0
FINANCIAL HIGHLIGHTS
OPERATING ANNUAL RESULTS
(in thousands of dollars, except per share amounts)
Sales
Earnings before income taxes
Net earnings
- per share
Net cash flow from operating activities
excluding impact of changes in non-
cash working capital, income tax paid
and interest paid (1)
- per share (1)
Net cash flow from operating activities
- per share (2)
Shareholders’ Equity
- per share (2)
Share price at fiscal year-end
Dividend paid per share (2)
2023
2022
2021
2020
2019
$512,821
$20,090
$14,688
$1.72
$631,185
$44,716
$32,679
$3.82
$615,946
$50,523
$37,836
$4.42
$454,103
$19,022
$13,811
$1.61
$449,587
$4,269
$3,054
$0.36
$29,674
$3.48
$42,968
$5.03
$195,003
$22.88
$14.07
$1.00
$55,051
$6.43
$26,013
$3.04
$186,779
$21.83
$12.17
$0.90
$60,003
$7.01
$33,278
$3.89
$160,948
$18.80
$9.56
$0.85
$28,645
$3.35
$11,441
$1.34
$121,229
$14.16
$6.71
$0.20
$9,775
$1.14
$13,408
$1.57
$113,408
$13.24
$4.82
$0.10
(1) Non-IFRS financial measure – refer to section “Non-IFRS Financial Measures” for more information and a reconciliation to the most directly
comparable IFRS measure, where applicable.
(2) Supplementary financial measure – refer to section “Non-IFRS Financial Measures” for more information.
NET EARNINGS (in million $)
SHARE PRICE as at November 30
40
30
20
10
0
$38
$33
$14
$15
$3
2019
2020
2021
2022
2023
TABLE OF CONTENTS
Chair’s Report to the Shareholders ...................... 2
President’s Report to the Shareholders ................ 3
Management’s Discussion and Analysis .............. 4
Consolidated Financial Statements and Notes ... 17
Directors and Officers ......................................... 47
Sales Offices and Distribution Centres ............... 48
HEAD OFFICE
225 Goodfellow Street
Delson, Quebec
J5B 1V5
Canada
2019
2020
2021
2022
2023
1
$4.82
$4.82
$6.71
$6.71
$9.56
$9.56
$12.17
$12.17
$14.07
$14.07
Toll-Free Canada: 800-361-6503
Tel: 450-635-6511
Fax: 450-635-3729
info@goodfellowinc.com
www.goodfellowinc.com
CHAIR’S REPORT TO THE SHAREHOLDERS
The fiscal year 2023 was one of resilience for Goodfellow. Despite numerous external challenges, the
Company successfully navigated difficult business conditions to achieve a solid performance.
The management team was loyal to its strategy of controlling costs and reconciling inventory levels to deliver
earnings of $1.72 per share. With a very sound balance sheet, sights are set on reinvesting in the business,
improving the efficiency of its assets, paying a consistent dividend, as well as pursuing relevant and strategic
acquisitions.
The Board of Directors extends its gratitude to Patrick Goodfellow, President and CEO, for his leadership,
and to all shareholders for their continued trust.
(Signed) “Robert Hall”
Chair of the Board
February 19, 2024
2
PRESIDENT’S REPORT TO THE SHAREHOLDERS
Goodfellow concluded its 125th anniversary year on a positive note, demonstrating resilience in the face of
volatile and ever-changing market conditions to achieve revised sales objectives affected by reduced
consumer demand. Sales for the year amounted to $513 M, with notable increases generated by commercial
project activity driven by infrastructure-related spending. Unfortunately, the retail sector experienced a
significant downturn in demand, leading to an oversupply in the market, with the flooring category suffering
the most significant setback in the second quarter of 2023. In addition, demand and pricing for hardwoods
softened considerably, with signs of recovery becoming evident only in the early months of fiscal 2024.
Goodfellow’s ability to meet expectations in a context affected by economic uncertainty and high interest
rates, can be attributed to the diversity of its product portfolio and the unwavering dedication of its talented
team who have been instrumental in keeping the company's interests at the forefront.
Looking ahead to 2024, there are reasons for cautious optimism. Should interest rates remain stable, market
conditions could rebound as the country struggles to meet its housing needs. Goodfellow is well positioned
to capitalize on growth opportunities thanks to its strong balance sheet and diversified approach.
Recognition and appreciation go out to shareholders, customers, suppliers and employees who contributed
to Goodfellow’s success in 2023. Delivering sustainable value and maintaining Goodfellow's reputation of
customer service excellence remain a top priority for the future.
(Signed) “Patrick Goodfellow”
President and Chief Executive Officer
February 19, 2024
3
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following Management’s Discussion and Analysis (“MD&A”) and Goodfellow Inc. (hereafter the “Company”) consolidated financial
statements were approved by the Board of Directors on February 19, 2024. The MD&A should be read in conjunction with the
consolidated financial statements and the corresponding notes for the years ended November 30, 2023 and November 30, 2022. The
MD&A provides a review of the significant developments and results of operations of the Company during the years ended November
30, 2023 and November 30, 2022. The consolidated financial statements ended November 30, 2023 and November 30, 2022 are
prepared in accordance with IFRS Accounting Standards (IFRS). All amounts in this MD&A are in Canadian dollars unless otherwise
indicated. All tabular dollar amounts are in thousands of Canadian dollars, except amounts per share or unless otherwise indicated.
Some amounts included in this MD&A have been rounded to make reading easier, which may affect some calculations. In addition,
in this Management’s Discussion and Analysis, we also use non-IFRS financial measures for which a complete definition is presented
below and for which a reconciliation to financial information in accordance with IFRS is presented in the section “Non-IFRS Financial
Measures” and in Note 22 “Segmented Information and Sales” to the annual consolidated financial statements for the years ended
November 30, 2023 and November 30, 2022. These measures should be considered as a complement to financial performance
measures in accordance with IFRS. They do not substitute and are not superior to them. Additional information relating to Goodfellow
Inc., including the Annual Information Form and the Annual Report can be found on SEDAR+ at www.sedarplus.ca and at
www.goodfellowinc.com.
FORWARD-LOOKING STATEMENTS
This MD&A contains implicit and/or explicit forward-looking statements relating, inter alia, to objectives, strategies, priorities, goals,
plans, financial position, operating results, trends and activities of Goodfellow Inc. and its markets and industries. Forward-looking
statements can be identified by words such as: “believe,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and
similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding
liquidity and risk management in the current economic conditions. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, 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. 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. Some of these expectations and assumptions relate to the state of the global economy and the economies of the regions
in which the Company operates; the level of demand for the Company’s products including from its recurring client base, including
bookings from customers; prices and margins for its products; competitors; reliability of supply chains; inflation; interest rates; foreign
currency fluctuations; the COVID-19 pandemic; overhead expenses; working capital requirements and access to capital or funding to
finance same; the collection of accounts receivable; the availability and sufficiency insurance coverage; the sufficiency and reliability
of the Company’s workforce; the successful management of environmental and health and safety risk; the sufficiency, reliability and
effectiveness of information systems; the sufficiency, reliability and effectiveness of internal and disclosure controls; and the absence
of adverse change in the Company’s regulatory environment and legal proceedings. In particular, expectations and assumptions
relating to the COVID-19 pandemic are more fully described in the Company’s Annual MD&A for the year ended November 30, 2023.
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 or prove to be
accurate. 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 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; level of demand and financial performance of the
manufacturing industry; competition from vendors; changes in customer demand; extent to which we are successful in gaining new
long-term relationships with customers or retaining existing ones and the level of service failures that could lead customers to use
competitors' services; increased customer bankruptcies; dependence on key personnel; impact of the COVID-19 pandemic and the
related climate of uncertainty; laws and regulation; information systems, cost structure and working capital requirements; occurrence
of hostilities, political instability or catastrophic events and other factors described in our public filings available at www.sedarplus.ca.
For these reasons, we cannot guarantee the results of these forward-looking statements. The foregoing risks and uncertainties are
described in greater detail in this MD&A. 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.
NON-IFRS FINANCIAL MEASURES
(unaudited)
We report our financial results in accordance with IFRS. However, in this document, the following non-IFRS measures, non-IFRS
ratios and supplementary financial measures are used: EBITDA, Net Cash Flows from Operating Activities excluding impact of
changes in non-cash working capital, income tax paid and interest paid, Gross profit, Gross margin, Shareholders’ Equity per share
and dividends paid per share. These measures do not have a standardized meaning under IFRS and could be calculated differently
by other companies and accordingly, may not be comparable. We believe that many of our readers analyze the financial performance
of the Company’s activities based on these non-IFRS financial measures as such measures may allow for easier comparisons
between periods. The Company also believes that these measures are useful indicators of the performance of its operations and its
ability to meet its financial obligations. Furthermore, management also uses some of these non-IFRS financial measures to assess
the performance of its activities and managers. These measures should be considered as a complement to financial performance
measures in accordance with IFRS. They do not substitute and are not superior to them. For measures displayed per share, the
4
Company divided the measures by the total number of outstanding shares at November 30 of the period presented in the case of
Shareholders Equity per share and by the weighted average number of outstanding shares for the relevant period ended November
30 presented for other measures per share.
“EBITDA” represents earnings before income taxes, net financial costs, depreciation of property, plant and equipment and of right-of-
use-assets and amortization of intangible assets. Management believes this metric is useful as it allows comparability of operating
results from one period to another by excluding the effects of items that primarily reflect the impact of long-term investment and
financing decisions, rather than the results of day-to-day operations.
The table below contain a reconciliation of EBITDA to the most directly comparable IFRS measure, net earnings.
Reconciliation of EBITDA
Net earnings
Income taxes
Net financial costs
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortization of intangible assets
EBITDA
For the three months ended
November 30
2022
(unaudited)
$
4,440
1,054
717
763
1,186
153
8,313
November 30
2023
(unaudited)
$
2,133
520
432
915
1,088
150
5,238
November 30
2023
For the years ended
November 30
2022
$
14,688
5,402
2,429
3,311
4,697
602
31,129
$
32,679
12,037
3,201
2,551
4,551
608
55,627
“Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest
paid” represents net cash flows from operating activities before changes in non-cash working capital, income tax paid and interest
paid. Management believes this measure is useful as it provides an indication of the Company’s financial flexibility, i.e. cash available
to the Company to service debt, meet other payment obligations, make investments and execute the Company’s strategy.
The tables below contain a reconciliation of Net Cash Flows from Operating Activities excluding impact of changes in non-cash
working capital, income tax paid and interest paid to the most directly comparable IFRS measure, Net Cash Flows from Operating
Activities.
Reconciliation of Net Cash Flows from Operating Activities excluding impact of changes
in non-cash working capital, income tax paid and interest paid – Fourth quarter
(unaudited)
Net Cash Flows from Operating Activities
Changes in non-cash working capital items
Interest paid
Income taxes paid
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working
capital, income tax paid and interest paid
Net Cash Flows from Operating Activities per share
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working
capital, income tax paid and interest paid per share
Weighted Average Number of Share Outstanding (thousands)
For the three months ended
November 30
November 30
2022
2023
$
$
40,295
26,879
(35,728)
(25,447)
305
191
3,535
3,163
4,786
8,407
3.15 4.71
0.56 0.98
8,537 8,561
5
from
Reconciliation of Net Cash Flows
Operating Activities excluding
impact of
changes in non-cash working capital, income
tax paid and interest paid
Net Cash Flows from Operating Activities
Changes in non-cash working capital items
Interest paid
Income taxes paid
Net Cash Flows from Operating Activities excluding
in non-cash working
impact of changes
capital, income tax paid and interest paid
Net Cash Flows from Operating Activities per share
Net Cash Flows from Operating Activities excluding
impact of changes
in non-cash working
capital, income tax paid and interest paid per
share
Weighted Average Number of Share Outstanding
(thousands)
For the years ended
November 30
2023
November 30
2022
November 30
2021
November 30
2020
November 30
2019
$
42,968
(24,213)
1,367
9,552
$
26,013
3,734
1,731
23,573
$
33,278
15,484
1,541
9,700
$
11,441
14,117
1,495
1,592
$
13,408
(6,856)
2,154
1,069
29,674
55,051
60,003
28,645
9,775
5.03
3.04
3.89
3.48
6.43
7.01
1.34
3.35
1.57
1.14
8,537
8,562
8,563
8,563
8,563
With respect to “Gross profit” and “Gross margin”, these measures are used under the sections “Cost of Goods Sold” in the discussion
below for the results for the year ended November 30, 2023, and the fourth quarter ended November 30, 2023. Please refer to such
sections for a description of how theses measures are calculated and a reconciliation to the most directly comparable IFRS measure.
In addition, the following tables set out the information supporting the per share calculation Shareholders’ Equity and dividend paid:
Reconciliation of Shareholders’ Equity per
share
November 30
2023
$
195,003
22.88
8,521
November 30
2023
$
8,539
1.00
November 30
2022
$
186,779
21.83
8,558
For the years ended
November 30
2021
$
160,948
18.80
8,563
November 30
2020
$
121,229
14.16
8,563
November 30
2022
$
7,706
0.90
For the years ended
November 30
2021
$
7,279
0.85
November 30
2020
$
1,712
0.20
November 30
2019
$
113,408
13.24
8,563
November 30
2019
$
851
0.10
8,537
8,563
8,563
8,563
8,563
Shareholders’ Equity
Shareholders’ Equity per share
Number of Share Outstanding (thousands)
Reconciliation of Dividend paid per share
Dividend paid
Dividend paid per share
Weighted average number of share at payment
(thousands)
BUSINESS OVERVIEW
Goodfellow Inc. is a diversified manufacturer of value-added lumber products, as well as a wholesale distributor of building materials
and floor coverings. Goodfellow Inc. has 9 processing plants and 13 distribution centres from coast-to-coast in Canada, as well as 1
distribution centre in the USA and 1 in the United Kingdom. The Company services customers in the commercial and residential
sectors through lumber yard retailer networks, manufacturers, industrial and infrastructure project partners, and floor covering
specialists.
OVERALL PERFORMANCE
Goodfellow concluded its 125th anniversary year on a positive note, demonstrating resilience in the face of volatile and ever-
changing market conditions to achieve adjusted sales and income objectives. Sales for the year amounted to $513 M, with notable
increases generated by commercial project activity driven by infrastructure-related spending. Unfortunately, the retail sector
experienced a significant downturn in demand, leading to an oversupply in the market, with the flooring category suffering the most
significant setback in the second quarter of 2023. In addition, demand and prices for hardwoods softened considerably, with signs
of recovery becoming evident only in the early months of fiscal 2024. Goodfellow’s ability to meet expectations in such a dynamic
environment can be attributed to its diversified offering and the unwavering dedication of its talented team.
6
COMPARISON FOR THE YEARS ENDED NOVEMBER 30, 2023 AND 2022
HIGHLIGHTS
Sales
Earnings before income taxes
Net earnings
Net earnings per share – Basic and Diluted
Net cash flow from Operating Activities excluding impact of changes in non-cash
working capital, income tax paid and interest paid (1)
Net cash flow from Operating Activities
EBITDA (1)
2023
$
512,821
20,090
14,688
1.72
29,674
42,968
31,129
2022
$
631,185
44,716
32,679
3.82
55,051
26,013
55,627
Variance
%
-19
-55
-55
-55
-46
+65
-44
(1) Non-IFRS financial measure – refer to section “Non-IFRS Financial Measures” for more information and a reconciliation to the
most directly comparable IFRS measure.
Sales in Canada during fiscal 2023 decreased 18% compared to last year due to a decrease in sales of all product categories. Quebec
sales decreased 20% due to a decrease in sales of all product categories. Sales in Ontario decreased 21% due to a decrease in
sales of all product categories. Sales in Western Canada decreased 20% due to a decrease in sales of all product categories except
for building material. Atlantic region sales decreased 5% due to a decrease in sales of flooring products, and specialty and commodity
panels.
Sales in the United States for fiscal 2023 on a US dollar basis decreased 25% compared to last year, and on a Canadian dollar basis
they decreased 22% compared to last year. Finally, export sales decreased 34% during fiscal 2023 compared to last year mostly due
to a decrease in sales of lumber and flooring products.
In terms of the distribution of sales by product, all product categories saw a decrease in sales. Flooring sales during fiscal 2023
decreased 33%, specialty and commodity panel sales decreased 20%, building material sales decreased 10%, and lumber sales
decreased 16% compared to last year.
Reconciliation of Gross profit
Sales
Cost of goods sold
Gross profit
Gross margins
7
November 30
2023
$
512,821
400,461
112,360
21.9%
For the years ended
November 30
2022
$
631,185
495,125
136,060
21.6%
55%(2022: 53%)12%(2022: 11%)18%(2022:18%)15%(2022: 18%)LumberBuilding MaterialSpecialty & Commodity…FlooringProduct Distribution of Sales for Fiscal 202310%(2022: 12%)19%(2022: 17%)9%(2022: 9%)27%(2022: 28%)35%(2022: 34%)US and ExportsAtlanticWestern CanadaOntarioQuebecGeographical Distribution of Sales for Fiscal 2023
Gross profit and Gross margins are non-IFRS financial measures. See section “Non-IFRS Financial Measures” for more information.
Gross profit is calculated as sales less cost of goods sold. Gross margin is calculated Gross profit over sales. The table above contains
a reconciliation of Gross profit to sales.
Cost of Goods Sold
Cost of goods sold during fiscal 2023 was $400.5 million compared to $495.1 million last year. Cost of goods sold decreased 19%
compared to last year. Gross profits were $112.4 million compared to $136.1 million last year, a decrease of 17% compared to last
year. Gross margins were 21.9% in fiscal 2023 (21.6% last year).
Selling, Administrative and General Expenses
Selling, Administrative and General Expenses during fiscal 2023 were $89.8 million compared to $88.1 million last year representing
a 2% increase compared to last year.
Net Financial Costs
Net financial costs during fiscal 2023 were $2.4 million ($3.2 million last year). The average Canadian prime rate increased to 6.86%
(3.78% last year). The average US prime rate increased to 8.09% (4.52% last year).
COMPARISON FOR THE THREE MONTHS ENDED NOVEMBER 30, 2023 AND 2022
(unaudited)
HIGHLIGHTS
Sales
Earnings before income taxes
Net earnings
Net earnings per share – Basic and Diluted
Net cash flow from Operating Activities excluding impact of changes in non-cash
working capital, income tax paid and interest paid (1)
Net cash flow from Operating Activities
EBITDA (1)
Q4-2023
$
125,415
2,653
2,133
0.25
4,786
26,879
5,238
Q4-2022
$
149,299
5,494
4,440
0.52
8,407
40,295
8,313
Variance
%
-16
-52
-52
-52
-43
-33
-37
(1) Non-IFRS financial measure – refer to section “Non-IFRS Financial Measures” for more information and a reconciliation to the most directly
comparable IFRS measure.
Sales in Canada during the fourth quarter of 2023 decreased 16% compared to last year due to a decrease in sales of all product
categories except for building material. Quebec sales decreased 21% due to a decrease in sales of all product categories except for
building material. Sales in Ontario decreased 23% mainly due to a decrease in sales of all product categories except for building
material. Sales in Western Canada increased 5% due to an increase in sales of specialty and commodity panels and building material.
Atlantic region sales increased 1% due to an increase in sales of all product categories except for flooring products.
Sales in the United States for the fourth quarter of 2023 on US dollar basis decreased 8% compared to last year and decreased 8%
on a Canadian dollar basis mostly due to a decrease in sales of all product categories except building materials. Finally, export sales
decreased 46% during the fourth quarter of 2023 compared to last year mostly due to a decrease in sales of all product categories.
In terms of the distribution of sales by product, all product categories decreased their sales except for building materials. Flooring
sales during the fourth quarter of fiscal 2023 decreased 25%, specialty and commodity panel sales decreased 12%, building materials
sales increased 5%, and lumber sales decreased 18% compared to last year.
8
10%(Q4-2022 : 10%)18%(Q4-2022 : 15%)11%(Q4-2022 : 9%)27% (Q4-2022 : 30%)34% (Q4-2022 : 36%)US and ExportsAtlanticWestern CanadaOntarioQuebecGeographical Distribution of Sales for the Fourth Quarter ended November 30, 202354%(Q4-2022: 55%)11%(Q4-2022: 8%)19%(Q4-2022: 18%)16%(Q4-2022: 19%)LumberBuilding MaterialSpecialty & Commodity PanelFlooringProduct Distribution of Sales for the Fourth Quarter ended November 30, 2023
Reconciliation of Gross profit
(unaudited)
Sales
Cost of goods sold
Gross profit
Gross margins
For the three months ended
November 30
November 30
2022
2023
$
$
149,299
125,415
120,409
98,632
28,890
26,783
19.4%
21.4%
Gross profit and Gross margins are non-IFRS financial measures. See section “Non-IFRS Financial Measures” for more information.
Gross profit is calculated as sales less cost of goods sold. Gross margin is calculated Gross profit over sales. The table below contains
a reconciliation of Gross profit to sales.
Cost of Goods Sold
Cost of goods sold during the fourth quarter of 2023 was $98.6 million compared to $120.4 million for the corresponding period a
year ago, a decrease of 18% compared to last year. Gross profits were $26.8 million compared to $28.9 million last year. Gross
profits decreased 7% compared to last year. Gross margins were 21.4% for the three months ended November 30, 2023 (19.4%
last year).
Selling, Administrative and General Expenses
Selling, Administrative and General Expenses during the fourth quarter of 2023 were $23.7 million compared to $22.7 million last year
representing an increase of 4.3% compared to last year.
Net Financial Costs
Net financial costs during the three months ended November 30, 2023 were $0.4 million ($0.7 million last year). The average Canadian
prime rate increased to 7.20% (5.55% last year). The average US prime rate increased to 8.50% (6.31% last year).
SUMMARY OF THE LAST EIGHT MOST RECENTLY COMPLETED QUARTERS
(unaudited)
Sales
Net (losses) earnings
Feb-2023
$
105,925
(211)
May-2023
$
142,326
6,575
Aug-2023
$
139,155
6,191
Nov-2023
$
125,415
2,133
Net (losses) earnings per share
(0.02)
0.77
0.72
0.25
Sales
Net earnings
Feb-2022
$
129,365
5,117
May-2022
$
184,947
12,542
Aug-2022
$
167,574
10,580
Nov-2022
$
149,299
4,440
Net earnings per share
0.60
1.46
1.24
0.52
As indicated above, our results over the past eight quarters follow a seasonal pattern with sales activities traditionally higher in the
second and third quarters.
STATEMENT OF FINANCIAL POSITION
Total assets
Total assets at November 30, 2023 were $252.8 million compared to $246.9 million as at November 30, 2022. Cash at November 30,
2023 was $28.4 million compared to $3.4 million as at November 30, 2022. Trade and other receivables at November 30, 2023 were
$53.7 million ($64.4 million as at November 30, 2022). Income taxes receivable was $6.3 million compared ($2.4 million as at
November 30, 2022). Inventories at November 30, 2023 were $98.5 million compared to $112.3 million as at November 30, 2022.
Prepaid expenses at November 30, 2023 were $4.2 million ($2.6 million as at November 30, 2022). Defined benefit plan asset was
$15.3 million at November 30, 2023 compared to $11.6 million as at November 30, 2022. Other assets were $0.8 million at November
30, 2023 (same as at November 30, 2022).
9
Property, plant, equipment, intangible and right-of-use assets
Property, plant and equipment at November 30, 2023 was $32.8 million compared to $32.3 million as at November 30, 2022, and
intangible assets at November 30, 2023 were $1.5 million compared to $2.1 million as at November 30, 2022. Capital expenditures
on property, plant and equipment and intangibles during fiscal 2023 amounted to $3.8 million compared to $4.9 million for the same
period last year. Property, plant and equipment capitalized during fiscal 2023 mainly included buildings and yard improvements,
equipment, computers and rolling stock. Right-of-use assets at November 30, 2023 was $11.4 million ($15.0 million as at November
30, 2022). Depreciation / amortization of property, plant, equipment, intangible, and right-of-use assets during fiscal 2023 amounted
to $8.6 million compared to $7.7 million last year.
Total liabilities
Total liabilities at November 30, 2023 were $57.8 million compared to $60.1 million as at November 30, 2022. Trade and other
payables at November 30, 2023 were $37.6 million compared to $36.3 million as at November 30, 2022. Current provision at
November 30, 2023 was $2.8 million ($2.3 million as at November 30, 2022) and the non-current provision was nil compared to $0.6
million as at November 30, 2022. Lease liabilities at November 30, 2023 were $13.2 million compared to $17.5 million as at November
30, 2022. Deferred income taxes at November 30, 2023 were $4.1 million ($3.4 million as at November 30, 2022).
Shareholders’ Equity
Total Shareholders’ Equity at November 30, 2023 was $195.0 million compared to $186.8 million as at November 30, 2022. The
Company generated a return on Shareholders’ Equity of 7.5%. during fiscal 2023 compared to 17.5% last year (Return on
shareholders’ equity is the net earnings (loss) divided by shareholders’ equity, expressed as a percentage). The share price closed
at $14.07 per share on November 30, 2023 ($12.17 on November 30, 2022). The Shareholders’ Equity per share at November 30,
2023 was $22.88 per share compared to $21.83 per share as at November 30, 2022. Share capital was $9.4 million at November 30,
2023 (same as at November 30, 2022).
On November 20, 2023, following approval of the Toronto Stock Exchange (the "TSX"), the Company renewed its existing normal
course issuer bid (“NCIB”). This program allows the Company to repurchase up to an aggregate 426,157 common shares,
representing approximately 5% of the common shares issued and outstanding as at November 9, 2023. All Shares purchased under
the NCIB will be acquired on the open market and in accordance with the rules and policies of the TSX and applicable securities laws
at the prevailing market prices, plus applicable brokerage fees, and cancelled. The share repurchase period will end no later than
November 19, 2024. Moreover, the Company has entered into an automatic share purchase plan (“ASPP”) with a designated broker
in connection with the NCIB. The ASPP will allow for the purchase for cancellation of shares, subject to certain trading parameters,
by its designated broker during times when the Company would ordinarily not be active in the market due to applicable regulatory
restrictions or self-imposed blackout periods. Outside these periods, shares may be repurchased by the Company at its discretion
under the NCIB. During fiscal year 2023, the Company bought back 36,500 shares at a weighted-average price of $12.50 for a total
aggregate purchase price of $456 thousand compared to 4,600 shares at a weighted-average price of $12.17 for a total aggregate
purchase price of $56 thousand during fiscal year 2022.
Additional information regarding the NCIB is contained in Note 14 of the Consolidated Financial Statements for the year ended
November 30, 2023.
The following dividends were declared and paid by the Company for the years ended:
Record
date
Mar 2, 2023
Oct 19, 2023
Amount
November 30, 2023
Declared
Per
share
$
0.50
0.50
1.00
$
Payment
date
Record
date
4,274 Mar 16, 2023
4,265
Nov 2, 2023
8,539
Mar 4, 2022
Oct 27, 2022
November 30, 2022
Declared
Per
share
$
0.40
0.50
0.90
Amount
$
Payment
date
3,425 Mar 18, 2022
4,281 Nov 10, 2022
7,706
The Company is continually assessing its declaration of dividends in the context of overall profitability, cash flows, capital
requirements, general economic conditions, and other business needs.
LIQUIDITY AND CAPITAL RESOURCES
Financing
The Company has a credit agreement with two chartered Canadian banks. The credit agreement has a maximum revolving operating
facility of $90 million maturing in May 2024 by way of bank loans and/or banker’s acceptances. In addition, an accordion of $10 million
is available once per fiscal year for a maximum of 150 days. 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 and immovable property of the
Company. As at November 30, 2023, the Company was compliant with its financial covenants. As at November 30, 2023, under the
credit agreement, the Company was not using its facility (same last year). As at November 30, 2023, the Company has $1.2 million
of issued letters of credit which reduces the availability of its facility ($1.0 million last year).
10
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 2023 was $43.0 million compared to $26.0 million last year. Financing activities during
fiscal 2023 was $(14.3) million compared to $(14.7) million last year. Investing activities during fiscal 2023 was $(3.7) million compared
to $(4.8) million last year (See Property, plant, equipment, intangible and right-of use 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 net debt-to-capital ratio to preserve its capacity to pursue its organic growth strategy;
3. Maintain financial ratios within covenants requirements; and
4. Provide an adequate return to its shareholders.
The Company defines its capital as net debt less shareholders’ equity as follows (the Company currently has no debt):
Cash
Net Cash
Share Capital
Retained Earnings
Shareholders’ Equity
Total Capital
November 30
2023
$
28,379
28,379
November 30
2022
$
3,420
3,420
9,379
185,624
195,003
9,419
177,360
186,779
223,382
190,199
The Company manages its capital and makes adjustments to it in 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 a 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’s financial objectives and strategy remain substantially unchanged.
The Company is subject to certain covenants on its credit facilities. The covenants include a debt-to-capitalization ratio and an interest
coverage ratio. 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.
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. The accounts receivable collection period has been historically
longer in the second and third quarters of its fiscal year. 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.
11
Cost Structure, Working Capital Requirements
At November 30, 2023, the Company’s debt-to-capitalization ratio stood at 0.6% (0.5% as at November 30, 2022). Debt-to-
capitalization ratio represents debt over total shareholders’ equity. Debt is defined as bank indebtedness less cash and cash
equivalents (i.e. debt excludes lease liabilities). Capitalization is debt plus shareholders’ equity.
FINANCIAL COMMITMENTS AND CONTINGENCIES
OBLIGATIONS
Payments due by period– undiscounted
Lease liability obligations
Total obligations
Total
$
15,321
15,321
Less than 1
year
$
5,008
5,008
2-3
Years
$
6,310
6,310
4-5
Years
$
2,875
2,875
After 5
years
$
1,128
1,128
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
Environmental Risk
The Company’s St-André (QC) site shows continued traces of surface contamination from previous treating activities exceeding
existing regulatory requirements. In 2022, the Company submitted a revised timetable for the site remediation which was approved
by the “Ministère de l’Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs” and is to be
completed before December 31, 2024.
Based on current available information, the provision is considered by management to be adequate to cover any projected costs that
could be incurred in the future.
Because of the nature of the liability, the biggest uncertainty in estimating the provision is the amount of soil to be treated and the
costs that will be incurred to remove it. Changes in estimates of future expenditures are the result of periodic reviews of the underlying
assumptions supporting the provision, including remediation costs and regulatory requirements.
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, become 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. Only one major customer exceeds 10% of total Company sales during fiscal 2023 (same last year).
The following represents the total sales consisting primarily of various wood products of the major customer:
For the years ended
Sales to the major customer that exceeded 10% of total Company’s sales
November 30, 2023 November 30, 2022
%
14.1
$
77,976
$
88,782
%
15.2
The loss of any major customer could have a material effect on the Company’s results, operations and financial position. The carrying
amounts of financial assets represent the maximum credit exposure.
12
Dependence on Market Economic Conditions
The demand for the Company’s 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 Company’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 Company.
Cyclical Nature
The business of the Company 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 Company is subject to the normal
economic cycle, the housing cycle and to macroeconomic factors, such as interest rates. Although the Company 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 imports from Asia 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 regulations
The Company is subject to multiple laws and regulations. These are laws that regulate credit practice, transporting products, importing
and exporting products and employment. New laws governing the Company’s business could be enacted or changes to existing laws
could be implemented, each of which might have a significant impact on the Company’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 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.
Cybersecurity
The Company is exposed to risks associated with data breaches, malicious software, unauthorized access, hacking, phishing, identity
theft, intellectual property theft, asset theft, industrial espionage, and other cybersecurity threats. Cyberattacks could cause, in
particular, loss of data, disruption of business operations, costs relating to restoration and investigation, cost hikes to maintain and
upgrade technological infrastructures and systems, increased costs for cybersecurity insurance, financial loss, non-compliance with
privacy legislation, legal claims and disputes, fines and reputational damage, all of which could affect the Company’s operating results
or financial position. Notwithstanding the measures implemented to protect itself against cyberattacks, the Company may be
unsuccessful in preventing or implementing effective preventive measures against every potential cyberthreat, as the tactics used are
multiplying, change frequently, come from a wide range of sources and are increasingly sophisticated. Moreover, cybersecurity
insurance coverage may not be sufficient to insulate the Company from the losses or costs stemming from any or all cybersecurity
breaches.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Company is exposed to risks arising from financial instruments, including Financing and Liquidity Risk, interest rate risk, currency
risk, and credit risk. Please refer to Note 18 of the audited annual consolidated financial statements for the year ended November 30,
2023 for additional details.
13
RELATED PARTY TRANSACTIONS
Related parties include 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. 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, 2023, the entities of the Company have not entered into business transactions with related
parties that are members of the Board of the Company.
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:
Salaries and other short-term benefits
Post-employment benefits (including remeasurement of defined benefit plan obligation)
November 30
2023
$
3,422
(114)
3,308
November 30
2022
$
3,122
42
3,164
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.
ii.
iii.
Allowance for sales returns
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.
Measurement of defined benefit plan assets and liabilities
The Company’s measurement of defined benefit plan assets and liabilities involves making assumptions about discount rates,
the expected rate of compensation increase, the retirement age of employees, and mortality rates. 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.
Valuation of inventory
The cost of inventories may no longer be recoverable if inventories are discontinued, damaged, in excess quantities, or if their
selling prices or estimated forecast of product demand decline. In determining the net realizable value of finished goods, the
Company considers recent sales prices and current market conditions. The Company regularly reviews inventory quantities on
hand, current production plans, and forecasted future sales, and inventories are written down to net realizable value when it is
determined that they are no longer fully recoverable. There is estimation uncertainty in relation to the identification of excess
inventories and in the expected selling prices used in establishing the net realizable value
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.
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. These estimates and
assumptions might require additional revisions in the future depending on changes in regulatory requirements, industry
practices, current technology, possible uses of the site or the economic environment. See Note 13 to the consolidated financial
statements for the year ended November 30, 2023 for further details.
14
v.
Critical judgments in applying accounting policies
The Company did not identify any critical judgements 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 statements.
SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies including IFRS Standard Issued, But Not Yet Effective are described in Note 3 to the
consolidated financial statements for the year ended November 30, 2023.
DISCLOSURE OF OUTSTANDING SHARE DATA
As at November 30, 2023, there were 8,521,454 common shares issued (8,557,954 as at November 30, 2022). The Company has
authorized an unlimited number of common shares to be issued, without par value. As at February 19, 2024, there were 8,512,954
common shares outstanding.
SUBSEQUENT EVENT
No subsequent events to report.
OUTLOOK
The Company expects differentiated growth rates across its customer segments in 2024. As demand for residential
housing continues to outpace supply, the outlook for residential construction and renovation could be positive if interest
rates continue to remain stable. The industrial segment continues to be strong, but rising costs of inputs and wages will
challenge profitability. Mitigating such challenges and capitalizing on positive industry trends will be of keen importance
for the Goodfellow management team.
CERTIFICATION
Disclosure Controls
Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide reasonable
assurance that all material information relating to the Company and its subsidiaries is gathered and reported to senior management
on a timely basis so that appropriate decisions can be made regarding public disclosure.
As required by National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the Chief
Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have caused the effectiveness of the disclosure controls and
procedures to be evaluated. Based on that evaluation, they have concluded that the design and operation of the system of disclosure
controls and procedures were effective as at November 30, 2023.
15
Procedures and Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial reports for external purposes in accordance
with IFRS.
As required by NI 52-109, the CEO and the CFO have caused the effectiveness of the internal controls over financial reporting to be
evaluated using the framework established in ‘Internal Control – Integrated Framework (COSO Framework)’ published by The
Committee of Sponsoring Organizations of the Treadway Commission (COSO), 2013. Based on that evaluation, they have concluded
that the design and operation of the Company’s internal controls over financial reporting were effective as at November 30, 2023.
In designing such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect
misstatements. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Additionally, management is required to use judgment in evaluating controls and procedures.
There has been no change in the Company’s internal control over financial reporting that occurred during the three and twelve months
ended November 30, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Delson, February 19, 2024
(Signed) “Patrick Goodfellow”
President and Chief Executive Officer
(Signed) “Charles Brisebois”, CPA
Chief Financial Officer
16
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements, which have been prepared in accordance with IFRS Accounting Standards,
and the other financial information provided in the Annual Report, which is consistent with the financial statements, 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, and their report is included
herein.
(Signed) “Patrick Goodfellow”
President and Chief Executive Officer
(Signed) “Charles Brisebois”, CPA
Chief Financial Officer
17
KPMG LLP
Tour KPMG
600 de Maisonneuve Blvd West, Suite 1500
Montréal, QC H3A 0A3
Canada
Telephone 514 840 2100
Fax 514 840 2187
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Goodfellow Inc.
Opinion
We have audited the consolidated financial statements of Goodfellow Inc. (the "Entity"), which
comprise:
•
•
•
•
the consolidated statements of financial position as at November 30, 2023 and November 30,
2022
the consolidated statements of comprehensive income for the years then ended
the consolidated statements of changes in Shareholders’ equity for the years then ended
the consolidated statements of cash flows for the years then ended
• and notes to the consolidated financial statements, including a summary of significant
accounting policies
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated financial position of the Entity as at November 30, 2023 and November 30, 2022, and
its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the "Auditor’s Responsibilities for
the Audit of the Financial Statements" section of our auditor’s report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to
our audit of the financial statements in Canada and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.
Page 2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements for the year ended November 30, 2023. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated
in our auditor’s report.
Description of the matter
We draw attention to Note 3 and Note 7 to the financial statements.
The Entity’s inventories balance is $98.5 million. 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.
The costs of conversion of inventories also include the costs directly related to the conversion of
materials to finished goods, such as direct labour and a systematic allocation of fixed and variable
production overhead.
Why the matter is a key audit matter
We identified the assessment of the existence and accuracy of inventories as a key audit matter
given the magnitude of the inventories balance and the increased extent of audit effort needed to
address the matter.
How the matter was addressed in the audit
The following are the primary procedures we performed to address this key audit matter:
• We observed the Entity’s physical inventory counts for a selection of locations at or close to
year-end and performed a sample of independent test counts which we compared to the
Entity’s records.
• We tested a sample of inventory movements to purchase invoices and shipping documents
between the count date and the year-end date.
• We tested a sample of inventory items to purchase invoices and we recalculated the weighted
average cost basis of the sampled inventory items.
Page 3
Other Information
Management is responsible for the other information. Other information comprises:
•
•
the information included in Management’s Discussion and Analysis filed with the relevant
Canadian Securities Commissions;
the information, other than the financial statements and the auditor’s report thereon, included in
a document likely to be entitled "Annual Report 2023".
Our opinion on the financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit and remain alert
for indications that the other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the
relevant Canadian Securities Commissions and the information, other than the financial statements
and the auditor’s report thereon, included in a document likely to be entitled "Annual Report 2023"
as at the date of this auditor’s report. If, based on the work we have performed on this other
information, we conclude that there is a material misstatement of this other information, we are
required to report that fact in the auditor’s report.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is responsible for assessing the Entity’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the
Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting
process.
Page 4
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting
intentional omissions,
misrepresentations, or the override of internal control.
involve collusion,
from error, as
fraud may
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Entity's ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Page 5
• Communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
• Provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence and communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
• Determine, from the matters communicated with those charged with governance, those matters
that were of most significance in the audit of the financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our auditor’s report
because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partner on the audit resulting in this auditor’s report is Giuseppe Funiciello.
Montréal, Canada
February 19, 2024
*CPA auditor, public accountancy permit No. A122264
GOODFELLOW INC.
Consolidated Statements of Comprehensive Income
For the years ended November 30, 2023 and 2022
(in thousands of dollars, except per share amounts)
Sales (Note 22)
Expenses
Cost of goods sold (Note 4)
Selling, administrative and general expenses (Note 4)
Net financial costs (Note 5)
Earnings before income taxes
Income taxes (Note 15)
Net earnings
Items that will not subsequently be reclassified to net earnings
Remeasurement of defined benefit plan obligation
net of taxes of $984 ($355 in 2022) (Note 16)
Total comprehensive income
Years ended
November 30
2023
$
November 30
2022
$
512,821
631,185
400,461
89,841
2,429
492,731
495,125
88,143
3,201
586,469
20,090
44,716
5,402
12,037
14,688
32,679
2,531
914
17,219
33,593
Net earnings per share – Basic and Diluted (Note 14b)
1.72
3.82
Notes 1 to 22 are an integral part of these consolidated financial statements.
23
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)
Right-of-use assets (Note 10)
Defined benefit plan asset (Note 16)
Other assets
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables (Note 12)
Provision (Note 13)
Current portion of lease liabilities (Note 10)
Total Current Liabilities
Non-Current Liabilities
Provision (Note 13)
Lease liabilities (Note 10)
Deferred income taxes (Note 15)
Total Non-Current Liabilities
Total Liabilities
Shareholders’ Equity
Share capital (Note 14)
Retained earnings
Total Liabilities and Shareholders’ Equity
As at
November 30
2023
$
As at
November 30
2022
$
28,379
53,674
6,286
98,473
4,215
191,027
32,761
1,487
11,354
15,347
777
61,726
252,753
37,620
2,789
4,732
45,141
-
8,497
4,112
12,609
57,750
3,420
64,423
2,439
112,294
2,555
185,131
32,269
2,096
14,999
11,620
802
61,786
246,917
36,286
2,281
4,969
43,536
634
12,537
3,431
16,602
60,138
9,379
185,624
195,003
252,753
9,419
177,360
186,779
246,917
Contingent liabilities and commitments (Note 20)
Notes 1 to 22 are an integral part of these consolidated financial statements.
Approved by the Board of Directors
(Signed) “Robert Hall”
Chair of the Board
(Signed) “Alain Côté”
Director & Chair of the Audit Committee
24
GOODFELLOW INC.
Consolidated Statements of Cash Flows
For the years ended November 30, 2023 and 2022
(in thousands of dollars)
Years ended
Operating Activities
Net earnings
Adjustments for:
Depreciation and amortization of:
Property, plant and equipment (Note 8)
Intangible assets (Note 9)
Right-of-use assets (Note 10)
Gain on disposal of property, plant and equipment
Accretion expense on provision (Note 13)
Provision (Note 13)
Income taxes (Note 15)
Interest expense (Note 5)
Interest on lease liabilities (Note 5)
Funding in (deficit) excess of pension plan expense (Note 16)
Other
Changes in non-cash working capital items (Note 17)
Interest paid (Note 17)
Income taxes paid
Net Cash Flows from Operating Activities
Financing Activities
Net decrease in bank indebtedness
Payment of lease liabilities (Note 10)
Redemption of shares (Note 14b)
Dividends paid (Note 14d)
Net Cash Flows from Financing Activities
Investing Activities
Acquisition of property, plant and equipment
Decrease (increase) in intangible assets
Proceeds on disposal of property, plant and equipment
Other assets
Net Cash Flows from Investing Activities
Net cash inflow
Cash (bank indebtedness), beginning of year
Cash, end of year
November 30
2023
$
November 30
2022
$
14,688
32,679
3,311
602
4,697
(139)
271
(397)
5,402
996
431
(212)
24
29,674
24,213
(1,367)
(9,552)
13,294
42,968
-
(5,350)
(456)
(8,539)
(14,345)
(3,836)
7
147
18
(3,664)
24,959
3,420
28,379
2,551
608
4,551
(45)
102
666
12,037
1,230
603
46
23
55,051
(3,734)
(1,731)
(23,573)
(29,038)
26,013
(2,000)
(4,985)
(56)
(7,706)
(14,747)
(4,827)
(54)
45
(17)
(4,853)
6,413
(2,993)
3,420
Notes 1 to 22 are an integral part of these consolidated financial statements.
25
GOODFELLOW INC.
Consolidated Statements of Changes in Shareholders’ Equity
For years ended November 30, 2023 and 2022
(in thousands of dollars)
Share
Capital
$
Retained
Earnings
$
Total
$
Balance as at November 30, 2021
9,424
151,524
160,948
Net earnings (Note 14c)
Other comprehensive income
Total comprehensive income
Dividend (Note 14d)
Redemption of Shares (Note 14b)
-
-
-
32,679
914
32,679
914
33,593
33,593
-
(5)
(7,706)
(51)
(7,706)
(56)
Balance as at November 30, 2022
9,419
177,360
186,779
Net earnings (Note 14c)
Other comprehensive income
Total comprehensive income
Dividend (Note 14d)
Redemption of Shares (Note 14b)
-
-
-
14,688
2,531
14,688
2,531
17,219
17,219
-
(40)
(8,539)
(416)
(8,539)
(456)
Balance as at November 30, 2023
9,379
185,624
195,003
Notes 1 to 22 are an integral part of these consolidated financial statements.
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(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, 2023 and 2022 include
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 IFRS Accounting Standards (“IFRS”) as
issued by the International Accounting Standards Boards (“IASB”).
These consolidated financial statements were authorized for issue by the Board of Directors on February 19, 2024.
b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following material
items:
• Environmental provision is recorded at the present value of the expected expenditures to be paid.
• Defined benefit plan assets and liabilities are measured at the present value of the defined benefit obligation
less the fair value of the plan assets.
c) Functional and presentation currency
The 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.
d) Use of estimates, judgments and assumptions
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 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 sales returns
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 involves making assumptions about
discount rates, the expected rate of compensation increase, the retirement age of employees, and mortality rates.
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
The cost of inventories may no longer be recoverable if inventories are discontinued, damaged, in excess quantities,
or if their selling prices or estimated forecast of product demand decline. In determining the net realizable value of
finished goods, the Company considers recent sales prices and current market conditions. The Company regularly
reviews inventory quantities on hand, current production plans, and forecasted future sales, and inventories are
written down to net realizable value when it is determined that they are no longer fully recoverable. There is
estimation uncertainty in relation to the identification of excess inventories and in the expected selling prices used
in establishing the net realizable value.
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
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.
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.
These estimates and assumptions might require additional revisions in the future depending on changes in
regulatory requirements, industry practices, current technology, possible uses of the site or the economic
environment. See Note 13 for further details.
v. Critical judgments in applying new accounting policies
The Company did not identify any critical judgements 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
statements.
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. Control exists when the Company has the existing rights that give it the current ability to direct the
activities that significantly affect the entities’ returns. The financial statements of subsidiaries are prepared with the same
reporting period of the Company. The accounting policies of subsidiaries are aligned with the policies of the Company. All
intercompany transactions, balances, revenues and expenses were fully eliminated upon consolidation.
b) Cash
Cash consists of cash on hand and highly liquid investments with an initial term of three months or less.
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. The costs of conversion
of inventories also include the costs directly related to the conversion of materials to finished goods, such as direct labour
and a systematic allocation of fixed and variable production overhead. 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 of 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.
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
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 Enterprise resource planning system
is subject to a linear amortization of 10 years.
f) Leases
The Company recognizes a right-of-use asset and a lease liability based on the present value of future lease payments
when the leased asset is available for use by the Company. The lease payments include fixed and in-substance fixed
payments and variable lease payments that depend on an index or rate, less any lease incentives receivable. The lease
payments are discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate. Generally,
the Company uses the lessee’s incremental borrowing rate for its present value calculations. Lease payments are
discounted over the lease term, which includes the fixed term and renewal options that the Company is reasonably certain
to exercise. Lease payments are allocated between the lease liability and a finance cost, which is recognized in finance
costs over the lease term in the consolidated statement of earnings.
When a contract contains both lease and non-lease components, the Company will allocate the consideration in the
contract to each of the components on the basis of the relative stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components. Relative stand-alone prices are determined by maximizing the most
observable prices for a similar asset and/or service.
Lease payments for assets that are exempt through the short-term exemption and variable payments not based on an
index or rate are recognized in selling, distribution and administrative expenses as incurred.
Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and
adjusted for any re-measurement of lease liabilities. Cost is calculated as the initial measurement of the lease liability plus
any initial direct costs and any lease payments made at or before the commencement date. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term or the useful life.
The Company leases buildings, furniture and equipment, and rolling stock.
g) Impairment of Non-Financial Assets
On each reporting date, the Company reviews the carrying amounts of property, plant and equipment, intangible assets
and right-of-use 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.
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
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.
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
Revenue from the sale of goods from activities relating to remanufacturing, distribution of lumber and wood products is
recognized, net of discounts and customer rebates, at the point in time when the transfer of control of the related products
has taken place (based on shipping or delivery terms as specified in the sales contract), and collectability is reasonably
assured. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur.
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. The Company’s net liability in respect of defined benefits is calculated separately for each plan
by estimating the amount of future benefits that plan members have earned in the current and prior periods, discounting
that amount and deducting the fair value of any plan assets.
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 rates. 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 costs arising from plan amendments are recognized in net earnings in the period that they arise.
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.
Pension expense consists of the following:
i. the cost of pension benefits provided in exchange for plan members’ services rendered in the period;
ii. net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount
rate used to measure the net defined benefit obligation at the beginning of the annual period to the net defined
benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the
period as a result of contributions and benefit payments;
iii. past service costs; and
iv. gains or losses on settlements or curtailments.
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
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
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) Financial Instruments
The Company initially recognizes financial assets on the trade date at which the Company becomes a party to the
contractual provisions of the instrument.
Financial assets are initially measured at fair value. If the financial asset is not subsequently accounted for at fair value
through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset’s
acquisition or origination. On initial recognition, the Company classifies its financial assets as subsequently measured at
either amortized cost or fair value, depending on its business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets.
i. Financial assets measured at amortized cost
A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any
impairment loss, if:
•
•
The asset is held within a business model whose objective is to hold assets in order to collect contractual cash
flows; and
The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments
of principal and/or interest.
The Company currently classifies its cash and trade and other receivables as assets measured at amortized cost.
Impairment of financial assets
The Company uses the “expected credit loss” model for calculating impairment and recognizes expected credit losses
as a loss allowance if they relate to a financial asset measured at amortized cost. The carrying amount of these
assets in the consolidated statement of financial position is stated net of any loss allowance.
ii. Financial assets measured at fair value
These assets are measured at fair value and changes therein, including any interest or dividend income, are
recognized in profit or loss. There are currently no financial assets measured at fair value with changes in fair value
recognized in profit or loss.
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
However, for investments in equity instruments that are not held for trading, the Company may elect at initial
recognition to present gains and losses in other comprehensive income. For such investments measured at fair value
through other comprehensive income, gains and losses are never reclassified to profit or loss, and no impairment is
recognized in profit or loss.
Dividends earned from such investments are recognized in profit or loss, unless the dividend clearly represents a
repayment of part of the cost of the investment. The Company currently has no equity instruments that are not held
for trading.
iii. Financial liabilities are classified into the following categories:
Financial liabilities measured at amortized cost
The Company classifies non-derivative financial liabilities as measured at amortized cost. Non-derivative financial
liabilities are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial
recognition, these liabilities are measured at amortized cost using the effective interest method. The Company
currently classifies trade and other payables, and bank indebtedness as financial liabilities measured at amortized
cost.
Financial liabilities measured at fair value
Financial liabilities measured at fair value are initially recognized at fair value and are re-measured at each reporting
date with any changes therein recognized in profit or loss. The Company currently has no financial liabilities measured
at fair value.
iv. Non-hedge derivative financial instruments measured at fair value
Non-hedge derivative financial instruments, if any, are recorded as either assets or liabilities measured initially at their
fair value. Attributable transaction costs are recognized in profit or loss as incurred. All derivative financial instruments
not designated in a hedge relationship are classified as financial instruments at fair value through profit and loss. Any
subsequent change in the fair value of non-hedge foreign exchange contracts are accounted for in cost of goods sold
for the period in which it arises. The Company currently has no derivative financial instruments measured at fair value.
n) 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.
o) 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
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
expenditures and discount rates are recorded in selling, administrative and general expenses in the consolidated
statement of comprehensive income.
p) 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.
q) 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.
r) Financial costs
Financial costs comprise interest expense on borrowings (including on lease liabilities), 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.
s) IFRS Standard Issued, But Not Yet Effective
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
On January 23, 2020, the IASB issued amendments to IAS 1 Presentation of Financial Statements (the 2020 amendments),
to clarify the classification of liabilities as current or non-current. On October 31, 2022, the IASB issued Non-current
Liabilities with Covenants (Amendments to IAS 1) (the 2022 amendments), to improve the information a company provides
about long-term debt with covenants.
The 2020 amendments and the 2022 amendments (collectively “the Amendments”) are effective for annual periods
beginning on or after January 1, 2024. Early adoption is permitted. A company that applies the 2020 amendments early is
required to also apply the 2022 amendments. The Company is currently assessing the impact on disclosures of accounting
policies.
IFRS2 Practice Statement Making Materiality Judgments, and amendments to IAS 1 Presentation of Financial
Statements
In February 2021, the IASB issued amendments to IAS 1 Disclosure of Accounting Policies. The amendments are intended
to help entities in disclosing useful accounting policy information. The main amendments: – require entities to disclose their
material accounting policies rather than their significant accounting policies; – specify that accounting policies that relate
to immaterial transactions, other events or conditions are immaterial and need not be disclosed; – specify that not all
accounting policies that relate to material transactions, other events or conditions are material to the Company’s financial
statements. The amendments will be effective for annual reporting periods beginning on or after January 1, 2023, but
earlier application is permitted. The Company is currently assessing the impact on disclosures of accounting policies.
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimate and Errors
In February 2021, the IASB issued amendments to IAS 8 Definition of Accounting Estimates, to help entities make a
distinction between accounting policies and accounting estimates. The amendments present a new definition of accounting
estimates, which specifies that they are monetary amounts in financial statements that are subject to measurement
uncertainty. The amendments also specify the relationship between accounting policies and accounting estimates by
stating that an entity develops an accounting estimate to achieve the objective set out by the accounting policy. The
amendments will be effective for annual reporting periods beginning on or after January 1, 2023. The Company is currently
evaluating the impact of the amendment on its consolidated financial statements.
Amendments to IAS 12 Income Taxes In May 2021, the IASB issued amendments to IAS 12
Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments limit the scope of the
initial recognition exemption so that it does not apply to transactions that give rise to offsetting and equal temporary
differences. As a result, entities will have to recognize deferred tax assets and liabilities for temporary differences arising
from the initial recognition of a lease and a decommissioning provision. The amendments will be effective for annual
reporting periods beginning on or after January 1, 2023. The Company is currently evaluating the impact of the amendment
on its consolidated financial statements.
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
4.
Additional information on:
Cost of goods sold
Employee benefits expense
Depreciation
Foreign exchange losses
Selling, administrative and general expenses
Employee benefits expense
Depreciation and amortization
5.
Net financial costs
Interest expense
Interest expense on lease liabilities
Accretion expense on provision (Note 13)
Other financial costs
Financial cost
Financial income
Net financial costs
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
2023
$
1,291
1,148
234
November 30
2022
$
1,339
898
532
November 30
2023
$
54,247
7,462
November 30
2022
$
54,317
6,812
November 30
2023
$
996
431
271
970
2,668
(239)
2,429
November 30
2022
$
1,230
603
102
1,271
3,206
(5)
3,201
November 30 November 30
2022
$
64,454
(342)
64,112
311
64,423
2023
$
54,131
(594)
53,537
137
53,674
November 30 November 30
2022
$
9,296
6,356
99,844
115,496
(3,202)
112,294
2023
$
11,450
7,433
82,801
101,684
(3,211)
98,473
For the year ended November 30, 2023, $383.7 million (2022 - $475.1 million) of inventories were expensed as cost of goods
sold. Included in inventories is a return asset for the right to recover returned goods in the amount of $1.2 million as at November
30, 2023 (November 30, 2022 - $1.1 million). For the year ended November 30, 2023, $0.4 million of write-down of inventories
was recognized as an expense in the period as cost of goods sold (2022 - $1.2 million)
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
8.
Property, plant and equipment
Land
Buildings, Yard
and Leasehold
improvements
Equipment,
Furniture and
Fixtures
Rolling
Stock
Computer
Equipment
Total
$
$
$
$
$
$
Cost
Cost at November 30, 2021
6,262
50,598
29,627
7,181
4,881
98,549
Additions
-
1,762
1,969
978
89
4,798
Cost at November 30, 2022
6,262
52,360
31,596
8,159
4,970 103,347
Additions
Disposals
-
-
1,123
-
(26)
-
2,638
(67)
76
3,811
-
(67)
Cost at November 30, 2023
6,262
53,483
31,570 10,730
5,046 107,091
Accumulated depreciation
Accumulated depreciation
at November 30, 2021
Depreciation
Accumulated depreciation
at November 30, 2022
Depreciation
Disposals
Accumulated depreciation at
November 30, 2023
Carrying Value
At November 30, 2022
-
-
-
-
-
-
32,079
25,910
6,407
4,131
68,527
1,352
735
306
158
2,551
33,431
1,358
-
26,645
983
6,713
826
4,289
144
71,078
3,311
-
(59)
-
(59)
34,789
27,628
7,480
4,433
74,330
6,262
18,929
4,951
1,446
681
32,269
At November 30, 2023
6,262
18,694
3,942
3,250
613
32,761
9.
Intangible assets
Cost
Cost at November 30, 2021
Additions
Cost at November 30, 2022
Disposals
Cost at November 30, 2023
Accumulated amortization
Accumulated amortization at November 30, 2021
Amortization
Accumulated amortization at November 30, 2022
Amortization
Accumulated amortization at November 30, 2023
Carrying Value
At November 30, 2022
At November 30, 2023
35
Computer Software and
Enterprise resource planning
system
$
6,581
54
6,635
(7)
6,628
3,931
608
4,539
602
5,141
2,096
1,487
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
10.
Right-of-use assets and lease liabilities
Right-of-use assets
Balance at November 30, 2021
Additions
Depreciation
Disposals
Balance at November 30, 2022
Additions
Depreciation
Disposals
Balance at November 30, 2023
Lease liabilities
Balance beginning of year
Additions
Early repayment of lease liabilities
Interest expense on lease liabilities (Note 5)
Payment of lease liabilities
Foreign exchange movements
Balance end of year
Less : current portion
Balance end of year – long term portion
Buildings Furniture and
Equipment
$
384
$
7,752
5,180
(2,330)
-
10,602
993
(2,569)
(772)
8,254
-
(165)
-
219
-
(117)
-
102
Rolling
Stock
$
4,126
2,162
(2,056)
(54)
4,178
845
(2,011)
(14)
2,998
Total
$
12,262
7,342
(4,551)
(54)
14,999
1,838
(4,697)
(786)
11,354
November 30
2023
$
November 30
2022
$
17,506
1,838
(950)
431
(5,781)
185
13,229
(4,732)
8,497
15,180
7,342
(52)
603
(5,588)
21
17,506
(4,969)
12,537
The following table presents additional amounts recognized in the statement of comprehensive income for the years ended
November 30, 2023 and 2022 related to leases:
Expense related to low value and short-term leases
Variable lease payments (not included in the measurement of lease liabilities)
November 30
2023
$
355
1,463
1,818
November 30
2022
$
254
1,354
1,608
The following table presents a maturity analysis of future undiscounted cash flows from lease liabilities:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total undiscounted lease liabilities
November 30
2023
$
5,008
3,510
2,800
1,851
1,024
1,128
November 30
2022
$
5,646
4,617
3,171
2,474
1,658
2,021
15,321
19,587
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
11. Bank indebtedness
The Company has a credit agreement with two chartered Canadian banks. The credit agreement has a maximum revolving
operating facility of $90 million maturing in May 2024 by way of bank loans and/or banker’s acceptances. In addition, an
accordion of $10 million is available once per fiscal year for a maximum of 150 days. 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 and immovable property of the Company. As at November 30, 2023, the Company was compliant with its financial
covenants. As at November 30, 2023, the Company has $1.2 million of issued letters of credit which reduces the availability
of its facility ($1.0 million last year).
12.
Trade and other payables
Trade payables and accruals
Payroll related liabilities
Other payables
13.
Provision
November 30
2023
$
26,975
6,492
4,153
37,620
November 30
2022
$
25,172
6,201
4,913
36,286
The Company’s St-André (QC) site shows continued traces of surface contamination from previous treating activities
exceeding existing regulatory requirements. In 2022, the Company submitted a revised timetable for the site remediation which
was approved by the “Ministère de l’Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs”
and is to be completed before December 31, 2024.
Based on current available information, the provision is considered by management to be adequate to cover any projected
costs that could be incurred in the future.
Because of the nature of the liability, the biggest uncertainty in estimating the provision is the amount of soil to be treated and
the costs that will be incurred to remove it. Changes in estimates of future expenditures are the result of periodic reviews of
the underlying assumptions supporting the provision, including remediation costs and regulatory requirements.
Balance, beginning of the year
Changes due to:
Revision of future expected expenditures
Accretion expense
Expenditures incurred
Balance, end of the year
Current portion
Long-term portion
14.
Share Capital
a) Authorized
An unlimited number of common shares, without par value
November 30 November 30
2022
$
2,147
2023
$
2,915
(37)
271
(360)
2,789
2,789
-
1,106
102
(440)
2,915
2,281
634
November 30 November 30 November 30 November 30
2022
Carrying
value ($)
2023
Number of
shares
2022
Number of
shares
2023
Carrying
value ($)
Shares outstanding at the beginning of the year
Repurchased and cancelled (b)
Shares outstanding at the end of the year
8,557,954
(36,500)
8,521,454
8,562,554
(4,600)
8,557,954
9,419
(40)
9,379
9,424
(5)
9,419
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
b) Share repurchase program (NCIB)
On November 20, 2023, following approval of the Toronto Stock Exchange (the "TSX"), the Company renewed its existing
normal course issuer bid (NCIB). This program allows the Company to repurchase up to an aggregate 426,157 common
shares, representing approximately 5% of the common shares issued and outstanding as at November 9, 2023. All
Shares repurchased under the share repurchase program will be cancelled upon repurchase. The share repurchase
period will end no later than November 19, 2024.
The following table summarizes the Company’s share repurchase activities under both the renewed and the previous
NCIB:
Common shares repurchased for cancellation (number of shares)
Average price per share
Total repurchase cost
Repurchase resulting in a reduction of:
Share Capital
Deficit (1)
November 30
2023
36,500
$12.50
$456
November 30
2022
4,600
$12.17
$56
$40
$416
$5
$51
(1) The excess of repurchase cost over the average carrying value of the common shares.
c) Net earnings
The calculation of basic and diluted net earnings per share was based on the following:
Net earnings, basic and diluted
Weighted average number of common shares, basic and diluted
d) Dividends
November 30
2023
$
14,688
8,536,512
November 30
2022
$
32,679
8,562,171
The following dividends were declared and paid by the Company for the years ended:
November 30, 2023
Declared
November 30, 2022
Declared
Record
date
Per
share
Amount
Payment
date
Record
date
Per
share
Amount
Payment
date
Mar 2, 2023
Oct 19, 2023
$
0.50
0.50
1.00
$
4,274 Mar 16, 2023
Nov 2, 2023
4,265
8,539
Mar 4, 2022
Oct 27, 2022
$
0.40
0.50
0.90
$
3,425 Mar 18, 2022
4,281 Nov 10, 2022
7,706
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
15.
Income Taxes
The income tax expense is as follows:
Current
Deferred
November 30 November 30
2022
$
12,112
(75)
12,037
2023
$
5,618
(216)
5,402
The provision for income taxes is at an effective tax rate, which differs from the basic corporate statutory tax rate as follows:
Earnings before income taxes
Statutory income tax rate (%)
Income taxes based on above rates
Adjusted for:
Permanent differences
Difference in expected rate of reversal versus current rate
Other
November 30 November 30
2022
$
44,716
26.7
11,939
2023
$
20,090
26.8
5,384
(1)
(77)
96
5,402
33
(54)
119
12,037
Temporary differences that give rise to deferred income tax assets and liabilities are as follows:
Deferred income tax (liabilities) assets:
Deferred pension asset
Provisions and other
Property, plant and equipment
Net deferred tax liability
16. Post-employment benefits
November 30
2023
$
November 30
2022
$
(4,109)
2,327
(2,330)
(4,112)
(3,108)
2,186
(2,509)
(3,431)
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 member 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 was 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 member 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.
All employees have ceased to accrue service under the defined benefit portions of the plans. As for the DC components, the
Company matches employee contributions.
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,
2023 was $1.5 million (same last year).
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
B. Defined Benefit Plans
The measurement date for the plan assets and obligations is November 30. The most recent actuarial valuations for funding
purposes were filed with the pension regulators effective December 31, 2021 for both plans. The next actuarial valuation for
both plans for funding will be no later than as of December 31, 2024.
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
Changes in demographic assumptions
Changes in financial assumptions
Effect of experience adjustments
Balance, end of year
Plan assets
Fair value, beginning of year
Interest income
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 $5.8 million in 2023 and $(4.2) million in 2022.
The significant actuarial weighted average assumptions used are as follows:
Defined benefit obligation:
Discount rate
Rate of compensation increase
Net benefit plan expense:
Interest cost
Interest income
Administrative expenses
Net benefit plan (income) expense
November 30 November 30
2022
$
2023
$
40,324
1,954
(3,263)
-
(223)
-
38,792
48,279
1,605
(2,134)
375
(7,820)
19
40,324
November 30 November 30
2022
$
2023
$
51,944
2,531
(3,263)
(365)
3,292
54,139
15,347
58,676
1,952
(2,134)
(393)
(6,157)
51,944
11,620
November 30 November 30
2022
%
2023
%
5.10
3.00
5.05
3.00
November 30 November 30
2022
$
1,605
(1,952)
393
46
2023
$
1,954
(2,531)
365
(212)
The net benefit plan expense is included in Cost of goods sold, and Selling, Administrative, and General Expenses in the
consolidated statement of comprehensive income.
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
The plan assets by asset category are as follows:
Equity security:
Canadian stocks
US stocks
International stocks
Fixed income:
Short/Mid Term bonds
Cash and equivalents
All investments are quoted on an active market
Amount, timetable and uncertainty of future cash flows:
Sensitivity analysis
Sensitivity to the discount rate:
Defined benefit obligation
Discount rate
Sensitivity to the life expectancy:
Defined benefit obligation
November 30
2023
%
November 30
2022
%
23
22
23
26
6
22
21
22
28
7
Down by 0.25% Assumption used
$38,792
5.10%
$39,740
4.85%
Up by 0.25%
$37,900
5.35%
Increase of one year
Assumption used
$39,819
$38,792
Mortality rates (CPM2014Priv – MI2017)
Life expectancy of man of 65 years (90% of CPM2014Priv – MI2017)
Life expectancy of woman of 65 years (100% of CPM2014Priv – MI2017)
23.9 years
25.4 years
22.9 years
24.4 years
Goodfellow Inc. contributes amounts required to comply with provincial and federal legislation.
The total cash payment for post-employment benefits for 2023, consisting of cash contributed by the Company to its funded
pension plans, was nil (same in 2022). Based on the latest filed actuarial valuation for funding purposes as at December 31,
2021, the Company expects to contribute nil in 2024.
The weighted average duration of the defined benefit obligation is 11 years.
17.
Additional Cash Flow Information
Changes in Non-Cash Working Capital Items
Trade and other receivables
Inventories
Prepaid expenses
Trade and other payables
November 30
2023
$
10,749
13,821
(1,730)
1,373
24,213
November 30
2022
$
(1,177)
(2,507)
1,566
(1,616)
(3,734)
Non-cash transactions
The Company purchased property, plant, equipment and intangible assets for which an amount of $49 thousand was unpaid
as at November 30, 2023 ($72 thousand as at November 30, 2022).
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
The reconciliation of movements of liabilities to cash flows arising from financing activities is as follows:
Liability related changes
Year ended November 30, 2022
Interest expense
Interest paid
Year ended November 30, 2023
Interest expense
Interest paid
18.
Financial Instruments and other instruments
Bank loans
$
Banker’s
acceptances
$
Lease
liabilities
$
485
451
367
378
745
677
629
558
603
603
431
431
Total
$
1,833
1,731
1,427
1,367
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, 2023:
FINANCIAL LIABILITIES
Trade and other payables
Total financial liabilities
Carrying
Amount
$
37,620
37,620
Contractual
cash flows
$
37,620
37,620
0 to 12
Months
$
37,620
37,620
The following are the contractual maturities of financial liabilities as at November 30, 2022:
FINANCIAL LIABILITIES
Trade and other payables
Total financial liabilities
Carrying
Amount
$
36,286
36,286
Contractual
cash flows
$
36,286
36,286
0 to 12
Months
$
36,286
36,286
12 to 36
Months
$
-
-
12 to 36
Months
$
-
-
Interest Rate 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 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 100 basis point fluctuation of interest rate on average bank
indebtedness throughout 2023 would have impacted interest expense by $0.1 million (November 30, 2022 - $0.3 million).
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 could enter into forward exchange contracts to hedge certain accounts
payable and certain future purchase commitments denominated in U.S. dollars, Euros and Pound sterling. During the twelve
months ended November 30, 2023, the Company did not use foreign exchange contracts to mitigate its effect on sales and
purchases. Consequently, as at November 30, 2023, there were no outstanding foreign exchange contracts. A fluctuation in
the Canadian dollar of 5% in relation to foreign currencies would not have a significant effect on the Company’s net earnings.
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
As at November 30, 2023, 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
Net exposure
USD
5,701
3,751
(1,644)
7,808
GBP
651
16
(2)
665
Euro
14
-
(141)
(127)
CAD exchange rate as at November 30, 2023
1.3560
1.7117
1.4765
Impact on net earnings based on a fluctuation of 5% on CAD
381
41
(7)
As at November 30, 2022, 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
Net exposure
USD
156
5,081
(1,952)
3,285
GBP
447
14
(10)
451
Euro
9
-
-
9
CAD exchange rate as at November 30, 2022
1.3412
1.6176
1.3960
Impact on net earnings based on a fluctuation of 5% on CAD
159
26
-
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. Based
on historical payment behaviour and current credit information and experience available, the Company believes that, apart
from the provision for doubtful accounts recorded, no impairment allowance is necessary in respect of trade receivables that
are current or past due.
The Company does not have long-term contracts with any of its customers. Distribution agreements are usually awarded
annually and can be revoked.
The following table presents information on credit risk exposure and expected credit losses related to trade accounts
receivable:
Current
31 - 60 days past due
61 - 90 days past due
91 - 120 days past due
Over 120 days past due
Loss allowance
Balance, end of period
November 30
2023
$
48,841
1,980
1,035
386
1,889
54,131
(594)
53,537
November 30
2022
$
59,678
2,664
1,060
370
682
64,454
(342)
64,112
As at November 30, 2023, since expected credit losses are limited to $0.6 million and because movements during the year in
the allowance for expected credit losses are minimal, the expected credit losses by trade accounts receivable aging and the
movement in the allowance for expected credit losses in respect of trade receivables have not been presented separately.
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
Economic Dependence
The Company does not have long-term contracts with any of its customers. Distribution agreements are usually awarded
annually and can be revoked. Only one major customer exceeds 10% of total Company sales during fiscal 2023 (same last
year).
The following represents the total sales consisting primarily of various wood products of the major customer:
For years ended
Sales to the major customer that exceeded 10% of total Company’s sales
November 30, 2023 November 30, 2022
%
14.1
$
77,976
$
88,782
%
15.2
The loss of any major customer could have a material effect on the Company’s results, operations and financial position. The
carrying amounts of financial assets represent the maximum credit exposure.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. 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 (if any) and trade and other payables approximate their fair values.
19.
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 net debt-to-capital ratio to preserve its capacity to pursue its organic growth strategy;
3. Maintain financial ratios within covenants requirements; and
4. Provide an adequate return to its shareholders.
The Company defines its capital as net debt less shareholders’ equity as follows (the Company currently has no debt):
Cash
Net Cash
Share capital
Retained earnings
Shareholders’ Equity
Total Capital
November 30
2023
$
28,379
28,379
9,379
185,624
195,003
223,382
November 30
2022
$
3,420
3,420
9,419
177,360
186,779
190,199
The Company manages its capital and makes adjustments to it in 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 a 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’s financial
objectives and strategy remain substantially unchanged.
The Company is subject to certain covenants on its credit facilities. The covenants include a debt-to-capitalization ratio and
an interest coverage ratio. 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.
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
20.
Contingent liabilities and commitments
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.
Commitments
As at November 30, 2023, the minimum future purchase obligation for the next year was nil (November 30, 2022 - nil).
21.
Related party transactions
Related parties include 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. 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, 2023, the entities of the Company have not entered into business transactions with
related parties that are members of the Board of the Company.
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:
Salaries and other short-term benefits
Post-employment benefits (including remeasurement of defined benefit plan obligation)
November 30 November 30
2022
$
3,122
42
3,164
2023
$
3,422
(114)
3,308
22.
Segmented Information and Sales
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. All significant property, plant and equipment,
and right-of-use assets are located in Canada.
The following table presents sales disaggregated by geographic markets and by categories, as this best depicts how the
nature, amount, timing and uncertainty of sales and cash flows are affected by economic factors.
Primary geographic markets
The Company’s sales to clients located in Canada represent approximately 90% (88% in 2022) of total sales, the sales to
clients located in the United States represent approximately 7% (8% in 2022) of total sales, and the sales to clients located in
other markets represent approximately 3% (4% in 2022) of total sales.
Canada
US
Export
45
November 30
2023
$
459,328
37,162
16,331
512,821
November 30
2022
$
558,660
47,851
24,674
631,185
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 2023 and 2022
(tabular amounts are in thousands of dollars, except per share amounts)
Sales categories
Lumber
Specialty and commodity panels
Flooring
Building material
November 30
2023
$
282,910
91,700
75,446
62,765
512,821
November 30
2022
$
335,444
114,470
111,837
69,434
631,185
46
CORPORATE INFORMATION
BOARD OF DIRECTORS
Robert Hall
Chair of the Board
Alain Côté * / **
Director and Chair
of the Audit Committee
David Goodfellow
Director
Douglas Goodfellow **
Director
James Hewitt *
Director
Stephen Jarislowsky *
Director
Founder of Jarislowsky Fraser Ltd
Sarah Prichard **
Director and Chair of the
Executive Compensation
Committee
* Member of the Audit Committee
** Member of the Executive Compensation Committee
OFFICERS
Patrick Goodfellow
President and Chief Executive Officer
Charles Brisebois
Chief Financial Officer and
Secretary of the Board
Mary Lohmus
Executive Vice President,
Ontario and Western Canada
Éric Bisson
Vice President,
Quebec
Luc Dignard
Vice President,
Sales, Quebec
Harry Haslett
Vice President,
Sales and Marketing, Atlantic
Eric McNeely
Vice President,
Business Development - Flooring
Jeff Morrison
Vice President,
National Accounts
Luc Pothier
Vice President,
Operations
OTHER INFORMATION
Head Office
225 Goodfellow Street
Delson, Quebec J5B 1V5
Tel.: 450-635-6511
Fax: 450-635-3730
Solicitors
Bernier Beaudry
Quebec, Quebec
Fasken Martineau
Montreal, 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.
47
48