Assets and Liabilities Are the Assets and Liabilities of the Government of Canada

CBC/RADIO-CANADA’S COMMITMENT TO TRANSPARENCY AND ACCOUNTABILITY

As Canada's national public broadcaster, we take very seriously our obligation to be transparent and accountable to Canadians. To meet our responsibilities, we provide access on our corporate website to information about our activities and the way we manage our public resources.

MANAGEMENT DISCUSSION AND ANALYSIS In addition to filing an annual report, we are required – like most Canadian federal Crown corporations – to file quarterly financial reports for the first three quarters of each fiscal year. The following Management Discussion and Analysis (MD&A) aims to provide readers with an overview of our activities and performance for the first quarter of 2019-2020, and should be read in conjunction with our most recent Annual Report. In keeping with our commitment to transparency and effective oversight of public funds, we are pleased to present this quarterly report for the first quarter ended June 30, 2019. We have organized our MD&A in the following key sections:

FINANCIAL HIGHLIGHTS 4 BUSINESS HIGHLIGHTS 5 PERFORMANCE UPDATE 7 DISCUSSION OF RESULTS 13 CAPITAL RESOURCES, FINANCIAL CONDITION AND LIQUIDITY 17 RISK UPDATE 19 FINANCIAL REPORTING DISCLOSURE 20 MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS 21

In this document, w e, us, our and the Corporation mean CBC/Radio-Canada. Refer to CBC/Radio-Canada’s Condensed Interim Consolidated Financial Statements for the quarter ended June 30, 2019 when reading this MD&A.

All amounts in this MD&A are in thousands of Canadian dollars, except where noted.

To help you understand this MD&A, note the following:

QUARTERLY REPORTING - The Condensed Interim Consolidated Financial Statements have not been reviewed by our auditors.

SEASONALITY - The majority of our earned revenue comes from advertising, which follows seasonal patterns based on our programming schedule. It also varies according to market and general economic conditions, as well as schedule performance. Subscriber-based revenue is relatively more stable on a quarter-by-quarter basis. Operating expenses tend to follow a seasonal pattern because they are also influenced by the programming schedule. Government appropriations are recognized in income based on the annual budget, which reflects seasonal impacts on expenditures and revenue.

FORWARD-LOOKING STATEMENTS - This report contains forward-looking statements about strategy, objectives, and expected financial and operational results. Forward-looking statements are typically identified by words such as “may”, “should”, “could”, “would” and “will”, as well as expressions such as “believe”, “expect”, “forecast”, “anticipate”, “intend”, “plan”, “estimate” and other similar expressions. Forward-looking statements are based on the following broad assumptions: CBC/Radio-Canada’s government funding remains consistent with amounts announced in the federal budget, and the broadcasting regulatory environment will not change significantly. Key risks and uncertainties are described in the Risk Update section of this report. However, some risks and uncertainties are by definition difficult to predict and are beyond our control. They include, but are not limited to, economic, financial, advertising market, technical and regulatory conditions. These and other factors may cause actual results to differ substantially from the expectations stated or implied in forward-looking statements.

PERFORMANCE INDICATORS - We rely on data from both internal tools and third parties to measure our performance metrics. While these data are based on what we believe to be reasonable calculations for the applicable periods of measurement, there are inherent challenges in collecting this information, particularly as the media industry undergoes a digital transformation. For example, Canadians now consume media content on multiple devices from an ever-growing array of content providers. As media consumption habits change, we are, together with audience measurement suppliers, refining methodologies and introducing new measurement technologies to ensure the accuracy and completeness of data gathered. As a result, changes in the way data are collected could result in certain information provided in future periods not being comparable with information disclosed in prior periods. Since some of these data are used to measure our strategic and operational indicators, we may be required to make adjustments to targets and historical results to enhance comparability of the data and follow industry best practices.

NON-IFRS MEASURE - T his report includes the measure “Budget Results”, which does not have any standardized meaning according to International Financial Reporting Standards (IFRS). It is therefore unlikely to be comparable to similar measures presented by other companies. Refer to the Discussion of Results section for further details.

FINANCIAL HIGHLIGHTS

Q1 Revenue increased by 0.6% this quarter. We generated additional income from production and facilities services provided to third parties. 2019-2020: $114M This quarter subscription revenue growth on our digital platforms exceeded 2018-2019: $113M subscriber declines on our conventional discretionary channels. TV advertising REVENUE TOTAL INCREASE: revenue was slightly lower this quarter. $1M or 0.6%

Q1 Government funding recognized this quarter decreased by 2.6%. 2019-2020: $274M This decrease is consistent with our expected needs for operating funding in the quarter. By year-end, our base operating funding recognized into income will be 2018-2019: $281M consistent with last year. GOVERNMENT TOTAL DECREASE: FUNDING $7M or 2.6%

Q1 Our ongoing expenses decreased slightly this quarter. This was primarily due to changes in programming content and scheduling. 2019-2020: $399M 2018-2019: $401M EXPENSES TOTAL DECREASE: $2M or 0.6%

For the three months ended June 30 2019 2018 % change Revenue 114,100 113,383 0.6 Government funding 274,224 281,431 (2.6) Expenses (398,932) (401,177) (0.6) Results before other gains and losses (10,608) (6,363) 66.7 Net results under IFRS for the period (12,410) (7,733) 60.5 Budget Results for the period¹ 3,073 9,116 (66.3) ¹Budget Results is a non-IFRS measure. This measure considers only revenue or expenses included in, or funded by, our operating budget. A reconciliation of net results to Budget Results is provided in the Discussion of Results section of this report. The comparative period has been updated to reflect a revised definition of our non-IFRS measure. For further details, refer to our most recent Annual Report.

Net results under IFRS for the period were a loss of $12.4 million, compared to a loss of $7.7 million last year. Our results decreased by $4.7 million this quarter due to lower government funding recognized in income by $7.2 million (2.6%), lower expenses by $2.2 million (0.6%), and an increase in revenue of $0.7 million (0.6%). Net results under IFRS for the period also include other gains and losses primarily from replacing or retiring capital assets. Budget Results for the period were a gain of $3.1 million compared to a gain of $9.1 million in the same period last year. This decrease of $6.0 million was primarily due to the timing of recognizing government funding as discussed above. Our budget results are normally higher than our IFRS results, which include certain non-cash expenses and other charges not included in our current operating budget.

BUSINESS HIGHLIGHTS

CONTENT AND SERVICES

This quarter, we announced major new partnerships and commitments and launched new diversity initiatives. From the launch of our new three-year strategic plan Your Stories, Taken to Heart to our Annual Public Meeting in Halifax, we started the new fiscal year with a bang. President and CEO Catherine Tait also announced at the Banff World Media Festival that by 2025 at least one of the key creative positions in all CBC/Radio-Canada’s scripted and factual commissioned programs will be held by a person from a diverse background.1 CBC/Radio-Canada also participated in the Women Deliver international conference in Vancouver in June. Taken together with our new and returning favourites in news, television, radio and digital programming, the first quarter of 2019-2020 provided a preview of the strong year to come.

ENGLISH SERVICES In June, CBC unveiled its slate of new programming, including the family drama The Trickster, based on award-winning Canadian writer Eden Robinson's novel Son of a Trickster. It marks the first time CBC will develop a TV show based on a book by an Indigenous author. A creative team of Indigenous filmmakers, writers and producers is behind the series. The new programming lineup also includes a reboot of CBC’s popular Battle of the Blades competition, a new sketch comedy show, Tallboyz, produced by Kids in the Hall alum Bruce McCulloch, and Family Feud Canada, hosted by comedian Gerry Dee. CBC Radio also announced The Cost of Living, a new weekly 30-minute national business show hosted by Paul Haavardsrud, set to debut on CBC Radio One in September. The show will cover the country’s most compelling business and economic stories and demonstrate how they intersect with the lives of Canadians. Despite challenging weather, the annual CBC Music Festival took place on May 25 at Toronto’s Echo Beach, once again entertaining crowds with performances by great artists from across the country. Some of this year’s acts included multi JUNO Award winner Exco Levi, activist and singer Buffy Sainte-Marie, Peach Pit, Alvvays, and Stars – who performed their seminal album Set Yourself on Fire in its entirety for an enthusiastic crowd. Music lovers can check out some of the great performances on the CBC Music website. Finally, in May CBC News brought home seven Canadian Association of Journalism (CAJ) Awards, representing excellence in journalism at both the Network and Local Services in digital and broadcast. Our talented teams brought to light stories of institutional abuse at a local Ottawa high school, the tragic treatment of some patients in long-term care homes, sales pressure for telecom workers to push products consumers don’t need, and an in-depth look at the status of each of the 94 Calls to Action set out by the Truth and Reconciliation Commission in 2015.

FRENCH SERVICES This quarter, we established Les Décrypteurs. The team tracks fake news that goes viral on social media in an effort to counter disinformation. This strengthens the impact of our journalism and helps us stay relevant as a public broadcaster in a rapidly evolving digital environment. Rad, Radio-Canada’s digital journalism lab, produced a feature on personal debt to help bring this major societal issue to light. The project generated a lot of buzz on Facebook and YouTube this quarter. Rad also launched Bunker, a weekly roundup of news from around the web in late June. For our younger audiences, we recently announced a call for applications for MAJ, a cross-platform news offering for kids aged 7 to 13. The joint brainchild of the Radio-Canada Kids and News teams, the initiative will allow young videojournalists to create content under the guidance of an editorial team to ensure compliance with our Journalistic Standards and Practices. On the music front, ICI MUSIQUE unveiled Rapophonie, a program created through a partnership with Les Médias Francophones Publics (MFP). The show’s music segments are also heard in Switzerland, Belgium and France. It’s a great way for MFP-member radio networks to reach new listeners with their common values of openness, cross-cultural sharing and musical diversity – the hallmarks of Francophone hip hop.

1 Key creatives include producer, director, writer, showrunner and lead performer. 5

After a resounding success on television, the third season of District 31 is now available on ICI TOU.TV, while season 4 is set to premiere on ICI TÉLÉ in September. And, in honour of National Indigenous Peoples Day, Espaces autochtones broadcast a special lineup of programming on Facebook Live that addressed the importance of preserving First Nations languages and culture.

TECHNOLOGY AND INFRASTRUCTURE The new Maison de Radio-Canada (MRC) project continued to progress, with exterior construction largely completed and internal construction in process. This quarter saw the beginning of the move of network servers from the current MRC to the new structure. Development of the new MRC’s Network Operations Centre (NOC) is underway. In the future, the NOC will enable us to oversee in real time our digital networks, as well as the status of our production systems and other remotely located technological solutions. Teams from both Production Solutions and Engineering Solutions are also actively installing, configuring and training on the new content presentation system for Montreal, which will be operational in early 2020. This quarter, as staff continue to prepare for their upcoming move, they got a taste of the new MRC work environment, including details about furniture installation and transportation options. The contract for food services in the new MRC cafeteria has been awarded to Laberge Services Alimentaires (LSA), giving staff a sneak peek at the food choices that will be offered in their updated environment. Information and progress updates on the project are always available here .

PEOPLE AND CULTURE At the beginning of April, a new Collective Agreement between CBC/Radio-Canada and the Canada Media Guild (CMG) took effect. Throughout April, the Industrial Relations team provided Collective Agreement training to CBC/Radio-Canada managers and leaders. CMG and CBC/Radio-Canada continue to enjoy a collaborative, respectful and transparent relationship. We continued the delivery of our 2018-21 Diversity and Inclusion Plan, announced last year. At the end of this quarter, progress included completion of the first Inclusion Lab in May to generate new and innovative ideas across the Corporation with the goal of creating a more inclusive workplace. CBC also launched its first monthly Engagement and Inclusion newsletter, while Radio-Canada recently launched “Femmes Expertes”, a pilot project that will target gender parity in three flagship programs on television and radio. In the first quarter of 2019-2020, People and Culture submitted its annual reports on Official Languages, Multiculturalism and Employment Equity to the federal government, and shared them on CBC/Radio-Canada's corporate website for all Canadians to access.

OTHER BUSINESS MATTERS In May, CBC welcomed Barbara Williams as its new Executive Vice-President (EVP). CBC’s new EVP brings a wealth of experience as a leading media executive at several Canadian broadcast companies. In line with the new three-year strategic plan noted above, the Canada Council for the Arts and CBC/Radio-Canada announced plans in May to launch the Creation Accelerator – a million dollar initiative to amplify digital creation in Canada. This spring, President and CEO Catherine Tait and EVP Barbara Williams also travelled to 13 locations across Canada to promote the new strategic plan. Two new partnership agreements were also signed with the Australian Broadcasting Corporation (ABC) and the British Broadcasting Corporation (BBC), respectively, as part of the Corporation’s “Take Canada to the World” strategic focus.

PERFORMANCE UPDATE

OUR PERFORMANCE – YOUR STORIES, TAKEN TO HEART

Below are the Key Performance Indicators (KPI) that will be used to measure and track our progress with respect to our new strategy, Your Stories, Taken to Heart, and its five strategic priorities: customized digital services, engaging with young audiences, prioritizing our local connections, reflecting contemporary Canada and taking Canada to the world.2 These priorities will shape our strategic initiatives for the next three years. For more information, see the summary of our new strategy. Targets are specific to the markets we operate in, and consider a number of factors such as market realities, competition and service penetration rate. The results outlined below are also discussed further in the CBC and Radio-Canada sections on the following pages.

RESULTS TARGETS APR 1 TO INDICATORS MEASUREMENTS 2019-2020 JUN 30, 2019

Customized digital services 1. Digital reach of CBC/Radio-Canada3 Monthly average unique visitors 20.4 M 20.7 M 2. Digital engagement with CBC/Radio-Canada4 Monthly average minutes per visitor 45 min/vis 39 min/vis

Engaging with young audiences 3. Digital visits to CBC/Radio-Canada kids content5 Monthly average visits 1,487 K 1,819 K

Prioritizing our local connections 4. Digital engagement with CBC news/regions6 Monthly average minutes per visitor 27 min/vis 24 min/vis 5. Digital engagement with Radio-Canada info/regions7 Monthly average minutes per visitor 12 min/vis 13 min/vis

Reflecting contemporary Canada 6. Employment equity representation8 % of CBC/Radio-Canada new hires 30.2% 29.3%

Our performance metrics are evolving as the media industry continues to undergo a digital transformation. Canadians consume media content on multiple devices (e.g., smartphones, tablets, smart TVs) from an ever-growing array of content providers. As media consumption habits change, audience measurement suppliers and the Corporation are refining methodologies and introducing new measurement technologies to ensure the accuracy and completeness of data gathered. Since some of these data are used to measure our strategic and operational performance, we may be required to make adjustments to targets and historical results to enhance comparability of the data. Customized digital services - In the first quarter our digital reach was trending above its annual target. With 20.7 million unique visitors, we now reach more Canadians through our digital platforms than ever before. Our digital engagement is currently trending below its annual target at 39 minutes per visitor, but is expected to increase in the fall when our programming seasons begin. Engaging with young audiences - Traffic to our overall digital offering for kids content is currently trending above target at 1,819 thousand visits per month. Prioritizing our local connections - Digital engagement for our news, info and regions sections is currently trending below target for CBC and above target for Radio-Canada. The coverage of major news events continues to be an area of focus for us, and we will track the progress of these indicators throughout the year. Reflecting contemporary Canada - With a result of 29.3% in the first quarter of 2019-2020, the employment equity representation of our new employees is slightly below target, but is expected to grow as the year progresses and we continue to implement our Diversity and Inclusion Plan across the Corporation.

2 Our fifth strategic priority – taking Canada to the world – is measured via internal KPIs. 3 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average of Monthly Unique Visitors, April to March, Canada. Unduplicated reach of CBC/Radio-Canada digital platforms. 4 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to CBC/Radio-Canada digital platforms, April to March, Canada. 5 Source: Adobe Analytics, monthly average visits, April to March. Visits to kids content, including visits to l’Appli des petits, Zone Jeunesse on Radio-Canada.ca and ICI TOU.TV where kids content was streamed (Radio-Canada) and visits to CBC Kids sites, CBC Kids News and CBC Gem where kids content was streamed (CBC). 6 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to CBC News/Regions, April to March, Canada. 7 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to Info/Regions (including Arts), April to March, Canada. 8 This metric is made up of three groups: Indigenous peoples, persons with disabilities and visible minorities. It is calculated as a percentage of new external hires for positions of 13+ weeks. 7

OUR PERFORMANCE – MEDIA LINES

In order to monitor our programming, we have built on our existing operating metrics by adding several new KPIs to measure our new strategic priorities. The new KPI framework – presented below – will be used to report on our performance to Canadians throughout Your Stories, Taken to Heart. Our first quarterly report contains a partial list of KPIs because many of the principal targets are measured starting in September each year. KPIs are not available for ICI TÉLÉ, ICI PREMIÈRE, ICI MUSIQUE, CBC Television, CBC Radio One and CBC Music until the fall, and are consequently not presented until our third quarterly report.

RADIO-CANADA 2019-2020 RESULTS

RESULTS TARGETS APR 1 TO INDICATORS MEASUREMENTS 2019-2020 JUN 30, 2019

Customized digital services Digital reach9 Monthly average unique visitors 4.9 M 4.9 M Digital engagement10 Monthly average minutes per visitor 47 min/vis 44 min/vis

Engaging with young audiences Digital visits to kids content11 Monthly average visits 287 K 371 K

Prioritizing our local connections

Digital engagement with Radio-Canada info/regions12 Monthly average minutes per visitor 12 min/vis 13 min/vis

Reflecting contemporary Canada Employment equity representation13 % of Radio-Canada new hires 16.5% 13.2% Television ICI RDI, ICI ARTV, ICI EXPLORA14 All-day audience share 4.7% 5.2% Revenue15 Total revenue Conventional, discretionary, online $216 M $51 M

Our performance metrics are evolving as the media industry continues to undergo a digital transformation. Canadians consume media content on multiple devices (e.g., smartphones, tablets, smart TVs) from an ever-growing array of content providers. As media consumption habits change, audience measurement suppliers and the Corporation are refining methodologies and introducing new measurement technologies to ensure the accuracy and completeness of data gathered. Since some of these data are used to measure our strategic and operational performance, we may be required to make adjustments to targets and historical results to enhance comparability of the data. Customized digital services - Our digital reach is tracking to target, and our digital engagement is slightly below target after the first quarter. We believe this was due to seasonality in the business, and expect results to strengthen as the year progresses. Engaging with young audiences - Radio-Canada's digital visits to kids content benefited from the addition of new titles on ICI TOU.TV, such as our new general knowledge magazine 14 mille millions de choses à savoir. Prioritizing our local connections - Our digital engagement with info/regions trended above target due to some major regional events such as the floods in Ontario, Quebec and New Brunswick. Reflecting contemporary Canada - This quarter employment equity representation of our new employees was tracking below the annual target. During the quarter we continued working on various Diversity and Inclusion initiatives.

9 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average of Monthly Unique Visitors, April to March, Canada. Unduplicated reach of Radio-Canada digital platforms. 10 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to Radio-Canada digital platforms, April to March, Canada. 11 Source: Adobe Analytics, monthly average visits, April to March. Visits to kids content, including visits to l’Appli des petits, Zone Jeunesse on Radio-Canada.ca and ICI TOU.TV where kids content was streamed. 12 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to Info/Regions (including Arts), April to March, Canada. 13 This metric is made up of three groups: Indigenous peoples, persons with disabilities and visible minorities. It is calculated as a percentage of new external hires for positions of 13+ weeks. 14 Source: Numeris, Portable People Meter (PPM), Francophones in Quebec, aged two years and older, April to March. 15 Includes advertising revenue, subscription revenue and other revenue (e.g., content sales). 8

Television - Our combined share of specialty channels was above our annual target, mostly due to ICI RDI’s performance. We broadcast several special programs on major news events such as the spring floods and the Notre-Dame de Paris fire. Revenue - Revenue is tracking towards our annual target after the first quarter of the fiscal year.

MAJ (Mon actualité du jour), a new multiplatform current events offering for kids age 7 to 13, will be available this fall. | Radio-Canada

CBC 2019-2020 RESULTS RESULTS TARGETS APR 1 TO INDICATORS MEASUREMENTS 2019-2020 JUN 30, 2019

Customized digital services Digital reach16 Monthly average unique visitors 17.4 M 17.2 M Digital engagement17 Monthly average minutes per visitor 37 min/vis 32 min/vis Engaging with young audiences Digital visits to kids content18 Monthly average visits 1,200 K 1,448 K

Prioritizing our local connections Digital engagement with CBC news/regions19 Monthly average minutes per visitor 27 min/vis 24 min/vis Reflecting contemporary Canada Employment equity representation20 % of CBC new hires 39.2% 37.0% Television CBC News Network21 All-day audience share 1.4% 1.4%

Revenue22 Total revenue Conventional, discretionary, online $210 M $45 M

Customized digital services - Digital reach and engagement are slightly below target. We anticipate that enhanced features and personalization, along with the federal election, will help drive growth in the second half of the year. Engaging with young audiences - Digital visits to CBC Kids content continues to see strong growth from the CBC Kids News site, strong editorials on cbcparents.ca and cbckids.ca, along with a strong presence on air and on social platforms. CBC Gem Kids also saw an increase in Q1 from releases of new content such as Detention Adventure and Find Me in Paris. Prioritizing our local connections - Digital engagement with CBC news/regions is below target after the first quarter. Overall we continue to see growth in engagement from the coverage of major news stories (e.g., floods, provincial elections, Toronto Raptors parade). Reflecting contemporary Canada - This quarter, the employment equity representation of our new employees was tracking below the annual target. We are continuing to deliver the 2018-21 Diversity and Inclusion Plan announced last year. At the end of this quarter, progress included completion of the first Inclusion Lab in May to generate new and innovative ideas to help create a more inclusive workplace.

16 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average of Monthly Unique Visitors, April to March, Canada. Unduplicated reach of CBC digital platforms. 17 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to CBC digital platforms, April to March, Canada. 18 Source: Adobe Analytics, monthly average visits, April to March. Visits to kids content, including visits to CBC Kids sites, CBC Kids News and CBC Gem where kids’ content was streamed. 19 Source: Comscore Media Metrix® Multi-Platform, Total Audience (desktop 2+, mobile 18+), Average monthly minutes per visitor to CBC News/Regions, April to March, Canada. 20 This metric is made up of three groups: Indigenous peoples, persons with disabilities and visible minorities. It is calculated as a percentage of new external hires for positions of 13+ weeks. 21 Source: Numeris, Portable People Meter (PPM), persons aged two years and older, in the Toronto, Vancouver, Calgary, Edmonton and Montreal-anglophone markets. Local Morning Shows: Monday-Friday 6:00-8:30am. 22 Includes advertising revenue, subscription revenue and other revenue (e.g., content sales). 10

Television - CBC News Network is on track after the first quarter due to the coverage of major news stories (e.g., floods in several provinces, fire at Notre-Dame de Paris, 75th anniversary of D-day, Toronto Raptors championship). Revenue - Revenue is tracking towards our annual target after the first quarter of the fiscal year.

Up-and-coming comics Franco Nguyen, Guled Abdi, Vance Banzo and Tim Blair explore friendship, race, masculinity and more in hilarious sketches in TallBoyz. | CBC

MEASURING OUR CANADIAN CONTENT Regulatory requirements for Canadian content on television are specified by the Canadian Radio-television and Telecommunications Commission (CRTC), which sets conditions of license for ICI TÉLÉ and CBC Television. As shown in the table below, in the current broadcast year-to-date and in the previous full broadcast year, ICI TÉLÉ and CBC Television exceeded the CRTC’s Canadian content conditions of license, both over the whole day and in prime time.

YEARLY RESULTS RESULTS CONDITIONS SEP 1, 2016 TO SEP 1, 2017 TO OF LICENSE AUG 31, 2017 AUG 31, 2018

ICI TÉLÉ

Broadcast day 75% 82% 79%

Prime time 80% 96% 92%

CBC Television

Broadcast day 75% 81% 82%

Prime time 80% 87% 87%

On R apophonie e very Friday, Myriam Fehmiu offers you a menu composed entirely of French hip hop, from here and elsewhere. | ICI MUSIQUE

DISCUSSION OF RESULTS The following analysis provides a more detailed discussion of our financial performance. RESULTS UNDER IFRS AND BUDGET RESULTS

For the three months ended June 30 2019 2018 % change Revenue 114,100 113,383 0.6 Government funding 274,224 281,431 (2.6) Expenses (398,932) (401,177) (0.6) Results before other gains and losses (10,608) (6,363) 66.7 Other gains and losses (1,802) (1,370) 31.5 Net results under IFRS for the period (12,410) (7,733) 60.5 Items not included in our operating budget Pension and other employee future benefits 14,333 15,482 (7.4) Depreciation, amortization and decommissioning expenses, net of amortization of deferred capital funding 3,858 3,750 2.9 Other provisions for non-cash items (2,708) (2,383) 13.6 Budget Results for the period¹ 3,073 9,116 (66.3) ¹Budget Results is a non-IFRS measure. An explanation of Budget Results is provided below.

Net results under IFRS for the period Net results under IFRS for the period were a loss of $12.4 million, compared to a loss of $7.7 million in the same quarter last year. Changes in net results were driven by the following: ● Government funding recognized in income was lower by $7.2 million ( 2.6%). Government funding recognized this quarter was consistent with our expected needs. ● Ongoing expenses were lower by $2.2 million ( 0.6%) as we aired more original content in the first quarter of last year, mainly because Radio-Canada shifted various season finales to April 2018 due to the broadcast of the 2018 Olympic Winter Games in early February. Expenses were also comparatively lower as a result of our cost-reduction initiatives. These decreases were partly offset by our continued investment in our digital initiatives. ● Revenue was higher by $0.7 million ( 0.6%), driven by higher subscriber revenue from our digital platforms and additional revenue this quarter for production and facilities services to third parties. TV advertising revenue was slightly lower this quarter.

Budget Results for the period CBC/Radio-Canada defines Budget Results for the period as Net results under IFRS less the adjustments for revenue or expenses not included in our operating budget. This measure is used by management to help monitor performance and balance the Corporation’s budget with parliamentary appropriations. We believe this measure provides useful complementary information to readers, while recognizing that it does not have a standard meaning under IFRS and will not likely be comparable to measures presented by other companies.

Adjustments include the elimination of non-cash pension and other employee future benefit costs, which represent the excess of the IFRS expense over the actual cash contribution for the period. Adjustments are also made for other non-cash items such as depreciation, amortization and decommissioning of capital assets; the amortization of deferred capital funding; and non-budgetary annual leave. Our Budget Results for the period were $3.1 million, a decrease of $6.0 million ( 66.3%) relative to the first quarter last year. This decrease is consistent with lower IFRS results as summarized above.

REVENUE

For the three months ended June 30 2019 2018 % change Advertising English Services 24,129 23,794 1.4 French Services 31,902 32,787 (2.7) 56,031 56,581 (1.0) Subscriber fees English Services 16,109 16,501 (2.4) French Services 14,962 14,246 5.0 31,071 30,747 1.1 Financing, investment and other income English Services 11,289 10,106 11.7 French Services 4,317 4,789 (9.9) Corporate Services 11,392 11,160 2.1 26,998 26,055 3.6 TOTAL 114,100 113,383 0.6 Our revenue slightly increased by $0.7 million ( 0.6%), as described below. ADVERTISING ( 1.0%) Our advertising revenue depends on the different events of significant importance we cover throughout the quarter, the overall health of the advertising market and the success of our programming schedule. The $0.6 million decrease in advertising revenue this period resulted mostly from lower TV advertising in the French market. In the same quarter last year, French Services’ results were particularly strong due to the delayed airing of some of ICI TÉLÉ programming to April 2018 as we broadcast the PyeongChang 2018 Winter Games in early February. In addition, the Francophone TV advertising market has softened when compared to the same period last year. This decrease was partly offset by higher digital revenue by $1.0 million ( 14.8%) driven primarily by improved digital display sales. SUBSCRIBER FEES ( 1.1%) Subscriber fees comprise revenue from both our specialty television and digital platforms. Our subscriber revenue is driven by the rates for our discretionary services and the size of our subscriber base. The subscriber base for our TV services is declining due to the adverse effects of the cord-shaving trend affecting the cable industry, whereas the number of subscribers is growing for our digital services. Our subscriber revenue increased by $0.3 million ( 1.1%) relative to the same period last year. This quarter the growth of our digital subscriber revenue more than offset the continued revenue decline on our traditional platforms. The main changes by discretionary service were as follows: ● There was growth for our subscriber numbers on our digital services: ICI TOU.TV EXTRA, Curio and CBC Gem. ● CBC News Network, ICI RDI and ICI ARTV’s revenue decreases resulted from subscriber base declines. FINANCING, INVESTMENT AND OTHER INCOME ( 3.6%) Financing, investment and other income depends on the different events and transactions throughout the quarter as it includes production revenue from host broadcasting services and revenue from the sale of content. It also reflects revenue from our rentals, sponsorships and retransmission rights. More information about our revenue streams is provided in note 13 Revenue of our Condensed Interim Consolidated Financial Statements. The $0.9 million ( 3.6%) increase in financing, investment and other income this period resulted mostly from additional revenue recognized for production services to third parties.

OPERATING EXPENSES

For the three months ended June 30 2019 2018 % change Television, radio and digital services costs English Services 204,859 205,075 (0.1) French Services 170,642 173,211 (1.5) 375,501 378,286 (0.7) Other operating expenses Transmission, distribution and collection 14,721 15,031 (2.1) Corporate management 2,911 2,530 15.1 Finance costs 5,799 5,330 8.8 23,431 22,891 2.4 TOTAL 398,932 401,177 (0.6) Our total operating expenses decreased by $2.2 million ( 0.6%) compared to the same period last year, with the main variances noted below.

TELEVISION, RADIO AND DIGITAL SERVICES COSTS ( 0.7%) Television, radio and digital services costs depend on the different events of importance we cover throughout the quarter and on our ongoing programming schedule. They represent the costs we incur in relation to the production of our programs, including the cost of our technical labour and facilities. The $2.8 million ( 0.7%) decrease in television, radio and digital services costs resulted from lower programming expenses due to scheduling changes. Programming costs were particularly high for ICI TÉLÉ in the first quarter of last year due to earlier summer programming and some season finales shifting to April 2018 due to the broadcast of the PyeongChang 2018 Winter Games in early February.

OTHER OPERATING EXPENSES ( 2.4%) Other operating expenses include costs related to the broadcasting of the Corporation’s programs (“transmission, distribution and collection,” corporate management costs, and finance costs). Other operating expenses increased by $0.5 million ( 2.4%) when compared to the same period last year. This increase was mostly due to higher Finance costs recognized for accounting purposes as we adopted the new lease standard (IFRS 16) this quarter.

M embers of CBC/Radio-Canada’s Senior Executive Team answer questions at the launch of the new strategic plan in June 2019. | CBC/Radio-Canada

GOVERNMENT FUNDING For the three months ended June 30 2019 2018 % change Parliamentary appropriations for operating expenditures 246,889 257,287 (4.0) Parliamentary appropriations for working capital 1,000 1,000 - Amortization of deferred capital funding 26,335 23,144 13.8 TOTAL 274,224 281,431 (2.6)

Parliamentary appropriations for operating expenditures a re recognized based on our expected needs, according to budgeted revenue and expenditures for the period.

Capital funding is recorded as d eferred capital funding. I t is amortized and recognized as revenue over the same periods as the related property, equipment and intangible assets are used in CBC/Radio-Canada’s operations. Parliamentary appropriations for operating expenditures decreased by $10.4 million ( 4.0%) this quarter. Our government funding recognized in the first quarter was lower due to the timing of our expected needs between quarters. Our overall annual base appropriation levels have remained unchanged in 2019-2020. Amortization of deferred capital funding was higher by $3.2 million ( 13.8%), mostly as a result of a change in accounting estimate made last year. OTHER GAINS AND LOSSES

For the three months ended June 30 2019 2018 % change Loss on disposal of property and equipment and intangibles (1,802) (1,370) 31.5 TOTAL (1,802) (1,370) 31.5

Other gains and losses reflect items that are not considered to be reflective of the standard activities of the Corporation such as the replacement or retirement of capital assets. The loss on disposal of property and equipment and intangibles increased by $0.4 million ( 31.5%) this quarter, mainly due to the retirement of assets in the regular course of our operations. TOTAL COMPREHENSIVE INCOME (LOSS)

For the three months ended June 30 2019 2018 % change Net results for the period (12,410) (7,733) 60.5 Other comprehensive income (loss) Remeasurements of defined benefit plans (169,329) 256,239 N/M Total comprehensive income (loss) for the period (181,739) 248,506 N/M N/M = not meaningful Remeasurements of defined benefit plans are driven by significant non-cash fluctuations in our pension plan’s obligations and assets that occur when actual results or interest rates differ from our actuarial assumptions. We recognize these movements immediately in other comprehensive income (loss) each period. A total comprehensive loss was recognized this quarter of $181.7 million, compared to comprehensive income of $248.5 million in the first quarter last year. In addition to net results, total comprehensive income includes remeasurements of pension plan values as detailed above. The decline of the pension plan’s net position of $169.3 million this quarter was mostly due to a 35 basis-point (bp) decrease in the discount rate to 2.97%, which increased the value of plan obligations by $412.2 million, offset by a gain on plan assets of $242.9 million from higher actual return on assets than estimated in our actuarial assumptions. Last year the $256.2 million increase in the pension’s net position was due to a $149.8 million actuarial gain on assets from higher returns than estimated in our actuarial assumptions, combined with a $106.4 million actuarial gain from a higher discount rate (+10 bp) used to value the defined benefit obligation.

CAPITAL RESOURCES, FINANCIAL CONDITION AND LIQUIDITY

REVENUE AND OTHER SOURCES OF FUNDS

We have four sources of direct funding: government appropriations for operating and capital expenditures, advertising revenue, subscriber fees, and financing and other income:

Government funding: This year, operating funding will be $1,098.1 million, capital funding will be $108.7 million and working capital funding will be $4.0 million. Advertising revenue: This includes both ongoing and Olympics-driven sales of advertising on our conventional television channels, digital platforms, discretionary television services and other platforms. Advertising revenue from broadcasting the Olympics can have a material impact on the Corporation’s revenue. Ongoing advertising revenue is decreasing as a proportion of our revenue and source of funds mainly as a result of the market’s shift away from conventional advertising platforms. Despite being a rising source of revenue, digital advertising is not significant enough to offset the decline observed in TV advertising. Subscriber fees: These are fees from our discretionary services: CBC News Network, documentary, CBC Gem, ICI EXPLORA, ICI ARTV, ICI RDI, ICI TOU.TV EXTRA and Curio.ca. Subscriber fees from our traditional platforms are experiencing downward pressure from the continuing cord-cutting and cord-shaving trends and the effects of recent regulatory changes enacted by the CRTC (affordable basic TV package, small TV packages, and pick-and-pay TV channels). Financing and other income: This includes both ongoing and Olympics-driven income from activities such as the rental of real estate assets, content sales, leasing of space at our transmission sites, host broadcasting sports events such as the Olympic Games or World Championships and contributions from the Canada Media Fund.

Borrowing Plan The Broadcasting Act, section 46.1, confers on CBC/Radio-Canada the authority to borrow up to $220.0 million, or such greater amount as may be authorized by parliament, subject to approval of the Minister of Finance. Section 54.(3.1) of the Act requires that our borrowing plan be included in our Corporate Plan. Borrowing to meet working capital purposes is prohibited. Under the Broadcasting Act, section 47.(1), we are an agent of the Crown and therefore have the constitutional immunities, privileges and prerogatives that are enjoyed by the Crown. The Crown is also fully liable and financially exposed for all our actions and decisions while we are operating within our mandate. Therefore, our assets and liabilities are the assets and liabilities of the Government of Canada.

FINANCIAL CONDITION, CASH FLOWS AND LIQUIDITY We rely on parliamentary appropriations and the cash generated from our operations to fund our operating activities and our capital needs in an environment highly dependent on technology. Specifically, our main sources of liquidity are parliamentary appropriations for operating, capital and working capital requirements, and revenue such as the sale of advertising on our various platforms. Our cash balance at June 30, 2019 was $99.6 million, compared to $89.7 million on March 31, 2019. CASH POSITION

For the three months ended June 30 2019 2018 % change Cash - beginning of the period 89,697 95,978 (6.5) Changes in the period Cash from (used in) operating activities (45,672) 4,776 N/M Cash used in financing activities (26,519) (22,429) 18.2 Cash from investing activities 82,061 6,519 N/M Net change 9,870 (11,134) N/M Cash - end of the period 99,567 84,844 17.4 N/M = not meaningful Cash from (used in) operating activities Cash from (used in) operating activities includes cash inflows from our drawdowns of parliamentary appropriations for operating expenditures and working capital.

Cash used in operating activities was $45.7 million this year, an increase in cash used of $50.4 million compared to the same period last year. Cash from (used in) operations is impacted each period by fluctuations in working capital. Cash inflows from operations were higher in the first quarter last year because we collected advertising sales from broadcasting the PyeongChang 2018 Olympic Winter Games.

Cash used in financing activities Cash outflows for financing activities were higher by $4.1 million ( 18.2%). This increase was mainly due to the adoption of IFRS 16 this quarter, which required lease payments to be classified as cash used in financing activities. These cash flows were previously presented in cash used in operating activities. Cash from investing activities Cash from investing activities includes cash from our drawdowns of parliamentary appropriations for capital expenditures.

Cash from investing activities was $82.1 million this year, an increase of $75.5 million compared to Q1 2018-2019. Cash inflows this quarter were mainly attributable to the funds received after several of our Canada Mortgage Bonds matured during the quarter.

RISK UPDATE As Canada’s national public broadcaster, we occupy an important place in the Canadian broadcasting system and face a unique set of risks to our plans and operations. Like all broadcasters, we must adapt to technological changes, shifts in demographics and evolving consumer demands, as well as structural changes in the industry. Given our statutory mandate to serve all Canadians, we also face unique public expectations and financial challenges. It is our policy to develop, implement and practise effective risk management to ensure risks and opportunities that impact our strategies, objectives and operations are identified, assessed and managed appropriately. There have been no significant changes to our risk profile since year end. Refer to our 2018-2019 Annual Report for a more detailed assessment of the risks, potential impacts and risk mitigation strategies.

A CBC/Radio-Canada employee on the job. | CBC/Radio-Canada

FINANCIAL REPORTING DISCLOSURE Our first quarter Condensed Interim Consolidated Financial Statements (“Interim Financial Statements”) were prepared in accordance with IFRS, as issued by the IASB, under IAS 34 – Interim Financial Reporting and adopted by the Accounting Standards Board (AcSB). They were approved by the Corporation’s Board of Directors on August 22, 2019. These Interim Financial Statements were prepared using the same basis of presentation and accounting policies as outlined under Note 2 of the Corporation’s Consolidated Financial Statements for the year ended March 31, 2019 except for changes relating to IFRS 16 as discussed in Note 3 of our Interim Financial Statements. Our Interim Financial Statements for the quarter ended June 30, 2019 do not include all of the notes required in the annual Consolidated Financial Statements. Discussion and analysis of our financial condition and results of operations are based upon our Interim Financial Statements.

FUTURE ACCOUNTING STANDARDS

Refer to Note 3 of the Interim Financial Statements for information pertaining to accounting pronouncements effective in 2019-2020 and in future periods.

KEY ACCOUNTING ESTIMATES AND CRITICAL JUDGMENTS

The preparation of these Interim Financial Statements requires management to make estimates and judgments about the future. Estimates and judgments are continually evaluated and are based on historical experience and other factors. There have been no material changes to our critical accounting estimates in the first three months of 2019-2020, except those pertaining to the adoption of the new lease standard (IFRS 16) as further described in Notes 3, 9 and 12. Our key significant accounting estimates and critical judgments are disclosed throughout the notes of our annual Consolidated Financial Statements.

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH DEFINED BENEFIT PLANS We made employer contributions to defined benefit plans as discussed in Note 11. We also provided management and administrative services to our defined benefit pension plans.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these Condensed Interim Consolidated Financial Statements in accordance with IAS 34 – Interim Financial Reporting, and for such internal controls as management determines is necessary to enable the preparation of Condensed Interim Consolidated Financial Statements that are free from material misstatement. Management is also responsible for ensuring all other information in this quarterly financial report is consistent, where appropriate, with the Condensed Interim Consolidated Financial Statements. Based on our knowledge, these unaudited Condensed Interim Consolidated Financial Statements present fairly, in all material respects, the financial position, results of operations and cash flows of the Corporation, as at the date of and for the periods presented in the Condensed Interim Consolidated Financial Statements.

______Catherine Tait Michael Mooney, President and Chief Executive Officer Acting Executive Vice-President and Chief Financial Officer

Ottawa, Canada August 22, 2019

TABLE OF CONTENTS CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PAGES

FINANCIAL POSITION (UNAUDITED) 24 INCOME (LOSS) (UNAUDITED) 25 COMPREHENSIVE INCOME (LOSS) (UNAUDITED) 26 CHANGES IN EQUITY (UNAUDITED) 26 CASH FLOWS (UNAUDITED) 27

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED JUNE 30, 2019 28 BUSINESS AND ENVIRONMENT 28 1. GENERAL INFORMATION 28 2. SIGNIFICANT ACCOUNTING POLICIES 28 3. NEW AND FUTURE CHANGES IN ACCOUNTING POLICIES 30 ASSETS AND LIABILITIES 33 4. TRADE AND OTHER RECEIVABLES 33 5. PROGRAMMING 33 6. BONDS RECEIVABLE 34 7. PROPERTY AND EQUIPMENT 34 8. INTANGIBLE ASSETS 36 9. RIGHT-OF-USE (ROU) ASSETS 37 10. PROVISIONS 38 11. PENSION PLANS AND EMPLOYEE-RELATED LIABILITIES 39 12. LEASE LIABILITIES 42 INCOME, EXPENSES AND CASH FLOWS 44 13. REVENUE 44 14. GOVERNMENT FUNDING 46 15. MOVEMENTS IN WORKING CAPITAL 47 OTHER 48 16. FINANCIAL INSTRUMENTS 48 17. RELATED PARTIES 50 18. COMMITMENTS 50

CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

As at June 30 As at March 31 (in thousands of Canadian dollars) NOTE 2019 2019 ASSETS Current Cash 99,567 89,697 Trade and other receivables 4,16 136,051 142,387 Programming 5 329,135 283,464 Investment in finance lease 3,691 3,630 Prepaid expenses 37,784 31,623 Promissory notes receivable 3,321 3,264 Bonds receivable 6 80,214 163,092 Derivative financial instruments - 92 Assets classified as held for sale 4,685 133 694,448 717,382 Non-current Property and equipment 7 772,725 773,289 Intangible assets 8 23,257 21,935 Right-of-use assets 9 156,035 - Assets under finance lease 9 - 5,414 Pension plan asset 11 320,278 497,601 Programming 5 33,734 32,892 Promissory notes receivable 30,501 31,352 Investment in finance lease 33,279 34,224 Deferred charges 42,106 41,781 1,411,915 1,438,488 TOTAL ASSETS 2,106,363 2,155,870 LIABILITIES Current Accounts payable and accrued liabilities 87,400 119,257 Provisions 10 32,020 30,401 Pension plans and employee-related liabilities 11 189,612 186,063 Programming liability - 5,659 Bonds payable 21,092 24,380 Lease liabilities 12 13,075 - Obligation under finance lease 12 - 583 Notes payable 8,398 9,172 Deferred revenue 6,104 12,332 Deferred operating vote drawdown 14 26,111 - Derivative financial instruments 16 324 - 384,136 387,847 Non-current Deferred revenue 8,864 10,584 Pension plans and employee-related liabilities 11 252,447 245,606 Bonds payable 177,235 186,724 Lease liabilities 12 148,859 - Obligation under finance lease 12 - 5,177 Notes payable 67,534 71,570 Deferred capital funding 14 528,835 528,170 1,183,774 1,047,831 TOTAL LIABILITIES 1,567,910 1,435,678 EQUITY Retained earnings 537,828 719,556 Total equity attributable to the Corporation 537,828 719,556 Non-controlling interests 625 636 TOTAL EQUITY 538,453 720,192 TOTAL LIABILITIES AND EQUITY 2,106,363 2,155,870 Commitments (NOTE 18) The accompanying notes form an integral part of the condensed interim consolidated financial statements.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF INCOME (LOSS) (UNAUDITED)

For the three months ended June 30 (in thousands of Canadian dollars) Note 2019 2018 REVENUE 13 Advertising 56,031 56,581 Subscriber fees 31,071 30,747 Other income 24,189 23,399 Financing and investment income 2,809 2,656 114,100 113,383 GOVERNMENT FUNDING 14 Parliamentary appropriation for operating expenditures 246,889 257,287 Parliamentary appropriation for working capital 1,000 1,000 Amortization of deferred capital funding 26,335 23,144 274,224 281,431 EXPENSES Television, radio and digital services costs 375,501 378,286 Transmission, distribution and collection costs 14,721 15,031 Corporate management 2,911 2,530 Finance costs 5,799 5,330 398,932 401,177 Results before other gains and losses (10,608) (6,363) OTHER GAINS AND LOSSES Loss on disposal of property and equipment and intangibles 7,8 (1,802) (1,370) (1,802) (1,370) Net results for the period (12,410) (7,733) Net results attributable to: The Corporation (12,399) (7,682) Non-controlling interests (11) (51) (12,410) (7,733) The accompanying notes form an integral part of the condensed interim consolidated financial statements.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

For the three months ended June 30 (in thousands of Canadian dollars) NOTE 2019 2018 COMPREHENSIVE INCOME (LOSS) Net results for the period (12,410) (7,733) Other comprehensive income (loss) - not subsequently reclassified to net results Remeasurements of defined benefit plans 11 (169,329) 256,239 Total comprehensive income (loss) for the period (181,739) 248,506 Total comprehensive income (loss) attributable to: The Corporation (181,728) 248,557 Non-controlling interests (11) (51) (181,739) 248,506 The accompanying notes form an integral part of the condensed interim consolidated financial statements.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

Retained earnings and total equity attributable to the Non-controlling (in thousands of Canadian dollars) NOTE Corporation interests Total Balance as at March 31, 2019 719,556 636 720,192 Changes in period Net results for the period (12,399) (11) (12,410) Remeasurements of defined benefit plans 11 (169,329) - (169,329) Total comprehensive income for the period (181,728) (11) (181,739) Balance as at June 30, 2019 537,828 625 538,453

Retained earnings and total equity attributable to the Non-controlling (in thousands of Canadian dollars) NOTE Corporation interests Total Balance as at March 31, 2018 529,029 645 529,674 Changes in year period Net results for the period (7,682) (51) (7,733) Remeasurements of defined benefit plans 11 256,239 - 256,239 Total comprehensive income for the period 248,557 (51) 248,506 Balance as at June 30, 2018 777,586 594 778,180 The accompanying notes form an integral part of the condensed interim consolidated financial statements.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

For the three months ended June 30 2018 (in thousands of Canadian dollars) NOTE 2019 (revised) CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net results for the period (12,410) (7,733) Adjustments for: Loss on disposal of property and equipment and intangibles 7,8 1,802 1,370 Financing and investment income 13 (2,809) (2,656) Finance costs 5,799 5,330 Change in fair value of financial instruments designated as at fair value through profit and loss 16 416 (431) Depreciation and amortization 7,8,9 30,386 26,894 Change in deferred charges (324) (930) Net change in programming asset 5 (842) 13,274 Amortization of deferred capital funding 14 (26,335) (23,144) Change in deferred appropriations for operating expenditures 26,111 14,463 Change in deferred revenue [non-current] - (6,439) Change in pension plan asset 11 177,323 (237,837) Change in pension plans and employee-related liabilities 11 (152,510) 233,767 Amortization of bond premium 49 324 Movements in working capital 15 (92,328) (11,476) (45,672) 4,776 FINANCING ACTIVITIES Payment of lease liabilities 12 (3,132) (138) Repayment of bonds (8,813) (8,185) Repayment of notes (3,869) (3,694) Interest paid (10,705) (10,412) (26,519) (22,429) INVESTING ACTIVITIES Parliamentary appropriations for capital funding 14 27,000 27,250 Additions to property and equipment 7 (29,049) (21,540) Additions to intangible assets 8 (3,136) (698) Acquisition of bonds receivable 16 (40,654) (19,734) Net proceeds from disposal of property and equipment 7 51 136 Collection of bonds receivable 16 123,462 16,746 Collection of promissory notes receivable 789 1,138 Collection of finance leases receivable 836 779 Interest received 2,762 2,442 82,061 6,519 Change in cash 9,870 (11,134) Cash, beginning of the period 89,697 95,978 Cash, end of the period 99,567 84,844 The accompanying notes form an integral part of the condensed interim consolidated financial statements.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED JUNE 30, 2019 BUSINESS AND ENVIRONMENT

This Section sets out the basis of preparation of these condensed interim financial statements when compared to the Corporation’s latest complete set of audited annual financial statements for the year ended March 31, 2019. This section also shows new and future accounting standards and whether they are effective in 2019 or later years. We explain how these changes are expected to impact the financial position and performance of the Corporation.

1. GENERAL INFORMATION

CBC/Radio-Canada (the Corporation) was first established by the 1936 Broadcasting Act. The Corporation, a federal Crown Corporation domiciled in Canada, is an agent of Her Majesty and all assets and liabilities are those of the Government. Its registered office is located at 181 Queen Street, Ottawa ON K1P 1K9. The Corporation is accountable to Parliament through the Minister of Canadian Heritage and in accordance with section 85(1.1) of the Financial Administration Act, the Corporation is exempt from certain sections from Divisions I to IV of Part X of this act.

As the national public broadcaster, the Corporation provides radio, television and digital services in both official languages, delivering predominantly and distinctly Canadian programming to reflect Canada and its regions to national and regional audiences.

2. SIGNIFICANT ACCOUNTING POLICIES

A. Statement of Compliance

The Corporation has prepared these condensed interim consolidated financial statements as required by Section 131.1 of the Financial Administration Act which requires most parent Crown Corporations to prepare and make public quarterly financial reports in compliance with the Treasury Board Standard on Quarterly Financial Reports for Crown Corporations. These condensed interim consolidated financial statements also comply with IAS 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (IASB) and adopted by the Accounting Standards Board (AcSB).

These condensed interim consolidated financial statements have not been audited or reviewed by the Corporation’s external auditor. They have been authorized for issuance by the Board of Directors on August 22, 2019.

All amounts are in Canadian dollars, which is our functional currency, and rounded to the nearest thousand, unless otherwise noted.

B. Significant Items in the Current Period

Adoption of IFRS 16 L eases

On April 1, 2019, the Corporation adopted IFRS 16 Leases (“IFRS 16”) using the modified retrospective approach under which comparative information has not been restated and continues to be reported under IAS 17 and related interpretations. See note 3.A of these condensed consolidated interim financial statements for more details.

The adoption of IFRS 16 has a significant impact on our condensed consolidated interim financial statements that resulted in: ● A significant increase in the Corporation’s: ○ non-current assets since we now recognize right-of-use (ROU) assets for leases previously classified as operating leases under IAS 17; and ○ current and non-current liabilities since all lease payments are now recognized as a financial liability (“lease liabilities”) that represents our obligation to make future lease payments; ● A change in the timing and presentation of lease-related expenses in the Corporation’s consolidated results; ● A change in the terminology used under IFRS 16. The Corporation uses the term “right-of-use asset” and “lease liability” which are presented separately on the Consolidated Statement of Financial Position to describe such balances; ● More extensive disclosures in relation to the nature of the Corporation’s leases. See notes 9 and 12 for further details.

C. Basis of Preparation

Basis of Presentation

As permitted under IAS 34, these interim consolidated financial statements are presented on a condensed basis and therefore do not include all disclosures that would otherwise be required in a full set of financial statements. These condensed interim consolidated financial statements are intended to provide an update on the Corporation’s latest complete set of audited annual financial statements for the year ended March 31, 2019 (“2019 audited annual financial statements”). Accordingly, they should be read in conjunction with the 2019 audited annual financial statements.

These condensed interim consolidated financial statements have been prepared on a historical cost basis, except as permitted by IFRS and as otherwise indicated within these notes.

The accounting policies used in the preparation of these condensed interim financial statements are consistent with those disclosed in the Corporation’s 2019 audited annual financial statements, except for the application of IFRS 16 Leases effective April 1, 2019.

See Note 3.A for further details.

The accounting policies have been applied consistently to all periods presented, unless otherwise noted.

Seasonality

Excluding government appropriations, approximately 50% of the Corporation’s revenue comes from advertising revenue that tends to follow seasonal patterns, with the second quarter typically being the lowest as the summer season typically attracts fewer viewers. Advertising revenue also varies according to market and general economic conditions and the programming schedule. By contrast, subscriber-based revenue is less volatile on a quarter-by-quarter basis. Operating expenses also tend to follow a seasonal pattern, as they are influenced by the programming schedule.

Key Sources of Estimation Uncertainty and Critical Judgments

The preparation of these condensed interim consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities at the date of such financial statements and the reported amounts of revenue and expenses recorded during the period, as well as all related disclosures.

Estimates are regularly reviewed by management and changes in those estimates are recognized prospectively by including them in the Condensed Interim Consolidated Statement of Income (Loss) in the period of the change, if the change affects that period only; or the period of the change and future periods, if the change affects both. Actual results could significantly differ from those estimates. Similarly, critical judgments are reassessed at each reporting date.

3. NEW AND FUTURE CHANGES IN ACCOUNTING POLICIES

A. Adoption of New and Revised International Financial Reporting Standards

The following new pronouncements issued by the IASB or the IFRS Interpretations Committee were adopted by the Corporation effective April 1, 2019:

IFRS 16 Leases

On April 1, 2019, the Corporation adopted IFRS 16. IFRS 16 supersedes IAS 17 Leases and related Interpretations and sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 removes the distinction between operating and finance leases under lessee accounting and requires the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value. The requirements for lessor accounting have remained largely unchanged.

We adopted this Standard using the modified retrospective approach under which the comparative information has not been restated and continues to be reported using IAS 17 Leases and IFRIC 4 Determining whether an arrangement contains a lease. At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted using an estimate of an incremental borrowing rate as of April 1, 2019 and adjusted by the amount of any prepaid or accrued lease payments. The associated ROU assets are measured at the lease liability amount on April 1, 2019, resulting in no adjustment to the opening balance of retained earnings.

Description of Changes in Accounting Policy i) Leases where the Corporation is a lessee – Key changes and practical expedients

(a) Leases previously classified as operating leases under IAS 17

The most significant change from the adoption of IFRS 16 is the balance sheet recognition of ROU assets of $153.8 million for operating leases where the Corporation is a lessee, and a liability for lease obligations of $159.1 million. As a result, we changed our accounting policy for leases as detailed in Note 9. In addition, the details of accounting policies under IAS 17 and IFRIC 4, applied in the comparative period, remain disclosed in Note 9 if they are different from IFRS 16.

We elected to use the following practical expedients on transition and applied these consistently to all of our leases: ● We have not reassessed whether any expired or existing contracts that were identified as leases under IAS 17 and IFRIC 4 are, or contain leases under IFRS 16; ● We used hindsight when determining the lease term if the contract contains options to extend or terminate the lease; ● We did not recognize a ROU asset or a lease liability for leases for which the lease terms ends within 12 months of the date of initial application; ● We elected to rely on our assessment of whether leases are onerous under IAS 37 Provisions, Contingent Liabilities and Contingent Assets as an alternative to performing an impairment review; and ● We excluded initial direct costs from the measurement of the ROU assets at the date of initial application.

In addition, the Corporation has elected to use the following practical expedients when applying IFRS 16 for the first-time and going forward: ● We elect not to recognize a ROU asset or a lease liability for short-term leases that have a lease term of 12 months or less. ● We elect not to recognize ROU assets and lease liabilities for low-value assets (i.e. assets below $5,000 as defined by the Corporation);

Several key judgments and estimates were made such as assessing whether an arrangement contains a lease, determining the lease term, calculating an estimate of an incremental borrowing rate and determining the stand alone selling price of lease and non-lease components.

(b) Leases previously classified as finance leases under IAS 17

On April 1, 2019, the carrying amounts of the lease previously classified as finance under IAS 17 are now presented within ROU assets and current and non-current lease liabilities. ii) Leases where the Corporation is a lessor

We did not make any adjustments on transition for existing leases in which we are a lessor. We accounted for our leases applying IFRS 16 from the date of initial application as of April 1, 2019. iii) Sale and Leaseback Under IFRS 16, the Corporation continues to account for the sale and leaseback transaction of the old Maison de Radio-Canada premises as a sale-and-leaseback transaction. We recognized a ROU asset and lease liability for the leaseback on April 1, 2019, measured in the same way as other ROU assets and lease liabilities at that date.

Financial Impact of Applying IFRS 16 The adoption of IFRS 16 resulted in the recognition of ROU assets of $153.8 million and lease liabilities of $159.1 million as at April 1, 2019, as shown in the table below. The difference between the ROU assets and lease liabilities recognized is due to the elimination of lease incentives and rent prepayments on transition to IFRS 16.

Leases in the Statement of Financial Position (in thousands of Canadian dollars) April 1, 2019 Non-current assets Right of use assets – Land 2,290 Right of use assets – Buildings 130,618 Right of use assets – Technical equipment 20,873 Total 153,781

Liabilities Current liabilities – Lease liabilities 12,359 Non-current liabilities – Lease liabilities 146,733 Total 159,092

When measuring lease liabilities, we discounted lease payments using an estimate of an incremental borrowing rate at April 1, 2019. The weighted average rate applied was 2.45%. For a reconciliation of our 2018-2019 year-end operating lease commitments to our opening lease liabilities recognized as of April 1, 2019 following the initial application of IFRS 16, refer to note 3.B New and Future Changes in Accounting Policies of our Consolidated Financial Statements for the year-end ending March 31, 2019.

The impact of adopting IFRS 16 is included in notes 9, 12, 13, 15 and 16.

B. Future Accounting Changes

At the date of this report, there were no future accounting standards or amendments issued by the IASB that are expected to significantly impact the Corporation’s consolidated financial statements.

ASSETS AND LIABILITIES

This section shows the assets used to fulfill the public broadcaster’s mandate and the liabilities incurred as a result. Only significant items are discussed below.

4. TRADE AND OTHER RECEIVABLES

June 30, 2019 March 31, 2019 Trade receivables 123,936 129,607 Allowance for doubtful accounts (447) (506) Other 12,562 13,286 136,051 142,387

Trade receivables disclosed above include amounts that are past due at the end of the reporting period.

Trade receivables are subject to credit risk, which is further discussed in Note 16.B.

5. PROGRAMMING

A. Programming by Category

June 30, 2019 March 31, 2019 Completed programs 159,194 143,227 Programs in process of production 135,545 89,414 Broadcast rights available for broadcast within the next twelve months 34,396 50,823 329,135 283,464 Broadcast rights not available for broadcast within the next twelve months 33,734 32,892 362,869 316,356

B. Movement in Programming

June 30, 2019 March 31, 2019 Opening balance 316,356 302,500 Additions 321,673 1,116,210 Programs broadcast (275,160) (1,102,354) Balance, end of period 362,869 316,356

Programs broadcast include programming write-offs for the three months ended June 30, 2019 of $0.7 million (2018 – $0.9 million). Programming write-offs are mainly due to terminated projects, programming not suitable for telecast or pilots not progressing into a series.

6. BONDS RECEIVABLE The Corporation holds Canada Mortgage Bonds in order to fund future commitments. The following table presents the contractual maturity profile of bonds receivable based on carrying value:

June 30, 2019 March 31, 2019 Less than one year 80,214 163,092 Later than one year but not later than five years - - Total 80,214 163,092

Interest income related to bonds receivable included in current year’s revenue and presented as finance income is $0.7 million (March 2019 - $2.2 million and June 2018 - $0.5 million).

The decrease in bonds receivable this quarter was due to some of our bonds maturing in June 2019.

7. PROPERTY AND EQUIPMENT

A. Cost and Accumulated Depreciation

Computer, office Uncompleted Leasehold Technical equipment capital Land Buildings improvements equipment and other projects Total Cost as at March 31, 2019 107,746 476,560 69,895 1,013,947 158,140 122,400 1,948,688 Additions - - - 1,455 845 28,385 30,685 Transfers (refer to Note 8) - 2,753 2,614 330 1,195 (6,412) 480 Assets classified as held for sale (1) (18,370) - (11) - - (18,382) Disposals and write-offs - (2,361) (3,413) (12,259) (5,391) - (23,424) Cost as at June 30, 2019 107,745 458,582 69,096 1,003,462 154,789 144,373 1,938,047 Accumulated depreciation as at March 31, 2019 - (254,443) (40,290) (761,823) (118,843) - (1,175,399) Depreciation for the period - (6,959) (932) (14,339) (3,094) - (25,324) Reclassification of depreciation on assets classified as held for sale - 13,819 - 11 - - 13,830 Reclassification of depreciation on disposals and write-offs - 1,714 2,935 11,531 5,391 - 21,571 Accumulated depreciation as at June 30, 2019 - (245,869) (38,287) (764,620) (116,546) - (1,165,322) Net carrying amount as at June 30, 2019 107,745 212,713 30,809 238,842 38,243 144,373 772,725

Computer, office Uncompleted Leasehold Technical equipment capital Land Buildings improvements equipment and other projects Total Cost as at March 31, 2018¹ 111,790 483,295 70,430 1,069,788 155,784 33,657 1,924,744 Additions - - - 10,691 10,492 124,179 145,362 Transfers (refer to Note 8) - 9,108 1,036 23,422 2,759 (35,436) 889 Assets classified as held for sale (313) (8,011) - (426) - - (8,750) Disposals and write-offs (3,731) (7,832) (1,571) (89,528) (10,895) - (113,557) Cost as at March 31, 2019 107,746 476,560 69,895 1,013,947 158,140 122,400 1,948,688 Accumulated depreciation as at March 31, 2018¹ - (237,396) (38,279) (787,510) (114,721) - (1,177,906) Depreciation for the year - (27,256) (3,582) (61,463) (13,018) - (105,319) Reclassification of depreciation on assets classified as held for sale - 4,432 - 398 - - 4,830 Reclassification of depreciation on disposals and write-offs - 5,777 1,571 86,752 8,896 - 102,996 Accumulated depreciation as at March 31, 2019 - (254,443) (40,290) (761,823) (118,843) - (1,175,399) Net carrying amount as at March 31, 2019 107,746 222,117 29,605 252,124 39,297 122,400 773,289 ¹ The cost and accumulated depreciation balances for land and buildings as at March 31, 2018 have been revised to reflect the remeasurement charge of $36.5 million that was recorded upon classifying Maison de Radio-Canada premises as held-for-sale. It was sold and derecognized in the same period.

The contractual commitments for the acquisition of property and equipment were $52.7 million as at June 30, 2019 (March 31, 2019 - $36.3 million).

B. Impairment and Other Charges

No impairment loss was recorded in the Corporation’s Condensed Interim Consolidated Statement of Income (Loss) for the first quarter of 2019-2020 (2018-2019 - nil).

C. Assets Classified as Held for Sale

Consistent with the Corporation’s financial plan to reduce its real estate footprint, several properties were classified as held for sale for accounting purposes as at June 30, 2019 with a total carrying value of $4.7 million (March 31, 2019 - $0.1 million). These properties are expected to be sold on a site by site basis over the next twelve months.

D. Disposals

There were no significant disposals during the first quarter of 2019-2020.

Other insignificant net gains and losses during the three months ended June 30, 2019 resulted from the disposal or retirements of equipment as part of the Corporation’s normal asset refresh cycle.

8. INTANGIBLE ASSETS

Internally Uncompleted developed Acquired capital software software projects Total Cost as at March 31, 2019 142,311 46,823 5,668 194,802 Additions - 36 3,276 3,312 Transfers (refer to Note 7) 533 304 (1,317) (480) Disposals and write-offs (1,784) (3,329) - (5,113) Cost as at June 30, 2019 141,060 43,834 7,627 192,521 Accumulated amortization as at March 31, 2019 (140,335) (32,532) - (172,867) Amortization for the period (250) (1,260) - (1,510) Reclassification of amortization on disposals and write-offs 1,784 3,329 - 5,113 Accumulated amortization as at June 30, 2019 (138,801) (30,463) - (169,264) Net carrying amount as at June 30, 2019 2,259 13,371 7,627 23,257

Internally Uncompleted developed Acquired capital software software projects Total Cost as at March 31, 2018 146,885 44,157 1,099 192,141 Additions - 1,884 7,974 9,858 Transfers (refer to Note 7) 959 1,897 (3,745) (889) Disposals and write-offs (5,533) (1,115) 340 (6,308) Cost as at March 31, 2019 142,311 46,823 5,668 194,802 Accumulated amortization as at March 31, 2018 (140,370) (27,972) - (168,342) Amortization for the year (1,151) (5,640) - (6,791) Reclassification of amortization on disposals and write-offs 1,186 1,080 - 2,266 Accumulated amortization as at March 31, 2019 (140,335) (32,532) - (172,867) Net carrying amount as at March 31, 2019 1,976 14,291 5,668 21,935

The contractual commitments for the acquisition of intangible assets were $3.8 million as at June 30, 2019 (March 31, 2019 - $3.0 million).

There were no impairment losses recorded or reversed during the three months ended June 30, 2019 (2018 – nil).

9. RIGHT-OF-USE (ROU) ASSETS As discussed in Note 3.A, we have applied the new lease standard IFRS 16 as at April 1, 2019. The following provides a full set of disclosures under IFRS 16.

ROU assets consist mostly of real estate leases for the rental of office space and technical equipment to carry out our transmission activities. The lease of office space typically runs for periods between 2 and 35 years, and lease of technical equipment (including transmission assets) for 5 to 35 years.

ACCOUNTING POLICIES CRITICAL ACCOUNTING (Policy applicable on April 1, 2019) ESTIMATES AND JUDGMENTS

Recognition and measurement The determination of the lease We determine if a contract is a lease at inception. Determining whether a contract term corresponds to the contains a lease requires judgment. Contracts are considered to be a lease when non-cancellable period and the contract conveys the right to control the use of an identified asset for a period of options of renewal or time in exchange for consideration. A contract conveys the right to control the use termination which are of an identified asset when all of the following apply: reasonably certain. The Corporation seeks to exercise ● It conveys the right to control the use of an identified asset. If the supplier renewal options or not to has a substantive substitution right, then the asset is not identified; exercise termination options in ● We will obtain substantially all of the economic benefits from the use of new leases when an economic the asset; and incentive is available in its ● We can direct the use of the identified asset. leasing arrangement.

Right of use assets are initially measured at cost which comprise the initial measurement of the lease liability (see note 12) plus any lease payments made at or before the commencement date and any initial direct costs less any incentives received. They are subsequently measured at cost less accumulated depreciation and impairment losses. IAS 36 is applied to determine whether the ROU asset is impaired.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The ROU asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Supporting Information

Leasehold Technical Land Buildings improvements equipment Total Net carrying amount for the period 2,290 128,495 5,265 19,985 156,035 Depreciation charge for the period 83 2,514 150 805 3,552

Additions to the ROU assets during the first quarter of 2019-2020 were $0.4 million.

Comparative Information As of March 31, 2019, we had an asset under finance lease consisting of a lease for leasehold improvements with an original lease term of seven years recognized on the Statement of Financial Position.

March 31, 2019 Cost 7,820 Accumulated depreciation (2,406)

Net carrying amount 5,414

See note 12 of 2019 audited year-end financial statements for more details about the IAS 17 accounting policies.

For this lease previously classified as a finance lease under IAS 17, the carrying amount of the ROU asset at April 1, 2019 has been determined at the carrying amount of the lease asset under IAS 17 immediately before that date.

10. PROVISIONS

Legal and other Environmental Total Opening balance 30,049 352 30,401 Additional provisions recognized 2,765 75 2,840 Provisions utilized (366) (15) (381) Reductions resulting from remeasurement or settlement without cost (588) (252) (840) Balance, end of period 31,860 160 32,020

Various claims and legal proceedings have been asserted or instituted against the Corporation. Some of these claims demand large monetary damages or other form of relief, and could result in significant expenditures. These claims consist mainly of copyright tariffs, grievances and other legal claims.

Litigation is subject to many uncertainties and the outcome of individual matters is not always predictable. Claims that are uncertain in terms of the outcome or potential outflow or that are not measurable are considered to be a contingency and are not recorded in the Corporation’s consolidated financial statements. In addition, claims where cash outflows are not probable are considered as contingencies.

At June 30, 2019, the Corporation had legal and other provisions amounting to $31.9 million (March 31, 2019 – $30.0 million). All matters are classified as current because, where estimable, the Corporation is working to resolve these matters within 12 months.

11. PENSION PLANS AND EMPLOYEE-RELATED LIABILITIES

A. Pension Plan Asset/Liability and Employee-Related Liabilities

Employee-related assets/liabilities recognized and presented in the Condensed Interim Consolidated Statement of Financial Position are as follows: Current Non-current June 30, 2019 March 31, 2019 June 30, 2019 March 31, 2019 Pension plan asset - - 320,278 497,601 Pension plan liability - - 128,870 123,026 Other post-employment plans - - 123,577 122,580 Vacation pay 66,714 62,194 - - Termination benefits 5,845 7,555 - - Salary-related liabilities 117,053 116,314 - - Total pension plans and employee-related liabilities 189,612 186,063 252,447 245,606

The amount included in the Condensed Interim Consolidated Statement of Financial Position arising from the Corporation's obligation in respect of its defined benefit plans is as follows:

Funded Unfunded Other post- Funded Unfunded Other post- pension pension employment pension pension employment plan plans plans plan plans plans June 30, 2019 March 31, 2019 Fair value of plan assets 7,820,515 - - 7,566,902 - - Defined benefit obligation 7,500,237 128,870 123,577 7,069,301 123,026 122,580 Net asset (liability) arising from defined benefit obligation 320,278 (128,870) (123,577) 497,601 (123,026) (122,580)

B. Significant Actuarial Assumptions

As disclosed in Note 16 Pension Plans and employee-Related Liabilities of the Corporation’s 2019 audited annual financial statements, the Corporation reviews its actuarial assumptions at each reporting period to ensure that the net defined benefit (liability) asset recognized in the financial statements is updated for significant changes arising from non-recurring events. The impact on the net defined benefit (liability) asset arising from any such changes in assumptions is recognized in other comprehensive income as a remeasurement for the period.

The significant actuarial assumptions used for the purposes of determining the defined benefit obligation and pension benefit costs were:

Assumptions – annual rates June 30, 2019 March 31, 2019 Assumptions for the calculation of pension benefit costs: Discount rate 3.32% 3.53%

Assumptions for the calculation of the benefit obligation: Discount rate - pension 2.97% 3.32% Discount rate - long service gratuity 2.66% 2.97% Discount rate - LTD benefit 2.66% 2.97% Discount rate - life insurance 2.91% 3.26%

C. Total Cash Payments

Cash payments for pension, other post-employment and other long-term benefits for the Corporation were as follows:

For the three months ended June 30 2019 2018 Benefits paid directly to beneficiaries 3,356 2,909 Employer regular contributions to pension benefit plans 13,943 12,345 Total cash payments for defined benefit plans 17,299 15,254

The Plan is funded on the basis of actuarial valuations, which are made on an annual basis. Employees are required to contribute a percentage of their pensionable salary to the Plan. The Corporation provides the balance of the funding, as required, based on actuarial valuations.

D. Movements in the Present Value of the Defined Benefit Obligation

Other post- Other post- Pension employment Pension employment plans plans plans plans June 30, 2019 March 31, 2019 Opening defined benefit obligation 7,192,327 122,580 6,887,493 117,814 Current service cost 31,196 1,065 113,280 5,105 Interest cost 59,121 785 240,744 3,849 Contributions from employees 15,469 - 56,690 - Remeasurements: Actuarial gains arising from changes in demographic assumptions - - - (488) Actuarial losses arising from changes in financial assumptions 405,291 2,503 196,424 2,418 Actuarial losses arising from experience adjustments 4,547 - 6,667 6,553 Benefits paid (78,844) (3,356) (308,971) (12,671)

Closing defined benefit obligation 7,629,107 123,577 7,192,327 122,580

E. Movements in the Fair Value of Plan Assets

Other post- Other post- Pension employment Pension employment plans plans plans plans June 30, 2019 March 31, 2019 Opening fair value of plan assets 7,566,902 - 7,071,998 - Administration fees (other than investment management fees) (1,750) - (7,100) - Interest income on plan assets 61,934 - 246,174 - Return on plan assets, excluding interest income 242,861 - 453,317 - Contributions from employees 15,469 - 56,690 - Contributions from the Corporation 13,943 3,356 54,794 12,671 Benefits paid (78,844) (3,356) (308,971) (12,671) Closing fair value of plan assets 7,820,515 - 7,566,902 -

F. Defined Benefit Plan Costs

Amounts recognized in comprehensive income (loss) For the three months ended June 30 2019 2018 Current service cost 32,261 29,345 Administration fees (other than investment management fees) 1,750 1,775 Interest cost on defined benefit obligation 59,906 61,055 Interest income on plan assets (61,934) (61,543) Other 151 (79) Expense recognized in net results 32,134 30,553 Less: Remeasurements recognized in other comprehensive income (loss) 169,329 (256,239) Total 201,463 (225,686)

Retained earnings include $743.6 million of cumulative actuarial gains as at June 30, 2019 (March 31, 2019 gains – $912.9 million).

Expense recognized in net results For the three months ended June 30 2019 2018 Television, radio and digital services costs 30,849 29,331 Transmission, distribution and collection 964 917 Corporate management 321 305 Total 32,134 30,553

12. LEASE LIABILITIES As discussed in Note 3.A, we have applied the new lease standard IFRS 16 as at April 1, 2019. The following provides a full set of disclosures under IFRS 16.

ACCOUNTING POLICIES CRITICAL ACCOUNTING (Policy applicable on April 1, 2019) ESTIMATES AND JUDGMENTS

Recognition and measurement The determination that the Lease liabilities are calculated as the present value of the remaining lease payments discount rate used to calculate as of the commencement date. As our leases do not provide an implicit rate, we use the lease liability is based on an an estimate of an incremental borrowing rate based on the information available at estimate of an incremental the commencement date in determining the present value of the lease payments. borrowing rate at the The Corporation remeasures the lease liability (and makes a corresponding commencement of the contract. adjustment to the related ROU asset) whenever the lease term has changed, there is a change in the assessment of exercise of a purchase option, the lease payments change due to changes in an index or a rate or a lease contract is modified and the lease modification is not accounted for as a separate lease.

Lease payments associated with short-term leases (defined as leases with a term of 12 months or less) and leases of low value assets are recognized as an expense under “Television, radio and digital costs” and “Transmission, distribution and collection costs” on a straight line basis over the term of the lease.

Lease payments included in the measurement of the lease liability comprise the following payments:

● fixed payments, less any lease incentives receivable; ● variable lease payments that depend on an index or rate; and ● the exercise price of a purchase option if the lessee is reasonably certain to exercise that option.

The lease liability is subsequently measured using the effective interest method.

The finance cost is charged to the Consolidated Statement of Income (loss) over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

For a contract that contains a lease component and one or more additional lease or non-lease components, the Corporation allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Supporting Information

Lease liabilities recognized as at June 30, 2019 Land 2,128 Buildings 133,161 Leasehold improvements 5,619 Technical equipment 21,026 Total 161,934

Comparative Information As of March 31, 2019, we had an obligation under finance lease consisting of a lease for leasehold improvements with an original lease term of seven years recognized on the Statement of Financial Position.

March 31, 2019 Obligation under finance lease – Current 583 Obligation under finance lease – Non-Current 5,177 Total 5,760

See note 12 of 2019 audited year-end financial statements for more details about the IAS 17 accounting policies.

For this lease previously classified as a finance lease under IAS 17, the carrying amount of the lease liability at April 1, 2019 has been determined at the carrying amount of the lease liability under IAS 17 immediately before that date.

Maturity Analysis

June 30, 2019 Contractual undiscounted cash flows Less than one year 16,951 One to five years 60,612 More than five years 122,939 Total undiscounted lease liabilities at June 30, 2019 200,502 Lease liabilities included in the Statement of Financial Position at June 30, 2019 161,934

Amounts recognized in the Consolidated Statement of Income (loss)

For the three month period ended June 30, 2019: ● There were no significant expenses or commitments made related to short-term leases; ● There were no significant expenses related to leases of low-value assets; ● There were no gains (losses) arising from sale and leaseback transactions; and ● The total cash outflow for leases amounted to $4.1 million.

Some of the real estate leases in which the Corporation is the lessee contain variable lease payments that are linked to an index or rate. This type of payments is common in the real estate industry.

INCOME, EXPENSES AND CASH FLOWS

This Section focuses on the results and cash flows of the Corporation. On the following pages you will find disclosures explaining the Corporation’s revenue and government funding for the year, finance costs, income taxes and supplemental cash flow information.

13. REVENUE The following provides a full set of disclosures under IFRS 15.

For the three months ended June 30 2019 2018 (revised) TV advertising¹ 48,173 49,734 Digital advertising 7,858 6,847 Subscriber fees 31,071 30,747 Production revenue² 8,687 9,142 Program license sales 4,979 5,051 Retransmission rights 1,052 754 Program sponsorship 396 330 Other services 391 355 Revenue from contracts with customers 102,607 102,960

Foreign exchange gain (loss) 125 122 Net gain (loss) from the change in fair value of ﬁnancial instruments (416) 431 Leasing income 7,656 7,089 Financing and investment income 2,809 2,656 Other gains and losses 1,319 125 Other sources of income* 11,493 10,423 114,100 113,383 * Out of scope of IFRS 15 - R evenue from Contracts with Customers. ¹ For the period ended June 30, 2019, TV advertising includes revenue from exchange of services of $0.5 million (2018 - $0.6 million). ² For the period ended June 30, 2019, Production revenue includes revenue from exchange of services of $5.4 million (2018 - $5.4 million).

Changes in Presentation

IFRS 15 was applied retrospectively, resulting in a change of classiﬁcation for income streams previously recognized as revenue but now out of scope under IFRS 15. As a result, a total of $0.1 million was reclassiﬁed from “Other services” to “Other gains and losses” for the period ended June 30, 2018.

Advertising revenue For the three months ended June 30 2019 2018 Advertising revenue English market 24,129 23,794 French market 31,902 32,787 Total advertising revenue 56,031 56,581

Subscriber fees For the three months ended June 30 2019 2018 Subscriber revenue English market 16,109 16,501 French market 14,962 14,246 Total subscriber revenue 31,071 30,747

Other income For the three months ended June 30 2019 2018 (revised) Other income Production revenue English market 5,885 6,003 French market 2,802 3,139 Total production revenue 8,687 9,142

Program license sales English market 3,481 3,470 French market 1,498 1,581 Total program license sales 4,979 5,051

Leasing income* 7,656 7,089 Retransmission rights 1,052 754 Program sponsorship 396 330 Other services 391 355 Other gains and losses* 1,319 125 Foreign exchange gain * 125 122 Net gain (loss) from the change in fair value of financial instruments* (416) 431 10,523 9,206 Total other income 24,189 23,399 * Out of scope of IFRS 15 - Revenue from Contracts with Customers

Contract Balances

Contract assets represent the Corporation’s right to consideration in exchange for services that have already been transferred to a customer when that right is conditioned on something other than the passage of time. Contract assets primarily comprise usage-based royalties from retransmission rights arrangements related to previously satisfied performance obligations. As a copyright owner of radio and TV programming, the Corporation is entitled to revenue from retransmission rights as distant signals are retransmitted in Canada or overseas. The Corporation’s right to consideration is dependent upon the tariff set by the Copyright Board of Canada and the Corporation’s share within various retransmission rights collectives.

Contract assets are presented under “Trade and Other Receivables” in the Condensed Interim Consolidated Statement of Financial Position. Trade and Other Receivables include $12.1 million of contract assets as at June 30, 2019 (March 31, 2019 – $11.1 million). There was no impairment loss in relation to contract assets for the periods considered.

Contract liabilities primarily relate to cash payments received in advance of our performance, mostly related to our host broadcasting and program sponsorship revenue streams. Contract liabilities are presented as current liabilities under “Deferred Revenue” in the Condensed Interim Consolidated Statement of Financial Position. Deferred Revenue include $3.7 million of contract liabilities as at June 30, 2019 (March 31, 2019 - $2.1 million).

14. GOVERNMENT FUNDING

The Corporation receives a substantial portion of its funding from the Government of Canada.

A. Government funding received

Parliamentary appropriations approved and the amounts received by the Corporation are as follows: For the three months ended June 30 2019 2018 Operating funding received 273,000 271,750 Capital funding received 27,000 27,250 Working capital funding 1,000 1,000

301,000 300,000

B. Deferred operating vote drawdown

Parliamentary appropriation for operating expenditures is recognized in the Condensed Interim Consolidated Statement of Income (Loss) based on the net difference between quarterly budgeted expenses and revenue.

Quarterly budgets are established from the annual budget approved by the Board of Directors at the beginning of each year and reflect expected appropriation funding for the year and seasonal impacts of expenditures and self-generated revenue. Jun 30, 2019 Mar 31, 2019 Operating funding received during the period 273,000 1,097,822 Less: Parliamentary appropriation for operating expenditures recognized in the Condensed Interim Consolidated Statement of Income (Loss) during the period (246,889) (1,097,822) 26,111 -

C. Deferred capital funding

Capital Funding received is recorded as Deferred Capital Funding in the Condensed Interim Consolidated Statement of Financial Position, with income being recognized in the Condensed Interim Consolidated Statement of Income (Loss) over the same basis and over the same periods as the assets acquired using the appropriations.

June 30, 2019 March 31, 2019 Opening balance 528,170 531,068 Government funding for capital expenditures 27,000 109,009 Amortization of deferred capital funding (26,335) (111,907) Balance, end of period 528,835 528,170

15. MOVEMENTS IN WORKING CAPITAL

For the three months ended June 30 2019 2018 Changes in Working Capital are comprised of: Trade and other receivables 6,462 43,803 Programming asset (current) (45,671) (52,706) Prepaid expenses (6,741) (1,774) Accounts payable and accrued liabilities (33,669) (47,796) Provisions 1,619 4,757 Pension plans and employee-related liabilities (current) (6,440) 37,896 Programming liability (current) (5,659) 339 Deferred revenues (current) (2,229) 4,005 (92,328) (11,476)

OTHER

This section discloses the Corporation’s information related to financial instruments, capital management, related parties and commitments.

16. FINANCIAL INSTRUMENTS

A. Fair Value

The carrying values and fair values of the Corporation’s remaining financial assets and financial liabilities are listed in the following table:

June 30, 2019 March 31, 2019 Carrying Fair Carrying Fair values values values values Method¹ Note Financial instruments measured at fair value through profit and loss on a recurring basis: Cash 99,567 99,567 89,697 89,697 Level 1 (a) Derivative financial instruments - - 92 92 Level 2 (c) Financial assets 99,567 99,567 89,789 89,789 Derivative financial instruments 324 324 - - Level 2 (d) Financial liabilities 324 324 - -

Financial instruments measured at amortized cost: Bonds receivable (current) 80,214 80,236 163,092 163,976 Level 2 (b) Trade and other receivables 136,051 136,051 142,387 142,387 Level 2 (a) Promissory notes receivable (current) 3,321 3,321 3,264 3,264 Level 2 (a) Investment in finance lease (current) 3,691 3,691 3,630 3,630 Level 2 (a) Promissory notes receivable (non-current) 30,501 34,256 31,352 35,160 Level 2 (c) Investment in finance lease (non-current) 33,279 38,883 34,224 39,833 Level 2 (c) Financial assets 287,057 296,438 377,949 388,250 Accounts payable and accrued liabilities 87,400 87,400 119,257 119,257 Level 2 (a) Bonds payable (current) 21,092 21,092 24,380 24,380 Level 2 (a) Notes payable (current) 8,398 8,398 9,172 9,172 Level 2 (a) Bonds payable (non-current) 177,235 217,300 186,724 230,475 Level 2 (d) Notes payable (non-current) 67,534 74,079 71,570 78,480 Level 2 (d) Financial liabilities 361,659 408,269 416,863 467,524 ¹Method refers to the hierarchy levels described in Note 2.B of the Corporation's 2019 audited financial statements. Each level is based on the availability of observable inputs used to measure the fair values of assets and liabilities.

There have been no transfers between levels during the quarter ended June 30, 2019.

(a) The fair values approximate their carrying value due to the current nature of these instruments.

(b) The fair values for bonds that trade in markets that are not considered to be active are based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs.

(c) The fair values related to the various amounts receivable were determined using the expected future cash flows and discounted using published Government bond rates with similar terms and characteristics, adjusted by a factor that reflects the credit worthiness of the various counterparties.

(d) The fair values related to the Corporation’s various financial liabilities were determined using the expected future cash flows and were discounted using published Government bond rates with similar terms and characteristics, adjusted by a factor that reflects the Corporation’s credit worthiness.

B. Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Corporation. The Corporation records allowances for potential credit losses based on an expected credit loss (ECL) model in accordance with IFRS 9. Actual losses have not exceeded management’s expectations in the past.

The maximum exposure of the Corporation to credit risk at June 30, 2019 and March 31, 2019 is the net carrying amount of its financial assets. i) Trade Receivables

The tables below provide an aging of our customer trade and other receivables, and additional information related to the allowance for doubtful accounts.

June 30, 2019 March 31, 2019 31 - 60 days 16,439 25,965 61 - 90 days 17,312 15,461 Over 90 days 30,791 19,032 Total 64,542 60,458

June 30, 2019 March 31, 2019 Opening balance (506) (1,106) Amounts written off during the year as uncollectible 59 713 Impairment losses reversed - (56) Net increase in allowance for new impairments - (57) Balance, end of period (447) (506) ii) Bonds Receivable

The Corporation holds Canada Mortgage Bonds that carry a determined fixed rate coupon of 2.00% payable twice a year. The Corporation intends to hold these bonds until maturity. During the three months ended June 30, 2019, $123.5 million have matured, of which $40.6 million were reinvested in new bonds. These government bonds have maturity dates in December 2019. None of these assets had been past due or impaired at the end of the reporting period.

17. RELATED PARTIES The Corporation enters into transactions with related parties in the normal course of business, on normal trade terms applicable to all individuals and enterprises and at market prices. These transactions are recorded at fair value by the Corporation. The following transactions were carried out with related parties:

For the three months ended June 30 Rendering of services Receipt of services 2019 2018 2019 2018 Other related entities¹ 33 28 144 - 33 28 144 - ¹ Transactions with other related entities primarily relate to administration services provided to the Corporate Pension Plan.

In addition, cash payments for the Corporation’s contributions to the defined benefit plans are disclosed in Note 10.C.

A. Transactions with Related Parties Excluding Government-Related Entities

There are no amounts owing to related parties and no amounts owing by related parties at June 30, 2019 (March 31, 2019 – nil).

No expense has been recognized in the current or prior periods for bad or doubtful debts in respect of the amounts owed by related parties.

B. Transactions with Government-Related Entities

CBC/Radio-Canada is a Federal Crown Corporation that operates in an economic environment dominated by entities directly or indirectly controlled by the federal government through its government authorities, agencies, affiliations and other organizations (collectively referred to as “government-related entities”). The Corporation has transactions with other government-related entities including but not limited to sales and purchases of goods and rendering and receiving of services.

The Corporation has elected to take an exemption under IAS 24 Related Party Disclosures which allows government related entities to limit the extent of disclosures about related party transactions with government and other government related entities.

18. COMMITMENTS Commitments are discussed in Note 30 Commitments of the Corporation’s 2019 audited annual financial statements. Commitments for the purchase of property and equipment this quarter are disclosed within Note 7.A Property and Equipment of this report. There were no other material changes to commitments during the first quarter of 2019-2020.