Superior Plus
Annual Report 2023

Plain-text annual report

Enabling the Adoption of Low Carbon Energy ANNUAL REPORT 2023 FINANCIAL HIGHLIGHTS Financial Results (millions of dollars) Revenues Gross profit EBITDA from operations (1) Adjusted EBITDA (1) Net earnings (loss) from continuing operations Cash dividends declared on common shares (dollar per basic and diluted share except dividends paid and shares outstanding) EBITDA from operations (1)(2) Adjusted EBITDA (1)(2) Net earnings (loss) from continuing operations attributable to Superior (2) Dividends declared per common share (2) Weighted average shares outstanding (millions) 2023 3,353.7 1,612.9 595.1 551.6 77.0 170.5 2023 2.30 2.13 0.23 0.72 259.0 2022 3,379.8 1,189.8 478.4 449.8 (87.9) 140.5 2022 2.13 2.00 (0.58) 0.72 224.9 (1) EBITDA from operations and Adjusted EBITDA are not standardized measures under IFRS. See “Non-GAAP Financial Measures and Reconciliations” section in the MD&A for a description of each measure. (2) The weighted average number of shares outstanding for the year ended December 31, 2023 was 259.0 million (year ended December 31, 2022 was 224.9 million). The weighted average number of shares assumes the exchange of the issued and outstanding preferred shares into common shares. There were no other dilutive instruments for the year ended December 31, 2023 and 2022. Financial Position (millions of dollars) Total assets Total liabilities Net capital expenditures (1) Senior secured debt (2) Total debt (2)(3) Leverage Ratio (3)(4) 2023 5,174.1 3,403.2 245.7 1,210.2 2,504.7 3.8x 2022 4,479.4 3,018.9 158.2 848.3 2,169.0 4.1x (1) Includes investment in leases amounting to $57.3 million in 2023 and $48.8 million in 2022. Excludes property, plant and equipment acquired through acquisition. (2) Senior secured debt is stated before deferred issue costs. (3) See “Non-GAAP Financial Measures and Reconciliations” in Superior’s Management’s Discussion and Analysis (MD&A) for additional details. (4) See “Non-GAAP Financial Measures and Reconciliations” in Superior’s MD&A for definition of Leverage Ratio. Superior Plus Corp. Annual Report 2023 1 A standout accomplishment of 2023 was the closing of the Certarus acquisition. This strategic move brings on board an industry leader in delivering low-carbon energy solutions, including CNG, RNG and hydrogen. Table of Contents IFC Financial Highlights 2 3 President’s Message Chairman’s Message 4 Management’s Discussion and Analysis 40 Management’s Responsibility for Financial Statements 41 Independent Auditor’s Report 46 Consolidated Financial Statements 50 Notes to the Consolidated Financial Statements 102 Corporate Information 103 Business and Shareholder Information Having successfully achieved scale and a significant presence across key markets, we are now well-positioned to shift our focus toward organic growth. 2 Allan MacDonald President and Chief Executive Officer Dear Shareholders, It’s with tremendous pride that I write my first letter to you as CEO of Superior Plus. As I reflect on 2023, I am honoured to have the opportunity to work with our team in developing the vision for Superior Plus as we look to the future of Energy Distribution. Having spent time meeting with the teams across Canada and the United States, it is abundantly clear that Superior has rightfully earned its reputation as one of the most successful companies in the sector. Witnessing the unwavering passion our teams exude in serving our customers is inspiring. It reaffirms our belief that we have only just begun to establish Superior Plus as the leading low-carbon energy distribution company in North America. The transformation of Superior Plus took a significant step forward in 2023 with the acquisition of Certarus, which was completed in May. Having grown significantly over the past three years, Certarus has solidified its position as the industry leader in distributing low-carbon energy, including Compressed Natural Gas (“CNG”), Renewable Natural Gas (“RNG”), and Hydrogen. Today, Certarus represents a full 25% of our EBITDA, and as they continue to grow in this ever-expanding energy market, it provides Superior Plus with a new avenue for investment in organic growth and expands our low-carbon energy product capabilities, making Superior Plus unique amongst its competitors. Our Propane business has also experienced substantial growth in recent years, driven by strategic acquisitions of some of North America’s most successful propane operators in sought-after markets. Having successfully achieved scale and a significant presence across key markets, we are now well-positioned to shift our focus toward organic growth. This involves acquiring new customers, minimizing annual customer churn, and taking market share from our competitors. We are leveraging the strength of our extensive footprint, valuable assets, 55 regional brands and dedicated people to grow our customer base across Canada and the United States. As we embark on the next phase of our growth and transformation journey, the timing is ideal to shift away from an acquisition-based growth strategy to a strategy that invests in our incredible companies. This new approach capitalizes on our broad base of energy products supported by our talented and experienced teams, thereby unlocking the potential growth within our businesses. Guided by this vision, our dedicated management team and I are steadfastly committed to growing Superior Plus through operational excellence. Our objectives extend beyond organic growth and include critical initiatives for prudent capital management, deleveraging the balance sheet, and upholding our commitment to safety and inclusivity, all while passionately delivering significant shareholder value. By prioritizing these critical aspects, we aim to fortify our market standing and ensure Superior’s sustained success and prosperity. In closing, I’d like to thank the board of directors for their unwavering confidence and support in my first year as CEO. Thank you to our shareholders, customers, dedicated employees across North America, and the communities we operate in for your commitment and support as we strive to make Superior the North American leader in next- generation energy solutions. Together, we will continue to lead the industry, provide safe and efficient service to our customers, and unlock Superior Plus’s full potential. Sincerely, Allan MacDonald President and Chief Executive Officer Superior Plus Superior Plus Corp. Annual report 2023David Smith Chairman of the Board 3 As we bid farewell to two departing members, Angelo Rufino and Eugene Bissell, we do so with gratitude for their invaluable contributions to Superior. Their insights and expertise have helped shape our company into the industry leader it is today, and we are indebted to them for their service. Looking ahead, we remain steadfast in our commitment to upholding the highest standards of corporate governance and board effectiveness. I’m happy to announce that we met our stated target of having 30% of directors who self-identify as women. Through thoughtful succession planning and strategic recruitment, we will continue to ensure that our board reflects the diverse perspectives and skillsets essential to driving long-term value for our shareholders. In closing, I wish to express my sincere appreciation to every one of you for your unwavering support and confidence in Superior Plus. Together, we will chart a course toward a future defined by innovation, resilience, and sustained success. Warm regards, David Smith Chairman of the Board Superior Plus Dear Shareholders, As I reflect on 2023, there is no doubt it was a year marked by significant change at Superior Plus. Amid these transformative shifts, Superior Plus not only navigated challenges but also emerged with a renewed vision for the future. I am delighted to share some pivotal highlights as we chart the course for growth and success in 2024 and beyond. A standout accomplishment of 2023 was the closing of the Certarus acquisition. This strategic move brings on board an industry leader in delivering low-carbon energy solutions, including CNG, RNG and hydrogen. The addition of Certarus strengthens our organic growth strategy in Canada and the U.S. as evidenced by the growth in its Adjusted EBITDA by ~50% from 2022 to 2023. Over the past several years, we have assembled a comprehensive portfolio of assets in key energy markets and diverse geographies. As a result of these efforts, our Propane business remains strong and our focus on low-carbon energy solutions further positions us at the forefront of the evolving energy landscape. Allan MacDonald, our new President and CEO, has brought with him a wealth of experience and a clear vision for the future of Superior. We are very confident in his leadership, and his newly formed management team is set to maximize the value of our expanded reach, drive organic growth, enhance operational efficiency, and return greater value to you, our shareholders. Along with the changes to the management team – I am reminded of the importance of maintaining a dynamic and forward-thinking board of directors. Throughout 2023, we welcomed three new members to our board: Jennifer Grigsby, a professional accountant who recently served as the Secretary of Economic Administration for the State of Oklahoma, and prior she held the position of Executive Vice President and Chief Financial Officer with Ascent Resources, LLC; Michael Horowitz, Managing Director in Brookfield’s Private Equity Group; and Calvin Jacober, former Vice Chair, Canada for PricewaterhouseCoopers (“PwC”). I am pleased to say that their diverse perspectives and expertise will continue to enrich our discussions and decision-making processes. Superior Plus Corp. Annual report 20234 Management’s Discussion and Analysis Three months and year ended December 31, 2023 and 2022 This Management’s Discussion and Analysis (“MD&A”) contains information about the performance and financial position of Superior Plus Corp. (“Superior”) as at and for the year ended December 31, 2023 and 2022, as well as forward-looking information about future periods. The information in this MD&A is current to February 21, 2024, and should be read in conjunction with Superior’s audited consolidated financial statements and notes thereto as at and for the year ended December 31, 2023 and 2022. The accompanying audited consolidated financial statements of Superior were prepared by and are the responsibility of Superior’s management. Superior’s audited consolidated financial statements as at and for the year ended December 31, 2023 and 2022 were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All financial amounts in this MD&A are expressed in millions of Canadian dollars except where otherwise noted. All tables are for the year ended December 31 of the period indicated, unless otherwise stated. This MD&A includes forward-looking statements and assumptions. See “Forward-Looking Information” for more details. Non-GAAP Financial Measures Throughout the MD&A, Superior has used the following terms that are not defined under IFRS, but are used by management to evaluate the performance of Superior and its businesses: Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) from operations, Adjusted EBITDA, Operating Costs, Net Debt, Leverage Ratio, Pro Forma Adjusted EBITDA and Adjusted Gross Profit. These measures may also be used by investors, financial institutions and credit rating agencies to assess Superior’s performance and ability to service debt. Non-GAAP financial measures do not have standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Securities regulations require that Non-GAAP and other financial measures are clearly defined, explained and are reconciled to their most directly comparable measure presented in the (primary) financial statements. Except as otherwise indicated, these Non-GAAP financial measures are calculated and disclosed on a consistent basis from period to period. Specific items may only be relevant in certain periods. The intent of using Non-GAAP financial measures is to provide additional useful information to investors and analysts; the measures do not have standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate Non-GAAP financial measures differently. See “Non-GAAP Financial Measures and Reconciliations” for more information about these measures. Forward-Looking Information Certain information included herein is forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking information may include statements regarding the objectives, business strategies to achieve those objectives, expected financial results (including those in the area of risk management), economic or market conditions, and the outlook of or involving Superior and its businesses. Such information is typically identified by words such as “anticipate”, “believe”, “continue”, “estimate”, “expect”, “plan”, “forecast”, “future”, “outlook”, “guidance”, “may”, “project”, “should”, “strategy”, “target”, “will” or similar expressions suggesting future outcomes. Superior Plus Corp. Management’s Discussion and Analysis5 Forward-looking information in this document includes: future financial position, consolidated and business segment outlooks, 2024 expected Adjusted EBITDA guidance, the markets for our products and our financial results, expected Leverage ratio, business strategy and objectives, development plans and programs, organic growth, weather, commercial demand in Canada and the U.S., product pricing and sourcing, volumes and pricing, wholesale propane market fundamentals, exchange rates, expected synergies from acquisitions, expected seasonality of demand, long-term incentive plan accrual estimates and future economic conditions. Forward-looking information is provided for the purpose of providing information about management’s expectations and plans about the future and may not be appropriate for other purposes. Forward-looking information herein is based on various assumptions and expectations that Superior believes are reasonable in the circumstances. No assurance can be given that these assumptions and expectations will prove to be correct. Those assumptions and expectations are based on information currently available to Superior, including information obtained from third-party industry analysts and other third-party sources, and the historic performance of Superior’s businesses. Such assumptions include, no material divestitures, anticipated financial performance, current business and economic trends, the amount of future dividends paid by Superior, business prospects, utilization of tax basis, regulatory developments, average MSU base, impacts of cost-saving initiatives, currency exchange, inflation and interest rates, future commodity prices relating to the oil and gas industry, future oil rig activity levels in the U.S. and Western Canada, trading data, cost estimates, our ability to obtain financing on acceptable terms and statements regarding net working capital and capital expenditure requirements of Superior, the assumptions set forth under the “Financial Outlook” sections in this MD&A. Superior cautions that such assumptions could prove to be incorrect or inaccurate. The forward-looking information is also subject to the risks and uncertainties set forth below. The forward-looking information is also subject to the risks and uncertainties set forth below. By its very nature, forward-looking information involves numerous assumptions, risks and uncertainties, both general and specific. Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, as many important factors are beyond our control, Superior’s actual performance and financial results may vary materially from those estimates and expectations contemplated, expressed or implied in the forward-looking information. These risks and uncertainties include risks relating to incorrect assessments of value when making acquisitions, failure to realize expected cost-savings and synergies from acquisitions, increases in debt service charges, colder average weather than anticipated, the loss of key personnel, fluctuations in foreign currency and exchange rates, fluctuations in commodity prices, increasing rates of inflation, inadequate insurance coverage, liability for cash taxes, counterparty risk, compliance with environmental laws and regulations, reduced customer demand, operational risks involving our facilities, force majeure, labour relations matters, our ability to access external sources of debt and equity capital, and the risks identified in: (i) this MD&A under “Risk Factors to Superior” and (ii) Superior’s most recent Annual Information Form. The preceding list of assumptions, risks and uncertainties is not exhaustive. When relying on Superior’s forward-looking information to make decisions with respect to Superior, investors and others should carefully consider the preceding factors, other uncertainties and potential events. Any forward-looking information is provided as of the date of this document and, except as required by law, Superior does not undertake to update or revise such information to reflect new information, subsequent or otherwise. For the reasons set forth above, investors should not place undue reliance on forward-looking information. Overview of Superior and Basis of Presentation Superior consists of the following four reportable segments: U.S. Retail Propane Distribution (“U.S. Propane”), Canadian Retail Propane Distribution (“Canadian Propane”), North American Wholesale Propane Distribution (“Wholesale Propane”) and Certarus Ltd. (“Certarus”). The U.S. Propane segment distributes propane gas and liquid fuels primarily in the Eastern United States, as well as California and, to a lesser extent, the Midwest to residential and commercial customers. The Canadian Propane segment distributes propane gas and liquid fuels across Canada to residential and commercial customers. The Wholesale Propane segment distributes propane gas and other natural gas liquids across Canada and the U.S. to wholesale customers and supplies the majority of propane gas required by the Canadian Propane segment and a portion of the propane gas required by the U.S. Propane segment. Certarus is a comprehensive low carbon energy solution provider engaged in the business of transporting and selling compressed natural gas (“CNG”), renewable natural gas (“RNG”) and hydrogen. Certarus’ principal business is supplying CNG as an alternative fuel for large-scale industrial and commercial customers in the United States and Canada. Superior acquired all the issued and outstanding shares of Certarus on May 31, 2023. Superior Plus Corp. Annual report 20236 Highlights • On May 31, 2023, Superior acquired all the issued and outstanding common shares of Certarus, a leading North American low carbon energy solutions provider (the “Certarus Acquisition”), for total consideration of $840.5 million consisting of $353.2 million in cash and 48.6 million common shares of Superior plus assumed debt of $214.2 million. As part of the regulatory review process and in order to close the transaction, Superior entered into a consent agreement with the Commissioner of Competition agreeing to divest eight retail propane distribution locations and related assets in Northern Ontario. • Full-year 2023 Adjusted EBITDA (1) of $551.6 million, an increase of 23% from prior year Adjusted EBITDA (1) of $449.8 million. Adjusted EBITDA (1) per share was $2.13 per share, an increase of $0.13 per share from $2.00 per share in the prior year. • Achieved 2023 Pro Forma Adjusted EBITDA of $643.3 million within the guidance range of $630 million to $670 million. Superior is expecting Adjusted EBITDA (1) growth in 2024 of approximately 5% compared to 2023 Pro Forma Adjusted EBITDA of $643.3 million. • Superior’s fourth quarter Adjusted EBITDA (1) was $213.6 million, an increase of $31.0 million from the prior year quarter Adjusted EBITDA (1) of $182.6 million. Adjusted EBITDA (1) per share was $0.77, a decrease of $0.02 per share from $0.79 in the prior year quarter. • Certarus achieved record fourth quarter Adjusted EBITDA (1) of $47.2 million, a 21% increase from the prior year quarter. • Superior’s Propane Operations Adjusted EBITDA (1) decreased $17.4 million compared to the prior year quarter due to warmer weather, weaker market differentials and the impact of divesting its Northern Ontario assets. • Superior’s Leverage ratio (1) of 3.8x as at December 31, 2023 improved from 4.1x as at December 31, 2022. • Effective January 1, 2024, Superior will begin reporting results in U.S. dollars to improve year over year comparability given foreign exchange rate fluctuations, as the majority of its business activities are denominated in U.S. dollars. Historical comparative financial information in U.S. dollars can be found on page 33. • Superior’s Net earnings of $77.5 million in the fourth quarter improved $14.5 million compared to the net earnings of $63.0 million in the prior year quarter. (1) These amounts are Non-GAAP financial measures and/or Non-GAAP ratios, see “Non-GAAP financial measures and reconciliations” on page 34 for more information. Superior Plus Corp. Management’s Discussion and Analysis7 Financial Results The following summary contains certain Non-GAAP financial information. See “Non-GAAP Financial Measures and Reconciliations” on page 34 for more information about these measures. Summary of Adjusted EBITDA (millions of dollars, except per share amounts) U.S. Propane Adjusted EBITDA (2) Canadian Propane Adjusted EBITDA (2) Wholesale Propane Adjusted EBITDA (2) Certarus Adjusted EBITDA (2) EBITDA from operations (2) Corporate operating costs (2) Realized loss on foreign currency hedging contracts (2) Adjusted EBITDA (2) Adjusted EBITDA per share (2) (3) Dividends declared per common share Volumes U.S. Propane (millions of litres) Canadian Propane (millions of litres) Wholesale Propane (millions of litres) (4) Certarus (thousands of million British thermal units “MMBtu”) Leverage ratio (2) Capital expenditures Efficiency, process improvement and growth-related (2) (5) Maintenance capital (2) (5) Leased vehicles Net earnings (loss) for the period/year Three Months Ended (1) December 31 Years Ended December 31 2023 113.8 50.2 16.3 47.2 227.5 (8.0) (5.9) 213.6 $0.77 $0.18 434 307 409 6,140 69.1 26.8 11.4 77.5 2022 116.7 58.3 22.7 – 197.7 (11.0) (4.1) 182.6 $0.79 $0.18 491 356 395 – 19.5 24.8 11.8 63.0 2023 302.5 133.9 63.4 95.3 595.1 (34.3) (9.2) 551.6 $2.13 $0.72 1,446 1,106 1,472 13,846 3.8x 127.3 72.9 35.2 77.0 $0.23 2022 284.9 144.8 48.7 – 478.4 (25.9) (2.7) 449.8 $2.00 $0.72 1,533 1,219 1,320 – 4.1x 58.2 59.1 29.6 (87.9) ($0.58) Net earnings (loss) per share attributable to Superior – basic and diluted $0.27 $0.27 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) These amounts are Non-GAAP financial measures and/or Non-GAAP ratios, see “Non-GAAP financial measures and reconciliations” on page 34 for more information. (3) The weighted average number of shares outstanding for the three months ended and year ended December 31, 2023 was 278.6 million and 259.0 million, respectively (year ended December 31, 2022 was 231.1 million and 224.9 million, respectively). The weighted average number of shares assumes the exchange of the issued and outstanding preferred shares into common shares. There were no other dilutive instruments for the three months ended and year ended December 31, 2023 and 2022. (4) Represents sales to third-parties and excludes sales volumes to the Canadian and U.S. Propane segments. (5) The amounts disclosed in the audited consolidated statements of cash flows for the year ended December 31, 2023 and 2022 are made up of the sum of these amounts. Superior Plus Corp. Annual report 20238 Results for the year ended December 31, 2023 Adjusted EBITDA for the year ended December 31, 2023 was $551.6 million, an increase of $101.8 million or 23% compared to the prior year Adjusted EBITDA of $449.8 million. The increase is primarily due to higher EBITDA from operations, partially offset by higher corporate costs and an increased realized loss on foreign currency hedging contracts. EBITDA from operations increased $116.7 million or 24% compared to the prior year primarily due to the impact of the Certarus acquisition and, to a lesser extent, higher Adjusted EBITDA from U.S. Propane and Wholesale Propane, partially offset by lower Canadian Propane Adjusted EBITDA. Certarus contributed $95.3 million in Adjusted EBITDA from the date of acquisition to December 31, 2023. U.S. Propane Adjusted EBITDA was $302.5 million, an increase of $17.6 million or 6% primarily due to the impact of acquisitions, higher unit margins to offset inflation and the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions, partially offset by the impact of warmer weather on sales volumes. Wholesale Propane Adjusted EBITDA was $63.4 million, an increase of $14.7 million or 30% primarily due to the impact of the Kiva acquisition and exceptionally strong propane wholesale market fundamentals compared to the prior year. Canadian Propane Adjusted EBITDA was $133.9 million, a decrease of $10.9 million or 8% primarily due to lower sales volumes due to warmer weather, the impact of divesting its Northern Ontario business and the impact of inflation on expenses, partially offset by higher unit margins. Corporate operating costs were $34.3 million compared to $25.9 million in the prior year. The increase is primarily due to higher incentive plan costs due to fluctuations in Superior’s share price, costs related to on-boarding new management and the impact of inflation on costs. Superior realized a higher loss on foreign currency hedging contracts of $9.2 million compared to $2.7 million loss in the prior year due to lower average hedge rates relative to changes in exchange rates. Results for the three months ended December 31, 2023 Adjusted EBITDA for the three months ended December 31, 2023 was $213.6 million, an increase of $31.0 million or 17% compared to the prior year quarter Adjusted EBITDA of $182.6 million. The increase is primarily due to higher EBITDA from operations and, to a lesser extent, lower corporate costs. EBITDA from operations increased by $29.8 million compared to the prior year quarter primarily due to the Certarus acquisition, partially offset by lower EBITDA from operations in the propane distribution segments. Certarus contributed $47.2 million in Adjusted EBITDA for the three months ended December 31, 2023. Canadian Propane Adjusted EBITDA was $50.2 million, a decrease of $8.1 million or 14% primarily due to warmer weather and, to a lesser extent, the impact of divesting the Northern Ontario assets, partially offset by higher average unit margins to offset the impact of inflation. Wholesale Propane Adjusted EBITDA was $16.3 million, a decrease of $6.4 million or 28% primarily due to weaker market differentials compared to the prior year quarter. U.S. Propane Adjusted EBITDA was $113.8 million, a decrease of $2.9 million or 2% primarily due to the impact of warmer weather on sales volumes, partially offset by higher average unit margins. Corporate operating costs were $8.0 million compared to $11.0 million in the prior year quarter. The decrease is primarily due to lower incentive plan costs due to fluctuations in Superior’s share price and lower insurance provisions. Superior realized a higher loss on foreign currency hedging contracts of $5.9 million compared to the loss in the prior year quarter of $4.1 million. Superior Plus Corp. Management’s Discussion and Analysis9 Results of Superior’s Operating Segments Superior’s operating segments consists of U.S. Propane, Canadian Propane, Wholesale Propane, Certarus and Corporate. U.S. Propane U.S. Propane’s operating results: (millions of dollars) Revenue Cost of Sales Gross profit Realized (loss) gain on derivatives related to commodity risk management (2) Adjusted gross profit (3) SD&A Add back (deduct): Amortization and depreciation included in SD&A (4) Transaction, restructuring and other costs (4) (Gain) loss on disposal of assets (4) Operating costs (3) Adjusted EBITDA (3) Add back (deduct): Gain (loss) on disposal of assets (4) Transaction, restructuring and other costs (4) Amortization and depreciation included in SD&A (4) Unrealized gain (loss) on derivative financial instruments Finance expense Earnings before income tax Three Months Ended (1) December 31 Years Ended December 31 2023 454.5 (205.3) 249.2 (3.9) 245.3 (168.9) 43.1 3.8 (9.5) (131.5) 113.8 9.5 (3.8) (43.1) (10.0) (3.6) 62.8 2022 581.9 (316.9) 265.0 (7.9) 257.1 (189.0) 41.5 7.9 (0.8) (140.4) 116.7 0.8 (7.9) (41.5) 0.7 (3.1) 65.7 2023 1,598.1 2022 1,733.9 (767.9) (1,010.8) 830.2 (28.9) 801.3 723.1 24.0 747.1 (680.4) (643.7) 176.2 15.6 (10.2) (498.8) 302.5 10.2 (15.6) 155.8 24.8 0.9 (462.2) 284.9 (0.9) (24.8) (176.2) (155.8) 22.8 (10.2) 133.5 (64.7) (7.6) 31.1 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) Realized gain (loss) on derivatives related to commodity risk management are reconciled to gains (losses) on derivatives and foreign currency translation of borrowings, see “Non-GAAP financial measures and reconciliations” on page 34 for more information. (3) Adjusted Gross Profit, Adjusted EBITDA and Operating Costs are Non-GAAP financial measures. See “Non-GAAP financial measures and reconciliations” on page 34 for more information. (4) The sum of the above amounts and the balances included in the Canadian Propane, Wholesale Propane, Certarus and the Corporate segments are included in SD&A and are disclosed in Note 19 or Note 26 of the audited consolidated financial statements as at and for the year ended December 31, 2023 and 2022. Superior Plus Corp. Annual report 202310 U.S. Propane Adjusted Gross Profit (millions of dollars) Propane distribution (2) Realized (loss) gain on derivatives related to commodity risk management (2) Adjusted gross profit related to propane distribution Other services (2) Adjusted gross profit (3) Three Months Ended (1) December 31 Years Ended December 31 2023 240.8 (3.9) 236.9 8.4 245.3 2022 254.7 (7.9) 246.8 10.3 257.1 2023 800.7 (28.9) 771.8 29.5 801.3 2022 694.2 24.0 718.2 28.9 747.1 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) The sum of propane distribution and other services agrees to segment disclosure in the annual audited consolidated financial statements. Realized gain (loss) on derivatives related to commodity risk management are reconciled to gains (losses) on derivatives and foreign currency translation of borrowings, see “Non-GAAP financial measures and reconciliations” on page 34 for more information. (3) Adjusted gross profit from operations is a Non-GAAP financial measure. See “Non-GAAP financial measures and reconciliations” on page 34 for more information. U.S. Propane Sales Volumes End-Use Application (millions of litres) Residential Commercial Total Volumes by Region (1) (millions of litres) Northeast Southeast Midwest West Total Three Months Ended December 31 Years Ended December 31 2023 243 191 434 2022 272 219 491 2023 764 682 1,446 2022 813 720 1,533 Three Months Ended December 31 Years Ended December 31 2023 280 74 34 46 434 2022 318 83 37 53 491 2023 952 217 105 172 2022 1,051 243 117 122 1,446 1,533 (1) Includes propane and other liquid fuels sold in over twenty-four states in the following regions: Northeast region consists of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, New Jersey, Delaware, Maryland, Virginia; Southeast region consists of North Carolina, South Carolina, Georgia, Tennessee, Florida, Alabama; Midwest region consists of Ohio, Michigan, Minnesota; West region consists primarily of California, Arizona and Nevada. U.S. Propane’s results of operations for the year ended December 31, 2023 Revenue was $1,598.1 million, a decrease of $135.8 million or 8% from the prior year primarily due to the impact of lower wholesale commodity prices and the impact of warmer weather on sales volumes compared to the prior year, partially offset by the impact of acquisitions completed in the prior year and, to a lesser extent, higher sales prices to offset the impact of inflation and the impact of the weaker Canadian dollar on the translation of U.S. denominated revenue. Adjusted gross profit related to propane distribution for the year ended December 31, 2023 was $771.8 million, an increase of $53.6 million or 7% from the prior year primarily due to the impact of acquisitions, higher average sales margins and the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions, partially offset by the impact of warmer weather and a decrease in distillate customers. Superior Plus Corp. Management’s Discussion and Analysis11 Total sales volumes were 1,446 million litres, a decrease of 87 million litres or 6% due to the impact of warmer weather, partially offset by the incremental volumes from acquisitions completed in the prior year. Average weather, as measured by degree days, across markets where U.S. propane operates for the year was 10% warmer than the prior year and 9% warmer than the five-year average. Residential sales volumes decreased by 49 million litres or 6% from the prior year due primarily to the impact of warmer average weather, partially offset by the impact of acquisitions completed in the prior year. Commercial volumes decreased by 38 million litres or 5% compared to the prior year primarily due to the impact of warmer weather on sales volumes, partially offset by the impact of acquisitions completed in the prior year. U.S. Propane average sales margins were 53.4 cents per litre, an increase of 6.6 cents or 14% from 46.8 cents per litre in the prior year primarily due to margin management in a lower-cost environment to offset the impact of inflation and the impact of the weaker Canadian dollar on the translation of U.S. denominated gross profit. Other services gross profit primarily includes equipment rental, installation, repair and maintenance charges. Other services gross profit was $29.5 million, an increase of $0.6 million or 2% over the prior year primarily due to the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions and the contribution from acquisitions completed in the prior year. Operating costs were $498.8 million, an increase of $36.6 million or 8% over the prior year primarily due to the impact of acquisitions completed in the prior year, the impact of the weaker Canadian dollar on the translation of U.S. denominated operating costs and, to a lesser extent inflation, partially offset by lower volume-related expenses. SD&A includes amortization, depreciation and transaction, restructuring and other costs whereas operating costs exclude these expenses and is used in the determination of Adjusted EBITDA. SD&A was $680.4 million, an increase of $36.7 million or 6% over the prior year. The increase is consistent with the increase in operating costs and includes higher depreciation and amortization as a result of a higher asset base associated with acquisitions and higher transaction, restructuring and other costs, partially offset by a gain on sale of assets compared to a loss in the prior year. Earnings before income tax were $133.5 million, an increase of $102.4 million over the prior year due to the reasons described above and the impact of a larger unrealized gain on derivative financial instruments compared to the loss in the prior year. U.S. Propane’s results of operations for the three months ended December 31, 2023 Revenue was $454.5 million, a decrease of $127.4 million or 22% from the prior year quarter primarily due to the impact of lower wholesale commodity prices and, to a lesser extent, lower sales volumes, partially offset by the impact of the weaker Canadian dollar on the translation of U.S. denominated revenue. Adjusted gross profit related to propane distribution for the three months ended December 31, 2023 was $236.9 million a decrease of $9.9 million or 4% from the prior year quarter primarily due to lower sales volumes, partially offset by higher average sales margins. Total sales volumes were 434 million litres, a decrease of 57 million litres or 12% compared to the prior year quarter primarily due to warmer weather and, to a lesser extent, attrition related to distillate customers. Average weather, as measured by degree days, across markets where U.S. propane operates for the quarter was 9% warmer than the prior year quarter and 11% warmer than the five-year average. Residential sales volumes decreased by 29 million litres or 11% from the prior year quarter and commercial sales volumes decreased by 28 million litres or 13% compared to the prior year quarter. The decrease in residential and commercial volumes is primarily due to warmer weather and the decline in heating oil volumes as a result of the divestiture during the quarter. U.S. Propane average sales margins were 54.6 cents per litre, an increase of 4.3 cents per litre or 9% from 50.3 cents per litre in the prior year quarter primarily due to holding prices as commodity prices declined to offset the impact of inflation and customer mix as the proportion of lower margin distillate customers decreased as a result of the divestiture. Other services gross profit primarily includes equipment rental, installation, repair and maintenance charges. Other services gross profit was $8.4 million, a decrease of $1.9 million or 18% compared to the prior year quarter primarily due to the impact of the divestiture during the quarter. Operating costs were $131.5 million, a decrease of $8.9 million or 6% over the prior year quarter primarily due to the sale of distillate assets in the quarter and lower volume related costs. Superior Plus Corp. Annual report 202312 SD&A was $168.9 million, a decrease of $20.1 million or 11% over the prior year quarter. The decrease is consistent with the decrease in operating costs and includes a gain on disposal of distillate assets and, to a lesser extent, lower transaction, restructuring and other costs as a result of less acquisition activity. Earnings before income tax was $62.8 million, a decrease of $2.9 million over the prior year quarter, primarily due to the above reasons and the impact of an unrealized loss on derivatives in the current year quarter compared to an unrealized gain in the prior year quarter. Financial Outlook U.S. Propane Adjusted EBITDA in 2024 is anticipated to be higher than 2023. Increased sales volumes due to average weather, optimizing customer pricing and cost-saving initiatives are expected to be partially offset by the impact of inflationary pressures on operating costs and distillate attrition. The average weather for 2024 in the Eastern U.S., Upper Midwest and California, as measured by degree days, is anticipated to be consistent with the five-year average. In addition to the significant assumptions referred to above, refer to “Forward-Looking Information” and “Risk Factors to Superior” for a detailed review of significant business risks affecting Superior. Canadian Propane Canadian Propane’s operating results: (millions of dollars) Revenue Cost of Sales Gross profit SD&A Add back (deduct): Amortization and depreciation included in SD&A (2) Transaction, restructuring and other costs (2) (Gain) loss on disposal of assets (2) Operating costs (3) Adjusted EBITDA (3) Add back (deduct): Gain (loss) on disposal of assets (2) Transaction, restructuring and other costs (2) Amortization and depreciation included in SD&A (2) Finance expense Earnings before income tax Three Months Ended (1) December 31 Years Ended December 31 2023 222.5 (112.1) 110.4 (78.9) 18.3 2.1 (1.7) (60.2) 50.2 1.7 (2.1) (18.3) (1.2) 30.3 2022 278.0 (157.6) 120.4 (78.9) 17.7 0.3 (1.2) (62.1) 58.3 1.2 (0.3) (17.7) (0.6) 40.9 2023 807.3 (433.1) 374.2 (320.9) 72.4 2.9 5.3 (240.3) 133.9 (5.3) (2.9) (72.4) (3.7) 49.6 2022 978.1 (604.0) 374.1 (296.2) 68.8 0.8 (2.7) (229.3) 144.8 2.7 (0.8) (68.8) (3.0) 74.9 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) The sum of the above amounts and the balances included in the U.S. Propane, Wholesale Propane, Certarus and Corporate segments are included in SD&A and are disclosed in Note 19 or Note 26 of the annual audited consolidated financial statements as at and for the year ended December 31, 2023 and 2022. (3) Adjusted EBITDA and Operating Costs are Non-GAAP financial measures. See “Non-GAAP financial measures and reconciliations” on page 34 for more information. Superior Plus Corp. Management’s Discussion and Analysis13 Canadian Propane Gross Profit (millions of dollars) Propane distribution Other services Gross profit Three Months Ended (1) December 31 Years Ended December 31 2023 103.4 7.0 110.4 2022 114.6 5.8 120.4 2023 355.9 18.3 374.2 2022 358.1 16.0 374.1 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. Canadian Propane Sales Volumes Volumes by End-Use Application (millions of litres) Residential Commercial Total Volumes by Region (1) (millions of litres) Western Canada Eastern Canada Atlantic Canada Total Three Months Ended December 31 Years Ended December 31 2023 53 254 307 2022 57 299 356 2023 172 934 1,106 2022 191 1,028 1,219 Three Months Ended December 31 2023 2022 138 123 46 307 172 137 47 356 Years Ended December 31 2023 477 461 168 1,106 2022 552 505 162 1,219 (1) Regions: Western Canada region consists of British Columbia, Alberta, Saskatchewan, Manitoba, Yukon, Alaska and Northwest Territories; Eastern Canada region consists of Ontario and Quebec; Atlantic Canada region consists of New Brunswick, Newfoundland & Labrador, Nova Scotia, Prince Edward Island and Maine. Canadian Propane’s results of operations for the year ended December 31, 2023 Revenue was $807.3 million, a decrease of $170.8 million or 17% from the prior year quarter primarily due to lower average wholesale commodity prices and lower sales volumes, partially offset by price increases to offset the impact of inflation. Gross profit related to propane distribution for the year ended December 31, 2023 was $355.9 million, a decrease of $2.2 million or 1% from the prior year due to lower sales volumes and, to a lesser extent, lower sales of carbon offsets, partially offset by higher average propane sales margins. Total sales volumes were 1,106 million litres, a decrease of 113 million litres or 9% primarily due to warmer weather. Average weather across Canada for the current year, as measured by degree days was 10% warmer than the prior year and 10% warmer than the five-year average. Western Canada was 12% warmer than the prior year while Eastern Canada was 7% warmer than the prior year. Residential sales volumes decreased by 19 million litres or 10% primarily due to the warmer weather and, to a lesser extent, the impact of the divestiture of the Northern Ontario assets, partially offset by the impact of acquisitions completed in the prior year. Commercial sales volumes decreased by 94 million litres or 9% primarily due to warmer weather. Average propane sales margins were 32.2 cents per litre, an increase of 2.8 cents or 10% from 29.4 cents per litre in the prior year primarily due to margin management in a lower-cost environment to offset the impact of inflation. Superior Plus Corp. Annual report 202314 Other services gross profit primarily includes equipment rental, installation, repair and maintenance and customer minimum use charges. Other services gross profit was $18.3 million, an increase of $2.3 million or 14% from the prior year of $16.0 million due to higher equipment rental revenue as a result of increased municipal and construction demand. Operating costs were $240.3 million, an increase of $11.0 million or 5% compared to the prior year. The increase in operating costs was primarily due to higher costs associated with inflation, the impact of acquisitions completed in the prior year, the impact of the CEWS benefit recorded in the prior year and, to a lesser extent, higher vehicle maintenance costs, partially offset by lower volume- related costs. Canadian Propane recorded no benefits related to the CEWS program during the year ended December 31, 2023 (2022 – $2.2 million). SD&A includes amortization, depreciation and transaction, restructuring and other costs whereas operating costs exclude these expenses and is used in the determination of Adjusted EBITDA. SD&A was $320.9 million, an increase of $24.7 million or 8% over the prior year. SD&A increased for the above reasons, as well as a loss on disposal of the Norther Ontario assets and, to a lesser extent, higher depreciation and amortization costs as a result of a higher asset base. Earnings before income tax was $49.6 million, a decrease of $25.3 million over the prior year due to the above reasons. Canadian Propane’s results of operations for the three months ended December 31, 2023 Revenue was $222.5 million, a decrease of $55.5 million or 20% from the prior year quarter primarily due to lower average wholesale commodity prices and, to a lesser extent, lower sales volumes due to warmer weather and the impact of the Northern Ontario divestiture and lower sales of carbon offset credits. Gross profit related to propane distribution for the three months ended December 31, 2023 was $103.4 million a decrease of $11.2 million or 10% from the prior year quarter due to the impact of warmer weather on sales volumes, the impact of the Northern Ontario divestiture and lower sales of carbon offset credits. Total sales volumes were 307 million litres, a decrease of 49 million litres or 14% with the prior year quarter. Average weather across Canada for the fourth quarter, as measured by degree days was 13% warmer than the prior year quarter and 13% warmer than the five-year average. Western Canada was 21% warmer than the prior year quarter while Eastern Canada was 1% warmer than the prior year quarter. Residential sales volumes decreased by 4 million litres or 7% due to warmer weather and, to a lesser extent, the impact of the divestiture of the Northern Ontario business during the quarter. Commercial sales volumes decreased by 45 million litres or 15% primarily due to warmer weather, the impact of the divestiture of the Northern Ontario business during the quarter and competitive pressures in the oilfield and automobile segments. Average propane sales margins were 33.7 cents per litre, an increase of 1.5 cents or 5% from 32.2 cents per litre in the prior year quarter primarily as a result of effective margin management in a lower-cost environment and, to a lesser extent, customer mix. Other services gross profit primarily includes equipment rental, installation, repair and maintenance and customer minimum use charges. Other services gross profit was $7.0 million, which increased $1.2 million or 21% from the prior year quarter’s gross profit of $5.8 million due to large customer projects and increased commercial activity. Operating costs were $60.2 million, a decrease of $1.9 million or 3% compared to the prior year quarter. The decrease in operating costs was primarily due to lower volume-related costs and the impact of the Northern Ontario divestiture, partially offset by higher costs associated with inflation. SD&A was $78.9 million, consistent with the prior year quarter. Earnings before income tax was $30.3 million, a decrease of $10.6 million over the prior year quarter due to the above reasons. Superior Plus Corp. Management’s Discussion and Analysis15 Financial Outlook Canadian Propane Adjusted EBITDA in 2024 is anticipated to be lower than 2023 primarily due to the divestiture of the Northern Ontario business as a result of the Certarus Acquisition and the impact of inflation on costs, partially offset by colder weather and higher average margins. The average weather for 2024, as measured by degree days, is expected to be consistent with the five-year average. In addition to the significant assumptions referred to above, refer to “Forward-Looking Information” and “Risk Factors to Superior” for a detailed review of significant business risks affecting Superior. Wholesale Propane Wholesale Propane’s operating results: (millions of dollars) Revenue Cost of Sales Gross profit Realized (loss) gain on derivatives related to commodity risk management (2) Adjusted gross profit (3) SD&A Add back (deduct): Amortization and depreciation included in SD&A (4) Transaction, restructuring and other costs (4) Gain on disposal of assets (4) Operating costs (3) Adjusted EBITDA (3) Add back (deduct): Gain on disposal of assets (4) Transaction, restructuring and other costs (4) Amortization and depreciation included in SD&A (4) Unrealized gain (loss) on derivative financial instruments Finance expense Earnings before income tax Three Months Ended (1) December 31 Years Ended December 31 2023 306.1 2022 401.6 2023 1,165.4 2022 1,365.5 (272.2) (357.8) (1,018.2) (1,272.9) 33.9 (1.8) 32.1 (20.5) 4.7 – – (15.8) 16.3 – – (4.7) (4.9) (0.1) 6.6 43.8 (3.5) 40.3 (23.0) 3.7 1.7 – (17.6) 22.7 – (1.7) (3.7) 0.1 (0.3) 17.1 147.2 (13.7) 133.5 (88.0) 17.5 0.6 (0.2) (70.1) 63.4 0.2 (0.6) (17.5) 7.7 (1.0) 52.2 92.6 4.6 97.2 (64.1) 13.5 2.2 (0.1) (48.5) 48.7 0.1 (2.2) (13.5) (13.0) (1.1) 19.0 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) Realized gain (loss) on derivatives related to commodity risk management are reconciled to gains (losses) on derivatives and foreign currency translation of borrowings, see “Non-GAAP financial measures and reconciliations” on page 34 for more information. (3) Adjusted Gross Profit, Adjusted EBITDA and Operating Costs are Non-GAAP financial measures. See “Non-GAAP financial measures and reconciliations” on page 34 for more information. (4) The sum of the above amounts and the balances included in the U.S. Propane, Canadian Propane, Certarus and Corporate segments are included in SD&A and are disclosed in Note 19 or Note 26 of the annual audited consolidated financial statements as at and for the year ended December 31, 2023 and 2022. Superior Plus Corp. Annual report 202316 Wholesale Propane Sales Volumes Wholesale Propane Volumes by Customer Relation (millions of litres) Third party sales volumes United States Canada Sales volumes to the Canadian Propane and US Propane segments Total Three Months Ended December 31 Years Ended December 31 2023 2022 2023 2022 337 72 409 378 787 323 72 395 412 807 1,262 210 1,472 1,309 2,781 1,129 191 1,320 1,375 2,695 Wholesale Propane’s results of operations for the year ended December 31, 2023 Revenue was $1,165.4 million, a decrease of $200.1 million or 15% from the prior year primarily due to lower wholesale commodity prices, partially offset by higher sales volumes related to the KIVA acquisition and, to a lesser extent, the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions. Wholesale propane prices were lower than the prior year quarter due to higher propane inventory levels in North America and lower demand in the current period. Adjusted gross profit was $133.5 million, an increase of $36.3 million or 37% from the prior year primarily due to the full year contribution from the Kiva acquisition completed in the prior year and, to a lesser extent, higher average unit margins associated with stronger wholesale propane market fundamentals compared to the prior year and the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions. Total third-party sales volumes were 1,472 million litres, an increase of 152 million litres or 12% from the prior year, primarily due to incremental volumes from the Kiva acquisition and 12% colder weather than the five-year average in California during the first quarter of 2023. Average propane sales margins, including the impact of sales to other divisions, were 4.8 cents per litre, an increase of 1.2 cents or 33% from 3.6 cents per litre in the prior year primarily due to strong market fundamentals in California and, to a lesser extent, Canada. Operating costs were $70.1 million, an increase of $21.6 million or 45% compared to the prior year primarily due to the Kiva acquisition completed in the prior year, the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions and, to a lesser extent, higher freight costs. SD&A includes amortization, depreciation and transaction, restructuring and other costs whereas operating costs exclude these expenses and is used in the determination of Adjusted EBITDA. SD&A was $88.0 million, an increase of $23.9 million or 37% over the prior year. SD&A increased for the above reasons, as well as higher depreciation and amortization costs as a result of a higher asset base partially offset by lower transaction, restructuring and other costs related to the acquisition and integration of Kiva in the prior year. Earnings before income tax was $52.2 million, an increase of $33.2 million over the prior year earnings of $19.0 million, for the above reasons and the impact of an unrealized gain on derivatives in the current year compared to a loss in the prior year. Wholesale Propane’s results of operations for the three months ended December 31, 2023 Revenue was $306.1 million, a decrease of $95.5 million or 24% from the prior year quarter primarily due to lower wholesale commodity prices and, to a lesser extent, lower sales volumes. Wholesale propane prices were lower than the prior year quarter due to higher propane inventory levels in North America and lower demand in the current period. Adjusted gross profit was $32.1 million, a decrease of $8.2 million or 20% from the prior year quarter primarily due to higher average unit margins in the prior year quarter associated with exceptionally stronger wholesale propane market fundamentals and lower sales volumes in the current quarter. Superior Plus Corp. Management’s Discussion and Analysis17 Total third-party sales volumes were 409 million litres, an increase of 14 million litres or 4%, primarily due to customer growth and spot sale opportunities in the U.S. Average propane sales margins, including the impact of sales to other divisions, were 4.1 cents per litre, a decrease of 0.9 cents or 18% from 5.0 cents per litre in the prior year quarter primarily due to the impact of strong market fundamentals in California in the prior year quarter. Operating costs were $15.8 million, a decrease of $1.8 million or 10% compared to the prior year primarily due to cost saving initiatives as a result of integrating the Kiva business acquired in the prior year. SD&A was $20.5 million, a decrease of $2.5 million or 11% over the prior year quarter. SD&A decreased for the above reasons and the impact of transaction costs incurred in the prior year. Earnings before income tax was $6.6 million, a decrease of $10.5 million over the prior year quarter earnings of $17.1 million, for the above reasons. Financial Outlook Wholesale Propane Adjusted EBITDA in 2024 is anticipated to be lower than 2023 due primarily to lower unit margins as a result of the strong market fundamentals realized in 2023. The average weather for 2024, as measured by degree days, is anticipated to be consistent with the five-year average. In addition to the significant assumptions referred to above, refer to “Forward-Looking Information” and “Risk Factors to Superior” for a detailed review of significant business risks affecting Superior. Certarus Certarus’ operating results for the three months ended and from the date of acquisition to December 31, 2023 are as follows: (millions of dollars except per MSU amounts) Revenue Cost of Sales Gross profit SD&A Add back (deduct): Amortization and depreciation included in SD&A Transaction, restructuring and other costs Loss on disposal of assets Operating costs (2) Adjusted EBITDA (2) Add back (deduct): Loss on disposal of assets Transaction, restructuring and other costs Amortization and depreciation included in SD&A Gain on modification of debt net of finance expense Earnings before income tax Three Months Ended (1) December 31, 2023 From the date of acquisition to December 31, 2023 $ per MSU (1) $ per MSU (1) 143.2 (23.0) 120.2 (102.4) 29.0 0.1 0.3 (73.0) 47.2 (0.3) (0.1) (29.0) (0.3) 17.5 210 (34) 176 (150) 42 – – (108) 68 – – (42) – 26 310.4 (49.1) 261.3 (231.8) 64.2 0.6 1.0 (166.0) 95.3 (1.0) (0.6) (64.2) 3.8 33.3 463 (73) 390 (346) 96 1 1 (248) 142 (1) (1) (96) 6 50 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) Adjusted EBITDA, Operating Costs and per mobile storage unit (“MSU”) amounts are Non-GAAP financial measures. See “Non-GAAP financial measures and reconciliations” on page 34 for more information. Superior Plus Corp. Annual report 202318 (millions of dollars) Direct gas distribution Ancillary services Gross profit Three Months Ended (1) December 31, 2023 From the date of acquisition to December 31, 2023 83.1 37.1 120.2 192.2 69.1 261.3 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. Certarus Sales Volumes Volumes by Region (thousands of MMBtu) United States Canada Total Three Months Ended December 31, 2023 From the date of acquisition to December 31, 2023 4,850 1,290 6,140 11,377 2,469 13,846 Certarus’ results of operations from the date of acquisition to December 31, 2023 Revenue was $310.4 million and includes sales related to natural gas distribution and ancillary services which consists of equipment rentals, standby services and take-or-pay arrangements. Cost of sales primarily consists of the cost of the commodity being distributed and excludes distribution costs, vehicle costs, salaries and wages and other costs related to the operations of the various satellite locations. These costs are included in operating costs and SD&A. Gross profit related to direct natural gas distribution for the year ended December 31, 2023 was $192.2 million. Total sales volumes from the date of the acquisition of Certarus to December 31, 2023 was 13,846 MMBtu resulting in an average direct natural gas distribution sales margin of $13.9 per MMBtu. Natural gas is purchased at spot rates, which are the daily rates in effect at the time of purchase and are quoted in relation to a physical location. The change in product costs period-over-period generally trend with the change in natural gas commodity prices for the same period. Certarus has the ability to quickly adjust pricing on short-term contracts and has contractual mechanisms in place to either flow through the excess cost of natural gas once a certain index threshold is exceeded or have the entire index price of natural gas as a flow through to the customer. These arrangements provide significant downside protection to Certarus in a volatile or rapidly rising natural gas price environment. Certarus is well positioned for margin expansion in a decreasing or low natural gas price environment. Certarus delivers to its customers safely and cost effectively through their platform of MSUs. As at December 31, 2023 Certarus had 729 MSUs. Operating costs for the year ended December 31, 2023 were $166.0 million and include the cost to operate the Certarus locations, distribute natural gas from the pipeline to the customer, vehicle costs and all other selling and administrative costs. SD&A includes amortization, depreciation and transaction, restructuring and other costs whereas operating costs exclude these expenses and is used in the determination of Adjusted EBITDA. SD&A for the year ended December 31, 2023 was $231.8 million. Earnings before income tax was $33.3 million for the year ended December 31, 2023. Superior Plus Corp. Management’s Discussion and Analysis19 Certarus’ results of operations for the three months ended December 31, 2023 Revenue was $143.2 million, and includes sales related to natural gas distribution and ancillary services which consist of equipment rentals, standby services and take-or-pay arrangements. Cost of sales primarily consists of the cost of the commodity being distributed and excludes distribution costs, vehicle costs, salaries and wages and other costs related to the operations of the various satellite locations. These costs are included in operating costs and SD&A. Gross profit related to direct natural gas distribution for the three months ended December 31, 2023 was $83.1 million. Total sales volumes for this quarter were 6,140 MMBtu resulting in an average direct natural gas distribution sales margin of $13.5 per MMBtu. Operating costs for the three months ended December 31, 2023 were $73.0 million and include the cost to operate its locations, distribute natural gas from the pipeline to the customer, vehicle costs and all other selling and administrative costs. SD&A includes amortization, depreciation and transaction, restructuring and other costs whereas operating costs exclude these expenses and is used in the determination of Adjusted EBITDA. SD&A for the three months ended December 31, 2023 was $102.4 million. Earnings before income tax was $17.5 million for the three months ended December 31, 2023. Financial Outlook Certarus’ Adjusted EBITDA for 2024 is anticipated to be higher than its Pro Forma Adjusted EBITDA in 2023 as a result of continued investment in the segment. Superior estimates that Certarus’ average MSU base will increase to approximately 790 trailers in 2024. In addition to the significant assumptions referred to above, refer to “Forward-Looking Information” and “Risk Factors to Superior” for a detailed review of significant business risks affecting Superior. Corporate Operating Costs A reconciliation between corporate SD&A and corporate operating costs is as follows: Corporate SD&A Add back (deduct): Amortization and depreciation included in SD&A (2) Transaction, restructuring and other costs (2) Corporate operating costs (3) Three Months Ended (1) December 31 Years Ended December 31 2023 (11.2) 0.2 3.0 (8.0) 2022 (51.6) 0.2 40.4 (11.0) 2023 (65.6) 0.8 30.5 (34.3) 2022 (83.1) 0.8 56.4 (25.9) (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) The sum of the above amounts and the balances included in the U.S. Propane, Canadian Propane, Certarus and the Corporate segments are included in SD&A and are disclosed in Note 19 or Note 26 of the annual audited consolidated financial statements as at and for the year ended December 31, 2023 and 2022. (3) Operating costs are Non-GAAP financial measures. See “Non-GAAP financial measures and reconciliations” on page 34 for more information. Corporate results for the year ended December 31, 2023 Corporate operating costs for the year ended December 31, 2023 were $34.3 million an increase of $8.4 million compared to $25.9 million in the prior year. The increase is primarily due to transition costs related to the changes in senior management, higher long-term incentive plan costs related to fluctuations in the share price causing a recovery in the prior year and the impact of inflation. Corporate operating costs included in Adjusted EBITDA exclude depreciation, amortization and transaction, restructuring and other costs. Corporate SD&A was $65.6 million for the year ended December 31, 2023, a decrease of $17.5 million from $83.1 million in the prior year primarily due to lower transaction, restructuring and other costs, partially offset by the above reasons. Superior Plus Corp. Annual report 202320 Corporate results for the three months ended December 31, 2023 Corporate operating costs for the three months ended December 31, 2023 were $8.0 million a decrease of $3.0 million compared to $11.0 million in the prior year quarter. The decrease is primarily due to lower long-term incentive plan costs in the current quarter related to fluctuations in the share price and an insurance provision in the prior year quarter. Corporate operating costs included in Adjusted EBITDA exclude depreciation, amortization and transaction, restructuring and other costs. Corporate SD&A was $11.2 million for the three months ended December 31, 2023, a decrease of $40.4 million from $51.6 million in the prior year quarter primarily due to lower transaction, restructuring and other costs compared to the prior year quarter and, to a lesser extent, the above noted reasons. Consolidated Capital Expenditure Summary Superior classifies its capital expenditures into three main categories: efficiency, process improvement and growth-related; maintenance capital; and investment in leased vehicles. Efficiency, process improvement and growth-related expenditures include expenditures such as the acquisition of new customer equipment to facilitate growth, system upgrades and initiatives to facilitate improvements in customer service. These capital expenditures are discretionary and non-recurring. Maintenance capital expenditures include required regulatory spending on tank refurbishments, and any other required expenditures related to maintaining operations. Investment in leased assets generally includes vehicles to support growth and replace aging vehicles, renewing railcar leases in the wholesale business and timing of renewing property leases. Superior’s capital expenditures are as follows: (millions of dollars) Efficiency, process improvement and growth-related (2) Maintenance capital (2) Proceeds on disposition of assets (2) Proceeds on divestitures (2) Property, plant and equipment acquired through acquisition (3) Total net capital expenditures Investment in leased vehicles (3) Investment in other leased assets (3) Total expenditures including finance leases Three Months Ended (1) December 31 Years Ended December 31 2023 69.1 26.8 95.9 (3.0) (60.3) 1.3 33.9 11.4 2.6 47.9 2022 19.5 24.8 44.3 (2.9) – 10.7 52.1 11.8 11.7 75.6 2023 127.3 72.9 200.2 (11.8) (60.3) 606.7 734.8 35.2 22.1 792.1 2022 58.2 59.1 117.3 (7.9) – 226.3 335.7 29.6 19.2 384.5 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. (2) The amounts disclosed in the annual audited consolidated statements of cash flows for the year ended December 31, 2023 and 2022 is made up of the sum of the amounts of efficiency, process improvement and growth-related and maintenance capital as part of the purchase of property, plant and equipment and intangible assets. The sum of proceeds on disposition of assets and on divestitures equals the proceeds on disposal of property, plant and equipment and other assets in the annual audited consolidated statements of cash flows for the year ended December 31, 2023 and 2022. (3) Property, plant and equipment acquired through acquisitions is disclosed in Note 3 of the annual audited consolidated financial statements. The sum of the leases is disclosed as additions in Note 14 of the annual audited consolidated financial statements. Superior Plus Corp. Management’s Discussion and Analysis21 Efficiency, process improvement and growth-related expenditures were $69.1 million and $127.3 million for the three months and year ended December 31, 2023 compared to $19.5 million and $58.2 million in the prior year. The increase is primarily due to expenditures made by Certarus related to MSUs and ancillary equipment, timing of tank and other equipment purchases and the impact of the weaker Canadian dollar on the translation of U.S. denominated purchases. Maintenance capital expenditures were $26.8 million and $72.9 million for the three months and year ended December 31, 2023 compared to $24.8 million and $59.1 million in the prior year. The increase is primarily due to tank refurbishment costs and general maintenance. Proceeds on disposition of assets and divestitures totaled $63.3 million and $72.1 million for the three months and year ended December 31, 2023 compared to the $2.9 million and $7.9 million in the prior year primarily due to the sale of the Northern Ontario business and sale of distillate assets in the fourth quarter. Property, plant and equipment acquired through acquisition is the allocation of fair value to acquired assets. Superior entered into $11.4 million and $35.2 million of leased vehicles for the three months and year ended December 31, 2023 which is consistent with the $11.8 million and $29.6 million in the prior year. Other leased assets of $2.6 million and $22.1 million for the three months and year ended December 31, 2023 changed from the prior year mainly due to the timing of renewing property leases and the impact of changes in discount rates. Capital expenditures were funded from a combination of operating cash flow and borrowings under the revolving-term bank credit facilities and credit provided through lease liabilities. Transaction, Restructuring and Other Costs Superior’s transaction, restructuring and other costs have been categorized together and excluded from segmented results. The table below summarizes these costs: (millions of dollars) Total transaction, restructuring and other costs Three Months Ended (1) December 31 Years Ended December 31 2023 9.0 2022 50.3 2023 50.2 2022 84.2 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. For the year ended December 31, 2023, Superior incurred $50.2 million in costs related to the acquisition of Certarus and the integration of acquisitions completed in the prior year. The costs in the prior year related primarily to completed acquisitions and integrations related to prior year acquisitions and include a $25.0 million reverse termination fee related to the terminated acquisition of Canexus in 2016. Superior Plus Corp. Annual report 202322 Financial Overview – Gaap Financial Information Consolidated Statements of Net Earnings (Loss) (millions of dollars, except per share amounts) Revenue Cost of sales (includes products and services) Gross profit Expenses Selling, distribution and administrative costs (“SD&A”) Finance expense Gain (loss) on derivatives and foreign currency translation of borrowings Earnings (loss) before income taxes Income tax (expense) recovery Net earnings (loss) for the period Net earnings (loss) attributable to: Superior Non-controlling interest Net earnings (loss) per share attributable to Superior Basic and diluted Cash flows from (used in) operating activities Cash flows from (used in) operating activities, per share (1) Three Months Ended December 31 Years Ended December 31 2023 985.8 (472.1) 513.7 (381.9) (38.1) 13.2 (406.8) 106.9 (29.4) 77.5 71.1 6.4 0.27 37.8 0.14 2022 1,070.3 (641.1) 429.2 (342.5) (35.1) 21.9 (355.7) 73.5 (10.5) 63.0 56.5 6.5 0.27 35.3 0.15 2023 3,353.7 (1,740.8) 1,612.9 (1,386.7) (124.9) 11.9 (1,499.7) 113.2 (36.2) 77.0 51.6 25.4 0.23 550.0 2.12 2022 3,379.8 (2,190.0) 1,189.8 (1,087.1) (91.6) (136.0) (1,314.7) (124.9) 37.0 (87.9) (112.5) 24.6 (0.58) 248.7 1.11 (1) (2) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. The weighted average number of shares outstanding for the three months and year ended December 31, 2023 was 278.6 million and 259.0 million, respectively (year ended December 31, 2022 was 231.1 million and 224.9 million, respectively). The weighted average number of shares assumes the exchange of the issued and outstanding preferred shares into common shares. There were no other dilutive instruments for the three months and year ended December 31, 2023 and 2022. GAAP financial information for the year ended December 31, 2023 Below is GAAP financial information not disclosed in Superior’s operating segments. Net earnings were $77.0 million, compared to a net loss of $87.9 million in the prior year. The increase in net earnings is primarily due to a higher gross profit and the impact of a gain on derivatives and foreign currency translation of borrowings compared to a loss in the prior year, partially offset by higher SD&A and, to a lesser extent, higher income tax and finance expense. Basic and diluted earnings per share attributable to Superior was $0.23 per share, an increase of $ 0.81 from a $0.58 loss per share in the prior year. The increase in earnings per share is due to higher net earnings in the period, partially offset by the impact from the increase in the weighted average shares outstanding. Finance expense was $124.9 million, an increase of $33.3 million or 36% from $91.6 million in the prior year. The increase is primarily due to higher average interest rates, higher average debt balances in the year and, to a lesser extent, the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions, partially offset by a gain recorded as a result of a modification of the debt during the year. Superior Plus Corp. Management’s Discussion and Analysis23 Gain (loss) on derivative and foreign currency translation of borrowings consists of unrealized gains (losses) on derivative financial instruments and foreign currency translation of borrowings, net of realized gains (losses) on derivative financial instruments and realized gains (losses) on settlement of U.S. denominated borrowings. The gain on derivatives and foreign currency translation of borrowings was $11.9 million for the year ended December 31, 2023, a decrease of $147.9 million compared to a loss of $136.0 million in the prior year. The change is primarily due to changes in market prices of commodities, timing of maturities of underlying financial instruments and changes in foreign exchange rates relative to amounts hedged. For additional details, refer to Note 16 of the audited consolidated financial statements. Total income tax expense of $36.2 million was $73.2 million higher than the prior year’s recovery of $37.0 million. Current income tax expense was $22.5 million, an increase of $15.1 million from the prior year’s expense of $7.4 million. The increase is primarily due to higher earnings in higher taxing jurisdictions. Deferred income tax expense was $13.7 million, a decrease of $58.1 million from the prior year’s recovery of $44.4 million. This decrease is primarily due to changes in earnings, timing of acquisitions, divestitures and utilization of tax pools. GAAP financial information for the three months ended December 31, 2023 Below is GAAP financial information not disclosed in Superior’s operating segments. The net earnings were $77.5 million, compared to a $63.0 million net earnings in the prior year quarter. The increase in net earnings is primarily due to a higher gross profit and a smaller loss on derivatives and foreign currency translation of borrowings compared to the prior year quarter, partially offset by higher SD&A and, to a lesser extent, higher finance expense and a higher income tax expense. Basic and diluted earnings per share attributable to Superior was $0.27 per share, consistent from the earnings of $0.27 per share in the prior year quarter due to the aforementioned reasons, fully offset by the impact of the increased number of common shares outstanding. Finance expense was $38.1 million, an increase of $3.0 million or 9% from $35.1 million in the prior year quarter. The increase is primarily due to higher average interest rates, higher average debt balances in the quarter, the impact of recording interest income on the Vendor Note in the prior year and, to a lesser extent, the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions, partially offset by a gain recorded as a result of a modification of the debt during the quarter. Gain (loss) on derivative and foreign currency translation of borrowings consists of unrealized gains (losses) on derivative financial instruments and foreign currency translation of borrowings, net of realized gains (losses) on derivative financial instruments and realized gains (losses) on settlement of U.S. denominated borrowings. The gain on derivatives and foreign currency translation of borrowings was $13.2 million for the three months ended December 31, 2023, a decrease of $8.7 million compared to a gain of $21.9 million in the prior year quarter. The decrease was mainly related to changes in market prices of commodities, timing of maturities of underlying financial instruments and changes in foreign exchange rates relative to amounts hedged. For additional details, refer to Note 16 of the audited consolidated financial statements. Total income tax expense of $29.4 million was $18.9 million higher than the prior year quarter’s expense of $10.5 million. Current income tax expense was $1.8 million, a decrease of $0.5 million from the prior year quarter’s expense of $2.3 million. Deferred income tax expense was $27.6 million, an increase of $19.4 million from the prior year quarter’s recovery of $8.2 million primarily due to changes in earnings, timing of acquisitions, divestitures and utilization of tax pools. Income Taxes Consistent with prior periods, Superior recognizes a provision for income taxes for its subsidiaries that are subject to current and deferred income taxes, including Canadian, U.S., Hungarian and Luxembourg income tax. Total income tax expense for the year ended December 31, 2023 was $36.2 million, comprised of $22.5 million in current income tax expense and $13.7 million in deferred income tax expense. This compares to a total income tax recovery of $37.0 million in the prior year quarter, which consisted of a current income tax expense of $7.4 million and $44.4 million deferred income tax recovery. Superior Plus Corp. Annual report 202324 Current income tax expense for the year ended December 31, 2023 was $22.5 million (2022 – $7.4 million expense), consisting of income taxes in Canada of $3.4 million (2022 – $2.8 million), in the U.S. of $10.5 million (2022 – $3.8 million) and in Hungary of $8.6 million (2022 – $0.8 million). Deferred income tax expense for the year ended December 31, 2023 was $13.7 million (2022 – $44.4 million recovery), resulting in a net deferred income tax liability of $190.7 million as at December 31, 2023. As at December 31, 2023, Superior had the following tax pools available to be used in future years: Canada Tax basis Non-capital losses Capital losses Scientific research expenditures Investment tax credits United States Tax basis Non-capital losses Interest Deduction – 163(j) (millions of dollars) 727.3 110.0 96.4 70.7 45.8 1,259.0 205.2 185.8 Liquidity and Capital Resources Debt Management Update Superior’s Leverage Ratio as at December 31, 2023 was 3.8x, compared to 4.1x at December 31, 2022. The decrease in the Leverage Ratio was due to higher Pro forma Adjusted EBITDA, partially offset by an increase in Net Debt. Net Debt, Pro forma Adjusted EBITDA and Leverage Ratio are Non-GAAP measures, see “Non-GAAP financial measures and reconciliations” on page 34. Borrowing Superior’s revolving syndicated bank facilities (“revolving credit facilities”), senior unsecured notes, lease obligations, deferred consideration and other debt (collectively “borrowing”) before deferred financing fees was $2,504.7 million as at December 31, 2023, an increase of $335.7 million from $2,169.0 million as at December 31, 2022. The increase is primarily due to the higher credit facility borrowings to finance the Certarus Acquisition, partially offset by the receipt of proceeds from the sale of the Vendor Note, cashflow generated from operations and, to a lesser extent, lower capital requirements associated with decreased commodity prices. On May 31, 2023, Superior entered into a new $550 million senior secured credit facility agreement (the “New Credit Facility”) with a syndicate of ten lenders. The New Credit Facility matures on May 31, 2026 and has similar covenants to the existing revolving credit facilities. Superior’s total and available sources of credit are detailed below: (millions of dollars) Revolving credit facilities (1) Senior unsecured notes (1) Deferred consideration and other Lease liabilities Total Total Amount 1,300.0 1,294.6 42.8 239.4 Borrowing 927.9 1,294.6 42.8 239.4 As at December 31, 2023 Letters of Credit Issued Amount Available 23.1 349.0 – – – – – – 2,876.8 2,504.7 23.1 349.0 (1) The revolving credit facilities, including the existing and the new credit facility, and the senior unsecured notes balances are presented before deferred financing fees, see Note 13 of the annual audited consolidated financial statements. Superior Plus Corp. Management’s Discussion and Analysis25 Net Working Capital Consolidated net working capital (deficit) was ($53.8) million as at December 31, 2023, a decrease of $218.5 million from $164.7 million as at December 31, 2022. The decrease from December 31, 2022 is primarily due to the receipt of the Vendor Note (Note 4) in trade and other receivables and, to a lesser extent, the timing of customer receipts compared to the timing of supplier payments and the impact of the Certarus Acquisition. Net working capital is defined in the audited consolidated financial statements and notes thereto as at and for the three months and year ended December 31, 2023 and 2022. See Note 26 of the audited consolidated financial statements. Compliance In accordance with the credit facility, Superior must maintain certain covenants and ratios that represent Non-GAAP financial measures. Superior was in compliance with its lender covenants as at December 31, 2023, and the covenant details are found in the credit facility documents filed in www.sedarplus.ca. Pension Plans As at December 31, 2023, Superior’s defined benefit pension plans had an estimated net defined benefit going concern surplus of approximately $4.9 million (December 31, 2022 – surplus $4.5 million) and a net pension solvency surplus of approximately $5.4 million (December 31, 2022 – surplus $5.0 million). Funding requirements by applicable pension legislation are based upon going concern and solvency actuarial assumptions. These assumptions differ from the going concern actuarial assumptions found in Superior’s year end audited consolidated financial statements. Contractual Obligations and Other Commitments (1) Current 2025 2026 2027 2028 Thereafter Total Borrowings before deferred financing fees and discounts (2) Lease liabilities (3) Non-cancellable, low-value, short-term leases and leases with variable lease payments (3) Certarus capital and other commitments Equity derivative contracts (2) US dollar foreign currency forward sales contracts (2) USD/CAD call options (2) 11.3 63.5 9.5 97.2 19.5 9.6 44.8 0.3 5.7 9.7 250.7 12.0 160.9 – Propane, WTI, heating oil, diesel and natural gas purchase and sale contracts (1) (2) 141.7 11.5 4.5 (1) Does not include the impact of financial derivatives. (2) See Notes 13 and 16 of the December 31, 2023 annual audited consolidated financial statements. 444.3 33.7 491.8 28.6 500.8 17.3 807.5 51.5 2,265.3 239.4 – 1.2 – 72.0 – – 1.0 – – – – – 1.0 – – – – – 2.6 – – – – 9.8 108.7 29.2 483.6 12.0 157.7 (3) See Note 14 of the December 31, 2023 annual audited consolidated financial statements. Operating leases comprise Superior’s off-balance-sheet obligations and are contracts that do not meet the definition of a lease under IFRS 16 or are exempt. In the normal course of business, Superior is subject to lawsuits and claims. Superior believes the resolution of these matters will not have a material adverse effect, individually or in the aggregate, on Superior’s liquidity, consolidated financial position or results of operations. Superior records costs as they are incurred or when they become determinable. Superior Plus Corp. Annual report 202326 Shareholders’ Capital As at December 31, 2023, the following shares were issued and outstanding: Balance as at December 31, 2022 Common shares Preferred shares Issued number (Millions) Share capital Issued number (Millions) Equity attributable to NCI 200.7 $2,617.9 0.3 $352.4 Common shares issued during the year net of issue costs Common shares repurchased and cancelled during the year Unrealized foreign currency gain on translation 48.6 (0.7) – 487.2 (9.2) – Balance as at December 31, 2023 248.6 $3,095.9 – – – 0.3 – – (8.1) $344.3 On May 31, 2023, Superior acquired all the issued and outstanding shares of Certarus for total consideration of $840.5 million consisting of $353.2 million in cash and 48.6 million common shares of Superior valued at $487.3 million; see “Highlights” for more information. Share issuance costs was $0.1 million and was presented net of the common shares issued. Superior’s previous normal course issuer bid terminated on October 13, 2023. For the year ended December 31, 2023, 0.7 million common shares were repurchased for $7.2 million, including commission, at a volume weighted average price of $9.79 per common share (December 31, 2022 – 994,542 common shares were repurchased for $10.0 million, including commission, at a volume weighted average price of $10.06 per common share). The repurchased shares with a total book value of $9.2 million (December 31, 2022 – $13.0 million), were immediately cancelled and a gain of $2.0 million was recorded to deficit. On November 6, 2023, the Toronto Stock Exchange (the “TSX”) accepted a notice filed by Superior of its intention to commence a new normal course issuer bid (the “NCIB”) with respect to its common shares. The NCIB will commence on November 10, 2023 and will terminate on the earlier of November 9, 2024, the date Superior has purchased the maximum number of common shares permitted under the NCIB or the date on which Superior terminates the NCIB in accordance with its terms. The NCIB permits the purchase of up to 12,427,942 common shares, such amount representing 5% of the 248,558,857 common shares issued and outstanding as at October 27, 2023, by way of normal course purchases effected through the facilities of the TSX and/or alternative trading platforms. The NCIB is subject to additional standard regulatory requirements as set out herein. Furthermore, subject to certain exemptions for block purchases, the maximum number of common shares that Superior may acquire on any one trading day is 201,908 common shares, such amount representing 25% of the average daily trading volume of the common shares of 807,635 for the six calendar months prior to the start of the NCIB. All common shares purchased by Superior under the NCIB will be cancelled. Superior has engaged a broker to administer the NCIB. Superior will also enter into an automatic purchase plan (“APP”) with its broker in relation to the NCIB to facilitate purchases of common shares under the NCIB at times when Superior normally would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Pursuant to the APP, from time to time, when Superior is not in possession of material non-public information about itself or its securities, Superior may, but is not required to, direct its broker to make purchases of common shares under the NCIB during an ensuing trading blackout period. Such purchases will be based on trading parameters established by Superior prior to the trading blackout period in accordance with the rules of the TSX, applicable securities laws and the terms of the APP. Dividends Dividends Declared to Common Shareholders Dividends declared to Superior’s common shareholders depend on its cash flow from operating activities with consideration for Superior’s changes in working capital requirements, investing activities and financing activities. See “Summary of Adjusted EBITDA” for 2023 above, and “Summary of Cash Flow” for additional details. Superior Plus Corp. Management’s Discussion and Analysis27 Dividends declared to common shareholders for the three months and year ended December 31, 2023 were $44.7 million or 0.18 per common share and $170.5 million or $0.72 per common share for the three months and year ended December 31, 2023, respectively, on a weighted average basis, compared to $36.2 million or 0.18 per common share and $140.5 million or $0.72 per common share for the three months and year ended December 31, 2022, respectively. The increase was due to the issuance of common shares during the previous year and shares issued in accordance with the Certarus Acquisition. Dividends to shareholders are declared at the discretion of Superior’s Board of Directors. Superior has a Dividend Reinvestment and Optional Share Purchase Plan (“DRIP”) that is currently suspended and will remain in place should Superior elect to reactivate the DRIP, subject to regulatory approval, at a future date. Dividends Declared to Preferred Shareholders Dividends declared to preferred shareholders for the three months and year ended December 31, 2023 were US$4.7 million (C$6.4 million) or US$18.1 (C$24.6) per preferred share and US$18.9 million (C$25.4 million) or US$72.5 (C$97.7) per preferred share, respectively (December 31, 2022 – US$4.7 million (C$6.5 million) or US$18.1 (C$24.6) per preferred share and US$18.9 million (C$24.6 million) or US$72.5 (C$94.6) per preferred share, respectively). Summary of Cash Flow Superior’s primary sources and uses of cash are detailed below: (millions of dollars) Cash flows from operating activities Cash flows used in investing activities Cash flows (used in) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of the year Effect of translation of foreign currency-denominated cash and cash equivalents Cash and cash equivalents, end of the year Three Months Ended (1) December 31 Years Ended December 31 2023 37.8 (34.9) (2.0) 0.9 40.6 (0.8) 40.7 2022 35.3 (67.3) 49.0 17.0 42.0 (0.6) 58.4 2023 550.0 (467.1) (99.7) (16.8) 58.4 (0.9) 40.7 2022 248.7 (632.1) 410.9 27.5 28.4 2.5 58.4 (1) Fourth quarter results are not required to be disclosed in the annual audited consolidated financial statements for the year ended December 31, 2023 and 2022. The GAAP and Non-GAAP financial information below can be derived by subtracting the results of the year ended December 31, 2023 and 2022 by the results of the nine months ended September 30, 2023 and 2022, respectively. The results for the nine months ended September 30, 2023 and 2022 can be found on www.sedarplus.ca or http://www.superiorplus.com/investor-relations/financial-reports/. Cash flows from operating activities for the year ended December 31, 2023 was $550.0 million, an increase of $301.3 million from the prior year primarily due to the positive change in non-cash operating working capital compared to the prior year and, to a lesser extent, higher earnings. Included in non-cash operating working capital is the collection of a vendor takeback note as a result of Superior selling its Specialty Chemical business in 2021. Cash flows used in investing activities for the year ended December 31, 2023 was $467.1 million, a decrease of $165.0 million from the prior year primarily due to less completed acquisitions, funded by cash, partially offset by the increase in purchases of property, plant and equipment and intangible assets as a result of the Certarus Acquisition. Cash flows used in financing activities for the year ended December 31, 2023 was $99.7 million, a decrease of $510.6 million from the prior year primarily due to advances under the credit facility and proceeds on the issuance of common shares to fund acquisitions in the prior year. Superior Plus Corp. Annual report 202328 Financial Outlook Superior achieved its 2023 Pro Forma Adjusted EBITDA with Pro Forma Adjusted EBITDA of $643.3 million which is well within the guidance range of $630 million to $670 million. Superior is expecting Adjusted EBITDA growth in 2024 of approximately 5% compared to 2023 Pro Forma Adjusted EBITDA. The increase is primarily due to organic growth, the assumption of normal weather and continued cost-saving initiatives, partially offset by the impact of market and supply differentials regressing to the average. Effective January 1, 2024, Superior will begin reporting in U.S. dollars see page 33 for a quarterly translation of 2023 results to U.S. dollars. Achieving Superior’s Adjusted EBITDA depends on the operating results of its segments and the following significant assumptions: • Weather is expected to be consistent with the average temperature for the last five years based on heating degree days, after adjusting for known weather in January 2024; • Economic growth activity in Canada and the U.S. is expected to increase modestly and won’t be negatively impacted by inflation and higher interest rates used to control inflation; • Superior expects to continue to attract capital and obtain financing on acceptable terms; • Superior expects maintenance and non-recurring capital expenditures net of disposals and including leases to be approximately US$230 million (2023 – US$182 million); • Corporate operating costs are expected to be approximately US$25 million; • The foreign currency exchange rate between the Canadian dollar and U.S. dollar is expected to average $0.74 for 2024 on all unhedged foreign currency transactions; • Financial and physical counterparties are expected to continue fulfilling their obligations to Superior; • Regulatory authorities are not expected to impose any new regulations impacting Superior; and • Superior expects to have an average MSU count of approximately 790 trailers in 2024. U.S. and Canadian Propane • Continue to manage the impact of inflation on fuel costs, labour and other costs through cost saving and pricing initiatives; • Continue to implement cost-saving initiatives related to workforce optimization; and • Wholesale propane prices are not anticipated to significantly affect demand for propane and related services. Wholesale Propane • Wholesale propane market fundamentals related to basis differentials are expected to decrease due to average market conditions; and • Continue to grow third-party sales volumes through sales and marketing initiatives to offset the impact of higher costs due to inflation. Certarus • The natural gas price differential to diesel remains favourable such that compressed natural gas remains a cost-effective means to displace diesel; and • Assuming an average MSU count of approximately 790 trailers in 2024 and average EBITDA per MSU consistent with Certarus’ historic results. Superior Plus Corp. Management’s Discussion and Analysis29 Financial Instruments – Risk Management Financial and non-financial derivatives are used by Superior to manage its exposure to fluctuations in foreign currency exchange rates, interest rates, share-based compensation and commodity prices. Superior assesses the inherent risks of these instruments by grouping derivative and non-financial derivatives related to the exposures these instruments mitigate. Superior’s policy is not to use derivative or non-financial derivative instruments for speculative purposes. Superior does not formally designate its derivatives as hedges and, as a result, Superior does not apply hedge accounting and is required to designate its derivatives and non-financial derivatives as held for trading. Effective January 1, 2024, Superior is changing its reporting currency from Canadian dollars to U.S. dollars. As a result, Superior will no longer hedge its U.S dollar EBITDA exposure as the foreign currency exchange risk will be significantly reduced. Subsequent to the year-end, Superior entered into foreign currency forward contracts and options to offset the below notional amounts. As at December 31, 2023, a summary of the notional amounts of Superior’s U.S. dollar forward contracts and options for the rolling twelve months is provided in the table below. USD-foreign currency forward sales contracts USD/CAD call options (1) Net average external US$/CDN$ exchange rate Current 250.7 12.0 1.32 2025 160.9 – 1.33 2026 72.0 – 1.34 2027 2028 – – – – – – Total 483.6 12.0 1.00 (1) USD/CAD call options expire in varying maturity dates between April and October 2024 and are priced at 1.35. For additional details on Superior’s financial instruments, including the amount and classification of gains and losses recorded, summary of fair values, notional balances, effective rates and terms, and significant assumptions used in the calculation of the fair value of Superior’s financial instruments, see Note 16 to the annual audited consolidated financial statements for the year ended December 31, 2023. Sensitivity Analysis Superior’s estimated cash flow sensitivity in 2023 to various changes is provided below: Impact to Adjusted EBITDA (millions) Impact to net earnings (loss) before income tax (millions) Change % Change U.S. Propane Change in U.S. propane sales margin Change in U.S. propane sales volume Canadian Propane Change in Canadian propane sales margin Change in Canadian propane sales volume Wholesale Propane Change in Wholesale propane sales margin Change in Wholesale propane sales volume (1) Certarus $0.005/litre 50 million litres $0.005/litre 50 million litres $0.005/litre 50 million litres Change in Adjusted EBITDA per MSU $14.0/MSU Corporate Change in CDN$/US$ exchange rate on US$ denominated debt Change in interest rates $0.01 0.50% (1) Based on total sales which includes sales to both the Canadian and U.S. Propane segments. 1% 4% 2% 5% 8% 3% 5% 1% 7% $ 7.2 $ 22.0 $ 5.5 $ 12.9 $ $ 7.4 1.7 $ 7.2 $ 22.0 $ 5.5 $ 12.9 $ $ 7.4 1.7 $ 10.0 $ 10.0 $ (2.4) $ (4.6) $ (8.4) $ (4.6) Superior Plus Corp. Annual report 202330 Disclosure Controls and Procedures and Internal Controls Over Financial Reporting Disclosure controls and procedures (DC&P) are designed by or under the supervision of Superior’s President and Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) in order to provide reasonable assurance that all material information relating to Superior is communicated to them by others in the organization as it becomes known and is appropriately disclosed as required under the continuous disclosure requirements of securities legislation and regulation. In essence, these types of controls are related to the quality, reliability and transparency of financial and non-financial information that is filed or submitted under securities legislation and regulation. The CEO and CFO are assisted in this responsibility by a Disclosure Committee, which is composed of senior leadership of Superior. The Disclosure Committee has established procedures so that it becomes aware of any material information affecting Superior in order to evaluate and discuss this information and determine the appropriateness and timing of its public release. Internal Controls over Financial Reporting (ICFR) are also designed by or under the supervision of Superior’s CEO and CFO and effected by Superior’s Board of Directors, management and other personnel in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Due to inherent limitations in all such systems, no evaluation of controls can provide absolute assurance that all control issues within a company have been detected. Accordingly, Superior’s disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of the corporation’s disclosure control system are met. Changes in Internal Controls over Financial Reporting No changes were made in Superior’s ICFR that have materially affected, or are reasonably likely to materially affect, Superior’s ICFR in the year ended December 31, 2023. However, management continues the process of harmonizing and integrating acquired businesses on to Superior’s existing information technology platform. Effectiveness An evaluation of the effectiveness of Superior’s DC&P and ICFR was conducted as at December 31, 2023 by and under the supervision of Superior’s management, including the CEO and CFO. Based on this evaluation, the CEO and CFO have concluded that Superior’s DC&P and ICFR were effective as at December 31, 2023 with the following exception: Section 3.3(1) of National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings, states that a company may limit its design of disclosure controls and procedures and internal controls over financial reporting for a business that it acquired not more than 365 days before the end of the financial period to which the certificate relates. Under this section, Superior’s CEO and CFO have limited the scope of the design, and subsequent evaluation, of DC&P and ICFR to exclude controls, policies and procedures of Certarus effective May 31, 2023. Summary financial information pertaining to this acquisition that was included in the audited consolidated financial statements of Superior as at December 31, 2023, is as follows: (millions of Canadian dollars) Revenue Net earnings before income tax for the period (millions of Canadian dollars) Current assets Non-current assets Current liabilities Non-current liabilities From the date of acquisition to December 31, 2023 310.4 33.3 December 31, 2023 128.7 1,111.4 (79.4) (101.5) Superior Plus Corp. Management’s Discussion and Analysis31 Critical Accounting Policies and Estimates Superior’s audited consolidated financial statements were prepared in accordance with IFRS. The significant accounting policies are described in the audited consolidated financial statements for the year ended December 31, 2023. Certain of these accounting policies, as well as estimates made by management in applying such policies, are recognized as critical because they require management to make subjective or complex judgments about matters that are inherently uncertain. Superior’s critical accounting estimates relate to the allowance for doubtful accounts, employee future benefits, deferred income tax assets and liabilities, the valuation of financial and non-financial derivatives, asset impairments, the purchase price allocation for business combinations, the assessment of potential provision for asset retirement obligations, estimating liabilities under the cap and trade programs and estimating the incremental borrowing rate on leases. Recent Accounting Pronouncements Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or the International Financial Reporting Interpretations Committee effective for accounting periods beginning on or after January 1, 2023, or latter periods. Several amendments and interpretations apply for the first time in 2023, but do not have an impact on the audited consolidated financial statements of Superior. Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”), to Introduce a Definition of Accounting Estimates In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of “accounting estimates”. The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments to IAS 8 are effective for annual reporting periods beginning on or after January 1, 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted as long as this fact is disclosed. The amendments to IAS 8 had no material impact on the consolidated financial statements. Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Disclosure of Accounting Policies In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2, Making Materiality Judgments, in which it provides guidance and examples to help entities apply materiality judgments to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their “material” accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments to IAS 1 are applicable for annual periods beginning on or after January 1, 2023 with earlier application permitted. Since the amendments to IFRS Practice Statement 2 provide non-mandatory guidance on the application of the definition of material to accounting policy information, an effective date for these amendments is not necessary. The amendments to IAS 1 and IFRS Practice Statement 2 had no material impact on the consolidated financial statements. Amendments to IAS 12, International Tax Reform—Pillar Two Model Rules In May 2023, the IASB issued narrow-scope amendments to IAS 12 that aim to provide temporary relief from the requirement to recognize and disclose deferred taxes arising from enacted or substantively enacted tax law that implements the Pillar Two model rules published by the Organization for Economic Co-operation and Development (“OECD”), including tax law that implements qualified domestic minimum top-up taxes described in those rules. The amendments also introduce targeted disclosure requirements for affected companies, and they require entities to disclose: • The fact that they have applied the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes; • Their current tax expense (if any) related to the Pillar Two income taxes; and • During the period between the legislation being enacted or substantially enacted and the legislation becoming effective, entities will be required to disclose known or reasonably estimable information that would help users of financial statements to understand an entity’s exposure to Pillar Two income taxes arising from that legislation. If this information is not known or reasonably estimable, entities are instead required to disclose a statement to that effect and information about their progress in assessing the exposure. Superior Plus Corp. Annual report 202332 The amendments to IAS 12 are required to be applied immediately (subject to any local endorsement processes) and retrospectively in accordance with IAS 8, including the requirement to disclose the fact that the exception has been applied if the entity’s income taxes will be affected by enacted or substantively enacted tax law that implements the OECD’s Pillar Two model rules. Superior and its subsidiaries (the “Group”) is within the scope of the OECD Pillar Two model rules. As at December 31, 2023, the Pillar Two legislation has been enacted in Hungary and has not been enacted or is substantially enacted in all other jurisdictions that Superior operates in. Since the Pillar Two legislation was not effective at the reporting date, the Group has no related current tax exposure. The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. The assessment of the potential exposure of the Pillar Two model rules is based on the most recent available information for the constituent entities in the Group. No significant impact is expected in the jurisdictions that Superior operates in, the Pillar Two effective tax rates are either above the minimum tax rate or the transitional safe harbor relief will apply. Standards issued but not yet effective Superior has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. Accounting standards issued but not yet effective that have not changed or management does not have an update for are disclosed below. IFRS S1, General Requirements for Disclosure of Sustainability-related Financial (“IFRS S1”) and IFRS S2, Climate-related Disclosures (“IFRS S2”) In June 2023, the International Sustainability Standards Board (the “ISSB”) issued its first two IFRS Sustainability Disclosure Standards, ushering in a new era in international corporate reporting: • IFRS S1 sets out the core content requirements for a complete set of sustainability-related financial disclosures and requires an entity to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. The effect on the entity’s prospects refers to the effect on the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term. • IFRS S2, which is the ISSB’s first topic-based standard, requires an entity to provide information about its exposure to climate- related risks and opportunities. The ISSB was established by the IFRS Foundation in November 2021 in response to demands from global capital markets for the development of standards to provide a comprehensive global baseline of sustainability disclosures. Both IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after January 1, 2024. A “climate first” transition option is available, which allows an entity to provide only climate-related disclosures in its first year of applying IFRS S1 and IFRS S2. Mandatory application of IFRS Sustainability Disclosure Standards depends on each jurisdiction’s endorsement or regulatory processes. The application of IFRS Sustainability Disclosure Standards is not linked to the application of IFRS Accounting Standards. Therefore, an entity applying IFRS Accounting Standards for financial reporting purposes is currently not required to also apply IFRS Sustainability Disclosure Standards, and vice versa. Superior is assessing the impact that the application of IFRS S1 and IFRS S2 will have on the audited consolidated financial statements. Superior Plus Corp. Management’s Discussion and Analysis33 Quarterly Financial and Operating Information (millions of dollars, except per share amounts) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Revenue Gross profit Net earnings (loss) Per share, basic Per share, diluted Adjusted EBITDA (1) 985.8 513.7 77.5 $0.27 $0.27 213.6 531.0 289.1 (107.8) (0.46) (0.46) 25.8 Net working capital (deficit) (2) (53.8) (139.8) 581.5 268.9 (39.8) (0.21) (0.21) 40.1 (56.1) 1,255.4 1070.3 541.2 147.1 0.63 0.63 272.1 57.3 429.2 63.0 0.27 0.27 182.6 164.7 510.5 172.2 (206.9) (1.06) (1.06) (8.8) (0.4) 628.6 194.5 (85.0) (0.46) (0.46) 25.6 39.1 1,170.4 393.9 141.0 0.68 0.68 250.4 161.9 (1) Adjusted EBITDA is a Non-GAAP financial measure, see “ Non-GAAP financial measures and reconciliations” on page 34. (2) Net working capital is comprised of trade and other receivables, prepaid expenses and deposits and inventories, less trade and other payables, contract liabilities, and dividends payable. Superior will begin reporting its financial results in U.S. dollars effective Q1 2024, below is a summary of historical financial information in 2023 in Canadian and U.S. dollar: (millions of dollars) Adjusted EBITDA U.S. Propane Canadian Propane Wholesale Propane Certarus Corporate costs Net earnings Canadian dollars U.S. dollars Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 113.8 50.2 16.3 47.2 (8.0) (5.8) 4.3 1.5 35.5 (10.1) 104.0 (107.8) 18.6 13.6 5.4 12.6 (10.5) (39.8) 175.9 65.8 40.2 – (5.7) 147.1 84.0 37.0 12.1 34.8 (5.7) 74.8 (4.5) 3.2 1.0 26.4 (7.5) (80.1) 13.8 10.0 4.0 9.5 (7.8) (29.2) 130.1 48.7 29.7 – (4.2) 109.3 Fluctuations in Superior’s individual quarterly results is subject to seasonality. Sales typically peak in the first quarter when approximately one-third of annual propane and other refined fuels sales volumes and gross profits are generated due to the demand of heating from end-use customers. They then decline through the second and third quarters, rising seasonally again in the fourth quarter with heating demand. In addition, the timing of acquisitions and divestitures may impact quarterly results. For information on acquisitions see Note 3 in the December 31, 2023 audited consolidated financial statements. Volumes U.S Propane sales by end-use application are as follows: (millions of litres) Residential Commercial Total Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 243 191 434 70 116 186 105 137 242 346 238 584 272 219 491 74 130 204 105 137 242 362 234 596 Canadian Propane sales by end-use application are as follows: (millions of litres) Residential Commercial Total Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 53 254 307 19 155 174 26 186 212 74 339 413 57 299 356 21 159 180 28 198 226 85 372 457 Superior Plus Corp. Annual report 202334 Wholesale Propane sales by region (1) are as follows: (millions of litres) United States Canada Total Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 337 72 409 237 31 268 265 33 298 423 74 497 323 72 395 252 26 278 276 27 303 278 66 344 (1) Wholesale propane sales volumes exclude inter-segment sales. Certarus sales by region are as follows: (thousands of MMBtu) United States Canada Total Q4 2023 Q3 2023 Q2 2023 (1) Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 4,850 1,290 6,140 4,803 1,724 868 311 5,671 2,035 – – – – – – – – – – – – – – – (1) Certarus sales volumes represent sales from the date of acquisition to June 30, 2023. Non-Gaap Financial Measures and Reconciliations Throughout the MD&A, Superior has used the following terms that are not defined by IFRS, but are used by management to evaluate the performance of Superior and its business. These measures may also be used by investors, financial institutions and credit rating agencies to assess Superior’s performance and ability to service debt. Non-GAAP financial measures do not have standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Securities regulations require that Non-GAAP financial measures be clearly defined, qualified and reconciled to their most comparable IFRS financial measures. Except as otherwise indicated, these Non-GAAP financial measures are calculated and disclosed on a consistent basis from period to period. Specific items may only be relevant in certain periods. The intent of Non-GAAP financial measures is to provide additional useful information to investors and analysts, and the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate Non-GAAP financial measures differently. Investors should be cautioned that EBITDA from operations and Adjusted EBITDA should not be construed as alternatives to net earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of Superior’s performance. Non-GAAP financial measures are identified and defined as follows: Adjusted EBITDA and Adjusted EBITDA per share Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, losses (gains) on disposal of assets, finance expense, restructuring costs, transaction, restructuring and other costs, and unrealized gains (losses) on derivative financial instruments. Adjusted EBITDA is used by Superior and investors to assess its consolidated results and ability to service debt. Adjusted EBITDA is a significant performance measure used by management and investors to evaluate Superior’s ongoing performance of its businesses. Adjusted EBITDA is also used as one component in determining short-term incentive compensation for certain management employees. Adjusted EBITDA is consistent with Segment Profit as disclosed in Note 26 of the audited consolidated financial statements. Adjusted EBITDA per share is calculated by dividing Adjusted EBITDA by the weighted average shares assuming the exchange of the issued and outstanding preferred shares into common shares. The seasonality of Superior’s individual quarterly results must be assessed in the context of annualized Adjusted EBITDA. Superior Plus Corp. Management’s Discussion and Analysis35 EBITDA from operations EBITDA from operations is defined as the sum of U.S. Propane, Canadian Propane, Wholesale Propane and Certarus segment profit (loss). Management uses EBITDA from operations to set targets for Superiors’ operating segments (including annual guidance and variable compensation targets). Note 26 of the audited consolidated financial statements discloses the segment profit (loss). Below is a reconciliation of net earnings to EBITDA and Adjusted EBITDA related to Certarus for the period of January 1, 2023 to the date of acquisition. The Adjusted EBITDA number is used as part of Superior’s guidance. Superior is including the pro forma Adjusted EBITDA impact of the Certarus Acquisition in its financial outlook, as the full economic benefit of Certarus’ 2023 Adjusted EBITDA prior to the close of the Certarus Acquisition was retained in the business. The pro forma Adjusted EBITDA for Certarus for the period of January 1, 2023 to the date of acquisition was approximately $91.7 million. For the period January 1, 2023 to the date of acquisition (millions of dollars) Net earnings before income taxes for the year ended December 31, 2023 Adjust for: Amortization and depreciation Finance expense EBITDA Adjust for transaction, restructuring and other costs Adjusted EBITDA for the year ended December 31, 2023 Less Adjusted EBITDA from the date of acquisition to December 31, 2023 Adjusted EBITDA for the period January 1, 2023 to the date of acquisition Certarus 74.4 87.0 8.2 169.6 17.4 187.0 (95.3) 91.7 Adjusted Gross Profit Adjusted gross profit represents revenue less cost of sales adjusted for realized gains and losses on commodity derivative instruments related to risk management. Managements uses Adjusted Gross Profit to set margin targets and measure results. Unrealized gains and losses on commodity derivative instruments are excluded as a result of the customer contract not being included in the determination of the fair value for this risk management activity. Superior Plus Corp. Annual report 202336 Realized gain (loss) on derivatives related to commodity risk management and foreign currency hedging contracts reconcile to total gain (loss) as follows: (millions of Canadian dollars) For the year Ended December 31, 2023 U.S. Propane Canadian Propane Wholesale Propane Results from Certarus Operations Corporate Total Realized loss on derivatives related to commodity risk management Realized loss on foreign currency hedging contracts Realized loss included in Adjusted EBITDA Unrealized gain on derivatives related to commodity risk management Unrealized gain on foreign currency hedging contracts Unrealized loss on equity derivative contracts Unrealized foreign exchange gain on U.S. dollar debt Unrealized gain excluded in Adjusted EBITDA Total (loss) gain on derivatives and foreign currency translation of borrowings (28.9) – (28.9) 22.8 – – – 22.8 (6.1) – – – – – – – – – (13.7) – (13.7) 7.7 – – – 7.7 (6.0) – – – – – – – – – (42.6) – (42.6) – (9.2) (9.2) (42.6) (9.2) (51.8) 30.5 – – – 30.5 – 18.2 30.5 18.2 (3.7) (3.7) 18.7 33.2 18.7 63.7 (12.1) 24.0 11.9 (millions of Canadian dollars) For the Year Ended December 31, 2022 Realized gain on derivatives related to commodity risk management Realized loss on foreign currency hedging contracts Realized gain (loss) included in Adjusted EBITDA Unrealized loss on derivatives related to commodity risk management Unrealized loss on foreign currency hedging contracts Unrealized loss on equity derivative contracts Unrealized gain on contingent consideration Unrealized foreign exchange loss on US dollar debt Unrealized loss excluded in Adjusted EBITDA Total loss on derivatives and foreign currency translation of borrowings U.S. Propane Canadian Propane Wholesale Propane Results from Operations Corporate Total 24.0 – 24.0 (64.7) – – – – (64.7) (40.7) – – – – – – – – – – 4.6 – 4.6 28.6 – 28.6 – 28.6 (2.7) (2.7) (2.7) 25.9 (13.0) (77.7) – (77.7) – – – – – – – – (13.0) (77.7) (27.5) (3.7) 2.0 (55.0) (84.2) (27.5) (3.7) 2.0 (55.0) (161.9) (8.4) (49.1) (86.9) (136.0) Superior Plus Corp. Management’s Discussion and Analysis37 For the Three Months Ended December 31, 2023 U.S. Propane Canadian Propane Wholesale Propane Results from Certarus Operations Corporate Total Realized loss on derivatives related to commodity risk management Realized loss on foreign currency hedging contracts Realized loss included in Adjusted EBITDA Unrealized loss on derivatives related to commodity risk management Unrealized gain on foreign currency hedging contracts Unrealized loss on equity derivative contracts Unrealized foreign exchange gain on U.S. dollar debt Unrealized gain (loss) excluded in Adjusted EBITDA Total (loss) gain on derivatives and foreign currency translation of borrowings (3.9) – (3.9) (10.0) – – – (10.0) (13.9) For the Three Months Ended December 31, 2022 Realized loss on derivatives related to commodity risk management Realized loss on foreign currency hedging contracts Realized loss included in Adjusted EBITDA Unrealized gain on derivatives related to commodity risk management Unrealized gain on foreign currency hedging contracts Unrealized gain on equity derivative contracts Unrealized gain on contingent consideration Unrealized foreign exchange gain on U.S. dollar debt Unrealized gain excluded in Adjusted EBITDA Total (loss) gain on derivatives and foreign currency translation of borrowings Per MSU amounts – – – – – – – – – (1.8) – (1.8) (4.9) – – – (4.9) (6.7) – – – – – – – – – (5.7) – (5.7) – (5.9) (5.9) (5.7) (5.9) (11.6) (14.9) – (14.9) 21.2 21.2 (1.5) (1.5) – – – 20.0 20.0 24.8 (14.9) 39.7 (20.6) 33.8 13.2 U.S. Propane Canadian Propane Wholesale Propane Results from Operations Corporate Total (7.9) – (7.9) 0.7 – – – – 0.7 (7.2) – – – – – – – – – – (3.5) (11.4) – (11.4) – (3.5) 0.1 – – – – – (11.4) 0.8 – – – – 0.1 0.8 (3.4) (10.6) (4.1) (4.1) – 16.5 2.0 1.4 16.7 36.6 32.5 (4.1) (15.5) 0.8 16.5 2.0 1.4 16.7 37.4 21.9 Per MSU amounts represent the operating results of Certarus divided by the average number of MSUs for the period. Superior uses per average MSU amounts to evaluate operating productivity. Per MSU amounts are presented in thousands of dollars. Adjusted EBITDA per average MSU Adjusted EBITDA per average MSU is used to evaluate the productivity during a reporting period. Adjusted EBITDA per average MSU is equal to Adjusted EBITDA divided by the average number of MSUs for the period. Superior Plus Corp. Annual report 202338 Operating Costs Operating costs for the U.S., Canadian, Wholesale Propane and Certarus segments include wages and benefits for employees, drivers, service and administrative labour, fleet maintenance and operating costs, freight and distribution expenses excluded from cost of sales, along with the costs associated with owning and maintaining land, buildings and equipment, such as rent, repairs and maintenance, environmental, utilities, insurance and property tax costs. Operating costs exclude gains or losses on disposal of assets, depreciation and amortization, transaction, restructuring and integration costs. Operating costs are defined as SD&A expenses adjusted for amortization and depreciation, gains or losses on disposal of assets and transaction, restructuring and other costs. Corporate operating costs include wages and benefits for employees, professional fees and other costs associated with the corporate function. Corporate operating costs are defined as SD&A expenses related to the corporate office adjusted for amortization and depreciation, gains or losses on disposal of assets and transaction, restructuring and other costs. Net Debt, Pro Forma Adjusted EBITDA and Leverage Ratio Pro Forma Adjusted EBITDA and Net debt are Non-GAAP financial measures. Superior uses Pro Forma Adjusted EBITDA and Net debt to calculate its Leverage ratio and, as a result, Leverage ratio is a Non-GAAP ratio. This ratio is used by Superior, investors and other users of financial information to assess its ability to service debt. Pro Forma Adjusted EBITDA is Adjusted EBITDA calculated on a 12-month trailing basis giving pro forma effect to acquisitions to the first day of the calculation period. Pro Forma Adjusted EBITDA is used by Superior to calculate its Leverage Ratio. 2023 Pro Forma Adjusted EBITDA is used to provide 2023 guidance and only includes a pro forma adjustment related to Certarus for the period of January 1, 2023 to the date of the acquisition on May 31, 2023. This adjustment is reconciled to Certarus’ net income for the same period above. Net Debt is calculated by the sum of borrowings and lease liabilities before deferred financing fees reduced by Superior cash and cash equivalents and Vendor Note. Net Debt is used by Superior to calculate its Leverage Ratio. Leverage ratio is determined by dividing Superior’s Net Debt by their Pro Forma Adjusted EBITDA. Reconciliation of Net debt and Pro Forma Adjusted EBITDA (in millions) Current borrowings Current lease liabilities Non-current borrowings Non-current lease liabilities Add back deferred financing fees and discounts Deduct cash and cash equivalents Deduct Vendor Note (1) Net debt Adjusted EBITDA for the year Pro-forma adjustment Pro-forma Adjusted EBITDA for the trailing-twelve months Leverage Ratio (1) Superior received the proceeds from the sale of the Vendor Note in January 2023. December 31 2023 December 31 2022 11.3 63.5 2,231.1 175.9 2,481.8 22.9 (40.7) – 2,464.0 551.6 91.7 643.3 3.8x 14.8 47.3 1,911.3 175.7 2,149.1 19.9 (58.4) (128.0) 1,982.6 449.8 35.8 485.6 4.1x Superior Plus Corp. Management’s Discussion and Analysis39 Risk Factors to Superior The risks factors and uncertainties are a summary of Superior’s assessment of its material risk factors as detailed in Superior’s most recent Annual Information Form (“AIF”) under “Risks associated with our business” which is filed on the Canadian Securities Administrators’ website, www.sedarplus.ca, and on Superior’s website, www.superiorplus.com. The AIF describes some of the most material risks to Superior’s business by type of risk: financial; strategic; operational; and legal. The risks factors and uncertainties remained unchanged from those previously disclosed, except for the following: Competition Certarus acts as a connection between suppliers and consumers of low carbon energy. The barriers to entry for a supplier or consumer of low carbon energy are limited. If suppliers or consumers of low carbon energy, or both, found it economical to do so, they may decide to incur the capital and labour costs to perform the services that Certarus offers for themselves, which could reduce the existing and potential customer base of Certarus and have material adverse effects on Certarus’ financial position. Demand, Supply and Pricing Certarus’ operations result in exposure to fluctuations in commodity prices, including natural gas, diesel and propane. On volumes that the Company delivers under an all-in pricing structure, rapid increases in natural gas prices can result in some margin compression. However, the Company actively seeks to limit the level of exposure it has to commodity prices. In addition to having the ability to adjust pricing on short term jobs as they refresh, the Company has contractual mechanisms in place to flow through the excess cost of natural gas once certain index thresholds are exceeded. These arrangements provide significant downside protection in a rising natural gas price environment. Transportation network disruptions Certarus purchases natural gas from a network of pipelines and similar to the other segments, the functioning of these pipelines can be affected by factors not limited to, severe weather, natural disasters and damage inflicted in an intentional manner. Any unexpected malfunctioning or leakage of these pipelines may result in Certarus’ temporarily being unable to obtain gas supply and therefore not able to deliver to its affected customers. As a result, Superior’s business operation and financial condition may be adversely affected. Superior Plus Corp. Annual report 202340 Management’s Responsibility for Financial Statements The accompanying consolidated financial statements of Superior Plus Corp. (Superior) are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards and include certain estimates that are based on management’s best judgments. Actual results may differ from these estimates and judgments. Management has ensured that the consolidated financial statements are presented fairly in all material respects. Management has developed and maintains a system of internal controls to provide reasonable assurance that Superior’s assets are safeguarded, transactions are accurately recorded, and the financial statements report Superior’s operating and financial results in a timely manner. Financial information presented elsewhere in this annual report has been prepared on a basis consistent with that in the consolidated financial statements. The Board of Directors of Superior is responsible for reviewing and approving the consolidated financial statements and, primarily through its Audit Committee, ensures that management fulfills its responsibilities for financial reporting. The Audit Committee meets with management and Superior’s external auditor, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities and to review the consolidated financial statements. The Audit Committee reports its findings to the Board of Directors for approval of the consolidated financial statements for issuance to the shareholders. The Audit Committee also considers, for review by the Board of Directors and approval by the shareholders, the engagement or re-appointment of the external auditor. The consolidated financial statements have been audited by Ernst & Young LLP, who were appointed at Superior’s last annual meeting. /s/ “Allan MacDonald” /s/ “Grier Colter” Allan MacDonald Grier Colter President and Chief Executive Officer Chief Financial Officer Superior Plus Corp. Superior Plus Corp. Toronto, Ontario February 21, 2024 Superior Plus Corp. Consolidated Financial Statements41 Independent Auditor’s Report To the Shareholders and the Board of Directors of Superior Plus Corp. Opinion We have audited the consolidated financial statements of Superior Plus Corp. and its subsidiaries (the Group), which comprise the consolidated balance sheets as at December 31, 2023 and 2022, and the consolidated statements of changes in equity, consolidated statements of net earnings (loss) and total comprehensive earnings, and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards [“IFRS”]. Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the ethical 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 judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements 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 matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements. Superior Plus Corp. Annual report 202342 Key audit matter How our audit addressed the key audit matter Assessment of impairment of goodwill As detailed in Note 8 Goodwill and Intangible Assets of To test the estimated recoverable amount of the CGUs, our audit the consolidated financial statements, the Group has procedures included, among others, assessing the significant $1,926.2 million of goodwill as at December 31, 2023. For assumptions and underlying data used by the Group in its purposes of impairment testing, goodwill is allocated to each analysis. To assess the reliability of earnings forecasts and of Superior’s cash generating units (“CGUs”). CGUs to which terminal growth rates used in the estimation of the recoverable goodwill have been allocated are tested for impairment amount we performed the following procedures, among others: annually or more frequently upon indication of impairment, in accordance with IAS 36 Impairment of Assets. Recoverable amount estimates are determined using fair value less cost of disposal or value in use. As detailed in Note 8 of the consolidated financial statements, excluding goodwill associated with assets disposed of during the period, the • Compared financial performance and growth rates implicit in current forecasts to historical results; • Compared historical forecasts to actual financial performance to assess the completeness and accuracy of Group’s forecasts and to evaluate the ability of the CGUs to achieve the Group did not recognize any goodwill impairment for the year forecasted cashflows; ended December 31, 2023. Auditing the Group’s annual goodwill impairment tests was complex, given the degree of judgment and subjectivity in evaluating the Group’s estimates and assumptions in • Considered other factors relevant to comparability of historical actual results, such as experienced heating degree days, and the impact of significant acquisitions or disposals; • Involved our valuation specialists to compare forecasted determining the recoverable amount of the CGUs established growth rates relative to comparable industry participants; and using value in use. Significant assumptions included earnings forecasts, terminal growth rate estimates, and discount rates, which are affected by expectations about future performance as well as market and economic conditions. • Involved our valuation specialists to perform sensitivity analyses on growth rates implicit within the earnings forecasts evaluate the impact on the recoverable amount. We involved our valuation specialists to assess the various inputs utilized in determining the discount rate by referencing current industry, economic, and comparable Group information, as well as Group and cash-flow specific risk premiums. We also involved our valuation specialists to assess the overall reasonableness of the recoverable amounts estimated by comparing and reconciling the Group’s estimated recoverable amounts against the Group’s market capitalization. We evaluated the adequacy and completeness of the disclosure included in Note 8 of the consolidated financial statements based on the IFRS requirements. Superior Plus Corp. Consolidated Financial Statements43 Key audit matter Acquisitions How our audit addressed the key audit matter As detailed in Note 3 Acquisitions of the consolidated To assess the existence of property, plant and equipment financial statements, on May 31, 2023 the Group executed acquired, we performed physical and virtual observations, and the acquisition of Certarus Ltd. for a total consideration of compared the Group’s fixed asset records to third-party data approximately $840.5 million and accounted for it using including supplier statements, insurance records, tax assessment the acquisition method in accordance with IFRS 3 Business records and registration statements. Combinations. The Group applied valuation techniques to determine the acquisition date fair value of property, plant, and equipment and intangible assets. The measurement To test the Group’s estimated fair valuation of property, plant and equipment and intangible assets, we performed the period for the acquisition ends as soon as the Group receives following procedures, among others: the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. Auditing the acquisition of Certarus was complex due to the subjective nature of estimating the fair values of certain identified assets. The fair value of property, plant and equipment was determined in reference to subjective inputs including replacement cost quotations, market data, and estimated remaining useful lives. The fair value of intangible assets was determined in reference to subjective inputs including estimated customer attrition, discount • Assessed the competence, capabilities, and objectivity of the third-party valuators, when engaged by the Group; • Evaluated customer attrition estimates as compared to historical attrition rates experienced at Certarus; • Involved our valuation specialists to assess the valuation methodology applied to estimate the fair value of intangible assets, and the various inputs utilized to determine the attrition rate and discount rates by referencing current industry, economic, and comparable Group information as well as Group and cash-flow specific risk premiums; rates, projection period, projected revenues and forecasted • Involved our valuation specialists to perform a sensitivity gross profit. In addition, the determination of the existence analysis on the discount rates to evaluate its impact on the of property, plant and equipment acquired was complex fair value ascribed; and due to the highly decentralized nature of these assets. As a result, significant judgement was required to assess Group’s conclusions about existence and measurement of certain identified assets. • Involved our valuation specialists to evaluate the Group’s fair value estimate models for property, plant and equipment, and to evaluate the useful life estimates against third-party studies. We evaluated the adequacy and completeness of the disclosure included in Note 3 of the consolidated financial statements based on the IFRS requirements. Superior Plus Corp. Annual report 202344 Other information Management is responsible for the other information. The other information comprises: • Management’s Discussion and Analysis • The information, other than the consolidated financial statements 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 statements, 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 materially misstated. We obtained Management’s Discussion & Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’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 misstatement 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 presentation 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 Group’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 Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Superior Plus Corp. Consolidated Financial Statements45 • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure, and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the 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 governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Tracy Brennan. Toronto, Canada February 21, 2024 Chartered Professional Accountants Licensed Public Accountants Superior Plus Corp. Annual report 2023 46 Consolidated Balance Sheets (Audited, millions of Canadian dollars) Assets Current Assets Cash and cash equivalents Trade and other receivables Prepaids and deposits Inventories Other current financial assets Total Current Assets Non-current Assets Property, plant and equipment Goodwill and intangible assets Employee future benefits and other assets Deferred tax assets Other non-current financial assets Total Non-current Assets Total Assets Liabilities and Equity Current Liabilities Trade and other payables Contract liabilities Lease liabilities Borrowings Dividends payable Other current financial liabilities Total Current Liabilities Non-current Liabilities Lease liabilities Borrowings Other liabilities Provisions Employee future benefits Deferred tax liabilities Other non-current financial liabilities Total Non-current Liabilities Total Liabilities Equity Capital Deficit Accumulated other comprehensive earnings Non-controlling interest Total Equity Total Liabilities and Equity (1) Restated to conform with current period presentation and see Note 2(b). See accompanying Notes to the Audited Consolidated Financial Statements. Note As at December 31 2023 As at December 31 2022 (1) 4 5 6 16 3, 7 3, 8 15 17 16 10 11 14 13 16 14 13 12 9 15 17 16 18 40.7 427.2 64.0 115.6 7.3 654.8 1,937.2 2,549.6 7.5 20.3 4.7 4,519.3 5,174.1 585.1 24.5 63.5 11.3 51.0 19.2 754.6 175.9 2,231.1 11.1 10.6 5.0 211.0 3.9 2,648.6 3,403.2 3,095.9 (1,786.4) 117.1 344.3 1,770.9 5,174.1 58.4 531.8 99.6 153.0 10.6 853.4 1,364.6 2,222.0 6.9 32.1 0.4 3,626.0 4,479.4 580.5 25.0 47.3 14.8 14.2 55.6 737.4 175.7 1,911.3 37.1 8.3 5.5 130.8 12.8 2,281.5 3,018.9 2,617.9 (1,669.5) 159.7 352.4 1,460.5 4,479.4 Superior Plus Corp. Consolidated Financial StatementsConsolidated Statements of Changes in Equity 47 (Audited, millions of Canadian dollars) As at January 1, 2023 Net earnings for the year Unrealized foreign currency loss on translation of foreign operations Actuarial defined benefit loss Income tax recovery on other comprehensive earnings Total comprehensive earnings (loss) Share Capital (Note 18) 2,616.7 – – – – – Common shares issued, net of costs 487.2 Common shares repurchased and cancelled (Note 18) Dividends and dividend equivalent declared to common shareholders Dividends to non-controlling interest shareholders As at December 31, 2023 As at January 1, 2022 Net (loss) earnings for the year Unrealized foreign currency gain on translation of foreign operations Actuarial defined benefit gain Income tax expense on other comprehensive earnings Total comprehensive (loss) earnings (9.2) – – – – – – – Common shares issued, net of costs 280.6 Common shares repurchased and cancelled (Note 18) (13.0) Dividends and dividend equivalent declared to common shareholders Dividends to non-controlling interest shareholders – – Contributed Surplus Total Capital Deficit Accumulated Other Comprehensive Earnings Non- controlling Interest (Note 18) Total 1.2 2,617.9 (1,669.5) 159.7 352.4 1,460.5 51.6 – 25.4 77.0 – – – – – – – – – – – – – – 487.2 – – – 51.6 – (9.2) 2.0 – – (170.5) – – – – – – – – – – – – – – – 280.6 (13.0) – – (112.5) – – – (112.5) – 3.0 (140.5) – (42.3) (0.4) 0.1 (42.6) – – – – 117.1 52.8 – 106.5 0.6 (0.2) 106.9 – – – – (8.1) – – 17.3 – – – (50.4) (0.4) 0.1 26.3 487.2 (7.2) (170.5) (25.4) (25.4) 344.3 328.6 24.6 23.8 – – 48.4 – – – 1,770.9 1,312.2 (87.9) 130.3 0.6 (0.2) 42.8 280.6 (10.0) (140.5) (24.6) 352.4 (24.6) 1,460.5 3,094.7 2,349.1 1.2 1.2 3,095.9 (1,786.4) 2,350.3 (1,419.5) As at December 31, 2022 2,616.7 1.2 2,617.9 (1,669.5) 159.7 See accompanying Notes to the Audited Consolidated Financial Statements. Superior Plus Corp. Annual report 202348 Consolidated Statements of Net Earnings (Loss) and Total Comprehensive Earnings Note 19, 21 19 19 19 16, 19 19 17 19 20 (Audited, millions of Canadian dollars, except per share amounts) Revenue Cost of sales (includes products and services) Gross profit Expenses Selling, distribution and administrative costs (“SD&A”) Finance expense Gain (loss) on derivatives and foreign currency translation of borrowings Earnings (loss) before income taxes Income tax (expense) recovery Net earnings (loss) for the year Net earnings (loss) attributable to: Superior Non-controlling interest Net earnings (loss) per share attributable to Superior Basic and diluted Other comprehensive (loss) earnings Item that may be reclassified subsequently to net earnings (loss) Unrealized foreign currency (loss) gain on translation of foreign operations Items that will not be reclassified to net earnings (loss) Actuarial defined benefit (loss) gain Income tax recovery (expense) on other comprehensive earnings Other comprehensive (loss) earnings for the year Total comprehensive earnings for the year Total comprehensive earnings (loss) for the year attributable to: Superior Non-controlling interest See accompanying Notes to the Audited Consolidated Financial Statements. Years Ended December 31 2023 3,353.7 (1,740.8) 1,612.9 (1,386.7) (124.9) 11.9 (1,499.7) 113.2 (36.2) 77.0 51.6 25.4 0.23 (50.4) (0.4) 0.1 (50.7) 26.3 9.0 17.3 2022 3,379.8 (2,190.0) 1,189.8 (1,087.1) (91.6) (136.0) (1,314.7) (124.9) 37.0 (87.9) (112.5) 24.6 (0.58) 130.3 0.6 (0.2) 130.7 42.8 (5.6) 48.4 Superior Plus Corp. Consolidated Financial Statements Consolidated Statements of Cash Flows (Audited, millions of Canadian dollars) Operating Activities Net earnings (loss) for the year Adjustments for: Depreciation included in SD&A Depreciation of right-of-use assets included in SD&A Amortization of intangible assets included in SD&A Gain on disposal of assets, net of loss from divestitures Unrealized (gain) loss on financial and non-financial derivatives and foreign exchange loss on U.S. dollar debt Finance expense Income tax expense (recovery) Changes in non-cash operating working capital and other Cash flows from operating activities before income taxes and interest paid Income taxes paid Interest paid Cash flows from operating activities Investing Activities Acquisitions, net of cash acquired Purchase of property, plant and equipment and intangible assets Proceeds on disposal of property, plant and equipment and other assets Cash flows used in investing activities Financing Activities Proceeds from revolving term bank credit facilities and other debt Repayment of revolving term bank credit facilities and other debt Principal repayment of lease obligations Proceeds from common share issuance Common share issuance costs Debt issue costs on credit facilities Repurchased and cancelled common shares Dividends paid to shareholders Cash flows (used in) from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of the year Effect of translation of foreign currency-denominated cash and cash equivalents Cash and cash equivalents, end of the year See accompanying Notes to the Audited Consolidated Financial Statements. Note 7 7 8 3 16 17 23 3 26 3 18 18 18 49 Years Ended December 31 2023 77.0 179.8 47.0 104.3 (4.1) (63.7) 124.9 36.2 185.3 686.7 (13.9) (122.8) 550.0 (339.0) (200.2) 72.1 (467.1) 2,272.7 (2,150.9) (52.8) – (0.1) (2.3) (7.2) (159.1) (99.7) (16.8) 58.4 (0.9) 40.7 2022 (87.9) 116.4 36.1 86.4 (1.9) 161.9 91.6 (37.0) (15.4) 350.2 (17.3) (84.2) 248.7 (522.7) (117.3) 7.9 (632.1) 3,150.5 (2,801.5) (42.5) 287.5 (9.2) (0.5) (10.0) (163.4) 410.9 27.5 28.4 2.5 58.4 Superior Plus Corp. Annual report 202350 Notes to the Consolidated Financial Statements (Audited, all amounts including tabular amounts are stated in millions of Canadian dollars, except per share amounts and unless otherwise stated) 1. Organization Superior Plus Corp. (“Superior” or the “Company”) is a diversified business corporation, incorporated under the Canada Business Corporations Act. The registered office is located at Suite 401, 200 Wellington Street West, Toronto, Ontario. Superior’s investment in Superior Plus LP is financed by share capital. Superior is a publicly traded company with its common shares trading on the Toronto Stock Exchange (the “TSX”) under the exchange symbol “SPB”. These consolidated financial statements were authorized for issue by the Board of Directors on February 21, 2024. Reportable Operating Segments Superior reports four distinct segments: United States Retail Propane Distribution (“U.S. Propane”), Canadian Retail Propane Distribution (“Canadian Propane”), North American Wholesale Propane Distribution (“Wholesale Propane”) and Certarus Ltd. (“Certarus”). The U.S. Propane segment distributes propane gas and liquid fuels primarily in the Eastern United States, as well as the Midwest and California, to residential and commercial customers. The Canadian Propane segment distributes propane gas and liquid fuels across Canada to residential and commercial customers. The Wholesale Propane segment supplies the majority of the propane gas for the Canadian Propane business, a portion of the propane gas for the U.S. Propane business and also supplies propane and other natural gas liquids to third-party wholesale customers in Canada and the United States (“U.S.”). Certarus is a comprehensive low-carbon energy solution provider engaged in the business of transporting and selling compressed natural gas (“CNG”), renewable natural gas (“RNG”) and hydrogen. Superior acquired all the issued and outstanding shares of Certarus on May 31, 2023; see Note 3 for more information. The Chief Operating Decision Maker (“CODM”), Superior’s President and Chief Executive Officer, manages the newly acquired business and evaluates its business performance separately from Superior’s existing businesses. As a result, Superior added Certarus as a new reportable segment. 2. Basis of Presentation (a) Preparation of Consolidated Financial Statements The accompanying consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements were prepared on a going concern basis. The consolidated financial statements were prepared on a historical cost basis, except for the revaluation of certain financial instruments, and incorporate the accounts of Superior and its subsidiaries. Subsidiaries are all entities over which Superior has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The financial results of subsidiaries are included in Superior’s consolidated statements of net earnings (loss) and total comprehensive earnings from date of acquisition, or in the case of disposals, up to the effective date of disposal. Where Superior’s interest is less than 100%, the interest attributable to outside shareholders is reflected in non-controlling interest (“NCI”). A subsidiary of Superior has outstanding cumulative preference shares that are classified as equity and reported as part of NCI; see Note 18. Superior computes its share of net earnings after deducting for the dividend entitlement on these preference shares. The NCI is translated using exchange rates prevailing at the end of each reporting period with the foreign exchange translation included in other comprehensive earnings (loss) for the year. All transactions and balances between Superior and Superior’s subsidiaries are eliminated upon consolidation. The assets and liabilities of Superior’s foreign operations are translated using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the year. Exchange differences are recognized in other comprehensive earnings (loss) for the year. Superior Plus Corp. Notes to the Consolidated Financial Statements51 If Superior loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, NCI and other components of equity, while any resultant gain or loss is recorded in profit or loss. Any investment retained is recognized at fair value. (b) Reclassification of Comparative Figures Superior adjusted the purchase price allocation for certain acquisitions that were completed in the prior year. As disclosed in Note 3, Superior has restated the consolidated balance sheet as at December 31, 2022 to record the impact of the adjusted purchase allocations as if the accounting for the business combination had been completed at the acquisition date. The consolidated statements of changes in equity, net earnings (loss) and total comprehensive earnings and cash flows for the year ended December 31, 2022 remain unchanged since the impact of the changes made was not significant to these consolidated financial statements. (c) Material Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid short-term investments that, on the date of acquisition, have a term to maturity of three months or less. For the purpose of the consolidated statements of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management. As at December 31, 2023, cash equivalents amounted to $11.0 million with a maturity of less than 30 days (2022 – $13.4 million). Inventories Inventories are valued at the lower of cost and net realizable value. Costs of inventories are determined either on a weighted average cost or first-in, first-out basis. The net realizable value of inventory is based on the estimated selling price in the ordinary course of business less the estimated costs necessary to complete the sale. Financial Instruments and Derivative Financial Instruments Financial assets and financial liabilities, including derivatives, are recognized on the consolidated balance sheets when the Company becomes a party to the financial instrument or derivative contract. Classification The Company classifies its financial assets and financial liabilities in the following measurement categories: i) those to be measured subsequently at fair value through profit or loss (“FVTPL”); ii) those to be measured subsequently at fair value through other comprehensive earnings (loss); and iii) those to be measured at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL. For assets and liabilities measured at fair value, gains and losses are either recorded in profit or loss, or other comprehensive earnings (loss). Realized gains and losses on derivative financial instruments are recorded as a component of gains (losses) on derivatives and foreign currency translation of borrowings together with the unrealized gains (losses) on derivatives. The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified. For classification of the Company’s consolidated financial assets and financial liabilities, refer to Note 16. Measurement All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or financial liability not at FVTPL, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payments of principal and interest. Superior Plus Corp. Annual report 202352 Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding, are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken through the consolidated statements of net earnings (loss) and total comprehensive earnings. For financial liabilities measured subsequently at FVTPL, changes in fair value due to Superior’s credit risk are recorded in other comprehensive earnings (loss). Impairment The Company recognizes expected credit losses for trade receivables based on the simplified approach under IFRS 9, Financial Instruments (“IFRS 9”). The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the trade receivable. The Company recognizes an allowance for expected credit losses for all debt instruments not held at FVTPL. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Trade receivables and debt instruments are reviewed qualitatively on a case-by-case basis to determine whether they need to be written off. Expected credit losses are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, credit ratings, the existence of third-party insurance, and forward-looking macro-economic factors in the measurement of the expected credit losses associated with its financial assets carried at amortized cost. The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward- looking information into its measurement. Derivative Financial Instruments Superior enters into a variety of derivative and non-financial derivative instruments to manage its exposure to certain financial risks. Such instruments arise from contracts comprising natural gas financial swaps, electricity financial swaps, fixed-price electricity purchases, propane forward purchases and sales, foreign currency forwards, interest rate swaps, and equity hedges. For commodity contracts, if physical delivery is effected based on Superior’s expected procurement, sale or usage requirements, the requirements of the so-called “own use exemption” under IFRS 9 are met, which do not represent derivative financial instruments in terms of IFRS 9, but represent pending purchase and sale transactions, which are assessed for possible impending losses in accordance with the requirements of IAS 37, Provisions, Contingent Liabilities and Contingent Assets. If the requirements for the own use exemption are not met (for example, by transactions for short-term optimization), the contracts are recorded as derivatives in accordance with IFRS 9. Further details of derivative and non-financial derivative instruments are disclosed in Note 16. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are measured subsequently at FVTPL. The resulting gain or loss is recognized in net earnings (loss). Realized gains and losses on derivatives are recorded as part of the gains (losses) on derivatives and foreign currency translation of borrowings, which also includes unrealized gains and losses on derivatives. Derivatives embedded in other financial liabilities and non-financial contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognized in net earnings (loss). Superior does not formally designate and document economic hedges, in accordance with the requirements of hedge accounting under IFRS, and, therefore, does not apply hedge accounting. Classification as Debt or Equity Debt and equity instruments are classified either as financial liabilities or as equity in accordance with the substance of the contractual arrangement. Superior Plus Corp. Notes to the Consolidated Financial Statements53 Equity Instruments An equity instrument is any contract that has a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by Superior or its subsidiaries are recorded at the proceeds received, net of direct issuance costs. Derecognition of Financial Liabilities Superior derecognizes financial liabilities solely when Superior’s obligations are discharged, cancelled or expire. Financial Guarantees at FVTPL Financial guarantees are classified as FVTPL when the financial liability is designated as FVTPL upon initial recognition. Financial guarantees at FVTPL are stated at fair value with any resulting gain or loss recognized in net earnings (loss). Fair value is determined in the manner described in Note 16. Property, Plant and Equipment Cost Property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses. Major renewals and improvements that provide future economic benefits and can be reliably measured are capitalized, while repair and maintenance expenses are expensed as incurred. Property, plant and equipment in the course of construction are carried at cost less any recognized impairment losses. Cost includes directly attributable expenses and professional fees. Disposals are derecognized at carrying costs less accumulated depreciation and impairment losses, with any resulting gain or loss reflected in net earnings (loss). Depreciation Depreciation is calculated using the straight-line method, based on the estimated useful life. Land is not depreciated. Depreciation of property, plant and equipment and those in the course of construction commences when the assets are available for their intended use. In the majority of cases, residual value is estimated to be insignificant. Depreciation by class of assets is as follows: Buildings and facilities Leasehold improvements Tanks and cylinders 15 to 40 years Over the lease term up to 10 years 30 years Trucks, railcar, tank bodies, chassis, field and other equipment 4 to 15 years Compression equipment Mobile storage units (“MSU”) MSU recertifications Furniture and fixtures Computer equipment 3 to 15 years 15 years 5 years 1 to 10 years 2 to 5 years Useful life, residual values and depreciation methods are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Leases At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Company as a Lessee The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date, which is defined as the date at which the right-of-use asset is available for use by the Company. Superior Plus Corp. Annual report 202354 Right-of-use Assets The right-of-use asset is initially measured at cost comprising the following: • The initial amount of the lease liability adjusted for any lease payments made at or before the commencement date; • Any initial direct costs incurred; • An estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located; and • Less any lease incentives received. The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option as defined below. Lease terms range from: Office space and buildings Railcars and leased trucks Storage and equipment 1 to 99 years 1 to 11 years 1 to 11 years The Company’s leases relate to office space and buildings, railcars, trucks, storage and equipment. Lease contracts are typically made for periods stated above, but may have extension options. Extension and termination options are included in a number of building and equipment leases across the Company. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Superior’s obligations under some leases are secured by the lessors’ title to the leased assets. The Company has recorded the right-of-use assets as part of property, plant and equipment. The right-of-use assets are periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. Lease Liabilities The lease liability is initially measured at the present value of the following lease payments: • Fixed payments, less any lease incentives receivable; • Variable lease payments that are based on an index or a rate; • Amounts expected to be payable by the lessee under residual value guarantees; • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate (“IBR”). The IBR is the rate of interest the lessee would have to pay to borrow over a similar term with similar security. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Superior Plus Corp. Notes to the Consolidated Financial Statements55 When measuring lease liabilities, the Company discounted lease payments using its IBR for similar collateral and term at the lease commencement date when the interest rate implicit in the lease was not readily determinable. The Company applied a single discount rate to a portfolio of leases with reasonably similar characteristics. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in the rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. Short-term Leases and Leases of Low-value Assets The Company applies the short-term lease recognition exemption to its leases for which the lease term ends within 12 months from the commencement date and do not contain a purchase option, and the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expenses on a straight-line basis over the lease term. Sale-leasebacks and Refinancing of Vehicles From time to time, Superior will purchase vehicles and then enter into a financing arrangement or will refinance leases for vehicles. These transactions will result in cash proceeds to Superior and a lease liability to the lessor. Any gains or losses on these transactions are nominal and expensed as incurred. Intangible Assets Intangible assets are reported at cost less accumulated amortization and accumulated impairment losses. For intangible assets with a definite life, amortization is charged on a straight-line basis over their estimated useful lives. Intangible assets acquired in a business combination are identified and recognized separately from goodwill when they satisfy the recognition criteria. The initial cost of such intangible assets is their fair value at the acquisition date. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets acquired separately. Software costs are capitalized for new systems if there are significant enhancements to existing systems. In addition to the cost of software, the capitalized costs include cost of installation and consulting services related to the system implementation or enhancement. Intangible assets recorded as part of a business combination generally consist of customer relationships, non-compete agreements, royalty agreements, intellectual property and other intangible assets. The assets are recorded at fair value, which is generally based on the future expected earnings. Software, developed technology and technology patents are valued based on the cost to acquire these assets. Useful life, residual values and amortization methods are reviewed at least annually, with the effect of any changes in estimate being accounted for on a prospective basis. Superior’s amortization rates related to its intangible assets are summarized as follows: Non-compete agreements Customer relationships Brands, trademark and trade names Software and developed technology Term of the agreements (1 to 15 years) 5 to 12 years 4 to 15 years 1 to 5 years As a result of propane distribution activity in Quebec, Nova Scotia, California, Washington and Oregon, Superior is required to purchase sufficient cap and trade emission units to offset its carbon footprint. Costs incurred to acquire these cap and trade emission units are recorded as intangible assets and measured at cost. As the cap and trade emission units do not diminish over time, they are classified as intangible assets with an indefinite life and are not amortized. The assets are subject to annual impairment testing. The assets are settled against the corresponding cap and trade liabilities at the end of the compliance period to which they relate. Superior Plus Corp. Annual report 202356 Impairment of Property, Plant and Equipment, Right-of-use Assets and Intangible Assets At each consolidated balance sheet date and when circumstances indicate that the carrying value may be impaired, Superior reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If impairment is confirmed, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, Superior estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset belongs. A CGU is the smallest level of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups. Recoverable amount is the higher of fair value less costs of disposal and value-in-use. An impairment loss is recognized if the carrying amount of an asset, CGU or group of CGUs exceeds its recoverable amount. Impairment losses are recognized immediately as a separate line item in the consolidated statements of net earnings (loss) and total comprehensive earnings. A previous impairment, if any, is subsequently assessed for any indication that the impairment has been reduced or no longer exists. An impairment loss is reversed if there has been an increase in the recoverable amount of an asset or CGU over its carrying value. Impairment losses are reversed only to the extent that the asset’s or CGU’s carrying amount would not exceed the carrying amount that would have been reported if no impairment loss had been recognized. Business Combinations and Goodwill All business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value at the acquisition date of the assets given up, the liabilities incurred or assumed and equity instruments issued by Superior in exchange for control of the acquiree. Transaction costs, other than those associated with the issuance of debt or equity securities that Superior incurs in connection with a business combination, are expensed as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, Business Combinations are recognized at their fair value at the acquisition date, except that: • Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured in accordance with IAS 12, Income Taxes (“IAS 12”) and IAS 19, Employee Benefits, respectively; • Liabilities or equity instruments related to the replacement by Superior of an acquiree’s share-based payment awards are measured in accordance with IFRS 2, Share-based Payment; • Right-of-use assets and lease liabilities for leases identified are measured in accordance with IFRS 16, Leases, in which the acquiree is the lessee; and • Assets or disposals that are classified as held for sale in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that standard. Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At subsequent reporting dates, such contingent liabilities are measured at the higher of the amount that would be recognized in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets or the amount initially recognized less (when appropriate) cumulative amortization recognized in accordance with the requirements for IFRS 15, Revenue from Contracts with Customers. Intangible assets arising on acquisition are recognized at fair value at the date of acquisition. The fair value is based on detailed cash flow models and other metrics depending on the type of intangible asset being recognized. Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over Superior’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If the net amounts assigned to the assets acquired and liabilities assumed exceed the cost of the purchase, then Superior is required to reassess the value of both the cost and net assets acquired, and any excess remaining after this reassessment is recognized immediately in net earnings (loss). Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Superior Plus Corp. Notes to the Consolidated Financial Statements57 If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Superior will report provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances at the acquisition date that, if known, would have affected the amounts recognized at that date. The measurement period is the period from the date of acquisition to the date Superior obtains complete information about facts and circumstances as of the acquisition date, to a maximum of one year. On disposal of a group of assets, the attributable amount of goodwill is included in the determination of the net gain or loss on disposal. Revenue Recognition Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control over a product or service to a customer, which may occur at a point in time or over a period of time. The nature of the goods and services and the timing of satisfaction of performance obligations are as follows: Sales contracts include supply of propane, CNG, RNG and hydrogen along with the loaning of storage tanks, equipment and related servicing and maintenance activities provided by the Company. Revenue from sale of propane, CNG, RNG and hydrogen, including take-or-pay arrangements, is recognized when control of the goods has transferred, generally when the goods are delivered to the customer (which occurs when the goods have been shipped to the specific location), the customer has full discretion over the goods, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Payment terms are generally between 30 and 90 days as agreed with the customers. Customers may be required to provide a deposit depending on credit quality. These deposits are recorded as part of contract liabilities and recognized into income over the period that it relates to. Revenue from loaning of storage tanks and maintenance activities is recognized as the performance obligations are satisfied over time, which is generally in accordance with the terms of the contract. The customer does not control the storage tank during the term of the contract. The customer does not have the right to direct the use of the storage tank, and there is no practical or contractual restriction on the Company’s ability to transfer the storage tank to another customer. The Company is able to redirect the storage tank to another customer at little or no additional cost and, therefore, it has an alternative use to the Company. In many cases, propane sales and the loaning of storage tanks are included under one sales contract. Propane sales prices are consistent based on the customer geography and type and, therefore, the residual amount is related to loaning of storage tanks. Rental payments received for periods greater than a month are recorded as part of contract liabilities and recognized into income over the period that the payments relate to. Included in the U.S. Propane Distribution segment is revenue related to the distribution of heating oil and refined fuels in the northeastern U.S. Its products are generally used in home heating, water heating and as motor vehicle fuel. Revenue from the sale of refined fuels is also recognized when control of the goods has transferred, generally when the goods are delivered to the customer (which occurs when the goods have been shipped to the specific location), the customer has full discretion over the goods, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Payment terms are generally 30 days from the delivery date. Customers may be required to provide a deposit depending on credit quality. These deposits are recorded as part of contract liabilities and applied against customer receivables when required. Provisions Provisions are recognized when there is a present legal or constructive obligation as a result of past events, for which it is probable that payment will be required to settle the obligation, and where the amount can be reliably estimated. The amount is the best estimate of the consideration required to settle the present obligation at the reporting date, considering the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefit required to settle a provision is expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the receivable can be measured reliably. Superior Plus Corp. Annual report 202358 Decommissioning Costs Liabilities for decommissioning costs are recognized when Superior has an obligation to dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a reliable estimate of that liability can be made. Decommissioning costs are recorded at the present value of expected costs to settle the obligation using estimated cash flows. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in net earnings (loss) as a finance expense. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. A corresponding item of property, plant and equipment of an amount equal to the provision is also created. This is subsequently amortized as part of the asset. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset. Environmental Expenditures and Liabilities Environmental expenditures that relate to current or future revenues are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future earnings are expensed. Liabilities for environmental costs are recognized when a cleanup is probable and the associated costs can be reliably estimated. Generally, the timing of recognition of these provisions coincides with the commitment to a formal plan of action or, if earlier, on divestment or on closure of inactive sites. The amount recognized is the best estimate of the expenditure required. When the liability will not be settled for a number of years, the amount recognized is the present value of the estimated future expenditure. Restructuring A restructuring provision is recognized when Superior has developed a detailed formal restructuring plan and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring. Employee Future Benefits Superior has defined-benefit and defined-contribution plans providing pension and other post-employment benefits to most of its employees. Superior accrues its obligations under the plans and the related costs, net of plan assets. Contributions to defined-contribution plans are recognized as an expense when employees have rendered service entitling them to the contributions. For defined-benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each consolidated balance sheet date. The net obligation for each defined-benefit plan is discounted to determine the present value using the yield at the reporting date on high-quality Canadian corporate bonds. Plan assets are measured at fair value, and the difference between the fair value of the plan assets and the present value of the defined-benefit obligation is recognized on the consolidated balance sheets as an asset or liability. Costs charged to the consolidated statements of net earnings (loss) and total comprehensive earnings include current service cost, any past service costs, any gains or losses from curtailments and interest on the net defined-benefit asset or liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in other comprehensive earnings (loss) in the period in which they occur. The defined-benefit obligation recognized in the consolidated balance sheets represents the present value adjusted for unrecognized actuarial gains and losses and unrecognized past service cost, and reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognized actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions to the plan. Income Taxes Income tax expense represents the sum of current income taxes and deferred income taxes. Superior Plus Corp. Notes to the Consolidated Financial Statements59 Current Income Taxes Superior’s income tax assets and liabilities are based on taxable net earnings for the year. Taxable net earnings differ from net earnings as reported in the consolidated statements of net earnings (loss) and total comprehensive earnings because they exclude items of income or expense that are taxable or deductible in other years as well as items that are never taxable or deductible. Superior’s liability for current income tax is calculated using tax rates that have been enacted or substantively enacted by the consolidated balance sheet date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements of net earnings (loss) and total comprehensive earnings. Management periodically evaluates positions taken in their tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred Income Taxes Deferred income tax is recognized on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of taxable net earnings. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable net earnings will be available against which those deductible temporary differences can be utilized. Deferred tax liabilities are recognized for all taxable temporary differences, except for the following: • When the deferred tax liability arises from the initial recognition of goodwill; • When an asset or liability in a transaction is not a business combination and, at the time of the transaction, affects neither the accounting net earnings or taxable net earnings; or • In respect of taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled by Superior and it is unlikely that the temporary differences will be reversed in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that they are expected to be reversed in the foreseeable future and it is probable that there will be sufficient taxable net earnings against which to utilize the benefits of the temporary differences. A deferred tax asset may also be recognized for the benefit expected from unused tax losses available for carryforward, to the extent that it is probable that future taxable earnings will be available against which the tax losses can be applied. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and laws that have been enacted or substantively enacted by the consolidated balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which Superior expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current liabilities and when they are related to income taxes levied by the same taxation authority and Superior intends to settle its current tax assets and liabilities on a net basis. Also, Superior recognizes any benefit associated with investment tax credits as deferred tax assets to the extent they are expected to be utilized in accordance with IAS 12. Uncertain Tax Positions Superior is subject to taxation in numerous jurisdictions. There are many transactions and calculations during the course of business for which the ultimate tax determination is uncertain. It is possible, however, that at some future date, liabilities in excess of Superior’s provisions could result from audits by or litigation with tax authorities. Where changes in facts or circumstances change estimates from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made. Management reassesses positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Current Tax and Deferred Tax for the Period Current tax and deferred tax are recognized as an expense in net earnings (loss), except where they relate to amounts recognized outside of net earnings (loss) (whether in other comprehensive earnings (loss) or directly in equity), in which case the current tax and deferred tax are also recognized outside of net earnings (loss), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is included in the accounting for the business combination. Superior Plus Corp. Annual report 202360 Foreign Currencies The financial statements of each subsidiary of Superior are translated into the currency of the subsidiary’s primary economic environment. For the purpose of the consolidated financial statements, the results and balance sheets of each subsidiary are expressed in Canadian dollars, Superior’s presentation currency. Transactions are recognized at the rates of exchange prevailing at the transaction date. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the period-end. Non-monetary items that are measured at fair value in a foreign currency shall be translated using the exchange rates at the date when the fair value is measured. Non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction and are not retranslated. For the purposes of presenting Superior’s consolidated financial statements, the assets and liabilities of Superior’s foreign operations, namely of U.S Propane, Wholesale Propane in the U.S. and Certarus in the U.S., are translated using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Goodwill and fair value measurements of identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences are recognized in other comprehensive earnings (loss) for the period. Share-based Payments Superior has established share-based compensation plans whereby notional restricted shares and/or notional performance shares may be granted to employees. The fair value of these notional shares is estimated using the period-end quoted market price and recorded as an expense with an offsetting amount to accrued liabilities, remeasured at each consolidated balance sheet date. All share-based payments are cash-settled. (d) Significant Accounting Judgments, Estimates and Assumptions The preparation of Superior’s audited consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. The estimates and associated assumptions are based on historical experience and various other factors deemed reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or where assumptions and estimates are required, are as follows: Estimates and Assumptions Fair Value of Derivative and Non-Financial Derivative Instruments Where the fair values of financial derivatives and non-financial derivatives cannot be derived from active markets, they are determined using valuation techniques including a discounted cash flow model. This requires assumptions concerning the amount and timing of estimated future cash flows and discount rates. Differences between actual values and assumed values will affect net earnings (loss) in the period when the difference is determined. Allowance for Doubtful Accounts Superior recognizes an allowance for doubtful accounts based on historical customer collection history, general economic indicators and other customer-specific information, all of which require Superior to make certain assumptions. Where the actual collectability of accounts receivable differs from these estimates, such differences will have an impact on net earnings (loss) in the period such a determination is made. Property, Plant and Equipment and Intangible Assets Capitalized assets, including property, plant and equipment and intangible assets, are amortized over their respective estimated useful lives. All estimates of useful lives are set out in the Significant Accounting Policies above. Superior Plus Corp. Notes to the Consolidated Financial Statements61 Provisions Provisions have been estimated for decommissioning costs, restructuring and environmental expenditures. The actual costs and timing of future cash flows depend on future events. Any differences between estimates and the actual future liability will be accounted for in the period when such determination is made. Determining decommissioning liabilities requires estimates regarding the useful life of certain operating facilities, the timing and cost of future remediation activities, discount rates and the interpretation and changes to various environmental laws and regulations. Differences between estimates and results will affect Superior’s accrual for decommissioning liabilities, with an effect on net earnings (loss). Employee Future Benefits Superior has a number of defined-benefit pension plans and other benefit plans. The cost of defined-benefit pension plans and the present value of the pension obligation are determined using actuarial valuations. These require assumptions including the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the valuation’s complexity, its underlying assumptions and long-term nature, a defined-benefit obligation is highly sensitive to changes in the underlying assumptions. Income Tax Assets and Liabilities Superior recognizes expected tax assets and liabilities based on estimates of current and future taxable net earnings, which may require significant judgment regarding the ultimate tax determination of certain items. If taxable net earnings differ from the estimates, there may be an impact on current and future income tax provisions in the period when the difference is determined. Asset Impairments Non-financial assets are subject to impairment reviews based on whether current or future events and circumstances suggest that their recoverable amount may be less than their carrying value. Recoverable amounts are based on a calculation of expected future cash flows, which includes management assumptions and estimates of future performance. Cap and Trade Superior purchases cap and trade emission units to satisfy its obligations under the Quebec, Nova Scotia, California, Washington and Oregon cap and trade programs; see Note 12. Liabilities under these programs are first recorded based on the cap and trade emission units purchased for the respective compliance periods, and any additional liabilities are based on the future estimated cost to purchase the underlying cap and trade emission units until those units are acquired. The cap and trade emission units purchased are recorded as intangible assets until they are settled against the corresponding cap and trade payable at the end of each compliance period to which they relate. As at December 31, 2023, Superior has a net liability of $3.6 million (2022 – $3.9 million net asset). Estimating the IBR on Leases Superior cannot readily determine the interest rate implicit in some of its leases; therefore, Superior uses its IBR to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR, therefore, reflects what the Company “would have to pay”, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). Superior estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating). Judgments Impairment of Property, Plant and Equipment An impairment evaluation involves consideration of whether there are indicators of impairment. Indicators include, but are not limited to, significant underperformance relative to historical or projected operating results, significant changes in the manner in which an asset is used or in Superior’s overall business strategy, or significant negative industry or economic trends. In some cases, these events are clear. In many cases, however, there is no clearly identifiable event. Instead, a series of individually insignificant events, some of them only later known, leads to an indication that an asset may be impaired. Management continually monitors Superior’s segments, the markets, and the business environment, and makes judgments and assessments about conditions and events in order to conclude whether there may be an impairment. Superior Plus Corp. Annual report 202362 Income Taxes Preparation of the consolidated financial statements involves making an estimate of, or provision for, income taxes in each of the jurisdictions in which Superior operates. The process also involves estimating taxes currently payable and taxes expected to be payable or recoverable in future periods, referred to as deferred income taxes. Deferred income taxes result from the effects of temporary differences due to items that are treated differently for tax and accounting purposes. The tax effects of these differences are reflected in the consolidated balance sheets as deferred income tax assets and liabilities. An assessment must also be made to determine the likelihood that Superior’s future taxable income will be sufficient to permit the recovery of deferred income tax assets. To the extent that such recovery is not probable, recognized deferred income tax assets must be reduced. Judgment is required in determining the income tax expense (recovery) and recognition of deferred income tax assets and liabilities. Management must also exercise judgment in its assessment of continually changing tax interpretations, regulations and legislation, to ensure deferred income tax assets and liabilities are complete and fairly presented. The effects of differing assessments and applications could be material. Purchase Price Allocation All business combinations are accounted for using the acquisition method. This requires management to recognize all identifiable assets, liabilities and contingent liabilities at the acquisition date fair values with a few exceptions. The allocation of the purchase price to property, plant and equipment and intangible assets requires management to exercise judgment when determining the acquisition fair value of each asset and its respective useful life. Consideration paid in a business combination that exceeds the net fair value of assets and liabilities acquired is allocated to goodwill. Goodwill is reviewed for impairment at least annually. As disclosed in Note 3, a number of acquisitions were completed during the prior year. Changes in the purchase price allocation could occur during the 12-month period following acquisition. Changes to the fair value of the assets and liabilities acquired could affect the purchase price allocation and segment’s net income. Financial Instruments The fair value of financial instruments is determined and classified in three categories, which are outlined below and discussed in more detail in Note 16. Level I Fair values in Level I are determined using quoted prices in active markets for identical instruments. Level II Fair values in Level II are determined using quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and value drivers are observable in active markets. Level III Fair values in Level III are determined using valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The fair value measurement of a financial instrument is included in only one of the three levels, the determination of which is based on the lowest-level input that is significant to the derivation of the fair value. Classification of financial instruments requires management to use judgment in respect of both the determination of fair value and the lowest-level input of significance. Revenue from Sale of Propane, Including Storage Tanks Certain propane supply contracts entered into by the Company include sale of propane along with the loaning of storage tanks and equipment by the Company. Because these contracts include multiple performance obligations, the transaction price must be allocated to the performance obligations. Superior Plus Corp. Notes to the Consolidated Financial Statements63 Management estimates the standalone selling price using the residual approach. The price of propane charged is consistent by geography and customer type, whereas fees and discounts associated with loaning storage tanks can vary. Management allocates revenue to the sale of propane based on the consistent price by customer geography and region, and the residual amount is applied to loaning the storage tank. Revenue from the sale of propane is recognized when delivered and revenue from storage tanks and equipment is recognized over the contract period. Determining the Lease Term In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option or not to exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended or not terminated. The initial assessment is reviewed if a significant event or a significant change in circumstances occurs that affects this assessment and that it is within the control of the lessee. (e) Changes in Accounting Policies and Disclosures Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”), to Introduce a Definition of Accounting Estimates In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of “accounting estimates”. The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments to IAS 8 are effective for annual reporting periods beginning on or after January 1, 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted as long as this fact is disclosed. The amendments to IAS 8 had no material impact on the consolidated financial statements. Amendments to IAS 1, Presentation of Financial Statements (“IAS 1”) and IFRS Practice Statement 2, Disclosure of Accounting Policies In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2, Making Materiality Judgments, in which it provides guidance and examples to help entities apply materiality judgments to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their “material” accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments to IAS 1 are applicable for annual periods beginning on or after January 1, 2023 with earlier application permitted. Since the amendments to IFRS Practice Statement 2 provide non-mandatory guidance on the application of the definition of material to accounting policy information, an effective date for these amendments is not necessary. The amendments to IAS 1 and IFRS Practice Statement 2 had no material impact on the consolidated financial statements. Amendments to IAS 12, International Tax Reform—Pillar Two Model Rules In May 2023, the IASB issued narrow-scope amendments to IAS 12 that aim to provide temporary relief from the requirement to recognize and disclose deferred taxes arising from enacted or substantively enacted tax law that implements the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (“OECD”), including tax law that implements qualified domestic minimum top-up taxes described in those rules. The amendments also introduce targeted disclosure requirements for affected companies, and they require entities to disclose: • The fact that they have applied the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes; • Their current tax expense (if any) related to the Pillar Two income taxes; and • During the period between the legislation being enacted or substantially enacted and the legislation becoming effective, entities will be required to disclose known or reasonably estimable information that would help users of financial statements to understand an entity’s exposure to Pillar Two income taxes arising from that legislation. If this information is not known or reasonably estimable, entities are instead required to disclose a statement to that effect and information about their progress in assessing the exposure. Superior Plus Corp. Annual report 202364 The amendments to IAS 12 are required to be applied immediately (subject to any local endorsement processes) and retrospectively in accordance with IAS 8, including the requirement to disclose the fact that the exception has been applied if the entity’s income taxes will be affected by enacted or substantively enacted tax law that implements the OECD’s Pillar Two model rules. Superior and its subsidiaries (the “Group”) is within the scope of the OECD Pillar Two model rules. As at December 31, 2023, the Pillar Two legislation has been enacted in Hungary and has not been enacted or is substantially enacted in all other jurisdictions that Superior operates in. Since the Pillar Two legislation was not effective at the reporting date, the Group has no related current tax exposure. The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. The assessment of the potential exposure of the Pillar Two model rules is based on the most recent available information for the constituent entities in the Group. No significant impact is expected in the jurisdictions that Superior operates in, the Pillar Two effective tax rates are either above the minimum tax rate or the transitional safe harbor relief will apply. (f) Standards Issued But Not Yet Effective The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s consolidated financial statements are below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. The Company has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information (“IFRS S1”) and IFRS S2, Climate-related Disclosures (“IFRS S2”) In June 2023, the International Sustainability Standards Board (the “ISSB”) issued its first two IFRS Sustainability Disclosure Standards, ushering in a new era in international corporate reporting: • IFRS S1 sets out the core content requirements for a complete set of sustainability-related financial disclosures and requires an entity to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. The effect on the entity’s prospects refers to the effect on the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term. • IFRS S2, which is the ISSB’s first topic-based standard, requires an entity to provide information about its exposure to climate- related risks and opportunities. The ISSB was established by the IFRS Foundation in November 2021 in response to demands from global capital markets for the development of standards to provide a comprehensive global baseline of sustainability disclosures. Both IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after January 1, 2024. A “climate first” transition option is available, which allows an entity to provide only climate-related disclosures in its first year of applying IFRS S1 and IFRS S2. Mandatory application of IFRS Sustainability Disclosure Standards depends on each jurisdiction’s endorsement or regulatory processes. The application of IFRS Sustainability Disclosure Standards is not linked to the application of IFRS Accounting Standards. Therefore, an entity applying IFRS Accounting Standards for financial reporting purposes is currently not required to also apply IFRS Sustainability Disclosure Standards, and vice versa. Superior is assessing the impact that the application of IFRS S1 and IFRS S2 will have on the consolidated financial statements. Superior Plus Corp. Notes to the Consolidated Financial Statements3. Acquisitions 2023 Cash Trade and other receivables Prepaids and other assets Property, plant and equipment Intangible assets Trade and other payables and contract liabilities Short-term debt and lease liabilities (1) Long-term debt and lease liabilities Other liabilities Deferred tax liabilities Net identifiable assets Consideration transferred Fair value of deferred consideration Fair value of common shares issued Cash paid on acquisition Total consideration transferred Goodwill arising on acquisitions 65 Certarus Others 20.0 115.3 8.5 603.5 176.9 (75.1) (217.7) (23.2) (0.6) (82.4) 525.2 – 487.3 353.2 840.5 315.3 – 0.2 – 3.2 1.6 (0.1) – (0.3) – (0.7) 3.9 1.1 – 5.8 6.9 3.0 (1) Included in this balance is the assumed interest-bearing debt from Certarus of $214.2 million that was fully settled by Superior immediately after the closing of the acquisition of Certarus. If the 2023 acquisitions had occurred on January 1, 2023, revenue and net earnings from continuing operations for the year ended December 31, 2023 would have increased by $247.3 million and $43.6 million, respectively. Certarus On May 31, 2023, Superior acquired all the outstanding common shares of Certarus for $353.2 million in cash and 48.6 million common shares of Superior for total consideration of approximately $840.5 million. In addition to the consideration paid, Superior assumed approximately $214.2 million in interest-bearing debt, giving the acquisition an enterprise value of approximately $1,054.7 million. The recognized goodwill of $315.3 million represents the ability of Superior to earn a higher rate of return on an assembled collection of net assets and employees than would be expected if Certarus net assets had to be acquired separately, including the intangible assets that do not qualify for separate recognition. Goodwill recognized is not deductible for income tax purposes and forms part of the Certarus segment. Acquisition costs directly attributable to the Certarus acquisition of $16.2 million (2022 – $4.0 million) were expensed and are included in SD&A. Superior Plus Corp. Annual report 202366 During the year ended December 31, 2023, Superior has finalized the purchase price allocation and, as a result, the previously reported fair values changed as follows: Previously Reported Adjustments As at December 31, 2023 Cash Trade and other receivables Prepaids and other assets Property, plant and equipment Intangible assets Trade and other payables and contract liabilities Short-term debt and lease liabilities Long-term debt and lease liabilities Other liabilities Deferred tax liabilities Net identifiable assets Consideration transferred Fair value of common shares issued Cash paid on acquisition Total consideration transferred Goodwill arising on acquisition 20.0 115.3 7.7 583.1 178.2 (68.9) (217.7) (22.3) (0.6) (72.8) 522.0 487.3 353.2 840.5 318.5 – – 0.8 20.4 (1.3) (6.2) – (0.9) – (9.6) 3.2 – – – (3.2) 20.0 115.3 8.5 603.5 176.9 (75.1) (217.7) (23.2) (0.6) (82.4) 525.2 487.3 353.2 840.5 315.3 Prepaids and other assets increased by $0.8 million; property, plant and equipment increased by $20.4 million, intangible assets decreased by $1.3 million; trade and other payables and contract liabilities increased by $6.2 million; long-term debt and lease liabilities increased by $0.9 million and deferred tax liabilities increased by $9.6 million. Prepaids and other assets, trade and other payables and contract liabilities changed as a result of updating the working capital for additional facts and circumstances obtained related to the original acquisition date. Property, plant and equipment and intangible assets changed as a result of changes made to estimated remaining useful lives and fair value of assets acquired. Long-term debt and lease liabilities changed as a result of updating the incremental borrowing rate associated with certain debts assumed. Deferred tax liabilities changed as a result of these updated values, and the remaining adjustment was to goodwill. The net impact was a decrease to goodwill of $3.2 million. Subsequent to the acquisition date, the acquisition contributed revenue of $310.4 million for the year ended December 31, 2023 and net earnings before income tax of $33.3 million for the year ended December 31, 2023. As part of the regulatory process, Superior entered into a consent agreement to retain all of Certarus’ assets while agreeing to divest eight Canadian retail propane distribution locations and related assets in Northern Ontario. In 2022, the combined volume at these locations was approximately 90 million litres of propane, or 2% of Superior’s total propane distribution volumes. Divestitures As a result of the regulatory process discussed above, on November 14, 2023, Superior divested its eight retail propane distribution locations and related assets in Northern Ontario. In addition, on October 25, 2023, Superior divested certain non-propane assets in the Northeastern U.S. The estimated net proceeds related to the Canadian Propane and U.S. divestitures are $36.6 million and $23.7 million (US$17.3 million), respectively. The goodwill balance allocated to the divestitures is net of a write-down of $9.0 million related to the Canadian divestiture, which was recorded as part of the gain (loss) on disposal of assets. Superior Plus Corp. Notes to the Consolidated Financial Statements67 Other Acquisitions During the year, Superior acquired certain assets of residential and commercial retail propane distributors in Lincoln and Lake Isabella, California, for an aggregate purchase price of $6.9 million (US$5.1 million). The purchase price allocations are final as at December 31, 2023. The total goodwill comprises the value of expected synergies arising from the acquisitions and the assembled workforce, which is not separately recognized. The goodwill recognized for Lincoln, California, is not deductible for income tax purposes, while the goodwill recognized for Lake Isabella, California, is deductible for tax purposes. Subsequent to the acquisition date, the acquisition contributed revenue of $3.3 million and net earnings before income tax of $0.4 million for the year ended December 31, 2023 to the U.S. Propane segment. Quarles McRobert Mountain Flame Heartland Other Acquisitions in 2022 Trade and other receivables Prepaid expenses Inventories Property, plant and equipment Intangible assets Trade and other payables and contract liabilities Short-term debt and lease liabilities Long-term debt and lease liabilities Provisions and other liabilities Deferred tax liabilities Net identifiable assets Consideration transferred Fair value of deferred consideration Cash paid on acquisition (2) Total consideration transferred Goodwill arising on acquisition Kamps Propane and Kiva (1) 39.9 1.2 16.8 101.0 105.5 (44.1) (20.1) (38.0) (11.5) (43.9) 13.4 – 4.4 100.7 30.0 (10.2) (0.3) (3.4) (1.2) – 1.8 – 0.5 10.7 2.0 – – – – – 106.8 133.4 15.0 – 277.2 277.2 170.4 – 198.5 198.5 65.1 1.4 16.7 18.1 3.1 0.4 – 0.2 5.0 1.7 (0.2) (0.1) (0.5) – – 6.5 1.6 8.4 10.0 3.5 0.2 – 0.1 2.6 2.5 (0.4) – (0.5) – – 4.5 0.8 7.5 8.3 3.8 0.5 – 0.4 6.3 1.0 – – – – – 8.2 3.6 5.5 9.1 0.9 (1) Kamps Propane, Inc.; High Country Propane, Inc.; Pick Up Propane, Inc.; Competitive Capital, Inc. and Propane Construction and Meter Services (collectively, “Kamps Propane”) and Kiva Energy, Inc. (“Kiva”). (2) Consideration paid for Kamps Propane and Kiva after total working capital adjustments of approximately $17.6 million is cash paid of $284.4 million net of estimated recovery of $7.2 million. Kamps Propane and Kiva On March 23, 2022, Superior acquired all the issued and outstanding shares of Kamps Propane and Kiva for an aggregate purchase price of $302 million (US$240 million) before final adjustments for working capital of $24.8 million (US$19.7 million). Goodwill arising on this acquisition has been allocated between the U.S. Propane segment for $109.4 million and the Wholesale Propane segment for $61.0 million. The goodwill recognized is not deductible for income tax purposes. Superior Plus Corp. Annual report 202368 During the year ended December 31, 2023, Superior has finalized the purchase price allocation and, as a result, the previously reported fair values changed as follows: Previously Reported Adjustments December 31, 2023 Trade and other receivables Prepaid expenses Inventories Property, plant and equipment Intangible assets Trade and other payables and contract liabilities Short-term debt and lease liabilities Long-term debt and lease liabilities Provisions and other liabilities Deferred tax liabilities Net identifiable assets Consideration transferred Cash paid on acquisition Total consideration transferred Goodwill arising on acquisition 39.9 1.2 16.8 101.4 102.2 (43.5) (20.1) (38.0) (11.5) (42.0) 106.4 275.3 275.3 168.9 – – – (0.4) 3.3 (0.6) – – – (1.9) 0.4 1.9 1.9 1.5 39.9 1.2 16.8 101.0 105.5 (44.1) (20.1) (38.0) (11.5) (43.9) 106.8 277.2 277.2 170.4 Property, plant and equipment decreased by $0.4 million, intangible assets increased by $3.3 million, trade and other payables and contract liabilities increased by $0.6 million and deferred tax liabilities increased by $1.9 million as a result of these changes. The changes in these fair values are due to updating the estimated age, cost and quantity of assets acquired and finalizing estimates. The impact of these changes and the increase in consideration of $1.9 million resulted in an increase to goodwill of $1.5 million. Included in trade and other receivables of Superior as at December 31, 2022, was $7.2 million representing a refund from the seller representing the final adjustment for working capital; see Note 4. As at December 31, 2023, this receivable has been fully collected. McRobert Fuels (“McRobert”) During the year ended December 31, 2023, Superior finalized the purchase price allocation related to the acquisition of McRobert with no change from the previously reported balances. Goodwill arising on this acquisition formed part of the Canadian Propane segment. 4. Trade and Other Receivables A summary of trade and other receivables is as follows: Trade receivables, net of allowances Vendor Note (1) Accounts receivable – other (2) Trade and other receivables 2023 403.4 – 23.8 427.2 2022 375.4 128.0 28.4 531.8 (1) On April 9, 2021, Superior completed the sale of its Specialty Chemicals business and as part of the consideration received $125.0 million in the form of a 6% unsecured note (“Vendor Note”). On December 21, 2022, Superior entered into an agreement to sell the Vendor Note for total proceeds of $128.0 million. Superior received the proceeds from the sale of the Vendor Note in January 2023. (2) This balance consists of accounts receivable related to indirect taxes, final settlements related to acquisitions and other miscellaneous balances. Restated, see Note 2(b). Superior Plus Corp. Notes to the Consolidated Financial Statements69 Pursuant to their respective terms, trade receivables, before the deduction of the allowance for doubtful accounts, are aged as follows: Current Past due less than 90 days Past due over 90 days Trade receivables 2023 262.4 128.6 30.3 421.3 2022 270.3 96.6 24.9 391.8 Superior’s trade receivables are stated after deducting an allowance for doubtful accounts of $17.9 million as at December 31, 2023 (2022 – $16.4 million). The movement in the allowance for doubtful accounts is as follows: Allowance for doubtful accounts, beginning of the year Impairment losses recognized on receivables Amounts written off during the period as uncollectible Amounts recovered Foreign exchange impact and other Allowance for doubtful accounts, end of the year 5. Prepaids and deposits A summary of prepaids and deposits is as follows: Prepaid insurance Tax instalments Deposits (1) Leases and licenses, storage, rent and other (1) Included in the deposits are commodity derivative contract collateral of $14.8 million as at December 31, 2023 (2022 – $51.9 million). 6. Inventories A summary of inventories is as follows: Propane and other refined fuels Propane retailing materials, supplies, appliances and other 2023 (16.4) (9.3) 6.3 1.2 0.3 (17.9) 2023 19.2 4.1 22.4 18.3 64.0 2022 (12.9) (9.4) 6.2 0.6 (0.9) (16.4) 2022 18.2 8.9 60.4 12.1 99.6 2023 97.0 18.6 115.6 2022 133.1 19.9 153.0 Superior Plus Corp. Annual report 202370 7. Property, Plant and Equipment Cost As at December 31, 2021 Additions – right-of-use assets Additions – property, plant and equipment (2) Additions through business combinations (Note 3) Adjustments related to asset retirement obligation (“ARO”) and provisions Disposals and other Net foreign currency exchange differences and other As at December 31, 2022 Additions – right-of-use assets Additions – property, plant and equipment Additions through business combinations (Note 3) Adjustments related to ARO and provisions Disposals and divestitures Net foreign currency exchange differences and other As at December 31, 2023 Accumulated Depreciation As at December 31, 2021 Depreciation expense – property, plant and equipment Depreciation of right-of-use assets Eliminated on disposal of assets Net foreign currency exchange differences and other As at December 31, 2022 Depreciation expense – property, plant and equipment Depreciation of right-of-use assets Eliminated on disposal of assets Net foreign currency exchange differences and other As at December 31, 2023 Carrying Amount As at December 31, 2022 As at December 31, 2023 Buildings and Facilities MSU, Trucks and Railcars 184.9 6.5 6.8 430.7 40.2 5.7 Storage, Machinery, Equipment and Other (1) 1,159.4 2.8 92.5 Leasehold Improvements 16.8 – 1.7 Total 1,867.8 49.5 106.7 35.7 34.4 148.0 1.3 226.7 – (3.5) 11.0 241.4 6.3 9.7 51.5 – (5.9) (4.3) 298.7 – (28.6) 19.5 501.9 51.0 60.5 351.3 – (1.2) (9.9) 57.3 1,448.9 – 119.7 202.7 2.2 – – 0.5 20.3 – 1.1 0.1 – (1.2) (42.4) 91.8 2,298.9 57.3 191.2 606.7 2.2 (24.3) (103.3) (0.1) (137.9) (18.6) 921.8 (5.8) 1,664.4 (0.8) 20.6 (31.3) 2,987.1 54.4 260.1 467.5 6.2 12.2 (2.0) 10.3 81.1 9.5 13.8 (3.1) (1.0) 100.3 160.3 198.4 27.3 23.5 (27.8) 2.4 285.5 59.2 31.9 (15.7) (11.9) 349.0 216.4 572.8 81.5 0.4 (6.6) 15.6 558.4 109.8 1.0 (84.0) 6.5 591.7 890.5 1,072.7 7.7 1.4 – – 0.2 9.3 1.3 0.3 789.7 116.4 36.1 (36.4) 28.5 934.3 179.8 47.0 (0.4) (103.2) (1.6) 8.9 11.0 11.7 (8.0) 1,049.9 1,364.6 1,937.2 Land 76.0 – – 7.3 – (0.4) 3.5 86.4 – 0.2 1.1 – (4.3) (1.8) 81.6 – – – – – – – – – – – 86.4 81.6 (2) These include tanks and cylinders, tank bodies, chassis, field and other equipment, compression equipment, MSU recertifications, furniture and fixtures and computer equipment. (1) Restated, see Note 3. Superior Plus Corp. Notes to the Consolidated Financial Statements71 The carrying amounts of the right-of-use assets included in the above are as follows: Carrying Amount As at December 31, 2022 As at December 31, 2023 Depreciation per cost category: SD&A Property, plant and equipment Right-of-use asset Total depreciation Office Space and Buildings Railcars and Trucks Storage and Equipment 93.3 93.8 134.4 140.7 10.0 16.5 Total 237.7 251.0 Years Ended December 31 2023 2022 179.8 47.0 226.8 116.4 36.1 152.5 Superior evaluated the property, plant and equipment as at December 31, 2023 and 2022 for indicators of impairment, and no impairment was identified. Therefore, the carrying value was not adjusted. See Note 8 for further details on testing of property, plant and equipment impairment in CGUs. Superior Plus Corp. Annual report 202372 8. Goodwill and Intangible Assets Cost As at December 31, 2021 Additions through business combinations (1) Additions acquired separately Disposals Net foreign currency exchange differences and other As at December 31, 2022 (1) Additions through business combinations Additions acquired separately Disposals and divestitures (Note 3) Net foreign currency exchange differences and other As at December 31, 2023 Accumulated Amortization As at December 31, 2021 Amortization expense Disposals Net foreign currency exchange differences and other As at December 31, 2022 Amortization expense Disposals Net foreign currency exchange differences and other As at December 31, 2023 Carrying Value As at December 31, 2022 (1) As at December 31, 2023 (i) Restated, see Note 3. Goodwill 1,320.9 246.8 – – 90.4 1,658.1 318.3 – (33.2) (32.1) 1,911.1 – – – – – – – – – 1,658.1 1,911.1 Customer Relationships Cap and Trade Emission Units Purchased Trade Names, Trademark, Non-compete Agreements, Brands, Software and Developed Technology 544.5 135.2 – – 37.9 717.6 87.2 – – 5.5 810.3 171.3 67.3 – 10.5 249.1 85.9 – (0.2) 334.8 468.5 475.5 14.8 – 29.8 (3.6) 0.4 41.4 – 14.3 (13.8) – 41.9 – – – – – – – – – 41.4 41.9 152.0 7.5 10.2 (1.6) 6.4 174.5 91.3 9.0 (1.1) (20.4) 253.3 98.7 19.1 (1.6) 4.3 120.5 18.4 (0.4) (6.3) 132.2 54.0 121.1 Total 2,032.2 389.5 40.0 (5.2) 135.1 2,591.6 496.8 23.3 (48.1) (47.0) 3,016.6 270.0 86.4 (1.6) 14.8 369.6 104.3 (0.4) (6.5) 467.0 2,222.0 2,549.6 Superior acquired definite-life intangible assets from the acquisition of Certarus, namely: • Customer relationships representing Certarus’ ongoing relationship with customers in place at the date of acquisition are amortized on a straight-line basis for 8 years; • Brand and trademarks, representing the Certarus brand name established within the industry, known among customers within the CNG distribution space for a proven track record of reliable service and industry leading safety standards, are amortized on a straight-line basis for 15 years; and • Developed technology, representing proprietary technology developed in house by Certarus, is amortized on a straight-line basis for 5 years. Superior Plus Corp. Notes to the Consolidated Financial Statements73 During the year, the Company invested $9.0 million (2022 – $10.2 million) in new software systems and enhancements to existing systems. These additions include the cost of the software, the installation and consulting services relating to the enhancements and implementation of these systems. Superior evaluated intangible assets as at December 31, 2023 and 2022 for indicators of impairment, and the Company did not identify any impairment. Therefore, the carrying value was not adjusted for the current year. Goodwill is a result of a number of previous business combinations and is generally attributable to anticipated synergies expected and other intangible assets that are not required to be separately identified. Goodwill by definition has an indefinite life and, therefore, is not amortized. Goodwill is subject to impairment tests at least annually. For purposes of impairment testing, Superior assesses goodwill at the segment level. The carrying amount of goodwill as at December 31 related to each segment is as follows: U.S. Propane Canadian Propane Wholesale Propane Certarus (1) Restated, see Note 3. 2023 2022 (1) 1,207.4 1,236.5 287.6 102.7 313.4 316.2 105.4 – 1,911.1 1,658.1 Superior conducts assessments for indicators of impairment on a quarterly basis and performs a detailed impairment assessment at least annually. As at December 31, 2023 and 2022, an impairment test was performed for all CGUs with allocated goodwill, and after considering all available evidence, including Certarus’ results performing higher than expected from the acquisition, no impairment was identified. The recoverable amount of each CGU was based on its value in use and was determined by estimating the future cash flows that would be generated from the continuing use of the CGU, incorporating the following assumptions: Basis on which recoverable amount was determined The recoverable amount for each CGU is determined using a detailed cash flow model that is based on evidence from an internal budget approved by the Board of Directors. Management’s internal budgets are based on past experience and are adjusted to reflect market trends and economic conditions. Key rates used in calculation of recoverable amount Growth rate to perpetuity The first five years of cash flow projections used in the model are based on management’s internal budgets, and projections after five years are extrapolated using growth rates in line with historical long-term growth rates. The long-term growth rates used in determining the recoverable amount for each CGU range from 2.0% to 2.3% (2022 – 2.0%). Cash flow projections exclude any costs related to expansions through acquisitions and other related initiatives. Discount rates Cash flows in the model are discounted using a discount rate specific to each CGU that is adjusted based on risk assessments for each CGU. Discount rates reflect the current market assessments of the time value of money and are derived from the CGU’s weighted average cost of capital and are adjusted for tax. The after-tax discount rates used in determining the recoverable amount for the CGUs range from 7.8% to 11.0% (2022 – 7.9% to 11.3%). Inflation rates Inflation rates used in the cash flow model are based on a blend of a number of publicly available inflation forecasts. The inflation rates used in determining the recoverable amount for each CGU range from 2.0% to 2.3% in 2023 (2022 – 2.1% to 5.5%). Key assumptions In determining the recoverable amount of each CGU, business, market and industry factors were considered. Superior Plus Corp. Annual report 202374 9. Provisions A summary of provisions is as follows: Balance as at December 31, 2021 Additions Utilization Unwinding of discount, impact of change in discount rate and net foreign currency exchange difference Balance as at December 31, 2022 Additions Utilization Amounts reversed or reclassified Unwinding of discount, impact of change in discount rate and net foreign currency exchange difference Balance as at December 31, 2023 Restructuring Decommissioning 2.1 – (1.1) – 1.0 0.2 (0.7) – – 0.5 7.4 1.2 (0.2) (0.1) 8.3 2.2 – – 0.1 10.6 Current (Note 10) Non-current Restructuring Other 3.6 27.7 (0.8) 0.3 30.8 – (27.7) (3.0) (0.1) – 2023 0.5 10.6 11.1 Total 13.1 28.9 (2.1) 0.2 40.1 2.4 (28.4) (3.0) – 11.1 2022 31.8 8.3 40.1 Provisions for restructuring are recorded in provisions, except for the current portion, which is recorded in trade and other payables. As at December 31, 2023, the current portion of restructuring costs was $0.5 million (2022 – $1.0 million). Decommissioning The provisions are on a discounted basis and are based on existing technologies at current prices or long-term price assumptions, depending on the expected timing of the activity. Superior records a provision for the future costs of decommissioning certain assets associated with the U.S. Propane segment. Superior estimates the total undiscounted expenditures required to settle its decommissioning liabilities to be $13.5 million as at December 31, 2023 (2022 – $10.7 million), which will be paid over the next 13 years. The discount rate of 3.8% as at December 31, 2023 (2022 – 3.3%) was used to calculate the present value of the estimated cash flows. Other On January 18, 2023, Superior paid a $25.0 million reverse termination fee plus $1.4 million interest and $1.3 million other costs related to the ruling of Alberta Court of Kings Bench against Superior on December 22, 2022 resulting from the termination of the arrangement agreement between Canexus Corporation and Superior in 2016. Superior appealed the decision to the Court of Appeal on January 19, 2023. Superior is subject to various other claims and potential claims in the normal course of business, but the Company does not expect the ultimate settlement of any of these to have a material effect on its financial results. The outcomes of all the proceedings and claims against Superior are subject to future resolution that includes the uncertainties of litigation. It is not possible for Superior to predict the result or magnitude of the claims due to the various factors and uncertainties involved in the legal process. Based on information currently known to Superior, it is not probable that the ultimate resolution of any proceedings and claims, individually or in total, will have a material effect on the consolidated statements of net earnings (loss) and total comprehensive earnings or consolidated balance sheets. If it becomes probable that Superior is liable, Superior will record a provision in the period the change in probability occurs, and the resulting impact could be material to the consolidated statements of net earnings (loss) and total comprehensive earnings or consolidated balance sheets. Superior Plus Corp. Notes to the Consolidated Financial Statements10. Trade and Other Payables A summary of trade and other payables is as follows: Trade payables Provisions (Note 9) Accrued liabilities and other payables (1) Cap and trade payable Current taxes payable Share-based payments, current portion Trade and other payables (1) Restated, see Note 2(b). 11. Contract Liabilities Balance, beginning of the year Additions during the year Recognized in net earnings Net foreign currency exchange differences Balance, end of the year 75 2022 426.9 31.8 106.5 2.4 0.8 12.1 580.5 2022 20.6 52.9 (49.7) 1.2 25.0 2023 413.7 0.5 112.4 38.4 8.0 12.1 585.1 2023 25.0 56.8 (57.1) (0.2) 24.5 The Company does not generally receive deposits for periods longer than 12 months in advance of performing the related service. 12. Other Liabilities A summary of other liabilities is as follows: Quebec cap and trade payable California cap and trade payable Washington cap and trade payable Share-based payments and other Other liabilities 2023 – 4.0 3.1 4.0 11.1 2022 12.1 23.0 – 2.0 37.1 Superior operates in California, Washington, Oregon, Quebec and Nova Scotia, and is required to participate in the respective government cap and trade programs, which require Superior to settle any liability with cap and trade at the end of each compliance period. Nova Scotia is transitioning from the cap and trade program to an Output-Based Pricing System for large emitters for the 2023-2030 period. During this transition period, the cap and trade program continues to apply to greenhouse gas emissions for the 2019-2022 period, with 2023 being the final year of the program. The final compliance deadline for all participants under the program is December 15, 2023, which Superior has fulfilled during the fourth quarter of 2023. Intangible assets are recorded when cap and trade emission units are purchased, and cap and trade liabilities are recorded upon the import of propane. These are included in the consolidated statements of cash flows, net of the liability that has been accrued related to cap and trade payable as part of changes in non-cash working capital. Superior Plus Corp. Annual report 202376 13. Borrowings A summary of borrowings is as follows: Revolving Term Bank Credit Facilities (1) Bankers’ acceptances (“BA”) 2027 Floating BA rate plus 1.70% Canadian prime rate loan (Prime and SwingLine) 2027 Prime rate plus 0.70% 167.0 3.8 93.0 – Year of Maturity Effective Interest Rate December 31 2023 December 31 2022 2027 Term SOFR rate plus 1.70% 312.5 494.7 Secured Overnight Financing Rate (“SOFR”) loans (US$236.0 million; 2022 – US$365.0 million) U.S. base rate loans (Prime and SwingLine) (US$5.0 million; 2022 – US$nil) Sidecar Facility (2) Senior Unsecured Notes Senior unsecured notes (3) Senior unsecured notes (4) Other Debt 2027 U.S. prime rate plus 0.70% 2026 Floating BA rate plus 1.95% 2029 2028 4.50% 4.25% Deferred consideration from acquisitions Other loans and borrowings (5) 2024–2031 2024–2031 1.74%–8.5% 1.9%–7.2% Total borrowings before deferred financing fees Deferred financing fees and discounts Total borrowings before current maturities Current maturities Total non-current borrowings 6.6 438.0 927.9 794.6 500.0 – – 587.7 813.2 500.0 1,294.6 1,313.2 26.6 16.2 42.8 2,265.3 (22.9) 2,242.4 (11.3) 2,231.1 37.5 7.6 45.1 1,946.0 (19.9) 1,926.1 (14.8) 1,911.3 (1) As at December 31, 2023, Superior had $23.1 million of outstanding letters of credit (2022 – $24.2 million) and $429.5 million of outstanding financial guarantees on behalf of its businesses (2022 – $391.8 million). The fair value of Superior’s revolving term bank credit facilities, other debt, letters of credit, and financial guarantees approximates their carrying value as a result of the market-based interest rates and the short-term nature of the underlying debt instruments. The credit facilities are secured by substantially all of the assets of Superior and mature on June 6, 2027. The lender commitments can be increased to $1,050.0 million on the condition that no event of default has occurred and lender consent is provided. (2) Superior entered into a $550 million senior secured revolving credit facility with a syndicate of ten lenders to fund the acquisition of Certarus. The senior secured credit facility matures on May 31, 2026 and is secured by the same assets as above. (3) Superior’s subsidiaries, Superior Plus LP and Superior General Partner Inc., issued at par US$600 million of 4.5% senior unsecured notes due March 15, 2029. The fair value of the outstanding US$600 million senior unsecured notes is $734.4 million (2022 – $697.5 million) based on prevailing market prices. There was an unrealized foreign exchange translation gain on the US$600 million senior unsecured note of $18.7 million for the year ended December 31, 2023 (2022 – $55 million loss). (4) Superior’s wholly owned subsidiary, Superior Plus LP, completed a private placement of $500 million of 4.25% senior unsecured notes, at par value, due May 18, 2028, which are guaranteed by Superior and certain of its subsidiaries. The fair value of the 4.25% senior unsecured notes based on prevailing market rates is $466.0 million (2022 – $434.0 million). (5) As part of the acquisition of Certarus, Superior assumed three definitive agreements enabling a strategic alliance and commercial investment (the “agreements”) into Certarus’ CNG infrastructure platform to service the Ontario industrial sectors. The total consideration received was $11.3 million and could be terminated in 2024 and 2025. If terminated, the quarterly tolling fee obligation and entitlement by the issuer would cease. The repayment would be based on a calculated buyout amount and paid within 30 days. From the date of acquisition to December 31, 2023, Certarus incurred $0.7 million in tolling fees. Effective July 1, 2023, the agreements were extended and could be terminated by either party on or after July 1, 2033. As a result of the modification, Superior recorded a gain of $4.5 million as part of finance expense. Future required repayments of borrowings before deferred financing fees are as follows: 2024 2025 2026 2027 2028 Thereafter Total 11.3 9.6 444.3 491.8 500.8 807.5 2,265.3 Superior Plus Corp. Notes to the Consolidated Financial Statements77 Total 174.5 32.3 48.8 9.3 (51.8) 9.9 223.0 16.6 57.3 11.4 (0.3) (64.2) – 0.5 2023 63.5 175.9 239.4 (4.7) 239.4 2022 47.3 175.7 223.0 14. Leasing Arrangements The lease liabilities by operating segment are as follows: U.S. Propane Canadian Propane Wholesale Propane Certarus Corporate Balance as at December 31, 2021 Lease liabilities assumed as part of a business combination Additions Finance expense on lease liabilities 95.5 27.8 25.5 5.2 69.1 – 11.4 3.2 Lease payments (25.8) (19.4) 8.8 4.5 11.9 0.8 (6.2) 1.1 20.9 – 8.5 1.3 – – – – – – – 16.3 3.7 0.5 (2.8) (1.6) 16.1 8.9 137.1 0.3 19.2 6.2 (0.1) 64.2 – 25.9 3.4 (31.2) (22.1) (7.8) (3.4) 128.2 (0.1) 71.3 0.4 23.3 1.1 – – 0.1 (0.4) – 0.8 – – – Impact of changes in foreign exchange rates and other Balance as at December 31, 2022 Lease liabilities assumed as part of a business combination Additions Finance expense on lease liabilities Lease payments Impact of changes in foreign exchange rates and other Balance as at December 31, 2023 Current portion of lease liabilities Non-current portion of lease liabilities Total lease liabilities The present values of lease payments are as follows: Not later than one year Later than one year and not later than five years Later than five years Less: future finance charges Present value of minimum rental payments Minimum Rental Payments Present Value of Minimum Rental Payments 2023 70.6 149.2 66.9 (47.3) 239.4 2022 52.9 142.1 75.0 (47.0) 223.0 2023 63.5 124.4 51.5 – 239.4 2022 47.3 117.8 57.9 – 223.0 Future minimum lease payments under non-cancellable, low-value, short-term leases and leases with variable lease payments are summarized below: Not later than one year Later than one year and not later than five years 2023 2022 9.5 0.3 9.8 2.0 0.6 2.6 Superior Plus Corp. Annual report 202378 15. Employee Future Benefits In accordance with IAS 19, the most recent actuarial accounting of plan assets and the present value of the defined-benefit obligation were calculated on December 31, 2023. The present value of the defined-benefit obligation and the related current and past service costs were measured using the projected unit credit method, which is the same as that applied in calculating the accrued defined-benefit obligation recognized in the consolidated balance sheets. The principal assumptions used for the purpose of the actuarial valuation were as follows: Average discount rate Expected rate of compensation increase Mortality rate (1) Defined-benefit Plans Other Benefit Plans 2023 4.6% 4.0% 2022 5.0% 4.0% 2023 4.6% 4.0% 2022 5.1% 4.0% 108%–112% 108%–112% 97%–109% 95%–109% (1) 2014 Canadian Private Sector Pensioners’ Mortality Table combined with mortality improvement scale MI-2017. Canadian Propane has defined-benefit and defined-contribution pension plans (the “Plans”) covering most employees. The benefits provided under the Plans are based on the individual employee’s years of service and the highest average earnings for a specified number of consecutive years. The objective of the Plans when managing their net assets available for benefits, which represent the capital of the Plans, is to provide members with the retirement benefits prescribed in the Plans. The Specialty Chemicals pension plans were divested earlier in 2022, except for one non-funded Supplemental Retirement Arrangement plan with four members, which has been assumed by Superior under the Corporate plan. All other benefit plans and the rest of the management objectives, policies and procedures are unchanged since 2022. The Plan assets are managed by the Human Resources and Compensation Committee of the Board of Directors on behalf of beneficiaries. The Human Resources and Compensation Committee of the Board of Directors retains independent managers and advisors. Information about Superior’s defined-benefit and other post-retirement benefit plans as at December 31, 2023 and 2022 in aggregate is as follows: Recognized Net (Asset) Liability Arising From Defined-benefit Obligation Balance as at December 31, 2023 Present value of defined-benefit obligations Fair value of plan assets Net (asset) liability arising from defined-benefit obligation Balance as at December 31, 2022 Present value of defined-benefit obligations Fair value of plan assets Net (asset) liability arising from defined-benefit obligation Canadian Propane Pension Benefit Plans Other Benefit Plans 22.0 (28.3) (6.3) 22.9 (29.6) (6.7) 5.0 – 5.0 5.5 – 5.5 Superior Plus Corp. Notes to the Consolidated Financial StatementsMovements in Defined-benefit Obligations and Plan Assets Movement in the present value of the defined-benefit obligation during the year: Benefit obligation as at January 1 Interest cost Actuarial losses (gains) Benefits paid Benefit obligation as at December 31 Movement in the fair value of the plan assets during the year: Fair value of plan assets as at January 1 Excess (shortfall) on plan assets Expected return on plan assets Contributions by the employer Benefits paid Administration expenses Defined contributions plan payments Fair value of plan assets as at December 31 Funded status – plan surplus (deficit) Net asset (obligation) arising from defined-benefit obligation Non-current net benefit asset (obligation) 79 Canadian Propane Pension Benefit Plans Other Benefit Plans 2023 2022 2023 2022 22.9 1.1 0.8 (2.8) 22.0 29.6 0.2 1.4 0.1 (2.8) – (0.2) 28.3 6.3 6.3 29.9 0.8 (4.2) (3.6) 22.9 36.9 (4.4) 0.9 0.2 (3.6) (0.2) (0.2) 29.6 6.7 6.7 5.5 0.2 (0.3) (0.4) 5.0 – – – 0.4 (0.4) – – – (5.0) (5.0) 6.8 0.2 (0.8) (0.7) 5.5 – – – 0.7 (0.7) – – – (5.5) (5.5) The accrued net pension asset related to the Canadian Propane pension benefit plan on December 31, 2023 was $6.3 million (2022 – $6.7 million), and the expense (recovery) for 2023 was ($0.1) million (2022 – $0.3 million). The accrued net benefit obligation related to the total other benefit plans of Canadian Propane and Corporate plan on December 31, 2023 was $5.0 million (2022 – $5.5 million), and the expense for 2023 was $0.2 million (2022 – $0.2 million). Amounts recognized in net earnings (loss) in respect of these defined-benefit plans are as follows for the years ended December 31: Service cost Administrative expense Defined contributions plan payments Net interest (income) expense Components of defined-benefit costs recognized in net earnings (loss) 2023 2022 – 0.2 (0.1) 0.1 0.2 0.2 0.1 0.5 The service cost, administrative expense and net interest expense related to Canadian Propane and Corporate plans for the year ended December 31, 2023 was $0.1 million (2022 – $0.5 million) and is included in SD&A. Superior Plus Corp. Annual report 202380 The remeasurement of the net defined-benefit liability is included in other comprehensive earnings (loss). The amounts recognized in accumulated other comprehensive earnings in respect of these benefit plans are as follows: Actuarial defined-benefit (loss) gain (before income taxes) Cumulative actuarial gains (before income taxes) Remeasurement on the net benefit obligation: Cumulative actuarial gains (before income taxes), beginning of the year Actuarial asset experience gain (loss) Actuarial (loss) gain arising from changes in financial assumptions Actuarial gain (loss) arising from changes in experience adjustments Cumulative actuarial gains (before income taxes), end of the year 2023 (0.4) 4.0 2022 0.6 4.4 2023 2022 4.4 0.2 (0.7) 0.1 4.0 3.8 (4.4) 5.2 (0.2) 4.4 Significant actuarial assumptions for the determination of the accrued defined-benefit obligation are discount rate, compensation increase, mortality scale and trend rate. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring as at December 31, 2023, while holding all other assumptions constant. Discount Rate A 1% change in the discount rate would result in a change to the accrued defined-benefit obligation related to Canadian Propane of $1.7 million as at December 31, 2023 (2022 – $1.8 million) and a change to the current service expense of $0.1 million as at December 31, 2023 (2022 – $0.1 million). A 1% change in the discount rate would result in a change to the accrued defined-benefit obligation related to the Corporate plan of $0.1 million (2022 – $0.1 million) and a change to the current service expense of $nil at December 31, 2023 and 2022. Compensation Increase A 1% change in salary would result in a change to the accrued defined-benefit obligation related to Canadian Propane of $nil as at December 31, 2023 (2022 – $nil) and a change to the current service expense of $nil as at December 31, 2023 (2022 – $nil). A 1% change in salary would result in a change to the accrued defined-benefit obligation and expense related to the Corporate plan of $nil as at December 31, 2023 and 2022. Mortality Scale A 10% change in the mortality scale would result in a change to the accrued defined-benefit obligation related to Canadian Propane of $1.1 million as at December 31, 2023 (2022 – $1.3 million) and a change to the current service expense of $nil as at December 31, 2023 (2022 – $0.1 million). A 10% change in the mortality scale would result in a change to the accrued defined- benefit obligation related to the Corporate plan of $0.1 million as at December 31, 2023 and 2022 and a change to the current service expense of $nil as at December 31, 2023 and 2022. Trend Rate A 1% change in the trend rate would result in a change to the accrued defined-benefit obligation related to Canadian Propane of $0.2 million as at December 31, 2023 (2022 – $0.2 million) and a change to the current service expense of $nil as at December 31, 2023 and 2022. The sensitivity presented above may not be representative of the actual change in the accrued defined-benefit obligation as it is unlikely that the change in assumptions would occur in isolation, as some of the assumptions may be correlated. There were no changes in the methods or assumptions used in preparing the sensitivity analysis from prior years. The average duration of the net benefit obligation related to Canadian Propane plans is 6.5 years as at December 31, 2023 (2022 – 6.6 years) and related to the Corporate plan is 8.2 years as at December 31, 2023 (2022 – 8.3 years). As at December 31, 2023, Superior expects to make contributions to the Canadian Propane plans of $0.5 million and to the Corporate plan of $0.1 million during 2024. Superior Plus Corp. Notes to the Consolidated Financial StatementsThe fair values of plan assets as at December 31, 2023, by major asset category, are as follows: Canadian equities Fixed income Cash Total The fair values of plan assets as at December 31, 2022, by major asset category, are as follows: Canadian equities Fixed income Cash Total 81 Canadian Propane Pension Benefit Plans Level 2 Assets Percentage 3.9 24.3 0.1 28.3 13.8% 85.9% 0.3% 100% Canadian Propane Pension Benefit Plans Level 2 Assets Percentage 3.8 25.7 0.1 29.6 12.7% 86.8% 0.5% 100.0% The actual returns on Canadian Propane plan assets during the year ended December 31, 2023 were 5.8% (2022 – (9.8%)). The Corporate plan was not a funded plan. As part of the risk management process, Superior has established a diversification policy, set rate of return objectives, and developed specific investment guidelines. As at December 31, 2023, the asset-matching strategic choices that are formulated in the actuarial report and Superior’s Statement of Investment Policies and Procedures (“SIPP”) of the total defined-benefit plan assets are: Canadian equities Global equities Fixed income (1) Based on Superior’s SIPP. Canadian Propane Distribution Pension Benefit Plans Range (1) (2) 4.0%–9.0% 4.0%–9.0% 82.0%–92.0% (2) Canadian Propane’s SIPP does not provide ranges for U.S. and foreign equities; instead it provides an aggregate range for global equities. As at December 31, 2022, the asset-matching strategic choices that are formulated in the actuarial report and SIPP of the total defined-benefit plan assets are: Canadian equities Global equities Fixed income (1) Based on Superior’s SIPP. Canadian Propane Distribution Pension Benefit Plans Range (1) (2) 2.0%–8.0% 2.0%–8.0% 84.0%–96.0% (2) Canadian Propane’s SIPP does not provide ranges for U.S. and foreign equities; instead it provides an aggregate range for global equities. Superior Plus Corp. Annual report 202382 16. Financial Instruments IFRS requires disclosure around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Superior’s market assumptions. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined by reference to quoted bid or ask prices, as appropriate, in the most advantageous active market for that instrument to which Superior has immediate access (Level 1). Where bid and ask prices are unavailable, Superior uses the closing price of the instrument’s most recent transaction. In the absence of an active market, Superior estimates fair values based on prevailing market rates (bid and ask prices, as appropriate) for instruments with similar characteristics and risk profiles or internal or external valuation models, such as discounted cash flow analysis using, to the extent possible, observable market-based inputs (Level 2). Superior uses internally developed methodologies and unobservable inputs to determine the fair value of some financial instruments when required (Level 3). Fair values determined using valuation models require assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those assumptions, Superior looks primarily to available readily observable external market inputs including forecast commodity price curves, interest rate yield curves, currency rates, and price and rate volatilities as applicable. All financial and non-financial derivatives are designated as FVTPL upon their initial recognition. For items that are recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing their classification at the end of each reporting period. During the year ended December 31, 2023, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements. Assets Foreign currency forward contracts, net sale Equity derivative contract Propane, West Texas Intermediate (“WTI”), heating oil and diesel purchase and sale contracts Total assets Liabilities Foreign currency forward contracts, net sale and foreign currency options, USD/CAD calls Equity derivative contract Propane, WTI, heating oil and diesel purchase and sale contracts Total liabilities Total net assets (liabilities) Current portion of assets Current portion of liabilities Level 1 Level 2 Level 3 5.5 – – 5.5 (4.5) – – (4.5) 1.0 1.9 (3.4) – 0.2 5.3 5.5 – (3.7) (14.9) (18.6) (13.1) 5.4 (15.8) – – 1.0 1.0 – – – – 1.0 – – 2023 Total 5.5 0.2 6.3 12.0 (4.5) (3.7) (14.9) (23.1) (11.1) 7.3 (19.2) Superior Plus Corp. Notes to the Consolidated Financial StatementsAssets Foreign currency forward contracts, net sale Equity derivative contract Propane, WTI, heating oil and diesel purchase and sale contracts Total assets Liabilities Foreign currency forward contracts, net sale and foreign currency options, USD/CAD calls Equity derivative contract Propane, WTI, heating oil and diesel purchase and sale contracts Total liabilities Total net assets (liabilities) Current portion of assets Current portion of liabilities Level 1 Level 2 Level 3 3.0 – – 3.0 (20.3) – – (20.3) (17.3) 2.7 (9.0) – 1.9 5.9 7.8 – (1.8) (45.7) (47.5) (39.7) 7.9 (46.6) – – 0.2 0.2 – – (0.6) (0.6) (0.4) – – 83 2022 Total 3.0 1.9 6.1 11.0 (20.3) (1.8) (46.3) (68.4) (57.4) 10.6 (55.6) The following table outlines quantitative information about how the fair values of these financial and non-financial assets and liabilities are determined, including valuation techniques and inputs used: Description Level 1 fair value hierarchy: Notional Value Term Effective Rates Valuation Technique(s) and Key Input(s) Foreign currency forward contracts US$483.6 2024–2026 $1.26–$1.38 Quoted bid prices in the active market Foreign currency options USD/CAD calls US$12.0 2024 $1.35 Quoted bid prices in the active market Level 2 fair value hierarchy: Equity derivative contracts Propane, WTI, heating oil and diesel purchase and sale contracts Level 3 fair value hierarchy: Propane, WTI, heating oil and diesel purchase and sale contracts (1) Millions of U.S. gallons (“USG”) purchased. C$29.2 2024–2025 $9.46–$14.55 Discounted cash flows – Future cash flows are estimated based on the share price 96.7 USG (1) 2024–2026 $0.76–$2.74 Quoted bid prices for similar products in an active market 19.0 USG (1) 2024 $0.76–$1.37 Quoted bid prices for similar products in an active market adjusted by supplier prices internally obtained by management Superior Plus Corp. Annual report 202384 Superior’s realized and unrealized financial instrument gains (losses) for the year ended December 31, 2023 and 2022 are as follows: Description Foreign currency forward contracts – net sale and foreign currency options, USD/CAD calls Equity derivative contracts Propane, WTI, heating oil and diesel purchase Realized Loss Unrealized Gain (Loss) (9.2) – 18.2 (3.7) Years Ended December 31 2023 Total 9.0 (3.7) Realized Gain (Loss) Unrealized Gain (Loss) (2.7) – (27.5) (3.7) 2022 Total (30.2) (3.7) and sale contracts (42.6) 30.5 (12.1) 28.6 (77.7) (49.1) Total (loss) gain on financial and non-financial derivatives Gain from the fair value change of contingent consideration Foreign exchange gain (loss) on U.S. dollar debt Total (loss) gain (51.8) 45.0 (6.8) 25.9 (108.9) (83.0) – – (51.8) – 18.7 63.7 – 18.7 11.9 – – 25.9 2.0 (55.0) (161.9) 2.0 (55.0) (136.0) The following summarizes Superior’s classification and measurement of financial assets and liabilities: Financial assets Cash and cash equivalents Trade and other receivables Derivative assets Financial liabilities Trade and other payables Dividends payable Borrowings and other liabilities Derivative liabilities Classification Measurement Loans and receivables Loans and receivables FVTPL Other liabilities Other liabilities Other liabilities FVTPL Amortized cost Amortized cost Fair value Amortized cost Amortized cost Amortized cost Fair value The fair values of cash and cash equivalents, trade and other receivables, trade and other payables, dividends payable, revolving term bank credit facilities disclosed in Note 13 and other liabilities correspond to their respective carrying amounts due to their short-term nature and/or the interest rate being commensurate with market interest rates. The fair value of senior unsecured notes disclosed in Note 13 is determined by quoted market prices (Level 2 fair value hierarchy). Offsetting of Financial Instruments Financial assets and liabilities are offset and the net amount reported on the consolidated balance sheets when Superior has a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. In the normal course of business, Superior enters into various master netting agreements or other similar arrangements that do not meet the criteria for offsetting, but do, however, still allow for the related amount to be set off in certain circumstances, such as bankruptcy or the termination of contracts. As at December 31, 2023 and December 31, 2022, Superior has not recorded any amount against other current and non-current financial assets and liabilities. Superior Plus Corp. Notes to the Consolidated Financial Statements85 Financial Instruments – Risk Management Market Risk Financial derivatives and non-financial derivatives are used by Superior to manage its exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices. Superior assesses the inherent risks of these instruments by grouping financial and non-financial derivatives according to the exposures these instruments mitigate. Superior’s policy is not to use financial derivative or non-financial derivative instruments for speculative purposes. Superior does not formally designate its derivatives as hedges and, as a result, Superior does not apply hedge accounting and is required to designate its financial derivatives and non-financial derivatives as held for trading. Superior’s operating segments enter into various propane forward purchase and sale agreements to manage the economic exposure of its wholesale customer supply contracts and monitor their fixed-price propane positions on a daily basis to monitor compliance with established risk management policies. Superior’s operating segments maintain a substantially balanced fixed-price propane position in relation to its wholesale customer supply commitments. Superior, on behalf of its operating segments, enters into foreign currency forward contracts to manage the economic exposure of its operations to movements in foreign currency exchange rates. Superior’s operating segments contract a portion of its fixed- price natural gas and propane purchases and sales in U.S. dollars and enter into forward U.S. dollar purchase contracts to create an effective Canadian dollar fixed-price purchase cost. Superior enters into U.S. dollar forward sales contracts on an ongoing basis to mitigate the impact of foreign exchange fluctuations on sales margins on production from its Canadian plants that is sold in U.S. dollars. Interest expense on Superior’s U.S. dollar debt is also used to mitigate the impact of foreign exchange fluctuations. Credit Risk Superior utilizes a variety of counterparties in relation to its financial derivative and non-financial derivative instruments in order to mitigate its counterparty risk. Superior assesses the creditworthiness of its significant counterparties at the inception and throughout the term of a contract. Superior is also exposed to customer credit risk. Superior’s operating segments deal with a large number of small customers, thereby reducing this risk. Superior’s operating segments actively monitor the creditworthiness of its commercial customers. Overall, Superior’s credit quality is enhanced by its portfolio of customers, which is diversified across geographical (primarily Canada and the U.S.) and end-use (primarily commercial, residential and industrial) markets. Allowances for doubtful accounts and past-due receivables are reviewed by Superior as at each consolidated balance sheet date. Superior updates its estimate of the allowance for doubtful accounts based on the evaluation of the recoverability of trade and other receivables with each customer, considering historical collection trends of past due accounts, current economic conditions and future forecasts. Trade and other receivables are written off once it is determined they are uncollectible. Liquidity Risk Liquidity risk is the risk that Superior cannot meet a demand for cash or fund an obligation as it comes due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. To ensure it is able to react to contingencies and investment opportunities quickly, Superior maintains sources of liquidity at the corporate and subsidiary levels. The main sources of liquidity are cash and other financial assets, the undrawn committed revolving term bank credit facilities, equity markets and debenture markets. Superior is subject to the risks associated with debt financing, including the ability to refinance indebtedness at maturity. Superior believes these risks are mitigated through the use of long-term debt secured by high-quality assets, maintaining debt levels that in management’s opinion are appropriate and by diversifying maturities over an extended period. Superior also seeks to include in its agreements terms that protect it from liquidity issues of counterparties that might otherwise affect liquidity. Superior manages its overall liquidity risk in relation to its general funding requirements by utilizing a mix of short-term and long- term debt instruments. Superior reviews its mix of short-term and long-term debt instruments on an ongoing basis to ensure it is able to meet its liquidity requirements. Effective January 1, 2024, Superior is changing its reporting currency from Canadian dollars to U.S. dollars. As a result, Superior will no longer hedge its U.S dollar segment profit (loss) exposure as the foreign currency exchange risk will be significantly reduced. Subsequent to the year-end, Superior entered into foreign currency forward contracts and options to offset the below notional amounts. Superior Plus Corp. Annual report 202386 Superior’s contractual obligations associated with its financial liabilities for the periods from January 1 to December 31 of the respective years are as follows: Current 2025 2026 2027 2028 Thereafter Total Borrowings before deferred financing fees and discounts Lease liabilities Non-cancellable, low-value, short-term leases and leases with variable lease payments Certarus capital and other commitments 11.3 63.5 9.5 97.2 9.6 44.8 0.3 5.7 USD foreign currency forward contracts, net sale 250.7 160.9 USD/CAD call options (1) Equity derivative contracts 12.0 19.5 – 9.7 Propane, WTI, heating oil, diesel and natural gas purchase and sale contracts 141.7 11.5 4.5 (1) USD/CAD call options expire on varying maturity dates between April and October 2024 and are priced at $1.35. 444.3 33.7 491.8 28.6 500.8 17.3 807.5 2,265.3 51.5 239.4 – 1.2 72.0 – – – 1.0 – – – – – 1.0 – – – – – 2.6 – – – – 9.8 108.7 483.6 12.0 29.2 157.7 Superior’s contractual obligations are considered normal operating commitments and do not include the impact of mark-to- market fair values on financial and non-financial derivatives. Superior expects to fund these obligations through a combination of cash flows from operations and proceeds on revolving term bank credit facilities. Superior’s financial instruments’ sensitivities are consistent as at December 31, 2023 and December 31, 2022. Equity Price Risk Equity price risk is the risk of volatility in earnings as a result of volatility in Superior’s share price. Superior has equity price risk exposure to shares that it issues under various forms of share-based compensation programs, which affect earnings when outstanding units are revalued at the end of each reporting period. Superior uses equity derivatives to manage volatility derived from its share-based compensation program. As at December 31, 2023, Superior estimates that a 10% increase in its share price would have resulted in a $2.6 million increase in earnings due to the revaluation of equity derivative contracts and a decrease in earnings of $1.4 million due to the revaluation of the underlying long-term incentive plan. Superior’s financial instruments’ sensitivities to changes in foreign currency exchange rates, interest rates and various commodity prices and the resulting impact to net earnings are detailed below: (in millions) Impact to net earnings of a $0.01 change in the CAD compared to the USD Impact to net earnings of a 0.5% change in interest rates Impact to net earnings of a $0.10/litre change in the price of heating oil and WTI Impact to net earnings of a $0.04/litre change in the price of propane 2023 +/- 0.2 +/- 3.7 +/- 2.5 +/- 20.6 The calculation of Superior’s sensitivity to changes in foreign currency exchange rates, interest rates and various commodity prices represents the change in fair value of the financial instrument without consideration of the value of the underlying variable, such as the underlying customer contracts. The recognition of the sensitivities identified above would have affected Superior’s unrealized gain or loss on financial instruments and would not have had a material impact on Superior’s cash flow from operations. Superior Plus Corp. Notes to the Consolidated Financial Statements87 17. Income Taxes Consistent with prior periods, Superior recognizes a provision for income taxes for its subsidiaries that are subject to current and deferred income taxes, including Canadian, U.S. and Hungarian income tax. The income taxes differ from the amount computed by applying the corporate Canadian federal-provincial enacted statutory rate for 2023 of 26.01% (2022 – 25.95%). The reasons for these differences are as follows: Net earnings (loss) Income tax expense (recovery) Earnings (loss) before income taxes Computed income tax expense (recovery) Changes in effective foreign tax rates Changes in tax rates Non-deductible costs and other Adjustments in respect of prior years Change in amount of recognized asset Other Income tax expense (recovery) Income tax expense (recovery) for the years ended December 31, 2023 and 2022 comprises of the following: Current income tax expense (recovery) Current income tax charge Adjustments in respect of prior years Total current income tax expense Deferred income tax expense (recovery) Relating to origination and reversal of temporary differences Changes in tax rates Adjustments in respect of prior years Change in amount of recognized asset Other Total deferred income tax expense (recovery) Income tax expense (recovery) 2023 77.0 36.2 113.2 29.4 (16.4) (0.9) 18.5 (13.2) 17.7 1.1 36.2 2022 (87.9) (37.0) (124.9) (32.4) (20.0) (0.4) 16.9 (2.0) 1.9 (1.0) (37.0) 2023 2022 25.2 (2.7) 22.5 5.6 0.3 (11.0) 17.8 1.0 13.7 36.2 4.2 3.2 7.4 (40.7) (0.4) (5.2) 1.9 – (44.4) (37.0) Superior Plus Corp. Annual report 202388 Deferred tax for the years ended December 31, 2023 and 2022 comprises of the following: Credited (Charged) to Net Earnings (Loss) Credited to Other Comprehensive Earnings (Loss) December 31, 2023 Property, plant and equipment Reserves and employee benefits Provisions Lease liabilities Borrowings Financing fees Basis difference in investments Unrealized foreign exchange gains (losses) Scientific research and development Investment tax credits, net of tax Non-capital losses Capital losses Other Total December 31, 2022 Property, plant and equipment Reserves and employee benefits Provisions Lease liabilities Borrowings Financing fees Unrealized foreign exchange gains (losses) Scientific research and development Investment tax credits, net of tax Non-capital losses Other Total Opening Balance (373.5) 33.0 3.3 59.4 (1.1) 15.1 – 15.2 18.9 43.7 87.3 – – (98.7) Opening Balance (271.9) 19.1 3.0 46.4 (5.0) 17.8 (13.5) 21.4 41.9 51.2 (1.3) (90.9) 15.6 (3.1) (0.1) 0.9 8.3 (4.1) (4.9) (12.1) (2.7) (17.0) 1.5 4.9 (0.9) (13.7) Credited (Charged) to Net Earnings (Loss) (28.8) 8.7 0.1 3.0 3.3 (5.1) 29.4 (2.5) 1.8 33.2 1.3 44.4 Acquisitions (106.0) 2.2 – 4.3 (0.3) 0.1 – (0.1) – – 16.5 – – Exchange Differences and Other 7.4 (0.4) (0.1) (0.9) (0.2) – – (0.1) – – (1.8) – 1.0 4.9 Closing Balance (456.5) 31.8 3.1 63.7 6.7 11.1 (4.9) 2.9 16.2 26.7 103.5 4.9 0.1 (190.7) – 0.1 – – – – – – – – – – – 0.1 (83.3) Credited (Charged) to Other Comprehensive Earnings (Loss) – (0.2) – – – 2.3 – – – – – Exchange Differences and Other Acquisitions (55.4) (17.4) Closing Balance (373.5) 4.2 – 7.4 – – – – – – – 1.2 0.2 2.6 0.6 0.1 (0.7) – – 2.9 – 33.0 3.3 59.4 (1.1) 15.1 15.2 18.9 43.7 87.3 – 2.1 (43.8) (10.5) (98.7) Deferred taxes reported in the two preceding tables are presented on a functional basis while deferred taxes reported on the consolidated balance sheets are on a legal-entity basis. Superior Plus Corp. Notes to the Consolidated Financial Statements89 The net deferred income tax liability relates to the following tax jurisdictions as at December 31, 2023 and 2022: Canada U.S. Total net deferred income tax liability Superior has available to carry forward the following as at December 31, 2023 and 2022: 2023 (41.0) (149.7) (190.7) 2022 30.9 (129.6) (98.7) Canadian federal and provincial investment tax credits Canadian scientific research expenditures Canadian non-capital losses Canadian capital losses U.S. non-capital losses U.S. interest deduction – 163(j) 2023 45.8 70.7 110.0 96.4 205.2 185.8 The federal and provincial investment tax credits available to reduce future years’ taxable income expire as follows: 2024 2025 2026 2027 Thereafter Total 2022 60.3 81.5 30.7 – 273.7 115.2 Canada 9.7 7.7 8.5 9.8 10.1 45.8 The Canadian scientific research expenditures, U.S. interest deduction – 163(j) and Canadian capital losses may be carried forward indefinitely. The Canadian and U.S. non-capital loss carryforwards are all due to expire beyond 2027. As at December 31, 2023, Superior had $89.4 million of tax pools (2022 – $91.5 million), $9.7 million of investment tax credits (2022 – $nil) and $54.0 million of capital losses for which no deferred tax asset was recognized. For all other deferred tax assets, it is probable that the asset will be realized through a combination of future reversals of temporary differences and taxable income. Superior Plus Corp. Annual report 202390 18. Total Equity Superior is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares. Common Shares The holders of common shares are entitled to dividends if, as and when declared by the Board of Directors, to one vote per share at shareholders’ meetings, and upon liquidation, dissolution or winding up of Superior to receive pro rata the remaining property and assets of Superior, subject to the rights of any shares having priority over the common shares, of which the preferred shares of Superior Plus US Holdings are outstanding. See Preferred Shares of Superior Plus U.S. Holdings below. As at December 31, 2022 Issuance of common shares, net of issuance costs (Note 3) Common shares repurchased and cancelled Net earnings for the year Other comprehensive loss Dividends declared to common shareholders As at December 31, 2023 Issued Number of Common Shares (Millions) Total Capital Attributable to Common Shareholders Equity Attributable to Common Shareholders 200.7 48.6 (0.7) – – – 2,617.9 487.2 (9.2) – – – 248.6 3,095.9 1,108.1 487.2 (7.2) 51.6 (42.6) (170.5) 1,426.6 Superior’s previous normal course issuer bid program terminated on October 13, 2023. For the year ended December 31, 2023, 0.7 million common shares were repurchased for $7.2 million, including commission, at a volume weighted average price of $9.79 per common share (2022 – 994,542 common shares have been repurchased for $10.0 million, including commission, at a volume weighted average price of $10.06 per common share). The repurchased shares with a total book value of $9.2 million (2022 – $13.0 million) were immediately cancelled and a gain of $2.0 million was recorded to deficit. On November 6, 2023, the TSX accepted a notice filed by Superior of its intention to commence a new normal course issuer bid (the “NCIB”) with respect to its common shares. The NCIB commenced on November 10, 2023 and will terminate on the earlier of November 9, 2024, the date Superior has purchased the maximum number of common shares permitted under the NCIB or the date on which Superior terminates the NCIB in accordance with its terms. The NCIB permits the purchase of up to 12,427,942 common shares, such amount representing 5% of the 248,558,857 common shares issued and outstanding as at October 27, 2023, by way of normal course purchases effected through the facilities of the TSX and/or alternative trading platforms. The NCIB is subject to additional standard regulatory requirements. Furthermore, subject to certain exemptions for block purchases, the maximum number of common shares that Superior may acquire on any one trading day is 201,908 common shares, such amount representing 25% of the average daily trading volume of the common shares of 807,635 for the six calendar months prior to the start of the NCIB. All common shares purchased by Superior under the NCIB will be cancelled. Superior has engaged a broker to administer the NCIB. Superior will also enter into an automatic purchase plan (“APP”) with its broker in relation to the NCIB to facilitate purchases of common shares under the NCIB at times when Superior normally would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Pursuant to the APP, from time to time, when Superior is not in possession of material non-public information about itself or its securities, Superior may, but is not required to, direct its broker to make purchases of common shares under the NCIB during an ensuing trading blackout period. Such purchases will be based on trading parameters established by Superior prior to the trading blackout period in accordance with the rules of the TSX, applicable securities laws and the terms of the APP. Superior Plus Corp. Notes to the Consolidated Financial Statements91 Preferred Shares of Superior Plus U.S. Holdings The preferred shares issued by Superior’s subsidiary (“Preferred Shares”) entitle the holders to a cumulative dividend of 7.25% per annum through to the end of Superior’s second fiscal quarter in 2027. If dividends are paid on the common shares, Superior is required to pay the dividend in cash on the Preferred Shares; otherwise, the Preferred Share dividends can be paid or accrued at Superior’s option. In the event that Superior declares a dividend on its common shares in excess of $0.06 per month, the holders of the Preferred Shares shall be entitled to an equivalent amount. Superior has the option to redeem all, but not less than all, the Preferred Shares on or after July 13, 2027 with not less than 30 days’ prior written notice to the holders of the Preferred Shares. The Preferred Shares can be redeemed at US$1,000 per share plus accrued and unpaid dividends. If Superior does not redeem the Preferred Shares, the dividend rate increases by 0.75% per annum for the next four years to a maximum of 10.25%. If the dividends are not paid in cash, the cumulative dividend increases by 1.0% per annum to a maximum of 14.25%. The Preferred Shares may be exchanged, at the holder’s option, into 30 million common shares of Superior (“Common Shares”), or at Superior’s option, if the volume-weighted average price of Superior’s Common Shares during the then-preceding 30-consecutive- trading-day period, converted to U.S. dollars at the applicable exchange rate, is greater than 145% of the exchange price or $8.67. On an as-exchanged basis, the Preferred Shares currently represent approximately 11% of the diluted outstanding Common Shares. The exchange price of the Preferred Shares will be subject to adjustment from time to time in accordance with the terms of the Preferred Shares. These potential adjustments relate primarily to accrued and unpaid dividends, an increase in or additional dividends to common shareholders, instances where there is a share split, share consolidation or a reorganization, the participation rate on the dividend reinvestment plan is greater than 35% and if Common Shares are issued below market value. Holders of Preferred Shares will be entitled to vote on an as-exchanged basis for all matters on which holders of Superior’s Common Shares vote, and to the greatest extent possible, will vote with the holders of Common Shares as a single class. In the event of any liquidation, winding up or dissolution of Superior, the holders of Preferred Shares are entitled to receive prior to, and in preference to, any distribution to the holders of Common Shares an amount equal to the greater of a liquidation rate per share of US$1,400 plus accrued and unpaid dividends or the amount receivable had the Preferred Shares been converted to Common Shares immediately prior to the liquidation event. In the event that upon liquidation or dissolution, the assets and funds of Superior are insufficient to permit the payment to the holders of Preferred Shares of the full preferential amounts, then the entire assets and funds of Superior legally available for distribution are to be distributed ratably among the holders of Preferred Shares in proportion to the full preferential amount each is otherwise entitled to receive. After the distributions described above have been paid in full, the remaining assets of Superior available for distribution shall be distributed pro rata to the holders of Common Shares. Dividends declared to preferred shareholders for the year ended December 31, 2023 were $25.4 million (US$18.9 million) or $97.7 (US$72.5) per preferred share, respectively (2022 – $24.6 million (US$18.9 million) or $94.6 (US$72.5) per preferred share, respectively). NCI As at December 31, 2022 Net earnings for the year Other comprehensive loss, allocated to NCI Dividends to preferred shareholders As at December 31, 2023 Issued Number of Preferred Shares (Millions) Equity Attributable to NCI 0.3 – – – 0.3 352.4 25.4 (8.1) (25.4) 344.3 Superior Plus Corp. Annual report 202392 Accumulated Other Comprehensive Earnings Accumulated other comprehensive earnings Currency translation adjustment Balance, beginning of the year Unrealized foreign currency (loss) gain on translation of foreign operations Balance, end of the year Actuarial defined benefits Balance, beginning of the year Actuarial defined-benefit (loss) gain Income tax recovery (expense) on other comprehensive earnings (loss) Balance, end of the year 2023 2022 155.9 (42.3) 113.6 3.8 (0.4) 0.1 3.5 49.4 106.5 155.9 3.4 0.6 (0.2) 3.8 Accumulated other comprehensive earnings, end of the year 117.1 159.7 Other Capital Disclosure Additional Capital Disclosure Superior’s objectives when managing capital are: (i) to maintain a flexible capital structure to preserve its ability to meet its financial obligations, including potential obligations from acquisitions; and (ii) to safeguard its assets while maximizing the growth of its businesses and returns to its shareholders. In the management of capital, Superior includes shareholders’ equity (excluding accumulated other comprehensive earnings) and current and long-term borrowings. Superior manages its capital structure and makes adjustments in light of changes in economic conditions and the nature of the underlying assets. In order to maintain or adjust the capital structure, Superior may adjust the amount of dividends to shareholders, issue additional share capital, conduct additional borrowing or issue convertible unsecured subordinated debentures, or conduct new borrowing or issue convertible unsecured subordinated debentures with different characteristics. Superior monitors its capital based on the ratio of senior debt outstanding to EBITDA, as defined by its revolving term credit facility, and the ratio of total debt outstanding to EBITDA. Superior’s reference to EBITDA as defined by its revolving term credit facility may be referred to as compliance EBITDA in its other public reports. Superior is subject to various financial covenants in its credit facility agreements, including senior debt, total debt to EBITDA ratio and restricted payments tests, which are measured on a quarterly basis. As at December 31, 2023, Superior was in compliance with all of its financial covenants. Superior’s financial objectives and strategy related to managing its capital as described above remained unchanged from the prior year. Superior believes that its debt to EBITDA ratios are within reasonable limits, in light of Superior’s size, the nature of its businesses and its capital management objectives. Superior Plus Corp. Notes to the Consolidated Financial Statements19. Supplemental Disclosure of Consolidated Statements of Net Earnings (Loss) 93 Revenue Revenue from products (1) Revenue from the rendering of services Tank and equipment rental Cost of sales Cost of products and services (2) Low value, short-term and variable lease payments SD&A Other expenses in SD&A (3) Transaction, restructuring and other costs Employee costs and employee future benefits expense (4) Distribution and vehicle operating costs (3) Maintenance and insurance expense (3) Depreciation of right-of-use assets Depreciation of property, plant and equipment Amortization of intangible assets Low value, short-term and variable lease payments Gain on disposal of assets, net of loss from divestitures (see Note 3) Finance expense Interest on borrowings Interest earned on Vendor Note (see Note 4) Interest on lease liability Non-cash financing expense, net of gain on modification of debt Gain (loss) on derivatives and foreign currency translation of borrowings Realized (loss) gain on financial and non-financial derivatives and foreign currency translation Unrealized gain (loss) on financial and non-financial derivatives and foreign currency translation Earnings (loss) before income taxes Income tax (expense) recovery Current income tax expense Deferred income tax (expense) recovery Net earnings (loss) for the year Years Ended December 31 2023 2022 3,170.7 3,282.4 106.2 76.8 72.0 25.4 3,353.7 3,379.8 (1,730.9) (2,183.9) (9.9) (6.1) (1,740.8) (2,190.0) (171.6) (50.2) (550.8) (202.4) (81.4) (47.0) (179.8) (104.3) (3.3) 4.1 (140.4) (84.2) (444.9) (123.5) (54.2) (36.1) (116.4) (86.4) (2.9) 1.9 (1,386.7) (1,087.1) (111.0) (75.2) – (11.4) (2.5) (124.9) (51.8) 63.7 11.9 113.2 (22.5) (13.7) (36.2) 77.0 (2.3) (9.3) (4.8) (91.6) 25.9 (161.9) (136.0) (124.9) (7.4) 44.4 37.0 (87.9) (1) Included in revenue from products is the sale of carbon credit of $4.6 million during the year ended December 31, 2023 (2022 – $8.5 million). (2) During the year ended December 31, 2023, the cost of products and services includes inventories recognized as an expense of $1,696.7 million and an inventory write-down of $2.5 million, respectively (2022 – $2,152.7 million and $2.8 million, respectively). (3) Restated to conform with current period presentation. (4) Expense is shown net of the Canada Emergency Wage Subsidy of $nil for the year ended December 31, 2023 (2022 – $2.2 million). Superior Plus Corp. Annual report 202394 20. Net Earnings (Loss) Per Share, Basic and Diluted Net earnings (loss) per share Basic Net earnings (loss) for the year attributable to common shareholders (1) Dividends declared to common shareholders Total earnings (loss) allocated to common shareholders Weighted average number of shares outstanding (millions) – basic Net earnings (loss) per share attributable to common shareholders (1) No additional allocation to the NCI because there are no excess earnings. Diluted Net earnings (loss) for the year attributable to common shareholders assuming Preferred Shares convert Weighted average number of Common Shares outstanding (millions) assuming Preferred Shares convert Net earnings (loss) per share attributable to common shareholders Years Ended December 31 2023 2022 51.6 170.5 51.6 229.0 $0.23 (112.5) 140.5 (112.5) 194.9 $(0.58) 77.0 (87.9) 259.0 $0.30 $0.23 224.9 $(0.39) $(0.58) Superior uses the two-class method to compute net earnings (loss) per common share attributable to common shareholders because Superior’s Preferred Shares are participating equity securities. For the purpose of computing earnings (loss) per share, the Preferred Shares are considered participating because they contractually entitle the holders to participate in dividends with ordinary shares according to a predetermined formula (Note 18). The two-class method requires earnings (loss) for the period to be allocated between Common Shares and Preferred Shares based upon their respective rights to receive distributed and undistributed earnings. Under the two-class method, the basic and diluted earnings and loss per share are computed as follows: a) Earnings or loss attributable to Superior’s common shareholders is adjusted (earnings reduced and a loss increased) by the amount of dividends declared in the period for each class of shares and by the contractual amount of dividends that must be paid for the period. b) The remaining earnings or loss is allocated to Superior’s Common Shares and participating equity instruments to the extent that each instrument shares in earnings as if all of the earnings or loss for the period had been distributed. The total earnings or loss allocated to each class of equity instrument is determined by adding together the amount allocated for dividends and the amount allocated for a participation feature. c) The total amount of earnings or loss allocated to each class of equity instrument is divided by the weighted-average number of outstanding instruments (and dilutive potential common shares for diluted earnings per share) to which the earnings are allocated to determine the earnings (loss) per share for the instrument. No such adjustment to earnings is made during periods with a net loss, as the holders of the Preferred Shares have no obligation to fund losses. The two-class equity method is performed in each period presented in reference to that period’s earnings or loss. Consequently, the sum of the four quarters’ earnings (loss) per share data will not necessarily equal the annual earnings (loss) per share data. Superior Plus Corp. Notes to the Consolidated Financial Statements95 21. Disaggregation of Revenue Revenue is disaggregated by primary geographical market, type of customer and major product and service lines. For the Year Ended December 31, 2023 Revenue from delivery of propane and other fuels Revenue from delivery of CNG, RNG and hydrogen Revenue from services Tank and equipment rental Total revenue For the Year Ended December 31, 2022 Revenue from delivery of propane and other fuels Revenue from services Tank and equipment rental Total revenue 22. Share-Based Compensation Restricted and Performance Shares Canada 1,265.1 42.3 28.9 17.5 U.S. Inter-segment 2,202.0 188.8 77.3 59.3 (527.5) – – – Total 2,939.6 231.1 106.2 76.8 1,353.8 2,527.4 (527.5) 3,353.7 Canada 1,644.3 19.6 4.0 U.S. Inter-segment 2,335.8 52.4 21.4 (697.7) – – Total 3,282.4 72.0 25.4 1,667.9 2,409.6 (697.7) 3,379.8 Under Superior’s long-term incentive program, restricted shares (“RSs”), performance shares (“PSs”) and/or director shares (“DSs”) can be granted to directors, senior officers and employees of Superior. All three types of shares entitle the holder to receive cash compensation in relation to the value of a specified number of underlying notional shares. RSs vest evenly over three years from the grant date, except for RSs issued to directors, which vest three years from the grant date. Payments are made on the anniversaries of the RSs to the holders entitled to receive them on the basis of a cash payment equal to the value of the underlying notional shares. PSs vest three years from the grant date and their notional value depends on Superior’s performance as compared to established benchmarks. DSs vest immediately on the grant date and payments are made to directors once they resign or retire based on the number of notional shares outstanding and the value of the shares on that date. Employee compensation expense for these plans is charged against net earnings or loss over the vesting period of the RSs, PSs, and DSs. The amount payable by Superior in respect of RSs, PSs and DSs changes as a result of dividends and share price movements. The fair value of all the RSs, PSs and DSs is equal to Superior’s common share market price and the divisional notional share price if related to a divisional plan. In the event of an employee termination, any unvested shares are forfeited on that date. For the year ended December 31, 2023, total compensation expense related to RSs, PSs and DSs was $5.3 million (2022 – $0.1 million recovery). Settlements during the year ended December 31, 2023 under the long-term incentive plan were completed at a weighted average price of $11.26 per share (2022 – $12.73 per share) for RSs, $10.61 per share (2022 – $12.48 per share) for PSs and $10.34 per share (2022 – $11.23) for DSs. For the year ended December 31, 2023, the total carrying amount of the liability related to RSs, PSs and DSs was $14.5 million (2022 – $14.1 million). Superior Plus Corp. Annual report 202396 The movement in the number of shares under the long-term incentive program was as follows: RSs PSs DSs 2023 Total RSs PSs DSs 2022 Total Opening number of shares 541,356 847,440 807,712 2,196,508 597,054 933,048 775,539 2,305,641 Granted 1,008,160 672,953 161,544 1,842,657 260,671 260,671 104,903 626,245 Performance factor adjustment and other – – – – – 180,476 – 180,476 Dividends reinvested 53,358 63,271 42,505 159,134 36,251 59,888 53,640 149,779 Forfeited (249,277) (135,243) – (384,520) (34,816) (56,999) – (91,815) Vested and settled (327,311) (409,427) (102,498) (839,236) (317,804) (529,644) (126,370) (973,818) Ending number of shares 1,026,286 1,038,994 909,263 2,974,543 541,356 847,440 807,712 2,196,508 Superior entered into equity derivative contracts in order to manage the volatility and costs associated with its share-based compensation plans. As at December 31, 2023, Superior had outstanding notional values of $29.2 million (2022 – $19.9 million) of equity derivative contracts at an average share price of $11.00 (2022 – $11.19). See Note 16 for further details. 23. Supplemental Disclosure of Non-Cash Operating Working Capital Changes and Other Changes in non-cash operating working capital and other Trade and other receivables, and prepaids and deposits Inventories Trade and other payables and other liabilities Changes in liabilities arising from financing activities Balance as at January 1 Net advances from revolving term bank credits and other debt Non-cash finance expense Deferred acquisition payments and assumed debt from acquisitions, net of repayments Lease additions net of repayments and other change in leases Debt issue costs Other, including foreign exchange Balance as at December 31 2023 2022 265.8 28.4 (108.9) 185.3 (41.1) (12.6) 38.3 (15.4) 2023 2022 2,149.1 133.9 1,630.8 382.2 4.7 3.5 20.6 (2.3) 172.3 2,481.8 2.7 5.1 38.6 (0.5) 90.2 2,149.1 Superior Plus Corp. Notes to the Consolidated Financial Statements97 24. Related-Party Transactions and Agreements Transactions between Superior and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Remuneration of directors and other key management personnel The key management personnel of Superior consist of executives of Superior and presidents of Superior’s business segments. The remuneration paid to directors and other members of key management personnel over the past two years is as follows: Short-term employee benefits (1) Other long-term employee benefits Termination benefits Share-based payments 2023 12.0 0.1 2.1 12.0 26.2 2022 4.6 0.1 – 3.7 8.4 (1) Short-term employee benefits paid to directors and other members of key management personnel include salaries and bonuses. 25. Group Entities Significant Subsidiaries as at December 31, 2023 Country of Organization Common Shares Ownership Interest (Direct and Indirect) SP Reinsurance Company Limited Superior Plus LP Superior Gas Liquids Partnership Superior General Partner Inc. Superior International Inc. Superior Plus Canada Financing Inc. Stittco Utilities NWT Ltd. Stittco Utilities Man Ltd. Cal-Gas Inc. Certarus Ltd. Superior Hungary Kft Superior Luxembourg Sàrl Certarus (USA) Ltd. Superior Plus US Holdings Inc. (1) Superior Plus US Financing Inc. (1) Superior Plus US Capital Corp. (1) Superior Plus Energy Services Inc. (1) NGL Propane, LLC (1) Osterman Propane, LLC (1) Sheldon Gas Company (1) Sheldon Oil Company (1) Sheldon United Terminals, LLC (1) United Liquid Gas Company, Inc. (1) Central Coast Propane, Inc. (1) Western Propane Services (1) Services Group, Inc. (1) Kamps Propane, Inc. (1) ACME Propane, Inc. (1) Kiva Energy, Inc. (1) Bermuda Canada Canada Canada Canada Canada Canada Canada Canada Canada Hungary Luxembourg U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (1) As disclosed in Note 18, Superior Plus US Holdings Inc. has issued 260,000 Preferred Shares to a third party, which are exchangeable into common shares of Superior. If converted, these Preferred Shares represent 11% of the common shares of Superior. Superior Plus US Holdings Inc. owns 100% of the common shares of these entities either directly or indirectly. Superior Plus Corp. Annual report 202398 26. Reportable Segment Information Superior operates four operating segments: U.S. Propane, Canadian Propane, Wholesale Propane and Certarus. This is consistent with Superior’s internal reporting and organization structure and how the CODM, the President and Chief Executive Officer, reviews the operating results, assesses performance and makes capital allocation decisions. Generally, these divisions are split between customer and product type, being wholesale, retail and natural gas. Retail is further split by customers in the U.S. and Canada. The U.S. Propane segment distributes propane gas and liquid fuels along the Eastern U.S. and into the Midwest and California. The Canadian Propane segment includes the Canadian retail business with operations across Canada. The Wholesale Propane segment is the wholesale business with operations in Canada and the Western U.S. The Certarus segment is a provider of on-road CNG, RNG and hydrogen. See Note 1 for further details. The CODM regularly reviews segment profit and capital expenditures as a measure of segment assets. Segment profit represents earnings before interest, taxes, depreciation, amortization, gain (loss) on disposal of assets, finance expense, transaction, restructuring and other costs, and unrealized gains (losses) on derivative financial instruments. Capital expenditures are reviewed by the CODM, representing additions to property, plant and equipment, software, and vehicle and other leases. Segment information is presented below. In the tables below, income tax recovery and expense are not allocated to the segments. Information by geographical region is provided in Note 27 of these consolidated financial statements. Year Ended December 31, 2023 U.S. Propane Canadian Propane Wholesale Propane Certarus Corporate Total Segments Inter- segment Total Consolidated Revenue External customers Inter-segment Total revenue 1,598.1 – 783.3 24.0 661.9 503.5 310.4 – 1,598.1 807.3 1,165.4 310.4 Cost of sales (includes products and services) (767.9) (433.1) (1,018.2) (49.1) – – – – 3,353.7 527.5 3,881.2 – 3,353.7 (527.5) (527.5) – 3,353.7 (2,268.3) 527.5 (1,740.8) Realized loss on financial and non-financial derivatives SD&A excluding costs identified below Segment profit (loss) Depreciation included in SD&A Depreciation of right-of-use assets (28.9) – (13.7) – (9.2) (51.8) (498.8) (240.3) (70.1) (166.0) (34.3) (1,009.5) 302.5 (86.2) 133.9 (40.9) 63.4 (3.6) 95.3 (49.0) (43.5) 551.6 (0.1) (179.8) included in SD&A (25.0) (12.8) (6.0) (2.9) (0.3) (47.0) Amortization of intangible assets included in SD&A (65.0) (18.7) (7.9) (12.3) (0.4) (104.3) Transaction, restructuring and other costs included in SD&A (15.6) (2.9) (0.6) (0.6) (30.5) (50.2) Gain (loss) on disposal of assets and impairment of goodwill included in SD&A Finance expense net of gain on 10.2 (5.3) 0.2 (1.0) – 4.1 modification of debt (10.2) (3.7) (1.0) 3.8 (113.8) (124.9) Unrealized gain on derivatives and foreign currency translation of borrowings Earnings (loss) before income taxes Income tax expense Net earnings for the year 22.8 – 7.7 – 33.2 63.7 133.5 49.6 52.2 33.3 (155.4) 113.2 – – – – – – – – – – – (51.8) (1,009.5) 551.6 (179.8) (47.0) (104.3) (50.2) 4.1 (124.9) 63.7 113.2 (36.2) 77.0 Superior Plus Corp. Notes to the Consolidated Financial Statements99 Year Ended December 31, 2022 U.S. Propane Canadian Propane Wholesale Propane Corporate Total Segments Inter- segment Total Consolidated Revenue External customers Inter-segment Total revenue 1,733.9 – 1,733.9 949.1 29.0 978.1 696.8 668.7 1,365.5 Cost of sales (includes products and services) (1,010.8) (604.0) (1,272.9) – – – – 3,379.8 697.7 4,077.5 – 3,379.8 (697.7) (697.7) – 3,379.8 (2,887.7) 697.7 (2,190.0) Realized gain (loss) on financial and non-financial derivatives SD&A excluding costs identified below Segment profit (loss) Depreciation included in SD&A Depreciation of right-of-use assets 24.0 – 4.6 (2.7) 25.9 (462.2) 284.9 (73.4) (229.3) 144.8 (38.7) (48.5) 48.7 (4.2) (25.9) (28.6) (0.1) (765.9) 449.8 (116.4) included in SD&A (21.1) (11.7) (3.0) (0.3) (36.1) Amortization of intangible assets – – – – – 25.9 (765.9) 449.8 (116.4) (36.1) included in SD&A (61.3) (18.4) (6.3) (0.4) (86.4) – (86.4) Transaction, restructuring and other costs included in SD&A (Loss) gain on disposal of assets included in SD&A Finance expense Unrealized loss on derivatives, gain from fair value change of contingent consideration and foreign currency translation of borrowings Earnings (loss) before income taxes Income tax recovery Net loss for the year (24.8) (0.9) (7.6) (0.8) 2.7 (3.0) (2.2) (56.4) (84.2) 0.1 (1.1) – (79.9) 1.9 (91.6) (64.7) 31.1 – 74.9 (13.0) 19.0 (84.2) (249.9) (161.9) (124.9) – – – – – (84.2) 1.9 (91.6) (161.9) (124.9) 37.0 (87.9) Superior Plus Corp. Annual report 2023100 Net Working Capital, Total Assets, Total Liabilities and Capital Expenditures U.S. Propane Canadian Propane Wholesale Propane Certarus Corporate Total As at December 31, 2023 Net working capital (1) Total assets Total liabilities As at December 31, 2022 Net working capital (1) (2) Total assets (2) Total liabilities (2) Capital expenditures for the year ended December 31, 2023 Purchase of property, plant and equipment and intangible assets Vehicle lease additions Capital expenditures excluding other lease liabilities Other lease additions Proceeds on disposal of property, plant and equipment Additions through business combinations (Note 3) (3) Total net capital expenditures Capital expenditures for the year ended December 31, 2022 (2) Purchase of property, plant and equipment and intangible assets Vehicle lease additions Capital expenditures excluding other lease liabilities Other lease additions Proceeds on disposal of property, plant and equipment Additions through business combinations (Note 3) (2) (3) Total net capital expenditures (27.5) 2,530.2 605.8 25.8 2,797.9 686.3 53.3 15.3 68.6 3.9 54.8 944.2 159.8 85.6 1,017.4 156.2 57.7 14.3 72.0 11.6 (20.9) 388.1 200.6 5.7 431.4 246.1 5.9 2.0 7.9 6.5 83.2 3.6 86.8 0.1 – – – – – – – (27.5) (42.4) (0.3) (1.9) – 14.1 780.4 865.4 4.8 49.8 58.8 7.9 66.7 3.8 – 41.2 52.5 21.7 74.2 3.5 5.4 – 5.4 11.9 (3.1) (4.7) (0.1) 290.8 358.2 12.7 85.7 65.5 82.7 46.6 (106.8) (53.8) 1,240.1 71.5 180.9 2,256.1 5,174.1 3,403.2 – – – 47.6 232.7 1,930.3 164.7 4,479.4 3,018.9 0.1 – 0.1 – – – 0.1 0.6 – 0.6 – – – 0.6 200.2 35.2 235.4 22.1 (72.1) 785.2 970.6 117.3 29.6 146.9 19.2 (7.9) 369.0 527.2 (1) Net working capital is composed of trade and other receivables, prepaids and deposits, and inventories, less trade and other payables, contract liabilities and dividends payable. (2) Restated, see Note 2(b). (3) These include property, plant and equipment and intangible assets acquired through business combinations. Superior Plus Corp. Notes to the Consolidated Financial Statements27. Geographical Information Revenue for the year ended December 31, 2023 Property, plant and equipment as at December 31, 2023 Right-of-use assets as at December 31, 2023 Intangible assets as at December 31, 2023 Goodwill as at December 31, 2023 Total assets as at December 31, 2023 Revenue for the year ended December 31, 2022 Property, plant and equipment as at December 31, 2022 (1) Right-of-use assets as at December 31, 2022 Intangible assets as at December 31, 2022 (1) Goodwill as at December 31, 2022 (1) Total assets as at December 31, 2022 (1) (1) Restated, see Note 2(b). 101 U.S. Canada Other Total Consolidated 2,428.2 751.9 156.5 414.4 1,357.4 3,082.7 2,177.3 772.1 157.0 420.4 1,320.7 3,132.2 925.5 934.3 94.5 224.1 553.7 2,059.0 1,202.5 356.7 78.8 143.5 337.4 – – – – – 32.4 – – – – – 1,319.6 27.6 3,353.7 1,686.2 251.0 638.5 1,911.1 5,174.1 3,379.8 1,128.8 235.8 563.9 1,658.1 4,479.4 Superior Plus Corp. Annual report 2023102 Corporate Information Board of Directors Corporate Officers and Senior Management Catherine (Kay) M. Best Director Calgary, Alberta Eugene V.N. Bissell Director Gladwyne, Pennsylvania Patrick (Pat) E. Gottschalk Director Philadelphia, Pennsylvania Jennifer M. Grigsby Director Oklahoma City, Oklahoma Douglas J. Harrison Director Burlington, Ontario Michael Horowitz Director New York, New York Calvin B. Jacober Director Calgary, Alberta Mary B. Jordan Director Vancouver, British Columbia Allan MacDonald President and Chief Executive Officer Toronto, Ontario David P. Smith Chairman Calgary, Alberta Rick Carron President, Superior Propane Grier Colter Chief Financial Officer Brian DeMille Vice President, Finance Jason Fortin Senior Vice President, Business Transformation Darren Hribar Senior Vice President and Chief Legal Officer Harry Kanwar Vice President, Risk and Compliance Allan MacDonald President and Chief Executive Officer Kirsten Olsen Chief Human Resources Officer Curtis Philippon Executive Vice President, Superior Plus and President, Certarus Ash Rajendra Vice President and Chief Information Officer Erin Seaman Vice President, Tax Michael Stoutley-Henderson Vice President, Corporate Development and Treasurer Shawn Vammen Senior Vice President, Superior Gas Liquids Superior Plus Corp. Annual report 2023 Business and Shareholder Information 103 Superior Plus Corp. Unit 401, 200 Wellington Street West Toronto, Ontario M5V 3C7 Telephone: 416-345-8050 Facsimile: 416-340-6030 Toll Free: 1-866-490-PLUS (7587) Investor-relations@SuperiorPlus.com www.superiorplus.com U.S. Propane Distribution Superior Plus Propane 650 E Swedesford Rd. Suite 300 Wayne, Pennsylvania 19087 Toll Free: 1-855-804-3835 Canadian Propane Distribution Superior Propane 55 Standish Court Suite 620 Mississauga, Ontario L5R 4B2 Toll Free: 1-877-873-7467 Fax: 1-877-730-5575 Wholesale Propane Distribution Superior Gas Liquids 840 – 7 Avenue SW Suite 1400 Calgary, Alberta T2P 3G2 Toll Free: 1-888-849-3525 Fax: 403-283-6589 Certarus Certarus Ltd. 308 – 4 Avenue SW Suite 3400 Calgary, Alberta T2P 0H7 Toll Free: 1-888-832-2004 Trustee and Transfer Agent Computershare Trust Company of Canada Suite 600, 530 – 8 Avenue SW Calgary, Alberta T2P 3S8 or: Suite 800, 100 University Avenue Toronto, Ontario M5J 2Y1 Toll Free: 1-800-564-6253 Website: www.computershare.com/ca Auditors Ernst & Young LLP 100 Adelaide Street West Toronto, Ontario M5H 0B3 Annual and Special Meeting of Shareholders The Corporation’s Annual and Special Meeting of Shareholders will be held virtually on Tuesday, May 14, 2024 at 4:00 p.m. (EDT). Toronto Stock Exchange (TSX) Listings SPB: Superior Plus Corp. shares Superior Plus Share Price and Volumes – TSX Quarterly high, low, close and volumes for 2023 and 2022. The table below sets forth the high and low prices, as well as the volumes, for the shares as traded on the TSX, on a quarterly basis. Period First Quarter Second Quarter Third Quarter Fourth Quarter Year High $11.62 $11.20 $10.90 $10.38 $11.62 2023 Low Close Volume $10.06 $11.14 58,447,680 $9.09 $9.30 $9.08 $9.08 $9.49 89,388,570 $10.26 86,575,055 $9.63 66,145,348 $9.63 300,556,653 High $13.47 $12.58 $11.70 $13.05 $13.47 Low $10.80 $11.04 $9.81 $9.44 $9.44 Close $11.48 $11.36 $10.02 $13.00 $13.00 2022 Volume 70,986,478 58,448,400 36,415,793 46,101,438 211,952,109 Superior Plus Corp. Annual report 2023Superior Plus Corp. 401, 200 Wellington Street West, Toronto, Ontario M5V 3C7 Tel: 416-345-8050 Fax: 416-340-6030 For more information send your enquiries to: investor-relations@superiorplus.com Toll-Free: 1-866-490-PLUS (7587) superiorplus.com 

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