Annual Report 2024 PA TNE IN THE A T OF LIVING Annual Report 2024 · Richelieu 3 The Annual General Meeting of Shareholders will be held on Thursday, April 10, 2025. Table of contents A Track Record of Sustained Growth ▪ 4 North American Leader ▪ 6 Values ▪ 9 112 strategically located centres ▪ 10 Performance and Soundness ▪ 12 Message to Shareholders ▪ 15 Directors and Officers ▪ 21 Customer Experience ▪ 22 Serving Manufacturers ▪ 23 Serving Hardware Retailers and Renovation Superstores ▪ 24 Architects and Designers ▪ 25 One-Stop-Shop ▪ 26 richelieu.com ▪ 27 Products and Innovations ▪ 29 ESG ▪ 38 Management’s Discussion and Analysis ▪ 41 Financial Statements ▪ 60 Related Notes ▪ 64 4 Annual Report 2024 · Richelieu 1988 1993 1999 2019 2024 CENTRE 1 SALES $27 M CENTRES 7 SALES $60 M MARKET CAPITALIZATION $0.04 B CENTRES 77 SALES $1.0 B MARKET CAPITALIZATION $1.5 B CENTRES 18 SALES $165 M MARKET CAPITALIZATION $0.1 B CENTRES 112 SALES $1.8 B MARKET CAPITALIZATION $2.3 B Listing on TSX (RCH) Richard Lord New President and CEO and shareholder First distribution centre in the U.S. 90 acquisitions Value creation A Track Record of Sustained Growth Annual Report 2024 · Richelieu 5 Since 1988, Richelieu has always been committed to a long-term vision and strong leadership in North America. The spirit of Richelieu is reflected in its passion for service excellence and innovation, placing customer satisfaction at the top of its priorities and respecting the values of intrapreneurship, creativity, performance, integrity and social and environmental responsibility. This passion for service and innovation, supported by an operating model adapted to customer needs, a compatible acquisition strategy and a sound corporate governance, has proven to be the best guarantee of value creation and sustainability for Richelieu. It keeps the Corporation firmly rooted in today’s society and enables it to reach new milestones every year. Manufacturers Retailers and renovation superstores 6 Annual Report 2024 · Richelieu SALES $1.8 B TEAM + 3,000 ≈ 50% + 50% employees Corporation shareholders involved in marketing, sales and customer service North American Leader Importer ⬝ Manufacturer ⬝ World-class distributor USA Canada Canada USA Annual Report 2024 · Richelieu 7 CUSTOMERS + 120,000 CENTRES 112 * including 3 manufacturing plants • Manufacturers of kitchen and bathroom cabinets, closet storage, residential and office furniture, doors and windows • Residential and commercial woodworkers • Hardware retailers and renovation superstores • Other customers PRODUCTS (SKUs) + 145,000 + 50% under our private labels and exclusive products * As at November 30, 2024 Area of centres 5.1 M sq. ft. Average daily visitors to showrooms + 3,000 from several continents 8 Annual Report 2024 · Richelieu Customer First Passion, commitment, discipline, attention to detail and rigour are the driving principles that motivate every one of us for a “customer first” strategic approach. We are always on the lookout for better ways to meet our customers’ needs. Anticipating their needs allows us not only to support them in their business, but even to exceed their expectations. Innovation Our creative approach and innov- ative product offering keep us at the cutting edge of global trends, and allow us to offer a unique range of innovations, concepts and innovative solutions. Our creativity is also reflected in our market development strategy, as well as in the sustained efforts of each of us to remain innovative, proactive and adaptable to change and new challenges. Performance At Richelieu, we are proud to make a significant contribution to achiev- ing outstanding performance. Impeccable execution, ongoing training, a strong team spirit and a concern for costs and efficiency are key elements in a successful business model aimed at excellence and high performance. Intrapreneurship All employees contribute to Richelieu’s success just as if it where their own business. We encourage the empowerment and commitment of all our team members towards our organization, culture and values Respect, integrity and ethics Respect for our employees, cus- tomers, suppliers and shareholders means we can build lasting and trusting relationships with our four pillars of growth. Collaboration, openness, transparency and honesty are keys to the smooth running of our organization. With integrity, we ensure responsible management in order to minimize risks, comply with law and ensure sound governance. Annual Report 2024 · Richelieu 9 Our Values 10 Annual Report 2024 · Richelieu 112 strategically located centres Flexibility ⬝ Quality and reliability of service ⬝ Product availability ⬝ Efficient inventory management 48 distribution centres in Canada Anjou, QC Barrie, ON Boucherville, QC Brampton, ON Burlington, ON Calgary (2), AB Concord, ON Dartmouth (2), NS Edmonton, AB Erin, ON Kelowna, BC Kitchener, ON Laval (2), QC Longueuil (2), QC Mississauga, ON Moncton, NB Montréal (4), QC North York, ON Ottawa, ON Québec (3), QC Regina, SK Saskatoon, SK St-Jacques, NB St-John’s, NT Sudbury, ON Terrebonne, QC Thunder Bay, ON Toronto (4), ON Vancouver (5), BC Victoria (2), BC Winnipeg, MB 61 distribution centres in USA Allentown, PA Atlanta (2), GA Birmingham, AL Boston, MA Buffalo, NY Burlington, VT Carlstadt, NJ Charlotte, NC Chicago (2), IL Cincinnati, OH Cleveland, OH Columbus, OH Dallas, TX Dania, FL Des Moines, IA Detroit, MI Eugene, OR Fort Myers, FL Greensboro, NC Greenville, SC Hartford, CT Hialeah, FL Hickory, CT Houston (2), TX Indianapolis, IN Jacksonville, FL Kansas City, MO Lewiston, ME Lincoln Park, IL Louisville, KY Memphis, TN 3 manufacturing plants Cedan Industries Inc. Longueuil (Veneers and edgebanding) USIMM UNIGRAV Inc. Drummondville (Machining, 3D digitization, unique products) Menuiserie des Pins Ltée Notre-Dame-des-Pins (Decorative mouldings and components for the window and door industry) Coverage by representatives Minneapolis, MN Morristown, NJ Nashville, TN New York, NY Omaha, NE Orlando, FL Ozark, MO Philadelphie, PA Phoenix, AZ Pittsburgh, PA Pompano, FL Portland, ME Portland, OR Reading (2), PA Richmond, VA Riviera Beach, FL Rochester, NY Sarasota, FL Savannah, GA Seattle, WA Sioux Falls, SD Springfield, OH St. Louis, MO Syracuse, NY Tampa Bay, FL Thomasville, GA Annual Report 2024 · Richelieu 11 48 centres Canada 61 centres USA 112 centres 3 manufacturing plants Canada 12 Annual Report 2024 · Richelieu Performance and Soundness Sales (in millions $) Adjusted cash flows from operating activities1 (in millions $) Net earnings per share attributable to shareholders (diluted) (in $) Equity attributable to shareholders/debt (in millions $) Appreciation in share price (RCH): 5,666% Since initial stock listing Total return on share/10 years*: 135% Average annual return on share/10 years*: 9% * Including dividend reinvestment Market capitalization 1. Adjusted cash flows from operating activities is a non-IFRS measure, as indicated on page 44 of this report. 1,127.8 1,440.4 1,802.8 1,787.8 1,832.2 2020 2020 1993 2020 2021 2021 2021 2022 2022 2022 2023 2023 2023 2024 2024 2024 2024 2020 2021 2022 2023 2024 2.51 1.50 2.99 1.98 1.53 121.1 183.0 227.8 190.5 165.7 666.4 551.1 817.2 904.9 926.5 5,3 6,0 5,9 6,4 5,8 $39 million $2.3 billion Annual Report 2024 · Richelieu 13 Financial Highlights Years ended November 30 (in thousands of $, except per-share amounts, number of shares and data expressed as a %) Years ended November 30 2024 $ 2023 $ 2022 $ 2021 $ 2020 $ Sales 1,832,218 1,787,754 1,802,787 1,440,416 1,127,840 EBITDA (1) 201,419 230,404 287,442 234,398 154,461 EBITDA margin (%) 11.0 12.9 15.9 16.3 13.7 Net earnings 89,480 113,827 169,949 142,331 85,611 Net earnings attributable to shareholders of the Corporation 85,754 111,474 168,390 141,764 85,222 ▪ Per share—basic ($) 1.54 2.00 3.01 2.54 1.51 ▪ Per share—diluted ($) 1.53 1.98 2.99 2.51 1.50 Net margin (%) 4.7 6.2 9.3 9.8 7.6 Adjusted cash flows from operating activities (1) 165,695 190,483 227,795 182,991 121,125 ▪ Per share—diluted ($) (1) 2.95 3.39 4.04 3.24 2.14 Dividends paid to Shareholders of the Corporation 33,503 33,521 29,083 19,374 11,284 ▪ Per share ($) (2) 0.600 0.600 0.520 0.280 0.200 Weighted average number of shares outstanding (diluted) (in thousands) 56,125 56,216 56,345 56,466 56,646 As at November 30 Total assets 1,394,129 1,314,963 1,283,865 964,180 771,056 Working capital 612,924 621,764 562,548 456,376 377,408 Current ratio 3.1 3.6 2.6 3.3 3.6 Equity 926,509 904,893 817,157 666,442 551,094 Return on average shareholders’ equity (%) 9.4 12.9 22.7 23.3 16.2 Book value per share ($) 16.78 16.13 14.65 11.93 9.86 Long-term debt 5,902 5,346 6,067 6,439 5,792 Net cash and cash equivalents (net bank overdraft) (12,284) 23,710 (111,988) 58,707 73,928 (1) EBITDA, adjusted cash flows from operating activities and adjusted cash flows from operating activities per share are non-IFRS measures, as indicated on page 44 of this report. (2) The dividends per share presented for 2021 excludes a special dividend paid of $0.0667 per share. 14 Annual Report 2024 · Richelieu Our long-term vision commits us to a strategy combining internal growth and growth by acquisition ⬝ market segment diversification and distribution network optimization ⬝ investment in innovations and excellence in execution ⬝ adaptation to change and rigorous resource management. Annual Report 2024 · Richelieu 15 Richard Lord, President and Chief Executive Officer Richelieu kept focus on its strategic objectives through financial year 2024, despite the general slowdown in the renovation market following its sharp rise in the pandemic years. By leveraging our adaptive skills and remaining con- sistent in our strategies, we succeeded in meeting both conjectural and episodic challenges. The diversification of our market seg- ments and our presence across Canada and the United States, together with our robust network and richelieu.com, are part of our overall strengths we need to withstand the ups and downs of the economy and market conditions, and to continue to grow. Thanks to the sustained commitment of our expert team to meeting the Corporation’s objectives, and the effi- ciency of our operating model, this year we were able to achieve sales exceeding those of 2023 and equaling those of 2022 marked by a sharp increase. We have maintained a very satisfying level of profitability in such a context, and our financial situation remained sound and solid. Message to Shareholders Message to Shareholders 16 Annual Report 2024 · Richelieu The driving force sustaining our performance over the years remains our customer focus, supported by our service concept which brings together several key complementary components to add distinctive value to our service and ensure a unique customer experience. At the core of our priorities and corporate culture, we have always placed the customer, which primarily means providing high- quality listening, superior execution and ongoing innovation. Our customers are many and diversified, and so are the challenges faced by the 120,000 contractors, manufac- turers, retailers and superstores who make up our cus- tomer base. The reasons why our customers choose us are essentially the attention we pay to their needs thanks to our proximity, and our personalized responses to pro- vide effective support for the realization of their projects and their competitiveness. Whether in our distribution centres, in our showrooms or online at richelieu.com, we do everything in our power to offer reliable and con- sistent quality of execution, aiming to exceed customer expectations. Our logistics performance is crucial, and we attach the utmost importance to it through the investments most appropriate to the nature of our distribution activities, given the wide diversity of our customers, the critical importance of product availability and our sources of supply across several continents. The robustness of our network is essential. The per- formance of our distribution centres and their ability to meet the needs of future growth are priorities to which we respond by constantly reviewing their operating effi- ciency and by investing to plan for the future. This is what we have been doing over the past three years, completing several expansion and modernization projects across our North American network, with centre consolidations in the New York area and on the west coast of Florida in 2024. We continue to develop our 250,000 sq. ft. Calgary The robustness of our network is essential. The performance of our distribution centres and their ability to meet the needs of future growth are priorities to which we respond by constantly reviewing their operating efficiency and by investing to plan for the future. Message to Shareholders Annual Report 2024 · Richelieu 17 centre after a major consolidation to support the growth of its manufacturers’ customers, in addition to centralizing the distribution of all products destined for retailers in Western Canada. We have also started to centralize our distribution activities for retailers in Ontario and Eastern Canada. Along with the quality of execution that is essential to our value-added service, our ability to bring the most appro- priate products and the world’s best innovations to our Canadian and American markets is of the utmost import- ance. The investments we make in innovation every year give our customers assured access to innovative products whose exceptional quality and durability make a major contribution to their residential, commercial or institu- tional projects. By updating and renewing our offer with innovations and complementary products, we help to shape future trends in our markets and add value to cus- tomer service. To meet the needs of growth— the Calgary distribution centre after major consolidation and modernization—250,000 sq. ft. of space. Message to Shareholders Along with the quality of execution that is essential to our value-added service, our ability to bring the most appropriate products and the world’s best innovations to our Canadian and American markets is of the utmost importance. The investments we make in innovation every year give our customers assured access to innovative products whose exceptional quality and durability make a major contribution to their residential, commercial or institutio- nal projects. 18 Annual Report 2024 · Richelieu Our offering includes in-depth product lines that give our customers access, one-stop-shop, to a complete range of products with different characteristics to meet the needs of their most varied projects, combining tradition and innovation. In this way, we are proud to contribute to a spirit of innovation and global-mindedness through our strategy of value and innovation. We achieve this through sustained collaborations with supplier-manufacturers whose innovation, technological and design creation talents make them world leaders and first-rate partners. We cultivate strong, long-lasting relationships with our suppliers, serving the performance of our customers and our corporation. Remaining the first choice destination for our customers, given the ever-changing needs and trends, is a constant challenge that drives us. It requires financial strength, constant attention to our customers’ needs and a keen awareness of global trends. Our two complementary growth drivers—innovation and acquisition—help us to meet this challenge. We have the opportunity to evolve in a highly fragmented North American market. The acquisitions we make every year, in line with our values and objectives, strengthen our foundations and service capabilities, extend our pres- ence, diversify and deepen our product ranges and market knowledge. We develop synergies with the companies we acquire, ensuring that the strength of our organization benefits them, and we exchange best practices. After the six acquisitions completed in 2023, we con- cluded seven new ones in 2024, four of them during the financial year and the other three after November 30. We are proud of these seven acquisitions, which add approximately $100 million in annual sales, new ter- ritories, new customers, product lines and expertise. Olympic Forest Products, completed in December 2023, diversified our wood products and specialty panels offer- ing, while expanding our presence in the Ontario market. We develop synergies with the companies we acquire, ensuring that the strength of our organization benefits them, and we exchange best practices. The seven acquisitions completed in 2024-2025 add sales of $100 million on annual basis. Message to Shareholders Annual Report 2024 · Richelieu 19 Rapid Start, acquired in January 2024, gives us access to a new market in Ohio. Allegheny Plywood, acquired in March, expands our range of decorative surfaces and panels, and our presence in Pennsylvania and Ohio. And Panexel, located in Quebec, also diversifies our decora- tive panel offering. The three acquisitions completed at the very beginning of financial year 2025—Mill Supply, a distributor based in Nova Scotia and Prince Edward Island, and Darant Distributing in Colorado—increase our offering of specialty products, while Midwest Specialty Products, a distributor of decorative surfaces, expands our presence in Minnesota. We have started 2025 with confidence and strong com- mitment. The current housing shortage in Canada and the United States should generate increased demand for specialized products, as well as attractive development opportunities. Regardless of the various challenges we have faced over the years, Richelieu has always managed to grow in a disciplined and profitable manner. We would like to thank all our team members, customers, suppliers, directors and business partners. We have started 2025 with confidence and strong commitment. The current housing shortage in Canada and the United States should generate increased demand for specialized products, as well as attractive development opportunities. Message to Shareholders To date, our growth has been driven by the strength of our operating model, the relevance of our strategies, our constant commitment to serving our customers, and our win-win collaboration with our supplier partners. In the future, we will continue on this same path, while remain- ing committed to supporting essential causes such as edu- cation, culture and the health of young people, as well as environmental protection, with the dedication of our talented team, ready to seize and create opportunities for profitable growth. (Signed) Richard Lord President and Chief Executive Officer Annual Report 2024 · Richelieu 21 Directors and Officers Directors Sylvie Vachon (1) Corporate Director Richard Lord President and Chief Executive Officer Richelieu Hardware Ltd. Lucie Chabot (4) Corporate Director François Gratton (4) Corporate Director Marie Lemay (5) President Royal Canadian Mint Luc Martin (2) Corporate Director Pierre Pomerleau (5) Executive Chairman of the Board Pomerleau Inc. Marc Poulin (3) Corporate Director Officers Richard Lord President and Chief Executive Officer Antoine Auclair Chief Financial Officer and Chief Operating Officer* Guy Grenier Vice-President, Sales and Marketing ⬝ Industrial Éric Plouffe Vice-President, Supply Chain Denis Gagnon Vice-President, Information Technology Marjolaine Plante Vice-President, Human Resources Jeff Crews Vice-President, Business Development ⬝ Retailers Market, Canada Craig Ratchford Vice-President, General Manager ⬝ United States Larry Lucyshyn Vice-President, Sales to US Retailers Éric Daignault General Manager of Divisions John Statton General Manager ⬝ Western Canada Division Yannick Godeau Legal Affairs and Corporate Secretary (1) Chairwoman of the Board (2) Chairman of the Audit Committee (3) Chairman of the Human Resources and Governance Committee (4) Member of the Audit Committee (5) Member of the Human Resources and Governance Committee * Upon approval by the Board of Directors on January 16, 2025, Mr.Antoine Auclair, CFO, is assuming the functions of Chief Operating Officer in addition to his current responsibilities. 22 Annual Report 2024 · Richelieu The added value of the multi- access service results from a range of customer-focused components LOGISTICS EXPERTISE Interconnected Distribution centres One-Stop-Shop centres Just-in-time deliveries Automation LISTENING TO CUSTOMER Understanding and anticipating needs MULTIACCESS SERVICE Proximity Customized service richelieu.com DISTINCTIVE SHOWROOMS Showrooms adjacent to the distribution centres Modern Welcoming Documented CONTINUOUS INNOVATION Catalyst for worldwide Innovations Market Influencer SALES TOOLS FOR CUSTOMERS Complete set of brochures and technical catalogs Display systems for manufacturers and retailers Website richelieu.com CUSTOMER A distinctive Customer Experience Annual Report 2024 · Richelieu 23 Our mission is to support the creativity and competitive- ness of our manufacturer customers, in all their special- ties in the residential, commercial and institutional reno- vation and construction industries, whether in kitchens, closets, residential and office furniture, outdoor kitchens or windows and doors. Our priorities are to offer them the broadest selection of quality products and innovative solutions, and to pro- vide them with consistent, reliable value-added service to optimize their residential, commercial and institutional projects. We work closely with our customers to support their performance as manufacturers and the growth of their businesses. Serving Manufacturers 24 Annual Report 2024 · Richelieu Serving Hardware Retailers and Renovation Superstores Growing demand for home renovations and do-it-yourself projects is expected to drive business for our thousands of retailers and renovation superstores in the periods ahead. We are proud to serve them with the quality of products and service they expect. Annual Report 2024 · Richelieu 25 We work with thousands of architects and designers across North America By creating spaces that combine technical and aesthetic innovation, functionality and distinctive style, architects and designers help shape their customers’ environments while reflecting the evolution of society. We provide them with comprehensive information on all our prod- ucts and innovative solutions to support their creative initiatives. We regularly organize events specifically for them at our various distribution centres. What’s more, on richelieu.com they’ll find work tools and functions to facilitate the creation and sharing of quotations with their customers. 26 Annual Report 2024 · Richelieu Decorative Hardware Opening Systems Closet and Storage Solutions Builder’s Hardware Screws and Fasteners Kitchen Solutions Office Solutions Veneer and Edgebanding Furniture Equipment Sliding System Solutions Surfaces and Decorative Panels Hinges Glass Hardware Finishing Products Slides Window and Exterior Door Hardware Lighting Solutions Solid Surfaces and Quartz One-Stop-Shop Annual Report 2024 · Richelieu 27 richelieu.com Instant and lively link, an integral part of our value-added service Designed for our diversified customers and for any visitor seeking information on our extensive product ranges, richelieu.com is constantly evolving to anticipate cus- tomer needs, announce new trends, present new products and new information content. With a visually appealing design, high-performance ergonomics and fluid naviga- tion, richelieu.com is an interactive showcase that pro- vides access to Richelieu’s complete offering and a wealth of information on solutions and products. Trilingual—French, English, Spanish Interaction between employees, customers and suppliers Real-time documentation: photos, videos, user instructions Easy choice and informed decision-making Easy purchasing process: complete purchasing operation Customer configuration of products and solutions to specific needs 28 Annual Report 2024 · Richelieu Every year, hardware innovations help shape the way we live and work, optimizing spaces, increasing functionality, enhancing comfort and personalizing interior design. Our leadership in North America is largely due to our innovation strategy, which makes Richelieu an innovative leader and a key trend setter. Innovations, a performance and growth driver for the art of living. Annual Report 2024 · Richelieu 29 Diversity and complementarity of our product ranges ⬝ Depth of our lines Our innovation and service strategy is focused on the evolving needs of our Canadian and American markets, including material durability, furniture ergonomics, mechanism versatility and space optimization. It keeps up with the rapid pace of technological innovation, pro- ducing innovative materials in a wide variety of finishes and multiple solutions to foster the personalization and long-term appeal of interior design. Our manufacturing partners around the world practice ongoing innovation to develop new solutions, but also to optimize patented products with unique features resulting in major improvements in performance, dur- ability and ease of use. We also distinguish ourselves by the depth of our product lines, allowing for multiple possibilities of use of products in the same line, whether to match them with various materials, for diverse settings, in a variety of dimensions and colors. The depth of these product lines, available in our centres and on richelieu.com, enables us to cover our customers’ needs as comprehensively as possible. 30 Annual Report 2024 · Richelieu Closet systems including a wide diversity of decorative panels, sliding doors, advanced hinges, retractable rods, multi-functional hooks, including a variety of lighting systems that create ambience to make these storage spaces functional, pleasant and stylish. Annual Report 2024 · Richelieu 31 A wide range of kitchen- optimizing options for easy access to cabinet contents, thanks to state- of-the-art pull-out and retractable mechanisms, drawer organizers and full-height cabinet storage systems. Flexibility and ergonomics for a place where people live and gather. 32 Annual Report 2024 · Richelieu The most extensive and versatile selection of panels for stylish, personalized interior designs in residential, commercial and institutional settings. Laminate selections with contemporary patterns and original textures for multiple uses, and thermostructured surface ranges that produce reliefs and natural finishes. Annual Report 2024 · Richelieu 33 An wide range of lighting systems for all residential, commercial and institutional spaces, allowing for customization and ambience creation. State-of-the-art, aesthetic systems of exceptional quality and durability. 34 Annual Report 2024 · Richelieu Cutting-edge modular and retractable solutions for small urban living spaces. Annual Report 2024 · Richelieu 35 For a well-organized and functional garage where everything is within sight and reach, storage systems that combine sturdy shelf supports with a variety of multi-purpose hooks, allowing you to customize the storage space to suit your needs. 36 Annual Report 2024 · Richelieu Extensive ranges of functional partitions and lockers for a variety of public spaces. A vast selection of exterior locks, including electronic ones. Annual Report 2024 · Richelieu 37 Perfect for guardrails, staircases, balconies and decks in private, commercial and public spaces, glass offers transparency, light and safety. To do so, it requires high- performance product lines. 38 Annual Report 2024 · Richelieu As a world-class importer, manufacturer and distributor of specialty hardware, Richelieu is committed to paying close attention to the environmental impact of its operations, as well as to maintaining sound corporate governance to conduct its business in the best interests of its employees, customers, suppliers and shareholders. The Corporation is also dedicated to supporting a number of societal causes in the communities in which it operates. Throughout its organization, Richelieu is committed to responsibly building a better future as a profitable, creative, inclusive and ethically and environmentally aware Corporation. The Corporation continues to implement a range of measures to reduce and control its carbon footprint, notably through the rational use of packaging materials, the sound management of the residual matters it gener- ates, the establishment of long-term partnerships with its main suppliers and transporters, and the efficient use of energy-efficient equipment. The Corporation pursues the diversification of its wide range of certified ecological products to meet the evolving needs of its customers, both manufacturers and retailers. In this regard, Richelieu is committed to the safe and responsible use of all its resources, including the protec- tion of its employees, the public and the environment in which it operates. To promote an operational culture based on well-being and safety, the Corporation has set up a structure offering its employees and consultants a healthy and safe working environment, free from harass- ment, as well as a range of continuing training opportun- ities adapted to each of its operating centres. Environment ⬝ Social ⬝ Governance A Commited Team Supporting team sport activities. Annual Report 2024 · Richelieu 39 In line with its business policies, the Corporation strives for fair and honest competition in every aspect of its oper- ations. Each employee is therefore required to confirm that he or she understands and complies with the provi- sions of the Corporation’s Code of Ethics and Professional Conduct. Richelieu relies on an effective governance structure and team. The Board of Directors and management ensure that Richelieu’s reputation as a responsible organization is safeguarded over the long term, in compliance with its values and objectives. Richelieu is involved in a number of projects aimed at improving the ecological diversity and quality of life of the communities in which it operates. The Corporation takes part in educational initiatives for the sustainable reintegration of young people into society and the job market, as well as reforestation, heritage conservation and community awareness projects. Le Semoir—a creative program for children to learn about climate, ecology and eco-citizenship. Le Phare—organization dedicated to pediatric palliative care. RÉCO—an innovative ecological initiative—a non- profit enterprise dedicated to the recovery and resale of building materials. 41 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Management’s Discussion and Analysis Highlights of the year ended November 30, 2024 ▪ 42 Presentation basis ▪ 43 Forward-looking statements ▪ 43 Non-IFRS measures ▪ 44 General business overview as at November 30, 2024 ▪ 44 Main trademarks ▪ 45 Mission and strategy ▪ 45 Network development ▪ 45 Financial highlights ▪ 46 Analysis of operating results ▪ 47 Quarterly data ▪ 48 Fourth quarter ▪ 49 Financial position ▪ 50 Contractual commitments ▪ 52 Financial instruments ▪ 52 Internal control over financial reporting ▪ 53 Significant accounting policies and estimates ▪ 53 Subsequent events ▪ 53 New accounting policies ▪ 53 Risk factors ▪ 54 Share information ▪ 56 Outlook ▪ 56 Supplementary information ▪ 56 Management’s and independent auditor’s reports ▪ 57 Consolidated financial statements ▪ 60 Notes to consolidated financial statements ▪ 64 42 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Richelieu ended fiscal year 2024 with sales up from 2023, as well as 2022, which had seen strong growth in the con- text of the pandemic. Given the temporary deceleration in the renovation market in North America, this increase in sales in 2024 is all the more appreciable. It reflects the expertise and dynamism of the team, the strength of the network, and the effectiveness of the service, innova- tion and acquisition strategies that remain the pillars of Richelieu’s growth. Despite circumstantial factors that continued to put pressure on profit margins, including inventories at higher purchase costs, lower selling prices for certain products, and the development of several expanded and modernized distribution centres in 2022 and 2023, the Corporation remained on track to achieve its operating objectives, deliver good results, and main- tain a strong financial position as of November 30, 2024. During 2024, Richelieu seized several business acquisi- tion opportunities, closing seven new acquisitions, four during the year and three after November 30, 2024. These acquisitions add approximately $100 million in additional annual sales. They also contribute to strengthening the Corporation’s presence in certain markets, broadening its product lines, diversify its customer segments, and integrate new expertise into the Richelieu team. As part of its continuous network improvement initiatives in North America throughout the year, Richelieu consoli- dated two distribution centres in the New York area and on the west coast of Florida. Completed in December 2023, the Calgary expansion project, which consolidated two centres into a 250,000 square-foot building, continues to support the growth of its manufacturer’s customers while centralizing the distribution of all products for retail cus- tomers in Western Canada. In addition, the Corporation has initiated the centralization of its distribution activ- ities for the retail market in Ontario and Eastern Canada. Richelieu started fiscal year 2025 with confidence and pragmatism, leveraging its fundamentals, including its customer-focused business model, its solid financial pos- ition, its network of 112 strategically located centres, its value-added service, and its innovation and acquisition dynamics. The current housing shortage in Canada and the United States suggests an increase in demand for spe- cialized products and presents promising development opportunities for Richelieu in the upcoming periods. Its expert team, driven by the values of creativity and excel- lence, is committed to seizing these growth opportunities in the North American market. ▪ Consolidated sales reached $1.8 billion, an increase of 2.5% compared to 2023, of which 0.3% from internal growth and 2.2% from acquisitions. ▪ Earnings before interest, income taxes and amor- tization (EBITDA)(1) came to $201.4 million, compared to $230.4 million for fiscal 2023, a decline of 12.6%. EBITDA margin stood at 11.0%, compared to 12.9% for the previous year. ▪ Diluted net earnings per share are $1.53, compared to $1.98 in the previous year, a decrease of 22.7% and net earnings attributable to shareholders amounted to $85.8 million, compared to $111.5 million last year, down by 23.1%. ▪ Adjusted cash flows from operating activities(1), totalled $165.7 million. ▪ Working capital reached $612.9 million, for a current ratio of 3.1: 1. ▪ Average return on equity was 9.4%. ▪ Repurchase of 1,007,712 common shares for $38.7,mil- lion and payment of $33.5 million in dividends to shareholders. Richelieu thus distributed $72.2 million to shareholders in 2024 while maintaining the financial resources necessary for growth in 2025. (1) EBITDA and adjusted cash flows from operating activities are non-IFRS measures, as indicated on page 44 of this report. Highlights of the year ended November 30, 2024 43 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Four acquisitions completed in North America in fiscal 2024 December 1, 2023: acquisition of Olympic Forest Products, a distributor of specialized lumber and panel products operating a distribution centre in Erin, ON. January 15, 2024: acquisition of Rapid Start, a distributor of specialized hardware operating a distribution centre in Rittman, OH. March 27, 2024: acquisition of Allegheny Plywood, a dis- tributor of specialized panels and decorative surfaces, operating three distribution centres in Pittsburgh, PA, Allentown, PA, and Cleveland, OH. November 13, 2024: acquisition of Panexel, a distributor of decorative panels, operating a distribution centre in Boucherville, QC. Three acquisitions completed in North America after November 30, 2024 December 1, 2024: acquisition of Mill Supply, a distributor of hardware and specialty products operating two distri- bution centres in Dartmouth, N.S. and Charlottetown, P.E.I. January 6, 2025: acquisition of Darant Distributing, a dis- tributor of specialized hardware operating a distribution centre in Denver, CO. January 13, 2025: acquisition of Midwest Specialty Products, a distributor of decorative surfaces operating a distribution centre in Minneapolis, MN. PRESENTATION BASIS This Management’s Discussion and Analysis (“MD&A”) relates to Richelieu Hardware Ltd.’s consolidated operat- ing results and cash flows for the year ended November 30, 2024, in comparison with the year ended November 30, 2023, as well as the Corporation’s financial position at those dates. This report should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended November 30, 2024 appearing in the Corporation’s 2024 Annual Report. In this MD&A, “Richelieu” or the “Corporation” desig- nates, as the case may be, Richelieu Hardware Ltd. and its subsidiaries and divisions, or one of its subsidiaries or divisions. Supplementary information, such as the Annual Information Form, interim MD&As, Management Proxy Circular, certificates signed by the Corporation’s President and Chief Executive Officer and Chief Financial Officer and Chief Operating Officer, as well as press releases issued during the year ended November 30, 2024, are available on SEDAR+ website at www.sedarplus.com and on the Corporation’s website at www.richelieu.com. The information contained in this MD&A accounts for any major event that occurred prior to January 16, 2025, on which date the audited consolidated financial statements and MD&A were approved by the Corporation’s Board of Directors. Unless otherwise indicated, the financial information presented below, including amounts shown in tables, is expressed in Canadian dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”). FORWARD-LOOKING STATEMENTS Certain statements set forth in this MD&A, including state- ments relating to the expected adequacy of cash flows to cover contractual commitments, to maintain growth and to provide for financing and investing activities, growth outlook, Richelieu’s competitive position in its industry, or ability to weather current economic conditions, access other external financing, close new acquisitions, and other statements not pertaining to past events, constitute forward-looking statements. In some cases, these state- ments are identified by the use of terms such as “may”, “could”, “might”, “intend” “should”, “expect”, “project”, “plan”, “believe”, “estimate” or the negative form of these expressions or other comparable variants. These state- ments are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events, including on the assump- tion that economic conditions and exchange rates will not significantly deteriorate, that supplies will be sufficient to fulfil Richelieu’s needs, the availability of credit will remain stable during the year and no extraordinary events will require supplementary capital expenditures. Although management believes these assumptions and expectations to be reasonable based on the information available at the time they were prepared, they could prove inaccurate. Forward-looking statements are also subject, by their very nature, to known and unknown risks and uncertainties such as those related to the industry, acqui- sitions, labour relations, credit, key officers, supply and product liability as well as other factors set forth in the “Risk Factors” section on page 54. Richelieu’s actual results could differ materially from those indicated in or underlying these forward-looking 44 Management’s Discussion and Analysis Annual Report 2024 · Richelieu statements. The reader is therefore cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subse- quent to the date hereof. Richelieu undertakes no obliga- tion to update or revise the forward-looking statements to account for new events or new circumstances, except as required by law. NON-IFRS MEASURES Richelieu uses earnings before interest, income taxes and amortization (“EBITDA”) as it believes this measure enables management to assess the Corporation’s oper- ational performance. This measure is a widely accepted performance indicator of a corporation’s ability to ser- vice and incur debt. However, EBITDA should not be considered by an investor as an alternative to operating income or net earnings attributable to shareholders of the Corporation, as an indicator of financial performance or cash flows, or as a measure of liquidity. Since EBITDA does not have a standardized meaning prescribed by IFRS, it may not be comparable to EBITDA of other companies. Richelieu also uses adjusted cash flows from operating activities and adjusted cash flows from operating activ- ities per share. Adjusted cash flows from operating activ- ities are based on net earnings plus amortization of prop- erty, plant and equipment and right-of-use assets and of intangible assets, deferred tax expense (or recovery), share-based compensation expense and net financial costs. These additional measures do not consider the net change in non-cash working capital items in order to exclude seasonality effects and are used by manage- ment in its assessments of cash flows from long-term operations. Therefore, adjusted cash flows from operating activities may not be comparable to the cash flows from operating activities of other companies. GENERAL BUSINESS OVERVIEW AS AT NOVEMBER 30, 2024 Richelieu is a leading North American importer, manufacturer, and distributor of specialty hardware and related products. Richelieu offers customers a broad mix of products sourced from manufacturers worldwide. The solid rela- tionships Richelieu has built with the world’s leading suppliers enable it to provide customers with the latest innovative products tailored to their business needs. The residential and commercial renovation industry is the Corporation’s principal source of growth. Richelieu’s offer 112 interconnected centres Over 145,000 different items 48 distribution centres in Canada More than 120,000 active customers 61 distribution centres in the United States 5,100,000 sq.ft. of storage 3 manufacturing plants in Canada Main product categories Furniture, glass and building decorative and functional hardware Sliding door systems Decorative and functional panels Lighting systems High pressure laminates Finishing and decoration products Baluster and railings Ergonomic workstations components Floor protection products Kitchen and closet storage solutions Power tools accessories Those products targeted to an extensive customer base of kitchen and bathroom cabinets, storage and closet, home furnishing and office furniture, door and window manufacturers, residential and commercial woodwork- ers, as well as hardware retailers including renovation superstores. This offering is completed by the Corporation’s three manufacturing subsidiaries (Les Industries Cedan Inc., Menuiserie des Pins Ltée and USIMM UNIGRAV Inc)., which manufacture a variety of veneer sheets and edge banding products, a broad selection of decorative mould- ings and components for the window and door industry as well as custom products, including a 3D scanning centre. 45 Management’s Discussion and Analysis Annual Report 2024 · Richelieu The Corporation employs over 3,000 people throughout its network, close to half of whom work in marketing, sales, and customer service. Nearly 50% of the Corporation’s employees are Richelieu shareholders. MAIN TRADEMARKS MISSION AND STRATEGY Richelieu’s mission is to create shareholders’ value and contribute to its customers’ growth and success, while favouring a business culture focused on quality of service and results, partnership, and intrapreneurship. To sustain its growth and remain a leader in its specialty market, the Corporation continues to implement the strategy that has proved beneficial to date, with a par- ticular focus on: ▪ strengthening its product offering by continuously introducing each year new diversified products that meet its market segment needs and position it as the specialist in functional and decorative hardware for manufacturers and retailers; ▪ further developing its current markets in Canada and the United States with the support of a specialized sales and marketing team capable of providing customers with personalized service, and ▪ pursuing its North American expansion by opening new distribution centres and through efficiently integrated, profitable acquisitions made at the right price, offering high growth potential and complementarity to its prod- uct mix and expertise. Richelieu’s solid and efficient organization, highly diversi- fied product selection, and long-term relationships with leading suppliers worldwide allows the Corporation to compete effectively in a fragmented market consisting mainly of a host of regional distributors offering a limited range of products. NETWORK DEVELOPMENT During the year, Richelieu concluded the following acquisitions: Date Company Name Nature of operations Locations December 1, 2023 Olympic Forest Products Distributor of specialized lumber and panel products Erin, ON January 15, 2024 Rapid Start Distributor of specialized hardware Rittman, OH March 27, 2024 Allegheny Plywood Distributor of specialty panels and decorative surfaces Pittsburgh, PA, Allentown, PA and Cleveland, OH November 13, 2024 Panexel Distributor of decorative panels Boucherville, QC December 1, 2024* Mill Supply Distributor of hardware and specialty products Dartmouth, N.S. and Charlottetown, P.E.I. January 6, 2025* Darant Distributing Distributor of specialized hardware Denver, CO January 13, 2025* Midwest Specialty Products Distributor of decorative surfaces Minneapolis, MN * Three acquisitions completed after November 30, 2024 as indicated in section Subsequent events of this report. 46 Management’s Discussion and Analysis Annual Report 2024 · Richelieu These seven acquisitions together will add approximately $100 million in annual sales. Additionally, in December 2023, the Corporation completed the Calgary expansion project by consolidating two centres into a single 250,000 sq. ft. warehouse. This new facility will enhance its service capacity and optimize operations, centralizing distribu- tion activities for the retailers market in Western Canada in Calgary. The Corporation has also begun optimizing distribution operations for the retailers market in Ontario and Eastern Canada. These projects are ongoing and have already involved the transfer of operations from three distribution centres. Richelieu also consolidated two dis- tribution centres located in the New York area and on the West coast of Florida. FINANCIAL HIGHLIGHTS (in thousands of $, except per-share amounts, number of shares and data expressed as a %) Years ended November 30 2024 $ 2023 $ 2022 $ 2021 $ 2020 $ Sales 1,832,218 1,787,754 1,802,787 1,440,416 1,127,840 EBITDA (1) 201,419 230,404 287,442 234,398 154,461 EBITDA margin (%) 11.0 12.9 15.9 16.3 13.7 Net earnings 89,480 113,827 169,949 142,331 85,611 Net earnings attributable to shareholders of the Corporation 85,754 111,474 168,390 141,764 85,222 ▪ Per share—basic ($) 1.54 2.00 3.01 2.54 1.51 ▪ Per share—diluted ($) 1.53 1.98 2.99 2.51 1.50 Net margin (%) 4.7 6.2 9.3 9.8 7.6 Adjusted cash flows from operating activities (1) 165,695 190,483 227,795 182,991 121,125 ▪ Per share—diluted ($) (1) 2.95 3.39 4.04 3.24 2.14 Dividends paid to Shareholders of the Corporation 33,503 33,521 29,083 19,374 11,284 ▪ Per share ($) (2) 0.600 0.600 0.520 0.280 0.200 Weighted average number of shares outstanding (diluted) (in thousands) 56,125 56,216 56,345 56,466 56,646 As at November 30 Total assets 1,394,129 1,314,963 1,283,865 964,180 771,056 Working capital 612,924 621,764 562,548 456,376 377,408 Current ratio 3.1 3.6 2.6 3.3 3.6 Equity 926,509 904,893 817,157 666,442 551,094 Return on average shareholders’ equity (%) 9.4 12.9 22.7 23.3 16.2 Book value per share ($) 16.78 16.13 14.65 11.93 9.86 Long-term debt 5,902 5,346 6,067 6,439 5,792 Net cash and cash equivalents (net bank overdraft) (12,284) 23,710 (111,988) 58,707 73,928 (1) EBITDA, adjusted cash flows from operating activities and adjusted cash flows from operating activities per share are non-IFRS measures, as indicated on page 44 of this report. (2) The dividends per share presented for 2021 excludes a special dividend paid of $0.0667 per share. 47 Management’s Discussion and Analysis Annual Report 2024 · Richelieu ANALYSIS OF OPERATING RESULTS FOR THE YEAR ENDED NOVEMBER 30, 2024, COMPARED WITH THE YEAR ENDED NOVEMBER 30, 2023 Consolidated sales The following table provides an overview of Richelieu’s sales in its two main markets for the years ended November 30, 2024 and 2023 : (in millions of dollars except exchange rates) Years ended November 30 ∆ % 2024 2023 Total Internal Acquisitions Consolidated 1,832.2 1,787.8 2.5 0.3 2.2 Manufacturers 1,614.5 1,543.6 4.6 2.0 2.6 Retailers 217.7 244.2 (10.9) (10.9) — Canada 1,048.7 1,048.4 — (1.7) 1.7 Manufacturers 872.7 857.3 1.8 (0.3) 2.1 Retailers 176.0 191.1 (7.9) (7.9) — United States $US 574.5 547.2 5.0 2.1 2.9 Manufacturers 543.9 507.9 7.1 4.0 3.1 Retailers 30.6 39.3 (22.1) (22.1) — United States $CA 783.5 739.4 6.0 Average exchange rates 1.364 1.351 Consolidated sales reached $1.8 billion, an increase of $44.4 million or 2.5% over last year, of which 2.2% from acqui- sitions and 0.3% from internal growth. In currency comparable to that of fiscal 2023, the growth in consolidated sales for the year ended November 30, 2024, would have been 2.1%. (in millions of dollars, except per share data) Years ended November 30 2024 2023 ∆ % Sales 1,832.2 1,787.8 2.5 Operating expenses excluding amortization 1,630.8 1,557.4 4.7 EBITDA 201.4 230.4 (12.6) EBITDA margin (%) 11.0% 12.9% Amortization of property, plant and equipment and right-of-use assets 58.1 50.1 16.1 Amortization of intangible assets 10.8 10.9 (0.4) Net financial costs 11.7 13.3 (12.2) 80.6 74.2 8.6 Earnings before income taxes 120.8 156.2 (22.7) Income taxes 31.3 42.4 (26.1) Net earnings 89.5 113.8 (21.4) Net earnings attributable to: Shareholders of the Corporation 85.8 111.5 (23.1) Non-controlling interests 3.7 2.4 58.4 Net earnings per share attributable to shareholders of the Corporation Basic 1.54 2.00 (23.0) Diluted 1.53 1.98 (22.7) 48 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Earnings before interest, income taxes, and amortiza- tion (EBITDA) totalled $201.4 million, down by $29.0 mil- lion or 12.6% over 2023. This decrease is mainly due to the reduction in gross margin, caused by the cost of inventor- ies purchased at higher prices than current levels, as well as by the decline in the selling prices of certain products. Additionally, temporary effects related to the ongoing consolidation and expansion projects have contributed to this decline. Therefore EBITDA margin stood at 11.0%, compared with 12.9% for 2023. Amortization expenses amounted to $69.0 million, com- pared with $60.9 million for 2023, an increase of $8.1 mil- lion, caused by the rise in property, plant and equipment, and right-of-use assets, stemming mainly from recent busi- ness acquisitions and expansion and modernization pro- jects completed in 2023 and early this year. Net financial costs were $11.7 million, compared to $13.3 million, down by $1.6 million due to the repayment of credit lines, offset by the impact of higher interest expenses resulting from the increase in lease obligations. Income taxes amounted to $31.3 million, a decrease of $11.0 million over 2023. Net earnings were down 21.4%. Considering non-control- ling interests, net earnings attributable to shareholders of the Corporation totalled $85.8 million, a decrease of 23.1% compared to 2023. Net earnings per share amounted to $1.54 basic and $1.53 diluted, compared with $2.00 basic and $1.98 diluted for 2023, a decrease of 23.0% and 22.7% respectively. Comprehensive income totalled $99.2 million, reflect- ing a positive adjustment of $9.7 million on translation of the financial statements of the subsidiary in the United States, compared with $114.7 million for 2023, which reflected a positive adjustment of $0.9 million on trans- lation of the financial statements of the subsidiary in the United States. Quarterly data (unaudited) (in millions of dollars, except per share data) 2024 Q1 Q2 Q3 Q4 Sales 406.9 481.4 467.7 476.2 EBITDA 40.4 53.8 53.0 54.3 Net earnings attributable to shareholders of the Corporation 15.2 23.4 22.7 24.4 ▪ Basic per share ($) 0.27 0.42 0.41 0.44 ▪ Diluted per share ($) 0.27 0.42 0.41 0.44 2023 Q1 Q2 Q3 Q4 Sales 403.0 472.1 459.0 453.7 EBITDA 49.1 61.5 61.0 58.8 Net earnings attributable to shareholders of the Corporation 22.4 30.7 29.8 28.5 ▪ Basic per share ($) 0.40 0.55 0.53 0.51 ▪ Diluted per share ($) 0.40 0.55 0.53 0.51 2022 Q1 Q2 Q3 Q4 Sales 384.5 487.9 472.9 457.5 EBITDA 53.7 77.9 79.2 76.7 Net earnings attributable to shareholders of the Corporation 30.1 47.0 46.4 44.9 ▪ Basic per share ($) 0.54 0.84 0.83 0.80 ▪ Diluted per share ($) 0.53 0.83 0.82 0.80 49 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Quarterly variations in earnings—The first quarter closing at the end of February is generally the year’s weakest quar- ter for Richelieu in light of fewer number of business days due to the end-of-year holiday period and the wintertime slowdown in renovation and construction work. The third quarter ending August 31 also includes fewer business days due to the summer holidays, which can be reflected in the period’s financial results. The second and fourth quarters ending May 31 and November 30, respectively, generally represent the year’s most active periods. FOURTH QUARTER ENDED NOVEMBER 30, 2024 Consolidated sales The following table provides an overview of Richelieu’s sales in its two main markets for the quarters ended November 30, 2024 and 2023: (in millions of dollars except exchange rates) Quarters ended November 30 ∆ % 2024 2023 Total Internal Acquisitions Consolidated 476.2 453.7 5.0 2.3 2.7 Manufacturers 421.6 393.2 7.2 4.1 3.1 Retailers 54.6 60.5 (9.7) (9.7) — Canada 275.4 267.6 2.9 1.2 1.7 Manufacturers 230.2 220.5 4.4 2.3 2.1 Retailers 45.2 47.1 (4.0) (4.0) — United States $US 145.9 136.2 7.1 3.1 4.0 Manufacturers 139.0 126.4 10.0 5.7 4.3 Retailers 6.9 9.8 (29.6) (29.6) — United States $CA 200.8 186.1 7.9 Average exchange rates 1.376 1.366 Fourth-quarter consolidated sales amounted to $476.2 million, compared with $453.7 million for the cor- responding quarter of 2023, an increase of $22.5 million or 5.0%, of which 2.3% resulted from internal growth and 2.7% from acquisitions. At comparable exchange rates to the fourth quarter of 2023, the consolidated sales growth would have been 4.6% for the quarter ended November 30, 2024. Earnings before interest, income taxes, and amortiza- tion (EBITDA) amounted to $54.3 million compared with $58.8 million in the fourth quarter of 2023, down 7.7%. The gross margin is slightly lower than in 2023, and the EBITDA margin stood at 11.4%, compared to 13.0% in the fourth quarter of 2023. This decline was primarily due to lower sales prices for certain products, higher cost of goods sold in specific categories, as well as operational expenses related to the ongoing consolidation and expan- sion projects. Amortization expenses amounted to $17.7 million com- pared with $16.4 million for the corresponding quarter of 2023, an increase of $1.3 million. Net financial costs are up $0.8 million. Income taxes amounted to $8.2 mil- lion compared with $10.8 million for the fourth quarter of 2023. Net earnings were $25.4 million, down by 13.7% over the corresponding quarter of 2023. Considering non-control- ling interests, net earnings attributable to shareholders of the Corporation amounted to $24.4 million, down by 14.6% over the fourth quarter of 2023. Net earnings per share were $0.44 basic and diluted, compared with $0.51 basic and diluted for the fourth quarter of 2023. Comprehensive income amounted to $37.2 million, reflecting a positive adjustment of $11.8 million on trans- lation of the financial statements of the subsidiary in the United States, compared with $29.8 million for the fourth quarter of 2023, which reflected a positive adjustment of $0.4 million on translation of the financial statements of the subsidiary in the United States. 50 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Cash flows from operating activities (before net change in non-cash working capital balances) amounted to $43.0 million or $0.77 per share, compared with $49.3 mil- lion or $0.88 per share for the fourth quarter of 2023, a decrease of 12.8% resulting primarily from net earnings decrease. The net change in non-cash working capital balances used cash flows of $15.8 million, reflecting the change in inventory and accounts receivable of $7.7 mil- lion, whereas the change in accounts payable and other items required cash flows of $8.1 million. Consequently, operating activities provided cash flows of $27.2 million, compared with $72.7 million for the fourth quarter of 2023. Financing activities used cash flows of $41.8 million, com- pared with $14.3 million for the fourth quarter of 2023. This change primarily resulted from common share repur- chases of $20.1 million for the fourth quarter of 2024 while no share repurchases were made in the fourth quarter of 2023. Investing activities totaled $7.9 million in the fourth quarter including $2.7 million for business acquisitions completed during the quarter and $5.1 million for the acquisition of various capital assets, notably to increase production capacity at one of our centre and for leasehold improvements related to ongoing consolidation projects. FINANCIAL POSITION as at November 30, 2024 Analysis of significant cash flows (in millions of dollars) Years ended November 30 2024 2023 Cash flows provided by (used in): Operating activities 133.6 270.7 Financing activities (117.9) (72.4) Investing activities (50.8) (61.8) Effect of exchange rate changes on cash and cash equivalents (0.8) (0.8) Net change in cash and cash equivalents (bank overdraft) (36.0) 135.7 Net cash and cash equivalents (net bank overdraft), beginning of period 23.7 (112.0) Net cash and cash equivalents (net bank overdraft), end of period (12.3) 23.7 Reconciliation of cash flow from operating activities to adjusted cash flow from operating activities: Cash flow from operating activities 133.6 270.7 Net change in non- cash working capital balances (inflow) 32.1 (80.2) Adjusted cash flows from operating activities 165.7 190.5 Operating activities Cash flows from operating activities (before net change in non-cash working capital balances) reached $165.7 million or $2.95 diluted per share, compared with $190.5 million or $3.39 diluted per share for 2023, a decrease of 13.0% mainly reflecting the net earnings decrease. The net change in non-cash working capital balances used cash flows of $32.1 million, mainly representing changes in inventory of $10.0 million whereas accounts receivable, payable, and other items used cash flows of $22.1 million. Consequently, operating activities generated a cash inflow of $133.6 mil- lion compared to a cash inflow of $270.7 million for 2023. 51 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Financing activities Financing activities used cash flows of $117.9 million, compared with $72.4 million for 2023. During the year, Richelieu repaid long-term debt of $3.2 million, paid lease obligations of $41.1 million and issued shares for $3.4 million, compared to a long-term debt repayment of $5.3 million, lease obligations payments of $34.1 mil- lion and a $8.6 million share issue in 2023. Dividends paid to shareholders of the Corporation amounted to $33.5 million compared to the same amount in 2023. The Corporation also repurchased common shares for an amount of $38.7 million compared with $0.8 million in 2023. Investing activities Investing activities used cash flows of $50.8 million, including $20.3 million mainly for four business acquisi- tions completed in fiscal 2024 and $30.6 million primarily for the purchase of equipment aimed at maintaining and improving operational efficiency, as well as for distribu- tion centre expansion projects, including investments related to the consolidation of the new Calgary centre. Sources of financing As at November 30, 2024, net bank overdraft amounted to $12.3 million, compared with net cash of $23.7 million as at November 30, 2023. The Corporation had a working capital of $612.9 million for a current ratio of 3.1:1, com- pared with $621.8 million as at November 30, 2023. Richelieu believes it has the capital resources to fulfill its ongoing commitments and obligations and to assume the funding requirements needed for its growth and the financing and investing activities between now and the end of 2025. The Corporation continues to benefit from an authorized line of credit of $85 million [November 30, 2023—$150 million] as well as a line of credit of US$56 million [November 30, 2023—US$56 million] renewable annually and bearing interest at prime rate and SOFR rate plus 1.40% respectively. In addition, Richelieu con- siders it could obtain access to other outside financing if necessary. The expectation set forth above consists of forward-look- ing information based on the assumption that economic conditions and exchange rates will not deteriorate signifi- cantly, operating expenses will not increase considerably, deliveries will be sufficient to fulfill Richelieu’s require- ments, the availability of credit will remain stable in 2025, and no unusual events will entail additional cap- ital expenditures. This expectation also remains subject to the risks identified under the “Risk Factors” section. Analysis of financial position (in millions of dollars, except exchange rates) As at November 30 2024 2023 ∆ % Current assets 901.8 859.5 4.9 Non-current assets 492.3 455.5 8.1 Total 1,394.1 1,315.0 6.0 Current liabilities 288.9 237.7 21.5 Non-current liabilities 176.2 169.1 4.2 Equity attributable to shareholders of the Corporation 926.5 904.9 2.4 Non-controlling interests 2.5 3.3 (23.7) Total 1,394.1 1,315.0 6.0 Exchange rates on translation of subsidiaries in the United States 1.401 1.358 Assets Total assets amounted to $1.4 billion as at November 30, 2024, an increase of 6.0 %. Current assets increased by 4.9% or $42.3 million from November 30, 2023. Non- current assets increased by 8.1%, mainly due to the addi- tion of right-of-use assets and property, plant and equip- ment related to lease renewals and expansion projects. 52 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Cash position and long-term debt (in millions of dollars) As at November 30 2024 2023 Current portion of long-term debt 3.5 2.9 Long-term debt 2.4 2.4 Total debt 5.9 5.3 Net cash and cash equivalents (net bank overdraft) (12.3) 23.7 Shareholders’ equity and share capital Equity attributable to shareholders of the Corporation totalled $926.5 million as at November 30, 2024, compared with $904.9 million as at November 30, 2023, an increase of $21.6 million. This increase is mainly due to a rise of $6.9 million in retained earnings and of $5.0 million in share capital and contributed surplus, while accumulated other comprehensive income increased by $9.7 million. As at November 30, 2024, the book value per share was $16.78, up by 4.0% over November 30, 2023, and the return on average shareholders’ equity was 9.4%. As at November 30, 2024, the Corporation’s share capital consisted of 55,218,678 common shares (56,088,365 shares as at November 30, 2023). In 2024, upon the exercise of stock options under the stock option plan, Richelieu issued 138,025 common shares at an average price of $24.96 (323,575 in 2023 at an average price of $26.43). The Corporation granted 289,000 stock options in fis- cal 2024 (306,500 in 2023) and cancelled 37,375 (41,000 in 2023). Consequently, as at November 30, 2024, 1,734,525 stock options were outstanding (1,620,925 as at November 30, 2023). Number of shares Number of options Outstanding at beginning of period 56,088,365 Outstanding at beginning of period 1,620,925 Issued 138,025 Exercised (138,025) Repurchased (1,007,712) Granted 289,000 Other — Cancelled (37,375) Outstanding, end of period 55,218,678 Outstanding, end of period 1,734,525 CONTRACTUAL COMMITMENTS as at November 30, 2024 (in millions of $) Less than 1 year Between 1 and 5 years More than 5 years Total Long-term debt 3.5 2.4 — 5.9 Operating leases 41.9 132.8 86.2 260.9 Total 45.4 135.2 86.2 266.8 For 2025 and for the foreseeable future, the Corporation expects that cash flows from operating activities and other sources of financing will be sufficient to meet its ongoing contractual commitments. The expectation set forth above consists of forward-look- ing information based on the assumption that economic conditions and exchange rates will not deteriorate signifi- cantly, operating expenses will not increase considerably, deliveries will be sufficient to fulfill Richelieu’s require- ments, the availability of credit will remain stable in 2025, and no unusual events will entail additional capital expenditures. This expectation also remains subject to disclosed “Risk Factors”. FINANCIAL INSTRUMENTS Richelieu periodically enters into foreign exchange for- ward contracts to fully or partially hedge the effects of foreign currency fluctuations related to foreign-currency denominated liabilities or to hedge forecasted purchase transactions. The Corporation has a policy of not entering into derivatives for speculative or negotiation purposes and to enter into these contracts only with major financial institutions. Richelieu also uses equity swaps to reduce the effect of fluctuations in its share price on net earnings in connection with its deferred share unit plan. 53 Management’s Discussion and Analysis Annual Report 2024 · Richelieu In notes 1 and 13 of the audited consolidated financial statements for the year ended November 30, 2024, the Corporation presents the information on the classifica- tion and fair value of its financial instruments, as well as on their value and management of the risks arising from their use. INTERNAL CONTROL OVER FINANCIAL REPORTING Management has designed and evaluated internal con- trols over financial reporting (ICFR) and disclosure con- trols and procedures (DC&P) to provide reasonable assur- ance that the Corporation’s financial reporting is reliable and that its publicly disclosed financial statements are prepared in accordance with IFRS. The President and Chief Executive Officer and the Chief Financial Officer and Chief Operating Officer have assessed, within the meaning of National Instrument 52-109—Certification of Disclosure in Issuers’ Annual and Interim Filings, the design and the effectiveness of internal controls over financial reporting as at November 30, 2024. In light of this assessment, they concluded that the design and the effectiveness of internal controls over financial reporting (ICFR and DC&P) were effective. During the year ended November 30, 2024, management ensured that there were no material changes in the Corporation’s procedures that were reasonably likely to have a material impact on its internal control over financial reporting. No such changes were identified. Due to their intrinsic limits, internal controls over finan- cial reporting only provide reasonable assurance and may not prevent or detect misstatements. In addition, projec- tions of an assessment of effectiveness in future periods carry the risk that controls will become inappropriate as a result of changes in conditions or if the degree of con- formity with standards and methods should deteriorate. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES The Corporation’s audited consolidated financial state- ments for the year ended November 30, 2024, have been prepared by management in accordance with International Financial Reporting Standards (IFRS). The preparation of the consolidated financial statements requires manage- ment to make estimates and assumptions that affect the amounts reported in the consolidated financial state- ments and accompanying notes. These estimates are based on management’s best knowledge of current events and actions that the Corporation may undertake in the future and other factors deemed relevant and reasonable. The judgments made by management in applying the accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements and the assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that could potentially result in material adjustments to the carrying amount of assets and liabilities during the following period are summarized as follows: Impairment of inventory, including inventory losses and obsolescence, requires the use of judgment and assumptions that may affect the amounts reported in the consolidated financial statements. The underlying esti- mates and assumptions are regularly reviewed. Revised accounting estimates, if any, are recognized in the period in which the estimates are revised, as well as in the future periods affected by the revisions. Actual results could dif- fer from those estimates. SUBSEQUENT EVENTS Effective December 1, 2024, the Corporation acquired all issued and outstanding share capital of Mill Supply Ltd., a distributor of hardware and specialty products oper- ating two distribution centres in Dartmouth, N.S. and Charlottetown, P.E.I. Effective January 6, 2025, the Corporation acquired the principal net assets of Darant Distributing, a distributor of specialized hardware operating a distribution centre in Denver, CO. Effective January 13, 2025, the Corporation acquired the principal net assets of Midwest Specialty Products, a dis- tributor of decorative surfaces operating a distribution centre in Minneapolis, MN. NEW ACCOUNTING POLICIES IAS 12, International Tax Reform— Pillar Two Model Rules In May 2023, the IASB published amendments to IAS 12, Income Taxes, with respect to the Pillar 2 Model Rules, to provide a temporary exception to the application of the provisions related to the deferred tax assets and liabilities. Since June 2024, the application of these amendments has been mandatory in Canada. The Corporation adopted these amendments in the third quarter of 2024 and applied the exception. 54 Management’s Discussion and Analysis Annual Report 2024 · Richelieu After evaluation, the Corporation does not expect the Pillar 2 tax rules to have a significant impact on its con- solidated financial statements. IFRS 18, Presentation and Disclosure in Financial Statements In April 2024, the IASB issued IFRS 18, Presentation and Disclosure Requirements in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The standard introduces new requirements for pres- entation within the statement of profit or loss, as well as specific disclosure requirements related to manage- ment-defined performance measures, which will now form part of the consolidated financial statements. IFRS 18 will be applicable to the Corporation beginning on December 1, 2027. The Corporation is currently evaluating the impact of the adoption of IFRS 18 on its consolidated financial statements. RISK FACTORS Richelieu is exposed to different risks that can have a material adverse effect on its profitability. To offset such risks, the Corporation has adopted various strategies adapted to the major risk factors below: Economic conditions The Corporation’s business and financial results partly depend on general economic conditions and the eco- nomic factors specific to the renovation and construction industry. Any economic downturn could lead to a decline in sales and have an adverse impact on the Corporation’s financial performance. The impacts or effects of recent announcements made by the United States regarding potential tariffs imposed on Canadian exports, and any retaliatory tariffs imposed on the United States by Canada, remain unknown and could have significant effects on the economy. Market and competition The specialty hardware and renovation products segment is highly competitive. Richelieu has developed a business strategy rooted in a diversified product offering in various targeted niche markets in North America and sourced from suppliers around the world, in creative marketing and in unparalleled expertise and quality of service. Up to now, this strategy has enabled it to benefit from a solid competitive edge. However, if Richelieu were unable to implement its business strategy with the same success in the future, it could lose market shares and its financial performance could be adversely affected. Foreign currency Richelieu is exposed to the risks related to currency fluctuations, primarily in regard to foreign-currency denominated purchases and sales made abroad. The Corporation’s products are regularly sourced from abroad. Thus, any increase in foreign currencies (primar- ily the U.S. dollar and euro) compared with the Canadian dollar tends to raise its supply cost and thereby affect its consolidated financial results. These currency fluctu- ations related risks are mitigated by the Corporation’s ability to adjust its selling prices within a relatively short timeframe so as to protect its profit margins although significant volatility in foreign currencies may have an adverse impact on its sales. Sales made abroad are mainly recorded in the United States and account for approximately 43% of Richelieu’s total sales. Any volatility in the Canadian dollar therefore tends to affect consolidated results. This risk is partially offset by the fact that major purchases are denominated in U.S. dollars. Supply and inventory management Richelieu must anticipate and meet its customers’ supply needs. To that end, Richelieu must maintain solid rela- tionships with suppliers respecting its supply criteria. The inability to maintain such relationships or to efficiently manage the supply chain and inventories could affect the Corporation’s financial position. Similarly, Richelieu must track trends and its customers’ preferences and maintain inventories meeting their needs, failing which its financial performance could be adversely affected. To mitigate its supply-related risks, Richelieu has built solid long-term relationships with numerous suppliers on several continents, most of whom are world leaders. Acquisitions Acquisitions in North America remain an important stra- tegic focus for Richelieu. The Corporation will maintain its strict acquisition criteria and pay particular attention to the integration of its acquisitions. Nevertheless, there is no guarantee that a business matching Richelieu’s acquisition criteria will be available and there can be no assurance that the Corporation will be able to make acquisitions at the same pace as in the past. However, the fact that the U.S. market remains highly fragmented and that acquisitions are generally of limited size reduces the inherent financial and operational risks. 55 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Credit The Corporation is exposed to the credit risk related to its accounts receivable. Richelieu has adopted a policy defin- ing the credit conditions for its customers to safeguard against credit losses arising from doing business with them. For each customer, the Corporation sets a specific limit that is regularly reviewed. The diversification of its products, customers and suppliers reasonably safeguards the Corporation against a concentration of its credit risk. No customer of the Corporation accounts for more than 10% of its revenues. Labour relations and qualified employees To achieve its objectives, Richelieu must attract, train and retain qualified employees while controlling its payroll. The inability to attract, train and retain qualified employ- ees and to control its payroll could have an impact on the Corporation’s financial performance. Close to 12% of Richelieu’s workforce is unionized. The Corporation’s policy is to negotiate collective agreements at conditions enabling it to maintain its competitive edge and a positive and satisfactory working environment for its entire team. Any prolonged interruption in operations as a result of a labour conflict could have an adverse impact on the Corporation’s financial results. Stability of key officers Richelieu offers a stimulating working environment and a competitive compensation plan, which help it retain a stable management team. Failure to retain the services of a highly qualified management team could compromise the success of Richelieu’s strategic execution and expan- sion, which could have an adverse impact on its finan- cial results. To adequately manage its future growth, the Corporation adjusts its organizational structure as needed and strengthens the teams at the various levels of its busi- ness. It should be noted that close to 50% of its employ- ees, including senior officers, are Richelieu shareholders. Product liability In the normal course of business, Richelieu is exposed to various product liability claims that could result in major costs and affect the Corporation’s financial pos- ition. Richelieu has agreements containing the usual lim- its with insurance companies to cover the risks of claims associated with its operations. IT contingency plan and data security The IT structure implemented by Richelieu enables it to support its operations and contributes to ensure their efficiency. As the occurrence of a disaster, including a major interruption of its computer systems, could affect its operations and financial performance, the Corporation has implemented a crisis management and IT contin- gency plan to reduce the extent of such a risk. This plan provides, among others, for an alternate physical loca- tion in the event of a disaster, generators in the event of power outages and a relief computer as powerful as the central computer. A breach of the Corporation’s IT security, loss of customer data or system disruption could adversely affect its busi- ness and reputation. Richelieu’s business is dependent on its online sales, pay- roll, transaction, financial, accounting and other data processing systems. The Corporation relies on these sys- tems to process, on a daily basis, a large number of trans- actions. Any security breach in its business processes and/or systems has the potential to impact its customer information, which could result in the potential loss of business. If any of these systems fail to operate properly or become disabled, the Corporation could potentially lose control of customer data and suffer financial loss, a disruption of its businesses, liability to customers, regu- latory intervention or damage to its reputation. In addition, any issue of data privacy as it relates to unauthorized access to, or loss of, customers and/or employees information could result in the potential loss of business, damage to Richelieu’s market reputation, liti- gation and regulatory investigation and penalties. To reduce its risk, the Corporation continuously invests in the security of its IT systems, business processes improvements and enhancements to its culture of information security. 56 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Natural disasters, terrorist acts, civil unrest, pandemics and other disruptions and dislocations, may adversely affect the Corporation Upon the occurrence of a natural disaster, or upon an inci- dent of war, riot or civil unrest, the impacted country, province, state or region may not efficiently and quickly recover from such event, which could have a materially adverse effect on the Corporation, its customers, and/or either of their businesses or operations. Terrorist attacks, public health crises including epidemics, pandemics or outbreaks of new infectious disease or viruses, domes- tic and global trade disruptions, infrastructure disrup- tions, civil disobedience or unrest, natural disasters, national emergencies, acts of war, technological attacks and related events can result in volatility and disruption to local and global supply chains, operations, mobility of people and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, busi- ness, financial conditions, results of operations and other factors relevant to the Corporation, its customers, and/or either of their businesses or operations, which may have a material adverse effect on the Corporation’s reputation, business, financial conditions or operating results. SHARE INFORMATION AS AT JANUARY 16, 2025 Issued and outstanding common shares 55,223,778 Outstanding stock options 2,022,675 OUTLOOK Soundly positioned and building on the strengths of its diversified market segments, its value-added ser- vice concept rooted in innovation and its One-stop shop approach, the performance of its website richelieu.com and its financial soundness, Richelieu will continue to drive growth through innovation and acquisitions, with the contribution of its expert and committed team. SUPPLEMENTARY INFORMATION Further information about Richelieu, including its latest Annual Information Form, is available on SEDAR+ website at www.sedarplus.com and on the Corporation’s website at www.richelieu.com. (Signed) Richard Lord President and Chief Executive Officer January 16, 2025 (Signed) Antoine Auclair Chief Financial Officer and Chief Operating Officer 57 Management’s Discussion and Analysis Annual Report 2024 · Richelieu The consolidated financial statements of Richelieu Hardware Ltd. (the “Corporation”) are the responsibility of the Corporation’s management. These consolidated financial statements have been prepared by management in accordance with IFRS and approved by the Board of Directors. The Corporation maintains accounting and internal control systems which, in management’s opinion, reason- ably ensure the accuracy of the financial information and maintain proper standards of conduct in the Corporation’s activities. The Board of Directors fulfills its responsibility regarding the consoli- dated financial statements, primarily through its Audit Committee. This committee which meets periodically with the Corporation’s managers and external auditors, has reviewed the consolidated financial statements of the Corporation and has recommended that they be approved by the Board of Directors. The consolidated financial statements have been audited by the Corporation’s external auditors, Ernst & Young LLP, Chartered Professional Accountants. Montreal, Canada, January 16, 2025. (Signed) Richard Lord President and Chief Executive Officer January 16, 2025 To the shareholders of Richelieu Hardware Ltd. Opinion We have audited the consolidated financial statements of Richelieu Hardware Ltd. and its subsidiaries [the “Corporation”], which comprise the consolidated statements of financial position as at November 30, 2024 and 2023, and the consolidated statements of earnings, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information. In our opinion, the accompanying consolidated financial state- ments present fairly, in all material respects, the consolidated financial position of the Corporation as at November 30, 2024 and 2023, and its consolidated financial performance and its con- solidated cash flows for the years then ended in accordance with International Financial Reporting Standards [“IFRSs”]. Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those stan- dards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Corporation in accordance with the eth- ical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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 judg- ment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context. Management’s report Related to the consolidated financial statements Independent auditor’s report (Signed) Antoine Auclair Chief Financial Officer and Chief Operating Officer 58 Management’s Discussion and Analysis Annual Report 2024 · Richelieu We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial state- ments section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying consolidated financial statements. Key audit matter How our audit addressed the key audit matter Valuation of customer relationships acquired through business acquisitions During the year-ended November 30, 2024, the Corporation made business acquisitions for an aggregate consideration of $21.8 million. As part of these business acquisitions, the Corporation recognized customer relationship intangible assets with a combined fair value of $5.8 million. The purchase price allocation related to these business acquisitions is disclosed in Note 3 to the consolidated financial statements. Our audit procedures performed included, among others, the following: ▪ Inspected the share and assets’ purchase agreements to obtain an understanding of all the transactions and the key terms; ▪ Involved our valuation specialists, on a sample basis, to assist in evaluating the valuation methodology selected by management, as well as validating the reasonableness of the discount rate used in the determination of the fair value of the customer relationships acquired; ▪ On a sample basis, evaluated the reasonableness of the significant valuation assumptions included within the forecasted cash flows, such as revenue growth, and EBITDA margins, as well as customer attrition, for which we reviewed historical financial data of the targets, and benchmarked against other acquisitions previously made by the Corporation; ▪ Performed sensitivity analyses on a sample basis, to test the sensitivity of the fair value conclusions to changes in significant assumptions such as revenue growth, customer attrition and discount rates; ▪ Evaluated the adequacy of the business acquisitions note disclosure included in Note 3 of the accompanying consolidated financial statements in relation to this matter. We identified the valuation of the acquisition-date fair value of the customer relationship intangible assets acquired in the business acquisitions as a key audit matter. The fair value of customer relationship intangible assets acquired is determined in reference to valuation inputs including estimates related to forecasted cash flows, such as revenue growth and earnings before interest, taxes, depreciation, and amortization [“EBITDA”] margins, as well as customer attrition and discount rates. These valuation inputs utilized in establishing the fair value of customer relationship intangible assets acquired require significant auditor judgment as well as the involvement of valuation specialists due to the sensitivity of the fair value conclusion to these significant assumptions. Other information Management is responsible for the other information. The other information comprises: ▪ Management’s discussion and analysis; and ▪ The information, other than the consolidated financial state- ments and our auditor’s report thereon, in the Annual Report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial state- ments, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be mater- ially misstated. We obtained management’s discussion and analysis prior to the date of this auditor’s report. If, based on the work we have per- formed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this aud- itor’s report. We have nothing to report in this regard. The Annual Report is expected to be made available to us after the date of the auditor’s report. If based on the work we will perform on this other information, we conclude there is a material misstate- ment of other information, we are required to report that fact to those charged with governance. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presenta- tion of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Corporation’s financial reporting process. 59 Management’s Discussion and Analysis Annual Report 2024 · Richelieu Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit con- ducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and main- tain professional skepticism throughout the audit. We also: ▪ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ▪ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control. ▪ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. ▪ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evi- dence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we con- clude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inad- equate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Corporation to cease to continue as a going concern. ▪ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. ▪ Obtain sufficient appropriate audit evidence regarding the finan- cial information of the entities or business activities within the Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with govern- ance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare cir- cumstances, we determine that a matter should not be communi- cated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Francis Guimond. (Signed) Ernst & Young LLP Montreal, Canada January 16, 2025 1 CPA auditor, CA, public accountancy permit no. A118111 60 Annual Report 2024 · Richelieu Consolidated Financial Statements CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at November 30 [in thousands of dollars] Notes 2024 $ 2023 $ ASSETS Current assets Cash and cash equivalents 41,389 46,327 Accounts receivable 240,138 219,264 Income taxes receivable 10,132 12,621 Inventories 598,674 572,351 Prepaid expenses 11,467 8,905 901,800 859,468 Non-current assets Property, plant and equipment 4 89,253 78,053 Intangible assets 5 64,615 67,808 Right-of-use assets 10 185,024 167,124 Goodwill 5 140,396 135,089 Deferred taxes 9 13,041 7,421 1,394,129 1,314,963 LIABILITIES AND EQUITY Current liabilities Bank overdraft 6 53,673 22,617 Accounts payable and accrued liabilities 8 167,827 169,785 Income taxes payable 9 2,772 4,373 Current portion of long-term debt 7 3,533 2,940 Current portion of lease obligations 10 41,227 37,989 Other liabilities 19,844 — 288,876 237,704 Non-current liabilities Long-term debt 7 2,369 2,406 Lease obligations 10 163,800 143,336 Deferred taxes 9 10,085 11,169 Other liabilities — 12,191 465,130 406,806 Equity Share capital 8 75,145 72,289 Contributed surplus 8 11,182 9,040 Retained earnings 801,879 794,971 Accumulated other comprehensive income 12 38,303 28,593 Equity attributable to shareholders of the Corporation 926,509 904,893 Non-controlling interests 2,490 3,264 928,999 908,157 1,394,129 1,314,963 See accompanying notes to the consolidated financial statements. On behalf of the Board of Directors: (Signed) Richard Lord Director (Signed) Luc Martin Director 61 Annual Report 2024 · Richelieu Consolidated Financial Statements CONSOLIDATED STATEMENTS OF EARNINGS Years ended November 30 [in thousands of dollars, except earnings per share] Notes 2024 $ 2023 $ Sales 1,832,218 1,787,754 Operating expenses excluding amortization 8, 13 1,630,799 1,557,350 Earnings before amortization, financial costs and income taxes 201,419 230,404 Amortization of property, plant and equipment and right-of-use assets 4, 10 58,139 50,070 Amortization of intangible assets 5 10,819 10,857 Net financial costs 10 11,656 13,280 80,614 74,207 Earnings before income taxes 120,805 156,197 Income taxes 9 31,325 42,370 Net earnings 89,480 113,827 Net earnings attributable to: Shareholders of the Corporation 85,754 111,474 Non-controlling interests 3,726 2,353 89,480 113,827 Net earnings per share attributable to shareholders of the Corporation 8 Basic 1.54 2.00 Diluted 1.53 1.98 See accompanying notes to the consolidated financial statements. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended November 30 [in thousands of dollars] Notes 2024 $ 2023 $ Net earnings 89,480 113,827 Other comprehensive income that will be reclassified to net earnings Exchange differences on translation of foreign operations 12 9,710 850 Comprehensive income 99,190 114,677 Comprehensive income attributable to: Shareholders of the Corporation 95,464 112,324 Non-controlling interests 3,726 2,353 99,190 114,677 See accompanying notes to the consolidated financial statements. 62 Annual Report 2024 · Richelieu Consolidated Financial Statements CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Years ended November 30 [in thousands of dollars] Attributable to shareholders of the Corporation Share capital $ Contributed surplus $ Retained earnings $ Accumulated other comprehensive income $ Total $ Non- controlling interests $ Total equity $ Notes 8 8 12 Balance as at November 30, 2022 61,829 8,400 719,185 27,743 817,157 2,665 819,822 Net earnings — — 111,474 — 111,474 2,353 113,827 Other comprehensive income — — — 850 850 — 850 Comprehensive income — — 111,474 850 112,324 2,353 114,677 Shares repurchased (22) — (751) — (773) — (773) Stock options exercised 10,482 (1,930) — — 8,552 — 8,552 Share-based compensation expense — 2,570 — — 2,570 — 2,570 Dividends [note 17] — — (33,521) — (33,521) (817) (34,338) Other liabilities — — — — — (2,353) (2,353) Change in fair value of other liabilities — — (1,416) — (1,416) 1,416 — 10,460 640 (35,688) — (24,588) (1,754) (26,342) Balance as at November 30, 2023 72,289 9,040 794,971 28,593 904,893 3,264 908,157 Net earnings — — 85,754 — 85,754 3,726 89,480 Other comprehensive income — — — 9,710 9,710 — 9,710 Comprehensive income — — 85,754 9,710 95,464 3,726 99,190 Shares repurchased (1,342) — (37,365) — (38,707) — (38,707) Stock options exercised 4,198 (753) — — 3,445 — 3,445 Share-based compensation expense — 2,895 — — 2,895 — 2,895 Dividends [note 17] — — (33,503) — (33,503) (2,465) (35,968) Acquisition of interests from minority shareholders [note 3] — — (383) — (383) (1,942) (2,325) Change in fair value of other liabilities — — (7,595) — (7,595) (93) (7,688) 2,856 2,142 (78,846) — (73,848) (4,500) (78,348) Balance as at November 30, 2024 75,145 11,182 801,879 38,303 926,509 2,490 928,999 See accompanying notes to the consolidated financial statements. 63 Annual Report 2024 · Richelieu Consolidated Financial Statements CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended November 30 [in thousands of dollars] Notes 2024 $ 2023 $ OPERATING ACTIVITIES Net earnings 89,480 113,827 Items not affecting cash and cash equivalent Amortization of property, plant and equipment and right-of-use assets 4, 10 58,139 50,070 Amortization of intangible assets 5 10,819 10,857 Deferred taxes 9 (7,294) (121) Share-based compensation expense 8 2,895 2,570 Net financial costs 11,656 13,280 165,695 190,483 Net change in non-cash working capital balances (32,140) 80,174 133,555 270,657 FINANCING ACTIVITIES Repayment of long-term debt (3,205) (5,306) Payment of lease obligations 10 (41,100) (34,108) Interest paid on bank overdraft (2,332) (6,387) Dividends paid to shareholders of the Corporation 17 (33,503) (33,521) Other dividends paid (2,465) (817) Common shares issued 8 3,445 8,552 Common shares repurchased for cancellation 8 (38,707) (773) (117,867) (72,360) INVESTING ACTIVITIES Business acquisitions 3 (20,290) (19,694) Additions to property, plant and equipment and intangible assets 4, 5 (30,552) (42,093) (50,842) (61,787) Effect of exchange rate changes on cash and cash equivalents (840) (812) Net change in cash and cash equivalents (net bank overdraft) (35,994) 135,698 Net cash and cash equivalents (net bank overdraft), beginning of year 23,710 (111,988) Net cash and cash equivalents and (net bank overdraft), end of year (12,284) 23,710 Supplementary information Income taxes paid 37,549 61,488 See accompanying notes to the consolidated financial statements. 64 Annual Report 2024 · Richelieu Notes to consolidated financial statements NATURE OF BUSINESS Richelieu Hardware Ltd. (the “Corporation”) is incorporated under the laws of Quebec, Canada. The Corporation is an importer, manu- facturer and a distributor of specialty hardware and complementary products. Its products target an extensive customer base of kitchen and bathroom cabinet, storage and closet, home furnishing and office furniture manufacturers, residential and commercial wood- workers and hardware retailers including renovation superstores. The Corporation’s head office is located at 7900 Henri-Bourassa Blvd. West, Montreal, Quebec, Canada, H4S 1V4. 1. SIGNIFICANT ACCOUNTING POLICIES The Corporation’s consolidated financial statements, presented in Canadian dollars, have been prepared by management in accord- ance with International Financial Reporting Standards (“IFRS”). The Corporation’s accounting policies have been applied con- sistently to all fiscal years presented in these consolidated finan- cial statements. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates are based on management’s best knowledge of current events and actions that the Corporation may undertake in the future and other factors deemed relevant and reasonable. The judgments made by management in applying the accounting policies that have the most significant effect on the amounts recog- nized in the consolidated financial statements and the assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that could potentially result in material adjustments to the carrying amount of assets and liabil- ities during the following period relate to impairment of inventory, including inventory losses and obsolescence, and require the use of judgment and assumptions that may affect the amounts reported in the consolidated financial statements. The underlying estimates and assumptions are regularly reviewed. Revised accounting esti- mates, if any, are recognized in the period in which the estimates are revised, as well as in future periods affected by the revisions. Actual results could differ from those estimates. The Corporation’s consolidated financial statements have been properly prepared within the reasonable limits of materiality, in accordance with the accounting policies summarized below: Consolidation The consolidated financial statements include the accounts of Richelieu Hardware Ltd. and its subsidiaries as described in note 14. All significant intercompany balances and transactions have been eliminated upon consolidation. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments with a term of three months or less. Cash and cash equivalents are measured at amortized cost. Accounts Receivable Accounts receivable are carried at cost, which is equivalent to fair market value on initial recognition. Subsequent measurements are recorded at amortized cost using the effective interest method. For the Corporation, this measurement is usually equivalent to cost due to their short-term maturities. At the end of each period, the Corporation estimates the expected credit losses. These expected losses are adjusted to reflect factors that are specific to accounts receivable, general economic conditions as well as an assessment of both current and forecasted economic conditions prevailing at the reporting date. The evaluation is calculated using the simpli- fied method. The net change in expected credit losses on accounts receivable is recognized in net earnings. Inventories Inventories, which consist primarily of finished goods, are valued at the lower of average cost and net realizable value. Net realizable value is the expected selling price in the normal course of business, less estimated costs to sell. The Corporation uses judgment when estimating the effect of certain factors on the net realizable value of inventory, such as inventory obsolescence and losses. The quan- tity, age and condition of inventory are measured and regularly assessed during the year. Property, Plant and Equipment Property, plant and equipment are recorded at cost and amor- tized on a straight-line basis over their estimated useful lives. The main components have different useful lives and are amortized separately. The amortization method and useful life estimates are reviewed annually. Buildings 20 years Leasehold improvements Lease terms Machinery and equipment 5-10 years Rolling stock 5 years Furniture and fixtures 3-5 years Computer hardware 3-5 years Notes to consolidated financial statements November 30, 2024 et 2023 (amounts are in thousands of dollars, except per-share amounts or otherwise indicated) 65 Annual Report 2024 · Richelieu Notes to consolidated financial statements Intangible Assets Intangible assets are acquired assets that lack physical substance and meet the specified criteria for recognition apart from prop- erty, plant and equipment. Intangible assets consist mainly of soft- ware, non-competition agreements, customer relationships, and trademarks. Software and customer relationships are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 20 years, depending on each case, while non-competition agreements are amortized over the terms of the agreements which are currently between 2 and 5 years. Trademarks have an indefinite useful life and are therefore not amortized. Leases i) Right-of-use assets Right-of-use assets are recognized at the commencement date of the lease (i.e., the date the underlying asset is available for use) and are measured at cost, less any accumulated amortization and impairment losses, and adjusted for any remeasurement of the lease obligations. The cost of right-of-use assets includes the amount of lease obligations recognized, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are amortized on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, which is currently between 2 and 15 years. ii) Lease obligations At the commencement date of the lease, the lease obligations are measured at the present value of lease payments to be made over the lease terms using the Corporation’s incremental borrowing rate. The lease payments include fixed payments less any lease incen- tives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised and payments of penalties for terminating the lease, if applicable. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that trig- gers the payment occurs. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired and reflects the development potential of the acquired businesses, combined with the Corporation’s oper- ations and from the expected synergies, and expansion of the prod- uct offering and distribution network. Goodwill is not amortized. Impairment of Non-Current Assets At the end of each reporting period, the Corporation determines whether indicators of impairment exist for its non-current assets, excluding goodwill and intangible assets with indefinite useful lives. If such indicators exist, the non-current assets are tested for impairment. When the impairment test indicates that the carrying amount of the tangible or intangible asset exceeds its recoverable amount, an impairment loss is recognized in net earnings in an amount equal to the excess. The Corporation is required to test goodwill and intangible assets with indefinite useful lives for impairment at least once a year, whether or not indicators of impairment exist. Impairment tests are carried out on the asset itself, the cash-generating unit (“CGU”) or group of CGUs as at November 30. A CGU is the smallest iden- tifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill and the supporting assets that cannot be wholly allocated to a single CGU are tested for impairment at the group of CGUs level. Impairment tests consist of a comparison between the carrying and recoverable amounts of an asset, CGU or group of CGUs. The recoverable amount is the higher of value in use and fair value less costs to sell. Where the carrying amount exceeds the recoverable amount, an impairment loss equal to the excess is rec- ognized in net earnings, however, the carrying amount of the assets is not reduced below the higher of their fair value less costs to sell and their value in use. Other than for goodwill, if a reversal of an impairment loss occurs, it must be recognized immediately in net earnings. On reversal of an impairment loss, the increased recover- able amount of an asset must not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized in respect of the asset in prior years. As part of goodwill impairment tests, the Corporation generally uses fair value less costs to sell to estimate the recoverable amount, which is calculated by multiplying earnings before depreciation, amortization, financial charges and taxes (“EBITDA”) of the CGU or group of CGUs by the multiple of the EBITDA from comparable companies whose activities are similar to those of the Corporation. As part of the impairment tests on intangible assets with indefinite useful lives, the Corporation also uses the fair value less costs to sell in order to estimate the recoverable amount, which is calculated according to the relief-from-royalty method. This method involves estimating the fair value of trademarks by reference to royalty levels payable for the use of comparable assets. Financial Liabilities Bank overdraft, accounts payable, accrued liabilities and long-term debt are initially recorded at fair value. They are subsequently measured at amortized cost using the effective interest method. For the Corporation, this measurement is usually equivalent to cost. Other Liabilities Options to purchase non-controlling interests that correspond to the definition of a financial liability are measured at fair value and presented under other liabilities. Gains or losses resulting from revaluation at the end of each period may be recorded in net earn- ings or in retained earnings. The Corporation has chosen to record them in retained earnings. The Corporation has classified the meas- urement of this fair value as level 3, as it is based on data which is not observable in the market. The fair value of the Corporation’s other liabilities is assessed based on a predetermined calculation method, based on a multiple of the average EBITDA over a specific period, depending on the agreements. Amounts that may become due within the next 12 months are classified as short-term items. 66 Annual Report 2024 · Richelieu Notes to consolidated financial statements Revenue Recognition Revenues are measured at the fair value of the consideration received or receivable, net of returns and discounts granted, and are recognized when control of the goods is transferred to the cus- tomer, which occurs when the Corporation satisfies its performance obligation, generally upon delivery of the goods to the customer. Income Taxes The Corporation follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabil- ities are accounted for based on estimated taxes recoverable or payable that would result from the recovery or settlement of the carrying amount of assets and liabilities. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the years in which the temporary differences are expected to reverse. Changes in these balances are recognized in net earnings in the year in which they arise. Deferred tax assets are recognized to the extent that it is probable that the Corporation will have future taxable income against which these tax assets may be offset. In determining these deferred tax assets, assumptions are considered, such as the period for tax loss carrying forwards to be completely used up and the level of future taxable income in accordance with tax planning strategies. Foreign Currency Translation Monetary assets and liabilities of the Corporation are translated at the exchange rate in effect at the end of the reporting period and the other items in the statements of financial position and earnings are translated at the exchange rates in effect at the date of transaction. Foreign exchange gains and losses are recognized in net earnings in the year in which they arise. The assets and liabilities of the U.S. subsidiary are translated into Canadian dollars at the exchange rate in effect at the end of the reporting period. Revenues and expenses are translated at the aver- age monthly exchange rate in effect during the periods. Foreign exchange gains and losses are recognized in the consolidated state- ments of comprehensive income. Derivative Financial Instruments The Corporation periodically enters into foreign exchange forward contracts with financial institutions to partially hedge the effects of fluctuations in foreign exchange rates related to foreign cur- rency liabilities, as well as to hedge anticipated purchase trans- actions. The Corporation does not use derivatives for speculation or trading purposes and only enters into these contracts with major financial institutions. The Corporation enters into equity swaps to reduce its exposure on net earnings related to the fluctuations in the Corporation’s share price relating to its deferred share unit plan. Fair Value Measurements Hierarchy Fair value measurements of financial assets and liabilities recog- nized at fair value in the consolidated statements of financial pos- ition or whose fair value is presented in the notes to the consoli- dated financial statements are categorized in accordance with the following hierarchy: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Share-Based Payment The Corporation offers a stock option plan to its officers and key employees. The subscription price of each share issuable under the plan is equal to the weighted average market price of the shares for the five (5) business days prior to the day the option was granted and must be paid in full at the time the option is exercised. Options vest at a rate of 25% per year starting one year after the grant date and expire on the tenth anniversary of the grant date. The Corporation recognizes stock-based compensation and other share-based pay- ments in net earnings using the fair value method for stock options granted with a corresponding increase recorded in contributed surplus. The Black & Scholes model is used to determine the grant date fair value of stock options. The application of this method is based on different assumptions such as risk-free interest rate, expected life, volatility and dividend yield as described in note 8. Deferred Share Unit Plan The Corporation offers a deferred share unit (“DSU”) plan to its directors who can elect to receive part or all of their compensation in DSUs. The value of DSUs is redeemable for cash only when a director ceases to be a member of the Board. The number of DSUs granted to a director equals the compensation amount to be con- verted into DSUs divided by the average closing price of the shares for the five (5) business days immediately preceding the date of the payment. The DSU liability is measured at fair value at each closing date on the basis of the number of outstanding share units and the market price of the Corporation’s common shares and is included in Accounts payable and accrued liabilities. The Corporation has entered into equity swaps to reduce its exposure on net earnings related to the fluctuations of the Corporation’s share price. The net effect of the equity swaps mostly offsets the impact of the change in the Corporation’s share price and is included in the Operating expenses excluding amortization. Net Earnings per Share Net earnings per share are calculated based on the weighted average number of common shares outstanding during the year. Diluted earnings per share are calculated using the treasury stock method and take into account all the elements that have a dilutive effect. 67 Annual Report 2024 · Richelieu Notes to consolidated financial statements 2. NEW ACCOUNTING POLICIES IAS 12, International Tax Reform—Pillar Two Model Rules In May 2023, the IASB published amendments to IAS 12, Income Taxes, with respect to the Pillar 2 Model Rules, to provide a tem- porary exception to the application of the provisions related to the deferred tax assets and liabilities. Since June 2024, the application of these amendments has been mandatory in Canada. The Corporation adopted these amendments in the third quarter of 2024 and applied the exception. After evaluation, the Corporation does not expect the Pillar 2 tax rules to have a significant impact on its consolidated financial statements. IFRS 18, Presentation and Disclosure in Financial Statements In April 2024, the IASB issued IFRS 18, Presentation and Disclosure Requirements in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The standard introduces new requirements for presentation within the statement of profit or loss, as well as specific disclosure requirements related to manage- ment-defined performance measures, which will now form part of the consolidated financial statements. IFRS 18 will be applicable to the Corporation beginning on December 1, 2027. The Corporation is currently evaluating the impact of the adoption of IFRS 18 on its consolidated financial statements. 3. BUSINESS ACQUISITIONS 2024 Effective December 1, 2023, the Corporation acquired all issued and outstanding shares of Olympic Forest Products Inc., a distributor of specialized lumber and panel products operating one distribution centre in Erin, ON. Effective January 1, 2024, the Corporation acquired from minor- ity shareholders an additional 15% interest in the voting shares of Provincial Woodproducts Ltd, thereby increasing its interest to 100%. Effective January 15, 2024, the Corporation acquired the princi- pal net assets of Rapid Start, a distributor of specialized hardware operating one distribution centre in Rittman, OH. Effective March 27, 2024, the Corporation acquired the principal net assets of Allegheny Plywood, a distributor of specialized pan- els and decorative surfaces operating three distribution centres in Pittsburgh and Allentown, PA, and in Cleveland, OH. Effective April 19, 2024, the Corporation acquired from minor- ity shareholders an additional 5% interest in the voting shares of Menuiserie des Pins Ltée, thereby increasing its interest to 90%. Effective June 4, 2024, the Corporation acquired from minority shareholders an additional 10% interest in the voting shares of USIMM UNIGRAV Inc., thereby increasing its interest to 85%. Effective November 13, 2024, the Corporation acquired the principal net assets of Panexel, a distributor of decorative panels operating one distribution centre in Boucherville, QC. Sales of $48.1 million have been generated by these acquisi- tions since their completion. Had these acquisitions been made on December 1, 2023, management believes that sales included in the consolidated statement of earnings would have totalled approximately $71.9 million. 2023 Effective January 1, 2023, the Corporation acquired, through a newly formed subsidiary, 100% of all issued and outstanding shares of both USIMM Inc. and UNIGRAV Inc., two 3D scanning providers offering custom-made products for the architectural and industrial market, in partial consideration for which a participation equiva- lent to 25% of the share capital of said newly formed subsidiary was issued in the name of the sellers. The offices of USIMM and UNIGRAV are respectively located in Montreal and Drummondville, QC. Effective January 4, 2023, the Corporation acquired all issued and outstanding shares of Quincaillerie Rabel Inc., a specialty hardware distributor operating one distribution centre in Terrebonne, QC. Effective January 6, 2023, the Corporation acquired all issued and outstanding shares of Trans-World Distributing Ltd., a distributor of industrial fasteners for the industrial market operating one dis- tribution centre in Dartmouth, NS. Effective April 3, 2023, the Corporation acquired the main net assets of Maverick Hardware, a distributor of specialized hardware oper- ating one distribution centre in Eugene, OR. Effective April 30, 2023, the Corporation acquired the main net assets of Westlund Distributing, a distributor of specialized hard- ware operating one distribution centre in Monticello, MN. 68 Annual Report 2024 · Richelieu Notes to consolidated financial statements Summary of Acquisitions The preliminary purchase price allocations, at the transaction dates, are summarized as follows: 2024 $ 2023 $ Current assets acquired 16,568 10,956 Property, plant and equipment and right-of-use assets [note 4, 10] 5,203 2,974 Intangible assets [note 5] 6,234 9,236 Goodwill [note 5] 4,288 7,467 32,293 30,633 Current liabilities assumed (7,425) (2,561) Non-current liabilities assumed (2,258) (2,214) Deferred tax liabilities (857) (1,912) Non-controlling interests — (625) Net assets acquired 21,753 23,321 Consideration Cash, net of cash acquired * 17,965 19,694 Consideration payable [note 7] 3,788 3,627 21,753 23,321 * The buyouts of minority shareholders’ interests during the fiscal year involved a total cash consideration of $2.3 million. Goodwill deductible for tax purposes with regard to these acquisi- tions amounts to $0.8 million [$1.3 million in 2023]. Preliminary purchase price allocations are subject to fair value adjustments to assets, liabilities and goodwill until the estima- tion process is complete. The final allocation of the purchase price should be completed as soon as management has gathered all the information available and deemed necessary to finalize the calcu- lation, in particular for intangible assets, no later than 12 months after the acquisition date. 69 Annual Report 2024 · Richelieu Notes to consolidated financial statements 4. PROPERTY, PLANT AND EQUIPMENT Land $ Buildings $ Leasehold improvements $ Machinery and equipment $ Rolling stock $ Furniture and fictures $ Computer equipment $ Total $ Cost 3,681 31,296 12,227 63,906 29,156 19,671 23,023 182,960 Accumulated amortization — (24,276) (8,282) (41,743) (18,661) (17,400) (17,766) (128,128) Net carrying amount as at November 30, 2022 3,681 7,020 3,945 22,163 10,495 2,271 5,257 54,832 Acquisitions (dispositions) 2,980 6,637 6,886 10,975 8,495 2,574 859 39,406 Business acquisitions [note 3] — — — 889 109 7 11 1,016 Amortization — (984) (1,910) (6,468) (4,229) (1,190) (2,574) (17,355) Effect of changes in foreign exchange rates — — 55 49 36 9 5 154 Net carrying amount as at November 30, 2023 6,661 12,673 8,976 27,608 14,906 3,671 3,558 78,053 Cost 6,661 37,897 18,765 71,622 34,704 18,976 17,735 206,360 Accumulated amortization — (25,224) (9,789) (44,014) (19,798) (15,305) (14,177) (128,307) Net carrying amount as at November 30, 2023 6,661 12,673 8,976 27,608 14,906 3,671 3,558 78,053 Acquisitions (dispositions) 8 3,057 8,583 7,916 7,641 1,269 1,482 29,956 Business acquisitions [note 3] — — — 483 750 8 34 1,275 Amortization — (1,545) (2,550) (7,255) (5,593) (1,664) (2,340) (20,947) Effect of changes in foreign exchange rates — — 301 275 248 41 51 916 Net carrying amount as at November 30, 2024 6,669 14,185 15,310 29,027 17,952 3,325 2,785 89,253 Cost 6,669 40,916 27,551 80,136 42,938 20,252 19,094 237,556 Accumulated amortization — (26,731) (12,241) (51,109) (24,986) (16,927) (16,309) (148,303) Net carrying amount as at November 30, 2024 6,669 14,185 15,310 29,027 17,952 3,325 2,785 89,253 70 Annual Report 2024 · Richelieu 5. INTANGIBLE ASSETS AND GOODWILL Software $ Non- competition agreements $ Customer relationships $ Trademarks $ Total $ Goodwill $ Cost 13,997 8,040 103,230 7,185 132,452 127,457 Accumulated amortization (10,380) (6,615) (48,854) — (65,849) — Net carrying amount as at November 30, 2022 3,617 1,425 54,376 7,185 66,603 127,457 Acquisitions 2,687 — — — 2,687 — Business acquisitions [note 3] 5 403 8,828 — 9,236 7,467 Amortization (1,047) (788) (9,022) — (10,857) — Effect of changes in foreign exchange rates — — 124 15 139 165 Net carrying amount as at November 30, 2023 5,262 1,040 54,306 7,200 67,808 135,089 Cost 15,420 8,464 112,343 7,200 143,427 135,089 Accumulated amortization (10,158) (7,424) (58,037) — (75,619) — Net carrying amount as at November 30, 2023 5,262 1,040 54,306 7,200 67,808 135,089 Acquisitions 596 — — — 596 — Business acquisitions [note 3] — 400 5,834 — 6,234 4,288 Amortization (1,273) (494) (9,052) — (10,819) — Effect of changes in foreign exchange rates 2 1 707 86 796 1,019 Net carrying amount as at November 30, 2024 4,587 947 51,795 7,286 64,615 140,396 Cost 15,960 8,988 119,915 7,286 152,149 140,396 Accumulated amortization (11,373) (8,041) (68,120) — (87,534) — Net carrying amount as at November 30, 2024 4,587 947 51,795 7,286 64,615 140,396 For impairment test purposes, the carrying amounts of goodwill and intangible assets have been allocated to CGUs or groups of CGUs. The carrying amounts of goodwill for the two groups of CGUs that are significant in comparison with the total carrying amount of goodwill are $104.9 million and $33.5 million, while the $2.0 mil- lion balance is allocated to another CGU. The carrying amounts of intangible assets with indefinite useful lives are allocated across multiple CGUs or groups of CGUs that are not individually signifi- cant in comparison with the total carrying amount of intangible assets with indefinite useful lives. 6. BANK OVERDRAFT As at November 30, 2024, the Corporation had lines of credit with authorized amounts of C$85 million and US$56 million [C$150 mil- lion and US$56 million as at November 30, 2023], bearing interest at the bank’s prime and Secured Overnight Financial Rate (“SOFR”) rate plus 1.40%, which were respectively 5.95% and 6.08% as at November 30, 2024 [7.20% and 6.43% as at November 30, 2023]. These lines of credit are renewable annually. As at November 30, 2024, an amount of $54 million, including US$31 million, was drawn on these lines of credit [as at November 30, 2023—$23 million, including US$17 million, was drawn]. Notes to consolidated financial statements 71 Annual Report 2024 · Richelieu 7. LONG-TERM DEBT 2024 $ 2023 $ Non-interest bearing business acquisition considerations payable 5,902 5,346 Current portion of long-term debt 3,533 2,940 Long-term debt 2,369 2,406 Principal repayments are as follows: 2024 $ 2023 $ Less than 1 year 3,533 2,940 1-2 years 2,178 1,452 2-3 years 58 802 More than 3 years 133 152 5,902 5,346 8. SHARE CAPITAL Authorized Unlimited number of: ▪ Common shares, participating, entitling the holder to one vote per share. ▪ Non‑voting first and second ranking preferred shares issuable in the series, the characteristics of which are to be determined by the Board of Directors. Changes in common shares are summarized as follows: Number of shares (in thousands) $ Outstanding, November 30, 2022 55,786 61,829 Issued 324 10,482 Repurchased (20) (22) Outstanding, November 30, 2023 56,090 72,289 Issued 138 4,198 Repurchased (1,008) (1,342) Outstanding, November 30, 2024 55,220 75,145 During fiscal 2024, the Corporation issued 138,025 common shares [323,575 in 2023] at a weighted average exercise price of $24.96 per share [$26.43 in 2023] pursuant to the exercise of stock options under the stock option plan. The weighted average share price on the market at the date of exercise was $41.15 [$41.09 in 2023]. In addition, during fiscal 2024, the Corporation repurchased for cancellation 1,007,712 common shares in consideration for $38,707 [20,000 common shares for a consideration of $773 in 2023], which resulted in a premium on the redemption in the amount of $37,365 recognized as a reduction of retained earnings [premium on redemption of $751 in 2023]. Stock Option Plan Changes in stock options are summarized as follows: Number of options (in thousands) Weighted average exercise price $ Outstanding, November 30, 2022 1,680 30,50 Granted 307 37,39 Exercised (324) 26,43 Cancelled (41) 37,63 Outstanding, November 30, 2023 1,622 32,44 Granted 289 46,66 Exercised (138) 24,96 Cancelled (38) 35,56 Outstanding, November 30, 2024 1,735 35,33 The table below summarizes information regarding the stock options outstanding as at November 30, 2024: Options outstanding Exercisable options Range in exercise prices (in dollars) Number of options (in thousands) Weighted average remaining period (in years) Weighted average exercise price (in dollars) Nombre Number of options (in thousands) Weighted average exercise price (in dollars) 18,82 – 23,53 115 1,16 21,70 115 21,70 23,54 – 29,43 445 4,09 36,80 445 26,80 29,44 – 36,80 363 4,97 34,03 308 33,88 36,81 – 46,66 812 8,18 42,50 195 41,34 1,735 5,99 35,33 1,063 30,97 Notes to consolidated financial statements 72 Annual Report 2024 · Richelieu During fiscal 2024, the Corporation granted 289,000 stock options [306,500 in 2023] with a weighted average exercise price of $46.66 per share [$37.39 in 2023] and an average fair value of $11.48 per option [$9.18 in 2023] as determined using the Black & Scholes option pricing model using an expected dividend yield of 1.3% [1.4% in 2023], an expected volatility of 24.4% [24.3% in 2023], a risk-free interest rate of 3.36% [2.75% in 2023] and an expected life of 6.12 years [6.46 years in 2023] and 37,375 options were cancelled [41,000 in 2023]. For the year ended November 30, 2024, com- pensation expense related to stock options amounted to $2,895 [$2,570 in 2023] and is recognized under Operating expenses excluding amortization. Deferred Share Unit Plan The financial liability resulting from the DSU plan of $4,945 [$7,500 as at November 30, 2023] is presented under Accounts payable and accrued liabilities. As at November 30, 2024, the fair value of the equity swaps amounted to an asset of $395 and is presented under Accounts receivable [an asset of $178 as at November 30, 2023 and presented under Accounts receivable]. The Corporation classified the fair value measurement in Level 2, as it is derived from observ- able market data. The compensation expense for the DSUs for the year ended November 30, 2024 amounted to $973 [$988 in 2023] and is recognized under Operating expenses excluding amortization. Number of DSUs 2024 2023 Outstanding, beginning of year 174,413 229,179 Paid (78,292) (77,675) Granted 24,243 22,909 Outstanding, end of year 120,364 174,413 Share Purchase Plan Compensation expense related to the share purchase plan amounted to $1,362 for the year ended November 30, 2024 [$1,289 in 2023] and is recognized under Operating expenses excluding amortization. Net Earnings per Share Basic and diluted net earnings per share were calculated based on the following number of shares: (in thousands) 2024 2023 Weighted average number of shares outstanding—Basic 55,832 55,870 Dilutive effect under stock option plan 293 346 Weighted average number of shares outstanding—Diluted 56,125 56,216 The computation of diluted net earnings per share did not take into account the weighted average of 503,750 stock options [256,750 in 2023] since their exercise price, being higher than the average price of the shares for the period, would have had an anti-dilutive effect. 9. INCOME TAXES The main components of the income tax expense were as follows: 2024 $ 2023 $ Current 38,619 42,491 Deferred: Related to temporary differences (7,033) (111) Deferred tax related to changes in tax rates (261) (10) 31,325 42,370 The effective income tax rate differs from the combined statutory rates for the following reasons: 2024 $ 2023 $ Combined statutory rates 26.62% 26.62% Income taxes at combined statutory rates 32,158 41,580 Increase (decrease) resulting from: Impact of statutory rates differences for the subsidiaries (297) (289) Share-based compensation 589 524 Non-deductible expenses and other (864) 565 Changes related to tax laws and tax rates (261) (10) 31,325 42,370 Notes to consolidated financial statements 73 Annual Report 2024 · Richelieu Deferred taxes reflect the net tax impact of temporary differences between the value of assets and liabilities for accounting and tax purposes. The major components of deferred tax assets and liabil- ities of the Corporation were as follows: Deferred taxes 2024 $ 2023 $ Reserves for tax purposes deductible only upon disbursement and other tax attributes 17,781 15,185 Excess of the net carrying value of property, plant and equipment over their tax value (5,447) (8,811) Excess of the net carrying value of intangible assets and goodwill over their tax value (14,733) (13,924) Right-of-use assets and lease obligations 5,355 3,802 Net amount 2,956 (3,748) The net deferred taxes included the following as at November 30 : 2024 $ 2023 $ Deferred tax assets 13,041 7,421 Deferred tax liabilities (10,085) (11,169) 2,956 (3,748) Changes in deferred taxes for the years ended November 30 are detailed as follows: 2024 $ 2023 $ Balance at the beginning of the year, net (3,748) (2,054) In net earnings 7,294 121 Business acquisitions [note 3] (857) (1,912) Other 267 97 Balance at the end of the year, net 2,956 (3,748) As at November 30, 2024, the Corporation had $113,457 of tax- able temporary differences related to investments in subsidiaries [$101,402 as at November 30, 2023]. Deferred tax liabilities were not recognized in respect of such taxable temporary differences as the Corporation controls the decisions affecting the realization of such liabilities and does not expect these temporary differences to reverse in the foreseeable future. However, if subsidiary earn- ings are distributed in the form of dividends or otherwise, the Corporation may be subject to corporate income tax or withhold- ing tax in Canada and/or abroad. 10. RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS Right-of-use Assets The main right-of-use assets held under the Corporation’s leases are warehouse and office premises. The following table presents changes in right-of-use assets: 2024 $ 2023 $ Balance, beginning of year 167,124 116,204 Acquisitions and lease terminations 47,793 80,972 Business acquisitions [note 3] 3,928 1,958 Amortization (37,192) (32,715) Effect of exchange rate changes 3,371 705 Balance, end of year 185,024 167,124 Lease Obligations The following table presents changes in lease obligations: 2024 $ 2023 $ Balance, beginning of year 181,325 124,850 Acquisitions and lease terminations 47,793 80,972 Financial costs 9,324 6,893 Business acquisitions [note 3] 3,928 1,958 Payment of lease obligations (41,100) (34,108) Effect of exchange rate changes 3,757 760 Balance, end of year 205,027 181,325 Notes to consolidated financial statements 74 Annual Report 2024 · Richelieu 11. COMMITMENTS AND CONTINGENCIES Commitments Contractual undiscounted payments under leases defined in note 10 are as follows: As at November 30, 2024 $ Less than one year 41,874 Between 1 and 5 years 132,760 More than 5 years 86,159 260,793 Claims In the normal course of business, various proceedings and claims are instituted against the Corporation. Management believes that any forthcoming settlement in respect of these claims will not have a material effect on the Corporation’s financial position or consoli- dated net earnings. 12. ACCUMULATED OTHER COMPREHENSIVE INCOME The change in accumulated other comprehensive income balance is, as follows: 2024 $ 2023 $ Balance, beginning of year 28,593 27,743 Exchange differences on translation of foreign operations 9,710 850 Balance, end of year 38,303 28,593 13. FINANCIAL INSTRUMENTS AND OTHER INFORMATION Fair Value The carrying value of long-term debt approximates its fair value because of the short maturity on balance of sale payable. The Corporation classified the fair value measurement in Level 2, as it is derived from observable market data. Credit Risk The Corporation sells its products to numerous customers in Canada and in the United States. Credit risk refers to the possibility that customers will be unable to assume their liabilities towards the Corporation. The average days outstanding of accounts receivable, as at November 30, 2024 and 2023, are deemed acceptable given the industry in which the Corporation operates. The Corporation performs ongoing credit evaluation of custom- ers and generally does not require collateral. The allowance for doubtful accounts for the years ended November 30 is as follows: 2024 $ 2023 $ Balance, beginning of year 6,749 7,449 Allowance for doubtful accounts 1,296 2,130 Write-offs (1,181) (3,236) Exchange rate variations and other 71 406 Balance, end of year 6,935 6,749 The aging of the accounts receivable is as follows: 2024 $ 2023 $ Current 163,844 156,850 Past due 1-30 days 52,733 43,312 Past due more than 30 days 30,496 25,851 Allowance for doubtful accounts (6,935) (6,749) 240,138 219,264 The balance of accounts receivable of the Corporation that are overdue for more than 60 days, totaled $9,027 [$8,476 in 2023]. As at November 30, 2024 and 2023, no customer accounted for more than 10% of the total accounts receivable. Market Risk The Corporation’s foreign currency exposure arises from purchases and sales transacted mainly in US dollars and euros. Operating expenses include, for the year ended November 30, 2024, an exchange gain of $1,475 [exchange gain of $1,724 in 2023]. As part of its business practices, the Corporation aims to preserve the purchase costs and the selling prices of its commercial activ- ities. To protect its operations from exposure to exchange rate risks, the Corporation uses, among other things, a centralized cash flow management. The Corporation may also periodically use forward foreign exchange contracts. By implementing these measures, the Corporation seeks to protect operating results from exposure to exchange rate fluctuations. The Corporation’s business practices in terms of foreign exchange risk management do not allow specu- lative trades. As at November 30, 2024, a decrease (increase) of 5% of the Canadian dollar against the US dollar and the euro on translation of monetary assets and liabilities, all other variables remaining the same, would have increased (decreased) consolidated net earnings by $690 [$592 as at November 30, 2023] and would have increased (decreased) other comprehensive income by $11,821 [$11,451 as at November 30, 2023]. The exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure of the Corporation’s financial instruments as at November 30, 2024. Notes to consolidated financial statements 75 Annual Report 2024 · Richelieu Liquidity Risk The Corporation manages its risk of not being able to settle its finan- cial liabilities when required by taking into account its operational needs and by using different financing tools, as required. In recent years, the Corporation has financed its growth, business acquisi- tions, share repurchases and payout to shareholders using mainly the cash generated by the operating activities and through its lines of credit when necessary. Interest Rate Risk The Corporation is exposed to interest rate risk associated with the use of its credit lines. Operating Expenses Excluding Amortization 2024 $ 2023 $ Inventories from distribution, import and manufacturing activities recognized as an expense 1,381,899 1,314,403 Salaries and related charges 245,290 232,581 Other charges 3,610 10,366 1,630,799 1,557,350 An expense of $4,858 [$4,714 in 2023] for inventory obsolescence was included in Inventories from distribution, import and manu- facturing activities. 14. RELATED PARTY INFORMATION Scope of Consolidation The following table lists the significant subsidiaries of the group individually and collectively as at November 30, 2024. . Names Country of incorporation Equity interest % Voting rights % Richelieu America Ltd. United States 100 100 Richelieu Finances Ltée (1) Canada 100 100 Cedan Industries Inc. Canada 100 100 Distributions 20/20 Inc. Canada 100 100 Provincial Woodproducts Ltd. Canada 100 100 Quincaillerie Rabel Inc. Canada 100 100 Menuiserie des Pins Ltée Canada 90 90 Interco division 10 Inc. Canada 75 75 (1) Richelieu Finances Ltée is the owner of 100% of Richelieu Hardware Canada Ltd. Key Management Personnel Compensation 2024 $ 2023 $ Short-term employee benefits 3,947 4,661 Other long-term benefits 861 689 Share-based compensation 671 661 5,479 6,011 Accounts payable and accrued liabilities include a retirement allowance amounting to $5,360 [$4,800 as at November 30, 2023] payable to one member of the key management personnel. Notes to consolidated financial statements 76 Annual Report 2024 · Richelieu 15. GEOGRAPHIC INFORMATION During the year ended November 30, 2024, nearly 57% of sales were made in Canada [59% in 2023]. The Corporation’s sales to foreign countries, almost entirely directed to the United States, amounted to C$783,530 [C$739,395 in 2023] and US$574,502 [US$547,266 in 2023]. As at November 30, 2024, out of the total amount in property, plant and equipment, $28,970 [$29,707 in 2023] was located in the United States. In addition, as at November 30, 2024, intangible assets and goodwill located in the United States amounted to C$25,752 and C$33,429, respectively [respectively C$27,330 and C$31,605 in 2023], and US$18,381 and US$23,861, respectively [respectively US$20,122 and US$23,270 in 2023]. Of the total amount of right-of- use assets, $113,221 [November 30, 2023—$108,477] was located in the United States. 16. CAPITAL MANAGEMENT The Corporation’s objectives are: ▪ Maintain a low debt ratio to preserve its capacity to pursue its growth both internally and through acquisitions; and ▪ Provide an adequate return to its shareholders. The Corporation manages and makes adjustments to its capital structure in light of changes in economic conditions and the risk characteristics of underlying assets. To maintain or adjust its cap- ital structure, the Corporation may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. As at November 30, 2024, the Corporation achieved the fol- lowing results regarding its capital management objectives: ▪ Debt/equity ratio: 0.6% [0.6% as at November 30, 2023] [long-term debt/equity] ▪ Return on average shareholders’ equity of 9.4% over the last 12 months [12.9% for the year ended November 30, 2023] The Corporation’s capital management objectives remained unchanged from the previous fiscal year. 17. DIVIDENDS PAID TO SHAREHOLDERS OF THE CORPORATION For the fiscal year 2024, the Corporation paid four quarterly divi- dends of $0.15 per common share [four quarterly dividends of $0.15 per common share in 2023] for a total amount of $33,503 [$33,521 in 2023]. On January 16, 2025, the Board of Directors approved the payment of a quarterly dividend of $0.1533 per common share for the first quarter of 2025. 18. APPROVAL OF FINANCIAL STATEMENTS The consolidated financial statements for the year ended November 30, 2024 (including comparative figures) were approved for issue by the Board of Directors on January 16, 2025. 19. SUBSEQUENT EVENTS Effective December 1, 2024, the Corporation acquired all issued and outstanding shares of Mill Supply Ltd., a distributor of hard- ware and specialty products operating two distribution centres in Dartmouth, N.S. and Charlottetown, P.E.I. Effective January 6, 2025, the Corporation acquired the principal net assets of Darant Distributing, a distributor of specialized hard- ware operating a distribution centre in Denver, CO. Effective January 13, 2025, the Corporation acquired the principal net assets of Midwest Specialty Products, a distributor of decora- tive surfaces operating a distribution centre in Minneapolis, MN. 20. COMPARATIVE FIGURES Some figures disclosed for the year ended November 30, 2023, have been reclassified to conform to the presentation adopted for the year ended November 30, 2024. Notes to consolidated financial statements Transfer agent and registrar Computershare Trust Company of Canada Auditors Ernst & Young LLP 900 De Maisonneuve Blvd. West Suite 2300 Montreal, Quebec H3A 0A8 Head office Richelieu Hardware Ltd. 7900 Henri-Bourassa Blvd. West Montreal, Quebec H4S 1V4 Telephone: 514 336-4144 Fax: 514 832-4002 richelieu.com Because the environment is a priority for Richelieu, this annual report is printed on Rolland Enviro Satin paper containing 100% post-consumer recycled fiber. Printed in Canada logo FSC richelieu.com