2022
Annual
Report
PAN-CANADIAN INFRASTRUCTURE
SUPPORT SERVICES
Yellowknife, NT
Baker Lake, NU
LEGEND
Offices
Manufacturing
Facilities
Kamloops, BC
Vancouver, BC
Grande Prairie, AB
Edmonton, AB
Calgary, AB
Winnipeg, MB
Amos, QC
Oromocto, NB
Thunder Bay, ON
Halifax, NS
Ottawa, ON
Montreal, QC
Mississauga, ON
Cambridge, ON
Grimsby, ON
Revenue Growth in $000s
Adjusted EBITDA* in $000s
$971,517
$733,380
$477,815
$261,059
$71,087
$80,755
$64,725
$16,540
2019 2020 2021
2022
2019 2020 2021
2022
*Includes Canada Emergency Wage Subsidies in 2020 and 2021 (see the
Reconciliation of non-GAAP Measures in the Management Discussion and Analysis)
TABLE OF CONTENTS
04 LETTER FROM THE BOARD CHAIR
05 LETTER FROM THE CEO
07 MANAGEMENT’S DISCUSSION
AND ANALYSIS
18 MANAGEMENT’S REPORT
TO SHAREHOLDERS
20 INDEPENDENT AUDITOR’S REPORT
TO SHAREHOLDERS
27
CONSOLIDATED FINANCIAL STATEMENTS
32
NOTES TO FINANCIAL
STATEMENTS
58
CORPORATE INFORMATION
LETTER FROM THE
CHAIR OF THE BOARD
To our shareholders:
We enter 2023 a stronger company. We
added key talent and bench strength
throughout the organization in 2022,
including appointing three new business
unit presidents and announcing Mark
Becker as our new CEO effective May 1, 2023.
This leadership team brings a combination
of internally developed expertise and new
talent into the organization which will help
us execute our strategy of building over the
longer term a company with greater scale
and strong profitability that shareholders,
customers, suppliers, employees and
communities trust and support.
Our revenues across the company were
strong in 2022. Our business was also
impacted by several global economic trends
including high inflation especially in the
construction and food delivery segments.
Management’s key priority in 2023 is to
improve our profitability and capitalize
Dexterra Group Annual Report 2022 | 4
on recent investments and strategic
acquisitions. We will also continue to invest
in people, processes, and tools for the longer
term.
On behalf of the Board, I would like to also
thank John Mac Cuish for his insights,
dedication, and support over the past several
years in building a strong foundation in the
company which will be leveraged in the years
to come.
We hope you will join us and look forward
to answering your questions at our virtual
shareholders’ meeting on May 10, 2023.
Bill McFarland
Chair of the Board
LETTER FROM
THE CEO
To our Dexterra Group stakeholders:
2022 was an important year in Dexterra
Group’s growth story. In January, we
welcomed both Dana Hospitality and
TRICOM Facility Services Group into our
Integrated Facilities Management (IFM)
business. Our Senior Leadership team
expanded with the additions of Sanjay
Gomes, President of IFM, Robert Johnston,
President of Modular Solutions, and the
promotion of Jeff Litchfield into the position
of President of Workforce Accommodations,
Forestry, and Energy Services. These
developments were important steps in
building the foundation for future profitable
growth.
2022 also had challenges. The impact of
rapid inflation, disruptions to supply chains,
rising interest rates and difficulties sourcing
and retaining talent were macro issues
faced by all businesses. The business impact
on Dexterra of COVID-19 and subsequent
variants of the virus reduced as the year
progressed and as more industries, such as
airports, retail, and education institutions,
shifted to a new normal and higher
volumes of work. The resilience of our
business shone through as we navigated
and met these business challenges head
on. Our team learned and pivoted in
2022 and remains focused on building a
strong company that delivers value to its
shareholders and all stakeholders over the
long term.
We are a people business and I would
like to personally thank the nearly 9,000
Dexterra Group employees across Canada,
who did an outstanding job supporting
our customers this year. The quality of
our people, our business model, and the
excellent service our teams deliver to our
clients are important differentiators for us
and will help us meet our aspirations in the
future.
Dexterra Group Annual Report 2022 | 5
Having our leadership recognized by the
industry is a great indicator that we truly
have strong people leading our business.
Lee-Anne Lyon Bartley, Executive Vice
President, Health, Safety, Environment,
and Quality, and her team’s contributions,
were recognized with Dexterra Group
being awarded Canada’s Safest Employer
Award by Canadian Occupational Safety.
Lee-Anne was also recognized as being a
Top Woman in Safety, along with Manasi
Koushik, Director, Quality Assurance and
Environment. Well done!
In closing, thanks to our customers, suppliers,
partners, communities, and shareholders for
supporting us over the past year and to the
Board of Directors for its insights. It has been
a privilege to be your CEO and work with
our various stakeholders to build a strong
foundation for the future. I also look forward
to watching the continued progress of the
company under Mark Becker’s leadership.
John Mac Cuish
Chief Executive Officer
THE VALUES WE LIVE BY
Accountability
We don’t just walk by. We own our
successes and setbacks. If we see
something wrong, we act to resolve it. If
we see something right, we celebrate it.
Diversity
Everyone has a voice. Sharing is how we
learn. It’s how we make progress and move
forward as a team.
Trust
Our actions speak louder than our
words. Trust is earned through clarity,
compassion and competence. It is
our commitment to our clients, our
colleagues and our communities.
Partnership
Service is what we sell. By asking
for, listening to and acting on client
feedback, we create long-term,
successful partnerships.
Dexterra Group Annual Report 2022 | 6
MANAGEMENT’S DISCUSSION
AND ANALYSIS
December 31, 2022
This MD&A has been prepared as at March 8, 2023.
Dexterra Group Annual Report 2022 | 7
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
The following Management’s Discussion and Analysis (“MD&A”) prepared as at March 8, 2023 for Dexterra Group Inc.
(“Dexterra” or the “Corporation”), provides information concerning Dexterra’s financial condition and results of operations. This
MD&A is should be read in conjunction with the Corporation’s audited Consolidated Financial Statements (“2022 Financial
Statements”) for the years ended December 31, 2022 and 2021, respectively. For additional information, readers should also
refer to Dexterra's Annual Information Form (“AIF”) available on SEDAR at sedar.com and Dexterra’s website at dexterra.com.
Some of the information contained in this MD&A contains forward-looking statements that involve risks and uncertainties. See
“Forward-Looking Information” for a discussion of the uncertainties, risks and assumptions associated with these statements.
Actual results may differ materially from those indicated or underlying forward-looking information as a result of various factors
including those described elsewhere in this MD&A and the AIF.
The accompanying 2022 Financial Statements of Dexterra as at and for the year ended December 31, 2022 and December 31,
2021 are the responsibility of Dexterra’s management and have been prepared in accordance with International Financial
Reporting Standards (“IFRS” or “GAAP”) and all amounts presented are in thousands of Canadian dollars unless otherwise
indicated.
Financial Summary
(000's except per share amounts)
Total Revenue
Adjusted EBITDA(1)(2)
Adjusted EBITDA as a % of revenue(1)(3)
Net earnings (loss)(2)(4)
Earnings (loss) per share
Basic and Diluted
Total assets
Total loans and borrowings
Free Cash Flow(1)
Three months ended December 31,
Years ended December 31,
2022
2021
2022
253,858
13,986
$
$
201,588
18,054
$
$
971,517
64,725
$
$
6%
9%
7%
2021
733,380
80,755
10%
(2,873) $
4,176
$
3,715
$
24,628
(0.04) $
611,401
94,045
23,117
$
$
$
0.06
533,629
65,320
20,791
$
$
$
$
0.05
611,401
94,045
40,252
$
$
$
$
0.37
533,629
65,320
45,393
$
$
$
$
$
$
$
(1)
(2)
(3)
(4)
Please refer to the “Non-GAAP measures” section for the definition of Adjusted EBITDA, Adjusted EBITDA as a % of revenue and Free Cash Flow and to the “Reconciliation of non-GAAP
measures” section for the related calculations.
Adjusted EBITDA for year ended December 31, 2021 includes the Canadian Emergency Wage Subsidy (“CEWS”) of $9.1 million, comprised of $1.7 million in IFM, $6.6 million in WAFES,
$0.6 million in Modular, and $0.2 million in Corporate ($nil for the three months ended December 31, 2021). There was no CEWS in 2022.
Adjusted EBITDA as a % of revenue for the year ended December 31, 2021 excludes CEWS of $9.1 million.
Non-recurring charges included in pre-tax earnings are described in the reconciliation of Non-GAAP Measures section and included $12.1 million in the year ended December 31, 2022
(2021- $2.0 million) and $7.0 million for the three months ended December 31, 2022 (2021- $2.0 million).
Non-GAAP measures
Certain measures and ratios in this MD&A do not have any standardized meaning as prescribed by GAAP and, therefore, are
considered non-GAAP measures. Non-GAAP measures include “Adjusted EBITDA”, calculated as earnings before interest, taxes,
depreciation, amortization, equity investment depreciation, share based compensation, gain/loss on disposal of property, plant
and equipment and non-recurring items; “Adjusted EBITDA excluding CEWS”, calculated as Adjusted EBITDA less CEWS;
“Adjusted EBITDA as a percentage of revenue”, calculated as Adjusted EBITDA excluding CEWS divided by revenue; IFM
Adjusted EBITDA as a % of revenue, excluding loss contracts and the Dana business, calculated as Adjusted EBITDA less Adjusted
EBITDA related to loss contracts and the Dana business divided by revenue less revenue from loss contracts and the Dana
business; and “Free Cash Flow”, calculated as net cash flows from (used in) operating activities, less sustaining capital
expenditures, purchase of intangible assets, lease payments and finance costs plus proceeds on the sale of property, plant and
equipment; and “Backlog” which is the total value of modular work that has not yet been completed that: (a) has a high
certainty of being performed based on the existence of an executed contract or work order specifying job scope, value and
timing; or (b) has been awarded to Dexterra, as evidenced by an executed letter of award or agreement, describing the general
job scope, value and timing of such work, and where the finalization of a formal contract in respect of such work is reasonably
assured and expects to be recognized in the next 12 months. These measures and ratios provide investors with supplemental
measures of Dexterra's operating performance and highlight trends in its core businesses that may not otherwise be apparent
when relying solely on GAAP financial measures. Dexterra also believes that securities analysts, investors and other interested
parties frequently use non-GAAP measures in the evaluation of issuers. Dexterra’s management also uses non-GAAP measures
in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets, and to
determine components of management compensation.
These measures are regularly reviewed by the Chief Operating Decision Makers and provide investors with an alternative
method for assessing the Corporation’s operating results in a manner that is focused on the performance of the Corporation’s
ongoing operations and to provide a consistent basis for comparison between periods. These measures should not be
construed as alternatives to net earnings and total comprehensive income or operating cash flows as determined in accordance
with GAAP as indicators of the Corporation’s performance. The method of calculating these measures may differ from other
Dexterra Group Annual Report 2022 | 8
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
entities and accordingly, may not be comparable to measures used by other entities. For a reconciliation of these non-GAAP
measures to their nearest measure under GAAP please refer to “Reconciliation of non-GAAP measures”.
Management's Discussion and Analysis
Core Business
Dexterra Group Inc. is a corporation registered and domiciled in Canada and its common shares are listed on the Toronto Stock
Exchange (“TSX”) under the symbol DXT. Dexterra is a diversified support services organization delivering quality solutions for
the creation, management, and operation of infrastructure across Canada. Our Integrated Facilities Management (“IFM”)
business delivers a suite of operation and maintenance solutions for built assets and infrastructure in the public and private
sectors, including airports, defence, education, rail, healthcare and leisure. Our Workforce Accommodations, Forestry and
Energy Services (“WAFES”) business provides a full range of workforce accommodations solutions, forestry services and access
solutions to clients in the energy, mining, forestry and construction sectors among others. Our Modular Solutions (“Modular”)
business integrates modern design concepts with off-site manufacturing processes to produce high-quality building solutions
for rapid affordable housing, commercial, residential and industrial clients.
Results for 2022
Highlights
•
•
•
•
•
•
Consolidated revenue totaled $971.5 million for 2022 compared to $733.4 million in the prior year, an increase of 32% or
$238.1 million. The increase in revenue is largely attributed to the continued growth in IFM and WAFES, including
additional revenue of $108.3 million generated by the acquisitions of FCPI Dana Investments Inc. (“Dana”) and the Tricom
Group (“Tricom”) businesses or collectively the “2022 IFM Acquisitions”;
The Corporation’s Adjusted EBITDA for 2022 was $64.7 million (2021 - $80.8 million). This decrease related to inflationary
pressures of approximately $20 million primarily on fixed price contracts on social affordable housing projects in the
Modular Solutions business which included a special provision in Q4 2022 of approximately $8 million to cover expected
cost escalation and future losses on projects to be completed in 2023. This was partially offset by strong WAFES results;
The Corporation reported consolidated net earnings of $3.7 million for 2022 which included non-recurring items of $12.1
million;
Net debt decreased to $94.0 million at December 31, 2022. For the year ended December 31, 2022, Free cash flow (“FCF”)
was $40.3 million, compared to $45.4 million in 2021. The FCF conversion rate is expected to approximate 50% in future
periods;
On December 2, 2022, the Corporation signed an agreement to acquire all outstanding shares of VCI Controls Inc. (“VCI”).
The acquisition closed on January 31, 2023 and expands the existing IFM service offering to include building automation
controls and energy efficiency solutions; and
Dexterra declared a dividend for the first quarter of 2023 of $0.0875 per share payable to shareholders of record at the
close of business on March 31, 2023 which will be paid on April 17, 2023.
Fourth Quarter Results
Highlights
•
•
•
The Corporation generated consolidated revenue of $253.9 million for Q4 2022 which increased $52.3 million, or 26%,
compared to Q4 2021. Revenue in Q4 2022 decreased by only $5.9 million or 2% compared to Q3 2022 with stronger
revenues in the IFM and Modular businesses. WAFES also has a very strong Q4 2022 on a seasonally adjusted basis. The
increase of revenue from Q4 2021 is primarily related to the 2022 IFM acquisitions which added $33.0 million of additional
revenue as well as an increase in WAFES revenue due to increased activity levels and successful new sales and rebids on
contracts;
The Corporation’s Adjusted EBITDA for Q4 2022 was $14.0 million compared to $20.1 million in Q3 2022 and $18.1 million
in Q4 2021. The decline in Q4 2022 Adjusted EBITDA is primarily attributable to weaker Modular results which included a
special provision of $8 million to cover the cost impact and future losses on social affordable housing projects which will be
completed in 2023 ($nil for the three months ended December 31, 2021). Strong results from WAFES partially offset this
decline; and
The Corporation reported a consolidated net loss of $2.9 million for Q4 2022 (net earnings of $4.2 million in Q4 2021)
which included non-recurring items of $7.0 million (2021 - $2.0 million).
Dexterra Group Annual Report 2022 | 9
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
Operational Analysis
(000's)
Revenue:
IFM
WAFES
Modular Solutions
Corporate and Inter-segment eliminations
Total Revenue
Adjusted EBITDA:
IFM
WAFES
Modular Solutions
Corporate costs and Inter-segment eliminations
Total Adjusted EBITDA(1)
Adjusted EBITDA as a % of Revenue(2)
IFM
WAFES
Modular Solutions
Three months ended December 31,
Years ended December 31,
2022
2021
2022
2021
$
78,543
$
39,250
$
279,354
$
155,131
$
$
123,148
52,171
(4)
111,924
46,473
3,941
489,996
199,611
2,556
393,797
181,701
2,751
253,858
$
201,588
$
971,517
$
733,380
2,764
$
2,509
$
13,553
$
21,391
(6,622)
(3,547)
18,462
2,923
(5,840)
74,526
(8,331)
(15,023)
13,283
72,309
13,322
(18,159)
$
13,986
$
18,054
$
64,725
$
80,755
4 %
17 %
(13) %
6 %
16 %
6 %
5 %
15 %
(4) %
7 %
17 %
7 %
(1)
(2)
Adjusted EBITDA for year ended December 31, 2021 includes CEWS of $9.1 million, comprised of $1.7 million in IFM, $6.6 million in WAFES, $0.6 million in Modular, and $0.2 million in
Corporate ($nil for the three months ended December 31, 2022).
Adjusted EBITDA as a % of revenue for the year ended December 31, 2021 excludes CEWS of $9.1 million.
IFM
For the year ended December 31, 2022, IFM revenues were $279.4 million, an increase of $124.2 million driven by the 2022 IFM
Acquisitions which contributed $108.3 million in revenue and new business wins. Adjusted EBITDA of $2.8 million for Q4 2022
and $13.6 million for the year ended December 31, 2022 were up slightly compared to Q3 2022 and fiscal 2021. Adjusted
EBITDA as a percentage of revenue excluding the impact of loss contracts and the Dana business was 7% for the year ended
December 31, 2022. Dana had revenues of $79 million during the year (Q4 2022 revenue - $24.2 million) and a negative
Adjusted EBITDA in both periods due to the restart of certain significant contracts as COVID restrictions lessened and food
inflation.
The majority of our IFM business, including the Dana contracts, include price adjustment and/or inflationary provisions.
However, there is often a delay before these costs may be passed onto clients which generally results in some margin erosion in
high inflationary periods.
For Q4 2022, IFM revenues were $78.5 million, an increase of $39.3 million, or 100%, from Q4 2021 and $7.1 million or 10%
higher than Q3 2022. The revenue increase primarily reflects the 2022 IFM Acquisitions, which contributed $33.0 million in
revenue in Q4 2022. Excluding the acquisitions, revenue increased by $6.3 million or 16% compared to Q4 2021 due to new
business wins earlier in the year. The IFM Adjusted EBITDA as a percentage of revenue, excluding the impact of loss contracts
and the Dana business, was 6% for Q4 2022 and improved compared to Q3 2022.
Management believes 2023 margins should continue to improve as inflationary pressures reduce, cost adjustment clauses are
enacted and the Dana business becomes profitable.
Direct Costs
Direct costs are comprised of labour, materials, supplies and transportation, which vary directly with revenues, and have a
relatively fixed component that includes rent and utilities. For the year ended December 31, 2022, direct costs were 92% of
revenue compared to 89% in 2021 (after adjusting for CEWS). This 3% increase is mostly due to the impacts of inflation and the
profitability of the Dana business.
Direct Costs as a % of revenue in Q4 2022 were 94% which is higher than 93% in Q4 2021 (after adjusting for CEWS) and were
impacted by the items described above.
Dexterra Group Annual Report 2022 | 10
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
WAFES
WAFES is comprised of two revenue streams: Workforce Accommodations & Forestry and Energy Services. A significant portion
of the WAFES business is support services related and not capital intensive and aligns closely with our IFM segment.
WAFES support services includes food and facilities services at remote client locations. Forestry is a seasonal business with its
activities primarily taking place in Q2 and Q3 each year and is reported in WAFES support services.
WAFES asset-based services represent remote workforce accommodation activities in which the structures are owned and
installed by Dexterra as part of an equipment supply contract or bundled with food and facilities services in turn-key camp
contracts or the Corporation’s open lodge operations. This segment also includes Energy Services, where the Corporation owns
access matting and relocatable structures, which are rented or sold to clients.
Revenue from WAFES for the year ended December 31, 2022 was $490.0 million which is an increase of $96.2 million or 24%
compared to 2021. The increase is attributable to growth in camp catering, install activities and higher occupancy levels.
Revenues from Energy Services were $59.3 million for the year ended December 31, 2022 which is an increase of $23.5 million
or 65% compared to 2021. Energy Services activity is closely tied to the energy industry and the increase reflects higher activity
in this sector in Western Canada driving demand for access matting and space rentals. For the year ended December 31, 2022,
WAFES support services activity accounted for 56% (44% asset-based services) of total WAFES revenue compared to 55%
support services for the same period of 2021.
Revenue from the WAFES business for Q4 2022 was $123.1 million, an increase of $11.2 million or 10% compared to Q4 2021.
WAFES revenue performance was stronger in Q4 2022 compared to Q4 2021 due to high business activity levels including
higher access matting rentals and sales and field service activity.
The 2022 Adjusted EBITDA as a percentage of revenue is 15%, compared to 17% in 2021. The lower margin as compared to
2021 is primarily due to a change in revenue mix in 2022 and inflationary increases to food and utilities costs in the business
which are generally passed on to clients with a timing lag. Adjusted EBITDA as a percentage of revenue was 17% for Q4 2022
which is consistent with Q4 2021 and included higher margin matting activities and retroactive price increases of $2.8 million
(2021- $1.8 million).
Direct Costs
Direct costs are comprised of labour, materials, supplies and transportation, which vary directly with revenues, and a relatively
fixed component, that includes rent and utilities. For the year ended December 31, 2022 direct costs were 83% of revenue
compared to 80% in 2021. This 3% increase is primarily due to the change in the revenue mix and the impact of higher food,
utilities and transportation costs which are passed on to clients with some timing lag.
The decrease of direct costs as a percentage of revenue in Q4 2022 compared to the prior year is due the additional revenue
generated from successful contract change order negotiations and higher margin access mat sales.
Modular Solutions
Revenue for the year ended December 31, 2022 was $199.6 million, an increase of $17.9 million or 10% over the prior year.
Modular Solutions segment revenues for Q4 2022 were $52.2 million, an increase of $5.7 million or 12% as compared to Q4
2021. Adjusted EBITDA loss for the year ended December 31, 2022 was $8.3 million (2021 - Adjusted EBITDA of $13.3 million)
and an Adjusted EBITDA loss of $6.6 million in Q4 2022 (Q4 2021 - Adjusted EBITDA of $2.9 million).
Inflation, especially higher subcontractor costs, and supply chain constraints significantly impacted the modular business
profitability including many fixed price social affordable housing projects signed in 2021. Most of these projects are British
Columbia (“BC”) based and experienced delays. The cost escalation or inflationary impact in 2022 attributed to social affordable
projects is approximately $20 million and included a special provision of $8 million in Q4 2022 to account for expected future
losses to complete these contracts in 2023.
Margins for the Modular segment are expected to improve in 2023 as the aforementioned fixed price projects are completed
and through ongoing efforts in executing a 4-point business turn-around plan including (i) improving project management
practices, processes, and tools, (ii) revising contract pricing and including inflation risk management provisions in all new
contracts, (iii) supply chain management initiatives including forward purchasing of lumber and other materials, and (iv)
continued diversification of the project pipeline to reduce social affordable housing concentration risk.
A key metric for the Modular Solutions is the backlog of projects. The backlog of $114 million for rapid affordable housing was
lower at the end of Q4 2022. Management understands significant new social affordable housing projects will be tendered in
Western Canada in the summer of 2023. The rise in interest rates is also impacting the demand for U.S. housing supply only
projects. The backlog for U.S. manufacturing supply and industrial projects is $32 million at December 31, 2022. Modular
Solutions also has recurring modular business beyond the projects above worth approximately $40 million per annum, which
consists of education modules, industrial/commercial modules and kiosks.
Dexterra Group Annual Report 2022 | 11
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
Direct Costs
Direct costs are comprised of labour, raw materials and transportation, which vary directly with revenues, and a relatively fixed
component that includes rent, utilities and the design and technical services required in the bidding cycle and post award
manufacturing and installation of the product.
Direct costs in Modular Solutions for the year and Q4 2022 were abnormally high given inflationary pressures and the escalating
costs on the fixed priced contracts as described above.
Other Items
Non-recurring items
Costs include non-recurring items recorded in direct costs and SG&A expenses for the year ended December 31, 2022 of $12.1
million (Q4 2022 - $7.0 million) including: contract loss provisions of $3.8 million (Q4 2022 - $0.6 million), net of revenue of $3.1
million (Q4 2022 - $nil) on pre-merger commercial disputes which have been remediated; $2.9 million recorded in Q4 2022 on
an onerous IFM contract to record future expected losses over the life of the contract; costs of $2.0 million (Q4 2022 - $2.0
million) related to the restructuring and systems implementation for a business unit being integrated with the VCI Controls Inc.
acquisition; restructuring costs of $1.8 million (Q4 2022 - $0.7 million); and other items of $1.6 million (Q4 2022 - $0.8 million)
including acquisition costs.
Selling, General & Administrative Expense
Selling, general & administrative (“SG&A”) expenses are comprised of head and corporate office costs including the executive
officers and directors of the Corporation, and shared services, including information technology, human resources, corporate
accounting staff and the associated costs of supporting a public company.
SG&A expenses for the year ended December 31, 2022 were $41.1 million compared to $34.9 million for 2021. SG&A expenses
increased in 2022 due to non-recurring expenses related to restructuring costs and acquisition costs of $2.9 million (2021 - $0.3
million) and the increased scale of business operations. Normalized SG&A expenses for the year ended December 31, 2022
were $38.2 million and as a percentage of revenue were 4% of total revenue for 2022 which decreased from 5% in 2021.
SG&A expenses for Q4 2022 were $10.5 million, an increase of $1.0 million when compared to Q4 2021. Normalized SG&A
expenses after deducting non-recurring expenses for the three months ended December 31, 2022 were $9.5 million or 4% of
total revenue.
Depreciation and Amortization
(000’s)
2022
2021
2022
2021
Three months ended December 31,
Years ended December 31,
Depreciation of property, plant and equipment and right-of-use assets $
7,735
$
7,856
$
33,092
$
Amortization of intangibles
1,361
1,058
5,513
Total depreciation and amortization
$
9,096
$
8,914
$
38,605
$
34,450
3,611
38,061
For the year ended December 31, 2022, depreciation and amortization was $38.6 million, a $0.5 million of increase compared
to 2021. Higher amortization of intangibles related to the 2022 IFM Acquisitions was offset by lower depreciation of property,
plant and equipment as more assets become fully depreciated. The Corporation plans to continue to operate in a capital light
model with lower depreciation expense as property, plant and equipment and right of use assets become fully depreciated. For
Q4 2022, depreciation and amortization was $9.1 million, an increase of $0.2 million compared to Q4 2021.
Finance costs
Finance costs include interest on loans and borrowings, interest on lease liabilities and accretion of debt financing costs.
The effective interest rate on loans and borrowings for the three months ended and year ended December 31, 2022 was 7.6%
(Q4 2021 - 3.7%) and 5.1% (December 31, 2021 - 4.0%), respectively. The interest rate has been impacted by the increases in
the Bank of Canada rate in 2022. The interest rate ranges from bank prime rate plus 0.5% to 1.75% per annum depending on
the debt level and earnings profile of the Corporation. The future effective rate will rise if there are increases in the central bank
interest rate.
Goodwill
Goodwill increased to $128.6 million compared to the $98.6 million in 2021 due to the 2022 IFM Acquisitions. $94.0 million of
the Goodwill is attributable to the IFM segment and $34.6 million is attributable to WAFES. The Corporation concluded no
impairment was identified for goodwill or intangibles as at December 31, 2022.
Dexterra Group Annual Report 2022 | 12
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
Gain/Loss on disposal
For the year ended December 31, 2022 , the gain on disposal was $0.4 million which was comparable to the gain on disposal in
2021. For Q4 2022, the gain on disposal was $0.1 million compared to a gain of $0.3 million in Q4 2021. The gains and losses on
disposal originated from the rationalization of WAFES assets for cash.
Non-controlling interest
Dexterra owns 49% of Tangmaarvik Inland Camp Services Inc. (“Tangmaarvik”) and controls its operations. As a result, the
results of Tangmaarvik are consolidated with the results of Dexterra and a non-controlling interest is recognized. For the three
months and year ended December 31, 2022, earnings of $0.1 million and $0.3 million were attributed to the non-controlling
interest, respectively.
Joint Ventures
Dexterra owns 49% of Gitxaala Horizon North Services LP (“Gitxaala”) and Big Spring Lodging Limited Partnership (“BSL LP”).
These equity investments represent operations of WAFES and generate earnings from providing workforce accommodations,
rentals, and maintenance of relocatable structures. For the three-month and year ended December 31, 2022, earnings from
equity investments were $0.5 million and $2.0 million, respectively (2021 - $0.8 million and $2.5 million).
Income taxes
For the year ended December 31, 2022, the Corporation's effective income tax rate was a recovery of 15%, compared to a tax
expense of 26.1% in 2021.The effective tax rate for the year ended December 31, 2022 is lower than the combined federal and
provincial income tax rates primarily due to the positive impact of the tax rate differential on certain transactions and
adjustments related to prior periods. For 2021, the effective tax rate was consistent with combined federal and provincial
income tax rate. The Corporation has non-capital losses for Canadian tax purposes of $92.4 million at December 31, 2022
available to reduce future taxable income in Canada. The benefit of the losses has been recorded in the financial statements as
the Corporation expects to fully utilize these losses before their expiry.
Outlook
Operations Outlook
Overall
The Canadian and global economies continue to experience inflationary pressures, higher interest rates, reduced labour
availability and supply chain issues along with concerns around a global recession. These factors have created a challenging
environment for all business.
Management is proactively addressing inflationary, supply chain, and labour availability issues across all its business segments
with the goal in 2023 to significantly improve profitability in the Modular and IFM business segments. We also expect our
overall profitability to improve with significantly lower non-recurring charges in 2023.
IFM
The focus of the IFM business is on improving the profitability of the Dana acquired business starting in Q1 2023 while
continuing to provide excellent service to clients. We will look at M&A opportunities in the back half of 2023.
WAFES
The WAFES business is expected to remain strong in 2023 given natural resource activity levels nationwide. The Crossroads
Lodge in Kitimat, British Columbia reopened in Q2 2022 and is expected to have improved occupancy in 2023 with a broader
client base which is a positive development.
Modular
The demand for social affordable housing in urban centers continues with various government assistance programs in place.
The segment is working through the backlog of fixed price contracts, executing on business improvement initiatives and is
expected to return to positive margins in 2023.
Liquidity and Capital Resources
Debt was $94.0 million at December 31, 2022. The Corporation's financial position and liquidity remain strong with $95.0
million of unused capacity on its credit lines at December 31, 2022.
For the year ended December 31, 2022, cash generated by operating activities was $64.0 million, which was similar to the prior
year as stronger working capital management offset the lower earnings in 2022. Debt levels are expected to be reduced in 2023
in the absence of acquisitions.
Dexterra Group Annual Report 2022 | 13
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
Capital Spending
For the three months and year ended December 31, 2022, gross capital spending for property, plant and equipment was $2.7
million and $6.9 million, respectively, compared to the $0.9 million and $5.9 million in the same period of 2021. Capital
spending in 2022 primarily relates to sustaining capital whereas the majority of the 2021 spending was for NRB Cambridge plant
expansion ($3.2 million).
Quarterly Summary of Results
(000's except per share amounts)
Revenue
Adjusted EBITDA
Net earnings (loss) attributable to shareholders
Net earnings per share, basic and diluted
(000's except per share amounts)
Revenue
Adjusted EBITDA
Net earnings attributable to shareholders
Net earnings per share, basic and diluted
Three months ended
2022
December
2022
September
2022
June
253,858 $
259,803 $
233,896 $
13,986
(2,939)
20,081
5,164
13,642
310
(0.04) $
0.08 $
— $
Three months ended
2021
December
2021
September
2021
June
201,588 $
202,760 $
173,627 $
18,054
4,093
22,372
7,780
22,502
8,206
0.06 $
0.12 $
0.13 $
$
$
$
$
2022
March
223,960
17,018
898
0.01
2021
March
155,404
17,825
4,277
0.07
Reconciliation of non-GAAP measures
The following provides a reconciliation of non-GAAP measures to the nearest measure under GAAP for items presented
throughout the MD&A.
Adjusted EBITDA
(000's)
Net earnings (loss)(1)
Add:
Share based compensation
Depreciation & amortization
Equity investment depreciation
Finance costs
Gain on disposal of property, plant and equipment
Income tax expense (recovery)
Non-recurring:
Contract loss provisions(2)
Restructuring and other costs(3)
Adjusted EBITDA(1)
Three months ended December 31,
Years ended December 31,
2022
$
(2,873) $
2021
4,176 $
2022
3,715 $
426
9,096
303
2,975
(117)
(2,854)
3,510
3,520
516
8,914
110
1,221
(308)
1,469
1,706
250
1,112
38,605
1,181
8,953
(417)
(495)
6,678
5,394
$
13,986 $
18,054 $
64,725 $
2021
24,628
2,099
38,061
627
5,101
(425)
8,708
1,706
250
80,755
(1) Includes CEWS of $9.1 million for the year ended December 31, 2021 ($nil for the three months ended December 31, 2021).
(2) Results include contract loss provisions for the year ended December 31, 2022 of $3.8 million (2021 - $1.7 million; Q4 2022 - $0.6 million; Q4 2021 - $1.7 million) for disputes and the
remediation work related to contracts in place at the time of the Acquisition of Horizon North Logistics Inc. in May 2020 (net of revenue of $3.1 million in 2022 (Q4 2022 - $nil)) and $4.0
million in 2021 (Q4 2021- $4.0 million) and $2.9 million related to an onerous IFM contract recorded in Q4 2022. The remediation work on the pre-Acquisition contracts is substantially
complete with final payments to be negotiated.
(3) Corporate SG&A for the year ended December 31, 2022 includes costs of $2.9 million including restructuring costs of $1.8 million (Q4 2022 - $0.7 million); and other items of $1.1 million (Q4
2022 - $0.3 million) including acquisition costs. Restructuring and other costs also includes direct costs of $2.5 million (Q4 2022 - $2.5 million), of which $2.0 million (Q4 2022 - $2.0 million)
relates to a restructuring and systems implementation for a business unit being integrated with the VCI Controls Inc. acquisition and $0.5 million relates to other items (Q4 2022 - $0.5
million).
Dexterra Group Annual Report 2022 | 14
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
IFM Adjusted EBITDA as a % of revenue, excluding loss contracts and the Dana business
(000's)
Revenue:
IFM Revenue
Deduct: Impact of loss contracts and Dana
IFM Revenue excluding loss contracts and Dana
Adjusted EBITDA:
IFM
Add: Impact of loss contracts and Dana
IFM Adjusted EBITDA excluding loss contracts and Dana
IFM Adjusted EBITDA as a % of revenue, excluding loss contracts and the Dana
business
Free Cash Flow
(000's)
Net cash flows from operating activities
$
Sustaining capital expenditures, net of proceeds
Purchase of intangible assets
Three months ended December 31, 2022
Year ended December 31, 2022
$
$
$
$
78,543
$
(29,486)
49,057
$
2,764
$
133
2,897
$
6 %
279,354
(84,343)
195,011
13,553
650
14,203
7 %
Three months ended December 31,
Years ended December 31,
2022
30,794 $
(1,717)
(47)
(2,739)
(3,174)
2021
2022
24,603 $
63,991 $
68
(353)
(1,128)
(2,399)
(4,369)
(187)
(8,531)
(10,652)
40,252 $
2021
64,486
(1,232)
(1,931)
(5,327)
(10,603)
45,393
$
23,117 $
20,791 $
Finance costs paid
Lease payments
Free Cash Flow
Adjusted EBITDA excluding CEWS
(000's)
Total Adjusted EBITDA
CEWS by Segment:
IFM
WAFES
Modular Solutions
Corporate
Adjusted EBITDA excluding CEWS
Adjusted EBITDA as a % of revenue
$
$
Year ended December 31, 2021
80,755
(1,713)
(6,607)
(577)
(203)
71,655
9.8%
No CEWS was recorded in Q4 2021 or in 2022 so the Adjusted EBITDA and Adjusted EBITDA excluding CEWS numbers are the same.
Accounting Policies
Dexterra’s IFRS accounting policies are provided in Note 3 to the Consolidated Financial Statements for the year ended
December 31, 2022.
Outstanding Shares
Dexterra had 65,241,628 voting common shares issued and outstanding as at March 8, 2023, of which 49% or 31,957,781 are
owned by subsidiaries of Fairfax Financial Holdings Limited.
Off-Balance Sheet Financing
Dexterra has no off-balance sheet financing.
Dexterra Group Annual Report 2022 | 15
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
Management’s Report on Disclosure Controls and Procedures and Internal Controls over
Financial Reporting
Disclosure Controls and Procedures
The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have designed, or caused to be designed under their
supervision, disclosure controls and procedures (“DC&P”) as defined in National Instrument 52-109 - Certification of Disclosure
in Issuers' Annual and Interim Filings (“NI 52-109”) of the Canadian Securities Administrators, to provide reasonable assurance
that: (i) material information relating to the Corporation is made known to the CEO and the CFO by others, particularly during
the period in which the interim filings are being prepared; and (ii) information required to be disclosed by the Corporation in its
annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed,
summarized and reported within the time periods specified in securities legislation.
There were no changes in Dexterra’s DC&P that occurred during the year ended December 31, 2022 that have materially
affected, or are reasonably likely to materially affect, Dexterra’s DC&P.
Internal Controls over Financial Reporting
The CEO and the CFO have designed, or caused to be designed under their supervision, internal controls over financial reporting
(“ICFR”) as defined in NI 52-109 of the Canadian Securities Administrators, in order to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
There were no changes to the Corporation’s ICFR during the period ended December 31, 2022 that have materially affected, or
are reasonably likely to materially affect, the Corporation’s ICFR.
Limitations on the Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial
Reporting
Because of their inherent limitations, DC&P and ICFR may not prevent or detect misstatements, errors or fraud. Control
systems, no matter how well conceived or implemented, can provide only reasonable, not absolute, assurance that the
objectives of the control systems are met.
Risks and Uncertainties
The financial risks, critical accounting estimates and judgements, and risk factors related to Dexterra and its business, which
should be carefully considered, are disclosed in the Annual Information Form under “Risk Factors” and in the Corporation's
Consolidated Financial Statements for the year ended December 31, 2022 under Note 22, dated March 8, 2023, and this MD&A
should be read in conjunction with them. Such risks may not be the only risks facing Dexterra. Additional risks not currently
known may also impair Dexterra’s business operations and results of operation.
Critical Accounting Estimates and Judgements
This MD&A of Dexterra’s financial condition and results of operations is based on its consolidated financial statements, which
are prepared in accordance with IFRS. The preparation of the consolidated financial statements requires management to make
estimates and judgements about the future. Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The MD&A should
be read in conjunction with the 2022 Financial Statements.
Financial Instruments and Risk Management
In the normal course of business, the Corporation is exposed to a number of financial risks that can affect its operating
performance. These risks are: credit risk, liquidity risk and interest rate risk. The Corporation’s overall risk management
program and prudent business practices seek to minimize any potential adverse effects on the Corporation’s financial
performance. The MD&A should be read in conjunction with the 2022 Financial Statements.
Forward-Looking Information
Certain statements contained in this MD&A may constitute forward-looking information under applicable securities law.
Forward-looking information may relate to Dexterra’s future outlook and anticipated events, business, operations, financial
performance, financial condition or results and, in some cases, can be identified by terminology such as “continue”; “forecast”;
“may”; “will”; “project”; “could”; “should”; “expect”; “plan”; “anticipate”; “believe”; “outlook”; “target”; “intend”; “estimate”;
“predict”; “might”; “potential”; “continue”; “foresee”; “ensure” or other similar expressions concerning matters that are not
historical facts. In particular, statements regarding Dexterra’s future operating results and economic performance, including
COVID-19 related impacts and the impacts of the 2022 IFM Acquisitions; management expectations of market sector recoveries,
its leverage, Free Cash Flow, NRB Modular Solutions backlog and revenue, and its objectives and strategies are forward-looking
Dexterra Group Annual Report 2022 | 16
Pa
Management’s Discussion and Analysis
Three months and years ended December 31, 2022 and 2021
statements. These statements are based on certain factors and assumptions, including expected growth, market recovery,
results of operations, performance and business prospects and opportunities regarding Dexterra, which Dexterra believes are
reasonable as of the current date. While management considers these assumptions to be reasonable based on information
currently available to Dexterra, they may prove to be incorrect. Forward-looking information is also subject to certain known
and unknown risks, uncertainties and other factors that could cause Dexterra’s actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied by such forward-looking
information, including, but not limited to: the ability to retain clients, renew existing contracts and obtain new business; an
outbreak of contagious disease that could disrupt its business; the highly competitive nature of the industries in which Dexterra
operates; reliance on suppliers and subcontractors; cost inflation; volatility of industry conditions could impact demand for its
services; a reduction in the availability of credit could reduce demand for Dexterra’s products and services; Dexterra’s
significant shareholder may substantially influence its direction and operations and its interests may not align with other
shareholders; its significant shareholder’s 49% ownership interest may impact the liquidity of the common shares; cash flow
may not be sufficient to fund its ongoing activities at all times; loss of key personnel; the failure to receive or renew permits or
security clearances; significant legal proceedings or regulatory proceedings/changes; environmental damage and liability is an
operating risk in the industries in which Dexterra operates; climate changes could increase Dexterra’s operating costs and
reduce demand for its services; liabilities for failure to comply with public procurement laws and regulations; any deterioration
in safety performance could result in a decline in the demand for its products and services; failure to realize anticipated benefits
of acquisitions and dispositions; inability to develop and maintain relationships with Indigenous communities; the seasonality of
Dexterra’s business; inability to restore or replace critical capacity in a timely manner; reputational, competitive and financial
risk related to cyber-attacks and breaches; failure to effectively identify and manage disruptive technology; economic
downturns can reduce demand for Dexterra’s services; its insurance program may not fully cover losses. Additional risks and
uncertainties are described in Note 22 of the Corporation's Consolidated Financial Statements for the years ended December
31, 2022 and 2021 contained in its most recent Annual Report filed with securities regulatory authorities in Canada and
available on SEDAR at sedar.com. The reader should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. Dexterra is under no obligation and does not undertake to update or alter
this information at any time, except as may be required by applicable securities law.
Dexterra Group Annual Report 2022 | 17
Pa
MANAGEMENT’S REPORT
TO SHAREHOLDERS
Dexterra Group Annual Report 2022 | 18
MANAGEMENT’S REPORT TO SHAREHOLDERS
The accompanying consolidated financial statements and Management’s Discussion
and Analysis of Dexterra Group Inc. (“Dexterra Group” or the “Corporation”) have been
approved by the Board of Directors (“Board”) of Dexterra Group. The consolidated financial
statements have been prepared by management in accordance with International
Financial Reporting Standards. Financial statements will, by necessity, include certain
amounts based on estimates and judgments. The financial information contained
throughout this report has been reviewed to ensure consistency with these consolidated
financial statements.
Management has overall responsibility for internal controls and maintains accounting
systems designed to provide reasonable assurance that transactions are properly
authorized, assets safeguarded and that the financial records form a reliable base for
the preparation of accurate and timely financial information. The Chief Executive Officer
and Chief Financial Officer have evaluated the effectiveness of disclosure controls and
procedures and internal controls over financial reporting and have concluded that they are
effective.
The Board oversees the management of the business and affairs of Dexterra Group,
including ensuring management fulfills its responsibilities for financial reporting and is
ultimately responsible for reviewing and approving the financial statements. The Board
carries out this responsibility principally through its Audit Committee, which consists of
four independent directors. An independent firm of chartered accountants, appointed as
external auditor by the shareholders, has audited the consolidated financial statements
and its report is included herein. The Audit Committee considers the report of the external
auditor, assesses the adequacy of internal controls of the company, examines the fees
and expenses of the auditor and reviews the consolidated financial statements with
management and the external auditor and reports its findings to the Board.
John Mac Cuish
President and Chief Executive Officer
Drew Knight
Chief Financial Officer
March 8, 2023
Dexterra Group Annual Report 2022 | 19
INDEPENDENT AUDITOR’S REPORT
TO SHAREHOLDERS
Dexterra Group Annual Report 2022 | 20
Dexterra Group Annual Report 2022 | 21
Dexterra Group Annual Report 2022 | 22
Dexterra Group Annual Report 2022 | 23
Dexterra Group Annual Report 2022 | 24
Dexterra Group Annual Report 2022 | 25
Dexterra Group Annual Report 2022 | 26
CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2022 and December 31, 2021
Dexterra Group Annual Report 2022 | 27
Consolidated statement of financial position
(000’s)
Assets
Current assets
Trade and other receivables
Inventories
Prepaid expenses and other
Income tax receivable
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Goodwill
Deferred income tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred revenue
Income tax payable
Asset retirement obligations
Lease liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Contingent consideration
Asset retirement obligations
Loans and borrowings
Other long term liabilities
Deferred income tax liabilities
Non-current liabilities
Total liabilities
Shareholders’ Equity
Share capital
Contributed surplus
Accumulated other comprehensive income
Retained earnings
Non-controlling interest
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of the consolidated financial statements.
Subsequent event (Note 26)
Note
December 31,
2022
December 31,
2021
5
6
7
8
9
9
17
10
14
12
8
8
12
11
13
17
13
$
$
$
$
$
211,397
$
26,045
5,324
—
242,766
$
156,608
23,363
35,375
128,607
8,118
16,564
368,635
611,401
$
$
184,776
16,998
4,948
2,213
208,935
161,981
22,057
21,777
98,640
2,081
18,158
324,694
533,629
170,629
$
121,868
10,706
381
8,478
7,783
1,946
—
5,277
7,346
$
197,977
$
136,437
20,311
697
3,164
94,045
640
7,584
126,441
324,418
$
$
233,968
2,236
341
50,245
193
286,983
611,401
$
$
17,722
1,142
5,283
65,320
769
2,608
92,844
229,281
233,541
1,199
—
69,639
(31)
304,348
533,629
$
$
$
$
Mary Garden
Director, Audit Committee Chair
John MacCuish
Director, Chief Executive Officer
Dexterra Group Annual Report 2022 | 28
Consolidated statement of comprehensive income
(000's except per share amounts)
Revenue
Revenue from operations
Operating expenses
Direct costs
Selling, general and administrative expenses
Depreciation
Amortization of intangible assets
Share based compensation
Gain on disposal of property, plant and equipment
Operating income
Finance costs
Earnings from equity investments
Earnings before income taxes
Income tax
Income tax expense (recovery)
Net Earnings
Other comprehensive income
Translation of foreign operations
Total comprehensive income for the year
Net Earnings Attributable to:
Shareholders
Non-controlling interest
Earnings per common share:
Net earnings per share, basic and diluted
Weighted average common shares outstanding:
Basic
Diluted
The accompanying notes are an integral part of the consolidated financial statements.
Years ended December 31,
Note
2022
2021
14
$
971,517
$
733,380
15
16
7,8
9
13
8,11
10
$
$
880,966
41,103
33,092
5,513
1,112
(417)
10,148
$
8,953
(2,025)
3,220
$
622,837
34,853
34,450
3,611
2,099
(425)
35,955
5,101
(2,482)
33,336
17
(495)
$
3,715
$
8,708
24,628
$
$
$
341
4,056
$
—
24,628
3,433
282
$
$
24,355
273
19
$
0.05
$
0.37
19
19
65,205
65,489
65,075
65,420
Dexterra Group Annual Report 2022 | 29
Consolidated statement of changes in equity
(000’s)
Note
Shares Share capital
Share capital
- Number of
Accumulated
other
comprehensive
income
Contributed
surplus
Retained
earnings
Non-
controlling
interest
Total
Balance as at December 31, 2020
64,869 $
232,348 $
354 $
— $
66,451 $
1,823 $
300,976
Dividends
Exercise of stock options
Share based compensation
Total comprehensive income
Balance as at December 31, 2021
Dividends
Exercise of stock options
Share based compensation
Total comprehensive income
20
13
13
20
13
13
—
282
—
—
—
1,193
—
—
—
(334)
1,179
—
—
—
—
—
(21,167)
(2,127)
(23,294)
—
—
24,355
—
—
273
859
1,179
24,628
65,151 $
233,541 $
1,199 $
— $
69,639 $
(31) $
304,348
—
91
—
—
—
427
—
—
—
(117)
1,154
—
—
—
—
(22,827)
—
—
341
3,433
(58)
—
—
282
(22,885)
310
1,154
4,056
Balance as at December 31, 2022
65,242 $
233,968 $
2,236 $
341 $
50,245 $
193 $
286,983
The accompanying notes are an integral part of the consolidated financial statements.
Dexterra Group Annual Report 2022 | 30
Consolidated statement of cash flows
(000’s)
Cash provided by (used in):
Operating activities:
Total comprehensive income
Adjustments for:
Depreciation
Amortization of intangible assets
Share based compensation
Gain on disposal of property, plant and equipment
Net transfers between inventory and rental fleet
Earnings on equity investments
Non-cash revaluation of contingent consideration
Asset retirement obligation settled
Finance costs
Income tax expense (recovery)
Changes in non-cash working capital
Income taxes refunded (paid)
Net cash flows from operating activities
Investing activities:
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds on sale of property, plant and equipment
Acquisition of Dana
Acquisition of Tricom Assets
Capital contributions in equity investments
Cash distributions received from equity investments
Net cash flows used in investing activities
Financing activities:
Issuance of common shares
Payments for lease liabilities
Drawings (repayments) on loans and borrowings
Finance costs paid
Dividends paid to non-controlling interest
Dividends paid to shareholders
Net cash flows used in financing activities
Change in cash position
Cash, beginning of year
Cash, end of year
Years ended December 31,
Note
2022
2021
7,8
9
13
7
10
12
17
18
17
7
9
4(a)
4(b)
10
13
11
20
$
4,056
$
24,628
33,092
34,450
5,513
1,112
(417)
(6,630)
(2,025)
(445)
(820)
8,953
(495)
21,314
783
3,611
2,099
(425)
2,017
(2,482)
(306)
(2,041)
5,101
8,708
(172)
(10,702)
$
63,991
$
64,486
(6,940)
(187)
709
(30,357)
(17,136)
(479)
4,553
(5,860)
(1,931)
749
—
—
(949)
—
$
(49,837) $
(7,991)
310
(10,652)
28,353
(8,531)
(815)
859
(10,603)
(19,942)
(5,327)
(1,151)
(22,819)
(20,331)
$
(14,154) $
(56,495)
—
—
$
—
$
—
—
—
The accompanying notes are an integral part of the consolidated financial statements.
Dexterra Group Annual Report 2022 | 31
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
1. Reporting entity
Dexterra Group Inc. (“Dexterra Group” or the “Corporation”) is a corporation registered and domiciled in Canada and its
common shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol DXT. Dexterra Group is a diversified support
services organization delivering solutions for the creation, management, and operation of infrastructure across Canada. Our
Integrated Facilities Management (“IFM”) business delivers a suite of operation and maintenance solutions for built assets and
infrastructure in the public and private sectors, including aviation, defence, education, rail, healthcare, and leisure. Our
Workforce Accommodations, Forestry and Energy Services (“WAFES”) business provides a full range of workforce
accommodations solutions, forestry services and access solutions to clients in the energy, mining, forestry and construction
sectors among others. Our Modular Solutions business integrates modern design concepts with off-site manufacturing
processes to produce building solutions for rapid affordable housing, commercial, residential and industrial clients.
2. Basis of Preparation
a.
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”). The consolidated financial statements were authorized for issue by the Board of Directors on March 8, 2023.
b.
Basis of measurement
The consolidated financial statements have been prepared using the historical cost basis.
c.
Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars (“CAD”), which is the Corporation and
subsidiaries’ functional currency with the exception of a United States (“US”) operational entity which has a US dollar
(“USD”) functional currency.
d.
Use of estimates and judgement
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. The judgements, estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual outcomes may differ from these estimates. The judgements, estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period
in which the estimate is revised.
Critical Accounting Estimates & Judgements
•
•
•
Purchase price equations (See Note 4) - The acquired assets and assumed liabilities are generally recognized at fair
value on the date the Corporation obtains control of a business. The measurement of each business combination is
based on the information available on the acquisition date. Management applied significant judgement in estimating
the fair value of the customer relationships. Management used the multi-period excess earnings method to fair value
customer relationships using a discounted cash flow model. The significant assumptions used in the discounted cash
flow models are revenue growth rates, the earnings before interest, taxes, depreciation, amortization, share based
compensation, and gain/loss on disposal of property, plant and equipment (“EBITDA”) and discount rates.
Impairment - Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) exceeds its
recoverable amount, which is the higher of its fair value less costs of disposal (“FVLCOD”) and its value in use (“VIU”).
The FVLCOD calculation is based on available data from binding sales transactions, conducted at arm’s length, for
similar assets or observable market prices less incremental costs for disposing of the asset. If no such transactions can
be identified, an appropriate valuation model is used. Management applied significant judgement in determining the
recoverable amounts. The recoverable amounts of the CGUs were based on FVLCOD method using discounted cash
flow models. Significant assumptions used in the discounted cash flow models included revenue growth rates, EBITDA
and discount rates.
Revenue Recognition Estimate - The Corporation recognizes revenue over a period of time as work is completed for its
modular construction contracts and estimates progress of these contracts by comparing costs incurred to the total
expected costs of the project. To determine the estimated costs to complete construction contracts, assumptions and
estimates are required to evaluate matters related to schedule, material and labour costs, labour productivity,
changes in scope, or terms of the contract, inflationary pressures and availability and terms for subcontractors. Due to
the nature of construction activities, estimates can change over the life of the contracts which may significantly
impact profitability.
Dexterra Group Annual Report 2022 | 32
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
3. Significant accounting policies and determination of fair values
(a) Basis of consolidation
i.
Subsidiaries
Subsidiaries are entities controlled by the Corporation. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases. The
accounting policies of subsidiaries are aligned with the policies adopted by the Corporation.
ii.
Joint ventures
The Corporation’s joint ventures are those entities over whose activities the Corporation has joint control, established
through ownership, voting rights, or by contractual agreement. Joint ventures are accounted for using the equity
method (equity accounted investees) and are initially recognized at cost.
iii.
Special purpose entities
The Corporation has established a number of special purpose entities (“SPE”) for operating purposes. A SPE is
consolidated when, based on an evaluation of the substance of its relationship with the Corporation and the SPE's
risks and rewards, the Corporation concludes that it controls the SPE. Control exists when the Corporation is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
iv.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with
equity accounted investees are eliminated against the investment to the extent of the Corporation’s interest in the
investee.
v.
Non-controlling interest
The Corporation owns 49% of Tangmaarvik Inland Camp Services Inc. and is exposed to variable returns from its
involvement with the entity such that control exists. As a result, the results of Tangmaarvik Inland Camp Services Inc.
are consolidated with the results of the Corporation and a non-controlling interest is recorded. As at December 31,
2022, none of the SPEs held any net assets and therefore there was no related non-controlling interest.
(b) Business combinations
Business combinations are accounted for using the acquisition method. Determining whether an acquisition meets the
definition of a business combination or represents an asset purchase requires judgement on a case by case basis. If the
acquisition meets the definition of a business combination, the assets acquired and assumed liabilities are classified or
designated based on the contractual terms, economic conditions, the Corporation’s operating and accounting policies, and
other factors that exist on the acquisition date. The acquired identifiable net assets are measured at their fair value at the
date of acquisition. Any excess of the purchase price over the fair value of the net assets acquired is recognized as
goodwill. Acquisition costs, other than those associated with the issue of debt or equity securities, that the Corporation
incurs in connection with a business combination are expensed as incurred.
Any contingent consideration is measured at fair value at the date of acquisition and is remeasured at each reporting date
with subsequent changes in the fair value of the contingent consideration being recognized in profit or loss.
(c) Financial instruments
IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through
other comprehensive income (“FVOCI”) and fair value through the consolidated statement of comprehensive income
(“FVTPL”). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial
asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a
financial asset in the scope of the standard are not separated. Instead, the hybrid financial instrument as a whole is
assessed for classification.
i.
Non-derivative financial assets
The initial classification of a financial asset depends upon the Corporation’s business model for managing its financial
assets and the contractual terms of the cash flows. There are three measurement categories into which the
Corporation classified its financial assets:
Amortized Cost: Includes assets that are held within a business model whose objective is to hold assets to collect
contractual cash flows and its contractual terms give rise on specified dates to cash flows that represent solely
payments of principal and interest;
Dexterra Group Annual Report 2022 | 33
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
FVOCI: Includes assets that are held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets, where its contractual terms give rise on specified dates to
cash flows that represent solely payments of principal and interest; or
FVTPL: Includes assets that do not meet the criteria for amortized cost or FVOCI and are measured at fair value
through the consolidated statement of comprehensive income. This includes all derivative financial assets.
The Corporation initially recognizes trade and other receivables on the date that they originate. All other financial
assets are recognized initially on the trade date at which the Corporation becomes a party to the contractual
provisions of the instrument.
The Corporation’s financial assets, trade and other receivables, are initially recognized at fair value plus any directly
attributable transaction costs. Subsequently, they are measured at amortized cost using the effective interest
method, less any impairment losses.
The Corporation derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or
it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets
that is created or retained is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial
position when, and only when, there is a legal right to offset the amounts and the Corporation intends either to settle
on a net basis or to realize the asset and settle the liability simultaneously.
ii. Non-derivative financial liabilities
The Corporation’s financial liabilities are categorized as measured at amortized cost. The Corporation initially
recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other financial
liabilities are recognized initially on the trade date at which it becomes a party to the contractual provisions of the
instrument.
The Corporation derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.
Bank overdrafts that are repayable on demand and form an integral part of the Corporation’s cash management are
included as a component of loans and borrowings for the purpose of the statement of cash flows.
Liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortized cost using the effective interest method.
iii.
Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and
share options are recognized as a deduction from equity, net of any tax effects.
(d) Property, plant and equipment
i.
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset, including non-recoverable
indirect taxes, acquisition costs including the cost of materials and direct labour, any other costs directly attributable
to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items
and restoring the site on which they are located, and borrowing costs on qualifying assets.
Costs related to assets under construction are capitalized when incurred. Assets under construction are not
depreciated until they are completed and available for use in the manner intended by management. When this
occurs, the asset is transferred to the appropriate class of property, plant and equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment, and are recognized within operating
expenses in the consolidated statement of comprehensive income.
Dexterra Group Annual Report 2022 | 34
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
ii.
Subsequent costs
The cost of replacing a major component of an item of property, plant and equipment is recognized in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will flow to the
Corporation, and its cost can be measured reliably. The carrying amount of the replaced major component is
derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in the
consolidated statement of comprehensive income as incurred.
iii. Depreciation
Depreciation is calculated using the depreciable amount, which is the cost of an asset, less its residual value.
Depreciation is recognized in the consolidated statement of comprehensive income on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the
expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are
depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the
Corporation will obtain ownership by the end of the lease term.
The estimated useful lives for the current and comparative periods are as follows:
Assets
Category
Camp & catering smallwares
Camp equipment & mats
Camp facilities (residual value of 20%)
Camp equipment & mats
Mats
Buildings
Camp equipment & mats
Land & buildings
Straight-line
Leasehold improvements
Land & buildings
Automotive
Automotive & trucking equipment
Computer hardware
Manufacturing & other equipment
Equipment
Manufacturing & other equipment
Furniture & fixtures
Manufacturing & other equipment
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
Method
Straight-line
Straight-line
Straight-line
Useful life
1.5 years
15 years
3-6 years
25 years
Term of lease
4-8 years
5 years
5-10 years
5 years
Depreciation methods, useful lives, and residual values are reviewed at each financial year end and adjusted if
required. Land and assets under construction are not depreciated.
(e)
Intangible assets
i.
Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill is measured at cost less
accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included
in the carrying amount of the investment. Goodwill is not amortized but is tested at least annually for impairment and
at the end of each reporting period during the year if an indicator of impairment exists.
ii.
Assets acquired
Intangible assets are acquired as a result of a business combination or through the purchase of other contractual or
legal rights which are transferable or separable. Intangibles acquired as part of a business combination are measured
at fair value on initial recognition. Intangible assets purchased are measured at cost. Amortization is charged on a
straight line basis to the consolidated statement of comprehensive income over their expected useful lives, as follows:
Assets
Customer relationships
Trade Names
Software and other
Method
Straight-line
Straight-line
Straight-line
Useful life
Up to 10 years
7 years
3 years
Amortization methods, useful lives, and residual values are reviewed at each financial year-end and adjusted if
required.
Dexterra Group Annual Report 2022 | 35
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
(f)
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on a weighted
average cost principle and includes expenditures incurred in acquiring the inventories, production or conversion costs, and
other costs in bringing them to their existing location and condition. In the case of manufactured inventories and work-in-
progress, cost includes an appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and selling expenses.
(g)
Impairment
i.
Financial assets
An impairment loss in respect of a financial asset measured at amortized cost is calculated using the “expected credit
loss” model and recognizes expected credit losses as a loss allowance. The Corporation recognizes an amount equal to
the lifetime expected credit losses based on the Corporation’s historical experience and including forward-looking
information. The carrying amount of these assets in the consolidated statement of financial position is net of any loss
allowance. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment
loss is reversed through net earnings.
ii. Non-financial assets
The carrying amounts of the Corporation’s non-financial assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. For goodwill and intangible assets that have indefinite useful lives, the recoverable amount is estimated at
least once a year at the same time.
The recoverable amount of an asset is the greater of its value in use (“VIU”) and its fair value less costs of disposal
(“FVLCOD”). In assessing the recoverable amount, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the "CGU"). The Corporation has identified four
CGUs: Workforce Accommodation and Forestry (“WAF”), Energy Services (“ES”), IFM, and Modular Solutions. For the
purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU or
group of CGUs that are expected to benefit from the synergies of the business combination. Goodwill allocation must
reflect the lowest level at which that goodwill is monitored for internal reporting purposes and cannot be larger than
the operating segment before aggregation.
The Corporation’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate
asset may be impaired, then the recoverable amount is determined for the group of CGUs to which the corporate
asset belongs.
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognized in the consolidated statement of comprehensive income. Impairment
losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the
units and then to reduce the carrying amounts of the other assets in the unit (group of units), on a pro rata basis. An
impairment loss in respect of goodwill is not reversed.
(h) Employee benefits
i.
Defined contribution plan
The Corporation’s defined contribution plan is a post-employment benefit plan under which the Corporation pays
fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in the
statement of comprehensive income when they are due.
ii.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognized for the amount expected to be paid under the short-term cash bonus plans
if the Corporation has a present legal or constructive obligation to pay this amount as a result of past service provided
by the employee and the obligation can be estimated reliably.
Dexterra Group Annual Report 2022 | 36
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
iii.
Share based compensation transactions
Equity-settled transactions
The grant date fair value of share-based compensation awards granted to directors, officers and employees is
recognized as an expense, with a corresponding increase in equity, over the period that the employees
unconditionally become entitled to the awards (vesting period).
Cash-settled transactions
The Corporation has a Restricted Share Unit (“RSU”) and Performance Share Unit (“PSU”) plan for its eligible directors,
officers and employees. The fair value of the amount payable to officers and employees in respect of the RSUs and
PSUs, for which the participants are eligible to receive an equivalent cash value of the common shares at a future
date, adjusted by the performance criteria for the PSUs, is recognized as an expense with a corresponding increase in
liabilities over the period that the employees and officers provide the related service and become entitled to
payment. For PSUs, the amount recognized as an expense is adjusted to reflect the number of awards for which the
related service and non-market vesting conditions are expected to be met, such that the amount ultimately
recognized as an expense is adjusted based on the number of awards that do meet the related service and non-
market performance conditions at the vesting date. The liability is re-measured at each reporting date and at the
settlement date. Any changes in the fair value of the liability are recognized as share based compensation expense in
the consolidated statement of comprehensive income.
(i) Provisions
(j) Revenue
A provision is recognized if, as a result of a past event, the Corporation has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax risk-free rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is
recognized as a finance cost.
The Corporation has adopted Onerous Contracts - Costs of Fulfilling a Contract (Amendments to IAS 37) from January 1,
2022. These amendments requires the inclusion of both incremental and allocated other direct costs in the measurement of
the onerous provisions. The amendments apply prospectively to contracts existing as at January 1, 2022.
The Corporation uses IFRS 15, Revenue from Contracts with Customers ("IFRS 15"). IFRS 15 provides a model for the
recognition and measurement of all revenue flowing from contracts with customers. The core principle is that revenue
recognition should align with the transfer of promised goods or services to customers in an amount that reflects the
consideration the entity expects to be entitled to in exchange for those goods or services.
The Corporation recognizes revenues over time as it fulfills its performance obligations to clients in line with contracted
terms. A performance obligation is a promise in a contract to transfer a distinct good or service to a client. A contract's
transaction price is allocated to each distinct performance obligation and recognized as revenues when, or as, the
performance obligation is satisfied. If a client contract has multiple performance obligations, the consideration in the
contract is allocated to the separate performance obligations based on stand-alone selling prices. Any modifications or
variations to contracts-in-progress are assessed to determine if they fall under the scope of the existing contract
performance obligation(s) or form part of a new performance obligation.
The transaction price of customer contracts may change over the duration of the contract period. Change orders may be
issued by customers to modify the original contract scope of work or conditions resulting in possible disputes or claims
regarding additional amounts owing may arise. Service delivery related to a change order or claim may proceed, and costs
may be incurred, in advance of final determination of the value of the change order. As change orders and claims may not
be settled until the end of the project, management estimates what changes orders to include in the determination of
revenue recognized.
Deferred revenue relates to payments received in advance of performance under the customer contract. Deferred revenue
is recognized as revenue as the Corporation fulfills its performance obligations under the contract. In normal course,
deferred revenue is recognized within a year as Corporation contracts are expected to have a duration of one year or less.
Revenues are derived mainly from the following types of client contracts and major products and services:
i.
Integrated Facilities Management
Integrated Facilities management provides solutions for ongoing maintenance and operations of infrastructure.
Ongoing facility management services are generally similar each month and are provided to customers at a contracted
price based on the amount of hours of service by the Corporation's employees and the amount of supplies required.
Revenue is recognized over time as the services are provided to the customer. If a contract has distinct performance
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
iii.
Share based compensation transactions
Equity-settled transactions
The grant date fair value of share-based compensation awards granted to directors, officers and employees is
recognized as an expense, with a corresponding increase in equity, over the period that the employees
unconditionally become entitled to the awards (vesting period).
Cash-settled transactions
The Corporation has a Restricted Share Unit (“RSU”) and Performance Share Unit (“PSU”) plan for its eligible directors,
officers and employees. The fair value of the amount payable to officers and employees in respect of the RSUs and
PSUs, for which the participants are eligible to receive an equivalent cash value of the common shares at a future
date, adjusted by the performance criteria for the PSUs, is recognized as an expense with a corresponding increase in
liabilities over the period that the employees and officers provide the related service and become entitled to
payment. For PSUs, the amount recognized as an expense is adjusted to reflect the number of awards for which the
related service and non-market vesting conditions are expected to be met, such that the amount ultimately
recognized as an expense is adjusted based on the number of awards that do meet the related service and non-
market performance conditions at the vesting date. The liability is re-measured at each reporting date and at the
settlement date. Any changes in the fair value of the liability are recognized as share based compensation expense in
the consolidated statement of comprehensive income.
(i) Provisions
A provision is recognized if, as a result of a past event, the Corporation has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax risk-free rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is
recognized as a finance cost.
The Corporation has adopted Onerous Contracts - Costs of Fulfilling a Contract (Amendments to IAS 37) from January 1,
2022. These amendments requires the inclusion of both incremental and allocated other direct costs in the measurement of
the onerous provisions. The amendments apply prospectively to contracts existing as at January 1, 2022.
(j) Revenue
The Corporation uses IFRS 15, Revenue from Contracts with Customers ("IFRS 15"). IFRS 15 provides a model for the
recognition and measurement of all revenue flowing from contracts with customers. The core principle is that revenue
recognition should align with the transfer of promised goods or services to customers in an amount that reflects the
consideration the entity expects to be entitled to in exchange for those goods or services.
The Corporation recognizes revenues over time as it fulfills its performance obligations to clients in line with contracted
terms. A performance obligation is a promise in a contract to transfer a distinct good or service to a client. A contract's
transaction price is allocated to each distinct performance obligation and recognized as revenues when, or as, the
performance obligation is satisfied. If a client contract has multiple performance obligations, the consideration in the
contract is allocated to the separate performance obligations based on stand-alone selling prices. Any modifications or
variations to contracts-in-progress are assessed to determine if they fall under the scope of the existing contract
performance obligation(s) or form part of a new performance obligation.
The transaction price of customer contracts may change over the duration of the contract period. Change orders may be
issued by customers to modify the original contract scope of work or conditions resulting in possible disputes or claims
regarding additional amounts owing may arise. Service delivery related to a change order or claim may proceed, and costs
may be incurred, in advance of final determination of the value of the change order. As change orders and claims may not
be settled until the end of the project, management estimates what changes orders to include in the determination of
revenue recognized.
Deferred revenue relates to payments received in advance of performance under the customer contract. Deferred revenue
is recognized as revenue as the Corporation fulfills its performance obligations under the contract. In normal course,
deferred revenue is recognized within a year as Corporation contracts are expected to have a duration of one year or less.
Revenues are derived mainly from the following types of client contracts and major products and services:
i.
Integrated Facilities Management
Integrated Facilities management provides solutions for ongoing maintenance and operations of infrastructure.
Ongoing facility management services are generally similar each month and are provided to customers at a contracted
price based on the amount of hours of service by the Corporation's employees and the amount of supplies required.
Revenue is recognized over time as the services are provided to the customer. If a contract has distinct performance
Dexterra Group Annual Report 2022 | 37
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
obligations, the transaction price is allocated to each performance obligation and recognized as revenue as the
performance obligation is satisfied.
ii.
Construction Contract Revenue - Modular
Construction contract revenue includes the initial amount agreed to in the contract plus any variations in contract
work, claims, and incentive payments, to the extent that it is highly probable that a significant revenue reversal will
not occur. The Corporation recognizes revenue over time for its construction contracts, and estimates progress of
these contracts by comparing costs incurred to the total expected costs of the project. Contract expenses are
recognized as incurred unless they create an asset related to future contract activity. An expected loss on a contract is
recognized immediately in the consolidated statement of comprehensive income.
iii. Workforce Accommodation
Workforce accommodation includes the management, supply and installation of modular and exploration facilities
and catering. In the workforce accommodation business, distinct performance obligations include the supply and
installation of the facilities, catering and maintenance of the facilities. Revenue is recognized over time as the supply
and installation of the facilities is completed and when catering services are provided to the customer. Catering
services are generally provided to customers at a contract price per unit served. If a contract has distinct performance
obligations, the transaction price is allocated to each performance obligation and recognized as revenue as the
performance obligation is satisfied.
iv.
Forestry Services
Forestry services include reforestation solutions, forest thinning and firefighting services. Revenue is recognized over
time as the services are provided to the customer. Reforestation, forest thinning solutions and firefighting services are
provided to customers generally at a contracted price per unit. If a contract has distinct performance obligations, the
transaction price is allocated to each performance obligation and recognized as revenue as the performance
obligation is satisfied.
v.
Energy Services
The Corporation provides access mat rental, relocatable structure rental, and transportation services to customers.
Revenue from rendering of these services are recognized over time. Rental days are used to measure the rental fleet
revenue. Revenue is recognized at the applicable day rate for each asset rented, based on rates specified in each
contract, and as the services are performed.
vi.
Sale of used fleet
The Corporation routinely sells items of property, plant and equipment that it has held for rental and such assets are
transferred to inventories at their carrying amount when they cease to be held for rent. The proceeds from the sale of
such assets are recognized as revenue at a point in time when control of the assets transfers. Proceeds from the sale
of rental fleet that is routinely sold before the end of its useful life are included in net cash flows from operating
activities. The investments in the acquisition or manufacturing of rental fleet are also included in net cash flows from
operating activities if the assets are expected to be predominantly sold before the end of their useful life, otherwise
the investments are included in net cash flows from investing activities.
vii. Sale of food and other goods
Revenue from the sale of food and other goods is measured at the fair value of the consideration received or
receivable. The Corporation recognizes revenue when it transfers control of the product or service to a customer,
which is generally when title passes from the Corporation to its customer, collectability is reasonably assured, the
associated costs can be estimated reliably, and there is no continuing management involvement with the goods.
(k)
Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset,
the Corporation assesses whether:
•
•
•
The contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should
be physically distinct or represent substantially all of the capacity of a physically distinct asset.
The Corporation has the right to obtain substantially all of the economic benefits from use of the asset
throughout the period of use; and
The Corporation has the right to direct the use of the asset. The Corporation has this right when it has the
decision-making rights that are most relevant to changing how and for what purpose the asset is used.
The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date. A right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at
Dexterra Group Annual Report 2022 | 38
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying assets or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Corporation’s
incremental borrowing rate. Generally, the Corporation uses its incremental borrowing rate as the discount rate.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in a rate, if there is a change in the Corporation’s estimate or the
amount expected to be payable under the residual value guarantee, or if the Corporation changes its assessment of
whether it will exercise a purchase, extension or termination period.
The Corporation presents right-of-use assets and finance lease liabilities in the consolidated statement of financial position.
The Corporation has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have an
expected lease term of 12 months or less and leases of low-value assets. The Corporation recognizes the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.
As a lessor
When the Corporation acts as a lessor, it determines at inception whether each lease is a finance lease or an operating
lease. The Corporation makes an overall assessment of whether the lease transfers substantially all of the risks and rewards
incremental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Corporation considers certain indicators such as whether the lease is for the
major part of the economic life of the asset. If the contract contains lease and non-lease components, the Corporation
applies IFRS 15 to allocate the consideration in the contract.
(l) Finance income and costs
Finance income comprises interest income on funds invested. Interest income is recognized as it accrues in the consolidated
statement of comprehensive income, using the effective interest method.
Finance costs comprise of interest expense on loans and borrowings, interest on lease liabilities, unwinding of the discount
on provisions, and foreign currency exchange gains/losses. Borrowing costs that are not directly attributable to the
acquisition, construction, or production of a qualifying asset are recognized in the consolidated statement of comprehensive
income using the effective interest method. Foreign currency gains and losses are reported on a net basis.
(m)
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in the consolidated
statement of comprehensive income except to the extent that it relates to a business combination or items recognized
directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following
temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable earnings, and differences relating to investments in subsidiaries and jointly
controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred
tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is
measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws
that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same
tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits, and deductible temporary differences to the extent that
it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed
at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realized.
Dexterra Group Annual Report 2022 | 39
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
(n) Earnings per share
The Corporation presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by
dividing the net earnings attributable to common shareholders of the Corporation by the weighted average number of
common shares outstanding during the year. Diluted EPS is calculated by the weighted average number of common shares
outstanding for the effects of all dilutive potential common shares, which is comprised of share options granted to
employees and directors.
(o) Segment reporting
A segment is a distinguishable component of the Corporation that is engaged either in providing related products or services
(business segment) which is subject to risks and returns that are different from those of other segments. The business
segments are determined based on the Corporation’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated
on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and borrowings and
related expenses, corporate assets and head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment and
intangible assets other than goodwill.
(p) Foreign currency translation
The consolidated financial statements are presented in CAD.
Foreign currency transactions entered into are translated into the functional currency of the operations at the exchange
rate on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated
into the functional currency using the exchange rate on the period end date. Foreign currency translation gains and losses
resulting from the settlement of transactions and the re-translation at year end are recognized in the consolidated
statement of comprehensive income within total profit. Non-monetary items that originated in a foreign currency are
translated at the exchange rate from the original transaction date.
The US entity has a USD functional currency and is therefore translated to be included in the consolidated financial
statements in CAD as follows: income and expenses are translated into CAD using the exchange rates on the dates of the
transactions and the assets and liabilities on the consolidated statement of financial position are translated into CAD at the
year end exchange rate. The effect of translation is recognized in other comprehensive income and included as translation
of foreign operations in accumulated other comprehensive income within equity.
(q) Government Assistance
IAS 20 “Accounting for government grants and disclosure of government assistance” (“IAS 20”) sets out the standard for
accounting of government grants and other forms of government assistance. Government assistance is not recognized
until there is reasonable assurance that the Corporation will comply with the associated conditions, and that the grant will
be received. Government grants shall be recognized in the consolidated statement of comprehensive income on a
systematic basis over the periods in which the entity recognizes the expenses for the related costs for which the assistance
is intended to compensate. For government assistance that becomes receivable as compensation for expenses or losses
already incurred, or for the purpose of giving immediate financial support to the Corporation with no future related costs,
are recognized in the consolidated statement of comprehensive income for the period in which it becomes receivable. The
Corporation recognizes government assistance as a reduction in the related expense, through the consolidated statement
of comprehensive income.
(r) New standards and interpretations not yet adopted
The new standards, amendments to standards and interpretations not yet effective for the year ended December 31, 2022,
and not applied in preparing these consolidated financial statements are disclosed below. The Corporation intends to adopt
these standards, when they become effective.
i.
Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12)
In May 2021, the IASB issued amendments to IAS 12 Income Taxes to clarify how companies account for deferred
tax on transactions that give rise to equal taxable and deductible temporary differences, such as lease transactions
under IFRS 16 that require recognition of a lease liability and a corresponding right-of-use asset at
commencement date of a lease. Following the amendments to IAS 12, entities will be required to recognize a
deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease on a
gross basis. The Corporation previously applied the exemption under IAS 12 to not record any deferred tax on
lease balances and will revise its accounting to align with these amendments. Comparatives will be restated and
the effect of applying the amendments will be recognized as an adjustment to opening equity on the date of
application. These amendments are effective for annual periods beginning on or after January 1, 2023 and are not
expected to have a significant impact on the Corporation’s consolidated financial statements.
Dexterra Group Annual Report 2022 | 40
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
ii. Non-current liabilities with covenants (Amendments to IAS 1)
On October 31, 2022, the IASB issued amendments to IAS 1 Presentation of Financial Statements to clarify that
only covenants with which an entity is required to comply on or before the reporting date affect the classification
of a liability as current or non-current. The amendments also require an entity to disclose information in the notes
that enables users of the financial statements to understand the risk that non-current liabilities with covenants
could be repayable within twelve months. The amendments are applied retrospectively on or after January 1,
2024 with early adoption permitted. The Corporation is currently evaluating the expected impact of the
amendments on its consolidated financial statements.
4. Business Combinations
On January 1, 2022, Dexterra Group acquired 100% of the issued and outstanding shares of FCPI Dana Investments Inc.
(“Dana”), the General Partner and sole owner of Dana Hospitality Limited Partnership and Marek Hospitality Inc. for total cash
consideration in the amount of $30.9 million net of working capital adjustments. This acquisition expands the existing culinary
services of the Corporation in its IFM segment.
On January 31, 2022, Dexterra Group acquired the business and certain assets of Tricom Building Maintenance, Tricom Service
Corp., and Kwik Supply Inc. (“Tricom”) for a total consideration of $19.1 million. This acquisition increases the scale of the
existing IFM business and provides access to new market sectors.
From the dates of the acquisitions to December 31, 2022, the acquired operations contributed $108.3 million of revenue and
$1.7 million net loss before income taxes, which included depreciation and amortization expense of $3.4 million which reflected
the amortization of the intangible assets recorded as part of the purchase equation. If both business combinations had been
completed on January 1, 2022, the revenue for the year ending December 31, 2022 would not have been materially different.
The Corporation incurred certain costs related to the acquisitions of $1.4 million relating to legal, restructuring, due diligence
and external advisory fees. $1.0 million of these costs were included in corporate selling, general & administrative expenses on
the consolidated statement of comprehensive income for the year ended December 31, 2022 (2021 - $0.3 million).
(a) Dana
The following summarizes the assets acquired and liabilities assumed:
Consideration:
Cash consideration
Fair value of assets acquired and liabilities assumed:
Cash
Trade & other receivables(1)
Inventories
Prepaid expenses and other
Property, plant and equipment
Right-of-use assets
Trade and other payables
Lease liabilities
Deferred income tax liabilities
Tangible Net Assets
Customer Relationships
Trade Names
Goodwill
Total Identifiable Net Assets
$
$
$
$
(000's)
30,913
556
7,318
1,396
271
2,426
236
(9,966)
(236)
(1,245)
756
12,600
750
16,807
30,913
(1) Trade and other receivables included a provision for expected credit losses of $0.5 million.
The primary factors that contributed to the residual purchase price allocation and resulted in the recognition of goodwill are:
the assembled workforce of Dana, cross selling growth opportunities with existing customers, and the increased additive service
offerings to existing customers. The goodwill recognized is not deductible for income tax purposes.
Dexterra Group Annual Report 2022 | 41
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
(b) Tricom
The following summarizes the assets acquired and liabilities assumed:
Consideration:
Cash consideration
Holdback payable
Total consideration
Fair value of assets acquired and liabilities assumed:
Inventories
Property, plant and equipment
Other
Right-of-use assets
Lease liabilities
Tangible net assets
Customer Relationships
Goodwill
Total identifiable net assets
$
$
$
$
$
(000's)
17,136
2,000
19,136
174
313
163
275
(275)
650
5,500
12,986
19,136
The primary factors that contributed to the residual purchase price allocation and resulted in the recognition of goodwill are:
the assembled workforce of Tricom, access to growth opportunities with existing customers, and access to opportunities in the
United States.
The acquisition also includes a performance-based incentive payment (the “Earn-out”) to a maximum of $5 million which is
based upon the actual results over two years, ending January 31, 2024, and continuing employment of certain key employees.
This Earn-out will be recorded in the consolidated statement of comprehensive income as an expense as incurred. For the year
ended December 31, 2022, no earn-out expense was recorded as the performance threshold was not met.
In addition, the acquisition includes a holdback that will be released to the previous owners eighteen months after the closing
date of the transaction less any amounts paid to third parties. As at December 31, 2022, the holdback of $2.0 million has been
included in trade and other payables.
5. Trade and other receivables
(000’s)
Trade receivables
Modular holdback receivables
Deferred trade receivables
Total trade and modular receivables
Accrued trade receivables
Other receivables
Allowance for expected credit losses
Total
December 31, 2022
December 31, 2021
$
$
135,972 $
9,738
5,756
151,466 $
53,025
7,732
(826)
115,265
10,297
12,428
137,990
43,504
4,460
(1,178)
$
211,397 $
184,776
Modular holdback receivables and deferred trade receivables of $15.5 million (December 31, 2021 - $22.7 million) represent
amounts billed on contracts which are not due until the contract work is substantially complete and any lien period has expired.
All modular holdback receivables and deferred trade receivables are expected to be collected within 12 months. Credit risks are
further described in Note 22.
Dexterra Group Annual Report 2022 | 42
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
6. Inventories
(000’s)
Raw materials
Food inventory
Modular work-in-progress
Finished goods and supplies
Inventories
(1) Certain prior year amounts have been amended to conform to the current period's presentation
7. Property, plant and equipment
December 31, 2022 December 31, 2021(1)
$
14,386 $
4,448
1,176
6,035
5,632
1,831
3,444
6,091
$
26,045 $
16,998
Carrying Amounts
(000’s)
Cost
December 31, 2020
Additions
Asset retirement obligations (Note 12)
Transferred to inventory
Sale to Big Spring Lodging LP
Disposals
December 31, 2021
Additions
Acquisition of Dana (Note 4 (a))
Acquisition of Tricom Assets (Note 4 (b))
Asset retirement obligations (Note 12)
Transferred from inventory
Disposals
December 31, 2022
Accumulated Depreciation
December 31, 2020
Depreciation
Transferred to inventory
Sale to Big Spring Lodging LP
Disposals
December 31, 2021
Depreciation
Transferred to inventory
Disposals
December 31, 2022
Net book value
December 31, 2022
December 31, 2021
Camp equipment
& mats
Land & buildings
Automotive &
trucking
equipment
Manufacturing &
other equipment
Total
$
148,449 $
27,684 $
17,458 $
8,167 $
201,758
1,411
914
(2,595)
(1,972)
(494)
1,991
1,069
1,389
—
—
—
(72)
—
—
—
—
—
—
(826)
(220)
5,860
914
(2,595)
(1,972)
(1,612)
$
145,713 $
29,603 $
17,701 $
9,336 $
202,353
2,660
—
—
1,604
5,672
(2,460)
1,642
2,426
—
—
—
425
—
190
—
—
(107)
(437)
2,213
—
123
—
—
192
6,940
2,426
313
1,604
5,672
(2,812)
153,189 $
33,564 $
17,879 $
11,864 $
216,496
9,551 $
1,205 $
3,910 $
3,045 $
14,676
1,191
(578)
(124)
(376)
—
—
(37)
6,371
—
—
(291)
2,002
—
—
(173)
$
23,149 $
2,359 $
9,990 $
4,874 $
14,607
(915)
(2,124)
2,629
—
222
3,920
—
(595)
1,812
(43)
3
17,711
24,240
(578)
(124)
(877)
40,372
22,968
(958)
(2,494)
$
$
$
$
$
34,717 $
5,210 $
13,315 $
6,646 $
59,888
118,472 $
122,564 $
28,354 $
27,244 $
4,564 $
7,711 $
5,218 $
156,608
4,462 $
161,981
Dexterra Group Annual Report 2022 | 43
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
8. Leases
(i)
Right-of-use assets
(000’s)
Cost
December 31, 2020
Additions
Disposals
December 31, 2021
Acquisition of Dana (Note 4 (a))
Acquisition of Tricom Assets (Note 4 (b))
Additions
Disposals
December 31, 2022
Accumulated Depreciation
December 31, 2020
Depreciation
Disposals
December 31, 2021
Depreciation
Disposals
December 31, 2022
Net book value
December 31, 2022
December 31, 2021
Camp
equipment
& mats Land & buildings
Automotive &
trucking
equipment
Manufacturing &
other equipment
5,593 $
20,385 $
1,640 $
445 $
2,215
(2,254)
11,489
(5,948)
1,391
(330)
75
—
Total
28,063
15,170
(8,532)
5,554 $
25,926 $
2,701 $
520 $
34,701
—
—
7,771
(5,529)
105
179
4,355
(1,294)
131
96
2,257
(64)
—
—
29
(230)
236
275
14,412
(7,117)
7,796 $
29,271 $
5,121 $
319 $
42,507
2,133 $
3,093 $
621 $
164 $
3,136
(2,526)
6,193
(850)
691
(201)
190
—
2,743 $
8,436 $
1,111 $
354 $
3,567
(2,054)
5,504
(1,294)
937
(49)
116
(227)
6,011
10,210
(3,577)
12,644
10,124
(3,624)
4,256 $
12,646 $
1,999 $
243 $
19,144
3,540 $
16,625 $
3,122 $
2,811 $
17,490 $
1,590 $
76 $
166 $
23,363
22,057
$
$
$
$
$
$
$
$
(ii)
Lease liabilities
Maturity Analysis – contractual undiscounted cash flows
Year 1
Year 2
Year 3
Year 4
Year 5 and beyond
Total undiscounted lease payable as at December 31, 2022
Lease liabilities included in the statement of financial position at December 31, 2022
Current
Non-current
$
$
$
(000's)
9,082
7,069
5,335
4,259
6,023
31,768
28,094
7,783
20,311
For the year ended December 31, 2022, the Corporation sublet leased equipment resulting in a lease receivable of $2 million
(2021 - $nil). The lease and sub-lease expire in 2025. There were no restrictions or covenants imposed by leases of a material
nature and there were no sale and leaseback transactions.
The amount of lease interest expense recognized during the year ended December 31, 2022 is $1.6 million (2021 - $1.4 million).
Dexterra Group Annual Report 2022 | 44
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
9. Intangibles and Goodwill
Intangible assets at the consolidated statement of financial position date are as follows:
(000’s)
Cost
December 31, 2020
Additions
December 31, 2021
Acquisition of Dana (Note 4(a))
Acquisition of Tricom Assets (Note 4(b))
Additions
Foreign Currency Translation(1)
December 31, 2022
Accumulated Amortization
December 31, 2020
Amortization
December 31, 2021
Amortization
December 31, 2022
Net book value
December 31, 2022
December 31, 2021
Trade Names
Customer
Relationships
Computer software
and other
3,800 $
22,483 $
—
—
3,800 $
22,483 $
750
—
—
—
12,600
5,500
—
74
2,649 $
1,931
4,580 $
—
—
187
—
Total
28,932
1,931
30,863
13,350
5,500
187
74
4,550 $
40,657 $
4,767 $
49,974
380 $
651
1,031 $
901
1,932 $
2,618 $
2,769 $
4,017 $
1,743
5,760 $
3,472
9,232 $
31,425 $
16,723 $
1,078 $
1,217
2,295 $
1,140
3,435 $
1,332 $
2,285 $
5,475
3,611
9,086
5,513
14,599
35,375
21,777
$
$
$
$
$
$
$
$
(1) Foreign currency translation relates to assets held in Dexterra Services LLC which has a functional currency of US dollars.
Goodwill at the consolidated statement of financial position date is as follows:
(000’s)
Goodwill allocated to:
Integrated Facilities Management
Workforce Accommodations and Forestry
Balance, end of year
Impairment of Goodwill
December 31, 2022
December 31, 2021
$
$
94,022
$
34,585
128,607
$
64,055
34,585
98,640
The Corporation assesses indicators of impairment at the end of each reporting period and performs a detailed impairment test
at least annually. At December 31, 2022, an impairment test was performed for all CGUs with allocated goodwill, which
comprise IFM and WAF. No impairment was identified.
The recoverable amount of the CGUs was calculated based on FVLCOD discounted cash flow models. The cash flows are derived
from the Corporation’s budget, strategy and business plan approved by the Board of Directors. The calculation of the FVLCOD
discounted cash flow model was based on the following key assumptions:
•
•
•
•
The approved 2023 budget uses current and anticipated contracts and market conditions to project revenue. EBITDA
is calculated using historical margins and additional operational factors.
The discount rate was estimated based on the Corporation's weighted average cost of capital, taking into account the
nature of the assets being valued and their specific risk profile. The after-tax discount rates used in determining the
recoverable amount for both CGUs was 14.0% (2021 - 12.5%).
The revenue growth rates are based on management's internal budgets and projections. Annual revenue growth rates
for 2024 - 2028 were estimated to be between 8% to 12% for IFM and 4% to 8% for WAF. The long-term growth rate
after 5 years for both CGUs used in determining the recoverable amount is 2.5% (2021 - 2.5%).
EBITDA for the five years is based on management's internal budgets and projections. EBITDA margins are projected
to be between 7% to 8% for IFM and 11% to 12% for WAF.
Dexterra Group Annual Report 2022 | 45
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
Sensitivities
The most sensitive inputs to the discounted cash flow model are the discount rate, the revenue growth rate, and EBITDA. All
else being equal, a 250 basis points decrease in the revenue growth rates, a 50 basis points decrease in EBITDA, or a 100 basis
points increase in discount rate would each result in an immaterial impairment in the IFM CGU.
10. Other assets
Other assets at December 31, 2022 include equity accounted investments in Gitxaala Horizon North Services Limited
Partnership (“Gitxaala”) and Big Spring Lodging Limited Partnership (“BSL LP”), both joint ventures that are 49% owned by the
Corporation with carrying value of $13.1 million (December 31, 2021 - $15.2 million) and $1.9 million (December 31, 2021 - $1.9
million), respectively. During the year ended December 31, 2022, Gitxaala paid cash distributions of $4.5 million (2021 - $nil) to
the Corporation for its share of cumulative profit. These equity investments represent operations of the WAFES segment and
generate earnings from providing workforce accommodations, rentals, and maintenance of relocatable structures. In addition
to the equity investments, the other assets include long-term lease receivables of $1.6 million (December 31, 2021 - $1.1
million).
11. Loans and borrowings
(000’s)
Committed credit facility
Unamortized financing costs
Total borrowings
December 31, 2022
December 31, 2021
$
$
94,822
$
(777)
94,045
$
66,469
(1,149)
65,320
Effective September 7, 2021, the Corporation reached an agreement with its lenders to amend its credit facility and extend the
maturity date to September 7, 2024. The amended credit facility has an available limit of $200 million plus an uncommitted
accordion of $125 million and is secured by a $400 million first fixed and floating charge debenture over all assets of the
Corporation and its wholly-owned subsidiaries. The interest rate for the credit facility is calculated on a grid pricing structure
based on the Corporation’s debt to Adjusted EBITDA ratio, as defined in the credit facility agreement. Amounts drawn on the
credit facility incur interest at bank prime rate plus 0.50% to 1.75% or the Bankers’ Acceptance rate plus 1.50% to 2.75%. The
credit facility has a standby fee ranging from 0.30% to 0.55% per annum.
As at December 31, 2022, the Corporation was in compliance with all financial and non-financial covenants related to the credit
facility and available borrowing capacity was $95.0 million (2021 - $124.5 million), after adjusting for $10.1 million (2021 - $9.1
million) in letters of credit outstanding at December 31, 2022. For the year ended December 31, 2022, the Corporation incurred
finance costs relating to the loans and borrowings of $7.3 million (2021 - $3.7 million).
12. Asset retirement obligations
Provisions include constructive site restoration obligations for company owned camp projects to restore lands to previous
condition when camp facilities are dismantled and removed.
(000’s)
Balance, beginning of year
Additions
Asset retirement obligations settled
Change in estimate
Accretion of provisions
Balance, end of year
December 31, 2022
December 31, 2021
$
10,560 $
1,599
(820)
5
298
11,629
—
(2,041)
914
58
$
11,642 $
10,560
The estimated present value of rehabilitating the sites at the end of their useful lives has been estimated using existing
technology, adjusted for inflation and discounted using a risk-free rate. The Corporation has estimated the net present value of
its asset retirement obligation at December 31, 2022 to be $11.6 million (December 31, 2021 - $10.6 million) based on a total
future liability of $12.3 million (December 31, 2021 - $10.7 million). The Corporate used an average risk free interest rate of
3.94% and an inflation rate of 2.06% (December 31, 2021 - 1.23% and 1.27%, respectively) to calculate the net present value of
its asset retirement obligations as at December 31, 2022. The timing of these payments is dependent on various factors, such as
the estimated lives of the equipment and industry activity in the region but is anticipated to occur up to 2028.
Dexterra Group Annual Report 2022 | 46
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
(000’s)
Current
Non-current
Balance, end of year
13. Share capital
(a) Authorized and issued
December 31, 2022
December 31, 2021
$
$
8,478 $
3,164
11,642 $
5,277
5,283
10,560
The Corporation is authorized to issue an unlimited number of voting common shares without nominal or par value and an
unlimited number of preferred shares issuable in series, of which no preferred shares are outstanding. The number of common
shares and share capital are presented in the table below:
(In 000's, other than number of shares)
Balance, December 31, 2020
Options exercised
Balance, December 31, 2021
Options exercised
Balance, December 31, 2022
(b)
Long-term incentive plans
(i)
Share option plan
Balance, December 31, 2020
Granted
Exercised
Forfeited
Balance, December 31, 2021
Granted
Exercised
Forfeited
Balance, December 31, 2022
Total number of
shares
Total share capital
64,869,417 $
232,348
281,666
65,151,083 $
90,545
65,241,628 $
1,193
233,541
427
233,968
Outstanding options
Weighted average
exercise price
990,000
527,272
(281,666)
(35,466)
1,200,140 $
627,271
(90,545)
(104,866)
1,632,000 $
3.22
6.49
3.05
4.55
4.66
8.01
3.42
6.30
5.90
The exercise prices for options outstanding and exercisable at December 31, 2022 are as follows:
Exercise price per share
$3.05 to $5.95
$6.21 to $6.53
$6.54 to $8.50
Total options outstanding
Exercisable options
Weighted average
exercise price per
share
Weighted average
remaining
contractual life in
years
3.45
6.48
8.45
5.90
2.7
3.1
4.0
3.2
Number
630,894 $
511,519
489,587
1,632,000 $
Weighted average
exercise price per
share
3.05
6.48
—
4.32
Number
313,005 $
183,716
—
496,721 $
Dexterra Group Annual Report 2022 | 47
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
The exercise prices for options outstanding and exercisable at December 31, 2021 was as follows:
Exercise price per share
$3.05
$6.21 to $6.53
Total options outstanding
Exercisable options
Weighted average
exercise price per
share
Weighted average
remaining
contractual life in
years
3.05
6.48
4.66
3.4
4.0
3.7
Number
638,334 $
561,806
1,200,140 $
Weighted average
exercise price per
share
3.05
6.37
3.35
Number
165,008 $
16,666
181,674 $
The Corporation calculated the fair value of the share options granted using the Black-Scholes pricing model to estimate the fair
value of the share options issued at the date of grant. The weighted average fair value of all options granted during the year and
the assumptions used in their determination are as follows:
Fair value per option
Forfeiture rate
Grant price
Expected life
Risk free interest rate
Dividend yield rate
Volatility
December 31, 2022
December 31, 2021
$
$
2.45
$
9.30 %
8.01
$
3.2 years
1.57 %
5.04 %
58.80 %
2.08
10.00 %
6.49
3.0 years
0.25 %
4.62 %
62.92 %
For the year ended December 31, 2022, share based compensation for share options included in net earnings amounted to $1.2
million (2021 - $1.2 million) respectively. Subsequent to year-end, the Corporation issued 772,570 share options under the plan
with an exercise price of $5.35 per share.
(ii) Restricted Share Units (“RSU”) and Performance Share Units (“PSU”) incentive award plan
(a) RSUs
The Corporation has a RSU Plan whereby RSUs may be granted, subject to certain terms and conditions.
Under the terms of the RSU Plan, the awarded units vest in three equal portions on the first, second and third anniversary from
the grant date, and will be settled in cash in the amount equal to the fair market value of the Corporation's share price on that
date. All outstanding RSUs have been granted to members of the Board of Directors as at December 31, 2022.
The following table summarizes the RSU’s outstanding:
Units outstanding at beginning of year
Granted
Exercised
Units outstanding at end of year
December 31, 2022
December 31, 2021
28,970
21,307
(9,656)
40,621
—
28,970
—
28,970
As at December 31, 2022, trade and other payables included $0.2 million (December 2021 - $0.2 million) for outstanding RSUs.
For the year ended December 31, 2022, share based compensation for RSUs included in net earnings amounted to $0.1 million
(2021 - $0.2 million). Subsequent to year-end, the Corporation issued an additional 110,442 RSUs under the plan to its Board of
Directors, key management and officers of the Corporation.
(b) PSUs
The Corporation has a PSU Plan whereby PSUs may be granted, subject to certain terms and conditions.
Under the terms of the PSU Plan, the awarded units vest no later than the third anniversary of the grant date according to the
vesting criteria, and the vested units will be settled in cash in the amount equal to the fair market value of the Corporation's
share price on that date. The vesting criteria is fixed by the Board. Performance Criteria set by the Board at the time of the grant
of PSUs, may include i) total shareholder return, including dividends; ii) the participant’s satisfactory individual performance;
and (iii) any other terms and conditions the Board may in its discretion determine with respect to vesting. The PSUs have been
issued to the Corporation’s officers and key employees and will be settled in cash upon vesting, if the performance criteria are
met.
Dexterra Group Annual Report 2022 | 48
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
The following table summarizes the PSU’s outstanding:
Units outstanding at beginning of year
Granted
Forfeited
Units outstanding at end of year
December 31, 2022
December 31, 2021
291,762
281,479
(54,112)
519,129
—
301,454
(9,692)
291,762
As at December 31, 2022, other long-term liabilities included $0.6 million for outstanding PSUs (December 31, 2021 - $0.7
million). For the year ended December 31, 2022, net earnings included a share based compensation recovery of $0.1 million for
PSUs (2021 expense of $0.7 million). Subsequent to year-end, the Corporation issued an additional 455,544 PSUs under the plan
to its key management and officers of the Corporation.
14. Revenue
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with
customers.
(000's)
Contract assets, which are included in accrued trade and other accounts receivables
Contract liabilities, which are included in deferred revenue
December 31, 2022
December 31, 2021
$
$
32,887 $
10,706 $
44,389
1,946
The contract assets relate to the Corporation's rights for work completed but not billed at the reporting date, mainly related to
the modular business. These amounts are included in accrued trade and other receivables. The contract assets are transferred
to trade receivables when the rights become unconditional. This usually occurs when the Corporation completes a construction
milestone under the agreed upon contract. The balance is made up of $17.4 million (2021 - $18.0 million) in accrued trade
receivables for Modular Solutions and $15.5 million in Modular holdback and deferred trade receivables (2021 - $22.7 million)
from customers, which are generally due within three to six months of services being completed. The deferred revenue is
comprised of contract liabilities which relate to payments received from customers, and for which revenue is recognized over
time and is excluded from revenue from operations.
The amount of $1.9 million recognized in contract liabilities at the beginning of the year has been recognized as revenue for the
year ended December 31, 2022 (2021 - $3.3 million).
As the Corporation contracts have an expected duration of one year or less, the Corporation has taken the practical expedient
and not disclosed the remaining performance obligations as at December 31, 2022.
15. Direct costs
(000's)
Cost of goods manufactured - materials and direct labour
Wages and benefits
Subcontracting
Product cost
Equipment and repairs
Transportation and travel
Partnership profit sharing
Utilities and occupancy costs
Contract loss provisions and restructuring(2)
Other direct costs
Years ended December 31,
2022
$
171,044 $
352,250
70,767
181,655
9,829
23,234
13,263
35,611
12,240
11,072
2021(1)
135,146
240,614
58,662
111,174
8,953
16,932
12,601
24,816
5,741
8,198
(1) Certain prior year amounts have been amended to conform to the current period's presentation.
(2) Contract loss provisions and restructuring includes $6.9 million (2021 - $5.7 million) related to contractual disputes and remediation work for contracts in place at the time of the Acquisition
of Horizon North Logistics Inc. in May 2020 as well as $2.9 million related to an onerous IFM contract to record future losses over the life of the contract (2021 -$nil), $2.0 million related to the
restructuring and systems implementation for a business unit being integrated with VCI Controls Inc. (see Note 26) (2021 - $nil) and $0.5 million in other items (2021 - $nil). The work on the pre-
Acquisition contracts is substantially complete with final payments to be negotiated.
The amount of inventory recognized as an expense during the year ended December 31, 2022 is $171.0 million (2021 - $135.1
million). Included in wages and benefits is the impact of the Canada Emergency Wage Subsidy (“CEWS”), which reduced wages
and benefits by $nil for the year ended December 31, 2022 (2021 - $8.9 million).
$
880,966 $
622,837
Dexterra Group Annual Report 2022 | 49
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
16. Selling, general and administrative expenses
(000's)
Wages and benefits
Other selling and administrative expenses
Years ended December 31,
2022(1)
23,084 $
18,019
41,103 $
2021
21,078
13,775
34,853
$
$
(1) Wages and benefits for the year ended December 31, 2022 includes restructuring costs of $1.8 million (2021 - $nil) and Other selling and administrative expenses includes $1.1 million in
acquisition and other costs (2021 - $0.3 million).
Included in wages and benefits is the impact of CEWS, which reduced wages and benefits by $nil for the year ended December
31, 2022 (2021 - $0.2 million).
17. Income taxes
For the year ended December 31, 2022, the Corporation's effective income tax rate was a recovery of 15%, compared to an
expense of 26.1% in 2021. The effective tax rate for the year ended December 31, 2022 is lower than the combined federal and
provincial income tax rates primarily due to the positive impact of the tax rate differential on certain transactions and
adjustments related to prior periods. For 2021, the effective tax rate was consistent with combined federal and provincial
income tax rate.
The Corporation has non-capital losses for Canadian tax purposes of $92.4 million at December 31, 2022 (December 31, 2021 -
$79.9 million) available to reduce future taxable income in Canada. The Corporation believes that it is probable that the results
of future operations will generate sufficient taxable income to fully utilize these losses before their expiry.
The Corporation received an income tax refund, net of payments, of $1.3 million during the year ended December 31, 2022
(2021 - $10.7 million taxes paid).
The current and deferred tax expense breakdown is as follows:
Income tax expense (recovery) (000's):
Current
Deferred
Years ended December 31,
2022
1,811 $
(2,306)
(495) $
$
$
2021
5,594
3,114
8,708
The provision for income taxes differs from that which would be expected by applying statutory rates. A reconciliation of the
differences is as follows:
(000's)
Earnings before income tax
Combined federal and provincial income tax rate
Expected income tax expense
Changes from tax reassessments
Non-deductible items
Changes in tax rates
Tax rate differential on certain transactions
Adjustments related to prior periods
Other items
Dexterra Group Annual Report 2022 | 50
Years ended December 31,
2022
2021
3,220
$
33,336
26 %
26 %
837
$
8,667
$
$
830
169
(291)
(969)
(285)
(786)
$
(495) $
—
402
81
(1,063)
—
621
8,708
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
18. Cash flow information
The details of the changes in non-cash working capital are as follows, and excludes opening balance sheets of the Dana and
Tricom assets acquisitions:
(000's)
Trade and other receivables
Inventories
Prepaid expenses and other
Trade and other payables
Deferred revenue
19. Net earnings per share
A summary of the common shares used in calculating earnings per share is as follows:
Number of common shares, beginning of year
Common shares issued, weighted average
Weighted average common shares outstanding - basic
Effect of share purchase options(1)
Weighted average common shares outstanding - diluted
Years ended December 31,
2022
$
(19,140) $
(7,477)
1,714
37,457
8,760
$
21,314 $
2021
(35,244)
(4,553)
2,899
38,090
(1,364)
(172)
Years ended December 31,
2022
65,151,083
54,099
65,205,182
283,664
65,488,846
2021
64,869,417
205,091
65,074,508
345,298
65,419,806
(1) The Corporation utilizes the treasury stock method for calculating the dilutive effect of share purchase options when the average market price of the Corporation’s
common stock during the year exceeds the exercise price of the option.
20. Dividends
A dividend of $0.0875 per share ($0.35 annually) was declared for the quarter ended December 31, 2022 and has been accrued
in trade and other payables as at December 31, 2022. The dividend is payable to shareholders of record at the close of business
on December 31, 2022 and was paid on January 16, 2023. A dividend of $0.0875 per share was declared for the quarters ended
December 31, 2021, March 31, 2022, June 30, 2022, and September 30, 2022 and were paid in January, April, July and October
2022, respectively.
(000's except per share amounts)
2022
2021
March 31
June 30
September 30
December 31
Amount per share
Dividend declared
Amount per share
Dividend declared
$
0.0875 $
5,703 $
0.0750 $
0.0875
0.0875
0.0875
5,707
5,708
5,709
0.0750
0.0875
0.0875
4,880
4,884
5,702
5,701
Total dividends declared
$
0.350 $
22,827 $
0.325 $
21,167
Dexterra Group Annual Report 2022 | 51
—
—
—
—
(48)
—
—
—
—
—
—
41,103
38,605
1,112
(417)
10,148
8,953
(2,025)
3,220
34,853
38,061
2,099
(425)
35,955
5,101
(2,482)
33,336
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
21. Reportable segment information
The Corporation operates through three operating segments: IFM, WAFES and Modular Solutions as described in Note 1.
Information regarding the results of all segments is included below. Inter-segment pricing is determined on an arm’s length
basis.
Year ended December 31, 2022 (000's)
IFM
WAFES
Modular
Solutions
Corporate
Inter-segment
Eliminations
Total
$
279,354 $
489,996 $
199,611 $
3,082 $
(526) $
971,517
Revenue
Operating expenses
Direct costs(2)
Selling, general and administrative expenses
Depreciation and amortization
Share based compensation (recovery)
Loss (Gain) on disposal of property, plant and equipment
Operating income (loss)
Finance costs
Earnings from equity investments
Earnings (loss) before income taxes
Total assets
257,272
410,775
201,157
(478)
880,966
8,530
6,745
52
(5)
6,760
78
—
7,901
24,921
(77)
(639)
47,115
675
(2,025)
6,785
5,414
(16)
(34)
12,240
17,887
1,525
1,153
261
(13,695)
(29,984)
824
—
7,376
—
$
$
6,682 $
48,465 $
(14,519) $
(37,360) $
(48) $
178,233 $
312,753 $
112,607 $
9,185 $
(1,377) $
611,401
Year ended December 31, 2021 (000's)
IFM
WAFES
Modular
Solutions
Corporate
Inter-segment
Eliminations
Total
Revenue
$
155,131 $
393,797 $
181,701 $
4,035 $
(1,284) $
733,380
Operating expenses
Direct costs(1)
Selling, general and administrative expenses(1)
Depreciation and amortization
Share based compensation
Gain on disposal of property, plant and equipment
Operating income (loss)
Finance costs
Earnings from equity investment
Earnings (loss) before income taxes
Total assets
$
$
(1,169)
622,837
136,336
319,081
162,848
5,512
3,329
146
(12)
9,820
52
—
5,517
27,200
110
(311)
42,200
431
(2,482)
5,531
5,294
97
(99)
8,030
1,011
—
5,741
18,293
2,238
1,746
(3)
(23,980)
(115)
3,607
—
—
—
9,768 $
44,251 $
7,019 $
(27,587) $
(115)
107,350 $
323,115 $
95,110 $
8,635 $
(581) $
533,629
(1)
(2)
Includes CEWS of $nil for the year ended December 31, 2022 and $9.1 million for the year ended December 31, 2021 (IFM - $1.7 million, WAFES - $6.6 million, Modular Solutions - $0.6
million, Corporate - $0.2 million).
Refer to Note 15 for a description of Direct costs related to the Corporate segment.
Dexterra Group Annual Report 2022 | 52
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
22. Financial risk management
Overview
The Corporation is exposed to a number of different financial risks arising from the normal course of business operations as well
as through the Corporation’s financial instruments comprised of cash, trade and other receivables, trade and other payables,
and loans and borrowings. These risk factors include credit risk, liquidity risk, and market risk, including interest rate. The
Corporation’s risk management practices include identifying, analyzing and monitoring the risks faced by the Corporation.
Credit risk
The following shows the aged balances of trade and other receivables:
(000's)
Trade receivables
Neither impaired nor past due
Outstanding 31-60 days
Outstanding 61-90 days
Outstanding more than 90 days
Total trade receivables
Accrued receivables
Other receivables
Provision for expected credit losses
Total trade and other receivables
December 31, 2022
December 31, 2021
$
127,513 $
9,500
7,798
6,655
91,516
33,484
4,352
8,638
151,466
137,990
53,025
7,732
(826)
43,504
4,460
(1,178)
$
211,397 $
184,776
As at December 31, 2022, the Corporation provided for expected credit losses in the amount of $0.8 million (2021 - $1.2
million). The provision for expected credit losses is based on an expected credit losses matrix and fluctuates based on the aging
of balances in receivables. The Corporation continues to monitor the recoverability of trade receivables and the impact of
current and expected future credit losses.
The Corporation had no major customer from which it generated greater than 10% of total revenue in 2022 (2021 - one
customer generated 10%).
Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation’s
approach to managing liquidity risk is to ensure that it always has sufficient cash and borrowing capacity on its credit facility to
meet its obligations when they become due. Management typically forecasts cash flows for each quarter to identify financing
requirements. These requirements are then addressed through a combination of demand credit facilities and access to capital
markets while maintaining optimal capital structure. The Corporation believes that future cash flows generated by the
operations and access to additional liquidity through capital and banking markets will be adequate to meet its financial
obligations.
The following shows the timing of cash outflows relating to trade and other payables, lease liabilities and loans and borrowings:
(000's)
Year 1
Year 2
Year 3
Year 4
Year 5 and beyond
December 31, 2022
December 31, 2021
Trade and
other payables(1)
Lease liabilities(2)
Loans and
borrowings(3)
Trade and
other payables(1)
Lease liabilities(2)
Loans and
borrowings(3)
$
171,010 $
9,082 $
— $
121,868 $
8,542 $
640
—
697
—
7,069
5,335
4,259
6,023
94,822
—
—
—
395
769
—
747
5,602
3,889
3,337
7,890
—
—
66,469
—
—
$
172,347 $
31,768 $
94,822 $
123,779 $
29,260 $
66,469
(1) Trade and other payables include trade and other payables, other long-term liabilities, contingent consideration and income tax payable.
(2) Lease liabilities include total undiscounted lease payments.
(3) Loans and borrowings include Dexterra Group's senior secured revolving term credit facility. The timing and amount of interest payments will fluctuate depending on balances outstanding
and applicable interest rates. As at December 31, 2022, the Corporation has unused credit facilities of $95.0 million (2021 - $124.5 million).
Dexterra Group Annual Report 2022 | 53
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
Market risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on future performance of
the Corporation. The market price movements that could adversely affect the value of the Corporation’s financial assets,
liabilities and expected future cash flows include foreign currency exchange risk and interest rate risk. As the Corporation’s
exposure to foreign currency exchange risk and interest rate risk is limited, the Corporation does not currently hedge its
financial instruments.
i.
Foreign currency exchange risk
The Corporation’s exposure to foreign currency exchange risk arises from its foreign operations in Dexterra Services
LLC which has a US functional currency. If the USD exchange rate were to decrease by 1.00%, it is estimated that the
Corporation’s net comprehensive income would decrease by $0.04 million. For the remainder of the Corporation’s
operations, there is limited exposure to foreign currency exchange risk as sales and purchases are typically
denominated in CAD.
ii.
Interest rate risk
The Corporation is exposed to interest rate risk as changes in interest rates may affect interest expense and future
cash flows. A high inflation environment impacts interest rate risk as the Bank of Canada increases rates to control
inflation. The primary exposure is related to the Corporation’s revolving credit facility which bears interest at a rate of
prime plus 0.50% to 1.75% or the Bankers’ Acceptance rate plus 1.50% to 2.75% per annum. If prime were to have
increased by 1.00%, it is estimated that the Corporation’s net earnings before income taxes would have decreased by
approximately $1.4 million for the year ended December 31, 2022 (2021 - $0.9 million). This assumes that the amount
and mix of fixed and floating rate debt in the year remains unchanged and that the change in interest rates is effective
from the beginning of the year.
23. Related parties
(000's)
Joint Ventures
Revenue
Management fee
Included in accounts receivable
December 31, 2022
December 31, 2021
$
547 $
575
1,514
3,057
645
490
The Corporation earned revenue of $0.5 million (2021 - $1.3 million) for the year ended December 31, 2022 for the
manufacturing, installation and transportation of relocatable units provided to Gitxaala, a joint venture in which the
Corporation has a 49% interest. The Corporation also charged $0.6 million (2021 - $0.6 million) in management fees for
administrative overhead related to accounting and management services. As at December 31, 2022, Gitxaala owed $0.5 million
(2021 - $0.3 million) in payables to the Corporation which are considered to be part of normal course of operations and have no
fixed terms of repayment.
The Corporation earned revenue of $1.0 million (2021 - $0.4 million) for the year ended December 31, 2022 for catering
services and equipment rentals provided to Big Springs JV, a joint venture in which the Corporation has a 49% interest. As at
December 31, 2022, BSL LP owed $1 million (2021 - $0.2 million) in payables to the Corporation which are considered to be part
of normal course of operations.
As at December 31, 2022 Dexterra Group has performance and labour bonds underwritten by Northbridge General Insurance
Corporation (“Northbridge”), a company with the same controlling shareholder as Dexterra Group, totaling $28.3 million
(December 31, 2021 - $44.0 million). Fees in the amount of $0.1 million were incurred for the year ended December 31, 2022
(December 31, 2021 - $0.2 million).
Dexterra Group has certain property insurance policies with Northbridge. This insurance coverage started on September 29,
2022 and the premiums paid were $1.1 million (2021 - $0.3 million) for coverage through the subsequent 12 month period and
are at normal commercial rates.
Key management personnel are those persons that have the authority and responsibility for planning, directing and controlling
the activities of the Corporation, directly or indirectly. Key management personnel of the Corporation include its named
executive officers and the board of directors.
The Corporation has entered into executive employment agreements with certain executive officers that provide for
termination payments. These agreements continue indefinitely until terminated in accordance with the terms thereof and the
base salary payable under the agreements is subject to annual review. The Corporation did not incur any termination payments
for the year ended December 31, 2022 (2021 - $nil).
Dexterra Group Annual Report 2022 | 54
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
Key management personnel compensation for the year ended December 31, 2022 and 2021 is comprised as follows:
(000's)
Short-term employee benefits
Post-employment benefits
Share based compensation
24. Subsidiaries
Subsidiary Name
10647802 Canada Ltd. (“106”)(1)
Acden Horizon North Limited Partnership ("Acden")
Acho Horizon North Camp Services Limited Partnership (“Acho”)
Dana Hospitality Limited Partnership (“Dana”)
Deninu Kue Horizon North Camp & Catering Limited Partnership ("DKHN")
Dexterra Group USA Inc.
Dexterra Services LLC
Eclipse Camp Solutions Incorporated ("Eclipse")
FCPI Dana Investments Inc.
Halfway River Horizon North Camp Services Limited Partnership (“HRHN”)
Horizon North Camp & Catering Partnership (“HNCCP”)
Horizon North Kapewin Inc. (“Kapewin”)
Kitikmeot Camp Solutions Limited (“Kitikmeot”)
Marek Hospitality Inc. (“Marek”)
NRB Inc.
Pioneer Site Service Ltd. (“Pioneer”)
Powerful Group of Companies (“PGC”)
Secwepemc Camp & Catering Limited Partnership (“Secwepemc”)
Sekui Limited Partnership ("Sekui")
Skin Tyee Horizon North Camp Services Limited Partnership ("STHN")
Tahltan Horizon North Services Inc. ("Tahltan")
Tangmaarvik Inland Camp Services Inc. ("Tangmaarvik")
Two Lakes Horizon North Camp Services Limited Partnership (“TLHN”)
Years ended December 31,
2022
2,752 $
239
805
3,796 $
2021
3,944
215
1,504
5,663
$
$
Ownership Interest (%)
Country of
Incorporation
December 31, 2022 December 31, 2021
Canada
Canada
Canada
Canada
Canada
USA
USA
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
—
49
49
100
49
100
100
40
100
49
100
100
49
100
100
100
100
49
49
49
49
49
49
100
49
49
—
49
—
—
40
—
49
100
—
49
—
100
100
100
49
49
49
49
49
49
(1) 106 was continued into 2395495 Alberta Ltd. on December 17, 2021 prior to being amalgamated with Dexterra Group Inc. on January 1, 2022.
(a) Special purpose entities
The Corporation has an equity interest in Kitikmeot, Acho, Secwepemc, HRHN, TLHN, Tahltan, Acden, Sekui, Eclipse, DKHN,
STHN and Tangmaarvik and maintains two out of four board of director seats in these special purpose entities (“SPE”) with the
remaining voting rights and board of director seats being held by Indigenous partners. Based on an evaluation of the substance
of its relationship with the Corporation and the SPE’s risks and rewards, the Corporation controls these entities. The control
results in the Corporation receiving the majority of the benefits related to the SPE’s operations and net assets, being exposed to
the majority of risks incident to the SPE’s activities and retaining the majority of the residual or ownership risks related to the
SPE’s or their assets. The SPE’s, other than Tangmaarvik, do not have net earnings but rather have limited assets and the only
non-flow through expenses are management fees paid to the partners. Indigenous participation in the governance of these
SPEs is required to secure projects in specific regions of Canada.
25. Comparatives
Certain prior year amounts on the statement of financial position, and in the notes to the consolidated financial statements
have been amended to conform to the current period's presentation.
Dexterra Group Annual Report 2022 | 55
Notes to the consolidated financial statements
Years ended December 31, 2022 and 2021
26. Subsequent event
On January 31, 2023, the Corporation purchased all of the issued and outstanding shares of VCI Controls Inc. (“VCI”) from
Universal Proptech Inc. (“Seller”) for an aggregate cash purchase price of $4,000,000, subject to normal closing adjustments.
The purchase price was financed through the Corporation’s existing credit facility. This acquisition expands our existing IFM
service offering to include building automation controls and energy efficiency solutions and the acquired business had
approximately $8 million revenue in the prior year.
Dexterra Group Annual Report 2022 | 56
CORPORATE
INFORMATION
Board of Directors
Senior Leadership Team
R. William McFarland
Chair of the Board
Toronto, Ontario
(1)(2)
Mary Garden
Victoria, British Columbia
(1)(2)
David Johnston
Ottawa, Ontario
(2)(3)
Simon Landy
Toronto, Ontario
(1)(3)
John MacCuish
Burlington, Ontario
Kevin Nabholz
Calgary, Alberta
(2)(3)
Russell Newmark
Inuvik, Northwest Territories
(1)(3)
Tabatha Bull
Toronto, Ontario
Toni Rossi
Toronto, Ontario
(1) Audit Committee Member
(2) Corporate Governance and Compensation Committee Member
(3) Enterprise Risk Management Committee Member
Dexterra Group Annual Report 2022 | 58
John MacCuish
Chief Executive Officer
Mark Becker
Chief Operating Officer
Sanjay Gomes
President, Integrated Modular
Facilities Management
Rob Johnston
President, Modular Solutions
Jeff Litchfield
President, Workforce
Accommodations, Forestry,
& Energy Services
R. Drew Knight
Chief Financial Officer
JD MacCuish
Executive Vice President,
Strategy & Corporate Planning
Lee-Anne Lyon-Bartley
Executive Vice President,
Health, Safety, Environment and Quality
Cindy G. McArthur
Chief Human Resources Officer
Christos Gazeas
Executive Vice President,
Legal and General Counsel
Auditor
PricewaterhouseCoopers LLP
Toronto, Ontario
Transfer Agent
TSX Trust Company (Canada)
1 Toronto Street, Suite 1200
Toronto, Ontario M5C 2V6
Head Office
5915 Airport Road, Suite 425
Mississauga, Ontario L4V 1T1
Stock Exchange Listing
Toronto Stock Exchange
Symbol: DXT
Annual Meeting of Shareholders
Wednesday, May 10, 2023 at 11:00 a.m. EST
Live Webcast: https://web.lumiagm.com/260045440
Website
dexterra.com
Dexterra Group Annual Report 2022 | 59
We’ve been serving North American clients for over 75 years.
The companies that began independently, and now form
Dexterra Group, have an outstanding record of supporting
the infrastructure and built assets that play a vital role in our
society. We bring the right teams with the right skills together
– offering both experience and regional expertise so companies
can operate their day to day, confidently and successfully.
1-866-305-6565 | dexterra.com | TSX: DXT