Consolidated Financial Statements
For the year ended December 31, 2023
Independent auditor’s report
To the Shareholders of AutoCanada Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of AutoCanada Inc. and its subsidiaries (together, the Company) as at December 31,
2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance
with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS
Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of comprehensive income for the years ended December 31, 2023 and
2022;
the consolidated statements of financial position as at December 31, 2023 and 2022;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
PricewaterhouseCoopers LLP
Stantec Tower, 10220 103 Avenue NW, Suite 2200, Edmonton, Alberta, Canada T5J 0K4
T: +1 780 441 6700, F: +1 780 441 6776, ca_edmonton_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Impairment and recoveries of intangible assets
in the Canadian Operations segment
Our approach to addressing the matter included the
following procedures, among others:
Refer to note 3 – Material accounting policy
information, note 5 – Critical accounting estimates
and note 19 – Intangible assets and goodwill to the
consolidated financial statements.
The Company had intangible assets of $682,137
thousand as at December 31, 2023, of which a
portion pertains to the Canadian Operations
segment. Management performs an impairment test
at least annually, or more frequently if events or
changes in circumstances indicate that they may be
impaired. For the purposes of assessing
impairment, assets are grouped as cash generating
units (CGUs), the lowest level for which there are
separately identifiable cash flows. An impairment is
recorded when the recoverable amounts of assets
are less than their carrying amounts.
The recoverable amount of each CGU is based on
the higher of fair value less costs to dispose
(FVLCD) and value in use (VIU). Impairment
losses, other than those relating to goodwill, are
evaluated for potential reversals of impairment
when events or changes in circumstances warrant
such consideration. Under the FVLCD approach,
fair value is calculated based on an applicable
multiple applied to projected earnings before
interest, taxes, depreciation and amortization
(EBITDA). In arriving at the FVLCD, management
considers projected operating margins, growth
rates and EBITDA multiples as significant
assumptions.
Tested how management determined the
recoverable amount for certain CGUs in the
Canadian Operations segment for which events
or changes in circumstances have been
identified, which included the following:
Tested the appropriateness of the
approaches used and the mathematical
accuracy of FVLCD and VIU calculations.
Tested the reasonableness of the projected
operating margins, growth rates and
discount rates applied by management in
the applicable calculations by comparing
them to the budget, management’s
strategic plans approved by the Board,
available third party published economic
data and the results historically achieved by
the respective CGUs.
Professionals with specialized skill and
knowledge in the field of valuation assisted
in testing the reasonableness of the
discount rates applied by management
based on available data of comparable
companies and in testing the
reasonableness of the EBITDA multiples by
comparing to market data, as well as
assessing the valuation methodologies
used.
Key audit matter
How our audit addressed the key audit matter
Tested the accuracy and completeness of
underlying data used in the FVLCD and
VIU calculations.
Tested the disclosures made in the
consolidated financial statements, including the
sensitivity of the significant assumptions used.
Under the VIU approach, the discounted cash flow
(DCF) method is used, which involves projecting
cash flows and converting them into a present
value equivalent through discounting. Significant
assumptions used in the VIU approach include
projected operating margins, growth rates and
discount rates.
Based on the impairment assessment, the net
recoveries of impairment for the year ended
December 31, 2023 were $3,538 thousand,
comprised of $5,669 thousand of recoveries of
impairment net of an impairment charge of
$2,131 thousand, both allocated to indefinite-lived
intangible assets in the Canadian Operations
segment.
We considered this a key audit matter due to (i) the
significance of the intangible asset balances and
(ii)the significant judgment made by management in
determining the recoverable amounts of the CGUs,
including the use of significant assumptions. This
has resulted in a high degree of subjectivity and
audit effort in performing audit procedures to test
the significant assumptions. Professionals with
specialized skill and knowledge in the field of
valuation assisted us in performing our procedures.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Richard Probert.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Edmonton, Alberta
March 6, 2024
AutoCanada Inc.
Consolidated Statements of Comprehensive Income
For the Years Ended
(in thousands of Canadian dollars except for share and per share amounts)
Revenue (Note 6)
Cost of sales (Note 7)
Gross profit
Operating expenses (Note 8)
Operating profit before other income
Lease and other income (Note 10)
Gain (loss) on disposal of assets, net (Note 10)
Recoveries of non-financial assets (Note 19)
Operating profit
Finance costs (Note 11)
Finance income (Note 11)
Gain (loss) on redemption liabilities (Note 14)
Other (losses) gains, net
Income for the year before taxation
Income tax expense (Note 12)
Net income for the year
Other comprehensive income (loss)
Items that may be reclassified to profit or loss
Foreign operations currency translation
Change in fair value of cash flow hedge (Note 24)
Income tax relating to these items
Other comprehensive income for the year, net of tax
Comprehensive income for the year
Net income for the year attributable to:
AutoCanada shareholders
Non-controlling interests
Comprehensive income for the year attributable to:
AutoCanada shareholders
Non-controlling interests
Net income per share attributable to AutoCanada shareholders:
Basic
Diluted
Weighted average shares
Basic (Note 29)
Diluted (Note 29)
December 31,
2023
$
6,436,803
(5,315,016)
1,121,787
(915,263)
206,524
13,156
422
3,538
223,640
(145,939)
3,346
3,639
(321)
84,365
30,584
53,781
December 31,
2022
$
6,040,619
(4,997,746)
1,042,873
(811,018)
231,855
14,301
(296)
8,691
254,551
(131,478)
4,144
(4,829)
1,496
123,884
32,824
91,060
6,489
1,800
(458)
7,831
61,612
50,490
3,291
53,781
58,321
3,291
61,612
2.14
2.06
6,505
6,650
(1,688)
11,467
102,527
85,436
5,624
91,060
96,903
5,624
102,527
3.28
3.03
23,561,236
24,450,681
26,050,206
28,233,882
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Company
(signed) Paul W. Antony
(signed) Barry L. James
Paul W. Antony, Director
Barry L. James, Director
Page 1 • AutoCanada
AutoCanada Inc.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
ASSETS
Current assets
Cash
Trade and other receivables (Note 15)
Inventories (Note 16)
Current tax recoverable
Other current assets (Note 20)
Assets held for sale (Note 17)
Property and equipment (Note 18)
Right-of-use assets (Note 23)
Other long-term assets (Note 20)
Deferred income tax (Note 12)
Derivative financial instruments (Note 24)
Intangible assets (Note 19)
Goodwill (Note 19)
LIABILITIES
Current liabilities
Trade and other payables (Note 21)
Revolving floorplan facilities (Note 22)
Current tax payable
Vehicle repurchase obligations (Note 25)
Indebtedness (Note 22)
Lease liabilities (Note 23)
Redemption liabilities (Note 14)
Other liabilities (Note 26)
Long-term indebtedness (Note 22)
Long-term lease liabilities (Note 23)
Long-term redemption liabilities (Note 14)
Derivative financial instruments (Note 24)
Other long-term liabilities (Note 26)
Deferred income tax (Note 12)
EQUITY
Attributable to AutoCanada shareholders
Attributable to non-controlling interests
December 31,
2023
$
December 31,
2022
$
103,146
222,076
1,154,311
22,187
15,718
22,152
1,539,590
378,269
405,105
16,708
35,444
3,920
682,137
98,266
3,159,439
238,427
1,174,595
—
1,982
744
28,411
22,580
12,325
1,479,064
562,178
469,013
25,000
2,219
1,368
55,768
2,594,610
534,847
29,982
564,829
3,159,439
108,301
217,790
979,540
—
10,142
—
1,315,773
345,592
396,369
17,298
40,984
4,970
659,261
78,084
2,858,331
229,696
992,254
13,952
2,277
777
27,766
26,219
4,338
1,297,279
554,351
457,111
1,050
1,939
8,894
50,910
2,371,534
457,899
28,898
486,797
2,858,331
Commitments and contingencies (Note 27)
The accompanying notes are an integral part of these consolidated financial statements.
Page 2 • AutoCanada
AutoCanada Inc.
Consolidated Statements of Changes in Equity
For the Year Ended
(in thousands of Canadian dollars)
Attributable to AutoCanada shareholders
Share
capital
$
Treasury
shares
$
Contributed
surplus
(deficit)
$
Share
repurchase
(deficit)
(Note 29)
$
Cumulative
translation
adjustment
$
OCI hedge
reserve
$
Retained
earnings
$
Total
capital
$
Non-
controlling
interests
$
Total
equity
$
433,693
(672)
(64,743)
—
1,400
(1,187)
89,408
457,899
28,898
486,797
—
433,693
—
—
(672)
—
51,525
(51,525)
(13,218)
(51,525)
—
—
—
—
—
—
939
—
—
—
—
—
—
—
—
(1,972)
13,831
1,624
(1,473)
(47)
—
—
(760)
400
(400)
6,485
4,117
—
—
—
—
—
—
—
—
1,400
—
6,489
—
(1,187)
—
1,342
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
89,408
50,490
457,899
50,490
28,898
3,291
486,797
53,781
—
—
—
—
—
—
—
—
—
—
—
7,831
—
7,831
—
—
(1,972)
13,831
1,624
(534)
(47)
(760)
—
6,485
(3,595)
(3,595)
1,388
—
—
—
—
—
—
—
—
1,388
(1,972)
13,831
1,624
(534)
(47)
(760)
—
6,485
—
—
—
—
—
—
—
—
—
—
—
Balance at December 31, 2022
as originally presented
Reclassification of share
repurchase (deficit)
Balance, January 1, 2023
Net income
Other comprehensive income
Dividends paid by subsidiaries to
non-controlling interests
Non-controlling interests arising
on acquisition
Forward share purchase (Note 26)
Purchase of UD LP Minority
Interest (Note 14)
Repayment of Executive Advance
(Note 33)
Settlement of share-based awards
(Note 29, 28)
Treasury shares acquired
(Note 29)
Deferred tax on share-based
payments
Shares settled from treasury
(Note 29)
Share-based compensation
(Note 28)
Balance, December 31, 2023
434,632
(319)
(51,525)
7,889
155
139,898
534,847
29,982
564,829
The accompanying notes are an integral part of these consolidated financial statements.
Page 3 • AutoCanada
AutoCanada Inc.
Consolidated Statements of Changes in Equity
For the Year Ended
(in thousands of Canadian dollars)
Attributable to AutoCanada shareholders
Treasury
shares
$
Contributed
surplus
(deficit)
$
Cumulative
translation
adjustment
$
OCI hedge
reserve
$
(2,440)
(6,823)
(5,105)
(6,149)
Share capital
$
510,819
—
—
—
—
—
—
—
—
Balance, January 1, 2022
Net income
Other comprehensive income
Dividends paid by subsidiaries to
non-controlling interests
Repurchase of common shares
under the Normal Course Issuer
Bid (Note 29)
Repurchase of common shares
under the Substantial Issuer Bids
(Note 29)
Reorganization of non-controlling
interests
Forward share purchase
(Note 26)
Repayment of Executive
Advance (Note 33)
Settlement of share-based
awards (Note 29, 28)
Deferred tax on share-based
payments
Shares settled from treasury
(Note 29)
Share-based compensation
(Note 28)
(32,089)
—
(24,516)
(55,533)
(27,009)
—
—
10,496
—
—
—
—
—
—
—
(21)
(2,890)
376
(5,101)
(2,401)
1,768
(1,768)
—
5,410
Retained
earnings
$
3,109
85,436
—
—
—
Non-
controlling
interests
$
Total
equity
$
Total capital
$
493,411
85,436
11,467
25,998
5,624
519,409
91,060
—
11,467
—
(3,247)
(3,247)
(56,605)
—
(56,605)
(82,542)
—
(82,542)
863
842
523
1,365
—
(2,890)
—
(2,890)
376
5,395
(2,401)
—
5,410
376
5,395
(2,401)
—
5,410
—
—
—
—
—
—
—
—
—
6,505
—
4,962
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance, December 31, 2022
433,693
(672)
(64,743)
1,400
(1,187)
89,408
457,899
28,898
486,797
The accompanying notes are an integral part of these consolidated financial statements.
Page 4 • AutoCanada
AutoCanada Inc.
Consolidated Statements of Cash Flows
For the Years Ended
(in thousands of Canadian dollars)
Cash provided by (used in):
Operating activities
Net income for the year
Adjustments for:
Income tax expense (Note 12)
Finance costs (Note 11) 1
Depreciation of right-of-use assets (Note 23)
Depreciation of property and equipment (Note 18)
Amortization of intangible assets (Note 19)
(Gain) loss on disposal of assets and lease terminations, net (Note 10)
Share-based compensation (Note 28)
Share-based compensation - Used Digital Division (Note 14, 28)
Unrealized fair value changes on foreign exchange forward contracts (Note 24)
Revaluation of redemption liabilities (Note 14)
Recoveries of non-financial assets (Note 19)
Net change in non-cash working capital (Note 34) 1
Income taxes paid
Interest paid 1
Settlement of share-based awards, net
Investing activities
Business acquisitions, net of cash acquired (Note 13)
Purchases of property and equipment (Note 18)
Additions to intangible assets (Note 19)
Settlement of prior year business acquisitions
Proceeds on sale of property and equipment
Financing activities
Proceeds from indebtedness
Repayment of indebtedness
Repayment of executive advance (Note 33)
Repurchase of common shares under Normal Course Issuer Bid (Note 29)
Shares settled from treasury (Note 29)
Proceeds from exercise of stock options, net
Settlement of Substantial Issuer Bids (Note 29)
Dividends paid to non-controlling interests
Proceeds from sale of equity interest in 15154871 Canada Inc. (Note 14)
Settlement of redemption liabilities
Repayment of loan by non-controlling interests
Principal portion of lease payments (Note 23)
Effect of exchange rate changes on cash
Net (decrease) increase in cash
Cash at beginning of year
Cash at end of year
December 31,
2023
$
December 31,
2022
$
53,781
91,060
30,584
145,939
33,443
25,030
529
(422)
6,485
36,725
(2,267)
(3,639)
(3,538)
(3,552)
319,098
(58,371)
(140,292)
(901)
119,534
(47,027)
(77,416)
(2,102)
817
299
(125,429)
674,560
(669,334)
1,624
—
353
279
—
(3,595)
25,000
(1,444)
3,083
(28,828)
1,698
(958)
(5,155)
108,301
103,146
32,824
131,478
30,781
20,852
374
296
5,410
391
(18)
4,829
(8,691)
(28,089)
281,497
(33,114)
(97,144)
(3,641)
147,598
(174,882)
(52,667)
—
(598)
123
(228,024)
1,010,006
(770,064)
376
(56,605)
1,768
8,573
(82,542)
(3,247)
—
—
2,162
(27,214)
83,213
3,034
5,821
102,480
108,301
1 Certain prior year figures have been reclassified to conform to the current year presentation (Note 36)
The accompanying notes are an integral part of these consolidated financial statements.
Page 5 • AutoCanada
AutoCanada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(in thousands of Canadian dollars except for share and per share amounts)
1 General information
AutoCanada Inc. (“AutoCanada” or the “Company”) is incorporated in Alberta, Canada with common shares
listed on the Toronto Stock Exchange (“TSX”) under the symbol of “ACQ”. The business of AutoCanada, held in
its subsidiaries, is the operation of franchised automobile dealerships and related businesses in the Provinces of
British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and New Brunswick, and in
the State of Illinois in the United States. The Company offers a diversified range of automotive products and
services, including new vehicles, used vehicles, vehicle leasing, vehicle parts, vehicle maintenance and
collision repair services, extended service contracts, vehicle protection products, after-market products, and
auction services. The Company also arranges financing and insurance for vehicle purchases by its customers
through third-party finance and insurance sources. The address of its registered office is 200, 15511 123 Avenue
NW, Edmonton, Alberta, Canada, T5V 0C3.
2 Basis of presentation
These annual consolidated financial statements ("Annual Financial Statements") have been prepared in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS
Accounting Standards”).
The preparation of Annual Financial Statements in accordance with IFRS Accounting Standards requires the use
of certain critical accounting estimates. The areas where assumptions and estimates are significant to the
Annual Financial Statements are described in Note 5.
These Annual Financial Statements were approved by the Board of Directors on March 6, 2024.
3 Material accounting policy information
The significant accounting policies used in the preparation of these Annual Financial Statements are as follows:
Basis of measurement
The Annual Financial Statements have been prepared under the historical cost convention, except for the
revaluation of certain financial assets and financial liabilities to fair value, including derivative instruments and
redemption liabilities.
Principles of consolidation
The Annual Financial Statements comprise the financial statements of AutoCanada and its subsidiaries.
Subsidiaries are all entities over which the Company has control. The Company uses judgment in determining
the entities that it controls and therefore consolidates. Judgment is also applied in determining whether the
Company controls the entities in which it does not have full ownership rights. Most often, judgment involves
reviewing contractual rights to determine if rights are participating (giving power over one entity) or protective
rights (protecting the Company’s interest without giving it power). Subsidiaries are fully consolidated from the
date control is transferred to the Company, and are no longer consolidated on the date control ceases.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties.
Page 6 • AutoCanada
Business combinations
Business combinations are accounted for using the acquisition method of accounting when the acquired set of
activities and assets meet the definition of a business and control is transferred to the Company. This involves
recognizing identifiable assets (including intangible assets not previously recognized by the acquiree) and
liabilities (including contingent liabilities) of acquired businesses at fair value at the acquisition date. The
excess of acquisition cost over the fair value of the identifiable net assets acquired is recorded as goodwill. If
the acquisition cost is less than the fair value of the net assets acquired, the fair value of the net assets is re-
in the Consolidated Statements of
assessed and any remaining difference
Comprehensive Income. Transaction costs are expensed as incurred.
is recognized directly
Contingent consideration is classified as either equity or a financial liability. Any subsequent change to the fair
value of contingent consideration is recognized in the Consolidated Statements of Comprehensive Income.
Non-controlling interests
Non-controlling interests are measured initially at their proportionate share of the acquiree’s or entity's
identifiable net assets at the date of acquisition or date the interest was granted. Certain arrangements contain
a vesting component where the non-controlling interest vests over a specified period.
Non-controlling interests issued in subsidiaries of the Company are recognized at their proportionate share at
the date of issuance.
Revenue recognition
(a) New and Used Vehicles
The Company sells new and used vehicles at its franchised dealerships, used dealerships, and related
businesses. The transaction price for a vehicle sale is determined with the customer at the time of sale.
Customers often trade in their own vehicle and apply the value against the purchase price of a new or used
vehicle. The trade-in vehicle is considered non-cash consideration and is measured at fair value, based on
external and internal market data, and applied toward the contract price for the purchased vehicle.
When a vehicle is sold, control is transferred at a point in time upon delivery of the vehicle to the customer,
which is generally at time of sale. The Company does not directly finance customers’ vehicle purchases or
leases, however, in many cases, third-party financing is arranged for the sale or lease of vehicles to its
customers in exchange for a fee paid to the Company by the third-party financial institution. The Company
receives payment directly from the customer at the time of sale or from the third-party financial institution
(referred to as contracts-in-transit or vehicle receivables, which are part of the Company's receivables from
contracts with customers) within a short period of time following the sale.
(b) Parts, service, and collision repair
The Company sells parts and services related to customer-paid repairs and maintenance, repairs and
maintenance under manufacturer warranties and extended service contracts, and collision-related repairs.
Each automotive repair and maintenance service is a single performance obligation that includes both the
parts and labour associated with the service. Payment for automotive service work is typically due upon
completion of the service, which is generally completed within a short period of time from contract
inception. The transaction price for automotive repair and maintenance services is based on the parts used,
the number of labour hours applied, and standardized hourly labour rates. The Company satisfies its
performance obligations, transfers control, and recognizes revenue over time for repair and maintenance
services because it is creating an asset with no alternative use and has an enforceable right to payment for
performance completed to date.
The transaction price for retail counter parts sales is determined at the time of sale based on the quantity
and price of each product purchased. Payment is typically due at the time of sale, or within a short period of
time following the sale. Control is generally considered to transfer at the point of sale or when the products
are shipped, which typically occurs the same day as or within a few days of the sale.
(c) Finance and insurance commissions and fees
The Company arranges financing for customers through various financial institutions and receives a
commission from the lender based on the difference between the interest rate charged to the customer and
the interest rate set by the financing institution, or a flat fee.
Page 7 • AutoCanada
The Company also receives commissions for facilitating the sale of third-party insurance products to
customers, including credit and life insurance policies and extended service contracts. These commissions
are recorded as revenue at the time the customer enters into the contract and the Company is entitled to
the commission. The Company is not the obligor under any of these contracts. In the case of finance
contracts, a customer may fail to pay their contract, thereby terminating the contract. Customers may also
terminate extended service contracts, which are fully paid at purchase, and become eligible for refunds of
unused premiums. In these circumstances, a portion of the commissions the Company receives may be
charged back to the Company based on the terms of the contracts. These chargebacks are a form of
variable consideration, and the Company only recognizes commission revenue at the estimated amount of
consideration to which it ultimately expects to be entitled. This estimate is based on historical chargeback
experience arising from similar contracts, including the impact of refinance and default rates on retail
finance contracts and cancellation rates on extended service contracts and other insurance products.
For the majority of finance and insurance product sales, the Company’s performance obligation is to arrange
for the provision of goods or services by another party. This performance obligation is satisfied when the
finance and insurance product is delivered to the end-customer, generally at the time of the vehicle sale. As
an agent, revenue is recognized as the net amount retained after paying the third-party provider for the
goods or services that party is responsible for fulfilling.
Taxation
(a) Deferred tax
Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the Consolidated Statements of Financial Position. Deferred tax is calculated
using tax rates and laws that have been enacted or substantively enacted at the end of the reporting period,
and which are expected to apply when the related deferred income tax asset is realized or the deferred
income tax liability is settled.
Deferred tax liabilities:
● Are generally recognized for all taxable temporary differences; and
● Are not recognized on temporary differences that arise from goodwill which is not deductible for tax
purposes.
Deferred tax assets:
● Are recognized to the extent it is probable that taxable profits will be available against which the
deductible temporary differences can be utilized; and
● Are reviewed at the end of the reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are not recognized in respect of temporary differences that arise on initial
recognition of assets and liabilities, outside of a business combination, that affect neither accounting nor
taxable profit and do not give rise to equal taxable and deductible temporary differences.
Deferred tax assets and liabilities are not recognized in respect of temporary differences between the
carrying amount and tax bases of investments in subsidiaries where the company is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse in
the foreseeable future.
(b) Current tax
Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Manufacturer incentives and other rebates
Various incentives from manufacturers are received based on achieving certain objectives, such as specified
sales volume targets. These incentives are typically based on units sold to retail or fleet customers. These
manufacturer incentives are recognized as a reduction of new vehicle cost of sales when earned, generally at
the latter of the time the related vehicles are sold or upon attainment of the particular program goals.
Manufacturer rebates to the Company's dealerships and assistance for floorplan interest are reflected as a
reduction in the carrying value of each vehicle purchased by the Company. These incentives are recognized as
a reduction to the cost of sales as the related vehicles are sold.
Page 8 • AutoCanada
Manufacturer advertising rebates that are reimbursements of costs associated with specific advertising
expenses are earned in accordance with the respective manufacturers’ reimbursement-based advertising
assistance programs, which is typically after the corresponding advertising expenses have been incurred, and
are reflected as a reduction in advertising expense included in administrative costs as an operating expense in
the Consolidated Statements of Comprehensive Income.
Financial instruments
The Company’s financial assets, including cash, trade and other receivables, and other assets are measured at
amortized cost.
The Company’s financial liabilities include trade and other payables, revolving floorplan facilities, vehicle
repurchase obligations, current and long-term indebtedness, derivative financial instruments, redemption
liabilities and lease liabilities. Financial liabilities are measured at amortized cost except for redemption
liabilities, non-hedge interest swaps, contingent consideration and embedded derivative, which are carried at
fair value through profit or loss. A financial liability is derecognized when the obligation under the liability is
discharged or cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially modified, the
Company considered both quantitative and qualitative factors in determining whether such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized in the Consolidated Statements of Comprehensive
Income.
Cash
Cash includes cash on hand, highly liquid investment grade short-term investments with maturities of three
months or less and other liquid deposits held with financial institutions.
Trade and other receivables
Trade and other receivables are amounts due from customers, financial institutions and suppliers that arise
from providing services or sale of goods in the ordinary course of business. Trade and other receivables are
recognized initially at fair value and subsequently measured at amortized cost using the effective interest
method. The Company applies the simplified approach to measuring expected credit losses, which uses a
lifetime expected credit loss allowance for all trade receivables. The carrying amount of the asset is reduced
through the use of an allowance account, and the amount of the loss is recognized as an operating expense in
the Consolidated Statements of Comprehensive Income.
When a trade and other receivable is uncollectible, it is written off against the allowance account for trade and
other receivables. Subsequent recoveries of amounts previously written off are credited against operating
expenses in the Consolidated Statements of Comprehensive Income.
Inventories
New, used and demonstrator vehicle inventories are recorded at the lower of cost and net realizable value, with
cost determined on a specific item basis. Parts and accessories inventories are carried at the lower of cost and
net realizable value. Inventories of parts and accessories are accounted for using the “weighted-average cost”
method.
In determining net realizable value for new vehicles, the Company primarily considers the age of the vehicles
along with the timing of annual and model changeovers. For used vehicles, the Company considers seasonality,
recent market data and trends such as loss histories along with the current age of the inventory. Parts
inventories are primarily assessed considering excess quantity and continued usefulness of the part. The risk of
loss in value related to parts inventories is minimized since excess or obsolete parts can generally be returned
to the manufacturer.
Page 9 • AutoCanada
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Residual values,
useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.
Land is not depreciated. Other than as noted below, depreciation of property and equipment is provided for
over the estimated useful life of the assets on a declining balance basis at the following annual rates:
Machinery and equipment
Furniture, fixtures and other
Company and lease vehicles
Computer equipment
20 %
20 %
30 %
30 %
Buildings are depreciated on a straight-line basis over the estimated useful lives of the buildings ranging from
10 to 40 years. Useful lives are determined based on independent appraisals.
The useful life of leasehold improvements is determined to be the lesser of the lease term or the estimated
useful life of the improvement. Leasehold improvements are depreciated using the straight-line method over
the useful life of the asset.
Depreciation of leased vehicles is based on a straight-line depreciation of the difference between the cost and
the estimated residual value at the end of the lease over the term of the lease. Leased vehicle residual values
are regularly reviewed to determine whether depreciation rates are reasonable.
Intangible assets
(a) Intangible assets
Intangible assets acquired in a business combination consist of rights under franchise agreements ("Dealer
Agreements") and certifications with automobile manufacturers. The Company has determined that Dealer
Agreements and certifications will continue to contribute to cash flows indefinitely and, therefore, have
indefinite lives due to the following reasons:
● Specific Dealer Agreements continue indefinitely by their terms; and
● Specific Dealer Agreements and certifications have limited terms, but are routinely renewed without
substantial cost to the Company.
Intangible assets are carried at cost less accumulated impairment losses. When acquired in a business
combination, the cost is determined in connection with the purchase price allocation based on their
respective fair values at the acquisition date. The fair value is determined based on the multi-period excess
earnings method, using the discounted cash flow model. When market value is not readily determinable,
cost is determined using generally accepted valuation methods based on revenues, costs, or other
appropriate criteria.
Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets with finite
lives are amortized over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortization expense on intangible assets with
finite lives is recognized in the statement of profit or loss in the expense category that is consistent with the
function of the intangible assets.
(b) Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are
recognized as an intangible asset when the Company can demonstrate:
● The technical feasibility of completing the intangible asset so that the asset will be available for use
or sale;
● Its intention to complete and its ability and intention to use or sell the asset;
● How the asset will generate future economic benefits;
● The availability of resources to complete the asset; and
● The ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any
accumulated amortization and accumulated impairment losses. Amortization of the asset begins when
development is complete, and the asset is available for use. It is amortized over the period of expected
future benefit. Amortization is recorded in operating expenses. During the period of development, the asset
is tested for impairment annually.
Page 10 • AutoCanada
(c) Software as a Service (SaaS)
Service fees associated with SaaS arrangements are recognized as an expense in the period that they are
incurred, unless it can be determined that the terms of the service arrangement provide the Company with
an identifiable asset. Costs that are incurred that are directly relatable to configuration or customization of
such SaaS arrangements are also assessed for whether they meet the definition of an asset, those that do
not meet the criteria are expensed as incurred or expensed over the term of the contract if they are not able
to be separately identified from the SaaS arrangement.
Impairment
Impairments are recorded when the recoverable amounts of assets are less than their carrying amounts. The
recoverable amount is the higher of an asset’s fair value less costs to dispose or its value in use. Impairment
losses, other than those relating to goodwill, are evaluated for potential reversals of impairment when events or
changes in circumstances warrant such consideration.
(a) Non-financial assets
The carrying values of non-financial assets with finite lives, such as property and equipment and right-of-use
assets, are assessed for impairment whenever events or changes in circumstances indicate that their
carrying amounts may not be recoverable. For the purposes of assessing impairment, assets are grouped as
cash generating units (CGUs), the lowest levels for which there are separately identifiable cash flows.
(b) Intangible assets and goodwill
The carrying values of all intangible assets with indefinite lives and goodwill are reviewed for impairment
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Additionally, the carrying values of identifiable intangible assets with indefinite lives and goodwill are tested
annually for impairment. Specifically:
● Our Dealer Agreements and certifications with indefinite lives are subject to an annual impairment
assessment. For purposes of impairment testing, the fair value of the Company's Dealer Agreements
is determined using a combination of a discounted cash flow approach and earnings multiple
approach.
● For the purpose of impairment testing, goodwill is allocated to CGUs based on the level at which
management monitors it, which is not higher than an operating segment before aggregation.
Goodwill is allocated to those CGUs that are expected to benefit from the business combination in
which the goodwill arose.
Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business. Trade and other payables are recognized initially at fair value, subsequently measured at
amortized cost, and classified as current liabilities if payment is due within one year.
Leases
(a) The Company as a lessee
The Company leases various properties with agreements ranging from 1 to 25 years but may have extension
options as described below. Lease terms are negotiated on an individual basis and contain a wide range of
different terms and conditions.
The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis.
Lease liabilities include the net present value of fixed payments (including in-substance fixed payments) less
any lease incentives receivable, variable lease payments that are based on an index or a rate, amounts
expected to be payable by the lessee under residual value guarantees, the exercise price of a purchase
option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating
the lease if the lease term reflects the lessee exercising that option. The lease payments are discounted
using the interest rate implicit in the lease, if that rate can be determined, or the Company’s incremental
borrowing rate.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability
and any lease payments made at or before the commencement date less any lease incentives received, any
initial direct costs, and restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-
value assets comprise IT equipment and office furniture.
Page 11 • AutoCanada
(b) The Company as a lessor
Lease obligations are classified as either operating or finance, based on the substance of the transaction at
inception of the lease. Classification is reassessed if the terms of the lease are changed.
(i) Finance leases
Leases in which substantially all the risks and rewards of ownership are transferred are classified as
finance leases.
When assets are leased out under a finance lease, the present value of the lease payments is recognized
as a receivable. The difference between the gross receivable and the present value of the receivable is
recognized as unearned finance income.
(ii) Operating leases
Leases in which a significant portion of the risks and rewards of ownership is retained by the lessor are
classified as operating leases.
When assets are leased out under an operating lease, the asset is included in the Consolidated
Statements of Financial Position based on the nature of the asset. Lease income on operating leases is
recognized over the term of the lease on a straight-line basis.
Redemption liabilities
The potential cash payments related to put options issued by the Company over the equity of subsidiary
companies are accounted for as financial liabilities when such options are to be settled in cash or a variable
number of shares. The amount that may become payable under the option on exercise is initially recognized at
fair value within redemption liabilities with a corresponding charge directly to equity attributable to
AutoCanada shareholders or share-based compensation. Subsequently, if the Company revises its estimates,
the carrying amount of the redemption liability is adjusted and the adjustment will be recognized as income or
expenses in the Consolidated Statements of Comprehensive Income. Put options that are not exercisable for at
least one year from the Consolidated Statements of Financial Position date are presented as long-term
redemption liabilities.
Share-based payments
The Company operates a number of share-based compensation plans for the benefit of certain employees and
directors, as described in Note 28.
The accounting for a share-based payment plan is based on whether the arrangement is classified as equity-
settled or cash-settled. Equity-settled arrangements are those in which the Company receives services as
consideration for its own equity instruments. Cash-settled arrangements arise where the Company pays the
employee cash amounts based on the value of the Company’s shares.
The fair value of equity-settled awards is recognized as an expense over the vesting period with a
corresponding increase in equity or redemption liabilities. The total amount to be expensed is determined by
reference to the fair value of the options at the grant date.
Foreign currency translation
The financial results of the dealerships that operate in the United States (U.S.) are translated from the functional
currency of U.S dollars into the reporting currency of Canadian dollars upon consolidation. Assets and liabilities
have been translated to the reporting currency of Canadian dollars using the exchange rates in effect on the
Consolidated Statements of Financial Position dates. Revenue and expense accounts are translated using the
average exchange rate during the period. The cumulative translation adjustments associated with the net
assets of foreign subsidiaries are recorded in accumulated other comprehensive income in the Consolidated
Statements of Changes in Equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and
liabilities of the foreign operation and translated at the closing exchange rate.
Derivative financial instruments
Derivatives are recognized initially at fair value on the date of contract inception and are subsequently re-
measured to current fair value at the end of each reporting period. The accounting for subsequent changes in
fair value depends on whether the instrument is designated as a hedging instrument and, if so, the nature of the
item being hedged. The Company currently designates certain derivatives as hedges of the interest rate cash
flow risk associated with the cash flows of variable rate loans, and does not hold any derivatives for trading or
speculative purposes.
Page 12 • AutoCanada
At the inception of the hedge relationship, the Company documents the economic relationship between the
hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking
hedge transactions. The effective portion of changes in the fair value of qualifying hedging derivatives is
recognized as a reserve within equity. The gain or loss relating to any ineffective portion is recognized
immediately in profit or loss. The periodic net settlement of the interest rate swap is recognized in profit or loss
within finance costs at the same time as the interest expense on the hedged borrowings.
Upon the expiry, sale, or termination of a hedging instrument, any cumulative deferred gain or loss and
deferred costs of hedging remain in equity until the original hedged transactions occur.
Further information on the Company’s risk management and hedge accounting is presented in Note 24.
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are recognized immediately in profit or loss and are
included in Revenue and Finance costs, as disclosed in Note 24.
The full fair value of a derivative instrument is classified as a non-current asset or liability when the remaining
maturity of the hedged item is greater than one year.
Segment reporting
The Company’s Chief Operating Decision Maker ("CODM") is identified as the Executive Chair and is responsible
for allocating resources and assessing the performance of each dealership. Supporting the CODM is the
President, North American Operations, who reports to the CODM. The Company will report segmented
information by Canadian Operations and U.S. Operations. Each reportable operating segment is comprised of
retail automobile dealerships and related businesses, which have been aggregated based on their economic
similarities.
The Company's CODM measures the performance of each operating segment based on operating profit, which
is defined as income before income taxes, net finance costs and other income (expense). The segmented
information is set out in Note 35.
4 New and amended accounting standards issued
Accounting standards and amendments issued and adopted in 2023
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
In May 2021, amendments were made to IAS 12 Income Taxes ("IAS 12) that require companies to recognize
deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible
temporary differences. These will typically apply to transactions such as leases and decommissioning
obligations and will require the recognition of additional deferred tax assets and liabilities. IAS 12 did not
previously address how to account for the tax effects of on-balance sheet leases and similar transactions and
various approaches were considered acceptable, these amendments attempt to uniform the approach taken.
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
In February 2021, International Accounting Standards Board ("IASB") amended IAS 1 Presentation of financial
statements ("IAS 1") to require entities to disclose their material rather than their significant accounting policies.
The amendments define what is material accounting policy information and explain how to identify when
accounting policy information is material. They further clarify that immaterial accounting policy information
does not need to be disclosed. If it is disclosed, it should not obscure material accounting information.
Definition of Accounting Estimates (Amendments to IAS 8)
The amendment made in February 2021, to IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors ("IAS 8") clarifies how companies should distinguish changes in accounting policies from changes in
accounting estimates. The distinction is important, because changes in accounting estimates are applied
prospectively to future transactions and other future events, whereas changes in accounting policies are
generally applied retrospectively to past transactions and other past events as well as the current period.
IAS 12 on Global implementation of Pillar Two taxes (Amendment to IAS 12)
In December 2021, the Organization for Economic Co-operation and Development (OECD) released the Pillar
Two model rules (the Global Anti-Base Erosion Proposal, or ‘GloBE’) to reform international corporate taxation.
Large multinational enterprises within the scope of the rules are required to calculate their GloBE effective tax
rate for each jurisdiction where they operate. They will be liable to pay a top-up tax for the difference between
their GloBE effective tax rate per jurisdiction and the 15% minimum rate.
Page 13 • AutoCanada
In May 2023, the IASB made narrow-scope amendments to IAS 12 which provide a temporary relief from the
requirement to recognize and disclose deferred taxes arising from enacted or substantively enacted tax law
that implements the Pillar Two model rules, including tax law that implements qualified domestic minimum top-
up taxes described in those rules. The amendments also require affected companies to disclose:
● The fact that they have applied the exception to recognizing and disclosing information about
deferred tax assets and liabilities related to Pillar Two income taxes,
● Their current tax expense (if any) related to the Pillar Two income taxes, and
● During the period between the legislation being enacted or substantially enacted and the legislation
becoming effective, known or reasonably estimable information that would help users of financial
statements to understand an entity’s exposure to Pillar Two income taxes arising from that
legislation. If this information is not known or reasonably estimable, entities are instead required to
disclose a statement to that effect and information about their progress in assessing the exposure.
The amendments listed above did not have a material impact on the amounts recognized in prior periods and
are not expected to significantly affect the current or future periods. Based on the analysis of the Company
operations, the Company does not expect a significant exposure to Pillar Two income taxes.
Accounting standards and amendments issued but not yet adopted in 2023
Certain new standards, interpretations, amendments, and improvements to existing standards were issued by
the IASB or International Financial Reporting Interpretations Committee (“IFRIC”) that are not effective for the
year ended December 31, 2023, and have not been applied in the preparation of these Annual Financial
Statements.
The standards issued that are applicable to the Company are as follows:
Non-current
(Amendments to IAS 1)
liabilities with covenants and classification of
liabilities as current or non-current
In October 2022, IASB issued amendments to IAS 1 to further clarify the earlier amendments, stating that
liabilities are classified as either current or non-current based on the rights that exist at the end of a reporting
period. Covenants of loan arrangements will not affect classification of a liability as current or non-current at
the reporting date if the entity must only comply with the covenants after the reporting date. Only those
covenants that must be complied with as at or before the reporting date will affect classification, even if the
covenant is tested for compliance after the reporting date. Additional disclosures are required in the instances
that a company classifies a liability as non-current and that liability is subject to covenants that must be
complied with within 12 months of the reporting date.
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, these
amendments are to be applied retrospectively in accordance with IAS 8, with early adoption permitted. The
Company is assessing the potential impact of this standard.
Lease liability in a sale and leaseback (Amendments to IFRS 16)
In September 2022, narrow-scope amendments to IFRS 16 Leases ("IFRS 16") were made, finalizing
requirements on how a company accounts for sale and leaseback transactions, specifically addressing
treatment after the date of transaction. These amendments specify that, in measuring the lease liability
subsequent to the sale and leaseback, the seller-lessee determines the "lease payments" and ''revised lease
payments" in a manner preventing the seller-lessee from recognizing any amount of the gain or loss related to
the right of use retained. This may particularly affect transactions where lease payments encompass variable
payments that do not use an index or a rate.
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, these
amendments are to be applied retrospectively in accordance with IAS 8, with early adoption permitted. The
Company is assessing the potential impact of this standard.
Supplier finance arrangements (Amendments to IAS 7 and IFRS 7)
Amendments to IAS 7 and IFRS 7 were made in August 2023, requiring new disclosures related to supplier
finance arrangements ("SFA's") with the objective to provide information about SFAs that enables investors to
assess the effects on a company's liabilities, cash flows and exposure to liquidity risk. Further, these
amendments specify the terms and conditions of SFAs that these new disclosures requirements are within
scope for.
Page 14 • AutoCanada
The IASB has provided transitional relief by not requiring disclosures on comparative information in the first
year of adoption and also, not requiring disclosure of specified opening balances. The amendments are
effective for annual reporting periods beginning on or after January 1, 2024. The Company is assessing the
potential impact of this standard.
5 Critical accounting estimates
The preparation of Annual Financial Statements requires management to make estimates about the future.
Estimates are continuously evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates. Critical estimates and assumptions were used to determine the
value of the following assets and liabilities.
Intangible assets and goodwill
Intangible assets and goodwill generally arise from business combinations. The Company applies the
acquisition method of accounting for these transactions, which involves the allocation of the cost of an
acquisition to the underlying net assets acquired based on their respective estimated fair values. As part of this
allocation process, the Company must identify and attribute values to the intangible assets acquired.
Management applies significant judgement in estimating the fair value of the intangible assets. These
determinations involve significant estimates and assumptions regarding projected operating margins, terminal
growth rates and discount rates.
These estimates and assumptions determine the amount allocated to intangible assets and goodwill. If future
events or results differ significantly from these estimates and assumptions, the Company may record
impairment charges in the future.
The Company tests at least annually or more frequently if events or changes in circumstances indicate that they
may be impaired, in accordance with its accounting policies. The recoverable amounts of CGUs have been
estimated based on the greater of fair value less costs to dispose and value in use calculations (Note 19).
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the Consolidated Statements of
Financial Position cannot be measured based on quoted prices in active markets, their fair value is measured
using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are
taken from observable market data where possible, but where this is not feasible, a degree of judgement is
required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit
risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of
financial on instruments. See Note 31 for further disclosure.
Inventories
Inventories are recorded at the lower of cost and net realizable value with cost determined on a specific item
basis for new and used vehicles. In determining net realizable value for new vehicles, the Company primarily
considers the age of the vehicles along with the timing of annual and model changeovers. For used vehicles,
the Company considers seasonality, recent market data and trends such as loss histories along with the current
age of the inventory. The determination of net realizable value for inventories involves the use of estimates.
Redemption liabilities
Redemption liabilities arise during business combinations where non-controlling interest shareholders have the
right to require the Company to redeem their equity interests in certain non-wholly owned subsidiaries (refer to
Note 14). The redemption amounts are determined with reference to the future profitability generated by those
subsidiaries and their operating businesses. The Company will initially recognize a financial liability at the
present value of the estimated redemption amount, and at the end of each subsequent reporting period, the
Company will revisit its estimates. If the Company revises its estimates, the Company will adjust the carrying
amount of the financial liability to reflect revised estimated profitability and the adjustments will be recognized
as income or expenses in the Consolidated Statements of Comprehensive Income.
Page 15 • AutoCanada
Leases
i. Critical judgments in determining the lease term
Extension and termination options are included in a number of property leases held by the Company. In
determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated). Potential future cash outflows have not been included in the lease liability if it is not
reasonably certain that the leases will be extended.
The assessment is reviewed if a significant event or a significant change in circumstances occurs that
affects this assessment and that is within the control of the lessee.
ii. Estimation uncertainty arising from variable lease payments
Certain leases contain variable payment terms that are linked to the consumer price index.
Deferred taxes
The extent to which deferred tax assets are recognized is based on estimates of future profitability.
Management has concluded that it is probable that the deferred tax assets will be recovered using estimated
future taxable income, based on approved business plans and budgets for each segment. The estimates will be
updated in future periods, which may result in increases or decreases in the amount of deferred tax assets
recognized based on the amount judged to be probable of recovery.
2023
$
2022
$
2,554,227 2,160,565
2,870,145
642,665
367,244
2,726,476
782,326
373,774
6,436,803 6,040,619
2,331,387
2023
$
2022
$
1,941,253
2,597,263 2,748,846
289,153
18,494
365,300
21,066
5,315,016 4,997,746
6 Revenue
New vehicles
Used vehicles
Parts, service and collision repair
Finance, insurance and other
Revenue
7 Cost of sales
New vehicles
Used vehicles
Parts, service and collision repair
Finance, insurance and other
Cost of sales
Page 16 • AutoCanada
8 Operating expenses
Employee costs (Note 9)
Government assistance
Administrative costs 1
Expected credit losses on trade and other receivables
Facility lease costs
Depreciation of right-of-use assets (Note 23)
Depreciation of property and equipment (Note 18)
Amortization of intangible assets (Note 19) 1
Operating expenses
2023
$
583,553
—
264,973
2,583
5,152
33,443
25,030
529
2022
$
520,515
(264)
234,742
1,273
2,745
30,781
20,852
374
915,263
811,018
1 Reclassification of comparative figure for presentation purposes. The Company previously included amortization of
intangibles assets in administrative expenses. Prior year comparative has been revised by reclassifying $374 out of
administrative costs and presented on a separate line.
9 Employee costs
Operating expenses incurred in respect of employees were as follows:
Wages, salaries and commissions
Withholding taxes and insurance
Employee benefits
Share-based compensation (Note 28)
Other benefits
Employee costs
10 Lease and other income and gain (loss) on disposal of assets, net
Lease and other income
Lease and rental income
Other income
Gain (loss) on disposal of assets, net
Gain on lease terminations, net
Gain (loss) on disposals of property and equipment, net
2023
$
478,637
33,970
27,340
43,210
396
2022
$
461,260
27,182
23,593
5,801
2,679
583,553
520,515
2023
$
8,824
4,332
13,156
328
94
422
2022
$
8,083
6,218
14,301
—
(296)
(296)
Page 17 • AutoCanada
11 Finance costs and finance income
Finance costs
Interest on long-term indebtedness
Interest on lease liabilities (Note 23)
Loss on extinguishment of debt (Note 22)
Unrealized fair value changes on non-hedging instruments (Note 24)
Amortization of terminated hedges (Note 24)
Loss on extinguishment of embedded derivative
Floorplan financing
Interest rate swap settlements (Note 24)
Other finance costs
Finance income
Interest on net investment in lease (Note 23)
Short-term bank deposits
2023
$
2022
$
40,911
33,019
1,382
928
3,067
—
79,307
68,596
(6,624)
4,660
29,325
29,828
9,860
(9,303)
3,268
29,306
92,284
33,644
1,084
4,466
145,939
131,478
61
3,285
3,346
64
4,080
4,144
Page 18 • AutoCanada
12 Taxation
Reconciliation of effective income tax rate for the year ended December 31, 2023 is as follows:
Income for the year before tax
Income for the year before tax multiplied by the blended rate of Canadian corporate
tax of 25.4% (2022 - 25.5%)
Effects of:
Tax losses and deductible temporary differences not recognized
Adjustment in respect of prior years
Impact of non-deductible and other permanent items
Impact of recovery of non-financial assets
Impact of change in substantively enacted rates
Foreign and other statutory income tax rate differentials
Other, net
Income tax expense
Effective income tax rate
Segmented components of income tax:
Canada
U.S.
Current income tax expense
Canada
U.S.
Deferred income tax expense
Total income tax expense
Components of deferred income tax:
Deferred tax asset
Deferred tax liability
Net deferred tax liability
2023
$
84,365
2022
$
123,884
21,429
31,590
452
123
8,341
(225)
18
198
248
30,584
36.3 %
2023
$
21,964
(115)
21,849
8,735
—
8,735
(1,810)
(709)
3,327
(500)
(268)
1,223
(29)
32,824
26.5 %
2022
$
40,347
3,198
43,545
(10,721)
—
(10,721)
30,584
32,824
2023
$
35,444
(55,768)
2022
$
40,984
(50,910)
(20,324)
(9,926)
Page 19 • AutoCanada
The movements of deferred tax assets and liabilities are shown below:
Deferred
income from
partnerships
$
Property
and
equipment
$
668
Intangible
assets
and
goodwill
$
Right-of-
use assets
net of lease
liabilities
$
Derivative
financial
instruments
$
Non-
capital
losses
$
Share-
based
payments
$
Other
Total
$
$
4,537 3,635 (12,933)
(14,422)
(28,577)
10,887
(6,471) 16,810
9,816
(753)
(6,098)
1,959
4,950 (1,604)
(359) 2,810 10,721
—
—
—
—
(1,688)
—
— —
(1,688)
—
—
—
—
—
—
(2,401) —
(2,401)
—
—
(673)
(3,743)
—
866
—
—
—
—
—
—
— —
(4,416)
—
(75)
791
(4,606)
(758)
(37,552)
12,846
(3,209) 15,206
1,777 6,370 (9,926)
(2,173)
(703)
(3,113)
1,886
(320) (4,249)
1,015 (1,078)
(8,735)
—
—
—
—
(458)
—
— —
(458)
—
—
—
—
—
—
(760) —
(760)
—
—
(151)
25
(314)
—
—
—
—
—
—
— —
(151)
—
(5)
(294)
(6,779)
(1,587)
(40,979)
14,732
(3,987) 10,957
2,032 5,287 (20,324)
Deferred tax assets
(liabilities)
January 1, 2022
Benefit (expense)
charged to income
taxes
Amounts charged
to other
comprehensive
income
Amounts charged
to contributed
surplus (deficit)
Acquisition of
subsidiaries
(Note 13)
Other
December 31,
2022
(Expense) benefit
charged to income
taxes
Amounts charged
to other
comprehensive
income
Amounts charged
to contributed
surplus (deficit)
Acquisition of
subsidiaries
(Note 13)
Other
December 31,
2023
Changes in the deferred income tax components are adjusted through deferred tax expense. Of the above
components of the deferred income tax (liability) asset, ($6,779) (2022 - $(4,606)) is expected to be recovered
within 12 months.
The recognized and unrecognized deductible temporary differences relating to the U.S. Operations are as
follows:
Total U.S. deductible temporary differences
xxxx
128,543
129,385
Less:
U.S. unrecognized deductible temporary differences, other than tax losses
U.S. unrecognized tax losses
Total unrecognized deductible temporary differences
Total recognized deductible temporary differences relating to the U.S Operations
Recognized deferred tax asset
(25,637)
(46,722)
(56,521)
(35,162)
(82,158)
(81,884)
46,385
13,226
47,501
13,544
2023
$
2022
$
Page 20 • AutoCanada
As at December 31, 2023, the Company has recognized the benefit of $46,385 (2022 - $47,501) of the
deductible temporary differences, relating to the U.S. Operations, as a deferred tax asset. The Company has
concluded that it is probable that the recognized deferred tax assets will be recovered using estimated future
taxable income, based on approved business plans and budgets for the segment. This estimate will be
updated in future periods, which may result in increases or decreases in the amount of deferred tax assets
recognized based on the amount judged to be probable of recovery.
The Company's U.S. Operations have federal and state net operating losses of $56,521 and $71,989,
respectively (2022 - $35,162 and $52,797). The federal losses can be carried forward indefinitely, while the
state losses expire, between 2038 and 2043.
The Company also has Canadian non-capital losses of $45,619 (2022 - $64,523) available to reduce future
taxable income, until their expiry between 2032 and 2043.
Page 21 • AutoCanada
13 Business acquisitions
During the year ended December 31, 2023, the Company completed the following business acquisitions that
have been accounted for using the acquisition method.
Acquisition of DCCHail
On February 23, 2023, the Company acquired 100% of the shares of 5121175 Manitoba Ltd. ("DCCHail"), a
paintless dent repair service provider operating throughout western Canada. The acquisition supports
management's strategic objectives of expanding the Company's collision centre capacity.
Acquisition of Premier Chevrolet Cadillac Buick GMC Dealership and Collision Centre
On April 17, 2023, the Company acquired substantially all of the assets of Premier Chevrolet Cadillac Buick GMC
Dealership and Collision Centre in Windsor, Ontario. The acquisition supports management's strategic
objectives of further expanding the Company's automobile dealership presence and collision capacity in the
province of Ontario.
Acquisition of London Auto Collision Limited
On May 1, 2023, the Company acquired 100% of the shares of London Auto Collision Limited, a collision centre
located in London, Ontario. The acquisition supports management's strategic objectives of expanding the
Company's collision centre capacity.
Summary of acquisitions
The estimated provisional purchase price allocations, which are subject to the finalization of the valuation of
acquired assets and assumed liabilities, of the business acquisitions completed during the year ended
December 31, 2023 are summarized as follows:
Current assets
Cash
Trade and other receivables
Inventories
Long-term assets
Property and equipment
Right-of-use assets
Intangible assets
Total assets
Current liabilities
Trade and other payables
Revolving floorplan facilities
Lease liabilities
Other liabilities
Long-term liabilities
Lease liabilities
Deferred income tax
Total liabilities
Net identifiable assets acquired
Goodwill
Total net assets acquired
Total consideration
Page 22 • AutoCanada
Total
$
1,124
1,828
5,388
8,340
6,751
6,205
18,940
40,236
1,495
—
149
517
2,161
6,056
151
8,368
31,868
16,283
48,151
48,151
The goodwill is attributable to the workforce, synergies from combining operations of the acquirees and
profitability of the acquired businesses. Goodwill of $101 is deductible for tax purposes.
Intangible assets relate to indefinite-life franchise rights associated with the respective dealership and
certifications related to the respective collision centre.
The results of operations of the acquired entities are included in the Consolidated Statements of
Comprehensive Income from the date of acquisition. Such results of operations and the related assets and
liabilities at the statement of financial position date are included in the Consolidated Statements of Financial
Position.
The results of operations of the acquired entities since the acquisition dates contributed $75,123 of revenue
and $2,950 of net income to the Consolidated Statements of Comprehensive Income for the period ended
December 31, 2023. Had the acquisitions occurred at January 1, 2023, consolidated pro-forma revenue and net
income for the period ended December 31, 2023 would have been $6,464,694 and $53,625 respectively.
These amounts have been calculated using the subsidiary's results and adjusting them for:
● Income tax expense (recovery);
● Interest on long-term indebtedness; and
● Leasing arrangements as if they had been entered into on January 1, 2023.
Transaction costs of $357 have been expensed and recorded in operating expenses.
Prior year business acquisitions
For the year ended December 31, 2023, the provisional amounts previously disclosed were finalized as follows:
● Cash consideration increased by $146
● Trade and other receivables decreased by $3,494
● Inventory increased by $477
● Property, plant, and equipment decreased by $209
● Goodwill increased by $3,755
● Trade and other payables increased by $262
● Deferred tax liabilities increased by $119
The above changes were adjusted prospectively in the 2023 financial statements.
Acquisitions in 2022 prior to adjustments of provisional amounts
During the year ended December 31, 2022, the Company completed the following business acquisitions that
have been accounted for using the acquisition method.
Audi Windsor and Porsche Centre London
On May 2, 2022, the Company acquired substantially all of the assets to be used in the operations of the Audi
Windsor and Porsche Centre London dealerships. The acquisition supports management's strategic objectives
of further establishing the Company's presence in the province of Ontario.
Burwell Auto Body
On June 30, 2022, the Company acquired 100% of the shares of Burwell Auto Body Limited ("Burwell Auto
Body"), a luxury-brand focused collision centre in London, Ontario. The acquisition supports management's
strategic objectives of expanding the Company's collision centre capacity, and also allows the Company to
leverage existing dealerships in Ontario.
Kelleher Ford Dealership and Collision Centre
On August 2, 2022, the Company acquired 100% of the shares of Kelleher Ford Dealership and Collision Centre
("Kelleher Ford"), a new and used vehicle Ford dealership and collision centre in Brandon, Manitoba. The
acquisition supports management's strategic objectives of expanding the Company's presence in the province
of Manitoba and collision centre capacity.
Velocity Autobody
On August 12, 2022, the Company acquired 100% of the shares of Velocity Auto Body Inc. ("Velocity
Autobody"), a
in Markham, Ontario. The acquisition supports
management's strategic objectives of expanding the Company's collision centre capacity, and also allows the
Company to leverage existing dealerships in Ontario.
luxury-brand focused collision centre
Page 23 • AutoCanada
Auto Gallery of Winnipeg
On September 22, 2022, the Company acquired 100% of the shares of Auto Gallery of Winnipeg Inc. ("Auto
Gallery of Winnipeg"), an independent used vehicle dealership in Winnipeg, Manitoba. The acquisition supports
management's strategic objectives of expanding the Company's Used Digital Division in the province of
Manitoba and provides a central logistics hub.
North Toronto Auction
On September 28, 2022, the Company acquired 100% of the shares of Northern Auto Auctions of Canada Inc.
("North Toronto Auction"), an entity that operates the North Toronto Auction, a fee-based used vehicle auction
business, serving dealers and consumers, located in Innisfil, Ontario. The acquisition forms part of
management's strategic objective of expanding the Used Digital Division in the Canadian pre-owned vehicle
market.
Kavia Auto Body
On October 27, 2022, the Company acquired 100% of the shares in Kavia Auto Body Inc. ("Kavia Auto Body"), a
collision repair facility in Saskatoon, Saskatchewan. The acquisition supports management's strategic objective
of expanding the Company's collision centre capacity.
Excellence Auto Collision
On November 7, 2022, the Company acquired 100% of the shares in Excellence Auto Collision Limited, an entity
that operates Excellence Auto Collision Silver Star and Excellence Auto Collision Midwest ("Excellence Auto
Collision Centres"), both luxury-brand focused collision repair facilities in Scarborough, Ontario and Toronto,
Ontario. The share purchase agreement contains a contingent consideration element that requires the
Company to pay the former owners up to a maximum of $4,000 if certain performance targets are met for each
of the three years ending December 31, 2025. The estimated fair value of the contingent consideration
arrangement is $nil as at the acquisition date and as at the year end December 31, 2023. The acquisition
supports management's strategic objective of expanding the Company's collision centre capacity.
Sterling Honda
On December 1, 2022, the Company acquired substantially all of the assets to be used in the operations of
Sterling Honda ("Sterling Honda"), a new and used Honda dealership in Hamilton, Ontario. The acquisition
supports management's strategic objectives of further establishing the Company's presence in the province of
Ontario.
Page 24 • AutoCanada
Summary of acquisitions
The estimated provisional purchase price allocations, which are subject to the finalization of the valuation of
acquired assets and assumed liabilities, of the business acquisitions completed during the year ended
December 31, 2022 are summarized as follows:
Current assets
Cash
Trade and other receivables
Inventories
Long-term assets
Property and equipment
Right-of-use assets
Intangible assets
Total assets
Current liabilities
Trade and other payables
Revolving floorplan facilities
Lease liabilities
Other liabilities
Long-term liabilities
Lease liabilities
Deferred income tax (Note 12)
Total liabilities
Net identifiable assets acquired
Goodwill
Total net assets acquired
Total consideration
Dealership
Acquisitions
$
Used Digital
Division
Acquisitions
$
Collision
Centre
Acquisitions
$
Total
Acquisitions
$
27
5,147
14,091
19,265
37,966
6,455
83,085
146,771
4,127
7,269
642
137
12,175
5,813
2,003
19,991
126,780
8,100
134,880
134,880
2,596
1,741
3,869
8,206
2,388
10,732
—
21,326
3,071
—
387
—
3,458
10,344
169
13,971
7,355
3,834
11,189
11,189
1,150
8,295
1,324
10,769
7,223
16,018
13,217
47,227
8,489
—
1,373
1,144
11,006
14,646
2,244
27,896
19,331
13,255
32,586
32,586
3,773
15,183
19,284
38,240
47,577
33,205
96,302
215,324
15,687
7,269
2,402
1,281
26,639
30,803
4,416
61,858
153,466
25,189
178,655
178,655
The goodwill is attributable to the workforce, synergies from combining operations of the acquirees and
profitability of the acquired businesses. Goodwill of $5,042 is deductible for tax purposes.
Intangible assets relate to indefinite-life franchise rights associated with the respective dealerships and
certifications related to the respective collision centres.
The results of operations of the acquired entities are included in the Consolidated Statements of
Comprehensive Income from the date of acquisition. Such results of operations and the related assets and
liabilities at the statement of financial position date are included in the Consolidated Statements of Financial
Position.
The results of operations of the acquired entities since the acquisition dates contributed $110,039 of revenue
and $4,755 of net income to the Consolidated Statements of Comprehensive Income for the year ended
December 31, 2022. Had the acquisitions occurred at January 1, 2022, consolidated pro-forma revenue and net
income for the year ended December 31, 2022 would have been $6,188,829 and $91,643 respectively. These
pro-forma results are not necessarily representative of future performance.
Transaction costs of $773 have been expensed and recorded in operating expenses.
Page 25 • AutoCanada
14 Interest in subsidiaries
Certain subsidiaries of the Company have non-controlling interests ("NCI") held by other parties. The interests
in these subsidiaries are summarized as follows:
Subsidiary
Ericksen M-B Ltd.
GI G Auto HoldCo Inc.
WBG Auto HoldCo Ltd.
WAM Motors LP
Brantford Auto LP
PCCBG Auto HoldCo Inc.
15154871 Canada Inc.
AutoCanada C Holdings Inc.
Canbec Automobile Inc.
156023 Canada Inc.
Auto Bugatti Inc.
RS M Motors LP
NBFG Auto Holdco Inc..
2282239 Alberta Ltd.
2282237 Alberta Ltd.
Principal place of
business
Alberta
British Columbia
Manitoba
Manitoba
Ontario
Ontario
Ontario
Quebec
Quebec
Quebec
Quebec
Quebec
Saskatchewan
Saskatchewan
Saskatchewan
Proportion of
ownership
interests held by
non-controlling
interests
10 %
10 %
10 %
5 %
10 %
5 %
10 %
15 %
15 %
— %
25 %
5 %
5 %
10 %
10 %
Proportion of
voting rights held
by non-
controlling
interests
10 %
10 %
10 %
5 %
10 %
5 %
— %
15 %
15 %
— %
25 %
5 %
5 %
10 %
10 %
The subsidiaries are companies that own automotive dealerships and related businesses. For purposes of
disclosure, the non-controlling interest profit and loss, and accumulated non-controlling interest of the
subsidiaries at the end of the reporting period are reported in aggregate as the subsidiaries are similar in nature
and risk, based on assessment of the interest and industry classification.
The Company provides long-term loans to specific NCI parties, and these are presented as other assets (Note
20).
Used Digital Division
A wholly owned subsidiary of the Company is the general partner of AutoCanada UD LP, a limited partnership
("the Partnership") that holds the interest in the used car dealerships acquired as a part of the used digital
strategy. The non-controlling unitholders hold put options where they can sell their units back to the
Partnership. These put options are recognized as redemption liabilities, measured at fair value at each reporting
date, with subsequent changes recognized on the Consolidated Statements of Comprehensive Income.
On December 27, 2023, the Company sold a 10% equity interest in 15154871 Canada Inc., a newly formed
subsidiary of the Partnership, that will sell finance, insurance, and warranty products to buyers of private
owner-sold vehicles on Kijiji's online marketplaces (the "Online C2C F&I Business") for $25,000 to a non-
controlling shareholder. The arrangement contains put options whereby the non-controlling shareholder is able
to sell its shares back to the Company. The put options are recognized as redemption liabilities, measured at
their fair value on the Consolidated Statements of Financial Position. The fair value is determined based on the
equity value of the related subsidiary. The arrangement also contains a call option whereby the Company is
able to purchase the shares from the non-controlling shareholder at the higher of $75,000 and the fair value of
such shares. The call option is recognized as a financial asset, measured at fair value on the Consolidated
Statements of Financial Position. The fair value is determined based on the equity value of the related
subsidiary. The fair value of the call option and associated financial asset has been determined as $nil as at
December 31, 2023, as a result of the investment in the Online C2C F&I Business.
On December 27, 2023, the Company completed the purchase of the minority 19.1% interest (the "UD LP
Minority Interest") in the Partnership from the company controlled by the Executive Chair and dealership
management. The aggregate purchase consideration of $37,775 consisted of $23,944 in cash, funded from the
proceeds of the Online C2C F&I Business investment, $7,500 in stock units, and $6,331 in performance share
units (Note 28). The fair value of the transaction was determined to be $37,775.
Page 26 • AutoCanada
The share-based payment arrangement contained in the equity interests held by the company controlled by the
Executive Chair and dealership management were modified concurrent with the purchase of the UD LP Minority
Interest (the "Digital Plan Modifications"). The $36,725 change in fair value of the put options and associated
redemption liabilities held by the UD LP Minority Interest was recognized in share-based compensation expense
(Note 28).
The fair value of the put options and associated redemption liabilities has been determined as $25,000 (2022 -
$1,050) as at December 31, 2023, as a result of the investment in the Online C2C F&I Business.
Other Redemption liabilities
Certain NCI entities contain put options, whereby the non-controlling shareholders are able to sell their shares
back to the Company. These put options are recognized as redemption liabilities, measured at their fair value
on the Consolidated Statements of Financial Position. The fair value is determined based on the equity value of
the related subsidiary (Note 32). Those options eligible to be executed in the next fiscal year are presented as
current liabilities.
The continuity of the aggregate redemption liabilities is summarized as follows:
Beginning of period
Additions in the year
Adjustment to fair value - Used Digital Division (Note 28)
Derecognition on settlement
Adjustment to fair value - other
End of period
Current redemption liabilities
Long-term redemption liabilities
15 Trade and other receivables
Trade receivables
Sales tax receivable
Other receivables
Less: Expected loss allowance (Note 31)
Trade and other receivables
December 31,
2023
$
December 31,
2022
$
27,269
25,000
36,725
(37,775)
(3,639)
47,580
22,580
25,000
22,332
—
391
(283)
4,829
27,269
26,219
1,050
December 31,
2023
$
185,919
25,341
14,064
225,324
(3,248)
222,076
December 31,
2022
$
162,118
44,256
13,122
219,496
(1,706)
217,790
The Company is exposed to normal credit risk with respect to its accounts receivable and maintains provisions
for expected credit losses (Note 31). Potential for such losses is mitigated because there is no significant
exposure to any single customer and because customer creditworthiness is evaluated before credit is
extended.
Page 27 • AutoCanada
16 Inventories
New vehicles
Demonstrator vehicles
Used vehicles
Parts and accessories
Inventories
December 31,
2023
$
542,978
78,092
475,126
58,115
1,154,311
December 31,
2022
$
327,866
65,994
533,024
52,656
979,540
Amounts recognized in the Consolidated Statements of Comprehensive Income:
Inventory expensed as cost of sales
Writedowns on vehicles included in cost of sales
Demonstrator expenses included in administrative costs
December 31,
2023
$
5,243,142
13,008
13,406
December 31,
2022
$
4,896,720
29,051
11,228
For the year ended December 31, 2023, the Company performed a comprehensive assessment on the net
realizable value of inventory. Provisions recorded on inventory were based on specific criteria regarding model
and year of production and reflect management's estimate of market pricing trends and seasonality.
17 Assets held for sale
Land and buildings
As a result of a settlement agreement announced on September 8, 2023, the Company has committed to sell
specific land and buildings in British Columbia and Alberta, which are included in the Canadian Operations
segment. The net assets have been reclassified as held for sale in these Consolidated Statements of Financial
Position
As at December 31, 2023, assets held for sale in the Canadian Operations segment include land and buildings
of $22,152 (2022 - $nil).
Page 28 • AutoCanada
18 Property and equipment
Company
& lease
vehicles
$
Leasehold
improvements
$
Machinery
&
equipment
$
Land &
buildings1, 2
$
Furniture,
fixtures &
other
$
Computer
equipment
$
Total
$
36,988
—
70,694
6,426
37,099
5,990
161,463
29,343
17,070
3,972
12,024 335,338
1,676 47,407
104
—
—
3,425
—
(90)
2,688
—
(291)
40,014
15,790
(36)
860
—
(175)
486 47,577
15,790
(1,308)
—
(716)
3,596
—
—
—
—
—
3,596
351
41,039
—
2,994
—
—
151
80,606
24,421
393
45,879
6,530
768
247,342
25,807
165
21,892
2,948
85
1,913
13,555 450,313
3,349 63,055
393
—
(721)
3,304
—
(549)
—
7,659
(581)
207
(11)
(791)
—
—
13
—
—
—
(29,891)
—
—
55
—
(67)
—
—
—
5
—
(2,192)
6,751
7,659
(4,110)
—
(595)
—
(29,891)
—
13
(156)
(129)
(181)
(436)
(71)
44,097
104,559
54,192
249,900
24,757
14,685
(32)
(1,005)
492,190
Cost:
January 1, 2022
Capital expenditures
Business combinations
(Note 13)
Acquisition of real estate
Disposals
Transfer from inventory,
net
Foreign currency
translation
December 31, 2022
Capital expenditures
Business combinations
(Note 13)
Acquisition of real estate
Disposals
Prior year business
acquisitions (Note 13)
Transfers to assets held
for sale
Transfers from inventory,
net
Foreign currency
translation
December 31, 2023
Accumulated
depreciation:
January 1, 2022
Depreciation (Note 8)
Disposals
Transfers to inventory, net
Foreign exchange
December 31, 2022
Depreciation (Note 8)
Disposals
Prior year business
acquisitions (Note 13)
Transfers to assets held
for sale
Transfers to inventory, net
Foreign exchange
December 31, 2023
(6,985)
(4,781)
—
3,247
(30)
(8,549)
(5,774)
—
(20,026)
(3,315)
33
—
(31)
(23,339)
(4,447)
544
(19,810)
(4,668)
176
—
(188)
(24,490)
(5,091)
441
(23,345)
(4,620)
—
—
(5)
(27,970)
(5,307)
591
(9,555)
(1,687)
156
—
(89)
(11,175)
(2,707)
93
147
—
(56)
(7,508) (87,229)
(1,781) (20,852)
512
3,247
(399)
(9,198) (104,721)
(1,704) (25,030)
3,802
2,133
—
—
386
—
—
—
386
—
3,694
17
(10,612)
—
—
19
(27,223)
—
—
97
(28,657)
7,739
—
6
—
—
44
(24,941) (13,745)
—
—
26
7,739
3,694
209
(8,743) (113,921)
Carrying amount:
December 31, 2022
December 31, 2023
32,490
33,485
57,267
77,336
21,389
25,535
219,372
224,959
10,717
11,012
4,357
5,942
345,592
378,269
1 As at December 31, 2023, the Company owns land of $78,724 (2022 - $88,250), which is not subject to depreciation.
2 As at December 31, 2023 $53,412 (2022 - $35,683) of construction-in-progress amounts are included in land and buildings
and are not subject to depreciation until the assets are available for use.
Page 29 • AutoCanada
Fully depreciated assets are retained in cost and accumulated depreciated accounts until such assets are
removed from service. Proceeds from disposal are netted against the related assets and the accumulated
depreciation are included in the Consolidated Statements of Comprehensive Income.
Land and building additions are used for Open Point opportunities as well as dealership relocations, dealership
re-imagings, and also include the purchase of a previously leased dealership property.
The Company started the construction of a dealership in Maple Ridge, British Columbia facility on January 24,
2022. This project will be completed in 2024. The construction is financed with the Company's non-revolving
term facilities (Note 22).
The amount of borrowing costs capitalized during the year ended December 31, 2023 was $1,077 (2022 - $409).
During the year ended December 31, 2023, management did not identify any assets that were impaired and no
(2022 - $nil) impairment losses were recorded.
Page 30 • AutoCanada
19 Intangible assets and goodwill
Intangible assets consist of rights under franchise agreements with automobile manufacturers and internally
generated software costs. Intangible assets and goodwill are tested for impairment annually as at December 31
or more frequently, if events or changes in circumstances indicate that they may be impaired.
The net (recoveries) of impairment were allocated to the assets of the respective CGU’s as follows:
Intangible assets
December 31,
2023
$
(3,538)
December 31,
2022
$
(8,691)
The changes in the book value of intangible assets and goodwill for the year ended December 31, 2023 were as
follows:
Cost:
January 1, 2022
Acquisitions (Note 13)
Additions
Prior year business acquisitions
Effect of foreign currency translation
December 31, 2022
Acquisitions (Note 13)
Additions
Prior year business acquisitions (Note 13)
Effect of foreign currency translation
December 31, 2023
Accumulated amortization and impairment:
January 1, 2022
Recoveries of impairment
Amortization of intangible assets (Note 8)
Effect of foreign currency translation
December 31, 2022
Impairment
Recoveries of impairment
Amortization of intangible assets (Note 8)
Effect of foreign currency translation
December 31, 2023
Carrying amount:
December 31, 2022
December 31, 2023
695,660
186,940
18,940
2,102
—
(1,273)
16,283
—
3,755
(2,099)
715,429
204,879
Intangible
assets
$
592,698
96,302
3,192
—
3,468
44,449
(8,691)
374
267
36,399
2,131
(5,669)
529
(98)
33,292
659,261
682,137
Goodwill
$
Total
$
154,363
25,189
—
1,672
5,716
103,402
—
—
5,454
108,856
—
—
—
(2,243)
106,613
747,061
121,491
3,192
1,672
9,184
882,600
35,223
2,102
3,755
(3,372)
920,308
147,851
(8,691)
374
5,721
145,255
2,131
(5,669)
529
(2,341)
139,905
78,084
98,266
737,345
780,403
Additions to intangible assets for internally generated software costs have a finite useful life.
The net (recoveries) of impairment for the year ended December 31, 2023 relates to the Company's reportable
segments as follows:
Intangible assets
Canadian
Operations
$
(3,538)
U.S.
Operations
$
—
Total
$
(3,538)
Page 31 • AutoCanada
Carrying value
CGUs have been determined to be individual dealerships. The following table shows the carrying amount of
indefinite-lived identifiable intangible assets and goodwill by CGU:
Cash Generating Unit
AL
AF
CI
AZ
U
AD
AX
S
D
AO
AH
CR
T
BS
BI
AK
Q
G
X
I
P
AE
CG
AP
AI
CF
CK
M
A
AR
CY
Other CGUs less than $10,000 1
Carrying amount
Intangible
assets
27,807
29,495
27,265
21,250
24,494
22,300
23,306
21,806
18,044
21,687
20,384
18,940
18,599
15,335
10,305
15,306
18,196
14,235
14,065
15,520
15,078
14,496
0
12,496
11,470
13,102
10,990
11,549
14,681
9,263
9,424
161,249
682,137
December 31, 2023
$
Goodwill
Total
6,135
922
2,919
3,970
506
2,629
—
—
3,724
—
—
382
—
3,029
6,887
—
—
1,677
1,740
—
—
—
14,233
941
1,903
—
1,132
—
—
950
628
43,959
98,266
33,942
30,417
30,184
25,220
25,000
24,929
23,306
21,806
21,768
21,687
20,384
19,322
18,599
18,364
17,192
15,306
18,196
15,912
15,805
15,520
15,078
14,496
14,233
13,437
13,373
13,102
12,122
11,549
14,681
10,213
10,052
205,208
780,403
Intangible
assets
27,807
29,495
27,265
21,250
24,494
22,300
—
21,806
18,044
21,687
20,384
—
18,599
15,335
10,305
15,306
16,824
14,235
14,065
15,520
15,078
14,496
1,570
12,496
11,470
1,248
10,990
11,549
10,384
9,263
—
205,996
659,261
December 31, 2022
$
Goodwill
Total
6,135
1,026
2,919
3,970
506
2,629
—
—
3,724
—
—
—
—
3,058
4,230
—
—
1,677
1,740
—
—
—
—
941
1,927
—
1,132
—
—
950
—
41,520
78,084
33,942
30,521
30,184
25,220
25,000
24,929
—
21,806
21,768
21,687
20,384
—
18,599
18,393
14,535
15,306
16,824
15,912
15,805
15,520
15,078
14,496
1,570
13,437
13,397
1,248
12,122
11,549
10,384
10,213
—
247,516
737,345
1 CGUs under $10,000 have been aggregated together, determined to be appropriate given the size of the Company.
Page 32 • AutoCanada
Impairment charges (recoveries)
Canadian Operations
For the year ended December 31, 2023, two Canadian dealerships (2022 - two) recorded recoveries of
impairment on indefinite-lived identifiable intangible assets amounting to $(5,669) (2022 - $(8,691)). For the
year ended December 31, 2023, one dealership recorded an impairment charge on indefinite-lived identifiable
intangible assets amounting to $2,131 (2022 - $nil). For the year ended December 31, 2023, $nil (2022 - $nil)
impairment charges on goodwill were recorded. The impairment charges and recoveries for all three
dealerships were determined using the value in use ("VIU") method.
U.S. Operations
For the year ended December 31, 2023, no U.S. dealerships recorded impairment charges on indefinite-lived
identifiable intangible assets and goodwill (2022 - none).
The valuation methodology used to assess the recoverable value of the CGUs uses level 2 inputs, indirectly
derived from the market, where possible, for key assumptions such as the discount rate. Where level 2 inputs
are not available, as is the case with the growth rate, the Company uses level 3 inputs, which are unobservable
to the market, but reflect management’s best estimates from historical performance and expectations for the
future.
Recoverable amounts
The following table shows the recoverable amounts of CGUs, with impairments or recoveries of impairments
recorded in either the current year or prior year, that have not been fully impaired:
Canadian Operations
Cash Generating Unit
Q
AJ
A
AH
Other CGUs less than $10,000
U.S. Operations
FVLCD or
VIU
VIU
VIU
VIU
VIU
FVLCTS
December 31,
2023
$
24,654
11,273
17,900
55,044
6,503
December 31,
2022
$
20,313
13,044
12,781
28,400
6,297
There were no CGUs in the U.S. Operations segment with impairments or recoveries of impairments recorded in
either the current year or prior year.
Impairment test of indefinite life intangible assets
The assumptions and sensitivities applied in the intangible assets impairment test are described as follows:
Valuation techniques
The Company did not make any changes to the valuation methodology used to assess impairment in the
current year. The recoverable amount of each CGU is based on the greater of fair value less cost to dispose and
value in use.
Value in use
VIU is predicated upon the value of the future cash flows that a business will generate going forward. The
DCF method is used, which involves projecting cash flows and converting them into a present value
equivalent through discounting. The discounting process uses a rate of return that is commensurate with
the risk associated with the business or asset and the time value of money. This model requires assumptions
about revenue growth rates, operating margins, and discount rates.
Fair value less costs to dispose
Fair value less costs to dispose (“FVLCD”) assumes that companies operating in the same industry will share
similar characteristics and that the Company's values will correlate to those characteristics. Therefore, a
comparison of a CGU to similar companies may provide a reasonable basis to estimate fair value. Under this
model, fair value is calculated based on an applicable multiple applied to projected earnings before interest,
taxes, depreciation, and amortization ("EBITDA"). Data for EBITDA multiples was based on recent comparable
transactions and management estimates. Multiples used in the test for impairment for each CGU were in the
range of 2.5 to 10.0 times forecasted EBITDA (2022 - 2.5 to 8.5 times).
Page 33 • AutoCanada
Significant assumptions for VIU
Projected operating margins and growth rates
The assumptions used are based on the Company’s internal budget, which is approved by the Board of
Directors. The Company projects operating margins and cash flows for a period of one year and applies
growth rates in the cash flow forecast period commensurate with industry forecasts. In arriving at its
forecasts, the Company considers past experiences, economic trends, and inflation as well as industry and
market trends.
Discount rates
The Company applies a discount rate to calculate the present value of its projected cash flows. The discount
rate represents the Company’s internally computed weighted average cost of capital (“WACC”) for each
CGU with appropriate adjustments for the risks associated with the CGUs in which intangible assets are
allocated. The WACC is an estimate of the overall required rate of return on an investment for both debt and
equity owners and serves as the basis for developing an appropriate discount rate. Determination of the
discount rate requires separate analysis of the cost of equity and debt, and considers a risk premium based
on an assessment of risks related to the projected cash flows of each CGU. Management applied a discount
rate between 11.80% and 12.88% in its projections (2022 - 11.42% and 12.72%).
Significant assumptions for FVLCD
Projected EBITDA
The Company’s assumptions for projected EBITDA are based on the Company’s internal budget, which is
approved by the Board of Directors. In arriving at the projected EBITDA, the Company considers projected
operating margins and growth rates as significant assumptions, past experiences, economic trends, and
inflation as well as industry and market trends.
EBITDA multiples
EBITDA multiples are based on recent comparable transactions, market comparatives, and management
estimates.
Sensitivity
As there are CGUs that have intangible assets with original costs that exceed their current year carrying
amounts, the Company expects future impairments and recoveries of impairments to occur as market
conditions change and risk premiums used in developing the discount rate change.
The recoverable amount of each CGU is sensitive to changes in market conditions and could result in material
changes in the carrying value of intangible assets in the future. Based on sensitivity analysis, no reasonably
possible change in key assumptions would cause the recoverable amount of any CGU to have a significant
change from its current valuation except for the CGUs identified below.
CGUs, which use VIU as the basis of recoverable amount, for which a reasonably possible change in key
assumptions would cause an impairment, along with the change required for an impairment to occur are as
follows:
Change in
discount rate
Change in
growth rate
Carrying
amount
$
Recoverable
amount exceeds
carrying amount
$
0.80 %
0.09 %
0.02 %
0.04 %
0.01 %
3.46 %
0.40 %
0.10 %
0.20 %
0.01 %
20,464
18,135
22,117
20,313
13,044
—
—
—
—
—
Cash Generating Unit
December 31, 2023
AE
AK
December 31, 2022
AK
Q
AJ
Page 34 • AutoCanada
CGUs, which use FVLCD as the basis of recoverable amount, for which a reasonably possible change in key
assumptions would cause an impairment, along with the change required for an impairment to occur are as
follows:
Cash Generating Unit
December 31, 2023
CR
December 31, 2022
AE
Change in
multiple
Recoverable
amount
$
Carrying
amount
$
Recoverable
amount exceeds
carrying amount
$
1.4
19,322
19,322
0.1
13,938
13,938
—
—
For the year ending December 31, 2023, the impairment charge and recoveries for all three dealerships were
determined using the value in use ("VIU") method.
20 Other assets
Prepaid expenses
Derivative financial instruments (Note 24)
Other assets
Net investment in lease (Note 23)
Other assets
December 31, 2023
$
December 31, 2022
$
Current
Long-term
Current
13,283
2,318
—
117
15,718
1,346
—
14,498
864
16,708
8,913
1,071
44
114
10,142
Long-term
539
—
15,839
920
17,298
Other assets of $14,498 (2022 - $15,839) relates to long-term loans receivable from the respective non-
controlling interests (Note 14).
21 Trade and other payables
Trade payables
Accruals and provisions
Sales tax payable
Wages and withholding taxes payable
Trade and other payables
December 31,
2023
$
75,079
87,445
32,757
43,146
238,427
December 31,
2022
$
89,765
60,717
31,948
47,266
229,696
The following table provides a continuity schedule of all recorded provisions:
January 1, 2022
Provisions made during the year
Amounts expired or disbursed
December 31, 2022
Provisions made during the year
Amounts expired or disbursed
December 31, 2023
Employee costs
Employee
costs
$
Legal and
other
$
2,237
1,388
(1,247)
2,378
1,244
(2,046)
1,576
6,319
273
(814)
5,778
—
(2,797)
2,981
Total
$
8,556
1,661
(2,061)
8,156
1,244
(4,843)
4,557
The balance represents management's best estimate of the most likely outcome of the Company's liability
associated with termination benefits and employment claims.
Page 35 • AutoCanada
Legal and other
The balance represents the non-recurring legal and loss provision associated with certain wholesale
transactions that occurred in 2018, and management's best estimate of the most likely outcome of the
Company's liability under ongoing legal claims.
22 Revolving floorplan facilities and indebtedness
This note provides information about the contractual terms of the Company’s interest bearing debt, which is
measured at amortized cost. For more information about the Company’s exposure to interest rate, foreign
currency, and liquidity risk, refer to Note 31.
Revolving floorplan facilities
Revolving floorplan facilities - Syndicate (ii)
Revolving floorplan facilities - Ally Financial (viii)
Revolving floorplan facilities - VW Credit Canada, Inc. (iii)
Revolving floorplan facilities - RBC (v)
Revolving floorplan facilities - BMW Financial (iv)
Revolving floorplan facilities - Mercedes-Benz Financial (vii)
Revolving floorplan facilities - GM Financial (vi)
Total revolving floorplan facilities
Indebtedness
Revolving term facilities (ii)
Revolving term facility
Unamortized deferred financing costs
Non-revolving term facilities
Non-recourse mortgages (ix)
Unamortized deferred financing costs
Senior unsecured notes
Senior unsecured notes (i)
Unamortized deferred financing costs
Other debt
Other long-term debt
Total indebtedness
Current indebtedness
Long-term indebtedness
December 31,
2023
$
December 31,
2022
$
728,935
114,639
103,246
69,544
65,810
50,973
41,448
1,174,595
187,000
(778)
186,222
31,235
(47)
31,188
350,000
(4,599)
345,401
111
562,922
744
562,178
636,775
110,619
72,477
33,964
68,355
38,713
31,351
992,254
180,000
(1,412)
178,588
31,979
(77)
31,902
350,000
(5,498)
344,502
136
555,128
777
554,351
The following table shows the movement of indebtedness during the years ended December 31, 2023 and
December 31, 2022:
Balance, January 1
Amortization of deferred financing costs
Amortization of note premium
Extinguishment and revaluation of embedded derivative
Draws and additions
Repayments and redemption
Other
Balance, December 31
Page 36 • AutoCanada
2023
$
555,128
1,220
—
—
674,560
(669,334)
1,348
562,922
2022
$
285,908
1,377
(322)
29,306
1,010,006
(770,064)
(1,083)
555,128
Terms and conditions of outstanding loans are as follows:
i.
The Company has Senior Unsecured Notes ("the New Issuance Notes"), with a $350,000 aggregate
principal amount (2022 - $350,000), issued at par for a stated interest rate of 5.75% (2022 - 5.75%). The
New Issuance Notes have a term of seven years and mature on February 7, 2029. Interest is payable semi-
annually on February 7 and August 7 of each year the New Issuance Notes are outstanding.
The New Issuance Notes agreement contains certain redemption options whereby the Company can
redeem all or part of the New Issuance Notes at prices set forth in the agreement, following certain dates
specified in the agreement. In addition, at any time prior to February 7, 2025, the Company may at its
option redeem up to 40% of the aggregate principal amount of the New Issuance Notes with net cash
proceeds from equity offerings at a specified redemption price in the agreement. The New Issuance Note
holders also have the right to require the Company to redeem the New Issuance Notes or a portion
thereof, at the redemption prices set forth in the agreement in the event of a change in control. These
redemption features constitute embedded derivatives that are required to be separated from the New
Issuance Notes and measured at fair value.
The embedded derivative components of these compound financial instruments are measured at fair
value at each reporting date with gains or losses in fair value recognized through profit or loss. For the
year ended December 31, 2023, the Company recognized an embedded derivative of $nil (2022 - $nil)
related to these redemption options.
ii. On February 3, 2023, the Company amended the $1,300 million syndicated credit agreement with a
syndicate of banks. The amended facility increased the revolving facility to $375 million, increased the
wholesale floorplan financing facility to $1,220 million and maintained a $15 million wholesale leasing
facility, for total aggregate bank facilities of $1,610 million. The amendment included the creation of a
goodwill tranche concept for the revolving facility, applicable changes to the interest rate structure, and
the loan term was extended to April 14, 2026.
Transaction costs of $1,382 (2022 - $9,860) related to the extinguishment of the credit facility were
recognized in finance costs (Note 11).
In the case of advances under the revolving facility, the margins above the prime rate, banker’s
acceptance rate or US base rate are subject to a pricing grid based on the then applicable ratio of senior
net funded debt to EBITDA as noted below. As at December 31, 2023, advances at the prime rate or US
base rate plus 0.75% (2022 - 0.75%) for total of 7.95% (2022 - 7.20%), or at the banker’s acceptance rate
plus 1.75% (2022 - 1.75%) for total of 6.22% (2022 - 6.22%) at December 31, 2023. The wholesale leasing
facilities bear interest rates of Canadian Dollar Offered Rate (“CDOR”) plus 1.75% (2022 - 1.75%) for a total
of 7.15% (2022 - 6.22%). The wholesale floorplan facilities bear interest rates of CDOR plus 1.00% (2022 -
1.00%) for a total of 6.40% (2022 - 5.47%), except for facility for floorplan of used export vehicles, which
bears interest rates of CDOR plus 1.25% (2022 - 1.25%) for total of 6.65% (2022 - 5.72%).
The agreement has certain reporting requirements and financial covenants. The floorplan facility is
collateralized by each individual dealership’s inventories that are directly financed by the facility. The
revolving credit facility is collateralized by certain of the Company’s real property and fixed assets, as well
as certain current receivable and inventory assets not otherwise pledged as collateral.
iii.
iv.
VW Credit Canada, Inc. (“VCCI”) provides floorplan financing for new and used vehicles for all of the
Company’s Volkswagen, Audi, and Porsche dealerships (the “VCCI facilities”). As at December 31, 2023,
the maximum amount of financing was $122,995 (2022 - $122,995). The VCCI facilities bear interest of RBC
prime rate plus 0.00%–0.25% (2022 - 0.00%-0.25%). The RBC prime rate was 7.20% at December 31, 2023
(2022 - 6.45%). The combined total interest rates were 7.20%-7.45% (2022 - 6.45%-6.70%). The VCCI
facilities have certain reporting requirements and financial covenants and are collateralized by all of the
dealerships' assets financed by VCCI. The individual notes payable of the VCCI facilities are due when the
related vehicle is sold.
BMW Financial Services Canada (“BMW Financial”), a division of BMW Canada Inc., provides floorplan
financing for new, used and demonstrator vehicles for all of the Company’s BMW dealerships (the “BMW
Facilities”). As at December 31, 2023, the maximum advance limit was $118,050 (2022 - $118,050). The
BMW Facilities bears interest rate of prime minus 0.40% (2022 - 0.40%) per 360 day annum for a total of
6.80% at December 31, 2023 (2022 - 6.05%). The BMW Facilities have certain reporting requirements and
financial covenants and are collateralized by the dealerships’ movable and immovable property.
Page 37 • AutoCanada
v.
Royal Bank of Canada ("RBC") provides floorplan financing for new, used and demonstrator vehicles for
four of the Company’s dealerships (the “RBC Facilities”). During the first and second quarters of 2023,
amendments were made to the maximum advance limit to $62,500 and $94,500 respectively. As at
December 31, 2023, the maximum advance limit was 99,500 (2022 - $55,000). The RBC Facilities bear
interest rates of RBC’s Cost of Funds Rate plus 0.00%-0.15% (2022 - 0.15%-0.40%). As at December 31,
2023 the RBC’s Cost of Funds Rate was 6.34% (2022 - 5.69%). The combined total interest rates were
6.34%-6.49% (2022 - 5.84%-6.09%). The RBC Facilities have certain reporting requirements and financial
covenants and are collateralized by the new, used, and demonstrator inventory financed by RBC and a
general security agreement from the dealerships financed by RBC.
vi. General Motors Financial of Canada (the "GM Financial Facilities") provides floorplan financing for new,
used, service loaner, and demonstrator vehicles for two of the Company's dealerships. GM Financial
Facilities bear interest of prime rate. As at December 31, 2023, the prime rate was 6.95% (2022 - 6.45%)
and the maximum amount of financing was $51,300 (2022 - $51,300). The GM Financial Facilities have
certain reporting requirements and are collateralized by the new, used, and demonstrator inventory
financed by GM Financial and a general security agreement from the Company's two dealerships financed
by GM Financial.
vii. Mercedes-Benz Financial (the “Mercedes-Benz Facilities”) provides floorplan financing for new, used and
demonstrator vehicles for two of the Company’s dealerships. As at December 31, 2023, the maximum
amount of financing was $65,500 (2022 - $65,500). The facilities bear interest at CDOR plus 1.50%-1.80%
per annum (2022 - 1.75%-2.05%) for total of 6.90%-7.20% (2022 - 6.02%-6.32%). The Mercedes-Benz
Facilities have certain reporting requirements and financial covenants and are collateralized by the new,
used, and demonstrator inventory financed by Mercedes-Benz Financial and a general security agreement
from the Company’s dealerships financed by Mercedes-Benz Financial.
viii. Ally Financial (the "Ally facility") provides U.S. floorplan financing for new, used, and demonstrator
vehicles in the Company's U.S dealerships. As at December 31, 2023, the facility limit was $127,500 USD
(2022 – $127,500 USD). The Ally facility bears interest at the Ally Bank prime rate. As at December 31,
2023, the Ally prime rate was 8.50% (2022 - 7.50%). The floorplan facility has certain reporting
requirements and financial covenants and is collateralized by each individual dealership’s inventories that
are directly financed by the facility.
ix.
The Company executed a non-recourse mortgage financing for a previously purchased property in Maple
Ridge, BC. The non-recourse mortgage arrangement funds land value as well as construction costs
associated with the development of two dealerships. The mortgage is comprised of three facilities with an
aggregate $39.0 million limit (2022 - $39.0 million), at a variable interest rate of prime + 1.50% (2022 -
1.50%) with a combined total rate of 8.70% as at December 31, 2023 (2022 - 7.95%). The mortgage has a
three-year term, twenty-year amortization, and will require monthly interest-only payments until
construction is complete. As at December 31, 2023, the Company has drawn $13.6 million (2022 - $13.6
million) on the facilities to fund land value only.
The Company has executed two non-recourse mortgage financings for previously purchased properties in
Windsor, ON and London, ON. The $7.1 million and $11.5 million non-recourse mortgage arrangements
(2022 - $7.1 million and $11.5 million), respectively, funds land and building value only. The mortgages
have a five-year term with a fixed interest rate of 7.07% (2022 - 7.07%). The mortgages require quarterly
installments of principal and interest based on a twenty-five-year amortization, with the outstanding
mortgage balance due at the end of the term.
The underlying real estate is pledged as collateral on the non-recourse mortgages in the amount of the
loan, as at December 31, 2023 the carrying value of the pledged real estate is $83.3 million (2022 - $46.9
million).
As at December 31, 2023, $0.7 million (2022 - $0.7 million) of non-recourse mortgage loans is classified as
current.
The Company was in compliance with its debt covenants as at December 31, 2023.
Page 38 • AutoCanada
23 Leases
The below table summarizes the right-of-use asset and lease liability movement for the Company's properties:
Right-of-use assets, beginning of period
Additions
Acquisitions (Note 13)
Depreciation (Note 8)
Disposals
Effect of foreign currency translation
Right-of-use assets, end of period
Lease liabilities, beginning of period
Additions
Acquisitions (Note 13)
Repayments
Interest expense (Note 11)
Disposals
Effect of foreign currency translation
Lease liabilities, end of period
Current lease liabilities
Long-term lease liabilities
December 31,
2023
$
December 31,
2022
$
396,369
40,279
6,205
(33,443)
(3,350)
(955)
405,105
370,998
23,095
33,205
(30,781)
(3,024)
2,876
396,369
December 31,
2023
$
December 31,
2022
$
484,877
40,279
6,205
(61,969)
33,019
(3,678)
(1,309)
452,817
23,095
33,205
(56,812)
29,828
(2,930)
5,674
497,424
484,877
28,411
469,013
27,766
457,111
For the year ended December 31, 2023, the Company had total cash outflows relating to the principal portion
for leases of $28,828 (2022 - $27,214).
Other disclosures
Other than depreciation, the following amounts have been recognized in income:
Expenses related to short-term leases (included in operating expenses)
Expenses related to leases of low-value assets that are not shown above as short-
term leases (included in operating expenses)
Income from sub-leasing right-of-use assets (included in lease and other income)
2023
$
798
131
2022
$
37
152
114
190
As at December 31, 2023, potential cash outflows of $669,496 (2022 - $635,856), (undiscounted), have not
been included in the lease liability as it is not reasonably certain the extension options will be exercised. The
financial effect of including reasonably certain extension options in leases liabilities and right-of-use assets is
$107,120 (2022 - $111,146).
Page 39 • AutoCanada
Leases as lessor
Finance lease
For the year ended December 31, 2023, the Company has sub-leased one property that has been presented as a
net investment in lease in other assets (Note 20) and recognized interest income on lease receivables of $61
(2022 - $64) (Note 11).
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments
to be received after December 31, 2023:
2024
2025
2026
2027
Thereafter
Total undiscounted lease receivable
Unearned finance income
Net investment in the lease
24 Derivative financial instruments
Total
$
117
123
127
133
812
1,312
331
981
Derivative financial instruments are held for the purpose of managing exposure to fluctuations in foreign
exchange rates and interest rates.
Foreign exchange risk
The Company uses foreign exchange forward contracts to economically hedge foreign currency risk. These
contracts are not designated as hedges for accounting purposes and changes in fair value are immediately
recognized in net income.
Interest rate risk
The Company enters into interest rate swap agreements to hedge the variable rates of the syndicated floorplan
facility transforming the variable rate exposure to fixed rate obligations. Certain interest rate swaps are
designated as cash flow hedges and periodically assessed for effectiveness. Where the hedging relationship is
assessed as being effective, changes in fair value are recognized in other comprehensive income. Changes in
fair value on derivative instruments not designated as hedging instruments are immediately recognized in net
income.
On September 19, 2023, the Company entered into a new interest rate swap agreement that fixed CDOR at
4.53% with a notional amount of $25,000 to economically hedge the variable rate of debt. This instrument has
a deferred start date of December 1, 2023, and a settlement period of December 2026, with an extended
termination date of December 2028, if the counterparty elects. Changes in the fair value of these instruments
will be recorded in finance costs as the Company has not applied hedge accounting to these contracts.
On November 16, 2023, the Company entered into a new interest rate swap agreement that fixed CDOR at
4.10% with a notional amount of $25,000 to economically hedge the variable rate of debt. This instrument has a
deferred start date of December 1, 2023, and a settlement period of December 2026, with an extended
termination date of December 2028, if the counterparty elects. Changes in the fair value of these instruments
will be recorded in finance costs as the Company has not applied hedge accounting to these contracts.
Swaps currently in place cover approximately 38.11% (2022 - 43.19%) of the variable principle outstanding on
the syndicate revolving floorplan facilities. The swaps fix CDOR rates in the range between 2.19% - 4.53% (2022
- 2.19% - 3.71%) and the variable rates of the wholesale floorplan facilities bears an interest rate of CDOR plus
1.00% (2022 - 1.00%), which, at the end of the reporting period, was 6.40% (2022 - 5.47%).
The swap contracts require settlement of net interest receivable or payable every 28 to 32 days. The settlement
dates coincide with the dates on which interest is payable on the underlying debt.
During the years ended December 31, 2023 and December 31, 2022, there were no changes to the designation
of cash flow hedges.
Page 40 • AutoCanada
The fair values and notional amounts of derivative financial instruments are as follows:
December 31, 2023
Other current assets (Note 20)
Derivative financial instruments - assets
Derivative financial instruments - liabilities
Notional values
Maturity
Change in fair value of outstanding
hedging instruments since January 1
Change in value of hedged item used to
determine hedge effectiveness
December 31, 2022
Other current assets (Note 20)
Other liabilities - current (Note 26)
Derivative financial instruments - assets
Derivative financial instruments - liabilities
Notional values
Maturity
Change in fair value of outstanding
hedging instruments since January 1
Change in value of hedged item used to
determine hedge effectiveness
Foreign exchange
forward contracts
Non-hedges
$
Interest rate swaps
Cash flow hedges
$
Non-hedges
$
Total
$
2,112
—
—
206
—
—
—
3,920
2,219
2,318
3,920
2,219
61,000 USD
50,000 CAD 227,800 CAD
2024
2024
2025 - 2026
—
—
—
155
—
—
(196)
196
1,071
—
913
511
—
—
—
—
4,057
1,428
(196)
196
1,071
155
4,970
1,939
45,100 USD
97,200 CAD
177,800 CAD
2023
2023 - 2024
2025
—
—
3,098
(3,098)
—
—
3,098
(3,098)
The weighted average hedge rate of cash flow hedges was 3.04% (2022 - 2.84%).
Page 41 • AutoCanada
Unrealized and realized pre-tax gains and (losses) on derivative instruments recognized in net income and other
comprehensive income on the Consolidated Statements of Comprehensive Income are:
For the year ended December 31, 2023
Change in fair value of hedging instruments
Unrealized fair value changes on non-hedging instruments
(Note 11)
Amortization of terminated hedges (Note 11)
Interest rate swap settlements (Note 11)
Unrealized fair value changes on foreign exchange forward
contracts
Realized loss on foreign exchange forward contracts
For the year ended December 31, 2022
Change in fair value of hedging instruments
Unrealized fair value changes on non-hedging instruments
(Note 11)
Amortization of terminated hedges (Note 11)
Interest rate swap settlements (Note 11)
Unrealized fair value changes on foreign exchange forward
contracts
Realized loss on foreign exchange forward contracts
Other
comprehensive
income
$
Net income
$
—
(928)
(3,067)
6,624
2,267
(928)
3,968
—
9,303
(3,268)
(1,084)
18
(4,429)
540
(1,267)
—
3,067
—
—
—
1,800
3,382
—
3,268
—
—
—
6,650
Total
$
(1,267)
(928)
—
6,624
2,267
(928)
5,768
3,382
9,303
—
(1,084)
18
(4,429)
7,190
Hedge ineffectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
effectiveness assessments to ensure that an economic relationship exists between the hedged item and
hedging instrument.
The Company enters into interest rate swap agreements that have similar critical terms as the hedged item,
such as interest rate, payment dates, maturities, and notional amount. The Company does not hedge 100% of
its loans, therefore, the hedged item is identified as a proportion of the outstanding loans up to the notional
amount of the swaps. As all critical terms matched during the year, the economic relationship was 100%
effective.
Effect of IBOR reform
Following the financial crisis, the reform and replacement of benchmark interest rates such as CDOR and other
interbank offered rates ("IBORs") has become a priority for global regulators (referred to as "IBOR reform"). The
Canadian Alternative Reference Rate Working Group (CARR) was created to identify and seek to develop a new
risk-free Canadian dollar interest rate benchmark. Although there are no plans to immediately discontinue
CDOR rates, an enhanced Canadian Oversight Repo Rate Average (CORRA) has been designed to comply with
recommendations of the Financial Stability Board as part of a global effort to reform benchmark interest rates.
As a result, while CORRA has been officially announced, it has not been approved and there is uncertainty
about how the Canadian dollar benchmark rates will evolve and the speed at which CORRA will become a
dominant benchmark for Canadian dollar borrowings. All of the Company's hedging instruments are currently
based on CDOR.
Page 42 • AutoCanada
The Company performs a qualitative assessment of hedge ineffectiveness for interest rate swaps, which may
occur due to:
● The credit value/debit value adjustment on the interest rate swaps which is not matched by the loan;
● Differences in critical terms between the interest rate swaps and loans; and
● The effects of the forthcoming reforms to CDOR because these may take effect at a different time
and have a different impact on the hedged item (the floating-rate debt) and the hedging instrument
(the interest rate swap used to hedge the debt).
The associated derivative financial instruments were valued at $206 as at December 31, 2023 (2022 - $1,473).
There was no ineffectiveness for the years ended December 31, 2023 and 2022.
The Company has evaluated the extent to which its cash flow hedging relationships are subject to uncertainty
driven by IBOR reform as at December 31, 2023. As the CDOR rate associated with the derivative financial
instrument was still in effect, there was no impact from the IBOR reform.
25 Vehicle repurchase obligations
The Company operates service loaner programs and provides vehicles to a third-party vehicle rental company
with individual terms not to exceed 12 months, at which time the Company has an obligation to repurchase
each vehicle at a predetermined amount. As a result, the Company has recorded the contractual repurchase
amounts as outstanding vehicle repurchase obligations and has classified the liability as current due to the
short-term nature of the obligation.
26 Other liabilities
Equity forward
Restructuring charges
Derivative financial instruments (Note 24)
Other liabilities
Equity forward liability
December 31, 2023
$
December 31, 2022
$
Current
Long-term
Current
Long-term
11,063
1,262
—
12,325
—
1,368
—
1,368
2,890
1,293
155
4,338
6,201
2,693
—
8,894
The Company has entered into an equity forward purchase agreement with a major Canadian financial
institution to reduce its cash and income exposure to fluctuations in its share price relating to the Restricted
Share Units ("RSUs"), Deferred Share Units ("DSUs"), and Share Appreciation Rights ("SARs"). Pursuant to the
agreement, the Company receives the economic benefit of share price appreciation and suffers the economic
loss of share price depreciation, while providing payments to the financial institution for the institution's cost of
funds minus dividends. As the agreement requires settlement in shares, the liability has been recorded as the
present value of the settlement and is not subject to remeasurement.
On January 25, 2023, the Company amended its existing equity forward agreement for 150,000 common
shares giving the Company and the counterparty the option to settle all of the common shares under the equity
forward agreement in advance of the contractual settlement date.
On June 24, 2023, the Company entered into a new equity forward agreement for a total of 100,000
outstanding common shares with an outstanding liability amounting to $1,972. The equity forward agreement
settles on June 24, 2026, for 100,000 common shares. The Company and the counterparty have the option to
settle the equity forward agreement in advance of the contractual settlement date.
As at December 31, 2023, the Company has equity forward agreements on 350,000 (2022 - 250,000)
outstanding common shares with an outstanding liability amounting to $11,063 (2022 - $9,091). The
outstanding liability is classified as a current liability.
Page 43 • AutoCanada
The following table shows the change in the equity forward liability for the years ended:
Outstanding, beginning of the period
Acquired
Outstanding, end of the period
Restructuring charges
December 31, 2023
December 31, 2022
Number of
shares
250,000
$
9,091
Number of
shares
150,000
100,000
1,972
100,000
350,000
11,063
250,000
$
6,201
2,890
9,091
Restructuring charges are related to the voluntary termination of two franchises in year ended December 31,
2019 and the operating costs of the related leased facility, with $1,288 (2022 - $1,242) being utilized and
recognized in operating expenses (Note 8) during the year ended December 31, 2023.
27 Commitments and contingencies
Lawsuits and legal claims
The Company is engaged in various legal proceedings and claims that have arisen in the ordinary course of
business. The outcome of all of the proceedings and claims against the Company is subject to future resolution,
including the uncertainties of litigation. Based on information currently known to the Company and after
consultation with outside legal counsel, management believes that the probable ultimate resolution of any such
proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial
condition of the Company, taken as a whole. Note 21 includes provisions to account for information known to
the Company and based on estimates of probable resolutions.
The Company’s operations are subject to federal, provincial, state and local environmental laws and regulations
in Canada and the U.S. While the Company has not identified any costs likely to be incurred in the next several
years, based on known information for environmental matters, the Company’s ongoing efforts to identify
potential environmental concerns in connection with the properties it leases may result in the identification of
environmental costs and liabilities. The magnitude of such additional liabilities and the costs of complying with
environmental laws or remediating contamination cannot be reasonably estimated at the Consolidated
Statements of Financial Position date due to lack of technical information, absence of third-party claims, the
potential for new or revised laws and regulations and the ability to recover costs from any third parties. Thus,
the likelihood of any such costs or whether such costs would be material cannot be determined at this time.
Letters of guarantee
The Company has outstanding letters of guarantee totaling $4,870 as at December 31, 2023 (2022 - $4,771) with
various due dates.
The Company will settle obligations as they arise for which these letters have been issued as security and it is
not the Company’s intent that draws will be made on these letters.
Capital commitments
As at December 31, 2023, the Company is committed to capital expenditure obligations in the amount of
$5,404 (2022 - $12,134) related to dealership relocations, re-imagings, and dealership Open Points with
expected completion of these commitments in 2024.
Page 44 • AutoCanada
28 Share-based payments
The Company operates an equity-settled compensation plan under which it receives services from employees
as consideration for share-based payments. The plans are as follows:
Restricted share units ("RSUs")
The Company grants RSUs to designated management employees. Effective in 2018, the share unit plan was
modified such that awards are intended to be settled in shares. The RSUs are also entitled to earn additional
units based on dividend payments made by the Company and the share price on date of payment. The RSUs
granted are scheduled to vest at different intervals over three years, conditional upon continued employment
with the Company.
The number of RSUs granted is determined based on the grant value divided by the weighted average share
price of the Company's simple average share price for the seven days prior to the grant date. For the year
ended December 31, 2023, 45,055 (2022 - 23,767) RSUs were granted at a fair value of $16.01 (2022 - $30.34).
The fair value of the RSUs granted is recognized as an expense over the period in which the RSUs are expected
to vest.
The share unit plan settles by way of common shares, based on the Company's volume weighted average share
price for the seven days prior to the vesting date. For the year ended December 31, 2023, 55,124 (2022 -
178,598) RSUs were settled, the weighted average share price at the date of exercise was $28.70 (2022 -
$28.51).
For the year ended December 31, 2023, (6,789) (2022 - 1,391) RSUs were forfeited, the fair value of the RSUs
forfeited in the year was $22.18 (2022 - $20.70).
The following table shows the change in the number of RSUs for the years ended:
Outstanding, beginning of the year
Settled - equity
Granted
Forfeited units
Outstanding, end of the year
December 31, 2023
December 31, 2022
Number of
RSUs
152,465
(55,124)
45,055
(6,789)
135,607
Number of
RSUs
308,687
(178,598)
23,767
(1,391)
152,465
During the year ended December 31, 2023, 380 RSUs were vested but not settled.
Deferred share units ("DSUs")
Independent members of the Board of Directors are paid a portion of their annual retainer in the form of DSUs.
They may also elect to receive up to 100% of their remaining cash remuneration in the form of DSUs. Effective
in 2018, the DSU plan was modified such that awards are intended to be settled in shares. The underlying
security of DSUs are the Company’s common shares and are valued based on the Company’s average share
price for the five business days prior to the date on which Directors’ fees are granted. The DSUs are also
entitled to earn additional units based on dividend payments made by the Company and the share price on
date of payment. For the year ended December 31, 2023, 52,332 (2022 - 38,200) DSUs were granted at a fair
value of $21.50 (2022 - $28.33). The fair value is recognized as an expense over the period in which the DSUs
are granted.
DSU's vest upon granting. The DSU's are scheduled to settle upon the termination date of the Director, at which
time, the DSUs will be settled in common shares no earlier than the termination date and no later than
December 15 of the calendar year following the Director’s termination date.
No DSUs were settled during the year ended December 31, 2023. For the year ended December 31, 2022,
55,422 DSUs were settled, with a weighted average share price of $30.44 at the date of exercise. The weighted
average share price value is based on the volume weighted average price of the Company's share price for the
five business days prior to the date of settlement.
Page 45 • AutoCanada
The following table shows the change in the number of DSUs for the years ended:
Outstanding, beginning of the year
Settled - equity
Granted
Outstanding, end of the year
Stock option plan
December 31, 2023
December 31, 2022
Number of
DSUs
141,048
—
52,332
193,380
Number of
DSUs
158,270
(55,422)
38,200
141,048
The Stock Option Plan (the “Plan”) is designed to provide long-term incentives to designated management to
deliver long-term shareholder returns. Under the Plan, participants are granted options which only vest if
certain service and market conditions are met. The terms of the Plan specify that following retirement an
employee may exercise vested options with the right to exercise continuing for 120 days following the
retirement date.
Options are granted under the Plan for no consideration and carry no dividend or voting rights. When
exercisable, each option is exercisable to acquire one common share. The exercise price of options is
determined by the Board and shall not be lower than the closing price of the AutoCanada shares on the Toronto
Stock Exchange immediately preceding the date of grant.
The following table shows the change in the number of stock options for the years ended:
December 31, 2023
December 31, 2022
Average
exercise price
per share
option
$
14.48
Share options
#
1,996,544
Average
exercise price
per share
option
$
13.47
Share options
#
2,745,968
—
9.72
35.72
13.57
—
(100,000)
(98,848)
1,797,696
22.63
10.72
35.72
14.48
100,000
(800,000)
(49,424)
1,996,544
Outstanding, beginning of the year
Granted
Exercised
Forfeited
Outstanding, end of the year
Vested and exercisable, end of the year
10.05
1,500,000
10.03
1,600,000
No share options expired during the year ended December 31, 2023.
The following table shows the expiry date and exercise price for the share options outstanding as at December
31, 2023:
Grant date
August 14, 2018
December 7, 2021
December 22, 2022
Total
Expiry date
August 14, 2028
December 7, 2026
December 22, 2028
Weighted average remaining contractual life of options outstanding, end of the period
Exercise
price
$
10.05
35.72
22.63
Share options
#
1,500,000
197,696
100,000
1,797,696
4.46 years
The weighted average remaining contractual life for the share options outstanding as at December 31, 2022 was
5.19 years.
During the year ended December 31, 2023, there were expenses of $1,655 (2022 - $1,800) and $807 recoveries
(2022 - $276).
Page 46 • AutoCanada
Share appreciation rights ("SARs")
The SARs are designed to enable those granted rights under the plan to participate in the growth and
profitability of the Company. Rights granted vest upon certain service and market conditions over a maximum
period of four years. Vested rights are exercisable for a maximum period of six years after the grant date.
Each SAR that is exercised entitles the employee to receive a number of common shares that is equal to (i) the
amount by which the fair market value of one common share exceeds the notional exercise price of the vested
SAR; divided by (ii) the fair market value of one common share.
The following table shows the change in the number of SARs for the year ended:
December 31, 2023
December 31, 2022
Weighted average
exercise price per
share appreciation
right
$
29.25
17.84
7.38
31.86
29.08
20.95
Share
appreciation
rights
#
1,201,000
Weighted average
exercise price per
share appreciation
right
$
18.11
Share
appreciation
rights
#
389,000
60,000
(25,000)
(25,000)
1,211,000
152,000
31.00
10.25
10.25
29.25
18.66
952,000
(120,000)
(20,000)
1,201,000
94,333
Outstanding, beginning of the year
Granted
Exercised
Forfeited
Outstanding, end of the year
Vested and exercisable, end of the
year
No SARs expired during the year ended December 31, 2023.
The weighted average contractual life remaining for these SARs as at December 31, 2023 is 4.02 years (2022 -
4.79 years).
The assessed weighted average fair value at grant date of the SARs granted during the year ended December
31, 2023 was $8.85 per option. The fair value at grant date has been determined using the Black-Scholes Model.
For certain SARs with market vesting conditions, the fair value at grant date has been determined using the
Black-Scholes Model.
The weighted average model inputs for the SARs granted during the year ended December 31, 2023 include:
● Rights are granted for no consideration and vest based on varying service and market price
conditions over a four year period. Vested rights are exercisable until September 6, 2028.
● Exercise price: $18.19
● Expected life of option: 4.00 years
● Share price at grant date: $17.93
● Expected price volatility of the Company's shares: 61.64%
● Expected dividend yield: 0.00%
● Risk-free interest rate: 3.36%
Expected price volatility was determined at the time of grant using the AutoCanada share price on a historical
basis, adjusted for any expected changes to future volatility due to publicly available information. It reflects the
assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual
outcome.
Used Digital Division
Common interests of the Partnership were granted to dealership management and a company controlled by the
Executive Chair (Note 33) under an equity issuance plan (the “Digital Plan”). This was designed to provide long-
term incentives to dealership and related party management to develop and deliver long-term returns on the
used digital strategy (Note 14).
Equity interests were issued under the Digital Plan for the fair value of the interests at grant date and carry no
dividend or voting rights. The interests vest in accordance with the terms stated in the initial grant agreements.
When exercisable, the consideration paid to the equity interest holders is based on the value of the Partnership
on the date of exercise and would have been settled in common shares.
Page 47 • AutoCanada
The company controlled by the Executive Chair held a 15% interest, containing a share-based payment
arrangement that vested immediately upon grant, in the Partnership. As a result of the Digital Plan Modification
(Note 14), share-based compensation expense of $28,950 (2022 - $391) was recognized in the Consolidated
Statements of Comprehensive Income.
Dealership management held a 4.1% interest, containing a share-based payment arrangement that vested over
7 years, in the Partnership. As a result of the Digital Plan Modification (Note 14), share-based compensation
expense of $7,775 (2022 - $nil) was recognized in the Consolidated Statements of Comprehensive Income.
Stock units
The Company awarded $7,500 of stock units, that vested immediately to the company controlled by the
Executive Chair as purchase consideration for the UD LP Minority Interest (Note 14). The stock units are settled
by way of the Company’s common shares purchased in the market. The stock units are also entitled to earn
additional units based on dividend payments made by the Company and the share price on the date of
payment. The number of stock units granted is determined based on the grant value divided by the average of
the closing prices of the Company's shares for the seven days after the closing date of the purchase of the UD
LP Minority Interest.
The stock units settle on the earlier of the third anniversary of the grant date and the achievement of specific
market price conditions.
For the year ended December 31, 2023, no stock units were granted. As a result of the Digital Plan Modification,
the stock units were fully recognized in the Consolidated Statements of Comprehensive Income as part of the
$28,950 share-based compensation expense.
Performance share units (PSUs)
The Company awarded $6,331 of PSUs under the existing share unit plan to dealership management as
purchase consideration for the UD LP Minority Interest (Note 14). The PSUs are settled by way of the Company's
common shares purchased in the market. The PSUs are also entitled to earn additional units based on dividend
payments made by the Company and the share price on the date of payment. The PSUs granted are scheduled
to vest based on the achievement of specific non-market performance goals over seven years and conditional
on continued employment with the Company. The number of PSUs granted is determined based on the grant
value divided by the average of the closing prices of the Company's shares for the seven days after the closing
date of the purchase of the UD LP Minority Interest. The fair value of the PSUs granted is recognized as an
expense over the period in which the PSUs are expected to vest. The share unit plan settles by way of common
shares.
For the year ended December 31, 2023, no PSUs were granted. As a result of the Digital Plan Modification, the
PSUs were fully recognized in the Consolidated Statements of Comprehensive Income as part of the $28,950
share-based compensation expense.
Share-based compensation expense
Total expenses net of recoveries arising from share-based payment transactions recognized during the year
included in employee costs are as follows:
Stock options
Restricted share units
Deferred share units
Share appreciation rights
Share-based compensation
Used Digital Division equity issuance (Note 14)
Share-based compensation expense
2023
$
847
544
1,185
3,909
6,485
36,725
43,210
2022
$
1,524
937
1,082
1,867
5,410
391
5,801
Page 48 • AutoCanada
29 Share capital and equity
Common shares
Common shares of the Company are voting shares and have no par value. The authorized share capital is an
unlimited number of shares.
The following table shows the change in common shares held during the years ended:
Issued, beginning of the period
Exercised stock options (Note 28)
Shares repurchased and cancelled under the
Substantial Issuer Bids
Shares repurchased and cancelled under the
Normal Course Issuer Bid
Issued, end of the period
Normal Course Issuer Bid
December 31, 2023
December 31, 2022
Number of
common shares
Number of
common shares
$
23,551,137
433,693
27,493,016
$
510,819
60,038
—
—
939
—
800,000
10,496
(3,011,558)
(55,533)
—
(1,730,321)
(32,089)
23,611,175
434,632
23,551,137
433,693
During the year ended December 31, 2023, no common shares were repurchased and cancelled under the
Company's Normal Course Issuer Bid ("NCIB").
During the year ended December 31, 2022, the Company repurchased and cancelled 1,730,321 common shares
at an average price of $33.55 per share, with prices ranging from $25.63 to $40.00 under its NCIB for $56,588
net of transaction costs of $17, which have been recorded within share capital.
On December 22, 2022, the Company received approval from the TSX to renew its NCIB, following the
conclusion of the previous NCIB. The renewal of the NCIB commenced on December 28, 2022, and terminated
on December 27, 2023. Under the NCIB, the Company was authorized to purchase, for cancellation, up to
1,350,048 common shares, representing approximately 10.00% of the 23,551,137 issued and outstanding
common shares of the Company as at December 20, 2022. The Company was limited under the NCIB to
purchasing no more than 21,695 common shares on any given day, subject to the block purchase exemption
under the TSX rules.
Substantial Issuer Bids
During the year ended December 31, 2023, no common shares were repurchased and cancelled under a
Substantial Issuer Bid.
On August 15, 2022, the Company completed a Substantial Issuer Bid, by way of a modified Dutch auction, to
purchase, for cancellation, the common shares of the Company (the “Offer”). The Company purchased and
cancelled 1,159,707 common shares (2021 - nil) at a purchase price of $28.00 per share under the Offer,
representing an aggregate purchase price of $32,472 which represents 4.37% of the total issued and
outstanding common shares of the Company before giving effect to the Offer. For the year ended December
31, 2022, the Company incurred transaction costs related to the Offer of $24 which have been recorded within
share capital.
On December 16, 2022, the Company completed a Substantial Issuer Bid, by way of a modified Dutch auction,
to purchase, for cancellation, the common shares of the Company (the “Second Offer”). The Company
purchased and cancelled 1,851,851 common shares (2021 - nil) at a purchase price of $27.00 per share under
the Second Offer, representing an aggregate purchase price of $50,000 which represents 7.29% of the total
issued and outstanding common shares of the Company before giving effect to the Second Offer. For the year
ended December 31, 2022, the Company incurred transaction costs related to the Second Offer of $46 which
have been recorded within share capital.
Page 49 • AutoCanada
Treasury shares
Shares are held in trust to mitigate the risk of future share price increases from the time the equity-settled
awards (Note 28) are granted to when they are fully vested and can be exercised. Under the Trust Agreement,
the third-party trustee will administer the distribution of shares to the beneficiaries upon vesting, as directed by
the Company. Dividends earned on the shares held in trust are reinvested to purchase additional shares. No
dividends were earned during the year ended December 31, 2023 (2022 - $nil). The shares held in trust are
accounted for as treasury shares and are recognized on a first-in-first-out basis upon issuance and presented
separately in the Consolidated Statements of Changes in Equity.
The following table shows the change in treasury shares held for the years ended:
Outstanding, beginning of the period
Treasury shares acquired
Treasury shares settled
Outstanding, end of the period
Earnings per share
December 31, 2023
December 31, 2022
Number of
treasury shares
(48,667)
(1,808)
38,010
(12,465)
Number of
treasury shares
(243,306)
—
194,639
(48,667)
$
(672)
(47)
400
(319)
$
(2,440)
—
1,768
(672)
Basic earnings per share was calculated by dividing earnings attributable to AutoCanada shareholders by the
sum of the weighted-average number of common shares outstanding during the period. Basic earnings per
share are adjusted by the dilutive impact of all share-based payment plans to calculate the diluted earnings per
share.
Net income for the year attributable to AutoCanada shareholders
2023
$
50,490
2022
$
85,436
The following table shows the weighted-average number of shares outstanding for the years ended:
Basic
Effect of dilution from equity forward
Effect of dilution from RSUs
Effect of dilution from stock options
Effect of dilution from SARs
Diluted
30 Capital disclosures
2023
#
2022
#
23,561,236 26,050,206
160,807
67,005
66,543
100,393
662,095
1,693,080
—
323,198
24,450,681
28,233,882
The Company’s objective when managing its capital is to safeguard the Company’s assets and its ability to
continue as a going concern while at the same time maximizing the growth of the business, returns to
shareholders, and benefits for other stakeholders. The Company views its capital as the combination of long-
term indebtedness and equity.
The calculation of the Company’s capital is summarized below:
Long-term indebtedness (Note 22)
Equity
Page 50 • AutoCanada
December 31,
2023
$
562,178
564,829
1,127,007
December 31,
2022
$
554,351
486,797
1,041,148
The Company manages its capital structure in accordance with changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust its capital structure, the Company may
assume additional debt, refinance existing debt with different characteristics, sell assets to reduce debt, issue
or repurchase shares, or adjust the amount of dividends paid to its shareholders.
Gross lease adjusted indebtedness
Gross lease adjusted indebtedness is one measure used by management to evaluate the leverage of the
Company. Gross lease adjusted indebtedness is calculated as total indebtedness, adjusted for embedded
derivative, plus lease liabilities, as follows:
Total indebtedness (Note 22)
Embedded derivative asset (Note 22)
Lease liabilities (Note 23)
Gross lease adjusted indebtedness
31 Financial instruments
December 31,
2023
$
562,922
—
497,424
1,060,346
December 31,
2022
$
555,128
—
484,877
1,040,005
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognized, in respect of each class of
financial asset and financial liability, are disclosed in the significant accounting policies (Note 3). The
Company’s financial assets are measured at amortized cost. The Company’s financial liabilities are measured at
amortized cost except for redemption liabilities and non-hedged interest swap agreements, which are carried
at fair value through profit or loss. The carrying values of financial instruments approximate their fair values,
excluding the senior unsecured notes. The fair value of the senior unsecured notes is $315,875.
Financial risk management objectives
The Company’s activities are exposed to a variety of financial risks of varying degrees of significance, which
could affect the Company’s ability to achieve its strategic objectives. AutoCanada’s overall risk management
program focuses on the unpredictability of financial and economic markets and seeks to reduce potential
adverse effects on the Company’s financial performance. Risk management is carried out by financial
management in conjunction with overall corporate governance. The principal financial risks to which the
Company is exposed are described below.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign currency and interest rates.
Foreign currency risk
The Company has operations in Canada and the United States. Foreign exchange risk arises from future
commercial transactions and recognized assets and liabilities denominated in a currency that is not the
functional currency of the relevant entity. The Company is exposed to foreign exchange risk because its
Canadian and U.S. operations engage in transactions denominated in a currency other than their respective
functional currency. Risk arises as a result of specific transfers associated with working capital between
Canadian and U.S. operations as well as wholesale used vehicle transactions where Canadian operations will
participate in disciplined cross-border sales when arbitrage opportunities are present.
Page 51 • AutoCanada
Interest rate risk
The Company’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section herein, the indebtedness note (Note 22), and the derivative financial instruments note
(Note 24).
Finance costs
Finance income
Embedded derivative
+/- 200 Basis Point
+/- 100 Basis Point
2023
$
21,947
87
2022
$
18,217
82
2023
$
10,974
43
2022
$
9,108
41
The early redemption embedded derivative asset on the new issuance notes (Note 22) is subject to interest rate
risk in the form of impacting the fair market valuation of the embedded derivative recorded. There is no change
in fair value based on +/-200 basis or +/-100 basis point change.
Credit risk
The Company’s exposure to credit risk associated with its accounts receivable is the risk that a customer will be
unable to pay amounts due to the Company. The concentration of credit risk with respect to contracts-in-transit
and accounts receivable is limited primarily to automobile manufacturers and financial institutions. Credit risk
arising from receivables with commercial customers is not significant due to the large number of customers
dispersed across various geographic locations comprising the Company's customer base. Details of the aging
of the Company’s trade and other receivables are disclosed in the table below.
The Company applies the simplified approach to measuring expected credit losses, which uses a lifetime
expected credit loss allowance for all trade receivables. The expected loss rates are based on the payment
profiles of sales over the 12-month periods prior to December 31, 2023 and December 31, 2022 and the
corresponding historical credit losses experienced within these periods.
The loss allowance for trade and other receivables as at December 31, 2023 and December 31, 2022 was
determined as follows:
December 31, 2023
December 31, 2022
Expected
loss rate
%
0.01
1.24
5.53
7.22
10.14
Gross carrying
amount - Trade
receivables
$
165,539
23,295
13,029
5,288
18,173
225,324
Expected
loss
allowance
(Note 15)
$
12
290
721
382
1,843
3,248
Current
31 - 60 days
61 - 90 days
91 - 120 days
> 120 days
Total
Expected
loss rate
%
0.02
1.06
2.65
2.82
3.26
Gross carrying
amount - Trade
receivables
$
153,091
17,017
13,315
7,755
28,318
219,496
Expected
loss
allowance
(Note 15)
$
31
180
353
219
923
1,706
The closing loss allowance for trade receivables reconciles to the opening loss allowance as follows:
Balance, January 1
Loan loss allowance recognized in profit or loss during the year
Receivables written off during the year
Balance, December 31
2023
$
1,706
3,614
(2,072)
3,248
2022
$
2,478
1,273
(2,045)
1,706
Page 52 • AutoCanada
The amounts disclosed on the Consolidated Statements of Financial Position for accounts receivable are net of
the expected loss allowance, details of which are disclosed in Note 15. When a trade and other receivable is
uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent
recoveries of amounts previously written off are credited against operating expenses in the Consolidated
Statements of Comprehensive Income.
Concentration of cash exists due to the significant amount of cash held with a Canadian financial institution.
The syndicated revolving floorplan facility (Note 22) allows the Company's dealerships to hold excess cash
(used to satisfy working capital requirements of the Company's various Original Equipment Manufacturer
("OEM") partners) in an account with the financial institution which bears interest at 6.397% at December 31,
2023 (2022 - 5.470%). These cash balances are fully accessible by the Company's dealerships at any time;
however, in the event of a default by a dealership in its floorplan obligation; the cash may be used to offset
unpaid balances under the facility. As a result, there is a concentration of cash balances risk to the Company in
the event of a default under the facility.
Liquidity risk
Liquidity risk is the risk that the Company is not able to meet its financial obligations as they become due or can
do so only at excessive cost. The Company’s activity is financed through a combination of the cash flows from
operations, borrowing under existing credit facilities and the issuance of equity. Prudent liquidity risk
management implies maintaining sufficient cash and the availability of funding through adequate amounts of
committed credit facilities. One of management’s primary goals is to maintain an optimal level of liquidity
through the active management of the assets and liabilities as well as cash flows.
As at December 31, 2023, the Company has $188,000 (2022 - $95,000) in readily available liquidity from its
revolving term facility. However, the Company's ability to borrow under this facility requires it to comply with
its financial covenants.
The following tables detail the Company’s remaining contractual maturity for its financial liabilities. The
amounts below have been determined based on the undiscounted contractual maturities of the financial
liabilities. For contractual interest payable, the cash flows have been estimated using the interest rates
applicable as at December 31, 2023.
December 31, 2023
Trade and other payables
Revolving floorplan facilities
Vehicle repurchase obligations
Indebtedness
Contractual interest payable
Lease liabilities
Derivative financial instruments
December 31, 2022
Trade and other payables
Revolving floorplan facilities
Vehicle repurchase obligations
Indebtedness
Contractual interest payable
Lease liabilities
Derivative financial instruments
2024
$
2025
$
2026
$
2027
$
Thereafter
$
Total
$
238,427
1,174,595
1,982
744
35,787
62,532
739
1,514,806
—
—
—
744
35,675
59,613
740
—
—
—
187,744
26,059
55,793
740
96,772 270,336
—
—
—
744
22,087
54,780
—
77,611
— 238,427
— 1,174,595
1,982
—
378,259 568,235
158,473
38,865
815,329
582,611
2,219
—
999,735 2,959,260
2023
$
2024
$
2025
$
2026
$
Thereafter
$
Total
$
229,696
992,254
2,277
880
33,624
58,734
2,399
1,319,864
—
—
—
744
33,518
56,991
1,143
—
—
—
180,744
25,449
53,974
406
92,396 260,573
—
—
—
744
22,108
50,257
—
73,109
229,696
—
— 992,254
2,277
—
562,115
379,003
174,866
60,167
767,826
547,870
3,948
—
987,040 2,732,982
Page 53 • AutoCanada
32 Fair value of financial instruments
The Company’s financial instruments as at December 31, 2023 are represented by cash, trade and other
receivables, other assets, trade and other payables, other liabilities, revolving floorplan facilities, vehicle
repurchase obligations, indebtedness, an embedded derivative, redemption liabilities, and derivative financial
instruments.
The fair values of cash, trade and other receivables, trade and other payables, other liabilities and revolving
floorplan facilities approximate their carrying values due to their short-term nature.
The call option included in other assets (Level 3) is remeasured at fair value each reporting period with the gain
or loss being recognized through profit or loss (Note 14). The fair value of the call option is calculated based on
the equity value of the related subsidiary using the DCF method.
The indebtedness has a carrying value that approximates the fair value due to the floating rate nature of the
debt. While there is a portion that has a fixed rate, the indebtedness has a carrying value that is not materially
different from its fair value.
The embedded derivative (Level 2) included within indebtedness (Note 22) is carried at fair value using the Hull
White pricing model.
Derivative financial instruments are made up of interest rate swap agreements and foreign exchange forward
contracts (Level 2). The fair value of both instruments are calculated as the present value of the future cash
flows. Both contractually agreed payments and forward rates are used to calculate the cash flows, which are
then discounted on the basis of a yield curve that is observable in the market.
Redemption liabilities (Level 3) are remeasured at fair value each reporting period with the gain or loss being
recognized through profit or loss (Note 14). Fair value of these redemption liabilities are calculated based on an
applicable multiple applied to projected earnings before interest, taxes, depreciation, and amortization.
The fair value was determined based on the prevailing and comparable market interest rates.
The fair value hierarchy categorizes fair value measurements into three levels based on the inputs to valuation
technique, which are defined as follows:
● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
● Level 3 – Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
There were no transfers between the levels of the fair value hierarchy during the year.
Page 54 • AutoCanada
33 Related party transactions
Transactions with related parties
During the year, there were transactions with companies controlled by the Executive Chair. These
counterparties are:
● A vehicle wholesale and export business that supplies and purchases used vehicles with the
Company; and
● A firm, that provides administrative, limited transportation, and other support services.
All significant transactions between AutoCanada and related parties were reviewed by the Company's Board of
Directors and are based on normal commercial terms and conditions. A summary of the transactions are as
follows:
Administrative and other support and sourcing fees
Used vehicle (sales to) purchases from related parties
2023
$
1,566
(1,755)
(189)
2022
$
2,208
199
2,407
Executive Advance
During the year ended December 31, 2021, the Company issued a $2,000 loan to the former President,
collateralized by his outstanding stock options under the Company's existing Stock Option Plan. The loan was
interest bearing at a rate of 1.00% (2022 - 1.00%) per annum and was being repaid on a monthly basis. As the
loan was considered to represent an advance against share-based compensation secured against the
Company's shares, it was treated as an equity instrument (Note 28). The loan was fully repaid during the period
ended December 31, 2023 (December 31, 2022 - $1,624).
Used Digital Division
A company controlled by the Executive Chair held a 15% common interest in the Partnership (Note 14), which
vested at the time of grant (Note 28). Changes in the value of the 15% interest are recorded in operating
expenses.
As a result of the purchase of the UD LP Minority Interest (Note 14), the 15% interest in the Partnership was
purchased from the company controlled by the Executive Chair for aggregate purchase consideration of
$30,000 consisting of $22,500 in cash, funded from the proceeds of the Online C2C F&I Business investment
(Note 14), and $7,500 in stock units (Note 28). The agreement requires $15,000 of the cash purchase
consideration to be used by the company controlled by the Executive Chair to purchase the Company's
common shares within a two-year period from the closing date. The shares purchased by the company
controlled by the Executive Chair may not be disposed of until the earlier of a two-year period or certain market
price conditions being satisfied.
As of December 31, 2023, the Company has recorded the cash purchase consideration of $22,500 in accruals
and provisions within trade and other payables (Note 21).
Key management personnel compensation
Key management personnel consists of the Company's executive officers and directors. Key management
personnel compensation is as follows:
Employee costs (including Directors)
Short-term employee benefits
Used Digital Division equity issuance
Share-based compensation
2023
$
6,597
198
28,950
4,503
40,248
2022
$
4,808
102
391
1,830
7,131
Page 55 • AutoCanada
34 Net change in non-cash working capital
The following table summarizes the net decrease in cash due to changes in non-cash working capital for the
years ended:
Trade and other receivables
Inventories
Other current assets
Trade and other payables 1
Revolving floorplan facilities
Other liabilities
Net change in non-cash working capital
December 31,
2023
$
(6,640)
(175,899)
(5,206)
(270)
184,981
(518)
(3,552)
December 31,
2022
$
(68,460)
(223,908)
824
(7,515)
270,794
176
(28,089)
1 Reclassification of comparative figure for presentation purposes. The Company previously included a portion of interest paid
in trade and other payables. Prior year comparative has been revised by reclassifying $148 relating to interest paid out of trade
and other payables and presented on a separate line on the statements of cash flows.
Factors that can affect these items include seasonal sales trends, strategic decisions regarding inventory levels,
the addition of new dealerships, and the day of the week on which period-end cut-off occurs.
35 Segmented reporting
During the year ended December 31, 2023, the Executive Chair served as the function of the Chief Operating
Decision Maker ("CODM"). The Executive Chair is responsible for allocating resources and assessing the
performance of the following segments: Canadian Operations and U.S. Operations.
Each reportable operating segment is comprised of retail automobile dealerships and related businesses.
Transactions between reportable segments are accounted for in accordance with the accounting policies
described in the summary of significant accounting policies.
AutoCanada's corporate office has been included with the Canadian Operations segment, as it is located in
Canada.
The CODM measures the performance of each operating segment based on operating profit. The segmented
information is set out in the following tables:
Year ended December 31, 2023
Year ended December 31, 2022
Canada
$
U.S.
$
Total
$
Canada
$
U.S.
$
Total
$
Revenue
Total revenue
5,607,194
829,609
6,436,803
5,129,658
910,961
6,040,619
Page 56 • AutoCanada
Operating profit before other income
Lease and other income, net (Note 10)
Gain (loss) on disposal of assets, net (Note 10)
Recoveries of non-financial assets (Note 19)
Operating profit
Finance costs (Note 11)
Finance income (Note 11)
Gain (loss) on redemption liabilities (Note 14)
Other (losses) gains, net
Income for the period before taxation
Year ended December 31,
2023
Year ended December 31,
2022
Canada
$
U.S.
$
Total
$
Canada
$
U.S.
$
Total
$
198,273
8,251 206,524
203,559 28,296 231,855
12,775
442
3,538
381
(20)
13,156
422
10,094
(296)
4,207
—
14,301
(296)
—
3,538
8,691
—
8,691
215,028
8,612 223,640
222,048 32,503 254,551
—
—
—
—
—
— (145,939)
—
—
3,346
3,639
(321)
—
— 84,365
—
—
—
—
—
—
(131,478)
—
—
—
—
4,144
(4,829)
1,496
123,884
As at December 31, 2023
As at December 31, 2022
Canada
$
22,152
2,834,012
U.S.
$
—
Total
$
22,152
Canada
$
—
U.S.
$
—
Total
$
—
325,427
3,159,439
2,521,158
337,173
2,858,331
61,556
2,098,703
9,158
495,907
70,714
2,594,610
51,395
11,802
1,876,726 494,808
63,197
2,371,534
Assets held for sale (Note 17)
Segment assets
Capital expenditures and
acquisition of real estate
(Note 18)
Segment liabilities
Disaggregation of revenue
The significant majority of the Company's revenue is from contracts with customers. Taxes assessed by
governmental authorities that are directly imposed on revenue transactions are excluded from revenue. In the
following table, revenue is disaggregated by major lines of goods and services and timing of transfer of goods
and services. The Company has determined that these categories depict how the nature, amount, timing, and
uncertainty of its revenue and cash flows are affected by economic factors. The table below also includes a
reconciliation of the disaggregated revenue with the Company's reportable segments:
New vehicles
Used vehicles
As at December 31, 2023
As at December 31, 2022
Canada
$
2,242,329
U.S.
$
Total
$
311,898 2,554,227
Canada
$
1,864,803
U.S.
$
Total
$
295,762 2,160,565
2,360,703
365,773 2,726,476
2,403,400
466,745 2,870,145
Parts, service and collision repair
681,694
100,632
782,326
559,277
83,388
642,665
Finance, insurance and other
322,468
51,306
373,774
302,178
65,066
367,244
Total revenue
5,607,194 829,609 6,436,803
5,129,658
910,961 6,040,619
Page 57 • AutoCanada
36 Reclassification of comparatives
Management has reclassified certain items within the comparative consolidated statement of cash flows to
enhance the clarity and comparability of the financial information presented. This reclassification had no effect
on the reported results of operations other than as described directly below.
December 31,
2022
As originally
presented
$
Reclassification
of comparative
figures
$
December 31,
2022
Revised
$
—
9,860
1,377
(322)
3,268
(9,303)
29,306
376
(27,941)
—
6,621
147,974
(131,478)
131,478
9,860
1,377
(322)
3,268
(9,303)
29,306
376
148
97,144
376
376
—
—
—
—
—
—
—
(28,089)
(97,144)
6,245
147,598
—
82,837
(376)
(376)
376
83,213
Cash provided by (used in):
Operating activities
Finance costs (Note 11)
Loss on extinguishment of debt
Amortization of deferred financing costs
Amortization of note premium
Amortization of terminated hedges
Unrealized fair value changes on non-hedging
instruments
Loss on extinguishment of embedded derivative
Repayment (issuance) of executive advance
Net change in non-cash working capital (Note 34)
Interest paid
Net operating activities
Financing activities
Repayment of executive advance (Note 33)
Net financing activities
37 Subsequent events
Land and Buildings Divestiture
On February 1, 2024, the Company completed the sale of specific land and buildings in British Columbia and
Alberta for cash consideration of $41,370. The land and buildings were presented as held for sale at December
31, 2023 (Note 17). The agreement is subject to customary closing adjustments. A gain of $19,218 was
recognized on the sale.
Interest Rate Swap
On February 1, 2024, the Company entered into a new fixed interest rate swap that fixed CDOR at 3.77% with a
notional amount of $75,000 to economically hedge the variable rate of debt. This instrument has a settlement
period of February 2027, with an extended termination date of February 2029, if the counterparty elects.
Opening of Maple Ridge GM
On March 1, 2024, the newly built open point dealership, Maple Ridge GM, located in Maple Ridge, B.C.,
commenced operations. The dealership consists of a 33,372 sq. ft. facility with 14 service bays and is the
Company’s first GM dealership in the Metro Vancouver area.
Normal Course Issuer Bid
On March 6, 2024, the Company received approval from the TSX to renew its NCIB, this renewal follows the
conclusion of the previous NCIB. Pursuant to the NCIB, AutoCanada may purchase up to 1,329,106 common
shares during the twelve-month period commencing March 11, 2024 and ending March 10, 2025 or such earlier
date as the Company may complete its purchases under the NCIB.
Page 58 • AutoCanada
The number of common shares authorized for purchase under the NCIB represents 10% of AutoCanada's public
float as of March 4, 2024 (calculated in accordance with TSX rules). Purchases will be made through the
facilities of the TSX and/or alternative Canadian trading systems at prevailing market prices in accordance with
the rules and policies of the TSX and applicable securities laws. Daily repurchases will be limited to a maximum
number of common shares, representing 25% of the average daily trading volume for the six months ended
February 29, 2024, except where purchases are made in accordance with the “block purchase exception” of
the TSX rules. All common shares purchased under the NCIB will be cancelled.
Page 59 • AutoCanada
AutoCanada Inc.
200 - 15511 123 Avenue NW
Edmonton, AB • T5V 0C3 www.autocan.ca