OVIVO INC. ANNUAL INFORMATION FORM

Transcription

1 OVIVO INC. ANNUAL INFORMATION FORM June 1, 2016

2 Table of Contents 1. CORPORATE STRUCTURE GENERAL BUSINESS DEVELOPMENT DESCRIPTION OF THE CORPORATION S BUSINESS RISK MANAGEMENT AND RISK FACTORS DIVIDENDS CAPITAL STRUCTURE SECURITIES TRADING MARKET DIRECTORS AND OFFICERS INFORMATION ABOUT THE AUDIT COMMITTEE MATERIAL AGREEMENTS LAWSUITS INTERESTS OF EXPERTS TRANSFER AGENT AND REGISTRAR SUPPLEMENTARY INFORMATION NOTICE REGARDING FORWARD-LOOKING STATEMENTS AUDIT COMMITTEE MANDATE.24 June 1, 2016 Page 2

3 In this Annual Information Form, Ovivo or the Corporation designates, as the case may be, Ovivo Inc. and its subsidiaries and divisions, or Ovivo Inc. or one of its subsidiaries or divisions. Unless otherwise indicated, financial information is expressed in Canadian dollars. The term fiscal followed by a year refers to the twelve-month period ended March 31 of that year. 1. CORPORATE STRUCTURE 1.1 Incorporation Ovivo Inc. (formerly GLV Inc.) was incorporated under the Canada Business Corporations Act on May 15, 2007 in connection with the transfer of the net assets and continuation of operations of the Water Treatment Group and the Pulp and Paper Group of Groupe Laperrière & Verreault Inc. (the Original Company ). A detailed description of the transaction is provided in the Corporation s annual report for the fiscal year ended March 31, 2008, available on SEDAR ( and the Corporation s website ( The Corporation s head office is located at 2001 McGill College Avenue, Suite 2100, Montréal, Québec, Canada, H3A 1G Subsidiaries The following table lists the Corporation s principal direct and indirect subsidiaries as at March 31, 2016, the percentage of voting rights held in each of these entities and their jurisdictions of incorporation. The subsidiaries that have been omitted from the list, as a group, represent less than 20% of the Corporation s consolidated assets as at March 31, 2016 and less than 20% of consolidated revenues for the twelve-month period ended March 31, None of the subsidiaries omitted from the list, individually, represents more than 10% of the Corporation s consolidated assets as at March 31, 2016 or more than 10% of the consolidated revenues of the Corporation for the twelve-month period ended March 31, Subsidiary of the Corporation Holder and Percentage of Voting Power Jurisdiction(s) of Incorporation Ovivo Aqua Austria GmbH Christ Water Technology GmbH (100%) Austria Ovivo Deutschland GmbH Christ Water Technology GmbH (100%) Germany Ovivo Shanghai Co. Ltd Christ Water Technology GmbH (100%) China Ovivo Singapore Pte Ltd Ovivo Inc. (100%) Singapore Ovivo Switzerland AG Christ Water Technology GmbH (100%) Switzerland Ovivo UK Limited Ovivo Inc. (100%) England and Wales Ovivo USA, LLC Ovivo US Holding Inc. (100%) State of Delaware, United States June 1, 2016 Page 3

4 2. GENERAL BUSINESS DEVELOPMENT Corporate Background The Corporation is engaged in water and wastewater treatment. On November 28, 2014, the Pulp and Paper division was sold to a company owned by related parties of the Corporation. It constituted the entire Pulp and Paper operating segment in our consolidated results up to that date. Since then, Ovivo has focused exclusively on water treatment products and solutions for municipal and industrial water. The following describes the general development of Ovivo and the main events of its last three fiscal years. Strategic Transaction In 2009, Ovivo acquired Christ Water Technology AG ( CWT ) in Austria. This acquisition expanded the Corporation s portfolio of technologies and solutions and strengthened its position as a leading global provider of complete solutions for the treatment of municipal and industrial water. Ovivo can thus provide thermal, electric and nuclear power stations with solutions that cover the full range of process water microfiltration, ultrafiltration, demineralization and recycling of process water. The CWT acquisition also provided Ovivo with access to a new key market, the Electronics segment, thanks to sophisticated ultra-pure water solutions for semiconductor wafer manufacturers. The CWT acquisition also allowed Ovivo to expand its presence in the emerging markets of Asia and the Middle East. Business Strategy Since June 2012, Ovivo s business strategy has been developed to ensure long-term growth. This business strategy is articulated as follows: - Simplify and refocus global operations on markets where Ovivo is recognized and where profitability has generally met management s financial targets, namely the Energy, Electronics and North American Municipal segments; - Accelerate development of the Parts and Services market, mainly by leveraging the extensive pool of equipment in operation for which Ovivo is the original manufacturer; and - For all operations, accept new projects based on more selective criteria, among them the exclusion of any civil construction component. Following the implementation of this strategy, Ovivo divested two of its non-core businesses in fiscal 2015, namely: - In December 2014, the Van der Molen division was sold to a group of third-party investors; and - In February 2015, the United Kingdom Municipal division was sold under a management buyout. June 1, 2016 Page 4

5 During fiscal 2016, Ovivo completed the sale of its other non-core businesses through the following transactions: - In September 2015, its North Africa division was sold to a group of Austrian investors; and - In December 2015, its South Africa division was sold to a group of local investors. Under the sales agreement for its operations in North Africa and South Africa, Ovivo remains responsible for the finalization of its contracts currently in progress at the time of sale. The results for the current fiscal year of these divisions, in addition to the comparative figures, are reported as discontinued operations. Ovivo continues to implement its long-term development plan, which focuses on three major objectives to ensure its growth: 1. A targeted strategy focused on three key markets, namely Municipal North America, Electronics, and Energy, to generate sustainable profitability; 2. A Total Life Cycle approach for its solutions, focusing on the continued development and growth of its Parts and Services segment; and 3. Strong emphasis on innovation initiatives to expand its state-of-the-art products and solutions and to leverage them as a competitive differentiator and a source of recurring revenues. In addition, timely acquisitions of technologies, knowhow and innovative businesses are integral to its business model. 3. DESCRIPTION OF THE CORPORATION S BUSINESS 3.1 Profile Ovivo is a global provider of equipment, technology and systems producing among the purest water and treating some of the most challenging wastewater in the industry. Ovivo is a powerful global brand with renowned trademarks, possessing more than 150 years of expertise and references in water treatment, supported by its proprietary products, advanced technologies and extensive system integration knowhow. Ovivo delivers conventional to highly technological water treatment solutions for the industrial and municipal markets, and leverages its large installed base of equipment around the world to offer parts and services to its customers. Ovivo is dedicated to innovation in an industry that is in constant evolution and offers water treatment solutions that are cost-effective, energy-efficient and environmentally sustainable. Ovivo operates an integrated global platform in over 15 countries, with 800 employees that are worldwide experts in water treatment. Ovivo is a public company whose shares trade on the Toronto Stock Exchange under the ticker symbols OVI.A and OVI.B. Ovivo s business plan is clear: grow the business exclusively in the water treatment industry while upholding its values, namely client focus, teamwork, entrepreneurship, accountability and integrity. June 1, 2016 Page 5

6 Ovivo designs and markets equipment and integrated solutions for the filtration, clarification, treatment and purification of water that will be used or reused in various industrial processes, returned into the environment or used for domestic purposes. To maintain its position in this competitive market, Ovivo makes innovation core to its business strategy. Ovivo is proud to own advanced technology, in addition to attracting and retaining highly qualified employees who design and work with these technologies. Ovivo also stands out from the competition because it puts the needs of its customers at the heart of its business strategy. Provision of Services and Sale of Equipment Ovivo obtains most of its contracts through a competitive request for tenders process for the execution of projects. Such projects mainly involve the supply of specific services, technological solutions, equipment and components for new or existing facilities. Ovivo may also participate in projects that include responsibility for engineering, equipment procurement and installation or construction work. The Corporation s philosophy in this regard is to manage the risks involved by teaming, where possible, with recognized and financially solid contractors, and strictly negotiating project terms and conditions. Typical project costs range from $1 million to $5 million with performance typically spanning 6 to 18 months. As a general rule, clients make an advance payment at the beginning of a project, progress payments during performance and final payment of the balance on acceptance of the work based on proven performance of the plant, process or equipment. The Corporation s obligations for most of the projects are secured by surety bonds, holdbacks or letters of credit. The projects in which Ovivo participates are generally subject to post-completion warranties for an average period of one to two years, which are covered by surety bonds, holdbacks or letters of credit. Most contracts are awarded on a fixed-price basis, and a schedule sets out the frequency and amount of receipts. Ovivo is therefore responsible for estimating as accurately as possible the cost of the work and procurement, and the related disbursements. For instance, it must consider the risk of an increase in the cost of labour and materials as well as the risks of currency fluctuations. To ensure that each project is profitable and to avoid significant overruns, costs are monitored throughout the life of the contract. The management team must comply with corporate policy on the terms and conditions of client contracts and establish procedures and guidance for analyzing and managing operational and financial risks in order to fully capitalize on business opportunities. For potential projects or requests for tenders, the responsible team draws up a proposal in compliance with internal authorization procedures based on project features, including value, associated risks and the degree of novelty or risk related to the required technology. Any project involving a high level of risk must be submitted for approval to the Corporation s President and Chief Executive Officer. Parts and Services Ovivo holds intellectual property rights to technologies and trademarks that allow it to provide clients with parts and services, which is a source of recurring revenues. June 1, 2016 Page 6

7 Sales and Marketing Ovivo s parts and services orders stem in particular from: - The direct sales efforts of employees assigned to specific regions, products or industries; - Their distributors or independent sales representatives; and - Their innovative marketing strategies that make use of the Web and social media to make information on its products and services readily available to existing and potential clients. Ovivo supplements its direct sales forces with distributors and sales agents in countries where maintaining direct sales staff is not profitable or commercially beneficial. Most sales leads are generated through business relationships or referrals from existing clients. Marketing forms an integral part of Ovivo s operations, with operating teams tasked with developing strategies and identifying business opportunities. Manufacturing Outsourcing Manufacturing of equipment and equipment components to which Ovivo owns the intellectual property rights is mostly outsourced to an extensive international network of subcontractors. As a result, the Corporation is able to focus on product engineering, project management, and sales and business development, which it sees as cost effective and supporting greater adaptability to changes in demand. Research and Development Further to its strategic aims, Ovivo develops its technology portfolio through business acquisitions, technology transfers and licensing agreements with companies with complementary products. In addition, Ovivo expands its product portfolio and improves its existing technologies by developing customized solutions, often in conjunction with technology partners and clients. As a result, a portion of R&D costs is included in the cost of specific contracts and is not presented separately in the Corporation s financial statements. For product development activities that are not directly linked to specific projects, management must comply with corporate standards, which set out criteria for measuring technological and commercial relevance. To support its innovation initiatives, on October 27, 2015 the Corporation announced the creation of a Technology Advisory Committee, composed of three independent internationally renowned water industry experts. Their mandate will mainly be focused on advising and supporting senior management and the Board of Directors on Ovivo s technology strategy, its deployment and its future investments as part of the growth plan. The committee will bring new ideas and external opinions on emerging technologies and trends that could benefit Ovivo and its clients. Intellectual Property Most of Ovivo s proprietary technologies are protected by patents. Ovivo does its utmost to protect the technologies and solutions it offers in its primary markets, particularly where technology provides a major competitive edge. Ovivo also enters into licensing agreements with third parties to grant or secure rights to patents, or to carry out technology transfers. In order to protect Ovivo s intellectual property rights, and given its manufacturing outsourcing strategy, manufacturing of the various equipment components of a given type of equipment is typically spread across a number of different subcontractors, with assembly carried out in Ovivo s own facilities or directly onsite at client premises. June 1, 2016 Page 7

8 Environmental Protection The Corporation s growth hinges on the design and marketing of technologies consistent with the principles of sustainable development, including energy efficiency and the optimal use of resources, notably the re-use of process water. As a result, Ovivo s solutions help its municipal and industrial clients reduce their environmental footprint. Management believes that such expertise will be a differentiating factor from competing entities over the medium and long term. With respect to its own operations, the Corporation believes that environmental protection requirements do not have any material, financial, operational or other impact, notably in regard to its activities, capital expenditures, earnings or competitive position. Areas of Operations and Key Markets Water needs are increasing. The Global Water Market 2017 study conducted by Global Water Intelligence (GWI) indicates that capital expenditures in the water market in 2015 totalled nearly $250 billion. In 2015, the markets Ovivo operates in represented $46 billion, with further growth expected in the coming years. Various factors support this trend: Global population growth; Urbanization and higher standards of living in developing countries; Need to upgrade aging infrastructures, in particular in North America; Environmental legislation; and Impact of climate change. Ovivo specializes in water, focusing on specific industrial and municipal applications. For fiscal 2016, the Municipal segment (wastewater and drinking water) accounted for approximately 40% of total revenue, while the Industrial market (wastewater, process water, water intake screening) accounted for 60%. In terms of sales, parts and services accounted for 28% of overall revenues, with new equipment sales represented a 72% share. The Municipal market is highly regulated and strictly controlled. Investments in municipal water and wastewater treatment are driven by environmental legislation, such as the Clean Water Act in the United States, and depend on access to sufficient capital needed to ensure adequate funding. As regards the Industrial market, Ovivo believes that water and wastewater management is an increasingly critical issue in several business segments and the focus of concerns and considerations such as cost, quality, reliability of supply and compliance with environmental legislation. In these industrial sectors, Ovivo believes Electronics, Energy, and Parts and Services are the market segments offering significant growth opportunities. In fact, companies operating in these market segments must have access to high-quality water for their processes and are potential clients for water recycling applications. Geographically, there are promising opportunities for water recycling applications in various regions such as the Middle East, Southeast Asia, the United States and Southern Europe, driven by scarce water supplies, rising water procurement costs and environmental issues. June 1, 2016 Page 8

9 Specialized Knowledge and Expertise Subsequent to its numerous acquisitions, Ovivo combines the experience and knowhow of approximately 20 businesses, some of which have operated for nearly 150 years. Ovivo s fundamental areas of expertise include the design and manufacture of equipment as well as integrated system design, enabling it to deploy comprehensive water treatment solutions that are not only high-performance but also eco-friendly. Offering a broad range of products and services, Ovivo has a portfolio of technologies that includes mechanical rakes, screens, clarifiers, membrane bioreactors ( MBRs ), moving bed bioreactors ( MBBRs ) and submerged aerated filters ( SAFs ) used by industrial and municipal systems for biological wastewater treatment. These technologies are supplemented by a line of seawater desalination, process water deionization, demineralization and polishing, as well as water purification and ultrapurification products used in applications where a high degree of purity is a critical factor, notably for the manufacture of components used in microelectronics. Global Presence Ovivo operates globally through subsidiaries, sales and service centres or sales agents. Prior to the CWT acquisition in 2009, operations were primarily located in North America and the United Kingdom. The acquisition of CWT enabled Ovivo to expand its presence in other regions, such as Asia-Pacific, the Middle East and Continental Europe. Ovivo s fiscal 2016 revenues by destination address were broken down as follows: 50.8% in North America, 15.2% in Europe, 23.0% in Asia and 11.0% in the rest of the world. Clients Ovivo s clients operate primarily in its Municipal North America, Energy and Electronics markets. June 1, 2016 Page 9

10 Suppliers and Subcontractors With the exception of a distribution rights agreement to the submerged membrane bioreactor, Ovivo has no material long-term supply agreements. Raw materials, components and supplies for major products are available either from a number of different suppliers or from alternative sources that the Corporation s management believes could be used without any adverse effect on the business. Manufacturing of equipment is mostly outsourced to a network of subcontractors with facilities near clients. Ovivo is focused on increasing its presence in certain emerging markets, including Southeast Asia, in order to broaden its client base and to expand its outsourcing network. Ovivo s extensive outsourcing network provides considerable advantages, including a more flexible and competitive cost structure that minimizes certain risks, such as the risk of currency fluctuations. Using this network also reduces the fixed costs specific to the operation of large-scale manufacturing infrastructures. In addition, due to the large number of subcontractors, the Corporation benefits from a diversified sourcing and subcontractors proximity to the markets it serves, which enables it in particular to obtain advantageous purchasing conditions. Competition In the municipal water treatment market, suppliers of conventional technologies mostly compete on a price basis, which may translate into lower price margins. Competition among suppliers of new technologies, like submerged membrane bioreactors, is largely driven by value added and technical knowhow, and provides for higher profit margins than conventional technologies. In the industrial water treatment market, competition is also driven by technical knowhow, value added and reputation. That being said, the overall market remains highly fragmented. The Global Water Market 2017 study referred to earlier surveys of different categories of companies positioned to offer the solutions sought by municipalities or industrial corporations. For instance, it cites multinationals that not only provide solutions based on their own technologies, but also offer turnkey services for the operation of water treatment facilities. Two French companies that are competitors of Ovivo stand out in this category due to their size and global presence: Veolia Environment and Suez Environment. Ovivo falls into the category of technology solutions providers operating worldwide. Its primary competitors in this category include Evoqua, Xylem Water Solutions, GE Water and Kurita. These companies generally design and sell systems from a portfolio of technologies for which they hold the rights. There are also a host of small companies with limited technology portfolios specialized in a specific niche or serving a particular region. Considering the scarce water resources and environmental legislation, clients will be further inclined to use the most effective technologies, regardless of their origin, to obtain solutions adapted to their needs. The Corporation believes that this trend benefits suppliers already operating worldwide as well as stimulating industry consolidation, given the benefit to businesses that enhance their technology portfolios to be able to offer the most comprehensive solutions possible. June 1, 2016 Page 10

11 Trademarks Ovivo s main trademarks are: - EWT TM - Brackett-Green - Enviroquip - COPA (*) - Jones+Attwood - LM TM Mixer - TOCSORB - OSMOSTIL - Tepro - EcoBLOX - CHRIST - Christ Water Technology - EQuipTech - Conesep - Equaflo Excell - UPW-Next - MicroBLOX TM - Ovivo MBR - Ovivo-Persol - U-Sorb - BulletProof - Duet - Eco-MAT - Oculus (*) The COPA trademark may be used by Ovivo outside the European Union Only. Employees As at March 31, 2016, Ovivo had 807 employees including 20 at head office. None of them are unionized. Most are engineers and specialized technicians with many years of experience. At the same date, Ovivo had 62 contractual employees. The proportion of employees under contract may range from 5% to 9% of personnel depending on the number of projects underway. Despite the restructuring of some operations in recent years to increase efficiency, Ovivo has managed to keep voluntary turnover under 10%. The following table shows Ovivo s personnel by region as at March 31, Region Number of Employees Europe/Africa/Middle East 390 Americas 267 Asia and Asia-Pacific 150 Total 807 June 1, 2016 Page 11

12 4. RISK MANAGEMENT AND RISK FACTORS An analysis of the risks and uncertainties to which the Corporation and its subsidiaries are exposed is presented under the section titled Risks and Uncertainties in the Corporation s Management s Discussion and Analysis for the year ended March 31, 2016, which section is incorporated by reference in this Annual Information Form. The Corporation s Management s Discussion and Analysis for fiscal 2016 is available on SEDAR ( and on the Corporation s website ( under the Investors tab. Risks and uncertainties other than those described in the Corporation s 2016 Management s Discussion and Analysis and of which management is currently unaware or that it deems immaterial may become more significant in the future and could have a material adverse impact on its financial position, operating results, cash flows or operations. 5. DIVIDENDS The Corporation has a policy of reinvesting earnings to finance the growth of its business. In addition, the Corporation s capacity to pay dividends is limited by the conditions of its financing agreements. Any decision to pay dividends will be made by the Board of Directors of the Corporation based primarily on its financial position, operating results, capital expenditures required to support growth, contractual restrictions and commitments under the terms of its financing agreements, solvency criteria imposed by legislation respecting corporations and other factors that the Corporation may deem relevant. The Corporation has paid no dividends since its incorporation on May 15, CAPITAL STRUCTURE The Corporation s authorized share capital consists of an unlimited number of shares without par value: Class A subordinate voting and participating shares; Class B multiple voting shares, carrying 10 votes per share, participating and convertible into Class A subordinate voting shares; and Preferred shares, issuable in series. As at June 1, 2016, the Corporation s outstanding share capital consisted of 41,940,013 Class A subordinate voting shares ( subordinate voting shares ) and 2,157,205 Class B multiple voting shares ( multiple voting shares ). The following text is a summary of the main provisions pertaining to the Corporation s subordinate voting shares, multiple voting shares and preferred shares as a class, subject to the complete text of the rights, privileges, restrictions and conditions associated with these shares. June 1, 2016 Page 12

13 Subordinate Voting Shares and Multiple Voting Shares Subject to the rights, privileges, restrictions and conditions associated with preferred shares, the holders of multiple voting shares and subordinate voting shares are entitled to receive notice of, to attend and to vote at all meetings of shareholders. At all such meetings, the holders of multiple voting shares are entitled to 10 votes per share held, and the holders of subordinate voting shares are entitled to one vote per share held. Multiple voting shares and subordinate voting shares will share equally, share for share, in any dividends declared, paid or set aside for payment by the Corporation. In the event of the winding up or dissolution of the Corporation, the holders of multiple voting shares and subordinate voting shares will share pro rata in the remaining assets of the Company. Conversion Privilege under Certain Circumstances Pursuant to the Corporation s articles, each multiple voting share is convertible, at any time, at the option of the holder, into one subordinate voting share. In addition, each subordinate voting share is deemed converted into one multiple voting share for the sole purposes of accepting an offer made to the holders of multiple voting shares of the Corporation (the Offer ). The Offer is defined in the Corporation s articles as a takeover bid, an exchange bid or an issuer bid for multiple voting shares of the Corporation, other than an Exempt Offer (as defined below), which must, pursuant to relevant legislation, be made to the holders of all multiple voting shares of the Corporation then outstanding. The term Exempt Offer is defined in the Corporation s articles as follows: i) An offer to all the holders of multiple voting shares that is made at the same time and the same price to the holders of subordinate voting shares under no less favourable terms and conditions, and dealing with a percentage of subordinate voting shares outstanding, at least equal to the percentage of outstanding multiple voting shares, which are subject to the Offer; ii) An offer made by an offeror, exempted from the application of Chapters III and IV of Title IV of the Securities Act (Québec), as presently in force or as amended or re-enacted, with the exception of an offer made through a recognized stock exchange. June 1, 2016 Page 13

14 However, in the following cases, the subordinate voting shares will not be deemed converted into multiple voting shares: i) If the number of subordinate voting shares which may be converted into multiple voting shares and tendered under the Offer is proportionally greater than the number of multiple voting shares which have been taken up and paid for by the offeror; in such case, the subordinate voting shares not taken up shall be deemed to have never been converted into multiple voting shares; ii) iii) If less than 50% of the multiple voting shares outstanding prior to the Offer, other than the multiple voting shares owned by the offeror, or by associates or affiliates of the offeror, are tendered under the Offer; If the Offer is withdrawn or the offeror does not take up and pay for the multiple voting shares in accordance with the terms and conditions of the Offer. Loss of Multiple Voting Rights of the Multiple Voting Shares The Corporation s articles provide that if there is no longer a majority holder or if the majority holders (as defined in the Corporation s articles), directly or indirectly, cease to be beneficial owners of shares of the Corporation carrying at least 25% of the voting rights attached to all issued and outstanding shares in the capital stock of the Corporation, the multiple voting shares shall henceforth carry only one vote per share. Adjustment A subdivision, split or consolidation of multiple voting shares or subordinate voting shares may be made only if, at the same time, the multiple voting shares or subordinate voting shares are affected in the same manner and under the same conditions. Preferred Shares Under its articles, the Corporation is authorized to issue preferred shares in one or more series and allow the directors to determine, without approval by the shareholders, the number and designation of the shares of each series, as well as the features of the shares of each specific series. Preferred shares do not grant their holders a voting right or the right to receive notices of meetings or the right to attend meetings of shareholders. Preferred shares of all series rank pari passu with each other and take precedence over multiple voting shares and subordinate voting shares with regard to the payment of dividends, and the reimbursement of capital in the event of the winding up or dissolution of the Corporation. As at March 31, 2016, no preferred shares were issued or outstanding. June 1, 2016 Page 14

15 7. SECURITIES TRADING MARKET Market Price and Transaction Volume The Corporation s subordinate voting shares and multiple voting shares are listed on the Toronto Stock Exchange under the symbols OVI.A and OVI.B, respectively, as of December 18, 2014; they were formerly listed under the symbols GLV.A and GLV.B, respectively. The following tables summarize the monthly trading data of the shares between April 1, 2015 and March 31, 2016, inclusively, on the Canadian consolidated quotes: OVI.A High Low Closing Price Volume 2015 April $1.77 $1.36 $ ,129 May $1.70 $1.50 $ ,183 June $1.73 $1.44 $ ,022 July $1.60 $1.25 $ ,686 August $1.60 $1.22 $ ,756 September $1.50 $1.36 $ ,137 October $1.50 $1.20 $ ,436 November $2.00 $1.10 $1.76 1,147,030 December $2.28 $1.68 $ , January $2.55 $2.03 $ ,400 February $2.32 $1.95 $2.16 1,409,794 March $2.40 $2.02 $ ,730 OVI.B High Low Closing Price Volume 2015 April $1.75 $1.24 $1.75 7,383 May $1.79 $1.37 $1.37 2,800 June $1.67 $1.36 $1.44 5,350 July $1.45 $1.40 $1.45 3,250 August $1.50 $1.44 $1.50 4,250 September $1.50 $1.24 $1.30 2,284 October $1.40 $1.24 $ ,100 November $2.10 $1.14 $ ,656 December $2.55 $1.63 $ , January $2.78 $2.12 $2.30 2,105 February $2.30 $2.12 $2.15 1,330 March $2.46 $2.07 $ ,300 June 1, 2016 Page 15

16 8. DIRECTORS AND OFFICERS Names, Positions and Securities Held Directors The following table lists the names and places of residence of the Corporation s directors, their principal occupations at present, the dates they assumed their duties as directors and the number of shares of the Corporation they held as at March 31, Name and place of residence Position with the Principal Corporation Director since (3) occupation (6) Number of shares of the Corporation held Subordinate voting Multiple voting Marc Barbeau Québec, Canada Director, President and Chief Executive Officer 2007 President and Chief Executive Officer of the Corporation 157,480 - Chantal Bélanger (1)(2) Québec, Canada Director 2011 Corporate Director 58,000 - Marc A. Courtois (1) Québec, Canada Sylvie Lalande (2) Québec, Canada François R. Roy (2) Québec, Canada Pierre Seccareccia (1) Québec, Canada Director 2007 Corporate Director 42,300 1,800 Director 2007 Corporate Director 67,595 - Director 2014 Corporate Director 12,200 - Director 2007 Corporate Director 18,200 - Laurent Verreault Alberta, Canada Director, Chairman of the Board of Directors 2007 Chairman of the Board of Directors of the Corporation 815,600 (4) 1,680,240 (5) Notes: 1) Member of the Audit Committee. 2) Member of the Corporate Governance and Human Resources Committee. 3) Each director shall remain in office until he/she is re-elected or replaced at the next Annual Meeting of Shareholders of the Corporation, unless he/she resigns his/her office or his/her position becomes vacant following his/her death, his/her dismissal or for any other cause prior to such Annual Meeting. 4) 515,600 subordinate voting shares held by Nova Scotia Company, a corporation in which all the voting shares are held by Trust Laurent Verreault and 300,000 subordinate voting shares held by Laurent Verreault. 5) 7,200 multiple voting shares held by Laurent Verreault and 1,673,040 multiple voting shares held by Nova Scotia Company, a corporation in which all the voting shares are held by Trust Laurent Verreault. 6) Each of the named directors has held the principal occupation indicated opposite his/her name for more than five years, except for: Marc Barbeau, CPA, CA, who, prior to November 28, 2014, served as Executive Vice-President and President of Ovivo, and prior to June 2012, as Executive Vice-President and Chief Financial Officer of the Corporation since February Laurent Verreault, who, prior to September 24, 2015, served as Executive Chairman of the Board of Directors of the Corporation. June 1, 2016 Page 16

17 Officers The following table lists each officer s name, place of residence, position with the Corporation and the number of shares of the Corporation held as at March 31, Name and place of residence Position with the Corporation (1) of the Corporation held Number of shares Subordinate voting Multiple voting Marc Barbeau Québec, Canada President and Chief Executive Officer 157,480 - France De Blois Québec, Canada Vice-President, Finance 6,600 - Gwen Klees Québec, Canada Vice-President, Legal Affairs, Risk Management and Corporate Secretary 14,263 - Jim Porteous Texas, United States Vice-President, Municipal North America 23,600 - Malek Salamor Basel-Landschaft, Switzerland Vice-President, Electronics 16,500 - Kaveh Someah Utah, United States Vice-President, Energy 10,000 - Notes: 1) Each of the named officers has held the position indicated opposite his/her name for more than five years, except as follows: Marc Barbeau, CPA, CA, who, prior to November 28, 2014, served as Executive Vice-President and President of Ovivo, and prior to June 2012, as Executive Vice-President and Chief Financial Officer of the Corporation since February France De Blois, CPA, CA, who served as Chief Financial Officer from June 2012 to November 7, 2013, and prior to that, as Vice-President, Accounting; before joining the Corporation in September 2010, she served as Controller at Transcontinental Inc. from 2007 to Kaveh Someah, who, prior to his appointment in February 2014, that is, from April 2013 through to his appointment, served as Director, Global Business Development for Oil and Gas, Petrochemicals, and from June 2006 to March 2013, as General Manager, Energy, North America. June 1, 2016 Page 17

18 Securities Held As at March 31, 2016, the number and percentage of subordinate voting shares and multiple voting shares held directly or indirectly under beneficial ownership by all the Corporation s directors and officers or over which they exercise control were as follows: Percentage by Number class of shares (%) Subordinate voting shares 1,242,338 3% Multiple voting shares 1,682,040 78% Each director and officer has provided his/her own information regarding the number of subordinate voting shares and multiple voting shares directly or indirectly held under their beneficial ownership, as the Corporation does not have this information. Trading Prohibitions, Bankruptcies, Penalties or Sanctions To the Corporation s knowledge, in the last ten (10) years, no director or officer of the Corporation, or shareholder holding a sufficient number of securities of the Corporation to materially affect control of the Corporation, is or has been a director or officer of any other issuer that, while that person was acting in that capacity (i) was the subject of a cease trade order or similar order, or an order that denied the other issuer access to any exemptions under Canadian securities legislation, for a period of more than thirty (30) consecutive days or (ii) became bankrupt, made a proposal under any bankruptcy or insolvency laws, or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his/her assets, except as follows: i) Mr. Roy who was a director of Komunik Corporation until April 1, 2008, approximately eight months before such corporation voluntarily filed for protection under the Companies Creditors Arrangement Act (Canada) on November 18, Mr. Roy is no longer a director of Komunik Corporation. ii) Mr. Roy who was a director of Pixman Nomadic Media Inc. until November 27, 2009, more than two months before such corporation filed a notice of intention to make a proposal to its creditors under the Bankruptcy and Insolvency Act (Canada). Between November 3, 2009 and February 17, 2010, the Alberta Securities Commission, the British Columbia Securities Commission, the Ontario Securities Commission and the Autorité des marchés financiers issued cease trade orders in respect of Pixman Nomadic Media Inc. in connection with its failure to file certain financial statements and other continuous disclosure documents within the prescribed time periods. Mr. Roy is no longer director of Pixman Nomadic Media Inc. Furthermore, to the Corporation s knowledge, in the last ten (10) years, no director or officer of the Corporation, or shareholder holding a sufficient number of securities of the Corporation to materially affect the control of the Corporation, has become bankrupt, made a proposal under any bankruptcy or insolvency laws, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his/her assets. June 1, 2016 Page 18

19 9. INFORMATION ABOUT THE AUDIT COMMITTEE The following information is provided in accordance with Form F1 under the terms of Regulation respecting Audit Committees of the Canadian Securities Administrators ( Regulation ). Composition of the Audit Committee As at March 31, 2016, the Corporation s Audit Committee comprised three directors: Chantal Bélanger, Marc A. Courtois and Pierre Seccareccia. On June 1, 2016, the Corporation s Board of Directors determined that the three members of the Audit Committee were independent within the definition of Regulation and had the requisite financial qualifications to sit on the Committee. Member Chantal Bélanger (FCPA, FCGA) Marc A. Courtois Relevant Education and Experience Chantal Bélanger is a Certified Corporate Director and holds her FCPA, FCGA designation from the Ordre des CPA du Québec. Ms. Bélanger was employed by Laurentian Bank from 1986 to 2006, where her last positions were Ombudsman for the Bank and its subsidiaries. She also served in various management positions in audit, information technologies and business development, including the position of Senior Vice-President, Retail Financial Services, Québec, for four years. Ms. Bélanger serves on the boards of Lassonde Industries Inc., Capital régional et coopératif Desjardins and Société de services financiers Fonds FMOQ inc. She also chairs the audit committees of those corporations, as well as the Portfolio Valuation Committee of Capital régional et coopératif Desjardins. In addition, she serves on the Board of Collège des Administrateurs de sociétés. Marc A. Courtois holds a Master of Business Administration (MBA) and has more than 20 years of experience in capital markets, in both financing and business mergers and acquisitions. He worked for RBC Dominion Securities Inc. from 1980 to Mr. Courtois is also an independent member of the Board of Directors of TVA Group and Chairman of its Audit Committee. He serves as a director and Chairman of the Board of The GBC North American Growth Fund Inc. He is a director and Chairman of the Board of NAV CANADA, where he is a member of the Safety and Corporate Governance committees. From 2007 to 2014, he served as Chairman of the Board and director of Canada Post Corporation. Pierre Seccareccia (FCPA, FCA) Pierre Seccareccia is a Corporate Director. He has been a Fellow (FCPA, FCA) of the Ordre des comptables professionnels agréés du Québec since 1996 following admission as a member of OCAQ in From 1992 to 2001, he served as Managing Partner of chartered accountancy firm PricewaterhouseCoopers LLP. Mr. Seccareccia serves as a director of Boralex Inc., New Millennium Iron Corp. and Ivanhoe Cambridge Inc. He also chairs the Audit Committee of these Corporations. June 1, 2016 Page 19

20 Audit Committee Charter The charter, attached as Appendix A to this Annual Information Form, describes the role and responsibilities of the Audit Committee. A written description of the duties of the Chair of the Audit Committee is also available on the Corporation s website ( under Corporate Governance in the About section. According to the written description, the main role of the Chair of the Audit Committee is to ensure that the Committee fulfills the tasks related to its Mandate. The Chair must regularly report on his/her activities to the Board of Directors. Pre-approval Policies and Procedures A uniform policy for the approval of the auditors non-audit services has been approved for all the Corporation s subsidiaries and divisions. Under this policy, the list of services that may be provided is approved at the beginning of each fiscal year. Any services that have not been pre-approved must be referred to the Chair of the Audit Committee or the Audit Committee as a whole. A report is submitted quarterly to the Audit Committee. External Auditor Fees The fees paid by the Corporation to Ernst & Young LLP (auditors of the Corporation for fiscal 2016) and to its affiliates for fiscal 2016 and 2015, are presented in the table below. Fees Fiscal year ended March 31, 2016 Fiscal year ended March 31, 2015 Audit fees (1) $698,921 $890,319 Audit-related fees (2) $25,652 $77,556 Tax service fees (3) $245,024 $530,762 Other fees (4) $57,530 $88,650 Total $1,027,127 $1,587,287 (1) (2) (3) (4) Audit fees consist of fees billed for the audit of the Corporation s annual consolidated financial statements as well as services that are usually provided by the external auditors in connection with statutory and regulatory filings. They also include fees billed for other audit services, that only auditors can provide, notably the review of documents filed with regulatory authorities and consultations concerning the accounting of specific transactions. Audit-related fees include assurance and related services associated with proper performance of the audit or the review of the Corporation s consolidated financial statements, as well as fees for services traditionally performed by external auditors, such as consultations on accounting standards and their application, review of security controls and operational effectiveness of systems, and due diligence reviews of controls prior to acquisitions. Tax service fees include fees billed for tax compliance services, including preparation of tax returns and claims for refunds; tax consultations, such as assistance and representation in connection with tax reviews, tax advice related to mergers and acquisitions, or requests for tax rulings or technical advice with tax authorities; tax planning services; and consultation and planning services. Other fees include fees for services other than those described under Audit fees, Audit-related fees and Tax service fees. Other fees consist mainly of financial reporting translation fees. June 1, 2016 Page 20

21 10. MATERIAL AGREEMENTS The material agreements entered into by the Corporation in recent years and which are still in force, other than those arising in the normal course of business, are listed below and have been filed on SEDAR: - November 20, 2009: Financing agreement between the Corporation and the Fonds de solidarité FTQ by way of an unsecured non-convertible debenture totalling $25 million (filed on June 29, 2010 under the profile of GLV Inc., now Ovivo Inc.) In April 2014, the Corporation entered into an amendment agreement with the Fund, which provided for a reduction in the debenture interest rate to 5.4% and withdrew the early redemption option in favour of the Corporation. The debenture maturity date remains unchanged at November 20, 2016 (filed on May 21, 2014 under the profile of GLV Inc., now Ovivo Inc.). In November 2014, the Corporation entered into an amendment agreement with the Fund, which provided for an increase in the interest rate to 6% from 5.4% and extended the maturity date to November 20, 2018 (filed on January 21, 2015 under the profile of Ovivo Inc.); - February 21, 2013: Indemnity agreement between the Corporation and Export and Development Canada ( EDC ), reserved for the issuance of letters of credit guaranteed by EDC up to a maximum of $100 million (filed on March 6, 2013 under the profile of GLV Inc., now Ovivo Inc.) and amended to a maximum of $115 million in April 2014 (filed on May 21, 2014 under the profile of GLV Inc., now Ovivo Inc.). Then, on November 28, 2014, this agreement was amended and the maximum was revised to $90 million. Other entities were added as guarantor entities on February 17, 2015, (filed on January 21, 2015 and May 12, 2015 under the profile of Ovivo Inc.); - September 24, 2014: Definitive agreement for the sale of the Pulp and Paper Division between the Corporation and Canada Inc., a corporation held by Richard and Laurent Verreault, shareholders and directors of the Corporation. On November 9, 2014, following the end of the go-shop process, the purchase price payable was increased to $67 million from $65 million. (Original version filed on September 24, 2014, amended on October 9, 2014 and the first amendment filed on November 10, 2014, under the profile of GLV Inc., now Ovivo Inc.); - November 28, 2014: the Corporation signed a new syndicated credit agreement valid up to November 28, This agreement consists of a first revolving credit facility of $60 million to meet the Corporation s day-to-day operating requirements, issue letters of credit and finance business acquisitions, and a second revolving credit facility of $80 million to issue letters of credit guaranteed by EDC (filed on January 21, 2015 under the profile of Ovivo Inc.); - April 11, 2016: a new credit facility of 15 million in Austria for issuing letters of credit, maturing on November 30, 2016 (filed on April 27, 2016 under the profile of Ovivo Inc.). June 1, 2016 Page 21

22 11. LAWSUITS A number of claims and actions are pending against the Corporation and its subsidiaries, but none of these claims and suits currently exceeds 10% of the Corporation s assets. In the opinion of management of the Corporation and its subsidiaries, the outcome of such claims and actions will have no material adverse effect on the Corporation s results or its financial position. 12. INTERESTS OF EXPERTS Ernst & Young LLP is the public accounting firm that has been selected by the Corporation to act as External Auditors. At the date hereof, Ernst & Young LLP is independent with respect to the Corporation within the meaning of the Code of Ethics of the Ordre des comptables professionnels agréés du Québec. 13. TRANSFER AGENT AND REGISTRAR The Corporation s transfer agent and registrar is Computershare Investor Services Inc. The register of the transfers of subordinate voting shares and multiple voting shares is kept in the City of Montréal, Québec. 14. SUPPLEMENTARY INFORMATION Supplementary information about the Corporation is filed on SEDAR at and on the Corporation s website at Additional information, namely the compensation of directors and executive officers, the Corporation s principal shareholders and securities authorized for issue under the terms of stock-based compensation plans, is presented in the Management Proxy Circular for the last fiscal year. Further information is provided in the Corporation s financial statements and in its Management s Discussion and Analysis. These documents are available on SEDAR ( and on the Corporation s website ( In addition to being available online, copies of these documents and this Annual Information Form may be obtained upon request to the Corporation s offices, at the following address: Head office: 2001 McGill College Avenue Suite 2100 Montréal, Québec H3A 1G1 Tel.: Fax: June 1, 2016 Page 22