2023
Annual
Report
Used in 2023 ESG and Annual
report
PAN-CANADIAN INFRASTRUCTURE
SUPPORT SERVICES
LEGEND
OFFICES AND
MANUFACTURING
PLANTS
OPERATING
JURISDICTIONS
Revenue Growth in $000s
Adjusted EBITDA* in $000s
*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
28
CONSOLIDATED FINANCIAL STATEMENTS
31
NOTES TO FINANCIAL
STATEMENTS
57
CORPORATE INFORMATION
LETTER FROM THE
CHAIR OF THE BOARD
To our shareholders:
2023 was a year of transition for Dexterra
Group with Mark Becker becoming our CEO
in May and the company delivering on its
near-term goal of $100 million in EBITDA
and over $1 billion in revenue in 2023.
The workforce accommodations, forestry
and energy services business delivered
exceptional results and the integrated
facilities management business took an
important step forward in improving its
profitability. The board and management
also completed a strategic review of the
modular business and decided to exit that
business. This decision allows us to simplify
our business and allocate capital to our
higher margin and growth businesses. We
also believe this will be a good decision for
our modular customers and employees.
The leadership team and employees are
energized about the future and business
opportunities ahead. At the same time,
we want to maintain our strong financial
Dexterra Group Annual Report 2023 | 4
position given higher persistent levels of
inflation, a higher interest rate environment
and other macro economic factors. The
2024 focus is to execute the business
operating plans with excellence and invest
smartly and in a disciplined manner in
people, technology, and accretive M&A
opportunities and in the process continue
to build a business for the long term that
is competitive, delivers strong shareholder
returns and provides exceptional customer
experiences.
We hope you will join us virtually for our
shareholders meeting on May 8, 2024 and
look forward to answering your questions.
Bill McFarland
Chair of the Board
LETTER FROM
THE CEO
To our Dexterra Group stakeholders:
2023 was a benchmark year for Dexterra
Group, the strongest and most profitable
in the company’s history. With this
momentum, I am very excited as we
begin the next phase of Dexterra’s journey
of profitable growth and success for
all stakeholders – clients, employees,
shareholders, business partners, and
communities.
Our strategy remains focused on building
our support services business portfolio.
We are focused on continuing to support
and grow our significant foundation in
workforce accommodations, forestry
and energy services. Our primary growth
engine is centred around Integrated
Facility Management (IFM) related to
infrastructure, healthy and efficient facilities
across a range of complementary service
lines. In addition to achieving substantial
organic growth in IFM in segments such
as post-secondary education, we have an
opportunistic acquisition strategy, exploring
accretive IFM opportunities in Canada
and the U.S. We expanded our technical
Dexterra Group Annual Report 2023 | 5
and trades service offerings in 2023 by
welcoming VCI Controls (VCI) into our IFM
business. VCI has brought capabilities
in building automation systems to our
Dexterra. Additionally, in Q1 of 2024, we
welcomed CMI Facilities Management to
Dexterra. CMI is a U.S.-based IFM provider,
servicing federal government agencies
for over 38 years. The addition of the
CMI team is complementary and builds
our presence and platform in the U.S.
We expect to continue to leverage the
strength of our balance sheet to pursue
strategic acquisition opportunities with an
overarching goal of delivering a 15% return
on equity to our shareholders.
One of last year’s defining events was the
intense wildfires that raged across Canada.
We provided a range of services, including
mobile fire camps, auxiliary support
labour, equipment and maintenance, and
evacuee camps. We were proud to support
the provincial agencies and affected
communities during these times of crisis
and natural disasters.
addition, COS named rising star Tobore
Adagha Systems Coordinator, a Top Safety
Leader Under 35. It is really terrific to see our
employees recognized by the industry at
large. It demonstrates the strength of our
people and leadership teams and the value
they bring to our clients and the industries in
which we operate.
Also in 2023, Dexterra was a recipient of
the Employment Equity Achievement
Awards in the Sector Distinction category.
This is recognition of our commitment to
fostering diversity, equity, and inclusion by
implementing employment equity practices
company wide. I was also very pleased that
Dexterra was recognized as a Top Growing
Company in The Globe and Mail Report on
Business for the second year in a row in 2023.
As we enter 2024, my focus, and the focus
of the entire organization, is to continue to
drive strong execution and to deliver long-
term, profitable and sustainable growth and
superior returns to our shareholders. I hope
you share my enthusiasm as we continue on
this journey.
Mark Becker
Chief Executive Officer
We earn our social licence as a vital and
growing business through the support
and engagement of the communities in
which we operate. Through our Stronger
Communities initiative, we supported 25
non-profit organizations and charities
through employee volunteering and
direct financial contributions. Our Outland
Youth Employment Program provided 156
Indigenous young people with development
and experiential opportunities through six
structured programs held across Canada in
2023.
Our relationships with Indigenous
businesses continue to grow with more
than 85 partnerships now in place that are
vital to the success of our business. In 2023,
our Workforce Accommodations, Forestry,
and Energy Services business unit received
Bronze-level re-certification from the
Canadian Council for Aboriginal Business’
Progressive Aboriginal Relations™ program.
This recognition is a testament to these
efforts and the mutually beneficial impact of
these partnerships.
We are a people driven business, and I would
like to extend a sincere thank-you to all of our
nearly 9,000 employees across the company.
Growth and business success does not
occur by happenstance – it takes the drive,
dedication, and determination of everyone
at every level of the business. You have
all played a critical role in our growth and
success this past year for that I am sincerely
grateful.
In addition to our business success in 2023,
our safety and environmental performance
was the best ever in the history of the
company. Lee-Anne Lyon-Bartley, Executive
Vice President and Shawneen Abrams,
Director were both recognized on the 2023
Top Women in Safety list by Canadian
Occupational Safety (COS) magazine. In
Dexterra Group Annual Report 2023 | 6
MANAGEMENT’S DISCUSSION
AND ANALYSIS
December 31, 2023
This MD&A has been prepared as at March 7, 2024.
Dexterra Group Annual Report 2023 | 7
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
The following Management’s Discussion and Analysis (“MD&A”) prepared as at March 7, 2024 for Dexterra Group Inc.
(“Dexterra” or the “Corporation”), provides information concerning Dexterra’s financial condition and results of operations. This
MD&A should be read in conjunction with the Corporation’s audited Consolidated Financial Statements for the years ended
December 31, 2023 and 2022 (“Financial Statements”). For additional information, readers should also refer to Dexterra's
Annual Information Form (“AIF”) available on SEDAR at sedarplus.ca 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 Financial Statements of Dexterra are the responsibility of Dexterra’s management and have been prepared
in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board (“IFRS
Accounting Standards”) 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)
Adjusted EBITDA as a % of revenue(1)
Net earnings (loss)
Earnings (loss) per share
Basic and Diluted
Total assets
Total loans and borrowings (“Net Debt”)
Free Cash Flow(1)
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
$
$
$
$
$
$
$
$
$
270,527
12,645
4.7%
$
$
253,858
13,986
5.5%
1,117,198
100,630
$
$
9.0%
(301)
$
(2,873)
$
26,750
$
0.00
607,088
89,615
53,416
$
$
$
$
(0.04)
611,401
94,045
23,117
$
$
$
$
0.41
607,088
89,615
53,062
$
$
$
$
971,517
64,725
5.7%
3,715
0.05
611,401
94,045
40,252
(1) 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.
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 as a percentage of revenue”, calculated as Adjusted EBITDA divided
by revenue; “Free Cash Flow”, calculated as net cash flows from (used in) operating activities, less sustaining capital
expenditures, 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 Group, 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. Sustaining capital expenditures included in the definition of Free Cash Flow are
replacement expenditures and/or leases necessary to maintain existing business.
These measures and ratios provide investors with supplemental measures of Dexterra Group's operating performance and
highlight trends in its core businesses that may not otherwise be apparent when relying solely on GAAP financial measures.
Dexterra Group also believes that securities analysts, investors and other interested parties frequently use non-GAAP measures
in the evaluation of issuers. Dexterra Group’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
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”.
Dexterra Group Annual Report 2023 | 8
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
Management's Discussion and Analysis
Core Business
Dexterra 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 2023
Highlights
•
•
•
•
•
•
•
•
•
The Corporation generated strong results for the 2023 year with consolidated revenue of $1.1 billion, an increase of 15.0%
or $145.7 million compared to $971.5 million in the prior year. The increase in revenue was due to continued growth in
IFM and WAFES including the positive impact of the unprecedented wildfire activity in 2023;
Adjusted EBITDA for 2023 was $100.6 million which is a record for the Corporation and an increase in Adjusted EBITDA of
$35.9 million or 55% compared to the prior year. This was driven primarily by higher business activity in WAFES as well as
significantly improved profitability in IFM due to new sales growth and operational improvements;
Consolidated net earnings were $26.8 million for 2023 compared to $3.7 million in 2022 and included non-recurring items
of $6.5 million (2022 - $12.1 million). Earnings per diluted share were 41 cents per share in 2023 compared to 5 cents per
diluted share in 2022;
Free Cash Flow (“FCF”) was $53.1 million for the year ended December 31, 2023, compared to $40.3 million in 2022. The
Adjusted EBITDA conversion to FCF for 2023 met expectations at 52.7% as compared to 62.2% in the prior year. FCF is
expected to be approximately 50% of Adjusted EBITDA in 2024;
Net debt decreased to $89.6 million at December 31, 2023 from $94.0 million at December 31, 2022. In 2023, the credit
facility was amended and provides $260 million of available credit plus an accordion of $150 million and the maturity date
was extended until September 2026;
In connection to the ongoing Normal Course Issuer Bid (“NCIB”), Dexterra repurchased 855,100 common shares in 2023 at
a weighted average price per share of $5.73 for a total cash cost of $4.9 million;
Dexterra declared a dividend for Q1 2024 of $0.0875 per share for shareholders of record at March 29, 2024, to be paid
April 15, 2024;
On February 29, 2024, the Corporation acquired CMI Management, LLC (“CMI”), an IFM business based in Alexandria,
Virginia serving federal government agencies and commercial clients across the United States (“US”). This acquisition
expands our IFM platform in the US. The purchase price was USD $23 million. CMI has approximately USD $50 million in
annual contracts with a strong backlog of business; and
The Board and Management recently completed a strategic review of the Modular business and are currently in
discussions with a potential buyer for the sale of the business unit. We believe our decision to pursue a sale of the Modular
business will be a positive for our Modular employees, customers and shareholders and will allow the Corporation to
simplify its business and deploy capital in areas of the business with stronger returns.
Fourth Quarter Results
Highlights
•
•
The Corporation generated consolidated revenue of $270.5 million for Q4 2023 which increased $16.6 million, or 6.6%,
compared to Q4 2022. This was mainly driven by the mobilization of new wins in IFM, and robust workforce
accommodations activity in WAFES despite the normal holiday season slowdown period. These increases were partially
offset by lower modular revenue related to delays in completing certain social affordable housing projects due to
manufacturing quality, subcontractor challenges and remediation work. Revenue in Q4 2023 decreased by $40.2 million or
12.9% compared to Q3 2023 primarily due to the wind-down of wildfire support services;
Adjusted EBITDA for Q4 2023 was $12.6 million and $14.0 million in Q4 2022. Increased profitability in the WAFES and IFM
business units for Q4 2023 as compared to Q4 2022 was offset by an EBITDA loss of $10.9 million in the Modular business
Dexterra Group Annual Report 2023 | 9
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
including a provision of $5.7 million to cover 2024 rework and remediation related to manufacturing quality and third-
party design and subcontractor issues;
•
•
Consolidated net loss was $0.3 million for Q4 2023 compared to a net loss of $2.9 million in Q4 2022 and included project
rework and remediation costs in Modular of approximately $9 million; and
Q4 2023 experienced strong FCF of $53.4 million as management reduced its investment in accounts receivable
significantly as the business moved out of its normal seasonal peak activity period in Q3.
Operational Analysis
(000's)
Revenue:
IFM
WAFES
Modular Solutions
Corporate, Other and Inter-segment eliminations
Total Revenue
Adjusted EBITDA:
IFM
WAFES
Modular Solutions
Corporate, Other and Inter-segment eliminations
Total Adjusted EBITDA
Adjusted EBITDA as a % of Revenue
IFM
WAFES
Modular Solutions
IFM
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
$
89,332
$
78,543
$
331,877
$
279,354
$
$
141,864
39,331
—
123,148
52,171
(4)
595,399
189,422
500
489,996
199,611
2,556
270,527
$
253,858
$
1,117,198
$
971,517
4,756
$
2,764
$
19,019
$
23,043
(10,922)
(4,232)
21,391
(6,622)
(3,547)
106,082
(6,144)
(18,327)
13,553
74,526
(8,331)
(15,023)
$
12,645
$
13,986
$
100,630
$
64,725
5.3 %
16.2 %
(27.8) %
3.5 %
17.4 %
(12.7) %
5.7 %
17.8 %
(3.2) %
4.9 %
15.2 %
(4.2) %
Our 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. Services for the IFM business include
management of facilities including maintenance, repair, utilities and energy performance. In addition, ancillary services such as
customer care services, waste management, food services, parking and security services are also provided depending upon
customer needs and requirements. Within the IFM segment, Dexterra delivers both single service and complex multi-service
contracts.
For the year ended December 31, 2023, IFM revenues were $331.9 million, an increase of $52.5 million or 18.8% compared to
$279.4 million in 2022. The increase is primarily attributable to new sales growth in post-secondary education food services as
well as the Hotel, Rail and Leisure division continued to show strong growth.
Adjusted EBITDA for the year ended December 31, 2023 was $19.0 million, which increased by $5.4 million or 40.2% compared
to $13.6 million in 2022. The increased profitability was driven by new sales, contract pricing adjustments to the existing
portfolio and a continued focus on execution and cost management. Adjusted EBITDA as a percentage of revenue was 5.7% for
the year ended December 31, 2023 compared to 4.9% in the prior year.
For Q4 2023, IFM revenues were $89.3 million, an increase of $10.8 million, or 13.7%, from Q4 2022 and $9.7 million or 12.2%
higher than Q3 2023. The revenue growth reflects the mobilization of new contract wins. IFM Adjusted EBITDA for the quarter
was $4.8 million compared to $2.8 million for Q4 2022 and $4.5 million for Q3 2023. Adjusted EBITDA as a percentage of
revenue was 5.3% in Q4 2023 compared to 3.5% in Q4 2022 and was impacted by lower margins on the onboarding of
contracts. Certain contracts continue to be impacted by higher labour costs as a result of inflation which we expect to recover
over time, through pricing adjustments and operational improvements.
Direct Costs
Direct costs are comprised of labour, food costs, materials, supplies and transportation, which vary directly with revenues, and
have a relatively fixed component that includes rent and utilities. Direct costs for Q4 2023 were $82.4 million compared to
$73.6 million for Q4 2022, an increase of $8.8 million as a result of new contracts and the increased work volume. Direct costs
as a percentage of revenue were 92.2% in Q4 2023 which is improved compared to 93.7% in Q4 2022 and reflects
Dexterra Group Annual Report 2023 | 10
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
management’s focus on managing inflationary costs. However, we are still impacted by delays in passing on inflationary impacts
to clients which is especially prevalent in the food services business.
WAFES
WAFES is comprised of three revenue streams: Workforce Accommodations, Forestry and Energy Services. A significant portion
of the WAFES business is support services, has longer term contracts and is similar to our IFM business. It is capital light and is a
growing segment of the platform.
WAFES support services includes food and facilities services on-site at client owned remote facilities and our owned camps.
Forestry is a seasonal business with its activities taking place primarily in Q2 and Q3 each year and is reported in WAFES support
services. The Forestry operations results in 2023 were reduced due to wildfire activities. The Energy Services business includes
access matting and relocatable structures, rented or sold to clients, that continue to deliver strong results.
For the year ended December 31, 2023, WAFES support services activity accounted for 41% of total WAFES revenue compared
to 44% last year, with the remaining revenue derived from asset-based services like accommodation and equipment rentals,
etc. The increase in asset-based services percentage is due to increased camp activity levels and significantly stronger
equipment utilization.
Revenue from WAFES for the year ended December 31, 2023 was $595.4 million which is an increase of $105.4 million or 21.5%
compared to 2022. The increase was due to strong activity in workforce accommodations, price adjustments on client contracts
to combat inflationary pressures, strong access matting sales and rentals, and high revenue from fire support services as a
result of the unprecedented wildfire season nationwide. Adjusted EBITDA was $106.1 million and 42.3% higher compared to the
prior year due to the factors noted above. For the year ended December 31, 2023, fire support services generated revenue of
$55.6 million (2022 - $9.1 million).
Adjusted EBITDA as percentage of revenue was 17.8%, which is higher compared to the 15.2% in 2022 primarily due to higher
occupancy for multiple large camps, successful price negotiations with clients, strong Energy Services margins and higher fire
support services.
Revenue from the WAFES business for Q4 2023 was $141.9 million, an increase of $18.7 million or 15.2% compared to Q4 2022.
WAFES revenue growth was stronger in Q4 2023 compared to Q4 2022 due to continued high occupancy at turn-key and open
lodges and strength in the access matting business.
Adjusted EBITDA for Q4 2023 increased to $23.0 million compared to $21.4 million for the same quarter last year (Q3 2023 -
$39.5 million). Adjusted EBITDA as a percentage of revenue of 16.2% is largely consistent with the 17.4% in Q4 2022, excluding
one-time retroactive price increases in Q4 2022.
Direct Costs
Direct costs are comprised of labour, materials, supplies and transportation, which vary directly with revenues, and a relatively
fixed component, which includes rent and utilities. Direct costs in the WAFES business unit for Q4 2023 were $116.3 million and
$100.5 million for Q4 2022. This increase in costs is primarily due to the higher activity levels. Direct costs as a percentage of
revenue for the year ended December 31, 2023 were 80.6% compared to 83.8% for 2022 as management continues to manage
inflationary costs and work with our customers.
Modular Solutions
Revenue for the year ended December 31, 2023 was $189.4 million, a decrease of $10.2 million or 5.1% compared to 2022 due
to reduced backlog including delays in approvals for social affordable housing projects. Adjusted EBITDA for the year ended
December 31, 2023 was a loss of $6.1 million, compared to an Adjusted EBITDA loss of $8.3 million in the prior year. Factors
impacting 2023 results include rework and remediation on social affordable housing projects of $15.0 million, due to third-party
design, manufacturing quality and subcontractor errors as well as a subcontractor insolvency. This includes an additional $1.6
million of additional costs related to certain fixed price BC housing projects impacted by delays (in excess of the provision taken
in Q4 2022). The education portables and commercial/industrial modular business continues to deliver positive growth and
solid profitability.
Modular Solutions revenues for Q4 2023 were $39.3 million compared to $52.2 million in Q4 2022. The Adjusted EBITDA loss of
$10.9 million was due to the project rework required on the projects mentioned above. A provision of $5.7 million was
recorded in Q4 related to the estimated 2024 costs to complete the remediation work. Adjusted EBITDA in Q4 2022 included a
provision of $6.0 million, to cover the cost impact and future losses on social affordable housing projects still under
construction. Plant staffing reductions were undertaken in Q4 2023 to help mitigate the temporary softness in the social
affordable housing backlog.
The Modular Solutions backlog of projects was $55 million at the end of the 2023 year. The backlog includes $38 million (Q3
2023 - $58 million) for rapid affordable housing projects and $17 million primarily related to commercial and industrial modular
builds. The education portables and commercial/industrial modular business typically provides an additional recurring business
of approximately $55 million per annum.
Dexterra Group Annual Report 2023 | 11
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
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 as a percentage of revenue for the year ended December 31, 2023
were 100.4% compared to 100.8% for 2022 due to the issues described above.
Other Items
Selling, General & Administrative Expense
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, corporate accounting staff and the associated costs of
supporting a public company.
SG&A expenses for the year ended December 31, 2023 were $47.4 million compared to $41.1 million for 2022. SG&A expenses
primarily increased in 2023 due to the growth and increased scale of the business along with non-recurring items including $1.9
million in CEO and CFO transition costs and $0.5 million in other restructuring costs. There were $2.9 million non-recurring
expenses related to restructuring costs and acquisition costs for the year ended December 31, 2022. SG&A expenses as a
percentage of revenue were 4.2% of total revenue for 2023 which is consistent with 2022.
SG&A expenses for Q4 2023 were $11.4 million, an increase of $0.9 million and a decrease of $2.1 million when compared to
Q4 2022 and Q3 2023, respectively.
Other non-recurring items
For the year ended December 31, 2023, non-recurring items recorded in Corporate direct costs include an onerous contract loss
provision of $1.6 million as the IFM portfolio was right sized and restructuring costs of $0.9 million. For the year ended
December 31, 2022, Corporate had direct costs of $12.2 million which included $6.9 million related to contractual disputes and
remediation work related to 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, $2.0 million related to
the restructuring and systems implementation for a business unit being integrated with VCI and $0.5 million in other items.
Non-recurring items included in Corporate direct costs for Q4 2023 include a $0.7 million recovery on the losses for an onerous
IFM contract due to a customer settlement.
During the year ended December 31, 2023, the Corporation also entered into an agreement to sell excess camp assets and
recorded a related impairment on these assets of $2.2 million in Q3. The sale is expected to close in the first half of 2024.
Depreciation and Amortization
(000’s)
Depreciation of property, plant and equipment and right-of-use assets
Amortization of intangibles
Total depreciation and amortization
Years ended December 31,
2023
34,695
$
5,549
40,244
$
2022
33,092
5,513
38,605
$
$
For the year ended December 31, 2023, depreciation and amortization was $40.2 million, a $1.6 million increase compared to
2022. The higher depreciation in 2023 compared to last year is a result of the additional access matting depreciation related to
the investment made in late 2022 and Q1 2023. The Corporation plans to continue to operate in a capital light model going
forward and depreciation expense will continue to reduce as more assets become fully depreciated.
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 year ended December 31, 2023 was 8.8% (December 31, 2022 -
5.1%), including amortization of financing costs. The interest rate has been impacted by the increases in the Bank of Canada
rate in the past 12 months. The Corporation has a strong balance sheet and expects to have an interest rate near the lower end
of the range in its banking agreement.
Goodwill
Goodwill at December 31, 2023 was $130.4 million which is an increase of $1.8 million compared to the $128.6 million at
December 31, 2022. The increase is a result of the acquisition of VCI in the first quarter of 2023.
Dexterra Group Annual Report 2023 | 12
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
Dexterra assesses indicators of impairment at the end of each reporting period and performs a detailed impairment test at least
annually. An impairment test was performed at July 1, 2023 for all CGUs with allocated goodwill, which comprise IFM and
Workforce Accommodation and Forestry. No impairment was identified. The Corporation concluded there were no indicators of
impairment on its goodwill or intangibles as at December 31, 2023. See Note 9 of the Financial Statements for more details.
Non-controlling interest
Dexterra owns 49% of Tangmaarvik Inland Camp Services Inc. (“Tangmaarvik”) and controls its operations which relate to the
WAFES business. As a result, the results of Tangmaarvik are consolidated with the results of Dexterra and a non-controlling
interest is recognized. For the year ended December 31, 2023, earnings of $0.1 million (2022 - $0.3 million) were attributed to
the non-controlling interest.
Joint Ventures
Dexterra Group holds a 49% ownership interest in Gitxaala Horizon North Services LP (“Gitxaala”) and Big Spring Lodging
Limited Partnership (“BSL LP”). These equity investments represent operations of the WAFES business unit and generate
earnings from providing workforce accommodations, rentals, and maintenance of relocatable structures. For the year ended
December 31, 2023, earnings from equity investments were $2.0 million which is consistent with the prior year.
Income taxes
For the year ended December 31, 2023, the effective income tax rate was 24.1%, compared to a 15.4% recovery for 2022. The
effective tax rates for the year ended December 31, 2023 are generally consistent with the combined federal and provincial
income tax rates. The Corporation also expects to continue to utilize its tax loss carryforwards to reduce any cash taxes paid and
does not expect to pay significant cash taxes in 2024.
Outlook
Strategic Outlook
Dexterra’s strategic focus is on profitable growth of IFM and to continue to support and grow our strong WAFES business. The
acquisition of CMI is a good strategic fit as it expands our US IFM capabilities.
Operations Outlook
Overall
The Canadian and global economies continue to experience inflationary pressures, higher interest rates and reduced labour
availability. We are actively managing the impact of inflation through proactive pricing adjustments on contracts, cost
management and other operational initiatives across all business units as we work to execute our business plan. Key
components of our business plan include driving strong execution, improving profitability and new sales opportunities that
meet margin profitability targets.
IFM
The focus of the IFM business is on profitable growth through continued strong sales, acquisitive opportunities, and margin
improvement. The combination of strong execution and operational improvements along with organic and acquisitive growth at
target margins is expected to support Adjusted EBITDA margins of our base business in the 6.0 to 6.5% range in the second half
of 2024. The addition of CMI will also help us achieve higher margins.
WAFES
The WAFES business is expected to remain strong as activity levels remain high across the natural resources and infrastructure
sectors nationwide in 2024. Sales progress has been strong with new contracts mobilizing in the first half of 2024 offsetting
several large projects. which are nearing completion, including LNG Canada and the Coastal GasLink (“CGL”) pipeline. Forestry is
a seasonal business with its activities taking place in Q2 and Q3 each year and as a result, those two quarters have the highest
revenue and variability depending on the fire fighting needs. Adjusted EBITDA margins as a percentage of revenue are
dependent on sales mix and activity levels and are expected to continue to approximate 15%.
Modular
Following a strategic review completed by the Board and management, we believe our decision to pursue a sale of the Modular
business will be a positive for our Modular employees, customers and shareholders. It will allow the Corporation to simplify its
business model and deploy capital in areas of the business with stronger returns.
We expect the backlog to build as 2024 progresses. Our pipeline is active and developing including social affordable and
indigenous community housing projects as well as manufacturing of commercial/industrial modular units. The recurring
education portables business continues to grow and deliver strong profitability.
Dexterra Group Annual Report 2023 | 13
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
Liquidity and Capital Resources
Effective August 15, 2023 the Corporation reached an agreement with its lenders to amend its credit facility and extend the
maturity date to September 7, 2026. The amended credit facility has an available limit of $260 million plus an uncommitted
accordion of $150 million. See Note 11 of the Financial Statements for more details.
Debt was $89.6 million at December 31, 2023, compared to $133.9 million at September 30, 2023. The decrease in debt from
Q3 2023 was expected as our accounts receivable were converted into cash as the business moved out of its normal seasonal
peak activity period in Q3 2023. Adjusted EBITDA conversion to FCF met expectations at 52.7% for the 2023 year as compared
to 62.2% in 2022. Adjusted EBITDA conversion to FCF in 2024 is expected to be approximately 50.0%, with Q3 and Q4
experiencing the highest conversions to FCF as a result of the seasonality of the WAFES and IFM business units.
For a summary of contractual obligations including payments due for each of the next five years see the Liquidity Risk section of
Note 22 of the Financial Statements.
Capital Spending
For the three months and year ended December 31, 2023, gross capital spending for property, plant and equipment was $2.9
million and $20.6 million, respectively, compared to the $2.7 million and $6.9 million, respectively, in the same periods of 2022.
The 2023 spend includes a special access matting investment of $11.8 million under multi-year advantageous contract terms.
Sustaining capital expenditures are replacement expenditures and/or leases necessary to maintain existing business and are
expected to be approximately 1.5% of revenue on an annualized basis. Actual amounts may vary depending on the timing of
expenditures. Growth capital expenditures are incurred when highly accretive and advantageous opportunities are identified.
Quarterly Summary of Results
(000's except per share amounts)
Revenue
Adjusted EBITDA
Net earnings (loss) attributable to shareholders
Net earnings (loss) per share, basic and diluted
(000's except per share amounts)
Revenue
Adjusted EBITDA
Net earnings (loss) attributable to shareholders
Net earnings (loss) per share, basic and diluted
Selected Annual Information
(000's except per share amounts)
Revenue
Net earnings attributable to shareholders
Net earnings per share, basic and diluted
Total assets
Loans and borrowings
Dividends declared per share
$
$
$
$
Three months ended
2023
December
2023
September
2023
June
2023
March
270,527
$
310,754
$
267,830
$
268,087
12,645
(313)
39,632
13,874
27,216
8,456
0.00
$
0.21
$
0.13
$
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
$
0.00
$
Years ended December 31,
2023
1,117,198
26,750
0.41
607,088
89,615
0.350
$
$
$
$
$
$
$
$
$
$
$
$
2022
971,517
3,715
0.05
611,401
94,045
0.350
$
$
$
$
$
$
21,137
4,601
0.07
2022
March
223,960
17,018
898
0.01
2021
733,380
24,628
0.37
533,629
65,320
0.325
Dexterra Group Annual Report 2023 | 14
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
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
Three months ended December 31,
Years ended December 31,
(000's)
Net earnings (loss)
Add:
Share based compensation (recovery)
Depreciation & amortization
Equity investment depreciation
Finance costs
Loss (gain) on disposal of property, plant and equipment
Asset impairment(3)
Income tax expense (recovery)
Contract loss provisions (recovery)(1)
Restructuring and other costs(2)
2023
2022
2023
$
(301)
$
(2,873)
$
26,750
$
(236)
10,017
439
3,507
1,042
—
(1,163)
(660)
—
426
9,096
303
2,975
(117)
—
(2,854)
3,510
3,520
1,812
40,244
1,614
14,270
919
2,210
8,488
1,596
2,727
2022
3,715
1,112
38,605
1,181
8,953
(417)
—
(495)
6,678
5,394
Adjusted EBITDA
$
12,645
$
13,986
$
100,630
$
64,725
(1) Contract loss provisions for the three months and year ended December 31, 2023 were a $0.7 million recovery and $1.6 million expense, respectively (Q4 2022 and 2022 - $2.9 million). The
costs in 2022 also included losses from a contractual dispute and remediation work on pre-acquisition contracts from the Acquisition of Horizon North Logistics Inc. in May 2020 of $3.8
million (Q4 2022 - $0.6 million).
(2) Restructuring and other costs for the three months and year ended December 31, 2023 of $nil and $2.7 million, respectively include costs related to the CEO and CFO transitions of $1.9
million and demobilization and restructuring costs of $0.8 million for the year. The three months and year ended December 31, 2022 items included restructuring, system implementation
and acquisition costs of $3.5 million and $5.4 million respectively.
(3) For the year ended December 31, 2023, the Corporation recognized an asset impairment of $2.2 million on excess camp assets which it is selling (2022 - $nil).
Free Cash Flow
(000's)
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
Net cash flows from operating activities
$
59,942
$
30,794
$
80,545
$
Sustaining capital expenditures, net of proceeds, including intangibles
Finance costs paid
Lease payments
Free Cash Flow
Accounting Policies
(636)
(3,659)
(2,231)
(1,764)
(2,739)
(3,174)
(2,792)
(14,413)
(10,278)
$
53,416
$
23,117
$
53,062
$
63,991
(4,556)
(8,531)
(10,652)
40,252
Dexterra’s IFRS Accounting Standards policies are provided in Note 3 of the Financial Statements for the year ended December
31, 2023.
Outstanding Shares
Dexterra had 64,177,529 voting common shares issued and outstanding as at March 7, 2024, of which 49% or 31,957,781 are
owned by subsidiaries of Fairfax Financial Holdings Limited.
See Note 13 of the Financial Statements for details on the NCIB. Dexterra will continue to be opportunistic in re-purchasing
shares in 2024.
Off-Balance Sheet Financing
Dexterra has no off-balance sheet financing.
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
Dexterra Group Annual Report 2023 | 15
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
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.
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
Accounting Standards.
Based on the evaluation of the design and operating effectiveness of the Company's DC&P and ICFR the Chief Executive Officer
and the Chief Financial Officer concluded that the Company's DC&P and ICFR were effective as at December 31, 2023. There
have been no changes in Dexterra’s DC&P or ICFR that occurred during the year ended December 31, 2023, that have materially
affected, or are reasonably likely to materially affect, Dexterra’s DC&P or 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 dated March 7, 2024 under “Risk Factors”, 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 operations.
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 Accounting Standards. 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 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 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 Group’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,
management market and inflationary environment expectations, lodge occupancy levels, its leverage, Free Cash Flow, the
strategic review and potential sale of the NRB Modular Solutions business, NRB Modular Solutions backlog and revenue, and
wildfire activity expectations and its objectives and strategies are forward-looking 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, a reasonable valuation and other satisfactory terms being obtained for a
potential sale of the NRB Modular Business, 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 Group, 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 Group’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 Group operates; reliance on suppliers and
Dexterra Group Annual Report 2023 | 16
Management’s Discussion and Analysis
Three months and years ended December 31, 2023 and 2022
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 Group’s products and services; Dexterra Group’s significant shareholder
may substantially influence its direction and operations and its interests may not align with other shareholders; its significant
shareholder’s 49.0% 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 Group operates; climate changes could increase Dexterra Group’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 Group’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 Group’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 year ended December 31,
2023 and 2022 contained in its most recent Annual Report filed with securities regulatory authorities in Canada and available on
SEDAR at sedarplus.ca. The reader should not place undue importance on forward-looking information and should not rely
upon this information as of any other date. Dexterra Group 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 2023 | 17
MANAGEMENT’S REPORT
TO SHAREHOLDERS
Dexterra Group Annual Report 2023 | 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
five 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.
Mark Becker
President and Chief Executive Officer
Denise Achonu
Chief Financial Officer
March 7, 2024
Dexterra Group Annual Report 2023 | 19
INDEPENDENT AUDITOR’S REPORT
TO SHAREHOLDERS
Dexterra Group Annual Report 2023 | 20
Independent auditor’s report
To the Shareholders of Dexterra Group Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Dexterra Group Inc. and its subsidiaries (together, the Corporation) as at
December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS Accounting Standards).
What we have audited
The Corporation’s consolidated financial statements comprise:
the consolidated statements of financial position as at December 31, 2023 and 2022;
the consolidated statements of comprehensive income for the years then ended;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, which include material accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are relevant to
our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical
responsibilities in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada, M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, ca_toronto_18_york_fax@pwc.com
Dexterra Group Annual Report 2023 | 21
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Impairment assessment of goodwill
Refer to note 2 − Basis of presentation, note 3 −
Material accounting policies and determination of
fair values and note 9 − Intangibles and goodwill to
the consolidated financial statements.
Our approach to addressing the matter involved the
following procedures, amongst others:
Evaluated how management determined the
recoverable amounts of the CGUs, which
included the following:
− Tested the mathematical accuracy of the
discounted cash flow models.
− Evaluated the reasonableness of significant
assumptions such as revenue growth rates
and EBITDA applied by management in the
discounted cash flow models by
considering management’s budget,
strategy and business plan approved by
the Board of Directors, current and past
performance of the CGU’s and industry
data.
− Professionals with specialized skill and
knowledge in the field of valuation assisted
in evaluating the appropriateness of
management’s fair value less costs of
disposal method and assessing the
reasonableness of the discount rates.
− Tested the underlying data used in the
discounted cash flow models.
The Corporation had goodwill of $130.4 million as
at December 31, 2023 which is allocated to cash
generating units (CGUs). Goodwill is subject to
impairment testing on an annual basis and at the
end of each reporting period during the year if an
indicator of impairment exists. Impairment exists
when the carrying value of a CGU exceeds its
recoverable amount.
Management applied significant judgment in
determining the recoverable amounts. The
recoverable amounts of the CGUs were based on a
fair value less costs of disposal method using
discounted cash flow models. The significant
assumptions used in the discounted cash flow
models included 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.
Management concluded that there was no
impairment of goodwill as at July 1, 2023, the date
of the annual assessment.
We considered this a key audit matter due to the
significant judgment applied by management in
determining the recoverable amounts of the CGUs,
including the development of significant
assumptions. This, in turn, led to a high degree of
auditor judgment, subjectivity and effort in
Dexterra Group Annual Report 2023 | 22
performing procedures and evaluating audit
evidence relating to the significant assumptions
used by management. The audit effort involved the
use of professionals with specialized skill and
knowledge in the field of valuation.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis and the information, other than the consolidated financial statements and our
auditor’s report thereon, included in the annual report.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Corporation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting
process.
Dexterra Group Annual Report 2023 | 23
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Corporation to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Corporation to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
Dexterra Group Annual Report 2023 | 24
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Alodie Cuvelier-
Brew.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
March 7, 2024
Dexterra Group Annual Report 2023 | 25
CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2023 and December 31, 2022
Dexterra Group Annual Report 2023 | 26
Consolidated statement of financial position
(000’s)
Assets
Current assets
Trade and other receivables
Inventories
Prepaid expenses and other
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.
Note
December 31,
2023
December 31,
2022
5
6
7
8
9
9
17
10
14
12
8
8
12
11
13
17
13
$
$
$
$
$
212,572
$
28,690
6,482
247,744
$
145,550
23,370
30,988
130,436
12,532
16,468
359,344
607,088
$
$
163,158
$
10,618
430
3,768
7,988
211,397
26,045
5,324
242,766
156,608
23,363
35,375
128,607
8,118
16,564
368,635
611,401
170,629
10,706
381
8,478
7,783
$
185,962
$
197,977
19,700
704
2,586
89,615
939
20,567
134,111
320,073
$
$
231,071
3,268
174
52,322
180
287,015
607,088
$
$
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
$
$
$
$
Mary Garden
Director, Audit Committee Chair
Mark Becker
Director, Chief Executive Officer
Dexterra Group Annual Report 2023 | 27
Consolidated statement of comprehensive income
(000's except for earnings per share amounts)
Revenue
Revenue from operations
Operating expenses
Direct costs
Selling, general and administrative expenses
Depreciation
Amortization of intangible assets
Share based compensation
Loss (gain) on disposal of property, plant and equipment
Asset impairment
Operating income
Finance costs
Earnings from equity investments
Earnings before income taxes
Income tax
Income tax expense (recovery)
Net Earnings
Other comprehensive income
Translation (loss) gain on 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.
Dexterra Group Annual Report 2023 | 28
Years ended December 31,
Note
2023
2022
14
$
1,117,198
$
971,517
15
16
7,8
9
13
7
8,11
10
977,028
47,434
34,695
5,549
1,812
919
2,210
880,966
41,103
33,092
5,513
1,112
(417)
—
$
$
47,551
$
10,148
14,270
(1,957)
35,238
$
8,953
(2,025)
3,220
17
8,488
$
26,750
$
(495)
3,715
(167)
26,583
$
26,618
132
$
$
$
$
$
341
4,056
3,433
282
19
$
0.41
$
0.05
19
19
64,993
65,221
65,205
65,489
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, 2021
65,151 $
233,541 $
1,199 $
— $
69,639 $
(31) $
304,348
Dividends
Exercise of stock options
Share based compensation
Total comprehensive income
Balance as at December 31, 2022
Dividends
Exercise of stock options
Share based compensation
Shares purchased and cancelled
Total comprehensive income
20
13
13
20
13
13
13
—
91
—
—
—
427
—
—
—
(117)
1,154
—
(22,827)
(58)
(22,885)
—
—
—
—
282
310
1,154
4,056
341
3,433
65,242 $
233,968 $
2,236 $
341 $
50,245 $
193 $
286,983
—
40
—
—
173
—
(855)
(3,070)
—
—
—
(51)
1,083
—
—
(22,708)
(145)
(22,853)
—
—
(1,833)
—
—
—
(167)
26,618
132
122
1,083
(4,903)
26,583
—
—
—
—
—
—
—
Balance as at December 31, 2023
64,427 $
231,071 $
3,268 $
174 $
52,322 $
180 $
287,015
The accompanying notes are an integral part of the consolidated financial statements.
Dexterra Group Annual Report 2023 | 29
Consolidated statement of cash flows
(000’s)
Cash provided by (used in):
Operating activities:
Net Earnings
Adjustments for:
Depreciation
Amortization of intangible assets
Share based compensation
Loss (gain) on disposal of property, plant and equipment
Asset impairment
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
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 VCI
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
Shares purchased and cancelled
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
The accompanying notes are an integral part of the consolidated financial statements.
Dexterra Group Annual Report 2023 | 30
Years ended December 31,
Note
2023
2022
7,8
9
13
7
7
10
12
17
18
7
9
4(a)
4(b)
4(c)
10
13
13
11
20
$
26,750
$
3,715
34,695
33,092
5,549
1,812
919
2,210
3,382
(1,957)
7
(6,299)
14,270
8,488
(9,395)
114
5,513
1,112
(417)
—
(6,630)
(2,025)
(445)
(820)
8,953
(495)
21,655
783
$
80,545
$
63,991
(20,560)
(96)
963
(3,704)
—
(2,220)
—
1,572
(6,940)
(187)
709
—
(30,357)
(17,136)
(479)
4,553
$
(24,045) $
(49,837)
122
(4,903)
(10,278)
(3,918)
(14,413)
(331)
(22,779)
310
—
(10,652)
28,353
(8,531)
(815)
(22,819)
$
(56,500) $
(14,154)
—
—
$
—
$
—
—
—
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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 with 49% of voting common shares
owned by subsidiaries of Fairfax Financial Holdings Limited resulting in de facto control over the Corporation as its largest equity
and voting shareholder. 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
as issued by the International Accounting Standard Board (“IFRS Accounting Standards”). The consolidated financial
statements were authorized for issue by the Board of Directors on March 7, 2024.
b. 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.
c. 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 the 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 2023 | 31
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
3. Material 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. See Note 24 for details.
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,
2023, 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 net earnings (“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 2023 | 32
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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 net earnings. 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. No gain or loss is recognized in the
consolidated statement of comprehensive income for shares repurchased and cancelled.
(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.
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
Dexterra Group Annual Report 2023 | 33
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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 net
earnings.
iii. Depreciation
Depreciation is calculated using the depreciable amount, which is the cost of an asset, less its residual value.
Depreciation is recognized in net earnings 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 net earnings 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.
(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.
Dexterra Group Annual Report 2023 | 34
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
(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. For the year ended December 31, 2023, the timing of the annual impairment test
was changed to July 1, 2023.
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 net earnings. 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 Direct
and Selling, general and administrative expenses 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.
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
Dexterra Group Annual Report 2023 | 35
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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
net earnings.
(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.
(j) Revenue
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 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 change 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
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.
Dexterra Group Annual Report 2023 | 36
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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
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.
Dexterra Group Annual Report 2023 | 37
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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 net earnings,
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 net earnings 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 income tax
expense(recovery) 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.
(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.
Dexterra Group Annual Report 2023 | 38
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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 net earnings. 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) New standards and interpretations not yet adopted
The new standards, amendments to standards and interpretations not yet effective for the year ended December 31, 2023,
and not applied in preparing these consolidated financial statements are disclosed below. The Corporation intends to adopt
these standards, when they become effective.
i.
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 does not expect this standard to have any impact on its
consolidated financial statements.
Dexterra Group Annual Report 2023 | 39
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
4. Business Combinations
(a) VCI
On January 31, 2023, Dexterra Group acquired 100% of the issued and outstanding shares of VCI Controls Inc. (“VCI”) for net
consideration of $4.2 million, after cash acquired. As at December 31, 2023, the Corporation has finalized the purchase price
equation for the acquisition.
The following summarizes the assets acquired and liabilities assumed on VCI acquisition:
Consideration:
Cash consideration
Holdback, net of working capital adjustments
Total consideration
Fair value of assets acquired and liabilities assumed:
Cash
Trade and other receivables
Prepaid expenses and other
Inventories
Property, plant and equipment
Right-of-use assets
Trade and other payables
Deferred income tax liabilities
Lease liabilities
Tangible net assets
Customer Relationships
Goodwill
Total identifiable net assets
$
$
$
$
$
(000's)
3,793
980
4,773
589
1,891
171
84
44
211
(979)
(16)
(211)
1,784
1,088
1,901
4,773
The primary factors that contributed to the residual purchase price allocation and resulted in the recognition of goodwill are:
the assembled workforce of VCI, access to growth opportunities with new customers, and the increased additive service
offerings to existing customers. The goodwill recognized is not deductible for income tax purposes.
During the year ended December 31, 2023, the Corporation paid a holdback of $0.5 million to the previous owners in
accordance with the purchase agreement.
The Corporation incurred certain legal and advisory fees of $0.3 million related to the acquisition which were included in selling,
general & administrative expenses on the consolidated statement of comprehensive income for the year ended December 31,
2022.
2022 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 expanded 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 increased the scale of the
existing IFM business and provides access to new market sectors.
Dexterra Group Annual Report 2023 | 40
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
(b) 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.
(c) 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
Dexterra Group Annual Report 2023 | 41
$
$
$
$
$
(000's)
17,136
2,000
19,136
174
313
163
275
(275)
650
5,500
12,986
19,136
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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. No earn-out is payable based as the results for the two years ended January 31, 2024.
In addition, the acquisition included a holdback to be released to the previous owners eighteen months after the closing date of
the transaction less any amounts paid to third parties. During the year ended December 31, 2023, the Corporation paid the
holdback of $2.0 million and related finance costs of $0.2 million to the previous owners in accordance with the purchase
agreement (2022 - $nil).
5. Trade and other receivables
(000’s)
Trade receivables
Modular holdback receivables
WAFES Deferred trade receivables
Total trade receivables
Accrued trade receivables
Other receivables
Allowance for expected credit losses
Total
December 31, 2023
December 31, 2022
133,897 $
135,972
13,657
15,304
9,738
5,756
162,858 $
151,466
$
$
42,406
8,837
(1,529)
53,025
7,732
(826)
$
212,572 $
211,397
Modular holdback receivables and WAFES deferred trade receivables of $29.0 million (December 31, 2022 - $15.5 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 WAFES deferred trade receivables are expected to be collected within 12
months. Credit risks are further described in Note 22.
6. Inventories
(000’s)
Raw materials
Food inventory
Modular work-in-progress
Finished goods and supplies
Inventories
December 31, 2023
December 31, 2022
$
9,419 $
14,386
9,477
1,150
8,644
4,448
1,176
6,035
$
28,690 $
26,045
Dexterra Group Annual Report 2023 | 42
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
7. Property, plant and equipment
Carrying Amounts
(000’s)
Cost
December 31, 2021
Additions
Acquisition of Dana (Note 4 (b))
Acquisition of Tricom Assets (Note 4 (c))
Asset retirement obligations (Note 12)
Net transfers from (to) inventory
Disposals
December 31, 2022
Additions
Acquisition of VCI (Note 4 (a))
Asset retirement obligations (Note 12)
Net transfers from (to) inventory
Disposals
Asset impairment(1)
December 31, 2023
Accumulated Depreciation
December 31, 2021
Depreciation
Net transfers from (to) inventory
Disposals
December 31, 2022
Depreciation
Net transfers from (to) inventory
Disposals
December 31, 2023
Net book value
December 31, 2023
December 31, 2022
$
$
Camp equipment
& mats
Land & buildings
Automotive &
trucking
equipment
Manufacturing &
other equipment
Total
$
145,713 $
29,603 $
17,701 $
9,336 $
202,353
2,660
—
—
1,604
5,672
1,642
2,426
—
—
—
425
—
190
—
—
(2,460)
(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
14,920
3,599
—
642
(4,439)
(1,179)
(2,210)
—
—
—
(1,348)
—
375
—
—
—
(378)
—
1,666
20,560
44
—
—
(464)
—
44
642
(4,439)
(3,369)
(2,210)
160,923 $
35,815 $
17,876 $
13,110 $
227,724
23,149 $
2,359 $
9,990 $
4,874 $
14,607
(915)
(2,124)
2,629
—
222
3,920
—
(595)
1,812
(43)
3
$
34,717 $
5,210 $
13,315 $
6,646 $
18,301
(1,057)
(893)
2,231
—
2,361
—
1,935
—
(116)
(357)
(119)
40,372
22,968
(958)
(2,494)
59,888
24,828
(1,057)
(1,485)
$
$
$
51,068 $
7,325 $
15,319 $
8,462 $
82,174
109,855 $
118,472 $
28,490 $
28,354 $
2,557 $
4,564 $
4,648 $
145,550
5,218 $
156,608
(1) For the year ended December 31, 2023, the Corporation recognized an impairment of $2.2 million on camp assets which are held for sale. The loss has been
included in the statement of comprehensive income.
Dexterra Group Annual Report 2023 | 43
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
8. Leases
(i)
Right-of-use assets
(000’s)
Cost
December 31, 2021
Acquisition of Dana (Note 4 (b))
Acquisition of Tricom Assets (Note 4 (c))
Additions
Disposals
December 31, 2022
Acquisition of VCI (Note 4 (a))
Additions
Disposals
December 31, 2023
Accumulated Depreciation
December 31, 2021
Depreciation
Disposals
December 31, 2022
Depreciation
Disposals
December 31, 2023
Net book value
December 31, 2023
December 31, 2022
Camp
equipment
& mats Land & buildings
Automotive &
trucking
equipment
Manufacturing &
other equipment
Total
$
5,554 $
25,926 $
2,701 $
520 $
34,701
—
—
7,771
105
179
4,355
131
96
2,257
—
—
29
(5,529)
(1,294)
(64)
(230)
236
275
14,412
(7,117)
$
7,796 $
29,271 $
5,121 $
319 $
42,507
—
1,463
49
4,536
162
3,530
—
162
211
9,691
(4,809)
(6,198)
(178)
(290)
(11,475)
4,450 $
27,658 $
8,635 $
191 $
40,934
2,743 $
8,436 $
1,111 $
354 $
3,567
5,504
(2,054)
(1,294)
937
(49)
116
(227)
12,644
10,124
(3,624)
4,256 $
12,646 $
1,999 $
243 $
19,144
3,350
4,832
(4,809)
(6,198)
1,610
(150)
75
9,867
(290)
(11,447)
2,797 $
11,280 $
3,459 $
28 $
17,564
1,653 $
16,378 $
5,176 $
3,540 $
16,625 $
3,122 $
163 $
76 $
23,370
23,363
$
$
$
$
$
$
(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, 2023
Lease liabilities included in the statement of financial position at December 31, 2023
Current
Non-current
$
$
$
(000's)
9,337
7,520
5,891
4,970
3,418
31,136
27,688
7,988
19,700
For the year ended December 31, 2023, the Corporation had a $1.1 million lease receivable related to sublet leased equipment
(2022 - $2.0 million). 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, 2023 was $1.6 million (2022 -
$1.6 million).
Dexterra Group Annual Report 2023 | 44
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
9. Intangibles and Goodwill
Intangible assets at the consolidated statement of financial position date are as follows:
(000’s)
Cost
December 31, 2021
Acquisition of Dana (Note 4(b))
Acquisition of Tricom Assets (Note 4(c))
Additions
Foreign Currency Translation(1)
December 31, 2022
Acquisition of VCI (Note 4(a))
Additions
Foreign Currency Translation(1)
December 31, 2023
Accumulated Amortization
December 31, 2021
Amortization
December 31, 2022
Amortization
December 31, 2023
Net book value
December 31, 2023
December 31, 2022
Trade Names
Customer
Relationships
Computer software
and other
$
3,800 $
22,483 $
4,580 $
750
—
—
—
12,600
5,500
—
74
—
—
187
—
4,550 $
40,657 $
4,767 $
—
91
—
1,088
—
(22)
—
5
—
Total
30,863
13,350
5,500
187
74
49,974
1,088
96
(22)
4,641 $
41,723 $
4,772 $
51,136
1,031 $
901
1,932 $
902
2,834 $
1,807 $
2,618 $
5,760 $
3,472
9,232 $
3,691
12,923 $
28,800 $
31,425 $
2,295 $
1,140
3,435 $
956
4,391 $
381 $
1,332 $
9,086
5,513
14,599
5,549
20,148
30,988
35,375
$
$
$
$
$
$
$
1) Foreign currency translation relates to the assets held in Dexterra Services LLC in the US 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(1)
Workforce Accommodations and Forestry
Balance, end of year
December 31, 2023
December 31, 2022
$
$
95,851
$
34,585
130,436
$
94,022
34,585
128,607
(1) See note 4 for additions to Goodwill of $1.9 million related to the acquisition completed in 2023. The fluctuations in goodwill balances are from foreign currency
translation of US operations.
Goodwill impairment assessment
The Corporation assesses indicators of impairment at the end of each reporting period and performs a detailed impairment test
at least annually. At July 1, 2023, 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 forecast, budget, strategy and business plan approved by the Board of Directors. The approved forecast,
budget, strategy and business plan use current and anticipated contracts and market conditions to project revenue. EBITDA is
calculated using historical margins and additional operational factors. The calculation of the FVLCOD discounted cash flow
model was based on the following key assumptions:
•
•
•
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% (December 31, 2022 - 14.0%).
The revenue growth rates are based on management's internal forecast and projections. Annual revenue growth rates
for 2024 - 2028 were estimated to be up to 8% for WAF on a normalized basis and 8% to 12% for IFM.
The long-term growth rate after 5 years used in determining the recoverable amount is 2.5% (December 31, 2022 -
2.5%).
Dexterra Group Annual Report 2023 | 45
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
•
EBITDA for the five years is based on management's internal forecast and projections. EBITDA margins were projected
to be 7% to 8% for IFM and 11% to 12% for WAF.
Sensitivities
The most sensitive inputs to the discounted cash flow model are in the IFM segment and relate to the discount rate, the
revenue growth rate, and EBITDA margins. All else being equal, a 100 basis points decrease in the revenue growth rates, a 25
basis points decrease in EBITDA margin, or a 50 basis points increase in the discount rate would, on an individual basis, result in
an immaterial impairment in the IFM CGU.
10. Other assets
Other assets at December 31, 2023 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, 2022 - $13.1 million) and $2.2 million (December 31, 2022 - $1.9
million), respectively. During the year ended December 31, 2023, Gitxaala and BSL LP paid cash distributions of $1.4 million and
$0.2 million, respectively, (December 31, 2022 - $4.5 million and $nil, respectively) 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 $1.1 million (December 31, 2022 - $1.6 million).
11. Loans and borrowings
(000’s)
Committed credit facility
Unamortized financing costs
Total borrowings
December 31, 2023
December 31, 2022
$
$
90,904
$
(1,289)
89,615
$
94,822
(777)
94,045
Effective August 15, 2023, the Corporation reached an agreement with its lenders to amend its credit facility and extend the
maturity date to September 7, 2026. The amended credit facility has an available limit of $260 million plus an uncommitted
accordion of $150 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 is calculated on a grid pricing structure based on the
Corporation’s debt to EBITDA ratio. 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 on the committed available limit
ranging from 0.30% to 0.55% per annum.
As at December 31, 2023, the Corporation was in compliance with all financial and non-financial covenants related to the credit
facility and had letters of credit outstanding in the amount of $16.7 million (2022 - $10.1 million). For the year ended December
31, 2023, the Corporation incurred finance costs relating to the loans and borrowings of $12.2 million (2022 - $7.3 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, 2023
December 31, 2022
$
11,642 $
—
(6,299)
642
369
10,560
1,599
(820)
5
298
$
6,354 $
11,642
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, 2023 to be $6.4 million (December 31, 2022 - $11.6 million) based on a total
future liability of $6.6 million (December 31, 2022 - $12.3 million). The Corporation used an average risk free interest rate of
3.88% and an inflation rate of 1.72% (December 31, 2022 - 3.94% and 2.06%, respectively) to calculate the net present value of
its asset retirement obligations as at December 31, 2023. 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 2023 | 46
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
(000’s)
Current
Non-current
Balance, end of year
13. Share capital
(a) Authorized and issued
December 31, 2023
December 31, 2022
$
$
3,768 $
2,586
6,354 $
8,478
3,164
11,642
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, 2021
Options exercised
Balance, December 31, 2022
Shares purchased and cancelled
Options exercised
Balance, December 31, 2023
Total number of
shares
Total share capital
65,151,083 $
233,541
90,545
427
65,241,628 $
233,968
(855,100)
40,001
(3,070)
173
64,426,529 $
231,071
On May 15, 2023, Dexterra commenced a Normal Course Issuer Bid (“NCIB”) under which the Corporation can purchase up to a
maximum of 1,300,000 shares over the period to May 14, 2024, representing approximately 2% of the common shares
outstanding, subject to certain restrictions under the securities laws. The shares purchased and cancelled are accounted for as a
reduction in the Corporation’s equity. No gain or loss is recognized in the consolidated statement of comprehensive income on
the purchase and cancellation of treasury shares. The total consideration paid includes any commissions or fees.
For the year ended December 31, 2023, the Corporation purchased and cancelled 855,100 common shares at a weighted
average price of $5.73 per share for a total consideration of $4.9 million (2022 - $nil) of which $1.8 million was charged to
retained earnings.
(b) Long-term incentive plans
(i) Share option plan
Balance, December 31, 2021
Granted
Exercised
Forfeited
Balance, December 31, 2022
Granted
Exercised
Forfeited
Balance, December 31, 2023
Outstanding options
Weighted average
exercise price
1,200,140
627,271
(90,545)
(104,866)
1,632,000 $
841,615
(40,001)
(246,956)
2,186,658 $
4.66
8.01
3.42
6.30
5.90
5.35
3.05
6.52
5.67
Dexterra Group Annual Report 2023 | 47
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
The exercise prices for options outstanding and exercisable at December 31, 2023 were as follows:
Exercise price per share
$3.05 to $5.95
$5.96 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
4.52
6.48
8.45
5.67
3.0
2.1
3.0
2.8
Number
1,315,776 $
456,843
414,039
2,186,658 $
Weighted average
exercise price per
share
3.21
6.48
8.45
5.00
Number
525,075 $
312,585
138,003
975,663 $
The exercise prices for options outstanding and exercisable at December 31, 2022 were as follows:
Exercise price per share
$3.05 to $5.95
$5.96 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 $
The Corporation calculated the fair value of the share options granted using the Black-Scholes pricing model 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, 2023
December 31, 2022
$
$
1.46
$
9.15 %
5.35
$
3.0 years
3.74 %
6.65 %
54.94 %
2.45
9.30 %
8.01
3.2 years
1.57 %
5.04 %
58.80 %
For the year ended December 31, 2023, share based compensation for share options included in net earnings amounted to $1.1
million (2022 - $1.2 million). Subsequent to year-end, the Corporation issued 1,005,806 share options under the plan with an
exercise price of $5.87 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 had been granted to members of the Board of Directors as at December 31, 2022. In 2023, RSUs
were granted to members of the Board of Directors as well as officers and key employees.
The following table summarizes the RSU’s outstanding:
Units outstanding at beginning of year
Granted
Vested and exercised
Forfeited
Units outstanding at end of year
Dexterra Group Annual Report 2023 | 48
December 31, 2023
December 31, 2022
40,621
117,473
(16,759)
(6,844)
134,491
28,970
21,307
(9,656)
—
40,621
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
As at December 31, 2023, trade and other payables included $0.5 million (December 2022 - $0.2 million) for outstanding RSUs.
For the year ended December 31, 2023, share based compensation for RSUs included in net earnings amounted to $0.4 million
(2022 - $0.1 million). Subsequent to year-end, the Corporation issued an additional 230,314 RSUs under the plan to its Board of
Directors, key management and officers of the Corporation and settled 38,066 vested units for $0.3 million.
(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.
The following table summarizes the PSU’s outstanding:
Units outstanding at beginning of year
Granted
Forfeited
Units outstanding at end of year
December 31, 2023
December 31, 2022
519,129
492,013
(143,618)
867,524
291,762
281,479
(54,112)
519,129
As at December 31, 2023, other long term liabilities included $0.9 million for outstanding PSUs (December 31, 2022 - $0.6
million in other long term liabilities). For the year ended December 31, 2023, net earnings included a share based compensation
of $0.3 million for PSUs (2022 - recovery of $0.1 million). Subsequent to year-end, the Corporation issued an additional 379,963
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 total trade and accrued receivables
Contract liabilities, which are included in deferred revenue
December 31, 2023
December 31, 2022
$
$
45,548 $
10,618 $
32,887
10,706
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 total trade and accrued 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 $16.6 million (2022 - $17.4 million) in accrued trade
receivables for Modular Solutions and $29.0 million in Modular holdback and WAFES deferred trade receivables (2022 - $15.5
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 mainly relate to payments received from customers, and for which revenue is
recognized over time and is excluded from revenue from operations.
The amount of $10.7 million recognized in contract liabilities at the beginning of the year has been recognized as revenue for
the year ended December 31, 2023 (2022 - $1.9 million).
As the Corporation’s 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, 2023.
Dexterra Group Annual Report 2023 | 49
Notes to the consolidated financial statements
Years ended December 31, 2023 and 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
Corporate(1)
Other direct costs
Years ended December 31,
2023
$
154,921 $
403,109
86,396
226,305
13,058
23,827
17,712
41,026
2,480
8,194
2022
171,044
352,250
70,767
181,655
9,829
23,234
13,263
35,611
12,240
11,073
(1) Corporate direct costs of $2.5 million for the year ended December 31, 2023 related to contract loss provisions, contract demobilization and restructuring costs. For the year ended December
31, 2022, Corporate had direct costs of $12.2 million which included $6.9 million related to contractual disputes and remediation work related to 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, $2.0 million related to the restructuring
and systems implementation for a business unit being integrated with VCI Controls Inc. and $0.5 million in other items.
The amount of inventory recognized as an expense during the year ended December 31, 2023 was $154.9 million (2022 - $171.0
million).
$
977,028 $
880,966
16. Selling, general and administrative expenses
(000's)
Wages and benefits(1)
Other selling and administrative expenses
Years ended December 31,
2023
24,264 $
23,170
47,434 $
2022
23,084
18,019
41,103
$
$
(1) Wages and benefits for the year ended December 31, 2023 include CEO & CFO transition costs of $1.9 million (2022 - $nil).
17. Income taxes
For the year ended December 31, 2023, the Corporation's effective income tax rate was 24%, compared to a recovery of 15% in
2022. The effective tax rate for the year ended December 31, 2023 is generally consistent with the combined federal and
provincial income tax rates. 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.
The Corporation has non-capital losses for Canadian tax purposes of $54.2 million at December 31, 2023 (December 31, 2022 -
$92.4 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 current and deferred tax expense breakdown is as follows:
Income tax expense (recovery) (000's):
Current
Deferred
Years ended December 31,
2023
(59) $
8,547
8,488 $
2022
1,811
(2,306)
(495)
$
$
Dexterra Group Annual Report 2023 | 50
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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
Income tax expense (recovery)
18. Cash flow information
Years ended December 31,
2023
35,238
$
25 %
8,810
$
$
$
—
628
512
(901)
(738)
177
$
8,488
$
2022
3,220
26 %
837
830
169
(291)
(969)
(285)
(786)
(495)
The details of the changes in non-cash working capital are as follows, and excludes the opening balance sheet impacts related
to the 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
Shares cancelled under NCIB, weighted average
Weighted average common shares outstanding - basic
Effect of share purchase options(1)
Weighted average common shares outstanding - diluted
Years ended December 31,
2023
716 $
(2,561)
(505)
(6,956)
(89)
(9,395) $
2022
(19,140)
(7,477)
1,714
37,798
8,760
21,655
$
$
Years ended December 31,
2023
2022
65,241,628
65,151,083
19,479
(268,496)
64,992,611
228,796
65,221,407
54,099
—
65,205,182
283,664
65,488,846
(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, 2023 and has been accrued
in trade and other payables as at December 31, 2023. The dividend is payable to shareholders of record at the close of business
on December 31, 2023 and was paid on January 15, 2024. Subsequent to December 31, 2023, Dexterra declared a dividend of
$0.0875 per share for shareholders of record at March 29, 2024, to be paid April 15, 2024.
Dexterra Group Annual Report 2023 | 51
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
(000's except per share amounts)
2023
2022
March 31
June 30
September 30
December 31
Amount per share
Dividend declared
Amount per share
Dividend declared
$
0.0875 $
5,708 $
0.0875 $
0.0875
0.0875
0.0875
5,695
5,667
5,638
0.0875
0.0875
0.0875
5,703
5,707
5,708
5,709
Total dividends declared
$
0.350 $
22,708 $
0.350 $
22,827
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, 2023 (000's)
Revenue(1)
Operating expenses
Direct costs(2)
Selling, general and administrative expenses(3)
Depreciation and amortization
Share based compensation
Loss (Gain) on disposal of property, plant and equipment
Asset Impairment(4)
Operating income (loss)
Finance costs
Earnings from equity investments
Earnings (loss) before income taxes
Total assets
Year ended December 31, 2022 (000's)
Revenue(1)
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 investment
Earnings (loss) before income taxes
Total assets
IFM
WAFES
Modular
Solutions
Corporate and
Other
Inter-segment
Eliminations
Total
$
331,877
$
595,399
$
189,422
$
500
$
— $ 1,117,198
304,858
480,172
190,276
7,999
7,164
115
(17)
—
11,758
282
—
$
$
11,476
178,129
$
$
12,717
26,590
152
(163)
2,210
73,721
897
(1,957)
74,781
311,341
5,292
5,269
35
(16)
—
(11,434)
832
—
1,722
21,426
1,221
1,510
1,115
—
(26,494)
12,259
—
—
—
—
—
—
—
—
—
—
977,028
47,434
40,244
1,812
919
2,210
47,551
14,270
(1,957)
$
$
(12,266) $
(38,753) $
— $
35,238
107,402
$
11,593
$
(1,377) $
607,088
IFM
WAFES
Modular
Solutions
Corporate and
Other
Inter-segment
Eliminations
Total
$
279,354
$
489,996
$
199,611
$
3,082
$
(526) $
971,517
257,272
410,775
201,157
8,530
6,745
52
(5)
6,760
78
—
$
$
6,682
178,233
$
$
7,901
24,921
(77)
(639)
47,115
675
(2,025)
48,465
312,753
$
$
6,785
5,414
(16)
(34)
12,240
17,887
1,525
1,153
261
(13,695)
(29,984)
824
—
7,376
—
(14,519) $
(37,360) $
(478)
880,966
—
—
—
—
(48)
—
—
(48)
41,103
38,605
1,112
(417)
10,148
8,953
(2,025)
3,220
112,607
$
9,185
$
(1,377) $
611,401
(1) Corporate results for the year ended December 31, 2023 included revenue in the amount of $0.5 million related to contract restructuring. The year ended December 31, 2022 included
revenue in the amount of $3.1 million, from contractual disputes and remediation work related to contracts in place at the time of the Acquisition of Horizon North Logistics Inc. in May 2020.
(2) Corporate results for the year ended December 31, 2023 included direct expenses in the amount of $2.5 million related to contract demobilization costs and restructuring. The year ended
December 31, 2022 include direct cost in the amount of $12.2 million related to the contractual disputes and remediation work noted in Note 15.
(3) Selling, general and administrative expenses incorporate CEO & CFO transition costs of $1.9 million for the year ended December 31, 2023 (2022 - $nil).
(4) For the year ended December 31, 2023, the Corporation recognized an asset impairment of $2.2 million on excess camp assets which are held for sale (2022 - $nil).
Dexterra Group Annual Report 2023 | 52
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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, 2023
December 31, 2022
$
132,761
127,513
15,623
2,885
11,589
162,858
42,406
8,837
(1,529)
9,500
7,798
6,655
151,466
53,025
7,732
(826)
$
212,572 $
211,397
As at December 31, 2023, the Corporation provided for expected credit losses in the amount of $1.5 million (2022 - $0.8
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 2023 (2022 - none).
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, 2023
December 31, 2022
Trade and
other payables(1)
Lease liabilities(2)
Loans and
borrowings(3)
Trade and
other payables(1)
Lease liabilities(2)
Loans and
borrowings(3)
$
163,588 $
9,337 $
—
1,643
—
—
7,520
5,891
4,970
3,418
— $
—
90,904
—
—
171,010 $
9,082 $
640
—
697
—
7,069
5,335
4,259
6,023
—
94,822
—
—
—
$
165,231 $
31,136 $
90,904 $
172,347 $
31,768 $
94,822
(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.
Dexterra Group Annual Report 2023 | 53
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
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%, the impact on the
Corporation’s net earnings and shareholder’s equity would be immaterial. 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 and shareholder’s equity would have
decreased by approximately $1.4 million for the year ended December 31, 2023 (2022 - $1.4 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
Joint Ventures and Affiliates
December 31, 2023
December 31, 2022
$
1,399 $
625
2,421
547
575
1,514
The Corporation earned revenue of $nil (2022 - $0.5 million) for the year ended December 31, 2023 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 (2022 - $0.6 million) in management fees for administrative overhead
related to accounting and management services. As at December 31, 2023, Gitxaala owed $2.0 million (2022 - $0.5 million) in
payables to the Corporation which comprised of flow-through revenue generated from providing catering and workforce
accommodation services to third parties through Gitxaala LP. The amount is paid to the Corporation as Gitxaala billings to
customers are collected.
The Corporation earned revenue of $1.4 million (2022 - $1.0 million) for the year ended December 31, 2023 for catering
services and equipment rentals provided to BSL LP, a joint venture in which the Corporation has a 49% interest. As at
December 31, 2023, BSL LP owed $0.4 million (2022 - $1.0 million) in payables to the Corporation which are considered to be
part of normal course of operations.
Insurance and bonds
As at December 31, 2023 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 $24.5 million
(December 31, 2022 - $28.3 million). Fees in the amount of $0.2 million were incurred for the year ended December 31, 2023
(December 31, 2022 - $0.3 million).
Dexterra Group has certain property insurance policies with Northbridge. The premiums paid in both years are approximately
$0.3 million annually at normal commercial rates.
Key management personnel
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.
Dexterra Group Annual Report 2023 | 54
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
Key management personnel compensation for the year ended December 31, 2023 and 2022 is comprised as follows:
(000's)
Short-term employee benefits
Post-employment benefits
CEO and CFO transition costs
Share based compensation
24. Subsidiaries
Subsidiary Name
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 Community Initiatives (“DCI”)
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”)
HN Pituvvik Camp Services Ltd. (“Pituvvik”)
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”)(1)
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”)
VCI Controls Inc. (“VCI”)(1)
Years ended December 31,
2023
4,171 $
203
1,854
1,230
7,458 $
2022
2,752
239
—
805
3,796
$
$
Ownership Interest (%)
Country of
Incorporation
December 31, 2023 December 31, 2022
Canada
Canada
Canada
Canada
Canada
USA
USA
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
49
49
100
49
100
100
100
40
100
49
49
100
49.5
49
100
100
100
100
49
49
49
49
49
49
100
49
49
100
49
100
100
100
40
100
49
—
100
100
49
100
100
100
100
49
49
49
49
49
49
—
(1) Subsequent to December 31, 2023, PGC and VCI were amalgamated into one combined entity named Dexterra On Demand Inc.
(a) Special purpose entities
The Corporation has an equity interest in Kitikmeot, Acho, Secwepemc, HRHN, TLHN, Tahltan, Acden, Sekui, Eclipse, DKHN,
STHN, Pituvvik, Kapewin 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 and have
limited assets with the only non-flow through expenses being management fees paid to the partners. Indigenous participation
in the governance of these SPEs is required to secure projects in specific regions of Canada.
(b) Dexterra Community Initiatives
DCI is a not-for-profit entity through which Dexterra promotes and supports community and environment initiatives. One of
these programs is providing training and work opportunities for indigenous youth.
Dexterra Group Annual Report 2023 | 55
Notes to the consolidated financial statements
Years ended December 31, 2023 and 2022
25. Subsequent event
In Q1 2024, the Board and management completed a strategic review of the Modular Solutions segment and initiated a process
to sell the business. This business will be reported as held for sale starting in the Q1 2024 financial statements.
On February 29, 2024 Dexterra Group acquired 100% of CMI Management, LLC (“CMI”) for approximately $31 million in cash,
subject to normal closing adjustments. CMI is an IFM company based in Alexandria, Virginia serving a number of federal
agencies and commercial clients across the United States. The purchase price was financed through the Corporation’s existing
credit facility and is expected to be mainly allocated to goodwill and intangible assets. CMI will be reported as part of the IFM
segment.
Dexterra Group Annual Report 2023 | 56
CORPORATE
INFORMATION
Board of Directors
Senior Leadership Team
Mark Becker
Chief Executive Officer
Denise Achonu
Chief Financial Officer
Sanjay Gomes
President, Integrated Facilities
Management
Rob Johnston
President, Modular Solutions
Jeff Litchfield
President, Workforce
Accommodations, Forestry,
& Energy Services
JD MacCuish
Executive Vice President,
Strategy & Corporate Planning
Lee-Anne Lyon-Bartley
Executive Vice President,
Health, Safety, Sustainability,
Quality & Community
Cindy G. McArthur
Chief Human Resources Officer
Christos Gazeas
Executive Vice President,
Legal and General Counsel
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)
Mark Becker
Toronto, Ontario
Kevin Nabholz
Calgary, Alberta
(2)(3)
Russell Newmark
Inuvik, Northwest Territories
(1)(3)
Tabatha Bull
Toronto, Ontario
(2)(3)
(1)(3)
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 2023 | 57
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 8, 2024 at 11:00 a.m. EST
Live Webcast: https://web.lumiagm.com/229327636
Website
dexterra.com
Dexterra Group Annual Report 2023 | 58
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