Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania...

20
March 2018 A final base shelf prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in British Columbia, Alberta, and Ontario. A copy of the final base shelf prospectus, any amendment to the final base shelf prospectus and any applicable shelf prospectus supplement that has been filed is required to be delivered with this document. Copies of the final base shelf prospectus, and any applicable shelf prospectus supplement, may be obtained from www.sedar.com, or via email to [email protected] No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. These securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "1933 Act") or any state securities laws and may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the 1933 Act) except pursuant to an exemption from the registration requirements of those laws. This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the final base shelf prospectus, any amendment and any applicable shelf prospectus supplement for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision. TSX: WOW.A

Transcript of Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania...

Page 1: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

March 2018

A final base shelf prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in British Columbia, Alberta,and Ontario. A copy of the final base shelf prospectus, any amendment to the final base shelf prospectus and any applicable shelf prospectus supplement that has been filed is required to bedelivered with this document. Copies of the final base shelf prospectus, and any applicable shelf prospectus supplement, may be obtained from www.sedar.com, or via email [email protected]

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. These securities have not been, and will not be, registered under the UnitedStates Securities Act of 1933, as amended (the "1933 Act") or any state securities laws and may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the1933 Act) except pursuant to an exemption from the registration requirements of those laws. This document does not provide full disclosure of all material facts relating to the securities offered.Investors should read the final base shelf prospectus, any amendment and any applicable shelf prospectus supplement for disclosure of those facts, especially risk factors relating to the securitiesoffered, before making an investment decision.

TSX:WOW.A

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Forward-looking statementsConfidentiality, Cautionary Advice and Forward-Looking StatementsThisPresentationcontainscertainforward-lookingstatementsandforward-lookinginformation(collectivelyreferredtohereinas"forward-lookingstatements")withinthemeaningofapplicableCanadiansecuritieslaws.Allstatementsotherthanstatementsofhistoricalfactareforward-lookingstatements.Forward-lookingstatementsareoften,butnotalways,identifiedbytheuseofwordssuchas"anticipate","achieve","could","believe","plan","intend","continuous","ongoing","estimate","outlook","expect","may","will","project","should"orsimilarwords,includingnegativesthereof,suggestingfutureoutcomes.Thesestatementsrelatetofutureeventsorfutureperformanceandreflectmanagement’sexpectationsorbeliefsregardingfutureevents.Inparticular,thisPresentationcontainsforward-lookingstatementsrelatingto:(i)WOWUnlimitedMediaInc.’s("WOW!")businessstrategy;(ii)themarketinwhichWOW!operatesandthedemandforchildren’sentertainmentcontent;(iii)theabilityofWOW! tosuccessfullyintegrateitscomponentbusinessesandtorealizeonperceivedsynergies;(iv)WOW!’spotentialfuturerevenueandlong-termvision;(v)theabilityofWOW!toidentifysuitableacquisition/partnershiptargetsandtoacquire/partnerwithsuchtargetsonreasonabletermsandinatimelyfashion;(vi)theabilityofWOW!toexpandintopotentialmarketsandtocapitalizeonsuchexpansion;(vii)futureoperationalandfinancialperformance,includingproductioncapacity;(viii)expectationsregardingtheabilityofWOW!toraisecapitalandtoincreaseitsbusiness;(ix)WOW!’s proposedstrategiesforglobalrolloutandplatformgrowth;(x)thecompletionofthecompletionoftheacquisitionoftheCategoryBspecialtyservice,andtheCanadianRadio-televisionandTelecommunicationsbroadcastinglicence fromBellMediaInc.andtheformalizationofthestrategicpartnershipwithBellMediaInc.;(xi)WOW!’sproposedoperations for2018;(xii)thecontinuedaccesstoandstabilityofdistributionchannels;(xiii).Thereaderiscautionedthatsuchforward-lookingstatementsmayprovetobeincorrect.ThisPresentationdoesnotconstitutearecommendationregardingthesecuritiesofWOW!.Variousfactorsandassumptions,certainofwhicharebeyondWOW!'scontrol,areappliedindrawingconclusionsormakingtheforecastsorprojectionssetoutinforward-lookingstatements.ThosematerialfactorsandassumptionsarebasedoninformationcurrentlyavailabletoWOW!,includinginformationobtainedfromthirdpartyindustryanalystsandotherthirdpartysources.Insomeinstances,materialassumptionsandmaterialfactorsare presentedelsewhereinthisPresentationinconnectionwiththeforward-lookingstatements.Readersarecautionedthatthefollowinglistofmaterialfactorsandassumptionsisnotexhaustive.Specificmaterialfactorsandassumptionsinclude,butarenotlimitedto:(i)theperformanceofWOW!'sbusiness,includingcurrentbusinessandeconomictrends;(ii)capitalexpenditureprogramsandotherexpendituresbyWOW!anditscustomers;(iii)theabilityofWOW!toretainandhirequalifiedpersonnel;(iv)theabilityofWOW!tomarketitscontentsuccessfullytoexistingandnewcustomers;(v)theabilityofWOW! to retaincustomers;(vi)theabilityofWOW!toobtaintimelyfinancingonacceptableterms;(vii)astablecompetitiveenvironment;(viii)WOW!’sabilitytoanticipateandadapttochangesintechnologyandproductconsumptionpatterns;and(ix)astableindustryregulatoryenvironment.Forward-lookingstatementsarenotaguaranteeoffutureperformanceandinvolveanumberofrisksanduncertainties,someofwhicharedescribedherein.Suchforward-lookingstatementsnecessarilyinvolveknownandunknownrisksanduncertainties,bothgenericandspecific,andanumberoffactorscouldcauseWOW!'sactualperformanceandfinancialresultstodiffermateriallyfromanyprojectionsoffutureperformanceorresultsexpressedorimpliedbysuchforward-lookingstatements.Theserisksanduncertaintiesinclude,butarenotlimitedto,thosecontainedhereinandthosecontainedinWOW!’sannualinformationformfortheyearendedDecember31,2016andthemanagement’sdiscussionandanalysisfortheyearendedDecember31,2016,bothofwhichareavailableonSEDARatwww.sedar.com.Anyforward-lookingstatementsaremadeasofthedatehereofand,exceptasrequiredbyapplicablesecuritieslaws,WOW!doesnotintend,anddoesnotassumeanyobligationtoupdatetheforward-lookingstatementscontainedherein.Certaininformationcontainedhereinisbasedon,orderivedfrom,informationprovidedbyindependentthird-partysources.WOW!believesthatsuchinformationisaccurateandthatthesourcesfromwhichithasbeenobtainedarereliable.WOW!cannotguaranteetheaccuracyofsuchinformation,however,andhasnotindependentlyverifiedtheassumptionsonwhichsuchinformationisbased.WOW!doesnotassumeanyresponsibilityfortheaccuracyorcompletenessofsuchinformation.Readersarecautionednottoplaceunduerelianceonforward-lookingstatements.WOW!’sfinancialdisclosureincludesnon-InternationalFinancialReportingStandards("IFRS")financialmeasuressuchas"AdjustedEBITDA" assupplementalindicatorsofWOW!’sfinancialandoperatingperformance.WOW!believesthesesupplementalfinancialmeasuresreflectWOW!’son-goingbusinessinamannerthatallowsformeaningfulperiod-to-periodcomparisonsandanalysesoftrendsinitsbusiness.Accordingly,WOW!believesthatsuchfinancialmeasuresmayalsobeusefultoprospectiveinvestorsinenhancingtheir understandingofWOW!’soperatingperformance.Thesenon-IFRSmeasuresarenotrecognizedunderIFRSanddonothavestandardizedmeaningsprescribedbyIFRS.Therefore,itisunlikelythatthesemeasureswillbecomparabletosimilarlytitledmeasuresreportedbyotherissuers.Non-IFRSfinancialmeasuresshouldbeconsideredinthecontextofWOW’sIFRSresults.WOW!cautionsreaderstoconsiderthesenon-IFRSfinancialmeasuresinadditionto,andnotasanalternativefor,measurescalculatedinaccordancewithIFRS.WOW!definesAdjustedEBITDAasearningsbeforeinterest,taxes,depreciationandamortization(excludingamortizationofinvestmentsinfilmandtelevisionproperties),adjustedforcertainitems.AdjustedEBITDAispresentedonabasisconsistentwithWOW!’sinternalmanagementreports.WOW!disclosesAdjustedEBITDAtocapturethe profitabilityofitsbusinessbeforetheimpactofitemsnotconsideredinmanagement'sevaluationofoperatingperformance.ThefinancialstatementsofWOW!arepreparedinaccordancewithIFRSandarereportedinCanadiandollars.Allcurrencyamounts inthispresentationareexpressedinandallreferencesinthispresentationto"$"toCanadiandollars,unlessotherwiseindicated.ThisPresentationdoesnotconstituteanoffertosellorasolicitationofanoffertobuynorshalltherebeanysaleofanyofthesecuritiesinanyjurisdictioninwhichsuchoffer,solicitationorsalewouldbeunlawful,includinganyofthesecuritiesintheUnitedStatesofAmerica.ThesecuritieshavenotbeenandwillnotberegisteredundertheUnitedStatesSecuritiesActof1933,asamended(the“1933Act”)oranystatesecuritieslawsandmaynotbeofferedorsoldwithintheUnitedStatesorto,orforaccountorbenefitof,U.S.Persons(asdefinedinRegulationSunderthe1933Act)unlessregisteredunderthe1933Actandapplicablestatesecuritieslaws,oranexemptionfromsuchregistrationrequirementsisavailable.

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Team

3

Bob Ezrin, Vice Chairman • Co-founder and CEO of 7th level

(interactive animation / entertainment company) and Enigma Digital (internet broadcasting company)

• Canadian Walk of Fame and Canadian Music Hall of Fame inductee

Neil Chakravarti, President & COO• Tech, media, and telecom investment banking

for JP Morgan • Head of English Channels and Global Head of

Strategy and Biz Dev for Zee Entertainment• Co-founder of Corporate Storytellers and

Initium.tv

• First Creative Director of MTV, last President of Hanna-Barbera, founder of Next New Networks (acquired by YouTube)

• Producer for all-time hits on Nickelodeon and Cartoon Networks

• Founder and CEO of Frederator Networks• Early investor and board member of Tumblr

(acquired by Yahoo)

• One of the founders of the Canadian animation industry

• Founded Nelvana in 1971• Co-founder of Teletoon• Sold to Corus for ~$650mm in 2000• Founded Cookie Jar Entertainment in 2004

‒ Sold to DHX Media for ~$110mm in 2012

‒ DHX stock price increased approx. 5x while he was Executive Chairman

John Vandervelde, EVP & CFO• Audit and advisory – KPMG • VP Production & Finance, Nelvana• SVP, Business Development & Co-

production, Cookie Jar• Managing Director, TEAM Finance

Michael Hirsh, Chairman & CEO Fred Seibert, Chief Creative Officer

TSX:WOW.A

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Content explosion redux!

TSX:WOW.A

1980s:Creation of ‘new niche platforms’

(CABLE CHANNELS) provided massive opportunities to build content libraries

Present day:Creation of ‘new niche platforms’

(Over the top (OTT) PLATFORMS WORLDWIDE) provide unlimited shelf space to build content libraries

Tech/media giants are spending extraordinary amounts of capital, resulting in exponentially higher demand for content

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THE GOAL:To super-serve an under-served audience with

WOW! – an audience focused media company

5

THE AUDIENCE IS KING!

The Best Content

The Most Engaging Platforms

and

1

2

TSX:WOW.A

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$0.0 $5.0 $10.0

2012

2016

Billions

Our Core Audience – ‘Kidults’ (Kids and Youth)

6(1) Source: Childwise Connected Kids Report(2) Source: Morgan Stanley(3) Business Insider Dec, 2015: “More than 70% of internet traffic during peak hours now comes from video and music streaming”

$3 B

$10 B

9.7% 5.2%

6.0%

6.2%

11.3%61.6%

Other

Marketplace

Social Networking

Tunneling/Encrypted

Web Browsing

Video

Global Kids Content Spend (US$ BB)(2) Video - 2/3rds of Mobile Usage(3)

• Kids 5 to 16 years old averaged 6.5 hours a day screen-time in 2015(1)

‒ Compared to 3.0 hours in 1995(1)

‒ Current viewership primarily through OTT and Mobile Platforms

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Castlevania

The Handmaid’sTale

Orange is theNew Black

StrangerThings

13 ReasonsWhy

House ofCards

GLOW

29.8

17.8

16.4

14.1

11.5

9.3

9.1

Game ofThrones

The WalkingDead

Castlevania

AmericanGods

Preacher

Fear theWalking Dead

Power

60.1

46.4

29.8

27.3

26.3

25.4

22.7

7

• High social media engagement

• Second season in production

• First video game adaption to get a “Fresh” rating of >60% on Rotten Tomatoes

US Audience Demand (July 9 – July 15, 2017)

Overall Demand (MM) Digital Originals Demand (MM)

Castevania Success

WOW!: First Content Release in 2017 – Castlevania

Source: Parrot Analytics - https://www.parrotanalytics.com/insights/top-10-most-in-demand-shows-in-the-us-july-9-july-15-2017/Rotten Tomatoes - https://editorial.rottentomatoes.com/article/netflix-castlevania-broke-rotten-tomatoes-record/

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Notable content/IP activity within first year

TSX:WOW.A

• Most funded animation and fourth most funded film/video on Kickstarter

• Raised ~$900K from 18,000 contributors

• Game adapted for series by Frederator

• Currently in production for Amazon Studio

• 1st CGI TV series, produced by Rainmaker

• Picked up by Netflix

• 2013 Best Web Show Shorty Award Winner

• Annecy International and Webby Award nominated

• Picked up by VRV

Page 9: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

Content growth plans

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Type Current Volume

Target Volume

Average Cost

Financing / Risk Management

SHORT FORM –THIRD PARTY 200,000+ videos 1,000,000 videos Negligible Revenue share per deal, typically

no mg to content owners

SHORT FORM YOUTUBE–OWNED 2,000 videos 10,000 videos $1,000-$2,000

per videoSupported by YouTube advertising + CAVCO

TOP END ANIMATION (Books/ Internal projects)(1) 5 series 20 series

$300,000-$500,000 per

half hr.

Presales + Tax credits + channel commissioning covers all out of pocket costs upfront

DIGITAL ANIMATION(1)

(short + long form)Anticipated to

Begin Q4 201725 series

500 episodes

$25,000-$75,000 per half

hour

Covered by VRV + WOW! TV budgets(2); plus CAVCO eligibility

LIVE STUDIO FORMAT Anticipated to Begin Q1 2018 TBD TBD Covered by WOW! TV budget(2)

Ongoing focus on content acquisitions

LIBRARY WITH GLOBAL DISTRIBUTION

3,000 – 6,000 half hours

(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined

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Platforms – finding audiences

>1,000

0

200

400

600

800

1,000

Nov-12 Nov-13 Nov-14 Nov-15 Nov-16

Mon

thly

Vie

ws

(in m

illio

ns)

1 billion monthly YouTube views reached in October 2017

Historical Monthly YouTube Views 1 Billion Views Milestone

2013 2014 2015 2016 Oct-2017

Merger of Rainmaker Entertainment Inc.,

Frederator Networks, Inc. and Ezrin Hirsh

Entertainment Inc.

December 2016

TSX:WOW.A

Over 50 million subscribers

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11

Platforms – content discovery

TSX:WOW.A

Industry Acclaim

“How Frederator’s Bee and PuppyCat Became One of YouTube’s Most Anticipated Shows” – Wall Street Journal

“Frederator’s Female Animation Project Raises Nearly $800K on Kickstarter” – Adweek

“Bravest Warriors is my favorite thing on the planet” –Robert Lloyd, LA Times

Data on audience needs and desires helps to:

• (1) create better content and

• (2) respond quicker to audience tastes

WOW brands discovered and developed from YouTube audience

Learnings

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Platform – growth driversLaunching 5 Major Initiatives in 2018

WOW! ON WOW! ON

12

3 4 5

Linear OTT Platform Mobile

Currently on

2

Linear / OTT Platform (H1/18 Launch)

1

OTT Platform

OWNED BY

Partnership Possibilities

(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined

(2)

(2)

(1)

(1)

(1) (1)

Page 13: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

Platforms – leveraging content

Independent, Short Form

WOW! Broadcast Studios

Syndicated Content

Top-end Animation

Live Action, Packaged

Animation, Live Action

✔ ✔ ✔✔

✔✔✔ ✔

✔ ✔ ✔ ✔

✔ ✔ ✔ ✔✔

13

Linear OTT Platforms Mobile

Multiple other distribution channels for WOW! to place content in the future

Content Source & Type 2018 Distribution Platform Launches

(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined

(1)

(1)(2) (1)(2)

(1)(1)

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14

Triple Play Synergistic Platform Rollout

Linear

Deal Summary(1)

OTT Mobile

To Leverage Core Competencies

PROGRAMMING

BRAND

DISTRIBUTION

TRANSMISSION

INFRASTRUCTURE STUDIO

AD SALES

• WOW! to acquire specialty Bell channel to be rebranded as WOW! Channel

• Bell Media becomes a shareholder in WOW!

• WOW! Channel to be run using Bell Studio and infrastructure

Consideration

• ~12% shares of WOW!, 24 month lock-up(3)

• Valued at $6.8 MM at $2.00/share

• Bell also participated in Dec raise

PRODUCTION

Bell Canada strategic partnership

(2)

(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to the closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined(3) Based on issued and outstanding shares as at the date hereof, subject to receipt of regulatory approval completion of the Bell Transaction.

“We are very excited about our strategic partnership with WOW! and the opportunity to work with them in realizing their strategy

of becoming a best in class international producer of kids and youth content” - Randy Lennox, President of Bell Media

Page 15: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

WOW! Ecosystem –Leveraging Assets for Content & Platforms

15

No cost audience validation (1 BN+ monthly views) DISCOVERY

1

25+ year track record of top end production CREATION

3

Low cost through partnerships, crowd-funding DEVELOPMENT

2

SHORTS

DISTRIBUTION /MONETIZATION

4PARTNER

PLATFORMS(1)

OWNED CHANNEL & PLATFORMS

(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined

(2) (2)

Page 16: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

Revenue model

16

A. IP Generation Revenue

A. YouTube Advertising On Demand

Animation Production

Networks and Platforms

B. Work For Hire Service Revenue

B. New Launches – WOW Unlimited TV

Selling owned & produced content to platforms/channels worldwide

Production services for clients

YouTube Advertising (Ad) revenue share

Subscription revenue from cable cos in US/Canada + Ad revenue

B. New Launches – VRV Subscription revenue from consumers + Ad revenue + production revenue

Page 17: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

Financial overview

17

Animation Production

Networks and Platforms

Illustrative Economics(1)

Subscriptions 3mm 6mm 9mm

Annual revenue @20¢/ sub

$7.2mm

$14.4mm

$21.6mm

(1) The information presented is illustrative only in nature and there is no guarantee as to actual range of subscribers or subscription rates

*Allfinancialdisclosuresavailableonwww.sedar.comAllfigureinC$

2017 Q1-Q3

2016 full year pro-forma

19.7mm

18.5mm

2017 Q1-Q3 7.0mm

8.0mm2016 full year pro-forma

Upcoming Platforms

Subscriptions 50k 100k 200k

Annual revenue @$3.99/ sub

$2.4mm

$4.8mm

$9.6mm

Page 18: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

39%

38%

12%

11%

Insiders

Institutional

Bell

Retail

Capitalization and Ownership

18

Capitalization Pro-Forma Ownership (Basic)(1)

(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017; shares outstanding in capitalization chart includes shares to be issued to Bell Media Inc. at closing of Bell Transaction

(2) TMX website

(1)

(1)

Page 19: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

19

Recap

TSX:WOW.A

There’s an ’arms race’ for content by tech and media majors, and investments will only grow as competition heats up

There’s never been a better time to build a large content library and niche-audience focused platforms

Page 20: Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania American Gods Preacher Fear the Walking Dead Power 60.1 46.4 29.8 27.3 ... (short + long

Thank you

TSX:WOW.A