2015
Focus on Long Term
Value Creation
AnnualReport E-SOURCING
SUPPLY CHAIN
CONSUMERS
MARKET PLACES
B 2 B
CPU
PROVIDE INNOVATIVE AND EFFICIENT E-COMMERCE SOLUTIONS OUR MISSION
Our mission is to provide to our customers innovative and efficient
technological solutions. In doing so, we seek to create value for our customers,
our employees and our shareholders.
WHO WE ARE
In business since 1996, Mediagrif is a Canadian leader in information
technology, owner of several recognized web and mobile platforms
including Jobboom, LesPAC, Réseau Contact, MERX, InterTrade, Carrus and
BidNet.
Our e-commerce solutions are used by millions of consumers and businesses
in North America and around the world. Our qualified and experienced
team of 400 employees is spread across our offices in Canada, the United
States and China.
Our shares are traded in the Toronto Stock Exchange under the symbol
“MDF.” To learn more about us, visit our website at www.mediagrif.com.
MEDIAGRIF
ANNUAL REPORT 2015
MESSAGE TO SHAREHOLDERS
OUR BUSINESS STRATEGY FOR FISCAL YEAR 2016
Dear Shareholders,
The results of fiscal year 2015 show that our actions
to create long-term value for our customers, our
employees and our shareholders are bearing fruit. The
figures speak for themselves: our revenues continued
to grow in 2015, reaching $70.2 million, an increase of
7% compared to 2014, while our operating profit grew
to $20.9 million, up 22%.
OUR OUTSTANDING EFFORTS DURING FY 2015
to
On the technology front, we invested in our research
and development capabilities
improve our
service offering. Among others, we hired a mobile
development team to enhance the accessibility of
our platforms, in response to rapid changes in user
demand. We also continued to invest in our hosting
infrastructure to increase its capacity and optimize its
performance.
On the operational side, we doubled the size of our
team specializing in search engine optimization
to maximize the positioning of our platforms. Also,
the marketing of our e-sourcing solution by MERX
in Canada has been very successful. The addition of
management modules for supplier qualifications and
performance are contributing to the adoption of our
solution by both new and longstanding customers.
During 2015, we evaluated several acquisition
opportunities, without concluding any transactions.
Our disciplined acquisition strategy forces us to
decline opportunities that do not meet our criteria.
We will continue to do that until the right opportunity
presents itself. We chose to allocate capital to repay
debt and accelerate our share repurchase plan.
Several projects await the attention of our teams
in 2016. We will deploy every effort to increase the
commercial presence of our e-sourcing platform and
our electronic data interchange platform in both
Canadian and American markets.
We will also continue to promote our LesPAC,
Jobboom and Réseau Contact platforms to boost
traffic and capture the interest of a greater number of
Quebec consumers. In parallel, we will continue our
efforts to increase the performance of other platforms
in our portfolio.
We are confident that our favorable financial position
will allow Mediagrif to seize interesting acquisition
opportunities. We will continue on this path without
losing sight of our acquisition criteria which consist
in finding profitable North American companies, with
robust business models, which are likely to create
synergies with our operations.
We wish to reiterate to Mediagrif shareholders our
commitment to propel the company to new heights
and focus on long-term value creation.
CLAUDE ROY
President and Chief Executive Officer
2
MESSSAGE TO SHAREHOLDERS
REVENUES
(IN MILLIONS OF CAN $)
60,7
65,4
70,2
53,8
47,1
OPERATING PROFIT
(IN MILLIONS OF CAN $)
20,9
19,9
17,1
12,3
13,2
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
PROFIT FOR THE PERIOD
(IN MILLIONS OF CAN $)
EARNINGS PER SHARE
(IN CAN $)
15,6
14,0
12,7
0,69
0,58
9,5
8,0
0,97
1,00
0,80
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
EBITDA
(IN MILLIONS OF CAN $)
25,2
24,3
27,5
17,4
15,1
ADJUSTED EBITDA MARGIN
(%)
41,5
37,2
39,2
32,1
32,3
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
3
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED MARCH 31, 2015
The following Management’s Discussion and Analysis (“MD&A”), which has been prepared as at
June 9, 2015, of the financial position and operating results of Mediagrif Interactive Technologies Inc.
(“Mediagrif” or the “Company”) should be read in conjunction with the audited consolidated financial
statements and accompanying notes thereto for the year ended March 31, 2015. This discussion and
analysis compares performance for the fiscal years ended March 31, 2015 and 2014 and for the quarters
then ended. The Company prepares its consolidated financial statements in accordance with International
Financial Reporting Standards (“IFRS”). Unless indicated otherwise, all dollar amounts are expressed in
Canadian dollars. This MD&A was approved by the Board of Directors of Mediagrif.
In addition to providing profit measures in accordance with IFRS, the Company’s statement of income
shows operating profit and earnings before interest, taxes, depreciation, amortization, foreign exchange
gain (loss) and other revenues (expenses) (“Adjusted EBITDA”) as supplementary earnings measures.
Operating profit and adjusted EBITDA are not intended to be measures that should be regarded as an
alternative to other financial operating performance measures prepared in accordance with IFRS. Those
measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar
measures presented by other companies. Operating profit and adjusted EBITDA are provided to assist
investors in determining the Company’s ability to generate profitability from its operations and to evaluate
its financial performance.
COMPANY PROFILE
Mediagrif (TSX: MDF) is a Canadian leader in information technology, owner of several recognized web and
mobile platforms including Jobboom, LesPAC, Réseau Contact, MERX, InterTrade, Carrus, and BidNet.
Mediagrif’s e-commerce solutions are used by millions of consumers and businesses in North America and
around the world. The Company has offices in Canada, the United States and China.
MISSION STATEMENT
Our mission is to provide to our customers innovative and efficient technological solutions. In doing so, we
seek to create value for our customers, our employees and our shareholders.
FINANCIAL HIGHLIGHTS – FISCAL YEAR ENDED MARCH 31, 2015
• Revenues increased 7% to reach $70.2 million for fiscal year 2015, compared to $65.4 million for
fiscal year 2014.
• Adjusted EBITDA1 of $27.5 million or 39% of revenues for fiscal year 2015, compared to
$24.3 million (including acquisition costs of $0.3 million) for fiscal year 2014.
• Profit of $15.6 million ($1.00 per share), compared to $12.7 million ($0.80 per share) for fiscal year
2014.
• Repurchase, under the normal course issuer bid in place, of 275,100 shares during the year for a
consideration of $5.0 million.
1 See reconciliation of adjusted EBITDA and profit.
4
CONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL INFORMATION
In thousands of Canadian dollars, except per share
amounts. (unaudited) - IFRS
REVENUES
GROSS MARGIN
OPERATING EXPENSES
General and administrative
Selling and marketing
Technology
2015
$
Years ended March 31
2014
$
2013 (1)
$
2012
$
2011
$
70,247
65,376
60,711
53,824
47,076
56,275
51,520
48,450
42,972
36,820
8,475
14,637
12,303
8,571
14,110
11,748
7,896
10,377
10,313
10,398
9,567
9,778
8,158
8,656
7,661
TOTAL OPERATING EXPENSES
35,415
34,429
28,586
29,743
24,475
OPERATING PROFIT
Other revenues (expenses), net amount
(Financial expenses) interest income, net
amount
Share of profit in a joint venture
Income tax expense
PROFIT FOR THE YEAR
ADJUSTED EBITDA (see reconciliation of
adjusted EBITDA and profit)
CASH FLOWS GENERATED BY OPERATING
ACTIVITIES
EARNINGS PER SHARE – BASIC AND
DILUTED
Declared dividends per share
Weighted-average number of shares
outstanding (in thousands):
Basic
Diluted
Stock options outstanding (in thousands)
TOTAL ASSETS
LONG-TERM DEBT (including current portion)
20,860
1,174
(1,075)
217
(5,543)
15,633
17,091
879
19,864
(19)
13,229
640
12,345
(651)
(1,194)
162
(4,227)
12,711
(911)
215
(5,176)
13,973
(480)
-
(3,884)
9,505
253
-
(3,952)
7,995
27,509
24,331
25,165
17,365
15,112
24,082
22,236
18,018
12,285
10,277
1.00
0.40
0.80
0.40
0.97
0.37
0.69
0.32
0.58
0.35
15,711
15,711
-
15,833
15,833
-
14,421
14,448
-
13,705
13,755
105
13,784
13,804
158
191,155
26,100
196,165
36,920
132,731
129,357
85,455
57
38,483
287
(1) Certain figures for fiscal year 2013 have been restated following the adoption of IFRS 11 “Joint arrangements”.
The financial information for the fiscal years ended March 31, 2012 and 2011 have not been restated.
5
RECONCILIATION OF ADJUSTED EBITDA AND PROFIT
Years ended March 31
In thousands of Canadian dollars (unaudited)
PROFIT FOR THE YEAR
Income tax expense
Depreciation of property, plant and equipment and amortization of
intangible assets
Amortization of acquired intangible assets
Amortization of deferred financing costs
Amortization of deferred lease inducement
Foreign exchange gain
Interest on long-term debt and interest income, net amount
Other expenses
ADJUSTED EBITDA
2015
$
15,633
5,543
1,586
4,971
120
(125)
(1,174)
955
-
2014
$
12,711
4,227
1,154
6,048
190
(124)
(881)
1,004
2
27,509
24,331
Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, foreign exchange
gain (loss) and other revenues (expenses) as historically calculated by the Company. The Company
modified the terminology used to comply with regulatory requirements.
PROFIT ANALYSIS
The profit analysis takes into consideration the impact of the acquisitions of Jobboom and Réseau
Contact, respectively completed on June 1, 2013, and November 29, 2013.
FISCAL YEAR ENDED MARCH 31, 2015 “FISCAL YEAR 2015” COMPARED TO FISCAL YEAR ENDED
MARCH 31, 2014 “FISCAL YEAR 2014”
Revenues
For fiscal year 2015, revenues totaled $70.2 million, an increase of 7% or $4.9 million compared to fiscal
year 2014. This revenue increase is mainly explained as follows:
• Addition of revenues from Réseau Contact and Jobboom for an additional period of eight and two
months respectively, for a total amount of $4.2 million.
•
Increase in revenues from MERX, InterTrade and Carrus for an amount of $0.8 million.
• Decrease in revenues from The Broker Forum, Market Velocity and Power Source On-Line for a
total amount of $1.3 million.
• Decrease in revenues from software development for an amount of $0.1 million.
•
Increase of $1.3 million in revenues attributable to changes in the Canadian dollar against the U.S.
dollar, combined with hedges in place.
During fiscal year 2015, revenues earned in Canadian dollars represented 66% of total revenues, compared
to 63% for fiscal year 2013. The increase in revenues earned in Canadian dollars compared to revenues
earned in U.S. dollars is mainly due to the addition of Jobboom and Réseau Contact (whose revenues are
primarily in Canadian dollars), combined with lower revenues in certain business networks whose
revenues are primarily in U.S. dollars.
6
Costs of revenues
Cost of revenues totaled $14.0 million during fiscal year 2015 compared to $13.9 million during fiscal year
2014. This increase is primarily due to higher labor costs of $0.2 million, higher commissions paid of
$0.3 million in connection with higher advertising revenues and to an increase in amortization expense of
$0.2 million.
These increases were partially offset by a reduction in professional fees of $0.2 million primarily related to
the integration of Jobboom’s operations during fiscal 2014, by a decrease in document printing costs of
$0.3 million and by a decrease in expenses related to software maintenance of $0.1 million.
Gross margin
Based on the information above, gross margin for fiscal year 2015 reached 80.1% compared to 78.8%
during fiscal year 2014.
Operating expenses
Operating expenses for fiscal year 2015 totaled $35.4 million, compared to $34.4 million for fiscal year 2014.
Changes in operating expenses are explained as follows:
• General and administrative expenses totaled $8.5 million during fiscal year 2015 compared to
$8.6 million during fiscal year 2014. The decrease is primarily due to lower professional service
expenses of $0.3 million related to the acquisition of Jobboom and Réseau Contact during fiscal
2014, lower software license expenses of $0.1 million as well as a reduction in amortization
expense of $0.1 million. This decrease was offset by higher labor costs of $0.4 million mostly
related to the acquisition of Jobboom and Réseau Contact.
•
•
Selling and marketing expenses totaled $14.6 million during fiscal year 2015, compared to
$14.1 million during fiscal year 2014. The increase is primarily due to an increase in the sales
workforce of $0.8 million, to higher advertising costs of $0.7 million (including those of Réseau
Contact and Jobboom) and higher credit card fees of $0.1 million. These items were partially offset
by a decrease in amortization expense of $0.8 million, a decrease in costs related to bad debts
expenses of $0.1 million and lower professional service expenses of $0.2 million.
Technology expenses totaled $12.3 million during fiscal year 2015, compared to $11.7 million during
fiscal year 2014. This increase is primarily due to lower tax credits of $0.8 million, partially offset by
lower professional services expenses of $0.2 million. The increase in the technology workforce of
$1.2 million during fiscal year 2015 was offset by the recording of internally developed software of
an equivalent amount.
Operating profit
Based on the information above, operating profit reached $20.9 million during fiscal year 2015, compared
to $17.1 million during fiscal year 2014.
Foreign exchange gain
For fiscal year 2015, the Company realized a foreign exchange gain on assets denominated in U.S. dollars of
$1.2 million, compared to $0.9 million during fiscal year 2014.
Financial expenses
Financial expenses totaled $1.1 million during fiscal year 2015 compared to $1.2 million for fiscal year 2014.
They primarily consist of interest expenses and standby fees on long-term debt as well as amortization of
7
deferred financing costs. The decrease in financial expenses is mainly due to long term debt repayments
made during fiscal year 2015.
Income tax expense
For fiscal year ended on March 31, 2015, income tax expense totaled $5.5 million, representing an effective
tax rate of 26.2%, compared to the statutory rate of 26.9%. During fiscal year 2014, the effective tax rate
stood at 25.0%.
During fiscal year 2015, the decrease in the effective tax rate compared to the statutory tax rate was mainly
due to the fact that foreign exchange gains realized by the Company are non-taxable. This decrease was
partially offset by a few prior years’ adjustments recorded during fiscal year 2015.
During fiscal year 2014, the decrease in the effective tax rate compared to the statutory tax rate was due to
some prior years’ adjustments recorded during the year. Moreover, certain U.S. tax attributes not
recognized in prior periods were recognized during fiscal year 2014. These positive effects on the effective
tax rate were partially offset by the fact that a portion of revenues is taxable in the United States, a
jurisdiction where the statutory tax rate is higher.
Profit
Profit for fiscal year 2015 totaled $15.6 million ($1.00 per share), compared to $12.7 million ($0.80 per share)
during fiscal year 2014.
FOURTH QUARTER ENDED MARCH 31, 2015 “FOURTH QUARTER OF FISCAL 2015”
In thousands of Canadian dollars, except per share amounts. (unaudited)
Three months ended March 31
2014
$
2015
$
REVENUES
GROSS MARGIN
OPERATING EXPENSES
General and administrative
Selling and marketing
Technology
TOTAL OPERATING EXPENSES
OPERATING PROFIT
Other revenues, net amount
Financial expenses
Share of profit of a joint venture
Income tax expense
PROFIT FOR THE PERIOD
ADJUSTED EBITDA (see reconciliation of adjusted EBITDA and profit)
Earnings per share – Basic and diluted
Weighted average number of shares outstanding (in thousands)
Basic and diluted
8
17,467
14,087
2,183
3,924
2,607
8,714
5,373
854
(195)
53
(1,502)
4,583
6,750
0.30
17,296
13,664
2,039
3,788
3,166
8,993
4,671
401
(330)
114
(888)
3,968
6,767
0.25
15,542
15,832
RECONCILIATION OF ADJUSTED EBITDA AND PROFIT
In thousands of Canadian dollars
PROFIT FOR THE PERIOD
Income tax expense recognized in profit
Depreciation of property, plant and equipment and amortization
of intangible assets
Amortization of acquired intangible assets
Amortization of deferred financing costs
Amortization of deferred lease inducement
Foreign exchange gain
Interest on long-term debt
Other revenues
ADJUSTED EBITDA
Revenues
Three months ended March 31
2015
$
4,583
1,502
435
921
-
(32)
(854)
195
-
6,750
2014
$
3,968
888
298
1,716
47
(32)
(398)
283
(3)
6,767
For the fourth quarter of fiscal 2015, revenues totaled $17.5 million, an increase of $0.2 million when
compared to the fourth quarter of fiscal 2014.
This increase in revenues is mainly explained by higher revenues from InterTrade and MERX for an amount
of $0.4 million and to a positive impact of $0.5 million attributable to variation in the Canadian dollar
against the U.S. dollar, combined with hedges in place.
This increase was partially offset by lower revenues in The Broker Forum, Jobboom, LesPAC and Power
Source On-Line for a total of $ 0.7 million.
During the fourth quarter of fiscal 2015, revenues earned in Canadian dollars represented 64% of total
revenues, compared to 65% for the fourth quarter of fiscal 2014.
Cost of revenues
Cost of revenues totaled $3.4 million during the fourth quarter of fiscal 2015 compared to $3.6 million
during the fourth quarter of fiscal 2014. This decrease is primarily due to lower document printing costs of
$0.2 million and to lower professional service fees of $0.1 million partially offset by an increase in
amortization expense of $0.1 million.
Gross margin
Based on the information above, gross margin for the fourth quarter of fiscal 2015 reached 80.6%,
compared to 79.0% in the fourth quarter of fiscal 2014.
Operating expenses
Operating expenses for the fourth quarter of fiscal 2015 totaled $8.7 million, compared to $9.0 million for
the fourth quarter of fiscal 2014. Changes in operating expenses are explained as follows:
• General and administrative expenses totaled $2.2 million during the fourth quarter of fiscal 2015
compared to $2.0 million for the corresponding period of fiscal 2014. This increase in general and
administrative expenses is primarily due to higher labor costs of $0.1 million and to termination
benefits of $0.1 million.
9
•
•
Selling and marketing expenses totaled $3.9 million during the fourth quarter of fiscal 2015,
compared to $3.8 million for the fourth quarter of fiscal 2014. The increase in selling and marketing
expenses is mainly due to higher advertising expenses of $0.3 million and to an increase in the
sales workforce of $0.1 million. These items were partially offset by a decrease in amortization
expense of $0.3 million.
Technology expenses totaled $2.6 million during the fourth quarter of fiscal 2015, compared to
$3.2 million during the corresponding period of fiscal 2014. This decrease was primarily due to a
reduction in amortization expense of $0.5 million and to the recording of internally developed
software for a net amount of $0.4 million. This decrease was partially offset by an increase in the
technology workforce of $0.2 million and by lower tax credits of $0.1 million.
Operating profit
Based on the information above, operating profit reached $5.4 million during the fourth quarter of fiscal
2015, compared to $4.7 million during the fourth quarter of fiscal 2014.
Foreign exchange gain
During the fourth quarter of fiscal 2015, the Company realized a foreign exchange gain on assets
denominated in U.S. dollars of $0.9 million, compared to $0.4 million in the fourth quarter of fiscal 2014.
Financial expenses
Financial expenses totaled $0.2 million during the fourth quarter of fiscal 2015 compared to $0.3 million
during the corresponding period of fiscal 2014. These costs consist primarily of interest expenses and
standby fees on the long-term debt and amortization of deferred financing costs. The decrease in financial
expenses is mainly due to a lower level of long-term debt on average as at March 31, 2015 compared to
March 31, 2014.
Income tax expense
For the fourth quarter of fiscal 2015, income tax expense totaled $1.5 million, representing an effective tax
rate of 24.7%, compared to the statutory rate of 26.9%.
During the fourth quarter of fiscal 2015, the decrease in the effective tax rate compared to the statutory tax
rate is mainly due to the fact that foreign exchange gains realized by the Company are non-taxable.
During the fourth quarter of fiscal 2014, the effective tax rate stood at 18.3% compared to a statutory rate of
26.9%. The significant decrease in the effective tax rate compared to the statutory tax rate was mainly due
to some prior years’ adjustments recorded during the fourth quarter of fiscal 2014. Moreover, certain U.S.
tax attributes not recognized in prior periods were recognized during the fourth quarter of fiscal 2014.
Profit
Profit for the fourth quarter of fiscal 2015 totaled $4.6 million ($0.30 per share), compared to $4.0 million
($0.25 per share) during the fourth quarter of fiscal 2014.
10
QUARTERLY PERFORMANCE
Selected quarterly financial information for the eight most recently completed quarters on or before
March 31, 2015, is as follows:
Unaudited and not
reviewed by
independent auditors
Revenues
Operating profit
Adjusted EBITDA
Profit
Basic and diluted
earnings per share
March 31
2015
$
Dec. 31
2014
$
Sept. 30
2014
$
June 30
2014
$
March 31
2014
$
Dec. 31
2013
$
Sept. 30
2013
$
June 30
2013
$
17,467
17,537
17,512
17,731
17,296
16,427
15,955
15,698
5,373
6,750
4,583
5,397
7,003
4,056
5,199
7,137
3,862
4,891
6,619
3,132
4,671
6,767
3,968
4,144
6,072
3,010
4,437
6,188
2,814
3,839
5,304
2,919
0.30
0.26
0.24
0.20
0.25
0.19
0.18
0.18
In thousands of Canadian dollars, except per share amounts.
2015 Quarters
• Fourth quarter: Compared to the third quarter of fiscal 2015, revenues and operating profit
remained stable.
Adjusted EBITDA slightly decreased mainly due to termination benefits for an amount of
$0.2 million. On the other hand, operating profit remained stable due to a lower amortization
expense also for an amount of $0.2 million.
The profit increased primarily due to a higher foreign exchange gain of $0.6 million and lower
financial expenses during the quarter compared to previous quarter.
• Third quarter: Compared to the second quarter of fiscal 2015, the revenues remained stable at
$17.5 million.
The adjusted EBITDA slightly decreased mainly due to higher advertising costs during the third
quarter. The increase in operating profit is due to lower amortization expense related acquired
intangible assets as well as a decrease in document printing costs. The expenses were partially
offset by higher advertising and promotion costs.
The profit increased due to lower financial expenses and lower income tax expense during the
third quarter.
• Second quarter: Compared to the first quarter of fiscal 2015, the decrease in revenues during the
second quarter of fiscal 2015 was primarily attributable to LesPAC and Jobboom, this decrease is
mainly explained by seasonal variations. The increase in revenues from MERX and InterTrade
during the quarter partially offset this decrease.
Otherwise, the increase in operating profit and adjusted EBITDA is mainly attributable to lower
seasonal advertising and promotion costs of $0.3 million, lower salary and benefits and additional
tax credits.
The profit has also increased due to foreign exchange gain of $0.4 million during the second
quarter compared to foreign exchange loss of $0.2 million during the first quarter.
• First quarter: Compared to the fourth quarter of fiscal 2014, the increase in revenues is primarily
attributable to higher revenues from LesPAC, partly offset by lower revenues from Jobboom.
Operating profit also increased due to additional revenues, lower depreciation expense and by the
11
recognition of internally developed software. Furthermore, operating profit and adjusted EBITDA
were affected by the increase of seasonal advertising and promotion and by reduced tax credits.
Meanwhile, the profit has decreased due to a foreign exchange loss of $0.3 million in the current
quarter compared to a foreign exchange gain of $0.4 million in the fourth quarter of fiscal 2014. In
addition, the income tax expense for the first quarter of fiscal 2015 was $0.3 million higher than
the fourth quarter of fiscal 2014 due to some prior years’ adjustments recorded in the fourth
quarter of fiscal 2014.
2014 Quarters
•
•
•
•
Fourth quarter: Improvement in financial results in the fourth quarter is primarily due to the
increase in contribution from Jobboom, the contribution of Réseau Contact for a first full quarter
and, to a lesser extent, the additional contribution from MERX and to our joint venture Global
Wines & Spirits. In addition, profit was positively impacted by a lower tax expense compared to the
previous quarters.
Third quarter: The positive impact on revenues during the third quarter of fiscal 2014 is due to the
increase in the contribution from Jobboom and the addition of Réseau Contact. Operating profit
and adjusted EBITDA declined, mainly due to termination benefits. Meanwhile profit has
benefited from a foreign exchange gain of $0.2 million compared to a foreign exchange loss of
$0.2 million in the previous quarter.
Second quarter: The increase in revenues, operating profit and EBITDA is primarily due to the
addition of Jobboom activities for a first full quarter and to the increase in revenues from
InterTrade. Moreover, the results of the previous quarter included non-recurring acquisition costs
of $0.2 million. Profit is lower during the current quarter due to a $0.3 million foreign exchange
loss compared to a $0.4 million foreign exchange gain during the first quarter of fiscal 2014.
First quarter: Compared to the fourth quarter of fiscal 2013, revenues increased due to the addition
of Jobboom and to the increase in revenues from LesPAC, partially offset by the decrease in
revenues from MERX. The operating profit, EBITDA and profit declined due to seasonal advertising
and promotion expenses, acquisition costs, termination benefits and by the addition of Jobboom
expenses.
LIQUIDITY AND FINANCIAL RESOURCES
In general, the Company finances its operations, capital expenditures, dividends, repurchase of common
shares and business acquisitions using funds generated by its operations and cash on hand.
When necessary, the Company may also use funds on the unused portion of its credit facility (see section
“Financing Activities – Credit Agreement”) or issue new shares to fund its operations including business
acquisitions.
As at March 31, 2015, the Company had cash and cash equivalents of $7.5 million and $33.9 million
available on its revolving facility of $60.0 million, subject to compliance with financial ratios.
OPERATING ACTIVITIES
In thousands of Canadian dollars
Cash flows related to operating activities before changes in non-cash
working capital items
Changes in non-cash working capital items
Cash flows related to operating activities
Years ended on March 31
2015
$
21,948
2,134
24,082
2014
$
19,788
2,448
22,236
12
For fiscal year 2015, cash flows generated by operating activities reached $24.1 million, compared to
$22.2 million for fiscal year 2014. The variation is mainly due to the increase in profit during the fiscal year
2015.
INVESTING ACTIVITIES
In thousands of Canadian dollars
Consideration transferred on business combination, net of acquired cash
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds on disposal of property, plant and equipment
Cash flows related to investing activities
Years ended on March 31
2014
$
(59,146)
2015
$
-
(766)
(1,718)
-
(1,061)
(314)
3
(2,484)
(60,518)
Cash flows used by investing activities amounted to $2.5 million for fiscal year 2015 compared to
$60.5 million in the previous fiscal year. Changes in cash flows related to investing activities is mainly due
to the fact that during the fiscal year 2014, the Company completed the acquisition of Jobboom and
Réseau Contact while there were no business acquisitions during fiscal year 2015.
Acquisitions of intangible assets totaled $1.7 million during fiscal year 2015 compared to $0.3 million
during fiscal year 2014. Additions to intangible assets during fiscal 2015 include an amount of $1.2 million
of internally developed software (nil in fiscal year 2014).
FINANCING ACTIVITIES
In thousands of Canadian dollars
Increase of long-term debt
Repayment of long-term debt
Repurchase of common shares for cancellation
Lease inducement received
Cash dividends paid on common shares
Cash flows related to financing activities
Years ended on March 31
2014
$
56,000
2015
$
-
(10,940)
(4,957)
79
(6,302)
(22,120)
(19,017)
(312)
-
(6,334)
30,337
For fiscal 2015, cash flows used for financing activities amounted to $22.1 million compared to $30.3 million
generated during fiscal year 2014.
During fiscal 2015, the Company had repaid, from its cash and cash equivalents, an amount of $10.9
million on its revolving credit facility and repurchased, under the normal course issuer bid in place, a total
of 275,100 shares for an amount of $5.0 million.
The amount paid in dividends by the Company remained unchanged at $6.3 million during fiscal 2015
compared to the corresponding period of fiscal 2014. The quarterly dividend has also remained the same
at $0.10 per share over both periods ended March 31, 2015 and 2014.
CREDIT AGREEMENT
On November 10, 2011, the Company entered into a credit agreement (the “Credit Agreement”) with two
Canadian financial institutions pursuant to which lenders made available to the Company a $60.0 million
secured revolving five-year credit facility (the “Revolving Facility”) for general corporate purposes, including
acquisitions, and an accordion loan of $40.0 million subject to lenders’ acceptance.
13
The Revolving Facility expires on November 9, 2016 and any outstanding amounts are due in full at
maturity. Amounts under the Credit Agreement are repayable before maturity without penalty.
As at March 31, 2015, the Company’s Revolving Facility stood at $26.1 million.
The Revolving Facility bear interest at a rate based either on Canadian prime rate, LIBOR or bankers’
acceptance rate plus a margin in each case. This margin varies according to the ratio of total debt to
earnings before interest, taxes, depreciation and amortization “EBITDA”. As at March 31, 2015, the actual
rate was 1.00% and the margin was 1.50%. In addition, the unused portion of the Revolving Facility bears
interest at 0.30% as standby fees.
All obligations under the Credit Agreement are secured by a first-rank security (hypothec) on substantially
all of the Company’s assets, tangible and intangible, present and future.
The Credit Agreement contains certain covenants and certain events of default customary for loans of this
nature, including some limitations to the levels of investments and acquisitions, capital expenditures and
distributions. The Credit Agreement is also subject to restrictive covenants requiring certain financial ratios
to be maintained. As at March 31, 2015, the Company was in compliance with the financial ratios
prescribed under these covenants.
FINANCIAL POSITION
As a whole, the Company has a sound financial position and is able to meet its financial obligations. As at
March 31, 2015, the Company had cash and cash equivalent of $7.5 million and $33.9 million available on its
credit facility of $60.0 million. At that same date, total assets of the Company amounted to $191.2 million
compared to $196.2 million as at March 31, 2014.
INFORMATION FROM STATEMENT OF FINANCIAL POSITION
In thousands of Canadian dollars
Cash and cash equivalents
Accounts receivable
Intangible assets
Acquired intangible assets
Goodwill
Accounts payable and accrued liabilities
Deferred revenues
Income taxes payable
Derivative financial instruments
Long-term debt
Years ended on March 31
2014
$
6,937
6,598
549
65,675
100,280
2015
$
7,546
5,691
1,719
60,704
100,280
6,861
16,473
1,084
1,431
26,100
6,202
16,175
482
669
36,920
The main changes in the Company’s statement of financial position between March 31, 2015 and 2014 are
explained as follows:
• Accounts receivable reached $5.7 million as at March 31, 2015, a decrease of $0.9 million compared
to March 31, 2014. This variation is mainly attributable to the decrease in accounts receivable of
Jobboom, Market Velocity and Carrus.
Total of intangible assets increased from $0.5 million as at March 31, 2014 to $1.7 million as at
March 31, 2015. This increase is mainly explained by the recording of internally developed software
during fiscal 2015.
Total acquired
intangible assets totaled $60.1 million as at March 31, 2015, compared to
$65.7 million as at March 31, 2014. This decrease results from the amortization recorded during the
fiscal 2015.
•
•
14
• Accounts payable and accrued liabilities of $6.9 million as at March 31, 2015, increased by
$0.7 million compared to March 31, 2014. This increase is due to higher accrued termination
benefits and other accrued liabilities.
• Derivative financial instruments totaled $1.4 million as at March 31, 2015, which represents an
increase of $0.8 million when compared to March 31, 2014. The variation is explained by the
difference between effective exchange rates on foreign currency forward contracts and exchange
market rates as at March 31, 2014 and 2015, respectively.
•
Long-term debt totaled $26.1 million as at March 31, 2015, compared to $36.9 million as at
March 31, 2014. This decrease reflects the long-term debt repayments made during fiscal 2015.
CONTRACTUAL OBLIGATIONS
The principal repayments required on long-term debt and the commitments under operating leases for
the coming financial years are as follows:
In thousands of Canadian dollars
Long-term debt
Operating leases
Total contractual obligations
Total
2016
2017
2018
2019
2020
2021 and
following
$
26,100
7,155
33,255
$
-
1,402
1,402
$
26,100
2,364
28,464
$
-
2,085
2,085
$
-
1,304
1,304
DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, the Company is exposed to certain financial risks. The Company does not
hold financial instruments for speculative purposes but only to reduce the volatility of its results from its
exposure to these risks. The nature and the extent of the risks arising from the financial instruments and
their related risk management are described in Note 24 to the Company’s audited consolidated financial
statements as at March 31, 2015.
The Company’s hedging program will yield an average (CA$/US$) exchange rate of 1.1418 on foreign
currency forward contracts of US $11.3 million held as at March 31, 2015, which will mature over fiscal years
2016 and 2017. As at March 31, 2014, the Company had foreign currency forward contracts of
US $12.2 million held at a rate of 1.0565.
During fiscal year ended March 31, 2015, there has been no material change to the nature of risks arising
instruments.
from financial
Furthermore, there was no change in the methodology used in determining the fair value of the financial
instruments that are measured at fair value in the Company’s consolidated statements of financial
position.
instruments, related risk management and classification of financial
RELATED PARTY TRANSACTIONS
The Company holds a 50% ownership in the joint venture Société d’investissement M-S S.E.C. (a limited
partnership), which operates under the brand Global Wine & Spirits (“GWS”), in which it shares joint control
with its co-venturers. GWS operates a virtual business-to-business electronic network offering an
integrated solution for the purchase and sale of wine and spirits.
During fiscal year 2015, the Company recorded revenues of $1.6 million from transactions with GWS
compared to $1.8 million during fiscal year 2014. In addition, the Company recharged to GWS operating
expenses in the amount of $0.3 million during fiscal years 2015 and 2014. As at March 31, 2015, and
March 31, 2014, the Company’s accounts receivable from GWS stood at $0.1 million.
15
In addition, the Company had a lease agreement which expired on December 31, 2013, with a company of
which one of its officers is a director. This company owns an office space where the Company exercised a
portion of its business. Therefore, the Company has not incurred any costs related to this space during the
fiscal year ended March 31, 2015, while for fiscal year ended March 31, 2014, minimum payments related to
this space totaled $56,535.
These transactions occurred in the normal course of business and were measured at the amount of
consideration agreed to by the parties.
RISKS AND UNCERTAINTIES
The Company is confident of its long-term prospects. However, in order to ensure that its strategy and
growth objectives are met, the Company seeks to diminish the risks and uncertainties created by
potentially unfavourable situations in its industry sector or its liquidity. The risks that the Company faces
are technological, operational or financial in nature or are inherent to its business activities or its
acquisition strategies.
RETENTION OF CUSTOMERS
We depend on our customer base for a significant portion of our revenues. If our customers fail to renew
their contracts, or fail to purchase additional services, then our revenues could decrease and our operating
results could be adversely affected. Factors influencing such contract terminations could include changes
in the financial circumstances of our customers, dissatisfaction with our products or services, our
retirement or lack of support for our legacy products and services, our customers selecting or building
alternate technologies to replace us, and changes in our customers’ business that may no longer
necessitate the use of our services, or other reasons. Furthermore, our customers could delay or terminate
implementations or use of our services or be reluctant to migrate to new services. Such customers will not
generate the revenues anticipated within the timelines anticipated, if at all, and may be less likely to invest
in additional services or products from us in the future.
ACQUISITIONS
Our growth strategy includes making strategic acquisitions, principally in the information technology
industry. There is no assurance that we will find suitable companies in this industry to acquire or that we
will have enough resources to complete any acquisition. We could also consider making acquisitions in
other promising sectors of the economy, if such acquisitions are likely to increase our value. Acquisitions
involve a number of risks, including: diversion of management’s attention from current operations;
disruption of our ongoing business; lack of expertise of management in the sector of activity of the
acquired business; difficulties in integrating and retaining all or part of the acquired business, its
customers and its personnel; assumption of disclosed and undisclosed liabilities; dealing with unfamiliar
laws, customs and practices in foreign jurisdictions; and the effectiveness of the acquired company’s
internal controls and procedures. The individual or combined effect of these risks could have a material
adverse effect on our business. As well, in paying for an acquisition, we may deplete our cash resources.
Furthermore, there is the risk that our valuation assumptions, customer retention expectations and our
models for an acquired product or business may be erroneous or inappropriate due to foreseen or
unforeseen circumstances and thereby cause us to overvalue an acquisition target. There is also the risk
that the contemplated benefits of an acquisition may not materialize as planned or may not materialize
within the time period or to the extent anticipated.
RESPONSE TO INDUSTRY’S RAPID PACE OF CHANGE
We operate in markets that are experiencing constant technological change, evolving industry standards,
changing customer needs, frequent new product and service introductions, and short product life cycles.
Our success will depend in large part on how well we can anticipate and respond to changes in industry
standards and introduce and upgrade new technologies, products and services and upgrade existing
16
products and services. We may face additional financial risks as we develop new products, services and
technologies and update them to stay competitive. Newer technologies, for example, may quickly
become obsolete or may need more capital than expected. Development could be delayed for reasons
beyond our control. Furthermore, substantial investment is usually required before new technologies
become commercially viable. There
in developing,
implementing and marketing new technologies, products, services or enhancements within a reasonable
time, or that there will be a market for them. New products or services that use new or evolving
technologies could make our existing ones unmarketable, or cause their prices to fall.
is no assurance that we will be successful
COMPETITION
The e-business market is intensely competitive, and we have many competitors with substantial financial,
marketing, personnel and technological resources. New competitors may also appear as new
technologies, products and services are developed. For example, the market for online classified ads in
which we operate is a very competitive market. Some of our competitors have financial resources far
superior than our own and operate under a business model different from ours. These competitors could
affect our pricing strategies, and lower our revenues and net income. It could also affect our ability to
retain existing customers and attract new ones.
DEFECTS IN SOFTWARE OR FAILURES IN PROCESSING OF TRANSACTIONS
Defects in our owned or licensed software products, delays in delivery, as well as failures or mistakes in our
processing of electronic transactions could materially harm our business, including our customer
relationships and operating results. Our operations are dependent upon our ability to protect our
computer equipment and the information stored in our data centers against damage that may be caused
by fire, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling
devices, and other similar events. Although we have redundant and back-up systems for some of our
services and products, these systems may be insufficient or may fail and result in a disruption of availability
of our products or services to our customers. Any disruption to our services could impair our reputation
and cause us to lose customers or revenue, or face litigation, necessitate customer service or repair work
that would involve substantial costs and distract management from operating our business.
POTENTIAL RISKS OF USING “OPEN SOURCE” SOFTWARE
Like many other e-commerce companies, we use “open source” software in order to add functionality to
our products and services quickly and inexpensively. We face certain risks relating to our use of open
source code. Open source license terms may be ambiguous and may result in unanticipated or uncertain
obligations regarding our products and services. Our use of open source software could subject certain
portions of our proprietary technology to the requirements of such open source software. That may have
an adverse impact on our sale of the products or services incorporating the open source software. Other
forms of open source software licensing present license compliance risks for us. If we fail to comply with
the license obligations, we could be sued and/or lose the right to use the open source code. Our use of
open source code could also result in us developing and selling products that infringe third-party
intellectual property rights. It may be difficult for us to accurately determine the developers of the open
source code and whether the code incorporates proprietary software.
INFRINGING ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS
We cannot be sure that our services and offerings do not infringe on the intellectual property rights of
third parties, and we may have infringement claims asserted against us. These claims may be costly, harm
our reputation, and prevent us from providing some services and offerings. We enter into licensing
agreements with our clients for the right to use intellectual property that includes a commitment to
indemnify the licensee against liability and damages arising from any third-party claims of patent,
copyright, trademark or trade secret infringement. In some instances, the amount of these indemnity
claims could be greater than the revenue we receive from the client. Furthermore, our e-business
networks are platforms bringing together buyers and sellers to find, buy and sell different products and
17
services. We have no control over the quality of products and services that our members display on our
platforms and there may be incidents where these products or services infringe the intellectual property
rights of third parties. Although we contractually limit our responsibility as it pertains to the content
posted on our networks by users, it is possible that complaints alleging violation of intellectual property
rights of third parties are made against us. Any claims or litigation in this area, whether we ultimately win
or lose, could be time-consuming and costly, injure our reputation, or require us to enter into royalty or
licensing arrangements. Any limitation on our ability to sell or use products or services that incorporate
challenged software or technologies could cause us to lose revenue-generating opportunities or require us
to incur additional expenses to modify solutions for future projects.
PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS
Our success depends, in part, on our ability to protect our proprietary methodologies, processes, know-
how, tools, techniques and other intellectual property that we use to provide our services. Our general
practice is to pursue patent, copyright, trademark, trade secret or other appropriate intellectual property
protection that is reasonable and necessary to protect and leverage our intellectual assets. We also assert
trademark rights in and to our name, product names, logos and other markings used to identify our goods
and services in the marketplace. We routinely file for and have been granted trademark registrations from
trademark offices worldwide. All of these actions taken allow us to enforce our intellectual property rights
should the need arise. However, the laws of some countries in which we conduct business may offer only
limited protection of our intellectual property rights; and despite our efforts, the steps taken to protect our
intellectual property may not be adequate to prevent or deter infringement or other misappropriation of
intellectual property, and we may not be able to detect unauthorized use of our intellectual property, or
take appropriate steps to enforce our intellectual property rights.
RETENTION OF KEY PERSONNEL
Our performance is substantially dependent on the performance of our key technical and senior
management personnel. Our success is highly dependent on our continuing ability to identify, hire, train,
motivate, promote, and retain highly qualified management, directors, technical, and sales and marketing
personnel, including key technical and senior management personnel. Competition for such personnel is
always strong. Our inability to attract or retain the necessary management, directors, technical services,
sales and marketing personnel, or to attract such personnel on a timely basis, could have a material
adverse effect on our business, results of operations, financial condition and the price of our securities.
REGULATION
The activities of the Company are subject to various types of regulations, particularly laws relating to the
protection of personal information, consumer protection and competition. For example, in Canada we are
subject to the Personal Information Protection and Electronic Documents Act (the “PIPEDA”). The PIPEDA
regulates how private sector companies collect, use or disclose personal information in the course of their
commercial activities. This regulatory framework may restrict our marketing activities and our capacity to
leverage our databases. In addition, we are subject to the Canadian Anti-Spam Law (“CASL”), which we are
subject to, prohibits the transmission of commercial electronic message to an email address without
consent and includes requirements relating to form and content. This regulatory framework also restricts
our marketing activities. Furthermore, failure to comply with CASL can result in financial penalties which
could affect the operating profit and financial position of the Company.
FAILURE TO PROTECT OUR DATABASES AND USERS PERSONAL INFORMATION
The Company maintains databases on the members of its platforms. These databases contain information
on members, including personal information. Although we have established rigorous security procedures,
member information stored in the databases could be subject to unauthorized access, use or disclosure.
Any breach of security on our databases could harm our reputation, result in complaints and investigation
by the authorities responsible for the enforcement of the laws on the protection of personal information or
lead to legal claims from our customers or sanction measures from the authorities.
18
DOING BUSINESS IN EMERGING COUNTRIES
We are doing business in emerging countries. Certain risks are associated with conducting our business in
emerging countries that could negatively impact our operating results, which include, but are not limited
to:
•
Language barriers, conflicting international business practices, and other difficulties related to the
management and administration of a global business.
• Difficulties and costs of staffing and managing geographically disparate direct and indirect
operations.
• Exchange rate fluctuations on the currencies.
• Multiple, and possibly overlapping, tax structures and the burden of complying with a wide variety
of foreign laws.
Trade restrictions and custom rates.
The need to consider characteristics unique to technology systems used internationally.
•
•
• Economic or political instability in some markets.
• Other risk factors set out herein.
For instance, in the People’s Republic of China (the “PRC”), the Internet sector is strictly regulated in terms
of foreign ownership and content restrictions. While many aspects of these regulations remain unclear,
they purport to limit and require licensing of various aspects of the provision of Internet information
services. These regulations have created substantial uncertainties regarding the legality of foreign
investments and business operations in the PRC for companies who have consulting activities related to
the Internet. We have the license enabling us to operate an e-commerce network in the PRC. It is however
possible that we could cease to qualify as an authorized recipient of this license and that we could be
unable to renew the license at the expiration of its term.
In these emerging countries where we operate, changes in laws, regulations or governmental policy, or the
uncertainty associated with the interpretation of these laws and regulations affecting our business
activities, may increase our costs, restrict our ability to operate our business or may make it difficult for us
to enforce any rights we may have or to know if we are in compliance with all applicable laws, rules and
regulations. Political, economic, social or other developments in the countries where we operate may
cause us to change the way we conduct our business, suspend the launch of new or expanded services or
force us to discontinue our operations altogether.
ECONOMIC CONDITIONS
Adverse economic conditions could result in a decline in our revenues. During an economic downturn, our
customers and potential customers may cancel, postpone or delay their new commitments, which would
affect the performance of the Company.
FOREIGN EXCHANGE
Our revenues are affected by fluctuations in the exchange rate between the Canadian dollar and the U.S.
dollar. We generate approximately 34% of our revenues in U.S. dollars while approximately 15% of our
operating expenses and cost of revenues are in U.S. dollars. As a result, any decrease in the value of the U.S.
dollar relative to the Canadian dollar reduces the amount of Canadian dollar revenues we realize on sales,
without a corresponding decrease in expenses. Exchange rate fluctuations are beyond our control, and the
U.S. dollar may depreciate against the Canadian dollar in the future, which would result in lower revenues
and margins. In order to reduce the potential negative effect of a weakening U.S. dollar, we have entered
into agreements to hedge the value of a portion of our future U.S. dollar net cash inflows for periods of up
to 18 months.
19
LIQUIDITY AND FINANCING RISKS
Our strategy aims to foster the organic growth of our operations and to make acquisitions. This strategy
requires investments, which may come from cash from our operations, loans from credit agreement and
issuance of securities from our capital stock. Our access to such funding sources may be limited by the
ability of financial markets to meet our needs and the volatility of our stock price. If we are not able to
obtain financing or if our cash flow does not allow us to repay our existing indebtedness according to the
targets that we have fixed for ourselves, we might not achieve our growth objectives. In addition, rising
interest rates could harm our ability to repay our debt, pay dividends and to execute our strategy
accordingly.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements in accordance with IFRS requires management to
make estimates and assumptions that affect the reported amounts of revenues and expenses during the
year and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements. Management reviews its estimates regularly, and
revisions to accounting estimates are recognized in the period in which the estimate is revised, if the
revision affects only that period, or in the period of the revision and future periods if the revision affects
both the period being reviewed and future periods. Actual results may differ from these estimates.
ESTIMATES
In preparing consolidated financial statements in accordance with IFRS, management must exercise
judgment when applying accounting policies and rely on assumptions and estimates that affect the
amounts of the assets, liabilities, revenues and expenses reported in these consolidated financial
statements and on the contingent liability and contingent asset information provided. The actual results of
items subject to assumptions and estimates may differ from these assumptions and estimates.
Explanations about the main assumptions and estimates are presented below:
Revenue recognition
As mentioned in Note 2 to the Company’s audited consolidated financial statements for fiscal year ended
March 31, 2015, the Company uses assumptions to recognize some of the revenues from rights of use i.e.
the sale of classified ad packages. Management reviews these assumptions on a regular basis. Significant
changes in these assumptions will have an impact on the Company’s profit.
Useful lives of property, plant and equipment and finite life intangible assets
At the end of each reporting period, the Company reviews the estimated useful lives of its property, plant
and equipment and finite-life intangible assets. At the end of the fiscal year, management has determined
that the useful lives of property, plant and equipment and finite-life intangible assets were appropriate.
Measurements of assets
When applying the discounted future cash flows model to determine the fair value of groups of cash
generating units to which goodwill is allocated, certain parameters must be used, including estimates of
future cash flows, discount rates and other variables; a high degree of judgment must therefore be
exercised. Impairment tests on property, plant and equipment and indefinite-life intangible assets are also
based on similar assumptions. Any future deterioration of market conditions or poor operational
performance could translate into an inability to recover the current carrying amounts of property, plant
and equipment and intangible assets.
20
See Note 13 to the Company’s audited consolidated financial statements for fiscal year ended
March 31, 2015 for more information on goodwill impairment testing and Note 12 for the test of indefinite-
life intangible assets.
Business combinations
For business combinations, the Company must make assumptions and estimates to determine the
purchase price allocation of the business being acquired. To do so, the Company must determine the
acquisition-date fair values of the identifiable assets acquired and liabilities assumed. Goodwill is
measured as the excess of the acquisition cost over the Company’s share in the fair value of all identified
assets and liabilities. These assumptions and estimates have an impact on the asset and liability amounts
recorded in the Consolidated Statement of Financial Position on the acquisition date. In addition, the
estimated useful lives of the acquired property, plant and equipment, the identification of other intangible
assets and the determination of the finite or indefinite useful lives of intangible assets acquired will have
an impact on the Company’s profit.
See Note 2 to the Company’s audited consolidated financial statements for fiscal year ended
March 31, 2015 for more information on the assumptions and estimates used.
Deferred taxes
The Company is required to estimate the income taxes in each of the jurisdictions in which it operates.
This includes estimating a value for existing net operating losses based on the Company’s assessment of
its ability to utilize them against future taxable income before they expire. If the Company’s assessment of
its ability to use the net operating losses proves inaccurate, this would impact the income tax expense
and, consequently, affect the Company’s profit in the relevant year. The Company may be audited by the
tax authorities of different jurisdictions. Given that the determination of tax liabilities involves certain
uncertainties in interpreting complex tax regulations, the Company uses management’s best estimates to
determine potential tax liabilities. Differences between the estimates and the actual amount of taxes are
recorded in profit at the time they can be determined.
JUDGMENTS
The critical accounting policy judgments that have the greatest impact on amounts reported in the
consolidated financial statements include the following:
Definition of cash-generating units
The Company assesses whether there are any indicators of impairment for all non-financial assets at the
end of each financial reporting period. If such indication exists, the recoverable amount is estimated in
order to determine the extent of the impairment loss (if any). When it is not possible to estimate the
recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-
generating unit to which the asset belongs. Determination of cash-generating units is based on
management’s best estimate of what constitutes the lowest level at which an asset or group of assets is
able to generate cash inflows. The Company must also determine whether goodwill can be attributed to
one or more cash-generating units.
See Note 13 to the Company’s audited consolidated financial statements for fiscal year ended
March 31, 2015, for more information on attributions of goodwill to cash-generating units and Note 12 for
the attribution of indefinite-life intangible assets to cash-generating units.
21
FUTURES CHANGES IN ACCOUNTING POLICIES
IFRS 9 FINANCIAL INSTRUMENTS
On July 24, 2014, the IASB issued the final version of IFRS 9 Financial Instruments (“IFRS 9”), which replaces
IAS 39 Financial Instruments: Recognition and Measurement. This final version of IFRS 9 represents the
completion of this project and it includes requirements for recognition and measurement, impairment,
derecognition and general hedge accounting. IFRS 9 does not address the specific accounting for open
portfolios or macro hedging, as these items are part of a separate IASB project that is currently ongoing.
This final Standard introduces a single, principles-based approach that amends both the categories and
associated criteria for the classification and measurement of financial assets, which is driven by the entity’s
business model for the portfolio in which the assets are held and the contractual cash flows of these
financial assets. Certain amendments have been made to the financial asset classification and
measurement principles in prior versions of IFRS 9. This Standard introduces an amended hedging model
which aligns hedge accounting more closely with an entity’s risk management activities and also includes
a new financial asset impairment model which has an expanded scope, is based on expected credit losses
rather than incurred credit losses and generally will result in earlier recognition of losses. This new
Standard supersedes all prior versions of IFRS 9. The Company has not yet examined the impacts of this
new standard. IFRS 9 will apply to the Company for the annual period beginning on April 1, 2018
IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS
IFRS 15 Revenue from Contracts with Customers establishes principles for reporting useful information to
users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows
arising from an entity’s contracts with customers. The core principle of the new Standard is for companies
to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the
consideration to which the Company expects to be entitled in exchange for those goods or services. The
new Standard will also result in enhanced disclosures about revenue, provide guidance for transactions
that were not previously addressed comprehensively (for example, service revenue and contract
modifications) and improve guidance for multiple-element arrangements. The Company has not yet
examined the impacts of this new standard. IFRS 15 will apply to the Company tentatively for the annual
period beginning on April 1, 2018.
FORWARD-LOOKING STATEMENTS
This MD&A contains certain forward-looking statements with respect to the Company. These statements,
by their nature, necessarily involve risks and uncertainties that could cause actual results to differ
materially from those expected by these forward-looking statements. The Company considers the
assumptions on which these forward-looking statements are based to be reasonable, but caution the
reader that these assumptions regarding future events, many of which are beyond the control of the
Company, may ultimately prove to be incorrect since they are subject to the risks and uncertainties that
affect the Company. The Company disclaims any intention or obligation to update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise, except as required
by applicable securities legislation.
CONTROLS AND PROCEDURES
In accordance with the Canadian Securities Administrators’ Regulation 52-109 respecting Certification of
Disclosure in Issuers’ Annual and Interim Filings, certificates signed by the President and Chief Executive
Officer and the Chief Financial Officer have been filed. These documents confirm the adequacy of controls
and procedures for disclosure of the Company and the design and effectiveness of its internal controls
regarding financial reporting.
22
DISCLOSURE CONTROLS AND PROCEDURES
The disclosure controls and procedures of the Company have been designed in accordance with the rules
of the Canadian Securities Administrators in order to provide reasonable assurance that material
information related to the Company is made known to the Audit Committee and the Board of Directors
and information required to be disclosed in the Company’s filings is recorded, processed, summarized and
reported within the time period specified in securities legislation.
Under the supervision of the President and Chief Executive Officer and the Chief Financial Officer,
management has evaluated the effectiveness of the Company’s disclosure controls and procedures in
accordance with the rules of the Canadian Securities Administrators and has concluded that such
disclosure controls and procedures are efficient for the fiscal year ended March 31, 2015.
INTERNAL CONTROL OVER FINANCIAL REPORTING
The internal control over financial reporting has been designed in order to provide reasonable assurance
that the financial information reported is reliable and that the financial statements were prepared in
accordance with the Company’s IFRS.
Under the supervision of the President and Chief Executive Officer and the Chief Financial Officer,
management has evaluated the design and the effectiveness of the Company’s internal control over
financial reporting and has concluded that such controls were efficient for the fiscal year ended
March 31, 2015.
There were no changes in internal control over financial reporting of the Company which has had, or is
reasonably likely to materially affect, the Company's internal control over the financial information.
ADDITIONAL INFORMATION
This report has been prepared as at June 9, 2015.
As of that date, the number of common shares outstanding was 15,542,255.
Additional information relating to the Company, including the Annual Information Form, is available on
SEDAR at www.sedar.com.
23
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND MARCH 31, 2014
MANAGEMENT’S REPORT
TO THE SHAREHOLDERS OF
MEDIAGRIF INTERACTIVE TECHNOLOGIES INC. / TECHNOLOGIES INTERACTIVES MEDIAGRIF INC.
The consolidated financial statements of Mediagrif Interactive Technologies Inc./Technologies Interactives
Mediagrif Inc. (the “Company”) as well as the information provided in the Management’s Discussion and
Analysis are the responsibility of management and are approved by the Board of Directors.
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS). In accordance with these standards, management makes estimates and
assumptions that are reflected in the consolidated financial statements and accompanying notes to the
consolidated financial statements.
To provide assurance that the consolidated financial statements are, in all material respects, accurate and
complete, management relies on an internal control system.
The internal control system includes management’s communication of the internal policies on ethical
business conduct to employees. In management’s opinion, the internal controls provide reasonable
assurance that its financial documents are reliable and form a sound basis for preparing consolidated
financial statements, and that its assets are properly accounted for and safeguarded.
The Board of Directors carries out its financial reporting responsibilities mainly through its Audit
Committee, which is made up solely of independent directors. The Audit Committee, management and
external auditors meet to review the consolidated financial statements and the internal controls over
financial reporting. The Audit Committee reviews the Company’s annual consolidated financial statements
and makes appropriate recommendations that the Board of Directors must consider when approving the
consolidated financial statements issued to the shareholders. The external auditors have free access to the
Audit Committee, with or without the presence of management.
Deloitte LLP, appointed by the shareholders as the Company’s independent auditor, have audited these
consolidated financial statements.
Claude Roy
President and Chief Executive Officer
Paul Bourque
Chief Financial Officer
June 9, 2015
24
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF MEDIAGRIF INTERACTIVE TECHNOLOGIES INC. / TECHNOLOGIES
INTERACTIVES MEDIAGRIF INC.
We have audited the accompanying consolidated financial statements of Mediagrif
Interactive
Technologies Inc., which comprise the consolidated statements of financial position as at March 31, 2015
and March 31, 2014, and the consolidated statements of income, the consolidated statements of
comprehensive income, the consolidated statements of changes in shareholders’ equity and the
consolidated statements of cash flows for the years ended March 31, 2015 and March 31, 2014, 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s 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 auditor considers 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 during 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 Mediagrif Interactive Technologies Inc. as at March 31, 2015 and March 31, 2014, and its financial
performance and its cash flows for the years ended March 31, 2015, and March 31, 2014, in accordance with
International Financial Reporting Standards.
June 9, 2015
Montreal, Canada
1 CPA auditor, CA, public accountancy permit No. A118581
25
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2015 AND MARCH 31, 2014
In thousands of Canadian dollars, except per share amount
Revenues (Note 6)
Cost of revenues
Gross margin
Operating expenses
General and administrative (Note 7)
Selling and marketing
Technology (Note 17)
Operating profit
Other revenues, net amount (Note 22 b))
Financial expenses, net amount (Note 22 c))
Share of profit of a joint venture (Note 9)
Profit before income taxes
Income tax expense (Note 20)
Profit for the year
Earnings per share
Basic and diluted
Weighted-average number of shares outstanding
Basic and diluted
Number of shares outstanding at end of year
2015
$
70,247
13,972
56,275
8,475
14,637
12,303
35,415
20,860
1,174
(1,075)
217
21,176
5,543
15,633
2014
$
65,376
13,856
51,520
8,571
14,110
11,748
34,429
17,091
879
(1,194)
162
16,938
4,227
12,711
1.00
0.80
15,711,474
15,833,227
15,542,255
15,817,355
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED MARCH 31, 2015 AND MARCH 31, 2014
In thousands of Canadian dollars
Profit for the year
Items that may be reclassified subsequently in profit or loss
Change in unrealized losses on foreign currency forward contracts
designated as hedging items, net of deferred taxes of $378 ($238 in 2014)
Reclassification of realized losses on foreign currency forward contracts, net of
deferred taxes of $173 ($91 in 2014)
Comprehensive income for the year
2015
$
15,633
2014
$
12,711
(1,028)
(648)
471
(557)
15,076
246
(402)
12,309
Refer to the notes to the consolidated financial statements.
26
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT MARCH 31, 2015, MARCH 31, 2014
In thousands of Canadian dollars
Assets
Current assets
Cash and cash equivalents
Cash held for the benefit of third parties (Note 10)
Accounts receivable (Note 24)
Tax credits receivable
Prepaid expenses and deposits
Non-current assets
Property, plant and equipment (Note 11)
Intangible assets (Note 12)
Acquired intangible assets (Note 12)
Goodwill (Note 13)
Investment in a joint venture (Note 9)
Deferred taxes (Note 20)
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Other accounts payable (Note 10)
Income taxes payable
Deferred revenues
Derivative financial instruments
Current portion of deferred lease inducement
Non-current liabilities
Long-term debt (Note 14)
Deferred lease inducement
Deferred taxes (Note 20)
Shareholders’ equity
Share capital (Note 15)
Reserves
Retained earnings
As at
As at
March 31,
2015
$
March 31,
2014
$
7,546
666
5,691
3,947
1,986
19,836
2,084
1,719
60,704
100,280
587
5,945
191,155
6,861
1,229
1,084
16,473
1,431
150
27,228
26,100
661
15,063
69,052
81,695
2,167
38,241
122,103
191,155
6,937
905
6,598
4,267
2,368
21,075
2,356
549
65,675
100,280
370
5,860
196,165
6,202
1,657
482
16,175
669
124
25,309
36,920
733
14,945
77,907
83,141
2,724
32,393
118,258
196,165
Approved by the Board of Directors,
Refer to the notes to the consolidated financial statements
Gilles Laurin
Director
Claude Roy
Director
27
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
YEARS ENDED MARCH 31, 2015 AND MARCH 31, 2014
For the year ended March 31, 2015
Reserves
In thousands of Canadian dollars
Balance as at March 31, 2014
Profit for the year
Other comprehensive income
for the year, net of income tax
Comprehensive income for the
year
-
-
-
Repurchase of common shares
for cancellation (Note 15)
Dividends declared on common
shares
Balance as at March 31, 2015
(1,446)
-
81,695
Equity-
settled
employee
benefits
$
3,213
Share
capital
$
83,141
Cash flow
hedging
Total
Retained
earnings
Total
$
$
$
$
(489)
2,724
32,393
118,258
-
-
15,633
15,633
(557)
(557)
-
(557)
(557)
(557)
15,633
15,076
-
-
(3,511)
(4,957)
-
3,213
-
(1,046)
-
2,167
(6,274)
38,241
(6,274)
122,103
For the year ended March 31, 2014
Reserves
Equity-
settled
employee
benefits
$
3,213
Share
capital
$
83,227
-
-
-
(86)
-
83,141
Cash flow
hedging
Total
Retained
earnings
Total
$
$
$
$
(87)
3,126
26,242
112,595
-
-
12,711
12,711
(402)
(402)
-
(402)
(402)
(402)
12,711
12,309
-
-
(226)
(312)
-
3,213
-
(489)
-
2,724
(6,334)
32,393
(6,334)
118,258
Refer to the notes to the consolidated financial statements.
In thousands of Canadian dollars
Balance as at March 31, 2013
Profit for the year
Other comprehensive income
for the year, net of income tax
Comprehensive income for the
year
Repurchase of common shares
for cancellation (Note 15)
Dividends declared on common
shares
Balance as at March 31, 2014
28
-
-
-
-
-
-
-
-
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2015 AND MARCH 31, 2014
In thousands of Canadian dollars
CASH FLOWS RELATED TO
Operating activities
Profit for the year
Adjustments for the following items:
Amortization and depreciation (Note 18)
Amortization of deferred lease inducement
Amortization of deferred financing costs
Interest expense
Foreign exchange
Share of profit of a joint venture
Deferred taxes
Loss on disposal of property, plant and equipment
Income tax expense recognized in profit
Changes in non-cash working capital items (Note 22 a))
Interest paid
Income taxes paid
Investing activities
Consideration transferred on business combination, net of
acquired cash (Note 7)
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds on disposal of property, plant and equipment
Financing activities
Increase of long-term debt
Repayment of long-term debt
Repurchase of share capital for cancellation (Note 15)
Lease inducement received
Cash dividends paid on common shares
Net change in cash and cash equivalents for the year
Impact of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents consist of the following statement of financial
position items:
Cash and cash equivalents
Cash held for the benefit of third parties
2015
$
2014
$
15,633
12,711
6,557
(125)
120
955
(1,432)
(217)
777
-
4,766
2,134
(922)
(4,164)
24,082
7,202
(124)
190
1,019
(636)
(162)
844
5
3,383
2,448
(1,104)
(3,540)
22,236
-
(59,146)
(766)
(1,718)
-
(1,061)
(314)
3
(2,484)
(60,518)
-
(10,940)
(4,957)
79
(6,302)
(22,120)
(522)
892
7,842
8,212
7,546
666
56,000
(19,017)
(312)
-
(6,334)
30,337
(7,945)
636
15,151
7,842
6,937
905
Refer to the notes to the consolidated financial statements.
29
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2015 AND MARCH 31, 2014
1
INCORPORATION AND NATURE OF OPERATIONS
Mediagrif Interactive Technologies Inc. (the “Company”) provides e-business solutions to consumer and
businesses. It operates its activities through its wholly-owned subsidiaries. The Company also owns
interests in a joint venture (Note 9).
The Company, incorporated on February 16, 1996, under the Canada Business Corporations Act, is listed on
the Toronto Stock Exchange. Its head office is located at 1111 St-Charles West, East Tower, Suite 255,
Longueuil, Québec, Canada.
The Board of Directors approved the consolidated financial statements on June 9, 2015. Amounts are
expressed in Canadian dollars, unless indicated otherwise.
2
SIGNIFICANT ACCOUNTING POLICIES
STATEMENT OF COMPLIANCE
The significant accounting policies described below have been applied to all periods presented in these
financial statements. The accounting policies are consistent with International Financial Reporting
Standards (IFRS) and interpretations currently issued and outstanding, relating to fiscal year ended
March 31, 2015.
BASIS OF PREPARATION
The consolidated financial statements have been prepared on a historical cost basis except for certain
financial instruments that are measured at fair value, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for assets. These
consolidated financial statements have been prepared on a going-concern basis. The principal accounting
policies are set out below.
SCOPE AND BASIS OF CONSOLIDATION
These consolidated financial statements include the accounts of the Company and its subsidiaries.
Participation in a joint venture is recognized using the equity method.
Subsidiaries
All of the subsidiaries are wholly owned by the Company, directly or indirectly.
These consolidated financial statements include the financial statements of the Company and those of
the entities it controls (its subsidiaries).
Entities are included in the scope of consolidation from the date the Company acquires control and until
that control ceases. The total comprehensive income of the subsidiaries is attributed to the Company’s
owners.
All intra-group transactions, balances, revenues and expenses are fully eliminated upon consolidation.
30
Interest in joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
Joint venture arrangements that involve the creation of a separate entity in which each venturer has an
interest are referred to as jointly-controlled entities.
The Company accounts for its interests in a joint venture using the equity method, except when the
interest is classified as held for sale, in which case it is accounted for using IFRS 5 Non-Current Assets Held
for Sale and Discontinued Operations. The Company records its share of the result of the joint venture.
Any goodwill that comes from the Company’s acquisition of an interest in a jointly-controlled entity is
recognized using the accounting policy that the Company uses to recognize goodwill from a business
combination.
Transactions between the Company and its joint venture have been measured to the amount of
consideration agreed to by the parties.
FOREIGN CURRENCY TRANSLATION
The Company’s functional and presentation currency is the Canadian dollar. The functional currency of all
the Company’s entities is also the Canadian dollar.
Transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at
the rates of exchange prevailing on the transaction dates.
Monetary items are translated at the rate in effect on the reporting date, and non-monetary items, and the
related amortization, are translated at their historical rate, whereas revenues and expenses are translated
at the average exchange rate for the year. Foreign exchange gains and losses are included in Other
revenues (expenses).
FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized when a Company’s entity becomes party to the contractual
provisions of a financial instrument.
Financial assets and liabilities are initially measured at fair value. Transaction costs directly attributable to
the acquisition or issuance of financial assets and liabilities (other than financial assets and liabilities
measured at fair value through profit or loss) are either added to or deducted from, whichever the case,
the fair value of financial assets or liabilities upon initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or liabilities measured at fair value through profit or loss are
immediately recognized in profit.
The Company derecognizes financial assets and liabilities if, and only if, its obligations have been settled,
cancelled or have expired. A financial asset is derecognized if the contractual rights on the related cash
flows are expiring, or if the asset is transferred and the transfer may be subject to derecognition.
Effective interest rate method
The effective interest rate method is a method of calculating the amortized cost of a financial asset or
liability and of allocating the interest income or interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash flows (including all commissions that
are an integral part of the effective interest rate, transaction costs and other premiums or discounts) over
the expected life of the financial asset or liability or, when appropriate, a shorter period.
31
Transaction costs consist primarily of legal, accounting, and underwriter fees and other costs directly
attributable to the issuance of the related financial instruments.
Deferred financing costs
Financing costs paid during the establishment of the Revolving Facility are recognized against the long-
term debt and amortized using the effective interest rate method over the expected term of the Revolving
Facility. When the Revolving Facility is paid in full, the deferred financing costs are presented as an asset
because they are attached to a revolving facility that still exists and is still available for use.
Impairment loss on financial assets
Financial assets, other than assets measured at fair value through profit or loss, are tested for impairment
at each reporting date. Financial assets are impaired if there is objective evidence of impairment as a
result of one or more events that occurred after the initial recognition of the financial asset on the
estimated future cash flows of the asset. For certain classes of financial assets, such as accounts receivable,
those assets that do not incur impairment losses individually are then collectively assessed for impairment.
For financial assets recognized at amortized cost, the impairment loss is measured as the difference
between the asset’s carrying value and the present value of estimated future cash flows discounted at the
financial asset’s original effective interest rate.
The carrying value of the asset is directly reduced by the impairment for all financial assets, with the
exception of accounts receivable, whose carrying value is reduced through the use of an allowance
account.
Aside from equity instruments and available-for-sale debt instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be objectively tied to an event occurring
after the impairment was recognized, the previously recognized impairment loss is reversed through the
income statement to the extent the carrying value of the asset at the date the impairment is reversed
does not exceed what the amortized cost would have been had the impairment not been recognized.
Classification and measurement
The Company classifies financial instruments into categories based on their nature and characteristics.
Management determines where to classify financial instruments when they are initially recognized, which
is usually the transaction date.
The Company has made the following classifications:
• Cash and cash equivalents and accounts receivable are classified as loans and receivables and are
measured at amortized cost.
• Derivative financial instruments that are not designated in hedge relationships are classified as
assets and liabilities at fair value through profit or loss and are measured at fair value. Gains and
losses from the periodic remeasurement are recognized in profit or loss.
• Accounts payable and accrued liabilities, other accounts payable and long-term debt are
classified as other financial liabilities and are measured at amortized cost.
Derivative financial instruments and hedge accounting
A portion of the Company’s revenues and operating expenses is denominated in U.S. dollars. The Company
uses foreign currency forward contracts to eliminate or reduce the risks of exchange rate fluctuations that
have an impact on a portion of these revenues. Management is responsible for setting acceptable levels of
risk and does not use derivative financial instruments for speculative purposes. More detailed information
on derivative financial instruments is provided in Note 24.
32
The fair value of instruments that qualify for cash flow hedging is reported on the Consolidated Statement
of Financial Position. The change in fair value related to the effective portion of the hedge of derivative
financial instruments denominated in U.S. dollars used as a cash flow hedge of anticipated revenues
denominated in U.S. dollars is recognized in other comprehensive income and recognized in profit or loss
when the hedged item affects profit or loss. The effectiveness of the hedging relationships is measured
both at the inception of the hedge and on an ongoing basis.
When a hedging relationship ceases to be effective, the corresponding gains and losses presented in
accumulated other comprehensive income are recognized in the profit or loss of the period during which
the hedging relationship ceases to be effective.
A derivative is presented as a non-current asset or a non-current liability if the remaining term to maturity
of the instrument is over 12 months and if it is not expected to be realized or settled within 12 months. The
other derivatives are presented as current assets or current liabilities.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash, bank balances and liquid investments that are readily convertible
in the short-term and have a maturity date of less than three months from the date of acquisition, into a
known amount of cash and for which the risk of a variation in value is negligible.
REBATES AND ACCOUNTS RECEIVABLE AND PAYABLE ARISING FROM DISPOSITIONS AND FROM
ESCROW TRANSACTIONS
The Company’s services include administering a rebate program and running a used equipment trade-in
program for certain customers. As part of these services, the Company frequently receives cash from
customers (in the case of the rebate program) and from used equipment resellers. This cash, minus related
commissions earned by the Company, must be remitted to the other party to the transaction. Financial
statement amounts related to these transactions are described in Note 10.
The amount received up to the reporting date but not remitted to the other party is presented on the
Consolidated Statement of Financial Position as Cash held for the benefit of third parties.
The Company also offers an escrow service. As part of this service, the Company is named as an escrow
agent to receive, hold and transfer funds. The Company receives cash that is released, minus any related
fees, costs or charges, once the transaction between seller and buyer is finalized. The cash received is also
presented on the Consolidated Statement of Financial Position as Cash held for the benefit of third parties.
The corresponding amount is presented on the Consolidated Statement of Financial Position as Other
accounts payable.
REVENUE RECOGNITION
Revenues derived from e-business industry are generated from the rights of use, transaction fees,
advertising, software development as well as from integration, maintenance and hosting services. In all
cases, revenues generated in the normal course of business are measured at the fair value of the
consideration received or receivable. Revenues are recognized only when there is persuasive evidence that
an arrangement exists, delivery has occurred or the service has been rendered, the price is fixed or
determinable, and collection of the related receivable is reasonably assured. Revenues arising from an
agreement to render services are recognized based on the stage of completion of the contract. Where
applicable, rebates and similar deductions are deducted from revenues.
33
In addition to these general revenue-recognition policies, the following specific revenue-recognition
policies are applied to the Company’s main sources of revenue:
• Revenues from rights of use are recognized on a straight-line basis over the term of the agreement
or in some cases, when the service is used. Certain rights of use revenues are generated from the
sale of classified ad packages. These revenues are recognized on a straight-line basis over the
estimated life as of the date the ad is posted. The estimated life is determined based on historical
data for each type of ad. An estimate based on the historical data is also used to determine ads
that will never be posted, and consequently are recognized as revenue upon receipt of payment.
•
Transaction fees are recognized when the transaction occurs.
• Revenues from advertising are recognized on a straight-line basis over the term of the campaign.
•
Software development revenues are recognized using the percentage-of-completion method. The
degree of completion is determined by dividing the cumulative costs incurred at the closing date
by the sum of incurred and estimated costs to complete the contract.
• Revenues from integration, maintenance and hosting services are recognized on a straight-line
basis over the term of the agreement.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recognized at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is recognized over the estimated useful lives of the related assets using
the following methods and periods:
Office furniture
Computer and other equipment
Leasehold improvements
Method
Straight-line
Straight-line
Straight-line
Period
3 years
3 years
Term of the lease
The estimated useful lives, residual values and depreciation methods are reviewed at the end of each
financial reporting period, and the impact of any change in estimate is accounted for on a prospective
basis.
Items of property, plant and equipment are derecognized upon disposal when no future economic
benefits are expected to arise from the continued use of the asset. A gain or loss arising on the disposal or
retirement of an item of property, plant and equipment is the difference between the sales proceeds and
the carrying amount of the asset and is recognized in profit or loss in Other revenues (expenses).
IMPAIRMENT OF LONG-LIVED ASSETS, EXCLUDING GOODWILL
At the end of each financial reporting period, the Company reviews the carrying amounts of its property,
plant and equipment and finite-life intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the amount of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and
consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-
generating units; otherwise, they are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets not yet available for use are tested for impairment at least once a year and whenever
there is an indication that the asset may be impaired.
34
Certain trademarks acquired in business combinations have been identified as having indefinite lives as
they are highly recognizable in the market and there is no foreseeable time limit to their ability to
generate revenues.
Cash-generating units to which indefinite-life trademarks have been allocated are tested for impairment
annually or more frequently when there is indication that the unit may be impaired. If the recoverable
amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated
proportionately across the assets of the unit.
Recoverable amount is the higher of fair value less costs of disposal and value in use. To measure value in
use, estimated future cash flows are discounted to their present value using a discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable
amount. An impairment loss is immediately recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating
unit) is increased to the revised estimate of its recoverable amount to extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
immediately recognized in profit or loss.
INTANGIBLE ASSETS
Intangible assets comprise software and acquired intangible assets.
Software
Some software are purchased to meet the Company’s technology needs and are recognized at cost less
accumulated amortization and accumulated impairment losses. Intangible assets also include costs to
produce internally-developed software and websites, including the portion of capitalized personnel costs
of the Company’s development group. These costs include all of the expenses incurred starting from the
date when all the capitalization criteria is met. Where no internally-generated intangible asset can be
recognized, development expenses are recognized in profit or loss in the period they are incurred. After
initial recognition,
less accumulated
amortization and accumulated impairment losses. These costs are amortized on a straight-line basis over
their estimated useful lives ranging from three to five years.
intangible assets are recorded at cost
internally-generated
Acquired intangible assets
Acquired intangible assets consist of client bases, technologies, finite- and indefinite-life trademarks and
databases acquired from business acquisitions. They are recorded at cost (i.e., the acquisition-date fair
value), less accumulated impairment losses and amortization. Acquired intangible assets, except for
indefinite-life trademarks that are not amortized but are assessed for impairment annually, are amortized
on a straight-line basis over their respective estimated useful lives, using the following periods:
Category
Client bases
Technologies
Finite-life trademarks
Databases
Period
3 to 10 years
3 to 5 years
10 years
5 years
35
The estimated useful lives and amortization methods of intangible assets are reviewed at the end of each
financial reporting period, and the impact of any change in estimates is accounted for on a prospective
basis.
Intangible assets are derecognized upon disposal or when no future economic benefits are expected from
their use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the
difference between the net proceeds from the disposal of the asset and its carrying amount, are
recognized in profit or loss when the asset is derecognized.
Internally-generated assets
Technology expenses are expensed as incurred, except for certain internally-developed software and
website costs, in particular enhancements to the Company’s websites, which are capitalized when the
criteria related to future economic benefits and measurement of cost are met. In which case these costs
are amortized over a period ranging from three to five years. Amortization of internally-developed software
and websites is included in technology expenses.
BUSINESS COMBINATIONS
Business acquisitions are accounted for under the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair
values of the assets transferred by the Company, liabilities incurred by the Company to the former owners
of the acquiree, and the equity interests issued by the Company in exchange for control of the acquiree.
Acquisition-related costs are generally recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at the
acquisition-date fair value, except that:
• Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements
are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits, respectively.
•
Liabilities or equity instruments related to share-based payment arrangements of the acquiree or
share-based payment arrangements of the Company entered into to replace share-based
payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-Based
Payment at the acquisition date.
• Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-
Current Assets Held for Sale and Discontinued Operations are measured in accordance with that
standard.
Deferred revenues from business combinations are recognized at fair value. This corresponds to the future
costs to perform the services, the collection of which took place before the acquisition, plus a profit
margin. This profit margin is the average margin the Company realized for the delivery of the same kind of
service.
36
The fair value of acquired intangible assets is determined as follows:
Trademarks are recognized at fair value according to the avoided royalties’ method. Acquired technology
is evaluated using the replacement cost method. It estimates the cost to rebuild a platform by adding the
estimated loss of profits during the reconstruction. The multiperiod excess earnings method is used to
calculate the value of customer relationships. The avoided royalties method, the replacement cost
method and the multi-period excess earnings method are all primarily based upon expected discounted
cash flows according to currently available information, such as historical and projected revenues, the
probability of renewal of each contract and certain other relevant assumptions.
Goodwill is measured as the excess of the total consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any) over the net balance of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed. If, after remeasurement, the net balance of the acquisition-date amounts
of the identifiable assets acquired and liabilities assumed exceeds the total consideration transferred, the
amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously-held
interest in the acquiree (if any), the excess amount is recognized immediately in profit or loss as a bargain
purchase gain.
GOODWILL
Goodwill arising from a business combination is recognized at cost as established at the date of
acquisition of the business (see Business Combinations) less accumulated impairment losses, if any.
For impairment testing purposes, goodwill is allocated to each of the Company’s cash-generating units (or
groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more
frequently when there is an indication that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than its carrying amount, the impairment loss is first allocated to reduce the
carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata
basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is
recognized directly in profit or loss of the Consolidated Statement of Income. An impairment loss
recognized for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
The Company has selected March 31 as the date for performing its annual impairment test for goodwill.
PROVISIONS
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of
a past event, when it is probable that the Company will be required to settle the obligation, and when a
reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the
present obligation at the end of the financial reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of those cash flows.
LEASES
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
37
The Company as a lessee of an operating lease
Operating lease payments are recognized as an expense on a straight-line basis over the lease term,
except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed. Contingent rentals arising under operating leases are
recognized as an expense in the period in which they are incurred.
When lease incentives are received to enter into operating leases, such incentives are recognized as a
liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-
line basis, except where another systematic basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed.
Deferred lease inducements
Deferred lease inducements refer to the reimbursement of leasehold improvement expenses and free or
preferential rent assumed by the landlord under leases for commercial premises. These inducements are
amortized on a straight-line basis over the terms of the leases falling due in April 2016, in October 2020
and in May 2022. Amortization is recorded as a reduction of the rent expense in the Consolidated
Statement of Income.
The Company as a lessee of a finance lease
Assets held under finance leases are initially recognized as Company assets at fair value starting from the
inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding
liability to the lessor is included in the Consolidated Statement of Financial Position as a finance lease
obligation. Lease payments are apportioned between finance expenses and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
expenses are recognized directly in profit or loss, unless they are directly attributable to qualifying assets; in
which case they are capitalized in accordance with the Company’s general policy on borrowing costs.
Contingent rentals are recognized as expenses in the periods in which they are incurred.
INCOME TAXES
Income tax expense is the sum of current taxes and deferred taxes.
Current taxes
Current tax payable is based on taxable income for the year. Taxable income and income reported in the
Consolidated Statement of Income differ due to revenue or expense items that are taxable or deductible
in other years and items that are never taxable or deductible. The Company’s liability for current taxes is
calculated using tax rates that have been enacted or substantively enacted by the end of the financial
reporting period.
Deferred taxes
The Company recognizes income taxes using the asset-liability approach. Under this method, deferred tax
assets and liabilities are determined based on deductible or taxable temporary differences between the
carrying amounts and tax bases of assets and liabilities using enacted or substantively enacted tax rates
expected to be in effect in the year in which the differences are expected to reverse. Such deferred tax
assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that
affects neither the taxable income nor the accounting income.
38
The carrying amount of deferred tax assets is reviewed at the end of each financial reporting period and is
reduced when it is no longer probable that sufficient taxable income will be available to allow all or part of
the asset to be recovered.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Company expects, at the end of the financial reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Current and deferred taxes for the year
Current and deferred taxes are recognized in profit or loss, except when they relate to items that have
been recognized in other comprehensive income or directly in equity, in which case the current and
deferred taxes are also recognized, respectively, in other comprehensive income or directly in equity.
Where current taxes or deferred taxes arise from the initial accounting for a business combination, the tax
impact is included in the accounting for the business combination.
TAX CREDITS
Tax credits, including research and development tax credits, are not recognized until there is reasonable
assurance that the Company will meet the eligibility criteria of the credits and that they will be received.
Tax credits are recognized as a deduction to the related expenses in the year they are incurred.
EMPLOYEE BENEFITS
Salaries, employee benefits, paid leave, sick leave and bonuses are short-term benefits that are recognized
in the period in which the Company’s salaries have rendered the related services.
39
3
NEW AND REVISED IFRS, ISSUED BUT NOT YET EFFECTIVE
Standard and
interpretation
Effective date for
the Company
Presentation and impact on the Company
IFRS 9 Financial
Instruments
Annual period
beginning on
April 1, 2018
IFRS 15 Revenue
from Contracts
with Customers
Tentatively for
the annual period
beginning on
April 1, 2018
On July 24, 2014, the IASB issued the final version of IFRS 9 Financial
Instruments (“IFRS 9”), which replaces IAS 39 Financial Instruments:
Recognition and Measurement. This final version of IFRS 9 represents
the completion of this project and it includes requirements for
recognition and measurement,
impairment, derecognition and
general hedge accounting. IFRS 9 does not address the specific
accounting for open portfolios or macro hedging, as these items are
part of a separate IASB project that is currently ongoing. This final
Standard
introduces a single, principles-based approach that
amends both the categories and associated criteria for the
classification and measurement of financial assets, which is driven by
the entity’s business model for the portfolio in which the assets are
held and the contractual cash flows of these financial assets. Certain
amendments have been made to the financial asset classification
and measurement principles in prior versions of IFRS 9. This
Standard introduces an amended hedging model which aligns
hedge accounting more closely with an entity’s risk management
activities and also includes a new financial asset impairment model
which has an expanded scope, is based on expected credit losses
rather than incurred credit losses and generally will result in earlier
recognition of losses. This new Standard supersedes all prior versions
of IFRS 9. The Company has not yet examined the impacts of this
new standard.
IFRS 15 Revenue from Contracts with Customers establishes
principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity’s contracts with
customers. The core principle of the new Standard is for companies
to recognize revenue to depict the transfer of goods or services to
customers in amounts that reflect the consideration to which the
Company expects to be entitled in exchange for those goods or
services. The new Standard will also result in enhanced disclosures
about revenue, provide guidance for transactions that were not
previously addressed comprehensively (for example, service revenue
and contract modifications) and improve guidance for multiple-
element arrangements. The Company has not yet examined the
impacts of this new standard.
40
4
MANAGEMENT’S ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements in accordance with IFRS requires management to
make estimates and assumptions that affect the reported amounts of revenues and expenses during the
year and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements. Management reviews its estimates regularly, and
revisions to accounting estimates are recognized in the period in which the estimate is revised, if the
revision affects only that period, or in the period of the revision and future periods if the revision affects
both the period being reviewed and future periods. Actual results may differ from these estimates.
ESTIMATES
In preparing consolidated financial statements in accordance with IFRS, management must exercise
judgment when applying accounting policies and rely on assumptions and estimates that affect the
amounts of the assets, liabilities, revenues and expenses reported in these consolidated financial
statements and on the contingent liability and contingent asset information provided. The actual results of
items subject to assumptions and estimates may differ from these assumptions and estimates.
Explanations about the main assumptions and estimates are presented below:
Revenue recognition
As mentioned in Note 2, the Company uses assumptions to recognize some of the revenues from rights of
use i.e. the sale of classified ad packages. Management reviews these assumptions on a regular basis.
Significant changes in these assumptions will have an impact on the Company’s profit.
Useful lives of property, plant and equipment and finite-life intangible assets
At the end of each reporting period, the Company reviews the estimated useful lives of its property, plant
and equipment and finite-life intangible assets. At the end of the fiscal year, management has determined
that the useful lives of property, plant and equipment and finite-life intangible assets were appropriate.
Measurements of assets
When applying the discounted future cash flows model to determine the fair value of groups of cash
generating units to which goodwill is allocated, certain parameters must be used, including estimates of
future cash flows, discount rates and other variables; a high degree of judgment must therefore be
exercised. Impairment tests on property, plant and equipment and intangible assets are also based on
similar assumptions. Any future deterioration of market conditions or poor operational performance could
translate into an inability to recover the current carrying amounts of property, plant and equipment and
intangible assets.
See Note 13 for more information on goodwill impairment testing and Note 12 for the test of indefinite-life
intangible assets.
Business combinations
For business combinations, the Company must make assumptions and estimates to determine the
purchase price allocation of the business being acquired. To do so, the Company must determine the
acquisition-date fair values of the identifiable assets acquired and liabilities assumed. Goodwill is
measured as the excess of the acquisition cost over the Company’s share in the fair value of all identified
assets and liabilities. These assumptions and estimates have an impact on the asset and liability amounts
recorded in the Consolidated Statement of Financial Position on the acquisition date. In addition, the
estimated useful lives of the acquired property, plant and equipment, the identification of other intangible
41
assets and the determination of the finite or indefinite useful lives of intangible assets acquired will have
an impact on the Company’s profit.
See Note 2 for more information on the assumptions and estimates used.
Deferred taxes
The Company is required to estimate the income taxes in each of the jurisdictions in which it operates.
This includes estimating a value for existing net operating losses based on the Company’s assessment of
its ability to utilize them against future taxable income before they expire. If the Company’s assessment of
its ability to use the net operating losses proves inaccurate, this would impact the income tax expense
and, consequently, affect the Company’s profit in the relevant year. The Company may be audited by the
tax authorities of different jurisdictions. Given that the determination of tax liabilities involves certain
uncertainties in interpreting complex tax regulations, the Company uses management’s best estimates to
determine potential tax liabilities. Differences between the estimates and the actual amount of taxes are
recorded in profit at the time they can be determined.
JUDGMENTS
The critical accounting policy judgments that have the greatest impact on amounts reported in the
consolidated financial statements include the following:
Definition of cash-generating units
The Company assesses whether there are any indicators of impairment for all non-financial assets at the
end of each financial reporting period. If such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). When it is not possible to
estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs. Determination of cash-generating units is based
on management’s best estimate of what constitutes the lowest level at which an asset or group of assets is
able to generate cash inflows. The Company must also determine whether goodwill can be attributed to
one or more cash-generating units.
See Note 13 for more information on attributions of goodwill to cash-generating units and Note 12 for the
attribution of indefinite-life intangible assets to cash-generating units.
5
SEGMENT INFORMATION
The Company has only one reportable segment.
Geographical information is as follows:
In thousands of Canadian dollars
Revenues
Canada
United States
Asia and other
Europe
42
2015
$
46,105
21,349
2,115
678
70,247
2014
$
41,362
20,713
2,512
789
65,376
In thousands of Canadian dollars
Non-current assets
Canada
United States
Asia and other
As at
March 31,
2015
$
140,100
24,681
6
As at
March 31,
2014
$
144,300
24,552
8
164,787
168,860
Revenues are attributed to geographic areas based on the location of the customers.
Non-current assets include property, plant and equipment, intangible assets, acquired intangible assets
and goodwill.
6
REVENUES
Revenues are detailed as follows:
In thousands of Canadian dollars
Revenues from rights of use
Revenues from transaction fees
Revenues from advertising
Revenues from software development
Revenues from integration, maintenance and hosting
Other
7
BUSINESS COMBINATION
DESCRIPTION OF THE BUSINESS COMBINATION
2015
$
52,048
6,728
6,663
2,627
1,312
869
2014
$
48,203
6,433
5,837
2,731
1,230
942
70,247
65,376
On June 1, 2013, the Company acquired from Québecor Média Inc. all the shares of Jobboom Inc.
(“Jobboom”) a company operating the jobboom.com website, a leader in online recruitment in Quebec
and a media expert in the labour market intelligence. Acquisition cost for this transaction was $56,818,465
including a favorable definitive working capital adjustment of $681,535. The acquisition was financed by
$8,318,465 in cash from the Company and by $48,500,000 from its Revolving facility.
On November 29, 2013, the Company also acquired from Québecor Média Inc. all the shares of Réseau
Contact Inc. (“Réseau Contact”), a company operating reseaucontact.com, one of the Quebec’s most
popular online dating sites. Acquisition cost for this transaction was $7,448,168 including a favorable
definitive working capital adjustment of $51,832. The acquisition was entirely financed by the Revolving
facility of the Company.
The acquisitions of Jobboom and Réseau Contact bring new possibilities considering the reputation of the
names Jobboom and Réseau Contact and their place in the online recruitment and interpersonal website
businesses and giving access to the Company to a large community of members and market with
countless opportunities. A solid profitability combined with high-potential synergies with the Company’s
e-commerce development and expertise were also determinant in these acquisitions.
43
ACQUISITION OF JOBBOOM
ASSETS ACQUIRED AND LIABILITIES ASSUMED AT THE ACQUISITION DATE
In thousands of Canadian dollars
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Prepaid expenses and deposits
Non-current assets
Acquired intangible assets
Client base
Technology
Trademark
Total
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Deferred revenues
Non-current liabilities
Deferred taxes
Total
Identifiable net assets acquired
SOURCES AND USES OF FUNDS AT THE TRANSACTION CLOSING DATE
In thousands of Canadian dollars
Sources
Revolving facility (Note 14)
Cash and cash equivalents
Uses
Cash consideration transfered
Favorable working capital adjustment
COSTS RELATED TO THE ACQUISITION
June 1, 2013
$
4,700
2,712
40
7,452
9,000
6,371
18,800
41,623
1,023
3,753
4,776
9,890
14,666
26,957
June 1, 2013
$
48,500
8,318
56,818
57,500
(682)
56,818
The total acquisition-related costs amounted to $266,409 and are included in General and administrative
expenses in the Consolidated Statements of Income.
44
GOODWILL ARISING FROM THE BUSINESS COMBINATION
In thousands of Canadian dollars
Cash consideration transferred
Less:
Fair value of net identifiable acquired assets
Goodwill
June 1, 2013
$
56,818
26,957
29,861
The goodwill recognized from this business combination is deductible for tax purposes in the amount of
$10,911,898, and the balance of $18,949,023 is not tax deductible.
Goodwill of $29,860,921 stems essentially from the synergies with other activities of the Company, the
economic value of the workforce acquired as well as intangible assets that do not meet the criteria for
separate recognition.
ACQUISITION OF RÉSEAU CONTACT
ASSETS ACQUIRED AND LIABILITIES ASSUMED AT THE ACQUISITION DATE
In thousands of Canadian dollars
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Prepaid expenses and deposits
Non-current assets
Property, plant and equipment
Acquired intangible assets
Technology
Trademark
Total
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Deferred revenues
Non-current liabilities
Deferred taxes
Total
Identifiable net assets acquired
November 29, 2013
$
420
88
300
808
138
2,800
2,700
6,446
74
130
204
1,097
1,301
5,145
45
SOURCES AND USES OF FUNDS AT THE TRANSACTION CLOSING DATE
In thousands of Canadian dollars
Sources
Revolving facility (Note 14)
Uses
Cash consideration transfered
Favorable working capital adjustment
COSTS RELATED TO THE ACQUISITION
November 29, 2013
$
7,448
7,500
(52)
7,448
The total acquisition-related costs amounted to $65,175 and are included in General and administrative
expenses in the Consolidated Statements of Income.
GOODWILL ARISING FROM THE BUSINESS COMBINATION
In thousands of Canadian dollars
Cash consideration transferred
Less:
Fair value of net identifiable acquired assets
Goodwill
November 29, 2013
$
7,448
5,145
2,303
For tax purposes, goodwill in the amount of $3,435,932 is deductible.
Goodwill of $2,302,731 stems essentially from the synergies with other activities of the Company, the
economic value of the workforce acquired as well as intangible assets that do not meet the criteria for
separate recognition.
IMPACT OF THE BUSINESS COMBINATIONS ON THE COMPANY’S FINANCIAL PERFORMANCE
The Company’s profit for the year ended March 31, 2014, includes $7,737,777 in revenues and a $1,123,200
profit generated from Jobboom additional business and $903,538 in revenues and a $132,683 profit
generated from Réseau Contact additional business.
If these business combinations had been completed on April 1, 2013, the Company’s consolidated
revenues for the year ended March 31, 2014, would have totaled $68,979,726, and consolidated profit for
the same period would have totaled $13,268,427.
The Company considers the pro forma figures to be an approximate measurement of the financial
performance of the combined business over a twelve-month period. However, pro forma information does
not account for synergies or changes to historical transactions and is not necessarily indicative of the profit
of the Company if the acquisitions actually occurred on April 1, 2013, nor of the profit that may be achieved
in the future.
46
To determine the Company’s pro forma consolidated revenues and profit if Jobboom and Réseau Contact
had been acquired on April 1, 2013, the Company:
•
•
•
calculated depreciation of property, plant and equipment and amortization of other acquired
intangible assets based on the fair value arising from initial recognition of the business
combination rather than the carrying amounts recognized in the pre-acquisition financial
statements.
calculated the borrowing costs on the Company’s net
combination.
indebtedness after the business
calculated an additional income tax expense to reflect the pro forma adjustments described
above.
8
SUBSIDIARIES
The table below provides details on the subsidiaries that the Company owned directly and indirectly as at
March 31, 2015.
Ownership
interest
percentage
Percentage
of voting
rights
Country of
incorporation
or
registration
and
operation
Canada
Canada
Canada
Canada
Subsidiary name
Carrus Technologies Inc.
3808891 Canada Inc.
The Broker Forum Inc.
MERX Networks Inc.
InterTrade Systems Inc.
Canada
100
100
100
100
100
InterTrade Technologies, Inc.
United States
100
4222661 Canada Inc.
Canada
100
TIM USA Inc.
United States
100
Market Velocity, Inc.
United States
100
Construction Bidboard Inc.
United States
100
Power Source On-Line, Inc.
United States
100
International Data Base Corp.
United States
100
Polygroup, Ltd.
United States
100
LesPAC Network Inc.
Mediagrif Information
Consulting (Shenzhen) Co. Ltd
Canada
China
Jobboom Inc.
Réseau Contact Inc.
Canada
Canada
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Industry sector serviced
by the electronic
commerce solutions of
the Company
Automotive aftermarket
Holding company
Electronic components
E-procurement
Supply chain
collaboration
Supply chain
collaboration
E-procurement
Holding company
Computer equipment,
telecommunication and
consumer electronics
E-procurement
Computer equipment,
telecommunication and
consumer electronics
E-procurement
Diamonds and jewelry
Classified ads
Electronic components
Employment and talent
acquisition
Online dating
47
9
JOINT-VENTURES
The Company has interests in a joint venture (the “joint venture”) in which it shares joint control with its co-
venturers. The Company’s interest in the joint venture and its operations is summarized as follows:
A 50% ownership in Société d’investissement M-S S.E.C. (a limited partnership), which operates under the
brand Global Wine & Spirits (GWS). GWS operates a virtual business-to-business electronic network offering
an integrated solution for the purchase and sale of wine and spirits.
During the year ended March 31, 2015, the Company recorded revenues of $1,618,860 ($1,843,177 in 2014)
from transactions with GWS. In addition, the Company recharged to GWS operating expenses in the
amount of $254,039 ($276,789 in 2014). These recharges were presented against operating expenses in the
Consolidated Statement of Income. As at March 31, 2015, GWS accounts receivable to the Company are
$120,980 ($52,415 as at March 31, 2014).
These transactions occurred in the normal course of business and were measured at the amount of
consideration agreed to by the parties.
10
REBATES AND ACCOUNTS RECEIVABLE AND PAYABLE ARISING FROM
DISPOSITIONS AND FROM ESCROW TRANSACTIONS
Cash received as at March 31, 2015, for the administration of a rebate program and used equipment trade-
in transactions, but not yet remitted to the counterparty, presented on the Consolidated Statement of
Financial Position as Cash held for the benefit of third parties, amounted to $206,084 (US$162,488)
($94,779 in 2014 (US$85,750)). As at March 31, 2015, the amount of accounts receivable related to rebate
and disposition transactions amounted to $563,258 (US$444,105) ($752,368 in 2014 (US$680,691)).
The amount received as at March 31, 2015, for escrow services presented on the Consolidated Statement of
Financial Position as Cash held for the benefit of third parties amounted to $460,127 (US$362,790)
($809,799 in 2014 (US$732,651)).
The total accounts payable for these transactions amounted to $1,229,469 (US$969,383) ($1,656,946 in 2014
(US$1,499,092)) and are presented in Other accounts payable in the Consolidated Statement of Financial
Position.
48
11
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
Office
furniture
$
Computer
and other
equipment
$
Leasehold
improve-
ments
$
Assets under
finance
leases
$
Total
$
In thousands of Canadian dollars
Cost
Balance as at March 31, 2013
Acquisitions
Acquisitions through
business combinations
Disposals
Balance as at March 31, 2014
Acquisitions
Disposals
Balance as at March 31, 2015
Accumulated depreciation
1,481
100
-
(176)
1,405
232
(1)
1,636
7,786
857
138
(388)
8,393
479
(13)
8,859
Balance as at March 31, 2013
(1,001)
(7,080)
Eliminations related to asset
disposals
Depreciation for the year
Balance as at March 31, 2014
Eliminations related to asset
disposals
Depreciation for the year
Balance as at March 31, 2015
173
(179)
(1,007)
1
(239)
(1,245)
383
(548)
(7,245)
13
(660)
(7,892)
1,194
104
-
(27)
1,271
55
-
1,326
(355)
27
(133)
(461)
-
(139)
(600)
Net carrying amount
Balance as at March 31, 2014
Balance as at March 31, 2015
398
391
1,148
967
810
726
198
10,659
-
-
-
198
-
(198)
1,061
138
(591)
11,267
766
(212)
-
11,821
(173)
(8,609)
-
583
(25)
(198)
198
-
-
-
-
(885)
(8,911)
212
(1,038)
(9,737)
2,356
2,084
49
12
INTANGIBLE ASSETS AND ACQUIRED INTANGIBLE ASSETS
Intangible assets consist of the following:
In thousands of Canadian dollars
Cost
Balance as at March 31, 2013
Acquisitions
Disposals
Balance as at March 31, 2014
Acquisitions
Disposals
Balance as at March 31, 2015
Accumulated amortization
Balance as at March 31, 2013
Eliminations related to asset disposals
Amortization for the year
Balance as at March 31, 2014
Eliminations related to asset disposals
Amortization for the year
Balance as at March 31, 2015
Intangible assets
Internally-
developed
software and
websites
Software
Total
$
$
$
3,756
314
(77)
3,993
538
(487)
4,044
(3,252)
77
(269)
(3,444)
487
(497)
(3,454)
103
-
(103)
-
1,180
-
3,859
314
(180)
3,993
1,718
(487)
1,180
5,224
(103)
103
-
-
-
(51)
(51)
(3,355)
180
(269)
(3,444)
487
(548)
(3,505)
Net carrying amount
Balance as at March 31, 2014
Balance as at March 31, 2015
549
590
-
1,129
549
1,719
50
Acquired intangible assets comprise the following:
Acquired intangible assets
Client bases
Technology
Finite-life
trademarks
Indefinite-
life
trademarks
Total
$
$
$
$
$
12,118
9,000
21,118
21,118
(9,221)
(2,378)
(11,599)
(1,538)
(13,137)
9,605
9,171
18,776
18,776
(5,468)
(3,657)
(9,125)
(3,428)
(12,553)
604
25,000
47,327
-
21,500
39,671
604
604
46,500
86,998
46,500
86,998
(586)
(13)
(599)
(5)
(604)
-
-
-
-
-
(15,275)
(6,048)
(21,323)
(4,971)
(26,294)
In thousands of Canadian dollars
Cost
Balance as at March 31, 2013
Acquisitions through business
combinations
Balance as at March 31, 2014
Balance as at March 31, 2015
Accumulated amortization
Balance as at March 31, 2013
Amortization for the year
Balance as at March 31, 2014
Amortization for the year
Balance as at March 31, 2015
Net carrying amount
Balance as at March 31, 2014
Balance as at March 31, 2015
9,519
7,981
9,651
6,223
5
-
46,500
65,675
46,500
60,704
IMPAIRMENT TEST OF THE TRADEMARK WITH AN INDEFINITE USEFUL LIFE
For the purpose of impairment testing, the indefinite-life trademark is tested at the level of its cash-
generating unit, since this is the lowest level at which the indefinite-life trademark with an indefinite
useful life is monitored for internal management purposes.
To determine the cash-generating units to which the indefinite-life trademark is attributed, management
has analyzed the cash flows related to the indefinite-life trademark and concluded that these entries were
largely independent from the cash flows from other assets or group of assets. The criterion used was the
nature of the revenue generated by such trademark. These revenues cannot be combined with any other
identifiable group of assets due to their distinct features.
The Company performed an annual impairment test of the cash-generating unit in the fourth quarter of
the year ended March 31, 2015, in accordance with the methods described in Note 2. The recoverable
amount of the cash-generating unit associated with the indefinite life trademark exceeded its carrying
amount. As a result, no loss in value has been recorded on the trademark with an indefinite useful life
during the years ended March 31, 2015 and March 31, 2014.
As at March 31, 2015, the recoverable amount of the cash-generating unit was established by calculating its
value in use. This calculation is made using discounted cash flow projections that are based on five-year
financial budgets approved by the Board of Directors. The model used to determine discounted cash
flows employed a 13.0% discount rate and a 2.0% growth rate for both the future cash flows and the final
value.
51
Based on observable market data such as the risk-free rate, risk premium observed in the market, the beta
of companies operating in the same sector, the premium associated with the size of the Company,
specific risks associated with the cash-generating unit and the statutory tax rate, the weighted-average
cost of capital was determined to a range between 12.0% and 14.0%. This reflects the overall risk of the
Company.
Each asset class (working capital, tangible and intangible assets and goodwill) has its own risk discount
rate. The Company has determined that the trademark is a risk that is similar to the overall risk of the
Company, consequently, a discount rate of 13.0%, representing the first key assumption, has been selected,
which is in inside the range mentioned above.
As a second key assumption, the Company believes that a growth rate of 2.0% is reasonable considering
the projected inflation rate and growth rate of consumer goods.
These are the two most sensitive assumptions. A change in other assumptions used would not have
changed the results significantly.
Reasonably possible changes to these two key assumptions would not cause the carrying amount of the
cash-generating unit to exceed its recoverable amount.
A 1.0% increase in the discount rate would not have reduced the recoverable amount of the cash
generating units below their carrying amount. A 1.0% decrease in the growth rate would not have
reduced the recoverable amount of the cash generating units below their carrying amount.
13
GOODWILL
In thousands of Canadian dollars
Balance at the beginning of year
Business acquisitions (Note 7)
Goodwill
2015
$
100,280
-
2014
$
68,116
32,164
100,280
100,280
For the purpose of impairment testing, goodwill is tested at the level of the Company as a whole since
management is of the opinion that the Company as a whole benefits from the synergies of business
combinations completed to date and since this is the lowest level at which goodwill is monitored for
internal management purposes.
The Company performed an annual impairment test of goodwill in the fourth quarter of the year ended
March 31, 2015, in accordance with the methods described in Note 2. The recoverable amount of the
Company as a whole exceeded its carrying amount. As a result, no loss in the value of goodwill was
recorded for the years ended March 31, 2015 and March 31, 2014.
As at March 31, 2015, the recoverable value of the Company was established by calculating its value in use.
This calculation is made using discounted cash flow projections based on five-year financial budgets
approved by the Board of Directors. The model used to determine discounted cash flows employed a
13.0% discount rate and a 2.0% growth rate for both the future cash flows and the final value.
Based on observable market data, such as the risk-free rate, risk premium observed in the market, the beta
of companies operating in the same sector, the premium associated with the size of the Company,
specific risks associated with the cash-generating unit and the statutory tax rate, the weighted-average
cost of capital was determined to a range between 12.0% and 14.0%. This reflects the overall risk of the
Company.
Each asset class (working capital, tangible and intangible assets and goodwill) has its own risk discount
rate. The Company has determined that goodwill is similar to the overall risk of the Company
52
consequently, a discount rate of 13.0%, representing the first key assumption, has been selected, which is
in inside the range mentioned above.
As a second key assumption, the Company believes that a growth rate of 2.0% is reasonable considering
the projected inflation rate and growth rate of consumer goods.
These are the two most sensitive assumptions. A change in other assumptions would not have changed
the results significantly.
Reasonably possible changes to these two key assumptions would not cause the carrying amount of the
cash-generating unit to exceed its recoverable amount.
A 1.0% increase in the discount rate would not have reduced the recoverable amount of the Company
below its carrying amount. A 1.0% decrease in the growth rate would not have reduced the recoverable
amount of the Company below its carrying amount.
14
LONG-TERM DEBT
On November 10, 2011, the Company entered
into a credit agreement, which was amended on
November 13, 2012 (the “Credit Agreement”) with two Canadian financial institutions pursuant to which
lenders made available to the Company a $60,000,000 secured revolving five-year credit facility
(The “Revolving Facility”) and an accordion loan of $40,000,000 subject to lenders’ acceptance.
The Revolving Facility expires on November 9, 2016, and any outstanding amounts are due in full at
maturity. Amounts under the Credit Agreement are repayable before maturity without penalty.
The Revolving Facility bear interest at a rate based either on Canadian prime rate, LIBOR or bankers’
acceptance rate plus a margin in each case. This margin varies according to the ratio of total debt to
earnings before interest, taxes, depreciation and amortization “EBITDA,” as described below. As at March
31, 2015, the actual rate was 1.00% and the margin was 1.50%. In addition, the unused portion of the
Revolving Facility bears interest at 0.30% as standby fees.
All obligations under the Credit Agreement are secured by a first-rank security (hypothec) on substantially
all of the Company’s assets, tangible and intangible, present and future.
The Credit Agreement contains certain covenants and certain events of default customary for loans of this
nature, including some limitations to the levels of investments and acquisitions, capital expenditures and
distributions. The Credit Agreement is also subject to restrictive covenants requiring certain financial ratios
to be maintained. As at March 31, 2015, the Company was in compliance with the financial ratios
prescribed under these covenants:
1) a fixed charge coverage ratio of not less than 1.20:1.00 at all times.
2) a total debt to EBITDA ratio of not more than 2.5.
Fixed charge, total debt and EBITDA, which are used in the calculation of the covenants mentioned above,
are defined precisely in the Credit Agreement.
Financial ratios are calculated using the financial information of the twelve-month period ending on the
date the ratio is calculated.
53
The following table provides the long-term debt information:
In thousands of Canadian dollars
Revolving credit facility, bearing interest at the bankers’ acceptance rate,
plus 1.50% (1.50% as at March 31, 2014), maturing in November 2016
Deferred financing costs
As at
March 31,
2015
$
26,100
-
26,100
As at
March 31,
2014
$
37,040
(120)
36,920
The minimum capital repayments are $26,100,000 for the year ending March 31, 2017.
15
SHARE CAPITAL
a) Authorized and paid, unlimited number
• Common shares.
• Preferred shares, issuable in series with terms, conditions and dividends to be determined by the
Board of Directors upon issuance.
b) The following table summarizes common share activity for the last two fiscal years:
In thousands
Balance at beginning of year
Repurchased for cancellation (Note 15 b) i))
Balance at end of year
2015
Shares
15,817
(275)
15,542
$
Shares
2014
83,141
(1,446)
81,695
15,834
(17)
15,817
$
83,227
(86)
83,141
i ) During the year ended March 31, 2015, the Company repurchased 275,100 of its common shares
(16,420 in 2014) for a cash consideration of $4,957,141 ($311,977 in 2014) in connection with its Normal
Course Issuer Bid. An average issue price of $5.26 ($5.26 in 2014) per share before repurchase was
recorded as a deduction from Share capital in a total amount of $1,446,003 ($86,369 in 2014), and the
balance was charged to Retained earnings.
c) Dividends declared
Subsequent to the end of the year ended March 31, 2015, i.e. on June 9, 2015, the Company announced the
payment of a cash dividend of $0.10 per share, payable on July 15, 2015 to shareholders of record on
July 2, 2015.
2015
On June 10, 2014, the Company announced the payment of a cash dividend of $0.10 per share, payable on
July 15, 2014, to shareholders of record on July 2, 2014.
On August 5, 2014, the Company announced the payment of a cash dividend of $0.10 per share, payable
on October 15, 2014, to shareholders of record on October 1, 2014.
On November 11, 2014, the Company announced the payment of a cash dividend of $0.10 per share,
payable on January 15, 2015, to shareholders of record on January 2, 2015.
On February 10, 2015, the Company announced the payment of a cash dividend of $0.10 per share, payable
on April 15, 2015, to shareholders of record on April 1, 2015.
54
2014
On June 11, 2013, the Company announced the payment of a cash dividend of $0.10 per share, payable on
July 15, 2013, to shareholders of record on July 2, 2013.
On August 6, 2013, the Company announced the payment of a cash dividend of $0.10 per share, payable
on October 15, 2013, to shareholders of record on October 1, 2013.
On November 12, 2013, the Company announced the payment of a cash dividend of $0.10 per share,
payable on January 15, 2014, to shareholders of record on January 3, 2014.
On February 11, 2014, the Company announced the payment of a cash dividend of $0.10 per share, payable
on April 15, 2014, to shareholders of record on April 1, 2014.
16
STOCK-BASED COMPENSATION
On July 2004, the Company established a stock purchase plan. Certain amendments to the plan have
subsequently been adopted and are in effect on the date hereof for all regular full-time and part-time
employees who are Canadian residents. Directors are not eligible to participate in this plan. Under the
terms of the plan, employees may elect to contribute, through payroll deductions, up to 10% of their
annual income up to a maximum of $20,000 annually ($10,000 in 2014) to purchase common shares in
the Company on the open market. Under the plan, the Company matches employee contributions to the
plan up to a maximum contribution of $1,300 per employee ($1,100 in 2014). Employees must hold the
portion of shares purchased with the Company’s contribution for a period of 12 months. The purchase
price of shares under the plan shall be equal to the market price of the Company’s common shares on the
purchase date.
17
TECHNOLOGY
In thousands of Canadian dollars
Research and development costs incurred
Tax credits
Capitalized Internally-developed software and websites i)
Amortization of capitalized internally-developed software and websites
2015
$
15,347
(1,915)
13,432
(1,180)
12,252
51
12,303
2014
$
14,381
(2,633)
11,748
-
11,748
-
11,748
i) Capitalized internally-developed software and websites are shown net of tax credits of $529,168.
These tax credits were capitalized because they are related to these internally-developed software and
websites.
55
18
EXPENSES BY TYPE
Operating profit includes the following items:
In thousands of Canadian dollars
Amortization and depreciation
Depreciation of property, plant and equipment
Amortization of intangible assets
Amortization of acquired intangible assets
Total
Employee benefits expense
Salaries and employee benefits
Termination benefits
Total
19
LEASES
2015
$
1,038
548
4,971
6,557
29,078
476
29,554
2014
$
885
269
6,048
7,202
27,596
528
28,124
The operating leases are on office space with terms of 1 to 10 years. Some of these leases feature renewal
options. The Company will not be able to acquire the leased assets at the end of the leases.
Payments recognized as expenses:
In thousands of Canadian dollars
Minimum lease payments
Obligations under non-cancellable operating leases:
In thousands of Canadian dollars
Less than 1 year
More than 1 year and less than 5 years
More than 5 years
2015
$
1,558
2015
$
1,402
4,449
1,304
7,155
2014
$
1,475
2014
$
1,211
3,103
1,541
5,855
The Company had a lease agreement with a company of which one of its officers is a director. This
company owns an office space where the Company exercised a portion of its business. The lease
agreement expired on December 31, 2013. Minimum payments related to this space totaled $56,535 for the
year ended March 31, 2014.
The transaction occurred in the normal course of business and was measured at the amount of
consideration agreed to by the parties.
56
20
INCOME TAXES
a) The income tax expense consists of the following:
In thousands of Canadian dollars
Current tax expense
Current taxes
Adjustments recognized during the year for current taxes of prior years
Deferred tax expense
Deferred tax expense relating to the origination and reversal of
temporary differences
Adjustments recognized during the year for the deferred tax of prior
years
Recognized operating losses
Income tax expense
2015
$
4,757
9
752
25
-
5,543
2014
$
3,470
(87)
1,197
(270)
(83)
4,227
b) The income tax expense is calculated using an actual tax rate that differs from the statutory tax rate for
the following reasons:
Weighted-average statutory tax rate
Increase (decrease) arising from:
Geographic distribution of operating profits
Non-taxable income and other
Operating losses recorded during the year
Prior-year tax adjustments and contributions
Actual tax rate
2015
%
26.9
-
(0.8)
-
0.1
26.2
2014
%
26.9
0.8
(0.1)
(0.6)
(2.0)
25.0
The tax rates used for the above-reconciled results for 2015 and 2014 are the tax rates applied to the
taxable income of Canadian companies under tax law in this jurisdiction.
57
The reconciliation of deferred tax assets (liabilities) by type of temporary differences recognized in the
Consolidated Statement of Financial Position:
In thousands of Canadian dollars
Balance as at March 31, 2013
Deferred tax (expense) recovery for the year recognized in
profit
Foreign exchange impact from remeasurement of
deferred taxes
Deferred tax (expense) recovery for the year related to
other comprehensive income
Deferred tax asset (liability) created during a business
combination
Property,
plant and
equipment
$
Intangible
assets
$
Foreign
exchange
impact on
foreign
subsidiary Provision
$
$
887
(3,754)
(676)
283
-
-
-
-
285
(10,367)
(39)
28
-
-
-
188
614
-
-
(905)
Balance as at March 31, 2014
496
(13,838)
(11)
(103)
(Expense) deferred tax recovery for the year recognized in
profit
(24)
(399)
33
321
Foreign exchange impact from remeasurement of
deferred taxes
Deferred tax recovery for the year related to other
comprehensive income
-
-
-
-
-
-
-
-
Balance as at March 31, 2015
472
(14,237)
22
218
58
Deferred
rent
$
Leases
$
Derivative
financial
instruments
$
Financing
costs
$
Research and
development
$
Tax losses
$
Tax
credit
$
Share
issuance
costs
$
Total
$
264
(33)
-
-
-
231
(5)
-
-
226
8
(8)
-
-
-
-
-
-
-
-
32
-
-
148
-
180
-
-
204
384
7
22
-
-
-
717
343
-
-
-
4,636
(906)
220
2,260
(1,119)
(242)
(56)
(844)
338
-
-
-
-
-
-
-
-
338
148
(10,987)
29
1,060
3,855
(1,148)
164
(9,085)
3
-
-
29
(763)
82
(54)
(777)
-
-
540
-
-
-
-
-
540
204
32
1,089
3,632
(1,066)
110
(9,118)
59
The following balances were recognized in the Consolidated Statements of Financial Position:
In thousands of Canadian dollars
Deferred tax assets
Deferred tax liabilities
March 31,
2015
$
5,945
(15,063)
(9,118)
March 31,
2014
$
5,860
(14,945)
(9,085)
Certain tax losses from Canadian and U.S. subsidiaries resulted in a deferred tax asset being recognized in
the Consolidated Statement of Financial Position, as management considers it probable that these tax
consequences will be used against future taxable income.
Tax risk
In the normal course of business, the Company is subject to reviews by the tax authorities in the
jurisdictions where the Company operates. These authorities may contest or refuse some of the positions
taken by management. The Company periodically examines the possibility of unfavourable outcomes
from tax audits and makes provisions for this purpose if the Company considers that an unfavourable
outcome will occur. As at March 31, 2015 and March 31, 2014, no provisions had been established for this
purpose.
Deferred tax losses
As at March 31, 2015, the Company’s U.S. subsidiaries had accumulated net operating losses at the federal
level of approximately US$34,158,426 (CA$43,323,132). Some of these losses are limited to a maximum
annual amount and expire from 2016 through 2030. Therefore, an amount of losses of US$26,598,405
(CA$33,734,757) can never be used against future taxable income. A deferred tax asset has been
recognized on a deferred tax losses amount of US$7,560,021 (CA$9,588,375).
In addition, the Company’s U.S. subsidiaries had accumulated net operating losses at the State level of
approximately US$10,356,554 (CA$13,135,217). These losses expire from 2019 through 2028. A valuation
allowance of approximately US$4,507,001 (CA$5,716,229) has been recorded for these losses. A deferred tax
asset has been recognized on a deferred tax losses amount of US$5,849,553 (CA$7,418,988).
As at March 31, 2015, the Company’s Canadian subsidiaries had accumulated net operating losses at the
federal level of $583,449 and at the provincial level of $193,723, which may be carried forward and used to
reduce the taxable income of future years. These losses expire from 2027 through 2030. The Company’s
Canadian subsidiaries also have $3,140,120 in accumulated research and development costs at the federal
level and $5,190,128 at the provincial level, which may be carried forward and used to reduce the taxable
income of future years. These costs may be used for an indefinite period. The tax consequences of these
items were recognized as deferred tax assets.
60
21
RELATED PARTY TRANSACTIONS
COMPENSATION OF KEY MANAGEMENT PERSONNEL
The following table presents the compensation of directors and the management team for the year:
In thousands of Canadian dollars
Directors – Directors’ fees
Management team
Short-term benefits
Termination benefits
2015
$
210
3,223
-
3,433
2014
$
195
2,724
210
3,129
The management team’s compensation is set by a compensation committee and is based on individual
performance and market trends.
22
SUPPLEMENTARY STATEMENTS OF INCOME AND CASH FLOW INFORMATION
a) Changes in non-cash working capital items are as follows:
In thousands of Canadian dollars
Decrease (increase) in:
Accounts receivable
Tax credits receivable
Prepaid expenses and deposits
Increase (decrease) in:
Accounts payable and accrued liabilities
Other accounts payable
Deferred revenues
b) Other revenues (expenses) consist of the following:
In thousands of Canadian dollars
Foreign exchange gain
Other expenses
2015
$
907
320
349
688
(428)
298
2,134
2015
$
1,174
-
1,174
2014
$
1,443
(899)
(63)
(675)
363
2,279
2,448
2014
$
881
(2)
879
61
c) Financial expenses consist of the following:
In thousands of Canadian dollars
Interest income
Amortization of deferred financing costs
Interest on long-term debt
23
CAPITAL DISCLOSURES
2015
$
-
120
955
1,075
2014
$
(15)
190
1,019
1,194
The Company’s capital management objective is to ensure sufficient liquidity to pursue its strategy of
organic growth, to undertake selective acquisitions and to provide an appropriate return on investment to
its shareholders. The Company’s capital consists of long-term debt, shareholders’ equity and deferred
revenues, net of cash and cash equivalents and short-term investments.
The Company’s primary uses of capital are to finance non-cash working capital requirements, capital
expenditures, business acquisitions and payments of dividends.
The Company may, from time to time, repurchase shares, adjust its capital level by issuing shares or secure
bank debt to finance its operations or business acquisition.
Other than the financial ratios described in Note 14 and required by a financial institution, the Company’s
capital is not subject to any externally imposed capital requirements, and the Company does not currently
use any quantitative measures to manage its capital.
24
FINANCIAL RISK MANAGEMENT
The Company’s financial assets and financial liabilities expose it to the following risks: market risk,
including foreign currency risk and interest rate risk, credit risk and liquidity risk. The Company’s main risk
management objective is to ensure that risks are properly defined and resolved to minimize potential
adverse effects on financial performance.
The finance department is responsible for risk management which includes identifying and assessing risks,
in close cooperation with management. The finance department is responsible for creating adequate
controls and procedures to ensure that financial risks are mitigated.
62
FOREIGN CURRENCY RISK
Foreign currency risk comes from transactions that the Company concludes in foreign currencies,
primarily the U.S. dollar. Foreign currency risk also comes from future sale and purchase transactions and
from financial assets and liabilities denominated in foreign currencies.
The Company’s main objective in managing foreign currency risk is to reduce its impact on performance.
In order to reduce the potentially adverse effects of a fluctuating Canadian dollar, the Company has
entered into foreign currency forward contracts to stabilize anticipated future revenues denominated in
U.S. dollars. Foreign currency forward contracts are used only for managing foreign currency risk and not
for speculative purposes.
The balances in foreign currencies are as follows:
In thousands of dollars
Cash and cash equivalents
Accounts receivable
Accounts payable and accrued liabilities
Total in foreign currencies
Total in Canadian dollars
2015
U.S.$
5,027
825
(710)
5,142
6,522
2014
U.S.$
5,631
1,644
(606)
6,669
7,359
The following table details the arrangements used as hedging instruments. The currency of the purchase
agreements is the Canadian dollar while the currency of the sale is the U.S. dollar:
In thousands of Canadian dollars
Notional amount US$
Weighted-average rate USD-CAD
Maturity (fiscal year)
2015
$
11,250
1.1418
2014
$
12,225
1.0565
2016-2017
2015-2016
Foreign currency forward contracts are contracts whereby the Company has the obligation to sell or buy
U.S. dollars in advance at a fixed rate.
Taking into account the foreign currency forward contracts and assuming that all other variables remain
constant, a 5.0% appreciation of the Canadian dollar against the U.S. dollar would have the following
impact on profit and other comprehensive income (in Canadian dollars):
In thousands of Canadian dollars
Profit
Other comprehensive income
2015
$
(104)
398
2014
$
(165)
532
A 5.0% depreciation of the Canadian dollar against the U.S. dollar would have had the opposite impact on
profit and other comprehensive income.
63
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Financial assets and financial liabilities with variable interest
rates expose the Company to cash flow risk. The Company’s cash and cash equivalents earn interest at
market rates.
As at March 31, 2015, the Company is exposed to interest rate risk on cash and cash equivalents whose
interest rates vary from 0% to 0.5%. If interest rates as at March 31, 2015, had been 0.5% higher or 0.5%
lower, the impact on profit would have been insignificant.
Financial assets and liabilities that bear interest at fixed rates are subject to fair value interest rate risk. The
Company is not exposed to significant risk with respect to financial assets and financial liabilities due to
their short-term maturities.
With respect to floating-rate financial obligations, a negative impact on cash flows would occur if there
were an increase in reference rates such as LIBOR, the rate of bankers’ acceptances and the Canadian
prime rate.
All other things being equal, a reasonably possible 1.0% increase in the interest rate applicable to the daily
balances of the Revolving facility would have had an impact of $315,700 ($330,167 in 2014) on the
Company’s profit for the year ended March 31, 2015. A 1.0% decrease in the interest rate would have had
the opposite impact on the Company’s profit.
CREDIT RISK
Credit risk is the risk of the Company incurring a financial loss because a customer or other counterparty
to a financial instrument fails to meet its contractual obligations. Financial instruments that expose the
Company to credit risk consist mainly of cash and cash equivalents, cash held for the benefit of third
parties and accounts receivable. Cash and cash equivalents and cash held for the benefit of third parties
are maintained at major financial institutions; therefore, the Company considers the risk of non-
performance on these instruments to be remote.
Based on its past experience, the Company believes that the credit risk associated with its accounts
receivable is low. The Company generally does not require collateral for its accounts receivable. Its trade
accounts receivable are not concentrated with any specific customers but rather with a broad range of
customers. The Company establishes an allowance for doubtful accounts for receivables deemed
uncollectible. The allowance for doubtful accounts amount is based on past experience of amounts
considered to have uncertain collectability.
The carrying value of the Company’s trade accounts receivable is presented net of the allowance for
doubtful accounts. Changes in the allowance for the year are as follows:
In thousands of Canadian dollars
Balance at beginning of year
Write-off
Expense for the year
Balance at end of year
64
2015
$
(245)
199
(96)
(142)
2014
$
(217)
207
(235)
(245)
As at March 31, the aging of trade accounts receivable is as follows:
In thousands of Canadian dollars
Current
Past due
1 - 30 days
31 - 60 days
61 - 90 days
Over 90 days
Total accounts receivable
2015
$
2,192
2,204
1,057
130
108
5,691
2014
$
689
4,654
883
241
131
6,598
There is no impairment or amount past due other than those related to accounts receivable.
LIQUIDITY RISK
Liquidity risk is the risk that a company will be unable to meet its obligations as they fall due. To manage
liquidity risk, the Company makes sure that it always has the cash it needs to meet its obligations when
they fall due. The Company’s financial liabilities, which consist of accounts payable and accrued liabilities
and other accounts payable, are due within 12 months or less. As at March 31, 2015, the Company had a
$60,000,000 credit facility, of which $33,900,000 was undrawn.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments recognized at fair value are classified using a hierarchy that reflects the significance
of the inputs used to measure the fair value.
The fair value hierarchy requires that observable market inputs be used whenever such inputs exist. A
financial instrument is classified in the lowest level of the hierarchy for which a significant input has been
used to measure fair value.
An entity’s own credit risk and the credit risk of the counterparty, in addition to the credit risk of the
financial instrument, were factored into the fair value determination of the financial assets and financial
liabilities, including derivative instruments. All financial instruments measured at fair value in the
Consolidated Statement of Financial Position were classified according to a three-level hierarchy:
•
•
•
Level 1: valuation based on quoted prices (unadjusted) observed in active markets for identical
assets or liabilities.
Level 2: valuation techniques based on inputs that are quoted prices of similar instruments in
active markets; quoted prices for identical or similar instruments in markets that are not active;
inputs other than quoted prices used in a valuation model that are observable for the instrument
being value; and inputs that are derived mainly from or corroborated by observable market data
using correlation or other forms of relationship.
Level 3: valuation techniques based significantly on inputs that are not observable in the market.
65
The following table presents the instruments measured at fair value on a recurring basis, classified using
the hierarchy described above:
In thousands of Canadian dollars
Level 1
Level 2
Level 3
Total
2015
2014
$
-
(1,431)
-
(1,431)
$
-
(669)
-
(669)
The negative fair value of these derivative financial instruments of $1,431,349 (US$1,128,557) reflects the
estimated amounts that the Company would have to pay to settle the contracts as at March 31, 2015, using
relevant market rates. As at March 31, 2014, the fair value was negative at $669,491 (US$605,710).
The fair value of cash and cash equivalents, accounts receivable and accounts payable and accrued
liabilities approximates their carrying amounts due to their short-term maturities.
The fair value of long-term debt is not significantly different from its carrying amount because the
contractual interest rate is close to the interest rate that the Company could have had on a similar
financial instrument.
66
ADDITIONAL INFORMATION
STOCK EXCHANGE LISTING AND SYMBOL
The Company’s common shares are listed on the Toronto Stock Exchange and trade under the ticker
symbol “MDF”.
TRANSFER AGENT
Computershare Investor Services Inc.
1500 Robert-Bourassa Blvd, Suite 700, Montreal, Québec Canada H3A 3S8
Tel.: (514) 982-7888 Fax: (514) 982-7580
AUDITOR
Deloitte LLP
1 Place Ville Marie, Suite 3000, Montreal (Québec) Canada H3B 4T9
Tel. : (514) 393-7115 Fax. : (514) 390-4100
SHAREHOLDER INQUIRIES
Inquiries regarding lost, stolen or destroyed certificates, change of address or transfer requirements should
be directed to the Company’s transfer agent:
Computershare Investor Services
Stock and Bond Transfer Department
1500 Robert-Bourassa Blvd, Suite 700, Montreal, Québec, Canada H3A 3S8
Tel.: 1 800 564-6253 (toll-free in North America)
service@computershare.com
ANNUAL MEETING OF SHAREHOLDERS
The Company’s Annual Meeting of Shareholders will be held on Tuesday, September 15, 2015, at 10:00 am.
EDT in the room Havre and Quais of the 357C, located at 357 de la Commune St. West, Montreal, Qc.
This annual report is also available on the web at www.mediagrif.com
Le rapport annuel 2015 de la Société est aussi publié en français.
67
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
Claude Roy
Québec, Canada
Chairman of the Board,
President and Chief Executive
Officer of the Corporation
André Courtemanche
Québec, Canada
President and Chief Executive Officer
VIAVAR Capital Inc.
Michel Dubé
Québec, Canada
Consultant
André Gauthier
Québec, Canada
President, Holding André Gauthier Inc.
Lyne Groulx
Québec, Canada
Senior Account Executive, talent acquisition
strategy & solution
AtmanCo
EXECUTIVE OFFICERS
Claude Roy
President and Chief Executive Officer
Stéphane Anglaret
Vice President, Technology
Paul Bourque
Chief Financial Officer
Mark Eigenbauer
Vice President, US Operations
Gilles Laporte
Québec, Canada
Director of corporations
Gilles Laurin
Québec, Canada
CPA, CA
Director of corporations
Catherine Roy
Québec, Canada
Senior Consultant, Executive Search
Décarie Recherche
Jean-François Sabourin
Québec, Canada
President and Chief Executive Officer
FinlogiK Inc.
President and Chief Executive Officer
JitneyTrade Inc.
Richard Lampron
Chief Operating Officer
Suzanne Moquin
Vice President, Consumers Solutions
Camil Rousseau
Vice President, Research and Development
Hélène Hallak
Vice President and General Counsel
Jean-Michel Stam
Vice President, e-business Networks
68
CAUSES THAT MATTER TO US
At Mediagrif, we are aware of our social responsibility and are taking concrete actions to
improve the quality of life of our community. Our social commitment is renewed and extended
year after year. Our support includes organizations working in the health and wellness areas.
The Company supports hospital foundations, clinic research institutes and hospitals.
• Hôpital Maisonneuve-Rosemont Foundation
•
Juvenile Diabetes Research Foundation
• Heart & Stroke Foundation
•
•
CHU Sainte-Justine Foundation
Portage Foundation
• Maison des soins Palliatifs de Laval
•
South Shore Alzheimer Society
The Company also provides support to organizations whose mission is to ensure the
well-being of the population, especially among young people.
•
Fondation du Père Sablon
• Marie-Vincent Foundation
•
Conseil des Arts de Montréal
Also, Mediagrif sponsors sports events such as the Leblanc Cup and the golf Omnium
of Père Marcel Sablonnière. We also sponsor Quebec athlete Karine Belleau-Béliveau.
MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
1111 St-Charles Street West, Suite 255, Longueuil, Québec, Canada J4K 5G4
Toll Free: 877 677-9088 | Phone: 450 449-0102 | Fax: 450 449-8725
www.mediagrif.com