Exhibit 99.2



DHX Media Ltd.



Consolidated Financial Statements

June 30, 2017 and 2016

(expressed in thousands of Canadian
dollars)











September 27, 2017



Management’s Responsibility
for Financial Reporting



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



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



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



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



|(signed) “Dana Landry”  |  | (signed) “Keith Abriel”
|----------------------- |  | -----------------------
|Chief Executive Officer |  | Chief Financial Officer
|Halifax, Nova Scotia    |  | Halifax, Nova Scotia   

















September 27, 2017



Independent Auditor’s Report



To the Shareholders of

DHX Media Ltd.



We have audited the accompanying consolidated financial statements
of DHX Media Ltd. and its subsidiaries, which comprise the consolidated balance sheets as at June 30, 2017 and June 30, 2016 and
the consolidated statements of changes in equity, income (loss), comprehensive income (loss) and cash flows for the years then
ended, and the related notes, which comprise 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 as issued by the International
Accounting Standards Board, 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 in our audits is sufficient and appropriate to provide a basis for our audit opinion.



Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of DHX Media Ltd. and its subsidiaries as at June 30, 2017 and June 30,
2016 and their financial performance and their cash flows for the years then ended in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board.



(signed) “PricewaterhouseCoopers LLP”



Chartered Professional Accountants, Licensed Public Accountants


















PricewaterhouseCoopers
LLP

1601 Lower Water Street,
Suite 400, Halifax, Nova Scotia Canada B3J 3P6

T: +1 902 491 7400, F:
+1 902 422 1166, www.pwc.com/ca



“PwC” refers to PricewaterhouseCoopers
LLP, an Ontario limited liability partnership.













|DHX Media
    Ltd.                          
|--------------------------------------------
|Consolidated Balance Sheet                  
|As at
    June 30, 2017 and 2016            
|(expressed in thousands of Canadian dollars)



|                                                                                     |  | June 30,
    2017 |           |  | June 30,
    2016 | 
|------------------------------------------------------------------------------------ |  | ----------------- | --------- |  | ----------------- | 
|                                                                                     |  | $                 |           |  | $                 | 
|Assets                                                                               |  |                   |           |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Current
    assets                                                                   |  |                   |           |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Cash
    and cash equivalents                                                        |  |                   | 62,143    |  |                   | 
|Cash held
    in trust (note 12)                                                     |  |                   | 239,877   |  |                   | 
|Amounts
    receivable (note 6)                                                      |  |                   | 245,033   |  |                   | 
|Prepaid
    expenses and other                                                       |  |                   | 10,092    |  |                   | 
|Investment
    in film and television programs (notes 3 and 7)                       |  |                   | 195,180   |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|                                                                                     |  |                   | 752,325   |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Long-term
    amounts receivable (note 6)                                            |  |                   | 26,502    |  |                   | 
|Deferred
    financing fees                                                          |  |                   | —         |  |                   | 
|Acquired
    and library content (notes 3 and 8)                                     |  |                   | 155,940   |  |                   | 
|Property
    and equipment (note 9)                                                  |  |                   | 30,996    |  |                   | 
|Intangible
    assets (note 10)                                                      |  |                   | 555,408   |  |                   | 
|Goodwill
    (note 11)                                                               |  |                   | 240,534   |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|                                                                                     |  |                   | 1,761,705 |  |                   | 
|Liabilities                                                                          |  |                   |           |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Current
    liabilities                                                              |  |                   |           |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Accounts
    payable and accrued liabilities                                         |  |                   | 178,365   |  |                   | 
|Deferred
    revenue                                                                 |  |                   | 50,949    |  |                   | 
|Interim
    production financing (note 12)                                           |  |                   | 101,224   |  |                   | 
|Current
    portion of long-term debt and obligations under finance leases (note 12) |  |                   | 234,876   |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|                                                                                     |  |                   | 565,414   |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Long-term
    debt and obligations under finance leases (note 12)                    |  |                   | 748,459   |  |                   | 
|Other
    liabilities                                                                |  |                   | 17,420    |  |                   | 
|Deferred
    income taxes (note 15)                                                  |  |                   | 14,559    |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|                                                                                     |  |                   | 1,345,852 |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Shareholders’
    Equity                                                             |  |                   |           |  |                   | 
|Equity
    attributable to Shareholders of the Company                               |  |                   | 329,297   |  |                   | 
|Non-controlling
    interest (note 5)                                                |  |                   | 86,556    |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|                                                                                     |  |                   | 415,853   |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|                                                                                     |  |                   | 1,761,705 |  |                   | 
|                                                                                     |  |                   |           |  |                   | 
|Commitments
    and contingencies (note 19)                                          |  |                   |           |  |                   | 



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











|DHX
    Media Ltd.                              
|------------------------------------------------
|Consolidated
    Statement of Changes in Equity 
|For
    the years ended June 30, 2017 and 2016  
|(expressed in thousands
    of Canadian dollars)



|                                                                        |  | Common
    shares $ |         |   | Contributed
    surplus $ |  |        | Accumulated
    other comprehensive loss $ |  |  | Retained
    earnings $ |   |  | Non-
    controlling interest $ |        |   | Total
    $ | 
|----------------------------------------------------------------------- |  | ------------------- | ------- | - | ------------------------- |  | ------ | ------------------------------------------ |  |  | ----------------------- | - |  | ------------------------------- | ------ | - | ----------- | 
|Balance
    - June 30, 2015                                             |  |                     | 236,757 |   |                           |  | 15,756 |                                            |  |  | (8,355                  | ) |  |                                 | 17,796 |   |             | 
|Net income
    for the year                                             |  |                     | —       |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | 27,668 |   |             | 
|Other
    comprehensive loss for the year                               |  |                     | —       |   |                           |  | —      |                                            |  |  | (11,931                 | ) |  |                                 | —      |   |             | 
|Comprehensive
    income (loss) for the year                            |  |                     | —       |   |                           |  | —      |                                            |  |  | (11,931                 | ) |  |                                 | 27,668 |   |             | 
|Shares
    issued pursuant to the employee share purchase plan ("ESPP") |  |                     | 264     |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | —      |   |             | 
|Normal
    course issuer bid ("NCIB) shares repurchased and cancelled   |  |                     | (1,265  | ) |                           |  | —      |                                            |  |  | —                       |   |  |                                 | (3,775 | ) |             | 
|Stock
    options exercised                                             |  |                     | 3,995   |   |                           |  | (1,249 | )                                          |  |  | —                       |   |  |                                 | —      |   |             | 
|Dividends
    reinvested and paid                                       |  |                     | 597     |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | (7,884 | ) |             | 
|Share-based
    compensation                                            |  |                     | —       |   |                           |  | 5,981  |                                            |  |  | —                       |   |  |                                 | —      |   |             | 
|Issued
    of cash consideration, net of costs and tax effect           |  |                     | 62,480  |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | —      |   |             | 
|Balance
    - June 30, 2016                                             |  |                     | 302,828 |   |                           |  | 20,488 |                                            |  |  | (20,286                 | ) |  |                                 | 33,805 |   |             | 
|Net loss
    for the year                                               |  |                     | —       |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | (3,634 | ) |             | 
|Other
    comprehensive loss for the year                               |  |                     | —       |   |                           |  | —      |                                            |  |  | (1,310                  | ) |  |                                 | —      |   |             | 
|Comprehensive
    loss for the year                                     |  |                     | —       |   |                           |  | —      |                                            |  |  | (1,310                  | ) |  |                                 | (3,634 | ) |             | 
|Non-controlling
    interest on acquisition of subsidiary (note 5)      |  |                     | —       |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | —      |   |             | 
|Shares
    issued pursuant to the ESPP                                  |  |                     | 205     |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | —      |   |             | 
|Stock
    options exercised                                             |  |                     | 149     |   |                           |  | (45    | )                                          |  |  | —                       |   |  |                                 | —      |   |             | 
|Dividends
    reinvested and paid                                       |  |                     | 1,138   |   |                           |  | —      |                                            |  |  | —                       |   |  |                                 | (9,908 | ) |             | 
|Share-based
    compensation                                            |  |                     | —       |   |                           |  | 5,867  |                                            |  |  | —                       |   |  |                                 | —      |   |             | 
|Balance
    - June 30, 2017                                             |  |                     | 304,320 |   |                           |  | 26,310 |                                            |  |  | (21,596                 | ) |  |                                 | 20,263 |   |             | 



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











|DHX
    Media Ltd.                                                            
|------------------------------------------------------------------------------
|Consolidated
    Statement of Income (Loss)                                   
|For
    the years ended June 30, 2017 and 2016                                
|(expressed in thousands
    of Canadian dollars, except for amounts per share)



|                                                                                              |  | June 30,
     2017 |         |   | June 30,
     2016 | 
|--------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------------ | 
|                                                                                              |  | $                  |         |   | $                  | 
|Revenues(note 23)                                                                             |  |                    | 298,712 |   |                    | 
|                                                                                              |  |                    |         |   |                    | 
|Expenses(note 17)                                                                             |  |                    |         |   |                    | 
|Direct
    production costs and expense of film and television produced                       |  |                    | 143,112 |   |                    | 
|Amortization
    of acquired and library content (notes 3 and 8)                              |  |                    | 10,541  |   |                    | 
|Amortization
    of property and equipment and intangible assets                              |  |                    | 17,565  |   |                    | 
|Development
    expenses and other                                                            |  |                    | 3,435   |   |                    | 
|Acquisition
    costs (note 5)                                                                |  |                    | 9,695   |   |                    | 
|Write-down
    of investment in film and television programs and acquired and library content |  |                    | 1,540   |   |                    | 
|Selling,
    general and administrative                                                       |  |                    | 74,133  |   |                    | 
|Finance
    expense (note 16)                                                                 |  |                    | 41,010  |   |                    | 
|Finance
    income (note 16)                                                                  |  |                    | (556    | ) |                    | 
|                                                                                              |  |                    |         |   |                    | 
|                                                                                              |  |                    | 300,475 |   |                    | 
|                                                                                              |  |                    |         |   |                    | 
|Income
    (loss) before income taxes                                                         |  |                    | (1,763  | ) |                    | 
|                                                                                              |  |                    |         |   |                    | 
|Provision
    for (recovery of) income taxes                                                  |  |                    |         |   |                    | 
|Current
    income taxes (note 15)                                                            |  |                    | 5,991   |   |                    | 
|Deferred
    income taxes (note 15)                                                           |  |                    | (4,120  | ) |                    | 
|                                                                                              |  |                    |         |   |                    | 
|                                                                                              |  |                    | 1,871   |   |                    | 
|                                                                                              |  |                    |         |   |                    | 
|Net
    income (loss) for the year                                                            |  |                    | (3,634  | ) |                    | 
|                                                                                              |  |                    |         |   |                    | 
|Basic
    earnings (loss) per common share (note 21)                                          |  |                    | (0.03   | ) |                    | 
|                                                                                              |  |                    |         |   |                    | 
|Diluted
    earnings (loss) per common share (note 21)                                        |  |                    | (0.03   | ) |                    | 



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











|DHX
    Media Ltd.                                       
|---------------------------------------------------------
|Consolidated
    Statement of Comprehensive Income (Loss)
|For
    the years ended June 30, 2017 and 2016           
|(expressed in thousands
    of Canadian dollars)         



|                                                                            |  | June 30,
     2017 |        |   | June 30,
     2016 | 
|--------------------------------------------------------------------------- |  | ------------------ | ------ | - | ------------------ | 
|                                                                            |  | $                  |        |   | $                  | 
|                                                                            |  |                    |        |   |                    | 
|Net
    income (loss) for the year                                          |  |                    | (3,634 | ) |                    | 
|                                                                            |  |                    |        |   |                    | 
|Other
    comprehensive income (loss)                                       |  |                    |        |   |                    | 
|                                                                            |  |                    |        |   |                    | 
|Items
    that will be subsequently reclassified to the statement of income |  |                    |        |   |                    | 
|Cumulative
    translation adjustment                                       |  |                    | (1,310 | ) |                    | 
|                                                                            |  |                    |        |   |                    | 
|Comprehensive
    income (loss) for the year                                |  |                    | (4,944 | ) |                    | 



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











|DHX
    Media Ltd.                              
|------------------------------------------------
|Consolidated
    Statement of Cash Flows        
|For
    the years ended June 30, 2017 and 2016  
|(expressed in thousands
    of Canadian dollars)



|                                                                                  |  | June 30, |          |   | June 30, | 
|--------------------------------------------------------------------------------- |  | -------- | -------- | - | -------- | 
|                                                                                  |  | 2017     |          |   | 2016     | 
|                                                                                  |  | $        |          |   | $        | 
|Cash
    provided by (used in)                                                    |  |          |          |   |          | 
|                                                                                  |  |          |          |   |          | 
|Operating
    activities                                                          |  |          |          |   |          | 
|Net
    income (loss) for the year                                                |  |          | (3,634   | ) |          | 
|Charges (credits)
    not involving cash                                          |  |          |          |   |          | 
|Amortization
    of property and equipment                                        |  |          | 6,186    |   |          | 
|Amortization
    of intangible assets                                             |  |          | 11,379   |   |          | 
|Unrealized foreign
    exchange loss (gain)                                       |  |          | 2,637    |   |          | 
|Amortization
    of deferred financing fees                                       |  |          | 1,682    |   |          | 
|Accretion on
    tangible benefit obligation                                      |  |          | 651      |   |          | 
|Debt extinguishment
    charge                                                    |  |          | 6,990    |   |          | 
|Share-based
    compensation                                                      |  |          | 5,867    |   |          | 
|Amortization of debt premium                                                      |  |          | 118      |   |          | 
|Movement in the fair value of embedded
    derivatives                            |  |          | (1,968   | ) |          | 
|Deferred tax expense (recovery)                                                   |  |          | (4,120   | ) |          | 
|Write-down of acquired and library
    content                                    |  |          | 363      |   |          | 
|Write-down of
    investment in film and television programs                      |  |          | 1,177    |   |          | 
|Amortization of acquired and library
    content                                  |  |          | 10,541   |   |          | 
|Net investment
    in film and television programs (note 22)                      |  |          | (57,235  | ) |          | 
|Net
    change in non-cash balances related to operations (note 22)               |  |          | 12,830   |   |          | 
|                                                                                  |  |          |          |   |          | 
|Cash
    provided by (used in) operating activities                               |  |          | (6,536   | ) |          | 
|                                                                                  |  |          |          |   |          | 
|Financing
    activities                                                          |  |          |          |   |          | 
|Proceeds from
    issuance of common shares, net of issue costs                   |  |          | —        |   |          | 
|Dividends paid                                                                    |  |          | (8,770   | ) |          | 
|Proceeds from
    issuance of common shares related to ESPP and options exercised |  |          | 309      |   |          | 
|Common shares
    repurchased and cancelled pursuant to the NCIB                  |  |          | —        |   |          | 
|Deferred financing
    fees                                                       |  |          | (32,340  | ) |          | 
|Proceeds from
    interim production financing                                    |  |          | 9,221    |   |          | 
|Proceeds from
    long-term debt                                                  |  |          | 782,362  |   |          | 
|Decrease (increase)
    in cash held in trust                                     |  |          | (239,877 | ) |          | 
|Repayment
    of long-term debt and obligations under finance leases              |  |          | (73,623  | ) |          | 
|                                                                                  |  |          |          |   |          | 
|Cash
    provided by (used in) financing activities                               |  |          | 437,282  |   |          | 
|                                                                                  |  |          |          |   |          | 
|Investing
    activities                                                          |  |          |          |   |          | 
|Business acquisitions,
    net of cash acquired (note 5)                          |  |          | (439,014 | ) |          | 
|Acquisition
    of property and equipment                                         |  |          | (5,618   | ) |          | 
|Acquisition/cost
    of intangible assets                                         |  |          | (4,332   | ) |          | 
|                                                                                  |  |          |          |   |          | 
|Cash
    used in investing activities                                             |  |          | (448,964 | ) |          | 
|                                                                                  |  |          |          |   |          | 
|Effect
    of foreign exchange rate changes on cash                               |  |          | (85      | ) |          | 
|                                                                                  |  |          |          |   |          | 
|Net
    change in cash and cash equivalents during the year                       |  |          | (18,303  | ) |          | 
|                                                                                  |  |          |          |   |          | 
|Cash
    and cash equivalents - Beginning of year                                 |  |          | 80,446   |   |          | 
|                                                                                  |  |          |          |   |          | 
|Cash
    and cash equivalents - End of year                                       |  |          | 62,143   |   |          | 



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











|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 1 | Nature
                                         of business
| | - | -----------------------------------------------------------



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



| | 2 | Basis
                                         of preparation
| | - | -------------------------------------------------------------



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



These consolidated financial
statements have been authorized for issuance by the Board of Directors on September 27, 2017.



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty
| | - | --------------------------------------------------------------------------------------------------------------



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



Basis of measurement



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



Consolidation



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



Subsidiaries are those
entities, including structured entities, which the Company controls. Consistent with the film and television industry, the Company
utilizes structured entities as a vehicle to create and fund some of its film and television projects. When the Company makes
substantive decisions on creation of the content and financing within the structured entities it consolidates them. For accounting
purposes, control is established by the Company when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated
from the date on which control is obtained by the Company and are de-consolidated from the date that control ceases.



(1)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Foreign currency translation



| | (i) | Functional
                                         and presentation currency
| | --- | -----------------------------------------------------------------------------



Items included in the
consolidated financial statements of each consolidated entity of the Company are measured using the currency of the primary economic
environment in which the entity operates (the "functional currency"). Primary and secondary indicators are used to determine
the functional currency (primary indicators have priority over secondary indicators). The primary indicator which applies to the
Company is the currency that mainly influences revenues and expenses. Secondary indicators include the currency in which funds
from financing activities are generated. For the Company and all material subsidiaries other than W!LDBRAIN Entertainment Inc.
(“Wildbrain”), Copyright Promotions Licensing Group Limited. (“CPLG”), Cookie Jar Entertainment (USA)
Inc. (“CJUSA”), DHX UK Holdings Limited (“DHX UK”), Wildbrain International Limited ("Wildbrain UK")
and DHX SSP Holdings LLC ("Peanuts and Strawberry") the Canadian dollar has been determined to be the functional currency.
For Wildbrain, CJUSA, and Peanuts and Strawberry the functional currency is the US dollar, and for CPLG, DHX UK, and Wildbrain
UK, the functional currency is UK pound sterling. These consolidated financial statements are presented in Canadian dollars, which
is the Company's functional currency. The financial statements of consolidated entities that have a functional currency other
than Canadian dollars (“foreign operations”) are translated into Canadian dollars as follows:



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

| | (b) | income
                                         and expenses - at the average rate for the period (as this is considered to be a reasonable
                                         approximation of actual rates).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All resulting changes
are recognized in other comprehensive income as cumulative translation adjustments.



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



| | (ii) | Transactions
                                         and balances
| | ---- | ------------------------------------------------------------------



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



(2)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Revenue recognition



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



| | (a) | the
                                         production has been completed;
| | --- | ---------------------------------------------------------------------------

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

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

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

| | (e) | collectability
                                         of proceeds is probable; and
| | --- | ------------------------------------------------------------------------------------

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



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



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



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



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



Revenue from the management
of copyrights, licensing and brands for third parties through representation agreements is recognized when the amount of revenue
can be reliably measured, the services have been provided and collectability is reasonably assured. Amounts received or advances
currently due pursuant to a contractual arrangement, which have not yet met the criteria established to be recognized as revenue,
are recorded as deferred revenue.



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



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

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

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



(3)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Gross versus net revenue



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



Investment in film
and television programs



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



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



The rates used for the
declining balance method of amortization range from 40 to 90% at the time of initial episodic delivery and at rates ranging from
10 - 25% annually thereafter. The determination of the rates is based on the expected economic useful life of the film or television
program, and includes factors such as the ability to license rights to broadcast rights programs in development and availability
of rights to renew licenses for episodic television programs in subsequent seasons, as well as the availability of secondary market
revenue.



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



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



Acquired and library
content



Acquired and
library content represents the balance of acquired film and television programs, as well as library assets that have been
transferred from investment in film and television programs after 5 years without active production. Acquired and library content
typically has minimal ongoing costs to maintain the content, and is charged to income using a declining balance method of
amortization.



(4)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Acquired and library
content(continued)



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



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



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



Broadcast rights



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



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



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



Accrued participation
payables



Included in accounts
payable and accrued liabilities are accrued participation payables, which are accrued at varying rates upon recognition of the
corresponding revenue.  Accrued participation payables reflect the legal liability due as at the balance sheet date, calculated
as the participation owing on cash collected and accounts receivable.



Deferred financing
fees and debt issue costs



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



(5)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Business combinations



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



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



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



Development costs



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



Property and equipment



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



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



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



(6)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Property and equipment(continued)



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



Goodwill



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



Identifiable intangible
assets



Identifiable intangible
assets are carried at cost, including amounts of purchase price allocations upon acquisitions. Amortization is provided on a straight-line
basis over the estimated useful life of the assets, using the following annual rates and methods:



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



Broadcast licenses



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



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



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



(7)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Impairment of non-financial
assets



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



Borrowing costs



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



Government financing
and assistance



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



Provisions



Provisions are recognized
when the Company has a present legal or constructive obligation as a result of past events, it is more likely than not that an
outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured
at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and
are discounted to present value where the effect is material. The Company performs evaluations to identify onerous contracts and,
where applicable, records provisions for such contracts.



Leases



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



(8)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Income taxes



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



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



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



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



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



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



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



Share-based compensation



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



(9)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Share-based compensation(continued)



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



Earnings per share



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



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



Financial instruments



Financial instruments
are classified as follows:



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



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



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



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



(10)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Impairment of financial
assets



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



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



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



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



Dividend distribution



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



Tangible benefit obligation



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



Cash and cash equivalents



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



(11)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



New and amended standards
adopted



| | i) | Effective
                                         July 1, 2016, the Company adopted the amendment to IAS 38, Intangible Assets, which restricts
                                         the use of revenue-based amortization. Previously, the Company’s policy was to
                                         expense investment in film and television programs using a revenue-based model. In adopting
                                         the amendment, the Company has separated its investment in film and television programs
                                         into two categories: productions completed and released and acquired and library content.
                                         Productions completed and released consist of all productions that have current active
                                         production or have had recent active production. This category continues to be accounted
                                         for as inventory and classified as short-term. Acquired and library content consists
                                         of acquired content, and library assets that have been transferred from productions completed
                                         and released. This category is accounted for as an intangible asset and presented separately.
                                         Productions completed and released are expensed using a declining balance method at rates
                                         ranging from 40 - 90% at the time of initial episodic delivery and at rates ranging from
                                         10 - 25% annually thereafter. Acquired and library content is amortized using a declining
                                         balance method at rates ranging from 10 - 20% annually. The amendment to IAS 38 has been
                                         adopted on a prospective basis.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | In
                                         November 2016, the IFRS Interpretations Committee ("IFRIC") issued its agenda
                                         decision addressing the expected manner of recovery of an intangible asset with an indefinite
                                         useful life for the purposes of measuring deferred income tax in accordance with IAS
                                         12, ("Income Taxes"). IFRIC noted that an intangible asset with an indefinite
                                         useful life does not mean infinite life, nor does it mean the expected manner of recovery
                                         of the carrying amount would result solely through sale. Therefore, in applying IAS 12,
                                         an entity must determine its expected manner of recovery of the carrying value of the
                                         intangible assets with an indefinite life and should reflect the tax consequences that
                                         follow from that expected manner of recovery. Previously, the Company measured deferred
                                         income taxes on temporary differences arising from indefinite life intangible assets
                                         using capital gains rates on the basis that the assets will be recovered through its
                                         disposition. As a result of the IFRIC agenda decision, the Company has changed its accounting
                                         policy under IAS 8 to measure deferred income taxes at the income rate applicable to
                                         ordinary taxable income expected to apply in the years in which the temporary differences
                                         are expected to be recovered or settled.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company adopted
this change on a retrospective basis as an accounting policy change in accordance with IAS 8, "Accounting Policies,
Changes to Accounting Estimates and Errors" and the impact on the consolidated opening balance sheet was to increase deferred income tax liabilities by $8,983 (2016 - $8,983), with a corresponding increase to goodwill
of $8,983 (2016 - $8,983).



Accounting standards
issued but not yet applied



IFRS 9 “Financial
instruments” (“IFRS 9”) introduces new requirements for the classification and measurement of financial
assets. IFRS 9 requires all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition
and Measurement” (“IAS 39”) to be measured at amortized cost or estimated fair value in subsequent accounting
periods following initial recognition. Specifically, financial assets that are held within a business model whose objective is
to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest
on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other financial
assets including equity investments are measured at their estimated fair values at the end of subsequent accounting periods.



Requirements for classification
and measurement of financial liabilities were added in October 2010 and they largely carried forward existing requirements in
IAS 39, except that estimated fair value changes due to credit risk for liabilities designated at estimated fair value through
profit and loss would generally be recorded in other comprehensive income.



(12)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Accounting standards
issued but not yet applied(continued)



IFRS 9 was amended in
November 2013, to (i) include guidance on hedge accounting, and (ii) allow entities to early adopt the requirement to recognize
changes in fair value attributable to changes in an entity’s own credit risk, from financial liabilities designated under
the fair value option, in other comprehensive income ("OCI"), without having to adopt the remainder of IFRS 9. The final
version of IFRS 9 was issued in July 2014 and included (i) a third measurement category for financial assets - fair value through
OCI; (ii) a single forward-looking expected loss impairment model; and (iii) a mandatory effective date for adoption of annual
periods beginning on or after January 1, 2018, with early adoption permitted. The Company is evaluating the impact of the new
standard on its financial statements.



The IASB issued IFRS
“Revenue from Contacts and Customers” (“IFRS 15”) effective for annual periods beginning on or
after January 1, 2018, although the standard is available for early adoption. IFRS 15 replaces IAS 18, “Revenue”
and IAS 11, “Construction Contracts”, and some revenue related interpretations. The underlying principle is
that an entity will recognize revenue to depict the transfer of goods and services to customers at an amount the entity expects
to be entitled to in exchange for those goods and services. The Company is currently evaluating the impact of the new standard
on its financial statements.



In January 2016,
the IASB issued IFRS 16, "Leases" ("IFRS 16") effective for annual periods beginning on or after January
1, 2019, with early adoption permitted for entities that have also adopted IFRS 15. IFRS 16 provides a comprehensive model
for the measurement, presentation and disclosure of leases and supersedes IAS 17, "Leases". The adoption of IFRS 16
will result in substantially all lessee leases being recorded on the balance sheet as an asset with a corresponding liability
with both current and long-term portions. The Company is currently evaluating the impact of IFRS 16 on its financial
statements.



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



The IASB issued amendments
to IAS 7, "Statement of cash flows" ("IAS 7 "), to improve disclosure of changes in liabilities arising from
financing activities. The amendments are effective for annual periods beginning on or after January 1, 2017. The Company is currently
evaluating the impact on its consolidated financial statements upon adoption of this standard.



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



(13)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Significant accounting
judgments and estimation uncertainty



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



| | (i) | Income
                                         taxes and deferred income taxes
| | --- | -------------------------------------------------------------------------------



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



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



| | (ii) | Business
                                         combinations
| | ---- | --------------------------------------------------------------



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



| | • | estimated fair values of
tangible assets;
| | - | -----------------------------------------

| | • | estimated fair values of
intangible assets;
| | - | -------------------------------------------

| | • | estimated fair values of
deferred revenue;
| | - | ------------------------------------------

| | • | probability of required
payment under contingent consideration provisions;
| | - | --------------------------------------------------------------------------

| | • | estimated income tax assets
and liabilities; and
| | - | ------------------------------------------------

| | • | estimated fair value of
pre-acquisition contingencies.
| | - | ------------------------------------------------------



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



(14)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 3 | Significant
                                         accounting policies, judgments and estimation uncertainty (continued)
| | - | --------------------------------------------------------------------------------------------------------------------------



Significant accounting
judgments and estimation uncertainty (continued)



| | (ii) | Business
                                         combinations (continued)
| | ---- | --------------------------------------------------------------------------



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



| | • | future
                                         expected cash flows from distribution, consumer products and licensing and other customer
                                         contracts;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | expected
                                         costs to complete film and television productions in-progress and the estimated cash
                                         flows from the productions when completed;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | the
                                         acquired company’s brand, broadcaster relationships and customer and distribution
                                         relationships as well as assumptions about the period of time these acquired intangibles
                                         will continue to benefit the combined company;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | • | uncertain
                                         tax positions assumed in connection with a business combination are initially estimated
                                         as of the acquisition date and are re-evaluated quarterly, management continues to collect
                                         information in order to determine their estimated value, with any adjustments to preliminary
                                         estimates recorded to goodwill during the measurement period; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | discount
                                         rates applied to future expected cash flows.
| | - | ----------------------------------------------------------------------------------------------



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



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



The costs of investing
in and producing film and television programs are capitalized, net of federal and provincial program contributions earned and
are charged to income using a declining balance method of amortization. The estimate of declining balance amortization rates used
by the Company depends on management judgement and assumptions concerning of the economic useful life of the program, which is
based on the pattern of historical experience and other factors. Fluctuations in the expected economic useful life could have
a significant effect on net income.



| | 4 | Compensation of key management
| | - | ------------------------------



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



|                               |  | 2017 |       |  | 2016 | 
|------------------------------ |  | ---- | ----- |  | ---- | 
|                               |  | $    |       |  | $    | 
|                               |  |      |       |  |      | 
|Salaries and employee benefits |  |      | 2,694 |  |      | 
|Share-based compensation       |  |      | 2,738 |  |      | 
|                               |  |      |       |  |      | 
|                               |  |      | 5,432 |  |      | 



(15)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 5 | Acquisitions
| | - | ------------



| | i) | On
                                         June 30, 2017 (“IED Effective Date”), the Company acquired all of the entertainment
                                         division of Iconix Brand Group, Inc. (“IED”), which includes an 80% controlling
                                         interest in Peanuts and a 100% interest in Strawberry Shortcake for consideration of
                                         US$349,236 (CAD$453,203), consisting of US$345,000 (CAD$447,707) paid at closing for
                                         the purchase price and a preliminary estimated working capital adjustment, which will
                                         be finalized post closing, of US$4,236 (CAD$5,497), of which US$1,503 (CAD$1,950) was
                                         paid at closing, and US$2,733 (CAD$3,547) of which is recorded in accounts payable and
                                         accrued liabilities at June 30, 2017. Specifically, the acquisition of IED consisted
                                         of two Membership Interest Purchase Agreements which provided for the acquisition of
                                         an 80% interest in Peanuts Holdings LLC (including all subsidiaries), a 100% interest
                                         in IBGNYC LLC (including all subsidiaries), a 100% interest in IBGSCREEN LLC, and a 100%
                                         interest in Shortcake IP Holdings LLC. The acquisition of IED was funded in conjunction
                                         with a refinancing (the “Refinancing”) of all the Company’s existing
                                         senior secured credit facilities (the "Former Senior Secured Credit Facilities")
                                         and existing senior unsecured notes (the "Senior Unsecured Notes"). The Company
                                         also entered into a new senior secured credit agreement (the "Senior Secured Credit
                                         Agreement") and completed an offering (the "Offering") of subscription
                                         receipts (the "Subscription Receipts"), which commensurate with the closing
                                         of the acquisition of IED on June 30, 2017 were automatically converted into special
                                         warrants (the "Special Warrants") which will ultimately be automatically exercised,
                                         for no additional consideration, into senior unsecured convertible debentures (the "Senior
                                         Unsecured Convertible Debentures"). The details of the Refinancing are further described
                                         in note 12. The remaining 20% interest in Peanuts Holdings LLC (including all subsidiaries)
                                         will continue to be held by members of the family of Charles M. Schulz. In addition to
                                         its 20% interest in Peanuts Holdings LLC (including all subsidiaries), the family of
                                         Charles M. Schulz is also entitled to receive an additional fee based on the revenues
                                         less shareable costs of Peanuts Worldwide LLC, a subsidiary of Peanuts Holdings LLC.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The goodwill value of $25,818
arising from the acquisition of IED is attributable to the Company’s ability to further develop the Peanuts and Strawberry
Shortcake properties in new ways; the increased size and scale of the combined consumer products and licensing businesses; synergies
related to the Company’s CPLG business, which manages copyrights, licensing and brands; and the value of the assembled workforce.
Goodwill is measured as the excess of the consideration transferred and the amount of non-controlling interests over the estimated
fair value of the identifiable assets acquired and the liabilities assumed. None of the goodwill is deductible for tax purposes.



The acquisition of IED
was accounted for using the purchase method; however, the IED Effective Date was June 30, 2017, the date of these consolidated
financial statements; accordingly, these consolidated financial statements include the assets acquired and liabilities assumed,
but do not reflect the results of any of IED’s operations and IED did not contribute to the Company’s consolidated
revenue or consolidated net income for the year ended June 30, 2017.



(16)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 5 | Acquisitions(continued)
| | - | -----------------------



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



|                                         |  | $ |        
|---------------------------------------- |  | - | -------
|Assets                                   |  |   |        
|Cash                                     |  |   | 12,754 
|Amounts receivable                       |  |   | 17,567 
|Prepaid expenses and deposits            |  |   | 1,787  
|Long term receivables                    |  |   | 8,661  
|Acquired and library content             |  |   | 74,618 
|Property and equipment                   |  |   | 104    
|Intangible assets - brands               |  |   | 422,012
|Goodwill                                 |  |   | 25,818 
|                                         |  |   |        
|                                         |  |   | 563,321
|                                         |  |   |        
|Liabilities                              |  |   |        
|Accounts payable and accrued liabilities |  |   | 6,665  
|Deferred revenue                         |  |   | 12,445 
|Other liabilities                        |  |   | 5,148  
|Non-controlling interest                 |  |   | 85,860 
|                                         |  |   |        
|                                         |  |   | 110,118
|                                         |  |   |        
|Net assets acquired                      |  |   | 453,203



The purchase price allocation
has not been finalized and remains open. The Company will finalize the purchase price allocation when both its valuation of the
assets acquired and liabilities assumed is completed and the working capital adjustment is finalized. Any future adjustments will
be recorded as adjustments to the purchase price allocation.



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



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

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



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



(17)







|DHX Media
    Ltd.                                                                                   
|-----------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial
    Statements                                                   
|For the
    years ended June 30, 2017 and 2016                                                       
|(expressed in thousands of Canadian dollars unless
    otherwise noted, except for amounts per share)



| | 5 | Acquisitions(continued)
| | - | -----------------------



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



|                                         |  | $ |      
|---------------------------------------- |  | - | -----
|Assets                                   |  |   |      
|Cash                                     |  |   | 10   
|Acquired and library content             |  |   | 3,484
|Goodwill                                 |  |   | 695  
|                                         |  |   |      
|                                         |  |   | 4,189
|                                         |  |   |      
|Liabilities                              |  |   |      
|Accounts payable and accrued liabilities |  |   | 75   
|Deferred income tax liabilities          |  |   | 631  
|Non-controlling interest                 |  |   | 696  
|                                         |  |   |      
|                                         |  |   | 1,402
|                                         |  |   |      
|Net assets acquired                      |  |   | 2,787



The purchase price allocation
has not been finalized. The Company will finalize the purchase price allocation upon making a final determination of the fair
value of the assets acquired and the liabilities assumed. Any future adjustments will be recorded as adjustments to the purchase
price allocation.



| | 6 | Amounts receivable
| | - | ------------------



|                                                                        |  | June 30,  2017 |         |   | June 30,  2016 | 
|----------------------------------------------------------------------- |  | -------------- | ------- | - | -------------- | 
|                                                                        |  | $              |         |   | $              | 
|                                                                        |  |                |         |   |                | 
|Trade receivables                                                       |  |                | 136,755 |   |                | 
|Less: Provision for impairment of trade receivables                     |  |                | (4,772  | ) |                | 
|                                                                        |  |                |         |   |                | 
|                                                                        |  |                | 131,983 |   |                | 
|                                                                        |  |                |         |   |                | 
|Goods and services tax recoverable, net                                 |  |                | 1,411   |   |                | 
|Federal and provincial film tax credits and other government assistance |  |                | 111,639 |   |                | 
|                                                                        |  |                |         |   |                | 
|Short-term amounts receivable                                           |  |                | 245,033 |   |                | 
|                                                                        |  |                |         |   |                | 
|Long-term amounts receivable                                            |  |                | 26,502  |   |                | 
|                                                                        |  |                |         |   |                | 
|Total amounts receivable                                                |  |                | 271,535 |   |                | 



The aging of trade receivables
not impaired is as follows:



|                       |  | June 30,  2017 |         |  | June 30,  2016 | 
|---------------------- |  | -------------- | ------- |  | -------------- | 
|                       |  | $              |         |  | $              | 
|Less than 60 days      |  |                | 125,081 |  |                | 
|Between 60 and 90 days |  |                | 1,833   |  |                | 
|Over 90 days           |  |                | 5,069   |  |                | 
|                       |  |                |         |  |                | 
|                       |  |                | 131,983 |  |                | 



(18)









DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 6 | Amounts receivable(continued)
| | - | -----------------------------



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



Trade receivables, goods and services taxes recoverable
and federal and provincial film tax credits and other government assistance are provided for based on estimated recoverable amounts
as determined by using a combination of historical default experience, any changes to credit quality and management estimates.
Goods and services taxes recoverable and other government assistance do not contain any significant uncertainty.



Provision for impairment of trade receivables:



|                                                  |  | June 30,  2017 |        |   | June 30,  2016 | 
|------------------------------------------------- |  | -------------- | ------ | - | -------------- | 
|                                                  |  | $              |        |   | $              | 
|Opening balance                                   |  |                | 6,459  |   |                | 
|Provision for receivables                         |  |                | 3,857  |   |                | 
|Receivables written off during the year           |  |                | (5,300 | ) |                | 
|Recoveries of receivables previously provided for |  |                | (94    | ) |                | 
|Exchange differences                              |  |                | (150   | ) |                | 
|                                                  |  |                |        |   |                | 
|Closing balance                                   |  |                | 4,772  |   |                | 



| | 7 | Investment in film and television programs
| | - | ------------------------------------------



|                                                                                                        |  | June 30,  2017 |          |   | June 30,  2016 | 
|------------------------------------------------------------------------------------------------------- |  | -------------- | -------- | - | -------------- | 
|                                                                                                        |  | $              |          |   | $              | 
|                                                                                                        |  |                |          |   |                | 
|Development costs                                                                                       |  |                | 1,678    |   |                | 
|                                                                                                        |  |                |          |   |                | 
|Productions in progress                                                                                 |  |                |          |   |                | 
|Cost, net of government and third party assistance                                                      |  |                | 37,346   |   |                | 
|                                                                                                        |  |                |          |   |                | 
|Productions completed and released                                                                      |  |                |          |   |                | 
|Cost, net of government and third party assistance                                                      |  |                | 503,648  |   |                | 
|Accumulated expense                                                                                     |  |                | (343,487 | ) |                | 
|Accumulated write-down of investment in film and television programs                                    |  |                | (11,131  | ) |                | 
|Transfer to acquired and library content and reclassification of participation payables (notes 3 and 8) |  |                | (29,873  | ) |                | 
|                                                                                                        |  |                |          |   |                | 
|                                                                                                        |  |                | 119,157  |   |                | 
|                                                                                                        |  |                |          |   |                | 
|Acquired participation rights - theatrical and non-theatrical                                           |  |                |          |   |                | 
|Cost                                                                                                    |  |                | 123,361  |   |                | 
|Accumulated expense                                                                                     |  |                | (53,926  | ) |                | 
|Transfer to acquired and library content (notes 3 and 8)                                                |  |                | (69,435  | ) |                | 
|                                                                                                        |  |                |          |   |                | 
|                                                                                                        |  |                | —        |   |                | 
|                                                                                                        |  |                |          |   |                | 
|Program and film rights - broadcasting                                                                  |  |                |          |   |                | 
|Cost                                                                                                    |  |                | 120,655  |   |                | 
|Accumulated expense                                                                                     |  |                | (83,656  | ) |                | 
|                                                                                                        |  |                |          |   |                | 
|                                                                                                        |  |                | 36,999   |   |                | 
|                                                                                                        |  |                |          |   |                | 
|                                                                                                        |  |                | 195,180  |   |                | 



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



(19)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 7 | Investment in film and
television programs(continued)
| | - | -----------------------------------------------------



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



|                                                                                                                                  |  | June 30,  2017 |         |   | June 30,  2016 | 
|--------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | -------------- | 
|                                                                                                                                  |  | $              |         |   | $              | 
|                                                                                                                                  |  |                |         |   |                | 
|Net opening investment in film and television programs                                                                            |  |                | 239,752 |   |                | 
|Increase in development costs                                                                                                     |  |                | 238     |   |                | 
|Cost of productions (completed and released and productions in progress), net of government assistance and third party assistance |  |                | 88,021  |   |                | 
|Expense of investment in film and television programs                                                                             |  |                | (24,348 | ) |                | 
|Write-down in value of certain investment in film and television programs                                                         |  |                | (1,177  | ) |                | 
|Increase of program and film rights - broadcasting                                                                                |  |                | 15,839  |   |                | 
|Expense of program and film rights - broadcasting                                                                                 |  |                | (22,515 | ) |                | 
|Transfer to acquired and library content and reclassification of participation payables (notes 3 and 8)                           |  |                | (99,308 | ) |                | 
|Exchange differences                                                                                                              |  |                | (1,322  | ) |                | 
|                                                                                                                                  |  |                |         |   |                | 
|                                                                                                                                  |  |                | 195,180 |   |                | 



During the year ended June 30, 2017, interest of $2,149
(2016 - $2,169) has been capitalized to investment in film and television programs.



Consolidated Structured Entities



To facilitate the production of two television series
(the “Productions”), the Company entered into two production financing structures whereby entities, in which the Company
has no direct ownership interest, will complete the Productions. The Company, through contractual agreements, has creative control
of the Productions and must fund any overspend on the Productions. Therefore, the Company has the ability to direct the relevant
activities of the entities and can use its power to affect the amount of returns it obtains. Consequently, the Company controls
these entities and consolidates them. The underlying assets of the entities at June 30, 2017 were investment in film and television
programs, cash, amounts receivable and account payable and liabilities are included in the Company’s consolidated results
and totalled assets of $14,835 and liabilities of $14,835 (2016 - $18,615 and $18,615 respectively).



| | 8 | Acquired and library content
| | - | ----------------------------



|                                                                                                          |  | June 30,  2017 |        
|--------------------------------------------------------------------------------------------------------- |  | -------------- | -------
|                                                                                                          |  | $              |        
|                                                                                                          |  |                |        
|Transfer from investment in film and television programs and a reclassification of participation payables |  |                | 88,462 
|Additions IED (note 5 (i))                                                                                |  |                | 74,618 
|Additions Kiddyzuzaa (note 5(ii))                                                                         |  |                | 3,484  
|Accumulated impairment of acquired and library content                                                    |  |                | (363   
|Accumulated amortization                                                                                  |  |                | (10,541
|Exchange differences                                                                                      |  |                | 280    
|                                                                                                          |  |                |        
|                                                                                                          |  |                | 155,940



(20)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 9 | Property and equipment
| | - | ----------------------



|                                 |  | Land |       |  | Building |  |       | Furniture,  fixtures and equipment |  |  | Computer  equipment |   |  | Post- production  equipment |         |   | Computer 
software |  |        | Leasehold 
improvements |  |  | Total  |  
|-------------------------------- |  | ---- | ----- |  | -------- |  | ----- | ---------------------------------- |  |  | ------------------- | - |  | --------------------------- | ------- | - | ------------------ |  | ------ | ----------------------- |  |  | ------ | -
|                                 |  | $    |       |  | $        |  |       | $                                  |  |  | $                   |   |  | $                           |         |   | $                  |  |        | $                       |  |  | $      |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|For the year ended June 30, 2016 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Opening net book value           |  |      | 4,276 |  |          |  | 1,798 |                                    |  |  | 1,377               |   |  |                             | 3,867   |   |                    |  | 1,460  |                         |  |  | 1,202  |  
|Additions                        |  |      | —     |  |          |  | —     |                                    |  |  | 220                 |   |  |                             | 727     |   |                    |  | 2,458  |                         |  |  | 595    |  
|Amortization                     |  |      | —     |  |          |  | (6    | )                                  |  |  | (244                | ) |  |                             | (1,813  | ) |                    |  | (1,001 | )                       |  |  | (759   | )
|Foreign exchange differences     |  |      | —     |  |          |  | —     |                                    |  |  | 1                   |   |  |                             | 30      |   |                    |  | —      |                         |  |  | 2      |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Net book value                   |  |      | 4,276 |  |          |  | 1,792 |                                    |  |  | 1,354               |   |  |                             | 2,811   |   |                    |  | 2,917  |                         |  |  | 1,040  |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|At June 30, 2016                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Cost                             |  |      | 4,276 |  |          |  | 1,876 |                                    |  |  | 5,400               |   |  |                             | 11,592  |   |                    |  | 5,743  |                         |  |  | 4,576  |  
|Accumulated amortization         |  |      | —     |  |          |  | (84   | )                                  |  |  | (4,054              | ) |  |                             | (9,021  | ) |                    |  | (2,826 | )                       |  |  | (3,592 | )
|Foreign exchange differences     |  |      | —     |  |          |  | —     |                                    |  |  | 8                   |   |  |                             | 240     |   |                    |  | —      |                         |  |  | 56     |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Net book value                   |  |      | 4,276 |  |          |  | 1,792 |                                    |  |  | 1,354               |   |  |                             | 2,811   |   |                    |  | 2,917  |                         |  |  | 1,040  |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|For the year ended June 30, 2017 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Opening net book value           |  |      | 4,276 |  |          |  | 1,792 |                                    |  |  | 1,354               |   |  |                             | 2,811   |   |                    |  | 2,917  |                         |  |  | 1,040  |  
|IED acquisition (note 5 (i))     |  |      | —     |  |          |  | —     |                                    |  |  | —                   |   |  |                             | 104     |   |                    |  | —      |                         |  |  | —      |  
|Additions                        |  |      | —     |  |          |  | —     |                                    |  |  | 1,071               |   |  |                             | 1,087   |   |                    |  | 8,223  |                         |  |  | 344    |  
|Disposals, net                   |  |      | —     |  |          |  | —     |                                    |  |  | —                   |   |  |                             | (170    | ) |                    |  | —      |                         |  |  | —      |  
|Transfers, net                   |  |      | —     |  |          |  | 158   |                                    |  |  | —                   |   |  |                             | —       |   |                    |  | —      |                         |  |  | —      |  
|Amortization                     |  |      | —     |  |          |  | (12   | )                                  |  |  | (314                | ) |  |                             | (1,475  | ) |                    |  | (2,852 | )                       |  |  | (488   | )
|Foreign exchange differences     |  |      | —     |  |          |  | —     |                                    |  |  | —                   |   |  |                             | (32     | ) |                    |  | —      |                         |  |  | —      |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|                                 |  |      | 4,276 |  |          |  | 1,938 |                                    |  |  | 2,111               |   |  |                             | 2,325   |   |                    |  | 8,288  |                         |  |  | 896    |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|At June 30, 2017                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Cost                             |  |      | 4,276 |  |          |  | 2,070 |                                    |  |  | 6,281               |   |  |                             | 12,536  |   |                    |  | 13,966 |                         |  |  | 4,896  |  
|Accumulated amortization         |  |      | —     |  |          |  | (132  | )                                  |  |  | (4,178              | ) |  |                             | (10,419 | ) |                    |  | (5,678 | )                       |  |  | (4,056 | )
|Foreign exchange differences     |  |      | —     |  |          |  | —     |                                    |  |  | 8                   |   |  |                             | 208     |   |                    |  | —      |                         |  |  | 56     |  
|                                 |  |      |       |  |          |  |       |                                    |  |  |                     |   |  |                             |         |   |                    |  |        |                         |  |  |        |  
|Net book value                   |  |      | 4,276 |  |          |  | 1,938 |                                    |  |  | 2,111               |   |  |                             | 2,325   |   |                    |  | 8,288  |                         |  |  | 896    |  



As at June 30, 2017, included in the property and equipment
net book value were leased computers equipment, post production equipment and computer software in the amount of $1,733, $5,787,
and $725 respectively, (2016 - $1,776, $2,498, and $293).



(21)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 10 | Intangible assets
| | -- | -----------------



All broadcast licenses relate to the operations of DHX
Television.



|                                 |  | Broadcast 
licenses |        |  | Broadcaster
 relationships |  |        | Customer
 relationships |  |  | Brands |   |  | Production and 
distribution rights 
(1) |         |   | Other (2) |  |        | Total | 
|-------------------------------- |  | ------------------- | ------ |  | -------------------------- |  | ------ | ----------------------- |  |  | ------ | - |  | ---------------------------------------- | ------- | - | --------- |  | ------ | ----- | 
|                                 |  | $                   |        |  | $                          |  |        | $                       |  |  | $      |   |  | $                                        |         |   | $         |  |        | $     | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|For the year ended June 30, 2016 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Opening book value               |  |                     | 67,800 |  |                            |  | 2,075  |                         |  |  | 25,990 |   |  |                                          | 27,686  |   |           |  | —      |       | 
|Amortization                     |  |                     | —      |  |                            |  | (819   | )                       |  |  | (2,831 | ) |  |                                          | (3,753  | ) |           |  | (1,164 | )     | 
|Additions                        |  |                     | —      |  |                            |  | —      |                         |  |  | —      |   |  |                                          | 1,359   |   |           |  | —      |       | 
|Additions acquired               |  |                     | —      |  |                            |  | —      |                         |  |  | —      |   |  |                                          | —       |   |           |  | 30,946 |       | 
|Foreign exchange differences     |  |                     | —      |  |                            |  | 6      |                         |  |  | (1,506 | ) |  |                                          | (439    | ) |           |  | (3,939 | )     | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Net book value                   |  |                     | 67,800 |  |                            |  | 1,262  |                         |  |  | 21,653 |   |  |                                          | 24,853  |   |           |  | 25,843 |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|At June 30, 2016                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Cost                             |  |                     | 67,800 |  |                            |  | 7,362  |                         |  |  | 27,920 |   |  |                                          | 35,279  |   |           |  | 30,946 |       | 
|Accumulated amortization         |  |                     | —      |  |                            |  | (6,143 | )                       |  |  | (6,933 | ) |  |                                          | (10,741 | ) |           |  | (1,164 | )     | 
|Foreign exchange differences     |  |                     | —      |  |                            |  | 43     |                         |  |  | 666    |   |  |                                          | 315     |   |           |  | (3,939 | )     | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Net book value                   |  |                     | 67,800 |  |                            |  | 1,262  |                         |  |  | 21,653 |   |  |                                          | 24,853  |   |           |  | 25,843 |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|For the year ended June 30, 2017 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Opening book value               |  |                     | 67,800 |  |                            |  | 1,262  |                         |  |  | 21,653 |   |  |                                          | 24,853  |   |           |  | 25,843 |       | 
|IED acquisition (note 5 (i))     |  |                     | —      |  |                            |  | —      |                         |  |  | —      |   |  |                                          | 422,012 |   |           |  | —      |       | 
|Amortization                     |  |                     | —      |  |                            |  | (732   | )                       |  |  | (2,747 | ) |  |                                          | (3,177  | ) |           |  | (2,387 | )     | 
|Additions                        |  |                     | —      |  |                            |  | —      |                         |  |  | —      |   |  |                                          | 969     |   |           |  | —      |       | 
|Foreign exchange differences     |  |                     | —      |  |                            |  | 1      |                         |  |  | (226   | ) |  |                                          | (76     | ) |           |  | (503   | )     | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Net book value                   |  |                     | 67,800 |  |                            |  | 531    |                         |  |  | 18,680 |   |  |                                          | 444,581 |   |           |  | 22,953 |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|At June 30, 2017                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Cost                             |  |                     | 67,800 |  |                            |  | 7,362  |                         |  |  | 27,920 |   |  |                                          | 458,260 |   |           |  | 30,946 |       | 
|Accumulated amortization         |  |                     | —      |  |                            |  | (6,875 | )                       |  |  | (9,680 | ) |  |                                          | (13,918 | ) |           |  | (3,551 | )     | 
|Foreign exchange differences     |  |                     | —      |  |                            |  | 44     |                         |  |  | 440    |   |  |                                          | 239     |   |           |  | (4,442 | )     | 
|                                 |  |                     |        |  |                            |  |        |                         |  |  |        |   |  |                                          |         |   |           |  |        |       | 
|Net book value                   |  |                     | 67,800 |  |                            |  | 531    |                         |  |  | 18,680 |   |  |                                          | 444,581 |   |           |  | 22,953 |       | 



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

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



(22)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 11 | Goodwill
| | -- | --------



The continuity of goodwill is as follows:



|                                                    |  | June 30,  2017 |         |   | June 30,  2016 | 
|--------------------------------------------------- |  | -------------- | ------- | - | -------------- | 
|                                                    |  | $              |         |   | $              | 
|                                                    |  |                |         |   |                | 
|Opening net book value                              |  |                | 214,325 |   |                | 
|Acquired on acquisition of IED (note 5 (i))         |  |                | 25,818  |   |                | 
|Acquired on acquisition of Kiddyzuzaa (note 5 (ii)) |  |                | 696     |   |                | 
|Acquired on acquisition of Nerd Corps               |  |                | —       |   |                | 
|Exchange differences                                |  |                | (305    | ) |                | 
|                                                    |  |                |         |   |                | 
|                                                    |  |                | 240,534 |   |                | 



Impairment testing



Goodwill and indefinite life intangible assets, being
the broadcast licenses, are tested for impairment annually or more frequently if events or circumstances indicate that the asset
might be impaired. The Company tested goodwill for impairment at June 30, 2017 and 2016, in accordance with its policy described
in note 3. For the purposes of allocating goodwill, the Company has determined that it has three CGUs: its production, distribution
and licensing of film and television programs business, being the Content Business; CPLG, which manages copyrights, licensing and
brands for third parties and DHX Television. The CPLG CGU does not have any goodwill or indefinite life intangible assets, and
has not been tested for impairment.



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



Value-in-Use



The value-in-use of our CGUs is determined by discounting
five-year cash flow projections from business plans reviewed by senior management. The projections reflect management’s expectations
of revenue, segment profit, capital expenditures, working capital and operating cash flows, based on past experience and future
expectations of operating performance.



Cash flows beyond the five-year period are extrapolated
using perpetual growth rates.



The discount rates are applied to the cash flow projections
and are derived from the weighted average cost of capital for each group of CGUs.



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



|                 |  | Assumptions used |     
|---------------- |  | ---------------- | ----
|                 |  | Perpetuity       |     
|CGU's            |  | growth rate      |     
|                 |  |                  |     
|Content Business |  |                  | 3.00
|DHX Television   |  |                  | 1.00



(23)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 11 | Goodwill(continued)
| | -- | -------------------



As the recoverable amount of the CGU's to which goodwill
and indefinite life intangible assets have been allocated was greater than its carrying value, the Company determined there were
no impairments of goodwill or indefinite life intangible assets as at June 30, 2017 and 2016. Management believes that any reasonably
possible change in the key assumptions on which the estimate of recoverable amounts of the DHX Television and Content Business
CGUs is based would not cause their carrying amounts to exceed their recoverable amounts.



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



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



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



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



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



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



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



The discount rates were estimated based on a combination
of weighted average cost of capital and other external sources.



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



|                                                           |  | June 30,  2017 |           |   | June 30,  2016 | 
|---------------------------------------------------------- |  | -------------- | --------- | - | -------------- | 
|                                                           |  | $              |           |   | $              | 
|                                                           |  |                |           |   |                | 
|Interim production financing                               |  |                | 101,224   |   |                | 
|Long-term debt and obligations under finance leases        |  |                | 983,335   |   |                | 
|                                                           |  |                |           |   |                | 
|Interest bearing debt and obligations under finance leases |  |                | 1,084,559 |   |                | 
|                                                           |  |                |           |   |                | 
|Amount due within 12 months                                |  |                | (336,100  | ) |                | 
|                                                           |  |                |           |   |                | 
|Amount due beyond 12 months                                |  |                | 748,459   |   |                | 



(24)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



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



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



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



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



| | a) | Bank indebtedness
| | -- | -----------------



The Revolving Facility has a maximum available balance
of US$30,000 (CAD $38,931) and matures on June 30, 2022. The Revolving Facility may be drawn down by way of either $USD base rate,
$CAD prime rate, $CAD bankers’ acceptance, or $USD and £GBP LIBOR advances (the “Drawdown Rate”) and bears
interest at floating rates ranging from the Drawdown Rate + 2.50% to the Drawdown Rate + 3.75%.



As at June 30, 2017, there were no amounts drawn on the
Revolving Facility.



On June 30, 2017, a portion of the proceeds from the Refinancing
were used to repay all amounts outstanding pursuant to the Former Revolving Facility.



| | b) | Interim production financing
| | -- | ----------------------------



|                                                                                                                                                                                                                                                                                                                                         |  | June 30,  2017 |         |  | June 30,  2016 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- |  | -------------- | 
|                                                                                                                                                                                                                                                                                                                                         |  | $              |         |  | $              | 
|                                                                                                                                                                                                                                                                                                                                         |  |                |         |  |                | 
|Interim production credit facilities with various institutions, bearing interest at bank prime plus 0.5% - 1.0%.  Assignment and direction of specific production financing, licensing contracts receivable and film tax credits receivable with a net book value of approximately $131,186 at June 30, 2017 (June 30, 2016 - $131,169). |  |                | 101,224 |  |                | 



During the year ended June 30, 2017, the $CDN bank prime
rate averaged 2.70% (year ended June 30, 2016 - 2.71%).



Federal and provincial film tax credits receivable and
certain other contractual amounts receivable (note 6) are provided as security for the interim production financing. Upon collection
of the amounts receivable, the related interim production financing is repaid, as required by the financing agreements.



(25)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



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



| | c) | Long-term debt and obligations under capital leases
| | -- | ---------------------------------------------------



|                                                                                                                                                                                    |  | June 30,  2017 |          |   | June 30,  2016 | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | -------- | - | -------------- | 
|                                                                                                                                                                                    |  | $              |          |   | $              | 
|                                                                                                                                                                                    |  |                |          |   |                | 
|Term Facility, net of unamortized costs of $26,023                                                                                                                                  |  |                | 616,339  |   |                | 
|Former Term Facility, net of unamortized issue costs of $nil (June 30, 2016 - $1,692)                                                                                               |  |                | —        |   |                | 
|Special Warrants, net of unamortized issue costs of $6,249                                                                                                                          |  |                | 133,751  |   |                | 
|Senior Unsecured Notes, net of unamortized issue costs, the fair value of the Redemption Option and the unamortized premium totaling $nil at June 30, 2017 (June 30, 2016 - $5,180) |  |                | 225,000  |   |                | 
|Obligations under various finance leases, bearing interest at rates ranging from 4.0% to 9.8%, maturing on dates ranging from July 2017 to March 2021                               |  |                | 8,245    |   |                | 
|                                                                                                                                                                                    |  |                |          |   |                | 
|                                                                                                                                                                                    |  |                | 983,335  |   |                | 
|                                                                                                                                                                                    |  |                |          |   |                | 
|Less: Current portion                                                                                                                                                               |  |                | (234,876 | ) |                | 
|                                                                                                                                                                                    |  |                |          |   |                | 
|                                                                                                                                                                                    |  |                | 748,459  |   |                | 



| | (i) | Term Facility
| | --- | -------------



The Term Facility has an initial principal of US$495,000
(CAD$642,362) and matures on December 29, 2023.



The Term Facility is repayable in annual amortization
payments of 1% of the initial principal, payable in equal quarterly installments, commencing September 30, 2017. The Term Facility
also requires repayments equal to 50% of Excess Cash Flow (as defined in the Senior Secured Credit Agreement), commencing for the
fiscal year-ended June 30, 2018, while the First Lien Net Leverage Ratio (as defined in the Senior Secured Credit Agreement) is
greater than 3.50 times, reducing to 25% of Excess Cash Flow while First Lien Net Leverage Ratio (as defined in the Senior Secured
Credit Agreement) is at or below 3.50 times and greater than 3.00 times, with the remaining balance due on December 29, 2023.



The Term Facility may be drawn down by way of the $USD
base rate or $USD Libor advances bearing interest at floating rates of $USD base rate + 2.75% or $USD LIBOR + 3.75%.



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



| | • | The ratio of Consolidated Funded Indebtedness (defined in summary
as all third-party indebtedness for borrowed money, unreimbursed obligations in respect of drawn letters of credit, finance leases
and other purchase money indebtedness and guarantees of the Company and certain of its subsidiaries (the “Restricted Subsidiaries”)
and generally excludes all interim production financing), less the unrestricted cash and cash equivalents of the Company and Restricted
Subsidiaries to Consolidated EBITDA (rolling consolidated adjusted EBITDA, pro-forma last 12 months) of the Company and its Restricted
Subsidiaries, calculated in $USD, which commencing for the 12 month period ended September 30, 2017 is not to exceed 7.25 times,
incrementally declining so as not to exceed 5.50 times by September 30, 2021 through until maturity.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(26)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



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



| | c) | Long-term debt and obligations under capital leases(continued)
| | -- | --------------------------------------------------------------



| | (ii) | Former Term Facility
| | ---- | --------------------



Effective December 31, 2015, the Former Term Facility
was amended to include additional principal amounts of $20,000 and US$20,000, with a scheduled maturity date of July 31, 2019.



During the year ended June 30, 2016, and in conjunction
with an additional issuance (the "Additional

Issuance") of Senior Unsecured Notes, the Company
made a principal repayment on the Former Term Facility of $47,016 and, accordingly, recognized a debt extinguishment charge of
$1,364, being a portion of the previously unamortized debt issue costs at the time of the principal repayment.



The Former Term Facility bore interest at floating rates.



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



| | (iii) | Subscription Receipts / Special Warrrants / Senior
Unsecured Convertible Debentures
| | ----- | -----------------------------------------------------------------------------------



On May 31, 2017, and in contemplation of the closing
of the acquisition of IED (note 5(i)), the Company completed the Offering of Subscription Receipts in the amount of $140,000, which
upon closing of the acquisition of IED (note 5(i)) on June 30, 2017 automatically converted into Special Warrants, which on October
1, 2017 will be automatically exercised, for no additional consideration, into Senior Unsecured Convertible Debentures of the Company.
The Subscription Receipts, Special Warrants and Senior Unsecured Convertible Debentures all bear interest at a rate of 5.875% and
the Senior Unsecured Convertible Debentures are convertible into common voting shares of variable voting shares of the Company
at a price of $8.00 per share, subject to certain customary adjustments. The Senior Unsecured Convertible Debentures will mature
September 30, 2024.



| | (iv) | Senior Unsecured Notes
| | ---- | ----------------------



As at June 30, 2017, the outstanding principal amount
due on the Senior Unsecured Notes was

$225,000 (June 30, 2016 - $225,000). The Senior Unsecured
Notes bear interest at 5.875% and with a scheduled maturity of December 2, 2021.



On May 13, 2016, the Company completed the Additional
Issuance, via private placement, of the 5.875% Senior Unsecured Notes, with an aggregate principal amount of $50,000 at a price
of $975 per $1,000 of principal. The net proceeds of $47,016 from the Additional Issuance of the Senior Unsecured Notes were used
to pay debt under the Former Term Facility.



(27)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



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



| | c) | Long-term debt and obligations under capital leases(continued)
| | -- | --------------------------------------------------------------



The Senior Unsecured Notes contain embedded
derivatives (the “Embedded Derivatives”). The Senior Unsecured Notes contain a redemption option (the
"Redemption Option") whereby the Company can redeem all or part of the Senior Unsecured Notes. The Senior Unsecured
Notes also contain a put option (the “Put Option”) whereby the lender can redeem all or part of the Senior
Unsecured Notes upon a change of control of the Company. The Embedded Derivatives are required to be accounted for as
separate embedded derivative financial instruments. On initial recognition, the Embedded Derivatives are recorded at their
calculated fair values and grouped with the Senior Unsecured Notes. The Embedded Derivatives are adjusted to their fair
values at each reporting date and any change in fair value is recorded within finance income/expense in the consolidated
statement of income (note 16). On initial recognition, the carrying value of the Senior Unsecured Notes was reduced by the
net fair value of the Embedded Derivatives, and is amortized over the term of the Senior Unsecured Notes.



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



| | (v) | Principal repayments and undrawn borrowing facilities
| | --- | -----------------------------------------------------



The aggregate amount of principal repayments required
in each of the next five years is as follows:



|                          |  | $ |        
|------------------------- |  | - | -------
|                          |  |   |        
|Year ending June 30, 2018 |  |   | 234,876
|2019                      |  |   | 8,434  
|2020                      |  |   | 7,724  
|2021                      |  |   | 7,402  
|2022 and beyond           |  |   | 757,172



(28)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 13 | Share capital and contributed surplus
| | -- | -------------------------------------



| | a) | Authorized
| | -- | ----------



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

Unlimited
Common Voting Shares without nominal or par value

Unlimited Variable Voting Shares without nominal or par
value

Unlimited Non-Voting Shares without nominal or par value



Preferred Variable Voting Shares



On November 12, 2014, the PVVS were transferred by the
Company’s Executive Chairman, to the Company’s Chief Executive Officer, in accordance with the terms of a shareholders
agreement among the Company and holder of the PVVS (the “PVVS Shareholder Agreement”). On the date of such transfer,
the Company’s Chief Executive Officer entered into the PVVS Shareholder Agreement with the Company, pursuant to which the
Company’s Chief Executive Officer: (i) agreed not to transfer the PVVS, in whole or in part, except with the prior written
approval of the Board; (ii) granted to the Company the unilateral right to compel the transfer of the PVVS, at any time and
from time to time, in whole or in part, to a person designated by the Board; and (iii) granted to the Company a power of attorney
to effect any transfers contemplated by the PVVS Shareholder Agreement.  The Board will not approve or compel a transfer without
first obtaining the approval of the TSX and the PVVS Shareholder Agreement cannot be amended, waived or terminated unless approved
by the TSX.



Common shares



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



On October 9, 2014, each outstanding Common Share of the
Company that was not owned and controlled by a Canadian for the purposes of the Broadcasting Act (Canada) (the “Broadcasting
Act”) was converted into one Variable Voting Share and each outstanding Common Share that was owned and controlled by a Canadian
for the purposes of the Broadcasting Act was converted into one Common Voting Share. Each Common Voting Share carries one vote
per share on all matters. Each Variable Voting Share carries one vote per share unless the number of Variable Voting Shares outstanding
exceeds 33 1/3% of the total number of Variable Voting Shares and Common Voting Shares outstanding, in which case the voting rights
per share of the Variable Voting Shares are reduced so that the total number of votes associated with the outstanding Variable
Voting Shares equals 33 1/3% of the total votes associated with the outstanding Variable Voting Shares and Common Voting Shares
combined. The economic rights of each Variable Voting Share, each Common Voting Share and each Non-Voting Share are the same. All
of the unissued Common Shares of the Company were cancelled on the completion of the Share Capital Reorganization. The Variable
Voting Shares and Common Voting Shares are listed on the TSX under the ticker symbols DHX.A and DHX.B, respectively. On June 23,
2015, the Variable Voting Shares were listed on the NASDAQ under the ticker symbol DHXM.



(29)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 13 | Share
capital and contributed surplus(continued)
| | -- | ------------------------------------------------



| | b) | Issued and outstanding
| | -- | ----------------------



|                                                              |  | June 30, 2017 |             |   | June 30, 2016 | 
|------------------------------------------------------------- |  | ------------- | ----------- | - | ------------- | 
|                                                              |  | Number        |             |   | Amount        | 
|                                                              |  |               |             |   | $             | 
|                                                              |  |               |             |   |               | 
|Preferred variable voting shares (note
    13 (a))            |  |               | 100,000,000 |   |               | 
|                                                              |  |               |             |   |               | 
|Common shares (note 13 (c))                                   |  |               |             |   |               | 
|Opening balance                                               |  |               | 133,774,729 |   |               | 
|Issued for cash consideration, net of costs and tax effect    |  |               | —           |   |               | 
|Shares issued pursuant to the ESPP                            |  |               | 31,500      |   |               | 
|Dividend reinvestment                                         |  |               | 195,319     |   |               | 
|NCIB shares repurchased and cancelled                         |  |               | —           |   |               | 
|Options exercised                                             |  |               | 60,000      |   |               | 
|                                                              |  |               |             |   |               | 
|Ending balance                                                |  |               | 134,061,548 |   |               | 
|                                                              |  |               |             |   |               | 
|Contributed surplus, stock options and PSUs (note
    13 (d)) |  |               |             |   |               | 
|Opening balance                                               |  |               | 7,137,125   |   |               | 
|Options issued to officers and employees                      |  |               | 1,742,400   |   |               | 
|Share based compensation                                      |  |               | —           |   |               | 
|Stock options exercised                                       |  |               | (60,000     | ) |               | 
|PSUs issued to employees                                      |  |               | 338,665     |   |               | 
|                                                              |  |               |             |   |               | 
|Ending balance                                                |  |               | 9,158,190   |   |               | 



| | c) | Common shares
| | -- | -------------



The common shares of the Company are inclusive of Common
Voting Shares, Variable Voting Shares and Non-Voting Shares. As at June 30, 2017, the Company had 103,821,287 Common Voting
Shares, 30,240,261 Variable Voting Shares and nil Non-Voting Shares issued and outstanding (2016 - 104,714,707, 29,060,022, and
nil respectively).



During the year ended June 30, 2017, the Company
issued 31,500 common shares, at an average price of $6.51 as part of the Company’s employee share purchase plan (2016 - 32,538
at $8.11).



During the year ended June 30, 2017, 60,000 common
shares were issued out of treasury at an average price of $1.73 upon exercise of stock options (2016 - 1,663,125 at $1.65).



During the year ended June 30, 2017, the Company
issued 195,319 common shares at an average price of $5.82, as part of the shareholder enrollment in the Company's dividend reinvestment
program (2016 - 88,754 at 6.73).



During the year ended June 30, 2016, the Company repurchased
and cancelled 659,000 Common Voting Shares at an average price of $7.64 for gross costs of $5,040 pursuant to a normal course issuer
bid.



On May 5, 2016, the Company issued 8,667,000 common shares
at $7.50 per common share for gross proceeds of $65,003, less cash costs of $3,657, net of tax effect of $1,134.



(30)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 13 | Share
capital and contributed surplus(continued)
| | -- | ------------------------------------------------



| | d) | Stock options
| | -- | -------------



As at June 30, 2017 and 2016, the Company had the following
stock options outstanding:



|                             |  |           |            |   | Weighted average | 
|---------------------------- |  | --------- | ---------- | - | ---------------- | 
|                             |  | Number of |            |   | exercise price   | 
|                             |  | options   |            |   | per stock option | 
|                             |  |           |            |   |                  | 
|Outstanding at June 30, 2015 |  |           | 6,353,750  |   |                  | 
|                             |  |           |            |   |                  | 
|Granted                      |  |           | 2,446,500  |   |                  | 
|Exercised                    |  |           | (1,663,125 | ) |                  | 
|                             |  |           |            |   |                  | 
|Outstanding at June 30, 2016 |  |           | 7,137,125  |   |                  | 
|                             |  |           |            |   |                  | 
|Granted                      |  |           | 1,742,400  |   |                  | 
|Exercised                    |  |           | (60,000    | ) |                  | 
|                             |  |           |            |   |                  | 
|Outstanding at June 30, 2017 |  |           | 8,819,525  |   |                  | 
|                             |  |           |            |   |                  | 
|Exercisable at June 30, 2017 |  |           | 3,938,500  |   |                  | 



The total maximum number of common shares to be reserved
for issuance through the Company's option plan at June 30, 2017 is 8.5% (June 30, 2016 - 8.5%) of the total number of outstanding
common shares at any time. As at June 30, 2017, this amounted to 11,395,231 (June 30, 2016 - 11,370,851).



On October 1, 2015, 1,446,500 stock options were issued
at $8.40 per share, vesting over four years, expiring on September 30, 2022.



On November 19, 2015, 25,000 stock options were issued
at $8.03 per share, vesting over four years, expiring on November 18, 2022.



On December 18, 2015, 600,000 stock options were issued
at $8.32 per share, vesting over three and four years, expiring on December 17, 2022.



On February 19, 2016, 350,000 stock options were issued
at $6.93 per share, vesting over four years, expiring on February 18, 2023.



On February 29, 2016, 25,000 stock options were issued
at $6.76 per share, vesting over four years, expiring on February 28, 2023.



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



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



(31)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 13 | Share capital and contributed
surplus(continued)
| | -- | ------------------------------------------------



The weighted average grant date value of stock options
and assumptions using the Black-Scholes option pricing model for the year ended June 30, 2017 and 2016 are as follows:



|                                  |  | 2017 |         |   | 2016 |  
|--------------------------------- |  | ---- | ------- | - | ---- | -
|                                  |  |      |         |   |      |  
|Weighted average grant value date |  | $    | 2.01    |   |      | $
|Risk-free rate                    |  |      | 0.69    | % |      |  
|Expected option life              |  |      | 5 years |   |      |  
|Expected volatility               |  |      | 37      | % |      |  
|Expected dividend yield           |  |      | 1.08    | % |      |  



Changes in the assumptions can materially affect the
fair value of estimates and therefore, the existing models do not necessarily provide a measure of the fair value of stock options.



During the year ended June 30, 2017, 60,000 stock
options were exercised at an average price of $1.73 per share for total proceeds of $104 (2016 - 1,663,125 at $1.65 for total proceeds
of $2,746).



Information related to options outstanding at June 30,
2017 is presented below.



|                |  | Number         |           |  | Weighted         |  |      | Weighted |  |  | Number         |  |  | Weighted |          
|--------------- |  | -------------- | --------- |  | ---------------- |  | ---- | -------- |  |  | -------------- |  |  | -------- | ---------
|Range of        |  | outstanding at |           |  | average          |  |      | average  |  |  | exercisable at |  |  | average  |          
|exercise prices |  | June 30,       |           |  | remaining        |  |      | exercise |  |  | June 30,       |  |  | exercise |          
|                |  | 2017           |           |  | contractual life |  |      | price    |  |  | 2017           |  |  | price    |          
|                |  |                |           |  | years            |  |      | $        |  |  |                |  |  | $        |          
|                |  |                |           |  |                  |  |      |          |  |  |                |  |  |          |          
|$1.00 - $6.07   |  |                | 1,585,625 |  |                  |  | 0.99 |          |  |  | 3.14           |  |  |          | 1,585,625
|$6.08 - $9.78   |  |                | 7,233,900 |  |                  |  | 4.29 |          |  |  | 7.77           |  |  |          | 2,352,875
|                |  |                |           |  |                  |  |      |          |  |  |                |  |  |          |          
|Total           |  |                | 8,819,525 |  |                  |  | 3.69 |          |  |  | 6.93           |  |  |          | 3,938,500



| | e) | Performance share unit plan
| | -- | ---------------------------



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



During the year and as at June 30, 2017, there were 338,665
(June 30, 2016 - nil) PSUs both granted and outstanding. During the year, the compensation expense recognized as a result of the
PSUs was $895 (2016 - $nil).



For the PSUs granted during the year, a weighted average
estimated fair value of $6.86 per PSU was determined using the Black-Scholes model with the following weighted average assumptions:



|Expected life           |  |  | 2.25 years |  
|----------------------- |  |  | ---------- | -
|Risk-free interest rate |  |  | 0.51       | %
|Expected volatility     |  |  | 30.5       | %
|Expected dividend yield |  |  | 1.03       | %



(32)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 14 | Government financing and assistance
| | -- | -----------------------------------



During the year ended June 30, 2017, investment in film
and television programs was reduced by $2,125 (2016 - $nil) related to production financing from government agencies. This financing
is related to participation amounts by government agencies and is repayable from distribution revenue of the specific productions
for which the financing was made. In addition, during the year ended June 30, 2017, investment in film has also been reduced by
$3,737 (2016 - $2,005) related to non-repayable contributions from the Canadian Media Fund license fee program. During the year
ended June 30, 2017, investment in film and television programs has been reduced by $25,547 (2016 - $37,714) for tax credits relating
to production activities. Lastly, during the year ended June 30, 2017, the Company received $39,919, in government financing and
assistance (2016 - $39,624).



Amounts receivable from the Canadian federal government
and other government agencies in connection with production financing represents 41% of total amounts receivable at June 30,
2017 (2016 - 49%). Certain of these amounts are subject to audit by the government agency. Management believes that the net amounts
recorded are fully collectible. The Company adjusts amounts receivable from Canadian federal government and other government agencies
including federal and provincial tax credits receivable, in connection with production financing, quarterly and yearly, for any
known differences arising from internal or external audit of these balances.



| | 15 | Income taxes
| | -- | ------------



Significant components of the Company’s net deferred
income tax liability as at June 30, 2017 and June 30, 2016 are as follows:



|                                                                           |  | June 30,  2017 |         |   | June 30,  2016 | 
|-------------------------------------------------------------------------- |  | -------------- | ------- | - | -------------- | 
|                                                                           |  | $              |         |   | $              | 
|                                                                           |  |                |         |   |                | 
|Broadcast licenses                                                         |  |                | (17,967 | ) |                | 
|Tangible benefit obligation                                                |  |                | 2,352   |   |                | 
|Leasehold inducement                                                       |  |                | 123     |   |                | 
|Foreign tax credits                                                        |  |                | 85      |   |                | 
|Participation payables and finance lease obligations and other liabilities |  |                | 64      |   |                | 
|Property and equipment                                                     |  |                | (1,724  | ) |                | 
|Share issuance costs and deferred financing fees                           |  |                | (1,051  | ) |                | 
|Investment in film and television programs                                 |  |                | (7,782  | ) |                | 
|Intangible assets                                                          |  |                | (6,278  | ) |                | 
|Non-capital losses and other                                               |  |                | 17,619  |   |                | 
|                                                                           |  |                |         |   |                | 
|Net deferred income tax liability                                          |  |                | (14,559 | ) |                | 



Deferred income tax liabilities have not been recognized
for the withholding tax and other taxes that would be payable on unremitted earnings of certain subsidiaries, as such amounts are
permanently reinvested. Unremitted earnings totalled $60,510 at June 30, 2017 (June 30, 2016 - $31,498).



(33)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 15 | Income taxes(continued)
| | -- | -----------------------



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



|                                                                                                   |  | June 30,  2017 |        |   | June 30,  2016 | 
|-------------------------------------------------------------------------------------------------- |  | -------------- | ------ | - | -------------- | 
|                                                                                                   |  | $              |        |   | $              | 
|                                                                                                   |  |                |        |   |                | 
|Income tax expense based on combined federal and provincial tax rates of 31% (June 30, 2016 - 31%) |  |                | (113   | ) |                | 
|Income taxes increased (reduced) by:                                                               |  |                |        |   |                | 
|Share-based compensation                                                                           |  |                | 1,792  |   |                | 
|Non-deductible acquisition costs                                                                   |  |                | 1,244  |   |                | 
|Tax rate differential                                                                              |  |                | (1,252 | ) |                | 
|Other                                                                                              |  |                | 200    |   |                | 
|                                                                                                   |  |                |        |   |                | 
|Provision for income taxes                                                                         |  |                | 1,871  |   |                | 



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



| | 16 | Finance income and finance expense
| | -- | ----------------------------------



Finance income and finance expense are comprised of the
following:



|                                                                                           |  | June 30,  2017 |        |   | June 30,  2016 | 
|------------------------------------------------------------------------------------------ |  | -------------- | ------ | - | -------------- | 
|                                                                                           |  | $              |        |   | $              | 
|                                                                                           |  |                |        |   |                | 
|Finance income                                                                             |  |                |        |   |                | 
|Interest income                                                                            |  |                | 556    |   |                | 
|                                                                                           |  |                |        |   |                | 
|Finance expense                                                                            |  |                |        |   |                | 
|Interest expense on bank indebtedness                                                      |  |                | 348    |   |                | 
|Accretion of tangible benefit obligation                                                   |  |                | 651    |   |                | 
|Interest on long-term debt, obligations under finance leases and other                     |  |                | 18,181 |   |                | 
|Early redemption penalties (notes 5 and 12)                                                |  |                | 13,464 |   |                | 
|Debt extinguishment charge (notes 5 and 12)                                                |  |                | 6,990  |   |                | 
|Amortization of debt premium on Senior Unsecured Notes (note 12)                           |  |                | 118    |   |                | 
|Net foreign exchange loss/(gain)                                                           |  |                | 3,226  |   |                | 
|Movement in fair value of the Embedded Derivatives on the Senior Unsecured Notes (note 12) |  |                | (1,968 | ) |                | 
|                                                                                           |  |                |        |   |                | 
|                                                                                           |  |                | 41,010 |   |                | 



(34)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 17 | Expenses by nature and employee benefit expense
| | -- | -----------------------------------------------



The following sets out the expenses
by nature:



|                                                                                          |  | June 30,  2017 |         |  | June 30,  2016 | 
|----------------------------------------------------------------------------------------- |  | -------------- | ------- |  | -------------- | 
|                                                                                          |  | $              |         |  | $              | 
|                                                                                          |  |                |         |  |                | 
|Investment in film and television programs                                                |  |                |         |  |                | 
|Direct production and new media costs                                                     |  |                | 96,249  |  |                | 
|Expense of film and television programs                                                   |  |                | 24,348  |  |                | 
|Expense of film and broadcast rights for broadcasting                                     |  |                | 22,515  |  |                | 
|Expense of acquired library                                                               |  |                | —       |  |                | 
|Write-down of investment in film and television programs and acquired and library content |  |                | 1,540   |  |                | 
|Development expenses and other                                                            |  |                | 3,435   |  |                | 
|Amortization of acquired and library content (notes 3 and 8)                              |  |                | 10,541  |  |                | 
|Office and administrative                                                                 |  |                | 20,395  |  |                | 
|Acquisition costs (note 5)                                                                |  |                | 9,695   |  |                | 
|Finance expense, net                                                                      |  |                | 40,454  |  |                | 
|Investor relations and marketing                                                          |  |                | 2,902   |  |                | 
|Professional and regulatory                                                               |  |                | 5,363   |  |                | 
|Amortization of property and equipment and intangible assets                              |  |                | 17,565  |  |                | 
|                                                                                          |  |                |         |  |                | 
|                                                                                          |  |                | 255,002 |  |                | 
|                                                                                          |  |                |         |  |                | 
|The following sets out the components of employee benefits expense:                       |  |                |         |  |                | 
|Salaries and employee benefits                                                            |  |                | 39,606  |  |                | 
|Share-based compensation                                                                  |  |                | 5,867   |  |                | 
|                                                                                          |  |                |         |  |                | 
|                                                                                          |  |                | 45,473  |  |                | 
|                                                                                          |  |                |         |  |                | 
|                                                                                          |  |                | 300,475 |  |                | 



| | 18 | Financial instruments
| | -- | ---------------------



| | a) | Credit risk
| | -- | -----------



Credit risk arises from cash and cash equivalents, cash
held in trust as well as credit exposure to customers, including outstanding trade receivables. The Company manages credit risk
on cash and cash equivalents by ensuring that the counterparties are banks, governments and government agencies with high credit
ratings.



The maximum exposure to credit risk for cash and cash
equivalents, cash held in trust and trade receivables approximate the amount recorded on the consolidated balance sheet of $465,277
at June 30, 2017 (2016 - 190,945).



(35)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 18 | Financial instruments(continued)
| | -- | --------------------------------



| | a) | Credit risk(continued)
| | -- | ----------------------



The balance of trade amounts receivable are mainly with
Canadian broadcasters and large international distribution companies. Management manages credit risk by regularly reviewing aged
accounts receivables and appropriate credit analysis. The Company has booked an allowance for doubtful accounts of approximately
3% against the gross amounts for certain trade amounts receivable and management believes that the net amount of trade amounts
receivable is fully collectible. In assessing credit risk, management includes in its assessment the long-term receivables and
considers what impact the long-term nature of the receivable has on credit risk. For certain arrangements with licensees, the Company
is considered the agent, and only reports the revenue net of the licensor’s share. When the Company bills a third party in
full where it is an agent for the licensor, the Company records an offsetting amount in accounts payable that is only payable to
a licensee when the amount is collected from the third party. This reduces the risk, as the Company is only exposed to the amounts
receivable related to the revenue it records.



| | b) | Interest rate risk
| | -- | ------------------



The Company is exposed to interest rate risk arising from
fluctuations in interest rates as its interim production financing, certain long-term debt and a portion of cash and cash equivalents
and cash held in trust bear interest at floating rates. A 1% fluctuation would have an approximate $7,000 to $8,000 effect on net
income before income taxes.



| | c) | Liquidity risk
| | -- | --------------



The Company manages liquidity by forecasting and monitoring
operating cash flows and through the use of finance leases, interim production financing and maintaining revolving credit facilities
(note 12). As at June 30, 2017, the Company had cash on hand of $62,143 (June 30, 2016 - $80,446).



Results of operations for any period are dependent on
the number and timing of film and television programs delivered, which cannot be predicted with certainty. Consequently, the Company’s
results from operations may fluctuate materially from period-to-period and the results of any one period are not necessarily indicative
of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition.
During the initial broadcast of the rights, the Company is somewhat reliant on the broadcaster’s budget and financing cycles
and at times the license period gets delayed and commences at a later date than originally projected.



The Company’s film and television revenues vary
significantly from quarter to quarter driven by contracted deliveries with the primary broadcasters. Although with the Company’s
recent diversification of its revenue mix, particularly in the strengthening of the distribution revenue stream and addition of
the broadcasting revenue stream, some of the quarterly unevenness is improving slightly and becoming more predictable. Distribution
revenues are contract and demand driven and can fluctuate significantly from year-to-year. The Company maintains appropriate cash
balances and has access to financing facilities to manage fluctuating cash flows.



The Company obtains interim production financing (note
12) to provide funds until such time as the federal and provincial film tax credits (note 6) are collected. Upon collection of
the film tax credits, the related interim production financing is repaid.



(36)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 18 | Financial instruments(continued)
| | -- | --------------------------------



| | d) | Currency risk
| | -- | -------------



The Company’s activities involve holding
foreign currencies and incurring production costs and earning revenues denominated in foreign currencies. These activities
result in exposure to fluctuations in foreign currency exchange rates. The Company periodically enters into foreign exchange
purchases contracts to manage its foreign exchange risk on USD, GBP, JPY and Euro denominate contracts. At June 30, 2017, the
Company revalued its financial instruments denominated in a foreign currency at the prevailing exchange rates. A 1% change in
the USD, GBP or Euro exchange rate would have an approximate $4,000 to $6,000 effect on net income and comprehensive
income.



| | e) | Contractual maturity analysis for financial liabilities
| | -- | -------------------------------------------------------



|                                         |  |       |           |  | Less than |  |         | 1 to 3 |  |  | 4 to 5 |  |  | After 5 |       
|---------------------------------------- |  | ----- | --------- |  | --------- |  | ------- | ------ |  |  | ------ |  |  | ------- | ------
|                                         |  | Total |           |  | 1 year    |  |         | years  |  |  | years  |  |  | years   |       
|                                         |  | $     |           |  | $         |  |         | $      |  |  | $      |  |  | $       |       
|                                         |  |       |           |  |           |  |         |        |  |  |        |  |  |         |       
|Accounts payable and accrued liabilities |  |       | 178,365   |  |           |  | 178,365 |        |  |  | —      |  |  |         | —     
|Interim production financing             |  |       | 101,224   |  |           |  | 101,224 |        |  |  | —      |  |  |         | —     
|Other liabilities                        |  |       | 12,568    |  |           |  | —       |        |  |  | 10,095 |  |  |         | 2,473 
|Long-term debt                           |  |       | 1,007,363 |  |           |  | 231,424 |        |  |  | 12,848 |  |  |         | 12,848
|Finance lease obligations                |  |       | 8,245     |  |           |  | 3,452   |        |  |  | 3,310  |  |  |         | 1,483 
|                                         |  |       |           |  |           |  |         |        |  |  |        |  |  |         |       
|                                         |  |       | 1,307,765 |  |           |  | 514,465 |        |  |  | 26,253 |  |  |         | 16,804



Payments noted above do not include interest, are not
discounted and other liabilities exclude deferred lease inducements.



At June 30, 2017, the Company had cash held in trust of
$239,877, which on July 11, 2017 was used to repay certain long term debt balances.



| | f) | Fair values
| | -- | -----------



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



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



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



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



(37)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 18 | Financial instruments(continued)
| | -- | --------------------------------



| | f) | Fair values(continued)
| | -- | ----------------------



Financial assets and liabilities measured at fair value



|                              |  | As at                 |        
|----------------------------- |  | --------------------- | -------
|                              |  | June 30, 2017         |        
|                              |  | Fair value  hierarchy |        
|Derivatives                   |  |                       |        
|Embedded derivatives (2)      |  |                       | Level 2
|Foreign currency forwards (3) |  |                       | Level 2



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

| | (2) | The fair values of Embedded derivatives are determined
using valuation models.
| | --- | ------------------------------------------------------------------------------

| | (3) | The fair value of forward currency contracts is determined
using prevailing exchange rates.
| | --- | -------------------------------------------------------------------------------------------



Financial assets and liabilities not measured at fair
value



The carrying amounts reported on the consolidated financial
statements for cash and cash equivalents, cash held in trust, trade receivables and accounts payable and accrued liabilities all
approximate their fair values due to their immediate or short-term nature. Bank indebtedness was renegotiated during the previous
year to reflect current interest rates; therefore, management believes the carrying amounts also approximate their fair values.



The following table summarizes the fair value and carrying
value of other financial assets and liabilities that are not recognized at fair value on a recurring basis on the consolidated
balance sheets:



|                                    |  | As at                 
|----------------------------------- |  | ----------------------
|                                    |  | June 30, 2017         
|                                    |  | Fair
 value 
hierarchy
|                                    |  |                       
|Term Facility(1)                    |  | Level 2               
|Senior Unsecured Notes(2)           |  | Level 2               
|Obligations under finance leases(3) |  | Level 2               
|Special Warrants(3)                 |  | Level 3               
|Interim production financing(4)     |  | Level 2               
|Other liabilities(5)                |  | Level 3               



| | (1) | The interest rates on the Term Facility resets regularly;
therefore, the fair value, using a market approach approximates the carrying value.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Management estimates the fair value using a market
approach, based on publicly disclosed trades between arm's length parties.
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (3) | Management estimates the fair value using a discounted
cash flow analysis, based on discount rates that reflect current conditions.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------



| | (4) | Interim production financing bears interest at variable
rates, therefore management believes the fair value approximates the carrying value .
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | The fair value of other liabilities, which includes
the tangible benefit obligations, the long-term portion of certain other contractual liabilities and excludes deferred lease inducements,
was estimated based on discounting the expected future cash flows. The key unobservable assumptions in calculating the fair value
are the timing of the payments over the next four years related to the tangible benefit obligation included in other liabilities,
and the discount rate used for discounting the other liabilities.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(38)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 18 | Financial instruments(continued)
| | -- | --------------------------------



| | g) | Foreign currency contracts
| | -- | --------------------------



At June 30, 2017, the Company had notional principal
of $7,756US (2016 - $5,313US) in contracts to sell US dollars.



| | 19 | Commitments and contingencies
| | -- | -----------------------------



Commitments



The Company has entered into various operating leases
for operating premises and equipment. The future aggregate minimum payments are as follows:



|                         |  | $ |       
|------------------------ |  | - | ------
|                         |  |   |       
|Year ended June 30, 2018 |  |   | 9,348 
|2019                     |  |   | 8,704 
|2020                     |  |   | 7,519 
|2021                     |  |   | 6,535 
|Beyond 2021              |  |   | 32,947



The Company has entered into various contracts to buy
broadcast rights with future commitments totalling $27,474.



Contingencies



The Company is, from time-to-time, involved in various
claims, legal proceedings and complaints arising in the normal course of business and as such, provisions have been recorded where
appropriate. Management does not believe that the final determination of these claims will have a material adverse effect on the
financial position or results of operations of the Company. The maximum exposure at June 30, 2017, related to the above matters
is estimated at $400.



| | 20 | Capital disclosures
| | -- | -------------------



The Company’s objectives when managing capital
are to provide an adequate return to shareholders, safeguard its assets, maintain a competitive cost structure and continue as
a going concern in order to pursue the development, production, distribution and licensing of its film and television properties
and broadcast operations. During the year ended June 30, 2017, the Company declared and paid dividends totalling $9,908 (June 30,
2016 - $7,884). The balance of the Company’s cash is being used to maximize ongoing development and growth effort.



The Company’s capital at June 30, 2017
and June 30, 2016 is summarized in the table below:



|                                                                                                                      |  | 2017 |           |   | 2016 | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | 
|                                                                                                                      |  | $    |           |   | $    | 
|                                                                                                                      |  |      |           |   |      | 
|Total bank indebtedness, long-term debt, obligations under capital leases, and excluding interim production financing |  |      | 983,335   |   |      | 
|Less: Cash and cash equivalents and cash held in trust                                                                |  |      | (302,020  | ) |      | 
|                                                                                                                      |  |      |           |   |      | 
|Net debt                                                                                                              |  |      | 681,315   |   |      | 
|                                                                                                                      |  |      |           |   |      | 
|Total Shareholders’ Equity                                                                                            |  |      | 415,853   |   |      | 
|                                                                                                                      |  |      |           |   |      | 
|                                                                                                                      |  |      | 1,097,168 |   |      | 



(39)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 20 | Capital disclosures(continued)
| | -- | ------------------------------



To facilitate the management of its capital structure,
the Company prepares annual expenditure operating budgets that are updated as necessary depending on various factors including
industry conditions and operating cash flow. The annual and updated budgets are reviewed by the Board of Directors.



| | 21 | Earnings (loss) per common share
| | -- | --------------------------------



| | a) | Basic
| | -- | -----



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



|                                         |  | June 30,  2017 |             |   | June 30,  2016 | 
|---------------------------------------- |  | -------------- | ----------- | - | -------------- | 
|                                         |  | $              |             |   | $              | 
|                                         |  |                |             |   |                | 
|Net income (loss)                        |  |                | (3,634      | ) |                | 
|Weighted average number of common shares |  |                | 134,059,478 |   |                | 
|                                         |  |                |             |   |                | 
|Basic earnings (loss) per share          |  |                | (0.03       | ) |                | 



| | b) | Diluted
| | -- | -------



Diluted earnings (loss) per common share is calculated
by adjusting the weighted average number of common shares outstanding to assume conversion of all potentially dilutive instruments
which are convertible into common shares. The Company has two categories of potentially dilutive instruments which are convertible
into common shares: stock options and performance share units. For both the stock options and the performance share units, a calculation
is completed to determine the number of common shares that could have been acquired at fair value (determined as the average market
price of the Company’s outstanding common shares for the period), based on the monetary value of the subscription rights
attached to the stock options and performance share units. The number of shares calculated above is compared with the number of
shares that would have been issued assuming exercises of stock options and issuance performance share units.



For the year ended June 30, 2017, the diluted weighted
average number of common shares outstanding is the same as the basic weighted average number of common shares outstanding, as the
Company had a net loss for the period and the exercise of any potentially dilutive instruments would be anti-dilutive.



For the year ended June 30, 2016, the weighted average
number of potentially dilutive instruments, comprised of shares issuable in respect of warrants and stock options, was 1,536,146.



|                                         |  | June 30,  2017 |             |   | June 30,  2016 | 
|---------------------------------------- |  | -------------- | ----------- | - | -------------- | 
|                                         |  | $              |             |   | $              | 
|                                         |  |                |             |   |                | 
|Net income (loss)                        |  |                | (3,634      | ) |                | 
|Weighted average number of common shares |  |                | 134,059,478 |   |                | 
|                                         |  |                |             |   |                | 
|Diluted earnings (loss) per share        |  |                | (0.03       | ) |                | 



(40)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 22 | Net change in non-cash balances related to operations
| | -- | -----------------------------------------------------



|                                                                |  | June 30, |         |   | June 30, | 
|--------------------------------------------------------------- |  | -------- | ------- | - | -------- | 
|                                                                |  | 2017     |         |   | 2016     | 
|                                                                |  | $        |         |   | $        | 
|                                                                |  |          |         |   |          | 
|Decrease (increase) in amounts receivable                       |  |          | (44,457 | ) |          | 
|Decrease (increase) in prepaid expenses and deposits            |  |          | (526    | ) |          | 
|Decrease (increase) in long-term amounts receivable             |  |          | 2,912   |   |          | 
|Increase (decrease) in accounts payable and accrued liabilities |  |          | 47,601  |   |          | 
|Increase (decrease) in deferred revenue                         |  |          | 10,899  |   |          | 
|Tangible benefit obligation payments                            |  |          | (3,599  | ) |          | 
|                                                                |  |          |         |   |          | 
|                                                                |  |          | 12,830  |   |          | 



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



|                  |  | $ |        |  | $ | 
|----------------- |  | - | ------ |  | - | 
|                  |  |   |        |  |   | 
|Interest paid     |  |   | 19,250 |  |   | 
|Interest received |  |   | 556    |  |   | 
|Taxes paid        |  |   | 15,996 |  |   | 



Net change in film and television programs



|                                                              |  | June 30, |         |   | June 30, | 
|------------------------------------------------------------- |  | -------- | ------- | - | -------- | 
|                                                              |  | 2017     |         |   | 2016     | 
|                                                              |  | $        |         |   | $        | 
|                                                              |  |          |         |   |          | 
|Decrease (increase) in development                            |  |          | (238    | ) |          | 
|Decrease (increase) in productions in progress                |  |          | (12,285 | ) |          | 
|Decrease (increase) in productions completed and released     |  |          | (75,736 | ) |          | 
|Expense of film and television programs                       |  |          | 24,348  |   |          | 
|Expense of acquired library                                   |  |          | —       |   |          | 
|Decrease (increase) in program and film rights - broadcasting |  |          | (15,839 | ) |          | 
|Expense of film and broadcast rights for broadcasting         |  |          | 22,515  |   |          | 
|                                                              |  |          |         |   |          | 
|                                                              |  |          | (57,235 | ) |          | 



Cash and cash equivalents



|                 |  | June 30, |        |  | June 30, | 
|---------------- |  | -------- | ------ |  | -------- | 
|                 |  | 2017     |        |  | 2016     | 
|                 |  | $        |        |  | $        | 
|                 |  |          |        |  |          | 
|Cash             |  |          | 62,143 |  |          | 
|Cash equivalents |  |          | —      |  |          | 
|                 |  |          |        |  |          | 
|                 |  |          | 62,143 |  |          | 



(41)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 23 | Revenues and segmented information
| | -- | ----------------------------------



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



|                                                                         |  | Year ended June 30, 2017 |       
|------------------------------------------------------------------------ |  | ------------------------ | ------
|                                                                         |  | CPLG                     |       
|                                                                         |  | $                        |       
|                                                                         |  |                          |       
|Revenues                                                                 |  |                          | 18,814
|Direct production cost and expenses, general and administrative expenses |  |                          | 16,589
|                                                                         |  |                          |       
|Segment profit                                                           |  |                          | 2,225 
|                                                                         |  |                          |       
|Reconciliation to income before taxes                                    |  |                          |       
|Amortization of property and equipment and intangible assets             |  |                          |       
|Finance expense, net                                                     |  |                          |       
|Amortization of acquired and library content                             |  |                          |       
|Other expense, net                                                       |  |                          |       
|                                                                         |  |                          |       
|Income (loss) before income taxes                                        |  |                          |       



|                                             |  | As at June 30, 2017 |      
|-------------------------------------------- |  | ------------------- | -----
|Non-current assets                           |  |                     |      
|Long-term amounts receivable                 |  |                     | —    
|Acquired and library content (notes 3 and 8) |  |                     | —    
|Property and equipment                       |  |                     | 522  
|Intangible assets                            |  |                     | 6,692
|Goodwill                                     |  |                     | —    
|                                             |  |                     |      
|                                             |  |                     | 7,214



|                                                                       |  | As at June 30, 2017 |       
|---------------------------------------------------------------------- |  | ------------------- | ------
|Current liabilities                                                    |  |                     |       
|Accounts payable and accrued liabilities                               |  |                     | 12,136
|Deferred revenue                                                       |  |                     | 3,081 
|Interim production financing                                           |  |                     | —     
|Current portion of long-term debt and obligations under finance leases |  |                     | —     
|                                                                       |  |                     |       
|                                                                       |  |                     | 15,217



(42)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 23 | Revenues and segmented
information(continued)
| | -- | ---------------------------------------------



|                                                                         |  | Year ended June 30, 2016 |       
|------------------------------------------------------------------------ |  | ------------------------ | ------
|                                                                         |  | CPLG                     |       
|                                                                         |  | $                        |       
|                                                                         |  |                          |       
|Revenues                                                                 |  |                          | 28,765
|Direct production cost and expenses, general and administrative expenses |  |                          | 18,116
|                                                                         |  |                          |       
|Segment profit                                                           |  |                          | 10,649
|                                                                         |  |                          |       
|Reconciliation to income before taxes                                    |  |                          |       
|Amortization of property and equipment and intangible assets             |  |                          |       
|Finance expense, net                                                     |  |                          |       
|Other expense, net                                                       |  |                          |       
|                                                                         |  |                          |       
|Income before income taxes                                               |  |                          |       



|                             |  | As at June 30, 2016 |      
|---------------------------- |  | ------------------- | -----
|Non-current assets           |  |                     |      
|Long-term amounts receivable |  |                     | —    
|Deferred financing fees      |  |                     | —    
|Property and equipment       |  |                     | 323  
|Intangible assets            |  |                     | 8,055
|Goodwill                     |  |                     | —    
|                             |  |                     |      
|                             |  |                     | 8,378



|                                                                       |  | As at June 30, 2016 |       
|---------------------------------------------------------------------- |  | ------------------- | ------
|Current liabilities                                                    |  |                     |       
|Accounts payable and accrued liabilities                               |  |                     | 10,778
|Deferred revenue                                                       |  |                     | 2,696 
|Interim production financing                                           |  |                     | —     
|Current portion of long-term debt and obligations under finance leases |  |                     | —     
|                                                                       |  |                     |       
|                                                                       |  |                     | 13,474



(43)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 23 | Revenues and segmented
information(continued)
| | -- | ---------------------------------------------



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



|                                              |  | June 30,  2017 |         |  | June 30,  2016 | 
|--------------------------------------------- |  | -------------- | ------- |  | -------------- | 
|                                              |  | $              |         |  | $              | 
|                                              |  |                |         |  |                | 
|Content Business                              |  |                |         |  |                | 
|Production revenue                            |  |                | 36,877  |  |                | 
|Distribution revenue                          |  |                | 100,408 |  |                | 
|Merchandising and licensing and other revenue |  |                | 26,253  |  |                | 
|Producer and service fee revenue              |  |                | 58,976  |  |                | 
|                                              |  |                |         |  |                | 
|                                              |  |                | 222,514 |  |                | 
|                                              |  |                |         |  |                | 
|DHX Television revenue                        |  |                |         |  |                | 
|Subscriber revenue                            |  |                | 53,240  |  |                | 
|Promotion and advertising revenue             |  |                | 4,144   |  |                | 
|                                              |  |                |         |  |                | 
|                                              |  |                | 57,384  |  |                | 
|                                              |  |                |         |  |                | 
|CPLG                                          |  |                |         |  |                | 
|Third party brand representation revenue      |  |                | 18,814  |  |                | 
|                                              |  |                |         |  |                | 
|                                              |  |                | 298,712 |  |                | 



Of the Company’s $298,712 in revenues for the year
ended June 30, 2017, (June 30, 2016 - $304,817), $173,427 was attributable to the Company’s entities based in Canada
(June 30, 2016 - $171,596), $1,089 (June 30, 2016 -$4,998) was attributable to the Company’s entities based in
the USA and $124,196 (June 30, 2016 -$128,223) was attributable to the Companies entities based outside of Canada and the
USA.



As at June 30, 2017, the following non-current assets
were attributable to the Company’s entities based in the USA: $21 of property and equipment, $158 of intangible assets, and
$924 of goodwill (June 30, 2016 - $101, $209, and $896, respectively). As at June 30, 2017, the following non-current
assets were attributable to the Company’s entities based outside of Canada and the USA: $2,091 of property and equipment,
$55,956 of intangible assets and $3,771 of goodwill (June 30, 2016 - $431, $37,755, and $3,846 respectively). All other non-current
assets were attributable to the Company’s entities based in Canada.



| | 24 | Accumulated other comprehensive loss
| | -- | ------------------------------------



As at June 30, 2017, accumulated other comprehensive
loss was comprised of cumulative translation adjustments of $21,596 (2016 - $20,286).



(44)







DHX Media Ltd.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2017 and 2016

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



| | 25 | Subsequent events
| | -- | -----------------



| | a) | Subsequent to June 30, 2017, 1,620,000 options were
granted to officers and employees to acquire common shares at an exercise price of $5.73 per share, expiring seven years from
the date of grant.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | On September 15, 2017, the Company acquired 51% of
the outstanding equity interests of Egg Head Studios LLC (“Ellie Sparkles”), which owns and produces proprietary children’s
and family content and operates a children’s and family focused YouTube channel, for consideration as follows:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Cash consideration of US$3,570 paid at closing, subject to a customary working capital adjustment; and
| | - | ------------------------------------------------------------------------------------------------------

| | • | Two performance-based earn-outs, each in the amount of up to US$1,000 which, subject to achieving performance based targets,
which may become payable on the first and second anniversaries of closing.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | As noted in note 12 c) (iv), on July 11, 2017, cash
held in trust of $239,877 was used to redeem the Senior Unsecured Notes, including all accrued interest and the early redemption
penalty.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(45)