Goodfellow Inc.

0 

 
 
FINANCIAL HIGHLIGHTS 

OPERATING RESULTS 
(in thousands of dollars, except per share amounts) 

Sales 
(Loss) Earnings before income taxes 
Net (loss) earnings 
 - per share 

Cash flow  

(excluding non-cash working capital, 

           Income tax paid and interest paid) 

 - per share (2) 

Shareholders’ equity 

 - per share (2) 
Share price at year-end 
Dividend paid per share 

2017 
IFRS 

2016 
IFRS 

2015 
IFRS 

2014 
IFRS 
(15 months) 

2013 
IFRS(1) 
(Restated) 

$523,659  
$(3,275) 
$(2,094) 
$(0.25) 

$565,173  
$(16,294) 
$(12,105) 
$(1.42) 

$2,840  
$0.33 
$109,434  
$12.86 
$8.33 
-  

$(10,802) 
$(1.27) 
$110,693  
$13.01 
$9.05 
$0.30 

$538,975 
$11,874 
$8,622 
$1.01 

$16,092 
$1.89 
$128,100 
$15.06 
$10.35 
$0.35 

$610,587  
$11,128  
$8,125  
 $0.96 

$15,228  
 $1.79 
$119,486  
 $14.05 
 $9.50 
 $0.65 

$483,485 
$7,307 
$5,279 
$0.62 

$9,681 
$1.14 
$117,138 
$13.77 
$9.06 
$0.35 

(1)  Year ended August 31 
(2)  Non-GAAP measures – refer to “Non-GAAP Measures” section of MD&A 

NET (LOSS) EARNINGS (in million $)

SHARE PRICE

15
10
5
0
-5
-10
-15

$8 

$9 

$5 

2013

2014

2015

$(2)

2017

$(12)
2016

2013

2014

2015

2016

2017

9.06  $ 

9.50  $ 

10.35  $ 

9.05  $ 

8.33  $ 

TABLE OF CONTENTS 

Chairman’s report to the Shareholders  ................. 2 

ANNUAL MEETING 

President’s Report to the Shareholders .................. 3 

Management Discussion and Analysis .................. 4 

Financial Statements and Notes ........................... 17 

Directors and Officers .......................................... 45 

Sales Offices and Distributions Centres .............. 47 

HEAD OFFICE 
225 Goodfellow Street 
Delson, Quebec 
J5B 1V5 
Canada 

1 

The annual Meeting of Shareholders 
will be held on April 13, 2018 at 11:00 
a.m. at the Goodfellow Inc. Head 
Office:   225 Goodfellow Street, 
Delson, Quebec. 

Toll-Free Canada: 1-800-361-6503 
Tel.: 450-635-6511 
Fax: 450-635-3729 
info@goodfellowinc.com 
 www.goodfellowinc.com 

 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
               
 
 
 
 
 
 
CHAIRMAN’S REPORT TO THE SHAREHOLDERS 

After a difficult start, the executive team of Goodfellow managed to restore the company's finances during the 

year with a better control of our inventory and of the number of employees while restoring gross margins on 

our  sales.  We  also  stabilized  and  continued  to  improve  our  enterprise  resource  planning  (ERP)  to  improve 

service to our customers. It is with great confidence that we look forward to 2018. 

On behalf of the Board of Directors, I would like to thank our President and chief executive officer, Mr. Patrick 

Goodfellow, his management team and each of our employees for their efforts during this past year. 

I would also like to thank our shareholders for their patience and our clients who have given us the opportunity 

to continue serving them throughout the year. 

Claude Garcia 
Chairman of the Board 
February 15, 2018 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRESIDENT’S REPORT TO THE SHAREHOLDERS 

December  1st,  2016  to  November  30th,  2017  must  be  evaluated  and  perceived  as  a  year  of  transition  and 
correction. All attempts were made to address very compromising issues related to the very dark chapter in the same 
previous period. Management had the objective of restoring stability and profitability as aggressively as possible. 

Inventory reductions rapidly targeted slow moving and obsolete goods. Costs were diminished by focusing on 
core activities and essential initiatives only. Margins were restored progressively by diligently resetting price lists and 
giving  the  Company’s  management  team  an  accurate  portrait  of  the  cost  of  goods  sold.  Staffing  levels  were 
significantly  right  sized  to  reflect  efficiencies  achieved  by  process  improvements  in  our  very  difficult  ERP 
implementation. 

Despite the major carry-over pre-tax loss of $7.6M in Q1, by the end of Q2 initiatives started gaining traction, 
which resulted in a profitable month of May 2017 and a Q2 loss of $717K. Our stated objective was the pursuit of a 
break-even scenario by year-end 2017. 

Q3 and Q4 pre-tax signaled a return to profitable operations for Goodfellow Inc. For the Year Ended November 
30th, 2017 Goodfellow Inc. showed a pre-tax loss of $3.3M (net of $2.1M) compared to a pre-tax loss of $16.3M (net 
of $12.1M) for the period ended November 30th, 2016; a pre-tax loss reduction of $13.0M. 

Some  ill-conceived  operational  partnerships  have  been  unwound  and  Goodfellow  Inc.  is  moving  proudly 
forward with its core activities. The Company is now reliant on its own independent operational assets therefore in 
control of its destiny. 

The  Company  has  successfully  renewed  its  traditional  cash  flow  banking  arrangement  with  the  TD/BMO 
syndicate. The Company’s ability to quickly right size inventory, reduce the operating loan and return to profitability 
promptly  made  this  renewal  with  our  loyal  lenders  possible.  The  Company  is  very  grateful  for  its  strong  banking 
relationship. The Company would also like to recognize and thank its key suppliers that have supported Goodfellow 
Inc. and look forward to further strengthening those relationships. 

All  those  changes  bode  well  for  the  future  and  have  contributed  to  putting  the  Company  back  on  a  solid 
conservative  footing  moving  forward.  The  Company  continues  in  its  transition  to  consistent  profitability  through 
responsible inventory management and the ability to capitalize on asset opportunities in 2018 and beyond. 

Patrick Goodfellow 
President and Chief Executive Officer 
February 15, 2018 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

PROSPECTIVE FINANCIAL INFORMATION 

The  following  Management’s  Discussion  and  Analysis  (“MD&A”)  and  Goodfellow  Inc.  (hereafter  the  “Company”)  consolidated  financial 
statements were approved by the Audit Committee and the Board of Directors on February 15, 2018. The MD&A should be read in conjunction with 
the  consolidated  financial  statements  and  the  corresponding  notes  for  the  twelve  months  ended  November  30,  2017  and  twelve  months  ended 
November 30, 2016. The MD&A provides a review of the significant developments and results of operations of the Company during the twelve 
months ended November 30, 2017 and twelve months ended November 30, 2016. The consolidated financial statements ended November 30, 2017 
and November 30, 2016 are prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts in this MD&A are in 
Canadian dollars unless otherwise indicated. 

This  MD&A  contains  implicit  and/or  explicit  forecasts,  as  well  as  forward  looking  statements  on  the  objectives,  strategies,  financial  position, 
operating results and activities of Goodfellow Inc., including the implementation of a plan for the remediation of the design weakness in the area of 
inventory controls. These statements are forward looking to the extent that they are based on expectations relative to markets in which the Company 
exercises its activities and on various assessments and assumptions including: the nature and magnitude of design deficiencies; the effectiveness of 
measures taken in the interim to provide confidence in the validity of inventory counts; and the appropriateness of the compensating controls over 
inventory management to be implemented under the remediation plan to mitigate the risk of a material misstatement. Although we believe that the 
expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements 
are made, are reasonable, there can be no assurance that such expectations and assumptions will prove to be correct. Readers are cautioned not to 
place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations 
upon which the forward-looking statements are based will occur. Our actual results could differ significantly from management’s expectations if 
recognized  or  unrecognized  risks  and  uncertainties  affect  our  results  or  if  our  assessments  or  assumptions  are  inaccurate.  These  risks  and 
uncertainties include, among other things; the possibility that the design deficiencies and impact thereof identified in our  review are significantly 
different  than  assessed  and  anticipated;  the  potential  ineffectiveness  of  the  compensating  controls  over  inventory  management  proposed  to  be 
implemented  under  the  remediation  plan,  the  effects  of  general  economic  and  business  conditions  including  the  cyclical  nature  of  our  business; 
industry competition; inflation, credit, currency and interest rate risks; environmental risk; competition from vendors; dependence on key personnel 
and major customers; laws and regulation; information systems, cost structure and working capital requirements; and other factors described in our 
public filings available at www.sedar.com. For these reasons, we cannot guarantee the results of these forward-looking statements. The MD&A gives 
an insight into our past performance as well as the future strategies and key performance indicators as viewed by our management team at Goodfellow 
Inc. The Company disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law. 

Additional  information  relating to  Goodfellow  Inc.,  including  the  Annual  Information  Form and  the Annual Report  can  be  found  on  SEDAR  at 
www.sedar.com. 

NON-GAAP MEASURES 

Cash flow per share and operating income before depreciation of property, plant and equipment and amortization of intangible assets (also referred 
to as earnings before interest, taxes, depreciation and amortization [“EBITDA”]), are financial measures not prescribed by the International Financial 
Reporting Standards (“IFRS”) and are not likely to be comparable to similar measures presented by other issuers. Management considers it to be 
useful information to assist knowledgeable investors in evaluating the cash generating capabilities of the Company. Cash flow per share is defined 
as Cash flow from operations (excluding non-cash working capital, income tax paid and interest paid) of $2.8 million for the fiscal period ended 
November 30, 2017 divided by the total number of outstanding shares of 8,506,554. 

Reconciliation of EBITDA 
and operating income to net income 
(thousands of dollars) 

Net loss for the period 
Provision for income taxes 
Financial expenses 
Operating income (loss) 
Depreciation and amortization 
EBITDA 

BUSINESS OVERVIEW 

For the years ended 

November 30 
2017 
$ 
(2,094) 
(1,181) 
4,199  
924  
4,085  
5,009  

November 30 
2016 
$ 
(12,105) 
(4,189) 
3,640  
(12,654) 
3,850  
(8,804) 

Goodfellow Inc. is a distributor of lumber products, building materials, and hardwood flooring products. The Company carries on the business of 
wholesale distribution of wood and associated products and remanufacturing, distribution and brokerage of lumber. The Company sells to over 7000 
customers who represent three main sectors - retail trade, industrial, and manufacturing. The Company operates 13 distribution centres, 9 processing 
plants in Canada, and 1 distribution centre in the USA.   

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OVERALL PERFORMANCE 

December 1st, 2016 to November 30th, 2017 must be evaluated and perceived as a year of transition and correction. All attempts were made to 
address very compromising issues related to the very dark chapter in the same previous period. Management had the objective of restoring stability 
and profitability as aggressively as possible. 

Inventory reductions rapidly targeted slow moving and obsolete goods. Costs were diminished by focusing on core activities and essential initiatives 
only. Margins were restored progressively by diligently resetting price lists and giving the Company’s management team an accurate portrait of the 
cost of goods sold. Staffing levels were significantly right sized to reflect efficiencies achieved by process improvements in our very difficult ERP 
implementation. 

Despite the major carry-over pre-tax loss of $7.6M in Q1, by the end of Q2 initiatives started gaining traction, which resulted in a profitable month 
of May 2017 and a Q2 loss of $717K. Our stated objective was the pursuit of a break-even scenario by year-end 2017. 

Q3 and Q4 pre-tax signaled a return to profitable operations for Goodfellow Inc. For the Year Ended November 30th, 2017 Goodfellow Inc. showed 
a pre-tax loss of $3.3M (net of $2.1M) compared to a pre-tax loss of $16.3M (net of $12.1M) for the period ended November 30th, 2016; a pre-tax 
loss reduction of $13.0M. 

SELECTED ANNUAL INFORMATION (in thousands of dollars, except per share amounts) 

Consolidated sales 
(Loss) Earnings before income taxes  
Net (loss) earnings 

Total Assets 
Total Long-Term Debt 
Cash Dividends 

PER COMMON SHARE 
Net (loss) earnings per share Basic and Diluted 
Cash Flow from Operations (excluding non-cash  
working capital item, income tax paid and interest paid) 
Shareholders' Equity 
Share Price 
Cash Dividends  

INVESTMENT IN A JOINT VENTURE 

2017 
$ 
523,659  
(3,275) 
(2,094) 

197,233  
55  
-  

(0.25) 

0.33 
12.86 
8.33 
-  

2016 
$ 
565,173  
(16,294) 
(12,105) 

241,568  
126  
2,552  

(1.42) 

(1.27) 
13.01 
9.05 
0.30 

2015 
$ 
538,975 
11,874 
8,622 

212,081 
- 
2,977 

1.01 

1.89 
15.06 
10.35 
0.35 

On December 1, 2015, the Company and Groupe Lebel Inc. completed the closing of a joint venture and the creation of Traitement Lebel Goodfellow 
Inc. with seven wood treatment plants to serve markets across Ontario, Quebec and the Maritimes. Traitement Lebel Goodfellow Inc. became one 
of the largest treated wood producer in Eastern Canada with unsurpassed geographical coverage.  Groupe Lebel's four plants located in Bancroft and 
Caledon, Ontario, Dégelis and St-Joseph, Quebec, were combined with the Company’s three plants located in Delson, Quebec, Elmsdale, Nova 
Scotia, and Deer Lake, Newfoundland, and were leased to the joint venture forming a new business unit focused on operational excellence.  With 
the creation of the joint venture, this transaction was supposed to enhance the strengths of the two partners to better serve the treated wood clients 
across Eastern Canada. In fiscal 2016, the Company invested $3.0 million in the joint venture in the form of inventory of raw material pursuant to a 
shareholder agreement in return of 40% of the shares of the joint venture.  

In Q2-2017, both parties agreed to dissolve the joint venture. The joint venture ceased operations on May 31st, 2017. The better part of the liquidation 
was done in Q3-2017. Goodfellow received back its initial investment of $3.0 million and $320 thousand of dividends as part of the dissolution. The 
closing of the joint venture will occur in summer 2018 and a final dividend of approximately $285 thousand is expected. 

BUSINESS COMBINATIONS 

On December 31, 2015, the Company completed the acquisition of 100% of the shares of Quality Hardwoods Ltd. located in Powassan, Ontario.  
Quality  Hardwoods  Ltd.  manufactures,  sells  and  distributes  hardwood  lumber  products  in  Ontario  and  in  the  US  which  is  core  to  our  business 
development strategy.  Sales of the acquired company recognized since the acquisition date amounted to approximately $13.9 million for 11 months. 
The purchase price was $6.3 million, subject to post-closing adjustments. The Company has financed the acquisition through its existing revolving 
credit facility. 

The following fair value determination of the assets acquired and liabilities assumed is final.  The following is a summary of the assets acquired, the 
liabilities assumed and the consideration transferred at fair value as at the acquisition date. The transaction was made in Canadian dollars. 

5 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets acquired 
Cash 
Trade and other receivables 
Inventories 
Prepaid expenses 
Property plant and equipment 
Intangibles 

Liabilities assumed 
Bank debt 
Trade and other payables 
Deferred income tax 
Total net assets acquired and liabilities assumed 

Consideration transferred 
Cash 
Holdback provision 
Consideration transferred 

December 31,  
2015 
$ 

892 
1,157 
2,601 
2 
3,097 
538 

560 
815 
576 
6,336 

5,100 
1,236 
6,336 

The  intangible  assets  relate  mainly  to  customer  relationships.  The  assigned  useful  lives  of  customers’  relationship  are  between  5  to  10  years. 
Significant assumptions used in the determination of intangible assets, as defined by Management, include year-over-year sales growth, attrition rate, 
discount rate and operating income before depreciation. From the holdback provision an amount of $0.6 million has been paid during the year 2016. 
The remaining balance was settled for $150 thousand during the year 2017. 

COMPARISON FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016 
(In thousands of dollars, except per share amounts) 

HIGHLIGHTS FOR THE YEARS ENDED  
NOVEMBER 30, 2017 AND 2016 

Consolidated sales 
Loss before income taxes  
Net loss 
Net loss per share Basic and Diluted 
Cash Flow from Operations (excluding non-cash  
working capital item, income tax paid and interest paid) 
EBITDA 
Average Bank indebtedness 
Inventory average 

2017 

$ 
523,659  
(3,275) 
(2,094) 
(0.25) 

2,840  

5,009  
80,010  
105,361  

2016 

Variance 

$ 
565,173  
(16,294) 
(12,105) 
(1.42) 

(10,802) 

(8,804) 
94,728  
130,940  

% 
-7.3 
+79.9 
+82.7 
+82.4 

+126.3 

+156.9 
-15.5 
-19.5 

Sales in Canada during fiscal 2017 decreased 10% compared to last year mainly due to the decrease in sales of pressure treated wood, siding and 
flooring products. Sales in Quebec decreased 15% compared to last year due to a loss of a pressure treated wood contract from one of our major 
retail groups. Sales in Ontario decreased 8% impacted by the decreased demand for pressure treated wood and flooring products. Sales in Western 
Canada decreased 3% mainly due to the slower housing market in Alberta. Atlantic sales decreased 4% compared to last year mainly due to inventory 
reduction and cleansing initiatives. 

Sales in the United States during fiscal 2017 decreased by 2% on a Canadian dollar basis when compared to the same period last year due to lower 
demand of hardwood lumber. Softwood lumber was impacted by the Countervailing and Antidumping laws effective since the beginning of 2017.  
On a US dollar basis, US denominated sales increased 0.1% compared to last year. Finally, export sales increased 20% during fiscal 2017 compared 
to the same period a year ago mainly due to increased demand of hardwood lumber in Asia, Europe and the Middle-East. 

6 

16%(2016: 14%)13%(2016: 12%)10%(2016: 10%)30%(2016: 30%)31%(2016: 34%)US  and ExportsAtlanticWestern CanadaOntarioQuebecGeographical Distribution of Sales for Fiscal 2017 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
These previously discussed factors impacted to various degrees our sales mix during fiscal 2017. Flooring sales during fiscal 2017 decreased 8% 
compared  to  the  corresponding  period  last  year.  Specialty  and  Commodity  Panel  sales  during  fiscal  2017  decreased  3%  compared  to  the 
corresponding period last year. Building Materials sales during fiscal 2017 increased 4% compared to the corresponding period last year. Finally, 
our core lumber business sales during fiscal 2017 decreased 11% compared to the corresponding period last year.  

Cost of Goods Sold 
Cost of goods sold during fiscal 2017 was $442.4 million compared to $483.9 million, a decrease of 8.6% when compared to last year reflecting the 
decreased  sales  level  and the  cost  structure  related  to  outsourced  production  of  Pressure  Treated Wood  and  Siding.  Total  freight outbound  cost 
decreased 11.4% compared to the same period a year ago. Average gas and diesel purchased prices during the fiscal 2017 increased approximately 
18% compared to the corresponding period last year. Gross profits remained stable during fiscal 2017 compared to the corresponding period last 
year while gross margins increased from 14.4% to 15.5%. 

Selling, Administrative and General Expenses 
Selling, Administrative and General Expenses during fiscal 2017 were $81.5 million compared to $93.9 million for last year. Selling, Administrative 
and General Expenses decreased 13.2% as a result of the headcount reduction. 

Net Financial Cost 
Net financial costs during fiscal 2017 were $4.2 million ($3.6 million a year ago). During the fiscal 2017, the average Canadian prime rate increased 
to 2.87% compared to 2.70% last year. The average US prime rate increased from 3.50% to 4.06%. Average bank indebtedness during fiscal 2017 
decreased to $80.0 million compared to $94.7 million last year. Average inventory during fiscal 2017 was $105.4 million compared to $130.9 million 
last year.  

COMPARISON FOR THE THREE MONTHS ENDED NOVEMBER 30, 2017 AND 2016 
(In thousands of dollars, except per share amounts) 

HIGHLIGHTS FOR THE THREE MONTHS 
ENDED NOVEMBER 30, 2017 AND 2016 

Consolidated sales 
Earnings (loss) before income taxes  
Net earnings (loss) 
Net earnings (loss) per share Basic and Diluted 
Cash Flow from Operations (excluding non-cash  
working capital item, income tax paid and interest paid) 
EBITDA 
Average Bank indebtedness 
Inventory average 

Q4-2017  

Q4-2016  

Variance 

$ 
127,558  
2,711  
2,216  
0.26 

3,635  

4,957  
60,971  
95,956  

$ 
130,748  
(14,830) 
(11,181) 
(1.31) 

(13,174) 

(12,604) 
99,678 
124,241  

% 
-2.4 
+118.3 
+119.8 
+119.8 

+127.6 

+139.3 
-38.8 
-22.8 

Sales in Canada during the fourth quarter of fiscal 2017 decreased 4% compared to the same period a year ago mainly due to decreased volume of 
pressure treated wood sales. Quebec sales decreased 2% due to a decrease in demand from the retail and manufacturing customer groups. Sales in 
Ontario decreased 6% mainly due to a decline in sales of pressure treated wood and hardwood. Western Canada sales decreased 5% due to decreased 
sales of flooring products. Atlantic region sales increased 3% due to increase sales in most product groups with the exception of cedar and engineered 
wood products.  

Sales in the United States for the fourth quarter of fiscal 2017 decreased 14% on a Canadian dollar basis compared to the same period last year due 
to decrease in sales of hardwood lumber products.  On a US dollar basis, US denominated sales decreased 9% compared to last year. Finally, export 
sales increased 28% during the fourth quarter of fiscal 2017 compared to the same period a year ago mainly due to increased demand for hardwood 
lumber in Asia and Europe. 

7 

53%(2016: 54%)10%(2016: 9%)18%(2016: 17%)19%(2016: 20%)LumberBuilding MaterialSpecialty & Commodity PanelFlooringProduct Distribution of Sales for Fiscal 201716%(Q4-2016 : 16%)12%(Q4-2016 : 11%)9%(Q4-2016 : 9%)31%(Q4-2016 : 33%)32%(Q4-2016 : 31%)US and ExportsAtlanticWestern CanadaOntarioQuebecGeographical Distribution of Sales for the Fourth Quarter ended November 30, 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
These  previously  discussed  factors  impacted  to  various  degrees  our  sales  mix.  Flooring  sales  for  the  fourth  quarter  ended  November  30,  2017 
decreased 6% compared to the corresponding period last year. Specialty and Commodity Panel sales for the fourth quarter of fiscal 2017 decreased 
6% compared to the corresponding period last year. Building Materials sales for the fourth quarter of fiscal 2017 increased 19% compared to the 
corresponding period last year. Finally, Lumber sales for the fourth quarter of fiscal 2017 decreased 3% compared to the corresponding period last 
year.  

Cost of Goods Sold 
Cost of goods sold for the fourth quarter of fiscal 2017 was $104.6 million compared to $119.6 million for the corresponding period a year ago. Cost 
of purchased goods decreased 12.5% compared to the corresponding period last year reflecting the decreased sales level and the cost structure related 
to outsourced production of Pressure Treated Wood and Siding. Total freight outbound cost for the fourth quarter of fiscal 2017 decreased 26.1% 
compared to the same period a year ago. Average gas and diesel purchased prices during the fourth quarter increased approximately 14% compared 
to the corresponding period a year ago. Gross profits increased  105.9% during the fourth quarter of fiscal 2017 compared to last year and gross 
margins increased from 8.5% to 18.0%. 

Selling, Administrative and General Expenses 
Selling, Administrative and General Expenses for the fourth quarter ended November 30, 2017 were $20.3 million compared to $24.8 million for the 
corresponding period last year. Selling, Administrative and General Expenses decreased 18.1% compared to the fourth quarter last year due to our 
continued cost reduction strategy. 

Net Financial Cost 
Net financial costs for the fourth quarter of fiscal 2017 were $1.1 million ($1.2 million a year ago). The average Canadian prime rate increased to 
3.20% during the fourth quarter of fiscal 2017 compared to 2.70% last year. The average US prime rate increased to 4.25% during the fourth quarter 
compared to 3.50% a year ago. Average bank indebtedness during the fourth quarter of fiscal 2017 was $61.0 million compared to $99.7 million for 
the corresponding period last year. Average inventory during the fourth quarter of fiscal 2017 was $96.0 million compared to $124.2 million for the 
same period last year. 

SUMMARY OF THE LAST EIGHT MOST RECENTLY COMPLETED QUARTERS 
(In thousands of dollars, except per share amounts) 

Sales 
Net (loss) earnings 

Feb-2017 
$ 
113,490  
(5,401) 

May-2017 
$ 
139,641  
(541) 

Aug-2017 
$ 
142,970  
1,632  

Nov-17 
$ 
127,558  
2,216  

Net (loss) earnings per share Basic and Diluted 

(0.63) 

(0.07) 

0.19  

0.26  

Sales 
Net (loss) earnings 

Feb-2016 

$ 
108,659  
(906) 

May-2016 
Restated 
$ 
166,623  
2,473  

Aug-2016 

$ 
159,143  
(2,491) 

Nov-16 

$ 
130,748  
(11,181) 

Net (loss) earnings per share Basic and Diluted 

(0.11) 

0.29 

(0.29) 

(1.31) 

As indicated above, our results over the past eight quarters follow a seasonal pattern with sales activities traditionally higher in the second and third 
quarter. 

STATEMENT OF FINANCIAL POSITION 

Total Assets 
Total assets at November 30, 2017 decreased from $241.6 million at November 30, 2016 to $197.2 million. Cash at November 30, 2017 closed at 
$1.6 million ($0.7 million at November 30, 2016). Trade and other receivables at November 30, 2017 was $58.3 million compared to $64.3 million 
at November 30, 2016 reflecting the lower sales volume during the fourth quarter compared to last year. Income tax receivable stood at $1.6 million 
compared to $6.6 million in fiscal 2016. Inventories at November 30, 2017 was $88.9 million compared to $115.4 million at November 30, 2016 
reflecting the decreased sales volume and our commitment to lower the inventory. Prepaid expenses at November 30, 2017 was $3.0 million compared 
to $4.9 million at November 30, 2016.  Defined benefit plan assets was $2.4 million at November 30, 2017 compared to $2.2 million a year ago. 
Investment closed at $0.3 million at November 30, 2017 compared to $3.4 million reflecting the dissolution of the joint venture. 

8 

51%(Q4-2016: 51%)10%(Q4-2016: 8%)19%(Q4-2016: 20%)20%(Q4-2016: 21%)LumberBuilding MaterialSpecialty & Commodity PanelFlooringProduct Distribution of Sales for the Fourth Quarter ended November 30, 2017 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
Property, plant, equipment and intangible assets 
Property, plant, equipment at November 30, 2017 was $36.2 million compared to $38.7 million at November 30, 2016. Capital expenditures during 
fiscal  2017  amounted  to  $1.3  million  ($3.0  million  last  year).  Property,  plant,  equipment  capitalized  during  fiscal  2017  included  leasehold 
improvements, computers, rolling stock and yard equipment. Intangible assets at November 30, 2017 closed at $4.9 million ($5.4 million last year). 
Proceeds on disposal of capital assets during fiscal 2017 amounted to $1.6 million (nil last year). Depreciation of property, plant, equipment and 
intangible  assets  during  fiscal  2017  was  $4.1  million  ($3.9  million  last  year).  Historically,  capital  expenditures  in  general  have  been  capped  at 
depreciation levels.  

Total Liabilities 
Total liabilities at November 30, 2017 was $87.8 million ($130.9 million last year). Bank indebtedness closed at $52.3 million compared to $94.1 
million last year. Trade and other payables at November 30, 2017 was $29.4 million compared to $30.7 million a year ago. Provision at November 
30,  2017  was  $1.4  million  (same  as  last  year).  Long-term  debt  at  November  30,  2017  was  $0.2  million  ($0.3  million  on  November  30,  2016).  
Deferred income taxes at November 30, 2017 closed at $3.6 million ($3.3 million last year). Defined benefit plan obligations was $0.9 million at 
November 30, 2017 compared to $1.0 million at November 30, 2016.  

Shareholders’ Equity 
Total Shareholders’ Equity at November 30, 2017 decreased to $109.4 million from $110.7 million last year. The Company generated a return on 
equity of (1.9)% during fiscal 2017 ((10.9)% last year). Market share price closed at $8.33 per share on November 30, 2017 ($9.05 on November 30, 
2016). Share book value at November 30, 2017 was $12.86 per share ($13.01 on November 30, 2016). Share capital closed at $9.2 million (same as 
last year). No eligible dividend was declared and paid to the holders of participating shares for the year ended November 30, 2017 ($2.6 million or 
$0.30 per share for the year ended November 30, 2016). 

LIQUIDITY AND CAPITAL RESOURCES 

Financing 
As at November 30, 2017, under the credit agreement, the Company was using $51.0 million of its facility compared to $91.5 million last year. The 
credit agreement has a maximum revolving operating facility of $125 million renewable in May 2018. For 2017, the available facility was $125 
million corresponding to the amount available during the peak season (February 1, 2017 to August 31, 2017) and has since been reduced to $100 
million which corresponds to the low seasonality of the business (September 1, 2017 to January 31, 2018). In addition, pursuant to the amended 
credit facility, the available facility has been reduced by $11.2 million in Q4-2017 due to certain tax refunds, the dissolution of the LGTI investment 
and $1.0 million for the sale of land in Drummondville. Therefore, the available credit was reduced from $100 million to $89 million as at November 
30, 2017. In December 2017, the Company renewed its credit agreement with its present lenders, two chartered Canadian banks. The credit agreement 
has a maximum revolving operating facility of $100 million renewable in May 2019. On November 30, 2018, the facility will be reduced to $90 
million which corresponds to the low seasonality of the business. Funds advanced under these credit facilities bear interest at the prime rate plus a 
premium and  are  secured  by  first  ranking  security  on  the universality  of the  movable  property  of  the  Company. As  at  November  30,  2017, the 
Company was compliant with its financial covenants. 

The Company’s business follows a seasonal pattern with sales activities traditionally higher in the second and third quarter. As a result, cash flow 
requirements  are  generally  higher  during  these  periods.  The  current  facility  is  considered  by  management  to  be  adequate  to  support  its  current 
forecasted cash flow requirements. Source of funding and access to capital is disclosed in detail under LIQUIDITY AND RISK MANAGEMENT 
IN THE CURRENT ECONOMIC CONDITIONS. 

Cash Flow 
Net cash flow from operating activities for fiscal 2017 increased to $39.7 million from $(34.0) million for the same period last year due to decreased 
inventory and collecting trade receivables. Financing activities during fiscal 2017 decreased to $(40.6) million compared to $44.5 million for the 
same period last year. Investing activities during fiscal 2017 increased $3.1 million compared to a decreased of $(10.6) million for the corresponding 
period a year ago (See Property, plant, equipment and intangible assets for more details).  

LIQUIDITY AND RISK MANAGEMENT IN THE CURRENT ECONOMIC CONDITIONS 

The Company’s objectives are as follows: 

1.  Maintain financial flexibility in order to preserve its ability to meet financial obligations; 
2.  Maintain a low debt-to-capitalization ratio to preserve its capacity to pursue its organic growth strategy; 
3.  Maintain financial ratios within covenants requirements; 
4.  Provide an adequate return to its shareholders. 

The Company defines its capitalization as shareholders’ equity and debt.  Shareholders’ equity includes the amount of paid-up capital in respect of 
all issued and fully-paid common shares together with the retained earnings, calculated on a consolidated basis in accordance with IFRS.  Debt 
includes bank indebtedness reduced by the amounts of cash and cash equivalents. Capitalization represents the sum of debt and shareholders’ equity. 

The Company manages its capital and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the 
underlying assets. In order to maintain or adjust its capital, the Company may adjust the amount of dividends paid to shareholders, issue new shares 
or repurchase shares under the normal course issuer bid, acquire or sell assets to improve its financial performance and flexibility or return capital to 
shareholders. The Company’s primary uses of capital are to finance increases in non-cash working capital and capital expenditures for capacity 
expansion. The Company currently funds these requirements out of its internally-generated cash flows and credit facilities. 

The Company incurred a net loss of $2.1 million and positive cash flow from operating activities (excluding non-cash working capital items) of $2.8 
million in fiscal 2017 compared to a net loss of $12.1 million and negative cash flow from operating activities (excluding non-cash working capital 
items) of $10.8 million in fiscal 2016. In 2017, the Company was able to decrease its inventory levels from $115.4 million to $88.9 million, its trade 
9 

 
 
 
 
 
 
 
 
 
 
 
 
 
receivables and other receivables from $64.3 million to $58.3 million and its bank indebtedness from $94.1 million to $52.3 million as at November 
30, 2017 as compared to November 30, 2016. Subsequent to year-end, Management renewed its banking agreement for a maximum available facility 
of $100 million expiring in May 2019. On November 30, 2018, the facility will be reduced to $90 million which corresponds to the low seasonality 
of the business. Funds advanced under these credit facilities bear interest at the prime rate plus a premium and are secured by first ranking security 
on the universality of the movable property of the Company. As at November 30, 2017, the Company was compliant with its financial covenants. 

The Company is subject to certain covenants on its credit facilities. The covenants include a Debt-to-capitalization ratio and year-to-date EBITDA. 
The Company monitors the ratios on a monthly basis. The Company currently complies with all externally imposed capital requirements. Other than 
the covenants required for the credit facilities, the Company is not subject to any externally imposed capital requirements. 

The Company’s financial objectives and strategy have changed in the past twelve months.  The financial objectives and strategy were to stabilize the 
Company and bring back to traditionally conservative management. Changes to its credit agreement and working capital structure were required and 
Management  have  addressed  them  with  a  renewed  credit  agreement  starting  December  2017  and  maturing  in  May  2019  with  its  lenders.    The 
Company believes that all its ratios are within reasonable limits, in light of the relative size of the Company and its capital management objectives. 

As at November 30, 2017 and 2016, the Company achieved the following results regarding its capital management objectives: 

Capital management 

Debt-to-capitalization ratio 
Return on shareholders’ equity 
Current ratio 
EBITDA (in thousands of dollars) 

As at 
November 30 
2017 

32.8% 
 (1.9)%  
 1.9  
$5,009  

As at 
November 30 
2016 

47.3% 
     (10.9)% 
 1.5 
$(8,804) 

These measures are not prescribed by IFRS and are defined by the Company as follows: 

  Debt-to-capitalization ratio represents the funded debt over total shareholders’ equity. Funded debt is bank indebtedness less cash and cash 

equivalents. Capitalization is funded debt plus shareholders’ equity. 

  Return on shareholders’ equity is the net earnings (loss) divided by shareholders’ equity. 
  Current ratio is total current assets divided by total current liabilities. 
 

EBITDA is earnings before interest, taxes, depreciation and amortization. 

General 
Management makes every effort to ensure that the Company benefits from effective risk management, which has been strengthened according to 
even stricter criteria with economic fluctuations. Management is responsible for identifying and assessing the potential risks that could have a material 
impact on the Company’s operations and financial position, as well as the risk management strategies implemented within the Company. It is also 
responsible for setting up risk management oversight provisions, notably by developing and recommending to the Board of Directors or its Audit 
Committee various policies and procedures to support effective strategies in regard to internal and external control in order to improve and reduce 
the impact of business and operational risk factors. 

Credit Risk 
The  Company  strictly  manages  the  credit  granted  to  its  customers.  In  recent  months,  special  emphasis  has  been  placed  on  the  monitoring  and 
collection of accounts receivables. For instance, the Company has performed a thorough review of all its customer credit files and credit limits have 
been reduced in many cases. The accounts receivable collection period has been historically longer in the second and third quarter of its fiscal year.  
Credit management remains relatively cautious and risks and rewards situation are analyzed on a regular basis. A rapid weakening of the economic 
conditions could result in further bad debts expenses. 

Supplier-Related Risk 
The Company’s business model is largely built on long-term relationships with a network of international, national and local manufacturers, which 
enables it to reduce the risks associated with inventory valuation and to adjust to fluctuations in demand. In addition, the Company’s practice is to 
take discounts and pay its suppliers on a timely basis which results in strong relationships with our key vendors and partners. 

Cost Structure, Working Capital Requirements 
At November 30, 2017, its total debt to capitalization ratio stood at 32.8% compared to 47.3% on November 30, 2016. For 2017, the available facility 
was $125 million corresponding to the amount available during the peak season (February 1, 2017 to August 31, 2017) and has since been reduced 
to  $100  million  which  correspond  to  the  low  seasonality  of  the  business  (September  1,  2017  to  January  31,  2018).  In  addition,  pursuant  to  the 
amended credit facility, the available facility has been reduced by $11.2 million in Q4-2017 due to certain tax refunds, the dissolution of the LGTI 
investment and $1.0 million for the sale of land in Drummondville. Therefore, the available credit was reduced from $100 million to $89 million as 
at November 30, 2017. In December 2017, the Company renewed its credit agreement with its present lenders, two chartered Canadian banks. The 
credit agreement has a maximum revolving operating facility of $100 million renewable in May 2019. On November 30, 2018, the facility will be 
reduced to $90 million which corresponds to the low seasonality of the business. Funds advanced under these credit facilities bear interest at the 
prime rate plus a premium and are secured by first ranking security on the universality of the movable property of the Company.  

For further information, the principal risk factors to which the Company is exposed are described in the Management’s Report contained in its Annual 
Report for the twelve months ended November 30, 2017 as well as in the 2017 Annual Information Form available on SEDAR (www.sedar.com). 

10 

 
 
 
 
 
  
  
  
  
 
 
 
 
 
 
 
 
COMMITMENTS AND CONTINGENCIES 

As  at  November  30,  2017,  the  minimum  future  rentals  payable  under  long-term  operating  leases,  for  offices,  warehouses,  vehicles,  yards  and 
equipment, did not materially change and are as follows: 

Contractual obligations 

Operating Leases 
Purchase obligations 
Total Contractual Obligations 

Total 

Payments due by Period (in thousands of dollars) 
1 – 3 
Years 
7,182 
- 
7,182 

Less than 
1 year 
4,811 
67 
4,878 

20,849 
67 
20,916 

4 –5 
Years 
5,262 
- 
5,262 

After 
5 years 
3,594 
- 
3,594 

Contingent liabilities 
During the normal course of business, certain product liability and other claims have been brought against the Company and, where applicable, its 
suppliers. While there is inherent difficulty in predicting the outcome of such matters, management has vigorously contested the validity of these 
claims, where applicable, and based on current knowledge, believes that they are without merit and does not expect that the outcome of any of these 
matters, in consideration  of insurance  coverage maintained,  or  the  nature  of  the  claims,  individually or  in  the  aggregate, would  have  a  material 
adverse effect on the consolidated financial position, results of operations or future earnings of the Company. 

RISKS AND UNCERTAINTIES 

Currency Risk 
Certain valuation risks exist depending on the performance of the Canadian dollar compared to the U.S. dollar, Euro and the Pound sterling. From 
time-to-time,  the  Company  enters  into  forward  exchange  contracts  to  hedge  certain  accounts  payable  and  certain  future  purchase  commitments 
denominated in U.S. dollar and Euro. During the twelve months ended November 30, 2017, the Company did not use foreign exchange contracts to 
mitigate its effect on sales and purchases. Consequently, as at November 30, 2017 there were no outstanding foreign exchange contracts. 

Interest Risk 
The Company uses a revolving line of credit to finance working capital requirements. The interest cost of this facility is dependent upon Canadian 
and US bank prime rates. The profitability of the Company could be adversely affected by increases in the bank prime rate. 

Credit Risk 
The Company is exposed to credit risks from customers. This risk is alleviated by minimizing the amount of exposure the Company has to any one 
customer, thereby ensuring a diversified customer mix. Additionally, the Company has a system of credit management to mitigate the risk of losses 
due to insolvency or bankruptcy of its customers. It also utilizes credit insurance to reduce the potential for credit losses. The loss of any major 
customer could have a material effect on the company’s results, operations and financial conditions. 

Environmental Risk 
The Company’s St-André (QC) site shows continued traces of surface contamination from previous treating activities exceeding existing regulatory 
requirements. The Company received approval for the environmental rehabilitation plan in fiscal 2016. The Company started to implement its plan 
during the fiscal 2016 and treatment of soil on-site will be performed over an estimated period of 5 years. Based on current available information, 
the provision as at November 30, 2017 is considered by management to be adequate to cover any projected costs that could be incurred in the future. 

Because of the long-term nature of the liability, the biggest uncertainty in estimating the provision is the amounts of soil to be treated and the costs 
that will be incurred. In particular, the Company has assumed that the site will be restored using technology and materials that are currently available. 
The Company has been provided with a reasonable estimate, reflecting different assumptions about pricing of the individual components of the cost. 
The provision has been calculated using a discount rate of 5.0% and an inflation rate of 2.1%. The rehabilitation is expected to occur progressively 
over the next 5 years. 

Competition from Vendors 
The Company is exposed to competition from some of its vendors in certain markets. From time to time, vendors might decide to distribute directly 
to some of our customers and therefore becoming competitors. This would adversely affect the Company’s ability to compete effectively and thereby 
potentially impact its sales. 

Dependence on Key Personnel 
The Company is dependent on the continued services of its senior management team. Although the Company believes that it could replace such key 
employees in a timely fashion should the need arise, the loss of such key personnel could have a material adverse effect on the Company. 

Dependence on Major Customers 
The Company does not have long-term contracts with any of its customers. Distribution agreements are usually awarded annually and can be revoked. 
Two major customers exceed 10% of total company sales in the twelve months ended November 30, 2017 while only one major customer exceeded 
10% of total company sales last year. The following represents the total sales consisting primarily of various wood products of the major customer(s):  

(in thousands of dollars) 

Sales to major customer(s) that 
exceeded 10% of total Company’s 
sales 

Years ended 
November 30, 2017  November 30, 2016 
% 

% 

$ 

$ 

110,848 

21.2 

90,241 

16.0 

The loss of any major customer could have a material effect on the Company’s results, operations and financial positions. 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dependence on Market Economic Conditions 
The Company demand for products depends significantly upon the home improvement, new residential and commercial construction markets. The 
level of activity in the home improvement and new residential construction markets depends on many factors, including the general demand for 
housing, interest rates, availability of financing, housing affordability, levels of unemployment, shifting demographic trends, gross domestic product 
growth, consumer confidence and other general economic conditions. Since such markets are sensitive to cyclical changes in the economy, future 
downturns in the economy or lack of further improvement in the economy could have a material adverse effect on the Company. 

Customer Agreements 
The majority of the Corporation’s supply and customer arrangements vary significantly in length. Most arrangements are for individual purchase 
orders and are satisfied upon delivery of the goods to the customer.  Some arrangements involve customers purchasing goods several months in 
advance of delivery. These arrangements, known as bookings, vary in length but are generally less than six months long.  There can be no assurance 
that these customers will renew their bookings or continue to place purchase orders with the Corporation. 

Cyclical Nature 
The business of the Corporation is, to a significant degree, seasonal and cyclical, and fluctuates in advance of the normal building season. Inventory 
is built up during the second quarter in anticipation of the building seasons, and the busy selling season begins in the last half of that second quarter 
and  extends  to  the  end  of  the  third  quarter.  Additionally,  the  Corporation  is  subject  to  the  normal  economic  cycle,  the  housing  cycle  and  to 
macroeconomic factors, such as interest rates. Although the Corporation anticipates that these seasonal and cyclical fluctuations will continue in the 
foreseeable future, it is seeking to reduce their impact on its operations and sales. 

Supply Chain 
The Company is exposed to supply chain risks relating mainly to the Asian imports from time-to-time. Management does not expect to incur any 
major losses related to supply due to the fact that it has built solid long-term relationships with numerous reputable suppliers. 

Laws and regulation 
The Corporation faces multiple laws and regulations. These are laws that regulate credit practice, transporting products, importing and exporting 
products and employment. New laws governing the Corporation’s business could be enacted or changes to existing laws could be implemented, each 
of which might have a significant impact on the Corporation’s business. Many foreign laws and regulations constrain our ability to compete efficiently 
on those foreign markets. 

Information systems 
The Company enterprise resource planning (“ERP”) information management system provides information to management which is used to evaluate 
financial controls, reporting and sales analysis and strategies. The Company has implemented a new ERP information management system in fiscal 
2016. The new ERP system should provide information to the Company's management which is expected to be used to improve financial analytics, 
reporting and controls. There can be no assurance that the ERP system will provide the information and benefits expected by management. The 
Company  may  also  experience  disruptions  in  its  business  and  a  diversion  of  management's  attention  to  the  Company's  business  relating  to  the 
implementation of the ERP system, which may also result from the integration process related to recently completed acquisitions. Any of these risk 
factors  could  have  a  material  adverse  impact  on  the  Business.  The  Company’s  operations  also  depend  on  the  timely  maintenance,  upgrade  and 
replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and 
other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component 
of information systems could, depending on the nature of any such failure, adversely impact the Company’s results of operations. Furthermore, the 
Company relies on vendors to support, maintain and periodically upgrade ERP or other systems which are essential in providing management with 
the  appropriate  information  for  decision  making.  The  inability  of  these  vendors  to  continue  to  support,  maintain  and/or  upgrade  these  software 
programs  could  disrupt  operations  if  the  Company  were  unable  to  convert  to  alternate  systems  in  an  efficient  and  timely  manner.  Information 
technology system disruptions, if not anticipated and appropriately mitigated, or the failure to successfully implement new or upgraded systems, 
could have a material adverse effect on our Business or results of operations. 

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS 

Risk Management 
The Company is exposed to financial risks that arise from fluctuations in interest rates and foreign exchange rates and the degree of volatility of 
these rates. The Company uses financial instruments from time to time to reduce the risk resulting from changes in foreign exchange rates and does 
not hold or issue financial instruments for trading purposes. 

Financing and Liquidity Risk 
The Company makes use of short term financing with two chartered Canadian banks. Should a significant decrease in cash and cash equivalents 
occur, the Company could make use of these facilities. 

The following are the contractual maturities of financial liabilities as at November 30, 2017: 
(in thousands of dollars) 

Financial Liabilities 

Bank indebtedness 
Trade and other payables 
Long-term debt 

Carrying 
Amount 
52,309  
29,409  
194  

Contractual 
cash flows 
52,309  
29,409  
194  

Total financial liabilities 

81,912  

81,912  

0 to 6  
Months 
52,309  
29,409  
69  

81,787  

6 to 36 
Months 
- 
- 
125  

125  

The following are the contractual maturities of financial liabilities as at November 30, 2016: 

12 

 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
 
 
Financial Liabilities 

Bank indebtedness 
Trade and other payables 
Long-term debt 

Carrying 
Amount 
94,113  
30,721  
262  

Contractual 
cash flows 
94,113  
30,721  
262  

0 to 6  
Months 
94,113  
30,721  
74  

Total financial liabilities 

125,096  

125,096  

124,908  

6 to 36 
Months 
- 
- 
188  

188  

Interest Risk 
The Company uses a credit facility to finance working capital requirements. The interest cost of this facility is dependent upon Canadian and US 
bank prime rates. The profitability of the Company could be adversely affected with increases in the bank prime rate. Management does not believe 
that the impact of interest rate fluctuations will be significant on its operating results. A 1% fluctuation of interest rate on the $52.3 million in bank 
indebtedness would impact interest expense by $0.5 million annually. 

Currency Risk 
The Company could enter into forward exchange contracts to  economically hedge certain trade payables and from time to time future purchase 
commitments denominated in U.S. dollars, Euros and Pound sterling. Fluctuation in the Canadian dollar of 5% in relation to foreign currencies would 
not have a material effect on the Company’s net earnings. As at November 30, 2017, the Company had the following currency exposure on; 

Financial assets and liabilities measured at amortized costs 
(in thousands of dollars) 

Cash 
Trade and other receivables 
Trade and other payables 
Long term debt 
Net exposure 

USD 
591  
8,546  
(3,304) 
(53) 
5,780  

GBP 
273  
315  
(27) 
-  
561  

Euro 
10  
-  
(768) 
-  
(758) 

CAD exchange rate as at November 30, 2017 

1.2897  

1.7443  

1.5352  

Impact on net earnings based on a fluctuation of 5% on CAD 

272  

36  

(42) 

Credit Risk 
The Company is exposed to credit risks from customers. As a result of having a diversified customer mix, this risk is alleviated by minimizing the 
amount of exposure the Company has to any one customer.  Additionally, the Company has a system of credit management to mitigate the risk of 
losses due to insolvency or bankruptcy of its customers. It also utilizes credit insurance to reduce the potential for credit losses. Finally, the Company 
has adopted a credit policy that defines the credit conditions to be met by its customers and specific credit limit for each customer is established and 
regularly revised. Accounts receivable over 60 days past their due date and not impaired represents 1.3% (7.1% on November 30, 2016) of total trade 
and other receivables at November 30, 2017. 

The movement in the allowance for doubtful accounts in respect to trade and other receivables were as follows; 

(in thousands of dollars) 

Balance, beginning of year 
Provision 
Bad debt write offs 
Balance, end of year 

November 30 
2017 
$ 

November 30 
2016 
$ 

1,816  
185  
(1,776) 
225  

426 
1,575 

           (185)    
          1,816     

Fair Value 
Fair values of assets and liabilities  approximate amounts at which these items could be exchanged in a transaction between knowledgeable and 
willing parties. Fair value is based on available public market information or, when such information is not available, is estimated using present 
value techniques and assumptions concerning the amount and timing of future cash flows and discount rates which factor in the appropriate level of 
risk  for  the  instrument.  The  estimated  fair  values  may  differ  in  amount  from  that  which  could  be  realized  in  an  immediate  settlement  of  the 
instruments. The carrying amounts of cash, trade and other receivables, bank indebtedness, trade and other payables and long-term debt approximate 
their fair values. 

RELATED PARTY TRANSACTIONS  

Related  parties  include  the  key management  and  other  related  parties  as  described  below.  Unless  otherwise  noted,  no  related  party  transactions 
contain special features, conditions and guarantees that have been given or received. Balances are generally settled in cash.  Transactions between 
the parent company and its subsidiaries and between subsidiaries themselves, which are related parties, have been eliminated upon consolidation. 

13 

 
 
  
  
  
  
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
These transactions and balances are not presented in this section. The details of these transactions occurred in the normal course of business between 
the Company and other related parties and are presented below. 

Commercial Transactions 
During the year ended November 30, 2017, the entities of the Company have not entered into business transactions with related parties that are not 
members of the Company. 

Other related party transactions 

(in thousands of dollars) 

Joint venture – Lebel-Goodfellow Treating Inc. 

Sales of goods 
Purchase of goods 
Lease rental income 
Miscellaneous charges 

Company controlled by a member of the Board – Jarislowsky Fraser Ltd. 

- Management fee 

November 30 
2017 
$ 

November 30 
2016 
$ 

2 
26,828 
208 
249 

3,782  
83,921  
415  
734  

187 

183  

These transactions are in the normal course of business and measured at the exchange amount of considerations established and agreed to in the 
contractual arrangements between the related parties. The Company has an outstanding receivable balance to Lebel-Goodfellow Treating Inc. of $0.2 
million as at November 30, 2017 ($3.5 million in 2016). 

Loans to related parties 
No executive officers, senior officers, directors or any person related to them is indebted to the Company.  

Key management personnel compensation 
Key management includes members of the board of directors, senior management and key executives. The following table shows the remuneration 
of key management personnel during the years ended: 

(in thousands of dollars) 

Salaries and other short-term benefits 
Post-employment benefits 

November 30 
2017 
$ 

November 30 
2016 
$ 

2,750 
60 
2,810 

2,362 
266 
2,628 

CRITICAL ACCOUNTING ESTIMATES 

The preparation of financial statements in compliance with IFRS requires management to make estimates and assumptions that affect the reported 
amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the 
reporting period. These estimates are based on management's best knowledge of current events and actions that the Company may undertake in the 
future. Estimates are volatile by their nature and are continuously monitored by management. Actual results may differ from these estimates. A 
discussion of the significant estimates that could have a material effect on the financial statements is provided below: 

i. 

Allowance for doubtful accounts and sales returns 

Management reviews its trade and other receivables at the end of each reporting period and estimates balances deemed non-collectible in the 
future. This review requires the use of assumptions and takes into consideration certain factors, such as historical collection trends and past due 
accounts for each customer balance. In the event that future collections differ from provisions estimated, future earnings will be affected. 

The Company provides for the possibility that merchandise already sold may be returned by customers. To this end, the Company has made 
certain assumptions based on the quantity of merchandise expected to be returned in the future. 

ii.  Measurement of defined benefit plan assets and liabilities 

The  Company’s  measurement  of  defined  benefit  plan  assets  and  liabilities  requires  the  use  of  statistical  data  and  other  parameters  used  to 
anticipate future changes. These parameters include the discount rate, the expected rate of return on assets, the expected rate of compensation 
increase, the retirement age of employees, and mortality tables. If the actuarial assumptions are found to be significantly different from the actual 
data subsequently observed, it could lead to changes to the pension expense recognized in net earnings, and the net assets or net liabilities related 
to these obligations presented in the consolidated statement of financial position. 

iii. 

Valuation of inventory 

Estimating  the  impact  of  certain  factors  on  the  net  realizable  value  of  inventory,  such  as  obsolescence  and  losses  of  inventory,  as  well  as 
estimating the cost of inventory, freight accrual and inventory provisions,  requires a certain level of judgment. Inventory quantities, age and 
condition, average costs and standard costs are measured and assessed regularly throughout the year. 

14 

 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
  
 
 
 
 
 
 
 
iv. 

Environmental provisions 

Environmental provisions relate to the discounted present value of estimated future expenditures associated with the obligations of restoring the 
environmental integrity of certain properties. Environmental expenditures are estimated taking into consideration the anticipated method and 
extent  of  the  remediation  consistent  with  regulatory  requirements,  industry  practices,  current  technology  and  possible  uses  of  the  site.  The 
estimated amount of future remediation expenditures is reviewed periodically based on available information. The provision requires the use of 
estimates and assumptions such as the estimated amount of future remediation expenditures, the anticipated method of remediation, the discount 
rate and the estimated time frame for remediation. See note 14 of our consolidated financial statement for further details. 

Critical Judgments in applying accounting policies: 

i) Going concern assumption 

Determining the Company’s ability to continue as a going concern requires Management to exercise judgment in particular about its future 
operations and projected future cash flows. See note 2b) for further details. 

Other than the going concern assessment mentioned above, the Company did not identify any other critical judgments that management has 
made in the process of applying accounting policies that may have a significant effect on the amounts recognized in the consolidated financial 
statement. 

ii) Interests in equity-accounted investees 

Management reviews the financial statements of the joint venture at the end of each reporting period and estimates its share of the interests. 
This review requires the use of assumptions and takes into consideration certain factors, such as historical average prices and production 
costs. In the event that future prices and costs differs from provisions estimated, future earnings will be affected. 

SIGNIFICANT ACCOUNTING POLICIES 

The Company’s significant accounting policies are described in Note 3 to the consolidated financial statements for the year ended November 30, 
2017.  

IMPACT OF ACCOUNTING PRONOUNCEMENTS NOT YET IMPLEMENTED 

IFRS 15, Revenue from Contracts with Customers 
On May 28, 2014 the IASB issued IFRS 15 Revenue from Contracts with Customers.  The new standard is effective for annual periods beginning 
on  or  after  January  1,  2018.  Earlier  application  is  permitted.  IFRS  15  will  replace  IAS  11  Construction  Contracts,  IAS  18  Revenue,  IFRIC  13 
Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers, and SIC 
31 Revenue – Barter Transactions Involving Advertising Services. The standard contains a single model that applies to contracts with customers and 
two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to 
determine whether, how much and when revenue is recognized.  New estimates and judgmental thresholds have been introduced, which may affect 
the amount and/or timing of revenue recognized. The new standard applies to contracts with customers. It does not apply to insurance contracts, 
financial instruments or lease contracts, which fall in the scope of other IFRSs. The Company intends to adopt IFRS 15 in its financial statements 
for the annual period beginning on December 1, 2018. The Company has not yet assessed the impact of adoption of IFRS 15, and does not intend to 
early adopt IFRS 15 in its consolidated financial statements.  

IFRS 9, Financial Instruments 
On July 24, 2014 the IASB issued the complete IFRS 9 (IFRS 9 (2014)). The mandatory effective date of IFRS 9 is for annual periods beginning on 
or after January 1, 2018 and must be applied retrospectively with some exemptions. Early adoption is permitted.  The restatement of prior periods is 
not  required  and  is  only  permitted  if  information  is  available  without  the  use  of  hindsight.  IFRS  9  (2014)  introduces  new  requirements  for  the 
classification and measurement of financial assets. Under IFRS 9 (2014), financial assets are classified and measured based on the business model 
in  which  they  are  held  and  the  characteristics  of  their  contractual  cash  flows.  The  standard  introduces  additional  changes  relating  to  financial 
liabilities. It also amends the impairment model by introducing a new ‘expected credit loss’ model for calculating impairment. IFRS 9 (2014) also 
includes a new general hedge accounting standard which aligns hedge accounting more closely with risk management. This new standard does not 
fundamentally change the types of hedging relationships or the requirement to measure and recognize ineffectiveness, however it will provide more 
hedging strategies that are used for risk management to qualify for hedge accounting and introduce more judgment to assess the effectiveness of a 
hedging relationship. Special transitional requirements have been set for the application of the new general hedging model. The Company intends to 
adopt IFRS 9 (2014) in its financial statements for the annual period beginning on December 1, 2018. The Company has not yet assessed the impact 
of adoption of IFRS 9, and does not intend to early adopt IFRS 9 in its consolidated financial statements. 

IFRS 16, Leases 
On January 13, 2016 the IASB issued IFRS 16 Leases. The new standard is effective for annual periods beginning on or after January 1, 2019. Earlier 
application is permitted for entities that apply IFRS 15 Revenue from Contracts with Customers at or before the date of initial adoption of IFRS 16. 
IFRS 16 will replace IAS 17 Leases. This standard introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities 
for all leases with a term of more than twelve months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use 
asset  representing  its  right  to  use  the  underlying  asset  and  a  lease  liability  representing  its  obligation  to  make  lease  payments.  This  standard 
substantially carries forward the lessor accounting requirements of IAS 17, while requiring enhanced disclosures to be provided by lessors. Other 
areas of the lease accounting model have been impacted, including the definition of a lease. Transitional provisions have been provided. The Company 
intends to adopt IFRS 16 in its financial statements for the annual period beginning on December 1, 2019. The Company has not yet assessed the 
impact of adoption of IFRS 16, and does not intend to early adopt IFRS 16 in its consolidated financial statements. 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
DISCLOSURE OF OUTSTANDING SHARE DATA 

At November 30, 2017, there were 8,506,554 common shares issued (8,506,554 last year). The Company has authorized an unlimited number of 
common shares to be issued, without par value. At February 15, 2018, there were 8,506,554 common shares outstanding. 

SUBSEQUENT EVENT 

In December 2017, the Company renewed its credit agreement with its present lenders, two chartered Canadian banks. The credit agreement has a 
maximum revolving operating facility of $100 million renewable in May 2019. On November 30, 2018, the facility will be reduced to $90 million 
which corresponds to the low seasonality of the business. 

OUTLOOK  

The Company has successfully renewed its traditional cash flow banking arrangement with the TD/BMO syndicate. The Company’s ability to quickly 
right size inventory, reduce the operating loan and return to profitability promptly made this renewal with our loyal lenders possible.  

All those changes bode well for the future and have contributed to putting the Company back on a solid conservative footing moving forward. The 
Company  continues  in  its  transition  to  consistent  profitability  through  responsible  inventory  management  and  the  ability  to  capitalize  on  asset 
opportunities in 2018 and beyond. 

CERTIFICATION 

Disclosure Controls and Procedures and Internal Controls Over Financial Reporting 

The Company’s management is responsible for establishing and maintaining appropriate control systems, procedures and information systems and 
internal control over financial reporting. The Chief Executive Officer and the Chief Financial Officer together with Management, after evaluating 
the design and effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of November 30, 
2017 concluded that the Company’s disclosure controls and procedures and internal control over financial reporting were ineffective and the material 
weakness previously disclosed was partially remediated. The material weakness remains because the controls put in place to remediate the deficiency 
have not operated for a sufficient length of time to properly evaluate their effectiveness.     

A material weakness existed in the design of the Company’s internal control over financial reporting in the area of inventory controls, principally 
due to the implementation of the new ERP system on December 1, 2015. For its financial year beginning on December 1, 2015, Goodfellow started 
using a new ERP software for its financial accounting records. In the course of the preparation of its financial statements for the quarter ended August 
31, 2016, management noticed certain anomalies relating principally to the cost of inventory for its products. Management undertook an extensive 
review process to determine the nature of the problem and the means of remediating the financial accounting records. This material weakness was 
caused primarily by the absence of certain preventive and detective controls over inventory management. 

Management has undertaken an extensive and thorough review of the transactions processed in the new ERP software with the objective of resolving 
all design deficiencies and implementing compensating controls to mitigate the risk of a material misstatement. The Company partially remediated 
the material weakness by implementing changes in its inventory management cycle. The significant changes in internal controls were as follows: 

- 

Implemented many preventive and detective controls over the inventory cycle either directly in the ERP system or through management 
review controls; 

-  Established monitoring controls, exception reports, edits checks and other tools to improve the accuracy of the information from the ERP 

system; 

-  Established controls over inventory management and financial reporting including management review controls over inventory costing, 

valuation and inventory movements; 
Increase the level of oversight and review of inventory balances; 
Increased training and knowledge awareness throughout the organization. 

- 
- 

The  evaluation  was  performed  in  accordance  with  the  Committee  of  Sponsoring  Organizations  of  the  Treadway  Commission  (COSO  2013 
Framework) control framework adopted by the Company.  

Other than as described above, there has been no change in the Company’s internal control over financial reporting that occurred during the three 
months  ended  November  30,  2017  that has  materially affected,  or  is  reasonably likely to  materially affect, the Company’s internal control  over 
financial reporting.  

Delson, February 15, 2018 

Patrick Goodfellow  
President and Chief Executive Officer   

Charles Brisebois, CPA, CMA 
Chief Financial Officer 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION 

The  accompanying  consolidated  financial  statements,  which  have  been  prepared  in  accordance  with  International  Reporting  Financial 

Standards,  and  the  other  financial  information  provided  in  the  Annual  Report,  which  is  consistent  with  the  financial  statement,  are  the 

responsibility of management and have been approved by the Board of Directors. 

The consolidated financial statements include some amounts that are based  on  management’s best estimates and judgment and, in their 

opinion,  present  fairly  the  Company’s  financial  position,  results  of  operations  and  cash  flows.  The  Company’s  procedures  and  internal 

control systems are designed to provide reasonable assurance that accounting records are reliable and safeguard the Company’s assets. 

The  Audit  Committee  is  responsible  for  reviewing  the  consolidated  financial  statements  and  Annual  Report  and  recommending  their 

approval to the Board of Directors. In order to fulfill its responsibilities, the Audit Committee meets with management and  independent 

auditors to discuss internal control over financial reporting process, significant accounting policies, other financial matters and the results of 

the examination by the independent auditors. 

These consolidated financial statements have been audited by the independent auditors KPMG LLP, Chartered Professional Accountants, 

and their report is included herein. 

Patrick Goodfellow  
President and Chief Executive Officer   

Charles Brisebois, CPA, CMA 
Chief Financial Officer 

17 

 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS’ REPORT 

To the Shareholders of Goodfellow Inc. 

We have audited the accompanying consolidated financial statements of Goodfellow Inc., which comprise the consolidated statements of 

financial position as at  November 30, 2017 and  November 30, 2016, the  consolidated statements of comprehensive income, changes in 

shareholders’ equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other 

explanatory information. 

Management’s Responsibility for the Consolidated Financial Statements 

Management  is  responsible  for  the  preparation  and  fair  presentation  of  these  consolidated  financial  statements  in  accordance  with 

International Financial Reporting 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. 

Auditors’ Responsibility 

Our  responsibility  is  to  express  an  opinion  on  these  consolidated  financial  statements  based  on  our  audits.  We  conducted  our  audits  in 

accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan 

and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. 

The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial 

statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation 

and fair presentation of the consolidated financial statements 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 entity’s internal control. An audit also includes evaluating the 

appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the 

overall presentation of the consolidated financial statements. 

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. 

Opinion 

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Goodfellow 

Inc. as at November 30, 2017 and November 30, 2016, and its consolidated financial performance and its consolidated cash flows for the 

years then ended in accordance with International Financial Reporting Standards. 

February 15, 2018 
Montreal, Canada 

*CPA Auditor, CA public accountancy permit no. A123145 

18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GOODFELLOW INC. 
Consolidated Statements of Comprehensive Income 
For the years ended November 30, 2017 and 2016 
(in thousands of dollars, except per share amounts) 

Sales 
Expenses  

Cost of goods sold (Note 4) 
Selling, administrative and general expenses (Note 4) 
Gain on disposal of property, plant and equipment 
Net financial costs (Note 5) 

Loss before income taxes 

Income taxes (Note 16) 

Net loss 

Items that will not subsequently be reclassified to net loss 

Remeasurement of defined benefit plan obligation (asset), 
net of taxes of $127 (2016 – recovery of taxes of $1,070) (Note 17) 

Total comprehensive loss 

    Years ended 

November 30 
2017 
$ 

November 30 
2016 
$ 

523,659  

565,173  

442,396  
81,533  
(1,194) 
4,199  
526,934  

483,885  
93,942  
- 
3,640  
581,467  

(3,275) 

(16,294) 

(1,181) 

(4,189) 

(2,094) 

(12,105) 

341  

(2,750) 

(1,753) 

(14,855) 

Net loss per share - Basic and diluted (Note 15) 

(0.25) 

(1.42) 

The notes 1 to 25 are an integral part of these consolidated financial statements. 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
   
 
 
 
  
 
 
 
 
 
 
 
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GOODFELLOW INC. 
Consolidated Statements of Financial Position 
(in thousands of dollars) 

Assets  
Current Assets 
Cash 
Trade and other receivables (Note 6) 
Income taxes receivable 
Inventories (Note 7) 
Prepaid expenses 
Total Current Assets 

Non-Current Assets 

Property, plant and equipment (Note 8) 
Intangible assets (Note 9) 
Defined benefit plan asset (Note 17) 
Investment in a joint venture (Note 10) 

Total Non-Current Assets 
Total Assets 

Liabilities 
Current liabilities 

Bank indebtedness (Note 12) 
Trade and other payables (Note 13) 
Provision (Note 14) 
Current portion of long-term debt (Note 12) 

Total Current Liabilities 

Non-Current Liabilities 
Provision (Note 14) 
Long-term debt (Note 12) 
Deferred income taxes (Note 16) 
Defined benefit plan obligation (Note 17) 

Total Non-Current Liabilities 
Total Liabilities 

Shareholders’ equity 

Share capital (Note 15) 
Retained earnings 

Total Liabilities and Shareholders’ Equity 

Going concern and future operations (Note 2 b)) 
Commitments and contingent liabilities (Note 22) 

Approved by the Board 

As at 
November 30 
2017 
$ 

As at 
November 30 
2016 
$ 

1,622  
58,317  
1,589  
88,860  
3,007  
153,395  

36,198  
4,942  
2,413  
285  
43,838  
197,233  

52,309  
29,409  
938  
139  
82,795  

446  
55  
3,582  
921  
5,004  
87,799  

9,152  
100,282  
109,434  
197,233  

703  
64,255  
6,598  
115,391  
4,863  
191,810  

38,693  
5,428  
2,234  
3,403  
49,758  
241,568  

94,113  
30,721  
963  
136  
125,933  

475  
126  
3,296  
1,045  
4,942  
130,875  

9,152  
101,541  
110,693  
241,568  

Claude Garcia, Director 

G. Douglas Goodfellow, Director 

20 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
GOODFELLOW INC. 
Consolidated Statements of Cash Flows 
For the years ended November 30, 2017 and 2016 
(in thousands of dollars) 

Operating Activities 

Net Loss 
Adjustments for : 
Depreciation 
Accretion expense on provision 
Decrease in provision 
Income taxes  
Gain on disposal of property, plant and equipment 
Interest expense 
Funding in deficit (excess) of pension plan expense 
Share of the profits of a joint venture (Note 10) 
Share-based compensation 

Changes in non-cash working capital items (Note 18) 
Interest paid 
Income taxes recovered (paid) 

Net Cash Flows from Operating Activities  

Financing Activities 

Net (decrease) increase in bank loans  
Net (decrease) increase in banker’s acceptances 
Increase in long-term debt 
Reimbursement of long-term debt 
Dividends paid 

Investing Activities 

Acquisition of property, plant and equipment 
Increase in intangible assets 
Proceeds on disposal of property, plant and equipment 
Business acquisitions, net of cash acquired (Note 11) 
Dividends from joint venture 
Dissolution of the joint venture 

Net cash inflow (outflow) 
Cash position, beginning of year 
Cash position, end of year 

Cash position is comprised of : 

Cash 
Bank overdraft (Note 12) 

21 

Years ended 

November 30 
2017 
$ 

November 30 
2016 
$ 

(2,094) 

(12,105) 

4,085  
50  
(104) 
(1,181) 
(1,194) 
2,821  
165  
(202) 
494 
2,840  

33,086  
(2,614) 
6,349  
36,821  
39,661  

(4,000) 
(36,500) 
68  
(136) 
-  
(40,568) 

(1,329) 
(446) 
1,585  
-  
320  
3,000  
3,130  

2,223  
(1,910) 
313  

1,622  
(1,309) 
313  

3,850  
52  
(202) 
(4,189) 
-  
2,392  
(197) 
(403) 
- 
(10,802) 

(16,054) 
(2,482) 
(4,663) 
(23,199) 
(34,001) 

2,000  
45,500  
369  
(780) 
(2,552) 
44,537  

(2,970) 
(2,865) 
-  
(4,795) 
- 
- 
(10,630) 

(94) 
(1,816) 
(1,910) 

703  
(2,613) 
(1,910) 

 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
   
 
 
 
  
 
GOODFELLOW INC. 
Consolidated Statements of Change in Shareholders’ Equity  
For the years ended November 30, 2017 and 2016 
(in thousands of dollars) 

Balance as at November 30, 2015 

9,152  

118,948  

128,100  

Share 
Capital 

              $ 

Retained 
Earnings 

$ 

Total 

$ 

Net loss 
Other comprehensive loss 

Total comprehensive loss 

Transactions within equity 

Dividends 

- 
- 

- 

- 

(12,105) 
(2,750) 

(12,105) 
(2,750) 

(14,855) 

(14,855) 

(2,552) 

(2,552) 

Balance as at November 30, 2016 

9,152  

101,541  

110,693  

Net loss 
Other comprehensive income 

Total comprehensive loss 

Transactions within equity 

Share-based compensation 

- 
- 

- 

- 

(2,094) 
341  

(2,094) 
341  

(1,753) 

(1,753) 

494 

494 

Balance as at November 30, 2017 

9,152  

100,282  

109,434  

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
   
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
   
 
 
   
 
 
 
 
 
 
 
 
   
 
   
 
 
   
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

1. 

Status and nature of activities 

Goodfellow Inc. (hereafter the “Company”), incorporated under the Canada Business Corporations Act, carries on various business activities 
related to  remanufacturing  and  distribution  of  lumber  and  wood products. The  Company’s head office and  primary  place  of  business is 
located at 225 Goodfellow Street in Delson (Quebec), Canada, J5B 1V5. 

The consolidated financial statements of the Company as at and for the years ended November 30, 2017 and 2016 includes the accounts of 
the Company and its wholly-owned subsidiaries. 

2. 

Basis of preparation 

a)  Statement of compliance 

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as 
issued by the International Accounting Standards Boards (“IASB”). 

The financial statements were authorized for issue by the Board of Directors on February 15, 2018. 

b)  Going concern and future operations  

These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue  its 
operations in the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course 
of business.  

The Company is subject to a number of risks and uncertainty associated with its products and services, the competition from vendors, its 
dependence on the economy as well as major customers, the supply chain, its information systems, environmental risk, credit risk, interest 
risk, currency risk as well as meeting its financing requirements for its operations. The attainment of profitable operations is dependent 
upon future events, including successful implementation of the Company’s operation plan and obtaining adequate financing.  

The Company incurred a net loss of $2.1 million and positive cash flow from operating activities (excluding non-cash working capital 
items) of $2.8 million in fiscal 2017 compared to a net loss of $12.1 million and negative cash flow from operating activities (excluding 
non-cash working capital items) of $10.8 million in fiscal 2016. In 2017, the Company was able to decrease its inventory levels from 
$115.4 million to $88.9 million, its trade receivables and other receivables from $64.3 million to $58.3 million and its bank indebtedness 
from $94.1 million to $52.3 million as at November 30, 2017 as compared to November 30, 2016. Subsequent to year-end, Management 
renewed its banking agreement for a maximum available facility of $100 million expiring in May 2019.  On November 30, 2018, the 
facility will be reduced to $90 million which corresponds to the low seasonality of the business.  Funds advanced under these credit 
facilities bear  interest at the  prime  rate  plus  a  premium  and  are  secured  by first  ranking  security  on the  universality of  the  movable 
property of the Company. As at November 30, 2017, the Company was compliant with its financial covenants. 

In evaluating the Company’s ability to continue as a going concern, the Company is required to determine whether it has the ability to 
fund its operations, meet its cash flow requirements and comply with the covenants as established by its amended credit facility. This 
evaluation requires to estimate and forecast the cash flows for at least the next twelve months to determine whether the Company has 
sufficient resources to attain these objectives. The Company believes that it will be able to adequately fund its operations and meet its 
cash flow requirements for at least the next twelve months. This determination, however, could be impacted by future economic, financial 
and competitive factors, as well as other future events that are beyond the Company’s control. 

If any of the factors or events described above result in significant variances from the assumptions used in the preparation of the going 
concern analysis, this could significantly impact the Company’s ability to meet its projected cash flows and meet its financial obligation. 

If  the  going  concern  assumption  were  not  appropriate for these financial  statements,  adjustments  to  the carrying  value of  assets and 
liabilities, reported expenses and statement of financial position classifications would be necessary. Such adjustments could be material 
and may occur in the near term. 

c)  Basis of measurement 

These consolidated financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair 
value of the consideration given in exchange for assets. Environmental provision is recorded at present value of the expected expenditure 
to be paid. Pension plans are recorded at net of the fair value of plan assets and present value of obligation. 

d)  Functional and presentation currency 

These consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency. All financial 
information presented in Canadian dollars has been rounded to the nearest thousand unless otherwise noted. 

e)  Use of estimates and judgments 

Key sources of estimation uncertainty: 

The preparation of financial statements in compliance with IFRS requires management to make estimates and assumptions that affect the 
reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and  

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

2. 

Basis of preparation (Continued) 

expenses during the reporting period. These estimates are based on management's best knowledge of current events and actions that the 
Company may undertake in the future.  Estimates are volatile by their nature and are continuously monitored by management.  Actual 
results  may  differ  from  these  estimates.  A  discussion  of  the  significant  estimates  that  could  have  a  material  effect  on  the  financial 
statements is provided below: 

i.  Allowance for doubtful accounts and sales returns 

Management  reviews  its  trade  and  other  receivables  at  the  end  of  each  reporting  period  and  estimates  balances  deemed  non-
collectible in the future. This review requires the use of assumptions and takes into consideration certain factors, such as historical 
collection  trends  and  past  due  accounts  for  each  customer  balance.  In  the  event  that  future  collections  differ  from  provisions 
estimated, future earnings will be affected. 

The Company provides for the possibility that merchandise already sold may be returned by customers. To this end, the Company 
has made certain assumptions based on the quantity of merchandise expected to be returned in the future. 

ii.  Measurement of defined benefit plan assets and liabilities 

The Company’s measurement of defined benefit plan assets and liabilities requires the use of statistical data and other parameters 
used to anticipate future changes. These parameters include the discount rate, the expected rate of return on assets, the expected 
rate of compensation increase, the retirement age of employees, and mortality tables. If the actuarial assumptions are found to be 
significantly different from the actual data subsequently observed, it could lead to changes to the pension expense recognized in 
net earnings, and the net assets or net liabilities related to these obligations presented in the consolidated statement of financial 
position. 

iii.  Valuation of inventory 

Estimating the impact of certain factors on the net realizable value of inventory, such as obsolescence and losses of inventory, as 
well as estimating the cost of inventory, freight accrual and inventory provisions, requires a certain level of judgment. Inventory 
quantities, age and condition, average costs and standard costs are measured and assessed regularly throughout the year. 

iv.  Environmental provisions 

Environmental provisions relate to the discounted present value of estimated future expenditures associated with the obligations of 
restoring the environmental integrity of certain properties. Environmental expenditures are estimated taking into consideration the 
anticipated method and extent of the remediation consistent with regulatory requirements, industry practices, current technology 
and possible uses of the site. The estimated amount of future remediation expenditures is reviewed periodically based on available 
information.  The  provision  requires  the  use  of  estimates  and  assumptions  such  as  the  estimated  amount  of  future  remediation 
expenditures, the anticipated method of remediation, the discount rate and the estimated time frame for remediation. See note 14 
for further details. 

Critical Judgments in applying accounting policies: 

i.  Going concern assumption 

Determining the Company’s ability to continue as a going concern requires Management to exercise judgment in particular about 
its future operations and projected future cash flows. See note 2 b) for further details. 

Other  than  the  going  concern  assessment  mentioned  above,  the  Company  did  not  identify  any  other  critical  judgments  that 
management has made in the process of applying accounting policies that may have a significant effect on the amounts recognized 
in the consolidated financial statement. 

ii.  Interests in equity-accounted investees 

Management reviews the financial statements of the joint venture at the end of each reporting period and estimates its share of the 
interests. This review requires the use of assumptions and takes into consideration certain factors, such as historical average prices 
and production costs. In the event that future prices and costs differs from provisions estimated, future earnings will be affected. 

3. 

Significant Accounting Policies 

a)  Principles of Consolidation 

The consolidated financial statements incorporate the Company’s accounts and the accounts of the subsidiaries, all wholly-owned, that 
it controls. The Company has control when it has the power to govern the financial and operating policies of an entity so as to obtain 
benefits from its activities. All intercompany transactions, balances, revenues and expenses were fully eliminated upon consolidation. 

b)  Cash and Cash Equivalents 

Cash and cash equivalents consist of cash on hand and highly liquid investments with an initial term of three months or less. 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

3. 

Significant Accounting Policies (Continued) 

c)  Inventories 

Inventories, which consist of raw materials, work in process and finished goods are recorded at the lower of cost and net realizable value. 
Cost  is  determined  using the weighted  average cost  method.  The  cost  of inventories comprises all costs  of  purchase and  other  costs 
incurred in bringing the inventory to its present location and condition. Net realizable value is the estimated selling price in the ordinary 
course of business less any applicable estimated selling expenses. The cost of inventory is recognized as an expense when the inventory 
is sold. Previous write-downs to net realizable value are reversed if there is a subsequent increase in the value of the related inventories. 

d)  Property, Plant, Equipment and intangible assets 

Items of property, plant, equipment and intangible assets are measured at cost less accumulated depreciation and accumulated impairment 
losses. Government grants received in respect to property, plant and equipment are recognized as a reduction to the cost. 

Cost includes expenditures that are directly attributable to the acquisition of the asset, including any costs directly attributable to bringing 
the asset to a working condition for its intended use, and borrowing costs. 

When an item of property, plant, equipment and intangible assets is made up of components that have differing useful lives, cost is 
allocated among the different components that are depreciated separately. 

A gain or loss on the disposal or retirement of an item of property, plant, equipment and intangible assets, which is the difference between 
the proceeds from the disposal and the carrying amount of the asset, is recognized in net earnings. Leasehold improvements are amortized 
using the straight-line method over the terms of the leases. Other capital assets are amortized using the declining balance method with 
the following rates: 

Buildings 
Yard improvements 
Furniture and fixtures 
Equipment 
Computer equipment 
Rolling stock 

4% to 20% 
8% to 10%  
4% to 20% 
4% to 20% 
20% 
30% 

Estimated useful lives, depreciation methods, rates and residual values are reviewed at each annual reporting date, with the effect of any 
changes accounted for on a prospective basis. 

e) 

Intangible assets 
Costs associated with maintaining computer software programmes are recognized as an expense as incurred. Development costs that 
are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised 
as intangible assets when the following criteria are met: 

it is technically feasible to complete the software product so that it will be available for use; 

 
  management intends to complete the software product and use it; 
 
 
 

there is an ability to use the software product; 
it can be demonstrated how the software product will generate probable future economic benefits; 
adequate technical, financial and other resources to complete the development and to use the software product are available 
and; 
the expenditure attributable to the software product during its development can be reliably measured. 

 

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an 
appropriate portion of relevant overheads. 

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously 
recognised as an expense are not recognised as an asset in a subsequent period. 

Computer software is subject to the declining balance method at a rate of 20%. Our ERP system is subject to a linear amortization of 10 
years and the customer relationship is subject to a linear amortization of 5 years. 

f)  Leases 

The Company accounts for a leased asset as a capital lease when substantially all of the risks and rewards of ownership of the asset have 
been transferred to the Company. The asset is initially recognized at the lower of the fair value of the leased asset at the inception of the 
lease and of the present value of the minimum lease payments. The corresponding debt appears on the consolidated statement of financial 
position as a financial liability in long-term debt. Assets held under capital leases are depreciated over their expected useful life on the 
same basis as owned assets or, where shorter, the lease term. 

All  other  leases  are  classified  as  operating  leases.  Rent  is  recognized  in  net  earnings  on  a  straight-line  basis  over  the  term  of  the 
corresponding lease. 

25 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

3. 

Significant Accounting Policies (Continued) 

g)   Impairment 

 i) Non-Financial Assets 

On each reporting date, the Company reviews the carrying amounts of property, plant and equipment and intangible assets for any 
indication of impairment. If there is such an indication, the recoverable amount of the asset is estimated in order to determine the 
amount of any impairment loss. If the recoverable amount of the individual asset cannot be estimated, the Company estimates the 
recoverable amount of the cash generating unit (CGU) to which the asset belongs. Where a reasonable and consistent basis of allocation 
can be identified, corporate assets are also allocated to individual CGUs; otherwise, they are allocated to the smallest group of CGUs 
for which a reasonable and consistent basis of allocation can be identified. 

Recoverable amount is the higher of fair value less costs to sell and the value in use. To measure value in use, 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 which the estimates of future cash flows have not been adjusted. If the estimated recoverable 
amount of an asset or of a CGU is less than its carrying amount, the carrying amount of the asset or of the CGU is reduced to its 
recoverable amount. An impairment loss is immediately recognized in net earnings. 

When an impairment loss subsequently reverses, the carrying amount of the asset or of the CGU is increased to the revised estimate of 
its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined 
had no impairment loss been recognized for the asset or the CGU in the prior periods. Reversals of impairment losses are immediately 
recognized in net earnings. 

ii) Financial Assets 

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective 
evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 
recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated 
reliably. 

An impairment loss in respect of a financial asset measured at amortized cost (loans and receivables) is calculated as the difference 
between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest 
rate. Losses are recognized in net earnings and reflected in an allowance account against loans and receivables. Interest on the impaired 
asset continues to be recognized through the unwinding of the discount. When a subsequent event causes the amount of impairment 
loss to decrease, the decrease in impairment loss is reversed through net earnings. 

h)  Foreign Currency Translation 

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the 
exchange  rate  at  that  date.  Non-monetary  assets  and  liabilities  denominated  in  foreign  currencies  are  translated  into  the  functional 
currency at the exchange rates prevailing at the respective transaction dates. Revenues and expenses denominated in foreign currencies 
are translated into the functional currency at average rates of exchange prevailing during the period. The resulting gains or losses on 
translation are included in cost of goods sold in the determination of net earnings. 

i)  Revenue Recognition 

Revenues from activities relating to remanufacturing, distribution of lumber and wood products, services rendered, sales of consignment 
inventory and direct shipments are net of discounts and credit notes and are recognized at the fair value of the consideration received or 
receivable when all of the following conditions have been met: 

i.  The accounting policy for the provision of our services follows the same policy as set out in Note 3 to the financial statements. 
ii.  No services are invoiced separately.  Revenue recognition (including services) were considered when all the significant risks and 

rewards of ownership have been transferred to the buyer. 

iii.  The value of work in progress related to the services offered are zero. 

Sales are recorded net of estimated volume rebates, term discount and sales returns, which is based on historical experience, current 
trends and other known factors. 

j)  Post-Employment Benefits 

a)   Defined Contribution Plans 

Defined contribution plans include pension plans offered by the Company that are regulated by the Régie des rentes du Québec and 
by the Canada Revenue Agency and 408 Simple IRA plans (for its US employees). The Company recognizes the contributions paid 
under  defined  contribution  plans  in  net  earnings  in  the  period  in  which  the  employees  rendered  service  entitling  them  to  the 
contributions. The Company has no legal or constructive obligation to pay additional amounts other than those set out in the plans. 

b)   Defined Benefit Plans 

The  Company  accrues  its  obligations  under  employee  benefit  plans  and  the  related  costs,  net  of  plan  assets,  as  the  services  are 
rendered. 

26 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

3. 

Significant Accounting Policies (Continued) 

The Company has a number of defined benefit pension plans and has adopted the following policies: 

i.  The  cost  of  pensions  earned  by  employees  is  actuarially  determined  using  the  projected  unit  credit  method  based  on 
management’s best estimate of salary escalation, retirement ages of employees, discount rates and mortality tables. Actuarial 
valuations are performed by independent actuaries on each reporting date of the annual financial statements. 

ii.  For the purpose of calculating the costs of the plans, assets are recorded at fair value and interest on the service cost is allowed 

for in the interest cost. 

iii.  Actuarial gains or losses are recognized, for each reporting period, through other comprehensive income. Past service cost 
arising from plan amendments are recognized immediately in net earnings to the extent that the benefits are already vested; 
otherwise, they are amortized on a straight-line basis over the average period remaining until the benefits become vested. 
iv.  The defined benefit plans are subject to minimum funding requirements which under certain circumstances could generate 
an additional liability under IFRIC 14. Any variation in that liability would be recognized immediately in net earnings. 

k)  Income taxes 

Income taxes consist of current tax and deferred tax. Current tax and deferred tax are recognized in net earnings except when they are 
related to items recognized directly in shareholders’ equity or in other comprehensive income, in which case the current tax and deferred 
tax are recognized directly in shareholders’ equity or in other comprehensive income, in accordance with the accounting treatment of the 
item to which it relates. 

The Company’s income tax expense is based on tax rules and regulations that are subject to interpretation and require estimates and 
assumptions that may be challenged by taxation authorities. Current income tax is the expected tax payable or receivable on the taxable 
income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to taxes payable 
in respect of previous years. The Company’s estimates of current income tax assets and liabilities are periodically reviewed and adjusted 
as circumstances warrant, such as changes to tax laws and administrative guidance, and the resolution of uncertainties through either the 
conclusion of tax audits or expiration of prescribed time limits within the relevant statutes. The final results of government tax audits and 
other events may vary materially compared to estimates and assumptions used by management in determining the income tax expense 
and in measuring current income tax assets and liabilities. 

Deferred  tax  is  recognized  on  the  temporary  differences  between  the  carrying  amounts  of  the  assets  and  liabilities  presented  in  the 
consolidated  statement  of  financial  position  and  the  corresponding  tax  bases  used  for  tax  purposes.  Deferred  income  tax  assets  and 
liabilities are measured using enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which 
temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax 
rates is included in net earnings in the period that includes the enactment or substantively enacted date except to the extent that it relates 
to an item recognized either in other comprehensive income or directly in equity in the current or in a previous period.  

The Company only offsets income tax assets and liabilities if it has a legally enforceable right to set off the recognized amounts and 
intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. 

A deferred income tax asset is recognized to the extent that it is probable that future taxable profits will be available against which they 
can be utilized. Deferred income 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. 

Deferred  income  tax  assets  and  liabilities  are  recognized  under  non-current  assets  or  liabilities,  irrespective  of  the  expected  date  of 
realization or settlement. 

l)  Earnings per Share 

Basic earnings per share (EPS) are calculated by dividing the net earnings of the Company by the weighted average number of common 
shares outstanding during the period. Diluted EPS is determined by adjusting the weighted average number of shares outstanding to 
include additional shares issued from the assumed exercise of share options, if dilutive. The number of additional shares is calculated by 
assuming that the proceeds from such exercises, as well as the amount of unrecognized share-based payment, if any, are used to purchase 
common shares at the average market share price during the reporting period. 

m)  Share-based payments 

The  grant  date  fair  value  of  share-based  payment  awards  granted  to  employees  is  recognized  as  an  employee  expense,  with  a 
corresponding  increase  in  equity,  over  the  period  that  the  employees  becomes  entitled  to  the  awards.  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 based on the number of awards that do meet the related service and 
non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair 
value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and 
actual outcomes. 

27 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

3. 

Significant Accounting Policies (Continued) 

n)  Financial Instruments 

All financial instruments are classified into one of the following five categories: financial assets at fair value through profit or loss, held-
to-maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments, 
including derivatives, are included on the statement of financial position and are measured at fair value with the exception of loans and 
receivables,  held-to-maturity  investments  and  other  financial  liabilities,  which  are  initially  measured  at  fair  value  and  subsequently 
measured  at  amortized  cost  using  the  effective  interest  rate  method,  less  impairment  and  adjusted  for  transaction  costs.  Subsequent 
measurement and recognition of changes in fair value of financial instruments depend on their initial classification. Financial instruments 
classified as financial assets at fair value through profit or loss are measured at fair value and all gains and losses are included in net 
earnings in the period in which they arise. Available-for-sale financial instruments are measured at fair value and changes therein, other 
than impairment losses, are recognized in other comprehensive income. When an available-for-sale is derecognized, the cumulative gain 
or loss in other comprehensive income is transferred to net earnings. 

Financial assets and liabilities measured at fair value use a fair value hierarchy to prioritize the inputs used in measuring fair value. Level 
1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other  than quoted prices in active 
markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no  market data 
exists, therefore requiring an entity to develop its own assumptions. 

Financial  assets  and  liabilities  are  recognized  when  the  Company  becomes  a  party  to  the  contractual  provisions  of  the  instrument. 
Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the 
Company has transferred substantially all risks and rewards of ownership. 

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally 
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the 
liability simultaneously. The Company has the following classifications: 

  Cash and cash equivalents and trade and other receivables are classified as loans and receivables.  
  Bank loans, banker’s acceptances, bank overdraft and trade and other payables are classified as other financial liabilities.  

o)  Non-Interest-Bearing Debt 

Non-interest-bearing debt is measured at amortized cost using the effective interest rate method. When  a non-interest-bearing loan is 
obtained,  to  the  extent  that  it  was  received  as  a  grant  related  to  an  asset,  the  difference  between  the  fair  value  of  the  loan  and  the 
consideration received is accounted for by deducting the grant from the carrying amount of the corresponding asset.  

p)  Borrowing Costs 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily 
take a substantial period of time to get ready for their intended use, are added to the cost of these assets until the assets are in the condition 
necessary for them to be capable of operating in the manner intended by management. In instances where the Company does not have 
borrowings directly attributable to the acquisition of qualifying assets, the Company uses the weighted average of the borrowing costs. 
The borrowing costs thus added to the qualifying assets will not exceed the borrowing costs incurred during the corresponding period. 

Investment  revenues  earned  on  the  temporary  investment  of  specific  borrowings  pending  their  expenditure  on  qualifying  assets  is 
deducted from the borrowing costs eligible for capitalization.  All other borrowing costs are recognized in net earnings in the period in 
which they are incurred. 

q)  Provisions 

Provisions are recognized if, as a result of past events, the Company 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. The amount recognized as a 
provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the 
risks and uncertainties related to the obligation. If the effect of the time value of money is material, the provisions are measured at their 
present value. 

i)    Onerous contracts 

A  provision  for  onerous  contracts  is  measured  and  recognized  when  the  Company  has  concluded  a  contract  for  which  the 
unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the 
contract. 

ii)   Environmental provisions 

Environmental provisions relate to the discounted present value of estimated future expenditures associated with the obligations of 
restoring the environmental integrity of certain properties. Environmental expenditures are estimated taking into consideration the 
anticipated method and extent of the remediation consistent with regulatory requirements, industry practices, current technology 
and possible uses of the site. The estimated amount of future remediation expenditures is reviewed periodically based on available 
information. The amount of the provision is the present value of the estimated future remediation expenditures discounted using a 
pre-tax rate that reflects current market assessments of time value of money and the risks specific to the obligation.  The increase 
in  the  provision  due  to  the  passage  of  time  is  recognized  as  financial  costs,  while  the  revision  of  estimates  of  environmental 
expenditures  and  discount  rates  are  recorded  in  selling,  administrative  and  general  expenses  in  the  consolidated  statement  of 
comprehensive income. 

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

3. 

Significant Accounting Policies (Continued) 

r)  Government Grants 

Government  grants  related  to  depreciable  assets,  including  investment  tax  credits,  are  recognized  in  the  consolidated  statement  of 
financial position as a reduction of the carrying amount of the related asset. They are then recognized in net earnings, as a deduction from 
the depreciation expense, over the estimated useful life of the depreciable asset.  Other government grants are recognized in net earnings 
as a deduction from the related expense. 

s)  Presentation of Dividends and Interest Paid in Cash Flow Statements 

IFRS permits dividends and interest paid to be shown as operating or financing activities, as deemed relevant for the entity.  The Company 
has elected to classify dividends paid as cash flows used in financing activities and interest paid as cash flows used in operating activities. 

t)  Financial costs 

Financial costs comprise interest expense on borrowings, unwinding of the discount on provisions and other financial charges. 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. 

u)  Business Combinations 

The  Company  accounts  for  business  combinations  using  the  acquisition  method  when  control  is  transferred  to  the  Company.  The 
consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill 
that arises is tested annually for impairment. Any gain on a purchase is recognized in profit and loss immediately. Transaction costs are 
expensed as incurred, except if related to the issue of debt or equity securities. 

v) 

Interests in equity-accounted investees 
The company’s interests in equity-accounted investees comprise interests in a joint venture. A joint venture is an arrangement in which 
the Company has joint control, whereby the Company has rights to the net assets of the arrangement, rather than the rights to its assets 
and obligations for its liabilities. Interests in the joint venture are accounted for using the equity method. They are recognized initially 
at cost, which includes transactions cost. Subsequent to initial recognition, the consolidated financial statements include the company’s 
share of the profit and loss and Other Comprehensive Income of equity-accounted investees, until the date on which significant influence 
or joint control ceases. 

w) 

IFRS Standard Issued, But Not Yet Effective 

i) 

IFRS 15, Revenue from Contracts with Customers 
On May 28, 2014 the IASB issued IFRS 15 Revenue from Contracts with Customers.  The new standard is effective for annual 
periods beginning on or after January 1, 2018. Earlier application is permitted. IFRS 15 will replace IAS 11 Construction Contracts, 
IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 
Transfer of Assets from Customers, and SIC 31 Revenue – Barter Transactions Involving Advertising Services. On April 12, 2016, 
the IASB issued, Clarifications to IFRS 15, Revenue from Contracts with Customers, which is effective at the same time as IFRS 
15. The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a 
point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much 
and when revenue is recognized.  New estimates and judgmental thresholds have been introduced, which may affect the amount 
and/or timing of revenue recognized. The new standard applies to contracts with customers. It does not apply to insurance contracts, 
financial  instruments or  lease  contracts,  which fall  in  the  scope  of  other  IFRSs.  The  Company  intends to  adopt IFRS  15  in  its 
financial  statements  for  the  annual  period  beginning  on  December  1,  2018.  The  Company  has  not  yet  assessed  the  impact  of 
adoption of IFRS 15, and does not intend to early adopt IFRS 15 in its consolidated financial statements.  

ii)  IFRS 9, Financial Instruments 

On July 24, 2014 the IASB issued the complete IFRS 9 (IFRS 9 (2014)). The mandatory effective date of IFRS 9 is for annual 
periods  beginning  on  or  after  January  1,  2018  and  must  be  applied  retrospectively  with  some  exemptions.  Early  adoption  is 
permitted.  The restatement of prior periods is not required and is only permitted if information is available without the use of 
hindsight. IFRS 9 (2014) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 
(2014), financial assets are classified and measured based on the business model in which they are held and the characteristics of 
their  contractual  cash  flows.  The  standard  introduces  additional  changes  relating  to  financial  liabilities.  It  also  amends  the 
impairment model by introducing a new ‘expected credit loss’ model for calculating impairment. IFRS 9 (2014) also includes a 
new general hedge accounting standard which aligns hedge accounting more closely with risk management. This new standard 
does not fundamentally change the types of hedging relationships or the requirement to measure and recognize ineffectiveness, 
however it will provide more hedging strategies that are used for risk management to qualify for hedge accounting and introduce 
more  judgment  to  assess  the  effectiveness  of  a  hedging  relationship.  Special  transitional  requirements  have  been  set  for  the 
application of the new general hedging model. The Company intends to adopt IFRS 9 (2014) in its financial statements for the 
annual period beginning on December 1, 2018. The Company has not yet assessed the impact of adoption of IFRS 9, and does not 
intend to early adopt IFRS 9 in its consolidated financial statements. 

29 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

3. 

Significant Accounting Policies (Continued) 

iii)  IFRS 16, Leases 

On January 13, 2016 the IASB issued IFRS 16  Leases. The new standard is effective for annual periods beginning on or after 
January 1, 2019. Earlier application is permitted for entities that apply IFRS 15 Revenue from Contracts with Customers at or before 
the date of initial adoption of IFRS 16. IFRS 16 will replace IAS 17 Leases. This standard introduces a single lessee accounting 
model and requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the 
underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying 
asset and a lease liability representing its obligation to make lease payments. This standard substantially carries forward the lessor 
accounting  requirements  of  IAS  17,  while  requiring  enhanced  disclosures  to  be  provided  by  lessors.  Other  areas  of  the  lease 
accounting  model  have  been  impacted,  including  the  definition  of  a  lease.  Transitional  provisions  have  been  provided.  The 
Company intends to adopt IFRS 16 in its financial statements for the annual period beginning on December 1, 2019. The Company 
has not yet assessed the impact of adoption of IFRS 16, and does not intend to early adopt IFRS 16 in its consolidated financial 
statements. 

4.  

Additional information on cost of goods sold and selling, administrative and general expenses 

Employee benefits expense  
Write-down of inventories included in cost of goods sold 
Depreciation included in cost of goods sold 
Depreciation included in selling, administrative and general expenses 
Expense related to minimum operating lease payments 
Foreign exchange gains 

5.  

Net financial costs 

Interest expense 
Accretion expense on provision 
Other financial costs 
Financial cost 
Finance income 
Net finance cost 

6.  

Trade and other receivables 

Trade receivables 
Allowance for doubtful accounts 

Other receivables 

7.  

Inventories 

Raw materials  
Work in process 
Finished goods 

Provision for obsolescence 

November 30 
2017 
$ 
52,815  
(1,573) 
1,329  
2,756  
4,804  
(444) 

November 30 
2016 
$ 
59,610  
3,305  
1,467  
2,383  
3,877  
(653) 

November 30 
2017 
$ 
2,821  
50  
1,350  
4,221  
(22) 
4,199  

November 30 
2016 
$ 
2,392  
52  
1,256  
3,700  
(60) 
3,640  

November 30 
2017 
$ 
57,073  
(225) 
56,848  
1,469  
58,317  

November 30 
2016 
$ 
64,693  
(1,816) 
62,877  
1,378  
64,255  

November 30 
2017 
$ 
7,521  
7,427  
76,203  
91,151  
(2,291) 
88,860  

November 30 
2016 
$ 
12,613  
8,307  
98,335  
119,255  
(3,864) 
115,391  

For the year ended November 30, 2017, $422.9 million (2016 - $461.9 million) of inventory were expensed as cost of goods sold.  

30 

 
 
 
 
 
  
  
 
 
 
  
  
 
 
 
  
  
 
 
  
 
 
  
  
 
 
  
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

8.  

Property, plant and equipment  

Carrying 
amount 
   November 30 
2016 
$ 
6,359  
16,706  
6,597  
1,264  
248  
5,470  
1,616  
433  
38,693  

Additions 

Reclassification 

Through 
business 
acquisition 

$ 
-  
192  
-  
356  
65  
141  
48  
393  
1,195  

$ 
-  
-  
-  
-  
(113)  
113  
-  
-  
-  

$ 
-  
-  
-  
-  
-  
-  
-  
-  
-  

Land 
Buildings 
Yard improvements 
Leasehold improvements 
Furniture and fixtures 
Equipment 
Computer equipment 
Rolling Stock 

Land 
Buildings 
Yard improvements 
Leasehold improvements 
Furniture and fixtures 
Equipment 
Computer equipment 
Rolling Stock 

Carrying 
amount 
Dispositions  Depreciation  November 30 
2017 
$ 
6,263  
15,842  
6,069  
1,267  
157  
4,636  
1,334  
630  
36,198  

$ 
-  
(926) 
(528) 
(312) 
(43) 
(1,073) 
(329) 
(182) 
(3,393) 

$ 
(96) 
(130) 
-  
(41) 
-  
(15) 
(1) 
(14) 
(297) 

Cost 

November 30, 2017 
Accumulated 
depreciation 
$ 
-  
18,839  
5,273  
1,920  
993  
21,744  
3,252  
5,667  
57,688  

$ 
6,263  
34,681  
11,342  
3,187  
1,150  
26,380  
4,586  
6,297  
93,886  

Carrying 
Amount 
$ 
6,263  
15,842  
6,069  
1,267  
157  
4,636  
1,334  
630  
36,198  

Carrying 
amount 
   November 30 
2015 
$ 
6,157  
15,818  
6,849  
958  
110  
4,542  
1,335  
377  
36,146  

Land 
Buildings 
Yard improvements 
Leasehold improvements 
Furniture and fixtures 
Equipment 
Computer equipment 
Rolling Stock 

Additions 

Reclassification 

Through 
business 
acquisition 

Dispositions 

$ 
-  
566  
300  
374  
164  
615  
636  
115  
2,770  

$ 
-  
-  
-  
-  
-  
-  
-  
-  
-  

$ 
202  
1,297  
6  
-  
4  
1,496  
5  
87  
3,097  

$ 
- 
- 
- 
- 
- 
- 
- 
- 
- 

Carrying 
amount 
Depreciation  November 30 
2016 
$ 
6,359  
16,706  
6,597  
1,264  
248  
5,470  
1,616  
433  
38,693  

$ 
-  
(975) 
(558) 
(68) 
(30) 
(1,183) 
(360) 
(146) 
(3,320) 

Land 
Buildings 
Yard improvements 
Leasehold improvements 
Furniture and fixtures 
Equipment 
Computer equipment 
Rolling Stock 

November 30, 2016 
Accumulated 
depreciation 
$ 
-  
17,970  
4,745  
1,609  
953  
20,710  
2,924  
5,606  
54,517  

Cost 

$ 
6,359  
34,676  
11,342  
2,873  
1,201  
26,180  
4,540  
6,039  
93,210  

Carrying 
Amount 
$ 
6,359  
16,706  
6,597  
1,264  
248  
5,470  
1,616  
433  
38,693  

Leased equipment 
The company leases computer equipment and lift trucks under capital leases. The leased equipment secures the lease obligation. As at 
November 30, 2017, the net carrying amount of leased equipment was $194 thousand ($249 thousand in 2016). 

There has been no impairments or recoveries recorded during the fiscal years ended November 30, 2017 and 2016. 

31 

 
 
 
  
  
 
 
  
  
  
  
 
  
  
 
  
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
  
  
 
  
  
  
  
 
 
  
  
 
  
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

9.  

Intangible assets 

Carrying 
amount 
November 30 
2016 
$ 
4,995  
433  
5,428  

Through 
business 
acquisition 

Additions 

$ 
299  
-  
299  

$ 
-  
-  
-  

Software and technologies 
Customer relationship 

Software and technologies 
Customer relationship 

Carrying 
amount 
Dispositions  Depreciation  November 30 
2017 
$ 
4,615  
327  
4,942  

$ 
(586) 
(106) 
(692) 

$ 
(93) 
-  
(93) 

Cost 

November 30, 2017 
Accumulated 
depreciation 
$ 
1,506  
203  
1,709  

$ 
6,121  
530  
6,651  

Carrying 
Amount 
$ 
4,615  
327  
4,942  

Carrying 
amount 
   November 30 
2015 
$ 
2,667  
- 
2,667  

Through 
business 
acquisition 

Dispositions 

$ 
8  
530 
538  

$ 
- 
- 
-  

Carrying 
amount 
Depreciation  November 30 
2016 
$ 
4,995  
433 
5,428  

$ 
(433) 
(97) 
(530) 

Additions 

$ 
2,753  
- 
2,753  

Software and technologies 
Customer relationship 

Software and technologies 
Customer relationship 

10.  

Investment in a joint venture 

November 30, 2016 

Cost 
$ 
5,915  
530 
6,445  

Accumulated 
depreciation 
$ 
920 
97 
1,017  

Carrying 
Amount 
$ 
4,995  
433 
5,428  

On December 1, 2015, the Company and Groupe Lebel Inc. completed the closing of a joint venture and the creation of Traitement Lebel 
Goodfellow Inc. with seven wood treatment plants to serve markets across Ontario, Quebec and the Maritimes. Traitement Lebel Goodfellow 
Inc. became one of the largest treated wood producer in Eastern Canada with unsurpassed geographical coverage.  Groupe Lebel's four plants 
located in Bancroft and Caledon, Ontario, Dégelis and St-Joseph, Quebec, were combined with the Company’s three plants located in Delson, 
Quebec, Elmsdale, Nova Scotia, and Deer Lake, Newfoundland, and were leased to the joint venture forming a new business unit focused 
on operational excellence.  With the creation of the joint venture, this transaction was supposed to enhance the strengths of the two partners 
to better serve the treated wood clients across Eastern Canada. In fiscal 2016, the Company invested $3.0 million in the joint venture in the 
form of inventory of raw material pursuant to a shareholder agreement in return of 40% of the shares of the joint venture.  

In Q2-2017, both parties agreed to dissolve the joint venture. The joint venture ceased operations on May 31st, 2017. The better part of the 
liquidation was done in Q3-2017. Goodfellow received back its initial investment of $3.0 million and $320 thousand of dividends as part of 
the dissolution. The closing of the joint venture will occur in summer 2018 and a final dividend of approximately $285 thousand is expected. 

Investment 
Group's share of profit and total comprehensive income 
Balance as at November 30, 2016 
Dissolution in a joint venture 
Dividend 
Realized profit from November 2016 
Group's share of profit and total comprehensive loss 
Balance as at November 30, 2017 

$ 
3,000 
403 
3,403 
(3,000) 
(320) 
374 
(172) 
285 

The following table summarises the financial information of Lebel-Goodfellow Treating Inc. as included in its own financial statements. The 
table also reconciles the summarised financial information to the carrying amount of the Company’s interest in Lebel-Goodfellow Treating 
Inc. 

32 

 
 
 
  
  
 
  
  
  
  
  
  
  
 
  
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
 
 
  
  
  
 
 
  
  
 
  
  
  
  
  
  
 
  
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

10.  

Investment in a joint venture (Continued) 

Non-current assets  
Current assets (including cash and cash equivalent) 
Non-current liabilities  
Current liabilities (including a credit facility – nil in 2017 and $7.3 million in 2016) 
Net assets (100%) 
Company’s share of net assets (40%)  
Elimination of unrealized profit on upstream sales 
Carrying amount of interest in joint venture  
Revenue 
Depreciation  
Interest expense 
Income tax expense 
Profit and total comprehensive (loss) income (100%) 
Profit and total comprehensive (loss) income (40%) 
Elimination of unrealized profit on upstream sales  
Company’s share of profit and total comprehensive (loss) income 

11.  

Business combinations 

2017 
$ 

                     -       

                     -       

914  
(175) 
(26) 
713  
285  

November 30  November 30 
2016 
$ 
821  
18,361  
(15) 
(9,725) 
9,442  
3,777  
(374) 
3,403  
84,336  
(204) 
(332) 
(703) 
1,942  
777  
(374) 
403  

285  
29,896  
(114) 
(137) 
166  
(432) 
(172) 

                     -       

(172) 

On December 31, 2015, the Company completed the acquisition of 100% of the shares of Quality Hardwoods Ltd. located in Powassan, 
Ontario.  Quality Hardwoods Ltd. manufactures, sells and distributes hardwood lumber products in Ontario and in the US which is core to 
our business development strategy.  Sales of the acquired company recognized since the acquisition date amounted to approximately $13.9 
million for 11 months. The purchase price was $6.3 million, subject to post-closing adjustments. The Company has financed the acquisition 
through its existing revolving credit facility. 

The following fair value determination of the assets acquired and liabilities assumed is final.  The following is a summary of the assets 
acquired,  the  liabilities  assumed  and  the  consideration  transferred  at  fair  value  as  at  the  acquisition  date.  The  transaction  was  made  in 
Canadian dollars. 

Assets acquired 
Cash 
Trade and other receivables 
Inventories 
Prepaid expenses 
Property plant and equipment 
Intangibles 

Liabilities assumed 
Bank debt 
Trade and other payables 
Deferred income tax 
Total net assets acquired and liabilities assumed 

Consideration transferred 
Cash 
Holdback provision 
Consideration transferred 

December 31 
2015 
$ 

892 
1,157 
2,601 
2 
3,097 
538 

560 
815 
576 
6,336 

5,100 
1,236 
6,336 

The intangible assets relate mainly to customer relationships. The assigned useful lives of customers’ relationship are between 5 to 10 years. 
Significant assumptions used  in  the  determination of  intangible  assets, as  defined  by  Management,  include year-over-year  sales  growth, 
attrition rate, discount rate and operating income before depreciation. From the holdback provision an amount of $0.6 million has been paid 
during the year 2016. The remaining balance was settled for $150 thousand during the year 2017. 

33 

 
 
 
  
  
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

12. 

Bank indebtedness and long-term debt 
a) Bank indebtedness 

Bank Loans 
Banker’s Acceptances 
Bank overdraft 

November 30 
2017 
$ 
7,000  
44,000  
1,309  
52,309  

November 30 
2016 
$ 
11,000  
80,500  
2,613  
94,113  

As at November 30, 2017, under the credit agreement, the Company was using $51.0 million of its facility compared to $91.5 million last year. 
The credit agreement has a maximum revolving operating facility of $125 million renewable in May 2018. For 2017, the available facility was 
$125 million corresponding to the amount available during the peak season (February 1, 2017 to August 31, 2017) and has since been reduced 
to $100 million which corresponds to the low seasonality of the business (September 1, 2017 to January 31, 2018). In addition, pursuant to the 
amended credit facility, the available facility has been reduced by $11.2 million in Q4-2017 due to certain tax refunds, the dissolution of the 
LGTI investment and $1.0 million for the sale of land in Drummondville. Therefore, the available credit was reduced from $100 million to $89 
million  as  at  November  30,  2017.  In  December  2017,  the  Company  renewed  its  credit  agreement  with  its  present  lenders,  two  chartered 
Canadian banks. The credit agreement has a maximum revolving operating facility of $100 million renewable in May 2019. On November 30, 
2018, the facility will be reduced to $90 million which corresponds to the low seasonality of the business. Funds advanced under these credit 
facilities bear interest at the prime rate plus a premium and are secured by first ranking security on the universality of the movable property of 
the Company. As at November 30, 2017, the Company was compliant with its financial covenants. 

b) Long-term debt 

The Company has entered into capital leases secured by the leased computer equipment and lift trucks. The obligation under capital leases bear 
interests at a rate of 2.7% and 6.1% per annum, maturing December 2018 and August 2022. 

13.  

Trade and other payables 

Trade payables and accruals 
Payroll related liabilities 
Sales taxes payables 

14.  

Provision 

November 30 
2017 
$ 
22,333  
5,658  
1,418  
29,409  

November 30 
2016 
$ 
23,034  
6,357  
1,330  
30,721  

The Company’s St-André (QC) site shows continued traces of surface contamination from previous treating activities exceeding existing 
regulatory requirements. The Company received approval for the environmental rehabilitation plan in fiscal 2016. The Company started to 
implement its plan during the fiscal 2016 and treatment of soil on-site will be performed over an estimated period of 5 years. Based on current 
available information, the provision as at November 30, 2017 is considered by management to be adequate to cover any projected costs that 
could be incurred in the future. 

Because of the long-term nature of the liability, the biggest uncertainty in estimating the provision is the amounts of soil to be treated and 
the costs that will be incurred. In particular, the Company has assumed that the site will be restored using technology and materials that are 
currently  available.  The  Company  has  been  provided  with  a  reasonable  estimate,  reflecting  different  assumptions  about  pricing  of  the 
individual  components  of  the  cost.  The  provision  has  been  calculated  using  a  discount  rate  of  5.0%  and  an  inflation  rate  of  2.1%.  The 
rehabilitation is expected to occur progressively over the next 5 years. 

The change in environmental provision is as follows:  

Balance, beginning of year 
Changes due to: 

Revision of future expected expenditures 
Accretion expense 
Expenditures incurred 

Balance, end of year 
Current portion 

Long-term portion 

34 

November 30  November 30 
2016 
$ 
1,589  

2017 
$ 
1,438  

(64) 
50  
(40) 
1,384  
938  
446  

(151) 
52  
(52) 
1,438  
963  
475  

 
 
 
 
  
  
 
  
 
 
 
 
 
  
  
 
  
 
 
 
 
 
  
  
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

14.  

Provision (Continued) 

Change  in  estimates  of  future  expenditures  are  as  a  result  of  periodic  reviews  of  the  underlying  assumptions  supporting  the  provision, 
including remediation costs and regulatory requirements. 

15. 

Share Capital 

a) 

Authorized 

An unlimited number of common shares, without par value 

Number of shares outstanding at the beginning and at the end of the year 

8,506,554  

8,506,554  

November 30  November 30 
2016 

2017 

b) 

Share-based payments 

Share-based payments 

November 30  November 30 
2016 
$ 
- 

2017 
$ 
494 

On January 15, 2017, the Company granted deferred shares to a key executive. Under this program, the executive was eligible to 
receive shares of the Company if specific non-market performance targets were met. The Company recognized the fair value of the 
shares at the grant date and the shares were vested at November 30, 2017 as the Company met the non-market performance targets. 

c) 

Share option plan 
The Company has a share option plan for directors, officers and employees, which provides for the purchase of common shares up 
to a maximum number of 420,000 issuable shares. Under the plan, the exercise price of each option equals the market price of the 
Company’s share on the date of grant and an option’s maximum term is five years. The rights relating to the options are vested over 
five years at a rate of 50% after three years and the balance after five years. 

No options were granted or exercised and there were no outstanding options in the current and prior fiscal year. As at November 30, 
2017, 220 000 common shares are reserved for the granting of options. 

d) 

Loss and dividend per share 

The calculation of basic and diluted loss per share was based on the following: 

Net loss - basic and diluted 
Weighted average number of shares – basic and diluted 

November 30  November 30 
2016 
$ 
(12,105) 
8,506,554  

2017 
$ 
(2,094) 
8,506,554 

No eligible dividend was declared and paid to the holders of participating shares for the year ended November 30, 2017 ($2.6 million 
or $0.30 per share for the year ended November 30, 2016). 

16. 

Income Taxes 

The income tax expenses is as follows: 

Current tax expenses 
Deferred tax expenses 

November 30  November 30 
2016 
$ 
(3,838) 
(351) 
(4,189) 

2017 
$ 
(1,340) 
159  
(1,181) 

35 

 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
  
  
 
  
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

16. 

Income Taxes (Continued) 

The provision for income taxes is at an effective tax rate, which differs from the basic corporate statutory tax rate as follows: 

Loss before income taxes 
Statutory income tax rate (%) 
Income taxes based on above rates 

Increase resulting from: 
Permanent differences 
Difference in expected rate of reversal versus current rate 
Other 

November 30  November 30 
2016 
$ 
(16,294) 
27.0  
(4,399) 

2017 
$ 
(3,275) 
27.1 
(886) 

(269) 
125  
(151) 
(1,181) 

62  
90  
58  
(4,189) 

The tax effect of temporary differences that give rise to significant portions of the deferred income tax liability is as follows: 

Deferred tax assets 

Deferred pension asset 
Provisions and other 

Deferred tax liability 

Property, plant and equipment 

Net deferred tax liability 

November 30  November 30 
2016 
$ 

2017 
$ 

(400) 
1,178  
778  

(4,360) 
(3,582) 

(317) 
1,388  
1,071  

(4,367) 
(3,296) 

On an annual basis, the Company assesses the need to establish a valuation allowance for its deferred income tax assets, and if it is probable 
its deferred income tax assets will be realized based on its taxable income projections.  As at  November 30, 2017, it is probable that the 
Company will realize its deferred income tax assets from the generation of future taxable income. 

17.  

Post-employment benefits 

The Company has a number of pension plans providing pension benefits to most of its employees. 

The Pension Plan for the Hourly Employees of Goodfellow Inc. (“Hourly Plan”) is a hybrid pension plan funded by employer and members 
contributions. Defined benefits are based on career average earnings for service up to April 30, 2008. The Hourly Plan was a pure defined 
benefit plan until April 30, 2008 but has been amended effective May 1, 2008 to introduce a defined contribution (DC) component. 

The Pension Plan for the Salaried Employees of Goodfellow Inc. (“Salaried Plan”) is also a hybrid pension plan funded by employer and 
members contributions. Defined benefits are based on length of service up to May 31, 2007 and final average earnings calculated at the 
earliest of retirement, termination or death. The Salaried Plan was a pure defined benefit plan until  May 31, 2007 but has been amended 
effective June 1, 2007 to introduce a defined contribution (DC) component. As for the DC components, the Company matches employee 
contributions. 

All employees have ceased to accrue service under the defined benefit portions of the plans. 

A. Defined Contribution Plans 

The Company contributes to several defined contribution plans and 408 Simple IRA plans (for its US employees). The pension expense 
under these plans is equal to the Company’s contributions. The pension expense for the year ended November 30, 2017 was $1.3 million 
(2016 - $1.6 million). 

B. Defined Benefit Plans 

The most recent actuarial valuations for funding purposes were filed with the pension regulators on December 31, 2015 for both plans. The 
next actuarial valuation for both plans for funding will be completed no later than December 31, 2018. 

Full actuarial valuations of the accrued pension benefit obligations for accounting purposes were prepared as at December 31, 2015 for both 
plans and the results were extrapolated to November 30, 2016 based on the assumptions applicable at that date to determine the periodic net 
retirement expense for the period from December 1, 2016 to November 30, 2017. In addition, full actuarial valuations of the accrued pension 
benefit obligations for accounting purposes were prepared as at December 31, 2015 and the results have been extrapolated to November 30, 
2017 on the basis of the assumptions applicable at that date in order to determine the funded status of the pension schemes as at November 
30, 2017. 

36 

 
 
 
 
  
  
 
 
 
 
 
 
  
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

17.  

Post-employment benefits (Continued) 

The measurement date for the plan assets and obligations is November 30. 

Information about the Company’s defined benefit plans is as follows: 

Defined benefit obligation 
Balance, beginning of year 
Interest cost 
Benefits paid 
Actuarial (gain) loss 

Effect of experience adjustments and Changes in demographic 
assumptions 
Changes in financial assumptions 

Balance, end of year 

Plan assets 
Fair value, beginning of year 
Interest income 
Employer contributions 
Benefits paid 
Administrative expenses paid from plan assets 
Return on plan assets in excess of interest income 
Fair value, end of year 
Net asset 

The actual return on plan assets was $4.3 million in 2017 and $2.4 million in 2016.  

The funded status of the defined benefits plans are as follows: 

Defined benefits obligation 

- funded 
- partly funded 

Fair value of plan assets 

- funded 
- partly funded 

Funded status - surplus (deficit) 

- funded 
- partly funded 

The significant actuarial weighted average assumptions used are as follows: 

Defined benefit obligation: 

Discount rate 
Rate of compensation increase 

Net benefit plan expense: 
Discount rate 
Rate of compensation increase 

37 

November 30 
2017 
$ 

November 30 
2016 
$ 

51,867 
1,888 
(3,065) 

313 
1,829 
52,832 

53,056 
1,928 
55 
(3,065) 
(261) 
2,611 
54,324 
1,492 

47,937 
2,013 
(2,267) 

(6) 
4,190 
51,867 

52,749 
2,219 
 185 
(2,267) 
(205) 
375 
53,056 
1,189 

November 30 
2017 
$ 

November 30 
2016 
$ 

14,362 
38,470 

16,775 
37,549 

2,413 
(921) 

13,983 
37,884 

16,217 
36,839 

2,234 
(1,045) 

November 30 
2017 
% 

November 30 
2016 
% 

3.50 
3.00 

3.75 
3.00 

3.75 
3.00 

4.30 
3.00 

 
 
 
 
 
 
  
  
  
  
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

17.  

Post-employment benefits (Continued) 

Net benefit plan expense: 

Interest cost 
Interest income 
Administrative expenses 
Net benefit plan expense 

November 30 
2017 
$ 
1,888 
(1,928) 
261 
221 

November 30 
2016 
$ 
2,013 
(2,219) 
205 
(1) 

The  net  benefit  plan  expense  is  included  in  Cost  of  goods  sold,  and  Selling,  Administrative,  and  General  Expenses  in  the  statement  of 
comprehensive income. 

The plan assets by asset category are as follows: 

Equity security: 
  Canadian stocks 
  US stocks 

International stocks 

Debt securities: 

Universal type 
Treasury 

All investments are quoted on an active market. 

  History of deficit and of experience gains and losses: 

Benefit obligation 
Fair value of plan assets 
Surplus 

Experience loss on plan liabilities* 

- Amount 
- Percentage 

* Excluding impact of change in assumptions 

November 30 
2017 
% 

November 30 
2016 
% 

21 
18 
20 

40 
1 

21 
20 
18 

40 
1 

November 30 
2017 
$ 
52,832 
54,324 
1,492 

November 30 
2016 
$ 
51,867 
53,056 
1,189 

- 
0.0% 

(6) 
0.0% 

A one percent change in discount rate would not have a significant impact on pension expense. 

Amount, timetable and uncertainty of future cash flows: 

 

Sensitive analysis 

Sensitivity to the discount rate: 

Defined benefit obligation 
Discount rate 

Sensitivity to the life expectancy: 

Defined benefit obligation 

Mortality table (CPM2014Priv – MI2017) 
Life expectancy of man of 65 years 
Life expectancy of woman of 65 years 

38 

Down of 0.25 % 
$54,799 
3.25% 

Assumption used 
$52,832 
3.50% 

Up by 0.25 % 
$50,973 
3.75% 

Up to one year  Assumption used 

$54,248 

$52,832 

22.8 years 
25.3 years 

21.8 years 
24.3 years 

 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

17.  

Post-employment benefits (Continued) 

 

Funding policy 

Goodfellow Inc. contributes amounts required to comply with provincial and federal legislation. 

 

Expected contributions 

The total cash payment for post-employment benefits for 2017, consisting of cash contributed by the Company to its funded pension 
plans, was $0.1 million ($0.2 million in 2016). Based on the latest filed actuarial valuation for funding purposes as at December 31, 
2015, the Company expects to contribute nil in 2018. 

  Duration 

The weighted average duration of the defined benefit obligation is 15 years. 

18.  

Additional Cash Flow Information 

Changes in Non-Cash Working Capital Items 

Trade and other receivables 
Inventories 
Prepaid expenses 
Trade and other payables 

November 30 
2017 
$ 
5,938  
26,531  
1,537  
(920) 
33,086  

November 30 
2016 
$ 
2,572  
(18,125) 
(528) 
27  
(16,054) 

Non-cash transaction 
The Company purchased property, plant, equipment and intangible assets for which an amount of $38 thousand was unpaid as at November 
30, 2017 ($321 thousand as at November 30, 2016). 

Joint venture 
In  fiscal 2016, the  Company invested  $3.0  million  in  the  joint  venture  in the  form  of  inventory of  raw  material pursuant to  a  shareholder 
agreement in return of 40% of the shares of the joint venture. 

19. 

Segmented Information 

The  Company  manages  its  operations  under  one  operating  segment.  Revenues  are  generated  from  the  sale  of  various  wood  products  and 
operating expenses are managed at the aggregate company level.  The Company’s sales to clients located in Canada represent approximately 
84% (86% in 2016) of total sales, the sales to clients located in the United States represent approximately 10% (9% in 2016) of total sales, and 
the  sales  to  clients  located  in  other  markets  represent  approximately  6%  (5%  in  2016)  of  total  sales.  All  significant  property,  plant  and 
equipment are located in Canada. 

20. 

Financial Instruments and Financial Risk Management 

Risk Management 
The Company is exposed to financial risks that arise from fluctuations in interest rates and foreign exchange rates and the degree of volatility 
of these rates. 

Financing and Liquidity Risk 
The Company makes use of short term financing with two chartered Canadian banks.  

The following are the contractual maturities of financial liabilities as at November 30, 2017: 

Financial Liabilities 

Bank indebtedness 
Trade and other payables 
Long-term debt 

Carrying 
Amount 
52,309  
29,409  
194  

Contractual 
cash flows 
52,309  
29,409  
194  

Total financial liabilities 

81,912  

81,912  

0 to 6  
Months 
52,309  
29,409  
69  

81,787  

6 to 36 
Months 
- 
- 
125  

125  

39 

 
 
 
 
 
 
 
 
 
 
 
  
  
 
  
 
 
 
 
 
 
 
 
 
  
  
  
  
  
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

20. 

Financial Instruments and Financial Risk Management (Continued) 

The following are the contractual maturities of financial liabilities as at November 30, 2016: 

Financial Liabilities 

Bank indebtedness 
Trade and other payables 
Long-term debt 

Carrying 
Amount 
94,113  
30,721  
262  

Contractual 
cash flows 
94,113  
30,721  
262  

0 to 6  
Months 
94,113  
30,721  
74  

Total financial liabilities 

125,096  

125,096  

124,908  

6 to 36 
Months 
- 
- 
188  

188  

Interest Risk 
The Company uses a credit facility to finance working capital requirements. The interest cost of this facility is dependent upon Canadian and 
US bank prime rates as well as the Company’s funded debt to capitalization ratio. The profitability of the Company could be adversely 
affected with increases in the bank prime rate. Management does not believe that the impact of interest rate fluctuations will be significant 
on its operating results. A 1% fluctuation of interest rate on the $52.3 million in bank indebtedness would impact interest expense annually 
by $0.5 million. 

Currency Risk 
The  Company  could  enter  into  forward  exchange  contracts  to  economically  hedge  certain  trade  payables  and  from  time  to  time  future 
purchase commitments denominated in U.S. dollars, Euros and Pound sterling. Fluctuation in the Canadian dollar of 5% in relation to foreign 
currencies would not have a significant effect on the Company’s net earnings. As at November 30, 2017, the Company had the following 
currency exposure on: 

Financial assets and liabilities measured at amortized costs 

Cash 
Trade and other receivables 
Trade and other payables 
Long-term debt 
Net exposure 

USD 
591  
8,546  
(3,304) 
(53) 
5,780  

GBP 
273  
315  
(27) 
-  
561  

Euro 
10  
-  
(768) 
-  
(758) 

CAD exchange rate as at November 30, 2017 

1.2897  

1.7443  

1.5352  

Impact on net earnings based on a fluctuation of 5% on CAD 

272  

36  

(42) 

Credit Risk 
The Company is exposed to credit risks from customers.  As a result of having a diversified customer mix, this risk is alleviated by minimizing 
the amount of exposure the Company has to any one customer.  Additionally, the Company has a system of credit management to mitigate 
the risk of losses due to insolvency or bankruptcy of its customers. It also utilizes credit insurance to reduce the potential for credit losses. 
Finally, the Company has adopted a credit policy that defines the credit conditions to be met by its customers and specific credit limit for 
each customer is established and regularly revised. Accounts receivable over 60 days past their due date and not impaired represents 1.3% 
(7.1% on November 30, 2016) of total trade and other receivables at November 30, 2017. 

The movement in the allowance for doubtful accounts in respect to trade and other receivables were as follows: 

November 30 
2017 
$ 
1,816  
185  
(1,776) 
225  

November 30 
2016 
$ 
426 
1,575 

           (185)    
          1,816     

Balance, beginning of year 
Provision 
Bad debt write offs 
Balance, end of year 

40 

 
 
 
 
  
  
  
  
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

20. 

Financial Instruments and Financial Risk Management (Continued) 

Two major customers exceed 10% of total company sales in the twelve months ended November 30, 2017 while only one major customer 
exceeded 10% of total company sales last year. The following represents the total sales consisting primarily of various wood products of the 
major customer(s):  

Years ended 
November 30, 2017  November 30, 2016 
% 

% 

$ 

$ 

Sales to major customer(s) that 
exceeded 10% of total Company’s 
sales 

110,848 

21.2 

90,241 

16.0 

The loss of any major customer could have a material effect on the  Company’s results, operations and financial positions. The carrying 
amounts of financial assets represent the maximum credit exposure. 

Fair Value 
Fair values of assets and liabilities approximate amounts at which these items could be exchanged in a transaction between knowledgeable 
and willing parties. Fair value is based on available public market information or, when such information is not available, is estimated using 
present value techniques and assumptions concerning the amount and timing of future cash flows and discount rates which factor in the 
appropriate level of risk for the instrument. The estimated fair values may differ in amount from that which could be realized in an immediate 
settlement of the instruments. The carrying amounts of cash, trade and other receivables, bank indebtedness, trade and other payables and 
long-term debt approximate their fair values. 

21. 

Capital Management 

The Company’s objectives are as follows: 

1.  Maintain financial flexibility in order to preserve its ability to meet financial obligations; 
2.  Maintain a low debt-to-capitalization ratio to preserve its capacity to pursue its organic growth strategy; 
3.  Maintain financial ratios within covenants requirements; 
4.  Provide an adequate return to its shareholders. 

The Company defines its capitalization as shareholders’ equity and debt.  Shareholders’ equity includes the amount of paid-up capital in 
respect of all issued and fully-paid common shares together with the retained earnings, calculated on a consolidated basis in accordance with 
IFRS.  Debt includes bank indebtedness reduced by the amounts of cash and cash equivalents. Capitalization represents the sum of debt and 
shareholders’ equity. 

The Company manages its capital and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of 
the underlying assets. In order to maintain or adjust its capital, the Company may adjust the amount of dividends paid to shareholders, issue 
new shares or repurchase shares under the normal course issuer bid, acquire or sell assets to improve its financial performance and flexibility 
or return capital to shareholders. The Company’s primary uses of capital are to finance increases in non-cash working capital and capital 
expenditures for capacity expansion. The Company currently funds these requirements out of its internally-generated cash flows and credit 
facilities.  

The Company is subject to certain covenants on its credit facilities. The covenants include a Debt-to-capitalization ratio and year-to-date 
EBITDA.  The  Company  monitors  the  ratios  on  a  monthly  basis.  The  Company  current  complies  with  all  externally  imposed  capital 
requirements.  Other  than  the  covenants  required  for  the  credit  facilities,  the  Company  is  not  subject  to  any  externally  imposed  capital 
requirements. 

The Company’s financial objectives and strategy have changed in the past twelve months.  The financial objectives and strategy were to 
stabilize  the  Company  and  bring  back  to  traditionally  conservative  management.  Changes  to  its  credit  agreement  and  working  capital 
structure were required and Management have addressed them with a renewed credit agreement starting December 2017 and maturing in 
May 2019 with its lenders.  The Company believes that all its ratios are within reasonable limits, in light of the relative size of the Company 
and its capital management objectives. 

As at November 30, 2017 and 2016, the Company achieved the following results regarding its capital management objectives: 

Capital management 

Debt-to-capitalization ratio 
Return on shareholders’ equity 
Current ratio 
EBITDA 

41 

As at 
November 30 
2017 

32.8 % 
 (1.9) %  
 1.9  
$5,009  

As at 
November 30 
2016 

47.3 % 
     (10.9) % 
 1.5 
$(8,804) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

21. 

Capital Management (Continued) 

These measures are not prescribed by IFRS and are defined by the Company as follows: 

  Debt-to-capitalization ratio represents the funded debt over total shareholders’ equity. Funded debt is bank indebtedness less cash 

and cash equivalents. Capitalization is funded debt plus shareholders’ equity. 

  Return on shareholders’ equity is the net earnings (loss) divided by shareholders’ equity. 
  Current ratio is total current assets divided by total current liabilities. 
 

EBITDA is earnings before interest, taxes, depreciation and amortization. 

22. 

Commitments and Contingent liabilities 

Commitments 
As at November 30, 2017, the minimum future rentals payable under long-term operating leases, for offices, warehouses, vehicles, yards, 
and equipment are as follows: 

Less than 1 year 
More than 1 year, but less than 5 years 
More than 5 years 

                $ 
4,878 
12,444 
3,594 
20,916 

Contingent liabilities 
During  the  normal  course  of  business,  certain  product  liability  and  other  claims  have  been  brought  against  the  Company  and,  where 
applicable, its suppliers. While there is inherent difficulty in predicting the outcome of such matters, management has vigorously contested 
the validity of these claims, where applicable, and based on current knowledge, believes that they are without merit and does not expect that 
the outcome of any of these matters, in consideration of insurance coverage maintained, or the nature of the claims, individually or in the 
aggregate,  would  have  a  material  adverse  effect  on  the  consolidated  financial  position,  results  of  operations  or  future  earnings  of  the 
Company. 

23. 

Related party transactions 

Related parties include the key management personnel and other related parties as described below. 

Other related party transactions 

Joint venture – Lebel-Goodfellow Treating Inc. 

Sales of goods 
Purchase of goods 
Lease rental income 
Miscellaneous charges 

Company controlled by a member of the Board – Jarislowsky Fraser Ltd. 

- Management fee 

November 30 
2017 
$ 

November 30 
2016 
$ 

2 
26,828 
208 
249 

3,782  
83,921  
415  
734  

187 

183  

These transactions are in the normal course of business and measured at the exchange amount of considerations established and agreed to in 
the  contractual  arrangements  between  the  related  parties.  The  Company  has  an  outstanding  receivable  balance  with  Lebel-Goodfellow 
Treating Inc. of $0.2 million as at November 30, 2017 ($3.5 million in 2016).  

Key management personnel compensation 
Key  management  includes  members  of  the  board  of  directors,  senior  management  and  key  executives.  The  following  table  shows  the 
remuneration of key management personnel during the years ended: 

November 30 
2017 
$ 
2,750 
60 
2,810 

November 30 
2016 
$ 
2,362 
266 
2,628 

Salaries and other short-term benefits 
Post-employment benefits 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For years ended November 30, 2017 and 2016 
(tabular amounts are in thousands of dollars, except per share amounts)  

24. 

Subsequent event 

In December 2017, the Company renewed its credit agreement with its present lenders, two chartered Canadian banks. The credit agreement 
has a maximum revolving operating facility of $100 million renewable in May 2019. On November 30, 2018, the facility will be reduced to 
$90 million which corresponds to the low seasonality of the business. 

25. 

Comparative information 

Certain prior period information has been reclassified to conform to the current period presentation. In 2017, the Company reclassified certain 
fixed assets into a separate category, leasehold improvements. To conform to the current presentation, the Company reclassified the related 
amounts in 2016. The amounts reclassified for the year ended November 30, 2016 were $1.3 million.

43 

 
 
 
 
 
CORPORATE INFORMATION 

BOARD OF DIRECTORS 

Claude Garcia */** 
Chairman of the Board 
. 

G. Douglas Goodfellow ** 
Secretary of the Board 
Goodfellow Inc. 

Stephen A. Jarislowsky */** 
Director 
Partner, Jarislowsky Fraser & Co. Ltd 

Normand Morin */** 
Chairman of the Audit Committee 

David A. Goodfellow 
Director 

*   Member of the Audit Committee 
** Member of the Executive Compensation Committee 

OFFICERS 

Patrick Goodfellow 
President & Chief Executive Officer 

Charles Brisebois 
Chief Financial Officer 

G. Douglas Goodfellow 
Secretary of the Board   

Mary Lohmus 
Senior Vice President, 
Ontario and Western Canada 

David Warren 
Vice President, 
Atlantic 

Luc Dignard 
Vice President, 
Sales, Quebec 

Jeff Morrison 
Vice President, 
National accounts 

OTHER INFORMATION 

Head Office 
225 Goodfellow Street 
Delson, Quebec  J5B 1V5 
Tel.: 450-635-6511 
Fax: 450-635-3730 

Sollicitors 
Bernier Beaudry 
Quebec, Quebec 

Auditors 
KPMG LLP 
Montreal, Quebec 

Transfer Agent 
Computershare Investor Services Inc. 
Montreal, Quebec 

Stock Exchange 
Toronto 
Trading Symbol: GDL 

Wholly-owned Subsidiaries 
Goodfellow Distribution Inc. 
Quality Hardwoods Ltd. 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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