairvest earned $25.4 million in distributions and interest income, $0.3 million in dividend income and $2.2 million in advisory and other fees from its investee companies. Additionally, acquisition entities of Clairvest which were not consolidated in accordance with IFRS earned $21.7 million in distributions and interest income, $0.8 million in dividend income and $0.6 million in advisory and other fees from its investee companies. 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 FINANCIAL 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, 2018. 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, $21.2 million of which remains unfunded as at March 31, 2018. 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, $103.6 million of which remains unfunded as at 26 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 March 31, 2018. 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 ("WF Fund IV"), all of which was unfunded as at March 31, 2018. WF Fund IV may no longer invest in new investments. Clairvest has also committed $30.3 million to WF Fund V. During fiscal 2018, Clairvest received a full return of capital from WF Fund V upon the sale of its loan portfolio as described in note 6(s). As at March 31, 2018, $30.3 million remained unfunded as at March 31, 2018. WF Fund V may no longer invest in new investments. Clairvest, as a general partner of WF Fund V, had guaranteed to return up to amounts received in the event the limited partners of WF Fund V do not meet their return threshold as specified in its Limited Partnership Agreement. During fiscal 2018, WF Fund V sold its loan portfolio and the limited partners received a full return of capital and a return above the threshold as specified in its Limited Partnership Agreement, and accordingly, the guarantee was extinguished with no amounts funded or owing with respect to the clawback. 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, 2018, the Realized Amount under the Bonus Program was $0.7 million and had 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 $7.8 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. In conjunction with the sale of Casino New Brunswick, Clairvest had agreed to a net guarantee of $2.0 million to fund any valid claims made by 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, 2018, no amounts with respect 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 totalling $41.9 million as at March 31, 2018 from an unrelated financial institution, while another acquisition entity of CEP III Co-Invest held term deposits totalling $41.9 million as at March 31, 2018 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, 2018. Clairvest had agreed to guarantee up to $10.0 million to support Discovery Air's credit facility with its bank. During fiscal 2018, the guarantee was extinguished. Clairvest had pledged $15.8 million to a Schedule 1 Canadian chartered bank which has provided debt financing to OWGTALP. The pledge was made to support the debt financing and is held in a bank account belonging to Clairvest at the Schedule 1 Canadian chartered bank which cannot be withdrawn without consent from the Schedule 1 Canadian chartered bank. Accordingly, it has been classified as restricted cash on the consolidated statements of financial position. Subsequent to year-end and in conjunction with the final closing of OWGTALP, the restriction on the cash was removed. As at March 31, 2018, the Company had future minimum annual lease payments under non-cancellable operating leases for the use of office space of $0.5 million due within one year, $2.1 million due after one year, but not more than five years and $1.8 million due after 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. 27 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 RISK MANAGEMENT The private equity investment business involves accepting risk for potential return, and is therefore affected by a number of risk factors. These factors, categorized as market risk, investing process risk and other risks, are described below. Additional risks not currently known to us or that we currently believe to be immaterial may also have a material adverse effect on future business of the Company. Market risk Fair Value risk Fair value risk includes exposure to fluctuations in the fair market value of the Company's investments. 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. At March 31, 2018, 9 investee companies were 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 have been an increase of $18.8 million or a decrease of $19.7 million to the carrying value of corporate investments and net investment gains, on a pre-tax basis, for the year ended March 31, 2018. 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 fair value is determined based on recent transaction information, this value is the most representative indication of fair value for a period of up to twelve months. The fair value of corporate bonds, debentures or loans is primarily determined using discounted cash flow technique. This technique 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, Clairvest has determined that there are no reasonable alternative assumptions that would change the fair value materially as at March 31, 2018. The Company's corporate investment portfolio was diversified across 17 investee companies in 6 industries and 4 countries as at March 31, 2018. The Company has considered current economic events and indicators in the valuation of its investee companies. Interest rate risk Fluctuations in interest rates affect the Company's income derived from its treasury funds. For financial instruments which yield a floating interest rate, the income received is directly impacted by the prevailing interest rate. The fair value of financial instruments which yield a fixed interest rate would change when there is a change in the prevailing market interest rate. The Company manages interest rate risk on its treasury funds 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 have been an increase or decrease of $1.2 million to distributions and interest income on a pre-tax basis for the year ended March 31, 2018. Certain of the Company's corporate investments are also held in the form of debentures and loans. Significant fluctuations in market interest rates can have a significant impact on the carrying value of these investments. 28 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 Currency risk The Company has implemented a hedging strategy because it has, directly and indirectly, several investments outside of Canada, currently in the United States, Chile, and India. 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, Clairvest and its acquisition entities, subject to certain exceptions, entered into hedging positions against these foreign-denominated currencies. As at March 31, 2018, the Company had net foreign exchange exposure to the CLP totalling $17.5 million and the INR totalling $40.2 million. 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 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. Commodity price risk Certain of Clairvest's investee companies are subject to price fluctuations in commodities. Clairvest understands the risk of investing in cyclical industries which are largely tied to commodity prices and takes such risk into account in making these investments. The Company manages this risk through oversight responsibilities with existing investee companies and by reviewing the financial condition of investee companies regularly. Investing process risk Competition risk Clairvest and the CEP Funds compete for acquisition of investments with many other investors, some of which may have greater depth of investment experience in particular industries or segment or greater financial resources. There may be intense competition for investments in which Clairvest intends to invest, and such competition may result in less favorable investment terms than would otherwise be the case. There can, therefore, be no assurance that the investments ultimately acquired by Clairvest will meet all the investment objectives of Clairvest, or that Clairvest will be able to invest all of the capital it has committed to invest alongside the CEP Funds. The Company manages this risk through a disciplined approach to investing its capital and that of the CEP Funds, and has strict investment policies where investments above a certain threshold require the approval of the Board of Directors. Uncompleted and unspecified investment risk The due diligence of each specific investment opportunity that Clairvest looks at and the negotiation, drafting and execution of the relevant agreements require substantial management time and attention and may incur substantial third-party costs. In the event that Clairvest elects not to complete a specific investment, the costs incurred up to that point for the proposed transaction are often not recoverable by Clairvest and the CEP Funds. Furthermore, in the event that Clairvest reaches an agreement relating to a specific investment, it may fail to complete such an investment for any number of reasons, including those beyond Clairvest's control. Any such occurrence could similarly result in a financial loss to Clairvest and the CEP Funds due to the inability to recoup any of the related costs incurred to complete a transaction. A shareholder must rely upon the ability of Clairvest's management in making investment decisions consistent with its investment objectives and policies. Shareholders will not have the opportunity to evaluate personally the relevant economic, financial and other information which is utilized by Clairvest in its selection of investments. Minority investment risk Clairvest and the CEP Funds may make minority equity investments in entities in which they do not legally control all aspects of the business or affairs of such entities. As at March 31, 2018, 15 of the 17 investments made by Clairvest were minority equity investments. In all investments, Clairvest monitors the performance of each investment, maintains an ongoing 29 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 dialogue with each investee company's management team and seeks board representation and negative controls as conditions of each investment. Gaming investment risk As at March 31, 2018, Clairvest's exposure to the gaming industry represented 55% of its net book value. These investments are subject to the risks of any other investment but have heightened exposure to political and regulatory risk whereby a change in the political or regulatory regime governing the gaming industry in a particular jurisdiction where Clairvest's gaming assets are located could have an impact on the ultimate returns of that investment. In addition, many of these investments involve the construction of a gaming facility whereby not only is Clairvest underwriting the risk of completing the facility on budget, but it is also relying on forecasted gaming revenue, versus historical results, which is only a best estimate. While a project is in construction and for a specified period thereafter, the owners of a newly constructed gaming facility may have to guarantee some or all of the bank facility or agree to fund any operating shortfall. The Company manages this risk through oversight responsibilities with existing investee companies and by reviewing the financial condition of investee companies regularly. Historically, Clairvest has been able to manage all of these risks but past performance of Clairvest provides no assurance of future success. Risks upon sale of investments In connection with the disposition of an investee company, Clairvest and the CEP Funds may be required to make representations about the business and financial affairs of the business. Clairvest and the CEP Funds may also be required to indemnify the purchasers of such investee companies to the extent that any such representation turns out to be incorrect, inaccurate or misleading. Investment structure and taxation risks Clairvest structures its investments in a manner that is intended to achieve its investment objectives. There can be no assurance that the structure of any investment will be as tax efficient as designed or that any particular tax result will be achieved, due to unanticipated tax law changes or unforeseen circumstances during the planning phase of the tax structuring. Furthermore, Clairvest's returns in respect of its investments may be reduced by withholding or other taxes imposed by jurisdictions in which Clairvest's investee companies are organized. Other risks 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, 2018, 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 receivable, a significant portion of which are with its investee companies and its CEP Funds. The Company manages this risk through its oversight responsibilities with existing investee companies by reviewing their financial conditions regularly, and through its fiduciary duty as manager 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. 30 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 The Company manages credit risk on its treasury funds by conducting activities in accordance with the fixed income securities policy which 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. 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 periods. Total unfunded commitments to co-invest alongside the CEP Funds, as described were $140.0 million as at March 31, 2018. 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. The Company manages liquidity risk by maintaining a conservative liquidity position that exceeds all liabilities payable on demand. The Company invests treasury funds in liquid assets such that they are available to cover any potential funding commitments and guarantees. In addition, the Company maintains a $100.0 million credit facility which was undrawn at March 31, 2018. As at March 31, 2018, Clairvest had treasury funds of $147.9 million and access to $100.0 million in credit to support its obligations and current and anticipated corporate investments. Clairvest also had access to $36.9 million in treasury funds held by its acquisition entities and $355.9 million in uncalled committed third-party capital through the CEP Funds at March 31, 2018 to invest along with Clairvest's capital. Conflicts of interest risk Clairvest's primary business is that of a private equity investor investing its own capital but it also manages third-party capital through the CEP Funds. In accordance with the various fund agreements for the CEP Funds, Clairvest is required to invest alongside the CEP Funds unless the relevant CEP Fund investor committee approves such an investment to be invested by Clairvest without the CEP Funds' participation. Accordingly, Clairvest shareholders may not realize the full benefit of Clairvest investment opportunities as such opportunities are required to be shared with the CEP Funds. Risk of CEP Fund Limited Partners' failure to meet capital calls The general partner of the CEP Funds is responsible to manage the affairs of the CEP Funds, which includes calling capital for investments made by the CEP Funds. If a limited partner of the CEP Funds fails to make the required capital contribution when due, Clairvest could be required to increase its investment under certain conditions. The general partner of the CEP Funds manages this risk through designing the terms of the CEP Funds appropriately and due diligence of potential limited partners of the CEP Funds prior to admitting them to the partnership. Minority shareholder risks As at March 31, 2018, Clairvest's Board of Directors and employees owned approximatrely 90% of Clairvest's common shares and Kenneth B. Rotman owned or controlled over 50% of such shares. Accordingly, Mr. Rotman and other insider shareholders have the ability to exercise substantial influence with respect to Clairvest's affairs and can usually dictate the outcome of shareholder votes and may have the ability to prevent certain fundamental transactions. Accordingly, Clairvest shares may be less liquid and trade at a relative discount compared to circumstances where such large shareholders did not have the ability to significantly influence or determine matters affecting Clairvest. 31 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 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 in accordance with its foreign exchange hedging policy as approved by the Board of Directors. During fiscal 2018, the Company received $0.1 million on the settlement of realized foreign exchange forward contracts. As at March 31, 2018, acquisition entities of Clairvest had entered into foreign exchange forward contracts to sell US$246.8 million at an average rate of C$1.2622 per U.S. dollar through to March 2019 and to sell 15.5 billion CLP at an average rate of C$0.002098 per CLP through to April 2019. The fair value of the U.S. dollar contracts held by these acquisition entities as at March 31, 2018 is a loss of $6.3 million and the fair value of the CLP contracts as at March 31, 2018 is a loss of $1.8 million. 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, 2018 and concluded that the disclosure controls and procedures were 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 CEO, Vice Chairman 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, 2018. Management has concluded that the design of internal controls over financial reporting were effective and operated as designed as at March 31, 2018 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 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. 32 MANAGEMENT'S DISCUSSION AND ANALYSIS As at, and for the year ended, March 31, 2018 June 27, 2018 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. 33 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, 2018. Based on that evaluation, management concluded that the Company’s internal control over financing reporting was effective for the year ended March 31, 2018. 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, 2018, 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 Vice Chairman Daniel Cheng Chief Financial Officer 34 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, 2018 and 2017, 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 audits 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, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards. Toronto, Canada June 27, 2018 35 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at March 31 $000s ASSETS Cash and cash equivalents (notes 3, 13 and 16) Temporary investments (note 3) Restricted cash (notes 6(p), 15(k) and 16) Accounts receivable and other assets (notes 9(m) and 16) Loans receivable (notes 6, 9(l) and 16) Derivative instrument (note 14) Income taxes recoverable Carried interest receivable (note 9(j)) Corporate investments (notes 6 and 16) Fixed assets (notes 7 and 9(o)) LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Accounts payable and accrued liabilities (note 9(o)) Income taxes payable Accrued compensation expense (notes 12 and 15(g)) Share-based compensation (note 12) Management participation (note 9) 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 2018 2017 $ $ $ $ $ $ $ 95,592 36,582 15,750 28,402 13,601 — 394 127,900 515,172 1,496 834,889 $ $ $ $ 3,708 5,680 11,643 31,326 91,267 23,944 167,568 81,388 585,933 667,321 834,889 $ 106,205 15,964 — 21,551 15,654 24 2,029 98,322 410,102 2,100 671,951 3,914 96 8,312 21,705 67,050 20,670 121,747 81,554 468,650 550,204 671,951 36 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended March 31 $000s (except per share information) REVENUE Net investment gain (notes 4 and 6) Distributions and interest income (notes 6 and 9) Net carried interest income (note 5) Dividend income Management fees (notes 9(e) and 9(h)) Advisory and other fees (note 9(n)) EXPENSES Employee compensation and benefits (notes 12 and 15(g)) Share-based compensation expenses (note 12) Administration and other expenses Finance and foreign exchange expenses (note 8) Management participation (note 9) Income before income taxes Income tax expense (note 10) Net income and comprehensive income for the year Basic and fully diluted net income and comprehensive income per share (note 11) See accompanying notes 2018 2017 $ 107,740 51,245 46,469 259 1,304 1,172 208,189 13,108 17,105 5,533 901 34,848 71,495 136,694 12,916 123,778 $ 72,946 20,266 35,617 — 1,311 1,330 131,470 11,342 10,992 4,888 814 23,834 51,870 79,600 9,474 70,126 8.15 $ 4.61 $ $ $ 37 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY For the years ended March 31 $000s Share capital Retained earnings shareholders’ Total As at April 1, 2017 Changes in shareholders' equity Net income and comprehensive income for the year Dividends declared ($0.3621 per share) Purchase and cancellation of shares (note 11) As at March 31, 2018 As at April 1, 2016 Changes in shareholders' equity Net income and comprehensive income for the year Dividends declared ($0.3191 per share) Purchase and cancellation of shares (note 11) As at March 31, 2017 See accompanying notes $ 81,554 $ 468,650 $ 550,204 equity 123,778 (5,502) (993) (166) 81,388 $ 585,933 $ 123,778 (5,502) (1,159) 667,321 81,662 $ 403,859 $ 485,521 $ $ 70,126 (4,855) (480) 70,126 (4,855) (588) (108) $ 81,554 $ 468,650 $ 550,204 38 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 Deferred income tax expense Net investment gain 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 (cost of acquisition) of temporary investments (notes 6(i), 6(j) and 9) Net loan advanced Proceeds from settlement of realized foreign exchange Increase in restricted cash forward contracts (note 14) Investments made in investee companies or acquisition entities Return of capital from investee companies or acquisition entities Settlement of share-based compensation liability (note 13) 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, net of disposals Cash used in investing activities FINANCING ACTIVITIES Cash dividends paid Purchase and cancellation of common shares (note 11) Cash used in financing activities Net increase (decrease) in cash during the year Cash and cash equivalents, beginning of year (note 13) Cash and cash equivalents, end of year SUPPLEMENTAL CASH FLOW INFORMATION Interest received Distributions received Income taxes paid Interest paid See accompanying notes 2018 2017 $ 123,778 $ 70,126 1,409 18,663 3,274 (107,740) (5,361) (59) (21,824) 12,140 (20,618) 2,053 83 (15,750) (38,709) 63,203 (9,042) (18,780) 3,493 (3,147) (805) (805) (5,502) (1,159) (6,661) (10,613) 106,205 95,592 4,355 24,392 5,468 704 $ $ $ $ $ $ $ $ $ $ 428 12,263 6,254 (72,946) (11,240) 100 — 4,985 5,829 14,909 457 — (21,110) 37,755 (7,364) 30,476 11,605 47,066 (668) (668) (4,855) (588) (5,443) 40,955 65,250 106,205 3,244 59,013 3,386 568 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 1. NATURE OF ACTIVITIES Clairvest Group Inc. ("Clairvest" or the "Company") is a private equity management firm 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 ("TSX") under the 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"), CEP V HI India Investment Limited Partnership ("CEP V India") 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 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"). These audited annual consolidated financial statements and related notes of Clairvest for the years ended March 31, 2018 and 2017 ("consolidated financial statements") were authorized for issuance by the Board of Directors on June 27, 2018. 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. Basis of consolidation The consolidated financial statements have been prepared in accordance with IFRS 10, Consolidated Financial Statements ("IFRS 10"), as issued by the IASB 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 an 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, do not meet the definition of an investment entity and provide investment-related services on behalf of the Company. 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 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 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 through consolidation. 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 that are accounted for at fair value rather than consolidated. These entities' principal place of business is in Canada. 2141788 Ontario Corporation ("2141788 Ontario") 2486303 Ontario Inc. ("2486303 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") The Company may also use intermediate subsidiaries whose sole purpose is to hold investments for the Company, and therefore, are not included in the list 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 9. 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 and other funds it manages for certain co-investors are not included in Clairvest's consolidated financial statements. (a) Classification and recognition of financial instruments In accordance with International Accounting Standard 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 ("FVTPL") 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. Financial instruments designated as FVTPL through inception: Cash equivalents, temporary investments, derivative instruments, 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 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) have their performance evaluated on a fair value basis, in accordance with risk management and investment strategies of the Company. The Company does not apply hedge accounting to its derivative instruments. 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. (b) 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. (c) 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. (d) 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 as at the consolidated statement of financial position dates. Non-monetary assets and liabilities that are measured at 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 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. (e) Derivative instruments The Company and its acquisition entities 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 forward contracts and their underlying investments and loans are valued at exchange rates in effect as at the consolidated statement of financial position dates. Foreign exchange forward contracts entered into by the Company are included in 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 as 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. (f) 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. (g) 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 and its acquisition entities operate and generate 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 are only recognized to the extent that, in the opinion of management, the most probable outcome is that the deferred income tax asset will be realized. (h) Stock-based compensation plans The Company's stock option plans allow 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 over the applicable vesting period and a corresponding liability is recorded based on the fair value of the outstanding stock options as at the consolidated statement of financial position dates. Fair value is measured by use of an appropriate option-pricing model. 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. 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) (i) Deferred share unit plans Directors of the Company may elect annually to receive all or a portion of their compensation in deferred share units ("DSUs") based on the closing price of a Clairvest common share on the date directors fees are payable. Upon redemption of DSUs, the Company pays to the participant a lump sum cash payment equal to the number of DSUs to be redeemed multiplied by the closing price of a Clairvest common share 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 to the fair value of the DSUs is charged to share-based compensation expense and recorded as a liability. 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 closing price of a Clairvest common share on the redemption date and the closing price of a Clairvest common share on the grant date. A participant may redeem his or her ADSUs only following termination of board service. Under the Company's ADSU plan, a change to the fair value of the ADSUs is charged to share-based compensation expense and recorded as a liability. Certain employees of the Company may elect annually to receive all or a portion of their annual bonuses in employee deferred share units ("EDSUs"). The number of EDSUs granted to a participant is determined by dividing the amount of the elected bonuses to be received by way of EDSUs by the five-day volume-weighted average closing price of the Clairvest common shares. EDSUs may be redeemed for cash or for common shares of the Company. A participant may redeem his or her EDSUs only following termination of employment. Under the Company's EDSU plan, a change to the fair value of the EDSUs is charged to share-based compensation expense and recorded as a liability. (j) 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. Fair value of the BVARs is calculated based on the latest book value per share published at the time the value is being determined. As the Company's BVAR plan is a cash-settled plan, a change to the fair value of the BVARs is charged to share-based compensation expense and recorded as a liability. (k) Entitlements of partners of a limited partnership The Company consolidates acquisition entities which include various limited partnerships as described in interests in unconsolidated subsidiaries in note 2 and the entitlements of partners of these limited partnerships that are external to the consolidated group of the Company are recorded as a liability and an expense of the Company. Accordingly, that portion of the carried interest from the CEP Funds which are ultimately paid to the limited partners of MIP III, MIP IV and MIP V, which are external to the consolidated group, are recorded as a management participation liability and a management participation expense on the consolidated financial statements. (l) 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 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 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. (m) Net income and comprehensive income per share Basic net income and comprehensive income per share ("net income") 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 are based on the weighted average number of common shares and dilutive common share equivalents outstanding during the year. (n) Critical accounting estimates, assumptions and judgments The preparation of consolidated financial statements in conformity with IFRS requires 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 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) techniques may affect the calculation of unrealized carried interest receivable and the resulting accrued liabilities for future payouts relating to the unrealized carried interest as at the consolidated statement 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. 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. As at March 31, 2018, the yield ranged between 0.9% and 2.0% (2017 – between 0.8% and 0.9%) per annum with a weighted average rate of pre-tax return of 1.8% (2017 – 0.9%) per annum. As at March 31, 2018, temporary investments comprised guaranteed investment certificates and other fixed income securities as permitted by the Company's treasury policy which in aggregate may not exceed 10% of book value and with no single issue greater than 1.5% of book value. Temporary investments have maturities greater than 90 days from the date of acquisition and through to April 2020. The yield on these investments ranged between 1.5% and 9.2% (2017 – between 1.4% and 1.7%) per annum, with a weighted average rate of pre-tax return of 3.8% (2017 – 1.5%) per annum. The composition of Clairvest's temporary investments as at March 31 was as follows: March 31, 2018 March 31, 2017 Due after 1 year Total Total Due in 1 year or less $ $ 19,074 5,751 24,825 $ $ 203 11,554 11,757 $ $ 19,277 17,305 36,582 $ $ 15,964 — 15,964 Guaranteed investment certificates Other fixed income securities 4. NET INVESTMENT GAINS Net investment gains for the years ended March 31, 2018 and 2017 comprised entirely of net changes in unrealized gains. 5. NET CARRIED INTEREST INCOME Net carried interest income for the years ended March 31, 2018 and 2017 comprised the following: Realized carried interest income (note 9) Net changes in unrealized carried interest (note 9(j)) $ $ 2018 16,891 29,578 46,469 $ $ 2017 1,304 34,313 35,617 6. 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. 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (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: March 31, 2018 Acquisition entity net assets (liabilities) Investee companies Total Investee companies March 31, 2017 Acquisition entity net assets (liabilities) Total Held directly by Clairvest Group Inc. $ 27,325 $ — $ 27,325 $ 26,549 $ — $ 26,549 Held through the following acquisition entities: 2141788 Ontario 2486303 Ontario CEP III Co-Invest MIP III CEP IV Co-Invest MIP IV CEP V Co-Invest MIP V Total 51,473 8,499 22,308 893 314,634 4,768 75,709 2,896 25,886 (9,253) (1,313) (12) (7,120) (53) (1,398) (70) 77,359 (754) 20,995 881 56,448 9,204 28,235 1,131 307,514 225,147 4,715 74,311 2,826 3,413 27,701 2,576 38,091 (9,866) 895 (5) 1,970 (48) (1,274) (65) 94,539 (662) 29,130 1,126 227,117 3,365 26,427 2,511 $ 508,505 $ 6,667 $ 515,172 $ 380,404 $ 29,698 $ 410,102 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 together with Clairvest holds a 100% interest in Clairvest Equity Partners Limited Partnership ("CEP"). CEP was an investment fund held by third-party investors until December 2015. 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 9(c), 9(f) and 9(i), respectively. During the year ended March 31, 2018, Clairvest made additional investments totalling $1.0 million in 2486303 Ontario and $36.1 million in CEP V Co-Invest. During fiscal 2018, CEP III Co-Invest received cash proceeds of $27.3 million as a result of the realization of Lyophilization Services of New England Inc. as described in note 6(b). Subsequently, CEP III Co-Invest declared distributions totalling $9.6 million to Clairvest, $15.9 million to 2141788 Ontario and $0.4 million to MIP III, respectively. CEP III Co-Invest also declared $2.3 million to the general partner, all of which was received by the limited partners of MIP III as described in note 9(c). Also during fiscal 2018, CEP IV Co-Invest received total cash proceeds of $42.0 million as a result of the realization of CRS Contractors Rental Supply Limited Partnership as described in note 6(e) and the partial realization of Winters Bros. Waste Systems of CT, LLC as described in note 6(h). Subsequently, CEP IV Co‐Invest made capital distributions totalling $45.6 million to Clairvest and $0.7 million to MIP IV as described in note 9(f). Also during fiscal 2018, MIP III declared distributions totalling $0.4 million to Clairvest as described in note 9(c) and MIP IV declared distributions totalling $0.7 million to Clairvest as described in note 9(f). 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 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: March 31, 2018 March 31, 2017 Assets Cash and cash equivalents Temporary investments Accounts receivable and other assets Loans receivable Income taxes recoverable Derivative instruments Deferred income tax asset Liabilities Accounts payable and accrued liabilities Loans payable Income taxes payable Derivative instruments Deferred income tax liability Net assets $ $ $ $ $ $ 25,945 10,942 1,657 — 63 168 142 38,917 $ 2,293 12,656 967 8,241 8,093 32,250 6,667 $ $ $ 41,430 7,464 1,890 423 1,030 83 — 52,320 2,135 10,283 753 2,371 7,080 22,622 29,698 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (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, 2018 March 31, 2017 Fair value Cost Difference Fair value Cost Difference Investments made by CEP III Co-Invest alongside CEP III Chilean Gaming Holdings(1) $ 60,113 $ 28,754 $ 31,359 $ 48,835 $ 28,754 $ 20,081 Lyophilization Services of New England Inc. Investments made by CEP IV Co-Invest alongside CEP IV Centaur Gaming County Waste of Virginia, LLC CRS Contractors Rental Supply Limited Partnership Davenport Land Investments(2) Discovery Air Inc. / Top Aces Impero Waste Services, LLC (fomerly Winters Bros. Waste System of CT, LLC) MAG Aerospace New Meadowlands Racetrack, LLC Rivers Casino Investments made by CEP V Co-Invest alongside CEP V Accel Entertainment Inc. Ace2Three Also Energy, Inc. Digital Media Solutions, LLC GTA Gaming Winters Bros. Waste Systems of Long Island Holdings, LLC Grey Eagle Casino(3) Wellington Financial(4) Other investments(5) — — — 27,248 6,619 20,629 192,394 19,776 — 3,018 44,926 4,100 21,164 10,237 23,787 27,258 40,228 6,189 9,126 602 9,764 11,331 3,626 487,639 20,866 34,657 11,314 — 2,196 55,522 3,019 5,068 6,444 9,058 15,978 55,968 6,038 8,254 602 10,636 11,017 — 264,525 788 157,737 8,462 — 822 (10,596) 1,081 16,096 3,793 14,729 11,280 (15,740) 151 872 — (872) 314 3,626 223,114 20,078 111,170 17,999 28,758 3,009 21,037 11,160 11,557 9,563 14,307 20,639 — — 8,179 — 11,190 12,613 22,101 379,365 1,039 34,657 7,533 10,573 2,196 36,860 8,053 5,068 6,444 9,058 15,978 — — 8,254 — 10,636 11,017 15,640 217,340 1,127 76,513 10,466 18,185 813 (15,823) 3,107 6,489 3,119 5,249 4,661 — — (75) — 554 1,596 6,461 162,025 (88) $ 508,505 $ 265,313 $ 243,192 $ 380,404 $ 218,467 $ 161,937 (1) (2) (3) (4) (5) Comprised CEP III Co-Invest's investment in Casino Marina del Sol, Casino Osorno and Casino Sol Calama. Comprised two entities which hold real estate surrounding a casino in Davenport, Iowa ("Davenport North" and "Davenport South"). Fair value included the portion owned directly by Clairvest and the portion owned indirectly through 2486303 Ontario. Fair value as at March 31, 2018 excluded the amount of $1.8 million (2017 − $1.0 million) which represented the carried interest of CEP to be received by 2486303 Ontario as described in note 9(a). Comprised interest in various Wellington Financial limited partnership funds and their respective general partners. Includes Clairvest's investment in common shares of Canadian Imperial Bank of Commerce ("CIBC") as discussed in note 6(s). The fair value of each investee company reflected valuation methodologies as described in note 17, except for notes 6(f) and 6(s) as described below. 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. (a) Chilean Gaming Holdings Chilean Gaming Holdings is a limited partnership, which has a 50% ownership interest in Casino Marina del Sol in Concepcion, Chile, and a 73.8% ownership interest in each of Casino Osorno in Osorno, Chile, and Casino Sol Calama in 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Calama, Chile. As at March 31, 2018 and 2017, CEP III Co-Invest held 30,446,299 limited partnership units of Chilean Gaming Holdings, representing a 36.8% equity interest. During fiscal 2018, CEP III Co-Invest earned dividends totalling $0.8 million (2017 – $3.7 million) through its in Chilean Gaming Holdings, bringing dividends earned to March 31, 2018 to $14.0 million investment (2017 – $13.2 million). (b) 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, 2017, CEP III Co-Invest held 6,406,000 Series A 10% cumulative preferred shares of LSNE which were convertible into a 11.2% ownership interest on a fully diluted basis and 331,506 Series B 10% cumulative preferred shares which were not convertible. Each Series A preferred share was convertible into one common share at CEP III Co-Invest's discretion and dividends would be forfeited on conversion. During fiscal 2018, CEP III Co-Invest realized its investment in LSNE for total proceeds of US$20.5 million (C$27.3 million) against a carrying value of $27.2 million as at March 31, 2017, for a net realized gain of $0.1 million. Over the life of this investment, CEP III Co-Invest received total proceeds of US$21.9 million (C$29.4 million) against its original investment of US$7.5 million (C$7.5 million) in LSNE. Clairvest and CEP III Co-Invest had also incurred total costs of $2.8 million on the foreign exchange hedging strategy for the investment in LSNE. (c) 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, 2018 and 2017, CEP IV Co-Invest held US$17.4 million in term loans with stapled warrants which, subject to regulatory approval, were convertible upon exercise to 12.7% of Class A and Class B units of Centaur Gaming. During fiscal 2018, Clairvest announced the proposed sale of Centaur Gaming. The transaction is subject to regulatory approvals and is anticipated to close during fiscal 2019. Clairvest holds its investment in Centaur Gaming through CEP IV Co-Invest and its carrying value in Centaur Gaming as at March 31, 2018 reflects the economics of the proposed sale, but adjusted for the risk of closing. (d) County Waste of Virginia, LLC County Waste of Virginia, LLC ("County Waste") is a private regional solid waste collection company servicing customers in the states of Virgina and Pennsylvania. As at March 31, 2017, CEP IV Co-Invest held 6,942.64 Class B units of County Waste and 174.3 units of Spare Lots, LLC ("Spare Lots"), a company affiliated with County Waste, collectively representing a 12.5% ownership interest on a fully diluted basis. During fiscal 2018, CEP IV Co-Invest invested an additional US$1.3 million (C$1.6 million) for 432.03 Class B units in County Waste and advanced US$1.7 million (C$2.1 million) in promissory notes accruing interest at 12% per annum with a maturity date of January 3, 2022. Interest of $43 thousand was earned from these promissory notes to County Waste during fiscal 2018. As at March 31, 2018, CEP IV Co-Invest held US$1.7 million in 12% promissory notes in addition to 7,374.67 Class B units in County Waste and 174.3 units in Spare Lots, which collectively represented a 13.0% ownership interest on a fully diluted basis. (e) CRS Contractors Rental Supply Limited Partnership CRS Contractors Rental Supply Limited Partnership ("CRS") was a provider of equipment rental services and related merchandise across Ontario, Canada. As at March 31, 2017, CEP IV Co-Invest held 241,896 Class B units and 10,572,805 Class C units of CRS, representing a 13.5% ownership interest. During fiscal 2018, CEP IV Co-Invest earned distributions totalling $0.2 million (2017 – $0.6 million) from CRS. Subsequently, CEP IV Co-Invest realized on its investment in CRS and received $31.7 million in cash proceeds against a carrying value of $28.8 million as at March 31, 2017, for a net realized gain of $2.9 million. 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Over the life of this investment, CEP IV Co-Invest received total proceeds of $33.8 million against its original investment of $10.6 million in CRS. (f) 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, 2018 and 2017, 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. Additionally, CEP IV Co-Invest had advanced a US$0.6 million promissory note to a partner to help fund its 50% ownership in Davenport North, which effective October 1, 2017, bears interest at a rate of 12% per annum (2017 – 10% per annum). (g) Discovery Air Inc. / Top Aces Discovery Air Inc. ("Discovery Air") is a specialty aviation services company operating across Canada and in select locations internationally. Top Aces (formerly Discovery Air Defence Services Inc.), which was a wholly owned subsidiary of Discovery Air until December 2017, is a supplier of advanced adversary services across three continents. As at March 31, 2017, CEP IV Co-Invest had invested $22.0 million in secured convertible debentures ("Debentures") of Discovery Air which had a maturity date of May 5, 2018. The Debentures accrued interest at a rate of 10% per annum and interest is paid in-kind and compounded on an annual basis. As at March 31, 2017, the gross accrued value of the Debentures was $33.6 million, which included $11.6 million in accrued interest. During fiscal 2018, $3.1 million (2017 – $3.2 million) in interest was accrued on the Debentures. During fiscal 2018, CEP IV Co-Invest exercised the swap option pursuant to a letter agreement dated June 5, 2017 between Discovery Air, Top Aces and Clairvest and its affiliates and exchanged $5.8 million of the Debentures into common shares of Top Aces. Subsequent to these transactions, a third-party institutional investor purchased $50 million of equity in Top Aces, half from Top Aces treasury and the other half from Discovery Air. Subsequently, Discovery Air repaid $7.6 million of interest owing to CEP IV Co-Invest under the terms of the Debentures. As at March 31, 2018, the gross accrued value of the Debentures was $23.3 million. As at March 31, 2018, the carrying value of the Debentures was $1.3 million (2017 – $14.2 million). As at March 31, 2017, Clairvest and CEP IV Co-Invest collectively held 22,384,024 Class A common shares of Discovery Air representing a 27.3% ownership interest on a fully diluted basis. During fiscal 2018, CEP IV Co-Invest purchased an additional 1,948,883 Class A common shares of Discovery Air for $0.4 million as part of a take-private transaction. As at March 31, 2018, Clairvest and CEP IV Co-Invest collectively held 24,332,907 common shares of Discovery Air representing a 29.9% ownership interest on a fully diluted basis. As at March 31, 2018 and 2017, the carrying value of the Discovery Air common shares was nil. As at March 31, 2017, Clairvest had advanced to Discovery Air $2.3 million in the form of a promissory note bearing interest at 8.0% per annum which had been included in loans receivable at the accrued value. During fiscal 2018, Discovery Air repaid the promissory note in full. Interest of $0.1 million (2017 – $0.2 million) was earned on this promissory note during fiscal 2018. In March 2018, Discovery Air commenced a restructuring under the Companies Creditors Arrangement Act ("CCAA") to conduct a Court-supervised sale process of its equity interest in its wholly owned subsidiaries and its residual interest in Top Aces (together, the "Assets"). CEP IV Co-Invest and other investors of the Debentures of Discovery Air (the "Discovery Air Investor Group"), have submitted bids to purchase the Assets as stalking horse purchasers (the "Transactions"). In support of CCAA proceedings, CEP IV Co-Invest has agreed to provide up to $12.6 million in debtor-in- possession ("DIP") financing, $4.9 million of which had been drawn as at March 31, 2018. Subsequent to year end, the DIP facility was increased to $15.0 million and was fully drawn. As at March 31, 2017, the Discovery Air Investor Group had in place a $25.0 million secured revolving credit facility ("Revolver") to Top Aces, $20.0 million of which was drawn as at March 31, 2017. The Revolver provides the Discovery Air Investor Group the option to convert the outstanding balance of the Revolver into common shares of Top Aces based on an agreed market value of Top Aces. During fiscal 2018, a second secured revolving credit facility ("2nd Revolver") for $13.0 million was provided under the same terms and conditions and both Revolvers were fully drawn. In total, 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) CEP IV Co-Invest funded $14.5 million under the Revolvers, $7.8 million of which was funded during fiscal 2018. Subsequently, the Discovery Air Investor Group exercised the pre-existing optional conversion feature pursuant to the terms of the Revolvers to convert all the outstanding amounts under both Revolvers into common shares of Top Aces. This occurred concurrent with the above-mentioned exercise of the swap option for common shares of Top Aces. Interest of $0.9 million (2017 – $0.2million) was earned from the Revolvers during fiscal 2018. As at March 31, 2018, CEP IV Co-Invest held 611.4 common shares in Top Aces, representing a 26.3% ownership interest on a fully diluted basis. (h) Impero Waste Systems, LLC / 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 servicing customers in the states of Connecticut and New York. As at March 31, 2017, 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. During fiscal 2018, CEP IV Co-Invest completed a partial realization of its investment in Winters Bros. of CT and received cash proceeds of US$7.9 million (C$10.1 million) for a net realized gain of $3.3 million and 4,817.86 Class A units of Impero Waste Systems, LLC ("Impero Waste"), the acquirer of Winters Bros. of CT, representing a 6.1% ownership interest in Impero Waste on a fully diluted basis. (i) MAG Aerospace MAG Aerospace ("MAG") is a U.S.-based specialty aviation and intelligence, surveillance and reconnaissance service provider. As at March 31, 2018 and 2017, CEP IV Co-Invest held 33,736 Class A stock of MAG, representing a 10.3% ownership interest on a fully diluted basis. The Class A stock had a stated dividend rate of 10% per annum and each Class A stock was convertible into 1.0114 common stock of MAG at CEP IV Co-Invest's discretion and dividends would be forfeited on conversion. As at March 31, 2018 and 2017, CEP IV Co-Invest also held $1.1 million in promissory notes from MAG Aerospace Canada (formerly Discovery Air Fire Services) which bear interest at 10.0% per annum with a maturity date of January 31, 2021. Interest of $0.1 million was earned from these promissory notes from MAG Aerospace Canada during fiscal 2018 (2018 − $21 thousand). Subsequent to year-end and in conjunction with the sale of MAG as described in note 20, the promissory notes and accrued interest were repaid in full. As at March 31, 2017, Clairvest had provided $2.9 million in loans to Momentum Logistics, a Canadian subsidiary of MAG, in support of its operations. During fiscal 2018, Clairvest advanced an additional $6.0 million (2017 − $7.0 million) to Momentum Logistics. Also during fiscal 2018, Momentum Logistics repaid the loans in full (2017 − $5.1 million was repaid). Interest of $0.2 million (2017 – $0.2 million) was earned from loans to Momentum Logistics during fiscal 2018. (j) New Meadowlands Racetrack, LLC New Meadowlands Racetrack, LLC (the "Meadowlands") operates a standardbred horse racing track located in East Rutherford, New Jersey. As at March 31, 2018 and 2017, CEP IV Co-Invest had invested US$5.4 million (C$5.6 million) to the Meadowlands in the form of secured convertible debentures, which accrue interest at a rate of 15% per annum, 10% of which was payable quarterly in cash and 5% was payable-in kind. Commencing January 1, 2016, CEP IV Co-Invest agreed that the entire 15% interest be payable in-kind. CEP IV Co-Invest also holds warrants which entitle it to invest in equity securities of the Meadowlands subject to certain conditions. 5% of the 15% interest on the secured convertible debentures would be forfeited in the event Clairvest exercises the warrants. As at March 31, 2017, the gross accrued value of the secured debentures was US$7.6 million (C$10.1 million), which included US$2.2 million in accrued interest. During fiscal 2018, US$1.1 million (C$1.4 million) (2017 – US$1.0 million; C$1.3 million) in interest was accrued on the Debentures. As at March 31, 2018, the gross accrued value of the secured debentures was US$8.7 million (C$11.2 million) and the carrying value of the secured debentures was US$7.3 million (C$9.4 million) (C$1.8 million) C$8.7 million), which (2017 – US$1.1 million; C$1.4 million) in accrued interest being provided for on the secured debentures. reflected US$1.4 million – US$6.5 million; (2017 CEP IV Co-Invest also invested US$0.7 million (C$0.9 million) in the Meadowlands in the form of preferred debt, which is junior to the secured debentures. The preferred debt has a stated interest rate of 3% per annum and interest is 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) payable in-kind. During fiscal 2018, CEP IV Co-Invest earned $26 thousand (2017 – $16 thousand) in interest on the preferred debt, which was fully provided for and presented on a net basis. (k) Rivers Casino Rivers Casino is a gaming entertainment complex located in Des Plaines, Illinois. As at March 31, 2018 and 2017, CEP IV Co-Invest held 9,021,917 units of Rivers Casino, representing a 5.0% ownership interest on a fully diluted basis. During fiscal 2018, CEP IV Co-Invest earned quarterly distributions totalling $1.3 million (2017 – $3.9 million) and quarterly fees totalling $0.6 million (2017 – $0.6 million) from Rivers Casino. As a result of CEP IV Co-Invest's investment in Rivers Casino requiring certain acquisition entities in the United States, $0.8 million (2017 – $1.2 million) in U.S. income tax obligations were incurred during fiscal 2018. (l) Accel Entertainment Inc. Accel Entertainment Inc. ("Accel Entertainment") is a licensed video gaming terminal operator in Illinois. As at March 31, 2018, CEP V Co-Invest held 283,478 Class D preferred shares of Accel Entertainment (2017 – 283,478), representing a 7.5% ownership interest on a fully diluted basis (2017 – 7.9%). The Class D preferred shares are entitled to certain preference over all other equity of Accel Entertainment. (m) Ace2Three Ace2Three operates an online, skilled-based gaming platform in India providing an online rummy experience. During fiscal 2018, CEP V Co-Invest invested $56.0 million in Ace2Three. The investment comprised $22.9 million in the form of compulsory convertible debentures which are denominated in Indian Rupees ("INR") and bear interest at a rate of 16.0% per annum, and $33.1 million in 202,230 common shares representing a 33.6% ownership interest on a fully diluted basis. In June 2017, Ace2Three experienced a material adverse development which resulted in a temporary shut- down of operation and a material loss in revenue. Ace2Three has since resumed its operations in certain jurisdictions and the validity of the regulatory developments is being challenged and the matter is before the courts. While Ace2Three remains profitable, Clairvest has determined that there has been a negative impact on the fair value of this investment. Accordingly, the carrying value of the equity investment made in Ace2Three was reduced by 50% or $15.8 million. As at March 31, 2018, the compulsory convertible debentures were carried at the accrued value of $24.6 million. (n) Also Energy, Inc. Also Energy, Inc. ("Also Energy") is a provider of software and hardware solutions that enable the monitoring and control of power production and plant operations for commercial, industrial, and utility-scale plants in the United States and around the world. During fiscal 2018, CEP V Co-Invest invested US$4.8 million (C$6.0 million) to acquire 1,013,062 Series A preferred stock of Also Energy. The Series A preferred stock which accrue dividends at a rate of 8% compounded annually, are convertible into common stock at CEP IV Co-Invest's discretion. As at March 31, 2018, CEP V Co-Invest's ownership interest in Also Energy was 14.3% on a fully diluted basis. (o) 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. As at March 31, 2018 and 2017, CEP V Co-Invest held 6,150,000 Class B units of 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. During fiscal 2018, CEP V Co-Invest earned distributions totalling $0.6 million (2017 – $0.8 million) from Digital Media Solutions, bringing distributions earned to March 31, 2018 to $1.4 million (2017 – $0.8 million). (p) GTA Gaming GTA Gaming comprised investments in two limied partnerships which operates various gaming assets in the Province of Ontario: Ontario Gaming GTA Limited Partnership ("OGTALP") and Ontario Gaming West GTA Limited Partnership ("OWGTALP"). 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) In December 2017, the Ontario Lottery and Gaming Corporation announced that OWGTALP was selected as the successful proponent to operate four gaming facilities in the West Greater Toronto Area (the "West GTA Bundle"). As support for this bid, Clairvest had pledged $15.8 million to a Schedule 1 Canadian chartered bank which remained restricted as at March 31, 2018. During fiscal 2018, CEP V Co-Invest invested $0.4 million for 405,151.2 units of OWGTALP reprsenting a 13.5% ownership interest. Subsequent to year-end and in conjunction with the final closing of the purchase of West GTA gaming assets, an additional $8.4 million was funded by CEP V Co-Invest for an additional 8,370,000 units of OWGTALP and the restriction on the $15.8 million was released as the pledge was no longer required upon completion of final closing. Also during fiscal 2018, the Ontario Lottery and Gaming Corporation announced that OGTALP was selected as the successful proponent to operate three gaming facilities in the Greater Toronto Area. During fiscal 2018, CEP V Co-Invest invested $0.2 million for 1,254,000 units of OGTALP representing a 0.6% ownership interest. (q) 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 servicing customers in Long Island, New York. WBLI II, LLC ("WBLI II"), is a company affiliated with Winters Bros. of LI and owned proportionately by the same unitholders of Winters Bros. of LI. As at March 31, 2018 and 2017, 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 on a fully diluted basis in the respective entities. (r) 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, 2018 and 2017, 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. Additionally, CEP is entitled to between 8.5% and 28.7% of the earnings of the Grey Eagle Casino until December 18, 2022. As described previously in note 9(a), 2486303 Ontario and Clairvest collectively holds a 100% interest in CEP. During fiscal 2018, Clairvest earned $0.5 million (2017 – $0.7 million) and CEP earned $1.6 million (2017 – $2.2 million) in equity distributions from Grey Eagle Casino. (s) Wellington Financial Wellington Financial, through various Wellington Funds, provided debt capital and operating lines to technology, biotechnology, communications and industrial product companies across Canada and the United States. Clairvest had made commitments to various Wellington Funds as described in notes 15(d) and 15(e), as well as entitlements to participate in the profits received by the general partners of these Wellington Funds. As at March 31, 2017, Clairvest had funded $15.6 million to Wellington Fund V. During fiscal 2018, Clairvest funded an additional $1.7 million (2017 – $1.0 million) to Wellington Fund V, bringing total amount funded to $17.3 million. Subsequently, CIBC acquired the loan portfolio of Wellington Fund V and certain assets of the general partner of Wellington Fund V. Clairvest received a full return of capital on its investment of $17.3 million and 194,876 CIBC common shares which are restricted for sale subject to certain conditions until January 7, 2021. As at March 31, 2018, the CIBC common shares were valued at a discount to the closing price of $113.72 per share to reflect the sale restriction and had been included as other investments. Clairvest continues to participate in its pro rata share of any profits realized from warrants previously granted to the various Wellington Funds and is eligible for additional payments on the sale of the general partner assets subject to certain conditions. During fiscal 2018, Clairvest received distributions totalling $24.5 million (2017 – $4.6 million) from Wellington Financial, which includes the fair market value of the CIBC common shares received on the sale. As at March 31, 2018, Clairvest had received distributions totalling $55.7 million (2017 – $31.2 million) from Wellington Financial. 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 7. FIXED ASSETS The composition of Clairvest's fixed assets was as follows: At cost Balance as at April 1, 2017 Additions Disposals Balance as at March 31, 2018 Accumulated amortization Balance as at April 1, 2017 Amortization expense Disposals Balance as at March 31, 2018 Carrying amount as at March 31, 2018 At cost Balance as at April 1, 2016 Additions Disposals Balance as at March 31, 2017 Accumulated amortization Balance as at April 1, 2016 Amortization expense Disposals Balance as at March 31, 2017 Carrying amount as at March 31, 2017 (1) Comprised computer equipment and computer software. Aircraft IT equipment (1) Furniture, fixtures and equipment Leasehold improvements 3,603 — — 3,603 2,359 356 — 2,715 $ $ $ $ 72 — (56) 16 62 5 (56) 11 $ $ $ $ 248 32 — 280 186 17 — 203 $ $ $ $ 816 773 (881) 708 32 150 — 182 $ $ $ $ Total 4,739 805 (937) 4,607 2,639 528 (56) 3,111 888 $ 5 $ 77 $ 526 $ 1,496 3,603 — — 3,603 $ $ 90 — (18) 72 $ $ 248 — — 248 $ $ 130 686 — 816 $ $ 4,071 686 (18) 4,739 $ $ $ $ $ $ $ $ 2,004 $ 355 — 56 24 (18) $ 165 $ 21 — 2,359 $ 62 $ 186 $ 4 28 — 32 $ 2,229 428 (18) $ 2,639 1,244 $ 10 $ 62 $ 784 $ 2,100 $ $ 8. CREDIT FACILITIES As at March 31, 2018 and 2017, Clairvest maintained a $100.0 million revolving credit facility which is participated in by several Schedule 1 Canadian chartered banks. The credit facility, which had an initial expiry of December 2021 and is eligible for a one-year extension on each anniversary date, bears interest at the prime rate plus 1.25% per annum on drawn amounts and a standby fee of 0.70% per annum on undrawn amounts. During fiscal 2018, the credit facility was extended to December 2022 under the same terms and conditions. The prime rate as at March 31, 2018 was 3.45% (2017 – 2.70%) per annum. The amount available under the credit facility as at March 31, 2018 and 2017 was $100.0 million. No amounts had been drawn on the facility during the fiscal 2018 and as at March 31, 2018. 9. RELATED PARTY DISCLOSURES Investments in acquisition entities and investment-related transactions with acquisition entities are further described in note 6. 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) (a) The general partner of CEP ("CEP GP"), an entity which is controlled by Clairvest, is entitled to participate in distributions equal to 20% of all net gains (a "20% carried interest") of CEP as governed by its Limited Partnership Agreement. 10% of the carried interest was allocated to Clairvest and the other 10% was allocated to principals and employees of Clairvest until December 21, 2015, when 2486303 Ontario purchased the 10% carried interest from principals and employees of Clairvest for $1.2 million. On January 1, 2018, 2486303 Ontario purchased substantially all of the remaining 10% carried interest from Clairvest for $0.9 million. During fiscal 2018, CEP GP earned $0.3 million (2017 − $0.5 million) in carried interest from CEP, $0.1 million (2017 – $0.3 million) was ultimately received by Clairvest, and the other $0.2 million (2017 – $0.2 million) was ultimately received by 2486303 Ontario. As at March 31, 2018, CEP had declared carried interest to CEP GP totalling $24.5 million (2017 – $24.2 million), $12.2 million (2017 – $12.1 million) of which was ultimately received by Clairvest, $11.8 million (2017 – $11.8 million) of which was ultimately received by the principals and employees of Clairvest and $0.5 million (2017 – $0.3 million) was ultimately received by 2486303 Ontario. (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. As per the Limited Partnership Agreement, the priority distribution is reduced to the extent of 75% of fees earned by Clairvest from corporate investments of CEP III. During fiscal 2018, CEP III declared to Clairvest priority distributions of $0.6 million (2017 – $0.9 million). There were no fees from corporate investments of CEP III netted against the priority distributions (2017 – $0.1 million). 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 MIP III. From time to time, additional units in MIP III may be purchased by the limited partners of MIP III. During fiscal 2018, CEP III GPs earned $16.6 million (2017 – $0.8 million) in carried interest from CEP III, 50% of which, or $8.3 million (2017 – $0.4 million), was ultimately received by Clairvest, and the other 50% or $8.3 million (2017 – $2.7 million) was ultimately received by the limited partners of MIP III, which reduced the management participation liability. During fiscal 2018, $3.4 million (2017 − $0.2 million) of the carried interest declared by CEP III was ultimately received by key management. As at March 31, 2018, CEP III had declared carried interest to the CEP III GPs totalling $56.1 million (2017 – $39.5 million), 50% of which was ultimately received by Clairvest and the other 50% was ultimately received by the limited partners of MIP III. (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 is the entitlement of the limited partners of MIP III. During fiscal 2018, CEP III Co-Invest declared $2.3 million (2017 – $0.3 million) to MIP III with respect to this carried interest entitlement, all of which were the entitlements of the limited partners of MIP III. During fiscal 2018, $1.0 million (2017 − $0.1 million) of the carried interest declared by CEP III Co-Invest was ultimately received by key management. As at March 31, 2018, CEP III Co-Invest had declared carried interest totalling $7.4 million (2017 – $5.1 million), $0.2 million (2017 – $0.2 million) of which was received by Clairvest and $7.2 million (2017 – $4.9 million) was received by the limited partners of MIP III. Clairvest, as the general partner of MIP III, is entitled to participate in distributions equal to the realizable value on the $1.1 million III distributed $0.4 million (2017 – $46 thousand) to Clairvest. As at March 31, 2018, $2.3 million (2017 – $1.9 million) has been received by Clairvest through this entitlement. III Co-Invest. During fiscal 2018, MIP invested by MIP in CEP III (d) As general partner of CEP IV, Clairvest is entitled to a priority distribution from CEP IV. Effective January 14, 2016, the priority distribution is calculated monthly as 0.1667% of invested capital net of write-downs of capital then invested. The 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) priority distribution is reduced to the extent of 63.2% of any fees earned by Clairvest from corporate investments of CEP IV. During fiscal 2018, CEP IV declared to Clairvest priority distributions of $2.4 million (2017 – $3.0 million). As per the Limited Partnership Agreement, fees of $0.5 million (2017 – $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 MIP IV. From time to time, additional units in MIP IV may be purchased by the limited partners of MIP IV. No carried interest had been declared by CEP IV to CEP IV GPs as at March 31, 2018 and 2017. (e) As manager of CEP IV-A, Clairvest is entitled to a management fee from CEP IV-A. Effective January 14, 2016, the management fee is calculated monthly as 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 2018, Clairvest earned management fees of $0.4 million (2017 – $0.4 million) as compensation for its services in the administration of the portfolio of CEP IV-A. As per the Limited Partnership Agreement, fees of $0.1 million (2017 – $0.1 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 had been declared by CEP IV-A to CEP IV-A GP as at March 31, 2018 and 2017. (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 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 is the entitlement of the limited partners of MIP IV. No carried interest had been declared by CEP IV Co-Invest as at March 31, 2018 and 2017. 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. During fiscal 2018, CEP IV Co-Invest distributed $0.7 million (2017 – $0.6 million) to Clairvest. As at March 31, 2018, $1.3 million (2017 – $0.6 million) had been received by Clairvest through this entitlement. (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: from January 14, 2016 to January 13, 2021, 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 58.8% of any fees earned by Clairvest from corporate investments of CEP V. During fiscal 2018, CEP V declared to Clairvest priority distributions of $5.7 million (2017 – $6.9 million). As per the Limited Partnership Agreement, fees of $0.1 million (2017 – $0.1 million) from corporate investments of CEP V were netted against the priority distributions. In April 2017, CEP V India was formed to facilitate investment in Ace2Three by certain limited partners of CEP V as governed by the CEP V limited partnership agreement. As general partner of CEP V India, Clairvest is entitled to a priority distribution from CEP V India. The priority distribution is calculated monthly as follows: from May 1, 2017 to January 13, 2021, 0.1667% of committed capital, and thereafter, 0.1667% of invested capital net of write-downs of capital then invested. During fiscal 2018, CEP V India declared to Clairvest priority distributions of $0.6 million (2017 – nil). The general partners of CEP V and CEP V India ("CEP V GPs") are entitled to a 20% carried interest in respect of CEP V and CEP V India 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 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) principals and employees of Clairvest. The limited partners of MIP V have purchased, at fair market value, units of MIP V. From time to time, additional units in MIP V may be purchased by the limited partners of MIP V. No carried interest had been declared by CEP V and CEP V India to CEP V GPs as at March 31, 2018 and 2017. (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: from January 14, 2016 to January 13, 2021, 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 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 2018, Clairvest earned management fees of $0.9 million (2017 – $0.9 million) as compensation for its services in the administration of the portfolio of CEP V-A. As per the Limited Partnership Agreement, fees of $0.3 million (2017 – $0.3 million) 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 had been declared by CEP V-A to CEP V-A GP as at March 31, 2018 and 2017. (i) As described in note 15(c), Clairvest is required to co-invest alongside CEP V, CEP V India and CEP V-A in all investments undertaken by CEP V, CEP V India 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 is the entitlement of the limited partners of MIP V. No carried interest had been declared by CEP V Co-Invest as at March 31, 2018 and 2017. 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 had been received by Clairvest as at March 31, 2018 and 2017. (j) The entitlement of carried interest from the CEP Funds as described in notes 9(b), 9(d), 9(e), 9(g) and 9(h) follows a distribution allocation which is governed by the Limited Partnership Agreement of the respective CEP Funds, and which requires the limited partners of the respective CEP Funds to first receive back the aggregate amount of their capital contribution and a specified preferred rate of return prior to a payment of carried interest to the general partner. As at March 31, 2018, if CEP and the CEP Funds were to sell all of their corporate investments at their current fair values and distribute all proceeds in accordance with the respective limited partnership agreements, 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. March 31, 2018 March 31, 2017 CEP(1) CEP III CEP IV CEP IV-A CEP V CEP V-A (1) 2,093 25,249 59,527 11,453 — — 98,322 A corresponding $1.8 million (2017 ― $1.0 million) in payable to 2486303 Ontario had been recorded to reflect the carried interest entitled to by 2486303 Ontario as at March 31, 2018. Also see note 6(r). 1,812 11,044 97,796 17,248 — — 127,900 $ $ $ $ (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 58 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) ultimately received by non-Clairvest participants, which were recorded as a management participation liability on the consolidated statements of financial position. 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, 2018 March 31, 2017 $ $ 5,522 48,898 8,624 — — 63,044 4,464 23,759 — 91,267 $ $ 12,625 29,763 5,727 — — 48,115 5,945 12,990 — 67,050 (1) Represents the entitlements of the limited partners of MIP III, MIP IV and MIP V, respectively, as described in notes 9(c), 9(f) and 9(i). (l) Changes in loans receivable for the years ended March 31, 2018 and 2017 were as follows: April 1, 2017 Net loan advanced (repaid) March 31, 2018 CEP III(1) CEP V(2) CEP V-A(2) CEP III Co-Invest(3) CEP IV Co-Invest(3) CEP V Co-Invest(3) 2486303 Ontario(4) Clairvest investee companies(5) Other $ 140 $ (140) $ — — 25 — 326 9,932 10,423 5,206 25 794 151 (25) 2,700 79 (381) 3,178 (5,206) (25) — 794 151 — 2,700 405 9,551 13,601 — — $ 15,654 $ (2,053) $ 13,601 April 1, 2016 Net loan advanced (repaid) March 31, 2017 $ $ CEP III(1) CEP IV(2) CEP III Co-Invest(3) CEP IV Co-Invest(3) CEP V Co-Invest(3) 2486303 Ontario(4) 140 — 25 — 326 9,932 10,423 5,206 25 15,654 (1) Loans advanced to CEP III bear interest at the prime rate in accordance with CEP III’s Limited Partnership Agreement. Interest of $1 thousand 140 (5,008) 25 (10,780) (216) (969) (16,808) 1,899 — (14,909) $ — 5,008 — 10,780 542 10,901 27,231 3,307 25 30,563 Clairvest investee companies(5) Other $ $ $ (2017 – $1 thousand) was earned from loans advanced to CEP III during fiscal 2018. (2) Loans advanced to CEP IV, CEP IV-A, CEP V, CEP V India and CEP V-A bear interest at the reference rate in accordance with the respective Limited Partnership Agreements. Interest of $0.3 million (2017 – $0.1 million) was earned from loans advanced to these partnerships during fiscal 2018. (3) Loans advanced to these acquisition entities are non-interest bearing loans. (4) Loans advanced to 2486303 Ontario bear interest at 10.0% per annum. Interest of $1.0 million ((2017 – $1.0 million) was earned from these loans during fiscal 2018. (5) Comprised loans advanced to Discovery Air and Momentum Solutions. See notes 6(g) and 6(i). 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) (m) Accounts receivable and other assets comprised the following: March 31, 2018 March 31, 2017 Clairvest’s investee companies $ 1,436 $ CEP III CEP IV CEP IV-A CEP V CEP V India CEP V-A Other accounts receivable and prepaid expenses Share purchase loans and loans to officers of affiliated company — 736 55 17,074 118 3,250 22,669 2,465 3,268 $ 28,402 $ 1,612 166 305 44 11,388 — 2,155 15,670 2,168 3,713 21,551 Included in accounts receivable and other assets as at March 31, 2018 were share purchase loans made to certain officers of the Company totalling $3.0 million (2017 − $3.0 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 $6.5 million (2017 – $4.8 million) as at March 31, 2018. None of these loans were made to key management. During fiscal 2018, other loans made to certain officers of a company affiliated with Clairvest were repaid in full (2017 − $0.4 million outstanding). Interest of $68 thousand (2017 – $67 thousand) was earned on these loans during the year. Additionally, acquisition entities of the Company which were not consolidated by the Company as described in note 6 held receivables from CEP IV totalling $0.1 million (2017 – $12 thousand), from CEP V totalling $17 thousand (2017 – $27 thousand), from CEP V-A totalling $3 thousand (2017 – nil) and from Clairvest's investee companies totalling $1.5 million (2017 – $1.8 million). (n) During fiscal 2018, Clairvest earned $25.4 million (2017 – $5.9 million) in distributions and interest income, $0.3 million (2017 – nil) in dividend income and $1.2 million (2017 – $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 6 earned $22.7 million income, $0.8 million (2017 – $3.7 million) in dividend income and $0.6 million (2017 – $0.6 million) in advisory and other fees from its investee companies. (2017 – $23.8 million) in distributions and interest (o) 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. 60 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 10. INCOME TAXES Income tax expense for the years ended March 31, 2018 and 2017 comprised the following: Current income tax expense Deferred income tax expense $ $ 2018 9,642 3,274 12,916 $ $ 2017 2,943 6,531 9,474 A reconciliation of the income tax expense for the years ended March 31, 2018 and 2017 based on the Federal and Ontario statutory rate and the effective rate was as follows: 2018 2017 $ % $ % Income before income taxes Statutory Federal and Ontario income tax rate Statutory Federal and Ontario income taxes 136,694 79,600 36,224 26.50 26.50 21,094 Non-taxable portion of net investment gains and distributions (20,251) (14.82) (12,120) Non-taxable portion of carried interest net of management participation Non-deductible portion of other expenses Foreign income tax rate differences Tax recoveries regarding prior year Other (1,932) 1,115 (14) (1,142) (1,084) 12,916 (1.41) 0.82 (0.01) (0.84) (0.79) 9.45 (1,596) 891 451 (612) 1,366 9,474 26.50 26.50 (15.23) (2.01) 1.12 0.57 (0.77) 1.72 11.90 In addition to the income tax expense recorded by Clairvest, acquisition entities of Clairvest recorded $4.6 million (2017 – $5.4 million) in income tax expense during fiscal 2018, which had been included in the fair value determination of these acquisition entities. 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, 2018 March 31, 2017 $ $ 24,023 — (8,360) 2,136 4,995 1,150 23,944 $ $ 18,065 3 (5,204) 1,412 4,144 2,250 20,670 All deferred income tax expenses (recoveries) were recognized in net income during fiscal 2018 and 2017. 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 61 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 10,000,000 non-voting shares (series 1) 1,000,000 non-voting shares (series 2) Issued and outstanding March 31, 2018 March 31, 2017 Common shares, beginning of year 15,194,095 $ 81,554 15,214,095 $ 81,662 Purchased and cancelled under normal course issuer bid (31,100) (166) (20,000) (108) Common shares, end of year 15,162,995 $ 81,388 15,194,095 $ 81,554 Shares Amount Shares Amount During fiscal 2018, the Company filed a normal course issuer bid enabling it to make market purchases of up to 760,677 (2017 – 760,627) of its common shares in the 12-month period ending March 6, 2019. During fiscal 2018, the Company made no purchases under the current normal course issuer bid and purchased and cancelled 31,100 common shares under a previous normal course issuer bid for an aggregate cost of $1.2 million. Common shares of 15,162,995 (2017 − 15,194,095) were outstanding as at March 31, 2018. The weighted average number of common shares outstanding during fiscal 2018 was 15,182,212 (2017 − 15,202,669). The basic and fully diluted net income per share computations for 2018 and 2017 were as follows: Net income and comprehensive income (000s) Weighted average number of shares 2018 Per share amount Net income and comprehensive income (000s) Weighted average number of shares 2017 Per share amount Basic and fully diluted $ 123,778 $ 15,182,212 8.15 $ 70,126 $ 15,202,669 4.61 During fiscal 2017, the Board of Directors of the Company authorized the creation of Non-Voting Series 2 Shares ("Series 2 Shares") which have a two times preference over the common shares. The Series 2 Shares were authorized as part of the new stock option program as described in note 12. No Series 2 Shares had been issued as at March 31, 2018 and 2017. 12. SHARE-BASED COMPENSATION The Company has a stock option plan (the "Legacy Option Plan") in place which had no options outstanding as at March 31, 2018 and 2017. As at March 31, 2018 and 2017, 558,856 options under the Legacy Option Plan are available for future grants and 558,856 common shares of the Company have been made available for issuance to eligible participants. During fiscal 2017, the Company adopted a new stock option plan (the "Non-Voting Option Plan"). Options granted under the Non-Voting Option Plan are exercisable for Series 2 Shares as described in note 11. Option granted under this plan vest at a rate of one fifth of the grant at the end of each year over a five-year period. During fiscal 2018, Clairvest granted 168,829 options under the Non-Voting Option Plan (2017 – 203,353). Also during fiscal 2018, 1,916 options were exercised (2017 - nil) and 7,662 options were forfeited (2017 - nil). As at March 31, 2018, 362,604 (2017 – 203,353) options were outstanding, 38,752 (2017 – none) of which had vested. Clairvest recognized stock-based compensation expense based upon the fair value of the outstanding stock options as at March 31, 2018 using the Black-Scholes option pricing model with the following assumptions: 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) June 30, 2016 June 30, 2017 193,775 56.48 168,829 71.90 As at March 31, 2018 Grant Number of options granted Price ($)(1) Black-Scholes assumptions used Expected volatility Expected forfeiture rate Expected dividend yield Risk-free interest rate Expected life (years) Value using Black-Scholes (000s)(2) (1) 10% 5% 1.00% 2.37% 4.25 1,228 Based on two times the five-day weighted average closing price of Clairvest common shares at date of grant and is adjusted for any special dividends paid by the Company. Share price for a Clairvest common share as at March 31, 2018 was $45.49 (TSX: CVG). 10% 5% 1.00% 2.31% 3.25 4,213 $ $ (2) During fiscal 2018, Clairvest recognized a share-based compensation expense of $4.5 million (2017 - $0.9 million) with respect to the Non-Voting Option Plan. During fiscal 2017, the Board of Directors of the Company approved an EDSU Plan. The EDSU Plan provides, among other things, that participants may elect annually to receive all or a portion of their annual bonus amounts that would otherwise be payable in cash in the form of EDSUs. EDSUs may be redeemed for cash or for common shares of the Company in accordance with the terms of the plan. Clairvest is required to reserve one common share for each EDSU issued under the EDSU Plan. The maximum number of Clairvest common shares reserved for the EDSU Plan is 200,000, which represented approximately 1.3% of the outstanding number of common shares as at March 31, 2018. During fiscal 2018, 32,111 (2017 – 18,445) EDSUs were issued based on the terms and conditions of the EDSU Plan. As at March 31, 2018, a total of 50,556 (2017 – 18,445) EDSUs were outstanding, the accrual in respect of which was $2.3 million (2017 – $0.6 million) had been included in share-based compensation liability. During fiscal 2018, Clairvest recognized an expense of $0.6 million (2017 – $0.1 million) with respect to EDSUs. As at March 31, 2018, a total of 684,920 (2017 – 1,091,081) BVARs were outstanding, the accrual in respect of which was $8.7 million (2017 – $10.0 million) and had been included in share-based compensation liability, and an additional $6.3 million (2017 – $5.9 million) not accrued as those BVARs had not vested. During fiscal 2018, 95,965 (2017 – 283,861) BVARs were granted and 502,126 (2017 – 312,128) BVARs were exercised. For the year ended March 31, 2018, Clairvest recognized an expense of $7.8 million (2017 – $7.8 million) with respect to BVARs. Compensation paid and payable to key management In addition to the directors, key management at Clairvest are the Chief Executive Officer ("CEO"), the Vice Chairman and the President. The CEO and President are entitled to annual discretionary cash bonuses of up to 175% of their individual annual salary based on individual performance. The Vice Chairman is entitled to annual discretionary cash bonuses of up to 100% of 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(g), the stock option plans, the BVAR Plan and the EDSU Plan. Aggregate compensation paid for the years ended March 31 to the CEO, Vice Chairman, and the President was as follows: 2018 2017 Paid Salaries Annual incentive plans Book value appreciation rights $ $ 698 1,158 3,687 5,543 $ $ 652 1,377 — 2,029 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Compensation payable to the CEO, Vice Chairman and President as at the consolidated statement of financial position dates was as follows: Payable Annual incentive plans Stock options Book value appreciation rights Employee deferred share units March 31, 2018 March 31, 2017 $ $ $ 4,849 1,803 4,350 755 11,757 $ 2,500 99 3,668 — 6,267 As at March 31, 2018, 247,807 (2017 – 235,516) DSUs were held by directors of the Company, the accrual in respect of which was $11.6 million (2017 – $8.2 million) and had been included in share-based compensation liability. During fiscal 2018, 12,291 (2017 – 16,210) DSUs were granted. For the year ended March 31, 2018, Clairvest recognized an expense of $3.4 million (2017 – $2.0 million) with respect to DSUs. As at March 31, 2018, 105,000 (2017 – 105,000) ADSUs were held by directors of the Company, the accrual in respect of which is $3.3 million (2017 – $2.0 million) and had been included in share-based compensation liability. For the year ended March 31, 2018, Clairvest recognized an expense of $1.3 million (2017 – $0.7 million) with respect to ADSUs. During fiscal 2018, no compensation was paid to directors under the BVAR, DSU or ADSU plans (2017 – $2.8 million). In addition to the DSU and ADSU plans previously discussed, compensation payable to the directors of Clairvest included $0.6 million (2017 – $0.1 million) under the Non-Voting Option Plan. 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 $ $ 2018 (6,851) $ 1,635 (206) 5,584 3,331 3,493 $ 2017 5,895 2,859 1,413 (14) 1,452 11,605 Cash and cash equivalents as at March 31, 2018 and 2017 comprised the following: Cash Cash equivalents March 31, 2018 March 31, 2017 $ $ 93,893 1,699 95,592 $ $ 88,026 18,179 106,205 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 in accordance with its foreign exchange hedging policy as approved by the Board of Directors. During fiscal 2018, the Company received $0.1 million (2017 – $0.5 million) on the settlement of realized foreign exchange forward contracts. As at March 31, 2018, the Company had no unexpired foreign exchange forward contracts (2017 – to sell US$1.5 million at an average rate of Canadian $1.3450 per U.S. dollar at a fair value of $24 thousand). As at March 31, 2018, acquisition entities of Clairvest had unexpired foreign exchange forward contracts as follows: 64 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Foreign exchange forward contracts to sell US$246.8 million (2017 – US$165.2 million) at an average rate of C$1.2622 per U.S. dollar (2017 – $1.3145) through to March 2019. The fair value of the forward contracts as at March 31, 2018 was a loss of $6.3 million (2017 – $2.3 million). Foreign exchange forward contracts to sell 15.5 billion Chilean Pesos ("CLP") (2017 – nil) at an average rate of C$0.002098 per CLP (2017 – nil) through to April 2019. The fair value of these contracts as at March 31, 2018 is a loss of $1.8 million (2017 – nil). The fair value of the foreign exchange forward contracts entered into by these acquisition entities had been included in the fair value of Clairvest's investment in these acquisition entities on the consolidated statements of financial position. No collateral was funded to the counterparties for Clairvest's foreign exchange forward contracts and those of its acquisition entities as at March 31, 2018 and 2017. 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 (2017 – $15.2 million) of which remained unfunded as at March 31, 2018. 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, $21.2 million (2017 – $21.2 million) of which remained unfunded as at March 31, 2018. 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, $103.6 million (2017 – $142.2 million) of which remained unfunded as at March 31, 2018. 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 (“WF Fund IV”) (2017 – $25.2 million), all of which was unfunded as at March 31, 2018. As specified in the Limited Partnership Agreement, WF Fund IV may no longer invest in new investments. (e) Clairvest has also committed $30.3 million to WF Fund V. During fiscal 2018, Clairvest received a full return of capital from WF Fund V upon the sale of its loan portfolio as described in note 6(s). As at March 31, 2018, $30.3 million (2017 – $14.6 million) remained unfunded as at March 31, 2018. WF Fund V may no longer invest in new investments. (f) Clairvest, as general partner of WF Fund V, had guaranteed to return up to amounts received in the event the limited partners of WF Fund V do not meet their return threshold as specified in its Limited Partnership Agreement. During fiscal 2018, WF Fund V sold its loan portfolio and the limited partners received a full return of capital and a return above the threshold as specified in its Limited Partnership Agreement, and accordingly, the guarantee was extinguished. As at March 31, 2018 and 2017, no amounts had been funded or owing with respect to the clawback. (g) 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, 2018, the Realized Amount under the Bonus Program was $0.7 million (2017 − $0.2 million) and had been accrued under accrued compensation expense liability. 65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 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 recorded a $7.8 million (2017 − $5.0 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. (h) In conjunction with the sale of Casino New Brunswick, Clairvest had agreed to a net guarantee of $2.0 million to fund any valid claims made by 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, 2018 and 2017, no amounts with respect to this guarantee have been funded. (i) As part of the holding structure of Chilean Gaming Holdings, acquisition entities of CEP III Co-Invest had loans totalling $41.9 million as at March 31, 2018 (2017 − $41.9 million) from an unrelated financial institution, while another acquisition entity of CEP III Co-Invest held term deposits totalling $41.9 million as at March 31, 2018 (2017 − $41.9 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, 2018 and 2017. (j) Clairvest had agreed to guarantee up to $10.0 million to support Discovery Air's credit facility with its bank. During fiscal 2018, the guarantee was extinguished. (k) Clairvest had pledged $15.8 million to a Schedule 1 Canadian chartered bank which has provided debt financing to OWGTALP. The pledge was made to support the debt financing and is held in a bank account belonging to Clairvest at the Schedule 1 Canadian chartered bank. Accordingly, it has been classified as restricted cash on the consolidated statements of financial position. Subsequent to year-end and in conjunction with the final closing of OWGTALP, the restriction on the cash was removed. (l) As at March 31, 2018, the Company had future minimum annual lease payments under non-cancellable operating leases for the use of office space of $0.5 million due within one year (2017 − $0.5 million), $2.1 million due after one year, but not more than five years (2017 − $1.9 million) and $1.8 million due after five years (2017 − $2.2 million). (m) 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 risk factors. Fair value risk Fair value risk includes exposure to fluctuations in the fair market value of the Company’s investments as described in note 17. 66 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) The Company's corporate investment portfolio was diversified across 17 investee companies in 6 industries and 4 countries as at March 31, 2018. Concentration risk by industry and by country as at March 31, 2018 and 2017 was as follows: March 31, 2018 March 31, 2017 Canada United States Chile India Total Canada United States Chile Total Contract manufacturing $ — $ — $ — $ — $ — $ — $ 27,248 $ — $ 27,248 Defence services Equipment rental Financial services Gaming Marketing services Renewable energy Waste management Other investments 44,926 21,164 — 23,804 11,933 — — — 688 — — — — — — — — 66,090 — 23,804 253,676 60,113 40,228 365,950 9,126 6,189 33,640 3,018 — — — — — — — — 9,126 6,189 33,640 3,706 21,037 28,758 22,101 12,613 — — — 1,039 11,557 — — — — — 32,594 28,758 22,101 155,679 48,835 217,127 8,179 — 40,349 3,009 — — — — 8,179 — 40,349 4,048 Total $ 81,351 $ 326,813 $ 60,113 40,228 $ 508,505 $ 85,548 $ 246,021 $ 48,835 $ 380,404 The Company has considered current economic events and indicators in the valuation of its investee companies. Interest rate risk Fluctuations in interest rates affect the Company's income derived from its cash, cash equivalents and temporary investments ("treasury funds"). For financial instruments which yield a floating interest rate, the income received is directly impacted by the prevailing interest rate. The fair value of financial instruments which yield a fixed interest rate would change when there is a change in the prevailing market interest rate. The Company manages interest rate risk on its treasury funds 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 have been an increase or decrease of $1.2 million (2017 – $1.2 million) to distributions and interest income on a pre-tax basis for the year ended March 31, 2018. Certain of the Company's investments in the investee companies are also held in the form of debentures and loans. Significant fluctuations in market interest rates can have a significant impact on the carrying value of these investments as described in note 17. Currency risk 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 may also advance 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, Clairvest and its acquisition entities, subject to certain exceptions, entered into hedging positions against these foreign-denominated currencies. As at March 31, 2018, the Company had foreign exchange exposure to the CLP totalling $17.5 million (2017 – $48.8 million) and the INR totalling $40.2 million (2017 – nil). 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 carrying value of these investee companies. The Company manages this risk through oversight responsibilities with existing investee companies and by reviewing the financial condition of investee companies regularly. 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, 2018 and 2017, there were no material income effects on changes of credit risk on financial 67 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) assets. The carrying values of financial assets subject to credit exposure as at March 31, 2018 and 2017, net of any allowances for losses, were as follows: March 31, 2018 Acquisition entities Clairvest Total Clairvest March 31, 2017 Acquisition entities $ $ 121,537 Financial assets Cash and cash equivalents Temporary investments Restricted cash Accounts receivable(1) Loans receivable(2) Derivative instruments Corporate investments(3) 95,592 36,582 15,750 26,223 945 – 508,505 683,597 (1) Account receivable from investee companies or the CEP Funds. Excludes prepaid expenses and other assets. (2) Loans receivable from investee companies or the CEP Funds. (3) Comprised debt investments made in investee companies. 47,524 15,750 27,880 945 168 568,541 782,345 25,945 10,942 – 1,657 – 168 60,036 98,748 106,205 15,964 – 19,662 5,371 24 380,404 527,630 $ $ 41,430 7,464 – 1,890 423 83 56,157 107,447 Total 147,635 23,428 – 21,552 5,794 107 436,561 635,077 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 are with its investee companies and its CEP Funds. The Company manages this risk through its oversight responsibilities with existing investee companies by reviewing their financial conditions regularly, and through its fiduciary duty as Manager 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, 2018, the Company had not entered into any derivative instruments (2017 – fair value of $24 thousand). Additionally, the Company's acquisition entities held derivative instruments which had mark-to-market losses totalling $6.3 million (2017 – $2.3 million). The Company believes the counterparty risk with respect to its acquisition entities' derivative instruments is nominal. The Company manages credit risk on its treasury funds by conducting activities in accordance with the fixed income securities policy which 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. 68 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) 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, were as follows: Cash and restricted cash Money market savings accounts R1-High Guaranteed investment certificates and investment savings accounts AA A A- BBB(1) BBB-(1) Not rated(1) Other fixed income securities Not rated(2) March 31, 2018 March 31, 2017 $ 109,643 $ 88,026 759 14,988 5,026 203 — — — 17,209 16,126 — — 202 101 505 17,305 147,924 $ — 122,169 Total cash, cash equivalents, temporary investments and restricted cash $ (1) Principal protected by the Canada Deposit Insurance Corporation. (2) Comprised other fixed income securities as permitted by the Company’s treasury policy which in aggregate may not exceed 10% of book value and with no single issue greater than 1.5% of book value. 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 periods. Total unfunded commitments to co-invest alongside the CEP Funds, as described were $140.0 million (2017 – $178.5 million) as at March 31, 2018. 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. The Company manages liquidity risk by maintaining a conservative liquidity position that exceeds all liabilities payable on demand. The Company invests treasury funds in liquid assets such that they are available to cover any potential funding commitments and guarantees. In addition, the Company maintains a $100.0 million (2017 – $100.0 million) credit facility which was undrawn at March 31, 2018. As at March 31, 2018, Clairvest had treasury funds of $147.9 million (2017 – $122.2 million) and access to $100.0 million (2017 – $100.0 million) in credit to support its obligations and current and anticipated corporate investments. Clairvest also had access to $36.9 million (2017 – $48.9 million) in treasury funds held by its acquisition entities and $355.9 million (2017 – $443.4 million) in uncalled committed third-party capital through the CEP Funds at March 31, 2018 to invest along with Clairvest's capital. 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. 69 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) (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 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 equity instruments 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: Financial assets Cash equivalents Money market savings accounts Investment savings accounts Temporary investments Guaranteed investment certificates Other fixed income securities March 31, 2018 Fair value measurements using Level 1 Level 2 Level 3 Assets/liabilities at fair value $ 759 $ 940 1,699 — — — $ — — — 19,277 17,305 36,582 $ — — — — — — 759 940 1,699 19,277 17,305 36,582 Corporate investments $ — 1,699 $ 20,178 56,760 $ 494,994 494,994 $ 515,172 553,453 70 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Financial assets Cash equivalents Money market savings accounts Investment savings accounts Temporary investments Guaranteed investment certificates Derivative instruments Corporate investments March 31, 2017 Fair value measurements using Level 1 Level 2 Level 3 Assets/liabilities at fair value $ 17,209 $ 970 18,179 — — — $ — — — 15,964 15,964 24 $ — — — — — — 17,209 970 18,179 15,964 15,964 24 $ — 18,179 $ — 15,988 $ 410,102 410,102 $ 410,102 444,269 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, 2018 and 2017, there were no transfers between the various levels of the fair value hierarchy. (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: Total realized / unrealized gains and foreign exchange revaluations included in earnings Fair value April 1, 2017 Purchases of assets / issuances of liabilities Sales of assets / settlements of liabilities Fair value March 31, 2018 Financial assets Unrealized gains and foreign exchange revaluations included in earnings for assets and liabilities for the year ended March 31, 2018 for positions still held Corporate investments $ $ 410,102 $ 410,102 $ 109,386 $ 109,386 $ 38,709 $ 38,709 $ (63,203) $ (63,203) $ 494,994 $ 494,994 $ 109,386 109,386 71 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Total realized / unrealized gains and foreign exchange revaluations included in earnings Fair value April 1, 2016 Purchases of assets / issuances of liabilities Sales of assets / settlements of liabilities Fair value March 31, 2017 Financial assets Unrealized gains and foreign exchange revaluations included in earnings for assets and liabilities for the year ended March 31, 2017 for positions still held Corporate investments $ $ 353,801 $ 353,801 $ 72,946 $ 72,946 $ 21,110 $ 21,110 $ (37,755) $ (37,755) $ 410,102 $ 410,102 $ 72,946 72,946 (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. On 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 6) 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, 2018 Valuation techniques Significant unobservable input Unquoted equity instruments (including warrants) or partnership units Public company comparables Recent transactions (a) EBITDA multiples (b) (a) n/a Range (c) 3.5x to 8.5x (b) n/a Corporate bonds, debentures or loans not traded or other finite set of cash flows Discounted cash flows Discount rates (c) 10.0% to 20.0% March 31, 2017 Valuation techniques Significant unobservable input Unquoted equity instruments (including warrants) or partnership units Public company comparables Recent transactions (d) EBITDA multiples (e) (d) n/a Range (f) 5.0x to 7.7x (e) n/a Corporate bonds, debentures or loans not traded or other finite set of cash flows Discounted cash flows Discount rates (f) 8.0% to 19.0% 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. As at March 31, 2018, 9 investee companies were valued using the earnings multiple approach. If the Company had used an 72 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) earnings multiple for each investee company that was higher or lower by 0.5 times, the potential effect would be an increase of $18.8 million or decrease of $19.7 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, 2018 (2017 – increase of $29.6 million or decrease of $29.3 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 fair value is determined based on recent transaction information, this value is the most representative indication of fair value for a period of up to twelve months. The fair value of corporate bonds, debentures or loans is primarily determined using a discounted cash flow technique. This technique uses observable and unobservable inputs such as discount rates that take into account the risk associated with the investment as well as further cash flows. For those investments valued based on recent transactions, Clairvest has determined that there are no reasonable alternative assumptions that would change the fair value materially as at March 31, 2018 and 2017. 18. CAPITAL DISCLOSURES Clairvest considers the capital it manages to be shareholders' equity. Clairvest also manages capital held in acquisition entities, 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 investee companies; Achieve an appropriate risk adjusted return on capital; Build long-term value in its investee companies to generate superior returns; and Have appropriate levels of committed third-party capital available to invest alongside 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, 2018 and 2017, Clairvest had no external capital requirements, other than as disclosed in note 16. 19. FUTURE CHANGES IN ACCOUNTING POLICIES Financial Instruments ("IFRS 9") 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. The Company has assessed the impact of IFRS 9 on its consolidated financial statements and has determined there are no significant changes to the classification or measurement of its financial instruments resulting from the adoption of this new standard on the required effective date. Revenue from Contracts with Customers ("IFRS 15") 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 in the process of completing its evaluation of IFRS 15. Based on the analysis performed, the Company does not anticipate any significant transition adjustment to its consolidated financial statements from adoption of IFRS 15. 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2018 and 2017 (tabular dollar amounts in thousands, except per share information) Leases ("IFRS 16") IFRS 16 was issued in January 2016 and will replace the previous lease standard, IAS 17 Leases, and related interpretations. Under IFRS 16, lessees are required to recognize assets and liabilities for most leases. IFRS 16 is effective for annual periods beginning on or after January 1, 2019. The Company is currently evaluating the impact of IFRS 16 and plans to adopt the new standard on the required effective date. 20. SUBSEQUENT EVENTS Subsequent to year-end, CEP IV Co-Invest realized its investment in MAG and sold its 33,736 Class A stock for US$29.5 million in proceeds at closing and retaining a 5% ownership interest in Momentum Solutions. The promissory notes from MAG Aerospace Canada were also repaid in full. Total proceeds for CEP IV Co-Invest including the notes repayment was $39.2 million. 21. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the fiscal 2018 consolidated financial statements. 74 SHAREHOLDER INFORMATION As at, and for the year ended, March 31, 2018 (unaudited) 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 long-term value of its corporate investments. Accordingly, the results reflected the fair 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 actual realizations. 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 (1) (2) (3) As at May 28, 2018. Excludes holders of 10% or more of the outstanding common shares. During the year, Clairvest filed a new Normal Course Issuer Bid. Common Shares(3) Toronto Stock Exchange CVG 15,157,895 9,679,480 5,478,415 685,894,749 247,898,279 $ $ BOOK VALUE PER SHARE(1) AT MARCH 31 $46 $44 $42 $40 $38 $36 $34 $32 $30 $28 $26 $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $- 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 (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, 2018 (unaudited) SHARE PRICE VS BOOK VALUE PER SHARE $48.00 $46.00 $44.00 $42.00 $40.00 $38.00 $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 4 1 - r a M 4 1 - n u J 4 1 - p e S 4 1 - c e D 5 1 - r a M 5 1 - n u J 5 1 - p e S 5 1 - c e D 6 1 - r a M 6 1 - n u J 6 1 - p e S 6 1 - c e D 7 1 - r a M 7 1 - n u J 7 1 - p e S 7 1 - c e D 8 1 - r a M Book Value Share Price SHARE TRADING VOLUME FISCAL 2018 AND 2017 Common shares Year to March 31, 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Year to March 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter SHAREHOLDER INQUIRIES Maria Shkolnik, Director of Corporate Relations tel: 416.925.9270 416.925.5753 fax: email: marias@clairvest.com High Low Close Volume 37.71 35.61 48.53 47.00 28.68 29.28 30.25 33.35 33.25 34.29 35.38 39.36 26.84 28.53 28.53 29.77 34.24 35.49 47.00 45.49 28.68 29.17 30.25 33.34 30,300 104,200 86,300 25,100 29,800 58,800 91,500 29,000 76 TRANSFER AGENT AND REGISTRAR Investors are encouraged to contact AST Trust Company (Canada) 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.astfinancial.com Email: inquiries@astfinancial.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 13, 2018 Vantage Venues, 150 King Street West, 27th Floor Toronto, Ontario Canada All Shareholders are encouraged to attend. 

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